The lagging

jobless1

‘Well,’ the lady business reporter said to the radio host guy, ‘at least there’s a silver lining to these jobless numbers.’

I brightened. A silver lining! – a good side to the news that Canada lost 43,000 jobs in a month when we were expected to create 10,000. Good news in a time when inflation’s turned into deflation and the economy’s contracting again. A silver lining. Gimme, gimme.

‘Yes, John, absolutely,’ she said. ‘Because in the US it was really grim – they lost 190,000 jobs.’

And with that, I damn near drove my Hummer over a Prius. Another one. After all, the USA has ten times the number of people and workers Canada does, which actually means for every job the Yank economy shed last month, we blew off two. To be precise, two and a third jobs.

Yes, I know employment is a lagging indicator. Of course, a thousand jobs can be lost in a single day, and yet it can take five years to get them back. And I’m aware that a mess of leading indicators, like housing starts, the TSX and durable goods orders are positive. But the fact remains the lack of work in both countries is saying something profound: there’s more supply of human capital than demand for it. And there can be no worse imbalance.

Just to be straight up. The official US unemployment rate is 10.2%. When discouraged workers are added, it rises to 17.5%, the worst number since the 1930s. In states where there was a housing boom three years ago (California, Florida, Arizona), this number has soared to an average of 20% – just slightly less than during the Great Depression. There’s now an equal number in key manufacturing states (Michigan, Ohio, Oregon, South Carolina).

As vultures who come to nest here often remind us, real estate values in those places have crashed by between 50% and 70%, and show no signs of revival. The situation is so dire that on Friday, hours after the latest numbers (which were just half as bad as in Canada) were released, Obama signed into law 20 addition weeks of unemployment benefits for the desperate. There are 16 million jobless Americans now, 7 million of them out of work in the last year.

But this is about Canada. Our jobless rate is 8.6%, up a couple of points, and likely on its way to 9% or so. In Canada, unlike the States, we don’t count people who are discouraged, who have left the workforce, who’ve given up, whose EI benefits have run out, who are underemployed or were forced out of full-time jobs and into part-time employment. Therefore, we can’t quite know the amount of human capital in Canada being wasted.

But we do know this: 27,500 people last month went from working for somebody else to being ‘self-employed.’ That means they were not counted as part of the out-of-work gang. It likely also means they had little if any income (start-ups being what they are). And it actually means we lost more than 70,000 existing jobs during the month. That’s three and a half times worse than the States.

I bring this up as an economic curiosity. As you know, the inflation rate since mid-summer has been negative. That’s deflation – falling prices, the result of capacity exceeding demand. At the same time, GDP (gross domestic product) declined in the last month, after doing nothing the month before, a negative trend line. So now we add in 70,000 lost jobs (or 43,000 if you believe the radio), and the picture is absolutely consistent. The economy is moribund.

In other words, if there ever was a time for caution (other than when you see my blacked-out grille behind you on the 401), this is it. Stock markets are ripe for correction after a euphoric rise. Commodity prices are Icarus-like. Bonds are edgy and rate-racked. And a lot of people are engaging in dangerous behaviour, with the potential to spray us all.

You know who they are. So does John.

Hey Garth, I am a 29 year old here in Victoria, married, kids, no debt, 30k cash.  Self employed as a painting contractor, 3 employees. Wife only takes in about 1k/month doing very part time work.

We currently rent a house for $1700 a month, which would sell today for around 500-550K.  It would cost us 1K a month more to buy this place at current interest rates.  I know you are not omniscient (I think), but should we continue to rent?

I am starting to consider moving to a new city, although all the hard work of building up my business for 5 years will be gone.  I just don’t know what to do; we don’t have parent seed money, prices are going up faster than I can save a down payment.

I am so fed up with seeing people buying $800,000 dollar houses as if it’s no big deal.

My biggest problem is that if the housing market collapses, my work won’t be as busy, so I’m basically screwed at both ends. Should I move to a new, cheaper city and start over? John

Rent or buy? John, boy, you don’t have a choice with thirty grand in the bank. In Victoria that’s enough for a down on a blue plastic house with ‘It’s my Potty’ stencilled on the side. Of course you should continue to rent, since plunging your family into $500,000 in debt at this point is financial roulette.

As for moving, why not? Sell your employees your business and find a place with a future where you can build some equity instead of buying an overinflated asset with debt you’ll never get out from under. They’re n-u-t-s in Victoria, Johnny. Once that bubble pops you don’t want to anywhere near.

BTW, John, I’m speaking there next week. Do you do security?

146 comments ↓

#1 squidly77 on 11.08.09 at 9:31 pm

the diminishing employment is daunting
its sad to see our great country suffer so
these will be trying times for Canadian families, lets all hope for the best

but the outlook is dire

I didn’t see the competition board of Canadas spat with CREA discussed here much, this is a fight that CREA should seriously fear
I through together a post with some links to the spat
it will be huge news if it comes to be
Real estate industry could face millions in fines if it won’t lower fees

#2 Dee on 11.08.09 at 9:32 pm

Sorry about the earlier post in reference to Jbesus, must have been the swine flu / adscam / Day thing.

The interac? Look at the Bank / Privacy Act. Lots of money to be made in Lieberal / Day adscam. Adscammers would love to get their hands on an individuals’ purchases.

The Genie is out of the bottle.

#3 Colin on 11.08.09 at 9:38 pm

Stock markets are ripe for correction after a euphoric rise. Commodity prices are Icarus-like. Bonds are edgy and rate-racked. And a lot of people are engaging in dangerous behaviour, with the potential to spray us all.

Garth, can you clarify what you mean above for commodity prices and bonds…(sorry, metaphors and financial jargon went over my head).

#4 kris b in Vancouver on 11.08.09 at 10:02 pm

“In Canada, unlike the States, we don’t count people who are discouraged, who have left the workforce, who’ve given up, whose EI benefits have run out, who are underemployed or were forced out of full-time jobs and into part-time employment. Therefore, we can’t quite know the amount of human capital in Canada being wasted.”

Actually we do. Stats Canada publishes supplementary unemployment rates called R8 (table 282-0085) which includes discouraged searchers, waiting group, portion of involuntary part-timers. This unemployment number for BC in October was 10.9% (I didn’t check the national number as it costs $ 3.00 to print it) versus official propaganda number of 8.3%. Do you want to see REAL unemployment? Wait till the middle of next year when the Olympic related BS is over.

Cheers Kris

#5 ruraldude on 11.08.09 at 10:05 pm

When the unemployment rate in the States was well south of 10% (no pun intended) some annalists estimated the real rate of unemployment to be upwards of 18%. I think in Canada if you factor in the unemployed with the given uppers (new term) and the self employed that have gone broke than I suspect we’re upwards of 15- 18 %. There’s always the casualties that no one talks about. Things are never as good as politicians will tell you. Garth you should know that. It’s called SPIN.

#6 Job Rutgers on 11.08.09 at 10:06 pm

State of Denial

there is something peculiar about Canada in it’s ability to see what is really happening, as if our media landscape reflects another time, another place. We collectively agree that this is a good place to liveand all is fine in the happy north. This snug self image is very much an interior reflection as a drive from St. Catherine over the Queen Elizabeth Express way shows the real face of this country: an endless depressing strip of commercial real estate that is empty, for lease for 100 km (at least a quarter of buildings). Even in Toronto down town lease signs all over the place. Yet this tangible, in your face evidence does no show up in newspapers or newsmedia. Is this an effort to talk ourselves up untill the economy moves up? A mass theraphy that tells us that we are fine? Excuse my paranoia but in Canadian newspapers I find no independent voice. Why is the kinds of discussions on this blog not exposed on a much larger scale? Why do newspapers cheer when housing moves further up? Only now and then a mild critical article appears to be s owed under an avalanche of home reno, flipping and raising. Did anybody ever investigate why media appear to be such a real estate slaves?

#7 Onemorething on 11.08.09 at 10:09 pm

Yes the U3 at 10.2 but as Garth states the U6 is now 17.5% and this is number you need to consider as it reflects what the average person is feeling on street.

Not to mention moving from 6.8M part-time workers to 9.28M in just a year. The avg. work week is now 33 hours. Production number way up but all that means is those protecting their Full Time Permanent jobs are working likely 50-60 hour work weeks to hold them.

The avg. 33 hour worker taking a 20% haircut!

Put it this way, you can only sway the sheeple so long until you see evidence mounting on the street, in your neighborhood and at the end of each month when your monthly household numbers come in. It’s already there but the NEED for DENIAL is never greater….for now.

As for John, right track my friend, make that move, sell that business off, pack any High Quality Tools in the U-HAUL and roll.

Better yet, sell the business to some retired folks that need to keep working (in Vic), convince your team (IP) to leave with you and turn the key where 30K means 4x as much.

Plus there’s strength in numbers and fun having your nose out front of a convoy!

Who’s up for “NAME THAT CITY?”

Good Luck!

#8 dd on 11.08.09 at 10:12 pm

John.

Try moving up island. How about around Duncan. That way you can maintain your business and have more reasonable rent and housing options. Your business could reach from Victoria to South Nan.

Good Luck.

#9 GeorgeP on 11.08.09 at 10:13 pm

The Obama administration extending jobless benefits by 20 weeks says it all.
The government in the US has no idea as to how to create jobs and improve the situation. They are simply throwing stuff out hoping something sticks. This is exactly what our government is doing.
This is equivalent to giving a man a fish; it does nothing for the long term. There needs to be a real plan but unfortunately, the planning department seems empty.

#10 Emma on 11.08.09 at 10:23 pm

People may tell you that it’s crazy to rent at that price – but if you continue to rent your place, it’ll take you 15-20 years to pay out the kind of money you’ll owe in interest alone if you take the mortgage. To which people will say, but at the end of the day you’ll have a house – to which you will say – “No, that’s just the interest, I still wouldn’t own the house”.

And in that 15-20 years think of how much you could save (at least 200K by not having the mortgage – 1K per month by your calculations) – not paying for a new roof, not repaving the driveway, not having to worry about flooding, not renovating the kitchen or bathrooms and most of all, being able to move if you feel the need. Hell, in 15 – 20 years you could probably walk up and buy a house outright at which point you’ll live longer having never had the stress of a 500K mortgage.

#11 Marina on 11.08.09 at 10:29 pm

Collapse and Death in Florida , Tampa

http://www.larouchepac.com/node/12312

“catastrophic” economic situation surrounding Tampa
(Florida);
since October banks in Tampa have put a $500 limit on cash withdrawals;
all of the car dealerships are now gone, and the only “new job opportunities that people can seek are as help in grocery stores and restaurants.

#12 Dan in Victoria on 11.08.09 at 10:37 pm

John what ever you do don’t buy,its crazy here.It’ll be a prison sentence.Just look at this quickly.If you work till you’re 65 thats 36 more years,or 432 months.If you owe $500,000 without interest payments thats $1150 a month.Wifeys money poof.
Now add in interest,Property taxes,maintenance,insurance etc.You get the idea.
Be prepared to get screwed over by these builders when things go sideways here,been there done that.I know how it works believe me,They will grind every last ounce of profit out of you.And you will have no choice,take it or leave it.
On the other hand if you do quality work,and are super reliable you have a good chance of doing well.Almost all of my painting friends have gone “retail”and do the exteriors and Mrs “Jones”type jobs.
Where you thinking of going John,up island?Was up in Qualicum/Parksville on the weekend,went for a beer at one of my favorite watering holes,2 one ton crew cab ford constuction trucks in the parking lot.Both out of province plates…both residential subs.Talked to one of my buddies who is a commercial super .Geez, Dan I got to drive down island to work,its drying up around here big time.Hmmm…. i’ve got a young painting contractor down the block from me….

#13 Not Garth on 11.08.09 at 10:38 pm

Garth,

WHEN (as in your estimate in terms of timing) does Victoria and Vancouver start to move downward again and resume their crash?

Fundamentals are fundamentally stretched (beyond the wildest of imaginations….).

#14 Sukh on 11.08.09 at 10:48 pm

Most businesses are probably happy with the high unemployment numbers…no pressure to raise wages of existing workers for the forseeable future. No wage inflation! 43000 jobs lost across both rural/urban canada…couple that with about 38,000 immigrants/temporary workers/students who came to canada mostly to urban centres last month, most with lots of money. So how does this affect the housing market Garth?

