With bloated hearts

Hear Garth in Halifax
Tuesday 7pm @ the Westin. Free admission.

1/2 mile – and $117,000 – apart

Canada house1

Abbotsford, Canada: $348,900, 3,750 sq ft lot

US house1

Sumas, USA: $214,000 ($231,000 C$), 11,000 sq ft lot

There’s always been a price to being Canadian. Paying twice as much to fly from Toronto to Vancouver, as New York to LA. Income taxes. Laying down $230 to watch the Leafs lose. GST. Now the HST. Booze.

And houses.

In fact, this has turned into the single greatest cost differential between the two countries. Sadly, housing also accounts for the greatest family expense and the largest lifetime purchase.

Look at this: The average Canadian house price is currently $324,779. The average US house price is $189,500 – or $204,600 C$.

The difference: $120,000, or a staggering 58%.

Why is this so? After all, median incomes are about the same in both countries. Mortgage rates are about the same. The unemployment rate is similar. The household income-to-debt ratio is about the same. In fact, Yanks have greater disposable income than we due because of a lower tax regime. So, if anything, you’d expect that extra cash to be pushing housing values higher.

Well, one reason for the incredible difference is the real estate correction which has gripped America for more than three years, after a housing bubble there. Having said that, the US bubble was actually not as great (in terms of average incomes required to buy the average house) as the current bubble in Canada. And even accounting for the 28% average decline in American home values, the Canadian premium is still mind-blowing.

A more plausible reason is that we are nuts. Delusional.

A small example for you in the two pictures accompanying this post. Reader Lance Leger sends this along:

Just outside Vancouver, in Abbotsford, there are two small communities on either side of the border… Huntington and Sumas.  Very comparable houses, just a half mile apart.

1,660 sqft house, built in 2006, on the market at $214,000 USD.  11,000 sqft lot.

A half mile away, a 1,656 sqft house, built in 2007, 3,750 sqft lot (tiny!) on the market for $348,900 CDN.

This is a great example of the disconnect going on… and northern Washington real estate prices are fairing quite well considering what is happening to many other US real estate markets.

Is there any reason why basically the same house, same age, same location but with a third of the lot size should be on the market for 50% more (including exchange).  The house in Sumas, USA, is certainly the superior choice.

This just tells me that that same house on the Canadian side of the border should be $200k… not $350k.

Being Canadian is a great thing. You can’t measure that in dollars.

Thank God.

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135 comments ↓

#1 Anthony on 10.02.09 at 11:19 pm

One of the reasons real estate in Abbotsford has value is its proximity to Vancouver – that doesn’t matter as much if you’re in the U.S., albeit just across the border … so perhaps this isn’t as apples-to-apples of a comparison as it seems at first blush.

#2 Anthony on 10.02.09 at 11:21 pm

According to Google Maps, getting from Abbotsford to Vancouver takes about 1 hr., from Sumas to Seattle about 2 hrs.

#3 Dan in Victoria on 10.02.09 at 11:37 pm

Phhhhf….. thats nothing ,work out your square footage price. http://www.kettlecreekstation.com/homes/detached.php

#4 Jonathan on 10.02.09 at 11:41 pm

But you can measure being American in dollars and $100,000 is ringing my name!

#5 TheFirstRick on 10.02.09 at 11:55 pm

For the extra $100K in Abby, you get the Narco culture, gangstas, wannabees, attitude and the morning mega commute to Van. All for a wage lower than anywhere else. If we could only all use Nostradamus’ pharmacist. But hey, his pharmacist is probably running a grow too.

#6 nonplused on 10.03.09 at 12:05 am

So far as I can assertain from postings on realturd.ca, people still figure an acre around Calgary, unserviced, with nothing but $200/year of hay comming off of it, is worth $100,000. Yet we have acres like that 100km in every direction. Crazy.

But as Keynes said, “markets can remain irrational a lot longer than you can remain solvent”.

Governments and banks. Plenty of reasons to be upset. They are manipulating this market. They aren’t trying to create new jobs with the low interest rates. All low interest rates do is make it easier to finance a new plant in China and close a legacy plant down here. They are trying to save the banks, which will collapse US style if the mortgage market goes south.

#7 Not Garth on 10.03.09 at 12:24 am

We know you are right Garth. Know it.

But WHEN will the SHAT finally start to hit the fan (good and hard)? This strength in our RE markets (expecially in BC) is just crazy. When does it start to unravel?

#8 heather on 10.03.09 at 12:28 am

Absurd the differences in home prices. But in Canada we are different right.. Another interesting article worth reading:

“Well rich in commodities we are. Canada is a vast country. So it may come as a surprise to many to find out that the ‘mining and oil and gas extraction’ industry only accounts for 4.5% of the Canadian economy. Furthermore, in the five years from 2004 to 2008 this industry’s output grew by only 1% in total. That’s less than 0.2% growth per year.”

http://americacanada.blogspot.com/2009/10/could-northern-bull-just-be-southern.html

#9 Cory Cherpin on 10.03.09 at 12:41 am

I read your blog daily and have read your books…I have found them very useful, but have yet to find a scenerio similar our current situation. You always seems to make reference to the east and west. We live in Saskatchewan (Weyburn–Oil/Gas country) Teacher/LPN–gross $80,000 a year…2 kids….we currently have a mortgage on a 1200 square foot bungalow. We were riding the prime +1 on a line a credit type mortgage until a few months back where I decided, based on following your blog advice and watching the interest rates, we locked in 75% of the mortgage at 3.9% (amortized for 5 years) $800 a month payment with $25,000 remaining on the line of credit (prime +1). Our house could be sold for about $250,000 now, which would give us about $150,000 in the bank. We currently have no savings but don’t have any other loans. We have very little put away in RRSP’s..about $15,000 each (including pension). I am 30 my wife is 34. Shall we even think about selling and working out a plan with the profit or sit on the house and enjoy our current situation…our ecomony here is a little different right now, and even though the boom has slowed it still is quite steady here. Any advice…?

#10 Bob on 10.03.09 at 12:44 am

my dad has about $500,000 line of credit with fixed interest rate. what’s gonna happen to him when two condos that he got lose value in half?

#11 Chaostrology on 10.03.09 at 1:04 am

For the Americans, Sumas Washington may as well be Alaska. It isn’t anywhere near civilization as far as they are concerned. It’s not even the middle of nowhere. It’s on the edge of nowhere.

Huntington B.C., however is on the edge of a city that is part of the heartbeat of the most vibrant part of British Columbia, VANCOUVER. (I didn’t say that this is a good thing)

Realistically, this is about a border, mountains and an ocean. The delta is only so big and without an option of expanding into the next farmer’s field, meadow, orchard.

It is what it is. (I hate agreeing with Nostro Jr.)

#12 Steve on 10.03.09 at 2:02 am

Sumas is not within commuting distance of any major city really. Abbotsford is a suburb of Vancouver and as such the prices for land are higher.

#13 Vik on 10.03.09 at 3:42 am

Of worthy mention : Our ‘merican brethren also
do pay less for their milk, gas , cars and gadgets.

Example : Ipod nano US$ 149 = CDN 169.
Sources : apple.com and apple.ca

But hey !! the very same car built here in Cambridge, ON gets better gas mileage ,once it crosses the border
back into the wintery great white north , example :

09 Toyota Corolla 1.8 L Auto : 8.7 L/ 100 kms city
Source : fueleconomy.gov
09 Toyota Corolla 1.8 L Auto : 7.4 L/ 100 kms city
Source : enercan.gc.ca

#14 Tony on 10.03.09 at 4:07 am

The Windsor Detroit border would show a much bigger price gap percentage wise.

#15 Herb on 10.03.09 at 5:28 am

The reason for the difference is the disconnect of supply and demand from the real economy. The suits behind the curtain have manipulated (and still are manipulating) consumer demand for real estate. In the States the real economy has caught up with the manipulation and reduced prices from what people are willing to pay to what people are able to pay. Here it still has to.

#16 David Bakody on 10.03.09 at 6:19 am

This just tells me that that same house on the Canadian side of the border should be $200k… not $350k.

There are a host of reasons ….. Americans do get to deduct their interest payment on taxes and second they must claim the profit of sale of property as taxable income. Second our government must find ways to collect more and more money for health care there by allowing RE to inflate house prices, and of course there are many who not only want the value of property to increase but require it the overall picture of being rich, which of course leads to a false sense of security. This is all encouraged by every money lending agency. Oh what a tangled web ……… South of the border they find other ways to rip their people off, health care is one of the biggest.

#17 DrC on 10.03.09 at 7:19 am

@#6 awwwww! Man, I wish someone did make a website of turds in real estate.

The market can stay irrational for a very, very long time.

Median house price in Melbourne, Australia just went over half -a-million AUD…
http://www.theage.com.au/national/melbourne-median-house-price-hits-520000-20091003-ggvm.html

That’s approximately ten times median income…
http://www.dse.vic.gov.au/CA256F310024B628/0/13ED79C2F56ECA3DCA2573A60007573B/$File/DPCD+5-Income+distribution.pdf

The Australian Federal governments bribe to potential first-home buyers is set to drop back to 7K from the inflated bribe of 14/21K (exisiting/new-build), and interest rates are stable but the next move there had been signalled as clearly up.

When everyone stops blowing up the bubble, how long does it take to deflate?

#18 JM on 10.03.09 at 7:47 am

This says it all:

http://www.yourhome.ca/homes/columnsblogs/article/703553–track-spending-to-avoid-being-house-poor

It’s a new show on HGTV about being house poor, the first paragraph opens with a family that can’t cook in their “fixer-upper” kitchen.

#19 dd on 10.03.09 at 8:25 am

N jr.

Let me guess, it is not on the North Shore so ….

It is in the valley and is a good 1.5 hours drive into Vancouver so you can’t use the big city angle.

#20 The enemy on 10.03.09 at 8:30 am

I should preface this by saying that i am not a real estate bull. Which is why my home paid for in cash is less than 10% of my net worth. Certain segments of the Canadian real estate market are certainly in bubble territory. Specifically high end luxury condos that were bought as pre-builds before the stock market crash with significant investor participation and are not yet complete. Unfortunately it will take until late 2010 and into 2011 for this to play itself out since the buyers currently only have their deposits at stake and are keeping their fingers crossed.

