So much for that

This week a magazine that leaves glossy droppings on the doorsteps of Toronto’s horsey set has been asking a panel of experts to create an email string on this question: ‘Whither real estate?’ Included among the chosen are rock star economist Sherry Cooper, controversial developer Harry Stinson, hot realtors Elli Davis, Elise Kalles and Barry Cohen and, for comic relief, me.

On pain of having my fetching derriere sued off, I cannot quote this stunningly incredible exchange in advance of it being published. But I can tell you all the key points made by all the participants (except me and another). Well, actually there’s only one. Real estate always goes up.

And as evidence that house values will continue to climb, this august panel points to the evidence that it has pretty much ascended in the past. So, what’s the problem? Buy now or be priced out forever. More importantly, all those people who bought in the last couple of years since the financial crisis – even with nothing down – are now in a “position of excellence” because they have “achieved equity.”

Which, of course, is crap. Their profits are illusory. Unrealized capital gains, the result of price inflation. If the market turns and buyers split, this equity can be gone in a week or two. These folks with 5% down and 35-year mortgages have paid virtually nothing off their massive debts, and are yet being told by people with gray hair and Bimmers they made astute investments.

As you know, this is exactly the kind of thinking which ate the American middle class. But then, we’re different. We fixed gravity.

Now here’s a question that flows from the above, and relates to our discussion of The Boomer Problem yesterday. If residential real estate is the foundation of Canadian personal wealth (seems to be the case), and we’re at the end of two of the best years ever for swelling house values, thanks to cheap rates and public insanity, then what gives with this latest survey by Sun Life?

The company found most people just ain’t buying all this real estate sunshine. In fact, they’re sum bitchy.

Last year most said they expected to retire at 65. Now, just twelve months later, they’ve jacked that up to age 68. In fact people making less than $50,000 a year figure they’ll need to work to age 70. Even worse, people already age 60 think they will need a job until they’re sucking oxygen and heaped over a walker at age 72.

What does this mean?

Well, as I said yesterday, none of it is good news for young people who are still ingesting the butt sunshine of the housing industry and leaping into debt. All these Boomers refusing to retire and die quietly mean fewer job openings over the next decade – and already youth unemployment is a staggering 14.4%.

Worse, older people are pissed because they can see the obvious. The economy’s flatlining, with the clear potential to decline. Says this study:  “Canada did not witness the extensive economic rebound it had hoped for, with unemployment still high, gross domestic product increasing at low levels, and continued worries about the health of other countries that could impact our economy.” This could be why the priority of those surveyed has changed. It’s not being house horny, but rather paying down debt.

Many of us know what can happen to interest rates (it’s hard to forget when you have a 16% mortgage), and how excruciating it is to pay off debt with dollars you actually earn. If I’m half right, this is exactly what awaits untold thousands who jumped into real estate since the crash. Rates will be higher next year, and the one after. House prices will be stagnant at best, and likely lower and falling. All those fat mortgages will not be erased by year-over-year price increase, but have to be paid off by, ugh, working.

But, why waste my breath?

As I sat typing my response for the slick magazine, I realized that coughing up valid arguments for real estate caution is hopeless. People are greedy and obsessed. House porn addicts. This blog’s also shown that proffering sound investment strategies is equally useless. Most are fearful and ignorant, ready to trash every asset they misunderstand.

Is it any wonder Freedom 55 is a joke? How did we get so off track, in this, the richest society in history?

I have two answers. An email and a vid. And then I might give up.

I stumbled upon your blog early last year and have been a daily reader ever since.  I thought that you would find this story amusing. I was giving financial advice to a colleague at work.  She currently rents for $600/month in Toronto and wants to save money to buy a house.  I asked her typical questions about how much she could afford to put aside etc..  During the conversation she was surprised to find out that I rent as well.  She joked that she should not be taking financial advice from someone who doesn’t even own a home.  I told her that I owned my money in the bank and that the day would come that house prices would correct themselves and that’s when I would consider buying.  To which she responded, without hesitation, “well if house prices correct then I’ll just buy a house too!”

“Just buy a house” like she was buying a new pair of underwear.  I burst her bubble by telling her that sadly she would need more than 1% as a down payment and probably closer to 20% if there were a correction and banks began foreclosing.  When I ballparked 100K as a down payment she laughed and walked away from my desk.

Did you ever envision someone who hardly makes rent at $600/month and has a savings plan of $40/pay could use the phrase, “Then I’ll just buy a house too”?

Sadly, I’m sure she could find a lender to give her the money if she went looking today.


#1 Willend Badly on 03.08.11 at 10:57 pm

Where are the jobs in Vancouver?

#2 on 03.08.11 at 11:00 pm

… again

#3 Grooby on 03.08.11 at 11:06 pm

Don’t worry Garth, I find your insights invaluable and have used them to build a balanced, safe-as-houses portfolio. Ok, safer actually.

Please keep fighting the good fight.

#4 Hovering on 03.08.11 at 11:10 pm

that video made me feel ill

shame on those people

aren’t journalists held to some sort of standard anymore ?

the builder qoute was good “it appears they have a lot of money”

angela calla ? what was that lacquered on her eyelids? and what language was she speaking?


#5 Victoria on 03.08.11 at 11:14 pm

I wonder the same.

#6 Mr. Lee on 03.08.11 at 11:14 pm

Mr. Turner, once again you are preaching the truth and once again many will dismiss you. Yesterday you spoke of the Baby Boomers and their freedom 75 option around unloading their homes to cover the remaining days they have left. Another scenario is one in which these Boomers will hold on to their dwellings for dear life, but for go spending in other areas. No new cars or trips to sunny destinations. No new cloths and a lot of KD. The generation that drove this economy could just as easily turn off the tap. Then what….watch our GDP, jobs and economy go into a tail spin.
The panel that you were on are preaching the same shit over and over again. Just two years ago when oil hit $147 housing prices started to decline as a result of lower activity……then presto….Mr C nukes the rates to .25% and like magic the mini house starts and now we are at pricing higher than at the height of the boom. To add to the fluff, F keeps on reducing the amortization period there by creating more mini booms and pulling demand forward. The end result will be the same, price and demand deflation especially with interest rates going to have to increase because of commodity pricing. I am sure your panel has an answerer for that as well.
“We are not going to see a housing collapse of any kind.” Ben Bernanke in front of the House Finance Committee Summer 2008

#7 LJ on 03.08.11 at 11:21 pm

Willend Badly: Grow op’s, what did you think they pay the mortgage with?

#8 Willa on 03.08.11 at 11:24 pm

The magazine included your interview to protect themselves. They want to create the impression they’re being balanced, not pandering to the real estate class. That suggests they know it’s all crap.

Meanwhile, at least a few subscribers out there will read your quotes and decide you make more sense than the rest.

It’s still worth it.

#9 bsallergy on 03.08.11 at 11:28 pm

There is no getting people to understand that a house is shelter and has no value except when you go to sell it. People who have gotten in and out in the last couple of years made out like bandits except they keep buying another bigger more expensive house. So glad to know that our newer, bigger, harder, faster, better, more intelligent, more ethical selfservative government is tightening the rules to protect us from a crash.

#10 Maxamillion on 03.08.11 at 11:29 pm

” it was sold as a tear down” LOL

#11 HouseBuster on 03.08.11 at 11:30 pm

All those MF’ers should be put in jail!

#12 GenXer on 03.08.11 at 11:33 pm

OK – that video is ridiculous.

“Real Estate Millionaire” = “Fake Millionaire”? What does that even mean? A person with a million dollar home and a 950k mortgage is not a millionaire. Sounds pretty good though.

“It’s going to get a lot harder for first time buyers to afford a home”. I’m so tired of people talking about how they are going to be “priced out of the market” – we ARE the market. If you can’t afford a home, what makes you think everyone else in the country has magic fairy money they can use to buy one? By definition, if you represent the average buyer in a market, you CAN’T be priced out of it.

Think oversea buyers will propel the market forever? Wait until the Chinese real estate bubble bursts – then we’ll see how many fly-in millionaires want to play in the Canadian market.

Of course, what do I know? I’m just a renter.

#13 Joseph R. on 03.08.11 at 11:33 pm

Great read on the Marxist view on “Commodity fetishism”

The quote are taken from his book: Das Capital.

#14 Throwstone on 03.08.11 at 11:37 pm

All the more reason to hit the reset button.

#15 Pr on 03.08.11 at 11:39 pm

The person in the gouvernement who puts back 20% cash for the down payment and amortisation maximum 25 years will be my hero.

#16 The Phantom on 03.08.11 at 11:40 pm

As always Garth, thoroughly enjoy your blog…Be of good cheer as they laughed at Peter Schiff on television as well (ref: “Who’s laughing now” on youtube). As stated before, some people have a vested interest to discover the positive in every situation, even if it looks hopeless. My suggestion is that there is no one who is so easily deceived as the one who wants to believe that what they have done is correct…RE agents, those who have recently purchased homes and now carry horrendous levels of consumer and mortgage debt can probably sleep just a bit easier if they tell themselves that what they have done is going to work out okay in the end…even if intuitively they know it won’t or can’t


#17 Tim on 03.08.11 at 11:54 pm

Sure all is well in Richmond, but what about in Canada? (by the way, if you don’t speak Cantonese, you may not get served too fast…) Harper is finally being taken to task:

Liberals to take down Steven Hubris–opposition-looks-to-scandals-not-budget-to-bring-down-tories?bn=1

“Why let them spin us with their own tax dollar (with the budget) when we can take them down clean and simple with rigged elections, forged documents, Stephen Hubris naming the government after himself,”

#18 Tom from Mississauga on 03.08.11 at 11:57 pm

80% of white dudes clients are Mainland Chinese??? Gee, his accent doesn’t sound like his Mandarin is very good.

#19 Sea Wave on 03.08.11 at 11:59 pm

Realtors and Bank Economists keep babbling on about rising asset prices miraculously offsetting rising debt levels (whoops: debt remains after asset prices tumble) whilst extrapolating recent trends in perpetuity into the future …

The underlying problem with all of their assumptions about perpetually rising home prices (apparently in excess of real wage increases) is low, and decreasing, productivity.

Our collective productivity, of course, inherently determines how much actual “wealth” Canada has (and, no, “debt” is not wealth).

“… Canada trails the U.S. in GDP per capita by $9,300. In 1981 that gap was only $2,600 … in a 35-country study of productivity Canada was in the middle of the pack … Canada was dead last in the G7 …Canadians generate $43.30 in Gross Domestic Product per each hour worked, while people in Luxembourg generate $74. Americans generate $57.40, while Germans generate $53.30 … when it comes to designing and producing new, innovative products, Canadian companies are laggards … because it’s easy to make big amounts of money extracting and exporting resources; businesses haven’t had to innovate. Our abundance of natural resources is actually something of a curse … Canada’s businesses fared poorly in international studies on research and development spending”

Clearly income/productivity gains do not support recent trends in house prices … financial manipulation is the root cause (expansion of credit via lowering of interest rates and lending standards, and so on) … the inevitable reversal of such manipulations (alas, no Ponzi scheme can last forever) will markedly decrease house prices.

That’s really all there is to it.

#20 JD on 03.09.11 at 12:02 am

Global TV makes me sick.

I ‘love’ how they just focus on how the 30 year ammortization is going to ‘COST’ the average buyer more money a month. In reality, they would be ‘SAVING” hundereds of thousands of dollars (in some cases) of interest over the term!

Also – the ‘big dilemma’ at the end as told by the Realturd (C) – Should the first time buyer dive in right now while they can still get a 35 year, or (apparantly the only other scenario) downgrade the expectations, and purchase something less.

Bring on the crashhhhhhh, this is just manic.

#21 Joe on 03.09.11 at 12:04 am

Garth, we’re all sitting here with our ears wide open wanting to learn, but when someone asks you to be specific you give some glib answer instead of something substantial. Yes, apparently we do need crayons. I’m not ashamed to admit that. If we know so little about fixed income, then tell us what it is that we don’t know. Pleeeeeeeeze!

Anyway, today the last of my renting comrades fell. (sniff sniff) We fought the brave fight together but in the end they just couldn’t hold on and bought at the absolute frothiest peak. So close to the end, but they gave in to the stainless steel and granite. We now stand alone among our late 20s/early 30s friends as the only renters. The only ones with liquidity. Sad, I expect their house will be worth less by the time they move in. I actually derive no pleasure from watching this mess unfold, it makes me quite sick to my stomach.

#22 AxeHead on 03.09.11 at 12:08 am

Look around folks…high gas prices, high food prices (going higher), home heating/air conditioning, taxes…and $106 extra because of elimination of 35 year amortization is a consideration! Something is going to snap.

#23 NotAGreaterFool on 03.09.11 at 12:10 am

Residential commercial real estate in Canada may be doomed in the near future, what about Canadian commercial real estate?

Depends on what kind. It’s all about cash flow and ROI. REITs are a good choice. — Garth

#24 DML on 03.09.11 at 12:11 am

11.1 million mortgages underwater and still rising.

#25 Utopia on 03.09.11 at 12:13 am

Lord, listening to that female commentator’s voice on the Global TV piece about real estate was about as comfortable as being drilled in the side of the head with a two by four.

Now I remember why I unceremoniously dumped my TV in the lane 10 years back. Does it not seem like the broadcasters are shouting all the time?

Maybe it’s just me.

Anyway, I am rushing to check my acounts. Maybe if I am lucky, I too can come up with the down needed to buy into Richmond before it is too late. Hey, they aren’t making any more land there, right? .

I think I know a speculative frenzy when I see one. Sure there is money to be made approaching tops, that is a fact. But hardly anyone ever cashes out in time to enjoy it.

I am looking forward to Globals story this time next year. You know, the one they will be doing after the SHTF, which it will in due time and I have no doubts about that whatsoever anymore.

I might just be damping down the volume next time though. The picture too. So much media pollution.

#26 CalgaryRocks on 03.09.11 at 12:13 am

#17 Tim on 03.08.11 at 11:54 pm
Sure all is well in Richmond, but what about in Canada? (by the way, if you don’t speak Cantonese, you may not get served too fast…) Harper is finally being taken to task:

Liberals to take down Steven Hubris–opposition-looks-to-scandals-not-budget-to-bring-down-tories?bn=1

Geez, with all the rich renters and crack investors on this site you’d think they’d be more conservatives here.

#27 Jsan on 03.09.11 at 12:14 am

The real estate industry uses 2 sales tactics, fear and greed. Again, for anyone who believes in one of the real estate industries most sleazy sales tactics that you had “better buy now or be priced out forever”, read this. Pass it on to everyone you know who has or may in the future fall for this underhanded sales trick using fear as the motivator.

#28 Bobby on 03.09.11 at 12:18 am

Everyone should see the recent movie/documentary called “Inside Job”. It outlines the financial disaster in the US staring from the run on the Iceland banks.

In the movie it shows how so called financial professionals, were selling real estate products on one hand as wise investments. Yet at the same time they were betting these same products would fail. So much for confidence in the system.

And the so called rating agencies that were stating these investments were AAA, they stood by the first amendment and said it was only an “opinion”.

Many top economists were publishing glowing reports as to the benefits of many of these supposed investment grade products, without disclosing that they were being paid a fee.

