Two years ago the landlord offered to sell them the house they were renting in Toronto. A steal. Four fifty. But it needed work.
So they bit. With three kids, it was easier to buy than move, even without much money. They went to Scotiabank and asked for enough to finance the deal plus the reno. The bank gave them a 125% mortgage, and they walked out for $550,000 at 4.7% for five years, on a 35-year amortization.
As usual, the renos cost too much. So they went to RBC and established a line of credit, and borrowed and spent $50,000 more. Then they sold a small property back in Cuba,, where they came from half a dozen years ago, and put that money into the house.
By the time they landed in my office, they’d spent $640,000, owed $600,000 and had a home assessed at $620,000. Realistically, it would fetch six, which means after commission a sale would leave them owing $30,000 and with a loss of $70,000.
And did I mention they earn about a hundred between them, and she’s about to lose her job? And they have nothing else but a paltry RESP and (inexplicably) three ounces of gold? And that I told them they are utterly screwed?
“But this is my home,” she protested, “and I need to feel secure, for my family.” He looked at her with loving disgust. She then said she put the odds of them getting into financial trouble, “at one per cent.” I asked him the same question. “Ninety,” he said quietly.
One of the great myths of our time is that Canadian banks are cautious, conservative, different, carrot-up-the rump, buttoned-down prudes. In reality, they’re in the business of shoveling money out the door with the same gay abandon as the First National Slots Bank in Vegas. They bribe first-time buyers with cash-back offers. They give out no-documentation mortgages, commonly known as liar loans. They’ll hand you more than 100% of the purchase price of your real estate. They target inexperienced property virgins. They fund ethically-challenged mortgage brokers who specialize in no-money-down real deals. And until the middle of March, they’ll continue to offer 35-year-long mortgages even though the government is wisely banning them (as CMHC-insurable).
In fact, Canada’s developed the same irresponsible, greed-drenched lending industry which brought down the American middle class. That should be self-evident from the numbers. We’ve never owed as much. Credit oozes everywhere. Cheap money, rapacious realtors and voracious lenders have created an entitlement society in which we get what we want decades before we earn it. If ever.
And it just kicked up a notch.
We whisk you now to Oshawa, a blue-collar burb of the godless GTA. In that town six months ago a woman named Dana joined a real estate company owned by Jason. “Bringing her outgoing and enthusiastic personality to our team she is excited to begin her hew venture in the real estate world,” said Jason’s Facebook page. “On her time off she enjoys the cottage life, socializing with friends and relaxing at home with her spouse.” But Dana also likes to get people juiced. She just fired off this email blast:
Subject: Huge Changes to Mortgages Rules That Will Certainly Effect You!
Hello,
I just wanted to let you know that there have been some major changes announced by the National Bank of Canada about new rules in regards to mortgages, these changes will surely effect you.
After March 18th, there will no longer be any mortgages available for a 35 year amortization, 30 years will be the maximum allowed. This may not seem like significant news, however, it will actually change what the average family can afford by $200 to $400 dollars per month. For example, a person who before March 18th would be approved for $200,000 dollars, after March 18th would be only afforded $178,000.
The average pre approval is only valid for 3 months so it may be a good idea to get it re done if you were originally approved several months ago, and if you have not been pre approved yet it is very important you do so soon. Also, if you are looking to purchase a home this year you may want to seriously think of taking advantage of 35 year amortization while it is still available.
This little note tells us quite a bit. Like, Dana thinks F runs a bank or something. And she assumes that “the average family” would naturally take a 35-year amortization, which makes this change “huge news.” She’s pushing first-time buyers to renew mortgage preapprovals, which would give them access to 35-year loans months after they are supposed to end. And she’s using this reform – aimed at preventing people from debticide – as a lever to push them into maximum borrowing.
I’m sure her dog loves her, but Dana needs ethics. So does Jason, her boss. Plus the mortgage brokers who support Jason’s real estate brokerage. And the major Canadian banks who provide the capital which finances the brokers’ loans.
But sadly, it’s too late to moan.
Just too many Jasons and Danas and Scotias and RBCs out there, feeding too many people with house lust but no money, to stop now. It’ll all roll along, frenzied, until it suddenly collapses.
For the 40-something couple with the big house and the big debt, I think it probably ended somewhere on the subway ride home from my office.
He reasons. She bristles. He insists. She defends. He argues. She digs in. He projects. She protects. He angers. She withdraws. He is Mars. She’s Venus. They go silent. Rendered. Done.
And it’s only a damn house.
On the market: $1,125,000
West 6th Avenue, Vancouver. MLS V841546. Hurry.
191 comments ↓
No matter where you are the pendulum will always swing back
http://tasmanianrealestatetrouble.blogspot.com/2011/01/swing.html
Garth sometimes you are so right. I’ve tried to tell all my house horny friends it is only a house, shelter, a warm place to sleep. They reply home, memories, heritage. I reply wasting your money, not a liquid asset, only worth what someone will pay when you go to sell . . .
first!
Sadly, the greater fools may be falling for the “buy now with 5%/35-yr or be priced out forever” ploy… a house in my neighbourhood that had been on the market since September 25th (and had dropped $60k last year with no success) just put a SOLD sign on the front lawn.
No Income No Job No Assets mortgages are everywhere, beware the NINJA. Had to google rapacious. You couldn’t have chosen a better word.
Dana’s letter makes the obvious conclusion that prices will drop 11% after the rules change. She also does not know what she is talking about – apart from some errant facts she was fed.
She is also wrong that there will not be any 35 year amortizations. They will be out there, somewhere, it’s just that they will not be offered by our by our “reputable” banks or backed by our tax dollars.
If anybody watched the National last night you’ll have seen the experts attempt to address the issue of retirement and Canadians’ sorry lack of planning. As Garth has often spelled out in this blog, Canadians (including the coming tsunami of boomers trying to ease away from work) by and large have no (as in zero) funds set aside for retirement – I think the stat was something like 63%.
The four expert panelists were asked at the end of the show to give their one essential piece of advice. It was basically save in one form or another (besides the economist from the CAW union who thought the government ought to be making better plans to bail us out with CPP lifts, etc.)
I must say that the elephant in the room that the experts were not really talking about was the concept of living within your means which is essentially what today’s blog is about as well.
Canadians need to wake up and smell the coffee – many of us feel somehow that it is our birthright to live the life of the grasshopper while magically thinking that “the government” ought to be filling the role of the ant. We need desperately to take more personal responsibility for our economic future and will not be able to get away with it without lowering our expectations. Taking a 125% mortgage and adding yet more $ obligation doesn’t accomplish that in any way.
I am not sure it is unethical for a mortage broker to advertise a legal product like a 35 year amortization.
It’s not illegal or immoral to sell rope even though people may hang themselves.
If people want to smoke or eat too much or borrow too much that is up to them. Nothing immoral about selling to them.
And out of the desperation of big debt can grow hard work to pay that debt off. As a friend of mine says. “Don’t spend less. Earn more.”
Debt makes the economy go around. There is a LOT of truth to the old saying “I Owe so Off to Work I Go”.
Work creates GDP. Debt motivates us to work. Therefore debt creates GDP.
This is wonderful!
Also mortgage brokers don’t force people to borrow… You should not blame McDonald’s for fat kids nor the banks or brokers for over-indebted fools.
Let’s have a little personal responsibility, shall we?
Dana does have a lot of houses to sell up there in Oshawa…
http://newsdurhamregion.com/business/article/169425
Housing construction almost doubled in 2010 for the Oshawa Census Metropolitan Area.
Good to know that all of these new homes will have a trusty realtor to match them up with the perfect 5/35 buyer!
“And it’s only a damn house”
It is also their biggest investment. Likely their only investment (except for the paltry RESP and 3 oz of gold).
Reminds me of my neighbour. Bought for $490K, 5 years ago (acreage property, new build like ours), parents in the basement with their $250K contribution (on title; not trustworthy of their son), $10K down and rest on mortgage. Prime plus 7% is their mortgage.
4 years later, parents want out, the adult children put alot of $ into the home keeping up with the Joneses – deck, interlock, ski doos and boat, trailer, etc.
Now their mortgage is $550K, prime plus 7% again, parents off the title – they increased the mortgage to pay the parents off. They must be spending at least $5K per month on payments and it can’t be sustainable.
Who in the heck pays prime plus 7% now or 5 years ago? He is in the trades and she is in retail. I fear this will do permanent damage to them.
Sad thing is, every time we do a reno/project, they follow suit. We put in interlock (DIY to save 75% of the cost) and they put in asphalt. $20K driveway, even with a $550K mortgage at prime plus 7%.
Of course they are in their mid-thirties and did not experience a RE bust – yet.
Surely i make the top 10 and get posted tonight.
The Irish RE time machine has arrived in 2002. Canada’s RE time cart departed for 2005 on monday. Heck this pathetic blog may even be extinct in 24 months.
For the love of all that is grammatically correct, could someone please educate realtors®™ on the difference between ‘affect’ and ‘effect’ (t.i.c)
Sadly that was the least offensive error in that entire misguided diatribe.
#8 Shawn Allen,
I agree that its not unethical for mortgage brokers to offer 35 year ams if the private market keeps the risk.
I can think of a lot better way to live my life than to be a slave to a mountain of debt. Yeah – it makes you work hard. You can choose to be on that side of the equation.
What Garth is advocating is getting your money to work for you. Its not a complicated concept. Own your stuff rather than having it own you.
“And it’s only a damn house.”
Amen.
Men are from Earth. Women are from Earth. Everyone’s from Earth, save some of us on the blog here.
Deal with it.
Everyone else’s mileage may vary.
And out of the desperation of big debt can grow hard work to pay that debt off. As a friend of mine says. “Don’t spend less. Earn more.”
Working for the bank sucks.
She’s pushing first-time buyers to renew mortgage preapprovals, which would give them access to 35-year loans months after they are supposed to end.
Has F confirmed that 35 year pre-approvals inked before the March deadline, will be insured if the homes close after March?
Spelling fix+
Well.. I guess it’s time for the publisher to release the “How to be stupid for Dummies” book.
This is getting out of hand!
Investor’s friend, no it’s not unethical but karma is a bitch! But if you want sustainable business as a realtor/broker/banker/politician/etc you may want to perform your work in the best interests of your client and not just your ego(s).
Shawn, Get real. It’s immoral to sell someone a rope knowing they will hang themselves with it (and moreso telling them they should). Sell any rope lately?
Garth, You’re getting gloomier; and with good reason. I myself have the distinct urge to chop and stockpile firewood. One February without gas and Regina would be a frozen pile ‘o bones.
#8 InvestorsFriend (Shawn Allen) on 01.20.11 at 11:55 pm
Work creates GDP. Debt motivates us to work. Therefore debt creates GDP. ……………………..<<<i guess you enjoy watching our taxes go up..what a ridiculous statement. Anyone who encourages the misfortune of others is lacking the necessary parts to be a man.
Ah, “… He is Mars. She’s Venus. He reasons. She bristles. He insists. She defends. He argues. She digs in. He projects. She protects. He angers. She withdraws…”.
It reminds me of a couple, who ~ 30 years ago, been torn between to sell or not to sell their first home because he lost his job, but she was working. She insisted, that it is just a temporary situation that recession will be over soon, and if he just could make some money to help with a mortgage pmt., they will be ok. He did found a way to make some money, delivering pizza. Meanwhile, recession got worst, RE dropped like a stone, prices of similar condos went below the mortgage they had. Make the story short, they sent keys to the bank, foreclosed, lost their 15% DP and moved out. Lesson was learned, but nothing to be proud off.
Hope this will help.
Glad I sold my cottage 3 years ago. Same area of cottages are 30% less. I’ll rent my old cottage next year for 3 weeks and let the new owner pay the other 11 months of taxes, insurance, painting, landscaping, etc.etc.etc.
The Boomer “retirement retreat” is now upon us.
The majority of my Boomer and post boomer friends
( Gen X’ers) have the saving strategy of a suicide bomber. Live for today because there’s no tomorrow.
And if they think the Canadian Govt will look after then because their destitute…..
Hope ya like working at 75 at McDonalds.
I must learn to let go of the negative energy that gets inside me when the subject of real estate comes up.
