Risk (IV)

He desperately wants a house. She thinks he’s crazy. They’re both early 30s, household income of $112,000, 18-month-old baby. Total savings: $108,000. Current rent: $1,850. The problem: Vancouver.

We spent a half hour debating that point. For me (and her) it was a no-brainer. The average so-so East Van house is $650,000 and with closing costs $663,000. Less a down payment of a hundred equals a mortgage of about $560,000. That carries for $2,655 a month (3% VRM, 25-year am), and with property taxes and insurance, the burden would be about $3,400, without anything breaking.

In other words, about double current monthly living costs. Savings cut from a hundred grand down to zero. No RRSPs. No RESP for the kid. No life. And a mortgage of more than half a million dollars. All for a house like this.


‘Yeah,’ he said, ‘but this is an investment. It’s for our son. It’s for us. I lived in the same house my whole life before I got married, and I want the same for him. Besides, everyone says the market’s turning around. Things are getting back to normal.’

‘You,’ she said, ‘are delusional. How exactly are going to be more stable if we have a giant mortgage and no money?’

About the time we were having this loving little slugfest, the latest numbers came out of the Canadian Real Estate Association, giving a snapshot of October. As objectively as I can relate the stats, here they are:

* October 2010 sales down 21.6% from a year ago
* Sales last month 4.6% higher than September
* Month-over-month sales up in most markets, including Toronto and Vancouver
* Listings up 1% in October.
* Listings down 14% from last year
* Average price $343,737, essentially the same as a year ago

I guess this means if you bought a house one year ago you’ve now made 12 mortgage payments, plus closing costs and down payment, and earned nothing. In the case of renters moving to become owners, the monthly cost of ownership was likely higher than renting (like the couple above). So you lost money – paying more to live, and getting a 0% return on the money invested in the home.

I guess it also means if you put your life savings into this one asset and have nothing else, you rolled the dice with lousy consequences. And it could have been far worse. Imagine if the number of houses for sale had not dropped 14% at the same time the number of buyers plunged by 21% – prices would likely have been driven down about 7%.

In the meantime, a portfolio of $100,000, invested in a balanced portfolio instead of going down the rabbit hole of a down payment, would have earned about $10,000 (at least mine did). Add in the extra cash flow a Vancouver renter would enjoy over an owner, and you can put that family about $29,000 ahead. Seems a big price to pay for trading a rented house and a clutch of investments for an owned property and an unrepayable debt.

Yet not how CREA sees it.

“The continuation of low interest rates is supporting sales activity, which has been improving over the past few months in a number of major markets including Vancouver,” Georges Pahud, CREA’s president said in the official media release.

“National sales activity is now running almost halfway between the highs and lows posted between late 2008 and late 2009,” added Gregory Klump, CREA’s chief economist. “This suggests that the Canadian housing market may be starting to normalize.  After the wild rollercoaster ride that many housing markets have been on, normal and stable market conditions are something that many buyers and sellers will likely welcome.”

Normal and stable market conditions. But how are those possible when we’ve never been so much in debt and now have $1 trillion in mortgages? When unemployment is stuck at 8% and the manufacturing sector’s been hollowed out? When there’s only one direction in which taxes and interest rates will travel? When the average price of a home in most Canadian cities is at the highest level on record? And when a house in this country costs twice what it does in the US, a market ten times larger with twice the incentives for home ownership?

But I long ago gave up trying to understand. Good thing. So I’ll just warn.

The social myopia can go on for as long as people want. They have bankers ready to cloak them in debt, and realtors happy to turn their heads. They have peers eager to compete and family keen to goad. What was once shelter is now mania. One blog ain’t doing much.

So I pick my battles.

Today it was a young couple with a baby in East Van. Tonight that child has an RESP.

152 comments ↓

#1 Boombust on 11.15.10 at 10:04 pm

Imagine having savings of $108,000 at their age.

They must have been doing SOMETHING right.

Hope they manage it wisely!

#2 Contrarian Canuck on 11.15.10 at 10:08 pm

Well said, Garth! Klump’s a chump.
CMHC, CREA didn’t get the memo!

http://financialinsights.wordpress.com/2010/11/15/cmhc-crea-didnt-get-the-memo/

#3 JO on 11.15.10 at 10:11 pm

The debt laden ship is a sailin’ on rough waters. The illusion of “growth” in the last 9-10 yrs will eventually show itself for what it really was all along: An illusion of wicked debt growth thanks to mania-like attitudes which caused enormous demand for debt, the “ability” of debtors to take on knowingly unnaffordable debt thanks to heavy taxpayer and saver subsidies such as ariticially low rates and CMHC gaurantees, and a banking system in hock with a greedy govt desperate for tax revenue.

You see, the entire economy rests on what is essentially a massive, societal credit card – a real Ponzi scheme. It has burst everywhere else in the world and will hit here too. Losses ? Of course, the banks and their bondholders should be eating all of them, but expect your friends in Ottawa to follow the same corrupt path all other world gov’ts are taking – gutting the nation’s social programs and income/assets (via higher taxes which further destroy economic activity and actually reduce the ability to repay the debt) and allowing the senior banking execs to continue “earning” large bonuses.

QE is merely a mechanism to transfer wealth to these fucking bastards – gov’t and senior bankers. What needs to happen will eventually happen but not until they have destroyed everything and taken most of your property. Gov’ts need to shrink and cut their pay, and banks also need to shrink and not get any subsidies. Rates need to be held at proper levels to allow for a balanced and healthy economy, not one focussed on asset price speculation – using of all things or shelter fo goodness sake.

JO

#4 Basil Fawlty on 11.15.10 at 10:22 pm

Notice the decrease in US Treasury Bond values in the linked chart. Does this mean the bond vigilantes are getting concerned about inflation and want a better return?

http://jsmineset.com/wp-content/uploads/2010/11/November1510Bonds2.pdf

#5 Junius on 11.15.10 at 10:30 pm

#170 Rightnoneofthetime (from previous post),

I would appreciate if you don’t input motives or opinions into my posts that are not in my writing.

One thing is for sure, I think they are smarter than you.

I have friends in the Asian community and, while by no means uniform, it does tend to develop its own conventional wisdom through its own press and leadership. I was at a function on the weekend and speaking to a few community leaders clearly came away with the view that they knew Vancouver Real Estate was headed for a correction.

We will see over the coming months.

#6 T.O. Bubble Boy on 11.15.10 at 10:32 pm

“almost halfway between the highs and lows posted between late 2008 and late 2009” = normalization

This could almost be a valid point, if not for the fact that interest rates are at all-time lows, and all of the growth has already been brought forward by the cheap money.

Where does any kind of future price appreciation come from? Mortgage rates can only stay flat or go up… and there are no greater fools left to dump today’s peak price properties off on.

#7 GregW., Oakville on 11.15.10 at 10:33 pm

Hi Garth, fyi interesting show 4 min trailer at site

There was once a village overlooking a river. The people who lived there were very kind.
These residents, according to parable, began noticing increasing numbers of drowning people caught in the river’s swift current. And so they went to work devising ever more elaborate technologies to resuscitate them. So preoccupied were these heroic villagers with rescue and treatment that they never thought to look upstream to see who was pushing the victims in. This film is a walk up that river. The river of human cancer.
For more information on the movie,
http://www.livingdownstream.com/trailer.php

#8 Joey on 11.15.10 at 10:37 pm

My wife and I are early 30’s… living in the GTA.

Total of 380K saved, renting for 800/mth. Annual income of 185K (saving about 75K/yr).

Just waiting to take the big plunge. Looking for a modest house in the suburbs in the 375K range. Will pay cash then invest for the next 15yrs and retire before 50. That’s the plan.

Our goal is to put the $2,500 that we would have paid in mortgage and interest into RRSP’s… get the $9,000 tax refund and invest in a TFSA buying dividend paying stocks.

That’s the plan!

#9 Min in Mission on 11.15.10 at 10:39 pm

Wish the Awesome Lady and I could have an income like that. Mostly just managed to have steady work. Finally managed to buy a house about 6 years ago. Bought the cheapest one that we could find. It is a place to live, and we didn’t want to be mortgaged to the max. Have it approx. 2/3 paid for. May not be the smartest thing I’ve done, but, it is working for us.
When we applied for the initial mortgage, we had approval before we even arrived home, took about 20 minutes. They would have OK’d us for 2 or 3 times what we wanted. Problem is, lots of people go for the max.

#10 dd on 11.15.10 at 10:41 pm

Vancouver housing an investment? Ha.

#11 Cashman on 11.15.10 at 10:45 pm

So, Greg “the chump” Klump is at it again. How much longer o Lord until people see through this chump and his bag of magic tricks? How much longer o Lord for the denziens to realize their folly? Let the coming real estate crash come o Lord and let us feast on those souls who bought now. What a feast it will be, to dine on those denziens who thought it wise to disregard the advice of a financial planner who is only trying to help. Unlike those bankers, mortgage brokers and real estate agents who will greedily entice them to buy high and sell low and lead them to financial ruin. Come real estate crash, come so I can pounce like a cat on mouse.

#12 Chaos on 11.15.10 at 10:47 pm

The price of a home in East Vancouver is definition of complete insanity.

Those houses are between 50 and 60 years old or more.

In houses, old means trouble!!!!!!!!!!!!

Trouble can only be fixed with more money.

Just ask our builder from Victoria.

Just so you know, in 1969 that house could probably have been bought for between $12,000. and $15,000.

Oh brave new world and all the crazy people in it.

#13 Nick on 11.15.10 at 10:54 pm

No family with a 112 000$ household income and 100k+ in savings should live in a house like that. This is wrong.

#14 Landless Serf on 11.15.10 at 10:56 pm

$100K saved up for a Vancouver house is chump change.

No way they should even be THINKING of buying a home.

#15 HouseBuster on 11.15.10 at 11:06 pm

#8 Joey
“Will pay cash then invest for the next 15yrs and retire before 50. That’s the plan.”
———————————————————
Worry about enjoying life before falling in the trap of trying to retire early. Next thing you know you’ll wake up retired and wonder where your youth went. Oh yeah… you were too busy thinking about retiring early.

