Don’t feed the tenants

Apologies to those who have tried to post on this site.
Technical issues are being resolved. -- Garth

It sits on 50 feet on the west side of town, imitating a biker clubhouse. Hell, maybe it is, judging by the realtor’s warning: “Cannot go inside due to Tenancy… Rent $3000…. QUIET. DO NOT DISTURB TENANTS. Offer any time. DO NOT DISTURB TENANTS. Inside floor and room measurements & numbers are very approx.” Um, did he mention the damn tenants? Or that it costs $2.489 million?

Such are the excesses as we grow close to the end. Greedy sellers. Conflicted buyers. Aroused realtors. It will all make what comes next even more spectacular.

The average house in Vancouver now costs $890,000. That number is swollen and sore thanks to the astonishing fact that 21% of all sales in that lichen-covered, damp metropolis last month were in excess of $1 million. And yet the average family income is still $83,130. This means, simply, no matter how many horny Chinese deplane at YVR, this market’s cooked.

Hmmm. Looks like Victoria may provide a model. The same number of houses just sold in that city as way back in 2000. But the average SFH now costs $628,462. The average household income? $76,625. It too, screwed.

Meanwhile in Calgary, where oil is supposed to save everyone, not so much. Crude may have levitated over $100 a barrel for months now, but house sales are flat and the average detached house price is stalled at just under $490,000. Back in BC, the fabled Okanagan Valley is sinking into its own myopia, while sellers in the Fraser Valley downwind from Vancouver are seeing sales drops of 70% and more.

Godless Toronto? Well, we’ll know that in a day or two. But up to two weeks ago, sales were still running behind 2010 levels – almost a year of negative numbers.

Meanwhile, all the fin-de-marché bulle signs are flashing yellow. Bidding wars in some neighbourhoods, while others languish. Average prices going up while sales stutter. Lusty young couples storming sales trailers, while 10-year old condos go unloved. A drop in listings but a jump in luxury sales. Shacks flogged for $2.4 million, while the economy turns nasty.

And the ultimate indicator? Most people think I’m an idiot.

Last night I walked into a dismal bar I’d never before visited, in a Toronto neighbourhood I always drive through at high speed, only to be greeted with a shout. “Hey, it’s Garth Turner,” a guy in the shadows yelled, laughing. “The real estate market is gonna crash!”

Of course, I decked him.

But let’s have a visit with Sherri:

I’ve just been reading your blog – been a fan for a long time. Here’s my question:  we’re thinking of selling our home in order to rent for a couple of years.

We bought it for a ‘normal’ sum of $162,000 6 years ago and could sell it today for around $265,000.  We’ve got two years left on a five year mortgage and a balance of only $89,000.

In other words, we aren’t upside down and don’t run the risk of being killed by high interest rates. However, we are looking at a lifestyle change as my husband starts a demanding new job, pursues his masters & I am growing a small business.  Our daughter is also leaving for university.  Renting sounds GREAT to us – a flat monthly expense, no shoveling or weeding or repairs, etc)

We found a place for $1550 inclusive which seems like a lot given what it might seem that we pay for our current home – but with utilities, heat, taxes, insurance and maintenance figured in it’s about even.  (I calculated that we’ve spent avg 505/month on improvements/maintenance here and we do NOT have luxury items or even new floors).. anyway..

Is it a stupid idea to sell close to the top of the market and invest while we rent?  We’d also save on car/gas as he could walk to work in five minutes from there. Any advice would be appreciated.  We go for our second viewing tomorrow and I promised the guy I’d bring my chequebook. Thanks a million, Sherri.

Sherri, let’s do the math.

The small mortgage likely costs you $450 a month (at 4%), and property taxes about $200. Add to that the average $505 you’ve experienced for hard stuff, and the occupancy cost is about $1,150 a month. But wait. You have $175,000 in equity, which is earning nothing. Even if you stuck that in bosom-safe assets like bank preferreds paying 5.5%, that would earn $800 a month – which has to be added to the true cost of your home. So, the house sets you back about $2,000.

Given that, is renting for $450 a month less a bad financial move? Hardly. In fact, if you do invest your equity slightly more aggressively and get, say, 7%, that adds $1,000 to your monthly income – which sure helps nuke the rent.

Moreover, what happens in the rare event I’m not an idiot after all? If real estate values revert to their mean in places like Toronto and Vancouver? If cities like Kelowna and Windsor turn out to be harbingers? If markets collapse because 90% of the people can’t afford to buy? If debt and worse times and bad decisions bite?

Or it isn’t different here after all?

Then, Sherri baby, you win.

 

140 comments ↓

#1 Siddelly on 06.02.11 at 9:37 pm

Westside update.

Stepmom just got back from a nice Arizona vacation flush with funds from her recent Point Grey sale to HAM. The flippers across the street who paid 2.5 and are now asking 2.88 are starting to get a little stale and might be feeling a tad nervous. It reminds me of that old saying- ” Sometimes you eat the bar and sometimes the bar eats you!”

#2 Young Buck on 06.02.11 at 9:40 pm

First!!!

#3 T.O. Bubble Boy on 06.02.11 at 11:01 pm

The “multimedia” on the realtor.ca listing makes me think that this is a joke.

21 pictures from 2006, all showing a house that hasn’t been cleaned since 1986.

$2.5M sure doesn’t buy what it used to.

#4 first on 06.02.11 at 11:01 pm

first finally!

#5 Devore on 06.03.11 at 4:16 am

Uh, oh. Someone’s gonna get grilled for adding maintenance to ownership costs. Apparently, houses fix themselves. And always go up in price.

Welcome to depreciating assets. Sure, you can skimp on all that, but when it comes time to sell, you will have major repairs and renovations to pay for, or take a major haircut on the sale price. It is not a normal market when teardown shacks go for 20% over asking in a flurry of multiple offers.

If you intend to live in your house for some years, you have to budget for a new roof, new windows, new siding, new deck, new fence, new furnace, new water heater, new floors, new kitchen, new bathroom, and regular inspections of all the mechanicals so your house doesn’t explode, and your fireplace doesn’t kill you in your sleep. Then you cross your fingers and hope there are no structural issues, your basement doesn’t flood every couple of years, and there’s no asbestos hiding in the walls.

Ain’t home ownership grand!

#6 D Sanchez on 06.03.11 at 4:36 am

Garth i am confused – you are telling us to ditch our house but you have a house no?
ps:
woohooo i am first. oh wait…..

#7 Chiquita Banana on 06.03.11 at 5:21 am

Renting now may be the wise move, financially, but boy does it suck to be a renter. If you have a dog, and in some cases even if you have a child, the vast majority of landlords will not take you. And unless you can afford the really high end of the rental market, the state of repair of most places is dismal, with creature comforts like laundry or even control over the heat very hard to come by. We’re looking now and it ain’t pretty.

#8 Pr on 06.03.11 at 5:26 am

OH OH! Whit the INTERNET and talk radio, People are waking up and discovering what is really going on. Time is ticking, sale your real estate before is to late!

http://www.zerohedge.com/article/postcards-greece-0

#9 Garth Turner on 06.03.11 at 6:05 am

Test message

#10 T.O. Bubble Boy on 06.03.11 at 6:16 am

Let’s do the “traditional mortgage” math on the $2.5M listing also:

Price = $2.489M

20% Down = $497,800 down payment (yes – I’ve heard that HAM buys all of these dumps with Cash)

Mortgage = $1,991,200

So, you’ve already shelled out half a million bucks, and you STILL have the $2M mortgage.

Most Canadians go for the 5-yr Fixed Rate (currently a bit under 4%, let’s say 3.75%).

With a 25-yr amortization @3.75% your monthly mortgage payment is $10,200!

Add on property taxes, insurance, etc. and you’re up to almost $11,000/month. If you include the income you’re missing out on from that $500k down payment (even just buying Preferred Shares @ around 5.5% would yield around $2300/month), you’re spending over $13,000 and getting only $3,000 in rent.

So, the current landlord needs to be seeing at least $10,000 per month in appreciation just to keep pace with the money he/she is losing on that tenant!

(what bubble?)

#11 renting in leaside on 06.03.11 at 6:20 am

Bear not bar idiot

#12 jerry on 06.03.11 at 6:48 am

Hi Garth

As a new retiree, I have invested in AAA rated corporate/bank bonds. If the real estate market crashes and folks walk away, will this impact on mortgages and value of bonds?

Worry not. — Garth

#13 Victor on 06.03.11 at 6:55 am

This one’s for you Sheri…

http://www.youtube.com/watch?v=AapxXRlsdwA

PS – Take Garth’s advice…sell, rent and invest!

#14 Steven Rowlandson on 06.03.11 at 6:56 am

Garth is the home owner and realtor serious about the price of the house in the picture? Tell us its a joke or a typo, anything but the real deal. I wouldn’t offer more than $25,000 to $30,000 tops and then may be. The place looks too old and slummy and there is probably something wrong with the place.

#15 Markey on 06.03.11 at 7:00 am

#11 – Did you not see the quotation marks? That’s a harsh response to a humerous phonetic spelling. Go get yourself a coffee; you’ll feel better.

#16 BoomerBoy on 06.03.11 at 7:11 am

#5 Devore :

“If you intend to live in your house for some years, you have to budget for a new roof, new windows, new siding, new deck, new fence, new furnace, new water heater, new floors, new kitchen, new bathroom, and regular inspections of all the mechanicals so your house doesn’t explode, and your fireplace doesn’t kill you in your sleep.”

Really?

Roof – $3,000, windows – $6000, siding? please – buy a brick house, deck – $2,000, furnace – $3,000, hot water tank? please – most are rented and replaced by the utility, no charge, floors? if you meant floor coverings, buy hardwood – it lasts forever, kitchen – $10,000 (with granite, of course), new bathrooms – $10,000. (Fireplace killing you in your sleep? – please, let’s not be too dramatic).

Grand total maybe $50,000 over tweny years, which equals $208 per month! Oh yeah, and most people will have the house paid off by that time – while the renter is still paying monthly rent – and alot more that $208 per month.

#17 mississaugaboy on 06.03.11 at 7:24 am

Oh no! They are trying to shut Garth down!!!

#18 Lisa on 06.03.11 at 7:49 am

I’ve been telling people that home prices are going down, we’re at the top of the market, etc. The reaction is always the same: stunned silence. It’s rather comical to see the exact same reaction over and over. Try it! Just like Garth said, once the masses realize we’re in a bubble, everything goes POP.

#19 mississaugaboy on 06.03.11 at 8:16 am

I have been telling my friends (a couple who bought a condo, can’t afford it now and are renting it out only because they are on fixed mortgage and can’t afford penalty) (a single girls who wants to move out of parents house to buy a condo) that the market will fall.

I feel bad for the couple because they have to rent out a property which is not getting much, if any cashflow from the condo since maintenance fees are about $600/month and will have to deal with a fall asset.

Yesterday my single friend asked about real estate lawyer since I bought and sold my home. She has been looking every weekend for places. I gave her advice but told her to not buy because a correction is pretty much here and I would hate to see her lose money. She has not replied yet.

I hope she doesn’t buy. We shall see.

#20 charles on 06.03.11 at 8:18 am

now I understand why I was not FIRST!

