2011

Jack and Sharon are easy to hate.

“We live in Toronto, in an average house worth $600,000, two kids, both 47, self-employed,” she writes. “Have $300,000 in cash, stocks, RRSPs and TFSAa. House is paid for. No debt.”

But they’re worried.

“Despite this, we have no company pensions coming to us down the line other than CPP. One of our biggest fears is what you always talk about which is not another market crash, but running out of money. We like our home and really don’t want to move right now. But, we believe this is a window of opportunity in which to sell. So, to satisfy both situations, we are considering selling and renting back. Are we wise?”

Oh, and Sharon adds this: “Love the blog. Been a reader for over 2 years, read your latest books and have managed to twist the arm of a few close friends/relatives to do the same. Most, as you can imagine, though think I’m from outer space reading this kind of stuff.”

Of course you’re an alien, Sharon. You have net worth of about a million, sans debt, high-quality liquid investments and you read this blog. If you only had a Hummer and a bad attitude, you’d be perfect!

But let’s parse this for a moment.

On one hand I have no doubt there will be a torrent of listings hitting the market in February. Realtors have been lubricating homeowners for months, telling them the sales slide of 2010 was an anomaly and everything will be back to normal (a.k.a. surging prices) in the Spring. Of course, exactly the opposite will be true, given what’s about to happen.

Because, on the other hand, the geniuses who run this country have finally awoken to the fact we are house-porning our way into oblivion. While real estate values have increased more than 70% in recent years and family indebtedness has reached epic levels, savings have plunged and we now have half of our collective net worth in a single over-valued asset. The majority of us have no pensions, are financial illiterates, actually believe Mike Holmes and think 3% mortgages are normal.

This is why central bank dude Mark Carney has been raising the alarm, making it clear the status quo won’t last. He’s been as subtle as a Lady Gaga fire-breathing brassiere. No doubt now that 2011 will bring higher interest rates, since he’s determined to stem piggy consumers by turning off the taps of cheap credit.

But that will happen gradually, and likely not until the summer. In the meantime, we have that little rascal F to contend with. This week he’s been busy selling his plan for a voluntary private-sector pension plan to the premiers, who love it because it makes them look proactive while costing dick. Soon he will be unveiling his new budget, and it sure looks as if it will lower the boom on the 5/35 generation.

As we’ve reported recently, even bank CEOs have been lobbying F to do something about the epidemic of HGTVitis sweeping the nation. They see the credit bubble from the inside, and can imagine the consequences of its gaseous implosion. I mean, how much more evidence do any of us need of the consequences of unattended bubbles?

The Tokyo stock and housing markets blew more than 20 years ago, and are still down 75% with that country in a perma funk. It’s now been a decade since the tech-heavy Nasdaq climaxed, and that market’s still 50% below its peak. And after five years of price declines and middle class decimation, the US housing market continues to sink. As you might imagine, nothing good for banks would come from a real estate conflagration here.

So the odds are mounting for new mortgage restrictions, a CMHC rule change knocking out 35-year amortization insurance or even a minimum 10% down-payment. What F chooses will be between him and his therapist, but don’t be surprised. And don’t wait.

The combination of far more supply, anemic demand, mortgage changes, rising long-term loan costs (thanks to that pesky bond market) and tapped-out households is a powerful one. It might even defeat the realtor fairy dust, all those nauseating, misleading Re/Max reports, and the best efforts of an army of sold-out pseudo journalists worried about their condo values.

So, Sharon, selling will give your family liquidity of $900,000. Invested in a conservative and balanced portfolio able to roll with the punches and yielding an achievable 8%, that’s $6,000 a month for rent. I’ll bet for that you can live better than you do now, with more freedom, less worry and without touching your torqued-up retirement nest egg. And your friends will mock and envy you!

But if you get the itch, history shows there’s a good chance of buying back your old place in a few years for less than you sold.

All you need is a greater fool.

209 comments ↓

#1 Contrarian Canuck on 12.20.10 at 11:37 pm

Nice advise. Hopefully F has the balls to go through with it. A 10/30 rule should be enough to cool prices. If so, watch out

Not everyone thinks the rule changes are necessary.

““I don’t see a price bubble and I don’t see that we need the mortgage criteria tightened as is suggested in some quarters”

“I didn’t think [the market] needed it at that time…the market was already in adjustment phase, housing sales were moving down…. So there was no bubble developing at that time, nor is there one developing.”

“(Real estate) will continue to hold its value — unless of course the government decides to tinker…”

We’ll see if F has the stones to do unscrew what he’s screwed up.

#2 Devil's Advocate on 12.20.10 at 11:46 pm

FYI: Some interesting stats on Okanagan Buyers in November

59.8% financed through conventional means with more than 20% down
21.8% financed through a high ratio insured mortgage with less than 20% down
18.4% purchased with all cash and no financing

27.9% were first time buyers
24.4% were upgrading
5.8% were buying investment property
4.7% were buying recreational property
3.5% were moving to a retirement home / senior’s community

So, almost all the first time buyers were high-ratio? — Garth

#3 Mean Gene on 12.20.10 at 11:48 pm

It appears being self-employed is the path to financial success.

#4 chris on 12.20.10 at 11:50 pm

I agree with you that F will likely tighten mortgage qualifications (maybe to 25 year max amortization) and it’s a given that C will increase rates next summer. Unfortunately, I think this will stoke the real estate market next spring as people try to get in before the new changes…

#5 Big Al on 12.20.10 at 11:57 pm

F must be getting his ass kissed after the gift he’s given the Insurance and or Banking community with the institution of the new pooled pension program he just introduced. Pucker up now more money for Banksters and their ilk.

#6 Basil Fawlty on 12.21.10 at 12:03 am

“He’s been as subtle as a Lady Gaga fire-breathing brassiere.”
Now that is super funny, not to mention a real statement to the absurdity of western culture. When is she coming to town?

#7 T.O. Bubble Boy on 12.21.10 at 12:03 am

“We like our home and really don’t want to move right now.”

I know where they live… $624,900 in Toronto:

http://www.realtor.ca/propertyDetails.aspx?propertyId=10128412&PidKey=1331120504

It’s a beauty!

#8 brynn on 12.21.10 at 12:05 am

OMG Sharon,

DONT SELL! moving is hell for you and your family – dont get caught up in the negative frenzy of this blog..I sold my home and was very very sorry – I became a transient renter (who is now being evicted due to a sale of home) and lost 100’s of thousands in tax free equity.
This is your home – it is not an investment and you are well balanced financially.

Lose fear and Lose greed. Dont let the histrionics on this website( most of which havent even owned a car, let alone a home) direct your future!

And now a word from Re/Max… — Garth

#9 obert on 12.21.10 at 12:10 am

With a total net worth 900000, how could she have a 30-40 % of assets in a house and the rest invested?

#10 Kevin on 12.21.10 at 12:24 am

Canada has been overbuilding for 10 years. Household formation has averaged 175k annually over the last 10 years while home building has averaged over 200k.

stealth inventory, hidden inventory, shadow inventory, it is out there lurking. Waiting to pounce. All we have to look at is inventory in the fall of 2008 and we can see inventory can pile up rather quickly. And if we look at CMHC housing monthly, we can see there are many homes under construction at the moment. (3rd most in 10 years). This inventory could come out due to house values dropping and speculators panicking, home ownership rates reverting back to the mean, boomers rushing to the exits, amortizations becoming shorter, interest rates increasing, China crashing, a combination of things etc.

December of 2010 should leave the nation with higher than usual inventories. So get ready. A whack of listings are coming this spring.

#11 realpaul on 12.21.10 at 12:27 am

Right-O……$300,000 in savings at 47 is a freaking disaster! I hope its the kids that are 47 and not the parents . The kids alone ( if school age) will suck up most of that 300K in education expenses by the time they turn sixty. Unless they want the kids to walk into their adulthood saddled with an enormous student loan debt. …or go through life being trained to exist as pond scum….with zero expectations.

There are so many of these fools who have deluded themselves into thinking that they’re ‘millionaires’ based on the value of their real estate and don’t realise that the roof over their head counts for nothing except as a place to live until they sell. Its these same fools who are spending themselves stupid thinking they can ‘afford it’.

If all you’ve maaged to squirrel away is 300K at 47 you’ve been real stupid with your money up to this point. Its at this point in peoples financial life that these people become ‘gamblers’…desperate to make up lost time and start to fancy themselves as ‘investors’…making stupid, wild and speculative bets on the stock market.

Newcomers and inheritance cases are the fastest losers and the biggest suckers for every ‘great opportunity’ that comes along. There is only one other investor class that loses money faster than these two and that is Dentists. This is no slight on the profession…but those guys make so much money that they literally throw it away as if it burned their hands.

The sad truth is that without taking on enormous risk this amount of money will not be anywhere near enough to ‘retire’ for more than a few years before its off to WallMart.

Garths right…they’ll have to sell the house and hope for the worst in the RE market…….just to stay out of the pet food aisle. Food prices , taxes, utility cost etc etc are going up so fast that a multi million dollar fortune will seem like peanuts in twenty years. Look at whats happened to your purchasing power just in the past five. See what is happening with massive paper dollars flooding the market driving up inflation. Think of how that is going to effect your income in the future.

The insurance companies are fairly good at predicting risk. Anyone interested should look at what annuities are paying for a ‘sure thing’. A $40,000 annuity costs about $550,000 right now.

BTW the stats say that the average person has saved about $25 grand….that will buy an annuity of about $Kibbles a week.

#12 BrianT on 12.21.10 at 12:39 am

#8Brynn-The thing is, moving is extremely stressful for a lot of women and renting is a source of shame for a lot of women. This blog is focusing on the way to optimize financial results-you are far from the only woman that simply doesn’t care if the house wrecks your finances, you still need it.

#13 Gord In Vancouver on 12.21.10 at 12:40 am

I Used To Take the Central 1 Credit Union (BC/Ontario) Seriously

Credit unions say household debt no big deal

Read more: http://www.vancouversun.com/business/Credit+unions+household+debt+deal/4001218/story.html#ixzz18iW2wFwH

http://www.vancouversun.com/business/Credit+unions+household+debt+deal/4001218/story.html

#14 Gord In Vancouver on 12.21.10 at 12:41 am

I Used To Take the Central 1 Credit Union (BC/Ontario) Seriously

Credit unions say household debt no big deal

http://www.vancouversun.com/business/Credit+unions+household+debt+deal/4001218/story.html

#15 Devil's Advocate on 12.21.10 at 12:48 am

So, almost all the first time buyers were high-ratio? — Garth

I too would assume so. Although… after applying a little of the magical SPIN one might rightfully suggest that, worst case, almost 22% of those first time buyers had the resources to put down at least 20% and financed through at conventional means. ;-) Not bad… not bad at all I’d say compared to that which we are led to believe. And that is “at least” that must be the case. And this is the Okanagan Valley where property values are oh so unaffordable. But of course this is “SPUN” right?

Do the math… (27.9% of all buyers were first time buyers and only 21.8% of all buyers financed through a high ratio insured mortgage with less than 20% down)

#16 dave in calgary on 12.21.10 at 12:51 am

#9 obert – She can borrow $260,000 (against the house) and invest it, claiming the interest against taxes. That’s the dumbed down version. I believe Garth has outlined ways to do this in previous posts, and books.

#17 T.O. Bubble Boy on 12.21.10 at 12:52 am

And for those of you who think I’m joking with that link to an “average” $600,000 home… in the December mid-month market update, the average detached house in Toronto was $678,587:

http://www.torontorealestateboard.com/consumer_info/market_news/news2010/nr_mid_month_1210.htm

So, a true “average” house might look something more like this:

http://www.realtor.ca/propertyDetails.aspx?propertyId=10006533&PidKey=915333477

#18 Stevermt on 12.21.10 at 12:53 am

#11 realpaul
how long will it take for the flames of the coming hyperinflation to burn up all of your riches?should be interesting..all we’re gonna need is fitness and a roof over our heads and no fear of getting our fingernails dirty.

#19 Freedom 55r on 12.21.10 at 12:53 am

My questions are: When do Jack and Sharon want to retire? How old are their kids? If they both keep working til age 60 or 65, would they be able to save enough to retire and also keep their house?

Why? — Garth

#20 Crash Callaway on 12.21.10 at 12:56 am

#5 Big Al said:
“F must be getting his ass kissed after the gift he’s given the Insurance and or Banking community”

And the irony is that the deal was done in Kanuasskis Alberta

#21 Elmer on 12.21.10 at 12:59 am

“yielding an achievable 8%, that’s $6,000 a month for rent.”

Wow, yesterday it was an achievable 6%, today Garth decides 8% is achievable. *rolls eyes* And not only does this portfolio return 8%, but apparently it generates it completely tax free.

An 8% yield this year was easily achieved. With most returns in the form of dividends or cap gains, the tax load for most people is 20% or less. As I wrote days ago, a balanced 40-60, fixed-equity portfolio this year has done 13%. — Garth

#22 TheBestPlaceOnEarth on 12.21.10 at 1:00 am

Most Canadians don’t have debt period. This is all a charade folks to make you sell your home to the vultures. Sure this person could sell there house and live as a transient renting. There kids room the decorated gone, the memories, the PRIDE OF OWNERSHIP. Remember that folks P-R-I-D-E. Oh yeah and she can buy back a couple years from now for cheaper. I’m sure she is an expert of calling the market bottoms like everyone else. Stay in your home. Trying to be smart selling because you know where the peak is will just alienate you from your friends who will think your foolish. Enjoy your life. Renters don’e enjoy life, Homeowners do! Renters just fret on couldashouldawoulda. When you retire you can rent out a suite at that time to supplement your income. Bring on 2011 F ain’t doin F all and that’s a FACT

#23 OttawaLuke on 12.21.10 at 1:04 am

Hi Garth,

Long-time reader, first-time commenter. You gear your writing towards the 70% indebted to real estate but don’t forgot us twenty-somethings sitting on the sidelines waiting for all of this to unfold. I appreciate the information gathering that you do for us and hope that you will guide us first-time buyers when we are at the bottom in a couple of years. Wouldn’t want to catch a falling knife…

#24 InvestorsFriend (Shawn Allen) on 12.21.10 at 1:18 am

Hey realpaul at number 11 who casts a Pall over this couple claims $300k saved at age 47 is a disaster (even with house paid for).

Well Real Pall… How old are you and what have you saved? (And how about a Real name to go along with it?)

#25 rentin on 12.21.10 at 1:25 am

Garth,

You have to start taking income tax of your calc’s….

6k is only 4.8k after 20% tax. Even less if you want to tax the 300K partial RRSP withdrawl income ….

But of course; the buy low-sell high cannot be argued with.

#26 SATO on 12.21.10 at 1:26 am

Can anyone post the link to Garth’s post about the perils of the “buyers representation agreement”? I believe it was posted a few months ago. Thanks.

#27 dark sad person on 12.21.10 at 1:29 am

I have to question how much Money will be enough in the future-
I don’t think you’ll need near as much as most think-

Everyone is looking at the ongoing speculation in commodities/stock market etc. as if this is sustainable-
It isn’t-every commodity must have a feed loop a drain off and that is where consumers enter the picture-
Consumers are the only purpose for the existence of commodities-
Affordability/purchasing power is falling out from under prices-at some point the price ceiling will be found and when that happens they must come to the market to meet the buyer-

All commodities have to clear the market at some point or they are valueless-

In a Deflationary World of high personal debt and disappearing net worth and rising unemployment and falling Government tax revenues-despite higher taxes-prices will be forced lower-there is no way they cannot be-

So-who knows how much liquidity one must have-
Who knows-maybe 300K will be a fortune in ten years-

Bottom line-
Those left with purchasing power and the guts to act at the inevitable bottom-which will be signaled by panic in the markets and a mood of resignation and defeat amongst the masses-for those who can recognize this and the always prevalent price undershoot-which will actually be the beginning of another great bull market-those people will be the winners-

#28 Nostradamus Le Mad Vlad on 12.21.10 at 1:31 am


Compared to the lady in the previous column, this couple is in relatively good shape, as they obviously know how to manage their money.

I concur — sell the home with a rent-back option (as long as the monthly rent is reasonable), then put the net proceeds into a balanced portfolio.

At the same time, if the children are old enough, start maxing TFSAs for them using part of the proceeds. That will set them up for a reasonably good pension plan when they quit the workforce.

“Most, as you can imagine, though think I’m from outer space reading this kind of stuff.”

If you’re from outer space, then you’re not a sheeple! Let them stand in their own corner of the field, bleating all they want.

