The plunge


Here’s a good suggestion, from a blog dog who’s also a mortgage broker: “There seems to be so much talk here and in mainstream media about what is driving the market..1st time buyers, affordability etc.  Although, it’s easy to forecast doom and gloom for these hapless souls, what advice would you give to those who have taken the plunge, or are about to take the plunge, this year?”

Just so happens I am brimming with it. Here are ten suggestions. Cut ‘em out. Tape to fridge. Obey.

(1) Lock up. You’re borrowing money at a rate you won’t see again in your lifetime. There’s only one way for the cost of money to go, so lock your mortgage in for five years. Also understand you might only be buying because of the abnormal, weirdo rates and when they return to historic norms, you’re probably screwed so…
(2) Go weekly. Or biweekly, instead of a monthly mortgage payment. By doing this you’ll shave years off the amortization period and save yourself a bundle of money, while building equity more quickly. If you want to read insanely absurd arguments about how exactly to do this, keep reading the posts below. Take lunch with you.
(3) Ram the am. Never, ever, ever take one of those stupid 35-year amortizations. If you do, you’ll be renting debt instead of paying it off. The shorter the am, the faster you pay back the loan and the quicker you gain a financial stake in your home. The longer terms may drop your mortgage payment by a few bucks, but they will suck away your future.
(4) Borrow less. Not more. Don’t follow the advice bankers give to add the high-ratio mortgage insurance premium to the mortgage principal. That simply means you get to pay it back three times over. If you don’t have the cash to handle this premium, or any other closing costs, don’t buy a house. Duh.
(5) Zero means zero. No-money-down real estate is a financial death sentence. This is not the time to be thinking about getting into real estate with a zero down payment, or accepting one of those “gifts” from lenders equal to 5% down. In fact, anything less than a 10% down payment is courting disaster, since there’s a damn good chance real estate values will fall by that much (at least) in the near future. Negative equity is not fun.
(6) Pay it back. Build equity as fast as possible, putting your extra money into debt retirement instead of building a deck with a hot tub or getting into a gardening and paving stone pissing match with your neighbours. Remember – the money you owe is going to get a whole lot more expensive at renewal time, so make the debt shrink.
(7)  Don’t panic. If you already own and have a mortgage with a year or so to go, don’t freak out at the thought of rising rates and renew now. You’ll face a penalty equal to at least three months’ interest – money which would be far better used to slap against the principal.
(8) Get options. When you negotiate a first mortgage, make sure you have the ability to pay it back in an accelerated way. So, get a loan that will allow increased monthly amounts or a big annual lump sum payment. Then ask your parents for an advance on your inheritance.
(9)  Stay out of Home Depot. Yeah, I know everyone’s excited about the home reno tax credit, but don’t fall for it. You have to spend $10,000 on a renovation just to save $1,350 in taxes next year. That is cash far, far better spent in reducing your debt. Besides, if you have a suburban house similar to every other one on the block, ten grand dumped on it will probably do zip for the resale value.
(10) Buy to sell. Nobody stays in their first home anymore for twenty years, or even five. (You will discover this.) So, don’t screw it up. Buy a home that will appeal to as many purchasers as possible. Buy the best street you can afford. Buy real estate with a future – smaller, efficient, on transit, trees. Don’t paint the foyer black or put winky lights in the bedroom ceiling. Keep it neutral, neat and toned down. Everything I’m not.

Coming soon: Rules for Disintegrating Boomers.


#1 Charles T. on 07.10.09 at 10:39 pm

Prime Minister Stephen Harper acknowledged for the first time on Friday that the federal government could run a deficit beyond five years if the recession lasts or Canada’s economic recovery is weaker than forecast in the January budget.

In response to a question about his five-year budget plan, Harper was clear he would not cut any programs, even if it meant abandoning his plan to eliminate the deficit within five years.

“Let me be very clear on this: we will allow the deficit to persist if necessary,” he said. “We will not, in order to meet some timetable, start raising taxes and cutting programs. That’s a very dumb policy.”

Harper says he’ll allow deficit to persist ‘if necessary’

#2 James on 07.10.09 at 10:56 pm

About the “ram the am” bullet.

What about pre-payment privileges? One can have a 35-year amortization but 20% pre-payment option and pay down off mortgage at a rate of, let’s say, 7 years. In this scenario the borrower is not committed to paying huge monthly payments if for some reason they get in a short-term cash crunch.

#3 timbo on 07.10.09 at 11:03 pm

number #2, bi-weekly is a winner. Get used to no name KD and the same car for 6 years and pay off the bank asap.

#4 nonplused on 07.10.09 at 11:04 pm

Hmmm… sounds a lot like how people used to buy houses ten years ago.

Although I certainly agree with all the advice, I wonder how folks are to follow the rules and actually manage to close, when they are bidding against “greater fools” using zero down, floating, 35 year amortizations? Seems to me a strict adherence to the rules would leave most new entrants to the market waiting for better days. Which might not be a bad thing.

#5 jess on 07.10.09 at 11:13 pm

spock giving an evil eye? that would be irrational?

#6 Bobby on 07.10.09 at 11:44 pm

How about this one.

You should never spend more than 32% of your gross salary on housing. So if some realtor or broker says that paying 60-70% of your income is a wise investment, turn and run.

#7 Nostradamus Le Mad Vlad on 07.11.09 at 12:40 am

The Plunge can be viewed from different perspectives. Diving off the cliffs in Acapulco is descending into the ocean, then repeat.

If a person is up to their eyeballs in debt, they descend into bankruptcy, but it takes a lot longer to swim again, and don’t repeat.

Our son and DIL are looking to buy a second hand townhome in Jan. or Feb. next year. They have your site bookmarked, but whether they read it or not is another matter.

They are adults now, both working and saving. I prefer to let them run their lives the way they want, make their own mistakes and only give advice when asked.

BTW, I had no idea that I was disintegrating! See, I learn something new about me everyday!
Encapsulates Garth’s 2015 book. — — This is the US version of Greenshoots + Pitbulls =

From second link: “And don’t forget that when you count our unfunded liabilities for social security and medicare, that the real national debt is greater than $55 trillion.”

New monetary system (not the Amero – yet) at the G8 today. —
If the US increases their forces in Af’stan, guess what Harper will do. The Soviets didn’t win there, neither will the yanks or us. —
See what happens when people get angry after being lied to. —
A week or so ago, the Queen said she needed a bailout to pay the staff (sell some palaces, wot!). Now it seems the military may be facing cuts, and that would leave only the US and Canada in Af’stan. —

#8 Increasing that 1% on 07.11.09 at 1:04 am

“..if you have a suburban house similar to every other one on the block, ten grand dumped on it will probably do zip for the resale value”. And, “Keep it neutral, neat and toned down”.
Having recently sold, this is very true – had wasted so much time and money on BS….Plus, in that time, lost money as prices decreased…senseless
Only put the money in, if necessary, to make it ‘neutral, neat and toned down’, and done quickly so you can enjoy it while there, or if selling so you can sell more quickly

Garth you do seem to be able to be neat and toned down when on TV appearances, not sure about the neutral, but still am trying to recover from the visual of blonde hair and tights

#9 dg on 07.11.09 at 1:12 am

Minsky’s Law
Over periods of prolonged prosperity the economy evolves from financial
relationships that engender a stable financial system to financial relationships
that produce economic instability. The longer the trend persists the more
violent the correction when the trend reverses.

