The trap

This is post number 2,589 for GreaterFool. That’s about two million words. Or 32 books. There are also 467,250 comments on this site, each one personally eyeballed and approved (or not). You’d think that by now I’d have earned a little slack. Fuggedaboutit.

Q: “You’re always jabbering about investing money in TFSAs or RRSPs, which is fine for rich people like Garth. But what about the rest of us who have some investments, but not nearly enough to max out these things? What are we supposed to do? Steal it?” – Dave in Kelowna.

A: First, dinglenuts, lose the attitude. I could be playing with Bandit in a snow storm instead of typing this. But here’s a suggestion: a contribution in kind. You don’t need actual extra money to plump up your tax-free or retirement vehicles. Instead simply move assets you already own into either a TFSA or an RRSP and it’ll count the same as using cash. The limit is $5,500 for the former and 18% of your income for the latter (to a max of about $25,000, plus any unused room from the past). This strategy works best for an RRSP because it magically generates a tax refund for making the contribution.

For example, if you live in Ontario, earn $100,000 and have $25,000 in accumulated room, sliding over existing assets (mutual funds, ETFs, stocks etc.) will end up in a tax savings or refund of a whopping $10,000. That’s ten grand for selling yourself things you already owned. Just remember moving stuff you’ve made a profit on will trigger capital gains tax – so use those comatose GICs and when they mature inside the RRSP convert to growth-based ETFs.

Q: “We have three years left on a 5-year mortgage at 2.4%, and my wife has been obsessed with accelerating payments to get it paid off as fast as possible. That leaves nothing for our TFSAs. She says we’re investing in the mortgage and that’s the same thing. I think she’s nuts. What do I tell her?” Darcy, Windsor ON.

A: Mars and Venus, dude. Just the way things are in many marriages. Guys think financial security is based on the size of your wad. Women think it’s based on owing nothing. Real estate is the ultimate test. Most men are fine with a reasonable level of debt if the asset is rising. Most women crave a debt-free nest. In this instance, and in this environment, the ladies are wrong.

Pure math proves that. Why pay off a 2.4% loan when a 60/40 balanced portfolio last year earned more than 8% and has averaged 6.5% over the last seven years? You’d be better off growing money during a five-year mortgage term, then using the investment gains to pay down the principal upon renewal. And now that Trumponomics is clicking in, some investments will be on steroids.

More importantly, the biggest risk people (especially women) face is not being homeless, or even losing money. It’s running out of it. You can always rent a roof. You can’t rent cash flow. Tell her she’s being emotional, unreasonable, selfish and irritatingly female. That should work.

Q: “I don’t know how many times your pathetic blog has been saying prices in Vancouver are dropping. Well, they’re not. Have toy actually tried buying a condo here lately? I’ve lost four bidding wars now. It sucks. Can’t you get anything right?” Lisa, in Surrey.

Sigh. Listen, Lisa, sales and prices are actually on the decline. Over the past year there’s a been a 40% crash in the number of properties changing hands, while prices of detached homes – actual selling prices – have plopped by double-digits. The number of listings overall is going up, while in some areas (like the Westside) and some categories (over $3 million) this market’s already crashed and burned.

So if you want to blame anyone for bidding wars on properties selling for less than $750,000, go ahead. Her name is Christy Clark and this is her email: [email protected] As you might know, the province of BC decided to piddle on federal efforts to cool off the housing market by bringing in fat downpayment-subsidy loans for first-time buyers. So far about 400 kids have been approved, and are now busy jacking up condo prices as a result. So while the top end of the market has been pummeled and detached home process under pressure, condo sales and prices are Lady Gaga hot.

You want advice, Lisa? Leave Surrey. Go to Winnipeg or Saskatoon. Real estate’s cheap there, and they need some spice.

160 comments ↓

#1 For those about to flop... on 02.12.17 at 4:20 pm

Pink Snow falling in West Vancouver.

These guys were speculating when they spent 5m on this 90 year old house on the north shore.

They bought it in late April and had it back on by September for 6 million but were forced to take 700k off in November,down to pretty much their break even point at 5.295m

It is semi waterfront ,with only its street and Caulfield Park between it and the water and that might be its one chance at redemption but it hasn’t happened yet…

M42BC

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAyOTFTRA==

https://www.zolo.ca/west-vancouver-real-estate/4765-pilot-house-road

#2 Millenial on 02.12.17 at 4:23 pm

Hey Garth,
I bought half an ounce of gold yesterday.

#3 TurnerNation on 02.12.17 at 4:23 pm

The Germans are coming or here?
Some say german Trump was bought in to further corporatize USA. The most powerful leaders in the world – Merkel and Trump, now are German.

After all it was Germany during and after WW2 which became an industrial powerhouse too. (And other Germans, like the Bush family that ruled USA for years and stood accused of funding this war effort. Why, even our “British” royal is family is of Germanic decent, as Wackypeida admits: https://en.wikipedia.org/wiki/House_of_Windsor )

Remember it, they built a WALL around Germany – the Berlin wall? History always repeats. Eliets love walling us in (see: Israel’s wall, Great Wall of China, Hadrian’s wall, etc.)

– Corpoate: the Millenials I know all buy most things via Amazon, and are using Apple Pay. Banks – what relics.
– They are wearing $1000 Canada Goose parks and using $1000 Iphones. Richer than they think.

– If anyone doubts the power of this insane Canadian housing market: look at chart of MIC.TO
http://schrts.co/7D5NuK
Explosive runaway breakout Uppa uppa up. Oh those bankers again.

#4 gameboy on 02.12.17 at 4:36 pm

This is post number 2,589 for GreaterFool. That’s about two million words. Or 32 books. There are also 467,250 comments on this site, each one personally eyeballed and approved (or not).

Thanks for choosing this foolish, expensive hobby.
Wishing you (and us) many more posts to come.

#5 OMERS on 02.12.17 at 4:45 pm

All in moderation….and besides where is someone in their early 30’s getting $100,000 from to slide over to a TFSA I’m mid 30’s and let me tell you lots of people in their 30’s still living at home with the bank of mom and dad.
I did what Garth said to do just 3 weeks ago…..buy the Harley….she’s a 2014 Ultra Limited….watch me Sail off into the sunset…

#6 When Will They Raise Rates? on 02.12.17 at 4:49 pm

#2 Millenial on 02.12.17 at 4:23 pm

Hey Garth,
I bought half an ounce of gold yesterday.
——————–

Why? You should have bought a full ounce… you probably got raped on the premium.

#7 Freedom First on 02.12.17 at 4:55 pm

“That should work”- Garth

I almost spit my coffee all over my keyboard on that one.

For sure, when a girlfriend gets to the point where she thinks she can start thinking for me, it’s time for me to go. It’s over.

Garth, love the pic today. Just want to say, your pics and your Blog, and everything about it, are an absolute treasure. Been a while since I let you know how much I appreciate what you are doing here.

Thank you,
Sincerely, FF

#8 This Week in Money on 02.12.17 at 4:55 pm

Dan Harris from ChinaLawBlog on This Week in Money.
Currency and Crypto Currency Controls in China.

http://www.howestreet.com/2017/02/11/this-week-in-money-91/

#9 mathman on 02.12.17 at 5:13 pm

Find it hilarious that anyone thinks TFSA’s are for rich people, many of whom probably lease low end luxury cars and wonder why they have no money.

Anyone should be able to save $5500, if you can’t you have taken on expenses that you cannot afford. The rhetoric around the TFSA being a vehicle for the rich is what killed the 10k limit, which was more than fair and achievable for anyone with a minor shred of financial discipline.

Savers are being punished, financial responsibility has been eschewed for taking on boatloads of debt and bragging about how many cash flow negative condo properties you own.

Canadians are not wealthy, not financial geniuses, all they did was walk into a bank and get a mortgage, and if you can fog a mirror this worked. the collective un-wisdom of the crowd, CMHC, FOMO and mom and dad have pushed this housing bubble into Japanese like territory.

Google Tokyo housing bubble, understand the outcome and tell me that can’t happen here.

You don’t own your house, the bank does.

Math

#10 mathman on 02.12.17 at 5:23 pm

The real truth of the matter is that as long as prices go up, this has enabled those riddled with debt to refinance and live on their lines of credit. Exactly what was happening in the US, and why the crash lagged.

Once prices stop moving, no more refinance, no more line of credit increases. The first casualty will be the cottage, followed by the cars, the unsecured credit, the visa then the house.

#11 Andrew Woburn on 02.12.17 at 5:30 pm

#8 This Week in Money on 02.12.17 at 4:55 pm
Dan Harris from ChinaLawBlog on This Week in Money.
Currency and Crypto Currency Controls in China.
===================

AFAIK the huge dollar FX reserves in China happen because Chinese exporters get paid in USD, but the Bank of China doesn’t want them to sell the dollars on the open market to avoid affecting the yuan exchange rate. Instead, the BOC buys the dollars and pays for them with newly printed yuan. The decrease in the FX reserves happens when Chinese buy USD to move offshore. The BOC obviously can exert a great deal of control over this kind of outflow.

Where currency controls will be less effective is on the dollar receipts that never make it to China because they have been skimmed off along the way through dummy companies controlled by the exporter. I assume this is a growing factor in the dwindling of Chinese FX reserves. I have every confidence in Chinese businessmen. They have had four thousand years of practice in screwing the Emperor.

#12 Rexx Rock on 02.12.17 at 5:38 pm

I wouldn’t wish Winnipeg or Saskatoon on my worst enemy.Who wants to live in a Siberian environment.Talked to a realtor here in B.C. and she says Winnipeg is basically 8 months of winter.Here in balmy Victoria my friend just called and said he’s at the beach wearing a t shirt.We all know its a big sacrifice living on the West Coast financially but it well worth it!Its all about working a fulltime and a part time job if you make under $25 an hour.

#13 Andrew Woburn on 02.12.17 at 5:43 pm

To me this looks like a tiny, black cloud on the fracking horizon that may simply blow away, but somehow I don’t see a Trump administration reducing the risk.

“OKLAHOMA CITY (AP) — The Environmental Protection Agency has told Oklahoma regulators to do more to protect the state from a surge in earthquake activity that scientists have linked to the underground disposal of oil and gas wastewater.

An EPA administrator sent a letter in November to the Oklahoma Corporation Commission, saying a magnitude 5.0 earthquake happened despite state and federal action to curb wastewater injection”

In the unlikely event that a frack quake caused death or significant damage, hardy Americans would probably skate right over it but those squeamish Europeans would likely clamp right down on their current feeble fracking initiatives. We of course would have an endless Royal Commission and keep on fracking.

