No investor would scoop a stock, bond, ETF or option if no money was to be made. But every second of the day, some juiced-up buyer closes a real estate deal based on emotion alone. So is a house an investment or a consumer good?

People buy real estate with their hearts and loins, of course, then try to justify it all as a sound financial move. That’s how they get into trouble. And trouble’s coming.

There’s no justifiable economic case to be made for buying a house at this time. The value of the asset will go down and the carrying costs will go up. That rules out a capital gain and promises you’ll have less cash flow. Renting a similar property can be done with far less dough. And investing your money in assets that actually pay you to own them, like a nice balanced portfolio giving 8% or so, means renting and investing actually makes you wealthier.

So buying is 100% emotional. It’s not an investment plan. Not a strategy for financial security. The costs of getting in and getting out are huge, and prices today are too high to reasonably expect any more appreciation. If you want a nice house and are willing to bleed money to get it, dig in. But if you’re sane enough to believe you should get something in return for investing $50,000 or $500,000, wait a while. It could take years before residential properties become cheap enough again to promise a capital gain.

Or you can start thinking about income-producing real estate.

There’s a world of difference between residential and commercial properties.  A home costs you a huge amount to own (including the lost earning power of your equity), with that expense offset only by the rent you don’t pay. This almost always results in a loss, especially when closing and selling costs are added. The only possible redemption is a capital gain. But, as I said, what fool would expect house prices to continue rising after an almost-continuous 7-year romp?

Commercial real estate, on the other hand, has cash flow. This is why you own it – so the user of it pays you regularly. Therefore it’s a simple thing to know exactly what your return on investment is – called the ‘cap rate.’

Some people think buying a condo or a SFH turns them into a commercial property investor. It doesn’t. Instead it makes them a humanitarian, since they end up subsidizing the tenant. Given current values, there’s a zero chance anyone buying a single residential housing unit will be in positive cash flow. So the best thing thousands of fools snapping up brand new condos in the GTA can hope for is a big surge in real estate values to recoup their sustained monthly losses.

And that ain’t gonna happen.

This brings us to multi-family structures, retail spaces, office buildings, industrial properties and even perceived money machines like car washes and laundromats. Now that we’ve reached a watershed moment for house values (crested, and in for a long descent), real estate investors too horny to wait for 2013 should turn their affections to the pleasures of ICI.

Natch, it goes without saying that any commercial vulture should circle where the carrion is. These days that includes southwestern Ontario (soon we will be adding the Okanagan). The region west of Toronto has more residents than all of Alberta, with a lousy manufacturing base, cascading house values and steady supply of renters.

So how about a 6-plex with an annual income of $24,000, on the market for $259,000? After expenses, that’s an 8% yield on your money – plus you get to own a Victorian-era mini mansion. And I’ve already told you about some nice little income-earners in Windsor, a city which unfairly caught the Detroit disease and now has some of the best property values in the country. There’s this 12-unit, three-storey apartment building for $539,000, this fully-rented 5-plex for $249,000, or this cutesy four-plex for the price of a porta-potty in Leslieville.

Here’s my point: If you want real estate that’s actually an investment, buy some. They exist. They work. They make money. They pay you to own them.

But if you crave emotional fulfillment, get a dog.


#1 Montrealer on 05.22.11 at 9:37 pm

In Montreal, the plex market is ridiculous, with asking prices of 15-20+ times incomes. It used to be worth it under 6 times revenue, at 15-20 no way you can make money.

Seems some regions in Canada are seeing the ratio back to normal, but certainly, a lot of cities are still asking way too much for apartment buildings.

#2 Forgot my name on 05.22.11 at 9:42 pm

I agree with Garth whole heartedly with regards to purchasing a commercial over a residential, but definitely not in Toronto as Garth does state.

Sold last week for $940,000 with three units in it. The current owners and now the new owners will live in the upstairs unit, while I will stay in my middle unit paying $1050/month, while the lower unit pays $1400/month.

So the new family are moving in, believing that they are buying a viable rental property. it’s in a fantastic location, right by Lake Ontario with homes on the same street going for $2-$3 million easy, but if you add up what the renters (myself and downstairs pay) that’s only $30,000/year on a $940,000 property.

This is how out of whack property values are in Toronto. I’m living in an amazing unit and paying just $1050/month with no stress whatsoever. So, if anyone thinks that they can be profitable buying a commercial unit in Toronto, you better think again and take Garth’s advice and look elsewhere like Windsor!

#3 Aussie Roy on 05.22.11 at 9:47 pm

Great article as usual Garth.

Aussie Update

It’s a bargain hunters paradise – LOL


Times are tough as Realtors cut their fees – The poor luvs.


Another month, another NATIONAL price fall.


What GREAT news, only a 5% fall expected this year – LOL.


Moodys downgrade of Aussie banks puts pressure on mortgage rates.


As the housing market slows, all the old tricks are being tried. Will they work ?.

Got a pulse, we want to lend you money.


Auction clearance rate data being fudged ?.


The infestors will save, oh wait, rental vancancies are rising, oops.


ABC 7.30 report (video).
Could we really have a housing bubble?.
RE industry, “of course not but even if we do prices cant fall far”.
Those with half a brain cell. “Prices are well above sustainable levels based on rental return and household income. Of course there is a bubble”.


#4 45north on 05.22.11 at 9:49 pm

first I guess but

My Buyer: taking Japanese scientific English and rewriting it as native scientific English.

holy cow! you can do that?

[email protected]

#5 betamax on 05.22.11 at 9:55 pm

#255 chojo: “This is when I knew the USA was in trouble:

Interesting link. I followed up on Zareh. Here’s an article from ’06 in which he thinks the market will bounce back and so is holding on to his properties:


And here’s an article from ’07 in which he’s losing properties in foreclosures:


And we all know what happened since. Looks like the would-be Trump was just another greater fool.

#6 Aussie Roy on 05.22.11 at 9:56 pm

Oops, sorry wrong link above.

Moodys downgrade of Aussie banks puts pressure on mortgage rates.


#7 HouseBuster on 05.22.11 at 9:56 pm

Garth.. I thought you said REITs outperformed residential and commercial real estate. Why not just buy one of those REITs?

Some people like to fix toilets. — Garth

#8 sick_of_waiting_to_buy on 05.22.11 at 9:59 pm

Oh, so now its 2013. In 2013, it would be 2016 and so on.

I think 2013 might be a fine time to buy a residential property. How about you? — Garth

#9 Drew on 05.22.11 at 10:00 pm

I used to own an “income earning property” – what a nightmare – the 3 o’clock in the morning phone calls never ceased, the renters trashin the place, the threats from these delinquents. what a nightmare. it all looked so good on paper. My advice to anyone thinking of doing this is to get a place with great renters who work and don’t to drugs, and hire a company to take the 3am phone calls. I can’t recall how many times I heard them say they “lost” their rent….

#10 BC Bring Cash on 05.22.11 at 10:01 pm

To invest $539,000 in a 12 unit Apartment building in Windsor is perhaps a case of a practical investment depending of course on rental $, condition of building etc… Compare that to buying an Okanagan single family dwelling for $700,000 and pretend that is an investment? Yea right! Good luck with the Kelowna RE home owership dream.

#11 Dan in Victoria on 05.22.11 at 10:05 pm

I’m a sucker for those old Victorian homes. Just love those old houses.
Lets see 259K and you get 24K in rent. Hmmmm.
A CHEAP lot in the Victoria area is that much.
Then ya gotta build…….
Oh right, everyone wants to live here.

#12 Howdy There on 05.22.11 at 10:08 pm

Commercial is as risky as it comes. People struggling will try to stiff their landlords. Businesses struggling from falling sales will try to stiff their landlords, and businesses are struggling as cash strapped ‘RE rich’ baby boomers and naive property virgins aren’t buying stuff.

We know residential RE is toast, but commercial isn’t any better. Look south for a model.

That is no model at all. Multi-family investment properties of the kind I illustrated in stable communities are solid performers for those who choose tenants well. — Garth

#13 Cato on 05.22.11 at 10:09 pm

People gotta live under a roof – exodus has to go somewhere. Wonder what the cap rate is like on shipping containers – http://www.greenpacks.org/wp-content/uploads/2010/01/shipping-container-housing.jpg

#14 downtown t.o on 05.22.11 at 10:11 pm

Garth speaks the good word!
I am a 20something from the gta and was once in the mindset that buying a condo would make me whole

I relized what matters after reading this and other blogs , and now am renting in downtown t.o with parking in one of those new condos along lakeshore for less then $1200 a month

I am letting an “owner” subsidiize my living, and investing the savings!

To buy in the same building is over 300K , to live in the same place with condo fees and property taxes I would be close to 2k a month!

Loving life on easy st!

#15 Medic on 05.22.11 at 10:14 pm

Do toilets really break that often? And do they always break at 3 AM?

#16 45north on 05.22.11 at 10:20 pm

brother-in-law just sold all his rental properties in Pickering, he just wanted out

Andy Miller in the US is one of the smartest former owners of commercial real estate:

what most intrigued me about Andy was that he had been almost alone among his peer group in foreseeing the coming end of the real estate bubble, and in liquidating essentially all of his considerable portfolio of projects near the top.


#17 Howdy There on 05.22.11 at 10:27 pm


But it can’t happen here.

That story is about commercial mortgage-backed securities. No, it can’t. — Garth

#18 disciple on 05.22.11 at 10:30 pm

When I was a young man, I had an income property. I learned pretty quickly that if a tenant in Toronto does not want to pay, they essentially do not have to until the bailiff comes knocking two months away and several K’s later. It’s even worse FOR THE LANDLORD if there is a lease, either written or verbal, because you have to let them stay for the term of the lease, hoping they will pay! Two of my clients are an older couple with a 3-plex in Toronto who just lost 10K on a tenant who did not give them a dime and stole their stove to boot!

