Under water

under water1

A property I found fetching in April, and toured, was listed at $649,000. The listing agent emailed me this week: it’s now $499,000.

This interests me for two reasons.

First, it sits on the western fringe of the GTA Republic, where the local real estate board’s whipping potential buyers into a frenzy with media releases about runaway sales and spiking, record prices. So, what’s the deal with a 23% price reduction? Turns out, they’re everywhere in the 905, north of 500K.

Second, the owner’s now under water. She owes $501,000, having paid $689,500 two years ago, coughing up just over $200,000 in cash for the down and closings. I know this, because I know her. But if I didn’t have personal knowledge, her negative equity situation would go unknown, unreported and unrecorded.

This is unlike in the US, where excellent stats exist on exactly how many families now owe more on their homes than those properties are worth, and even projections on what this situation will look like in six months. More on that shocking situation in a moment.

Negative equity is the thing Canadians should most fear. We have few foreclosures, almost nobody being thrown into the streets and it’s rare to hear of a sheriff seizing a home and changing the locks while a bank agent sits outside in a sedan with smoked glass. Sure, people go bankrupt, can’t make their payments and go through year-long power of sale proceedings. But even that happens without public disclosure.

But this is not the danger.

Instead, in a country where the average downpayment on all properties is now less than 10%, where zero downs are common again, where 35-year amortizations mean monthly payments hardly touch the principal and where 95% financing (or more) is virtually the norm with all new buyers, we are always just a couple of rough months away from personal disaster. A general decline of 10% in real estate prices would put almost all 2009 buyers under water. A 20% reduction would be Canada’s financial Nine Eleven.

Here’s why:

Say you bought a new starter house in the Toronto suburb of Brampton months ago for $359,000. You put 5% ($18,000) down, and borrowed the closing costs ($6,000) from your folks. Your mortgage is $341,000 and the combined monthly is $2,300.

If housing prices drop by 10%, the property is worth $323,100. If the dismayed owner decides to sell (or is forced to do so by a job loss in the household), he’s on the hook for commission (5%, or $16,155), mortgage penalty (3 months, or IRD, at least $4,500) plus legals and moving ($1,500 and three cases of beer). In other words, the homeowner will walk away from the deal with $301,000, which means he has to take a cheque for $40,000 to his lawyer on the day of closing.

Under water – and only a 10% correction. In this case, the loss is about $65,000. If the homeowner didn’t have cash to get out of the deal – after being lucky enough to find a buyer willing to pay full market price – he’d be trapped in this house.

Now imagine if the market dropped 20%. The loss here would double.

You might think that’s just impossible, but so did homeowners in Fresno, Cleveland, Miami, Los Angeles, Bakersfield, Fort Myers and a host of other places where property values have fallen precipitously. They saw housing values soar, stabilize, then plunge after reaching levels unaffordable to most families. And they weren’t just the no-money-down, fog-a-mirror subprime set. Falling property values have infected entire communities and every homeowner living in them.

In fact, a new study estimates that (are you sitting?), 48% of all mortgage holders in America will be under water by March. That’s 25 million households with mortgages larger than the total value of their homes.

This is not a rogue number. There were already 11 million families in negative equity by the end of 2008 and 15 million four months ago. So if housing prices drop another 14% (on top of the 30% the country has already experienced over four years), 25 million houses will be unsalable by their owners, many of whom will chose to walk.

(Sadly in Canada, walking is not an option. You’re still responsible for the mortgage amount, penalties and costs, even if you deposit the keys up your loan officer’s rear.)

Of these underwater households, 41% are expected to be ‘prime’ borrowers – Leave-it-to-Beavers who bought their homes with significant downpayments and have conventional mortgages. Half of those will owe an astounding 25% more than their houses are worth, making a sale virtually impossible.

And this: It’s estimatesd that within half a year 77% of borrowers in New York City will be in negative equity, 65% of mortgage-holders in Chicago and 93% in Fort Lauderdale.

There, but for the grace of God, go we?

We're not making this up. Really.

“Right now, it is a seller’s market … We’re constantly in multiple offers. Recently, a two bedroom bungalow, with no parking and an unfinished basement had four offers. It was listed at $329,000 and it sold for $375,000.”
– Candace Kaszas, Toronto realtor, National Post August 6, 2009

135 comments ↓

#1 Bottoms_Up on 08.06.09 at 10:16 pm

Striking Garth, just striking. You were waiting for the perfect time to unlease these stats eh? I hope your bomb shelter is coming along nicely, when ‘Bottoms_Up’ shows up at the door, please let me in.

#2 Keith in Calgary on 08.06.09 at 10:17 pm

Calgary SFH are down 17% since the July 2007 peak.

Add in another 7/3% of realtor fees…….plus the current norm of a 5% +/- discount and you’ve lost between 25-27% (at a maximum) if you bought a single family house in that period, and decide to sell.

I fugre that there are roughly 30,000 +/- upside down homeowners in Calgary right now based on the 2007/08 CREB sales figures.

Of course the Calgary Herald, laying on their financial death bed, would never publish that little tidbit, it would upset their only remaining advertiser of note…….the real estate industry.

#3 blobby on 08.06.09 at 10:21 pm

Hi Garth

I thought the 0 down thing was outlawed in October last year? How the heck are people getting away with putting next to nothing down now?

Im confused. (still new to this country – dont understand the rules yet)

As reported here earlier, major banks will gift a 5% downpayment to borrowers as a cash back. Many other avenues are also available from brokers and developers to achieve a zero down. — Garth

#4 squidly77 on 08.06.09 at 10:37 pm

the biggest threat to Canadians is the unreported numbers of toxic mortgage products out there these people put down the required 20% to avoid regulation
these things will blow sky high and crash the market
big time

#5 Homeless on 08.06.09 at 10:47 pm

Garth,

Being selfish and waiting to buy a home, i want RE to go down but with every passing day i doubt if that would happen at least in near future. Why the Government would let his happen. In near term people would be running to buy homes before their low rate pre approval expires and new home tax kicks in driving prices even higher.

#6 No Condo in the 604 on 08.06.09 at 10:58 pm

Garth, do you care to cast a prediction for Vancouver?

since Peak prices, i’ve discovered couples in their late 30s/early 40s, all first time homebuyers, who dumped inheritances as downpayments into homes that they bought for 600k, 700k, and 800k. i know that two of these homes are 35yr mortgages, and for all three, they required major renovations, into six figures.

thing is: before their inheritances they were living hand to mouth. and now, although “homeowners”, they are living hand to mouth once again, only they have a mortgages spanning quite possibly for the rest of their natural lives.

what happens to folks like this?

#7 Scott on 08.06.09 at 10:58 pm

Garth, another excellent post…thou I think your math is wrong. If the hypothetical buyer put 5% down, that $18,000 subtracted from the original $359,000 would leave a mortgage of $341,000 not $311,000. So, if forced to sell, that cheque to the lawyer would be $40,000, not $10,000…even worse!

Indeed. Corrected with the even more devastationg numbers. — Garth

#8 Nostradamus Jr's Analyst on 08.06.09 at 10:59 pm

I think Vancouver just used up it’s backlog of fools in July.

I’ll be back in 2011 for the 50% off sale.

#9 hal smith on 08.06.09 at 11:04 pm

It kinda reminds me of Jonestown………

#10 Bob on 08.06.09 at 11:08 pm

man~ i thought you could just drop the key and walk away~ mortgage holders are gonna be in some serious trouble…

#11 Sanchez on 08.06.09 at 11:13 pm

Here is the Deutsche Bank report link (for U.S.); sign up for site if you want to read the PDF file.

http://www.docstoc.com/docs/9509772/Debt

#12 Joseph on 08.06.09 at 11:19 pm

In relation to your comment, “This is unlike in the US, where excellent stats exist on exactly how many families now owe more on their homes than those properties are worth, and even projections on what this situation will look like in six months … ”

It might be worth considering on your part, though I am uncertain as to its feasability (or required level of research), to use this blog as a springboard to produce a web site that provides these shadow stats, whether it be for the CPI and unemployment numbers (what the real rates are as opposed to the government released numbers), negative RE equity numbers, etc..

Your comment regarding homes not selling over $500K is also interesting as my dad recently spoke to a real estate agent here in Ottawa, and he also stated that homes above the $500K range are sitting idle.

#13 Mike B on 08.06.09 at 11:24 pm

Sellers market here in Toronto!!! ???? You mean if the property is below 500k ??? Right?? I personally know of a half dozen homes above that price that are sitting… these are in prime areas in the city. But a few months ago it was a “balanced” market now in mid summer it is proclaimed a sellers domain. I know of a few houses that got multiples but most of the offers were well below asking.. You gotta take the realturds info with a big grain of salt.

#14 Chris L. on 08.06.09 at 11:29 pm

Garth, Canada is immune from a real estate correction. Didn’t you hear it in the news…multiple times?!?

If it hasn’t happened yet….ho, hum.

Plenty of gullible people going massively into debt as if the world didn’t change a few months ago. Oh well. I do try my best, but alas two close friends have gone astray. Their loss I suppose, I’m working on plans to build a “small home”…you know one that used to be popular. Guaranteed under 1,000 sq ft, but not sure exactly how much under. Now I just need someone desperate to sell me a plot of land on the cheap adjacent to city amenities with enough acreage to grow food and raise egg layers :) I think farmers will part with an acre or two when times get tough.

#15 Industrial Guy on 08.06.09 at 11:46 pm

RE market crash #2 will start in earnest after Labour Day. The dominoes are wobbling.

“(Aug. 6, 2009 SP) Toronto – A report by Equifax Canada reveals that more Canadians are falling behind on paying their bills on time with 500,000 Canadians now three months behind on credit payments. Some say its a sign of the times with Canada in the midst of a recession.” The Christmas season will be a nightmare for retailers in Canada if this trend continues.

Credit card debt could become Canada’s version of the Subprime mortgage disaster if enough consumers default over the coming months. EI benefits are running out for over 100,000 workers who were booted from their jobs after Labour Day 2008.

