This pathetic blog

Three years and eight months ago I started this blog to coincide with writing a book on the troubled future of real estate. Months later the housing market tanked. A year on, emergency interest rates in effect, it roared back. Today both prices and debt (they rose together) are middle class time bombs. I’m still at it.

While real estate’s clearly peaked and become unsalable in many areas, in others leveraged homebuyers have made out like bandits. I’ve written 887 posts, and in response to every one have been called an idiot. Or worse. So far in 2011, I have a file with 183 pages full of censored comments I dare not publish. And, of course, this blog was digitally bombed so often in the past year that it’s now hosted on another planet. I also find it necessary to travel in a convoy of plated Suburbans with lesbian Amazon guards. All of them former realtresses.

This personal trauma has left my views unchanged. There’s more danger in Canadian real estate now ever before. It no longer matters if interest rates stay artificially suppressed or not. The masses have gorged themselves on borrowed money, bid up the value of properties, and turned shelter into a speculative commodity akin to a futures contract.

As I said days ago, this will continue. Until it ends. Three years ago it could have wound down in an orderly way, like slippery Greek debt. Now, real estate-related borrowing is so overwhelming, and housing such a huge piece of the economy, there’ll be no soft landing.

So, once more: the people most at risk are (a) those with the bulk of their net worth in a single asset, their home, (b) house-rich, illiquid and pre-retirement Boomers, plus (c) infatuated property virgins suckered into real estate by dumb peers, idiot parents, cash-back mortgages, the RRSP home buyer’s plan and their own incubating hormones.

Which brings us to Katie. And then Sean.

I am ending this tumultuous week with the purposeful juxtaposition of notes I received today. One’s from a first-timer buyer anxious to know when to get in; the other from a first-time seller counting the days until he can get out.

Comment if you wish. I’m going to join the Amazons. Friday nights we clean our weapons, and sponge bath.

From Katie in the GTA:

I’ve been following your blog for a few months now, and I have been trying to apply your opinions to my personal situation.  Since I’m a little fuzzy on what you would think, I thought I would just ask!

Here is my info: Late 20s, married for one year, living in parents basement, saving to buy a house,

We refuse to carry more than a 300k mortgage, and a 20% minimum downpayment is a must.  In the areas we are looking (Vaughan/Aurora/Richmond Hill), this means that we would need a downpayment of about $60-$80k for a starter home.  We are within range now, but the last thing we want to do is to buy something at the top of the market.  We can manage another year in the basement before we will want to move into something larger and closer to work (could be another rental).

So, what to do??  Wait?  For how long? We are not comfortable with the idea of renting for life, although I know that from an investment standpoint this may be the best option.  We are not looking at buying a home as a brilliant investment, but we also don’t want to buy at the top.  Also, if rates rise and prices go down, I feel that the money out of our pocket will not be much different anyhow.

Any advice would be appriciated, although I realize that this might be the type of thing you (rightfully) charge for. Thanks, Katie

From Sean in Vancouver:

I ran by the bank to get my closing costs for cleaning up the mortgage. The payout is 415ish with the 5k penalty. So over 7 years we have paid approx $250K in payments and took a whopping $80K of the principle. LOL.. now to be honest I did know how it works and I knew at the outset how the math works but to actually be reminded of it really made this whole process hit home, and in a good way.

It makes me think that much like cigarettes, mortgages should be packaged with images of massively indebted families and some visual representation of the balance between borrowing costs and principle. You see a box of cigs with a rotting lung or yellow teeth, and it makes you think.. do I want to do that to myself?

The existing warnings the words Credit and Cigarettes are interchangeable.

Cigarettes are addictive – Credit is addictive
Cigarettes can harm your children – Credit can harm your children
Cigarettes can harm those around you – Credit can harm those around you

They all work lol.. And in both cases the government is reliant enough on the income or economic output of both product to mostly look the other way.

Closing day cannot come fast enough.

167 comments ↓

#1 loon on 10.28.11 at 9:35 pm

First ?

#2 Jim on 10.28.11 at 9:39 pm

The future is still a bungalow – although perhaps not at these prices!

#3 JO on 10.28.11 at 9:40 pm

Katie: My wife and I are in the same situation. Lucky for her, my hobby/passion (one of them anyway) has been to follow markets/economies and financial crisis since 12: Why would you “buy” now after the greatest debt bubble with home prices artificially high by about 25-30 % ?. Why now with the cost of owning at record highs compared to regular rent ? Why now when rates are at multi decade lows ? Why now when everyone and their brother has bought a home and everyone is extremely optimistic on RE ?

Pay regular rent and keep your money in the bank and keep your monthly expenses a lot lower. Buying now is financial suicide. In fact, people who buy are in effect gambling on rising home prices because they are homedebtrenters – that’s right, buying a home leaves you paying inflated rent to the senior bank execs and gov’t – legal homeownership does not really exist in Canada anyway.

Don’t rush, keep saving and rent. The debt pyramid scheme is over in most places. BTW, I work in financial services and have lent money before.
JO

#4 Van guy waiting on 10.28.11 at 9:44 pm

Credit is not addictive. It’s the price gains that is addictive. When prices start to really drop, is that credit still addictive?
BTW: Vancouver was f$&kin pissing rain today. And this BS is the signal of the beginning of 6 straight months of rain. BPOE my @ss

#5 Bill Gable on 10.28.11 at 9:46 pm

I get rather cheesed that people use this forum to call out people because of a particular belief system, when it comes to money, and in particular, our Bearded, bunkered, and busy host, getting shotgun blast of stupidity make me cringe.

Let’s stop and think for a second.

Are ypu going to pay attention to a gent who RAN the financial gears of this great country, plus actually gives away free and well thought advice?

Or are you going to eat your lunch all by yourself and think this is some kind of game,where you win and the, ahem, house loses.

That kind of thinking is dangerous for your financial health.

#6 vyw on 10.28.11 at 9:57 pm

Thanks for putting up with us. Your posts have helped alot of people realize the dangers ahead.

Katie: you should move out of you parents place and rent a house for say a year and see if you can keep up with all of the expenses. Owning a house will also mean $$ for property taxes, water fees, insurance, maintenance, etc. If prices fall, you’re still better off with a mortgage at higher rates.

Sean: 7 years is 84 months so $250 / 84 is around $3000 a month. What would it have cost to rent the place? The house index is up about 100% from 2004 – 2011 in Vancouver so the property appreciated more than any extra payments to the bank and it’s tax free – congratulations!

#7 vatoDETH on 10.28.11 at 10:02 pm

Katie… is your money invested? or sitting in a high-interest (which is a joke right now) savings account?

Invest that money! Imagine how much more money you will make when interest rates go up!

You mention that interest rates are low right now and that is why you could afford a mortgage. Do those calculations with 8% and 10% interest rates to see how much your payments could be in 5 years from now.

#8 Blair on 10.28.11 at 10:02 pm

Dear Katie,

Don’t buy. You’re married for a year and living with your parents. Find a rental. There are many reasons to rent and not just the real estate bubble talk. Here are a few:

– Landlord must maintain the property. You don’t. Ask your home owning friends about all that extra cash they drop at Home Depot every weekend. New or re-sale you’ll end up there. It becomes addictive…one repair or reno leads to another.
– Municipal taxes – always going up. Let the landlord pay it.
– Rent increase limits imposed by the gov’t every year and based on Ontario CPI – 0.9% last year and not more than 4% in about the last 10 years. Not bad.
– Hubby doesn’t live with in-laws anymore.

Take your money and get an advisor and invest in liquid assets for a few years – let the market tank and then reconsider.