#14 Kelowna on 02.12.17 at 5:49 pm

Thanks Garth for all your hours hunched over the keyboard writing all these posts. It may not feel like it some days but your practical and common-sense approach to financial management is very much appreciated as evidenced by your ever growing readership!!

#15 Jerry on 02.12.17 at 5:54 pm

Crooked Christy, the developers stooge has done so much to screw up the housing market. First of all the 15% tax was optics for the election. We all know that anyone coming here buying a house with cash will not flinch at an extra 15%. The thing that has cooled the market is the government of China is finally cracking down on money flowing out of the country. Anyone that can buy a house now that is stupid enough to just got tax free loan from the government. Those who can’t afford to still won’t. We will all be glad when she gets turfed.

#16 Jack Fortin on 02.12.17 at 5:54 pm

Hi Garth …. One of my clients forwarded a link to your blog about a week ago. Great stuff. Thanks for taking the time out to do this. I have had so much fun stirring up the muck and I even learned a thing or two.
sincerely ….Jack

#17 Guaranteed Capital Investments on 02.12.17 at 5:55 pm

Garth , are there any guaranteed investments that can protect my mothers capital? I thought I heard RBC had something at around 4% annual return?

She is finally ready to sell in Don Mills, very hot area featured in the Toronto Star this last week. Not sure what it will fetch but anything in high 1 million’s is a no brainer for her at this point in her life with limited investments / savings left and burning up cash flow because of living costs.

Nothing guaranteed at 4%, and beware of insurance-based products which promise a 5% yield but end up just giving you your own money back. If she has at least 20 years left and needs income, then a balanced, diversified portfolio is appropriate. — Garth

#18 Bucky on 02.12.17 at 6:01 pm

“Tell her she’s being emotional, unreasonable, selfish and irritatingly female. That should work.”

Please review this video for perspective before considering following this bit of, ummm, “advice” from Garth. Or get a good marriage counselor, your choice.

http://youtu.be/-4EDhdAHrOg

#19 joey on 02.12.17 at 6:10 pm

Winnipeg Saskatoon. Last week was what? Nova scotia
Sarcasm?
Darts?

#20 Ogopogo on 02.12.17 at 6:12 pm

Dave in Kelowna, listen to Garth. You don’t have to be “rich” to learn basic elements of investment.

In other news, the desperate sellers at 1888 Abbott, the much-coveted “Abbott Corridor” in Kelowna, are stuck trying to offload their overpriced shack. They’ve had about 8 or 9 open houses and nothing. And now a $30,000 reduction. Desperation setting in. So tempted to go and make an offensively low offer in the low $400,000 range. Here’s the MLS listing for this sad joke:

https://www.realtor.ca/Residential/Single-Family/17623865/1888-Abbott-Street-Kelowna-British-Columbia-V1Y1B5

I wonder if the self-styled Golden God of Okanagan RE (a.k.a. our fave clown, DA) is their shill.

#21 DON on 02.12.17 at 6:12 pm

Lisa from Surrey should slow down on the must have a property ‘biding wars’ for condo’s and pay attention.

Christy Clark’s (BC Liberal – Harper loving operatives) Chief campaign fundraiser was the Condo King himself Bob Rennie, realtor. He recently stepped down from the position and voila the new home buyer loan program came out. Lisa read about bubbles, don’t watch Global BC or read the vansun or province newspapers and you will start to think differently from your friends.

And I hope you are not participating in Surrey biding wars…stray bullets are common in Surrey.

#22 Smoking Man on 02.12.17 at 6:24 pm

Cuba. Eating the cost of a ticket to Equidor and Panama city. Staying here for another 5 days or more.

Love these people, low check bone Thailanders. Same time zone as my kids and my forex brilliance. I only trade usdcad as you know. My real bank just a quick boat ride away.

This chick with donkey teeth and a perfect body and cha cha moves showed me how to Saltsa dance with real rithum.Teeth are way over rated is what I’m thinking.

Never want to come home.

Hemingway got it right. Hunter S Thompson went with rum dairies in Port o Reco to look like he was not a copy cat. Screw that copy cat shit

Hemingway nailed it. It was his surroundings that made him. Hunter should have been a real rebal and came here.

#23 Not tired of being wrong on 02.12.17 at 6:31 pm

Oh for gods sake. How long will you continue to be wrong. You’ve given some of the worst advice I’ve seen over the years. Because of your terrible advice people sold on on some substantial real estate gains and more to come. This is the new normal. When will you accept.

#24 G on 02.12.17 at 6:33 pm

Garth

Thanks again for the blog.
After all these years it may be time to monetize the blog, and donate the proceeds to my preferred organization:
Autism Ontario.

#25 G on 02.12.17 at 6:34 pm

The end is not in sight in the GTA.

https://ca.yahoo.com/news/brampton-home-draws-532-showings-103000421.html

#26 patrick on 02.12.17 at 6:39 pm

“Why pay off a 2.4% loan when a 60/40 balanced portfolio last year earned more than 8% and has averaged 6.5% over the last seven years?”

cherry picking

#27 Jack Fortin on 02.12.17 at 6:39 pm

#2 millenial …. good on you. Smaller units of gold do carry a higher premium but if you bought a maple leaf coin, most dealers will pay you a modest premium on it should you choose to sell it. My shop pays $10 over on one ounce and half ounce maple leaf coins as long as they are in good enough condition for resale.

There is a tax advantage on smaller units as well. Unless tax code has changed, when you sell a gold coin there is no capital gains owing (nor can capital losses be declared) if the sale amount is under a thousand dollars, irrespective of initial cost.

I believe it is called the dominimus rule. Hopefully a tax expert can elaborate on this.

Another reason to stick with the higher premium coins is due to the proliferation of counterfeit material coming out of Red China. An astute dealer can verify a coin by looking at it or conducting a few inexpensive tests. Bars and wafers are generally subject to destructive testing as most dealers cannot afford sophisticated testing equipment.

Counterfeits are the one thing I, as a dealer; loose sleep over. My shop has gone to extraordinary measures to ensure we never buy (or sell) such. Go to Alibaba and look up replica bullion product if you want to loose some sleep as well.

Keep adding to your gold savings.

#28 Wrk.dover on 02.12.17 at 6:41 pm

I repeat, Garth Turner has listened to more Canadians than any politician, and mostly about important issues.

Plus blather too. For he’s a jolly good fellow…

#29 Smoking Man on 02.12.17 at 6:47 pm

Can’t tell you buggers how much loot I’ve made since my batman call awhile ago. Second ear ring a bell.

http://www.bankofcanada.ca/rates/interest-rates/canadian-bonds/

Bond Junkie. How about you. You’re a fan ?

#30 David McDonald on 02.12.17 at 6:49 pm

When I was teaching elementary statistics I tried to add a bit of common sense to each lecture. I wanted to have a positive influence on the young adults in my class. It gave me a sense of satisfaction when I connected. Garth, you are doing the same on a much grander scale. Enjoy being relevant.

#31 Re., mathman on 02.12.17 at 6:59 pm

I don’t own my house the bank does ?

Lol

No I do . My name is on it . Are you okay ?

#32 When Will They Raise Rates? on 02.12.17 at 7:00 pm

#10 mathman on 02.12.17 at 5:23 pm

The real truth of the matter is that as long as prices go up, this has enabled those riddled with debt to refinance and live on their lines of credit. Exactly what was happening in the US, and why the crash lagged.

Once prices stop moving, no more refinance, no more line of credit increases. The first casualty will be the cottage, followed by the cars, the unsecured credit, the visa then the house.
—————–

I hope you’re right… Cottages in the area I was looking to buy 2 summers ago (which I didn’t pull the trigger on because I thought they were over priced even then) have since doubled…

Crossing my fingers for a fire sale!

#33 Hotdogs from Heaven on 02.12.17 at 7:01 pm

#17 Guaranteed Capital Investments on 02.12.17 at 5:55 pm

Garth , are there any guaranteed investments that can protect my mothers capital? I thought I heard RBC had something at around 4% annual return?

She is finally ready to sell in Don Mills, very hot area featured in the Toronto Star this last week. Not sure what it will fetch but anything in high 1 million’s is a no brainer for her at this point in her life with limited investments / savings left and burning up cash flow because of living costs.

Nothing guaranteed at 4%, and beware of insurance-based products which promise a 5% yield but end up just giving you your own money back. If she has at least 20 years left and needs income, then a balanced, diversified portfolio is appropriate. — Garth

————————————————
Government of Israel bonds pay as much as 4% (in chunks of U.S. $500) and they have NEVER been defaulted on:

https://www.israelbonds.ca/bonds_rates.php?gclid=CMr4j_fhi9ICFRS2wAodaxAHxg

#34 Frank on 02.12.17 at 7:02 pm

You’re always jabbering about investing money in TFSAs or RRSPs, which is fine for rich people like Garth………….For example, if you live in Ontario, earn $100,000 and have $25,000 in accumulated room

Garth you adorable bugger. $100K is a top 10% income. The commentor is talking about people making around the average Canadian income of $46K. They want to know what average people who live almost paycheck to paycheck should do. When you say “Oh, just save ten grand of your six figure income” you seem out of touch. Just tell them that they’re screwed.

Oh and Lisa is right in Vancouver. Condos are selling well. That’s because while the million dollar sales are pooched, the plebs at the bottom haven’t got the memo and Christie’s recent tax-free down payment loan has juiced the low end of the market. They’ll get hosed too, in fact likely worse. Why? Downturns disproporitionally affect the poor. 2008 wiped out fortunes and turned billionaires into millionaires but worse it put people barely making it onto the street and caused thousands more to commit suicide due to the stress. The condo market isn’t on fire because Garth it’s wrong, it’s because the people that can’t swim are the last ones who see the tidal wave coming.

#35 Hotdogs from Heaven on 02.12.17 at 7:03 pm

Sorry, that should have been increments of $5,000 after an initial investment of $25,000.

#36 Hopefully no one heeded .. on 02.12.17 at 7:07 pm

Garth’s advice and instead of paying down debt in ’15 poured into the tsx . Then proceeded to get scared and sold

Keep in mind- the market isn’t a GIC . You’re taking on higher risk than a GIC . Neither Garth or ANYONE will GUARENTEE returns .

#37 Rob on 02.12.17 at 7:10 pm

“Tell her she’s being emotional, unreasonable, selfish and irritatingly female. That should work.”

This is why I go to Greater Fool for all of my relationship advice. XD

Eh… I’d feel pretty lucky to have a wife like Darcy’s. Most ladies would rather spend everything on clothes and knickknacks. If you find a lady who wants to pay off debt, then forget the numbers. Keep her happy. You could do worse.

#38 For those about to flop... on 02.12.17 at 7:14 pm

Pink Snow falling in Vancouver.

These guys were the unlucky ones holding the bag when the music went from Death Metal to Swing Jazz.

