Mama safe

Rick’s mom is a roller. Sounds like it, at least. But he seeks advice.

“My mother has taken out a residential mortgage and is 6 months into a 5 year term at 4% on 500K.  Due to the recent sale of a commercial property she now has the means to pay the mortgage off in full.  This would save her approximately $85K in interest payments, less the break fee.

“I cannot find any secure income investments that will pay out more than her mortgage interest is costing her over the same term.  I have looked at strips, preferred shares, and corporate bonds (she has 0 risk tolerance for this money).  Nothing like the examples in your book.  Am I missing something?”

Well, Ricardo, this question cuts to the quick of the times we’re living. Lots of people, like Mother, want yield, but no risk. At the same time, vast numbers of us, also like Momsy, will borrow a half million dollars on an asset class almost guaranteed to fall in value. In short, we’ve all lost perspective of what risk really is. That’s what will make 2011 so damn interesting.

For example, here’s the chief Canadian economist of Merrill Lynch forecasting that the Bank of Canada will more than double its key rate this year, taking it from 1% to 2.5%. So what? So, that’ll increase the chartered banks’ prime from 3% to 4.5%, and add a corresponding amount to variable rate mortgages. When does this start? March, she says.

I don’t have to tell you what this might mean for real estate, especially coming just after F drops his annual budget. As you know, big banks have actually been lobbying the feds to tighten up on mortgage rules (like ditching 5% down, or 35-year amortizations), in order to avoid a bubble burst of flatulence that could flatten the housing market (and bank profits) for a generation.

Meanwhile it looks like the bond market will be selling off for a while, as credit risk grows in Europe and those godfearing Teabaggers in Washington do all they can to provoke a debt crisis. Of course, the bond market is where fixed mortgage rates are set, so it’s reasonable to expect the cost of five-year money to also jump.

See what I mean? Higher short-term rates jacking up VRMs and LOCs, as long-term loans also plump, while the feds move to curb excessive borrowing by cutting off homebuyers who don’t have any money. This is not good news for, say, a crappy house in West Van currently listed for $1.1 million.

Meanwhile the US economy seems to be rustling back to life. Factories were the busiest in seven months in December. Construction spending is up a tad. Facebook will probably IPO for about fifty billion. And the stock market is already anticipating a year of growth, which might mean falling unemployment and a bottom for the housing market. Maybe. But it’s all enough to help lots of money sitting in bonds migrate over to equities, driving yields higher.

What does this mean for the rest of the year? I have no idea, and neither do you. But we know this much: Emergency interest rates have created an orgy of borrowing and Canadians now owe more than anyone imagined they could. Mortgages at 3% for the past two years have brought forward a whack of demand from the future. The same bankers now tut-tutting about the need for tighter lending rules are the same mothers who have used cash-back mortgages, liar loans, 125% collateral loans and massive ad campaigns aimed at reeling in first-time buyers. The net result of all this has been an unsustainable jump in real estate values which must, and will, correct.

So, as I keep on saying, this isn’t an asset class where you want to have the bulk of your net worth. I know it’s heresy. And I expect to be bashed some more for saying it. But this country will not escape. There is no wall around Canada, protecting the stupids.

Home ownership in Canada is now at 70%, which is a sell signal on its own. In the States, it continues to fall, while rental rates rise and more SFHs are sold to investors. It raises an interesting question of whether middle class homeownership in the country that created it is now doomed, as more people understand housing only makes wealth under very specific conditions, when there’s an adequate supply of greater fools.

So back to Ricky’s Mommy. She wants 4% without risk as an alternative to dumping half a million into a residential property which, if she’s real lucky, will yield 0% (plus operating costs), and could easily fall by 15%. See what I mean about the stupids?

Interestingly enough, I ran some year-end numbers last weekend while I was waiting for the girls to finish detailing the Humvee, and dress. My conservative, highly diversified, balanced, 40% fixed and 60% growth portfolio did 14.89% in 2010. Unlike the Bunker, it’s totally liquid, and can be converted into cash in three days. It kicks out dividends and capital gains which avoid taxes. It has no dinglenuts mutual fund managers with their hands out for fees. It owns no individual stocks, diminishing market risk. It just goes.

Of course returns this year may be less. You can’t count on anything.

Except denial.

169 comments ↓

#1 HouseBuster on 01.03.11 at 11:14 pm

Housing in Canada is a slow motion train wreck waiting to happen.

2003 prices are coming. I guarantee it just like Goldman Sachs did and shorted into the housing crash of the US.

#2 Al on 01.03.11 at 11:23 pm

FRom The Christian Science Monitorr – “European nations begin seizing private pensions
Hungary, Poland, and three other nations take over citizens’ pension money to make up government budget shortfalls.”
Maybe it’s better to own Real Estate rather than RRSPs

#3 Devil's Advocate on 01.03.11 at 11:32 pm

#202 David on 01.03.11 at 10:15 pm
#179 D.A.
Real Estate is super-competitive at the realtor level. A bunch of unskilled rubes all running around trying to collect as much loot as they each can in a massively corrupt game. That is your ‘competitive business’.
One layer above those wrestling pigs is an oligopoly, 95% controlled by 2 or 3 firms who have overseen the fixing of prices for several generations…fact.
You see the grunts, the ‘hitmen’, as the industry….you want us to be oblivious to the existence of the Dons who call the shots.

And this is where you demonstrate your complete lack of understanding of how the business really operates.
That “oligopoly, 95% controlled by 2 or 3 firms who have overseen the fixing of prices or several generations” is not of real estate. Those firms of which you speak are not a lot more than landlords who rent to REALTORS® office space and services such that those individual competing REALTORS® can enjoy a reasonable economy of scale in acquiring such services as they need to run their business (office space, photocopiers, telephone systems, receptionist, accountants, conveyancers, fax machines, etc, etc, etc. Were we each to find it necessary, through the lack of such services provided by those “brokerages” to each go out and hire them you can be sure those hefty commissions would be all that much heftier David.
The agency I work under is not my employer and really has little influence over how I do my work. They are not a lot more than a service provider to me just as is the newspaper I advertise in.

Now, unlike Mikey @ 164 in the previous thread, I, with due respect, have taken a few moments to explain something to you. Please exhibit the intelligence to understand it. You are wrong and, respectfully, I doubt you have the capacity to understand not necessarily for lack of intellect but certainly for lack of insight.
There is no oligopoly, there is no conspiracy… there is one hell of a lot of competition.

Again David… what is it you do for a living? Care to share?

#4 Edmonton Fool on 01.03.11 at 11:33 pm

Just curious…you mentioned a few times previously that your balanced portfolio includes REITs…why would these continue to be profitable if real estate is poised to continue a downward slide for the foreseeable future?

Good REITs have nothing to do with residential properties, and own top-quality commercial real estate with assured cash flow. — Garth

#5 T.O. Bubble Boy on 01.03.11 at 11:37 pm

Looks like Canadians are good investment/fund managers. Dynamic Funds had the best US Equity fund of 2010:

http://online.wsj.com/article/SB10001424052748704543004576051950548897730.html?mod=googlenews_wsj

(no wonder Scotia bought them)

#6 squidly77 on 01.03.11 at 11:49 pm

No housing comment tonight, just one about the photo.
The only thing that matters to three guys on the run, who is the slowest. Golf clubs can also be used to trip.

Great post as always, and too true.

#7 $froma$ia on 01.03.11 at 11:51 pm

Garth,

You keep talking about your Hummer… Have you got a set of nuts for it yet?

$

Glass. — Garth

#8 McLovin on 01.03.11 at 11:57 pm

Devil’s Advocate you were voted the biggest douche of 2010. Please just go away instead of trying to show everyone how happy and smart you are.

PS-Your “profession” is a joke everyone knows it. Deep down inside I think you do too.

#9 pablo on 01.04.11 at 12:01 am

How can rates in Cda go up when we have a dollar running at parity or maybe even better than the U.S dollar this year. With oil expected to be over $100/barrel
this year. With inflationary increases expected in most commodities including food this year. With unemployment going higher this year. If the U.S. doesn’t raise rates, which would make their foreign debt more expensive to carry; how will Cda be able to raise rates??

Wait and see. We obviously can’t handle cheap money, and the consequences of an indebted, cash-strapped consumer outweigh many other factors in an economy 65% dependent on goods and services spending. — Garth

#10 Elmer on 01.04.11 at 12:01 am

Can someone explain why a home ownership rate of 70% is bad? In an ideal economy wouldn’t everyone own their own home?

Hey, let’s all have a Mercedes, too. That would be ideal. — Garth

#11 Bigboy on 01.04.11 at 12:05 am

I’m loving 2011, into my 3rd day of retirement. I followed Garth’s advise in the spring of this year, sold my condo and am now renting. I have a diversified portfolio with a fee based manager and feel pretty good about the future. All of my expenses are covered by CPP and a partial Ontario Gov’t pension, investment income will give me the extras I might want. I read this blog, watch BNN and a few other sites so I try to stay informed. Keep putting it out there Garth, you are making a difference.

#12 Siddelly on 01.04.11 at 12:08 am

My latest favourite investing book is called ” The Black Swan “, although you may disagree that it is about investments after reading a couple chapters ( He is not big on future market predictions).
Your stated method Garth is to avoid individual stock picks whereas Mr.Taleb prefers to keep 90-95 percent in BBB bonds and safer, while devoting the remainder to high risk flyers and even derivatives like call options for extra leverage. The theory is that although it may be fun to predict the crash of a bubble and the creation of a Black Swan, it is far from easy as my hometown of Vancouver would suggest with Real Estate. So therefore the best strategy is to be prepared for the Australian flood or the collapse of Lehman brothers or the creation of smartphones by exposing yourself to the unknowable.

#13 Michael Motorcycle on 01.04.11 at 12:23 am

Now might be a good time to remind people about RSP/TFSA contributions – nevermind, I just did.

#14 Republic_of_Western_Canada on 01.04.11 at 12:25 am

it’s all enough to help lots of money sitting in bonds migrate over to equities, driving yields higher

Essentially the target of Fed ‘reflation’ that’s forcing peeps out of a collapsing bond mkt into an overvalued stock market.

Funny thing though, Soc Gen sees the best yield/risk ratio to be in Euro investment grade corporate bonds.

http://www.businessinsider.com/socgen-here-are-the-key-investing-trends-to-watch-for-in-2011-2010-12#but-now-those-emerging-market-equities-are-hardly-attractive-10

#15 Utopia on 01.04.11 at 12:28 am

Home ownership in Canada is now at 70%, which is a sell signal on its own. In the States, it continues to fall, while rental rates rise and more SFHs are sold to investors.—-Garth

That is really a great point Garth. I have thought for quite awhile now that if US rental rates stabilized and rose that housing prices would stop collapsing. Whenhomes become attractive to the landlording class again then the carnage will end.

Homes would again become a class of investment that would interest those who want to be landlords. The returns need to be favourable though and up until now they have not been.

Many are still saying US housing is overpriced and I tend to agree but it is looking more and more likely to me that price stabilization is on the horizon when you consider yields on funds invested and that will be a key area to watch over the coming two years.

I still would not buy there though until I saw convincing evidence of prices on the mend in major markets.

A nice article today by the way. Really enjoyed it.

#16 David on 01.04.11 at 12:30 am

D.A. You need your own blog….The Greatest Fool.

#17 randman on 01.04.11 at 12:35 am

And this from Bob Hoye…

Ignore at your own peril!

“Bob: First of all it’s not the central bankers that have dropped the short dated T-Bill rates down. These are features of post bubble contraction. Money, the real money that is around heads for the most liquid items. So it it bids interest rates down because US T-Bills are one of your most liquid items. It bids gold up too. So it’s not the policy of the central banks to have short dated rates this low. This just happens and they are trying to look as if it is policy. The main thing is that they have no control of the yield curve so when longer dated rates want to go up as they have been recently they have no control. No control on credit spreads so that when interest rates for lower grade credits such as mortgages and bonds go up they go up. And there’s nothing that these damn fool central bankers can do about it. It’s unfortunate that Canada has been in a bit of a cocoon here because they have this idea that because of resources and commodities they won’t be affected. The only thing you can say for the Canadian banking system is it has not been designed by the US congress. So Canada is just as vulnerable. Also we haven’t had a real crash in Canadian residential housing prices yet.

So the idea that economies are national and can be managed by an inspired bank of Canada is nonsense. These global expansions have been universal. They afflict everything and when the party is on everybody think it’s great and they take on a whole lot of debt. The problem in the contraction is that the economy isn’t big enough to service the debt so then you have to go into the great bond revulsion whereby as I said they’ll get marked down and priced to exceptionally low numbers. Many issues will be will be in default, a feature of a post bubble contraction. The idea that the fed or the bank of Canada can provide a stimulus, all it is is throwing credit at a credit contraction and hoping that it will go away. I mean these guys are dealing without no empirical evidence whatsoever. They are dealing with theories that have been pulled out of somebody’s imagination. ”

http://www.moneytalks.net/daily-updates/4738-how-to-protect-yourself-from-a-resumption-of-trouble.html

#18 nonplused on 01.04.11 at 12:49 am

#4,

If you take a look at a graph of any Canadian REIT, you’ll see that much of the froth is already off that market, and indeed at the worst of the trough they were low indeed. If Garth bought there and is using that as his mark price, he could be doing 14% for sure. But I think a double dip is coming.

