Sure thing

Anatomy of a Bubble

bubble1

'Why a 50% drop in housing is not the bottom', here

A curious thing happened to me on Saturday. Gave a financial lecture in a ritzy Vancouver-area golf club. Packed room. My usual scary scenario for real estate – especially for the delusional Lower Mainland. And yet, nobody argued with me.

Incredible. I can always count on a few people jumping up and defending the divinity of home ownership. But, in fact, this day all the questions were about energy prices (stand back), mutual funds (the sleeper story), gold prices (down) and tax-free savings accounts (not for saving). Oh yeah, and if there’s going to be a depression (still 20%).

No idea if this means real estate capitulation has started to hit this part of the country. In Vancouver there is now a seven-month supply of resale homes on the market. Sales were ahead in March compared to February, but are off by a quarter year-over-year. Since peaking 11 months ago, prices are down an average of $121,000, which translates into monthly deflation of more than ten thousand bucks.

To put it in perspective, the average Van house is losing more money per year than the average Van family is earning.

Sigh. And despite the reality of what is to come (our housing decline, merely a year old, has many years yet to run), I am peppered daily with strident emails from people who believe otherwise. Sadly victimized by late-night infomercials for no-money-down real estate courses, sucked into the cultish real estate network of get-rich-quick insta-gurus or lured into a dusky suburban hotel ballroom where a guy with a Britney Spears headmic is selling power-of-sale info you can get for free, they are pitiful.

Like Joseph in Calgary. “In my mind the only hedge we have against inflation is PAID FOR investment real estate,” says the 25-year-old genius.

“Just last summer I bought a 1BR apartment in downtown Calgary. Its rented out. No doubt it’s down 10-15%, and on paper I have suffered a 100% loss on my investment. However the rent covers 100% of my cost. The renter is very stable, and even if I had to rent it out for 20% less it still would only cost me maybe $200/month.

In 20 years from now the condo is going to be worth whatever its going to be worth, who knows. Even if it is worth the exact same as I paid for it. As in ZERO inflation over 20 years, I will still make over 10% on my money, and that’s assuming no inflation in rents and zero price appreciation over 20 years. (not even a bear like you I would think would forecast that!).

So my investment was $20,000. Its cash flow neutral. Current value ~$225,000 (down from $245,000 that I paid). 20 years from now, assuming ZERO price appreciation and no mortgage as it will be paid off I will make over 12% per year tax deferred.

Initial Investment: $20,000, Future Value: $225,000, Time: 20 years, CAGR: 12.86%

Now admittedly I am assuming interest rates don’t change and there is no maintenance costs, and no increase in property taxes, however I feel that the fact that I am assuming no increase in value and no increase in rents offsets that.

Now you call this a bad investment???”

Hmmm. This is interesting. If these assumptions turn out to be correct, the lad would have to collect $355,000 in rent over 20 years to carry just the mortgage ($130,000 in interest and $225,000 in principal), plus enough to cover condo fees, insurance, property taxes and any special assessments. That should come to about $450,000. Plus there is the matter of the $20,000 downpayment. Had that been invested for 20 years at just 5%, it would turn into $53,000. So now we have a half-million dollars at play, plus twenty years of recruiting, vetting and cleaning up after tenants.

At the end, the kid would be 45 years old with a box in a 20-year-old building worth $245,000, paid for by $500,000 in cash flow. As equity was built up in the unit and the interest portion of the mortgage reduced, rental income would become taxable in Joseph’s hands. If he ended up in the top tax bracket by middle age, that could account for 50% of what a tenant paid. Then there is the certainty that today’s interest rates – at the lowest point in history – will increase. That could mean a higher monthly cost after every mortgage renewal.

Finally, there’s the fact this condo was bought, unarguably, near the moment of maximum cost – the summer of 2008. This unit will probably lose value for the next three to five years, meaning no lender is going to renew Joe’s financing next time without a fat little capital infusion.

But, whadda I know. It’s been years since I was 25, and had it all figured out.

118 comments ↓

#1 Charles T. on 04.18.09 at 8:50 pm

Watch out this weekend

#2 KJ on 04.18.09 at 9:03 pm

Hey Garth it was a great lecture, thanks. We enjoyed it and even though we have been keeping up with you via books and daily blogs, its still nice to see the graphs and have you put it all together in one tidy package. I have to agree it was amazing that no one argued with you about real estate values in Vancouver, in fact there were hardly any questions at all, were there? The way you put it all together makes sense, and yet although we ourselves, are renters right now, having been priced out of the RE market for a number of years in vancouver, we are so tired of renting someone else’s house, and living with their rules and their decorating etc…. we just want to own our own home again, so we can call the shots, decide how many animals we want to own, have chickens in the yard and a vege garden if I want to. So after all is said and done, we still want to buy the right house at the right price…(vulture-wise).
I guess you’d call us nuts, but renting is no cup of tea.

Ps. I couldn’t hardly believe my eyes on the graph you showed that the RE in Kelowna is 178% inflated….did I read that right?

#3 Too Old Bob$ on 04.18.09 at 9:32 pm

“But, in fact, this day all the questions were about energy prices (stand back), mutual funds (the sleeper story), gold prices (down) and tax-free savings accounts (not for saving).”

That’s the beauty of Extraordinary Popular Delusions and the Madness of Crowds. Even when a particular investment or market takes a big hit and loses flavour, where always looking for the next lottery. Ok! everyone here’s the next secret money making deal. Oops! I need money first before I tell you.

“The renter is very stable”

What happens if some other renter (who is more desperate) lowers his prices and the competitive rental market starts. Just a thought.

#4 dd on 04.18.09 at 9:36 pm

“Now admittedly I am assuming interest rates don’t change … no maintenance costs …no increase in property taxes..

Isn’t this the same model that the investment bankers used to price the subprime mortgages?

#5 lgre on 04.18.09 at 9:39 pm

I guess the kid is living is some form of bubble himself, the bubble is blurry so he’s not able to see what is happening outside of it. Who can blame him?

#6 Gerel on 04.18.09 at 9:46 pm

Garth, I’ve attended your lecture at the golf club.
You were invited by Dundee investment team. By observation, 80 percent of gathered were older wealthy folks from affluent White Rock area, who paid off their houses decades ago and who entrusted their investment in mutual funds with Timms team.
I assume they got scared by monthly statements showing meltdown of their investment and started pulling their money out of Dundee Wealth. So this lecture was one of attempts to prevent it, so their worries are about preservation of already accumulated wealth, and not real estate. Main message was – keep your money with investment broker; you will not be successful on your own. That’s why no one was jumping.
My husband and I drove all the way from Downtown Vancouver and were expecting heated arguments.
Myself, I am still a renter, immigrated 10 years ago. By the time we were set to buy real estate, prices went up beyond our reach. Couple of years ago we were bombarded and ridiculed for not buying. Now we see devastated friends loosing their jobs and scrambling to make their mortgage payment. Both of us have stable jobs and we are planning to buy around 2012/13.

Good luck with that attitude. — Garth

#7 . . . fried eggs and spam . . . on 04.18.09 at 9:59 pm

#1 Charles T. at 8:50 pm — “. . . there is another Armstrong turn date coming on 2009.3, or 19-20 April. What we have to figure out is which market is going to turn.” (From link supplied.)
——
Good link. It could be a number of things, all happening simultaneously, or within a few days of each other.

FWIW, with China now dumping the greenback and replacing it with copper and other commodities, the natives in China and other parts of the world getting more and more restless with their own govts.’ inability to cope with the downturn, Japan’s and most of the EU’s economies almost trashed and with the possibility that Israel is preparing to strike at Iran’s nuke power stations — which supply electric power to their citizens — which have been built by Russia so Russians are still present there, it may be that part two of three of the worldwide blowup may be about to start.

Guess life gets a lot more intense from now on. The Cycle of Nines is no longer a sleeping giant, as it zooms into action!

#8 Real Estate Deal or No Deal on 04.18.09 at 10:02 pm

Garth,

Just finishing “After the Crash”, and am really enjoying it.

In your section on Gold … you are quite the gold bug … if I read between how well you know how to buy it.

But in this blog you mentioned that price is going down … just looking for a few websites from you or others to start tracking the purchase of some gold.

Also, regarding a safe … what would you recommend for an apartment renter …

Cheers!

Gold is only for hedging against inflation, since it is disproving itself as a currency alternative. Safe? Freeze it. — Garth

#9 ca on 04.18.09 at 10:11 pm

Garth —

Could you clarify what you mean by saying mutual funds are sleeper stories?

#10 wayupnorth on 04.18.09 at 10:26 pm

It’s all in the spin.

I was reading an article today where jacky Chan was speaking about why Chinese in Hong Kong will never see demcracy as they “they needed an overseer like all Chinese” with a title to that effect. Buried near the end was a gem when he said “if a Chinese person wanted to buy a television they would buy Japanese as they would be afraid of one produced in China blowing up!”

The last few days the Media has been full of “Iggy wil raise taxes” stories yet I remember first reading the origional article in which he stated that “he would raise taxes if necessary rather than pass on the deficit we are building to our grandchildren as any honest politition would”.

With all the news media outlets going bankrupt you would think that at least one would like to stay in business and spin the stories differently? Imagine two different headlines. “Iggy says any honest politition won’t pass on the current deficet to our grandchildren even if it means raising taxes”. Or “Jacky Chan says Chinese won’t buy their own tv’s because they blow up so WHY DO WE?” Same story different spin. Either everyone just reads headlines or someone is controlling what we are allowed to see and think. Couldn’t be the NWO or could it….