The mini gold rush rush for new cars in the US ends Labour Day. With it starts 6 months of truly dismal sales. All the “Cash for Clunkers” program has done is clear out the inventory of 2009 models and potential buyers from the market. If you turn all your September, October and November buyers into July and August buyers. What happens after Labour Day? Shut the lights and come back in January? The decision to destroy the engines of these “Clunkers” will create a huge supply shortage in the used car market on both sides of the border. Can’t afford a new car? Too bad. All the good used one were destroyed.

#16 Grantmi on 08.06.09 at 11:49 pm

Same with the Fraser Valley Real Estate Board in BC .. Garth! It’s all peaches and cream all over again!

The blueberry’s are ripe for the picking.. and so are the 1st time home buyers!

http://www.fvreb.bc.ca/statistics/Package%20200907.pdf

“Move along! Nothing to see here!”

#17 Crash on 08.06.09 at 11:51 pm

Garth’s example reinforces just how close to the ragged edge we really are. There is no margin for error now.

#18 Roger in Victoria on 08.06.09 at 11:54 pm

There is another difference between Canada and the US – the banks will not agree to a “short sale”

In the US if the owner tries to sell and comes up short to pay off the mortgage the bank may accept partial payment of the mortgage balance to get the property off the books. In Canada they won’t do this because the entire mortgage is covered by CMHC insurance if the buyer took out a high ratio loan. Why would the bank accept partial payment when they have insurance against the seller defaulting on the mortgage.

So… A Canadian seller that goes underwater and does not have the savings or ability to get a loan to pay off the shortfall on the mortgage can’t sell. The bank will refuse to clear the mortgage off the title and any deal the seller negotiated will collapse. The buyer will sit in their house watching it drop further in market value until they tell the bank to take it over, go bankrupt or get a court ordered sale/foreclosure. And in Canada if you send the keys in the mail you are still on the hook for the mortgage.

This is going to get real ugly in two or three years when all these zero down, 40 year amortization mortgages come up for renewal and rates are back to historical levels.

#19 Ultraman on 08.07.09 at 12:00 am

It’s not appropriate to say negative equity. The politically correct term is equity challenged.

#20 Dean-oh on 08.07.09 at 12:44 am

BULLISH NO MORE

The headline from the latest Elliot Wave Theorist which I subscribe to. Bob Precther is calling an end to this bull market rally giving the possibility of another 300-500 hundred point pop in the Dow. They say the Daily Sentiment Index is at 88 which is the highest since the Dows Oct 9, 07′ peak. Just before the Dow imploded. Apparently we are peaking at the same time the media is proclaiming the birth of a new Bull market! The issue came out a week and half early due to the urgency of the matter. I hope it’s not true. But if it is, a market implosion would take out any bear market rally in Canadian real estate. Elliot wave is calling for a Dow of under 1000 in the not too distant future. -Just a heads up.

#21 Nostradamus Le Mad Vlad on 08.07.09 at 1:07 am

“Under water” — I love the sea, whether I was surfing or swimming underwater with no mask, eyes open and holding my breath for two to three minutes.

Alas, no more. Life goes on, I guess. No ocean in the Okanagan (unless one looks at the ocean of For Sale signs!).

“There, but for the grace of God, go we?” — Are you referring to Tim Geithner (link further down) or Cdns.?!
——
The start of the “October Surprise?” If the US goes belly-up, most of the western world follows. —
http://www.doomdaily.com/2009/the-united-states-has-officially-hit-the-treasury-debt-wall/

Except for the few who look to reap the rewards. —
http://bailoutsleuth.com/09/08/358/morgan-stanley-others-to-earn-1-billion-on-aig-collapse/
——
Two sides to each story. One = Recovery (m$m BS, which is why a lot of them are going under). Deux = Collapse. Accurate, but a fifty-fifty call. —
http://www.larouchepub.com/other/2009/3630collapse_kills_recovy_fantasy.html
——
I’m not sure god could help us if this is true! —
http://business.theatlantic.com/2009/08/is_geithner_the_next_fed_chairman.php
——
Didn’t Wells Fargo recently pull out of Canada? —
http://www.google.com/hostednews/ap/article/ALeqM5i5M2ABQskC_C3rHnCufGlOYQHnogD99TD5F00
——
This is only for those who enjoy being confused with numerology! —
http://www.mirror.co.uk/news/weird-world/2009/08/07/couple-to-marry-at-12-34-56-07-08-09-115875-21577826/

#22 Jet Pilot on 08.07.09 at 1:46 am

Garth,

Did I miss something in the Brampton example you provided? Wouldn’t a selling price of $359,000 less a downpayment of $18,000 (5%) result in a mortgage of $341,000 as opposed to the $311,000 you quoted?

With that $30,000 difference applied to your sales example of $323,100, once all the fees are applied, wouldn’t the homeowner instead have to cough up north of $40,000 to the lawyer on closing day?

Just trying to reconcile the math.

JP (in Brampton)

Correct. The actual loss (factoring in the downpayment and closing) is north of $60,000. Yeow. — Garth

#23 Future Expatriate on 08.07.09 at 1:54 am

The gov’s and bank’s motto:

Why make the same mistake once when you can do it twice?

#24 Bilbo Bloggins on 08.07.09 at 1:55 am

Garth my dear,

Intelligent and rational individuals like yourself KNOW what is supposed to happen in the end game under a free market.

However, the wildcard is government intervention.
I fear that like the US, once the doggie doo hits the fan, the federales can and will step in with TARP 2.0 and bailouts galore.

In the US, idiots who purchased more house than they could afford are going to have their mortgage rates capped, payments forgiven and so forth.

Meanwhile, modest purchasers who continue to make their payments on time and at market rates, don’t see a dime.

Look at the news articles down. Some overleveraged specuvestors purchased rental properties and even though their tenants are paying the rent on time, they in turn pocket the rent money and decide not to pay the mortgage. Why?
Because by not paying, they get federal assistance.

I think in the end, tax payers and future generations will be on the hook for all this frenzied buying.

It’s FCKING disgusting, but it’s inevitable.

#25 dd on 08.07.09 at 2:08 am

“In fact, a new study estimates that (are you sitting?), 48% of all mortgage holders in America will be under water by March.”

And all the news media focuses on is pricing at the moment. If the news media tomorrow reported home prices as flat the stock market would add 5% in a heart beat.

And where is this recovery coming from?

#26 dd on 08.07.09 at 2:13 am

…Of these underwater households, 41% are expected to be ‘prime’ borrowers – Leave-it-to-Beavers…

add to that equity loans, car loans, student loans, and credit card loans. Have the banks worked through these losses yet?

#27 David on 08.07.09 at 2:26 am

When White Siberian Tigers start hitting the bottom of the pool, it is time for pool break. Nassim Talibi talked about Black Swans, so this is so YIKES!
There is something about stacking tinder wood and carelessly throwing matches that goes together like ham and eggs. Real estate reality 101 and do not be late for class and do not be asking for a bail out from us dummies who knew better. It really will not hurt to cough up hundreds of thousands when people have to sell or experience job loss. Trust your local realtor for expert advice at 6%, which equals most down payments. It was all too good to last.

#28 HouseBuster on 08.07.09 at 2:31 am

Garth, What 905 are you talking about? Because I don’t see that happening in Oakville or Burlington.

#29 Wayne Lewis on 08.07.09 at 2:41 am

Don’t forget the other ‘knock on’ effect.

My old work friend re-mortgaged (money from the walls) his home to provide his son and wife a down payment on a home worth almost double of his.
His home, valued at the time at 380k, was paid off in full and retirement was the party of all time – wicked!

The young couple needed 180k to put down on a McMansion in the high 600’s and the mortgage payments, albeit at low interest is an obscene amount.

But hey, they both work, new baby, shiny car and holidays … until a pink slip was issued on one of wifey’s jobs.

Now, the value of both homes has slid, payments are in arrears and it looks like Daddy (180k up guy) might need a Walmart greeter job to go golfing – no powered cart.

This is sad but true.

#30 Mike Hunt on 08.07.09 at 6:47 am

#24 – the sad reality is that this happens in Canada already, but without any discussion or input from the populace.
Instead, the govt will just buy up more crappy loans from the banks (like the $74B they did last year), and create more artificial demand while sweeping the toxic crap under the rug.
How long can they do this? How much time do you have?!

I really wonder who the stupid ones are – those who become overleveraged only to be rescued by govt bailouts (or the equivalent) or poor schleps like us that “manage” their finances more conservatively but are given no handouts.

I gotta be honest, I feel stupid for being so fiscally conservative all these years; it clearly has been the wrong thing to do…

#24​​ ​Bilbo Bloggins​ on 08.07.09 at 1:55 am

Garth my dear,

Intelligent and rational individuals like yourself KNOW what is supposed to happen in the end game under a free market.

However, the wildcard is government intervention.​
​ I fear that like the US, once the doggie doo hits the fan, the federales can and will step in with TARP 2.0 and bailouts galore.

In the US, idiots who purchased more house than they could afford are going to have their mortgage rates capped, payments forgiven and so forth.

Meanwhile, modest purchasers who continue to make their payments on time and at market rates, don’t see a dime.

Look at the news articles down. Some overleveraged specuvestors purchased rental properties and even though their tenants are paying the rent on time, they in turn pocket the rent money and decide not to pay the mortgage. Why?​
​ Because by not paying, they get federal assistance.

I think in the end, tax payers and future generations will be on the hook for all this frenzied buying.

It’s FCKING disgusting, but it’s inevitable.

#31 OttawaMike on 08.07.09 at 7:04 am

A couple of points,
Here in my community I have heard of 2 familys declaring personal bankruptcy in the past 6 months.
Both have been allowed to remain in their homes, even though they were fully mortgaged out. The banks logic being that they would take an even bigger hit going through the POS process. Better to just let the victims keep paying to a new schedule. After all almost everybody else rents from the bank.

I’m still poking around trying to find a RE bargain, to no avail.
I Looked at a 100 x 150 ft lot near the river yesterday c/w well and septic but the caveat is after the mobile burnt down the city will not permit any new construction- at all. Minimum footprint req’d 150′ x 150′.
Did the realtor put any caveats in his listing? Come and claim your prize if you said no.