#10 taxpayer like you on 07.11.09 at 1:27 am

“Go weekly. Or biweekly, instead of a monthly mortgage

Make that accelerated weekly or accelerated bi-weekly.

Garth, I know you understand, but if you dont ask for accelerated, you probably won’t get accelerated.

Of course you could just change your post to reflect this
and delete me….

An acceerated is implied, as it always has been with me. — Garth

#11 bruce on 07.11.09 at 1:44 am

Question for Garth…

What should a person due if they have their mortgage on a line of credit at prime…Interest only payments.. We are paying our mortgage at 2.25% interest only, but have accelerated our payments to 4 times what the interest only payment are, on weekly payments.If prime doubles or climbs in the 8% range as you predict, wouldn’t it better to continue hitting debt and then lock in to a fixed mortgage when prime hits 8%???

Please comment


#12 Investx on 07.11.09 at 2:30 am

“There’s only one way for the cost of money to go, so lock your mortgage in for five years.”

Great. First it was go with a VRM mortgage, now lock-in. Which is it? What changed the past month?

This is for first-time buyers, who (of necessity) almost always need to lock up. — Garth

#13 Charles T. on 07.11.09 at 2:59 am

The following is from an article titled “How Herbert Hoover Put the “Great” in Great Depression”

Rothbard believes (as do I) that the severity of a depression is directly proportional to the amount of government intervention directed at “fixing things.” He contrasts America’s depression of 1920, which lasted less than a year, with the Great Depression, which just about dragged out into World War II.

America used to have depressions all the time. The 19th century and early 20th century were peppered with them. They were always short and sweet, because the US government was not yet large or powerful enough to really do anything about them. So the panics would come and quickly pass…excesses would be removed from the system…and the path would be clear for the next economic upturn.

The last time the US government pursued a mostly laissez-faire policy in handling a recession/depression was 1920-1921. Warren Harding was president – so it’s not hard to imagine he had a difficult time keeping his hands off the levers, because Harding was widely regarded as one of the least qualified presidents in American history. He’s the guy who Republicans believed just looked like a president – so they dressed him up, and sure enough, he was eventually elected into office.

Ironically, the man Harding appointed as Secretary of Commerce in March 1921 was none other than Herbert Hoover, who only accepted the position on the condition he’d be able to meddle in government economic policy. So Hoover quickly set to work in 1921 by mapping out boneheaded designs for public works projects and other central planning types of activities.

Fortunately for the US, the depression ended before Hoover was able enact any of his programs. But the stage was set for the big dance, coming up at the end of the decade.

When the stock market crashed on October 24, 1929, Hoover kicked into gear right away and started “doing stuff”. He ignored the laissez-faire advice of his Secretary of Treasury Andrew Mellon, who said:

“Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people.”

How Herbert Hoover Put the “Great” in Great Depression

#14 abc on 07.11.09 at 3:07 am

Sell it NOW!!!!!!!!!!!!!!!! Buy it back later for less. Get out NOW!!!!!!!!!!!

#15 David on 07.11.09 at 3:53 am

The Real Estate Decalogue according to Garth is all very good. At his point in history, one can only reflect upon past sins and transgressions.
Commandment #5 is the biggie. Negative equity, despite arguments to the contrary, this is exactly the primary cause of the housing collapse in the USA and elsewhere. Even a modest price correction in housing like what happend last winter had realtors screaming like scalded cats. It will be an awful rude awakening when home sellers find out they owe more than they own.
Here is good article from the Wall Street Journal on Sin Number 5.

#16 Halifaxfamily on 07.11.09 at 5:06 am

Good advice for those who bought at the top

#17 mattbg on 07.11.09 at 6:12 am

I would also add that, to have the right mindset, you have to appreciate that ANYTHING you buy in lieu of paying down your mortgage while you hold one effectively gets rolled into your mortgage and paid off over 25 years or whatever your am is… even that pizza you buy when you could have eaten at home.

#18 Samantha on 07.11.09 at 7:14 am

A few more suggestions:

Plan before you buy and know exactly what you can live, not just the house, but the total debt and payments. Regardless of how long you live in the house, it will feel like a much longer and arduous time if you can’t live with the debt.

If you haven’t done it before, now is a very good time to start working with a budget. Get it down on paper. Track your expenses against income. Know where your money is going, so that you can optimize repayment and the growth of equity in the property.

While I agree with (6) pay it back, I also believe that savings in an emergency fund are a way to create your own insurance against unexpected life events (and this applies to everyone – renting or buying). On paper, review your budget and calculate all necessary expenses for 1 month. Your emergency fund should provide for 6 months (and these days, preferably 12 months) of basic living expenses. If you lose your job, then these savings will help keep you afloat and protect your credit and house while you sort the situation out. The amount to save may seem daunting, but keep at it until you get this fund in place.

Besides, if you have planned to buy correctly, your budget should allow for savings – emergency, annual expenses, and future expenses and maintenance.

One last point – when you look at houses, bring a tape measure and a camera. Measure the rooms yourself. The measurements in the ads are not always accurate. The camera will help you remember window and door placement, which can affect how your furniture will fit.

And, measure your furniture and know exactly how much space you need for it. If you can’t open a dresser drawer because it wedges up against the bed, then you won’t be confronted with the additional expense of replacing furniture.

#19 Darryl on 07.11.09 at 7:45 am

Why not lock int a 10 year for added comfort. Still low rates I think. By the end of the term they could have the majority of the mortgage paid down.

A disaster, unless it is portable. Most people do not stay for a decade (especially first-time buyers), so breaking the loan could be very costly. — Garth

#20 Repatriated Expat on 07.11.09 at 7:50 am

Item #10 is a really good point as well.

I thought that I was an odd-ball in moving every few years, but it seems to be more typical of careers these days.

But then you really gotta ask yourself if you are only living in a house for less than five years, how could it ever make financial sense to buy factoring in all the associated transaction costs.

It doesn’t make sense if house prices are flat, and can really hurt when when house prices go down.

#21 Canadian Army Guy on 07.11.09 at 8:58 am

Advice from a person who have owned 7 houses (Alberta, BC, New Brunswick, Ontario X 3 Nova Scotia… I am in the army!)

1. Lock up….. Not yet. Wait until November at the soonest. No need sooner.

2. Go Weekly….. Absolutely!

3. Ram the am….. If you cannot amortize for 20 years, do not buy!!!

4. Borrow less….. 10% down minimum. Ever tried a second job for a year??? Do that.

5. Zero means zero….. Folks get sucked in to this????

6. Pay it back….. On top of paying my mortgage every Friday, I have an accelerated component of $80 extra. What? Can’t afford it? Stop going to Timmies and stop ordering PIzza weekly. Bike to work. My principal evaporates monthly; very encouraging for me!

7. Don’t panic….. 4.44% for 5 years closed is good right now: ( You’ll have that penalty paid off within the first year. Unless you have a $400K mortgage!

