Parental abuse

Enough about house-horny Asians. We’ve an endless supply of home-grown fools, which means I am never quite finished doing the Lord’s work. She apparently has a sense of humour. Just to prove it, here’s Thomas:

Hi Garth: I appreciate the information you provide on your blog (and books) and believe that it has no doubt helped a lot of people avoid disaster. I’m hoping you could help me out from having to feed my parents in their old age. Here’s the scenario, my parents (65+ – Dad still working in construction at 69 yrs) have decided to become debt slaves:

Assets: 2.5 condos (total current worth, I’m guessing is 640k), RRSPs, about 10k – and that’s it – well they do have 3 “kids”…

So given that they only have about 98% of their net-worth in real estate, they’ve decided that they want to bump that up to a healthy 99%. One of the three “kids” is going through a messy divorce in a European country and wants to bring her two kids (and dog) with her back to Canada. She is a nurse, but needs to jump through a bunch of hoops to get certified. So her prospects of immediate work in Canada are uncertain. The parents want to buy a condo, as “It’s so hard to find a place to rent with pets”, for her and the kids for about 340k. The down payment and mortgage being fully funded with credit.

My dad thinks that given the amount of construction still going up, and the desire for people to live here will keep prices up (of course it’s different here). I’ve tried telling them about the downturn that has started, but it’s not getting through. I’ve told them I will send them a link to read, and they’ve agreed at least to that. Feel free to respond on your blog in any way that could be helpful for them to see the “retirement” they can expect.

Thanks a bunch, TMP

PS. the offer is already in.

OK, dude. This was your idea. I will not be held responsible for parental rage, ostracism, shunning, cutting out of wills, verbal abuse, embarrassing public scenes or (shudder) endless waves of guilt.

Dear Thomas’ Parents:

Out of boundless love for you, and courageous disregard for his own personal well-being and future mental health, your son has asked me to pen a few words of advice on your hopelessly flawed plan to buy another condo, plus the financial crisis and retirement abyss which awaits you. How are you?

I’m told you currently have an investment portfolio of some $650,000, of which only ten thousand is liquid. The assumption is you plan on retiring with an income stream from rent, in the absence of anything other than the CPP you’re entitled to. As the condos in question are worth less than $300,000, I’d imagine the rents for these one-bedroom units would be in the $1,200 range – which is likely less than $800 after strata/condo fees and property tax. So, that would yield (on 2.5 units), about $2,000 a month, or $24,000 per year. With the maximum CPP (if you both qualify), your total income would be $47,040.

Of course, rental income is added to pension income, and taxed as such, which means you’d end up with $39,000 to live on – or $3,250 a month. And you’d better pray that none of your buildings have any leaks or structural issues, and that your units are rented 100% of the time to people who always pay up and never trash the place or try to flush any deceased iguanas.

By the way, $24,000 in rent represents a return of 3.7% on the $640,000 you invested. Yes, that’s GIC territory.

Oh, and let’s hope the real estate market doesn’t tank (and I’m assuming you have no financing in place) because if it does, so will rents. You see, Mr & Mrs T’s P, condos are a weird thing. You actually own just what’s inside the paint, and yet assume a share of all liabilities and depreciation. There is no land, no actual stone or brick, that is yours. This makes condos real estate’s canary in the coalmine – where valuations can swing wildly based on supply and demand and fad.

And because they’re easy to buy (you proved that), too many speckers and investors do so. Yes, they probably know rents hardly make it worth the bother, but figure prices will climb without limit. This is why they’re fools. We are clearly at the top of the real estate curve thanks to a staggering economy, average prices average people can’t afford, an aging population, the certainty of higher rates, tighter credit, investors delusion and the certitude Asians will flock off the way they flocked in.

Now, imagine you wisely sold those places and invested $640,000 in a nice, conservative balanced portfolio of 50% fixed income (corporate and government bonds, bank preferreds, REITs etc.) and 50% diversified growth assets (low-cost sector and index ETFs spread across regions, sectors and various capitalizations) and achieved 7% – the average stock market return of the past few decades. Your income would be about $45,000. Add in the CPP, and the total would top $68,000 – a gain of $21,000. After tax (dividends and capital gains are taxed vastly lower than rent money), you’d have about $58,000, or $4,800 a month.

So, to summarize: Own condos and live on $3,250 a month with the near-certainty of your units will fall in value and become somewhat illiquid. Or, sell the condos, invest prudently, and have 47% more income, no tenants or iguanas, plus flexibility.

Or, borrow $340,000 with 0% down to house your loser daughter, instantly inflate your risk and see your retirement cash flow halved. Which apparently is what you deserve.

Thomas sends his love.

Thomas? Where the hell did you go, man?

 

194 comments ↓

#1 Hoof - Hearted on 06.05.11 at 9:40 pm

11111111111111111 rrrssstttttttttt

#2 Rafa on 06.05.11 at 9:41 pm

I’ve been trying first many times but i’m losing hope…

#3 jas on 06.05.11 at 9:42 pm

Garth,
good post and good explanation with numbers.

However I don’t agree with you when you say:
Or, borrow $340,000 with 0% down to house your loser daughter

We don’t know the circumstances of their daughter’s personal life. Calling her a loser is not right.

#4 Mister Obvious on 06.05.11 at 9:42 pm

Damn! Regardless of what people may think of your message you are a most entertaining writer Mr. Turner. Very rarely seen in an economist type I might add. (No dawgs, he didn’t pay me to say that).

#5 Trailer Park Boys on 06.05.11 at 9:44 pm

Yeah..

We are having the Illuminati, Bilderbergs and Freemasons over for a Keg party.

Man……. are they sucking the brewskies down…any of you have requests while we have them over a barrel ( literally and figuratively )?

They are starting to eye our sheep….should we call the SPCA ???

#6 Ralph Cramdown on 06.05.11 at 9:45 pm

Garth, that’s so unfair. Most condos come with the equivalent of about 100 square feet of land — and they’re not making any more of that! When the time comes, all you have to do is convince 249 other unit owners of your vision, and you can all redevelop together.

#7 TurnerNation on 06.05.11 at 9:45 pm

Everyone knows, Ft. McMac is an overpriced hole!!

VANCOUVER (NEWS1130) – WestJet is famous for using humour to keep passengers entertained while in the air, but some feel a recent comment went too far.

While en route from Vancouver to Fort McMurray, one flight attendant poked fun at the northern Alberta city, asking “Who does not want to go to Fort McMurray?”

It just so happened that the mayor of Fort McMurray Melissa Blake was on that flight, and she tells News1130, several passengers, including herself, were not impressed.

http://tinyurl.com/3esxn64

#8 confused on 06.05.11 at 9:47 pm

first?

#9 xyz on 06.05.11 at 9:53 pm

awesome

#10 SWM on 06.05.11 at 9:54 pm

No comments on the TREB numbers that were just released?
Sales didn’t ‘crash’ , ‘plummet’ or go into free fall this time. They were up despite mortgage rule changes. Listings down 15%.

Where have you been? — Garth

#11 Marshal on 06.05.11 at 9:56 pm

What the !#@! is the deal with all these idiots who think it means something to be the first to post? It’s moron central here!

#12 mississaugasold on 06.05.11 at 9:56 pm

LMAO at this post

#13 kc on 06.05.11 at 10:02 pm

“Assets: 2.5 condos (total current worth, I’m guessing is 640k), RRSPs, about 10k – and that’s it”

One thing missing here… are they 100% paid off? If they are carrying a debt then this tosses another problem into the mix.

#14 Rachel on 06.05.11 at 10:08 pm

I wonder if those 2.5 condos (how the hell do you own half a condo?) are owned outright. They’re probably servicing debt on those, too.

#15 Andrey on 06.05.11 at 10:09 pm

…well-being and future metal health, your son…

Probably should be …well-being and future meNtal health, your son…

Yes, PFS. — Garth

#16 ucatzoduro on 06.05.11 at 10:10 pm

Thomas went to try and convince Chinese to outbid his parents on the condo for his sister.

#17 Min in Mission on 06.05.11 at 10:13 pm

Great post!! Made me laugh, in a sad kind of way. No way that I would want to be working in construction @ 69 years old. Barely manage it now @ 60!! Things could be worse, the parents might not have anything. They may not be working the “right” plan, but, at least they have a plan of some sort. Many people, that I know, have no assets and no plan. After a long life of errors and mistakes, I am barely getting started, just in time to quit!!

#18 T.O. Bubble Boy on 06.05.11 at 10:18 pm

1994: Vancouver Canucks make Stanley Cup Final, and housing peaks.
1995: Vancouver Housing Market Crashes

2011: Vancouver Canucks make Stanley Cup Final, and housing peaks.
2012: Vancouver Housing Market Crashes

In both hockey and real estate in Vancouver, everything will turn out fine if you just wait 17 years.

#19 TaxHaven on 06.05.11 at 10:22 pm

“…achieved 7% – the average stock market return of the past few decades.”

That’s another big “if” for mom and pops.

The recession/depression we are entering is more serious than it appears to be on the surface. It could be different this time: how ong have central banks had the pedal to the metal, waiting and waiting in vain for an economic “self start” to take hold?

It won’t, is my bet. Not for YEARS. Falls in real incomes, in employment and in business profitability have been masked by massive government overspending and money-printing chicanery – to the point that no one really has a clue how much of this economy is “real” and how much would fall over backward at the first puff of austerity…

Bonds will yield a miniscule income – likely to be overrun by inflation anyway. Stocks, ETFs and preferred shares currently are price for “recovery” and carry financial obligations that the issuers will soon have trouble meeting.

I predict the parents and their 2.5 boxes-in-the-sky will be in trouble however they try to finagle this…

Sigh. Another post from someone who misunderstands fixed income. — Garth

#20 Hoof - Hearted on 06.05.11 at 10:24 pm

Listen….people who beatch about those who are 1st are simply jealous.

Being first is based on a lot of intelligence and strategy, God’s will….its much like HAM Darwinism.

BTW me and Garth will have a weekend seminar in Fart McMurray on how to be 1st on this blog….early birds get 50% off. Otherwise STFU (+HST).

We will leave spots for those BSing tradesmen that sat they make $160,000 per annum.

#21 wicked as it seems on 06.05.11 at 10:27 pm

hang on! And Thomas’s dad is still swinging a hammer at 69 as well? The whole presentation is floored!

#22 Mr. Reality on 06.05.11 at 10:28 pm

#3 jas on 06.05.11 at 9:42 pm

Garth,
good post and good explanation with numbers.

However I don’t agree with you when you say:
Or, borrow $340,000 with 0% down to house your loser daughter

We don’t know the circumstances of their daughter’s personal life. Calling her a loser is not right.

When your mommy and daddy have to bail you out…..you lost……you are a loser. Winners don’t get bailed out by mommy and daddy.

Hide the decline

Mr. R.

#23 John on 06.05.11 at 10:29 pm

You lost me at the ‘loser daughter’ part. Maybe you know something you didn’t share with us, or maybe you
you just aren’t a very thoughtful person.

#24 Joe on 06.05.11 at 10:30 pm

I agree with Garth, the daughter is a loser. If you are old enough to have got married, had kids, moved to a different continent and got divorced, you are old enough to be taking care of yourself and putting your own roof over your head. It doesn’t matter what her circumstances are, there is no way they can be nearly as bad as her 60-something-year-old parents with 10K in cash, working in their retirement. That’s shameful.

#25 45north on 06.05.11 at 10:34 pm

Trailer Park Boys: We are having the Illuminati, Bilderbergs and Freemasons over for a Keg party.

can I get an invite? I need to talk to them to influence the direction of monetary policy etc.

look I’ll bring some home-made wine (Illuminati don’t drink beer).

[email protected]

#26 Aaron - Melbourne on 06.05.11 at 10:35 pm

VIDEO: ANZ Australia’s chief Phil Chronican discusses the threat posed by a collapsing housing market.

http://www.abc.net.au/lateline/business/items/201106/s3234312.htm
http://www.abc.net.au/lateline/business/items/201106/s3234315.htm

and same content covered by fairfax media

http://www.theage.com.au/money/investing/bank-exec-questions-negative-gearing-20110603-1fjq7.html

#27 martin on 06.05.11 at 10:37 pm

turner when can i ask you to dine and wine with me at The Keg just for the hell of it. i will bring my cousin to put some sense into him about his investments. let me know. you choose the time.

p.s. open bar for you!!!