#16 Junius on 11.15.10 at 11:07 pm

#3 Jo,

You said, “Of course, the banks and their bondholders should be eating all of them, but expect your friends in Ottawa to follow the same corrupt path all other world gov’ts are taking – gutting the nation’s social programs and income/assets (via higher taxes which further destroy economic activity and actually reduce the ability to repay the debt) and allowing the senior banking execs to continue “earning” large bonuses.”

Where have you been? The banks have already been bailed out as they have the protection of the CMHC which has guaranteed the vast majority of the loans that will go bad. No need for the banks to beg. It is already a done deal.

And why do people keep implying all of this has something to do with social programs like it is some lefty concept? The banks in the US were bailed out by a Republican administration under Bush and a Conservative administration in Canada. Capitalism is dead.

#17 Debtisforever on 11.15.10 at 11:07 pm

How could they manage a payment of $3400 a month? My SO and I make about that, and I could never envision paying $3000 a month just to buy some crappy Vancouver house! Every time I think about buying real estate in Vancouver, all I have to do is search in MLS for single family homes under $600k and quickly lose my appetite. They are all ugly as sin and 40-50 years old! Has anyone not noticed that??? They all look like they’re just days from falling apart. One day we are going to wake up from this crazy nightmare called “Vancouver real estate” and laugh (or cry) at what fools we were for thinking that crack shack was “an investment”. God help us.

#18 EJ on 11.15.10 at 11:11 pm

The CREA credo closely matches the Bundy family credo:

http://www.youtube.com/watch?v=ABkYwDIIcSc

#19 Junius on 11.15.10 at 11:11 pm

#9 Min in Mission,

Don’t be confused by the tenor of the advice here. This Blog is not against home ownership or even owning Real Estate. I think most people here are owners.

It all depends on your situation. However people who are looking to buy right now simply have to acknowledge that we are at or near the market peak and interest rates will go up over the next few years.

#20 Jason on 11.15.10 at 11:22 pm

Garth,
Get a load of this thread on the REIN forum, posters being attacked by realtards and REIN moderators deleting posts again:

http://www.myreinspace.com/forums/index.php?showtopic=19603&st=225&start=225

Its seems to me REIN ain’t in the business of helping of real-estate investors as much as its in the pockets of the real estate brokers – heck Don Campbell was the only schmuck to come out against the Competition Bureua’s complaint! REIN looks to be a scam.

#21 virginhomebuyer on 11.15.10 at 11:23 pm

That house in the blog is selling for $350 a square foot. That’s a steal in Toronto.

#22 Jon B on 11.15.10 at 11:26 pm

If that photo of the house is anything close to resembling the POS in gang-land East Van they are considering, they’ve got to be fools to go into debt for that.

#23 Mean Gene on 11.15.10 at 11:27 pm

An RESP for the rug rat, now that is a wise investment for the future!!!!!!!!

#24 westcanguy on 11.15.10 at 11:39 pm

Joey on 11.15.10 at 10:37 pm
My wife and I are early 30′s… living in the GTA.

Total of 380K saved, renting for 800/mth. Annual income of 185K (saving about 75K/yr).

Just waiting to take the big plunge. Looking for a modest house in the suburbs in the 375K range. Will pay cash then invest for the next 15yrs and retire before 50. That’s the plan.
————————————————————

So Joey, is that what life is really all about? You get married and you and your spouse work your ass off all the while living in a shithole in the GTA and watching every penny you spend until your 50 and then retire?

I’m all for saving and planning for the future but……You still have to live a life. You two basically live on 36k a year after tax. Take away rent, utilities, food(hopefully you eat at least once a day)and in all likelyhood, a trip to value village once in a while to see whats on sale to replace worn clothing. There sure isn’t much left for vacations or travel, a special meal out somewhere or anything else for that matter.
What this 49 year old is trying to say is that I hope you don’t look back on your youth when you retire at 50 and regret that you gave it up along with all the experiences all for the almighty dollar.
I have a friend who told me when we were teenagers that he was going to be a millionaire when he was 40. He worked hard and saved every damn penny he could. He was true to his word. His marriage dissolved a few years later. He’s not a millionaire anymore.
You never know whats around the corner or what happens tomorrow……So you have to live a little because when you reach the finish line…You’re dead.

#25 IfonlyitwerethatEASY on 11.15.10 at 11:39 pm

#8 Joey

If only it were that easy Joey. Life has away of throwing curve balls at you. Let’s say you you have yor plan set and panning out the way you planned. You one begin to find out that your wife is seeing the yoga instructor that you despise so much due to him showing an usually large package in class. You get a divorce, and your wife wants 75% off what you own pleading that you had first had an affair with the nanny, but you contest that arguement saying how can you can have an affair when suffering from ED blah blah blah….eventually you lose half of what you have and your lawyers have taken 20% of assetsto pay for their bill….

#26 Crash Callaway on 11.15.10 at 11:40 pm

Eye of the beholder.
That house is only worth 125,000
Man that chimney looks like something a former owner stole out of Charles Dickens outhouse.
First stop for that couple should be the optometrist not the bank.
And it’s so close to next door you could reach out the window and borrow sugar from the neighbor.

But hey, it’s in Van so it must be something extra special.

#27 TheDude on 11.15.10 at 11:45 pm

Product of our education system. Sure they both probably have degrees with that income but that doesn’t make a person smart. I Once worked with a Principal of a school here. On Halloween he wanted to make a circle on the gym floor with sand and have a bonfire for the kids. A wood floor inside a building? And he couldn’t see what was wrong with that idea. Being “educated” and being smart are not one in the same. Our education system only teaches what the government “mandates” us to learn. We are so easily lied to by authorities is laughable.

#28 re: joey on 11.15.10 at 11:46 pm

Joey… what are you spending 100k/year on? If I might pry…

#29 Utopia on 11.15.10 at 11:59 pm

#166 BrianT on 11.15.10 wrote:

China poking a few holes in their RE bubble http://www.bloomberg.com/news/2010-11-15/icbc-china-s-state-banks-to-halt-property-loans-till-year-end-paper-says.html
———————————————————

Thanks for that Brian. I had not picked up it anywhere else tonight and it was fascinating. I am impressed with how well Chinese officials, government, banks and other authorities have grasped the finer points of how our system is operated and how they have very deftly moved to offset changes in US policy and initiatives to head off potential threats to their own economy.

How many people do they really have working on economic puzzles, currency, political and policy machinations and interpreting global financial dynamics I wonder?

#30 Prem on 11.16.10 at 12:03 am

Brampton RE market crashing hard? The brampton RE board STILL has yet to put out september 2010 numbers. Word is sales are down 65% and they need to enron the numbers. If anyone can find it and post a link that would be great. How bad is this housing crash? Word is greater then 50% and one rumour is over 65% drop in sales.

#31 Patz on 11.16.10 at 12:09 am

Garth sez: One blog ain’t doing much.

Gandhi sez: Even if you are a minority of one; the truth is still the truth.

#32 Prem on 11.16.10 at 12:10 am

Many power of sales in Brampton. Many have gone bankrupt and and left Canada. Canadians will pay for the bankers greed. Canada will see many people go bankrupt and leave brampton to go back home. One family take alot of credit and took it home to live a good life. Canada good for credit not for good job.

#33 TheBestPlaceonEarth on 11.16.10 at 12:14 am

FOr that couple to continue to rent is a monumental mistake. Conveniently left out are such things as their current house being sold and being out on the street with a young child looking for a place to rent (note: not a home). No mention that rents can skyrocket while they would have had a fixed mortgage. Pride of ownership, nope thats gone now too. The shame and humilation of renting from parents and relatives. Sure they might say to your face you have a cool pad and doing the right thing in this “hot market”, but on their drive home they are snickering and ridiculing your decisions. That house looks like a smokin deal. Buy it, hold on too it. Garth cannot stop the Asian Tsunami of Cash hitting our shores. 2 million for this property in the next 10 years is almost guaranteed. Sounds fart fetched but a similar house on the West Side would go for 2 million right now. West Side homes within 10 years in my opinion will be the most expensive real estate in the world trumping places like Tokoyo. Basic supply and demand fundamentals. Because this couple has hardly any cash they need to buy immediately before they are priced out forever

#34 crazed and a little confused on 11.16.10 at 12:17 am

I would marry that woman for being so financially savey

#35 Patz on 11.16.10 at 12:22 am

From the discussion yesterday of who is culpable in the mess we’re in the banks and governments or the people who took out loans I have to say I mostly side with Moneta, Junius and any others who lay most of the blame on those that profited most.

Wouldn’t it be interesting if there had been courses in school on personal finances, especially what car loans, mortgages and lines of credit actually cost. How about basic investing information? Nah, nobody in the system ever wanted an educated citizenery or as they call them now, ‘consumers.’

#36 Tim on 11.16.10 at 12:26 am

Who in their right mind would use a VRM of 3% for long term forecasting of mortgage payments, when the long term average is 6-8%? That $2655 monthly pymnt would go to over 5 Grand a month when mortgage rates reach their long term average. Even if the house sold for half that much, it is still a dump, with future renno payments ready to drain what little cash whoever the poor sap buys this dump has.

#37 garthfan on 11.16.10 at 12:34 am

Re: Risk 4.0

I saw that game today at the 2nd-hand shop. Not the most sought after, but then I heart Scrabble.

Now, now… clearly it’s a family game.

A common situation is that the attacker wants to take over a whole region of countries during the same round, by a series of battles. After each successful battle, the attacker leaves one army in that country, and continues with the remaining attacking armies into next country.

You wrote:

“One blog ain’t doing much.”

I reply:

“It’s doing better than doing nothing.”

#38 Burnaby Boy on 11.16.10 at 12:35 am

You are a saint.

#39 Be A Man on 11.16.10 at 12:36 am

Another born renter. Thank you for paying all the costs associated with my property and helping me build equity.

If the price goes down, I guess the rent-money-equity that I’ve collected over their lifetime will be burned away. Renters are a godsend. Bless them all!

