Perspectives

Being a minor celeb, but less than the Trivago guy, I get emails. Tons. Read them all, sometimes sharing a few with you. Naturally everyone has to include a MSU to get through the filter and make me feel worthy. Dog pictures help, too.

This week’s been poignant, for reasons unknown. Here are some words worth reading, and a few of my thoughts.

Hi Garth: I read your blog every day.  As a mom of two small wonderful humans, my most favourite thing is hugs and snuggles from my 6 and 7 year olds.  After they are tucked away for the night,  my other favourite thing is reading your blog.

I sold my home a few years ago.  My Dad had a stroke and then another and then another.  He didn’t recognize me, didn’t recognize himself.  It was heartbreaking. I had to put him in a long term care home.  Dad was always self employed, no insurance, no benefits. He never saved anything.  I doubt he believed he would ever get ‘old’.

My Dad slowly got better,  It was miraculous, really.  Today he is half the person he used to be but 20 times the person he was in the hospital. I sold my home to take care of my Dad.  Assisted living costs about $5,000 a month.  I couldn’t afford it, Dad had no income except $1400 from the Canada pension.  In case you are curious, my Dad cannot live with me, although it would be much better for me financially.  He has very intense anger/confusion issues and it’s really not healthy for my kids.

I cashed in my house to take care of my Dad and have spent more than $200,000 for Dad’s housing the last few years.  I am 40 now. I will take a second job if it means keeping Dad in a good environment.  Maybe I really screwed things up for me and the children.  Where do I draw the line?  I just wanted to tell you why I rent a house now… It’s because I have to, because I chose to, because sometimes you have to choose between brick and mortar or love.  Love should always win.

Yes, always. As lives grow longer, lingering good-byes and dementia become more and more common. People have to plan for that. Budget for it. You’ve done what you had to, dividing your love and obligation between your father and your children. What a wrenching choice. Let your words be a lesson. There are insurance vehicles to help with this situation. There are equity lines of credit that can be used as a less drastic alternative to selling. And, of course, every human alive has the moral responsibility to arrange for their own care until death do us part.

And now, for comic, relief, is a dude who wants me to adopt him.

Hi Garth: [Insert super suck up comment here about how I’ve been reading your blog daily for a long time – hoping this would somehow catch your attention].

What would it take for you to mentor me?

To help you consider this wonderful opportunity and experience, let me list out the potential pros and cons here for you:

PROS
* You’ll LEARN.  About a Canadian born to Pakistani parents and what impacts financial decisions (keeping up with the Ahmads vs keeping up with the Joneses)
* It allows you to share knowledge/expertise, and see the impact over time
* Gain insight for online learning in case you ever wanted build a course for adult financial literacy (I’m a Learning Engineer – there’s the standard way of teaching someone and then there’s a more efficient/effective way to learn – more on this if/when we chat!)
* There’s really too many pros to list!

CONS
* I don’t have a dog

Your Blog U post yesterday inspired me to ask: what do you wish to learn today? Kindly let me know your thoughts and feel free to reach out via cell. Thank you, Shak.

That’s sweet, Shak, but a little creepy. I sure hope you don’t start hanging around the car or show up at my pet bank. Just keep reading this pathetic blog for the basics, even including the comments. Not all of them are from deplorables, climate change-deniers, gold nuts, doomers, house-humpers, Dipper fanatics, Trumpians or morose moisters.

Like Peter – who has a few life lessons to impart.

First off, thank you for all of your past, present and future contributions to our beloved country.

I purchased my first paper (Telegram) route in from my older brother  at the savvy age ten.  Purchased the neighboring route and consolidated.  Sold.  Did the same with the The Star (Saturday bag weighed more than I did ). Finally The Globe. Lessons learned: Beware of Dogs and people that don’t pay.

Started The Gardener lawn care Company with my best friend in high school and university.  Now franchised. Lessons learned:  Beware of dogs and their ‘business ‘ in back yards and clients that don’t pay.

Lived on the left coast.  Started Peter and Co.  Successful coffee and muffin cafes (Starbucks wanted me to be their baked goods supplier when they only had a few units in Seattle and Vancouver). Lessons learned: Love what you do and get a dog to pick up chicks at Kits Beach.

Finally got to build a national network: Weed Man lawn care franchise North America.  700 franchises and growing like dandelions.  Lessons learned:  Beware Dobermans in back yards and NEVER trespass on an American’s property .

I hated dogs all my life, scared, chased , bitten.  Disgusting, pooping animals. Then I had a daughter.  She wanted a dog.  What is a decent man to do?  Mr. Turner, it took me forty years to appreciate the bonding that occurs between humans and dogs.  Our Havanese Onyx just celebrated ten years with us.  What an arc of evolution for this simple Paperboy.  I’m already missing him if passes before me.

