Juicy

In 1973 I built my first home. Actually I hired a builder and he did it, since I was too busy being an irritating, master-of-the-universe, entrepreneurial, know-it-all prick who wore white shoes. Of course today so much has changed. I wear boots.

The house was a two-story place with aluminum siding on an acre lot outside Toronto. The project cost me $65,421. That was the good news. The bad news was my mortgage was 11.75%. Worse, I couldn’t sell it during a recession two years later without dropping the price. Still worse, interest rates changed, and I was reamed with an IRD that damn near wiped me out.

In short, I lost money, but learned a great deal. One lesson: never, ever put all your eggs in one basket. Especially an illiquid one.

Sadly most people never absorbed that one. Or they forgot. Even the Boomers who staggered through real estate declines in the mid-70s recession, the late-80s crash, the early-90s meltdown, or the 08 panic. You’d think that in return for turning into a flabby, near-sighted, diabetic, halitosic, flaccid, sack of wrinkles, Stones CDs and sex aids you’d at least accumulate the wisdom of the ages. But, nah, ain’t gonna happen. So this year as a Boomer turns 65 almost as often as DA posts here, we are reaping the results.

I mention this because it’s that annoying RRSP time of year when banks are teenage hot to sell you mutual funds so you can retire with a white yacht and a juicy wife who looks 36, just like in the posters in the branch. Sadly, that doesn’t work, either. There is no chick wife fund. I checked.

In fact, mutual funds of any kind are highly unlikely to get most Boomers (or their desperately impoverished children) out of the sinkhole they’re now in. Here are a few facts culled from recent surveys designed to make you feel totally inadequate.

  • Four in 10 Canadians figure they won’t have enough to retire on when they retire. So they won’t.
  • Half of us think we need less than $300,000 to retire on. For 30 years. Pass the weed.
  • Of those people who do have retirement savings (40% of us), half have saved less than $20K in the last five years.
  • About 85% of Boomers say they are not well prepared to stop working.
  • And here’s a keeper from the Canadian Institute of Chartered Accountants (people without enough personality to become economists): the top reason people don’t have enough put away for retirement? “Insufficient funds.” Brilliant.

And why is that?

Here’s another statistic which could explain it: 70% of all Canadian families now own houses. That would suggest most people have decided they can replace financial planning, investing, saving and a post-work strategy, with a mortgage and the myth that they can sell out at the moment the money quits. That may have been true in the inflationary, high-growth decades now past. But in the low-growth deflationary world now upon us, well, fail.

For the past seven months, in the country’s largest markets, house sales have declined.  Victoria was down another 23% in January, Vancouver off 5.4%, Fraser Valley lower by 15%, Toronto 11% and Edmonton 21%. Bucking the trend were Calgary (up 4%) and Skatch (10%) where cabin fever is endemic and antifreeze is considered an aperitif.

And while prices have risen in some of these places (thanks to the magic of real estate board averages), the writing is on the wall. Once that March 29th federal election is behind us, and F’s statue has its erection at CREA (his best ever), there will be an inexorable slide into reality. More listings. Fewer buyers. A paucity of house-horny first-timers. And, if Hosni Mubarak’s camel cavalry gets its way, an oil crisis wiping away equity from the Boomers’ cottages in Muskoka.

My point is simple: Anybody with the bulk of their net worth in a single asset, especially a potentially  illiquid one like a house, is a gambler. Or a fool. Or an insufferable in white loafers.

The world is not turning into a more secure and predictable place. The best defence against the volatility and change to come is a portfolio that’s diversified, tax-smart, balanced between asset classes, pays you and is liquid.

Soon that will be crystal.

206 comments ↓

#1 Devil's Advocate on 02.02.11 at 11:04 pm

My point is simple: Anybody with the bulk of their net worth in a single asset, especially a potentially illiquid one like a house, is a gambler – Garth

Just as is one who chooses to rent in anticipation that house prices will eventually fall that they can better afford one.

#2 librarykaren on 02.02.11 at 11:15 pm

Okay, that was gross. Your use of photograhic metaphor is good…too good. Please stick with fat chicks. Thanks.

#3 Chris B on 02.02.11 at 11:18 pm

Love your blog Garth. Seems like your wonderful words of common sense are falling on kool-aid filled ears these days. Hard to believe there are people running up house prices in Sask when it’s -45C today.

#4 Jsan on 02.02.11 at 11:20 pm

A co-worker told me today how his 20 year old son is in the process of buying a condo. He’s barely been working for a year. It will not be built for a year or so as they haven’t even broke ground on it yet. I said oh, so he’s moving out in a year? His response was No? Ok, so why is he buying it I asked? Too flip was his response.

Is their anyone under the age of 40 who doesn’t believe that all you have to do is buy some real estate, wait a year and than reap the rewards after you sell it? I swear, this 20 to 30 something generation is going to be taken to the cleaners when this mess inevitably turns and they will all be like deers looking in headlights. They have no clue and/or no grasp of the concept that inflated housing always comes crashing back to earth. This probably explains why so many of them are also heavily into online Poker. They are all looking for the easy, get rich quick scheme and we all know how it most often turns out for those types of people.

#5 mid-Ontario on 02.02.11 at 11:25 pm

I am surrounded by two types of boomers.

Those who had to sell in the last 2 years as they could not afford to stay in their house after they retired with next to no savings; the $1200/month P does not go far.

The others figure that their house is worth far more than people are willing to pay and the lightbulb has yet to go off. I cannot broach the Garth world conversation of what is about to happen as previous attempts have fallen on ears that just won’t hear and I don’t want to lose the few friends left.

Good luck to all. They may change the rules to wrangle a little more pension money but inflation and Premier Dad are bent on taking any extra cash from everyone here in Ontario.

Thanks to years of mismanagement through all political colours our Hydro God in Ontario demands a full tithe now or you simply freeze in the dark.

#6 Min in Mission on 02.02.11 at 11:29 pm

“chick wife fund” Yeah, I checked too. No luck here either. Go figure, no truth in advertising, worse than brokers and real estate agents.

#7 prayforcrash on 02.02.11 at 11:29 pm

So you retire at 65 and you’re gonna live for 30 years? A bit selfish isn’t it? I’ll neck myself when I’m 80 before I start making people sick just by looking at me.

#8 Devil's Advocate on 02.02.11 at 11:33 pm

The world is not turning into a more secure and predictable place. – Garth

Tell that to the German Jews of 1939 – 45 or so many persecuted others through the ages. Hell tell it to primitive man who practically every minute of every day, day in and day out struggled to maintain mere existence.

But I agree; we in North America live in a perpetual Disneyland compared to so many others. Can it last? Look at any other civilizations through the ages which have enjoyed comparatively so much at the time; Egyptians, Romans, Mayans to name but a few.

What will your “portfolio that’s diversified, tax-smart, balanced between asset classes” provide you then when we meet a similar fate as they?

No the world is not turning into a more secure and predictable place. And we, obsessively building paper monuments with vast fields of blacktop where we tie up our iron steeds while we whet our appetite for material things built in a far away land we can buy with a fiat currency that chattels our children’s souls, have become indefensibly, fat, lazy and ripe for slaughter. Yes but all that provides such sound opportunity for investment in financial instruments upon which we might more comfortably rely than the land which gives us life.

It’s all a gamble… It’s a game… an unpredictable challenging game… enjoy.

#9 T.O. Bubble Boy on 02.02.11 at 11:33 pm

If your net worth is low (which would be the case for many Canadians with too much debt), it’s not hard to have the majority of that small net worth in a house.

Example: A “typical” 30’s/40’s couple might have a $400,000 house, $300,000 mortgage, and say $60,000 in RRSPs/TSFAs, and a couple of car loans (-$15,000)and some LOC debt for a kitchen reno (-$25,000).

So, they have say $120,000 net worth, 83% of it ($100,000) being in the house.

Sad but true – this is the average Canadian these days!

#10 Devil's Advocate on 02.02.11 at 11:39 pm

… and first my wife and now me. I trust you are paying us royalties for those pictures?

#11 somejerk on 02.02.11 at 11:45 pm

Maybe first?

#12 Maxamillion on 02.02.11 at 11:47 pm

There is no need to worry about not having enough money to retire. The youth in Egypt don’t need to worry about their future. The 47 million Americans living on food stamps don’t need to worry. Stop worrying about rising food and oil prices. The reason not to worry is because your friendly Wall Street banker has earned some of the highest compensation ever recorded. Funny how they almost blew up the world, were bailed out and profit from it all. At least we don’t have to worry about the bankers.

http://online.wsj.com/article/SB10001424052748704124504576118421859347048.html

#13 vreaa on 02.02.11 at 11:50 pm

Disillusion Row, Numbers 1-12

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

Twelve Vancouver RE anecdotes from a single recent thread at vancouvercondo.info, archived as a record of some of the sentiment being expressed at this juncture.
Our housing bubble is at the very least profoundly distracting. Worse, it is scaring away human capital and putting our local economy at risk of implosion.

#14 Your Cat on 02.02.11 at 11:52 pm

Garth, you’ve said in previous posts that one of your cardinal rules is not to be “beholden to anyone”. So how is the renter (in your opinion) not beholden to the landlord? In my opinion, when you rent, you live within stricking distance of the “cat’s paw”. You gamble on whether the landlord is going to jack your rent, or turn your building into condos, or do something else to swat you and your sad existence into oblivion. Is that not being beholden to someone? The way I see it, if you buy what you can truly afford, and work to pay it off as soon as possible, you may not be making a sound investment, but you are working towards not being beholden to a lender or a landlord. You are getting away from the “cat’s paw”.

A mortgage worth 90% of your house at rates you can`t control; property taxes that can change on a single vote; insurance charges you are victim to; maintenance you`re forced to fund; and a market that can wipe away your equity. Home ownership defines obligation. — Garth

#15 Dark Sad Monster Bunny on 02.02.11 at 11:59 pm

Garth – why an IRD penalty when rates rose?

And there is absolutely a chick wife fund. I’ve been contributing for over 25 years!

And at least the hippie dude is buff! (relatively speaking)

#16 Paul on 02.03.11 at 12:00 am

You mentioned in the past about Working Opportunity Fund. A financial planner is trying to get my partner into those for the rrsp tax refund. Could you give a quick explanation of these funds again?

Thanks

Labour-sponsored investment funds require a hefty tax break to convince people to invest, since they often invest in unproven companies with a high risk profile. A general rule is that if you are only attracted to an investment by a tax incentive, walk away. — Garth

#17 Mark on 02.03.11 at 12:02 am

That old geezer in the photo…wasn’t he the janitor at my grade school. Thank god for flora.

#18 Debt's Dark Embrace on 02.03.11 at 12:09 am

Once that March 29th federal election is behind us, and F’s statue has its erection at CREA (his best ever),

I wanna see Flaherty’s statue with the erection.

#19 MadMan on 02.03.11 at 12:09 am

Of the first 10 posts, D.A. takes up three of them… A new personal best ?! That guy is wearing out the scroll wheel on my mouse…

#20 Tkid on 02.03.11 at 12:09 am

Gahhhh … My eyes … My eyes …

#21 Ayn Rand on 02.03.11 at 12:10 am

OMG, Garth, are you diabetic too? Join the club. Let’s talk, I have years of experience. Or were you referring to B. Mulroney? (I am Type 1 however).

BTW it is February and your new book is imminent I hope.

YT

Ayn

#22 Drew on 02.03.11 at 12:14 am

Everyone I know has gotten into real estate. there is literally no one left to buy in my large circle of friends.
except me,, and I am waiting for the correction.

#23 nonplused on 02.03.11 at 12:21 am

There is a way to create your own chick wife fund through basket derivatives.

First, become a trader at a bank and assemble a basket of derivatives in your book that can’t possibly be marked to market by the mid-office. Second, collect obscene bonuses by mismarking the book and taking obscene risks. Third, collect enough obscene bonuses to have $1 million in liquid net worth for every year you want your chick wife to be younger than you. So at 65 you need $29 million in liquid assets to get a 36 year old chick wife. Fourth, write your children out of the will and leave it all to her. That is what she doesn’t spend while you are still alive watching TV while she visits her personal trainer at the gym.

The guy in the bank photo is actually one of the bank traders using the capital in your account to add leverage to his chick wife fund. They just wanted you to see who you were lending your money to.

#24 TryingToGetOutAlive on 02.03.11 at 12:23 am

@ #15
IRD rises as interest rates drop.
because they were making more money from your (higher interest rate) mortgage than they are able to make now lending to someone else. so they make up the difference with the IRD.

as interest rates rise, the IRD drops, but they will usually take 3 months interest as the penalty, whichever is more.

interesting though that garth would have locked into a fixed mortgage back then… 11.75% just sounds insane nowadays.

#25 Chris in Langley on 02.03.11 at 12:26 am

“You’d think that in return for turning into a flabby, near-sighted, diabetic, halitosic, flaccid, sack of wrinkles, Stones CDs and sex aids you’d at least accumulate the wisdom of the ages. But, nah, ain’t gonna happen. So this year as a Boomer turns 65 almost as often as DA posts here, we are reaping the results.”

Garth…you’re killin’ me! But in a very good way of course.

So many superlatives and so little time.

#26 TheBestPlaceOnEarth on 02.03.11 at 12:29 am

If you are comfortable with your due diligence then their is minimal risk in putting all your eggs in one basket. Many many fortunes have been made this way with diversification coming after the fact. Diversification is for people who don’t know what they’re doing/lazy which for many people is the appropriate course of action.

#27 Crazy on 02.03.11 at 12:32 am

Garth,

Do you rent, or own your house?

* Sigh * The stupid question is re-asked. Have all the real estate you want, just keep to around a third of your net worth. — Garth

#28 Chris in Langley on 02.03.11 at 12:33 am

To – MadMan on 02.03.11 at 12:09 am

One day the villiage idiot from Kelowna posted 39 times, no kidding.

Depending on his emotional state, he is good for double digits. The pattern is pretty consistent now.
1. He acts like a nut.
2. He gets reprimanded and pounded on by other posters.
3. He cleans up his act and posts like a semi-normal person. This can last up to several weeks at a time. Lucid behaviour is relatively consistent.
4. He acts like a nut again, and the cycle begins once again.