It has been sold 3 times in the last couple of years with a couple of them walking away with approximately 500k in profits and now these guys have it back on for cost, plus expenses/taxes.

There are some beautiful homes down in the Southlands…this ain’t one of them…

M42BC

https://www.zolo.ca/vancouver-real-estate/6267-dunbar-street

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAwMFQ4Ng==

#39 Millenial on 02.12.17 at 7:19 pm

#6 When Will They Raise Rates? on 02.12.17 at 4:49 pm

Why? You should have bought a full ounce… you probably got raped on the premium.

**********************************************

Imagine one day the price of gold skyrockets in fiat currency valuation to something stupid like $8k or $9k, on account of a loss of confidence in Central Banks. [Garth would tell you this is impossible of course.] But let’s just pretend this happens, and you decide you want to cash out to get some fiat currency. I’d rather have some fractional gold coins as: (1) the buyer is more likely to have that smaller sum of cash, and (2) the buyer is more likely to not question the authenticity of the fractional coin [less likely somebody would try and fake a gold-plated tungsten quarter or half-ounce coin]. If you’re buying physical gold you’re buying it for a reason, and the exit strategy is just as important as the purchase.

#40 NEVER GIVE UP on 02.12.17 at 7:44 pm

Our people, Canadians, are what they call in the auto industry, people who pay the original asking price. “Laydowns”!

“Laydowns” are people who allow their government to pump up the RE market in BC with our own money and nary a peep from the Plebs about it.

It will cost $160 million to administer and it will inject over a billion into our local Condo market that is already heating up again.
“Laydowns” are suckers, “Laydowns” are Canadians. We are fat lazy and really we do not care what happens to us as long as we have our drive thru’s to get easy food.

OK Governments. Keep on sticking it to us. Buy votes on our dime. Use us for whatever you want we will say nothing, for we are “Laydowns”!

#41 Gasbag Boomer on 02.12.17 at 7:45 pm

Lisa, listen to me. David Clayton Thomas?

#42 Long-Time Lurker on 02.12.17 at 7:51 pm

Thanks, Garth.

It’s always a pleasure to read your blog. The comments section is another matter.

LL

#43 Pete from St. Cesaire on 02.12.17 at 7:57 pm

A trend I’ve noticed and would like to see more of: Retired Boomers buying Ferrari’s, Porsche’s and Rolly’s, and taking expensive vacations such as going on a safari. It seems that many of the older folk are realizing that when it comes to their money it is looking like it is a spend-it-now-or-lose-it-later economy. And they are right. In fact, probably 70% of them would be what Garth would consider to be ‘doomers’.
I know because I often converse with these guys and they know they’re being smart to live-it-up while they still can.

#44 Mean Gene on 02.12.17 at 8:02 pm

Dave in Kelowna needs to get a second job and work his a$$ like an immigrant.

#45 Cheap Houses on 02.12.17 at 8:13 pm

Christy Clark huh? Funny last I checked money laundering was supposed to be enforced by the RCMP.

#46 Bourdy Graham on 02.12.17 at 8:15 pm

If O’Leary becomes the PM, Will he charge us an annual MER like he does his mutual funds?

#47 Fish on 02.12.17 at 8:18 pm

THANKS Garth,
But please winnipeg, I’m out, In the spring

#48 Nonplused on 02.12.17 at 8:23 pm

2,589 posts? Sad, I think I read all of them.

467,250 comments? Sad, I think I made about 4,000 of them and read about 10% of the others.

Well, “I’ve got my mind on my money and my money on my mind”. And not much else to do when getting into my gin and juice. (Which probably explains some of my comments. Smoking man isn’t the only one commenting after a few.)

I haven’t always agreed with everything you say, and especially took exception when you tried to explain hiring Ryan and Doug on your day off (it’s your blog, and anyway they were good choices), but I’ve found your blog consistently both insightful and entertaining, even if somewhat repetitive (but some things bear repeating, especially for new readers). I’ve implemented many of your strategies. Some of the ideas I also got from other sources but it has been nice to have one central, concise, consistent reference in a world full of crazy ideas. You have done good work here Garth and a service to all who come by. I am sure you’ll never meet more than a fraction of those you’ve helped, but you have done a great service. Not probably on par with the inventor of penicillin, but given the number of clicks you get it has to be substantial. Maybe you’ll get a statue in front of parliament one day. Ok probably not.

I always assumed you had the Amazon security detail handle the moderation. But you don’t talk about them much anymore. Did you fire them? Time are rough I know but it seems a shame if you did.

#49 Bernie on 02.12.17 at 8:25 pm

“This is post number 2,589 for GreaterFool. That’s about two million words. Or 32 books.”

Not at all, it is one book draft with loads of repetition. If you edit it well, one book remains. But it’s a good book, I might buy it. Have you thought about that?

#50 Jack Fortin on 02.12.17 at 8:26 pm

#44 Cheap Houses…. It is actually an organization called Fintrac that looks after that. Their head office is in Vancouver. Don’t expect them to clamp down on money laundering in Vancouver real estate as it would cause the value of their own homes and condos to fall.

#51 Barb on 02.12.17 at 8:26 pm

#3 TurnerNation on 02.12.17 at 4:23 pm

“…Germanic decent”.
————————————

Danke.

#52 Bond Junkie on 02.12.17 at 8:27 pm

Smokie you know I’m always watching! Fantastic call and it’s been doing wonders for my REIT exposure. Currently in FLA and hitting up little Havana tomorrow (I guess the wife is a little homesick). Hope you’re having a blast!

-Bj

#53 Reply to #26 on 02.12.17 at 8:29 pm

Gold coins are listed personal property (LPP):

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/127/cmpltng/lstd/menu-eng.html

LPP is a type of personal-use property. The tax rules for calculating gains or losses are in the link below:

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/127/cmpltng/prsnls/menu-eng.html

#54 Ponzius Pilatus on 02.12.17 at 8:35 pm

Garth, the Dougie kid is getting the idea on how to deal with the blog dogs.
Are you grooming him, or will he have to pry the keyboard from your cold dying hands?

#55 BillyBob on 02.12.17 at 8:37 pm

#30 Re., mathman on 02.12.17 at 6:59 pm
I don’t own my house the bank does ?

Lol

No I do . My name is on it . Are you okay ?

====================================

Try missing a few mortgage payments, and then let us know who still owns your house.

—————————————————————

#12 Rexx Rock on 02.12.17 at 5:38 pm
I wouldn’t wish Winnipeg or Saskatoon on my worst enemy.Who wants to live in a Siberian environment.Talked to a realtor here in B.C. and she says Winnipeg is basically 8 months of winter.Here in balmy Victoria my friend just called and said he’s at the beach wearing a t shirt.We all know its a big sacrifice living on the West Coast financially but it well worth it!Its all about working a fulltime and a part time job if you make under $25 an hour.

====================================

The ultimate in cult-ism. The Canadian west coast has to be the most overrated place on the planet (I grew up there). I can only hope this advice to work two jobs just to try and scrape by in such a smug, moldy place is intended as humour. I can’t argue that it’s better weather than the prairies, but that’s not exactly setting the bar high, is it?

—————————————————————-

As an expat, I’ve had a good laugh over the last week at the haters who have zero experience outside their own borders but don’t let it stop them from expressing their strong opinions of those in Thailand and elsewhere. Thanks for the chuckles!

And Garth, I notice there are a lot more people taking shots at you in the comments lately, which pretty much confirms that your opinions are hitting a sore spot – due to their accuracy. Thanks for all you do.

#56 Ponzius Pilatus on 02.12.17 at 8:47 pm

#128 Jack Fortin on 02.12.17 at 7:43 pm
Wow …. Good score Ronaldo. The least I ever paid for 80% silver dollars was a little under four dollars. I could not afford that many because my income was very limited.

I have some gand daughters as well. I like to think that I am putting away a few more coins than I will need for retirement. Those surplus coins will one day make a big difference in their lives.
————————-
Sure it will. The day will be the day they’ll turn 16 and waste all the coins on a sportscar.
Better use is to go to Vegas and blow it all on the slots.
Go have some fun, Grandpa!

#57 TheDood on 02.12.17 at 8:50 pm

“A: First, dinglenuts, lose the attitude………”

LOL! I love it !

If you don’t make enough to invest in TFSAs and RRSPs then sell your overvalued (for the time being) house or the new Ram 1500 sitting in your driveway – or better, sell them both!

Our (wife and I) combined income is a small fraction over 100K, 2 kids, we rent, have zero debt, and max out the TFSA, RRSP, and RESPs every year. Why do we do this? Because one day when we grow old, we’re going to need an income, and unless you’re fortunate enough to make 200 or 300K, you cannot achieve this investing in real estate that puts you into debt for 25 years! Besides, a house doesn’t pay you a dime – even when its paid for!

#58 crowdedelevatorfartz on 02.12.17 at 8:51 pm

@#21 Smoking Man
“Hunter S Thompson went with rum dairies …..”
*******************************************
Smokey Smokey Smokey you drunken dyslexic doppelganger.

Hunter s Thompson wrote the Rum Diarrheas……which is where you are headed my friend after you eat your first meal in Panama City.

Enjoy

#59 crowdedelevatorfartz on 02.12.17 at 8:56 pm

DELETED

#60 Ponzius Pilatus on 02.12.17 at 9:04 pm

#20 DON on 02.12.17 at 6:12 pm
Lisa from Surrey should slow down on the must have a property ‘biding wars’ for condo’s and pay attention.
And I hope you are not participating in Surrey biding wars…stray bullets are common in Surrey.
———————
Don, I live in Surrey and I’m sorry to say that you are a Surreyphobe, which in my IMHO is worse than a Xenophope.
And, please, please refrain from dispensing wisdom.

#61 Td on 02.12.17 at 9:09 pm

Garth seriously
Guy asks what average person who can’t afford to fund registered accounts is to do and u tell him to transfer from from his non registered account ? lol
Maybe he can sell some of his vintage Ferraris and rare art too

#62 Sam the Sham on 02.12.17 at 9:10 pm

Approximately 3500 suicides take place annually in Canada. I wonder how many of these are long term renters? There must come a point in time when someone realizes they have made the biggest mistake of their lives by not buying a home. Year after year price go up relentlessly. Their rent go up as well. There may have been a time when they could have afforded a home, but that time has long past. They were told stay liquid and mobile, don’t be a slave to the bank. Etc, etc. Now they realize it’s too late. I guess we should feel sorry for these big time losers, but it’s hard not to snicker and smirk.