#21 charles on 06.03.11 at 8:22 am

You people do not need to sell and rent, just buy something you can easily afford even with 7% interest mortgage…..if at this moment you dont have a house, yes rent because there is nothing decent you can afford with today’s prices!

#22 Brandon on 06.03.11 at 8:42 am

Two questions:

1.
Purchase price: 212,000 (Sept 2010)
Mortgage amount: 122,000
Mortgage: 500 + 250 property tax
Utilities, maintenance, insurance: 500

Are you saying I should be renting too? I can’t imagine being able to rent anything comparable for 1250/m all in

2. Since you keep suggesting people sell and use their home equity to invest and let the dividends pay their rent, shouldn’t you use a percentage of the dividends to reinvest to cover inflation? Their rent will likely climb year after year and bank preferred values are typically flat over their lifespan

#23 HJ on 06.03.11 at 8:43 am

What an ugly house for $2,489,000!

Here is an ugly house in Windsor for $44,900!

http://www.realtor.ca/propertyDetails.aspx?propertyId=10423112&PidKey=1443294209

Currently there are 18 full detacted houses for sale in the city of Windsor for less than $50,000!

Here’s what you can buy in Windsor/Essex county for around $2,500,000 …

http://www.realtor.ca/propertyDetails.aspx?propertyId=10496082&PidKey=-1755682465

Makes your head spin.

#24 TS on 06.03.11 at 8:44 am

Think about this……

Sales and marketing firm The Key launches an online real estate venture later this month, offering week-by-week discounts. The first one promises savings of C$200,000 ($206,000) if a buyer snaps up two condos rather than one.

http://ca.reuters.com/article/businessNews/idCATRE7506EA20110601

#25 PEI Red on 06.03.11 at 9:01 am

#5 Devore

Not sure where you’re getting your numbers or information from. Never lived somewhere where the hotwater tank was rented from the utility company. Just redid our bathroom (luxe, to be sure) for over $10k doing the labour ourselves. (Granted not in a competitive market so I acknowledge we paid more that townies would. – Yes that’s when I miss the big city the most!) General rule of thumb 2-3% of your house value should be set aside annually for maintenance. I guess that’s the good news when prices drop.

#7 Chiquita Banana
Renting does have its down side. Owners won’t drop bucks on high end repairs – they go cheap whenever possible. There is also a stigma with renting. We went to a time share presentation and had to be “approved” to attend as we didn’t own our own home at the time, despite that fat wad of cash we had invested from the sale of our property…still was totally worth it! (PS Didn’t buy into the time share, just wanted the free nights at the resort.)

#26 Kevin on 06.03.11 at 9:04 am

@Brandon:

“I can’t imagine being able to rent anything comparable for 1250/m all in”

Brandon, Garth would also include the lost “opportunity cost” of the equity tied up in your house, earning you nothing. In other words, if you sold the house and paid off the mortgage, and invested all that equity ($90,000) in bank preferreds earning 5.5%, you’d have another $400/month with which to put towards rent. Thus, the true rent you should be comparing to is $1,650.

Of course, that ignores realtor fees, mortgage-breaking penalties, and taxes, but you get the gist.

#27 Hoof - Hearted on 06.03.11 at 9:06 am

#195 teachers vs. school board/admin.

from last post

3. many of these “officials” make deals with private businesses (like IBM, Dell, Pepsi, Ricoh, Grand/Toy etc.etc..) and spend more taxpayer money than you could ever imagine.

schools, in turn, are forced to order products (and supplies) from favoured “catalogues”…even if the price is triple that (or much, much more) offered by another company.

If don’t mind my asking, what Province are you in,.

How rampany is it…is this covered up…how do they get away with it? I know one way is pre screened list to exclude others, but is that done fairly?

In BC, I have juicy story to tell re Playground suppliers, a Prinicpal and a School District cover-up

#28 Kevin on 06.03.11 at 9:07 am

@PEIRed:

“Never lived somewhere where the hotwater tank was rented from the utility company.”

I’ve never lived anywhere where you DIDN’T rent your hotwater tank. It’s standard in Eastern Ontario, at least. Everybody rents.

#29 Utopia on 06.03.11 at 9:11 am

#11 renting in leaside

“Bear, not bar, idiot”
——————————————

Works for me. I thought Bar was just fine. Really depends on where you drink though and who is bouncing the night you decide to get frisky with someone else’s girlfriend.

#30 Bottoms_Up on 06.03.11 at 9:14 am

#22 Brandon on 06.03.11 at 8:42 am
————————————-
To your $1250/mo (as per Garth’s advice) you should be adding the lost opportunity of not having your down payment ($90,000) invested.

Thus, $90,000 could reasonably generate ~$5000 per year, or approximately $400/mo.

Thus, you should compare the house you bought with rentals that go for $1650/mo.

#31 BrianT on 06.03.11 at 9:19 am

#23HJ-The premise is that it is a 2.489 million lot-the house itself has no value and would be torn down.

#32 Hoof - Hearted on 06.03.11 at 9:19 am

Is Calgary’s boom back?

Consumer confidence seen climbing ‘with a vengeance’

Read more: http://www.calgaryherald.com/business/Calgary+boom+back/4886179/story.html#ixzz1ODn8eGFz

CALGARY – From BMWs to Bentleys to a good bottle of wine, Calgary consumers are opening their wallets in what’s being described as more than just a recovering economy – with some even willing to say the word “boom” again.

Retailer Wayne Henuset is in the thick of it, discovering his own barometer to measure what is quickly turning into a healthier marketplace.

The owner of Willow Park Wines and Spirits says consumer confidence has been rising “with a vengeance” since fall.

“We know this because when things are bad, people just buy wine, on sale, and bring it home.

====================
According to the BMO Blue Book report released this week, Alberta is expected to lead the country in real GDP growth by next year as the province’s economy starts humming again.

Real GDP is expected to expand 3.6 per cent this year before moderating to 3.4 per cent by 2012, according to BMO Capital Markets.

++

Oh good, that will save the Kelowna market

#33 jas on 06.03.11 at 9:20 am

Good post Garth!
In 1989 when I was in the UK, the RE market crashed from the peak. At that time the avg income to avg. house price ratio stood at 1:5 and a lot of people made the smart move of selling before the crash and went into renting.
However at that time the ratio alone wasn’t the contributing factor, the interestest rate also doubled in one year. It went from 7% to 14% !

Whether its the ratio or interest rates, the point is that when RE goes beyond affordability, there is only one direction it can travel in and we know what that is.

On a different note, Garth, I’d contacted a realtor in Windsor and asked her to send me income/expense statement of an investment property. She replied with a standard disclaimer that the given numbers are provided by the vendor etc…etc…
I then asked for audited statement and I’m still awaiting (even) the acknowledement of my query.

I want to alert the would-be investors not to go by what a relator provides on a paper, ask for what was actaully submiited to revenue Canada relating to that investment property/business. I’ve learnt it the hard way…in my case I’d trusted the realtor and that SoB..betrayed my trust

#34 kilby on 06.03.11 at 9:21 am

#11 Dan’l Boone shot a bar….maybe some validity in the spelling.

#35 ARES on 06.03.11 at 9:23 am

That listing is ridiculous. The house is worth -$10,000 (cost to remove). The lot is worth $1,800,000. New houses in that area are selling for $3,000,000-$4,000,000.
If Carney keeps the rates at 1% for the next 3 years, those values will hold.

#36 Lost the taste for RE on 06.03.11 at 9:34 am

Yes, Steven (#14), I believe the $2.4 million. “It’s all lot value!” Insane, isn’t it?

But you know why the realtor and owner don’t want you to disturb the tenants? It’s because they’ve inflated the rent they claim they’re getting for this ugly block. Even on the westside of Vancouver, that place, as a rental, won’t get more than $2,000 a month, give or take $200.

It’s only the sellers, purchasers and realtors who are crazy in Vancouver. The renters are pretty sane.

#37 Ronaldo on 06.03.11 at 9:38 am

#24 TS – the lad behind the Chinese real estate mania..

http://www.thekey.com/Blog.php/270

“creative” is an understatement for this young man..ask Garth..

#38 Justin in Seattle on 06.03.11 at 9:50 am

Come join the party in an awesome city with a real soul!:

http://www.youtube.com/watch?v=ftt9wCYH4o0

http://www.youtube.com/watch?v=RWr-wQ8kBOI&feature=related

http://www.youtube.com/watch?v=S4CqTV9eEkI

http://www.youtube.com/watch?v=WzykSUyOmhk

http://www.youtube.com/watch?v=7D3Vv3NaqIQ

http://www.youtube.com/watch?v=G2-DA73VSqM

http://www.youtube.com/watch?v=YLVVFxAdta4

http://www.youtube.com/watch?v=xjhNvAZKgfw&feature=related

http://www.youtube.com/watch?v=YLVVFxAdta4

http://www.youtube.com/watch?v=g5PyIVVKoWU&feature=related

http://waterfrontseattle.org/Calendar/Detail/50/# (the most amazing and pedestrian friendly waterfront to be!!! Say goodbye to the ugly viaduct. Watch the video here)

We hope you all can join us, Canada!!! We love you too and as always, we wish you the best!

#39 BrianT on 06.03.11 at 10:00 am

Many posters have commented that the prime cities like San Fran have not really crashed-Mish has the data today and San Fran is down 41% from the peak of 2006 to the levels of 2002 http://globaleconomicanalysis.blogspot.com/

#40 Justin in Seattle on 06.03.11 at 10:02 am

And my favorite from the Seattle based company, T-Mobile

http://www.youtube.com/watch?v=Kav0FEhtLug&feature=related

#41 BrianT on 06.03.11 at 10:04 am

The other thing you will notice is that in absolute dollar terms the losses in San Fran have been greater than in any other US city ($318000).

#42 Abitibidoug on 06.03.11 at 10:19 am

@Lisa, #18;
I’m puzzled, how could so many people NOT see we’re in a bubble? Is there anyone left in the world that remembers how the real estate market dropped in 1982 or 1990? We’re constantly flooded with news and media from the United States, our nearest neighbour and the biggest economy in the world. In fact it’s a constant uphill battle to keep our culture and identity from being drowned out in a sea of Americanism. With all this American information, doesn’t anyone see a parallel with the U.S real estate market?

#43 Utopia on 06.03.11 at 10:25 am

#22 Brandon…

“Since you keep suggesting people sell and use their home equity to invest and let the dividends pay their rent, shouldn’t you use a percentage of the dividends to reinvest to cover inflation? Their rent will likely climb year after year and bank preferred values are typically flat over their lifespan”
———————————————-

I can sure appreciate your question Brandon. All that most have ever known over the years is that prices rise steadily year after year. Houses, rents, fuel and food. It will not always be that way though. Not for everything.

We are entering a period where some of the old assumptions might just get thrown out the window. If we are agreed that asset prices in Canada are falling or on the verge of falling we can make a safe assumption that rents will not be spiking upwards despite the fact energy and food costs are on the increase.

After five years of declining real estate values in the US it is my understanding that rental rates are just stabilizing now while some are just beginning to rise again. A long period elapsed before this came about.

In general though, falling home values don’t correlate well with rising rental rates so that should not be a major concern for you.

We know many of our local housing markets are overbuilt and hundreds of thousands of units nationally are currently held back by speckers, flippers, investors and owners of second or third residences.