#9 Devil's Advocate on 10.28.11 at 10:04 pm

Oil Puts the Squeeze On the Economy

http://www.youtube.com/watch?v=V4vNYzBxdsY

#10 Mr. Lee on 10.28.11 at 10:11 pm

2008 was a wake up call for everyone in the Western World. Here closer to home in Calgary, we wittnessed home values double in less than 8 years due to an economic growth cycle powered by global leverage. Then in the fall of 2008 the economy went into recession and interest rates were slashed to generational lows.

What happedn, well people gorged themselves on cheap credit to a point were the debt service level for many, is too much to handle. So the only soft landing that we may want to look for is the one the we put ourselves through before the greater economy forces us to.

#11 vyw on 10.28.11 at 10:18 pm

To Blacksheep:

thanks for the reference to Nick’s site: http://overthepeak.com/wordpress/

Some interesting posts but I think MMTers need to factor in the animal spirits/behaviour/expectations, otherwise it’s all doomer stuff, tax cuts, spending cuts, etc.

IMHO the modern monetary theory offers an excellent model, but other schools can contribute. The Austrians were best at calling the balance sheet recession but they focused too much on the Govt and made the wrong call on hyperinflation – it’s a private credit issue. The Keynesians had the best call on the response ie. help for Main Street and specifically Govt stimulus but wrongly assumed this was an income recession (as opposed to one where households especially in the US have too much debt). MMTers have gained credibility afterr the debt ceiling debacle and US bond interest rates crashed even with a downgrade – some people lost a lot of money betting against bonds.

Garth’s posts had some excellent charts a couple days ago which shows the early 80’s bubble in Vancouver (up 100% in about a year and then down again) and 1989 Toronto bubble: http://pacificapartners.com/blog/wp-content/uploads/2011/10/Canadian-Real-Home-Price-Index-cumulative-return-from-first-quarter-1974.png

We’ve been here before and we know what will happen – just don’t know when.

#12 Renters Revenge on 10.28.11 at 10:23 pm

Great post Mr Turner you made me laugh out loud, all by mysef in a quiet room! Enjoy your evening with the Amazons!
Great picture too, very appropriate!

#13 walter safety on 10.28.11 at 10:35 pm

Your safe Garth .I saw you at the Hamilton airport on the 17th without security or Suburban, you were invisible.
Your biggest risk is emotional but I think words will never hurt you.
Physical confrontations are more rare than owners of gold at less than 1 %.

But if you want to talk fear we could talk about the fear appraisers are putting in the hearts of sellers.

Deals blowing up because the appraiser says “evidence of previous water damage ” (the house is 50 years old ) and newbie buyers don’t understand what adds character. Or “furnace is 25 years old” ,never mind that it only costs $700 a year to heat the place with gas.
Newbies spend more on a brake job for their BMW than the 60’s bungalow will cost in annual maintenance.
So they buy new – now that’s scary .

#14 Dan in Victoria on 10.28.11 at 10:42 pm

Katie Katie Katie……..
“Also, if rates rise and prices go down, I feel that money out of our pocket will not be much diffrent anyhow.”

#15 Kurt on 10.28.11 at 10:42 pm

Katie, don’t worry about being a life-long renter. It should be safe to buy in 5 or 10 years (maybe sooner if The Masters Of The Universe screw up and stall the world economy again.) For comparison, my parents didn’t buy until they’d been married 6 years and had three kids, and houses cost a hell of a lot less back then. (Yes, I rent. Always have. It’s the lifestyle I want. You worried about renting for life – you can buy smart by renting now and buying only a little later.)

#16 C K on 10.28.11 at 10:45 pm

You can tell the end is near in the big smoke when the TO condo developers begin taking a page out of the “Vancouver Playbook”. Make believe line-ups/lists and of course can’t forget about the HAMs, and other investors from around the world viewing this city as a safe haven amid the turmoil. (wait, I thought Vancouver was the safest place to invest in real estate)

You can substitute Global BC with the Toronto Star being the patsy.

Take a read…
http://www.moneyville.ca/article/1078078–looking-to-buy-a-condo-get-to-the-back-of-the-line?bn=1

Have to say this is news reporting at its finest. All that is missing is a full page ad of the condo development embedded in the article.

Oh, did I mention your buddy Brad Lamb was also quoted in the article? Wonderful insight.

#17 Mike Rotch on 10.28.11 at 10:47 pm

61 bigrider on 10.28.11

RE: Suburban wastelands

By citing Richmond Hill etc., you missed half of my point. I referred to suburban wastelands “in the far flung reaches of 905”.

(I believe Garth’s case studies were buying in Milton and Bowmanville……)

The “Toronto-touching” inner loop of 905 is certainly more desireable than the edges, and depending on your priorities, can arguably be as palatable as 416.

Advantages – Fewer ugly social issues (homelessness, addictions, crime)

Disadvantages
-Considerably higher tax rates coupled with crappier service,
-Transit generally sucks, so more likely to need two or more cars per household,
-Commuting any significant distance sucks……Certainly there are massive expressways threading through the paradise to the north of TO, but it is no great privilege or pleasure to drive on them when all of your citymates are also trying to get to work!

I have lived or worked in every part of inner 905 (Mississausage, Markham, Vaughan, Pickering), and in many parts, the driving is worse than in-city, and God help you if you’re stuck with transit!

Anyway, to each his own. I bought something affordable that’s enough house and enough yard for me, and puts me close to where I work and where I play………my point was why would anyone dig themselves a huge hole for something less practical?

#18 EJ on 10.28.11 at 10:47 pm

Move to the Wet Coast K, then you can watch the slugs slowly crawl up your rental while listening to your landlord talk about how her million dollar bungalow is going to do great things for her. The deluded wet coast is a great place for funny people watching–watch the Starbuck hoppers smile about all the great weather here (while it pours) and then congratulate themselves that Global news, The Vancouver Sun (which phrase is an oxymoron–see, shows how deluded people here really are; where the $&** is the sun here?) validate that Real estate is cool.

#19 T.O. Bubble Boy on 10.28.11 at 10:52 pm

What if Sean in Vancouver buys his cigarettes on credit?

#20 Gord In Vancouver on 10.28.11 at 11:00 pm

Another great post, Garth.

#21 Jsan on 10.28.11 at 11:01 pm

If this is all that it is claimed to be, this would probably not be good news for the Oil Sands or any other expensive to produce low yield energy sources.

There could be, I repeat could be a potential game changing energy breakthrough invention. The long awaited test of this invention was set for the 28th of October and the preliminary results of the tests from yesterday appear to be quite successful. It is still top secret and still not fully understood even by the inventors. The technology appears to be a LENR (Low Energy Nuclear Reaction) (Cold Fusion?) however the material that produces this reaction in not radioactive, whatever it is it is stated to be cheap and plentiful.

The test ran by firing up the Rossi power plant using a large generator and than once the plant came up to temperature it ran on it’s own for 5.5 hours before being shutdown. It generated 500,000 Watts of power for that period and it was self generating meaning no other energy source was required to maintain this power level. It is stated by the inventors to be cheap to produce, easy to maintain and very economical to run and very safe and enviro friendly with no byproducts.

Is this the free energy breakthrough the world has been waiting for or some sort of scam, heaven knows there have more than we can count? Time will tell but if it is what it is claimed to be, we will probably begin to hear about it.

1 MW E-Cat Cold Fusion Device Test Successful

http://www.youtube.com/watch?feature=player_embedded&v=7sZHOQ6P-Rw

http://pesn.com/2011/10/28/9501940_1_MW_E-Cat_Test_Successful/

.

#22 Devore on 10.28.11 at 11:02 pm

Also, if rates rise and prices go down, I feel that the money out of our pocket will not be much different anyhow.

Well, Garth, looks like all your efforts were for naught.