Garth,

I like the picture of the bear growling at golfers. Our current mentality is that you work for the government until you are 55 and then the government will pay you to golf for another 30 years, after which they will keep you in depends. It’s not going to happen of course, as Alan Greenspan already explained to the US congress more than once. Sure, you could, as he said (to paraphrase), “always ensure an adequate supply of money to meet those promises, but you can’t ensure an adequate supply of resources to be bought with those dollars”. In other words he basically told congress that unfunded liabilities will cause hyperinflation at some point down the road. But since governments use such a high discount rate when NPV’ing the future, anything more than 4 years away counts for zero, so the problem hasn’t even been seriously discussed by decision makers.

The boomers start turning 65 this year. 3 in 4 of those over 62 are already collecting reduced benefits (US statistic, but since our stats almost always end up being worse once they are finally admitted to I am going to use it. Feel free anyone to refute with actual numbers but I know my dad is taking the money now even though he doesn’t need it because, in his words, “I’m not going to get it later”.). Almost all public pensions are underfunded, and that’s assuming they get an 8% return, which they won’t. This will only get worse. I think somewhere around 2015 or 16 the bear storms out onto the golf course. And there won’t be anything we can do about it because the tax base isn’t there in real dollars. Benefits will be curtailed because there is no other choice. But every other conceivable bamboozle including F’s new retirement nonsense will be tried first, to no avail except to make matters worse.

Its simple math, folks. I have often used the example that even if you own your home free and clear, a 2% property tax will return the house to the municipality every 50 years, and that is if inflation is zero. Plus you get to do the maintenance. Add a 2% inflation rate to that, and you can make the return period as little as 35 years. Maybe less.

The geometric function, which was used with such gusto to justify largess on the pension side, can also be applied to the payout side, and what we see is simple: Without 8% growth in fund assets and near zero CPI, we are screwed, glued, and tattooed. But not for another 4 years at least so discount it to zero if you are a government decision maker. However, if you are not a government decision maker and can see yourself and imagine yourself in 4 years and are close to retirement and depending on government largess to fund that retirement, panic now and avoid the rush. The bear is coming for you. He will chase you off the golf course, assuming you can run.

PS sell that membership before everyone doesn’t want one. Seasons tickets too.

#19 Nostradamus jr. on 01.04.11 at 12:51 am

#8 McLovin on 01.03.11 at 11:57 pm

“Devil’s Advocate you were voted the biggest douche of 2010. Please just go away instead of trying to show everyone how happy and smart you are.””

…Only just found out D A.
Congratulations…You and Garth will be co-interviewed by the Globe and Mail or CBC Radio.

Dont forget to say “hi” to all us runnerups.

Booya

I actually predicted you would win nearly 500 years ago.

Nostradamus jr.

#20 Mark on 01.04.11 at 12:51 am

Wouldn’t an absolutely terrible economy (ie: Canada’s) call for rates to fall, not rise? Especially if houses drop 15%, which they are likely to? Raising rates when there’s no inflation and nobody’s buying anything certainly doesn’t seem like something any prudent central banker, nevermind Mark Carney, would do.

I can see banks raising spreads on mortgages though, as new origination volumes fall, and they want to maintain overall margins.

#21 Utopia on 01.04.11 at 12:55 am

#8 Elmer on asked:

“Can someone explain why a home ownership rate of 70% is bad? In an ideal economy wouldn’t everyone own their own home”?
———————————————————

Elmer, it is not intrinsically bad for everyone to own a home however is does represent an imbalance in the system based on the long term averages.

You can appreciate that in a country like ours where as much as 20% of economic activity can revolve around housing that once you have breached the higher numbers then new demand has been squashed.

This really bodes poorly for our economy for a few years as too high levels of ownership invariably will translate in employment losses in new home construction and all the related trades.

Furthermore, by having arrived at such a high number of owners versus renters the pool of potential new buyers is diminshed and therefore we run the risk that supply will overwhelm demand and put downward pressure on home prices.

This is exactly what we are about to witness in this country. So when you combine those dynamics with rising interest rates (or even the risk of rising rates) and a demographic destined to begin moving out and moving down as retirements commence in large numbers then we have something of a perfect wave shaping up.

Course, this is real estate. The wave will likely form slowly and build but we cannot rule out the risk of say a sharp stock market correction that might unsettle everyone and hurt confidence in a hurry.

I do not recall exactly how much housing dropped following the credit bubble (sub-prime) bursting in the States but was in not in the range of 20% nationally?

Last. Very high rates of home ownership negatively impact labour mobility and can actually have a harmful effect on an economy. This is all the more obvious if many people, particularly young people with high ratio mortgages are suddenly in the position of having negative equity. How do you move then especially if you cannot even afford the costs to close the deal?

The worst consequences start to appear when people are forced to sell. Remember, all it takes to lower your own homes value is for your neighbor to suddenly drop his price to what the vulture buyer is demanding.

You have not done anything wrong personally of course and might well have perfect credit and a healthy bank account etcetera but you still just lost equity and wealth. And the day you go to sell you will discover that everyones house in your neighborhood is suddenly worth less too.

Naturally, the few remaining buyers will have cottoned on to the markets changes by this time and will just stay out of the market waiting for better deals. This is how the vicious cycle of price declines in the US really got underway and picked up extra momentum and why the carnage has still not ended.

Those are just some of the risks that evolve when home ownership levels get too high.

#22 realityguy on 01.04.11 at 1:05 am

Just looked at the Rental units for the Lower Mainland on Craigslist

Over 800 ads for Jan 03. I guess all previous renters are now proud owners

#23 TheBestPlaceOnEarth on 01.04.11 at 1:10 am

Bottom line it was hard to beat your return on Vancouver Real Estate between the years 2004-2010. That $250k Main Street Home is now worth close to 1 million tax free dollars. Only junior mining gave huge returns and you had to be out of that market during the meltdown of 2008 (Those whou bought the junior golds during this time made out like bandits). Merill Lynch can forecast all they want, no doubt i could get a similar forecast from a guy wearing a mac jacket sitting on a stool blowing players plain smoke over the donuts at Tim Horton’s. Bottom line is Vanouver held solid during the last decade, this is a fact and cannot be debated. 2010 – 2020 we go supersonic. Fasten yiour seatbelts we’re heading to the stratosphere. For those pro renters please enlighten me how you prospered renting during the past 10 years over leveraging yourself to the hilt in Lotusland. I’m all ears

#24 dark sad person on 01.04.11 at 1:14 am

Meanwhile the US economy seems to be rustling back to life. Factories were the busiest in seven months in December. Construction spending is up a tad. Facebook will probably IPO for about fifty billion. And the stock market is already anticipating a year of growth, which might mean falling unemployment and a bottom for the housing market. Maybe. But it’s all enough to help lots of money sitting in bonds migrate over to equities, driving yields higher.

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

If unemployment continues to rise houses will continue to fall and if risk starts leaving bonds and piling into stocks it’s usually a topping indicator-
Flush the money out of safety and into the waiting net of GS et al who are positioned at the top of the commodity/stock market goose-where they have successfully front run all the Fed stimulus and will gladly sell to all the fresh meat–

You can’t get a hold of those savings unless you coax the money out into the open-
I know-I’m such a pessimistic bear-

#25 Devil's Advocate on 01.04.11 at 1:23 am

#8 McLovin and #16 David

It will be my sincerest pleasure to take the time in 2011 to, pro bono, cultivate and convert you both to the dark side where when once here you will both then see the light. I am confident it can be done. It will be a challenge for sure, but one I am up to ;-)

#26 Jeff Smith on 01.04.11 at 1:28 am

>#2 Al on 01.03.11 at 11:23 pm
>FRom The Christian Science Monitorr – “European
>nations begin seizing private pensions
>Hungary, Poland, and three other nations take over
>citizens’ pension money to make up government
>budget shortfalls.”
>Maybe it’s better to own Real Estate rather than RRSPs

Harpie will never do that to us! He is a nice guy!
.

#27 Gary in Kelowna on 01.04.11 at 1:29 am

Garth,
If you have a large enough portfolio why are you not in individual stocks rather than ETFs. You could have your own basket of stocks that would be like your own ETF without the fee?
Just asking?
Thanks as always

Why increase risk? I’m happy with 14%. — Garth

#28 Tim on 01.04.11 at 1:31 am

Real Estate increases 17 percent in Richmond in 2010…

So with a 20 percent correction, it would be down a whopping 3 percent from last year…

#29 Jeff Smith on 01.04.11 at 1:32 am

Guy1 = Holy Crap! A bear! Run for your life!
Guy2 = Oh my god! Oh my god! We can never out run the bear
Guy3 = I don’t have to outrun the bear, all I need is to outrun one of you!

Guy3 is a realturd!

#30 Tim on 01.04.11 at 1:35 am

Rates can’t go too high in Canada, as the differential between Canada and the states can be too high. The states is so messed up that it will be a long time before rates rise significantly. So homeowners in Canada continue to benefit from low rates, even if they increase a few percent, they are far lower than the historical average. As a result, many have mortgage payments that are not much higher than people’s rent.

#31 Nostradamus Le Mad Vlad on 01.04.11 at 1:36 am


“Except denial.” — 3:13 clip Living in denial, this is what the vast majority of sheeple are doing. Lyrics — Pretty Fly For A White Guy The Offspring.
*
#205 dark sad person on 01.03.11 at 10:33 pm — “So–is “Something” is out of place? Copper price blowoff characteristics when weighed against the non conformity and current USD strength? Nawwww– can’t be-”

Hmmm. You may be on to something there, DSP. Something is out of place, too convoluted for me to figure out.

#2 Al — Good link, esp. with the welfare one below. Might be worthwhile to switch to TFSAs and max them out every year; put the net gains into a non-registered acct. with monthly DRIPs.
*
“I cannot find any secure income investments . . .” — Umm, there are no such beasts as safety and security. Never have been, never will be.

Suggest following similar to Garth’s strategy, enjoy life and stay fluid, e.g. move with the times, chop and change only when necessary.

I could be wrong, but I see a bear approaching. Perchance, is it as friendly as Fozzie Bear?

“. . . want yield, but no risk. . . flatten the housing market (and bank profits) for a generation. There is no wall around Canada, protecting the stupids. See what I mean about the stupids? I have no idea, and neither do you.”

These are the unknown unknowns. See Donald Rumsfeld for a better transcript!

“The same bankers now tut-tutting about the need for tighter lending rules are the same mothers who have used cash-back mortgages, liar loans, 125% collateral loans and massive ad campaigns aimed at reeling in first-time buyers.”

The Greatest Fool has boarded the ship, gangplank’s gone and now we’re headed straight for a gargantuan tidal wave, and the banks know it.

As far as the banks go, weren’t they the ones extolling the virtues of taking on more debt? Karma’s a bitch and likely to strike when we least expect it.
*
Pic on http://rense.com/ shows chem trails are not the normal flying routes — spread out and possibly coming from something else.

Vancouver properties assessed 12% higher, and not by Realtors.

Resistance Is Futile Or is it? There are always numerous sides to every story.

WW3 or Peace — Wot’s yer call?

More FFs Western world must create more FFs to justify their existence. Have they ever given thought to living within their means, and not taking other stuff which doesn’t belong to them?

For all intents and purposes, the elite are transforming the UK into a nation of welfare serfs, then Europe and us. Plus — Hiding the depression — Real figures.

Evidence of a sister to Yellowstone in Arkansas. Could be part of the New Madrid fault line.

Further to Garth’s musings on factories, and Weird Pix.

#32 Utopia on 01.04.11 at 1:43 am

Can any of you people out there tell me how you are doing text editing within the submit window on this site.

I would appreciate anyone who has better computer skills than me offering even a brief explanation. So far everything I write always ends up back in normal text mode.

Maybe my version of windows is wrong…..

#33 NorthOf49 on 01.04.11 at 1:50 am

“…while I was waiting for the girls to finish detailing the Humvee, and dress.”

I burst out laughing at that one. Man you crack me up!!

#34 LG on 01.04.11 at 1:55 am

It is all very well for the group that understand all this.

When you speak about financial illiteracy you have to realize that that even though we may be reading the books, the blogs, and attending the retirement seminars – we still don’t understand the process!

That is what illiteracy is.

And that is what paralyzes us…

#35 zara on 01.04.11 at 2:20 am

RE: # 7
Garth has an awesome set crystal balls hanging from his hummer…….haven’t you figured that out yet???? DUH.

#36 TheBigLebowski on 01.04.11 at 2:27 am

For example, here’s the chief Canadian economist of Merrill Lynch forecasting that the Bank of Canada will more than double its key rate this year, taking it from 1% to 2.5%-Garth. Don’t ever take what an investment banks says at face value, they are usually talking their book, nothing more. Next you’ll be putting your faith in Goldman Sachs statements. The same company that sold MBS to its own clients and rated them AAA, meanwhile they were BBB, its like the difference between a 10 and a 4. They then turned around and shorted the same bonds they just sold. Any comment a mainstream investment house makes is mis-direction at best and most likely government fed propaganda. They are Fed billions of dollars of bailout money to ensure their loyalty to government. The only thing driving markets higher at this point is a flight from paper currency into tangible assets, stocks being one of them. Its driven by a currency induced inflation trade, not an improving U.S economy. QE1 consisted of 1.5 trillion dollars and only produced a push sideways of the western economy for 2.5 years. QE2 will end up being twice that to produce the same result. What will QE3 and QE4 consist of to keep us afloat ?

The consensus opinion is for rising rates. I agree, as stated here often. — Garth

#37 Chappy on 01.04.11 at 2:37 am

Just had a buddy over who currently lives in San Fransisco. While he is no RE expert, he claims that the stupidity that still reigns in Vancouver is alive and well in SF as well. Prices are still through the roof there with no telling when the bubble will burst there. I guess not every US city is taking it on the chin.