His nickname is Sybil, but he never catches on because a different personality is reading and writing each time he hits the refresh button.

Ask him about his 50 ish wife who looks 22, see if he’s man enough to back up his bluster by posting a current photo of her.

#29 Devil's Advocate on 02.03.11 at 12:39 am

#19 MadMan on 02.03.11 at 12:09 am
Of the first 10 posts, D.A. takes up three of them… A new personal best ?! That guy is wearing out the scroll wheel on my mouse…

}:-o

It’s a calling

#30 Your Cat on 02.03.11 at 12:40 am

Thanks for the response to my comment Garth. However you didn’t answer my question. How is the renter not beholden to the landlord? In my opinion, the home buyer is definitely beholden to a slew of people – from the lender to the insurer to the tax man… The important distinction here is that if the home buyer has purchased what he or she could afford, and strives to pay it off as soon as possible, then one day hopefully that person is out of striking distance of the “cat’s paw”. The renter on the other hand is always at the mercy and whim of the landlord. If rents are going through the roof across your town or city (because the economy is booming) then good luck just moving to find a cheaper rent with another land lord. The home buyer has a chance of not being beholden to anyone eventually. The renter will be beholden to a landlord forever, without owning a thing (and will have paid off someone else’s mortgage umpteen times in the process). Meow!

#31 boomer62 on 02.03.11 at 12:43 am

Garth, where did you get the photo of Devil’s Advocate?
He (DA) is smiling because there is no seat on his bicycle!

#32 Howdy There on 02.03.11 at 12:44 am

So let’s see,

I agree with Garth on housing, but disagree on other investments. He’s too optimistic on the overall economy.

I have 71% in housing, 14% in RRSP, 6% in non-registered, 6% in cash, and 3% in RESP, and no TFSA (waiting for the crash)

I think Garth would classify me as a basket case.

I live modestly and save well, so don’t fear outliving my savings, even if they are invested conservatively.

I think Garth is living in the ‘old world’ where accounting rules mean something and you can count the non-housing markets to behave. I’m living in a world where I don’t know what the ???? to believe.

#33 Adam in Montreal on 02.03.11 at 12:46 am

You know, even if the banks did have a Chick Wife Fund, the sad truth is that most aging boomer boys wouldn’t have the funds to afford to keep her – including paying for the Viagra, which isn’t covered by most drug plans.

#34 Heinz Skitzvelvett on 02.03.11 at 12:51 am

BMO’s Lifetime Cash Flow ad in high, high rotation on the hockey game broadcast.

The hook: “Get guaranteed monthly payouts for life”

Laughable. Can’t wait to get my $3.11 per month at age 77.

#35 kc on 02.03.11 at 12:53 am

12 Maxamillion on 02.02.11 at 11:47 pm

“Wall Street banker has earned some of the highest compensation ever recorded.”

What else did you expect from EX-Enron employees?

And to the person who mentioned “twisted sister” “not gonna take it” from a day or two back…. POX on your balls!!!! I had that stupid song in my head all day… arrrhg….. LOL

cheers

#36 Concessionman on 02.03.11 at 12:56 am

It’s so nice to be sitting on the fence waiting for Garths Vulch 101 blogs in a few+ years…(while the highly diversified TFSA and RSP Accounts grow…)….good time’s ahead!

#37 wes_coast on 02.03.11 at 12:56 am

#1. D.A. Said : Just as is one who chooses to rent in anticipation that house prices will eventually fall that they can better afford one.


D.A. Is right. Sort of. D.A emphasizes renting as the culprit. Anticipating a fall in prices is the real culprit. Even if prices flatlined right now and for the next 20 years – renting (read: zero downside risk) would make more sense than buying. If you need an emotional status based purchase – get a bimmer (or a hummer if that’s your thing). Its way cheaper than a house. I rent a house for 1500 per month that would cost me 3300 per month to buy with a 5/35 for the privelage of putting a few hundred of that into ‘equity’. Why pay my landlord’s mortgage? Because he charges less than the alternative: RBC (where they call rent interest and refuse to fix my toilet when it breaks).

#38 Patz on 02.03.11 at 12:58 am

Housing continues its imitation of platform diving in the US. Some of the figures are truly astonishing. House price declines since 2007 have now outpaced the Great Depression reaching 26%, slightly more than the 30s (and are still dropping).

The most amazing stat though is that 11% of homes are vacant, that’s just north of 18 million houses. Wanna put that in perspective? That’s roughly twice as many homes as in all of Canada (roughly 9 million)! Speaking of Canada, another comparison: there are 43 million Americans who can not feed themselves without the aid of food stamps, that’s almost 10 million more people than in our whole crib.

The US housing collapse is at the core of their economic pain and it is a whole world of hurt. But we’re gonna be OK, aren’t we? Sure, just ask a realtor.
http://www.cnbc.com/id/41355854

#39 boomer62 on 02.03.11 at 1:01 am

Garth,
What’s the present value of that two storey aluminum sided palace of yours from the 70’s?
Never would have pegged you as a white shoe boy…glad you switched to boots.

Or was it goofy boots…

http://www.urbandictionary.com/define.php?term=goofy%20boots

Cheers!

#40 Crazy on 02.03.11 at 1:01 am

Garth,

From your response, I take it you own your home, and have other “liquid” assets generating income for you. Is that correct? You DO own a home then. Is it mortgaged? Thanks.

#41 Kuwaiti on 02.03.11 at 1:05 am

“So this year as a Boomer turns 65 almost as often as DA posts here..” LOL.

#42 boomer62 on 02.03.11 at 1:05 am

#22 Drew on 02.03.11 at 12:14 am

Get a life, and get new friends.

#43 boomer62 on 02.03.11 at 1:06 am

#26 TheBestPlaceOnEarth on 02.03.11 at 12:29 am

What’s your excuse?

#44 KindaDifferent on 02.03.11 at 1:10 am

I want to start a macho man fund for all the women that would like to leave their rotund belly men but don’t for fear of not having enough moola in retirement. How to market this….mmm…Those who fear to suffer, suffer from fear.

#45 cornstars on 02.03.11 at 1:22 am

If Harper calls an election , he wants to lose this minority then the lib’s win minority everything goes for a [email protected]#$,
and it will ! another election slap chop Harper minority !

Justin T the seal meat is not the agenda !

#46 Soylent Green is People on 02.03.11 at 1:31 am

Speaking of unspeakable old white wrinkled men with unmentionables hanging out….

~o~o~o~o~o~o~o~o~o~o~o~o~o~o~o~

Harper’s Foreign Affairs Minister Lawrence Cannon Lectures Mubarak on turning peaceful protestors into dangerous ones

There’s a certain laugh-out-loud irony to the spectacle of the Canadian government, whose own police thugs beat peaceful protesters in the streets of the nation’s largest city last June, lecturing Egyptian President Hosni Mubarak about the need to make his police take it easy on protesters in the streets of his country’s largest city just now.

Presumably Mubarak is too busy at this moment to point this out to Prime Minister Stephen Harper and his sanctimonious crew, what with his unfortunately initialed National Democratic Party headquarters in Cairo going up in flames, but we can be confident that in the fullness of time someone from the region will.

“The issue remains an Egyptian decision,” the foreign affairs minister told the CBC. “We don’t get involved in, as you know, the internal sovereignty of a country…” Unless, of course, that country’s name happens to be Afghanistan. But never mind that just now…

http://www.rabble.ca/blogs/bloggers/djclimenhaga/2011/01/laugh-out-loud-ironies-dot-cannons-sanctimonious-sermon-mubarak

.
.
.

#47 Bottoms_Up on 02.03.11 at 1:36 am

#7 prayforcrash on 02.02.11 at 11:29 pm
———————————————-
I heard a stat recently that said a woman alive today in her 50’s has a 50% chance of living to 95. Sorry, don’t have the link but thought you’d like to know.

#48 Jeff Smith on 02.03.11 at 1:37 am

>#2 librarykaren on 02.02.11 at 11:15 pm
>Okay, that was gross. Your use of photograhic
>metaphor is good…too good. Please stick with fat
>chicks. Thanks.

I prefer the thin one in the pool the other day.

Garth why do you always have to remind us that we are impoverished boomer’s kids? Do we always have to always face reality? Somebody pass me another bier!

#49 Throwstone on 02.03.11 at 1:38 am

Garth,

I had a tail and 3 million brothers when you built that house!….Back then I was liquid. (still am)

So, what are we youngsters suppose to do?…

I have witnessed the 80’s crash, 90’s meltdown, 08 Panic, what’s next 22% tax increase?…Yeah right like I will stick around for that one….Good luck with that. I love Canada just not that much.

Here is the plan…work, save money, avoid taxes, travel, return….

Work, save money, avoid taxes, travel, return…repeat 20x….find excellent destination to retire at 30 cents on the dollar…enjoy! enjoy! enjoy!

The World is my oyster…not just Canada.

#50 Jeff Smith on 02.03.11 at 1:39 am

>#3 Chris B on 02.02.11 at 11:18 pm
>Love your blog Garth. Seems like your wonderful
>words of common sense are falling on kool-aid filled
>ears these days. Hard to believe there are people
>running up house prices in Sask when it’s -45C today.

Chinese investor people from mainland china.

#51 45north on 02.03.11 at 1:41 am

Your Cat: How is the renter not beholden to the landlord?

sigh

being under obligation for a favor or gift : indebted
http://www.merriam-webster.com/dictionary/beholden

well the renter pays the rent according to the lease he is not under an obligation for a favour or a gift. What favour? True enough the landlord could fail to renew the lease or if there is no lease then he could ask the tenant to leave. I suppose in theory.

I have owned a house for 40 years. If I were a tenant, I sure wouldn’t feel “beholden” to my landlord.

#52 Jeff Smith on 02.03.11 at 1:42 am

>#4 Jsan on 02.02.11 at 11:20 pm

Those 20s/30s with those condos for flipping will just walk away from it when it gets bad. Then they will hop on a plane fly to Ireland, while the contemporary 20s/30s from Ireland will be flying over here. Oh wait, I heard they are already here.

#53 Crash Callaway on 02.03.11 at 1:43 am

Oh those Darn pics.

In the wrestling world you got yer:
Half Nelson,
Full Nelson,
and some might say, yer Father Nelson

In Garth’s world if you magnify the above pic in the area around the handlebars you got yer:
Willie Nelson!

#54 Pat on 02.03.11 at 1:44 am

@ #14 Your Cat,

I normally avoid discussions with dumb people but several beers have lowered my threshold + I’ll keep it short.

The way I see it, it is the landlord and his/her house who is beholden to me.

#55 freedom_2008 on 02.03.11 at 1:49 am

Hi D.A.

I wish that I would have the same shape when I am your age ;-) Could you tell us how did you do it?

#56 Pat on 02.03.11 at 1:50 am

@ #21 Ayn Rand,

Ah, enough with that book already. Don’t you have a library or a bookstore up there in the tundra? Go take a look – thousands of books you haven’t read, some better than Garth’s.

#57 Devore on 02.03.11 at 1:55 am

#1 Devil’s Advocate

Just as is one who chooses to rent in anticipation that house prices will eventually fall that they can better afford one.

Buy now, or be priced out forever?

Even you can do better than that.

#58 Nostradamus Le Mad Vlad on 02.03.11 at 1:58 am


F’s Erection-Free Zone defies the laws of gravity — he’s an airhead-cum-asshat!

“Juicy Lucy. There is no chick wife fund.” — Boomers / Busters can always Dream On, can’t they?

“. . . March 29th federal election . . .” — Not much to choose from, is there? Harper – Iggy – Layton – May – Bouchard . . . what about Jack Daniels, Johnnie Walker, Jim Beam or Milli Vanilli?

Way more fire in their jelly-bellies than the other pile of sleazebags!
*
The Chinese Borg have arrived, so here is a way to keep in touch.

Uranium, lithium and valladium. All good bets for TFSAs.

Bull or Bear Market? Only TPTB know and they ain’t telling.

Paying Attention Protests in Egypt have been largely peaceful, so what are the agents provocateurs or govt. shills doing (other than create riots, violence, flare-ups, etc.)?

Cyclone Panic buying down under.

Destruction Never fear — the IMF is here!

US banks seem to be doing quite well.

#59 Dark Sad Monster Bunny on 02.03.11 at 2:11 am

24 TTGOA – sorry, I must be going blind. I Read Garths
post more than once and I kept seeing “rates rose”
not “rates changed”. Makes sense now, thanks.

#60 Devil's Advocate on 02.03.11 at 2:39 am

#28 Chris in Langley/b> on 02.03.11 at 12:33 am
Ask him about his 50 ish wife who looks 22, see if he’s man enough to back up his bluster by posting a current photo of her.

Chris we went over this once before. You are going to have to stick (pardon the pun) to your 1975 issue of Boobs-R-Us. There is no way I’m posting a picture of my girl that you might find use for that last mail order vial of Viagra.

#61 LB on 02.03.11 at 2:40 am

It is now a renter’s market in my area. Competion is heating up among an ever growing list of empty apartments, condos, suites and houses. There is a plethora of choices available and prospective tenants are being courted with negotiable rents,free heat,water, cable,laundry and a choice of one year or 6 month leases, or month to month basis (unheard of 2 years ago). Along with this, further enticements of one month’s free rent, pets welcomed and gov’t regulated rent increases limited to a maximum of 3%. Renters are definitely in the driver’s seat.

For them, no mortgage interest payments, unlimited property tax and strata fee increases or maintenance, reno and replacement costs or line of credit bondage,and no tying up the majority of their net worth in one (depreciating) asset.

Liberated,debt free and pocketing their cash to work for them, rather than vice-versa, they leave all that to the landlord/owner and instead walk out the door and turn the key, free to engage in a broader, more diverse and secure life, beyond the 4 walls of a high risk financial prison, and yes,beholden to no one.

#62 vomitingdog on 02.03.11 at 2:45 am

Oh yes. Mubarak will pay the West back in spades for not backing him. Cairo will have a long tail.