Fortunately prices aren’t going down. Never have in almost 2 decades. Never will. Sorry blog dogs. Poor guys.

#40 lexington on 11.16.10 at 1:03 am

Give it up Garth! Real estate sales are rising again, as are prices. If the crash hasn’t happened by now, it never will. Vancouver real estate remains far below the peak of San Fran prices. NYC and San Fran prove that even after a real estate crash, important cities remain immune to price corrections. The Chinese are going to buy up half of Vancouver and Toronto at this rate. Even after the epic stock market rally we’ve had over the past 18 months, real estate has been a far better investment than stocks over the past decade (at least if you invested in a TSX or S&P ETF).

#41 Nostradamus Le Mad Vlad on 11.16.10 at 1:05 am


“He desperately wants a house.” — I’m sure there are several nice shacks in Alice Springs, central Oz. Does get a tad warm there, tho! Maybe he should try listening to her.

‘Yeah,’ he said, ‘but this is an investment.’ — Not really. A home is shelter, not an ATM. See Mish’s link on gold as a bad investment; RE is also a terrible investment.
*
After watching a PPS file of several shots taken from the Hubble, and the beautiful colors and designs of star clusters throughout the cosmos, it really puts life here in perspective.

Everything from galaxies resembling an eagle to an ant, the size of this planet compared to Sirius which, in turn is dwarfed by something else gives an entirely different view on all the ups / downs of life here.
*
Link in. Euro-zone and / or WW meltdown. One thing to remember is Gandhi’s non-violent resistance. A lot of folks, esp. in the Euro-zone have not yet learned how simple it is just to back off and do nothing. That frustrates the elite more than anything else.

Gold Just as houses are a dumb investment, so too is gold. Another opinion, that’s all. Plus — China New aircraft winds?

The Greeks have recently elected some more socialists, who will put them over the edge. Why?

Link in. Well lookkeee here. Guess who has shares in the TSA airport scanning machines? The ones that can change DNA around? Link in. Soros again. But . . .

Curious. DC seems to be outsourcing itself to Mexico.

Obama The news doesn’t get any better. Like the Leafs, wait ’til next year! Link in.

Global Famine and / or Latvia “. . . credit-fuelled property bubble burst, . . .” — Sound familiar?

Greg W. — Fluoride is bad for you, says the ADA and CDC.

#42 Coho on 11.16.10 at 1:12 am

Youngsters aren’t buying houses, they’re buying prisons. That house above looks like cell block D, number 3.

I guess the thinking is with zero down they’re buying into ATM machines that will appreciate 10% per year. And of course since everyone will be earning 100K in service sector jobs 10 years from now, today’s buyers will be able to buy up into their dream homes because there will be a lot of greater fools able to borrow one or two million for a fixer upper in Vancouver.

You can just hear the conversation 20 years from now. “Son”, the parents will say, “we bought this house for you to have when we pass on. Just think, in 30 more years after we croak, you’ll inherit this house and by then there will only be 200K left on the mortgage! And when you’re 80, this house will finally be paid for. Don’t know what the lifespan is of wood houses, but whether it is standing or in a heap, it’ll be yours free and clear, son! And always remember what life is about — it is the Canadian Dream — you work work work to pay for a house and then you croak.”

#43 mark on 11.16.10 at 1:45 am

Don’t you love an unregulated industry of cowboys offering advice to the government on how to regulate another industry…

http://tasmanianrealestatetrouble.blogspot.com/2010/11/its-all-good.html

#44 random guy on 11.16.10 at 1:51 am

wow #8 joey..

do you want a cookie?

#45 palebird on 11.16.10 at 2:11 am

Just curious… call me ignorant or whatever.. I have lived just off of Queen east for two years while going to school, and I always wondered why would anyone in their right mind want to spend any time, let alone live, in the GTA ? I have lived in some major metros around the world but this one just kills me..you want to live in Canada open your eyes.. just vsayin

#46 realpaul on 11.16.10 at 2:16 am

I read a new study that suggested that one in seven are having to go without regular meals. Officially , one million clients use the food banks…unofficially that numer is at least quadruple that when you consider the people who still have an ounce of pride and are holding back.

But……………….this is a great time to buy a house……………….ya right………good luck with that crack shack…and hope nobody gets laid off or has an illness (or has another child). With no savings after the ‘big buy’ you find yourself living paycheque to tenuous paycheque…one eye open…..not a sexy feeling……frightening and limp really.

Just when you lose your job, the roof will collapse or the market will crash and you find yourself falling behind…selling at a loss. Funny…I just watched this same scenario played out a dozen times on some expose’ called ‘Cross Currents’ a couple of nights ago. Oh Canada…..

#47 rentin on 11.16.10 at 2:26 am

Junius – You are such a whiner. Quit dragging yesterdays news into today. Nobody here today cares what you said yesterday.

“After the wild rollercoaster ride that many housing markets have been on, normal and stable market conditions are something that many buyers and sellers will likely welcome.”

10% increase wasn’t considered wild on the way up…..

#48 Captain Jack on 11.16.10 at 3:14 am

The husband pushing to buy a house! Shit it’s usually the other way around. Come on man gain some common sense. Thank Garth for turning you around…rent and never buy in YVR for at least 24 to 26 months…and even then think hard again…move to another city in Canada and you will have a significant improvement in your lifestyle. I really think all the weed grown here is some how creating delusion by osmosis. And with all this freaking rain…If I had the money I would buy a place in Hawaii instead of Van.

#49 Hosehead on 11.16.10 at 3:23 am

It is a real dialemma whether to buy these east vancouver homes at 650k. On the one hand, it makes no sense for all the reasons Garth says. On the other hand, compare the price of these homes to the same homes in Toronto that are the same distance from the downtown core. Depending on where you are in east van, you can still bike downtown in under 30 minutes. In Toronto, anything within a 30 minute bike ride of the downtown core would be a deal at 650K.

What bugs me about this couple – and which most people seem to subscribe to – is the myth that once you have young kids you must buy a house. It’s such a crock. You can live in small spaces with young kids at least til they are 3. You can rent houses that your 3 year old will trash. Most importantly, this couple could rent in a more affluent neighbourhood for far les money and have their kids going to much better schools than they will find themselves stuck with in east van if they buy. Schools that are closing by the way. Renting gives you options for schools (since it is easy to move or chooe an area with better schools).

You did them a big favour Garth.

#50 For Sale: Canada, All Currencies Accepted on 11.16.10 at 3:48 am

A holdhold income of $112,000 is barely enough to survive in Vancouver with a child, let alone somehow save $108,000 by your early 30’s. Sounds fishy.

#51 Brian1 on 11.16.10 at 4:04 am

GregW; It may be that even tobbaco may not really cause cancer but the chemicals that are put in it. I say this because of Cuba, the only known country where organic farming is the law and cancer rates have fallen dramatically. They had to farm organically because the American embargo and the ceasing of help from their old friends in Europe. Taking a wild guess it could be that the American tobbaco companies were only too willing to encourage the continuation of the embargo. Before they let Cuba back into the stream they probably would want them to return to pesticide use so as to skew the results.

#52 Brian1 on 11.16.10 at 4:29 am

As I am drinking I wonder if my coffee is full of this crap. Then so would not tea. Must I go completly organic. Another reason to rent, but if I had my own house I could grow it all myself.

#53 Right All the Time on 11.16.10 at 5:13 am

#5
___________

#170 Rightnoneofthetime (from previous post),

I would appreciate if you don’t input motives or opinions into my posts that are not in my writing.

One thing is for sure, I think they are smarter than you.

I have friends in the Asian community and, while by no means uniform, it does tend to develop its own conventional wisdom through its own press and leadership. I was at a function on the weekend and speaking to a few community leaders clearly came away with the view that they knew Vancouver Real Estate was headed for a correction.

We will see over the coming months.
***********

Lol. You still did not address your logical fallacy about being “smart investors” but buying when apparently only greater fools buy.

And your attempt at tap dancing around your stereotype of “smart asians” with references to “conventional wisdom” does not go unnoticed.

But hey, I guess I am just one of those smart asian investors that that is a greaterfool for buying Vancouver real estate.

Oh, and be sure to tell those “community leaders” that they they need impart their “conventional wisdom” on rest of their community to stop buying real estate. Last time I checked, Richmond real estate was still booming (but alas it is not Vancouver proper eh?), with plenty of new developments going up and plenty of offshore money buying up houses.

#54 Thetruth on 11.16.10 at 5:14 am

US bond yields rocketing higher…

Cause?

China selling and/or us dollar devaluation in progress. Things are about to get interesting in our backyard.

#55 Outside the Box on 11.16.10 at 5:33 am

They need to think outside the box. Is Vancouver really worth going into a huge lifetime debt to live in? They live in Canada, a wonderful country full of great places to live, 100% of them cheaper than Vancouver.

Get up and move, have a life and some savings left. Buy in a different part of Canada and enjoy the diversity of a great country.

Why be a slave in Vancouver?

#56 I. Muvrini on 11.16.10 at 5:59 am

A book recommendation (how passé!), to help understand the buyer mindset:

Why People Believe Weird Things (Pseudoscience, superstition, and other confusions of our time), Michael Shermer, 1997, Freeman Ed.

#57 Aussie Roy on 11.16.10 at 6:12 am

#33 TheBestPlaceonEarth on 11.16.10 at 12:14 am
You poor delusional fellow.

Lets see how you try to convince us these people are crazy and you are superior.

Rule 1. Tell people how inferior they are not to have a BIG mortgage.

You said “The shame and humilation of renting from parents and relatives”.

RULE 2. Its always a good time to buy, prices up – GET IN NOW – Prices down – Grab a bargain. Don’t forget the mantra. House double every …… years. Oh and dont forget the rich ….. are always coming.

You said “That house looks like a smokin deal. Buy it, hold on too it. Garth cannot stop the Asian Tsunami of Cash hitting our shores. 2 million for this property in the next 10 years”.