There is deflation, but only in some sectors such as imported manufactured goods where overseas oversupply coupled with reduced demand lowered prices. In other sectors, unfortunately, prices of food/energy continue to go up for families because inflation. I’m sure most readers would agree on this??

There is inflation ALREADY because of the vast amount of money that has been ‘printed’ in mostly the usa and injected into financial institutions. They got to do something with the money rather than having it sit and earn 0.25%. They buy stocks and commodities. They are going up not because of ‘green shoots’ or a V-shaped recovery but because of inflation. How better to protect the value of your money than to buy assets. The people who will be better positioned over the next 15-20 years are those who own assets and not those who are cash rich as our US/CDN dollars will be worth less and less compared to other nations. So real estate is also an asset. Watch the price of farmland over the next 5-7 years.

Warren Buffet bought the railroads for $44 Billion US in the states because he is betting that Oil prices will hit the moon, not because of a US recovery but because of Inflation/currency weakness. Trucking will decline…but the need to move goods will still be there.

Any thoughts on this?

#15 T.O. Bubble Boy on 11.08.09 at 10:52 pm

You’re only 29… keep on saving and enjoy sitting on the sidelines when one of Canada’s biggest housing bubbles comes crashing down. Since Victoria is Canada’s equivalent to Arizona/Florida (retirement destination), I would assume the % drop will be significant.

Oh – and if the $30k isn’t already in a RRSP, put it there. You can get 30%-40% of it back in taxes, and you can withdraw it at any time.

#16 conan on 11.08.09 at 11:18 pm

Why move? Career change makes sense but if your going to stay a painting contractor then the city of 800k homes is where you want to live.

#17 LB on 11.08.09 at 11:34 pm

Security detail? Surely you don’t need that Garth, in Vancouver or Victoria,where your tales of gloom and doom elicit barely a ripple,or at the most, an indulgent shaking of the head by those who pity your lack of understanding of how “different” it is here in Lotus Land. Don’t you know that EVERYONE wants to live here,at ANY cost?!? It’s all about the winter weather – ie.better to splash in it rather than shovel it for nine months.

Forget the economic indicators,the only thing that will truly change the real estate market here is a major earthquake!

#18 Rob on 11.08.09 at 11:42 pm

The Canadian people have let their government down.

You see, they needed you to take all that easy, cheap money and go and spend it on flat screen TV’s, cars, washing machines, WII fits, holidays to Vancouver, and eating at restaurants you can’t afford. Why?

Well, because these activities create jobs.

But no. You had to blow your brains out on 5% down 35 year mortgages (you know it only would have taken 5 years to pay off that TV) with a variable rate that gives you a monthly payment which you can barely afford at record low interest rates— not quite the multiplier the Tories were looking for. Oh well.

So what should the feds do now? Take it all away, and risk a longggg drawn out recession— or let it continue to flow, and risk the mother of all housing bubbles.

You really put Steve, Jim, and Mark in a tough spot by not cooperating! And after all they have done for you!!

At least you could use your HELOC to buy an asset that is going to depreciate even faster than your house.

#19 BD on 11.08.09 at 11:44 pm

For those that like humour with their doom and gloom, the latest on the edge” with Max Keiser has an interesting bit in the middle. He points out that it would have cost less for the U.S. gov’t to pay off all mortgage and credit card debt than they have put into “saving” banks and companies to date with the obvious better results. What he doesn’t mention is that if even only a portion of that money were paid back at low interest according to individuals ability to pay the gov’t could recover more than half the amount spent. Any guesses on how much of the money will be recovered from industry?

One of the biggest problems of any downtrn is forgetting that investing in people results in bigger profts in the future. A good case is the stupidity of many of our governments lowering corporate tax rates to 25% thus putting more burden on individuals to pay a larger share. The U.S. and I suspect other countries corporations pay 35% at home minus the amount paid to the country they made the money in. This results in our silly governments handing the U.S. a free 10% windfall tax as a result of this insane idea that by lowering taxes we wll somehow attract more investment. Maybe the time has come to invest in our own first and set up the same type of micro loan programs that work in Africa and other places.

#20 Elle on 11.08.09 at 11:55 pm

John….

Glad to hear that you are thinking ahead.

1. …hang on to that business….if you lose it and have to take a job working for someone…..you’ve just acquired a big T4 with no business write-offs.

2. …keep bidding for contracts and keep your men working….your business will stay alive in Victoria.

3. …Goggle, Construction Contractors in various towns/cities that you & your family could move to without huge moving costs. This will give you names, addresses and phone #’s.
There are dozens in Surrey alone. Start enquiring!

You already have a solid track record in Victoria.
Once you’ve located a contractor who needs a great painting company …..bingo company #2. It is always easier to get a new job….if you’ve already got one in your back pocket! Now you’ve got choices.

Wouldn’t hurt to hear what Garth has to say next week either!! Best of luck.

elle

#21 double mike on 11.09.09 at 12:03 am

The funniest thing in context is that our govt continues importing “human capital” from all around the world at amazing rate 260000 units/year.

#22 NorthOf49 on 11.09.09 at 12:05 am

John, don’t let decisions about real estate affect business decisions. I agree with Garth that you should keep renting, but I disagree that you should move. Why give up an established business only to try getting it started again in some other part of the country that isn’t booming right now, and having to compete with established painters there?? Too risky IMO.

When Victoria’s real estate market implodes, there will still be a need for good painters…just not that many of them. Since you have a good indication of what’s coming in the economy, get prepared now. Let your three employees know that you may not be able to keep them employed in the months/years ahead, and if you have to, go back to being a one-man show. Also, shed as much business debt as possible.

A painter friend of mine has stayed busy and profitable for the last 20 years, in the same location, regardless of the economy. Its because he is the best at what he does and he takes on or unloads hired help depending on demand.

As for real estate, stick it out and keep renting and see what happens after the Olympics, after rates go up, after POS becomes a household word. You’re a painter, you should see a sweet private deal come by at some point.

#23 Ghost of Tom Joad on 11.09.09 at 12:08 am

There is no further hiring of BC provincial government workers for years to come. BC gov’t is shutting down most contractors and crown corporations will soon be down-sizing. The future in BC is fewer jobs and lower paying jobs. So don’t buy house especially in overpriced town like Victoria.

With $30 thousand, move to better province with no earthquakes like New Brunswick or Nova Scotia. The weather’s colder, but the people are warmer. And you don’t need to make doctor’s salary to live a good life.

Anyone hear about plague hitting Ukraine? Doesn’t sound like H1N1.
http://ukraineplague.blogspot.com/

#24 Watched Bubble Never Pops on 11.09.09 at 12:16 am

#6 Job Rutgers

If you know somebody who is looking to sell their commercial property I would like to hear of it.

I like shopping for commercial property and have analyzed a few dozen over the last couple weeks, negotiated with a few owners and from what I can tell, they are not particularly interested in selling for anything but the highest of prices. My search continues.

As an aside, even in Windsor where the residential vacancy rates are approaching 20%, apartments also hold very healthy valuations.

#25 BearClaw on 11.09.09 at 12:18 am

If someone’s EI benifits run out they are still counted as unemployed as long as they are still looking for work.

The loss in employment was in part-time while full-time work increased slightly.

#26 Einsam Solo on 11.09.09 at 12:24 am

“Well,’ the lady business reporter said to the radio host guy, ‘at least there’s a silver lining to these jobless numbers.”

An excellent example of the poor quality of business reporting in the mainstream media. Foolish, amateur and misleading.

#27 random guy on 11.09.09 at 12:31 am

@11 Marina

your link was hilarious

“Recently in Tampa, a medical helicopter flew to a paperwork factory, to pick up a worker who had collapsed on the job. The citizen’s view is that people are under such incredible stress, that such incidents are becoming a norm. “When I try to talk to people about what is happening, they say, ‘the only thing that matters is where I get my meal today.’

come on. no car dealerships? http://www.google.ca/search?hl=en&safe=off&q=tampa+car+dealerships&meta=&aq=0&oq=tampa+car+dealer
what are all those?

people, you can get your point across without pulling up inane articles from some irrelevant site. while i agree that the canadian real estate market is due for a correction of maybe ten or so points, with some places getting maybe a quarter hair cut, let’s lay off all of the chicken little, sky is falling stuff, ok? it will just strengthen your overall argument.

#28 Joshua on 11.09.09 at 12:52 am

Garth,

A great post. Again, any set dates for a visit to Calgary

#29 Ulsterman on 11.09.09 at 1:46 am

Just because John says it would cost him $1000 more a month to own doesn’t then mean that he is saving $1000/month towards his downpayment. Maybe after he’s paid all his bills etc he may be only able to afford a houseing payment of $1700/month.

The concept that all the renters are saving the difference between what they pay to rent and what it WOULD have cost them for a mortgage is a fallacy. Most people just get by.

If you don’t have major family ties to Victoria you probably should just start over somewhere else affordable. People having been calling for a housing reversal for years and years. OK, say it corrects 25%, you’re still going to be severely stretched to pay a mortgage in Victoria. What if rates move up significantly – you’re screwed.

#30 Emma on 11.09.09 at 1:46 am

Forgive the length but I’ve included my methodology in case mistakes have been made…I hope I’ve explained it clearly.

The employment rate measures the number of people with jobs, divided by the population over age 15 that is not in the military or institutions (times 100).

The participation rate measures the labour force, divided by the population over age 15 that is not in the military or institutions (times 100). The labour force is defined as those who have a job or are looking for one.

Therefore the difference between the employment rate and the participation rate would be the ‘looking for work rate’.

So, it should work that: 100 minus the employment rate = population not working while 100 minus the participation rate = population not working and not looking. Therefore, the difference between these rates gives the percentage of people not looking.

And the change over time in this final number should give you the number of people who are dropping out of the looking for work category, despite not having a job.

Garth, could this be the drop out rate you seek? If so, it equates to 1.59M people in Oct 2009, 1.56M people in Sep 2009 and 1.14M people in Oct 2008. So of the people who are not employed, 30,000 less people were looking for work between September and October 2009 (percentages below).

Oct 2009: 38.8% not working and 33% not participating (5.8% not looking) Total pop: 27,433,100

Sep 2009: 38.6% not working and 32.9% not participating (5.7% not looking) Total pop: 27,401,500

http://www.statcan.gc.ca/subjects-sujets/labour-travail/lfs-epa/t091106a1-eng.htm

Oct 2008: 36.3% not working and 32.1% not participating (4.2% not looking) Total pop: 27,044,100

Sep 2008: 36.3% not working and 32.2% not participating (4.1% not looking) Total pop: 27,012,800

http://www.statcan.gc.ca/daily-quotidien/081107/t081107a-eng.htm

#31 InvestorsFriend on 11.09.09 at 2:06 am

Deflation!

Speaking of Deflation, in the next month or so all those retired government people on pensions will learn what their increase will be in the new year.

Usually it 60% of inflation. So let’s see 60% of zero is (give me a minute, now… carry the zero) oops it’s about zero.

So just wait until this hits the news. These tend to be the relatively well-off and well educated seniors. The retired teachers, nurses, and government workers. These people will raise a big stink even though their incomes will just be flat…

Meanwhile the unemployed take a huge haircut going on UI and then when that runs out… well… then they can’t affford a haircut… But the unemployed are usually less organized and lesspowerful than the seniors…

And what if we get deflation for a number of years will the pensions be cut accordingly? Somehow I think not, even though the cost of living will be down.

#32 Peter Wiener on 11.09.09 at 3:15 am

Re # 6 Job Rutgers

There is simply no longer a vibrant and independant press in this country and even fewer real journalists left as they( the management) are terrified of “losing access” to the politcal set and the loss of circulation (which further reduces newspapers’ appeal as an advertising medium). Accordingly, they have become “prostitutes of the press” in an attempt to survive. The press will quite literally and without the slightest research or question publish ANYTHING the politicoes or RE industry gives them. In addition, wages and job opportunities for journalists are poor and the ‘profession’ is in serious decline.

IT SAVES THE PUBLISHER MONEY TO HIRE PEOPLE WHO TAKE DICTATION INSTEAD OF PROFESSSIONAL JOURNALISTS AND THEY NEED THE SAVINGS. (ever heard of CanWest Global?)