As far as the bottom of this whole mess we are in it is simple. Follow the bouncing ball called wages. If it takes $50,000 per year to qualify for a $200,000 mortgage it requires nearly $30 an hour to reach that level. If we keep shedding those jobs paying that amount so we can buy exploding tv’s from China cheap then it is easy to see that the new average wage of $15 an hour will only buy a $100,000 mortgage. Because the U.S. keeps letting wages drop in a futile effort to be competative they never find the bottom of their real estate market until they hit third world wages. This is a direct failure in not establishing a worldwide minimum wage if you want to participate in “free” trade.

As for our buddy Joseph, he might want to go back to school and redo arithmatic because he seems to be missing some basic concepts.

#11 robotgirl on 04.18.09 at 10:34 pm

Sadly, 25 is just a mere age, my parents and my aunt thinks this is the best time for me to get my own place. In their minds, real estate equity will increase as long as there’s no war, even if it’s very little, and it’s much less riskier than stocks. And they are very stubborn thinkers, set in their ways. My aunt surprises me, every time she “shops” for a home, her budget increases!

#12 Gord In Vancouver on 04.18.09 at 10:59 pm

Thanks for the update, Garth. Staying in tonight to get ready for tomorrow’s Sun Run.

A curious thing happened to me on Saturday. Gave a financial lecture in a ritzy Vancouver-area golf club. Packed room. My usual scary scenario for real estate – especially for the delusional Lower Mainland. And yet, nobody argued with me.

It took awhile but people here on the west coast are finally starting to get it.

…Since peaking 11 months ago, prices are down an average of $121,000, which translates into monthly deflation of more than ten thousand bucks.

Yikes !!! Every 4 months, a year of pay is eaten up !!

#13 Jim on 04.18.09 at 11:33 pm

Garth,
I am saving up for a down payment, if prices ever actually drop in Raincouver enough to justify buying. . My income is $93000 and am unsure if I should max out my RRSP, or continue to save in a cash account in case the market finally tanks and it makes sense to jump in. I already have a substantial amount in my RRSP in equities. If I continue to save in cash or fixed income outside my RRSP, I’ll get taxed on it, but if I put it all in my RRSP I won’t have enough for a 25% downpayment. Any recommendations?

#14 Munch on 04.19.09 at 12:50 am

bwahahahahaha

Hey Garth?

I like YOUR attitude!

You don’t take any sh*t from your readers either, and I like that!

All the best

Munch

#15 hal smith on 04.19.09 at 12:54 am

C’mon Garth, you can’t just say shit like “sleeper story”. If you think mutual funds are gonna tank just say so.

It got your misguided attention. — Garth

#16 Increasing that 1% on 04.19.09 at 1:01 am

Yes, ‘Do the math’, seems to be a lost skill.

Reading the forms and ensuring you understand before you sign, reading the fine print all just seem to be done so rarely.

I just signed, yes, drumroll…..with an AGENT (!), a listing agreement, and am now officially bound to its contents.

I know it’s late, Garth et al – (those who knew to sell earlier), but gotta try…Always something that ‘needed’ done to show properly, never ending

This will be the fourth time in my life for selling a home, and looking back I can say all four times have been like a living nightmare that feels like it just goes on and on….and on.

Overall, with money that was made, lost, made, then kinda lost, with what’s left I question whether it was all worth it vs the quality of life I could have had otherwise if I’d had the knowledge, and ‘done the math’ at times, ie: by renting or buying really cheap, and other investments…but I realize I will never know the answer to this.

So, what I’m saying is, overall renting may not have been so bad vs all the crap with owning and selling.

Yes, owning should be about it being a home, but it certainly can also be like an imprisonment.
(But, please someone buy my house for now)

#17 Keep it Real on 04.19.09 at 1:17 am

Garth, I also attended your lecture at the golf club. Fantastic presentation. Quite surprised to see that a large majority of the attendees were baby boomers. I agree with Gerel it appears that Dundee failed to draw the right crowd for your very informative lecture . Generation X & Y are the ones that really need to hear a contrarian point of view before it’s too late. I’ve heard many baby boomers in the past few weeks advising the younger generation that now is the time to buy. “you’re never going to have an opportunity to buy at these levels with such low interest rates.” Uninformed boomers are also adding fuel to the fire misleading newbies with a false sense of hope. I suppose your audience today will be sending the right message to the young & neive.

#18 TS on 04.19.09 at 1:46 am

Hi Garth, great post as always. I REALLY appreciated the link to the Charles Hughes Smith material… fascinating statistics and a great explanation of the macro-economic forces that are in play in the global economy.

It is not too hard to apply the reasoning that Smith puts toward the real estate bubble market to the stock market. The huge run-up in value of both the Dow and TSX appear as classic bubbles and the current choppy but upward trend in the markets over the past six weeks or so seem to mirror the “bottom fishers keep trying” phase.

Looking at the chart perspectives it certainly looks plausible that the Dow could hit 3,500 or even lower and the TSX could still be headed for something in the 4,500 to 5,000 range.

We still have all of our retirement funding parked in cash – not earning much at the moment (3% – 4% or so) but much better than putting it at risk right now. We were fortunate to start pulling our money out of the stock markets in the summer of 2007 and although we have experienced a minor capital loss since the peak in July 2007 we have certainly faired far better than most people… many of whom have lost 40% to 50% of their retirement nesteggs.

Based on the material in your posting and Smith’s bubble model, it certainly does not appear like the stock markets will be recovering to their 2007 levels anytime soon…. and probably very doubtful that we will see those levels again for at least a decade – perhaps two.

Thanks again Garth! GREAT posting!

#19 Cameroni on 04.19.09 at 2:00 am

Well it is about time that Vancouver Real Estate started to come back to earth. It has been a world class bubble there for almost two decades waiting to burst and most of the rest of Canada will be pleased to see that LA-LA land has finally started to return to the world of sane expectations of growth.

And who in this country does not know of a Vancouver braggart whose home increased by hundreds of thousands of dollars and had to listen to that same blow-hard try to suggest it was based on some personal effort on their part. As if they had anything personal to do with the uptrend in the markets! OH Lord! Enough already.

I say bring the house down and let Vancouver start to live like the rest of us. These declines are just a warm-up to reality anyway and it it is about due.

It is their due and to those Vancouverites who over-extended themselves in the grand belief of all their good fortune and new-found wealth, I want to wish them all the best in their coming bankruptcy hearings and add…I told you so!

What goes up must come down.

Cam

#20 Dave on 04.19.09 at 2:20 am

Gold is only for hedging against inflation, since it is disproving itself as a currency alternative. Safe? Freeze it. — Garth
—————————————

i agree with this, but lately I’ve been hearing in the news how the price of food has been going up. I personally havne’t noticed this. Maybe they’re comparing prices through 2008 and how things went up last year….who knows

#21 Vancouver_Renter on 04.19.09 at 2:31 am

Wow, Joseph’s logic sure takes me back. I came up with similar reasoning in the early 1990s when I was around 24 years old. I remember sitting down with my parents and walking them through my logic and explaining to them how “I couldn’t lose”. They wisely advised me to “be very careful”.

I bought two Burnaby rental condos with the expectation that I would do very well over the long-term, and possibly even make a quick buck in the short-term.

Well, both those condos fell to 50% of their purchase price over the next 10 years. And then there were unexpected leaky condo special levies that cost a fortune. And what about that “nice” renter that didn’t pay his rent because he was arrested by the RCMP and sitting in jail?

There were times when the “stable” renters suddenly left and one or two of the suites sat empty because anyone who was interested in renting the places seemed too unreliable to me. And of course, the condo fees and taxes increased to much higher levels than I anticipated. Finally, there were those annoying demands, by renters, to come fix things in the suite that they broken – and that time when one of the places was trashed after a break & enter.

No, it wasn’t all a bed of roses. It took me 15 years to break even on those investments.

My problem was that I bought those two condos at a time when real-estate had just gone through a 10 year bull market. The hard lesson I learned: The people who really make a killing at buying and renting out real-estate are the speculators and long-term investors who buy when real-estate is out of favor and prices are truly depressed.

In my case, I witnessed my older siblings make a lot of money on real estate appreciation in the 1980s, and I foolishly assumed that I would automatically do the same. Back then I didn’t appreciate that markets operate in long-term cycles.

You’ll know it is the right time to buy investment property when everyone views real-estate as a dead-end investment and stops paying attention to it. We’re not even close to that yet, in my opinion. It might take a generation to get there. Until then, study the previous deflationary contractions in the last few hundred years to determine where the opportunities will likely be going forward. They are not in real estate.

#22 "Humble yet esteemed" North Vancouver Citizen Jr. on 04.19.09 at 3:12 am

dd….The reason you stalk me and my ecvery message is because you yourself have no self esteem..look at your name, all lower case.

Garth, so you buy a bunker somewhere near Loserville Ontario why? because it won’t make one difference where anyone lives, considering the World as we know it will soon self destruct?

Do you admit bunkers near Winnersville BC will always retain their current value because Winnersville BC will become the next financial/trade/cultural/leisure capital of the Free World?

…Will you admit the Ottawa will never bail out the CAW?

#23 Da HK Kid on 04.19.09 at 3:49 am

Garth, great link to all the RE charts but especially how the Bubble plays out traditionally. Buying right now is absolutely a death sentence especially with the unknowns playing out. You can pick one two and any simple reason to not buy right now such as:

1 – Prices are still falling and WILL. There is no reason for them to go up or even stabilize with simply unemployment issues.

2 – It takes at least 3 years or more to revalue your property taxes so even if you house is worth $500K as peak, now $250K you are still looking at paying taxes on the last valuation.

3 – Interest rates at some point will climb. The tactic to go variable at low rates then lock in for a longer team to protect yourself against inflation is fine however if you cant pay off the house during this term, you may be in trouble when 12-15% rates are in your grill.