#28 Sea Wave on 06.05.11 at 10:41 pm

Here’s another example of a couple of 60-somethings with the majority of net worth in their (for now) 1.7 million dollar house, and negative cash-flow of over 3000 per month, as funded by their HELOC (which is currently sitting at almost half a million).

http://tinyurl.com/68nllfg

The brilliant financial plan: sell the house in 3 years to fund retirement.

How many thousands of these dingbats are out there, all thinking the same thing?

Whoops …

#29 Tim on 06.05.11 at 10:49 pm

Does it ever make sense to own a condo? You don’t own the land. Half of them in Vancouver leak, much of the construction is shoddy, you can hear your neighbors beside underneath and on top of you. You have some control freak on the Strata council that has so little power in her life that she gets satisfaction out of being the strata natzi. There are so many rules. You pay $300-$400 a month in fees, which, in Vancouver can only go up, with the cost of everything.

#30 Bottoms_Up on 06.05.11 at 10:52 pm

Yes, PFS. — Garth
————————-
Perfectionist?

As a side note, recent activity in my neighbourhood in Ottawa has seen a drop in showings but the ones that do show up to the open houses all seem to be Asian. I wonder if some of that corrupt money is flowing into Ottawa?

#31 Thomas - TMP on 06.05.11 at 10:52 pm

Hi Garth,
Thanks for the breakdown of the numbers, etc.. unfortunately I have to agree with poster #3, that the one comment (about my sister) isn’t so nice. She’s saved countless lives in the operating room, raised her kids well, and I’m proud of her.
I may send an edited version to my folks, but that last comment would make almost any parent toss out anything you said before it.

#32 Kill the dog and rent on 06.05.11 at 10:53 pm

lol, I love how everyone gets caught up on the little things.

#33 Trailer Park Boys on 06.05.11 at 10:56 pm

#25 45north

yeah

Satan crashed the party and was pissed off when Bubbles beat him at rock -paper -scissors…

Satan lost his bet and had to release quite a few Goldman Sachs alumni….last thing we heard they were on economy flight to Fart McMurray, talking to pipefitters.

#34 Kim on 06.05.11 at 10:57 pm

what does PSF mean?

PFS – phat fingers syndrome. — Garth

#35 Randis on 06.05.11 at 10:58 pm

This is like a carbon copy to my friend’s situation. Father in 70s still working in construction, mom at early 60s working in some cheap cash part time job. Daughter works in government as a financial planner and between the 3 of them they own 5 investment properties and funny how they think a.) value can only go up b.) at 10% avg down they do not need to pay for mortgage and feed themselves on the full rent …
Even better, while making 70k+per year the daughter is actually moving into one of the rental units of the parents and live free without needing to pay rent … so that she can rent her own unit out and reeling in cash … I mean, WTF is this

#36 Bottoms_Up on 06.05.11 at 11:02 pm

Interesting take on what retirees might do:

“He added that the builders were “very pleased” that OMB also ordered the city to change a requirement that targets for intensified growth within city limits be met before any expansion is approved.

“That’s simply not possible,” he said, explaining that the requirement was based partly on the belief that so-called empty nesters will embrace life in condos rather than single-family homes.

“That’s very unrealistic. How do you put a gun to someone’s head and say, ‘Thou shalt move to a high-rise because the city says you should?’” Herbert argued. “They just won’t do it,” he said, adding that research shows seniors are among the healthiest and wealthiest ever, and tend to stay in single-family homes longer than previous generations. “We expect that trend to continue,” he said.”

http://www.ottawacitizen.com/news/Ottawa+takes+beating+Ontario+Municipal+Board/4897380/story.html

#37 charles on 06.05.11 at 11:06 pm

what the hell…..I think I am first and then notice I am like 20TH!

#38 not 1st on 06.05.11 at 11:06 pm

Another plan to risk your retirement in the ponzi stock market.

The guy is 70 years old, probably won’t see 85 after working all those years in construction. Sell the condos, live off the cash and have some fun until you can combine your CPP with OAS if you make it that far. There is no reason to put your savings into the stock market and sit there worrying which scumbag CEOs will steal it from you.

In fact I suggest getting the biggest loan you can in your old age and blowing it all and defaulting on it as you enter the coffin and let your life insurance pay it off. Enjoy the money, don’t fret about it investing it again.

#39 Ben on 06.05.11 at 11:08 pm

The brilliant financial plan: sell the house to fund retirement.

How many thousands of these dingbats are out there, all thinking the same thing?
——————————————————-

Is there anybody that’s purchased in the last couple years that isn’t thinking that?

LMAO

#40 Jed on 06.05.11 at 11:08 pm

Take a pill with the “loser daughter comments offends me” dribble. Poetic license, the thrust of the main argument, irony–do you understand what writing is about or do you just want to look at a series of numbers? Who cares about the daughter; its just a story to the reader about…

#41 Kim on 06.05.11 at 11:09 pm

In regards to ‘loser daughter….regardless of the situation… Work it out. Grown up already. Asking your Mommy and Daddy help after age 20?… come on.

#42 Bill and Barb on 06.05.11 at 11:09 pm

Hi Garth
Alternative view from two retirees:
We have recently retired from Alberta to the West Coast. We came on a recce mission three years ago and moved this year. We have so far viewed around 15 houses and follow around 50 on line.
Observations so far out of 50:
6 sales
18 removed and relisted. Day on market goes back to 0
22 “new prices”. some after a relist some just straight price drop – 100K of drop not unusual.
We have also viewed two houses that we first saw three years ago. Still for sale by same owners.
First one 2008 price 1.8 million / 2011 price 1.25 million. Still unsold
Second one 2008 1.7 million / 2011 1.4 million. Still unsold but recently relisted. Days on Market now 3 but has been for sale for three years. You figure it out!

Conclusion:
Do your own research. Work out your own statistics. The information is all out there.
Treat buying a house as you would running your own business. It is your money.
Ignore DOM – meaningless
Ignore asking price – fantasy

Realtors are not bad people they are just very good at what they do – Controlling the market, using selective and misleading statistics and maximising their fee.

We are happily renting with our money sensibly invested. Our time will come.

Bill and Barb

PS The name of the city where houses do not sell for three years – Victoria.

#43 Kelli on 06.05.11 at 11:15 pm

Why is it that people always look down upon renters. Me and hubby have a lot of money. Over a mil in cash and equivalents. When people find out that we’re looking for a house to rent in vancouver’s west side they totally give us the pitty look. Its so weird. Before you all get crazy about the amt of cash we have we carry 70% in investments – and none of it tangled in realestate, and no debt. Not even a leased car. why is renting so taboo? Why the pitty looks.

#44 Nostradamus Le Mad Vlad on 06.05.11 at 11:25 pm


The pic of WWE wrestlers, depicting parents as interfering, know-it-all portapotties is spot on (Parental Abuse), and Thomas’ parents don’t realize the enormous favor he (and you) are giving them. See Okanagan RE link further on.

“. . . I am never quite finished doing the Lord’s work. How are you?” — Fine, thanx. Art thou speaking of Lord Conrad A Whiter Shade of Pale Black? That’s the only lord I can think of, and he is still in the slammer!

“Thomas sends his love. Where the hell did you go, man?” — As far away as possible to avoid the fallout — parents generally don’t like being usurped by their smart offspring.
*
#18 T.O. Bubble Boy — Good comparison. What happens if the Canuckleheads take The Full Monty? Is a superquake included at no cost?
*
Okanagan RE down Plus Shuswap.

FEMA and the NMF Lotsa info., links and charts in. Cdn. Military #5 Trailer Park Boys — You forgot to mention the Rothschilds . . . Mind control from Harper (if that is possible). Plus Govt. doublespeak Look for it on this continent to scare sheeple shitless.

Fukushima The west coast is getting a little warmer. Libya NATO war crimes. Will they be called to task? Not a chance in hell! Plus No Rebels. It’s all a facade. This is why Saudi Arabia (then Iran) are next on the chopping block. When than takes place, Russia and China will be more than interested spectators.

Hunger Manmade via (unknowingly) by banxters; Germany and France put themselves on Shit Street to help Greece; The Big Fat Greek Sell Off; and Saint Bono Not so saintly.

Asteroids or Hemmorhoids? They’re flying past us, but getting closer.

Turkey Older than Stonehenge.

#45 Tom from Mississauga on 06.05.11 at 11:30 pm

69 years old and not afraid of borrowing 340,000. Boy I hope Flaherty tightens CMHC. This is lunancy. Would dad have to take a medical to ensure he can continue to earn for the next 30 years to get insured by the taxpayer.

#46 Increasing that 1% on 06.05.11 at 11:31 pm

#1. Hoof=FFFFFF***head!!!!!

So, if you’re going to allow those posts, then this should be allowed too-ooo-ooo-oooo

• Respectful, wide-ranging discussion on the topic of the posting is encouraged, and will not be censored. (#1.Hoof’s=not)
• Abusive, obscene or disrespectful commenters will not be published, and are subject to banning from this forum.
(Mine)

Ok, if it’s some kid or it gets a perpetual non-poster to begin to post then so be it but Hoof is a grown-up, and repeat offender.
Sometimes there are rules for a reason, Mr Turner. Is someone not paying attention? (I just love it when you say that….memories..) I don’t think your Father- a Principal none the less-would have approved. (spoken tersely)
———————————————
In regards to today’s subject- first reaction is the Daughter needs to take care of herself, herself, ….but, guess it depends on what stresses the parents out more–to help- or not to help–but then that could be helping

but, yeeeah, there are places to rent with pets- well-behaved ones. I see dogs around the hi-rises in TO all the time…and in my place I never hear them at all=no bother, no mess, responsible owners
There’s a section in the listing (that the Agents have access to) about pets allowed or not= Y, N or R (restricted)-if you go through something on MLS

#47 Devore on 06.05.11 at 11:34 pm

There is no way they would be able to use the capital gains from their portfolio as retirement income; to do so requires them to sell off their capital, which will reduce their future income (dividends etc) and capital gains potential. Obviously, it’s a strategy better than nothing, but a strategy with a time horizon.

#48 Dan in Victoria on 06.05.11 at 11:35 pm

Once again the predictibility of people is proved by Garths last paragraph.

#49 Axehead on 06.05.11 at 11:52 pm

Hey, the’ looser daughter’ comment was justified and besides, I didn’t start laughing until I read that – thanks Garth.

Near 17th ave (Calgary’s Red Mile) I was approached (again) by grocery cart man collecting bottles. There are so many of these guys…he talked to me and told me he was 62 years old. After he left, I told my daughter that there are going to be a lot more of these guys around who 1) never thought they’d end up like this 2) don’t have a choice – it’s empty bootles or the food bank or both.

People don’t change unless something shakes up their belief systems a bit…just maybe these future loosers can get angry or scared enough to reach that point…doubt it though, nice try Garth.

#50 Mean Gene on 06.05.11 at 11:59 pm

No mention of the 90 minus your age to determine the percentage of real estate that should be in your investment portfolio.

#51 Hashnugs Inthebong on 06.06.11 at 12:03 am

Pics of the loser daughter, or she doesn’t exist.

#52 Cato on 06.06.11 at 12:04 am

You can see the financial zombies wandering everywhere these days. Most of the early beneficiaries of the boom didn’t cash out chips and walk away when they had the chance – they got greedy, levered up and gambled. They are the architects of their own misfortune.

#53 Signpost in the bushes on 06.06.11 at 12:15 am

Carefully study the first three letters of the word condominium….

#54 Jason on 06.06.11 at 12:16 am

WOOF WOOF

#55 ARES on 06.06.11 at 12:16 am

I think the parents own 1/2 of Thomas’s condo.

#56 Mrs Loquacious on 06.06.11 at 12:31 am

No self-respecting adult with children should be relying on senior-aged parents to bail them out, period. When you become a grown up and make grown up decisions to get married and have kids, then you assume the grown-up responsibilities that come with those choices and you clean up your own messes, period.