No, Katie, not “anyhow”. Even if your payments are the same, a smaller debt is far preferable. You can retire it much faster as your incomes rise, or you free up cashflow, or win the lottery, or inherit some money.

All that kids these days can see is the monthly payment. Do try to think a little further out than which bars you’ll want to hit this Friday.

#23 GregW, Oakville on 10.28.11 at 11:27 pm

Hi Garth, Some might like to know? It sound interesting. Big Ideas on TVOntario Sat&Sun at 5pm.
Noam Chomsky on The State-Corporate Complex
http://bigideas.tvo.org/

#24 Chris L. on 10.28.11 at 11:29 pm

Garth, I sold my student rental – myself. It closes in May so I get to collect the rest of the rent I am due.

#25 Don on 10.28.11 at 11:29 pm

Just heard from a friend that the average new house in Langford Victoria isn’t selling at the moment. I try not to respond, just take the intel and move on.

People are waking up now. You can see it. Some are choosing to ignore it. So be it! I’d rather be ready than blind sided by reality.

This blog is a Port in a Storm.

#26 nonplused on 10.28.11 at 11:34 pm

“Lesbian Amazon Guards”. – Garth, no matter how “pathetic” this blog may be (and I quite enjoy it by the way – hope I never called you an idiot even when disagreeing with you), you know how to live. You roll large, man. “Clean weapons and sponge bath”??? Argh. I’m still working on my bike detailing crew, but with your inspiration and a little cash to burn I am up to 2, neither as nubile as yours.

Not sure your post tonight was up to the standards you usually set early in the week, but you do have a sponge bath to get to. Rock on with your pathetic blog Garth!

#27 johnny C on 10.28.11 at 11:54 pm

ok already. Your not a genius. Everyone knows we are in a bubble and it looks like the correction is in hand. The 905 and cottage country in Ontario is dead. Nothing is moving. This is not a good thing. You should help people not scold them for being stupid. The Govt. obviously doesnt care.

#28 Beach Girl on 10.29.11 at 12:06 am

I am friends with a bunch of people living in Ontario Housing close to the beach. We sit out there sometimes to watch the sunset. All with a nice beverage. Sometimes an illegal fire. These are the most relaxed people I have ever met. Although it took years for them to get in there.

They laugh and say they have won the lottery. Now that is not true of all. But these people are very happy, makes me happy as well.

That’s where I spent my Friday night.

#29 kc on 10.29.11 at 12:08 am

“So, once more: the people most at risk are (b) house-rich, illiquid and pre-retirement Boomers,”

Approximately a year ago I said in here that my mom and step dad placed their home on the market. They finally have a sale and close mid Nov. At first I was happy for them to cash out and be in the black, until I heard the particulars. they are selling for 225K down from the original 265K, and I was told they are moving into a 55+ community in south Okanagan for a buy in price of 230K (original list of 295K 9 months ago).

After I got the final numbers from them I was floored. they are short by 145K and will be doing something called porting (bank flipping the line of credit from one sale to another) I am still at a loss for words. Here I thought they would just take the money stick it away and rent a small place on the cheap and never have to worry about money again and live off their pensions.

How can a bank allow 65+ people to carry such debts? (good thing the offer they placed is still subject to finance) maybe the bank will see the problems here.

I am blue in the face trying to talk some sense into their (throwing money away on rent mind set) hope the bank has other words. I tried all the angles, bubble top, can’t sell if prices drop for loss (underwater) etc…

I give up. Devil’s Advocate wins another …

#30 VICTORIA TEA PARTY on 10.29.11 at 12:16 am

“DOWNSIZED” THE REALITY TV SHOW

I was just watching the review, on CNN’s tabloid HLN channel, of the latest American TV “reality” show.

It is called “Downsized” or somesuch. It details the travails of an out-of-work former middle class American family and all the neat things they do as they wait for the return of any one or all of the following events: American Nirvana; Route 66; too much ice cream; Obama becoming a Republican free enterpriser; OWS getting banking jobs; more 8,000 calorie burgers cooked up by some junk food dispensary in Vegas (What happens in Vegas spills out into Texas)!

Rome wasn’t built in a day, but the American know-how-to-make-a-buck-out-of-appalling-tragedy-culture was invented RIGHT FRIGGIN’ NOW! Take that you pesky Romans!

This “reality” family lives in a house, I couldn’t determine if it is foreclosed; it doesn’t matter.

What is important is what got them into this jam in the first place (and now TV fame–how lucky!), was the destruction of the US real estate market.

This fate IS coming to us, simply because it HAS TO! Timing is everything. Just wait for it.

Garth is not ill-timed; it’s quite simply impossible to nail the arrival dates of such monstrous economic tsunamis or other mind-blowing money events. But come it damn well will.

So, for those long-suffering members of the sack cloth and ashes regiments, it’ll be worth the itchiness and the coal dust.

All good things must come to an end.

Maybe even Garth’s motor-babes will find real jobs, perhaps wrecking new unoccupied suburbs driving Garth’s Hummer, as our “House-Prices-Always-Go-Up-Industry” bitterly and finally bites the Good Earth.

Arise, all ye mortgage serfs; you’ve nothing to lose but your klingon mortgage brokers, the pilot fish of an industry that will get what it desrves, because it deserves what it will get!

#31 Nostradamus Le Mad Vlad on 10.29.11 at 12:20 am


“. . . both prices and debt (they rose together) are middle class time bombs.” — When they erupt together, that will be our Yellowstone moment.

“. . . it’s now hosted on another planet. I also find it necessary to travel in a convoy of plated Suburbans with lesbian Amazon guards. All of them former realtresses.” — Nice planet, not sure of the realtresses. Are they ex-WWE stars?

Easy to see (with “Why bother?” and current post), it’s going to decimate a lot of folks, and there is nothing that can be done for them.

Ignorance is bliss, so let the sheeple graze blissfully on cow patties.
*
#6 vyw — “Thanks for putting up with us. Your posts have helped a lot of people realize the dangers ahead.” — Well said!
*
#177 Painted Toenails on 10.28.11 at 9:19 pm — “Was there this summer for a few days and was stunned by the massive increase in poverty/crackheads/gangs who loitered seemingly everywhere.”

Nothing like having the experience of seeing what it’s like first-hand, then giving others a brief overview of that reality.

NAmerica is rapidly declining, the far East is picking up steam as they know the mess we’re in.
*
CPP is changing; Whirlpool plans to cut about 5K jobs in NAmerica; Extravagant Wusses of the World unite! Three Months Ago where were you? See whut I mean about time racing along; Duct Tape for EU That’s how they solved the crisis! Trilogy Birth, life, death or work, save, lose most at retirement; 3:24 clip Greeks switch to bartering, abandoning cash.

Very Confusing Chart concerning Grecian Formula 2000; Trade Agreements a.k.a. CRAPitalism; 10:28 clip Chanos on the beginning of China’s bear, and The Good, Bad and Ugly of the EU bailout.

Adele has got such a deep, sultry voice for a young girl from London. She sounds a lot like Tina Turner or Ella Fitzgerald. Hope her voice recovers; Steve Jobs Portrait done in apples by Cdn. artist; Monsanto Guaranteed to make you sick! Solidarity between Egypt and Oakland; NWSO New World Social Order and 3:52 clip Protect IP Act breaks ‘net; Fukushima Tokyo supermarket uninhabitable and Twenty times more cesium than TEPCO reported; West Coasttakes a hit from radioactive garbage.

Snooping skyrocketing on ‘net; Facebook keeps records in Arctic Circle; Suicide Of A Superpower That’s the cycle change, not suicide; Water Going quickly; Flying Humvee Guess who is building them? dubya So much for Sadaam’s non-existent WMD. Look at the cost.