No wonder the Americans are mad. Think it can’t happen here. Wait for it!

#29 City Slicker on 03.09.11 at 12:19 am

My question is with the drug lords and chineese buying and jacking up real estate prices, what are the rest of Vancouver residents doing when they really are getting priced out at 80K household incomes? Think there’ll be a revolution or civil war soon like in the middle east.

#30 Jeff Smith on 03.09.11 at 12:26 am

Holy smokes! I would love to bang that

DELETED. Your last post. Get lost. — Garth

#31 Mr. Reality on 03.09.11 at 12:28 am

Wow i love this country. Global will promote real estate investment that is geared towards TAX EVASION! Pay less taxes by tearing down the house and rebuidling? Nice. We let foreigners abuse the system too. What a joke.

Mr. R.

#32 Cognizant on 03.09.11 at 12:33 am

My wife and I earn nearly 4 times the median household income in Vancouver. We can’t afford to buy a decent home for our family. This thing either starts crashing or we are out of here. I can’t live with the rage I feel towards all of the greedy realtors and house porn addicts who don’t see that the crazy RE prices here are DESTRUCTIVE and dangerous. I am so crazy mad at all of this.
Garth, I only discovered your blog a few weeks ago but it is a huge emotional help to read your daily posts. Everyone is so blinded and irrational about this that it is pretty lonely being a RE bear these days and this blog makes me feel a little less isolated. So please keep up the good fight, I for one need the support.

#33 Karla on 03.09.11 at 12:34 am

It seems that you’ve convinced a few people, so why would you despair just because the majority are not inclined to listen? I’ve learned something from the investing advice you’ve provided – or I’ve been inspired enough to begin to teach myself. I’m already through five books on investing and two library seminars in an attempt to gain back some financial control in my investing decisions, rather than simply placing all my trust in a financial advisor with mutual funds to sell.

#34 Patz on 03.09.11 at 12:35 am

Depression 2.0 new release, no fixes, no updates will be required. Comes in a plain brown box with one can of beans. Can can be reused as cooking utensil over small fire.

Look at the video and think “one week to go before the dotcom bust.”

#35 Jody on 03.09.11 at 12:36 am

“Land value.” Hahahahahahaha! Oh please. I wonder how much land out in the boonies will be worth when oil is $300 a barrel. And those fugly houses they are having built, a gas fireplace? yea, good luck using it when gas skyrockets. The Chinese are buying, bullshit. China is going tits up like the yanks. Every week this nuttiness continues the bigger this crash is going to be. I mean Christ almighty, every night the news is talking about how the price of food is going up, how heating is going up and for some reason people can’t take their head out of their ass long enough to figure this shit out? Wow. We really are screwed. I hope my taxes don’t go over 90% to pay for all this stupidity by all those retards.

Gold Has No Intrinsic Value and it is Not a Store of Value

#36 mooncake on 03.09.11 at 12:40 am

Tulip Mania has hit the west coast!

#37 morry on 03.09.11 at 12:40 am

Mr. Reality: what are you smoking. It was not TAX EVASION. Simply Tax avoidance ..something every one maximizes where possible.


#38 Dave on 03.09.11 at 12:40 am

Ha! You could almost see it flash across the last realtors face: “Don’t say they’ll have to wait till prices are lower, don’t say they’ll have to wait till prices are lower”

#39 CalgaryRocks on 03.09.11 at 12:42 am

Good news for Alberta’s employment.

Pretty easy saving 100G working in the oilsands.

#40 Andy In Vancouver on 03.09.11 at 12:43 am

At first, the teardown incentives (if the video is correct) sounded like the stupidest thing I had ever heard.

But, if saving on HST gives you an incentive to tear the place down, it’s like a stimulus package in disguise I guess.

Go Richmond! Make us some jobs.

#41 Six Foot Six on 03.09.11 at 12:45 am

Maybe it’s not the Kool Aid they’re drinking…

I currently reside in the old part of Milton, and have driven past the hives that are being erected for the last 10 yrs around town and never understood it… but maybe I do now…

#42 Alex on 03.09.11 at 12:54 am

Global. My nemesis.

Today, Global BC sent me its response to the CRTC/CBSC complaint I filed a couple weeks back and flagrantly flaunted in the number one Comments spot of this debauched, vile blog. I won’t go into the gory details yet, but suffice to say Global assured me the two “news” pieces in question (A billion Asians repelling from Sikorskys and never-ending condo lineups) were both newsworthy *and* valid. Global also allayed my fears of backroom dealings between it and the its Number One Advertiser by advising me it delivers a balanced look at the market.

To which I say, “HA!!”

My next step is to request a ruling by a CBSC panel. It is a step I’m going take. And if that doesn’t work, I already have alternate plans. The more I get into this, the more entrenched I get.

As for “giving up,” Garth, don’t you dare, man. You probably have no idea just how many people you’ve inspired to look away from the dark side. To ignore all the crap on display virtually every day in the mainstream media, even though you know deep down inside that it somehow feels all wrong, requires a HUGE psychological shift. You (and guys like Ben Rabidoux over at Financial Insights) provide the basis for that shift.

And somewhere in the distance, Bette Midler begins to sing, “You are the wind…”

#43 Debtfree on 03.09.11 at 12:55 am

Hi Garth to back up my claim that it is really different here . re; exceptions to every rule .

Wanted – Rent or Buy 4+ bdr Home on Acreage 1-250-287-0680 New or Updated
Looking for a home to rent on acreage for our family of 6. Starting July 1st. 12-18 month rental. 4-5 bedroom minimum. Rent money can be paid in full up front. OR do you have an acreage for sale? We need to relocate our family to Terrace from the Vancouver Island area. Please contact Carl or Jennifer at the email below or 250-287-0680
by Jen · email · edit · del

Please don’t post this on the blog as we don’t want anymore people to move here . It’s getting nuts enough here without me adding to it.

#44 April on 03.09.11 at 12:58 am

Check out saskatoonhousingbubble. Listings, sales and mths of invertory. “Back to 2006 prices”, “Alberta has busted”… “BC on it’s way”. ” Van … defying gravity…. but it is close”

#45 Naive or Stupid on 03.09.11 at 12:58 am

So true about that email. I couldn’t beleive that a friend of mine working at Safeway in Edmonton for $10/ hour and no savings brought a $320,000 townhouse with 0 down/40 year mortgage in 07-08. Now she sees an house listed for 199,000 and still not selling. She still beleives that the market will improve…. Naive or Stupid ??

I am sitting with more than 200K and still can’t convince myself to jump in…because its a stupid financial decision. Renting surely helped me save a lot of money and I am only 32 and I have all time in the world…..I will wait it out.

#46 BrianT on 03.09.11 at 12:58 am

#19Sea wave-No-GDP is far from an accurate measure of the wealth of a country’s economy. More than a few countries with a very high GDP per capita number are broke, which would be mathematically impossible if the number was accurate, which it clearly isn’t. Iceland,Ireland,Greece-just to name a few. In the USA, if you have your appendix out and the bill is $150000 that will add 10 times more to GDP than if the bill was $15000. That is your “wealth creation”. A lot of it is just a zero sum game-moving cash from one pocket to another. At this point, the average American is toast-you should read a little more to understand this fact.

#47 levelzero on 03.09.11 at 12:59 am

I’m in the lower mainland. I’ve spoken to more then a few people in the last few months that feel the market is overheated and due to correct. Slowly but surely the sentiment towards RE is changing.

Garth, I know we all have bad days at work and it sounds like you may be having one. I would like to thank you for taking the time to write this blog and share your opinions. I found this blog when I was considering buying. Instead I have my money in equities and know I have saved myself from what would have been the worse decision I could have made.

You’ll never change the mind of an idiot, but there is always hope for people who seek knowledge on their own.

#48 Cyrus on 03.09.11 at 1:00 am

The 100th monkey.

#49 JO on 03.09.11 at 1:00 am

The nonsensical argument that recent buyers since the crash of 08 have an equity cushion is quickly going to show its worth. As Garth said, these “gains” are an illusion…in my words, these current RE prices are a figment of peoples’ excessive credit epansion imagination…all it will take is that one sale of a comparable home for 30-40 K less and bingo..the next sale begins at that lower price of the most recent sale..
Many of these recent homeDEBTRENTERS are going to realize what the word risk means – leveraged 20 to 1 on an large illiquid asset is akin to gambling at Vegas with all of your life savings..

My main point of contention is that these speculators should not be subsidized by us and also need to be better educated about the risk they are entering into.

For most of them, their world of 2013-2015 wil look the same: house down 20-25 % and well below that value of the mortgage…utilities,prop taxes and all related costs up 40-50 %,and sudden realization that they are financially wiped out…

Therein lies the wonder of the debt based, highly leveraged, fractional reserve, fiat money system at work: using debt, inflation and taxes to slowly but very methodically siphon off as much as possible from the fruits of their labour over to the two most fundamentally parastic entities in society – the government and FIRE industry bosses…when one of these sheep come crying to you in 2015 about how they could have worked a life time and have nothing left to show for it with no’ll be able to explain to them how the whole charade was just a societal credit card on steroids..

Take it easy out there

#50 USInvestor on 03.09.11 at 1:01 am

Funny thing about Vancouver, the city prides itself on being one of the most sustainable in the world – where it is anything but! How can anyone afford to live there!

If prices do keep going up (lets just pretend for a second) who will live there in the future? Who will work there? Where will the workers live? Will they be bussed in every day from the States? Everyone there now will be set when they retire, though they will have to promptly leave as rents will have to rise too. (My fantasy is assuming the price to rent ratio will reset by rising rents not falling prices.)

#51 Patz on 03.09.11 at 1:01 am

BTW Angela Calla, the Stepford mortgage broker interviewed towards the end: she is billed as “winner of AMP (Accredited Mortgage Professional) of the year award.” Anyway, she was on the radio a week ago pushing “no money down” house buying. If she’s the top “professional” you gotta wonder what the bottom feeders are like.

#52 Soylent Green is People on 03.09.11 at 1:04 am

Hey, I just saw a version of that picture today on the C.R.U.S.H. wall.


In 2006, Harper won his “minority” government by 4,502 votes in 11 ridings across Canada. That’s it.

Having an extra $1.3 million to throw around helped cinch the election for them. Abusing the advertising rules by using no-chance ridings to divert money and bolster their advertising in competitive ridings is illegal when the party’s reached its cap. It is more than an accounting or administrative error. It is yet another deliberate manipulation of the voting system to achieve an undemocratic result.


#53 Chen on 03.09.11 at 1:07 am

I wonder what will happen when Richmond slips into the ocean? It’s coming soon! I guess real estate will triple with more waterfront homes!

I’m sorry, but I’m also Chinese, but I was born in Canada. I’m just as sick as other Canadians about The Mainlanders buying up property at insanely overpriced prices. I don’t live in Richmond, and never would.

My kids won’t be able to afford a home either if this keeps up, well I guess I should say they already can’t afford, but they are still too young.

Anyway, I’ve been called ‘white washed’ by other Chinese people because I don’t agree with their ‘money is god, greed is good’ attitude. They really hate it when I point them to this blog. They want the prices to keep going up. The sellers that is.

Don’t even get me started about that crooked real estate company in Richmond that was double dealing and flipping before the homes were even sold.

#54 BrianT on 03.09.11 at 1:09 am

#28Bobby-the thing about that movie is that it is old news-pretty well anyone with their eyes open is aware of the whole story. The members of the public who should view the film are not interested, either because they find it depressing, or the topic is feared as a “conspiracy theory”. Look-Goldman got reclassified as a Tier 1 bank, which means it is being subsidized by the US taxpayer as I type this (in addition to their gigantic bailout). The original premise for taxpayers subsidizing big banks was that they would then facilitate lending to the general economy, so there would be a benefit to the overall economy. Goldman doesn’t do this-they are basically a huge hedge fund, subsidized by the general public. Nobody cares (except to yell Conspiracy Theory whenever facts are presented). Nobody cares at all, so the moral is just try to look out for yourself because your trusted authority figures are definitely not going to.

#55 been there, done that on 03.09.11 at 1:20 am

Please no, say it aint so. Sherry Cooper? Isn’t she the “economist” who advised us all to adopt the U.S. dollar back when it was close to 60 cents? It is really sad to say this but as a Calgarian, who graduated with Stephen Harper, in the same program of Economics (all us of us are dim-witted twits), I’ve now sold my noose of a Victoria home, cashed out, and my only wish is to be? Garth Turner! And he’s not even pretty! (Enjoyed his Victoria lecture.) Love the blog, read it every day and thank god I never listened to all those “financial types”. (I am CFP, with another degree in mathematics.). ETFs, prefered’s, dividend stocks, cash and a rental home that costs $3200 but is $12,400 at 4.45%. Life is nice.

#56 Utopia on 03.09.11 at 1:21 am

You know, I am actually a little shocked by the level of exaggerated enthusiasm shown by those in tonights Global TV report.

Are these guys and gals all scripted to make buying R/E at the market top sound as exciting as possible? Forgive my bluntness but that clip was 100% pure bullshit.

So before we all get too excited about Richmond minting millionaires by the day lets all just review a few of the facts.

Over the last few months we have received damning reports on the levels of debt held by Canadians and the risks of holding too much mortgage debt, LOC and credit cards from no less than a dozen “sound” and respected sources.

These include reports from the Vanier Institute, the Certified General Accountants Association of Canada, the Action Task Force on Canadian Household Debt, The Governor of the Bank of Canada himself, commentary from the Chief Economists at ALL of our major Canadian Banks, from the Conference Board of Canada and the Chamber of Commerce too.

Wait, I am not finished….

We also have documented evidence of trouble brewing coming from Government itself, from the Minister of Finance, from Statisics Canada, from CMHC itself and from some of the best business columnists and Journalist this country has to offer.

Most recently we have been treated to worried voices warning of the parallels of our situation to that of America coming from out of the United States. Nobel Laureates of Economics no less have expressed reservations and doubts about the sustainability of the path we are now on.

Plus a whole host of other sources including the many found daily on this blog and the Host himself. Need I say more?

But who wants to listen to all those people and organizations when we have Global TV spouting fantasy and blowing sunshine on the nightly news. It feels like a circus watching that clip.

Do they not know at Global that the verdict is already in? Perhaps they might find time to report that the brightest people and organizations in this sorry country of ours have been expressing very serious reservations about the state of our housing market and the continued growth of debt levels for many months now?

But that is not done at the circus, is it?

Bring on the Clowns..!

#57 AG Sage on 03.09.11 at 1:27 am

Carsten is what one might call a tool. Topped only by the narrator.

Those that don’t make it? Those poor souls with their pick of houses declining in price, you mean?

#58 Nostradamus Le Mad Vlad on 03.09.11 at 1:35 am

“. . . and, for comic relief, me.” — So much for that. At least you’re good for something, Garth!

“Real estate always goes up. . . . a magazine that leaves glossy droppings . . . Whither real estate?” — A moxieoron if ever I saw one (where is spellcheque?).

“But then, we’re different. We fixed gravity.” Gravit E = mc public insanity. Yeppers sir, we’re really diff’rent here!