8. Get options….. See above link.

9. Stay out of Home Depot….. Embellishment sells. Refresh your decor. TRust me. I sold 6 homes in my life.

10. Buy to sell….. Yup. See above…

#22 Jerry on 07.11.09 at 9:06 am

Well I do respect Garth’s views I have to disagree. Who really cares how much the government owes ? It does come down to if we have money to put food on the table. Telling people to buy with selling in mind is just plain wrong! I say buy when the time is right for you and what will meet your family needs. Paint and renovate as being in a place you love makes you happy . Who cares about the neighbours think anyways .

All this worrying and fear in the media has blown things out of wack sooner or later people will move on and not listen to it anymore. And besides the big story is Michael Jackson now.

So enjoy life live within your means and avoid all the garbage in the media or the spread of fear. The only thing fear does is spread more fear and it really gets boring after day in and day out.

Spoken like a person without a mortgage. Given today’s prices, no wise newbie buyer should take the plunge without an exit strategy. Stuff your romanticism. As for government finances, they determine levels of family tax. That’s why we all should care. — Garth

#23 Nostradamus jr. on 07.11.09 at 9:21 am

Business…Montreal Gazette…

July 11th/09

“Canada lost a fraction of the number of jobs forecasters were expecting.”…”We’re poised for recovery”

#24 Dean on 07.11.09 at 10:35 am

11. Buck the trend and stay in your house more than 5 years. Watch while everyone keeps upgrading and renovating themselves into more debt. Spend your money on the quality of your life rather than the quantity of granite countertops.

#25 canmoreguy on 07.11.09 at 11:23 am

Thanks Garth, one of your best posts yet. Timeless financial advice that will help young buyers get ahead

As a CA, who has seen some young clients get themselves into trouble, could i add one more? 11. Once your mortgage is in place, avoid “debt consolidation refinancing” unless absolutely necessary. Lines of credit and c/c’s to ‘pay for’ new furniture, renos, landscaping for the new house (and other luxuries you can’t afford) are trouble. You will NEVER pay off your mortgage.

PLC’s and c/c’s feel like free money, but are a trap for many young people. Don’t use them. If you have to, pay them off over 1 year, not 25

#26 Ben on 07.11.09 at 11:40 am

Good set of advice. Those rules have worked well for my wife and I over the last 4 years, when we first took the plunge.

Moral of the story is debt is debt, and is to be paid off as quickly as possible. Don’t listen to the noise about good debt vs. bad debt.

#27 Vexed in Victoria on 07.11.09 at 12:20 pm

NYT – Tight Mortgage Rules Exclude Even Good Risks

“…The credit pendulum is stuck at ‘stupid,’” said Lou S. Barnes, an owner of Boulder West Financial Services, a Colorado mortgage bank. “I am turning down loans every day that my grandfather in his Ponca City, Okla., savings and loan in 1935 would have been happy to make. And he was tough.”

#28 TrueGritCalgary on 07.11.09 at 12:20 pm

“An acceerated is implied, as it always has been with me.” — Garth

Garth, it is not necessarily implied. Over the years I have run into people who thought they were on the accelerated track, only to find out they were merely just bi-weekly. This group also includes someone I know who works at a big 5 bank.

I said it is implied with me. Everyone else is free to screw up. — Garth

#29 AParker on 07.11.09 at 12:59 pm

NPR Planet Money

Mortgage-Burning Parties Almost Extinct

#30 TJ on 07.11.09 at 1:37 pm

“With more than $300,000 in combined annual income, tens of thousands of dollars in the bank and credit scores that top 800, Jennifer France and her partner would seem like ideal candidates for a mortgage refinance. But when they applied to swap an interest-only loan on their nearly $1 million San Carlos home for a 30-year fixed that locked in today’s low rates, they were summarily denied. The refinancing would have saved them nearly $2,000 in monthly payments and allowed them to begin paying the principal on the mortgage. They were ultimately able to modify their loan through one of the federal stimulus programs, but it lowered their payment by only about $1,500 and the loan remains an interest-only mortgage.”

‘I was really surprised, I had been preparing to refinance for years,’ said France.”

#31 Investx on 07.11.09 at 1:43 pm

Canadian Army Guy:

1. Lock up….. Not yet. Wait until November at the soonest. No need sooner.


3. Ram the am….. If you cannot amortize for 20 years, do not buy!!!


4. Borrow less….. 10% down minimum. Ever tried a second job for a year??? Do that.


#32 Investx on 07.11.09 at 1:46 pm

“This is for first-time buyers, who (of necessity) almost always need to lock up. — Garth”

Why wouldn’t other buyers also benefit from this strategy which supposedly achieves favorable rates?

Because they have no income flexibility. Others, more mature in their finaces, can benefit from maintaining a term choice. But lock up if it makes you feel fetal. — Garth

#33 TJ on 07.11.09 at 1:54 pm

“Did all the economists inside and outside the government get their diplomas off the Internet or from the back of a comic book?

Friday’s newspapers were filled with stories about how surprised everyone was about the country’s latest unemployment numbers.

And the smart economists didn’t see this coming? Huge jumps in housing prices, no consumer saving, consumer debt constantly rising.

But no one thought that was a problem.”

#34 Samantha on 07.11.09 at 1:55 pm

#22 Jerry –

I am by no means a “newbie”. Every house I have purchased has always been with a cold, critical eye to resale ability. This is one of the main reasons that location is considered by many to be so important when purchasing a house.

As to decor, neutral is the easiest to sell and I never veer from this during the time I live in a house. My walls, flooring, cabinets and fixtures are all neutral with color and design interest in things such as art and accessories.

Why? Two reasons: 1) if a crisis occurs I may not have the time or ability to redo a large laundry list of items in order to ready the house for sale; and 2) why on earth would anyone want to create such a large “to do” list before selling? Easier on the stress levels to just have to do a thorough cleaning, minor cosmetics, and decluttering.

I care how much the government owes because it does matter to all of us. If you think of our country as a business with all of us as shareholders, then the financial health of our country determines our quality of life.

Maybe it’s my rural Manitoba sensibility, but I do care about what my neighbors think and would never do something silly and outrageous to spoil their enjoyment of their home and property. Besides, how else can we build community without knowing or caring about what our neighbors think?

As to fear: planning and preparation prevent fear and panic.

#35 Nostradamus jr. on 07.11.09 at 2:19 pm

World’s Most Expensive Cities to Live

20/Dubai 19/Helsinki 18/Rome 17/Tel Aviv 16/London 15/Caracas 14/Oslo 13/Paris 12/Shanghai 11/Milan 10/Singapore 9/Bejing 8/New York 7/Copenhagen 6/Zurich 5/Hong Kong 4/Geneva 3/Moscow 2/Osaka

…Garth, it seems like Canadian cities have been overlooked…

#36 Grumpydawgs on 07.11.09 at 3:17 pm

For one thing, according to my banker friend, it’s an almost sure bet that 99% of the people coming in for a new mortgage loan have zero downpayment.

2) The new buyers are taking out the longest AMs possible.

3) It’s all variable, no one locks in. Monthly payments only

4) No three month payment penalties on refi’s , the amounts are too large. The new deal is the interest rate differential. he has told me that the average refi nets the bank between 20 and 40K per.