#57 Kevin on 06.06.11 at 12:31 am

20 Percent Mortgage Down Payment Under Fire
http://www.cnbc.com/id/43257844/20_Percent_Mortgage_Down_Payment_Under_Fire

“Adversity makes strange bedfellows, and today’s mortgage market is nothing short of adverse. The group came together to argue against what Edwards called “draconian requirements” for a the proposed “Qualified Residential Mortgage” (QRM) standard. The QRM is part of new risk retention rules, mandated by the Dodd-Frank Financial Reform legislation of last year. The proposal, which is under comment period until the end of next week, includes a 20 percent down payment for a home loan to qualify as a QRM. If the loan does not meet the QRM standards, the lender must hold on to 5 percent of the risk.

They call that “skin in the game,” but banks big and small say it will make mortgages more expensive and difficult to obtain, while consumer advocates say it is nothing short of discrimination. ”

While the US is looking at ways to tighten mortgage rules, Canada is still giving out cash back, 0 down and even free down payment mortgages. Good thing Canada is conservative in their lending!

#58 reality guy on 06.06.11 at 12:32 am

Its kind of suspicious that all this HAM money is coming from china but there are no number to back it up.

The run up has been over 7 years. So I’m sure the banks should have some figure on foriegn investments into canada via housing.

Because of that and from talking to people during the open houses. I truly believe the majority of buyers are Locals outbidding each other. Example: my hairdresser who probably makes no more that 50 grands a year owns 4 condo’s/ townhouses.

sure there are some HAM coming into play but I bet you its probably only about 10 % or less.

#59 Utopia on 06.06.11 at 12:35 am

So lets see the score: Where do we stand today?

*Quantitative Easing is ending in the US this month.
* US homes prices continue to drop; employment is tanking.
* Stimulus in Canada is concluding and austerity has arrived.
* Federal budgets, the bureaucracy will be trimmed.
* Australia’s housing bubble is just bursting now
* Greece is teetering on the edge.
* The Irish are getting downright testy about the IMF and ECB.
* Germany and the Finnish voting public are sick of bailing out the Euro periphery.
* China is widely believed to be slowing.
* The commodity boom has ended (for now)
* Food prices meanwhile continue to rise.
* Bonds are the rage again as economic insecurity rises.
* Stock markets appear to be in the process of rolling over and correcting. Equities will likely continue to decline.
* Much of the globe is staggering under massive debt.
* Japan itself will sink even deeper into debt as a result of its Tsunami (if more debt is even possible)
* Economists agree the global economy is slowing.
* The Middle East continues to be in turmoil.
* China’s R/E credit bubble is now being called the biggest bubble in history by some analysts.
* The US is now embroiled in three wars at once.
* Brazil, Russia, China are murmuring about a new reserve currency.
* The US dollar meanwhile, is weakening again.
* Africa is as poor as dirt (like always) but now it is being pillaged and plundered by global corporate interests in a race for land and commodity ownership.

Meanwhile, here in Canada, we continue to revel in rising property prices. We seem completely oblivious to all the troubles around us as they lap at every shore.

With each passing day we take on ever higher levels of debt despite the most stern warnings from….well,…. just about everyone except Realtors lately.

If even a few of the issues mentioned above goes critical then the global financial system could unravel and be on the rocks again.

I am guessing on the basis of the preceding that Vancouver’s property bubble is pretty much at an end. Whether they know it there or not, it has been cooked. The tipping point has been reached and it is not a far reach for that last plump apple before buyers and sellers start falling out of the trees.

There is enough greed in that one single city to take down the whole damn country when the realization that “it” is over and confidence is killed everywhere at once.

#60 penpal on 06.06.11 at 12:41 am

#3 jas and especially #31 Thomas TMP

Couldn’t agree more.
Man up and apologize for that very stupid comment Turner.
To not do so confirms that you are the smug and condescending jackass that your rebuttals / comments often hint at.

I doubt you have the balls to publish this.

And to think you were once a politician and a noted journalist…… surely you could have hid your contempt a little better.

I don’t think that we are the only three readers of this blog that would take exception to such uncalled for rudeness.

This is a financial blog. She’s a financial loser. No apology. — Garth

#61 Ronaldo on 06.06.11 at 12:41 am

#29 Tim – “Does it ever make sense to own a condo?”

I would say that it would make sense if the cost to own was equal to or less than it would be to rent a similar place. Today that would be almost impossible to find.

I totally agree with all your other comments especially the one about the strata natzi and don’t forget the condo cop, the one that makes it his post retirement career to make everyones life miserable. And the rules, yes the rules, no shortage of those.

Many people are not aware of why condos came into existance to begin with. It mainly started with the government imposing rent controls and as a result, developers stopped building rental units which resulted in shortages of affordable housing for many citizens.

I believe BC Housing Corp was a result of such legislation if I recall correctly.

It was certainly a good deal for developers since they passed the problems that they would normally have had by owning these units themselves onto the buyers of these things. An example of this as you pointed out are the many leaky condos that have resulted in huge financial distress for many condo owners.

The other thing that can result by strata councils run by owners of these developments (especially seniors developments) is that at times strata fees are assessed to low resulting in insufficient funds for major repairs down the road which end up being picked up by later buyers. One of the many things to be careful when thinking about buying a condo. How much do they have in the bank to cover major expenses that may arise? Some people have gotten some major surprises after buying only to get a nice fat bill for roof repairs or other such thing.

My first home was a townhouse condo in North Vancr which I purchased in 1970 and I can tell you that I would never consider owning another again unless it was someting totally out of the ordinary.

#62 Tim on 06.06.11 at 1:07 am

We have someone else who is now in Contempt of Parliament, she’s on the first pg of Micheal Moore’s website

http://www.michaelmoore.com/
Now Stephen Harper isn’t the only one who has been found in contempt of Parliament lol

#63 Peter Pan on 06.06.11 at 1:11 am

TMP’s dad is 69 and still working?!? Why does anyone bother listening to him for financial advice? At this rate, the old codger will be working until the mortician sticks him with a needle full of formaldehyde… I’d rather take my financial/investment advice from a 55 year old sunning himself in the Bahamas…

#64 CalgaryBoy on 06.06.11 at 1:26 am

Well, their daughter should be able to take care of herself as she is a nurse! They make very good money! Running back to mommy and daddy? Come on, she needs to grow up and take responsibility.

#65 CalgaryBoy on 06.06.11 at 1:27 am

Plus, what kind of example is she setting for her kids?!?

#66 Canuck Abroad on 06.06.11 at 1:42 am

28 / Sea Wave – Oh. My. God. As shocking as this story is, I am guessing that this story is playing out with Boomers all over the country, although probably with smaller numbers. They are living off a HELOC? These two are living way beyond their means and if Vancouver real estate prices start to fall they could have a lot less to invest. Their advisor has recommended a $500k condo – I’m thinking that’s not going to buy much of a condo in Vancouver.

#67 UKLurker on 06.06.11 at 2:10 am

Great post as usual, but things aren’t quite as black and white as that.

In the UK where prices have stagnated are heading south outside of London, the rental market is booming because people who aren’t buying have to rent. Rents have risen to their highest levels ever, and apartments go in hours.

If I were Thomas’ parents, I’d definitely listen to Garth with respect to one of the condos…ditch it and diversify your risk and income potential as that is wise. However, if one of your properties is desirable and always going to be rentable, I’d keep it and then you are hedging your bets against long term inflamation and potentially making a reasonable income even if there is a downturn.

With regard to your daughter…don’t be silly, there are pet sanctuaries, or certain restaurants that will take of them of her hands. She should be looking after you at this stage, not the other way round.

#68 Utopia on 06.06.11 at 2:35 am

Anyway, to hell with the “end of the world as we know it” for today. I have a garden to tend now. Just finished it up this week and it’s looking really good. Very nice.

I put in rows of potatoes, hundreds of onions and garlic sets, carrots of course along with an assortment of healthy looking tomatoes, herbs, hot peppers and a nice mix of lettuce in every spare spot for good measure.

I am a big fan of Robins this time of year too. They just seem so stoic and hardworking as they get focused on business of daily survival.

They blithely ignore barking dogs, appear immune to traffic noise, hardly notice people walking nearby and shun other birds in competition with them while they hop along listening intently for those yummy worms and grubs.

Wish I had their concentration skills. Mmm, grubs!

#69 yulyyz on 06.06.11 at 2:58 am

I suspect it may be a cultural thing, this buying of condos and barely any other type of investment… soon to be 3 condos, one for each of their 3 kids – it’s a mentality consistent with many Europeans, they want a condo or house or whatever for each kid. They are pretty much buying it for them. So to me it doesn’t sound like anything but the fact that since the daughter was in Europe, they had not yet acquired a property that would be for her one day. Now that she’s coming they need to get something similar and of equal value to the others… another hint that it was the master plan – all 3 kids get equal stuff. I’ll bet if they get her a car too, that they will either buy a car of equal value for the other 2 or give the other 2 equal value in cash (if they have it). It worked well 2 generations ago, when it involved parcels of farming land, and no one had much money and kids took in their folks in if they needed it.

#70 Ralph Cramdown on 06.06.11 at 3:13 am

No comments on the TREB numbers that were just released?

OK, here’s one: Median price down 0.5% from last month. # of times May’s median has been below April’s in the last 8 years? None, until now. Nothing to see here, probably just a sales mix issue.

#71 Ralph Cramdown on 06.06.11 at 3:17 am

Daughter works in government as a financial planner and between the 3 of them they own 5 investment properties […] Even better, while making 70k+per year the daughter is actually moving into one of the rental units of the parents and live free without needing to pay rent … so that she can rent her own unit out and reeling in cash … I mean, WTF is this

Intergenerational income splitting, now. Later, when she inevitably claims primary residence status on the condo she owns to avoid CG tax, it’ll be tax fraud.

#72 confused and a little crazed on 06.06.11 at 3:31 am

24# Joe/ 35 # randis.

I can one up both of you. I think I mentioned before long ago
37yr old guy loses/ quit job. Gets wife pregnant who has a family history of difficult births instread of rushing to find whatever job he can get . He decides to move into his 83 year old dad/ 70 year old mom’s basement.

The basement is not up to his standards so he has it remodeled at 80 % expense to grand Dad since he has no money from mortgage penalty/ lost job and then tells them it’s ” Best for everybody” The Homeowners ( Grand DAD/ Mom). Have no say in carpet / paint or anything but they are paying for most of remodelling.

afterwards he pays no rent / no utilities or even helping with insurance. So owners haave to rely on younger Son to do the house maintenance , paint / mow lawn/ grocery shop for elderly b/c they can’t drive .

granted the wife is having a diificult birth but they knew this before hand. Genetics do not lie.

Both basement dwellers demand absolute silence so home owners have to tip toe upstairs. grand Dad walks with a cane and is deaf. So people have to speak loudly for him to hear.

basement dewellers complain about noise and when the younger son confronts him to say ” give him a break …he’s 80 and deaf”
Older son replies ” turn up his hearing aid”

70 year old grand ma( she takes some anxiety meds)
sometimes forgets to lock deadblot on door .but the door knob lock is secure. older son yells at her ” You don’t care about my baby!!”

older son know all about the condition of his parents prior to moving in and did not care

Younger sibling confronts him and tells ” if you don’t like it here why don’t you leave!?”

reply” i ‘ can’t !”

grandma/ grandpa are living off CPP/ pension very restrictive income stream…they are trying their best…but it’s not up to Older Son’s standards”

eventually he leaves w/o paying 1 cent in rent or a loaf of bread to help out with groceries. truly a class act.

grandma/ grandpa eventually sold the home…but the decision was definitely influenced by the older son perpetual boomerang ” I want therefore you provide” behavior There was a lot of heartache and tears from that house.

therefore a house does not make a home

For those religious bloggers thinking they should find GOD…basement dwellers are christians…bug whup

Let see you top that :)

#73 SophieZombie on 06.06.11 at 3:39 am

Agree with Kim comment 41.
When you are old enough to have pet, you should realize that there is financial consequence. Do one dog worth to buy a 340K dog house ? She is either too princess to rent an use it as an excuse or is seriously not having any math skills ( or do not care as she is not spending her own money ?). She is a nurse in Europe: she could continue to work there and continue to save lives while starting the application process, studying, even do a trip to Canada for 1 exam or 2 rather than doing nothing here than enjoy Mommy’s todo includo condo ? I just don’t think it is a smart economics move.