The pic is interesting re: some of the following links. Turns out there is quite a lot of oil left, esp. here (add Fort Mac in after); it’s being hidden away from us.
Peak Oil? Not so much. TPTB have and are deliberately jacking up prices, while pushing for a new carbon tax to line their pockets while sheeple are fleeced. “That’s enough crude to fully fuel the American economy for 2041 years straight.” Plus No Oil Shortage The US$ is tanking, that’s another reason why oil is going up. Sadaam was right to move away from the US$, which is why dubya’s boys went in to prevent him from doing so.

Moving In For The Kill “The World Bank / IMF is owned and controlled by NM Rothschild & Sons plus 30 to 40 of the wealthiest people in the world. For over 150 years they have planned to take over the planet through money.”

Webmaster’s Commentary: “That only works if the people are brainwashed into believing in the divine right of bankers, as they were once brainwashed into believing in the divine right of kings.”

6:49 clip Look for The Tiny Dot (economy).

Deliberate Lies Or how to turn sheeples’ attention away from the economy.

NWO A few months ago, it was China and Russia. Now Iran and India — both good friends of China and Russia — are voicing the same opinion.

9:17 clip A practicing Muslim cannot be a terrorist.

No Nukes Is Good Nukes “The director general of the International Atomic Energy Agency has once again confirmed that Iran is not after a nuclear arms program.”

#59 Mean Gene on 03.09.11 at 1:42 am

Real Estate is scab everyone likes to pick at.

#60 Peter Pan on 03.09.11 at 1:45 am

I love the Global TV report…

You have to see the speculative blow-out before prices can correct back to the mean…

#61 Cato on 03.09.11 at 1:50 am

Pure unadulterated greed on all levels – consumers, industry, government. Fear and greed are predictable so at its core this is a policy failure.

I have no problem with newly minted quasi-capitalists coming from mainland china to buy BC, its a free market. The few I’ve met are neophyte investors with bulk of their wealth tied up in one asset class – real estate. Not a herd I’d be taking direction from. What rubs me raw is the fact these buyers get to arrive from a low/no tax jurisdiction and compete against Canadians who suffer under domestic tax regime. Their income goes alot further then canadian counterparts, its hard to compete with that advantage in not only real estate but other business opportunities.

I think we are well past the point of heading off this disaster, there is no way to soften whats about to unfold. Housing is just a symptom of much larger failure brought on by a culture of greed,entitlement and big government. If Canada has to be land of have and have nots then so be it. Of course we could also become the land of socialism if the heavily indebted feel justified saddling rest of us with their mistakes.

#62 Edmontonian on 03.09.11 at 1:51 am

Hearing the fact that real-estate is getting super bubblicious in some areas is shocking looking around me at Real Estate in Edmonton! Prices are down 30% from the peak of prices in JUne 2007 almost 4 years ago. Yet with oil prices making a huge comeback, the 35 year mortgage still available & historically low interest rates, prices are way down again In edmonton over last summer.
In edmonton we have terrible transit services most people drive, increased fuel costs will murder the budget of over the hilt in debt edmontonians!
We have the Highest foreclosure rates in Canada, and they are starting to surge again. Bankrupties still are fairly high in Alberta too.
What is going to happen in this city? SO much wealth has been purged out of this Province by multi-national corporations which I feel have big control over our Governemnt here in ALberta.
Historically does anyone knoe if Edmonton Prices, or Real Estate prices in Alberta collapse before the rest of the country?
While other hot areas in BC and Ontario have continued to soar the last 7-8 months it looks like we could be going through another huge downturn.

#63 South Sea Company on 03.09.11 at 1:51 am

Funny that Global didn’t mention that real estate prices went down last year in Metro Vancouver outside of Vancouver, Richmond and Burnaby.

It would be interesting to find out what is happening in these other areas these last two months.

#64 Crash on 03.09.11 at 1:57 am

It’s actually getting pretty comical here in Vancouver. It’s amusing to watch the local R/E industry pull different rabbits out of their hat to try and keep this thing going. Now it’s the ‘rich Asian’. And it’s even funnier to see the local media being used as pawns in the game without them even realizing they are being used.

#65 $froma$ia-The mother of all Bubbles on 03.09.11 at 2:05 am


Notice that agent on the video didn’t say customers that decide to wait for any kind of market correction to get in?

Funny thing how I was sitting in a Subway Res. Having lunch when a kid in his mid 20’s came in talking about his big purchase of a house in Richmond for $600k that has two suites. Telling the waitress that he bought a house becuase it’s likely that next year it will be something like $800k to buy.

Hmmm, funny thing is that the waitress was right there with him on the great purchase.

Reminds me of that time before the ‘Great Depression’…that story about when the shoe shiner was telling that gentlemen to buy stock….

The gentlemen imediatley sold all his shares and got out.

My name is “$froma$ia-The mother of all Bubbles” and reducing ammortization to 30 years is too little too late.

We are at the mercy of the rates governed by inflation.

Inflation is Marc Carneys boss when it arrives and it is already showing up…


#66 The Original Dave on 03.09.11 at 2:19 am

#64 The Original Dave

wait a minute, you’re saying that companies increase advertising when things are tough? I always thought that the marketing dollars were the first to go.

Which is why you will never run your own business?

When things get tough, the strongest not only survive, but get stronger. They don’t do it by curling up in a corner.

yeah, nice assumption. I’ve run 2 of my own businesses, have traded stocks (successfully) and have managed over $5 million in real estate properties for family since I was a teen.

I’ve actually delved into some serious marketing books the past few years as I wanted to inform myself on branding etc. All my sources (good sources I might add) suggested that the marketing department and dollars were the first to get slashed when a brand/product/business is losing market share.

Marketing dollars shouldn’t be the first to go, but I think they are in a lot of cases when business dwindles. My comment had nothing to do with “the strongest surviving” like you’ve assumed, but general business practices in a down market. Maybe you need some reading comprehension?

#67 wetcoaster on 03.09.11 at 2:22 am

I want to puke all over Chris Galius’s suit after listening to that bullshit reporting. Not once the word “correction” is mentioned, or even the possibility of less buyers equals lower prices. Bunch of real estate whores deserve an outright crash on their earthquake fault zone ‘mecca”.

Future famous Chinese saying: He who builds on bog goes under real quick.

#68 wetcoaster on 03.09.11 at 2:32 am

#28 Bobby. You should read The Big Short, explains the same thing but with several key characters who figured out ahead of time this charade was going on and made billions.

You have to think that the Canadian pension funds are being sold the same pile of shit via MBS’s via CMHC. These being the same ones the Canadian government bailed the banks out for $125 billion a couple years back.

There is no way CMHC can be stupid enough to shoulder all the blame when this same house of cards collapses. Thats why they are so adamant their “model” is solid”, just like Morgan Stanley and Bear Sterns thought too. There has to be some type of AIG sucker taking on some, or alot of the risk of these 40 and 35 year subprimes the past few years and is why Flarhety is cutting them off at the knees thinking he’s out of the woods. Surpsise Jimbo.

#69 Timing is Everything on 03.09.11 at 2:33 am

Even worse, people already age 60 think they will need a job until they’re sucking oxygen and heaped over a walker at age 72. – Garth

Well Garth, I work at a to remain nameless post secondary ‘Institution’….And I ain’t making this up
(I wish I were). I know of two faculty members, past age 65 still teaching (one close to 70). Now that in and of itself isn’t so bad…However, they both have Parkinsons Disease. And I suspect either dementia and/or fairly severe side effects from medication. One can not afford to retire…3rd marriage. The other I suspect can, but won’t. There are some great young faculty, just waiting to show their stuff at half the cost…But sadly, the geezers won’t budge. And there is nothing that can make them. Generous incentives have been offered. No movement. No joke.


Oh ya, they both get full-time Instructional Assistants because they can not do the teaching or develop current curriculum themselves anymore.

#70 Gary in Alberta on 03.09.11 at 2:44 am

#228 Tony (From last thread)

Admire your philosophy and it is very much the same as mine and the way i have been conducting my affairs over the past many years.

Part of “bugging” out of the system is cashing in your chips and going to physical gold and silver as a contra bet against this corrupt and grossly mismanaged system and i have been doing this since about 2001 or so and is has worked extremely well as my bet has increased several times over and i think likely will continue to do so until the system is wrung out from all its wrongs.

I still continue to purchase physical precious metals and bought some more physical silver today with a view to keeping it and even passing it on to my children or until such time as i feel comfortable that there is a reason to invest again in our economy.

If you can’t beat them, you don’t have to join them as you can opt out as completely as you want and continue to live peacefully and privately away from the “Maddening Crowds”.

Good luck to you and educate your family and friends as unless we all get together in one way or the other the rats will continue to run the ship.

#71 grantmi on 03.09.11 at 3:06 am

#2 on 03.08.11 at 11:00 pm

… again

No! You’re a loser!!!

#72 supermike on 03.09.11 at 3:10 am

The market is still red hot out there.

See this one in North York, Toronto:

C2045576; For Sale: $825,000

285 Hillcrest Ave Sold yesterday: $998,000

Do you know who got this house? Not some rich Chinese! A builder!

Builders are in the bidding war! And this builder is not the only one. I have heard of many of this kind of things recently.

Do all builders lose their minds? Do they know the market better than individuals?

I am confused now.

To be honest, I believe that the market will correct sooner or later. I believed that it would be soon. That was why I didn’t buy a house even though I was easily able to afford one without lowering the quality of my life. And I have been paying 1.5K for rent a month for a 2-bed condo unit.

But now I realize the timing is the key.

Based on the current market situation, I don’t see the correction will come anytime soon.

I saw a brand new house priced at 450K less than 2 years ago(Inspiration community in RH, builder is Tribute). Now it is 680K+! In less than 2 years!

So, I am wondering if there is a correction, will the price go back to 450K?

Timing. It is the key.

I believe what Garth said. I rushed to the Chapters to buy his new book as soon as I saw the info on this site. And I still believe he is right. All bubbles burst in the end. Yes. In the long term!

But the question is, when?

I started believing the housing market was crazy when I was just over 30 years old. Before my daughter was born. Now my daughter is almost 6 years old. And the market is still carzy when I am 37 now. And my daughter is going to grade 1 this Sep. I have to pay 1K+ for a private school because the school near my condo isn’t so good while many of my friends will pay NONE because they bought houses in some called “good school” communities years ago.

Garth’s theory is completely right! if we can remain young for 60 years! Otherwise, it doesn’t make much sense because we can’t live forever.

Garth has a decent house to live in. He can talk about the theory no matter how long it takes. But, for people who don’t have his own home. It is difficult.

I lived in an apartment for 6 years. The rent wasn’t low, it was over 1.1K a month for 1 bed+den excluding laundary which was around 50+ a month. The condition of the unit got worse and worse and worse every year. there was mold. There was full of cockroaches everywhere.

Then I moved to a condo, I lived there for almost 2 years. then the landlord decided to sell it. Then we lived in hell because there were so many buyers visiting every day! What could we say? Stopped the landlord from selling his own condo unit?

Renting is not an easy thing! Garth hasn’t been suffering for this pain for decades! Of course, if you can easily afford 2-3000 dollars to rent for a month, you have much more choices. Rich people alway have more choices as they can easily find more tax shields than average hard-working people.

I read an article in the newspaper when I was living in the apartment. An old couple who never bought a house. Their apartment got worn and worn every year. Their bath tub couldn’t even work well. And the problems just couldn’t be fixed by the building management. As an old couple, they had no choice in stead of complaining!

Garth talked about those boomers with a house only. Don’t you realize they have so many choices? They can downsize, they can sell, they can…

Having choices is a very good thing! (As I remember, facebook’s founder is renting now! )

Do you know the worst thing for a human being,especially old people? No Choice! When you have a spacious house of your own, you have your choices! If you rent in your whole life, you have no choice no matter how bad the landloard or the condition of your rental goes! especially when you are too old to change your situation!

So, I am not say Garth is wrong. He is right. He is a rich man who hasn’t been renting for decades even though he suggests we should rent forever.

I still think he is right. But I will buy a house whenever my second kid is born.

The key is, I will only buy a house I can afford enen though it might be small or something.

I only live that long, eighties? hehe , I am alreasy reaching my 40s. I don’t want to spend my life proving some economical theories.

Incredible. If you want to buy, do it and stop whining, — Garth

#73 reality guy on 03.09.11 at 3:51 am

#6 Mr Lee

The problem with Turner is he preachers but has “NO BALLS” to pull the trigger. No one will listen until the rates start to climb. And that is when these guys know he’s means business.

For the old guys without a job they have to live on something. If you only have 10 years to live the value of your house ++ interest or dividend is a pretty sweet way to subsides your lifestyle. (for now) because in 10 years time when these guys start croaking it may be worth fractions of the values they are now!

#74 patient in BC on 03.09.11 at 3:55 am

What is it with UBC then???
All those new developments who have been for sale for months… And no line up for Sitka. Pretty quiet I must say.
Why would Rich Asian buyers be crazy about Vancouver West, except the beautiful UBC campus? They used to love it over here. Why would they line up in Burnaby while suites are sitting empty in the luxury condos south of 16th avenue???

#75 reality guy on 03.09.11 at 4:09 am

I’m sorry real estate agents, but I’m enjoy my profits
from Wind, Transcanada pipeline, Placer Dome and Barrick gold.

And Oh yeah My National bank, CIBC stocks because they are safe and the taxpayers will take the grunt of the fall.

I think Canada are retarded. That infomercial is so concendending.

First they say most of the buyers are from mainland china, the next thing they say its being sparked up by the 30 year loan period. (which doesn’t concern china buyer because they are rich)

Interesting article about china’s real estate shell game

#76 Mark on 03.09.11 at 4:24 am

I like how that last real estate agent talks, he was just about to mention “Wait for the massive collapse… ” :)

#77 Mooks on 03.09.11 at 4:30 am

The Mexican Constitution regulates the ownership of land and declares that …within a zone of 100 kilometers from the border or 50 kilometers from the coast, a foreigner cannot acquire the direct ownership of the land. These areas are known as Restricted or Prohibited Zones

……Sounds like a good idea for Canada

#78 March of the Pigs on 03.09.11 at 4:30 am

All television is educational television. The question is: what is it teaching? ~Nicholas Johnson

#79 Robert Dudek on 03.09.11 at 4:36 am

Mr. Reality:

” Pay less taxes by tearing down the house and rebuidling? Nice…”

Once they rebuild, the house will be worth much more than before, so property taxes will be much higher.

#80 confused and a little crazed on 03.09.11 at 4:46 am

hi garth,

i know you must seem dishearten but the fact so many seemingly educated people just do not bother to do the math and Jump into an very costly asset

” it’s different this time follwed by….fill in blank”
but a few listen. even i do not follow everything I buy individual stocks. I haven’t found an ETF/ preferred I particularly liked. But the bottom line here is… it is still a material asset. You are not going to die without it.