“All you need is a greater fool.” — Sell ASAP! Use the winter blahs to your advantage.
*
Echinacea To some extent, this is true. A better remedy is a mixture of Vitamins C, D, D3, Echinacea, fresh air, sun and about 45 mins. of daily exercise, and, if necessary, Fisherman’s Friend lozenges. Count big pharma’s crap out.

Downgraded Now the downgrades begin across Eurolalaland.

600% interest rate hike in two years? Probably goes with the previous story, about the downgrades.

US$ — a possible post-mortem.

UN – Gore How to spend / waste hundreds of billions on something that happens anyway — GW and GC, better known as CC.

China with Soros and Obama helping in the background, are tinkering with the US.

Pictorial Frozen London, England. The UK has almost come to a complete halt and, as per last year is running out of grit / salt for roads and sidewalks.

Love-in for Chindia. Plus — China – Pakistan are getting along well, esp. since China has built two nuke power plants for them to provide heat for their citizens.

US – Russia nuke treaty nearly gone.

Krugman — What is money?

5:07 clip of China’s new bullet train, and 4:57 clip of the trip to and from hell — Baltimore to NY.

#29 Tim on 12.21.10 at 1:33 am

Garth,
why do you recommend investing in REITs if real estate is trending down? Won’t the commercial market soften as well?

REITs gained 20% this year with a dividend north of 6%. — Garth

#30 Devil's Advocate on 12.21.10 at 1:36 am

#8 brynn on 12.21.10 at 12:05 am

OMG Sharon,

DONT SELL! moving is hell for you and your family – dont get caught up in the negative frenzy of this blog..I sold my home and was very very sorry – I became a transient renter (who is now being evicted due to a sale of home) and lost 100′s of thousands in tax free equity.
This is your home – it is not an investment and you are well balanced financially.

Lose fear and Lose greed. Dont let the histrionics on this website( most of which havent even owned a car, let alone a home) direct your future!

And now a word from Re/Max… — Garth

I kinda tend ta have ta agree with ya brynn.

I sold revenue properties at the peak of the market (summer 2008) thinking it was a good idea to crystallize those equity gains, hold and buy back in when things settled down. Didn’t want to carry the debt through the tough times I knew lay ahead. WTF was I thinking? Damned properties carried themselves just fine. But oh no, all the “smart” advice was “get rid of your debt”. Prepare for tough times, no renters, high interest rates, yada, yada yada… And someone ready willing and able to pay my price… Seemed like a no brainer. The “Buy low, sell high, buy back in again low sometime in the future” thing?

All I ended up doing was writing a big fat capital gains tax cheque to our government so they could “stimulate” the economy some more. Buy back in as planned? Not so much chance of that from what I can see. But hey it was my bad. I was a victim of my own greed. I lost sight of the reason I bought the properties in the first place – long term revenue holding properties. I played the “speculation” game, granted in reverse but still a “speculative gamble” thinking property values would fall. Well they haven’t and I honestly don’t believe they will so much. Not enough to compensate me for that “fat capital gains tax cheque” I wrote anyway. Oh and then there was the “alternative minimum tax” thing – but don’t get me started on that one…

Take what you want from that of my experience… but be warned; be it your “home” or a “revenue property” short term speculation as reason to buy or sell is just a bad idea.

And now a word from Kelowna super-realtor. — Garth

#31 Dan in Victoria on 12.21.10 at 1:41 am

Brynn @ 8

Don’t worry Suzanne researched this, just for you…..

http://www.youtube.com/watch?v=Ubsd-tWYmZw

#32 undecided_waiter on 12.21.10 at 1:45 am

Garth
I love your blog and some how avioded making a stupid mistake of buying I was going to make under a lot of pressure from idiots (read relatives). I have close to 50,000 in cash and 40 yr old, can you show us where a person like me can invest (potentially safe) for a modest return of 6% or even 5%. I have a job and wife stays home with two kids make around 90,000 / yr believe me I am unable to save something significant at the end of month. I have recently moved to this country and first thing I was told to buy a home if I had some down payment because RE always goes up here. I tried to do some research and it appeared to me that fundamentals are not right here.
I own a house far away at back home that is worth C$100 grand and I receive 350 /month rent.
Can you show people like me on this blog where we can invest our money and make some extra income or can you make a plan here for a people like me how we can keep putting our money every month in diversified investments and generate/increase some cash flow for us.
I honestly do not know how to thank you for your great blog and the great service you are doing for people like me who were confused and were under lot of pressures from their in-laws. Thanks a lot again.

Sincerely

#33 Devore on 12.21.10 at 1:47 am

Someone explain to me the rationale for this new pension plan please. Between RRSPs and TFSAs, how many are actually maxing out their contributions? The problem is not the limits are too low, and adding another pension scheme will be not only expensive and confusing, but do nothing to make people save. Maybe if F starts subtly flogging the inevitable, which is cuts to real CPP benefits (which will no doubt take the form of nickel and diming so as to hide the obvious) more people will get the hint.

#34 TaxHaven on 12.21.10 at 1:53 am

“We live in Toronto, in an average house worth $600,000…”

“WORTH XXX$” is a more meaningless expression than ever.

“Worth” is only what a given buyer will give you, and no more. So let’s re-phrase that:

“We live in Toronto, in an average house expected to fetch $600,000…” or

“We live in Toronto, in an average house which we hope will fetch $600,000…” or

“We live in Toronto, in an average house – the kind that has fetched $600,000 in the past…” or

Only THE MARKET can tell anyone what their house is “worth”, and only at one given instance in time.

#35 dd on 12.21.10 at 1:56 am

2011 – Watch 60 minutes and have a look into the neighbours to the south. They are bankrupt as per 60 minutes.

IF the Federal Government doesn’t print money the stock markets in the US are going to roll over and could test March 09 low. If they do print money the US dollar will be trashed. All debts are due. Now.

http://www.cbsnews.com/video/watch/?id=7166293n&tag=related;photovideo

#36 brynn on 12.21.10 at 2:11 am

Brian T – you and Garth are misogynists who protray every female as a granite seeking, gold digging finance wrecker…
I know just as many smarmy males who buy the consumerism lie – but you garth and all the other delightful misogynists on this site paint all women as granite seeking, gold digging, financial disasters. I bought my own home with my own $ and lost a fortune due to selling it.
Garth, you are a somewhat intelligent male, dont you get sick of the same, tired, paranoid retort that anyone who is a contrarian to you is an undercover remax agent?

shhhh we better quiet, the chat room is bugged by F and the CREA has hired computer hackers to sabbotage your system……

You sound hot. — Garth

#37 Frank Dean on 12.21.10 at 2:12 am

While I’m in general agreement with Garth that this is a bad time to buy, I believe this is terrible advice.

Transactions costs: Buying and selling a 600k house will cost 30k in real estate commissions. Moving twice will cost at least 10k, and is a horrible inconvenience. Depending on their age, your children may have to change schools.

Your personal financial situation isn’t really that grim. You’re both 47, which means you both have at least 10 prime earning years left. If you own your home outright, your living expenses in your retirement years will be quite low. If your investment portfolio yields 6%, 600k in financial assets and your own home when you hit 65 will provide 3k a month income. If you save 10k a year (which you appear quite capable of doing), you’ll hit this target easily if your investments yield 6%.

Since you are self-employed, I imagine it may be possible for you to continue to operate your business on a part-time basis after age 65.

I think your energy would be better spent figuring out how your self-employment income can be at least partially sustained in your later years, either by bringing in partners or organizing the business so that it is an asset that can be sold.

#38 realpaul on 12.21.10 at 2:20 am

What Mr Economist/RE industry Apologist discounts is that fact that it only took thirty years to literally hit the wall and that the debt has suddenly accelerated to 150%.

“Household debt levels have been growing in Canada as well as most industrialized countries since the 1970s, he said. His economist peers’ fixation on 150% as a danger level is “arbitrary” and illogical, he said.

“It’s just a broader trend in the economy and society that we are more reliant on debt than before,” he said.

Read more: http://www.vancouversun.com/business/Credit+unions+household+debt+deal/4001218/story.html#ixzz18itmEuq0

What has happened is that the pyramid scheme that was started in the 1970’s was grossly exaggerated by the manipulation of the money supply in the early 2000’s and quickly spiralled past the Keynsian 3% p/a to over 100% in less than a decade. The fact that we have hit the wall seems to surprise the credit union apologist. Its called hyperinflation Mr Pastrick !

House prices, meat, eggs, coal, gold, copper, cars, cheese, clothes taxes etc etc etc have all doubled and tripled in price over the past ten years since the US under Greenspan started up the printing presses…….no connection??????

Values have not gone up….the government has merely Zimbabwe’d the value of our dollars.

#39 UK lurker on 12.21.10 at 2:33 am

I think your advice here is a bit wonky. Sharon and her husband still have 15 to 20 yeas of working life in them. With no mortgage they can put every penny they have spare into other investments, the kind you wisely recommend, giving them a diversified portfolio when they retire. If they like their home, aren’t they better off just staying put instead of treating it as investment? The peace of mind that comes from knowing you have your own home and can’t be turfed out by a landlord or bank is priceless.

I sold to rent many years ago in the UK on advice similar to that given by you. The fundamentals were similar then in the Uk as they are now in Canada (they are now many times worse here). We had a brief correction, and I still believe that prices now are going to fall significantly, but if I’d planned to stay on this side of the pond, I think I’d have been better off keeping my home.

No investment is guarenteed, including those you recommend. But if you have a roof over your head, and it’s paid for, personally I feel that is worth more than the prospect of making more money..bird in the hand etc etc.

If I was in Sharon’s shoes, I’d stay put and pour my spare cash into other stuff like RTFs etc and stop thinking about the value of your home (yes, it’s a home, not just a part of your investment portfolio).

#40 virginhomebuyer on 12.21.10 at 2:39 am

Why own when you can rent?

Why drive a Hummer when you can take a bus and save on money?

#41 kitchener1 on 12.21.10 at 2:42 am

Looking like its just about a done deal, 35 year will be dead and we will be going to either 5/30 or more likely 10/30 mortgages.

F will be slick about it, the reasoning will be about:
govt responsibility
tax payer protection via CMHC losses

He will state that if banks want to go 5/35 they are free too but CMHC will only do 10/25.

Increase listings
increase in mortgage rates
new mortg rules take effect approx April 1
looking like a great summer.

#42 Alan on 12.21.10 at 2:43 am

One small point: If interest rates are indeed going higher and inflation (beyond the cost of housing) is going up then that means a decline in stocks especially interest sensitive stocks like utilities, telecoms and reits that have to re-finance at higher rates compressing their spreads. So I would be careful to advise buying stocks ahead of a series of interest rate hikes. Of course banks make more money, so my call would be to own the banks.

#43 Jeff Smith on 12.21.10 at 2:47 am

>#3 Mean Gene on 12.20.10 at 11:48 pm
>It appears being self-employed is the path to financial
>success

The majority of financially successful people are self employed. Come you can’t become rich by slaving to make someone else rich.

#44 Renter in Van on 12.21.10 at 2:48 am

Just a quiet plug for this blog from a wealthy (2mill), 3 fancy car owning, professional female (no inferiority complex here) who is happy to be out of the home ownership game and renting a house for 1/1000 of it’s current value. Go Garth!

#45 Neutral renter on 12.21.10 at 2:48 am

Thought I’d toss in an anecdote from Vancouver about renting, from a very neutral perspective. Have been renting for over 10 years, have family of 4 now, moved 3 times in that period. We are not renting b/c of ideology, just never could commit to buying for variety of reasons. No question, if I could go back in time (to 2000) and buy I would b/c real estate has exploded here since 2000, but was not possible at that time (and I would sell now, from a pure investment perspective). Point of post is this: buy or rent as you see fit, but dont’ buy b/c renting is “scary” or “risky”. If you use a bit of good sense and choose landlords carefully, really it is no big deal, and you can change your mind anytime after a minimum 1 year. For the curious, I know I have saved significantly more liquid cash/investments than friends who bought; however, my friends who bought at least 5 years ago could liquidate their homes if they wanted right now and do much better than my investments did, so I am not suggesting they made the wrong decision by buying. It is really a personal choice. Best of luck to everyone either way.

#46 Jeff Smith on 12.21.10 at 2:48 am

What a dream home!

>#7 T.O. Bubble Boy on 12.21.10 at 12:03 am
>“We like our home and really don’t want to move right
>now.”
>I know where they live… $624,900 in Toronto: http://www.realtor.ca/propertyDetails.aspx?propertyId=10128412&PidKey=1331120504

It’s a beauty!
.

#47 Roial1 on 12.21.10 at 2:57 am

11 realpaul on 12.21.10 at 12:27 am

Unless they want the kids to walk into their adulthood saddled with an enormous student loan debt. …or go through life being trained to exist as pond scum….with zero expectations.

Just shows how some are really out of touch with reality. (and are stuck with their nose in the air over collage education)

Right now if your son or daughter where to start a trade apprenticeship they would be so well off in ten years that they will OWN several “Collage grads”—- each.
Here in BC the shortage is already stagering. AND YOU CAN YOUR TRAINING FOR FREE!
So next time someone tells you that you have to “Pay” for your kids education LAUGH IN THEIR FACE! and tell them of your auto body mechanic son makeing $ 40 or $50 an hour while theirs works at Wallys World for min. wage.

#48 Peter Pan on 12.21.10 at 3:03 am

“As we’ve reported recently, even bank CEOs have been lobbying F to do something about the epidemic of HGTVitis sweeping the nation.”

————————
It doesn’t appear the credit unions have clued in… Helmut “Tickle Me Elmo” Pastrick (Central 1 Credit Union’s Chief Economist) doesn’t want further restrictions in mortgage lending and doesn’t even understand why things were tightened up in April.

I guess credit unions enjoy giving their members more rope to hand themselves with…

#49 Peter Pan on 12.21.10 at 3:04 am

Forgot to give the link to the story…

http://www.financialpost.com/news/Credit+unions+household+debt+deal/4001218/story.html

#50 Midas on 12.21.10 at 3:58 am

Construction on the west side of Van continues apace. The hammers never stop. Every day it seems another old home is torn down to make way for the new.

My friend’s place in N. Van, listed in July, remains unsold. He dropped the asking price $100k in October.

#51 See you in February on 12.21.10 at 4:02 am

See you in February,
I have been watching R/E for 30 years, quite the opposite will happen in February.

I laugh your wrong this time Garth, or are you right but just got the dates wrong? hmmmmm

I believe in April or May 2012 you will be more right but not in February 2011.

The reasons are the same thing you have writing on this blog….. people get emotional over R/E. and second Interest rates will not rise till after the summer 2011, and not enough for people to notice in 2011.

Therefore, February will see few listings and lots of buyers. This is what I call the movers month, people who plan ahead and get a house for the summer, and move before school starts in September.

The next wave is all the people who get greedy, That’s when house porn starts as people start listing because they see R/E increasing based on February sells.

Then April or May and more likely summer 2011, they will either admit they are wrong and sell at a lower price, or hang on.

Then late in the year they will pull the houses off the market.

Then wait for 2012 for I believe your to early in your forecast. As the cumulative effect of a slowing economy, massive world debt and higher interest rates

You should print this and keep it as your forecast is off by a year.

I have told you long ago I agree with much of what you say but a forecast is a moving target, its not if but when.

The only thing that can change my forecast is a financial meltdown in Europe, again not if but when.

As for advice to Sharon and the kids, Garth wrote this a few months ago to me, and I printed it….. If you have made the largest capital gain in your life why would you not sell? I am still pondering that important thought.

#52 See you in February on 12.21.10 at 4:11 am

Here is some information to chew on as why Canada is different from good ole USA.

From the book The Age of Deleveraging: Investment strategies for a decade of slow growth and deflation, published in late 2010 by Gary Shilling.

One of the major contributing factors in the USA and subsequently world financial crisis was that between 2000 and 2005 40% of all mortgages in the US were sub prime. People who never would have qualified got mortgages. These were then packaged off as AAA bonds and sold around the world.

I would bet that number is closer to 5% in Canada, but I am sure some blog dog on here can look it up.

Anyway Gary Shilling predicted 7 of the last 7 recessions, must be doing something right.

We give mortgages every day to people without money. How is that so different? — Garth

#53 Dorothy on 12.21.10 at 5:27 am

Although Toronto and Vancouver may have housing bubbles, I don’t believe the same is true for the rest of Canada. In my neighbourhood prices have been gradually falling for over a year, and now appear to have levelled off. And in talking to friends who live in various locations across Canada this softening of the real estate market seems to be a trend. So I wonder if its wise for the government to set national policy based strictly on what’s happening in Toronto and Vancouver?
I am in favour of increasing the downpayment on insured mortgages to 10% because, regardless of where you live, it seems prudent to me to always have enough equity to protect you from the inevitable minor market fluctuations, but I don’t think it’s necessary to lower the boom entirely by also reducing amortizations at the same time. If the government overtightens the mortgage lending rules unnecessarily they will cause the very thing homeowners hope to avoid, which will in turn drag down the overall economy and end up hurting even those on this blog who are currently salivating at the prospect of a housing crash. My advice to those who are hoping to see such a crash is to “be very careful what you wish for”, because if you get your wish we’re ALL going to be a lot worse off than we are right now, not just homeowners.

