Escape from Van

Drew’s buddy recently moved to godless Toronto from riotous Vancouver. Sold his BC shack. Went house-hunting. Posted this on FB: “Put an offer in this morning on a house.. scheduled offer presentation time is tonight. Our agent just called to let me know there are now a total of 10 registered offers. Welcome to real estate in TO.”

Says Drew: “I told him to check out your blog in a rather joking non-committal way (I don’t want to be too closely associated with all the doomers who camp out in your comments section between weeding their gardens and cleaning their guns). Write him some scathing advice and I’ll send him the link :)”

Well, Drew, there is a difference between Van and the GTA. Besides counting four million more people, it has an actual economy and nobody expects to win any hockey games. Or ball games. Lacrosse. Football. Or croquet. The mayor’s slobbish, unlike preppy Gregor. We have a 16-lane highway instead of paved logging roads. There are two land transfer taxes and you pay to have your garbage picked up (unless you’re one of those low-emission annoying eco freaks with their Hummer-baiting bicycles).

The average SFH costs 35% less than one in Vancouver, and incomes are 16% higher – and still listings are down, sales are mediocre and most people think housing values are ridiculous. The average price increased about 8% last year or one-third of the romp experienced in Vancouver. There are no basement-less, butt-ugly, two-bedroom, stucco bungalows in the GTA selling for $1.4 million with 130 people at the open house. In Toronto, bidding wars are quietly desperate and civilized executions and would likely not exist if listings were at normal levels.

Does this mean TO real estate is worth the bucks? Hardly. The average SFH in 416 costs almost $800,000, which is eight times household income. This market will correct, and could languish for some time thanks to condo over-building, a slowing economy (at least there is one) and the inevitability of higher interest rates. But while the price adjustment will be painful to all those fools who bought with little or nothing down, overpaid to be near a Starbucks or have all their wealth in one asset, it will not be anything like Vancouver. As I’ve said, the technical term there is Biblical.

Simply, people in Toronto, as shallow and vacuous as they may be, are just as horny for houses as any other Canadians. This is why we’re setting ourselves up for one mama of a deleveraging over the coming few years. Stats Can reaffirmed it this week – record debt, most of it snorfled up to buy real estate. The debt-to-disposable income ratio keeps rising, now at over 147%, which means we owe more than the Americans – where the average house costs 50% less, mortgages are tax-deductible and they have Lady Gaga. Like, no contest.

But while rising house values plump up the equity side of the household balance sheet (household net worth is about $184,000), the rise in debt, says an RBC economist, “has exceeded that of both new assets and net worth.” So what happens when real estate values correct? Right. The equity side goes down and the debt side does not. People get less wealthy fast, and start spending less. Thus, recessions are born.

This, Drew’s friend, is why you are so lucky to be in Toronto and not Vancouver. A rerun of the Nineties real estate crunch is probably in the cards – wherein prices dropped about 15% in most hoods (more in the desperate burbs), but then took almost 13 years to recover. Compared to what awaits Vancouver, this is but foreplay.

There are many reasons, but population’s a good place to start. More people mean more prospective buyers, more economic activity and more resilience. Second, price excesses bring excessive corrections. Just as Miami, Vegas and Phoenix boomed, so they crashed. Van prices have attracted global attention with their lunacy, and everyone loves a car wreck. Third, HAM is fleeting and while it’s been a factor in parts of the GTA, Asian money in the Lower Mainland has whipped people into a frenzy. But it won’t last. Classic herd behaviour within a homogeneous group can turn crack shacks into mansions, and back again just as fast.

Finally, demographics. BC has an older population than Ontario, thanks to the mouldy weather. After all, you don’t need to shovel bacteria. Just as Florida and Arizona have attracted more US retirees – and paid for it in a housing implosion – so the same may be in store for much of Vancouver Island, the Okanagan and swaths of the LML.

In fact, aging, wrinkly, hideous old Boomers with jelly biceps are being singled out increasingly as a time bomb for all North American real estate. Says a California demographer this week: “What we’ve gone through recently could be nothing compared to what we have five years from now. When the boomers start to sell off their houses, there are going to be too many boomers and not enough buyers.”

Of course, the more of these oxygen-suckers there are in a region, the messier things could get.

In short, buddy of Drew, your escape from Van was well-timed. Now you can just ride up the CN tower and watch the distant mushroom cloud rise in the west, secure in the knowledge Torontonians may be crazy, but they’re not delusional. Unless they act like you.

Dude. Never, ever go after a house that’s a combat zone. Nobody ‘wins’ a bidding war. There are so many pre-approved zombies roaming the streets, unfearing of debt, that you’re guaranteed to pay too much. Forget the hot new listings. Don’t play the favourite realtor game of listing under market value then accepting offers at a specific time. It’s all designed to create a testosterone-laden competition in which expensive decisions are made in mere, terrifying moments. When the correction comes (as I said), the debt remains.

So rent a nice condo. Get subsidized. Wait.

You know it’s time to buy when we win something.

178 comments ↓

#1 The InvestorsFriend (Shawn Allen) on 06.21.11 at 9:40 pm

The old saying about life insurance was “buy term and invest the difference”.

(Buy cheaper term insurance, instead of expensive whole life and invest the difference.)

Same advice regarding buying a house.

Rent term and invest the difference.

But do remember not to rent and spend the difference. Be sure to invest the difference. Someday it will make sense to buy in Toronto and even Vancouver and you want to be there, down-payment at the ready, when that time comes.

#2 Frank Rizzo on 06.21.11 at 9:43 pm

Yo Branbag!

#3 End of the Line on 06.21.11 at 9:52 pm

Canada is different. We have our own collective delusion that we somehow are immune fro the rest of the global economy.

We were late following the original boom, we were late when it ended. WE are now late being the last one to get clobbered.

We are not exceptional just tardy.

#4 Jon B on 06.21.11 at 9:52 pm

I live in an area frequented by HAM. I have to admit, new listings are going very fast. This is a trend I have not witnessed in years for this area. Something’s up.

#5 Mr. Reality on 06.21.11 at 9:57 pm

Garth….the one thing that keeps me coming back to your blog is your writing style.

“In fact, aging, wrinkly, hideous old Boomers with jelly biceps are being singled out increasingly as a time bomb for all North American real estate.”

jelly biceps? lol

Mr. R.

Thanks for the laugh

#6 not asian on 06.21.11 at 9:59 pm

Please someone explain this to me:

There is a townhouse complex in Richmond British Columbia where every unit is very similar-same age, same size, same builder, same location, etc.

V849400 – #16-11100 Railway Ave Sold for $549,000 Oct/2010
V892845 – #47-11100 Railway Ave Sold for $900,000
June 2011 (Some upgrades)

If this isn’t an indication that money is cheap and easy, I don’t know what is. How does one justify $351,000 for stainless steal appliances? I thought HAM is leaving.

#7 House Poor on 06.21.11 at 9:59 pm

Number …. who cares. haha

#8 Hoof - Hearted on 06.21.11 at 10:01 pm

1111rrrrrssszzzzzzzzzzzzzzzzzzzzzzzzzzzzzt !!!

#9 Sasquatch on 06.21.11 at 10:05 pm

Got a colleague who wants to move out of Mommy’s basement by buying a condo in Airdrie, Alberta of all places. Told her to rent, and the reason given for buying? security while she goes off to work and live in Australia. Thinks she can rent it out while she’s gone to off set cost of owning it.

Still plenty of fools.

#10 Tom from Mississauga on 06.21.11 at 10:10 pm

The Toronto Rock won the NLL. Awesome final game against Washington last month too. The violence was like a Property Virgin bidding war.

#11 Pr on 06.21.11 at 10:10 pm

So rent a nice condo. Get subsidized. Wait….I really hope you do! The Spartans are walking on Athens , the geeks are not going to lay down for the bankers , Spain is about to explode too especially after the treatments of the demonstrators by the police last week , this is just the beginning it is going to go worse and it is going to affect England America China and anybody who exports to Europe , this thing is BIG, America has no clue what’s going on this can take the whole world financial system in a couple of days easy….

#12 TurnerNation on 06.21.11 at 10:11 pm

Garth and others: I can certainly recommend this
brand-new book about the possible changing economics of oil and the disconnect between “wet” barrels and paper barrels (with none of that peak oil non-sense).

http://www.amazon.com/Vega-Factor-Volatility-Global-Crisis/dp/0470602082

http://thevegafactor.com

I’m only a little ways into the book, and it is thought provoking thus far. I do not see it as a Doomer book but rather as a trading tool/insight into possible future trends.

#13 Raj on 06.21.11 at 10:13 pm

Is Toronto Housing in bubble?

See what others think at

http://www.wikiopine.com

#14 Bill Gable on 06.21.11 at 10:13 pm

If this piece of brilliant verbiage, by Mr. Turner doesn’t catch your attention, I give up.

I spent the morning with a friend, who called me and asked me if I could come over and have a coffee.

Thought it a bit odd – it was 8:30 in the morning, and I hadn’t even stopped laughing at Mr. Turner’s pictures on this wonderful blog.

To make it short and less gruesome – this gent and I went to school together, and is a great fellow. Trouble is, he has ‘invested’ in five condos. He just lost two tenants, and he has exactly 42 bucks in the bank.

His wife, also known as “The genius” was at her Mom’s trying to scrounge money. Nice, Mom is 82, and is ill. Don’t ya’ love it?

He then actually had the jam to ask for a loan. After my B/P dropped 75 points to near normal, I replied, very quietly and calmly – “better call your Banker, and your Lawyer, and your accountant – you are in i zone I can’t even fathom – and no, I can’t lend you any money”.

Even if I wasn’t in shaky health myself, I wouldn’t lend him a sou. He started to cry.

This is the real world. This is what happens when people think they can build wealth by being in debt up to their probiscus.

I felt awful and had some lame euphemism and said my goodbyes.

He called me three hours later. Mumsie “lent” them 50 K.

I thought how lovely this was – your Mom is dying and you take money from her?

Is this what we’ve come to?

Last note – Vancouver people are still seething over the riots here.

Liveability in this burg has gone south a long time ago.

As Mr. Turner so aptly states – when wrinkly, busted boomer, boneheads start to bail, it will be a catastrophe.

Maybe Gregor Robertson should build some new bike paths and allow for even more chickens on the deck of the condo.

I am not confident in the future of this City and haven’t been for a long time.

If I was in the position to leave, I would.

But – I am sitting here, renting and watching the BMW’s fly down Pacific Avenue.

People walking along the street smoking dope.

Oh, and check craigslist = nice penthouse for 10 K a month!

Ain’t vancouver grand?

#15 albertagreekgirl on 06.21.11 at 10:14 pm

Oh Garth!!! I love your writing, wit & humor. I also love the pic from todays post. Where DO you get your pics from?!?! Thank you for so generously sharing your wit and wisdom with us. All the best!

#16 AB Bust on 06.21.11 at 10:14 pm

Why bother trying to understand Vancouver RE. Only thing exciting is watching the media when the crash happens. I hope they interview some hot RE agents and their insightful info on the current comditions.

#17 TurnerNation on 06.21.11 at 10:17 pm

I hope you enjoyed my book review. Next up: Last Summer at Band Camp.

Ps. clowns are still creepy!!

#18 Tim on 06.21.11 at 10:18 pm

“The mayor’s slobbish, unlike preppy Gregor.” He probably would also know how to plan for and staff an event of 100, 000 people with enough cops…

#19 cool on 06.21.11 at 10:20 pm

Vancouver is worst place to live in Canada.
GTA is second worst place to live in Canada.

#20 Hartley on 06.21.11 at 10:21 pm

tenth!!!!

#21 squidly77 on 06.21.11 at 10:23 pm

A flipper and his legacy.

“There are buyers and renters and that’s OK, the world needs both”

I need these renters to pay for my nice house in River bend and my new 300 HP Maxima. Moreover I have a trip coming up that I need my tenants to pay for.

I have yet to meet a renter, in my 17 years of adulthood, that has sizable assets, portfolios or even a healthy net worth. If I was remotely influenced by a renters comments regarding rent vs ownership, on the side of renting, I may even spend some time to compare average renter net worth to average home owner net worth. But I would be wasting my time as renters fill the owners pockets, pay their mortgages, pay for their trips, and make my life so much easier and secure. As well the net profit from each property that I rent gets re-invested to pay down the rental units mortgage a considerable amount each year.

I know one thing….investing in real estate has greatly assisted in my top 10% status for Net Worth in Edmonton. Most of the renters I have met at work (IT), are just not educated enough and don’t have the business knowledge or plain guts to take a risk (or at least an educated risk). I am not saying renters are uneducated, just not as entrepreneurial.
http://edmontonrealestateblog.com/2011/06/edmonton-housing-is-definitely-afforadable.html#comments

Comment 76.

I posted that so as to show, that should you buy now, these are the types you help.

Let them hold their magical real estate pot o gold, as it plunges head first into the dark hole of hell.

#22 Elmer on 06.21.11 at 10:24 pm

You forgot to mention that Toronto gets about 90,000 immigrants a year. All those people need somewhere to live. That’s why Toronto real estate is different.

#23 Tim on 06.21.11 at 10:28 pm

You mention demographics, but you haven’t mentioned that the West is growing in population, while the east, read Ontario is declining. Who would want to retire in Toronto? What would you rather do, sit on the 401 for an hour every day choking in the smouldering humitidy and freezing your ass off in the winter when you are retired, or golf 10 months of the year in Victoria where the grass is green all year?

As for the economy in Vancouver, what is it? Other than dope, construction, and tourism and a smattering of tech jobs, what sustains it? Now that were at parity, the film industry has to actually compete, so there goes that. Can anyone name 5 large companies with head offices in Vancouver?

#24 Serge on 06.21.11 at 10:28 pm

I love it when someone gives me a personnal “I know a guy that … ” a-n-e-c-d-o-t-e to dismiss macro-economic indicators indicating a coming correction.

Be reminded that, unless you collect the personnal housing anecdotes of everyone ever; your blinding yourself into bubblishiousness with how housing will be fine based on “that guy you know”.

Come to think of it, are we not in an anecdote driven bubble? I mean credit seems to have done it’s part … what’s left? “I know a guy stories”? What hard macro-economic statistic can point to housing prices increasing?

FYI: I know a guy that had a “soft landing” on a flight home from Pheonix… so housing is fine.

#25 squidly77 on 06.21.11 at 10:32 pm

Sorry about the extra commas.

#26 Increasing that 1% on 06.21.11 at 10:34 pm

What about renting an apartment instead of a condo?