#32 View from the South on 08.07.09 at 7:08 am

“We have few foreclosures, almost nobody being thrown into the streets and it’s rare to hear of a sheriff seizing a home and changing the locks while a bank agent sits outside in a sedan with smoked glass.”

No, around here (Windsor) folks pack up and leave quietly. The neighbours don’t notice until the Dodge Caravan isn’t in the driveway anymore and there’s a legal notice taped to the front door.

#33 Samantha on 08.07.09 at 7:10 am

“Canada lost 45,000 jobs in July: Statistics Canada”

http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20090807/jobless_numbers_090807/20090807?hub=TopStories

#34 Nick on 08.07.09 at 7:44 am

RE #20 – Dean-oh

>Elliot wave is calling for a Dow of under 1000 in the >not too distant future. -Just a heads up.

Did I read that right, DOW under a 1000? Crikey!
I don’t know much about Elliot Wave Theory so do you have any links regarding this stuff? I’d love to read it and see what it’s all about.

Thanks!

#35 Don't Believe the Hype on 08.07.09 at 8:00 am

It’s all pretty simple. Don’t take advice from anyone who is trying to sell you something. Especially someone who is on commission. The real estate agents (pimps) are no different from the car sales reps, Future Shop sales reps, mortgage brokers, etc. These folks run on raw greed. They are in commission sales because they are greedy – the model dictates it.
So, remember folks, don’t take candy from strangers and don’t take advice from drooling commission driven salespeople…

#36 The Great Gazoo on 08.07.09 at 8:13 am

ABSOLUTELY UNREAL AND SICKENING!

Yesterday the Toronto Star website had a headline for the WHOLE freakin’ afternoon and night that the Toronto real estate market is HOT HOT HOT!

Today, this morning, hidden in the top right corner is the small headline “jobless rate holds steady” even though an absolutely staggering 75,000 private sector jobs were lost (again offset by poor guys becoming self employed ie. cutting grass for old ladies in their neighbourhood and calling it a business – no exageration I know a guy as such!)

Well I thought the Toronto Star was a social justice, left-leaning, anti-right-wing-bible-thumping-war-mongerers, for-the-people type media outlet, nevertheless they are sellouts like the rest reporting the news as deemed appropriate by their largest financiers – the re mogul sleaze and vermin.

Today we have news that Canadians are FURTHER falling back on their bill payments (24% from this point last year)…

This housing crash will be worse than Garth ever thought!! Thank you Toronto Star for being a propaganda machine!!!!

#37 PC on 08.07.09 at 8:14 am

I love the smell of reality in the morning…

July job losses worse than expected

Module body

59 minutes ago

By Louise Egan
ADVERTISEMENT

OTTAWA (Reuters) – More Canadians lost their jobs in July than expected as employers continued to cut workers even though the economy is believed to be on the mend after its worst recession since the early 1990s.

Statistics Canada said on Friday the economy posted net job losses of 44,500 in the month, nearly three times the consensus forecast. But the unemployment rate remained unchanged from June at an 11-year high of 8.6 percent as fewer people stayed in the labor market looking for work.

The Canadian dollar fell to a one-week low against its U.S. counterpart after the worse-than-expected report, hitting C$1.0851 to the U.S. dollar, or 92.16 U.S. cents.

The weakness was widespread, cutting across all types of workers and sectors, with the heaviest layoffs registered in the construction industry and accommodation and food services.

“It probably highlights the downside risk to third-quarter GDP,” said Sal Guatieri, senior economist at BMO Capital Markets in Toronto.

“We still think the economy will expand in the current quarter, but consumers could continue to struggle until job losses slow, if not end,” he said.

The Bank of Canada and most private-sector economists say the economy will start to grow in the third quarter after three quarters of contraction. The central bank projects 1.3 percent growth in the July-September period.

The Bank of Canada has promised to keep its benchmark interest rate at an all-time low of 0.25 percent through June 2010, conditional on inflation staying under control.

But if the outlook worsens, the bank could either keep rates on hold for longer or consider creating money to buy bonds in the market.

“(The report) is likely to keep the Bank of Canada cautious, maintaining current, very stimulative conditions,” said Paul Ferley, assistant chief economist at Royal Bank of Canada.

Prime Minister Stephen Harper has tried to dampen any hopes of a quick rebound in the job market, warning of continued layoffs for several months to come.

Economists, disappointed as they were by the report, pointed out a silver lining — the worst-hit sector was short-term summer youth employment. Employment was down 11 percent for students aged 15 to 24 in July from a year earlier.

“This weakness should get reversed in September,” said Ferley.

Full-time employment in July declined by 29,000 and part-time employment fell 15,000. The private sector dropped 75,000 workers from payrolls while the public sector losses were marginal, and the number of self-employed rose by 35,000.

Hourly wages for permanent employees rose 3.2 percent in July compared with a year earlier, down slightly from 3.4 percent in June.

#38 PC on 08.07.09 at 8:17 am

I love the smell of inflation in the morning…

Tim Hortons quarterly sales rise, but CEO warns of potential price increases
Thu Aug 6, 3:02 PM
David Friend, The Canadian Press

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* Printable View

By David Friend, The Canadian Press

TORONTO – Coffee giant Tim Hortons Inc. (TSX: THI.TO) pulled up its sales and profits in the latest quarter as it overcame aggressive promotions from competitors, but the company’s CEO warned that the price of a double-double and doughnut could be increasing in some parts of the country.

Chief executive Don Schroeder said Thursday that price increases could be implemented in certain regions to offset cost pressures from both higher food prices and rising minimum wages.

#39 Book Bug on 08.07.09 at 8:28 am

Did you look behind the job loss numbers today?

Total Job Losses: 44,500

BUT, true losses were

Private Sector Job Losses: 74,900
Public Sector Job Losses: 4,400
Total: 79,300 – almost twice the reported figure.

Offset by a
Self-employment increase of: 34,800

PLUS, the total unemployment rate reported as UNCHANGED.

Which means ~40,000 people stopped looking for work, 44,500 lost their jobs and 34,800 started their own company to try and make ends meet.
So in June we had 119,300 people leave the full time work force for less lucrative options. A city the size of Oshawa lost their paychecks in one month.

#40 miketheengineer on 08.07.09 at 8:31 am

Garth:

You analysis is correct. I believe it will be much worse. Thousands have purchased homes with little down. When I purchased 10 years ago, 5% was all that was needed. I have been in financial trouble several times, due to automobile failures etc, the caused me to re-finance etc. Based on my own experiences and those of my friends, your analysis is correct, and the next 12 months will prove it.

#41 Jonathan on 08.07.09 at 8:32 am

Canadian lending standards has the benefit of the power of sale, rather than foreclosure. That certainly helps the supply side of the equation.

However, on the other hand, who is going to take a chance buying a property in Canada when they are plummeting? If it falls further, it’s not like you can just walk away from it. In the states, buyers can jump in at any moment with little remorse. So America definitely has the benefit on the demand side of the equation.

#42 smw on 08.07.09 at 8:43 am

Garth,

You findings are true of many Canadian cities. Here in Ottawa(Civic Hospital/Dow’s Lake through Westboro) where prices aren’t as inflated as VAN or TO you will find only a handful of “acceptable” homes priced under $450K. The bulk of the homes sit in the $450K – $700K price range, and aren’t moving. These homes are out of the price range of entry level buyers but yet too expensive for a person with lots of skin in the game to buy unless they take on the equilent of another mortgage.

My “Boomer” neighbor TWO years ago decided to do a reno instead of moving, his main reason was he didn’t want to have to cough up another 200K+ to buy and be stuck with another 10 years of mortgage payments, so he reno-ed instead, probably at a 1/4 or a 1/3 of the cost of moving.

A close “Gen X” friend in the interior in BC in 2008 just finished selling the house he bought in 2001 for 200K for 550K and then preceded to buy an 850K home. Instead of being up 300K, he now owes 300K+.

This prophecy has already been foretold in my circles to those that wanted to listen. The low end homes will go first. They are in demand by those that are, either over their head in their current mortgage/unemployeed and have to downsize; or new buyers.

The low end homes are now competing for all the middle end home dollars, this will put EXTREME downward pressure on the middle end because bluntly, there aren’t any buyers for these homes that can’t even be bought with 5% down, a 35 year mortgage and ultra low credit.

If Garth’s post suprised anyone, give this a go, check out craigslist and see how many HUNDREDS of apartments(Lets call them investments) are for rent. 450 yesterday in Toronto alone. I see a lot of stainless steel and granite, more importantly people asking mortgage prices for apartments…

Vacancy rates are edging higher…

http://www.cmhc-schl.gc.ca/en/corp/nero/nere/2009/2009-06-10-0815.cfm

To quote the great David Wilcox, “Its right there between the lines”.

#43 smw on 08.07.09 at 8:56 am

#12 Joseph

Shit I missed your post but I concure with your message. For example, one place I’m watching that has been on the market since spring started out at $550, now just under $500K.

I think it says a lot when the majority of Canadians, if they had to buy their current home today, couldn’t afford the mortgage.

That is the definition of an asset bubble! Wait till people HAVE to start dumping their tulips.

#44 smw on 08.07.09 at 8:57 am

#3 blobby

The reason you don’t understand the rules I like most of us, are having a hard time follwoing the ever changing gimmicks from the finance department.

#45 Justin on 08.07.09 at 8:58 am

Homes Above $500,000 Sitting Idle

Seasoned Real Estate Agents have a term for the driving force behind Home sales. They call it the Bump.
i.e. Rookie buys Condo or Starter Home (e.g. $200,000 – 300,000) which then pushes existing owner into next price bracket (e.g. $300,00 to 500,000) upon sale, which then bumps those owners up the next level etc.,etc.

The fact that Homes above $500,000 (in saner regions) are either not selling or selling at a reduced price means that the bump has broken down. i.e. It appears the more seasoned Home owner understands the true nature of our economic situation. Note: The economy is not recovering as the fundamentals (lending and productivity) have not improved. A slowdown in the rate of decline should not be interpereted as a plus. The current rally will by necessity end and a new bear market occur towards year end.

The Greatest Fool has indeed arrived!