The world has changed and overpriced, poorly written lies, spin, misrepresentation and regurgitated drivel hasn’t much appeal when compared to the truth served up for free on the internet.

I hope every one of these ‘rags’ folds and for good!
New people intent on informing others as opposed to misinforming others will replace them, hopefully employing journalists and managements of merit.

#33 Dom_now living in Zurich on 11.09.09 at 4:00 am

I moved from Canada to Zürich, Switzerland on Oct 1st. Why? Because I could not imagine spending $500K plus on a starter home in Toronto. Evreyone kept telling me how expensive Zürich was yet the funny thing is I am netting almost 3x what I did in TO. That is because taxes here are about 11% on income, but there are a lot of service fees, so if you consume more you pay more. Unemployment here is hovering around 4% and people here are calling that a crisis. Canada is in a huge bubble and the people simply don’t see if for all the froth.

One of the most overtaxed countries in the western world and the problem is you don’t get the service levels that you would expect for that kind of tax rate. Here when i called the government to get some tax information my call was answered by a live person on the second ring. When I called Canada to get the same info it took me 3 weeks of continuous dialing even to get through to the IVR….

Oh yah, a wooden hut, badly constructed in a city where the average net income is a joke is really worthwhile….

#34 Patiently Waiting on 11.09.09 at 4:58 am

John,

Could you stand to move into a co-op or some other more affordable family housing? That $1700/month is crippling your saving. Co-ops rent for maybe $1000/month.

#35 David Bakody on 11.09.09 at 7:20 am

Hey John be on the ground floor on the move plan not at the end of the line …. Here on the Atlantic Ocean, Dartmouth housing is a third or less for more. Not sure about the house painting business but I know two or three older people who are retiring. Good affordable painters are hard to find and there are lots of homes in the area. People do not get it “Less is more” 250K here gets one a good home in a good area to raise a family …. 450K gets you a McMansion plus a good area. AND 850k will get you a Ocean Front super McMansion and well a million plus will put you in with the South End’s Finest, but unfortunately not pass for the Christmas Ball …. oops sorry fortunately.

In any rate Canada is a beautiful country and there are many area’s where a good man with your skills and thought can live and raise their family. I just like the east coast and the laid back ways, people here still do not get to excited over many things. Sure our children have had to go west and beyond, so they should, but I always here them say I wish I could work and live here. Priorities my dear Watson!

#36 FORREST on 11.09.09 at 7:44 am

So, unemployment is a “lagging” indicator. Now that I lost my job, things will get better. Phew, that was a close one.

WTF

#37 Colin on 11.09.09 at 7:57 am

#6

Did anybody ever investigate why media appear to be such a real estate slaves?

Next time you read any of the major papers look at how many real estate ads you see (or entire real estate sections).

Newspapers are businesses too, and can’t afford to alienate their biggest customers by writing “critical” articles about this sector.

It’s really that simple.

#38 ca on 11.09.09 at 8:30 am

Garth —

I agree with you that the stock market is ripe for correction. However, it seems the Fed is committed to destroy the dollar. What will stop the madness?

#39 Evangeline on 11.09.09 at 8:36 am

Karl Denninger has a good post up this morning on the dangers of the U.S. dollar carry trade, how its collapse will cause the price of oil to skyrocket, and how the game could be stopped by the U.S. Federal Bank raising its rates to 2%.

http://market-ticker.denninger.net/archives/1600-So-Its-Official-IMF-Carry-Trades.html

He closes:

“We certainly do and will live in interesting times, but thus much I am certain of – the Average Joe will neither understand why oil skyrockets the next time it does, nor will he properly place the blame where it belongs: squarely on Ben Bernanke, President Obama and our Congress.”

Indeed. We will all blame the big bad oil corporations!

#40 Herb on 11.09.09 at 8:42 am

If you want to react appropriately to what’s happening behind the curtain, Garth, you’ll have to upgrade that Hummer to a steamroller.

Isn’t it grand? Here we had a crisis that was denied until the Harper Government was safely reelected, we have thrown tons of paper money at it since then, false flags are being raised and celebrated as green shoots, the usual suspects are still making out like gangbusters, and nothing has changed and no one is the wiser.

Perhaps the problem is that “trailing” indicators are the reality that can’t be manipulated. Pay no attention to them: make out with the “leading” ones.

#41 curious to know on 11.09.09 at 8:57 am

Garth,

Thank you for keeping us informed.

By the way, how are those on severance pay (mandatory with 5 years in Ontario, isn’t it?) counted?

N ot sure what you mean, but severance pay is not income. — Garth

#42 Toronto C9 Renter on 11.09.09 at 8:58 am

to #11 Marina, re: “catastrophic economic situation surrounding Tampa”

Marina, can’t you detect agenda-driven propaganda when you see it?? Your link leads to a scary, poorly written, ultra-right-wing propaganda factory. Everything and everone they don’t like (which seems to be everybody) they call a Nazi, including using that label for Obama several times. Scary!

#43 disilusionedinGTA on 11.09.09 at 9:09 am

Garth,

I got into a discussion on the weekend about housing in GTA. The person I was speaking to was adimnt that imigration of wealthy new canadians will fuel the housing market there for years to come, even if the market drops off the face of the earth in other Ontario cities. My wife and I have been awaiting a correction for 2 years and no cigar!
-Is there any merit to the theory of wealthy immigarnts creating economic fuel for real estate?
-If this is a crock, then why will immigartion NOT boost the housing market in Cities like T.O and Van?
Can someone please answer these questions for me.
Garth,any of the blog dogs.

#44 MarkArgentino on 11.09.09 at 9:15 am

Hi Garth,

Another informative and interesting post.

When I read your words “Stock markets are ripe for correction after a euphoric rise” I couldn’t agree with you more.

I hit the SELL Button last Friday, and I’m elated!

I’m not looking for a link, but if you want to read my entire abysmal story of investing in the stock market, I just posted it at my blog here:

http://www.mississauga4sale.com/blog/2009/11/i-hit-sell-button-last-friday-and-im.html

I still nearly completely disagree with you about your views on the GTA real estate market, only time will tell on this issue.

Thanks and have a great day!
Mark

#45 Nostradamus jr. on 11.09.09 at 9:38 am

Suddenly…unexpectedly…..U.S. rates are hiked to 2%.

…Crashes the markets, commodities and Chinese manufactured goods.

U.S. Dollar jumps visa vis all other currencies.

After this event, only remaining place safe and growing scenario for investments…..

Vancouver BC

Nostradamus jr.

#46 John_In_DimJims_Riding on 11.09.09 at 9:39 am

I require some clarification on the claims of deflation (not a flame Garth, I generally agree with you). I know you reference Stats Canada on the inflation/deflation numbers, but I purport their methodology is flawed. Stats Can looks at a “basket” of goods that includes things like Plasma TVs and granite countertops. They routinely take out the cost of energy and food in their calculations. However, it is the cost of energy and food that takes the majority of our money and has the greatest impact on us. You buy a TV every 10 years; you buy food every single day. Food is skyrocketing – if the price is stable look at the amount. Decontenting is rampant in the food industry now. Gas and oil are going up (as you predicted). I am of the opinion there IS inflation. I would like to hear Garth and other’s comments on this. Thank you!

#47 Downsized and Delighted on 11.09.09 at 9:45 am

After reading the attacks on “Watched Bubble” I’m a little hesitant to post my “opinion” (and that’s all it is), but here goes –

Garth – do you honestly believe that a “painter” is better off moving from a high income area where he rents to a low income area where he can own his own home (and will probably have lots of spare time to paint it)?

No offense, but that is the craziest advice you have given in quite some time. This guy actually has a reason to rent and you encourage him to buy?

Who said Victoria is a ‘high income area’ as opposed to, say Halifax or Waterloo? That is about the most conceited thing you’ve had to say to date. — Garth

#48 robert on 11.09.09 at 10:01 am

What if unemployment is now a leading indicator? Wasn’t this the case in the Great Depression? The problem is that people today have been conditioned by every recession since WW2 to believe the lagging indicator story and in the constancy (and salvation) of credit inflation. The faith remains strong that somehow a rising stock market will magically presage the reappearance of jobs and all will be well again in the world. Everyone continues to whistle past the economic graveyard with the lagging indicator story firmly planted behind their eyes.

In my humble opinion the behaviour of the stock and commodity markets since March underscores the strength of belief in a thesis which is simply no longer relevant to our times. The bond markets, while wavering of late, do not appear convinced inflation is right around the corner. I conjecture for now that a delusional belief in the imminence of inflation or hyperinflation is the primary driver of gold to new highs. My thesis patiently awaits proof in cash and near cash instruments until the next inevitable “correction” begins in stocks and commodities.

#49 Fred on 11.09.09 at 10:16 am

Just a thought but if (when) a correction in RE hits Lotusland, will not a great deal of people leaving/being forced from RE be painting their overpriced multi coloured rooms to tones of beige. Paint your business cards into the bland paint colour and you might just have the new owners calling for a red dining room. HAHAHHAHA

You and house stagers may be the only ones to profit in the chaos.

#50 latinlife on 11.09.09 at 10:20 am

For Garth who emotionally prefers oil to gold.

As my ever-eloquent good friend Jim Grant of Grant’s Interest Rate Observer said to me, “So much for the modern conceit that gold isn’t money!”

http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/indias-big-vote-for-a-gold-rally.aspx

Nothing emotional ’bout it. — Garth

#51 pjwlk on 11.09.09 at 10:25 am

#16 conan on 11.08.09 said:

“Why move? Career change makes sense but if your going to stay a painting contractor then the city of 800k homes is where you want to live.”
—————
I disagree with you on that, people who have spent all of their money on real estate don’t have money for much else.

I’ll always remember the words of a family friend who owned a chain of transmission shops. Back in the 70’s he said, “it’s always the guys with the big Cadillacs who don’t pay their bills” I’m guessing that they’ve spent all their money trying to make others think they have money…but really, they don’t.

#52 kc on 11.09.09 at 11:02 am

John, Sorry to say this but you said you are into being a painter for 5 years with out stating more particulars of the contracts you do, there are these simple observations…

I am not sure if you went thru the 80’s down turn and the 90’s? i am guessing not likely for you will be knowing what is coming next for painters (in general)

In private homes (homeowners) will begin to do their own painting and “save” the money to hire a painter. The next problem is that many out of work carpenters, contractors, subs and the like will take $500.00 and start-up a painting “business” with the thought that anyone can paint…. be honest with your self here… work is slowing down?

the last one to touch the house is the painter and the bare walls will need touch ups (if new construction was your bag) how many slipshot contractors out there that DON’T pay the trades? painters are the last of the barrel.

to sell a painting business is hard for if you have any real investment in a painting company, the largest expense is your wheels, (and guess what) the paper is full of wheels for sale…. it is the knowledge of how to cut-in, roll a drip-less ceiling, and how to fix a oil-based latex cover-up that the home owner figured was so easy… this information DOES NOT transfer in a “painting company sale” get out that colour wheel and point it to the stars, for they may hold your answers….

cheers

#53 Stop Puttin Down Boomers on 11.09.09 at 11:25 am

#35 David Bakody on 11.09.09 at 7:20 am

In any rate Canada is a beautiful country and there are many area’s where a good man with your skills and thought can live and raise their family. I just like the east coast and the laid back ways, people here still do not get to excited over many things. Sure our children have had to go west and beyond, so they should, but I always here them say I wish I could work and live here. Priorities my dear Watson!

…..

Hi David – You forgot to mention our climate is damp, but not as much rain as Victoria nor as cold in the winter as other other areas of the country. Yes, home prices are much less expensive in comparison to other areas of the country, but I think for many salaries are lower as well, so it might be somewhat relative. Not sure what you consider ‘affordable’ painters as I don’t know what they are paid elsewhere. A neighbour, who lost his bar tending job several years ago, became a painter. He did several rooms in our home a few years ago & did a good job. Got hired by a painting company, but last year had a recurring major back problem and was unable to work. After all kinds of treatment, he’s back to work part time for the painting co. as the co. can’t provide full time right now. As he & his wife have lived here their whole life, she & he have lots of connections and does work ‘under the table’. His wife has a good paying job & their home has been paid off for at least 15 yrs. Not sure what he charges per hour, but know its a lot more than when he did our place. He’s a hard worker, however.