There is no housing shortage in this country and this will be proven shortly as it becomes obvious to all that the bloom has come off the real estate rose.

Toronto is a good example of course. Thousands upon thousands of condos are under construction, in the planning stages or sitting empty waiting to be bid up.

Any correction will see the rental market flooded with excess supply. Rents will naturally fall as competition heats up. It is just that the usual supply and demand dynamics have eluded us until now due to current house price distortions. Balance will be returning.

I agree that investing for income is a very good idea right now. I happen to like banks and companies with long performance records, solid balance sheets and a proven track record for paying out dividends.

What I don’t like is being invested in assets that I know with certainty are going to continuously lose value over an extended period of time. A lot of value in the case of some Canadian real estate. Preferred’s are a good option in my mind.

You know, two year back, the blog-dawgs here were seen as heretics for worrying over the prospect of falling home values and a rising bubble. Talking openly of the risk was akin to swearing in church. No more though.

The idea has gone mainstream as reality has sunk in. Our business columnists with the national papers have done an especially good job getting the message out to anyone who would listen.

What is still missing though (and thus left a bit of a vacuum) is good advice on where to invest alternative to housing and how to protect the capital you have acquired after cashing out at the markets top.

It is my opinion that Garth has done a good job of offering sane sensible advice on that issue and it is one of the main reasons I read his daily column.

Some investors want to chase yield to maximize every penny. They buy Greek bonds at 24%, penny stocks, small caps with no proven reserves or lumps of Silver and risk losing it all. Others invest for growth and pray stocks rise in value (they might be in for a surprise this coming year).

Then there is another group, and I include myself here, who want to see a sensible mix of income and growth to protect the nest egg. I see ownership of solid companies as the means to achieve that while riding out whatever storm is coming our way. Income is good.

Stocks in general are going into a downdraft though by the way and so just buying any old damn thing will just not do. Getting advice helps if you are not familiar with corporate performance or do not know what investing with defensives is all about.

Take a look at the TSX just for fun. Click on the one year chart. Does that paint a picture? See, you do not even need to be a technical analyst to perceive that the market has rolled over after a long rise nor that it is heading lower, possibly for an extended period of time.

Check for yourself and form your own opinion. The Dow, S&P and most others are signaling a similar pattern. You should pay attention to what it is telling you. The global economy is going to slow down and this is a clear visual cue about how markets are already pricing that information on the indexes.

http://www.theglobeandmail.com/globe-investor/markets/indexes/summary/?q=tsx-i

#44 realityguy on 06.03.11 at 10:30 am

Buying VS Renting

If you buy a shack in Vancouver it will cost you at least 600,000 dollars. Which will also mean $$$ in repairs

Every 10-15 years
– Furnace – 5000
– Water Tank – 900
– Roof (depending on material 5000)
– gutters
– paint and repairs

Property taxes 500 per month

don’t forget most old houses probably need drainage tiles repair at a sweet 20,000
But you can probably hunt your own meals of RATS and mices pies every night.

If you left 600,000 in 1 year GIC (@1.92)
that will be about 200*6 = 1200 per month (no risk 100% guarantee)

If you left 600,000 in 3 year GIC (@3)
that will be about 300*6 = 1800 per month (no risk 100% guarantee)

If you buy Preferred bonds you can get 3.25 to 5.6 (little risk)
that is 400*6 = 2400 per month
650* 6 = 3900 per month

So think what you can rent with

900 – 1-2 brm approx 700sf – or basement suite of new van special
900- 1300 – 2 brm appox 900 sf

1300- 1700 – great place

Right now were renting a 3 brm basement suite for 1350.

Includes – cable, heat and utility
spankin new granite tops, and entire suite just built in the last year in a 1,700,000 housing in burnaby.
1500 sqft. Were good tenants and prepaid for six month rent. And built a good relationship with the landlords causing them no grief at all.

best of all its in striking distance from my work and kids school. I come home for lunch and can bike to work within 10 minutes. Also 2 minutes to the sky train for my wife so we save tons on GAS. Which is worth about 300 dollars a month on gas savings.

#45 Live Under Your Means on 06.03.11 at 10:34 am

#5 Devore on 06.03.11 at 4:16 am

If you intend to live in your house for some years, you have to budget for a new roof, new windows, new siding, new deck, new fence, new furnace, new water heater, new floors, new kitchen, new bathroom, and regular inspections of all the mechanicals so your house doesn’t explode, and your fireplace doesn’t kill you in your sleep. Then you cross your fingers and hope there are no structural issues, your basement doesn’t flood every couple of years, and there’s no asbestos hiding in the walls.

Ain’t home ownership grand!

…………..

Two new roofs since then. Have done all of the above except we heat electrically supplemented, until recently, with basement wood stove and living room fireplace which we added. In 2009 we spent about $650+ in wood. (I keep track of per cord annual costs.) Wood has increased quite a bit so we put in an ETS system downstairs in the family room (split entry) as we don’t have Time of Day pricing here unless you have an ETS or a heat pump system, etc. Had to change the electrical panel. Last summer, when we changed windows and siding, etc., discovered ¾ of the sills were rotten (carpenter ants) as the house was improperly graded. Also extended an office into a bdrm and a laundry room to house a shower, etc. Thankfully, we have a truss system that allows us to remove all interior walls.

Devore – You forgot the landscaping, driveway that requires maintenance, and if you don’t have a garage, a large enough shed that has to be built to house the snow blower, lawn mower, gardening tools, motorcycles, etc., etc.

Even tho hubby has done much of the work over the years, I don’t think we’ll ever recoup what we have spent on the house. My hubby didn’t get the garage he wanted, but we love the area we live in (great neighbours & close to all amenities) and I got the large lot that I dreamed about to create a veggie and flower gardens – at least $15K back then. Unfortunately, 21 yrs later I struggle to maintain those gardens – and some were lost when we had to dig up areas around the house to put in new sills.

Pardon my long post – should go out and cut off all the tops of the tulip blooms. Lots of spring/early summer perennials in bloom, however. :-)

#46 free advice? on 06.03.11 at 10:40 am

Hey Garth, or others out there…
I want your advice.
I spent a long time in university (with student loans), and worked in some fairly crappy jobs afterward, but now have a solid early career with good prospects for the future. I had a monkey on my back, huge student loan and credit card debt sucking away my earnings. After a few years of pushing back hard, I am finally debt-free and have a little lump of savings ($30k, which is not a lot to most of you but this is against -$80k a few years ago in debilitating debt). I like in a Vancouver suburb. EVERY financial “adviser” (at the bank or on the street) tells me to get in now, make some money, use my piddly 30k to get a ~400k condo and mortgage up the rear end. After tearing myself from the sucking hole of debt (that could have become my grave!), I feel complete aversion to a mortgage in general and especially one that is 8X my income. I am currently a renter, spending about $1350 for a place that would cost $1 million to buy (i.e., double the square footage of a condo/TH that $400 could purchase). Garth, what should I do, ignore everyone… are they all delusional? Are the banks really trying to make everyone a serf? The advisers I spoke to thought nothing of me getting a mortgage for 8X my annual income. At this moment, where should I park my little wad of cash and start building from there? I ask here because I know nobody will say to buy a leaky condo in Surrey (hopefully). I can afford $800/mo to go either into a higher mortgage payment or into this investment. Also, if there is a major RE crash (I am becoming a believer), how will this affect my assets in the big banks (dividend mutual funds with 30% of the fund in RBC, TD, etc)? Free advice that doesn’t involve RE??? :-)

#47 Devore on 06.03.11 at 10:46 am

#25 PEI Red

Not sure where you’re getting your numbers or information from.

I’m not getting any numbers. The information is common sense. Things wear out.

General rule of thumb 2-3% of your house value should be set aside annually for maintenance.

This is my point. Houses cost money to own. We’ve had many people claim they spend a couple hundred a year on maintenance. They’re forgetting to set money aside for the big repairs, just like condo associations don’t have enough money in their contingency funds then hit up owners for $10k each when things fall apart.

#48 Siddelly on 06.03.11 at 10:52 am

#29 Utopia

Beautiful interpretation of Sam Elliot!!

#49 Trailer Park Boys on 06.03.11 at 10:55 am

That area is known as Asthma Flats.

It was once a swamp
Much of it was developed for returning soldiers bungalow-ville.

The ad sounds like a desperate Hamster.
It was very working class….but nothing special….some side roads don’t even have sidewalks.

#50 Mr. Reality on 06.03.11 at 10:59 am

#35 ARES on 06.03.11 at 9:23 am
That listing is ridiculous. The house is worth -$10,000 (cost to remove). The lot is worth $1,800,000. New houses in that area are selling for $3,000,000-$4,000,000.
If Carney keeps the rates at 1% for the next 3 years, those values will hold.

Realestate prices and their ability to hold in place are not affected by rates alone. They are affected by something called the global economy, debt, cost of living, oil prices, recessions, a boat load of other factors and most importantly and the most forgoten of all rules…..

supply and demand

Mr. R. is rolling his eyes………sheeple

Get your shorts in folks…..short the TSX, S&P 500 and oil.

#51 Seriously? on 06.03.11 at 11:01 am

Nice. Reeeeeeeeeeeal nice…
http://toronto.ctv.ca/servlet/an/local/CTVNews/20110519/ontario-man-oprah-fake-tickets-110519/20110519?hub=TorontoNewHome

Justin in Seattle, that was fun to watch. Thanks. Check this one out as a tribute to Oprah…

http://www.youtube.com/watch?v=1aSbKvm_mKA&feature=related

#52 Live Under Your Means on 06.03.11 at 11:08 am

#25 PEI Red on 06.03.11 at 9:01 am
#5 Devore

Not sure where you’re getting your numbers or information from. Never lived somewhere where the hotwater tank was rented from the utility company. Just redid our bathroom (luxe, to be sure) for over $10k doing the labour ourselves. (Granted not in a competitive market so I acknowledge we paid more that townies would. – Yes that’s when I miss the big city the most!) General rule of thumb 2-3% of your house value should be set aside annually for maintenance. I guess that’s the good news when prices drop.

#7 Chiquita Banana
Renting does have its down side. Owners won’t drop bucks on high end repairs – they go cheap whenever possible. There is also a stigma with renting. We went to a time share presentation and had to be “approved” to attend as we didn’t own our own home at the time, despite that fat wad of cash we had invested from the sale of our property…still was totally worth it! (PS Didn’t buy into the time share, just wanted the free nights at the resort.)

…………….

When we moved here, IIRC, our hot water tank was heated by a large propane tank outside. After a year we got rid of it. Co. didn’t maintain it properly, (rusted, etc.) could smell it in the back basement, to the point we were very concerned.

Recall going with a gfriend (30+ Yrs ago) to visit her gfriend’s place in the burbs of Dallas for a week. Her house stunk of propane or natgas (or can you even smell Natgas?). We both noticed it, but she didn’t!!! Thankfully nothing happened during our stay. Guess when you live with certain smells – smoke, animals, etc. your senses become acclimatized.

Went to a time share presentation in the Dom. Rep. many years ago too. We had no intention of ever buying.