#74 Reality on 06.06.11 at 3:40 am

http://tinyurl.com/6cvlrol

25,37,43

#75 SMOKING MAN on 06.06.11 at 5:56 am

#31 Thomas – TMP on 06.05.11 at 10:52 pm

She is a losser. But don’t take it personal. I have 3 kids, one of them will always be a losser…

It is what it is, you want make money firsting thing is don’t cloud your head, see things from what they are and not what you want or hope them to be.

You folks are lossers too, they are weak and can’t do the right thing.

See I am a losser Parent too. But at leased I know it.

#76 Imstupid on 06.06.11 at 6:09 am

If I may add my stupidity… their daughter might be a loser but mom and dad love her. You can’t fault them for that. I see it all the time, parents work a life time and the kids get the benefits. I think Thomas is upset because his sister is stealing mom and dads money and he wished it was him. How many siblings get into fights over parents estate after their dead? The fact that dad is 69 and still working is ridiculous. I agree with Garth that the condos are a bad move, but what should he do let his daughter and grand kids live on the streets? Do you think that will give him peace of mind? They will have a coronary and not need to worry about retirement. That will make Thomas happy because he will get 200k to buy toys. I have two siblings also but the difference is that we would be happy to get nothing in the event our parents die. I believe that everyone should leave this place with what they came with, nothing. I don’t deserve a dollar from my parents as that dollar was their sacrifice not mine.

#77 Live Under Your Means on 06.06.11 at 6:10 am

Beware of get-rich schemes
Rental property venture turned into a lose-lose situation
By ALISON GRIFFITHS | DIY MONEY

http://thechronicleherald.ca/Business/1247100.html

#78 eddy on 06.06.11 at 6:12 am

Startling revelations from a Swiss banking insider

http://noviden.info/article_239.html

#79 C on 06.06.11 at 6:16 am

Burlington, Ontario May 2011 yr/yr #s. Often referred to as one of the best places in Canada to live.

Average prices went up onLY 2.3% yr/yr from May 2010 to May 2011.

Big whoopie!!

My wife and I sold in April 2010 and have been renting since June 2010 and will continue to do so. The past year has felt like periodically we were on trial an we are the defendants defending our decision to sell and rent.

My wife was a little shy at first telling people we are renters but like me now we are both proud to tell em we rent cause when this thing crumbles, people will be like didn’t C+S rent cause they feared this would happen?

All this hype and euphoria in the real estate market and the avg price only goes up a shade over 2% in Burlington where we live?

I’m quite happy with no risk to real estate, and getting a healthier return on the equity we harnessed when we sold than a measly 2.3%.

It simply just makes sense.

#80 Blase on 06.06.11 at 6:21 am

loser
loser
loser
loser
loser
loser

For [email protected]#$ sakes, it’s NOT losser, it’s loser. Bring back spelling bees please.

#81 David B on 06.06.11 at 6:30 am

And the saga continues ….. offer on the table …. full speed ahead …..Followed by how was I to know, no one ever told me!

off for a coffee a nice newer Second Cup … a steep up from Tim’s I know … but what the heck!

#82 Mr Buyer on 06.06.11 at 6:39 am

You know the whole retirement pension thing was kind of a joke when it was first introduced in England some time ago. I do not remember the specifics but some politician introduced the bill bringing about pensions but the qualifying age limit was a year or two higher than the average life expectancy at the time. If my facts are straight newborns today would not qualify for retirement until 81. As far as families sticking together and supporting one another, it is done all over the world, even in Canada in my grandparent’s time. This whole “start a household of your own” thing is another element of expansionist economics. These boom bust cycles of contraction and expansion are masking the fact that economies can not expand into infinity and they are likely to contract given the limits of the earth’s carrying capacity (which is a moving target but related to environment, population and rate of resource consumption). It costs a family a great deal less to be living under one roof. As far as golden years retirement baloney goes the days all start to feel like Sunday pretty quickly and that gets old fast. The facts are this latest obscenity of a housing bubble is going to force a large number of people to work well into their golden years. I think given what little positive we did for our children and future generations the least we can do is support them any way possible and continue working until we medically no longer can. Take holidays for sure, but keep producing. I can tell you I hear the terms natural selection and survival of the fittest kicked around in circles other than biology. From a biological point of view retirement was a short lived experience for most organisms.

#83 Guan-Di on 06.06.11 at 6:52 am

This is a financial blog. She’s a financial loser. No apology. — Garth

Hear Hear! If I so much as let my nearly septuagenarian Mom pick up the bill at a restaurant I would never be able to look myself in the mirror again, and she has about $750,000 in liquid assets, a paid off home and a healthy pension! That said, I can sympathise somewhat since she does have kids and the maternal protective instinct would be kicking in at that point, which would overide any filial loyalty, but still, in financial terms she is a loser and a great lesson to all couples out there to protect yourselves financially as individuals… no point in getting sappy, if my partner pisses off or dies, I want to know that I, and our kids, will be alright.

#84 BoomerBoy on 06.06.11 at 6:55 am

#70 Ralph Cramdown: Re latest TREB stats.

Wrong! In May 2011, the median price was $400,000, up substantially from the median of $376,750 recorded in May of 2010.

#85 Pr on 06.06.11 at 6:55 am

#43 Kelli
Why is it that people always look down upon renters. When people find out that we’re looking for a house to rent in … they totally give us the pitty look.. no debt. Not even a leased car. why is renting so taboo? Why the pity looks.
I do the same ,and i am a Realtor with 10 years of buying and selling, for my self! I have the same as you, its bizarre at first, but now we are laughing at the situation! Waite until you get out to buy, when their is blood in the street ! With nobody left to buy with cash in hand. The heard is always wrong! Enjoy the *vacation*! No risk, no attach, extreme mobility, no head heck, more choice. Renters and free!

#86 debtified on 06.06.11 at 7:06 am

Some people who read this blog get offended too easily and somehow find it okay to imposs their morals on their host. Agree or disagree on the subject matter – don’t get too hung up on the emotional stuff. You’re just distracting from the topic at hand. Do yourself (and most of us) a favour and watch Oprah or Dr. Phil instead.

“This is a financial blog. She’s a financial loser. No apology. — Garth”

Clever comeback, Garth!

As for the subject matter, my own observation tells me that TMP’s parents are not unique in this country – working beyond the expected retirement age with little assets outside of real estate. This is one of the reasons why I think a house (even worse, a condo) is not a good buy these days. Their kids who failed to grow up properly is another reason.

#87 Mr Buyer on 06.06.11 at 7:19 am

68 Utopia watch out for powdery mildew. It looks like little blotches on the leaves you can hardly notice but in the end it is a distinctive whitish powder. I put in a big garden in big planter boxes 15 years ago and only the tomatoes survived but even some of them were being over run.

#88 Live Under Your Means on 06.06.11 at 7:21 am

#61 Ronaldo on 06.06.11 at 12:41 am

Totally agree re condos. Sis and I had bought a condo TH with a flat roof many years ago . A year later we were hit with a special assessment to replace the roof. They put in a truss system (?). Prov. laws at that time were lax re contingency funds.

Most of the board members had held their positions for many years and a few were, IMO, corrupt. Due to apathy & ignorance of so many owners, they kept getting reelected. Thankfully, most of the board members have now been replaced. My sis and BIL still live there and he’s now a board member.

Over 30 years ago, people bought into a condo building in an expensive part of the city. Couple of years later the bricks on the outside started crumbling. Turned out the bricks were purchased in Montreal (cheaper than local) and were not compatible with the salt air here – at least that’s what I read in the local paper.

Thankfully, hubby & I were able to find a young greater fool to buy our TH. Our RE agent arranged private 2nd mtg. financing for buyer. I’d NEVER again buy a condo. I’d rather rent a home or apt.

#89 detalumis on 06.06.11 at 7:30 am

#3 she is a loser. This phenomena of extending childhood into your late 30’s or some such thing is relatively recent. The thing about how difficult it is to become a nurse is not true, the nurses associations bend over backwards to help you and it is likely at the worst case she would be considered an RPN not an RN and would have to take some additional training.

I used to feel sorry for parents who ended up like this but now I realize that it just shows that they themselves had poor parenting skills, overindulged their kids and encouraged them to remain dependent and they do it because it makes them feel wanted.

#90 TurnerNation on 06.06.11 at 7:34 am

Here’s the lastest economic scam. Pollution is outsourced to other countries now, and the rulers’ wars are the main source of pollution. Let the bombs rain down on Libya! It’s a liberation! Truly the world is run by mad men. Oh well, the meek shall inherit the earth.

By Gerard Wynn

BONN, Germany, June 5 (Reuters) – The World Bank will suggest a global levy on jet and shipping fuel in recommendations to G20 governments later this year on raising climate finance, a senior official said on Sunday.

Developed countries have already written off chances of agreement on a new binding deal at a U.N. conference in Durban this year, placing a new focus on piecemeal efforts including fund-raising.

Binding targets under the Kyoto Protocol cap the greenhouse gas emissions of nearly 40 industrialised countries but expire in 2012 and now look unlikely to be extended in time.

#91 Mr Buyer on 06.06.11 at 7:37 am

My brother in law lived with his parents until he got married when he was 32. In that time he banked 200k from a job that started off at 1600 a month salary. He has no debt. His wife lived with her parents until she married my brother in law and she banked a considerable undisclosed sum as well (it is actually impolite to talk about money but that will be another post). They are living in a rental unit presently and will return to live with my father in-law when the great grandmother passes away (he will take over the house at that time and look after my father and mother in-law throughout their old age). The money my brother in-law saved is for his own son. For university and a car and renovations to the family home when the time comes. I think my brother in-law is very independent and much farther ahead than most who would say otherwise (he accomplished this in a stagnant economy). There is absolutely nothing heroic or independent about paying interest. I have done it most of my adult life. Sadly my own children may have to as well but not for University and hopefully not for a car.

#92 Mr Buyer on 06.06.11 at 7:51 am

I was at a dinner party 8 or 9 years ago. My wife brought me to the party (she was just an acquaintance at the time). There were about 15 or 16 people there and everyone was chatting. During the course of the evening I blurted out the salary I was making and the room fell silent. It took a few minutes for the volume to return to the same level before my indiscretion. I was forgiven because I was after all a barbarian. My wife gently explained to me that while people have a general idea of salaries they do not speak about them. People play it very close to the cuff here in Japan as far as money goes. Even so I have found a few people that have told me they are still paying for property in the form of their home that they paid over double what its current value is (bought during the bubble).

#93 Kaganovich on 06.06.11 at 8:02 am

Rather than waste time moaning about Garth’s unscrupulous, rude and undoubtedly entertaining writing style, why not worry about just how many financial losers are out there….say, about 95% of the world population. By now, it should be clear to anyone that can see past the end of their nose that we are heading back down with most of the remaining developed countries (AU, NZ,CAN) chewing on the debt lure as it gets ‘set’ by TPTB. Here are some relevant articles on what is coming up and what the main issues will be.

http://www.creditslips.org/files/kuttner-on-past-future-bkcy.pdf

http://www.nakedcapitalism.com/2011/06/michael-hudson-will-greece-let-eu-central-bankers-destroy-democracy.html

#94 TS on 06.06.11 at 8:09 am

A by product of a very unhealthy housing market. Scams continue in the U.S.
Short sales may be targeted for fraud

http://www.latimes.com/business/realestate/la-fi-harney-20110605,0,721067,print.story

#95 Oakville Owner-Possible Renter Soon on 06.06.11 at 8:56 am

#79-C

Have you been able to find a decent rental in Burlington? I was thinking of selling and renting last year but could not pull the trigger. I am much closer to doing it now as my equity invested at 5% should cover the rent until the bubble burst’s. What would I be looking at paying a month for a clean/newer 3 bedroom home in Burlington?

#96 a prairie dawg on 06.06.11 at 9:08 am

@ #53 Signpost in the bushes

Carefully study the first three letters of the word condominium….