There’s no way in hell that that sh!tbox is worth anywhere near $1,125,000. You could find a nice place in Paris or Madrid for that much…you know, real cities.
And there’s absolutely no reason that houses in Vancouver (aka Seattle North) should cost twice as much as they do in Toronto. That is just f’in lunacy!
This is life in the Canadian Bubble ™.
Garth, great site. Thanks for articulating a lot of what’s been frustrating me for the past decade. Question for you: What can discipline bankers from driving interest rates too low and extending credit to people who shouldn’t have it (thus attempting to create prosperity through money printing). It’s not educating people about the dangers of excess credit or letting really really smart people make the decisions – that has been the system and it’s not working. I say it’s calling gold what it actually is: money and using it as such. What say you?
Banks do not set interest rates, and gold is not money. — Garth
>The government spends tax revenue it does not create capital….not a thin dime.
I guess gold miners “create” capital … all others just collect and spend revenue.
what’s with the “first!” dude that always come in third???
“She also does not know what she is talking about…”
Hmm, I wonder if she talks as poorly as she writes?
“…Vancouver (aka Seattle North)”
You kiddin’ me? Quite a different breed of cat, I can ASSURE you.
As a previous comment mentioned about F’s expression (his appearance that is) made the said individual want to puke. In my opinion F’s face looks like a can of SQUASHED ASSHOLES. Perfectly matches the crap oozing out of his mouth.
Garth used the worst picture of the house. There’s a real nice stove inside definitely worth $1.25 Mil!!!
Don number 18 says:
if you want sustainable business as a realtor/broker/banker/politician/etc you may want to perform your work in the best interests of your client and not just your ego(s).
Don, your realtor/broker/ banker / politician is not your Mommy.
See, the way capitalism works is that each person looks after their own interests and then the greatest good results. It’s when people pretend to have YOUR best interest at heart that you better hold on to your wallet the tightest.
Read Adam Smith, 1776, An Inquiry into the Nature and Causes of The Wealth of Nations for more.
John M. at number 20 chastises me for saying debt motivates us to work which adds to GDP and therefore is not a bad thing.
Not all debt is a misfortune. There is nothing wrong with taking out a reasonable mortgage and then working your tail off and living the frugal life to pay it down. That is what I did.
If the truth hurts, I can’t help that.
Again, how about some personal responsibility folks?
A fool and his money are soon parted. That is life.
So is Dana playing for ‘Team Evil’ or ‘Team Stupid’?
My bet is that Dana is stupid… but then again, we’re renters, not buyers… so either way we’re winners!
I had a recent real estate discussion with my Dad a few months ago (turned 80 this year). He told me that when they built the house that we grew up in in the 1960’s, the house was just a house. That was it. Nothing more. Investments were something else, but the house was just a place to live.
Somewhere along the line our society went off the rails. I blame it on Martha Stewart, Norm Abrams and Bob Vila.
10-12 million forclosures coming to market in the next few years in the US: Double Dip Coming in Housing:
http://www.youtube.com/watch?v=ZZViMUBpXgE&feature=channel
How will this not destroy our southern neighbours?
Chilled Vancouver commuters faced their second day of winter hell today, as an additional ¼ centimeter of the peculiar white stuff fell, bringing the lower mainland to its knees and causing millions of dollars worth of damage to the marijuana crops.
Scientists suspect that the substance is some form of frozen water particles and experts from Saskatchewan are being flown in. With temperatures dipping to the almost but not quite near zero mark, Vancouverites were warned to double insulate their lattes before venturing out.
Vancouver police recommended that people stay inside except for emergencies, such as running out of espresso or biscotti to see them through Vancouver ‘s most terrible storm to date. The local Canadian Tire reported that they had completely sold out of fur-lined sandals.
Drivers were cautioned to put their convertible tops up, and several have been shocked to learn that their SUV’s actually have four wheel drive, although most have no idea how to use it.
Weary commuters faced soggy sushi, and the threat of frozen breast implants. Although Dr. John Blatherwick, of the Coastal Health Authority reassured everyone that most breast implants were perfectly safe to 25 below, down-filled bras are flying off the shelves at Mountain Equipment Co-op.
The government has to do something,” snarled an angry Trevor Warburton. “I didn’t pay $850,000 for my one bedroom condo so I could sit around and be treated like someone from Toronto ..
–
“Out of control. And it just kicked up a notch. And it’s only a damn house.”
Women are from Mars. Men (usually) are beyond help so it really isn’t to hard to see where this partnership will end up.
A link I read a few hours ago (not posted here) said “This Party is Just Beginning”; e.g., this debacle we are seeing first hand for ourselves is in its infancy and, like a terminal illness, growing rapidly and exponentially.
Newbies don’t have a cat in hell’s chance of surviving the forthcoming onslaught. One possible reason why Obama is congratulating China on their meteoric rise is that (as said before), the elite choose who to act as their henchman (not voters — witness dubya’s two illegal terms), and that when Obama is replaced in 2012, he will be kept in a role that suits the elite well (pushing communism and a totalitarian govt. ahead).
*
1:55 clip Didn’t Greenspan love gold once before? If he didn’t, he sure loves it now (by killing the US$).
Warped Minds Dominoes Pizza gets bailout while people go hungry.
Oil Price Manipulation? Something stinks, and it sure ain’t oil.
US Housing Slump continues, and ours is playing catch-up.
Brazil and China, both putting the brakes on.
Monsanto States are trying to bypass Monsanto’s trash. ObamaCare was tossed Wed.; Monsanto may follow suit.
10:02 clip HAARP and the NWO.
BP Anyone remember them?
Birds are coated with stunning colors.
Cartoon at top is good.
Flaherty or Peter van Loan? Can’t remember which one owned or owns a used-car dealership.
Bankruptcy States looking for different alternatives. How about default? Plus M2 Update
A 1912 blue collar bozo house for $1,125,000… what a joke, this town is gonna need a enema.
Is Boston a reasonable comparison to Toronto?
Had a conversation with a fellow today who insisted that Boston is a reasonable comparison to the GTA, and that Boston hasn’t suffered much at all with the housing crisis in the U.S.
Most of us in our late forties and early fifties will probably have to move out of Vancouver to small towns unless we want to work until 70, or unless the market here finally tanks. Hell, who wants to stay in a place where the former solicitor general is up for corruption charges?
http://www.cbc.ca/canada/british-columbia/story/2011/01/20/bc-heed-rcmp.html
At least they’re finally exposing these scum. It is just a matter of time before Campbell is proven guilty over his part in the BC Rail scandal. Goin’ down Gordo, you weasel…
Looking at that Vancouver house makes Saskatoon’s bubble look small. Even so, according to Royal Lepage, Saskatoon has more expensive bungalows and two storey homes than Edmonton and the spread between two storey homes in Calgary and Saskatoon is only $45,000. And wages in Saskatchewan are not what they are in Alberta.
The average price to average income is out of whack compared to historical stats and affordability for a first time buyer in Sask is terrible.
Looks like every market is still out of control.
http://saskatoonhousingbubble.blogspot.com/2011/01/saskatoon-real-estate-bubble-average_20.html
Saskatoon real estate bubble: average bungalow, two-storey price to income, affordability
Vancouver area real estate agents need to start dusting off the resume for jobs a WalMart and CostCo before they’re all snapped up. Sales are evaporating and the Spring CMHC rule change wont be enough to keep ’em employed long.
Latest stats on Vancouver MLS activity:
Sales = 1,617 (2nd lowest in last 10 years)
New Listings = 4,628 (close to 2nd highest in last 10 years: Jan/08 had 4,675)
Current Sell/List = 34.9%
Would you like to live in America?
1% control 43% of the wealth. 43 million Americans receive food stamps, while Goldman Sachs offering average bonuses of $430,000
http://www.mybudget360.com/financial-elite-dismantled-american-middle-class-average-banking-bonus-goldman-sachs-record-homeless/?source=patrick.net#content
always look for trees on the house pictures, in dead of winter … might be a sign this one is rotten.
The scary part about this blog entry.
The folks Garths talks about are very average in their yearn for debt and lack financial intelligence.
Without 0/40 or 0 (5)/35 this would never have happened.
Look up the law of mean revision thats were RE is going.
House shown must have had porch (maybe more) built without permits…the porch and stairs railing would not pass code.
This post is in response to the $hit storm I caused yesterday. Nothing much yet to say about today’s post from Garth except “yep”.
#40 Devore
Cheers! For a while I thought I was the only one that thought 20 years was a long time, and time enough for a lot to happen.
#85 Another Albertan
Your response was way funnier than mine. Tip o’ the hat.
#112 Mister Obvious
That’s good too. I’ve never programmed in C, I find it too, how shall we say, unnecessarily semantic. But I have reviewed your code and think it will work in visual basic also:
While YouStillCan 0
GetOutNow
Wend
I see we have a convention disagreement between caps and underscores as well. This will complicate documentation should it ever get done.
#121 fancy_pants
Wow, I managed to find all 3 of them! And the 4 of us are the only ones who get the jokes but I think they’re funny.
#136 Bill Grable
I fat fingered an extra “o”, which even a grammar checker won’t catch (apparently), and you blow a gasket and start calling names???? I must have hit a nerve. You have to give us engineers and computer programmers a little slack, we don’t speak English, we speak math and logic.
And if I managed to get an engineering degree and self teach myself to program computers to the extent it helped me amass a small fortune, heck, I’ll take the 67 IQ, and be dumb, rich, good looking and happy. I even have a ride and the wenches detailing it like Garth (in the summer, in the winter the wenches are on hot tub duty).
So go pound sand, Bill.
#152 Lonely Limey
Thanks buddy! Nice to know my back is covered!
#156 AG Sage
More thanks, more nice to know.
Garth on same response: You may have a point in how it should be, but in how it is grammatically AG wins, and that’s what Bill flipped out about. My sin was an extra tiny “o”. But what fun! I might intentionally say “we are all going to loose money from here!” all the time. Hey, that might not be the wrong way to say it.
So – Mr. Turner has been telling you that Waterfront cottages are trouble….maroons like the “BPOE”, of course, won’t think it’s true –
Well – here is a snippet from today’s Vancouver Sun – titled –
“Some Rural Waterfront Properties see Substantial Price Drops”
> Carrie Lightburn, a Royal LePage realtor based in Jaffray in southeastern B.C., knows firsthand how the waterfront market has tanked.
“I’ve lost one customer, for sure, who bought a property on the other side [in the U.S.],” Lightburn said in an interview. “People are definitely looking south.”
Lightburn said the more expensive lakefront properties in her area simply aren’t moving, although prices there haven’t dropped as much as other parts of the interior.
“Nothing has been selling for 12 months. The only big one I know of was in November 2009, and that went for over $1 million. But there’s been nothing since.
“One cabin came on the market two years ago for $879,000. The last price we had was $695,000 and it still hasn’t sold.”
“Some properties have been listed for over two years, but that many owners still refuse to drop their price.”
DOH!!
http://tinyurl.com/4op5q57
Garth, you are WRONG.
The banks ARE conservative.
What else would you call loaning out money with zero risk?
(government backstops everything).
Garth’s thingy took out the less than or greater than symbols in my rework of Mister Obvious’s code. They are still there in Word when I copied them from. For those who follow.
What a steal for 1.125 million. I’m all in! Double down!
#8 InvestorsFriend (Shawn Allen)
i’m all for personal responsibility. that’s why to me both sides (lender and borrower) need to be held accountable.
but why do you let the government decide what is morally acceptable by believing that whatever is legal is ok?
to me, that’s what it means to be ethically challenged. shrugging off questionable behaviour because somebody else told you they won’t arrest you if you do it.
The banks, realtors, govt and any other parasite involved in the exploitation and ruin of peoples futures should be given free “rope” with explicit instructions on how to use it.
These vultures have a moral obligation to provide a service that does not harm their clients.
The “hired” expert who omits or camouflages the truth to sucker a buyer into their web should be held as accountable as the bartender who keeps serving a customer after they are intoxicated.
Funny how these bozos are allowed to run amok flogging their scam unchecked while hosts entertaining guests in their home at Christmas time would be accountable accountable if an impaired guest drove home and got into an accident.
In this sick ass backward twilight zone the moral compass always points down to the common man/woman never up to the crooks rigging the show.