#38 604genX on 01.04.11 at 3:23 am

Jeffrey Simpson just predicted a federal election in 2011. Harper just shuffled the cabinet. This sounds like another leading indicator of the Conservatives last-ditch attempt to grab a majority ahead of the looming real estate meltdown. Better to face the electorate now while they’re all high on property tax assessments than to face the wrath after the collapse.

Garth, where do you get over 4% on anything now? I just wrapped up AFTER THE CRASH and started MONEY ROAD. I’m hoping for some answers.

#39 Rust Belt Buster on 01.04.11 at 3:32 am

#16 David on 01.04.11 at 12:30 am wrote –

D.A. You need your own blog….The Greatest Fool.

——————————————————

Rather amusing this is.

Over the holidays I was speaking with my brother in law (former VP Sales for Telus SW Ontario) who stuck a toe into the shark infested waters of RE a couple of years back. Once a salesman, always a salesman. Nowadays he’s into selling computer software for ridiculous commissions. He’s one of those guys that you could throw in a pool of dog crap and he’ll come out smelling like a rose every time.

Outcome of the conversation is that RE agents are no more morally grounded than any other salesperson out to stick you into a sales agreement you can’t afford, shouldn’t enter into, whatever the case. Salespeople by very definition could care less about anything other than selling YOU something with the end result of THEM making money.

Having said that, DA is a duly licensed professional. ;) And just like a visit to the doctor for a rectal exam, no matter how uncomfortable that sensation of having some foreign object inserted into an orifice that is only intended as an exit is, DA will have you convinced that what is happening to you is for the greater good of you and your family.

Which reminds me. I have to call my insurance broker tomorrow.

#40 ruraldude on 01.04.11 at 3:46 am

Garth! Been reading your blog for better part of two yrs. It seems you abhor owning real estate. In the last 25 yrs the richest people “I” know made there money in real estate. On the other hand I know quite a number who sold their real estate and reinvested it in stocks, mutual s, GIC’s etc and are now sorry. You make the rest of us look like idiots with your fantastic returns and as of yet I’d like to see some real and not general examples.

Nothing wrong with owing real estate. I do. Just keep it around a third of net worth. — Garth

#41 realpaul on 01.04.11 at 3:53 am

The TSX venture exchange was up 50% in 2010…the TSX up 14.9%. It was a year where a monkey could have thrown a dart at the stock pages and picked a weener.

But what happened….was very interesting. A flood of money continued to pour out of equities ( which were rising) and into bonds as they tanked……..was this a good lesson in investor psychology? Not really…we’ve seen it all before…most recently in real estate where seemingly knowledable people who should know better have kept piling in to a market which is obviously collapsing….kerflush goes the dough-re-mi. “Stupids” you say? Statistics have to agree with that characterization.

So the ‘stupids’ lost out on a 50% rise that could have been had by simply index investing or through an ETF….without having to do a thing…

Sector investors made even more. Well managed gold funds clocked in 80%…while some individual issues doubled and tripled…..but these triple baggers are like lightning in a bottle and even the pro’s don’t get the ‘pick’ just right 100% of the time.

The news was ‘in your face though and it would take a blind melon not to have caught for example the 100% run in Agrium, Teck, Thompson creek Metals, Tim Hortons. saputo from the depths of the ’09 a-stocko-lypse’. There were a lot more but you get the drift.

Looking out I see more of the same….for many reasons…too numerous to name…..too complicated for many to understand.

At this juncture the worst place in the world you want to ‘invest ‘ money is in real estate. It will be gut wrenching for those who are fully exposed to real estate who have to watch the powerful gains being made in the equity market. It will be doubly bad in a rising rate enviornment alongside softening prices while at the same time paying higher taxes and mainteance costs for a dead weight.

lets say you have a million tied up in RE and its costing you 10% to hold onto in taxes and maintenance , and have a fair to whopping mortgage as well…..and you have to listen to your smarter co-workers who just made 20% ‘in the market. Thats 300 thousand ( plus the tens of thousands you’ve pissed away in intrest) you’ve lost. It could happen just like that THIS YEAR….for reasons you don’t comprehend…..if you did…you wouldn’t be investing in real estate.

Garth is right….a bit conservative…but absolutley right.

#42 confused and a little crazed on 01.04.11 at 4:05 am

hi blog dogs,

2011 will be a good year. out of about 13 stocks i have 1 down 30 % , 1 down 13 % and 1 down only 8 %.

the others all gains from 60 % to 20 % all giving me dividends.
this year will be free rent year and it only gets better as the Interest rates and commodities prices goes up.

I just heard on the CBC news property taxes will go up and gas can go up to $1.50/ litre by summer.

my commodities stock gains have already exceeded my yearly expenditure on gas… another 25 % increase …let’s bring it on!!

i do kinda fell sorry for the people who bought in vancouver and have to travel to surrey or vica versa in order to get to work

i still a little confused on ETFs…I’ve be busying Mutual funds for my RRSP contributions …I look at it and it only been giving me about 4 %/ year since I started

Garth, can you give me link to a good EFT pro/ con explanation…there is a US natural index fund but it doesn’t have alot of info it. I will probably start a self directed RRSP b/c the mutual funds gains are poor most RBC/ TD personal finance reps do not know alot …only about the respective companies and what their boss wants them to sell.

thanks ahead of time

#43 JIM on 01.04.11 at 4:50 am

What will record oil prices to come this year do to the price of Real Estate in Alberta? and in turn rich Albertans buying property in BC

#44 Aussie Roy on 01.04.11 at 5:51 am

Aussie Update

Queensland hotels face receivership as they struggle to trade out of global financial crisis

60 Queensland pubs will struggle to convince banks they can trade out of trouble amid a nationwide financing crunch on hotels.

http://www.couriermail.com.au/business/queensland-hotels-face-receivership-as-they-struggle-to-trade-out-of-global-financial-crisis/story-e6freqmx-1225981221035

Banks move on 300 NSW pubs

At least 50 face immediate foreclosure in the biggest clean-out of the struggling industry since the 1991-92 recession.

Key industry sources said the banks have lost patience with both loss-making hotel corporations and heavily indebted individual operators who bought pubs at the height of the real estate boom, only to see values plummet by 40 per cent.

Australian Hotels Association secretary Colin Waller said rumours sweeping through the industry pointed towards the banks seizing control of 300 distressed pubs, setting the scene for the mother of all firesales.

http://www.heraldsun.com.au/ipad/banks-move-on-300-nsw-pubs/story-fn6bfkm6-1225981348656

Not in the news YET, but push by Aussie retailers to ensure govt reduces the current $1000 import limit GST exemption, to zero. Retailers claim more shopping online from overseas is hurting their profits. They could try reducing their margins or better still set up some online shops in competition. The retailers to are being held to ransom by the property bubble, shopping mall rents here are some of the highest in the world. Retail sales are rapidly falling away, tourist numbers are well down, IMHO the recession we cant avoid has already started.

#45 Haggis on 01.04.11 at 7:16 am

Devils Advocate,

Kindly explain why realtors in London, UK, can manage a transaction for 1.25%. Realtors in Hong Kong can complete a transaction for 1%.

Hell, the engineering on a commercial building is a lower percentage than what a realtor charges. And engineers have professional qualifications, liability and they’re not charging a percentage on the land the project sits upon.

Phones, faxes, desks and cappuccino machines are not expenses unique to realtors. In North America, realtors simply do not deliver value for money.

#46 Melissa on 01.04.11 at 7:43 am

Here’s a different take on the US housing market. It certainly makes you think about the role of planning rules in causing housing bubbles.

http://www.unconventionaleconomist.com/2011/01/truth-about-us-housing-market.html

#47 T.O. Bubble Boy on 01.04.11 at 8:17 am

@ #28 Tim:

Your comment made me wonder – how many people compare their “paper” housing gains to other “paper” investment gains?

In other words, do households in Richmond BC plan out their investments based on that 17% gain?

If you were trading Richmond housing like a stock, that 17% would look pretty good.

Unfortunately, unless you have the ability to move homes for a $7.99 trading fee, that gain is rather superficial.

#48 randman on 01.04.11 at 8:22 am

Should mention those avg returns in Cad$

Actually not. — Garth

#49 T.O. Bubble Boy on 01.04.11 at 8:26 am

Another comment on those online BC property assessments: if it’s anything like Ontario, the assessments are always a couple of years behind the market.

From doing a couple of quick realtor.ca searches, and comparing list price to assessment price, it appears that some houses are assessed 10% below the list.

My last MPAC (ontario) assessment on my old condo was 35%-40% higher than the one before it, and it was still tens of thousands below the selling price I got.

#50 dd on 01.04.11 at 8:41 am

“those godfearing Teabaggers in Washington do all they can to provoke a debt crisis”

They won’t do anything. Watch the debt ceiling be raised again. QE to infinity.

#51 dd on 01.04.11 at 8:46 am

…Interestingly enough …. My conservative, highly diversified, balanced, 40% fixed and 60% growth portfolio did 14.89% in 2010….

Great. My conservative, highly concentrated gold and silver portfolio kicked out over 55% in gains in 2010. It is fully covered with stop losses.

Take your gains. Only a fool, a gambler, or both, would not. — Garth

#52 Calgary REality on 01.04.11 at 9:31 am

“I cannot find any secure income investments that will pay out more than her mortgage interest is costing her over the same term. I have looked at strips, preferred shares, and corporate bonds (she has 0 risk tolerance for this money).”

I know EXCATLY how she and you feels on this. I can’t find anything paying over 2% that isn’t risk free and I’ve been reading this blog for 2 year now as well as Garth’s book.

Garths’ strategy is an excellent one with the preferred shares, but it’s for those who don’t need their capital but need the income and are worried about running out of money. If you need your capital then there is risk and it may not be suitable for those who need their captial back.

Remember past performance is not an indicator of future performance.

Myself, I am in the same cash boat and 99% cash (1% oil stock) but won’t touch the stock markets as this isn’t money (hard savings) that I can lose nor afford to gamble with and the markets are just too risky at the moment for me.

My advice is the same as what I do myself, just sock it away in a high-interest bank account paying 2%+ and wait till the economy settles down.

Sure hope you have lots of money. You’ll need it. — Garth

#53 Sean on 01.04.11 at 9:35 am

#12 Siddelly on 01.04.11 at 12:08 am
My latest favourite investing book is called ” The Black Swan “, although you may disagree

—————-

Taleb is a bit of a twit… I read his books, and he brings forth some interesting points… but his logic is littered with flaws. For example, 90-95% in BBB plus rated bonds?? Are you kidding?? The lack of diversification is precisely what invites Black Swans along, and makes them so devastating. I mean this BBB nonsense… we’ve just seen this movie… they weren’t BBB at all. The rating agencies have been shown to be in on the game, with incentives to mislead the public, help the big boys front run ratings, etc, etc.

Do yourself a favour, and enjoy Taleb’s writing and anecdotes, but avoid his crash and burn track record of investing.

#54 Calgary REality on 01.04.11 at 9:37 am

#28 Tim “Real Estate increases 17 percent in Richmond in 2010…So with a 20 percent correction, it would be down a whopping 3 percent from last year…”

@ Tim, that would be incorrect:

Take $1,000,000 x 17% =

$1,170,000

17% price correction =

$971,100 (a loss of $28,900)

A correction % downward (of the same amount) is always greater than upwards. People forget that with RE prices, stock markets, etc.

#55 bigrider on 01.04.11 at 9:41 am

“it has no dinglenuts mutual fund managers with their hands out for fees” -Garth

I have been paying Eric Sprott, John Embry, Norm Lamarche and Rohit Sehgal these fees for years.

Boy do I feel foolish… LMAO

#56 Utopia on 01.04.11 at 9:44 am

Bear…? What bear?

I thought todays picture was in reference to the movie Caddyshack. That is really just a huge angry gopher on the horizon and those golfer guys are Bill Murray, Chevy Chase and Rodney Dangerfield doing a double take as the overgrown rodent seeks his revenge.

See, that’s why gopher stew will be on my menu come the crash. They are big and juicy. And you can can them for winter.

#57 Sean on 01.04.11 at 9:49 am

#10 Elmer on 01.04.11 at 12:01 am
Can someone explain why a home ownership rate of 70% is bad? In an ideal economy wouldn’t everyone own their own home?

Hey, let’s all have a Mercedes, too. That would be ideal. — Garth

——————————

Elmer, first off, home ownership is inappropriate for everyone… a home is illiquid, a long term investment to be amortized and paid off over time, etc. In a flexible economy, we want jobs to be able to move to productive sectors of the economy, and to geographic areas where the job growth is. Life cycle analysis also provides many scenarios / life stages where home ownership is not ideal.

From the point of view of pricing efficiency, home prices should reflect underlying fundamentals. With a healthy pool of renters and rental properties, there is competition among landlords, and prices will be kept at market clearing levels… i.e. if home prices rise too much, investors sell, as the returns on the investment no longer justify the investment, and home prices correct back.

Only with the free market unable to send pricing signals.. in this case due to government mandated artificially cheap money… are bubbles like this possible. The fundamentals are forgotten…

blah, blah, blah.. I’m even boring myself now! Elmer, point is home ownership rates should not reach even 70%. As Garth points out, this in and of itself a signal that the market is out of whack.

#58 Moneta on 01.04.11 at 9:52 am

It could happen just like that THIS YEAR….for reasons you don’t comprehend…..if you did…you wouldn’t be investing in real estate.
———
It’s been the same game for 3 decades and it’s coming to a screeching halt. ZIRP marks the end of this secular play. Lower rates made asset values go up without having to lift a finger. Flat rates will mean flat values. Rising rates will mean swimming against the current.

Look at the people around you. Make a list of those who have gotten rich without really understanding what made them. Nearly all. The longer the winning streak, the more you come to think you are god’s gift to the world.