– – –

I see your point Signpost. But you can also study the first 6 letters of condominium and find meaning too. (something to wrap yourself in before you get screwed)

#97 Jim on 06.06.11 at 9:11 am

Update from Vancouver. I notice none of the “bear blogs” have commented on Vancouver’s continuing strong market it in May?
Why is that?
I note that the first week of June’s average detached price is off versus the previous week however.

#98 disciple on 06.06.11 at 9:13 am

This is a financial blog? Imposseeebluh!…It’s too entertaining…btw, how DOES this blog make any money? Either way, I remain a disciple…of this blog…

#99 Chris no longer in England on 06.06.11 at 9:30 am

Or give a home to the daughter’s dog and then she can rent.

#100 Mikey the Realtor on 06.06.11 at 9:34 am

#92 Mr Buyer
“I blurted out the salary I was making and the room fell silent.”

You’re odd, and they talk about realtors; sheeesh

#101 bill C on 06.06.11 at 9:40 am

sOMETHING MANY ARE NOT AWARE.
qUANTITIVE EASY 2 IS OVER IN jUNE.
What will happen is anyones guess. When 600 billion dollars is printed and it looks like the only ones using it
are Canadian home buyers. In other words Canadians are buying real estate with free money that does not exist.
So what do you think will happen.

#102 torontorocks on 06.06.11 at 9:50 am

All I know is when I go to Zillow, I can see that things were definitely different in the US. When you see the properties you can get in first class cities like Chicago where you’re actually incentivized to borrow and purchase (eg mortgage deductibility) and get into some gorgeous properties. Following where those properties peaked and where they ended up today tells me that we’re foolish to believe that this market is realistic, sustainable and not subject to correction. My 2 cents.

#103 Hoof - Hearted on 06.06.11 at 9:53 am

Building permits plunge in April

OTTAWA — The value of building permits plunged much more than expected in April, led by a big drop in Ontario activity, Statistics Canada said Monday.

The federal agency said permits dropped 21.1 per cent during the month to $5.3 billion, following a revised 16.8 per cent increase in March and a 9.8 per cent rise in February.

“The non-residential and residential sectors both declined in April, with Ontario posting the largest decrease,” the agency said.

On average, economists had expected permits to fall by around six to 7.5 per cent in April.

Read more: http://www.vancouversun.com/business/Building+permits+plunge+April/4899581/story.html#ixzz1OVTsyD6t

#104 Kim on 06.06.11 at 10:04 am

I have a solution for the pity looks when you rent.
The other day my landlady said something to me in a conversation: “… if you were smart you’d have your own condo by now”…. I just smile.
(Never underestimate the power of a smile.)

#105 Neo on 06.06.11 at 10:08 am

Garth,

Just thought I mention how silly your commodities rant was a couple of weeks ago, specifically Gold. You said it was due for a correction. I said in a couple weeks it would test it’s all-time highs because the U.S. deficit matters, QE2 matters and the U.S debt matters. The effect of all those things are bearish on the U.S. dollar and bullish for Gold which is $1,551 as we speak. Even if it does correct again it won’t change it’s 10 year trend which is up, up and up.

I agree with a lot of what you say about housing in Canada. I just think in the short to medium term you grossly understate the difficulties the U.S. faces structurally and how that will not only effect their economy and equity markets but the the global economy and equity markets.

Your macroeconomic analysis is flawed.

Macroeconomics is not measured in weeks. — Garth

#106 Hoof - Hearted on 06.06.11 at 10:09 am

Could the Net be killing the planet one web search at a time?

The Internet has long promised a more efficient and greener world. We save on paper and mailing by sending an email. We can telecommute instead of driving to work. We can have a meeting by teleconference instead of flying to another city.

Ironically, despite the web’s green promise, this explosion of data has turned the Internet into one of the planet’s fastest-growing sources of carbon emissions. The Internet now consumes two to three per cent of the world’s electricity.

If the Internet was a country, it would be the planet’s fifth-biggest consumer of power, ahead of India and Germany. The Internet’s power needs now rival those of the aviation industry and are expected to nearly double by 2020.

“The Internet pollutes, but people don’t understand why it pollutes. It’s very, very power-hungry, and we have to reduce its carbon footprint,” said Mohamed Cheriet, a green IT expert and professor in the engineering and automation department at Montreal’s Ecole de Technologie Superieure (ETS).

Read more: http://www.montrealgazette.com/business/Could+killing+planet+search+time/4891461/story.html#ixzz1OVXgTo1O

#107 Trailer Park Boys on 06.06.11 at 10:15 am

#75 SMOKING MAN

Hay,gedt yer spellink cheqqer fixxed.

#108 AG Sage on 06.06.11 at 10:15 am

Re: “loser” comment. Note to those seeking free advice from Garth: There is a price of admission.

>#84 BoomerBoy on 06.06.11 at 6:55 am
Your reading comprehension needs some serious work.
TREB medians:
april 2010 373k
may 2010 377k
april 2011 402k
may 2011 400k

#109 Desi on 06.06.11 at 10:31 am

Building permits plummet in April

http://www.cbc.ca/news/business/story/2011/06/06/building-permits-april.html

#110 Gutcheck on 06.06.11 at 10:47 am

GO JETS GO!
Truly I am excited to have an NHL team back in Winnipeg. The thing I don’t like is that True North is offering financing options on season ticket packages. There are plenty of people who can afford the ticket prices but this is promoting the not-so-well-off folks to get further into debt. Probably the same people who have 5%-35 year mortgages.

#111 Bruce on 06.06.11 at 10:47 am

@Hoof – Hearted

Got a source for your ridiculous ramblings about the volcano? No? What a surprise.

http://www.guardian.co.uk/environment/blog/2010/apr/21/iceland-volcano-climate-sceptics?cat=environment&type=article

You’re a Grade A idiot.

#112 BoomerBoy on 06.06.11 at 10:52 am

#103 Hoof – Hearted “Building permits plunge in April”

While one must be careful when analysing a single month’s worth of data, a significant drop in building permits is not typical of a housing bubble.

Over-building and bloated new home inventories are far more indicative of irrational exuberance, as they usually foretell of serious price declines in the future.

In the GTA, new home inventories are the lowest on record, while active resale listings are 27% below last year’s numbers.

The real estate market is a supply-side story at present. Until that changes, prices will continue to climb.

#113 Alin on 06.06.11 at 11:00 am

Must read
http://www.bnn.ca/News/2011/6/6/April-building-permits-unexpectedly-plunge.aspx

#114 Jessica6 on 06.06.11 at 11:03 am

#84 BoomerBoy on 06.06.11 at 6:55 am
#70 Ralph Cramdown: Re latest TREB stats.

Wrong! In May 2011, the median price was $400,000, up substantially from the median of $376,750 recorded in May of 2010.

You are citing yoy stats; Ralph was referring to month over month. May came in lower than April.

#115 Mr. Plow on 06.06.11 at 11:11 am

#7 TurnerNation

Fort Mac has been an armpit for years. If they don’t like the joke, they should do something about it or change the public perception of their city.

Cities like Calgary embrace their reputation and poke fun at themselves, i.e., The Stampede. I am not suggesting that Fort Mac have a stipper/prostitution and drug use carnival this summer but the mayor needs to lie in the bed he/she made.

#116 Rob on 06.06.11 at 11:12 am

When Castanet admits things might be off you know things must really be off. Sales are way down in shangri la di da. If prices don’t soon follow….

http://www.castanet.net/edition/news-story-62435–.htm#62435

#117 Mr. Plow on 06.06.11 at 11:13 am

You own 0.5 of a condo by purchasing it with another owner.

You buy 50% they buy 50%.

#118 Live Under Your Means on 06.06.11 at 11:17 am

#92 Mr Buyer on 06.06.11 at 7:51 am
I was at a dinner party 8 or 9 years ago. My wife brought me to the party (she was just an acquaintance at the time). There were about 15 or 16 people there and everyone was chatting. During the course of the evening I blurted out the salary I was making and the room fell silent. It took a few minutes for the volume to return to the same level before my indiscretion. I was forgiven because I was after all a barbarian. My wife gently explained to me that while people have a general idea of salaries they do not speak about them. People play it very close to the cuff here in Japan as far as money goes. Even so I have found a few people that have told me they are still paying for property in the form of their home that they paid over double what its current value is (bought during the bubble).

……………

Learned a long time ago that one does not disclose the salary they make, nor any inheritances, especially amongst family members.

#119 Mr. Plow on 06.06.11 at 11:21 am

#43 Kelli

It shouldn’t be. I rent to a lot of people that are better off than me, mainly because I don’t want to rent to losers.

Everyone has different reasons for different decisions. I rent to one guy who loves leaving for 2 months of the year and he enjoys the freedom that renting provides for that.

Works for me.

The stigma I think comes from people who associate renting with the losers who rent to three 19 year olds who live in a basement suite smoking weed and having parties.

#120 Mr. Plow on 06.06.11 at 11:26 am

#49 Axehead

How do you know their will be more losers like the bottle guy? Most people on the streets aren’t there because the lost money in real estate.

A large percentage are:
-mentally ill with no family support.
-drug abusers.
-mentally infirm, they have tagged out of society, unable to cope.

You get a small percentage who lost their home and are too proud to stay with family.

#121 Mr. Plow on 06.06.11 at 11:29 am

#63 Peter Pan

You assume people work cause they have to.

Do you think Trump, Buffet, heck even Garth likely doesn’t have to work if he doesn’t want to.

I do, but I know there are lots of people out there that don’t need to but continue to do so. Doesn’t mean they are financially screwed.

#122 Mr Buyer on 06.06.11 at 11:32 am

Live and learn

#123 Mr. Plow on 06.06.11 at 11:33 am

#76 Imstupid

Nail on the head right there.

My parents are always apologizing to me cause they lost 30% in equities in 2008 and are just getting back they are saying they won’t have much to leave etc…

I always tell them to worry about enjoying their money. They earned it, leave with nothing for all I care.

#124 vyw on 06.06.11 at 11:36 am

Check out the CMHC 2nd Qtr report on BC:
http://www.cmhc-schl.gc.ca/odpub/esub/65442/65442_2011_Q02.pdf?fr=1307376819913

Page 3: Sales down, average prices down, YOY, in all markets except Vancouver and Kamloops (small increase in prices).

These local markets are correcting as observed in other jurisdictions. It’s just a matter of time for Vancouver.

#125 SwampLily on 06.06.11 at 11:38 am

I’m going to have to agree with the “loser daughter” statement… How can she let her 79-year-old father BORROW money to get her a condo? There’s no reason she can’t rent a decent place first. If it were me, I’d have started “jumping through the hoops” to get certified in Canada the second I knew the marriage was going sour. The kids and pets would be MY responsibility, and I would have a job very shortly after arriving. Maybe it wouldn’t be a nursing job right away, but I’d have a job and paycheques coming in!

#126 Hoof - Hearted on 06.06.11 at 11:44 am

#61 Ronaldo on 06.06.11 at 12:41 am

#29 Tim – “Does it ever make sense to own a condo?”

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

Good points….

I am getting a freebie lesson r: a family member.

They moved into a condo (built circa 1986) about 5 years ago.

It is approx 80 units, 3 – storey well – run, has an on – site caretaker.. and has a pretty good Council.

However, contrast that with the money pit….
They have had the leaky condo fix…etc .etc.,

The latest is the need to redo the copper plumbing.
One resident, an engineer said the original plumbing was poorly designed.

One thing about multi family units, the plumbing has about 20-25 year lifespan.

Why?

Much of it is due to sharing of lines(ie family members unit shares ONE shut off valve for 4 units. )Water hammering..ie constant on and off has much greater impact. The condo is already suffering burst pipes.

Its a given that NON SFH will have to incurr re-plumbing after 20-25 years.

Also….in their unit you hav ea spectrum of age groups…those 80+ and sense the grim reapers breath don’t want to spend the money. They are also noticing parties that are running out of savings aka ” lived too long.”

Ironically, many are on civil service pension so $$$ is irrelevant

In some ways, homelessness may be better than condo living hell.