Don’t get me wrong, I’ve had really good tenants as well, but if and when I do invest in RE again, I know what and who to look for, but this was enough to chase me away at the time…and this was many years ago when prices were sane. Anyone attempting to do this now must surely be a fool.

#19 betamax on 05.22.11 at 10:33 pm

My father funds his retirement, in part, by owning and renting out a four-plex. It provides a tidy revenue stream. But he owns outright and will happily let a unit sit vacant for several months until a great tenant appears. Otherwise, it’s not worth the trouble.

#20 John on 05.22.11 at 10:34 pm

High yields on rental usually mean you are dealing with a lower quality tenant, and accompanying headaches.

This blog is full of dumbass comments this morning. You just won. — Garth

#21 Tim on 05.22.11 at 10:37 pm

Why wouldn’t you buy a REIT instead? How do you know if you will be faced with a big repair bill? Or if it will nickle and dime you to death with small repairs? What if a month or 3 months goes by without all units being rented? Unless you’re a handyman who lives within a half hour of the property, how can it ever make sense at these multiples to buy for the rental income? You are much better off buying big name blue chips- Transcanada, Scotia, Canadian Tire, Emera, CN Rail, Chevron…

#22 not 1st on 05.22.11 at 10:39 pm

Sure 4 and 6 plexes are resonably priced in tertiary markets like Lethbridge or Med hat or some similar city, but also the job prospects are lower and economy more of a one trick pony which adds risk to your rental venture.

If you want to own RE in a solid market with lots of diversified jobs and a growing economy, like calgary, these plexes go for a million plus. No cash flow there either.

Why buy anything in Calgary? — Garth

#23 Howdy There on 05.22.11 at 10:45 pm

Here’s a thought. Commercial RE is usually bought using debt. Since debt is destined to become more expensive, commercial RE is destined to become cheaper. If you want to buy some commercial RE, be patient. It will be cheaper next year, and cheaper yet the year after. There is no need to rush.

#24 Hoof - Hearted on 05.22.11 at 10:46 pm


I see two dynamics…..in Metro Van

Old commercial will be bought up , and residential put in.

This displaces cheaper rental space.

New residential buildings build retail space on the ground floor, which sits empty , to expensive to rent.

McMansions will create a nightmare….they have invaded every neighbourhood …they are already being turned into rooming houses.

Too many rental options chasing too few tenants.

#25 daniel on 05.22.11 at 10:47 pm

hi Garth
love your blog,
sold my overvalued house in burnaby heights in 2009 and was crucified by friends but was the best thing i ever did. Packed up and moved to southwestern ontario and picked up a 1350 sqft ranch on a 62 ft lot a few blocks from a great golf coarse for a buck and a quarter. It would have cost me 2 mil in vancouver for the same home. I too am looking to buy a few muti units the problem in windsor is that commercial property taxes are insane that 12 plex you reference is in a bad location and you would need rent from 3 to 4 units to cover the taxes.

keep up the great work

#26 Howdy There on 05.22.11 at 10:50 pm

Has anyone looked at the balance sheets of REITs. There is a common characteristic. They have lots of debt. We’ve learned on this blog that debt is something we should avoid. It’s becoming more expensive, and will become even more expensive in the future. Maybe REITs can grow their cash flow to keep up with the increased costs of their debts, but I’m skeptical. We know the situation for cash strapped boomers. We know the cost of food, fuel and other necessities is growing. The fate of REITs looks dismal. Challenges on the revenue front combined with growing costs to service their considerable debts suggests shrinking distributions and falling equity prices.

Not the REITs I have written about. Give concrete examples. — Garth

#27 Howdy There on 05.22.11 at 10:55 pm

Garth, I know I’m posting a lot of comments that disagree with you. But here’s the deal. I agree with you analysis of housing. It’s well detailed and well thought out. But it seems like you’re unwilling to make the same effort with other assets. You’ve provided many reasons why housing is toast, but many of those same reasons extend to other asset classes.

You don’t seem to be willing to analyse anything but housing to any significant depth.

#28 Josh L on 05.22.11 at 10:57 pm

Sick of Waiting to Buy,
We’ve already started to see prices going down in most places and sales have been plunging for awhile. Garth’s point is it may take another 2 to 3 years for the prices to go low enough to be reasonable … maybe more.

#29 Devore on 05.22.11 at 11:04 pm

#15 Medic

Do toilets really break that often? And do they always break at 3 AM?

Forest … trees.

It’s just an example. The point is there is far more to being a landlord than just throwing an ad up on Craigslist, and most people do not realize this.

#30 House_Party on 05.22.11 at 11:07 pm

I like to know if Ontario Tories win the October election would they abolish the rent control and tribunal. This would set the rent to sky high and the prize of the properties always stay high.

#31 wes_coast on 05.22.11 at 11:42 pm

While southern Ontario valuations look good – be cautious. High vacancy rates , unverifiable and falling rents, population outflow causing vacancies in the housing sector all spells overcapacity. The listings look nice but dig deeper and you see alot of rot. There is no corner of the country immune to the mismanagement caused by the CMHC and prolonged artificially low rates.

There is no population outflow in SW Ontario and no evidence of falling rents. Your comments are unsubstantiated and obviously fabricated. — Garth

#32 LS on 05.22.11 at 11:43 pm

Talking about the costs of getting in and getting out…

In these markets, like the west side of Vancouver, it’s cost prohibitive to move up. For two reasons. Reason 1) if you’re already in an SFH, to get something markedly better than the house you’re already in, you’re looking at $500,000 – $750,000 more. 2) the real estate commission, $36,000 (on a $1.2 million sale of existing home) and 3) the property transfer tax $32,000 (on a $1.7 million house.)

You can understand why people aren’t moving in their neighbourhood. Just with closing costs and property transfer tax alone, $68,000. Or in total $568,000 in this case.

Who can afford this? You can see why this is not a healthy market. $70,000 in fees and taxes just to move house!

#33 TaxHaven on 05.22.11 at 11:52 pm

“…a nice balanced portfolio giving 8% or so, means renting and investing actually makes you wealthier.”

~ only if you count your wealth in cash terms!

But a whole pile of other assets – gold, collectibles, farm acreage, cheap real estate, a business or commodities – might well out-produce cash.

#34 jas on 05.23.11 at 12:01 am

I like this post because here you make a case for real estate investment in residential arena!
(I’m not a great fan of investing in commercial RE.)
Especially in the last paragraph, with concrete examples, you’ve made me think about those locations in Ontario.

Any reliable contacts who cater to these locations whom I can contact or do you provide that service for a fee?

Thank you very much

#35 B in Victoria on 05.23.11 at 12:02 am

Hi Garth,

I have been wondering about properties that are multi-use and so this most recent posting raises my question again…we have a house in Victoria that we are getting ready to sell. We purchased the house because it has a suite on one half of the bottom floor and the other half is set up to be able to have a home based business…we are both Massage Therapists. We currently rent out the suite for $750 which is half of our mortgage costs. If we move part of our existing clinic to our house, we can then rent the shifts at our clinic out to other therapists. Do you think this sounds like a good enough arrangement to warrant keeping our house? We have no problem selling and renting for a while as we did buy as the market was topping out 3 years ago and won’t feel good if our house ends up being worth less than what our mortgage is…looking forward to your insight.

#36 Not Wondering Anymore on 05.23.11 at 1:16 am

The variable you are not taking into account in this “buy commercial property” scenario is that you may not be able to rent them out AT ALL due to a glut in the rental markets, which we are now beginning to see. This should be noted as a high risk which can effectively skewer and negate your assumption of guaranteed income or profit when purchasing these properties.

I know of no Canadian city where there is a rental ‘glut’. Do you? — Garth

#37 Carp on 05.23.11 at 2:03 am

I love renting this home/farm. We sold our suburbia mansion, invested our money (very conservative investments but balanced). Meanwhile, we are learning what it takes to have a small farming operation that is profitable as a first prototype. The cost 2-3K + rent.

Now for #15 Medic .. it wasn’t the toilet but the sunk-pump that broke in the basement and I’m sure glad to find out about failure point at no cost to me.

#38 Chaddywack on 05.23.11 at 3:03 am


Great post and this should prove the nay sayers wrong who claim that you are always saying that RE is a poor investment. We both know that is bunk, but here you’ve given some good examples of when it can be.

Incidentally a realtor I was using a year or so ago called me this afternoon and told me that I need to get moving and buy in Vancouver. He told me “I deal with a LOT of wealthy Asian clients and they’re buying up the city” he went on to say “Seriously, I’m only doing this because I know you so well and if you don’t buy within the next 2-3 months prices in Vancouver will be so high that you’re done and won’t ever make it on the property latter.” He went on to mention that China has over a billion people and that even if 1% of them are millionaires that’s a lot of people wanting to move to Vancouver…..

Fear is such a powerful emotion, I can totally see how people get sucked in….

#39 reality guy on 05.23.11 at 4:09 am


I’ve been monitoring http://www.mls.ca, picking specific areas

burnaby and east vancouver

Right after the RBC news, I’ve notice a spike in listing.

Since January of this year the burnaby listings have steadily increase 100 % for 950 listings to over 2000

and the east vancouver have increase from 1800 to 3200 listings.

The past 4 days I’ve seen an additional 100+ listings in east van and about 50 in burnaby. wonder if the trend will continue.

#40 C on 05.23.11 at 6:39 am

Last week my wife and I finally found a beauty rental in downtown Burlington. We were kinda set on the idea that we’d have to rent a townhouse, but a really cool bungalow popped up and within a day we took it off the market.

Lots alone in downtown Burlington would go for $400-$500K minimum.

Our long term plan is coming together perfectly! Sold in April 2010, renting an apartment since, and now moving in a beauty bungalow in a prime location next month. We told the landlord we will likely rent for 2-4 years and he said perfect! Didn’t ask why though :)

Funny thing too is our landlord is a real estate agent.