This can’t end well. The parliamentary Budget office forecast another 700K unemployed next year, that is on top of the 450K forecast for this year. That means the real economy is getting worse doesn’t it?

The Feds are renaming the people who have run out of EI weeks ‘self employed’ instead of ‘going on welfare’, but the blast off welfare numbers and the lines at the food banks are really getting extreme. In Vancouver I have never seen so many homeless. The unemployment numbers are obviously getting fudged by the PMO.

Being self employed doesn’t mean you’ve instantly got a paycheque dudes. Calling the unemployed self employed is just insulting. Yesterday the government tried to tell us that the 47000 full time jobs was tempered by the new jobs created by the people going solo. Bwahahahahahaha, give me a break.

Part time work doesn’t make a mortgage payment.

We were told by the CBC and Argus reearch that affordability was going up based on pre tax income. Sorry, wrong again. Hey Argus if the Fraser Institute says that the government takes 70% in direct and indirect taxes how do you figure theres 42% left for housing? What are the kids eating? Are they running around naked?

Maybe this is why so many families can’t afford sports programs for the kids anymore. Maybe this is why the groceries are all going on the Visa.

I stood behind a postman at a store recently who went through 5 credit cards, all maxed out trying to pay for his weeks groceries. He had to walk away empty handed. Is that the what the government is after when pimping out all this cheap money for home loans. Are we moving into an economy where 138% of household income being encumbered by debt is just a dream and we are heading to 150% or 175%. Why not 200%.

At 138% ( the norm in Canada according to official stats) then that means that the average person is adding 38% onto his debt every year. Remeber that this is not a game Mr. Flahrety, 100% is a deathspiral scenario. 138% is crazy and you not be pimping this dangerous game off to average Canadians who can’t understand the ramifications.

An extraordinarily useful comment. — Garth

#37 Munch on 07.11.09 at 3:19 pm

Here’s some good advice for those who bought at the top, or who are going to buy now!


Thanks for listening


#38 Dan in Victoria on 07.11.09 at 6:09 pm

Good list Garth.Should be a must read for first timers.My question is do they teach any of this in school anymore?Do they teach math?Do they understand compounding interest?Or better yet has school just turned into a giant day care?I just whistle to myself sometimes on some of these “money calculation”replies.Has the good old fashioned three”Rs” been replaced with,Reefers,Raves,and Reproducing?

#39 Future Expatriate on 07.11.09 at 6:29 pm

Insider trading scandal about to break wide open?

Goldman-Sachs had sercret program that allowed online trading to beat all competition.

If this doesn’t make people pull all their wealth out of paper, nothing will.

Goldman-Sachs Secret Weapon

#40 gold bugger on 07.11.09 at 6:31 pm

Started talking rent levels with a guy at work today.

He was excited to learn from another co-worker that some local condo project would only cost him $824 a month to buy into.

I started to explain to him how that presumably advertised rate probably required a downpayment that he didn’t have (trust me) and that it was probably calculated with a 2.9% interest rate, etc. And then I realized it was just wasted breath.

The biggest thing readers of this blog overlook is the innumeracy of the vast majority of the population.

They buy houses the same way they buy cars and appliances: based on what it costs them each month.

They are also voters. So when trouble starts, expect your beloved politicians to bail them out.

That is why we might have market setbacks. But we will never have total calamities. Ottawa will resort to whatever means necessary to keep homeowners liquid.

#41 David Rockefeller on 07.11.09 at 6:44 pm

What is the consensus on buying a $420k house just outside of Windsor? Its the best house we’ve seen in three years, and that includes looking for two years in Victoria BC. We’re huge fans of mid-century modern, and this is an excellent example of that.

We’d end up with about $100k mortgage.

#42 Nostradamus Le Mad Vlad on 07.11.09 at 6:48 pm

#129 Chris no longer in England on 07.11.09 at 1:30 pm — “I was picking his brains about what we might do with a few hundred thousand while we wait. Being cautious where money is concerned (i.e. I don’t want to go back to work and have to earn some more) I am interested in parking it in various places to grow, modestly if need be, rather than taking any chances on higher risk options. So … everyone feel free to comment (I know you will)!”

Hello Chris NLIE.

Perchance, Bill Gibson, C.A. of Gibson Wealth Management Group is a VP and investment advisor with RBC Dominion Securities, who writes a column in The Okanagan Saturday every other week ( ).

I was going to quote his column today anyway, but saw your post so it is good to integrate the two. His column today has the headline “Thoughts on dividend stocks”.

Bank preferred shares are spoken of here, but banks can be volatile at the most unexpected of times, as there are no flat lines anywhere.

He says GICs are yielding approx. 3.5% per annum and five year govt. guaranteed bonds are at least one per cent lower.

Short term money market vehicles are less than one per cent, and there are differences in tax rates charged on interest income, versus dividend income.

However, billions, if not trillions in cash is sitting on the sidelines, doing nothing productive and there are numerous companies that need strong cash-flows to stay healthy.

He says to have an advisor suggest some alternatives to the boring, regular stuff and a Canadian Dividend mutual fund is an option.

There are quite a few which pay a monthly dividend-based income, and taxes on these payouts are a lot lower than those mentioned above. If I had $300K, give me the Cdn. monthly-pay dividend option anytime!

His e-mail is on the website above. Trust this may be of assistance.

BTW, CC (Climate Change, not Credit Cards) is turning quite a lot warmer here. Someone remembered to turn the furnace up!

#43 Mike (Authentic) on 07.11.09 at 7:10 pm

41 David Rockefeller “What is the consensus on buying a $420k house just outside of Windsor?”

Correct me if I’m wrong, but if it’s just outside Windsor and Windsor real estate is sub-100k, why would you buy something x4 more than Windsor RE that’s just outside?


#44 eddy on 07.11.09 at 7:26 pm

Sound advice. However,

“(9) Stay out of Home Depot”

Surely this tip precludes routine maintenance.

#45 X on 07.11.09 at 8:47 pm

Interesting link on GS about the super computer program that was stolen/taken by a previous employee to a rival bank.

If GS feels that this program is potentially dangerous in the wrong hands….and capable of market manipulation…then why should the gov’t let any company use such a program. It sounds pretty unfair to us the average investor.

I heard Kevin O’Leary discussing on BNN a what if…the gov’t instituted a capital gains tax based on how long an stock was held (the longer it is held the less taxed on gains) to defer banks from trading a billion shares in a second (buy and sell) to manipulate prices, profits. He figured the TSX would be cut in half in 1 day if these companies could not use such a program to trade large volumes on units in fractions of a second.

I can’t remember what a % of the S&P trading was done by GS, but he said that 36% of the futures trading was GS. (please don’t quote me on the %’s, but you get the point, heavy trading = manipulation)

It would be great if the gov’t acted on this to even that playing field. A computer program should not influence share price, but earnings/dividends/supply should be a factor.

Curious to know if anyone thinks the gov’t should act to protect greater fool’s. I mean it would temporarily dry up the RE market, but a law requiring 10% down, and/or 25 year maximum amortization period may help save a few bankruptcies.