#63 debtified on 02.03.11 at 2:48 am

#30 Your Cat on 02.03.11 at 12:40 am
Thanks for the response to my comment Garth. However you didn’t answer my question. How is the renter not beholden to the landlord?

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

Garth answered your question. You’re simply too convinced about your own point of view, and blinded by it, to see and understand the answer. You are surrounded by renters in this blog who do not feel “beholden” to their landlord. Millions of people in Europe rent for generations. They live a happy live – beholden to no one. Open your mind.

#64 InvestorsFriend (Shawn Allen) on 02.03.11 at 3:02 am

BUT if you win a huge lottery prise, that still comes with a white yacht and a wife who looks 36 right?

Loto 649 was running that ad constantly… surely it’s true and surely “winning the lottery” is a reasonale retirement strategy, right?

I mean someone’s gotta win, right?

And I mean it’s not like the odds of winning are only 1 in 14 million per draw, right?

Well, even so, if I buy a ticket on every draw I should win one in 14 million tries… Yeah, that should work…

#65 InvestorsFriend (Shawn Allen) on 02.03.11 at 3:05 am

It’s not so much the problem that people have a house as their only financial asset. It’s that most of them still owe a fortune on the castle.

If your house is paid off and you have no savings then start saving like mad.

Otherwise pay that shack off as fast as you can and then start saving.

I don’t recommend adding to your mortgage to invest since that is too much stress and besides the wife will never allow it.

#66 CalgaryBoy on 02.03.11 at 3:49 am

Ew! That is one gross photo!

#67 Monex on 02.03.11 at 3:52 am

Looking at one house that has allergens depending on how bad the allergen is can leave the looker sick for days. Now pile on top of that most people when looking for a new home will make multiple appointments back to back for time sake.

#68 Debt's Dark Embrace on 02.03.11 at 3:55 am

#31 boomer62 on 02.03.11 at 12:43 am

Garth, where did you get the photo of Devil’s Advocate?
He (DA) is smiling because there is no seat on his bicycle!
………………………………………………………………………….
Hahahaha. Boomer62, I’d like to buy you a couple of beers………

#69 Money Talks ydbd on 02.03.11 at 3:59 am

The scent of money wafts over your shoulder, around the nape of your neck, and back up through your nostrals , landing home again into the third eye of your investments. All is clear now.
Liquid Liquid Liquid.
Tendered tears for those who grasp on too tight to the power of MY (illusive) might.
Can’t let go? Than suffer the flow….

Of life without money.

money talks

Money Talks ydbd

#70 betamax on 02.03.11 at 4:42 am

#14 Your Cat: “So how is the renter (in your opinion) not beholden to the landlord? In my opinion, when you rent, you live within stricking distance of the “cat’s paw”.

Nice control fantasy, but anyone can move, even if it takes a while, which is hardly the same as being swatted into “oblivion”. Nor is renting a life sentence: most people rent when younger and buy when older. Circumstances change and markets fluctuate.

But hey, if you’re so sure you have all the advantages, then leverage what you already own and buy more rentals — you can’t lose, right?

Sometimes cats strike out at rottweilers and end up losing a paw.

#71 BigAl (Original) on 02.03.11 at 4:50 am

Why is ‘everyone’ in Real Estate/Housing?
Because we have all watched so many we know who bought from 2007 and back (2, 5, 10-plus years) make a lot of money, some of it realized and cashed in, some of it in equity, from a few thousand to hundreds of thousands.
-E.g. Joe bought a house (after renting all his life), when he was 44, in 2003, in Brampton, with only 5% down. In 2009 (after only 6 years) he was able to sell the Brampton house, and buy a house, paid in full, with cash in Barrie. In only 6 years. After only 6 years of mortgage payments, Joe never has to worry about rent or mortgage again.
-Or the guy in London, Ontario I know who was a struggling Polish immigrant since 1988 when he arrived in Canada. Suddenly he gets a break in 2002 and lands a gov’t job. Has some connections in the mortgage industry and all-of-a-sudden begins to buy run-down homes in the Dundas East area (bad area), ends up with about 8 now. I don’t think he’s too worried about their value right now, because they’re full of renters.

Yes, timing is everything.
But repeat these story thousands of times, with different characters in similar but different scenarios. The lure from these true stories is like the pull of a freakin’ black hole to the high number of people who live cheque-to-cheque. Combine that with the low interest rates and the lure of mortgage payments being equal-to or less-than rent, then you have what we have today – 70% home ownership, camp-outs at the new-home grand openings, etc, etc.

Here’s the way the herd is looking at this:
-Almost everyone in the last 10 plus years has MADE money (or equity – no difference in their minds) from real estate. And here’s these very few people mumbling about market fundamentals, human nature, herd-mentality, etc.

Everyone from the media, to our managers and co-workers at work instill a culture of “stay positive”. Ideological positivity (not to be confused with rational optimism) has become our religion. Truth and fundamentals have nothing to do with success in life, family, and work any more – it’s all about attitude. The glass-church-guy and Tony Robbins culture. The Billy Crystal SNL character “You look mmmarvelous” way of life.

So, while the present euphoria may be rooted in real life examples of recent successes in real estate, the fundamentals supporting that euphoria include the ‘Stepford Wives’ world we all take part in.

(Didn’t that Lehman Bros. CEO always shut down, in a positive rage, any criticism in the boardroom?)

#72 prollywrong on 02.03.11 at 4:55 am

Your Cat –

“How is the renter not beholden to the landlord? The renter on the other hand is always at the mercy and whim of the landlord. If rents are going through the roof across your town or city (because the economy is booming) then good luck just moving to find a cheaper rent with another land lord”

This is not feudal Europe: many cities have rent controls that limit annual allowable rent increases. The renter is not ‘beholden’ (nice Dungeons and Dragons word choice, BTW) to the landlord except on a monthly basis. If the renter is unhappy with something he or she is free to walk, with the possibility of losing a deposit. Try walking on a mortgaged home in a month’s time – it won’t happen, and if it does, you’ll be oozing broken-contract cash.

Your argument can be easily inverted: in order to pay their mortgage, landlords are beholden to the task of finding suitable, responsible tenants who won’t trash the place.

This, then, can be a reciprocal relationship. Tenants want something (mobility, lower housing costs, no debt slavery) and landlords want something else (stability, potential income, the ability to use inane feline references).

Further, you wrote:

The renter will be beholden to a landlord forever, without owning a thing (and will have paid off someone else’s mortgage umpteen times in the process)

This is just dumb. Renters can own any assets they choose, including other real estate. And again, it doesn’t matter if, as renters, they are ‘paying off someone else’s mortgage.’ Why should a renter care what a landlord is doing with the rent? It’s not part of the equation. The equation for a renter is: “Based on my tolerance for debt, what is most cost effective way for me to put a roof over my head at this moment?”

Renters and owners are not aligned against each other in some diabolical fantasy novel-like contest. Owners are not somehow – except in the dimmest and most painfully class conscious minds – superior to renters. It remains a decision for the individual in a particular circumstance at a particular time.

#73 Is this spring gold or bust on 02.03.11 at 7:03 am

If I have no mortgage then I am better off than renting.
I do not care that I pay property taxes, heat, hydro and water. Do you pay less than $600 a month in rent for a nice house.
Its a place to live that all plain and simple.

Right now half my assets are in a house. I guess if R/E falls by half then I am ahead by your 1/3 magic number

When you have no mortgage you are paying the lost opportunity cost on the money buried in equity. Interesting how people don’t get this. — Garth

#74 SquareNinja on 02.03.11 at 7:07 am

I’m glad you didn’t say anything sexist in this post, Garth.

#75 Sail1 on 02.03.11 at 8:08 am

Foreign investors looking to the relative safe haven of Canada have also piled into the condo market. Many of the investors are from Asia and the Middle East.

http://ext01.realnet.ca/pdfs/press_rel/2010_Real_Estate_in_Review_News_Release-
Jan_20_2011.pdf

http://www.thestar.com/business/article/932540–gta-condo-sales-hit-near-record-high

#76 gpoz on 02.03.11 at 8:21 am

Well Garth, I’ve been reading your blog for a long time now, and I have to come to the conclusion that you might be wrong. Your predictions just have not materialized…. even a broken clock is right twice a day. Municipal governments are banking on inflated property values as a clandestine form of increasing tax revenues, without officially increasing taxes, to the point of being fiscally dependent on this ever increasing revenue stream to balance operational budgets. ie. City of Edmonton claims your house went up 10% in value this year! Three are just too many players with vested interests in high house prices for everything to just suddenly fall off a cliff….nobody can afford it!

I never said things would fall off a cliff. Melt, dude. Like when winter ends in Edmonton in June. — Garth

#77 bigrider on 02.03.11 at 8:28 am

Garth says- ” Mutual funds of any kind are unlikely to get boomers out of the sinkhole they are in”

Garth it is disappointing to see you continue to use this forum as a means to continually bash mutual funds. What is going to cause boomers to remain in there sinkholes is there lack of good savings habits and continuous acquisition of debt.

If boomers learned to save aggressively and continuously, even the most expensive mutual fund sold at the counter at a local bank branch would probably do the job.

Now heaven forbid they were “sold” a “better one” from a “mutual fund salesperson” like the likes of Dynamic, Frontstreet or Sprott to name a few.

I think it’s time you bought an ad. — Garth

#78 bigrider on 02.03.11 at 8:52 am

So far all of us predicting doom are continually being proven Wrong

http://www.moneyville.ca/article/932540–gta-condo-sales-hit-near-record-high?bn=1

Condo sales hotter than ever in T.O !

Are you that big a fool? “There are 286 active projects in the GTA, representing 73,953 units — the most of any city in North America. The sheer number of units has had some analysts warning for years that a correction is imminent in the highrise market.” — Garth

#79 Moneta on 02.03.11 at 9:13 am

I am surrounded by two types of boomers.
———-
My father is an engineer who graduated in Quebec in the early 70s. No jobs. He switched into business. High tech. He was one of those who never got a pension. He did well because he was a saver and took calculated risks.

I grew up surrounded by engineers and scientists and got a first hand look at what economic volatility does to household finances despite going through long term growth. Managing volatility makes a the whole difference.

Now I am surrounded by highly educated 60 year olds who got kicked out of the job market when the tech bubble burst.

Boomers in the FIRE economy should go have lunch with those in the tech sector. They’d learn a thing or 2. They’ll need it.

#80 Grrr on 02.03.11 at 9:23 am

Of course renters are beholden to their landlords. So what. We live in a complex society where everyone is interdependent on many other people. The concept of the rugged individualist is just a marketing ploy.

#81 Dino on 02.03.11 at 9:26 am

Garth, I love your blog!!! Check in daily. Im getting a hard-on just thinking about your next book. Can you give me an idea of when its coming out so I don’t end up with some sort of erectile dysfunction.

You just creeped me out. — Garth

#82 Sean on 02.03.11 at 9:37 am

#14 Your Cat;

Being beholden to anyone is a state of mind.

I dumped my house 2 years ago and we have been renting since then. Sold our 1800 sq ft sfh and are now renting a 1700 sq ft end unit th. Our monthly costs have gone down 30%.

I have a good income, $100k + and my wife’s business is doing gangbusters right now. We also watch the overhead in her business extremely close as well.

We are beholden to no one, and our ‘landlord’ basically breathed a sigh of relief by renewing our lease another year and they thanked us by leaving the rent at the current level. They even have a guy come by to cut the grass in the summer and shovel the snow in the winter.

This world of slave and master you speak of will only exist if you let it exist. Do something personally about your situation that takes you forward and the rest will take care of itself.

Of all the people that may laugh saying I’m paying someone else’s mortgage for them, I would be willing to bet that my net worth is growing at a faster clip than most people’s with a house, we are saving and investing the lion’s share of our income. We are late 30’s and early 40’s with a teen and a tween. We will have a minimum 7 figure net worth, liquid , before this decade is out. We have been at this for almost 5 years now.

Not bad for a renter, eh.

#83 Carpe Diem on 02.03.11 at 9:38 am

G-Man, just when I think I have you figured out, you pull another one out of the hat – keep up the awesome work.

Have you ever returned to an area that you haven’t seen in years and couldn’t recognize it – well, I had not returned to the lakeshore area in Etobicoke for about 12 years since we moved north of Toronto. And I tell you, what once lined the waterfront with run down pay by the hour motels – now arose from the ground gleaming 40 story buildings – it seemed like each building had 2000 units – glass units from floor to ceiling, a balcony large enough to place 2 plasticy chairs – and what one building near completion boast that it offers 600 sq.ft or pure joy. Was I in a coma for the past decade, 600sq.ft sounds like my double car garage size – and with a starting price tag of $285,000 – oh yeah – we’re all in a deep load of trouble when this bubble pops.

Just received my yearly mortgage statement and looked it over with glee as our outstanding balance sits at $100K – within 8 years we have knocked down our mortgage by ½… with abit of budgeting and scrapping I hope to be mortgage free within the next 6years. I know Garth preaches that real estate is a bad investment (agree, but that all depends on when you bought, how much skin you have in the game and what true reasons are you in to begin with). I rented for a number of years – and hated every minute of it. Maybe I was just unlucky with the 3 different areas that I rented. Each one had noise issues – tenants who didn’t give a crap about noise – only time I saw my landlord was at the beginning of each month , and always this feeling of not belonging – never painted as I said what for – not mine – never planted because again it all felt temporary – and paying $1,100 each month for the luxury of sitting in a 800sq.ft box – that’s $52,800 dollars that I will never see again but padded the pocket of the landlord who must have been smiling ear to ear as I sheepe paid my dues.

I am glad I bought when I did – today’s prices are just insane – we purchase with a few stress tests – our first test – could only one of us carry the mortgage if the other lost there job – Yes…could we continue to pay our mortgage if rates went to 11%…Yes again – and the most important question – can we plant ourselves and feel comfortable for the next decade if need be – Yes again.

Our goals are coming together – we live in “our”home – doing what we want too – by the time we are mortgage free –we still have 25 years to use the funds that were intended to pay the mortgage and pump it into our retirement. It may not be the best strategy – but it works in our books.