#53 SwampLily on 06.03.11 at 11:09 am

For anybody looking for a place to rent, forget the ads placed by owners trying to rent part of their crappy dumpy houses. Contact some property management companies to find a nice place at a good price. When something breaks, you simply call the property management company and they will send a professional to fix or replace it, and any rent increases will be minimal and according to the law. Also, you most likely won’t have the owner sniffing around all the time.

#54 David Jensen on 06.03.11 at 11:10 am

Isn’t it interesting that Alberta is the most rational of all the major Canadian real estate markets?

Edmonton and Calgary have, by far, the lowest carrying costs as a % of income of all major CDN cities (31% for Edmonton, 36% for Calgary vs. 70% for Van).

Maybe people in Alberta are just a bit more rational in financial matters than the rest of Canada, and that’s why our economy is better as well.

Anyways, if you are sitting there hoping for higher interest rates to drop house prices, your hopes took a sh.. kicking this week. Global recovering faltering, bond yields falling, interest rate hikes are ON HOLD.

#55 Medic on 06.03.11 at 11:16 am

No surprise that Garth had some trouble in a bar. The following scene was loosely based on a Garth Turner incident in an Ottawa pub years ago.

http://www.youtube.com/watch?v=BEoFOqBGrUE

#56 T.O. Bubble Boy on 06.03.11 at 11:16 am

Wow – the GTA May Numbers are in, and there was a surprising change of direction in terms of sales (up 6% from May 2010).

http://www.torontorealestateboard.com/consumer_info/market_news/index.htm

Total Listings are 27% lower than last year (May 2010 was when the flood of listings started for the GTA), which helps to explain the price jump — but it is surprising that the GTA broke the 13-month streak of year-over-year sales declines.

#57 Xnilo on 06.03.11 at 11:20 am

Here is something terrifying Straight from the horse’s mouth :

“Risks to the world’s economy are “glaring and global,” with growth likely to suffer as governments withdraw fiscal and monetary support, according to Jacob Rothschild, chairman of RIT Capital Partners Plc. (RCP)”

http://www.bloomberg.com/news/2011-06-03/-glaring-risks-ahead-for-world-economy-rothschild.html

Two simple words from a man of very few word – “glaring and global,” Risks to the world’s economy i.e.

#58 maxx on 06.03.11 at 11:20 am

#1 Siddelly on 06.02.11 at 9:37 pm

“The flippers across the street who paid 2.5 and are now asking 2.88 are starting to get a little stale and might be feeling a tad nervous. It reminds me of that old saying- ” Sometimes you eat the bar and sometimes the bar eats you!”

The end of house mania mass-psychosis has taken hold. Reaching critical mass is a given and will accelerate . More and more sheeple are waking up and realizing that their future wealth is being stolen from them by the misallocation of cheap money. No amount of QE will spare them nor the economy.

#59 ??wth?? on 06.03.11 at 11:22 am

Sherri,
You are halfway home to being mortgage free. Your mortgage pmts are, as Garth said probably under $500 / mo, and you bought at a good time so you don’t have to worry about going under on your property.

Even if the market in your area goes down 35%, you are still ok and the house will be worth at least what you paid.

My comment is, why would you sell a home you have 50% paid for and paid 40% less than what you could get for it now, and go rent?

I agree with most of what Garth says, but he is only a man. He is educated in his field, but he is no prophet.Whay gamble your future on what somebody (even educated)speculates on? What you propose to do makes sense if you bought at high end with little down, but you bought at a good time and are halfway home as far as the mortgage is concerned. Some people who read this blog and ask advice need to think for themselves sometimes.

So what if you sell and do invest your equity money. There is no guarantee that your investments won’t tank. Garth keeps on bringing the state of the world to everyones’ attention. These same events will have the same devastating effects on monetary investments as they will have on real estate. If the monetary system crashes or becomes adjusted (maybe hyperinflated), you are toast. Even if your investments flatline, or pay off enough to cover inflation, you would have been better off paying off your mortgage and living worry free.

Garth may have control of this board and have many people here drinking his own form of ‘kool aid’, but I myself think that you would be foolish to do what you are proposing. You are gambling what is a very comfortable lifetstyle (one that most wish for) to hope and make a monetary gain, based on what someone thinks will happen. Don’t let greed steal your peace of mind. Most likely you will end up sorry. Peace of mind is what most people are searching for, they are just looking in the wrong place. A few extra thousand dollars won’t get you peace of mind. You have or can have peace of mind right now with your blessed situation.

You will always need a place to live and you almost have yours paid in full. It will only cost you taxes to live there soon. Garth’s message is a good one, but he is not the real estate saviour.
Think for yourself people!

#60 God on 06.03.11 at 11:28 am

Utopia:

Art thou trying to outrace verbiage of Holy Scripture?

If thou does not cease and desist……Hell for you will be a condo in Winnipeg.

BTW I know where to get lawyers….basement suite of Satan

#61 Devore on 06.03.11 at 11:29 am

So apparently extra payments are a “needless frill”:

http://www.ctv.ca/generic/generated/static/business/article2039467.html

4. Forgo needless frills

Lump-sum prepayment privileges often come with higher rates. That’s wasted money for the 82 per cent of Canadians who don’t make lump-sum prepayments in a given year. If you’re not going to maximize your annual prepayment allowance, ask if cheaper mortgages exist with less generous options.

Lump sum payments a “needless frill”? Most “home owners” (82%) don’t make extra payments? Why, I thought people bought only what they could afford and planned to pay it off in half the years. Say it ain’t so!

#62 Utopia on 06.03.11 at 11:29 am

#39 BrianT….

“Mish has the data today and San Fran is down 41% from the peak of 2006 to the levels of 2002 http://globaleconomicanalysis.blogspot.com/
——————————————————–

Thanks Brian. That is a great Mish interview you posted up today. I had not seen it until now but I have to tell you I really love that guys mind.

Mish is amongst my favourite analysts and is, in my opinion, one of the few guys who really understands the big picture, what is going on and where we are all headed.

There are others I follow closely who’s opinions, knowledge and intellect I really respect and value. David Rosenberg of course (did I even need to tell you I think he is amongst the best?).

Rick Ackerman has made tremendous contributions to the debate and is always ready to hold the flame to the feet of the bluffers and peddlers of nonsense. I highly recommend his site for well needed perspective and relief from the crazy talk on some of the American MSM sites.

There is another guy too. He is “hands-down” one of my favorites for taking a sensible daily approach to markets and he is a guy who often captures the trends ahead of everyone else. His name is Larry Edelson from the site “Uncommon Wisdom”.

If you don’t follow Larry I suggest you give his site a try. No charge I think for getting a free missive in your e-mail box daily if you hit the subscribe button. Good perspective, smart thinking, chart analysis and balanced opinions. Larry sees the dollar diving and I do not always agree with him but he might be correct that a new reserve currency is inevitable.

I guess, in short, you would say that I am still in the deflation camp in the larger picture and agree that commodities prices are really all that is holding up the current inflation trend. It is a trend that will end with any China slow-down nipping the cost-push price growth in the bud as demand falters and growth slows.

Mish has it right as he discusses credit in todays video. If you didn’t watch it yet, then try to give it a moment of your time. I think he has done a really good job of capturing the big picture trend in such a short clip.

Actually, my whole point here was to make note of the fact that Mish has mentioned his rationale for why Gold will continue to do well in the coming years.

He’s got it right.

#63 Devore on 06.03.11 at 11:38 am

#45 Live Under Your Means

Oh, I realize those are just the basics. Also, “pride of ownership” requires at least keeping up with the Jonses, if not sticking it in their faces and leaving them in the dust. When 82% of Canadians just make the minimum mortgage payment, I doubt they’re putting away any money for home repairs. That’s what HELOCs are for, you know, “good debt”.

Oh, hey folks, Van city is now giving away free money to people with no money (that would be Vancouver “home owners”), through our favourite public works corporation, Vancity Credit Union:

http://www.vancouversun.com/technology/Vancouver+council+approves+home+retrofit+loan+program+considers+expansion/4870599/story.html

Alright, that’s enough out of me, see VCI for more wacky news from this week.

#64 Nick on 06.03.11 at 11:52 am

I find it funny when people talk about how this house sold for X millions, that one for 800k, as it were proof the market is healthy. In the US, peak buying was practically a national sport in 2005, an yet, it didn’t prevent gravity from kicking in.

#65 Utopia on 06.03.11 at 11:53 am

#45 Live Under Your Means

“Pardon my long post – should go out and cut off all the tops of the tulip blooms? :-)”
———————————————-

OK, now you just sound dangerous. Step away from the tulips Ma’am….show us your hands…..that’s right girl…..now drop those clipping shears. We are armed too you know!

#66 Utopia on 06.03.11 at 12:01 pm

#60 God, responding to Utopia on the Greater Fool site wrote:

“Art thou trying to outrace verbiage of Holy Scripture?”
———————————

Dear God. I will try to be brief after today. But please tell my good friend Daystar that I got voted “longest post ever” by the dawgs last week and therefore…..

I win, I win, I win”

#67 Live Under Your Means on 06.03.11 at 12:04 pm

#25 PEI Red

Not sure where you’re getting your numbers or information from.

I’m not getting any numbers. The information is common sense. Things wear out.

General rule of thumb 2-3% of your house value should be set aside annually for maintenance.

This is my point. Houses cost money to own. We’ve had many people claim they spend a couple hundred a year on maintenance. They’re forgetting to set money aside for the big repairs, just like condo associations don’t have enough money in their contingency funds then hit up owners for $10k each when things fall apart.

……………..

Sis & I bought a low cost condo townhouse MANY years ago. Condo laws were really bad – did not protect owners – just the developers. And the BoD’s were corrupt and, as in politics, those who vote are mostly ignorant IMHO. My hubby and I spent 2 weekends reviewing the books (at the Mgr’s house – much to his chagrin) and we found all kinds of over charging for services. Manager worked for a power corp. here and used co. copiers to produce all correspondence, etc. BUT he charged condo owners. President would hire kids for $X for doing stuff and charge 4/5x to condo owners. We had a problem with the condo corp. We spent weeks going door to door & getting signatures from all the condo owners. We had a good majority. I even talked to a big wig in our govt. at the time who, on the side, did an audit on our condo corp who admitted to me – via a telcon – that something was not right. But, auditors can only go by what info is given to them.

To make a long story short – we had hired a well known legal firm here who took on our case (for very few $$) because they thought we had a good case and they wanted to see condo law changes.

Then my BIL convinced us to hire a previous small claims court judge. Never again will I ever accept my BIL’s opinion. I recall at the time when were fighting the condo exec, my BIL was YA, YA in agreement, but when I stood up to state my opinion, he didn’t come to my defense. Now he’s on the BOD’s. He’s a real con – hates taxes but loves all his DVA payments, etc. Never fought in a war. Supposedly he’s going to receive more for a tinitis problem – strange, I’ve known him for 30+ years and have never heard him complain about that. Oh well, the extra will allow them to change their flooring.

#68 Kevin on 06.03.11 at 12:04 pm

Rising house prices should be a reflection of rising incomes not a reflection of one’s ability to borrow.
http://saskatoonhousingbubble.blogspot.com/2011/06/rising-house-prices-should-be.html

When house prices are rising not because of rising incomes but because of ones ability to borrow, a huge misallocation of present and future capital feeds the bubble. When the bubble pops no one really knows but all bubbles pop.