#46 Davinci on 08.07.09 at 9:22 am

My father walked away from 2 houses in his life time. Not sure how he did it as we are not on speaking terms.

During this crisis in the USA they changed the laws several times to keep people in their homes. I has not worked but I expect the same from our government.

Instead they should let people fail it will be painful and the people that get freashly printed money will benifit, but a lesson will be learned that will be passed down.

With that said I expect our governemt to go as far as forgiving loans. It is money created out of nothing you know.

#47 Kevin in Winnipeg on 08.07.09 at 9:37 am

700 sf 2 bedroom Winnipeg home by the airport (end of runway) – Asking $152,000… sold for $175,000.

An acquaintance I know, he is 25 years old and his 23 year old girlfriend just signed off on a $450,000 house at 1.5% interest in the Waverley West debacle. He thinks it’s a great deal.

People are insane!

#48 MikeB on 08.07.09 at 9:38 am

The funny thing about being under water is that in Toronto, even with a whopping 10% unemployment, people are still freakin buying houses. I just don’t get it.
I guess they see the cheap money and say what the heck.
I guess it also means that within a year or so those people who jump in AND loose their jobs or have a work week reduction will say bye bye to their newly acquired homes. So Garth may be right when all is said and done BUT it might not happen till a year or two from now… and that’s assuming that the governments just sit tight and do zippo…. is that likely??

#49 MikeB on 08.07.09 at 9:43 am

Too insane to even discuss is that with an unemployment rate in Toronto of 10% we still give our inside and outside workers a 6% increase in pay and let them keep their banked sick days and for that matter keep their jobs. Our mayor has to go. What a con man. Calls the council to vote on the Friday of a long weekend. Tell me this guy is not a political minded socialist. If he gets in again I am moving out of the city. Sorry just a hair off topic.!!!

#50 Larry on 08.07.09 at 9:47 am

My biggest fear in all of this is that the govt will bail out these idiots who bought houses they can’t afford. It’s a disgrace what has happened in RE these past 5 years everywhere in Canada except QC. I feel i have lost out big time not buying that house here in Calgary in 2006, but the wife and myself just cannot accept to pay over $400K for an average house in a city like Calgary. The sad part is that the financial prudent people are being screwed. If interest rates had not been lowered prices would have dropped at least 10% here as the trend had started in november. Just the other night we sat down and calculated the interest we would pay on a 400K house with an interest rate of 8% holy shit we’ll continue to rent that 400k house would cost near 1 million.

#51 Cash is King on 08.07.09 at 10:18 am

Enviromental clean-up obligations of closed GM plants simply vanish in bankruptcy. Taxpayer to be left with clean up costs. Green shoots, protect the enviroment, electric cars, blah, blah, blah.

http://www.freep.com/article/20090807/BUSINESS01/908070382/GM-gets-to-walk-away-from-its-polluted-sites

Unemployment in Windsor is now 15.3%. That is after all the Chrysler and (what’s left) of GM employees returning to work after the bankuptcy. That figure does not included the 10% increase in Ontario Work applications.

“Will the last person leaving Windsor…..

#52 TS on 08.07.09 at 10:19 am

Too bad that emotions and reality run on completely different planes.

The media, in its own self interest, tries to blow up even the smallest shred of news and skew it to the positive…gotta keep those real estate ad revenues coming in!

Regardless of the fact that the US jobless numbers were better than expected last month our biggest trading partner is still in HUGE trouble. Another round of mortgage foreclosures is beginning to be seen in the ‘prime’ market, and commercial real estate is getting close to desperate. And, the US government is spending itself into oblivion! The US debt will soon top $12 TRILLION…tax revenues are in the toilet with personal taxes down 22% and corporate taxes off 57%.

Garth has been warning about higher interest rates looming….one thing to watch is what is happening in the US (we are NOT immune folks)…. so far this year the 10-year Treasury yields have ballooned from 2.06% to 3.75%…a sign that the world financial markets have recognized where interest rates are heading.

As Garth continues to point out, the underlying fundamentals are just terrible and the spin and hype coming out of governments and media is almost criminal. Unfortunately the vast majority of people do not have any live brain cells and they react to the sound bites they watch on the MSM….and run off to load up on more debt.

When will society learn that we cannot borrow ourselves out of a debt crisis? Will we ever get honest politicians who have the guts to tell Canadians that we now have a structural deficit caused by ill-advised Conservative cuts to the GST coupled with record expenditures (even before the recession hit), and that the only way out of this financial quadmire is higher taxes?

Harper and Dim Jim will continue to mislead the Canadian public about all of this…and the average Canadian is far to stupid and uninformed to even realize it. Sad. So sad.

#53 Chris no longer in England on 08.07.09 at 10:42 am

‘The recession and the rain eliminated another 45,000 jobs in July…’

http://www.theglobeandmail.com/report-on-business/job-losses-deeper-than-feared/article1244299/

“With the record rain, who needs waiters for the patio, or travel-related services?” he said.

[Philip Cross, chief of economic analysis at Statistics Canada]

#54 ralph on 08.07.09 at 10:43 am

Memo to Mike Carney:

Economy sheds 45,000 jobs in July
(by Canadian Press)

#55 Slice on 08.07.09 at 10:43 am

Two points:

i) My wife lost her job some time ago. She faithfully gets up each day and spends hours looking for a position. Because her EI has run out, the government no longer counts her as unemployed.

ii) An associate of my wife lost his job. To keep up appearances he has become a self-employed consultant – therefore Stats Canada does not count him as unemployed either. His income since January 2009?

$2,000

There is no point in even reading the government press releases anymore.

#56 Bookrat on 08.07.09 at 10:49 am

“Sadly in Canada, walking is not an option.” Garth, please put conditionals on statements like these, (e.g. “most of Canada”) because while the statement may be true in many places, it is not universally the case across the country.

The law in Saskatchewan is still that first mortgages on primary residences are non-recourse, and I’d be surprisied if we were the only jurisdiction where that’s so.

It was an Ontario example. — Garth

#57 kenda on 08.07.09 at 10:56 am

Garth and others,

on what basis is Deutsche Bank claiming that millions of more american families will be under water next year or so?
From the little I know and learnt… higher interest rates, further reduction in RE prices

QUESTION: how come the US will see further reduction in prices (currently already 30% lower) and Canada will not see any? Defies logic and belief … esp since US (vs CA) has higher family average Income(more affordability), less housing space (lower supply), more people (higher demand)

#58 ralph on 08.07.09 at 10:56 am

memo was to Mark Carney not Mike, whatever.

#59 MenWithHats on 08.07.09 at 11:11 am

Glug,glug,glug .

#60 dave99 on 08.07.09 at 11:19 am

#49, Mike B

The 6% increase is over 3 years, and thus will approx equal inflation. Thus it is actually a 0% increase.

The banked sick days are an accrued, earned benefit. To suggest taking them away is no different than your employer advising he is going to confiscate your earned vacation time or pension benefits.

#61 TT on 08.07.09 at 11:24 am

Here’s a quick question.

What real importance does a changing price of a house really have on an owner?

I see a few scenarios if all housing falls:

a) If the price declines and the owner decides to sell taking the loss, they can still move into another similar house based on the proceeds of their current house as that new house they are moving into has also fallen in value the same amount.

b) If you are underwater and are in the above situation (i.e. moving to another similar home), the total debt obligations you agreed to when you bought that first home still exist. So when you move, you end up having to pay off the amount you are underwater, however that was principal that you originally agreed to pay back to begin with!

Point (a) applies too if the price of housing skyrockets. Sure, on paper you’ve made a killing, but when it comes time to move, all real estate around you has also jumped up and you still end up being able to afford the same style of house again as a result…

The only time it becomes relevant is if you intend to completely get out of home ownership or move to a significantly different enough market that you could end getting hurt.

Man, I’d live to sell you something. — Garth

#62 My_view on 08.07.09 at 11:26 am

O.k. since Im one of the few who see passed through the gloom on this blog. Its very interesting how Garth has been looking for homes, very interesting, I wont comment further on that. The zero down product/cash back has been around for a long time, long time. Just think the people that have no savings but have a pay cheque/income, dont care, what do they have to loose (5-7 yrs bad credit), the saviors get punished. The governments agenda is home ownership, it creates communities, taxes and the best part voters.
I do see a correction coming, however it wont be as bad, and the correction will take another 2 years to pan out. This new HST (July 1/2010) and many other provinces will follow. Before then this will ignite another frenzzy, and afterwards the hst will kill new home building/development, that will then lead to a demand for housing, so resales will remain strong.

#63 lili on 08.07.09 at 11:30 am

Hmm… I don’t know what everyone’s sniffing around here. So far Garth and one poster know some people in trouble.

As for the stats, GTA prices were up 6% in July. I don’t see the connection. Anyone else smelling a rat?

#64 PC on 08.07.09 at 11:33 am

Time for Garth and his fellow gold bears to look at what
gold has done against ALL major currencies(CASH).

http://www.kitco.com/ind/Hayes/aug062009.html

#65 The 'VULTURE' on 08.07.09 at 11:46 am

“If my competitor were drowning I’d stick a hose in his mouth and turn on the water.” (Ray Kroc Founder of McDonalds Restaurants.)

Foolish people do foolish things for foolish reasons all the foolish time. Pay too much for a house ignoring downside risk and your will drown in debt. Didn’t do your home work? Did you become to emotional, teary eyed, sentimental? Nice! Homerun for the realtors and bankers. What the heck…free money flowing like crack cocaine.. You can’t get off the addiction to debt? I am going to feed you.

Underwater with your mortgage? Drowning in dept? Your banker parked outside your house across the street? Strange phone calls in the middle of the night? Credit cards maxed out and no longer working? Collection agencies interrupting sex time and meals?
Stay low, real low and keep your big mouth shut. This won’t hurt one bit..

Drowning in debt and no greater fool to save you from your misery. Open your mouth wide sucker…this vultures gonna turn the tap up full blast!

#66 pbrasseur on 08.07.09 at 11:54 am

Bubble = loss of common sense due to false or distorted information.

This blog = Many basic truth and a daily dose of common sense.