However, after reading this blog for the last few days it has become quite clear why so many people here are ultra bearish on homes in the 400K to 1.5MM range. Because they dont have any money! You could practically feel the rage and bitterness on the screen when they responded to the 20 something young couple who each made 100K. And then they practically lost it when someone claimed to have 250K in non RRSP savings. Of course if those numbers seem incredulous to you than the thought of someone buying a 700K home must seem absolutely reckless. It would not take a psychologist to assess the jealousy on this board towards people who are financially ahead. And on a somewhat related note it explains the large number of individuals on here that constantly post links to conspiracy sights. Research has shown that it is a complete dissatisfaction with their own lives which causes them to focus all blame for their failures on politicians, bankers, and a host of conspiracies.

You have to stop looking at average incomes when analysing certain markets, particularly Toronto. The average person is not buying an expensive home. They are renting or buying a small condo. People with relatively high paying jobs are buying the pricier properties. And at that risk of making certain peoples heads explode in anger I have to tell you that Toronto has alot of people that do very well. I work in finance and on my trading floor if we exclude the people in administrative positions (who still make at least 50K) even the 20 somethings make at LEAST 200K. And it just gets better from there. Hate to break it to you but its not just hockey players that make 7 figures in Toronto. And before you say that the game is over in finance i should point out that our bonuses will be higher than last year.

Now i will conclude by saying that in general i agree with Garth. The average canadian is too concentrated in real estate and are using amortizations that are too long. I think RE apprecation will be very muted for many years, much like stock market returns due to stagnant incomes, higher taxes and lower government spending. And over time canadians will begin to reassess their situation. The key here is TIME! This will take years to develop. But Garth writes a new blog everyday and you all keep coming here wondering if today will be the crash and getting frustrated when its not. As i said before watch the high end condo mkt. Thats where the action will be (but not until 2010-11). So relax folks. Get away from your computers and enjoy your lives. Time is the only commodity you are rapidly running short on.

Now i will

#21 dd on 10.03.09 at 8:38 am

#9 Cory Cherpin

“We live in Saskatchewan (Weyburn–Oil/Gas country)
$250,000 . We currently have no savingsI am 30 my wife is 34”

Cory – you are 34. You are not suppose to have a lot of money in the bank! Sit tight. You are in the light oil region of the country and this commodity will only go up in value. $80k income with a $250k house … not a bad situation to be in. The house value will hold.

Read Garths last post about diversifying.

#22 BOB on 10.03.09 at 8:50 am

The Enemy #20

Great post.

#23 jess on 10.03.09 at 9:21 am

I noticed in my city houses that were for sale and sold quickly that some of them are now ‘rent to own’ which led me to read about becoming an enlightened millionaire.

When I googled
Enlightened Millionaires Institute
http://www.complaintsboard.com/complaints/wwwthe-successnetworkcom-c249916.html

#24 Nostradamus jr. on 10.03.09 at 9:34 am

Denninger details the growing unemployment in the U.S.

http://market-ticker.org/

…What this tells me is…..

1/
Millions of California illegal aliens will be sent packing…so the unemployed can find work….from farming to daycare.

2/
The U.S. will invade Cuba…and call it Nationalism.

3/
California will legalize “Pot”, then completely close the U.S. Mexican border.

#20 the enemy
good post…Many readers here do not understand there is a difference between Toronto/Vancouver and their respective Hinterlands…they are like two different worlds.

imo, Vancouver will survive much better than Toronto will.
Toronto relies on too much manufacturing…Vancouver is a city one third the size of Toronto and V has what everyone requires/wants/desires.

…Fresh drinking water, lots of ‘lectricity, a mild climate, quick access to the U.S., and a growing international transportation hub.

Nostradamus jr.

#25 Christopher on 10.03.09 at 9:52 am

Where is the money coming from. How long will you receive a wage? If you make 19.00 an hour 40 hours a week you can not spend more than 60 dollars a day. How much do you pay for a place to sleep? Big drug bust here in Victoria! hundreds of thousands of dollars in cash were found so this is what us working folks are up against! Like I said before There is no God in housing so keep God in your hearts.

#26 Keith in Calgary on 10.03.09 at 10:17 am

I came back from Las Vegas last month.

Everything down there is 1/2 down to 1/3 the price of an equivalent property here in Calgary. Even if property was the same price, I’d rather live their to be quite frank……..it is a nicer city.

Our 1 bedroom condo in Rio de Janeiro is 1/6 the price of an equivalent property up here in Calgary…….and 1/10 the price of a property in Vancouver (which has beachs a few blocks away like our place in Copacabana does) whereas there are none in Calgary.

#20 the enemy……our combined cash net worth is mid 6 figures…….so we can afford to write the cheque for a cardboard shit shack up here on the frozen bald assed prairie, but the difference between us and the realtor who would be trying to sell us said property in Calgary in the price range you describe, is that we’re not as stupid as the realtor thinks we are. It is hubris on your part to think we would be jealous of someone who is a “greater fool”.

Seriously now, go back to calling clients to come to your open houses.

#27 Brainsail on 10.03.09 at 10:25 am

#16 David Bakody

In the US you do not pay taxes on the profit from the sale of primary residence if you use the profit to purchase another residence within two years or you reach a certain age. I believe it is 60.

Size matters. US median single family dwelling(unattached or semi-attached) is 2400SF and 195K. What are the Canadian numbers?

At least the unemployment numbers match. Canada 1.5M vs. US 15.1M. Canada’s population is aprox 1/10 US.

#28 Got A Watch on 10.03.09 at 10:41 am

#20 – Nice ivory tower view. I think you should get out of the tower and talk to ordinary people at street level. Maybe even leave Bay St. once in a while. Even the “rich” have been hit hard in this economic crisis, aided by “investment professionals” like yourself. In fact, Barrons just said the “richest” lost $300 Billion, while so ably “advised” by “professionals”.

The fact is, E, that people who make over $200K in Canada are probably less than 1% of the population. I am looking at Stats Can where they show the average FAMILY (not individual) income, for the top 20% of Canadian families by income, is around $120K. There may be more of them clustered in Toronto than most areas, but that does not mean there are as many as you seem to think. Individuals who make more than $200K are very rare.

Let me put it like this: every condo builder, home builder, resort, golf course, expensive restaurant etc are all aiming at the “executives”. But simple arithmetic tells me there are not enough “doing very well” to support all those aiming to help them spend their money. Or else they wouldn’t be going out of business left and right.

The tone of your post made me laugh. It seems to be about “I’m doing fine, and so are my co-workers”. Bully for you. If you want to see what happens to “highly paid” “financial services” people in a Depression, examine the New York City or London, England experience right now. I am sure you would agree that NY or London are much bigger financial centers than Toronto on the world stage. Yet somehow, those cities are seeing plunging financial employment, vanishing companies, and falling real estate values, with the “high end” being hit hard.

And for a guy who claims to be involved with “trading”, your thought process on real estate valuations seems rather bizarre. Are you denying that there is a clearly defined and visible cycle to real estate prices, apparent to almost anyone when looking at a long term chart of prices? What would a “trader” say about a market that has been in a ‘Bull market’ for 12 years – is it more likely to keep going up forever, or, after a long run up that is an historical outlier (longer than most in the past), would it be more likely to have a multi-year correction, just like the many other times this has happened? What would you say if this was a stock? Buy more now?

And no, E, I have plenty of money. I trade the markets for my own account, and have done so for 8 years now. In fact, I fired my “Broker” in 2001, and have not looked back. I live in what used to be one of the highest income postal codes in Canada, and almost all my neighbors (at the least the ones I have talked to) are in fact, by their own admission, less wealthy ( some much less) than they were a few years ago.

“research has shown”…..LOL. Please. You seem to be channeling Marie Antoinette there. And you are certainly over-generalizing about people here. Many ordinary people are angry about the cost to society of “financial professionals” and the mess they make, that ordinary taxpayers have to clean up afterwards. And rightly so. They view you and your co-workers as parasites, creating no value, and providing no real contribution to society at all. I am sure it gratifies your ego to think otherwise. In fact, your arguments are a good summary of why the rest of the country hates Toronto in particular and “financial professionals” in general. Arrogance, greed, and the expectation that those “ordinary” people you so despise will bail you out when you gamble with their money and lose.

Try a little humility, and be more thankful you are lucky enough to be in the 1%, not the 99%. And I am really, really glad that you are not managing my money. Bonus that.

#29 T.O. Bubble Boy on 10.03.09 at 10:41 am

I can’t say that I have any personal knowledge of the Abbotsford or Sumas communities, but house this type of comparison seems to be all about perception.

My guess is that people in Abbotsford think that they “live in Vancouver”, vs. Sumas residents think that they live in a small town community. I woud also guess that some people see Abbotsford as a desirable suburb of Vancouver (with housing prices that are still 50% lower than the average Vancouver home).

The same phenomenon exists all around the GTA. People see Milton (West) or Ajax (East) or even Barrie (North) as “living in Toronto”.

#30 hal smith on 10.03.09 at 10:49 am

It’s funny. Canada has a huge land mass, the largest in the world. Let’s say 98% of our land base is unused and is “crown land” and 2% is privately held. Why not increase the supply of land available to the public and and make it more affordable for the average joe? Why not spend some stimulus dollars to open up new areas for private ownership? It just seems strange to me that in a country this vast and underpopulated that so little land is available to the public and that the land that is available is so expensive. Anyone ever wonder about that? Hmmmmm

#31 Marina on 10.03.09 at 10:50 am

GARTH,

could you comment post of The Enemy #20 pls.

#32 Brainsail on 10.03.09 at 10:53 am

Capital Gains Exclusion on Sale of Principal Residence – Issue Summary

What is the fundamental issue?
In 1997, Congress enacted an exclusion for the gains on the sale of a principal residence. Taxpayers who file a joint return can exclude up to $500,000 of gain from taxation. All others may exclude $250,000. The 1997 provision was not indexed for inflation. In 2007, the House passed a limitation to this proposal that, if enacted, would change the tax treatment of a home that is used as a second home or rental property and then converted to a principal residence.

I’m a Realtor®. What does this mean to my business?
The exclusion is the most taxpayer-friendly provision enacted in many years. It offers an excellent retirement planning foundation. The 1997 legislation eliminated the requirement that proceeds from the sale of a principal residence be reinvested in another property of the same or greater value. This change facilitated mobility from high cost to lower cost areas. It also allowed the homeowner the greatest freedom in the use of his/her capital. Proceeds from the sale of a principal residence may be used to purchase another principal residence, a second home, investment property or other capital assets.