There’s a 10 yr old condo, (or 6y.o. depending who you talk to), that’s closed off all their balconies for four months, so far, supposedly due to deterioration around the railings, wth?, how long can it take, before they do something?, what about deterioration around one’s whole unit, then?

If it was an apt. and no condo corp involved, wouldn’t the owner just have gotten it fixed-or wouldn’t they be expected to- fairly quickly?

If you’re renting and a balcony is part of the deal, and the plan for the renter, shouldn’t they be reimbursed for this loss? Released from their lease, if something’s not done in a reasonable time, and manner?

#27 Andrey on 06.21.11 at 10:34 pm

Garth. Sorry for my ignorance. Why Toronto is “godless”?
IMHO, it’s not (at least according to this http://www.torontochurchlist.com/)

#28 Blobby on 06.21.11 at 10:36 pm

Okay – im being dumb. What does HAM mean? Everyone keeps using the term, and im clueless.

#29 nonplused on 06.21.11 at 10:47 pm

Humorous post today Garth, I liked it.

Did you award the books yet? My call was for 15% in TO and up to 40% in Riotville, not unlike your thinking but based on a simple chart.

I am not sure why listings are off so hard. There may not be a better time to sell in many years, its like the BoC and CMHC have given sellers one last shot to get out before TSHTF.

I know the world isn’t ending, but this Greek tragic comedy is about to evaporate a lot of real money all around the world. Not Greece alone, but by what will happen to interest rates when it becomes clear that printing money and bailouts don’t fix anything. Canada is not immune to the rapidly approaching contagion.

I am not sure why Lady Gaga is an advantage. Don’t get me wrong, I wish I had the opportunity to date girls like that in high school. Oh wait, I get it.

Book prize winners tomorrow. Wear something nice. — Garth

#30 SMOKING MAN on 06.21.11 at 10:47 pm

Garth tooo wasted to read your stuff please forgive me

Something about van, with anuke dude head line thing.

You are wrong van is the new nipski hong kong. Get use to it. one of my asin competertors at the hedge fund just sold a parking spot for 7 hundred k

My son is an idiot, just sold his condo tp hrvest cash for his music dream….. Idiot ya he broke the record on price, told the re agent brfore he tock the offer back that he was thing of rasing the price based onmy input.

My son is a loser he just kist away an outher 100k

o well he will love and learn.

He is a moron

That is just too tempting… — Garth

#31 Utopia on 06.21.11 at 10:49 pm

“So what happens when real estate values correct? Right. The equity side goes down and the debt side does not. People get less wealthy fast, and start spending less. Thus, recessions are born.”~~Garth Turner
————————————————————————–

Exactly. And I do not know how we can avoid recession anymore with the debt levels we carry and the real prospects of a housing correction looming over us. (When? Lord, I really do not know anymore. The persistence of the property buying insanity is totally baffling in light of everything we all know now).

As you pointed out though, when equity declines and debt does not you start to feel really poor, really fast. Ratios can becomes bitterly skewed. Credit nearly impossible to obtain.

Oh yes. Hardly any consumer ever considers this ugly aspect of borrowing. You cannot get loans easily when your debt exceeds your wealth. Banks are loathe to lend to those, even those with perfect credit histories, who are carrying excessive burdens relative to assets.

That is when the rubber hits the road and we discover that it is only those with real savings and strong balance sheets who will actually be in a position to enjoy the opportunities that are coming. They will be the favoured clients of the banks then.

The mere ability to service debt will again take a back seat to net worth that solidly backs a loan as it has for most of our credit-granting history. I think most people have already forgotten we are living in very exceptional times. Dirt easy credit will not continue on forever.

So Debt/Equity ratios will be a big deal soon enough.

Getting qualified, priceless.

#32 SMOKING MAN on 06.21.11 at 10:55 pm

bubble heads my son is stupid……… he sold

The herd is dumb as sh!t \

oh man wish i was wrong for his sake but im not…

Why did god give me this power of observation, he is fn with me.

God I hate to guts, I want to hang out with the devil after its over, hookers and crack. vs happy dumb @ss content happy people .

Hokkers win
ahahahahhahahahhahahahha

#33 Ravishing rick on 06.21.11 at 10:57 pm

4444th

#34 squidly77 on 06.21.11 at 10:58 pm

I am not sure why listings are off so hard

You put too much trust in realtors that report the stats.

#35 Carp on 06.21.11 at 11:03 pm

According to Money Sense mag Ottawa is #1. Folks in Vancouver and TO can keep dreaming they live in the best place on earth. We in Ottawa will keep enjoying life.

#36 Mr Buyer on 06.21.11 at 11:10 pm

#14 Bill Gable…Thanks for the story. I have to wonder how many more of these stories are playing out right now under the surface while everything still looks calm on the surface. Real human suffering. I feel sad for your friend (that could have been me so easily). I hope he understands your position. My Japanese wife said the ‘divorce’ word to me only once since we got married and that was over lending 2k to my brother (who still has not repaid me and I do not think he ever will). It was only 2k. She will never allow me to borrow squat or lend for any reason. It was quite an adjustment the first couple of years after we got married but she was hot (and much younger than I) so I would have eaten glass if she asked me. I threw money out the window much faster than I brought it in the door for a good deal of my adult life (my 20s more than any time). It is really strange now though because Fukushima really shook her up and she wants to buy a home in Canada NOW and she is not open to renting. She really likes to pinch pennies (I should say yen) at heart so it has been only a little bit of a challenge to get her to hold off and wait.
An unrelated bit of news about the Earth Quake recovery effort here in Japan fell into my lap yesterday. There was a thought floating around the federal government here in Japan for a few years that involved doubling the baby bonus from 13000 yen to 26000 yen (over $130 to over $260) per child per month but that is off the table and the existing baby bonus will be decreased by 2000 yen (over $20) and no longer be universal (people with higher salaries will no longer get it). I am not sure if these measures will be permanent or temporary. When I first came to Japan it cost over $34 dollars in toll fees to drive less than two hundred kilometers on the highway. A program was put in place to promote driving and tourism that saw a flat rate of over $10 to drive anywhere. This program is now ending and a return to full tolls has occurred with the proceeds slated to help cover the the costs associated with the recovery from the earthquake.

#37 City Slicker on 06.21.11 at 11:18 pm

Garth, sounds like Alberta will be having a labour shortage for all the work required in the oil sands over the next 10 years. Doesn’t look like this industry is slowing down. Think this will keep the RE market in Alberta elevated? Maybe it’s different here this time.

#38 Golden Stewie on 06.21.11 at 11:31 pm

Garth – Re Doomer 2…..

You seem an intelligent guy, how you think a collapse of the bankrupt US government will not affect Canada baffles me, maybe its different here… right! You have the symptoms correct, but have totally missed the cause. People who understand that are buying G&S.

However it doesn’t matter what you or I think of gold or silver, but pay attention to the sovereign wealth funds and the very wealth buying every ounce they can get their hands on. In a world of governments printing infinite amounts of money to prop up the banking system, I wish you well, but keep peddling your REITS and Bonds and one morning you will wake up and discover the meaning of the phrase “counter party risk”. I suggest you go read the work by GATA.

As for the “conspiracy” of Goldman Sachs manipulating the market etc, barely a week goes by without another fine handed out to Goldman and a multitude of other banks for price rigging, fraud, embezzlement, drug related money laundering, the list is endless. You talk daily about very valid points, you have all the info but seemed to have missed the common link. Its like someone using google earth and still thinking the world is flat!

Good luck, see you the other side of the next financial collapse. If you need some canned squirrel, let one of us goldbugs know as we will have bought it all up when a zero gets added to the price of gold and silver!

PS … love reading the blog and the comments, keep up the great work, just follow the yellow brick road, you will thank me :-)

#39 Utopia on 06.21.11 at 11:31 pm

I know a gal and her husband out Vancouver Island way. They have bragged many times about how much their house appreciated over the last few years.

All swagger and puff and bullshit.

They laugh when I tell them about the cheap little small town prairie houses. They are much too good for that of course. The laughter is not for enjoyment either. They feel sorry (and silently superior) that they earned a housing lottery for having done nothing while the poor prairie folk are stuck picking weeds in the garden. They meanwhile, holiday in Mexico using other peoples money.

So they bought a place down there. Bragged about that too. But I know in fact they can barely make ends meet with the mortgage payments, the kids, the taxes, the new truck and all. He can hardly get a full weeks work lately, she is but a part-timer.

She actually admitted once they didn’t have money for food. The bills had eaten everything up. There was no money left over at all. What to do? She and hubby got a fat line of credit, bought tools and a trailer and then bragged about that too.

I will have to admit that I might just enjoy seeing the smug look on their faces wiped away in the correction that is coming. I wasted too much breathe warning them of the trouble that was coming already. Nothing I ever said changed their minds and they minimized my point of view like it was some weird alien thesis.

The correction will make my gardening more enjoyable.

#40 Phinny on 06.21.11 at 11:37 pm

Had a good talk with a fellow oil-man yesterday about the ridiculous prices of houses in Edmonton- where the average house runs about 370 000.

Both of us watching as housing dips and dips and dips, here in Wild Rose Country. Now, the Alberta economy is no powerhouse like the BC economy, but I wonder how wise those draft-dodging hipster to the West are, putting up money like that…

#41 Siddelly on 06.21.11 at 11:41 pm

Wow! You really blew me out of the water with that one Garth. Direct from Fukushima courtesy of General Electric.

#23 Tim
The film industry was supposed to get a big boost this year with HST but here I am blogging with Garth Turner instead of working my normal 12 hour days on set. This will turn out to be a year that shakes out the indebted movie makers, The Americans aren’t buyin.

#42 teddy in toronto on 06.21.11 at 11:41 pm

Garth, what do you mean by “subsidize?”. I’m intrigued – please reply!

#43 Nostradamus Le Mad Vlad on 06.21.11 at 11:46 pm


Combined with residential RE, commercial RE should be ready to blow with their defaults / loans / mortgages plus outstanding student loans and credit card debts, etc. Garth’s bunker or my stomach look like safe havens!

“. . . it will not be anything like Vancouver. As I’ve said, this is but foreplay in godless Toronto [but] the technical term there is Biblical.” — Biblical Vancouver, a.k.a. Sodom and Gomorrah. Well, the Left Coast, from Alaska thru to San Diego is well overdue for major plate realignments, so that can be added into the mix as well for good measure.
*
#175 miketheengineer — G’day Mike. Good to see you’re still around. Yep, lotsa things happening with lots more to come. FEMA camps? Some links here.

Not worth paying attention to events which are out of one’s control. All anyone can do is look after themselves first, then help others. That’s it. But Garth is right — if one has a good advisor, or is a relatively astute investor, then roll the dice and make spare cash. Keep in good health!
*
America’s Fukushima Cooper nuke plant, and here.

Money Well Wasted A short read, which shows how anyone can blow six bln. when they are not planning; Hong Kong Physical silver contracts there, a shortage here; HSBC Like rats on a sinking ship; Cascade Concerns arise, not over Greece but from the spill-over effect to other PIIGS, etc.; Well duh! Have economists finally figured this out? JPM fined for being naughty. The fine doesn’t even amount to a hiccup; BoA 34 individuals file involuntary Chapter 11;

Naval drills in Virginia, incl. various countries; Suicide This is what the WH and Pentagon are doing their own people. The wars are illegal, and 12:43 clip US taxpayers are tired of funding these illegal wars, as all their taxes are going up while jobs are being shipped overseas.

Odious Debts Write all debts off (including sheeples) and start fresh! (Without the US Fed, BoC and others); Food Theft Try eating diamonds and gold; IMF No credibility at all; Plan B Where is Plan B? and Value traps galore.

Little Ice Age Zero sun spots (which are the driving force behind CC), plus volcanoes to block the sun’s warmth out.

#44 JohnnyBGood on 06.21.11 at 11:51 pm

#179 Sebastien on 06.21.11 at 9:23 pm

RE: “Overdose”: I would not call that documentary ‘pessimism porn’. It’s an excellent, broad, historical overview of the financial crisis––and it’s all true.

In fact, in some instances, the situation was even worse than described in the movie. For instance, the movie doesn’t tell you that not only was TARP rammed through congress with incredible intimidation and threats, but that it was also the biggest ‘bait-and-switch’ in history. Instead of buying actual toxic assets, once TARP was passed, Paulson basically just gave the money to the banks via equity investments.

The doc also doesn’t tell you that it wasn’t 700 billion. It was 700 billion at a time (as many times as needed), no questions asked.

“Overdose” is a good place to start. For those who want to get a better understanding of what really happened and what continues to go on in the economy and financial system, I suggest you check out people like Michael Hudson, William K. Black, Peter Schiff, Janet Tavakoli, Karl Denninger, Catherine Austin Fitts, Eric Janszen… I could go on. These are some very intelligent people, and most have worked inside the ‘system’ (Wall Street, government, academia, etc.) in various capacities; they understand it much better than most.

And one thing all of them will tell you. This is not over.

#45 Dodged-a Bullit-in-Alberta on 06.21.11 at 11:56 pm

Greetings: # 28 Blobby, “HAM” Hot Asian Money ie: offshore mega bucks that some think is blowing the Vancouver real estate market . Money from mainland China, laundered in Canada. Money that makes the Harper Government pimps!!!

#46 Hoof - Hearted on 06.21.11 at 11:57 pm

ROTHSCHILDS FINISH OFF GADDAFI

http://www.youtube.com/watch?v=rgdn0bNsMkQ&feature=related

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

Interesting premise

Qaddafi is trying to get rid of fiat currency using Gold.

Others are considering the same, if no other reason than get out of Banksters control.

The Banksters are scared witless…thus creating False Flag situation. The end of the video shows what Libyan citizens get from the Gov’t doesn’t look that bad..

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

#12 TurnerNation
Interesting…link

I saw one today re the 1973 Oil “shortage”:
There was none.

The banksters saw the US $ was sinking…and Oil was tied to the US $$$. The shortage was artificial, and this helped boost the US dollar.

Same pigs- different trough.

#47 Devore on 06.21.11 at 11:59 pm

#6 not asian

If this isn’t an indication that money is cheap and easy, I don’t know what is. How does one justify $351,000 for stainless steal appliances? I thought HAM is leaving.

Why would HAM buy a townhouse? Some local buyer, scared stiff of the Asian invasion pricing him out forever.

#48 Crash on 06.22.11 at 12:08 am

#23 Tim:
“Can anyone name 5 large companies with head offices in Vancouver?”