Now the real estate gratitudes.  Bought our first home/ house in Markham 2000.  Sold moved up.  Lived the suburban dream. Bought home in Naples Florida at the very bottom and dollar at over par .  ( remember I was doing business in the USA) Renovations Markham 2012. Started reading YOUR book / blogs 2013.  My sense was that things didn’t feel right

Wife gets promoted big time to Manhattan, NY in 2015.  Purchase tired, dream retirement/ legacy property Muskoka. Real estate Craziness in Markham like I had just witnessed in USA.  We sell Markham peak, early 2016 thanks to reassurance from YOUR blog. Sell Naples property last month in run up in prices and drop in currency delta; in part due to YOUR blog.

I guess, I just felt compelled after all these years to say thank you for making me appreciate enjoying a dog’s life.  You have had an impact on this entrepreneur’s life. In my travels the most heartfelt compliment I give someone, no matter the local:  You’re a good Canadian .  They always understand. The Honourable Garth Turner, you are a good Canadian. – Peter

And, finally, Jeremiah. A moister working on (yet another) academic degree who was inspired when that Chilliwack teacher wanted help designing a financial literacy course.

I’m a 27 year old millennial and wrapping up my third degree, so I (of course) have to chime in. If there’s ever a post to respond to, it’s this one. In my humble opinion, teaching prudent financial management is only half the battle. People have to actually want to save first.

Learning about maxing out TFSAs, making regular contributions to RRSPs, stuffing money in RESPs, knowing what investments work best in non-registered accounts, etc. is the easy part. An hour of reading through your blog posts should cure anyone of basic financial illiteracy if they didn’t already know to avoid mutual funds like the plague. But is this even what people want? Do people even want to save?

The real enemy is our entire culture – the current mass-consumption zeitgeist of my generation, and perhaps society writ large. The pervasive need to consume at all costs has people filling whatever void they feel in their lives with houses, cars, vacations, expensive meals, or whatever gimmick catches their eye on a given day. I’m not sure that I even blame the average Joe or Jill. Any corporation with even a basic understanding of behavioural psychology can push their (sugar-filled/diabetic causing/wallet-depleting/cheaply-made) crap in the market. People don’t even have a chance. But in the absence of (unlikely/undesirable) government intervention, people really do need to take personal responsibility for their spending. I know you talk about this in the context of housing and bigger purchases, but it’s the little things that count. I’m not sure that people realize that it is their daily spending habits, and not necessarily their monthly bills, that keep them trapped in debt.

I learned this lesson the hard way, even though I had parents who taught me better. This is where I take umbrage with your (admitted) generalization of teachers. My folks, newly retired from careers as public school teachers, have significant liquid assets sitting in flush TFSAs and RRSPs. They paid off their house in a nice neighbourhood, and even have a rental condo to boot. They did this all with the knowledge that they had generous pensions coming their way. They simply prioritized their spending, and didn’t throw it away on Starbucks or spin classes.

I should note, it wasn’t a penny-pinching lifestyle either. Yes, clothes were bought at Costco, but they still sent my sister and I to private schools, paid for our post-secondary education with fat RESPs, and put us in more summer camps than you could possibly count (to get us out of the house while they were enjoying two months off every summer). Full disclosure, we’re from Winnipeg. As you’ve noted recently, it’s a lot easier to get ahead in mid-sized markets where housing costs aren’t totally out of control. Who knows, maybe it even helped that it was too cold to leave the house and spend.

Regardless, my parents set the best example a kid could ask for, with lessons learned from their working-class parents. Even still, it took me far too long to realize just how much eating out and a pay-it-off later mentality affects your long-term net worth. I’ve eventually learned that it’s the little things that count. If you watch your cash-flow, minimize expenses, and focus on the day to day…well, the big picture often works itself out.

The current debt crisis is more about values than anything else. Frugality used to be held in high-esteem. Now, cash is king and it’s about whatever looks good on an Instagram page. People live to spend, and are obsessed with going out and flashing their cash (or more likely, their fancy credit cards). Rather than looking forward to home-cooked meals with family and good friends, people enjoy fast company and want to be seen out on the town.

This is a culture war, Garth. While everyone has a role to play in this comedy of errors, it’s not just about banks and the federal government. It’s about how people derive value from their lives, and what they think will make them happy. Yes, housing costs in Vancouver and Toronto are nutty, but it seems like people have lost their sense of proportion in every aspect of their spending. They just can’t seem to say no. Maybe I’m the one overgeneralizing now, but from what I see, it’s endemic. Saying “no” to spending seems to be the exception, not the rule.