#33 Cabin_Boy on 10.03.09 at 11:22 am

re: #28

The reason why more land is not put up for sale is simple…you wouldn’t want it even if it was given to you for free. Who’s going to drop the $50K to build a road up to your ’40 acres and a mule’? Who do you suggests runs a gas line up there? And power lines, and sewage, and phone, and cable etc. etc. The land is not the problem, servicing it is. You can buy land dirt cheap in most Provinces. But do you want to pay half a million to get it serviced? Or maybe the taxpayers should pick up the tab? hmmmm

#34 X on 10.03.09 at 11:31 am

British RE market sounds alot like Canada’s:

http://www.financialpost.com/opinion/breaking-views/story.html?id=2060258

Spain RE down 9% despite low rates:

http://www.financialpost.com/opinion/breaking-views/story.html?id=2060840

#35 Jim on 10.03.09 at 11:44 am

Re #20
Ah you are one of the folk that gets a ridiculous wage for producing nothing of value! The incompetence of the people in the finance industry almost brought down the system. You should save your money and be grateful that you have a job, that doesn’t require more intelligence than many other jobs, but for some reason pays far better. Don’t bet on keeping that wage forever.

Jim

#36 lgre on 10.03.09 at 11:49 am

#20 The enemy on 10.03.09 at 8:30 am

yes there are people who can easly afford a $700k shack in TO, yes there are 12 year olds making 7 figures, yes there are dogs running around with diamond collars..BUT, that is not the average or the norm.

Infact, one thing I have learned over the last 2 years is that bankers making high 6 figures and well into the 7’s are not living in reality. Blankfein from GS also feels that he deserves a $65million bonus..does he? I doubt it, especially when he needed TARP money to stay alive.

My banker friend, it is very easy to talk and boast when taxpayers are paying for bankers mistakes and greed.

People that complain about high prices have a right to, who wants to eat KD and drink water just so they can buy a roof over their head. Living in the real world around people that make average salaries, I can tell you that many are suffering due to jumping in this great investment called RE..now that is the norm, not what you descibe.

#37 Kurt on 10.03.09 at 11:53 am

@The Enemy – I would not paint all posters with the same brush. As for your suggestion that we can have two disjoint residential real estate markets in same geography, that thought occurred to me a few days ago in response to something Eduardo wrote. I don’t know how to model that, but I’m stll thinking about it. I do agree that large moves will take time – a “crash” is not in the offing, and Garth takes care to repeat that for all the people who seem to have reading comprehension problems.

As for the have-nots being pissed at the haves, that’s a political issue that bears watching. There will always be haves and have nots, but under certain circumstances that relationship can end badly enough that the haves would be well advised to do something about the relationship. Yes, it *is* your problem. Turning your back on it might work out – it has for the North American power elite for quite a while. But it might not. Maybe a modest bunker out in the boonies would be a good idea. Oh wait, where have I heard that before?

#38 Gord In Vancouver on 10.03.09 at 11:53 am

#30 hal smith

It just seems strange to me that in a country this vast and underpopulated……..
_________________________________

Underpopulated? You’ve obviously never visited Vancouver or Toronto.

#39 ALE on 10.03.09 at 11:55 am

#20 The enemy:

There are more than a few of us out here who feel the fundamentals aren’t reflected in asset prices. This has nothing to do with emotion or our ability to afford $700k homes.

#40 The Vulture on 10.03.09 at 11:55 am

S.U.R.P.R.I.S.E!!!!!! THE MILK MAN IS YOUR DADDY…

You have a real estate working for you looking at re-sale homes and you have not signed any contracts or paper work of any type. You have told him/her your mortgage pre-qualification amount, your annual income, marital status, how much you are willing to spend, what you do for a living and on and on…literally your life history including your weaknesses and vices. You have looked at a number of homes and found one you really liked and decided to put an offer in on it. Lets say that the home is listed at $475,000.00 and you tell your agent to write up an offer for $460,000.00. You also mention that you would be willing to go as high as $470,000.00 or even full list just to get the home if that is what it took to purchase it. You also mention to your RE agent that you are willing to have a long close or short and though you want to have a conditional home inspection clause thrown in with you offer, you will go in firm and unconditional if you have to.

Question: What is wrong with this scenario and how could it put you, the buyer, at a serious disadvantage with respect to the seller and possibly cost you a great deal more money than you would have liked to spend to acquire the property of interest.

Answer: The listing real estate agent (i.e. the sellers own agent) has a fiduciary duty (a fiduciary duty is a legal or ethical relationship of confidence or trust between two or more parties) to the seller and to at all times look after the sellers best interests. Unless you have signed a legally binding contract titled “Buyer Agency Agreement” the agent you thought was working for you actually is working in tandem with the seller’s (listing agent) RE agent at the same level of fiduciary duty and is called a sub-agent to the seller’s agent. S.U.R.P.R.I.S.E!!!!!!

Remember all the financial goodies, time bombs, deep secrets…how much you were willing to offer on the property of interest in the first place, the fact you would submit at full list on a firm deal with no conditions…funny that is they way the deal went down. There is nothing stopping an agent from revealing this information to the seller and they may or may not…I thought all the info I told my RE agent was to be kept between us??? How could this have happened in the first place?? Unless you sign the Buyer Agency Agreement you are known as a customer to said agent. If you sign the Buyer Agency Agreement then you are known as a client to the agent and are afforded, by your current jurisdictions common law, much higher levels of commitment, confidentiality and fiduciary duties. When you do not sign the agreement, you RE agent is working in a fashion that is similar to a car salesman at the dealership. The salesperson works for the dealership and not on your behalf.

Should you sign a “Buyer Agency Agreement”? It is always your decision. A word to the wise though, go short on the length of the contract, really short (no more than a week). I often go as short as a couple of hours (this length of term has nothing to do with your offer to purchase agreement). Also be on the lookout for contractual holdover provisions as per your Buyer Agency Agreement. If you fire your RE agent but the contract has not expired and you purchased a home through another agent, you are screwed and say hello to a big lawsuit and your former RE agent suing for full commission and damages.

There are great real estate professionals out there working hard to help their clients. Just be careful as with anything else in life. It is amazing that many people that have been buying and selling homes for years do not know this little bug a boo. TIME BOMB!

Best plan of action, a contract is only as good as the paper that it is written on. Keep your mouth shut at all times and de very discerning as to the type and amount of info you give your RE agent (be very cautious about price points, income levels and commitment levels to the home). Put them on a need to know basis at all times and go in with your eyes and ears wide open and your wallet shut. Trust no one or any fact until material. Independently, verify all facts and figures. Get yourself a great agent and happy house hunting…

#41 hal smith on 10.03.09 at 11:56 am

#33 Cabin boy:
Ever heard of water wells? Septic fields? Satellite dishes? Solar power? Geothermal heating? Cell phones? Wood stoves? If the land was available people would find a way to do it. I lived on a small semi rural acreage near Kelowna for many years and that’s what I had.

#42 greyhound on 10.03.09 at 12:01 pm

Ah, class warfare on such a lovely Autumn day.

During prosperous times most folks don’t resent those who make 100x as much money, because their own standards of living are going up with the rising tide.
But when times get tough and unemployment is rising and people are scared, they seek scapegoats. Human nature.

Already in the States, Bentley sales are dropping like a stone. Why? Wealthy people don’t want to draw attention to themselves. Braggadocio about 20-somethings who make more than 200k tells me that class warfare has crossed the border.

The “research” that was referred to sounds like Eric Hoffer’s book, The True Believer. Well worth your time, especially in current circumstances.

Here’s a fairy tale for today. Jim and Joe are 30 and live next door to each other in identical houses. Each has a family of 4. Jim buys a mutual fund; Joe buys a boat.
Fast forward 30 years. Now Jim has a nest egg; Joe has an old boat. So Joe goes to Ottawa and says, “I can’t feed my family. You must tax Jim or I’ll starve.” Joe’s family votes. You’re an MP. What do you do?

#43 Shawn Allen on 10.03.09 at 12:09 pm

Ultimately the difference in home prices should reflect differences in costs.

Labour and material is probably somewhat cheaper in the U.S.

Land servicing costs somewhat cheaper.

We need to look at home much of the land servicing costs are paid by municpality and then collected back in property tax es, that could be different.

The raw land should ultimately not be cheaper in the U.S. as we have lots of that.

I suspect the cost difference can not explain this huge difference.

partly we have a (possibly temporary) crash in U.S. home prices that has probaly taken prices well below replacement cost on new houses. That would suggest the U.S. prices recover somewhat unless we get general deflation.

#44 Toronto C9 Renter on 10.03.09 at 12:10 pm

to #20 …good for you!

Why do so many Bay-Streeters feel the need to brag and exagerate? Whenever I see a prematurely bald guy in a Porsche or Ferrari careening through Rosedale I wonder — what is he trying to compensate for??

Your post reminds me of Brad Paisley’s excellent video “so much cooler online”!

http://www.youtube.com/watch?v=7GcVnhNjWV0

#45 hal smith on 10.03.09 at 12:11 pm

#38 gord in vancouver
I have been to Vancouver and Toronto. Do you have any idea how huge Canada is and how much unused land there is out there? If there was more land made available maybe Vancouver and Toronto wouldn’t be so crowded.

#46 jmcanuck on 10.03.09 at 12:16 pm

#28 Got A Watch

Great post! IMO financial professionals and realtors who make over $200K while helping people lose their money contribute nothing to the real economy (ie. they are parasites). I know a guy who barely finished high school who is now “advising” people (how to lose their money) at a major bank. The middle class workers who do real work so you can enjoy your smug life are the ones who deserve to be getting paid more. A monkey can be a trader or a realtor.

#47 Lance on 10.03.09 at 12:50 pm

Maybe we should go out in to the Valley to see if prices drop enough to equate to living in Sumas, USA (which, with a Nexus pass, is an easy commute to the Valley anyways). How about Agassiz, which is 2+ hours to Vancouver?

http://www.realtor.ca/propertyDetails.aspx?propertyId=8682293

$339,900 for a 1,794 sqft house, 5,922 sqft lot…?

So what the market is telling us is that there is only a small reduction in price premium when you move a further 45+ minutes out in to the Valley? There really isn’t anyone commuting to Vancouver from Agassiz.

We’re punch drunk at the top of a real estate bubble, that’s the only explanation.

#48 Lance on 10.03.09 at 12:52 pm

“beautiful maple kitchen cabinets and quality laminate flooring”

I love the marketing spin… maple cabinets and laminate floors are something to get excited about?