LuLuLemon
Telus
Ritchie Bros.
Silver Wheaton
First Majestic Silver
Pan American Silver
Teck Resources
QLT
etc…

#49 kilby on 06.22.11 at 12:14 am

#28 Hot Asian Money…..

Friend listed their 107 year old 900 sq. ft house in popular area of Vancouver three weeks ago. All the realtors interviewed agreed that it would list for $699K but that their would be multiple offers and would likely fetch closer to 800K no problem. Well, there has been 4 open houses with lots of traffic and no offers, another open house this weekend along with the one across the alley. Interesting as another on the same block sold 4 weeks ago for $790K on an asking price of $699K. Could this be the beginning for East Vancouver? Everyone was certain of a quick sale………..

#50 Aussie Roy on 06.22.11 at 12:14 am

Aussie Update

Its fine, the Aussie housing market is in great shape, says bank CEO. Even if mortgage arrears are rising.

http://www.smartcompany.com.au/property/20110261-westpac-s-gail-kelly-attempts-to-calm-mortgage-fears-but-experts-warn-pressure-rising.html

The financial position of Australian households has deteriorated to their worst level in at least a decade, a survey that measures savings shows.

http://www.smh.com.au/business/household-finances-dive-to-worst-in-at-least-10-years-20110621-1gcpe.html#ixzz1PyeoiYKH

Loan stress mounts as budgets hit by high rates

http://www.smh.com.au/business/loan-stress-mounts-as-budgets-hit-by-high-rates-20110617-1g7s3.html#ixzz1Pyf3NAIN

The current conditions in Melbourne’s property market are forcing vendors to work harder to secure a sale, as buyers take the upper hand.

With recent falls in home values, vendors are having to increasingly adjust their asking prices to be able to attract buyers and make a sale.

http://theage.domain.com.au/real-estate-news/market-forcing-more-realistic-prices-20110618-1g999.html

MELBOURNE:- The worst fears of real estate agents and property vendors has arrived: the orderly sale of property has broken down. A twenty year uptrend made Australian real estate ‘most severely unaffordable’ and a Ponzi scheme propelled by consumer debt. Prosper says prices are now in free-fall.

http://www.prosper.org.au/2011/06/21/property-market-in-disorder/

BRISBANE’S prestige property market is in free fall, with some agents reporting the “beginning of the end” of prestige housing.

Gail Havig, who sold $60 million worth of cash unconditional property within two months in 2007, said she could no longer be optimistic about the market.

http://m.brisbanetimes.com.au/queensland/top-end-of-town-loses-its-way-to-market-20110618-1g9cc.html

Aussie MEGA RE spruiker Chris Joye gets his numbers crunched.

http://anglesoneconomics.wordpress.com/2011/03/25/measures-of-affordability-in-context-and-is-this-chris-joyes-fischer-moment/

So in short, all is fine in the land down under, home of the largest national housing bubble in the world.

#51 Dodged-a Bullit-in-Alberta on 06.22.11 at 12:15 am

Greetings: Here is a good reason why this world is f****d, we have people without decent housing, food, water, security, but this is important!!!

http://www.huffingtonpost.com/2011/06/20/marilyn-monroe-subway-dress_n_880190.html

#52 Jane on 06.22.11 at 12:23 am

Hey smoking man, who’s the moron?

#53 The Phantom on 06.22.11 at 12:28 am

Hi Garth & Fellow bloggers:

As an aside to the GTA and Vancouver housing prices, were any of your readers aware that clowns used to symbolize death at one point a long time ago? Curious and somewhat appropriate perhaps for the life support some households will require should the correction materialize in the proportions that have been suggested here.

You know I live simply; have a 1200sq ft house on 1/3 acre about 10 minutes from Wpg. The interior is “tired” but my sons need to grow up more before I renovate. My van has 439,000 km on it and it is being held together with duct tape and rubber bands. The car, somewhat nicer, is a gas guzzler but they’re both paid for…no veh payment. Mortgage is $325.00/mo (PI only) and I’ll have the option to pay the balance off cash when it opens in 2013…Apart from that, I have few other obligations…currently working a few jobs, one of which I sort of loath but am working part time on a new career option from home and looking into other occupations…and one of the reasons I think that I have some choices is because I am not a slave to debt. Say what you want about Manitoba…the winters are cold sometimes (although I believe people here depict it to be worst than it really is quite frankly), the bugs suck about 2 weeks after a series of torrential rains and there is the flooding stuff. To the plus side, there are some of the most beautiful sunsets anywhere, our community has a friendly feel to it with some small town character (everyone knows plenty of people and neighbours are friends as well) so there isn’t these high degrees of anonymity that are prevalent in the larger urban centres…Life is just a bit slower, more relaxed and less frenetic without the worry of monthly bills and trying to stretch that last dollar to cover too many items…Nearly debt free and loving it here in “the Gateway to the West”. Night all…

the Phantom

#54 Paolo on 06.22.11 at 12:29 am

What is ‘HAM’?

What does it stand for?

Hot Asian Money. — Garth

#55 Jane on 06.22.11 at 12:29 am

Hummer-baiting bicycles…thanks for the humor, Garth : ). You must have had a really bad experience in Vancouver in the past, ’cause you really don’t like this town much. We have one or two good things going for us!

Check out the FP housing bubble link. A fun read for what may be coming in RE in Caanda.

#56 Hoof - Hearted on 06.22.11 at 12:34 am

Puppet of the Banksters: President Woodrow Wilson – part 2/2

http://www.youtube.com/watch?v=dgfrE3TdJnY&feature=related

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

Very good explanation:

There is a part 1

Related videos talk about Fort Knox , as a means to store confiscated gold , rise of fiat currency….and that Income tax didn’t exist till after Banksters took over.. ..its purpose was to pay the banksters

#57 The Original Dave on 06.22.11 at 12:41 am

Hey G, in the past few months, you mentioned that the stock market was overpriced or due for a correction by 10%. Today you posted that corporate profits were up 18% (if i remember correctly).

Are you saying that the 18% was priced in already before the correction started?

I said the market was overvalued and would correct. It did. I also smart people buy dips. Did you? — Garth

—————-

no need to get defensive. I simply couldn’t understand if you thought the high corporate profits were already priced into the 10% over – valuation of the market.

#58 Kimi on 06.22.11 at 12:46 am

#21 Squid … from a flipper: ‘I have yet to meet a renter, in my 17 years of adulthood, that has sizable assets, portfolios or even a healthy net worth….’
——————————-
Like every renter he meets opens thier personal portforlio to shares it with him.
But enough of that, I’m signing off now… so I can pick out a cute outfit for tommorrow. (:

#59 Utopia on 06.22.11 at 12:53 am

#124 eaglebay on 06.21.11 at 12:29 pm

“This year should be one of my better years.”
—————————————————————————

I am betting this next bounce up in the TSX will terminate before it hits 13,500 then head back down again. The FOMC meets tomorrow I think and we might get a hint of rate increases Stateside or even new stimulus talk. That could change everything of course. All things being equal, I am still counting on a bit of a rebound these next 10 to 14 days or so. Commodities should be showing a little more strength for a while.

#60 Seen this in the States and now it's here in Canada on 06.22.11 at 12:57 am

@ #21 squidly77

I get a little upset by people like you. I’m a self made multi-millionaire and I rent in Canada. Right now I’m renting a $769,000 condo on the Lake Okanagan for $1,300 a month, which includes all utilities, cable and internet. The guy who owns the mortgage is taking a beating, while I’m using my $769,000 cash to actually make money in the stock market. People who have money know what value truly is. The value in real estate is in the US not in Canada, that’s where the Canadian realtors are buying and they should know. People like yourself are on the road to insolvency, it’s a lousy road to be on, but it looks like that’s the road you’ve chosen. Happy trails!

#61 JohnnyBGood on 06.22.11 at 12:59 am

The cited opinion on boomers and real estate is interesting, if not unanticipated.

An article that quotes said demographer also quotes another analyst who reports that aging populations actually INCREASE demand for real estate. Makes sense.

However, in trying to present an opposing view, the author conflates an aging population with retiring boomers. They may sound like the same thing, but actually they are not necessarily.

I think we can anticipate that many retired boomers will not have the physical or pecuniary strength to maintain their homes, especially if the cost of home ownership (and pharmaceuticals) continue to rise in real terms.

However, reverse mortgages can mitigate the costs and partially offset the anticipated trend. I think these frauds will explode in popularity, unless most would-be heirs can convince their decrepit parents to go die in box somewhere.

If boomers do abandon their private piece of God’s little acre en masse, this will shift demand from SFH’s to other types of ‘homes’. But, assuming higher occupancy densities, this cannot offset the decline in SFH values in order to keep demand for RE constant overall.

If the cost of living gets TOO high, we can always just implant everyone with flower crystals in the palms of their right hands that will indicate when it’s time to “go.”

It must be late.

#62 Houston on 06.22.11 at 1:03 am

HAM -please explain? I can’t work it out after a numerous visits to this godforsaken blog.

#63 Shank on 06.22.11 at 1:08 am

Ok I have all your books (one signed), saw you when you came to town, read your post every night (except saturday – your one day off). I have followed your advice and sold my house I owned for a dozen years for aalmost a 4 bagger. Now live in a “mansion on the ridge” that at $3500 a month, 3 year lease is 80% paid for by dividends from my “house money” . And of course I pay no property tax or major maintiance. All of that to say… You alluded a week or so ago that you were going to go to the next level and move past your primary message ( as it has now been picked up by major media) and move on to your next theme. I’m a fan. And don’t want to be pushy. But I think there are more than a few of us looking to consider your next thoughts. We just want to know what they are. Put it in a book if you wish. I will happily pay for it. You are a source of opinion that I consider when forming my own opinion. All that to say… What drum are you beating next? I’m all ears.

#64 Utopia on 06.22.11 at 1:15 am

#153 Jed on 06.21.11 at 5:12 pm

“And at the same time they think stocks will plummet, the dumber half is loading up on blackberries, ipads, etc…”
——————————————————————————————–

Good point Jed. You know, if I had bought as much tech stock in the early 80’s as I bought computer equipment I would be so stinking rich right now I could hire monkeys to write programs for me just for fun and I would be basking on a Greek beach with the local sweeties, Pina Coladas on tap and hardly a care in the whole freaking world.

But foolish me. I bought the hardware. Not the company stock.

I wish I could get that part of my life back just once!

#65 Rust Belt Buster on 06.22.11 at 1:30 am

The InvestorsFriend (Shawn Allen) on 06.21.11 at 9:40 pm

>> Nothing personal, but you sound an awful lot like someone who believes that saving for the “big purchase” is worthy of consideration as part of an investment strategy.

Find a good landlord and a comfy place to call home.

#66 Bill Gable on 06.22.11 at 1:32 am

Squiggly 77 – you are a total ass.
You are saying renters are bums?
No, we are smart. We get cretins like you to subsidize us.

I have enough money to buy anything I want, but unlike you snobby, uneducated cretins, you make generalizations that prove your IQ is your shoe size.

Mr. Turner, the shallow end of the gene pool, including BPOE, is starting to swell.

Boy, there are some real jerks extant.

#67 Nick on 06.22.11 at 1:46 am

Thanks to Garth my LOC is now at 0$ and the duplex is sold. I’m 34 and will be renting and saving for a long, long time. There is exactly zero reason for Canadian RE to be 100% more expensive than it’s US equivalent. (That’s Z.E.R.O. if you try to read this while you’re drunk.)

#68 Thetruth on 06.22.11 at 1:58 am

Times have changed…

Feels like a riot is happening in the blogosphere. Many posts are refuting Garth’s assertions. Posters want crashes, financial crises, financial collapse.

Remember, people with wealth make the laws and the societal system we live in. Not the people without wealth.

#69 zorik on 06.22.11 at 1:59 am

22 Elmer on 06.21.11 at 10:24 pm
You forgot to mention that Toronto gets about 90,000 immigrants a year. All those people need somewhere to live. That’s why Toronto real estate is different.

Where you take 90.000 immigrant ?

http://www.cic.gc.ca/english/immigrate/skilled/apply-who-instructions.asp#list

Note: If you are applying under one of the 29 eligible occupations, as of June 26, 2010, a maximum of 20,000 Federal Skilled Worker applications will be considered for processing in the following 12 months. Within the 20,000 cap, a maximum of 1,000 Federal Skilled Worker applications per eligible occupation will be considered for processing each year.

#70 Musical Jimmy on 06.22.11 at 2:07 am

A response to Comment #26:
I live in a second-storey apartment with a gorgeous twenty-foot balcony. If it was closed down by the owner for more than a reasonable amount of time to get it fixed, I’d be demanding a reasonable discount in my rent – the balcony is part of my apartment as listed in my lease agreement. If I were to not recieve it, I would go after the owner through the tenancy board, and quite possibly withhold my rent payments. (that is, of course, my last recourse, once all other avenues are exhausted)
This is part of why I like apartment living – I’m not responsible for maintenance and upkeep. Anyone who knows me knows that I shouldn’t be allowed to handle power tools, especially heavy-duty house-repair-type power tools. So I let someone else deal with the dirty work. The downside is that sometimes it takes a while. The upside is that I don’t have to do it, nor do I have to pay for it. (and yes, I know the cost of maintenance is included in my rent, but I don’t incur any unexpected costs for building repair)

#71 zorik on 06.22.11 at 2:09 am

if you say 20.000 profesional workers and 70.000 refuges I Could believe.
By the way it is not immigration it is slave migration
Canada only need slaves who come here to pay high taxes and bills that it is.

#72 AG Sage on 06.22.11 at 2:25 am

Drew’s Buddy, Cash is King, why give it all away and be a pauper instead?

Find a promising rental listing, take the annual rent and multiply times 13. That’s the real value of that property. Take the market price of a similar place that’s for sale and divide by 13. The difference between the two is a subsidy from the property owner direct to your pocket, Drew’s Friend.

Take the money. Take it. You can always change your mind and buy instead. That’s easy. The other way around is far more expensive to reverse. You’re young, keep your options open and your pockets full.