So #8 InvestorsFriend(Shawn Allen) even on days when you are pushing & shoving the little people outta the way in your haste to deposit your investments…
I’d wager these decent folk with a moral compass would still warn you if they saw a piano about to fall on you from a 3 story window.
That’s what morals make people do.
They make em care and look out for each other.
@23 housebuster…
Agreed!
#23 HouseBuster said…..
“There’s no way in hell that that sh!tbox is worth anywhere near $1,125,000. You could find a nicer place in Paris or Madrid for that much…you know… real cities.
———————————————————-
You are right. I could not have said it better myself Housebuster.
Incredibly, those who own property in one of the most outrageously overpriced regions of the entire world seem absolutely dumb-struck to know their very good fortune at this moment in history.
They are just too freaking stupid and full of ego and highbrow fluff to know when to get out of the market and take profits. Too late for most of them sadly. They will learn.
Next time.
I know. I used to live there. I have seen the boom and the bust of Vancouver R/E first-hand. Several times over. I participated in it too.
And a final comment,… I am supremely confident about how this will end for all those Lower Mainland fools who cannot understand how easy it really is to snatch opportunity and wealth from the jaws of certain failure and losses that now loom on the horizon.
I am confident beyond words that market will take a big tumble and wipe out the fortunes and optimism of those too proud and too certain of future financial gains to realize that this funny money game is actually over.
It is finished. The many fools there are still happily blinded by greed and avarice. Too confident to see the reality that is coming with the certainty of a great, fat, angry meteorite.
The problem is that there is just no perspective when you live in a metropolitan community where everyone else is also smitten with exactly the same poisonous vision of the world and the same sense of certainty of immortality despite the odds.
It is a fantasy land like no other but nothing has really changed there. The exact same sentiment existed prior to each and every past crash in that strange land.
Does not anyone learn!
Incredibly, those dreamers have not yet realized that their homes and the wealth they have accrued already put them in the top one percentile of wealth worldwide!
Yet they still think they will get richer yet with no more effort than just delaying the date of sale and waiting for higher prices. Idiots! They are at the literal top of the economic food chain in the global economy and they still refuse to take profits and sell.
How freaking stupid are they anyway? You tell me.
Most of those Vancouver and regional area home owners have never ever lived overseas. They have no real idea of how wealthy they really are in comparison to everyone else on the planet. Some of them even complain about being poor.
OH, How sad!!!!!
They have ZERO perspective. That is why they will be ruined, by the thousands, until prices fall to reflect reality.
And on that sorry day they will wake up and realize that even the Chinese have sold out and gone elsewhere to happier hunting grounds leaving them all alone with empty dreams, million dollar losses and tax liabilities they cannot afford.
Then they might be humbled a little. Then they will understand what wealth really means. You have probably heard the expression “greater risk equals greater reward”.
Did you also understand that the same risk/reward process works inversely too though?…….that risk can also lead to significant losses?
As the market rolls over and teaches those legions the lessons of true wealth (and the lessons of real loss), I feel only disgust at witnessing the acme of greed that has overtaken an entire province and all its culture. I have no sympathy for them any longer.
Bring it on.
You might be a Useful Idiot if….
(ps Stealin’ Harper scored very high on this quiz over on CRUSH – Canadians Rally to unseat Steve Harper).
oooooooooooooooooooooooooooooooo
Watching and listening to Stephen Harper’s bizarre and unnerving speech about anti-Semitism and Israel raises the question as to whether or not the man is mentally fit to be prime minister.
In effect, Harper has taken the position of being Israel’s defender no matter what – in other words, this commitment comes before his duty as prime minister, before his duty to represent Canada’s interests abroad, before his role of elected representative. Harper is a defender of Israel no matter the consequences for Canada. He stated:
“[As] long as I am Prime Minister, whether it is at the United Nations, the Francophonie, or anywhere else, Canada will take that stand whatever the cost. I say this, not just because it is the right thing to do, but because history shows us, and the ideology of the anti-Israeli mob tell us all too well if we listen to it, that those who threaten the existence of the Jewish people are a threat to all of us.”
His dedication to that country supersedes his commitment to his own. That would be disturbing enough if Harper were merely a private citizen. But as prime minister it is beyond the pale and it isn’t much of a stretch to suggest it borders on the betrayal of Canada and certainly Canadian interests. For what does it mean that Harper will defend Israel no matter the consequences for Canada?
http://communities.canada.com/vancouversun/blogs/communityofinterest/archive/2010/11/11/harper-on-israel-is-the-prime-minister-mentally-sound.aspx
o
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Yo. just btw, I think Israel SUCKS big time. They suck suck suck.
–
Why is HarperCon **SO** fanatical about supporting Isreal bombing innocent Palestinian civilians? What’s the secret agenda at work here?
http://www.youtube.com/watch?v=oQ2MY58RunM
5:30 point: Canada does one billion dollars of trade with Israel annually. Most of it military.
… the standard picture is that the U.S.(and by extension Canada) is an honest broker trying to bring together two recalcitrant opponents- Israel and Palestinian Authority.
That’s just a charade.
♥
http://www.democracynow.org/2010/11/30/noam_chomsky_wikileaks_cables_reveal_profound
snip snip: If there were serious negotiations, they would be organized by some neutral party and the U.S. and Israel would be on one side and the world would be on the other side. And that is not an exaggeration.
The issue that’s being debated is a footnote, a minor footnote: expansion of settlements. Of course it’s illegal.
In fact, everything Israel is doing in the West Bank and Gaza is illegal. That hasn’t even been controversial since 1967.
“gay abandon”
hehhe eh ehhe hehehehe
Price doesn’t matter; it’s how you work the monthly payment.
Did I mention SHORT sighted.
Garth – best post yet. Unfortunately, that couple’s story will be told literally thousands of times again in the next several years: homeowners whose appetite for debt has met or even exceeded their recent windfall of bubble-fueled appreciation. Intoxicated by easy winnings and cheered on by a ubiquitous chorus of self-interested dirt pimps, they blew huge sums of money without even bothering to add it up. With all the imprudence of a drunk on a losing streak at 3 am in Vegas, they blew their winnings without ever cashing in their chips. And it’s happening everywhere.
Everytime I hear an “expert,” I don’t know if I should puke or get the shotgun out for some target practice. I still think the US is going to go under and we will soon follow. Even 60 minutes is getting into it:
http://www.youtube.com/watch?v=nP3b0_fnPxQ
and I’m sorry but if people don’t think we are going to see huge price inflation on things we really need like food they have their heads shoved so far up their own arse they can watch themselves swallow. The government keeps devaluing the national currency to “keep exporters competitive”. The price of fuel goes up almost immediately, and it currently is. It then percolates through the system(hahahaha, yea right), but in time everyone will grow wiser and price hikes will occur almost on a par with currency devaluation. Governments will race each other to the bottom. We will see hyperinflation in food, natural gas and other needs, while wants like TV’s and cars deflate faster than promises made by the government of Alberta.
#8 InvestorsFriend [sic]
Work creates GDP. Hunger motivates us to work. Therefore hunger creates GDP.
Work creates GDP. Envy motivates us to work. Therefore envy creates GDP.
This is wonderful!
Yet there is no denying the fact that they are. Why are they? Because people in this country have the free democratic right to choose where they want to live and what they are prepared to pay to live there. Clearly a good many choose to pay more to live in Vancouver rather than those other cities to which they could move and live cheaper.
Thanks for the grammar lesson. Like I said; I come here to learn. Today’s visit was not a waste. ;-)
Heinz Skitzvelvett
Ah I get it now… Heinz Skitzvelvett “The Grammar Nazi” ;-)
#8 InvestorsFriend
You’re right about the Mortgage broker advising whatever they would like to advise. People need to think for themselves, and make their own decisions. Mortgage brokers are the same as Realtors, car salesman, and anyone else who needs to convince you to part with your money. A fool and his money right…
That being said, the unethical entity today is Government meddling/subsidizing of lending via CMHC. Government should not be in the business of underwriting mortgages, or any other loans as they are enabling big banks to be completely reckless in lending, as the risk is on the taxpayer. The artificial lowering of risk ala Gov’t has distorted the RE market badly, and changed the face of Canadian citizen finances. A free market would have had a natural limit on credit supply as the risks would be assessed properly if these big lenders stood to lose on bad loans.
As for smokers and fatties killing themselves with their habits, lets bring in private health care. Without government intervention to keep health care artificially low, these people would have a vested interest (aside from life expectancy) to try and be healthier to keep their costs down. This of course, would only be acceptable if our income taxes were to drop proportionately with the absence of public funding for health.
I see where Garth is coming from. Every time I encounter an individual like yourself, and end up hearing or reading the rubbish that you come up with, I lose more and more faith in my fellow human. All I can really hope for is that you are in no way involved in public decision making, or education of any young people. Sigh.
Houses in the lower Methland are at insane levels. I was in an back and forth with a delusional fellow on the Global Web site comment page. Even after I suggested he do some research on the Case/Shiller index. He list all the classics and some plain silliness
-We have beaches, mountains and fresh air
-rich Asians will keep things afloat
-the Olympics, great advertising for Vancouver
-only way to build wealth
THE BEST WERE
-it different here
-real estate ALWAYS goes up
I was happy to hear this of course as we are selling the family home ASAP. PT Barnum was right, thankfully for me.
Love the Blog
The Kudlow Report: Donald Trump Interview on China (1/19/11)
http://www.youtube.com/watch?v=BmL20eE6iFE&feature=player_embedded
I have decided to buy books that I can only get on my Kindle from now on.
Hey I just bought a house like that in another province for 50K. Vancouver is so over valued and watch it fold when money gets a little more expensive. The only city that survives on speculation, that said the ATM is starting to show a negative balance. Wait until rates go up, ouch.
“It’s not illegal or immoral to sell rope even though people may hang themselves.”
Only if you sell rope outside of a suicide recovery center…
People who get 5/35 get them because they can’t afford anything else, and chances are they are too stupid to realize the danger they put themselves in.
Its like giving a kid $10 to go to the candy store. Chances are he won’t come out with change.
People have no patience anymore. Everybody needs instant gratification.
Not every 5/35 will fail, only the ones that were taken at MAX or (>90% ) of lending limit.
#8 InvestorsFriend (Shawn Allen)
If people want to smoke or eat too much or borrow too much that is up to them. Nothing immoral about selling to them.
_________________________________
It is immoral to heavily market a product or service when its consumption negatively impacts or threatens Canadian society (higher medical costs due to lung cancer from smoking, higher taxes due to CMHC problems).
just watch a good new show on the National
– They are running a multi – part series on retirement.
I hope it opens up alot of peoples eyes.
What alot of the retiree’s are doing is selling their million dollar property and downsizing to the Burb.
Things are much cheaper there and you can get an nicer house for 1/2 or 1/4 of the price in the cities.
Its a good solution because they will automatically have 250,000 to 500,000 in savings after downsizing.
Plus taxes are lower and cost of living, and things in a small town is closer together eliminating parking and car cost.
RE V841546 Just for shits n giggles google street map this dump , it seems they loaded it with lipstick and now attempting to dump it! good luck with that!
I think Dana means ‘Affect’, not ‘Effect’, unless she
is being creative, as in “Wealth Effect” Dont be creative, Dana. It will make your clients *Think*: the worst client is one who can Think. (in all sales)
Mygod these people want Permenancy and Meaning
at Any price.
You can get it Free at the library. (or desktop)
Cheers.
US states study bankruptcy. Would the Fed be next?
http://www.nytimes.com/2011/01/21/business/economy/21bankruptcy.html?_r=2&pagewanted=1&src=busln
I live in a modest condo in the northern Toronto. The recent high water mark for a two bedroom here has been the high $270k range. The last one changed hands in late fall for $277k.
Two weeks ago a nice two-bedroom in my building went on the market, asking price $395k, or about 43% more than the last sale. Whoa, crazy right?
This week I heard that it has already sold, for $360k! That’s 30% over the last sale in this complex?
I have heard of markets climbing a wall of worry, but wow, a 30% move? Yikes!
#8 Investors Friend (Shawn Allen) on 01.20.11 at 11:55 pm
I am not sure it is unethical for a mortgage broker to advertise a legal product like a 35 year amortization.