#54 House on 12.21.10 at 7:46 am

My vision of a central banker DUDE is one that is ahead of the wave. Not one that is continually trying to catch up.

#55 SafetyBear on 12.21.10 at 7:52 am

“If all you’ve maaged to squirrel away is 300K at 47 you’ve been real stupid with your money up to this point.” Realpaul #11, You are Gordon Gecko and I claim my $5.

#56 Hamilton Guy on 12.21.10 at 7:55 am

Please expand on the 8% ROI achievement. have your book (great) – will read it again – need to shake off analysis paralysis.

#57 wordparser on 12.21.10 at 8:24 am

Is “transient renter” the new scare word realtors are learning at the Monday morning sales meetings?

Last place we lived in for five years. Met the landlords once. ONCE! It felt as much our home as anywhere I’ve ever lived – whether owned or rented.

Was finding a new place to rent hard work? Yes. But finding the right place to commit a (nominal) $600K (average price) is hard work, too.

Cost to move? I think I paid Ingrate Truck Rental about a hundred bucks for the day and about 50km of mileage.

In our new place, I don’t wear a scarlet letter that indicates “renter.” I’m just one of the guys.

When I pick up a tool and fix something, it’s for other people and they pay ME. At our place, I take care of small stuff out of personal pride, but I’m not on the hook money-wise or labor-wise for anything big around here. On weekends I sit on my @ss and watch football.

#58 Marquee on 12.21.10 at 8:24 am

My dad, who lived through the great depression in the 30s, said that the people who survived best were those that OWNED property. The key is to own and carry no debt because when you own a place, nobody can kick you out and you can grow food if necessary.

It’s only 1931 in your mind. — Garth

#59 JO on 12.21.10 at 8:25 am

Changing the rules or raising rates or any combinaton to reduce the rate of growth in debt will also bring the economy near the brink..or into outright recession. Given the levels of debt we are at and the historically high rate of growth in debt (which as far as mortgage debt has actually been trending downward for the last 3-4 yrs), the PM and company will be in shock at how bad the economy will really look like…GDP and asset values will have to be supported by the lower, more realistic GDP level which no longer has extreme credit issuance inflating it.

An Australian economist Steve Keen has done a lot of work around how high debt levels and excessive rates of debt growth work…some great work.

The CONservatives could easily shoot themselves..in fact, they better opt for election right away this spring and then make the mortgage changes.

BTW, 8 % on a balanced portfolio is too high a rate Garth. I would rely on 5 or max 5.5 %.
JO

You can get 5% for showing up. — Garth

#60 X on 12.21.10 at 8:25 am

re # 30 – not all REIT’s are linked/affected by residential or comercial properties. There are Health Care, Retail, Residential, Office and Mortgage REIT’s out there.

Glad to hear there will be changes to the 5%/30 yr mortgage options in th eupcoming budget. Otherwise raising rates sooner to dampen the RE market, would have had an impact on the economy.

#61 Seasonally adjusted on 12.21.10 at 8:39 am

6%, 8%, 13%, 9000% returns…. “Past Performance Does Not Guarantee Future Results” it’s best to remember that when “investing” in anything.

@Jack and Sharon –

If you want to sell, then sell it QUICKLY and without greed. You have to get it sold before the spring stampede which means, price it BELOW the market.

Word of advice: If you are greedy, you will most likely lose more as your house will sit, you’ll lower the price, again it will sit as the other spring houses come on for sale, you’ll lower again (and repeat).

In the end, cut the price now to the lowest amount you would accept, sell now and you most likely will be out ahead come spring.

About investing your house money… NEVER “bet the house” in the market, put the money aside for your next place in a SAFE (GIC or Orange guys shorts) PLACE, the rest, if you are fine to potentially lose it, then invest it in the markets.

#62 gentleInvestor on 12.21.10 at 8:53 am

Governments first deny a problem, then admit their is a ‘little’ problem and then when disaster strikes they claim it was ‘not their fault.’ I’m pretty sure we’re at the ‘it’s a little problem’ stage with real estate. As government is now getting involved I’m 100% convinced things will begin to go south within the next year or so. Government intervention will pull forward the correction probably faster than when it would have inevitably happened.

#63 bigrider on 12.21.10 at 9:14 am

#31 Devils Advocate. Patience DA you will get your chance to buy for less. 4-7 year gradual erosion of prices coming right up. Think 90’s

#37 Brynn- You’re right males just as horny for RE and hump it regularly with their purchases but nesting instinct you must admit exists only in the female and adds kerosene to an already dangerous housing situation.

#64 bullion.bunny on 12.21.10 at 9:22 am

#45 Roial1 on 12.21.10 at 2:57 am

So next time someone tells you that you have to “Pay” for your kids education LAUGH IN THEIR FACE! and tell them of your auto body mechanic son making $ 40 or $50 an hour while theirs works at Wallys World for min. wage.

Well maybe, cars have become more and more reliable over the last ten years requiring fewer repairs. The industry trend is for zero repairs over the life of the product. When was the last time you replaced a muffler? Most are now stainless steel and last for the life of the car. Tune ups are a thing of the past, spark plugs put in new cars only need be changed every three years. Also the automation used to manufacture parts and products becomes faster, more reliable and requires less design time! In fact it would not surprise me to see a greatly reduced need for auto mechanics and skilled trades.

#65 Moneta on 12.21.10 at 9:30 am

TaxHaven on 12.21.10 at 1:53 am
“We live in Toronto, in an average house worth $600,000…”
———
Or…

Our house is paid off but we only have 300K in our investment portfolio and we’re 47.

#66 dandy on 12.21.10 at 9:45 am

Horrible advice today.

Why not just let them be, whats the point in selling a house to make a saving of max 100 grand (after costs). They don’t need the money they are not living beyond their means.

Their biggest risk is that they don’t have any debt! what if we enter an inflationary period? at least get some leverage on that with a bit of debt.

I know a guy with multiples of billions of dollars and he’s less sure of where the future lies than Garth!

One thing I learnt from the Global Financial Crisis was that NO ONE really knew how to protect themselves!

I did just fine. — Garth

#67 Mikey the Realtor on 12.21.10 at 9:45 am

As a flood of listings hit Canada in the spring, many people will be jumping off the fence and into RE, this blog alone probably has about 10k pups and poodles licking their chops and paws ready to buy.. There will be no huge price reductions worth mentioning. This is going to be a deja vu from earlier this year.

#68 Sand Piper on 12.21.10 at 9:50 am

RealPaul – I read your comment regarding what a tragedy for Sharon that she’s 47 – house fully paid off and $300K in investments…I just about fell out of my chair when you seem to openly mock her…get a grip buddy… Sharon is way ahead of most in that age bracket and is wise enough to realize that “change” could be coming and she at least can determine what is the best course of action..though I wonder why she would blog such a serious future move … spend a few bucks and gets some top quality investment advice (no disrespect to you G-Man)…

I like most of my 40 something crowd are pretty much in the same boat – kids – house (and most like ourselves are about 5-7 years from being mortgage free and we are very anxious on having a old fashion mortgage paper burning event).

We saved – but lived life – and a note .. if the average family is making approx. $60K a year…please explain to me how one can generate $300K in savings without actually living in a tent – (or parents basement) and living like a hermet..

RealPaul – you may be awashed with money – bathing in it .. good for you! For the rest of us – the game plan, pay down that mortgage monster – and if the cards fall in the right places – you should have 15-20-25 years to properly put some decent savings away –

And don’t believe the BS from banks about the $1Million + you need in retirement – why do they preach that…bing-Go…fees…lots and lots of fees the banks will charge – they couldn’t give a rats $^%#& if you eat dog food in your 80’s…

Pension (if there is still one available + savings + a occasional part time job) could easily satisfy most.

Real Paul – enjoy your yauht… I’ll enjoy my life!!

#69 CTO on 12.21.10 at 9:51 am

#8 brynn

Don’t Sell? These people are sucessful. They have made decisions in life that have got them to a good place, likely because they THINK IT OUT, and it appears they have!
Garth has provided them FUNDEMENTAL reasons for them to decide on.
You give them DON”T SELL?
You must be from REMAX!!!

#70 mattbg on 12.21.10 at 9:56 am

Had a letter from my former real estate agent yesterday, trying to spin increased listings, decreased unit sales, but increased average sale price in my area as an overall great thing for the health of the market.

An additional problem is that, because of their position on both sides of the transaction, they try to spin it as a good thing for BOTH buyers and sellers.

#71 AM on 12.21.10 at 10:01 am

#23 TheBestPlaceOnEarth on 12.21.10 at 1:00 am

“Most Canadians don’t have debt period. ”

Care to back that up with some real evidence?

Or is it a fact because you say so.

You are not making a very good case for yourself…but then again, you have failed to do so on numerous occasions, so why would anyone take you seriously.

#72 CTO on 12.21.10 at 10:01 am

#17 T.O. Bubble Boy

YuK!!!! That house is definitely average!
I might pay…say…$290,000 for that bungalo.

There was a Globe and Mail artical last week about a study in T.O that shows a map of LOW income areas sourrounding inner T.O. Very Polarized! Keele and Lawrence is right in the low income area of $30000 per person.
$70000 per family / yr is going to pay $600+ for this.

THIS IS NOT GOING TO END WELL!!!!!!!

#73 CTO on 12.21.10 at 10:04 am

#55 House

How innocent!

Mark C is flying buy thee seat of his pants like all central bankers today!

#74 CTO on 12.21.10 at 10:08 am

#52 See you in February

You’re right, the timing is a moving target, but the fundementals under it all still remain.
For all those with a lifetime of repayments, god help em!
Not if, but when….

#75 MadMan on 12.21.10 at 10:13 am

re: #54 Dororthy

Like myself, I bet most persons visiting this blog are not “salivating” for a housing crash. Instead we are hoping for the time when sanity returns to the Canadian economy. Yes, a RE correction will ultimately hurt most people but it’s in everyones best interest to get the pain over with now. Then we’ll get back to normal families being able to afford normal houses while investors get a little something back from their savings. Keeping this bubble inflated will only make the pain worse in the end…

#76 Agio on 12.21.10 at 10:24 am

realpaul @ 11
Some people like obert @ 9 can’t read, others are simply too stupid to understand what they read. You win the stupid cookie today as you most often do. Turner should give out lil gold stars or something. Congratulations.

Aside from slamming a couple who are self-employed with ZERO debt, who probably avoid more in yearly income taxes than your yearly income and who have a higher net worth than your parents will ever be able to leave you if you don’t suck em dry living in their basement while writing bullshit on a blog, the couple happen to agree with much of what Turner advises (that’d be the ‘we’re concerned, we follow your blog and have bought your books’ parts to name but three)
They asked a question or two and Turner gave them some options and unlike most they have the luxury of choice.
You yourself validate that with your incredibly astute closing line of your nonsensical diatribe. I absolutely loved the ‘BTW’ part of it-it positively screams “I can cut n paste” Superbly done as always.
__________________________

TheBestPlaceOnEarth @ 23

You wrote ‘Most Canadians don’t have debt period. This is all a charade folks to make you sell your home to the vultures.’

What planet are you from?

#77 Live within your means on 12.21.10 at 10:31 am

#48 Roial1 on 12.21.10 at 2:57 am

Last week we had an electrician in to put in a new breaker panel, etc. He has his own one man business & has never advertized. He’s 61. Gets all his work through recommendations. Though he had to wait around for hours for the power corp inspector to change our meter, he gave us a quote and stuck by it. Believe his rate is $55/hr plus HST (15%). Each year he and his wife travel to Europe for a month or 2. He’s invested in the market and though he lost in 2008, he stayed in. If IIRC his wife is/was a RE agent. So yes, I agree that smart trades people can make a good living.

In today’s world most students must have a Masters to even get into the job market. I fear for a niece of mine who will graduate next year with a Master in Art History. Not many jobs in that field, but its what she loves.

#78 Mike Turner on 12.21.10 at 10:34 am

TheBestPlaceOnEarth you do realize that P-R-I-D-E is one of the seven deadly sins right? Not one of the virtues…

#79 Habsfan on 12.21.10 at 10:35 am

Lady Gaga fire-breathing brassiere can be found where????

Where it’s usually located. — Garth

#80 Joe Q. on 12.21.10 at 10:37 am

#54 Dorothy on 12.21.10 at 5:27 am writes: “Although Toronto and Vancouver may have housing bubbles, I don’t believe the same is true for the rest of Canada.”

You can easily figure this out by comparing house prices to family incomes or rental yields in particular areas of interest. If people are routinely buying homes at 5-6 times annual income or are just barely covering mortgage payments + taxes with their rental income, there’s a strong indication that a bubble mentality is at play.

In any case, Toronto and Vancouver account for such a huge proportion of total real estate wealth in Canada that “even if” the bubble is confined to these two cities, the national effect is still huge.

#81 Agio on 12.21.10 at 10:58 am

Frank Dean @ 38
“Your personal financial situation isn’t really that grim. You’re both 47, which means you both have at least 10 prime earning years left. If you own your home outright, your living expenses in your retirement years will be quite low. If your investment portfolio yields 6%, 600k in financial assets and your own home when you hit 65 will provide 3k a month income. If you save 10k a year (which you appear quite capable of doing), you’ll hit this target easily if your investments yield 6%.
__________________________

Grim? I missed the part of Turner’s entry where he said these folk were screwed and also the part he skipped about how to invest.

Apparently December 21st 2010 is the day for people who can’t read to post self-aggrandizing bullshit in stereo. Must be the mention of Lady Gaga’s fire-breathing boob supporter.

#82 Ret on 12.21.10 at 11:09 am

F or any other politician will not do the “right” thing and you can bet on it.

Look at the record of any other country in dealing with this problem that the politicians themselves have created. We are talking about drug addicts here, addicted to the feel good highs of a voting electorate stoked by a housing bubble.

Every drug addict says that they wants to stop. They just never do until they crash and burn. Look at the PIIGS.

Is the Canadian government really any different than any other government?

Re: housing- I went up to Garner Rd. (#53) on Hamilton’s west mountain. A huge survey is going in with delivery in 18 months.
Woodland Trails in Oakville has 2 other huge adjoining phases tentatively planned between Dundas and the #407. Phase 1 is just about all sold out and not one home has been started. Delivery later 2011.

At the same time, every stimulus project in Hamilton is months behind schedule. So we have governments stimulating the construction industry with lots of taxpayer dough while people are having to wait 12-18 months to get a house built. Great planing F & C.

We let these people mange our pension plan and health care? They couldn’t run a 3 flavour pop stand.

#83 AG Sage on 12.21.10 at 11:20 am

>#39 realpaul on 12.21.10 at 2:20 am

You don’t ever do the shopping, do you? I avoid that chore myself if at all possible, but Christmas makes it unavoidable. I just got back from Macy’s and I can tell you stuff is incredibly cheap. I bought two bag-loads full for the kids of the extended family (I *can* match colors, well, good enough for a four year old) and with $35 in coupons the stores sent (which I never usually use, but that was too much of a bribe) the whole pile (plus a dress shirt and cotton-poly blend sweater for me that were the cheapest I have bought in a decade) was <$200.

Only one piece out of the whole pile was made in China. That was the other interesting thing. Bangladesh, Nicaragua, not China.

I don't do much grocery shopping, but I know the price of bulk coffee at my neighborhood roaster hasn't changed in at least three years. And quicken insists the grocery bill has not gone up overall. These things speculators are manipulating the futures contracts for aren't changing price at the till.

#84 Macrath on 12.21.10 at 11:22 am

Nicole Foss and Max Keiser do Canada !

Foss predicts 90 % RE decline + Alberta bashing deluxe.

http://www.youtube.com/watch?v=sevM5IstFFY

#85 Utopia on 12.21.10 at 11:24 am

On some levels it really makes no difference what changes in policy are made now by the crew in charge.

The damage has already been done.

Most demand that existed has already been brought forward. Those anxious to have a home of their own are already in one. So with home ownership rates at roughly 70% this market has nowhere left to go anyway.

It has just run out of steam, climaxed and is in the stage of lighting up a smoke before reality sets in (say what, the condom broke?)

In the broadest sense, there really are no more new buyers. Just plenty of sellers with no hope of ever getting the price they want.