That was sick. — Garth

#63 Ponzius Pilatus on 02.12.17 at 9:12 pm

#40 Gasbag Boomer on 02.12.17 at 7:45 pm
Lisa, listen to me. David Clayton Thomas?
————–
Lyrics
She hangs her head and cries on my shirt
She must be hurt very badly
Tell me what’s making you sad, Li?
Open your door, don’t hide in the dark
You’re lost in the dark, you can trust me
‘Cause you know that’s how it must be

Lisa Lisa, sad Lisa Lisa

Her eyes like windows, trickle in rain
Upon the pain getting deeper
Though my love wants to relieve her
She walks alone from wall to wall
Lost in her hall, she can’t hear me
Though I know she likes to be near me

Lisa Lisa, sad Lisa Lisa

She sits in a corner by the door
There must be more I can tell her
If she really wants me to help her
I’ll do what I can to show her the way
And maybe one day I will free her
Though I know no one can see her
Lisa Lisa, sad Lisa Lisa

Written by Cat Stevens, Yusuf Islam • Copyright © EMI Music Publishing, Sony/ATV Music Publishing LLC, Warner/Chappell Music, Inc, BMG Rights Management US, LLC

#64 Jack Fortin on 02.12.17 at 9:19 pm

Thank You …Reply to # 26.

That is the reason you may wish to pay a little more on premiums and buy smaller fractional gold coins. I only buy 1/10 oz maples and the odd sovereign for my savings.

The same folks who say gold will never go to $5,000 or $10,000 would have never predicted the financial repression we now know as negative interest rates ten years ago. The fact that the financial authorities claim that a normalization of rates would be a disaster should be a big red flag that something is terribly wrong.

Having strong savings gives you stronger hands when dealing with your investment portfolio. You are far less likely to panic and do something silly when the market crashes or the banks have a “holiday”. Just as you would not hold cash in your investment portfolio, you should not hold gold there either. If you really want to invest in gold buy shares in producers.

Your gold, and some cash; should only be considered part of your savings. Ideally it should be held completely outside the financial sector. A safe box at a bank should only be considered for short term storage until you can make more secure arrangements.

Keep your gold in the form of coins and never refer to it as anything other than a “coin collection” when making a net worth determination or any other financial disclosure. Do not elaborate on the composition of your collection. It is best valued at the face value on the coins themselves. Though they are non circulating legal tender, nevertheless they are still “legal tender”.

Stocks markets have no reason to crash; there have been no bank holidays in Canada this lifetime; and nobody is coming to steal your silly pieces of metal. — Garth

#65 Interest rates up, house prices down on 02.12.17 at 9:27 pm

I have waited for this stupid bubble to burst since 2011.
Rates are stupidly cheap. Prices will only dramatically really fall when interest rates go up. But it’s not happening as the USA has to inflate themselves out of dept. It doesn’t work but Feds don’t know what else to do.

http://www.economist.com/blogs/buttonwood/2013/05/debt-crisis

#66 Jack Fortin on 02.12.17 at 9:28 pm

Reply to Sam … We shall see how many home owners off themselves when interest rates normalize. That process is sure to see them go well above “normal” then fall back to that point.

Carrying a lot of debt is excessively risky in this environment.

#67 Jack Fortin on 02.12.17 at 9:35 pm

I hear you Garth. “Stocks are at a permanent high”. Oh wait, someone already said something like that back in 1929.

Do you think that the banks would not have had a holiday without the bailouts they received in 2008-2009? Maybe not but they would have had to dump a huge pile of real estate into the market then to get liquid.

Stealing my silly pieces of metal? Tell that to the ministry of finance…. You clearly haven’t heard of Bill C124 section 33 which was passed into law in June 1993.

Stocks are far from historic highs based on the only measure that matters – P/E ratios. No, there has never been a bank holiday, and never will be in Canada. And Bill C124 will not result in the confiscation of your currency. Gold nuts are unwelcome on this site since you are basically unstable. — Garth

#68 Fish on 02.12.17 at 9:36 pm

I am presently. Wait ING.
Get ready 6 Am

#69 Ponzius Pilatus on 02.12.17 at 9:45 pm

#63
Your gold, and some cash; should only be considered part of your savings. Ideally it should be held completely outside the financial sector. A safe box at a bank should only be considered for short term storage until you can make more secure arrangements.
————
Jake, as I recommended before on this blog, the safest place for your cash and gold coins is a well designed mattress like the bestselling “Stasher Mattress” sold at Sleep Country.
Tellem Ponzi send you, for a 10% discount.

#70 Freedom First on 02.12.17 at 9:45 pm

Darcy, I hate to tell you this, but it is remiss not to.

Women want the house paid off, and, then if she isn’t planning to leave you yet, she will want a full reno or an upgrade to a more expensive place.

Houses are always the best for women. Hard to liquidate and easy to keep for her and the kids when you are gone. Plus, you will still be paying.

The truth is almost always painful, but as men get older, a lot of them can no longer deny it. For sure when it is their own experience, or/and, they see it all around them. Seems only then do the blinders come off.

I have been Blessed.

#1
Freedom First
Master of Freedomonics

#71 Tigidou on 02.12.17 at 9:46 pm

Have you seen the news about Ontario Securities Regulator giving a notice to Home Capital, conveniently Friday after close?

Because they failed to disclose fraudulent mortgages during two years.

I wonder if 2017 is the year the dirty secrets will come out.

I hope some lender employees will make themselves useful and leak out important issues. Right?

#72 Chaddywack on 02.12.17 at 9:48 pm

Leaving Surrey is ALWAYS good advice regardless of the real estate market. (I lived in Whalley for years…fun times!)

Btw I’ve never seen so many blue dots for sale on the westside of Vancouver before. I notice all the prices for detached homes are at LEAST $3M if not more. Even a specialist doctor cannot afford the westside anymore. Sad times we live in.

#73 Bubbalicious in all the world on 02.12.17 at 9:51 pm

So why hasn’t this thing popped. We are the most bubbly.

http://www.businessinsider.com/housing-markets-with-the-biggest-bubble-risk-according-to-ubs-2016-9

#74 Vampire studies GMST 454 on 02.12.17 at 9:54 pm

33 Frank – Dave did mention having investments, just not enough to max out. But of course he doesnt need to max out. He could just transfer what he’s got (possible cap gains though) and continue with what ever he can
contribute.

The $46K/yr earner is well served by the TFSA as the marginal tax rate isnt high enough to give great advantage to the RRSP.

#75 Tony on 02.12.17 at 10:18 pm

Re: #2 Millenial on 02.12.17 at 4:23 pm

The U.S. dollar should push at least the 120 area (dollar index) and more likely the 140 level but who knows maybe the FED and bankers will finally stop monkey hammering gold and silver.

#76 re. TheDood on 02.12.17 at 10:41 pm

You cannot be serious ?

Bought our home 21 yrs ago for $265,000. Our two boys know it’s home. One is now off to university . We loved the neighbirhood and still do. Peace of mind that no one can tell us to leave

Our home is valued at $900,000

#77 DON on 02.12.17 at 10:50 pm

#59 Ponzius Pilatus on 02.12.17 at 9:04 pm

#20 DON on 02.12.17 at 6:12 pm
Lisa from Surrey should slow down on the must have a property ‘biding wars’ for condo’s and pay attention.
And I hope you are not participating in Surrey biding wars…stray bullets are common in Surrey.
———————
Don, I live in Surrey and I’m sorry to say that you are a Surreyphobe, which in my IMHO is worse than a Xenophope.
And, please, please refrain from dispensing wisdom.
****************

I stated fact with respect to Surrey. Gangland would be a better term. I wasn’t spewing wisdom it is a fact. Using your logic that would make you a factophobe.

Oh, I forgot you don’t want the negative attention bringing down your property values. Geezus. By the way wisdom is not spewed it is embraced. Now shit talking is spewed out.

#78 Sir John Hawkwood on 02.12.17 at 10:56 pm

Invest for Trump!
ETFs are fine.

#79 DON on 02.12.17 at 10:58 pm

#61 Sam the Sham on 02.12.17 at 9:10 pm

Approximately 3500 suicides take place annually in Canada. I wonder how many of these are long term renters? There must come a point in time when someone realizes they have made the biggest mistake of their lives by not buying a home. Year after year price go up relentlessly. Their rent go up as well. There may have been a time when they could have afforded a home, but that time has long past. They were told stay liquid and mobile, don’t be a slave to the bank. Etc, etc. Now they realize it’s too late. I guess we should feel sorry for these big time losers, but it’s hard not to snicker and smirk.

That was sick. — Garth
******************
These comments make me wonder. Why? Because a mortgage is a long term commitment (if not paid off right away). When prices revert the pain will still be felt and the Line of Credits will come due.

No one sees a bubble burst they only tend to deal with the consequences.

It is time to regulate realtors, the lying and misinformation needs to stop. They have endangered our economy.

#80 Adele is awesome on 02.12.17 at 11:58 pm

Five Grammies Garth. Count em. Five.

#81 Fortune500 on 02.13.17 at 12:17 am

I don’t know how you do it Garth, but there are many of us who appreciate that you do.

Thanks for all of your help and advice over the years. As I continue to educate myself I continue to be impressed by the quality of the information that is laid out here week after week for free.

If you are new to this blog, please ignore the realtors and other haters who have yet to learn about irrational exuberance, reversion to mean or recency bias.

#82 SueMe on 02.13.17 at 12:23 am

What makes Winnipeg seem “cheap” I wonder?

J

#83 Vancouver in the Rearview on 02.13.17 at 12:27 am

Garth, you often post about your dogs, so I’m hoping you’ll permit this thread-jacking.

Sadly, our dog, a five-year-old Cavalier King Charles Spaniel, died yesterday suddenly, and completely unexpectedly. One moment she was fine, the next moment, she had died. There was nothing anyone could do.

Our pup was an integral part of our life – she was with us every day, woke up with us, went to bed with us, and was part of our family. It’s especially hard for my wife, who was the primary dog-parent and raised her from the size of a dinner plate to a grown adult. CKCS dogs aren’t known for the longest of life-spans, and they do have health problems, but a sudden death at 5 years old is just not what we were expecting.

She was such a beautiful dog…physically and emotionally. Well-behaved, kind, great with people, and so loving. She had a beautiful coat, and a great smile. We cared for her like she was our child, and for a longtime, she was. She wanted to be near us, and we made sure she was. She loved us, and we loved her so very much. Just how much, I am only now beginning to understand.

So blog-dogs, take a moment to hug your dog and make sure they know you love them as much as they love you. I know we did this with our pup, and I’m grateful we had that level of foresight otherwise this would be even harder.

I love my dog. I miss my dog. Our hearts are broken.

#84 3s on 02.13.17 at 12:34 am

From Bloomberg: Vancouver’s multimillion-dollar homes are increasingly out of reach for Vancouverites. And nothing speaks to the Canadian city’s affordability crisis more than its empty houses.