Rule 3. Always choose your words carefully always say its about supply and demand, most people wont realise supply and demand is a function of properties for sale versus the number of willing and able buyers. Never talk about other shortage markets where demand vanished and they went from shortage to glut without adding much supply. If someone askes are you sure there is a shortage and its not just speculative demand for ownership driving these fundamentals, simply change the the subject. Finally always use FEAR and you cant beat the classic “buy now or be priced out forever”. Oh and of course NEVER talk about rental returns, most will work out housing isnt and investment just a speculative position.

You said “Basic supply and demand fundamentals. Because this couple has hardly any cash they need to buy immediately before they are priced out forever.”

Good to see you didnt forget this one.

Never quote facts, never quote ANY LONG term averages (its only the last 10 – 20 years that matters), coz its different this time / here. NEVER EVER talk about the ratio of household income to price – NEVER.

Did I miss anything, other than the obvious.

Aussie Update.

http://www.theaustralian.com.au/business/industry-sectors/new-bank-bonds-to-cut-rates-pressure/story-e6frg96f-1225954069785

http://www.theage.com.au/small-business/finance/rates-heat-hits-rural-business-hard-20101116-17v2k.html

first homebuyers in the ACT are eligible for the $7,000 grant regardless of the property purchase price.
http://www.abc.net.au/news/stories/2010/11/16/3067617.htm

http://www.news.com.au/business/breaking-news/chinas-top-banks-stop-real-estate-lending/story-e6frfkur-1225954149799

http://www.theaustralian.com.au/business/opinion/reserve-bank-minutes-blow-holes-in-political-debate-on-interest-rates/story-e6frg9p6-1225954376842

http://www.theaustralian.com.au/business/industry-sectors/reserve-bank-expected-banks-to-lift-rates-beyond-official-policy-minutes-show/story-e6frg96f-1225954315727

#58 Ben on 11.16.10 at 7:04 am

5-year yields closed up huge on Monday and discounted fixed rates should follow if yields don’t drop soon. A few non-bank lenders have already announced fixed-rate increases, effective today.

Regardless of your position on the fixed vs. variable debate, it can’t be overstressed how low fixed rates are right now. At 3.39% for a 30-day close, 5-year fixed mortgages are a whopping 166 basis points below the 10-year average of deep-discount rates. Locking in at 3.39% is like winning a small lottery, historically speaking.

So if you need a fixed rate for a new mortgage closing in the next 180 days, be prepare to act

#59 Aussie Roy on 11.16.10 at 7:04 am

Just in case people where interested

“Did I miss anything, other than the obvious”.

Its the debt load versus income and how the higher the multple of income borrowed the more sensitive you are to interest rates changes. Most mortgages during the 70s was 2.5 times their annual income, fast forward to today and many people have loans at >5 times their income. It should not take much to work out at these figures a rate today of 9% has the same drag on your cash flow as 18% did in the 70’s.

My point, forget about the spruikers there will be a day when big mortgages (high multiple of yearly income) will meet high interest rates and this price delusion will be see for what it is. So prices outstripping income might be all well and good when money is cheap and plentiful but will it always be like this, have we really banished the business cycle?. I think not.

#60 Weeping in Windsor on 11.16.10 at 7:06 am

And this is what you get for $639,900 in the Windsor area.

http://www.realtor.ca/propertyDetails.aspx?propertyId=10062914&PidKey=-1387536314

Are all the people in the Vancouver area crazy?

#61 Ben on 11.16.10 at 7:13 am

TMV could be your ticket to major profits. It’s an inverse ETF that tracks 30-year bond prices with 3x leverage.
TMV has been moving up since the beginning of October.

#62 John on 11.16.10 at 7:14 am

As a couple, our income is a little more than the couple in the posting, savings much less than they, but we live in Nova Scotia. That house would maybe go for 150-200k depending on location. Should we buy?

God bless the Maritimes.

#63 David B on 11.16.10 at 7:32 am

#40 lexington on 11.16.10 at 1:03 am

Give it up Garth! Real estate sales are rising again, as are prices. If the crash hasn’t happened by now, it never will.
______________________

Never eh? cool and 1929 never happened nor did WW II and a Blackman become President of United State of America. Really?

—————————–

#64 Mikey on 11.16.10 at 7:44 am

#15 Housebuster, #24 WestcanGuy, #25 Ifonly it were that easy –

We are not living like peasants. Actually quite the opposite.

Our monthly income is $10,500

Investments – $2,500/mth
Living expenses after house is paid for – $2,500/mth which includes utilities, car insurance, gas, food, etc

Left over money for our lifestyle is $5,000/mth which will pay for trips, kids stuff, house upgrades, etc.

We’re actually living very well once the house is paid and will still retire before 50. The key is to pay off the mortgage and use the money you’re saving in mortgage to invest in RRSP’s then take the tax credit and buy TSFA’s!

#65 dd on 11.16.10 at 8:04 am

Inflation in the UK. Is the US and Canada next?

http://www.theglobeandmail.com/report-on-business/economy/uk-cpi-rises-boe-ready-to-act/article1800580/

#66 T.O. Bubble Boy on 11.16.10 at 8:07 am

Hey, whaddaya know, the Vancouver Sun reports that home sales will go up next year!

http://www.vancouversun.com/business/Improving+economy+lower+mortgage+rates+fuel+home+sales/3834173/story.html

Riddle me this: did the RE Associations accurately forecast 2010 home sales in the Vancouver Sun? Did they predict -35% to -40% drops in most months, or -12% overall for the year?

Ummmm… not exactly:

http://www.vancouversun.com/business/real+estate+2009+bounce+back+taper+this+year+2011/2500826/story.html

“Association chief economist Cameron Muir is forecasting provincewide sales in 2010 to increase only three per cent above a hot 2009’s results to 90,100 sales in 2010, then slip back three per cent to 87,500 units in 2011.”

Well, +3% and -12% are pretty close, right?

#67 Pr on 11.16.10 at 8:23 am

#39 Be A Man
…Fortunately prices aren’t going down. Never have in almost 2 decades. Never will. Sorry blog dogs. Poor guys.

Sorry for you , in 1997-1999 house where on the market for more than one year before saling, housing was not the trend , imagine when you have real cash on hand how many ammmmmazing deal was made their. Cash your realeastate,a the top , invest wisely for the moment, so you have no rent to pay because of that investement, and come back later and buy 2x are 3x 4x time what you have now! The real PRO are out of the market rigth now!

#68 S.B. on 11.16.10 at 8:25 am

Say, how’d that “War on Communism” turn out?

1. http://www.bloomberg.com/news/2010-11-16/gap-wal-mart-clothing-suppliers-raise-prices-on-terrifying-cotton-costs.html

Gap Inc., J.C. Penney Co. and other U.S. retailers may have to pay Chinese suppliers as much as 30 percent more for clothes as surging cotton prices boost costs.

“It’s a little terrifying to deal with cotton suppliers now,” said Vicky Wu, a sales manager at Suzhou Unitedtex Enterprise Ltd., a closely held, Jiangsu province-based clothes maker that counts Gap and J.C. Penney among its clients.

Cotton futures in China have surged more than 70 percent this year

2. Morning cup of coffee, made in China?

The popular Starbucks coffee shop chain is now growing and processing some of the beans that go into its brew.

The Seattle-based company has opened its first farm and processing facility in China’s Yunnan province.

Read more: http://www.cbc.ca/consumer/story/2010/11/15/con-starbucks-china.html#ixzz15S0Km9u9

#69 westcanguy on 11.16.10 at 8:52 am

Mikey on 11.16.10 at 7:44 am
#15 Housebuster, #24 WestcanGuy, #25 Ifonly it were that easy –

We are not living like peasants. Actually quite the opposite.

Our monthly income is $10,500

Investments – $2,500/mth
Living expenses after house is paid for – $2,500/mth which includes utilities, car insurance, gas, food, etc

Left over money for our lifestyle is $5,000/mth which will pay for trips, kids stuff, house upgrades, etc.

We’re actually living very well once the house is paid and will still retire before 50. The key is to pay off the mortgage and use the money you’re saving in mortgage to invest in RRSP’s then take the tax credit and buy TSFA’s!
.————————————————————

Well Mikey..or Joey…or whoever you choose to be with your next post, perhaps you’ll want to get your story straight. Originally, it was stated the combined income was 180k and paying 800/month in rent and saving 75k a year. Now you say you’re saving 2500 a month? You also go on to mention that your living expenses after the house is paid for is 2500. After the house is paid for?? lol and then you’ll have 5k a month for vacations, kids stuff and house upgrades? Do you have kids now? I’m thinking no cuz you want to be financially ready, right?

You stick with that plan……but also have a look around and ask any number of 50 year olds if their “plan” worked out the way they expected it to…
All the best.

#70 Got A Watch on 11.16.10 at 9:00 am

The Age of Deleveraging

“In his new book, The Age of Deleveraging: Investment strategies for a decade of slow growth and deflation, published by John Wiley & Sons, Dr. A. Gary Shilling makes the case for slow economic growth and deflation for many years ahead as well as lays out the investment strategies that flow from this forecast—12 sectors to sell or avoid and 10 to buy….”

This means deflation will resume it’s primacy again, as extending and pretending is coming to an end. The inflationistas will be proved wrong, by being well too early, as I expected they would be. The forces of credit contraction have been winning behind the scenes all along.

Mish and Steve Keen etc will be proved quite correct on their macro-economic theories over the longer term. The Kondratieff Wave is the iron wheel of history turning, and it cannot be denied. Bob Bronson’s forecast for the next 10 years will be as entirely correct as his last one.

We are sailing directly into the Storm of The Century, the next 4 years. Foundations will crumble, and “conventional wisdom” will be cast aside. It will be a different time in 5 years.

I would be concentrating on personal survival for you and your family. You won’t be able to save the Greater Fools, so don’t waste valuable time and energy trying.

#71 lexington on 11.16.10 at 9:01 am

Garth and the people on this site just don’t get it. They don’t seem to understand that people are willing to pay a huge premium to live in cities like Tokyo, Paris, London, New York, San Fran, Toronto and Vancouver.