There is no way if we wanted to buy the property we could cover all the costs at only $1,850/m. Property would likely sell for close to $500,000.

To Garth’s point exactly the landlord is subsidizing our rent. We are using the capital gain from our 2010 condo sale to invest in a fairly low risk diversified mix.

When the market eventually turns people who recently bought will ask what the hell was I thinking much like most Americans who bought in 2004-07.

Keep up the great work Garth. When the big turn hits all your efforts will be worth it!

#41 munch on 05.23.11 at 6:51 am


No they don’t, and nobody said they do – it’s a figure pf speech.


#42 Fractional Reserve on 05.23.11 at 7:42 am

Garth, would you consider buying a property like the Windsor 12 unit building you cite in your blog?

#43 Sid on 05.23.11 at 8:25 am

I have been doing this for a long time. Nobody has ever called me to fix a toilet at 3am. It is not that much work if you buy places that are not dumps and get tenants with good credit scores. A bit of work up front pays off in the long run. You can get 8% cap rates all over south west ontario, and if you you buy with a mortgage the return on your down payment is in the 25-30% range a year (given 0 capital gains).

#44 Chris L. on 05.23.11 at 8:39 am

When toilets break at 3:00 a.m.? Ha, my ringer is off after 11 pm. Even tenants should be expected to use some creativity like shitting in a bucket or the backyard! It’s dark afterall.

Those midnight calls are rare, but I suppose it all depends on how many retarded tenants you select through your screening process. And yes, you can tell a bad tenant from a good one with a good line of questioning.

How many red flags do you let slip?

#45 bigrider on 05.23.11 at 8:51 am

Sid at #38.

Fine, I believe what you are saying but why not forgo the work involved in the multi plex investing racket and simply put your downpayment on some preferred shares, or REITS, paying 5-7% and borrow the difference much like you would with the building(s).

I mean even if you are yielding 8% on a rental multiplex, there would have to be some management fees that factor into the equation taking down the return, or, you are doing legwork and running around to keep the rental machine going.

Everyone I know that has these multi plexes confirms that there is quite a bit of maintenaqnce and work involved, or they hire people to do it for them and are left with much lower yield. They also confirm that there is a belief that the buildings will appreciate in value which I think we can both agree is probably not going to happen over next decade or so.

No judgement in your comment ,just a question so that I can better understand the thinking that goes behind these sorts of investment purchases

#46 bigrider on 05.23.11 at 8:53 am

I meant sid at #43 above

#47 brucey on 05.23.11 at 9:04 am

Wondering if I made a big mistake. I just bot a 400,000 town house in Oakville with my brother. We put 20% down and rent out the house. I also own a 320,000 townhouse in Oakville (with a 140,000 mortgage). I moved out of it a few years ago and I rent it out. My fiancee and I rent a Toronto condo for 1,600 a month. We have no debt (other than the mortgages i mentioned above), 130,000 household income. Only 72,000 in RRSPs and 10,000 in emergency cash. We plan to keep renting. Should I get out of the house I just bot?

Sigh. — Garth

#48 Sail1 on 05.23.11 at 9:10 am

Multifamily dwellings have been my life for 30 years. know your demographics, have a good lawyer and hire a good property management company. Beyond that Garth is 100% correct.

Much to choose from in Toronto, have a look below, but understand what Garth has written.


#49 grantmi on 05.23.11 at 9:23 am

#5 betamax on 05.22.11 at 9:55 pm

The houses aren’t exactly throwing off cash:

Tahmassebian estimates that he loses $3,500 a month on them, since he doesn’t bother to rent out all 15. “If I’m negative on a few, that’s okay,” he says. “I’m in it for the appreciation.” In seven months, he estimates, the 15 properties have appreciated from $2 million to $3 million. He’s planning to sell in the next two to three years, but if the market does crash–which he doesn’t expect–it wouldn’t be a disaster, he says: “You just hold on till it comes right back up.”

Just love that line in Betamax’s link from above!!

but if the market does crash–which he doesn’t expect–it wouldn’t be a disaster, he says: “You just hold on till it comes right back up.”

WOW! Famous last words! I’d love to find out what this Tahmassebian dude is doing now cira 2011??

Betamax did a great job tracing him up till 2007. There’s got to be more to this guys story. Dying to know!


#50 Montrealer on 05.23.11 at 9:31 am

what happens to the 8% yield (you calculated a 10x income with your 6plex) when the interest rate rise?
8% is today with a very low interest rate, no? This 8% is bound to go down if the rates are higher and especially if you own in a city with strict rent control (i.e. you can’t raise the rent to match)

So don’t buy, timid one. But if you do, lock in for five years, then raise rents (legally) to cover the added costs upon renewal. What the hell is the matter with folks? Man up, people… — Garth

#51 Toon Town Boomer on 05.23.11 at 9:35 am

I’ve been watching Kijiji ads for a rental house/condo to rent and have been coming across a lot of angry post that slam Landlords.
Some Landlords here are not wanting to rent to:
Pet Owners
First time renters
Some don’t want children
I can understand the smoking, but the rest seems strange to me. This just elimanates a good majority of people from the pool of renters.
What’s up with this?

#52 SMOKING MAN on 05.23.11 at 9:36 am

Garth said:

some juiced-up buyer closes a real estate deal based on emotion alone

Thank you captain obvious…. Same could be said with Cars trucks and boats…. Last time I checked lots of cars on the road. and just try and find a boat slip in toronto these days…Good luck…..

Cars lose value fast…. Boats lose value even faster….

People still buy them..

Most people buy a house cause they want to own and need shelter, and hate the land lord..

Will a house buy today lose more % than a boat even if the gloom and doom hits the market? nope. In 25 Years will you be able to buy a 500 sqft condo in TO for under 1 million. Not a chance.

#53 Heart of the World on 05.23.11 at 9:37 am

Today I have a tale of bloodcurdling horror to share. Didn’t happen to me though.

We just sold our 1969 built house in a Vancouver burb days before the amortisation rules changed. I noticed that the buyer amortised over thirty-five years — whew! Out by the skin of my teeth! No way will the house pay the buyer anything like an income reflecting his purchase price in rentals, even though the existing up and down tenants will stay (we had installed a ground level suite).

We did quite well on the transaction (bought in ’99 for under half of the sale price) and now I am gazing at Okanagan Lake, with Summerland beyond, then the mountains and a big, big sky… from my fully paid up (no mortgage) bungalow, which pays us a handsome income as a ‘summer rental’ for tourists.

So where is the horror, you ask?

Checking my mail the other day (a handful of days after the funds transferred) there was an unusual letter, from my former L/M municipal government. It seems that they are now ‘legalising’ ground level suites. This letter was addressed to me as we had been ‘fingered’, I guess by a neighbour. Some of its blood curdling contents: annual utility bills for the house going forward would double (there goes another grand); the suite will need to be inspected and ‘brought up to code’; and failure to comply with this edict will result in $200 a day fines starting in 2012.

My heart goes out to the buyer, who purchased the place for its rental income stream. And thank you, guardian angel, that none of this is now my problem!

So I actually escaped by the skin of my teeth not once, but twice! And that vast inland sea out of my window is sure looking fine this morning.

As municipalities across the country begin to experience more and more money woes, look for more and more tax grabs like this one going forward.

#54 April on 05.23.11 at 9:41 am

#Chaddywack. So you saw thru the lying realtor?

#55 jas on 05.23.11 at 9:51 am

#43 Sid
If you buy with a mortgage the return on your down payment is in the 25-30% range a year (given 0 capital gains)

I don’t think that is true or makes any sense in the context of this particular post; i.e. Windosor, Ontario.

I think what Garth is saying is that numbers make sense if you buy it outright without any loan.

#56 young & foolish on 05.23.11 at 10:02 am

Wow … so much animosity towards rental properties!
Now I know why so many people shy away from buying them. But hey, nobody is going to give you money for nothing. Being a landlord is a part-time job. And an investor in the stock-market is often a speculator, hoping future earnings will justify capital gains and dividends.

But Garth makes a great point (as usual) here – people have to live somewhere, and when they pull back from buying because of poor fundamentals, they will be turning to rentals.

#57 Tim on 05.23.11 at 10:05 am

What Garth doesn’t say in his blog is that the economy is slowly picking up. Spending is picking up, especially in the oil patch:

Gearing up for a Labour Crunch:
“In 2008, oil sands capital spending hit about $18-billion (Canadian). Projections by Calgary-based investment dealer Peters & Co. suggest industry will surpass that level by next year. By 2014, the firm forecasts capital spending will exceed 2008 levels by nearly 25 per cent.

The Alberta government says the province will be short 77,000 workers in the next 10 years. The Petroleum Human Resources Council has predicted up to 130,000 new workers will be needed in the coming decade, both to staff new jobs and replace retirements.

A labour shortage in Ft Mac does not mean ‘the economy is picking up.’ What a leap. — Garth

#58 maxx on 05.23.11 at 10:05 am

#9 Drew on 05.22.11 at 10:00 pm

“I used to own an “income earning property” – what a nightmare…..”

Trouble is Drew, far too many “landlords” expect to do nothing for the rent. They think that paying their costs to own also puts paid to their responsibilities towards their tenants.
We are model tenants- always leave the dwelling in better condition than when we moved in. Recently had a nightmare experience with a useless landlord and are now taking it to court.
Bottom line, there are bad tenants, there are bad landlords and good people who sometimes get caught in between. As for management companies that do absolutely nothing at 3 a.m. when idiots nearby decide they want a nightclub experience, police do a great job and you even get a report number to present to the courts as proof positive of greed abdicating its responsiblities. With any luck, next time the “landlord” decides to abuse another decent tenant, its name will pop up at the rental board.