#73 keny65 on 06.22.11 at 4:10 am

The 2008 recession was caused by the only maket who runs on cash…drugs,according to Russian Television.When the Mexican cartels were investigated in 2007 they removed their money from banks espescially from wachovia.Wich created the bank run.The proof that power is liquidity not debt and that cocaine is the most important thing for these bankers…to keep them high enough to keep this dellusion going and keep the cash flow coming in…

#74 David_Ricardo on 06.22.11 at 5:56 am

More Hard Truths About Residential Real Estate (US)

Is Canada different? You decide.

http://www.madhedgefundtrader.com/june-22-2011-2.html

#75 detalumis on 06.22.11 at 6:26 am

If you bet on the boomers to sell en masse in 5 years and that will be the reason for declining house prices you may be waiting for 30 more years or so. I live in a south Oakville suburb built in 1960 and it is full of boomer parents who haven’t moved out yet. I have neighbours ranging in age from 75-91. They leave when they are carted out feet first. Please remember that the boomers are a 18 year demographic, some of us are 50 not 65. If I live as long as my 91 year old neighbour I can stay in my bungalow and raise some chickens for another 40 years. By that time the 30 something waiting to buy my house will be pushing 70 himself.

I also don’t know anybody who moves from here to retire to B.C. either. I find the weather here pretty good, I get more depressed on wet days than cold ones. I think most retirees out there come from Alberta and the prairies not from southern Ontario.

Nobody has suggested an en masse selling – just the predictability of a steady stream of sales forced by economic circumstances. The current Boomer generation is far larger than their parents’ was, less financially secure (pensions are a rarity), and more house-heavy. It is an inevitable factor. — Garth

#76 TS on 06.22.11 at 6:34 am

Desperation factor in housing market
http://www.financialpost.com/opinion/columnists/Desperation+factor+housing+market/4984409/story.html

http://network.nationalpost.com/np/blogs/fullcomment/archive/2010/02/11/peter-foster-canada-moral-hazard-corp.aspx

#77 TurnerNation on 06.22.11 at 7:18 am

We could use Meetup.org for organizing local Blog Dog/Debt Sinner events in our cities.

But those doomer/endtimes/gun rack/metalheads scare me!

Something like this:

Me: Hi I’m TurnerNation.

Metalhead: Are you lookin’ at ma silver?

Me: No.

Metalhead: I said, are ya looking at ma silver, boy? Cause if you are…

Me: N-No.

Metalhead: (makes sliding motion with index finger).

Me: *Runs*

#78 bigrider on 06.22.11 at 7:48 am

Real estate in T.O chugging merrily along

http://www.moneyville.ca/article/1012922–anxiety-as-condo-sales-hit-record-high?bn=1

No let-up in site yet.

#79 debtified on 06.22.11 at 7:48 am

RE: #30 SMOKING MAN
– Funniest comment you have posted, ever. You should have just left it at that, though. You lost me, again, @ #32.

RE: Gold Standard/Gold is Money
– If it’s already bad that the vast majority of the wealth is controlled by a very small percentage of the population in a fiat currency world, it would even be worse with gold. Be careful with what you wish for.

RE: Greece will default -PIMCO
http://www.webcitation.org/5zdBuDV1j
– What cannot be paid will not be paid. People will borrow beyond their means if they are allowed to. With debt-to-income ratio approaching 150%, Canadians face a very painful deleveraging process.

RE: Real Estate Agents
– If I were one, I’d pray for a crash to happen sooner than later. Sales might pick up then. It’s better to sell five cheaper houses than sell one expensive house.

#80 JohnnyBGood on 06.22.11 at 8:13 am

#73 keny65 on 06.22.11 at 4:10 am

The laundering of dirty drug money and ill-gotten gains from other illegal activities is apparently huge business for international banks. If I recall correctly the annual figure is estimated at somewhere between 1 and 1.5 trillion. Maybe someone else has actual stats on this.”High” finance indeed.

#81 Gord In Vancouver on 06.22.11 at 8:41 am

Mr. Marr doesn’t understand the importance of a large down payment

…..which makes higher interest rates less of a factor.

http://www.nationalpost.com/Desperation+factor+housing+market/4984409/story.html

#82 panopticon singularity on 06.22.11 at 8:52 am

“..nobody expects to win any hockey games. Or ball games. Or Lacrosse. ”

uh, excuse me sir? ever heard of a little team called the Toronto Rock?

Winner of the 2011 NLL championship, again, tied with Philadelphia for most NLL championships won, at 6.

perhaps its time we all embraced canada’s original national sport, as we seem to be terrible at hockey, but please no more burning cars, the fumes hurt my throat.

#83 T.O. Bubble Boy on 06.22.11 at 9:02 am

@ #76 TS:

I also saw that “Desparation Factor in the Housing Market” article on the National Post website today… interesting that the #1 Harper & Flaherty cheerleader (along with the Sun) has put out several pieces recently that call it like it is instead of going along with the Conservative spin game.

I did notice a quote that made me question the entire post-secondary education system in this country:

Queen’s University professor John Andrew says it’s in the real estate industry’s interests to promote the idea prices will rise forever. But while he thinks it’s obvious in places like Vancouver there will be a price correction, it doesn’t help you if interest rates go up.

“You see a 10% price correction but if interest rates go up two [percentage points], you are not better off,” Prof. Andrew says. “Buyers are caught in this quandary that when interest rates go up, prices will come down.”

Apparently this Queens Prof can’t do the math on a mortgage? Having a 10% cheaper house w/ 10% higher rates will put you way ahead:

$500,000 @ 4% over 25 years = $2,630.10 per month
After 5 years, the principal remaining is $435,283.15.

$450,000 (10% cheaper) @ 4.4% (10% higher) over 25 years = $2,465.67 per month
After 5 years, the principal remaining is $394,441.05.

Both of these scenarios would reset after 5 years anyway, so they should be considered “equal” after that first mortgage is up. Scenario #2 puts you over $40,000 up.

#84 T.O. Bubble Boy on 06.22.11 at 9:08 am

Whoops – apparently I can’t read (so much for my own post-secondary education).

That Queens prof used a scenario with a “10% correction w/ 2% higher rates”, which would be a closer call:

$500,000 @ 4% over 25 years = $2,630.10 per month
After 5 years, the principal remaining is $435,283.15.

$450,000 @ 6% over 25 years = $2,879.13 per month
After 5 years, the principal remaining is $404,288.32.

So, you paid $249 more every month for 5 years (=$14,940 more for the mortgage term), but you are $31,000 up at the renewal.

But, that still means you’re $16,000 up with scenario #2 after 5 years.

Sucks to be learning about math from Queens I guess.

#85 joe larue on 06.22.11 at 9:09 am

Toronto Rock are NLL champs. Please don’t lump them in with the Leafs & Raptors.

#86 Utopia on 06.22.11 at 9:17 am

#32 SMOKING MAN

Holy crap. Sober up man. You talk like an idiot.

#87 Randis on 06.22.11 at 9:22 am

#42 Teddy

When you buy and own an unit, you have to pay for mortgage + property tax + maintenance + utilities + insurance etc etc.

But when you rent, all you need to pay is the flat rental fee and don’t need to worry about all the other items because the landlord would take care of them. So basically your cash outflow is less if you rent vs. own. That’s what it means by “subsidize”

#88 BPOE on 06.22.11 at 9:22 am

If you rent be scared be really scared.
Folks renting and investing the difference AND being successful at investing usually doesn’t work for most people.
Had lunch with a renter the other day. Age 58 and rented his whole life. His friends all bought, are mortgage free and in retirement need to generate enough money for taxes, maintenance (they can prop that leaning fence up) and the rest of the expenses are the same as a renters ie. heat, hydro. Folks a renters story is a story of tragedy. It is not what is being portrayed on this blog. This blog never explains the tragedy of longterm renting. Sure if you move to a town for a couple of years renting generally makes more sense. Folks, here’s the deal. Are age 58 renter is faced with higher and higher rents as time go forwards and his earnings go down in retirement. But folks here is the real tragedy. Real estate is booming and everytime he rents a home he is FORCED to move every couple of years as these home are being sold offshore. Folks, sit back and think about it. How are you going to afford to pay in the thousands of dollars of rent when you retire? How do you feel about being forced out of your rental home at age 65 and having to move AGAIN. Folks in 25 years MAX the mortgage is finished and you never have to move again. Think about it. If you think housing will plummet in your area then by all means wait but NOT TOO LONG. Think about it, You now know what you need to do. Many banks open 7 days a week now. Most renters are debt laden so clean up your credit, get approved and be at peace with your future secured.

#89 bcc on 06.22.11 at 9:32 am

HAM = hot asian money

but i think the term isn’t accurate, if not wrong. Those are not hot money as we seen in financial market. The asian, unless they are totally screwed financially but not yet on the death row for corruption, won’t move these money out. Do you call the dirty money Gaddafi or Kim Jong Il deposited in their swiss bank hot money? not really. Even if it’s cash in the swiss bank and has the top most liquidity they are not going to move it.

my 2 cents, after tax

#90 bcc on 06.22.11 at 9:41 am

to further,
the asian may finally learned that buying vancouver house is not a good way to park dirty money, after lots of market correction. but still, those who parked already are not going to sell as if its a bad investment and can give better return in other vehicles.

all in all, they still need a place to hide from the firing squard http://en.wikipedia.org/wiki/Lai_Changxing
and enjoy life.

#91 disciple on 06.22.11 at 9:45 am

#29 nonplused…
I guess I should tell you that Lady Gaga is hermaphroditic. Do you still want to date gals like “her”?

#73 keny65…
Absolutely fascinating! I have heard about this Wachovia angle before, and now it is beginning to explain why Canada probably will not have a banking collapse. Perhaps one or two major banks (RBC?) that have exposure to the drug money-laundering business will be affected if there are any drug flow disruption issues.

But the housing collapse does not need a banking collapse; in fact, housing will collapse BECAUSE the banks will succeed in plundering our wealth – just like during the Great Depression in the US. Probably why wise investors like Garth recommend bank preferred shares. I, of course, would not ethically invest in the tool of my own destruction and that of my posterity. I would rather invest in technology. Do what you know is right.

#92 Otto Doppelganger on 06.22.11 at 9:47 am

from http://bit.ly/lwPrp8

“Canadian homebuyers are showing “a high level of financial literacy,” according to a new Canada Mortgage and Housing Corp. survey that found both high levels of research and a determination to pay off mortgages quickly.”

Yes, and lots of literate people choose to read Snooki’s autobiography over Maya Angelou.

#93 jess on 06.22.11 at 9:53 am

regarding china thought this might be of interest …Ceteris Paribus beings being cousins y’all

“Lin Zexu is now seen as a national hero for Chinese people; three films have been made on his role in the Opium Wars such that he is now one of the symbols of modern China’s resistance to European imperialism.

A statue of Lin stands in the United States in Chatham Square (Kimlau Square) in New York’s Chinatown.
It is estimated that the average London worker spent five percent of his or her total household budget on tea. Second, northern Chinese merchants began to ship Chinese cotton from the interior to the south to compete with the Indian cotton that Britain had used to help pay for its tea consumption habits. To prevent a trade imbalance, the British tried to sell more of their own products to China, but there was not much demand for heavy woolen fabrics in a country accustomed to either cotton padding or silk.

The only solution was to increase the amount of Indian goods to pay for these Chinese luxuries, and increasingly in the seventeenth and eighteenth centuries the item provided to China was Bengal opium. With greater opium supplies had naturally come an increase in demand and usage throughout the country, in spite of repeated prohibitions by the Chinese government and officials. The British did all they could to increase the trade: They bribed officials, helped the Chinese work out elaborate smuggling schemes to get the opium into China’s interior, and distributed free samples of the drug to innocent victims.
===============
The cost to China was enormous. The drug weakened a large percentage of the population (some estimate that 10 percent of the population regularly used opium by the late nineteenth century), and silver began to flow out of the country to pay for the opium. Many of the economic problems China faced later were either directly or indirectly traced to the opium trade. The government debated about whether to legalize the drug through a government monopoly like that on salt, hoping to barter Chinese goods in return for opium. But since the Chinese were fully aware of the harms of addiction, in 1838 the emperor decided to send one of his most able officials, Lin Tse-hsu (Lin Zexu, 1785-1850), to Canton (Guangzhou) to do whatever necessary to end the traffic forever. …
http://afe.easia.columbia.edu/special/china_1750_opium.htm#letter

#94 mississaugaboy on 06.22.11 at 9:59 am

SIGH, another friend bited the dust. Just got an email from the friend I tried warning NOT to purchase a condo has just informed me that she bought a condo.

An older building (eeek) in an area of Toronto where there are way too many condos, very little infrastructure and at a time when she is looking for better employment elsewhere so who knows where her work will be located.

I hope things work out for her but I have to bite my tongue and pretend to be happy for her :(

#95 mississaugaboy on 06.22.11 at 10:01 am

@ 81 and @84:

I just saw this article too. They clearly don’t understand that it’s NOT about servicing debt on a monthly basis but total debt. *facepalm*

#96 Sumadartson jr. on 06.22.11 at 10:03 am

RIGHT RIGHT RIGHT RIGHT RIGHT

GARTH IS BATTING 100%

#97 Canuck Abroad on 06.22.11 at 10:11 am

60 / Seen this in the States and now it’s here in Canada – Squidly’s comment was posted by someone else on another site, which he/she linked.

I too am renting after owning for 10+ years. I rent for lifestyle flexibility, and I’m sure renting is cheaper but that was never my main motivation. I have a large four bedroom flat that would sell for easily £1 million, and it costs me £3000 per month to rent. If I want to move, I hand in my notice and go. No selling stress, no upkeep. Anything breaks, I ring the landlord. Last year every owner in the building got a bill for £40,000 for overdue building repairs because the previous management company had let the maintenance slide. There are many young families with small children in the building who really stretched to buy and this was a big cheque to write. There is still work that needs to be done as well…

#98 disciple on 06.22.11 at 10:11 am

Please allow me to share a personal anecdote with you:

When I first met my wife many years ago, I saw something in her that I could not put into words because although I apprehended that “je ne sais quoi”, I did not comprehend it. And so as the years passed and I studied more closely economic theories and current events, I gradually became self-labeled as a conspiracy theorist…whatever…your ignorance is nobody else’s fault…

I eventually understood what it was about my wife that totally captivated me: she was not Western-educated. Get it? She was not brainwashed by our foolish system. In many ways, she is 50 times smarter than me and can smell a ploy a mile away. Although she may not be interested in the scam of central banking or the recycled mythology of the ancient solar cult or even in the absurd contradictions in quantum mechanics (all subjects that continue to fascinate me on a daily basis) it is her ability while knitting her latest sweater design to once in a while stop, look at me and tell me her brilliant opinion on the next step in our family’s financial plan…and she’s ALWAYS right. I am a lucky man. I take many risks, I always have, and one of them was hooking up with a woman that my family did not approve of.