#32 The Biotech guy on 10.29.11 at 12:25 am

Been following your blog for a couple of months now. I really enjoy your style. And you do align yourself with what is good and just and honest. It is reassuring to see someone point out characters like Eddie the zero-downpayment-guy etc. Thanks.

My main concern is that a lot of readers might follow your blog as an investement advice no as literary piece. God help them if they do. Timing is everything and markets can be irrational for much longer than my or anybody’s pocket can handle.

Talking about greater fool… It is not just the last guy holding the overpriced property that loses. What about people who sat on a fence throughout and never participated in the bubble ? Do you consider them winners or losers or just the righteous dudes ?

The point is this. If the prices continue to rise in the next 3 years, maybe, just maybe we should invest now and sell later (presumably to a greater fool) and walk away with some profit. Is that bad ? Why ? Buying stock on the rise is the same thing…

Or do you think this is just done deal. Too late now. Just walk.

Please comment on timing.

#33 jonni on 10.29.11 at 12:27 am

“And, of course, this blog was digitally bombed so often in the past year that it’s now hosted on another planet. I also find it necessary to travel in a convoy of plated Suburbans with lesbian Amazon guards. All of them former realtresses.”

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Dammit Garth ….. that sounds like something taken from the grotesque King Mayor of TO’s ( Rob-the-pigs-Ford ) playbook. C’Mon Man !!!

#34 Crash Callaway on 10.29.11 at 12:28 am

Dear Katie, “We refuse to carry more than a 300k mortgage, and a 20% minimum downpayment is a must”

That’s like me saying I refuse to pay more than $1000 at the brothel and I ain’t giving more than 50 bucks up front.
I could probably hold on a bit longer and wait for the $600 hooker team to show up… oh what to to… what to do!

Real estates a brothel and people have no place in it at 1000 or 300.
Once the fiasco is cleaned up if ever (meaning prices return to what the house is actually worth) buying makes sense but buying just to get your ego laid like the foolish herd gathered around the water cooler isn’t the way to go.
The only thing you will get at the brothel is a faked orgasm and a 25 to 30 year rash.

Stay in that basement and wait this storm out!

#35 45north on 10.29.11 at 12:30 am

Katie: So, what to do?? Wait? For how long?

Any advice would be appreciated

read the mortgage, every word. For the last 50 years the mortgagee (the bank) didn’t really mean it.
In the US, the mortgagees (the banks) now are foreclosing the homeowners that don’t pay, they are suing them, they are charging them penalties. No kidding.

now the mortgage says that at the end of five(5) years you owe the principal balance. Interest cannot get much lower.

I bought my first house 50 years ago. I have watched house prices steadily increase and I have done very well. Don’t expect the same.

#36 Jimbo on 10.29.11 at 12:47 am

We rent our house in suburban Vancouver for $1 per square foot. It would cost $50 per square foot to purchase this house.

Renting is so much cheaper than owning and we have the freedom to move anytime we want, without worrying about liquidity. With the money we save, we’ve been enjoying 2 months of vacation every year while others around us have become mortgage debt slaves who can’t afford any fun.

“Ah, but others are building equity while you are throwing away your money on rent!” some might say. Wrong. Real estate is not the only game in town. Over the last 10 years we been socking it away and our diverse portfolio has increased at a higher rate than real estate.

“Yes, but you have the risk of getting booted out anytime,” people also warn. No, not us. During our first year of renting, we were the perfect tenants and kept the place in excellent shape. I always paid on time, took care of all the minor (and a few more serious) repairs and maintenance around the house, and never bothered the owner. Then I approached him asking for a 2-year lease with no rent increase, breakable by us anytime. He said yes because he didn’t want to lose his dream renter. We later extended the lease until 2014 with a LOWER rent.

So here we live with liquidity + flexibility + stability + low cost of living + no downside risk + no fear of higher property taxes or major repair bills. And we’ve got enough cash to buy a house mortgage-free, when the time is right.

I could see a young couple considering buying a home 10 years ago. But now? Buying a home in what, by almost any measure, is the biggest bubble in real estate history? They’d have to be complete fools.

Young potential home buyers… Learn this valuable lesson about investing and life… Everything – and I mean EVERYTHING – is cyclic. Whatever is hot today will, someday, be shunned by all. Whatever is out of favor today will be back in favor in the future. Life just works that way.

A buyer’s market in Canadian real estate is coming.

#37 Norton72 on 10.29.11 at 12:48 am

Katie :

Why don’t you “pay” your parents mortgage, taxes, utilities, maintenance etc., etc. (all the expenses) for the one year you guys thought you might rent longer for.

You will learn alot about what it takes. Plus it will probably be more saving than what your doing but also make you guys feel the pinch.

I remind myself every now and then of an adage I was told of a number of years back –

“Youth may be wasted on the Young; but retirement is wasted on the Old.”

You could have the best of it all – save a bunch and enjoy yourselves while envisioning your financial independence down the road.

Debt sucks.

#38 stevenson on 10.29.11 at 12:50 am

You buy your gambling, you rent your gambling. One’s and investment and the other is trying to beat the house. The house being the environment along with media are misleading and incorrect. We need to believe in things we choose to. 3 years ago the RE market tanked dragged down but the collapse of the US economy. How bad was Canada’s RE market? HOw long did it take for it to come back and take off?

If people bought a property 10 years ago and still paying their mortgage. Say the market drops 10-15% (IF that ever happens). How much are still up? No one is going to panic and start throwing away their properties. Then often the stupid calls others stupid for not believing their stupidity.

#39 dd on 10.29.11 at 12:53 am

Katie

Late 20s, married for one year, living in parents basement…We can manage another year…We are not comfortable with the idea of renting for life…
____________________________________________

How sad. Waiting 2 years … oh the thought! It is like living the rest of your life in a shhhhh “in a rental.”

Buy then, or stop your bleeding crying! Move out of the basement!

#40 Cato on 10.29.11 at 1:06 am

The country failed, its infuriating to watch. Through a series of fortuitous conditions brought more by chance than prudence Canada had the opportunity escape the western credit bubble relatively unscathed. Instead of taking witness of what was occurring around the globe we blindly walked down the same path that led other western nations to ruin.

A social safety net exists when the majority are willing and able to shoulder the burden of those who cannot. Contrary to what many socialists believe it isn’t the state forcing altruism upon an unwilling population. It exists because those who can shoulder the burden agree its the right thing to do. Its the better part of capitalism, not socialism, that gave us our way of life. The safety net is a delicate balancing act built upon a strong middle class. We all know who will be made to suffer when the middle class falters, casting off the weak is never healthy for a free society.

Government debt is largely irrelevant, its a sideshow. The main event is consumer debt. Government debt can always be repaid through taxation or monetization. Consumer debt must be repaid through productive work. The elephant in the room is the fact vast swaths of the population have incurred a level of debt that can simply never be repaid. The lucky ones will manage to crawl out of the chasm by earning their way out, the rest will go bankrupt or live a life of austerity for remainder of their days.

The aftermath won’t end quickly, we could be living with the effects of the bubble for decades to come. No gloom and doom but no roaring recovery either. Just a widening chasm between those considered to be middle or upper class and those who are not. Profitable companies will continue to serve the needs and desires of an exploding human population. Opportunity will continue to abound in the west. Technology will continue to advance & life will get better for majority of the 7 billion people now on planet earth. Its all a matter of perspective.

#41 Nemesis on 10.29.11 at 1:10 am

…”travel in a convoy of plated Suburbans with lesbian Amazon guards.” – Hon. GT

Muammar tried that, too… Apparently, it didn’t work out that well.