Good work Garth!

#67 MenWithHats on 08.07.09 at 11:56 am

Canadian’s fall further behind :

As the recession causes the financial squeeze to get tighter, a credit monitoring company says Canadians are falling behind on their credit payments at “an ever-increasing rate.”

Equifax Canada says the average national delinquency rate at the end of June rose to 1.56 per cent — a jump of 24 per cent over the same time last year.

Equifax defines a delinquent bill as one that’s at least 90 days overdue.

The company says the province with the highest delinquency rate is Nova Scotia at 2.09 per cent, while Saskatchewan has the lowest rate at 1.24 per cent.

It says rates of overdue bills are increasing fastest in Alberta and British Columbia at 32 per cent and 30 per cent respectively.

Equifax says among major Canadian cities, Toronto has the highest delinquency rate of 2.03 per cent.

#68 gold bugger on 08.07.09 at 11:56 am

Don’t Believe the Hype: Your Marxist “greed” is a capitalist’s “motivation” for getting out of bed in the morning.

Do you work for free? Didn’t think so.

#69 Bill on 08.07.09 at 12:01 pm

On a side note, just wanted to let everyone know that I sold all my stocks in my RRSP. Since March 2009, I made over 20%, after paying buying and selling commissions. I’ve reached my threshold, and am now waiting patiently on the sidelines for another stock market crash. Maybe October 09? Janurary 2010?
See ya! Hope you aren’t the ones holding the bag.

#70 Seilfworcehtsa on 08.07.09 at 12:05 pm

The funnymental analysis of the TO RE market tends to give the nod to the buyers and considers the sellers a harmless herd of hasty hightailers leaving money on the table. And thus we have a RE market but a market with a lot of froth on top and as we beer drinkers know a little froth is not a bad thing but too much and we are being srewed by the bartender. The banks have been instructed by the govt. to shovel the money out the door and they are doing so at little or no risk to themselves. The newbe RE buyer thinks it is manna from heaven and the path to his new front door is the path of glory, riches and contentment but when the RE in real estate becomes the reality of the market place effected by the new economy in the coming year or so be prepared for a lot of pain and no gain.

#71 confused and a little crazed on 08.07.09 at 12:06 pm

Hi Garth,

referring to my last post on …fundamentals…thanks again ; however getting a financial advisor is tricky . i ‘m sure you heard of the recent news on fraud investment cons/ ponzi schemes. there is even one 10 million dollar fraud in BC…who do u trust?. i ‘ll read up on the preferred shares of banks and other companies and try to find a reputable investment arm…like RBC…i guess.

thanks :) I o have dividends coming from common shares of GE/ a big US chem comp and Mcdonalds

#72 The 'VULTURE' on 08.07.09 at 12:13 pm

“If my competitor were drowning I’d stick a hose in his mouth and turn on the water.”
(Ray Kroc Founder of McDonalds Restaurants.)

Foolish people do foolish things for foolish reasons all the foolish time. Pay too much for a house ignoring downside risk and your will drown in debt. Didn’t do your home work? Did you become to emotional, teary eyed, sentimental? Nice! Homerun for the realtors and bankers. What the heck…free money flowing like crack cocaine.. You can’t get off the addiction to debt? I am going to feed you.

Underwater with your mortgage? Drowning in dept? Your banker parked outside your house across the street? Strange phone calls in the middle of the night? Credit cards maxed out and no longer working? Collection agencies interrupting whoopie time and meals?
Stay low, real low and keep your big mouth shut. This won’t hurt one bit..

Drowning in debt and no greater fool to save you from your misery. Open your mouth wide sucker…this vultures gonna turn the tap up full blast!

#73 $fromA$ia "Garths Nugget Boy" on 08.07.09 at 12:19 pm

An acquaintance I know, he is 25 years old and his 23 year old girlfriend just signed off on a $450,000 house at 1.5% interest in the Waverley West debacle. He thinks it’s a great deal.

People are insane!
*********************************************

People as well as Kevin, Dont blame the buyers, blame your Prime Minister, the jester and the rest of the Conservative Party. You can’t blame the population, they are proudly Canadian.

#74 Shawn on 08.07.09 at 12:20 pm

Be very glad that in Canada we can’t walk away from our mortgage obligations.

In U.S. walking has unintended consequences like Banks flooding the market with walked-away-from houses driving prices down. Empty houses driving prices down.

Walk aways benefit deadbeats and hurt other home owners.

Under water is not great but the homeowners in Canda will (mostly) just suck it up and mee their payment obligations as they should.

It all hinges on job losses. If job losses get too high then we will get bankruptcies and we may see a flood of houses.

Home owners, please just pay your mortgages. That is what you agreed to do.

#75 Samantha on 08.07.09 at 12:44 pm

“Under water” – someone needs to drain the swamp.

Here is an unwelcome precedent and evidence of more sharks in the water:

“Top court OK’s pension money shift”

http://www.cbc.ca/canada/story/2009/08/07/supreme-court-pension007.html

Here is a video suggesting Japan’s economy is ready to collapse. Treading water gets tiring after awhile…

“Japan’s Future: “It’s Going to Be Scary””

http://finance.yahoo.com/techticker/article/297420/Japan's-Future:-;_ylt=A9j8aphKYHxKPSABbI79ba9_;_ylu=X3oDMTFnYjJmdTJoBHBvcwMzBHNlYwNjb250ZXh0dWFsLXRlY2h0aWNrZXIEc2xrA2phcGFuc2Z1dHVyZQ–

#76 bubbleboombust on 08.07.09 at 12:46 pm

Vancouver Sun Business section headlines today:
“Ballard Power cuts 85 jobs in Burnaby”
“B.C. job postings plummet in July”
“B.C. building permits jump about 30 percent in June” (huh?)
“B.C., Alberta lead country in credit delinquency rate increases”

Yawn! I’m tired of being right. When’s this tree going to bear some fruit? When does the real carnage start?

#77 TJ on 08.07.09 at 12:53 pm

Time for some math –

In B.C. – say you make – 72 K – after PROV/FED TAXES and CPP et al (*not including deductions for health care and benefits, that most wage earners get tagged with every two weeks) – you get around $2,000 every two weeks.

Total After tax per month = $4,000

For argument sake = mortgage/rent = $1,700 (*being generous – a small two bedroom – but no washer/dryer in W/E Vancouver is around that number).

So of that $4000.00 = you have $2300.00 left. That’s to start – but…

Then lets’ add food = average couple = $500.00

Power/Cable/Insurance *conservative) = $150.00

Car payment = $350.00

Gasoline =*conservative =$200.00….

We are now living on $1100.00 a month.

Coffee/Beer/Fun = $200.00

Credit Card payment minimum = $200.00

Now we are down to $700.00 a month….and we haven’t bought any clothes, or SAVED anything.
No money has gone to RRSP’s.
We haven’t paid for any Ferry trips to see Granny, furniture, gifts.

Most people do, right?

What I am trying to say is: CREDIT has been the liquor that has spiked the punch bowl, and a lot of people don’t realize that in effect, they are broke.

But they keep buying on those multiple credit cards, and they charge that new Plasma Tube and Trip to Vegas.

It’ll all work out. Sure.

In Canada 1.5% of Credit Cards are 90 days past due or more – in the supposedly ruined USA, it is only 1.3%.
DOH!!

We can’t walk from a mortgage. You have to pay the piper.

Garth has reminded us this is not an era to be gambling your families future on a pile of debts and a home you can’t afford.

Trouble is, too many people’s livelihoods depend on keeping this racket going.

The Real Estate agent, the Bank, the guy at the advertising department at the local newspaper, or the desperate sales manager at a nearly bankrupt TV station do NOT have YOUR best interests at heart.

Be careful out there.

#78 artisuseless on 08.07.09 at 12:59 pm

Hi there,

One BIG difference as well between US and Canada is that in the US non-recourse mortgages are common while here, the bank owns you.

Trouble is, people only look at what the current monthly payments are. They seem to think that any uptick in rates would be slow, or at the very least wouldn’t go up faster than their incomes.

A person underwater in the US at least has the option to just walk away from it all with just a hit to his/her credit rating.

#79 jim youtump on 08.07.09 at 1:00 pm

Economist returns home
“…it’s going to be five or 10 years.”

http://ca.finance.yahoo.com/personal-finance/article/canadianbusiness/1183/the-rock-star-of-wall-street-economists-returns-home

Bob Farrell’s rules …

Farrell was the chief stock market analyst at Merrill Lynch for 25 years, a legend and a “hero” of Rosenberg’s. Herewith, his Top 10 market rules.

1. Markets tend to return to the mean over time.

2. Excesses in one direction will lead to an opposite excess in the other direction.

3. There are no new eras — excesses are never permanent.

4. Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways.

5. The public buys the most at the top and the least at the bottom.

6. Fear and greed are stronger than long-term resolve.

7. Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names.

8. Bear markets have three stages — sharp down, reflexive rebound and a drawn-out fundamental downtrend.

9. When all the experts and forecasts agree — something else is going to happen.

10. Bull markets are more fun than bear markets.

#80 NoFreakinClue on 08.07.09 at 1:01 pm

Hello Garth,

How do you interprete the FULL-TIME job GAIN in Ontario mostly in service industry? is that sustainable? who is hiring so much that covers for loss of jobs in manufacturing?

“There was good news for struggling Ontario, however, which picked up 50,700 full-time jobs, mostly in the services sector, which offset losses in construction.”

Reference: http://www.google.com/hostednews/canadianpress/article/ALeqM5itk3xa470XH4OAaHr6oVrlDPY5zQ

Thank you,
AA

Good morning! Would you like a buggy? — Garth

#81 NoFreakinClue on 08.07.09 at 1:04 pm

to #47 Kevin in Winnipeg

What is term of these mortgages? how come these rates are so low?

AA

#82 Don of the Basement on 08.07.09 at 1:11 pm

Another addendum to the numbers revisioning?

Did we forget the CMHC premium? Tacked onto this 5% down mortgage…another $9,400 for a mortgage of $350,400.