I have a strong fundamental problem with RE that has only been determined from looking at all the realistic facts. TOO MANY HOUSES WHERE BUILT & THE BUBBLE POPPED DUE TO SUBPRIME CREATED BY GOVERNMENT IN THE BIGGEST GLOBAL PONZI SCHEME EVER!

I look at it this way!

Just as you get out of sub prime you are followed by devaluations and job losses. Then when you think ITS TIME TO BUY, the Alt A and Option Arms bubble pop, more deflation, more job losses, more foreclosures.

Then from CC – AUTO – STUDENT Loans followed by Commercial RE loans you see more wealth destruction more layoffs which start to hurt the 10-15-25% down home owners and they default as they are pushed too far under water and cannot renew.

People, all the current foreclosures need to come off the books right now for the banks for stress tests SO these homes are going to be marked down further sucking in everyone who has purchased a $300K+ house in the last 5 years basically. AGAIN, when the BANKS dump properties it’s going to set the mark on your house on the same street. BE WORRIED if any property in your neighborhood is a foreclosure sale.

Finally, as you can imagine at this point in the US there is no issue with a housing shortage until houses come down to an affordable level BUT this wont happen as there are 600K inventory of shadow properties SITTING ON THE SIDELINES which the banks are afraid to list or their balance sheets are toasted, and IF YOU ARE A BANK CEO and TARPED, your future is on the line.

The big question I have after all of these EYES WIDE OPEN moments, is when is it going to end? The drop in RE I mean? And will it be even worth buying in the next 100 years or 1000?

Eventually, you may look at something like life in the 50’s, those with money only purchased RE for a place to live. If they purchased another is was that they wanted to be a landlord and there was a 3-5% return on this. This will only make sense when inflation comes as those stuck in owned homes and renting are likely in the very near future NOT GOING TO EVEN BE FLUSH when rentals deflate below carrying costs.

2012? 2015? Is this the date we return to the 50’s?

Anyone wish to comment?

#24 David Bakody on 04.19.09 at 6:02 am

It new fails to amaze me just how smart our younger generation is …… once again pay down debt save wisely ….. and leave the big money games for those with deep pockets who by the way many got continue to make their fortunes on real fart smellers like the one mentioned. I read an article some time ago where the big boys would not invest unless they were guaranteed a minimum of approx. 30% (quick turnarounds) and why not with loads of suckers on the street? Play big or stay at home …. by the way ladies and gentlemen white poker chips in the high class play rooms are still $100 and the rooms are still full.

#25 Darryl on 04.19.09 at 8:31 am

#9

“Garth –

Could you clarify what you mean by saying mutual funds are sleeper stories?”

I second this question.

For most buyers, there is no money to be made, and mush to be lost, in RE over the next half-decade, while equity investors will see significant returns. The current rally may well turn out to be a bear, but we are far closer to correcting an oversold market. — Garth

#26 Chris L. on 04.19.09 at 8:50 am

Garth what about a property that is profitable by $1,000 a month under the exact same scenario? As in the case of say a duplex, then does that math make sense?

I feel great pity on fools that purchase “investment” properties that cost money or break even. You know full well that gurus pitched this idea after they had nothing else to pitch. What I mean by this is that at one point (as late as 2002 and no further) you could purchase a property and create positive cashflow. Since then, gurus had to pitch something else to sell their ideas, and this was the idea that it was okay to break even.

At this message, I lost interest so haven’t purchased since I couldn’t get my $1,000 a month positive cashflow. To me, it’s simply not worth the hassle to carry a property at someone else’s benefit despite what they put into my equity via debt repayment. I would hope that values come down to where real investments are possible and others don’t get into the trap put out by gurus. Investment properties can make sense, but the numbers come first, not after. I’ve recently convinced my brother to sell his break-even duplex. He should have sold it a long time ago, but the gurus and friends got to him, so he kept it counting on 20+ years of debt repayment for eventual positive cashflow. It’s a costly mistake. No way though, that I’m ditching my positive earners just yet, unless you can advise me otherwise! I love my positive money and hand over fist, I’m miles ahead of any other investment. I’m enjoying the ride down…and even at the 2.5-5% decline (thus far) it’s still making sense to keep it. RE sometimes does make sense, but not always, you are right!

#27 Sean in E-Town on 04.19.09 at 9:53 am

I still envy my friend, the English professor. Two years ago, remember the peak? He lucked into… (okay, researched, was reasonably connected and fast acting) and found a property that had a rent-price ratio of, get this: 23! As you can suspect, it’s paid off now, and he’s got his eye out for one more like it, which he just realized he may be sitting on. It was fun talking to him and quizzing him on great appreciating real-estate investments that he’d made. The common thread was that the rent-price was always some great number like 40, or 30, and so by the time his home had ‘tripled in value ten years later’ it was due to his good fortune in finding an effective distress sale and some decent repair skills of his own.

#28 Grantmi on 04.19.09 at 10:04 am

Question for the group?? (or you Garth)

Has anyone been successful in getting their rental rate LOWERED with their current landlord?

Me thinks that with new homes/appt. coming on the rental market (since they can’t sell) at much lower prices then past retes. And I’m sure are NOT getting rented quickly, that the current landlords must be pooping right now?

I need to reduce my rent due to the current conditions. I REALLY don’t want to move. We love the place we’re in. But the current rent is killing us!

I’m a great tenant, and I think the landlord knows it.

Any suggestions for the Turner flock??

#29 dd on 04.19.09 at 10:14 am

Chris L.

If you could earn $1000 a month hassle free then I would switch. Remember that capital gain is decreasing every minute.

#30 Got A Watch on 04.19.09 at 10:24 am

Garth – I am pleased to see you are reading ‘of Two Minds’, it is one of the most thoughtful Blogs around. I don’t get to reading as much as I used to, but Charles Hugh Smith is always a good read. Highly recommend it be bookmarked/favorited by everyone.

#8 Real Estate Deal or No Deal – Spot gold prices (and other precious metals) at Kitco, a bullion dealer. The ‘World Spot Price’ section has links (left side, squiggly line symbol) to the ‘LiveGold’ and ‘LiveSilver’ etc. charts which show how spot gold trades 24/5 on various markets around the globe and the hours they are open.

Futures contract prices can be found at StockCharts, in the “Easy As 1-2-3 Create A Chart Now” box, enter ‘$Gold’, or ‘$Silver’, and hit ‘Go’, this shows you the chart based on the closing price from the previous market day (for non-subscribers, subscribers get live data), once you get to the Chart page, you can adjust parameters if you want, I would not bother, the default is fine. Great site for learning about technical analysis and markets, check out the ‘Public Charts Lists’ link on left side, subscriber traders post live charts with analysis.

If you want to buy physical precious metals, in Canada, it is easiest at Scotia Bank, they own a metals dealer, Scotia Mocatta, and they can take your order and have it delivered to the local Bank branch for pickup. Or you can buy from Kitco, they have a Montreal office, and are a good company, I have bought from them. For paper trading in metals certificates, I have found the Royal Bank Direct Investing Brokerage has the lowest cost, you can buy at ‘spot’ prices, based on NYMEX spot, during the hours 8:20 AM – 1:30 PM EDT Mon-Fri only. Commission is very low, compared to other alternatives.

As to the timing, precious metals are in a correction now, but that should be over with in the next few months, maybe sooner. The time of the year, or ‘seasonality’, is a large factor in precious metals, studies of past years indicate the best time to buy is generally late June to early August, and to sell is generally late April-mid May. This year the seasonal pattern was late developing, we may have another spike up before the summer doldrums hit, or not. Adam Hamilton at Zeal LLC, an American advisor, has some great and lengthy articles on seasonality and precious metals, look under the ‘Essays’ link at top. ‘Sell in May, Go Away’ often applies to precious metals, the summer can be flat.

If you need more links or have questions, I can try to answer them.

I don’t recommend people who are not traders should try and time the market. Almost everyone should have 10% of their investment capital in precious metals exposed areas of some kind, as a hedge against currency devaluation and geo-political uncertainty, if nothing else. The next few years look uncertain, to say the least.

This is not investment advice. Do your own due diligence. YMMV.

#31 eddy on 04.19.09 at 10:37 am

“Now you call this a bad investment???”
it’s the three question marks that make me think that Joseph is trying to convince himself, combined with his ‘paper’ loss. what about occupancy – 100%?

#32 Bill-Muskoka (NAM) on 04.19.09 at 10:46 am

Well, now we know what the New Math has done for the following generations!

#33 Kash is King on 04.19.09 at 10:54 am

#13 Jim, “Raincouver” ! Bwaaaaahaha ! I’ll have to use that one.

Anyways, some interesting thoughts on debt/peak debt here:

http://messages.finance.yahoo.com/ETFs_%28A_to_Z%29/ETFs_P/threadview?m=tm&bn=41611&tid=812254&mid=812254&tof=1&frt=2

BTW have I mentioned lately that North Vancouver gets 220 inches of rain per year? That’s 18.333 feet!

Got moss?