SpongeBaths!? I know what Arnie would have said… Something to do with ‘GirlyMen’. Then again, Arnie is so pedantic… Austin always enjoyed his…

http://tinyurl.com/3jyr2wb

#42 the Phantom on 10.29.11 at 1:24 am

IMHO…

Katie: If you and your spouse get along well with your folks and there are few to no issues that stress the relationship, try and remain in the basement for a couple more years. Find a good investment guy and see if he can’t purchase some corporate bonds as these pay anywhere from 5 1/2 to 9 3/4 %.

Sean for yourself…perhaps try and and find a broker you trust and apply the same advice.

the Phantom

#43 Cristian on 10.29.11 at 1:40 am

Anybody know the difference between principle and principal?
If you do, explain it to Sean from Vancouver… who obviously doesn’t (and also doesn’t know the difference between of and off)

#44 from kits on 10.29.11 at 2:02 am

katie..

I like vyw advice..move out of the basement and rent at the same costs it would be for owning this house you want…see how it goes.

worst case you are back in the basement best case, housing drops while you wait, even if it drops, how much more can it really go up…

your realtor says lots!

#45 Tom from Mississauga on 10.29.11 at 2:18 am

Oh Katie, rent outside of your parents house, do not deny yourself the experience. Yes, renting is paying somebody elses mortgage and blah blah blah. Also get that money earning something. My balanced portfolio bagged 15 per cent this October.

Nice Kev. It is through making personal mistakes that one learns the best lessons.

#46 Jody on 10.29.11 at 2:29 am

“It makes me think that much like cigarettes, mortgages should be packaged with images of massively indebted families and some visual representation of the balance between borrowing costs and principle.”

LOL! Yes, but those jerkoffs who run the banks and government would never do that, which sucks. You’re right Sean, people don’t understand what they are getting into, such a shame. But I think it’s more of a case that they can’t be arsed, they think the government will save them if something goes wrong. People have lost the ability to take care of themselves.

“I have a file with 183 pages full of censored comments I dare not publish.”

You saving those for the government then? You’re part of the New World Order! Conspiracy! Conspiracy! They are out to get us! Run away!

#47 ghostrider iv on 10.29.11 at 2:42 am

These comments keep me up until 12:pm to 1:am every night! I now know all about Van, Toronto, Edmonton, Calgary, Sask. Richmond Hill, Kelowna (I live here)
and where I lost a lot of my money (real estate). I am hooked on the weather and am staying.There is no other place in Canada that I know of that we pray for rain!

#48 Marco from the bestest place on the smallest part of earth on 10.29.11 at 2:57 am

I was at a halloween party of shaugnessyites this evening.

Most of the breadwinners, high income pros, wealthy retirees and so on (all but one a man) were talking about the tanking RE market.

Some were HAM, most local second gen to long time Canadians. All but three (1 HAM, 2 local old money) were mortgage free. The host was talking about having to sell a whistler property with a hefty haircut to loosen up cash needed for private schooling.

Bottom line, a whole party of folks talking about prices goIng down? Does that suggest an opinion/sentiment change?

No way… The grown kids of the retiree couple were calling bullschtit! They told us oldies we were
Nuts as real estate always goes up in van. Limited land and the whole world wants to move here.

We’ll see, oldies who remember previous recessions vs. young ones who weren’t even around when I had my first hangover…

#49 HunterS on 10.29.11 at 3:04 am

Hey is there an ETF or some other way to short Canadian real-estate? A reverse REIT or something?

#50 dd on 10.29.11 at 3:28 am

What did I say months ago. Centrals Bank want inflation (AKA – a weaker us dollar):

“Bank of Canada Governor Mark Carney said central banks have been less than forthcoming in admitting that one of the primary aims of quantitative easing is to weaken their foreign-exchange rates.”

Confirmed.

#51 Aussie Roy on 10.29.11 at 4:43 am

Katie some great advice above, if you want to move then rent otherwise stay and save. Think of it this way every month you save you actually reduce your mortgage payments by thousands of dollars over the life of the loan when you finally buy. I wouldn’t buy until prices are around 12/15 times annual rent.

Devils A

It’s very funny talking about replacement costs, it’s a good old fashioned LAND bubble not a building bubble, buddy. Like all previous house price bubbles it’s the cost of the dirt which has raced ahead much faster than inflation/wages, while building costs have pretty much kept up with inflation/wages.

Don’t believe me, take a look at the historical ratio of land cost versus building costs and then take a look at todays ratio. Land here in Aust has gone up 167% above inflation (taking into consideration land sizes). Building a new home has gone up 16% above inflation for the same period (taking into consideration we are building much larger homes).

Good try, but sorry no cigar, how about a pin for that bubble, all bubbles find one sooner or later.

Aussie Update

It’s all the footy watchers fault – nothing to do with falling prices.

http://smh.domain.com.au/real-estate-news/footy-is-over-and-auction-season-is-ready-to-kick-off-20111028-1mo8l.html

Rent seeking govt says “Pay us quicker”, as property turnover slumps.

HOME buyers will be given less time to pay their stamp duty bills, in a desperate bid by the Baillieu government to shore up its fragile budget surplus

http://www.theage.com.au/victoria/stamp-duty-payment-deadline-slashed-to-aid-budget-surplus-20111028-1moc7.html#ixzz1c9ovi5I7

Banks say “where have all the greater fools gone”?.

PREDICTIONS of thousands of job losses in the banking sector were reinforced yesterday after former investor darling Macquarie Group revealed it had cut almost 500 jobs in the past six months.

http://www.theage.com.au/business/job-losses-loom-as-banks-to-wield-axe-20111028-1moax.html#ixzz1c9piDOL2

Sell your Aussie home and buy something that is overseas and affordable.

Castles in the air become reality as prices fall

http://www.theage.com.au/victoria/castles-in-the-air-become-reality-as-prices-fall-20111028-1mo49.html#ixzz1c9q6GdlT

My mistake atleast 7% of all loan applicants are greaterfools.

Potential first-time buyers – some as investors while they rent – continue to seek 100% no-deposit home loans even though banks no longer offer them.

Dean Rushton, chief operating officer of mortgage broker Loan Market says 7% of the brokerage’s total enquiries during October 2011 had come from people wanting no-deposit home loans.

http://www.propertyobserver.com.au/mortgages/first-home-borrowers-still-looking-for-no-deposit-home-loans

We have a shortage of housing, save us the PM needs a place to stay while “The lodge” gets a make over.

A shortage of places that have a guard house and security – too funny, a shortage – LOL.

http://www.news.com.au/money/property/housing-stress-pms-struggles-to-find-a-rental-property/story-e6frfmd0-1226179004217

#52 Onemorething on 10.29.11 at 5:39 am

Hey intelligent responses so far today. There is nothing wrong with a roof over your head as long as its paid for and pre 2003 purchase.

Cant wait to negotiate my rent downward as China RE tanks and the Asian markets follow!

#53 Mortgage broker on 10.29.11 at 5:40 am

I would like to 2nd Bill Gables comments! Well said! Garth your blog is a valuable resource for me to read. Thank you so much for sharing your knowledge!

#54 David B on 10.29.11 at 7:28 am

“STOP”

If you want to buy a house buy one!

If you think a house is a good investment, invest!

If you think you can may $1000″s flipping houses flip!

If you do think renting and saving until and enjoying life and having cash in pocket then don’t!

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

In the end people will do exactly what they want ….just like governments that run up debt or go off spending $Trillions looking for WMD’s

But remember this the world’s smartest people on the face of earth housing now 7 Billion people can not set the finances of Greece, Italy , Spain, Portugal, Ireland, England and yes the USA on the right track.

So run out “NOW” yes NOW dam it and buy that house y’all been whining about ….. and be happy.

