An almost-30 with fifty thousand in the orange guy’s shorts and a GF “with a ticking clock.” “She grew up in one house and that’s what she wants now,” he said, “and babies.” He puts on a brave face.
A father of three, 55, with a company, “in the yellow zone thanks to this economy.” Two hundred left on a four hundred house, $85,000 in a GIC, no pension, nice suit. Have you told your wife yet, I ask, if she knows you’re going to run out?
A retiring 60ish civil servant with a pension of thirty thousand and less than $8,000 in liquid assets. Two kids, 22 and 26, back home after losing their jobs. Paid-for house, but he’s convinced he can’t pay the electric bill.
Rural boomers with an acreage near town they always planned on as their retirement strategy. So they worked hard to pay it off, and neglected investing. Now the farm’s in an environmental protection zone, and illiquid. “These days,” she says, “I don’t sleep anymore.”
Just four I spent time with over the last few days. Looked into their troubled eyes. They asked me for advice and I gave it. Asked for help, but there was little. Stories like these underscore two realities of our time. A majority of people – despite the veneer of middle classness, and the nice car which just pulled up beside you – are disasters in the making. Second, real estate’s as much a destroyer of financial security as it is a builder of it.
It wasn’t supposed to be this way, as you know. If you got married, had kids, bought a house and threw at it what was left after everyday living, you’d be fine. Pension, maybe. Lots of equity, for sure. Inflation, wage gains, a swelling economy and constantly rising asset values would paper over neglect, ignorance or foot-dragging. It was a formula that worked just fine for about half a century. Until two years ago.
So this week, the Koreans started a pissing contest. Could soon be a war. Ireland crapped out, with Portugal and Spain now on bond vigilantes’ hit list. The US real estate market took another bullet, as new home sales dropped and the shadow inventory of resales – foreclosed homes not yet for sale – ballooned to over 2.1 million. This could keep American staggering for three more years. President Palin?
Ontario announced it’s spending $90 billion on a power plan which will double electricity bills. Ottawa revealed a big jump in inflation, of which the HST figures prominently. F told MPs there is no housing bubble, while he prepares an austerity budget for the new year.
In short, there’s instability, global debt excess, country risk and rising prices – at the same time governments figure they have no choice but to turn off the spending taps. This means hundreds of thousands of laid-off civil servants in Britain. Higher retirement ages in France and elsewhere. Budget massacre in the PIGS. A Tea Party austerity binge in the USA, and belt-tightening here.
In this world now unfolding, prices will keep rising while asset values fall. So you’ll pay more for power, food, insurance and taxes, while your house loses value and your wages flatline. If you happen to be like any of the people I’ve tried to help this week, and lived your life as your parents wanted you to, well, you’re pretty much toast. As I keep telling anyone who will listen, having the bulk of your net worth in one piece of property over the next few years will be like betting your future on Butterbutt in the fifth. Not diversifying into multiple asset classes, or thinking a baby needs a 2,500-square-foot, is an equal gamble.
Some people come to this sorry blog because they’re anxiously awaiting a 50% plunge in housing values so they can buy one. Others come to argue a housing collapse is impossible and sustained demand (as we see now) will propel it higher, emasculating mortgage debt. Neither group gets it.
It’s not that housing won’t correct. It will. But Vancouver won’t become Phoenix or Toronto turn into Toledo. By the same token, without a burst of economic growth, more jobs and higher salaries, no boom’s possible. Instead, it’s the dangerous, muddling middle that we have to understand.
Modest, but sustained, price declines. Economic torpor. Unemployed, boomers especially, who never work again. Young homeowners under water, until their kids move out. No bang. Many whimpers.
Some people have no time to recover. Millions do.
You?
201 comments ↓
New property tax assessments just came out for certain areas of Winnipeg. Why does the city assessment department assess values based on current inflated property values? Are they not more insightful than this? Seems a bit lazy and it just fuels the fire for the realtors. Kinda frustrating. It will all come around I guess.
Mother got on my case about purchasing real estate tonight once again. Everyone else has done. She rented in the 60’s, I shouldn’t be renting in this day and age. The worst part of it, my wife backs her up. Gentlemen, if your wife supports your stance on things be grateful – I’m not as fortunate.
Anything that is not sustainable is a bubble! Information, real estate, dot com, car financing, food, oil, music, fashion. It’s all a big joke. A distraction to keep the paper hand cuffs on. Wake Up before it’s to late. If it is not profitable to some one you will never know about it. Let’s get real.
>”It’s not that housing won’t correct. It will. But Vancouver won’t become Phoenix or Toronto turn into Toledo.”
Don’t be too sure about that Garth, it’s not like Toronto and Vancouver have special status from God and hence protection. Anything can happen, though we, certainly I hope not.
Wife and I are debating selling our house. She’s getting really emotional over it. Thing is even if we sell right this moment it’s likely we’d only get about 40k back when its all said and done, 25k of which would be profit I guess.
Our mortgage is 238k, house valued at 310 – 320 k … we’re in year 2 of our 25 yr mortgage. Bought in Feb 09 when prices were tanking … made some equity real quick (god bless you Milton) …. but I’ve been feeling really meh about it all … We’re a 20 percent value drop from being almost even, 25 percent value drop from being negative equity.
Debating selling over the winter. Wife doesn’t want to lose the house though “it’s all we have” she says. I try to show her that the money we’ll save renting plus the profit we make (which we can put into paying off our estimated 30k debt) would benefit us more.
Either way I feel time is getting short. Either we do this now or if the market does crash come spring, this home will become our prison. =(
Wake up, dude. You have negative net worth. — Garth
FIRST!
Vancouver does have special status from God. God created it and Lords over its Riches. Asia gets it but the rest of Canada is asleep at the wheel.
It’s encouraging to see Garth coming around in my opinion to the understanding Vancouver is going to see no US style huosing crisis Especially long term.
****>”It’s not that housing won’t correct. It will. But Vancouver won’t become Phoenix****
Anyone following Jim Sinclair these days one smart dude.
“An even more absurd belief is the one that puts U.S. dollar and U.S. debt as a safe haven. There is not any convincing economic evidence that the U.S. dollar is well managed, and there is no reason to believe that the dollar will rise in value. In fact, it is the U.S. governments’ intention to devalue the dollar and to print money to avoid a deflation in the U.S. Why do some global commentators see the dollar as a safe haven? In our opinion, the only safe haven is precious metals, energy, food and other assets which will hedge against the inevitable inflation that the above policies create.”
And in the other housing Bubble across the sea. Again, maxed out new home buyers praying, wishing, hoping that the record low rates which they purchased at will stay low forever are beginning to realize the harsh reality that interest rates that hit bottom have only one direction to go and that would be up. Down the road in the not to distant future the media will be talking about the last great housing meltdowns of Australia and Canada. Again, you get tired of beating a dead horse but when your housing is ONLY affordable thanks to record low interest rates the inevitable unwind will eventually happen.
“A new report shows a sharp increase in the number of ‘low-doc’ borrowers struggling to keep up with their mortgage repayments as interest rates rise.”
http://www.abc.net.au/news/stories/2010/11/23/3074069.htm
.
From 121 Got A Watch on 11.23.10 at 3:52 pm
Aussie sites you might find of interest
http://www.debtdeflation.com/blogs/
http://www.bubblepedia.net.au/tiki-index.php
http://www.moneymorning.com.au/
http://www.dailyreckoning.com.au/
http://www.unconventionaleconomist.com/
http://delusionaleconomics.blogspot.com/
http://www.whocrashedtheeconomy.com/
http://lvrg.org.au/
http://s4.zetaboards.com/Australian_Property/index/
http://realestatenavigator.wordpress.com/
Aussie Update
We have been told we dont have any sub prime lenders, but wait we do.
http://www.news.com.au/money/property/rates-pain-is-biting-back-hard/story-e6frfmd0-1225960108331
http://tasmanianrealestatetrouble.blogspot.com/2010/11/here-we-go.html
The “Block” house porn aussie style.
http://smh.domain.com.au/real-estate-news/the-block-proves-a-bankbuster-for-nine-20101123-185u0.html
Flaherty informed: “No sign that CANADA has a housing bubble”
http://www.calgaryherald.com/business/real-estate/index.html
Original Dave
Gentlemen, if your wife supports your stance on things be grateful – I’m not as fortunate
**** The cost of home ownership is largely dependent on your spouses spending habits*****
I used to think there would be the 50% house price drops but this is Canada. The neck collar tightens one painful notch at a time.
I’m ready for my pat down Mr. “F”
So Long America
BREAKING NEWS
St. Petersburg, Russia – China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.
Wake up, dude. You have negative net worth. — Garth
I know that. Which is why I’m considering selling now before a bad situation becomes the catastrophe a housing crash would mean to us.
We do make enough to service our debts (110k/yr), but I keep thinking if we sell now we could pay off everything and start fresh …. it’s difficult though convincing my wife that this is the right course of action and needs to be done sooner rather than later
Give her a calculator for Christmas. — Garth
Garth I get the feeling, from your last few blogs, that you are not seeing a 20-30% drop in prices in the spring 2011(specially in Vancouver), like you have been propogating before. Now you think it will be a correction of a few percent every year for the next few years.
Wrong. I have consistently suggested there will be a correction of up to 20%, followed by a slow and painful decline in prices. Where it ends is anyone’s guess. I do not expect a drop of 40-70% as in Phoenix, and never suggested that would be the case. This will be serious enough. — Garth
“Now the farm’s in an environmental protection zone…”
What? No grandfathering? No “right to farm”?
Right to farm, yes. Right to sell for development, no. — Garth
Calgary will become Phoenix and see a 60% plunge and the big smoke will become Tampa Bay, take it to the bank.
How exactly will mortgage rates stay at 2% ?
Commodity prices are about to plunge, as are the stock markets and the CDN.
When your blog was squirrel and panic, it was real.
Your message must never waver.
Helping people rests on credibility, not hyperbole. — Garth
Give her a calculator for Christmas. — Garth
I actually did sit down with a calculator with her last night haha.
I wanted to show her your blog, maybe not this particular day’s post though =]
Very hurting, very true.
Everyone thinks this will all unfold suddenly. Or that it has already unfolded, in Sept.-Nov. 2008.
But they’re all likely to be wrong. Economic events are epochal and they occur with glacial speed.
Western living standards are being forcibly wrenched down…but the key point is that this has been ongoing since the eighties, or even the seventies…
But all this has been masked with more DEBT.
Doing it the right way, like our parents did, won’t cut it…
“We are oft to blame in this. ‘Tis too much proved that with devotion’s visage and pious action we do sugar o’er the devil himself.”
Devil’s Advocate, you said on #104 yesterday,
“Isn’t it time you all just threw in the towel as I have and accept it for what it is – unpredictable madness. This is not unique to the real estate markets though.”
“…there is no sanity in THIS world Garth.”
Excellent points you’ve raised. We see the world not as it is, but as we are.
Recent wiki link Australian house bubble. Garth perhaps you would consider doing something the same on wiki for the Canadian market. Here is the “work in progress” aussie housing bubble wiki link.
http://en.wikipedia.org/wiki/Australian_property_bubble
Good Aussie data site http://burbwatch.wordpress.com/
How to spot a greaterfool.
GF “But its different here”.
“Yes it is, same delusion, same rental yield compression, same big household debt, same price appreciation expectations but you are right its a different part of the world”.
GF “We are told we dont have a bubble here but strong fundamentals”
“So you have the same delusion as other markets but no bubble”
GF “yes that is what we are told and I believe it”
“mmm, ok, do you want to buy my house, you know they only ever go up?”.
GF “So how much do you think it will go up in the next 5 years”?
“Oh it could easily double”.
GF “Wow, that sounds great”.
“All you need to do is rent it out at 3% return and take out a mortgage at 6%”.
GF “Doesnt that mean it costs me money every week”?
“Sure but think of those profits once it doubles in price”.
GF “Where do I sign”.
Its the delusion we share in every bubbled market that makes us all the same, not your position on the planet.
#13 TheBestPlaceonEarth on 11.24.10 at 12:17 am
“Vancouver does have special status from God. God created it and Lords over its Riches. Asia gets it but the rest of Canada is asleep at the wheel.”
I think that statement would definitely classify you as Schizophrenic or plagued with some type of Schizo-affective disorder as per the DSM TR-IV.
Anyways, I refuted your arguments last time with facts, and here you come spewing Schizophrenic propaganda again.
The US is the world’s reserve currency. Oil is priced in USD. Most international trade is priced in USD. The US has the largest and most technologically advanced economy in the world, along with the strongest military. A centuries old stable democratic government to boot. If you want to settle trade accounts, purchase commodities or military weapons, you need to at some point in the transactions convert to USDs.
Logic 101 and financial wisdom, that you do not have, schizophrenic delusions, those you DO definitely have.
And again, Vancouver is not a world class city. Vancouver is a former lumber town turned speculative real estate town. It’s over 1/3 Chinese. The weather sucks. There is no culture. Somebody from Europe does not say, ‘Oh my, I feel like partaking in an exotic and cultured enlightenment– I think I’ll visit Vancouver!’ HAHA, no, they go to London, Paris, Vienna, Barcelona, Tokyo, Zurich, Amsterdam, New York, Rome– those my intellectually stunted gimp ‘couver Pumper, are world class cities. Vancouver’s population is what, 500K? Yes I know the VMA is 2M+, but people do not visit a “world class city” to drive to suburbs and oogle crackshacks.
God you’re hopeless.
And remember…. wear sunscreen.
http://www.youtube.com/watch?v=sTJ7AzBIJoI
#7 TheBestPlaceonEarth on 11.24.10 at 12:09 am
Anyone following Jim Sinclair these days one smart dude.
“An even more absurd belief is the one that puts U.S. dollar and U.S. debt as a safe haven. There is not any convincing economic evidence that the U.S. dollar is well managed, and there is no reason to believe that the dollar will rise in value. In fact, it is the U.S. governments’ intention to devalue the dollar and to print money to avoid a deflation in the U.S. Why do some global commentators see the dollar as a safe haven? In our opinion, the only safe haven is precious metals, energy, food and other assets which will hedge against the inevitable inflation that the above policies create.”
******************
Sinclair called for a dollar crash 3 years ago-
Sinclair wrote
Giving you gold price objectives has not proved in the past to be in your best interest as we are read by both sides of the gold market spectrum.
However, one time ONLY, here they are:
– $1000. Three tries and success. This is the third try.