#34 Jmack on 04.19.09 at 11:01 am

The Beasley Development just sold out here in Vancouver. It also seems like most younger people who I talk to at work are salivating over low mortgage rates and truly believe right now is the right time to buy….All logic has been lost and the criminal marketing strategies really are working here. When will this house of cards implode?? Even boomers I talk to say ” you and your brother sister and girlfriend should buy a house together and fix it up and sell it”……Hold on….you bought your first house with one middle class income…now we should need 4 incomes to purchase a worse house?????” Everyones hitting the pipe. Another populare line : Mortgages are only like $500 a month per $100,000……. hmmmm ok….600G…average….times…. (6*5)= 3000 per month just for the mortgage on the average crappy tear down. Property tax just went up 8% in Vancouver today, no doubt a picture of much higher increase once the IOC takes there Olympic money and leaves….the papers and marketing have done a great job of hiding the world problems….”Can’t happen here”

#35 JO on 04.19.09 at 11:04 am

That 25 yr old is in a heap of trouble. I hear that in some cities (Windsor/Oshawa), for some “owners” who bought with little/no equity and are now down with a lot more to go, banks are asking for cash paydowns to reduce the balance before renewal. This will be spreading if that’s the case. While we still may have one final bubble rally in long bond prices in the next few months (would be perfect and likely a massive double top as first top was Dec 08 – see TLT), the inevitable long term trend change once this potential second top is made is for a multi year baer market in long bonds, dropping prices and raising rates. This will put pressure on mtg rates 3-5 yrs and longer. Not only that, with exploding unemployment, dropping collateral values (falling home prices) and the rising cost of funding loans, FI s will also need to add a default premium to these renewing mortgages. What a catastrophic situation for anyone renewing at 80 % or more LTV.

We will also see gov’t services cut, taxes raised – at precisely the wrong time. That too will come to a shocking end – thanks to the soon to come long bear market in gov’t bonds. So much for “progress” and the “highest” standard of living. A quick look at the total debt outstanding chart, and then the Dow/Gold chart shows very clearly all “progress” since 1981 has been a mirage of credit and money growth – masked by assets who “rose” in value thanks mainly to the declining value of our fiat money. The blatent intervention in the economy that has distorted the credit/money markets and assets is now coming unglued. The worst is yet to come. Watch out for Oct – Feb. SP500 easily under 550 with a chance for more.

JO

#36 Cash in King on 04.19.09 at 11:08 am

“Garth –

Could you clarify what you mean by saying mutual funds are sleeper stories?”

I second this question.

For most buyers, there is no money to be made, and mush to be lost, in RE over the next half-decade, while equity investors will see significant returns. The current rally may well turn out to be a bear, but we are far closer to correcting an oversold market. — Garth

So what options are available for all this cash I’ve been hoarding? TFSA’s are NG, RRSP’s may not be the answer in 20 yrs due to rising tax rates, Mutual funds go up and go down. Not knowledgable enough to invest in stocks. Can I wait 5 years for bonds to creep up to 6-7% then stock up?

#37 Grantmi on 04.19.09 at 11:14 am

Oh! And good luck today Garth in Langley! I’m sure it will be a packed house!!

I’d be there … but got a soccer game today with my kid!! (First one!)

Peace!

#38 Just a Carpenter on 04.19.09 at 11:39 am

The key to revenue properties is to get in with little or no investment and have someone else pay for it leaving you with cash flow and equity. In this climate it becomes near impossible so I don’t recommend trying. You do not need a rising market, just a stable one. Some people are very good at being landlords, I hated it! Well not totally, I kept my commercial properties because my initial investment has long been paid back, (equity take out) and the hassle free cash flow is too good to give up. Sure the future will bring lower values, lease rates and higher vacancies, bottom line is that if the economy gets so bad that no business can survive and pay rent then we will meet in the bread line rather than online!

So my question is who is the greater fool those who own property and rent it out or those who pay the rent? I would submit to you that neither may be the fool as it depends wholly on individual circumstance.

#39 squidly77 on 04.19.09 at 11:55 am

http://spreadsheets.google.com/pub?key=pKhf_Qhx1jfrbTbcuR-dHSw&gid=1

#40 dd on 04.19.09 at 12:07 pm

#22 “Humble yet esteemed” North Vancouver Citizen Jr.

“The reason you stalk me and my ecvery message is because you yourself have no self esteem..look at your name, all lower case.”

That is totally right! And that is why every time you get the chance your thoughts and words always turn towards racism. Keep on pumping yourself up “esteemed” because no one else will.

#41 "Humble yet esteemed" North Vancouver Citizen Jr. on 04.19.09 at 12:23 pm

#19 Cameroni

Garth, Cameroni is an obvious racist and his racist posting should have been “deleted”.

“””It has been a world class bubble there for almost two decades … >>the rest of Canada will be pleased<>LA-LA land<>I say bring the house down<>It is their due…I told you so!
What goes up must come down.<<“””

…This guy is bonkers…most likely a Chrysler Union member and a citizen of Oshawa or Oakville.

Garth, do you have a double standard on this blog?

The only thing that must “come down” is his racist posting.

…The pundits around the world are beginning to compare Vancouver/Hongcouver with Monaco/Monte Carlo…and Toronto with Detroit.

It really is different here.

#42 jess on 04.19.09 at 12:27 pm

http://www.guardian.co.uk/business/2009/apr/19/budget-2009-alistair-darling

government-backed asset (gba)

One of these new “products” will carry a promise that the government will buy it back, at face value, at any time,

This is a re-invention ?

#43 Irene on 04.19.09 at 12:31 pm

i agree with this, but lately I’ve been hearing in the news how the price of food has been going up. I personally havne’t noticed this. Maybe they’re comparing prices through 2008 and how things went up last year….who knows

Dave, if you haven’t noticed food prices increasing, you are not obviously doing the shopping or the cooking. Your not reading or listening to the news either. Where do you live anyway? On Parliment Hill with a cushy government job no doubt.Say that to a minimum wage earner,low income family and they just might laugh you right in your face. Either that or you take your turn standing in line at the food banks.

Cheers

#44 Shawn on 04.19.09 at 12:36 pm

Garth said:

“To put it in perspective, the average Van house is losing more money per year than the average Van family is earning.”

A couple of years ago the average vancouver house and Edmonton / Calgary house was making more money than its owners. Few people seemed to realise how incredibly unsustainable that was.

Up she rose and down she goes. If your house is paid for or is still worth a lot more than you paid, and you are not planning to move, just forget about it.

Focus on growing your liquid wealth in stocks which Garth also has mentioned.

#45 Sun Yat-sen suit on 04.19.09 at 12:56 pm

Spectacular corporate failures – can anybody give the skinny on ones we don’t already know about..?

#46 betamax on 04.19.09 at 1:50 pm

As a rule, anyone should budget about 3%/yr of the total price of a place for repairs/maintenance, and recent poor construction quality suggests investors in condos should budget considerably more.

The quality of virtually all new construction is abysmal, tacked together in a hurry by untrained and often, inebriated labour. Before you accuse me of stereotyping, I saw the same thing first-hand in the early 80’s when I worked in construction, where I was sometimes ridiculed for not drinking, toking or snorting on the job. (I’m not a prude, I just didn’t want to get high while working with power saws.)

Point being — all new construction over the past half-dozen years, and perhaps longer, is going to require massive amounts of money for maintenance & repairs. If investors don’t budget for it, then expected ROI will be grossly over-estimated.

#47 David on 04.19.09 at 2:07 pm

Reading about Joesph left me aghast. There are many easy to apprehend and simple formulas for evaluating the soundness of rental properties. It is not particle physics in terms of the numeracy required to see if a property passes the smell test. If the guy wishes to choose the route of undisciplined real estate investment good luck to him.
Year one and he has a 100% equity dissolution and rent barely covering carrying costs in an environment of historically low interest rates. Rent covering 100% of his cost means he is effectively subsidising the renter and not earning anything for the risk he took. Correct me if I am wrong. What happens when prices go further south and interest rates, taxes and maintenance go north? Is full occupancy for the next 25 years guaranteed for each and every month?
Joseph should have been looking at fundamentals like Gross Rental Multipliers, Cap Rates, Cash Flows before and after Taxes, ROE and Gross and Net Operating Incomes to name just a few.
An over priced property is not much of hedge against inflation, especially when the capital appreciation is not there.

#48 Finanzkrise on 04.19.09 at 2:24 pm

Garth – just got back from your talk in Langley. In addition to RE, I appreciated your thoughts on bonds and gold. In fact, you did a great job of putting a number of markets spread over various time periods into perspective.

One thing that wasn’t discussed (I should have asked) was the current state of derivatives and their threat to the financial system given the magnitude of the market (~500 trillion?).

If a derivative such as a credit default swap (a ~$60 trillion market) is essentially a zero sum bet (i.e. it’s not an asset, but there’s a winner and a loser), then the biggest threat is counterparty risk (i.e. the loser can’t pay).

Do you think this counterparty risk has diminished since last Fall?

Or, does the derivative market still pose the greatest risk to the financial system, as the potential for further losses in underlying assets (e.g. real estate and corporations) get magnified by thus unprecedented derivatives market?

I often wonder if even Ben Bernanke could speed up the printing presses enough to counteract a major event in the derivatives market…

Thanks again for the blog(s), keep up the good work.

#49 Garthlover on 04.19.09 at 3:52 pm

Garth, please comment on this latest crapola to hit the industry, as it is a very dangerous situation:

Apparently, in BC, the buyer’s agent holds onto the downpayment his client puts on an offer-to-purchase. I was under the impression that sellers had first rights to this money, as compensation for inconvenience of “what if the sale falls through because a buyer walks away for no good reason.”

Anyway, here’s the dilemma, REAL & CURRENTLY HAPPENING STORIES, IN BC, RIGHT NOW:

Lately, (sellers who bought within a year or so ago, and are underwater, but forced to sell through job-loss, let’s say), there have been times when offers are too low to cover outstanding mortgages. Therefore, the banks have the right to step in and protect their territory by refusing such offers.

Sooo, IF the offer is accepted, the SELLER’S/LISTING agent is finding himself not only LOSING the commission owed to him, but to add insult to injury, is LIABLE to PAY THE BUYER’S AGENT HIS COMMISSION! All because the total selling price is not enough money to pay off all creditors. So the bank gets it all, leaving realtors screwed.