#99 Cookie Monster on 06.22.11 at 10:17 am

#63 Shank on 06.22.11 at 1:08 am
Garth is an excellent drummer for those with too much house and not enough other investments. You’re in an excellent position now for a new drummer, check out Peter Schiff, I think he’s got your next beat. Yes, Schiff knows gold is money, this is his rhythm.

#100 Cookie Monster on 06.22.11 at 10:25 am

#71 zorik on 06.22.11 at 2:09 am
if you say 20.000 profesional workers and 70.000 refuges I Could believe.
By the way it is not immigration it is slave migration
Canada only need slaves who come here to pay high taxes and bills that it is.
———-
Amen brother, Amen.
That’s why this little slave always has an eye on the exit more and more with each passing year. This little renter slave has enough wealth to retire outside the rock quarry of Canada.

#101 smalltownboy on 06.22.11 at 10:28 am

Safe to assume towns and cities with a large number of boomers will see housing prices drop due to the increase of houses on the market?

#102 GTA Girl on 06.22.11 at 10:30 am

Finally! Someone has nerve to print truth. Housing bubble fueled by investor money in downtown condo markets are unsustainable.

http://www.moneyville.ca/article/1012922–anxiety-as-condo-sales-hit-record-high?bn=1

It’s as though Garth wrote it. Love how the BILD guy makes absolute nonsense try to sound coherent.

#103 vreaa on 06.22.11 at 10:39 am

“After all, you don’t need to shovel bacteria.”

——
LOL (very hearty)

#104 jess on 06.22.11 at 10:41 am

“…many leaders in the real estate industry are looking to apartments and rental properties as the new hot market.”
Reasoning:
1-Falling home prices,
2-increases in foreclosures
3-anemic job growth

A national trend, Zillow Chief Economist Stan Humphries said at last week’s meeting of the National Association of Real Estate Editors in San Antonio.

However, Dr. Mark Dotzour, chief economist for the Real Estate Center at Texas A&M University, said U.S. housing numbers and reports often do nothing more than cause potential homebuyers in healthier markets to panic.

“They’re not helping people make good decisions,” Dotzour said. “It’s kind of a hindrance.”

Dotzour said good properties in stronger markets continue to hold their value.

Data – Texas Market Reports – Recon – Housing Activity & Affordability
recenter.tamu.edu/ – United States – Cached – Similar

==
AUSTIN T

The U.S. Department of Housing and Urban Development+ NeighborWorks America have given Texas more than $135.4 million in federal grants to help homeowners at risk of foreclosure.

The Emergency Homeowners Loan Program provides funding (HUD)
-involuntary unemployment ,underemployment caused by the economy or medical conditions.

One in every 1,074 homes in Texas received a foreclosure filing last month
http://recenter.tamu.edu/recon/

http://www.nw.org/network/index.asp

A federal program that will provide interest-free loans to unemployed homeowners so they can make mortgage payments was launched yesterday after months of delays, with $61 million earmarked for Massachusetts

#105 kevman on 06.22.11 at 10:44 am

#84 T.O.

Uh…the prof’s math isn’t off, your reading comprehension is. The prof said

“You see a 10% price correction but if interest rates go up two [percentage points], you are not better off,”

$450,000 (10% cheaper) @ 6% (two percentage points higher) over 25 years = $2,879.13 per month.
After 5 years, the principal remaining is $404,288.32

However the interest cost of the term is $127,036.12 compared to $93,089.15 when purchased at 4%. After spending an extra $34,000 in interest over 5 years you’re only up $31,000 on principal remaining…

#106 Cookie Monster on 06.22.11 at 10:48 am

#79 debtified on 06.22.11 at 7:48 am
RE: Gold Standard/Gold is Money
– If it’s already bad that the vast majority of the wealth is controlled by a very small percentage of the population in a fiat currency world, it would even be worse with gold. Be careful with what you wish for.
—–
Actually, it’s the opposite, things would get better. If all transactions are backed by gold wages would be real, savings would be real, this would allow the working class and poor to build real savings and make real investments with no chance of insipid theft by inflation. Hard work would be rewarded and secure. Wealthy gold holders have to spend or invest their money for it to be of any use to them, so it would circulate. We’d have a moral and honest society once again

#107 Utopia on 06.22.11 at 11:05 am

#46 Hoof – Hearted on 06.21.11 at 11:57 pm

“ROTHSCHILDS FINISH OFF GADDAFI”
——————————————————————————————

Hoof, that video is just bullshit (no offense intended towards you though so please don’t get upset by my attitude). The thing is, I have watched this whole story about Euro Bankers working to take over Libya because Gaddaffi had a plan to create a Gold-Backed currency blah, blah blah with total amazement.

And while there is certainly evidence Gaddaffi was promoting both the ideals of Pan-Arabism and of an economic union of African States, the essential idea that he was attempting to destroy the worlds financial system with the few hundred tonnes of Gold he owned and the oil wealth he controlled is sheer nonsense.

One of the proofs cited that a conspiracy is taking place is the fact that the Rebel government in Bangazzi formed a Central Bank so quickly after hostilities breaking out (noted at 8:03 of the video).

Everyones minds were blown!

This truly had to be a Bankers invasion then! Even “the Bernanke” had to be involved for gawds sakes, they claimed. At least according the Gold conspiracy crowd. They slapped each other on the back in a self-congratulatory way and then began wildly expanding on the story.

And that story got more interesting as each day passed.

Why the hell indeed would a bunch of disorganized rebels form a Central Bank when they barely had a military force of their own to contend with Gadaffis well organized and well-stocked military? Were they so sophisticated? What could it all mean? It just made no sense to them at all.

A new conspiracy was born.

I am here to inform you there is no conspiracy whatsoever. How do I know that? Well the reason I have inside information on the subject is because I am the person who promoted the idea of forming a Central Bank in Bengazzi as a strategy to deprive Gaddaffi of control over the nations financial resources.

I said so on this very site during the early days of the conflict and I wrote my ideas out in a great detail. I suggested then that the existing Dinar be refused by the Bank of International Settlements (BIS) and that the BIS not effect new business with anyone but the Rebel insurgency in the form of a new currency. Gaddaffi’s power could be nullified through currency controls.

This, I suggested, would quickly lead to a downfall of the Gaddaffi regime as he would be unable to transact business in oil abroad and the blunt tools of money would shift from Gaddaffi to the Rebel side thus ensuring his defeat. He could be “buried by paper” were my words, if I recall correctly.

The purpose behind this action was to ensure that the East of the country could continue to carry on business with the rest of the world, sell oil, buy food and supplies and military equipment and that they would not be hurt by the conflict that was depriving the citizens there of badly needed cash.

You will be aware that during the early days of the conflict that Libyan Dinar (printed in England) were being embargoed at sea and that no fresh cash was flowing to the conflict zones. Gaddaffi himself was strangling off the rebellion by withholding funds from the rebel strongholds and he was using financial controls to bring the people back in line.

Everyone needs money to survive, right.

My near neighbor who is living in Canada on funding from Libya, read my comments and then e-mailed my thoughts back home. Those thoughts circulated quickly and were apparently seized upon by the Rebel Leadership as a solution to their problems. It suddenly seemed obvious that their war could be won if control could be exercised over the currency.

What was needed next was recognition of the rebels Government in Europe. Within days, France stepped up to the plate. Others followed and today even the US is considering accepting the authority of Bengazzi as the countries legitimate government in waiting.

My neighbor was not the only one who promoted my ideas though. Within days of publication here on this site, the idea was circulating widely in the media. The thoughts were quickly picked up by others who expanded on them further.

A strategy was born.

I am not a Rothschild though. Just a farm guy in Saskatchewan who had a good idea for winning a war by using financial tools. I wrote about it. Others found those ideas compelling enough to follow up on them and so they were implemented and accepted.

A Central Bank of Bengazzi was formed as a result.

Some of the conspiracy folk have really been running hard with this one lately though. They are totally off-base in my opinion and I have been amazed at how layers of new information keep getting added to the story to expand on it’s premise. The Gold nuts seem to be in charge of this one now.

It grows bigger by the day.

Let me assure you. It is complete bullshit. The idea came straight out of my own head. It was original material and it was first printed right here at Greater Fool. I wrote it.

Check the record. You will see my comments were the source.

#108 An Cat Dubh on 06.22.11 at 11:13 am

37 City Slicker on 06.21.11 at 11:18 pm
Garth, sounds like Alberta will be having a labour shortage for all the work required in the oil sands over the next 10 years. Doesn’t look like this industry is slowing down. Think this will keep the RE market in Alberta elevated? Maybe it’s different here this time.
.

This comes up every once in awhile and now they are saying in B.C. and Canada will have a labour shortage when boomers retire. If you look at the Canadian birth records, just as many kids were born in the 90s as the 1940s, plus immigration means there is more than enough to replace these boomers. Some companies I believe just want to import workers so that they can pay lower wages. Business in the western world had it quite good the last 40+ years. Lots of boomers and women entering the job market which means more competition for jobs, which pushes wages down. On a short stretch on Atkinson St. in Penticton there are 10 condos for sale plus quite a few homes with for sale signs.

#109 Zara on 06.22.11 at 11:17 am

Jon B #4. Pumper or agent?…. “somethings up”…. It’s not HAM it’s BOLOGNA with sauté mushrooms. 

#110 Abitibidoug on 06.22.11 at 11:26 am

As Garth said, and defended the idea in posting #75, there will be many boomers trying to sell their houses at the same time in years to come. The boomer generation is more educated than any previous generation in history. Why didn’t more of them sell their big houses and downsize during the recent period of strength in the housing market?

#111 Devore on 06.22.11 at 11:38 am

#81 Gord In Vancouver

http://www.nationalpost.com/Desperation+factor+housing+market/4984409/story.html

Bwahaha!

It’s easy to say wait until the market crashes in cities like Vancouver, where prices are up 25% from a year ago. But if rates go up, it could be just as expensive to carry a home.

“You see a 10% price correction but if interest rates go up two [percentage points], you are not better off,” Prof. Andrew says. “Buyers are caught in this quandary that when interest rates go up, prices will come down.”

If you are sitting on the housing sidelines, it might seem like you can’t win either way.

This is what passes for economics today?

Sure you can win.

A) Who says prices will only drop 10%?
B) Smaller debt is vastly preferable under every circumstance to larger debt, even if your monthly payments are the same.

#112 SAD on 06.22.11 at 11:49 am

Inside Whitney Elementary School in East Las Vegas, nearly 85 percent of the children are homeless. That’s 518 kids out of 610.

Read more: http://www.cbsnews.com/stories/2011/06/09/eveningnews/main20070437.shtml#ixzz1Q1VPk1cV

#113 BrianT on 06.22.11 at 11:56 am

#75Deta-The other thing is that if boomers hang on tooth and nail to their homes as you predict, the overall economy will slow as their funds will be diverted. Add in far higher energy costs and any discretionary spending would be gone for this group overall, which would impact the overall economy, housing included.

#114 TS on 06.22.11 at 12:05 pm

Anxiety, as condo sales hit record high

On an annualized basis, May sales are running at 26,000 units per year, when demographic demand would suggest a rate of 14,000 to 15,000 per year, said Dunning.

http://mobile.thestar.com/mobile/NEWS/article/1012922

#115 BrianT on 06.22.11 at 12:07 pm

#38Stev-Fiduciary responsibility is gone from the system. Just a couple days ago, JPM admitted to another fraud and paid a fine of 153 million. IMHO, very very few persons would give a penny of their own money to JPM, Goldman or a host of other firms continually running fraudulent scams. Yet pension funds, banks, insurance companies, etc. line up to give your money to these guys to play with-yet would never consider doing the same with their own money.

#116 bill on 06.22.11 at 12:13 pm

”I wont say any more though as the dope you sent me last time was off the hook”

he who has not smoked dope at the table of allah knows not what good dope is….

#117 vyw on 06.22.11 at 12:15 pm

Here’s a story on population estimates – see increases for Ontario – http://www.cbc.ca/news/canada/story/2011/06/22/statscan-population-study.html

#75 raises some good points about boomers staying in their homes as opposed to downsizing or renting. There is also the intergenerational wealth shift from pre-boomer parents. And boomers will also do the same, that is hand the property over to their children. Let’s say at age 65, the mortgage for the SFH has been paid up…will boomers be able to live on their CPP, OAS/GIS, savings, pensions and HELOC or share the house with others? If so, then why move? Home is more than a store of wealth – it has all the memories – family, friends and neighbours.

#118 luke8929 on 06.22.11 at 12:30 pm

Massive theft of state funds alleged in China

It said the officials smuggled billions into the US, Australia, Canada and Holland through offshore bank accounts or investments, like property or collectables.

http://www.radionz.co.nz/news/world/78043/massive-theft-of-state-funds-alleged-in-china

I would imagine the Central Bank of China massively underestimated the amount stolen and some of it is buying houses in Canada.

#119 Cato on 06.22.11 at 12:40 pm

Vancouver is unlike any city in the world when it comes to income not matching lifestyle. Credit, not income, finances lifestyle out here and homes are just a part of the problem. Governments at all levels encourage it, juiced consumer spending is good for pet projects.

Ontario is no prized pig either. The wealth divide in TO will start to become a chasm. A minority will benefit from new economic order, the majority won’t – which side of fence your on likely depends on debt ratio and employment sector. If this strikes any social idealists as unfair, life isn’t fair so get used to it – you’ve already destroyed the manufacturing sector with your meddling.

Drew buddy, load an ipod with a selection of elevator music, teenie bob crap and other motivational tracts for your friend, he’ll need it. This used to be favourite playlist of various metrosexual bubble heads I met in California who were just as certain that bidding wars meant values could only go higher. I still keep in touch with a few of em – one is in the army sucking dust, the other crawls into holes for a living killing rats and the only thing you’ll hear playing in their car now is death metal. Guns & ammo replaces home & garden as the rag of choice on coffee table.

I’m not a doomer, I’m a realist – realists make money by shearing the sheep. Doomers come after a crash, they’re the ones who were unprepared and had their world turned upside down who now feel betrayed and want to burn the system down in vengence. They’re the ones you need to be worried about. The path from bubble head to doomer is a short one, just wait till you see how fear changes people.

#120 YEG on 06.22.11 at 12:43 pm

Squidly 77…

I just have to pile on.

How can you lament renters so much!

You are such a pumper!