– $1024
– $1089
– $1156
– $1225
– $1296
– $1369
– $1444
– $1521
– $1600
– $1681
Then on to Alf’s numbers.
Alf refuses to give his levels as he is too concerned that those who know them will attempt to trade them, resulting in their being out of position as an upward explosion takes place.
this is the mystery of his numerical order => take each second addend and add “2”
– $1024 +65 = 1089
– $1089 +67 = 1156
– $1156 +69 = 1225
– $1225 +71 = 1296
– $1296 +73 = 1369
– $1369 +75 = 1444
– $1444 +77 = 1521
– $1521 +79 = 1600
– $1600 +81 = 1681
– $1681 +83 = 1764
One smart dude or maybe magical–
*********************
#13 TheBestPlaceonEarth on 11.24.10 at 12:17 am
So Long America
BREAKING NEWS
St. Petersburg, Russia – China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.
*********
So China is going to unlock the USD peg and let the CNY float?
Because if they don’t unlock-the CNY performance will still hinge on the USD performance-
Some people speak-without understanding a lot–
All this talk of continued bailouts is giving Basil major league indigestion. Honestly, is there anyone out there who believes we are doing anything more than rearranging the deck chairs on the Titanic?
Consider the bailout of Ireland and that the money is coming 2/3 from the EU and 1/3 from the IMF. Well the US share of the IMF is 16.77%, while Canada’s is 2.89%. So, based on the $122B US bailout that equals $6.8 for Uncle Sam and $1.17B for us Canuckians.
Well, this little bit of mathematics brings up a few questions. Such as why is F working on an austerity budget while planning to send over a billion to Ireland?
How about the question of how can the US spend near $7B on Ireland, while letting California implode financially? Here is another one, where is the EU and IMF money coming from for the bailout? I bet the money will not even exist until Ireland signs and puts themselves under the gun of structural adjustment, then the cash will be printed out of thin air.
Finally, and for the nth time, how do you solve a problem of too much debt with more debt? The problem can not, at the same time, be the solution, unless you are a PR master of mind muck.
Not only is the spending party over, the hangover is terrible. Poor PIIGS. Not in Saskatoon, though. We have spent and spent but there is no stopping cause its different here.
In 2003, the city of Saskatoon debt was 27 million. By the end of 2010, city debt will be an estimated 171 million. City of Saskatoon spending has almost doubled in 5 years.
Saskatoon homeowners spent $469,977,171 on real estate in 2005. This doubled to $1,065,494,799 in 2009.
more at
Saskaboom: Spending, Spending and more Spending
http://saskatoonhousingbubble.blogspot.com/2010/11/saskaboom-spending-spending-and-more.html
bestplaceondrugs,
You missed Sinclair’s point, he meant assets that actually go up, not overvalued ball and chain Canadian houses ladled in debt at record levels. As Jim Dines was asked once about Vancouver real estate “run, don’t walk”.
but.. but.. I want vancouver to phoenix
secretaries own 2 places. rent them out and live with their parents
people here think crack shacks at 900 on 6 lane higways are a steal so they buy them, knock them down, get their cousin’s friend to build a press board lean two in the rainy season to sell for 2 million.
gawd.. the madness
What did you advise the 30 year old to do?
Give her a calculator for Christmas. — Garth
You are appealing to her logic – will not work – very male.
Appeal to her emotions – currently that house is giving her emotional value – explore the emotions of a debt trap – a whole different value equation – it is not $ it is feelings
Garth is conservative with his estimate of an initial 20% crash followed by a gradual hammering of the real estate market. A 20% drop would send TO condo prices crashing 340K from 420K.
Now if we assume a normalization of ownership costs to rental from the current 2.5:1 to let’s say 1.1:1, and condo fees remain the same, then a 800 sq ft condo that’s going for $420K now would rent for $1800 (a nice one!). Subtracting condo fees, 400, and prop taxes, 200, we’re left with 1200, and when interest rates return to the historical norm of 8%, let’s say the mortgage is amortized at 7% and for 25 years, then you’re paying $700/monthly per $100K, so giving the condo a valuation of about $188,571.
That seems in line with that they were in 2000, and salaries have remained stagnant for a year (PP hasn’t increased).
Keep in mind, however, that when bubbles do burst, the downside tends to overshoot below the historical average (see the USA currently, where it’s cheaper to buy now than to rent, but many people still have a bad taste in their mouth from the housing collapse).
Can’t believe this is where I decide to make my debut.
I have held the opinion Garth does about real estate long before I found this blog or Garth for that matter. I faithfully read this “sorry blog” as Garth puts it, as I agree with fundamental view and overall framework it supports.
However, today’s blog was like reading a horoscope so general and so vague that it could apply to anyone the Armageddon type or the real estate goes up forever type.
Today was definitely an example of this “pathetic blog.” I’m looking forward to the return of the feisty houseagedon blogging tomorrow…
If Garth means 20% then 5% a year for 5+ years… then yes, that seems realistic.
But a 20% dip and rebound is what we had back in ’08– when interest rates were dropped to 50-year lows, amortization upped to 40 years and downpayments chopped to 0. Not to mention the stock market didn’t have much appeal, and the bond market was returning almost nothing.
If those life saving emergency measures weren’t rushed into law back then, the housing market would have truly corrected then– most likely 30-40% (it dropped what, 15-18%?).
Now we have a far worse scenario where we inflated the bubble for a short term band aid, but we’re in some for some EXTREME and EXTREMELY LONG pain….
Sorry- salaries (PP-wise) haven’t remained stagnant for a year, I meant for over a decade! LOL
Garth, I attended your presentation a couple weeks back here in Toronto along with my close friend. We both rent and are saving for a future and are in no rush to ‘OWN’ a home right now.
However, my parents are different. They are probably 5 years away from retirement with limited savings. A paid off home of approximately $350,000, not much with two of my siblings still living at home.
Their plan is the following and it makes me sick to my stomach. My fathers brother has just retired and will be moving to Ottawa. My parents want to live right beside him in a condo to make their retirement plans easier.
That’s not the problem….
THe problem is that they want to purchase a condo now right beside him, rent it out for 5 years, so in 5 years, they can simply move in right beside him.
They will have to go into debt to do this and don’t understand that the rent more than likely will not cover all the costs with taxes/hydro..etc.
Furthermore, what if, or what will happen when the value of their condo falls in value 5 years from now!
What do I tell them??
Once housing crashes and the banks wipe their diarrhea courtesy of the tax payer via the CMHC, don’t think for a split second that the bond vigilantes won’t punish Canada…
That’s the scariest part. IMF anyone?
50% drop, no, but 30-40% is in the cards for sure.
We will go back to 3.5 times income at a min. in Toronto, that will be just over 30% for Toronto. Thats if we dont overshoot.
look at it this way, average house in toronto is 450k ish, 30% drop brings that to approx 315K. Big haircut.
It does not have to be dramatic, I see houses that were selling for the 350ish mark in brampton and Durham now selling in the 300ish range, thats a 15% drop without any fanfare at all.
Just a question for the housing bulls, lets say rates creep there way up to 6-7% meaning that the average discount rate were to be 5% instead of 3.5% it is now, what happens to house prices?
So nice to see a sold sign right now in front of our TO house. 10 years to fully reno it. It was the classic tale of a contractor’s own house, never getting done. Some of us refer to the process as causing divorce dust. Getting wife, three year old, and pets into an RV to travel for awhile. We’ll probably relocate to BC, but a completely open ended trip to start, head where it’s warm first. Having a house that the bank let’s you stay in and stress your health away paying for isn’t always the right solution for everyone. So many people in the rat race here I see are running around chasing their tails, keeping the house afloat. It doesn’t help family relationships much either.
Maybe it’s just because of the uncertainty with the extreme global economic conditions now, but just like that saying about boats, two of the best days for me were the day we bought the house and the day we sold it.
Predicting anything is a mugs game if by predictions one means timing, e.g. such and such will happen on this date or that narrow time frame. But to predict something and not be quite sure when; well that’s got a much better chance.
But I’m gonna play the mugs game and say I think we’re in for a big tilt on pinball machine earth just about any day now. Here’s why. Extend and pretend has been the game since late 2008. But that’s run out of steam. The PIIGS are running amok and the ward housing the US is overflowing and running out of seroquel. So on a clear provocation from S. Korea the North attacks and the US, Canada and the UK all vow to “support our ally against aggression.”
Gosh, wouldn’t it be convenient to have a war to distract us from financial calamity. And you thought it was gonna be Iran. The ME is so 2010!
I’m just new to the blog. My wife is totally confused..what does “in the orange guy’s shorts”
mean?
I feel for the folks with the farm. It goes to show you want it means to be a property owner in a socialist-democracy-dictatorship. You have no rights to your property other than as granted by the crown, subject to change, and for the privilege of holding title you have tax obligations and potential liability, as well as some risk the government will change the zoning or seize the property. Want to park your RV in the driveway? No can do. Put up a windmill on the roof? Forget it.
Buying is still very expensive. I don’t know if the situation can remain like this indefinitely but I know I didn’t get a 150% raise (after taxes) over the last 4 years. Interest rates may never rise and the dollar may fall as a result but I won’t have any more money! It makes more sense to rent unless rents pretty much double. Don’t see that happening without wage gains doing more than double (taxes).
We are in an unsustainable situation. Something has to give, and it won’t be wages in this economy! Things that cannot go on forever, usually don’t.
Except in Vancouver, where it doesn’t matter if you can afford a house, you buy and live of home equity loans because it’s the only way to compete with those pesky Asians who are investing in Seattle, Portland, and California since they get way more for the money.
#5 Scott
238k, house valued at 310 – 320 k
I surely hope you are doubling up that mortgage … that is sure a hell a lot in debt…. for a 300K home … or you best be doing 200K as a family. Shit my dad would give me a shot in the head otherwise.
I had less than that in debt on a 600K home and I sold in a very wanted street. Because now is the time the man must do what his gut says.- using deception is one way to trick the woman (sorry ladies) … I had to use some interesting tactics.
I explained lots of macro-economics to her in terms of the financial crisis, show her awesome u-tube vids of how the financial crisis is not over, and a few charts that we can make money in a diversified portfolio (garth no news from you dude).
That kinda worked but the emotions where not fulfilled.
I had to promise an AGRI-zoned land so we can grow crops, chickens, sheep and my guard animal a donkey.
But renting a place for now was our best option until we understand what we wanted.
Shit I’m closing in a week, got load of cash to invest, some ventures in town and Montreal (I’m in Ottawa).
We are renting an AG home for at least a year but I know the owner wants to sell.
I have a few opps in Vancouver and considering going back there because her mom is there with the unsellable house and I can rent that and try to convince the lady to drop the price by 300K and avoid the whole buy a farm now for 2-3 years cause its not time to do that.
All, it is time to sell, don’t you smell it? Be liquid and free ….
Next week I’m a free man once again …
re #18 scott
good luck man, i went through the same process almost a year ago and i tell you we are so much better for it now.
i think the key that helped me seal the deal was i realized that my wife had this idea that renting = decrease in standard of living. so i convinced her that i didn’t want to change our standards either, and that my goal was the same as hers – to eventually get that house that we want with the picket fences – and selling now will help us get there sooner.
Scott,
Remember that whatever decision you make, in the end you are the one ultimately responsible for it, not Garth, blog dogs, friends, etc..
Nobody can predict the future, we can just make educated guesses based on fundamentals and historical notions, in the and many guesses never materialized
Before you make any decisions, complete proper cost analysis scenarios, consider social/relationship costs, lifestyle, etc..
You might own a depreciating asset, but treat it as a home, whatever the price movement may be, if you re in for the long term hold on as its tough to time the market
Your transaction costs may amount to about 10% of the price, can you be certain that in 2-3 years that same house will be 10% less, I honestly cannot say that about my own place,
Consider: job stability, kids, neighborhood, longer term goals/plans, rent/own analysis, moving and sale costs
Try to get rid of the debt asap, hunker down, eliminate unnecessary expenses, roll some money into RRSP’s and lower your tax brackets and further utilize proper tax planning, you would be surprised what you can achieve with proper advice
#14 Scott
Dude, who is paying all the bills. I gave those all the my wife so she understood there were limits to the money tree.
I gave her no options on the double up payments and side investments + kept re-enforcing a diversified portfolio…
Shit, I lost money in my last property but less than renting and making 0% on my capital.
Wife, listen to your man … we are surely heading towards a US-style correction. Maybe not as bad but an 110K …. can you really handle a 200+ mortgage?
Me? Well thanks for asking. Actually I have nothing to recover from… Stocks have long since recovered for me.
In 2010 people seem to pine for the days when house prices always rose, pensions were fantastic, jobs were for life, and all costs were lower.
But did those glory days really exist? And are things really so bad today.
During the first world war people must have pined for the peace times that went before.
In the 30’s they must have pined for the 20’s
In the 60’s and 70’s we discovered birth control and as a direct result of that the dual income family and as a direct result of that divorce (With fewer kids and a job she could now afford to dump you). We then pined for the glorious 50’s with it’s single income life style.
For about 40 years we continued to pine for those good old 50’s when a single income was all that was needed. Conveniently we forgot that along with single income came a single bathroom, a single television, less travel, less entertainment, a colder house, few to no meals out, and on and on.
Really the 50’s were nowhere near as glamorous as people like to think. Even in the 60’s where I grew up, just on the edge of a town of 8000 people there were rural people right on the edge of town without running water in the house. They were poor but I am not sure they really knew it. In the 50’s that was totally common in rural areas. Life was no bed of roses.
Similarly the 80’s and 90’s and early 2000’s had their share of problems.
The fact is that the average standard of living in North America and much more so the world continues to go up. And if that is not the case then please explain to me about the increased size of houses with fewer inhabitants and more cars out front. Explain to me about the increased size of stores of all kind. And the ever growing number of restauants. Somebody is enjoying that bounty.
Andy you can talk about debt all you want but that is just money owed from one person to another. None is borrowed from Mars. And for indivual citizens none is borrowed from China either. One man’s debt is another man’s savings.
What is undenable is that the amount of goods and services produced per capita continues to rise. Ergo living standards also on average rise.
It’s simple math folks.
That is not to say that some of you are not going to get strangled by your own debt. But on average people will continue to do better every decade or couple of decades and yet will pine for yesteryear.
Life is great, stop whining!
Scott..
That’s funny. Good idea on holding off showing her the blog. Good luck dude.
Garth – said “…real estate’s as much a destroyer of financial security as it is a builder of it.”
Agreed. RE is neither good nor bad. It is just RE.