Cheers to all the blog dogs –

#84 oneangryslav2 on 02.03.11 at 9:44 am

@gpoz:

Apropos of your claim: “Municipal governments are banking on inflated property values as a clandestine form of increasing tax revenues, without officially increasing taxes, to the point of being fiscally dependent on this ever increasing revenue stream to balance operational budgets. ie. City of Edmonton claims your house went up 10% in value this year!”

You should really sit yourself down and learn how property tax levels in Canadian cities are assessed. The assessed value of your home, in and of itself, is not the crucial variable in determining how much property tax you pay. Thus, if home price assessment come in 10% higher this year, this DOES NOT NECESSARILY mean that your property tax bill will be 10% higher. Why not? Here’s what the city of Edmonton has to say about how they determine your annual property tax bill (link at the bottom of this post):

Municipal property taxes are affected by two factors:

* The City budget for all services and programs for the year. If the budget increases, property taxes will likely increase. For 2011 the average increase for residential property taxes is about 3.85 per cent.
* If your property’s assessed value changed more or less than the average change in Edmonton, your tax increase will be more or less than the average 3.85 per cent tax increase required for the budget.

2011 average change in residential property values

For the 2011 tax year, the market value for all residential properties increased by an average of about 9 per cent. This does not mean taxes will increase by 9 per cent. The overall municipal property tax requirement is determined in the budget for the year.

In order to determine if you will pay a tax increase more or less than the 3.85 per cent increase required in this year’s budget, compare the per cent change in the assessed value of your home with the average change in residential assessment in the City.

If your property increased less in value compared to the average, your municipal taxes will increase less than the 3.85 per cent average increase in taxes.

If your property increased more in value compared to the average, you can expect an increase in the municipal tax portion of your total property taxes.

http://www.edmonton.ca/for_residents/residential_property_taxes/assessed-property-value.aspx

#85 theletterM on 02.03.11 at 9:45 am

I laughed.
I cried…for all noobs who bought real estate in the last 5 years.
I giggled some more; “There is no chick wife fund. I checked.”

Thanks for the great post, G.

#86 charles on 02.03.11 at 9:48 am

NASA announced the discovery of earth like planets this week. Among the most notable is the planet Wealthy Garth where six figure incomes are the minimum, where even $300K in savings relegates the holder to a level of insignificance, and parking spots are all ten feet wide. On this distant world living on less than $50K a year is unimaginable and anyone who thinks differently is sent to the reality of 21st century Canada.

#87 Onemorething on 02.03.11 at 9:50 am

I never said things would fall off a cliff. Melt, dude. Like when winter ends in Edmonton in June. — Garth

Long and drawn out for a decade. Do you want to be part of it is the ???

The only reason to own a home is if you had 3 and already sold 2. 30% of your net worth in RE max. But lets face it, 1 in 1000 are in that position.

One in 100 Canadians have investible assets of $1 million. Try to aim higher. — Garth

#88 BionicMan on 02.03.11 at 9:55 am

Condo sales in Toronto hit near record high! You guys couldn’t predict the sun rise. Timing is everything in the market. I could easily say that the stock market will go down 15% in the future, and it probably will some time. I just have to wait long enough for it to happen and then claim that I predicted it. The only greater fools are those that are sitting here predicting that the market will go down. Guess what? You are all wrong. Had a listened to Garth I would have missed out on $100,000 increase in my houses value. Don’t bet against the trend until theres some evidence that the trend has changed.

Freehold home sales sunk. In the last 11 years, 2010 ranked 10th. A condo is the new Nortel. — Garth

#89 AACI-Okanagan on 02.03.11 at 9:55 am

A mortgage worth 90% of your house at rates you can`t control; property taxes that can change on a single vote; insurance charges you are victim to; maintenance you`re forced to fund; and a market that can wipe away your equity. Home ownership defines obligation. — Garth

I like to call it “pride in ownership”. I always maintain that beating the rent man is the way to go. People should treat real estate for what it is, a home, and think of it as a long term investment. It doesn’t mean I support someone going out and buying something outside of their means so they can keep up with the Jones. Real estate values will bounce back, they always do. People who bought at the peak of the early 90’s boom were crying the blues for 5 +/- years after, well they are sure smiling now and even if values drop another 20% they are still sitting pretty good. If you think that you are going to move in the next 1-5 years, then yes, buying real estate could be a gamble, but if you plan on staying where you are for 10+ years, then buy, just remember the golden rule, “sell in the spring and buy in the fall” and stay within your means!

#90 Tom from Mississauga on 02.03.11 at 10:10 am

Hi Garth
Do you have a snail mail address?

Are you a lawyer? — Garth

#91 Jake on 02.03.11 at 10:12 am

Awesome… when I retire, if all I have left is only enough to buy some clothes or a bicycle with flowers on the handle bar… guess what I’d do.

#92 AACI-Okanagan on 02.03.11 at 10:18 am

I never said things would fall off a cliff. Melt, dude. Like when winter ends in Edmonton in June. — Garth

ha ha, good one, and that is why homes in Victoria/Vancouver will always be worth way more than homes in Edmonton

Duh. — Garth

#93 Marty on 02.03.11 at 10:25 am

“Bucking the trend were Calgary (up 4%) and Skatch (10%)”

If that’s for the month of January, I’m willing to bet that’s due to F’s announcement of reducing mortgages to 30 years, but waiting until March 18th in order to implement it. That will pull what remains of the demand forward (foolishly I might add) before the March 18th deadline.

“Once that March 29th federal election is behind us”

I’m not aware of any official election announcement, but there is speculation they could pick that date. If that’s their timeline, then I can see why they picked the March 18th deadline to change the mortgage rules. This way, they could claim that “the housing market’s still going strong” under their governance while they’re vying for re-election, even though they’ve just pulled forward the demand for housing.

#94 Oasis on 02.03.11 at 10:37 am

aren’t things wonderful?

Egypt Violence Escalates After Gunfire Assault…
Obama response draws criticism in Israel…
Egyptian army starts rounding up journalists…
Worries Mount Over Possible Suez Canal Disruptions…
UN to evacuate staff…
Muslim Brotherhood wants end to Egypt-Israeli peace deal…
World food prices reach new record…
Oil breaks through $103…

can’t wait until the real fun starts.

#95 boomer62 on 02.03.11 at 10:39 am

#68 Debt’s Dark Embrace on 02.03.11 at 3:55 am

Cheers, anytime….a Keith’s with PEI mussels, fresh bagette and alfredo sauce – please.

Alas, where would this sorry, pathetic blog be without the Devil’s Advocate?

#96 GTA house hunter ? on 02.03.11 at 10:52 am

Garth,I have been looking for places in Brampton and Mississauga and that too very hard.There seems to be no drop in price.On the contrary it has increased marginally.Also the difference between renting and owning seems to just an odd $100-$150 per month.Do you think things could change drastically post March?

Advice: stop looking for six months. — Garth

#97 boomer62 on 02.03.11 at 10:56 am

#79 Dino on 02.03.11 at 9:26 am

Go back to Bedrock an.

#98 TaxHaven on 02.03.11 at 11:07 am

All is sunshine, lollipops and rainbows!

Vancouver Sun has not one but TWO happy headlines on the front page today:

“Most Canadians say their finances are in good shape”
http://www.vancouversun.com/business/Most+Canadians+their+finances+good+shape/4216726/story.html

—and—

“Metro Vancouver housing market balanced in January; demand rising” http://www.vancouversun.com/business/Region+housing+market+balanced+January+despite+signs+sellers+market/4212643/story.html

Oh. And perhaps more importantly for the masses, “Premier Campbell appoints task force to review sled dog deaths”.

Without Vision, the People Perish….

#99 Jeff Smith on 02.03.11 at 11:07 am

Unbelievable, the government has actually done something nice for Canadians after all. Just when I thought Harpie has no hope whatsoever, he totally redeemed himself.

http://cnews.canoe.ca/CNEWS/Politics/2011/02/02/17131346.html

#100 Devil's Advocate on 02.03.11 at 11:16 am

A mortgage worth 90% of your house at rates you can`t control; property taxes that can change on a single vote; insurance charges you are victim to; maintenance you`re forced to fund; and a market that can wipe away your equity. Home ownership defines obligation. — Garth

All very good points Garth. All equally as applicable to mere citizenship as well let alone investments be they financial or in land. It would be hypocritical to use that logic against real estate in favour of other “investments” for indeed none are above “risk”. I would suggest though that those insurance and maintenance costs you speak of pertain to the structure built upon the land which is the real investment and even those insurance and maintenance costs are at least controllable by the owner.

#37 wes_coast on 02.03.11 at 12:56 am

I rent a house for 1500 per month that would cost me 3300 per month to buy with a 5/35 for the privelage of putting a few hundred of that into ‘equity’. Why pay my landlord’s mortgage? Because he charges less than the alternative: RBC (where they call rent interest and refuse to fix my toilet when it breaks).

Enjoy it while it lasts. Economics dictate it will not.

#57 Devore on 02.03.11 at 1:55 am

#1 Devil’s Advocate
Just as is one who chooses to rent in anticipation that house prices will eventually fall that they can better afford one.
Buy now, or be priced out forever?
Even you can do better than that.

No Devore, no I can’t. It was not at all parallel to a “Buy now, or be priced out forever” comment, quite the opposite. It was rather similar to your effort to debunk the notion.

#101 Devil's Advocate on 02.03.11 at 11:22 am

A mortgage worth 90% of your house at rates you can`t control; property taxes that can change on a single vote; insurance charges you are victim to; maintenance you`re forced to fund; and a market that can wipe away your equity. Home ownership defines obligation. — Garth

All very good points Garth. All equally as applicable to mere citizenship as well let alone investments be they financial or in land. It would be hypocritical to use that logic against real estate in favour of other “investments” for indeed none are above “risk”. I would suggest though that those insurance and maintenance costs you speak of pertain to the structure built upon the lan,d the land being the real investment. And even those insurance and maintenance costs which insure the structure and not so much the real investment in the land are at least controllable by the owner.

#37 wes_coast on 02.03.11 at 12:56 am

I rent a house for 1500 per month that would cost me 3300 per month to buy with a 5/35 for the privelage of putting a few hundred of that into ‘equity’. Why pay my landlord’s mortgage? Because he charges less than the alternative: RBC (where they call rent interest and refuse to fix my toilet when it breaks).

Enjoy it while it lasts. Economics dictate that it won’t.

#57 Devore on 02.03.11 at 1:55 am

#1 Devil’s Advocate
Just as is one who chooses to rent in anticipation that house prices will eventually fall that they can better afford one.
Buy now, or be priced out forever?
Even you can do better than that.

No Devore, no I can’t. It was not at all parallel to a “Buy now, or be priced out forever” quite the opposite. It was rather similar to your effort to debunk the notion but to the contrary.

#102 Devil's Advocate on 02.03.11 at 11:24 am

There is a reason it is called “real” “estate”.

#103 mousey on 02.03.11 at 11:40 am

Update from Vancouver westside: almost all of the older homes recently sold have the orange fencing around them – 3 in just the two blocks on either side of our house. The orange fencing is napalm for the older Vancouver home. Some of these houses are well past their prime, so update costs would not be justified, but many are lovely and just in need of some tender loving care. As I drove by about a dozen of these orange fenced houses on my commute home, I thought I should compile a little photo montage, as a keepsake for Vancouver. I’m not against change or the colour orange(well ok, sometimes I am) but the new improved houses being built are mostly butt ugly. Is there a catalogue of ugly architechture out there? And is it given to those building million dollar plus homes in Vancouver’s west side?

On the issue of listings and sales, on an anecdotal basis, the increase in for sale signs is noticeable, but the MLS listings for houses under 1.5 million (which is what I look at) are still pretty anemic – hovering at about 45-50. Most of the listings in this price range are older bungalows, tear down shacks (advertised as “mostly liveable”) or have some location issue like being on a busy street. There are many properties languishing – for example the three “green” contemporary designer homes on the corner of Cambie and 33rd. I believe they are all priced over 1.5 million, but I swear they’ve been for sale for almost a year – no takers Asian or otherwise. Why not? If a lot goes for 1.6 million in Douglas Park, why aren’t these houses going like hotcakes?

Finally, does anybody have any updates on sales in the Olympic Village? Is there anything “changing” or “new” to take the catch phrases from last year’s ad campaign?

#104 Junius on 02.03.11 at 11:41 am

#99 Jeff Smith,

I too was shocked by this announcement. I will give Steven Harper credit if he does reverse this absurd decision of the CRTC.

However one thing is now certain…..an election is coming.

#105 Crazy on 02.03.11 at 11:43 am

Will this support downtown Toronto condo prices?

http://www.thestar.com/news/article/932475–details-of-toronto-s-aquarium-are-massive?bn=1

#106 grantmi on 02.03.11 at 11:48 am

Here’s some juicy stats that the Fraser Valley Real Estate board likes to hide!!

http://bit.ly/eKk82o

Total units sales for 2010 year end are officially down 30% from the peak in 2005.

Low, Low rates and the 2010 Olympics rent-my-house out thingy likely help cause a spike in 2009!

But the slope is obvious! We’re heading down, down, down!

#107 kitchener1 on 02.03.11 at 11:50 am

The biggest problem in our economy is that boomers will not retire when they hit 65.

This will become a mainstream issue in about 2-3 years out.

Thats what the riots were about in France, raising the retirement age meant another 3 years of unemployment for Frances youth. The boomers thinks its all good, but in the end they are taking away jobs from their grandkids and kids. Sad

As for the election, Harper is going to lose seats, a lot of them. He won many seats with a margin of under 2000 votes in a election that had one of the lowest turnouts ever.

Libs/NDP are going to offer some real nice CPP ramp up’s in their platform, the boomers will vote them in, election turnout is going to be huge this time around.

#108 Fuzzy on 02.03.11 at 12:03 pm

Love the comment on RRSP and how banks sleazily advertise them. Speaking of which, I just sold my last mutual fund. For some reason, RBC decided to make a well-diversified, strong performing (for once) monthly income oriented mutual fund no longer RRSP eligible. Even though I bought some as recently as a year ago.