I was shocked to hear this. But I was told it is happening right now, with listing agents having the right to sue buyers’ agents for the money that buyers’ agents cannot keep themselves in the first place! OUCH.

Please Garth, find out the inside story on this BS, and the legal choices of all involved.

You realize that realtors will be foolish to take ANY listing that is not juicy with owner-equity?

Is it legal (maybe) for agents to get commissions upfront, pre-sale, with the legally-protected right to keep if sale goes through, but of course with the understanding that funds will be fully refunded to seller if property does NOT sell? Thank you

#50 Gord In Vancouver on 04.19.09 at 4:40 pm

#46 betamax

The quality of virtually all new construction is abysmal, tacked together in a hurry by untrained and often, inebriated labour.
_____________________________________

You’re not the first person to make those comments. I’ve even heard them from people who benefit from hot real estate markets.

I respect your comments but hope you’re wrong.

#51 Keith in Calgary on 04.19.09 at 4:55 pm

Garth……

It is because of fools like Joseph from Calgary that the “REIC” keeps going after first time buyers……..they are naive, clueless and milquetoasts when it comes to dealing with professional thieves like RE agents.

Interest rates are at historic impossible to beat lows. As a result it is the absolute worst time to buy a high priced depreciating asset like RE. Rates have nowhere to go but up, and they eventually will, then the asset will goe down in value even more as a result, while your carrying cost increases dramatically.

A great investment indeed….ROTFLMAO !!! Joseph, you reading this ?

#52 Mitchell Cardno on 04.19.09 at 4:56 pm

#39 – Squidly77,

Excellent chart, what was the source of all that historical data? Happen to have something similar for Calgary?

#53 Dan in Victoria on 04.19.09 at 5:12 pm

Joseph,One of the few people in Canada that figures things out like that would be our current minister of finance Jim Flaherty.You have bought at the Top of the market,the market is now heading Down,You have bought at the lowest point of interest rates in history,They are soon to be headed up.Not a good combination.Buy low sell high is the best way to do it.Rents will drop relative to the market value of your property.The debt will NOT it will have to be fed.I see you are only 25 years old. Good,you are going to have what we call “one of lifes little lessons”There will still be time to recover.Also you have NEVER experienced a good old down turn like the early 80’s, it will get your attention quickly if( actually when)history repeats itself.I wish you well,nothing wrong with trying to get ahead,I just think your timing and math is off.

#54 JM on 04.19.09 at 5:12 pm

Let’s talk numbers. Lately, in Toronto, the media and “economists” have been touting real estate as a “great buy”, “on the way up”, “done correcting”, etc. With sales and prices showing a significant uptick, you too may be tempted to join the ranks of real estate bulls. But you’d regret that decision

Lets start with the premise that the bulk of modern buyers have a strong sense of entitlement and spend the max the bank will allow. If buyers behave in this way, then it’s the “monthly payment” and not the price of a home they’ll consider when deciding to buy. comparing the payment for a house bought today with the payment for the equivalent house bought last April gives an accurate idea of just how much more real estate prices in TOronto have effectively fallen than is being reported. Take a house which last year would have sold for $440k. The buyers would have had to put down 40k or 10%. Their fixed payment for the 400k amortized would have been $2679 (25 years 5-year fixed 6.5%). Now, as even Mr. Lamb or Maureen O’Neil would admit, that same house is only worth 420k (-5%). But that drop in price is negligable. The drop in payment, however, is crazy. The new carrying cost would be about $1950 ($380k 25 years 5-year fixed 3.8%). That’s an effective of drop of about 30%!!!! Buyers are now paying 30% LESS for the same property. That fact should absolutely terrify anyone with money tied up in real estate because it all but guarentees future capital losses.

If people are now willing to pay less on a monthly basis for a house then they were 1 year ago, what’s going to happen when rates increase? Consider the hypothetical 420k house. At 6% it would have to fall in price to 320k to keep the payment at $1950, at 10%,$230k.

Unless buyers somehow become willing and able to pay more per month for property, houses will fall substantially in price. Can anyone really make a case that in a recession, people will become able to pay more?? I can’t see it.

#55 DG on 04.19.09 at 5:20 pm

@46 betamax: I truly think that the next big ugly skeleton to tumble out of the closet is the awful standards of condo construction. Back in the early 60s in the UK, various corrupt developers and incompetents designed and built huge social housing projects, many of which were demolished not much more than 30 years later, in part because of issues with mold and rot, not to mention generally shoddy construction standards. There is simply no reason why this won’t be the case for some of the condo towers built in Toronto and other Canadian cities during the boom.

People seem to think that because their towers are “luxury” projects, they’re somehow protected. But it’s quite possible for your condo tower to be condemned or require cripplingly expensive repairs even though it’s got thin slices of the cheapest granite on the countertops and bottom of the range appliances that just happen to have stainless steel finishes.

We’re currently renting in a brand new tower in Toronto, and as I’ve noted before, the quality of construction is shockingly bad. Baseboards are peeling away from the walls because of damp and condensation, mold is forming in several places, the “engineered hardwood” (i.e. a micro-thin sliver of real wood) floors are uneven and getting worse by the week, the carpets in the common areas are fraying at the edges, and it goes on and on… This simply can’t end well.

#56 Steve on 04.19.09 at 5:26 pm

Garth, what do you mean that the TFSA is not for saving?

#57 "Told Y'all" North Vancouver Citizen Jr. on 04.19.09 at 6:04 pm

#132 Truth Be Told on 04.18.09 at 11:43 pm “Harleynomics”

…Will Ontario descend into the abyss, will Toronto become the next Detroit?

Ladies and Gentlemen…Truth to be Told eloquently asks Garth in his post, (reposted below) the same questions I’ve been asking Garth.

…The way T be Told describes, it sure seems plausible that Ontario could fall into the Abyss…and from this Western Canadian, I can assure Ontarians… BC is not interested in bailing out Ontario…Ontario’s Auto Industry is a Provincial Political/Financial problem…not Canada’s.

>>>”””Garth, what is your take on the latest pressure on the Canadian Autoworkers?
My take is that if the powers that be push too hard and far, there will not be an auto manufacturing industry left in Ontario. If GM, Ford, and Chryco are allowed to fail, then there are a massive number of people with out pensions, plus most of them will be headed for the welfare rolls.
What the media has not understood is that the auto industry pensions are not funded like the normal pension plans.
Harper, Flarhety, et al are playing with TNT not fire!

Once the mfgs are down, so goes their dealers, and parts distribution, then 2 or 3 of our banks that are carrying all that inventory on their loans.
These pensions were allowed to stay outside of the pension reforms enacted earlier in Ontario simply because it was thought that the big three would never fail. If they go so will the parts mfg, then the Oriental mfgs will retreat to Asia. The worst case scenerio is that this can bankrupt the Provinces and the Federal Gov’t. Just how many retirees can we afford on welfare?
Then where will your real estate go? Back to weeds and brush?
Do you see any sanity in this current round of demands?
As my laid off auto worker son says it is wrong that he was making more than double what a fully trained, licensed mechanic in a repair garage makes, but the Autoworkers Union did not think of that nor the practice of other unions to require the employers to deposit the pension funding with the union’s financial trustees for investment and management each quarter year!
Do you disagree?<<<“””

#58 Go Flames! on 04.19.09 at 6:12 pm

To Jim #13:

The RRSP Homebuyers Plan or Tax Free Savings Account will both allow you to withdraw from your savings in order use the money for a downpayment (both without incurring any tax penalties). Have a look.

#59 Some Guy. on 04.19.09 at 6:27 pm

So what options are available for all this cash I’ve been hoarding? TFSA’s are NG, RRSP’s may not be the answer in 20 yrs due to rising tax rates, Mutual funds go up and go down. Not knowledgable enough to invest in stocks. Can I wait 5 years for bonds to creep up to 6-7% then stock up?

I second this question too!!!

#60 Charles T. on 04.19.09 at 6:48 pm

It May Be Time for the Fed to Go Negative

#61 Chris P. on 04.19.09 at 7:20 pm

David on 04.19.09 at 2:07 pm wrote

“Joseph should have been looking at fundamentals like Gross Rental Multipliers, Cap Rates, Cash Flows before and after Taxes, ROE and Gross and Net Operating Incomes to name just a few.”

That’s funny! If you did that what property would you have purchased? The short answer is “none”. Simple fact is that no or hardly any properties produce positive cashflow anymore. I remember reading in the real estate paper for the first time the argument about just buying and breaking even for 25 years and about how this was still a good idea because at the end of things, you’d own the property free and clear. While this is true, why not just get a second job or save an extra $500 a month. It’s all the same! In practice, that’s all you are really doing anyway. Do a basic amortization schedule on a property and the mortgage only goes down by a few hundred a month which can easy be saved. If you buy rentals, there has to be money today… now. You must be greedy for this to work. When I look, I want my money now, and I want a lot of it. The idea that buying income property was a good idea no matter what the return is, is a good part of the reason no one made money on rentals anymore, lest they bought them pre-peak years.

You should see the glut of properties for rent in my city that are unrentable for profit. Instead these “investors” just let them sit vacant. Stupid. These investors are looking at students for $400 a room, but alas so are the rest of the sheeple…get in line.

#62 dd on 04.19.09 at 7:22 pm

#48 Finanzkrise

“Do you think this counterparty risk has diminished since last Fall?”

Great question. AIG is the biggest marker in this market. If you look at their balance sheet from before and after the crisis nothing much has changed. When their balance sheet starts to contract you will see signs that the their derivative book is slowing running down.

#63 dd on 04.19.09 at 7:29 pm

“39 squidly77

Squidly, if you take the highs in 82 and 90ish and line it forward the price is around $160k in 2010. You figure house prices will come back down to these levels?