I have a confession to make. We may hire someone to work under the table to do renovations. We’ve tried to get above the board renovators, but everyone has had an excuse – job too small (2 bathrooms, extension of 1 room) bought everything except gyproc, blueboard, etc. so contractors won’t make $$$ off of us. Checked references. He’s in his early 60’s, & has a real work ethic. He’s a man of all trades, been working in the industry since 12 yrs of age & keeps up with building codes, etc. Charges $20./hr. Wants to be paid every 2nd day. Has agreed to sign a legal document that he can’t sue us for liability (?) if he has an accident. That’s the only way we’d hire him.

Comments, please? I’m sure I’ll hear from many posters not to support the underground economy.

P.S. We’ve never had to hire a ‘contractor’ before as my husband has done all the renovations in the house before, but has back & shoulder problems so can no longer do the work.

BTW, David, a poster on my husband’s website said he (originally from Holland) moved from NS to Scotland and that it was one of the biggest mistakes he made in his life.

#54 PeckedToDeathByDucks on 11.09.09 at 11:50 am

Real estate got you down?
Condos boxes too ticky-tacky similar?
Welll bunky, looka here…. It’s a new, unique style of living. This condo building is ideal for those who fear heights and are open to a new daily life style in this topsy turvy world. Sky facing balconies in all premium units. Newly developed.

Down To Earth Condos Dvlpmt. Ltd. at rock bottom prices.

#55 Downsized and Delighted on 11.09.09 at 11:51 am

Let me phrase it another way that is easier to understand:

If you work in construction, or related area, and you are doing very well and have built up your business, but the area you work in (Victoria BC) is too expensive for you to afford to buy a home, and you feel that the housing market and the economy are about to go bust; should you:

1. Move to Halifax and start your business there. (Garth’s advice)

2. Continue renting and put away as much money as you can till you actually have enough to buy a home when the housing market goes bust (as Garth keeps telling us it will)

You can call it conceit if you like Garth, but I suspect that the markup on house painting is higher in Victoria than it is in Halifax.

Based on what? The average income in Halifax is higher than Victoria (according to Stats Can). Besides, a 30% housing bust in Victoria still leaves the guy staring at a $450,000 mortgage. Some plan. — Garth

#56 Calgary_Rip_Off on 11.09.09 at 11:54 am

The tragic thing is that to get the job and dealing with the people is oftentimes harder than the job itself.

If people were just and civil to others and honest the world would be a different place. That however is not realistic. What people see about other people is what they observe and does not realistically illustrate what is happening under the surface.

People are motivated by money, survival, and the drive for security. As if these things give a man salvation.

The point is to get the job, minimize the distractions to producing great work, and then use the money to live life.

This apparently is more and more of an impossibly. Kind of like the game of hot potato in Alberta where the fool is stuck holding the potato in the end.

This is shown in the oil sector, the gas sector, the housing market, the job market.

It’s truly been a gong show as the general populace watches as its PC party that it voted in stumbles on unsound principles. Hopefully a more socialist party can be instituted to throw out the uneducated PC tories. Try liberal or NDP.

The coldness in Calgary grows colder still.

#57 Downsized and Delighted on 11.09.09 at 11:57 am

#53 Stop Puttin down boomers-

You want to hire someone in his 60’s with a real work ethic for $20/hr to do your illegal renovation and sign a paper that he won’t sue you if he gets hurt on your jobsite?

Sounds like a great plan. How could anything possibly go wrong with that?

#58 Downbytheriver on 11.09.09 at 12:04 pm

@#39 Evangeline

The dollar carry-trade confuses me to no end. According to some it makes the USD over-valued, but according to Nouriel Roubini it’s put downward pressure on the USD and when it stops, the US Dollar will skyrocket and everything else will tank like it did last fall/spring. I understand in theory what it is – but not the end results of it – whether it props the dollar up or supresses it.

To be honest, I don’t think an economy can function with $150 oil, at least if wages stay where they are. High energy costs drive up the prices of everything else and there’s already a lack of real demand out there.

At the same time the G-20 has pledged to keep stimulous going until the real recovery catches up. Hasn’t Japan been trying that for 20 years now? Anything to dodge real reform of the financial system, it seems. I really recommend reading Simon Johnson’s “The Quiet Coup” that was in The Atlantic and can be found online.

I think Buffet’s bet isn’t on oil prices going up but on a bet that future government stimulous spending (or environmental regulation, take your pick) will be on high-speed rail. Burlington Northern’s trackage is pretty extensive. A couple of years ago either CN or CP bought up a big RR in the US NE – they’d probably be a good investment too.

As for the subject in the article, someone else made a good point about the East coast. It’s a lot more affordable, there’s a similarly large proportion of retirees. The main drawback would be starting over but it is a friendly place at least…

#59 can't remember on 11.09.09 at 12:15 pm

http://1.bp.blogspot.com/_nSTO-vZpSgc/SvO2S1XwTvI/AAAAAAAAHO4/1jBVUGfO_MU/s1600-h/canada+equity.png

Garth, I would be interested to see if you have a historical and non-hysterical take on the data shown above (if it is indeed accurate). A disorderly unwind from the scenario shown above can NOT be allowed to happen; martial law if necessary.

Several things I believe:

1. We are in slow economic car crash – Canadian real estate and stocks are in bubble formation, but the burst will not occur soon. Maybe even past 2010. People posting here about impending real estate doom are going to have to suffer quite a bit more. This is not the worst time to buy–maybe spring 2011 will be the absolute peak which will be so high that you’ll wait half a decade for a retrace to todays levels. Crapshoot either way unless you are already awash in capital.

2. Garth has been right about his investment advice because correlations between asset classes are still way high (bearish) just as they were during the crash–in other words ANY bull call since the start of the year appears to be genius since EVERY bull riser has gained. Noteably however, Garth continues to be wrong about GOLD – which during a crash retains its value better than his other picks, yet has significant upside left also in a sustained bull market into next year.

3. The job loss scenario, while regrettable, is only a threat if populist movements take root in opposition to bond market machinations – the HST is showing that this is NOT happening. You need lots of very angry very visible disenfranchised people stirring up opposition to debt financing measures to scare the market. I mean protesting, bad images on TV sent around the world that threaten our debt ratings. This is not happening, which is a tribute really to mass media and media consolidation in general. Additionally, as long as university professors and the accomplished people in think tanks are paid at several times the national wage, they will not lead any sort of organized challenge to the status quo. If things get bad enough that academia feel truly threatened, then perhaps we see a change in the way we deal with unemployed persons.

Frankly, I think “watched bubble” is on the money, though doing a lot of bragging never really makes anyone happier–not even the braggart.

Good day all (if this makes it up).

The chart is two and a half years old, but the trend line is clear. This is what I have been writing about for some time. As for gold, I stick by my call that balanced portfolios should have 10-15% precious metals exposure as an inflation hedge. If you want to put 50% of your net worth in metals, well, good luck. — Garth

#60 Onemorething on 11.09.09 at 12:38 pm

#43 Dilusioned in GTA,

This has been covered in some past blogs but the fact still remains, there are not enough of these immigrants to fill one hole on this sinking ship of one thousand holes.

As I have said first hand, my Asian contacts in HK and SING, China and Taiwan all agree that Canada has lost its way. They are now selling some investment properties in TO and VAN.

Yes, we are in being medicated further with cheap money, which if the market was just left to work you would be looking at affordable housing in the GTA right now, sorry have to wait a little longer for the GREAT GLOBAL RESET to take hold.

Oh ya, take a very hard look at RE when the reset does occur, you might find with rates increasing and a potential decade of sideways movement, renting is the better option and home ownership will no longer be a worthy play.

There are too many poisoned people looking for short term solutions, life used to be a long term plan, start thinking that way again and you might see opportunities others dont!

#61 Pat on 11.09.09 at 12:42 pm

@#35 David Bakody

House prices in Halifax/Dartmouth are overpriced. Obviously not as much as in Victoria, Toronto, Vancouver, etc., but still. This is obvious if you look at the appreciation rate over the last 9 years or compare prices and income.

Show me a 250K house for sale there, which is “a good home in a good area to raise a family.” For me such a home would mean 3B/2B house with modern amenities, which does not need repair/renovation, has a decent insulation, is in an area where one can take a peasant walk outside, and is close to good public transportation. Good schools and playgrounds are also important for raising a family.

Speaking of contractors in Nova Scotia – they have horrible work ethics!

#62 The Vulture on 11.09.09 at 12:48 pm

Hey Everybody!

Want to give Mike Carney some really scary nightmares?????

……….STOP BUYING…………….STOP RIGHT NOW!……
.
STOP GOING INTO FURTHER DEBT.
.
.
YOU WILL BE VERY SORRY IF YOU DON’T.
.
No more credit card purchases.
.
.
You have to buy food, heat, water and gas but cut out everything that is non-essential to survival.

No new HD TV. Your 5 year old crt works just fine thank you!

No new clothes. Wear what you have until it scares even moths away.

No Vacations. Go to your local park or conservation area.

No new car. Buy used and only when you have to. Get your current car tuned up and cleaned.

No new cell phone. Old one works fine.

No new furniture. Who are you trying to impress. If a chair works then keep using it.

No new hardware or tile floors. Sure, it looks really pretty but food in your stomach is much more satisfying.

No new video games. Come on, $80-$90 for a video game that the kids play for a couple of days and then get bored of. Rent instead. Common sense it would seem.

No rental DVDs. Get legal stuff off of YouTube.

No new DVDs. Just forget it.

No eating out. Prepare your food from scratch. Forget heavily packaged food items as well.

No stopping by the bar with some friends after work. Bar tabs run up really fast.
Stop smoking.
No going to that expensive gym. Purchase your own equipment used and work out in your basement. Want an expensive new treadmill??? Go outside for a walk instead.

No buying daily newspapers. All that you want to read is on the net anyways.

Stop buying magazines, shampoo (soap is great), chocolate bars, fast food etc.
No buying anything that is not an absolute necessity.

Have discipline. You cannot prosper without it.

STOP BUYING JUNK…STOP GOING FURTHER INTO DEBT.

STOP TO THINK ABOUT THIS BEFORE IT IS TOO LATE!

#63 bigpictureguy on 11.09.09 at 12:58 pm

#57 Downsized and Delighted

I suspect this poster is mentally challenged. It’s unfortunate Garth can’t ban users or have an ignore function.

#64 Keith in Calgary on 11.09.09 at 1:03 pm

#32 Peter Wiener…….

Very well said……today’s print and TV media are nothing more than paid shills for the “Real Estate Industrial Complex” and political parties.

As it costs literally “next to nothing” to maintain a website (been there, done that) relative to the massive overhead of the other two competitors, differing opininons are now only only found online.

#65 kitchener1 on 11.09.09 at 1:23 pm

RE #53 and hiring some “under the table help”

Great example as it forcasts 3 huge trends that will effect the marketplace in the coming years.

1. Underground economy- we are either at the point already or very close to it where we have reached “maximum bearable taxation” all levels of govt. What happeneded with cigareetes in Ontario is going to happen across all verticals very soon. At some point even people who happily paid taxes in the past are going to reconsider and start looking at ways to avoid tax. Reno’s are a great example, with cities adjusting their mill rates to make up the loss in corporate tax, watch for a lot of folks to keep quiet about their reno’s turn to the underground economy. There really is not much revunue canada can do about it.

Look at your local Kijji services section for an idea, tons of mechanics, painters, electricans, plumbers all willing to work for less (most case $20-30/hours, less then half of market price)= downward pressure on prices.

2. Defaltion: That 60 something person doing your reno’s can undercut any contractor because he might very well already be receiving CPP benefits, he does not need to get a permit/business lic/insurance/ etc… that all other contractors require. Not to bash on boomers again, but in the next 10 years there will be a huge shortage of trades. What better way for these boomers to supplement their income by working for cash. Its happening now as I personally know of at least 4 diff trade guys that are 65 or over that work on the side for ridicoulus cheap. the prices that co-workers are telling me are insane. Think about it, these guys have been in business for the last 30-40 years, have all the contacts, its not hard for them to get a occassional day(s)/week(s) of work. They do not have the same overhead as 20-30something contractor with 2 kids at home to feed.