Fine, EFF-YOU RBC and your pathetic mutual funds. I found an ETF that is nearly identical (with 1/3 the fee). Be-bye, now all my RRSP holdings (and TFSA for that matter) are ETFs.

#109 Devil's Advocate on 02.03.11 at 12:05 pm

“Some people have claimed that the word real in this sense is descended (like French royal and Spanish real) from the Latin word for ‘king’. In the feudal system (which has left many traces in the common law) the king was the owner of all land, and everyone who occupied land paid him rent directly or indirectly (through lords who in turn paid the king), in cash, goods or services (including military service). Property tax, paid to the state, can be seen as a relic of that system, as is the term fee simple. However, this derivation of real is a misconception.” http://en.wikipedia.org/wiki/Real_estate

And so, as it once was there is no reason to believe that it will never again be for while history may not repeat it certainly does ryhme. These are foundational roots in our social culture; habits that are hard to break unto themselves further engrained by the fundamental necessity of the land to our very existence.

Argue against it as you may… do you really want to return to those feudal times?

Think. Are your motives to “rent” yours or are they of anothers construct? Are you being “herded” (shepple)?

And of the wealth that has been lost in this recent orgy of price capitulation that followed the real estate feast… who are the beneficiaries? Who is doing who?

Want to talk sinister plot? (Introduce Twilight Zone theme music here)…

But I’m just thowing some wild thoughts out there. Do with them as you wish.

};-)

A.D.D.D.A.

#110 Stevermt on 02.03.11 at 12:12 pm

#14 Your Cat..
Well next month you can be in a different house or appt. in another neighbourhood…exciting…change of scenery is good for everyone. And you can do it quickly unlike the potential of being stuck in a house unable to sell.

#111 boomer62 on 02.03.11 at 12:12 pm

#99 Jeff Smith on 02.03.11 at 11:07 am

Dude, government intervention in the market place is never a good thing. All utlities invoice for both fixed and variable costs…the rest is political nonsense.

#112 Timing is Everything on 02.03.11 at 12:13 pm

The $1 million table at this casino…..

‘Private trading on the rise’

“The catch? You often need as much as $1 million in liquid assets for a seat at the table.
SharesPost is one such exchange. Since launching in mid-2009, the exchange allows its 50,000 members to bid for shares in 150 companies worth some $400 million.” [CBC]

http://www.cbc.ca/money/story/2011/02/03/f-private-trading.html

#113 Stevermt on 02.03.11 at 12:24 pm

#8,29 Devils Advocate, #19 MadMan
DA I liked your #8 post, some days I ponder the same ideas, but we know we have to keep playing the game. Do you know when disneyland closes?
Also you take a beating and keep on ticking, while maintaing a good attitude especially to others on this blog..good on ya.

#114 Devil's Advocate on 02.03.11 at 12:30 pm

Truth is… we all rent. Owners effectively rent from
The Crown. Owners are land “Lords” who merely have bestowed upon them by the crown more rights and privileges, which the Crown can revoke at its whim and fancy. But that be the case on all matters under the Crown… all matters.

#115 CrowdedElevatorFartz on 02.03.11 at 12:32 pm

Wow ! Devil’s Advocate is on a roll !
I want to be a real estate agent so I can sit in my home office and do nothing all day but read blogs and write rebuttals.
What a life. He’s almost semi retired.

#116 Devil's Advocate on 02.03.11 at 12:40 pm

And the truth is; the State (Crown) has a vested interest in an indebted, subservient, immobile populace as is defined by a mortgaged landowner. Such a populace is representative of reliable tax paying, little worker bees.

};-)

A.D.D.D.A.

#117 Chris no longer in England on 02.03.11 at 12:41 pm

I spoke to my vet last night on the phone. We have a realtor in common (she bought, I rented). She reported a conversation with this realtor about the state of the market, which she knows I believe to be deflating. Au contraire – according to our realtor. Things are looking really good as prices are going up and more people are taking advantage of low interest rates in order to buy. Well that’s what she says, although it doesn’t seem to be true around here.

My vet reported this gem to me because she is worried I am doing the wrong thing by waiting for prices to go down. Well being a foreign know-it-all I told her prices were up because sellers were holding properties back in the hope of higher prices in the spring, and that anyone ‘taking advantage’ of current low interest rates in order to pay a high price is an idiot! Oh dear, I have just contradicted a well-known local real estate professional with over 30 years experience.

Silly English Twit.

#118 Junius on 02.03.11 at 12:47 pm

#103 mousey,

Thanks for the anecdotes. Interesting.

The Olympic Village is supposed to relaunch this month with a new sales strategy and new pricing. However rumours are that a large developer has made a bid to buy up the project. In return they would get concessions on land around the Rogers Arena and BC Place area. I don’t have an update on those rumours. We should see something shortly either on the new sales plan or the rumour.

Meanwhile I drove through the Village yesterday. It is so empty it is unbelievable. The new Legacy liquor store is massive and has no customers. I have been told by a third party that they don’t have to pay rent until the London Drugs is completed which looks a long way off because they aren’t even working on it. Out of mind but certainly not out of sight if you go through it.

#119 SAD on 02.03.11 at 12:53 pm

Nice little article summing up F’s social engineering and tinkering with qualification rules. Stealing from the future. Also covered up the median household income problem.
Good move F. Playing around since 2003.
http://www.financialpost.com/news/Mortgage+changes+will+bite/4123270/story.html

#120 It's Time on 02.03.11 at 1:01 pm

No sub-prime in Canada ???…..Yeah right !
Check it out…

http://www.antirent.com/

It’s Time….

#121 canali on 02.03.11 at 1:12 pm

vancouver still under RE porn influence with rising demand….this from Vancouver Sun:
http://www.vancouversun.com/business/Region+housing+market+balanced+January+despite+signs+sellers+market/4212643/story.html

#122 canali on 02.03.11 at 1:16 pm

but victoria’s prices tumble a bit….some interesting comments too, ie that Victoria is not popular with asian investors as is Van, Van east or Richmond….
http://www.vancouversun.com/sports/Average+house+price+Greater+Victoria+tumbles/4210096/story.html

#123 Roial1 on 02.03.11 at 1:18 pm

54 Pat on 02.03.11 at 1:44 am
@ #14 Your Cat,

I normally avoid discussions with dumb people but several beers have lowered my threshold + I’ll keep it short.

The way I see it, it is the landlord and his/her house who is beholden to me.

As a landlord I can only say—– RIGHT ON!

But don’t call me to fix your toilet at 3am.

I turn OFF my phone.

#124 AG Sage on 02.03.11 at 1:23 pm

>#96 GTA house hunter ? on 02.03.11 at 10:5
>Advice: stop looking for six months. — Garth

Best. Advice. Ever.

Vancouver-wise, prices will continue to rise for Feb and April because we are reaching zero growth year on year and those were exceptionally high priced months. April 2010 was the peak (so far) according to the Van Board’s Index. But after April it will be like this guy if he lost his brakes.

And to all those grossed out by the old guy. A, he will probably outlive you and B, you should hope to look so good at even ten years younger than him. I give him serious kudos for not giving a shit what anyone thinks of him. Talk about not moving with the herd. This guy doesn’t even acknowledge the herd.

#125 Bailing in BC on 02.03.11 at 1:31 pm

#91 Jake.

Do us all a favour and buy some clothes!

#126 Robert Dudek on 02.03.11 at 1:32 pm

Renters are “beholden” to their landlord in the same way that a car renter is “beholden” to the car rental company.

That is to say, he/she isn’t. It’s simply a contract between two parties of a finite length of time.

#127 Kris on 02.03.11 at 1:36 pm

Halitosic?

Stop, I’m going to pee my pants!

#128 BigAl (Original) on 02.03.11 at 1:43 pm

#81 Dino on 02.03.11 at 9:26 am
Garth, I love your blog!!! Check in daily. Im getting a hard-on just thinking about your next book. Can you give me an idea of when its coming out so I don’t end up with some sort of erectile dysfunction.

You just creeped me out. — Garth
=======================================

Ewwww.
(no offence or comment on GT’s appearance, but really…ewww)

#129 race against time on 02.03.11 at 1:47 pm

Success!!

Talked with the in-laws last night. After 3 months of sit down meetings, informative emails laden with graphs and charts, links to the less offensive bits of Garth’s blog (they don’t have the sense of humour), and multiple phone calls, they have agreed to list!!

Apparently repetition works.

Now they are putting their 550K town home on the market. Heck maybe they’ll even spark one of those fabled chinese bidding wars. Their complex’ address has a bunch of 8’s in it, after all.

This is such a relief. They are the quintessential case described ad nauseum in this blog : absolutely no savings and their only equity is in their home. They have both recently retired with no pensions. They are young and healthy and will live at least another 20 years.

As they resisted my urgings I would ask them, “what the heck are going to live on in two years when the last of your cushion is gone?”. They have a monthly bill of $3000 for mortgage and living, and 5 years of payments ahead of them.

If they can sell for the 550K now, pay off the $100 k left on the mortgage, rent for two years spending say $36K, while the market softens by say 15%, or $82 k. They are ahead $46k, and still have $414K in liquid cash.

Not a lot, but something to work with. Now to start working on the plan.

Garth, what would be your first move with this small pot?

And thanks, man. Hopefully you have saved my family some real hurt.

#130 Devil's Advocate on 02.03.11 at 1:58 pm

Garth;

That post of mine Devil’s Advocate on 02.03.11 at 12:05 pm, which appears stuck in moderator Pergatory, a little too “tin hat” for this blog there? Or…???

Do I believe it? Probably not so much but it certainly is worth of contemplation if only for the very real possibility of it.

I am confident that it will pass the moderation test and you will air it that the Blog Dawgs can heed, ridicule or ponder it as they see fit.

};-)

A.D.D.D.A.

#131 bill on 02.03.11 at 2:00 pm

junius said ‘one thing is now certain….’

I think you are right old son.

garth did you interact with konrad v. finckestein?
do you have an opinion of him you would care to share?

#132 Widening Gyre on 02.03.11 at 2:05 pm

Here in Squamish a house that was listed in the summer of 08 for $548,800 is now dropped it’s price to $329000.

The townhouse complex where I rent has a foreclosure that has dropped to $429K. The high in the complex was approx $530k.

I feel beholden to my landlord in much the same way that I feel beholden to my local pub. I am a loyal and happy customer and it would be a real nuisance to have to cross the road to go to the pub on the other corner.

#133 whibur on 02.03.11 at 2:10 pm

Janaury Stats, REBGV reports
January 2011 4.2 percent decline in Greater Vancouver housing compared to December 2010 and a decrease of 5.4% compared to January 2010
Historically still pased the 1790 sales average for the past 10 years
January new listing down 6.7% for Apartments compared to January 2010
Total residential property listings increased 5.8%
listings increased 2.2% compared to a year ago
deetached properties increased 2.7 percent from January 2010
Apartments increased 1.4%
Attached properties increased 2.6%

I personally make more than 2.7 on my investments so, why would anyone want to purchase a home in Vancouver?
Spring will be interesting to see what will happen to the housing market in the Greater Vancouver area.
Sold two homes fall 2009
Happy renting at 50!

#134 Live Within Your Means on 02.03.11 at 2:14 pm

#99 Jeff Smith on 02.03.11 at 11:07 am
Unbelievable, the government has actually done something nice for Canadians after all. Just when I thought Harpie has no hope whatsoever, he totally redeemed himself.

……………….

Your last sentence was too funny. He had no choice. His back was up against the wall. Imagine going into an election with such a hot potato.

#135 Robert Dudek on 02.03.11 at 2:14 pm

D.A.: ‘There is a reason it is called “real” “estate”.’

In many European languages it’s called “unmovables”.

That’s the other side of the coin.

#136 Derek on 02.03.11 at 2:15 pm

#40 Crazy on 02.03.11 at 1:01 am wrote:

Garth,

From your response, I take it you own your home, and have other “liquid” assets generating income for you. Is that correct? You DO own a home then. Is it mortgaged? Thanks.

Garth has made it clear on previous occasions there is nothing wrong with owing your own house, provided that the value of the house is no more than 30% of your net worth. In other words if you have a house worth $150,000, you need savings/investments of at least $350,000 to be safe from the housing meltdown. Your non-real estate investments should be worth at least twice as much as your real estate whether that real estate is mortgaged or not.

If you only have savings/investments of $100,000, you should be renting since houses costing $30,000 or less are few and far between.

Whether or not Garth owns his house and whether or not he has a mortgage on it is his own private business. And we don’t need to know. But I have no doubt that whatever he does makes good financial sense.

#137 Mtl RE Observations on 02.03.11 at 2:18 pm

Hi Garth
Do you have a snail mail address?

Are you a lawyer? — Garth

=====

Ha ha ha. Love the response.

#138 poco on 02.03.11 at 2:21 pm

#88BionicMan–so true –timing is everything–i guess these buyers didn’t get the timing thing right

mls#v866776 bought Dec 08-453.9k
now listed -427.7k
mls#v863699 bought Oct 07-309.2k
sold–258k
mls#v866548 bought July 08-363k
now listed 342.9
lots and lots like these–i guess what screws the numbers are the high end properties like this recent sale
listed in the summer of 08– asking 1149.9k
sold for 860k
yup — timing is everything

#139 X on 02.03.11 at 2:22 pm

re # 73 – ROI, Return on Investment, If you are living in a paid off house worth the CDN average, doing nothign with the equity, that could be worse than having it sit in a ‘high yield’ account, if property values decline.

#140 Debtfree on 02.03.11 at 2:23 pm

@77 bigrider ….. mutual funds are the slime of investments . I would not touch one with a barge pole .. the only ones that make any money with them are the ones that sell them and then churn them for fees . If you don’t believe then you must read ” the naked investor ” by lawrence something or other . Just google it . I read it when it was the most read in canada . If on the other hand you sell them hopefully someone you sold them to will wake up one day , sneak up behind you and screw you as badly as you have screwed them. If I owned a mutual fund I would dump it to day and buy an asset .. assets put money in your pocket , liabilities take money out .

Nosty mad I agree with lithium and valladium I’ve made mad cash with lithium but uranium it’s going to be a flat imho. just like the last time the russians and yanks made a treaty so the can get rid of the old nukes to be replace by new and improved ones . The old one’s fuel go into reactors .