#46 dg on 07.11.09 at 9:00 pm

Advice ….get a second opinion.

I remember someone saying a Madoff can’t happen in Canada.

Well, maybe just maybe……….it can.

#47 meggie on 07.11.09 at 10:08 pm

Hey Rory
I’ve been busy and just returned to the blog after a couple days. I read your post from then and of course i accept your apology.
One thing I want you to understand however is that my hubbies pension is municipal and fully funded (unlike those is US @ UK) When there are shortfalls, we receive notices via mail and our premiums go up substantially. In fact , despite an anual pay increase of 2-3.5% for many years (yes,that’s all he gets) his take home pay has BARELY changed in 5 years because it gets clawed back with the huge pension premium increases. Yes, I agree it’s still a good plan but it is not all a bed of roses.
Get Smart did make some very good points on the pros of private sector work and the cons of public. He’s worked both.
Also Rory, I can’t agree less about the pay. He have personally seen and been offered welding work at three times his wage and overtime. But we are both very conservative and security (at least we hope and pray) trumps huge salaries for us. And yes, he has invested SO much in his pension it makes no sense to leave it now. Thanks again for your apology and we sincerly wish you the best.

#48 Sean in E-Town on 07.11.09 at 10:09 pm

Garth, I absolutely despise rule 10. People should be trying to avoid wealth transfer taxes, public or private, such as real-estate commissions, especially with sluggish long-term captial gains. I’m actually leery of buying a one bedroom condominium right now not just because of price, but because it’s a four story walkup.

#49 OttawaMike on 07.11.09 at 10:11 pm

The latest issue of The Economist has a story on the wealth effect of rising house prices. I have always believed in this theory but some recent research seems to disprove it.
“The theory behind the wealth effect runs as follows. Housing is one of the main assets in which people hold their wealth. Rising house prices make people wealthier, increasing the amount they have to spend over their lifetimes. And they will disburse some of it in the present, because they like to spread their spending roughly evenly over the course of their lives.”

#50 nonplused on 07.11.09 at 10:33 pm

I don’t understand this concept of “monet sitting on the side”. As I understand it, the money has to be somewhere. Even if you put it in a bankaccount the bank lends it out. If you have cash in your brokerage account they lend it as margin to somebody else. If you put in in t-bills it is effectively lent short term to the goverment. Is there a huge pile of cash sitting by the side of the road somewhere? Otherwise when people start buying stocks they will have to sell something else.

And even if there is some massive amount of money that isn’t involved in the economny in any way right now, why couldn’t it just stay “on the side”?

#51 Josh on 07.11.09 at 11:23 pm

I’m in a 40 yr mortgage on a property in Saskatoon bot in June/08.
Garth, should I bail or try to stick with it?
This is currently a rental property and not my owner occ upied dwelling. Rent does not cover the expenses.

Then why own it? Jump. — Garth

#52 bruce on 07.12.09 at 12:21 am

Question for Garth…

What should a person do if they have their mortgage on a line of credit at prime…Interest only payments.. We are paying our mortgage at 2.25% interest only, but have accelerated our payments to 4 times what the interest only payment are, on weekly payments.If prime doubles or climbs in the 8% range as you predict, wouldn’t it better to continue hitting debt and then lock in to a fixed mortgage when prime hits 8%???Should we lock in right now even if our interest rate is 2.25% and a 5 year rate is around 3-4%??

Please comment


#53 Nostradamus Le Mad Vlad on 07.12.09 at 12:21 am

Cdn. voters get what they voted for. About 3:40 in, Harper clearly says “global government”. —
Whichever part of the West is interfering in Iran (probably the CIA and Mossad) they have now accomplished what no one else could do — they have shot themselves royally in the arse!

By dragging China into the fray, which has already stated it will back Russia and Iran, they are setting themselves up for a potential war.

Second link is a neat way of manipulating the masses. Notice how Obama directly says . . .

“. . . its (Iran’s) nuclear weapons programme . . .”; basic research and investigation — ask the IAEA — shows that Russia has built two nuke power PLANTS for Iran to supply . . . ummm . . . power. That’s all.

No mention is made of nuke WEAPONS, so who were the script-writers? The CIA / Mossad?

In some respects, I guess these go with the aforementioned — /\ — In any event, all the stuff happening is pointing to an almost ‘lost decade’ of confusion. Comment from

“The most “popular” proposals, which could generate tens of billions of dollars in revenue for global purposes, involve taxes on greenhouse gas emissions and financial transactions such as stock trades.”

Webmaster’s Commentary: “I keep telling you, this global warming crap is a scam to impose new taxes an a socialist global government.”
Water wars in India. Like North America and other places, they are drying up as well. —
Makes for good reading! —

#54 Two-thirds on 07.12.09 at 2:19 am

Fools greater than Greater fools in AB:

“Even though Jason had a reported income of less than $20,000 the previous year, a large Canadian bank approved him for two mortgages: one worth $550,000, the other worth $300,000, for a total of $850,000.

He never met anyone from the bank, never saw the houses, never planned to live in them and doesn’t even know where they are located.

“They should never have approved me for a mortgage.””

I wonder just how many have fallen victim to this scam and whether this form of fraud has risen during the current crack boom…

#55 David Rockefeller on 07.12.09 at 8:32 am

#43 Mike (Authentic)

Its an incredible house.

#56 Mike (Authentic) on 07.12.09 at 9:21 am

#55 David Rockefeller “Its an incredible house.”

I’ve been to the area before a few times (between Windsor and Niagara Falls) and it is beautiful, the one of the areas I’d consider living in myself. So I bet it’s a great property. Any MLS#?

I’ve always viewed rural properties to be the last to go up in price and the first to fall. They were an indicator of prices in Calgary falling (when people stop buying rural homes/acerages) and if you want a glimspe of the future, look what is happening OUTSIDE of the cities (like Vancouver or Calgary). Prices falling. Low Demand. High Supply.

That’s your canary in the cage.


#57 Barb ... reader, Calgary on 07.12.09 at 10:34 am

#129 Chris no longer in England on 07.11.09 at 1:30 pm
“We are not far from Trenton and PEC, so I was interested to read comments the other day from a couple of people who had driven through Picton and counted up the For Sale signs… but having nothing to compare it to (i.e. how many were there last year, or the year before?) … Now it has got me wondering just why so many people want to move… I am guessing that it must be hard to earn a living out here if you are not a farmer or involved with the military or the tourist industry in some way… Not everyone has the luxury of working from home, and like my son’s friend’s father (who wants to go back to the city) there might be many plans to migrate back to Toronto hidden behind those For Sale signs.”
. . . . . . . . . . . .

Hi Chris,
I think your guess is probably correct — they’re likely moving because of jobs in larger centres. But the draw to the big city probably also includes an element of moving closer to family, friends and amenities. The major population centres keep attracting the crowds — despite the wonderful rural places to live around there. (But just look at London, England, isn’t it the same thing, so many people want to live in the bustling big city.)
As you get accustomed to your new found homeland here, you’ll notice it’s the same in any of the areas betwixt major centres.. East, west and north of Toronto there are many areas as you describe. The small towns and farm areas are fantastic — and ‘just right’ for some people, but overall it’s the larger centres that attract most people and development money. It’s interesting isn’t it? There’s pros and cons to living in lightly or heavily populated areas.
That area you’re in, is so pretty, with tons of history and plenty of access to water. I think you’ve chosen well. Keep us informed as that area often comes up in our conversation as a possibility for retirement years.