#69 maxx on 06.03.11 at 12:06 pm

#46 free advice

Great job in getting into the black in <3 years!!!

2 things: Saving while you're young is way less painful than when you're older;
Going forward, money will be harder, and harder (and harder) to get and even harder to hang on to.

Good luck.

#70 Hoof - Hearted on 06.03.11 at 12:10 pm

Yesterday..we took a drive out from Richmond to Abbotsford.

It was eerie.

Many homes along 16 th avenue for sale… SOLD /Listing ratio approx 1 in 10

Around Aldergrove…..saw these dinky 10 house subdivisions going up….and thought zombie land….so screwed…Aldergrove amy as well be set of Andy of Mayberry Version (2).

It made one think about herd mentality..they (developers ) just don’t get it…

Then Abbotsford….just felt dead….like it was Surrey East. We went to the Highwayman PUB (whih we highly recommend..prices serving and quantities GREAT…….but from South Surrey to Abbotsford…its looking BAAADDDD.

#71 John on 06.03.11 at 12:17 pm

Garth, Can you please add my vote to the ‘you are an idiot’ ballot. Thanks

#72 Scalgary on 06.03.11 at 12:20 pm

Garth

I had trouble accessing your blog last night.

Got message as ‘cant find the server’.

I could browse other sites.

Cheers

I was attacked. — Garth

#73 tran, Calgary on 06.03.11 at 12:27 pm

#21 Charles,

A very sound advice indeed; short and sharp.

#74 Bill Gable on 06.03.11 at 12:32 pm

Incredible.

I just got back from dropping a friend at his Mom’s in the Fraser Valley.

Tumbleweeds. I swear.

You can just about hear the homeflippers hitting themselves on the head, with one of those ACME hammers from the Warner’s Cartoon days “What was I thinking…..?”.

#75 Kevin on 06.03.11 at 12:36 pm

@RealityGuy:

“600,000 in 3 year GIC (@3) that will be about 300*6 = 1800 per month”

2 problems with this.

1. GICs don’t work like that. You don’t get to take out the interest “per month.” You get nothing at all until the very last day of the term. So for a 3 year GIC, you get not a penny from it for 3 years, then you get all your interest, all at once.

2. Interest income is the worst kind of income, taxable at your full marginal rate. You’ll be paying income tax on that entire $1,800 monthly amount, so you cannot plan to use it all to pay for rental costs. At least capital gains come with a 50% exemption. Dividends also receive favourable tax treatment.

#76 Winterpeg on 06.03.11 at 12:40 pm

The “tenants” in the above listing perhaps are of the “cannabis” variety, which is why they don’t want to be disturbed.

Prospective buyers might want to check into the electric bills.

#77 Cato on 06.03.11 at 12:40 pm

The secret to life & finance is balance. Unlike other mammals humans are prone to emotional extremes. Money doesn’t buy happiness, but happiness isn’t found in grinding poverty either. When our economy is unbalanced our society becomes unbalanced. The pendulum swings to extremes of boom & bust and destroys lives in the process.

I own a house. I know financially prudent move would be to put that capital to a more productive purpose and accumulate even more capital but not all gains in life are financial. I was lucky enough to be born in a free market society during the dawn of the information age with an analytical mind – I will not outlive my money, nor will my children or their grandchildren. A house is not an investment but it is a castle – its one of the many intangibles found in a balanced life that need to be weighed against financial gain.

Most people I pass within social circle are living well above their means in the financial extreme. I fail to see the attraction of such a manic lifestyle. The housing bubble is just a symptom of much larger societal problem brought about by the boom & bust cycles of neo-keynesian economics. This is the root cause of the economic failure we are in today, and it won’t be solved by a housing correction.

#78 Mr. Plow on 06.03.11 at 12:40 pm

#10 T.O. Bubble Boy

HAM or not what buyer of a 2 million+ property will use traditional financing?

Not saying the property isn’t over priced, but your exercise didn’t prove anything.

Whether the market is bloated or not, a property that is priced at that price will never be bought by someone who only has 20% down.

#79 Randis on 06.03.11 at 12:45 pm

#46 Free Advice:

get into RE! NOW! lol j/k don’t do it …

My suggestion for you is to invest the 30k into a good solid fixed income/balance portfolio, which can easily generate 6+% return (and I am being a little conservative) at bumpy time like this. I would load up a little more fixed income at this time (probably 70% FI vs 30% EQ) because of the uncertainty of the equity market. In general, when EQ underperform, FI shines, and the fixed income distribution hedge your risk in fluctuating market value. FYI please see below for the performance data in May.

http://cawidgets.morningstar.ca/ArticleTemplate/ArticleGL.aspx?id=383255

Also, bankers don’t care they just want your business to fill up their mortgage quota so its bullcrap.

Anyhow, good luck and don’t fall into the RE trap.

#80 Trailer Park Boys on 06.03.11 at 12:48 pm

Ok..we admit it we smoke in church..

But this is really terrible

QUOTE:

Will owning a penthouse pad help you get lucky tonight?

http://www.theglobeandmail.com/life/the-hot-button/will-owning-a-penthouse-pad-help-you-get-lucky-tonight/article2042242/

Single guys in the condo market can forget about location, location, location. In real estate as in romance, big-city cads insist, size matters.

Especially when the average condo is smaller than a garage. (Sound familiar, Toronto and Vancouver?) In hot spots like New York, sprawling Brazilian cherry floors and multimillion-dollar views are the ultimate babe magnet, the New York Post reports.

Jim Norton, 42, says few ladies can resist shelter porn. When this Casanova cum comedian gets lucky, the credit goes to his Upper West Side apartment in a Trump building that has floor-to-ceiling windows.

“Women see windows – and skirts come off,” he says, adding that bleak economic times make seduction a cinch.

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

I mean Garth should sit down with his solar powered acabus err abacus and do a cost benefit analysis.

We mean….what is it with these nouveau riche…and tight shorts?
Even Bubbles has no problem .

Is this why RE is so high…cuz …tank tops are low and skirts may as well be made of dental floss ?

Cheaper to buy a turkey or even get an offshore bride.

#81 Mr. Plow on 06.03.11 at 12:50 pm

Watching everyone bash the listing is awesome, cause it shows how little you all know about real estate.

Not saying it is worth what they are asking, I have no clue I don’t want to act like I know the Van market. But do you really think the house makes up any aspect of the property value? Or maybe the price was set based on the land value and the house is for tear down purposes?

Try google street viewing the address to see what the neighboring homes look like.

And Garth, if the sellers are selling for market value, why does that make them greedy? Would you sell one of your properties below market value so you would not appear to be greedy? I know I wouldn’t, but I don’t think that makes me greedy.

#82 Observer on 06.03.11 at 12:51 pm

Re: #16 Boomer Boy

Wow , not sure where you came up with your prices.

Never heard of a rented hot water tank .

You forgot cost of wood floors. They do wear out and have to be refinished or replaced.

Gas fireplaces are a carbon monoxide concern. This odorless gas will either kill you in your sleep or put you to sleep & then you die.

As far as your prices for a kitchen & bathrooms – good luck!. If you do some proper research or get quotes for decent materials & workmanship cost would be triple your guesses.

I will try to be respectful – either you don’t own a house or you haven’t had any work done since the 1970’s.

Not sure if you were just considering house maintenance , but what about initial closing costs, mortgage payments, mortgage interest.

Property taxes, water & sewer, insurance, yard maintenance etc. – these costs continue after mortgage is paid off.

As far as paying off house in twenty years – I’m going to venture a guess that most people have 25 -35 year amortizations.

I own a home some I am aware of the costs.

#83 Karl Hungus on 06.03.11 at 1:03 pm

Lets recap since you declared “its here” (the crash that is).

For Edmonton

In March, SFD were up 5.8% and condos were up 0.8%

In April, SFD remained flat, and condos were up 0.6%

In May, SFD were up 0.25% and condos were up 3.65%

Sorry Garth, no crash in Edmonton.

You’re kidding, right? — Garth

#84 Burnt Norton on 06.03.11 at 1:08 pm

#7 Chiquita Banana on 06.03.11 at 5:21 am

“Renting now may be the wise move, financially, but boy does it suck to be a renter. If you have a dog, and in some cases even if you have a child, the vast majority of landlords will not take you. And unless you can afford the really high end of the rental market, the state of repair of most places is dismal, with creature comforts like laundry or even control over the heat very hard to come by. We’re looking now and it ain’t pretty.”

———————————————————-

We faced these issues but with perseverance we have found a place that serves us very well in comparison with the equivalent mortgaged ownership options.

Our positive renting experience has illustrated to us the irony of the commonly-held belief that mortgaged ownership confers more stability and security. The income to be generated by our diversified investments now allows us to feel more stable and secure as we budget for shelter as part of our overall expense allocation. It took a lot of careful consideration to deviate from what our parents did and from what most of our friends are doing. At this juncture it simply makes sense for us to rent.

We have learned to think about our overall picture in terms of financial risk management and, somewhat unexpectedly, we now realize that the freedom inherent in renting vs mortgaged owning is a great bonus which more than offsets any of our previously held misconceptions around loss of control, comfort or security.

#85 BoomerBoy on 06.03.11 at 1:10 pm

Well, there goes your theory regarding the GTA real estate scene Garth. How does that go again, oh yeah, higher prices on lower volume equals bubble about to burst.

How about the reality of higher prices on higher volume?

Latest TREB stats show sales up, prices up and listings way down. We have never witnessed a market like it. Not to mention off-the-chart sales of new condos. House-porn is alive and well in T.O. Me so horny.

One month in 12 doesn’t excite me too much. And check out May 2010 levels before you slap on the jelly. — Garth

#86 Hoof - Hearted on 06.03.11 at 1:22 pm

just got this e-mail ..person is a fellow volunteer

QUOTE:

we love our new house

IE: if you know anyone selling in Richmond – tell them to be really careful – know your agent beyond well and don’t trust many agents.

we were put thru the ringer by the buyers and they played games and tried to do things unethical – and illegal.

………guess what denomination ………. they really feel they are beyond the law……. put us thru hell the last 2 weeks.

we stood our ground and threatened to sue

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

#87 disciple on 06.03.11 at 1:25 pm

Contrary to popular belief, the objective is to get rid of as many dollars as possible. All dollars are debt, somebody owes someone else that money. The longer you hold on to dollars, the longer you hold on to debt. Liquidity allows you to get rid of them whenever you want. Money is no longer a medium of exchange, it is now a medium of your enslavement.

I await the expected comments like, “okay, you can send them my way” etc…but at least we’ll separate the wheat from the chaff…those who understand and those who don’t…

#88 bill on 06.03.11 at 1:34 pm

ahh !
the former clubhouse of the ”east van enemas” is on the block…
the wild parties and impromtu drag races on the street in front of this fine example of the carpenters trade, have thoroughly broken in the neighbors already.
ample parking for motorcycles and a garage /workshop make it the ideal domicile for the up and coming biker of today.
wont last long at this price.

http://ttlive.iomtt.com/index.htm

#89 noworries on 06.03.11 at 1:36 pm

Hey Garth,

If I was to buy a house now would it not make sense to put down 5% instead of 20%. I don’t want to lose my hard earned money if it all collapses but i don’t mind losing 5% (possibly 0% down).
I can claim bankruptcy because if the market falls everyone will do the same..