#49 Justin on 10.03.09 at 12:58 pm

#20 The enemy on 10.03.09 at 8:30 am

It’s rather distressing to see someone (who claims to be at the top of the economic food chain) post so many words yet have so little of anything of value to say
Further this when they refer to themselves as “the enemy” (embedded anxiety disorder?) after reading so few posts on this blog. After dropping hints of possible psychological disorders this individual dismisses the peons (malefactors) with the dismissive that they need to get out more often and think less.

Arrogance or a grand scale or something else…….

#50 Dan in Victoria on 10.03.09 at 1:10 pm

Post #20,I’ll pass on what you said to the old guy that goes through the garbage cans at Tim Hortons in Langford looking for recyclables.I have a bunch of empties rolling around in the back of my pickup that I discreetly give him in the parking lot.Haven’t seen him for awhile, maybe his investments paid off.Or maybe his time ran out.

#51 Evangeline on 10.03.09 at 1:13 pm

#28 Got a Watch

(( Many ordinary people are angry about the cost to society of “financial professionals” and the mess they make, that ordinary taxpayers have to clean up afterwards. And rightly so. They view you and your co-workers as parasites, creating no value, and providing no real contribution to society at all. I am sure it gratifies your ego to think otherwise. In fact, your arguments are a good summary of why the rest of the country hates Toronto in particular and “financial professionals” in general. Arrogance, greed, and the expectation that those “ordinary” people you so despise will bail you out when you gamble with their money and lose.))

YES!!!!!

#52 Men With Hats on 10.03.09 at 1:29 pm

Glug, glug, glug ! Trying to breathe under water.
No one mentions that the San Andreas fault line runs right up the coast of Vancouver .
Come the major geological correction Van will be under water .
Buh,bye greedy guts .All land on the lower mainland is worthless in consideration of this fact .
When California slips into the sea Van will follow .All hail the new Atlantis .
The new coastline will begin at Hope . How appropriate.
Geological experts say the correction is long over due .

#53 Keith in Calgary on 10.03.09 at 1:37 pm

When Canada’s largest owner of rental properties decides that they will not buy anymore apartments in Alberta because they are too expensive, you had better take notice……..

http://www.calgaryherald.com/business/real-estate/Boardwalk+shun+property+purchases/2061343/story.html

Boardwalk REIT does not aim to acquire rental apartments this year, preferring to continue its unit buyback program, its chief executive said.

The trust, Canada’s largest rental apartment landlord, said the cost of purchasing property is still too high in many parts of the country.

“It’s still cheaper to purchase units in our company than it is for us to purchase apartments in eastern Canada or even western Canada because property values on main street have actually been very surprising and have held better than what purchasers would like to pay,” said CEO Sam Kolias.

Imagine that eh ?……….having personaly sold high end cars to Sam Kolias, his wife Melissa and his brother, I can vouch for their business acumen and ability to analyze the potential of probably any given deal. It is apparent that they do not see any value in real estate acquisitions at today’s prices.

#54 charles on 10.03.09 at 1:55 pm

Wow #20,
Your not the Enemy, just another parasite on society, skimming off your commissions and creating nothing. While you are out and about enjoying life keep those blinders on because there is a city full of people around you who actually contribute something to the country.
BTW here is conspiracy site for you.
http://dealbook.blogs.nytimes.com/2008/12/23/head-of-fund-invested-in-madoff-said-to-commit-suicide/

#55 DaBull on 10.03.09 at 2:10 pm

#10 Bob

You ain’t gonna get no inheritance buddy.

#56 Downsized and Delighted on 10.03.09 at 2:16 pm

#20 That was certainly a different perspective from what I usually read on here. I agree with you on the high end condos – that’s why I don’t own one. But then, I don’t see a future for the low-end condos either – they are just as heavily investor dominated and/or owned by 20-somethings who have bought not out of need but simply as a stepping stone for their future housing purchase. (when they have a family and actually “need” a house)

Just out of curiosity, is the 10 percent home investment before or after the 40 percent drop in your portfolio? If it’s after, you are really doing well!

#57 ted on 10.03.09 at 2:34 pm

for the sane person commuting form Sumas across the border to Canada doesn’t make sense. But I have heard of people living on the sunshine coast and taking a ferry in each day to vancouver. I would rather live in Sumas than take a ferry each day. so Garth may be on to something. By in sumas now or be priced out forever. Even though I say this jokingly I bet there are some people in Vancouver giving this some thought.

#58 ottawa on 10.03.09 at 3:02 pm

Paying more for everything – it’s the Canadian way (and with minimal grumbling).

Similarly I went to the states to buy my vehicle – for exact same, made in Japan, vehicle I saved $10k after exchange. Government has moved to close this loophole (to the benefit of car co’s and at the expense of every Canadian) by demanding new vehicle theft deterrent something or other (Co’s would have to apply to allow importation of their US-bound cars which of course they will not do).

This newer regulation pretends to target one thing but actually is designed to do something else entirely – ensures foreign Co’s can continue to unfairly pluck excess profits from Canadian consumers by stopping consumer imports that were narrowing the pricing differential.

#59 Eduardo on 10.03.09 at 3:08 pm

http://www.financialsense.com/fsu/editorials/amerman/2009/1002.html

Inflation/Deflation definition debate to discuss what Mish/Garth think vs what the other side is arguing.

Must read so that we can all stop arguing about it here.

#60 dd on 10.03.09 at 3:11 pm

#20 The enemy

“You have to stop looking at average incomes when analysing certain markets”

Really? Just like looking at the stock market PE ratio and eyeing for under or over valuations. Averages median, or affordabiltiy serve a purpose. It is a quick way to value potential upside and downside risks.

Great post, it has people talking.

#61 Sotiri on 10.03.09 at 3:22 pm

#28 Got A Watch – Great post – thank you.

#20 The enemy – to many “specialists” like you working in the finance is the reason of this catastrophic financial situation.

#62 NKVD Black Raven on 10.03.09 at 3:25 pm

Canada is going to be so unattractive to immigrants add offshore business unless there is a correction.

#63 are we being inflated? on 10.03.09 at 4:33 pm

SUMAS VS. ABBOTSFORD

Come on….

Basically cheap draft beer and pull tabs on the side of the road in Sumas versus a city that has a population in the 100k – approx.

Real estate is inflated but you have had better examples……this has to be the worst.

The average national stats are there to be commented on. Use your time more productively and try that. — Garth

#64 Not Garth on 10.03.09 at 4:38 pm

Garth:

When do you think Vancouver prices start to fall?

When do you think interest rates start to climb?

How far do you see Vancouver prices falling?

Thank you .

#65 jess on 10.03.09 at 4:47 pm

tycoons and typhoons

Anger among ordinary households has led to plans for a two-week repayment strike starting on Thursday. It has been organised by the Icelandic Home Coalition, a new grassroots movement.

Anger is in large part focused on a belief that ordinary working people, who never sought to take huge financial risks, have been forced to pick up the tab for an elite band of aggressive business tycoons, a few of whom may have been fortunate enough to salt away some of the spoils of their own recklessness before their luck turned.

Sigfusson confesses he shares some of this frustration. “It is more than easy to see people will say: ‘This is not our debt. These were private banks, why should we have to pay for their mistakes.’ It is the same question people are asking about the City and Wall Street.

“These banks were allowed to grow out of all proportion. A peculiar atmosphere was created. There was a total lack of self-criticism, mostly in the political and financial world, but also in the media. These politicians and ideologists … in many ways turned Iceland into a neoliberal laboratory. And the experiment had a terrible ending.”

http://www.guardian.co.uk/business/2009/sep/28/iceland-crisis-one-year-on

hotel splits in half !!!!!!!!!
http://media.smh.com.au/national/national-news/i-just-survived-an-earthquake-768739.html&from=timeout

#66 Bill-Muskoka (NAM) on 10.03.09 at 5:29 pm

Being originally from the States I know U.S. housing and pricing and what real value means. After becoming a Canadian I am still shocked at the gullibility of most Canadians when it comes to housing prices. Maybe it is some kind of cultural hangover from England wherein the Feudal Landlords and Crown held title to all the land?

Our housing is way overpriced, over valued, and insane, but there are sufficient Sheeple to keep the market alive and the RE industry plays them as well as any casino.

But then I, being the rational person I am, still regard our house as our HOME, and not our primary investment.

Granted we have very cold winters, but not as bad as say Minnesota where the temp drops regularly to -35 to -45 F (about the same in Celsius). I suggest checking out housing prices there as a realisitic comparison.

I still wonder how many Canadians actually bother to take the time to research the history of property they buy? In Ontario you can easily go to the Land Records Office and see how the ‘value’ has been grossly increased by second or third morthages. You are paying off the credit debts of the owners when you willfully absorb all those add-on mortgages. How smart is that?

Yes, we own a modest home and love it. We have mature and great neighbors, a real neigborhood, and watch out for and over each other like normal civilized folks do.

What the asking price for ‘Century Homes’ is makes me almost laugh because people that buy these energy sucking POS’s have no clue as to the true costs they will pay just to keep a place to live, slightly better than a tent (which is debatable for many such places) in a reasonable level of repair. But that’s okay because I have a lot of contractor and professional friends who are retiring on your stupidity. LOL

#67 Burls on 10.03.09 at 5:41 pm

http://www.financialsense.com/fsu/editorials/amerman/2009/1002.html

Inflation/Deflation definition debate to discuss what Mish/Garth think vs what the other side is arguing.

Must read so that we can all stop arguing about it here.

A question Eduardo: How does the spiel in this link resolve anything?
Burls

#68 angrylittlefella on 10.03.09 at 6:01 pm

#20 the enema

You are the injection of a liquid through the anus to stimulate evacuation.
Oh … that says enemy.

my bad

angrylittlefella

#69 Dubble on 10.03.09 at 6:06 pm

#28 AMEN!

#20

Financial Services Advisor = Greed, Ego, and Heartless.

Your post highlights exactly why people in your position are despicable. You need to grow up.

When will people understand that we depend on eachother, we cannot take advantage of others and expect to better society. Contribute, and quit leeching.

#70 Calgary_rip_off on 10.03.09 at 6:19 pm

The enemy said: “It would not take a psychologist to assess the jealousy on this board towards people who are financially ahead. And on a somewhat related note it explains the large number of individuals on here that constantly post links to conspiracy sights. Research has shown that it is a complete dissatisfaction with their own lives which causes them to focus all blame for their failures on politicians, bankers, and a host of conspiracies.”

Dude, you make many associations where there may be some/or none!!!