#59 Abitibidoug on 05.23.11 at 10:15 am

You mention the cascading house values in southwestern Ontario. I live in London and see new subdivisions of big houses going up, gobbling up more and more agricultural land, all around the edge of the city. Is London somehow immune to these bad times, being a regional centre and with less cyclical industries like health care and education, or are there a lot of greater fools in this population of 353,000 people?

Sales in London last month plunged 26.3%. The average price increase equaled inflation. Come to your own conclusions. — Garth

#60 eddy on 05.23.11 at 10:20 am

Paul Craig Roberts on max kaiser’s show

pt 1


pt 2

#61 Tim on 05.23.11 at 10:24 am

Banks see red as Chinese migrants numbers swell:
Financial Post


ndeed, even as Beijing seeks to let some air out of its domestic housing market, Chinese nationals are investing in real estate overseas, helping push Vancouver house prices to the third highest level in the English-speaking world, according to the Frontier Centre for Public Policy.

In 2007, China boasted around 22,000 high net-worth households (with more than $1-million in assets), and that number is expected to increase to 409,000 by 2017, according to a report by Barclays Wealth.

I raised this over a year ago, even if a small fraction of wealthy Chinese come over here we’re screwed and it is starting to happen…

#62 shanks on 05.23.11 at 10:30 am

#74 disciple on 05.17.11 at 9:13 am

lol been a long time, good to take a break from this ultranet system! you hit the nail on the head disciple… owning is just renting the land from the queen of england. I have yet to figure out what legitimate claim she has to Canada anyways, considering the land was full of people when her servants arrived here oh so long ago.

on another note, it is getting serious when mainstream banks start to say bad things about housing. Somehow i do not think this is going to make a dent in there soon to be announced profits!

#63 Tim on 05.23.11 at 10:31 am

Falling rent? Where? I want in!

#64 Pat on 05.23.11 at 10:49 am

#27 Howdy There wrote:

“You don’t seem to be willing to analyse anything but housing to any significant depth.”

Ha-ha. Not quite. Garth analyzes lots in depth. Period. And he makes for a fun reading.

#65 young & foolish on 05.23.11 at 11:30 am

There is also the case of leverage: tax deductable loans used to purchase rental property which is also paid off by the user.
An investor/landlord would never put in the full amout paid to the seller.

#66 Hoof - Hearted on 05.23.11 at 11:39 am

# 53 Tim

Good scoop

I am quite pissed off.

Is this move a back-door quasi CMHC ?

INVESTOR An investor is a party that makes an investment into one or more categories of assets — equity, debt securities, real estate, currency, commodity, derivatives such as put and call options, etc. — with the objective of making a profit.

So…where’s the profit ?
Doesn’t CRS have a definition for business?aka “profit”…hence if no profit= no business thus not an investor, thus go back home?

So….the intent is to accomodate more offshore investment…I say no enough is enough.

Canadians are simply becoming hewers of wood drawers of water and WHORES or Real Estate.

This appears to be a means to launder money, and to bring in capital to keep the bubble pumped up.

IMHO, its the Gov’t and Bankster waiving the white flag and letting China become the de-facto Gov’t.

I say go the other route, restrictions before a civil war breaks out… this is simply delaying the inevitable.

#67 Rainbird on 05.23.11 at 11:47 am

What caused the interest rate spike in 1981?

Out Government could not control it at that time; but now it does? How did that happen?

Can that happen again?

#68 Uki_7 on 05.23.11 at 11:55 am

to #51 Toon Town Boomer:
“Some Landlords here are not wanting to rent to:
Pet Owners
First time renters
Some don’t want children
I can understand the smoking, but the rest seems strange to me. This just elimanates a good majority of people from the pool of renters.”

It depends:

– My wife is a smoker, but she NEVER smoke inside no matter what. We have a balcony and she goes out even at coldest day in a year.
– We rent in a brand new building in Mississauga and some people already have 2 dogs and a cat. We don’t like this at all and we are going to look somewhere else once our rental term expire. ( I am wondering what the heck management think ! The only explanation would be, they are still unable to sell all remaining units due to ridiculously high price, so they just close the eyes. )
– Everything else looks OK to me.

O, I forgot to mention another reason why we are not going to buy in this building and move from here sooner or later: Most of realtards advertise this building as being close to newly build Sheridan College at Square One, so you can rent your “investment properties” and becoming rich. NO, we don’t want to leave in one building with bunch of college kids and see them partying, vomiting in elevator ( yes, its going to happen ), drug-selling dealers and all of this stuff .

#69 HouseBuster on 05.23.11 at 12:01 pm

The numbers are in for April for the Hamilton-Burlington area. Sales are down 14%. Not only that, sales for April were below the 10 year average.

Not looking good.

#70 Aussie Roy on 05.23.11 at 12:07 pm

Aussie Update 2

Hedge funds line up to short Australian banks

Shares in Australia’s big banks have come under heavy selling pressure from short-sellers attracted by lenders’ exposure to Australia’s housing sector, which some perceive as being overpriced.

ANZ was the worst hit, plunging 77 cents, or 3.4 per cent, to a 10-month low of $22.02.

Westpac fell 68 cents, or three per cent, to a five-month low of $22.07, while National Australia Bank (NAB) lost 75 cents, or 2.7 per cent, to $26.66, and Commonwealth Bank (CBA) fell 75 cents, or 1.44 per cent, to $51.42.

“(The banks) have been fingered by a number of commentators as good shorts,” CMC Markets chief market strategist Michael McCarthy said.


It’s the debt stupid

Europe’s debt problems may be on the other side of the world, but Australian mortgage-holders are very much in the firing line.

Analysts say the increasing cost of funding for the banks will mean higher interest rates, creating another headache for consumers already under pressure from rising rents and utility prices.

Investors bailed out of banking stocks on Monday morning, wiping $8 billion off the banking index.


Sunrise – Real Estate report – BULL TURNS BEAR

Louis Christopher is a property analyst who joined us today on Sunrise.

Louis has observed that the property market prices are not ‘flat’ or ‘stablising’ or ‘plateauing’ – they’re falling.

Louis says the real estate industry is not being honest about what’s happening with property prices. In the end, he says, a transparent market improves investor confidence.


Gee we are so lucky “it’s different here”….

#71 Roial1 on 05.23.11 at 12:08 pm

#9 Drew on 05.22.11 at 10:00 pm

My advice to anyone thinking of doing this is to get a place with great renters who work and don’t to drugs, and hire a company to take the 3am phone calls. I can’t recall how many times I heard them say they “lost” their rent….

And MY advice to any who would take over and manage their own building is VET the potential tennent.

I-we, my wife and I have held our building for 10 years, (8 units) and because we vet EVERY new tennent we have no trouble.
Also very low turn over. Only two move outs ( to buy their own sfh) and two passed away (Old age not drugs) in ten years. Right now all of them have been in the building for 3 or more years. One lady has been in for 30 yrs.
I enjoy doing all of the maintenence and upgrades. I pay myself well. LOL. Our ROI is only 4.5% but very safe as we owe NOTHING on the building but have a mortguage on our house. (great for tax purposes)(no other debt no heloc)

Our other investments are returning 6 to 14%.

Thank you Garth.

Life is good.

#72 Cellar Dwellar on 05.23.11 at 12:10 pm

@#15 Medic “….Do toilets always break at 3am…?”

No, not always…..but as an experienced(20+years) building maintenance person I can tell you that most water leaks occur at night. Why?You ask. Because water pressure in most municipalities rises at night with lack of use( ie people are sleeping). I have dealt with MASSIVE water leaks. Most occuring at night.
But I have also dealt with break and enters, drunk tenants that lost their keys ( ask me how understanding a drunk tenant is when you demand a $25-50 fee for being woken out of a sound sleep at 3 am because THEY lost their keys! Hello Police? I have been threatened.)
Or the boyfriend that beats the crap out of his girlfriend and the neighbour phone you! Not 911 because your a cop too!
Or the baby loves tossing hair brushes down the toilet. Or the pet pees,shits, vomits in one favourite closet
( hey ! Its a rental. Who cares!).
Or the rent is ALWAYS past due!!!! I LOVE making 4 trips to the same tenant every month because I have nothing better to do.

So Medic. If you invest in a rental. Hire someone like me that has heard it. Seen it, and done it and wont be moved by tears, or BS.
Have a nice Victoria Day… :)_

#73 Waiting Patiently on 05.23.11 at 12:12 pm

I’m paying lower rent than in 2007 when I moved in. Started at $1180. 2008 increase to $1200. Then in 2009, I noted the number of vacancy signs nearby and my landlord lowered my rent to $1150. It hasn’t moved since.

We just signed another lease, and my landlord started whining about how high his costs are (rising taxes etc.) and how cheap my rent is. But, I know that he knows that I know he bought the place ten years ago and is really doing just fine. But yeah, year after year of rents not keeping up with inflation is starting to grind on him, especially after replacing the leaky roof last year.

Today, I walk around my Coquitlam neighbourhood and see how “vacancy” signs have gone from rare to being a permanent fixture in front of every building. Ads on Craigslist reveal the truth about how each “vacancy” sign represents not one unit, but three or four. Some of these buildings must have vacancy rates in the 5-10% range. Some are owned by REITs BTW.

The problem with real estate right now in Vancouver is that the CMHC has no upper limits on mortgage insurance. One relative bought a house in 2001. Ten years later, had a $250K mortgage on a house worth $500K. So what do they do? They sell that one and buy a bigger house for $800K. Now they have a $600K mortgage (50K for upgrades) without blinking an eye, and they think they’ve won the real estate lottery. Estimated family income $100K.

People are doubling-down in Vancouver and the CMHC better put a stop to it before its too late. It is for my relative.

#74 Cellar Dwellar on 05.23.11 at 12:22 pm

@#37 Carp.
“sunk-pump” ?
While I actually like your name for the pump.(because it describes it perfectly). It’s called a “Sump pump”…

#75 Cellar Dwellar on 05.23.11 at 12:44 pm

@#51 Toon Town
Your comment…
“Some Landlords here are not wanting to rent to:
Pet Owners
First time renters
Some don’t want children…..”