And you are going to have to sell when you get old. With stocks giving you dividends you are getting passive income …something we all what when we get old….to old to fix the house…to old to get a job…. we need money coming in

so focus on that. Right now i just politlely nod when people tell me they bought a place and tell them ” Good for you….”

why rock the boat…eveyone wants to own. You are just going to alienate yourself . But It iss better if you tell them you buy stocks b/c the last 2 year have been great

vancouver condo 1 bedroom= $300,000 plus maintenance & tax and insurance , utilities
$6-$700/ rent a month 1 bedroom basement

just does not add up. but of course valuations do not matter

#81 Mark on 03.09.11 at 5:50 am

#82 Jas Girn on 03.09.11 at 5:55 am

Well, she can buy a house if she wants but then she will be scrimping money just to buy new underwear and make-up. Typical mentality of the populace when it comes to real estate. No wonder, a lot of people are debt whores living under the illusion of being comfortable.

Canada is such a big country with a lot of smart people and a hell lot of resources, yet houses are so expensive. Sustainable housing is the future (more like the past because it should have been thought out way before).

#83 Professor on 03.09.11 at 5:58 am

Hey Hon. Garth,
1 Got any hot American cities that you’re looking at for investments? I don’t think Phoenix is all that.

2 You changed your home page look. Man you’re good lookin.

#84 Calgary Hat on 03.09.11 at 6:43 am

OMG! Only a week a half to go before 35 year morts get drops? Why didn’t anyone tell us! (kidding).

I like how this is a BC TV video uses a “300k mortgage at the lowest rate 3.79%” when they were just bragging about a $1m average! Makes $106/mo extra look small, but really it’s much higher. If they were going to skew facts, they should have used a $30k mortgage and it would only go up by $10/mo.

Also I think when you have so little sales and 1 ethnic group is mostly buying it can be spun just like this.

When Canadian’s are not buying their homes, the Chinese sould take note of that if they were smart.

Canadian’s use the term “To tell a good Chinese eating spot look for Chinese eating there”… funny the Chinese do not know a good investment spot because the Canadians are not eating there. haha.

#85 Brian1 on 03.09.11 at 7:18 am

Utopia: concerning Japan yesterday;
James Fallows, The Atlantic:26 Feb 2011
Current Account surplus $194 billion
The Yen has risen 65% against the U.S. dollar in last 20 years.

#86 Brian on 03.09.11 at 7:23 am

Generation Screwed!!!

#87 Brian1 on 03.09.11 at 7:28 am

Garth: I am not making things up. I just believe something as an opinion. Who really ever knows anything for sure. If I say that the Dow may crash then the focus is on ‘may’ not ‘will’. When our house prices fall what will Americans think after we told them how perfect our banks were? Sure, it may take more than that to cause Americans to reign in their spending but their crisis is not over.

#88 March of the Pigs on 03.09.11 at 8:12 am

I wonder if we’ll see a perp walk on wall street?

#89 Shane on 03.09.11 at 8:23 am

Garth, Are you still projecting a 10-15% correction in the market this year?


#90 bigrider on 03.09.11 at 8:28 am

Garth how long did they wait to for the sunshine to shoot that video. Maybe wasn’t even shot in Vancouver.

Ratchet time back 11 years or

Carsten Love decision making process “by now a property that is not what you really want to beat deadline or wait for your income to rise to buy what you really want” Of course waiting period or renting not an option in his book.

Realturd dirtbags

#91 SAD on 03.09.11 at 8:31 am

Seems to be contradictions in what is driving Vancouver.

“For the first two months of the year, Vancouver housing starts are up 23 per cent [compared to January and February 2010],” CMHC’s regional economist Carol Frketich said in an interview. “That reflects a stronger resale market in [Metro Vancouver]. Also, Vancouver has had stronger job creation than the rest of the province.”

Can you say speculator?This is a scary time for builders. Are they going to close?Of course with CMHC backing things there is less questions.

#92 bigrider on 03.09.11 at 8:38 am

Garth I have an associate, just purchased a 4 million dollar commercial building in Hamilton. Not a great area of the city, somewhat seedy. He put 1 Million down currently total rent collected $320,000 per year, B class tenents. Currently nets after all expenses $110,000 a year. Mortgage at 4.29% He expects no capital appreciation on his purchase (he is realistic)but does not expect to lose his tenants either.

I think he is vulnerable on many levels(tenant loss overall decline in RE values etc.) but the guy is pretty shrewd and has done well for himself to say the least.

What are you thoughts just of the top of your head on this?

If I had a mil to invest it would not be in a seedy part of Hamilton with ‘B class’ tenants, while assuming 3 mil in debt at rates destined to rise. — Garth

#93 serge on 03.09.11 at 8:54 am

Do you know what else always goes up: Nortel stock … Never went down for decades, juste like houses, well except for that one time.

#94 bigrider on 03.09.11 at 8:58 am

Everyone needs to watch the show “Big City Broker” which features Brad Lamb, self proclaimed king of condos in Toronto and his band of cronies, crooks and scam artist employees as they manipulate people into big, expensive purchases of “investment” condos.

Amazing to me as there is no oversight and regulation to hold these people accountable for their actions when it comes to pushing debt and leverage.

Now go and try and implement a leverage loan for investment purposes into financial assets, a loan that is tax deductible and see the hoops the advisor needs to jump through in order have said loan initiated for investor and the amount of ongoing due diligence required to make sure said loan is still in best interest of investor.

Talk about enormous double standard

#95 Moneta on 03.09.11 at 9:02 am

What does this mean?

Something like 60% of boomers are retiring with an average debt between 50 and 100K.

And even in the top 10%, all I see is debt. For example, it is not rare to see someone with 1.5-2 million in assets which are backed by 600-800K in debt.

Even if they have 1 million in net worth, most of the time their assets are of the real estate kind which are non producing money pits. And their debt requires at least 20K in interest payments at 3%. At 5% this goes above 30K. That’s a lot when your pension is between 30-60K.

So many in the 10% are going to get squeezed.

#96 Jack Russell on 03.09.11 at 9:04 am

Those homes are tear-downs? Just so they can save on some taxes? Something is seriously effed up in that area, but I guess you already knew that.

#97 Steven Rowlandson on 03.09.11 at 9:04 am

Hello Garth.
I just saw the video and what comes to mind is that either there are people who have money to burn or there are lots of people who are not quite right in the head. How can such insanity be cured?


#98 Moneta on 03.09.11 at 9:09 am

When I ballparked 100K as a down payment she laughed and walked away from my desk.
Well the advice was good until it got too extreme.

If real estate drops by 30% and the average home goes from 350K to 250K, a 20% down payment is 50K, not 100K.

Big difference.

#99 gentleInvestor on 03.09.11 at 9:10 am

That real estate guy at the end of that video said – concerning the new rules:

“After the new rules apply, you are going to have to save more or wait until your salary increases or you’re going to have to make do with less of a house than you wanted.”

What about ‘wait for prices to correct?’ He forgot that one.

#100 S.B. on 03.09.11 at 9:11 am

Here is a Toronto condo update from a cartel member. They seem to suggest 5.5% yearly appreciation is normal and sustainable?

Sales Commentary
January 2011 sales on the Toronto Real Estate Board were down by 13% from January a year ago. Some will interpret this as a continuing weakness in the market. Others, such as our self, would make the case that the monthly difference has been narrowing from a high of 23% last summer. We are well positioned for the spring market. The downtown condo market was off by only 2% this January versus January of 2010. While active listings on TREB are the same as last year, they are up by 45% for downtown condos. So don’t look for condos to appreciate at the same rate as detached housing in prime markets.

Looking to February, we expect the sales gap from last year to narrow further to 8%. Sales for the downtown condo market will begin to run ahead of last year. As we stated in our January Forecast, the downtown condo market consists of two components: the resale and pre-construction markets. Last year, pre-construction sales exceeded TREB sales, and as all of these new projects are built and enter the resale market, we are expecting that downtown condo sales on TREB will double in five years.

Most experts tell you that current sales are stronger than they predicted because buyers are trying to beat the forecasted rise in interest rates later this year and the tighter mortgages rules being implemented for mid-March. Not true! That’s just a guess on their part. The reality is that we have a lot of Generation X and Y buyers who want it now – not later – and they will be able to qualify even if rates move up marginally later this year. So this market will not look like 2010 with a strong first half and a weaker second half to the year!

In this Report, we looked at sales at 77 Harbour Square on Queens Quay. This is an older building that still appeals to younger people because of its amenities, upkeep, and great water views. The first unit we tracked was a 615 sf jr. one bedroom with parking and locker. The first sale was in 2000 for $175,000. The same unit sold again in 2007 for $240,000, in 2009 for $270,000 and then in 2010 for $300,000. That represents an average compounded price gain of about 5.5% per year and a current price of just under $500 per sf. The next sized unit is the most popular in the building – a 758 sf, one bedroom with balcony, parking and locker – facing west on a high floor with a water view. It sold in 2003 for $287,000 and again in January of this year for $410,000 in two days. This unit appreciated again at about 5.5 per cent and because of the higher floor, and balcony sold for $540 per sf. The final unit we looked at also sold in January of this year. It was a two bedroom with parking and locker on a high floor but no balcony and only a city view. Newly renovated, it sold for $580,000 or over $600 per sf. When you factor in inflation, prices in this, one of the most desired buildings in downtown Toronto, are only rising by 3% per year which economists will tell you are sustainable in the long term. So where is the real estate price bubble??

#101 Andrew on 03.09.11 at 9:19 am

I’m sure you’ll be as right as you were last time Garth!

nice try buddy. you were on a similar panel in December of 2008. They all called the bottom and you were wrong.

you may end up being right, but why can’t you at least admit that you’ve been dead wrong for a couple of years now?

please remember, early = wrong

The housing market is not a casino, since the costs of entry and exit are huge and leverage is very costly. Early is sometimes a huge saving grace. In any case, I’d rather sell too early than too late. You will learn that shortly, it seems. — Garth

#102 S.B. on 03.09.11 at 9:26 am

Furthermore, it’s an illusion: condo prices did not rise by 5.5%/yr, rather interest rates DROPPED by 5.5.% per year creating the illusion of wealth.

#103 S.B. on 03.09.11 at 9:34 am

To the people who wondered why someone is taking a Masters degree at age 26-30, why not at age 22. I’ll tell you: I now work with three people who have a Masters (an MBA, mathamatical finance, and Computer science). They all started in a junior positions below me. They have no experience, life, work or otherwise. They are learning the job from the ground up and will progress as any other, in due course.

And I just heard of a bank teller with a CFA (Chartered Financial Analyst) designation. A bank teller position is junior customer service/sales, essentially dead end unless you are good at flogging mutal funds and move to a sales position at the branch. Why? I’m guessing the same, no experience.

Why not log 5 years in the workforce and then decide whether you should spend another few years and a 100k (actual and oportunity costs) for additional education?

#104 Herb on 03.09.11 at 9:52 am

Good thing no one listens to Michael Moore …

#105 S.B. on 03.09.11 at 9:54 am

Give ’em hell in that R/E panel Garth! Leave ’em speechless and staring down at their polished wingtip shoes or fiddling with a diamond earring in disbelief.

“Who let HIM into this discussion”, their tongues will tut-tut and wag. :oops:

Garth: our establisment anti-establisment hero. :)

#106 S.B. on 03.09.11 at 9:55 am

Err, that’s establishment. More coffee.

#107 Kaganovich on 03.09.11 at 10:04 am

Old but nonetheless relevant in light of the responses to the topic in yesterday’s post (check out the authors):

I am sure Garth knows all about this, but perhaps some other dawgs are unfamiliar with the huge role of inheritance in the acquisition of wealth (although some made allusions to it yesterday). I doubt it has become less significant over the years since the article was published judging from the rising concentration of wealth. Modern portfolio theory techniques as the way to grow enough wealth to retire on over the course of a single life cycle without inter generational wealth transfers will be difficult to say the least, if not impossible for most. Besides, like Coho mentioned earlier, the shareholders need the majority of people to keep consuming to keep the dividends rolling in, right? What will 2011 bring, political instability, demand destruction and global financial upheavals and alot of Canadians finally getting a clearer view of their dire financial picture.

#108 GTA Girl on 03.09.11 at 10:11 am

Every morning I open up your blog while having morning coffee with my husband. We are in the financial business and love to read opinions of many. But we both feel you are on the money on the whole housing mess. People are stretched too thin. People with annual earnings of $60k are buying $500k on a townhouse. These are the people who need to be redirected. As well as the development and real estate professionals who are preying on them. It’s grade school peer pressure. We love you Garth. Don’t stop. I quote you almost daily. You are not a voice in the wind.

#109 Utopia on 03.09.11 at 10:13 am

#85 Brian1
Utopia: concerning Japan yesterday;
James Fallows, The Atlantic:26 Feb 2011
Current Account surplus $194 billion
The Yen has risen 65% against the U.S. dollar in last 20 years.

Thanks Brian. Those are actually both good points.

Here are a few you might also consider. At this time, more than 25% of all Japanese government revenues are consumed to service debt charges.

This is astonishing when you consider the extremely low rates the government is paying its people on bonds it sold into the domestic market. If I am not mistaken, those rates are a mere 1.5% or less. Not much of a savings plan for retirement is it?

Second, both Moody’s and Standard and Poor have recently downgraded Japanese debt from stable to negative.

Seems they are beginning to entertain doubts about the sustainability of the mountain of debt that actually places Japan in the same company as Zimbabwe when measured as a percentage of GDP.

I am not even making that up. Have a look at the following chart expressing public debt as a percentage of GDP.

So it is great that Japan has a current account surplus. They also have more than 12 trillion in domestic debts though. They are in a very poor position going forward as the population is rapidly aging and the country will not likely meet growth targets in the coming years.

Hedge funds are already lining up bets against the Yen and it is not because they think they are going to lose money on that trade. On the contrary, they expect to make a killing. Starting pretty much any time now.

There are two big reasons they are so confident. First, most debts in Japan are internal to the country. These are debts payable to its own people, in effect representing the bulk of national savings.

In other words, the Japanese government owes most of its obligations to itself. It therefore is in a good position to monetize that debt (run the presses, baby) and devalue it for the sake of balance.

Second, the Japanese are major holders of US Treasuries which as we know have taken a hit due to the devaluation of the US dollar. So they are in a squeeze from both the savings side and the expense side. Their treasury holdings are slipping in buying power and national debt is growing daily.

The Japanese, like the Chinese, own a mountain of US paper incidentally. They are in fact the second largest holder of that debt instrument after China. As of the most recent counting it stood at just under 900 billion dollars.

Selling off every cent of it though would hardly put a dent in the bills coming due in that country. What is likely is that the Japanese will suffer an historic loss in their standard of living over the coming years as the government is forced to essentially default against its own people.

#110 Industrial Guy on 03.09.11 at 10:22 am

The Government manipulated real estate boom created by the Minister of Finance’s announcement January 19, 2011, ends March 18, 2011. If you bought a house during this time, your Government of Canada thanks you for your service as an economic Lemming. Enjoy the flight.

So, the panic buying will be over. The really ugly numbers will start rolling in by mid May. It’s kinda like the US auto industry after the “Cash for Clunkers” circus was over.
The sad reality is …… It was planned that way. All to give the party in power its holy grail ….. a Majority Government.

