Grow up

Besides this oversexed and nicely muscled blog, real estate is about as addictive a thing known to man. And woman. It’s the most emotional asset, edging out even gold and puppies. Otherwise smart people are smitten, then spend their entire lives seeking, financing, maintaining and flaunting houses. None more pathetically, I surmise, than those damn Boomers.

Maybe it was that back-to-the-land thing. Or drugs. Or growing up amid four decades of inflation. Or maybe rising real estate values just saved the collective ass of a generation that set our to reform the world and ended up being wrinkly with acid reflux. Whatever. Boomers are house porn addicts of the first degree.

This will not end well. Too many people have too much net worth in one asset (as I keep writing, hoping things change. Alas.). After a few years of falling values and increasing illiquidity – especially when 70% of these folks have no corporate pensions – this could mean a hard landing in retirement. But, that’s their problem. Mick Jagger is 68, fer God’s sake. Time to grow up,

But not content with the HGTV world they created, many horny Boomers are intent on passing the housing STD on to their kids. In fact, it’s astonishing to me how many twenty-somethings are convinced (by their parents) that the very first thing an adult does is get a mortgage. Even though it’s obvious real estate has never cost more, mortgage rates will only rise, the economy has vapours and everything from demographics to global trade is stacking up against property owners.

And this brings me to Alissa. This weekend she sits, alone, in a townhouse on the skirts of  Calgary, wondering. “Well, as I assume you get many many of these emails everyday,” she writes me, “I only hope (perhaps I am delusional) that I might get your advice on my current situation (and if not, well, I’ll keep reading the blog and see what happens, when it does).”

Alissa, we are listening.

“In September of 2009, my parents and I hatched a scheme to get me out of paying my $1250/month rent, and put that money into earning myself equity (vs. paying my landlords mortgage off). “This is a great time to buy” mom assured me, so with $230,000 of parental backing, we went house shopping in Calgary. I found a new townhome development in the NW, and we bought a home for $306,000. With this parental support, I managed to get a mortgage for only $80,000, 5 yr fixed @ 3.89% (point being to have me afford to live in this new home without going house poor).

“So here I sit, after being alerted to your blog by my current boyfriend (who rents, and saves, and thinks I was an emotional crazy person to have ever bought a ‘townhome on the outskirts of town’) and decide to ask your advice. Anyhow, BF feelings aside, I wonder if I should try and sell now or not?

“I feel that, as it is now, I have a place to live, and really, the total risk of staying in this place and watching the value fall (if what your blog speaks to what will happen, as I’m tending to believe!), lands nearly 100% on my parents (who are 60 and 58 respectively, & thinking about retirement) as they’ve ‘invested’ into this home with me, but I will get out scott free when we sell (only their ‘investment’ takes a hit if we sell for a loss (as we’ve arranged that the mortgage is paid first, and then the rest returns as their investment to them…)

“But I feel pretty guilty about this arrangement, and perhaps that I can save them! if I sell now (yes, at a loss, but not as much of a loss in 2-5 yrs from now in my opinion), and then just go rent (again – which is why I wanted a house in the first place…) though I think I could rent now. Seeing now that being an owner comes with more costs then I ever imagined – how property taxes are raised, and that if anything breaks (even in a new house) it’s my money that needs to be used for fixing it.

“SO. Should I stay here, and let my parents lose their investment? Or should I try and sell while I might still have the chance?? (Which is not great – the unit across the street, while 1 yr older than mine, listed at 322,000 and finally sold for 299,000 4 months later…) Like I said – not too much of a hit, but still lower. But who knows what will happen in 2-5 yrs?!?…

“Renting somewhere else or staying here, to me, is not a big deal – but my BF isn’t too interested in the commute from my house to DT, and I have a feeling he’ll be wanting to go rent somewhere close to downtown Calgary sooner rather than later. So my mom says “well, then you rent this place out – I don’t think selling now will be the best outcome or use of the money”.

“Advice? Many thanks, and hoping I’m not too much of a greater fool, or if I have been, perhaps I can change that!”

Well, Alissa, the foolishness you may once have shown is dissipating fast. There’s no doubt your parents lost their way when they hatched that terminally dumb idea. Were they trying to be nice to you (do you need protective coddling?), or were you used an excuse for them to pillage another piece of property and cloak it in parenting?

In any case, your worries for them are as well founded as your guilt is touching. A suburban townhouse in NW Calgary may be handy if you’re a flight attendant, but I’d hardly classify it as an investment. In fact, if Europe blows up, China stalls and the US stays mired in debt, cascading commodity prices could push Cowtown valuations lower than a realtor’s email.

The fact you have lost money since you bought the place, with mortgage rates at historic lows and house prices ahead nationally, shows what a turkey this thing is. If the market weakens more, you’ll need a realtor to sell the place, which could mean (if you are lucky enough to match the price your neighbours got) clearing $284,000 from a sale. After paying off the mortgage (with penalty), that leaves barely more than $200,000 – so your folks have already burned through thirty grand. That’s a loss of 13%, not even tax-deductible.

But it gets worse. A 10% decline in Calgary prices (a certainty) augments their loss to $55,000. A 20% correction makes that $83,000. A 30% drop means they lose $112,000 – or half their entire investment. And all the while, you walk away.

So, Alissa, if you truly want to look after your poor, misguided, house lusty parents, list the sucker. Then make it all back to them.

Get some tickets.


#1 Utopia on 07.08.11 at 9:38 pm

It is not the same video our old friend Devil’s Advocate posted but still pretty good. Where is he these days anyway?

#2 MikeT on 07.08.11 at 9:47 pm

“Boomers are intent on passing the housing STD on to their kids.” That’s gross. STDs are passed through you know what and that thing btwn parents and kids is called incest… This was over the line.

At birth. Clean your mind up. — Garth

#3 shanks on 07.08.11 at 9:51 pm

the man in that video looks an awful lot like an oversexed and nicely muscled blogger I have heard about…

#4 Utopia on 07.08.11 at 10:00 pm

What the Hell??!!

Stop the presses. Don’t anyone move a muscle.

I am first. I have never been first in two and a half years on this great blog and I did not even try (I never try because that is not what turns my crank, but oh well).

Ok, now just let me prove how immature I can really be. (being a boomer of course..we are all pretty much children at heart anyway)

This is for you HOOF HEARTED.


#5 Min in Mission on 07.08.11 at 10:01 pm

As one of the “boomers” that has recently, (within the last 7 years) purchased a house, I cannot help but think that the entire “house” thing must be genetic. Ownership is difficult to justify, yet, we still behave just like lemmings.

I tend to agree with the overall outlook in the last blog post. I really believe that “this will not end well”. The strange thing is that so many people that I work with, all of them ‘supposedly’ intelligent, seem to be totally oblivious to the developing world situation!

#6 mad vancouver on 07.08.11 at 10:01 pm

HE is hidden there:é-sur-Cisse

#7 Siddelly on 07.08.11 at 10:11 pm

We drove down to Seattle in ’82 to see the Stones play and four of us high school friends got a hotel room and filled the bathtub up with 2 cases of green Heinies and 2 cases of brown ones along with 4 bags of ice. We got so drunk all I could remember was the J Geils song ” Freeze Frame” echoing through the Kingdome before the Brits got on and having one helluva hangover the next day. I never wanted to see another brown Heineken again. I don’t even know how we found our way back to the hotel. To think that those guys have survived 50 years of the rock’ n roll lifestyle is pretty darned amazing, and they should be given a reward for it.

#8 nonplused on 07.08.11 at 10:12 pm

Alissa and Garth, especially Garth.

I’m always so surprised you don’t get the basics. Alissa’s parents bought her a place so they wouldn’t have to hear her hump her boyfriend anymore. Simple as that. And if they are still humping, well, it’s the same as when I throw the tent out of the RV when camping with the kids. “Mom and Dad need a little Privacy”. Or Alissa and boyfriend need a little “don’t do that in dad’s house”.

Maybe $300,000 is a lot for Alissa’s dad. But at least he has the hot tub back, unspoiled and ungross.

#9 Lisa on 07.08.11 at 10:13 pm

For goodness sake, do NOT list with a “Realtor”! Time to starve those greedy parasites! List the place yourself using one of those discount brokerages that will get it up on MLS for $399. Check online! comes to mind. Also, just merged with Realtysellers so this is looking like the future.
No more big, fat 5% for doing absolutely nothing!

Bad idea in a thin market. FSBO ends up costing most people a bundle in lost proceeds. — Garth

#10 Sumadartson jr. on 07.08.11 at 10:21 pm


Keep the townhouse and marry Garth’s son.

That’ll be a miracle. — Garth

#11 steve on 07.08.11 at 10:23 pm

Bought a house for $32000 reno done for $90000. $120000 in. appraised for$170000. mortgage for $133000. Rented for $2500 inclusive, furnished. $1200 positive cash flow. guess what city I live in

#12 Hoof - Hearted on 07.08.11 at 10:24 pm

TANX ” Ewe -TOPIA” lollllllllllllllllllllllllllllllllllllllllllllllllllllllll

Mick Jagger…the siren call for the “boomers”

Something about rather die at 30….after that it’s shite..said 38 years ago…

Mick attended London School of Economics???

Mick was one of the” Flower Generation” ……hypocrites/hippie-crites to realize the corporate side of the mu$ik biz ?

Mick was once quoted , re: fans…that they were like a cult…that as long as Rolling Stones kept rocking and rolling…”ma-ma-ma-my g-g-g-g-g -eneration..their fans felt never age either..time was frozen…pseudo immoratlity?

Yeah Mick….embalm thyself like Lenin.

Thy generation has the mark of the beast….

#13 Joseph [original] on 07.08.11 at 10:28 pm

Alissa, keep the house! It is all but paid for. It is a gift to you from your parents. Keep it. They want you to have it and be debt free at an early age. You don’t betray their trust by turning around and selling their gift back to them. Price depreciation is not what this is all about. It’s about your financial stability. You have it now. Why make things complicated by paying tens of thousands in fees to sell, wait a few years, and then pay tens of thousands all over again to buy back into the real estate market. This is something sacred as far as I am concerned. Relax, screw what your renting boyfriend thinks, and enjoy your tranquility. You won’t regret it. I am making the assumption here that your parents aren’t expecting you to pay them back.

Now a townhouse near the airport is ‘sacred.’ This is worse than I thought… — Garth

#14 MikeT on 07.08.11 at 10:30 pm

At birth. Clean your mind up. — Garth

people giving birth in their 50s and 60s? You have a rich imagination!

Here, in crayon: genetics. — Garth

#15 garrulous squirrel on 07.08.11 at 10:41 pm

It’s easy to understand how boomers are stuck on that ‘treadmill of an idea’ ……that real estate will always go up….but….

What if the market go’s down and never go’s back up again……ever?

This point is very well covered in this article by Motley Fool I ran across. The arguments for a final collapse are compelling. In Canada we may well be in a delusional state very similar to the many previous mania’s that have engulfed and destroyed many other maniacs before this.

This salient point is popularily known as ‘Popular delusions and the madness of crowds’…..describing the history and heartaches of historic crash scenario’s and the groundwork leading up to the final event. In every case…anyone who spoke against the delusion was soundly castigated….and sometimes worse. I suggest Garth… sit facing the door …with your back against the wall…..lest a bellicose Calgarian realtard come charging. MMMMMOOOOOOO !!!!!!!

The amaing and alarming aspect of this ballooning trainwreck is it’s LONGEVITY……….this pointy hat has been kept aloft by an orchestration of delusion…….minors who lust after what they can’t have…politicians who lusted for a majority government….a finance minister who decided that Canadians aren’t close to taxed enough…….a bank governor who isn’t…..and a collusion of special intrests that look the other way when dope money and criminal proceeds flush through the sewers to ‘make an economy’.

Thoughtlessness corruption…fraud….arrogance….ignorance….greed……I’ll hope to read about this one day as the greatest financial disaster in history……………but it seems the co-authors are releasing only a few words at a time…so that no one can ever grasp the whole story…..its all so ….Machiavellian……and one day……pooooooofffffffffff !!!!! How can things turn out any other way?

Cash people….cash cash cash………ding ding ding !!!!!

And the jobs numbers ………..Bwahahahahahahahahahaaha …..why aren’t all the alarms going off in North America? This is the enviornment that calls you into the real estate market? When the prices are their highest in recorded history by every measure? You like real estate? Now? Are you insane?

#16 Tim on 07.08.11 at 10:43 pm

Hey, I’ll take this geriatric rock with its roots in blues and some hip guitar parts by Keith, over this souless rap shit or overproduced cheesy pop any day. Don’t most of us wish we had the constitution of Keith?

Deal or no deal, sell… you’re in Calgary, where oil is oil and trees are, well, almost non-existant

#17 TS on 07.08.11 at 10:44 pm

To: #4 Utopia on 07.08.11 at 10:00 pm
Another illusion created by your mind. I get all sorts of expectations that do not come true. I than get disappointed.
For Alissa.
I can see your parents so called help turning into a resentment or at least you are going to feel bad staying in that over priced home. Buying a home is suppose to be a good feeling. If you have sister and brothers you are going to hear all about it at some point of time (probably at the will probate if not before) . That is one unhealthy set up with money that may (probably will ) fail and may cause lots of long term family relationship problems.
Going to be hard to explain this to your parents but for your long term mental health get out of that kind of twisted deal. Ask them to find a financial advisor before cooking up schemes like this.
Money and family relationships intertwined can cause lots of hard feelings. I know our family has the T-shirt.

#18 JohnnyBGood on 07.08.11 at 10:44 pm

Dear Alissa,

The world would be a much happier place if everyone had your housing problems.

What you are saying, basically, is that, thanks to your parents’ wherewithal and willingness, you get to own your own home for the cost of financing a luxury car at historically low rates. To badly paraphrase an age-old expression: “Don’t look a gift house in the monthly payment.”

A couple of words about selling and ownership. First, the fact that your neighbour only got 93% of the asking price after four months on the market means the market is behaving NORMALLY. I know we have gotten accustomed to news about houses selling above asking within hours on bidding wars, but that is not normal.

Second, yes, when you own something you have to pay for it when it breaks. This includes houses. This, too, is normal. That said, if you cannot afford to pay for upkeep, that’s another matter and, no, you should not own a home.

Oh, and property taxes are normal too. When you rent, you also pay property taxes–your landlord’s. Only you don’t see it because all of his/her expenses are wrapped up on your rental costs.

While the bubble makes buying a home riskier at the moment, the highest risk is to those who will need to carry a large mortgage debt load and who may be forced to sell in a down market. It sounds like this does not apply to you. Your parents even said that if you want to move out, just rent the house, which suggests you have the financial firepower to rent and carry the house too. Given your diminutive mortgage, sounds like the rent may carry the costs (but you’d have to work the numbers yourself).

Given your apparent circumstances, and my opinion that basing your decision to own primarily on pricing forecasts is unwise, why would you want to sell at a guaranteed loss? Sure, house prices can drop significantly over the coming years. Or they may not.

I would not treat my home like a swing trade with a stop loss, particularly if I had the option to hold it indefinitely. Listen, not even the Great Depression could put a permanent dent in housing. Unless, we see a widespread generational revulsion toward home ownership––which is possible, but a highly speculative assumption––in the long run, real estate values will continue to rise if the property is located in a stable, prosperous community with a growing population. Do yo think Calgary qualifies? I’m not being flippant. I’m serious.