So many clueless, so many portfolios to plunder. And even a good understanding might not spare you.

Good luck. We’ll need it.

#59 Young Old Fart on 01.04.11 at 10:05 am

#38 604genX on 01.04.11 at 3:23 am
“…Garth, where do you get over 4% on anything now? I just wrapped up AFTER THE CRASH and started MONEY ROAD. I’m hoping for some answers.”

Let me put one more straw on this camels back…..

Oh for %#@&’s sake. I see this question over and over and over again. Do you people not read the business or investing sections? If you are that stupid you deserve to be poor! Sorry if I seem a tad insensitive….

Below are some of what I own with the corresponding %’s dividends I am being paid!

Provident Energy Trust PVE.UN Energy 9.47%
BCE Inc. BCE Telecommunications 5.27%
IGM Financial Inc. 4.80%
Power Financial PWF 4.65%
TMX Group Inc 4.54%
TransCanada Corporation 4.42%
Shaw Communications, Inc. 4.28%
Enerplus Resources Fund ERF.UN 7.30%
AGF Management Limited AGF.B 6.04%
Vermilion Energy Inc 5.43%

You see anything UNDER 4%? Didn’t think so….

Even Garth has mentioned more than once about certain bank stocks that pay more in dividends (5+%) than they do in their TFSA’s (1-2%)

So if this STILL is not clear for some of you, let me put it this way. I own BMO stock (sorry, BANK OF MONTREAL for the ones that don’t read financials) so they PAY ME over 5% for owning that stock. If you have a TFSA with them, in cash they pay you UNDER 2 %…..

Same bank…..

If that ain’t clear enough for all the dimwits that constantly whine on this blog about not being able to find good returns I seriously recommend you not look for some guy with nuts hanging off his Hummer. You’ll give him a seizure. As for me, I will just sit back, make some coffee and continue to watch my dividends come in…..

YOF

#60 Utopia on 01.04.11 at 10:20 am

#24 Dark Sad

“I know-I’m such a pessimistic bear””
———————————————————-

Not in my opinion Dark, not on this subject anyway. You are a realist. The outlook is dismal to depressing for many of us who have taken a really hard look at the numbers and are estimating where we are all headed. The noose is ready and waiting for the lemming class to hang their sorry heads on.

You have got it right in my opinion.

#61 David B on 01.04.11 at 10:50 am

Let’s all hope Mr. “F” does not get a change of job … who else could take a $14 Billion surplus and a $3 Billion emergency fund …and give mortgage money away like a boxing day sale and turn it into this:

Our federal debt grew by $5.8-billion in 2008-09, by $55.4-billion in 2009-10 and is expected to grow by $45.4-billion in 2010-11. Further, it’s expected to grow through at least 2014-15. In just three years all the debt repayment of the past eight years will be wiped out.

Canada’s debt re-passed the $500-billion mark at 4:55:46 AM on December 2, 2009.
——————

So what? Do not believe Garth Turner buy, buy and spend like there is no tomorrow …. your house will double in value and your boss will give you a 10% raise and Mr. “F” will lower interest rates and taxes.

Mr. “F” business man of the year ….. oh happy days?

Did I miss something?

#62 Utopia on 01.04.11 at 10:50 am

#53 Sean wrote….

“Do yourself a favour, and enjoy Taleb’s writing and anecdotes, but avoid his crash and burn track record of investing”.
———————————————————

I Could not have said it better myself.

Big mistake to follow Taleb’s past thinking right now. Too much has changed too fast and the philosophy is out of date with the reality. Even Taleb does not follow Taleb anymore if you catch what I am saying.

Everyone changes in other words. We all need to be flexible to moving markets and books written prior to some of our crisis periods are not applicable even to the writers who wrote the advice.

Credit to those guys who can shift quickly with the times and adjust as markets evolve. As Garth noted in yesterdays post about rabbits and stew…….

We need to be nimble and quick now. It is better in other words to be the diner rather than the dinner.

#63 Jan Etter on 01.04.11 at 11:05 am

#49 TO Bubble Boy

In Ontario assessment values are a snapshot at fixed intervals, the current valuations are as of Jan 1 2008 and by 2012 will be 4 years out of date:

http://www.mpac.ca/pages_english/property_owners/how_mpac_assesses_property.asp

“The Government of Ontario made a number of changes to the property assessment system, which took effect for the 2009 property tax year, including the phase-in of eligible assessment increases.
To provide an additional level of property tax stability and predictability, market increases in assessed value between the January 1, 2005 and January 1, 2008 valuation dates are phased in over four years (2009-2012). The phase-in program does not apply to decreases in assessed value. The full benefit of any decrease is applied immediately.”

#64 Devil's Advocate on 01.04.11 at 11:15 am

#10 Elmer on 01.04.11 at 12:01 am

Can someone explain why a home ownership rate of 70% is bad? In an ideal economy wouldn’t everyone own their own home?

Hey, let’s all have a Mercedes, too. That would be ideal. — Garth

Homes are a little different than cars Garth. Although… you can live in your car but you can’t drive your house.
In essence it is not a bad thing Elmer. Where the flaw is is how that extra percent were afforded to opportunity to buy a home when under normal circumstances they would not have been able to. Give a man a fish and he will eat for a day. Teach a man to fish and he will eat for a lifetime. We gave it (homeownership) to them we didn’t teach them how to earn it.

#45 Haggis on 01.04.11 at 7:16 am

Devils Advocate,

Kindly explain why realtors in London, UK, can manage a transaction for 1.25%. Realtors in Hong Kong can complete a transaction for 1%.

Hell, the engineering on a commercial building is a lower percentage than what a realtor charges. And engineers have professional qualifications, liability and they’re not charging a percentage on the land the project sits upon.

Phones, faxes, desks and cappuccino machines are not expenses unique to realtors. In North America, realtors simply do not deliver value for money.

Don’t have an good answer for that Haggis as I am unfamiliar with RE in the UK and Hong Kong but I suspect it is for reasons quite contrary to what would appease you. On the engineer one I will ask my engineer friend why he is so willing to pay what we charge when his fees are, apparently, so low. Come to think of it I will ask the same of my Chinese clients and those from Great Britain.

Oh and don’t think we don’t have liability too… as the saying goes in real estate “It’s not a matter of if you will be sued, it’s a matter of when you will be sued”.

Thinking about it though I suspect there is a good reason because certainly under the current model in Canada we could not make a viable business of it for less.

Now that being said here is some food for thought. In the US they are starting to charge a retainer. If you successfully sell your home it is deducted from the commissions charged. If you insist on pricing your home too high that it never sells then the expenses the agent incurs through their efforts to sell it are covered and they need not pass them along to those clients of reasonable expectation who are successful. As you can well imagine those successful sellers are then charged a lesser amount as they are not called upon to subsidize the unsuccessful. This contingency system is coming to Canada.

BTW in British Columbia real estate fees are typically 7.0% on the first $100,000 and 3.0% on the balance (half of that going to the selling REALTOR®) as opposed to in Ontario where they are typically 5.0% across the board. Do the math, on a $500,000 home sale Ontario REALTORS® are charging 31.57% MORE.

But you will be happy to know that commissions are always negotiable and there are discount brokerages which will do the job, or try, for a whole lot less. And you can always try sell your home yourself. No one is saying you have to use a REALTOR®.

#65 David on 01.04.11 at 11:32 am

The North American Real Estate Brokerage industry is the biggest, longest-running price-fixing cartel that has ever existed. But perhaps its biggest sin is that it has caused many people to abandon useful and productive careers in search of filthy pirate lucre.

At best, it is intellectually dishonest to defend such a blatantly corrupt endeavor as this cartel. But it is because their realtor jobs have delivered them such enormous, mostly unearned wealth that people like Devil’s Advocate delude themselves, and try to delude us, that their industry is essential, and popualted by giants of small business. Anyone who says that real estate represents the epitome of a competitive market, as Devil’s Adjective proudly asserted, is capable of anything.

‘The Godfather’ movie has more insight for this discussion than just seeing realtors as street muscle and their brokerages as the Dons who collude and lobby behind the scenes to keep the bucket shops running: After a long ‘business’ career, Don Michael Corleone tries to cleanse his family’s reputation with a big PR effort and laundering the family wealth….similar to what D.A. is dedicated to doing on this blog (albeit anonymously).

Aside: Although it doesn’t advance this discussion in itself, it is a tasty morsel that Michael wants to buy a firm called ‘International Immobilierre’…..a real estate company.

Aside #2: the whole topic of ‘the Mob’ infuriates many people of Italian descent, who deny that there is any such thing as organized crime, or Dons, or protection rackets….weird, eh D.A.?

#66 DARLENE on 01.04.11 at 11:41 am

Garth, I think you need to change the focus from the boomers to the gen xers.
http://www.newswire.ca/en/releases/archive/January2011/04/c7490.html

Since gen xers have the same investment strategy wouldn’t it be more beneficial to help the generation that has 21 to 35 years to fix the problem.

#67 Western Canadian on 01.04.11 at 11:53 am

I like how Garth quotes a Chief Economists when it suits his purpose and supports his argument.

Meanwhile when other Chief Economists come out ( as they do all the time ) and say that the Canadian housing market is not overvalued, or is “in balance” he questions their integrity and suggests they are biased because they are employed by the ones doing the mortgage lending.

So which is it Garth, are they credible or aren’t they?

Let me guess, they’re credible if they agree with you, and if they don’t their biased industry shills.

Unbelievable.

Commenting on a market your employer’s heath is dependent on never excites me too much. — Garth

#68 Calgary REality on 01.04.11 at 11:57 am

“Sure hope you have lots of money. You’ll need it”. — Garth

I have no fear of running out of savings in my lifetime.

#69 Calgary REality on 01.04.11 at 11:59 am

I should add. There is no magic bullet to become rich. It’s just plain ol’ hard work, watching what you spend and saving your dollars. (income and outcome).

#70 Stevermt on 01.04.11 at 12:02 pm

I kinda agree with DA.. I mean why are we picking on realtors. Everyone’s selling something to someone in this country to make a decent living.The sheeple just just keep buying..hence the debt levels. O btw, if you work for a company, they are advertising and selling too..( and your products are very likely produced offshore)…and you make a paycheck because they do.

(I’m not a realtor..honest, just self-employed)

#71 Basil Fawlty on 01.04.11 at 12:07 pm

“Great. My conservative, highly concentrated gold and silver portfolio kicked out over 55% in gains in 2010. It is fully covered with stop losses.

Take your gains. Only a fool, a gambler, or both, would not. — Garth”
This makes sense from a traditional investment perspective. However, it is tempered by the current investments of some very prominent people, such a Eric Sprott who is personally currently 90% invested in precious metals.
I see Eric Sprott a neither a fool or a gambler, but as a very shrewd investor who clearly sees the massive mismanagement of the world financial system and specifically the adverse consequences of money printing to infinity.

#72 $froma$ia on 01.04.11 at 12:15 pm

Glass nuts?

WTF, thats gay!

At least get a set of furry nuts for the hitch to go with the furry dice on your dash.

Ah yes, good beginning and good ending.

Afterthought. Glass???

#73 Jan Etter on 01.04.11 at 12:18 pm

#59 YOF

re #52 Calgary Reality

Yeh, a tad insensitive – here’s my attempt at a more gentle explanation:

Generally speaking, the greater the return the greater the risk of fluctuations in “capital” (i.e. adjusted cost base) but as Garth has attempted to point out a number of times in the past couple of years, there is RELATIVELY smaller risk vs. yield in certain vehicles because of liquidity and/or intrinsic value of the companies (e.g. sector ETFs, Big 5 bank stocks) and comparing tax advantages of certain asset classes (e.g. interest income vs. dividend income). The market is in the big picture efficient in pricing risk either by asset market value and/or income paid in dividends or interest, but market forces (e.g. emergency interest rates by central banks, QE) and sentiment (e.g. fear, irrational exuberance, herd mentality) mean there are relatively better risk vs. reward equations if you look for them.

That said, if capital preservation is a must then you have to accept, again as Garth has said more than once, that “preservation” is a risk in itself, because if you believe as Garth does that there will be inflation in basic necessities and taxation and low returns on “risk free” investments (GICs? bank deposits?) for the foreseeable future, then your capital will actually be eroded in real terms. (i.e. the real risk is running out of money.)

That’s why Garth makes little distinction in risk between 2% in the Orange Guy’s Shorts as a “Guaranteed” investment vs dividend yields over 2x that on Big 5 bank stocks, for example.

#74 C on 01.04.11 at 12:19 pm

Any word on January 2011 GTA real estate numbers??

#75 C on 01.04.11 at 12:19 pm

Any word on December 2010 GTA real estate numbers??

#76 HouseBuster on 01.04.11 at 12:20 pm

#59 Young Old Fart – you better check your yield on provident again… it isn’t a trust anymore

#77 realpaul on 01.04.11 at 12:43 pm

The civil service and porn

http://fullcomment.nationalpost.com/2011/01/02/the-civil-services-right-to-porn/

#78 Young Old Fart on 01.04.11 at 12:47 pm

#69 Calgary REality on 01.04.11 at 11:59 am

I should add. There is no magic bullet to become rich. It’s just plain ol’ hard work, watching what you spend and saving your dollars. (income and outcome).

EXACTLY!!! I like your way of thinking….

#79 bigrider on 01.04.11 at 12:53 pm

” I don’t know what you heard about me but you can’t get a dollar out a me..no cadillacs , no perms you can see..cause I’m a humvee drivin P.I.M.P ”

“She liked my style, she like my car she like the way I talk”

“So I spun a little G-man and my game got er..an hour and I had her assets up in the markata..”