#58 CM on 07.12.09 at 11:17 am

Americans are looking for another plunge when those who started receiving unemployment insurance in the spring will run out of payments in a couple of months.

For your amusement, Dennis Kucinich exposes lies about Canadian healh care system and whacks this ignorant young man up the side of the head after his deliberate lies or profound ignorance – I’d go for the former myself – during a congressional committee.

Why is a young conservative so much more scary than an old conservative? He even wrote this article to spread his lies around like so much slime.

The Ugly Truth About Canadian Health Care by David Gratzer

This guy grew up in Canada (but then again, so did David Frum) and he’s a PSYCHIATRIST. May the gods preserve us.

The whole post is worth reading. Here’s a direct link to one of the things mentioned in the post about American right-wing funding pouring into the coffers of HarpoCons during the last couple of elections. There’s a button on the top right to download the full PDF report, with lots and lots of links about your favourite Cons and their unsavoury connections.

American right pours money into Conservative campaign

#59 Gord In Vancouver on 07.12.09 at 11:54 am

July 12, 2009 – Global BC Morning News Business Segment Diverts Attention Away From Higher Unemployment #s.

Global BC acknowledged that Canadian unemployment numbers were up and may stay high. Much more time; however, was spent on emphasizing the recent interest rate fueled spike in home sales (now old news) and Michael Jackson’s post death CD sales.

In the past, I thought that complaints about the mainstream media were sour grapes but now clearly see what’s going on. When Global is struggling to pay its bondholders and Remax is one of its largest sponsors, new bad news will continue to be masked by old good news.

#60 Winnipeg is no Different on 07.12.09 at 11:57 am

Re: #49 Ottawa Mike:

Great piece on the wealth effects of housing:

In summary, says that declining house prices will significantly decrease consumption because owners use their homes as ATMs to fund their expensive lifestyles when prices are rising. This additional consumption disappears when home prices decline. T

“Our results demonstrate that homeowners in high house price areas borrowed heavily against the rise in home equity from 2002 to 2006. We also provide evidence that real outlays were a likely use of borrowed funds. Money withdrawn from home equity was not used to buy new homes, buy investment properties, or invest in financial assets. In fact, homeowners did not even use home equity withdrawals to pay down expensive credit card debt! These facts suggest that consumption and home improvement were the most likely use of borrowed funds, which is consistent with Federal Reserve survey evidence suggesting home equity extraction is used for real outlays.”

#61 Keith in Calgary on 07.12.09 at 12:28 pm

The only problem with the majority of your points Garth is that they require a job with serious disposable income in order to fulfill them. And that is something many people don’t, or soon won’t have, anymore………

So don’t buy a house. It’s not a right. — Garth

#62 rory on 07.12.09 at 12:51 pm

#47 meggie you said: “I read your post from then and of course i accept your apology.”

I said in #83 in ‘the trap’ – “Yes, one comment went a little far” …this comment was directed at another bloggers comments at you …I was not trying to apologize for anything I said …so I kinda have to ask for you to take your apology back…have to stay fierce …lol.

As to your comments on the fully funded pension plan …your missing my main point …yes it is nice to see that hubbie has to pony up some of the losses in the plan but (prove me wrong) I am pretty sure the muni gov’t is paying at least the other half if not more to keep it fully funded…the muni gov’t invests in the same re, stock & bond mkt as the rest of us.

So instead of scaling back the pension all parties (like one would need to do in a defined contribution plan) put more money in and a large part of that ‘new’ money comes from increased taxes or reduced services that I have no say in saying NO to….pls see my example in #88 of ‘the trap’….and it is a trap – a taxpayer trap.

Again, I am glad hubbie has a stable job and a good pension…just wish the people did not have to subsidize it forever.

And yes ty for all the best …ditto.

One thing I want you to understand however is that my hubbies pension is municipal and fully funded (unlike those is US @ UK) When there are shortfalls, we receive notices via mail and our premiums go up substantially. In fact , despite an anual pay increase of 2-3.5% for many years (yes,that’s all he gets) his take home pay has BARELY changed in 5 years because it gets clawed back with the huge pension premium increases. Yes, I agree it’s still a good plan but it is not all a bed of roses
Yes, one comment went a little far.

#63 wetcoaster on 07.12.09 at 1:02 pm

gord in van,

I noticed that loud and clear. How can you go from talking about record unemployment numbers and then it’s “boy, how about those housing numbers,aren’t they great ! “.

Where was the basic educated/logical next question of “why are we still having this power home buying when people are being laid off in droves ? ” Of course it never came,just smiles and cajoling and a round of high fives.

It’s disgusting how advertising dollars of Remax turns TV announcers along with the brother of the Premier of BC into idiot reporters/commentators in a heartbeat.

#64 OttawaMike on 07.12.09 at 1:17 pm

Mad Vlad,
I appreciate all the interesting links you provide but may I suggest you avoid the 3rd party Tiny URLs. I like to somewhat see where I am clicking to. Also by linking everything through there is just another server in the chain to fetch through increasing the chances that the link won’t work.

#65 debtfree on 07.12.09 at 2:36 pm

love this blog. so informative . Some of it drives me nuts for ie. A house is an asset .This is only true after you sell it. If there is a mortgage on the house it is an asset for the the lender. A car is not an asset ,if one borrow for the car it is an asset for the lender. If you payed cash for your car it still takes money out of your pocket. Def. for asset v. liability …. an asset puts money in your pocket . A liability takes money out of your pocket . The banks put houses ,cars, boats etc. In your asset column but they are speaking bankese .They either don’t know the difference or are deliberately misleading . This is understandable as a few year ago I made a small bundle in the market . Then went to the bank ( small town 25k ) to pay of the rest of my mortgage in a lump sum . Not one person in the bank including the loans manager knew how to take my 7k she had to call head office to find out , pitiful . This at the time told me that few if anyone were doing the same as us in this town . Same happened when years earlier we opened our investment account (cash account ) They knew how to set up an rrsp full of mutual funds both imho value traps. The most ill inform people I have met so far ,work on the front line in banks .

#66 For.Sale.Or.Lease on 07.12.09 at 2:53 pm

#46 dg –

Advice ….get a second opinion.

I remember someone saying a Madoff can’t happen in Canada.

Well, maybe just maybe……….it can.

That’s not the half of it.

Developing story on Goldman-Sachs ‘as we speak’ indicates they were sniffing trades from other co-located trading companies near the NYSE, then quickly placing their own trades in advance for a daily profit of 100 million dollars a day over this last year.

Of course when a russian immigrant programmer jumped ship, probably to get the hell away from the whole thing, he was instantly arrested by the FBI without an investigation apparently at the request of Goldman-Sachs, so that world wouldn’t learn exactly how it was all done.

The programmer apparently had the foresight to create a [life] insurance policy for himself by copying the programs offshore for proof of what was going on.