What came first, the chicken or the egg? Maybe financial literacy leads to self-reflection and a shift in values. Maybe if every kid learned about the time-value of money, they wouldn’t be so quick to finance consumption with debt. So I applaud what you do Garth, but my fear is that it’s not enough. That it only stems the tide. The real question, as you’ve previously noted, is what happens when it becomes truly unsustainable? What happens when people can’t finance what they think they deserve? It’s a very scary thought. Sincerely, Jeremiah

Remember, J, that people like to think they live in the worst of times, on the cusp of profound change, facing forces they cannot alter or avoid. But almost nobody does. Compared to decades past, we are the chosen ones. In this society our lives are cushioned from real adversity, while we moan about the cost of houses and gas. It’s comical how perspective has been lost.

Is a reset coming? Of course. There’s always a reset. This one has started. I think you’ll get through it. But I’m worried about Shak.

Animal spirits

The silent spring. It was shocking when environmentalists first pointed out the growing absence of song birds. (We’ll save the climate change debate for another day. It’s real, by the way.) Now, in terms of the most important assets citizens own, the more terrifying silence.

The housing market’s in worse shape than official stats tell. That’s the view from the ground level. As this blog showed the other day, the vast majority of realtors are starving alley cats. Mortgage brokers are living on bugs. Appraisers and home inspectors are looking for real jobs. The country can no longer support over 110,000 people whose only occupation is flogging houses. Worse, if the bulk of your net worth is in one pile at one address in one city, you better pray it’s the right burg. Like Montreal or Halifax.

But not Vancouver. Or most of the 905. The LM. Victoria, or anywhere near a swollen river (oops, more climate change talk. Sorry.)

There was an interesting tidbit in the Van media this week about a couple who’ve lived almost two decades in a rich hood there. Now retired, they’ve saw their property jump in value to $4 million. Property tax, too, from five grand a year to almost three thousand a month. Meanwhile the house has shed 30% of its value since the Dippers arrived and started killing the market. So, yes, the place is now listed.

The lefties and moisters on this blog will have no sympathy. They’ll fail to understand these people weren’t speculators, did nothing to pump the worth of their property, and are powerless as it deflates. But government actions have turned a correction into a growing crash. It was inevitable Mr. Market would turn tale and pop the speculative bubble. No help was needed from a foreign buyer tax, a spec tax, a vacancy tax or extra property tax. Even the stress test. It’s all been overkill, say the people affected. But because there are many fewer dinged owners than envious renters, nothing will change. The rout will continue.

It’s been asked a few times here why this is happening, and who’d getting gouged. Politicians point out that at least 95% of the population pays none of these taxes. So if they have cratered the market, it must prove Chinese dudes, dirty money and speckers were driving things.

Not so fast. It’s psychology which fuels markets. Not taxes. Not foreigners. Not even macroecononics or mortgage rates.

Human nature makes us crave what is rising in value. Assets become popular, desirous, wanted. The more that they rise in value the greater the worry they will swell forever, becoming unattainable. So people rush in, their breasts beating with FOMO, borrowing and paying too much. The zenith was two years ago, with 30% year/year price gains recorded monthly in the GTA or Vancouver. Yes, it bred speculation. Half the condo sales in Toronto went to people with no intention of living in them.

Governments reacted to a perception real estate was out of control. And it was. But not because of offshore buyers or people hoarding vacant units. It was on fire from widespread, across-the-bard demand after realtors, politicians and the media managed to convince most people it was no bubble, but the future. The result was insatiable demand and reckless behaviour.

Now we’re on the other side of the mountain. It’s not that a bevy of new taxes and regulations have killed off real estate by shutting out offshore buyers or that the stress test itself eliminated first-timers. Instead, it’s a sense buying now would be catching a falling knife, that prices are crazy inflated and especially that peer pressure to do so has evaporated. In short, when people think something, it exists. Mortgages are cheap, real estate is cheaper, competition has vanished and choice has blossomed. Yet sales fall.  See what I mean?

Anyway, what now?

The prognosis is poor unless May numbers bounce back strongly. The summer months usually bring less demand, while the second half of 2019 will be dominated by political uncertainty and macro events like the seething Sino trade war. Trump is getting more controversial, not less, and we’re steaming towards a pivotal national election in October. You can probably rule out any more interest rate cuts, given the latest jobs numbers. And it looks like the stress test is here to stay.

In short, the advice stands. If you need a house and can afford it without dumping all your net worth in there, go ahead. It’s better than last year. But don’t call it an investment. Or a retirement plan. It’s just a place to live and you may indeed see lost equity.

Having said that, the longer you wait, the cheaper things will get. When everyone calls you a moron – do it.