Shaun you just summed up the problem. If the banks and mortgage broker had ethics the purchaser would not have to use self restraint. It is called taking advantage of your position and misrepresenting the facts to people who do not know better. Easiest thing to do in the world. It is called a Confidence trick, also known as con, scam, or flim flam. People use to go to jail for this. Apparently it is acceptable now a days. Called smart business. A very selfish act. It is all part of Social Darwinism which H, F and C seem to think this way of thinking is normal. Destroying a persons trust is a very serious spiritual harm. Ethics is having a conscious.
Yes, the housing market is out of control and I think the F-straw is about to break the camel’s back, despite all the realtor/media claims otherwise.
We bought a house in Victoria mid 2001 for $365,000 and sold it for $740,000 four years later (which we thought was ubelievable). Thinking the market was too expensive in 2006, we left and came over to Nova Scotia, where our money went a lot further. On the BC Assessment online site, that Victoria house is now assessed at $934,000! As my husband and I keep wondering “but.. they’re still buying.” Until now…
I agree with everything that Garth is saying. It has to end, and I think the realtors know this – they are just keeping on trying to furiously bail out the sinking ship.
Bail away, bail away…but in the end, even they will realise there is a time to abandon the ship!
My employer knows that the graphics object and crystal reports keep me up at night and then I sleep at work so he makes the secretary program graphs, printing and reporting.
let me guess, you’re a programmer or a brain surgeon who also does open heart surgeries.
Population growth usually means GDP growth. And a growing GDP implies money growth.
It used to be that people wrote eachother IOUs to settle trades but these IOUs were not easily tradable. So we created national currencies that everyone recognized.
But our central bankers are not privy to every single transaction yet are asked to inject the right amount of money into the economy. This already tells us that every once in a while we’ll hit a snag. It was determined that this injection would be done through debt creation.
This system is far from perfect because the banks need to create an extra layer of money to finance the interest payments and over the long term banks end up owning everything. So mathematically, our current monetary system is set up to hiccup at some point and need a reset.
If money is allocated efficently and debt does not grow too fast, it takes longer for the system to get out of whack.
Obviously, debt is out of control and misallocation of capital is rampant. The reset is upon us.
the only reason that house is listed over $1 mil is they are selling the grow-op and brothel business with it
This system is far from perfect because the banks need to create an extra layer of money to finance the interest payments and over the long term banks end up owning everything.
———-
We can see this in the US where banks are being propped up and they are now owners of a large amount of real estate.
The reset means that either we let the banks and current top 1% control the wealth and the country becomes a banana republic or that the banks get handcuffed and wealth gets redistributed.
#7 Westcoaster.
Good analogy, as it hits close to home for this ant! Blog dogs, watch out for the ‘reformed grasshopper’ who says he/she is now an ant.
I met one of those last year – said having to go through bankruptcy changed her whole perspective. Funny thing was, she didn’t like my 15 year old furniture, so we’re off to Ashley to buy a new set. The warranty ran out on her 5 year old car, but she still owed 6 grand on it – could this ant countersign a loan so she could get, wait for it, a new SUV!
She even suggested I trade in my paid-for Gixxer for a Harley! That was the last straw. After this winter, that’s one grasshopper who is going to be looking for a new ant hill in which to live.
I had same thing happen… maybe try the ISO-8859-1 entity numbers. less than: & # 60; greater than: & # 6 2;
< >
“…door with the same gay abandon as the First National Slots Bank.”
This use of the word gay in this way is no longer approved in Canada as it induces ‘dire straits’ far in excess of such trivial topics as household debt and real estate excess.
@22 Cellar dweller:
“have the saving strategy of a suicide bomber” – the best and shortest description of today’s old and young generations!
dweller, you made my day. LMAO
and over the long term banks end up owning everything
———-
In theory this would be the case but in practice shareholders only get the crumbs.
The bankers and their friends get the most of it… Bonuses that reduce eps, stock options that dilute the shareholders, loans that flop but never get repaid (i.e. the Donald), IPOs of companies whose owners are cashing out at the top. The list goes on. All this leads to hyper concentration of wealth until the system implodes on itself because of huge misallocation of capital.
The system is this way by design but ironically, most bankers don’t even know it is. Most just know they are getting good pay for little work.
#35 Very entertaining. Thanks.
#76 Well put. Perhaps Shawn would be interested in reading some other perspectives on the idea of ‘spontaneous order’, ‘invisible hand’ and/or ‘cunning reason’. One title that comes to mind is Filthy Lucre by Joseph Heath (Ch. 1). Hell, even Adam Smith’s corollary on Moral Sentiment provides a bit of context for the blind mechanism concept. One work that I have found illuminating is Ha-Joon Chang’s Bad Samaritan.
As for smokers and fatties killing themselves with their habits, lets bring in private health care.
—————
85% of us will end up dying of either cancer, stroke or a heart condition.
What’s more expensive for government… someone dropping dead of a heart attack at 60 or someone living until 85 with all kinds of chronic problems, collecting unfunded CPP and pay-as-you-go OAS?
The solution is more complicated than bringing in private health care.
That’s the problem with the right, they always think that everything is black or white.
Don’t forget that the proposition that precedes “A fool and his money are soon parted” is “A fool and his money were lucky to get together in the first place.”
And for nonplused:
Never trust a guy who can count to 1024 on his fingers.
Everyone else’s mileage may vary.
#35 mostMiserablePlaceon Earth on 01.21.11 at 1:24 am – Hilarious
Nostradamus Le Mad Vlad & Prairie Girl from yesterday – Thanks for the explanation re Naramata.
Devil’s Advocate from yesterday. You assume too much. I spent a few days in ’75 visiting an old friend in Naramata and thoroughly enjoyed it. And, I don’t do Timmy’s and have never set a foot in Starbucks.
Wow! If this goes through, I wouldn’t want to be a public servant with a guaranteed pension, a McMansion, cottage and 5 condos.
http://www.nytimes.com/2011/01/21/business/economy/21bankruptcy.html?_r=3&src=busln
#3 first on 01.20.11 at 11:48 pm
first!
Sorry Charlie…..
What is with the desire to be first? Get a life….it’s just a blog. Damn good one sure….but just a blog…..
Soylent Green wrote:
“Yo. just btw, I think Israel SUCKS big time. They suck suck suck.”
And there you have it. It’s never too far below the surface is it?
Your bile-filled diatribes do nothing but expose you. Garth has axed others for far less. Not sure why you are permitted to use this forum for your bigotted rants.
Piss-off!
I thought about this comment before approving it. I concluded that hating a country is perfectly acceptable for a variety of reasons, the result of its national policies. Hating a race, group or religious or ethnic community is not acceptable since there is no consensus of opinion. Israel is populated by Jews, Arabs and Christians, therefore I did not take this as a slur, and allowed it. — Garth
If the banks and mortgage broker had ethics the purchaser would not have to use self restraint.
——-
Ethics imply a social contract but the social contract is dead.
And ethics, apart from the basic 10 commandments, are different for everyone.
#11 Rich Renter on 01.21.11 at 12:14 am
Surely i make the top 10 and get posted tonight.
Nope…and stop calling me Shirley!!!
61 Betamax
Of course yes, you are right Envy IS wonderful.
Envy pushes us to do better and to want better for our kids. By pushing to do better we constantly improve ourselves and the world. (Would you like to have been born in the year 800? even 1900 Really?)
It’s biological too, those most worthy of envy get more reproduction opportunities. Whether they are Peacocks, lions or humans. God designed it that way.
Here’s a few anecdotes from around Calgary:
-I heard a commercial for Beattie Homes yesterday on the radio. It said if the base price for your new home is lower when it’s finished than when you paid for it, they’ll refund you the difference.
-One builder in Walden set up a sign saying something like “Special price, $286,000 to the next 5 customers.” This was back when there were leaves on the trees. After a month or two the 5 was stroked out and replaced with a 3. And thus it still remains.
-Down the road in Black Diamond, one condo development has a huge sign “Year end blow-out.” They’ve reduced units from $459k to $389k.
-Another builder in Black Diamond used to have a sign saying “Homes starting in the 370’s” Now it’s been covered over and states “Homes starting in the low 300’s.
-I work for a disposal company that has a bin contract with a major builder. Last winter we had maybe 5-10 bins in storage. This winter we have 70-80, or almost half of total. I talked to an exterior installer last week and asked him how business is. He said they usually did 5 houses a month, now they’re lucky to do 2.
According to the authors’ 1997 book, The Fourth Turning, modern history repeats itself every four generations; approximately 80–100 years. The authors of the book mention that the four-cycles always come in the same order. The first one, the High cycle, occurs when a new order or human expansion is developed, replacing the older one. The next cycle is called the Awakening. More spiritual than the previous, this is a time of rebellion against the already established order. The third cycle is known as the Unraveling, when elements of individualism and fragmentation take over society, developing a troubled era which leads directly to the Fourth Turning, an era of crisis dominating society during which a redefinition of its very structure, goals, and purposes is established.
Garth, it must get depressing having to see so many come into your office who are as you eloquently put it, “so screwed”. A part of the wealth building formula is time. Those who are in their forties and beyond and have no significant net worth are also missing the other key component to wealth building – time. It is the part of the wealth building equation that cannot be reversed. The equation is: starting capital x rate of return x time. Take heed all “ye young readers”, get your financial house in order early in life so you don’t find yourselves in Garth’s office one day being told “you’re so screwed”. Time, once lost, is lost forever.
#64 domain
“….. the unethical entity today is Government”
Exactly! But then, is there a public figure who has ever been elected for telling it like it is? Ha! Look what happened to Mr. Turner!
According to the authors’ 1997 book, The Fourth Turning, modern history repeats itself every four generations; approximately 80–100 years.
——
It’s probably also correlated to debt creation and the need for a reset every now and then.
•Jubilee Bible. In the Hebrew Scriptures, a year of rest to be observed by the Israelites every 50th year, during which slaves were to be set free, alienated property restored to the former owners, and the lands left untilled.
Debt jubilee used to be practiced every few decades. So even then, they lost control of their monetary system and accepted this as fact since debt jubilee was put in place to deal with the issue.
Something tells me that it is correlated with human lifespan. Cycles are probably a little longer today because life expectancy has gone up.
High end water front homes in BC getting kicked in the nads!! ouch!!
http://bit.ly/guqarS
Cue Johnny Knoxville here!!
Garth, I thought we were friends…
But it seems you are attempting to classify all mortgage brokers as unethical, money grubbing, people who only put our own personal financial needs in front of all of our clients. Willing to place the mortgage noose around the necks of all the inexperienced first time homebuyers…
Well, having 20 years in the business I really dont believe you can paint us all with that the same brush.
I love how when people are making money during the last 20 years, we are all the best of friends. Clients, realtors, bankers, mortgage brokers and politicians a like.
But now as the light at the end of the tunnel is blowing out like a candle in a hurricane… Everyone starts to point fingers….
Clients point a greedy realtors..
Realtors point at the unethical mortgage brokers.
Mortgage Brokers Point at the Banks
Banks point at the Politicians.
Politicians are trying to sweep the problem under the carpet and hope no one notices…
I think there is enough blame to go around for each and every member of the transaction…
6 months ago, for the first time in my 20 years of brokering mortgages have loss faith the entire global housing market…
Sold my house in May… Now renting…. How does that look, a mortgage broker of 20 years who does not own any real estate ….
But what I think is crazy, is that we as Candians have had so many warning signs of what is coming, but continue to believe the “not in my back yard” stories being spun by the the Government, Banks, Mortgage Brokers, and even the clients themselves..
Its hard to know the just how bad things will get. Some of my frineds continue to shun my apocoliptic views of the housing market ?? They remind me I was predicing this back in 2008, and look it did not drop…
See you were wrong !!! They would remind me..
Not in Southern Ontario… Really ???
The Leaf’s have a better chance of winning the Stanley Cup this year, vs another year of increased values in real estate.
19 Guy/70 Gord – So is it immoral for me to sell my house to a greater fool when I feel the price is only going to go down from here?
So I took Garth’s advice and asked a mortgage broker I know what the average new mortgage looks like these days.
Lo and behold, his answer was that almost everyone is taking a 5/35.