#83 bigpictureguy on 08.07.09 at 1:35 pm

Garth,

I’m a housing bear myself but if let’s say unemployment at worst will be 20% isnt there still 80% employed will be playing the RE roulette to drive the market?

Sure, 80% worried they’ll become the 20%. It ain’t called consumer confidence for nothing. — Garth

#84 Jeff Smith on 08.07.09 at 1:43 pm

Jobless rates went up. Some kind of recovery. Whew!

http://news.google.com/news/more?pz=1&ned=ca&ncl=dyiSK74SgV4yTZMZXl2F6LKF0-maM

#85 TJ on 08.07.09 at 1:53 pm

Turns out I was being too conservative on the number of Canadians falling behind on their plastic:

As the recession causes the financial squeeze to get tighter, a credit monitoring company says Canadians are falling behind on their credit payments at “an ever-increasing rate.”

Equifax Canada says the average national delinquency rate at the end of June rose to 1.56 per cent — a jump of 24 per cent over the same time last year.

Equifax defines a delinquent bill as one that’s at least 90 days overdue.

The company says the province with the highest delinquency rate is Nova Scotia at 2.09 per cent, while Saskatchewan has the lowest rate at 1.24 per cent.

It says rates of overdue bills are increasing fastest in Alberta and British Columbia at 32 per cent and 30 per cent respectively.

Equifax says among major Canadian cities, Toronto has the highest delinquency rate of 2.03 per cent.

** Let’s keep bidding up those condos!!

http://tinyurl.com/lo6v3o

#86 JET on 08.07.09 at 2:12 pm

What the heck is the TSX rallying today for? The US unemployment numbers get slightly better due to one-time government census and auto workers being hired, and the TSX goes along for the ride. Is the Canadian unemployment number irrelevant?

Also, worth a look: http://www.zerohedge.com/sites/default/files/images/Bob%20Farrell.jpg

#87 CalgaryRocks on 08.07.09 at 2:23 pm

ii) An associate of my wife lost his job. To keep up appearances he has become a self-employed consultant – therefore Stats Canada does not count him as unemployed either. His income since January 2009?

$2,000

To succeed as a consultant, you need a good reputation as a leader in your field first. Takes more than a few months to achieve that. I booked 20k for my sideline gig last month but these are foreign (Asian) companies, not Canadian.

#88 rory on 08.07.09 at 2:32 pm

#60 dave99 you said:

“The 6% increase is over 3 years, and thus will approx equal inflation. Thus it is actually a 0% increase.

The banked sick days are an accrued, earned benefit. To suggest taking them away is no different than your employer advising he is going to confiscate your earned vacation time or pension benefits.”

Well Dave, you know if you support union pay increases and gold plated benefits on this blog you will get an earful…so here goes mine on you.

The outcome of our economy is uncertain, employment is going thru the roof, we may have deflation before inflation, people are maxed out and taxed out.

We are angry at unions, all unions, and all levels of gov’t as all do not seem to care if they screw the taxpayers…we are viewed as an unlimited supply of cash.

You have people that would take those unions jobs with huge downgrades in pay and benefits but unions are just too smug for that to happen …I could rain on you all day but I think you get the point…the taxpayers cannot afford you…you got it yet.

#89 Cash is King on 08.07.09 at 2:43 pm

.#82 bigpictureguy on 08.07.09 at 1:35 pm
Garth,

I’m a housing bear myself but if let’s say unemployment at worst will be 20% isnt there still 80% employed will be playing the RE roulette to drive the market?

Sure, 80% worried they’ll become the 20%. It ain’t called consumer confidence for nothing. — Garth

Sure there is “only” 20% unemployment. i.e. people still collecting E.I. funds from the government but there is not 80% still working. What about the unknown %’s of people whose E.I. has expired, are in reciept of Social Services, have given up, moved to other provinces or return to school etc.

If someone took the time to add up all the E.I. claims since last summer vs. all those who have found work, the 20 + 80 = 100 is a myth.

#90 PTDBD on 08.07.09 at 2:47 pm

Security and Prosperity Partnership meeting in Mexico Aug. 9 & 10. Shhhhhh….keep it under water.

#91 Makeorbreak on 08.07.09 at 2:50 pm

Underwater, and probably keep working until the day they die:

http://money.cnn.com/2009/08/07/news/economy/hired_unretirement/index.htm

#92 Future Expatriate on 08.07.09 at 3:05 pm

#34- Easy peasy

First thing I googled with plenty of links to elaborate:

Elliott Wave- Dow Below 1000 – Seriously?

Sell. Now. All of it.

#93 Makeorbreak on 08.07.09 at 3:15 pm

Prisoners of drywall as well?

http://online.wsj.com/article/SB10001424052970203674704574332264031026476.html

#94 MenWithHats on 08.07.09 at 3:22 pm

Good morning! Would you like a buggy? — Garth

Oh,man Garth . Too funny . You got me ROTFLMAO .
Best comedy site on the entire net .

#95 dd on 08.07.09 at 3:29 pm

#91 Future Expatriate

“Sell. Now. All of it.”

Really, on a theory? And do what?

#96 Joe Realtor on 08.07.09 at 3:31 pm

Ah interesting times ahead indeed.

I was talking with a friend of mine the other day. She wants a bigger house but only hubby is working right now. Poor guy. She also told me that she’ll give any sale and purchase to another agent so I have nothing riding on this.

I told her that in my opinion, they should sell now, rent and wait a couple of years and buy when prices come down. All these people going into major debt now aren’t going to be able to pay mortgages when rates increase.

No, they want to buy now because rates are low. “They aren’t going to stay low though”- fell on deaf ears. Does anyone remember something called “sub-prime” and rate resets?

When I told her that I didn’t think the bank would lend them even as much as they got 10 years ago for a mortgage because hubby works in an industry that can be recession sensitive, she told me the bank said “they’d work something out”.

Crazy. As someone said above, why only screw things up once when you can do it twice?

#97 Dean-oh on 08.07.09 at 3:40 pm

#34 Nick, here is the link

http://www.elliottwave.com/

By the way, Elliot Wave International is predicting gold to go down in price. Probably due to investors trying to liquidate and raise cash in order to pay debts, bills, asset restructuring. It must be noted that the largest banks are shorting gold right now. Just a heads up. Bob Prechter does recommend to hold some physical gold.

#98 edy on 08.07.09 at 4:33 pm

Just sold my condo in downtown toronto for 270K. Last winter something similar sold for 235K.
Will be cheaper next winter? I hope to get something bigger and better at the same price …. if market goes down. But will it go down? Anyway I was about to change for something bigger … but in the mean time I will rent for a while to see where the market is going.
keep this blog running …..

#99 JoeCalgary on 08.07.09 at 5:17 pm

Roubini tells Aussies financial crisis “not over.”

http://www.theaustralian.news.com.au/business/story/0,28124,25877483-36418,00.html

#100 DrC on 08.07.09 at 5:31 pm

Ah. Finally I understand. Having just come from Australia where the same insane house price rises are occurring (with the same RE industry claptrap being spouted) the obvious fundamental cause of the bubble continuing in Canada and Oz is that all mortgages are full recourse. Much harder emotionally to take the quick pain of negative equity, and impossible for the banks to start pricking the balloon themselves as so many of their ‘assets’ are just overpriced residential properties.

#101 calgaryrenter2 on 08.07.09 at 5:35 pm

A little taste of Calgary foreclosures. House was listed at ~1.3 two months ago.

http://www.REALTOR.ca/propertyDetails.aspx?propertyId=8545168

I rent down the street from this place. Walked by yesterday and heard some little kids laughing in the yard….made my stomach turn.

#102 Vanisle on 08.07.09 at 6:09 pm

This is the unemployment picture in BC:

British Columbia recorded 88,150 Employment Insurance (EI) beneficiaries in May 2009, its highest level since comparable data became available in 1997. The number of residents receiving regular benefits increased 115% over May 2008, and 6.2% over April 2009. Since October 2008, the number of beneficiaries has risen by 42,600 in BC, and the province had the second largest percentage rise nationally, following Alberta. In this same period, employment fell, mostly in construction; manufacturing; finance; insurance; and real estate and leasing. The BC economy continues to face challenges due to significant job losses in the timber industry.

Yet people in Victoria are still buying houses.
Go figure…

#103 Nostradamus Le Mad Vlad on 08.07.09 at 6:47 pm

Dee-lish-uss-leee smog-free day here in the Woekanagan. WE WILL SELL NO SMOG BEFORE IT’S TIME!

Now to a poster (sorry, can’t recall your handle) — we debated the size, amount and speed the US debt / deficit was increasing by. I received an e-mail from [email protected] (Money and Markets).

Square brackets mine — not good with math but here are a few paras.

“. . . the once-mighty U.S. Dollar Index broke support in this weekly chart. It should now go to test support at 76. And if that fails — and that’s likely — then the greenback will be on its way to test even lower, MUST-HOLD support.

“And if that last-ditch support fails? Well, then the outlook for the U.S. dollar becomes grim indeed.

“What’s driving our currency, once the envy of the world, lower and lower? The spendthrift ways of the Good-Time Charlies in Washington, that’s what!

“The U.S. government debt has soared to $11.7 TRILLION.

” [ That debt is increasing by $1 MILLION every SIX SECONDS ] .

“Our debt is now at 80 percent of Gross Domestic Product, and soon enough will be at 100 percent of GDP!

“We are on track to pile up $1 TRILLION a year in annual deficits for the next 10 years.

“This is a grim picture, no doubt about it. Now for the good news. You can protect yourself — and potentially pile up some hefty profits — with futures and futures options.”