(Where does Canada have a key Goldman-Sachs alumnus employed? Bank of Canada GOVERNOR?)

#67 Onemorething (aka DaHKkid) on 07.12.09 at 3:45 pm

I guess we’ve got soft on the SELL and ONLY RENT to account for the SHEEPLE.

It wont save them but maybe help them loose less!

My last three days in Vancouver have really solidified my view on people and the market here!

While I have various more bodies to shake for opinion, one thing is absolutely clear, not a single person has an understanding of the global dynamic that applies to all of us nor the local US dynamic that plagues Canada.

These people need to get out more, read some international business and get their bloody heads out of the sand.

I have met over a dozen people who are sitting nicely on the dream that their $1M properties will be OK!

That the Olympics will just raise the bar further and provide another boost to what they believe is the one city in the Universe that will not be changed.

Dreamers, arrogance and ignorance – The Deadly Hat Trick!

Will report more after a few more dinner parties but I dont expect to be surprised!

#68 victoria reader on 07.12.09 at 4:11 pm

Only problem with #10/ buy to sell/ is that when you sell it costs you realtor fees and moving expenses. If the reason to sell is to upgrade than you are adding more debt. Isnt it better to stay in your home and renovate to your needs than to add a bigger mortgage.

#69 bigpictureguy on 07.12.09 at 4:56 pm

The shocking truth about the value of your home
New evidence shows that Canadian prices could go down, and stay down, for a decade

A bout a year ago, Simon Côté, managing director of property derivatives at National Bank, had a bright idea. He noticed that the market let investors bet their money on oil futures, bond futures, even canola futures, but there wasn’t a way to bet on the future prices of Canadian houses. So he decided to launch a whole new market, one that, among other things, would allow investors who think they know where the housing market is going to put money on it. If they thought house prices would go up by five per cent in a year, while others thought prices would go down, they could buy a contract saying so, and if they were right, they could rake in huge profits. The market would also be useful for investors who wanted to hedge against falling house prices. By buying contracts that paid out if house prices declined, they could help to recoup any money they lost in the housing market.

In conjunction with the forward market (like a futures market, but with contracts sold over the counter), National Bank also launched the Teranet-National Bank House Price Index, which tells us where house prices are at right now. The index uses data from Teranet, a respected but little-known company that manages the land registry database for the government of Ontario. Because every house sale in the province must be entered in the database by law, and Teranet has agreements with other provinces to access their data, Côté says the company’s numbers are much more “robust” than the house price data economists currently use. Because much of that current data comes from the real estate industry itself, the Teranet data can boast of coming from a more unbiased source as well.

When the Teranet market started up in December, it immediately predicted a shocking drop of 20 per cent, followed by an excruciatingly slow recovery that might not see prices return to last year’s high for seven years, or longer. It’s still young and thinly traded, but the Teranet market outlook is startlingly different from what most economists see. Last week, for instance, the Canadian Real Estate Association (CREA) predicted a drop of just eight per cent in 2009, followed by a speedy recovery that would see prices starting to edge up again in 2010. Most banks and investment firms (with the exception of Merrill Lynch Canada, which predicted a more significant drop followed by a slow recovery) fell into line with similar predictions of drops between eight and 12 per cent.

Just six months ago, the Canada Mortgage and Housing Corporation (CMHC), the government agency that insures billions of dollars worth of Canadian mortgages, predicted that we would actually see an increase in house prices of almost three per cent in 2009. It has since backtracked dramatically, issuing a new forecast three months later predicting an increase of just 0.1 per cent. Another revision was scheduled for last week, but the agency cancelled the release at the last minute, saying that the data needed more analysis than expected. They set a new date for the release, but they missed that date too. “Conditions in the housing markets really have been changing,” CMHC’s chief economist Bob Dugan says. “So we’ve been doing a series of revisions to our forecasts.” He says their latest figures now show that housing prices will go down in 2009. But that doesn’t mean he sees any real cause for concern, despite January’s largest-ever single-month job loss figures and our faltering GDP. “When I look at the economy as a whole,” he says, “I don’t really see the smoking gun.” He’s been scanning the numbers and just can’t see “the big scary indicators that say things are going south really terribly.” So he also predicts just a little dip followed by a quick recovery. “We think that house price growth is going to catch again during the year,” he says. “So year over year, you’ll see a decrease when you compare 2009 to 2008, but we think that during the year, prices will start to increase again.”

The sunniest forecast of all comes from Royal LePage, a national real estate company. In a recent release entitled “Correction, not crash for Canadian real estate market in 2009,” Royal says there will be a minor slip of three per cent, then “consumer confidence is anticipated to recover, prompting real estate activity to pick up once again in the latter half of 2009.” Phil Soper, the CEO of Royal LePage, says when you look at both prices and the volume of houses being sold each month, the market has already been declining since the end of 2007, so we’re due for a recovery soon. “We’ll hit bottom in about mid-year,” he says. “We believe that things will flatten out in the third quarter, and the recovery will begin for housing towards the end of the year.” He rejects the idea that the industry burnishes its predictions. “I can say absolutely that it does no one in the real estate industry any good to forecast home prices higher than the reality.”

So who’s right? The economists predicting a brief setback, or the futures market investors who see years of decline? Robert Shiller is an economics professor at Yale University and an internationally acclaimed expert on housing markets. He is one of the creators of the S&P/Case Shiller Home Price Index in the U.S.—one of the world’s most closely watched measures of real estate values. He says it looks like we’re in for the long decline. “I’d go with the futures market,” he says. “That’s called putting your money where your mouth is.”

Shiller says that when the U.S. market peaked in 2006, he saw the exact same situation we’re now seeing in Canada. Like us, the U.S. had just launched a futures market, and it was telling a drastically different story from the one the economists were pushing. “At first our market specialist thought the market would go up, but he immediately lost a lot of money,” says Shiller, “because the people trading on the market kept predicting declines. And ever since then, they have continued to predict declines.” Meanwhile, the economists were still talking of increases, or at worst, a minor correction. “The National Association of Realtors had economists that were boosting the market all the time, and doing everything they could to get people in,” says Shiller. “Their chief economist, David Lereah, even wrote this dreadful book called Are You Missing the Real Estate Boom? He wrote that in 2005, just before the peak.”

Shiller says that futures markets are better predictors because while the predictions made by CMHC, for instance, represent the opinions of one or two economists, the predictions made by a futures market represent the combined best guesses of many investors who are so convinced of their forecast, they’re willing to literally bet money on it. As New Yorker writer James Surowiecki detailed in his bestselling book The Wisdom of Crowds, such prediction markets tend to be more accurate than individual predictions, both because they are less biased and because the collective wisdom they draw upon is more powerful than any one economist’s best guess.