I bet you want and think that real estate will go up forever and that you will just continue to make money off renters backs. But the day of reckoning for you is coming! It may not be 2008 or 2009 or 2010 there are only six months left in 2011 so probably 2012 for you. All of that equity you have built up on the backs of your renters will be gone!

I bet you are a realtor too. You probably work in Calgary and lie to buyers and sellers all the time.

Get a real job cause your real estate gig will be up at some point in the next 20 years.

#121 this is wonderland on 06.22.11 at 1:22 pm

#84 T.O. Bubble Boy

Thank you.

After reading Prof. Andrews comment, I just wanted to hang my head and cry…

Now I know how G.T feels.

———————————————————————
“You see a 10% price correction but if interest rates go up two [percentage points], you are not better off,” Prof. Andrew says. “Buyers are caught in this quandary that when interest rates go up, prices will come down.”

#122 garrulous squirrel on 06.22.11 at 1:30 pm

If we were talking about the normal fluctuations of the Canadian economy and demographic I would readily agree that we’ve gone insane. But a game changer has been introduced…one that has never been seen before…has never been accounted for……has never been calculated or quatified by Canadian by Canadian economic observers.

And you know I’m talking about the Tsunami of crooked Chinese nationals swamping out of a pool of 1.5 billion. This is unprecedented. Each ‘immigrant’ sponsors from 6 to 20 +++ family members making the’official’ immigration stats a joke. The body count isn’t the 350K the government is telling us but in the millions when the wave of relatives hits the health care rolls.

But wait……..there are hundreds of thousands of non immigrant speculators coming to Canada…specifically Vancouver…..to invest”””for later’. This last number is completely unaccounted for in the ‘official’ statistics.

There will be no stopping the real estate rampage by saying that we’ll peak based on traditional Canadian economics….this position is naive…to say the least. The traditional Canadian math doesn’t apply…….we’ve already run out of Canadians to buy property in Vancouver. The ponzi pyramid should have collapsed except for the new factor of the billion and a half crooked Chinese officials desperate to use the ‘easy laundry’ ( how ironic eh?) of Canada to get the ill gotten loot out of China.

If we want to try and understand the dynamics of the HAM vs Canada we have to strip out all the pre concieved notions we learned in the 1970’s at UNI and look at what actually IS happening. Once you get over the past you quickly realize that our government….by letting untaxed foreign funds into the market….has tipped the country’s economy in the favour of the Chinese crooks while keeping Canadians pushed down with egregious taxation schemes.

This time…..there actually is a new paradigm……..and brother is it ever different. Until the Canadian government gets smart ( like Aussie did) we’ll continue to have Chinese stolen loot as the basis of the local real estate economy. That can’t be good.

#123 Hoof - Hearted on 06.22.11 at 1:33 pm

One good example re JP Morgan..Goldman Sachs etc.

Remember the scene in Blazing Saddles where the Sherrif is surrounded by the rednecks?

He pulls out his gun…holds it to his head and says…” OK stop or the “N” gets it?”

This is what banksters have done…f*ck with us and we’ll pull the plug.

Politicians are both cowards and bought off.

What happened in Greece was simply a clever fuse at the base of the 1st domino….

#124 Unshaven on 06.22.11 at 1:52 pm

To Comment #84

For your sake I would be concerned about our educational system too…

The article by the Queen’s Prof clearly states “…you see a 10% price correction but if interest rates rise two percentage points, you are not better off”

Let’s do the math again shall we?

$500,000 @ 4% over 25 years = $2,630.10 per month
After 5 years, the principal remaining is $435,283.15.

$450,000 (10% cheaper) @ 6.0% (two percentage points) over 25 years = $2,879.13 per month
After 5 years, the principal remaining is $413,738.87

This means that scenario two would have paid off $28,455 LESS than scenario one, on a cheaper home. Scenario one clearly wins equity-wise.

#125 Devore on 06.22.11 at 1:59 pm

#108 Utopia

This, I suggested, would quickly lead to a downfall of the Gaddaffi regime as he would be unable to transact business in oil abroad and the blunt tools of money would shift from Gaddaffi to the Rebel side thus ensuring his defeat.

Except oil is bought and sold with dollars.

#126 Hoof - Hearted on 06.22.11 at 2:05 pm

#108 Utopia

Whoa…calm down

“And while there is certainly evidence Gaddaffi was promoting both the ideals of Pan-Arabism and of an economic union of African States, the essential idea that he was attempting to destroy the worlds financial system with the few hundred tonnes of Gold he owned and the oil wealth he controlled is sheer nonsense.”

=====
The person in the interview submitted a premise.That’s all it was.

Qadddafi seems primed as a False Flag target.

Also…watch Pakistan.

What I gleaned from it was what has been suggested for years…that this fiat currency is the root of evil….and others have suggested that one does not need Banksters…simply create other monetary supplies.

Read some history.

As it stands…the debts racked up by the world’s gov’ts can never be repaid…its IMPOSSIBLE…..thus the banksters strategy is to literally commence with hard asset confiscation….or control thereof.

They created money out of their arses….they have lost nothing…

#127 Devore on 06.22.11 at 2:13 pm

#118 vyw

#75 raises some good points about boomers staying in their homes as opposed to downsizing or renting. There is also the intergenerational wealth shift from pre-boomer parents.

No, not really. As Garth says, no one is expecting all boomers to sell all their houses all at the same time.

Always, there are some people who need to sell. As boomers retire, there will be more and more people who now need to sell, who did not need to sell before. Boomers, more than their parents, have more wealth tied up in their house. Also more than their parents, they carry loans, mortgages and HELOCs into their retirement.

If CPP/OAS/GIS is not enough for a dignified life, they will need to look for new sources of income. After selling stuff and downsizing their life, the only thing they will have left is their house. Some, will need to sell. This will bring additional inventory.

Those who need to sell to put food on the table will not be holding out to get “what their house is worth”. Although I think most would rather reverse-mortgage than sell and downsize, which means the only “wealth transfer” the next generation will see is to the banks.

#128 Stevermt on 06.22.11 at 2:19 pm

#120 Cato…thank you for commenting on the realists vs doomers. I know that I am a realist, but there are people calling me a doomer…it’s frustrating.
Realists read and educate themselves, don’t wish for bad events to happen, but acknowledge that they could..the mental preparation is more important than anything else.
Life must go on and BAU to an extent, knowing all too well that BAU might come to an abrupt end. That could make the landing for a realist a little softer…

#129 Mr. Reality on 06.22.11 at 2:33 pm

“#52 Jane on 06.22.11 at 12:23 am
Hey smoking man, who’s the moron?”

Click on his name in his post and it will take you to his blog. The answer to your question is just one click away!

MR. R.

#130 Devore on 06.22.11 at 2:35 pm

From down south: when numbers don’t cooperate, just change the numbers! They won’t mind.

http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201106211841dowjonesdjonline000414

#131 jess on 06.22.11 at 2:42 pm

Logistics -“pass throughs”

The Miracle of Procurement Debunked Again: The Air Force Finally Got Tired of Getting Screwed (Literally)
Wednesday 22 June 2011
by: Dina Rasor, Truthout | Solutions

Boeing has just been caught spending $37 dollars for nut and bolt retainers for the Army’s CH-47 helicopter, but charging the Army an average of $381.78, according to a recent Department of Defense’s (DoD) inspector general’s (IG) report. The IG’s office won’t comment on the report because it is “For Official Use Only,” but Bloomberg News got a hold of the report and wrote a story on May 24 about how the DoD IG recommends that Boeing refund the government at least $6 million. If the Army had used the traditional way of getting the parts for this helicopter, through the Defense Logistics Agency (DLA), they could have paid $6.77 each; there were, as of last December, 734 of the bolt and retainer sets in the DLA stocks….

http://www.truth-out.org/miracle-procurement-debunked-again-air-force-finally-got-tired-getting-screwed-literally/1308754483

=

Department of Defense WhistleblowerIn 1968, Mr. Fitzgerald reported a $2.3 billion cost overrun in the Lockheed C-5 aircraft program.[1] As a congressional witness before the Joint Economic Committee, he rejected the advice of Air Force officials and testified with candor and transparency about billions of dollars in avionics program cost overruns and other technical problems.

In response to Mr. Fitzgerald’s testimony, President Richard M. Nixon directed that he be fired. “It was reported that Nixon told aids to ‘get rid of that son of a bitch.’” In executing the president’s order, Mr. Fitzgerald was ultimately terminated by Defense Secretary Melvin Laird.

Because of his candor and commitment to the truth, Mr. Fitzgerald was a driving force for whistleblower protections. Mr. Fitzgerald continued to fight a four decade long campaign against fraud, waste, and abuse within the Department. Consequently, he was instrumental in the enactment of the Civil Reform Act of 1978, a precursor to the Whistleblower Protection Act of 1989.

#132 Montrealer on 06.22.11 at 3:17 pm

Taling about Van condos… rad this forum post on rfd: http://forums.redflagdeals.com/pre-sale-condo-vancouver-please-help-me-decide-if-i-should-get-1051377/

Guy wants to buy $360k, 660sqft condo, loose each month and make money on cap gains…

“To be honest, I will still be out of pocket for around $700 to $800 per month after factoring all expenses. But since the location is very good and the developer is known, I’m hoping the condo price appreciation will cover the additional monthly payments I’m making.”

This is i-n-s-a-n-e, he needs the condo to gain $10k per year just to get even.

#133 T.O. Bubble Boy on 06.22.11 at 3:37 pm

@ #106 kevman:

You’re point is what?

That paying more in interest is WORSE than paying more for the house itself?

You really think that people care if they pay less money, but more goes to the bank in interest?

#134 T.O. Bubble Boy on 06.22.11 at 3:42 pm

@ #126 Unshaven:

Are you insane? How is paying off more principal better if you still owe more in debt? In scenario 2, you own the same house, but owe less for it… that obviously is the better option.

Today’s posters are scaring me.

#135 disciple on 06.22.11 at 3:45 pm

Clearly, all international wars (US Civil War included) were and are instigated by the mass mind control of the financial parasite class, commonly known to you as the Matrix of international central banks headed by the IMF. The Arab nations espouse a monetary system devoid of interest/usury/debt bondage. That is the reason for these modern Crusades. Anybody who tells you otherwise is lying or is ignorant, either willfully or obediently. And you can take that to the bank…

#136 BrianT on 06.22.11 at 4:05 pm

Miami might be nearing the bottom-63% cash buyers is pretty impressive IMO http://www.usatoday.com/money/economy/housing/2011-06-21-all-cash-buyers-scoop-up-homes_n.htm

#137 randman on 06.22.11 at 4:06 pm

Just a friendly response to the Doomer entry

“Betting against gold is the same as betting on governments. 
He who bets on governments and government money bets against
6,000 years of recorded human history.”


–Charles de Gaulle

#138 Sail1 on 06.22.11 at 4:06 pm

“One cannot totally discount the possibility that some pockets of the Canadian housing market are taking on characteristics of financial asset markets, where expectations can dominate underlying forces of supply and demand,” Mr. Carney said. “The risk is that expectations become extrapolative, prompting the classic market emotions of greed and fear -greed among speculators and investors -and fear among households that getting a foot on the property ladder is a now-or-never proposition.”

http://www.financialpost.com/personal-finance/Should+house+before+late/4984409/story.html

Carney knows this but do you think he would start to increase rates.

#139 disciple on 06.22.11 at 4:07 pm

Bubble Boy…This is an interesting problem. You are correct, of course, that less debt overall at a nominally higher rate is better in the long-term. I guess you can single out the homeowners (I used to be one) that are attempting to justify a bad purchase decision.

Free advice for kevman and Unshaven: SELL NOW!

#140 Timing is Everything on 06.22.11 at 4:10 pm

#94 Cookie Monster

We’d have the ‘golden rule’…..Those who have the gold…rule!

Same as it ever was…
Meet the new boss, same as the old boss…

#141 poco on 06.22.11 at 4:14 pm

Smoking Man—you’re comment from Tragic
My son wanted to sell his condo in feb. I told him no. Ilast week more than e. Rrds of the units in his build are sold. Price up 25 k since start of year
______________________________________________
your comment from post #30 today
My son is an idiot, just sold his condo tp hrvest cash for his music dream….. Idiot ya he broke the record on price, told the re agent brfore he tock the offer back that he was thing of rasing the price based onmy input.

My son is a loser he just kist away an outher 100k

o well he will love and learn.

He is a moron
_____________________________________________

i think we have to let our kids make their own decisions–you know the saying—learn from their mistakes etc…..

by the way i think your son just told you something

#142 Industrial Guy on 06.22.11 at 4:18 pm

Please!!! Send HAM to South Western Ontario.

Our market is softening. We all dream of selling our houses at 5 times over asking and moving to Canada’s new retirement destination ….. Windsor! It’s South of Detroit you know?

#143 Markey on 06.22.11 at 4:36 pm

Looks like CMHC is blowing smoke: http://ca.finance.yahoo.com/news/CMHC-says-Canadians-aim-pay-capress-298179403.html?x=0

#144 EX-Cowtown on 06.22.11 at 4:39 pm

Calgary:

Sales volumes up over 2010. Average and Median prices down. Listings way down.

And that confirms that the CGY market is on the skids. Look out below.

Well that and the CREA screaming that prices are going up another 5-7% this year…. really…. for sure this time…. you betcha….

Oh, and I didn’t read anything by BPOE and Smoking Man today…. so I didn’t feel my IQ drop by 30 points!

#145 vyw on 06.22.11 at 4:40 pm

#129 I appreciate your response Devore and I agree that certainly some boomers will sell their homes to retire or downsize, etc. The older boomers 55-65 have the highest levels of home ownership – something like 75+%, and this level has increased over the years. Demographers are counting on the boomers to downsize and sell. I’m saying that perhaps we haven’t fully factored in intergenerational wealth transfer from the 65+ years parents of boomers to the boomers.

Check around the neighbourhood – are there 70+, 80+ yr olds living in their own homes? It doesn’t make financial sense. Their mortgages are paid, kids have left, heck the grandkids have left, they could sell the SFH home for 900K in Vancouver and move into a nice condo. Some seniors do this, others are moved into senior housing, care facilities but as per #75’s comments, some of these seniors will stay put in their SFH homes right to the end. I think that many boomers will do the same thing especially in the preferred neighbourhoods in Vancouver, Toronto, and other cities. Lower supply, maybe not higher prices but maybe a floor after the correction.