With some other links, and esp. with the one last night about the Treasury Dept. hitting the debt wall (nowhere to go but up), one sees the greenback is going south, debts / deficits exploding which brings in the October Surprise — maybe financial or physical (another 9-11).
——
Two looks at US jobs / jobless, which probably carries over here (check the headings and first few paras.).

http://globaleconomicanalysis.blogspot.com/2009/08/dismal-unemployment-situation-in-chart.htmlhttp://globaleconomicanalysis.blogspot.com/2009/08/dismal-unemployment-situation-in-chart.html

http://angrybear.blogspot.com/2009/08/employment-report.html

Overall, it doesn’t bode well for the near- and mid-term future. If DC is increasing debt by US$1 mln. every six seconds, what does that say about Carney / Harper / Flaherty?
——
With the US $ going down, everything is rising proportionately, and precious metals are ready for takeoff into the stratosphere. —
http://www.uncommonwisdomdaily.com/the-golden-juggernaut/

#104 X on 08.07.09 at 6:58 pm

Don’t worry about the Canadian housing bubble popping, the gov’t will step in and reverse things just like the gov’t did for our southern neighbours…..wha….oh…

I mean…they won’t let it pop, all they would have to do would be to lower interest rates to a historically low level….already done that…wha….

But really they won’t let it pop, the gov’t will reduce our taxes so that we will have more free cash to pay the mortgage…..wha….the HST…next year….

#105 M. Brocciu on 08.07.09 at 7:03 pm

#69 : Bill

“On a side note, just wanted to let everyone know that I sold all my stocks in my RRSP. Since March 2009, I made over 20%, after paying buying and selling commissions. I’ve reached my threshold, and am now waiting patiently on the sidelines for another stock market crash. Maybe October 09? Janurary 2010?
See ya! Hope you aren’t the ones holding the bag.”

====

Smug bastard. Grow up.

#106 bigpictureguy on 08.07.09 at 7:11 pm

Dean if you follow Prechter he predicting a Wave 5 – DOW going below 2000 and S&P below 400. He says March/09 low is just the beginning.

#96 Dean-oh on 08.07.09 at 3:40 pm
#34 Nick, here is the link

http://www.elliottwave.com/

By the way, Elliot Wave International is predicting gold to go down in price. Probably due to investors trying to liquidate and raise cash in order to pay debts, bills, asset restructuring. It must be noted that the largest banks are shorting gold right now. Just a heads up. Bob Prechter does recommend to hold some physical gold.

#107 Jody on 08.07.09 at 7:48 pm

A super mall in Balzac is opening up in mid-August

http://www.calgaryherald.com/business/Holt+Renfrew+opening+uncertain+Balzac+CrossIron+Mills/1866609/story.html

not sure how long the place will stay open, especially when the US dollar tanks in October. Calgarians seem to just keep spending and I think (after living out there for some years) that the keeping up with the Joneses is worse there than anywhere else, it’s all about where you live, what you wear and what you drive. Right now I’m in Europe and seeing all the real estate rubble here is an eye opener, similar situation to the US. A couple of days ago I was in a greek village and had to argue with a local to get them to accept Euros, they don’t want to use them, they don’t like the incrase in costs a common currency has brought.

I personally hope the crash is huge, there are so many people I want to yell at and say:

“I F’in told you so, didn’t I , you knob head!!??”

However I have no doubt that the government will bail these losers out and as a saver I will be nailed. I don’t care if people totally screw their lives up, it’s their choice, so long as they don’t make me pay for their choices. It’s all about personal responsibility and not abdicating it to others, something so many people from 20 to 60 years of age have forgotten or never learnt in the first place, I’m afraid a giant crash is needed to really make this lesson sink in.

#108 john m on 08.07.09 at 8:29 pm

Crazy times for sure,like nothing i have ever seen in my lifetime.The banks are pushing out money to the highest risk clientele …the government is backing it with the futures of generations and our tax dollars and bragging about how they have cured the recession which is only in stage one.they have created a stage 2 far worse then what we were facing when the economy tumbled…how many generations will it take to get the country out of this mess??? Ah yes and people are wondering why IGGY never attempted to overthrow the government….only the greatest fool would want to try and cure the problems created by the Harper government………problems which will ever be cured and at the same time remain popular to the voters by any political party…i hope they let him stew in his own incompetent juices. Bernie Maddoff never came close to screwing as many people’s futures as we are seeing happening around us from the people we elected (not me) to look after our futures.IMO……….the bad times we have seen so far are a “cake walk” to whats coming!

#109 eddy on 08.07.09 at 8:50 pm

in the last 20 years, toronto’s biggest drop was around 1990 when they dropped 25%. In the spring of 09 they dropped around 15%, in spite of mortgage rate drops. that Was the correction. anyone waiting for a big drop in toronto has missed it. “the revolution will not be televised” and the ‘right’ time to by will not be accurately predicted by an internet site. because there is no right time. turn off the PCs and go hunting for deals, they’re Always out there

#110 $fromA$ia "Garths Nugget Boy" on 08.07.09 at 8:56 pm

http://www.schiffforsenate.com/

What can I say, Garth you need to get some support and take leadership again.

#111 Dubble on 08.07.09 at 9:03 pm

Hi guys,
I have been following this blog daily for a few months now and feel like posting my thoughts and opinions.

I had a shitty day today.

My workplace is cutting costs thus placing more and
more work on my plate in the process. This would be o.k if the prospect of a raise or a promotion were on the table. But lets face it, it’s not coming. I make a decent salary and there really are no other oppertunities around. So I feel stuck there.

I cant afford to buy a house, they are too damn expensive. Prices here are still on the rise.

You know what else is growing in leaps and bounds? CRIME AND UNEMPLOYMENT!!

What the hell is wrong with our society? I am so frickin’ tired of the “elite”!
I read an article today about GM and them backing out of paying the fees for cleaning up the environment where they are closing factories. The cities cant sell the sites to potential buyers because they are toxic cesspools.
WTF!!! How can this be???
They cant afford to, after paying the lawyer fees for filing bankruptcy.

The elite get paid!

Bankers and corporations get bailed out with taxpayer dollars and pay themselves millions in bonuses.
WE get jack.

We get screwed out of homeownership, out of our benefits, our jobs, our childrens futures…
We get shafted in each and every way possible.

AND THE ELITE GET PAID!!!

How can 80 percent of the worlds wealth be held by 2% of the worlds population. The gap between the rich and poor has never been wider than it is today. We are selling future generations down the river, so that a few fat son of a bitches can live high on the hog and impose more laws to keep us down.

#106 – I couldn’t agree more, but I think your anger is better directed at the source of the problems.

Anyways,

Thanks for reading, needed a good vent.

#112 Barb .. a reader in Calgary on 08.07.09 at 9:04 pm

#106 Jody

Jody, what you fail to understand is that we are not a society educated enough (yet) to fully understand responsibility. You yourself fail to understand that the world/Canada are huge pots of people made up of varying degrees of comprehension. We have FAILED to embrace the agreed middleground of socialism and capitalism. We ALL must pay for the endless tide of less ‘able’ people and the naive, as well as the endless tide of the criminally greedy, who take advantage of the less able/naive. For the unfairness that ensues, we all pay. If you want to gripe about it, at least be constructive. Don’t leave people out on the ledge and then complain that they are out there and falling off.

Where do you think keeping up with the Jones comes from? Ignorance. So why aren’t we having those discussions across society in more meaningful and helpful ways to try and rid society of poverty, lack of education and irresponsibility. All we have right now is a failing society, ripe for the picking by greed and criminal minds…. just you wait and see, the future does not look good if we don’t recognize that we’ve lost respect for each other and we fail to understand that we are dependent on each other in every way.

And that people are generally stupid — take it from there. Realize that the stupid are being taken advantage of, and that affects you. Take responsibility yourself and be more constructive. If you’re not part of the solution then you are just a griping part of the problem.

#113 EJ on 08.07.09 at 9:15 pm

The drop is relative to the run-up. The current run-up eclipses all past ones. The current credit and asset bubble is far larger and more widespread than any in history. The downswing is going to be far more brutal than any in history. Entire economies are being destroyed due to all of this greed, and yet in Canada, the greed continues. People blithely believing they are immune.

#114 Bill-Muskoka (NAM) on 08.07.09 at 9:23 pm

Garth,

I am worn out with the RE diatribe, but the picture of the Tiger is FANTASTIC. Truly the King of The Beasts and my favourite large predator. Now, if we could only train them to hunt down and devour the tasteless scumbags who steal and cheat people the world would improve rapidily. How about a pair for Oddawahaha and another for Queen’s Park? Nice kitty! LOL

I still like ‘Mr. Bone Crusher’ in the movie ‘Nothing But Trouble’ starring Chevy Chase, Demi Moore, John Candy, and Dan Akroyd. Swift and sure Mr. Bone Crusher is when the Reeve pushes the button ion verdict.

#115 CalgaryRocks on 08.07.09 at 9:50 pm

#106 Jody on 08.07.09 at 7:48 pm ….blah, blah, blah, I’m so smart, everyone else is so stuuupid, blah, blah,blah (paraphrased)….

I’m afraid a giant crash is needed to really make this lesson sink in.

I hope that when the ‘giant’ crash comes you’re the first one to lose your job, your house and your marriage. Maybe you’ll learn a good lesson about what goes around…

#116 Barb .. a reader in Calgary on 08.07.09 at 9:54 pm

#110 Dubble :“We are selling future generations down the river, so that a few fat son of a bitches can live high on the hog and impose more laws to keep us down”

Exactly Dubble.

And just look at the example of the ‘puppets’ the elites get to work for them… the Rethuglicans in the U.S., sicked their mad dogs on Healthcare Town Hall meetings to disrupt and shout, thereby effectively keeping the people from discussing their own democracy. When those Republican puppets yelling about healthcare reform are asked why they’re so mad, they scream that they don’t want ‘socialized medicine’. When the same idiots are asked to raise their hands if they have received any medicare or medicaid, most raise their hands… sheesh, the ignorant hissing Rethuglicans at the town hall meetings are so stupid that they don’t even realize they are already on the very socialized medicine they “don’t want”.

#117 Jody on 08.07.09 at 10:11 pm

Barb,

I am part of the solution, I joined the free state project and try to be Libertarian when I can. There is one simple rule that would make this world a much better place: do not initiate force, ever, for any reason. Taxes are an initiation of force and its what gave the people who got us into this mess the power to do so.

It matters not what glorious and wonderful government program one thinks is going to cure all the ills of society, one has no right to force their neighbour to pay for it. I would never go up to my neighbour, put a gun to their head and tell them to give me a portion of THEIR wealth so I can have public healthcare, it does not become anymore legit when I use the guns of government either. It’s sick and twisted and anyone who supports it is sick and twisted, be they liberal, conservative, NDP, Green etc. they are all the same, the only difference is which toilet ones wealth gets flushed down.