Vacant or temporarily occupied dwellings have more than doubled since 2001 to 66,719 last year as neighborhoods are hollowing out, said Andy Yan, director of Simon Fraser University’s City Program, who analyzed census data for Metro Vancouver released Wednesday. Observers worry the trend will undermine Canada’s fastest-growingregional economy.

Public scrutiny has focused on landlords, particularly from abroad, who park their cash in investment properties where windows remain dark throughout the year. Vancouver introduced a new tax on empty homes last month aimed at boosting the supply of rentals in a city facing a near-zero vacancy rate. The province also imposed a 15 percent tax on foreign buyers last August after discovering more than C$1 billion ($761 million) of global cash had flowed into local properties over a five-week period.

#85 Stock Picker on 02.13.17 at 1:07 am

DELETED

#86 For those about to flop... on 02.13.17 at 1:39 am

Pink Snow falling in New Westminster.

Here’s another case of an average, to say the least ,looking house working its way up the price ladder with the rampant speculation that has taken place in Vancouver for the last 15 years.

Look at these transactions in the last while.

August 2015…810k

Jan 2106…1.01m

March 2016 …1.12m

Feb 2017….1.18m….if they get their number,which is now unlikely.

All these people took on a lot of risk for next to no gain,except the first person.

No Chinese tycoon is dicking around with a dump in New West…..this one is on the locals and most likely this guy is going to wear it…

M42BC

1805 Eighth Avenue, New Westminster

Oct 12:$1,198,880
Feb 12: $1,188,888
Change: – 9992.00 -1%

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAzVVM5Sg==

#87 jane24 on 02.13.17 at 2:06 am

Hey Number 3, Turner Nation.

Trump’s mother was born in Scotland which makes him actually British and able to get our passport. I don’t know if this is a good or bad thing though.

Garth I know a lot of family in Canada in their 30’s and NONE of them have a home of their own or $100,000 to invest. They rent flats if they can afford them and work very long hours to exist. All have student debt. Few can afford kids. Their actual lives will not start until they are 40. Sad. What have we done to this generation.

Daffs and crocus are up in my coastal garden though. Lifts your heart.

#88 Annek on 02.13.17 at 2:07 am

#76Re The Dood
Your house is not worth $900,000 unless you sell it.
If the bubble bursts, then your house will not be worth that. I hope you have other investments .
So , if you don’t – sell your house to a greater fool, take the money and gloat.
Otherwise, your house is worth only what you sell it at.
I too, have a house worth more than that and paid what you did. But the value of my investments, RRSPs ,TFSA are much more . I don’t look at the worth of my house unless I plan to sell it. It is just a place to live in. Smart thing would be to sell it, but I have a disabled daughter living with me, my son still in school, so moving would be challenging. But, if I was an empty nester, I would sell it in a heartbeat and take the profits.

#89 When Will They Raise Rates? on 02.13.17 at 2:19 am

Gold nuts are unwelcome on this site since you are basically unstable. — Garth

——–
Which is a better store of value, this:

http://s11.postimg.org/lcz6uz36r/12400619_1549046742091487_4052053619609900482_n.jpg

Or this:

http://www.mint.ca/store/dyn/MEDIA_CustomProductCatalog/116754_hero-388.png

Who’s nuts?

#90 NEVER GIVE UP on 02.13.17 at 3:03 am

#21 DON on 02.12.17 at 6:12 pm

Christy Clark’s (BC Liberal – Harper loving operatives) Chief campaign fundraiser was the Condo King himself Bob Rennie, realtor. He recently stepped down from the position and voila the new home buyer loan program came out. Lisa read about bubbles, don’t watch Global BC or read the vansun or province newspapers and you will start to think differently from your friends.
====================================
The moral compass of our leaders goes like this:

Christie: “If they (the Plebs) let us take it from them then it must be OK!” “Now where is that Big donation from the builders for my Election Campaign?”

Bob Rennie and the Condo Crooks:
“Got another Premier in our pocket! Lets make whatever we can out of this party before it ends!”

Local Government leaders:
“No Ahole condo king is going to build in my backyard unless he delivers a brown paper bag to my office!”

None of the above is going to be the first one to find God. They figure if everybody’s doing it then why shouldn’t I?

#91 Euro observer on 02.13.17 at 3:17 am

#79 DON on 02.12.17 at 10:58 pm
#61 Sam the Sham on 02.12.17 at 9:10 pm

————————————–
It kind of shows how correct are people who move abroad and decide not to pay taxes any more to a sh.t government who encourages such scam.

Just looking at successful ‘realtors’ like Brad Lamb, the incompetent BOC governor and the sunny boy will give you chills.

And no, one should does not need to commit suicide, just to move to a better place to live leaving the sh.t hole Canada has become.

#92 Euro observer on 02.13.17 at 3:21 am

And I wish happy non-retirement, ever higher taxes (CPP, carbon tax,…), electricity bills, lack of well paid jobs for the young, even more expensive real estate, groceries, longer health care waiting times, you name it, all the goodies that come with the biggest in the history of the world reals estate credit bubble an miss-allocation of capital associated with it.

No country in the world has ever prosper with idiots ruling it.

#93 westcdn on 02.13.17 at 6:57 am

I get a kick out of my ancestry – many of we offspring are nonconformists. My ancestral Canadian mother on my father’s side was a fille du roi. I know that because my family lines included nuns who wrote down history but I don’t speak/read French so I depend on family for French facts. My mother family history is vague. Apparently there was a Scottish fur trader based on the west shore of Hudson’s Bay who fathered children among the native population. Then he sailed away never to return. These Metis survived under a rather unique family name.

In a dog’s world, I am a mutt. Point is – my ties to Canada are long and deep. I will not bug out when things get tough. Having being said, I will not stand in front of a train to ‘pass’. Leaving Canada is not a favourite plan for me but I will if things get ridiculous.

Calgary real estate is an interesting study in behaviour. I think there is a growing pride in being a West Canadian and this is our home. We will tough out hard times (Vancouver area is its own universe). Housing prices are a commitment to the future for most.

#94 westcdn on 02.13.17 at 7:15 am

I should also add to my previous comment that getting fat and tanned is not a lifestyle to which I aspire. Mind you, I would have few problems living like a king but I would remember where I came from.

#95 Alex on 02.13.17 at 7:40 am

Most people buying a house these days take a mortgage and will end up paying at least twice its initial market price once all interests are accounted for.
So, even if your house is valued twice what you paid for twenty years down the road, you made no money at all.
Actually, you lost plenty since that same money could have been invested elsewhere (stock market).
That’s why the only way you should buy a house is either to pay it all cash, or take a mortgage for less than 5 years.
If you can’t afford a less than 5 years mortgage, it means that you can’t afford this house and should be renting.
25 years mortgage is foolish. It’s actually insane !

#96 masterofthetelecaster on 02.13.17 at 8:04 am

Mr Turner
Following your advice has caused me a massive problem. By selling gold mining stocks in my non registered account during the last run up and putting them into ETF’s I seem to have created a large tax bill.
Don’t get me wrong my non registered portfolio is doing great and I can sleep at night now that I am balanced and diversified but I am paralized as to how to proceed from here. I am stuffing all I can into my RRSP account (about 30000 a year) as I have lots of room. So can you give me some advice. Do I slide money from the non registered into the RRSP to try to defer or do I sell ETFs to pay off the tax bill? I seem to be making a killing in the non registered but I may be mistaking good luck for genius.
Because I have so much room in the RRSP area should I even have a non registered account?
Thanks for your effort it is much appreciated. You have significantly changed what retirement is going to look like for myself and if my kids are listening to me theirs also.

#97 Investment Categories on 02.13.17 at 8:12 am

Here’s one of the best articles I’ve read on investing:

http://fortune.com/2012/02/09/warren-buffett-why-stocks-beat-gold-and-bonds/

This article completely redefines risk, and really drives home the difference between investment and speculation.

Note that Buffett places real estate in the third major category of investments, but places houses during housing bubbles in the second category.

#98 TSX all time high on 02.13.17 at 8:28 am

Where would anyone invest their hard earned money for a decent return?

This blog preaches ETF’s (which I agree with), but the stock market is at an all-time high so buying into a well diversified portfolio is not right at this time.

Put the money into a GIC? Say it ain’t so, but what is a person to do if everything is too rich for our blood? Sigh.

Stock markets are not at an all-time high. You are mistaking a numeric index for the real measure – P/E ratios. Common, and costly, mistake. — Garth

#99 96 - you're definitely .... on 02.13.17 at 8:34 am

Not a genius . Erase that thought

#100 traderJim on 02.13.17 at 8:36 am

@ Smoking Man

Enjoy Havana! I used to love going there 20 years ago, but the police state aspect combined with the lack of internet and increasing rules and regs about using US dollars made me decide to head for greener pastures.

Not sure if it’s still there but the famous La Guarida paladar is worth a visit. Not so much for the food but for the amazing setting.

I’m sure there are other great paladars open now, unless the government has decided to shut them down again forcing their owners to go back to working for the state salary of $27 a month (talk about exploitation).

You can see some of the best salsa dancing in the world at la Casa de la Musica, and some pretty attractive women too. You know what they say about people that dance well…sort of the opposite of the pussy hat marchers.

#101 maxx on 02.13.17 at 8:44 am

#10 mathman on 02.12.17 at 5:23 pm

….”Once prices stop moving, no more refinance, no more line of credit increases. The first casualty will be the cottage, followed by the cars, the unsecured credit, the visa then the house.”

Oh-oh domino!

#102 suburban coyote and pup on 02.13.17 at 9:00 am

#83 vancouver in the rear view. Sorry for the loss of your pup, they are family too.

Thank you Garth for your dedication and patience with ungrateful comment section.

Onf51

#103 Housing Bubbles on 02.13.17 at 9:04 am

For testimony by Warren Buffett before the Financial Crisis Inquiry Commission, esp. on housing bubbles, click the link below:

http://fortune.com/2016/03/11/heres-what-warren-buffett-thinks-caused-the-financial-crisis/

#104 Stock Picker on 02.13.17 at 9:15 am

Passive investors don’t know it, because their passive advisors don’t know it, but the indexes are trapped in a fracturing, with individual stocks less correlated to indexes than ever before. Individual equities are outperforming indexes by wide margins. There are more dogs in the S&P 500 than the movers can lift . Today’s example: QSR vs Consumer Discretionary. This market will be very frustrating for passive index and ETF holders….whereas stock pickers are on a roll…possibly for the entire Trump term. This doesn’t mean go out and speculate on moosepasture..but inside the indexes are exceptional companies. Indexing the shotgun method is dead

Hardly. A balanced and diversified approach lessens the volatility that perennially causes people to buy high and sell low. — Garth

#105 Samantha on 02.13.17 at 9:16 am

#23 Not tired of being wrong on 02.12.17 at 6:31 pm

Oh for gods sake. How long will you continue to be wrong. You’ve given some of the worst advice I’ve seen over the years. Because of your terrible advice people sold on on some substantial real estate gains and more to come. This is the new normal. When will you accept.