I would’nt hold my breath about boomers actually thinking about the consquences of their actions in this example, they have always and always will look out for themselves. Odd thing is that when they were in the workforce, they demanded fair wages, but just watch them undercut others to get the work, while at the same time demanding and increase in CPP benefits.

3. Changing market dynamics: Imagine being a contractor in your 20-30-40’s and being undercut on many jobs. This will continue to bring pressure to market forces driving wages down. The end user or customer does not care about the effects, they want it cheap and they want it right now. Look at our retail market- no body cares that people in china/india are working for cents on the $, they want there stuff cheap.

#66 Bob on 11.09.09 at 1:26 pm

I may have missed it, but how do I get a ticket to your Victoria speaking?

(250) 475-3698. — Garth

#67 Elle on 11.09.09 at 1:43 pm

#56 Calgary-Rip-Off

“People are motivated by money, survival, and the drive for security. As if these things give a man salvation.”

While I understand how cut-throat things can be regarding the world of work, with all due respect Calgary, on this side of the dirt, ….without money and a natural drive for security, your chances for a long life are slim to none! Salvation is more in the integrity that you apply to it all, don’t you think?

“The coldness in Calgary grows colder still.”

This just makes me want to say…. Honey, if at all possible, …. get out of there!

elle

#68 Increasing that 1% on 11.09.09 at 1:46 pm

Re: #51. pjwlk
…..“it’s always the guys with the big Cadillacs who don’t pay their bills” I’m guessing that they’ve spent all their money trying to make others think they have money…but really, they don’t.”
———————————————–

When delivering pizzas (thiry min or free!) many years ago, I noticed in the area of ‘Leaside’ (expensive) people barely tipped vs those just outside the area in basement apts and rundown buildings

(This was when there was no delivery charge also included- and not that people HAD to give ANYthing, just an observation about those that did)

#69 RJD on 11.09.09 at 2:03 pm

The statement “unemployment is a lagging/leading indicator” only really has meaning when you have context. I would suggest it is a leading indicator to:
– the people that just became unemployed and the change to their life that unemployment will bring
– the people that were already unemployed and the new competition for jobs they will face
– the people who still have jobs and will worry more about their future (especially those on the edge).

It may not be a leading indicator to those of us that still have jobs and want to make investment decisions but at the end of the day, aren’t “people” what we are all about?

#70 jess on 11.09.09 at 2:07 pm

The Canada Revenue Agency launched a two-year pilot project in 2008 to better focus its investigations into the so-called “electronic suppression of sales,” or ESS, by sending in teams to selected establishments to ferret out hidden software in cash-register systems.

Before the pilot began, the agency had identified 11 such cases — and has since found others, though a spokesperson would not provide details. The new cases have been referred to enforcement officers.

“Preliminary work indicates that ESS is prevalent across Canada,” Caitlin Workman said in an email.

“These are ongoing investigations, and the CRA has identified additional businesses using electronic sales suppression.”

Once the pilot is complete in March and the level of fraud better estimated, the agency will launch the next enforcement phase, she added. Restaurants were chosen in the first phase because of the high volume of cash sales.

Workman declined to indicate how agency auditors can determine whether cash sales have been hidden or deleted on computer systems, saying it could jeopardize investigations.

The Quebec government, which is Canada’s leader in hunting down cash-register fraud, estimates cheats in that province cost their treasury $425 million in 2007-2008.

The provincial government has passed legislation prohibiting the design, manufacture, installation and use of zapper-type programs.
http://news.therecord.com/Business/article/626341

#71 Evangeline on 11.09.09 at 2:12 pm

#58 Downbytheriver

((The dollar carry-trade confuses me to no end. According to some it makes the USD over-valued, but according to Nouriel Roubini it’s put downward pressure on the USD and when it stops, the US Dollar will skyrocket and everything else will tank like it did last fall/spring. I understand in theory what it is – but not the end results of it – whether it props the dollar up or supresses it.))

I don’t think the carry trade either props up or supresses the dollar … monetary policy (setting interest rates) does that. The carry trade just takes advantage of lower interest rates.

Here is pretty good older article about the yen carry trade. The exact same principles apply to the USD carry trade.

Why is the carry trade so dangerous? By Cris Sholto Heaton Aug 24, 2007

http://www.moneyweek.com/investments/why-is-the-carry-trade-so-dangerous.aspx

((To be honest, I don’t think an economy can function with $150 oil, at least if wages stay where they are. High energy costs drive up the prices of everything else and there’s already a lack of real demand out there.))

I agree … in fact I agree so much that I got rid of all my oil stocks, no matter how much I lose from skyrocketing oil prices in the future. I refuse to profit from an economic situation that will inflict so much misery on society. When I had oil stocks I literally could not sleep at night thinking about that.

#72 John on 11.09.09 at 2:14 pm

Hey guys,

Many great points both for and against sticking it out here in Vic. A couple things: I don’t see much promise in the Maritimes, as “unskilled” labour is worth about half what it is on the west coast; can you imagine the trouble of finding a few decent guys to work for me, while only being able to charge 15/hr for my time? Yikes! The only move that seems feasible at this point is to the Fraser Valley(Abbotsford, etc.), near enough to service
the eastern lower mainland, far
enough to afford the real estate. All my work is in custom homes/renos, and interior/exterior repaints, with the focus of being a high end painting company. This focus and approach will hopefully lead to success if I do move elsewhere.

Thing is, when I started my biz 5 years ago, I had nothing but my final paycheck and a pissed off ex boss. So since then, I’ve been paddling madly behind the crest of the house price wave.

Let’s not forget who deserves a lot of the blame for this gigantic RE bubble, not CIBC, RBC, BMO, CREA, CMHC.

I blame HGTV

I also mentioned Ontario. We now have Internet and paved roads. — Garth

#73 Larry on 11.09.09 at 2:24 pm

Garth, housing starts are on the rise here in Calgary and prices have increased from last year YET we have the highest jump in unemployment in the country something’s not right. What do you need to come and speak to the folks here in Calgary?

#74 gordon on 11.09.09 at 2:27 pm

John;

Keep bankrolling your money. Your going to need it for re-training and living expenses. The unempolyment rate in Victoria has gone from 3.1 to 6.6 percent in one year and most of the jobs are related to real estate. Victoria is a small town and when the jobs are gone, the moving vans are loaded up and leave the Garden City.

I was here during the real estate correction in the mid 1990’s, after the Commonwealth Games, the major developers were broke and the sub trades were rarely paid.

Let’s keep Victoria’s size in perspective. Today there are only 53 houses for sale in Victoria City proper and 36 homes during the last 30 days. Those 36 sales ranged from a low of $395,000 to a high of 1.1 million with a median of $530,000.

The Victoria market is high risk. Imagine if next month the sales dropped by 25? What would happed to the Victoria marketplace as opposed to a drop of 25 sales in Vancouver or Toronto.

#75 Just a Girl on 11.09.09 at 2:27 pm

On the subject of rain in Victoria … yes, it does rain, mostly from Nov to Feb. But not nearly as much as other coastal cities, especially Raincouver .. I mean Vancouver. The rest of the year is pretty dry and sunny in Victoria, thanks to the rain shadow effect of the Olympic Mountains :)

I think there is this myth that it never stops raining in Victoria, or that Victoria is somehow just a smaller city version of Vancouver’s weather.

However, it has its own lovely micro-climate, which is one of the reasons people are attracted to this location. This puts pressure on prices, always has. I know it doesn’t happen every year, but this past summer was almost like being in the Mediterranean, with endless sunshine and dry weather, really quite nice for paddling and picnicking at the beach. The breeze is also nice for smelling the salty air, and keeping the mosquitos away.

I know, earthquakes, wind and all that. Not to mention the city is on an island, and some people feel very trapped by that geography. Every place has its own “weather recipe” and there are always trade-offs. But Victoria’s desirable climate is one contributing factor to high RE prices.

#76 I in Vic on 11.09.09 at 2:32 pm

John…If you want to stay in Victoria please continue on as a renter. When the fart bubble pops here many people will be wearing shit. This could lead to many POS. in the RE market. Don’t buy into the Fantasy Island spin. I am seeing many Reduced signs on the lawns. It’s only a matter of time before pop goes the bubble.

#77 Nostradamus jr. on 11.09.09 at 2:41 pm

Actually, in my line of work…the Prophecies Industry, downticks in world economies bolsters my income…both from paid subsriptions of my newsletter and from private meetings.

…Recently, my largest paycheques have come from Mohamed’s next calling…Barrack Obama and from Hank Paulson, ex Sec Treasury….H P wanted to know if at any time in the future he would be pitchforked and his head stuck on top of a pole.

I charged them each $10 million and told them what they wanted to hear.

Hey, I’ve got ex wives and kids to support like most other men.

Nostradamus jr.

#78 Men With Hats on 11.09.09 at 2:46 pm

Lagging indicator : The whole country is strapped for
cash .
Retail sales for Christmas will be abysmal .
Booze continues to sell well though .
Make my psychic pain go away .

#79 Bill-Muskoka (NAM) on 11.09.09 at 2:58 pm

#54 PeckedToDeathByDucks

You should also mention the Hillbilly Highrise concept!

#80 Men With Hats on 11.09.09 at 3:09 pm

Zapp !
Software makes fourty million in restaurant sales vanish into thin air .
The amount of hidden cash income – with no taxes paid – is likely to be much higher once the pilot project concludes in March, officials say. Agency auditors are swooping in on restaurants across the country to determine whether their electronic cash registers contain illegal software that selectively deletes sales from official accounting records.
Federally, it is a criminal offence to alter accounting books and records to dodge taxes, with penalties of up to five years in prison and fines up to twice the evaded sums. The fraud works on cash sales only; credit and debit cards create separate readily traceable audit trails.
Phantom-ware is factory-installed software within electronic cash registers that can selectively delete sales records, leaving no audit trail. Not disclosed in the user manual, it is often passed “verbally” to the business owner. Zappers are temporary installations, such as a memory stick that can be removed to hide the fraud.

And the beat goes on .

#81 The VULTURE on 11.09.09 at 3:10 pm

Hey Everybody!

Want to give Mike Carney some really scary nightmares?????

……….STOP BUYING…………….STOP RIGHT NOW!……
.
STOP GOING INTO FURTHER DEBT.
.
.
YOU WILL BE VERY SORRY IF YOU DON’T.
.
No more credit card purchases.
.
.
You have to buy food, heat, water and gas but cut out everything that is non-essential to survival.

No new HD TV. Your 5 year old crt works just fine thank you!

No new clothes. Wear what you have until it scares even moths away.

No Vacations. Go to your local park or conservation area.

No new car. Buy used and only when you have to. Get your current car tuned up and cleaned.

No new cell phone. Old one works fine.

No new furniture. Who are you trying to impress. If a chair works then keep using it.

No new hardware or tile floors. Sure, it looks really pretty but food in your stomach is much more satisfying.

No new video games. Come on, $80-$90 for a video game that the kids play for a couple of days and then get bored of. Rent instead. Common sense it would seem.

No rental DVDs. Get legal stuff off of YouTube.

No new DVDs. Just forget it.

No eating out. Prepare your food from scratch. Forget heavily packaged food items as well.

No stopping by the bar with some friends after work. Bar tabs run up really fast.
Stop smoking.
No going to that expensive gym. Purchase your own equipment used and work out in your basement. Want an expensive new treadmill??? Go outside for a walk instead.

No buying daily newspapers. All that you want to read is on the net anyways.

No buying anything that is not an absolute necessity.

Have discipline. You cannot prosper without it.

STOP BUYING JUNK…STOP GOING FURTHER INTO DEBT.

STOP TO THINK ABOUT THIS BEFORE IT IS TOO LATE!

#82 POL-CAN on 11.09.09 at 3:13 pm

More on the flu hoax:

TERESA FORCADES, doctor in Public Health, reflects on the history, and gives scientific data, of A type flu and lists all the irregularities related to this subject.