#80 bigrider on 01.04.11 at 1:08 pm

#71 Basil Fawlty

Oh but Basil you would have had to pay a heck of a lot of fees to own Eric Sprott products ,so, I imagine you would have been better off not owning them at all and attempting to duplicate his performance via ownership of low cost ETF’s

Or maybe not.

#81 Chris on 01.04.11 at 1:11 pm

Garth
I have read the book and followed the blogs as well but I think what would be help full here if there were some real working portfolio examples presented of how one could go about these low risk investments to get the rates talked about here between 4-8 % on this blog. From this question, it seems people have the money to invest but they are having a hard time getting started with the portfolio and understanding the risks involved.

Every person is different and every portfolio needs to be personalized to risk tolerances, personal situations, expected income sources and a suspicious spouse. There is not a one-size-fits-all. If you c=don’t have time to learn this, hire someone. — Garth

#82 David on 01.04.11 at 1:22 pm

#70 – Stevermt . Whether or not, in aggregate, a given realtor makes enough sales to constitute a living (decent or otherwise) is another convenient deceptive framing of the debate.

What a realtor makes on a single transaction is the measure, and it is egregious. If you took the time to understand and appreciate the mechanics of their compensation structure, you would not argue this point.

Seriously…..just jot down a few hypothetical house sale prices on paper with the realtor’s fee schedule on the side. Play with the figures …you will be amazed, possibly embarrassed.

#83 Got A Watch on 01.04.11 at 1:28 pm

“There is no wall around Canada, protecting the stupids.”

But, but, I thought we have Holy Maple Leaf Power running our Great White Northern Wall of Snow? Canada is so superior, we don’t even have to talk about how different it is here, this time, do we? Everyone just knows it is. You got to beeeelieeeeeeeve!! All worship the Holy Snowflake!!

More seriously, thanks to Long Term US Stock Market Growth 1871-2010 Charts for a nice look at the really high level view, the second chart is the money.

Hat tip to Big Picture for the link to the very interesting Visualizing Economics website. For more fascinating long term charts and studies there is always great new material at dshort one of my favorite economics/market websites, many unique charts with a longer term focus.

#84 eddy on 01.04.11 at 1:29 pm

GET READY FOR BANCOR
here is a handy currency converter, you will notice that IMF SDR (XDR)
is already a conversion choice!

http://www.xe.com/ucc/

#85 dragonslayer on 01.04.11 at 1:35 pm

Realtors get a lot of bashing on this site, with some valid points made, but I am going to put my two cents in and say that name calling- ie. referring to them as “realturds” does no one any good. In fact it says more about the person doing the mud slinging. But isn’t that always the case in life? The most inadequate people are those that feel the need to demean others.
As in any profession there are superb realtors that will go to the ends of the earth to find you the right home and there are those that are interested only in the sale.
But the average buyer has little to no knowledge of the intricacies of the market or more importantly a grasp of contract law.
This is the largest single financial transaction most people will make in their lives, other than the choice of a career. Decisions made in terms of home purchase will have life long implications.
Speaking anecdotally only, our realtor was the consummate pro. He was patient with us and we never for a second got the feeling he was pushing us into a sale. On the contrary- we got the feeling he was less than thrilled with the house we eventually settled on.
But he put together a meticulously worded offer that got the job done.
I saw the work that he did and do not begrudge him his commission. He worked hard for it.
Before throwing the mud so freely consider for a moment the consequences of a transaction gone bad such as a lawsuit and you may realize that a good realtor is money well spent.
As for the bad agents, well that is where your due diligence comes in. Do your homework and it should not take you long to weed out the bad apples.

#86 dark sad person on 01.04.11 at 2:11 pm

214 Oasis on 01.04.11 at 8:38 am

Copper price blowoff characteristics when weighed against the non conformity and current USD strength?
______________________________________

yes. of course. USD strength. strong against what? the Euro? mmm.. What about the Swiss Franc? Aussie$$? NZ $? .. loonie at Par? Gold $1400? strong against those?

i see.

poor copper. what about oil? what’s it doing at $92? and cotton? and wheat, soy, corn?

here’s what’s happening.

USD is toilet paper. Euro is toilet paper.

in the real world, people protect themselves by buying commodities. Gold, silver, copper, oil, food, etc etc.

_______________________________________
The dollar looks to be at the same level today as it was in Oct. 2008
__________________________________

why don’t you try looking at a chart that’s 40-years old. might give you some perspective. even longer if you can manage. but your brain might explode.

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

Ka-Boom!

So–what a difference a day can make?

Little Oasis must be taken it right up the A$$ today huh

lol

#87 Jim on 01.04.11 at 2:12 pm

I am starting to invest and move away from real estate. This is what I am starting with this index funds through my discount broker:
TD Cdn Indx, TD US Indx, TD Int Indx

Is this following the Garth philosophy? These are very low commission options. Are they dividend producing? What else should I invest in to get high yield relatively safe dividend producing index funds? How would I go about buying corporate bonds, REITS through my discount broker.

Thanks

#88 Young Old Fart on 01.04.11 at 2:12 pm

#76 HouseBuster on 01.04.11 at 12:20 pm

#59 Young Old Fart – you better check your yield on provident again… it isn’t a trust anymore

Not to worry. The gains made as the value of this stock climbs will offset any reduction in dividends. Their asset base is worth a much higher stock price. We’ll see…

#89 kitchener1 on 01.04.11 at 2:17 pm

The general consensus is that rates will be moving up in 2011, the % remains to be seen.

As long as QE2 and possibly QE3 is in play, the equity markets will do well.

Politically, the conservatives do not want an election, it will serve no purpose and the polls right now are too tight. I dont see anything in term of new bills that will cause an election. Outside of doing something crazy in the budget.

The budget will be the test. Harper and company have already put out feelers into the media, prepping people to be ready for a “tough budget”. Carney is out there in full force warning people about debt and possible changes in mortgage rules. Funny thing is that even Harper mentioned possibly changing rules in his Christmas address.

The real test will be the Bloc and NDP. They will not like the new budget, thats 100% given, the libs will heam an haw and maybe force some minor adjustments but will live with it.

Watch out for crazy jack, if he smells blood he will offer the farm and then some to the boomers in terms of $1800 CPP/month etc…

It will be a fascinating study in politics if that happens, will the boomers go with there convictions or switch teams for their own good?

#90 pablo on 01.04.11 at 3:06 pm

Wait and see. We obviously can’t handle cheap money, and the consequences of an indebted, cash-strapped consumer outweigh many other factors in an economy 65% dependent on goods and services spending. — Garth

OMG- Ive been anointed by the pope, a direct reply from the garthminator hisself! Quick lets bake up the squirrel quiche and uncork those beers it’s party time. Thank you, oh Thank you.

#91 Mark on 01.04.11 at 3:19 pm

#45, “Hell, the engineering on a commercial building is a lower percentage than what a realtor charges. And engineers have professional qualifications, liability and they’re not charging a percentage on the land the project sits upon.

Engineers are terrible arbitrers of their own value, and most of them are too stupid to realize that working for $70-$80k/year is basically giving their lives and skills away almost for nothing to the banker crowd.

I’m an engineer (but run my own business in the financial sector), and when I explain this to some of my engineering friends, I get blank stares. How they can work their entire careers creating tens of millions of dollars worth of value for the economy, yet barely have their mortgage paid off and no pension, is beyond me.

#92 Vancouver_Bear on 01.04.11 at 3:27 pm

#19 Nostradamus jr. on 01.04.11 at 12:51 am

Hoorray!!!! Congratulations with resurrection!!! How the other guys living in your brain doing? I mean the BestCRAPonEARTH and VacnoverGoingDownTheToilet?

Wanna visint UAE? Prepare to pay $250-$1000 just for visa. Well Done CanAda!

#93 Vancouver_Bear on 01.04.11 at 3:29 pm

#19 Nostradamus jr. on 01.04.11 at 12:51 am

Hoorray!!!! Congratulations with resurrection!!! How the other guys living in your brain doing? I mean the BestCRAPonEARTH and VacnoverGoingDownTheToilet?

Wanna visit UAE? Prepare to pay $250-$1000 just for visa. Well Done Mr.H!

http://www.reuters.com/article/idUSLDE6BS0L320101229

#94 Steven Rowlandson on 01.04.11 at 3:35 pm

Regarding profit taking:
Although at some point taking a profit can be a good thing it should never be done on the basis of some one else suggesting that you do so. Usually after you take the profit the price goes way up and you miss out on the real profit you really wanted. This causes frustration causing you to constantly try to make up for the past mistakes untill your money is all gone to the enrichment of stock brokers and the delight of your critics.
When you invest you must check out what you are investing in and weigh up all the info before buying.
So why sell out early on the word of someone who is not going to compensate you for your lost windfall profits and also has no skin in the game either.
Don’t get suckered out of a good investment for chump change before a big move in the price. Buying low and selling high sounds easy but it isn’t. Good investments
are not all that easy to come by and neither is investable capital. Its a bit like hunting and you only got one bullet. The first critter you see is a partridge.
The partridge is a tasty meal. Shoot and its game over.
Or you could wait and watch for the moose you were really after and shoot and you are fed many times.
So while there are many partridges and one moose you have one bullet and one chance to get what your after.
Don’t waste the chance to get what you want. One shot, one kill and no exceptions.

Steven

#95 terry D on 01.04.11 at 3:46 pm

CREA has never before made this satement.

“All signs point downward, in terms of residential property prices for 2011, according to the Canadian Real Estate Association.

According to recent findings, prices are predicted to fall 1.3% in 2011 after a rise of 3.1% this year. Additionally, there is an expectation that sales numbers will continue to fall as weak economic prospects put downward pressure on demand, despite interest rates being low. They warn that these numbers could fall by 9%..”

9% on $500 is $45,000

#96 Hell in a Hand Basket on 01.04.11 at 3:53 pm

So I am going to be part of that wave of houses coming on the market in the spring. I might beat them by about a month, but I doubt that is going to be enough. I got my wife reading this blog and we’ve been tossing around the idea of selling our place for awhile. My plan was to sell then rent for awhile, but she was against renting. But she has changed her mind, considering we can actually rent quite nice houses for what we pay for in mortgage payments. I’m on a mission to get the townhome ready to sell by mid-feb and my wife and I are prepared to undercut the lowest price in our development by 10% to get our home sale closed first. We shouldn’t have waited but fate has played itself out and we are perch at the beginning of the swell that will turn into a house tsunami in Vancouver and the lower mainland (at least that is what it feels like). I’ll keep you all informed how this plays itself out.

#97 David on 01.04.11 at 4:02 pm

#85 Dragonslayer…You bought a house that your realtor was ‘less than thrilled’ with? Really?

So does that indicate that: 1) though you say you had the utmost faith in his professionalism and knowledge that you ultimately ignored all that, 2) that he was so much more interested in seeing his cheque than in providing you with his own, expert point of view (which you were certainly paying for, whether he gave it or not) that he just silently filled out the offer without reagrd for your long-term satisfaction with the decision, or 3) that he did not actually understand what you (his client) wanted, and was in fact a hinderance instead of a help?

PS – The first house I bought, I had to threaten my realtor that if she didn’t get me an appointment to see it, I would get another realtor. And I knew exactly what her problem was…the house was a much cheaper purchase than she knew I could afford, and she wanted nothing to do with handling a sale in that price point of the market.

Service industry…right!

#98 dd on 01.04.11 at 4:04 pm

#51 dd

…Take your gains. Only a fool, a gambler, or both, would not. — Garth…

Again, the fundamentals are only getting worse. Governments are kicking the can down the road. The debt correction is not over yet.

#99 bigrider on 01.04.11 at 4:08 pm

Much like a gentle herbel laxative, many RE agents and RE investors, whether they be house horny pumpers or rental collecting pimps, will experience a gentle ‘purging’ this year followed by the ‘runs’ next year and beyond.

No, it will not be the barium enema experienced by RE in the U.S over past five years.

#100 FerrisWheel on 01.04.11 at 4:11 pm

Hi Garth,

Loved your book and this blog. Question: When you write:
“My conservative, highly diversified, balanced, 40% fixed and 60% growth portfolio did 14.89% in 2010.”

Does the 14.89 consist of the dividend payouts or just capital appreciation (stocks going up)?

Thanks for all your help. Keep up the good work in 2011

It is a balanced portfolio which means fixed income returns (predictable) are augmented by capital gains (unpredictable). — Garth

#101 Renting in Sherwood Park (formerly Edmonton) on 01.04.11 at 4:23 pm

#85 dragonslayer on 01.04.11 at 1:35 pm

What you are saying is easy to say when you are buying in that technically you don’t pay your realtor any commission. It is the seller that is paying for both realtors which is wrong. The question is, is that your realtor is supposed to look for a house that has your wants/needs. Did your realtor look at houses that are for sale by owner? Did your realtor check Comfree? More than likely he plunked in your requests into the mls system and showed you those homes only. So basically he is working in his/her best interest since his/her commission are somewhat guaranteed via mls. If the realtor found you a house that is FSBO or on Comfree, he would have to negotiate for a commission so why bother on his part right? I am curious what commission you paid him for writing an offer for you.

I will be selling my house for a list price of $300,000. If i use a realtor here in Alberta, it is basically 6% or 7% on the first $100,000 then 3% on the rest. So i will pay my realtor $6500 and the buyers realtor $6500. My realtor will write an ad on mls, take some picture, put a lock box on my door and negotiate for me meaning he will write a counter offer on my behalf and then tell the buyer “it is a good price”. That will be the extent of my realtors negotiations. The buyers realtor will look for a place on mls and then show some houses to the buyer and write an offer. All this costs $13,000?