That reality is finally going to start sinking in too many of the thick arrogant skulls out there. Too late though. And all those people that many of us tried to warn will wake up with that sick feeling that they guessed wrong about the markets after all. That their faith was misplaced and that greed got the better of them.

Gee, good information really does help doesn’t it. Sure beats guessing.

#86 Bramptoner on 12.21.10 at 11:26 am

To hell with all the troubles, sold my house, bought a beach front place in Thailand to live out my days in the sun.

Tired of worrying about money after working hard all these years and see taxes and inflation eat away at it. Will be back a month ever summer crashing at the kids.

#87 Joe Q. on 12.21.10 at 11:36 am

Here’s a good summary of the consumer debt situation in Canada, from the CGA Association.

http://bit.ly/9XnV0O

The full version of the report is at http://my.texterity.com/cgaresearchreports/debt2010#pg1

#88 BrianT on 12.21.10 at 11:37 am

#32Dan-LOL-that has got to be one of the scariest TV commercials ever made-even the lighting is dark and ominous.

#89 AG Sage on 12.21.10 at 11:42 am

>#38 Frank Dean on 12.21.10 at 2:12 am

I’m leaning toward Frank’s logic. $600k sale now to buy in say 4 years from now at, let’s be really generous and say $350k. Two sides of the transaction/moving costs, plus rent in the interim (possibly offset by new investments), plus stress equal to a death in the family or divorce. Boy, it’s close to worth it, but hardly a slam dunk. If this were Van and the house were going to sell for 1.1mil and one could expect to buy it back at 550k, that starts to look worth it.

Hm, well, what’s the economic lifespan of this house? A bubble IS a good time to offload a property that has issues. People don’t look as close. Then if you are planning on staying forever, buy something different with more years left on the odometer.

>So, almost all the first time buyers were high-ratio? — Garth

Not sure why this assumption. When prices began to crash in the u.s. and financing got tight, the entire market briefly became first time buyers, they were the only ones with cash.

>#23 TheBestPlaceOnEarth on 12.21.10 at 1:00 am
>I’m sure she is an expert of calling the market >bottoms like everyone else.

>#24 OttawaLuke on 12.21.10 at 1:04 am
>don’t forgot us twenty-somethings sitting on the >sidelines waiting for all of this to unfold.

The bottom is trivial to spot. When prices go flat, year-on-year, time to start shopping, and you can take your time. With the overhang, there will be no V shaped recovery.

#90 AG Sage on 12.21.10 at 11:52 am

>#80 Habsfan on 12.21.10 at 10:35 am
>Lady Gaga fire-breathing brassiere can be found where????

>Where it’s usually located. — Garth

My coffee break is over, but I love this video so I’ll link it.

http://www.youtube.com/watch?v=qrO4YZeyl0I

Watch all the way to the end.

#91 Utopia on 12.21.10 at 11:57 am

Another thing that has struck me recently about Canadian real estate markets…

We are just too proud up here. Smug at times. Look!, We didn’t melt down like the US. We are a miracle that can defy gravity itself.

Sadly, we might have been better off had we deleveraged debt like America has done. I am not suggesting it is a pretty picture down there but it is looking as though they will see a market bottom within the next couple years whereas we (in our enviable success) will be stuck with albatross like payments and massive personal indebtedness for decades.

Down there, home ownership is well on it’s way to becoming truly affordable. The reversion to the mean is fully in effect. They will actually have the last laugh.

Up here meanwhile we will happily pay double, triple, even quadruple US prices just so that we don’t have to live through the market correction the Yanks are now suffering through.

We are on top all right. And we will pay for it for a long, long time to come. Like Carney said “Pride goes before the fall”.

He could not have chosen better words to describe us.

#92 Devil's Advocate on 12.21.10 at 12:03 pm

#40 UK lurker on 12.21.10 at 2:33 am

I think your advice here is a bit wonky. Sharon and her husband still have 15 to 20 yeas of working life in them. With no mortgage they can put every penny they have spare into other investments, the kind you wisely recommend, giving them a diversified portfolio when they retire. If they like their home, aren’t they better off just staying put instead of treating it as investment? The peace of mind that comes from knowing you have your own home and can’t be turfed out by a landlord or bank is priceless.

I sold to rent many years ago in the UK on advice similar to that given by you. The fundamentals were similar then in the Uk as they are now in Canada (they are now many times worse here). We had a brief correction, and I still believe that prices now are going to fall significantly, but if I’d planned to stay on this side of the pond, I think I’d have been better off keeping my home.

No investment is guarenteed, including those you recommend. But if you have a roof over your head, and it’s paid for, personally I feel that is worth more than the prospect of making more money..bird in the hand etc etc.

If I was in Sharon’s shoes, I’d stay put and pour my spare cash into other stuff like RTFs etc and stop thinking about the value of your home (yes, it’s a home, not just a part of your investment portfolio).

Am I sensing a growing wave of rebuttal to Mr. Turners advice to sell and rent?

Dare I say it again?

Oh what the hell.

I kinda tend ta have ta agree with ya #40 UK lurker.

I sold revenue properties at the peak of the market (summer 2008) thinking it was a good idea …

…short term speculation as reason to buy or sell (real estate especially your “home”) is just a bad idea.

Cue… Garth…

#93 Devil's Advocate on 12.21.10 at 12:12 pm

In the broadest sense, there really are no more new buyers. Just plenty of sellers with no hope of ever getting the price they want. #86 Utopia

More than 27.9% of those who bought a property in November were first time buyers Utopia. 24.4% were upgrading to a more expensive home. 5.8% were buying investment property. 4.7% were buying recreational property.

Kinda suggests to me that, at least, 62.8% of the market was moving forward not backward. Of course your area statistics may vary.

#94 Devil's Advocate on 12.21.10 at 12:16 pm

Of course all this positive “SPIN” means is we are ever nearer that point of total capitulation. How long we been waiting for that now?

#95 BrianT on 12.21.10 at 12:17 pm

#90AG-If selling a house is about as stressful as a death in the family, then I think we can agree that our society is severely f–ked up at this point.

#96 T.O. Bubble Boy on 12.21.10 at 12:26 pm

The Wall St. Journal took notice of the giant TD and BMO acquisitions:

http://online.wsj.com/article/BT-CO-20101221-707518.html

Is it time to buy mid-size US Banks? Maybe the Regional Banks SPDRS ETF?

http://www.google.com/finance?q=NYSE%3AKRE

#97 Basil Fawlty on 12.21.10 at 12:29 pm

Dark Sad One
“Consumers are the only purpose for the existence of commodities-”
Jim Rodgers made an interesting point recently in that if the world economy does well, commodities will go up in price. Alternatively, if the world economy does poorly, the central banks will print like maniacs, which will push up commodity prices.
In the longer term diminishing supplies of key resources should maintain upward pressure.
In the case of oil, it costs a lot of money to drill down 35,000 feet and additionally it is not a sign of abundant product. If we can’t pay the price someone else will.
Do you not agree that some of the trillions being printed worldwide are going into commodities, as a flight to the safety of real assets?

#98 GregW, Oakville on 12.21.10 at 12:36 pm

Good morning Garth, article, (I read the list and you are
defiantly showing ‘potential signs of terrorism’!
It’s such a broad list I’d be afraid of anyone that didn’t get put on it. I’m afraid of the people that signed off on the list!)

You Are A Terrorist
http://www.infowars.com/you-are-a-terrorist/
“The problem is, according to numerous law enforcement advisories, training manuals, seminars and other literature, the federal government defines political activism, flying American flags, wearing Levi jeans, being nice, looking “normal” and going scuba diving all as signs of domestic terror.

By encouraging Americans to “report suspicious activity” that includes such behavior, the feds are knowingly on a mission to chill political dissent, by making people afraid to exercise their constitutional rights in the fear that their neighbors will turn them in to the authorities unless they rigidly control their behavior and don’t risk even patently benign activities being misconstrued.

The following is a list of behaviors, actions or interests that the federal government, via centralized threat fusion centers that collate such information, considers to be potential signs of terrorism under the MIAC Report….” (go to link and read the list)

#99 Utopia on 12.21.10 at 12:39 pm

#85 Macrath reported:

“Nicole Foss and Max Keiser do Canada! Foss predicts 90 % RE decline + Alberta bashing deluxe”.
——————————————————-

Thanks for that link Macrath. Max Keiser is always fascinating to watch. The guy is brilliant. Have you ever noticed how he pulls it all together and makes up a storyline as he goes? None of it is scripted. The guy thinks on his feet but every once in awhile he goes off color.

And that is why he is so interesting to watch.

Now about Nicole Foss…she has a lovely accent! I might swear she came from Ireland in the distant past. I don’t agree with some of her wild assertions though.

Like R/E declines in Canada of 90%.
Or that accessing Tar Sands are energy neutral. Let’s see the data on that claim.

She seems nice enough though but too extreme in her views. Does she write into this site sometimes? Stoneleigh sounds familiar to me.

That Irish lilt is kind of infectious though. The narrator voice in my head, you know, the one that you hear when you are reading something,…well it sounds Irish all of a sudden.

Probably just me.

#100 bill on 12.21.10 at 12:46 pm

the autobody biz relies primarily on people crashing into each other. this happens a lot .
snow in vancouver is just a plus.
our bass player [ owner of an autobody shop ] exhibits a calm almost beatific smile when the flakes start falling…..
compared to the concerned faces of the rest of the band.
oh and keep using those all season tires they really help the bottom line too.

#101 CTO on 12.21.10 at 12:49 pm

#92 Utopia

You are defintely right!

The scary thing is that the American people will have finally capitulated, cut their losses, and start, at least partially start being somewhat business competitive with the rest of the world while we will be in the middle of a painfull adjustment.

Our trade deficite to the US will grow ever larger as we will be cut off from selling products to the US because our population wil demand higher income to support their hefty mortgages, making business with Canada expensive, just as interest rates start to rise. Much worse a high petro $!
Ekks!!!

behind the scenes it is painting a pretty dark picture, especially for Ontario in the rest of this decade or so…

#102 CTO on 12.21.10 at 1:06 pm

68 Mikey the Realtor

Mikey, Mikey, Mikey…you just keep hopein for that remaining 30% who havn’t jumped in yet, keep those fingers crossed and keep clickin those heels!
I seen a Hobo on the street that might take you up on that offer as the bank would likely lend to them.

Me? I’m not interested in buyin $600,000 dumps in grey incompetitive cities with average salaries decaying at $40,000 / year.
I think I might invest in a 2000 sqft, 10yr old house in sunny Florida for $60,000 though.
Good value for being able the go Ocean fishing and beach walking only 1 block away for $1000/year taxes.

#103 Mr. Plow on 12.21.10 at 1:12 pm

Quick question for everyone, and Garth if he wants to weigh in.

If mortgage rules are tightened up, whatever they may be, that will likely eliminate a lot of 1st time buyers from the market. Prices will be pushed down with less buyers etc…

But what does that mean for vacancy rates and rents? I would think as less people are able to buy, more will end up renting. Vacancy rates will drop and rents will rise.

Thoughts?

They rent now. — Garth

#104 rory on 12.21.10 at 1:13 pm

#45 Renter in Van

I think you need some real balance in your life …how’s about a negative net worth guy (becomes pos after the bookie gets paid), one beat up mid 80’s Dodge Caravan (doesn’t look out of place in the East End scoring), high school dropout (who isn’t in my circle of drunks & who doesn’t have esteem issues, jeez) and is happy living in his custom trailer (19 feet of mid 70’s decor with a 42 inch plasma (need the big screen to watch monster jam and cage fighting – wahoo!)… But I am an owner (pad rental hurts though) and kind of cute. Say we hook up and live in bliss – me anyway …can I drive, pretty please.

Everything is false except the kind of cute part but I think you have done very well …smart, confident, well off women, entrepreneurial to boot (hoping) with fancy cars are my fav.

I am going to be picky though …no Hummers please.

#105 Devore on 12.21.10 at 1:22 pm

#53 See you in February

Anyway Gary Shilling predicted 7 of the last 7 recessions, must be doing something right.

He’s actually predicted the last 12 of 7 recessions (if you catch my drift) and has been short the stock market since 2009 (must be working out great for him).

Got any more gurus for us?

#106 GregW, Oakville on 12.21.10 at 1:22 pm

Hi Garth, fyi

CTV.ca News Staff
Although social assistance in Canada has more or less kept pace with inflation in recent years, it has not kept up with the speed at which food prices have increased, making it more and more expensive for poor Canadians to eat healthy.
http://news.sympatico.ctv.ca/home/poor_are_hit_hardest_by_rising_food_prices_study/449b2e74

#107 Only The Bankers Laugh on 12.21.10 at 1:25 pm

DA,

What did you do with the proceeds of your revenue generating property? I sold Whistler last year and am making good returns which are better than the rental income I was getting out of the market there. There is no expected major increases in capital gains in RE for immediate future so if you invest, my little poodle, with your university pedigree wasted on your chosen profession, you will do just fine and most likely better than RE returns without the downside risk. There are other investments outside of real estate, my saggy poodle. I believe that balanced portfolio has been mentioned here once.

Best place on Earth,

When people are more proud and care more for their possessions, houses and cars than they do for their own, their childrens and others development, well, you know the story. It’s a house for cripes sake. If you’re scared of renting because of what your friends think or say, get some new friends who have more interesting things to talk about.

However, it does sound like, from your Vancouver pumping, you drank the koolaid of greed and could be just a little too leveraged in the Wettest City on Earth. Hornby to Caribou Highway in 90 minutes. Gastown to Mountain Hwy in 75. High density without infrastructure = quality of life? Ski and swim in the same week,weather permitting. Love Vancouver and my friends love for it who live there but it’s simply a nightmare to navigate.

Garth comment today “You sound hot” – still laughing.

#108 rory on 12.21.10 at 1:45 pm

#45 Renter in Van you said: … renting a house for 1/1000 of its current value. Go Garth!

Oops to my previous entry … my Mensa member buddy (he just can’t hold a job) just pointed out I may have been a little premature in my praise, specifically you may be a little math challenged or just an honest mistake …you still have 3 fancy cars. Right!

If you rent, say, for 2,000 a month or $24,000 per year, at 1/1000 would be an implied home value of $24,000,000 …if true then I need you on my acquisition team and you can drive any damn vehicle you please including that Hummer… just don’t have it in canary yellow.

#109 Dan in Victoria on 12.21.10 at 1:48 pm

Hmmmm. Can I borrow the hummer Garth. I’ll bring it back full. LOL.

#110 GregW, Oakville on 12.21.10 at 1:48 pm

Hi Garth, fyi article

Has the U.S. Passed Peak Gas (Demand)?
http://spectrum.ieee.org/energywise/energy/fossil-fuels/has-the-us-passed-peak-gas-demand
“Declining gasoline demand is clearly better than increasing demand, but such issues are rarely completely straightforward when…”

#111 Got A Watch on 12.21.10 at 1:57 pm

“Like myself, I bet most persons visiting this blog are not “salivating” for a housing crash. Instead we are hoping for the time when sanity returns to the Canadian economy….”

Indeed. Why are people so bitter about real estate on both sides of the question, anyway. It’s not like there isn’t lots of historic data that shows real estate goes up for a while, then it goes down. Over very long periods (100 years+) it about keeps pace with long term inflation averages. The stock market does better over the same period, so does gold, while ca$h money loses value (loss of purchasing power). Is anyone really surprised?

To me the economy just is, like the weather. Every day you get up, and there is weather, and an economic condition, out the window.

You can try and say it’s good or bad, or that this or that will happen. But whatever is going to happen will actually happen, regardless. Wishing or hoping don’t make it so.

Everyone is entitled to their biases and delusions and articles of faith that can’t be challenged. But when those cause you to make bad decisions based on flawed logic derived from incorrect information and misconstrued perceptions….things can go bad in a hurry.

You might have the best laid plan, until reality and Murphy’s Laws intervene. Or a bit of bad medical luck. And then it all falls apart quickly. Basing your decisions on bad conclusions only makes it worse. Life is risky anyway, why make it worse by flawed thinking, unless you’re a masochist and just enjoy failure.

In the real world, reading the real estate market might cause you to buy high and later sell low. Like buying now, for instance, after a 13 year run-up in price, when those usually don’t last that long, and are always followed by a period about as long where the price falls then flatlines. Then losing it or abandoning it later, when you get a margin call from the Bank on your underwater mortgage, as the “value” falls below the balance of your mortgage. Oops. Think it “can’t/won’t/never/it’s different/this time/” happen here? Of course, inconceivable, I know.

Do that a couple of times in your life, and you’ll probably be retiring to a luxurious park bench with 360 degree outdoor views. Most people only have 2-3 decades in their life when they really are able to make some good money. You simply cannot afford to fritter it away.