———————————————–

Garth has been wrong for many years, but I think he’ll be right about GTA top this year. The rest of the country is flattish or in decline already.

I have never been wrong in counseling that people mitigate risk by being diversified and balanced in their entire financial lives. Concentrating wealth in one asset (a house) is also concentrating risk. A bad idea. — Garth

#106 LP on 02.13.17 at 9:18 am

#83 Vancouver in the Rearview on 02.13.17 at 12:27 am

I am so very sorry for your loss. Our dogs easily become part of the family. Treasure your memories of your pet.

#107 Tater on 02.13.17 at 9:21 am

Hotdogs from Heaven on 02.12.17 at 7:01 pm
#17 Guaranteed Capital Investments on 02.12.17 at 5:55 pm

Garth , are there any guaranteed investments that can protect my mothers capital? I thought I heard RBC had something at around 4% annual return?

She is finally ready to sell in Don Mills, very hot area featured in the Toronto Star this last week. Not sure what it will fetch but anything in high 1 million’s is a no brainer for her at this point in her life with limited investments / savings left and burning up cash flow because of living costs.

Nothing guaranteed at 4%, and beware of insurance-based products which promise a 5% yield but end up just giving you your own money back. If she has at least 20 years left and needs income, then a balanced, diversified portfolio is appropriate. — Garth

————————————————
Government of Israel bonds pay as much as 4% (in chunks of U.S. $500) and they have NEVER been defaulted on:

https://www.israelbonds.ca/bonds_rates.php?gclid=CMr4j_fhi9ICFRS2wAodaxAHxg

——————————————————————-
So put an entire nest egg in EM bonds, from one country, denominated in a foreign currency? Yeah, that’s an awful idea.

#108 Euro observer on 02.13.17 at 9:27 am

#97 Investment Categories on 02.13.17 at 8:12 am
Here’s one of the best articles I’ve read on investing:

http://fortune.com/2012/02/09/warren-buffett-why-stocks-beat-gold-and-bonds/

——————————
Buffet does not understand the utility of gold.

The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.

You can keep your dollar bills under the mattress or in bonds/GICs and they will produce nothing real.

The purpose of investing in gold is to retain purchasing power.

Janet Yellen’s ring and necklace are not made from dollars.

The ‘staggering’ 170 k tons of gold translate to 20 grams per person on the earth and that includes jewelry, electronics and hey, the stupid central banks who hoard it by some reason (as Ben Bernanke said – ‘tradition’).

#109 Euro observer on 02.13.17 at 9:33 am

And by the way by far the best investments in the last decade and probably in the years to come were and will be sport franchises and luxury goods.

The very fact that Buffet invests in IBM from all technology companies out there speaks volumes.

Microsoft has much better position in the world the technology as does google and amazon.

Buffet does not understand that, he understands food and drink.

#110 When Will They Raise Rates? on 02.13.17 at 10:12 am

Ran into a realtor friend last night… Got some very juicy (and disturbing) info to share with the blog dogs:

So my realtor friend does business primarily up in the Georgina area. Business has been booming for him recently – He laughed when I asked him if he was worried about a crash. He said verbatim “Oh no, it’s not going to crash”. Then he drops the bomb on me…

You know how people in Vancouver believed that it was all HAM driving the market? Well folks, HAM is precisely what has been filling my realtor friend’s pockets as of late!

He is selling houses hand over fist in places like Keswick to mainland Chinese buyers, often sight unseen. Oh yeah. Tis true.

One mainland Chinese woman bought 4 houses off him on the same street, wanted to know if she could get more…

But the best story, the one he sold last week:

Dude has an open house for a bung in Keswick, sh#t loads of people, multiple offers, you know the deal… Winning bid? Guy makes a ridiculous offer, way over ask. Seller accepts. Guy says, “OK, we win? We get house?” Guy then goes out to the black Mercedes parked outside to inform the “real buyer” in the car that he had won the bidding war… black tinted window opens a crack, then closes back up. My realtor friend is like, wow, that’s strange, buyer doesn’t want to be seen. So, papers have to be signed, etc… So the caravan of cars proceeds to the Timmies to sign the papers, etc… Buyer’s rep takes the papers to the car for the buyer to sign, but this time, the car door opens, and my realtor friend gets a good look at the buyer.

He was a kid!!!

^ Shady, shady stuff going on here, folks. TONNES of HAM, at least up in Georgina, according to my friend.

Minors cannot buy real estate in Ontario. Get a better friend. — Garth

#111 When Will They Raise Rates? on 02.13.17 at 10:23 am

Oh, one more thing… I asked him where the next area that HAM is looking to buy up. You’re not going to believe the answer.

ALL around Lake Simcoe to the north… GRAVENHURST and surrounding area!

#112 crowdedelevatorfartz on 02.13.17 at 10:25 am

Yo Stock Picker!
Congrats!
We were both DELETED on the same day.
Syncronicity.
As much as it horrifies you…… we are one.
“Bruthas frum anutha mutha” so to speak.

I knew I had a “double” out there.

#113 crowdedelevatorfartz on 02.13.17 at 10:32 am

@#62 Sam the Shamed

“Year after year price go up relentlessly. Their rent go up as well.”
*******************************************

Its good to know you spent your money on the mortgage payments instead of an education….
Enjoy the vacation to Knotts Berry farm, I hear its intellectually overwhelming…..

#114 When Will They Raise Rates? on 02.13.17 at 10:33 am

And yeah, one more thing… He told me that none of these buyers are actually moving into these houses. He said he could get me a sweet lease on any of these houses for dirt cheap (literally next to nothing) if I want… Might take him up on that offer! lol

#115 Vanrentor on 02.13.17 at 10:37 am

Detached homes in Toronto continued to see a buying frenzy according to the latest numbers from the Toronto Real Estate Board (TREB).

https://betterdwelling.com/city/toronto/3-in-5-toronto-neighborhoods-see-detached-home-prices-rise-over-20/

#116 Euro observer on 02.13.17 at 10:44 am

I had to kick myself to ensure I am not drunk or dreaming:

https://ca.finance.yahoo.com/news/feminists-watching-closely-gender-based-091503060.html

#117 When Will They Raise Rates? on 02.13.17 at 10:46 am

Minors cannot buy real estate in Ontario. Get a better friend. — Garth

Indeed. Kid was presumably a proxy for his parents back home… Just reporting what’s happening. Don’t shoot the messenger…

Nor can a minor enter into a legal agreement such as an offer of purchase & sale. — Garth

#118 InvestorsFriend on 02.13.17 at 10:46 am

It’s Buffett people, with two “T”s!

Euro Observer said:

“Buffet does not understand that, he understands food and drink.”

***************************************
Yeah what does a man who started out with money from odd jobs and then paper routes and who KNEW by about age 7 that he would absolutely be rich someday and who told his wife in his early 20’s that he would someday be one of it not THE richest person in the world and who did indeed top that list at least once in his life know anyhow?

Other than how to spell his name, that is?

What could anyone possibly learn from the most successful investor in history and one of the greatest financial minds in history?

Do not bother reading his annual letter when it comes out in about two weeks.

#119 Alex on 02.13.17 at 10:56 am

#98 TSX all time high

Just bought 30 min ago 120K worth of VCN ‘at an all time high’

In 20-25 years, this ‘all time high’ will be just another level from the past

#120 Mike in Edm on 02.13.17 at 10:58 am

A friends brother and his soon to be baby mama currently rent in Edmonton for about $2k/month. (Ouch because I rent a much nicer, larger house for $1600). They are in the process of buying a townhouse through one of those as they put it “rent to own” schemes where the realtor or lendor or home builder or someone puts forth the 5% down payment b/c they don’t have it.

They’re still going to be paying about $2k/month PLUS condo fees for some sort of cookie cutter duplex pile of junk. He’s in construction but it can sometimes be unreliable work, and the baby mama’s got zero education, has only worked a little bit in a hair salon or most recently part time as a server, and she also doesn’t driver or even have her license. I can only assume the entire scheme is sub-prime-esq they have zero DP, basically 1 unreliable income, and sounds like they are receiving a pretty high interest rate based on what they’re going to be paying a month vs what they’re going to be living in.

This will not end well for them.

Meanwhile the friends of mine bought a ‘worst on the block’ cookie cutter home way off in the NE sticks about 18 months ago for somewhere in the $375k range, and they want to move home (back east), but can’t b/c they are now (and will be for at least the next 5 yrs) so far underwater on the house, that they can’t afford to sell.

This isn’t turning out so well for them either.

#121 Ole Doberman on 02.13.17 at 10:58 am

#93 westcdn on 02.13.17 at 6:57 am

I get a kick out of my ancestry – many of we offspring are nonconformists. My ancestral Canadian mother on my father’s side was a fille du roi. I know that because my family lines included nuns who wrote down history but I don’t speak/read French so I depend on family for French facts. My mother family history is vague. Apparently there was a Scottish fur trader based on the west shore of Hudson’s Bay who fathered children among the native population. Then he sailed away never to return. These Metis survived under a rather unique family name.

In a dog’s world, I am a mutt. Point is – my ties to Canada are long and deep. I will not bug out when things get tough. Having being said, I will not stand in front of a train to ‘pass’. Leaving Canada is not a favourite plan for me but I will if things get ridiculous.

Calgary real estate is an interesting study in behaviour. I think there is a growing pride in being a West Canadian and this is our home. We will tough out hard times (Vancouver area is its own universe). Housing prices are a commitment to the future for most.
—————————————————–
Thats what they said about the West coast pride in California, then Detroit too – give it time market forces always prevail and an epic crash is coming.

#122 InvestorsFriend on 02.13.17 at 10:59 am

Is the Age of Science and Facts Over?

For thousands of years faith and religion ruled the earth and natural phenomenon were mysterious.

Then there was a period of several hundred years when people started to believe in science and facts and hungered for truth. This was propelled by both a scientific revolution and the early forms of the communication revolution (the printing press).

Books and newspapers were largely trusted. There were debates. But science and facts prevailed.

Now we are in an age of information overload. There seems to be less consensus about facts and science. Books and newspapers and the “main stream media” are no longer trusted by a huge percentage of people.

Trump has proven that telling people what they want to hear (even if if it is patently ridiculous or an outright lie) gets people elected.

I am not sure where this is headed but the age of facts and science and civilized debate is clearly under attack.