According to Canadian law, the date set for an election must be at least 36 days after the issuance of the writ. So a non-confidence vote the last week of March (Reading of the Federal Budget on March 22, 2011) results in an election writ with a short thirty six day campaign. Election day is the last week of April or the first week of May.
Now, the real estate news reported in April will reflect the orgy of buying in March up to the March 18 deadline. Things must be good. Housing sales are way up!

The hiring of staff for the Federal election and the return to work by many in the construction industry will also drop the unemployment numbers for the month.
It’s a lot of carefully timed and crafted positive news.

But …… we have been here before. The Minister of Finance claimed we were in for a soft landing prior to the 2008 election and the numbers from Statistics Canada supported his claim. Yes, there were some who noticed that this was all a charade and that the economy was changing quickly. But, no one listened.

Ninety days after the Federal election, the Canadian economy was in a virtual free fall. Here we go again.

#111 robert in london on 03.09.11 at 10:26 am

Real estate, stocks, bonds,options, warrants, precious metals, commodities, inflation, deflation, leverage, no money down. Who needs a job anymore? Thanks to the internet, corporatized media and the democratization of modern finance everyone can now be an expert and grow wealthy sitting in front of their tv’s and terminals. As long as you steer clear of the US Dollar you can’t lose.

#112 Dont Believe the hype on 03.09.11 at 10:26 am

Do you just love the comments at the end of the video. They made it sound like you better buy before March 18th or else you will regret it. They are under the assumption that prices will continually go up.

I rather take my chances and wait for the mkt to correct. It’s only a matter of time.

#113 Alpha Bravo on 03.09.11 at 10:27 am

#27 Jsan

“The real estate industry uses 2 sales tactics, fear and greed.”

Even though I walk through the valley of the shadow of debt, I will fear no realtor evil.

#114 Ex-Cowtown on 03.09.11 at 10:34 am

That whole video makes no sense. If “Mainland Chinese” are such smart investors, why are they bidding up house prices by 25% to avoid 12% in taxes? Idiotic and illogical.

Also if the “Mainland Chinese” are all coming with so much money, why the concern about the 35 yr amortization expiring? Again, illogical. There needs to be another, logical driver.

The actual driver here for the “Mainland Chinese” is possibility of capital gain with virtually no risk. Let me explain:

To begin with I agree with you Garth, to the “Mainland Chinese” Richmond RE is not a casino; it’s better than a casino. They have a high potential upside and a capped downside risk. The buy-in is small, 5%, or maybe zero if they get a loan for the down payment. Price goes up, they keep the $$$. The risk can be effectively zero if it all goes south.

In a crash, the Mainland Chinese investor (by definition NOT a Canadian citizen or landed immigrant) will lose their down payment (5% max, zero min). In which case the investor doesn’t bother moving to Canada and lets CMHC and the taxpayers pick up the bill for the roll of the dice. Owe a loan in Canada? Who cares??? Didn’t want to live there anyway; it was just an investment.

Now that makes perfect financial/investor sense. Borrow somebody else’s money, risk it and walk with no recourse. Now that’s even better than a casino. Canadians can’t do that as we have to live with the debt either personally or as taxpayers.

Maybe CMHC should be limited to Canadian citizens only? Let’s see Global do a story on this one.

#115 Utopia on 03.09.11 at 10:38 am

#66 The Original Dave wrote…

“Marketing dollars shouldn’t be the first to go, but I think they are in a lot of cases when business dwindles..”


Actually, you are correct Dave.

Marketing and advertising is often the first thing to get cut, especially by less experienced businesses. Unfortunately, companies that make the deep cuts there are typically penalized once the economy improves again.

Sometimes they disappear altogether as was proven by quite a number of big companies during the Great Depression. Here is a decent article for you that gets into some of the details and the numbers.

#116 Kaganovich on 03.09.11 at 10:53 am

#104 Herb

I don’t know what to think sometimes.

Good thing no one listens to Michael Moore …

Here is an echoing opinion on the context of the oncoming austerity measures in the USA:

#117 Sid on 03.09.11 at 10:54 am

If somebody wants to sink Richmond real estate all we need is a convincing documentary about the ancient burial ground the city centre was built on and how all the spirits are angry over the frivulous consumption, leading them to roam around peoples homes causing illness and even death. The Chinese are extremely superstitious. Remembering the fiasco over the hospice at UBC.

#118 Utopia on 03.09.11 at 11:05 am

I have probably said quite enough for one day but I just have to throw out a chart in map format of debt to GDP by country (pictures are always nice, right?).

Check out Canada relative to everyone else. We are in the so-called Red_Zone and I think this is just a good reminder to all that we have paid a tremendous price in order to have evaded the worst of the credit crisis.

So much for cautious borrowing and lending. We spend like a bunch of drunken sailors in this country and are on par with some African nations when it comes to public debt.

This should be telling you that taxes will rise over the coming years and that services will also suffer as programs are pared back.

Or….you can just blissfully ignore the warnings like most people do and go out and get yourself a great big fat mortgage (before you are priced out forever!)

#119 lurker on 03.09.11 at 11:20 am

Calgary is full of speculators, mostly realtors and people who have been given too much money to borrow. I know a realtor with maybe 5 houses. A working couple with 5 houses too. My friend’s nephew who is a doctor bought 10 condo units with a couple other doctors to sell for a quick buck (not sure how they fared). I know a 32 year old couple who had flipped 5 houses (guy’s sister is a mortgage broker – an insider to this mess). The funny thing is, in reality, I know very few people. So those who think the market is stable in Calgary, are so wrong. Many owners of property do not have a solid stake in them in the financial sense and since those properties are not their “homes” because they don’t live in them.

#120 supermike on 03.09.11 at 11:24 am

I agree with #101 Andrew.

Early=Wrong! And Garth you have been dead wrong for years.

We are here talking about investment, market, finance…, right? If we are talking about those things, we have to consider one key thing, TIMING!

It doesn’t make any sense if we talk about markets without timing because all markets have ups and downs. If you keep saying the market will go down for years like you have been doing, you will be right someday. But it won’t make any sense.

early =wrong. And Garth you are way too early.

Jesse Lauriston Livermore was a genius. He foresaw the 1929 crisis. Then he kept shorting. He was so right. But he ended up being broke and hanging in a worn apartment in NY.

Why? Because he was too early!

#121 Kitchener1 on 03.09.11 at 11:31 am

On the National last nigh, they ran a cover story about boomers not wanting to retire. Its going to be the story in 3-4 years.

Ill make a side bet that the conservatives are going to be throwing some nice bones to the retired crowd in this next budget. Increase CPP etc… throwing jack a bone or two.

Nice video, reminds me a lot of CNBC and Kramer circa 2000.

#122 MikeT on 03.09.11 at 11:55 am

@103 S.B.:
you are totally right: it makes no sense to get an MBA if you don’t have prior experience.
I got mine with no experience and I had to start from a very low position. Well, I advanced fast, but not because of the MBA, but because I was under pressure to provide for my family, which helped me double my salary in 2 years from the moment I started working.

I do not believe in the existence of a bank teller with a CFA designation: in order to get “CFA” after your name you need 4 years of experience in investments field, so you can see the “conflict” here. Styudying for my CFA currently – so I know it first hand.

#123 trinotuta on 03.09.11 at 12:00 pm

“An annual home-ownership survey from Royal Bank of Canada showed 90 per cent of Canadians are confident in the country’s real estate market. Among homeowners, 85 per cent feel they are doing a good or excellent job of paying off their mortgage”

“Twenty-nine per cent of survey respondents said they intended to buy a home within the next two years. That was down two percentage points from the same survey a year earlier, but still the second highest level of intent since 2006.”

Oh man… good times for the vultures ahead. Can’t wait !!! :-D :-D :- D

#124 stage1dave on 03.09.11 at 12:03 pm

Best picture yet!

Yesterday’s column & this one got me thinking about a conversation I had many years ago with a fellow I still do a bit of business with now & then. We both tinkered with cars, fixed ’em up, bought, sold, etc. When the subject of housing came up, he mentioned that he considered a house “…the worst debt you’ll ever have.” (This was in the middle 80’s in Saskatoon)

Took me a while to understand…he was very “business” orientated (still is) & viewed it as one of his few long term debts that COULD NOT be written off. ( he paid it off as fast as possible so it could be used as a borrowing vehicle, btw) Also, a profit of a few thousand dollars on a home (sometimes over several years) was typical back then, people didn’t look at them as a continually rising investment to finance their lifestyles. It wasn’t something that generated any income!

Since he had to live somewhere, he looked at his house as a necessity, and a financial drain that took available cash away from his business investments. It was simply somewhere to live…and he’s still in that house, despite being a millionaire many times over.

Between that point & yesterday’s column, I was struggling to come up with some useful advice to my GF’s 18 yr old daughter & her impending graduation from high school & into real life…I briefly considered telling her to make sure her boyfriend’s dad has money & to make sure one of her kids gets drafted in the first round…or sings Lady GaGa fairly well.

Seeing as how some Canadian’s retirement plans alternate between Lotto 649 & Freedom 95, I’m at somewhat of a loss to provide “good advice”…hard work and/or talent don’t cut it anymore. (probably never did)

Telling her that she has a choice of 30 yrs of mortgage payments or saving as hard as she can (100G before 30) so she can afford to grow old isn’t my idea of a well-spent life.

Since the best teaching tool is by example, I simply told her to look fwd to renting for a while; her mom & I have been for years…buy a house when you can afford it; it’s just somewhere to live, after all.

#125 Dodged-A-Bullit-in Alberta on 03.09.11 at 12:07 pm

Greeting: This morning,I finished reading the comments from yesterday about Geezers, read todays post and comments, and then re-read Garths’ post of today. Here are a few thoughts:

I believe that a huge number of seniors and boomers do not own or use computers or the internet. I would wager a large proportion of recent Canadians [immigration] are also computer illerate. As a result their info comes from the MSM and they have no other way to provide balance to the spin.

I also think that of the above group who do use computers they have been brainwashed by the MSM and the corporate, political powers behind them, to shun the internet. Many times I have heard comments to the effect one shouldn’t believe anything seen on the web. A well informed public is why Harper would view Mr. Turners use of the WWW as a threat to his own control of the media.

If Garth is showing some frustration with what he sees as a failure of the message to “sink in”, not surprising. However, there have been a lot of new handles appearing on this blog, so the word is getting out.

If this blog is getting a bit tired, and stale, a shift to the upcoming election should liven things up a bit, I for one look forward to seeing Harpers sorry arse punted, if the gods are willing!!! Sadly, I see no one in Ottawa worthy of the effort to go to the ballot box for.

If “none of the above” was placed on the next ballot, Canadians would turn out in record breaking numbers! It would be an awesome sight!!

#126 rosie on 03.09.11 at 12:13 pm

118 Utopia

Good post. For all you conservatives out there that believe conservatism equates to fiscal responsibility scroll down to the map from July 06, pre Harper days, or almost. H.& F. have done a bang up job.

#127 Cognizant on 03.09.11 at 12:17 pm

I have some thoughts about property law and how that plays into all of this, wonder what everyone thinks….
BC (and, I believe, most of western canada) use a Torrens type property registration system. That means the “crown” holds the physical title to the property through the Land Titles office and the property “owner” holds only a copy of the title. Theoretically the “crown” as the title holder of the property could arbitrarily and without due process change who gets exclusive access to the property, basically expropriate without compensation. Canada has very weak property laws. I wonder if the foreign buyers putting small fortunes into residential real estate in BC understand how weak our property laws are?
Is this an issue or not?

#128 AG Sage on 03.09.11 at 12:23 pm

>#120 supermike on 03.09.11 at 11:24 am

You’re a genius because you have hindsight?

#129 Al Bundy on 03.09.11 at 12:31 pm

Brampton Real Estate numbers are up. Anyone have a chance to look at them?

#130 Fred tURPAN on 03.09.11 at 12:39 pm

Canadian homewowners confident

#131 Renting in Rosedale on 03.09.11 at 12:40 pm

#120 supermike on 03.09.11 at 11:24 am…

“..early =wrong. And Garth you are way too early..”

Mike, there are only three possible ways to sell an investment:

1. Early (make money)
2. Perfect timing (AKA dumbass luck)
3. Late (Lose money)

Which do you typically apply to your investments?

#132 Northern Dirt on 03.09.11 at 12:46 pm

So screwed….

#133 JT on 03.09.11 at 12:49 pm

Rather interesting show on PBS last night with Suze Ormand (sp?), try and catch it. It maybe the second coming – take more joy in saving money than spending it – The New American Dream. Okay its not much, but maybe a start.

#134 Oil Amen on 03.09.11 at 12:51 pm

I can’t believe this site still exists. Garth should change the title to Greater Loser – a pity blog for people who are too stupid to get into the market. Throwing your money away on rent praying for a housing crash that will never happen is idiotic. I am on my third house on the property ladder. The formula is simple folks, buy as big a house as you can afford, wait a year or two, flip it for more than you paid for, repeat. Later this year I will sell again and move into my dream house. Later this year and beyond people on this blog will still be whining about being priced out, and saying:wait the crash is coming. Grow a set and get on the gravy train.

That was satire, right? — Garth

#135 Oil Amen on 03.09.11 at 12:52 pm

Oh yeah, suck on this :

#136 Moneta on 03.09.11 at 12:53 pm

supermike on 03.09.11 at 11:24 am
I agree with #101 Andrew.
The thing is he is wrong for the 10% who can can practice market timing but right for the 90% who should not be market timing.

The 10% just make more money off the 90% who have no clue.

#137 Industrial Guy on 03.09.11 at 1:02 pm

So, family debt is at an all time high and the Government of Canada is now trying desperately to apply the brakes. It’s too little and way too late.

Have you noticed that no one wants to talk about commercial debt? ie ….. Business Lines of Credit and commercial mortgages.
Now there’s a story that would scare your socks off. A lot of business owners have been required by the Banks to backstop their business lines of credit with personal assets like, their houses. Machinery, inventories and receivables are now considered almost valueless. Just imagine the economic chaos which will occur if house prices drop by 20%.

I have been to auctions where good machinery has sold for scrap metal value. At a recent auction, we purchased a $75,000 Fanuc industrial robot with 500 hours on it for $4,800.00. This price included all the software, manuals, programming pendant and accessories. It has been running perfectly since we installed it. A lot of engineering and fabrication shops in Southern Ontario are wondering what they will be doing once all the “infrastructure money” dries up this summer. This recession is far from over.

Like consumers, a lot of business survived the last two years by running up their credit cards and lines of credit. Like the Government of Canada, Canada’s chartered banks are getting nervous too. What do you do when some overpaid bank MBA has determined that your industry has a poor chance of survival in Canada and wants to slash your business line of credit to something that resembles a credit card limit?

Wasn’t it smart thinking of the Government of Canada to extend the end of the Infrastructure program well past any possible Spring election? It’s so important to reduce any bad employment news till after the votes are counted?

#138 vreaa on 03.09.11 at 1:03 pm

Perverse Markets Cause Misallocation Of Efforts –
Young 31 yr old Couple; Two Kids; Finances Under Pressure; Considering Moving From Vancouver; Higher Risk Investments Become Priority Over Careers

#139 No crystal ball... on 03.09.11 at 1:06 pm

Most mainstream media outlets tell people what they want to hear in order to get ratings or sell papers. They will continue to fuel the fantasy and the minute everything goes pear-shaped with real estate, they can sit back and report it just like the latest tsunami or earthquake – just another shocking event that strikes with no warning. They will never be held accountable for misleading information and they know it.

