How to invest

The rate on a 10-year bond in India these days is 8%. But in the US, investors get 2.6% for holding government paper for a decade. India’s had six interest rate increases. The US is frantically printing money to crash rates. India has a housing bubble. America has a real estate depression.

Of course, Obama’s in India right now, so comparisons are apt. But this also underscores the global slugfest going on between inflation and deflation. If you bet the wrong way on this one, you get killed.

The inflation guys are into stocks and gold – both of which soared last week. They think all this new American money will debase the currency and therefore send things denominated in dollars higher. And they’re right. For now. Equity markets think the Fed is deliberately trying to create inflation and artificially stimulate the economy. Also right.

The deflation guys think a world drenched in debt, where households and government owe more than they can repay, is a recipe for economic misery. Quite correct. They see no potential for a US housing rebound anytime soon, so long as unemployment festers, family incomes stagnate and consumer spending and confidence erode. In fact, these are classic conditions for price declines, corporate trouble, falling rates and a bond market rally. And it’s hard to argue with that.

So what should you do?

This is actually what I’m talking about in Toronto Tuesday night at the Blog Dog Summit. The highly prestigious and exclusive event, being held on the exotic airport strip, has been made available only to those lost souls doomed to eternally wander this site muttering about stewed squirrels and fat people in underwear.  More than a thousand have reserved seats, which should mean an excellent night for petty crime stats in the GTA.

(BTW, if you are coming to the DoubleTree Hilton for the event at 7 pm, park in the South Lot. And consider prepaying when you enter, which will mean a speedy exit when you leave at nine. You’ll want to rush home for a sponge bath.)

In general, I’d say after stocks and metals romp higher for a spell, we’re in for an inevitable fall amid profit-taking and the slaughter of the innocents. A few months from now, things are likely to feel anything but encouraging, as slumping housing sales start to translate into sagging prices. As I said on the weekend, this is already a fact of life in much of rural and small-town Canada, and will soon be infecting the burbs and cities.

Stock markets and gold can do what they want, but the main asset North Americans own is a house. There is nothing else which matters when it comes to dictating future economic activity. The real estate biz alone accounts for 20% of the Canadian GDP, and 100% of consumer confidence. In fact, two-thirds of the economy is made up of direct consumer expenditures.

Meanwhile 9% of Canadians own equities, and less than 1% hold precious metals. I might also add that only 1% of families have investible assets of a million dollars – which is about what most middle class couples without a corporate pension will need to finance retirement a decade or two from now.

You see the problem?

If you happen to throw your life savings into the wrong pot – bars of silver, shares in GM’s IPO, or a slanty house in Leslieville – you stand a hefty chance of evisceration or perhaps vivisection. It will be as memorable as it sucks.

This is one good reason why sane people have portfolios in which stocks, bonds, trusts, metals and houses are kept in some kind of balance, while they work at avoiding taxes and staying liquid. It`s exactly the opposite of what most families are doing – being laden with real estate assets and mortgage debt. It also flies in the face of the endless self-serving advice now being given by those who pump stocks, funds and gold for a living, abetted by a slobbering media.

All I need do lately is review my emails for evidence I`m on the right side of this. After all, there`s a reason I was thrown out of this coming weekend`s Property Show in Toronto. Or that a reference to this blog was eliminated from a national newspaper site days ago. Or that a bullion fanatic alleges I “sold out” because of “a promise that you and your family would be protected from what is to come.”

Holy crap. Maybe this site will be blown up again in a few hours. Probably a damn good thing I had the undercarriage of the Hummer reinforced with steel plate and got a doggy body armour jacket for Bandit.

Now you won’t miss us when we roll in Tuesday night.

191 comments ↓

#1 G.P.girl on 11.07.10 at 6:29 pm

“Blog Dog Summit”. Too funny and wishing I could attend. Was there in September. Nice but too many people for me.

#2 Canned Goods and Buckshot on 11.07.10 at 6:57 pm

—Or that a bullion fanatic alleges I “sold out” because of “a promise that you and your family would be protected from what is to come.”–

Please elaborate. I have no idea what you are referring to but its sounds so Revelations.

#3 Taxpayer like everyone else on 11.07.10 at 7:09 pm

Devore – from last thread

Here is what you said cut and pasted:

“RRSPs represent a huge pool of tax-deferred money (all
those rich people avoiding paying their fair share!) ”

Read that carefully – you say BOTH defer and avoid, therefore I stated:

“Devore – you’ve made the arguement the taxes are
deferred, and now you are saying they are avoided.”

NEW ENTRY:

I did NOT put words in your mouth, er, blog. I simply pointed out it looked like you were contradicting yourself.

Anyway your later post is much clearer.

Oh and the govt gets their share when you die. They always get their share somewhere along the line.

#4 dark sad person on 11.07.10 at 7:14 pm

If i was in the vicinity-i would attend and take you to task over this call–

“The inflation guys are into stocks and gold ”

The deflation guys are also into gold and gold mining stocks-
One side is wrong-yet both will likely win-unless like you say-when it becomes clear to the deluded Inflationists-that there will be no Inflation and if they hold Gold-they better pray there isn’t Inflation or Gold will crash-instantly-
You could well be right about a sharp pullback in Gold “if” deflation makes itself visible to Inflationists-
God only knows what it will take to do that-but if it does-the Inflationists will be mistaken again and sell off Gold-at exactly the wrong time-
Gold “is” Money and Money is King in Deflation-

#5 BrianT on 11.07.10 at 7:28 pm

Even the Chinese know the score http://market-ticker.org/akcs-www?post=171514

#6 Sam on 11.07.10 at 7:30 pm

I own no gold, and IMHO a well diversified portfolio has 5% and never more than 10% in Gold. That said,

“In general, I’d say after stocks and metals romp higher for a spell, ”

except that “for a spell” for gold has been since 2000.

One should spin the negatives against Gold, where they are negatives, but they should be REAL negatives.

#7 Basil Fawlty on 11.07.10 at 7:39 pm

You make good sense Garth, as diversification reduces risk. These are obviously volatile times, since if QE II had not occurred the run-up in commodities last week probably would not have happened. People are concerned about ongoing money printing and the value of the US dollar. They realize that if the US government discontinues QE, then the economy will sink like a stone and interest rates will rise, which will crater bond prices and US Treasuries, which are the biggest bubble in history. QE just kicks the can down the road and makes the eventual unwinding of debt that much worse.

#8 Ayn Rand on 11.07.10 at 7:40 pm

See you on Tuesday night Garth, if I can get out of work on time.

I take heart your commentary WRT retirement savings required. I note you comment about

“Meanwhile 9% of Canadians own equities, and less than 1% hold precious metals. I might also add that only 1% of families have investible assets of a million dollars – which is about what most middle class couples without a corporate pension will need to finance retirement a decade or two from now.”

You see, thru conscious planning, me and hubby work for the Ontario government, both will have 30+ years pensionable earnings in about 10 years from now, so expect to receive about 65% of $95K @ 2 incomes or about $117K per year, in todays dollars (indexed to inflation). According to a previous article in MoneySense magazine, the value of our pension is considerable.

We do have RRSP investments and more importantly have RESPs for the kids as we believe education is the best investment there is.

The question for your esteemed knowledge and forethought and planning is this – do you have much faith that our Ontario Public Service pensions will be reliable and there for us in 10+ years time.

BTW, I know the rarity of defined benefit pensions and am very thankful we chose that fortunate route; a very consious decision when I experienced my parents retirement options – not a nice one, many worries; they being small business entrepreneurs with little investments.

#9 squidly77 on 11.07.10 at 7:44 pm

There’s a Mad Man controlling the U.S. Fed.
http://www.youtube.com/watch?v=XK4dxacv7jY

#10 Utopia on 11.07.10 at 7:51 pm

Terrific stuff Garth and straight to the point. We have entered a period of tremendous fear and trepidation in the world of investing with leaders on different fronts calling for tragic economic outcomes in opposition to each other. It is beyond confusing to almost everyone including the experts.

Some say Bonds will be destroyed by this stimulus,
others claim we are being driven deeper into recessionary territory through increased indebtedness and Bonds will outperform.

A third camp (the Elliot Wave Gang) claims that global stock markets are on the verge of a cataclysmic plunge to the depths of hell. Even to Zero according to one I read.

A fourth camp claims that this stimulus money will send commodities rocketing into the stratosphere while a 5th group is certain that equities are about to experience a rennaissance.

Is it any wonder the average person cannot understand what is taking place in the world and the economy at large anymore. The entire system appears unstable and perched on a ledge.

But which way will it fall?

Every day brings another prediction of gloom and doom, many of them agenda driven speculations on how the future will unfold. How we invest at this juncture will make or break us.

Guts are needed.

Ben Bernannke may be right in one respect. He is attempting to do what many think is impossible; reignite market confidence by raising asset values and in essence pulling the economy up by it’s bootstraps.

The alternative, a devastating collapse of equities that plunges us all into an unthinkable 1930’s style depression cannot be permitted from that perspective.

From that standpoint we would welcome inflation and many hope that QEII will achieve exactly that and in the process jumpstart this anaemic recovery.

Somewhere between all the mad prognostications and rumours found on the web such as how gold will form part of a new reserve currency to assertions that deflation (or inflation) is already here amongst us,………….lies the truth.

Few see it.

Good luck with your Toronto show Garth. I am glad to see you stepping out on your own and that you blew off the stinkers from “The Toronto Property Show” event.

Of all your past memorable photos posted on this site, one of my all-time favorites was the one showing your Vancouver crowd all smiling and waving in unison at us blog-dog folk.

It was Priceless!

#11 TheBestPlaceOnEarth on 11.07.10 at 8:20 pm

I’ll say one thing Garth you are consistent. I’ve been reading your posts since the 1990’s on the web. This is the same message from the 1990’s. Following your advice you would of done alright but would of done fantastic loading up in Vancouver mortgaged to the max

This blog started 3/08. — Garth

#12 Nostradamus Le Mad Vlad on 11.07.10 at 8:38 pm

“How to invest”. — Follow your advice (it’s free, after all), invest wisely ($1 mln. thereabouts in what you recommend), save enough for a rainy day (when we hit 71, RIF age) and live an adequate lifestyle.

Simple, unless we speak of Sheepletons!

“. . . the global slugfest . . .” — Indeed. In- and deflation, RE worldwide, QE2 / 3 / 4 etc. are all part of the Lego Set we are in.

Blocks are moved around, shitquakes happen and there’s nowt anyone can do, except take care of one’s self.
*
Link in. Beginnings of a Bank Holiday? Starts somewhere.

Link in. Mike the Engineer — Web Bots are falling into place. Charts and timelines in.

Empty Shipping Containers Someone (not sure who) said a day or two ago that shipping is the most efficient method of transportation, but not necessarily the quickest.

9:31 clip Agenda 21 For Dummies (incl. moi).

14:34 clip Ben showing his true colors. Black, evil.

BP and FFs There is more to the spill than just the oil.

Interesting read. CERN, China’s Three Gorges Dam and plenty of other things.

Five Steps for a new economy. Trash the present one, eliminate debts / deficits / govts. / lying politicos / send all members of the elite to an imploding sun. Should be relatively unscathed!

Fed’s Gang Warfare Jessie Ventura has clued in nicely!

Link in. Apparently govts. don’t care for individuals who speak the truth.

Massive solar flare yesterday. Does it affect volcanoes, etc.?

The Taj Mahal doesn’t want the US$. Not surprising.

#13 Mathew on 11.07.10 at 8:38 pm

Prices don’t seem to be abating here in Toronto. My brother-in-law’s father had his house listed in the late spring in the Yonge and York Mills area (for those unfamiliar – it’s a nice neighborhood) for 999k. Before the offer date they got a ‘bully’ offer of 68k over the asking price. They turned it down and waited for a bidding war. None ensued and the property sat for two months before they took it off the market.

They re-listed it in the past couple of weeks and just sold it for 1.2 million!

I have been looking at listings in various parts of Toronto for sometime and find there aren’t that many listings and the prices remain high. Anything good sells pretty fast.

I am looking to move in the next year for location and size reasons. I regret not buying in 2008 when the prices went down. At that time I assumed the prices would continue to fall. (a house I liked at that time was 460 and wouldn’t go for less than 600 now) I understand the reasons presented for why the prices climbed but as there doesn’t appear to be an end to the artificially low rates it seems like prices aren’t falling (as I hoped). Lots of sources are saying we are over valued and at this point it wouldn’t make sense for me to move up now as I think that prices can’t possibly climb higher.