The posters on this site have probably never been to a restaurant other than McDonald’s or Tim Hortons. They’ve probably never set foot in an art gallery. Their idea of a film festival is watching a Star Wars triple feature on DVD. Their idea of entertainment is going to the local multiplex or minigolfing. Their drink of choice is Molson Canadian, and they drink it in bars full of toothless hicks.

That’s Canada for you.

#72 bigrider on 11.16.10 at 9:02 am

There are some real hard lines drawn in the sand regarding the direction of Real estate prices not only on this blog but everywhere. I have never seen such divirgent opinions and that includes the top back in 1989.
I am of the opinion that prices are going to fall continuosly for several years but I cannot ignore the fact that many have been barking about a RE bubble for some time(including me) and yet no burst yet.
9.3 times income in Vancouver and 5.4 in TO. Maybe the insanity will take TO to a match with Vancouver..LOL
Anyway, 500k for a particle board townhouse in Milton when you stand back from it, is the definition of insanity IMO.

#73 bigrider on 11.16.10 at 9:07 am

To continue..is it possible we go to $1000 a square foot condos in T.O like NewYork, all the while are infrastructure being 60 years to old while everyone sits gridlocked for eternity on our roads in this so called “world class city..laugh”
I suppose so ,crazier things have happened. Brad Lamb would certainly have you believe it..he should change his name to wolf or better yet piranha

#74 jjg123 on 11.16.10 at 9:12 am

Joey/Mikey:

No need to tell people your plans when you’re doing so well. Many will try to bring you down. (“where did your youth go” LOL)

I see nothing wrong with making 200k and living like you’re “only” making 100k and investing the rest, but I seem to be in the minority.

Congrats

#75 Doctore on 11.16.10 at 9:24 am

How is it that a hovel like the one pictured goes for 3x what my 3 yr old modern house goes for? It all goes to location in the country I guess. However the people in Vancouver certainly do not make more per average household than other parts of Canada. How they afford this is beyond me. The couple above if they had to take on such mortgage would not have much left over for anything else. And if anything happened ie. sickness or injury, or loss of job, what happens then? All these obscenely overpriced areas in Canada are going to come back to earth one way or another.

#76 vreaa on 11.16.10 at 9:32 am

Terry Chen, Vancouver Actor and RE Speculator – “I have flipped about three properties in the last ten years. I have another large loft space in downtown Vancouver. The goal for me now is to sit on the property I have for as long as I can and not sell.”

http://wp.me/pcq1o-1xA

#77 canali on 11.16.10 at 9:33 am

yet CMHC says things are improving for BC and esp Vancouverites…..(yet some comments are valid afterword ie many bulls have predicted a correction for last 5 yrs but while blips, has never appeared (hope they’re wrong and this time sooner rather than later).

http://www.vancouversun.com/business/Improving+economy+mortgage+rates+boost+housing+sales+CMHC+says/3831738/story.html

#78 DiGiacomo on 11.16.10 at 9:46 am

found this was a pretty interesting disconnect:

review of poll done comparing attitudes of DC elites and the rest of the country (not-so-surprising summary: they’re different!)
http://www.politico.com/news/stories/1110/45136.html

meanwhile, 7 of the top 10 richest counties in the US are around the DC area
http://voices.washingtonpost.com/local-breaking-news/dc/7-of-10-richest-counties-in-dc.html

#79 Throwstone on 11.16.10 at 10:08 am

We did bail out our banks!

http://www.rabble.ca/blogs/bloggers/alex/2010/05/canadian-good-banks-myth

Garth any chance we will have to do it again?

#80 Pat on 11.16.10 at 10:19 am

#48 Captain Jack wrote:

“The husband pushing to buy a house! Shit it’s usually the other way around.”

I suspect that’s one of the reasons Mr. G decided to relate this exact story to us. Enhances the moral of the story.

#81 canali on 11.16.10 at 10:20 am

interesting debate at yatter matters:
http://www.yattermatters.com/2010/11/in-ten-years/comment-page-1/#comment-36206

#82 luketheduke on 11.16.10 at 10:38 am

month to month sales on the rise..That must be a sign of weakness…

#83 dark sad person on 11.16.10 at 10:53 am

#64 dd on 11.16.10 at 8:04 am

Inflation in the UK. Is the US and Canada next?

British inflation unexpectedly rose further above its target in October but the Bank of England said it was ready to change policy in either direction as the risks to the outlook were substantial on both sides.

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

I see you’ve been mislead and have fallen into TPTB’s Keynesian trap-exactly as they have it designed for all the good little sheep to follow–
Breakaway from their influence over you and learn what real Inflation is-

#84 Stealth on 11.16.10 at 10:54 am

Tuition cost statistics, costs going up at least 5% annually.

http://www40.statcan.gc.ca/l01/cst01/educ50g-eng.htm

Garth what RESP strategy do you recommend? It would be a natural thing to talk about it since you finished the last post with it.

Thanks.

#85 BrianT on 11.16.10 at 10:58 am

#25If-I met a guy who was working for the feds at a mid to senior level position. He had 4 kids and a wife not working and he was divorced. His wages were being garnished and his actual net take home was less than if he was on welfare (he was renting a bsmt apt). The kicker was his wife also had a steady boyfriend.

#86 Junius on 11.16.10 at 11:05 am

#33 BPOE,

You are a cartoon character. What nonsense.

#87 Junius on 11.16.10 at 11:07 am

#52 Wrongallthetime,

Fair enough. You convinced me.

There are stupid Asian investors. I did not know you were Asian.

I was also in Richmond on the weekend. I couldn’t help but notice at least 3 liquidation of furniture stores on Bridgeport Road. I guess all those investors you speak of are keeping their units empty so they can flip them.

Good luck with that.

#88 Junius on 11.16.10 at 11:20 am

#47 rentin,

Did you take a poll?

#89 nelson in ktown on 11.16.10 at 11:27 am

http://www.castanet.net/news/Kelowna/58249/Housing-market-trending-upward-in-2011 More pumping here in Calowna.

#90 Agio on 11.16.10 at 11:36 am

I love these pissing contests about income and fanciful numbers and ‘investment portfolios’ that inevitably show up here or anywhere else on the innernets. It’s all so much crap unless of course only wealthy 2 percenters comment on this blog. Must be the case given that only 1% of Canadians have a mil to invest and the vast majority of people are a sprained ankle away from goin broke.
“I make X per year and have 380k in zee bank”
“100k is chump change for a house in GTA”
“We make 10500 a month”
“So do you want a cookie?”
“Don’t chase the almighty dollar, be happy”
“Gold is going to 2000 easy, silver 90-150 no problem, sell your house and buy!! The Elliot Wave sez 7000 on gold by 2016!!”

C’mon folks, get a grip. If it’s so Fn easy to be capture wealth how come so many are broke, including many wannabes who post here I suspect? No offense meant to anyone.

P.S. You should see my paid for house, paid for attack gerbils that protect the manse and my horde of gold n silver stashed in custom designed secret compartments in my paid for Escalade.

#91 victoria boy on 11.16.10 at 11:37 am

From yesterday:
Here’s to the dogmatic gold nuts. Woof! — Garth

hahahahaha. Garth, you can always make me smile. This dog loves it when you smack the wingnuts around. Woof!

I dont know why some people cant accept that your opinion is just that. And I think that I speak for most when I say that I’m very interested in your opinion. Thank you for continuing to provide it.

#92 Dorf on 11.16.10 at 11:42 am

“That carries for $2,655 a month (3% VRM, 25-year am), and with property taxes and insurance, the burden would be about $3,400, without anything breaking.”

Look at the little guy trying to be like The Donald.
You can’t afford it.

I make $72 – $96k annually. My wife makes a static $37k.
Our mortgage is a little over $1000/mo.
We live comfortably, and secure in the knowledge that if I don’t work for awhile, we can still make our mortgage payment. We have enough money to do things when we want. We live 1/2 hour from town by a nice lake in the country. You don’t get that in Vancouver, so we moved north of Vancouver by about 9 hours in order to do it. Now, the time I used to spend sitting in my car on the 401, I spend sitting in my boat on the lake.

Choices, choices……

Here’s a real life look at the other costs of home ownership:

New roof: quoted $5,000 – done myself for $2,000
New furnace and extra ductwork: quoted $5,000 – done myself for $1500
New septic tank: quoted $5,500 – done myself for $2,200
Minor foundation repairs: done myself for $900
Next is siding, then floors, then some interior dressup.

And you think you are going to be able to afford to maintain a 50+ year old house in a rainy climate, after making $3,400/mo mortgage payments ?

#93 brunt on 11.16.10 at 11:45 am

#21 virginhomebuyer on 11.15.10 at 11:23 pm

That house in the blog is selling for $350 a square foot. That’s a steal in Toronto.

——————————————————–

Look at that house, there is NO WAY that it is over 1800 sq ft above grade. A single floor on a 33 ft lot would have to be about 80-90 ft long to get that sort of square footage.

It is likely 900 sq ft and they included the basement to inflate the number. While this may not be the right way to do it, many agents do.

So really, it’s closer to $700 per sq ft.

And by the way, just because something costs more somewhere else does not automatically mean that it is attractively priced. Doubly so if they lie to make it look better.

#94 Coraline on 11.16.10 at 11:46 am

Apologies to those who read my comment in the Globe yesterday, but I thought that this crowd might be more appreciative. Re the CREA fluff piece:

Note how the CREA carefully avoids reporting the raw data. What were total sales in October? All we are told is that they are 21.6% below October 2010. If that’s the case, then they were 33,154 (not seasonally adjusted). Now, if you snoop around a little on the web, you can find out that October 2009 sales were 41.5% higher than October 2008. That would make October 2008 sales 29,886 (again, not seasonally adjusted). So here’s what we have:

October 2008: 29,886 sales
October 2009: 42,288
October 2010: 33,154

Now, on what planet is 33154 “almost halfway” between October 2008 and October 2009 sales? (By the end of the day, the “almost halfway” had changed to “halfway!”)