If the choice came down to buying and carrying a large mortgage at a risky time, vs. renting and investing your cash, and if you really preferred to rent as a lifestyle choice, then I’d say renting may be the better option. But, first of all, it sounds like you don’t actually have much of your own money to invest, and the money your parents’ gave you was earmarked specifically for a home. Second, you can still rent somewhere else if you wanted to and just rent out your house that will basically cost you little or nothing of your own money to maintain.

Under these circumstances, why consider selling at a guaranteed loss? My advice: keep the house and kiss your parents. If you get tired of renting downtown, kick out your tenant(s) and buy a nice Barbecue for the deck your boyfriend will build you in the backyard.

#19 Elmer on 07.08.11 at 10:45 pm

If she has no desire to move to a different location, why not just stay put in the townhouse? Why does it matter if it goes down in value if she continues to live there? Her mortgage is much less than rent on a comparable dwelling would be, and she IS building equity, no matter how little.

#20 Burnt Norton on 07.08.11 at 10:46 pm

Many days here there is earnest discussion about marital strain resulting from housing decisions. Today’s article goes further and justifiably so since these issues can really strain families across generations as well.

I can understand that it’s a tough decision although as soon as one accepts a gift like that from parents, one is set up to have to face uncomfortable situations like this. I would definitely think twice before accepting that kind of dough, especially from parents in-law. The implied expectations and business aspects can easily intrude into and corrupt the family relationships.

#21 Don on 07.08.11 at 10:47 pm

Could this be the tipping point? I can sense it on the street.

Brother in law – told me today, all my past babbling might be coming true. All homeowners have heard about the projected 25% decrease – I wonder if that’s the best case scenario, especially in the hotspots.

Better than watching semi-reality TV.

#22 MikeT on 07.08.11 at 10:49 pm

Here, in crayon: genetics. — Garth

Genetics don’t help in spreading STDs.

#23 Burnt Norton on 07.08.11 at 10:49 pm

Wow, MikeT – you hittin’ the bottle hard tonight?

#24 detalumis on 07.08.11 at 10:51 pm

I think the worst thing the Boomers did was raise some very entitled children. I am sure her parents would not have expected their own parents to finance their first home.

A 300K house is actually not that expensive. I paid 220K for my place 21 years ago and interest rates were much higher. I think Alyssa probably earns at least the same salary as I did in relative dollars so this place is likely cheaper than what I paid on my own with no help from Mommy and Daddy.

The fact that she does not recognize that she is a spoiled entitled princess is the real problem in the story. She may as well just go live with her dude boyfriend and play at being kids for another 10 years or so – longer than her parents ever did. She can always buy her house when she is 60 or so after she inherits her parents’ estate.

#25 garrulous squirrel on 07.08.11 at 10:51 pm

Van (Rat) Couver is often compared to Seattle…..why? The American city has average real estate prices half that of ‘Rat City’.

#26 MikeT on 07.08.11 at 10:52 pm

Here, in crayon: genetics. — Garth

Genetics don’t help in spreading STDs.

Sorry for being annoying. My respect for you wasn’t affected. You are doing a very good thing for our fellow Canadians, and that’s what I respect.

#27 Dirt Dog on 07.08.11 at 10:58 pm

I think Mick and the boys still look pretty good after all these years. Drugs and Booze taken into account.
They can still play and remember the words after all.

#28 stage1dave on 07.08.11 at 11:07 pm

A 230K down payment from the parents?!

Wish I’d had a mommy & daddy like that…I wanna replay the DNA lottery, dammit! JHC, even knocking 3 zero’s off that number would leave me looking for a set of pliers in order to get it out of my relatives…

Anyway, I’ve wondered for a few years just how much “dumb money” is out there (buying everything from condos to 600K McMansions) for their poor deprived children so they can get a “good” start in life. And how much of a factor it is in the current RE madness?

Guess you always want the best for your kids, but seriously…here’s some money, buy a house? REALLY?

Maybe that’s why may hair is too long, I have too many fast cars, still rent, & am presently trying to corner the market on hi-grade 71/72 OPC hockey commons…hmmm….

Perhaps I’ll just bequeath my kids that PSA 8.5 Ken Dryden…the way the Calgary market is heading, in a few years they’ll be able to buy a crackshack in Bankview after they sell the card.

And all I’m gonna be out is a hundred bucks…what I paid for it a few years ago. Gee, I feel paternally responsible already!

#29 The InvestorsFriend (Shawn Allen) on 07.08.11 at 11:11 pm

Nonplused at number 8 said:

“Alissa’s parents bought her a place so they wouldn’t have to hear her hump her boyfriend anymore. Simple as that.”

Now that is definitely one of the more intelligent posts that I have seen in the comments on this blog. Funny too.

Keep the house… Rock On… and Hump On…

#30 Dan M. on 07.08.11 at 11:13 pm

#11, Steve, I’ll bite. Iqaluit?

#31 Randman on 07.08.11 at 11:39 pm

Here’s a little taste from an excellent article…..

I want to lay out as many reasons as I can on why you should divest all of your investment Real Estate portfolio right now. I would have preferred you sell your real estate and buy real tangible assets like I did in 2005,but we are on the verge of another leg down in Real Estate and the name of the game is wealth preservation. Beyond wealth preservation,I believe that those that hold their wealth in real assets will see a massive increase in their real purchasing power. So here are all of the reasons why you should flee the investment Real Estate market while you still can.

1. Real Estate is not a tangible asset. Sure the property is real and tangible enough,but its value is dramatically effected by the paper/debt market. Almost all Real Estate is bought with mortgages/debt/ paper and leverage. Even if a property is paid in full with cash,it’s value was directly effected by the competing bidders who are using leveraged debt to pursue that property. Still think that property is a Real Asset? What is your property worth without a 30 year mortgage? ( Most of the world does not have 30 year mortgages.) What is it worth if interest rates were at say 10% instead of 4.5%? What is the cash value of your property if there is no credit market at all? What is the value of your property if/when the dollar collapses? The answer should show that the value of Real Estate is much more determined by paper/debt market than its real tangible value.

2. Most of your Real Estate is not an asset at all. Most Real Estate is non income producing property. If your property does not prove to be cash flow positive asset,it is by default a liability. When you factor in all of the taxes,interest,maintenance and upgrades,you will see what a drain it can be. That is not to say that it does not have value,it is just is not an asset. (Funny story. When I was done with Boston College and the Marines I lived at my parents home. After a few months,my parents wanted me to pay $500 a month rent to stay in their mansion. I was indignant that I had to pay rent to my parents,who obviously did not need the money. I would show them! I would move out and get my own house. $40,000 down and $2,000 a month later,I showed them! )

#32 bcc on 07.08.11 at 11:42 pm

Is the money from parents a gift, or an interest free loan?

Alissa, maybe you should consider repaying your parent after you’re mortgage free. and if you are already planning to do that, then you’re fully responsible for the money you borrow from bank and from parent. no guilty feeling needed. just bear with your own decision and consequence.

#33 Utopia on 07.08.11 at 11:57 pm

Getting back on topic….

Alissa’s case is definitely one of the more interesting ones I have seen on this site. It is a lose/lose for both her and her parents if she holds on and goes down with the market. They will all take a big financial hit. That is virtually guaranteed.

It is also a lose/lose situation currently if she sells and returns less than the original invested amount her parents gave her. She might never get such a good opportunity at a free pass in life from them again.

If the parents get stung now they will not be encouraged to make the same kind of helpful investment twice (unless they are stinking rich in which case none of this really matters). Assuming Alissa is mortal, she needs to think this one through very carefully.

Lets keep in mind that the parents want her to have a home of her own AND they want a return on their investment in the end. If she holds on long enough ( a decade or more) then the Boomer’s might actually get both their wishes.


So the parents are married to the real estate myth and prefer Alissa rent out the home instead of selling as she pursues her errant boyfriend to digs closer to town. They love R/E and would resent her selling as it would certainly generate a loss already.

No doubt the boyfriend is complicating the situation and Boomer Ma and Pa will always hold him responsible for whatever outcome emerges.

That is just how it works. Don’t fight it, man.

It will always be his fault if Allissa moves to follow her true instincts. He will wear the loss on the investment as if he personally wrote the low-ball check on sale date himself.

[Primordial instincts here. We are talking evolution now].

Relationships, coupling and the prospects of eventually producing offspring only predate the modern mortgage by maybe six or seven million years. I could be off by a few millenium but so what.

Real nesting does not ever require debt. Some couples get it. We see daily that people in Canada and the US continue to function exactly as genetically preordained. They couple up, sometimes marry, then reproduce. That is nature.

And those are the basics. Who needs a house for that? People in the Third World with almost no money at all continue to baffle the West by producing the biggest families on the planet. How is that even possible without Mom and Dad’s money and the Banks easy loans?

I think you can all figure that out.

It seems obvious to me that Alissa is torn between her natural desires versus her tribal loyalties to her parents who are providing the real security. The girl would probably prefer to follow the BF closer to town if it was not all so complicated.

She is being divided between natural relationship yearnings and the conflicts of financial reasoning that have little bearing on how humans really function.

We are not born with calculators in our hands nor with charts on asset values to guide our futures. Yet we are genetically programmed to live our lives according some very simple programs that continue to function despite all the worlds mental acrobatics and complications.

Alissa has a tough decision.

Keep the house while allowing her parents investment to fail. She could then join her future mate in the downtown while retaining all her own security (with a renter), or give in to mixed feelings of clan tribalism that suggest her first loyalty should be to the center of security, to her parents before her own needs.

If she chooses option two and sells she will likely still end up with the BF in downtown Calgary but she will lose her home and possibly even a bit of her parents respect. She will naturally be disappointing them then.

Hmmmm. Tough call. Am I close on this one Alissa?

#34 Nostradamus Le Mad Vlad on 07.09.11 at 12:02 am

Agree with your advice, so any comment from moi is meaningless, but I liked the line “. . . Cowtown valuations lower than a realtor’s email.”

Are you referring to the previous Calgary realtor, perchance? Remember the one who chimed “. . . that Canada has a real good chance to be OK.” Yes, there is also a 50% chance that the realtor will get his ass burned by a pancake landing when RE does a bellyflop. Whatever. Easy come, easy go.
#12 Hoof – Hearted — “Mick attended London School of Economics???”

Quite the intelligent man. Jagger and Richards do the finances on a Stones tour, costing it down to the last penny and then, at some point they reach, then cross the break even point.

After that, it’s all gravy. Nice job if you can get it!
Going Global Greece The virus is spreading quickly; Closing 20 stores a day (chain retailers); Suicides up since economy barfed; Euro (money) The loonies are running the asylum; WH forces state and local govts. into insolvency (why? to dismantle the country?); The Euro is in shambles, and Jobs Report This is the “true” picture, but the realistic one has more details (try 22-25% unemployment); Rich Hoarders are destroying society. Not sure if that’s correct.

3:06 clip Gadaafi is quite well liked, despite m$m reports to the contrary; NOTW Unfair dismissal lawsuits pending; Energy War in the Caspian Sea? Burning Uranium releasing it into atmosphere; A Cdn. quake with a minus Richter scale reading? The Shape of Things to come, momentarily.
Chaos — Info. on Comet Elenin, here (need Javascript) and “. . . that is “beyond coincidence” that Comet Elenin is scheduled make its closest approach to the Sun on the 10th anniversary of the 9/11 attacks, 11 September 2011, and that on 11 November 2011 (11-11-11) its orbit will carry it into a “grand alignment” between itself, earth and other planets in our solar system.” Bear in mind the Mayan Age concludes 24 Dec. 2011, the Aztec and Incan ages a few years after.

#35 Guy_in_Regina on 07.09.11 at 12:05 am

I also say keep it. It’ll probably be a major strain on your relationship with your parents if you sell now. Besides, they bought the frickin’ thing for you! If it tanks, oh well, then it turns out they’re not so smart after all. Like Garth says, you’re scott free! $230K from your parents and an $80K mortgage. Ya gotta live somewhere – what’s that mortgage run you monthly? oh yeah, peanuts. Just be thankful your parents coughed up that serious dough. Mine wouldn’t give me five grand. And tell the BF that a townhouse for $80K is a steal of a deal!

#36 WI Boomer on 07.09.11 at 12:07 am


You don’t own the BF, but you DO own the townhouse.
Whether to sell it, or keep it is a question of how close is it to work, do I really like it, if I sold it…then what??

Come on, the carry on an 80K mortgage is not that big of a deal. How “serious” is the relationship with the BF?
I hear they can be replaced rather easily these days.
So can spouses, at least here in the US where divorce rates hover near 50%, with money being the main reason cited.

Yes, owning any dump has responsibilities, and yes, the dam things cost a lot more than you think. You should also be able to pay the thing off in 8 years or less. Perhaps you and the BF get serious, wed, or shack-up. That cuts housing costs, too.

Watch out for those STD’s though, there a bitch.

That being said -jokingly- owning property, or sharing a life is a gamble. You can try to sell as a breakeven
proposition, it is possible. While their are perilous fears for the future, that might be next week, or month, or year, maybe never. No one has a CLEAR crystal ball.

Lots of my neighbors got house stupid over the last decade, some lost everything, others like me, paid it off with cheaper money as rates went down.

No regrests here. This Boomer is set for a nice retirement. Maybe I can hit 68, too?

Still love that Rock N Roll Go Mick!! GO!!

Maybe I should dust off the old Seeburg, and load up a bunch of 45’s?? That’s more fun than Real Estate

#37 Dan in Victoria on 07.09.11 at 12:13 am

You’ve got a good set of parents there Alissa.
Give them a great big hug. I’m still raising mine, eye roll.
Sit down and do the math, we’ve gone over it a time or two here.
Do some CRITICAL THINKING and see where you end up.
Make YOUR own mind up.
This blog is a good start, smart people in general here, now take what they say and use it as a tool.
Good Luck kid.
I mean it.

#38 Whistle punk on 07.09.11 at 12:15 am

Talking to a person I know couple days ago he said the Alberta housing market is in bad shape. Nothing is selling, he is originally from Alberta.

The reality of things is starting to show and it definatly isn’t looking good. In the community I live (BC) prices are starting to fall 10-15%. Nothing is selling, places are sitting on the market for awhile now the odd tire kicker looking nothing ever happens. Realtors are not making any sales they are worried.

Looking like most areas are going to be in for a long trend of no sales and lots of desparation from the people that need to sell.

Bankruptsy and foreclosure here we come, oh ya this is going to end well. Time to sit back and watch the fools loose every thing they own.

God I’am I glad I never bought a house, who is the looser now definatly not me.

#39 Utopia on 07.09.11 at 12:16 am

Not appreciating the “Ewe” comment “Who-Farted”

#40 NFN_NLN on 07.09.11 at 12:17 am

people giving birth in their 50s and 60s? You have a rich imagination!

Here, in crayon: genetics. — Garth

I’m not a doctor or psychologist but my prevailing theory is that a lot women dropped a lot of acid in the 70s… while they were pregnant. It’s the only logical explanation.

There’s no sense selling the house. That is their retirement plan and it’s genius. Your parents current home loss, combined with this “investment” loss, will force them to have to move in with you instead of a real retirement. You’ll agree to this because you already feel guilty about screwing them on the townhouse.