So keeping a clear mind, and trying to make the most dispassionate logical decision you can is the key to personal financial planning. To do that you gather as much real information as you can, in a reasonable amount of time, then make the best informed decision you can. It’s not like history and case studies and comparisons and Blogs like this one aren’t out there, you just have to spend some time.

Nobodies perfect, and everybody makes mistakes. All you can do is try to improve the odds of success by going with the high probability outcomes.

A Merry Christmas to All the Blawg Dawgs! And A Very Happy New Year! Don’t let a Depression depress you. Life goes on. Have a Merry Happy, dance around the tree, enjoy a beverage, stay away from retail hell

#112 Devil's Advocate on 12.21.10 at 1:58 pm

#108 Only The Bankers Laugh;

As Garth called me Super-Realtor so I am… on financial investments I suck that’s Garths area – that and real estate. ;-)

I like land. Call me old fashioned. Call me a fool. What ever… I practice what I preach and preach what I practice.

To me it doesn’t much matter what they throw at us we’re all going to need a place to live rented, owned, begged, borrowed or stole. They only made so much of it. Supply and demand. Whether you buy it or rent it your demand is demand. Nothing, absolutely nothing matters so much as the land upon which you live. Think not? Try doing anything without it.

#113 dark sad person on 12.21.10 at 2:02 pm

#98 Basil Fawlty on 12.21.10 at 12:29 pm

Do you not agree that some of the trillions being printed worldwide are going into commodities, as a flight to the safety of real assets?

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

Yes i agree with that but in the end-commodities must be consumed and other then necessities-what will there be to support prices long term-
I’m not so sure about a flight to safety being the reason at this point-otherwise gold would be smoking much hotter then it is-

I think what’s driving prices is the big quants speculating with taxpayers money-keeping prices high with the blessing of Bernanke who has some pipe dream that if prices are kept high it will make people start spending again-

With user demand falling-there has to be a correction-especially when China tips over-
I think we’ll see the same sort of sell down as we seen in 08-maybe not as severe-but a major correction for sure-

I don’t agree with Rodgers and Schiff etc. that China will decouple and continue booming-
Long term i like China and commodities but only from much lower price levels-

If those leveraged quants get zapped like last time-watch for them to come begging for us to save them again-

#114 David B on 12.21.10 at 2:03 pm

Jack & Sharon, you are very fortunate to have done so well and I suggest to continue on the path you have set out and enjoy life. Selling/renting and investing is a good idea but living within your means raising your children with the same values in your own family home has great merrit. Perhaps when the kids have moved out the time will come to make such a move. Let your heart rule and all will be fine ….. Merry Christmas.

#115 realpaul on 12.21.10 at 2:19 pm

Its a classic ‘tale of two tapes’ in both general opinion and the media today. Most people think they’re going to be OK when they retire…regardless of the fact that none have adequate savings to do so. Is this denial?

On the CTV this am there was a segment of how a majority of seniors are now ‘subsisting’ because of the fixed income trap, rampant cost of living inflation, ZIRP’ed , food costs going through the roof etc etc. These are all the same people who probably thout that they’d be ‘just fine’ when they retired ten and twenty years ago and now find themselves ‘binning’ , standing in line at the foodbank, eating dogfood and freezing.

We see factual coverage also of young working families now reliant on the foodbank to make monthly ends meet. These are not people who are saving for retirement….the future looks bleak for a huge segment of the population due to the ZIRP, soaring cost inflation and extreme mortgage debt.

A few hundred thousand obviously seems like a financial dreamscape for many posters but simple division will prove that it is inadequate. Being a tradesman and working ( if you have a steady job) cannot offer you income when you are physically forced to retire.

Twenty five years of poverty can be an eternity if you retire at 70 and are unlucky enough to live to 80 +. 300K is only 2 grand a month for ten years or so and then its cat food ….what happens if your forced to pay for a retirement home at $5000 a month…or your wife needs to be in care?

Being a tradesman means you’ll never run the shop…you’ll never make the big money, you’ll never have the tax advantage of an investor and you’ll probably end up eating Kibbles. Make sure your kids get a University education so that they at least have the opportunity to avoid the trap.

Heres an example of how the fat civil service is avoiding the pain.

http://www.vancouversun.com/Ferries+David+Hahn+nearly+doubles+years/4005616/story.html

The number of civil servants making more than 100K a year has been rising more than 20% per year. They’ll get the dough and have fat succulent tax indexed taxpayer funded pensions……while the seniors appearing for the CTV will starve in their elder years.

Bull. Civil servants have nothing to do with most people retiring on inadequate incomes. It’s usually their own greed and fear that led them astray. — Garth

#116 Dan in Victoria on 12.21.10 at 2:20 pm

Jack and Sharon. Well done.

I think selling is a wise move myself. “At this time.”
As far as real estate fees etc. it’s just the cost of doing business, you have to spend to make money.

I’m just going to pick one spot to comment on.
If you invested at 7% compounding you will double your money after 10 years I believe.
So 900K in 10 years is 1.8 million,
10 years later its 3.6 million.
So at 67 years old you would have $252,000 @ 7%. Yearly. “Hypothetically”
You can do the math for what ever age you want to stop and recieve income. Just saying.

Before all you arm chair economists jump all over me I KNOW that there are taxes etc. etc. to consider.
Thats why you hire a planner / advisor / accountant to navigate all this.
We could fill the blog up for a day with all our comments on that alone.

Also keep in mind that the house requires maintenance, roof, plumbing, furnace, windows, paint, taxes, and on and on.
Realistically its another 18 years older when you retire.
And is that where you are going to retire?
Bottom line, is that house going to pay you in $ to live in it.

I think your thought process is solid. I guess we’re from the same planet.

#117 kabloona on 12.21.10 at 2:22 pm

From Yahoo Finance:

“Could a U.S.-style collapse happen here?

Tom Fennell, On Monday December 20, 2010, 5:25 pm EST

Home ownership is at the centre of many Canadians’ financial retirement plans. That’s especially true for baby boomers who are sitting snugly atop a nice wave of real estate inflation.

In fact, the average price of a detached home in Canada has doubled since 2000, and in September was sitting at $331,000. Of course that number pales when compared to Vancouver, where the average price for the same period was $679,000 and in Toronto it was a still-high but a more modest $427,000.

So a lot of people nearing retirement age are hoping the housing market will stay buoyant until they cash out, allowing them to downsize, pay off their debts and still have plenty of money left over.

A lot of American homeowners used to think that way. But from their peak in 2005, U.S. house prices have fallen almost 30 per cent, and they are still trending lower. Things are still so bad in the U.S. that the real estate default rate hit a record high in 2010, with more than three million households receiving foreclosure notices. And it could get even worse in 2011.

But could a U.S.-style collapse really happen here?

Obviously Bank of Canada Governor Mark Carney thinks so, and last week urged politicians and Canada’s banking oligarchs to tighten mortgage lending requirements to slow Canada’s plunge into debt….”

http://tinyurl.com/2coeyms

“Banking Oligarchs”….hah-hah!

#118 CTO on 12.21.10 at 2:32 pm

#17 T.O. Bubble Boy

$669000 house

Further to your post MLS®: W1967990
1214 GLENCAIRN AVE
TORONTO, ON M6B 2B5

Check out that dump on ariel…What a scumhole!
There is an industrial facility right next door (likely old, decaying and closed down). YUK!

#119 Devil's Advocate on 12.21.10 at 2:39 pm

“…from their peak in 2005, U.S. house prices have fallen almost 30 per cent, and they are still trending lower…” – #118 kabloona on 12.21.10 at 2:22 pm

Sure would like to see a proof source on that statistic as thus far I have been able to find none that say anything even so great as half that figure for the average drop nationally in the US.

#120 bullion.bunny on 12.21.10 at 2:48 pm

Bull. Civil servants have nothing to do with most people retiring on inadequate incomes. It’s usually their own greed and fear that led them astray. — Garth

True but they are overpaid for what they do!

More bull. — Garth

#121 Daniel on 12.21.10 at 3:01 pm

– Started to looking at houses in Phoenix, crazy.

Prices have collapsed about 75%, houses that were $250k, no going for about 70k.

I was looking at 2000sqft homes 4/3 in good areas for 65 – 75k – wow, compare that to 500k in Calgary, 1.5 million in Van, or 600k in T.O. …. oh and they rent for about 1k per month.

Looks like a nice place to live, going down in Jan to look at properties.

#122 a prairie dawg on 12.21.10 at 3:03 pm

@67 One thing I learnt from the Global Financial Crisis was that NO ONE really knew how to protect themselves!

Considering the number of pros that didn’t see what was coming back in ’08, I understand your remarks, but don’t lump us all into that category.

I saw the warning signs in late ’07, well before the crash in the spring of ’08. Took the most conservative approach I could then, given the options I had. Ended up making a 21% gain on my investments over the last 3 years.

I even tried to warn a few people I worked with back then. Most ignored the advice. Some even said “It’s OK, I’ve got a financial guy.” Post crash, now they just avoid the subject altogether. Hmmm…

“You can lead a horse to water…”

#123 jess on 12.21.10 at 3:05 pm

Irish Developers …this will irritate you (socialised debt)
transfers to wives ,helicopters for private outings,race horses
top 10 developers owe 17b –
top30 27b.

http://www.rte.ie/player/#v=1087511

what of the builders top 30 who created the mess
40 percent of the nama portfoilio (national management agency)

For what followed in journalist Rita O’Reilly’s hour-long investigation was a glimpse of the gilded life some developers are still living, as if the financial crisis had never happened.

#124 RDG in Toronto on 12.21.10 at 3:06 pm

“In today’s world most students must have a Masters to even get into the job market.”
* Nonsense. You might actually want to do some research here.

“The kids alone ( if school age) will suck up most of that 300K in education expenses by the time they turn sixty. Unless they want the kids to walk into their adulthood saddled with an enormous student loan debt.”

* Whoa. I’ve heard this before, but I don’t get it. My parents paid for tuition and board for my sister and I at a couple of universities in Toronto for an estimated $200k combined. (We paid for our own dailies like food, books and transit.) Combined they’ve never made more than maybe $140k/year in pretty standard middle class professions. Their house was paid for in ~12 years, though it helped that they rented out the basement for most of that time. I make just under 6 digits approaching age 30. That’s with an undergrad only, and not in a regulated profession. Love my job. Thanks to my beloved parents, no student debt. Ever. Some of the bleak accounts reported here leave me scratching my head.

#125 jess on 12.21.10 at 3:09 pm

NO ONE really knew how to protect themselves!

are you kidding watch the video about the irish developers

======Latest

Big 4 Bombshell: “We Didn’t Fail Banks Because They Were Getting A Bailout”
The Economic Affairs Committee of the House of Lords questioned representatives of the four largest audit firms on the issue of “going concern” opinions during the financial crisis. In particular, why were there none for the banks that failed, were bailed out, or were nationalized?

The answer the Lord’s received was, in one word, “Astonishing!”

The leadership of the Big 4 audit firms in the UK admitted that they did not issue “going concern” opinions because they were told by government officials, confidentially, that the banks would be bailed out.

How could I been so naive? If it happened in the UK, why not in the US?

#126 bullion.bunny on 12.21.10 at 3:18 pm

More bull. — Garth

Oh please you have been in Government way too long! I’ve seen these people in action, try Toronto works dept, or Ontario Hydro……what a waste! Cut the wages 40% and fire 50%.

I’m not in government, but I drink water. Don’t you? — Garth

#127 GregW, Oakville on 12.21.10 at 3:19 pm

Hi Garth, fyi an article to think about. Is your blog going to be safe? I don’t think the pope will help you.

“, has already begun policing the Internet. They are quietly seizing and shutting down internet websites (web domains) without due process or a proper trial. DHS simply seizes web domains that it wants to and posts an ominous “Department of Justice” logo on the web site. See an example at http://torrent-finder.com. Over 75 websites were seized and shut in a recent week. Right now, their focus is websites that they claim “violate copyrights,” yet the torrent-finder.com website that was seized by DHS contained no copyrighted content whatsoever. It was merely a search engine website that linked to destinations where people could access copyrighted content. Step by careful step freedom of speech can be taken away. Then what?”
http://www.infowars.com/wikileaks-a-big-dangerous-us-government-con-job-2/

#128 Dorothy on 12.21.10 at 3:19 pm

#112 Got a Watch
“Most people only have 2-3 decades in their life when they really are able to make some good money. You simply cannot afford to fritter it away.”

This is one of the most useful pieces of advice I’ve read on this blog in a while, and one that the younger blog dogs should pay strong attention to.

When we are young we often have a tendency to put off until tomorrow what we should be doing today, under the mistaken impression that we still have a long time ahead of us. It is only when we reach the autumn of our lives that we begin to realize how very short life really is, and that the earning portion of our lives is even shorter.

Regardless of whether you choose to rent or buy, put your savings into bonds, ETF’s, or the orange guys shorts, the most important thing is that you DO save a portion of your income on a regular basis. Remember the old rule of “pay yourself first” and you’ll have far fewer regrets when you’re older. Once you’ve established a regular savings routine, you can make the other decisions after. But for goodness sake, learn from the mistakes of those older blog dogs who are now living with the consequences of not following this simple rule and PAY YOURSELF FIRST!

#129 BrianT on 12.21.10 at 3:20 pm

#111Greg-funny article-the author does everything to pussyfoot around the reality that conventional global oil supply peaked in 2005 and will be way down from current levels by 2025. IMO this reality should be part of everyone’s financial planning.

#130 dave in calgary on 12.21.10 at 3:24 pm

#113 Devil’s Advocate: Nothing, absolutely nothing matters so much as the land upon which you live. Think not? Try doing anything without it.

I think this is a silly argument. I could argue that water is just as important. Should I go and borrow a bunch of money to buy a lake or a cloud?

#131 UrbanCowboy on 12.21.10 at 3:26 pm

Hey when the bubble popped in the US what was the initial carnage? % wise in Spring 2008, anyone?

#132 bullion.bunny on 12.21.10 at 3:31 pm

I’m not in government, but I drink water. Don’t you? — Garth

No, I don’t drink the water. I have my own well and septic tank. Also have you checked your hydro bill of late? Most of the cost is for mismanagement. Garth your problem is you have never done anything practical. You are a typical ex-civil servant, just push paper all day long.

#133 GregW, Oakville on 12.21.10 at 3:52 pm

Hi #130 BrianT, I notice that too, that’s why I ” ”
the part with ‘issues are rarely completely straightforward’. It’s why we are into the unconventional sources like tars sands, shale gas, and will need more nuclear. But constant growth is not sustainable on a finite planet. It doesn’t look like it’ll end well to me.

#134 bigrider on 12.21.10 at 3:52 pm

#120 Devils Advocate -on US housing decline.

Devil are you denying that housing in the U.S has not been the source of much financial grief among owners regardless of what you,I or anyone else believes the percentage drop to be nationally, peak to current trough?

#135 bigrider on 12.21.10 at 3:56 pm

#131 -Dave in Calgary.

That was funny !

#136 Tom from Mississauga on 12.21.10 at 4:06 pm

Garth
A journalist!!! Tom Fennell, writing what he actually thinks!!! There is hope that the media can tell the truth!!!
http://ca.finance.yahoo.com/news/Could-U-S-style-collapse-yahoofinanceca-2480210207.html

#137 GregW, Oakville on 12.21.10 at 4:06 pm

Hi Garth, fyi

NEW YORK, Dec. 21, 2010 /PRNewswire-USNewswire
Fluoride in Water Linked to Lower IQ in Children
http://www.prnewswire.com/news-releases/fluoride-in-water-linked-to-lower-iq-in-children-112261459.html

#138 Jeff Smith on 12.21.10 at 4:20 pm

Garth, so what do you make of F’s new care package to the Canadian people? Is it gonna save us from poverty in our retirement years or not? We are waiting for your indepth analysis oh lord of financial wizardry.

#139 Mouldy Basement Renter on 12.21.10 at 4:21 pm

#65 Bullion Bunny
“In fact it would not surprise me to see a greatly reduced need for auto mechanics and skilled trades….”
Sorry, but I disagree…( yes I’m a tradesman)
When I se how badly people have tried to “fix” something I realize more and more what a disposable society we have become.
Your Dryer stops working… buy a new one!
Kids toss a toy down the toilet…call a plumber!
Car headlight burns out… Canadian Tire here I come!