Similar (but different) to stocks or gold or collector cars or hockey cards or stamps.
The destinction RE has, from my point of view, is that it’s shelter (a home) first. It is real-time useful to me and my family. Anything after that is a bonus. But then again…timing is everything. I did not bet the farm on it, so to speak. We did buy a modest house on 2 useful acres (pre-2001). It was a calculated decision, risk even.
———————————————————–
Hmmm, sometimes ya gotta say WTF…
http://www.youtube.com/watch?v=geDCtBQeN8c&feature=related
#2 Original Dave.
Do what I did. Get a job in another city and that will force you to sell. That solves your ‘sell vs stay’ problem. Then, show her the math about rent vs buy.
Wrong. I have consistently suggested there will be a correction of up to 20%, followed by a slow and painful decline in prices. Where it ends is anyone’s guess. I do not expect a drop of 40-70% as in Phoenix, and never suggested that would be the case. This will be serious enough. — Garth
*****
So let’s say we do have a 20% correction worst case scenario right off the bat. Take our new owner who paid $500k for his condo. It drops 100k the next 5 years =400k. Let’s say it drops another 10% so now it’s worth 360k (ON PAPER!!!!). Let’s take a look at the same condo where a person bought 5 years ago for 250K (This owner is still up, paying off his mortgage and has a place to live for life!!!) Both scenarios the owner is in great shape, they are paying off their condo and the condo is going to rise again. Remember nothing goes down or up forever and as I’ve stated over and over Vancouver has the unstoppable Asian factor. Meanwhile the renter is screwed. The bulk of renters are unable to manage their finances so there is NO way they are investing in other assets, they are just one paycheque away from the street. The other class of renters are anxiety ridden and bitter as they realize the COLOSSAL mistake they made not buying and now (if Canadian) are financially ruined. Rent is so high for these people (2000k plus per month) and their self esteem so destroyed that extra money is spent at the liquor store on above average quality wines. Hey, if your never going to own a home you might as well drink. The final class of renter is the person who has no interest in Real Estate, this person likes to be liquid, they usually invest in one sector, often in 1 stock. This person studies an investment inside and out and isn’t afraid to bet it all on one horse. For this renter diversification is for people who do not understand stocks. Bottom line for most Canadians they have missed the boat big time and that 3rd or 5th glass of Merlot is becoming the norm everynight to wash away the pain. Vancouver is going higher folks, don’t keep standing on the docks as the Ship of Gold sails further out to sea
#1 gutcheck on 11.23.10 wrote:
“New property tax assessments just came out for certain areas of Winnipeg. Why does the city assessment department assess values based on current inflated property values”?
———————————————————
Great question Gutcheck. We all need that one answered. In a nutshell though the cities want a fair piece of the action and this is how it is achieved. Property assessment acts as a form of indexing for inflation. Unfortunately it is also a system of accounting for deflating prices.
OH Drat. There had to be a hitch somewhere!
It all works just fine in an environment of constant gentle inflation and expansion. Property prices go up, thus assessments change and taxes rise to reflect this change and in the process the city has the revenue it requires year after year indexed to the inflating value of homes.
This is important as cities are growing and need to expand services to meet new demands. There is no argument as long as growth does not stop.
Of course the system breaks down as cities expand services, hire new labour at rates that exceed the cities ability to pay when recession strikes, as they commit to new civic projects that are only funded on estimates that can no longer be achieved etc……. Right?
So down go home values along with reduced economic activity, down go assesments and valuations, down go tax receipts and down go……..
Oh wait. Those snarly civic servants don’t want to take a lousy pay cut just because of the vagueries of a real estate decline????? WTF!!!
And the contractor who bid to build the new civic center or the ones who contracted to plow snow won’t reduce rates to meet the cities new lower revenue forecasts?
What? What’s that you say? A strike?
But we always treated you well. Paid you well. Gave you benefits and days off for your kids. How can you not understand your wages need to decline in light of the reduced mill rates? How can you not understand that we don’t know how to make budgets in the first place!
Welcome to California 2010.
Where cops, Firemen, School teachers, Social service workers and even Garbagemen are all being tossed out of work because the unions will not back down on wages in light of the new reality and reduced civic incomes.
The Unions won! Wages remain the same! Hooray. Too bad so many of their membership got lost in the process and are now sitting in the EI office or getting foodstamps while sucking back the Dole.
And it is all because of cycles related to asset bubbles that local elected councillors never seem to really get a handle on before it is too late. Hey, they all understand growth and inflation. They just don’t see the flip side. The dark side.
And so they never see the good times ending. Like now.
Aussie Update
One of the best articles I’ve read.
“Possible triggers for a collapse in prices
– Rising interest rates
– Increased taxes
– Signing of Free Trade Agreements and tariff reductions, which lead to unemployment as cheaper foreign produced goods are imported.
– Drop in the stock market, which can cause job losses and loss of superannuation, so people have to sell their houses for the extra capital.
– Rising costs such as electricity and food.
– Inflation
I’m not at all happy about this situation and the pain that it will cause to Australian families. This problem has been created by the government, banks and mainstream media.
Some examples:
– First home owners grant encouraged buying
– We were told that owning a home was the great Australian dream
– Banks lent to people who couldn’t pay back their loans
– Small deposit required or none at all which didn’t encourage saving
– Low interest rates encouraged borrowing
– TV programs encouraged people to buy multiple investment properties”.
I wonder if any of the above has occured in other markets. Of course it has, same stuff just a different location.
http://www.tasmantimes.com.au/2074/the-great-australian-nightmare/
# 19 Scott,
Start looking for rental properties with your wife this will probably help. I know when it was first suggested to me to rent I pictured myself living in some dank basement with no sunlight living out my days like a Vampire and she’s probable feeling the same way. So take her for a drive show her some rental properties she will quickly see that there are lots of lovely new homes out there ready to be rented.
And don’t let Garth get you down; you see he’s old and sometimes even when he has his high heal cowboy boots on he still can’t seem to reach the gas pedal on his Hummer.
Cheers and Good Luck.
#12 Crash Callaway writes…..
“I used to think there would be the 50% house price drops but this is Canada. The neck collar tightens one painful notch at a time. I’m ready for my pat down Mr. “F”.
——————————————-
Try not to worry Crash. And forget about the collar. Just tighten up the butt muscles instead so the Gold coins don’t fall out. If “F” pats you down it’s not for your body. He is only after your wallet.
I don’t know Garth but it sounds to me like your message is slowly softening?
But Garth…..isn’t ‘forced savings’ the mantra of the tried and true? If you buy a house and just keep your head down for the full thirty five won’t come out right in the end? You’re exploding the myths with a preposterous prognostication of change….it can’t happen….not with Flaherty at the helm and Carney stoking the boiler……can it?
I read where the total inventory in the US is now 6.3 million and rising…that the values of real property in the US will keep falling for several years…that can’t be good news for the cheerleaders north of the border.
The national debt just grew a little larger here in stately and solid as a rock Canada today because of our distributing aid to the bailout of ireland ( wasn’t Greece only weeks ago?) as part of our membership in the IMF. The BOC assures us that our debt to GDP is a mere 75% but we know thats crap because the fudging has been done by off loading the majority of the debt onto the cities and provinces which ‘fools’ the debt down but doesn’t hide it….only a fool thinks that Canada’s debt to GDP is any less than any of the other G7 countries who are all over 120% ( well the US says 112% but theres some ‘splainin to do on those numbers too).
We see the ‘austerity ‘ measures happening in all jurisdictions….and ‘F’ has begun to tell us that ‘foolish spending’ is not in the cards…meaning that we will see spending collapse here as well…but under the guise of ‘prudence’ rather the causation.
But …our civil service earning more than $100 K per has trebled in the past five years…..in fact the civic service have now become the top 2% of all income earners in the country…higher than business earners…entrepeneurs…risktakers…capitalists…internationally renowned thinkers…all making less than the ‘cookie monster’ down at the Health Dept…….?
Officially one million ‘clients’ use the food banks today…..newly hungry working families can make an appointment…how nice. There are emergency food programs for the children of the suburban homeowner who now come to school hungry…no breakfast…no lunch….Mom and Dad are too busy…driving their leases to ‘work’.
But the population of the hungry is far greater…you know as well as I….we’re forgetting about the seniors whose saving have been raped away by ‘F’ as he killed the Trusts and then decimated the rest with the ZIRP and the newly crystallized capital gains as seniors have had to cannibalize their meagre savings to feed themselves and keep a lump of coal on the Hibachi and sit in the dark because the heating costs and light are already unaffordable on a fixed income.
But these are people who went through the Great Depression …the seniors are fighters…..they’re proud…so they they stay away from charity as much as they can….no one see’s them anyway…the local governments have cancelled the ‘meals on wheels’ programs as well. Count these old soldiers and the plight of the poor would explode…embarrassing for rich Canada…built on the backs of the now starving masses…to be given away to pandering politics on people who grab at the new life they haven’t earned and expect to ride for all its worth….uncaring…unseeing…
Oh Canada…what a farce…a shameful farce…an unsustainable ponzi scheme that as Garth has pointed out is going to quickly get much more expensive amd less ‘compassionate’.
I wonder though…where will the biggest cuts begin…..civil service or private sector funding? I know what I’d like to see….but how will ‘F’ and his band of thugs play it?
Interesting. China -Russia quit US dollar.
http://www.chinadaily.com.cn/china/2010-11/24/content_11599087.htm
What do you think of that Le Mad Vlad ?
Scott
Your financial future shouldn’t be dependent on the fact that you don’t want to inconvenience yourself. This is the Garth post that convinced me to list, which I did today:
http://www.greaterfool.ca/2010/10/24/more-than-money/
Specifically the following para from that post:
See what I mean? This is the mainstream middle class view. And it comes from a person who has been exposed to all the alarmist things I’ve had to say – in books, in person, online. But none of my economic, financial or strategic arguments can hold a candle to this guy’s overwhelmingly nastiest possible outcome: upsetting his family’s lifestyle.
Emphasis on the last line, that the worst outcome of upsetting his family’s lifestyle. That did it for me.
And, BTW, I bought in Vancouver in 2002, likely I will never go under water, but when I look at selling for more than TWICE what I paid, that is making a $600,000 tax free gain, I figure I will kick myself even if there is “only” a 20% correction. That is, I could have made $200 large easy just by a little inconvenience. Oh, and it’s cheaper to rent.
Good luck.
#7 TheBestPlaceonEarth on 11.24.10 at 12:09 am
How is that bed bug battle going? Losing it?
It must be difficult to look these people in the eye and tell them there isn’t much you can do to help them. This aspect of your calling must be a real downer. Keep up the good work though, there are people that are listening.
To #7 TheBestPlaceonEarth
You must be a Real Estate agent.
My wife is a financial advisor.
She deals with many clients who have over extended themselves in mortgage & credit debts, etc.
Mortgage payments $3/4k/mth. plus other debts.
These clients are on the verge of loosing their dignity.
They have beautiful homes, cars, all the toys, but no net worth, just liabilities.
No savings for retirement, etc.
“Wake up” Canada (including Vancouver) is not immune to the global crisis.
People have lost their common sense.
Spend their hard earned cash like there’s no tomorrow.
Mortgage is $460,000 @ 2.5% (Mortgage payment $1800)
Property (today) valued at $580,000
Car loan debt $10,000 @ 7%
Credit card debt $30,000 @ 11%
Family Income (jobs) is $90,000 year
Rental Income on same property is $2800/month
No other investments, own a truck outright
She has a $12000 pension/yr coming
Early fourties and fit (for now)
One child
Love the homestead (gardens, forests, 11 acres)
Open to ideas
On craisgslist by owner
What would you do? Any advice?
Thanks in advance
Garth; We may need another book from you detailing ETF’s and other investments. I’m not sure financial advisors are all on board with your thoughts. Any that are would have to be known to be under your banner. My wife and I are in what we believe to be recession proof occupations and have heeded your advice in not purchasing a home nor rushing to buy metals. We are average Canadians but most of your advice is aimed at people with a lot of equity. I feel that we are a lot better off than most Canadians.
Scott. Good luck to you. Definitely show her this blog and others that warn of the dire circumstances facing our current economic status.
We are professionals with children. We don’t own. We rent and are very happy with it. My wife and I are right on the same page with ideas regarding investment. She is as frugal forward looking as I am and don’t give a crap what anyone thinks of us renting. The ghost of Xmas future has shown us what’s in store :-)
Some services, like selling a house are going down by 50% thanks to the horrible RE market. $109 to list a home for sale on the MLS? Sounds good to me, just watch out for the other end of the commission stick (buyers realtor).
http://www.bestvalue.biz/index.htm
http://www.ihatecommission.com
Get on the MLS for $109 national listing service
$109 listing service (there are no hidden fees). Wherever you are in Canada, we can list your property on REALTOR.ca
NOTE: I am not affiliated in any way with this service.
This is cool. Three Aussie bloggers sticking it to the banking/political establishment. You’ve gotta love the power of the internet.
http://www.unconventionaleconomist.com/2010/11/son-of-wallis-challenge.html
Reading this blog for much time now.. With much discussion of US real estate melt down talk. Why bother if it is not going to reflect in the same manner here? Wasted couple of years for poxy 20% correction if were lucky.
“#14 Scott on 11.24.10 at 12:24 am
Wake up, dude. You have negative net worth. — Garth
I know that. Which is why I’m considering selling now before a bad situation becomes the catastrophe a housing crash would mean to us.”
Will it be a catastrophe if the value drops 100k?
You will be able to ride out the storm if your income is secure. If not, get out while you can. Unemployed and being forced out at a big loss is a catastrophe.
On the other hand, forcing the wife out of her home may become a catastrophe. Might not be worth saving 100k.
Even if you decide what to do together, it’ll still be all your fault.
F is such a weasel!
In the past, he and others would be claiming “there is no housing bubble” based on their projections that we wouldn’t see a “US-style collapse”. This statement will always be true, since no 2 markets are ever identical.
Now he’s making his case by comparing Canada to Ireland!
“There is no sign that Canada has a housing bubble, Finance Minister Jim Flaherty said on Tuesday, dismissing the idea the country was facing the same kind of property crisis as Ireland.
“The evidence is not there that Canada has a housing bubble. In fact, the evidence with respect to affordability of mortgages in Canada is solid and we have a stable market,” he told the House of Commons finance committee.
“It’s a long, long stretch to compare our housing market with that of Ireland,” he said.”
So, for everyone reading this crap, these comparisons to the US or Ireland are just politician-speak, used for covering one’s ass.