Let me try and deal with your question in point form.

Smokers… The entire suite will stink. Fire insurance premiums. Typically spend their last dollar on a pack of smokes or a lotto ticket. Rent? Whats that?

Pet Owners…. Pets have fleas. When they move out. The fleas stay…for several cycles if you dont clean properly.

First Time Renters….You mean University Students? Ah yesssss, Our future leaders. Bastions of responsibilty they are. I’d take a three welfare moms over one rich snotty law student any day.

Children … hair brushes/toys/cellphones tossed in toilets =PLUGGED, adult building, no play grounds,…..

#76 TheBigLebowski on 05.23.11 at 12:44 pm

Multi -family rentals are fine at the right time and location. Its just not the right time with interest rates at history lows. Prices will come down even more as rates rise . Give it another 3 years and then start looking. Until then protect your assets as the dow/gold ration returns to 1 to 1. Then roll your money into rentals. History tells us when this market peaks, real estate will bottom.

#77 TurnerNation on 05.23.11 at 12:49 pm

Using new name now :) On another forum someone posted they just bought a 520 square foot pre construction condo for almost 340,000! This is $650 per square foot! At best it will rent for 1400/mo.
Add closing costs of perhaps 10k to this figure.

The builders measure square footage from the centre of the walls and exclude bulkheads that may inpinge upon living space. Either way 520 is tiny space.
What could cause a 520 sq foot condo to rise above $650/square foot? Not a shortage, with over 10,000 new condos coming online in Toronto this year.

#78 not 1st on 05.23.11 at 12:53 pm

Lets be honest of what “most” renters really are. They aren’t rich people sitting on the sidelines waiting for the market to fall or nice elderly people downsizing in retirement.

Most are transient, immature, irresponsible, work shit jobs, never owned anything in their life, don’t have a real credit score (phone and power bills don’t count), always have a ready made excuse for anything, don’t have investments and couldn’t get an appointment with a banker if their life depended on it.

All while they talk shit about their big dreams and plans that never happen and are barely solvent.

Reprehensible comments. You are done here. — Garth

#79 Scalgary on 05.23.11 at 12:56 pm

Why buy anything in Calgary? — Garth


Look at this link below:


Three 2 bdrms and 2 single bdrm multiplex in Connaught (will never be a problem to rent it out) is listed for $700K. I wouldnt mind taking this property any time, than buying 1960 built 2 bdrm condos in Kensington for $400k.

Thanks a lot for providing different options for investing…

I say again, you are ‘Gandhi’ for your struggle for freeing common man from insanely high debt.


#80 grantmi on 05.23.11 at 1:09 pm

#53 Heart of the World on 05.23.11 at 9:37 am

Checking my mail the other day (a handful of days after the funds transferred) there was an unusual letter, from my former L/M municipal government.

Heart! Can you say which Muni this is..?? what’s the big secret. We’re going to track you down?

We have plenty of illegal suites on our streets, and I know the local city does not know about them, and are not paying their fair property taxes, and probably not claiming they rental income as income!

I want them out now.. and I want them out fast!!

#81 Snowman on 05.23.11 at 1:14 pm

“Why buy anything in Calgary? — Garth”

Cuz, there is where the money is, aways follow the money trail if you wanna make any uself. Why buy anything in the rust belt? Is the local rust market booming yet?

#82 Devore on 05.23.11 at 1:44 pm

#53 Heart of the World

Well, municipal governments across LM have been turning a very blind eye towards semi- and illegal suites for years. On the one hand, illegal (grey) suites are cheap and provide housing options for low income people, on the other, they need money, and legal suites bring in more money to city hall.

So they’re stuck between the proverbial rock of affordable housing and a hard place of bottomless budgets. I figured they’d stiff the low income people to look after themselves, but not this soon.

Which city is doing this?

#83 canucklhead on 05.23.11 at 1:46 pm

#57 Tim
You obviously weren’t in fort mac during the crash. Sub $50 oil turns fort mac into a ghost town. Tons of my friends last their jobs, I had my salary slashed. It was a nightmare. Thank god I’m out of there, its a boom/bust town and always will be.

#84 Snowman on 05.23.11 at 1:53 pm

#73 Waiting Patiently

“The problem with real estate right now in Vancouver is that the CMHC has no upper limits on mortgage insurance.”

Your relative paid 20% down for the new house, so what does that have to do with CHMC? A vast majority of those high priced houses in Vancouver are not insured by CHMC. The legend being circulated that a Vancouver burger flipper gets a 5% down $1mil – insured by CMHC – loan, is just that – a legend.

#85 InvestX on 05.23.11 at 2:36 pm

“There is no population outflow in SW Ontario and no evidence of falling rents. Your comments are unsubstantiated and obviously fabricated. — Garth”

So does this mean you don’t think rents will fall, which was alluded to in your recent post about the effect of 16,000 new condo units hitting Toronto by the end of the year?

You didn’t ask about Toronto. — Garth

#86 Patiently Waiting on 05.23.11 at 2:37 pm

I agree, my relative apparently didn’t use CMHC insurance. I’m sure they could have gone with a smaller downpayment, and the bank would have been more than happy. And many others in similar circumstances (doubling-down) are, which is helping to raise prices.

All the equity sloshing around here is what’s keeping things going for now, I guess.

#87 Howdy There on 05.23.11 at 2:45 pm

“Not the REITs I have written about. Give concrete examples. — Garth”

I Googled and found a listing of REITs. I picked familiar names and then a few more; here are the results. Nothing I looked at was passed over because it didn’t fit my theory posted above (#26).

BEI.UN is in negative equity.
CWT.UN has a D/E of 1.8/1.
D.UN = 1.5/1
REI.UN = 2.1/1
CAR.UN = 2.9/1
CRR.UN = 5/1
INN.UN = 2.1/1
LRT.UN = 12/1
NPR.UN = 1.4/1

Most of these companies have 2/3 or more of their capital from debt. The best of the bunch, Dundee and Northern, still have 60% of their financing coming from debt.

You’re worried about ‘financing coming from debt’? Where else does it come from? Don’t give up your day job. — Garth

#88 Carla on 05.23.11 at 2:50 pm

#32 LS

Funny, we’d always calculated between 300,000 and 400,000 to move up to the next level in Van west. Why we held off for so long. But last year the perfect house came on the market. We sold ours, but the inspection for new home showed several defects that would have had us borrowing more. Then we found this blog. Now renting with our proceeds invested.

We are an exception – everyone thinks that we’re crazy and will never be able to buy back in. It’s taken a while but I’m happy that we don’t have 2 million sunk into a house right now.

#89 Slumlord on 05.23.11 at 3:06 pm

Toilet ?

What’s that ?

Does the building out back count ?

Next thing those tenant pricks will want is running water…maybe even heat.

#90 Sales are in the dumps on 05.23.11 at 3:07 pm

Three friends at three different parts of the GTA and three homes that can’t sell. First one is Brampton who has been trying to sell for over a year and two price drops and yet nothing. Brampton is in deep trouble and if you search the MLS you will see countless empty houses that have been on the market over one year. Second one is North York who has been on the market for two months with little interest at the 6 open houses. The third one is in Milton where his home is falling apart after just two years. The homes has been on the market for about six weeks now. Buddy tells me the houses are all Garbage there. With sales now falling for one straight year you can say the housing crash coming together . Canada is in the year 2006 of the US housing crash.

#91 Hoof - Hearted on 05.23.11 at 3:16 pm

#82 Devore

#53 Heart of the World


Suites via landlords are about the worlds 3rd oldest profession…after Blogging and Used car sales.

The Local Gov’ts were in denial and concurrent bylaw enforcement . However suites have increasingly provided affordable housing in high cost urban areas, and prevented revolution.

Now….Local Gov’ts cannot ignore the issue for a number of reasons, including political optics.

However, in typical Gov’t fashion, it has to milk the cow and create more bureaucracy red tape and …..drum roll …… Ca$$$$h cow via permits and licenses.

IMHO, once you are on their radar screen, your annual permit fees wil rise and subject to inspections from here on in…

I’d love the hear some stories about (or from) landlords with suites and surrendering to Big Brother and how it all clusterf*cked with regrets.

#92 TurnerNation on 05.23.11 at 3:22 pm

8201 apartments and condos for rent within the City of Toronto on this site


#93 Hoof - Hearted on 05.23.11 at 3:36 pm

#78 not 1st

So…do you rent the basement or the attic of the local hostel?

#94 Sid on 05.23.11 at 4:00 pm

Not First, you are a jerk. Many renters are just regular people who cannot afford a home. They are young couples paying off student loans saving up for a house, they are single mothers with decent jobs, they are retired people on disability who want a small place requiring no maintenance. Your ignorance is disgusting.

#95 B in Victoria on 05.23.11 at 4:16 pm

Hi Garth,

I have been wondering about properties that are multi-use and so this most recent posting raises my question again…we have a house in Victoria that we are getting ready to sell. We purchased the house because it has a suite on one half of the bottom floor and the other half is set up to be able to have a home based business…we are both Massage Therapists. We currently rent out the suite for $750 which is half of our mortgage costs. If we move part of our existing clinic to our house, we can then rent the shifts at our clinic out to other therapists. Do you think this sounds like a good enough arrangement to warrant keeping our house? We have no problem selling and renting for a while as we did buy as the market was topping out 3 years ago and won’t feel good if our house ends up being worth less than what our mortgage is…looking forward to your insight.

#96 Shirlgirl on 05.23.11 at 4:17 pm

so how much are the units being rented for? what are the monthly costs overall. does their rent including heat, hot water and or lights, etc? How much can I safely get as return on my investment. Thinking opf buying and moving right now.