#64 Toronto C9 Renter on 04.19.09 at 7:39 pm

#30 Got a Watch said: “…As to the timing, precious metals are in a correction now, but that should be over with in the next few months, maybe sooner. The time of the year, or ’seasonality’, is a large factor in precious metals, studies of past years indicate the best time to buy is generally late June to early August, and to sell is generally late April-mid May…”

Got a Watch, folk wisdom, if only it was that simple!!

Also, important for everyone to remember the impact of currency fluctuations if trading gold miners like ABX, K, G and YRI in c$. Recently gold strength has often been cancelled by c$ strength

Agree kitco’s not bad for casual traders, although it c$ gold feed is not great

#65 Sail1 on 04.19.09 at 8:40 pm

#28 Grantmi

Heard of some success in commercial around the GTA, have not heard of anything residential. The increase in vacancies has not reached any astronomical proportions and I don’t think it will, here at least. It never hurts to ask.

#66 canadarocks69 on 04.19.09 at 8:47 pm

garth why are tfsa’s (not for saving)?

#67 Dave on 04.19.09 at 9:21 pm

Dave, if you haven’t noticed food prices increasing, you are not obviously doing the shopping or the cooking. Your not reading or listening to the news either. Where do you live anyway? On Parliment Hill with a cushy government job no doubt.Say that to a minimum wage earner,low income family and they just might laugh you right in your face. Either that or you take your turn standing in line at the food banks.

Cheers
——————————————

the major reports are saying “deflation” and not inflation. Unless they’re talking core inflation, food prices are included in that. No I don’t do most of the shopping, I was simply questioning the accuracy of that statement of food prices increasing in the past few months. Is it safe to say food prices have been increasing since the market crashed in October? It seems like we’re seeing deflation and can’t imagine the price of food increasing since then.

What I do know though is how to make the distinction of when to use “your” and “you’re”. Can you say the same?

#68 Happy Renter in North Van on 04.19.09 at 11:45 pm

Gold Bugger, I work in downtown Vancouver and I remember last year often walking by condo projects and seeing construction guys smoking copious amounts of weed… Don’t know if this is specific to Vancouver but I can’t imagine the work these guys did will stand the test of time… There are already stories of chunks of concrete falling off the Woodwards building… Yikes!

#69 Cameroni on 04.20.09 at 12:02 am

To “Humble yet Esteemed”

You should read my comments again. There was not a single racist overtone in the message. My comments simply relate to what I and others view as selfish self interests based on faulty reasoning about real estate. This market correction is the medicine that is needed to humble the greed a little and bring some reality back into your expectations of what is “normal” asset growth. Vancouver’s bubble is really an exception, akin to tulip mania. I was appalled when I was there to hear locals talk about their ever inflating property values because I knew it would lead to a lot of broken dreams. But there they were, all puffed up with pride about their terrific investments and not even a little interested in hearing that it might all end badly. Now the day to get out the hanky and cry has arrived and I don’t feel sympathetic. You should have all seen it coming.

Cam

#70 LS on 04.20.09 at 12:13 am

Of course TFSA’s are for saving. They’re not gonna save you huge money, but they’re better than nothing. If you haven’t opened an account yet, do it now, even if you don’t plan to put anything in it.

Contribution ceiling is cumulative, regardless of balance or lack thereof. So if you open an account now with $1 and don’t touch it for 5 years you can put in $25k. If you open that same account in 5 years you can only put in $5k.

The TFSA is only the tax vehicle, where you put your investments is still entirely up to you (mutual funds, GIC, savings, whatever).

This is a useless saving vehicle. Its real benefit is as a shelter for higher-yielding investments or those with capital gains potential. — Garth

#71 taxpayer like you on 04.20.09 at 12:30 am

64 TC9R – Gold “seasonality” that 30 Got a watch refers to is not reckless theory. Demand in India and the middle east starts to rise in the fall due to local customs and
religious festivals, and then christmas in the western
world. A noticeably consistent trend. Of course it is only
one of many factors.

Got a watch – can you tell what kind of premium scotia puts on its bullion? Thanks.

#72 . . . fried eggs and spam . . . on 04.20.09 at 12:57 am

Long ago, I figured out that stock markets were no better than lottery tickets. Nine times out of ten, an individual would lose close to everything; the tenth, one may win a few thousand.

A few strong and diverse equity mutual funds, held for two to three decades would return a handsome pension plan, if they were left alone. When I was in the workforce a decade ago, an automatic amount was paid into a fund which my CFP set up — if it wasn’t on my net take-home pay, I couldn’t spend it.

A way of looking at funds for the long-term, no matter the highs and lows over a five year period, it would be up three years, down two; a decade, six / four; two decades, 14 / 6 (rounded off).

The monthly dividends from my own investments have been re-invested to buy more shares of the companies, not paid out (then I would have to pay tax).
——
For the shiny yellow metal lovers! Comment from wrh.com. — http://tinyurl.com/cn7h6x

“Gotta keep gold prices down so people don’t desert the stock markets!”
——
The second wave of home foreclosures may have started; during the very near future, commercial foreclosures will kick in. — http://tinyurl.com/cb8688
——
From Russia With Love. — http://tinyurl.com/dna68h

#73 Ultraman on 04.20.09 at 1:36 am

TFSA account: The contribution room is cumulative regardless of when the account is actually open. Just like RRSP, you may not have one for 20 years but you still cumulate the contribution room

Woodward building: No chunk of concrete felled off. It was never poured in the first place for whatever reason. There is absolutely no way even if a North Korean missile hit it that a chunk of reinforced concrete would detached itself so cleanly.

#74 Just a Carpenter on 04.20.09 at 1:42 am

#46 betamax claims that:

“The quality of virtually all new construction is abysmal, tacked together in a hurry by untrained and often, inebriated labour.”

Do you make a habit of hurling insults at people who carry sharp tools? We have feelings too you know. My grade 7 teacher told me it did not matter whether I got it right, just as long as I felt good about it.

I am also appalled at you political incorrectness, terms are “technically challenged” and “chemically affected” !

#75 kc on 04.20.09 at 4:32 am

Hey Joseph, great ideas, hope they work out for you…

One little tid bit you might want to read before you sign on that 35 year dotted line…. and ask yourself if Canada is any different than our southerly neighbours.

here is a good read for all (and this backs up Garth’s gospel of how he sees what we have entered)

U.S. Real Estate/ Credit Bubble Deflation 18: Tick-Tick-Tick….

http://www.marketoracle.co.uk/Article10033.html

#76 wjp on 04.20.09 at 5:22 am

Dave # 67…you may know the difference between your and you’re but unfortunately you’re ignorant about the CPI figures. Inflation was up 1.2% last month, food alone up 9.5%, which obviously means something else was down, maybe autos or somputer parts? I can’t be bothered to go to Stats Can to figure it all out for you but I am sure a man of your intellect will be able to find it for yourself. Point is? Seniors rely on the CPI figures as their pensions are based on it. If food is is 9% and the CPI is up 1.2, and their pensions go up 1.2, what would you suggest they eat now? Computer parts are not very palitible…

#77 wjp on 04.20.09 at 5:43 am

For Dave 67….

The upward pressure on the Consumer Price Index (CPI) came primarily from two sources: higher food and shelter costs.

Food prices, the largest factor, rose 7.9% during the 12-month period to March, on the heels of a 7.4% rise in February. March’s increase was the largest since November 1986.

Shelter costs, the second largest factor, advanced at a 12-month rate of growth of 2.1% in March, after increasing 3.0% in February. While still a major contributor to consumer price growth, the 12-month change in the shelter price index has slowed since reaching a peak of 5.4% in July 2008.

Mitigating the overall increase in the CPI was a 6.2% decline in transportation costs. Year-over-year price drops for gasoline and for purchasing and leasing passenger vehicles were the primary downward contributors. Increasing prices for passenger vehicle insurance mitigated the overall 12-month drop in transportation costs.

Excluding gasoline, the CPI rose 2.4% in the 12 months to March. Overall, energy prices fell 11.2% during the same period, a larger drop than February’s decline of 8.8%.

#78 "Told Y'all" North Vancouver Citizen Jr. on 04.20.09 at 7:20 am

#49 Garthlover

1/
…..Have “Good faith deposits” held by Vendor’s solicitor.

2/
…..Insert in Purchase and Sale contracts, “Commission payable upon completion only”.

…Problems solved…

#55 DG
>>>””We’re currently renting in a brand new tower in Toronto….Baseboards are peeling away from the walls because of damp and condensation, mold is forming in several places, the “engineered hardwood” (i.e. a micro-thin sliver of real wood) floors are uneven.””<<<

…Link some pic’s DG…otherwise you are posting BS

#79 Future Expatriate on 04.20.09 at 7:26 am

#72: OF COURSE the G20 wants to dump gold… it’s just another giveaway to the Elite (who will be doing ALL the buying) at bargain-basement prices.

Better in their private coffers than public, they obviously think.

#80 lgre on 04.20.09 at 8:20 am

“garth why are tfsa’s (not for saving)?”

As Garth said, TFSA’s should be used in investments with capital gains potential..no point of putting your money in an ING account just to get that big 2%. Buy ETF’s or even stocks if you feel brave.

#81 Chinstrap on 04.20.09 at 8:23 am

Regarding cap rates and returns…

My brother in law wanted to buy a condo to rent out in TO. I did the math and it was a 2% cap rate… (net operating income / cost. He was confused and said he would help pay the negative CF.

EVERYBODY – this real estate fad has gone, done, finito. It’s like you are buying tech stock in 2002! I like real estate as much as the next guy but this cycle is done.

Alternative: If you can buy Calloway REIT that is yielding 15% (okay it’s levered but implied cap rate is 9%) and not have to do any work yourself then why would you buy such crappy real estate?