Don’t take a statement from F that “Canada is not like Ireland” or “Canada will not see a US-Style collapse” to mean anything except “I’m choosing extreme comparisons to avoid providing real answers”.
Some people have no time to recover. Millions do.
……………………………………..
It must be really bad now that you are trying to cheer us up.
@ #51 TheBestPlaceonEarth:
Please stop posting your mindless spam — you are just embarassing yourself.
In the past couple of days, you have claimed that “interest rates won’t rise for 100 years”, “inflation leads to low interest rates”.
Today, you are posting that a 28% drop (-$140,000) on a $500,000 condo puts the buyer “in good shape”? Why don’t you ask that first-time buyer who put every dime of his/her $25,000 savings into a 5% downpayment on that $500,000 place, only to watch it tank $140,000 in just a couple of years!
Let’s say that the buyer with a $475,000 mortgage then needed to move, and was forced to come up with over $100,000 (more like $130,000+ after closing costs) just to get out of the place. And, this was someone who could barely come up with a 5% ($25,000) downpayment!
Please try and post some kind of valid comment, or go post on the Vancouver Sun website, where mindless pumping of RE is always appreciated.
Euro region is a good perspective on what will hit North America in the next 2-3 yrs. Some of what is happening is positive (cutting gov’t spending and reducing the size of gov’t), but this Austerity drive is being done for the wrong reasons. It is being done to bailout the senior bondholders of the global banks. These punks should be losing their money..ooops, that’s right,most of them are banks…no room to take losses…but that i what has to happen. Tax reform needs to be done but the overall level of tax needs to come down…not higher as they are doing..
Careful, the International Monetary Fraudsters are out and about…
JO
#60 Vancouver_bear on 11.24.10 at 3:19 am
Don’t bother, brother. TheBestPlaceOnEarth is obviously one of those homeless ‘Couverites who slips into the internet cafes to spew his schizophrenic wares. I would estimate his IQ to be 80-85, after all, he disputes that interest rates do not correlate positively with inflation.
But, none the less, I cannot resist…
“Both scenarios the owner is in great shape, they are paying off their condo and the condo is going to rise again”
You do realize that, above a certain mortgage : rental cost ratio, renting allows you to own the property far sooner, sometimes in less than 10 years, versus 25-35, right? Actually, no, you don’t, because you have a hilariously low IQ.
“Rent is so high for these people (2000k plus per month) and their self esteem so destroyed that extra money is spent at the liquor store on above average quality wines.”
I’m sure that someone who spends $2 million a month on rent has quite the low self esteem.
“Hey, if your never going to own a home you might as well drink.”
You’re– not your. High IQ.
“The final class of renter is the person who has no interest in Real Estate”
What? Oxymoron?
“Vancouver is going higher folks, don’t keep standing on the docks as the Ship of Gold sails further out to sea”
Ship of Gold? Illusions of Grandeur anyone?
TheBestPlaceOnEarth is certifiably mentally ill. He is logically refuted over and over, and like a mentally ill person keeps spewing the same mantra.
Hey TheBestPlaceOnEarth, actually, I’m actually DEAD serious, would you be willing to take the other leg on a derivative short on the Vancouver housing market? Say, I pay you $1K/month, for a period of 5-10 years, with the downside being if there is a drop of more than say… 15%, then you owe me $250-500K?
You’d have to own property of course, and you’d put it up as collateral. My lawyer would notarize it.
What do you say Schizo? You’d have to see a shrink first, of course, so you can’t claim you weren’t mentally sound at the time of signing. And of course, I highly doubt you even own any property, let alone rent, but alas, I can dream of making an easy buck…
Garth
Yes the welfare state is collapsing and credit is reversing, that will go on for years, but not all is bad, at the same time american corporations are registering record profits.
#56 McLoven: I don’t know Garth but it sounds to me like your message is slowly softening?
___________________________________________
Years back before ‘near banks’ were all the rage I was privately lending to people at ridiculously unsustainable rates. Occasionally, over time some people came to me and still do for advice(God help them). You have two types-those that are fishing for cash or validation of their idiocy and those that are truly in trouble and are looking for some direction. Oft times there isn’t a good way to tell the latter they are screwed or on the verge of getting humped but you don’t tell them ‘Wow are you ever a fucking moron’
That you reserve for the 1st types as they spin their illuminating tales of netting 100k plus a year or per deal while fondling their rolex and only need some ‘bridge financing’ then bounce the cheque for 20k on payback day and lose all their toys to you.
The latter though, they are sincere and oft times while you can’t help them per se you can at least try to point them in a more realistic direction. After you’ve done it a few times or a few hundred you can differentiate between the two types. People who are sincere are looking for help, not rants.
Of course many times you can lead a horse to water but in the end you just have to shoot it.
TheBestPlaceOnEarth
I know what Santa’s dropping down the cracks of your leaky, fungus-infested Vancouver condominium***:
http://badaboomtt.com/boom/components/com_virtuemart/shop_image/product/Bubble_Machine_4c4832e260e39.jpg
*** – Assuming you’re not a Schizophrenic homeless Vancouver transient and actually rent or have a mortgage on a concrete tomb.
Garth to bigrider #148 yesterday- “complexity tends to rise with wealth thats how they got that way, seems you don’t know”
Right, so a portfolio of 1million dollars invested in a basket of etf’s is twice as complex to assemble and manage than one which is 500k in size therefore requiring the planner to charge twice the fee. Twice the work right?
And of course 2million dollar account charged at 1%($20,000) a year to the “fee only planner” is warranted against the 1% charged to the 500k account($5000) because of the added “complexity” to a magnitude of 4 times ..lol of ” managing” the additional money ??
Ya right. Seems I do know doesn’t it.
No planner would put a million in a basket of ETFs. I regret you have learned so little about asset allocation in the months you lurked here. — Garth
#47 Investors friend shawn allen- Well said
#51 -Thebestplaceonearth-you’re hysterical ! Balsy ! but wrong. all the best to you !
#47inv-you do not understand the math. Re real median wages in Canada, they peaked in 1979-all this consumption you point to has been fueled by increasing levels of debt-to put it in terms you might understand, it is like a chain letter-if we never break the chain we can all be billionaires. We are reaching the debt limits at this point, which is also basic math.
“I figure I will kick myself even if there is “only” a 20% correction”
Don’t forget, the price of a home is just 1 of the factors in it’s “real costs”… you also have to add in the loss to:
– Using an agent to sell your home. -7% and -3%
– Yearly Property Taxes -$4000 (on avearge)
– Monthly mortgage interest payments
– Home upgrades and updates (kitchen, bathrooms, carpet, roof, etc)
– Home maintenance issues
– Higher costs of carring the home (bigger sqft) vs a rental (smaller sqft).
When you add those costs in there it all adds up to a bigger negative.
#51 TheBestPlaceonEarth
“Vancouver is going higher folks, don’t keep standing on the docks as the Ship of Gold sails further out to sea”
Interesting metaphor you have chosen there as Vancouver is on the West coast so sailing out to sea would be going West into the Ocean…. which is actually a Chinese metaphor for death.
#80 Garth to bigrider-“No planner would put a million in a basket of etf’s. I regret you have learned so little about asset allocation in the months you have lurked here.”
I regret to all that lurk here that you avoid the essence of my point.
No Planner deserves to be paid twice as much on an account twice the size nor 4 times as much for an account 4 times the size.
Yes, I am fully aware that a portfolio of a million dollars should not be invested all in etf’s. I regret you focus on verbatim and not the essence of the issue.
Asset gathering is the name of the game. The fee only planner disguises this fact by “projecting” unbias advice while collecting differing amounts from various investors for same said advice.
No good planner just invests, but helps clients avoid taxation, do long-term forecasting, manage debt and achieve goals like retirement and kids’ education. The more wealthy an individual, the more complex it usually is. We all know you flog mutual funds, with their 2-3% MERs, and hate planners who offer more for 1%. But at least try to be gracious. — Garth
#51 TheBestPlaceonEarth on 11.24.10 at 2:13 am
So let’s say we do have a 20% correction worst case scenario right off the bat. Take our new owner who paid $500k for his condo. It drops 100k the next 5 years =400k. Let’s say it drops another 10% so now it’s worth 360k (ON PAPER!!!!). Let’s take a look at the same condo where a person bought 5 years ago for 250K (This owner is still up, paying off his mortgage and has a place to live for life!!!) Both scenarios the owner is in great shape.
Yes lets have look at these 2 people.
“new owner who paid $500k for his condo. It drops 100k the next 5 years =400k. Let’s say it drops another 10% so now it’s worth 360k (ON PAPER!!!!)”.
90% mortgage 450k at say 5% 22,500 year paid 5 years of interest $112,500 (IO loan) and has lost should he have to sell for ANY reason another $140,000. Yeah that looks pretty dam good doesn’t it. Lets say he didn’t have to sell and market rose by 5% a year starting at $360,000 you can work out how many years it takes of paying interest on the 450k just to get back to the original 500k. Mean while the property next door sold for $360k how is that guy doing who has been renting for the last 5 years before buying?. Mmm
Let’s take a look at the same condo where a person bought 5 years ago for 250K (This owner is still up, paying off his mortgage and has a place to live for life!!!)
You prove the point you are actually arguing against its not the ownership but the cost of ownership. You seriously cant tell me that the person buying that 500K condo you mention above is doing the right thing. After 5 years at my example numbers he has blown 112.5k in interest and if he has to sell another 140k. The renter for the 5 years has lived in a place which is cheaper to rent than buy save the difference and purchase a place for 360k instead of 500k. Einstein, who is better off after another 5, 10 or 20 years. Let me guess that depends on the delusion of ever recurring price appreciation.
I anticipate your answer, ah but they will go up lots in the future. Yep there is that delusion again.
Income drives housing values, credit and emotion drive prices. Its so simple.
Here is a hint captial gains are speculative you just dont know (you might think you do). Convience us unwashed that RE in Van is a great investment for its rental yield, the tangable, the known, the cash flow. I look forward to your comments.
#51 TheBestPlaceonEarth
There are some writers in this blog that i just skim over as their words are just glorified trash…
Tell me, are you 15 years old?
Recently went for weekend trip to Seattle. Lots of tourists from Vancouver on “shopping holidays”. Huge sales in all of stores. Very clingy store clerks, nice and better than being ignored, but are they all on commission? Looked through local papers and lots of homes for sale, cheapish, but no “holy cow that is cheap” moments. Hotel courtesy shuttle driver, born and raised in Seattle, said that the real estate situation wasn’t so bad in Seattle because although lots of inventory was sitting, at least the developers had the money to finish the big projects. Got out on the street and walked around a lot. On one busy corner downtown, we encountered a very lively group of young protesters and I immediately thought, WWF, Greenpeace, anti-bank protesters, save the greenspace, etc. Wrong. They were actually seeking to impeach Obama! The grounds for the impeachment were unclear, but there was a reference to printing money. I thought the youngins’ were in the Obama camp. I had one of those “you’re a long way from Kansas” moments. Glad to be home, but man will I miss those sales.
The plan to dumb-down the populace is working:
(As it stands, many young people are now able to absorb only 140 character Twitter and Facebook updates: “lol gonna get smashed this weekend woo hoo!!”)
http://www.bloomberg.com/news/2010-11-24/students-to-hold-national-protest-against-2012-increase-in-university-fees.html
“Cameron plans to allow British universities to charge as much as 9,000 pounds ($14,218) a year for tuition, compared with the current 3,290 pounds, as the government seeks to cut subsidies to colleges.
The cuts are part of efforts to slash 81 billion pounds from public spending by 2015 to narrow the record budget deficit. “
Canada has a debt to GDP ratio of 150% and 60% would be in trouble with just the loss of one paycheck. Like in the US savings are miniscule. There is no incentive to save with 1% interest rates. Do not forget savings are the lifeblood of the economy. “In history, nothing happens by accident. If it happened, you can bet someone planned it.” [Franklin Delano Roosevelt] So when is time , Canadian will be in the same mess than the rest of the world!
#41 Heddok
“orange guy’s shorts”
Garth means the guy on tv who promotes ING Direct (go to ingdirect.ca and you will see that the company colour is “orange”). Put your money in his “shorts” and make 1.5%.
#77PB-look beneath the headline-a lot of these “profits” are just accounting scams.
President Palin? YES! and why not? just look how good Canada is with “King Steve” America deserves her.
Case closed.
Local Real Estate
——————-
Closed early for the festive season.
———————-
Dat about sums it up here in the East.
BigRider,
Typically professional high net worth managers set the fee at 1% plus an incentive amount (.05-0.15) of every percent that your portfolio beats a predetermined amount (be it the S&P index, something that both parties agree upon, etc). Same goes for hedge funds and many other money management vehicles.
On the topic of salespeople and commissions
Many on this blog and society in general seem to be critical of salespeople and commissions they earn whether selling RE, cars, life insurance, mutual funds ,financial planning services, etc. etc
I want to just put this out there for some to think about.
Without commissioned salespeople most companies would not have grown to levels they have(lower profits) hence fewer jobs(no need for more paper pushers behind desks in corporations if goods aren’t being moved by their respective sales forces) and I believe all our standard of livings would be less than they are today. If you pay a sales person a salary, well, lets face it ,production generally diminishes.
Thank goodness for the commission. Increases drive and ambition.
It’s easy to be critical and I don’t want to get attacked for above comments as I know commissions create as a by product, a lot of distortions, but I think we need to think about both sides of this one a bit more.
Cant help but feel like Garth is softening. A 20% decline is hardly the houseaggeddon anyone following this blog for the last several months has come to expect. With constant reminders that “WERE DIFFERENT” (from the US) is he finally backing away from that stance and saying WE ARE IN FACT ACTUALLY DIFFERENT? Has it stricly been his agenda to sensationalize the pending collapse in hopes of obtaining a larger base of cliental? I am truly concerned that the conflict of interest present in this profession can never be fully eliminated. Anything and everything Garth has been preaching (Asset Allocation/Balanced Portfolio, Tax Avoidance, etc.) can be found in every Financial Planning textbook ever written. Should you not be preaching to the masses to educate themselves first, before paying so-called experts thru the teeth for their fee-based advice?
Actually a 20% correction is significant and life-altering for most indebted homeowners. It`s actually the number I have used consistently on this blog. But remember this is just phase 1 of a process which will likely last for years. As for educating people financially, I think this blog is worth every dime that you pay to read it. — Garth
Tired One @ #36,
tell your parents (and your uncle!) that the weather in Ottawa is a lot worse than in TO, that condos are overpriced (with a moribund market), that condo fees are high and bound to rise, and that they will pay the highest property taxes in Canada. (Between condo fees and property taxes they will pay a minimum of $600 a month before mortgage payments and utilities kick in.)