I gave you the contact info. — Garth

#97 Roger on 05.23.11 at 4:19 pm

True a duplex a triplex. Why a condo

#98 Duke on 05.23.11 at 4:21 pm

wow! almost seems too good to be true!

#99 Patiently Waiting on 05.23.11 at 4:27 pm

Illegal or grey market suites are usually busted for one of three reasons:

– tenants causing disturbances
– excessive street parking
– too much garbage/recycling on garbage day

#100 Sid on 05.23.11 at 4:28 pm

Big Rider, yes there is some work and maintenance involved but it is really not that much. When I look at a potential property I have to know the investment will make sense even if there is no price appreciation. Where landlords make money is through the leveraging. A property can have a 8% cap rate but if you only put 20% down then you are making way more.

Some people seem to have trouble understanding what cap rates are. Take the purchase price and divide it by the net income. Cap rates have nothing to do with interest rates or mortgage.

#101 JSS on 05.23.11 at 4:29 pm

I’d like to buy rental or commercial property for long-term investment.

I don’t have 20% cold hard cash, but I have a HELOC of approx $200K on the house. Untouched.

Is it advisable to buy an investment property using 20% HELOC and 80% mortgage?

Or do I keep saving up cash for the 20% down (this is hard)

So, let’s recap. You want to buy an investment property. You have no money. You are asking for advice? Do I have this straight? — Garth

#102 NotAGreaterFool on 05.23.11 at 4:36 pm

Came across an old (Nov 2010) clip from The Agenda hosted by Steve Paiken. The episode is called “The Debate: The Case Against Home Ownership”. Many of the same themes discussed on this blog are debated by a seasoned/veteran panel of experts that include Robert Shiller, Richard Florida, Jane Saber Phil Soper . Good discussion for those who can spare 40 mins.


#103 sick_of_waiting_to_buy on 05.23.11 at 4:38 pm

Garth has already been forecasting this since 2-3 years but the fact is that prices are only going up.
Most of the people would agree that housing is un affordable but how this can be corrected while banks are handing out credit with no responsibility. My friend other day got his 375K mortgage approved with $20K annual income.

And how is that sustainable? (Hard to believe how impatient people are.) — Garth

#104 Utopia on 05.23.11 at 4:40 pm

#70 Aussie Roy

“Hedge funds line up to short Australian banks.

Shares in Australia’s big banks have come under heavy selling pressure from short-sellers attracted by lenders exposure to Australia’s housing sector, which some perceive as being overpriced”.

Thanks Aussie Roy.

The media may be rationalizing bank shorts in Australia justified based on falling market conditions in your housing sector however this is now a global phenomenon.

Take a look at the chart below from Finviz. Banks and Financials like insurance are getting creamed in the US and abroad as well. It has been picking up steam since last week and the big boys are breaking below key resistance levels. Goldman itself has taken a hell of a beating since February as have others.


This is the markets response to a lack of confidence in a real recovery. Without QE3 of course the big firms will not be able to turn in the spectacular results they have seen for the past two years. Earnings are widely expected to fall going forward.

Furthermore, lending has not picked up significantly. Consumption in the US is anemic to say the least and as housing continues to decline bank risk for extending loans remains high particularly as there is no guarantee we will not go recessionary once more without additional stimulus.

But the stimulus magic did not ever really work. Ouch. There is the quandary for the guys at the Fed who are only getting an ounce of growth for each pound of medicine added to the system.

Compounding this is the very real risk of Greece leaving the Eurozone. I put the odds at 100% myself however when it happens is anyones guess. Banks on this side of the pond have exposure naturally and troubles in Europe spell trouble for us. This is much bigger than the Lehman debacle actually, the one that set off the last credit crisis.

Investors are now pricing the risk of holding financial’s into the market a little more aggressively as June approaches and QE officially ends. Contagion risk from Europe and falling earnings anticipation are weighing things down but there is a growing sentiment (despite a lot of bullishness) that a major market correction is near, possibly even imminent. Not good for bank stocks generally speaking.

There is no doubt the bloom is coming off the commodities sector at the moment and markets appear to be in the early stages of rolling over. I am sure not holding my breath for any big rise in equities over the summer months. Today looked ugly if you noticed.

The thing is we have never really fundamentally gotten past the risk to financial institutions in the first place and the stress tests really did nothing to soothe investors minds. Many still feel it was just smoke and mirrors. The risk posed by derivatives has never been properly addressed either so many of the big banks continue with what some view as hazardous business practices.

So what has really changed? Not much. The US banks in particular got pumped full of liquidity but that has thus far failed to stop the real estate free-fall in the US, boost American consumption, improve the employment outlook or even increase lending (!).

What was achieved is that inflation was exported globally, commodities rose dramatically, China may face an economic slowdown as it puts the brakes on pressures there, the US dollar went into free-fall and now we are right back at square one again.

Is it any wonder investors are pulling out of Banks as the Fed initiatives and supports are restrained or removed? Like I said, this is global. Australia might just get a double whammy though as it gets caught up in its own housing correction.

Our own banks in Canada still look pretty damn healthy compared to what is transpiring in the US and Europe though.


#105 Utopia on 05.23.11 at 5:22 pm

Oh, did I mention this is a good time to get the hell out of debt, increase your cash flow and consider defensive companies with good dividends?

If commodities continue to tumble then the risk of out-sized inflation will naturally decline. Indeed the health of bond buying tells us that deflationary expectations are still of greater concern.

You might want to take that signal to heart. The boys who do the big buying have more data than the rest of us so the observation is not a casual one. They are indicating that this years commodity induced inflation is less permanent than is suggested by recent numbers.

It has really only happened as a result of US policy intervention and Fed largesse without any real growth breaking out globally and this is an important point.

No growth or slow growth suggests a market decline too. Hell, most corporations have already squeezed all they can out of the expense side of the ledgers to keep revenue looking healthy. What are they going to do the next time we see an economic retrenchment? Naturally most investors will be worried if earnings cannot be maintained.

I mention this because there continues to be a camp out there that is convinced inflation is at our door in a permanent way. It is not, and despite the calls for the death of the dollar and a looming hyperinflation (too) I contend only fools subscribe to that camp. That nonsense thinking can never seem to grasp how the future will change all their current rationalizations.

Our inflation has been but a flash in the pan though and there is no guarantee it will continue as commodities decline. Oil especially will have the largest impact.

You Silver buyers should take note.

As we have seen the US dollar is again rising and is showing strength, particularly as the Euro has declined. Within a month we will have clearer answers on the unfolding Greek tragedy and my bet is the dollar will hold firm and carry on rising into the fall.

This is a sure commodity killer and thus will pull the rug out from under those in the inflation camp as capital flight to hard assets and “stuff” sees a reversal. Gold excepted, prices will again begin to fall.

I mention Gold because to my mind it will continue to attract investment whichever way the market turns at this stage with Gold miners in particular showing growth. Silver, not so much, as industrial demand tapers off with a looming slowdown in China.

I could talk China all day but won’t. Trust me, there are big problems over there and the market distortions are truly mind boggling. It is just a matter of time before something gives but when is anybodies guess.

I would pay close attention to the Eurozone for the next while too. There are just so many moving parts and so many conflicts arising over debt and credit markets. I do not honestly think the ECB can pull it all together.

The wild card now seems to be the public itself and growing disgust with what sacrifices the banks are demanding of them. Politics will answer a lot of the questions but the man on the street who has shown an “Arab Spring” style willingness to demonstrate lately holds more sway than the folks who actually sign on the dotted lines.

Like I said, I anticipate the US dollar to continue strengthening, commodities to decline and equities to take a big one of the chin.

All in good time though. For you and I though, getting out of debt is probably the single best thing a person can do for their own financial security at a time like this.

Just my opinions for this Monday afternoon.

#106 brucey on 05.23.11 at 5:42 pm

Wondering if I made a big mistake. I just bot a 400,000 town house in Oakville with my brother. We put 20% down and rent out the house. I also own a 320,000 townhouse in Oakville (with a 140,000 mortgage). I moved out of it a few years ago and I rent it out. My fiancee and I rent a Toronto condo for 1,600 a month. We have no debt (other than the mortgages i mentioned above), 130,000 household income. Only 72,000 in RRSPs and 10,000 in emergency cash. We plan to keep renting. Should I get out of the house I just bot?

Sigh. — Garth

what kind of answer is that? you are so cool Garth

The answer is self-evident. Anyone who thinks this is an investment strategy is delusional. I just wrote the entire post above on the subject. If someone’s too lazy to read it, then – sigh – it’s their problem. — Garth

#107 jess on 05.23.11 at 5:42 pm

…”The green investment bank will go from an idea to a flow of investment in under two years, and quickly grow into an independent investing, and then borrowing, institution,” he said, noting it is an “an extraordinary political commitment” at a time the government is axing billions of dollars of spending to cut heavy national debt.

Clegg said the global market for low-carbon and environmental goods and services was worth 3.2 trillion pounds in 2008/09, and is forecast to continue to show strong growth.

Britain will be first to have a national bank dedicated to the green economy.

The bank will be capitalized with an initial 3 billion pounds ($4.8 billion) from the Treasury but will be given independence from the Treasury and will be able to borrow in the capital markets and from the private sector beginning in April 2015.

Clegg said he expects the bank to inject about 15 billion pounds into the green economy within four years.

“The bank is intended to bridge the gap between venture capital and the green economy, provide the finance for low-carbon infrastructure and lay the foundation for long-term, balanced growth,” said Clegg, leader of the junior Liberal Democrats party, part of the Conservative-led coalition government.

“The green investment bank will go
Britain will be first to have a national bank dedicated to the green economy.

#108 grantmi on 05.23.11 at 5:54 pm

#78 not 1st on 05.23.11 at 12:53 pm

eh! Not First!

Found your pic on your FaceBook page!


#109 Daniel on 05.23.11 at 6:22 pm

#25 daniel

What community did you decide to live in. We’re in Calgary right now, renting after we sold our house and looking for something in Southern Ontario.