#123 Mike in Edm on 02.13.17 at 11:08 am

Also, I was just out last weekend with 2 friends from Fort McMurray. One bought near the peak of house prices in late summer of 2014 and here’s some opinions they gave to me:
1) Fort McMurray will never be what it once was (insane booming gold town). All the major players have finished (or nearly finished) building their mega oilsands structures. So even if down the road, oil is back at $100+/bbl, maybe 1 or 2 more sites could be built but it’s nothing on the scale that was happening 10 years ago. And construction jobs is what brings the mass migration in. Once the plants are built, you only need a fraction of the people to run them.

2) Many people just aren’t rebuilding after the wildfire. They’ve taken their insurance money and are jumping ship back to where ever home is. A few people are gobbling up cheap ($200k) lots from those whose houses burnt thinking it’s a great deal, but they are going to get burnt hard (no pun intended).

So another once-booming RE market in Canada has completely fizzled out. From the non-scientific stats that I keep, house price have dropped over $100k YoY from last Feb, and last Feb was pretty horrendous. You could say that house prices there have dropped anywhere from 15-30% at least because of low oil, government policies, and the fire. I don’t feel bad for my buddy that paid $695k though for a 3 bedroom. He knew the risks, but was sick of commuting from Edmonton every 6 days. His house is now worth maybe $550k and he’s put $50k into it. Ouch.

#124 Jerry Mander on 02.13.17 at 11:13 am

Is the picture a prelude to DJT meeting T2?

#125 OMERS on 02.13.17 at 11:15 am

#114 When will the rates rise…well The rates won’t be rising anytime soon, if they do a while lot of people will be throwing the keys at the bank and walking away from their mortgages…just my opinion.
and on a side note.. investing in gold is investing in real currency, when you invest in gold companies you hold a piece of paper, not the actual physical gold…..which you want to be holding! Better to own the real thing than invest in a piece of paper.

#126 cramar on 02.13.17 at 11:18 am

#83 Vancouver in the Rearview on 02.13.17 at 12:27 am
Garth, you often post about your dogs, so I’m hoping you’ll permit this thread-jacking.

Sadly, our dog, a five-year-old Cavalier King Charles Spaniel, died yesterday suddenly, and completely unexpectedly. One moment she was fine, the next moment, she had died. There was nothing anyone could do.

[snip]

—————-

Thanks for sharing this. It brought much tears, since we are facing the looming death of our four-legged family member. Dogs are such wonderful companions, but have such limited lifespans compared to humans. This is our last dog. I just can’t take it when they die. It is just too hard. No more!

#127 millmech on 02.13.17 at 11:31 am

#95 Alex
Your right on, nobody understands the math its an emotional decision, when you factor in it is paid with after tax income it costs even more.
As for the millennials sucking wind and not having money and living at home they should be looking at their career/educational choices. At the plant I work at they have just hired four young tradesmen into our department in the last month and with overtime these millennials are taking home $3000/biweekly, labourers(semi skilled take home $1600-$2000 biweekly).
There is a lot of opportunities for millennials to make good incomes as one of my neighbors manages a wood plant and they cant find young people to replace the retiring ones and the starting wage is $23/hr with lots of overtime.

#128 Shortymac on 02.13.17 at 12:04 pm

Lots of sexism in the comments, realize that Garth’s was a joke.

But I would highly recommend Lois Frankel’s books “Nice Girls Don’t…” for anyone’s daughters, wives, nieces, etc.

The basis of her books are that women are taught to be risk-averse and it prevents them from attaining great wealth: pushing them into safe but low-paying careers, avoiding the stock market, etc.

I found her books very helpful when starting out and I have a nice beginner nest egg thanks to it.

#129 S.Bby on 02.13.17 at 12:14 pm

RRSPs less popular since creation of TFSA, StatsCan data finds.
http://www.cbc.ca/news/business/rrsp-tfsa-tax-1.3979822
Read the comments under this link; it is unbelievable how ignorant some people are about these things.
First comment by someone: “Returns on RRSPs are generally pathetic, like 2.5%/a over the long term. I would never buy an RRSP. Much better to dabble in the markets directly.”

#130 IHCTD9 on 02.13.17 at 12:32 pm

http://www.cbc.ca/news/politics/canadian-citizenship-applications-decrease-1.3976140

A $500.00 increase in fees cuts new Citizen applications in half?

I seriously doubt that. I just paid more than 500.00 just to renew the plates on our cars for a couple more years.

There’s probably some much more persuasive – less palatable – reasons why applications are down…

#131 S.Bby on 02.13.17 at 12:32 pm

#110 When…
This story sounds like the same BS that was being flung around the Lower Mainland a year or so ago. It tells me that TO R/E is finished this year.

#132 IHCTD9 on 02.13.17 at 12:35 pm

#116 Euro observer on 02.13.17 at 10:44 am
I had to kick myself to ensure I am not drunk or dreaming:
_______________________

If the analysis is done with honesty, this one could well backfire on the feminazis. At which point they would accuse the Federal Government of Canada of misogyny (of course).

#133 Euro observer on 02.13.17 at 12:42 pm

#118 InvestorsFriend

You mean the guy who magically gets financing when he needs it? Buffett is a proxy for European capitals on the US market. As JP Morgan was at the time.

Most successful investor in history? BS.

Bill Gates is far more successful entrepreneur. His private wealth alone is bigger then Buffett’s and in addition he has a foundation that manages similar amount (greater than Buffett’s wealth)

Buffett has produced nothing, he accumulates wealth by having the correct connections.

Amancio Ortega is far more deserving applauds.

And I am hearing Buffet made some nice bucks by having his protege – Obama rejecting keystone pipeline so his railroad can profit from the oil transportation to US. The best investor in the history, BS.

#134 IHCTD9 on 02.13.17 at 12:47 pm

#105 Samantha on 02.13.17 at 9:16 am

Garth has been wrong for many years, but I think he’ll be right about GTA top this year. The rest of the country is flattish or in decline already.
_________________________________________

He called the top in YVR as well – before the Chinese dude tax was levied. Since then, this tax is credited with the declines, and that is partly correct. What is also correct is that the YVR RE market was already starting to roll over, and this fact was blogged right here on the GF PRIOR to that tax coming down.

I’ll hold my tongue on the GTA market, too much rides on what Trump will do. In the GTA, (like YVR) everything is tied to emotion, so all it will take is the idea that things may improve to keep the house prices heading up, and FOMO will carry it.

The metrics suck big time though – no doubt about it. If it doesn’t blow in 2017, then – short of divine intervention – 2018 will see the mushroom cloud.

#135 Grey Dog on 02.13.17 at 12:50 pm

Round table discussions Trump Trudeau with women executives. Ivanka is seated next to T2, we have promised to sell all Ivanka’s leftovers from Nordstrom so the rest of NAFTA discussions will be a breeze.
(Ya an alternate fact…but it may be true!)

#136 Euro observer on 02.13.17 at 12:55 pm

http://nomadcapitalist.com/2014/04/21/warren-buffett-americas-biggest-crony-capitalist/

#137 escaposouth on 02.13.17 at 1:27 pm

Garth

Better load up the camper van and head for the US…apply under the “Financial Advisor” refugee programme

http://www.cnbc.com/2017/02/13/with-trudeau-in-dc-canada-could-be-trumps-next-tax-target.html

#138 Reply to #108 on 02.13.17 at 1:28 pm

“Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.” – Warren Buffett

“… Gold … has two significant shortcomings, being neither of much use nor procreative. True, gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end.” – Warren Buffett

#139 jess on 02.13.17 at 1:29 pm

triple citizen?
Dan Horsky, 71, formerly of Rochester, New York, is a citizen of the United States, the United Kingdom and Israel who served for more than 30 years as a professor of business administration at a university located in New York.

FOR IMMEDIATE RELEASE
Friday, February 10, 2017
Former University Business Professor sentenced to Prison for Hiding over $220 Million in Offshore Banks
Evaded More than $18 Million in Federal and State Taxes over 15 years

https://www.justice.gov/opa/pr/former-university-business-professor-sentenced-prison-hiding-over-220-million-offshore-banks

=====
hum….
U.S. District Court Blocks Anthem’s Acquisition of Cigna

#140 IHCTD9 on 02.13.17 at 1:37 pm

#87 jane24 on 02.13.17 at 2:06 am

Garth I know a lot of family in Canada in their 30’s and NONE of them have a home of their own or $100,000 to invest. They rent flats if they can afford them and work very long hours to exist. All have student debt. Few can afford kids. Their actual lives will not start until they are 40. Sad. What have we done to this generation.
______________________________________

This is a pretty common theme these days, but I’ve come to realize that this plight is essentially an urban one. I know a lot of young couples doing just fine. 20 somethings with a kid or two living in some decent digs of their own, and having enough spare cash to have a little fun. How is this possible?

1. They never got a degree
2. They don’t live in a metropolis

That’s pretty much it in a nutshell.

Some couples over time are fortunate enough have one of them luck into a decent government job, now they’ve really got it made in the shade. These couples will have new vehicles, new boats, new quads, and still have money left over because now they earn over 9 grand a month, their mortgage payment is 800.00/month, and they don’t have 100+G’s worth of school debt.

#141 Tater on 02.13.17 at 1:42 pm

125 OMERS on 02.13.17 at 11:15 am
#114 When will the rates rise…well The rates won’t be rising anytime soon, if they do a while lot of people will be throwing the keys at the bank and walking away from their mortgages…just my opinion.
——————————————————————-
Tough to do in most parts of Canada, as the mortgage doesn’t just have recourse to the home.

#142 Vancouver in the Rearview on 02.13.17 at 1:57 pm

#102 suburban coyote and pup
#106 LP

Thanks for the kind words. Our little pup was definitely part of our family in a huge way. It’s only a couple of days, and I still miss her a ton. She was supposed to live to be ten or twelve, and I feel cheated of seven years of joy. Pup had five wonderful years of life with us, though, and had lots of walks, lots of swims, and lots of love. For what she had, she had a high quality of life.

#143 Ace Goodheart on 02.13.17 at 2:03 pm

RE: “I don’t know how many times your pathetic blog has been saying prices in Vancouver are dropping. Well, they’re not.”

Home prices may never drop back to anything close to what they used to be, or even close to an adjusted for inflation price range. There have been far too many changes in our Society for that likely to ever happen. Home prices will stay just below the “Goldilocks zone” of middle class affordability, and sales will drop off a cliff once the price point passes that point (then you are selling to the 1%, which is a very small group of ultra wealthy people).