#14 dark sad person on 11.07.10 at 8:38 pm

I might also add that only 1% of families have investible assets of a million dollars – which is about what most middle class couples without a corporate pension will need to finance retirement a decade or two from now.

*******************
I’m not sure if a million will be needed-especially if you think Deflation will be with us that long and it very well might be and if it does last that long-a million could be worth 2 or 3 or more million in terms of today’s buying power-

If Deflation continues-prices will come down-“they have to” as purchasing power on a Global scale decreases because of high unemployment-diminished trade surplus and already impaired personal and Government and Corporate balance sheets-
There will not be an any great amount of Credit expansion-combined with dwindling cash availability to drive prices higher-in fact that combination will lead to lower prices-

Of course-war/famine/epidemics/peak oil/asteroids and who knows what all-could derail any call we make from now until then-

#15 l dubya on 11.07.10 at 8:45 pm

how long do you expect your presentation on Tuesday to be?

i am eagerly awaiting! :)

58.5 minutes. — Garth

#16 S.B. on 11.07.10 at 8:45 pm

“More than a thousand have reserved seats, which should mean an excellent night for petty crime stats in the GTA.”

Priceless! If nothing else this event will provide a warm hangout for the homeless, for a few hours. ;)

p.s. who is Bandit, a dog? Is Garth becoming a Don Cherry-styled guru with canine at side?

#17 realpaul on 11.07.10 at 8:46 pm

Right on Garth…its a prudent thing to be afraid…very afraid.

For the woman who wonders about the sanctity of her government pension in 10 years…….I wouldn’t count on there being no changes. Canada is up to its neck in debt and the refinancing is going to create major turmoil in entitlements as well as huge tax increases. Its expected that our borrowing costs will careen over the cliff before the decade is out.

http://blogs.wsj.com/economics/2010/11/06/number-of-the-week-102-trillion-in-global-borrowing/

As you see, national bankruptcy is a very real concern and the ZIRP is gutting pension plans and resulting in massive underfunded liabilities at the exact time when a tsunami of retiree’s will hit the Barka-Loungers and expect the fat sloppy civil service pension cheques to roll in unhindered. If you wonder why Canada is ramping up immigration its not altruism its that they are running scared ahead of the forensic accountants.

Look for a break above 1230 S&P as an indicator this week and $55 QQQQ. Above that we have ‘blue sky’…..hope you don’t get nosebleeds easily. Bust out till May and then ‘go away…possible…BWTFDIK

#18 Kevin on 11.07.10 at 8:48 pm

Since 1998
inflation in Saskatoon has grown about 40%
Income growth is about 67%
Rents are up about 75%
Interest rates are down a few points.

Do these fundamentals justify the growth of the average house price to be about 200%?

#19 Debt Free in the U.S. on 11.07.10 at 8:51 pm

Interesting… Indian Bonds at 8%. WEe here is the US are anticipating the newly elected class of idiots to extend Bush’s TAX CUTS thereby denying to government the funding it needs to avod increasing the deficit.
I wonder who is predicting bets on the survival of the US? Does anyone know where credit default swap spreads on US soverign debt stand currently? Same question needs to be asked of Canadian spreads? THERE might be a real opportunity to place a wager, just know how well your counterparty is fixed to pay off.

#20 Contrarian Canuck on 11.07.10 at 9:00 pm

Lots of good information out there on the blogosphere. Garth’s blog does a great job. Th Whisperer and Ben over at financial insights also both posted about investments this week.

http://financialinsights.wordpress.com/2010/11/04/crazy-days-and-what-to-do-about-them/

http://financialinsights.wordpress.com/2010/11/06/574/

http://whispersfromtheedgeoftherainforest.blogspot.com/2010/11/no-limits.html

All good info.

#21 Hiteclowtec on 11.07.10 at 9:01 pm

Missing the Blog Dog Summit is breaking my heart. But I just evacuated that city vowing never to return. Your 100% on target with your message and they just can`t stand it. The want to squeeze every last nickel they can from their lucrative cartel propaganda marketing machine. God forbid someone wakes them from their trance.

#22 David B on 11.07.10 at 9:15 pm

Breaking News:

BY PATRICK MCGROARTY
BERLIN—German officials, concerned that Washington could be pushing the global economy into a downward spiral, have launched an unusually open critique of U.S. economic policy and vowed to make their frustration known at this week’s Group of 20 summit

——————–

In simple terms ….. Printing more money sending it to Wall Street via the banks will not work! (QE2)

Y’all read my last where the USA will be broke by May … and of course a new Sheriff who does not want to give em a dime! Mama Grizzly!

Let the games begin.

#23 Jacques on 11.07.10 at 9:18 pm

As with all fiat bugs, they are assuming there is a free market for gold, but there is not.

No matter how much yen the Bank of Canada or US Fed pumps into the economy, deflation deepens. It’s all about confidence, of which there is virtually none.

#24 SquareNinja on 11.07.10 at 9:23 pm

There are still lots of suckers buying new homes in Aurora…

#25 Sean on 11.07.10 at 9:23 pm

Garth.. I’ve been reading your blog since before Al Gore invented the Internet. Garth, one thing I’m surprised you haven’t got yet… the word “gold” is even worse than the word “muslim”… ya just can’t throw it out there and expect people to gloss over it. For “Christ’s” sake man…

As gold bug myself, I must say I never cease to be amazed by the maniacal postings of many other bugs when it comes to gold. It is exactly this type of irrational all-in mentality that, when it reaches a critical mass, defines a market top. Personally, I feel that we are at essentially an important mid-cycle high… that we will see a significant pullback… but that due to the lack of broad based participation in the metals, and due to the endless rounds of QE that likely lie ahead, that a truly secular high in gold prices is still a long ways off.

Finally, to those who might harbor dreams of leisure and luxury on a million dollars… I pity you the harsh reality that awaits. I remember having a conversation with a fellow equities trader back around 2000 about how much money it would take to say F-it and retire. He said 2Mil… I was floored… I said 20Mil… and that was before the era of bailouts and QE’s. 1Mil, say 10-15 years from now, will barely get you through the year.

Thanks Garth, for the postings and the forum… these are truly unprecedented times and it is most cathartic for many of us to come here to listen, learn, vent, rant, pontificate and speculate… whatever the case may be.

#26 Leanne on 11.07.10 at 9:28 pm

In light of all that’s been happening, Garth will probably have body guards at the Toronto event. I’m expecting to have to pass through an x-ray machine prior to admission.

I might frisk you. — Garth

#27 rory on 11.07.10 at 9:35 pm

#8 Ayn, you should know better as you have been a reader for awhile …so to my rant for you.

I really have no patience with people that tell all about their financial positions on a public blog – bragging, showing off, clueless, brain dead, stupid …pick one. And you just have to be .gov staffers also. Just great!

If there was a DOG …I`m dyslexic … the .gov should fire one of you with a only one per family member policy, reduce your salaries and pension by 20% because you are over compensated (salary, bennies, & pension) compared to the private sector taxpayer, and tax all public pensions at 75% on anything over $75K. This is my 10 year prediction and hope for all .gov.

And to add insult, your job probably would not be missed by taxpayers. Regardless, your parents at least contributed to the economy instead of sucking on it. Gee, think I get a little miffed at entitlements.

As to GT`s post …I think we need to be sitting on the fence with a plan to enter when we see the financial situations starting to be fixed – the hoped for market correction, also. Then it is time for cash to enter the markets + I have to agree with the common sense approach GT is preaching.

As to getting in now, kind of think we missed most of the upside …so wait and see would be prudent …but have 10% in PM stocks as my hedge.

#28 joe 6 pack on 11.07.10 at 9:37 pm

Garth do you hold any PM’s? Come on fess up:)

Smart dude like you should know that the only time they don’t work their money magic is when times are as dull as the fifties or dishwater … and even then King Cash sat on a golden throne.

That said and being smart enough to know how little I know I hold cash and stock as well 25% 15% 65% not necessarily in that order.

(BTW How clever of you to notice that little detail but then I am j6P and not a numeric funambulist)

#29 T.O. Bubble Boy on 11.07.10 at 9:38 pm

“If you happen to throw your life savings into the wrong pot – bars of silver, shares in GM’s IPO, or a slanty house in Leslieville – you stand a hefty chance of evisceration or perhaps vivisection.”

At least with Silver, you could claim that you are trading (i.e. betting) on this lawsuit:

http://www.forbes.com/2010/10/28/hsbc-jpmorgan-silver-markets-commodities-lawsuit-manipulation-futures.html?boxes=Homepagechannels

Leslieville — you’re trying a bit to hard to find the “next hot area”… just because a bunch of young people are moving there, and there are a few Starbucks, doesn’t mean that a normal semi-detached house on a 17ft lot should cost $529k or even more.

GM IPO — you’re just not thinking straight… why would it be run any better now than before the bailouts?

#30 JJ in Calgary on 11.07.10 at 9:45 pm

Hi Garth,

Great advise about diversifying your assets. Are you recommending increasing the allocation of people’s wealth to precious metals?

I have to admit that I have been converted from a Real Estate bull until 2007 into a precious metals bull as people will be selling RS and buying gold and silver to protect their wealth. Like you said if people go from 1% to 6%-10% of their wealth into precious metals, there will be a shortage that will be reflected in higher prices.

I’m not planning on buying RS in Canada any time soon. Perhaps in the US and hand on to precious metals, dividend paying large companies and bond investments as long as I can.

I have to say, It is scary to see all the World Central Banks printing money out of thin air and I’m afraid they will not stop until they have to.

keep up the great work.

JJ

#31 Frank from Calgary on 11.07.10 at 9:47 pm

Just finished, “Money Road”. Very good information, and thanks for the tax tips. Opened up a TFSA last week.

As for the inflation/defaltion debate….is it the case that Gold and now Oil (commodities) are going up or that they are traded in the USD which is being inflated that is causing the price of said commodities to go up?

#32 Jon B on 11.07.10 at 9:48 pm

Or you can just hold cash. It’s the sans gambling approach.

Only if you already have your mil. — Garth

#33 Mark on 11.07.10 at 9:51 pm

“The question for your esteemed knowledge and forethought and planning is this – do you have much faith that our Ontario Public Service pensions will be reliable and there for us in 10+ years time.”

Is it sustainable to be paying retired people salaries that are far higher than even working Canadians earn?

I personally find it likely that the inflation indexxing will dissappear on your pensions.

#34 eaglebay on 11.07.10 at 9:56 pm

Went hunting today, in Alberta.
Got 4 Ruff Grouse and a large whitetail doe.
Next week up to Northern Alberta for moose.
Squirrels sucks.

#35 Mikey the Realtor on 11.07.10 at 10:01 pm

#13 Mathew

hey Mathew, you are right, the market is going to keep going up, you should get in now as that $600k house will be up to about $750-$800 by the end of 2011. let me know if you want me to represent you, your window of opportunity is closing..so hurry!!

#36 Sex & Real Estate | Landlord Rescue on 11.07.10 at 10:05 pm

[…] Turner, author, former MPP and Greater Fool Blogger the chief wanker. That’s just not nice. I like Garth’s writing and I’m going to HouseAggedon in a few days, to check it out. Going to a speech doesn’t necessarily mean that I agree with everything […]

#37 George on 11.07.10 at 10:16 pm

Prices seem to be abating here in Toronto. My Sister-in-law’s father had his house listed in the late spring in the Yonge and York Mills area (for those unfamiliar – it’s a nice neighborhood) for 990k. Before the offer date they got a ‘bully’ offer of 50k over the asking price. They turned it down and waited for a bidding war. None ensued and the property sat for two months before they took it off the market.

They re-listed it in the past couple of weeks and could not sell it for 850K. This is not such a shock since many houses in the area sit without any buyers. Some homes I seen sit since July. The housing market is getting worse and sales have fallen over 20% each and every month since July. Prices and sales will continue fall. Anyone who didn’t sell in spring has missed the boat and now face a much lower selling value.

#38 Popeye the sailor man on 11.07.10 at 10:18 pm

Garth What your view on this program?

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/11/buyer-protection-plan.html#tp

http://www.buyerprotectionplan.ca/

Buyer Protection Plan
Realtor referrals can be a valuable chunk of business for mortgage professionals. But cultivating new relationships with Realtors is a challenge.