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

Garth you did your best …. get a real life then call me and we can have real good chat/laugh about the world.

#55 I'm stupid on 10.29.11 at 7:28 am

And what’s sad is when housing does correct or should I say people realize it’s correcting, they will blame you. So enjoy your convoy because you’ll need it for life. It’s human nature to blame others for ones mistakes. The mirror is a hard place to look when placing blame for a bad situation. It’s usually where the right answer is. Hopefully, your lesbian Amazon guards are hot and put on a show for you once in a while because you’ll need them for life. Your opinion has made the housing bubble your fault.

#56 Moneta on 10.29.11 at 7:38 am

People 10 years ago bought a 350K house and think that since it is now 800K, they’ve made so much money, especially compared to the friend who bought at 200K and whose house has only moved up to 400K.

Wow, that’s close to a 500K gain! NOT!

When you sit down and do the math, you see that with 3% interest, you paid much more in interest as well as muni taxes and maintenance. Perhaps even more in keeping up with your neighbours. In the end, even at 800K, the difference between that house and the cheaper one is less than a 100K gain.

So the ones saying they are buying for the long term and buying luxury on debt are deluded. The last decade has been the market of the flipper, not the long term holder.

I have a lot of friends with houses over 600K. They bought at 300-350K. And they are now scratching their heads. They would not be able to afford their houses today and if they are in the top 10% income earners who the heck is going to buy their house?

There are too many houses over 600K for the number of Canadians who can afford them. Soon, people are going to realize that 400K is the ceiling and we will be flooded with oversized and overpriced homes.

#57 yorel on 10.29.11 at 7:46 am

Katie:
When you say “starter house”, that means you still don’t get it.

#58 Aussie Roy on 10.29.11 at 7:54 am

Global outlook by Satyajit Das

http://www.prudentbear.com/index.php/featuredcommentaryview?art_id=10584

#59 Moneta on 10.29.11 at 8:08 am

Government debt is largely irrelevant, its a sideshow. The main event is consumer debt. Government debt can always be repaid through taxation or monetization
——–
Baloney. Government debt squeezes out private enterprise.

#60 Moneta on 10.29.11 at 8:11 am

Yes, renting is paying somebody elses mortgage and blah blah blah
———
Not if the landlord is not breaking even because he expects to make it up with cap gains.

#61 bigrider on 10.29.11 at 8:22 am

Looking to buy a condo in T.O, get to the back of the line.

http://www.moneyville.ca/article/1078078–looking-to-buy-a-condo-get-to-the-back-of-the-line?bn=1

Torontstar

#62 Mike Rotch on 10.29.11 at 9:07 am

.#36 Jimbo on 10.29.11 at 12:47 am
We rent our house in suburban Vancouver for $1 per square foot. It would cost $50 per square foot to purchase this house.

If it were liveable, I’d snatch up a $50 per foot Van area property today for cash.

You mean $500 per foot, correct?

#63 The American on 10.29.11 at 9:16 am

#30: Victoria Tea Party, very nice post. You nailed it. The real estate collapse in the U.S. was the procuring cause of the American economic collapse. Greed and poor lending standards were the procuring cause of the real estate collapse.

I hate it, but it is indeed coming to Canada too. Nothing is different there than from what happened in the U.S., other than the fact Canada has even higher consumer debt levels, lower savings rates than Americans, income gaps widening the fastest in the entire G20, and all loans in Canada are the equivalent to the low-interest/low-money-down ARMs that reset and got the U.S. into this mess in the first place. Rates don’t and won’t stay low forever. When they do raise, not if, it will wipe out families and households in the blink of an eye. If rates don’t raise, the implications on the Canadian economy in the long-run will be horrific. This is a real Catch22.

#64 Smoking Man on 10.29.11 at 9:23 am

I have a file with 183 pages full of censored comments I dare not publish.

Yes I am sure many of those are mine………..

Here are the boundarys………

No talking about mid east politics…
Things that happen in public bathrooms.
And dirty talk to Beach Girl.

Every thing else is ok :)

#65 househornyhousewife on 10.29.11 at 9:25 am

Garth,

I don’t understand why all of these 20 somethings want to buy a home ? When I was 20 something I was renting an apartment and having a ball travelling and doing anything but paying down an expensive mortgage. We bought our first house when we were in our mid thirties, after we had paid off our student loans and could see what we were going to be earning over our forseeable future. Not to mention making sure that our relationship was well settled and we were certain that we wanted to live where we purchased.

Katie, what is the damned hurry ? Definitely get out of the parents’ basement (and fast !) but find a nice rental with a beautiful yard or a patio overlooking some gorgeous scenery somewhere. Make it yours and start making some serious money before settling down with a mortgage. In time the prices will settle and you will find something that works. Believe me, what you want in your twenties is not what you want in your 30’s and 40’s. In 5 to 10 years’ time, not only will houses be cheaper but you will have a bigger downpayment put aside AND hopefully some investments that are also working to make you some income on the side.

Oh and Sean from Vancouver … that is the most hilarious comparison of debt and cigarettes that I have ever seen. Really cute and quite accurate.

Have a great sponge bath with those amazons, Garth.

Regards,

HHHW

#66 Incubus on 10.29.11 at 9:41 am

No Garth, you are not an idiot. They said that because they are afraid.

Here an exemple in Montreal about virgins buyers:

http://www.realestateinvestormontreal.com/2011/09/madness-surrounding-sale-of-duplex-in.html

You should speak sometime about real estate in Montreal. It so crazy here!

#67 detalumis on 10.29.11 at 9:44 am

#29 you sound more upset that your parents are spending money instead of doing grannie things like crocheting afghans and babysitting the grandchildren. I think that’s more the issue, you know old people shouldn’t be consumers but should pile up the do-re-mi for the inheritance instead – okay maybe spring for a step-in bath or some such thing. Now we have a future coming where you probate the will and everyone will find out that their parents have left nothing but a big pile of debt instead of the pot of gold at the end of the rainbow. Hey you might even have to pay for the funeral.

20 years ago you couldn’t even get a mortgage in your 60’s they would use 71 as the end day for your amortization. It happened to my neighbour who wanted to buy their first house after 60 (retired minister). She is now 91 and still living in the place.

#68 MarcFromOttawa on 10.29.11 at 9:51 am

Garth,

Your bullish conferance call turned out to be great timing. I’m sitting on a tidy profit and don’t have much more to invest for the moment.

The most interesting development stemming from the Greek crisis is the “voluntary” 50% haircut. Since it’s “voluntary” it does not trigger a “credit event” which means anybody who insured their loans against loss is not getting paid.

You just have to look at the list of board of directors at the ISDA to understand the conflict of interest. The ISDA decides what is a credit event for the unregulated quadrillion $$$$ OTC derivative market.

http://www2.isda.org/about-isda/board-of-directors/

#69 I'm stupid on 10.29.11 at 9:56 am

#49 hunters

Short answer no.

#70 shanks on 10.29.11 at 10:08 am

So i was talking to the owner of a coffee shop that i frequent yesterday, and somehow we got to housing. I told him that now is a good time to sell, as prices have probably peaked. I did include a disclaimer that this time it might be different. He was like “what do you mean? house prices never fall”. I laughed thinking he MUST be joking, but he wasn’t. I told him every 13 years or so housing corrects, and he was totally clueless.