Now for those that say you have other options. Of course i do but the exposure is less. Then you will say that other realtors charge less. This is rare. I live in Edmonton, let me know the names of realtors that charge less commssion than the norm. Then someone will say use 2% realty at which point i say will the buyers realtor will not show my home because why waste time asking me for more commission when there are other homes that will give the full commission.

Probably my best bet is to list on mls for the $500 or whatever it costs and pay the buyers realtor full commission. This way i save a bit and only get raped on one side without losing exposure.

Any thoughts?

Oh and has anyone used this service?
http://www.snaplistings.ca/discount-mls-listings.php

#102 Smoking Man on 01.04.11 at 4:28 pm

You guys focuss to much on fundamentals, and not enough on human nature….and the power driving main stream media.

#103 bigrider on 01.04.11 at 4:35 pm

Bestplaceonearth needs a thorough colon cleansing. He is showing signs of ‘toxic shock’ from overindulging at the RE buffett that Vancouver has been past ten years.

#104 (low density) Sam on 01.04.11 at 4:38 pm

#28 Tim on 01.04.11 at 1:31 am

Real Estate increases 17 percent in Richmond in 2010…

So with a 20 percent correction, it would be down a whopping 3 percent from last year…
______________
Since you agree with Garth’s 20% I wonder why you left out the 10 to 30% that will come with the “slow melt”

That’s a LOT MORE than a “whopping 3 %”.

And regarding that 3%: when the buyer expected that every year ad infinitum, 3% down is pretty damn devastating.

But that’s a quibble – glad you agree with Garth. Now, just add those extra few years down …

#105 Stevermt on 01.04.11 at 4:43 pm

#82 David
thanks
point taken, believe me I don’t love paying those fees.
selling a home is very expensive…
But if the market does go south a la USA, then nature will weed out the excess chaff…along with other unsustainable stuff.
Also, its an outrage what corporate CEOs and bigwigs are pulling in compared to the rest of us (yesterday’s headlines about CEO pay being on average 155X the average worker). they already made yesterday more than the rest of us will all year….sheesh)

#106 Timing is Everything on 01.04.11 at 4:43 pm

#85 dragonslayer

There are good and bad people, not professions.
Even a professional ‘Hitman’ can be the nicest guy to go bowling with…it’s just a job.

Make that sale….That is the ‘bottom line.’
I’ve used 1 realtor once and another 3 times (years ago)
That was the way it was done…Commission. But ‘normal’ houses were not selling for over half a million $.
So, I worked out a mutually agreed commission.

The guy I used three times, was very good as we were neighbors (wives were friends, babysat each others kids etc.). He even wrote me an after sales ‘cheque’ as I used is services (insert joke here) 3 times.
Of course, this was done ‘off the books’
You see, Realtors are people too….Just like the ‘Hitman’.
Just get to know them first. Good bowlers too.

#107 Nostradamus jr. on 01.04.11 at 4:50 pm

…Heere is sumethin fer ya Renturs and Sellurs frum too yeers ago…aftur ya reed this, y’all kin git outa Dodge or Kanada fer that mattur two….

“”Oh, Canada

Canada is increasingly becoming a destination for foreign investors amid the global turmoil.

Its economy is sound, it has a rich resource base amid rising commodity prices, its banking system is safe, and Ottawa’s fiscal policy is deemed as attractive compared to its peers.

“What the markets are telling you is that Canada, the little brother to the north, is a much safer place to park your money from a fiscal balance sheet standpoint,” chief economist David Rosenberg of Gluskin Sheff + Associates, noting lower longer-term bond yields in Canada.

All of this has helped drive the Canadian dollar to around parity with the U.S. greenback, where it’s projected to stay for some time yet.

That’s a far cry from the days of 40 or so cents when the loonie was dubbed the Hudson Bay Peso and Canada, with its public finances in a mess, was deemed a basket case.

Analysts believe the loonie will continue strong throughout the year, buoyed by a stronger economic outlook, high commodity prices and a weaker U.S. dollar.

“The Canadian dollar is on a tear as the combination of rising commodity prices (particularly oil) and a bullish outlook for U.S. economic growth in 2011 leads to a sell Europe, buy North America mentality,” said Rahim Madhavji of Knightsbridge Foreign Exchange.

Mr. Rosenberg, in a note titled Oh, Canada!, also noted that Canada’s benchmark stock index, the S&P/TSX composite , did better than the S&P 500 last year on comparable currency terms, gaining 21 per cent when expressed in U.S. dollars compared to 13 per cent. That outperformance has happened in seven of the past eight years, he said.

“Canada is experiencing very similar modest rates of economic growth like the U.S. but not on the back of quantitative easing and not at the risk of blowing a hole through the government balance sheet,” Mr. Rosenberg added.

“Household debt in Canada is clearly problematic, but for now, completely serviceable. At the national level, as far as we know, Canada is the only G7 country with a credible federal government plan to balance the books over the next five years and at the same time promote domestic competitiveness via a schedule of sliding top marginal corporate tax rates.”””

CTVnews

…I never saw soooo many complainers and whiners till I came to this site…

Nostradamus jr.

#108 GregW, Oakville on 01.04.11 at 4:53 pm

Hi #31 Nostradamus, thanks for the links.

This from the ‘WW3 or Peace’ link. Worth reading the rest too.

“, and we do not count except as consumers. Collectively, we have forgotten that shoppers are not citizens. Citizenship requires an educated populace. Citizens must be well-informed; and then they can act in beneficial ways both within their families, as well as the country at large. This is all greatly missing…”

#109 Cats and Hogs on 01.04.11 at 4:55 pm

For those of you with an axe to grind with Public Sector Employees in Canada, you’ll love this story.
http://fullcomment.nationalpost.com/2011/01/02/the-civil-services-right-to-porn/

#110 Devil's Advocate on 01.04.11 at 5:01 pm

#101 Renting in Sherwood Park (formerly Edmonton) on 01.04.11 at 4:23 pm

Any thoughts?

Yes quite a few actually but, respectfully I don’t have enough time to share them all with you. What I will suggest is “Exclusive Buyers Agency” which as per my “contingency” discussion earlier will eventually lower the cost of our services to consumers as we weed those who are not such seriously motivated buyers and sellers from the market. It is those “not so seriously motivated buyers and sellers” which push up the aggregate cost of real estate services.

Unfortunately if you want to list your home for 20% more than it is worth and will ever sell for, you can find a hack agent who will do it for you. While that does little for them or you where it really screws things up is the neighbours who now think because you “LISTED” your home for that price theirs is worth more.

#111 Devil's Advocate on 01.04.11 at 5:07 pm

#101 Renting in Sherwood Park (formerly Edmonton) on 01.04.11 at 4:23 pm

Any thoughts?

What I meant to say is “Exclusive Buyers Agency” allows me to show my clients absolutely any property secure in the knowledge that I will be paid for my efforts in locating it, expireds, FSBO, discount brokerage, builder direct, foreclosure, rentals, or knocking on the door of a home that appears the PERFECT home for my buyer. And if the commission offered is less than my buyer agreed to pay then my buyer makes up the difference. and if the commission is more than my buyer agreed to pay then I rebate back to them the difference.

But I know this discussion will heat up the blog as the blog dogs can’t get their head around the concept that a REALTOR should charge anything for their services.

#112 nonplused on 01.04.11 at 5:20 pm

Neat chart for deciding what rate of return is reasonable to expect over the long term:

http://www.nytimes.com/interactive/2011/01/02/business/20110102-metrics-graphic.html

#113 april on 01.04.11 at 5:21 pm

Terry #95. I don’t trust CREA. They are playing it down. If a buyer finds what they want are they really going to wait for a 1.3% drop. I don’t think so. Besides, how can they measure such an exact correction. BS in my opinion.

#114 Devore on 01.04.11 at 5:42 pm

#28 Tim

Real Estate increases 17 percent in Richmond in 2010…

So with a 20 percent correction, it would be down a whopping 3 percent from last year…

So if something goes up 50%, and then drops 50%, you’re breaking even, right? Right?

#115 Devore on 01.04.11 at 5:45 pm

#50 dd

They won’t do anything. Watch the debt ceiling be raised again. QE to infinity.

Of course debt ceiling will be raised (or even removed) with near-unanimous vote. Anyone betting otherwise will have their clock cleaned.

I’m still trying to figure out why “godfearing” is an attribute unique to (or a requirement of) “teabaggers”. No democrats, republicans or independents are godfearing?

#116 GregW, Oakville on 01.04.11 at 5:48 pm

Hi Garth, FYI RT video. The first 5-6 min has me thinking!

Max Keiser and co-host, Stacy Herbert, about the US State Department’s genetically modified retaliation against France,…
http://www.infowars.com/keiser-report-monsanto-and-the-seeds-of-evil/

I double dog dare any ‘Hamsters’ or ‘rodent’ or human beings that want grand childen to watch the first 6 minutes worth.

#117 Bill Muskoka (NAM) on 01.04.11 at 5:53 pm

Gold dropped nearly $40 an ounce today. Hope you sold off like the insiders did?

#118 David on 01.04.11 at 5:57 pm

#105 Stevermt – Every one of those CEO’s has more skills, education, and certainly more accountability than any realtor I’ve heard of, and there are 10 more guys behind him who do too, but will never get the job. Shareholders get a say every year on the compensation they agree to pay the CEO, and that say is in direct proportion to their ownership interest.

Open, competitive, fair, and totally fine by me.

Compare that to ,say, oh I don’t know….real estate. Where a realtor, right off of his 3-week course and with no deal experience to mention, commands the same egregious payday as the most experienced salesman in the business. Why? Because We Say So!

#119 (low density) Sam on 01.04.11 at 6:03 pm

#94 Steven Rowlandson on 01.04.11 at 3:35 pm

taking a profit … never be done on the basis of some one else … who is not going to compensate you for your lost windfall profits and also has no skin in the game either.
____________________________
So what, THEY won’t compensate people, but then NEITHER WILL YOU … why post this BS , unless …

unless this is YOU OFFERING to compensate people who stay in on YOUR say-so, and thereby and lose a ton of money?

#120 Mikey the Realtor on 01.04.11 at 6:10 pm

‘Most Canadians don’t plan to retire’

http://news.ca.msn.com/top-stories/cbc-article.aspx?cp-documentid=27018537

This means that most Canadians would rather work themselves into the grave then give up on their RE. Get in or be priced out forever. We will be holding a recruitment meeting at out brokerage house and will be picking several clients each to represent in their RE needs for 2011, please come early if you would like an opportunity, we apologize for the people that don’t get picked but we are busy and will only represent the wealthiest of clients, preferably Asian or Italian. Myself and DA will be hosting the meeting so please don’t hesitate to ask questions.

#121 dark sad person on 01.04.11 at 6:12 pm

A good indication of how it’s going down south-

http://js-kit.com/blob/3ziCuB081tgDWtouRvXMC7.jpg

Not well-

I have no idea how anyone sees a recovery-let alone any hopes for one until these complete fools in all facets of government stop believing they can fix this-
The fix will come when they’re totally destroyed by the free market-

Anyone paying attention to Bernankes physical appearance?

The market is destroying him-
No surprise-
The market will destroy anyone and everyone who’s foolish enough and try’s to stop it-

We’re all so tiny as to not matter one bit-as we stand in its awesome shadow-
It was here and discounted this little event 10 thousand years ago-
Today-it’s 10 thousand years ahead of us looking at “everything” and discounting the future as always-

Listen to what the market is “always” telling you-it’s constantly transmitting its intentions to us and if you do listen it will even occasionally reward you-by dumping gobs of money in your lap-

#122 crazed and a little confused on 01.04.11 at 6:16 pm

116 Bill Muskoka,

Gold will go down but not right now QE2 still hasn’t really started yet

http://finance.yahoo.com/news/Fed-minutes-Economy-needs-apf-1790712586.html?x=0&sec=topStories&pos=2&asset=&ccode=

THe US people must love their Debt it is standing at 13.9 Trillion …the current ceiling 14.3 trillion

#123 OttawaMike on 01.04.11 at 6:31 pm

Timing the market strategy:
Anybody who consistently bought the Dow on the closing of the last day of the month and sold on the closing of the first day would be up 30% today.

The key is it has to be done over a long time period.

http://news.yahoo.com/s/ap/20110102/ap_on_bi_co_ne/us_wall_street_week_ahead

#124 HouseBuster on 01.04.11 at 6:37 pm

Real estate and realtors – the biggest con game in history.

#125 Kaganovich on 01.04.11 at 6:44 pm

Good take on what to expect in 2011:

http://www.nakedcapitalism.com/2011/01/auerback-drinking-the-austerity-kool-aid-in-2011.html

His summation of the FIRE sector is beautiful:
“The revolving door between Wall Street and Washington calls attention to the rotten heart at the core of the American polity today — what James Galbraith has felicitously termed “the predator state”. The state has become too weak and therefore remains another instrument of corporate predation. The revolving door policy (eagerly embraced by this president, much like his predecessors) perpetuates the problem because it enhances the dominance of the so-called “FIRE” (finance, insurance, real estate) sector of the economy. The FIRE sector simply acts as a parasite on the production and consumption core, extracting financial and rent charges that are not technologically or economically necessary costs. Its revenue takes the form of what classical economists called “economic rent,” a broad category that includes interest, monopoly super-profits (price gouging) and land rent, as well as “capital” gains. Its ethos consists largely of denuding the state of any provision of public goods, privatizing the public domain and erecting tollbooths to charge access fees for basic necessities such as health insurance, land sites, home ownership, the communication spectrum (cable and phone rights), patent medicine, water and electricity, and other public utilities, including the use of credit cards or the credit needed to get by. It’s a zero-sum economic activity. One party’s gain (that of Wall Street usually) is another’s loss. It looks like we’ll have much more of the same as we enter into 2011.”