So you expect people that make around $100K a year here in Calgary happy to buy a house that is worth half the market value? And how dude are you supposed to get a decent down payment here when the rents are more than most people’s mortgages in Calgary? It’s not jealousy dude. It’s called outrage about the situation. I have disconnected from the situation by accepting that Calgary and its real estate and most things in Calgary are f3cked-sideways. The newspapers are run by idiots, people drive too slow, there are too many uncaring conservatives(whats with the working homeless here-nice caring government-wtf?), the weather is horrible in the winter. Know why I am here? Work, that is it(job is great!). My wife hates it here. My daughter has to deal with kids who have parents who whine to my wife if my daughter plays too rough-with the boys. WTF? And from work you should in most cases have an ability on $100K a year to buy a decent house-except in a whacked market(and dont tell me to go buy a condo for $250K). So it seems to me dude that your argument that everyone should go pack to fudgepacking as merrily happy renting is a screwed argument-I’ll leave the fudge packing to you as you seem to excel at it. Please phone your local realtors in Calgary so they can phone me repeatedly asking for the owner of the house and I tell them, “Oh, you again. Nope, still renting.” click.

#71 taxpayer like you on 10.03.09 at 6:41 pm

52 hats. Google “Juan de fuca plate”. Its eastern faultline (NOT the Sand Andreas) runs a ways off the WEST coast of Vancouver Island. Not to say Van cant have a pretty hard shake, biggest danger being the liquification of the soils in the Fraser Valley. Nosty Jr on the NoShore will be
safe from that and any tsunami.

Gotta watch – nice retort to “the enemy”, but I have to ask, if you make your money from trading stock, how is
your work contributing to society?

Hal Smith – I cant tell if your question regarding land available for development is questioning the political will required to do so, or if you’re nit familiar with the process
of land development. You may want to check the housing
affordability studies at demographia.com for an
interesting theory on the RE boom-bust cycle.

26 Keith in Calgary. Wouldnt you really rather be Keith in Rio?? Go for it!

#72 artisuseless on 10.03.09 at 6:44 pm

@20 The enemy – I’m not jealous. For the record, my husband and I own our house outright and have plenty of savings.

I used to work in PR and know professional ‘spin’ when I see it. There were a couple of ‘letters’ that Garth answered that struck me (and a few other readers) as more likely written by an RE agency posing as a twenty-something advice-seeking couple than an actual person. I think ‘Brat’ was an actual person but the one from yesterday sounded like a shill – the wording seemed more like something written by a PR person than an actual financially inexperienced, twenty-something couple.

Also, when it comes to median incomes, yes, it’s true – poorer people likely rent – but I’ve also met a lot of people who exaggerate their income and job title (to brag, wishful thinking, etc.) and these days, it seems that no matter what someone earns, they try to live a lifestyle above what they’re actually able.
Sure, there’s admin people who make 50K but over all, not that many. Sure there’s people in their 20s who make 200K but again, not that many (and I still suspect that in those cases nepotism trumps brilliance – just seen it too many times).
There’s no shortage of people who live well beyond their means in order to show off to ‘friends’ – particularly in Vancouver and Toronto.
Gail Vaz-Oxlade manages to find at least two couples a week as examples and I’m sure there’s plenty more.

#73 mike as in mike on 10.03.09 at 7:37 pm

#28 Got A Watch

Wow! That has to be one of the best post’s ever on this blog.

#74 piccaso on 10.03.09 at 8:22 pm

LOL… The one in Abbottsford doesn’t have a garage either because it wouldn’t fit on that postage stamp lot.

#75 Frugalistas on 10.03.09 at 8:33 pm

Garth, you’re coming to Halifax? Awesome. Could you provide us with Halifax-centric data? I would appreciate it.

#76 jungberg on 10.03.09 at 8:55 pm

1) Garth, you said the immigrant/overseas’ RE investor issue, particularly wrt Vancouver, had been dealt with already here. I searched and couldn’t find where. Can you or anyone else point to a past post about that?

2) I’m starting to think that people in Vancouver (and Lower Mainland) really believe all that stuff about it being the most livable place in the world.

On top of that, recruiters used to tell me that companies shy away from west coasters because they tend to not want to leave.

Makes me think that Lower Mainlanders will do and pay anything at all costs to stay in the best and only place they’ve ever lived.

#77 robert on 10.03.09 at 9:11 pm

#9 Cory

You have a house in Weyburn that “would sell for $250,000.” That must be some shack or things have really changed since I knew the place in the late 90’s. I’d be curious to know what happened to the price of real estate in Saskatchewan in the 30’s. I’m guessing it didn’t go up. I know, I know oil and gas and potash will save the “Land of Living Skies” but frankly these are commodities subject to the same laws of supply and demand that broke the farmers in the twenties through the Depression. What happens when oil prices are halved again and the Chinese decide they really don’t need that much fertilizer?

#78 Jim on 10.03.09 at 10:04 pm

#20 The enemy

I agree. There is a lot of wealth in Toronto and a lot of people don’t want to hear about it.

My friend is an attorney who is in his 30s makes $200K and he works M-F and still has his weekends. He used to work in downtown T.O. – it was more lucrative (double) but said that he had to work a lot of hours and sacrifice his weekends. So he quit, found a job in mid-town Toronto and took half the salary and got his evenings and weekends back.

Another couple have 2 children and they clear $400K a year (household) and have a net worth of $2M.

Toronto has a lot of money and it’s not all reckless money. $200K (household) for a young professional couple is not unusual.

#79 Daystar on 10.03.09 at 10:06 pm

#9 Cory Cherpin on 10.03.09 at 12:41 am

#7 Not Garth on 10.03.09 at 12:24 am
“We know you are right Garth. Know it.

But WHEN will the SHAT finally start to hit the fan (good and hard)? This strength in our RE markets (expecially in BC) is just crazy. When does it start to unravel?”

It will begin when interest rates rise. Its anyone’s guess but next year seems most likely and if I had to be specific, I’d say summer of 2010. It could even be sooner. Canada Trusts 1 point rate move was a surprise (I think it was CT). It would not surprise me to see banks get ahead of the Bank of Canada with hikes intitially.

I would also like to add that the looney is likely to keep appreciating through the fall and winter, then flatline and fall slightly for a few months before rate hikes begin. As we all know, the loonie has followed the price of oil. My thoughts are that the loonie will not follow any oil price spikes shortly before rates rise so I’m watching for this as a sign that rates will rise assuming oil rises and the dollar does not. Either way, from the summer or fall of 2010 on , I predict the looney to fall as rates rise and the U.S. dollar rises overall for a few years.

While this occurs, this trend in currency and asset depreciation will occur until either: We elect a government (or the U.S. dollar falls again but thats on the outside, I think the U.S. dollar will strengthen some time in the spring/summer for the rest of Obama’s presidency), elect any government that can balance budgets or return to surplus’s and/or grow the economy through the markets with the return to good tax policies such as was the case with income trusts and keep a watchful eye on Foriegn M & A’s through tougher regulations.

This will take time both for the markets to correct and for good policies to bear fruit. Both real GDP and the markets have to grow, with a return to trade surplus’s and its hard if not impossible to do this during a period of asset deflation, but the groundwork can be laid through market expansion. Nevertheless, a good government must bring back the kind of environment that makes economies grow or it will get worse. If these things don’t take place, our Loonie might recover with a second U.S. dollar fall taking place in 2013, 2014 on but it will continue to fall overseas until our deficits are addressed along with policy that grows our markets, our productivity and GDP.

Again, I’m predicting a falling dollar some time next year, followed by higher interest rates. This will in turn cause the cost of imports to rise or cause inflation (a higher cost of living) but higher interest rates will most definitely cause asset deflation.

Translated: The cost of living will rise, consumer spending will fall, asset valuations/personal equity will shrink, the markets will shrink and the loonie will be worth less on an international scale. In other words, I’m calling for a W shaped recovery/recession the second of which will last 3 years or longer depending on whether or not Canadians elect a good government. In short, we will all be poorer.

Oh yeah. While I think of it, I’m not scapegoating a government when I say that they blew it. I’m not poor. I’m an investor that has had my best year. Social/economic status has nothing to do with my views as as the odd commentor might suggest. I’m merely informed and in general aware of the facts that aren’t hard to find and approach it in terms of an investors point of view.

Again, I’m saying that this government has blown it huge by erasing surplus’s to generate debt, jacking up spending in areas that don’t pay in places like Afghanistan and following the gameplan of rapid asset inflation policy during a low interest rate strong dollar environment that will, when the Real estate bubble bursts due to higher interest rates caused by government debt, leave us much more indebted and ruin alot of lives. And if I’m right about Canada’s currency falling against the dollar, the cost of living will create a tighening of a vice that most will feel and few will be happy about.

If there is one way for a government to make a nation poorer, they’ve found it in spades. If readers don’t understand why that is, I’ll be glad to simplify or expand on my reasoning. Who knows? Maybe one or more of my conclusions are wrong and debate could bring it to light, but… I don’t think so. I truly wish I was wrong, I truly do.

#80 Jim on 10.03.09 at 10:12 pm

For those angry/jealous/envious of #20 the enemy and those like him. Enjoy this video:

http://cosmos.bcst.yahoo.com/up/fop/embedflv/swf/fop_wrapper.swf?id=15876904&autoStart=0&prepanelEnable=1&infopanelEnable=1&carouselEnable=0

#81 Dan in Victoria on 10.03.09 at 10:15 pm

Yeah post 369 Dubble,You’re right.You know I thought about the guy I gave my cans to.He was about 75 or so had a little two wheel shopping cart, was very polite.He wore an old suit and some worn out dress shoes and had seen better times.Times had been better for him no doubt.But he had his pride,”hey pal take what you need out of the back of the truck”Thank you sir…Maybe our poster #20 could take some of his “bonus money” and help out.How much of that bonus could go to the local food bank instead of a few pairs of 100 dollar sun glasses or eighty dollar haircuts.How about when you are at Timmies or Starbucks this winter and see that old person with that dollar cup of coffee sitting there in the corner.Ever think that they didn’t spend a buck for the coffee and maybe spent it to sit there and get warm?Or to talk to a few people?What about that old pensioner thats ahead of you in the check out line buying some food,and she’s a couple of bucks short?She’s going through her change purse looking for a few pieces of silver to pay.I bet you are impatient as hell c’mon,c’mon I got to go.Whats it take to bend down and say,Oh look miss you dropped this twoonie when you pulled your purse out?They all had mothers and fathers,dreams and goals.Just because things went good for you doesn’t mean that your’re better, maybe everybody didn’t get the same chance.What about that overweight 20 year old girl that serves you coffee every morning,does it take any extra effort to smile and ask how are you today dear?…and actually mean it?Money is NOT everything.