Turns out he is from Egypt, where home prices actually never decline! at least not like here. turns out in Egypt there is no such thing as a morgage, you either have the money or you dont. There are some loans you can get, but they are 3 and 6 year terms only. not 20, not 25, certainly not 40 year loans!!

makes a lot of sense. i wonder what he is thinking about right now…

#71 Al on 10.29.11 at 10:13 am

In the Saturday Toronto Star; confirmation that between 45 to 60% of new condo developments are snapped up by investors ( mostly HAM) before the Sale sign goes up!
http://www.moneyville.ca/article/1078078–looking-to-buy-a-condo-get-to-the-back-of-the-line?bn=1

There is no evidence these are HAM (offshore) buyers. The GTA has enough people of Asian heritage to fuel condo-binging. As for investors, the proportion of units being bought by speculators is north of 80%. The hallmark of a doomed market. — Garth

#72 Moneta on 10.29.11 at 10:33 am

I don’t understand why all of these 20 somethings want to buy a home ? When I was 20 something I was renting an apartment and having a ball travelling and doing anything but paying down an expensive mortgage
—–
Yup. The reason why we bought at 25 was because we were going through a referendum and my gut was telling me that houses could not get any cheaper.

I just wanted to travel in those days, so taking the house was a ball’n chain! And they were less than 100K then, with the same household income!!!

#73 Moneta on 10.29.11 at 10:37 am

29 you sound more upset that your parents are spending money instead of doing grannie things like crocheting afghans and babysitting the grandchildren. I think that’s more the issue, you know old people shouldn’t be consumers but should pile up the do-re-mi for the inheritance instead
——
That did not even enter my mind. My first thought was that I hope they don’t need a spot in LTC.

#74 Kayak Freddy on 10.29.11 at 10:48 am

Reading Katie’s question – ah, have you not just answered your own question…

You are light years ahead of most who either deny that housing is seriously unaffordable or seriously ignorant of what is brewing around them.

Katie – you have the facts, so what’s your deal!! Now is just a personal decision. How does Garth know your comfort level, what you value in life…please, sit with a financial advisor and spend a few bucks and have them break down costs based on a number of different facts. You would actually risk your financial health by asking strangers on this blog for their personal opinion. That’s as laughable as I stop people on the street corner and ask them what they think of a medical condition and what would they do…sheezzzz!

There is never a right time nor wrong time to buy – because everyone has different reasons and goals. I bought in 2002, and that was just a lucky break because many things worked in our favour. As we renew our last 5 years at rates never seen before – I can honestly say if the markets return to 2002 price levels, so what. I will be mortgage free in 2016 and that’s when I get to buy my toys…(sailboat / bike).

Live life, be smart and always keep this motto, you can’t take it with you anyways when you die.

#75 Hammer1 on 10.29.11 at 10:49 am

did you pick up Ghadafi’s ladies at a bargain rate?
http://acidcow.com/pics/17638-gaddafis-all-female-bodyguards-known-as-the.html

#76 X on 10.29.11 at 11:02 am

The advice from this investor reminded me of someone…

http://www.theglobeandmail.com/globe-investor/investment-ideas/features/me-and-my-money/equity-analyst-takes-a-contrarian-view/article2218082/

#77 British Leyland U-boat on 10.29.11 at 11:03 am

Katie do what you want to do rent and wait for the drop. Moving & renting is easier and gives you chance to try out house-type or high rise, marriage & family?

#78 Abitibi Doug on 10.29.11 at 11:07 am

What I find intereting is many economists predict that Canada’s economy will be sluggish for the next 2 years then improve after that time. If real estate is really such a big part of the economy, and we’re in for a correction like we’ve seen in the United States and Europe, won’t that put a damper on the economy for years to come? Is it possible that 3 to 5 years from now the economies elsewhere in the world (U.S., Europe) will be recovering after the real estate correction has gone by, and the economy in Canada (with the possible exception of the resource sector) will still be in a recession?

#79 eaglebay - Parksville on 10.29.11 at 11:08 am

#9 Devil’s Advocate on 10.28.11 at 10:04 pm

First, there’s enough natural gas in North America to replace oil and to last for 200 years. In the meantime some kind of technology would eventually take over.

Second, the high price of oil is good for the North American economies. Due to very high transportation costs from around the world, we’ll have to start producing more goods locally. This is already starting to happen with steel, furniture, heavy equipment, etc…
The results would be job creation, business investments and so on.

Keep your retorts short.

#80 johnny5z on 10.29.11 at 11:39 am

Moses, played by Mel Brookes, came down the mountain with his 15, I mean 10 commandments. The 11th commandment was not to do or say anything that might lower the price of real estate.

#81 Willa on 10.29.11 at 11:56 am

Katie – If you really want to buy a house, move to a more affordable city. There are lots of them out there. If you buy a house in an expensive city, most of your life is spent scrounging to pay off a mortgage, the rest is spent in rush hour. What a treadmill. No poofty Toronto “career” is worth that. There are lots of interesting things to do elsewhere.

But if you can’t bear to leave GTA, then rent. Buy yourself a sweet little cabin in the wilderness somewhere in Eastern Ontario where you can escape the grind. You’re going to need it.

#82 Devil's Advocate on 10.29.11 at 12:05 pm

#185penpal on 10.28.11 at 10:20 pm
@ # 168 D A

My purchases have also included land, handsomely positioned, both developed with structures and without.

Again, how long have you been in the business?

Me, over 30 years – residential, commercial, land development, all as the principal.

Been through numerous cycles, watch so called ‘professional’ Realturds never get ahead because they ALWAYS end up eating their own cooking and washing it down with the koolaid of the times.

Realturds should really stick to being the scumbag salespersons they are anyway. Not one in 50 has the brains for anything else.

Don’t worry, next time I won’t sugarcoat my opinion of Realturds and I’ll tell you what I really think.

It’s always ” a good time to buy” with you a-holes.

:-)

#83 kc on 10.29.11 at 12:07 pm

#67 detalumis on 10.29.11 at 9:44 am

“#29 you sound more upset that your parents are spending money instead of doing grannie things like crocheting afghans and babysitting the grandchildren. I think that’s more the issue, you know old people shouldn’t be consumers but should pile up the do-re-mi for the inheritance instead – okay maybe spring for a step-in bath or some such thing. Now we have a future coming where you probate the will and everyone will find out that their parents have left nothing but a big pile of debt instead of the pot of gold at the end of the rainbow. Hey you might even have to pay for the funeral.”

Why I am even answering you is beyond me, however, you can’t be so more out of touch than what you are saying here. Makes me think you are a banker (who makes bonuses from pumping out loans) or you are a RE Agent who profits from other peoples stupid ideas. Either way your pre-conceived thoughts about me and my intentions of future gains are crazy.

My points are more to the direct point of how brainwashed people are about real estate and how stupidity is ruling this province (& country). I don’t need to be given anything in the future for I live 100% debt free and live comfortable.

And one other thing, “20 years ago you couldn’t even get a mortgage in your 60′s they would use 71 as the end day for your amortization.”

This was my point exactly… (not to mention the crashing prices) Don’t you think (see) something wrong here? how can a couple with limited income on pensions pay off any large loans and still live without needing? Society thinks this is normal now… it is the “what are my monthly payments” generation that knows no boundaries.

#84 penpal on 10.29.11 at 12:16 pm

@ # 56 Moneta

Bingo!

This was the basic problem in the US that no one acknowledges.

The builders targeted this part of the market as it was by far the most profitable mass market segment.

Problem is, there are only so many people who can afford these expensive houses long term.

Those who thought they’d flip them out later or build equity over the long term couldn’t do the math, which simply put, was that they could not carry them over the long haul which is why they bought them with high ratio mortgages in the first place!

Ask your friends in their formerly 300 K houses how they like paying taxes and insuring their now “appraised at” 600K houses which they ‘couldn’t afford to buy at these prices’, but are stuck with carrying costs that reflect these nosebleed valuations!

Most people simply cannot do math.

I guess they’ll learn very soon.

F’ing morons can’t even put together a budget.