#41 Dan in Victoria on 07.09.11 at 12:20 am

Siddley @ 7
Mere amateurs, I have many a story about road trips.
Did you know that a chevy Geo will do 55 miles an hour with the emergency brake fully on. (You have to get it up to speed first)
Two guys can push the roof back up on a car from the inside when it tips over.
A 82 ford F250 crew cab is capable of flight…….

#42 ms bboomer on 07.09.11 at 12:20 am

Housing STD

LOL, sexually transmitted disease of house horniness passes from parents to children, that’s about it. (Mike, it’s the house that did it, symbolism only)

#43 Chaos on 07.09.11 at 12:26 am

Smart girl…

Value going down…taxes going up…fat lady singing.

Your parents will get over it someday…or you could just send them here…

We’ll take care them.

#44 ralph t. on 07.09.11 at 12:32 am

Outstanding video clip Garth

#45 WI Boomer on 07.09.11 at 12:39 am

Great post tonight. Yeah, I have never been first either, likely never will be.

Yes, the Stones, Who, Beatles and scores of others made up the sound-track for US Boomers. From Chuck Berry to the Clash, and all in between. Don’t think much opf today’s rock, but I know that is just generational bias.

Much like the Mark of the Beast, but that is another story. Rock-on!!

You’ll get dead soon enogh, enjoy the trip here while you can. 50 years of Rockin is a record!! Go Mick, Go!!

#46 Mark on 07.09.11 at 12:40 am

There’s a pretty good chance that the $200k was the entirety of the folks’ life savings. So while they’re suffering a meltdown on their own property, and the daughters’ property melts down, Canadian bank shareholders will be laughing all the way to the bank (to collect their rising dividend cheques, of course!).

Canadian housing down 50%. TSX to 50,000.

#47 reality guy on 07.09.11 at 1:04 am

I truly believe this September 11th would be the start of the day of reckoning for Vancouver housing.

Since late May, the market slowed, kind of like thawed.

But in September when business men re-assesses the Financial markets (after their holidays) we will start to see a decline in the global markets as we head down the double dip recession.

Yet housing prices continues to go up, while the economic market cools. Teachers, Telus, Rogers and government workers have been recieving their pink slips as of late. And several of my construction buddies are saying thing are starting to cool on the construction front too.

Once the thaw becomes a melt then we’ll see more layoff and un-employment hit cities across canada

#48 Andrew on 07.09.11 at 1:21 am

Secretly sell the house under the arrangement that you’ll rent from the new owner. When the market falls by 80%, you can surprise your parents with a new Cadillac.

#49 TheFirstRick on 07.09.11 at 1:31 am

Don’t be so cynical Garth, Alissa’s folks will likely see a decent return on their investment……
…..when they are 90!

#50 Shane on 07.09.11 at 1:36 am


I would say Windsor, but that rental income figure is too high, even out by the university… (unless you rent to suckers who don’t know better)


#51 SmarterThanYouLook on 07.09.11 at 2:35 am

Keep the townhouse. It’s a nice gift. Why pay the landlord’s mortgage?

Real estate will be fine despite what everbody has been saying… for years.

#52 Michelle on 07.09.11 at 4:00 am

I used to worship my Rock idols from the 60’s and 70’s…but then Elvis Costello got fat… and Bob Dylan did a Victoria’s Secret TV commercial…

If Neil Young starts shilling for a cell phone company I’m throwing myself off a cliff.

#53 Homebound on 07.09.11 at 5:35 am

We will be moving back to Calgary in the near future and talked to a friend on the phone there who brought up what Calgary neighbourhood we will looking at to buy a home in.

I think my response took him by surprise as I said “I think we are going to rent for a while as prices continue to come down”

We have enough to buy a Mount Royal home, no mortgage req, but are chosing not to buy but to rent. What does that say if people with money are chosing NOT TO BUY?

Can’t wait to talk to Garth with what to do with our investment money rather than buy RE.

#54 Jas Girn on 07.09.11 at 6:10 am

MikeT, are you on drugs or are you really that slow. WTH man. Lol.

#55 bigrider on 07.09.11 at 6:14 am

Alissa you and your parents MUST be Italian. No other parents of any culture would be so house “investment’ obsessed.

#56 bigrider on 07.09.11 at 6:24 am

Garth, an update to all from my builder contacts in T.O.

34 Townhomes for sale, 1600 sq.ft to 1900 starting at 439k. “Beautifully located” units flanked by the wonderful droning noise of the 400 hwy to your left and postage stamp backyards backing onto and insanely busy commercial plaza at Rutherford and the 400(Canadas wonderland area)

All 34 sold in one day .750 of those 800 people pre registered for viewing were turned away.

35 townhome units for sale at college and bathurst just west. Starting price 1.05mill. Technically all pre sold as any interested parties will come to realize that if they wish a unit, they will have to buy from an “insider’ flipper at an inflated price.

Alas Garth, your predictions of an RE meltdown, as much as I wish them to be correct, continue to be incorrect.

#57 David B on 07.09.11 at 6:30 am

Being indebted to parents is not good, best to find a way out sooner rather than later …..nuff said!

#58 bigrider on 07.09.11 at 6:34 am

Mark at #24 ” houses down 50% TSX 50000.”

You have said this many times and you have no idea how much I want you to be correct .

So far, looks very elusive doesn’t it?

#59 GTA Girl on 07.09.11 at 7:14 am

I’d do Mick, still….at least it’d be a real STD

#60 Herb on 07.09.11 at 7:31 am

Hell just froze over – for once I agree with Hoof-Headed (at #12).

No wonder the boomers are screwed up if they worshipped that shit all their lives!

#61 Ex-Cowtown on 07.09.11 at 7:35 am

Boyfriends/girlfriends/husbands/wives, even diamonds come and go….

Only a deeply upside down mortgage is forever…..

#62 Lisa on 07.09.11 at 7:47 am

Giving this scenario some more thought, I think she should keep the townhouse and pay off her mortgage. The costs are reasonable. She has some security in that. Unless the BF puts a ring on her finger and sets a date, she has no security with him. If they do get married, then they have a nice, paid off starter home to live in. If he doesn’t like the location, too bad, suck it up. There’s worse problems to have.

And screw the parents, right? — Garth

#63 Utopia on 07.09.11 at 7:51 am

#19 Elmer noted….

“Her mortgage is much less than rent on a comparable dwelling would be, and she IS building equity, no matter how little.

Alissa cannot be building equity if the market is going to drop or is dropping already. It is impossible. Lets imagine the crazy scenario where the market totally tanks (like by 3/4’s).

Her parents will take the first hit until nothing is left of their investment, then it is her turn. Alissa has not earned one cent of equity though even if that trend took 20 years.

She can only feel a wealth effect if the market actually rises again. The loan from the parents sounds like one that is granted interest free. Alissa therefore stands to take all the profit with all her leverage if real estate prices actually rise (they won’t).

The worrying part though is that she needed a quarter million dollar subsidy to buy in the first place. That is how much investment was needed to make her condo affordable for her.

Even with that massive subsidy which amounts to almost three quarters of the total cost, she is uncomfortable with paying rising taxes and repairs. She notes that these costs would come out of her pocket (who did she think might be responsible?).

What we are really seeing is a picture of how extremely overpriced real estate really is from the perspective of a typical working person.

If Alissa is struggling in a low rate environment and with a massive mortgage subsidy right now, then how can others less fortunate possibly be coping with their debts.

Yeah, rates are a big worry.

#64 Utopia on 07.09.11 at 8:00 am

If I could just get back the last few minutes of my life, Elmer, I would revise all my previous comment. I know what I was trying to say yet still wrote it wrong. I am an idiot.

Brain is not quite awake yet. More coffee needed.

Anyway. Alissa would pay off her debt over time and that would create equity (for her only) in my little scenario above. The parents stand to be big time losers though.

Maybe they will read the posts on this blog. Maybe not. Guess it all boils down to the importance of preserving invested funds and family cohesion.

Not all families cooperate well on these issues.

#65 JohnnyBGood on 07.09.11 at 8:14 am

#33 Utopia on 07.08.11 at 11:57 pm
“Lets keep in mind that the parents want her to have a home of her own AND they want a return on their investment in the end.”

If her parents have that kind of money to give her, I’m guessing the only ROI they really want is a happy, prosperous, responsible daughter who one day settles down with a good man and gives them plump, precocious grandkids.


#46 Mark on 07.09.11 at 12:40 am
“There’s a pretty good chance that the $200k was the entirety of the folks’ life savings.”

#55 bigrider on 07.09.11 at 6:14 am
“Alissa you and your parents MUST be Italian.”

If Mark’s assumption is correct, then I would be shocked if the self-loathing bigrider is also correct. I don’t know ANY Italians who would be stupid enough to put their entire life savings into a house for their kid.

#66 Boombust on 07.09.11 at 8:17 am

“If Neil Young starts shilling for a cell phone company…”

Hell, why not? I’d rather hear that than his singing voice.

#67 mailman on 07.09.11 at 8:53 am

And screw the parents, right? — Garth

stupid people are supposed to get screwed.

#68 Derek on 07.09.11 at 9:01 am

There is a realtor based out of Edmonton who charges a flat %2 commision for full service. I’ve used him and he was excellent. He has set up an office in Calgary.

#69 JessicaJ on 07.09.11 at 9:02 am

Here is good example of where the market seems to be going. This 2 BR at Yonge and St. Clair was reduced by $100K in just over a month. $599 May 27; $549 Jun 11; $519 Jun 25; and today $499K; open house tomorrow.

#70 Stevermt on 07.09.11 at 9:35 am’re no. 1 ! you’re no 1 ! own that at least for today :)
#33 post..Your point about how people in the third world function producing families w/o debt is so true..big picture stuff
also the tribal loyalties ..
thanks great post

#71 Canuck Abroad on 07.09.11 at 9:45 am

Tough one, Alissa. Here is my opinion, which is worth exactly what you are paying for it.

Really depends how much influence the parents had on the decision (1) to buy and (2) to buy out in the boonies. If it was really their idea, and they pressured you, and they really believe real estate only goes up, then selling now and presenting them with a guaranteed loss on their “investment” after only a few years ownership is just going to piss them off and damage your relationship. Seriously, let them take the loss if it was their idea. If you lock in a loss to them now, you will be branded a financial moron by them forever.

However, If it was your idea to buy a house in the boondocks and now you have changed your mind, then you should sell but make your parents whole. Yep, that’s right, you eat the loss Alissa. And next time don’t take money from your ageing parents. Good grief.

What your boyfriend thinks is irrelevant. Does he like you, or your location? Boo hoo hoo he has to drive to see you. Why are you considering his opinion on financial matters if he is not your husband? Tell him to MHOB.

Seriously Alissa, you have issues. You let your parents influence (or make) your decision to buy. Then you let your boyfriend pressure you into selling? Then you write in to Garth so that a bunch of random faceless commenters on the internet can weigh in with their opinions. Take control of your own life and stop asking other people what to do.

#72 Mr. Reality on 07.09.11 at 9:47 am

Get Out. Do it before everyone else realizes they have to and the sellers parade begins.

Some Chinese inflation and economic numbers are coming out this weekend and the market reaction will give us all insight on if we will in fact have a China cooling. If China does infact start to cool off. SELL YOU FRIGGEN HOUSE! Commodity demand will slow and you will see the beginning of the perfect storm for Canada.

Low demand on our exports + high debt + austerity + record high real estate prices + Euro debt = perfect storm.

Yes blog dogs its over. Go cash or short and enjoy the ride with nothing to lose.

Short the TSX!

Mr. Reality

#73 Stevermt on 07.09.11 at 9:52 am

#61 Ex-Cowtown…LOLMAO !!!! that was good

#74 Sumadartson jr. on 07.09.11 at 10:04 am

Rent the townhouse.

#75 Cory on 07.09.11 at 10:09 am

The only thing keeping this boat afloat is low interest rates. That’s it!! change mortgage rules all you want but with cheap/free money, the bubble will only keep filling.

Even the ECB raised rates last week for a second time. Countries around the world have raised rates except Canada, US, and England. The “emergency” is over. Australia is at 4.75%!! These people running the central banks are complete idiots. Especially Bernanke, but then their central bank is a privately owned corporation so why wouldnt they want inflation to continue right?

Raise rates Mark!!! ASAP. Bond markets need to follow suit but this will have to be done by the markets.

#76 bigrider on 07.09.11 at 10:10 am

#66 Johnnybe Good- Johnny big quick, Johnny SAT on the candlestick (or his buddies &^%$)

Self loathing ? you’re an idiot. Could not be more proud of my heritage but understand it a hellofalot better than you, clearly evident.

Buying a house is the holy grail of Italian culture. Building them, investing in them, land aquisition ,construction, development..there would not be a GTA as you know it without them.

Simply pointing out that such unquestioning belief in RE may at some point cause some problems for them

#77 Mr. Reality on 07.09.11 at 10:18 am

Brazilians, Canadians and Australians should be rather concerned with the rising inflation in China (commodity exporters sucking on the China teat). If you do not think so, go buy a house today and talk to me in a year or so………….

Mr. R.

#78 Agio on 07.09.11 at 10:24 am

This is truly a tragic tale and one deserving of your brilliant insights Mr. Turner
Poor Alissa, struggling to make ends meet ‘hatches a scheme’ with her parents to fork out 230k of their money and saddle Alissa with a horrendous 80k mortgage and now the poor gal is all confused. Oh what will they all do?
These terrible tales of woe make me puke and sadly they aren’t all that uncommon.
I guess if this person’s parents are stupid enough or guilt-ridden enough to throw 230k at her she might as well catch it. Perhaps they are wealthy. How the hell they got there I do not know but perhaps they are.
Regardless the personal situation, why even write about this crap? To illustrate the high expectation underachievers of the world? Yeah poor Alissa is facing some serious life changing questions indeed and oh the poor parents…what will they do? Christ.

#79 Ben on 07.09.11 at 10:25 am

I think I can remember seeing the Stones live 35 years ago, maybe it was 38…. I can’t remember.
We were all so f uk ed up on LSD hitting our peak in a crowd of 45,000 and I was just praying it would all end. lol
Generation Y probably never heard of LSD, well it was the most powerful, hallucinogenic drug the size of a pinhead you could buy for $2.00 and you were totally f uk ed for 8 hours.
Ah the younger days of the boomer!

#80 Burnt Norton on 07.09.11 at 10:33 am

#65 Mikey the Realtor on 07.09.11 at 8:05 am
Firstly, Alissa needs to start thinking for herself, she had her parents thinking for her and now she is asking the blog to think for her, not a good start in life if you ask me. But, who did ask me? Nobody, I’m just Mikey the Realturd.

Have a great weekend all!!!


It’s called soliciting advice. Kinda like what clients ask of professionals they hire. I guess realtors like you don’t know about that.

Funny thing about your comment is that once more people do start thinking for themselves a whole bunch of realtors will be sitting all day down at their local Timmy Ho’s wishing people would stop thinking for themselves.

#81 Zara on 07.09.11 at 10:37 am

#11 steve. WHO CARES !!

#82 westcanguy on 07.09.11 at 10:40 am

And screw the parents, right? — Garth

Really Garth?
First, thanks for posting the pic of your aunt and uncle on a Kawasaki Nomad. Great bike.