Those who can’t handle the truth and are happy to turn on the six o’clock news and feel totally justified in knowing they are part of the insightful elite who decided to “buy now or be priced out forever”. These are the same people who would probably view Garth as the antichrist, and think that the kids in the 60 Minutes piece were just paid actors.

All I can say is thank goodness the majority of people that come here know the truth and are not so easily duped by the mainstream news reports – especially when we know who the sources are.

I believe that common sense (not blind faith) drives most of us to know what is sustainable and what is not. Whether that means getting out of (or avoiding) real estate right now, or smarter investing to protect our financial future, ultimately we have to do what is best for our own individual situations.

#140 Devore on 03.09.11 at 1:11 pm

#35 Jody

Gold Has No Intrinsic Value and it is Not a Store of Value

Aha, good old Gary North! Always hard to find any fault with his reasoning. Mandatory reading for any gold bug. Saved me a pile of money in 2007, and 2009, so I may be biased. Just a little. Personally, I’m looking forward to his “book”, and hope the Cliff’s Notes version weighs less than I do.


#141 Todd on 03.09.11 at 1:12 pm

#12 GenXer on 03.08.11 at 11:33 pm

“‘It’s going to get a lot harder for first time buyers to afford a home’. I’m so tired of people talking about how they are going to be “priced out of the market” – we ARE the market. If you can’t afford a home, what makes you think everyone else in the country has magic fairy money they can use to buy one? By definition, if you represent the average buyer in a market, you CAN’T be priced out of it.”

Apparently, my brain has been transplanted to another person. Or maybe you just know Economics 101 too. Or we both just use common sense.

#142 wetcoaster on 03.09.11 at 1:17 pm

On Twitter via a west coast mortgage broker : “Heads up: cmhc has been declining 5% down payment purchases lately, Aim for 10% for safer approvals.”

Game is over people, CMHC isn’t waiting for the last minute suckers. Put on your crash helmuts, just don’t use the ones that say “Made in China”.

#143 45north on 03.09.11 at 1:17 pm

we fixed gravity

pretty funny

Utopia: the verdict is already in

great post Utopia

here’s a piece in French, I have to listen very carefully to follow. We’re at the Wiley Coyote moment, you know where he jumps off the cliff but has not yet started to fall

#144 tonguestump on 03.09.11 at 1:22 pm

#114 Ex-Cowtown, WOW what a brilliant contribution to this blog. Incredibly insightful possibility. Just a thanks for your insghts, My buying strategy has now shifted. thank you

#145 Another Opinion on 03.09.11 at 1:26 pm

Garth I read pretty much every blog you write. Keep them coming please! You have a fantastic style of passing along info more people should listen to.
I have been reading a few things about the newest changes coming to CMHC insured mortgages. Somethings additional to the move down to 30 yr amortizations are also HELOC not being insured and being able to borrow a max of 85% of home value.
Have you heard these new changes as well?
It would be great to hear any other changes happening to mortgages.

#146 DJ on 03.09.11 at 1:31 pm

Scary thought.

Please tell me it isn’t possible that these “Mainland Chinese” are buying these houses with no money down (or only 5/35) mortgages from Canadian banks (that are CHMC backed). The thought struck me when I heard in the video that they “appear” to have money.

#147 The Original Dave on 03.09.11 at 1:37 pm

I agree with #101 Andrew.

Early=Wrong! And Garth you have been dead wrong for years.

We are here talking about investment, market, finance…, right? If we are talking about those things, we have to consider one key thing, TIMING!

It doesn’t make any sense if we talk about markets without timing because all markets have ups and downs. If you keep saying the market will go down for years like you have been doing, you will be right someday. But it won’t make any sense.

early =wrong. And Garth you are way too early.

Jesse Lauriston Livermore was a genius. He foresaw the 1929 crisis. Then he kept shorting. He was so right. But he ended up being broke and hanging in a worn apartment in NY.

Why? Because he was too early!

I’ll say this agin, you guys make it seem like Garth preached to sell real estate (if it made up too much of your net worth) and bury the cash. He thinks investing that cash is the safer way to go. It’s not like house prices went up and all other assets went down. It’s fundamentals.

Warren Buffett has been wrong countless times. He said tech stocks were going to get clobbered. Everyone asked when? and mocked him. They did get clobbered…..and past the point when he started warning about the sector. He used fundamentals too.

#148 debtified on 03.09.11 at 1:41 pm

Latest news on housing:

Canada new home prices hit record high, pace slows

#149 HouseBuster on 03.09.11 at 1:48 pm

They say mainland Chinese but they don’t say if they’ve been living in Canada for 50 years.

#150 Ron on 03.09.11 at 1:50 pm

Hi folks, really great dialogue here, although not that many arguing against Garth’s opinion. And let’s remember it is an opinion. And it is a strong one, and good for selling quite a few books and it appeals to those with a certain outlook on life. Like survivalists say, and those guys leading up to Y2K that were saying that all our computers would stop working and our entire economy would crash. Economics is not a science. It is not always predictable. And, Canada is Canada. We are not America and references to south of the border, though important and relevant, are not in the least scientific. They are speculative.

#151 Mister Obvious on 03.09.11 at 1:53 pm

#74 patient in BC:

“Why would they line up in Burnaby while suites are sitting empty in the luxury condos south of 16th avenue???

Because the condos at UBC are dangerously close to the wandering spirits of the recently dead. Why is that not obvious to you?

#152 super dave on 03.09.11 at 1:53 pm

I love the last line “But it may avoid a financial disaster in the future” end video… man she really slipped that in quick, did anyone catch it? Oh all you heard was “Million dollars in one year” “Get in now before it is too late”

#153 Herb on 03.09.11 at 1:56 pm

#116 Kaganovich,

“I don’t know what to think sometimes.”

Neither do I. I always ask myself the cui bono question: who wants me to believe something for whose benefit/which purpose. This yields a good indication of what should be discarded. If no clear answer emerges after that elimination process, I suspend judgment.

Here is a link from a couple of days ago that interprets what’s going on in the Middle East. What is relevant to our discussion comes at the end, why it will be different here.

#154 olliekk on 03.09.11 at 2:04 pm

Hi Garth, I would just like to say that you are definitely not wasting your breath. I’ve never posted here before, but I do read your blog and everyones comments just about every day. It’s almost become an obsession.

I live in Ottawa and own my home, mortgage free. My husband and I bought in 1999. We had a good downpayment and managed to pay off our mortgage within 7 years. We live in a very nice townhome and never had any desire to buy that big house. We love to travel and do other things which make us a lot happier. On my death bed, I sure won’t be thinking about those granite countertops, but rather the incredible experiences we had while backpacking through Asia or sailing in the Thousand Islands on our sailboat with our friends and all those other things we were able to do because all of our money did not go towards that big house.

I am in my forties and my husband is in his fifties. We both work for private industry and have no pensions. We have been trying to put away as much as possible, while trying to enjoy our life while we are still here on the planet. We have lost some family members and close friends over the past few years and one doctors visit can change everything – believe me, as I’ve just recently had my own scare. So it is a fine balancing act of paying bills, enjoying life now, as well as saving enough for the future, especially when there is no cushy pension or large inheritance coming.

Although we own our home outright and have some modest savings, I feel we need to have a lot more. We’ve made a couple of financial mistakes along the way that we are trying to make up for now and we cannot afford to make any more. So I am really glad that I stumbled upon this blog as I have learned a lot from you and some of the posters here. You have inspired me to get educated on financial matters and take control of my financial future. I have read Greater Fool and I am now in the middle of Money Road – great books.

I just recently went over our finances and have taken a good look at our investments and will be making some changes. I cannot believe some of the dismal returns we have had over the past 15 years. I recall at one point, the advisor from one of the well known institutions we deal with, told me that we have many more years before we retire so I shouldn’t keep looking at those statements all the time. Now I see why. And in the next couple of weeks, he will be losing two clients.

Anyway, our goal is to move to Vancouver or somewhere in B.C. someday. My mom moved there in the summer of 2000 and I have been following the real estate market since then, so I am very well aware of what has been going on over there and continue to play close attention to it.

As long as our health allows, I don’t think that we will completely stop working at age 65. We just want to be in a position financially that if we do work, it will not be out of necessity for the basics, but rather to make some extra money for more trips abroad and simply because we are really enjoying the work that we are doing.

So I just want to say thank you again Garth for taking the time to keep this blog going. You have really helped me and I’m sure a lot of other people as well.

#155 The Original Dave on 03.09.11 at 2:05 pm

as far as technicals go, from what I’ve seen, everything seems normal in Toronto. I just had a gander at and there’s nothing unusual about 2011. The chart does only show from 2006-2011 though….all bubble years except for 2008. Just a waiting game I guess.

#156 bigrider on 03.09.11 at 2:12 pm

#92 Garths reply to Bigrider ” would not invest 1 Million in Hamilton with B class tenants…”

Nice to see you are on same page as me. The associate who did so can be persuasive and had me almost second guessing my reasoning.

#157 poco on 03.09.11 at 2:16 pm

#120 Supermike
I guess it just depends where you live–check out the link from #63 South Sea Company (great link by the way)
this area(tri-cities) never really recovered from the downturn of 2008–prices stayed flat for awhile, then started slowly downward and still heading south

if you really want to buy in this market there are properties that have dropped 30% in Pt. Moody and at least 20% in PoCo from 2008–you just have to do your research

#158 HGTV babes are hot! on 03.09.11 at 2:19 pm

Wealth is created through managing risk and taking profits along the way. Remember Nortel’s stock price plunged from C$124 to C$0.47. Analyst were saying it was a bargain all the way to the bottom. Mr. Timing when will you take your profit? Where do you see the top and bottom of the current market? No bull market lasts forever. I look at some of companies listed on the TSX that control millions of hectares of property in the west for mining or energy. These companies pay peanut shells per acre of land so don’t see the current housing prices in Canada as sustainable or warranted.

#159 JayJay on 03.09.11 at 2:28 pm

Hi Garth,

Just wanted to tell you that the family was listenting to Suzie Ormon last night on her show and interestingly she has the same investment advice as you do.

– Tax Free Savings Accounts (ofcourse she is in the US so they have a different name there)
– Maxing out pension contributions to take advantage of the employer match
– ETFs

I thought WOW. Garth is not alone in this. Even her book sounds like yours “Money Class” vs “Money Road”…lol

By the way, Garth is there a minimum amount that a couple has to have put aside for investment before you will give advice? Or is everyone welcome?


I try to assist everyone. — Garth

#160 Alex on 03.09.11 at 2:34 pm

Anyone who doubts how quickly the market can change and the level of homeowner confidence as that shift has already begun, need only read this. From the U.S., circa December 2006. An incredible, highly interesting article, especially considering when it was published.

#161 pjwlk on 03.09.11 at 2:47 pm

#115 Utopia on 03.09.11 at 10:38 am

#66 The Original Dave wrote…

“Marketing dollars shouldn’t be the first to go, but I think they are in a lot of cases when business dwindles..”


I think the whole advertising thing is pretty simple. If you’re running a company that’s struggling during hard times and you need to make changes to survive (i.e. 0% financing, or 20% off etc.) all of your potential customers need to know about it. The most effective way of doing that is by advertising more, not less.

To me cutbacks to advertising during tough times would seem like a poorly reasoned decision. You’d be better off cutting unprofitable product lines – or get rid of some dead wood in management…lol

#162 SK on 03.09.11 at 2:56 pm

I live in Regina, SK and I must tell you, housing addiction is as strong as ever. Even with reports coming out that Regina prices are far out of line with incomes there is a sense that our housing prices will rise for ever. It’s funny how short of a time span it takes to develop this attitude. From roughly 1983 – 2003 house prices in Regina grew very minmally, maybe 15-30% over that entire period. In roughly 5 years prices have more than tripled for the typical 1000 sq ft bungalow.

I rent and am constantly looked down upon, like i am some sort of economic abomination. Keep in mind most of these people don’t know what a bond is.

The general consensus in Regina is that the government will not allow interest rates to rise as that would hurt too many people. Apparently these people are not aware of our government’s primary mechanism to combat rising inflation.

I would say that with fuel, food, rent/housing costs added into an inflation equation, the average rate of inflation in Regina over the last few years would average 15-20%. I know my rent has nearly double over 3 years.

My fear is not that there won’t be a correction, economic fundamentals ensure there will be. My fear is that the government, at all levels, federally, provincially, municipally, in SK are going to implement some bullshat policies that will keep this bubble going. What do you think Garth? Maybe the gov of SK will add an additional royalty to potash that they will use to provide housing loans to middle class Skatchers. This on the surface sounds crazy, but then again so does expunging billions of dollars into an economy rather than letting market forces prevail and creating a climate of free money.

Mortgage brokers in SK have a mantra and that is: in today’s market, money isn’t an important consideration when buying a house.

#163 Mr.Plow on 03.09.11 at 2:58 pm

I can only comment on what I read and hear about in TO and Van and what I know about Alberta. I can’t comment on the other parts of the country…

I have not seen increases in price in Alberta. If anything I have seen prices dropping steadily since the summer of last year. They rose steeply at the beginning and then dropped off again as the year finished. They have stayed pretty flat ever since. I would suspect that prices are basically back to the 2005-2006 range and are not dropping or rising.

If there are huge increases in Van and TO, would that not mean that they would experience the huge decreases too? I’m not saying Alberta would be immune to a decrease too, but without the huge runup for the last two years would it drop as steeply?

Thanks for any insights.

#164 Mr.Plow on 03.09.11 at 2:59 pm

#8 Willa…

Great point!

#165 Technicals on 03.09.11 at 3:09 pm

Hi Dave, Toronto real estate prices can be plotted like a stock. They follow an upper and lower price channel when you draw a line across the peaks and valley’s. Currently prices are touching the upper channel with no where to go but down if the trend continues. If prices rise any further there will be a new bull market in housing. The momentum is slowing in the housing market which indicates a new upward trend can not be sustained with higher prices and lower volumes.

#166 Roial1 on 03.09.11 at 3:26 pm

Want to know where the new “Richmond Millionairs” are going with their money??????

You can still buy a great NEW house on the Island and have enough left over to live WELL on it (if you deversify) anywhere north of Nanaimo. (No I am NOT in real estate)

Enough of the BULL SHIT!
I’m retarded and going fishing! (If the rain ever stops)

(Retired on the island)

#167 Ex-Cowtown on 03.09.11 at 3:31 pm

Further to my comments in #114:

Re: Mainland Chinese find Richmond RE better than a casino; minimal to no loss, no risk.

If the “Mainland Chinese” are willing to buy condos in China and sit on them with loans payable in China (where they live and have a legal responsibility to re-pay the loan or get a bullet in the back of the head) it’s a no-brainer for them to gamble wildly on assets in a distant, foreign, country where they have no responsibility to re-pay the loan and unlimited access to easy cheap money. Who wouldn’t want to grab a piece of this gig, whether you be Chinese, Latvian or Swahili?