#82 is winter coming? on 10.03.09 at 10:15 pm

That’s right folks Canada still has winter season. Reality kicks back in once snow start falling. US has 10 times the size of our population for a reason.

#83 BCing You on 10.03.09 at 10:22 pm

#30 hal smith

I don’t think Canada is under populated. Canada is one of the few countries in the world that is not over populated. Also, there is a reason why vasts parts of Canada are sparsely populated. Hint, think cold long winters. If Canada’s population continues to grow, the current high populated areas will just get more and more populated.

#84 Jim on 10.03.09 at 10:31 pm

FYI: This is where the money is:

http://www.brocku.ca/maplibrary/Atlas2001/Toronto/avghouseincome.pdf

PS: $200K households are by no means the norm. However, just because they exist doesn’t mean you need to hate. Don’t worry, be happy!

#85 ted on 10.03.09 at 11:21 pm

#72 artisuseless good post. I am one of those people who didn’t believe the couple posting. I agree with what you say about nepotism.
I love how guys like #20 use the example of twentysomethings on trading floors. Sadly I can verify that as I am one of the few people on here who actually works on a trading floor. But with that said none of those people are posting here. I can read a fraud from a mile away.

#86 Daystar on 10.04.09 at 12:32 am

Canada trust (doh!) Make that TD.

http://www.theglobeandmail.com/globe-investor/personal-finance/td-rate-boost-should-customers-cheer-or-jeer/article1296309/

#87 Bob Bentley on 10.04.09 at 1:21 am

Well looks like we’re enticing those rich Albertans back into the B.C. economy again…. too bad the auctions over

http://www.cbc.ca/canada/british-columbia/story/2009/10/03/bc-invermere-condo-auction.html

#88 Andrew on 10.04.09 at 1:33 am

#20 The enemy

“It would not take a psychologist to assess the jealousy on this board towards people who are financially ahead.”

The venomous reactions proved your point. Excellent!

It would be interesting to get a psychological profile of the people writing in to this blog. 1% of the population believes in conspiracy theories but 75% of the bloggers on here believe in them.

Good old group-think at its dysfunctional best.

#89 Onemorething on 10.04.09 at 1:47 am

Bla Bla Bla, the only difference between these two properties are the Canadian one hasn’t been DEFLATED YET! Don’t even try to make a case for it!

Canadians have only been given a second chance to sell since the US stimulus was thrown at the sinking ship and is undermining the correction.

HINT – those holes have temporary plugs!

I will take it one step further and say not only will the RE market tank badly but I dont expect the new regulation for bank loans will attract anyone to buy.

Thus an oversupply of RE in Canada will spiral down soooooo badly it take years for the bottom to come and buyers to be remotely interested or approved to buy.

Let’s face it! When this happens, the upside will be zero to own compared to other investments so buying wont even make sense. Can you say 3 years of oversupply that could last 10 years to turn.

We will go from ponzi manipulated buying now to dont trust any buying in the future. Both of these extremes are closer together than you think.

Watch 09Q4 show you the way and pick up the pace downward followed by the Olympics which will mark the absolute turning point for it all. Further is will be BC which drags the TO market and others down.

#90 Nostradamus jr. on 10.04.09 at 7:30 am

Garth’s original germane advice stands…

Get out of debt.

…To his bellyaching Vancouver renters, I suggest all of you relocate, buy a home on the East Coast…become a homeowner and forget about wishing the worst on your Vancouver brothers.

Nostradamus jr.

#91 Devil's Advocate on 10.04.09 at 8:58 am

I’m familiar with the Fraser Valley (Chilliwack, Abbotsford etc). Anyone who lives and works there might be wise to purchase the Sumas house rather than the Abbotsford house. Crossing the boarder is easy in that location. It’s the same distance to Vancouver from Sumas or Abbotsford. The discussion of how far Sumas is from Seattle is… irrelavent, people work in Sumas and the surrounding areas as they do in Abbotsford and the surrounding areas. They are not just bedroom communities of Vancouver and Seattle.

Keep your BC Medical eh?
Cheap US beer eh?
Cheap US gas too eh?
Keep your Canadian job eh?

Y’all come back now… ya hear.

The

#92 WillsDad on 10.04.09 at 9:49 am

I don’t get it. How do you live in Sumas and collect BC medical? I thought you could only live in the states for 6 months of the year?

#93 BOB on 10.04.09 at 9:50 am

What’s with all the bashing on stock trading not contributing to society? Do stock traders not pay income taxes? Would you prefer they work for the government or collect unemployment? It’s no ones business on how someone decides to make a living as long as it’s legal. Also many small companies go public to raise funds to expand their business. Investors invest in companies that they think have promise and also because of the liquidity. It is very important to be able to sell and exit your position when you want. Stock traders provide liquidity.

#94 r on 10.04.09 at 9:56 am

#20

yes, working in the financial industry is sweet. i have to admit, lending money you didn’t earn is pretty hard to fail.

what’s funny is the idea that somebody in the financial industry can easily buy a home.
it’s a twist on the idea that the financial industry, because of cheap money, is disportionate in size to the economy.

we got a taste of what the economy is really worth, and then we got scared and borrowed again.
maybe another collapse in 10 years, so don’t check this site every day for the big day. Read Garth because he’s good at writing not because he’s going to announce the big day; that’s the day of reckoning, if your conspiratorially-minded.

of course, if we listen to our Central Bank and go out and actually invent stuff the world needs, we’re going to be ok.
for now, we’ re going to invent more financial products.

and if you get paid what you’re worth, you might think of the value of things.
if you get paid more than you’re worth, you can easily buy a home today.

one last thing. the problem with conspiracy theorists is that they aren’t benefiting from one.
the cure is to be part of one.
be the first, since they don’t exist right now.

#95 The Enemy on 10.04.09 at 10:17 am

Ah what a firestorm i created. #28 what do i contribute to society? Thats a good question, not sure how it relates to real-estate but i’ll take a crack at it. First off i’m not a stockbroker and i dont deal with retail clients. In fact, i dont deal with clients at all. I’m a proprietary trader. I bet the house’s money and i do it very well. So basically there are international bond, currency and commodity markets where hedgers meet speculators and i make tens of millions a year, every year for my firm. The shareholders are happy and i keep a percentage of which i then pass 46.4% to the federal and provincial government. No tax shelters, no off shore accounts just straight off the bonus cheque. What do i contribute to society. Well over the last 17 years i have paid conservatively 20 million in income taxes so that my less fortunate fellow canadians can enjoy free health care and quality education. You see without me whom you despise so much you would have to accept fewer free government services or pay much more than half your income to the government. I keep your taxes low. Forgot about that huh? You trade stocks all day. So you see we are very similar in terms of what we do. The only difference is i’m really, really good at it and my fellow canadians split the profits with me. You on the other hand probably scrape together some marginal gains and then put through some bogus self employed/home office deductions to minimize what little tax you pay. Not need to thank me though, you are welcome.

Now back to real estate. You actually identified why people are so fascinated by it. On average canadians are financially illiterate. They pay the highest mutual fund MERs around and they are advised by people who are as inept as most real-estate agents. For most people investing is the financial equivalent of treading water. And the final straw was watching the stock market crash and the average home price just dip slightly. They dont understand investing but they are comfortable with houses. They are now officially in love with real estate. So they have decided to take advantage of low rates and buy as much house as they can get their hands on as a forced savings/investment tool. The problem is they will over the course of years begin to realize that their house is not a great investment and they cant count on it to support their lifestyle. They will have to hunker down and make sacrifices and save more. You ask if i recognize what a bubble looks like. You betcha. And they collapse when SPECULATORS are forced to sell. Outside of certain segments of the condo mkt i dont see the huge speculator interest. What we have is people that bought too much house but they wont be forced to sell. They will just have to give up some of the other toys they thought they would be able to afford as well. In canada mortgages are not non recourse. They cant just hand back the keys if they are upside down on the loan. We will have a general malaise for the next decade as deleveraging continues. But no real estate collapse, sorry.

Anyways, this is my last post folks. I’m not a fan of posting on the internet. Too much shouting and there are so many intersting things to do in the real world, and so little time. I hope all of you get what you want. Except of course those of you hoping for the end of western civilization. To them i hope you get the special help and medication that you need.

Gotta get back to work. This defecit is going to require alot of help from yours trully.

#96 Got A Watch on 10.04.09 at 10:35 am

Thx for kind words. I thought after I posted that maybe I was being too harsh on ‘The Enemy’, but on reflection I think the tone was about right. His arrogant tone just irked me.

I am ‘retired’, so I guess some would say I make little “meaningful contribution” to society, by some metrics. I do not work, and my income is from trading. I have some capital, my life savings, if I lose that I guess I would have to sell my house (small mortgage balance remaining) and move to a cardboard box under a bridge.

I actually ‘retired’ too early, at age 40, due to difficult circumstances – divorce, family issues, health issues etc. If I sold everything I own at full ‘market value’ I would maybe have $1 Million, best case scenario. But a lot of it will never be sold, like the family antiques, my vintage vehicles etc.

If you want to call me “unproductive” go ahead, if it makes you feel better. I have a very bad back, and cannot do much physical work anymore. Even sitting in a chair hurts after a while, I have to use ergonomic back cushions and a good chair, or I could not even type these words. With proper exercises and caution, I can live a normal life, but I am one casual move in the wrong way from being unable to stand up straight for a week, it happens frequently.

But I ask for no sympathy from anyone. I pay my own way, and have never collected any money from any Government, nor will I till I receive my pittance of CPP/OAS at age 65 or so. Well, GST rebate is the only one that comes to mind. I pay taxes, lots of them. I help out lots of friends who are not so fortunate, in various ways. I donate to charity.

At age 48, the only work I could do full-time would be behind a desk, my back won’t handle standing all day or doing construction work etc for long periods, as I used to do when I was in my ’20s. I have had many careers, from truck driver owner-operator and construction worker in my 20s to sales manager, project manager and business owner. I am contemplating several entrepreneurial ventures now, small business of various types, but the economic timing seems wrong.