But they will have access to nice natural features and federal cultural institutions.
They also might consider the tax implications of having no “realistic expectation of profit” in their contemplated rental operation, as well as the conversion of rental to personal use property when the time comes.
A lot od discussion about long term financial planning here-what you should remember is that things are changing rapidly-the whole TSA thing would have been ridiculed as an absurd conspiracy theory just a few yrs ago. Anyone that thinks RRSP balances could not be seized eventually hasn’t looked at the math IMO-what is very clear is this could be done TODAY with very little public resistance.
Hi Garth, fyi, Canada is mentioned too! see 7min video
(What type of world do you want your kids to grow up in? What are you going to do today! not just tomorrow?)
Alex Jones: America is becoming a tyranny. 7min
http://www.infowars.com/alex-jones-america-is-becoming-a-tyranny/
Are Air Travelers Criminal Suspects?
http://www.infowars.com/are-air-travelers-criminal-suspects/
“Certainly, those who choose to refuse the humiliating and potentially harmful new full body scanner machines may suffer delays, inconveniences, or worse. But I still believe peaceful resistance is the most effective tool against federal encroachment on our constitutional rights, which leads me to be supportive of any kind of “opt-out” or similar popular movements.”
Ron Paul: Crotch Groped by TSA, Calls for Boycott of Airlines
http://www.infowars.com/ron-paul-crotch-groped-by-tsa-calls-for-boycott-of-airlines/
““If we tolerate this,” Paul said, “there’s something wrong with us.” He added that the American people deserve to be humiliated and demeaned by the government if they refuse to stand up and resist.
Paul predicted Americans will eventually boycott the airlines to put an end to the intrusive searches and the unconscionable use of dangerous backscatter radiation naked body scanners….”
Well maybe if I knew specifically what the questions were instead of having to read between the lines. As you must know even a well written direct question is subject to misinterpretation. That said, with some latitude given me by you, let me try decipher and answer your veiled implications.
Agreed
Eventually but not to the extent you might think for quite some time.
Media SPIN or propaganda has been with us always and will continue to be. Only a fool would believe everything or anything they read without question including this Blog.
Agreed
“Will not be disappointed”? I’m not sure I can agree with you on this comment as you seem of more sinister desire for a revenge of sorts than of pragmatic forecast.
I agree prices need to adjust or the economy needs to catch up to the price. Essentially a good judge of relative equilibrium in the real estate markets is when an investor can buy a revenue property with relative ease that they could rent out and get back a “reasonable” income profit for their having bought carried maintained and managed said revenue property. We are a ways from that and although rents have increased (dropped in the last year) the intersect has not yet been achieved. Therefore I must agree property values must drop or the economy and rental rates continue up. One or both.
“Vindicated”, “Never back down” “trying to sell a “bill of goods””? Again I sense a sinister tone.
I would just like to say… a true professional does not try to “SELL” anyone. A true professional asks questions to learn what their prospect is trying to achieve and helps that client achieve those goals important to the client. A true professional puts the clients wants and needs before their own. A true professional may try to steer a client away from disaster as they seek to retain that client long term. But a true professional knows that if they do not assist that client in achieving the clients goal without prejudice someone else will and they will take advantage with EXTREME prejudice.
If I am helping someone buy a house because they are going to buy a house for very real wants and needs I try to find them the very best house long term – one that will withstand market fluctuations and one they can be proud of and happy with long term. That is how to maintain a loyal customer base.
They are going to buy so isn’t it better I do a good job for them rather than let them fall prey to someone of lesser fiduciary responsibility? I am not alone in this quest.
Houses are bought and sold every day and will continue to be so.
I agree wholeheartedly and it is just such conviction that I bring to the table every day which benefit my buying and selling clients who are going to, one way or another buy and or sell – with or without me. So best I do a better job for them than have them go elsewhere that they might not be so fortunate. And yes better that they pay me for such service than someone else the same for less or even less which is worthless.
Yes exactly… those ARE the kinds of friends I would rather have and rather be.
What you seem to misunderstand is that life goes on… people are buying and selling homes every day in every market. These people have hopes, dreams and aspirations and they are hell bent of achieving them with or without us. Without us they might well fall prey to someone of less scrupulous morals.
I am very passionate about the service I provide. You may have gathered that from my previous posts. I am not a discount broker and never will be. I am a most capable guide through the real estate maze and if there ever was need of such a guide it is today.
My participation on these blogs is with this sentiment even though often I find the pups and poodles constant barking up the wrong tree frustrating as hell.
There is a story of a neighbourhood all a twitter about a bear up a tree. The neighbours were all so concerned about the bear. “What if it gets my cat” “What if it gets my dog”, “What if it gets my garbage”, “What if it attacks my child”. They called the authorities who tried to coax the bear down from the tree and trap it. They shot tranquilizer after tranquilizer into the bear hoping to sedate it and strung a net to catch it when it fell. All night they tried to get the bear out of that tree. The it started to finally teeter. A little more slip… and then some more and then it finally fell. All the neighbours gathered around to check out the bear only to find it was a black garbage bag full of leaves.
Don’t waste your time barking up the wrong trees pups and poodles… life is what goes on when you are busy making plans for the future.
#41 Heddok
orange guy’s shorts means ING direct or other supposed high interest savings accounts.
I use one to keep the cash portion of my balanced portfolio. But many have all their net-worth in such accounts which are eroded by inflation.
Garth will your new book be out for Xmas ?
#95 Blitzkrieg
Thanks for your reply but Garth and I are referring to financial planners and how they charge their clients specifically ,not talking about various investment vehicles and their underlying investment teams.
The products you refer to as an options to invest in like Hedge funds or specific minimum investment type vehicles et al are not what we are referring to.
There is no incentive to save with 1% interest rates. Do not forget savings are the lifeblood of the economy.
———
There’s a bubble in undersaving. When everyone thinks it’s not worth saving when rates are 1%, you know it’s the best time to save!
Instead of saving people are spending… buying houses and renovating on the margin. In a few years, patientsavers will become the new rentiers.
Scott…..
You need to wake up not your wife, so you have total debt of 270k, and approx 110k income a year. It’s not your debt thats a problem its your spending. You should be saving more than you earn, as you have 30k in debt you are obviously spending beyond your means. If you guys are happy with the house you may as well keep it. Your mortgage shouldn’t cost more than 1200 a month and a 300k house is hardly excessive.
You have to live someplace and as you don’t seem to save very much at least you are forced into saving.
Plus Winter is a really bad time to be selling anyway.
Plus divorces are a lot more expensive than a 30% correction in prices.
VancouverBitterintheBasementSuiteBear
****I always give the scenario of LONG TERM home ownership. I was replying to Garth’post as a worst case scenario which in Vancouver will never happen. VancouverBitterintheBasementSuiteBear do tell how you will change a billion Chinese minds that owning Real Estate is a bad investment in Vancouver. Nice slam of the mentally ill people as well. Now clean out the mouse traps by the shared laundry room
Hi #89 S.B., re: tuition
I recall being told educations was an investment in our societies future prosperity. So why is it being made so expensive?
re: The plan to dumb-down the populace is working:
~20 studies from ~4 countries showing fluoride exposer in infants will reduce there IQ permanently. And then there are the other TOXIC effects fluoride has on the brain and soft tissue of your body. Don’t take my word on it, read the science your self.
So why are human beings (mostly in the west) still force to drink fluoridated water???
‘ Fluoride Action Network ‘, have a look, do a web search, it’s a .org site, has science based info and links to the science reports so you can read them for your self, and see info videos if you only have 29min to start.
.
FYI, Brita (carbon) filters do not remove fluoride and boiling it only makes it more concentrated.
Both the CDC & ADA have finally said infants should not get fluoride.
Know any mothers, do they know yet, can they afford un-fluoridated water supply?
What about you?
#95 bigrider
Yeah bigrider!
May I also add; there is no lesser paying easy job than sales and there is not better paying hard job than sales. In sales you get paid EXACTLY what you are worth. Some agents discount their commissions, and so they should. ;-)
Hi Garth, What a dangerous game. Reminds me of the movie ‘Dr. Strange Love’. Or are they just blinded by the beauty of there weapons? It can’t be good of anyone since the killing machines are very real.
Who has the most WMD?
Might more be going on since the USA world petrol Dollar is not going to be used by more than a few now!
(The axis of evil, now Russia & China and remember Iran.)
on YouTube, ‘Robert Newman’s History of Oil ( 1 of 9 )’
you might find it enlightening.
Pentagon to Send Aircraft Carrier Strike Group into Yellow Sea (artical)
“, North Korea said it was responding to a provocation by South Korea. Pyongyang characterized South Korea’s nationwide military drill called Safeguarding the Nation as “simulating an invasion of the North” and “a means to provoke a war.”
The official North Korean news agency said on Tuesday night that the South “recklessly fired into our sea area,” according to the New York Times. Lee Yong-geul, South Korea’s deputy minister of defense, admitted that artillery units had been firing from a battery on the South Korean island of Baeknyeongdo, close to the North Korean coast.
The Pentagon will further exacerbate the situation by sending in an aircraft carrier strike group led by the USS George Washington into the Yellow Sea. The U.S. had postponed the deployment during earlier anti-submarine warfare exercises amid complaints from Chinese military officials that a carrier in the sea threatened China because U.S. warplanes from the ship could reach targets in China, according to the Washington Times.”
#23 RE Bear – Spot on. I am a Vancouver native living in conti Europe. Spend a few years overseas (or even Montreal if you don’t have a passport) and you soon recognise what all the myopic yoga boners in Rain City don’t: the city is not “world class”, unless you need somewhere to stop on your way to whale watching. The fact that it keeps describing itself as such while no one else does tells you all you need to know about the place. Small. Provincial. Backwater. Crap weather. Sell.
#105, how do you get non flouride water without removing the other nutrients. Can’t be healthy to drink distilled water.
Anyway, just to be clear, I do believe fee only planners probably do have the market cornered when it comes to the fairest advice you will receive in an imperfect system , just understand the fee for service model at a fixed charge is not perfect,overall.
Just make sure you judge each individual advisor you deal with on his own merit.
A home is a consumable. Consumables cost irrecoverable money. They are items which we “consume”. “Homes” do not appreciate in value they only depreciate as they become dilapidated obsolete piles of timber, bricks and mortar. It is the land which appreciates always has and always will.
Speak with any accredited property appraiser and they will tell you the improvements upon the property depreciate. An appraiser always builds into their appraisal an allowance for depreciation even though that depreciation may only be cosmetic as past trends give way to new like arborite to granite, like linoleum to hardwood, like harvest gold to black to stainless.
So really, get over it… never should one buy a home in pure speculative anticipation of equity gain. Building equity the old fashioned way – by paying off the mortgage maybe. And then some day you live in a free and clear title home but even then there are costs as laid out in those comments above. But then much welcomed reduced costs for when you live on that fixed retirement income. But expecting your home to increase in value? Not so much if at all, for if it does it then only costs that much more to replace it.
Land… location, location, location.
And of “Greater Fools”; Greater Fools are driven by greed. Greater Fools typically want today that which they have not yet earned. Greater Fools are they who get into the markets at the very peak driven by want of the gains obtained by those earlier in which only then become apparent. Greater Fools push the market beyond reason because Greater Fools are unreasonable. There have always been and will always be Greater Fools.
A Greater Fool is a useful barometer of the state of the economy. When Greater Fools start buying you know the peak is near. When Greater Fools stop buying you know the bottom is near.
Meant fixed percentage charge model and meant to say judge each advisor you deal with by his own merit regardless of system he operates under.
Hi Garth, fyi, still flying with your kids, daughter, wife?
TSA Gropers Prone To Predatory Criminal Behavior
artical and 2 min CNN video
http://www.infowars.com/tsa-gropers-prone-to-predatory-criminal-behavior/
In the past, countries were built on blood, sweat, tears and delayed gratification. The last half century or so it has been more and more built on instant gratification, lines of credit and debt.
Our society once based on need is now based on greed. Debt is the foundation we now stand on and structures eventually fail and fall without a solid foundation, it doesn’t matter what that structure is.
A life cycle of all historical great nations is as follows:
bondage – spiritual faith – courage – liberty – abundance – complacency – moral decay – apathy – collapse
Um, guess where we are in that cycle? The old saying is true: Here today, gone tomorrow. Enjoy your sodas and fat snacks, it’s squirrel soup tomorrow.
168 HouseBuster on 11.23.10 at 11:05 pm
#161 Oakville Owner – You’re in for a shock… 2003 prices are headed our way.
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“The median sales price fell a record 14%, hitting $194,900 in October, the lowest level since 2003. ”
http://www.marketwatch.com/story/oct-new-home-sales-down-81-to-283000-2010-11-24-100220
Am I good or what??? Wrong country though…. for now! But it is coming to Canada.
And really people, yes volumes have subsided but it is the Greater Fools, which pushed them high in the first place, who have left the market. The numbers are as they were before the unreasonable Greater Fools pushed them beyond reason. This is normal. These are the numbers which should be… might even be a little on the high side still.
And yes price does follow volume but not with so steep a trajectory up or down. Prices are sticky up and sticky down as buyers don’t really want to pay too much and surely sellers are reluctant to sell for less than THEY THINK it worth. So yes, I’d say prices are still going to fall – but not nearly so much as you think.
Here’s the deal:
Some geographical and economic clarifications from politicians, officials and commentators:
1. ‘Spain is not Greece’ – Elena Salgado, Spanish Finance Minister, ~February, 2010.
2. ‘Portugal is not Greece’ – The Economist, 22nd April, 2010.
3. ‘Greece is not Ireland’ – George Papaconstantinou, Greek Finance Minister, 8th November 2010.
4. ‘Spain is neither Ireland nor Portuga’ – Elena Salgado, Spanish Finance Minister, 16th November, 2010.
5. ‘Neither Spain nor Portugal is Ireland’ – Angel Gurria, secretary-general of the Organization for Economic Cooperation and Development (OECD), 18th November, 2010.
6. ‘Ireland is not Greece’ Vanessa Rossi, senior research fellow in international economics at Chatham House in London, 18th November, 2010.
7. ‘Canada is not Ireland’ – F, this week
See, it’s simple. Glad that’s straightened out. Still to be determined: whether Belgium is in fact Belgium.