IMHO, strata is simply democratized Stalinism…

#127 April Showers on 06.06.11 at 11:47 am

BPOE, looks like Vancouver is not on this list for top global cities to retire. Seattle is, though!!!! Bwahahahahahahaha.

http://custom.yahoo.com/lifelonginvesting/slideshows/sets/1262/great-places-retire?mod=fidelity-livingretirement&cat=fidelity_2010_living_in_retirement

#128 new_era on 06.06.11 at 11:52 am

China navigates through the recession with ease. Sounds alot like Canada. Now with a global slowdown the true colors will show.

http://www.smh.com.au/business/inflation-and-debt-could-derail-china-20110606-1fpa0.html

#129 PortlandBound on 06.06.11 at 11:56 am

Particularly great post today, Garth!

Vlad: Love your stuff. Keep it coming!

re: Fort Mac sucking: While considering taking a job as an EMT/Firefighter there, I asked my friends, “If I’m working in my ideal career as a firefighter, is it worth making the sacrifice of living in such an undesirable city?”

My favourite response from a friend who lived there until he was eighteen: “My girlfriend grew up in communist Russia, and she has spent years doing reporting in third world countries. She still says Fort Mac is the worst city she’s ever been to.”

I didn’t take the job.

#130 bill on 06.06.11 at 12:02 pm

axehead
recently I have noticed that better dressed ,apparently sane people ,are giving the binners competition ,here in kits.
these folks look like regular wage earners and their clothes and bicycles look a distinct cut above our usual scruffy bottle collectors .
yet they are out ‘binning’ …..
I think a lot of folks are hurting already.

#131 new_era on 06.06.11 at 12:08 pm

China bluff and now have to show its hand.
Canada looks alot like China in the way it steer itself through the 2008 recession.

http://www.smh.com.au/business/inflation-and-debt-could-derail-china-20110606-1fpa0.html

#132 Hoof - Hearted on 06.06.11 at 12:15 pm

#112 BoomerBoy

Out here in lotusland….I look at the grassroots parameters…call it gut feel..or simply driving around an area and seeing the For sale signs.

The HAM $$$ was something I always suspected…given its lifeblood seems to be via herding. aka Juice therherd mentality. Assholes in RE create stunts to give the view that market is fine.

However, IMHO, when Gov’t bodies actually admit a decrease is quantifiable….to me that means they are in the credibility zone and can’t BS any longer.

Here in BC….the collapse is starting ..it is so bloody obvious…1st the periphery, then the ground zero gets beatch slapped.

#133 Devore on 06.06.11 at 12:17 pm

#29 Tim

Does it ever make sense to own a condo?

Sure it does. However, today condos in all major markets are overvalued. Condos have become highly sought after for first time buyers, who can no longer afford a starter SFH, and by investors, who can buy them very cheaply. As a result, on purchase price alone, condos have become price-competitive with equivalent SFH (if such exist), but then they come with added costs and expenses which houses do not have (and which can be better managed by the owner).

It’s even challenging to find a cashflow positive condo (assuming bought with 20% down). That should tell you something.

#134 Devore on 06.06.11 at 12:24 pm

#68 Utopia

Worms are the good guys, they aerate the earth and other good things.

#135 disciple on 06.06.11 at 12:30 pm

Wow, if BPOE didn’t exist, half of the commenter community here wouldn’t. It’s more than heated debate, it seems decapitation is sought after…I guess the housing issue hits very close to home.

#136 MikeT on 06.06.11 at 12:37 pm

re: the bottle guy and what’s coming: today I had lunch at a Toronto restaurant that used to be quite full at lunch hour. Today, it was 70% empty. Looks like there is much less discretionary spending these days. And it’s not like there is a boom in job creation…
Anyone here can relate about the restaurant business and its recent trends?

#137 Mister Obvious on 06.06.11 at 12:50 pm

ON WINNERS AND LOSERS:

My parents were born in Canadian in the early 1920’s. They had it tough.

Dad was a teenager in Hamilton through the great depression, left school in grade 10. He spent the six years of WWII in the Canadian army and took part in the Normandy invasion. He saw things in battle no one should ever see and never recovered from post traumatic stress. There were no such fancy psychological terms then. Most people who couldn’t shrug off their war experiences were considered ‘losers’.

Mom was from Vancouver. Her family lived in poverty on the east side. At twelve years of age the greatest thing she discovered was that you could go to the library and take out any book you wanted and keep it for two whole weeks! Free of charge. To say Mom was ‘disadvantaged’ would be and understatement.

They way out for a young woman after the war was to find a good, responsible, non-alcoholic man. Many of those were either buried in Europe or returning home in pieces both physically and mentally. She was in bitter competition with her four sisters for the few available decent men. Those who couldn’t snag a mate by the age of 25 year were considered ‘losers’.

This generation made a vow to their own progeny (my generation) that they would never suffer in that way. We would have education, clothes, enough food, vaccinations and we would never attend wars waged by old men on foreign soil. They made good on most of that.

Instead we ‘suffered’ in new ways. We had a long, stale cold war, constant threat of nuclear annihilation, race riots, misogyny, and drugs galore. Somehow we bungled our way through all that and came out thinking we were quite clever indeed.

My generation made a vow to their progeny. Our privileged young savants would never be subject to anything but fair play and the milk of human kindness.

Mom and Dad would micromanage every aspect of their lives. They would choose their friends, schedule playtimes, pester their teachers, push them to ever greater sporting achievements (coercing coaches was not out of the question), negotiate at their job interviews and generally micromanage every aspect of their life until the fine day they would ‘become of age’ and subsequently fall flat on their faces.

I know dozens of them. Their futures prospects crippled by unrealistic beliefs about the true nature of the world they were born into. This is all in spite of (and generally because of) the best intentions of their parents. Yep. A generation of losers. It’s not really their fault I suppose (just like WWII and the great depression were not my parents fault), but the label sticks and they will have to find a way to fix themselves. Their parents have already done their part. (They’re off to the Bahamas now.)

Closing thought: My Dad held an executive position in a manufacturing plant. On his recommendation I got my first production line job there at the age of 16. He went to my foreman before I started and told him I was to be given no special privileges. I should be treated just like any new inexperienced kid off the street. Then he told me I was on my own and he never once came down to witness my ‘treatment’ on the shop floor. That was his greatest gift.

#138 Fools-Rush-In on 06.06.11 at 12:52 pm

Garth, ever consider a second bunker? Buy it and I’ll rent the servants quarters from you.
I believe this tidy little unit started at 1.299 and now its down to $899. Port Huron’s not that far.
http://www.joannwine.com/mls/full_view.php?;_extra_office%5B%5D=JOANN%20WINE%20AND%20ASSOCIATES%20INC;_extra_url%5B%5D=joannwine.com;_extra_url_pub%5B%5D=www.JoannWine.com;_extra_officephone%5B%5D=810.985.5080;_extra_autosy%5B%5D=y;_php%5B%5D=1;_multidb%5B%5D=RealComp,RealComp_Condo,RealComp_Vacant;_template%5B%5D=default_results_4;office_name:like:aw:pw%5B%5D=JOANN%20WINE;_order%5B%5D=price:des;_prefer_favorite%5B%5D=3;_favorite_office_like%5B%5D=%25JOANN%20WINE%25;_startat%5B%5D=0;_multicount%5B%5D=RealComp%3D164,RealComp_Condo%3D20,RealComp_Vacant%3D37;_db%5B%5D=RealComp;_totalcount%5B%5D=164;&_startat[]=6&_limit[]=1

#139 Devore on 06.06.11 at 12:54 pm

#82 Mr Buyer

Well, you know when things we have today like social security, when they were first brought in, average life expectancy meant you would be drawing them for a couple of years. They (politicians) could literally promise you anything, and the cost would be negligible. Pay all your expenses? Sure! Not so much when people are living 20, 30 years into retirement. Some even stay retired longer than they worked.

#140 Hoof - Hearted on 06.06.11 at 1:05 pm

#111 Bruce

What are ya…a grad student in some grant – sucking institoote of higher yearning ?

http://www.geology.sdsu.edu/how_volcanoes_work/climate_effects.html

Review examples under this title;

EXAMPLES OF GLOBAL COOLING IN THE AFTERMATH OF HISTORIC ERUPTIONS:

ie

Laki (1783)
Tambora (1815
KRAKATAU (1883)
PINATUBO (1991)

Now get back to the laptop and quit watching democratic porn ya retard

#141 BrianT on 06.06.11 at 1:06 pm

#117Live-You can disclose your salary if someone asks and you feel like it but loudly bragging about your gross income at a dinner party means you are a barbarian and an idiot.

#142 BoomerBoy on 06.06.11 at 1:10 pm

#108 AG Sage and #114 Jessica6: Re TREB stats.

Duly noted. I jumped the gun. Mea Culpa.

#143 not asian on 06.06.11 at 1:14 pm

Let me get this straight –

This “not loser” daughter is allowing her aging senior parents to get into a financial black hole for – A DOG?

This is the definition of “A LOSER”.

If it weren’t for THE DOG, this courageous nurse and 2 kids can rent just about anywhere. Single mother with a good occupation is just about the most ideal tenant you can get – stable, long term, pays rent on time, no parties. But because she won’t get rid of a pet, the princess needs to buy? Anyone who is tongue lashing Garth needs a wake up call as well.

#144 An Cat Dubh on 06.06.11 at 1:16 pm

Went down to the Cherry Lane mall yesterday. A short 15 min walk. I counted 10 for sale signs. All but three were new. Four were condos.
Air flight ground schools closing in Penticton. 11 jobs will be lost. I regretfully will have to move by July 31 at latest. I won’t turn out the lights, as there are still some retirees here.
http://www.bclocalnews.com/okanagan_similkameen/pentictonwesternnews/news/123062528.html

#145 GregW, Oakville on 06.06.11 at 1:42 pm

Hi Garth, You and others might be interested in this artical regarding solar power.

Examining the New Dawn of Dye-Sensitized Solar Cells with their Discoverer
http://spectrum.ieee.org/nanoclast/semiconductors/nanotechnology/examining-the-new-dawn-of-dyesensitized-solar-cells-with-their-discoverer

“In the end, what we would really like to see is kWh price used as a metric in addition to peak watt price. The peak watt price is a good standard but when it comes to outdoor applications it often does not reflect reality such as the performance under cloudy conditions and the drop of conversion efficiency with temperature encountered by silicon solar cells,” he said.

#146 eddy on 06.06.11 at 1:48 pm

re permits down in April

David Miller, in a final extravaganza before exit introduced New Zoning for Toronto. But the buildings dept didn’t just clear plans through the New zoning, no: All permits had to be cleared by buildings dpt through old AND new zoning. I waited 5 months for a preliminary plan review, which used to take 2-3 weeks. This nonsense dragged into the first few months of 2011, i think it’s over now. It definitely brought the TO permit numbers down

#147 Thetruth on 06.06.11 at 1:54 pm

Epic post yesterday Garth!

As we always said, it is immigration(foreign money), psychology (herd mentality) and easy money (Cmhc and C), and land use restrictions in cities (ALR) that has been dissociating RE values from Incomes for the last decade. No particular order though.

The cartel is powerful.

PS Anyone see Junius last few days?

#148 Bill Gable on 06.06.11 at 1:55 pm

#29 – Tim – you nailed Condos in Vancouver.

We sold ours at the right time, one of the main reasons being a psycho on council and the endless ‘remediation’.
Since we have moved, the building has become a mess – not enough money to fix an elevator that has been out for months. Crazed ex-owner suing, yada, yada.
The place is a nightmare. The old neighbours have said they are all stressed to the max.
Oh, there is stress in rent – BUT – if you want to rent – do what one smart blog dawg suggested – to screw these accidental landlords – make sure if you rent that if the home is listed on MLS or for sale anywhere during the term of your lease – you get thirty days out and no penalty. Get it in writing.
If the person renting the place won’t sign – move on.

If you are about to rent a place here in crap city (Vancouver) – think that is a very smart move.

#149 dosouth on 06.06.11 at 1:57 pm

Wow! It’s finally hitting the Okanagan….the truth (sort of) that is!

And just after our place sold here in May (breathing more than a heavy sigh of relief) When it hits the main stream media you know it is always worse than reported……….

http://tinyurl.com/3ap4gkw

#150 Toon Town Boomer on 06.06.11 at 2:08 pm

I do not agree with calling people losers and think this is totally uncalled for. As times get tougher families will need to stick together and help each other out. Sometimes circumstances & situations happen that are out of our control like the housing market, price of gas & food along with all the other crap that happens.