Check out the number of deaths in the CDN population reports today (table 1): http://www.statcan.gc.ca/daily-quotidien/110622/dq110622a-eng.htm
It’s approaching 70,000 in 2011 1st Qtr.

Those intergenerational assets (from a generation of savers who survived the Depression and WWII) are going to go somewhere. The boomers win again? I didn’t say we deserve it.

Canada is the one of best places to live and on that point – this is directed at the doomers – one shouldn’t count the Americans out – they still have tons of money and they’re buying in the midst of their housing correction – > http://www.nytimes.com/2011/06/19/realestate/more-parents-buying-apartments-for-their-children.html?pagewanted=1&_r=1&hpw

#146 JoshL on 06.22.11 at 4:42 pm

#136 TO Bubble Boy,
I agree with you. The point that Unshaven is missing is that the house he bought for $500,000 would go down to $450,000 when the interest rates go up. He somehow thinks paying more “off” means he gets more equity.

The principle owing is still the principle owing. More, in this case, is not better.

#147 kevman on 06.22.11 at 4:43 pm

#135 T.O.

Well I guess “my point” was the article said 2 percentage points and not 10%… (Which you admittedly had caught after I had already submitted my response.)

But anyway if we’re going to actually compare the numbers to try and rip apart his quote there are a lot of variables at play. Are we talking buying the same house TODAY for $500k @ 4% or $450k @ 6%? If so, without a question you’re better off buying scenario 2.

However, if we’re talking about purchasing the home for $500k @ 4% today versus buying the same home for $450k @ 6% in 5 years just to save $16,000 (or $3,200/year) well then maybe scenario 1 starts to look a little more attractive… Wait, is that still a little too vague?

Regarding post #126… the poster simply said given scenario 2 one would end up paying less to own a less expensive house. How does this scare you? Given you said “Having a 10% cheaper house w/ 10% higher rates will put you way ahead:” I don’t think it’s unreasonable that he’s not talking about the same home but rather two homes with different prices…

It’s funny that the house prices debate appears to have followed that of global warming, errr climate change debate. Gone is the ability to have rational conversations about a grey subject area. In it’s place are emotional driven black or white arguments.

I’m sure you could present a very convincing argument based on projected variables that show you’re better off renting for 5 years to buy home x versus buying the same home today. Then again, I’m equally confident in my ability to put together the argument that supports the idea of buying today. Funny thing is we really wouldn’t know who’s projections (wild ass guesses) were more accurate until 5 or 10 years down the road. I’d even go further to guess that reality ends up somewhere in the middle…

#148 Imstupid on 06.22.11 at 5:07 pm

#135 T.O Bubbleboy

I agree with you. Let me add my stupidity to this one. A higher mortgage interest rate is better than a lower one. It’s seems stupid but I’ll explain.

Let’s assume that the monthly payment of a single family home is 40%. Their are two ways to get that number:
1 principle
2 interest

A higher mortgage rate reduces the price of the home to equal 40%. The common number used for affordability. A lower interest rate increases the price equalling again the 40%.

The difference is that by buying with such a low rate it front loads the mortgage. Meaning you cannot pay mortgage faster and reduce costs because all the costs are in purchase price. If rates go up you run the risk of being underwater and having affordability go out window.

Now take a higher interest rate. That back loads the mortgage. If you make higher regular payments you shave years of mortgage and save a bundle. It also gives you the opportunity for a win fall if rates go down.

The only people who get screwed with higher mortgage rates are those who bought and borrowed when rates were lower. It doesn’t matter how high the rates go. As long as the market can function freely and settle inline with affordability for any market, rates can be 100% and it would be better than 0%. Unshaven and Kevman couldn’t add 1+1 let alone figure out market rates, affordability, compound interest as a percentage of household income, and the meaning it all has on personal finance.

But I’m stupid.

#149 VICTORIA TEA PARTY on 06.22.11 at 5:26 pm

STOCKS: THEY’RE A BUY!

Now that the “dust” has settled over Investorland, we can now dip our aging toes back into the stock market following this 5 or 6 weeks of worry-walling or whatever.

Those in the “know” believe that Greece, not to forget its utterly impoverished citizens (including more and more of the “rich”), is safely on the road to fiscal re-balancing and a debt-free future. All it’ll take is to sell off whatever is or is not bolted to that fabled landscape, and to have the denizens therein life lives of fiscal servitude, paying off their exceedingly wealthy bond-holder benefactors in Frankfurt and Paris for the next 300 years or more.

Back in the Good Ol’ USA, Big Ben and the Federal Reserve bunker-dwellers came out into Washington DC sunshine today, eyes blinking in the harsh light and announced that everything’s good, even if growth will more or less stagnate until 2012, after which miracles of the economic kind will occur and everything will be doubly good!

Adding to this amazing outlook is, of course, a very “nice” insurance policy that’ll be trotted out by, I expect, August:

QE 3!

Having been totally unsuccessful in restarting the US economy (except the stock markets!) through stimulus packages and QE 1 and QE 2, since 2009, QE 3 oughtta do the trick!

CNBC is all over this latest FOMC revelation:

“The only way that [the Fed] could possibly consider QE3 is if the macro data refuses to improve and the market starts to take a real hit—another 15 percent from here,” said Kenny Polcari, managing director of ICAP Equtiies. “But if that doesn’t happen and if things just muddle along, then I don’t think there will or should be any QE3.”

In other word, there will be a QE 3!

At this time, then, some careful market bottom-fishing is probably on. In fact I’m getting out my trolling gear right now, after I’ve first cut the grass!

Priorities, priorities!

#150 ballingsford on 06.22.11 at 5:51 pm

Just spoke with a neighbor renter. We live in town home type apartments with back yards for gardening, barbeques, and patio sets, and are close to all amenities with a 10 minute drive to Parliament Hill.

Neighbor: I’ve been out all day looking at real estate.

Me: Oh yah, where are you looking?

Neighbor: Kanata, Barrhaven, but mostly Barrhavan(suburbs for you not familiar with Ottawa. Nickname for Barrhaven is also nicknamed Farrhaven).

Me: When are you looking at moving?

Neighbor: About 3 or 4 months. When are you going to move out?

Me: When the housing bubble crashes and the prices come down.

Neighbor with a stern and convincing voice: Housing prices never come down, they always go up.

Me: Oh yah, well all the best in your search! (What else could I say verbally except to think ‘What a GreaterFool is he’.

I smiled and joined my 3 1/2 year old son who was enjoying playing outside. Most of the neighbors in this area get along well, there’s lots of green space, rent and parking are less than a mortgage, property taxes, maintenance, etc.

Do we care if we rent at the moment? Certainly not! Actually, we have a good enough amount of disposable income for good cuts of meat, great wine, and other stuff, no debt, and are still able to put some cash away and also maximize the RESP each year.

Cheers!

#151 ballingsford on 06.22.11 at 5:56 pm

As per my post above, I forgot to tell you the best part. The neighbor I was speaking with is about 30 years old and lives with his dad (just the two of them). They both work at Costco, and they have been pre-approved for a $500,000 mortgage.

Go figure!

#152 tran, Calgary on 06.22.11 at 6:02 pm

New Marijuana Bill

http://ca.finance.yahoo.com/video/investing-22350847/5-family-vacations-under-1-000-25527346#video=25712978

Canada?

#153 Hoof - Hearted on 06.22.11 at 6:17 pm

Chinese Interbank Liquidity Freeze Continues For Third Day, Will Persist As Inflation Expected To Rise Over 5.5%

http://www.zerohedge.com/article/chinese-interbank-liquidity-freeze-continues-third-day-will-persist-inflation-expected-rise-

#154 VICTORIA TEA PARTY on 06.22.11 at 6:19 pm

#108 Utopia

What a story!

I have to believe it, because you always write credibly about the issues that you find of interest.

The problem with the Internet is that “information” flows unabated, unless some government decides to prevent it from occurring.

What is most amazing is the shallowness of Europe’s posh governing elites. If Sarkozy was persuaded by a lad, from the interior of the world’s second largest country, to give the Libyan rebels some form of legitimacy, it just shows to go ya how deeply in trouble is the Industrialized West.

In the good old days of ABC, CBS, NBC, BBC and CBC there were plenty of ways of monopolising information gathering and dissemination. This idea of your’s, Utopia, is something the CIA would have dumped on the President’s desk, back in those days.

And the Lefties all over the West would have marched in the streets whining: “Whadda we Want? Everything! When do we want it? Now (Kinda like OUR posties)!”

But today’s Lefties are content with dining out on government grants, twitting, and a little bit of this and that, until the next communications link comes on the scene, probably by tomorrow sometime!

And the vaccuum-headed elites running downtown Europe, NATO, the White House and probably the Bilderbergs, are actually doing the REALLY SERIOUS work; deciding where to go tomorrow for a little lunch!

Does this mean that the rest of us are in trouble? Nope. Not if squirrel soup recipes and long guns are in your lives.

#155 T.O. Bubble Boy on 06.22.11 at 6:31 pm

@ #149 kevman:

You pretty much confirmed my point: obviously, if you ignore any concept of waiting X years, the Prof’s argument is incorrect.

This is not like global warming – there is zero grey area here… the argument was simply about the mathematical calculation, which clearly show that if you take the same house and make it 10% cheaper w/ 2% higher interest rates, it is far better than to buy at a 10% higher price with 2% lower rates.

My point about 5 years is that the vast majority of Canadian mortgages are on 5 year terms, and would renew at a new rate after that 5 year term.

Again – this whole argument is based on 2 scenarios that were quoted in a national newspaper by a University Professor… my real point here is that the media printed this quote from the Prof as if it was the absolute truth, when really the numbers show that he’s mis-stating the facts.

#156 disciple on 06.22.11 at 6:36 pm

kevman…trust me…you will eventually come to your senses…your words betray much that you are not saying, such as “one should own their own home” and “everybody needs a mortgage so why not get one at a lower rate? These are fallacies that are colouring your logic such that you cannot see the error in your thinking. Been there, done that…

#157 disciple on 06.22.11 at 6:41 pm

Do you not want to save 16,000 yoohas? The rate and the time factor are not as important as the overall debt. The former two species are variable, the last is permanent. And anyway, the general interest rates likely will not change too much in the next few years, but the pricing of housing will…to the downside. There is no advantage in owning at the present moment…

#158 Nostradamus Le Mad Vlad on 06.22.11 at 6:51 pm


GW my arse! 29 today, 23 Thurs. and 19 Friday. Global Goreballs “My deal with Dubya was that if I threw Florida in 2000 that I could loot Americans with the carbon tax for the rest of my life, and YOU ARE NOT GOING ALONG WITH THE DEAL!!!!!” — Saint Al of the Gore
*
Obama “For those a little rusty on their history, the Sturmabteilung or SA, better known as the “brownshirts”, was the paramilitary organization utilized by the Nazi Party to bring Adolf Hitler into power.”

Debt Nukes Similar to pic. at head; Military for Jobs? There are better methods; New York Fed “It’s nunya business! We are above the law, dammit! We answer only to God, I mean, to Lloyd Blankfien! Just shut up and pay your taxes, slave!!” — Ben Voldemort, Dark Lord of the Federal Reserve. wrh.com; 1:57 clip Euro prison is collapsing around Greece; Chicago taxpayers on hook; Rich – Poor States PDF file. Hawaii is 47th. The TSA ruined the state; S&P “Meaning the only way for the US Government to preserve its credit rating is to plunge the American taxpayer deeper into debt to the money-junkies!” wrh.com; Lotsa cash, but no hiring; Pension One and Pension Two; ObamaCare “It was only discovered in the past few weeks – And it will cost tens of billions.” Greek gold and Perth silver;

Canada — 13:54 clip “Conservative strength means tough austerity measures on the way.” Remember Bill C-51? It’s back, but adjusted.

US Constitution “Zakaria is a smart fellow. He knows the Constitution established bedrock principles that led to previously unimagined wealth and prosperity.” Even dubya said “. . . the Constitution is just a goddamned piece of paper . . .”; NATO Possible cracks over Libya; Orwell in Libya “Tastes great — Less filling!” Historic Fairytales Iraq’s nukes, now Iran’s; Agenda 21 is a UN law within US law.

4:26 clip Footage of tsunami shot from inside a car. Water starts appearing about 1:09, Japanese announcer; Fukushima USA It appears these dominoes are ready to go down like the Hindenburg; New Study on fluoride.

#159 TurnerNation on 06.22.11 at 7:14 pm

Maple Group Acquisition Corp., a corporation whose investors comprise 13 of Canada’s leading financial institutions and pension funds, has increased the offer price and the maximum cash consideration being offered to shareholders of TMX Group Inc. as part of an integrated acquisition transaction to acquire 100 per cent of the TMX Group shares now valued at approximately $3.8-billion.

Under the enhanced terms, Maple is increasing its offer price to $50 per share from $48, and is increasing the number of shares to be purchased for cash under the offer from 70% to a maximum of 80% of the TMX Group shares. The offer remains subject to a non-waivable minimum tender condition of 70% of the TMX Group shares. The offer will be followed by a second step court-approved plan of arrangement providing for a corresponding increase in the value of the share consideration per TMX Group share. The increased cash purchase price will be funded entirely by additional proportionate equity investments by the Maple investors.

#160 Devore on 06.22.11 at 7:16 pm

#149 kevman

It’s funny that the house prices debate appears to have followed that of global warming, errr climate change debate. Gone is the ability to have rational conversations about a grey subject area. In it’s place are emotional driven black or white arguments.

No, it’s because everyone is using made up numbers that make their case.

Just look at your example.

6% interest rates are still way below historical trend (think closer to 8%), so you’re saying there will be a very low interest rate environment for YEARS to come.

10% decline in 5 years is basically saying the market goes sideways for the next 5 years. It’s nothing. Even it it does so, real estate will remain a very unhappy place, with lots of investors and flippers jumping off the train. Nothing ever corrects 10%. Not after more than doubling in 10 years.

Or hey, how about these numbers:

purchasing the home for $500k @ 4% today versus buying the same home for $300k @ 8% in 5 years

Or the Japanese scenario:

purchasing the home for $500k @ 8% today versus buying the same home for $250k @ 2% in 5 years

Or the American scenario:

purchasing the home for $500k @ 5% today versus buying the same home for $300k @ 3% in 5 years

See, I can make stuff up too.

#161 arctodus on 06.22.11 at 7:40 pm

#122 BL
of course we will now see global fiat devaluation and rampant currency printing…but the real reason is still not clear to 99% of humanity.