Paraphrased from an older post at Euro Intelligence an excellent Euro area Blog
2 more great Euro area Blogs:
A Fist Full of Euros
Not A Yes Man Economics Blog
My favorite Blogs, mandatory daily reading:
Naked Capitalism Yves Smith, very nice lady, author of “Econned” a great book about the financial crisis
FT Alphaville FT writers group Blog, superb analysis, day in, day out and some cheeky British humor
Zero Hedge # 1 financial Blog, a group effort, many contributors, superb analysis and very fast. They have a Bloomberg data terminal, when news crosses the wires they have it with instant bang-on analysis within about 7 minutes usually (Bloomberg has a 5 minute black-out period, they can’t repost any faster than that), you get the headline plus the implications much faster than any other Blog. May seem tinfoilish at first, but they are very accurate in their predictions, often many months ahead of even other Blogs, years ahead of the MSM. Read by every financial mover and shaker now, thought most won’t admit it. If you want to see how deep the rabbit hole goes, this is the site.
Bill Cara Canadian, author of “The Trader Wizard”, 40+ years as a market trader, common sense, and very accurate market calls, that you can only make with that much experience. Tons of free info, Daily Blog, lists of quality companies to trade in and out of (Cara Top 100, Global 600 etc), manages about $3B for clients, if you have $250K and you want to actively trade the market they have a global team of traders and will trade your account 24/5. Friendly traders on the Blog, ask a question and they will help you. Taught me a lot.
Let the information free your mind. The internet is a superb resource, if you know where to look. This type of info was simply not available to ordinary citizens and small accounts even 10 years ago. Information IS power.
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Aussie Roy – thanks for all the links, I will have a look. Though probably not enough time to read them all, there’s never enough time.
Have a great weekend all.
Yes, I am fully aware that a portfolio of a million dollars should not be invested all in etf’s. I regret you focus on verbatim and not the essence of the issue.
We all know you flog mutual funds, with their 2-3% MERs, and hate planners who offer more for 1%. But at least try to be gracious. — Garth
I don’t see anything disrespectful here. As far as a planners’ forecasting goes, their crystal ball is as faulty as anyone else’s.
Hi #88 mousey, a Question for you.
Were was the stuff for sale you look at made?
Glade you got ‘out & about’ (say it like a Canadain) while you were there.
If you go again ask the people on the street a bit more.
It would be interesting to here what the person on the street tells you.
Hi Garth, I misted adding the link to artical above #107
Pentagon to Send Aircraft Carrier Strike Group into Yellow Sea
http://www.infowars.com/pentagon-to-send-aircraft-carrier-strike-group-into-yellow-sea/
Location, location, location… where would YOU rather live; Edmonton or Vancouver Island? Toronto or The Okanagan Valley? You might belong to that renegade younger faction which loves winter and keeps your parents near for their love of you but the by far larger group of aging Canadians become fonder and fonder of the more welcoming gentler winters the West has to offer where you can golf almost all year long. And you know what they say; “Golf is for people who don’t have time left for work”.
Hi Garth, fyi atrical
China, Russia quit dollar
China Daily
November 24, 2010
http://www.infowars.com/china-russia-quit-dollar/
@Basil Fawlty #26 – Excellent summary of the IMF bailout perpetual money machine.
I watched four financial commentators discuss the immediate American financial situation. Here is a brief encapsulated version. The actual discussion went on for about 30 minutes…
Moderator: “We are in dire financial straits, paying way too much on debt and our only choice is to adopt an austerity budget starting now. We have to cut our debt”
Commentator 1: ” I agree. For example the unemployment triple-extended deadline will expire soon and thousands will be homeless with no paycheque. If we could extend that deadline again, just think of the billions that would flow back into the economy.”
Commentator 2: “Yes, that’s all very good but where will we get the money to pay for extending the unemployment payments? Ahhh…maybe we could take it by not extending the tax cuts for the rich. That money alone would pay for it”
Commentator 3: “Hold on now. Just remember who owns all of those factories and businesses that create jobs. It’s the rich…those same folks that you are going to punish by eliminating their tax cuts. If you do, they can’t hire.”
Commentator 4: “Well, there is obviously just one solution. We have to do both. We have to pass the Unemployment Payment Extension AND continue the tax cuts for the rich.”
(Everyone is shown with a self-satisfied, congratulatory look as Moderator introduces 15 minutes of commercials)
Dandy,
The thing is there are alot of extra costs on top of the 1300/mth mortgage. Property taxes is another 200 a month or so. 407etr is another 400 a month (no choice on this …), gas is 400 a month (I commute over 200km a day round trip!). Plus another 400 a month for the car and another 200 a month for insurance/home + auto. If I include the car actually our total debt is 40k. If I include my wife’s student loans it’s more like 60k.
I’m thinking if we sell, we can rent for 1200 – 1500 a month and STILL take home at least 1000 more a month than we do right now (which could be put into debt on top of whatever we make on the house).
The flip side though is that if we stay put I guess we’ll be here for years because if/when this price correction happens I doubt we’ll be able to sell even if we want to.
Some people think Milton (suburb outside Toronto) is a protected area (everyone wants to move here is the theory), I’m not so sure.
I’m starting to think we can barely afford this house right now, never mind if there is a price correction … we both do really like the house though. We rented in downtown Toronto for 10 years before buying, it would be tough to go back to living in a highrise again.
Finally my job is not stable. My wife is an RN but I’m currently on contract (self employed) until March … after that it’s anyone’s guess.
Hi Garth, fyi artical, yes we should be very afraid, but of what? Are you paying attention?
TSA Gestapo Empire
http://www.infowars.com/tsa-gestapo-empire/
Ha..ha.. the picture sooo funny..
F under the debt..
For those unaware of oil depletion, it isn’t a “conspiracy theory” and has nothing to do with tin foil-it is important and it is right here right now. Martenson covers the implications http://www.chrismartenson.com/blog/economy-set-starve/48474#part-ii
Hi Garth. I was just wonder if you think that these 2 nuclear power plant “investments” will help keep prices high in Durham Region. I’m waiting to buy but concerned with all the money flowing in it will help maintain current inflated home prices.
Thanks
D
Anyone who thinks China is stupid enough to discard the $ and destroy the value of their own 2.6 Trillion USD’s in reserves and make themselves the biggest bag holders in history-doesn’t understand a lot-
” It appears the day of reckoning has arrived ”
Well worth a read about Ireland.
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8156282/Ireland-austerity-plan-to-cost-Irish-households-3000.html
I live in Victoria and would rather live in Toronto (I did for 6 years) Actually I would rather be in Paris – I lived there for 13. I miss the shopping, restaurants, culture. It depends what you like. Not everyone wants to golf and look at water.
#14 Scott on 11.24.10 at 12:24 am –
it’s difficult though convincing my wife that this is the right course of action and needs to be done sooner rather than later
—
Does wifey understand that a ) taxes WILL increase b ) utility costs WILL go up and c ) interest rates WILL rise ? In short, servicing your home WILL cost more, not less.
You say you “think” you may be able to realize $30g’s or so fro mthe sale of your house. What’s it going to cost to harvest any capital gain you may realize? And you’re carrying $30g’s in debt over and above the house?
The writing is on the wall. Teach your wife how to read it. And if that’s not enough to get her to see the light, ask her one very simple and sobering question. What if either one of you loses their job ?
Time for some tough love dude.
This little Piggy went to market-
This little Piggy stayed home–
F invests our money wisely–
Ireland now-the others soon-then-
Who will bail us out?
Ohhh-there’s always the IMF-which is full of X Canadian Politicians–
Anyone remember the name–“Maurice Strong”?
Betcha G remembers-
********
http://www.bloomberg.com/apps/quote?ticker=GGGB10YR:IND
http://www.bloomberg.com/apps/quote?ticker=GSPG10YR:IND
#36 Tired One on 11.24.10 at 1:11 am
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Depending on where and how big the condo is, it will likely rent for ~$1400-2400/month. Rents in Ottawa are crazy! There are 40,000 students at U of O alone…that’s a big pool of prospective renters….
Their plan is not a bad one, as long as they can afford any extra carrying costs for the next 5 years. Also, the condo market in Ottawa isn’t over-built, and demand is fairly high from young professionals and retirees…can’t see a major swing downward anytime soon.
#5 Scott on 11.23.10 at 11:45 pm
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So you’re going to force your wife to move in order to ‘start clean’. I think this is a bad move.
#1: you will incur tens of thousands of dollars in selling expenses (breaking your mortgage will cost you 10g, 20g to sell the place, 1.5g to move etc.). These are unnecessary expenses.
#2 you guys make a lot of money. Your mortgage is only 238k. Lots of people would actually kill to have a mortgage that low. You have done well, stick it out, and come up with a savings plan on how to reduce your current expenses and start saving.
#3 before you know it, your mortgage will be below 200g, your equity likely 150g, and your other debts paid off
these videos should be seen asap!
http://westernstandard.blogs.com/shotgun/2010/11/video-britains-trillion-pound-horror-story.html#tp
I should also add about 25k of the debt is my fault completely. That’s what’s making this more difficult … I screwed up.
#80 Garth to bigrider-”No planner would put a million in a basket of etf’s. I regret you have learned so little about asset allocation in the months you have lurked here.
Umm, what’s wrong with ETFs? Okay, granted I have only lurked here for a few weeks, but regardless…I have my retirement portfolio in a range of equity / bond / commodity ETFs, which I manage and rebalance quarterly myself. I do this to avoid paying fees to mutual funds. Obviously no leveraged or inverse ETFs. I use very conservative option strategies for income generation, and am a futures trader by profession. I don’t see your issue with a $million in ETFs. What would you see as a maximum figure to put in ETFs and where else would you put it instead? Would you rather people put that money into ripoff mutual funds – not bloody likely. I think you need to elaborate here Garth.
Obviously, I rent (duh!)
I have not posted on this blog before and have been enjoying reading the discussions but please…..GregW, Oakville….stop posting so much BS! Get a life.
I’m done….thanks for blog.
#124 Scott on 11.24.10 at 1:22 pm
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as a renter paying $1500 will you not still have $400/mo gas and $400 etr expenses?
And after your contract runs out, I’m assuming you’ll be saving that $800/mo anyway?
You could also look into extending your amortization to 30 or 35 years, that could drop your monthly by a few hundred bucks.
#103 dandy on 11.24.10 at 11:18 am
————————————
Dandy has a good point, if you’re going to sell, wait at least until Feb./March.
DJ Loser on 11.24.10 at 1:37 pm
Hi Garth. I was just wonder if you think that these 2 nuclear power plant “investments” will help keep prices high in Durham Region. I’m waiting to buy but concerned with all the money flowing in it will help maintain current inflated home prices.
Thanks
D
X 2 on this Question.
#117 Got A Watch
Thanks for that FT alphaville link . I`ve been for a good financial rss feed for a quite while.
Thanks for that FT alphaville link . I`ve been looking for a good financial rss feed for a quite while.
I called the mortgage company, the cost to break the mortgage is 2800.
Realtor and lawyer fees would be around 20k I’m guessing.
Our full mortgage is 246k and the house is worth about 310 – 320 k … so we would come out with 40 – 50 k.
Yes the “start clean” thing is what’s holding me back. I don’t want her to pay for my mistakes.
One good thing I guess is that we are locked in at 3.79 for another 4 years. So if we stay and rates do rise we’d be ok until 2015.
#135 Bottoms_Up
Good advice Bottoms_Up.
And there-in is a big part of the problem I have with the bulk of the advice offered on this blog. These “scare tactics” might push some in a direction they ought not go. Yes those who bought at the peak of the market with zero down 30 plus mortgages have cause to be concerned but the vast majority are far from such concern.
There are many costs to selling and moving to a rental. The whole notion of taking your tax free capital gains is nothing short of speculation. It’s a timing thing and we all know you can’t time the markets with such precise accuracy. At the very least you must consider the very real costs you will encur in your venture as outlined by Bottoms_Up at post #135. Those costs will mitigate any speculative gain you might (might) realize.
It’s a home. You want to gamble your home go right on ahead.
Hey I’m a REALTOR… why ever would I try convince you NOT to sell?
Now Garth would tell you not to have more than 40% of your net worth tied up in real estate and with that I agree… BUT, you have to start somewhere and you need, in this Country at this time of year anyway, a roof over your head – rented or owned. And it is pretty hard to save for that house when rent is gobbling up a good portion of your start out take home pay.
Sure you can rent all your life or at various junctures in your life. We have rented and I’m sure we will rent again but home ownership does have it’s advantages… if it didn’t no one would own homes – including the one you might be renting.
Don’t let Garth or the pups and poodles scare you away from home ownership without thoroughly thinking it through.
#117 Got A Watch
Thanks for that FT alphaville link . I`ve been looking for a good financial rss feed for a quite a while.
Sorry ! cut and paste attention deficit disorder
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#39 bridgepigeon — Suggest not coming west right now. It’s not called the Iceanagan for nothing!
BTW, ice wine grapes (picked when the temp. is -12C or less, I understand) were plucked from their branches a couple of nights ago, when it was about -22C, + windchill.
Steer clear until April – May or so!
#40 Patz — That’s right. South Korea started shelling first, were asked by the NKoreans to stop, didn’t, so were subsequently bombed, and screamed blue murder about it.
Also of note — SKorea had 70K troops plus several US ‘advisers’ on hand, and were talking about an invasion of NKorea.
Could be Obama’s FF, the incident needed to distract sheeple’s attention away from the economy.
#47 Investors friend shawn allen — Excellent post.
#58 Dan in Victoria — All things are flowing together as they should. Some time ago, a link said that China + Russia were going to head the NWO.
As Soros, Obama’s bankroller likes the Chinese way of doing business, life itself is sliding down an icy hill with no brakes.
#64 Brian1 — Our CFP reads Garth’s posts (not comments) quite regularly, so has a good idea of what to do. But there are plenty of loud-mouthed, arrogant losers out there, that’s fer sure.
#74 JO — “Careful, the International Monetary Fraudsters are out and about…”
That is precisely what the IMF (Rothschilds – Rockefellers, etc.) want — to drag NAmerica into slavery, under their long and controlling arm.
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#121 Devil’s Advocate on 11.24.10 at 12:51 pm wrote:
If one is rich enough that holding a job is a nuisance then one would definitely not chose Okanagan or Vancouver Island as one’s choice for place to live and play golf. There are much better golfer’s spots in the world with lower tax rates to boot.