I do enjoy the mental stimulation of trading, it is war on the digital battlefield, no quarter asked or given. I came late in life to economics and trading, when I was younger I just worked and gave my money to a “broker” who did his best to make me broke. Over the last almost 9 years, I have learned much, and still learn new things everyday. Most of my real hard knowledge has been gained from Blogs, as opposed to the MSM or “education”, and they still provide more facts and real news every day. I started out trading precious metals, mostly silver, and have done well at it. The first few years it was mostly luck, the right trade at the right time, without realizing it, they say it takes 10 years and losing $100K to make a good trader. These days, I mostly trade commodity stocks for short/medium term trend riding, and do some aggressive day-trading of stocks and option plays. I suppose I could make a new career in finance, but I have no interest in managing others money, and there is too much regulation.

I hope for the best, but plan for the worst. Even though this is a Depression, do not be fooled by the MSM, I remain optimistic that this too will pass in time. You do the best you can with what you have.

#97 On the sidelines from Calgary on 10.04.09 at 10:40 am

#81 I wish more people would think and act like you …

It will be interesting to watch how people’s attitudes will change when the house of cards is coming down in Calgary.

#98 dd on 10.04.09 at 10:49 am

#88 Andrew

…It would be interesting to get a psychological profile of the people writing in to this blog…

To complex. Simple. Most people think housing is overvalued.

#99 dd on 10.04.09 at 10:57 am

#77 robert

…What happens when oil prices are halved again and the Chinese decide they really don’t need that much fertilizer…

Too funny. Short term the price can do anything. However these are two commodities that the world cannot do without long-term.

The world is in a commodities bull market for at least the next 8-10 years.

#100 DaBull on 10.04.09 at 10:59 am

Sumas Population 1,127
Abbotsford Population 123,864 (5th largest center in BC)

Passport requirements June 1, 2009. Living in US and working in Canada requires a Canadian work visa, If Canadian living in US requires a green card. So distance from Sumas to major US center…. relevant.

#101 TS on 10.04.09 at 12:01 pm

The link below will take you to a new article about a recent survey done by the Certified General Accountants Association of Canada.

The results are concerning:
1) Debt in Canada is rising rapidly (consumer debt has increased over $1 TRILLION)
2) 85% of Canadian households have credit card debt
3) 21% of Canadian households now have a debt level that they cannot manage.

As unemployment continues to decimate families in Canada we will see rises in home foreclosures, bankruptcies etc…. all of which will eventually be felt with significantly decreased demand for housing…. which in turn will drive home prices down.

http://yourmoney.ca/debt/ContentPosting?newsitemid=011102415&feedname=CP_EN_FINANCES_PERSONNELLES&show=False&number=0&showbyline=True&subtitle=&detect=&abc=abc&date=False

#102 jess on 10.04.09 at 12:01 pm

so andrew no one is against wealth that i know …it is how wealth is created and who controls it.
Have you read this author
http://www.monetary.org/treasurytalk.htm
Money has come to have a more fightening association to some people due to the few who seem to control the rules.

Especially getting rich by war profiteering, trading in humans, drugs etc…
http://www.youtube.com/user/BlackwaterBook

#103 Dean on 10.04.09 at 12:13 pm

#20 – Troll.

#104 Keith in Calgary on 10.04.09 at 12:25 pm

#20 the enemy…….probably works for Swift Trade…….LOL !!!

Google that name and add job to the search for more information……..they all use the term “proprietary trader” like it is some badge of honor whilst they try to scalp stocks for pennies and pay the house for the privilege.

#105 Future Expatriate on 10.04.09 at 12:29 pm

#20 – Don’t be an idiot. Most people on the sidelines of this bubble are rich, and that’s how they got to be that way… by buying at the BOTTOM, not the TOP.

The richer you are, the cheaper you are. Also the more likely you are to be in the know about trends.

No one rich is buying in this market; it’s all stupid greatest fools of all drunk with “free” money from the banks they’ll be paying back the rest of their lives on a depreciating asset. IF not actually underwater on it for at least a decade or more by the time this bubble pops its last gasp.

#106 Jim on 10.04.09 at 12:33 pm

Quite a lot of people make over $150K (household) in Toronto (2005 census):

http://tinyurl.com/y9xro2h

Today it is likely that a quarter of a million households in Toronto have a household income of $150K or more.

#20 predicted the hate and jealousy dead on! Good job! Don’t worry, a quarter million Toronto households are with you!

A quarter million households is 50% of the Toronto population. The average income is $70,500 (per family). You are way off the mark, unless the other half earn zero. — Garth

#107 DaBull on 10.04.09 at 12:36 pm

#100 TS

http://www.cga-canada.org/en-ca/SpeechesPresentations/ca_pre_2009-03-12_indebtedness.pdf

Here is that survey you are refering to. Read it and see if you can find any off that information referenced in your posting.

Blogs are full of mis-information.

#108 DaBull on 10.04.09 at 12:46 pm

#81 Dan in Victoria

Reminds me of the little old lady in downtown Edmonton who everydday would be out on the street at 7:00 am in morning, rain, snow or shine. After a hard day of panhandling she would walk down the alley, jump in her brand new 450SL and drive home to her Riverside condo. So don’t judge a book by it’s cover, some people are more well off than they let on. Why do they panhandle or collect cans, I think because some just like to have something to do and some, like the little old lady in Edmonton, have figured out it can be very lucrative business. Just think no taxes….

#109 jess on 10.04.09 at 12:52 pm

unwinding indeed – the theory of how the few effect the large.

Kaupthing, the bank at the heart of the Icelandic financial collapse, lent billions of pounds to companies linked to a key director and top shareholders, according to leaked internal documents.

Kaupthing was one of three Icelandic banks that collapsed last OctoberThe papers appear to cast light on Kaupthing’s highly unusual lending practices just two weeks before the Icelandic system failed last October, wiping out millions of pounds of savings deposited by UK local authorities and charities.

It reveals that its highest loans, totalling more than €6.4bn (£5.45bn), was given to companies connected to just six clients, four of whom were major shareholders in the company. Kaupthing granted some of these loans with partial or no collateral, the largest of which was given to Exista, its biggest shareholder with a 22pc stake.

The bank, which had a huge retail depositor base in the UK, was also lending millions of pounds to individuals and holding companies so that they could buy shares in Kaupthing itself – effectively propping up its own share price.
http://wikileaks.org/wiki/Kaupthing_leak_exposes_loans

KPMG and PwC Reykjavik offices are raided by Icelandic police
Police have raided the offices of KPMG and PricewaterhouseCoopers (PwC) in Reykjavik, seizing documents and computer data as part of an investigation into alleged criminal activity at three collapsed Icelandic banks.

By Rowena Mason
Published: 9:30PM BST 01 Oct 2009

#110 Gord In Vancouver on 10.04.09 at 12:58 pm

#45 hal smith

I have been to Vancouver and Toronto. Do you have any idea how huge Canada is and how much unused land there is out there? If there was more land made available maybe Vancouver and Toronto wouldn’t be so crowded.
__________________________________

You can blame environmentalism, the cost of road building, and lack of economic opportunities in untapped areas for most of this problem.

The main issue; however, is the unwillingness of Canadian residents and immigrants to relocate to rural or colder regions within our country. I’m convinced that increasing immigration by 20% and building homes in remote areas would do little to resolve the problem you mentioned. A post by #76 jungberg shed light onto this issue.

#111 r on 10.04.09 at 1:06 pm

#94

thanks for spending too.
you see, the manufacturing base in Ontario is shrinking.
they say jobs are a lagging indicator in a recession but if jobs are getting outsourced and never coming back, I don’t see how that can be a lagging indicator.

so we need the highly paid workers in the financial sector to spend and buy homes and pay taxes, just like you say.

#112 Another Albertan on 10.04.09 at 1:16 pm

For those who are interested in more than just mud slinging…

From a senior tax partner in the Calgary office of one of the major accounting firms and from a litigator at a boutique Calgary law shop, comments that are separate but come together extremely nicely:

The accounting firms are dealing with an ever-increasing work load of corporate and personal restructurings and bankruptcies. The work load has increased as the year has progressed, not lessened, and there is currently no end in site.

The lawyer indicates the same thing PLUS litigation has gone through the roof as creditors try to extract any form of payment from the debtors. On top of that, some creditors are asking their lawyers to “bury” the defaulting party to try to make it as difficult as possible to recover, form a new company, etc.

Both indicate that there have been many very complex payment arrangements between owners/principals and their companies and this is clearly exacerbating things – Loans from companies to shareholders that aren’t getting repaid, followed by a BK by an owner, causing a promissory note to default, triggering clauses in corporate shareholder agreements, etc. There are many fiascos that are unwinding out there out of public view and the modus operandi for the 12 months has simply been to buy time.

Well, the lawyer and accountant are saying that time is probably running out on a lot of people and a lot of organizations, especially when 12-month funding extensions are now being pulled, lines of credit are not being renewed, etc.

The question I had was “when do you see an end to this?” and the response was “No time soon. This will take quite a while longer to unravel and there will be carnage along the roadside. We will guarantee that. The general public simply isn’t aware of what is happening out there.”

Everyone else’s mileage may vary.

#113 jealous taxpayer on 10.04.09 at 1:17 pm

You people got it all wrong. Houses in BC will always be worth more because of the ”grow up” premium.
I work in the paper industry and yesterday I just discover that two of my friends have grow ups in their basement since 5 years.
I could not beleieve it so they showed it to me. It is truely amazing. In an aera of less than 70sqt they grow up seevral plants that bring close to 20000 cad every 6 weeks.
I dont know how to feel about it, I keep working for years and today make 60000/year and if you consider taxes I pay, that makes it less than 40000 a year. And some money I have in the bank is earning less than 1%.
Those guys make more than that in 3 months.
I am seriously considering doing the same thing, it seems everybody is doing it and there is no much harassement from the police for small size grow ups. Am I wrong? What is going on here I dont understand?

#114 are we being inflated? on 10.04.09 at 1:47 pm

“The average national stats are there to be commented on. Use your time more productively and try that. — Garth”

Try what? Ambiguity

Cheers,

#115 are we being inflated? on 10.04.09 at 1:52 pm

#20

Your post has no logic. Must be a trader. You tell us how much money the high end earners are making and bonuses are getting better then you tell us the high end condo market is going to crash….sometime.
Sorry I don’t follow………I guess because I only make 60K.

#116 confused and a little crazed on 10.04.09 at 2:09 pm

#20 guy

i agree… you don’t make the rules. You don’t force people to pay you. it is what the industry dicates and it is true a lot of people are financially illiteraate otherwise why pay sdo much for a house which does not financially compensate you until u sell it. AS for mutual funds …there are high MER fees but no one said you have to keep it there forever…move it around . mutuals F are a more diversified variation of stocks and yiu are right …most Bank mutual find advisors don’t know much …they sell what the banks wants them to sell.