Check out TOD (the oil drum) postings today show that there is good evidence that humanity is no longer at “Peak Oil”……..

we are now heading DOWN the decline slope that many in the peak oil community have been warning about for a decade. Now we will see the real bad stuff start.

The world wide economy is in full meltdown and governments and other world power structures are truying desperately to hide this bedrock and unforgiving truth……

A world made by hand is coming fast now…

gee whiz batman….what happens to 500 nuclear power stations (or some other large number) when the electrical grid goes down?…..

Have fun all….no need to listen to a “doomer”……

#162 Kaganovich on 06.22.11 at 7:55 pm

#108 Utopia

I can’t figure out whether your proud for coming up with an idea to legitimize the illegitimate, or just proud for supposedly coming up with an idea that some elites thought was ‘good’? Or do you think the rebels are legitimate? Is the war right, Utopia? Unbelievable.

Here are some links to articles and videos that think that what is happening is wrong:

Murray Dobbin
http://rabble.ca/columnists/2011/06/libya-latest-product-canada’s-ugly-war-assembly-line

Louis Farrakhan
http://www.youtube.com/watch?v=h3ZdmRd-91A&feature=related

Concerned citizen Marian Falk
http://www.globalresearch.ca/index.php?context=va&aid=24389

“The Libyan Government is not a totalitarian dictatorship. If your political party supports the military intervention in Libya, you are supporting illegal interference in the healthiest, richest, most egalitarian state in all of Africa.

By supporting the military intervention of Libya, your political party is claiming selectively that certain countries are more important than others to receive Canada’s assistance. If Canada was truly concerned with saving civilian lives, our Government would press for resolutions protecting the citizens of Iraq, Gaza, Afghanistan, Yemen, Saudi Arabia, Bahrain, and elsewhere where civilians are being systematically murdered by their governments.

If your political party supports the military intervention in Libya, you are supporting an act of war that is illegal according to international law. You are therefore supporting the destabilization of our entire global order.

If your political party supports a Canadian military intervention in Libya, you are directly supporting Al-Qaeda and other extremist religious groups that our Government claims to be protecting us from. You are NOT supporting a peaceful protest movement; you are supporting an illegal armed insurrection. Canadian support of this mission is a direct threat to the safety of every single Canadian citizen.”

#163 Spot The Speculator #46 – ‘Invested’ in five condos; Just lost two tenants; Exactly 42 bucks in the bank; Asks friend for loan; Starts to cry | Vancouver Real Estate Anecdote Archive on 06.22.11 at 8:02 pm

[…] Bill Gable at greaterfool.ca 21 Jun 2011 10:13pm [hat-tip 'Makaya' and 'Bailing in BC'] – “I spent the morning with a friend, who called me and asked me if I could come over and have a coffee. Thought it a bit odd – it was 8:30 in the morning. This gent and I went to school together, and is a great fellow. Trouble is, he has ‘invested’ in five condos. He just lost two tenants, and he has exactly 42 bucks in the bank. His wife, also known as “The genius” was at her Mom’s trying to scrounge money. Nice, Mom is 82, and is ill. Don’t ya’ love it? He then actually had the jam to ask for a loan. After my B/P dropped 75 points to near normal, I replied, very quietly and calmly – “Better call your Banker, and your Lawyer, and your accountant – you are in a zone I can’t even fathom – and no, I can’t lend you any money”. Even if I wasn’t in shaky health myself, I wouldn’t lend him a sou. He started to cry. This is the real world. This is what happens when people think they can build wealth by being in debt up to their probiscus. I felt awful and had some lame euphemism and said my goodbyes. He called me three hours later. Mumsie “lent” them 50 K. I thought how lovely this was – your Mom is dying and you take money from her? Is this what we’ve come to? Last note – Vancouver people are still seething over the riots here. Liveability in this burg has gone south a long time ago. I am not confident in the future of this City and haven’t been for a long time. If I was in the position to leave, I would. But – I am sitting here, renting and watching the BMW’s fly down Pacific Avenue. People walking along the street smoking dope. Oh, and check craigslist = nice penthouse for 10 K a month! Ain’t vancouver grand?” […]

#164 Kaganovich on 06.22.11 at 8:17 pm

Here is another article revealing the motivations behind Libyan regime change:

http://www.counterpunch.org/zadeh06172011.html

#165 zombiedelight on 06.22.11 at 8:37 pm

Victoria Tea party
You are a greedy scum, i hope someday you come to realize your greed is starving billions of people around the planet with your pushing for money printing…

You know, starving like unable to buy a loaf of bread, you know, feeling hungry and weak, you know in those countries where they barely can get water , you know, those people rioting since QE 1 and 2, you know??

You know that feeling you get when food is 50% of your income and it gets at 80% because of some central currency money printing thats devaluing all currencies?

You know that feeling , right?

You’re no better than the luciferian elite

#166 DavesNotHere on 06.22.11 at 8:39 pm

“#23 Tim on 06.21.11 at 10:28 pm

As for the economy in Vancouver, what is it? Other than dope, construction, and tourism and a smattering of tech jobs, what sustains it? Now that were at parity, the film industry has to actually compete, so there goes that. Can anyone name 5 large companies with head offices in Vancouver?”

——————————————–

TELUS?
Jim Pattison?
Finning International ?
Teck Cominco?
Canfor?
BC Hydro?
West Fraser Timber?

#167 Utopia on 06.22.11 at 8:44 pm

#127 Devore to #108 Utopia

“Except oil is bought and sold with dollars.”
—————————————————————————–

Yes, I am aware of that Devore. What you probably meant though was oil is priced in dollars. That is not the currency used by most countries internally though. For example, in Canada, we sell oil priced in US dollars but US dollars do not circulate here as an outcome. I hope you can appreciate that the reserve currency is used as the means of measurement and that physical paper movement does not result in the exchange.

No matter, my point was that the purpose and the power of the BIS in refusing to recognize Dinar would mean that no exchange mechanism would exist and trade would cease to function in that currency thus rendering both the physical paper and it’s electronic version worthless for use anywhere but domestically.

The message would get through quickly enough to the people who would then seek the use of alternate currencies. Pounds, Euros, Dollars etc. The effect would be that Gadaffi’s massive treasury of paper bills would have no value to the mercenaries he was hiring and he would then be forced to make payments in Gold or some other medium.

Power over a new currency could then be vested in the East, thus depriving Mr Gadaffi of legitimacy and control over even the West of the country.

#168 Utopia on 06.22.11 at 8:52 pm

#164 Kaganovich

Not an issue of pride at all Kaganovich. You are getting to be as foolish as Nostradamus. A Goldbug too no doubt. You missed the point entirely. The discussion was about a conspiracy theory that I know to be bunk and I said so. Now you know too.

In any event, if you are curious, I wholly support Canada’s role there and the removal of Gaddaffi as that countries leader. I merely presented my best idea for bringing about his defeat with the least bloodshed.

What did you offer?

#169 Utopia on 06.22.11 at 9:01 pm

#156 VICTORIA TEA PARTY to #108 Utopia

“What a story!”
———————————————————–

Thanks. And every word of it is true. Funny how so few recall. Seemed like half the site was ripping into me for a few days on the Libya issue then. They seem to think that the barbaric treatment dished out by Gaddaffi to his citizens was OK, but standing up to a tyrant and a dictator was unacceptable.

Bunch of left leaning tree-hugging cowards.

Now bring on the squirrels. I am starved.

#170 Min in Mission on 06.22.11 at 9:19 pm

I am one of the “ageing boomers”, but, I am totally incapable of weeding the garden while cleaning my gun.

I weed the garden, then go inside to watch the news and clean my gun.

#171 Kaganovich on 06.22.11 at 9:24 pm

#170 Utopia

I guess I am proposing the exact opposite of your position Utopia. This regime change attempt in Libya is an attempt by Western elites to take out a leader that is refusing to dance to the western neoliberal tune. That our CONadian government is supporting this illegal war is an embarrassment. Why would you assume I was a goldbug? As near as I can tell, Gadhaffi was pivotal in fostering a pan-African alliance to prevent some of the exploitation that has been going on via Western interests and those institution that execute their directives, like the IMF over the past three decades. The Conservatives hardly represent what Canadians think and feel on this issue. Read the Dobbin article. If you think the ruling party’s stance is representative of this nation, you are mistaken. We should meet sometime since I am in Saskatoon frequently…our contrasting views could contribute to a fecund conversation!

#172 Utopia on 06.22.11 at 9:46 pm

#128 Hoof – Hearted to #108 Utopia

“Whoa…calm down”
———————————————————-

Thanks pal. I am quite calm actually, I just object to conspiracy nonsense and as my commentary on this site was at the Genesis of the formation of one I thought it appropriate to respond. You can read the first of many remarks on the topic below if you care. The one that follows was circulated in Libya and was instrumental to the formation of a Central Bank in Bengazzi as an awareness developed that financial controls were potentially more valuable than weaponry .

http://www.greaterfool.ca/2011/03/06/fumes-and-hormones/#comment-88244

#173 VICTORIA TEA PARTY on 06.22.11 at 10:02 pm

zombiedelight

What a delightful post. Are you having a good day or what!? Hope you’re not a postal-postie! I’m only kidding, of course, I think.

OK, where to begin?

If you’ve been reading my stuff, over the last year and a bit, you’ll know that I’m one of those doomers that Garth takes note of from time to time.

You also have no idea of the difference between serious discourse and satire. None at all!

First the QE projects. They’re killing us:

The Lehman’s collapse, and other financial companies meltdowns in 2008, really did help push our financial system to the brink.

However, the actions taken to “save the system” have since only exacerbated the world’s economic condition. We are way worse off and there are some big Black Swans out there looking for places to land: Greece/EU, the US, all the banks. I hope you get the picture.

OK, on to Greece, an specific sub-example of the above:

The Greeks got themselves into this pickle because of their culture of corruption and entitlement, sort of like the destination the US is reaching at warp speed as I write this.

The Greeks will suffer, but they needn’t. I really hope they push the corruption button one more time and tell the bond holders and banksters to go straight to Hell and renege on those unrepayable debts.

That WILL bring down the world economy, there is NO DOUBT.

But we deserve it because we’ve lost our financial way. We spend money we don’t got on things we don’t need as individuals and countries; been doing it for years and it’s gotta stop!

Luciferian!

My, that’s a word to be sure.

That more describes the world’s bond vigilantes at this time in history. They will literally create Hell on Earth for those who don’t take care of their financial knitting, zombiedelight!

#174 Ronaldo on 06.22.11 at 10:12 pm

#139 Randman – good quote by Charles Degaulle. The decoupling of gold to the dollar had a lot to do with him when he requested payment in Gold rather than treasury debt paper. He could see the the U.S. were printing lots of paper and devaluing the dollar much like what is taking place today.

“The End Of the “Fixed” Dollar
Gold War I – The “London Gold Pool” – 1961 to 1968
By the beginning of the 1960s, the $US 35 = 1 oz. Gold ratio was becoming more and more difficult to sustain. Gold demand was rising and U.S. Gold reserves were falling, both as a result of the ever increasing trade deficits which the U.S. continued to run with the rest of the world. Shortly after President Kennedy was Inaugurated in January 1961, and to combat this situation, newly-appointed Undersecretary of the Treasury Robert Roosa suggested that the U.S. and Europe should pool their Gold resources to prevent the private market price for Gold from exceeding the mandated rate of $US 35 per ounce. Acting on this suggestion, the Central Banks of the U.S., Britain, West Germany, France, Switzerland, Italy, Belgium, the Netherlands, and Luxembourg set up the “London Gold Pool” in early 1961.

The Pool came unstuck when the French, under Charles de Gaulle, reneged and began to send the Dollars earned by exporting to the U.S. back and demanding Gold rather than Treasury debt paper in return. Under the terms of the Bretton Woods Agreement signed in 1944, France was legally entitled to do this. The drain on U.S. Gold became acute, and the London Gold Pool folded in April 1968. But the demand for U.S. Gold did not abate.

By the end of the 1960s, the U.S. faced the stark choice of eliminating their trade deficits or revaluing the Dollar downwards against Gold to reflect the actual situation. President Nixon decided to do neither. Instead, he repudiated the international obligation of the U.S. to redeem its Dollar in Gold just as President Roosevelt had repudiated the domestic obligation in 1933. On August 15, 1971, Mr Nixon closed the “Gold Window”. The last link between Gold and the Dollar was gone. The result was inevitable. In February 1973, the world’s currencies “floated”. By the end of 1974, Gold had soared from $35 to $195 an ounce.”

P.S. – Do not store your silver in a leaky boat.

#175 Abitibidoug on 06.22.11 at 10:21 pm

@BPOE #89:
Is buying really better than renting? Some years ago I lived in Timmins, Ontario and owned a house. In the 8 years I lived there the price appreciated 12.5%, or actually 7% if you count the sales commission. If I sold a year later, when prices dropped in 1998, I would have been lucky to break even. Had the money been invested elsewhere, even in those mutual funds Garth tells us to avoid with the exorbitant manangement fees, I would have made more money, been more mobile, and had less hassle. The increase in mobility has been great, having since lived in Sudbury, Ottawa, Barrie, and now in London. Speaking of London, I have accumulated enough wealth to buy 2 houses in very a desirable neighbourhood here, or more like 3 or 4 in a cheaper locale like in the east end. So yes, renting is a bad financial idea.

@Cato, #120: So people borrow to maintain lifestyle in expensive Vancouver? If you’re right, the day of reckoning will be ugly. What is it about balancing ones budget that’s so hard to understand?

#176 zombiedelight on 06.22.11 at 11:03 pm

Victoria tea Party
Then if its satire I apologize, there was no hints at your post being a satire… I guess you are bad at satire ….

I am one of those craaaaaazy doomers too, I just couldnt help but get enraged at someone pushing for QE3, for i know many dont care and see only their stock market profits… and their right to endless continuous profits…

Sorry again about that

#177 Utopia on 06.22.11 at 11:06 pm

#173 Kaganovich

Fecund? Well we could get together for beer. No doubt it would be interesting. I don’t wear skirts as our conspiracy nut-job on this site suggested the other day. Be prepared for normal. I got my hair done for tomorrows big announcement by Garth though. Died blue. Cropped above the ears. I look like I sound. Neck is sunburned. Horses are afraid of me. But If you keep talking dirty to me I will have to go with my regular date who does not know what the hell fecund means!

#178 David B on 06.23.11 at 7:02 pm

Bin doing some reading on what is really happening with Greece and in short ….Bad bad news even with a bailout!