She won’t be screwing the parents. It was the parents decision to throw that kind of money into a downpayment for the daughter. The daughter thinks its an investment for her parents but we haven’t heard from the parents, have we?
I don’t recall her stating that there was any payback expected.
She received a great gift from her parents and she feels guilty. Her parents don’t want her to sell. It would be an insult to them if she sold. She should keep it. Prices will fall but she is young and the real estate cycle for lemmings will not stop at the bottom. She will be immune to the crap that is just starting in real estate and will come out on the other side just fine.
If she feels that guilty, start paying her parents back. The boyfriend..pfft. The commute is his biggest problem? Please…
I turned 50 this past Monday. Was married for 20 years. raised and then paid child support for 3 great kids. If I’ve learned anything…its look after your own ass first.

I will agree with Garth about the house lust addiction for boomers. I rent because I refuse to buy into market that has nowhere to go but down. I had a relationship recently go south because apparently… renting at my age, I’m not financially responsible or stable…….next.

#83 Ben on 07.09.11 at 10:49 am

I think I can remember seeing the Stones live 35 years ago, maybe it was 38…. I can’t remember.
We were all tripppping on LSD hitting our peak in a crowd of 45,000 and I was just praying it would all end. lol
Generation Y probably never heard of LSD, well it was the most powerful, hallucinogenic drug the size of a pinhead you could buy for $2.00 and you were totally f uk ed for 8 hours.
Ah the younger days of the boomer!

#84 wetcoaster on 07.09.11 at 11:06 am

#7 Siddley,

Were you the guy behind me screaming “Paint It Black” over and over like a drunken madman ? I preferred the herb, made it easier to navigate the nasty Kingdome stairways. Hell of a show though.

#85 TS on 07.09.11 at 11:12 am

To: #56 bigrider on 07.09.11 at 6:24 am
Yes I also know of many sites like that. 80 townhouse release in Meadowvale starting $439,000. Have 649 people on a list.
This does not mean anything until the units have closed!!
Builders are very concerned with closings. Long time builders know things can swing the other way in a very short period of time. They are not sleeping so well lately. Builders feel they are overpaying for land and lots in Toronto if they can even find product that makes sense. Most sellers are being greedy.
You have to keep the machine going. $11,000 a foot for townhouse land. That is nuts.
We are at the turning point and purchasers are taking on way too much debt.

#86 Victor from Vancouver on 07.09.11 at 11:28 am

As Garth recently mentioned, Canadian RE market became a trading game, similar to Forex or stock market. Anyone who tried Forex or stock trading knows that even return of your original investment over a long period of time requires some skills. Making constant profits requires very good skills. Making a constant and high profit requires exceptional skills. My opinion is that Alissa’s position in this RE trading game is such that she can short the market, i.e. sell now betting on price decrease, and buy later at lower price. Then she can take a long position and magnify her wealth even more. This is not rocket science, people do it. Myself, I successfully sold my property in East Europe for $70k in 2008 and now I can buy it back at $30k. Prices in that place keep falling for 3 years already. I already made a small long position in the same country by buying a house in a small town for $6k. This may sound crazy for Canadians but yes you can make money by shorting real estate.
However, if you start playing this game you need to realize the risk you are taking. You may lose your money and in this case also your parents money. If your bet is wrong (which can happen because there is still a possibility of very high inflation in near future due to excessive money printing by the the USA and rest of the world following it), you may sell at low price and then not be able to buy back as prices will start increasing and your dollars start losing their value. If you are smart and lucky and sell high, and then market starts seriously going down, you will enter the new phase of the game and that is catching the bottom. This game is as exciting as catching the top, and due to emotions involved you can also lose by buying to early. I was successful in this game so far but only with small money and without leverage. Leverage makes this game even more exciting but also much more dangerous.
And, there is always a choice to stay away from the game. In this case you simply do nothing. You keep your piece of real estate and ignore the market. There is a chance that price of your property will go down for few years, but at some point inflation will start pushing RE prices up and price of your property will return to its original level. Then price of your property will go up simply because dollar will cost way less then than it costs now. And, in the end, your parents will be right.
If you feel that you are smart enough to play the market, go ahead and sell your property. If you are very conservative and risk averse, do nothing. You are currently in a long position that may be in a loss for a few years and the worst that can happen is a forced sale at a very low price, in which case you and your parents will lose. If you and your family have a real big equity and are strong enough emotionally to ignore the temporary parer losses, stay were you are, hold your long position and you may see profits 5 or 10 or 15 years from now. Again, this is impossible to predict. To better understand what you play with now, I suggest that you open a tiny small $100 or $200 Forex account and try trading currencies. There is a good chance that you money will be lost in few minutes, hours, days, or months, or may be you will make profits, who knows. But for this very small amount you will get a great understanding of your own emotions. You will see your hand hovering in excitement over the “buy” button when the chart keeps climbing up, and you will notice how in fear of losing everything your finger wants to click “sell” when the chart drops down to the ground. Later, if you will not quit the game due to a margin call or your own frustration, you will start understanding how human emotions (including your own) work. And you will understand that all bubble markets are driven by emotions. Also, you will know if it is a good idea for you to start playing with money (which is what you are about to do). Who knows, maybe in your case the best choice is to do nothing with your property and focus on things like career, education, or your boyfriend (or another guy whatever).

#87 Beach Girl on 07.09.11 at 11:48 am

#46 Mark TSX to go to 50,000. I would die and go to heaven. How do you figure this could happen. Explain please.
When Keith Richards fell out of a coconut tree and nearly died, they asked him if he was happy to be alive. He said, Man, I am happy to be anywhere.
#59 GTA Girl. Spunky, liking that. They say he not that well endowed though. Keith calls him Brenda. All my heroes are looking quite scary right now, Mick, Arnold. Quite frightening actually.

#88 Utopia on 07.09.11 at 11:52 am

I am behind the news it seems. Just caught this Globe article this morning “Will the Housing boom Last Indefinitely?”

It is one of the more optimistic takes on the future of housing in Canada. Benny Tal is now telling us to chill and just relax. If we exclude Toronto and Vancouver from the averages then nuthin’s really going on.

To which a commenter replies that excluding over a quarter of Canada’s population does not add up well in his books (paraphrasing).

Interestingly though, Benny also says “So looking beyond the average price numbers reveals a highly segmented and multi-dimensional market that is probably influenced by different forces.”

Which is just another way of saying it is different everywhere. In other words, Canada is not one large homogeneous market.

We have already seen that there can be wide differences between provinces and even within individual cities where pricing is concerned. Some are currently rising while others are in the process of declines. All markets are not behaving alike.

So there you have it. It really is different here (or there).

#89 Babblemaster on 07.09.11 at 11:57 am

As the Terminator said, “It is in your nature to destroy yourselves!”

The fact is, as has been stated many times in this blog, humans have a short term memory and are extremely selfish and are tremendously motivated by greed and fear.

I’m not really trying to be judgemental, but just acknowledging things for what they are. Meaning, humans are what they are and could not have evolved any differently in this physical world with these physical laws. We have a nature that helped us to dominate and eradicate other homonids during our evolutionary period. This nature now works against us in many ways in this modern world. One example is booms and busts and the damage they cause our society.

Alissa and her avarise boomer parents are perfect examples of greed and the stupidity it spawns. Now Alissa wants advice to help save her, and her parent’s, skin? Such advice as “sell now”. Well, that just means that someone else (a greater, or later fool) will be “victimized”. This is a zero sum game.

My question is, why should we care about Alissa’s fate. or that of her parents. After all, it is these kind of people that have helped to cause this mess!

Alissa, my advice is to listen to the wisdom of your mother. She has donned the rose-coloured glasses and knows that, if you just hang-on to that house, things will get better and that her retirement will be golden.

#90 eddy on 07.09.11 at 12:06 pm

This is like turning on the radio in 1968 and hearing:

“Paul Whiteman is going on tour, with special guest, Rudy Valee”

#91 Timing is Everything on 07.09.11 at 12:40 pm

Bad idea in a thin market. FSBO ends up costing most people a bundle in lost proceeds. — Garth

Hey Garth, I know people who can ‘fix’ their own computers too. I make a lot of money fixing people’s fixes.
Oh ya, my three best buddies are a carpenter, a plumber and an electrician…They get their computers repaired/upgraded for ‘free’.

#92 grrr on 07.09.11 at 1:11 pm

garth you keep referring her townhouse as being near the airport, but the airport is in the NE and she says she bought in the NW. Still a desolate wasteland, but not near the airport. The key question too is how much money can the parentals afford to lose? If they’re loaded, no big deal but if it’s their life savings that’s another matter.

It takes me 6 minutes to get from the NE to the NW. It’s such a cute little town. — Garth

#93 Not 1st on 07.09.11 at 1:15 pm

This is hilarious. Some one who can’t handle a little 300k mortgage with huge backing from her parents is going to just magically sell it and become a diligent renter/saver/investor. Yeah right.

Keep your bloody townhouse. Live in it for 10 years until you are ready for a family, then rent the sucker out when you move up. Trust me, you can’t save your self rich, the only way is to have assets do it for you. Think of your mortgage as a forced savings plan.

#94 T.O. Bubble Boy on 07.09.11 at 1:51 pm

30 Reasons to get out of Real Estate and into Real Assets:

(I can think of a few more, but 30 should be convincing enough)

#95 Timing is Everything on 07.09.11 at 2:05 pm

Ahhh…Country life…In the city? (RE related, but off today’s topic)

#96 Kitchener1 on 07.09.11 at 2:17 pm

Truth is that the boomers have yet to adjust to the new paradim.

Even in the 80’s when interest rates were 15%, a house could be had for 30-40-50K while people were earning 12-15K a year, houses were still 2.5-3.5 times income. Still better off.

Back in the 80’s and 90’s, the boomers that were making 12-15 hours still had much more purchasing power then that same amount adjusted for inflation today.

#97 garrulous squirrel on 07.09.11 at 2:24 pm

You shouldn’t be surprised that people are acting stupid over real estate…..Canadians are generally a stupid and complacent people. I can’t decide whether it is the arrogance that has the hallmarks of a spoiled child or the ignorance that has been instilled by the nanny state. In either case there is no top or bottom…just a dumbo-numb snore-fest from one side of the country to the other.

Government rapes the seniors with the ZIRP…..nothing…no response. Police murder citizens….nothing…..Ethnic wacko’s blow airliners out of the sky…can’t say anything for fear of offending them….drunken cops driving around using prostitues…no charges……bureaucrats and civil servants raping the taxpayers….zero…..teachers demand 26 weeks paid leave ”’to comfort a friend…blah blah……………… hungry…so what…..Indian chiefs ripping off their people…big deal…..taxes now hitting the 90% mark…..go away……..real estate getting sucked into a giant money laundering scheme by crooked foriegn nationals….say no more.

This country has fewer working bones than a quadrapelegic. I’m surprised that we haven’t a free national surgery program to take out mens lower ribs so that they can suckle themselves.

#98 Canuck Abroad on 07.09.11 at 2:26 pm

81 / Burnt Norton – “It’s called soliciting advice. Kinda like what clients ask of professionals they hire…”

Actually it’s completely different. When you hire a professional, you check their credentials, check their references, give them full background information and pay them properly for their time.

Soliciting advice over the internet has entertainment value only. Expecting useful financial advice from people without full information for no payment is naive.

#99 Devore on 07.09.11 at 2:30 pm

Alissa, you should not have taken the money to begin with, such arrangements can only lead to trouble. But what is done is done. At this point, SOMEone’s feelings are gonna get hurt. You either stay in a place you don’t really like for reasons you do not agree with and against your judgement, or you sell it and throw the money back in their faces (which is what it will look like, if they insist you keep the place “because real estate is the best investment you can make”).

For vast majority of people, dealing with business arrangements or significant amount of money with with family will only end in tears, because you are not making rational sound business decisions. You’re concerned with feelings, and that way a money pit lies.

#100 Mark on 07.09.11 at 2:58 pm

#88, “Mark TSX to go to 50,000. I would die and go to heaven. How do you figure this could happen. Explain please.

a) We’re really still in a recession/depression, and normally P/E multiples in a recession/depression are 20-30X, not the current 12-15X on the TSX. So you get a double right from there.

b) Rising long-term interest rates imply that much of the long-term debt on the balance sheets of TSX firms evaporates (ie: becomes relatively less expensive to service), giving rise to rising earnings.

c) CMHC has $500B-$1T of mortgages guarantees on its books that are probably going to cost the Canadian gov’t $500B, ie: similar to the country’s national debt. The TSX is currently worth about $2T in market cap. If the TSX goes to 50k, that market cap expands to around $6T, creating $4T of value. At a capital gains tax rate of effectively 10%, that gives Ottawa approximately $400B in capital gains tax revenue to pay out against CMHC insurance claims.

d) The stock market, being comprised of active, value-creating businesses, should always outperform housing (housing not being an active business, and houses create no value!).

#101 Devore on 07.09.11 at 3:02 pm

#70 JessicaJ

Is there a character limit on the listing description? That thing takes a realtor license to make sense of.

#102 Hoof - Hearted on 07.09.11 at 3:02 pm

#26 MikeT on 07.08.11 at 10:52 pm

Here, in crayon: genetics. — Garth

Genetics don’t help in spreading STDs.

Sorry for being annoying. My respect for you wasn’t affected. You are doing a very good thing for our fellow Canadians, and that’s what I respect.


Never apologize

Sign of weakness

Most of Garth’s Blogger could go to war right now with genetically modified Kevlar

#103 CrowdedElevatorfartz on 07.09.11 at 3:06 pm

#7 Siddley
I was at that Oct ’81 concert as well(not ’82 because I had just flown into Van from back east and was immediately ‘kidnapped” to go to the Stones by my friends) Got separated from my friends/lost in the Kingdome(no cell phones back then!) . Met some strangers from Van. Drank too much. Also Woke up hung over in a Seattle hotel room the next day.

It was the begining of BPOE’s and my “relationship” :). Never new he was going to be sooooooo annoying in his old age.

Was the drive back to the border as painful as I remember?????

#104 Hoof - Hearted on 07.09.11 at 3:11 pm

#45 WI Boomer..

Actually, we went the see the Stones..on Babylon Tour…loved it.

I am simply pointing out Mick as a very bright guy…but perhaps an icon of the era….

Did he do a Jim Morrison … aka die in his prime….NO!

Did he consider money evil….give it away….NO !

Did I recall a STONES farewell tour in early 1980’s…..YES !!!!

Sir Mick is almost 70……how much is ever enough ?

Seems to be a typical Hippy-Crite….probably the greediest generation with a sense of entitlement, and F*ck with the rest of us.

Maybe have “Soylent Green channel” marathon….lol

#105 Edmonton Guy on 07.09.11 at 3:39 pm

I was checking out the MLS STATS here for Edmonton and I found that we are about $12,000 DOWN year over year for an avrg. condo price sale and down over $11,000 per avrg. house price. Can you imagine when interest rates rise? The banks have even lowered interest rates isnce last year! The Edmonton Housing Market is going bust again (for the 3rd time in 30 yrs.).

#106 Hoof - Hearted on 07.09.11 at 3:47 pm

If one looks at less than mainstream opinions.

One school of thought, for the leading edge of boomers, was the Feminist movement was initiated by the Black Hands.

The agenda was to herd them into careers , as the single income family wouldn’t allow for “inflation”…but a dual income family opened the floodgates for this ie higher RE prices..etc.

Early 1970’s as a demarcation point…a wave of people in early 20’s entering careers ?

However,…coincidentally….the leading edge boomers gained, at least drunk on the euphoria of the asset increases….but this orgy is now running out of steam.