She explains the consequences of the declaration of a PANDEMIC, the political consequences from this declaration and makes a proposal to keep calm. She calls for an urgent activation of all legal mechanism and the participation of all citizens in this matter.

http://www.globalresearch.ca/index.php?context=va&aid=15980

It is trully sad that the best obective analysis of the “pandemic” that I have found to date comes from a nun in Spain.

Where is the investigative journalism? Where is the MSM?

There seems to be a complete lack of any info regarding the “new” strain hitting Europe. Why is that?

#83 Downsized and Delighted on 11.09.09 at 3:22 pm

I didn’t say he should “buy” in Victoria Garth – I said he should rent and sock away cash (from his established business) till the housing market goes bust. THEN, he can move to whatever area he would like with a downpayment for a house. That’s my plan.

I know Halifax Garth. It’s a great city. But painters don’t move to the East Coast to find work – they move in the opposite direction. But you know everything Garth.

I know there is currently a net migration east, not west. — Garth

#84 Jeannie on 11.09.09 at 3:30 pm

John, as you may have noticed, the folk on this website are ever ready with genuine, helpful suggestions….whether or not they’re helpful to you is another matter !
Here’s my two cents; A painting contractor on our former street decided to ‘branch out’. He put a few ads around the city offering to clear out garages, and haul the unwanteds to the junkyard.
He told my spouse that he’s earning three times as much, and business was thriving last we heard. Of course you’d have to invest in a truck with a sizable box. When business slows, what other ‘needs’ could you, and your staff of three identify ?

#85 Gord In Vancouver on 11.09.09 at 3:38 pm

Update On BC’s Job Market

http://www.bivinteractive.com/index.php?option=com_content&task=view&id=2019&Itemid=32

#86 Downsized and Delighted on 11.09.09 at 3:52 pm

I know there is currently a net migration east, not west. — Garth

If we are talking about Victoria, should that be a surprise?

#87 Soju on 11.09.09 at 4:01 pm

That’s right John keep renting and have nothing to show for! Maybe you should forget the house and buy something more affordable.

Ever heard of negative equity? — Garth

#88 Calgary Rip off on 11.09.09 at 4:09 pm

“Garth, housing starts are on the rise here in Calgary and prices have increased from last year YET we have the highest jump in unemployment in the country something’s not right. What do you need to come and speak to the folks here in Calgary?”

Larry, the reporting by Mario Toneguzzi and others at the Herald may be honest on the surface without accounting for other factors. The current stats may illustrate late starts that are surfacing now. Look at the reality: Job losses and houses that are still $200K above what they should be(overinflated market value).

Elle: Salvation and survival are two different things. Survival is tooth and nail. Salvation is from Jesus Christ. That’s the difference. One you need cash to sustain, the other, death is inevitable, you cannot buy, it is given. And as far as getting out of Calgary, yes there are many reasons, however the only thing lacking is investment in one of the overpriced shacks here. As a current renter I can only watch as things go up in flames around me, due in part largely due to ego, greed, deception, and false values of what matters. In the meantime I’ll continue earning $90K(increasing year by year), voting for far left parties(NDP and liberal), and enjoying my family and playing my Stratocaster loud and fast through my Marshall amplification in the basement of the rental shack I am fortunate to inhabit and not worry about the value of.

#89 David Bakody on 11.09.09 at 4:40 pm

#61 Pat on 11.09.09 at 12:42 pm

# 1

http://www.homesacrosscanada.com/cgi-bin/WebObjects/cps.woa/wa/ListingDetails?board=SSNS&key=3707372&tm=487319

Both my Children went to the school mentioned and have done well and my wife was a stay at home mum.

#2

http://www.homesacrosscanada.com/cgi-bin/WebObjects/cps.woa/wa/ListingDetails?board=SSNS&key=3994066&tm=353311

My daughter lives in this area …. besides the good schools there is a Sportsplex there that a hockey player you may have heard of played there ” Sidney Crosby”

#3

http://www.homesacrosscanada.com/cgi-bin/WebObjects/cps.woa/wa/ListingDetails?board=SSNS&key=3976706&tm=789559

as noted good new schools near by ….

Last comment …. of course you joke about East Coast Work ethics …. Soon it will be anniversary time of the Halifax Explosion …. my wife’s grandfather came and built many homes after that from the Valley. I was in the contract business for years and worked with many contractors who worked to very high standards, some of my contracts were farmed overseas and their work was returned or late more often. I also worked in the offshore industry with the Texas boys and they were more than satisfied with our work. Of course as any person will tell you older homes were built under better conditions, having said that building materials are much different to-day and better in some respects. My home was built by a Newfoundlander ….he did a great job using tongue and grove wood and the best of materials …. I just replaced some carpeting in my home after 35 years and the hardwood floor installer stated just how good the old carpet still was. I could also mention our Naval Dockyard and the ship building industry and the fine craftsman of Lunenburg and beyond the list goes on and on. To be fair our working class here do not have to put with the 401 or other massive highways to get to/from work perhaps lowering their stress levels on the job. Are they perfect, of course not, but damit I often thought they were many times.

#90 David Bakody on 11.09.09 at 4:53 pm

#64 kitchener1 on 11.09.09 at 1:23 pm

Just wait for Harper’s Sales Tax (HST) to kick in BC & Ontario, you ain’t seen nothing yet baby went in comes to cash sales …. under da ode table.

Hey talk about job creation check out yesterdays Halifax Chronicle Herald of PEI/CTV’s most favorite and hard working Senator!

#91 curious to know on 11.09.09 at 5:02 pm

Garth:

About people on severance pay, I meant are they counted as unemployed in the statistics?

#92 nonplused on 11.09.09 at 5:04 pm

Garth, You drive a Hummer???? I hope it’s an H1, which is actually a real Hummer that the army might try and drive off road, and not an H2, which is a Yukon with an overly heavy body on it, or an H3 which is an ugly Envoy. Not that the Envoy wasn’t ugly enough already, I think the GM design team has either gone completely mad or perhaps they were all laid off. But I have to admit “Government Motors” products are every day more and more resembling the best the soviet auto industry managed to produce, only much harder to repair.

I understand the Chinese now own Hummer. Any rumors on when they are moving production back to the mainland? I bet they can make an H1 in China for $7,000, instead of the $120,000 you have to pay for one here. If you can find one. Ever since the start of the Iraq war I have not noticed nearly as many H1’s driving around. Not even with bill boards painted on them.

For the record I think the H1 is a rather neat off road vehicle for those who don’t think a CJ uses enough fuel. But the H2 and H3 are kind of like a tough façade on a soccer mom’s suburban.

I though you were a Jeep guy?

Oh ya, the topic is housing! Right. Watched Bubble Never Pops is right, real estate can only increase exponentially. In 20 years the average house price in Canada will be $27.4 million dollars and the average income will be $60,000/year, so buy now before you are priced out forever! I had to throw something on topic in there.

#93 Dan in Victoria on 11.09.09 at 5:38 pm

Post#53 He’ll sign a paper that says he won’t sue.Ha!LMAO,How about he signs a paper that says he’s liable for his screw ups.Lets see what could possibly happen…..Hey honey the water in the toilet is hot.Hey honey the toilet is screwed down not bolted,Hey honey this sink drains slow and belches back air.Yeah, if you disconnect these white wires, the white wire isn’t hot ya know….hey all our electronics just went out,and won’t come back on.What do you mean the tile is loose?I used the stuff out of the bag….well maybe it was setting up when I put the tile down,but it should be okay.The grout will fix that.This bathroom fan doesn’t seem to suck any air.And on and on.
NOT saying the gentleman is like this.But Is he a qualified electrician,plumber,carpenter etc?I’ve seen this drama play out a hundred times,almost every time it was a cash job, no permit,no trade papers,no insurance,you get the idea.
You gotta do what ya gotta do,No whinning afterwords.

#94 David Bakody on 11.09.09 at 5:50 pm

How much is this home worth in Victoria or Van or TO or Cal. or even available.

http://www.homesinhalifax.ca/listings/Listings_All.html

The reason I post this is simple ….. if owning a showpiece is your thing and you are a professional couple then why settle for less. Hello, for what this would cost you in the above area’s you could live here/entertain in style alongside many rich people and travel the world and still bank money.

As is less is more ….. paying more money is not more.

#95 gold bugger on 11.09.09 at 6:06 pm

Deflation? Deflation?

Get serious. Money being printed. Credit ballooning.

Do you even buy your own groceries or do you have a minion do it for you? Your entire blog is built on the tragedy of higher house prices.

Where is the deflation? By any definition other than phoney-baloney government statistics?

As opposed to yours? — Garth

#96 kc on 11.09.09 at 6:12 pm

#71 John

“with the focus of being a high end painting company. This focus and approach will hopefully lead to success if I do move elsewhere.”

“So since then, I’ve been paddling madly behind the crest of the house price wave.”

82 Jeannie

“Here’s my two cents; A painting contractor on our former street decided to ‘branch out’”

John, I am not going to blow smoke up your ass from a positive nor negitive point of veiw, I am going to give you some straight goods here. (and from this information you can make up your own mind and DO YOUR HOMEWORK)

My long term girlfriend is a painter and has been painting for over 32 years. Her father is a painter and has been painting over 50 years and her grandfather owned a paint shop in hammond and painted till he died.

My girlfriend’s work from steady customers, word of mouth referals and excellent connections (not to mention her family name in the business) is drying up faster than water vapours in a hot oven. Her father’s work has slowed to nill in painting, however he is connected to a few good contractors that are keeping him busy with construction jobs. (he is well aware of what is coming down the pipe in this trade) you need to be versitile and flexible and to uproot your name (or contracting name) to start over in a new town is great if there are shortages of labour in your desired trade… but guess what, that “crest of the house price wave” is going to turn sharply into a full force hurricane and you will be like a small wooden boat that gets capsized. (at least you have a 30K bankroll to cushion the blast.

You said high end paint company… (Benjamin Moore paint is name only) means nothing except to the yuppy who thinks that BM paint is best when GP is a contractors source…. High End still means nothing for my gal has had to slicce her bidding processes now TWICE to try and keep up with the over supply of painters fighting for work.

Do some Craigs list / kijjii ad searching for jobs in skilled trades on the GVRD to see what I am talking about.

The majority of the “guys” looking to hire painters as in a crew pay peanuts 10-15 an hour, and also many here that advertise for crews are the good ol’ paintpro – student painters … well, we in the trades know all about the bad stories with these guys.

this is just food for thought. cheers

#97 kc on 11.09.09 at 6:15 pm

89 curious to know on 11.09.09 at 5:02 pm Garth:

About people on severance pay, I meant are they counted as unemployed in the statistics?

I truely can’t believe i read this… If you get your severence pay… guess what… you are UNEMPLOYED so I am sure you are counted for something somewhere.

#98 Vancouver_Bear on 11.09.09 at 6:26 pm

#76 Nostradamus jr. on 11.09.09 at 2:41 pm

Share with us the stuff you’re smoking…..it’s just not fair to keep it to yourself!!

#99 Emma on 11.09.09 at 6:48 pm

#44 MarkArgentino
Found your website a number of years ago and have been watching your “average price of single family homes” chart for a while now. Ingenious – no one else was doing this at the time and it was shocking to see such honesty from a realtor (no offence intended). Don’t know if you still have the chart that shows to buy in May and November but that was also very helpful to me when I purchased. Thanks. Funnily enough though, your data compilation was the first indication to me that we are headed for a $hitstorm and yet you disagree with Garth. Oh well, we can all tell a story with the data, eh?

#54 PeckedToDeathByDucks
Lmao at the sales pitch!

#89 curious to know
I am assuming that you are referring to the fact that severance pay disqualifies you from EI for a while (depending on the sev amount) – but these stats are based on the labour force survey. The survey covers about 50,000 households in Canada and if the person on severance pay is not working and actively looking for work, then he/she is considered to be unemployed.

Here is the strict definition for the last census – I am assuming the def’n would be the same for the monthly surveys or else the data would be skewed.
http://www12.statcan.ca/english/census06/reference/dictionary/pop124.cfm

Also, here’s the actual survey – the labour force stuff starts on page 54.
http://www.statcan.gc.ca/imdb-bmdi/instrument/3701_Q1_V3-eng.pdf

#100 Ultraman on 11.09.09 at 6:51 pm

Severance pay: As far as EI is concerned you are considered employed, therefore not eligible for EI until your severance runs out prorated on your previous weekly income of course.