Well put Mr. Auerback.

#126 Carlyle on 01.04.11 at 6:47 pm

Just a quick update:

So I called a real estate agent. He’s offering me a package of either 2.0 percent (with full marketing) or 1.0 percent (just one open house, MLS listing and negotiation services with buyer). The buyers agent will take 2.5 percent.

Should I go with the “full marketing” package? I know this guy sold 2 houses on my street already.

I would take all the help I can get, since you want a quick sale. — Garth

#127 Renting in Sherwood Park (formerly Edmonton) on 01.04.11 at 6:50 pm

#109 Devil’s Advocate on 01.04.11 at 5:01 pm

The concept you mention only works if every realtor does it. Why would i pay you a guaranteed commission up front if you can’t find a home i’m looking for but more specifically the realtor next door will charge me nothing until i buy the home.

I am selling a home not selling and buying so the “Exclusive Buyers Agency” doesn’t apply to my situation unless i misunderstood something. Is there an “Exclusive Sellers Agency”?

I believe fee based is best. Charge me for taking pictures, charge me for writing the ad, charge me for taking other realtors calls, charge me for taking care of the open house and then tack on a small commission.

In terms of overpricing a home by 20% i’m not sure where you’re getting that from. In fact, it is those realtor hacks that take clients and list for whatever the price the buyer asks are the problem. And that is most of them since they will ask the buyer to reduce his/her price afterwards. The realtors know this so they take anyone and everyone.

I can say the same thing about realtors underpricing a home by 20% to get a quick sale. Out of 4 realtors that i interviewed so to speak. RH from Team P here in e-town brought me all the comparables in the area that are listed at the lowest price or sold at the lowest price. Of course any other higher priced comparables were conveniently left off his “home evaluation”. But it is very easy to get market evaluations from other realtors to get an idea what you should TRY and sell for so i quickly showed him the door.

#128 Vancouver_Bear on 01.04.11 at 6:54 pm

#119 Mikey the Realtor on 01.04.11 at 6:10 pm

“…preferably Asian or Italian.”

Time to start a discrimination lawsuit I guess. And get rich…..

#129 kc on 01.04.11 at 6:56 pm

96 Hell in a Hand Basket on 01.04.11 at 3:53 pm

“So I am going to be part of that wave of houses coming on the market in the spring. I might beat them by about a month, but I doubt that is going to be enough… I’m on a mission to get the townhome ready to sell by mid-feb and my wife and I are prepared to undercut the lowest price in our development by 10% to get our home sale closed first. … the beginning of the swell that will turn into a house tsunami in Vancouver and the lower mainland”

This is interesting… even before any price adjustments go into the market place you have slashed 10% off your “kneecaps” to beat the wave… I am curious as to where/what area you live in… and what are the comps in your area? Any brand new comps? and if yes, how many are sold/sold out over how long? One other question… if the “spring wave” sees that your price is 10% less and they under cut you, are you willing to chop another 5-10%?

cheers (please tell us where you are at)

#130 Vancouver_Bear on 01.04.11 at 7:02 pm

#101 Renting in Sherwood Park (formerly Edmonton) on 01.04.11 at 4:23 pm

“All this costs $13,000?”

It should not cost more then $300-$500 period.

#131 jess on 01.04.11 at 7:08 pm

henry thornton 1802
An Enquiry into the Nature and Effects of the Paper Credit of Great Britain,
http://books.google.ca/books
================================

“Poyais humbug” http://en.wikipedia.org/wiki/Gregor_MacGregor

French Bailout
“The Panic of 1825 was a stock market crash that started in the Bank of England arising in part out of speculative investments in Latin America, including in the fabled imaginary country of Poyais. The crisis was felt most acutely in England where it precipitated the closing of six London banks including Henry Thornton’s bank and sixty country banks in England, but was also manifest in the markets of Europe, Latin America, and the United States. An infusion of gold reserves from Banque de France saved the Bank of England from complete collapse.

The panic has been referred to as the first modern economic crisis not attributable to an external event, such as a war, and thus the start of modern economic cycles. (wiki)

===========================
“The stock market boom became a bubble as investors bid up the prices of real and imaginary stocks (e.g., bonds from the imaginary South American Republic of Poyais). Asymmetric information led to adverse selection, and legitimate firms found it more difficult to obtain finance, except at premium rates. Banks infected with the euphoria let down their guard and
made risky loans.”
http://research.stlouisfed.org/publications/review/98/05/9805mb.pdf

#132 Devil's Advocate on 01.04.11 at 7:12 pm

#113 Devore on 01.04.11 at 5:42 pm
#28 Tim

Real Estate increases 17 percent in Richmond in 2010…
So with a 20 percent correction, it would be down a whopping 3 percent from last year…

So if something goes up 50%, and then drops 50%, you’re breaking even, right? Right?

WRONG. If something $100,000 goes up 50% in value it rises to $150,000 ($100,000 x 1.5= $$150,000). If it then falls by 50% it falls to $75,000 ($150,000 x .5 = $75,000).

It’s much the same confusion with plagues neophytes with how markups and discounts can affect profits

#133 Stevermt on 01.04.11 at 7:30 pm

#117 David
There was an expert on this subject on the Lang & O’Leary Report last night arguing the opposite of what you’re saying…its also breeding great inequality in the work place. I agree with you that they’re far more educated. apparantly the shareholders just sort of rubber stamp the process because every major corp. does it. It not like the old days when a CEO got a performance review every year and then they decided what to pay him (or her??..another inequality). Statistically most of them are white men.(fair and competitive when you’re in that club)
I think most people will agree that executive pay is out of whack….You might be in the minority on this point( except on Bay St.).

#134 Moneta on 01.04.11 at 7:37 pm

I’m an engineer (but run my own business in the financial sector), and when I explain this to some of my engineering friends, I get blank stares. How they can work their entire careers creating tens of millions of dollars worth of value for the economy, yet barely have their mortgage paid off and no pension, is beyond me.
——–
My father is an engineer. He made all kinds of stuff, radios, calculators… but graduating in the 70s, he quickly realized that if he wanted to feed his family he would have to go into business. He landed a job with Xerox when the market went ballistic. First thing he did was take apart a photocopier as he felt he needed to know how it was made and how it worked to sell one. LOL.

Die hard engineers like to know how things work. That’s how their brain is wired. Many don’t fit the businessman profile. You are asking them to be what they are not.

#135 poco on 01.04.11 at 7:37 pm

#96-Hell in a hand basket

Mid February will be way too late to list your property for sale if you’re anywhere near the tri-cities
just spoke with my “friend” the realtor (who gives me the strait goods —unlike some others on here ) new listings for today are at 42 and counting-many expired listings from Dec 1st last year-2010-coming back on the market,at a reduced price
assessments up in the tri-cities but prices still dropping

#136 (low density) Sam on 01.04.11 at 7:50 pm

#116 Bill Muskoka (NAM) on 01.04.11 at 5:53 pm
Gold dropped nearly $40 an ounce today. Hope you sold off like the insiders did?
____
??? insiders?

I don’t understand that.

There are commodity traders that trade Gold, but they’re not insiders in any sense of the word.

There may be “insiders” in Gold mining companies, maybe in Gold retailers

Then there are the banks with huge Gold forwards/shorts/options – but those are bank insiders.

What do you mean by “insiders” in Gold itself, and how do you know “they” “sold off”

#137 realpaul on 01.04.11 at 8:23 pm

Theres a couple of OK realwhores posting here that are obviously trying to ‘muscle up the market’ with their attempt at blowing a constant stream of smoke up anyone who’ll listenes ass.

A more honest whore said this in todays msm,

“Kelowna Century 21 realtor Jason Neumann said it’s no surprise that Kelowna’s assessments remained flat — barely an average of one per cent, based on the B.C. Assessment estimate of the residential market value.

“The Alberta market has dried up for us,” said Neumann, who noted that the number of residential units sold in the central Okanagan are off six per cent so far this year to the end of November compared to last year, from 3,687 to 3,463.

“It’s a lot slower than what we’re used to. That [the latest assessments] doesn’t surprise me in the least.”

Neumann said unit sales in the month of November totaled 210, 36 per cent lower than the 326 units sold in November 2009.

He also noted that the average residential price in November was $440,123, compared to $451,311 in November 2009.

Read more: http://www.vancouversun.com/business/Metro+Vancouver+property+values+jump+especially+Richmond/4053541/story.html#ixzz1A7AuhY9d

Obviously..bellicose whoring and cheerleading are just delusion acts that have no effect on the market …except the one in your mind DA.

#138 Nostradamus Le Mad Vlad on 01.04.11 at 8:26 pm


#98 dd — “The debt correction is not over yet.”

To a large extent, the full scope of indebtedness is completely unknown to most. It is good to see #96 Hell In A Handbasket and significant other are on the same page.

To HIAH: Follow Garth’s advice to #125, then subtract $25K to get a quick sale.
As it unfolds shortly, those who couldn’t be bothered to pay attention to what us going on will end up losing the most, whereas those who took steps to look after themselves will be able to live well within their means.

#120 dark sad person — “Anyone paying attention to Bernankes physical appearance? The market is destroying him-”

If it is, then it will be one mother of a takedown, esp. with the west indebted beyond their eyeballs.

#139 jess on 01.04.11 at 8:30 pm

Over €70bn in deposits fled Irish banks in 2010
==============

The revelation – cooked books /fake audits/auditors

Paul Appleby, Director of Corporate Enforcement, is launching investigation into a surge of false and illegal accounting practices at thousands of businesses across the country, the Irish Independent has learnt .where individuals have pretended to be auditors to companies and illegally signed-off on their accounts.

http://www.independent.ie/business/irish/surge-in-accounting-cheats-sparks-probe-into-firms-nationwide-2482324.html

#140 randman on 01.04.11 at 8:38 pm

Garth

You allowed my post #48 which was a follow up to my
previous post…which you didn’t allow

The first post was a link to 10 year charts showing
gains in silver/gold against all currencies..

What gives?

R

It’s not a gold blog. — Garth

#141 realpaul on 01.04.11 at 8:38 pm

Carlyle #125……..NEGOTIATE YOUR DEAL DOWN!!!! Keep kicking the real whores out the door until you find one that works for you and not itself.

When a buyer writes up an offer…. they want the house….not the whore. Renegotiate the buyers agents commission as part of your counter offer procedure. If he/she/it balks, he has to go back to the clients and explain to them that the one and only person standing between them and their dreamhome is him/her/it. They’ll do your work for you 99% of the time.

If he doesn’t like your deal…kick the bastard out. The buyers will be back with a whipped puppy in tow. The greedy whores are six months behind in their desk fee’s for the majority and in a position to be dictated to.

You lose nothing…gain thousands….and get a good laugh at the end of the day. I have done this plenty of times and believe me…every real whore I’ve bent over the table has said ‘uncle’. You just have to be ‘firm’. Whores secretly like to be slapped around…Its why they became whores in the first place.

PS….don’t take the whores word for anything…..comparable listings mean ZERO…….look at only the most recent sales in a market like this. Don’t get led down the garden path by a whore with sleeve brochure that took all of three minutes to slap together. Remember…these morons want their commission…they care nothing about you. What do you expect

You are an obscenely negative person. Try raisin bran. — Garth

#142 LongviewLonghorn on 01.04.11 at 8:45 pm

What, Mario Toneguzzi is now quoting Garth in the Herald alongside all the other respectable experts like Dianne Scott?? Surely the poor man’s cheese has slid completely off his cracker!

http://www.calgaryherald.com/business/Calgary+home+sales+drop+lowest+level+years/4059473/story.html

#143 KT on 01.04.11 at 8:48 pm

Hi Garth,

I’m sure you’ve heard this before, but have you considered creating a Twitter feed to promote your blog postings and books? The Twittersphere has a lot of mentions of you, and it would be interesting to see the dynamic develop between you and your naysayers, particularly as we move forward in 2011.

Just sayin’ . . .

-KT

Just what I need. — Garth

#144 David on 01.04.11 at 8:51 pm

Just like voters, shareholders get what they deserve…if they rubber stamp the pay, and it ultimately comes out of their pockets, why should Lang, O’Leary, or you care more than they do?

#145 GregW, Oakville on 01.04.11 at 8:58 pm

Hi Garth, fyi link ~40min video interview/opinion of a Canadian guy on the economic situation today and global politics. Some may find it interesting.

The Global Elite’s “ENDGAME” for Humanity
“Infowars | Canadian author, blogger, and philosopher Stefan Molyneux of freedomainradio.com joins the show to discuss several key issues…” http://www.infowars.com/the-global-elites-endgame-for-humanity/

#146 nsqt on 01.04.11 at 8:59 pm

With all that is going on in the world of fiance and R/E , taxation etc….how will it end in the next 15 to 20 years? I wonder how this is going to affect the kids when they are in their 30’s and their kids….Some kids now are seeing their parents live way beyond their means….what is that teaching them?….

#147 David on 01.04.11 at 9:01 pm

#1232 Stevermt – Who’s an ‘expert’? If such a person exists, why don’t we all turn to him for his decree on what salaries everyone gets?

I wonder what pay he’d want to do such a job? Who would decide his salary? We’d need another expert for that…..blah blah blah…..next stop Moscow, 1968.

Why should you, or Lang, or O’Leary care what other people do with THEIR money and how they run THEIR companies?