Real estate agents have heard all the sales pitches from bank reps and brokers before (i.e. low rates, fast approvals, good products, etc.). It takes something a little more unique to snatch Realtors’ attention these days. That got Greg Williamson thinking.

Williamson, a Calgary mortgage broker and mortgage trainer, has come up with an idea called the Buyer Protection Plan (BPP).

“It’s based on the fact that home buying is primarily an emotional decision and fear is the biggest factor,” Williamson says. “The Buyer Protection Plan mitigates that fear.”

In a nutshell, the Buyer Protection Plan protects home buyers from loss if the home they buy falls in value after one year. More specifically, if there’s a drop in the median MLS sales price of similar local properties, the seller rebates the buyer up to 5% of the purchase price

#39 El Rojo on 11.07.10 at 10:22 pm

Garth,
I’d love to be able to attend the blog dog summit in Toronto. However I’m hanging out in Arizona at the moment checking out the vulture opportunities. So far this year prices are down over last year and listings are up. To early to pull the trigger yet so we will wait and reassess the situation in the new year. It’s looking more like another year before bottom????????????? Thanks for all your good advise!

#40 Dave on 11.07.10 at 10:25 pm

No matter how much yen the Bank of Canada or US Fed pumps into the economy, deflation deepens. It’s all about confidence, of which there is virtually none.

As with all fiat bugs, they are assuming there is a free market for gold, but there is not.

#41 Dark Wettler on 11.07.10 at 10:40 pm

Regarding the inflation vs. deflation debate:

Have a look at the three year CCI. It is screaming near – term inflation. If oil breaks out above it’s 17 month consolidation pattern then we will be above the June/08 high before you can say ‘pee in the soup’.

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=CJY00&sid=1319&o_symb=CJY00&freq=2&time=10

#42 Lady GooGoo on 11.07.10 at 10:58 pm

So what should you do?

———————————–

One word .. “plastics”

#43 Jim on 11.07.10 at 11:01 pm

Is it me or nothing is selling in Toronto? Realtors have come out with numbers claiming sales are down greater then 20% for the past 5-6 months but that seems like a low ball number. When going out and looking around the city there is nothing but for sale signs and very few if any sold signs. Sold signs have become so rare that you would think 50% drop in sale is the real figure. It’s obvious realtors post on newspaper sites and on this blog claiming of sales that are above asking or market price. It’s doesn’t take much to see it is all lies. Word is spreading that people have lost their homes. A co-worker has told me her uncle and his wife lost their jobs over a year ago and have burn through their life savings. Now the bank owns their home after being unable to sell. The economy is getting real bad.

#44 BrianT on 11.07.10 at 11:03 pm

#24Sean-IMO if you need more than 20 million to do what you want with your time, 200 million is unlikely to be nearly enough. I know a guy with 48 and he is miserable.

#45 Caron on 11.07.10 at 11:22 pm

Nostradamus Le Mad Vlad: your link

“The Taj Mahal doesn’t want the US$. Not surprising.”

about the Indian cultural sites refusing American dollars is from 2007.

#46 Aussie Roy on 11.07.10 at 11:27 pm

Lets just take a moment to look back at some history. When the FED slashed interest rates after 911 it ended in a GLOBAL stocks, commodity and a housing bubble. With the FEDs current low rates and QE what will be the out come. Could it be as simple as looking back at history for answers?. It does appear US policy is having the same affect on commodities and stock market prices right now. So how long will this reflation of assets last, what will be the catalyst for the next “return to the mean” – deflation of the current bubbles. As a smart fellow once said “the definition of insanity is doing the same thing over and over again and expecting a different result”. Loose FED policy created the boom years and also the bust of 2008, how long will this boom last, which bubble will burst sending the system once again into shock?. Ride that equities wave as it gathers pace but dont forget your life vest – PUT options.

#47 somecatchphrase on 11.07.10 at 11:35 pm

QE won’t go on to infinity. QE might be a dead duck walking.

This has big time implications for Canadian homeowners.

Further to my comment from last Friday, have a look at the links below. You’ll get basically the same argument from some much more authoritative sources, including a Federal Reserve governor and JP Morgan.

The bit about rising commodity prices being passed along to end consumers is the key point.

Congress, corporate heavyweights, and Joe Six Pack will all be having a collective hissy fit if Bernanke manages to create input cost inflation sufficient to impact S&P earnings and/or the price of gas.

If commodity prices continue to go berserk, the USA might be quitting QE cold turkey, soon.

This would translate into higher mortgage rates, which, as we all know, is very bad news for those Canadian home “owners,” who rent from a bank, rather than a landlord.
_____________________________________________

“Betting On An Infinite Bernanke Put? Not So Fast, Says Fed Governor Kevin Warsh”

http://www.zerohedge.com/article/betting-infinite-bernanke-put-not-so-fast-says-fed-governor-kevin-warsh

“But if the recent weakness in the dollar, run-up in commodity prices, and other forward-looking indicators are sustained and passed along into final prices, the Fed’s price stability objective might no longer be a compelling policy rationale. In such a case—even with the unemployment rate still high—we would have cause to consider the path of policy. This is truer still if inflation expectations increase materially.”

AND
“How Ben Bernanke Sentenced The Poorest 20% Of The Population To A Cold, Hungry Winter”
http://www.zerohedge.com/article/how-ben-bernanke-sentenced-poorest-20-population-cold-hungry-winter

“In other words should rampant liquidity end up pushing food and energy prices to double (something that is a distinct possibility currently), Ben Bernanke may have very well sentenced about 60 million Americans to a hungry and very cold winter, let alone having any resources to buy trinkets with the imaginary wealth effect.”

#48 Ayn Rand on 11.07.10 at 11:46 pm

Rory, I love to stir the pot – remember Peter Wenier (sp) exploding back in May – first time over 200 responses on the blog on the – I love to see things grow or foment. See you took the bait – again.

I know my good fortunes. Not brags, just the facts. I also got major burned in the 1990 TO bubble, again, not brags, just facts.

So tell me Rory what cure for cancer you have discovered in your private sector endeavors? I bet you work for a bank, those nasty institutions that charge us tons of service fees – right??

As a civil servant, I do not build widgets, but I do write physican health policy -policy that provided the impetus for the new Sudbury medical school which will reap health benefits in time as northern Drs are added to the much responsive communities.

Not super exciting, but a good profession. And I am proud of my work. Very proud. Some of us civil or public servants are crown prosecutors – like the men and women who put criminals away. Some teach kids with kindness and vigor – I should know, my 2 greatest mentors were 2 of my high school teachers.

Tell me Rory, I am listening.

#49 Ghost of Tom Joad on 11.07.10 at 11:47 pm

Oh, isn’t that nice!? The globalist Harper is going to keep us in Afghanistan!
Ottawa talks of extending Afghan mission:
http://www.theglobeandmail.com/news/politics/ottawa-talks-of-extending-afghan-mission/article1789279/

Kind of links back to:
Rockefeller Reveals 9/11 FRAUD to Aaron Russo
http://www.youtube.com/watch?v=7nD7dbkkBIA

Canada and the West are controlled by the New World Order. Listen and learn from the great Alex Jones:
http://www.infowars.com

#50 McLovin on 11.08.10 at 12:07 am

George #36 – I LOVE stories like that.

Sheer unabashed GREED.

#51 Debtfree on 11.08.10 at 12:12 am

I’m all for frisking Leanne …..she sounds dangerous.

#52 concessionman on 11.08.10 at 12:22 am

After Party at the Landing Strip?

#53 Nostradamus Le Mad Vlad on 11.08.10 at 12:33 am


“. . . the slaughter of the innocents.” — When all heaven breaks wind, the innocents (sheeple) down here, who continually regurgitate their mantra of “I’m alright Jack, keep your hands off my stack” will be bleating for fed. and prov. govt. bailouts — e.g., you’re the govt., you said it was okay to buy so you can pay my debts off now.

Ummm, better get a reality check. You’re not GS or JPM. No cash left in the kitty for you.
*
James Bond’s Jetpack New stunts, clip starts automatically.

Aha! Busted! Pix that the GW clowns never wanted anyone to see.

One good piece of news; 14 not so good. Caution: Don’t read while eating or drinking!

Adding more maple syrup to the mix . . . Could lead to this. Then again, it might not.

The bloody US won’t leave Iran alone, even ‘tho it doesn’t have any WMD and does not intend getting anyway. Why the hell don’t they stay out of other countries’ business?

NAFTA still sux, but what will happen if a Pacific FTA comes into play? How about a Fair Trade Agreement?

Link about a possible mega-quake in Indonesia, in English and with map.

Frozen GW Apparently the Brits don’t believe them either.

1914 and on hyperinflation, plus Imperial Dollar.

The Three Stooges Here they are in glorious technicolor! Along with — Headline in article is quite revealing.

California “With one in every eight workers out of a job, the state is borrowing billions of dollars from the federal government to pay benefits at the rate of $40 million a day.” Wasn’t California the world’s eighth largest economy at one point? That’s because the WH is sending jobs overseas, and the buck stops with the president!

1955 When life was good and gas was 29 cents a gallon.

The US, UK, Canada and others will never leave AfPak until WW3 is over. That will keep the war mongers and munitions makers ecstatic.

US Fed / Finance “There is going to be a very ugly patch ahead for most working Americans, unless they happen to be bankers.” wrh.com.

#54 Junius on 11.08.10 at 12:33 am

#22 David B,

The international reaction to QE2 is very interesting. I have never seen such criticism of US monetary policy at the same time from both Europe and Asia.

It will be interesting to watch the US dollar this weak. Heading down for sure but it might really drop.

QE2 or The Titanic? We shall see but I am worried.

#55 Peter the greek on 11.08.10 at 12:42 am

George #36

You are right about those who didn’t sell in spring have missed the boat. Nothing much is moving in Toronto and the situation becomes more grim by the day. The number of emtpy houses and condos in Toronto has become a problem and many are hanging by a hair. Going to be interesting how much prices will be down next spring? Word from insiders think 20%.

#56 Crash Callaway on 11.08.10 at 12:47 am

Yup, I can just see the gold bugs trying to convince Apu down at the Kwik-E-Mart that “gold is money”
when things turn sour here in Canada.

#57 Alberta Renter on 11.08.10 at 12:51 am

#10 Utopia

I read your post quite closely, but was disappointed that didn’t follow through. No final analysis, thesis, or words of wisdom. Just three cliff hangar words “Few see it” sitting all alone in their own paragraph.

Either you don’t have an opinion, which I doubt or else why waste all those words and thoughts. Or you, you’re and upstanding citizen, and don’t want to lead anyone astray with what you think. Either way, I say go for it. After all, it’s a blog. Garth goes for it every couple of nights~!

Ok so here’s some of my thoughts.

Now that Americans (and the rest of the world) has been shocked once with QE1, QE2 is a slam dunk. I think it’s plain to see that no US GOV is going to risk being ousted out of office by austerity measures. They are scared of what Americans might do if they raised interest rates and caused more hardship. What they did in Greece or France would look like tea party. Pardon the reference.

The rest of he world knows it too and they’re watching closely to see what happens. Gold will continue to rise at a steady pace with a few blips, until the US economy gains real traction, as in real jobs, rising housing, and confidence restored. Until that happens we’re still on a slippery slope and anyone can fall down.

I think stock markets are pretty touchy these days, and will react very quickly to bad or good news. It’s very hard to read and like you Utopia, I have read very diverse predictions from some well respected analysts.

I don’t think we’re out of the woods by any stretch. Some analysts say the chances of second meltdown have passed, but I still think if that is the case, why QE2?

So where to put your money? Oil and commodities? Preferred shares? It’s a very confusing time and one thing for sure is that uncertainty reins which is a very good time to make or lose money.

Few see it.

#58 Dorf on 11.08.10 at 1:03 am

Some friends just told me that the last time they re-mortgaged, they consolidated all their credit card and small loan debt by borrowing against the equity of their home, due to the increase in valuation. So now, they have no equity left in the house and they will be paying mortgage interest on all that petty debt for the life of the mortgage. What a shame.

#59 Dorf on 11.08.10 at 1:07 am

An aside….can somebody ‘Splain Me Lucy, how China ties their currency to the USD ? I have heard it said before that Obama wanted them to untie it, but they declined.
I understand as much as that this is all about business strategy, and trade…..could somebody ‘splain from there ?

#60 Marty on 11.08.10 at 1:32 am

Highest unemployment in 25 year. Where did the jobs go?