Thanks

#90 BoomerBoy on 06.03.11 at 1:36 pm

#82 Observer:

I own three homes. All less than ten years old. I live in one and rent out the other two. Thank-you very much.

I prefer to purchase new homes (7-year Tarion warranty) and sell them before they are ten years old, prior to requiring major repairs. My strong advice is – don’t buy garbage. Old houses are a nightmare.

I am currently in my fourth principle residence since first entering home ownership some 23 years ago. Each home bigger and better than the last. That’s how you climb the property ladder.

Oh yeah, mortgage-free for the past eight years. But thanks for asking.

Newsflash Observer – things cost money. Does your car run maintenance-free? Maybe you’ve heard of gasoline, tires, oil-changes, insurance, etc? Or do you rent that too?

#91 BB on 06.03.11 at 1:40 pm

#81 Mr Plow

You’re on the wrong blog. Intelligent discussion will get you nowhere. Sensationalism is what the ignorant want.

If Garth had pointed out that it was for land value, there would be no “shock value.”

…and nobody is greedy until it comes time for them to sell their own home.

#92 maxx on 06.03.11 at 1:50 pm

#75 Kevin-

GICs can pay out monthly, but you’ll forfeit ~.25% of your interest for the privilege.

#93 Scalgary on 06.03.11 at 1:57 pm

I was attacked. — Garth
————————-

Shame on those selfish losers…

May be its time for you to think of subscriptions to your blog… to make it more secured.

I never came across anyone educating common man for free as you do… Kudos to your magnanimity…!

Cheers…

#94 gmc on 06.03.11 at 2:07 pm

The Canadian Dollar is No Haven from a US Dollar Collapse
Jeff Berwick

We spend a lot of time here at The Dollar Vigilante chastising Ben Bernanke and the Federal Reserve and preparing our subscribers for a collapse of the US dollar – something which has been paying off very handsomely, with gold and silver at record highs this year – but don’t take that to mean that we prefer any other fiat currency. No fiat currency in the western world is any better than the US Dollar. In fact, in every case, they are worse.

The Federal Reserve is still, despite its secrecy, one of the most transparent central banks in the world. It also has, over the last century, despite inflating the dollar downward by 97%, been one of the least inflationary banks.

We often hear of people denounce the US dollar and correctly divine that it is headed to worthlessness, but, in the same breath, they say they own other fiat currencies like the Canadian dollar.

This is a case of ignorance of the workings of banks like the Bank of Canada – or virtually any other major central bank in the world, for that matter.

There are numerous reasons why the Canadian dollar will not survive a US dollar collapse:

The Canadian economy is very tied to the US economy
The Canadian Government is intent on devaluing the Canadian dollar alongside the US
The Bank of Canada has virtually no gold backing the Canadian dollar
All that does back the Canadian dollar is the US dollar and other fiat currencies
The Canadian dollar is not used globally

The Canadian Economy is Very Tied to the US Economy
We need only show one graphic to make this point:

It is obvious that if the US goes through a monetary collapse or even just a major depression, the Canadian economy will be hobbled significantly.

The Canadian Government is intent on devaluing the Canadian dollar alongside the US
The Canadian Government has made it painfully clear that they have no intention of allowing the Canadian dollar to rise much more than par with the US dollar. The reason: lobby groups and voting blocks from export based industries will depose of any government which allows this to happen.

The Bank of Canada has virtually no gold backing the Canadian dollar
Since 1980, Canada has sold 99.5% of it gold. Canada now has the 78th largest holding of gold of all countries. Countries such as Bolivia, Bangladesh, Cambodia and Macedonia have more gold than does the Bank of Canada.

The Bank of Canada used to have 653 tonnes but today it only holds 3.4 tonnes. To give a rough idea of what all of Canada’s gold holdings look like, we created this rough estimate of what it would look like if Canadian Prime Minister, Stephen Harper, was standing beside it:

All that does back the Canadian dollar is the US dollar and other fiat currencies
If you believe that the US dollar is headed to zero then it makes no sense to own the Canadian dollar. Practically all that backs the Canadian dollar is US dollars.

The Canadian dollar is not used globally
The Canadian dollar is not a true global currency. There is only one, current, true global currency: the US dollar. It is accepted on the streets of New Delhi, Phnom Penh, Buenos Aires, Moscow and practically everywhere. Try bringing some Canadian monopoly money to Shanghai and try buying some street noodles. You’ll see how valid of a global currency the Canadian dollar is. No soup for you!

Jeff Berwick
Chief Editor

T

#95 disciple on 06.03.11 at 2:23 pm

Assets can never increase in value. It is only your greed that deludes you into mis-defining the term “value”, so you think you have made a profit. You’re wrong.

Only labour and labour of the mind (technology) increases asset valuations, and extrapolating the mathematical valuation curve, infinite asset valuations can be said to be “priceless”, or in other words, “free”.

Through technology, the following assets will eventually be free of monetary value: Food, Water, Shelter, Energy, Clothing. Just think for a moment on who has the monopoly on these things at the present moment, and how they maintain it by spreading the myth of increasing asset valuations, mostly at the end of a gun.

All problems have their origin in psychological problems. And if you don’t cure yourself of this particular form of mind disease, it will continue to consume you.

#96 g2thaBLA on 06.03.11 at 2:25 pm

#4 first — hahaha

#97 spaceman on 06.03.11 at 2:27 pm

#10 T.O. Bubble Boy

nope, they tear it down and build a mega mansion, they don’t care about the current rental. HAM don’t rent out. They send their kids to go to school and they live in it.

#98 g2thaBLA on 06.03.11 at 2:27 pm

#89 noworries

That doesn’t seem like a very good strategy…

#99 Increasing that 1% on 06.03.11 at 2:33 pm

“Last night I walked into a dismal bar I’d never before visited, in a Toronto neighbourhood I always drive through at high speed, only to be greeted with a shout. “Hey, it’s Garth Turner,” a guy in the shadows yelled, laughing. “The real estate market is gonna crash!”

Of course, I decked him.”—Garth

>Is that you loudly speeding by on your Harley? (Or Harleys aren’t ‘loud’ or ‘noisy’…they purrr…?)
Couldn’t be ‘The Loose Moose’, on Front, as with all the taxis around it’d be kind of hard to speed? (Not that I’d know if it’s dismal)

But, sounds like you are going to be getting some criticizing, based on the latest GTA sales numbers increasing? (As #56. T.O. Bubble Boy reports)

BTW, since you’d mentioned Bikers, and now they’re out ..as a former Politician AND a biker…why is it legal for those *&^&*%’s to make so much Noise?!
–are politicians too afraid to deal with this?
–is it the politicians- and their relatives-and friends- who are the bikers?
–is it necessary to have the noise-for safety? ha–some of those scooters can’t be heard and they seem fine–and they are cee-ute

May be a real testosterone booster for some, but if purchasing real estate it really sucks to have a loud biker in the neighbourhood going by 10 times a day–sure have no control there–can’t complain–it’s legal–makes no diff if you’re out in the country, maybe only if you’re realllly far from the road..
In dwntwn a zillion vehicles can go by–no bother–then comes the *&*&^’n loud biker…whoa-olly crap.

#100 Bill Gable on 06.03.11 at 2:34 pm

DNS attack on Mr. Turner because he is trying to help people?

Maybe it’s those fiendish Central Bankers in “You Know Where”, that are trying to muzzle you, sir.

We have a lot of squirrel hunters here, who will be happy to rally to your defense – bring it on!

Keep on, keeping on, Mr. Turner.

#101 mississaugaboy on 06.03.11 at 2:50 pm

Oh man my friend replied back and told me she was looking at buying more for short term 1-2 years and then flipping.

Worse response than I could imagine. I wrote a LONG email explaining the outright costs of buying/selling and to just rent. I really hope she listens but I doubt it.

#102 BoomerBoy on 06.03.11 at 2:56 pm

U.S. unemployment rate up in May to 9.1% on very dissapointing job numbers. The U.S. and Canada are going in opposite directions economically. I never thought I’d live to see the day.

But it’s not ‘different’ here – right?

#103 BPOE on 06.03.11 at 2:57 pm

The property WILL be sold. Folks, the american, junius and Garth don’t get it. It will sell. It will be bulldozed. Another 1 to 2 million poured into a new home with CASH and NO MORTGAGE. Garth how many years decades can you be wrong but yet so adamant. Folks that house could be picked up for 500k 10 years ago and now going for almost 10times. I can assure you Garth’s balanced portfolio would not attain those returns in a 100 years. All these posts go to show what a sham Junius and the american are. The prices tell the story.

#104 BPOE on 06.03.11 at 2:58 pm

Folks rent is 3 grand a month or $36000 lost forever. Over the last decade that equals $360 THOUSAND down the toilet. 10 years ago you picked up that house for 500k and now a multimillionaire. Yet the american says this is BAD? Look at the FACTS. Who is telling the TRUTH

#105 debtified on 06.03.11 at 3:10 pm

#80 Trailer Park Boys on 06.03.11 at 12:48 pm

Will owning a penthouse pad help you get lucky tonight?

“Women see windows – and skirts come off,” he says, adding that bleak economic times make seduction a cinch.


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

I must admit, I have met plenty of women that will make this assertion so true.

However…

What an expensive way to pay for sex! There are way too many more, and better (and way less expensive!) ways to get laid with far more desirable women. I mean, if these are the kind of women you’d want to score with, you might as well hire an escort – your mortgage interest will more than cover the cost plus you don’t have to worry about avoiding a phone call in the future.

The best sex is with a woman who insists on splitting the dinner bill with you earlier that night. Nothing’s more attractive than an independent woman who knows what she wants and gets it.

#106 BrianT on 06.03.11 at 3:13 pm

#80Trailer-OTOH that comedian can’t do it with Ahnuld’s maid-she has already banged a guy with a bigger house.

#107 Cookie Monster on 06.03.11 at 3:30 pm

#87 disciple on 06.03.11 at 1:25 pm

Good job, you’ve already self separated one of the nuts.

#108 Nostradamus Le Mad Vlad on 06.03.11 at 4:06 pm


“I was attacked. Of course, I decked him. — Garth”

Hmmm. I had figured a convoluted computer conspiracy virus theory, leading to intended consequences from multitudes of oddballs of different kinds, the ones who don’t care for what you’re preaching, and to whom you’re preaching it to.

We have become the enlightened ones, and our adversaries, the opposites don’t like it one little bit.

For Sherri: Listen to and follow #13 Victor’s advice — “PS – Take Garth’s advice…sell, rent and invest!” — Can’t go wrong.

*
#220 dosouth on 06.02.11 at 7:03 pm — Duly noted, dosouth but we generally agree the whole market has slowed significantly.

In the very early ’90s when we lived in Port Coquitlam, I always noticed ads in the classified section of papers — 10 acres for $50K or less, and that was one of the reasons we came here — to buy land, hold it for a decade or so then sell it.