Especially if the country not only allows it, but encourages it by backstopping these speculative loans.

We have met the greater fools and they are us… all of us…. and our name is CMHC.

#168 dd on 03.09.11 at 3:32 pm

PIMPCO unloads US bonds. What recovery?

Garth … can you say money printing?

#169 poco on 03.09.11 at 3:34 pm

#149Ron–please don’t mention the last word in your post to these buyers of luxury condos in the tri-cities–you know–“speculative”

these pre-sales have got to take the wind out of your sails !!!
don’t know the exact date these fools signed on to the undeveloped highrise but closing dates appear to be around apr to june 2009
mls#v842435–bought may09-497.9k—list july 10–499.9k–now 469k
mls#v872803 bought–581.9k– list oct 10–519.8k–now 480k
mls#v867340 bought apr 09–567.9— listed apr09–629.8–now 460k
mls#v872626 bought apr 09–592.9–listedoct09–519.8 now 485k
mls#v872625 bought may09–609.9k–listed july09–535k–now500k
1185 The High ST.–2982 Burquitlam–coquitlam

i would hazard to guess that the majority of owners in these highrises are STUCK–if these have dropped so much and are not selling the other owners cannot list their properties without taking a huge loss
the hot(not) Vancouver market hasn’t kept these condos afloat since the buyers signed on the dotted line
and remember real estate only goes up !!!
i wonder what we’ll see in 3years time when the closing dates forthe pre-sales at Kingsway And Willington (Bby) come due–lets all remember that one,shall we

#170 (low density) Sam on 03.09.11 at 3:38 pm

#21 Joe on 03.09.11 at 12:04 am
I’m not ashamed to admit that. If we know so little about fixed income, then tell us what it is that we don’t know. Pleeeeeeeeze!
websites are not for basic education, they’re for news, opinion and short analysis.

What you’re looking for is at the library, university, college or bookstore.

Preferably not the fiction section, where you’ll find Don Campbell, Robert Kiyosaki, Russ Whitney & Donald Trump.

#171 (low density) Sam on 03.09.11 at 3:40 pm

And hopefully you won’t only read the books or just sit in the lectures daydreaming but DO THE EXERCISES with a calculator or spreadsheet so you understand bond pricing & what interest rates really mean & what inflation really does.

#172 Sid on 03.09.11 at 3:44 pm

Big Rider, those returns seem pretty low for a scuzzy part of Hamilton. His net profit should be double that to make this investment worth while. I am guessing there is value in the land or zoning for future development. If not, your friend got suckered into a really poor investment.

Secondly, Garth is it true that foreigners can buy property with 5% down with the help of CMHC. I always thought that CMHC was only for Canadian buyers.

#173 Traveling Renter on 03.09.11 at 3:48 pm

Richmond? really? This is so funny and stupid I’m laughing and crying at the same time.

These mainland asian buyers are basking in the sunshine being blown up their a$$es by realtors.

I wouldn’t pay 100 grand to live in richmond let alone 2 million!!!

There’s a greater fool born every day.

#174 BrianT on 03.09.11 at 3:57 pm

It looks like the US taxpayer is going to be on the hook for even more T-bill purchases-PIMCO is out

#175 skyrider on 03.09.11 at 4:23 pm

I enjoy reading the blog, especially all the interesting comments and links…this is my first time posting a comment.

I know that there are many reasons for the Chinese buying in Canada, but I think inflation is very high there.

I think the Chinese are buying land in Canada, and elsewhere, I guess, because they think a currency crash/hyperinflation is imminent.

I mean, suppose I have a million dollars, but I believe that its buying power will be decimated very soon…I would buy land, gold, commodities…anything I think will still have an intrinsic value.

Indeed, many people are advising this strategy right now eg: Peter Schiff, Jim Rogers…whoever believes that hyperinflation is imminent.

If the Chinese truly believe this is the future, they won’t care if the Richmond market goes up or down…even if it crashes 50%…at least they will not be stuck with worthless currency. They will buy at any price, relieved that things didn’t crash before they could do so…

Not an economist of any kind…hope my reasoning is clear.

Any comments?

#176 Edmonton Real Estate Blog on 03.09.11 at 4:30 pm

ha, some great banter.

#177 MikeT on 03.09.11 at 4:32 pm

@153 olliekk: “enjoy your life now” is my motto starting today. Last night I learned that a friend of a friend was diagnosed with a brain tumour… He’s 36, a very educated and modest man, has a wonderful wife and a sweet kid. Now, he’s at home, barely reacting to what people tell/ask him, awaiting an operation with an uncertain result… Enjoy life, within reasonable limits, but enjoy it while you can!

#178 betamax on 03.09.11 at 4:37 pm

#120 supermike: “Livermore…ended up being broke and hanging”

So did a lot of bulls.

A bubbled prolonged is still a bubble. Housing — highly leveraged and illiquid — is one of the worst asset classes to get caught in when a bubble bursts.

After the crash, no one bitches about selling early. Ask people in the US.

#179 Devore on 03.09.11 at 4:41 pm

#167 poco

Keep up the good work. Anyone who cares to dig a little will quickly see LML real estate is sick. But the bubble fever is still running hot in some Vancouver/Richmond/Burnaby/White Rock areas, in some types of properties. Most everything else is sitting on market, or cutting prices.

My Coal Harbor condo I sold in May 2010… doubt I could get the same money today, if it sells at all. Late 2010 already saw de facto lower prices, as the properties that were moving were above average and in great move-in condition. The crappy East Van tear-downs were taken off the market. There’s been a resurgence recently fueled by rules changes, rising rates, and general media-inspired paranoia of being priced out forever by swarms of Chinese buyers.

#180 Mtl RE Observations on 03.09.11 at 4:42 pm

The Montreal Real Estate Board just published their data. February marked the 11th consecutive month of sales decline. Volume is down 7% compared to Feb. 2010, and active listings are up 13%.

#181 bystander on 03.09.11 at 4:44 pm

Watch for commodities to pull back, followed by interest rate hikes, and increase in bankruptcies. The outflow of large capital from Canada will pull the throne from under Harper. This will be the beginning of recession in Canada. We will wake up to the reality where we have no manufacturing jobs left, with remaining assets held by foreigners. A sharp correction of the CAD will follow, with inflationary pressure reinforcing the downward trajectory.

The commodities Bull will leave us to return two decades later.
And the above, of course, is not certain, but likely. Unless the government intervene again… And that makes me think that the convulsive measures of the government to outsmart the wisdom of the free market will expose the the ugly face of Soviet-like system and must scare to death everybody who thought they were living in the free market called capitalism. Welcome to the Soviet Union of Canada.

P.S. A notion that Canada is somehow different is irrelevant. The history will unfold in the way we can’t predict or control though individual actions. Only the collective behavior can have the impact. And that is the subject we need to analyze in order to look into tomorrow, whether it real estate or anything else for that matter. I suggest everyone to watch the video and try to find an answer whether we are different here or not.

“Peak Oil Lessons From The Soviet Union”


#182 (low density) Sam on 03.09.11 at 4:56 pm

#65 $froma$ia-The mother of all Bubbles on 03.09.11 at 2:05 am
Reminds me of that time before the ‘Great Depression’…that story about when the shoe shiner was telling that gentlemen to buy stock….
The name you seek is “Joseph Kennedy”, father of JFK.

#183 Naive or Stupid on 03.09.11 at 4:58 pm

Some interesting and some scare-mongering tweets about the March 18th changes

After March 18, the 35 year mortgage amortization will no longer be available. Buy now to take advantage of it.

If u want to MAXIMIZE your buying dollar, all u loft buyers need to connect with @###### before mortgage rules change on March 18.

Lots of changes coming March 18 in the mortgage industry. Check out all your options before it is too late.

Market is picking up again. Mortgage lending rules changing March. 18 making it tough for first time home buyers. Get preapproved. Call Me

only 9 days left to utilize 90% of the value of your home. As of March 18 you can only borrow 85%. call TODAY if you need a new mortgage

#184 (low density) Sam on 03.09.11 at 5:01 pm

#69 Timing is Everything on 03.09.11 at 2:33 am

both get full-time Instructional Assistants because they can not do the teaching or develop current curriculum themselves anymore
If they can’t write a curriculum, they can’t write grant applications, so they can’t be science or engineering at a research-oriented university.

Unless things have decayed considerably lately.

#185 Stevie B on 03.09.11 at 5:05 pm

#120 Supermike
Timing? Hello? Garth established the correct trend which is down. If you felt there was an opportunity to time a real estate purchase then I’m sure no one would stand in your way.
PS – I’m sure he’ll come good and tell you the EXACT timing once you pay the balance of your subcription in full. Until then be happy with the free service, whether you chose to act on it or not.
By the way you will rarely sell at the top or buy at the bottom but you will be successful if you get the trend right. Trends don’t last for a few weeks or a few years especially in real estate and its expensive to move in and out of the market so its especially hard to time.

#186 BrianT on 03.09.11 at 5:12 pm

#165Ex-Cow-IMO you don’t understand how guv depts work-the purpose of CMHC is to grow their business and empire-if they could give your money to Bernie Madoff right now they would do so willingly, because the bigger CMHC gets the better it will be for everyone running CMHC. The woman who ran that Electronic health records scam in Ontario is now running one in California-when the whole CMHC thing hits the fan it will not harm the guys running the thing in the least.

#187 jess on 03.09.11 at 5:14 pm

Their profits are illusory

“Actors on the Farm ?
Gov. Walker Walker is that 8,000 emails or 19,000
the state’s Open Records Law requires that open records requests receive responses “as soon as practicable and without delay.” The complaint states: “Defendants have violated the Wisconsin Open Records Law and Wis. Stat. § 19.37(1) by withholding the requested email messages and delaying granting access to the email messages.” It calls the defendants’ failure to provide these records “arbitrary and capricious.”

aggressive tax shelter marketers goes on trial,0,3129545.column

#188 edmonton mortgage broker on 03.09.11 at 5:14 pm

#122 MikeT on 03.09.11 at 11:55 am

among my friends (90% of which are university educated), the ones that could not secure gainful employment upon completion of their undergrad studies were the only ones that went back to complete their MBAs in the hope that it would make them more attractive to potential employers. i just don’t think an MBA carries much weight in the grand scheme of things anymore. relevant industry experience is far more important to potential employers and rightfully so.

i have also noticed that many people i know (mostly finance and accounting majors) are working on or have completed their CFAs. i believe the value of a CFA is being diluted as well, although if i had to choose, i’d choose to do a CFA over an MBA anyday.

the biggest problem with a CFA is the low cost of entry. it’s far cheaper to complete a CFA (via self study) than an MBA (especially an executive MBA). however, the course material of CFA is quite advanced and it’s a high failure rate, so that should balance it out.

congrats if you can pull off a CFA, it’s not an easy task!

#189 Tax-O-Rama on 03.09.11 at 5:15 pm

I don’t understand why the Government doesn’t just tax capital gains. More (much needed) tax revenue + way less incentive to flip properties for quick cash. Wouldn’t this have prevented the RE casino ages ago?

A home should be a place to live, not a tax free business enterprise …

#190 Mr. Plow on 03.09.11 at 5:21 pm


I love the subtitle, “just because a bank will lend you the money, it doesn’t mean you should take it.”

#191 Two-thirds on 03.09.11 at 5:26 pm

#109 – Utopia

“So it is great that Japan has a current account surplus. They also have more than 12 trillion in domestic debts though. They are in a very poor position going forward as the population is rapidly aging and the country will not likely meet growth targets in the coming years…

There are two big reasons they are so confident. First, most debts in Japan are internal to the country. These are debts payable to its own people, in effect representing the bulk of national savings.”

Very interesting topic.

Perhaps an oversimplification, but wouldn’t the fact that the debt is owned to a rapidly-aging domestic population be the solution to the problem?

A cynical individual may conclude that when tax money collected from citizens goes back to the citizens (whom paid the tax) in the form of bond repayments, the net effect on the economy is nil.

The aging part could be construed as being favourable, since:

a) the inevitable cuts in healthcare will likely accelerate the death of the bondholders


b) when the bondholders die, how much of the outstanding debt will be cancelled? Suppose the inheritance tax laws may be set in a way that lets government off the hook…

Of course, there is the not unthinkable part where tax revenue may fall substantially, so default, outright, or by monetisation would happen.

Seems to me that demographically speaking, Canada could learn from the Japanese experience – what not to do, that is.

#192 edmonton mortgage broker on 03.09.11 at 5:35 pm

#122 MikeT on 03.09.11 at 11:55 am

…and that bank teller is probably working towards their CFA, as opposed to having the designation. With their mutual fund license, it is my understanding that the time they work as a teller will count towards the 4 yrs of “investment work experience” required for the CFA.

there really isn’t any point already having a CFA and working as a bank teller, or even the bank manager for that matter.

but i would wouldn’t have a hard time believing there are MBAs and other highly educated individuals flipping Mcburgers in the US right now…

#193 Steven Rowlandson on 03.09.11 at 5:39 pm

Re: #114
Maybe CMHC should be limited to Canadian citizens only?

Absolutely right! If in fact we should have a CMHC then it should be for canadians only. Citizenship should have exclusive rights, freedoms and I hesitate to say privileges for members only. Allowing foriegners to come in and prop up or inflate property values is unjust to under paid canadians. This needs to stop!


#194 Devore on 03.09.11 at 5:49 pm

#189 Two-thirds

A cynical individual may conclude that when tax money collected from citizens goes back to the citizens (whom paid the tax) in the form of bond repayments, the net effect on the economy is nil.

Until the bonds mature and principle needs to be repaid. Usually, it is just rolled over, but at what interest?

#195 Dontcallmeshirley on 03.09.11 at 6:04 pm


The vindication will be glorious when Canada’s overnight rate is finally put back to 5% won’t it?

#196 Live Within Your Means on 03.09.11 at 6:39 pm

I, along with many others, hope that Garth will continue with his blog. He’s obviously helped save many from going into greater debt. He’s helped us to finally rid ourselves of a MF sales guy and put our investments with a fee based, no commission co. in line with Garth’s investment advice. :-)

#197 Ret on 03.09.11 at 7:07 pm

#145 DJ -The newcomers are Permanent Residents, the old term for Landed Immigrants, so of course they can apply for CMHC insurance. The banks also will give them student loans too! They pay a slightly more for CMHC insurance because their income can’t be verified.

If RE turns south, they have an exit plan and a passport for their home country and are good to go! CMHC backed by Canadian taxpayers will be stuck with the mortgage mess.

Is there anybody reading this blog who is “on the ground” who can tell us what is going on with the Mainland Chinese and the suitcases of cash? Fact or fiction?

The details from CMHC:

#198 Confused and a little crazed on 03.09.11 at 7:07 pm

187 # tax o Rama
The reason why the govt encourages the realestate bubble here in can as opposed to stock is to improve econ activity.

real estate for BC is the economy. We manufacture nothing therefore no spending…no taxes

buying stocks especially since everything is online self directed does not directly increase expenditures for econ stimulus

as opposed to buying furniture, legal fees, brokerage fees, paint etc…etc

#199 Mantrid on 03.09.11 at 7:11 pm

Forget liquidity. Richmond home-debtors should look to Christchurch NZ for a lesson on liquefaction.