I probed a little more about the reason why. He said in the majority of cases, people could afford more, but with rates so low, they preferred to take the extra cash and invest in the equity market and other things (just like Garth suggests). Is this so bad?
I think it may be false to believe that all people who chose 5/35 mortgage is because it is all they can afford.
..just playing Devil’s Advocate here… (is that trade marked? ..hope I don’t get sued)
That MLS # doen’t exist
I notice the real estate pumpers don’t want to go near the long term stats and charts on house price values that I have been posting. Just avert your eyes, and keep whistling past that graveyard. The truth won’t come true, if you just pretend it does not exist. LOL. Carry on.
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Kaganovitch – thanks for the links. The AToL analyst was mostly right on, I can agree with him. I will download and listen to the Keen .mp3. I’ve like him for years, as a very insightful macro-economist. For trading markets, macro insight won’t help you much, so I tend to ignore economists when they predict the price of this or that will rise or fall this year, or whatever. They are much more accurate at predicting long term trends. Which is why most real market traders don’t pay any attention to economists, and rightfully so. The market can remain irrational longer than you can remain solvent, and all that.
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TheBig Lebowski – “But the future generations are not around to complain, so there is no checks and balances in place. This is why Europe and the western economies are in the predicament they are in today. We have governments who answer to lobbyist groups who pressure government to overspend now kicking the debt can down the road for our children to deal with.”
Exactly. What politician can resist? None.
——————————————————–
Behavioral Finance -“There is plenty of individual stocks that outperformed oil. S&P 500 +1,264% underperformance over the other assets clearly showns that being diversified in too many companies hurts your returns. Additionally S&P index is overweighted on larger companies so you are losing companies who are small and mid cap and are growing much quicker.”
And your point is? Over very long term periods of time, most “individual Stocks” vanish into the mists of time, especially the med/small ones. Failure, takeover, buy-out, whatever. There are a few exceptions of course, like GE and IBM, but not many.
Studies like this do not compare results with active traders, they are based on a long term buy’n’hold strategy. Very few manage to time the market successfully, decade after decade. Maybe you think you will, good luck with that. Let’s be realistic.
I am an active trader and a speculator, and I like to think I am fairly good at it, and I trade only individual miners, mostly. But I doubt over 40 or 100 years I would be able to sustain a rate of % gain any better than that of oil or gold in that study. I’ve done very well, I’m not complaining, but I’m realistic. It also takes a lot of time to do that, how many are able to devote 60 hours a week to trading anyway?
How many traders trade individual stocks these days? Not many, I think. Almost everyone uses ETF’s, as that’s what hot today. There will always be those traders who out-perform the general Indexes, and over long periods, they will always be very few in number. If you like to think you are that elite, don’t let me get in the way of your ego. You should be managing a big Hedge Fund. It’s like any field, the top 10% make 90% of the money, the rest scramble for the crumbs. You seem to assume you will only pick winning stocks and avoid losers. A long time study of pro traders I read recently found they averaged about 55% winning trades, it was strict money management that made the difference, and riding the winners hard. Most people are simply not capable of trading like that, it goes against human psychology.
Saw a great line earlier “House Owers”, sounds about right. Locally, noticing a number of blank highway billboards lately. “Signs” of trouble maybe. Any other local inputs from around The Great White?
#93 Carruthers
“I thought about this comment before approving it. I concluded that hating a country is perfectly acceptable for a variety of reasons, the result of its national policies. Hating a race, group or religious or ethnic community is not acceptable since there is no consensus of opinion. Israel is populated by Jews, Arabs and Christians, therefore I did not take this as a slur, and allowed it”. — Garth
————————————————————
I agree with that sentiment. Here in Canada we have an ongoing love/hate relationship with our neighbor to the South of us. What it really always comes down to though is that we love America and what America stands for…..but we hate the politics, agenda and rhetoric that seems to define those who are in power.
It is no different then to be dissapointed with the policies of a nation like Israel. I think it is fair to criticize that country without introducing overtones that come across sounding like racism or bringing up ugly memories from the past that have nothing at all to do with the present.
As you know from my past comments, I lived for an extended period of time in Israel and spent a great deal of time in Gaza. I loved Israel, the country and sometimes even the stressed-out culture but hated the politics.
Like a lot of others I am disgusted by how those in Gaza have been treated over the years but will not go into those details here.
Suffice to say that it seems incredible to me after all these years that no accomodation could be found for Palestinians and that the condemnation to the pergatory of such extreme poverty is too harsh a sentence when the punishment is meted out to every single member of that society equally instead of to those responsible for unrest.
You can buy a nicer house in Windsor, guess how much: http://www.realtor.ca/propertyDetails.aspx?propertyId=10234470
http://www.vancouversun.com/Debt+fears+overblown+says+mortgage+industry/4131355/story.html
Wow. Stunning, laughable amount of self-serving myopia.
They should remove ‘Accredited’ and ‘Professionals’ from their association name at once.
Garth, did my comment from today disappear? Did I say something worthy of being censored?
You said nothing at all. No comment in the queue. — Garth
I am a huge advocate for selling and getting out of Dodge asap. In fact we did it a couple of years ago and have been renting and it has worked out really well for us financially as we have grown our nest egg significantly.
The only thing that people need to be aware of is something that caught us totally off guard. If you are discharging your mortgage early (before your term is up) you may have to pay something called “interest differential”. Check your mortgage contract in the fine print. It used to be that you had to pay three months of interest to discharge early but now it works differently so that the bank still get’s their pound of flesh from you.
They calculate how much you have paid in interest and subtract it from how much interest you should have paid on the whole term. In our case we were lucky because we had less than two years (of five) left on the mortgage, which still cost us almost $10,000 to discharge early. At the time we were told that there have been people who have had to pay over $40,000 because of the interest differential clause.
If home prices drop as I believe they will, you could still stand to lose a lot more than this – especially if you are mortgage-heavy. But just be aware that you could be on the hook for an unexpected surprise from the bank on closing.
IRD has been the standard for decades. — Garth
The only good mortgage is one that’s paid off. You don’t “own” a home until it is paid off. And then local governments tax you until you are forced to move out and find somewhere cheaper to live. Problem is it is getting harder to find cheaper places to live.
The only good mortgage is tax-deductible. — Garth
#8 shawnallen
First off, envy is what the males who didn’t get the female are left feeling (I’m sure you can relate). As for personable responsibility, how young and immature are you? Your post shows a very inexperienced, naive, and shallow perspective. Come down from upon high and experience the real world. Personable responsibility doesn’t live in an isolated and protected bubble. Have a slice of humble pie.
Mish: talking about Irish bonds: The correct response to that sort of nonsense should be “Irish taxpayers cannot make whole – foreign investors for their piss poor decisions. As a gesture of goodwill, we are prepared to offer 2 cents on the dollar for all debts owed.”
pretty funny
Every Realtor is pumping their own version of BS.
From: Vivian Lee [mailto:[email protected]]
Sent: Wednesday, January 19, 2011 1:10 PM
Subject: 2011 CREB Forecast Summary
2011 CREB Forecast Summary (recap) – “Reading the Tea Leaves”
The key to market recovery in 2011 will be permanent job creation, sufficient to stimulate in-migration/ With little pent up demand from renters, recovery in the first half of the year with be more modest, picking up pace in the later half. Recovery of sales will come to single family homes, closer to the downtown core, followed by condos and single family homes in the outlying towns.
Affordability will be key to market expansion and price increases are not likely until the latter half of 2011, when inventories have eased and demand has recovered. With interest rates not expected to increase, there is little urgency for buyers to move into the market in the first half of the year. Nonetheless, 2011 will offer buyers unprecedented affordability, low interest rates, and a large selection of inventory.
For the first time since 2008, oil patch employees are expecting bonuses and profit share at the end of March 2011, which may translate into a flurry of demand in the mid priced homes. This confidence in the oil patch and improvements in the overall global economy may trigger sales of larger and higher priced homes, prior to an overall rebound in more average priced property.
This will put upward pressure on average prices, but actual price appreciation will require a resurgence of sales in the entry level homes to fuel a sustainable recovery and create a more balanced market. On the upside, better than expected employment numbers in Central Canada may prompt an early boost to interest rates and this may spur buyers who are waiting on the sidelines to jump back into the housing market earlier than anticipated.
Vivian Lee
Million Dollar Club Member
A CIR TOP PRODUCER
“….. the unethical entity today is Government”
————
Define ethical.
More an more people today sound like my daughter who screams “not fair” when she does not get EVERYTHING.
We are over 30 million people will different levels of satiation. I don’t think there exists a black book out there that tells us how to distribute resources efficiently.
In the end, the squeaky wheel gets the grease.
Dana – it won’t “effect” anyone. It will certainly have an effect if it affects them, but the correct use of “effect” and “affect” doesn’t seem to affect, or interest you. So many illiterate and stupid people affecting my mood today. Bum!
# 55 Soylent Green is People
I saw that speech, it was quite a while ago. I did not like it all.
First, he does not have the authority to guarantee that Canada will do whatever it takes at all costs, he is a PM in a minority govt. Any bills would have to pass parliment.
Worries me that the PM is acutally considering sending Canadian troops into another no win situation. No he didnt say that, but “at any cost” implies that too me.
What really worried me the most was how engaged and passionate Harper was. That was probely the best speech I’ve ever heard him give. He spoke with conviction, sincerity etc..
I have yet to seem Harper exhibit the same vigor and passion for the Canadian people/middle class/working poor etc..
Did you say they sold a small property in cuba…
Dam, now there is a property I would love to own.
There is a great place to retire with only a fraction of the cost of living here is canada.
#88 Moneta
That’s the problem with the left, they always think anyone who disagrees with them is from the right. My team vs your team. Red vs blue. And the insanity continues.
Hmmm, Well not really ‘news’, is it? The Bottom Line [CBC]
Watch the video [15 minutes], if you have time. Sorry if this was posted already.
Garth, any thoughts on this vid?
http://www.cbc.ca/money/taxseason/story/2011/01/20/f-retirement-national-panel.html
Spin Doctor #118
That is hilarious! People are getting punted in the downtown Cowtown oilpatch and the realtors have themselves talked into an alternate reality where unemployed people get bonuses anyway. Gotta love their optimism!
Devore on 01.21.11 at 1:24 pm
#88 Moneta
That’s the problem with the right, they always think that everything is black or white.
That’s the problem with the left, they always think anyone who disagrees with them is from the right. My team vs your team. Red vs blue. And the insanity continues.
———-
You make a good point but in Canada:
– Private health care
– No government
– No taxes
– Unfettered right to guns
top the wish list of the right.
#99 Fractional Reserve….
I agree with your equation, however, what is a young person suppose to do when the cost of living, education, health care, transportation, communication etc. in Canadian Society have far outpaced their income.
Take someone born in mid 1970’s, look at the gauntlet of economic events we youngn’s have navigated to get here so far. I am not doubting it is possible to reach ages 25-29 without debt, although not very probable.
Wages are a pittance to the cost of living in Canada compared to 25 years ago.
There is a reason why they have been coined the lost generation. I like to think they will find their way, when they have their say.
ETHICS
Ever since Reagan made his proclamation that “Greed is Good”, the right wing, the corporati, and all the little small/medium entrepeneurs (and their misguided anticipatory socialization, thinking they are on-side with the big boys), have run with this mantra. One only has to look at that very Canadian straight-shooter Kevin O’leary.
Their whole argument is that ethics and morality are out the window. They see themselves as absolute realists. Noone has been able to stop the growth of this view. Challenges to it have been weak, by minor players.
And now you’re seeing it play out to its fullest. Especially in the U.S., where Wall Street and Washington, with the collusion of the 4th estate, are in a state of outright looting of the treasury.
Ultimately, (and I doubt it will happen) people will have to start exercising their opposition to “Greed is Good” at the grassroots level, shaming first their local robber-barons, cheats, and liars – in their own communities, in their towns and cities. If something is wrong, say so, say it out loud, do something. Then, if your newspapers are leaving things out, not saying enough, ignoring issues or not reporting them, call them out on it, start an “anti-XYZ newspaper blog”, do it loudly.
But this will never happen.
So, things will get worse. As the world gets busier, faster, the mantra of “change is the new norm” becomes its own reality, and we don’t have time for activism.