#70 Barb ... reader, Calgary on 07.12.09 at 5:20 pm

#58 CM on 07.12.09 at 11:17 am


What a difference a year makes, eh? On the old blog we had to dig to find those connections. I’ll enjoy reading your links. But I guarantee you’ll enjoy watching last night’s Bill Moyer’s episode on PBS. Moyer’s interviewed Wendall Potter who worked for CIGNA 15 years and left last year. With almost 20 years inside the health insurance industry, Wendell Potter saw for-profit insurers hijack the health care system and put profits before patients. Now, he speaks with Bill Moyers about how those companies are standing in the way of health care reform in his first television interview since leaving the health insurance industry. Potter tells Bill Moyers why he left his successful career as the head of Public Relations for CIGNA, one of the nation’s largest insurers, and decided to speak out against the industry. “I didn’t intend to [speak out], until it became really clear to me that the industry is resorting to the same tactics they’ve used over the years, and particularly back in the early ’90s, when they were leading the effort to kill the Clinton plan.”

Right in line with your link, CM, Potter reveals everything about the healthcare lobby and that it’s really Wall Street that has been running healthcare. As an insider, he says he was insulated from realizing the devastation his industry was causing. He also warns not to trust what they say now.

The video interview is very worth watching.

#71 Smart on 07.12.09 at 5:24 pm

RE prices going up again… Promissed 15-30% price correction will not help at all… Garth is wrong???

Read the last 10 posts. — Garth

#72 taxpayer like you on 07.12.09 at 5:38 pm

69 bigpicture

Old news. Also please just provide link, not text. Thanks

#73 $fromA$ia on 07.12.09 at 5:44 pm

Garth what do you think of the discounted properties listed on this link???

Are they or would you consider them good deals or theres more room for dropping further?

I could not run away from Ozzie Jurock fast enough. — Garth

#74 jess on 07.12.09 at 5:56 pm

i recommend that the new risk alert labels have skulls with crossed bones

“In a much-anticipated response to the financial crisis of the past two years, the chancellor will look at ways of extending the highly visible risk alerts for tobacco and fatty foods to include mortgage and pension products.”

#75 timbo on 07.12.09 at 6:31 pm

ponzi in montreal. things sure come to the surface when the party is over.

#76 Bottoms_Up on 07.12.09 at 6:32 pm

#64 OttawaMike on 07.12.09 at 1:17 pm
It’s easy to see he gets paid for people accessing those links….he’s trying too hard….

#77 ottawa pete on 07.12.09 at 7:07 pm


Years ago I came up with a novel plan (or so I thought) to create a public market for residential home equity where home owners could acheive some diversification and access their equity without paying interest. These securities would appear as a lien on the home and act more like bonds and would not mature until the house was sold. Various derivatives could also be created based on the shares, and of course mutual funds etc. would package shares. No need for involvement of banks…

Turns out the idea was already contemplated:

, but has not yet been implemented. “Shared equity appreciation” mortgages have been sold in Australia and the U.S. :

but these schemes involve a bank or other institution gaining an equity share at a steep discount ( around 25% I think). Ironically this would have worked in the home owner’s favour in California as long as they didn’t invest the money in real estate…and note that AIG was the financial backer for the REX agreements…

#78 Repatriated Expat on 07.12.09 at 7:28 pm

#73 $fromA$ia

I have to admit that the first time I heard about the potential implosion of the US sub-prime mess was on CKNW – well before any other mainstream media would talk about it many years ago.

That being said, every time Ozzi Jurock is asked about declines in the Canadian Housing market, his response is that he has never experienced a significant bear housing market, and he really is still bearish on the housing market. But I guess RE is the hand that feeds him.

so Garth is right, run!

#79 ottawa pete on 07.12.09 at 7:53 pm


It seems a similar house price derivative market was implemented in Australia as well back in 2007:

#80 Nostradamus jr. on 07.12.09 at 10:34 pm

Onemorething (aka DaHKkid)

…Why don’t you post some Deep Cove, North Vancouver pictures of this neighbourhood where you are staying.

This will allow posters on this blog to make up their own minds rather than your assessment, I mean jealousy.

#81 aaron on 07.12.09 at 10:52 pm

Great advice I would make one recommendation on
(2) Go weekly.

If monthly payments are $1,000 or $12,000 per year
Then weekly payments are $250 or $13,000 per year

The savings of paying weekly are due solely to the extra $1,000 paid per year. To achieve the same savings with a monthly payment simply increase your payments to $1,083 or $13,000 per year. It’s as simple as that.

The best advice is to always match your mortgage payment to your pay schedule.

Matching payments to pay cheques minimizes the chance of missed payments and ensures you get the lowest possible renewal rate.

If anyone one is curious please feel free to try it out and post your results.


#82 bigpictureguy on 07.12.09 at 11:08 pm

Ottawa Pete

Dude. The point of the article is futures index in Canada is forecasting a 20% drop and with no end in site in terms of a recovery. Ignore the lame azz economists of CREA, Developers and Banks

#83 Across The Fence on 07.12.09 at 11:45 pm

. If they dont get the unemployment numbers to reverse soon a depression will result, it is totally unavoidable. This fall the first of this cohort runs out of unemployment insurance and after that 600 000 American men will become destitute and desperate EVERY THIRTY DAYS. 5 years from now you may not recognize the USA. They allowed the private sector to create money. The founding fathers where adamant that only Congress should ever have that power. They knew 200 years ago what is happening now would be the result if you let the clever greedy men control the ability to create money.
Oh by the way, the price of gold will fall. Every one has predicted gold to go to the moon as a result of what is happening. Not so sure on that.
Gold may be hopelessly over valued in dollar terms now. In real terms you can buy twice as much American housing with the same amount of gold as you could 2 years ago. Three times as much in oil, 10 times in nickel, 4 times in copper and about 1000 times more in Baltic Dry Shipping.

#84 Mike (Authentic) on 07.13.09 at 4:21 am

#57 Barb ” The major population centres keep attracting the crowds — despite the wonderful rural places to live around there. (But just look at London, England, isn’t it the same thing, so many people want to live in the bustling big city.)”

Hold the phone. I’m living in that London, UK city right now and let me tell you first hand, you don’t want your city to be a “world class city”. It’s overly expensive for everything, overly populated (think PNE/CNE exibition walking ALL year round) and M25/London downtown traffic (4 hour rush hours!), don’t get me started on that. Also there is no where to go to get away from the people/madness of the whole lot.

Who wants all that? Fun for a couple months then you feel like you are just ratting the cage.

FYI, I’m a inner-city loving, living person back in Canada. :)


#85 ottawa pete on 07.13.09 at 11:43 am


Dude. I always have and always will….I sold over a year ago at the local peak in my price range :) I simply thought you and others on this blog would find the information on securitization of home equity interesting especially as it would allow homeowners who have equity (according to appraisals) to diversify. They could also squander the money if they wish, but at least they wouldn’t be paying interest…

#86 AppleCrunch on 07.13.09 at 4:18 pm

Looking for a hot property?

Check this one out… It is a steal:

#87 Bluefood on 07.13.09 at 5:05 pm

Wonder what is driving these markets? Have a read of the attached article, it’s US specific, but I can tell you as a banker, we in Canada are very much engaged in the same practice…..enjoy!!.html

#88 Republic_of_Western_Canada on 07.14.09 at 4:49 pm

#86 AppleCrunch –

An Ontario resident’s dream! Just outside of Toronto within easy commuting distance, on a huge lot with wood heating, it has both municipal water AND windows.

Apparently the ground is soft and fertile enough to dig and work for agriculture and other purposes, too!