Answer: The average joe is being disemployed by China.

The average joe is your neighbor.

Your house is only worth what you think its worth until your neighbors can’t make their bills anymore.

#61 poco on 11.08.10 at 1:55 am

#222 Drew from the Peg –last post
watched a bit of your link–Phil Soper pumping bullcrap again- when they were talking about owners being underwater and Soper stated “that doesn’t exist anywhere in Canada.” I had heard enough and turned him off

I guess he doesn’t get out to BC very much (the best place on earth) another bullcrap story

I track the tri-cities area and can assure any non believer that there are many,many homeowners who are underwater here in lovely BC. A large percentage are those who bought into the condo market in the last 2 or 3 years and now have listed their property for 10’s of thousands below what they paid a short time ago.

Anyone remotely thinking of buying in the tri-cities area should link up with a “good” realtor (everyone has an old friend who’s a realtor) and have him/her send you listings you are interested in—you’ll get all the new listings, sales, and price changes of what your looking for–this is the easiest way to track RE– and once you do this I’ll bet you won’t be buying for sometime to come

here’s a couple of recent e-mails i received

mls#856316-bought dec. 07–304.9k
listed mar 10–359.9k
now listed –299k
mls#856324-bought dec 09–374.2k
listed apr 10–424.9k
now listed –360k
and a couple of sales
mls#853632–bought apr 08–329k
sold oct 10–290k
mls#849972–bought jul 08–448.9
sold oct 10–385k

here’s a forclosure I posted last aug.
mls#847727–bought in jun 09–539k–2 price drops since then now at 379.5k
and this isn’t just cherry-picking, I’ve got reams of paper full of properties like these

#13 Mathew–give us some mls #’s so we can check out your claims

#34 Mikey the realtor–i take it you’re trying to be the new comic relief on this blog since DA was “committed”

#62 TaxHaven on 11.08.10 at 2:05 am

India doesn’t just have a housing bubble: it has price inflation, and

“Inflation is everywhere and always a monetary phenomenon” ~ Milton Friedman

…and the Indian (and Chinese, and…) money supply is exploding.

While the American money supply, currently bottled up in the banks’ excess reserves, isn’t growing much on the surface, it likely WILL. And, before that, watch American food and energy prices S-O-A-R as the dollar devalues.

All of this points to worldwide price inflation to me.

How each investor sees the inflation-deflation debate will inform his views on gold. I’d guess that anyone who persists in viewing gold as a commodity would expect oil prices to plunge later too? Or maybe the argument would go that oil is a usable commodity while gold is not? If you look at gold as just another commodity – one with no actual USE – then you may be right in eventually expecting a price pullback. But I doubt even that…

Problem is, gold is money. The world’s oldest. The unit of final account, the only money able to ultimately extinguish debt. A money in very limited quantity in a world awash with increasingly valueless paper dollars, rupees, pounds, etc.

Whatever the ultimate denouement turns out to look like, it will settle this question.

#63 Keith in Calgary on 11.08.10 at 2:50 am

Squidly77 now runs a censored blog.
If you do not agree with him, he deletes your comments.
Squidly used to be a bit less crazy but for a while now his drinking have made him go off the deep end.
Back to real estate…
calgary resale prices have soared in the last week or som adding nearly $14K to the average transaction. Are prices going higher? I think not. Probably what is selling at this time are pricier homes. Or there a few $1million+ homes being moved, which of course adds up.
Anyway, homes are not a commodity: a house is a house and usually holds its value over time.
So take it from me, as a new realtor: There has never been a better time to buy a home in thriving Calgary!

#64 TheBestPlaceOnEarth on 11.08.10 at 3:00 am

This blog started 3/08. — Garth
****
Correct but are you saying you were not posting in the late 90’s on the web about the dangers of having all your eggs in one basket (real estate) and were infact stating that Real Estate was not a place to put your money but to put it in equities????!!!!

#65 Vancouver_bear on 11.08.10 at 3:06 am

http://www.theglobeandmail.com/report-on-business/canadian-mortgage-debt-tops-1-trillion-for-first-time/article1789172/

Congratulations to Globe and mail, it appeares that mortgage owner in Canada owes on average $200 for a house…..devide $1,008,000,000 by 5650000 of mortgage owners……

“The Canadian Association of Mortgage Professionals said in its annual report to be released Monday that there were $1,008,000,000 in mortgages outstanding at the end of August, a gain of 7.6 per cent in one year.”

1 trillion has 12 zeros…. Who cares about the number of zeroes in a trillion. CREA and Mortgage Association provide only truthful numbers. LOL.

#66 Brian1 on 11.08.10 at 4:37 am

Thank you Moneta and DSP for information yesterday.
Garth; I don’t think you will need a million dollars to retire, not with all the poor people about to be created.

#67 ca on 11.08.10 at 5:37 am

For those of us that live 1000s of miles away, how about posting an audio of the summit?

#68 David B on 11.08.10 at 7:09 am

Morning News as y’all know:

Canadian mortgage debt tops $1-trillion for first time

Yup …..whoopie ….let the good times roll. As mentioned far to soon all this and more wll come abruptly to re-newal time at a much higher rate.

Then what?

No problem you say we can just cut into our savings for those past past pay raises and Harper/Flaherty Tax Cuts!

Dream on oh Canada….

#69 blase on 11.08.10 at 7:24 am

Calgary:

Median condo price just dropped to $250,000.

Ouch.

#70 bigrider on 11.08.10 at 7:25 am

Garth- The inevitable fall you see coming in the next few months or so in the equity markets…how bad do you think it could get ? Do we test March 2009 lows ?

#71 Brian1 on 11.08.10 at 8:06 am

There is a Pizza Hut north on Kipling near the hotel. For some reason their pizza is better than other Pizza Huts. For $17.00 you can take home a good meal. I am not affiliated in any way with Pizza Hut nor do I reccomend buying their shares.

#72 Christian on 11.08.10 at 8:13 am

World Bank chief surprises with gold standard idea

http://af.reuters.com/article/metalsNews/idAFSGE6A70A720101108

#73 Ret on 11.08.10 at 8:15 am

Re: Ontario civil service pensions

Ontario teachers have already had their pension indexing changed for service 2010 and onwards. (See link)

Also, unlike the gold plated benefit plan given to every other civil servant at retirement, Ontario teachers retire with not one benefit. They buy their benefit plan on the open market or go without a plan until they turn 65.

http://www.canada.com/vancouversun/news/business/story.html?id=c3b59a47-d868-4446-bafa-24e9e67d2522

#74 Moneta on 11.08.10 at 8:38 am

Some say Bonds will be destroyed by this stimulus,
others claim we are being driven deeper into recessionary territory through increased indebtedness and Bonds will outperform.
———
How can they not?

The 5-year treasury is currently trading at 1% and the 7-yr at less than 2%. Who in their right mind believes these bonds won’t take a hit?

If the 5-yr stays at 1% for a couple of years, today’s 5 year will be a 3-yr in a couple opf years and maybe the 3-yr could still be at 1%. But the 7yr?

I refuse to believe the Fed can do QE for 5-7 years without yields popping up over 1%.

IMO, QE is being used to pick up all the real estate junk: MBS, CDO, CRE. There’s maybe another 1 or 1.5 years left and that’s it.

#75 Salty Trader on 11.08.10 at 8:41 am

#62 Keith in Calgary ” There has never been a better time to buy a home”

This is an imposter posing as this user. Keith would never say such house salesman comments.

Gold is money… Humm… no. Salt was money before Gold was money. Salt will return to our currency again. Don’t believe that gold is money, salt is. People holding worthless gold are telling you that so they can buy salt with it after they sell it to you. Salt futures are up 500% over the last 2 years vs gold. If you are investing in gold over salt, you are losing out. And 1lb of salt will buy 1oz of gold soon.

#76 Moneta on 11.08.10 at 8:44 am

Ben Bernannke may be right in one respect. He is attempting to do what many think is impossible; reignite market confidence by raising asset values and in essence pulling the economy up by it’s bootstraps.
———–
The problem with his strategy is that if he keeps 5r-yields at 1% for too long, he’s going to have to fund pension plans…

The majority of plans in the US are still using expected returns over 7% and a discount rate above 5%. At 1% for a couple of years, this low yield environment will only make pension plans even more underfunded, forcing companies to make higher contributions further reducing profits.

#77 Buyright241 on 11.08.10 at 8:46 am

Here is another good read

Picking our poison
http://financialinsights.wordpress.com/

#78 Moneta on 11.08.10 at 8:49 am

He said 2Mil… I was floored… I said 20Mil… and that was before the era of bailouts and QE’s. 1Mil, say 10-15 years from now, will barely get you through the year.
——-
And to think of all those people in McMansions heating their pools until November thanks to cheap Hydro-Quebec energy.

#79 Moneta on 11.08.10 at 8:56 am

do you have much faith that our Ontario Public Service pensions will be reliable and there for us in 10+ years time.”
——-
– If they print, it’s going to be there. You’ll get your money. You just won’t be able to buy much with it.

– If they cut entitlements, it won’t be there.

Those are their only 2 choices unless we magically get productive and quickly grow our way out of the mess.

#80 Billy on 11.08.10 at 8:58 am

For those of us who have important things to do the day of your talk but are still interested in what you have to say, can you record it and post it on this website in MP3 format, or upload it to youtube, or something?

#81 bullion.bunny on 11.08.10 at 8:58 am

The Gold is coming……now the bankers are talking about it.

http://www.businessinsider.com/robert-zoellick-gold-standard-2010-11

Now it’s only a matter of time.

#82 Behind the Numbers on 11.08.10 at 9:01 am

Motley Fool is warning investors that gold is in a bubble and the price could drop below $500. They reach this conclusion by graphing the price of gold back to 1851, and applying the Law of Mean Reversion.

Motley Fool: http://www.generationaldynamics.com/cgi-bin/D.PL?redir=http://www.fool.com/investing/etf/2010/11/02/warning-gold-could-drop-below-500.aspx

http://www.generationaldynamics.com/ww2010/g101107b.jpg

#83 BrianT on 11.08.10 at 9:16 am

#81Behind-Motley Fool is usually OK but this one makes no sense at all-the current monetary setup didn’t exist in 1951, let alone 1851. You could draw up a similar chart and predict that the global growth in derivatives must reverse rapidly as it is far above the 150 yr trendline.

#84 Herb on 11.08.10 at 9:17 am

Ayn Rand @ #47,

Rory indeed has discovered the cure for all cancers: reduce the wages of public servants by 20%, and give them the same benefits as the private sector.

But he might be too modest to admit the discovery that the public service managed to drain the economy all by itself, without any assistance from the private sector. His discovery should be a shoo-in for the Nobel Prize in Economics.

Stupid comment. PS salaries are generally substandard to those in the private sector. The DB pension plan is meant to be the leveler, but should probably become DC. — Garth

#85 BrianT on 11.08.10 at 9:20 am

#75Moneta-Bernanke doesn’t fund pension plans in any way-the mess they are in isn’t his problem and he will in no way be involved in the resolving of it.

#86 BrianT on 11.08.10 at 9:37 am

#61Tax-IMO the inflation/deflation debate is a bit of a smokescreen-currently the US economy is entering into an inflationary DEPRESSION ( which hasn’t happened there in the experience of anyone alive right now). It is a South American type situation at this point-it could change but that is where it is headed right now. IMO many don’t realize that a lot of the US RE could head to a ZERO value under a high inflation scenario-this confuses many as they think of the 1970s when high inflation lifted all wages and boosted RE enormously. Not anymore-property taxes and all other expenses will go up as the value goes down.

#87 Moneta on 11.08.10 at 9:39 am

Bernanke doesn’t fund pension plans

Yes and he does not fund Pimco either.

#88 Keith in Calgary on 11.08.10 at 9:40 am

Someone is posing under my handle and making comments quite of out character.

Must be A SLOW DAY IN REAL ESTATE SALES………….heh.

Garth, would you please do an IP search and see if you can figure out if it is an existing commentator and reveal who it is, then ban them. Thanks.

#89 Martin on 11.08.10 at 9:52 am

Bandit;
You are probably looking for mischief and excitement in your life–things that are currently lacking. “I could see a buttoned-down person name his or her dog ‘Bandit,'” says Croke. You have your life under control and everything is in order, but you want people to think you have a wild side.