As much as your loathe paying tradsmens’ wages, most people wont ” Do it themselves ” for the simple reason they are too intimidated, too busy or too lazy.
Take your pick.
Since most kids today dont like getting their hands dirty(who really does). Why flock to university with the rest of the herd to get a B.A diploma that may or may not help.
My best advice to a young kid starting out ( male or female) apprentis as an electrician, plumber or refrigeration mechanic. Earn while you learn.
Those trades don’t starve……

#140 ??wth?? on 12.21.10 at 4:38 pm

It seems that to be esteemed by the high and mighty posters of this blog that one would have to have $millions$ in diversified investments and real estate bought and paid for to not be screwed for retirement!

Are you posters kidding? This couple isn’t even 50, has a paid for house and $300K in the bank and you call them screwed?

I am not a bitter renter. I own my house outright which I bought 9 years ago. I have a RRSP account, although I haven’t contributed over the past 9 years. I have lived modestly and tried to make a difference in my community. I don’t put so much faith in the economy and investments because to anyone who is not distracted by greed, it is pretty clear that we are all in for a wakeup call. Just as the real estate market corrects, so will the global economies of scale. So take these facts about me into consideration before you critique what I have to say…

Plain and simply put, it doesn’t matter what anyone has invested or where it is invested. This fiat money system we use in North America and the rest of the globe will collapse and all traces of investments will be scattered and gone without a trace.

We built our economy on usury and interest. That is, many have made millions on money they don’t have themselves. This can’t work long term. Think about it. Its no different that the RE market you are all experts on, just a larger scale.

There is nothing backing our dollar. This paper money system, built on usury and greed will come crashing to the ground. It will happen so fast and so hard that most won’t even realize it happened until they see the military at the local grocery stores preventing people from killing each other over basic necessities.

Life is about living basically and simply, people. Considering someone a loser becasue he only has $300K saved is so incredibly stupid. Billions of people go to bed hungry every day and all you greedy morons are worried about is your houses and bank accounts.

We all came into the world with nothing and will leave it the same way.
What makes you think that the world can go on so unbalanced for much longer?
What makes you all think your money is going to be so safe for your retirement?
What makes you think that those who really control the money won’t decide to drop the financial nuke and kill all confidence in our unbacked paper money?
What makes you think that you are entitled to a wonderful retirement? Because you worked so hard and you deserve it? Gimme a break!

If the world economy keeps going the way it is, there is nothing stopping our fiat money from crumbling. This can and will happen here in North America. An economy built on greed and corruption eventually has a breaking point.

You are all going to be the greater fool when you realize that your pensions, savings and house that you ‘earned’ over the past lifetime and expected to be your nest egg for a dream retirement will have disappeared.

Many of you have built your whole identities and personalities on your money and possesions. This is why when the financial “nuke” drops and you are stripped of everything, it will hurt all the more.

We all watch the videos of people in 3rd world countries living in squalor, recovering from disasters and we just turn the channel and forget they even exist.

Yep, its gonna hurt when its our turn.

Lord have mercy…

#141 young & foolish on 12.21.10 at 4:48 pm

I am wondering about all those “boomers” ….. are they not about to inherit the largers ever wealth transfer from the previous generation?
I know of a lot of “waiters” (people just waiting for their inheritance). Many of them live well, and don’t seem to worry much about saving or money in general.

#142 Nostradamus Le Mad Vlad on 12.21.10 at 4:53 pm


Passing the buck the legal way.

#175 dark sad person on 12.20.10 at 11:39 pm

“As to how long from now-i have no idea but my guess is it will be triggered when we experience a Currency upheaval in one of the Majors-Likely the Yen-imo-not that it matters which one-any Major would do it-at that point they must shed Debt or they’ll get lined up by Traders for Grade Ratings”

2011 will be a very curious year. So many things are happening which the controlled m$m conveniently avoids.

With the links from last night’s (#29 post), and David Bond’s column in today’s KDC (“US gridlock will damage Canada, too”), timelines of various happenstances can be pinpointed almost daily now.

#23 TheBestPlaceOnEarth — “. . . the PRIDE OF OWNERSHIP. Bring on 2011 F ain’t doin F all and that’s a FACT”

Pride goeth before a fall.

#34 Devore — FWIW, my coverage from Blue Cross (wage replacement loss, slightly under $10K / yr.) finishes in 2021. RIFs won’t kick in until 2027, so we are going to max. out our TFSAs as often as possible to provide an income (plus DPP from the feds., slightly under $15K / yr.) during the six year difference. It is simply a matter of self-discipline, and having sufficient funds when necessary.

#36 dd — “2011 – Watch 60 minutes and have a look into the neighbours to the south. They are bankrupt as per 60 minutes.”

Correct. See my response to DSP — you are both right on the ball.

“You sound hot. — Garth” — Wanna come back to my place? This is the Frozenagan!

#63 gentleInvestor — “. . . disaster strikes they claim it was ‘not their fault.’ I’m pretty sure we’re at the ‘it’s a little problem’ stage with real estate.”

Indeed, but there is a small problem with that; all the quotes that C-H-F ever made, about “Canada is as strong as the northern shield” or “There will not be a recession in Canada” can easily be found on the ‘net, then flung straight back in their faces come election time.

#69 Sand Piper — “. . . why do they preach that…bing-Go…fees…lots and lots of fees the banks will charge . . .”

‘Sright. Bloody unexpected fees are a real pain in the ass, which is why we only have a nominal amount in saving and chequing accts.

The bulk is in Cdn. equity MFs, using monthly DRIPs to increase their value. All without the use of a bank.

#117 Dan in Victoria — “Hypothetically.”

The term ‘constant change’ also runs with ‘hypothetical’, because we are prevented from seeing the future. If we were able to witness it, then none of this would have taken place, as we all would have taken steps to prepare ourselves beforehand.

But you are correct in saying that never-ending maintenance costs, property taxes and others are fixed, and (for me) it would be better to sell below market value, invest the proceeds to avoid tax, then (at my age) to avoid home ownership altogether.

I’m getting to old for this game, now.

#129 Dorothy — “PAY YOURSELF FIRST”.

Excellent advice — put straight into a TFSA, then follow up with further deposits in RSPs.

#142 Mouldy Basement Renter — “. . . to a young kid starting out ( male or female) apprentis as an electrician, plumber or refrigeration mechanic. Earn while you learn. Those trades don’t starve……”

Also top-notch advice. As a former tradesman (printing) myself, it wasn’t a requirement for college / university degree for me.

Always had food one the table, saved and invested adequately. Highly recommend a trades life.

#143 Cookie Monster on 12.21.10 at 4:57 pm

Bull. Civil servants have nothing to do with most people retiring on inadequate incomes. It’s usually their own greed and fear that led them astray. — Garth

True but they are overpaid for what they do!

More bull. — Garth
————
Garth, you gotta see the forest from the trees. Everything is connected. Bloated public sector wages, benefits and pensions do affect everyone, especially those in the non-public sector and especially those in the lower income brackets.

The natural order of a free market economy is falling prices and a rising standard of living. But, the bank of Canada’s policy is +2% CPI, meaning rising prices.

Inflation means expansion of the money supply which includes credit, so the money supply must first expand enough just to prevent prices from falling due to productivity improvements, then it must expand even further to achieve +2% CPI. The result is an actual inflation rate, meaning increase in the money supply, of closer to 5% per annum.

Also, inflation and taxes and government debt ties up capital from productive employment and is used for consumption by government spending in the public sector, services, etc. This prevents companies from being more productive and impedes their ability to produce more competitively, this is why we’re buying so much offshore and can’t compete domestically.

Check out http://www.mises.org to round out your understanding of economics. A few years of reading material from Mises and you’ll see the world of economics in a different light called reality.

Those who understand the true economy will be able to understand the damage being done and will best be equipped to protect themselves as reality unfolds over time.

#144 bigrider on 12.21.10 at 5:01 pm

Boy do I love my mutual funds.

(Hedge funds too !)

#145 dave99 on 12.21.10 at 5:01 pm

#109 Rory,

In response to your unemployed mensa friend’s rebuttal to #45’s comment about rent to price at 1:1000.

This refers to the rental cost ($2000 in your example) to the price (which would thus be $2m).

In your rebuttal, for some reason you chose to take the monthly rental of $2000, multiply by 12 for the annual rental price, and then pointed out that $24m would not be realistic.

Note that rent is paid monthly, and not annually.

#146 Cookie Monster on 12.21.10 at 5:21 pm

My point on inflation can be seen very clearly in the demise of our penny. When I was a kid, 30-35 years ago, I saved a lot of pennies and a hundred of them made a dollar and back then a dollar was worth a chocolate bar, some gum, a handful of jube-jubes, tootsie rolls and caramels.

The penny has been rendered worthless now. Money as you know is a facilitor, a medium of exchange, a tool for trade. Well, the government is destroying the unit of measure that we transact in. It’s like getting rid of the milli-meter because people are just so damn fat we only need to measure their waistlines in centimeters. The inflation of the mony supply is so fat, that we no longer need to measure any resolution below 1/20 of a dollar. The 1/100 is meaningless now.

The death of the penny is much more than a matter of convince, its a sign that people have no clue what money is and how it’s being destroyed.

Inflation is not just a tax on your annual earnings, its a tax on everything you own, your assets.

#147 Lonely Limey on 12.21.10 at 5:27 pm

@ agio #82

“……..Must be the mention of Lady Gaga’s fire-breathing boob supporter”.

I personally prefer the term, boulder holder.

Did this turn into Grade 4 recess? — Garth

#148 Macrath on 12.21.10 at 5:28 pm

#100 Utopia

Max and Stacy sure put that BNN drivel to shame. I`d love to ditch BNN, but I`m stuck with it in my satellite package. Much like we are all stuck with that farce of a do not call list and a bunch of lame brained politicians.

Why have we not built a reactor in the oil sands instead of burning all that natural gas for nothing? Canadians supposedly build the safest reactors in the world. We also have Bombardier but not a half decent train in the country. What we do have is a Chipboard MacMansion gulag economy.

#149 Bullion.Bunny on 12.21.10 at 5:29 pm

#142 Mouldy Basement Renter on 12.21.10 at 4:21 pm

Sorry, but I disagree…( yes I’m a tradesman)
When I se how badly people have tried to “fix” something I realize more and more what a disposable society we have become.

I agree with most of what you say. Practical knowledge is very important as it provides a guide as to how the world really works as opposed to how people think it works. This becomes useful when making the transition to engineering or management. However that said, the point I was trying to make is the trend to zero maintenance, fully recyclable and bio-degradable consumer products is firmly in place. Industrial systems are becoming self healing and fully redundant, this alone will reduce the number of trade’s required on the manufacturing side. German automotive companies are almost there with the goal to produce vehicles made of 100% recyclable material. Of-course these advancements take time and we may not see a reduction in the need for trade’s people for another ten years. The trend is there and gathering momentum, time will tell. Trade’s people will always be required; all we are arguing about are the numbers going forward. So if you are a practical person and like get your hands dirty then the trades are for you. Just make sure you really love it and are good at it. It’s about to become very complicated.

P.S. I know many people that have university degrees and are exceptional at what they do. My wife being one of them.

#150 kabloona on 12.21.10 at 5:37 pm

#120 – DA:

Just quoting the article, it’s not my commentary….I thought US house prices were off about 25% on a National basis, however the following graph of Case-Shiller Index indicates approximately 30% drop from peak since 2005.

http://en.wikipedia.org/wiki/File:Cshpi-peak.svg

#151 RDG in Toronto on 12.21.10 at 5:39 pm

“My best advice to a young kid starting out…”
Mouldy Basement Renter: You may want to refrain from dispense that very good advice because that last thing you’ll want is a market saturated with tradesmen ;-)

Yes kids, run along and do your BAs in Philosophy/English/History with no follow up game plan!! And when that doesn’t work out for you, continue to perpetuate the idea that university education is over valued.

Bottom line is, education is pretty much like any other good or service with its value determined by supply and demand. I’m all for doing what you love, it’s very important, but love wisely ;-)

#152 dd on 12.21.10 at 5:52 pm

#65 bullion.bunny

…In fact it would not surprise me to see a greatly reduced need for auto mechanics and skilled trades…

Wake up bunny. How do you think gold is going to be dug out of the ground? If you don’t have a heavy duty mechanic on staff, good luck. The next 10 years will be about commodities; real things. And real things need skilled trades.

#153 dd on 12.21.10 at 5:56 pm

#121 bullion.bunny

“True but they are overpaid for what they do!”

You haven’t even figured out where gold comes from. I really don’t think you are qualified to comment.

#154 Mikey the Realtor on 12.21.10 at 5:56 pm

#103 CTO

Hey CTO,

Not hoping, it will happen regardless of what I hope for. The pups on this blog represent most Canadians when it comes to RE lust (hence, why you’re all here). Emotion over takes logic for most, which is the reason there will be no hard lending just a soft blip here and there. RE is love for most.

Every young person on here should buy 2 houses, one for living and rent the other. In 25 years both are paid, sell one and woalla, there is your retirement money.

#155 realpaul on 12.21.10 at 5:59 pm

Wonder why people can’t save in Canada. I took the following from the Boomer and Echo site. Average expense are taking up 96.75% of this ‘average ‘ persons gross income.

A Look Back At Expenses This Year
Posted on December 20, 2010 by Echo
One of the benefits of setting up a monthly budget as well as forecasting income and expenses is that at the end of the year I can review each of the areas where we spent our money and make improvements for the future. Reducing our expenses was definitely top of mind as we adjusted to single-income living earlier this year. Since we had never used a budget before, I wasn’t sure what to expect. Looking back, I am extremely pleased with how we were able to control our expenses this year.

Home Expenses
Mortgage & Property Taxes – 21% of gross income
Extra Mortgage Payments – 8.5% of gross income
Utilities (Power/Gas/Water) – 3.25% of gross income
Cable/Phone/Internet – 2.5% of gross income
Furniture & Improvements – 1% of gross income
Overall we spent just over 36% of our gross income on our housing expenses, but a large portion of that was extra payments we were applying to our mortgage as we try to reduce our total balance before upgrading our house next year.

Daily Living Expenses
Groceries – 9% of gross income
Baby Supplies – 1.5% of gross income
Pet Food & Supplies – 1.5% of gross income
Miscellaneous Spending – 1.5% of gross income
Dining Out – 1% of gross income
Alcohol – 0.5% of gross income
I’m really impressed with the way we controlled our daily living expenses, as this can be the largest variable expense in your monthly budget. We did a great job creating a meal plan and sticking to it, which saved us a lot of money on groceries and dining out. Since we have a small child to look after we didn’t go out very much this year, just for special occassions like birthdays, our anniversary, and Harry Potter movies

Transportation Expenses
Car payment – 5.5% of gross income
Insurance & Registration – 1.5% of gross income
Gas – 1% of gross income
Parking & Maintenance – 0.5% of gross income
We were able to save a lot of money in this category this year. I work less than 5 KM from our house, which saves money on insurance and gas expenses. We also redeemed our Air Miles rewards for gas certificates to Shell, which saved us $300 in fuel charges this year.

The remainder of our expenses go towards my pension plan (11%), federal and provincial taxes (15%), TFSA and RESP contributions (6%), CPP and EI (4%), and then a lot of miscellaneous expenses under 1% of gross income. We also had a modest vacation this summer out in Kelowna as well as camping in the interior BC.

All in all I am happy that we started a budget this year and I like that we were able to save money, control expenses, and still maintain a good quality of living on just one income. For next year, I’d like to continue to save some extra money each month until we move into our new house. At that point, I’ll need to re-evaluate our monthly budget until we get a good handle on what some of our new monthly expenses will be.

Do you look back at your expenses each year? How much of your gross income are you spending on each category?

#156 Mikey the Realtor on 12.21.10 at 6:00 pm

“Greater Toronto Area new home sales are up by 1 per cent in November compared with a year earlier”

http://www.thestar.com/business/article/910439–gta-november-new-home-sales-up

#157 Al on 12.21.10 at 6:03 pm

Let’s see if RE prices and volume do climb in Spring 2010

#158 Moneta on 12.21.10 at 6:07 pm

As much as your loathe paying tradsmens’ wages, most people wont ” Do it themselves ” for the simple reason they are too intimidated, too busy or too lazy.
Take your pick.
——-
When I bought my first house, it was a 1950 bungalow. Everytime we wanted to change a fixtire, it became the job from hell. No 2 screws were the same.

In the 50s, people were more frugal and did things on their own.

When this real estate bubble bursts, you’re going to see a lot of trades people without a job. Because people will be fixing their own stuff… or not fixing it.

#159 Agio on 12.21.10 at 6:26 pm

Flash forward 100 yrs, we are living in a Mad Max kinda time….

realpaul and Devil’s Advocate in the Thunderdome where ‘two men enter; one man leaves’

Who could you root for? I’m torn so I say mute em both.