#101 D Paris on 11.09.09 at 7:07 pm

Great post Emma, bang on. I would never incurrage my kids to buy. Wait for the correction. Signed Homeowner no mortgage.

#102 Grantmi on 11.09.09 at 7:21 pm

Well more yob layoffs today!

Electronic Arts is laying 1,500 Canadian staff!! (I hate that word.. it means FIRED!!! Layed off means you might be called back!)

http://bit.ly/2ZMXSP

I wonder if they have mortgages and loans?!?!?!?!?

#103 Piccaso on 11.09.09 at 7:23 pm

Companies aren’t hiring employees any more, their hiring contractors. Been that way for a while and getting more so by the month. When your out of work as a contractor, you don’t make the unemployed stats.

#104 Grantmi on 11.09.09 at 7:26 pm

Sorry! Correction! 1,500 staff in total @ EA … Not Canada alone. Sorry for the miss-type!

#105 Watched Bubble Never Pops on 11.09.09 at 7:43 pm

Governments around the world reassure investors that they will keep rates low (more like 0) and to keep the party going in the stock market. There is little doubt that low interest rates will also keep the RE party going. Party like it’s 1983!

http://tinyurl.com/ybqabaf

#106 Watched Bubble Never Pops on 11.09.09 at 7:45 pm

#93 gold bugger

Inflation is the current reality regardless of what you choose to believe.

http://tinyurl.com/ycua8qt

#107 TheComingDepression on 11.09.09 at 7:48 pm

If you want to put 50% of your net worth in metals, well, good luck. — Garth

I love this illiterate post! Had I listened to Garth Turner I would not have put OVER 50% of my net worth in GOLD ($450) and SILVER ($4)! I would NOT have been able to almost triple my money. I would have LOST my money in some loser mutual fund. Garth you’ll be babbling about GOLD and SILVER when it hits $2000 and $100..not to go near it as the DOLLAR PLUNGES into abyss. The Economic Depression is getting closer by the day..But not according to GARTH..LOL

More proof too much bullion makes you into a maniac. — Garth

#108 Stop Puttin Down Boomers on 11.09.09 at 7:49 pm

#91 Dan in Victoria on 11.09.09 at 5:38 pm

Dan – I’ve done lots of research & my husband is very knowledgeable about mechanics,plumbing & electricity, etc. He did a major reno to our main level & is a perfectionist – old school Euro trained, but is an IT supervisor now. Not much he can’t do. He could teach most people a thing or 2. I did up a worklist with specifics as well as a layout using a ‘home design’ program. We’ll both be ‘overseeing’ the job daily & can let him go on a day’s notice if we’re not satisfied with his workmanship.

You assume we’re ignorant Dan. I doubt you have 1/10th of the knowledge & capability of my husband.

#109 ca on 11.09.09 at 7:58 pm

Garth —

Hope you’ll comment on this story:

http://www.guardian.co.uk/environment/2009/nov/09/peak-oil-international-energy-agency

#110 conan on 11.09.09 at 8:12 pm

Re 51
Well the people with the equity and the burden of old age can afford the cost of a painter. City trades people make at least twice the money that rural trade people make. The rural town with 150k homes is not where he wants to be.

Re 53 if he hurts himself badly I do not think that document protects you. The easiest solution is to tell this guy go buy an accident only disability policy from a life insurance company. It’s like 70 bucks a month for 2 k of coverage and it pays from the first day. If he lets the insurance slip he gets fired.

Also make sure he understands and you understand that the 20-dollar an hour is just for him. He cannot show up at your house with really “cheap” labor that he is only paying 5 bucks an hour to. With the legitimate and legal right to pocket a quick 15 bucks an hour profit per employee.

Re: 94 High-end homes get high-end renovations and any contractor worth their salt hires high quality “work and materials ” painters. Good painters get paid close to what carpenters get paid.

John:

I would stay where you are. Have you thought about increasing the “re-paint” part of your busines?

With 30 k in the bank you can afford to do work for the larger landlords who have tons of work but only use 90 day invoicing.

Re-paints are also excellent because you can set up piecework arrangements with them. That’s free money.

#111 kc on 11.09.09 at 8:18 pm

John, further to what i was saying about painters in gvrd, here is a search for companies/contractors who offer painting services. from this you will quickly understand what it is I am saying. read some of these ads.

http://vancouver.en.craigslist.ca/search/sks?query=paint&catAbbreviation=sks

#112 eddy on 11.09.09 at 8:32 pm

DisilusionedinGTA wrote

“My wife and I have been awaiting a correction for 2 years and no cigar!”

You missed the correction, it was May 2009. Some folks on this blog think another correction is ‘just around the corner’ but I don’t recall anyone ‘calling’ the last one, many predicted it, but no one ‘called it’ when it happened. i knew it was happening because i was physically going through houses, talking to agents etc.

‘Greater Fool’, published March 2008. — Garth

#113 $fromA$ia on 11.09.09 at 8:40 pm

This is a must see on this blog.

Please, if you have the time please watch this short video about a guy who can’t sell an ounce of gold for $20 US.

http://www.youtube.com/watch?v=Gk5aRIz17fk&feature=player_embedded

Garth, this is especially for you.

#114 Stop Puttin Down Boomers on 11.09.09 at 8:43 pm

#91 Dan in Victoria on 11.09.09 at 5:38 pm

Dan – maybe I was a little harsh in my previous post as when I first read it, it seemed totally negative. My husband, in addition to the visible renos he’s done, put in a complete air/heat exchange system and an alarm system within our house. We actually have, ‘panic’ buttons in various areas of the house that turn on 2 loud sirens. Though we live in a low crime area, cars on our street were broken into many years ago during a time when my husband had to travel. Yes Garth we’ve a safe, have everything to live for several weeks without hydro, etc. What can I say :-) My family think we are paranoid. Last winter he set up 8 tiny cameras (he did not pay for them) in the back basement cause I had seen a little mouse. If you’ve got one, you’ve got many. He laid out warfarin & set traps & each morning before he’d go to work he’d view the goings on during the night. Yep, there were several baby mice, but they managed to lick the P’nut butter but escape the trap. The traps finally worked, but we felt sorry for the little mice. Thankfully I didn’t have to dispose of them.

#115 Stop Puttin Down Boomers on 11.09.09 at 8:53 pm

# 108 ConN

Re 53 if he hurts himself badly I do not think that document protects you. The easiest solution is to tell this guy go buy an accident only disability policy from a life insurance company. It’s like 70 bucks a month for 2 k of coverage and it pays from the first day. If he lets the insurance slip he gets fired.

We’re meeting with him tomorrow eve. I’ll call my lawyer tomorrow to see what he says.

#116 Dan in Victoria on 11.09.09 at 8:54 pm

Post #53 “Comments Please” okay, if you don’t like the response,ask a diffrent question.I’m sure your smart husband and you will eventually get the answer you want.Keep trying.LMAO.

#117 Gord In Vancouver on 11.09.09 at 8:54 pm

Another Update On BC’s Job Market

http://www.cbc.ca/canada/british-columbia/story/2009/11/09/electronic-arts-cuts-jobs.html?ref=rss

#118 HouseBuster on 11.09.09 at 9:02 pm

Hey Garth… Have you seen this?

http://www.guardian.co.uk/environment/2009/nov/09/peak-oil-international-energy-agency

The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying.

The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves.

#119 Stop Puttin Down Boomers on 11.09.09 at 9:03 pm

#108 conan on 11.09.09 at 8:12 pm

OOps, forgot to mention, he works on his own – no employees, etc. If we don’t get our main bathroom renovated within the next few months I actually fear that one morning one of us will find ourselves in the basement!!

#120 Stop Puttin Down Boomers on 11.09.09 at 9:05 pm

#114 Dan in Victoria on 11.09.09 at 8:54 pm

Thanks for your typical con non answer.

#121 John on 11.09.09 at 9:13 pm

Re: Stop Puttin Down Boomers.

So, you guys get a hint of mice, and buy 8 cameras to find them? Panic buttons, calling your lawyer, contracts etc.

Sounds like this poor old handy man doesn’t know what HE’S in for.

With your husband’s desire for perfection, and judging that you aren’t poor, save yourself and hire an established, reputable local contracting company. Then you get written contracts, liability insurance, and WCB. Sure you pay a little more, but the peace of mind will be well worth it for you.

I could go on and on about reasons not to hire one of these 20$/hr guys, but that kind of stuff belongs on another blog.

#122 Taxpayer like you on 11.09.09 at 9:16 pm

53 Boomers

I think David B lives near Halifax, and you’re saying you’re not as damp as Victoria?

Check 1 (Victoria) and 14 (Halifax) in following link.

http://list.canadianbusiness.com/rankings/bestplacestolive/2009/weather/Default.aspx?sp2=1&sc1=0&d1=a

#123 Evangeline on 11.09.09 at 9:21 pm

#104 Watched Bubble

you are arguing inflation but linked to Mish Shedlock arguing deflation … what did I miss?

#124 BAD on 11.09.09 at 9:31 pm


Stock markets rally…

Yet many investors are uneasy. For these people, the market is taking on a “greater fool” feel, meaning that many don’t really believe in the investments they are making. They are banking on being able to sell to a “greater fool” later.

Dow Leaps in Skeptics’ Rally

The ‘greater fool’ feel, after a few years, seems to be a quite normal state in the Canadian RE market.

Interesting times we live in, interesting indeed.

#125 Taxpayer like you on 11.09.09 at 9:42 pm

Garth @ 55 “Based on what? The average income in
Halifax is higher than Victoria (according to Stats Can).”

There’s lots of tables at Stats Can for various definitions of income, and they are 3 years old, but they generally don’t confirm that. The following link is median, but just explore the options on the left a little more:

http://www40.statcan.gc.ca/l01/cst01/famil107a-
eng.htm

#126 Not Garth on 11.09.09 at 9:47 pm

http://www.cbc.ca/canada/british-columbia/story/2009/11/03/bc-olympic-rentals-slowing.html

ya, the rent from the Olympics will offset the higher price we pay….ya…right.

#127 Not Garth on 11.09.09 at 9:52 pm

WHEN

Garth

Any sense of

WHEN

The downward trajectory will resume?

Thanks

#128 shane on 11.09.09 at 10:32 pm

Garth, what type of business do okay in a recession?

Mikey

Blogs. — Garth

#129 r on 11.09.09 at 11:39 pm

#36
unemployment is not a lagging indicator if the jobs are being outsourced.
it’s a lagging indicator if the job market temporarily contracts as companies reorganize. i think the latter was the reason for jobs to lag growth.
this is not happening now and economists should be ashamed of themselves for holding this self-serving idea.

then we have the idea that retirees will free up jobs, which means that the current generation in school will have good job prospects and they’ll wonder what the fuss was all about. this one is more plausible.

and then there’s the one that sounds like a prayer. innovation and our ability to rebound from dread.
more real but you get the pain, so it’s not a solution at all.

#130 Duane on 11.09.09 at 11:44 pm

“In Canada, unlike the States, we don’t count people who are discouraged, who have left the workforce, who’ve given up, whose EI benefits have run out, who are underemployed or were forced out of full-time jobs and into part-time employment.”

Hi Garth. Thought you and the readers would like to know that Canada does in fact record alternative employment numbers, just like the Bureau of Labor Statistics in the US does. Its just that in Canada we have to pay to see them!

R1 – Unemployed 1 year or more
R2 – Unemployed 3 months or more
R3 – Comparable to the US rate
R4 – Official rate
R5 – Plus discouraged searchers
R6 – Plus waiting group (recall, replies, long-term future starts)
R7 – Plus involuntary part-timers (in full-time equivalents)
R8 – Plus discouraged searchers, waiting group, portion of involuntary part-timers

Enjoy!

PS. If you like what they do with unemployment numbers, wait ’till you find out what they do with CPI and GDP!

#131 nonplused on 11.10.09 at 12:18 am

.#111 $fromA$ia

is it just me or did you miss the point of that video? It’s about financial illiteracy, not the price of gold vs. value. If he’d of tried to sell it to me, I’d have lifted him and asked if he had any more to sell. Even with the risk of it being a fake, i know what they look like and would have taken a swipe if it looked good.