From
http://www.forbes.com/2010/02/25/dog-name-owners-lifestyle-what-your-dogs-name-says-about-you_2.html

While I appreciate the psychocanineanalysis, Bandit was a rescue dog and came with that name. Besides, he looks good with the little mask and holster set. — Garth

#90 TheBestPlaceOnEarth on 11.08.10 at 9:58 am

Canadians have no problems with higher mortgage payments, none whatsoever
http://www.vancouversun.com/business/Canadian+mortgage+holders+good+shape+Survey/3793795/story.html
What they will have problems is with their RRSP’s being whacked in half again. Get Smart, Load Up and come out to the Coast. It’s Goin Up

#91 smw on 11.08.10 at 10:05 am

#87 Keith in Calgary

Keith, you’ve been around here since the inception as has I, its obvious that there are some REIN clan members and RE agents with poopy pants hanging out lately.

Must be the 1/3 drop in sales and drop in prices in all areas of RE. Luxury house going down big time, those liquidating those McMansion’s are the ones driving average prices higher, not new home buyers…

Good news those working the housing based economy, your going to have lots of time to spend with the family in 2011.

#92 Herb on 11.08.10 at 10:09 am

Stupid comment. PS salaries are generally substandard to those in the private sector. The DB pension plan is meant to be the leveler, but should probably become DC. — Garth

Gee, Garth, I hope the “stupid” refers to the “reduce-the-PS” mantra, not my feeble attempt at reductio ad absurdum

#93 Contrarian Canuck on 11.08.10 at 10:26 am

Housing starts decline….but at least debt’s not an issue

http://financialinsights.wordpress.com/2010/11/08/home-starts-down-but-at-least-debts-not-an-issue/

“One in five homeowners used their home as an ATM in the past YEAR, with the average amount of equity extraction being 46K! Wow that says a lot about the true financial state of many Canadians….Some rudimentary math tells us that equity withdrawals added over $8,000 of additional spending per household! That is HUGE! This is money that bolsters the broader economy. But it only lasts while home prices increase and people are confident enough to tap their equity.”

#94 T.O. Bubble Boy on 11.08.10 at 10:28 am

More proof that consumer confidence (i.e. housing market confidence) is declining… some “tentativeness” in housing starts:

Canada Oct housing starts fall more than expected

#95 Larry in Calgary on 11.08.10 at 10:32 am

There’s nothing like the smell of coffee and croissants while reading this blog on a monday morning.

#96 dark sad person on 11.08.10 at 10:45 am

#58 Dorf on 11.08.10 at 1:07 am

An aside….can somebody ‘Splain Me Lucy, how China ties their currency to the USD ?

******************
China can keep the peg by tracking the amount of US printing through base money supply (SBASENS)

Then China will print an equivalent amount of Yaun (devalue) and buy up the USD (strengthen)-based on a ratio of USD supply vs Yaun supply-
This is roughly how it’s done-
Also-they have to take into account an adjustment for interest rate policy-carry trades and sentiment-
Monetary printing can be followed by watching base currency expansion-
They also watch M3 and M1 for Countries with no M3-
These pegs are not rock solid-but the results are as close to a lock/peg as they can be-

#97 T.O. Bubble Boy on 11.08.10 at 10:46 am

@ #89 TheBestPlaceOnEarth:

That article refers to an online poll conducted by the Association for Mortgage Professionals — not exactly unbiased information, wouldn’t you agree?

Also — the main statistic that is provided is a bit misleading:

“84 per cent of those with mortgages could withstand paying an extra $300 or more on their monthly mortgage payments”

What this doesn’t say: if the mortgage payment went up $300, the Line of Credit and other expenses would also have gone up.

So, to get that $300… you could have something like:

$300,000 mortgage @4% / 25-yr = $1,578.06 per month

changing to

$300,000 mortgage @5.75% / 25-yr = $1,875.07 per month

But, what about a HELOC?

Let’s assume that you did some home renos to “take advantage” of the ‘Economic Action Plan’… throw $50,000 onto a HELOC that is at prime+1% today, and you get another couple of hundred bucks being eaten up by rate increases.

#98 TS on 11.08.10 at 10:48 am

Mortgage debt in Canada now tops $1 TRILLION

http://news.sympatico.ctv.ca/home/canadas_mortgage_debt_surpasses_1t_for_first_time/082baf37

#99 Junius on 11.08.10 at 11:08 am

#89 BPOE,

The survey says 84% of the mortgage holders could afford $300.00 more per month. You call this a survey?

First of all, what about the other 16%? It took less than 10% of the mortgage holders falling into arrears to send the US market down.

Now do the math. If a 1% increase pushes mortgage payments up 10% then a 2% increase in interest rates will push prices up more than $400.00 a month on a $2,000 a month mortgage. You aren’t now going to try and tell us that most mortgages in Vancouver are less than this are you?

Since rates traditionally go more than that – usually 4% or more then prices will be much higher.

Survey is garbage.

Prices going down – way down.

#100 GregW, Oakville on 11.08.10 at 11:12 am

Hi Garth, Just in case you mist it.

CTV.ca News Staff
Canadians are carrying more mortgage debt than ever before, with the total crossing the $1 trillion threshold for the first time, according to a new report released Monday.
http://news.sympatico.ctv.ca/home/canadas_mortgage_debt_surpasses_1t_for_first_time/082baf37

‘About 6 per cent of homeowners would have trouble with an increase of less than 1 per cent of their current monthly payment, and a further 5 per cent would have trouble with an increase of between 1 and 1.49 per cent.’

#101 RICHARD LICKER on 11.08.10 at 11:15 am

http://news.sympatico.ctv.ca/home/canadas_mortgage_debt_surpasses_1t_for_first_time/082baf37

Please read the above link and give negative feedback.
Can’t wait……..

#102 Basil Fawlty on 11.08.10 at 11:24 am

“Yup, I can just see the gold bugs trying to convince Apu down at the Kwik-E-Mart that “gold is money”
when things turn sour here in Canada.”

Yes it would be much wiser to take your Canada Savings Bonds or preferred share certificates. Apu would take those in a flash!
This is just like the argument that, “you can’t eat gold”, which is true. However, throughout history those escaping persecution rarely escaped with cans of beans sewn into their clothing.

Nobody is claiming CSBs or equity certificates are money. Glad you admit gold isn’t, either. — Garth

#103 Dorf on 11.08.10 at 11:26 am

Dark Sad Person – Thanks once again for the explanation.

:-)

#104 GregW, Oakville on 11.08.10 at 11:26 am

Hi Garth, Are you still letting them radiate you at the airport?
When did it start being a good thing to be exposed to increasing/accumulative amounts of ionizing radiation?

FYI: 3 links below.
Academics Send Letter to Holdren on Naked Body Scanners. (on April 6, 2010)
http://www.infowars.com/academics-send-letter-to-holdren-on-naked-body-scanners/

TSA Fondles Women and Children Refusing Airport Naked Body Scanners. (see 12min video)
http://www.infowars.com/tsa-fondles-women-and-children-refusing-airport-naked-body-scanners/

Opt Out of a Body Scan? Then Brace Yourself
http://www.infowars.com/opt-out-of-a-body-scan-then-brace-yourself/

#105 Bill Muskoka (NAM) on 11.08.10 at 11:28 am

Commit to SIN (Stop Inflation Now) That is the only real solution to this fiasco of economic theory that has repeatedly FAILED.

#106 Utopia on 11.08.10 at 11:44 am

#56 Alberta Renter on 11.08.10 at 12:51 am
#10 Utopia

I read your post quite closely, but was disappointed that didn’t follow through. No final analysis, thesis, or words of wisdom. Just three cliff hangar words “Few see it” sitting all alone in their own paragraph.

—————————————————–

I just ran out of time. It is funny you mentioned it too.
I was in the middle of writing when another issue came up so I wished Garth good luck and ended my post.

#107 Industrial Guy on 11.08.10 at 11:46 am

“U.S. mortgage delinquencies rise”
“Housing starts plunge 25% in Ontario”
“U.S. Steel locks out 900 workers at Hamilton plant”

The Canadian Association of Mortgage Professionals claim, “Canadian mortgages top $1 trillion”

Translation: This false economy built on debt is not going to end well ……..

#108 Pat on 11.08.10 at 11:52 am

@ #47 Ayn Rand,

Biting you own bait Ayn?

#109 BrianT on 11.08.10 at 12:02 pm

#103Greg-you fail to understand that it is those dastardly Afghanis that are the real threat to our freedom.

#110 calgaryillusion on 11.08.10 at 12:04 pm

Naysayers about precious metals have only been incorrect for 20 years. I’m sorry to say Garth that you have been on the wrong side on the PM trade for many years, but you have made excellent calls on bonds. We will soon find out whether the bond market is correct – or the equities market. As long as interest rates in the US stay where they are and they keep printing dollars out of thin air…..gold will continue to outperform. In less than 6 months the United States will be the largest holder of US debt (they are now #2). If you are the largest holder of your own debt – how do you think commodities will react (positively of course). Once the US has a plan to increase interest rates (which they bloody well can’t now), that is when to start pulling gold off the table.

My last three books have recommended a gold holding of 5-10%, and I stick by that. Any more is overweight, as we will all discover. — Garth

#111 BrianT on 11.08.10 at 12:06 pm

#97TS-time to start shooting-all the stupid cattle are in the pen.

#112 BrianT on 11.08.10 at 12:10 pm

#86Moneta-I guess you aren’t aware that PIMCO has done a lot better than the average private or public pension fund. A lot better.

#113 Northern Dirt on 11.08.10 at 12:20 pm

#51 concessionman on 11.08.10 at 12:22 am

After Party at the Landing Strip?

…………………………………………………………

haha.. Beat me to it..!

#114 Live within your means on 11.08.10 at 12:24 pm

#8 Ayn Rand on 11.07.10 at 7:40 pm

……………….
I took early retirement from a prov. govt. 9 yrs. ago after weighing all costs associated with working and payroll deductions. We also underwent 4 restructurings in 5 yrs. I hated the uncertainty and ended up hating my job. BTW, many Managers got great ‘buy out’ packages, but the plebes. And some of those Managers continued to work for the govt. in consultant/special project positions.

This year we received the following from the govt.

No indexing in 2010 and depending on the province’s finances (not good) “indexing of 1.25% for each of the next 5 years will be guaranteed. After that time, the trustees will follow a comprehensive process to determine the level of indexing the Plan can afford in the future.” In 2 years my provincial pension will be clawed back based on the amount received from OAS. In other words, don’t count on a fully indexed pension. My husband works for the municipality but he does not have an indexed pension. Their current pension is under review and no doubt his contributions will increase.

#115 Devore on 11.08.10 at 12:45 pm

#95 dark sad person

These pegs are not rock solid-but the results are as close to a lock/peg as they can be-

They’ve done pretty well, ingenious bunch, those Chinese.

http://www.xe.com/currencycharts/?from=USD&to=CNY&view=10Y

#116 Bailing in BC on 11.08.10 at 1:05 pm

Does anyone have any insight into the market in Kamloops? My occasional search of Duplexes (a lot of which are rentals) seems to have yielded a much larger amount of listings than usual. Have listings in Kamloops increased dramatically?

#117 Ted on 11.08.10 at 1:07 pm

Hey Garth, when you were saying the same things in April 2009 I bought a place in Victoria, did some reno’s and now I have a sale $100K higher than I bought! Net profit is $45K with no expense for housing during that time. Too late to do it again?

#118 steve p on 11.08.10 at 1:08 pm

is this true? this was on yahoo today

Canadians continue to favour fixed-rate mortgages and a five-year fixed-rate mortgage remains the most popular option despite the fact that variable rates have become much less expensive than fixed rates

#119 realpaul on 11.08.10 at 1:16 pm

Yikes!!!!!! Gold hit $1400 today and the GDXJ is tearing the market a new ‘you know what’. The sentiment index sat well above 85 during the 80’s run and the market now is lagging that by 40 points….so maybe this pup has a ways to run yet before Joe Sixpack piles in and spoils the fun.

Maybe the ‘gold bugs’ and paranoids’ have had a case all along…look back to April and compare that with the manipulation cases now before the Supreme Court.

http://www.marketwatch.com/story/radical-gold-bugs-vs-wall-street-2010-04-05

Given that gold and silver has risen dramatically since they took HSBC and JPM to task there may be a case to assume the maybe the PM market WAS manipulated for the benefit of a few.

#120 Devil's Advocate on 11.08.10 at 1:18 pm

#87 Keith in Calgary on 11.08.10 at 9:40 am
Someone is posing under my handle and making comments quite of out character.