Ahhh, but life had other ideas — we bought in Kelowna when a job opened up in 1992, and have been here ever since. Wouldn’t go back there at all!
*
Offshoring destroys economies, esp. NAmerica’s, and Diesel up 15% in UK as supplies run short. Banks create wealth If so, why did banks get bailouts from govts.? Good reason here. Jobs drying up.

8:28 clip FF on Chicago’s Sears Tower? War Zones in the US. Forty Signs the Chinese economy is wiping the floor with the US economy. Critical Mass is almost here, but it’s not my bellybuster!

Europhrenia and Schizophrenia What’s the difference? Apparently, the m$m has caught on (at last). GD2. Downsizing Not to everyone’s taste. 7:12 clip Why the m$m is trash, and everyone else isn’t.

Empty Cities “If all of these cities (Beijing and Shanghai) were to be destroyed, hundreds of millions of Chinese refugees would need a new place to live… and these new ‘built from scratch cities’ might be just what is needed.”

Twenty Cellphones with the most radiation, and Cancer from cell phones.

Monsanto et al Farm Wars spreads the message.

The French Connection between DSK and NYPD.

#109 noworries on 06.03.11 at 4:07 pm

g2thaBLA

Why not? If the housing market stabilizes ill up my downpayment to reduce my monthly payments. If it comes crashing see u later and rebuy thru other means…

#110 kilby on 06.03.11 at 4:07 pm

#94 GMC Well said, so logical. I had no idea we were so lacking in gold, wonder which bunch sold it off?

#111 Neo on 06.03.11 at 4:11 pm

at #102

Our credit bubble (housing bubble) hasn’t popped yet. But it will. That’s why.

#112 Rob on 06.03.11 at 4:30 pm

Karl,

Edmomton is not crashing because it has been melting for a couple of years now.
Not sure where you get your data, but you can find the real stats here:
http://edmontonrealestateblog.com/

Average single family is about $15000 cheaper now than May last year. Listings are high, sales are meh. Perhaps no crash but we are on several years of no upside.

That blog is run by honest realtors that post the stats every Friday.

#113 Cowboy_aka_My_View on 06.03.11 at 4:33 pm

Jus sayin….

Looking for a 4-5 year investment?

Rewind less than 4 years ago…..load up on all the 0/40 mortgages you can get and squirrel away as much gold & silver possible!

Sell now? Wait for 2012? Get greedy 2013?

Decisions……..

If it where that simple…….

#114 robert james on 06.03.11 at 4:41 pm

When HAM goes bad… Judging by the comments I think there would be many that would offer to drive these people to the airport if they decided to leave Canada.. Hooray for UBC !!! It is about time that someone stood up to this absolute BS.. Ghosts,,my foot!!! http://www.theprovince.com/business/hospice+approved+despite+residents+concerns/4884345/story.html

#115 jess on 06.03.11 at 4:56 pm

loan to own ya due diligence
French banks that held €31 billion of Greek bonds,
German banks with €23 billion, and other foreign investors.

..”“I won’t pay” movement as Greeks refused to pay road tolls or other public access charges. Police and other collectors did not try to enforce collections. The emerging populist consensus prompted Luxembourg’s Prime Minister Jean-Claude Juncker to make a similar threat to that which Britain’s Gordon Brown had made to Iceland: If Greece would not knuckle under to European finance ministers, they would block IMF release of its scheduled June tranche of its loan package. This would block the government from paying foreign bankers and the vulture funds that have been buying up Greek debt at a deepening discount….”

Friday, June 3, 2011Replacing Economic Democracy with Financial Oligarchy
By Michael Hudson
==================

The Fed. “keystrokes”
bank”profit” is only due to loan loss provisions

Thursday, June 2, 2011Randall Wray Interviewed on The Real News

#116 ballingsford on 06.03.11 at 4:57 pm

#13 Victor on 06.03.11 at 6:55 am

This one’s for you Sheri…

http://www.youtube.com/watch?v=AapxXRlsdwA

PS – Take Garth’s advice…sell, rent and invest!

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

Thanks for the link, it’s been a while since I heard ‘O Sherry’ by Frankie Valli and the Four Seasons! Love it!!!

I need to get that song and others on my personal listening device (Ipod, Zune, etc). It sure would put me in a good mood when I arrive to work after listening to them on the bus during the commute to work.

#117 Scalgary on 06.03.11 at 4:58 pm

#100 Bill Gable

If Learning free about investing wise is squirrel hunt for you then you might be running a higly profitable massage centre…

I dont mind hearing your success story…

#118 Fat Bastard on 06.03.11 at 5:18 pm

Dear Garth,

As long as Chinese and Iranians (Only rich ones with government ties which gives them blood money or drug money) are able to buy these houses in Vancouver the prices will go up. Others like my wife and I are trying to make ends meet. I have been looking for a job for the past 6 months here, and seeing falling wages to $60K per year from $75K. How could an average working stiff afford a shitty old house for $1+ million? But so called investors with blood or drug money are buying up everything. So is it fare to say that Communist system Won and Capitalist system lost and our politicians let it happen.

Sincerely,

Fat Bastard

#119 Soylent Green is People on 06.03.11 at 5:20 pm

There is no such thing as a woman who insists on splitting the dinner bill with a man and then having sex with him.

Give your head a shake Mr. Cheapo

#120 ARES on 06.03.11 at 6:01 pm

The area where that tear down house is is prime real estate. House worth -$10,000 (cost to tear down).
2 new houses in that area sold for over $3,900,000 in April 2011. Lot is probably worth $1,800,000. New house cost+ $900,000.

Trust me, I think real estate values will tank in the years to come, but Garth if you invested $3,000,000 and hired me last year as your contractor you could turn that into $3,900,000+ (less realtor fees etc.).

If Carney keeps interest rates at 1% this will continue.

#121 Karl Hungus on 06.03.11 at 6:17 pm

#112 Rob

I get my stats from the same place that that blog does – edmonton real estate board. Those %’s are month over month btw.

I know that Edmonton had a slow melt, thats the point. There is no such thing as a Canadian real estate market, the country is too large and there are too many micro economies. Thats the problem with Garth declaring “the crash is here”, some places are up, some are down.

You cant have a blanket statement for the whole of Canadian real estate.

You will. — Garth

#122 Borrow As Much As You Can on 06.03.11 at 6:19 pm

If you go bankrupt just leave Canada in financial ruin. Canada is not a country you care about. It’s a place to rob and steal and borrow and spend as much as you can. Get rich and get out(good plan). That is what the conservatives are all about. Join the spend and never pay back party. I would bet over 90% of the mortgages are lent out to people who borrowed their downpayment and have no skin in the game. I know many people who borrowed to get their home and then used the HELOC to put down a downpayment on an rental investment. The BoC is telling you all to borrow like there is no tomorrow and when tomorrow comes you go bankrupt. The goal is to bankrupt Canada to the IMF and then they own all of Canada. Might as well enjoy the party like everyone without money is doing right now. We all know if interest rate went to 5-7% and/or the CHMC stopped backing sub-prime loans the house of cards would fall apart just like our Americans friends. The party will end but who knows when. Might as well enjoy it. Max out your credit cards and borrow any money the banks are willing to give you. I’ve given up living within my means. Bought a home in my name only as wife doesn’t like the thought of going bankrupt. Going bankrupt is like doing number two as you do it and walk away felling good and lighter then going in. Why waste your time working and saving money when you can just borrow? My wife’s only worry is could they come after her if she is working and they come for my debts? BTW I would quit working if I had to and work for cash with BIL at reduced earnings (25%) from what I currently make now. Does anyone know if they can come after wife? That is my only worry.

#123 Trailer Park Boys on 06.03.11 at 6:22 pm

I think we should pass the hat for our Greek brothers.

I mean , they gave us a lot of BS we never ended in school…but the foods damn good.

Solidarity to stop the Goldfinger Sachs guerrilla warfare

We are gonna armour plate our shopping karts….Randy can watch our dope ..we’ll buy him a T -Shirt for him when we get back

#124 Trailer Park Boys on 06.03.11 at 6:37 pm

#105 debtified

oh yeah..right on..

women should be put on a pedestal…they are the goddesses of life (plus that way you can shine up your rubber boots and see the reflection).

men that are sexist are losers..one should support womens equality….that way they want to try and prove they are equals….at least as bad pigs as men or worse…it is our duty as member of the XY chromosone club to roll over like an itchy chihuhau and let them have their way with us… Don’t make them beg too long, thats not very chivalrous

If you have a Z chromosone, you will vote NDP and be in condo lineups till 50….

BTW…lots of unemployed BQ polticians at the trailer park…we told them we can’t understand them…maybe go back and learn English

#125 T.O. Bubble Boy on 06.03.11 at 6:45 pm

@ #78 Mr. Plow and others:

I hope you realise that if you (or a HAM) were to buy the entire property in cash, the investment comparison is just as bad.

$3000/month in rent (what the current owner is getting)

vs.

$2.489M @ 5.5% in Preferreds = over $11,400 in income (all dividend income, taxed far lower than normal income)

Is that really any better?

Indeed. The preferreds would pay $136,895 in annual income. — Garth

#126 wetcoaster on 06.03.11 at 6:46 pm

Sooner or later there will be a disconnect between the HAM and the average Joe and it won’t matter how much dirty commie money they have.

By the looks of the lower prices out of Vancouver and Victoria, though slight, it is going to be sooner. The hottest market time of the year is over, no more easy money = game over.

#127 Mr. Reality on 06.03.11 at 6:48 pm

#42 Abitibidoug on 06.03.11 at 10:19 am
@Lisa, #18;
“I’m puzzled, how could so many people NOT see we’re in a bubble? Is there anyone left in the world that remembers how the real estate market dropped in 1982 or 1990? We’re constantly flooded with news and media from the United States, our nearest neighbour and the biggest economy in the world. In fact it’s a constant uphill battle to keep our culture and identity from being drowned out in a sea of Americanism. With all this American information, doesn’t anyone see a parallel with the U.S real estate market?”

I read a harvard study a couple years back that claimed humans are hard wired for denial. They claimed that denial was a part of a series of survival mechanims within the brain that help humans cope with life…..Look at how many people you know that cope through denial to get through life. They are a dime a dozen.

That is the beauty of investing and history. Sheeple in denial replicate historical patterns of behavior. Look back into history and see what excess debt in society did to the economy. Look back at past bubbles and stock market crashes. The biggest losers were the people in denial = the masses.

People are programmed not to see. Add in the media, government and social pressure and you have a period where there never has been more denial of the obvious in human history. Look at how greed affects denial………”I’ll buy a 750k house because in 3 years it will be 1.2 million, 5 years it will be 3.0 million”. These statments happen everyday based on one thing only — denial. “The markets will never go down, this time it is different.”

Denial + greed = Mr. Reality makes big money shorting.

Your money should now be moved into shorts, low risk fixed income or cash.

Mr. Reality

.

#128 Hoof - Hearted on 06.03.11 at 7:06 pm

Quintet draws big crowd

http://www.bclocalnews.com/richmond_southdelta/richmondreview/business/123137478.html

QUOTE:

The demand for quality new downtown Richmond condos continues to seem unquenchable, the latest example being the second phase of Quintet.

Sales doors won’t open until 1 p.m. Saturday, but prospective buyers were already lining up three days earlier, the first at 9 a.m. on Wednesday for a shot at one of the 306 units that could become available.