#160 RE Bear on 12.21.10 at 6:33 pm

TheBestPlaceOnEarth
“There kids room the decorated gone”

Rambling in a drunken-like stupor are tellatale signs of Schizophrenia medication side effects, FOLKS!

And remember, if you didn’t buy a house back in ’06 with 100% financing, IT WAS IMPOSSIBLE FOR YOU TO ENJOY LIFE, FOLKS! The only true people that are enjoying life now are the underwater folks in Florida and Nevada that are going to be in negative equity for the next 20+ years. Everybody who rents in London, New York and Paris is a lowly renter, who is incapable of enjoying life and has failed the dream of home ownership. Remember folks, P-R-I-D-E! Buy now.

God this man is mentally ill…………. Garth, why do you even let this sick, sick man post?

#161 Bill Grable on 12.21.10 at 6:43 pm

What did the Us REALLY think about Vancouver 2010 – and in particular – The Olympic Village?

Leaky, Wiki, indeed: From The Guardian in UK>

4. (U) The same cannot be said for the C$700 million-plus Olympic Village, a key element of the Games and a major responsibility of the City of Vancouver. The Village is being developed by a private corporation on prime waterfront land provided by the city. It’s slated to become a mixed use residential/commercial area after the Games with high, middle and low-income housing. The developer ran into problems in September, when more than C$100 million in cost overruns threatened to stop the project. Then Mayor Sam Sullivan and the City Council held a series of closed door meetings where they developed a plan for the city to provide guarantees so a loan could be obtained to cover the increases. The secretiveness of the financial arrangements became a major factor in the December city elections, which saw Sullivan’s coalition lose the mayoral seat and all but one city council position. In addition, the controversy caused the city manager, a senior deputy and the chief financial officer to lose their jobs. In December, just after the elections, the primary financial backer of the project, U.S. company Fortress Investment Group, announced it would not deliver the final C$458 million in capital to complete the project due to financial losses from the sub-prime mortgage crisis. The new mayor, Gregor Robertson, found himself in the same hot seat, dealing with the possible collapse of the project. In the end, he sought, and was granted, special provincial legislative authority for the city to seek loans to cover completion of the project. Olympic critics have had a field day with the problems, promoting stories of taxpayer losses in the billions, and a combination of substantive factors led Moody’s and Standard & Poor to place the City of Vancouver on credit-watch status. Real estate analysts have been more optimistic, asserting that the city could make a considerable profit on the deal down the road and highlighting the fact that it is the last undeveloped piece of waterfront property in downtown and very desirable. The city paid only C$50 million for the land through its Property Endowment Fund, a longterm investment fund estimated to be worth almost C$3 billion. Even if the development makes only half of the originally estimated profit, the fund could cover the immediate loss without affecting the city operation’s budget and, as a longterm investment, it could still be a win for the city. VANOC’s Guscott was confident the city would meet its part of the deal, presenting a completed, functioning Village on time. In VANOC’s view the project has been caught in an unfortunate cross between municipal elections and the downturn in the economy, with the financial problems severely overblown.

> Insert your own punchline here:

http://tinyurl.com/2ds9amj

#162 kitchener1 on 12.21.10 at 6:44 pm

Regarding the mortgage changes

its all about perspective

70% of Canadians have already had or have taken the opportunity to get in at 0/40 or 5/35 mortgages. So changing the regs wont have that huge an effect.

That and the fact that any political fallout from a change will be tiny compared to the consequences of a CMHC bailout. If Canadians need to bailout CMHC, that will pretty much elminate a chance of ano CON govt for a decade.

#163 Macrath on 12.21.10 at 6:45 pm

#65 bullion.bunny

Wanted Supervisor, Tooling and Die Production

Royal Canadian Mint – Ottawa, ON

requirements and company policies. 6.0 Machinist Apprenticeship Training and … five years experience as a certified machinist in the province of Ontario
From Royal Canadian Mint –

See also — Frank Stronach networth $1.19 billion
trade Machinist

#164 Bullion.Bunny on 12.21.10 at 6:48 pm

#155 dd on 12.21.10 at 5:52 pm

Wake up bunny. How do you think gold is going to be dug out of the ground? If you don’t have a heavy duty mechanic on staff, good luck. The next 10 years will be about commodities; real things. And real things need skilled trades.

WHAT!

http://www.youtube.com/watch?v=Z8AL2ZRPpSI

First read comment #152, second…….automation, artificial intelligence, machine vision and various other high reliability, low maintenance systems are taking over. We need fewer people every year, wake up to the facts.

#165 Robert Dudek on 12.21.10 at 6:50 pm

An 8% yield this year was easily achieved. With most returns in the form of dividends or cap gains, the tax load for most people is 20% or less. As I wrote days ago, a balanced 40-60, fixed-equity portfolio this year has done 13%. — Garth

********************
How did it do in 2008?

Beautifully. — Garth

#166 Bullion.Bunny on 12.21.10 at 6:52 pm

#146 Cookie Monster on 12.21.10 at 4:57 pm

Thank you….spot on. Add a market driven system of free floating interest rates and the world would be a better place. Central banks are ready for the dust bin of history, all they do is create bubbles.

#167 Cowboy_aka_My_View on 12.21.10 at 6:52 pm

Sure paid off house, 300k liquid and in their late 40’s. RENT! What’s the point? Why even ask? Maybe if you had a liquid mill, then stay and your brats at least will inherit a wonderful long shopping spree.

#168 Mouldy Basement Renter on 12.21.10 at 7:19 pm

@ 152 BB
Good points !

#169 conf in T.O on 12.21.10 at 7:31 pm

#157 Mikey the Realtor

You’re right Mikey, I have a nephew whos got himself in deep, leveraged to the hilt with two highly overpriced condos because he is young and ignorant and listens to snake oil salesmen that are self serving just like you.

His behavior is already starting to change with fear after he did the math and found he would be cashflow negative. Only a housing miracle will save his sorry ass now.

For others like like him, the lust still burns, but, if you’re old enough…and I’m not sure you are, you would clearly remember how fast that changed right here in T.O a couple of decades ago. Just like its happened all over the world now.

Now, being a real estate agent, you likely failed at math. If you look at the states, do the math on the cost of living there, using reasonable examples, you would make the shocking discovery that Canada is quickly pushing itself into a time of huge trade deficite because of our high cost of housing. This will bring long lasting economic implications…but…ahhh…that economic stuff these asses with their so called fudementals.
“Housings goin up now fo the pups and poodles and get in while you can”!…
Go for it Mikey, sell, sell. sell

#170 goldenfox on 12.21.10 at 7:33 pm

Understanding Derivatives-a Primer

Heidi is the proprietor of a bar in Detroit.

She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar.

To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later.

Heidi keeps track of the drinks consumed on a ledger (thereby granting the customers’ loans).

Word gets around about Heidi’s “drink now, pay later” marketing strategy and, as a result, increasing numbers of customers flood into Heidi’s bar. Soon she has the largest sales volume for any bar in Detroit .

By providing her customers freedom from immediate payment demands, Heidi gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages.

Consequently, Heidi’s gross sales volume increases massively.

A young and dynamic vice-president at the local bank recognizes that these customer debts constitute valuable future assets and increases Heidi’s borrowing limit.

He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral!!!

At the bank’s corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into DRINKBONDS.

These “securities” then are bundled and traded on international securities markets.

Naive investors don’t really understand that the securities being sold to them as “AAA Secured Bonds” really are debts of unemployed alcoholics. Nevertheless, the bond prices continuously climb!!!, and the securities soon become the hottest-selling items for some of the nation’s leading brokerage houses.

One day, even though the bond prices still are climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Heidi’s bar. He so informs Heidi.

Heidi then demands payment from her alcoholic patrons, but being unemployed alcoholics they cannot pay back their drinking debts.

Since Heidi cannot fulfill her loan obligations she is forced into bankruptcy. The bar closes and Heidi’s 11 employees lose their jobs.

Overnight, DRINKBOND prices drop by 90%.

The collapsed bond asset value destroys the bank’s liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.

The suppliers of Heidi’s bar had granted her generous payment extensions and had invested their firms’ pension funds in the BOND securities.

They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of the bonds.

Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.

Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multibillion dollar no-strings attached cash infusion from the government.

The funds required for this bailout are obtained by new taxes levied on employed, middle-class, nondrinkers who have never been in Heidi’s bar.

Now do you understand?

#171 jess on 12.21.10 at 7:53 pm

Storm’s fiancial business model backfired
-borrow against their homes and use the borrowings for margin loans to buy into the stockmarket

=====

Storm Financial Limited was a financial advice company, based in Townsville, Queensland, Australia. The company was founded by Emmanual Cassimatis and his wife Julie Cassimatis in 2004.[1] It went into administration in January 2009 and was placed in liquidation on 26 March 2009. The collapse left an estimated 14 000 investors facing significant losses.
wiki

===========================
Macquarie’s new Storm
STUART WASHINGTON | Victims of Storm Financial with margin loans through Macquarie Bank were forced into deeper losses as a result of a procedural failure.

http://www.smh.com.au/business/macquarie-in-storm-loan-coverup-20101221-194fb.html

#172 Cory on 12.21.10 at 7:57 pm

??wth??

Excellent Post!

We are all consumed by greed and fear. It’s very sad….

I’m trying to change.

#173 Wealthy Renter on 12.21.10 at 8:11 pm

CTO & Bubble Boy,

There was a Globe and Mail artical last week about a study in T.O that shows a map of LOW income areas sourrounding inner T.O. Very Polarized! Keele and Lawrence is right in the low income area of $30000 per person. $70000 per family / yr is going to pay $600+ for this. THIS IS NOT GOING TO END WELL!!!!!!!

I was thinking the exact same thing when I read that study. As my wife and I hit our late 30s, we are itching to move into our own home. Although Garth jokes about it being hormonal, it is a logical step for people with their financial ducks in order. With that said, I TOTALLY agree with you. The income numbers cited in that very detailed study do not match current housing prices.

I don’t discount the possibilty that housing can go to the stratosphere in Toronto (and other places in Canada,) but something will have to buckle, like economic prosperity. At some point, the low interest rate party will come to an end and people will sober up. I can’t see how a generation of house poor people and retiring boomers will generate much economic activity.

We’ll wait patiently for a while longer……

#174 Sam on 12.21.10 at 8:13 pm

Further thought occurred after posting:

there’s a Toronto based self proclaimed “fight for the consumer” condo guy who makes a huge deal out of this – representing the buyer’s best interests, if the buyer signs something like this agreement.

I find his constant claims of his own high integrity and moral character and everyone else’s lack thereof … fishy, to say the least.

I’m curious to read Garth’s thoughts on this.
___________
#27 SATO on 12.21.10 at 1:26 am

Can anyone post the link to Garth’s post about the perils of the “buyers representation agreement”? I believe it was posted a few months ago. Thanks.

#175 TheBestPlaceOnEarth on 12.21.10 at 8:25 pm

Remember the trillion dollars of inheiritance boomers are going to get. Oh yeah I guess everyone forgot about that. Buy a home, Get Rich and Enjoy Life.
Buy the way pro renters do you think Vancouver is ending 2010 and this first decade of the 2000’s up or down? Yeah in your heart you know the truth. Truth=Vancouver

#176 dark sad person on 12.21.10 at 8:30 pm

#149 Cookie Monster on 12.21.10 at 5:21 pm

Inflation is not just a tax on your annual earnings, its a tax on everything you own, your assets.

*********************
Yes-Government by Inflation-

Easy to see how fast prices climbed after the World cut Gold loose in 1971 and they opened the Money/Credit spigots-

http://research.stlouisfed.org/fred2/series/CPILFESL

Even though the Gold Standard didn’t exist in any way shape or form to its original structure-that tiny link prior to 1971 allowed Gold to function as a Monetary brake-
When Foreign Countries demanded payment in Gold only because the US was devaluing/printing to pay Foreign Debt
That demand (by law) -castrated the USD-

Deflation was being forced on the US as their Money Supply (Gold) was being shipped out of the Country-
(the only acceptable settlement) by International law-

Nixon either had to Default or lose the US Gold Supply-or do what he did-renege-break the law and decouple the $ from Gold-

As the chart shows above-Governments/CB’s took it upon themselves to try and be the “Market” and foolishly think they could control Sentiment by regulating Credit such as jacking rates up and down-
Here we are 40 short years later and look at the mess-

#177 sam the zam on 12.21.10 at 8:31 pm

I love you buddy
but please don’t pick on Mike “holmes” he actually does help people.

#178 Ben on 12.21.10 at 8:32 pm

70% of Canadians have already had or have taken the opportunity to get in at 0/40 or 5/35 mortgages. So changing the regs wont have that huge an effect.

——————————————————-

It will collapse the ponzi pyramid

#179 Mean Gene on 12.21.10 at 8:42 pm

Professional public servants are actually underpaid for the type of work they perform, at least within Federal Government.

The superannuation and benefits keep them on staff, certainly not the wages or disdain of the general public

#121 bullion.bunny on 12.21.10 at 2:48 pm

Bull. Civil servants have nothing to do with most people retiring on inadequate incomes. It’s usually their own greed and fear that led them astray. — Garth

True but they are overpaid for what they do!

More bull. — Garth

#180 Sam on 12.21.10 at 8:44 pm

If I remember correctly Shilling has predicted major deflation since 2000.

To make up for that record, his recession calls better all have been to the day the recessions started.
________
#53 See you in February on 12.21.10 at 4:11 am

Shilling predicted 7 of the last 7 recessions, must be doing something right.
___________________________
“even a broken watch … “

#181 Bruce on 12.21.10 at 8:48 pm

I’ve said this right from the start: There is *NO* recovery. What we saw was a brief respite of job creation and economic upswing through stimulus spending. Now that we see that money drying up, it appears we’re heading right back to where we started:

http://www.lfpress.com/news/london/2010/12/21/16636516.html

#182 dark sad person on 12.21.10 at 8:50 pm

Oooops-

Government “theft” by Inflation-

#183 Joe Q. on 12.21.10 at 8:51 pm

#159 Mikey the Realtor on 12.21.10 at 6:00 pm writes: “Greater Toronto Area new home sales are up by 1 per cent in November compared with a year earlier”

Did you read the article you linked to? The new “home” sales increase is entirely due to increased condo sales. Sales of new houses down ~10% from last year. Existing home sales down ~14% from last year.

Good thing there are so many people still hot for a 500-sq-ft box in the sky! Otherwise where would you be?

#184 Macrath on 12.21.10 at 9:02 pm

#167 Bullion.Bunny

High reliability, low maintenance systems are a complete fabrication of the sales department. Commercial and industrial equipment has always been high quality and has always required skilled trades to install, operate and maintain.

3000+ sq ft. chipboard low quality construction is engineered to create jobs for the trades in perpetuity, unless you DIY ,but don`t try to sell it to a tradesman when your finished. He will likely call in Mike Holmes and foot you with the bill.

#185 The American on 12.21.10 at 9:05 pm

At #23: AdecentplaceinCanada, eh hem.. in case you haven’t heard, Canadians are the MOST indebted people of all of the G20 now. Yes, this even includes the likeness of us “entitled” Americans who like to spend spend spend (Americans have home prices leveling now at a much lower level, yet we’re being responsible and saving at a positive 6% savings rate). Of course, this didn’t come to a shock to anyone on planet Earth, except for the Canadian people who have been continually lied to by their government, media, and banks. Canadians have NEGATIVE savings rates at -2%. What does this tell you? Well, Canadians like to spend more than even us “entitled” Americans. Let me help to break it down for you – Canadians and the Canadian banking system are screwed, regardless of if rates tick up even the slightest (and we all know they will). If they do not tick upward, well that could prove even worse for Canada. Please do not speak untruths about debt levels of the Canadian people again as I am frankly tired of hearing the lies being spoken to them. I’ve read previous posts of your’s, and either you are a liar, or you are ignorant of finance and economics. Being that you are a reaTURD, I have a tendency to think you are probably a combination of the two. The Banks in Canada were lending like CRAZY on 40-year amortization with the notes resetting anywhere from 1 to 5 years with $0 down (eh hem, this is otherwise known as “subprime lending, but even worse so as the amortization period exceeded 30 years). This didn’t sit well with some officials, so the banks reigned it in on 35-year notes that reset anywhere from 1 to 5 years with $0 down (this is also known as “subprime” lending and still highly-irresponsible). The U.S. amortizes on 30 years intervals (over 98% of loans) with notes resetting from 1 year to the full 30-year amortization period (imagine that, you really can have a mortgage that is fixed for 30 years and fully paid off in that time! geesh, what a concept). So, here’s a little link for you to watch. I would recommend you review it in its entirety. It will be well worth your time, especially when you’re ready to come to grips with the reality that will be.

http://goldsilver.com/video/keiser-report-jp-morgue-e105/

#186 Guy_in_Regina on 12.21.10 at 9:07 pm

Bullion.Bunny #133 said:
“Garth your problem is you have never done anything practical. You are a typical ex-civil servant, just push paper all day long.”