In my experience..the only boomers I know that are relatively “set” are retired civil servants, but even then the warning signs exist that may undermine their alleged clawbacks, underfunded /unfunded liabilities.

Quite predictable..if one does a retro -analysis.

#107 The InvestorsFriend (Shawn Allen) on 07.09.11 at 4:41 pm


ummm, duh, being house horny is not a real STD.
when Garth says:

“Boomers are intent on passing the housing STD on to their kids.” He does not mean that housing is literally an STD.

There now, does that clarify things for you?

And I am glad to know that your Mom told you how STDs are spread. An STD is something most of the losers who post here probably don’t have to worry about catching.

#108 VICTORIA TEA PARTY on 07.09.11 at 4:45 pm

#89 Utopia

What lasts indefinitely is the hubris extant within the Baby Boom generation.

It peters out when they start checking out. And many have so far for a variety of reasons. And the big news here is that the rest will follow! You can take THAT to the BANK (for a reverse mortgage?)!

As to the motley crew, highlighted in this latest offering, nothing matters until the interest rate chickens start coming home to roost.

If you sell at a loss, or keep the joint and continue with the payments, you’ll be under a certain depth of water for the long term, ANYWAY,so what the hell? The higher go the rates the deeper the water! Buy a snorkle. Have a little croissant!

My advice, is to keep on working, all of you, and keep that hubris under control. Really! And read your history.


Just look at the US right now. All of it; that sight’s known as Empirical Hubris. The Romans, Greeks, Brits and Soviets all contracted it.

They didn’t invent it; they just couldn’t help it. That’s because hubris is just an unfortunate part of the human condition, like a bad dose of something, and they all had it BIG TIME.

One day the Chinese will be stricken with it. Oh. They already have! About 2,000 years ago! But things will be different this time, right?

Whatever you say!

#109 LS on 07.09.11 at 5:01 pm

Hi everyone, a quick request, when you say, in the community where I live, can’t you just name where you live? Most people are signing on here anonymously, so I don’t really see the downside in this? And then we’d know where you were talking about, at least give us a hint!

#110 Suburban Guy on 07.09.11 at 6:17 pm

I don’t see anyone telling Alissa and her parents to see a lawyer–seriously. If that boyfriend (or any boyfriend) moves in and stays, is it two years?, he gets half of the house.
–not just a bozo “storefront” lawyer, but a good one who specializes in co-habitation agreements and the like.
How can the three of them be so stupid?

#111 Maxamillion on 07.09.11 at 6:20 pm

#56 Bigrider

That location on Rutherford is ideal compared to the Langstaff Gateway approved by the town of Markham. It’s a strip of land between Yonge St. and Bayview Ave. It’s perfectly sandwiched between the 407 and a cemetery, plus its split by the train tracks. Almost forgot about the hydro corridor too. The town calls it a mini Manhattan and the density proposed is insane. Since I live in Richmond Hill I can tell you it will be a mini Hong Kong.

Map of the location:,-79.415274&spn=0.017738,0.042272&t=h&z=15–mini-manhattan-approved

#112 Alberta Ed on 07.09.11 at 6:59 pm

Hmm… the gal who couriers customers at the local GM dealership says her sister bought another place in Calgary to cash in on the housing boom; she’s going to flip it in a year or so. The former tenant of the $750,000 house we’re renting in Canmore for peanuts, moved out and bought a fixer-upper. He figures happy days are here again with all the natural gas coming back. Seems there are a lot of Greater Fools out there. BTW, that’s not a Harley…

#113 ralph tieleman on 07.09.11 at 7:22 pm

A grown man on a Japanese motorcycle !! now I’ve seen everything ! that’s funny !

#114 Mr Buyer on 07.09.11 at 7:24 pm

#112 Mikey the Realtor …”RE will decline one day, just maybe not in this life time”…I would say you are now in the bargaining phase of grief, acceptance is still a little further down the road…

#115 Get Real on 07.09.11 at 7:36 pm


ummm, duh, being house horny is not a real STD.
when Garth says:

“Boomers are intent on passing the housing STD on to their kids.” He does not mean that housing is literally an STD.

There now, does that clarify things for you?

And I am glad to know that your Mom told you how STDs are spread. An STD is something most of the losers who post here probably don’t have to worry about catching.


Mike T

You are wrong even if you took it literally..

Ever heard of congenital syphilis or congenital herpes or congenital transmission of HIV

#116 Bottoms_Up on 07.09.11 at 7:38 pm

If Boomers are so house-horny and love ownership, I don’t foresee many of them becoming renters.

That said, if, going forward, they do sell their homes en masse (in order to down-size and cash in on their equity), then there will likely be higher demand for those homes to which they want to down-size.

So…..what homes might those be?

Condos in city centres? Places near hospitals? The Exurbs?

#117 Hoof - Hearted on 07.09.11 at 7:40 pm

#111 LS on 07.09.11 at 5:01 pm

Hi everyone, a quick request, when you say, in the community where I live, can’t you just name where you live? Most people are signing on here anonymously, so I don’t really see the downside in this? And then we’d know where you were talking about, at least give us a hint!


No problemo

I live in RichHam B.C..

………..aka Richmond BC…and have for 50+ years

I agree….posters will not be tracked down and beat up…..thus may be useful to ID their geographical terms of reference.

#118 Bottoms_Up on 07.09.11 at 7:45 pm

#96 T.O. Bubble Boy on 07.09.11 at 1:51 pm
How can you listen to someone that doesn’t know the difference between ‘effect’ and ‘affect’?

#119 TurnerNation on 07.09.11 at 7:56 pm

My, Garth, you certainly have a way with young, forlorn house horny lasses. Better hope the missus never learns about this weblog. :-D

#120 Utopia on 07.09.11 at 7:58 pm

#98 Kitchener1 on 07.09.11 at 2:17 pm

“Truth is that the boomers have yet to adjust to the new paradim. Back in the 80′s and 90′s, the boomers that were making 12-15 hours still had much more purchasing power then that same amount adjusted for inflation today”

You said it. I can clearly recall making 12.50 hourly in 1981 in a union shop as a starting wage and I could afford pretty much anything I wanted then. No special skills were even required as it was all on-the-job training. Younger people (those without Uni) seem thrilled to get that much now.

But this is literally 30 years later.

Buying power has eroded for almost everything except imported goods from Asia. Hell, I was saving better than 15k a year then with blowing a stitch. Now, as we know, most are saving nothing.

Pack of smokes then were maybe 85 cents (guessing), gas was cheaper by the gallon, rent….pretty much peanuts by standards now. My apartment was costing me 200 monthly in those days.

Wages have dropped considerably over the years. Our incomes have been inflated away, buying power diminished and most costs rose. They are continuing to rise too.

It was still relatively common for only one person in the home to work then although that was changing fast. Over those thirty years our time has been eaten up too in a way that might shock younger people now. We really did have more leisure time to spend with family and friends. It was not so long ago really.

Now it is just go, go, go. Barely even time for Twitter.

It was a consumption driven society that drove us into the hands of free trade and created globalization as a means to expand the economy and insulate against recession.

We are paying the price now though as one of the outcomes was the shifting of labour intensive work overseas to low-wage countries. We needed that to happen to allow us to continue to maintain our standard of living and be able to afford the lives we were already accustomed to. We needed cheaper goods.

Some saw the risk in the policies that were being implemented then but most could not understand that consequences would surely follow.

In the simplest possible terms though, what we were doing was working to prevent a decline in our standard of living that had already begun. It could not be arrested as manufacturing went into decline and technology did not replace what was lost.

Innovation itself was eating into jobs numbers. Automation, computerization and robotics also took a toll.

That chicken is coming home to roost finally and it seems obvious to me that only a real adjustment in our standard of living can be the outcome now. It will not be easy as the Americans are discovering.

Low interest rates policies really are the last rabbit to come out of the hat. The magicians have run out of tricks. Once housing declines in this next cycle we will really begin to discover how big our lossses really are.

This tells me that taxes will rise, social benefits will be eroded, and universality itself may come under threat. What could possibly prevent a further decline in the West from here on in then?

See, saving does matter after all.

#121 45north on 07.09.11 at 8:18 pm

Aissa: But I feel pretty guilty about this arrangement, and perhaps that I can save them! if I sell now

well you have already offered to sell it and your mother said no. From your story your house has declined in price from $306,000 to $300,000. I think that you should renew your offer to sell but say that you don’t want to rent it out. ( do not be a landlord ) If they say no again then it’s on them. I think that you have to make the offer. In their minds they have helped out their daughter but there is the expectation that their $230,000 will be worth at least $253,000 in 10 years.

LS: when you say, in the community where I live, can’t you just name where you live?

that bugs me too, like I should know where they live

#122 TurnerNation on 07.09.11 at 8:20 pm

#34 Nostradamus Le Mad Vlad on 07.09.11 at 12:02 am

You said “the shape of things”…reminds me of Jeff Beck group’s song ‘Shapes of Things’.

(this song sounds a bit like Led Zep’s ‘Out on the Tiles’ song – must have been that era’s sound. Before my time but…). “Where’s that confounded bridge!”

#123 PennilessPensioner on 07.09.11 at 8:26 pm

@ #99 garrulous squirrel

Government rapes the seniors with the ZIRP…..nothing…no response.

Seniors are obviously at the bottom of the pecking order in a zero interest rate policy environment. I’m surprised that Canadian senior citizen’s organizations aren’t lobbying more.

#124 Utopia on 07.09.11 at 8:29 pm

#73 Mr. Reality

I am not feeling quite so dire as your post suggest but I do agree that lower commodity prices are inevitable if China slows. So you are right.

And it is a good thing.

For some reason this always infuriates the Gold-huggers and the hyperinflationists. Lower commodity prices put a great big hole in their boat as it runs contrary to the theme that too many dollars will be chasing too few goods. Too few goods indicate that demand for resource inputs is high and prices should rise. That idea falls flat as input costs decline.

Of course, we are not yet living in a world of shortages and they always overlook that fact. Not here in North America anyway.

If anything, we have too much stuff. We are swimming in possessions and so a central idea of hyperinflation theory is nullified (try telling them that though without the whole lot going apoplectic).

What we do know is that precious metals tend to track commodities prices. If China slows and their demand for resources declines then it should be obvious that PM’s will see something of a retreat.

Indeed, if the global economy goes into contraction or a “soft patch” then deflation will once again be our primary concern and falling prices for inputs can only be viewed as positive where they are then stimulative of renewed demand.

A low rate environment could therefore continue on for a considerable period of time and the debt overhang would not have to be dealt with on a premium basis as interest consumed a greater portion of income and revenues.

I am actually in favour of falling prices for commodities now and believe that policy interventions can help bring this about.

What we badly need is real growth in the economy. At present, commodity speculators have succeeded in taxing the global economy of disposable income and therefore stand in the way of renewed growth prospects.

Just my opinion. Some do not like it. I don’t care.

#125 Onemorething on 07.09.11 at 8:30 pm

Lose Lose Scenario!

However how much do you want to lose before you have learned your lesson?

Kinda like lowered expectations on Nortel Stock.

Anyone who purchased RE since 2005 is at risk.

I’ve basically done a calculation of my net worth since leaving Canada and getting out of RE completely starting in 2003.

Considering cost of ownership and 1000 different factors along with these properties increasing 2x in value I’m still hugely ahead by renting and I mean 2x the value of the RE increases.

I will tell you something else, the quality of life/time not being strapped to this illiquid asset in good times and presumed bad which are right around the corner really opened my investement eyes.

Ever wondered why some of the top investors still rent?

Ever wondered why your emotional tie to RE seems stronger than the one with your spouse?

Stop being taken for fool and the long munipulated ride!

#126 Utopia on 07.09.11 at 8:38 pm

#71 Stevermt on 07.09.11 at 9:35 am

“’re no.1. Own that at least for today :)

Thanks Steve. I am just enjoying ribbing Hoof-Hearted a little as he has become this sites most vocal boomer-hater. Didn’t anyone else notice his handle is just a play on the words “Who-farted”?

Where is BPOE when we need him.

#127 UVZ on 07.09.11 at 8:45 pm

#102 Mark

BTW thanks for the interesting analysis.

[We’re really still in a recession/depression, and normally P/E multiples in a recession/depression are 20-30X…]

Having trouble following the above as I don’t have the historical stats. Which recessions/depressions are you referring to?

What is the long-term P/E average of the TSX?

#128 Victoria on 07.09.11 at 9:02 pm


I know two people who are giving up their jobs to become real estate agents.

#129 JessicaJ on 07.09.11 at 9:11 pm

#103 Devore

Is there a character limit on the listing description? That thing takes a realtor license to make sense of.
Not sure what you mean by character limit Devore. The MLS listing # is: C2136550

#130 vinoverde on 07.09.11 at 9:17 pm

Hey siddeley, I am way down here and you are comment 7, but I wanted to tell you I went to that show in Seattle too. 72000 in the kingdome, sure. I thought it was 81 though,

#131 Siddelly on 07.09.11 at 9:18 pm

#85 wetcoaster

Yeah, I think that was me rocking back and forth on my Daytons alright! I do remember being up high in the nosebleeds and the sound was pretty echo- like as I recall. The outdoor stair ramp walkways were a little bizarre and took a while to navigate. I actually had a better time seeing the Who in ’79 at the Coliseum with Pete Townsend crashing his telecaster guitar against his head near the end of the show. We rushed the stage for that one, he was probably 6 feet away from us at that point. But the best show was probably The Kinks around the same era when Ray Davies was being idolized by the punk rocker movement at the time and was suffering from volleys of hurled spittle as a way to show their respect for him. The show truly shifted dimensions when the Superman blotter kicked in and the volume seemed to reach warp frequency levels just as the band started to sing ” I want to fly like superman… Superman, superman, I want to fly like superman”

I’m glad I survived all that.

#132 mel on 07.09.11 at 9:24 pm

Okay Allisa:

I am getting the ‘feeling’ that your ‘gut’ feeling is telling you something. Forget about your parents, your friends, newspapers, or the rest of us. Heck, your gut feeling is telling you that there is something wrong with the whole house hunting business.

Sell while you can. Save your parents, yourself from feeling guilty that your ‘ fantasy with house ownership’ could seriously put your parents future retirement in jeopardy.

Do it now, and don’t look back only until houses will correct to their fundamental values. Until then, do what my daughter in Edmonton does. She lives alone, has a good job, saves for her pension through direct paycheque deductions, and travels the world. She is 31 years old.

Your job from now on is to learn everything you can find about how to evaluate home prices, stock prices, and investments as a whole. So that, when you hear someone speaking be it expert, media, politicians…. you will know who is giving you bull sh….

#133 eaglebay on 07.09.11 at 9:25 pm

#73 Mr. Reality

Short the TSX at your own peril.
The TSX and the TSX.V have done very well in the past 2weeks. All year for that matter.
You must be losing your shirt, loser.
The economy is much better than the doomers think.
The developing economies are doing great and so is the US economy. Slow but growing.
Canada will do fine with the exception of RE.

#134 CrowdedElevatorfartz on 07.09.11 at 9:49 pm

ahhhhhh yes, Iggy Pop at the Commodore in ’82. Spit flying through the spotlights like big fat moths to the ‘flame” of Iggy.
Iggy was psychic, ” I’m livin on Dog Food! So What!”