You have to make a choice from 3 options. Become as ruthless and heartless as “they” are and most likely enjoy all the worldly comforts and pleasures that life has to offer, be a silent cog and live with some small security and comfort and don’t get involved, or suffer a life of poverty and possible alienation for your principles.
You only have one life, no second chances. Look around you, in your home, your neighbourhood, city, country, and world. Do you realize that not a single person that you see here on this earth today will be here a hundred years from now? Including you? We will all have died and been replaced.
You make a good point but in Canada:
– Private health care
– No government
– No taxes
– Unfettered right to guns
top the wish list of the right.
——————————
So when a person states a few ideas which focus on these extremes, I think it is fair to assume he is somewhat, leaning to the right just a little.
“V841546, $1,125,000″….
Check it out on Google street view (it’s behind the trees)…nobody is going to buy this place to live it. This is a commercial park…your neighbours would be a metal engraver and laboratory. 10 years ago you wouldn’t walk down that street at night…in fact a lot of people still wouldn’t (only person on a street full of closed business with the occasional person sleeping in the doorway of those businesses). It’s the rich and ruthless developers who buy a place like this, then the place next to it….and before you know it they have 40 condos for sale from $600,000 to $1.5mil on the little piece of land….now that place doesn’t seem so overpriced (it’s pocket change to a developer).
#119 Moneta
“More an more people today sound like my daughter who screams “not fair” when she does not get EVERYTHING”
Good point …. it seems like “Government by the People for the People” has morphed into a pseudo version dedicated to “bailouts” and “handouts” until finally it threatens to blow up. Then, the calls arise (Tea Party anyone?) to “starve the beast” by reducing social “entitlements”, but never “corporate welfare”.
Ultimately, the excesses in spending will likely be spread out to “the many”, so get ready for what Garth has been saying here: asset deflation and cost of living inflation!
#118 Spindoctor…
Thanks for that post you submitted by Vivian Lee. What I found interesting was how she has taken a mix of facts and good analysis and then melded and twisted it into a nonsense conclusion.
She knows the real ramifications going forward yet still plays to the fears while trying to send a message that all is OK and growth in prices will continue. It was really an amazing piece of manipulative and imaginative fluff but unfortunately I believe many people will fall for it.
Guess that is what denial is all about. We want to believe the so-called experts on housing and real estate. We want to think everything is OK even when it is obvious an earthquake is in progress.
I am sure that lady has a steady following. She is after all ….Vivian Lee, a Million Dollar Club Member and a A CIR TOP PRODUCER. She must be right.
I loved this single line from her post. It said it all.
“Nonetheless, 2011 will offer buyers unprecedented affordability, low interest rates, and a large selection of inventory.
She got it right about selection but the suggestion of “unprecedented” affordability had me busting a gut in hysterics because it is just so lame and everyone in this country of ours knows it. Poor Vivian seems to be in a dreamworld all her own.
#105 Dark Sad Monster Bunny,
in one word, yes.
But don’t let that worry you. Morality and ethics cunningly have been segregated from personal advantage or profit, and are expected to have influence only on the conduct of others.
#121 kitchener1 on 01.21.11 at 1:19 pm
What really worried me the most was how engaged and passionate Harper was. That was probely the best speech I’ve ever heard him give. He spoke with conviction, sincerity etc..
——
Harper was passionate because he’s a christian bible thumper who thinks Jesus the jew was the son of god. crazy. We have a religious nut with a poisoned mind for prime minister. Allah help us!
********
Fancy Pants, what? I don’t what you mean by brain surgeon/heart surgeon. I program microcontrollers in C and Windows MFC in C++ with MFC when I have to but Windows programming is really not my thing. I’m more a hardware guy, power electronics, Windows programming is just an evil I have to cope with from time to time so I always have my ears open for someone to help me. What might take an experienced programmer a week, will take me over a month. For me it’s like pulling teeth, so I guess I’m more of a part time dentist!
I thought that the use of the word gay was used in the way of it being blissful. It would be good if people could do like Garth and use it without the sexuality context. Some people use the word to describe something as negative. I do not think that is appropriate.
Thank you Garth for being so gay in your postings on such depressing topics. I learn a lot and like the light tone on serious issues.
#82 Rusty1: “She even suggested I trade in my paid-for Gixxer for a Harley!”
That’s all you needed to say…
http://www.vancouversun.com/business/Some+high+rural+waterfront+properties+substantial+price+drops/4140062/story.html
I’ve said for some time that there is only a TEMPORARY and small amount of rich asians coming to Vancouver. They are rich business owners who received stimulus money from the Government of China during the period of the US financial crisis. They are looking to dump that money offshore away from the Chinese Government for obvious reasons. I know this incoming Chinese stimulus money is temporary because my wife’s brother-in-law works in the provincial government of Guangzhou, China and they are addressing the issue.
Here is a Vancouver Sun article that said rich buyers are going south where house prices are 1/5 of what they are here. Read the article and you’ll see the storm is heading this way. First, vacation and recreational properties such as cabins get dumped. Second, all the excessively leveraged rental income 2nd, 3rd, even 4th properties get dumped. Lastly, principle residences will be sold to pay off the previous 2 groups that went for crap.
Rich people get rich because they know where they are supposed to put to their money, not on over-inflated assests that are ready to explode. Poor people stay poor because they are always one step behind the rich buying what the rich are selling.
#135 mostMiserablePlaceOnEarth
still laughing!!!
@#63 DA
Shut up!
Price drops of more than 50% on rural and island rec properties are showing up.
http://www.vancouversun.com/business/Some+high+rural+waterfront+properties+substantial+price+drops/4140062/story.html
That doesn’t bode well for the bull argument that real estate always goes up.
Pity the fool that bought a year ago.
more and more competition for renters in kits.
three different apt on 8th ave have ”suites for rent”
no nibbles since jan 6 2011 on our suite. most unusual.
renters are becoming rare for us.
BigAl (Original) on 01.21.11 at 1:47 pm
——–
It makes me think of an episode of Big Love when Bill was trying to make a deal with the Natives.
The only way he would get their allegiance was if he opened up and offered something they could use against him.
That’s what is happening right now. Everyone has skeletons in the closet and if they whistle blow, the bones will come falling out.
Starmine earnings momentum indicators show that the TSX sixty earnings are expected to be powered by…..wait for it…………..gold stocks.
The current price swoon in the sector is a god-send. Gold and Oil…..its back to the 70’s eh? Somebody say ‘inflation expectations?’
http://www.theglobeandmail.com/globe-investor/investment-ideas/number-cruncher/searching-sptsx-60-for-earnings-momentum/article1877948/
Dark Sad Monster Bunny on 01.21.11 at 11:52 am
19 Guy/70 Gord – So is it immoral for me to sell my house to a greater fool when I feel the price is only going to go down from here?
—–
Not if you tell the buyers the truth and they laugh in your face ;)
Its all fine if China stays strong. Bottom line. Some people are hedging against China because of a crazy real estate bubble forming there. If that even slightly pops, the cascading global market effects will eventually impact Can R/E. Particularly Vancouver. If China stays strong and there is no “hard landing”, we will see barely a correction. Hard landing = bigger correction than people realize.
#135 = one bang on post.
Sitting here on my Lanai in Maui, I laughed so hard I just about fell onto Ka’anapali Beach. (*no we RENT).
Take a look at Vancouver Sun story I posted on REC property in B.C.
Getting UGLY here in the States – to whit:
“The Phantom 15 Million” –
Taming unemployment starts with solving the mystery of the jobs that were supposed to have been created in the past 10 years but weren’t.
(*might explain why 34 million people are on food stamps here in Estados Unidos – and why I wouldn’t touch RE here in Maui, or anywhere else, with a ten foot pole).
http://tinyurl.com/4u5mmtx
>#33 Geology Joe on 01.21.11 at 1:23 am
You cannot convince me that the Craftsmen Era houses that dot my neighborhood were built by “a house is shelter” oriented people. No chance. Ditto the even older Victorians with massive curved staircases and glowing oak corinthian columns in the living room. Nope, nope, nada.
Visit Pompeii sometime. Especially the house of the high priest near the stadium. He had his own miniature canal running through the house for running model boats on it.
Nothing has changed. Nor will it ever. The previous generation wasn’t magically perfect in comparison to this one. People got burned in the 30s and get house shy and called it shelter in the 60s because it scared them to do otherwise. Absent getting burned, people are house horny and that has been true since we started designing better tents to follow the herd around more comfortably.
Master: As a student it is your duty to be aware of your surrounding such as that grass hopper by your foot.
Student: Master, how is it that you see these things.
Master: Student, how is it that you do not.
I was a sales person at one time. I was told “If they walk in the door, they have the ability to pay, and want what you are selling, if you let them walk out without a signature, kiss your ass goodbye, you are a failure”
the government allowed the pushers to sell the crack… legally. tell me one reason they would not take advantage of this situation? Ethics????? HA HA HA HA HA HA HA AHAAHAHAHAHAH…. you kill me…
Emmediately upon recieving the news, my mortgage broker send me an email, and you guessed it “Get in now before its gone….” was the message…
Busy at work haven’t been able to keep up here.
Could 35 year mortgages potentially be insured by someone else? Like Genworth Financial?
I’m not looking for guesses, someone in the know who knows.
Thanks.
“Canada’s developed ” Do you mean copied? Isn’t our so called made in Canada model the dream to be copied;^)
Did you read this report :
[In 2005, Citigroup global analysis team dubbed the USA a “plutonony” –a top heavy economy where economic growth is powered by and largely consumed by the wealthy few.” The imbalance works fine, as Citigroup analysts see it, though they grant that the United States may be ripe for “labor backlash.
“At the heart of plutonomy is income inequality,” the Citigroup report explained. “Societies that are willilng to tolerate/endorse income inequality, are willing to tolerate/endorse plutonomy. “By Citigroup’s reckoning, only the United States, United Kingdom, and Canada qualify. “We project that the plutonomies…will likely see even more income inequality,disproportionately feeding off a further rise in the profit share in their economies, capitalist-friendly governments, more technology-driven productivity and globalization.”
Ajay Kapur,Niall MacLeod,Narendra Singh, Priscilla Luk,Hao Hong, and Audrey Seybert.”Plutonomy:Buying Luxury,Explaining Global Imbalances,”Global Investigator,October 14,2005.
William Greider, “Come Home America” page 185
A follow-up report, in 2006 asserted, “We think the rich are likely to get even wealthier in the coming years. We like companies that sell to or service the rich–luxury goods,private banks,etc.”
Revisting Plutonomy:The Rich Getting Richer,”Global Investigator,March 5,2006.
=================
…”Barofsky said that “unless and until institutions like Citigroup can be left to suffer the full consequences of their own folly, the prospect of more bailouts will potentially fuel more bad behavior with potentially disastrous results.”
==============================.
http://bailout.propublica.org/entities/96-citigroup
#123 Devore
#88 Moneta
Ha!…They win. Got you guys/gals fighting amongst yourselves again. That’s the problem! Lib or Con…same shit different pile. It all smells the same to me. How ’bout we (citizens) at least clean up some of the pile. It’s getting too stincky for us. Simple, but not easy. Ottawa is turning into a rather large pile.
Ask Garth.
Too much GUV….Too much guv at all levels. For example, we even have ‘unelected’ levels of guv here in Victoria [CRD – Capital Regional District]
Victoria has 13 or 14 municipalities. Ha! The place is run like medieval fiefdoms with the CRD overlord.
“The peasants are revolting.”
“They certainly are. Have you seen them lately. EEWWW!”
Ya, you got it…We (the whole family) have not voted, at any level, in 15 or so years….and will not until there is a ‘none of the above’ choice.
But, all is not lost. We have our lil’ bunker…
– acreage, yup
– secure well water, yup
– genset, yup
– irrigation, yup
– food garden, yup
– mild climate (for Canada), yup
– lifetime supply of wood for heat, yup
– good rapport with neighbours, yup
– other ‘necessities’, yup
– lifetime supply of sno-cones, yup
It’s never too late to make a better decision….
even if you’re married to Dana.
MaxP:
“It’s the rich and ruthless developers who buy a place like this, then the place next to it….and before you know it they have 40 condos for sale from $600,000 to $1.5mil on the little piece of land….now that place doesn’t seem so overpriced (it’s pocket change to a developer).”