The only info worth looking at is provided at this CREA link:
http://creastats.crea.ca/natl/

In the second chart, you can see that October sales (seasonally adjusted) are at the same level as they were in 2002, apart from the 2008 crash. That’s why CREA doesn’t want to give us any raw data.

Others have commented on the lack of good data in Canada. This is a prime example. CREA constantly shifts between “seasonally adjusted,” “not seasonally adjusted,” and “annualized” figures, so that it is very difficult for a third party to use their numbers for an independent analysis. But I just did a half-hour’s work that a good journalist should have done.

#95 BrianT on 11.16.10 at 11:57 am

This TSA thing is now getting to absurd 1984-like levels-the latest is people who refuse to be groped and cancel their flight plans are being prosecuted-the guv stance is once you enter the “security zone” you have given up all legal rights and cannot leave!!!

#96 Reasonfirst on 11.16.10 at 12:03 pm

#33 BPOE

Sarcasm?

#97 BrianT on 11.16.10 at 12:08 pm

#67Lex-of all the rationalizations for the glory of the big city, the “museums and art galleries” takes the cake, followed closely by “live theatre”. Most living in TO or NYC hit a museum once every 10-15 yrs, if that often. Live theatre, maybe once every couple yrs.

#98 DJH on 11.16.10 at 12:33 pm

Quantitative easing explained – it’s all quite simple. http://www.wallstreetwindow.com/content/node/18288

#99 gutcheck on 11.16.10 at 12:37 pm

More CMHC crap. Unbelievable.

http://www.winnipegfreepress.com/business/manitoba-resale-homes-market-about-to-hit-the-gas-cmhc-108364639.html

#100 Call me a cynic on 11.16.10 at 12:45 pm

So did I get this right. Western Economies for the most part grew based on debt. One example German Banks lend Greece money they could not afford so they can buy German produced goods. The other concept I love is that we need immigration to replace the aging workforce and immigration is also good for growth. And yes it is so good of us to allow people of lesser opportunity to come to Canada. Hmm.. this video shows lots of future housing demand based on that way of thinking.

http://tiny.cc/sco5r

#101 lonely limey on 11.16.10 at 1:08 pm

Good article from Canadian Business magazine.

“Travel agents and stockbrokers are nearly obsolete thanks to the internet – are real estate agents next?”

http://tinyurl.com/2vjctck

#102 joseph on 11.16.10 at 1:17 pm

“#1 Boombust…
Imagine having savings of $108,000 at their age.”

I don’t know what your so excited about, $108,000 between two people in your thirties is not that impressive.

I’m 27, and alone I have a networth of $200,000, mostly through hardwork, and investing (with definitely some speculating), I also have a University degree which I got while I managed to work 4 nights a week at a restaurant and still graduated with distinction (GPA over 3.7) (mind you a BCOMM is no Engineering degree as my girlfriend in University liked to point out all the time)

Now I’ve got $100,000 or so in real estate and $100,000 or so in the markets.

This couple has $108,000 between the two of them and their in their thirties with a family income of over $100,000 (I have not made $100,000 in any year yet but I’m hoping to soon).

BTW I’m not even remotely bragging, I’m doing OK but not particularly great. According to most calculations I will need my little nest egg to grow at 7-8% per year and invest +$10,000/year until I’m sixty to have a couple million bucks which is the minimum you’ll need to retire.

Wow, if people are impressed with a networth of $50,000 in your thirties than Garth probably is right and people are screwed.

#103 Devore on 11.16.10 at 1:23 pm

#75 Throwstone

We did bail out our banks!

http://www.rabble.ca/blogs/bloggers/alex/2010/05/canadian-good-banks-myth

Garth any chance we will have to do it again?

Two years late to the party, but better late than never.

http://network.nationalpost.com/np/blogs/fpcomment/archive/2008/12/03/the-bank-of-canada-s-mystery-assets.aspx

#104 BrianT on 11.16.10 at 1:23 pm

While Obama was busy prancing around Bollywood touting the magic of Globalization, China was busy eating Boeing’s lunch http://globaleconomicanalysis.blogspot.com/

#105 Devore on 11.16.10 at 1:33 pm

#83 Junius

I guess all those investors you speak of are keeping their units empty so they can flip them.

That is what they do in China actually. An apartment that has been lived in is not worth nearly as much as one that is “unspoiled”. So not only is it common to see entire blocks of empty apartments in Beijing or Shanghai, but it is perfectly normal to be so.

#106 Mr. D - Ottawa on 11.16.10 at 1:37 pm

If you’re a real estate agent…move along, skip to the next comment. A lot of you may be doing something else in 5-10 years. If you are not an agent…enjoy…

I saw this interesting article today in Canadian Business Magazine.

Estate sale
Travel agents and stockbrokers are nearly obsolete thanks to the Internet. Are real estate agents next?
From Canadian Business magazine, November 22, 2010

Full article can be found here:
http://www.canadianbusiness.com/managing/strategy/article.jsp?content=20101122_10030_10030

Here’s a small part:

… “He was new to the industry. He’d sold only three houses under the old regime, and was almost embarrassed accepting the commission, feeling he hadn’t earned it. Seven months later, following CREA’s Oct. 24 ratification of a consent agreement with the Competition Bureau that will permanently open “mere posting” access to the Multiple Listing Service (MLS), its proprietary database representing about 90% of the homes for sale in Canada, he has 125 listings — most of them no–frills listings for $649 a pop. If the clients complete the sale without further help from Arora, that’s all they pay.

The former restaurateur was inspired to enter the real estate business two years ago, after paying an agent $19,500 to sell his $650,000 Langley City home. “I thought it was like highway robbery,” Arora says. He took the necessary courses and exams to obtain his B.C. real estate licence. But instead of getting in on the game, he sought to change it from the inside. ” …

#107 Tripp on 11.16.10 at 1:38 pm

#67 lexington

“They don’t seem to understand that people are willing to pay a huge premium to live in cities like Tokyo, Paris, London, New York, San Fran, Toronto and Vancouver.”
——————————————————-
Lexington, you need to travel more. There is not too much resemblance between the first five cities you mentioned and Toronto, even less with Vancouver.

As much as we would like to consider TO and Van world class, they are simply not there.

I have collected some data regarding Berlin, although it is not on your list: 4 universities, 27 colleges, 153 museums, 420 art galleries, over 50 theatres, 3 large opera houses, 7 symphony orchestras, 12 Michelin restaurants, 700 hotels, 5,334 km roads, 979 bridges, 620 km bike paths. And so goes for the industrial production, media, sports, architecture, festivals, fairs, carnivals, etc. Since we are on a real-estate blog, I could develop on the quality of their housing, maybe in another post.

Very similar city profiles could be found for NY, London, Paris, Amsterdam, Rome, Eastern European and Asian cities. Try to compare them and be prepared to be surprised.

Or even better, try to visit some of these cities, you might understand.

#108 Sandra on 11.16.10 at 2:08 pm

@ #24 westcanguy

So true. You’re spot on.

#109 Mister Obvious on 11.16.10 at 2:18 pm

#85 Agio

”C’mon folks, get a grip. If it’s so Fn easy to be capture wealth how come so many are broke, including many wannabes who post here I suspect? No offense meant to anyone.”

None Taken. But who said it’s easy to capture wealth?
Fortunately, most of us here live in Canada where it’s at least possible to capture wealth rather than hopeless as it might be in, say, Somalia or other seriously distressed places on this planet.

One “captures” wealth the same way one pans for gold. By being patient and satisfied with a few flecks at a time. One gathers these bits up until there is something significant to work with. Then one invests prudently without prematurely harvesting profits for stupid toys. Simple, eh? It worked for me. It took forty years though. Canada offers this potential. One can take it or leave it.

My father did not have an RESP in place for me. No one had ever heard of an RESP in his day. He gave me something far more valuable. He taught me to detest debt. This was the greatest gift a parent could give. Almost none of my contemporaries were so lucky. Today, most of them struggle needlessly at an age when they should be thinking about kicking back and spending time on weekdays posting to blogs.

#110 cafeswartz on 11.16.10 at 2:19 pm

#86 Agio— good post ,it isn’t easy,but reading blogs helps.
My problem with so many posts including Garth’s prescription is that people don’t see working and earning as a solution over time. Selling the place you live in to invest in financial assets which you cannot know everything about(or worse know nothing about) is not a solution unless your in over your head.
Speaking of solutions look at # 88 – working off expense- excellent!
Regardless of what calamity is coming the future is bright for those who know how to make work for themselves that pays or saves.
So Garth , are you going to make more money this year working or investing?

#111 bill on 11.16.10 at 2:30 pm

wow a sitting target.
those folks living behind the man sitting with the target must be a little nervous too i would think.
great advice as usual Garth.
from what I have gleaned from the contributors on this blog and elsewhere the chinese property bubble will be a very spectacular crash.
sure hope this doesnt result in a ‘short patriotic war’ to put all those young chinese men to ‘work’ after it crashes…. those things have a bad habit of blowing up in the face of all involved.

#112 freedom_2008 on 11.16.10 at 2:37 pm

To Joey and Mikey (note I think you are from two different families):

As a couple went though what you are doing now and retired at age 48/52 in 2008, I think you are doing absolutely right thing for yourselves. To us, enjoyment is not all about materials, it is about living a healthy and happy life, it is about the freedom to choose what to do and when to start/stop, no need to stay in the rat race nor to keep up with the joneses.

Yes we are of the minority and that is perfectly fine. You can see our life/spending example in sept/oct 2010 version of MoneySense (article: Three happy couples). There is also another good blog of a happy and active earliy retiree: http://earlyretirementextreme.com/about

Keep focused, and have fun (not gears) in doing so.

#113 BrianT on 11.16.10 at 2:47 pm

Cisco has lost an incredible 29 BILLION in value in 4 trading days (more than most companies are worth)-chalk up another one for insiders. The stock is trading right where it was 12 yrs ago-at the time, the arguments for buying it were eerily similar to Vancouver RE right now-top quality, always in demand, etc. etc.