#135 Burnt Norton on 07.09.11 at 10:01 pm

#100 Canuck Abroad on 07.09.11 at 2:26 pm

Gee thanks Einstein. She emailed Garth (a professional) asking for his advice. Of course the rest of the anonymous babbling here is not necessarily worth betting the farm on. On the other hand, having read the comments in this blog almost daily for over a year, I can tell you that many people put effort into giving genuine advice. Different perspectives, not gospel. Duh.

#90 Babblemaster on 07.09.11 at 11:57 am

You’re either part of the solution or you’re part of the problem.

#112 Mikey the Realtor on 07.09.11 at 5:30 pm

Check back in 3 years. Box of TimBits waiting for ya.

#136 eaglebay on 07.09.11 at 10:12 pm

#76 Cory

There are no mortgage rules. Only mortgage insurance rules if you’re using CMHC because your down payment is too low or non existent.
If you get a mortgage with “private mortgage people” wether it’s a bank or private money with a good down payment, the CMHC do not apply. Loser.

#137 camcool on 07.09.11 at 10:16 pm

Allow me to play doubles advocate here for a moment. For all intensive purposes I think you are wrong. In an age where false morals are a diamond dozen, true virtues are a blessing in the skies. We often put our false morality on a petal stool like a bunch of pre-Madonnas, but you all seem to be taking something very valuable for granite. So I ask of you to mustard up all the strength you can because it is a doggy dog world out there. Although there is some merit to what you are saying it seems like you have a huge ship on your shoulder. In your argument you seem to throw everything in but the kids Nsync, and even though you are having a feel day with this I am here to bring you back into reality. I have a sick sense when it comes to these types of things. It is almost spooky, because I cannot turn a blonde eye to these glaring flaws in your rhetoric. I have zero taller ants when it comes to people spouting out hate in the name of moral righteousness. You just need to remember what comes around is all around, and when supply and command fails you will be the first to go.

Make my words, when you get down to brass stacks it doesn’t take rocket appliances to get two birds stoned at once. It’s clear who makes the pants in this relationship, and sometimes you just have to swallow your prize and accept the facts. You might have to come to this conclusion through denial and error but I swear on my mother’s mating name that when you put the petal to the medal you will pass with flying carpets like it’s a peach of cake.

#138 April on 07.09.11 at 10:41 pm

119 Bottoms Up. I don’t think anyone is saying boomers will be selling “en masse” and yes I would think they’ll be buying condos but they may be shocked to find little demand for their large homes even after a price depreciation.

#139 Mark on 07.09.11 at 11:04 pm

#136: The TSX and the TSX.V have done very well in the past 2weeks.

Yeah but still flat on the year. I agree that shorting either, and putting more faith in the government’s currency, is a foolish move though.

#140 Hoof - Hearted on 07.09.11 at 11:11 pm


Sense the D-I-V-I-D-E and CONQUER strategy..whether it be by ethnic…religous..etc lines.

Those are the terms of reference.

#141 JohnnyBGood on 07.09.11 at 11:37 pm

#77 bigrider on 07.09.11 at 10:10 am

Yeah, yeah, yeah, we all know about Italians and construction and real estate. How do you break up an Italian wedding? Yell out, “Concrete truck’s here!” Yada, yada, yada…

Too bad people like you keep trying to perpetuate the stereotype. And if that’s how you define Italian culture, it’s you who knows little about your heritage.

GTA? Yeah. Sure. But I wonder how all those other cities around the world without large Italian populations managed to get built?

And if you want to insult me, maybe you should try it in Italian next time. You can’t seem to do it very well in English.

#142 No Sympathy For The Devil Or The Stone Heads on 07.10.11 at 12:13 am

#60 Herb

No wonder the boomers are screwed up if they worshipped that shit all their lives!

Have to totally agree.

Too many people got into illicit sex, illegal drugs, and bad noise instead of good music.

This will not end well.

#143 The Phantom on 07.10.11 at 12:14 am

Evening All:

This blog continues to provide a worthy source of entertainment…Housing markets tend to cool during an era of rising interest rates. Wait for the rates to start increasing as the BofC tries to temper the RE market given that other measures thus far have proven futile.

the Phantom

#144 wetcoaster on 07.10.11 at 12:18 am


Saw The Who at the ugly Kingdome, wish it was in Van, some prick kept dropping firecrackers on us from the upper deck. Someone went up and pounded him, lol. Was the best concert era ever, McCartney in the Kingdome, Pink Floyd The Wall in LA, Supertramp,Aerosmith, Dylan, etc , I can’t even list them all. I do have the concert clippings from the Stones show in my memorbilia stash. Jagger went undercover into the crowd on the floor before the show and no one recongnized him. Wild times indeed. Where did all the good times go, and how did we survive ? LOL

#145 Where's the money Guido? on 07.10.11 at 12:28 am

#11, Steve, I’ll bite. Phoenix

#146 Where's the money Guido? on 07.10.11 at 12:29 am

#11, Steve, or Detroit?

#147 Where's the money Guido? on 07.10.11 at 1:20 am

In a 10 block radius of where I live in N.E. Port Coquitlam, I have seen at least 10 properties sell in no more than a month or so from the time they have gone on the market, and most in less than a month (2 weeks or so). I guess I live in a good neighborhood (Lincoln Park)…..I talked with the owner of the only place that never sold (he had it on the market for around a month-6 weeks) and he said that the market had changed and he was going to wait until next spring to list it again (he had a high asking price). 2 houses less than a block from his sold in less than a month. Funny thing is, a SFH just around the corner from my house went on the market less than 2 weeks ago and sold this week (I’ll check if he got full price)….It’s busier now than it was last year in my area, and more for sale signs up on average than in all the 4 years I’ve been here, and they’re moving. Asking prices from what I’ve seen are up about 18% from what I paid in 2007.

#148 Tony on 07.10.11 at 3:18 am

Sounds like very good advice since the most likely scenario is an implosion in commodity prices. The US looks like it will slip back into the recession it never came out of. Hopefully we will get the true GDP figures out of America not something someone decided to make up month after month. Oil seems to be a commodity that has been manipulated upwards beyond belief. The true value is probably around 20 dollars U.S. a barrel but hedge funds and banks have driven it up to around the 95 to 100 dollar mark. It can’t stay there forever it can only fall and fall hard in price even if the U.S. dollar falls in price.

#149 Tony on 07.10.11 at 3:29 am

#130 UVZ

P/E ratios dropped to six back in the late summer of 1982.

#150 BrianT on 07.10.11 at 7:41 am

#151Tony-If the true value of oil is $20 then the true supply of oil is a lot lower than the current level. A relatively high % of the global oil supply costs a lot more than $20 to produce.

#151 bigrider on 07.10.11 at 7:46 am

#144-Johnnybe Good-“GTA yeah sure” etc.

Yes GTA was what I was referring too. Thanks for confirming the stereotype I’m quite sure has much basis in truth. Nobody said anything about heritage of “old country”. I am equally aware of it’s rich and varied history and could not be more proud of it.

Insulting you in Italian would be too easy. Seems to me you are far to sensitive and possibly the “self loathing” type yourself.

And if you are not of Italian background ,possibly jealous as well.

#152 bigrider on 07.10.11 at 7:54 am

#114- Maxamillion. “Langstaff and Yonge corridor to Bayview”

Yes I know all about that site. Three condo towers proposed with redevelopment of a town centre and most importantly the subway. It will be pretty.

Maxamillion, the land primarily owned by stone company currently present(can you say the name “pacitto”) is to valuable to be continued to be used as such. And since Con-Drain “freddy” pretty much gets his way when it comes to redevelopment it was inevitable.

Two Italians above have known each other for a long time. Partnership was inevitable but don’t be too upset about what is proposed, if you look closely at it, it will be a good thing. Subway will take lots of pressure off of Yonge st south of Hwy 7.

#153 BrianT on 07.10.11 at 7:54 am

Good analysis of the Basel 3 scam

IMO most cannot accept what is happening in the global financial sphere-the regulators have been captured to a third world degree.

#154 eaglebay on 07.10.11 at 8:18 am

#151 Tony

Conspiracy, right? Blame the “speculators”.
Oil at $20 a barrel? What is the cost of producing a barrel of oil? Or, do you know?

Welcome to the real world.

#155 UVZ on 07.10.11 at 9:04 am

#152 Tony

Assuming accurate data & calcs, here is an S&P500 P/E chart. 1982 looks quite low indeed. Long-term average is 16.

#102 Mark

The S&P 500 P/E ratios are way different than the ones you posted for the TSX.

#156 UVZ on 07.10.11 at 9:19 am

#157 eaglebay and #151 Tony

Here is some oil production cost data:

The cost range can be from single digit to three digits per barrel depending on location and industrial process.

Generalizing, Middle East oil production costs are very low. For example, Saudi Arabia was at $4-6 per barrel a couple of years ago – if the link info is accurate.

#157 seven Stars and Orion on 07.10.11 at 10:15 am

#140 camcool

I laughed so hard this morning my wife thinks I’m having a breakdown. I asked her to wade up and spill the coffee.

#158 Imstupid on 07.10.11 at 10:55 am

#140 CamCool

I’v read alot of stupid posts on here but yours was by far the dumbest. It was a complete waste of time. Sadly I cannot get that time back, so to compestate for the waste of time I must tell you that you are either a complete moron or on some heavy drugs. For your sake I hope it’s the latter because rehab can cure you, but stupidity is for life.

I ask the other bloggers on here to read it and tell me if in wrong.

#159 JohnnyBGood on 07.10.11 at 11:01 am

#154 bigrider on 07.10.11 at 7:46 am

Va bene… Va bene… Non ti preoccupare.

#160 Cowboy on 07.10.11 at 11:13 am

God, Italian superiority is so boring….
You guy’s would have us believe you never make mistakes in business.
What a joke, just look at what a mess Italy is right now
(right from the citizens of the country!)
Italian’s can’t take it but they can sure dish it out!

Perhaps the Italians know there is no apostrophe use in pluralizing. — Garth

#161 S on 07.10.11 at 11:24 am

#102 Mark on 07.09.11 at 2:58 pm

Please explain how this works:

“b) Rising long-term interest rates imply that much of the long-term debt on the balance sheets of TSX firms evaporates (ie: becomes relatively less expensive to service), giving rise to rising earnings.”

(Just curious how debt becomes less expensive to service with higher interest rates.)

And here (read below) I’m really lost. Dude, are you saying that in this economic and geopolitical climate stocks are actually cheap?

“a) We’re really still in a recession/depression, and normally P/E multiples in a recession/depression are 20-30X, not the current 12-15X on the TSX. So you get a double right from there.”

I don’t know… Maybe some day TSX will be at 50 000 but I’m sure that by that time I’ll be dirt in the ground:

#162 Babblemaster on 07.10.11 at 11:33 am

#138 Burnt Toast

Her mother is greedy and Alissa is easily swayed by greed. After all, Alissa had no real problem with her parents putting their hard earned nest-egg in harm’s way. Now that she’s clued in that it’s possibly in jeopardy, she is worried. Greed and fear. Not very altruistic qualities and not a very altruistic goal they had in mind.

If people want to offer her the obvious useful advice to cut her losses, they can go ahead and do so. Of course, if she does sell, it just means that another fool will be burnt.

If you’re not part of the solution ….. Blah, blah. Sorry, but what simplistic BS. The fact is that, on a macro level, there is no solution. Prices are way too high, and they will come down. There will be pain. People like Alissa and her parents (not to mention Flaherty) caused this fake RE boom and when it corrects, we’ll all have to pay.

Over the last 3 years, I have occasionally offered people advice, when solicited, to stay out of the market, but they’ve usually laughed at me. Look, I tried in my own humble way to present a viewpoint based on some logical, critical thinking, but logic is usually rejected when greed is at play.

On a societal level, the problem is human nature. And there is no solution to that problem.

#163 BrianT on 07.10.11 at 11:41 am

#159UV-KSA is spending billions on installing nuclear energy -would you do that if you were confident of a sustainable supply of cheap to extract crude oil? Of course not.

#164 Devil's Advocate on 07.10.11 at 11:45 am

#1 Utopia on 07.08.11 at 9:38 pm
It is not the same video our old friend Devil’s Advocate posted but still pretty good. Where is he these days anyway?

I’m around. Working hard, “earning” a living…

We are the victims of our own vices…

#165 BrianT on 07.10.11 at 11:49 am

#154Big-You are not Italian at all-at best you are a Canadian/Italian hybrid. You probably grew up playing hockey, eating Tims donuts and using eh in every second sentence. If you visited Venice or Rome they would likely recognize you as a foreigner immediately.

#166 Thirty something on 07.10.11 at 11:51 am


Can you please let us know what your take is on the current US financial picture. What will happen if the US has it’s credit rating downgraded? How could this potentially affect Canada? Thanks.

#167 Edmontonian on 07.10.11 at 12:03 pm

In Edmonton & all of ALberta there is a lot of illusions about “all the jobs” being created here and how wonderful it is! Yet unemployment went up 0.2%. Very rare that unemployment would ever go up in Alberta, with all the jobs in landscaping and road repair during our very short summer.
The oil companies have certainly rehired a lot of people since the downturn of 2009, but most have been hired back at $20 an hour not $40, and a lot of jobs are temporary contract jobs also.
Vacancies remain the highest in Edmonton of every other major city in Canada sitting at %5, and many other smaller oil towns that were busting at the seams with people sittting at 0% vacancy rates like Grande Praire & Fort Saskatchewan are sitting now at 10% Vacancy rates.
Now, this is causing the Housing Market to collapse here. Many areas are plundging into 2005 price levels!

#168 Abitibidoug on 07.10.11 at 12:06 pm

The central theme in this blog is the foolishness of putting all your investment eggs in one basket, in this case housing. A big part of the problem is houses have gotten bigger and bigger in the last 50 years, even though family size has gotten smaller. Are these bigger houses what people actually want, or do people buy them because that’s all that’s available in newer housing? I look around older neighbourhoods in many different cities, including London, Ontario where I live now, and see a lot of smaller houses that that would suit me (or any person or family with some common sense) just fine. What’s the story with these big McMansions that cost a fortune to buy, fortune to heat or cool, take forever to clean, and cost even more to drive to and from because they live far away in sprawling suburbs? What’s the attraction in them?

#169 Chaos on 07.10.11 at 12:26 pm

Grow up…no kiddin’ eh.

“All good things must come to an end”.

Our good thing ended a few decades ago.

As Utopia sez, things used to be much better. We had more time, money, focus,hope…We could count on our country to have a plan. Changes happened slower and we had time to make good decisions. We didn’t have to think of terms of spin and who was lying to us. We didn’t have to deconstruct the dissimulations of every political action to find a particle of the true career for these actions.(and btw, apparently we all understand now that everything is political, everything)(every action has a consequence)(many of them planned far in advance of you knowing about them)

Time to grow up and play the game instead of being played for fools.

This means being decisive. This means taking a side and playing for your team. This means having to be visible.
This may mean that you have to do something unpopular. This means becoming “Political”.

Of all things you may have to “stuck in”. (shame on you if you don’t know what this means)

In my mind this means honouring the sacrifices of our
two greatest generations, the 1914-1918 cohort and the 1939-1945 cohort.

You may argue that these men and women were just the pawns of the respective times, but without their shoulders to stand on we would never be enjoying this latest fall of Rome.

Will we burn our birth right to the ground or will we stand up and save it?