#110 Nostradamus Le Mad Vlad on 05.23.11 at 6:27 pm

Good to be back from a splendid weekend of R&R.
Dog God holds a brief presstitute conference. Flabbergasted “Religion has done more harm to civilization than anything else in history.”

Commercial RE Mtgs. 2012 seems to be The Whoopee year. Ponzi Scheme When it ends, how will food and other necessities be purchased?

3:31 clip The real reason for NATO’s and the US invasion of Libya — refer back to dubya and the invasion of Iraq. They were about to dump the US$ and go with the Euro. Gadaafi The west is having a slight problem with extrapolating his billions. China Guess who is helping Pakistan? That area is a powderkeg, readyy to explode.

Link in. Betcha don’t remember what happened in 1694 in London. Four min. video clip.

9:59 clip Week of Rage going viral (worldwide).

About Turn India outsourcing jobs to the US, yet Offshoring continues and Egypt US backs their bond with US$1 bln., but it’s not worth anything, but China #1 in buying gold. Nice, colorful chart.

2:31 clip Utah legalizes gold and silver as legal tender. Guess it’s about that time. When Greece Defaults the world reserve currency will by the YuanRubleRemnibi backed by Monopoly Money.

Cartoon DSK’s perfect job description.

#111 silvia on 05.23.11 at 6:36 pm

i do not believe that someone got a 375K mortgage on 20K a year.

#112 Hoof - Hearted on 05.23.11 at 6:42 pm

I think we need a new TV show

” Landlord Virgins” ..or ” Virgin landlords”

Not for the faint hearted..maybe on Garth’s soft porn network.

oy vey

#113 InvestX on 05.23.11 at 6:48 pm

Banks see red as Chinese migrants numbers swell:
Financial Post


ndeed, even as Beijing seeks to let some air out of its domestic housing market, Chinese nationals are investing in real estate overseas, helping push Vancouver house prices to the third highest level in the English-speaking world, according to the Frontier Centre for Public Policy.

Garth, do you still think the Asian investors don’t account for a significant part of the real estate boom in Vancouver? I’m wondering if this is “evidence”.

#114 45north on 05.23.11 at 7:02 pm

brucey: Wondering if I made a big mistake?

Should I get out of the house I just bought?

brucey: you just made a big mistake and nobody here can fix it

but just supposing you can sell the one place for $400,000 and the other for $320,000, I thinking you might break even. it’s worth a try.

#115 Hoof - Hearted on 05.23.11 at 7:20 pm


never say “Trust Me”…only Garth and Santa can say that with some degree of credibility.

The entire investment system is rigged and a scam…..IMHO everything follows the trail Goldman Sachs blazed….insider BS….complex computer programs….

–If China tanks…which I am sure it will…then all those Satellite HAM Daddy’s (ie family lives here,takes advantage of the social infrastructure here ie schools hospitals) Daddy works in China under different tax regime) will roll over teats up.

The HAM Daddy’s(nice rap sound eh?) won’t find jobs here……certainly not the same after tax income. Can see them going flusshhh, perhaps even more than local house horny crowd.

#116 BrianT on 05.23.11 at 7:24 pm

#105Utopia-The boys that do the big buying need taxpayer bailouts repeatedly.

#117 Utopia on 05.23.11 at 7:26 pm

#100 Sid said….

“Some people seem to have trouble understanding what cap rates are. Take the purchase price and divide it by the net income. Cap rates have nothing to do with interest rates or mortgage”.

You know, you may have hit on a key point here Sid. And it might explain why there is such an overwhelming objection to the idea of owning rental properties on the site today.

So here is a Wiki link on Cap Rates for starters:

What many are not considering is that there is a shortage of professionally managed rental buildings available right now. Speculative money and builders have focussed on construction for home buyers and not the rental market.

Furthermore, there is a built in limitation on rental construction during a real estate decline as investment generally recedes then for all kinds of new construction.

In a real estate rout there will no doubt be many private home-owners who offer up space but as any renter will know these can be less than suitable.

The home-owner doing the renting for a first time tends to exaggerate their rights over those renting from him/her and this makes professionally managed buildings more appealing in the long run for many people.

The thing is, there are markets in this country right now today that are in recession. Ontario in particular seems hard hit. Some of the posters today are making the assumption that just because real estate is declining that the people renting will all vanish suddenly too!

Not so. And it should be kept in mind that rents are almost always sticky going down. That means that those renting properties have time on their sides no matter the economic situation. Over this time period they are presumably behaving responsibly and retiring debt thus improving the cap rate as time goes by. Some empty suites from time to time will not kill them that is for sure.

I think that Garth is absolutely correct that selectively chosen income producing properties in certain markets is not a bad idea. It is a business, not an emotional personal pursuit so you weight it differently.

Clinically, to be more precise. It is about making a buck.

Income is always a good thing, just don’t anticipate any major capital appreciation over the medium term. In the meantime it is worth noting that some juicy deals could be presenting themselves over the coming years.

It is when you look at the age and demographic features of who currently holds most of the rental stock that the picture becomes clearer. It is Boomers of course and they want to start cashing out.

Expect plenty of vendor financing to grease the wheels of this market over the coming years as apartment building owners discover for themselves that most good candidates to take over the reigns of their buildings are already in debt to their eyeballs.

The deals will be yummy. Just wait.

#118 Daystar on 05.23.11 at 7:35 pm

#104, 105 Utopia

Hats off to you again, my sentiments exactly. I thought initially the media play around Greece was more to do with the optics of a European, more specifically a German IMF dude to replace the head banker lost in scandal than anything else, but Europe does have a crisis on their hands.


I’ve maintained for a year now that Italy is the one nation to fear in terms of European debt crashing the Euro. Spain and Portugal’s public debt to GDP ratios are nowhere near comparison to Greece, Ireland and Italy. Italy has the 7th largest nominal GDP, the 10th largest real GDP, the 6th largest government budget and the worlds 9th largest defense spender, sharing NATO nuclear capabilities.


Currently, their public debt to GDP is estimated at 106% Debt to GDP (a mere 9 points back from Greece), with a Prime minister who is hard not to consider as “the Don” of Italy.


Key questions remain in terms of just how real the numbers are now coming out of Italy due to questionmarks surrounding their political leadership and media (in bed with each other as bad as it gets, check out the above link more closely), as well as just how much more expensive their oil has become due to supply disruptions of oil from Libya (its worth noting that Italy imported 3/4’s of their oil from Libya before the North African nation spun itself into war).

Couple Euro woes with Japan’s uncertainty caused by the earthquakes in the region and nuclear issues, Japan has some ugly GDP quarterlies coming that are sure to shine the spotlight on Japan’s own ugly debt to GDP story. (Sony recently reported an annual 4.3 billion dollar loss) Both scenarios, European debt fear part 2 combined with the very real production problems of Japan with trade as well as public debt (their debt to GDP ratio is estimated at 200% debt to GDP raising the spectre of hyperinflation should trade surplus’s go negative) are happening simetaneously.

Add problems in Chindia such as runaway inflation and high interest rates sure to impact real estate and consumption there, and we have a global problem that is sure to prop up the U.S. dollar and cause a contraction in consumption creating over supply in commodities which can’t help but negatively impact commodities at current valuations.

I’ve said it before… the smart money left equities in April.

#119 Jim on 05.23.11 at 7:40 pm

Now I have seen everything. First RBC, now an honest realtor? I’m getting Andrew involved in my next deal.


#120 45north on 05.23.11 at 7:41 pm

despite being a Conservative supporter , I am concerned that the new Conservative Government could increase the prison population: I looked through their online policy and found these two measures:

ended the practice of giving 2-for-1 credit for time served in pre-trial custody;

ended the practice of granting early parole to white-collar criminals and other non-violent offenders;

I am impressed with the quality and wisdom of the judges I have seen in court. From what I’ve seen I would give more discretion to judges.

California has run out of money and has to release tens of thousands of prisoners.


#121 Utopia on 05.23.11 at 7:49 pm

#103 sick_of_waiting_to_buy

“Most of the people would agree that housing is unaffordable but how this can be corrected while banks are handing out credit with no responsibility? My friend other day got his 375K mortgage approved with $20K annual income.

The mortgage will seem a life-time, the trend change is measures in months or at most a year now. Regret and debt is what your friend just borrowed and bought, not the security of a home.

#122 Axehead on 05.23.11 at 7:52 pm

A friend bought a property in 2007 and just rescently sold same property for 60k loss, just about destroyed his mariage. They had to do it, or else, live with anguish of not knowing it will sell – they had a buyer and went for it. Folds, what Garth is saying is real.

Just came back from Ireland, that country is totally depressed, cabbie told me that a townhose that sold for 90k 15 years ago was selling for 900k in 2008 and now is dropped in price so much, it’s a disaster for the owner. What’s happenin in the PIIGS will soon happen in Canaday – inevitable.

#123 Ben on 05.23.11 at 7:57 pm

My friend other day got his 375K mortgage approved with $20K annual income


Your bull s hit ing?

#124 Utopia on 05.23.11 at 8:06 pm

#118 Daystar

Right on the money Daystar. You hit the high points and I do as a matter of fact recall your comments regarding Italy from last year. They were of interest to me then as almost nobody else was expressing similar concerns at the time.

I had taken the time actually to follow up on your comments and take a closer look at the Italian picture which was a blind spot for me as my focus was elsewhere.

In any event, we are agreed. The US dollar will continue to rise as worries over evolving sovereign crisis, bondholder haircuts, bank losses and stifling austerity programs abroad spill over onto the broad markets.

The reasons behind that almost all relate to dismal debt pictures in places like Japan (this is an ugly slow brewing issue though) and an outright crisis over the resolution of European debt that could take down some of the bigger banks there in the near future.

Like I said. Get out of personal debt. And hurry.