Must be A SLOW DAY IN REAL ESTATE SALES………….heh.

Garth, would you please do an IP search and see if you can figure out if it is an existing commentator and reveal who it is, then ban them. Thanks.

Integrity, if you have it nothing else matters and if you don’t nothing else matters. Do yourself a favour and find a more healthy site to visit. The community here is more toxic than cancer.

#121 jess on 11.08.10 at 1:20 pm

47 Ayn Rand
you may like to read this then, how Not to get things done.

definition of the american c-span
a room full of nothing but robotic cameras, turned on a lone speaker,and a crowd of empty seats.

The broken Senate
By Tom Casciato
October 29, 2010
http://www.pbs.org/wnet/need-to-know/security/audio-the-broken-senate/4355/
=======
The Empty Chamber
Just how broken is the Senate?
by George Packer

Read more http://www.newyorker.com/reporting/2010/08/09/100809fa_fact_packer#ixzz14i0Oe5IL
==============================
Tom
“support our troops”…in N.Carolina it seems it takes a while!

http://www.ny.frb.org/research/current_issues/ci12-7/refber87.html
camp lejeune water contamination
A St. Petersburg Times review of Marine Corps documents shows that Camp Lejeune failed to close its toxic wells for years — despite stark warnings that its drinking water was befouled by industrial cleaning solvents. The Corps then provided misleading information about the contamination to regulators, the public and its Marines.

It is unfortunate we must require something as simple as this by statute,” said U.S. Rep. John Dingell, a Michigan Democrat who co-sponsored the House amendment. “But 23 years after the contaminated wells were shut down, we have had enough delay from the Department of the Navy,” Dingell said.

http://www.newsobserver.com/2010/05/28/505296/bill-would-force-all-tainted-water.htmlhttp://www.newsobserver.com/2010/05/28/505296/bill-would-force-all-tainted-water.html#ixzz14dRImMkc
Published Fri, May 28, 2010 02:39 PM

#122 BDG-YYC - please just stop ... on 11.08.10 at 1:26 pm

Basil Fawlty … & Garth for that matter …

This whole “money” is/isn’t arguement is getting so tiring, distracting, annoying etc. and is petty and inane to boot. The list of what is “not” money is long indeed. Bottom line on this is … “money” is what the damn law of the land says it is … no more no less as in “legal tender”.

Officially minted canadian coins and bills are money in Canada … they must ber legally accepted when tendered in payment. Period … but only in Canada. They are not money in the USA or anywhere else in the world … period. Sooo …. while it is “money” it also isn’t money. Ooooo … and actually in Canada … as well as in the USA and many other countries … silver is also by definition and existance “money” since Canadian minted silver coin is still plentiful and must be accepted at face if tendered. Now … the fact that the silver content in say a 1960 something Canadian Silver Dollar is north of 20 Loonie dollars has no bearing on the moneyishness of the coin itself. And … bla, bla etc.

Now … we should just for the record add the following to the list of what is NOT “money”.
Oil, Diamonds, etc. … and …
Credit Cards are not money,
Debit Cards are not money,
Cheques are not money,
Bank Account Balances are not money

And GOLD is Not money – unless it happens to be say an officially minted Canadian $5 Gold piece in which case you could actually call a Cop to enforcer its acceptance at face value if you were so stupid as to insist on it.

Now … we can go back not that far in time to when we had gold standard currency and … well …. while curencies were actually gold backed and could be exchanged for money … and there was gold coinage (just as there is today) … gold was still not “money” but money could be officially exchanged for gold.

YOUR “money” consists of … wait for it now … the $20 Bill in your wallet plus the half kilo of coins you have in your pocket – another 12 bucks and the 6 kilos you’ve thrown in your top drawers $113 and the 4 loonies in your couch. Yes … you have about $143 in “money” relatively speaking. Everything else you have is money spent stuff like the box of cornflakes that has a cash value if you can find a buyer, or money stashed away … in a bank account, or investment account, or bond, or whatever … with a value somebody is liable to you for and that you hope will make good on it.

No Gold is not money. And yes both gold and silver are listed and traded on the International Foreign Currency Exchange Market right along with all of world currencies but not because they are “money” any more than a British Pound is money, or a US Dollar is “money” or a Canadian Dollar, or Yuan, or Peso etc…

Now … here’s a good one … When currencies are traded at different relative values gazillians of times a day on the Foreign Exchange Markets are they really trading “money” or are they trading “in” money … and is it actually “money” being exchanged or is it something different? Is it different than the booth at the airport where I can actually walk up with a handful of Pesos and trade them for a few dollars and visa versa?

The debate is foolishness. So stop.

#123 torontorocks on 11.08.10 at 1:29 pm

I couldn’t give a shit about an online poll for the Association of Mortgage Brokers. Just like internal polls at work, I always suspect they’re not completely anonymous. Furthermore, I can only imagine someone filling that out and having to either ‘lie’ on the poll to make themselves feel better rather than face the cold hard reality that I could almost be underwater (God forbid).

So no – no matter what this cannot run into perpetuity and if it does, then I’m buying in April.

Any great preferred share picks out there? I”m thinking Loblaws.

#124 dark sad person on 11.08.10 at 1:30 pm

#111 BrianT on 11.08.10 at 12:10 pm

#86Moneta-I guess you aren’t aware that PIMCO has done a lot better than the average private or public pension fund. A lot better.

***********************

When you have the Fed in your ass pocket and taxpayers funding it all-how can you help but do well–

**********************

April 2 (Bloomberg) — Treasury Secretary Timothy Geithner’s plan to rid banks and markets of devalued assets may be a boon for Pacific Investment Management Co.’s Bill Gross.

The plan may reward investors with 20 percent annual returns on “really ‘toxic’” mortgages bought at 45 cents on the dollar by allowing them to borrow six times their money with “non-recourse” government-backed debt, New York-based Credit Suisse Group AG analysts Carl Lantz and Dominic Konstam wrote in a March 27 report. That loan would be worth 15 cents to an investor seeking the same return who can’t use borrowed money.

Unlike Geithner’s plan for loans, the public-private funds for securities will be limited initially to only five managers, such as Pimco and BlackRock, already overseeing $10 billion of the assets targeted. That program will buy securities from holders of toxic assets other than banks.

“There it’s probably going to work — for five people,” said Dan Castro, chief risk officer at hedge fund Huxley Capital Management in New York. “You’re selecting a very small group of large guys and giving them all the advantage

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aKm0M7RHXDoQ

#125 Keith in Calgary on 11.08.10 at 1:35 pm

#87:

I am Keith. I am from Calgary.

You are a lame impersonator.
You are really paranoid, you know. Who should i call myself? carioca canuck? That’s a real stupid name you know.

++++++++++++++++

Canadians hold $1trillion of mortgages. That is a real good figure. Since we are over 34million folks, that’s roughly $300 each in mortgage obligations. Big deal!!!

There are just over 7 million households, of which 30% do not own real estate and 45% have no mortgage. Do the math. — Garth

#126 Bailing in BC on 11.08.10 at 1:39 pm

Sorry if this is posted twice, it didn’t seem to come up the first time.

Does anyone have insight into the Kamloops RE market?

Have listings increased dramatically or is it just me?

#127 BrianT on 11.08.10 at 1:43 pm

#118Real-if the big guns accumulating physical gold and silver don’t back off there could be a real smash-up-JPM can naked short using US taxpayer funds but they can’t create even one ounce of actual product.

#128 Moneta on 11.08.10 at 1:51 pm

Translation: This false economy built on debt is not going to end well ……..
—————
I wouldn’t say it’s a false economy. The Lego blocks are there. The problem is that there aren’t enough blocks to keep on growing the pyramid.

#129 S on 11.08.10 at 1:54 pm

Well Garth, you mentioned gold in your post so don’t blame me for bringing up the subject.

A while ago, when I became skeptical of the equity markets and bailed before the financial crisis, I decided to invest in precious metals. I kept buying gold until it hit the $800.00 per oz at which time I decided to cross-reference my own gut feeling with what I considered (and still do) the voices of reason such as Jon Nadler of Kitco.com, Danielle “Juggling Dynamite” Park and a number of other well known individuals. These experts provided a number of very logical reasons for a looming price pullback for both, Au and Ag. I adjusted my investment strategy accordingly… Today, as gold exceeded $1400.00 per oz, I see that the one voice of reason I should not have ignored to was my own intuition. As for the experts, it is almost certain that some day they will be right. For the last four years, of course, they have been dead wrong…

#130 Moneta on 11.08.10 at 1:54 pm

BrianT:

The Fed has shown us that it can decide to prop up a lot of stuff. And their interventions have been propping up pension funds.

I think you don’t get my tongue in cheek comments.

#131 The Apocalyptic One formerly Old is Gold on 11.08.10 at 2:11 pm

Isaiah 5:9
In mine ears said the LORD of hosts, Of a truth many houses shall be desolate, even great and fair, without inhabitant.

Large and beautiful houses without inhabitants in Las Vegas

#132 Junius on 11.08.10 at 2:12 pm

Garth,

I look forward to tonight’s post on Canada crossing $1Trillion in mortage debt. Shocking and scary.

Anyone know how much of this is guaranteed by the CMHC? Other than too much?

This will end badly.

CHMC’s debt limit was recently raised to $600 billion. Most of that represents high-ratio (high risk) loans. — Garth

#133 UrbanCowboy on 11.08.10 at 2:25 pm

130 The Apocalyptic One formerly Old is Gold on 11.08.10 at 2:11 pmIsaiah 5:9
In mine ears said the LORD of hosts, Of a truth many houses shall be desolate, even great and fair, without inhabitant.

Large and beautiful houses without inhabitants in Las Vegas
——————————————————–

How can that be, but they got casinos, their different….

Gold $1409!

#134 dd on 11.08.10 at 2:35 pm

I see Robert Zoelleck, President of the World Bank, is opening discussions about world currencies and a possible link to gold.

#135 Pat on 11.08.10 at 2:38 pm

@ #113 Live within your means,

“…And some of those Managers continued to work for the govt. in consultant/special project positions.”

Yeah, what’s the deal with these consultants? I know several people who work as consultants and can’t imagine that anybody would want to pay a cent for their “expert” opinion.

#136 Fish Bait on 11.08.10 at 2:52 pm

Caution!!!!!! Devil’s Idiot is back!

He speaks of integrity…hmmm. Imaging someone going on to a blog about breast feeding and doing a retarded job of giving an opposite point of view. What would be accomplished? The community exists for the express purpose of learning and sharing information about breast feeding. But still the person continues to oppose women who are there to learn.

The integrity Devil’s Advocate speaks of is the manipulative belief that anyone can become a customer. He was trained to never give up trying to convince a prospect to buy. So, even though he has made an ass of himself repeatedly, and continues to by going againest his word about not coming back till the new year at the soonest (there’s a man keeping his word), he keeps trying to win people over to his point.

Integrity means keeping your word. You said you wouldn’t be back, several times.

If this blog is so toxic, why are you here?
Try your act on some other blog like breast feeding, classic cars or mountain biking. Go on there and argue the opposite point of view and see how many friends you make. Then…remember to trash people, wander aimlessly, commit to not doing it again, and then do it all over again many many times.

Yes, you are a man of integrity.

P.S. – When you go on those blogs and get flack from other posters who know you’re an idiot, remember to vacilliate wildly in your posts and contradict yourself regularly.

#137 Devore on 11.08.10 at 3:00 pm

#121 BDG-YYC – please just stop

You’re trying to play some kind of middle of the road compromise here, but are just confusing yourself.

So one one hand you say gold coins are legal tender (which they are) and therefore money (at face value), on the other you say gold is not money. Say what?

In fact, when paper money was 100% gold backed, gold was money, and was accepted as payment, because the paper money was just a warehouse receipt for the stated amount of gold. Either one would be accepted, provided the paper was from a trusted institution, and you would be assured of receiving the gold from it. And yes, there were multiple currencies at times, anyone could issue paper money, but it would only be as accepted as people were willing to trust it. Eventually, only official government issued paper notes were universally accepted, and the rest is history.

So whatever point you were trying to make is completely lost on this reader. The way to stop this silly gold debate is to simply stop responding to it. Garth could easily do it just by refraining from stirring things up with every other post.