If one must work for living then one has to choose place to live where the work is (or near). And that again is doubtful to be Vancouver Island or Okanagan Valley.
Now, there’s a fraction of the population for which Vancouver Island or Okanagan Valley is a good choice but that group is unlikely larger than the groups for which Toronto or Edmonton is a good choice.
I like my bunker with Kollsman’s SEROS and ADIR.
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got a watch
“Information IS power,”especially if you are an insider
Scott @ 124
I thought there was more to the story.
I read it last night and thought the math doesn’t add up.
Simple common denominator.
Greed – Fear.
Bottoms up
———————————-
as a renter paying $1500 will you not still have $400/mo gas and $400 etr expenses? —
——————–
No because we would move back to the Toronto core. The 407ETR fee would dissapear and gas would go down from 400 a month to 100 – 150.
Part of the cost of living in Milton is the commute … there really aren’t any jobs in this town (although I guess I could look in Mississauga)
I do not know why everyone slams BestPlaceOnEarth.
If you read his posts carefully, you will note that he is really just a frustrated bear who missed out on the Vancouver run-up in real estate. He recites the standard RE pumper myths, which in his mind, have turned into reality, to a degree, because the market has been hot for so long. He infuses his diatribes with his own renter experiences and assessments.
He is not a true RE bull – just someone who got fed up waiting and thinking that the market should correct. His ramblings are really just a release for him, and are designed to elicit responses from other bears to validate his deeply engrained bearishness.
You should really just cut him some slack.
Cheer up BestPlaceOnEarth – you will soon be able to own some of that Vancouver real estate that you so covet :)
Hi #139 Ryan MacKay, Thanks for posting.
Which BS are you referring to?
If it’s that fluoride is toxic and should not be force on human being by adding it to the drinking water supply, I’m afraid you should actually read the science.
Feel free to expose yourself, I wouldn’t suggest it. I don’t drink fluoridated water anymore!
I’ve seen and read the science and have been convinced forced water fluoridation need to stop.
Much like exposure to second hand smoke, even as the science was pilling up that it caused harm to some people it was still allowed to go on. But no more.
Did you look at the 29min info video with Nobel prize winner in median and other scientist calling for the end of water fluoridation world wide at ‘ Fluoride Action Network ‘ .org web site? or read the 2006 NRC report?
Might they be speaking up because they are informed about fluoride toxic effects.
@ bad#150 there is little point in responding to da …he is never going to get it . The lower the sales stats are the longer his posts become . I’ve stopped reading them just notice the length. As for the ok real estate .. for us it would be like buying a bench at the circus . While the acts are going on ie; concerts , wine tours , hot days in the lakes it’s really fun . Then come sept. and the fun is over except for the skiing but we’ve got skiing here without all the lines . We really enjoyed being at the circus but two weeks this summer was too long couldn’t wait to get back up north. I’m surprised that he does not mention the new and improved drink driving laws . They will have by summer killed the wine tour tourism . We won’t be doing that again anytime soon. Another stab in the heart of ok tourism by the fiberals . As far as I can see all the ok markets have nothing but down side .
Garth wrote: I have consistently suggested there will be a correction of up to 20%
Great wizard, this is suppose to happen when? Unless you think interest rates are skyrocketing to 9% this coming spring. 20% seems really far fetched.
Wait and see. — Wiz
#76 RE Bear on 11.24.10 at 8:37 am
Take a chill pill, man. Your posts today are almost as unhelpful as TBPOE’s.
#73 T.O. Bubble Boy
Give it a rest bubble but, if he’s annoying you don’t read it.
#156 Greg- Flouridated water
How do I get unflouridated water? where do I buy it? How can I be sure the bottled water I am buying is free of flouride?
Any advice appreciated
Just went for lunch today with a friend who had her sister visiting from Florida. SHe had lived in Edmonton for all her life, but left for Florida 10 years ago as she married an American man.
She could NOT believe the prices of everything here. SHe was so shocked! Housing up 300% Groceries & Heat up 250%, eating out up over 150%. What is going on she asked? How can the conservative government allow the average citizen’s too suffer so much while oil companies made tens of billions of $$$ in profit at the expense of the average tax payer and Alberta’s pollution has soared!
I dunno I said, our Governemnt has changed for the days of Lougheed in the 80’s when he stood up for the people of the province, some say the recent priemer’s have been corporate puppets.
In any case Garth, I agree 100% with what you are saying, no real estate collapse over night, but a slow downturn of prices until they come back to earth. It’s really a joke when you look at how much desposible income a family would have left in Edmonton after buying a samll bung. The market has to correct-it will be lsow & painfull. Especially in Edmonton where we have the biggest drop in standards of living in North America. 25% of kids don’t finish highschool-social services was trashed in the 90’s here. We give $100 less than in 1980, for individuals who are desperate enough to have to turn to welfare (no wonder crime rates have soared).
THE “I’M ALL RIGHT JACK CROWD…BACK IN THE BUSINESS OF STRUTTIN’ THEIR BS IN FRONT OF THE ROA (Rest of America)
Not trying to sound like a jealous class warfare nut-case, but merely an interested observer, this intriguing story showed up on CNBC, today, cannibalised from the New York Times.
The Wall Street Elites have decided the good times are back, and its time to rub the Rest of Amrica’s noses in it through extravagant, and very public, “living.”
“Wallets Out, Wall St. Dares to Indulge…
Exuberance made a comeback this year at Josh Koplewicz’s annual Halloween party. More than 1,000 people packed into…the Good Units night club in Manhattan, a substantially larger crowd than in the last several years.
The open bar was sponsored by Russian Standard vodka, and Mr. Koplewicz, an investment analyst at Goldman Sachs, was able to snag a big headliner: the hip-hop star Lil’ Kim, who performed dressed in a black cat costume.
…It’s true that firms scaled back the corporate excesses…for which they were vilified…Many of those constraints remain in place, like flying commercial on business trips…
But when it comes to personal indulgences, there are signs that the wallets are beginning to open up…Businesses whose fortunes ebb and flow with the financial markets are thriving again.
‘Wall Street is back spending as much if not more than before,’ said the New York dermatologic surgeon Dr. Francesca J. Fusco, whose business is booming again after a difficult few years.
Christie’s auction house says investors from the financial world…are ‘pouring’ back in.
Expensive restaurants report a pickup in bookings…”
It must be remembered. There is a difference between those who have access to the levers of financial power, and might, and those who don’t.
Those who don’t are the usual suspects, the ones destined for lifetimes of real estate and credit card poverty. Many still believe that they can borrow their way back to prosperity. “Look,” they’ll say, “at the US. They’re printing up brand new money, and Obama says prosperity is coming back soon.” Or some such “reasoning.”
The Wall Street elites know the score: It’s “One” for them, and the rest of us “Zero”. Why? Their brokerages have made zillions in cash and T-bill swaps since the 2008 market meltdown.
We all remember how then-Treasury Secretary Hank Paulson helped to organize the various Wall Street bank bailouts using the US taxpayers.
That’s why there’s such swagger in New York City. The poor paid the shot!
This will only add more fuel to the fires of discontent as millions of jobless, hopeless, and hungry Americas brace for another winter of deprivation.
They may be looking to the impoverished bretheren in Ireland, Portugal, UK, Italy. Looking for what? Ways to demonstrate in the street? Maybe hold a general strike? No. I think there will be a lot more seethings and pain, first, leading to God knows what and when.
At the end, I believe the Wall Streeters may suffer from their hubris. China, Russia and India may have something to do with that, I expect.
TheBestPlaceOnEarth, aka TheIllestManOnEarth,
I’m not slamming the mentally ill, I’m just pointing out that you’re mentally ill and for people to ignore what you write. Mentally ill people be definition are irrational, in particular cannot comprehend logic or reason (neither of which you’re capable of either), do not make sense (ding ding), and have illusions or talk in strange grandoise terms, and also have illusions of grandeur (ie that some Chinese are going to come and buy all of Canada, again, schizophrenic thinking, Ships of Gold, that God created Vancouver and made it ‘special’, etc).
“Now clean out the mouse traps by the shared laundry room”
What? Oh, it’s time for your meds. Gotcha.
PS – So you’re cowarding from my bet? Gotcha. As I suspected, you’re a homeless mental ward escapee in the internet cafes in Vancouver.
Hmmm looks like prices will be about the same at year’s end as they were at the start of last year.
Kinda like what I was saying in the summer, that it wasn’t panic time, that the drops we’re seeing were just eroding gains from earlier in the year.
Weird. I guess the sky doesn’t appear to be falling yet.
As DA said yesterday (I think) this is going to be hard for anyone to predict.
But what I do know, is that the theme on the comments section (not Garth’s posts) do tend to vary. It used to be, “prices are crashing cause rates will go up.” Then it was, “sales have stopped prices are crashing.” It will always be something, but at the end of the day there are some undeniable truths on both sides of the fence that point to a drop in prices or not.
As time goes on, the panic that some people here want to see is just not going to happen. I could be just as wrong as they are, but as time marches on their claims become less and less relevant.
As long as the immigrants keep buying the ponzi scheme will continue. Why do you think the fed keep letting them pour in.
Hi Garth, fyi, 2 articals
11 Reasons Why North Korea Is The Most Bizarre Nation On Earth
http://www.infowars.com/11-reasons-why-north-korea-is-the-most-bizarre-nation-on-earth/
Is the USA quickly heading to bazarre also?
Big Sis Wants Behavior Scanners At Sports Events, Malls
http://www.infowars.com/big-sis-wants-behavior-scanners-at-sports-events-malls/
Might our pressent Canadian leadership be far behind?
Classic Peter Schiff video-hilarious watching Peter try to explain basic math to this stupid anchorman http://www.youtube.com/watch?v=kgOovAcsLA8
Yes indeed, I can not entirely disagree with you. I, for example would rather play out my final days floating in the blue Caribbean sea from island to island. But even at my relatively young age I am beginning to realize why so many fear venturing too far from our Canadian health care.
For many, the work opportunities West of the Rockies are limited to be sure. That is why “ya earns yer money where ya has ta and ya spends it where ya wants ta”.
On the last point I disagree only because I help a whole lot more families and individuals move out here than I help moving from here to there. And of those I do help move from here to there, eventually with but very few exceptions I end up helping move them back here.
Scott, typically you want to live close to where you work, not only to save money but to save time. I imagine that you must be wasting more than 2 hrs a day on commuting, hell of a lot of time wasted if you ask me. Why don’t you wait until your job situation clarifies and either way decide to sell in early spring (to avoid later listing congestion), rent something close to work and eliminate debt, build up savings and play a wait and see game.
Nearly half of over 50’s have yet to fulfill even one life long dream……
http://www.dailymail.co.uk/news/article-1331409/Nearly-half-50s-fulfil-lifelong-dream.html#ixzz15ocmykFl
If you remove Fluoride from your water through a filter you either get Distilled Water or Reverse Osmosis Water. Both remove healthy minerals. Distilled Water is thought to leach out minerals from your body.
The best gauge I know of the market is the deals written boards in our office. They have proven a good gauge not only of business written but consumer confidence year after year month in and month out. And they have always proven a most reliable all-be-it “ballpark” indicator, but then what isn’t, of what we can expect three months hence. Let me just say that this month is shaping up to be a most respectable November and Spring I expect will be not bad at all either based on this leading indicator alone.
House prices dropped 1.1% in September
m/m growth
Latest: -1.1% previous: +0.2% prior: +0.5%
y/y growth
Latest: +7.9% previous: +10.4% prior: +12.4%
FACTS: In September, the Teranet–National Bank National Composite House Price IndexTM dropped 1.1%, the first monthly decline after 16 consecutive rises. Moreover, prices were down in all of the six metropolitan areas covered, a first since February 2009. In September, prices fell 2.4% in Halifax, 2.2% in Calgary, 1.6% in Toronto, 0.5% in Ottawa and 0.3% in Montreal and Vancouver. In the latter case, it was a third decline in a row. On a y/y basis, the Composite index was up 7.9% in September, decelerating for a third consecutive month. Y/y price growth was 9.2% in Ottawa and Vancouver, 9.0% in Toronto, 7.6% in Montreal, 3.6% in Halifax and 1.7% in Calgary.
OPINION: Despite September’s decline, home prices are still 5.5% above their pre-recession peak at the national level, a situation that contrasts sharply with the one prevailing in the U.S., where prices are down 28% from their peak dating four years ago (top chart). September’s drop notwithstanding, we do not think that a significant price correction looms in housing. For one, market conditions as depicted by the new-listings-to sales ratio remain balanced (middle chart). Second, Canadian banks’ record for past-due mortgage loans reflects the health of the domestic economy (bottom chart). It is therefore very unlikely that the Canadian market will be flooded with foreclosures as is still the case in the U.S. This being said, the high indebtedness of Canadian households and record homeownership rate argues for a much slower pace of home price appreciation in the coming years.
Marc Pinsonneault
National Bank Financial Group
Carioca Canuck
“U.S. recovery now self-sustaining”
R U kidding me????????
Do you still believe what’s in the media????? Or what are you smoking, dude?
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#115 fancy_pants — First-class post! Yet sheeple still refuse to see the writing on the wall.
*
Seems things are heating up across the globe. Portugal, Ireland and soon Spain are / will be in hock to the IMF for billions, student protesters have set fire to parts of London and the western world, in general, is tanking big time.
With the BS begun by South Korea (aided by the US), it seems Uncle Sam is looking for war with China to avoid repaying their debts. One has to wonder if it was only coincidence, that on the day China and Russia made the announcement to go with their own currencies for bilateral trade, South Korea decides to provoke the Chinese-client state, North Korea, with military exercises, exercises in which ‘US advisors’ participated?
Don’t forget that China and Russia will always back each other, no matter what and both will always protect Iran. Their oil and nat. gas is too precious to let it go to waste.
So WW3 . . .
*
London Bridge is burning down.
Fail in life and prosper on Wall St.
Food Shortages “The world experienced a major food crisis in 2008 that led to civil and political unrest from Bangladesh to Haiti and added millions more to those suffering from malnutrition.”
Bernanke is actually Charles Ponzi re-birthed.
US Unemployment Higher than expected, almost GD1 levels.
6:11 clip Now Portugal has popped, along with Ireland, Greece, Iceland, etc. Anyone see a trend here?
US – GB The lines are being drawn in the sand, with China and Russia finishing with the US$. How convenient. Just in time, the US dispatches an aircraft carrier to the Korean Peninsula, plus another one steaming toward the Yellow Sea.