But you must admit the bailout of 880 billion to pure bullshit. free market is the basis of how capitalism works …then when things go wrong …banks/ govt changes the rules….that’s really pathetic and sad because I ‘m sure some finance guys are thinking let’s do it again. The banks now are even bigger now ; therefore “they are too big to fall” more so than before

#117 Calgary_rip_off on 10.04.09 at 2:31 pm

“Stock traders provide liquidity”

Yes people get well lubed-there’s always a loser, and the loser better be well lubed.

#94: The Enema: Dude you better be prepared to look back when you are old and know that you were disconnected from any real production of anything. Have you ever fixed anything basic-or is all high in the sky theoretical bs? Why dont you get a real job?

It’s laughable to think that anyone would want your job. You are in hell on Earth and dont even know it. I’d rather be dead and going to see Satan in Hell than to be in your shoes.

And you seem to know a bit about medication. Start taking your ex-lax dude-oh, I forgot, you get enemas regularly.

I thought this blog was about housing and what’s happening there not some pretentious idiots trying to act smart-I want facts on interest rates and future housing trends not some crap about some stocktrader with no life and his daily enemas.

#118 ted on 10.04.09 at 2:33 pm

I notice financial professional gets thrown around a lot. Other than accountants what occupations in finance have a professional designation. I notice people throw out professional or consultant a lot and expect people to kiss their arse. The term makes me think the person posting is very juvenile or a fake poster.

#119 ValueHunter on 10.04.09 at 3:29 pm

#94 Enemy “Well over the last 17 years i have paid conservatively 20 million in income taxes …”

Not that I don’t believe in what you said, but you said you paid ~46.4% in taxes so your total income over the 17 yrs would have been $43 millions, averaging $2.53 millions per year in taxable income (salary + bonus). It would be safe to assume that you are making mostly in bonus. Further assuming that you are getting 10% of the profit as bonus, you would have to turn in a profit of $25.3 year after year for 17 yrs. This is an incredible feat by any measure.

#120 Marina on 10.04.09 at 4:15 pm

People still buy RE in Toronto like a crazy. My freind’s family just bought 1bdr+den condo on Steels & Bathurst for $ 310 k, it will be built in 2 years. The friend said they got very good discount and told me that RE will never go down in Canada. Don’t know what to say…
The condo site is http://www.poshcondos.ca

#121 dave99 on 10.04.09 at 5:00 pm

#117 Ted,

Since you appear too lazy to quickly google the answer to your question, I will answer for you.
CFA,
Actuary,
Pure Math Doctorate (many pure math phd’s who can’t get a professorship (there are very few of those jobs), usually end up working as quant’s for financial firms.)

#122 charles on 10.04.09 at 6:19 pm

Lest get a couple of things straight Enema. On every deal you close that makes the fabulous fake money for your employer there is someone somewhere taking the loss. The incalculable harm the arbitrage trade does to all but the world reserve currency in which you brag about being so successful at will mark your fortune as blood money.
The essential commodities whose prices you inflate for reasons of greed results in starvation and poverty throughout the world. The military industrial complex which enables you enslaves us all.
But you’re a hero because of the taxes you pay. Dude that does not even begin to pay the bill for the horrors your values inflict on this earth

#123 robert on 10.04.09 at 7:02 pm

#98 dd

Easy credit has allowed the world to borrow forward demand for the next 8 to 10 years in a hugely misguided speculative frenzy. Commodities began peaking in 2007, culminating last year with price and buying exhaustion levels not seen for nearly thirty years (which is hardly short term behaviour). With very few exceptions all have suffered enormous percentage declines (some even after the expected technical rebound since February/March).

Don’t make the mistake of conflating a dead cat bounce with a new boom. It will be very disastrous to your financial health. Just ask the pension fund geniuses that bought oil at $147, rice at $20, natural gas at $8, copper at $3.50 – the list goes on. Hopefully they weren’t your fund managers. If you don’t believe me go to INO.com and check the charts. The only bullish chart I see is sugar which is in an all too familiar parabola (presaging the predictable swan dive). The majority of the rest (and especially the important ag and energy commodities) are technically broken and remain guilty in the eyes of this prudent investor until proven innocent (ie. until the highs from 2007-08 are taken out with conviction). Like stocks, the time to buy was early in the year and certainly not to marry. Those gutsy and shrewd enough to do so have almost certainly sold months ago at a tidy profit.

The world is awash in excess capacity: labour, real estate, automobiles, tanning salons, big box retailers, pet groomers – another list that just goes on and on. Incomes are falling or stagnant. Unemployment is reaching levels not seen in this part of the world in decades. The credit markets are still seized, world trade is a shadow of its former self and securitization is dead. A secular change in consumers’ view of debt (they have way too much) and savings (they don’t have near enough) is getting underway with a vengeance. Just look at the recent almost unprecedented change in savings rates south of the border.

I’m sorry but you will have to do a better job of persuading me that commodities are on the cusp of a bull market given this rather unfriendly environment.

PS the greater fool in Chindia theory doesn’t count.

#124 Jim on 10.04.09 at 7:47 pm

So much hate/envy/jealousy for the Enemy. You guys are proving him right with every post directed at him. Keep it going.

Posters shouldn’t be so negative – it’s bad for blood pressure and overall health. There isn’t enough positive energy on this blog. To anybody that is successful and contributes to society (whether they earn $25K or $2.5M a year) I say congratulations!

#125 taxpayer like you on 10.04.09 at 8:07 pm

106 Jim – thanks for that link. I dont know what Garth is on about, seemed pretty straight forward to me. Lots of smaller communties listed too. I’ve explored the statscan site before, but hadnt found such a concise table as that.

#126 dd on 10.04.09 at 9:15 pm

#123 robert

…Commodities began peaking in 2007, culminating last year with price and buying exhaustion levels…With very few exceptions all have suffered enormous percentage declines…

Yes the world is awash in commodites short term. But long term (more that one year) it is a great investment. Supply is still very low and mines will not open because of costs. Couple this with the sell off of the US dollar and money printing … countries will inventory hard assets.

#127 dd on 10.04.09 at 9:17 pm

.#123

“PS the greater fool in Chindia theory doesn’t count”

You don’t say anything about supply … only demand.

#128 Daystar on 10.05.09 at 12:51 am

#95 The Enemy on 10.04.09 at 10:17 am

I agree with everything you said and will miss your input (as sparky as it can sometimes be) simply because it offers a fresh perspective.

But… I do disagree with one of your points and it has to do with your belief that since mortgages are recourse, real estate won’t collapse. If people can’t make their mortgage payments, they’ll still lose their homes and it doesn’t matter how ugly it gets from there, whether its recourse loans in Canada or non-recourse in Alta. Too many mortages are being lent to buyers that can’t afford mortages with any kind of rate hikes.

http://americacanada.blogspot.com/2009/07/we-live-in-borrowed-times.html

http://americacanada.blogspot.com/2009/06/despite-what-you-have-been-told-real.html

Is this all sustainable? No. Any rise in interest rates and everything will fall apart. Going forward we will eventually hit a point where we can’t possibly grow credit any further, even at 0% interest. At this point the economy will be saddled with a massive debt but without new leverage entering it to support it. Without adding new leverage the economy will begin its long overdue deflationary spiral. As it sinks, the burden of the debt will grow and grow. Consumer spending will contract. Deflation will set in. The economy will shrink more, and the cycle will continuously feed itself.

What the magic bottom will be in Canadian real estate is hard to predict but the downward spiral of deflation will begin next year as rates begin to rise and we are likely to see home valuations sink to early 2006 levels as a home valuation marker. The U.S. is experiencing what I believe currently is a bottom and its been recognized only because of near zero fed rates there… if not for low rate policies, real estate would still be in a free fall.

We might not be so lucky here and no… this isn’t what I want.

Oh, yeah,

#129 ted on 10.05.09 at 12:58 am

121.dave okay I forgot actuaries. CFA’s not sure about that. Do know they are a dime a dozen these days. As for having a phd in math it is a feat but I wouldn’t call it a profession to be a quant. Is there a society for professional quants. I don’t think so. Anyways my point is the term gets thrown around a lot and means nothings. Passing your canadian securities course and selling people mutual funds doesn’t count and is pretty much a step up from used car salesman.

#130 dave99 on 10.05.09 at 11:23 am

#129, point taken.

#131 Mr. D - Ottawa on 10.05.09 at 11:25 am

#20, #95, The Enemy

Good posts. Thanks for taking the time to comment and provide a fresh viewpoint.

There are other professions that make the kind of money needed to buy in this market. My younger brother in St. Catharines makes $500K+ as a doctor (specialist) and lives in a million dollar home (nearly paid off in 5 years). My sister is a lawyer in Toronto (runs own small firm) and makes over $200K. My other brother is a chiropractor and earns a very good income. All bought a home in the past five years.

Maybe this isn’t the best time to buy, but most life long renters will retire poor. I bought my first house in 2000 and it was wonderful not having a landlord raising the rent every year. Now I have about 200K in equity and can handle a substantial drop in prices.

Good luck to those still renting. If prices drop a lot or stay flat for a long time, I suggest buying if you have 25% down like I did (no CMHC fees). Try to pay it off in 15 years or less.

#132 Future Expatriate on 10.05.09 at 3:28 pm

#113 – If everyone like you made just one anonymous phone call with a couple of addresses, you’d put a serious dent in that narco-economy.

You have no one to blame but yourself.

OR… you can wait a bit until California legalizes pot to survive and does it for you.

#133 AnonInVan on 10.05.09 at 9:23 pm

For the record, both Sumas and Abbotsford smell like pig poop.

#134 steven rowlandson on 10.06.09 at 9:13 am

Being Canadian is a great thing. You can’t measure that in dollars.

Thank God.

Garth I think if being able to buy a house in Cantada was linked to citizenship alot of people in Cantada would have to leave because they are not paid enough to stay. Then again if they were paid to stay or did leave the economy would likely shut down. Time to knock the hell out of real estate prices by decree. Lets say back to late 1960’s prices which is about where wages are.

Steven

#135 A on 10.06.09 at 6:41 pm

Yup. People have opened up the Canadian landscape for housing. In fact, several thousands of individuals spend 3 hours per work-day in a car–to commute from the isolated Abbotsford detached home to a job in or around Van. Opening up more of Canada would be very ill-advised. It will increase frustration and increase price for well-situated housing. Moreover, the commute will never cease through more freeways.