By 4:30 p.m. on Thursday, 109 people had obtained registration numbers to buy a unit at the future site of the residential complex at Firbridge Way and No. 3 Road which will boast a private, elevated, two-acre park.

==============================
QUOTE:

Many huddled under canopies, sitting on plastic chairs, with black, white and red blankets all provided by Quintet’s developer. Food and beverages were also being offered up to interested buyers, who needed to remain on site to retain their registration numbers, with a roll call held every couple of hours.

Some slept in their cars, mostly BMWs and Mercedes, others played cards, and all appeared to be of Chinese descent. They were also offered free wifi to watch Wednesday night’s Canucks hockey game.

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

QUOTE:

Buyers are also being lured by the prospect of winning a stunning, white, $211,000 Audi R8 Spyder convertible sports car with a V10 engine. To enter, no purchase is necessary, and entrants must write a 1,500-word essay outlining why they love Quintet. The contest closes on Nov. 30, and is open to residents of Canada, the U.S., Hong Kong, China, Japan, Malaysia, India, Signapore, South Korea, Taiwan, Vietnam, Australia, the United Kingdom and Germany.
Many huddled under canopies, sitting on plastic chairs, with black, white and red blankets all provided by Quintet’s developer. Food and beverages were also being offered up to interested buyers, who needed to remain on site to retain their registration numbers, with a roll call held every couple of hours.

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

OK that’s enough time to rise up and shut the borders……..if this ain’t a scam, what is?

#129 RoninBC on 06.03.11 at 7:14 pm

what a bargain! Why tear it down when the rental income is so high? Love the awnings.

http://vreaa.wordpress.com/2011/06/03/westside-50-lot-no-waterfront-no-view-ordinary-street-asking-price-2489000/

as they say, the west side is the best side.

#130 Nostradamus Le Mad Vlad on 06.03.11 at 7:31 pm


#118 Fat Bastard — “. . . that Communist system Won and Capitalist system lost and our politicians let it happen.”

Better to ask Obama and his backer, George Soros. Both are left-leaning and have read Karl Marx’s writings. As far as politicos go, they are thrown a few glitzed-up dust bunnies, to buy them off and keep their mouths shut. Better to talk with a brick wall.
*
From wrh.com: “In the end, “debt” is a myth, like “divine right” and “Chattel ownership of slaves.” It creates a sense of obligation only so long as people believe it is real.”

Europe Taking matters into their own hands, and damn the consequences. Cooked Goose We’ve just been lowered in the pot of boiling water. 10:22 clip Greenspan on unemployment — TV. Not Too Big To Fail Moody’s may cut ratings.

Blood Drinking Zombie Cannibals Not the Monty Python sketch. Understated Unemployment levels higher than GD1. Greenshits Spinning the numbers doesn’t add up.

WW3 Does Russia have a major role to play? Or China? Do bears crap in the woods? NATO — Freeing Africa from the African people. One of these days, they’re gonna bite off more than the can chew, then choke on their own failures. 1:11 clip TEPCO warns waste-water may overflow. Bacteria We’re all bacteria on the face of the planet.

GM Crops and E.coli. “Several experimental and commercial genetically-modified plants, including GM cotton cultivated in India and other countries, make the Cry1Ac protein which is toxic to some insects. The insects die when they try to eat parts of these GM crops.”

“And there we have a probable cause of Colony Collapse Disorder killing off the honey bees.” wrh.com. Combined with excessive cellphone use, jamming bees frequencies.
13″33 clip The Great Global Warming Swindle. Worth watching, then belching more emissions into the air!

Hackers Speculation time.

Iran “All of this wealth is the result of imposing poverty upon other countries,” Ahmadinejad said, adding that “the American and European people are too held captive by the cruelty and injustice of their corrupt leaders.”

8:05 clip “How the NSA, CIA and multi-national corporations work to take world resources.”

#131 Onemorething on 06.03.11 at 7:57 pm

Garth, how about providing your own Rent vs. Own Reality Calculator? Call it the TURNER REALITY CHECK!

It’s gonna be bitter sweet when all these predictions become reality. The Canadian Home is a House made of cards.

#132 Hoof - Hearted on 06.03.11 at 8:18 pm

Winston Churchill

” Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery “.

#133 Bill Gable on 06.03.11 at 8:37 pm

Holy Canoli!

“China has dropped 97 percent of its holdings in U.S. Treasury bills, decreasing its ownership of the short-term U.S. government securities from a peak of $210.4 billion in May 2009 to $5.69 billion in March 2011, the most recent month reported by the U.S. Treasury.
Treasury bills are securities that mature in one year or less that are sold by the U.S. Treasury Department to fund the nation’s debt.
Mainland Chinese holdings of U.S. Treasury bills are reported in column 9 of the Treasury report linked here.”

http://tinyurl.com/3l57u75

#134 Bill Gable on 06.03.11 at 8:42 pm

One more REALITY CHECK: (*Sure buy a condo on a golf course in California – go ahead_NOT!!) >

We’ve Got Depression-Level Unemployment

Unemployment is currently underreported. Even government officials admit that their “adjustments” to unemployment figures are inaccurate during recessions.

In addition, the most widely-cited statistics use the Department of Labor’s Bureau of Labor Statistics’ “U-3” methodology. But “U-6” figures are more accurate, because they include people who would like full-time work, but can only find part-time work, or people who have given up looking for work altogether. U-6 is also is closer to the way unemployment was measured during the Great Depression than U-3

Current levels of unemployment are Depression-level numbers, especially when compared to Darby’s figures.

For example, economist John Williams puts current U-6 unemployment at 15.9%. That’s higher than 9 out of 12 years charted by Darby.

And there are certainly Depression-level statistics in some states. For example, official Bureau of Labor Statistics numbers put U-6 above 20% in several states:
California: 22.0
Nevada: 23.7
Michigan 20.3
(and Los Angeles County has 24.1% unemployment, higher than any of the Depression years as reported by Darby)
Williams puts SGS unemployment – which he claims is the most accurate measure – at 22.3%. That’s higher than 11 out of 12 years charted by Darby.

Youngstown State University’s Center for Working Class Studies puts the “De Facto Unemployment Rate” at 28.76%. I’m not sure if that compares to methods used during the Great Depression, but it surpasses all 12 out of 12 years charted by Darby.

http://tinyurl.com/3fp36h9

#135 Siddelly on 06.03.11 at 9:09 pm

#86 Hoof – Hearted

Very important when selling to flippers- Non-Refundable Deposit written on the sales contract with all parties signing. Another important fact is when your agent represents the buyer, it is known as Dual Agency no matter what you think or what your agent claims. When the buyer and your agent both speak a language that you may not be proficient in, there is the potential for malfeasance.

By the way, how are you gonna keep them on the farm once they’ve seen Karl Hungus?

#136 Mr Buyer on 06.03.11 at 9:20 pm

I have to say that quite a few people I have met, that are looking at Canada from the outside, have no problem stating that a RE bubble now exists in Canada. They are particularly amazed by the home equity loans that Canadians routinely obtain. Imagine if prices remained as they are. It would put an end to the economy in relatively short order. I am guessing that people understand this and are betting upon getting in and out of the bubble before it bursts. I am imagining people are saying RE is great to preserve the number of buyers as long as possible. I also have to wonder about these hordes of people competing for properties. I looked at many houses a few weeks ago. I went to the first house in the morning and there were 4 other people there to see it. I immediately felt more compelled to make an offer on the house (it was only my past experience as a salesman that attenuated that impulse and allowed me stick to my plans and to take the time to look closely at the house). Upon close inspection of the house I could see at least 30k worth of work to be done not counting replacing the siding that was clearly installed by amateurs. I was a home electronics salesman so do not start flaming me as a RE salesman. I do not know if all salesmen are the same but I told my customers the truth but I presented it artfully and in a context that minimized the implications of said truth. One mathematically adept customer quickly surmised that the store financing lead to the goods costing double. There I was with my pants down and red faced and in a panic I desperately blurted out that yes it costs double but not if you pay it off early. Right in front of my eyes this fellow’s look of concern disappeared and he made the purchase. After that I introduced our store financing as a purchase option the could lead to the merchandise costing double but not if you payed it off early. A year later I had only one customer come in after making a purchase and ask about the expense of the financing. I agreed that it costs double and I reminded him that I pointed that out to him before he made the purchase. The man acknowledged that I had done so and went on his way. Honesty is the best policy (whenever possible) but was I really being honest when I was at the same time presenting the facts in a context that minimized their implications. Some say buyer beware and it is the fault of the buyer but the buyers were not well prepared and have little opportunity to acquire the experience needed to be prepared. High school would be a great place to go over the psychology involved in various types of sales and the art practiced in sales. In the environment that has prevailed recently I am guessing it would not take a high level of art to do well in RE sales but I am wondering if that will be the case from this point forward.

#137 Burnt Norton on 06.03.11 at 11:11 pm

#122 Borrow As Much As You Can on 06.03.11 at 6:19 pm

“If you go bankrupt just leave Canada in financial ruin. Canada is not a country you care about. It’s a place to rob and steal and borrow and spend as much as you can. Get rich and get out(good plan). That is what the conservatives are all about. Join the spend and never pay back party… The goal is to bankrupt Canada to the IMF and then they own all of Canada. Might as well enjoy the party like everyone without money is doing right now… Max out your credit cards and borrow any money the banks are willing to give you… Going bankrupt is like doing number two as you do it and walk away felling good and lighter then going in…”

——————————————————–

You are BPOE, n’est ce pas? Same ISP, right Garth?

Inciting purposeful / planned bankruptcy. Hmm. Even if you are FOS, I wonder if the RCMP white collar division would be interested in knowing more about the fact that you are publicly promoting your scheme? I bet your bank manager would want to know.

SECTION 380 OF THE CRIMINAL CODE

The offence of fraud is created by s. 380 of the Criminal Code. The offence is defined as follows:

380 (1) Everyone who, by deceit, falsehood or other fraudulent means, whether or not it is a false pretence within the meaning of this Act, defrauds the public or any person, whether ascertained or not, of any property, money or valuable security or any service,

(a) is guilty of an indictable offence and liable to a term of imprisonment not exceeding fourteen years, where the subject matter of the offence is a testamentary instrument or the value of the subject-matter of the offence exceeds five thousand dollars; or

(b) is guilty
(i) of an indictable offence and liable to imprisonment for a term not exceeding two years, or
(ii) of an offence punishable on summary conviction, where the value of the subject-matter of the offence does not exceed five thousand dollars.

#138 Tony on 06.04.11 at 12:51 am

#46 free advice?

The stock market is more overvalued now than when it crashed in ’29 or in 1987. America is now the land of liars everything that comes out of that country is now a total lie from GDP to company profits. The last thing in the world to be in right now is long stocks even more so than Canadian real estate. My guess is Canadian bank shares will lose about two-thirds of their present value over the next two and a half years.

Then hope you don’t have GICs. — Garth

#139 betamax on 06.04.11 at 4:24 am

#91 BB: “If Garth had pointed out that it was for land value, there would be no “shock value.””

Right. Nothing shocking about that lot going for $2.5m

#140 betamax on 06.04.11 at 4:30 am

I mean, it must be prime ocean-front property, right?

Wait…it’s where?