—————————————–
I hear what you’re saying Max, but something still doesn’t ‘add up’ (to coin a phrase). I live about a mile from that house and know the area well. It’s almost exclusively commercial & light industrial. It’s definitely not where you’d want to raise your kids. Clearly, any perceived value of this property lies in its zoning.
The Google maps street view is from perhaps 18 months ago. It was obviously a dump until recently. (originally built in 1912). Some might say it still is a dump, but judging from the other pictures on the MLS listing, some ‘much-more-than-necessary’ money has been spent tarting up this oinker.
My question is: What for? It looked perfectly adequate to rent out before these ‘upgrades’. Why on earth does someone pour a lot of time and money into a property that a potential buyer probably only wants to hold?
A bad paint job was probably all that was needed to find a renter for a 100 year old house on a piece of land with commercial and/or industrial potential. I’d say the seller has reduced rather than enhanced the saleability of this property with pointless renovations.
I drove through Kitsilano yesterday, ground zero in the crack shack or mansion game. I wondered what most of those mostly ramshackle places were really worth. Of course I know the answer is always the same–“they’re worth what someone will pay.” But again looking at them, thinking of the bust to come I wondered who would stick by them when the flood waters of unrequited debt rolled in. Lots won’t, methinks.
It’s really not as far from Detroit to Vancouver as most think. In reality you can get there in a heartbeat.
Pardon me if this seems overly dramatic but it reminds me of a tragedy on the highway to Squamish many years ago. A nasty storm washed out the M Creek bridge leaving a precipitous drop to the rocks below. One man managed to stop before going over. He pulled his car off to the side; walked up the road a ways and tried to flag down the oncoming traffic. To the drivers that rainy windswept night he looked like an apparition waving frantically. None stopped and four cars went over the edge killing 9 people.
We rarely heed warnings.
#35
Thanks for the laugh
Reg arb
Remember that airplane that crashed on the Hudson and the flight commuter crash 3407?
After watching this investigative report , I understand why some executives to like to have their own planes . Do they know what we now know with regard to, “pencil wipping” ,illegal parts, outsourcing,(insourcing singapore MRO in Mobile, Alabama) and foreign worker permits within this industry.
….this was a very interesting report.
http://www.pbs.org/wgbh/pages/frontline/flying-cheaper/reporters-notebook/
====================
Boeing cutting 1,100 jobs, citing declining orders for C-17 cargo planesThe Associated Press
. — Dwindling domestic demand for C-17 cargo planes will force Boeing Co. to slash 1,100 jobs at its U.S. plants, most of them in Long Beach, Calif., where the aerospace giant has cut 13,000 jobs since the 1990s, the company said Thursday
==================
plutomony
ego leakage
“Societies that are willilng to tolerate/endorse income inequality, are willing to tolerate/endorse plutonomy. “By Citigroup’s reckoning, only the United States, United Kingdom, and Canada qualify. “We project that the plutonomies…will likely see even more income inequality,disproportionately feeding off a further rise in the profit share in their economies, capitalist-friendly governments, more technology-driven productivity and globalization.”
What happened to all the rich city people lining up to move here?
In our beautiful island county in Ontario there are lots of listings and very few sales. In fact, this week’s paper had no sold signs on any house advertisement.
For the first time in years, we got an agent begging for listings letter, um, I mean free real estate evaluation opportunity in the mail.
It will be interesting to see how many “vacation homes” come up for sale in the next two months.
But it’s different here. Everybody wants to move here.
CALIFORNIA, OSHAWA: REAL ESTATE MADNESS KEEPS ON KEEPIN’ ON
To Mr. and Mrs. Canada and all the ships at sea. Now hear this!
It seems that just everyone here on the wet/left coast, and points east, just seems to LOVE California, believing it to be the origin of just about everything “good” for them.
Could be, depending how one defines the word “good.”
The word “good” accompanied by “…for nothing”, “…and broke”, or “good riddance” definitely suffice right now.
Take a look at this:
“California Declares Fiscal Emergency
Published: Friday, 21 Jan 2011 By: Reuters
Jerry Brown, California’s governor, declared a state of fiscal emergency…to tackle its $25.4 billion budget gap.
Democrat Brown’s declaration follows a similar one made last month by his (Republican governor) predecessor Arnold Schwarzenegger.
Democrats who control the legislature declined to act on Schwarzenegger’s declaration, saying they would instead wait to work on budget matters with Brown…
Brown was sworn in to his third term early this month and has presented lawmakers with a plan to balance the state’s books with $12.5 billion in spending cuts and revenue from tax extensions that voters must first approve.”
So the locals there face service cuts and tax hikes. Is that a harbinger for us? After all isn’t California our start-point of so many of our attitudes?
I sure as heck hope not as all that glisters is NOT gold, including the Golden State.
It’s a sad fact that California’s 2006 real estate bubble helped it get to the sorry-assed point it’s at right now (and the rest of us, too!). Serves ’em (us) right!
Hmm, 2006; that’s a while back now, isn’t it?
Mr. California Real Estate Monitor himself, Dr. Housing Bubble, has this latest zinger from that font of all wisdom and knowledge.
“January 19th, 2011
Southern California housing and the lost decade in prices –Inland Empire median home prices now officially back to 2001 price levels. Orange County median price down 5 percent on an annual basis.
The full 2010 housing data for Southern California sales are in and the results are surprising only to those who think mega billion dollar deficits and high unemployment are good for the economy.
You could have gone to sleep on January 1 of 2010 and waking up today you would have not missed one dollar of price appreciation in housing.
In fact most counties are now showing year-over-year declines as expected. Two counties in the Inland Empire have now entered into a lost decade of nominal home prices.
What we should remember is all of this occurred with the backdrop of unprecedented Federal Reserve intervention and subsidies flung at the housing market…”
Let’s be careful to what sorts of false gods we bow and scrape before, OK?
NOW THIS, brought to us via Garth; Oshawa’s newest (?)Queen of Grammatical Incompetence:
“Subject: Huge Changes to Mortgages Rules That Will Certainly Effect You!
Hello,…”
Hello indeed, you bungling linguist. The word you should have put in your headline is “affect”, in that how it will AFFECT you! Got It?
As for the rest of your presentation, some remedial English grammar lessons would be fine. Also read some good English poetry. “Rime of the Ancient Mariner” is good. It concerns albatrosses and necks; and hot California-type weather! Right up your alley, likely.
IN SUM…
We need higher interest rates like we need higher taxes. But that strong medicine, or in its place, huge price inflation is all that will quell this real estate Kamikaze beast. This beast can also consume the innocent, as well as the guilty remember, if it gets truly out of hand. And it has in sunny Cal.
From the crainially-parched desert denizens of the Inland Empire to a real estate potential hopeful, in Oshawa, have a nice day!
location…Vancouver housing bubble!!!!
Think about this…
My property assessment has gone up an average of 18.71% over the last 7 years. this raise’s my mill rate by the same amount…..
If your assessment increase’s so do your property tax’s.
Per $1000 consider this year 0 of assessments. The first year’s increase is to $1,187, the second $1,409, the third $1,672, the fourth $1985, the fifth year, 2,357, the sixth $2,798, The seventh $3,321, the eight $3,943, the ninth $4,681, the tenth $5,557, the 11th $6,596, 12th $7,831, 13th $92962, the 14th $11,036, the 15th year $13,100, the 16th year is $15,551, the 17th year is 18,561, the 18th year is 21,915, and at 19 years we are looking at 26,015.00 per $1,000 dollars of assessment.
As I currently am assessed at about $12,000 a year that means I will owe $312,180 a year in tax’s on my property when I’m 74 and trying to retire on a fixed income.
So all your intellectual giants try and retire on that property tax base
property tax’s should be based on purchase value for your primary property. If you want to pay a million for your property you should pay a mill rate based on the purchase price. As is because I bought smart and economical for my primary residence, I am expected to cover speculators subsidies in the form of averaged tax prices. That’s corporate welfare and freeloading.
All second, etc investment properties should be treated as investments and taxed as such!
Pissed of taxpayer property owner
Like waving a red cape in front of a bull. ;-)
Yup, it’s happening. Demand is being pulled forward. Move-ups are wanting to beat rising interest rates by making their move, porting over their mortgage and anchoring it at today’s rates before they do rise. And First Time Buyers are wanting to beat the new qualification and lending criteria.
Mulitple offers are starting to become more commonplace again due to this bringing forward of demand amid low inventory levels as so many sellers were holding off until Spring sprang. The early bird gets the worm…
So prices will rise for a bit before they fall. Sorry, I know that isn’t what you want to hear, but I am comfortable calling it a quarters worth out (3 mths) and that it seems is what the market is doing.
Reporting to you live from the trenches
D.A.
Where I live in SW Ontario, that crack shack would be between 95K and 120K.
I was in Van last Sept. I don’t get it.
Something happens to people when their pushed into high density housing.
#104 refinow on 01.21.11 at 11:39 am
same as you, i’ve sold my house and liquidating investment property. renting now, and trying to talk as many friends and clients out of their over leveraged real estate as possible. but it’s near impossible when emotions come into play. i’ve always been a numbers guy so it was easy for me. not so, for the majority of folks out there with less understanding wives, who covet stainless and granite. trust me, when the realturds and mortgage pushers are selling, maybe they’re on to something….
will a typical mortgage broker or banker talk you out of refinancing or buying a home? hell no. how they going to feed their family by turning away business? the only half honest salesman is the independently wealthy one, who isn’t depending on that next commission to put food on da table! In our society, you’re expected to watch out for your own ass! sooner people take responsibility for their actions and stop blaming other “ethically challenged” people, the better. mortgage pushers go through all the numbers and affordability with their clients. if the clients are still to hard headed to realize they are at the limit of what they can afford, then they should be responsible for the consequences. no one was complaining when their houses were going up by 50% a year, why complain now?…cause losers never like to admit fault, they always looks for someone else to blame.
#137 groundzeropat on 01.21.11 at 2:41 pm
I’ve said for some time that there is only a TEMPORARY and small amount of rich asians coming to Vancouver. They are rich business owners who received stimulus money from the Government of China during the period of the US financial crisis.<<<<<<< hate to disagree BUT…no1..rich business owners my ass IMO they are money launderers for the drug trade and if they have "x" amount of dollars they are welcomed with open arms………are they going into permanent retirement??? Rich business owners are usually smart people ,the opportunity for business with the high price of real estate and the average wage scale is not an area anyone with any business savvy would venture into…..in fact most don't, they live in these million dollar palaces with little or no source of income—please explain that to me?
#153 Mister Obvious
Since you live so close, can you report back when/if it sells?
AG Sage #147
Nobody says that human nature isn’t prone to conspicuous consumption. The problem arises when conspicuous consumption is perversely recast as “an investment”.
There is a great difference between being able to buy something and being able to afford it. Just because you can buy something doesn’t mean that you should. If you live in fear of losing one of the incomes needed going to support the house payments, or if a blown furnace blows your house budget for the year, you probably can’t afford your house, even if you were able to buy it.
If you can write the cheque, buy whatever you like and more power to you. If you have to borrow to buy it… think again.
Concerning the deflation-inflation debate (since DSP isn’t here today to explain this much better, I’ll try to present a simple argument)
Many here claim that inflation will dominate in the years to come. As evidence, they point to price increases in the necessities of life (food, fuel, etc.).
To have rampant inflation, money and credit supply have to be massively higher than the goods and services available for purchase.
At the individual level, however, if the necessities of life continuously rise to a point where they consume a large portion of the individuals’ own money supply (i.e., income+credit), there is less money available for non-essentials.
If individuals collectively stop buying non-essentials (i.e., goods and services other than food, transportation and shelter), demand for the latter falls, eventually leading to (in sequential order) : 1) price reductions, 2) staff layoffs, 3) bankruptcies in non-essential goods and services businesses.
Hence, this unabated price escalation in essential goods and services would lead to price drops in non-essentials, followed by job losses and business closures.
If non-essential goods and services represent a majority of the GDP of a country, increasingly high prices in essentials will effectively lead to demand destruction for non-essentials. Businesses that fold and the people they lay-off do not buy more, but less, so GDP would decline, which is recessionary.