#151 TS on 06.06.11 at 2:09 pm

http://www.bnn.ca/News/2011/6/6/April-building-permits-unexpectedly-plunge.aspx

Interesting video interview on BNN in the link above…estimation that the Canadian housing market is in for a 25% correction over the next 3 years.

#152 BrianT on 06.06.11 at 2:17 pm

#136Mister-You are very impressive-you need a Facebook page so we can keep track of your daily accomplishments.

#153 jess on 06.06.11 at 2:27 pm

the tax holiday “deferred tax” to be repatriated
2004 – 360billion came back to pay dividends, buybacks ceo bonuses

now mitt will use this as his platform he knows much about “offshoring”

=

The Congressional Research Service actually found that the largest beneficiaries of the last tax holiday cut jobs over the subsequent two years. So while “WinAmerica” might be good for corporations and their executives, it’s undoubtedly a loss for everyone else.
http://thinkprogress.org/economy/2011/03/24/152929/winamerica-low-taxes/

=========

Bond WashingWhat Does Bond Washing Mean?
The practice of selling a bond just before it pays a coupon payment and then buying it back once the coupon has been paid. Bond washing results in a tax-free capital gains because after the coupon has been paid, the bond will sell for less. Investopedia explains Bond Washing
Bond washing is a method of tax avoidance. In this manner the bond holder avoids paying taxes on the bond coupon income. Because bond washing is a form of tax evasion, whereby buyers and sellers may collude to benefit from tax avoidance, it has been banned, though the practice still exists.

#154 Neo on 06.06.11 at 2:29 pm

Garth,

Just thought I mention how silly your commodities rant was a couple of weeks ago, specifically Gold. You said it was due for a correction. I said in a couple weeks it would test it’s all-time highs because the U.S. deficit matters, QE2 matters and the U.S debt matters. The effect of all those things are bearish on the U.S. dollar and bullish for Gold which is $1,551 as we speak. Even if it does correct again it won’t change it’s 10 year trend which is up, up and up.

I agree with a lot of what you say about housing in Canada. I just think in the short to medium term you grossly understate the difficulties the U.S. faces structurally and how that will not only effect their economy and equity markets but the the global economy and equity markets.

Your macroeconomic analysis is flawed.

Macroeconomics is not measured in weeks. — Garth

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

Exactly!!

So why were you waxing poetically about Gold’s demise on a slight dip caused by margin increases squeezing out some speculators when like I said the 10 year trend is nothing but bullish and the U.S. and Canada have done nothing currently or will be doing anything in the short or medium term to materially change Golds trajectory. It was a blip not a long term trend which are macroeconomic.

Just saying.

Ten-year trends do not exist. — Garth

#155 Devore on 06.06.11 at 2:30 pm

http://edition.cnn.com/2011/WORLD/asiapcf/06/06/japan.nuclear.meltdown/

Oops. I’m sure no one was ever in any danger, government just looking out for everyone’s safety.

#156 Dan in Victoria on 06.06.11 at 2:31 pm

Mike T @135
Hi Mike one of my long term friends/client owns a little mom and pop resturant here in Victoria.
Great food, large portions, fair price.
Dropped by for breakfast a week ago.
Hows things I asked.
We’re down 30% from last year and last year wasn’t “good” he said.
This “Fing” tax is killing me.
Changed the subject to fishing and he perked up.

#157 dddd on 06.06.11 at 2:34 pm

tsx swan dive getting ugly , van city house prices stable

overweight cash – tsx down 2-3k yet. anyone wanna bet what loses 15% faster from here – city of van sfh or tsx.

#158 Devore on 06.06.11 at 2:45 pm

#147 Bill Gable

make sure if you rent that if the home is listed on MLS or for sale anywhere during the term of your lease – you get thirty days out and no penalty. Get it in writing.

Don’t need to, it’s the law. If you have a lease, nothing changes if there is a new owner. Unless the new owner wants to move in himself. Then you have 2 months notice, and 1 month free rent, if they break your lease for personal use.

#159 Devore on 06.06.11 at 2:49 pm

#149 Toon Town Boomer

Boomer, financial hardship happens, and there will be many people moving in together in the future to make ends meet. But here we have a person who is getting her parents to buy her a condo. Gifted a condo? Doesn’t sound like a hardship case to me. If she was moving in with parents, laying low, saving money and getting back on her feet, that is a different story.

#160 Househunter on 06.06.11 at 3:31 pm

The correction everyone has been talking about is a myth. All I know is Vancouver is booming. Forecast whatever you want but houses continue to sell here fir extreme prices. Only a trend of rate hikes will stop this train and Carney said “eventually” rates will rise. Yawn. What an old story. I don’t think rates will budge in 2011.

#161 Cato on 06.06.11 at 3:34 pm

I see the usual suspects in the press doing their best to massage latest building permit numbers. The month over month decline is startling but not nearly as dire as the YOY numbers which nobody seems to be mentioning. This looks like a drop across the board, if this were developers simply getting cold feet we’d see alot more regional variability. A drop this consistent is likely banks pulling financing. If the banks are getting scared the housing bubble may pop pretty quickly.

#162 Trailer Park Boys on 06.06.11 at 3:49 pm

What’s the definition of loser?

Randy and Lahey ?

Hey….if you can milk Uncle Willy, pay no capital gains on dope, yet still claim the trailer as a write- off…WTF is the problem?

We even got a grant for shopping carts….no GHG emissions…

Its not Rocket semantics…suggest you all get your Grade 10 diploma….

#163 pen pal on 06.06.11 at 4:07 pm

# 158 Cato

Very good observation.
I haven’t seen the detailed report, but if it was multi -family that had the greatest decline, then that would give even more credence to your hypothesis.

I hope you have it right as it will indeed accelerate the correction in house prices.

#164 South Sea Bubble on 06.06.11 at 4:14 pm

@ #159 Househunter.

Vancouver home prices are booming in only a few areas. They have been flat or even dropped in many areas over the year, or in some cases, dropped over the last three years.

North Surrey Guildford Townhouses down 13% in 3 yrs.
Port Moody s.f down 8% in one year.

Other areas are up or down 3-4%, hardly booming.

The boom is mainly limited to Richmond,Burnaby, Vancouver West.

Don’t listen to Global BC, they only report the booming areas, with no mention of the flat or dropping areas.

See the stats for yourself, very easy to read charts;

Real Estate Board of Greater Vancouver:
http://www.rebgv.org/housing-price-index

Fraser Valley Real Estate Board:
http://www.fvreb.bc.ca/mls-statistics.php

#165 pen pal on 06.06.11 at 4:16 pm

# 136 Mister Obvious

You were lucky to have the father you did.

He did right by you on your first job, though it may not have made sense at the time, I’ll bet you are grateful for that lesson now.

#166 BPOE on 06.06.11 at 4:27 pm

You are an anomoly. Most renters can’t save a dime and don’t qualify for a loan. They smoke marijuana and moan about how life has dealt them a bad hand. The whiners hoping for real estate to drop aren’t pro renting they’re just bitter they missed out on the boom. They want the market to crash so they can BUY.
Canada needs our international investors folks. Our international friends is what is keeping our economy going. What is the Conservatives number 1 prority? That’s right the economy. The government needs money to be spent and that means low low interest rates for years and years and years to come.
________________________________________
Kelli on 06.05.11 at 11:15 pm
Why is it that people always look down upon renters. Me and hubby have a lot of money. Over a mil in cash and equivalents. When people find out that we’re looking for a house to rent in vancouver’s west side they totally give us the pitty look. Its so weird. Before you all get crazy about the amt of cash we have we carry 70% in investments – and none of it tangled in realestate, and no debt. Not even a leased car. why is renting so taboo? Why the pitty looks.
.

#167 BPOE on 06.06.11 at 4:29 pm

Carney isn’t going to do anything ever in his tenure. He knows interest rates are never going to rise. I’m sure the Government feels responsible for the mess Canadians have gotten into. BUT this will not stop international investment. Canada is for sale folks and being bought up one home at a time.
+++++++++++++++++++++++++++++++
Househunter on 06.06.11 at 3:31 pm
The correction everyone has been talking about is a myth. All I know is Vancouver is booming. Forecast whatever you want but houses continue to sell here fir extreme prices. Only a trend of rate hikes will stop this train and Carney said “eventually” rates will rise. Yawn. What an old story. I don’t think rates will budge in 2011.
.

#168 Hoof - Hearted on 06.06.11 at 4:31 pm

Vancouver booming?

All I can say is from my own perch….I am seeing all the warning signs of a “correction” at the epicenter.

It looks like some developers are savvy enough to let their raw land sit…ie risk management. Concord has (2) acre down the block, and hasn’t even started pre-load yet, which they can even without a permit.

Other developers I foresee in bankruptcy protection….their projects are near completion but one can see the desperation.

The SHTF it’s happening as we speak. realtors are actually trying to lasso buyers with open houses and balloons on the signs as well.

One cannot rely on herded HAM $$$, fiscally fatal mistake.

#169 Timing is Everything on 06.06.11 at 5:00 pm

http://tinyurl.com/3f9zjc2

#170 Mr Buyer on 06.06.11 at 5:06 pm

140 Brian T…I was complaining but thanks for the concern Einstein

#171 Nostradamus Le Mad Vlad on 06.06.11 at 5:12 pm


Garth — out of interest, I noticed you changed the 40-60 to a 50-50 split. What is / are the reason/s for this?
*
#43 Kelli — “Why is it that people always look down upon renters. Me and hubby have a lot of money. Over a mil in cash and equivalents.”

Nicely done and well set up. If life had taken a different path for us, we would have sold and rented a while back, but it was not to be.

But life is good, and we’re enjoying it.

#78 eddy — Good link. It would be curious to see how deep (and where) the corruption runs.

#90 TurnerNation — “The World Bank will suggest a global levy on jet and shipping fuel in recommendations to G20 governments . . .”

TPTB don’t want sheeple traveling anywhere anymore — they simply want us to stay in our own fields, eat our own grass, don’t ask questions, don’t do anything at all, yada yada yada. Another form of control they have taken to greater heights.

#101 bill C — “qUANTITIVE EASY 2 IS OVER IN jUNE.”

There are unconfirmed reports (previously posted) that QE3 is all set to go; on the other hand, with so much anger and violence happening, TPTB may choose that moment to pull the rug out from under our feet, bring in WW3 and see where it leads (aside from hurricanes, tornadoes, volcanoes, ‘quakes, tsunamis and others).

#104 Kim — “(Never underestimate the power of a smile.)”

Agreed. Several comments here are redundantly funny, almost as good as Dilbert!

#128 PortlandBound — Noted, and will do so!

#139 Hoof – Hearted — Good point. When the volcanic ash settles in the various streams above, it automatically blocks heat (and the sun) from doing its usual song and dance.

This is why when Yellowstone, Toba or any of the others get mad and blow their tops, we will likely be close to another mini ice age. Two parkas and lots of mitts, maybe long johns to boot!

#155 Dan in Victoria — Hi Dan. If you’re referring to the HST as that ‘Fing tax’, I agree. I’m on a fixed income, and live well within my means. I don’t need further taxes in my life, any more than I need another hole in my head.

It’s a tax grab by a broke govt., that’s all.

#156 dddd — “tsx swan dive getting ugly . . .” — All things in their rightful time. When the Dow, NASDAQ, TSX etc. take more and more baths, then housing will follow, although it would be curious to see what would happen if everything took place within 30 days.

A 50-50 mix would better suit a couple needing more income than growth, and with a lower risk tolerance. — Garth

#172 Timing is Everything on 06.06.11 at 5:13 pm

Well, at least the daughter is a nurse. She’ll be useful after the parental abuse.

#173 pen pal on 06.06.11 at 5:46 pm

# 52 Cato

I’m counting on it.

No different than any other bubble and when it pops, you’ll hear stories of unbelievable stupidity and they will be true!

#174 DM in C on 06.06.11 at 6:05 pm

#160 Cato

The Calgary rag has the headline “Building permits in Calgary region rise — Up 15.4% in April from a year ago” Next to a photo of residential housing under construction.