This political game is the source of these financial problems. Group A uses their govt to reward their friends and punish their enemies while group B uses their govt to reward their friends and punish their enemies. Meanwhile the very rich keep trucking along.

You ever feel like you are a hamster on a wheel? Politics is there as a hamster wheel to distract us. We get preoccupied with this hamster wheel to stop us from being effective. All your effort changing nothing at the end of the day, being handed a treat now and then to make you think that you actually matter. I want freedom and liberty and that does not involve taking wealth from others so that a bunch of thugs in some building (be it in Ottawa, Edmonton or city hall downtown) can tell me what is best for me.

Insanity: walking into a voting booth and thinking anything will change.

#118 lili on 08.07.09 at 10:11 pm

“Is the Canadian unemployment number irrelevant?”

In a word: yes.

If Canadians had strong employment and the US has weak employment numbers, then conventional wisdom will project weak numbers to follow in Canada. You’ll hear that over and over again from the property bears here.

The US employment numbers are improving, period.

But the property bears lurking here are loathe to admit it. Things are turning around and will do so undoubtedly until the debt is addressed. Then… well… we’ll see.

#119 Jody on 08.07.09 at 10:15 pm

Calgary rocks,

I actually save my money and don’t buy what I can’t afford. I have over $100,000 saved in cash and metals, how about yourself?

#120 Future Expatriate on 08.08.09 at 12:41 am

#91- “Watch and be ready”

Personally, I’m in gold. Your (and Garth’s) mileage may vary.

#121 Future Expatriate on 08.08.09 at 12:44 am

#91 PS- Although I’m in gold (and have been for years) I wouldn’t recommend buying in now unless you watch daily and surf the troughs and buy low.

#122 CalgaryRocks on 08.08.09 at 8:46 am

118 Jody on 08.07.09 at 10:15 pm

Calgary rocks,

I actually save my money and don’t buy what I can’t afford. I have over $100,000 saved in cash and metals, how about yourself?

Like, you said, 100K in Calgary, we call that our kid’s allowance. BTW, empty beer cans doesn’t count as ‘metals’. Haha!

#123 Chris no longer in England on 08.08.09 at 9:38 am

Jody, “I joined the free state project ..”

Well I didn’t know what that was, so looked it up. Very interesting!

#124 Bill-Muskoka (NAM) on 08.08.09 at 12:15 pm

Barb,

Not in all my sixty plus years have I witnessed such blatant mindless rhetoric as the Redumblicans are using now. It has also spread into Canada with the Harper groupies as well.

Looking back at history these people are employing exactly the same tactics that Hermann Goebbels used in Nazi Germany. Their depth of ignorance must be challenged at every opportunity. They are the most anti-democratic form of being on this planet and treat our democracy like it is some winner take-all sports event.

I have taken the position that I will strongly challenge them regardless of who they are and that includes family members and friends who purport such diabolical tripe. They are playing on the innocent and naiive using FUD and the future of everyone deserves better.

#125 X on 08.08.09 at 1:19 pm

There have been 3 bubbles in the past 10 years. Tech, Re, stock market…all popped.

All because of too much cheap money. WE can’t help ourselves, money is really cheap, and we can’t help ourselves from buying our wants.

If we want a population with more savings we have to increase interest rates to promote savings.

Right now, it just makes debt more affordable to carry.

What really scares me is derivatives, HVTP (high volume trading programs utilized by most big banks), and the US debt-moreso their ability to repay it.

Things need to change to reduce the amount of leverage in the world, to level the stock market to an even playing field. And printing money isn’t the way to do it.

Let things crash. If thats what happens. But let the free market correct itself. No, it won’t be fun. But it will correct. We are currently delaying the inevitable.

Inflated RE. Inflated stock market. Artificially done. Because of low rates, and computer programs that trade amongst themselves. I don’t want to go along that ride.

Let things correct themselves.

#126 dd on 08.08.09 at 2:36 pm

#124 X

…If we want a population with more savings we have to increase interest rates to promote savings…

The government cannot really do this for the long term. Long term interest rate movements are set by the market. What we really need is a government to tax consumption (GST and PST) and to reward saving (interest income, divs, capital). Money will flow to the highest returns … after tax. Our economy has to adjust from a consumer based to an investment base.

#127 Ronaldo on 08.08.09 at 5:25 pm

35,000 self employed jobs created according to the latest stats. I think I saw a couple of them pushing a Wal Mart cart down the street the other morning.

#128 Jody on 08.08.09 at 8:20 pm

CalgaryRocks,

I also have no debt, how about yourself?

#129 CalgaryRocks on 08.08.09 at 11:20 pm

#127 Jody on 08.08.09 at 8:20 pm CalgaryRocks,

I also have no debt, how about yourself?

Well I haven’t had any debt except my mortgage since the age of 26. You must be new here, I already posted that several times. Along with some links to the likes of Dave Ramsey and others.

Not too sure why you’re so interested in my finances. Are you looking for a date?

#130 X on 08.09.09 at 10:08 am

125 dd – completely agree in theory w taxing consumption to curb expenses in general.

-not sure that more tax breaks in investments wouldn’t cause yet another bubble….as too much money could flow into investments.

-but a capital gains tax on some of these HVTP (high volume trading programs) utilized by some of the banks may be worth looking into.

I know that you agree that something has to change to promote savings within the general public. Most people in Canada haven’t even maxed their RRSP’s, and don’t have a work pension plan….but they just can’t help themselves when the see something they want.

#131 steven rowlandson on 08.10.09 at 6:21 am

Good thing Canada’s real estate market doesn’t depend on guys like me to support so called market prices. With my politically correct free market wage rates and a proper ratio of 3 times my annual pay for a house price. I would say that the price range would have to be $15,000.00 to lets say $45,000.00 for a house in the Barrie area and thats assuming a healthy economy.
By the way my trade is stair building and I am currently
on WSIB and trying to recover from a hand injury.
The way I see it those like me live in the real world. If I tried to live in Canada and buy real estate at existing prices and marry a canadian feminist I would be living in a fools hell. I am not going to allow that.
Unless people are filth stinking rich or government employees or Union workers , corperate executives or just cheating I don’t know how any one can live in Canada at all. Alot of people must be faking it hoping reality doesn’t bite them in the butt any time soon.

Steven

#132 End the Fed on 08.10.09 at 6:18 pm

re: Bill-Muskoka (NAM)

Bill, those protesters at the town halls are not republican shills. They are everyday ordinary seniors and citizens both republican and democrat who are SICK of the mass spending of taxpayer funds, and who don’t appreciate being forced into a single payer system. To give you an idea of what is being proposed in America, which is not at all like the Canadian system:

– government access to all bank accounts for the purposes of deducting forced insurance premiums

– at least two of the “Czars” appointed in the current administration believe that priority care must be given to the young as opposed to the elderly, etc.

– senators voting for this bill admit to not even having read it! So you can understand why people get upset, as much as the current administration would like to pretend these are all republican or big pharma shills (which was proven wrong, but alas in Canada we don’t get the facts, just the warm and fuzzies).

– forced purchasing of insurance

The UK NHS system for example is one of the LARGEST employers in the world, employing 1.5 million people, and consumes 25% of UK GDP! THAT is what this healthcare “reform” is all about. It’s not a republican or democrat thing, but I have to laugh when senators and congressmen run away from a bunch of old ladies.

#133 Evangeline on 08.10.09 at 7:54 pm

((What we really need is a government to tax consumption (GST and PST) and to reward saving (interest income, divs, capital). ))

Canadians really should get over the idea that government is mommy-daddy who has to carrot and stick us into correct behaviour. If people want to grasshopper their lives away spending every penny they earn, that’s their business, not the government’s. Free people should presumably be able to make their own financial decisions and rise or fall accordingly without punitive sales taxes to ‘guide’ them into proper social outcomes. We can see what a mess government interventions have made of our economy, we don’t need more interventions, we need less.

#134 CalgaryRocks on 08.10.09 at 9:40 pm

#132 Evangeline on 08.10.09 at 7:54 pm
Canadians really should get over the idea that government is mommy-daddy who has to carrot and stick us into correct behaviour.

It’s refreshing to read a sane point of view once in a while.

#135 Bill-Muskoka (NAM) on 08.14.09 at 11:44 am

#131 End the Fed

As an American/Canadian I know how both systems work. President Obama does not have the authority to invoke anything unless Congress (House and Senate) pass a Bill to do so. He can only lead, and with that bunch he might as well be pushing a rope. Yet, it is THE issue that needs more attention than any other in the name of humanity.

Too many Canadians think the U.S. works like government here in Canada where a minority PM is King of Canada, despite not having the authority to do so. It is not that way in the U.S.. I have had healthcare under the U.S. providers and I will take Canada’s system any day. I do not need to ask ‘Do I want to live or go bankrupt?’ All the whiners in Canada are those who think they know more than their doctor, are more important than others, and should go to the head of the line, even though they can wait.

Yes, there are screwups by doctors, but that is true everywhere. Here our doctors face a serious peer review and censoring, but in the U.S. the doctors face a lawyer who’s first and foremost interest if MONEY and GREED. That results in huige malpractice insurance costs which is a major part of the medical costs the people have to bear. Again the insurance companies (those oh so trusted ones like AIG are the cause of the problem)

As to the protestors…Their depth of ignorance is overwhelming. They think anything the government tries to accomplish for ALL Americans is socialism. Just like the morons who think socialism is communism. Yet, they refuse to accept the outcome of the democratic process.

They know neither and are mere pawns in a game for the benefit of the healthcare insurance industry. As one doctor (among many) said ‘I spend more time dealing with private insurance companies than Medicare because they are always looking for ways to deny coverage for my patients in need.’ I have been through it first hand.

As to your Libertarian name (handle) I doubt you even understand the need for federal government. Granted it would be nice to have one that is functional and not lieing and promising everything without delivering. That applies to ALL political parties. Both major parties make me feel like puking at their childishness.