#141 poco on 02.03.11 at 2:25 pm

#103 mousey
i think Feb12 is the big day for their new marketing plan–does the date sound familiar?

#142 comfortably numb on 02.03.11 at 2:25 pm

Comfortably Numb: I just sold a car part to an old timer from Richmond.

45 North – what car part? like an alternator?

Apparently I have been outed ! How is that alternator working for you ? and have you listed your house yet ?
p.s. my wife almost had a heart attack when she read your post !

#143 X on 02.03.11 at 2:28 pm

Hi Garth
Do you have a snail mail address?

Are you a lawyer? — Garth

Hilarious.

#144 Incubus on 02.03.11 at 2:30 pm

A must read:

“According to Mr. Madani’s calculations, the average house price, of $314,000 as of the third quarter of 2010, is roughly 5.5 times the leverage disposal income of $58,347. Historical data indicate the average house price is roughly 3.5 times disposable income. As a result, Mr. Madani said the present fair value for a house is calculated around $205,000, or 3.5 times above the $58,347 of disposable income.

To get back to the 3.5 times historical average, he calculates a housing price decline of roughly 25% over a number of years assuming inflation-adjusted mortgage rates remain unchanged and 2% annual growth in disposable income — which Mr. Madani warned was a “generous” assumption given the low inflation outlook.”

http://www.financialpost.com/news/Rate+hike+could+trigger+housing+collapse+economist+warns/4217677/story.html

#145 The Coming Depression on 02.03.11 at 2:32 pm

Garth did you write this?
Rate hikes could spark house price collapse, economist warns
Here..

#146 Genghis on 02.03.11 at 2:36 pm

This consultancy predicting that the average house price in Canada could easily drop from the current $314,000 to $205,000, over a number of years. The $205,000 figure is in 2010, inflation-adjusted dollars.

http://www.financialpost.com/news/Rate+hike+could+trigger+housing+collapse+economist+warns/4217677/story.html

#147 Mr. Plow on 02.03.11 at 2:42 pm

#28 Chris in Langley

Re: A photo of the DA’s wife.

Who cares!? Frick grow up, if DA says his wife looks 22 who gives a shit. Why do so many people obsess about this guy?

You are so obsessed with him and what he says, that you actually want him to post a picture of his wife? You realize he could google what ever he wants and post that right?

Pathetic regardless.

#148 X on 02.03.11 at 2:53 pm

This can and has been happening, link to real life posting:

http://www.canadianmoneyforum.com/showthread.php?t=6101

#149 Got A Watch on 02.03.11 at 3:12 pm

Real estate in Canada: if it were a stock, I’d be shorting it hard. Timing IS everything, if you bought 13 years ago, congratulations. If you bought in the last 5 years, maybe 8, not so much.

You know, buy low and sell high. Not the reverse.

With the way food prices are rising, you had better do something about your future wealth, or lack thereof. The purchasing power of your $ is eroding daily, like Obama’s credibility or Charlie Sheen’s sanity. Or look forward to 3 squares a day of wish sandwiches without any bread, in your private cardboard box conveniently located under a bridge. Real estate will be an anchor to your personal wealth, dragging it down into the watery deep, for the next decade probably. It’s just that timing thing again.

I don’t know how many are paying attention, but the prices of some mining shares have been going up at a pace that resembles a rocket launch. Wildly speculative, highly risky – much like everything else in life. No risk, no reward. No guts, no glory. Its just a hot current speculation, it will fade soon enough then another sector will heat up.

I have one miner up 800% since July (I’m up 600% on it from my entry), it is a poster child for “ride the trend until it bends”. Which is very hard to do, it goes against human nature. Everyone wants to pick a top or a bottom, then enter. And yes, I know it will fall back to earth, one day soon, probably with a big thud, which is why the trailing stop was invented. In the mean time, surf’s up, volatility is my friend. I have now passed my trading goals for the year, before the end of the first month, which makes it well on track to be my most profitable trading year ever. If I wasn’t already retired, I’d retire again.

Now I am not going to recommend trading miners for everyone. I’ve been at it for years, it took me 8 years of active trading before I got good at it. But you’d better do something. Buy some silver, or some agricultural stocks, or uraniums, or rare earths, or something (you pick) that will rise in price over time at a pace that might match inflation, if you’re lucky. Keeping money in the Bank, or in Bonds at today’s yields, could be one definition of insanity. I’d just call it loserdom.

For those who think miners are a waste of time etc – consider this fact: an Index of junior uranium miners I follow rose some +17,400% (no typo!) in the middle years of the last decade. Because the price of the underlying commodity rose, but nowhere near as much as the speculative mining stocks in that sector did. Yes, it did correct after that, but who cares – if you entered late, then got stopped out after it peaked, you maybe made +10,000%. Ouch. I feel bad about reporting that, but somebody did make that much(I personally wasn’t trading uranium miners at that time) – I post that as the reason why I trade junior miners.

Garth’s recommendations are a great place to start for novices, or those too busy at work etc. Just take some action.

And don’t whine to me about the “risk”. Life is risky, then you die. The biggest risk to your future is inaction. One thing is guaranteed, we aren’t even close to the end of this crisis period. I could link to tons of analysis that strongly suggests the financial cyclone has come ashore, but you can find them on your own. The internet is an invaluable tool, if you want to use it. Finding this Blog is a great place to start.

#150 triplenet on 02.03.11 at 3:25 pm

#84 – oneangryslav2
re: Edmonton property taxes

If your property increased more in value compared to the average, you can expect an increase in the …………..municipal tax portion of your total property taxes.

Depending on what province or city you live in there may be multiple entities that are granted the right to apply a tax rate toward your assessed value in order to generate the required operational funding for their specific purposes.
EG: library, assessment authority, health, education, municipal finance, 911, cross jurisdictional services such as water/sewer etc.

The City portion of your taxes may only increase 2% per annum however each entity that has “taxation authority or jurisdiction” is something that a city has limited influence over, if any. Analyse your past tax statements and track the local/regional library and their ability to “book value” over the past 5 years.

Our property taxation system has morphed into an unaccountable form of income generation for various entities that apparently we cannot live without.

#151 bigrider on 02.03.11 at 3:37 pm

#78 Garths response-“Are you that big a fool…etc.

For Godsake’s Garth, check my history, I am as bearish as it comes to RE prices here and in particular GTA condos. I was merely providing a link to a pump article as it appeared today in the Torontostar.

I would not buy a condo here in T.O for a 40% discount to prices today.

Now as for the taking out an ad comment in #75, I simply wanted to point out that the rate of savings of the average Canadian is main problem with lack thereof and not so much with savings vehicle of choice.

#152 bigrider on 02.03.11 at 3:39 pm

To add, my post at #78 was meant to be sarcastic.

#153 Devil's Advocate on 02.03.11 at 3:43 pm

#115 Chris no longer in England on 02.03.11 at 12:41 pm
I told her prices were up because sellers were holding properties back in the hope of higher prices in the spring, and that anyone ‘taking advantage’ of current low interest rates in order to pay a high price is an idiot!

No Chris take pause and think. “Prices are up because sellers were holding properties back in the hope of higher prices in the spring”? Are you saying that the current prices, “asking” prices, are a reflection of the state of the market? Think Chris… think… take your time now. Because if that is what you are saying… you need to take some time to learn the very basics of the market.

The only true reflection of market value Chris is what a ready willing and able buyer is prepared to pay a ready willing and able seller, neither being under undue influence to buy or sell. When that happens Chris you have a demonstrated real indication of what market value is despite any prediction of what might lie in wait over the horizon that neither you or I know of and to suggest we do is nothing more than pure speculation.
Your vet might prove you wrong with time… “might” But there is, I think, a better chance you will be able to tell her I told you so because, technically, I do not believe we are through the price capitulation phase quite yet. That being said it, I think, is going to be far, far lesser capitulation than you and as such many might find that their anticipation was for not as other factors in their financial plan gobble up and exceed any of those savings they sought by waiting.

Please reread my post though Chris and note that these are MY thoughts, and qualified as such, provided only for your consideration not so much debate as I am sure you could not be won over by suspect foe any more than I. We must each learn for ourselves.

};-)

D.A.

#154 Carpe Diem on 02.03.11 at 3:48 pm

[2nd post of the day – I must be really bored] – one thing that Garth has not mentioned nor have I read any comments about – Interest rates!!

So the idea is – bought in 2002 – never heard of a housing bubble brewing then (but was aware of the 80’s crash while living at home – old man would say it reminded him of the closing of the Brampton Areo jet fighter that was scrapped and thousands lost their jobs and houses in the late 50’s..)

Anyways – my house has appreciated 65% – actually I think it went up way to fast – couldn’t care less if it even kept in line with inflation, its shelter –

But the Biggie that no one here talks about – interest rates are at there lowest on record – sooooooo, for those who bought before the bubble phase (2004 – present) what an AWESOME time to capitalize on these sick low rates – and pay off the mortgage — those who score are those who use this time to lock into those delicious low rates, pound the snot out of the mortgage and be mortgage free in 10 – 12 years without any undue hardship – its that simple.

Garth is advising to sell everything (realestate) and jump into a gopher’s hole, thinking of all the money you save – cause it will be cheaper next year – sure- totally agree if your paying today’s retart prices..

People – not everyone owning is doomed! If the world is leaning towards insanity – I would actually like to hold hard assets instead of some paper that says I own 500 shares of XYZ – that may be only good enought to wipe your butt once if the entire system goes balistic.

Final conclusion – those who bought early – and are bright enough to realize that a mortgage is your biggest enemy – and you use these ultra low rates to help you reach your goal that much sooner – are the real winners – Cha Ching!!

#155 Timing is Everything on 02.03.11 at 3:55 pm

Build it and they will come….

http://www.timescolonist.com/Uptown+pushes+forward+amid+challenges/4214329/story.html

#156 Junius on 02.03.11 at 4:19 pm

#131 bill,

I have met Konrad V F. Very tall by the way. Very, very intelligent. He is also very decent and honourable.

He has been an excellent Comissioner in many respects but he has significant pressures on him. The CRTC has real limits to what they can achieve as it is very questionable about where the gov’t really stands on a number of issues. Basically the Cons talk about being in favour of competition and free markets but that depends very much on who benefits. Certainly the current vertical integration in the broadcasting system is a potential long term disaster for the country.

#157 Vancouver_Bear on 02.03.11 at 4:36 pm

Interest rate rise could trigger house price collapse, report says

http://www.canadianbusiness.com/markets/headline_news/article.jsp?content=b5846334

What a shock…..nobody saw it coming.
POP….POP…..POP…..POP…..POP
WTF was that?

#158 Devil's Advocate on 02.03.11 at 4:40 pm

#115 CrowdedElevatorFartz on 02.03.11 at 12:32 pm
Wow ! Devil’s Advocate is on a roll !
I want to be a real estate agent so I can sit in my home office and do nothing all day but read blogs and write rebuttals.
What a life. He’s almost semi retired.

Actually I am coming out of semi retirement not going in. Took some time off while the market was so surreal with an orgy of wanna-be Donald Trump speculators circle jerking everyone. Just prefer to work in markets like this one believe it or not… real markets… challenging markets markets in which buyers and sellers need a competent consultant/negotiator/overseer.

Now I must be off to explain to a client why their condo is not worth what they paid for it in 2008 and that if they are serious about selling will have to accept that it needs to be priced in accordance with what the market has demonstrated it will bear as demonstrated by more recent successful sales.

};-)

D.A.

#159 Vancouver_Bear on 02.03.11 at 4:46 pm

#1 Devil’s Advocate on 02.02.11 at 11:04 pm

I see your desperation….Where is the “buy now or never” thingy?

#160 Victor on 02.03.11 at 4:51 pm

The Canadian Press, On Thursday February 3, 2011, 2:33 pm

OTTAWA – Canadian homes could lose as much as a quarter of their value over time once interest rates start rising, says a new report.

The analysis by Capital Economics predicts that home prices in Canada will likely fall by 25 per cent over the next few years.

Capital Economics notes that Canadian home prices in recent years have gone through the biggest increases ever, adding that the fall could be just as abrupt.

The study says the trigger will be higher interest rates that will increase the cost of buying and owning a home.

Last year Canada’s central bank increased its policy rate three times, by a quarter percentage point each time, to the current level of one per cent.

The Bank of Canada is widely expected to again raise its key rates later this year, probably with one or more quarter-point increases.

http://ca.finance.yahoo.com/news/Interest-rate-rise-trigger-capress-2046187280.html?x=0

#161 Devore on 02.03.11 at 4:55 pm

#140 Debtfree

Nosty mad I agree with lithium and valladium I’ve made mad cash with lithium but uranium it’s going to be a flat imho. just like the last time the russians and yanks made a treaty so the can get rid of the old nukes to be replace by new and improved ones . The old one’s fuel go into reactors .

Lots of politics and China flexing muscles behind the rare earths trade, not so much fundamentals.

Enriched uranium from weapons stockpiles accounts for less than 15% of nuclear reactor material world-wide. Disarmament is a small factor, and churn is churn: new weapons require newly produced uranium.

#162 edmonton mortgage broker on 02.03.11 at 5:01 pm

“Today’s webinar was to show you the differences between the MERIX Flex Down and the MERIX Cash Back program.

The Flex Down Program allows your client to borrow the 5% as their down payment from an alternate source (i.e. secured/unsecured LOC, credit cards, personal loans etc).”

straight from the trenches. Some of our lenders like merix will actually still let you borrow your 5% downpayment. so zero down is still alive an well. and don’t forget to qualify now before the march 17th 35 yr am deadline! our operators are waiting for your calls sheeple!

#163 jess on 02.03.11 at 5:08 pm

.#12 Maxamillion
It is in the public record due to the S&L at least back then liars went to jail.
Regulations ignored control fraud and assumed that paper profits produced by fraud ….. George A. Akerlof and Paul G. Romer, 1993, “Looting: The Economic

==
Mr. Black:
“September 30, 1993 is an interesting date. I was the deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement (NCFIRRE). We issued our report in July 1993 on the causes of the S&L debacle. Our report was based on an extensive investigation of what worked and what failed in regulation.