Thus the combination of less disposable income and increased unemployment across society due to high prices of essential goods and services is largely deflationary for non-essential goods and services and recessionary for the economy as a whole.
Adding higher taxes to make up for deficits and increased demand for unemployment benefits (to name a few), depressed salaries due to an increase in labour supply, and the tightening of credit (e.g., new mortgage and LOC rules), makes the economic environment more deflationary, not less.
I know some are thinking “printing press” at this point, but that is an issue separate from high food prices, which is the topic of this simple example.
If the above is true, I wonder if a way to protect oneself from high food prices would be by owning shares in food manufacturers and distributors. I don’t know if it is possible to invest in unprocessed food producers themselves, but it would seem a reasonable course of action.
#159 DA–from what i get in e-mails everyday i would have to conclude that you sir, are full of crap
#161 Devils Advocate
I call BS– its been five days since the rules changed, 5 days! and we now have multiple offers etc…\
How many sales since the monday annoucement in your neck of the woods???
Ill talk to my contacts– mortg brokers and RE agent this weekend and report back what they tell me.
Speaking for GTA, with declining sales volume 7 months straight, I dont see enough pent up demand in this area.
here is the catch, if there is a mad rush to buy before the rules change– that will just prove how significant these changes really are. If thats the case, be very worried.
#152 Timing is Everything
Huh? I’m pointing out the folly of the left-right paradigm, and I’m fighting? How do you propose to dislodge this ridiculous method of thinking then?
@ #152 Timing is Everything
Forgot a ‘must have’ for a bunker…
– gravity fed septic system (low maintenance), yup yup
;)
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http://www.cmhc-schl.gc.ca/en/co/buho/buho_003.cfm
IMF and the global elites are meddling in Canada again…will Harper buckle to them? You bet. And IMF will supply the ‘crisis’ on demand.
>Lack of a single regulator could hamper Canada’s ability to respond to a crisis: IMF
International community will question Canada’s commitments to financial stability, Hockin says
Thursday, January 20, 2011
By Megan Harman
The Canadian financial system could lose the confidence of international capital markets unless it moves forward with plans to establish a single national securities regulator, according to Tom Hockin, executive director of the International Monetary Fund, representing Canada and the Caribbean.
Speaking at an Economic Club of Canada event in Toronto on Thursday, Hockin said several international organizations have identified Canada’s fragmented regulatory system as an area of weakness within its financial system.
“International organizations have taken notice of this situation, and are urging us to act,” Hockin said.
The IMF, for instance, has identified the lack of a single regulator in Canada as a potential problem that could hamper Canada’s ability to respond to a crisis, according to Hockin. The IMF has urged Canada to establish a single regulator that operates with an integrated focus on financial stability.
The financial crisis, and particularly the asset-backed commercial paper problems, highlighted Canada’s fragmented regulatory framework as an area of weakness, according to Hockin, since there was no single body that could effectively respond to the crisis.
In the IMF’s perspective, this reveals a “large glaring hole” in the Canadian financial sector, Hockin said. This could mean poor results for Canada in the IMF’s financial sector assessments in the years to come.
Unless Canada takes action, Hockin said it will face poor grades on these assessments of financial stability.
“It’ll mean that the international community will question Canada’s commitments to financial stability,” he said, adding that this could ultimately deter international investors from investing in Canada.
“When they see a big hole in how Canada is run, they back off,” he said.
The Organisation for Economic Co-operation and Development has also expressed concern with Canada’s regulatory system.
“The nation’s capital markets should be more efficiently regulated, notably by establishing a single securities regulator,” the OECD said in a report, quoted by Hockin.
IOSCO has also voiced concerns with the system of 13 securities commissions in Canada, Hockin said.
This type of international criticism is likely to become even more pointed in the aftermath of the financial crisis, he warned.
All countries are facing “a new era of international scrutiny,” Hockin said, and Canada must take steps to improve its image.
“Canada can do better, and we must do better. This is not just a matter of ending international embarrassment. It’s about being competitive, and about being seen to be competitive by international capital markets. It’s about being taken seriously as a place to invest.”
Hockin called on industry practitioners to speak out on this issue and to aggressively push for a national securities regulator.
Timing is Everything on 01.21.11 at 4:13 pm
#123 Devore
#88 Moneta
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Ya well, I guess I lost it. I’m sick of being called a pinko because I believe we need some form of government or being called a commie because I don’t think cutting taxes is going to solve our problems at this point.
I also believe government is out of control but so is corporate America. It’s a parasite thinking that when its developed host keels over and dies, it’ll be able to jump onto a developing one. But the parasite is really millions of germs, and only one needs to find a new host. All the others die with the corpse but they don’t see it yet.
#161 Devil’s Advocate – I totally agree. I think we will see a rise because inventory is still not high and demand will be up so that people can squeak in before the i% rate hikes at years end and the lending changes.
Cashtration: The act of buying a house, which renders the subject financially impotent for an indefinite period of time.
http://www.cnbc.com/id/35525568/Are_Your_Still_a_Victim_of_Cashtration
$1.125mill for that place in van is just the height of insanity. put down the joint dude, you’re smoking way too much of your crop and it’s affecting your judgment. they deserve what they get, with bonehead moves like this.
hey; I’ve got a 12×10 garden shed with 13ft high peaked roof line, lots of head room, windows, probably built better than most houses these days. maybe I should subdivide and list the shed separately ……. $595k….do I hear $600k? Would be suitable as a nice little starter home for some young 20-30 somethings. Tell ya what; I’d even pay to transport to Van if they already have their own lot out there!!!
Vancouver Canuck Hockey Team Captain ‘Clever Trever Linden’ hung up his skates and has sunk his career earnings into …wait for it…..real estate development in Vancouver and Victoria’s CONDO market. Bwahahahahahahahahahahahahahaa …it goes to show the IQ of your average hookey player. Is this fall out from too many small town ass kissings and too many concussions?
Just what this town needs….another newbie real estate developer. Maybe he should have stuck his hand out and done a few hemmeroid cream commercials instead.
He expects to sell his units for in excess of a million …Bwahahahahahahahahahahahah !!!!!! I suppose he thinks his name is going to attract the suckers.
Didn’t Clever Trever see what happened to the famous Olympic village and the cum soaked carpets of the ‘world class’ atheletes quarters? LLLLLOOOOOOOOOOOOOOSSSSSSEEERRRRRRRRRRR !!!!!
Garth and #122 Poor Buffalo farmer
Just to let you know and obviously you’re ignorant about anything about Cuba.
Cuban citizens have NEVER owned property. these people never could have sold anything and brought funds back to Canada.
all homes in Cuba are owned by the State run mafia machine. They squash any dissent and encourage people to squeal on their own neighbours, if anything looks suspicious. Security police are everywhere watching the citizens. everyone (including doctors and lawyers earn $10 US/ month, but they all get 1/4ib coffee, 3 ibs of rice and beans and 1 bar of soap per month. They get free health care in run down hospitals with no supplies.
Sounds like a great place for you to retire Poor B farmer.
you would not be able to own property, and you would live just like the locals…POOR and desperate in a tropical paradise.
They indicated real estate changes hands for cash despite the regime. — Garth
Don’t believe me or not, your prerogative, I really could care less. I could give you real examples but that would kinda blow my identity. I’m just reporting what I’m experiencing. I’m not saying it’s a good thing. Of course my sellers think it is. Buyers? Not so much.
Will the changes significantly change the market. Some will believe what ever they are told and to them that changes everything. It’s always easy to buy; not so of selling.
Is it real? Yes. Is it sustainable? No.
Timing has a lot to do with the outcome of a good raindance. Good luck to you both.
See #168 poco and #169 kitchener1 some people get it. ;-) Again I’m not telling you at all to “buy now or be priced out of the market forever”. I am NOT telling you that. What I am doing is giving you a heads up on what IS happening in the market. Go ahead though look a gift horse in the mouth.
In Dubai, the real estate world is sinking….literally.
http://www.telegraph.co.uk/news/worldnews/middleeast/dubai/8271643/The-World-is-sinking-Dubai-islands-falling-into-the-sea.html
Don’t get me wrong; all hell has not broken loose. All I am saying is the traditional Spring market has started a lot earlier this year. From my perspective anyway. And all I can attribute it to is buyers wanting to avoid the prospect of higher interst rates and or tightened lending rules. All I’m saying…
Booga booga…. lol ;-)
I’ve been hearing that the rich Asians and Italians have been running wild this week. The frenzy is starting folks, buy now or be priced out forever!! F is the puppet master, this guy deserves a metal for manipulating the masses one month at a time, brilliant!
As my pal DA has pointed out, the rush has started folks and it doesn’t look good for the fence sitters, you know how the saying goes so I won’t repeat it or I might be told to shut up.
As others on the ‘net have pointed out, Mikey, the rush is on and the future doesn’t look bright for those who ‘get off the fence.’
While I love my new rental condo – all the finishes, none of the expen$e$ – the place is already falling to pieces. Imaging paying top dollar for a place, only to have it fall apart and then to be worth less than what you paid for it a year later.
Looks like Fraser Valley listings are rising (almost double December totals) and sales are trending lower (note to date sales are 17% below last January). (see http://www.homebuyandsell.com for stats). Anyone have stats for other boards? If so, it would be great if you could post here to give a picture of what is happening in other markets. Thx.
Fraser Valley Home Sales Stats – as of JAN 21, 2011 (13 of 20 Working Days)
JAN 2011 Listings 1707 Sales 499
DEC 2010 Listings 819 Sales 516
JAN 2010 Listings 1853 Sales 601
#139 allisun on 01.21.11 at 2:50 pm
@#63 DA
Shut up!
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HAHA!
I was just seriously thinking of making the same comment – not just for the DA but also for another frequent commenter here. Before I could do it I came to a realization that the opposing views, regardless of how preposterous some are, are exactly what makes this venue so educational.
While reading today’s blog and comments I had a premonition… My gut tells me that the next crisis (or worsening of the current one) will hit due to problems in China, Australia and Canada. But that’s just me – I am *no* expert.
Here’s what the so-called experts think about the global risk 2011: http://www.weforum.org/reports/global-risks-report-2011
#127 Throwstone.
I sympathize with your generation’s future but one major thing you can do at this point in time is to stay clear of assuming a mountain of debt in the form of a house. We are at a watershed moment in history with major asset deflationary forces gathering momentum coupled with price inflationary pressures to give us a unique historical situation, unlike any seen before. Garth has given everyone an excellent reading of the “economic tea leaves” and 2011 will prove him right. It is not just Garth saying this by the way. A respected hedge fund manager I have investments with is calling for some very ominous times ahead of us in 2011. According to his latest report, what is coming down the economic pipes will make 2008 look like a walk in the park.
#170 Devore
#173 Moneta
#123 Devore
#88 Moneta
Moneta – said “I also believe government is out of control but so is corporate America.”
Ahhh, now you’re talking. ‘No limits’ imposed by their owners (citizens and shareholders) on these two monsters (that is how they got to be monsters). Remember, there are limits to everything. If we, the citizens/shareholders, don’t control them…Who? Do good parents not set limits on their children? Does society not set limits on their citizens? Should shareholders not set limits on their corporations? It is up to us. Big Guv and Big Biz are duping us all, by the few.
I bet if you two met eyeball to eyeball, you’d have more in common than not. Actually, you are both right, to a point. But, what is that point (limit)? Good question.
One last point. I’d probably get out and vote for Moneta and Devore over the lot I’ve seen in the last decade. You’d keep each other in check…balance. Plus, I know more about your ideas than I do my councilor, MLA or MP thanks to Garth’s blog. I’m pretty sure you guys would find a compromise that works and works well.
#105 Dark Sad Monster Bunny
19 Guy/70 Gord – So is it immoral for me to sell my house to a greater fool when I feel the price is only going to go down from here?
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You got me there – next time, I’ll have to be more specific.
#83 fancy_pants
Thanks for the tip, but I think I’m not going to try and program Garth’s blog anymore. The thing doesn’t seem to want to execute.
Garth, what are the “appraisals” of some of these properties coming in at that you are talking about in Vancouver and elsewhere.
Who is appaising them and what are the values is much more important and this will give us a clue as to what is really going on.