#132 Pat on 11.10.09 at 12:29 am

@#87 David Bakody,

OK, let’s see the 3 examples you gave.

#1

http://www.homesacrosscanada.com/cgi-bin/WebObjects/cps.woa/wa/ListingDetails?board=SSNS&key=3707372&tm=487319

– poor public transportation (as pretty much everywhere throughout HRM);
– very far away from Halifax; commute time must be an hour by bus or car in rush hour;
– for a house in the boonies, surprisingly little privacy;
– no nice park nearby where one can walk to and spend a few hours with the kids, or walk to a nice coffee shop, etc.
– I am sorry, but I wouldn’t want to send my kids to the local high school. What percentage of the kids there have parents with university degrees; what about postgraduate degrees?

Bottom line – this is a very distant suburban neighborhood of a mid-size town. The population is probably mostly middle to lower-middle class. $250k for this house in this neighborhood is too much.

#2

http://www.homesacrosscanada.com/cgi-bin/WebObjects/cps.woa/wa/ListingDetails?board=SSNS&key=3994066&tm=353311

Same as the previous house. This one is also older. Might have asbestos, parts look dated, widows are small, single car garage. Price would be OK if it were in the city but not in this area.

#3

http://www.homesacrosscanada.com/cgi-bin/WebObjects/cps.woa/wa/ListingDetails?board=SSNS&key=3976706&tm=789559

Same as above + this is a small house – 1285 sqft. Look at the picture showing the back of the house – a cottage for a 1/4 million.

Regarding my comment about the work ethics of contractors in NS, my many bad impressions are from our experience and that of our friends. I am also in position to compare with how business is being done in other countries.

#133 Duane on 11.10.09 at 12:54 am

“In Canada, unlike the States, we don’t count people who are discouraged, who have left the workforce, who’ve given up, whose EI benefits have run out, who are underemployed or were forced out of full-time jobs and into part-time employment.”

They do them, they just don’t publish them for free!

R1 – Unemployed 1 year or more
R2 – Unemployed 3 months or more
R3 – Comparable to the US rate
R4 – Official rate
R5 – Plus discouraged searchers
R6 – Plus waiting group (recall, replies, long-term future starts)
R7 – Plus involuntary part-timers (in full-time equivalents)
R8 – Plus discouraged searchers, waiting group, portion of involuntary part-timers

#134 Duane on 11.10.09 at 12:56 am

Sorry for the double-post. I refreshed and nothing was ever said about “waiting for moderation”.

Also, #126 Shane

Lobbying is also doing extremely well these days – in no part due to the feds waiving around $50billion, of course.

#135 Dan in Victoria on 11.10.09 at 1:43 am

Post#112 Negative ?nah,I’m a realist. You know what? We typically get a couple of calls a year where the home owners have bought all their own materials and want us to come and do the job for 20 bucks an hour.
Can’t blame them, but we don’t do that.Most reputable contractors don’t.
Maybe thats why you can’t seem to find a contractor.
Look at it like this,
I pay, Workers Compensation,I pay GST,I pay Income tax,I pay liabilty insurance,I pay my employees (when I have them)a fair wage.I give them a well deserved bonus at christmas.I give them a half day off before a long weekend IF I can.
We also have donated when we can to ALS,Help fill a dream,buy bicycles for young kids at christmas,partially paid the air fare of a terminally ill young mother and family to go on their dream vacation to Hawaii.Etc.I work in this community and I try to give back when I can.
On top of that I have trucks,tools,bookeping,Buisness license,trade license,bonding,etc.
Can’t do it for twenty bucks an hour.
Where does that tax money go?It goes to pay for the social programs that we are so proud of.You know, medicare,Unemployment,Pensions etc.
It goes to a young hard working Journeyman who is starting out trying to raise a family,maybe saving to buy a house.
Or maybe he’s saving to buy the tools and materials to start his own buisness.
You are quite proud your husband was trained in Europe,What is wrong with trades training in Canada?
Are the colonies that bad?
As to your husband being smarter than me,maybe,maybe not.I don’t care.And it has nothing to do with what you asked.
YOU asked for comments,I told you what I see time,and time again,in the housing industry.
You maybe/are diffrent.
Are you paying for a building permit?
Are you paying GST?
Are you paying Workers Compensation?
Does your man have liability insurance?
You get the idea.
Do you want a pension?
Do you want medical?
Do you want Social programs?
Why should my company,and my employees pay their share and you and your cash contractor be exempt?You should be ashamed of yourself.You have provided nothing of any substance in your replies,or arguments,free cameras for mice…. sheeesh.Move on,you have been exposed.

#136 Daystar on 11.10.09 at 2:16 am

105 TheComingDepression on 11.09.09 at 7:48 pm

The one big reason gold has risen so much has been the fall of the U.S. dollar. Don’t expect it to fall forever.

Personally, I expect the U.S. dollar to be the laughing stock of currencies by the end of the century, although I don’t expect to live to see it. How will it fall? Like a set of stairs. The U.S. dollar appears to be in endless freefall, but it will flatline and have some mild recovery with a pop in interest rates and when it does, hate to break it to you, your gold rush is over…. til’ the next seemingly endless U.S. greenback freefall occurs.

Oh yeah. While you believe Gold was the best gig in town, while gold was $50 an ounce rising to 1000, copper was a buck rising to 4. Base metals outperformed gold during this time.

Message for John:

Try Saskatchewan.

#137 Daystar on 11.10.09 at 2:20 am

Correction: I meant gold at $450 an ounce rising to $1000. Point is simple. Copper’s rise nearly doubled the rise of gold in a much shorter timeframe. Thats where the money was before the world economy hit the skids.

#138 TJ on 11.10.09 at 2:54 am

What is absolutely galling is that Mr. Turner is not getting a wider platform.
There is no harder role in society than “truth speaker”.
Cassandra-esque figures dance in some “positive thinkers” heads, and when you rain on the parade – it’s not happy time at Casa ‘In Box’.

People are positively demented in BC.

Debt is slavery.

If you feel like working for a Bank or lending institution for the rest of your days – and sleepless nights – be my guest – pick a condo, any condo here in La La land, and pass the remote.

What comes next is going to be very interesting.

Look up Tulips. 1873.

Waterloo.

#139 $fromA$ia on 11.10.09 at 9:35 am

#129 nonplused on 11.10.09 at 12:18 am .#111 $fromA$ia

is it just me or did you miss the point of that video?

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

I would of kicked the shit out of him and tokk it for free, you don’t walk around anywhere flashing that kind of stuff. It’s a sign of things to come. I think it supports gold at $1100. As long as most people are oblivious that means theres allot more upside! To just about anything you purchase!

#140 Azza4 on 11.10.09 at 11:29 am

#43

Immigrants are usually coming to Canada with bare minimum of money. It’s about $14000 for family of 3. In about half cases that is BORROWED money. It’s just that Canada government will not grant a visa without that money on bank account in Canada. So people borrow it, set account in Canada and send that money back to relatives/friends right after arrival. Believe it or not, but $14000 in savings are hard to accumulate in poor countries. Just think about it. Average salary is about $100-$200 per month. How much would you be able to save if food prices (or diapers, or clothes) are essentially the same as in Canada due to globalization? $14000 is just about enough to get by for 6 month (rent, food, fees, old car) without job. Most immigrants don’t speak English very well, do not have connections / network of people, so it’s rarely story of success from year one. Yes, there are stories about those ‘rich’ immigrants that buy houses and expensive cars upon arrival, but nobody saw those ‘rich’ only heard about them. Let’s use common sense here. Do you really think that millionaires from poor countries are coming to Canada as immigrants? They are well settled in their own countries I would guess. Do you really believe that there are more millionaires in poor countries than in Canada? How many millionaires in Canada do you know?

#141 David Bakody on 11.10.09 at 12:54 pm

#53 Stop Puttin Down Boomers on 11.09.09 at 11:25 am

Agree! My dear mother then well into her 90’s living in her own home ( Ontario) had no other choice than to use good under the table contractors …. Why? Honesty, they came recommended and did only what was required … some if not most wanted to do more and charge more and tried to lead her down the garden path. She would call my Big brother (BIG) and he would come down and believe me the conversation was one sided …. unfortunately our/we seniors do not have the networking Mum had and the news is full of sad tales. I have told my kids should something happen to me they are to sell everything and move their mother into a nice safe clean apartment and buy her a small new car pronto! Should not be, then again I continue to hear stories every day and our children are not only scattered around Canada they are now around the world.

#142 conan on 11.10.09 at 1:03 pm

I think they are just hiring someone to help them around the house.

It’ s like hiring a gardener .

The home owner is acting as general contractor.

The only thing wrong with buying your own materials is if you forget to ask for a healthy “contractor discount” .

I think her post explains the situation.

Look at your employees or yourself for that matter. You could be doing what this guy is doing when your 60 +. It is a sad reality for many who go the trades route.

Ever see The Wrestler? Same concept.

#143 David Bakody on 11.10.09 at 1:05 pm

Pat:

Back to RE …. not sure if our prices are now as high as they were several years ago. In any rate there has been some issues that inflated house prices. Offshore Industry when gas prices were high, down homers returning after long careers in Ontario and beyond, ocean front property bought by Europeans and of course supply and demand. I would like to think there was not much the good ode house flipping going on but that would be untrue.

Here is a website that tells the story of a Calgary girl who I have met and is very wonderful talented gal who found a dream here in NS.

http://www.turbine.ca/

#144 Future Expatriate on 11.10.09 at 5:10 pm

#113, that video shows how suitably distrusting people are of some stranger selling something that is probably counterfeit on the street. NOT the “value” of gold, or even the public’s ignorance of the value of gold.

If he’d tried to sell a piece of “gold” jewelry or a “diamond” necklace, the reaction would have been more clearly understood.

#145 MarkArgentino on 11.11.09 at 11:34 pm

#99 Emma on 11.09.09 at 6:48 pm

Hi Emma,

You asked “Don’t know if you still have the chart that shows to buy in May and November but that was also very helpful to me when I purchased.”

This is the link to the chart you were asking about that shows the seasonal trends of the Toronto Real Estate Market prices:

http://www.mississauga4sale.com/TREBavg1995date.htm

Really, you should sell at the peaks and buy in the valleys.

I’ve always said that the best time of the year to buy real estate is December 10th of any year. Maybe I’ll blog about that sometime.

All the best,
Mark

#146 MarkArgentino on 11.11.09 at 11:52 pm

#99 Emma on 11.09.09 at 6:48 pm

I should have added that in the graph at http://www.mississauga4sale.com/TREBavg1995date.htm there is a period from about September 2008 until February of 2009 that many real estate agents in the GTA were getting out of the business because our marketplace stalled. It wasn’t a crash, just a huge slowdown, many were worried that it may have been the beginning of the end in the GTA for growth in prices.

You will note on the above graph that prices did recover as we progressed through spring of this year, then dropped as they usually do in the summer and have now surpassed the all time high prices again this September and October. This is a little disconcerting.

Garth will like this comment: I have noticed that the Toronto Real Estate Board in their monthly press releases no longer trumpets “All Time Highs” or “Markets have no end in sight” etc. but only matter of fact state that prices and/or volumes are up. This too is disturbing to me. We just catapulted through the $420,000 average price point with very little fanfare or parades as we would have seen or heard in the past. This is an immense average price for the Toronto area, especially in light of the fact that the areas taken into consideration in calculating this figure are as far west as Burlington, as far east as Newcastle and Innisfil and Essa to the north. Prices in these outlying areas do not average $423,000 so all this means is that average prices within the 416 area are stratospheric. This worries me.

Again, I still feel that anyone not putting 20 to 25% downpayment on their real estate purchase are putting themselves at too much risk, no matter what price point they are buying at and over extending their budget. Although rates are at all time lows, the Bank of Canada has already stated rates will increase next year and you can bet that the lending companies are already planning to boost their rates (and profits) beyond what the Bank of Canada does.

If we can get through the Winter Olympics and then the dreaded HST without a significant downturn in the real estate market, then it will be smooth sailing until 2018 and once again myself and my clients will prove Garth wrong once again in his predictions of a bursting bubble.

Enjoy the ride.

All the best!
Mark