#125 jas on 05.23.11 at 8:07 pm

Garth, please allow me to say the following.

Financial Post has this headline:

Is China’s economic boom over?


I’d say the sooner the better. We all will be better off.
What a FU**ing loot of natural resources of the planet they have caused. Listen China, control your Fhgxcjhz population. I’d say the same to India.

And the corporations have been brain washing the society to consume…consume…consume… for what? so that their profits rise…but at what price? plundering the planet’s resources…creating Obesity and all the associated health problems and burden on the shoulders of society.

Here is what I mean: in our local store, pop was for sale…buy 4 packs then each pack is $1.66 but a lesser quantity was $3.66 a pack!! what message are they sending….consume..consume..consume.. Oh WTF!

Youth of any country is one section from which society can hope for change…but where is Candian youth?…oh its busy with ipad..ipod..i this..i that… Youth is chilling…youth is sleeping…

#126 supermike on 05.23.11 at 8:18 pm

It seems that the interest rate won’t go up any time soon. So the housing price will keep going up for a while. Maybe another 20-30% increase before BoC eventually starts increasing the interest rate?

I believe this is why lots of people are still crazy about RE because the government is encouraging them!

The government and BoC has been telling us how much debt Canadian families are having, how dangerous it is…blah blah…for years. But what have they actually done to control the crazy market? So Little!

I am getting more and more negative about the corrections. Maybe another big increase before the market actually corrects. This is not good news for people who actually want a home for their families.

I have been renting for 10 years. Renting is not such a pretty thing to do. It is not so cheap either.

Not mention the old apartment full of cockroaches I lived for 6 years, my previous landlord sold his Condo unit last year. There were so many buyers and agents coming to my home in the last 2 month that I felt I lived in a zoo.

My current landlord just sent me a notice couple of days ago. They plan to sell their Condo unit. oh god, not again.

And I am paying 1450 a month. This equals around 400K mortage. And I have no any problem affording this. My family income is over 110K.

When your little kid keeps asking when we are gonna have a house with big backyard like her classmates and friends, it is not a easy question for a dad. Also how would you answer your wife when she asks why we don’t buy a house when we can afford one? It is hard for a husband to convince his wife while the housing price increased 50%.

So Garth’s information is for reference only. Not everyone is a sophisticated investor.

So my point is that if you want to buy a house for your family and you have more than 20% down payment, you might just go for it. Just don’t pay too much.

If you want to invest, you might just hold one as Garth and lots of people here suggest.

A 20% price rise for housing? You need help. BTW, if you want junior to have a backyard, lease a damn house. — Garth

#127 Utopia on 05.23.11 at 8:26 pm

#116 BrianT wrote…..

“#105Utopia – The boys that do the big buying need taxpayer bailouts repeatedly”.

Actually I was not referring to the investment banks Brian but rather institutional investors, major private investors, pension funds, mutual funds and the like.

Those folk are driven less by attaining risk yields at any cost than they are concerned with realizing a reasonable long-term and secure return on capital while insulating wealth against market hazards. The Canada Pension Plan folks would also fit into this category of buyer.

#128 Hoof - Hearted on 05.23.11 at 8:32 pm



The European Union is composed of 27 sovereign Member States: Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Republic of Ireland, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom.



The European Union was formally established when the Maastricht Treaty came into force on 1 November 1993,[8] and in 1995 Austria, Sweden, and Finland joined the newly established EU. In 2002, euro notes and coins replaced national currencies in 12 of the member states. Since then, the eurozone has increased to encompass 17 countries. In 2004, the EU saw its biggest enlargement to date when Malta, Cyprus, Slovenia, Estonia, Latvia, Lithuania, Poland, the Czech Republic, Slovakia, and Hungary joined the Union.[35]

On 1 January 2007, Romania and Bulgaria became the EU’s newest members. In the same year Slovenia adopted the euro,[35] followed in 2008 by Cyprus and Malta, by Slovakia in 2009 and by Estonia in 2011. In June 2009, the 2009 Parliament elections were held leading to a renewal of Barroso’s Commission Presidency, and in July 2009 Iceland formally applied for EU membership.

On 1 December 2009, the Lisbon Treaty entered into force and reformed many aspects of the EU. In particular it changed the legal structure of the European Union, merging the EU three pillars system into a single legal entity provisioned with legal personality, and it created a permanent President of the European Council, the first of which is Herman Van Rompuy, and a strengthened High Representative, Catherine Ashton.[36]


IMHO…the whole EU idea was a charade, simply meant to corral weaker members, and let a Goldman Sachs type of rape and pillage happen.

If enough revolt..perhaps WW III ?

#129 kc on 05.23.11 at 8:32 pm

91 Hoof – Hearted on 05.23.11 at 3:16 pm

I’d love the hear some stories about (or from) landlords with suites and surrendering to Big Brother and how it all clusterf*cked with regrets.

I can tell you what is/has happened to my mom’s basement rental. Smaller town BC, when she bought it there was a small 2 bedroom suite in the lower section, and wanting to do the “right” thing she made it all legal when she bought the house.

after 8 years of renting it out, fixing the broken stuff (or destroyed stuff) she has had enough or renting it out. So the place has been empty for the last year. Well guess what happens to the taxes? yep you still pay higher as if it is rented. She has objected about this to no avail. And of course the bills are separate so here she is having 2 sets of bills every month. It is a pain in the A** for her now.

#130 Will on 05.23.11 at 9:04 pm

IMO it will take decades for sentiment to return to levels to produce another housing bubble. The states is 6 years in with no end in site, Canada has a long road ahead. When the kids see there parents forclosed out of homes, they’ll likely think twice about the same amount of leverage purchasing their own homes (or perhaps they’ll just rent).

The crash will not just affect real estate, it will hit all corners of the economy. If you think of all the people who are employed that are connected to real estate who will soon be out of jobs, and add a slowing in commodities and you have a recipe for 20% unemployment/underemployment (similar to the states if you look at U-6). There will still be profitable rental properties left, but your tenants will certainly be under pressure and may force rents lower.

#131 Aussie Roy on 05.23.11 at 9:30 pm

Utopia always enjoy your writting.

As a retired risk manager (Ag commodities and currency), your comment regarding “risk” is spot on most dont know what risk is let alone how to manage it.

Yes agree its a global credit bubble, the liquidity has kicked the can down the road but the problem has never been one of liquidity but one of solvency. This makes counter party risk the most likely driver to any future credit squeeze.

Yes the Aussie banks are held up as pillars of responsible lending, its a lie. Our banks may not have sliced and diced the way the US banks did (RMBS, CDO, CDS etc) but lots of debt pushed out into the community to fund ever rising house prices. IMHO they are still royally screwed as house prices continue to sink past the S bend.

Aussie update

Sydney market fragile.


Houses are NOT an investment


So should boomers cash out of RE now – Aussie Roy did 2 years ago.


#132 Patiently Waiting on 05.23.11 at 9:46 pm

91 – My parents bought a place in surburban Vancouver with a basement suite and had to let a city inspector look at it to prove it wasn’t a residence anymore.

They got the A-OK after that though.

What they didn’t mention was they were going to run my Dad’s engineering lab in there. Makes many times more than a basement suite, or a grow-up for that matter.

#133 betamax on 05.23.11 at 9:55 pm

#80 grantmi: “We have plenty of illegal suites on our streets….I want them out now.. ”

You can report them to Canada Revenue directly. A friend of mine did this, and the CRA followed up on it. They take tax evasion very seriously.


#134 Utopia on 05.23.11 at 10:47 pm

#131 Aussie Roy

“Utopia always enjoy your writing”.

And I have enjoyed yours too Roy. Little do you realize I get almost all my information on the Aussie market from your selection of articles. Very helpful. I have not needed to go anywhere else to get the scoop and wow, is it getting rough and tumble down there lately or what.


#135 Aussie Roy on 05.23.11 at 11:26 pm


Certainly is getting interesting, funny as it may seem most average Aussie Joes have no idea how things are looking most are blinded by their faith in ever increasing house prices. But I suppose thats a bubble mania in all its glory.

I’ve been e regular blog dog across the globe since retiring in 2006, its been fasinating watching this all unfold. I’ve heard all the bulls claims and reasoning in every market none of which ring true once sales finally slump and prices start to slip.

IMHO the same mistake is made over and over again no matter which country, that is people confuse value with price. Price is driven by emotion and credit (debt) value is driven by wages and rental yield.

#136 Timing is Everything on 05.24.11 at 12:51 am

Multi-family investment properties of the kind I illustrated in stable communities are solid performers for those who choose tenants well. — Garth

Why bother? Multi-family = Multi-headaches….Pass the Tylenol…Extra Strength.

REIT’s or something else for me…I hate fixing toilets.

#137 Dom_Now_in_Zürich on 05.24.11 at 4:59 am

i keep seeing all these comments on the doom and gloom of the EU and how it will die a slow death.

I must say I just got back from Milan a few hours ago and was amazed at the number of big buildings being built and what a change it has seen in the last 20 years since I was last there. Went out for dinner on Sunday night with the family and everywhere was jammed with happy, smiling people spending lots of money. Admittedly a lot of people used plastic to pay but after hearing all the doom and gloom reports on this blog about the EU i have to say i was expecting a black hole of recession and despair….it was the exact opposite.

Spain is definitely reeling…in southern Spain lots of tourists have fled but the Spanish are smart…noticed a huge increase in the number of Russian billboards and advertising so obviously the Spanish know who has the money.

Have traveled Europe extensively in the 2 years we have lived in Switzerland and I don’t know where you all get the idea that it is going somehow wrong here? France and Germany had tremendous growth through YTD and Switzerland is humming along (no debt period)

Real Estate here is wonderfully affordable compared to what i am hearing about Vancouver and Toronto.

Just some anecdotal info as I think the shit will hit the fan a hell of a lot harder in Canada vs Europe..