Social and financial breakdown.
Definitely worth a read, especially Bears whose blood pressure will definitely rise!
http://www.theglobeandmail.com/report-on-business/rob-magazine/is-vancouver-in-a-real-estate-bubble/article1808967/singlepage/#articlecontent
#16 Taxpayer like everyone else on 11.24.10 at 12:26 am“Now the farm’s in an environmental protection zone…”
What? No grandfathering? No “right to farm”?
Right to farm, yes. Right to sell for development, no. — Garth
*********************************************
and the same thing is playing out here in Melbourne Australia….
Urban-rural interface will affect Melbourne’s food bowl.
No mention of contentious boundary changes and govt land acquisition though?
http://theage.domain.com.au/urban-sprawl-fuels-friction-with-farmers-on-the-fringe-20101124-187e3.html
#125. Scott
Your wife’s job may not be as secure as you think. Not that she couldn’t get some-thing.
But, in general, for her line of work, there have been lots of cutbacks, and currently there are hiring freezes in places where they were ‘always looking’.
Also, some ads out there are BS, there’s not really any – (or there are very few)- positions, but guess it looks good for the organizations to appear as though they’re hiring.
Another thing I’ve noticed is there are very, very few reliable sources of information for the Canadian Real Estate market.
In the USA, there are plenty of independent market analytics available, however in Canada, they are all released by the real estate boards and the CMHC, which are without a doubt biased towards making housing look good or spinning the data to their liking.
It’s very very hard to find anything that doesn’t pump RE, and the sheeple eat it up.
Anyways, I’ve been trying to calculate how much money the CMHC would hemorrhage once RE starts to tank– I’m guessing around $100B? The bank would unload at last 300,000+ mortgages @ what, $300K+ a pop? They have $<10B in assets, so the feds would be on the hook for $90B. HST revenues would drop like a rock, costing them another 10-20B, aka tripling the budget deficit to $150B from $50B. Bond vigilantes would give it to Canada, sending interest rates from 5-6% to 10%+, costing Canada another $30B in interest. Yikes.
So basically we'd go from a $50B deficit to a 11-13% deficit… ala Greece/Ireland.
As a Realtor I just love when I see for sale by owners and now they are even offered on the MLS, this is great because they are easy to take advantage of. :) As a buyers agent I will get my buyer the best price and its even better when I am mismatched with a seller who has no idea how to negotiate. I am glad CREA did this, if you are gonna list your home, know the consequences!
Nosty,
South first, west when it warms up…
Scott,
Milton’s different,” everyone wants to live here”…no one I know…
Complicated times as these call for simple solutions; you’re not special, everyone makes mistakes, you’re in it together with wife, pay off what you owe, be happy that you can
North Korea: Uncle Kim & Co are just gesticulating for ANOTHER HANDOUT. They huff & puff until they get their way. The 1 million soldiers are mostly starving. On Kim’s birthday soldat get a piece of pork which is a true crapshot cause many develop dysentry and die before being able to goose step in Kim’s parade. The populaces are brain-washed, they know no other way than family club Z’s and firing squads. Halve the NK fleet can’t leave port cause they’re down on fuel. Gangster regime more broke and hungry than Iceland or Ireland.
There is spring water without flouride in it…read the label. It must say flouride 0 ppm…there is no safe amount. I buy it in 4L bottles.
Flouride in water.
Do the spring waters that are carbonated like PC and perrier have flouride in them?
#132 Confused in Victoria
See ya. Wouldn’t wanna be ya.
#186 Sue
Just so you know, if it states there are 0 ppm of fluoride that means there IS fluoride in the water but it is less than 0 parts per million. Therefore, it is present but at a lowe scale ie. parts per billion (ppb).
ALL natural water has fluoride in it as it is a natural occurring element in the earths crust. Now, it can be removed through reverse osmosis, if this is the case it will not be written on the bottle. But if anything is written, even if it says 0, there is some of this element present but at a level recorded lower than the scale it’s written on.
Regards,
You friendly neighbourhood geologist
U.S. recovery now self-sustaining:
http://www.reuters.com/article/idUSTRE6AN3VM20101124
Bring on the negativity!!!!!!
Bring on some common sense! Read the article, hardly glowing, in fact key indicators such as “non–defense” manufacturing are seriously down. As for employment numbers they’ve got more tricks than a $2 hooker. Unemployment is actually running at GD1 levels.
183 FSBO for Sale on 11.24.10 at 9:56 pm
As a Realtor I just love when I see for sale by owners and now they are even offered on the MLS, this is great because they are easy to take advantage of. :) As a buyers agent I will get my buyer the best price and its even better when I am mismatched with a seller who has no idea how to negotiate. I am glad CREA did this, if you are gonna list your home, know the consequences!
_ _ _ _ _ _ _ _ _
How can this be any different than the collusion that presently takes place between realtors?
I will be listing FSBO with Property Guys very soon. For any real estate agents bringing me an interested buyer a “flat fee agreement” will be ready for the signing! If you don’t like it – you can just walk away. If your interested, go ahead and negotiate, as long as I get what I feel is a fair price, have proof of financing, pocket the bulk of the commission ($15K), and obtain a reasonable deposit I will be very happy.*
Furthermore, for potential buyers preferring to avoid real estate agents I will pay the buyers home inspection fees (max $500), their closing costs (max $2000) and the full cost of title insurance on the property post-closing in cash!
As far as I am concerned, I would rather see cash in the hands of the buyer and seller VS a realtor any day of the week!
*any deal will be reviewed by my RE lawyer prior to signing.
Now there you go assuming again. You know what happens when you make such assumptions don’t you? You make an ass of you and me.
Those independent sources you speak of have ad hoc data garnered from unreliable sources compiled together to form the best they can. The CREA and NAR stats are compiled from hefty sample sizes and believe it or not are very accurate. You might take exception to their presentation but the hard data can not be beat as true.
Again, we REALTORS® really could care less if prices go up or down. Don’t shoot the messenger RE Bear and that is all we are, the messengers.
But believe what you want… just don’t expect your fantasy to change reality.
Assume = ass-u-me. It’s workin bro… it’s workin but draggin you down with me.
That’s right. A 64% drop in real estate values in a major city, among luxury downtown properties – destroying this young woman’s financial future (and that of every other buyer in the last two years).
She continues: “The market’s collapse is the worst thing that has happened many young people of my generation. In 2008, even as the market was softening, I honestly thought I had found my ideal home for a reasonable price. I got caught up in the crazy mania of feeling I must have an apartment… I chastise myself for incarcerating myself in my own financial prison. A prison, I soon learned, that had no more than about 10 inmates. Today the other apartments in my building are filled to the brim with wise renters.”
Could this happen in Calgary? Vancouver? Toronto? Or is it so different here? Did the laws of supply and demand give Canada a pass?
———————————————————-
20% decline? 64% decline? What is it Garth?
Stop putting fear in people.
#188 Devil’s Advocate on 11.24.10 at 11:15 pm
Then why is it that quite literally, whenever any price depreciation is reported, an arbitrary price point in the past is referenced to point out some irrelevant price gain?
Prices could crash 7% in one month, and the RE boards would still point out that it’s still 8.2% higher than in 2005.
And you know perfectly well that the greedy sheeple see only that, and buy, buy, and buy…
Second, you also know very well that a depressed market means far less sales, and for you realtors (if you really are one) that’s quite the salary cut. I know quite a few realtors, and sales have slowed drastically.
OttawaDaddy: I watched the first video. The British accents were great, spot on!
I heard that a British billion was quite unlike an American that is an American billion was a 1000 times a million but a British billion was a million times a million?
#195 virginhomebuyer on 11.24.10 at 11:32 pm
20% decline? 64% decline? What is it Garth?
Stop putting fear in people.
******************
G doesn’t know how much the decline will be-
He’s like the rest of us-just guessing-based on floating abstractions-
Who knows how much the decline will be?
The Market knows–
#130 dark sad person on 11.24.10 wrote:
“Anyone who thinks China is stupid enough to discard the $ and destroy the value of their own 2.6 Trillion USD’s in reserves and make themselves the biggest bag holders in history-doesn’t understand a lot”
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You are a smart cookie many days Mr Dark and perhaps I have underestimated you. The reserves in China incidentally are not anywhere near 2.6 Trillion in US Dollars. This is often misunderstood. Those exchange reserve numbers apply to all of the countries that China does trade with and so some of that figure represents Can $, some is in Euro etcetera. The value of direct US trade as represented in dollars is less than 1 trillion by some recent estimates.
Nevertheless, I think you are absolutely correct in your assumption that China will not absolve itself of US Dollars at this time. This is a political gesture. A gambit. A bet that I believe will backfire as the dollar rises over the coming weeks.
China is abandoning the dollar as surely as it is abandoning it’s trade relationships with the world at large…….In other words, not at all.
Stay tuned for more drama (and BS out of Asia).
#118 Got A Watch wrote: …….
“Here’s the deal:
Some geographical and economic clarifications from politicians, officials and commentators”:
1. ‘Spain is not Greece’
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That was pretty good material Got-A -Watch. You obviously get it and I have noticed you are consistent in your views and sensible in your assessments. Todays post was really interesting.
So I want to know,…..is that your own material?
Because I thought it was terrific.
#177 Screwed in BC wrote regarding:
Carioca Canuck
“U.S. recovery now self-sustaining”
R U kidding me????????
Do you still believe what’s in the media????? Or what are you smoking, dude?
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Carioca Canuck is not far off the mark and I agree that a recovery may well become self sustaining. We are not out of the woods by any means. Growth is essential to kickstarting the economy and ensuring we can all tackle the mountain of debts that currently exist.
So small steps are welcome, as are these expectations
1) No Crisis lasts forever. Not even the financial crisis.
2) The US burst housing bubble will see a bottom and a recovery sooner than most expect. Ahead of Europe and all others according to the trends.
3) I fully expect a strong dollar in the coming months as European woes send the Euro tumbling and Asian growth slows creating global growth jitters.
4) Currency and debt troubles in Japan are dollar positive in my books. So count on the Greenback.
5) Use your head and money wisely.
6) Never bet against the US.
#198 Expand your means: “The tone of posters has gone from ‘possible collapse’ to ‘potential erosion’ of RE values.”
Blah. People are just being conservative because their predictions are on the record.
Like every other market excess, it’ll over-correct on the downside. In other words, it’ll crash like a drunken teenager driving mom’s Taurus.
How much depends on where…look to the US for similar models — they’ll provide a ballpark figure. Vancouver = Florida.
#41 Heddok:
Glossary of Acronyms, Terms, References & Abbreviations:
wrt flouride…you have got some choices: DW which I am not comfortable with even with added Baking Soda, Reverse Osmosis which is expensive as hell as the unit is $500 and filters $50 every 3 months…yes the flouride burns a hole through the filter every 3 months regardless of what the mfr says.
I choose to buy Spring Water with “zero” ppm flouride. It’s 99 cents for 4L which is essentially free and it greatly diminishes my flouride intake. I am hoping Smart Water will come down in price and be sold in 4L jugs (in plastic with a #2 on the bottom preferably to avoid BPA- known for adding pseudo estrogen substances to your body-that doesn’t end well)
nuff said on this topic now.
Hi #190 jeffc, fyi
Hi #173 John, fyi
What my understanding is of water fluoride level and BPA;
Yes it’s difficult to get away from fluoride 100%. I just do what I can to minimize my exposure when I can. Knowledge of what fluoride is in helps.
I do not intentionally drinking fluoridated water now. This can reduce most persons daily exposure quit a bit. Yes some ground water and spring water could have lots of fluoride depending on the rock its come from. I wise I wasn’t still forced to wash in it, due to the cost of a whole home filter system!
RO filters can remove most fluoride but not 100%.
(Brita, carbon filters do not remove fluoride and boiling water makes it more concentrated.)
Ion exchange filters can be made to remove fluoride, but they need to be replaced often to insure they keep working properly.
RO filtered water’s PH is more neutral.
Distilled water will remove fluoride, but it’s PH is more acidic. So if you were always to drink distilled water, your body will uses minerals that are in you to try and naturalize the PH.
I understand that your body tries to stay alkaline on the PH scale to stay healthy, So the water I buy for drinking has been passed through a medium that changes its PH to the alkaline end of the PH scale. But neutral RO filter water is ok too. Ion exchange filters reduce fluoride even more if working as new.
I did drink distilled water when I was in Chicago for 3 day last year, since that was the only un-fluoridated water I could find to drink.
I buy RO alkaline water in refillable glass bottles, and take water in stainless bottles to work and when hiking. This also reduces my exposure to BPA found in some plastics also.
BPA was invented in the 1930’s as a possible estrogen mimicking replacement hormone. Something better was found and it stayed in the chemistry books until the 1950’s when plastic was invented. Someone else said lets use this BPA, perhaps not knowing it was invented as an estrogen mimicking chemical or realizing that you need much less exposure to a hormone chemical to have an effect since a hormone is a biological switch that can cause cascade effects.
I hope BPA is take out of food can soon. Food is added to the cans sealed and then heated!
I hope the wise persons that are given the responciblity to try and keep people healthy actually ‘read the science’ that is clearly pointing to health issues with forced water fluoridation.
(Might there be less profit for some, if people stayed healthy longer?)
Nature seems to have figured out that fluoride is detrimental to an infants brain development,
so even if a mother drinks fluoridated water here beast filters out fluoride from mothers breast milk so her infant gets very low exposure. The American Dental Association and CDC have finally come out and said infants should not be exposed to fluoride it’ll damage there teeth.
If it can damage developing teeth, don’t you think other soft tissue of the body could be effected?
So why are we still adding toxic fluoride to human beings drinking water supplies?
Just because someone in a white coat said to drink it? Your local dentist and doctor is just repeating what they were told to say, or there means of making a living would be placed in jeopardy. They might actually believe fluoride is ok to drink, as I once did.
If they actually read the science of fluorides effects on the brain and soft tissue of the body they would at least be better informed themselfs.
People with Noble prizes in medicine and other knowledgeable professional aren’t calling for the end to artificial water fluoridation world wide for no reason!
I hope some find this info useful.
It’s a bad idea for a 50% correction. If that happens, what comes with it is high crime, poverty, unemployment and undesirable places to live. Look at parts of Phoenix.
Right now in Calgary there are some houses that are ok, but nothing outstanding for the price. This is why houses are not selling.
What is the motivation to buy now? That it is winter and deals are to be had? Who knows if in the spring with more supply prices wont drop lower? Why buy if the inventory still sucks?