We we cede it to special interests or will we wrestle it back to our control?

What are you prepared to sacrifice in order to live like the Canadians that came before us?

Do you really think that this is just about real estate?

Puhleez…I put it to you that our country and our culture hangs in the balance.

No kiddin’…grow the woof up.

The “Summer of Love” is becoming the “Winter of our discontent”.

#170 Beach Girl on 07.10.11 at 12:35 pm

Used to own a McMansion in Unionville, Ontario from 1985 to 1995. My ex and I thought we were special. We were not. Lucky boomers. What a disaster. Did not take a bath on it. But holy smokes I was the only white girl left. No I am not racist. But I know what being a minority feels like. No more subdivisions for me. Amy Winehouse says, No No No. The Mayor at the time, Ms. Bell got bounced out of office, complaining that Asians were taking over this historic area. I am sure Garth remembers this. Have been to Vancouver, really have no desire to visit it now. Have a nice weekend all.

#171 reality guy on 07.10.11 at 12:43 pm

Here some news on chinese debt and real estates starting to slow

China has been playing musical chairs, fabricating GDP to hide the recession.But now the music is about to stop and Bam!

#172 allister on 07.10.11 at 12:46 pm

#145 – Too many people got into illicit sex, illegal drugs, and bad noise instead of good music.

Thats what we called sex, drugs and rock n roll HAHAHAHA

#173 Utopia on 07.10.11 at 12:54 pm

#157 eaglebay……

“Blame the “speculators”.

Well, speculation certainly plays a role. One estimate I have seen suggests that up to 25% of the price of commodities is based on speculation alone and not typical supply and demand equations.

I believe that estimate is conservative.

If we try to picture how oil might be affected given fairly steady population growth versus know existing supply you might imagine a chart that rises in a moderate yet consistent progression over a decades time.

But is that the case? Or do manias and speculation fever have the capacity to alter prices radically over that same time frame? Do the periodic crisis drive prices in unpredictable ways too…including lower as the shorts profit at the expense of the prior bullish excess?

Let’s see then……

Oil was selling for below 18.00 per barrel in 2001 yet cost more than 130.00 just seven years later. That is a multiple of 7 in as many years. Ouch

Today oil runs a bit over a hundred per barrel but no more than two years ago the price was below 50. What this should indicate is that pricing has some really wild swings and speculation does indeed play a major role (as does fear).

The idea that oil cannot fall below the cost of production periodically does not hold. My personal objection to current high prices is that they are stalling the possibility of real organic economic growth taking root again.

The fear trade is still overwhelming confidence and so expansion becomes impossible as fear drives up input costs, lowers real output, reduces consumption, takes bread out of the mouths of the needy and poor in the Third World and kills corporate profits everywhere.

Perhaps it is the internet and the very wide dispersion of negative ideas and conspiracy that has infected the minds of investors. With luck it shall end soon and we can get back to the business of creating real sustained growth.

Take a look at this oil chart. Then tell me speculation is nothing to be concerned about. We obviously have a big problem and a conflict has developed between how the capital of investors flows around the globe versus government initiatives to stimulate.

It is incredibly complex. We can see that competing interests and agendas are at play by reading the charts themselves and trying to grasp capital flows as they compete against policy (and defeat it sometimes too).

#174 Bottoms_Up on 07.10.11 at 1:03 pm

#123 Utopia on 07.09.11 at 7:58 pm
Just got my (Ontario) auto insurance renewal in the mail — premiums are staying the same but my coverage has been halved in a bunch of categories. Nice to know that my dollar goes half as far this year than it did last.

#175 UVZ on 07.10.11 at 1:03 pm

#161 Imstupid

Re: #140 CamCool. I spilled coffee on my shirt.

#176 Bottoms_Up on 07.10.11 at 1:06 pm

#141 April on 07.09.11 at 10:41 pm
I think Boomers will largely stay in their homes (as long as the home is conducive to their ageing). The places they’ve loved and cared for all these years; good neighbours; familiarity with local amenities; memories; friends. You gotta live somewhere!!

#177 garrulous squirrel on 07.10.11 at 1:15 pm

#126 Penniless….I would have prefered the senior bloc to have very publicly spoiled their ballots in protest during the last election. The ZIRP and the murder of the Income Trusts have been the biggest travesty of this Conservative government.

The ZIRP forces seniors to cannabalize their savings by crystallizing holdings so that the Government can claw back taxes on the withdrawals. This has caused legions of seniors to run out of cash decades before they had planned. Seniors are starving in droves. So…why they voted for the Cons after the rape of the Income Trusts on top of the IRP really threw me. I would have thought the senior lobby would have used the Cons failures to make some sort of stand.

As has been proven ad nauseum….’F’ was lieing through his teeth when he took the position that income trusts were a tax loss to the government due to foriegn ownership. He simply wanted to speed up the tax collection process by having seniors and savers have to sell and pay tax on the proceeds.

Seniors ( except for the fat sucking civil servant upper classes) have been run to ground and repeatedly raped by the Cons. They have zero income from returns on bonds that the government has decided to issue to itself at zero return. There is a massive problem underway. Seniors are not the biggest users of food banks…….the cost of social services to poor seniors will be another ‘Black Swan’ event that the Cons didn’t account for. Not only will the health care system collapse under the weight of the poor boomers anyway…but the new welfare system for starving seniors will dwarf that……………….and probably blow a giant hole in any ‘balanced budget’ projections for at least twenty years or more.

The ‘young uns’ should say hello to a doubling of direct taxation and look forward to the insidious march of ‘service fee’s and special levies’ by local governments as the system ballons with people who could have supported themselves ( as they had spent a lifetime planning for) but have been stripped and raped by a government who’s own spending is out of control.

#178 Mark on 07.10.11 at 1:48 pm

#164: Please explain how this works:
(Just curious how debt becomes less expensive to service with higher interest rates.)

Most of the TSX is comprised of firms that have long-term fixed rate debt, at interest rates of 7-10%. As interest rates have been falling and consumer prices have been tame, this fixed rate debt has become relatively more expensive to service. As rates rise, quite the opposite occurs; rising interest rates actually are quite beneficial to profits for these companies because the relative burden of debt service falls.

And here (read below) I’m really lost. Dude, are you saying that in this economic and geopolitical climate stocks are actually cheap?

I believe so; that the market is overly pessimistic. I mean, we’re still below levels of 3 years ago, yet corporations have retained the most of 3 years worth of earnings, have considerably lower operating costs, and profits have almost never been better. All this in the midst of a recession, so imagine how much better it gets once Canada gets back to growth!

I don’t know… Maybe some day TSX will be at 50 000 but I’m sure that by that time I’ll be dirt in the ground:

Dying soon I reckon??

#179 Utopia on 07.10.11 at 1:51 pm

#174 Reality Guy posted some interesting links. Here is a quote from one of those. It was published by the Wall Street Journal and refers to risky local government Chinese debt.

“Moody’s said the audit office’s data failed to account for …. about $540 billion of loans to local governments, because the audit agency didn’t feel governments should be responsible for those particular loans. Yvonne Zhang, a senior analyst for Moody’s based in Beijing, said in a statement that those loans are “most likely poorly documented and may pose the greatest risk of delinquency.” Speaking at a news briefing, Ms. Zhang estimated the delinquency ratio for those loans will be around 50% to 75%.”

Go big or go home. No saying was ever more true of China. They simply do everything bigger than anyone else including the creation of bad debts.

The suggestion above from Moody’s that 50 to 75 percent of this debt class might become delinquent is simply mind boggling.

Even here in Canada with all our worries over housing, the threat of even 1.5% of mortgage holders becoming delinquent following a pair of 25 basis points rate hikes is seen as mind numbing.

That is a crude and unfair comparison perhaps but you get the drift. Debt issue is out of control in China and the capital buildout is going to be their downfall. Ours too as commodities could fall hard and the big buying dries up.

I smell trouble of course.

If anybody is still not getting that the Chinese property bubble implosion could lead to a serious growth slowdown over there then….well………you are still not paying attention yet.

I have been warning that commodities will see a big decline in future quarters as China slows and that this will certainly impact on precious metals in a negative way. That message almost never gets through to the Gold-Huggers though.

Hell, nothing can affect their view that metals will shine based on fear and worry. I disagree with some of the estimates for how high Gold might go because in my view price will become relative to all other metrics and measures.

Wasting words though. What is the point.

#180 eddy on 07.10.11 at 1:55 pm

Toronto hydro is an never ending rip off ( debt retirement, delivery charges – all with HST, that’s right – tax on nothing) This is about smart meters, the video halfway down the page is interesting

#181 Dorf on 07.10.11 at 2:02 pm

paying my $1250/month rent, … $230,000 of parental backing, …bought a home for $306,000…have me afford to live in this new home without going house poor

Wow! You’re an expensive little habit, aren’t you ?
1250/mo for rent or a 306k home…most BF’s live much cheaper and a girl with such expensive tastes is called a bad disease.

Live there without going house poor ?

Direct translation to proper english is:

Live there for far less than what it actually costs the average person. So, little Alissa gets horribly subsidized by anyone and everyone so that she doesn’t have to experience the cold hard reality of what life is really like, she gets the financially watered-down Disney version. Nice life.

#182 T.O. Bubble Boy on 07.10.11 at 2:07 pm

@ #121 Bottoms_Up

How can you listen to someone that doesn’t know the difference between ‘effect’ and ‘affect’?

True – that article (30 reasons to dump real estate) was very US-centric, and not written by someone as eloquent as our host Garth here on this blog.

However, there are still at least 30 reasons residential real estate in Canada is not the place to be investing these days:

1) Interest rates will rise – and if they don’t, then other factors such as unemployment and debt ratings will ensure that the housing market is a tougher place to buy. Also – the Euro zone and many Asia-Pacific Countries (China, Australia) have been raising rates, so it is even more likely that Canada will need to in the near future.
2) Mortgage rules will get stricter – and if they don’t, it’s because the market has already tanked and the government is trying to stimluate a weak housing sector.
3) CMHC will eventually be reined in, making mortgages for first-time buyers and sub-primers (a huge chunk of today’s market) more expensive. The private mortgage insurers are already gaining market share, and at some point the government will need to be less exposed to the housing market.
4) Oil will correct at some point, reducing the wealth of certain Canadians both directly and indirectly.
5) Ditto for Precious Metals.
6) Ditto for other Raw Materials (Potash).
7) Ditto for Banks.
8) Ditto for Service/Manufacturing/Tech sectors that sell to the US – including larger companies like RIM.
9) In many areas of the RE market, large percentages of recent gains can be linked to superficial improvements from the home renovation binge. Once styles change and/or better technologies emerge, the perceived “value” of granite & stainless goes away.
10) Affordability ratios are as bad as ever.
11) Consumer debt levels are as bad as ever.
12) Boomers have insufficient savings, and will need to dump RE.
13) MSM (media) are becoming more negative on RE, which drives the herd mentality. Mainstream economists that used to forecast small annual increases in RE are now calling for 10%-25% declines.
14) There is an over-supply of condos in this country – especially Toronto. Most of today’s buyers are “investors”, and many sit empty.
15) There is a huge amount of speculation in the RE market, especially Vancouver and parts of Toronto.
16) Mortgage default levels are still extremely low (because house prices keep rising), but will rise once the economy worsens and/or rates rise.
17) HELOCs have become more difficult to obtain, so many families will not have the luxury of over-spending on a house and making up the difference by tapping into home equity.
18) There is no giant “next wave” of buyers. The population is not growing as it has in the past, so there will not be a group of buyers to sell today’s highly-priced homes to.
19) From the TSX – if you look beyond the big banks, Pure-play Canadian mortgage companies like Home Capital Group ( have grown 10x-15x faster than the general market — 1050% vs. 76% over the past 10 years. Even Gold and Silver can’t claim 1000% growth in 10 years.
20) The RE decline has already started in many parts of the country.
21) At the moment, inflation is hitting everything we buy (food, energy), while incomes are flat. There is less income left for housing.
22) The “Economic Recovery” in Canada has produced a ton of part-time jobs (replacing full-time ones), which can’t pay for a SFH.
23) Families move homes a lot more than they did a generation ago – so the concept of buying the dream home you’ll live in for 50 years simply doesn’t exist. The way that people view housing is becoming more transient/temporary, which makes renting and/or buying a “value” home more likely.

And, here are several points from the article that do hold true in Canada:
24) Most housing is not income-producing — if you exclude the expectation of huge capital gains, most houses are in fact liabilities.
25) RE is illiquid.
26) Property taxes will continue to be raised.
27) The “bigger is better” Boomer generation is moving out of RE – so the demand for McMansion housing stock and recreational properties will decrease.
28) The Boomers’ kids are broke.
29) Multi-generational housing is coming back (so less homes are needed).
30) Foreign Investment Exodus — once the Chinese are shown that their “bet” on Canadian housing is starting to take a turn for the worse, those dollars will flee to another country, or another investment type altogether.

and, 1 bonus reason…
31) Two Words: Garth Turner.

#183 Dorf on 07.10.11 at 2:14 pm

This story is a perfect example of my next comment.

Garth, you would not believe the number of 30-somethings and 40-somethings, sitting on their asses, working an entry-level job and renting a cheap place or even sharing with a like-minded friend, doing nothing to further themselves, only doing enough to get by day to day…..why ?

Because they have the belief that their parents, having paid off a house in this house-lottery economy, are now super-rich !

All they have to do is lay around until dear old mom and pop croak, and take over the lottery winnings, be instantly super-rich and never have to do a thing for themselves, like they ever were used to the idea of doing for themselves anyway.

This is just another piece in the puzzle of mass genetic cleansing. If you don’t think it is happening, do some more reading or just open your eyes. Lazy people, stupid people, inept people, people who are unable to contribute or survive on their own, they are all on their way to the recycle bin.

I didn’t plan it or encourage it, I am just watching it happen and see how many people catch on to it, and which ones do. I will just watch the rest perish, there’s nothing anyone can do about it anyway.

In my opinion, people who spend their lives waiting to have their pooper wiped by everyone else, and do nothing to further their own existence are only good for collateral damage anyway. They probably should have perished long ago anyhow if it wasn’t for guilt and over-parenting.

#184 Snowman on 07.10.11 at 2:26 pm

Poor Alissa, $416.06 mortgage per month – if she got the 25y – or $375.45/month – if she got the 30y one – or some $335.00/month – if he got the 35y one, how did she allowed herself into such a mess? How about her parents, why would they do this to her. This is the most desperate case I’ve seen ever since this blog started. What if she loses her job and only left with $1000/month after mortgage? What if the mortgage rates go up and she may be forced to pay 6, maybe $700 per month? How is she going to make that payment in a city where the average wage is $55,000/year?

The only sane person in this fictional play looks to be her BF, who lives free rent and saves like crazy (a hundred and something a month – his part) and plans to convince her to move DT to have her pay 4x what she pays now. My guess is that she is going to move DT and as soon as she asks him to contribute to the rent, he is going to dump her.

#185 digo on 07.10.11 at 2:39 pm

Mike T, your a looser. The word is sex, and i don’t think you have much of it. how old are you? 10? Garth is using an expression to sell his point.

#186 Snowman on 07.10.11 at 3:08 pm

All the boomer-doomer stories have a very simple solution. Boomers should sell and rent …. back the same place from the buyer. Investing the proceeds with Garth, the 8% should be more than enough to pay the new landlord the mortgage and utils, while no longer on the hook for repairs. Everyone’s happy: boomers live for free in a place they enjoy, landlord ends up with a place paid by others, Garth gets his comission.