#138 Devore on 11.08.10 at 3:04 pm

#121 BDG-YYC – please just stop

Cheques are not money,

Oh, and for the record, yes they are. Why is it money? You can buy things with it. Clearly, you’re not bartering. Each time you write a check, you create money, money backed only by the assets of your account, so it’s not very good money. When you get a certified check, that is also money, but the money is backed by the assets of the bank, so you will find it is much more trusted.

#139 jjpetes on 11.08.10 at 3:06 pm

Garth quote “Gold is not money”

World Bank President Robert Zoellick mentioned a role for gold in the development of a new monetary system to succeed “Bretton Woods II”

Paint your Hummer yellow Garth, it won’t get stolen…

jjpetes

#140 Keith in Calgary on 11.08.10 at 3:08 pm

There are just over 7 million households, of which 30% do not own real estate and 45% have no mortgage. Do the math. — Garth“

OK here goes. Following your statement:

30% of 7 000 000 equals roughly 2 100 000. So leaves roughly 5 000 000 owned households, of which 45% without mortgages. this equals approximately 2 200 000 which leaves 2 800 000 mortgages out there. So today all these 2 800 000 mortgages equal $1 000 000 000 000. The average mortgage would then equal $335 000.
Of that amount how many have also refinance to wipe off debts or to secure a HELOC which are also included in said amount…
Anyway at 5% interest over 30 years, our happy family pays $400 weekly. Very affordable. In 30 years the house is theirs. As a renter the not so happy family will keep paying rent while having no equity.

#141 Kitchener1 on 11.08.10 at 3:09 pm

To bad I wont be able to make the Toronto event due to personal obligations, to bad, was looking forward to meeting you again.

Here is an idea for you Garth,

since its all blog dawgs at the event, why not do an informal poll and see who the top dawg(s) are? would be interesting to see were the conspiracy dawgs rank in the listings. It would also give you great insight into the views and leanings of the dogs.

#142 Keith in Calgary on 11.08.10 at 3:11 pm

There are just over 7 million households, of which 30% do not own real estate and 45% have no mortgage. Do the math. — Garth“

However according to the CBC, the average mortgage is for “$146,000, or 50 per cent of the average value of their homes“.

Read more: http://www.cbc.ca/canada/toronto/story/2010/11/08/mortgage-debt-2010.html#ixzz14irvWcH8

#143 Kitchener1 on 11.08.10 at 3:13 pm

Just wanted to add, today’s markets are very telling.

Even with the USDX up to 77 mark, up big time from lasts weeks breach of support. Commodities of all stripes are inching up wards. Gold/Silver/Brent crude/cotton/wheat are all shooting up.

intersting indeed

#144 Devore on 11.08.10 at 3:19 pm

#135 Fish Bait

Yes, you are a man of integrity.

Of course he is. Recently he insisted, with air of assured confidence and authority, that as a landlord you could just show up at your property with a locksmith at the end of the month, and kick the renter out. I fear for the financial well-being of his customers whom he is dispensing this investment “advice” to.

A few months ago he insisted, repeatedly, rents across BC were rising, and would continue to do so, even as evidence abounds that real rents are flat at best, and enterprising renters are easily getting multi-$100 discounts on their rent. This is the man you want to take real estate investment advice from?

He either has no clue what he is so confidently talking about, or is intentionally dispensing false and misleading information.

It surprises me not in the least that his extended hiatus is over, and he has descended upon us again to bless us with his presence and wisdom.

#145 Alister on 11.08.10 at 3:36 pm

WHATTT?

9% have stocks? 1% have $1m? 1% have precious metals??

How come the restaurants are full, the planes are full, the car lots are loaded with $30-60K cars. People are paying for 4 cell phones for them and the kids, the cable or satellite bill is $100+/mo.

I would love to be a bank loan officer just to see what shape this country is in.

#146 p. on 11.08.10 at 3:36 pm

L’envolée des prix de l’or intervient par ailleurs alors que le président de la Banque Mondiale, Robert Zoellick, a appelé lundi, dans un entretien au Financial Times, les pays du G20 à redonner à l’or un rôle stabilisateur dans le système monétaire international.

#147 dark sad person on 11.08.10 at 3:40 pm

#137 Devore on 11.08.10 at 3:04 pm

#121 BDG-YYC – please just stop

Cheques are not money,

Oh, and for the record, yes they are. Why is it money? You can buy things with it. Clearly, you’re not bartering. Each time you write a check, you create money, money backed only by the assets of your account, so it’s not very good money. When you get a certified check, that is also money, but the money is backed by the assets of the bank, so you will find it is much more trusted

*******************

You’re right Devore-
Whatever will spend-is money-
Have to include even air-miles and coupons and limit amounts to credit lines and CC’s-
All of it’s money and all of it is spendable and when the availability of any of it decreases-either by the backers of it-or simply a personal decision-it is deflation-

#148 LB on 11.08.10 at 3:47 pm

#139 Keith

Where in your equation is the money permanently lost to interest over the life of the mortgage (and other debt) and where in your equation is the amount earned while invested in other markets over that same time period on the money saved each month by renting rather than “owning”? And finally,where in your equation is your provision for lost equity if your real estate declines in value over the life of the mortgage, as we are currently witnessing in the US and elsewhere? Your logic is flawed and risky.

#149 Keith in Calgary on 11.08.10 at 4:02 pm

This site is very pro-renter. You refuse to see ANY positives for owning a beautiful property.
Very sad indeed.
Are you all going to rent until you die!
Life expectancy grows…
Still paying rent when you`re 80!!!
Imagine STILL paying rent when you`re 80!!!

#150 angel on 11.08.10 at 4:06 pm

to #87 Keith:

You mix billion with trillion – your calculation is for $1 billion of mortgages, not $1 trillion. 1 trillion = 1000 billions, so the $300 per person should be more like $300,000 per person.

#151 Northern Dirt on 11.08.10 at 4:08 pm

#139 Keith in Calgary

As a renter the not so happy family will keep paying rent while having no equity.
…………………………………………………………………………..

Or they will take the $6400 (considering $1200 for a 2 bedroom rental) they save per year, and invested for 30 years at 5% they will have $450K.. Not to mention, saving on property tax, maintenance, heating/hydro etc…

#152 Steven Rowlandson on 11.08.10 at 4:09 pm

Hello Garth.
If less than 1 % of canadians own precious metals does that mean I am part of the elite?
Also since for the last 20 years to today my silver holdings gained 11.265% per annum do I go to the front of the class? That kind of beats GICs by a pretty good margin wouldn’t you say?

Steven

#153 Increasing that 1% on 11.08.10 at 4:10 pm

Garth, happened to catch you on Mike Bullard’s radio show at noon (1010). Short and sweet-literally–you were your polite self, and he was not nasty to you before, during or after, but rather complementary, especially about you making a parking lot for motorcycles
———————————————-

Whew, the real Keith in Calgary is still intact
———————————————

Rental prices for TO core sure are not reflective of any ’empty condos’ or other trouble going on.
———————————————

#17. ending with ‘BWTFDIK’-
wow, it’s scary how quickly I got that
———————————————

Are we really going to meet Bandit?!

#154 Northern Dirt on 11.08.10 at 4:16 pm

Actually adding Prop tax, Maintenance and Heating, and its over $10K per year

#155 somejerk on 11.08.10 at 4:22 pm

#11 TheBestPlaceOnEarth – I think it was the 90’s ;)

G didn’t someone sponsor you in the good ol’ days doing a radio bit which was transcribe to net content? That was the time of spinney email graphics – links and people investing all their hard earned in those dot-coms that were like real estate and went up forever…

same great message… keep it up…

#156 Fish Bait on 11.08.10 at 4:22 pm

Devore,

Devil’s Idiot has so many stories that don’t jive that the only logical solution I can come up with is that he’s a head case…dual or even multiple personalities who is trying to live out some dream of who he’d like to be. It’s important to remember that brilliance and insanity are only a couple degrees removed from each other.

How could someone as unstable as he is possibly build the sort of long term trusting relationships that are required to build a business? Impossible.
Maybe he was once successful, but he certainly isn’t now.

Hasn’t he figured out that all his contradictions and lies are all in print? Why leave finger prints all over the place unless you’re just stupid?

He’s a deluded man trying to look important.
“I’m quitting this blog, I’m back, I’m quitting, I’m back, I’m quitting, I’m back, I’m quitting.”
Does that sound like someone with all their marbles?

#157 Northern Dirt on 11.08.10 at 4:27 pm

#148 Keith in Calgary

This site is very pro-renter. You refuse to see ANY positives for owning a beautiful property.

…………………………………………………………………….

Keith, I have nothing against owning property. I just don’t see the value in losing money on an investment.

If I could put 30-50% down, on a mortgage that carries for the same price as my rent, id be buying tomorrow. Until then, ill continue to invest my savings and wait until an opportune time comes where I can buy or have a house built for myself. Considering I spend only a couple hours a day at my place, while not sleeping, I don’t see the point in throwing away so much money.

#158 Kevin in Winnipeg on 11.08.10 at 4:27 pm

“In the future, Canadians may also be able to buy insurance-like products that help them lock in the value of their property—in effect, protecting you against falling house prices. There are a number of companies in the U.S. which, in return for a one-time premium ranging from 1% to 2% of the value of your home, will allow you to protect the value of your property for a set number of years. ” – http://www.moneysense.ca/2010/10/15/look-out-below/4/

You may be able to buy a “put option” on your house. Wow.

#159 Marty on 11.08.10 at 4:57 pm

Paper money is simply promise to pay. It’s not money because it no intrinsic value, it’s money because the LAW says so.

The LAW and economy are not the same beast. An economy without intervention is an efficient mechanism that functions in a way to give the most value to all its participants. In an economy gold is the critical yard stick of value as it provides stable price due to its scarcity.

When you try to create an economy with “IOUs” (notional commodity aka promises to pay aka bank notes), you end up where we are, thanks to the LAW, but not thanks to an economy.

Solution: create/participate in a new economy that is not part of corporate law but functions under common law of the land and forget this bogus CANADA corporation registered in District of Columbia in Washington, look it up on D&B.com.

CANADA
1746 MASSACHUSETTS AVE NW
WASHINGTON, DC 200361903

#160 Debtfree on 11.08.10 at 5:02 pm

I’m surprised that only 9% of canadians own equities . They are the easiest money I’ve ever made . Do canadian not believe in their own country ? The gold bugs nutty as they are ,are at least supporting our gold miners . They did not bad today. However they did lousy compared to me with my Quebec LI mine t.clq up 18.6 % today . Gold is so pretty . I have some but lucky for me I have a hell of a lot more lithium . If your one of the 91% that don’t have anything in the market I feel sorry for you but I feel more sorry for canada .

#161 jess on 11.08.10 at 5:19 pm

Professor Morgan Kelly
The Irish Times – Monday, November 8, 2010
If you thought the bank bailout was bad, wait until the mortgage defaults hit home
http://www.irishtimes.com/newspaper/opinion/2010/1108/1224282865400.html

#162 jeff on 11.08.10 at 5:24 pm

Realtor Keith in Calgary is a very worried man as sales have crashed and prices are down. Don’t sleep much do you realtor keith? The housing nightmare is only going to get worse.

#163 Vancouver_Bear on 11.08.10 at 5:36 pm

#124 Keith in Calgary on 11.08.10 at 1:35 pm

if you devide $1,000,000,000,000 by 34,000,000 the number will be close to $30k per person, this does not include credit card debt and other types of debt. Canada is in the much worse position then US….way worse, per capita we owe to banksters more then amricans, which means we are screwed big time.

#164 Vancouver_Bear on 11.08.10 at 5:42 pm

Here is the link to the debt map. Canada’s Public debt to GDP ration is 82%, while in US it’s 62%…do the math.

http://buttonwood.economist.com/content/gdc

#165 what to do on 11.08.10 at 5:45 pm

I have my place for sale.

Realtor says its not overpriced, but no one is looking.
He said even if I listed lower it wouldn’t stimulate any more bites, the market is just dead here (Calgary).

:(

#166 Vancouver_Bear on 11.08.10 at 5:45 pm

Compare China and Canada….public debt in canada is higher, while population is 30 times less. Go! Canada Go!

#167 Mikey the Realtor on 11.08.10 at 5:47 pm

No way Poco, RE is serious business for me. I just got my license and looking for clients, I think you might of scared away Mathew with your tone, one more thing, some of you need to cut down the battering of DA, he is my idol and I need him to succeed in the game of real estate.