#148 HouseBuster on 01.04.11 at 9:06 pm

#135 (low density) Sam –

I was wondering the same thing… what is a gold insider? lol

#149 Canned Goods and Buckshot on 01.04.11 at 9:07 pm

Mammy and Ricardo should take a look at a 5.5% term investment in New Zealand. Not totally risk free with respect to currency fluctuations, but at least an English speaking 1st world nation.

http://www.marac.co.nz/

#150 Haggis on 01.04.11 at 9:22 pm

#91
“Engineers are terrible arbitrers of their own value, and most of them are too stupid to realize that working for $70-$80k/year is basically giving their lives and skills away almost for nothing to the banker crowd.”

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

I think that statement is probably applicable to most of the traditional professions. Given that such professions actually have a certain level of monopolistic rights granted by law, it’s ironic that their fee structure ends up providing such a relatively modest income.

It’s a rather sad commentary on values when those creating value are compensated so poorly. Whilst shuffling assets here and there generates huge fees for the handlers.

I’m no engineer, but what I find alarming is the diverting of effort from creating things to asset shuffling: that is, the bizarre structure of the Western FIRE economy. South Korea graduates more engineers than the US which I don’t think bodes well.

But hey, I guess we can all sell our overpriced houses to each other and collect a fat commission cheque in the process whilst those losers in Asia make things…

#151 ballingsford on 01.04.11 at 9:32 pm

I watched a show on TV last night about the lack of water in Phoenix and other areas of the US. Sure explains a bit about why Phoenix real estate has gone down the tubes. The choice of what crops to farm is also a concern. Once a lush growing area using diverted water for growing crops and filling swimming pools has almost dried up. Cactus farming anyone?

One must really think twice or three times if they think buying a home in one of those regions is a good choice because they are so cheap. What’s it worth when the neighborhood is covered over by sand dunes?

That city will once again fall into the desert and be discovered by future archeologists.

They have run out of water and are trying to dig deeper into the earth to find water. Will they find it? It doesn’t matter, they will eventually run out of water unless they can get some from another area, such as Canada.

We must convince our politicians to not sell our Canadian water to them to keep them alive and let them to continue to grow hazelnut trees and fill their pools so some wealthy owner and homeowners can continue with their ways. The writing is on the wall. They are doomed! We could also be doomed just because of water.

Think about what would happen if water dried up just like oil eventually will. Just like many civilizations that came before us and built their kingdoms where water was plentiful. Then it all was gone! They are now considered history.

NO, I am not an environmentalist, just a realist! History does repeat itself!

Seems like we live when times are good (e.x., lots of water to exploit) we live the good life. When the shit hits the fan (e.g., water dries up, housing implodes, credit is too much to carry, lower wages and joblessness is the norm) it scatters everywhere.

Are we in a point-in-time in history that will be recorded in the future as the ‘time of greed’ of Governments, Corporations, Sleezeballs, and individuals?

Probably!!!

#152 canali on 01.04.11 at 9:35 pm

vancouver property values jump:
http://www.vancouversun.com/business/Metro+Vancouver+property+values+jump+especially+Richmond/4053541/story.html

Assessments are not the same as values. — Garth

#153 GregW, Oakville on 01.04.11 at 9:36 pm

Hi Garth, fyi article
(I wonder just how interesting F & H’s budget here could be?)

European nations begin seizing private pensions
“Hungary, Poland, and three other nations take over citizens’ pension money to make up government budget shortfalls.”
http://www.infowars.com/european-nations-begin-seizing-private-pensions/

#154 Mean Gene on 01.04.11 at 9:53 pm

Speaking from experience, the person in question was likely a manager or having personal problems, they would get a suspension; it’s called progressive corrective action.

If the person had committed theft, they would be fired.

#109 Cats and Hogs on 01.04.11 at 4:55 pm
For those of you with an axe to grind with Public Sector Employees in Canada, you’ll love this story.
http://fullcomment.nationalpost.com/2011/01/02/the-civil-services-right-to-porn/

#155 I call B.S. on D.A. on 01.04.11 at 9:56 pm

“Those firms of which you speak … rent to realtors office space and services (so that) realtors can enjoy a … economy of scale in … such services … (office space, photocopiers, telephone systems, receptionist, accountants, conveyancers, fax machines, etc. Were we each to … each go out and hire them you can be sure those hefty commissions would be all that much heftier David.

What a load of horse pucks.

I was forced, by law, for the first two years of being a realtor to hang my shingle with one of the oligopolists. I went with Sutton. $250 a month to Sutton, plus another large chunk to cover my board and regulator fees. I got accees to the internet, a photocopier where I had to pay 25c a copy, a receptionist and conveyancing.

And that was a GREAT deal compared to the Blue/Red/Whtie Balloon company, which charges realtors $1500 a month for the same [email protected] “service.”

Then I went out on my own.

The board and regulator fees were the same ripoff. I paid for a virtual office downtown $125 a month, which gave me a receptionist who answered calls in my brokerage’s name, office space when I needed it (rarely). I have internet and a copies at home (like the rest of the world) and for larger-scale copying there’s Staples at about 5c a page.

Real estate is a cartel that operates in favor of the brokerages. Those are your real thieves in this business.

If government allowed realtors to set up one-man shops right out of the gate – that would mean less whining about regulation from the spineless babies who populate this board, mind you – prices would drop.

They would. That’s what competition does. And that’s what regulation kills.

#156 canali on 01.04.11 at 9:58 pm

#152…thanks for correction garth…was a bit hasty in my intro….

this in anyway: analysis of vancouver’s RE from a former property developer:
“Peering into 2011 Housing picture”
http://www.vancouversun.com/business/Peering+into+2011+housing+picture/4046282/story.html

#157 AG Sage on 01.04.11 at 10:02 pm

#150 Haggis on 01.04.11 at 9:22 pm

I was just looking at these numbers to compute the total housing valuation to GDP ratio for British Columbia (5.2! by my quick calculation). (The U.S. is a mere 0.88)

But that’s an aside.
GDP per capita relative to Income per capita starts to tease at this pay gap. British Columbia the GDP per capita is $43,000 and the income per capita is $35,000.
The U.S. the GDP per capita is $48,000 and the income per capita is $39,000.

Not that I don’t disagree that a handful of individuals contribute (usually through creativity) far above their remuneration. I’ve worked with a few like that. They also seemed to not care that was happening.

#158 Devil's Advocate on 01.04.11 at 10:55 pm

#155 I call B.S. on D.A.

And you sound like one who had quite a bit of success during his/her stint as a REALTOR. I should maybe adopt that business model you think?

#159 GregW, Oakville on 01.04.11 at 11:14 pm

Hi Garth, This sound positive, I just got it in my email. I just hope the powers that be can critically look at the science that is now avaible and take action to protect everyone health? At lease there is some hope.

I stopped drinking my cities water after I learned just how Toxic fluoride is to the human body and brain!
(I recall hearing the Oakville Mayor said he would vote to stop it when he was asked during the last election. I assume he has looked at the science and is a critical thinker. I hope the other regional councilors are as smart, get informed and care about there own families health too.)

I will be sent a letter to my Regional Councilor asking them personally to look hard at the science
and stop water fluoridation for all the right reasons!
How about you?

January 4th Update: 2010 President’s Report, Fluoridation Update, Volunteers Needed for Funding Committee and Great Events This Month!
http://www.oakvillegreen.org/index.php?option=com_content&view=article&id=239:january-4th-update-2010-presidents-report-fluoridation-update-volunteers-needed-for-funding-committee-and-great-events-this-month&catid=76:emails&Itemid=122

“Getting Fluoride Out of Our Water

All four major environmental groups from Halton Region have collaborated on letters sent to all members of Regional Council notifying them that we will be working to have fluoride removed from Halton’s water supply and thanking those Councillors who have already indicated their support. The letter contains a referenced summary of the negative impacts of adding fluoride to drinking water. To see the letter please click here or go to our homepage.”

FYI bloggers, watch the ‘FAN’ 28min info. video at a minimum. link below scroll down a bit to find it.

“Featuring a Nobel Laureate in Medicine, three scientists from the National Research Council’s landmark review on fluoride, as well as dentists, medical doctors, and leading researchers in the field,”
http://www.fluoridealert.org/

fyi, Brital, carbon water fliters Do Not remove fluoride!!!
What’s in your families water?

#160 Devil's Advocate on 01.04.11 at 11:18 pm

#141 realpaul

I’d love to know what you do or did to earn a living?

#161 Devil's Advocate on 01.04.11 at 11:27 pm

#155 I call B.S. on D.A.

You can take a cab or you can take a limo. Choice is yours.

I am in the real estate office I am because it is by far and away the best I can do for my clients. Yes there are less expensive offices in town but the return on investment in this one, for me and for my clients is worth the additional cost.

I like so much dealing with those REALTORs who have to run down to Kinkos to send me a fax or scan an email. Yes THAT is so professional. Or those who hand write a spec sheet on a property and have black and white copies made at the corner drug store. Yes my clients would surely be impressed with such service for the money they pay me.

Some agents discount their commissions… and so they should.

#162 dark sad person on 01.04.11 at 11:53 pm

#139 jess on 01.04.11 at 8:30 pm

Over €70bn in deposits fled Irish banks in 2010
==============

The revelation – cooked books /fake audits/auditors

Paul Appleby, Director of Corporate Enforcement, is launching investigation into a surge of false and illegal accounting practices at thousands of businesses across the country, the Irish Independent has learnt .where individuals have pretended to be auditors to companies and illegally signed-off on their accounts.

****************
The corruption tentacles are deep and wide-
Banks/governments/corporations/unions/military-royalty/msm -everything-is built on lies backed by fraudulent paper and there’s nothing to underpin it but more lies and cover ups for collateral –

Bodies will continue floating to surface as the biggest fraud in the world is slowly exposed–
The problem is-who’s listening to it-who sees it?
A few boards full of bloggers who can’t step out of the zone and explain it to anyone without the risk being committed to mental institution-
It’s gonna be a slow burn until something no one is watching blows up and something will-

******************
138 Nostradamus Le Mad Vlad on 01.04.11 at 8:26 pm

#120 dark sad person — “Anyone paying attention to Bernankes physical appearance? The market is destroying him-”

If it is, then it will be one mother of a takedown, esp. with the west indebted beyond their eyeballs.

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

You’re right-debt is enemy #1-

When those in debt working are not-begin to see that what they’re paying for is worth half or less of the amount they owe-the psychological effect will cause them to fold-

About Bernanke-

“Everything” he’s tried to do to “stimulate” inflation into the economy since deflation reared its beautiful head has failed-

The free market has stymied every move he’s made-including all the unconstitutional law breaking and outright lying to the people-

His efforts to bring on inflation-

Lowering rates to zero–nope

Print money–nope

Make low-interest-rate loans to banks–nope

Maiden Lane–nope

Buy down toxic assets at 100 cents on the dollar–nope

Bailing out the Euro zone through swap lines–nope

Print more money–nope-

Bond purchases–nope

Threaten China–nope

Send GS with a load of dough to speculate in futures and commodities in order to create an illusion–nope

Whipped by the market-

Our man F will never suffer the emotional stress of Bernanke-cuz–
He hasn’t a friggen clue what’s happening-never did and never will-

#163 Stevermt on 01.05.11 at 12:05 am

David, David…such hypocracy my dear.
You don’t care about the CEOs outrageous salary because you don’t think it hits you or shareholders in their wallets ( or you are one which I doubt)
Why do you care about a realtors earnings then? Oh yes, because it hits you in the wallet. HMMMM.
interesting.
Nobody has a gun to your head to use a realtor..go market your house yourself ..easy, solved..if everybody did that, the marketplace would weed out a lot of them. they would have no jobs. duh..that’s capitalism.

#164 David on 01.05.11 at 2:00 am

#163 Stevermt

I am not against wealth. I support freely working, open markets.

CEO pay is decided by the market. You just don’t think that’s “equitable”, which is irrationally rooted in an envious and/or socialist attitude. (You decide which one fits).

Realtor fees are arbitrarily set and protected by the anti-competitive efforts of a cartel.

But if you’re P.O.ed about “unfair” salaries, why don’t you get some hate on for professional athletes instead? There are a dozen or more CEO-size salaries on every team for you to be disgusted by.

#165 David on 01.05.11 at 2:06 am

For Stevie: As I mentioned previously, I sold my last 2 houses. It was easy, and saved me about $28,000 in fees for about 35 hours of work and $250 in out-of-pocket costs.

I know of what I speak….how ’bout you?

#166 realpaul on 01.05.11 at 2:11 am

#160…….DA….I don’t lie cheat and steal….I’m not a parasite……I’m not a realwhore.

Think of what the realwhores chances of getting a job with the ‘qualification’ that the twenty minute test gives you.

You don’t need to know what I do…you need to think about what you’re going to do.

#167 David B on 01.05.11 at 11:47 am

Just when y’all things were getting better in housing market south of the border?

Honey I Shrunk the Credit Score

http://www.huffingtonpost.com/2011/01/05/honey-i-shrunk-the-credit-score_n_804105.html

Thank Goodness for our Canadian Shield and the World’s Greatest Finance Minister standing on top of it. Never happen here eh?

#168 David on 01.05.11 at 1:57 pm

#166 Realpaul – DA keeps asking what everyone else does. I’m not sure if he’s on the lookout for another career option now that the gravy train is over (in more ways than one!!), or if he’s just desparately turning to the time-tested, pathetically weak strategy of changing the topic and attacking the opponent using an irrelevant issue.

#169 Daisy Mae on 01.05.11 at 10:02 pm

To DA re Okanagan house price average —

“A ReMax Canada survey suggests the average house price in the Okanagan city has jumped to $422,000 this year, up from $355,000 last year.” Nowhere near the figure you quoted a day or so ago. And I take this survey with a grain of salt….

Read more: http://www.cbc.ca/money/story/2006/10/26/bc-kelowna-houses.html#ixzz1ADQBLmX4