In 1999, I bought a triplex in TO for $300k which the woman had bought in 1989 for the same price (flat for 10 years). I rented it out for about $48k revenues and about $36k NOI for a 12% cap rate (levered had 30%+ returns). That house went up to $650k now.. That is real real estate investing.

#82 mattbg on 04.20.09 at 9:05 am

Regarding not being able to get a mortgage renewal on that investment property, I went into one of the big-five banks recently to talk about renewing my mortage. I used to work for the same bank and had since moved on, so they had no record of me being employed. I asked if I needed to provide them with any further documentation to renew — such as proof of employment — and the rep said that they don’t care as long as I continue to make the payments.

I do have high equity in the property, though. Maybe that made the difference. But he didn’t mention anything about equity being a factor. Or maybe investment properties are treated differently…?

#83 "Told Y'all" North Vancouver Citizen Jr. on 04.20.09 at 9:05 am

#73 Ultraman on 04.20.09 at 1:36 am

>>>”””Woodward building: No chunk of concrete felled off. It was never poured in the first place for whatever reason. There is absolutely no way even if a North Korean missile hit it that a chunk of reinforced concrete would detached itself so cleanly.”””<<<

…Ultraman, Garth allows any and all negative “make believe” to be posted about Vancouver.

What is his agenda?

He visits for a couple of seminars, spends two nights at a Holiday Inn and that makes him an all things West Coast Expert.

The world is in a Depression and at least two of us here have asked his views on Immigration, how to protect Canada’s jobs and whether or not the CAW/GM/Chrysler situation in Ontario is a Provincial or Federal problem.

The above no doubt affects real estate across the country.

#84 dd on 04.20.09 at 9:39 am

“Told Y’all” North Vancouver Citizen Jr.

“The world is in a Depression and at least two of us here have asked his views on Immigration, how to protect Canada’s jobs”

Ok North Van … Immigration: Don’t you think that Canada will be in a total depression when two taxpayers will have to support three people on pension? Our population is getting older. If Canada doesn’t start increasing the population how is it going to support itself when the majority of people collecting pensions?

#85 pbrasseur on 04.20.09 at 10:44 am

Lots of info about US bubble, close to bottom but still deflating

http://www.businessinsider.com/henry-blodget-housing-market-2009-4

#86 Ultraman on 04.20.09 at 10:52 am

Mortgage renewal: In 10 years of lending I have never ask or worry wether someone was employed when came the time to renew a mtg, regardless of equity.

Woodward: ” …Ultraman, Garth allows any and all negative “make believe” to be posted about Vancouver.”
Besides chunk of concrete that may or may not be falling off, there are plenty of negative news about that complex. People that bought into that fantasy are years and years away from living in a decent neighborhood and being able to recover their investment.

#87 Dawn in Calgary on 04.20.09 at 11:37 am

#28 – Grantmi

Just last week we negotiated a 20% decrease in rent for the SFH we live in. We’re now paying less than in 2007 for twice the house. So yes, some landlords do recognize that the market has changed.

#88 Got A Watch on 04.20.09 at 11:50 am

#64 – The ‘seasonality’ of precious metals is not “folk wisdom”, it is just a pattern that seems to repeat each and every year with not too much variation. If that’s ‘folk wisdom’ to you, looking at historical price action, umm, whatever.

34 Year Gold Seasonality Chart and 40 Year Silver Seasonality Chart beg to differ with you. Read more at the Zeal link I put above, in depth analysis.

There clearly is a seasonal pattern, which, like history, does not usually repeat exactly, but it sure rhymes.

Kitco’s price feeds are from NYMEX during their trading hours, the world market’s as they open and close throughout the trading day. The Canadian price of precious metals is of lesser interest, except to the Canadian $ invested, who are not a force on world markets.

The largest precious metals markets (by far and away) is the London Bullion Market, you can get live prices from there at The Bullion Desk UK 24/5. Futures traders should get contract prices from their Brokers feeds or other data services, not of much interest to ordinary citizens who aren’t trading those instruments. Prices are quoted in US $ at most places, it is still the world’s reserve currency, for now.

#71 – I have not personally bought from Scotia Bank. It would probably be the easiest (most convenient) way for Canadians who are not in major cities, a Scotia Bank branch is within range of most people, so paying a bit more might be worth it. If you are in a major city, check out coin shops and bullion dealers etc and compare prices with Scotia, Kitco, etc. I have heard a Vancouver company, “WorldWide Precious Metals” or something like that, is OK, though I have no personal knowledge of them.

Scotia Mocatta does not give exact prices, but they do charge a “small commission on top of bar/coin premiums”. “Convenient, easy and affordable through any Canadian branch of Scotiabank”, you just need a Scotia Bank account. Call or visit your branch for a price quote. I have no account there.

Physical metals are hard to trade, there is usually a “fee” when you sell them back for “assaying” etc, plus shipping and insurance etc. A pain, so buy them to hold for a while. For trading purposes, I use the paper certs, all the Canadian Banks have them, though RBC seems to be most cost effective on comparison of fees and commissions.

#89 $fromA$ia on 04.20.09 at 12:36 pm

Canadian bank stoks lose 2.5-4% on the day, gold up $21.

Hmmm…. compare printed money (fluff) to yellow shiney stuff.

Bank stocks have improved over 20% in a month. I did not hear you comment on that. — Garth

#90 calgary_green_lights on 04.20.09 at 1:14 pm

Nice post Garth.

People hop on any deal here in calgary that they see. So as far as prices coming down, that isnt likely because the vultures are waiting. Unless the economy takes a colossal hit prices may come down a bit more, but it certainly isnt anything to be high off of. The median and mean prices are still nowhere near the pre boom crap, so likely that people will still part with their cash as the rentals are still ridiculously high also. Noone is to blame, its just the way it is. Calgary real estate is screwed. If you can afford to buy do it, otherwise you have no alternative.

#91 CM on 04.20.09 at 1:24 pm

I don’t know about the quality or competence of the construction workers, but the quality of the materials in new or renovated condos and houses may not be exactly sterling.

This story was all over the U.S. networks recently. The number of affected houses is growing all the time.

Now the problem is showing up in Canada. Not only does this stuff give off various sulphide gases, it also corrodes (think sulphuric acid) the copper wiring behind the walls.

—–
Toxic Chinese drywall accused for health problems in Canada, U.S.

“VANCOUVER — Homeowners from several communities in B.C.’s Lower Mainland have joined the flood of callers to a U.S. consumer group investigating Chinese drywall that has allegedly begun to sicken North Americans.

Thomas Martin, president of America’s Watchdog, says that in the past two weeks about a dozen Lower Mainland callers have all reported experiencing the same nose bleeds, breathing problems and allergy-type symptoms that have affected homeowners across the U.S.”

http://www.leaderpost.com/health/Toxic+Chinese+drywall+accused+health+problems/1377648/story.html
—–

As for TFSA’s, I’ve always been suspicious of these things without being able to pinpoint exactly the source of my discomfort. They just seem to make our problems even worse than they already are. And the stock market peaks recently just seem to be like investing in air.

Tulip mania and the South Sea Bubble – they were overpriced nothings too. What’s the next one going to be – the totally useless carbon cap-and-trade system that our “government” wishes to pursue? It’s all nothing.

Meanwhile, the things we DO need are being left to rot – schools, hospitals, teachers, doctors and nurses, safe food supply, safe housing, children living in poverty.

#92 JoeCalgary on 04.20.09 at 1:31 pm

“Zimbabwe admits raiding private bank accounts”

http://cnews.canoe.ca/CNEWS/World/2009/04/20/9173991-ap.html

If it happened there, can it happen anywhere?

#93 Has on 04.20.09 at 1:47 pm

It looks like our friend Phil Soper is at it agian:

“Time is right for first-time homebuyers, housing experts say”
http://finance.sympatico.msn.ca/banking/mortgages/article.aspx?cp-documentid=19254306

#94 "Outside the box"North Vancouver Citizen Jr. on 04.20.09 at 1:54 pm

…Now here is a final chance for saavy Eastern Canadians to get in the Vancouver market “on the cheap”…

Woodwards Project set to open in Vancouver

http://www.theglobeandmail.com/servlet/story/RTGAM.20090415.wbcwaves15atlart2239/BNStory/National/home

Nearly $500 million invested by Govt.

…do you really believe 5000 drug addicts will continue to control this downtown neighbourhood for too much longer?

You heard it here first.

#95 dd on 04.20.09 at 1:54 pm

#89 $fromA$ia

“yellow shiney stuff.”

Up 100 down 100, so what? Gold will shine if people don’t believe in money or there is inflation.

Inflation will not take hold until capacity is over 100% (plant capacity).

#96 Anon on 04.20.09 at 2:16 pm

#50 Gord In Vancouver,

it is true, current construction quality in Canada is unacceptable. Even if prices corrected I would not buy for exactly that reason. An average European house is much more solid than most freshly built high end houses in Canada…

#97 lgre on 04.20.09 at 2:28 pm

“Bank stocks have improved over 20% in a month. I did not hear you comment on that. — Garth”

We will see another fall in the market, once people figure out that the economy is going nowhere but down. I also played in the last 5 weeks and sold off last thursday…the more I read about the lies of Obama and the rest of the political cult I’m not sure what a safe bet is anymore.

#98 David on 04.20.09 at 3:08 pm

Chris P. the fundamentals do indeed count. Total agreement. I was remiss in leaving out potential loan to value ratios, debt coverage ratios, vacancy and credit loss ratios, break even calculations, cash on cash returns and adjusted costs basis to name just a few others.
This property is already unable to carry itself and expecting a better outcome in the future is to say the least implausible.