#114 Vancouver_Bear on 11.16.10 at 3:00 pm

#33 TheBestPlaceonEarth on 11.16.10 at 12:14 am

Worst case of word diarrhea and stupidity.
Looks like you are already loosing sleep over the craphole you just forked over $700k or so. From here your craphole is going to devalue at a rate of 10% per month. Mark my words.

#115 GregW, Oakville on 11.16.10 at 3:01 pm

Thanks 41 Nostradamus for that.
More good science based info at
http://www.fluoridealert.org

fyi,
The Quebec Medical Association is officially opposed to both the cosmetic use of pesticides on lawns and the use of the unregulated fluorides in drinking water. Under a recent Freedom of Information request they stated that they were unaware that Quebec dental groups were incorrectly citing the Quebec Medical Association as an organization which endorses artificial water fluoridation.

The Ontario Medical Association executive did not oppose the use of pesticides and does not oppose the use of fluorides in drinking water.

This leaves the public with a dilemma. Which medical organization are we to trust?

-Since I took the time to learn about the TOXIC effects fluoride has on the brain and soft tissue of the body I do not drink or cook with fluoridated water. I wish I could afford to not shower and bath in it!

#116 Vancouver_Bear on 11.16.10 at 3:04 pm

#39 Be A Man on 11.16.10 at 12:36 am

Welcome Mr. realturd to our blog. You must be only 20 years old, since you never seen the prices going down. They will go down starting about now.

#117 GregW, Oakville on 11.16.10 at 3:08 pm

Hi 51 Brian1, fyi, The Medical Doctor from India at the UofT conference told us that the tea plant has lots of fluoride, allways drink tea with calcium rich milk, not black tea. The calcium helps bind the fluoride in the tea so you absorb less.

#118 dark sad person on 11.16.10 at 3:08 pm

#90 Coraline on 11.16.10 at 11:46 am

Others have commented on the lack of good data in Canada.

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

There’s a lack of even poor data in Canada-
Tracking money supply here is just plain weird-
How i wonder did they come up with the concept that measuring Velocity should be correlated to GDP-when GDP is so skewed by adding money printing and War costs and anything else they can drag out-as their clueless plan to increase prices and make Canadians “think” that prices are going to continue climbing-so-this little slight of hand will get them borrowing and spending like fools–
Oooops we already did that one-

If they’re going to use anything to link to Velocity-they should use personal income/wage levels–
But even with cheating-they’re not winning-

(Velocity = Nominal GDP/Money supply M2+++ (gross)

http://bankofcanada.ca/en/graphs/V41552801-gr.html

http://4.bp.blogspot.com/_Et4TQ-a0gGU/Smx-uxPC3wI/AAAAAAAACXI/VWw6CiddVLw/s1600-h/CAN_velocity_rate.png

Wonder what it would look like with a link to personal income levels instead?
Ugly-

http://bankofcanada.ca/en/graphs/V3075179-gr.html

#119 Vancouver_Bear on 11.16.10 at 3:20 pm

#67 lexington on 11.16.10 at 9:01 am

go back to china or wherever you come from. Leave CANADA TO CANADIANS!

#120 C on 11.16.10 at 3:27 pm

Sold the condo in April 2010 in Burlington, Ontario.

Just noticed the mid-November 2010 real estate stats were released for the GTA. Condo prices for the (905) region for the first half of November 2010 are down -2% vs the first half of November 2009.

Eat it naysayers!!! Wooooooo!!!! I know it’s only a 2% decline but it’s a decline and just what I’ve been waiting to see. A year over year decline. Been renting since June 2010. Just wait till we see the year/year comparisons for April, May, and June 2011! -10% to -25% price declines seem probable. Especially how we now have Europe unravelling, and US Municipalities and States gasping for air :p

#121 Leanne on 11.16.10 at 3:28 pm

#67 lexington: “The posters on this site have probably never been to a restaurant other than McDonald’s or Tim Hortons. They’ve probably never set foot in an art gallery. Their idea of a film festival is watching a Star Wars triple feature on DVD. Their idea of entertainment is going to the local multiplex or minigolfing. Their drink of choice is Molson Canadian, and they drink it in bars full of toothless hicks.”

I am Canadian.

#122 no flu on 11.16.10 at 3:48 pm

Real estate creates wealth on the way up. More so than stocks.

http://www.planbeconomics.com/2010/11/07/the-wealth-effect-and-consumption/

Real estate also destroys wealth on the way down – more so than stocks.

#123 GregW, Oakville on 11.16.10 at 3:51 pm

Hi Garth, fyi, still flying?

Lots of thought provoking stories today on
http://www.infowars.com/
-TSA Now Putting Hands Down Fliers’ Pants
-TSA Targets Tyner In Effort To Chill Nationwide Backlash
-Rand Paul: Thought Crime USA
-The Police State is The Real Threat Against America
-NYT reports Paperclip CIA Nazi link
-Full Frontal Nudity Doesn’t Make Us Safer: Abolish the TSA

#124 MizFitz on 11.16.10 at 4:11 pm

I noticed this story on MSN this morning & when i went back to reread it after lunch, it had quickly dropped low on the priority scale like it was yesterdays news as more people are concerned with the upcoming Royal wedding…blah blah blah…

Basic jist of the story…

“A couple from Chilliwack, B.C., say they are out almost $80,000 to repair structural defects in their house despite paying for new-home warranty coverage they believed would protect them.”

It doesn’t…shoddy work with a shaky foundation & they’re left holding the bill…see link below for full story!

http://news.ca.msn.com/canada/cbc-article.aspx?cp-documentid=26369232

#125 Debtfree on 11.16.10 at 4:17 pm

I bet most canadians think that harpo and his neocons don’t like the way the chinese/ burmese /russian’s operate their laws against their citizens …… well think again .

http://thetyee.ca/Mediacheck/2010/11/16/BigBrotherInternetLaws/

#126 Reasonfirst on 11.16.10 at 4:23 pm

#96 joseph

You are brgging and probably a little insecure too.

#127 jess on 11.16.10 at 4:24 pm

#3 JO

… the author points out that his country didn’t not get properous with free trade.

Ha-Joon Chang details South Korea’s economic ascent in his 2007 book Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism.
=====================
Rebooting the American Dream – Chapter One: Bring My Job Home!
Monday 15 November 2010

by: Thom Hartmann, Berrett-Koehler Publishers | Book Excerpt

#128 jess on 11.16.10 at 4:31 pm

On November 16, 2009, Russian anticorruption lawyer Sergei Magnitsky died while in police custody in Moscow, imposed after he testified against Russian police in an embezzlement case. In this trailer for a new documentary, “Justice For Sergei,” the filmmakers investigate the circumstances surrounding Magnitsky’s death.

http://www.rferl.org/video/12439.html

#129 echo on 11.16.10 at 4:33 pm

“Prime Renfrew Area located 2 blocks west of Renfrew Street.”

ha ha!

#130 Steven Rowlandson on 11.16.10 at 4:40 pm

Garth the problem is obvious and so is the solution.
People are getting paid too little for their work and being charged too much for the roof over their head.

The solution is either add a zero to everyones rate of pay or knock at least a zero off the price of real estate.
Otherwise canada is not going to be a viable entity.
Ditto for the rest of the world as well.

Steven

#131 RE Agents Continue to Mis-represent. Here's more: on 11.16.10 at 4:52 pm

I hate how self-serving brokers misrepresent things, as they did with Oct.10 stats: They choose crunch the numbers, and then choose various arbitrary stats to make it look as if the market is improving.

From taking a Dec.08-Dec.09 period (arbitrary), to comparing Oct.09 to Oct.10, to the last 3 months sales, all these statistics are meaningless. More importantly, they are independant of each other.

You could choose other stats to make exactly the opposite conclusion, if you wanted to.

Check out this chart, showing sales 09 & 10. You can see 2 things:
1. Sales in last half of year were consistantly higher in 09
2. CREA said m-o-m increased in last 3 months. They didn’t say the pattern was same in 09 (and probably a regular seasonal trend, after the slower summers)
http://oulahen.com/images/stats_GTA.jpg

Most importantly, the market isn’t improving (& Nov’s preliminary stats bear this out).

As any stock trader familiar with technical analysis will tell you, the time to sell is after a big run up, when volume slows and prices still rise.

#132 Live within your means on 11.16.10 at 4:55 pm

#67 lexington on 11.16.10 at 9:01 am
Garth and the people on this site just don’t get it. They don’t seem to understand that people are willing to pay a huge premium to live in cities like Tokyo, Paris, London, New York, San Fran, Toronto and Vancouver.

The posters on this site have probably never been to a restaurant other than McDonald’s or Tim Hortons. They’ve probably never set foot in an art gallery. Their idea of a film festival is watching a Star Wars triple feature on DVD. Their idea of entertainment is going to the local multiplex or minigolfing. Their drink of choice is Molson Canadian, and they drink it in bars full of toothless hicks.

That’s Canada for you.
………………..

What a load of shite.

#133 sue on 11.16.10 at 5:03 pm

@Greg Oakville.
Drink white tea (no flouride as it is less processed than green or black) and don’t add milk to it because it interferes witht the absorption of EGCG (antioxidants). This is key to cancer prevention and other positive effects.

#134 Sail1 on 11.16.10 at 5:05 pm

Average price $343,737

Garth, if this couple was in Toronto and wanted to purchase an average home for $343,737 it would be much better then renting. Not everyone is purchasing a $700.000 home with $100.000 down. Clearly this couple needs to reflect on what they are doing. Your assessments are always negative. There are people out there that are doing things the right way. Owning a home, for most people is a place to live, not an investment. God forbid you would write something positive for a change. Your scenarios are skewed.

#135 Sail1 on 11.16.10 at 5:09 pm

#32 Prem

All I see is sold signs, where is your proof?

#136 BrianT on 11.16.10 at 5:18 pm

#124Stephen-the zeros are being added on but only for a small % of the overall population-for this reason a minority of the NA residential RE will eventually go sky high-the future isn’t so bright for most of it.