In particular, we found that the deregulation and desupervision created an environment in which at “the typical large failure” “fraud” was “invariably present.” By fall 1993, the Office of Thrift Supervision had learned the lessons and developed extremely effective rules, supervision, enforcement, and support for the criminal justice system. Congress passed the Prompt Corrective Action (PCA) law in 1991. The regulators had removed the abusive regulatory accounting rules designed to cover up the scale of the debacle. Administration officials had falsely used this cover up of losses through accounting gimmickry to claim that the S&L crisis had been “resolved” at no cost to the taxpayers. The PCA was based on the finding that such accounting cover ups and “forbearance” greatly increased the eventual cost to the taxpayers. ..”
http://www.michaelmoore.com/words/mike-friends-blog/obama-embrace

======================================
Competency seems to be an illusion these days.
In Canada the Dr. Smith trials but after watching this program investigation you see how widespread this is….
Liars who knew they made fraudulent loans to gain big profits and now so called coroners (that aren’t certified nor are they doctors that have studied forensic pathology!) who make up the cause of death on the certificates.

post mortem
http://www.pbs.org/wgbh/pages/frontline/post-mortem/etc/introduction.html

#164 No more Garth on 02.03.11 at 5:19 pm

I thought the last post was titled “No more Garth”?

End your misery. Leave. — Garth

#165 S.W. Ontario on 02.03.11 at 5:30 pm

Garth, I need some advice. My biggest concern is for our son who lives in London, Ontario where house prices have stayed at a resonable level for years. He bought a Condo there in 2008.
It doesn’t look like prices are going come down but the spiral down doesn’t always let you know it’s coming.
We like so many others you keep talking about were ignoring what was happening in Canada as , we were sure that what ever was happening in the housing market in the US in 2008 wouldn’t happen here and we went ahead and co signed with our adult son for his first home,(the condo) in London. After all -no down payment and a deal well below prime, how enticing can it get. Our son bought what seemed a really good deal in a small one bedroom condo in a low rise. The price $66,000.00, how much better can one do. It is a nice place which was apartments being changed over to condo’s when any tennant’s lease expired. It appeared to be a lucky find, if he was going to work in London.

Our son finished school in this university/ college city but didn’t find work there and now drives an hour each way to get to his job which is in our little town.
The rising cost of gas is eating a hole in his pay check. He plans to move back home and rent our downstairs from us for the time being.
Clincher to the worry, he doesn’t want to sell his condo, but to rent it out and keep on paying the morgage.
I feel that in such unsettling times this is really a bad idea. Everything form food to gas is going up and mortgage rates have only one way to go. Condo fees always rise.
His dad is siding with him that nothing too extreme is going to happen in Canada, after all they keep telling us we have the best banks in the world !
Reality has set in for me after hearing what Canada’s debt load is plus Ontario’s share of that debt!
Our Premier of Ontario is raising our electricity rates to the tune of almost 8 % per month. Taxes are going to go up. Food prices on the rise and I’m looking for what is the next blow.

What are your thoughts or anyone elses on this idea of keeping the Condo as income property ? ? ?

If he has no equity, he’s a fool. Hubs, too. — Garth

#166 Burnt Norton on 02.03.11 at 5:36 pm

#103 mousey on 02.03.11 at 11:40 am

#118 Junius on 02.03.11 at 12:47 pm

#132 Widening Gyre on 02.03.11 at 2:05 pm

———————————————

Three interesting perspectives.

Squamish has great appeal for kitesurfers and rockclimbers. I guess the salaries associated with those vocations don’t support an average $500K townhouse market. Still, I would rather commute 45 min to Van from Squamish than from the valley.

$1.5+M for a townhouse directly on Cambie St. Does it come with a rubber room in the basement?

If there is any sense to be made out of this, could one conclude that detached homes on Van west side are at the core of the melting ice cube?

#167 betamax on 02.03.11 at 5:42 pm

#71 BigAl (Original): “Everyone from the media, to our managers and co-workers at work instill a culture of “stay positive”. Ideological positivity (not to be confused with rational optimism) has become our religion. ”

Excellent post throughout, well said.

#168 Kevin on 02.03.11 at 5:46 pm

Capital Economics is saying a rate hike will trigger a collapse in housing prices.

The reason is that house prices were not pushed up by inflation, or wages but by the ability and appetite of more mortgage credit.

Take a look at Saskatoon’s market ( every Canadian city is probably the same)

Saskatoon’s housing prices have not followed inflation, or wages, but mortgage credit and housing prices follow each other quite nicely.

http://saskatoonhousingbubble.blogspot.com/2011/01/saskatoon-real-estate-housing-measures.html
Saskatoon Real Estate Housing Measures

#169 Azza4 on 02.03.11 at 5:46 pm

#30 Your Cat
Your problem is that you cannot do elementary math, add money amounts by yourself and depend too much on propaganda theories of own-for-the-same-amount-as-your-rent. It’s NEVER the case as you are dealing with people whose income depends on you making purchase. They don’t exactly lie to you (or maybe they do), but simply withhold some information, like that one that mortgage is not the only payment you are on the hook for. Here is my old post for you, so you see for yourself that RE is NEVER good investment (even if you are banking on capital gain that is far from guaranteed).

Here is example. If you have $300K and you decide what to do with it: to buy a house for cash or invest it.

Right now the market has several stocks that pay 9-11% per annum in dividends. In general, these dividends add up to about $30K per annum + possibility to increase the original $300K due to capital gains.

Now to quality of life. We, for example, are lease home in High Park area and live in the area for 8 years. At first we rented 1 bedroom for 750 bucks on the second floor of a private house, now we rent first and second floor of a private house for 1100. All Inclusive. Renovated throughout. The son of the owners lived there before us. All appliances in the kitchen are new as lockers, doors, etc. House looks at the park. Quality of air is superb.

So, we get $30K per year in dividend income. We pay $13.2K rent. $22.8K remains for perks.

Obviously, we cannot buy a house in our neighborhood for $300K, but even if we did…
You invest $300K into the house and left with zero money. Money does not feed you anymore, and you need to feed your house.
Taxes – 4800
Heating – 3000
Electricity – 1500
Insurance – 700
Repairs – 1000

Total: $11K in the red. If you rent out basement for 900, still in the red.

Now choose. $22.8K in your pocket every year with decent growth potential, or at best a small loss, but rather a great loss if you consider mortgage and downside potential in housing. In case of rent you do not really care if you lose your job, since there is income from dividends. What can you do if you lose your job and have mortgage to pay?

#170 Pat on 02.03.11 at 5:54 pm

@ #123 Roial1 wrote:

“As a landlord I can only say—– RIGHT ON!
But don’t call me to fix your toilet at 3am.
I turn OFF my phone.”

:)
Incidentally, one of my toilets needed fixing last night. Did it myself in 10 min in the morning.

About twice a year I send my landlady a list of repairs that need to be done. She sends somebody to do the job and that’s it as far as our interactions go. Rent has gone and stayed below market for 2 years now – 27K/y for a 680K house.

#171 Mr. Lee on 02.03.11 at 5:55 pm

Caveat Emptor

#172 Azza4 on 02.03.11 at 5:59 pm

# 34
//BMO’s Lifetime Cash Flow ad in high, high rotation on the hockey game broadcast.//

If the Deposit Value is equal to or less than the remaining Deposit Balance then you will not receive any return on your Lifetime Deposits. It is possible that no return will be paid on the Lifetime Deposits. (from terms…) yea… :-)

#173 john m on 02.03.11 at 6:44 pm

Something to consider!!!……What percentage of the world’s population live in Canada?
In: Canada History

34 million / 7 Billion = 0.0048 x 100 = 0.48.

Less than one half of one percent of the world lives in Canada………….That’s the real picture..we have a PM who spends money like water and is under the misguided impression he is some kind of superpower…..and we have Vancouver residents that think the other 99% of the world’s population wants to live there…..when in actual fact the majority of the world’s population would not even know where the hell B.C. is……….but curiously enough as the world economy has crashed over easy credit our leadership has encouraged it…hmmmmm ……so really does anyone think the world is taking lessons from”H” “F” “C” and company??……:-)

#174 john m on 02.03.11 at 7:02 pm

#114 Devil’s Advocate on 02.03.11 at 12:30 pm

Truth is… we all rent. Owners effectively rent from
The Crown. Owners are land “Lords” who merely have bestowed upon them by the crown more rights and privileges, which the Crown can revoke at its whim and fancy. But that be the case on all matters under the Crown… all matters<<<<<<< excellent and so very true!

#175 Craiger on 02.03.11 at 7:03 pm

While in theory, Mr. Turner, I agree with your premise that real estate is overpriced and is going to correct, particularly in Vancouver, in real life you have proved to be spectacularly incorrect.

The Vancouver market continues to edge or steam upward, defying all predictions. Obviously, there are variables that we (read: you) don’t take into account or don’t give proper weight.

To paraphrase some prominent thinker…at a certain point being wrong about timing is indistinguishable from being wrong.

I have been reading Vancouver real estate bubble blogs for the past 6+ years (starting with VHB’s notorious blog). They (and later you) predicted the imminent and inevitable demise of the real estate market. apart from a short-lived hiccup, they (and you) have been uniformly and dramatically wrong about Vancouver’s (and to a lesser extent Canada’s) real estate market.

so, you will likely in the end be somewhat vindicated (a correction is inevitable given enough time) but in the meantime anyone who has followed your advice will have lost out on the huge returns that have accrued in the past five years or so.

at this late juncture, my gut feeling is that real estate isn’t a good investment. then again, that has been my gut feeling for a long time (and I have been wrong). the difference between you and me is that I admit my ignorance and try not to condescend people (many of whom have ignored me and made better choices, in hindsight.

hubris, sir, hubris.

Greed, dude, greed. It’s a housing market, not a futures game. Sales are falling while prices rise. I strongly advise you to leave the vessel now. — Garth

#176 jess on 02.03.11 at 7:05 pm

these guys explain why the banks don’t modify

http://www.youtube.com/user/fiercefreeleancer#p/a/u/0/ssl5yb7FewA

#177 Azza4 on 02.03.11 at 7:09 pm

Correction: $22.8K —-> $16.8K for this year’s results.

#178 Devil's Advocate on 02.03.11 at 7:46 pm

#152 Carpe Diem on 02.03.11 at 3:48 pm
But the Biggie that no one here talks about – interest rates are at there lowest on record – sooooooo, for those who bought before the bubble phase (2004 – present) what an AWESOME time to capitalize on these sick low rates – and pay off the mortgage — those who score are those who use this time to lock into those delicious low rates, pound the snot out of the mortgage and be mortgage free in 10 – 12 years without any undue hardship – its that simple.

Final conclusion – those who bought early – and are bright enough to realize that a mortgage is your biggest enemy – and you use these ultra low rates to help you reach your goal that much sooner – are the real winners – Cha Ching!!

Good post with some valid points some should ponder there Carpe Diem.

Might I also add… it is not so much that prices have gone up as the purchasing power of peoples fiat currency has been eroded. That started in 1971 and has not abated since. In the case of my wife and I, we bought when interest rates were around 18.0%. Yes 18.0%. What saved our naive house horny newlywed asses? The money we borrowed to buy that home bought more home back then. We anchored it in at the then prevailing economic math. Now 30 years later it would take almost 7 times as many fiat currency $1.00 notes to buy that same house.

My point is… to those who really truly firmly believe that prices are never going up again are setting themselves up for a very probable disappointment. I remember as clearly as were it yesterday and, in fact, have a Vancouver Sun editorial exclaiming the excessively high prices of the day. The day was 1981 the same year we bought our first home which would today take almost 7 times the dough to buy.

Unless you aren’t planning on being around for more than 5 years, be it rented, mortgaged or owned you are going to need a roof over your head. Ours today is bought and paid for and believe me when I tell you, back in 1981 everything the basement dwelling Blog Dawgs complain about we were then too. The only difference… we took the plunge and have not looked back since. Yes our “paid for” home still costs us maintenance, taxes, and utility costs but the fact is if we wanted to downsize today and rent, as you so proclaim we should, the proceeds invested or not would pay the rental for the rest of our lives… and we aren’t so near retirement age yet.

I’d be happy to take a bet with anyone willing that all things being equal the cost of housing over the next 30 years will have far far more continued the trend of the last 30 than not.

#179 Junius on 02.03.11 at 7:58 pm

#175 Craiger,

Why is it that we see so many of these posts? I agree with you Mr. Turner but look at how wrong you have been…blah, blah, blah. Please don’t mind if I think you are a pumper faking it.

Garth can stick up for himself but let me say this. Most people buying homes are entering into 35 year agreements (soon to be 30). So what is prices have gone up the past few years? You have to sell to realize your gains and that costs as well. Very few people are looking to buy and flip. If that is your game then this is not the blog for you. Most people here are looking at long term investing and long term trends.

If you bought with a 35 year mortage then 5 years is less than 15% of the term of the agreement. Therefore the most important issue for most people is going to happen over the future of the contract. Many of us with paper gains will see those eroded over the next few years. Such is life.

The long term trend is cleary for prices to fall as interest rates rise and overall affordability erodes. Furthermore demographic trends also point to lower prices.

If you want to be a flipper go ahead and play. If you want to be a long term investor then follow the hard, long term trends.

#180 poco on 02.03.11 at 8:03 pm

#156 DA—-now I must be off to explain to a client why their condo is not worth what they paid for it in 2008

you must be on your way to Port Coquitlam –I laughed when i read this e-mail
mls#v867457 asking 389k-
DA–please advise this owner who just listed their property that they don’t have a hope in hell of getting anywhere near their asking price and please tell the realtor to do some comparisons before listing
two other properties for sale in the same building–one the same sq. footage –one bigger
V866376–299.9k–934sq’
v856582–309.9k–897sq’
this just proves how f__ked up the real estate market really is–buyers – sellers and realtors

#181 Stevermt on 02.03.11 at 8:08 pm

#173 John m
I know that we’re small in terms of population, in wealth terms we are up near the top , hence why we are a member of the G8 club. We are in 9th place for GDP, among all nations
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_

#182 Vancouver_Bear on 02.03.11 at 8:16 pm

Newspapers picking up the story about Canadian RE bubble burst:

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/rate-hikes-could-spark-house-price-collapse-economist-warns/article1893062/

http://www.thestar.com/business/personalfinance/article/933010–forecast-predicts-25-per-cent-decline-in-housing-prices

#183 Wayne on 02.03.11 at 8:27 pm

Wow … is that a self portrait of Garth wearing a wig?