Looking deeper in the article you’ll find this, “Year-to-date, total building permits in the Calgary region are up 43.96 per cent to $1.85 billion compared with the same period in 2010. That’s primarily due to a 147.49 per cent hike in the non-residential sector to $1.06 billion. The residential sector has dropped by 7.86 per cent from a year ago to $789 million.”

http://www.calgaryherald.com/business/Building+permits+Calgary+region+rise/4899439/story.html

But people only read headlines and look at the pictures — who reads fine print any more, eh?

#175 mooncake on 06.06.11 at 6:32 pm

Coming soon the real estate agent near you.

http://www.businessinsider.com/john-mcmonigle-newport-real-estate-bankruptcy-housing-bubble-2011-6?utm_source=facebook&utm_medium=social&utm_term&utm_content&utm_campaign=fanpage

#176 Joe on 06.06.11 at 6:32 pm

#72 Confused and crazed: “One up”? “Top that”?

“For those religious bloggers thinking they should find GOD…basement dwellers are christians…”

———————————————————

What are you going on about now??

#177 Axehead on 06.06.11 at 6:37 pm

#136 Mr. Obvious. Bravo – you win comment of the day.

#178 TurnerNation on 06.06.11 at 6:40 pm

Latest realtor spin from the GTA (Garth Turner Area). Down is the new up!!

SALES COMMENTARY:

April marked a slowdown in real estate markets, not just for Toronto but across Canada as well. Toronto Real Estate Board statistics showed 9,041 sales in April versus 10,898 for April last year – a drop of 17%. It should be noted that April sales in 2010 were the biggest sales month of the year. Overall condo sales were also lower in April – off 18% from April a year ago, while the downtown condo market was off by 12%. Part of the explanation is that there is a lack of listing inventory. Active listings are down 24% from the same time a year ago. The sales-to-list ratio for even the downtown condo market is virtually unchanged from a year ago, even with the more new projects hitting the market. This is an indication that prices will remain strong.

Lower sales results in isolation have lead many experts to proclaim that the real estate market will decline for the balance of the year. However preliminary results for May suggest that 10,500 units will be sold. This would be a 16% increase from April of this year, but more importantly it would be 10% greater than May 2010! Contrary to the experts, we have been predicting that 2011 sales will start to run ahead of 2010 by midyear. Again it appears that our forecasts are more accurate than the so called experts. While there may be some increase in mortgage interest rates later in the year, it will be minor and should have minimal impact. At this time there are no factors in place that would suggest any change in the direction of this market. And if we do not get more listings into this market, prices will not level off as many

suggest but will continue to increase at rates above 5%.

http://tinyurl.com/6dk5zwg

#179 new_era on 06.06.11 at 7:01 pm

BPOE is right for now.

As long as Carney doesn’t make good on what he purposes. The Canadian Gambles will continue their ways.

Until their credit limits all hits its peak and no additional credit is given to them due to no more rise in credit limits.

But note China may not be able to continue its FACADE any longer. Its true colours are beginning to show and its looks pretty damn ugly. It may be asian contagion 1997, aka asian contagion 2012. Remember the first one brought the mighty Japanese empire to its knees. Will this one bring China to its knees

http://www.bloomberg.com/news/2011-06-06/hong-kong-banks-mortgage-rate-increases-take-steam-out-of-housing-boom.html

Asian Contagent 2007 :) .

http://www.youtube.com/watch?v=PIQdsAQs37Y

#180 Tony on 06.06.11 at 7:51 pm

He’d be better off stuffing his money under the mattress than putting it in stocks even over a long period of time in the future. Say around 25 years.

Where did I say anything about stocks? — Garth

#181 MikeT on 06.06.11 at 7:53 pm

@151 BrianT: you poke fun at people who accomplished something in their lives. Poor sorry loser do that. Smart winners learn from that, get inspired, then go out and accomplish big things.
Think about that…

#182 Nostradamus Le Mad Vlad on 06.06.11 at 7:58 pm


Suicide Cult taking US economy past the point of no return. Finances Links in. Serfdom via student debts, SS etc. 6:34 clip Gold is tungsten, silver is lead and Monopoly Money rules! Taxpayers still bailing out banks, so they will continue to profitable (at least for now). Bank of Ireland Is there a bank in Ireland anymore?

Manipulation to stop gold and silver from heading higher? Into The Sun Corporate profits vs. life here. Build A Burger Criminal intentions revealed! With sour pickles, BLT, onions, double cheez whiz plus a bun!

4:47 clip 9-11 Truthers jailed for life under new law. US law allows testing of biochemicals, etc. on civilians.

Contrast between the wealthy and middle class, and Contrast Two.
.
Iran is Iraq Part II. There is only one country in the ME with loads of nukes; guess which one? Similarities abound. See for yourself — police brutality becoming more prevalent.

Fukushima Three full-blown nuke melts. Not pretty.

5:21 clip Causing rifts between countries — this is how TPTB work, then bring The Toilet into play. E.coli — “The attempt to demonize organic farming has cratered!” wrh.com. 4:15 clip FunVax. Not sure whether this is a spoof about organized religion (the vax is the cure), or serious.

GG (Global Goofballs) “Let’s put all climate change scaremongers in tents throughout winter periods…”

#183 Jim on 06.06.11 at 7:58 pm

BPOE,

The Vancouver West Market is cooling in segments.
May is the peak.

#184 Ben on 06.06.11 at 8:05 pm

Economist says housing prices to fall 25%

http://www.bnn.ca/News/2011/6/6/April-building-permits-unexpectedly-plunge.aspx

#185 Utopia on 06.06.11 at 8:17 pm

#163 South Sea Bubble

Good points. And you are right. Apparently declining property prices in certain areas are not “NEWS” while homes in those other regions seeing spectacular gains are well worth reporting on.

If the talking heads were not so breathlessly giddy in their reporting of the so-called “good news” while grinning from ear to ear we all might have a very different impression of the market in general.

In other words, if the media (like Global) actually offered fair and balanced reporting without all the “WOW, YAHOO, WE ARE RICH BABY!” slant in their newscasts about real estate they might actually be doing a favour for their audience who still trust they are getting balanced and factual news reports.

Unfortunately they seem more skilled at delivering sensationalism than real information. Surely they must be aware that many daily viewers actually depend upon the stories they deliver to help guide them in basic investing decisions.

Like home buying.

So much for the most trusted source. I call it fluff.

#186 BoomerBoy on 06.06.11 at 8:36 pm

#183 Ben

“Economist says housing prices to fall 25%”

Unfortunately it’s the same economist, David Madani, from Capital Economics (a U.K. firm, incidentally) every single time. Not one single major Canadian bank economist agrees.

Last month he predicted the exact same thing but for a new reason, get this: based on the high level of renovation and home improvements going on in Canada.

He failed to explain how that particular metric correlated to a housing correction, however.

I can understand how renovating, repairing and building additions on to homes increases their value and utility, but I fail to discern how how doing so is indicative of an inevitable correction.

#187 Utopia on 06.06.11 at 8:36 pm

#183 Ben wrote…

“Economist says housing prices to fall 25%”
————————————————————

Regarding the sharp drop in new building permits:

Absolutely right Ben. Economists worry about those kinds of statistics for good reasons. They are called “leading indicators” and they tell us about the health of the market insofar as new investment is concerned in housing.

Over the last few days there have been comments on this site minimizing the impact of the sudden drop in building permits. Usually those remarks come from people who don’t have a clue what they are talking about.

If new building permits are dropping sharply we can know immediately that investors, builders, speculators, contractors etcetera are losing confidence in the market or feeling less than secure about the future.

They have not run out of money for projects of course, but rather are holding back on plans in anticipation of negative news.

They do not want to make major investments at a time when the market appears to be unpredictable or risky over the construction period. Nor do they do not want to be stuck holding property that later sells for below cost should real estate actually begin correcting.

They believe one of two main things. First, that supply may likely exceed demand in coming months. Second, that there is less certainty of profit on a project due to be completed in the future.

Both of these are major warning signals that tell us sentiment in the investment community is turning negative.

They are not fools. The correction has already begun.

#188 BrianT on 06.06.11 at 9:03 pm

#180Mike-Look-go be the first man on Mars if that is your goal-good for you-go out there and accomplish your dreams-just don’t post every detail of your farts and expect to get adulation from those having to scroll past your nonsense.

#189 Utopia on 06.06.11 at 9:08 pm

#158 Devore

As is so often the case, you nailed it perfectly Devore.

Your comment summed up the situation with good common sense. This is the age of entitlement, is it not? Where children get better houses than their own parents ever lived in for a fraction of the monthly carrying costs.

Barring that, they get a home that is financed by Mom and Dad out of the parents sweat equity, savings and good credit rating.

Few make sacrifices anymore. What we have today is not the “me” generation anymore. Instead it is the “fast-food, big-mac give me service, right bloody now” generation of spoiled entitled children who have not learned anything from their parents or grandparents except how to be selfish and needy and dependent.

Garth is right,….she is a loser.

#190 Utopia on 06.06.11 at 9:56 pm

#185 Boomer boy wrote….

“I can understand how renovating, repairing and building additions on to homes increases their value and utility, but I fail to discern how how doing so is indicative of an inevitable correction.”
——————————————————

Apparently you have not read the recent report written by Certified General Accountants Association nor reviewed the data presented by the Vanier Institute.

You also seem to have missed the commentary from the chief economists of the Royal Bank, TD Canada Trust, Scotia Bank and even the Bank of Montreal amongst others.

While you were out there has been a flurry of quality reporting on commentary from all of those outfits and many more from our friends at the National Post, Vancouver Sun and Globe and Mail.

In case you missed it..the problem is debt. Debt servicing costs versus income to be more specific. Not just mortgages but home equity lines of credit (HELOCS) combined with credit card burdens and all the variety of high ratio borrowing that usually accompanies people who cannot make ends meet anymore.

Still wondering why Canadians who borrow to do renovations by using the guarantees provided by CMHC (now past) can result in problems down the road? This is all about credit and the over-use of credit if you are still curious.

Borrowing to spend on homes, (excess to mortgage costs), is now one of the biggest categories of risk because that lending is made available as a function of appraised home values. Values that will not hold following a housing correction.

In other words, those debts are considered excessive relative to existing inflated housing prices. It is bad enough that housing costs are too high already but then to borrow against that high value for repairs, expansion and renovations only magnifies the problem.

#191 penpal on 06.07.11 at 12:14 am

# 186 Utopia (aka Mr. Know-it-all)

I just love reading nonsense comments like yours;

“Usually those remarks come from people who don’t have a clue what they are talking about .”

Like yourself?

Are you a good sized developer or builder?
Do you work in the industry? Do you know a lot of builder / developers?

My guess would be no.

Builders aren’t pulling permits because they can’t get financing or can’t pre-sell enough units (now 70%, formerly 60%) to secure financing.

Builders will continue to build if they can get the financing to do so even if it eventually bankrupts them. It is all they know in many cases and the only way they ‘get paid’ is to continue to build.

They are still building new houses / commercial properties in the US despite their RE implosion and painfully obvious massive oversupply.

So, why don’t you comment on things you do know in your prolific postings.

#192 Bruce on 06.07.11 at 11:19 am

@Hoof-Hearted

Read your link. I never denied the impact volcanos can have. What is curiously missing is any talk of a volcano negating all human efforts towards climate change permanently in four days.

That has been debunked, sorry my friend. You’re a classic example of the phrase “a little knowledge can be extremely dangerous”

#193 Cubfoot on 06.07.11 at 12:07 pm

It’s already happening in Australia. A market much like Canada that was supposedly immune to the Global Financial Crisis because of their strong banking fundamentals. Sound familiar?

http://theage.domain.com.au/real-estate-news/the-home-that-no-one-will-buy-20110604-1fmid.html

Get ready for the ride Canada, it’s not going to be pretty.

#194 David B on 06.07.11 at 2:16 pm

ECONOMY LAB
Vancouver primed for housing correction: BMO
STEVE LADURANTAYE
Globe and Mail Blog
Posted on Tuesday, June 7, 2011 11:12AM EDT

No Kidding!