#168 Marty on 11.08.10 at 6:00 pm

Marc Faber – Special Guest on BBN

Bernanke, Currency Wars, Gold, Canada real-estate… etc…

Marc says, Canada’s suburbs are the next emerging economies due to availability of natural resources, water and infrastructure, property rights, and so on and so forth. :)

Interesting…. Garth… ever consider this notion?

vid1
http://watch.bnn.ca/trading-day/november-2010/trading-day-november-8-2010/#clip372133

vid2
http://watch.bnn.ca/trading-day/november-2010/trading-day-november-8-2010/#clip372094

#169 Moneta on 11.08.10 at 6:04 pm

How come the restaurants are full, the planes are full, the car lots are loaded with $30-60K cars. People are paying for 4 cell phones for them and the kids, the cable or satellite bill is $100+/mo.
——
Because 1/3 paid down their mortgage and 20% took 50K out of the house and spent it. I guess the rest bought bonds!

Thus, no money for stocks.

#170 ontheshoreline on 11.08.10 at 6:05 pm

I bought some silver last year at $17 as insurance(as well as gold) roughly 10% of my holdings.

I wish I had bought a wack more to speculate in as I watch silver bump $28.

#171 Dave on 11.08.10 at 6:20 pm

I was looking to build a new home in Toronto in 1992 (find nice lot, knock down the old house, and build a new one).

Prices were high, and a few started to have nice ‘discounts’. I ended up waiting 4 months: Prices were down 2/3 (66% discount) in that time. I grabbed a home, and had it knocked down to build a new one.

I thought I had a great deal (& did, compared to 4 months earlier), however prices kept reducing, and were Another 20% lower by the following year… overall, approx 50% haircut from the high prices in 1991.

It’s starting again: I’m having agents telling me that I could ‘pick up’ 2 of the properties I’m looking at, if I act immediately, for 25% less than the asking price… and I haven’t even made an offer!

Be careful out there.. it’s repeating again

#172 David B on 11.08.10 at 6:20 pm

And then there was Ireland.
Ireland’s Next Blow: Mortgages

By DAVID ENRICH And CHARLES FORELLE
Ireland’s commercial-property bust has knocked the country’s banks to their knees. Now the lenders are bracing for another blow: losses on home loans

http://online.wsj.com/article/SB10001424052748703514904575602650960629366.html?mod=WSJ_hp_LEFTTopStories

So what would that do stock markets, the Euro, & QE2

Who knows ….. not me for sure.

#173 john m on 11.08.10 at 6:32 pm

“164 Vancouver_Bear on 11.08.10 at 5:45 pm

Compare China and Canada….public debt in canada is higher, while population is 30 times less. Go! Canada Go!”…………….absolutely right we have a plastic generation who want it all (that includes our government) a whole generation of entitlement without the slightest damn idea about how to actually be successful.

#174 Timing is Everything on 11.08.10 at 6:50 pm

We’re gonna…Pump you up! Garth, should I lock-in or wait for the 5 year to go down some more?

3.35% for a five year fixed…for us anyway.

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/11/rbc-cuts-5-year-rate-as-yields-rise.html

http://www.canadianbusiness.com/markets/headline_news/article.jsp?content=b5073751

#175 YEG on 11.08.10 at 6:59 pm

I was out at an opening for a house on the weekend in SW Edmonton where the proceeds of the sale were going to a local charity.

It was a $900,000 property that sold by 11:00am for asking price.

So while there are stories of the down side of the market right now there are upsides too.

I don’t think it has tanked quite yet if this sort of stuff is still happening.

Of course. We’re not nearly out of fools yet. — Garth

#176 S.B. on 11.08.10 at 7:16 pm

Air Canada today added extra flights from Calgary/Toronto/Montreal to…Phoneix AZ! Is this in response to Vultching demand in AZ?

#177 tf on 11.08.10 at 7:16 pm

Garth
Why don’t you put some of these presentations up on Youtube?

You need another excuse not to go outside? — Garth

#178 Ron @ Delta on 11.08.10 at 7:17 pm

Hello Garth and others on this blog. Just curious, what happens to the Canadian stock market (equities, finance, bond funds) if the housing crash happens? I see the bond and balanced funds are made up of government bonds, bank stocks/shares, etc, that are linked to these overpriced mortgages.

#179 Live within your means on 11.08.10 at 7:17 pm

Agree that buying in this market is a bad move. I’ve lived in apts. for over half of my life. Actually improved some of them on my own dime ’cause my ‘environment’ was important to me. For us a house is a ‘home’ and being part of a neighbourhood – getting to know & enjoy your neighbours. It wasn’t just an investment for us. My priority was a nice neighbourhood and a place to garden, hubby didn’t get his garage, but he got a large workshop and later had space to house for his older beemer bikes. We had to compromise.

We’ve been here 19+ yrs. Paid it off in 7 and did some renos 10 yrs ago & just spent more K’ on renos than I want to admit. Much of it is to reduce our energy costs. Will we recoop all our money in 10+ yrs? Maybe not, but at least we’ll enjoy our home & neighbours in the meantime. And, maybe our small $ investments, handled by a smart, FA will reap us rewards!!

#180 S.B. on 11.08.10 at 7:19 pm

Update from T.O. condo brokerage:

http://tinyurl.com/28o7wvd

“September sales on TREB were 6300 units – up slightly from August but down 23% from September a year ago. It appears that sales have reached a plateau at just over 6,000 units per month. Usually October sales are higher than September. This year, preliminary October numbers are tracking for a 5% increase, which confirms that market activity bottomed out in August. We would describe this as a ‘normal’ fall market.

Looking at the downtown condo market, sales were off by just 15% from September of last year, suggesting that the condo market is outperforming the overall market. While sales are steady, it is the oversupply of condo listings which has held prices down. While interest rates for fixed rate mortgages are being lowered, this will have little impact on the market. Looking forward, we do not see any significant drop in prices. Some buildings have experienced price corrections of as much as 10% and others have had no drop in prices from the peak of the market in April. (Ignore reported year over year average price changes which are irrelevant and which are technically meaningless). Overall, the condo market is down 5%. In terms of new condo developments, we believe that prices will not go much higher than $600 per sf. The problem is not with costs but with rental rates that are too low! In Chicago, for example, two bedroom units rent for $3000 versus $2100 in Toronto. You can buy condo units in Chicago at $350 per sf – down from $500 at the peak. While we have always maintained that condos don’t move across borders, investors do! The new condo market is now dominated by investors. Need we say more?”

#181 TaxHaven on 11.08.10 at 7:39 pm

@#122 BDG-YYC – please just stop…

(Obviously someone who is busy fervently praying that the dollar stops falling against gold!)

What’s this? ~

“…we can go back not that far in time to when we had gold standard currency and … well …. while currencies were actually gold backed and could be exchanged for money…”

Surprisingly accurate: “currencies” (paper) could be exchanged for “money” (gold).

Now we have just the paper.

#182 Mike on 11.08.10 at 7:48 pm

Garth: Do you frown upon streaking at your event?

Only by people named ‘Mike’. — Garth

#183 Joe Q. on 11.08.10 at 7:54 pm

#149 Keith in Calgary on 11.08.10 at 4:02 pm writes: “This site is very pro-renter. You refuse to see ANY positives for owning a beautiful property. Very sad indeed. Are you all going to rent until you die!”

Garth has never said that there are no positives to owning property — only that the negatives outweigh the positives if you are devoting all of your money to that property.

95% of the people reading this site would agree that in the long-term, it makes sense to buy. That doesn’t mean it’s always a good time to buy.

#184 jess on 11.08.10 at 8:02 pm

Patricia Adams, executive director of Probe International (an environmental and public policy advocacy organisation in Canada), and author of Odious Debts: Loose Lending, Corruption, and the Third World’s Environmental Legacy, has stated that:

…”by giving creditors an incentive to lend only for purposes that are transparent and of public benefit, future tyrants will lose their ability to finance their armies, and thus the war on terror and the cause of world peace will be better served.
http://www.odiousdebts.org/odiousdebts/index.cfm?DSP=content&ContentID=4669

=

#185 Junius on 11.08.10 at 8:05 pm

#173 john m,

You said, “absolutely right we have a plastic generation who want it all (that includes our government) a whole generation of entitlement without the slightest damn idea about how to actually be successful.”

I can only assume you mean the baby boomers who got us into this mess.

#186 Utopia on 11.08.10 at 8:13 pm

#56 Alberta Renter on 11.08.10 commented……


Either you don’t have an opinion, which I doubt or else why waste all those words and thoughts. Or you, you’re and upstanding citizen, and don’t want to lead anyone astray with what you think. Either way, I say go for

#187 Aaron - Melbourne on 11.08.10 at 8:15 pm

149 Keith in Calgary on 11.08.10 at 4:02 pm

Are you all going to rent until you die!
Life expectancy grows…
Still paying rent when you`re 80!!!
Imagine STILL paying rent when you`re 80!!!
******************************************
Imagine your children, your insurer, or the state, paying your nursing home fees for assisted living!
Imagine THAT!!!

#188 Nostradamus Le Mad Vlad on 11.08.10 at 8:53 pm


Ever one for new adventures, and after learning how to boil water (not that hard), I am now headed for Crockpot Rice Pudding w/ Rum ‘n’ Raisins.

If successful and accompanied with a hearty barrel of White Russians, it will come in very useful as breakfast on a cold winter’s morn. About four in the morning when it’s bloody frozen outside!

Great posts today, esp. from DSP to Old is Gold’s good nine min. clip re: homeless in Las Vegas. Shows the reality of life, and the switch from west to east in cycles. Also see link further on re: big players dumping US$ in a few weeks.
*
3:47 clip The contempt the elite have for sheeples (not us — we’re contempt free!). This also is their attitude toward us.

Dumping The US$ May be a good idea to follow the market a little more closely now, but add this to the mix — 5:07 clip “In short, the metals traders are playing the same game with gold and silver that the Federal Reserve banks play with depositor dollars. That is, for each actual once of gold in the vaults, the traders are selling 45 “paper” gold ounces, increasing the illusion of a gold glut to keep prices down, to trick investors into staying with the dollar and the stock market. Like the reserve banks, the system works as long as everyone does not come in to redeem their paper certificates at the exact same time.” wrh.com.

Following on from the Bank Holiday link last night.

Commodity Bubble As if there weren’t enuff, for gawd’s sake . . .

But who were the ones who pushed Obama into selling out? They are the guilty ones, not Obama.

Chart(s) showing duration of unemployment in the US. Apply the same here. Rising Poverty.

Strange ad at start. “Translation: The jobs Americans lost are NOT coming back any time soon! The much-ballyhooed 56K jobs Obama claims have resulted from his India trip are about 1/8 of the new jobless claims and do not even cover the loss of jobs from the Gulf Oil disaster!” wrh.com. Pure, unadulterated spin no matter which way it’s viewed.

The Cold War begins heating up again.

Wasn’t Bretton Woods finished with some time ago? As well, what part does the IMF play in this charade?

7:02 clip “QE2 The Last Gasp of a Monetary System: A Message to the World.”

Living on borrowed money has its drawbacks, as the WH and US Fed have found out.

Fraudulency — not the same as flatulency, strange as it may seem.

Diverting away from the economy: “Nuclear smuggling bust in Georgia reveals that nuclear bomb grade uranium has been sold on the black market long enough to have a standard price per gram.”

#189 Timing is Everything on 11.08.10 at 9:27 pm

#188 Nostradamus Le Mad Vlad – said…

“…the system works as long as everyone does not come in to redeem their paper certificates at the exact same time.” wrh.com

True, and that is why you need a backup plan, just in case that ever did happen…Oh ya, the rules can be changed at any time…People have a hard time coping with that one it seems…Go figure.

Also, nature can be nasty, worse than humans sometimes….Best to be ready for ‘incidentals’. ;)

#190 april on 11.08.10 at 10:25 pm

#187 Aaron Melbourn.

So what’s wrong about renting. What is this snobbery about renting versus owning. Not all rentals are run down or in poor areas. Also people who can afford to own often choose to rent.
Red Robinson is renting in Vancouver—- waiting for prices to come down.

#191 Basil Fawlty on 11.08.10 at 10:53 pm

“Nobody is claiming CSBs or equity certificates are money. Glad you admit gold isn’t, either. — Garth”
My point was that gold is not the only investment that would have to be sold for cash to make most purchases.
In regards to gold being money, we have hashed that issue over eight ways to Sunday and disagree with each others opinion, so I leave it alone.