Yeah, Garth hasn’t done anything worthwhile. That’s why he’s written numerous successful books; goes coast to coast speaking to packed venues; gets interviewed in major media and publications; was elected to the house of commons where he developed little, unheard of things like the TFSA; that’s why all kinds of people seek him out and beg for advice; and that’s why he writes this blog that people from all walks of life love to read and benefit from, including yourself. Yep. Nothing practical there – nothing that compares to sitting around counting (and drooling over) shiny things.

Cookie Monster # 149
OMG, now I’ve heard it all – ‘the public service killed the penny!!’. Hey, could one create a battery out of a stack of pennies?

#187 GregW, Oakville on 12.21.10 at 9:10 pm

Hi Garth, fyi 2 article

FCC’s Stealth Plan to Censor Internet Content
http://www.infowars.com/fccs-stealth-plan-to-censor-internet-content/
“In order to control the internet and do so without much notice, the FCC has rolled a censorship plan into its Net Neutrality scheme….”

BEWARE: The Real Terrorists are Upping Their Chatter
http://www.infowars.com/beware-the-real-terrorists-are-upping-their-chatter/

#188 AG Sage on 12.21.10 at 9:10 pm

Glancing back, I don’t see Aussie Roy on here, but I’ll post this anyway. Data are slow getting reported from Australia and it is subscription so the last reports are getting trickled out through the press.

Prices of the most expensive 10% of houses in Sydney fell 7.5%, in Melbourne 10.8% in the six months ending September. — from business week

#189 Guy_in_Regina on 12.21.10 at 9:12 pm

#151 Mcgrath

Because natural gas is way cheaper than nuclear.

One machinist job at the Royal mint – wow.

#190 Nostradamus Le Mad Vlad on 12.21.10 at 9:23 pm


Greg W. — Toxic sodium fluoride in water.

Oligarchy vs. Plutocracy “If this is the mission of the Fed, it has radically failed and the American people should audit the Fed to see what went wrong.” The US Fed is a private business; they alone, not taxpayers, are responsible for clearing up their own debts. Same here; we are in no way responsible for Trudeau’s, Mulroney’s, Chretien’s, Martin’s or Harper’s debts — THEY ARE.

2011 Chart Why are nincompoops elevated to these positions?

Death “So, a young woman with access to Citigroup inside information splatters on the sidewalk and ABCNNBBCBS rushes to reassure us all that even though this woman had no reason at all to kill herself, that her death must have been a suicide!” wrh.com. Plus — Suicide? “What this article does not mention is that Widlak was President and CEO of the bank. And all of a sudden we have a lot of people with inside knowledge of the mortgage fraud turning up dead.” wrh.com.

MickeyBleeps By a pure turn of coincidence . . .

Walking On The Sun “Roughly 23.2 percent of all single-family homeowners who have a mortgage are underwater on their property, according to third-quarter data from Zillow. (Zillow estimates that 40 percent of single-family homes are owned, with the rest mortgaged.)”

Transfer of Wealth “The people who are managing this huge criminal ‘transfer of wealth’ (and want more) from the middle classes are understandably nervous: sixty million people’s jobs, pensions and property have moved and are still moving into the hands of the already rich as you read this – who do you think buys all those foreclosed homes ‘for peanuts’?”

Red Herring “The country is now the Homeland, reminiscent of the Nazi Fatherland and the Soviet Motherland.”

10:58 clip Foreclosures on people who never missed a mtge. payment.

GW — Sign of the times. Plus — Snow in Summer “The Carbonazis are running around trying to claim that global warming causes cold weather, but if that were really true, then why did Hadley CRU claim snow would be a “thing of the past” in 2000?” wrh.com.

Science Snafus “This is the same misinformation that Hansen has been repeating. Most of Greenland, Alaska and Western Canada are running well below normal temperatures. It is -46F on the Greenland ice sheet headed down to -63F later this week.

“These people are completely incompetent. Australia is far below normal. Antarctica is far below normal. The Pacific Ocean is far below normal.”

AfPak — It’s all about oil! “But the oil and gas there is worthless until it is moved.” ‘There’ is the Caspian Sea. Cdn. troops are fighting and dying for someone else’s energy needs.

US$2 Trillion “According to economists, 100 US cities are threatened by bankruptcy, thanks to $2 TRILLION dollars in debt.”

Nice one by Brazil for Palestine.

War in Yemen Further interference to destabilize the region.

Monsanto This is what Bills S-510 and C-36 are intended for.

‘Net Control “One of F. William Engdahl’s latest articles is titled “Wikileaks, a Big Dangerous US Government Con Job”.

Top 10 List Greediest People in 2010.

4Closure No More “He may appoint a special master to over look at foreclosure paperwork for fraud!”

Part Time Workforce Why US corporations have money hand over fist.

#191 S.B. on 12.21.10 at 9:24 pm

The Wild West prefers regional fifedoms…

“The Globe and Mail reports in its Tuesday edition that Saskatchewan is formally opposing the creation of a single securities regulator, providing fresh ammunition for the provinces waging a fight against Ottawa. The Globe’s Karen Howlett writes Saskatchewan joined Alberta, Manitoba and Quebec on Monday in rejecting the federal government’s push to create a single regulator. “We’re looking toward a plan that will be under the jurisdiction of the provinces,” Saskatchewan Finance Minister Ken Krawetz told The Globe at the end of the finance ministers meeting in Kananaskis, Alta. Federal Finance Minister Jim Flaherty, the chief architect of a single regulator, faces an uphill battle now that four provinces are formally opposed and two others — British Columbia and New Brunswick — have raised concerns about giving up control over policing securities markets. “Unanimity has not been achieved,” said Mr. Flaherty, a clear understatement that sparked chuckling from some provincial ministers. Alberta Finance Minister Ted Morton was elated with the development. “It’s been a good week for Alberta,” he told reporters. “It looks like the ranks of those opposing [a national regulator] have grown.” “

#192 Devil's Advocate on 12.21.10 at 9:28 pm

#137 bigrider on 12.21.10 at 3:52 pm

#120 Devils Advocate -on US housing decline.

Devil are you denying that housing in the U.S has not been the source of much financial grief among owners regardless of what you,I or anyone else believes the percentage drop to be nationally, peak to current trough?

Did you maybe mean “are you denying that housing in the U.S. has been the source of much financial grief” or “NOT been…”? If, as I suspect, the former then while yes I do most certainly believe it has been the source of many a financial grief among many owners I do believe it is being exaggerated as to the extent to which it is impacting that economy. I don’t think housing is so much a core issue as reported. That sector of the economy is quite resilient. Yes some families will be devastated in the process of the “correction” but that is, to a large degree, of their own doing and they rightfully should be expected to share and suffer in the consequences.

Housing issues are a consequence not a cause. What is the cause? Well where does the buck stop? I think with the FED to a large degree but more who controls the FED and what their motives are. I’m not being paranoid and implying it is so much a conspiracy. I don’t think they are quite that well organized… yet.

#153 kabloona on 12.21.10 at 5:37 pm
#120 – DA:
Just quoting the article, it’s not my commentary….I thought US house prices were off about 25% on a National basis, however the following graph of Case-Shiller Index indicates approximately 30% drop from peak since 2005.

http://en.wikipedia.org/wiki/File:Cshpi-peak.svg

The site source which most immediately comes to mind for me can be found here;

http://tinyurl.com/p5gfj

This information coincides with much of that on the Wiki site you reference but I don’t see the drastic numbers you quote. Isn’t theCase-Shiller a composite of sorts? These appear to be raw numbers. I tend to favour raw numbers.

I’ve pointed this site out before. Note the number of shares of the DJIA it took and takes now to buy an average house in the US. Look at that graph which depicts the number of ounces of gold it took and takes to buy an average house in the US. I’m thinking there is great food for thought here. But you all make up your own minds.

#193 Devil's Advocate on 12.21.10 at 9:35 pm

#131 dave in calgary on 12.21.10 at 3:24 pm

#113 Devil’s Advocate: Nothing, absolutely nothing matters so much as the land upon which you live. Think not? Try doing anything without it.

I think this is a silly argument. I could argue that water is just as important. Should I go and borrow a bunch of money to buy a lake or a cloud?

Probably not a bad idea! Water will become a far more apparent precious commoditiy than land in the not too distant future.

#194 Macrath on 12.21.10 at 10:06 pm

#192 Guy_in_Regina

If they built a plant it would create lots of jobs. Pay for the plant by selling the gas to heat our houses.

#195 Bullion.Bunny on 12.21.10 at 10:09 pm

#166 Macrath on 12.21.10 at 6:45 pm

See also — Frank Stronach networth $1.19 billion
trade Machinist

You are really “THICK”, technology replaces people. Get over it. What took years to accomplish now only takes months due to technology. Even the engineers are feeling the squeeze, 3D computer aided design tools allow designers to test and simulate before any metal is cut. Hundreds of engineers, designers, technologists and IT people retired early due to advancements in computer technology. As far as frank goes 25% of the tool makers and skilled trades are GONE, replaced by automation. I know I designed and installed a great deal of it. Also this depression reduced the need for a great number of skilled trades and technical staff.

#189 Guy_in_Regina on 12.21.10 at 9:07 pm

Oh holly crap it’s a cheerleader!

#182 Mean Gene on 12.21.10 at 8:42 pm

Professional public servants are actually underpaid for the type of work they perform, at least within Federal Government.

Fine, civil servants are underpaid at $100,000 per year plus all those benefits at unsustainable levels. Wait until the Government can no longer pay those wage and benefit levels. Then what? Governments are growing at levels the country can no longer afford. Time to wake up.

http://www.fin.gov.on.ca/en/publications/salarydisclosure/2010/

http://www.canadafreepress.com/index.php/article/2444

P.S. I wish I had the Federal sunshine list, I’m sure it would be larger.

#196 Duke on 12.21.10 at 10:15 pm

I think I understand the constraints Garth might feel in criticizing the public sector. We can’t afford its current size and expanding the money supply to pay for it is ultimately a tax. The picture of the 11 blue clad workers in the previous piece reminds me of a scene two Saturdays ago in Vancouver when many more workers stood around hurrying to complete the Hornby St. bike path. The private sector resents the public sector for good reason.

#197 Utopia on 12.21.10 at 10:53 pm

#151 Macrath

Yes I agree that a reactor would be an asset to the Tar Sands. We could power up the whole North while we are at it which would make the Arctic more accessible and reduce the consumption of fossils fuels and coal that are currently being used. Saskatchewan recently nixed a plan to build a reactor for the province and I see that as a shame because the opportunity was there to export power to Northern Alberta and the Tar Sands projects for revenues. Cost sharing for the project could have been met through some partnering with the oil majors up there too. But it did not come to pass, alas. And so we ship our provincial yellow cake bonanza overseas instead.

#198 Utopia on 12.21.10 at 11:11 pm

#173 goldenfox wrote:

“Understanding Derivatives-a Primer”
————————————————–

Oh Lord goldenfox, that was absolutely hysterical,..and too true (hic). Did you write it? It’s a lesson that should be taught in econ. classes. Maybe the next generation will work more dilligently to prevent the outrages and excesses of Wall Street.

(Or maybe they will just learn how not to get caught)

#199 Macrath on 12.21.10 at 11:20 pm

#198 Bullion.Bunny

You are really “THICK”
———————————-

So was my union and they are hiring. All your engineering jobs are in Asia and IT in India. The only thing I can think of made in Canada are those silver Maple leafs from the mint I got today.

Save Canada buy silver!

#200 Behavioral Finance on 12.21.10 at 11:25 pm

This sums it up pretty well. It is always different.

Different streets
Different countries
Different currencies
Different people
Different prices
Different magnitude

http://www.theaustralian.com.au/business/housing-market-a-time-bomb-says-investment-legend/story-e6frg8zx-1225880119320

But I always loved the argument, they don’t make any more land.

#201 Behavioral Finance on 12.21.10 at 11:28 pm

This is classic.

Clark sounds like he’s a big believer in the Chuck Price Music Theory best described in retrospect as “Keep dancing until you dance out the door”.

Read more: http://www.businessinsider.com/canada-real-estate-bubble-banks-2010-12#ixzz18o4u89dH

#202 Timing is Everything on 12.21.10 at 11:32 pm

#32 Dan in Victoria

Good one…Ha!

#203 Bullion.Bunny on 12.22.10 at 12:36 am

#202 Macrath on 12.21.10 at 11:20 pm

So was my union and they are hiring. All your engineering jobs are in Asia and IT in India.

Typical “union guy” attitude, us v.s. them. God I can’t wait to retire from this crap. Yes, lets fire all the engineering staff, tech’s and IT people. Then you to can have the pleasure of getting all your materials and assembly instructions from China. Hope you like that 1/2 inch trade conduit made from all that recycled Chinese steel. Almost impossible to bend because it’s soft in one spot and hard as hell four inches later. Good luck with that! I made one simple statement about the reality of automation in the real world and all the union types have a hissy fit. Typical!

#204 Bullion.Bunny on 12.22.10 at 12:53 am

#200 Utopia on 12.21.10 at 10:53 pm

Yes I agree that a reactor would be an asset to the Tar Sands.

No thanks, we have two in Ontario and they are a complete mess. Both are old and in need of replacement, Ontario just announced they will spend 90 billion fixing the old junk reactors. Also the waste is a big problem, we now have so much of it sitting in “hot pools” we don’t know what to do with it. Long term storage is a huge problem that the 90 billion does not address. In addition Port Hope is now a radio active waste dump after 50 years of producing uranium pellets. Yes people are still living in the town and to make matters worse the radio active dirt is spread all over the town. Plus the rain water washes through the radio active tailings ponds into Lake Ontario. Get ready Quebec you are going to glow in the dark yet. It’s Ontario’s way of say we love you. All brought to you by our Federal Government.

http://www.thestar.com/News/article/276037

Do you really want a 200 billion dollar radio active mess in the west. It’s a gift that keeps on giving, lasting for at least 25,000 years. Think about that, Pickering and Darlington are going to be radio active “hot” for 25,000 years. Our Government does not have enough money to last ten years never mind 25,000.

#205 Macrath on 12.22.10 at 1:22 am

#206 Bullion.Bunny

We had plenty of engineers working in my trade because they could not get Engineering jobs. Sad situation for sure. It`s because we sold our souls to Walmart many years ago and now we are paying the price. So how can we Engineer our way out of this mess?
Something to sleep on.

#206 Meooyah on 12.22.10 at 4:16 am

realpaul on 12.21.10 at 12:27 amRight-O……$300,000 in savings at 47 is a freaking disaster! I hope its the kids that are 47 and not the parents . The kids alone ( if school age) will suck up most of that 300K in education expenses by the time they turn sixty. Unless they want the kids to walk into their adulthood saddled with an enormous student loan debt. …or go through life being trained to exist as pond scum….with zero expectations.

There are so many of these fools who have deluded themselves into thinking that they’re ‘millionaires’ based on the value of their real estate and don’t realise that the roof over their head counts for nothing except as a place to live until they sell. Its these same fools who are spending themselves stupid thinking they can ‘afford it’.

If all you’ve maaged to squirrel away is 300K at 47 you’ve been real stupid with your money up to this point.

================

Yes, it is better to be in debt like everyone else…

#207 randman on 12.22.10 at 8:13 am

#143 ??WTH??

Best post I’ve seen here in a long time!!!

Bravo Sir/Miss

#208 Angela on 12.22.10 at 11:23 am

@ #23 Bestplace

Just the other day I was talking to friends who lamented that because of their house they never had the opportunity to travel. Being a renter, we’ve travelled lots and done all kinds of fun things…but gosh, we really didn’t enjoy it at all. Those friends sitting at home in their owned house who sat at home reading their amortization table had a lot more fun than we did.

#209 Utopia on 12.22.10 at 11:55 am

#207 Bullion.Bunny

We cannot fear the future based on mistakes from the past. I agree that nuclear reactors have been problematic in Ontario but these were early generation facilities. Things have changed and there is a huge build-out of reactors across the globe now that promise to exceed the capabilities of the old style projects. China itself is building dozens. They come much smaller these days too and the industry has evolved and learned from it’s mistakes.

But if you prefer to breath dirty fumes from coal plants (actually they have evolved too) then all the best to you. Nuclear provides clean energy though and lots of it from a central location. I am all in favor of having a plant out here in Saskatchewan.