#99 Munch on 04.20.09 at 3:12 pm

Where is Garth?

Please to read Kuntsler – then you will understand

Greetings and thanks

#100 Another VCR opinion on 04.20.09 at 3:20 pm

Spent the weekend at open houses in VCR suburb as I need a bigger place with 3rd kid on the way.
Every open house had multiple visitors and several had offers already.
As a regular visitor to this blog I was surprised and asked a few agents what their take was.
They said low rates and lower prices had brought buyers out of the woodwork and looking in desirable neighbourhoods.
BTW I would not buy anything made in last 10 years and nothing with a strata or maintainance few. Stick to a traditional house with good accessto mass transit and energy related upgrades like windows, high efic furnace etc. Those were the ones with offers!
I will also add that I am not saying VCR is the next leisure/finance capital of the world but there is legitimate market action happening (albeit at reduced prices) and the only layoffs are in the highly mobile construction sector.

#101 SSS on 04.20.09 at 3:29 pm

#97 Another VCR opinion
I agree with you, my experience is same in Edmonton.

#102 Davinci on 04.20.09 at 3:34 pm

Good one Garth, I did not see the holes in the kids plan until you pointed it out.

Now if he sells and buys gold coins then waits for the Tsunami of inflation from the “quantitative easing”. He will see a much better return if he sells the privately and does not mention it to the tax man.

Instead he may take your advice and learn the hard way the meaning of this…

“They shall cast their money in the streets, and their bond shall be removed”

The above statement has occurred over 1600 times after it was written. The quote was corrected so you can understand it, what was lost in the translation is the fact that money and silver was the same word and a man’s word to repay was good as gold.

I have done a lot of reading on hyperinflation and in each case the politicians and the public believed with their heart of hearts that men would not allow debasement of the money. I remember reading one story where a German politician in 1922 publicly declaring he would not buy a suit because the price was to high and would wait for it to come down, it was unknown if he got the new suit.

Yet in every case including this one some how men believe we have advanced enough to be trusted with the printing press.

People should have 10% of their net worth in gold or silver as insurance. In this case this kid should have 2 oz of gold. It does not sound like much but, FYI, in almost all cases of hyperinflation 1 oz of gold could purchased a city block.

Just remember you don’t buy a home without fire insurance.

“Horrible! Like lightning had struck. No one was prepared, you cannot imagine the rapidity with which the whole thing happened. ” Sound like a person who lived through a house fire but it was Dr. Friedrich Kessler, Harvard law professor who lived through the Weimar Hyperinflation.

Got Gold?

#103 Dave on 04.20.09 at 3:39 pm

For Dave 67….

The upward pressure on the Consumer Price Index (CPI) came primarily from two sources: higher food and shelter costs.

Food prices, the largest factor, rose 7.9% during the 12-month period to March, on the heels of a 7.4% rise in February. March’s increase was the largest since November 1986.
—————————————————

thank you. That’s what I was asking

#104 Chris P. on 04.20.09 at 3:44 pm

Excellent post and worth emphasizing as such. I agree full force, flat for years to come after the decline! When you’re in the bubble it all looks fuzzy outside until it pops!

>>>>>
Chinstrap on 04.20.09 at 8:23 am

Regarding cap rates and returns…

My brother in law wanted to buy a condo to rent out in TO. I did the math and it was a 2% cap rate… (net operating income / cost. He was confused and said he would help pay the negative CF.

EVERYBODY – this real estate fad has gone, done, finito. It’s like you are buying tech stock in 2002! I like real estate as much as the next guy but this cycle is done.

Alternative: If you can buy Calloway REIT that is yielding 15% (okay it’s levered but implied cap rate is 9%) and not have to do any work yourself then why would you buy such crappy real estate?

In 1999, I bought a triplex in TO for $300k which the woman had bought in 1989 for the same price (flat for 10 years). I rented it out for about $48k revenues and about $36k NOI for a 12% cap rate (levered had 30%+ returns). That house went up to $650k now.. That is real real estate investing.

#105 sail1 on 04.20.09 at 3:46 pm

#99 Another VCR opinion

No different in GTA north suburbs, much traffic and many sold signs.

#106 lgre on 04.20.09 at 3:46 pm

Stress tests for the 19 U.S banks have leaked, 16 insolvent..government trying to cover it up.

http://theautomaticearth.blogspot.com/

#107 The Coming Depression on 04.20.09 at 4:07 pm

Looks like the STRESS TESTS have been revealed. We are in for one BIG collapse in the banks as I have constantly stated:
http://thecomingdepression.blogspot.com/2009/04/stress-test-results-published-by-blog.html

#108 dd on 04.20.09 at 4:44 pm

#96 lgre

“The more I read about the lies of Obama and the rest of the political cult I’m not sure what a safe bet is anymore”

The government cannot replace the spending power of a confident consumer. People have this illusion that all will be well once the government spending kicks in.

#109 jess on 04.20.09 at 4:44 pm

Fortune 500 for America’s largest companies.

From $645 billion in profits in 2007, profits dropped this year to just $98.9 billion – an 84.7 percent decline!

..well were those really profits ?

#110 Cris on 04.20.09 at 5:21 pm

Can you really expect to get 5% return on investment in this day and age? I doubt it. It seems like much of the “profits” generated by companies were under false pretenses, Ponzi schemes, bad mortgages, and good old creative accounting. Grotesquely inflated management bonuses and self entitled corporate greed and deception make the stock market seem like a very bad bet indeed. However, I’m sure they’d love us to continue investing like good little peons!

#111 james murphy on 04.20.09 at 6:40 pm

I heard a rumor that Garth has just purchased a house…..is this correct?

Yeah. 15-foot lot is just wide enough for my bike. — Garth

#112 dd on 04.20.09 at 6:56 pm

#108 Cris

“Can you really expect to get 5% return on investment in this day and age?”

Sure you can. There is plenty of debt offered by Grade A corporations up to 10%.

#113 Vancouver_Renter on 04.21.09 at 2:30 am

#89. Garth wrote, “Bank stocks have improved over 20% in a month. I did not hear you comment on that.”

#94. “Up 100 down 100, so what? Gold will shine if people don’t believe in money or there is inflation.”

I’m quite surprised at how unaware the average person is of gold stock performance in the many great deflationary contractions in the past. Gold is not – repeat NOT – an asset class that performs well only in hyperinflation. Gold stocks, due to rising margins, have historically outperformed every other asset class during great credit contractions and deflationary spirals.

I guess the average Joe will figure this out once all the easy money has been made. By this time next year, the party will be in full swing for gold stocks.

20% in one month? The gold stocks I track have doubled since their lows of November, 2009.

#114 Gord In Vancouver on 04.21.09 at 8:22 am

#99 Another VCR opinion

….and the only layoffs are in the highly mobile construction sector.
_______________________________________

Many Vancouverites are hoping that your observation, not recent media reports, reflects reality. I’m not disputing your comment but a link would make it more credible. For example:

Company downsizing increases in Q1: report

http://www.financialpost.com/news-sectors/story.html?id=1514875

“Vancouver has very little now supply being built but rents are still coming down. The average downtown rental rate is $48 per square foot per year, down from $55.85 per square foot in the fourth quarter.”

#115 Gord In Vancouver on 04.21.09 at 8:26 am

#95 Anon

Thanks.

#116 613 Happy where I am on 04.21.09 at 2:15 pm

Well, let me tell you a short story about gold….

About 30 years ago, my mother got a sizeable inheritance from my great aunt who had married 3 times…

My mother took the money and bought gold…

Sold the gold close to the all time high when the Iranian Hostage crisis was going on (remember Ken Taylor???)

With the profits, she bought a small two bedroom “shack” at Cape Cod which we called “the gold nugget.”

Will this happen again???? Probably not…. Garth is right in saying that gold SHOULD have shot up with the mess the economy is in right now, but didn’t.

BTW, Garth… two power failures in the east and south of Ottawa in two days… get an ad for generators into the Citizen promptly !!!

#117 Live Within Your Means on 04.21.09 at 8:00 pm

O/T

The below blogger posted:
Moving The Bullseye
The opposition parties seem to be having a hard time making the EI issue stick in a real way to the government, despite the number of people who are being damaged by it.

They seem to be having the hardest time with Diane Finlay’s stonewall refrain to all criticisms, whether it be relevant to the argument or not that: “It’s based on fifty-eight different regions for Employment Insurance across the country and the system adjusts automatically every month to those local employment conditions.” (CBC’s Politics April 20 2009)”

My sis is short 12 hours to qualify for EI, has paid into it for 27+ years & never put in a claim has put in an appeal, on principle. She has rec’d docs which basically quote legal cases to the effect she doesn’t have a leg to stand on. Can anyone please point me to up to date govt. stats re unemployment figures in the Montreal region re Findley’s quotes above. I’m sure since my sis was laid off on Jan. 6 that employment stats have changed.

#118 Live Within Your Means on 04.21.09 at 8:31 pm

#114 613 Happy where I am on 04.21.09 at 2:15 pm
Well, let me tell you a short story about gold…

When I read about the English lady (getting ready to move to CDA) who’d rather have gold jewelery I laughed. Before one of my hubby’s grandmas died she gave me a lot of 22K old French jewelery. I lost one ring a month later. Have since given several pieces away to my much younger ‘French’ SILs as I wanted them to stay in their French side of the family and as I no longer wear much jewelery. I don’t want to see beautiful pieces melted down for the sake of $$$. I’ve several pieces of sterling silver from the old country, dated more than 100 yo, & the younger generation doesn’t seem to appreciate them. My hubby and I were just talking about our wills tonight and I said I want to change mine. Unfortunately, Cdn. laws are not as ‘free’ as French laws.