But we are not talking here about the upper limits of what the middle class can afford. We are talking about a general price correction not linked to market factors. Which is not likely to happen the way it is being described. The two documented price corrections that happened thus far are:

1. The Alberta correction, which happened because everyone lost their job and the Provincial government turned socialist, meaning high taxes, regulations on the Province’s vital oil industry that makes it more expensive to produce oil there in a declining price per barrel market (basically killing the industry that was already half dead anyway)

2. The Vancouver correction, which is underway and which happened because the houses got so expensive that no one could buy them.

However these situations do not lead to a general, prolonged real estate correction or crash. They lead to price adjustments in line with the market.

What has caused high house prices is lack of supply and low interest rates. These two items together create a situation where a bunch of buyers are bidding for hardly any houses, and they are able to borrow into the stratosphere.

But low interest rates are not here to make it easier for people to buy houses. They are here to make it easier for governments to borrow money (which they use to stimulate an economy that was thought to be in recession). The more money governments borrow, the lower interest rates have to be. Rates can only rise if tax revenues rise with them (because you have to make up the hole in general revenue, with increasing tax revenues).

The above is not going to happen in Canada. Our tax revenues are going down. Way, way down. They are going to crash like you have never seen before. Mostly because our main trading partner, the USA, whose government borrowed for 50 years to run a money losing (and economic prosperity creating) military experiment in world domination, is broke. So no more good jobs building military equipment. No more sucker industries that rely on these jobs for spin off cash. We are collectively in trouble.

What is likely to happen is not a housing correction but rather a general currency value correction. When this sweeps through, it is anyone’s guess what the end result will be. It may not be lower house prices…..

#144 For those about to flop... on 02.13.17 at 2:03 pm

Pink Snow falling in Vancouver.

These guys have a serious decision to make when they get their first decent offer.

In January 2016, when all was fine in the land of speculation,they shelled out 6.9 million for this house in Shaughnessy.

It has been back on the market for a month with the lofty price tag of 9.28million,which in a neighborhood which that is currently having the biggest correction in all of Vancouver,is simply not going to happen.

Priced high ,just to be beaten down so the buyer feels like they scored a victory, this one is one of the highest speculations I have seen.

There has only been 2 sales in what most people consider one of the most desired neighborhoods in the last two months, so this one could take a while to play out.

A big price drop followed by a big decision seems the logical process for this one…

M42BC

https://www.zolo.ca/vancouver-real-estate/6812-arbutus-street

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAwMFRTNQ==

#145 jess on 02.13.17 at 2:24 pm

the past “crap”
Credit Suisse Agrees to Pay $5.28 Billion

“Credit Suisse’s mortgage misconduct hurt people, including in Colorado,” said Acting United States Attorney for the District of Colorado Bob Troyer. “Unscrupulous lenders knew they could get away with shoddy underwriting when making mortgage loans, because they knew Credit Suisse would buy those defective mortgage loans and put them into securities. When those mortgages went into foreclosure, many people got hurt: families lost their homes, communities were blighted by empty houses, and investors who had put their trust in Credit Suisse’s supposedly safe securities suffered huge losses. Our office led this investigation into Credit Suisse to protect homeowners, communities, and investors across the country, including here in Colorado. Credit Suisse is paying a hefty penalty and acknowledging its misconduct, but that is not all. Years after the Great Recession, many families still struggle to afford a home, so we also crafted an agreement to bring needed housing relief to such families, including specifically in Colorado.”

This settlement includes a statement of facts to which Credit Suisse has agreed. That statement of facts describes how Credit Suisse made false and misleading representations to prospective investors about the characteristics of the mortgage loans it securitized.
https://www.justice.gov/opa/pr/credit-suisse-agrees-pay-528-billion-connection-its-sale-residential-mortgage-backed

==========

moody’s the Statement of Facts:

…”Starting in 2001, Moody’s RMBS group began using an internal tool in rating RMBS that did not calculate the loss given default or expected loss for RMBS below Aaa and did not incorporate Moody’s own rating standards. Instead, the tool was designed to “replicate” ratings that had been assigned based on a previous model that calculated expected loss for each tranche and incorporated Moody’s rating level standards. In October 2007, a senior manager in Moody’s Asset Finance Group (AFG) noted the following about Moody’s RMBS ratings derived from the tool: “I think this is the biggest issue TODAY. [A Moody’s AFG Senior Vice President and research manager]’s initial pass shows that our ratings are 4 notches off.”

https://www.justice.gov/opa/pr/justice-department-and-state-partners-secure-nearly-864-million-settlement-moody-s-arising

#146 Euro observer on 02.13.17 at 3:22 pm

#140 IHCTD9

In big Canadian cities – low paid jobs, expensive life/housing

in small Canadian towns – no jobs, expensive food

US Taxas, Minneapolis/St Paul – plenty of jobs, cheap housing.

The choice is yours.

#147 Wrk.dover on 02.13.17 at 3:30 pm

I read an autobiography ghost written for Buffett, he got his start at a job where a rich fellow mentored him into getting into insuring people, which Warren called money for nothing, year after year. He may be modest, but he claims every thing just kept on falling into his lap with perfect timing.

The good timing right now is big govt. nurturing the stock market instead of main street.

#148 ccc on 02.13.17 at 3:52 pm

Question #2 is one I relate to lots. Wife into paying mtg asap while me for investing into financial assets. So we ran this little experiment where for the first 2 years all extra income would go into lowering mtg principal. We’re now on the second 2-year term where all extras go into buying fin assets. By now wife convinced the second approach deserves serious consideration. Just renewed mtg at 2.55 for 5 years and we have an agreement of going the investing route for the first three years to later reconsider based on the facts. Balanced portfolio of low cost etfs only and short-term bonds. No need to put down your lady as Garth suggests. Will unleash a down correction in your sex life.
Just play the fair card; she gets some time window to lower mtg you follow after investing. Worked well over here.

#149 Jame on 02.13.17 at 3:53 pm

Well I guess we dont have to worry about the big bad Trumpster regarding our trade issues, or do we?

http://www.cnn.com/2017/02/13/politics/donald-trump-justin-trudeau-white-house/index.html

#150 Vanrental on 02.13.17 at 3:57 pm

Ross Kay on Howe Street – Vancouver’s 27% Property Value Loss Historic

http://www.howestreet.com/2017/02/06/vancouvers-27-property-value-loss-historic/

#151 Jame on 02.13.17 at 3:57 pm

#29 Smoking Man on 02.12.17 at 6:47 pm

Can’t tell you buggers how much loot I’ve made since my batman call awhile ago. Second ear ring a bell.

http://www.bankofcanada.ca/rates/interest-rates/canadian-bonds/

Bond Junkie. How about you. You’re a fan ?
……………………………………………………………………
No but you are going to tell us all at some point. You just can help your self can you? I still would say as someone else here pointed out what the hell is a so called millionaire doing in Cuba? I could think of at least a thousand other better places to go.

#152 Euro observer on 02.13.17 at 4:02 pm

#143 Ace Goodheart

Interest rates are contract between the borrower and the lender.

more indebted borrower justifies higher rates due to the higher risk of default.

when government borrows money from itself with zero rates and steals from savers, this is not free money market. It is theft.

Hence the value of the sh.t currency in everything valuable – housing, productive assets, even gold goes down.

#153 Wrk.dover on 02.13.17 at 4:30 pm

#146 Euro observer on 02.13.17 at 3:22 pm
#140 IHCTD9

In big Canadian cities – low paid jobs, expensive life/housing

in small Canadian towns – no jobs, expensive food

US Taxas, Minneapolis/St Paul – plenty of jobs, cheap housing.

The choice is yours.

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The point of small town is you can grow half of your food. Plus access a quarter locally produced for your freezers ( plural ) in season.

#154 Ace Goodheart on 02.13.17 at 4:38 pm

#147 Wrk.dover on 02.13.17 at 3:30 pm

“The good timing right now is big govt. nurturing the stock market instead of main street.”

What I’ve found to be a good deal right now are bonds.

Some folks apparently believe that now that Trumpster is in charge, the USA will experience a turn around, rates will rise and bonds will be worthless (because they’ll have low rates in relation to the current interest rate).

I look at this and find it funny. But if people want to sell me investment grade corporate debt that pays 4%, I will take it from them.

I watch the Trumpster blunder his way through his mandate, behaving in the exact way I expected, wearing his heart on his sleeve, taking advice from no one, understanding nothing, and getting into personal conflicts with everyone, over stuff that does not matter and I wonder, this is the guy that people feel so strongly about, that they are fire sale-ing their bonds to me?

Also noted everyone is interested in Life Insurance all of a sudden, as Warren Buffett got his start here. Remember, he started out quite a while ago, when everyone was young. Now everyone is old. Life insurance only works if the people you are insuring, don’t die…..

#155 Tony on 02.13.17 at 4:52 pm

Re: #125 OMERS on 02.13.17 at 11:15 am

I’d bet the farm the U.S. dollar index will move to at least the 120 level and more likely to the 140 level which doesn’t auger well for gold. We’ve yet to see the massive monkey hammering from the FED and bankers on both gold and silver but like a chapter from a story book it happens over and over again.

#156 Metaxa on 02.13.17 at 4:57 pm

Its a long story that I’ve written about before, so long story short: For a period of time I owned a vet practice, land and buildings. Sold it back to the formerly employee vets once they got stuff figured out but:

You want a dog that lasts and loves, get a SPCA or Rescue mutt. Purebreds have been ruined by greed and avarice leading to bad breeding and most carry some sort of debilitating gene or snip of DNA.

Buying a pure bred dog is like buying a single stock…buying a mutt is diversified and balanced.

Plus a rescue is just so damn grateful…they know how close they were…

#157 Grey Dog on 02.13.17 at 5:00 pm

83 Vancouver in the Rearview,
I’m so sorry to hear about your family dog. Mine is exactly the same age as yours. Make certain you let the breeder know about your horrible outcome.

#158 Reply to #143 on 02.13.17 at 5:07 pm

Here’s more discussion of interest rates and their effect on the Canadian dollar:

http://www.bankofcanada.ca/core-functions/monetary-policy/key-interest-rate/

http://www.lop.parl.gc.ca/Content/LOP/ResearchPublications/tips/tip117-e.htm

#159 Nathan on 02.13.17 at 6:32 pm

Nothing guaranteed at 4%, and beware of insurance-based products which promise a 5% yield but end up just giving you your own money back. If she has at least 20 years left and needs income, then a balanced, diversified portfolio is appropriate. — Garth
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Garth aren’t some of he bank preferred shares at 4%+? Over 5 with a dividend tax credit? What am I missing?

#160 Vancouver in the Rearview on 02.13.17 at 7:27 pm

#157 Grey Dog

Thanks for the kind words. We did let the breeder know, and she was as shocked as we were. She said that sudden deaths like that are extremely rare. Little solace to us, but it was good to know that others will hopefully not have the experience we did.