#137 Cashman on 11.16.10 at 5:22 pm

#17 Debtisforever on 11.15.10 at 11:07 pm

Those 50-60 year old homes are built more solid than today’s glued fiberboard houses. I have seen how they build today’s houses and it scares me. The builder starts at 7am and by noon your new house is almost done, save for the exterior cladding. It wouldn’t take much to knock today’s cookie cutter, mass produced, subdivision homes down. A good sneeze and the whole neighbourhood would look like hurricane Ivan came to town. Do these old homes need some TLC, you bet. But with a little elbow grease, why they would be fixed up and ready to sell, ahem, ready to live in in no time at all. Forget about locking the doors, I just have to sneeze and I can take what I want from you new house. I’ll start with the gas fireplace and built in dishwasher, since their worth the most and can be readily sold. Psst, I gotta really good deal on a gas fireplace and built in dishwasher, the price is a real steal. :-))

#138 BrianT on 11.16.10 at 5:22 pm

#115Leanne-I AM CANADIAN also. I spent a few hours in the Metropolitan Museum of Art in NYC a few yrs ago and haven’t felt an overwhelming urge to repeat the experience. Vegas is actually more fun IMHO.

#139 Cashman on 11.16.10 at 5:29 pm

125 Live within your means on 11.16.10 at 4:55 pm

If everyone is lying, what is the incentive? Is there a book to buy, or dvd or newsletter to subscribe to? Last time I checked, this blog doesn’t cost anyone a penny to read to get real gold: knowledge. Knowledge is the new power now. It is far more valuable than gold itself. Just look at Uncle Ben and you have to look no further to get the real truth on what is happening in our economy.

By the way, how do you like owning fiat money? Because it’s coming very, very soon. It’s a race to the bottom to see who can devalue their currency the fastest and furthest. Then the whole financial system falls like a house of cards. You should really read Alex Jone’s blog http://www.prisonplanet.com to get a sneak peak at what is happening in the world.

#140 Agio on 11.16.10 at 5:32 pm

#103 Mister Obvious-my post (in its entirety) essentially comments on and agrees with much that you wrote.
I’ve been around for 40 some years myself and what I have learned is what bullshit smells or reads like and there is much of it on here as there is most everywhere else nowadays. Yeah I sound old :)
It is, for the most part harmless , but the sense of entitlement and grifting high expectation under achievement irritates me at times. Of course if one is constantly told they are entitled to a nice house, two or three vehicles , top dollar job or profession, 2.3567 vacations a year, easy high yield no risk investments and all the goodies n toys I suppose it eventually permeates the thinking and a need to validate to strangers when in fact most have squat. I consider easy credit squat and see it on a day to day basis in my businesses. Most should simply count themselves lucky that mommy popped em out in a country where they have opportunity
Look at #96 and you see what I’m typing. The person seems to miss Turner’s point in his lil story, belittle the people Turner is writing about, manages to insult another poster, followed by the ubiquitous ‘how much I MAKE and I’M WORTH” and then sums up the idiocy by stating everyone is indeed screwed if all they have is ‘X’ by such a time in their lives.
This one sees everywhere regardless of age yet all evidence seems to point in the opposite direction. As I originally said, most people are a sprained ankle away from going broke. Pretty much what Turner writes about hence why I read this blog.
___________________________________________

#104 cafeswartz-If you have read any book by Turner (if so I hope you got the book on sale, if not-wait and get one on sale) or followed this blog he’s actually pretty consistent. Right now he’s on about overvalued real estate and the unsustainable debt many are taking on or are already stuck with.
I can’t speak for the man (he does that often enough on his own) but I’ve not seen him say working and paying off debt and gaining over time is a bad thing nor the wrong way to gain financial ground (keep in mind he’s a 105 yrs old)
No investment is ‘easy’, not supposed to be, but if you’re strangled with debt or are leveraged to the nuts on your principal residence and are counting on it to be your windfall simply because it’s been going up then you might be screwed. Turner advocates taking the windfall and getting liquid. Property is dropping and it is extremely illiquid.
If you own your principal clear title or have minimal debt and are living well below your means with have excess cash to invest, then great. Most aren’t in that position. Nowhere near it. That was my point.

#141 HouseBuster on 11.16.10 at 5:43 pm

#67 lexington on 11.16.10 at 9:01 am
Garth and the people on this site just don’t get it. They don’t seem to understand that people are willing to pay a huge premium to live in cities like Tokyo, Paris, London, New York, San Fran, Toronto and Vancouver.

The posters on this site have probably never been to a restaurant other than McDonald’s or Tim Hortons. They’ve probably never set foot in an art gallery. Their idea of a film festival is watching a Star Wars triple feature on DVD. Their idea of entertainment is going to the local multiplex or minigolfing. Their drink of choice is Molson Canadian, and they drink it in bars full of toothless hicks.

That’s Canada for you.

———————————–
Hey… who said anything about drinking Molson Canadian? I prefer Red Cap.

#142 Cashman on 11.16.10 at 5:53 pm

check out this link

http://www.montrealgazette.com/business/Euro+under+siege+Portugal+hits+panic+button/3831814/story.html

#143 Sail1 = Low IQ on 11.16.10 at 6:22 pm

Sail1, the average price in Canada is $343, in Toronto it’s in the $400’s, and that average includes condos, which are priced less, and as you know Single Family Homes are far more, $500+ typically.

I don’t even know how to address your point, because it does not seem feasible that you’re capable of comprehending logic. The debate at point is that housing is overpriced, and that you have to go into ridiculous, perpetual debt to purchase a crappy 1,200 sq ft home that will most likely make you go bankrupt and homeless in 5 years when rates go from 3.5% to 8+%.

#144 Pat on 11.16.10 at 6:36 pm

#67 lexington wrote:

“Garth and the people on this site just don’t get it. They don’t seem to understand that people are willing to pay a huge premium to live in cities like Tokyo, Paris, London, New York, San Fran, Toronto and Vancouver.”

Well, I live in one of these cites, SF, without paying a huge premium. Do you get it?

#145 Mikey and Joey :) on 11.16.10 at 6:37 pm

Sorry, I was using two different computers and my name was different.

#65 Westcanguy – No need to believe me and our financial situation, but to clarify the $2,500/mth and $75,000 annual savings.

Our monthly income is $10,500… minus $2,500 RRSP’s, minus $2,500 living expenses and $5,000 left over. If you include the $2,5000 RRSP + $5,000 left over after expenses times 12mths (minus unforseeable cost items) we have been saving over $75,000 per year.

#70 jjg123… thanks for your comment

#106 freedom_2008… thanks for the website. I will definitely go through it!

#146 Vancouver_Bear on 11.16.10 at 6:50 pm

Hawaii looks more affordable then Urinecouver….this is how it smells in downtown Crapcouver.

http://www.hawaiis.com/search/details/onm/29/

#147 S.B. on 11.16.10 at 7:35 pm

Received an update to CIBC credit card agreement. It deletes the section that says you must IMMEDIATELY repay any amount exceeding your credit limit.

The new term states: any spending over your Credit Limit does not need to be repaid immediately but will be included in the Minimum Payment!

I guess this an “infinate” card now!

#148 EB on 11.16.10 at 7:35 pm

“Tokyo, Paris, London, New York, San Fran, Toronto and Vancouver”

Two of these things are not like the others.

#149 S.B. on 11.16.10 at 7:39 pm

Scary email from a mortgage brokerage, poorly written:
————————————–
Qualifying for two homes!?!

A client we got a mortgage for several years ago called us yesterday. Her name was Dorothy and she wanted a smaller place.

Her children have all moved out and Dorothy wanted a smaller place that was easier to maintain. She had seen a number of properties that she liked but was afraid she would not be able to sell her current home in this market. In fact, she wasn’t even sure she wanted to sell her old home for few reasons.

She didn’t feel that this was the time of the year to get the maximum value for her home.
She has lots of pets and over the years they had done damage to the property. She wanted to renovate before selling the home to maximize her sale price.
She would have to pay a whopping penalty to her current lender to break the mortgage, but if she held on to the property for another year the penalty would disappear. (she has a 5 fixed rate mortgage)

Most importantly, she actually prefers to rent out the house. (If the heroes at True North Mortgage can get her qualified for two mortgages.)
Okay, it is time for me to start tooting my own horn.

CMHC made a bunch of changes last April to make it harder in general to get a mortgage. However, (and this gets way underreported) they made it easier to get a mortgage on a new purchase if you will be keeping your old home as a rental. It’s true. They changed the way they look at rental income to such an extent that as long as rental income is greater than the mortgage payment by 20%, it won’t affect the application.

In Dorothy’s case we will get a Market Rents Assessment completed by an independent appraiser to verify the rent and voila she can qualify to purchase another home with as little as 5% down

#150 Right All the Time on 11.16.10 at 7:49 pm

#83 Judas

I was also in Richmond on the weekend. I couldn’t help but notice at least 3 liquidation of furniture stores on Bridgeport Road. I guess all those investors you speak of are keeping their units empty so they can flip them.
****

Ah, so when faced with the reality of strong sales, prices increases and housing starts in Richmond, you fall back to pointing out the existence of 3 liquidation stores in Richmond?

Are you kidding me? Really? That is what you have? Is that supposed to be a micro indicator of the coming collapse? An indicator of the speculator owned properties in Richmond? How does that extraneous indicator tie in with all those bear “economic fundamentals” that have been recited here over and over again?

Normally, we have average salary/average house price ratios, rent vs own ratios, ROI ratios on investment properties, etc. So I guess we better add “percentage of liquidation stores in a specific locale” as another bear indicator and rationale for a collapse of the RE market.

Lol. Dear lord, I hope you never practice law or negotiate business deals.

#151 Nick on 11.16.10 at 11:21 pm

#67 lexington

The city I live in has the equivalent of half the population of Canada. I still think Vancouverites are on crack.

#152 GregW, Oakville on 11.17.10 at 12:07 pm

Hi #126 sue, thanks for your input on tea.
Do you just top up your tea keetle or pour it out emty each it? Boil fluoridated water make the added fluoride more concenterate. Fluoride is toxic to the brain and soft tissue of your body. Go to that web site I have mentioned before if you’d like good science based information. ;) Brital (carbon) filters do not remove it.