#184 BAD on 02.03.11 at 8:39 pm


Seems there are few others that predict RE prices decline in similar fashion as Garth:

“The recent housing boom has resulted in the largest rises in house prices ever seen in Canada which have been similar in magnitude to those during the recent boom in the U.S.,” said Capital Economics analyst David Madani in a report released Thursday. “Unfortunately, the subsequent falls in price could also be just as severe as those elsewhere.”

Madani is predicting that house prices will fall by a cumulative 25 per cent over the next several years or “in the same ball park as the recorded declines in the U.S. and other countries.”

Forecast predicts 25 per cent decline in housing prices

But that of course cannot happen in Canada, eh?
He just forgot that this is Canada, no RE melt here… ever.
Unless all the snow melts due to global warming our igloos are going to rise in price forever.

#185 bill on 02.03.11 at 8:41 pm

craiger the melt is well under way.
in rosedale there are numerous for lease signs in its small biz district. it will arrive in vancouver at just about the time garth indicated.
melting from the edges …rosedale is around chilliwack.
plenty of signs that all is not well in Kits either.

#186 big_cheese on 02.03.11 at 8:45 pm

Back to the note someone wrote about kicking someone out.

It ain’t that easy. And don’t forget you got to prove the tenant got the notice. Get him to sign or take a picture of the note with some to prove he has it.

It gets tricky too if you want to kick him out so you can charge higher rent. Look at the guys downtown vancouver, they tried to kick people out so they can double the rent, NO-CAN-DO. That is totally against the law. The Agency quickly ki-boshed that!!!

Anyways stop your scare tactics, because the renters has way too many rights. After you give the notices they have 2 months to do harm to your place.

If someone give you a notice, stop paying rent, because most likely the landlord will try to keep the damage deposit. So just stop paying and get two months rent free, which will end up with 1.5 rent free. The beauty is you don’t have to leave the place clean. Its very painful for a landlord to get money from you, because you can counter with pain and suffering and don’t have the cash due to the move.

anyways for more details–>

http://apartmentguide.ca/Advice/expert-advice.asp?sub=275

A: The Residential Tenancy Act of BC contains provisions that affect the ending of a tenancy when the landlord wants the rental premises for his own use. When a property is being sold and the purchaser wants the premises for his own use the Act requires that two months notice be given by the landlord (section 49) and the landlord must pay the tenant the equivalent of one month’s rent as compensation.

#187 Milhous Plumbers on 02.03.11 at 8:58 pm

Looking at that guy in world naked bike ride now I know why Sherman Adams threw it all in for a fur coat.

#188 super dave on 02.03.11 at 9:11 pm

Garth, you’ve said in previous posts that one of your cardinal rules is not to be “beholden to anyone”. So how is the renter (in your opinion) not beholden to the landlord?

Easy, I am only “Beholden” for the next months rent, I can walk away any time. That is a very small obligation, compared to the alternative, and very little risk (ok he could boot me out if he finds the mushroom farm in the basement)

#189 john m on 02.03.11 at 9:16 pm

#181 Stevermt on 02.03.11 at 8:08 pm

#173 John m
I know that we’re small in terms of population, in wealth terms we are up near the top , hence why we are a member of the G8 club. We are in 9th place for GDP, among all nations<<<<<< and whats happening to our wealth??

#190 Nostradamus Le Mad Vlad on 02.03.11 at 9:20 pm

Gotta say DA does have a valid point. A home a few blocks away from us had a “For Sale” sign up for less than ten days before a “SOLD” sign was added today.

“A condo is the new Nortel. — Garth”

Only if one buys it, but if one rents and invests in an adequate portfolio, one can still be relatively well off in these times.

Nortel and Bre-X are for the greedy, unbalanced ones.

#140 Debtfree — Thanks for the response. Better half started her TFSA today (Chinese New Year and she is Chinese — she says the Year of the Rabbit is a lucky one), put $10K into Fidelity Balanced with has averaged 7% p.y. with monthly DRIPs.

I’ll start mine shortly, debating on junior mining / gold or the stuff I mentioned earlier.

Cheers!

#145 The Coming Depression — Great link. Things like that will happen when they are least expected, but Egypt, Tunisia, Europe and the like could provide a good indicator.

#147 Mr. Plow — “Pathetic regardless.”

Well said.

#169 Azza4 — Excellent post and easily understood. Unfortunately, we still have a home to maintain (it’s in good shape and paid for), but the ever-increasing costs deem it unworthy of staying for the long term, so one day soon, we’ll have moved on.

#177 Azza4 — Correctio taken into account; I would still prefer to rent, invest the net proceeds and use monthly income to pay the rent.

#191 Devil's Advocate on 02.03.11 at 9:25 pm

#175 Craiger

on 02.03.11 at 7:03 pm

For a long time I too thought the market was poised to tank in a big way. I did let many a good opportunity pass me by because I thought “prices are going to drop, they have to”. But they did not. I have newsletters I created in which the editorial outlook was a somber word of caution to my clients. I have them on file and can prove that this “Bull” was once a “Bear”. Even Garth may recall a communication between he and me where I expressed exasperation over my industries blind disregard of the failing fundamentals.

But while most certainly things did hit a sudden and abrupt bump in the road in 2008 they far from derailed.

Today I am of different opinion as we approach the 3rd anniversary of near economic Armageddon, and do believe it truly was that near economic Armageddon. Had they not done what they did you can be sure we would be in a far worse state than we are. I don’t entirely agree with it all, I especially don’t agree with the irresponsible policies which led to the need to take such drastic action in the first place. But the fact remains that they did pull it off and sufficient time has passed that we must give them credit for if things do go sideways it will most assuredly be due to some black swan which lies in wait over the horizon that no one will have seen coming.

Garth message is a good one. Unfortunately some (most) of the Blog Dawgs are fanatical zealots who hear what they want to hear and run with it. Think Bible and the differing factions of its religious offshoots. Some interpretations of that story most certainly are grossly exaggerated misinterpretations. Garth is not against “home ownership”. Garth owns real estate. He just doesn’t want you to own a disproportionate amount of it. Garth does not believe property values are going to tank that they go back to the pre-bubble of the very early stages of the last decade. He believes there will be a claw-back of unwarranted perceived gains in the range of 15 to 30% depending upon the market and location of the property.

Many might believe that I devote my time here in effort to debunk Garths message. Not so. I am here to add strength to it. I attend these blogs because they pertain to something I am passionate about, something that is the subject of my vocation – real estate – more specifically helping people find their way through the real estate jungle in which there is indeed a great deal of peril but the rewards too can be great because those rewards are of “home” and as corny as it may sound Dorothy was right be it rented, mortgaged or owned “There is, no place, like home”.

And really it does not take much time here and there in my 24/7 day to post the drivel I do. Admittedly today was a rather big posting day. Yet I still managed two market evaluations, a price reduction, subject removals and calling my daily quota of clients. But dang it all no sale today! So don’t give me a bad time about the odd grammatical or spelling error. I’m shooting from the hip for the most part.

};-)

#192 Devil's Advocate on 02.03.11 at 9:35 pm

But, nah, ain’t gonna happen. So this year as a Boomer turns 65 almost as often as DA posts here, we are reaping the results.

With that accolade Garth, you motivated me to bring forward so many of my future posts that I fear your blog will now dwindle to it’s pre-D.A. sub one hundred Blog Dawg posting comments as I have none left to contribute.

};-)

#193 robert james on 02.03.11 at 9:58 pm

The Jan. stats our out for the Central Okanagan.. A bit of a price drop Methinks.. The residential average house price is now $436,913 down from $481,405 a month ago and down from the peak of $524,113 in April 2008.. But,,guess what,,”It is a great time to buy” according to OMREB..http://www.omreb.com/files/01%20-%20CO%20Statistics%20January%202011.pdf

#194 Pr on 02.03.11 at 10:10 pm

This real estate madness, if the prices fall, we all gonna get hurt some way are a other. Not necessary at all. No more manipulation, 20% cash 25 years amortization and keep it like that for a other 60 years.

#195 vreaa on 02.03.11 at 10:18 pm

“Since I bought my home my ‘income’ has been 40% from my job and 60% from housing appreciation.”

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

The amount of “income” from appreciation of current market value of their house should be ringing alarm bells for this Vancouver owner, and telling him/her something about the market, …but it isn’t.

#196 bridgepigeon on 02.03.11 at 10:23 pm

193 DA,
Come on DA, don’t sell yourself short…

#197 Paul on 02.03.11 at 10:36 pm

Buy now as prices are going up!

http://www.castanet.net/edition/news-story-59933-6-.htm#59933

#198 Nostradamus Le Mad Vlad on 02.03.11 at 10:38 pm


3:36 clip Bernanke wants to audit himself!

Soaring food prices and Copper’s going bananas. Just a reminder on who cornered 80% of London’s copper market not that long ago — the initials are JPM.

6:38 clip Toppling Dominoes — US cities heading for the dump, plus — US shutdown?

Irish eyes aren’t smiling, but Shell’s are.

GW for Al Bore and Orange Crush (figuratively speaking, of course).

Armchair Revolutionaries Be careful what is wished for, because Janus, God of Beginnings.

3:45 clip Police brutality in US (and here) is increasing, just like the ME and Europe.

The elite Anyone recall who is running the Polish govt.? That’s right, and that is why Poland is now threatening Belarus to toe the line.

Guess what Stevie has given us for a pre-election goodie?

Sarkozy Sucks Good on the French cops!

BDI We’re going down. What floor would you like?

The Donald has spoken.

#199 Paul on 02.03.11 at 10:39 pm

DA, did they get 399.900 for the recent sale? on Ladner?

#200 Hoof Hearted on 02.03.11 at 11:30 pm

Local BC news….

They said the condo market is slow….BUT the detached home sales are doing well. Richmond home….list approx $ 700,000, had over 40 bids,drove it into the $1Million range.

The house looked about 1970’s vintage

The news also bluntly stated that the Asian market was driving this SFH buying spree….boohoo to condo owners ?

They said the tougher financing regs will stop speculators (locals ?)…but that may make the Asians SF house horny, and leave many hi -density developers holding the bag.

A friend of mine had rented a Vancouver house from an Asian investor, rented for approx. 16 years….got his notice to vacate….and the house was SOLD.

Maybe a new dynamic in play.

#201 Hoof Hearted on 02.03.11 at 11:37 pm

#175 john m

Well said

Between the Crown and the Grim Reaper…we are ALL renters.

#202 Hoof Hearted on 02.04.11 at 12:07 am

#77 gpoz

Did you ever think that there is a symbiotic loop here between the Feds ,Province and Local Gov’ts?

With all the downloading….Local Gov’ts have become dependent on RE development as a revenue stream….and the Feds maybe ” coincidentally ” compensated the downloading by juicing the RE via the CMHC.

Keep in mind the Local Gov’ts don’t give a shite of RE collapses…… they simply adjust the mill rate to achieve their revenue targets.

#203 Chris no longer in England on 02.04.11 at 1:26 pm

154 Devil’s Advocate:

“Are you saying that the current prices, “asking” prices, are a reflection of the state of the market? Think Chris… think… take your time now. Because if that is what you are saying… you need to take some time to learn the very basics of the market.”

No I am not saying that. I am saying that despite expectations that prices should be falling, they have not done so as fast (or as far) as we might wish. That can in part be explained by lack of inventory allowing properties that are available to maintain their current price tags. I think that as soon as more properties hit the mls prices will be driven down.

We read the same things on here every day, multiple times. Anyone who has been reading this blog for a couple of years knows what Garth is telling us; I am no exception.

My waiting to buy has a few components to it – not least the fact that while I wait the money I have is increasing. Also, I do not live in Toronto or Vancouver or anywhere prices are completely crazy. The kind of property I want tends to be the kind of property others don’t (farm, outbuildings, land). That type of thing is already falling in price around here and I keep a whole list of interesting properties that have been decreasing in asking price for months now. Common sense tells me they will go lower still.

My vet unfortunately won’t be proving me wrong, as she is one of the classic cases so often portrayed in the letters people send to this blog asking for Garth’s help. She has a house call practice and doesn’t own a surgery or hospital she can sell on when she retires. She bought a house in the last four years and is up to the max on all her credit cards. It is nice that she looks out for me but I am the one worrying about her.

Thanks for your concern DA, but don’t worry. My biggest problem is fighting off the realtor who would like me to buy. Luckily, her husband (another realtor) knows better. He is looking for a farm I can rent. Either way, I just want a hobby farm. If I own it or rent it I simply don’t care. It’s all about the dogs, eh Garth?

#204 Daisy Mae on 02.04.11 at 4:07 pm

….and in the WESTSIDE WEEKLY: “Crystal Ski Resorts’ expansion plans appear to have hit the downslopes of the new economic reality.

The first phase of a major development proposed for Crystal has been drastically cut, from 1200 to 418 beds, or from 203 resicdential equivalent units to 70…the proponents have been unsuccessful in their attempt to secure financing for the entire phase one development….”

Hmmm…..

#205 Karl Johann on 02.04.11 at 7:38 pm

Right on target Garth, Fill your larder… Have you looked at the price of food lately, I have and it is skykocking.
Bad times are a coming!!!

#206 jim on 02.04.11 at 10:05 pm

Harper is selling out Canada to the USA with this new border deal. We will lose our sovereignty. Imagine arriving home to Canada and be greeted by an American border officer and the American flag! There should be no negotiation on this matter. None of the terrorists came through Canada. 16 million illegal immigrants didn’t come through Canada. This is a plot for Harper to have Canada join the USA.

Don’t leave any important discussions on our country to Harper and co. No Tony Clement to negotiate our future of our country!!