The gods wouldn’t let that happen to the best place on earth would they?

#200 Live Within Your Means on 03.09.11 at 7:22 pm

Has anyone used Studio Tax (freebee right now) to do there tax returns?. If so, how do you like it?

Bought Turbotax (previously QuickTax) again this year but it keeps going up every year. Currently $60. at Costco. I have only 2 returns to do, but do have some investments, etc.

Hope to do our taxes next week, but after will, unless I hear otherwise from the blog dawgs, re-imput my 2010 tax info to see how it works.

Comments, please!

#201 Ret on 03.09.11 at 7:40 pm

CDN dollar hit $103.25 US today.

Should I buy some? lots? or forgetaboutit?

#202 Mr. Plow on 03.09.11 at 7:43 pm

#189 Tax-O-Rama

They do tax capital gains.

Primary residence is not taxed, flipping properties or secondary residences are.

#203 jess on 03.09.11 at 7:50 pm

Vice President Wallace’s answer to those questions was published in The New York Times on April 9, 1944, at the height of the war against the Axis powers of Germany and Japan.

“The really dangerous American fascists,” Wallace wrote, “are not those who are hooked up directly or indirectly with the Axis. The FBI has its finger on those. The dangerous American fascist is the man who wants to do in the United States in an American way what Hitler did in Germany in a Prussian way.

The American fascist would prefer not to use violence. His method is to poison the channels of public information. With a fascist the problem is never how best to present the truth to the public but how best to use the news to deceive the public into giving the fascist and his group more money or more power.”

In this, Wallace was using the classic definition of the word “fascist” – the definition Mussolini had in mind when he claimed to have invented the word. (It was actually Italian philosopher Giovanni Gentile who wrote the entry in the Encyclopedia Italiana that said: “Fascism should more appropriately be called corporatism because it is a merger of state and corporate power.” Mussolini, however, affixed his name to the entry, and claimed credit for it.)
March 9, 1945

WWII: Bombing of Tokyo Kills 100,000 (1945)
During WWII, Allied bombing devastated half of Tokyo, destroyed or damaged many famous landmarks, and ruined nearly all of the city’s industrial plants. In the US firebombing raid that began on March 9, 1945, nearly 2,000 tons of incendiary bombs were dropped on the Japanese capital, killing roughly 100,000 people and destroying about 16 mi² (41 km²) of the city—making it the most destructive conventional bombing raid in history. How did the destruction compare to that of Hiroshima and

#204 Jason on 03.09.11 at 8:01 pm

Funny Global is warning about the impending death of the 35 year mortgage while not mentioning the fact that most banks have renamed it to Skip-A-Payment Mortgage Option. Yup that’s right — you can skip a mortgage payment, every year for as long as you want!

#205 tmg on 03.09.11 at 8:01 pm

Isn’t anyone bothered by foreigners taking advantage of our tax system. Why is there no guidelines as to what may be considered a “tear down”??

#206 Nostradamus Le Mad Vlad on 03.09.11 at 8:20 pm

#154 olliekk — “It’s almost become an obsession.”

The Love Drug Potion from Garth that keeps us coming back, no matter whether the world blows a gasket!

#175 skyrider — “I think the Chinese are buying land in Canada, and elsewhere, I guess, because they think a currency crash/hyperinflation is imminent. . . . whoever believes that hyperinflation is imminent.”

Bear in mind that hyperinflation is a politically-motivated situation, not an economic one.

If TPTB (Soros, Ted Turner via Obama and Harper) see an opportunity to reap enormous rewards, they will instruct their minions (politicos) to do so.

In-, de- and stagflation are economic-driven events. In the early to mid-90s, Soros made a billion pounds net profit in one day by betting against the UK pound.

This is one possibility they could use in messing with China, but all China has to do is dump one currency and switch to the other (Yuan / Renmibi).

Another point re: rich Chinese. A friend’s son has lived and worked in HK for several years said the Chinese are diversifying out of China, but moreso to Singapore, Malaysia, Indonesia, etc. Money is coming here, primarily through North and West Vancouver, but not as much as previously believed.
Brief and Critical updates on Justin (Eggnog) Bieber and Charlie Sheen.
Welfare State A new moniker for the US, and Free Trade and Industry — Race to the bottom?

China and Oil plus UK Food Inflation. HSBC warns of food riots in UK.

Truth Hurts Somewhere in this article (‘tho not said) the Rothschild banxters appear. Via their politicos, they want Libya’s sweet crude. Kissinger One of TPTB who once referred to people as cannon fodder, like Brezezinski.

#207 Oasis on 03.09.11 at 8:26 pm

CDN dollar hit $103.25 US today.

Should I buy some? lots? or forgetaboutit?

you should buy as many CDN dollars as you can, as the USD will continue to go lower. lol

#208 john m on 03.09.11 at 8:46 pm

Peter Milliken, the Speaker of the House of Commons, issues a ruling on two questions of privilege on March 9, 2011.
Speaker hits Tories with two more contempt rulings…………. :-) i am loving this!

#209 Phil on 03.09.11 at 8:47 pm

It is hard to predict currency exhange beyond 30 days. On the radio they predict 105 by the end of the year but that is just lip service. Banks charge roughly 3% so you will do better trading with a company like Bendix Foreign Exhange. If you need the money for March break I would trade now. If you don’t need the money I would wait as $1.10 is possible down the road.

#210 Ret on 03.09.11 at 9:06 pm

Tax programs? “U-file,” $19.95 for Standard Edition. Does 8 returns. I use it for 3 family including one university student with tuition and tax credit transfers to parent etc. I have used it for 3 yrs. It does capital gains/losses, carry forwards from past returns, and lots of other stuff. I don’t e-file so I don’t know about that aspect. Well worth the twenty dollars IMHO.

#211 Say What? on 03.09.11 at 9:12 pm

#166 Roial1 on 03.09.11 at 3:26 pmWant to know where the new “Richmond Millionairs” are going with their money??????

You can still buy a great NEW house on the Island and have enough left over to live WELL on it (if you deversify) anywhere north of Nanaimo. (No I am NOT in real estate)

Enough of the BULL SHIT!
I’m retarded and going fishing! (If the rain ever stops)

(Retired on the island)


retarded ????

#212 HappyPlace54 on 03.09.11 at 9:25 pm

#125 You do realize that Boomers are 50+? Most of us work full-time and likely couldn’t get along without being computer illerate.

#213 S.B. on 03.09.11 at 9:34 pm

You say you want a Revolution.

I believe Garth’s downfall will occur when he states he is “bigger than jesus”.

People will then take to the streets, burning Garth books, memorabilia, and yellow ties.

Once, when asked by a reporter if he is a short or long he replied: Neither, I’m a shlong.

:) :)

#214 aosk on 03.09.11 at 9:40 pm

Pay attention?

#215 Boombust on 03.09.11 at 9:58 pm

“…these pre-sales have got to take the wind out of your sails !!!
don’t know the exact date these fools signed on to the undeveloped highrise but closing dates appear to be around apr to june 2009”

That is about the same time the Nahanni was completed in the Klahanie neighbourhood of Port Moody.

The entire building is FULL of renter. Price drops galore. And, even so, they sit and sit.

#216 Daisy Mae on 03.09.11 at 10:00 pm

HEADLINES – CBC – March 9th


“Home prices inch forward in Jan.
Canadians saw the value of their homes rise marginally in January, said Statistics Canada Wednesday.”

Followed by:

“Most Canadians say they can weather housing crash: RBC
Three-quarters of Canadians say their personal finances could handle a falling housing market, according to a new RBC poll released Tuesday.”

#217 Utopia on 03.09.11 at 10:14 pm

#178 betamax

After the crash, no one bitches about selling early. Ask people in the US.

You’re a good man Betamax. Hit the nail dead-on.

#218 Adventures in Sea-Tac with Moneta on 03.09.11 at 10:20 pm

127 Cognizant – it’s a non-issue. A torrens system provides much better security of title than a deeds

#219 Timing is Everything on 03.09.11 at 10:21 pm

#184 (low density) Sam

You are correct Sam. I should have said “…by themselves anymore”. So to be fair, they do participate.
This at a college level, science and engineering are the disciplines.

#220 CalgaryRocks on 03.09.11 at 10:27 pm

Bye, bye public unions. Gov Walker please come to Canada!

#221 Jsan on 03.09.11 at 10:35 pm

#42 Alex on 03.09.11 at 12:54 am

Global. My nemesis.


Way to go Alex! It’s about time some of these “news” organizations are held accountable for the crap they put out that is nothing more than glorified infomercials for the real estate industry. Too many Canadians complain and than just sit on their hands and do nothing. At the least they should be sending some angry emails out to these stations.

#222 Dork on 03.09.11 at 10:42 pm

Although nothing of consequence has ever been predicted by this blog or the posters, it has consistently demonstrated the money losing follies of renters. Well done!

Was that the name your mom gave you, or did you earn it? — Garth

#223 BrianT on 03.09.11 at 10:47 pm

#177MikeT-it is shocking how many people are dying from brain cancer these days-I have known three personally-30 yrs ago it was very uncommon-Swedish scientists say avoid spending countless hrs on the cell phone (obviously no guarantee). Those studies have been squashed here effectively (money talks).

#224 BrianT on 03.09.11 at 10:56 pm

#193Steven-what do you think Globalization means? USA taxpayers helped prop up Canadian banks-the game is to take taxpayer money and use it.

#225 Professor on 03.09.11 at 11:07 pm

# 143 Westcoaster:
This only applies in the west coast, and it should be 20% or more. Not like that in Alberta, and won’t be until we find it’s a danger zone. Looks to me like cmhc is listening to RBC.

#226 An Cat Dubh on 03.09.11 at 11:13 pm

CMHC in Kelowna predicts higher prices this year. I heard on the radio that housing starts were down becuase of the cold weather. Sure a few days were cold, but that’s not the real reason is it. Unfortunately, there are more than a few foreclosures and the bailiffs are busy repossessing “toys”.

#227 Prof ANON on 03.09.11 at 11:13 pm

@ #209 Phil

RBC has linked Canadian-US checking accounts. The spread is less than 2%, but it has a pretty significant time lag, and sometimes it’s possible to use this to your advantage. (e.g., if the looney goes up/dollar down, it’s best you know to wait till the next day to transfer to US dollars and vice versa). As far as I’m concerned, it is the most convenient way to transfer money. Especially since they give you a US debit card and US checks. I’m not a trader, I just travel back and forth a lot.

#228 Grampa Hindsight on 03.09.11 at 11:34 pm

I can tell you exactly when the real estate market will start dropping in your area
Way back in 1989 or so I noticed an unusual amount of ”for sale” signs around town
Wasnt long after that everything dropped
It it always comes down to supply and demand
There it is the simplest formula you could ask for

#229 Dork on 03.10.11 at 12:12 am

Truth hurts.

Just a clue to the uninformed: mainland Chinese who buy $1m tear downs are using cash; no financing. Mainlanders don’t have mortgages. So much for hoping for a crash all you renters.

Buy Garth’s books instead. You can still afford those.

Oh, so it was your mom. — Garth

#230 The American on 03.10.11 at 12:20 am

At #87: Brian1, you asked a question. So, as an American, I will answer it for you. Honestly, most Americans already fully understand the situation Canada is entering. Additionally, most Americans and American analysts have bee stating for well over 18 months that the Canadian banking system and all of its pumping has been a farce and complete lie to the Canadian. Americans also find it difficult to believe that Canadians didn’t see this coming, well over five years after it happened in the U.S. Canadians and the Canadian banking system repeated, almost verbatum, what Americans did. However, as we’ve pointed out before, we can look at it as Americans and say we were at the forefront of the collapse, so hindsight is 20/20. However, we cannot understand for the life of us how Canadians were handed an optimal opportunity NOT to recreate the same mess, yet obviously it is much worse there than ever was in the U.S. Case in point, rates are lower in Canada, housing values are even higher than was U.S. peaks, Canadian household debt now exceeds that of even Americans, yet Canadians earn less than Americans and they are taxed at much higher rates. Canadians are now dipping into their savings in overwhelmingly increasing numbers (evidence they truly cannot afford the prices they’re paying), and the Banks and Government of Canada continue to spew propaganda telling everyone that everything is fine. It is truly unbelievable for a number of reasons. We cannot understand how people in Canada do not see the writing on the wall. Nor, can we understand how Canadians still believe that everything is not only fine, but going swimmingly well! So, in a nutshell, our take is Canadians are completely delusional and sticking their heads in the sand at the reality of the situation. If you think it is bad in the U.S. right now, then what do you think that means for Canada in the very, VERY near future? All economic indicators show Canada has behaved worse than the U.S. and it is only a matter of time before it corrects to normalized levels. Because Canada has had a tremendous run upward compared to that of other nations, it will come down just as hard. Probably means it will end worse there than here. Also, we’re tired of hearing the stupidity that surround the arguments that “immigration will save us [Canada]” or “everyone wants to move here [Canada].” The truth of it is, the U.S. has, even as a per capital ration, exceedingly higher numbers of immigration than Canada (in fact, the U.S. has more immigration than all countries combined each year). And, in a recent Gallup poll, 700 MILLION people were interviewed. The overwhelming amount of people stated they would prefer to move to the U.S. over any other nation in the world. That was nearly 170,000,000 people who stated that. Canada ranked in at about 40,000,000 people. Do the math, and it is easy to see where Canada is headed. That is our take… Believe me, I’ve talked with several people about it in the U.S., and most everyone I encounter would agree with everything I’ve said. It is VERY sad to me, but honestly, the pridefulness and entitlements in Canada today have overpowered integrity, honesty, and cognitive thinking. The correction is coming, and when it does there will be a lot of Canadians eating crow (in fact, many are even today).

#231 betamax on 03.10.11 at 3:47 am

#230 Dork: “mainland Chinese who buy $1m tear downs are using cash; no financing. Mainlanders don’t have mortgages”

Misinformed tripe. My wife’s relatives are mainland Chinese multimillionaires who are still mortgaged to the hilt, borrowing against paper equity gains to buy yet more property. If you believe that RE goes up forever, then you don’t stop buying when your cash reserves are used up.

Think before parroting.

#232 Nomad on 03.10.11 at 4:07 am

OK. Fun blog.

Yes, I think Canadian real estate will correct, yes of course its in a bubble. This seems obvious by now.

What confuses me: why is everyone eagerly waiting for the moment to happen, giddy and giggling? LOL, reap profits while you still can, glean what you can from the consumer base…why the unproductive schadenfreude?

Another point: I see a lot of people saying Vancouver is a “shitty” city where they would not live. Do you people have passports? Have you traveled? Have you tried jogging in Beijing? Pick a lung. Have you tried nature expeditions in Shanghai? Wake up. BC may be overvalued, but you have to understand that there IS a certain sector of mainland buyers very attracted to Van city real estate. I mean the bureaucrat money that is going to houses of 3MM CAD+.

#233 landlessinvan on 03.10.11 at 10:55 am

Nonetheless, I sure wish I’d been a homeowner in Richmond, so that I could sell right now and make a half-million with no capital gains.