The only unknow in this case is: how long can Garth keep it up …. the 8% that is. Cause if something happens and the 8% turns into 2% or -10%, then this may indeed not end well: boomers unable to pay rent, landlord unable to pay mortgage and Garth may get some shared accomodation with the 10% guy south of the border.

Maybe people should focus more on whether Garth can or cannot deliver on the magique 8%? Think about it …

#187 Hoof - Hearted on 07.10.11 at 3:10 pm

Camcool’s comment was funny !

Sounds a bit like an old Trailer Park Boys Script…though…

#188 Hoof - Hearted on 07.10.11 at 3:19 pm

Apparently… the early 1990’s a Barrel Of Oil was near collapse…to below $5 barrel.

The Kuwait invasion by Saddam was a plan hatched by the vested interests to drive up the price.

It seems a knee-jerk response everytime….but has anyone been able to quantify an oil shortage exists that merits the “coincidental” price rise ?

WTF is the actual difference between OPEC cartel and the Federal Reserve?

It’s all Bullshit…and we haven’t even delved into the abiotic oil theory.

#189 PesaMingi on 07.10.11 at 3:24 pm

#140 Camcool

Ok, big eye, you win post of the day.

LOL, as the young guns say!

#190 TurnerNation on 07.10.11 at 3:26 pm

Again for Whistler BC I’ve bookmarked this realtor’s link and this week there are 4-5 New Price or Reduced ads. The fun is just beginning! Property taxes have skyrocketed over the years in Whistler I have heard.

Realtors are like tapeworms sometimes: hangers on commited to sucking the life out of you ;)

#191 eaglebay on 07.10.11 at 3:34 pm

#176 Utopia

The trend (oil) long term is up. The reason being peak oil, cost of production (as in shale and offshore) and increase demand from developing countries.
You’ll also notice that the effect of speculation is short term. That’s what speculation, as oppose to investment, is all about.
Speculation is looked upon as something bad but, believe me it does serve a purpose in the markets.
The only people blaming speculators and conspirators are usually the ones losing their investments, which is the majority of so called “investors”.
These people buy stocks or PM like they buy houses.
A lot of people don’t know what due diligence is or cannot do proper DD.
I could go on but I’m getting bored.

#192 TurnerNation on 07.10.11 at 3:39 pm

This forum is rife with anti-Italianites I guess (or maybe they are just self-hating italians) :-P

#193 eaglebay on 07.10.11 at 3:47 pm


This cost money and is part of our future.

#194 TurnerNation on 07.10.11 at 3:50 pm

About oil prices, you simply must read this new book or at least a summary of it. It has turned my idea of oil pricing upside down and really explains the current situation. This book is a hard read, I’m only 100 pages into it and must re-read certain sections as the author (an oil consultant and professor type) writes with a deep and scholarly manner.

“From the Inside Flap
There is a sleeping dragon at the heart of the financial system. Soon the beast will awake and rear its terrible head, and we will look back on the days of the subprime disaster with nostalgia. In this riveting book by oil industry expert Kent Moors, you will meet the dragon he refers to as oil vega, and you’ll discover why it poses such a grave threat to world economic and political stability.
Those familiar with the options and currency markets will recognize vega as the term traders use to denote the rate of price volatility. Expanding upon that traditional usage, Moors coined the expression oil vega to describe the dramatic increase of price volatility seen in the oil markets over the past several years. In The Vega Factor, he describes how, contrary to popular belief, the current environment of runaway volatility in the markets is not the work of diminishing reserves, manipulation by oil producing nations, or increased competition among nations. Rather, it is a result of a structural flaw in the trading system itself.

Oil futures contracts, Moors explains, while once a valuable source of liquidity and price stability, have exceeded their historic mandate, leading to an upending of the traditional relationship between “wet barrels” and “paper barrels.” With oil now as much a financial asset as a commodity, and an oil derivatives market currently worth thousands of times more than the world’s combined oil reserves, a perverse dynamic has evolved in which the price of crude chases the price of paper barrels in a race it can never win. In some of the most gripping passages of the book, Moors considers the global mayhem and destruction that will likely result from an ongoing failure by policymakers and industry to peg the value of oil—literally the fuel that drives industrialized economies—to anything more tangible than the greed, fear, and superstition of financial speculators.”

#195 jess on 07.10.11 at 3:56 pm

lesson from daddy to daughter
Winner of the TUC 60 Seconds contest

#196 An Cat Dubh on 07.10.11 at 4:09 pm

141 April on 07.09.11 at 10:41 pm
I think Boomers will largely stay in their homes (as long as the home is conducive to their ageing). The places they’ve loved and cared for all these years; good neighbours; familiarity with local amenities; memories; friends. You gotta live somewhere

That will be true for the ones that have their place paid off and are healthy. The home will be passed on to one of their siblings, like a slacker municipal job, or if you are in TO, Maple Leafs season tickets.

#197 bigrider on 07.10.11 at 4:16 pm

#168 Brian T To Bigrider.

Actually, you are right on all counts except the Tim Hortons thing (not much for junk food like to stay in shape) and the use of “eh” it’s actually “eh oh Bro” …LOL if I were to use any slang at all.

Anyway, first generation immigrants all dying off unfortunately and second generation slowly taking over.

Proud to be a Canadian first and my background heritage second. Hope you can say the same.

#198 Killer Chicken or Imploding Boomer? on 07.10.11 at 4:29 pm

180 Real Paul – some points to consider

1) If seniors have their savings in an RRSP, withdrawals are taxed at the same rate whether it is interest,
dividends, cap gains or return of capital. The govt gets
their slice – no advantage to ZIRP for them in this case.

2) If savings are in unsheltered accounts, interest is taxed at the full marginal rate. taxman actually loses with ZIRP.

#199 BrianT on 07.10.11 at 4:34 pm

#191-Look-when oil was first discovered it was literally bubbling up out of the ground-getting it was like picking apples, the easiest thing imaginable. Why do you think they are drilling way beneath the bottom of the ocean? For a lark? Why do you think they are making that oil sands garbage? For fun? You might notice that the MSM is very quiet on light sweet crude supply having hit a peak and now in decline-very quiet. Compare their attitude on this and their attitude on climate change and the necessity of carbon trading.

#200 Jamaican_Gal on 07.10.11 at 4:49 pm

At Royal York and Lakeshore there are three houses sitting beside each other with their fancy “for sale” signs. They have been languishing for around three months now and that is very unusual for this area.

Let’s see how they fare in the coming weeks/months.

#201 garrulous squirrel on 07.10.11 at 4:56 pm

Can you imagine if we had a fair and intelligent media here in Canada…we’d get articles like this.

The reporter rightly states that the ‘real estate appreciation game’ has all been mirrors when compared with the skyrocketing inflation that has boosted real costs of food, energy, taxes etc etc .

I don’t care what the BOC says regarding inflation numbers in Canada……Carney and his friends are flat out ‘full of it’….and then some. If you have been buying food, paying fee’s and charges, buying gas etc etc you know that costs have been rising minimally 20% per year …every year. The ‘idea’ that you’re ‘rich’ and that same ‘wealth effect’ allows you to live large ….is just BS.

The only ones who benefit are the folks in the soul sucking civil service who get indexed pensions and fat salaries and perks……and the blood suckers in the local government who have increase the prooperty taxes to reflect…..’the increased…’values.’ Mine have gone up 21% again this year. Its a windfall for city governments who ‘pass along the loot to themselves and the unionized pirates in the community.

Recently a women came to me and asked…..”They’re collecting so much more in taxes from the rise in prices and the thousands of new condo’s that are going up. Shouldn’t the taxes be going down now that they have so much new revenue?

You know…..she’s right…….where the f**k is all the money going from this tsunami of ‘tax revenue’? And why aren’t taxpayers getting any benefit from the city being in better financial shape?

Go figure……you combine a few lots that as individuals payed a few thousand dollars each in yearly peoperty tax….then you rezone the land into condo or townhouse and you put up dozens of new units all paying a couple of thousand each in prop taxes….the city has increased it’s reveue thousands of times on the same piece of land…..and all that happens is that every one else see’s a continued increase in property taxes because ‘values’ have gone up?

This game of the government keeping up ‘values’ artificially is got to end at some point. Do we continue to be wage and pension slaves to the gluttonous civil servants who never get enough or do we take out country back? Will it take starving children on the news to make people finally start thinking? One women came into my office and asked the question…….that means it’s a question that a lot of people are asking.

#202 Hoof - Hearted on 07.10.11 at 5:17 pm

#194 eaglebay

Do you watch that show ” License to Drill ” ?

They get lucky about every 3 attempts.

Then they cap the well ….hang a little sign to mark it……and then bugger off ?

What’s that all about….why ain’t that puppy hooked up and supplying the market ASAP.

Ah….I get it….riiiiggghhhtt !!!!!

#203 shanks on 07.10.11 at 5:35 pm

How do rising interest rates affect bond prices? I have read your posts regarding investing in bonds and the correlation between bond prices and home prices, but i am concerned that bond prices will fall as interest rates rise…


Asked numerous times, and answered. Rates are one factor determining bond prices. Demand is a greater factor. — Garth

#204 BrianT on 07.10.11 at 5:55 pm

#200Big-I don’t have a background heritage-my parents were from different tribes and English is the only language I know. I have had more than a few close friends who were Italian Canadians-I guess that was what I was relying on when I came up with your profile.

#205 Bottoms_Up on 07.10.11 at 6:02 pm

#202 BrianT on 07.10.11 at 4:34 pm
Think about this for a minute:

There is today more proven reserves of oil in Venezuela than there was thought to be entire world reserves in the 1970’s (back when the world oil reserves ‘peaked’).

Oil was created over millions and millions of years; it’s gonna take us awhile to find it all and use it up.

#206 Utopia on 07.10.11 at 6:44 pm

#197 TurnerNation

Thanks for the link. I knew you had my back buddy.
First I had heard that Kent Moors had a new book out though and I am interested in having a closer look at his ideas. He has been sounding the alarms for quite a while and it is not yet clear if the right people are listening yet.

There is absolutely no question that speculative behavior and the instruments being used now are creating a whole new set of risks. By all rights, oil prices should be heading to 85 not rising towards 105 as global growth is actually slowing and consumption is down in the US.

There is a disconnect between supply and demand.

Here is a recent short news clip from “The Street” with Kent discussing commodities and oil risk that was on your link.

I have come to the conclusion meanwhile that the widespread speculation in commodities we are seeing now is one of the primary reasons that we have not yet fully escaped the current recession and returned to our usual pattern of growth.

It was not possible in the fairly recent past for Mom and Pop to play these markets and the shift to hard asset plays has gained unnatural momentum with the advent of easily accessible trading vehicles. The steep rise of hedge funds has only magnified the hazards for the global economy.

We absolutely must get a grip on this aspect of the market or recovery will just keep slipping through our fingers and volatility will only keep increasing as the frequency of recessionary periods narrows.

PS: You get a vote for Italians from me. I may have a little Mediterranean blood in my veins although I am loathe to admit it on this Italian hating blog.

#207 Cabot Lodge brylcreem & trenchcoat on 07.10.11 at 6:45 pm

Alissa do your own thing. In my experience what might have turned on my mom & dad [gambling & AeA] didn’t do squat for me. Your trapped like one of those little girls who let dad buy them their first car, then total it.

Move on, be yourself do the opposite of what they say.

#208 Hoof - Hearted on 07.10.11 at 6:59 pm

Immigration wave drove booming real estate market


The report, authored by economist Ryan Berlin, claimed that based on the addresses provided by purchasers, only 195 out of 55,512 home sales were to foreigners.

Wong, whose Magnum Properties has assisted with sales at Quintet on No. 3 Road and River Green next to the Richmond Olympic Oval, believes that a surge in immigration late last year and earlier this year—and not foreign investing—led to the property price boom.


But local realtor Austin Kay still remains doubtful, dubious that the 0.4 per cent figure is accurate.

Many foreign buyers already own real estate in the Lower Mainland, and are using those addresses when completing real estate transactions. Others are likely using local lawyers when making investments, masking their influence.


Lily Korstanje, sales director at River Green, said her team is able to discern where buyers are coming from through the course of the sales process, when they get to know their clients better.

She said in order to accurately gauge the impact of offshore investing, there’s a need to define what constitutes a foreign investor.

Many buyers work in Asia but have their families living in the Lower Mainland and spend their earnings in Canada and have a local address.

Others are truly foreign investors with no local links, and conduct their business through a local lawyer, for example.

Then there are those who establish a numbered company in B.C.

Knowledge about where buyers are coming from is important for a realtor to be successful, Korstanje said, so she sees the benefit of looking into this issue more closely.

Trend spotting enables realtors to customize their marketing toward where the majority of their clients are coming from.

If there’s a sudden wave of investors from Russia, for example, that information would assist realtors in researching what types of homes and neighbourhoods they would like to live in.

Berlin said the study only looked at figures through the end of 2010.


Don’t ya love the demographic /semantics game ?

#209 AG Sage on 07.10.11 at 8:19 pm

>#4 Utopia on 07.08.11 at 10:00 pm

Wow. Lame, dude.

#210 garrulous squirrel on 07.10.11 at 8:42 pm

I think rates will not be going up signifigantly any time soon…anywhere…..especially here. Its not because the ‘economy is fragile’ or the over used ‘ the recovery is weak’…..its all about how government debt payments will balloon out of control if rates go up as little as 2 to 3% .

Europe is already facing this reality

You don’t get the truth in print about government debt in Canada…its a secret….but we do know that the US is flat broke……that leaves us guessing this side of the border. We know that the CMHC low side estimate is a trillion…the national debt is higher than a trillion and you have to add in all the hidden debt of cities, municipalities and provinces that also don’t get summed up and presented to the press.

The Canadian government has been an absolute debt pig and spend thrift. Where is all the money going to come from if rates are going up? You can’t expect the slimy government workers to cut back……it can only mean huge increases in taxation and sneaky ways….like exploding the ‘value’ of your house so that they can double and triple the tax pn your homes.

The Conservative government can not pay the debt if rates were to rise……………………so they won’t. Look for more inflated prices……………..making todays bubble look tame. Trouble is….the money won’t do you any good because current inflation ( caused by excess money printing) doubles the cost of living every four years.

#211 eaglebay on 07.10.11 at 9:02 pm

#205 Hoof – Hearted

Don’t have to watch the show.
I live in Alberta and I’am a hunter. I go to all the places that you’re talking about.
Now, remember that they’re building inventory.
They have to develop many and many wells. Then they have to build the infrastructure to carry the oil to market (refineries). Think and you may be successful in the investment business.
Do your DD. Duh!

#212 BrianT on 07.10.11 at 9:10 pm

#208Bottom-On this topic you will need to exhibit somewhat more knowledge to get a detailed response-I don’t know who told you that the fact that oil formed over millions of years is going to help out the global oil supply situation in any way.

#213 Daisy Mae on 07.10.11 at 9:26 pm

I was listening to the news tonight….a commercial started…I was, naturally, half listening to it.

Suddenly I perked up when I heard a man exclaim while throwing his arms in the air: “PEOPLE DON’T WANT TO KNOW THAT THE WORST IS YET TO COME!”