#85 Devil's Advocate on 10.29.11 at 12:27 pm

Penpal;

“If you don’t have anything nice to say don’t say anything at all”. Those are not words I am telling you today but words I am right now repeating to myself over and over and over.

;-)

#86 penpal on 10.29.11 at 12:45 pm

@ # 65 HHHW

The “hurry” is that they have pretty empty lives and figure that being homeloaners will give them some ‘substance’, cause that’s how they were brought up.

Are people ever shallow.

Your advice is solid. Not only do your ideas of life change and how you want to live it in your 30’s and 40’s, but there is a better than 50 / 50 chance they won’t be married any longer.

Living MARRIED in your parent’s basement in your 20’s?
How the hell do you do that?
No, really?
Totally creeps me out – Privacy for a young couple’s intimacy? WTF?

I could care less what you are ‘saving up for’, that is one compromise you only make during wartime or extreme duress.

Sheesh!

#87 Timing is Everything on 10.29.11 at 12:50 pm

#4 Van guy waiting

We lived in Vancouver for one year. 1988 or so. It wasn’t for us, so we moved. What are you waiting for?

#88 Jimbo on 10.29.11 at 12:52 pm

#62… “If it were liveable, I’d snatch up a $50 per foot Van area property today for cash. You mean $500 per foot, correct?”

Right, my mistake. $900K/1800sqft = $500/sqft.

#89 penpal on 10.29.11 at 12:54 pm

@ # 85 DA

Correction for you DA;

If you don’t have anything INTELLIGENT TO SAY, don’t say anything.

So maybe go away for a while again like you did a while back.

That was the NICEST thing I witnessed you do on this blog.

Face it dude, you are a Realturd!

Hey, you CHOSE the profession with all its well earned bad reputation.

If the shoe fits, wear it.

If you are not a scumbag, then why would you be offended. What I have written regarding your foul brethren is accurate in my long and wide ranging experience.

Perhaps you are the exception, perhaps not, but your Realturd blathering seems to indicate you carry some of the Realturd infection to my mind.

Go take a look in the mirror, always the best test fella!

#90 The thing in the basement on 10.29.11 at 12:58 pm

80 Johnny – here it is!

http://www.youtube.com/watch?v=fdgI0dokQOg

51 Aussie Roy – I disagree with your view on land v
building prices. Not the experience here – they have tracked each other much more closely.

63 American – there must be something different here if we havent cracked (yet). Can we pinpoint any one event which acted at as the trigger in the US collapse?

31 Mad Vlad – bummer about Adele.Also, I think money sense has a graphical on the new CPP rules showing
breakeven points (age at death). Thanks for your continued work on those links.

#91 Incubus on 10.29.11 at 1:00 pm

Take a look of this:
“This dream house has got to go”

http://business.financialpost.com/2011/10/28/this-dream-house-has-got-to-go/

Can someone explain how come a guy who worked at least 40 years with 6 figures income end up with only an equity less than 2 millions?

#92 Dorothy on 10.29.11 at 1:03 pm

#29 – KC
It all depends on how much pension income and other investments your parents have. If they can easily afford to make the payments from their pension, and/or pay off the mortgage balance from their investments, then what it really boils down to is lifestyle.

We boomers spent our lives working and saving for our retirement, and if we choose to spend that retirement in a 55+ community in the South Okanagan, rather than renting a house that is nowhere near as nice and is in a less desirable area, then that is our choice.

It’s kind of like choosing to buy a nice dining room table from the Bay, when you know darn well you could get a much cheaper, perfectly serviceable one from Walmart. If you can afford the more expensive one, then why shouldn’t you do it? There’s more to life than buying everything on the cheap and investing the rest, particularly when your already past 65.

The key here is to “live within your means”, and if your parents feel that dream retirement home they’ve just bought is “within their means” then I don’t see a problem with it.

#93 City Slicker on 10.29.11 at 1:04 pm

Here is Peter Schiff interviewing the angry people at Occupy Wall Street. Covers some of the housing fiasco, intriguing to watch:

http://www.youtube.com/watch?v=UGL-Ex1CD1c

#94 Devil's Advocate on 10.29.11 at 1:05 pm

#56Moneta on 10.29.11 at 7:38 am

There are too many houses over 600K for the number of Canadians who can afford them. Soon, people are going to realize that 400K is the ceiling and we will be flooded with oversized and overpriced homes.

There is a great deal of truth in what you posted there Moneta as evidenced by the fact that this year to date in the Okanagan 3,135 (65.89%) of the 4,758 homes sold were $400,000 or less. 3,924 of the homes sold were sold for under $500,000 that’s a whopping 82.47% of the market.

More disturbing is that there are 630 residential properties listed in the Okanagan at an asking price of $1mil or more yet there have only been 103 such sales this year to date. That is five years’ worth of inventory. Even going as low as all properties sold for $500,000 or more, for which there have been just 834 sales this year to date, there is a whopping 2.3 years supply on the market today (2,305)

On the other hand there are just for homes priced under $500,000 there is little more than a year’s inventory (15 months – still quite a few though at 6,234 units available).

A balanced market is thought to be about 7 month’s inventory. Over that is a buyers’ market and under is a sellers’ market. Truth is though we very rarely have a balanced market as they are but a short transitory period while we shift gears. We are by far more often in a buyers’ market. It’s generally all good though but for the extremes at either end other than, depending upon your particular wants and needs, you personally might prefer one or the other of those two extremes.

How’s the market? Well that all depends – are you buying, selling or renting and where?

#95 Devil's Advocate on 10.29.11 at 1:06 pm

#56Moneta on 10.29.11 at 7:38 am

There are too many houses over 600K for the number of Canadians who can afford them. Soon, people are going to realize that 400K is the ceiling and we will be flooded with oversized and overpriced homes.

There is a great deal of truth in what you posted there Moneta as evidenced by the fact that this year to date in the Okanagan 3,135 (65.89%) of the 4,758 homes sold were $400,000 or less. 3,924 of the homes sold were sold for under $500,000 that’s a whopping 82.47% of the market.

More disturbing is that there are 630 residential properties listed in the Okanagan at an asking price of $1mil or more yet there have only been 103 such sales this year to date. That is five years’ worth of inventory. Even going as low as all properties sold for $500,000 or more, for which there have been just 834 sales this year to date, there is a whopping 2.3 years supply on the market today (2,305)

On the other hand there are just for homes priced under $500,000 there is little more than a year’s inventory (15 months – still quite a few though at 6,234 units available).

A balanced market is thought to be about 7 month’s inventory. Over that is a buyers’ market and under is a sellers’ market. Truth is though we very rarely have a balanced market as they are but a short transitory period while we shift gears. We are by far more often in a buyers’ market. It’s generally all good though but for the extremes at either end other than, depending upon your particular wants and needs, you personally might prefer one or the other of those two extremes.

How’s the market? Well that all depends – are you buying, selling or renting and where?

#96 Devil's Advocate on 10.29.11 at 1:21 pm

@ #89 penpal

I respect every single one of the over 100,000 REALTORs in Canada as my own personal sales force. Some I have higher opinion of, but all are welcome and encouraged to sell my listings each with equal opportunity and reward. I eagerly work with ALL of these people.

Fortunately for me a side benefit of my business is that I can choose who I want and don’t want to work with.

Penpal, you will never know if I am a “Realturd” or not.

#97 Suede on 10.29.11 at 1:22 pm

You should educated yourselves and your kids that Credit Cards should be called, and only used as, Convenience Cards.

#98 Westernman on 10.29.11 at 2:28 pm

Beach Girl,
Who cares?

#99 poco on 10.29.11 at 2:29 pm

85 DA
If you don’t have anything nice to say don’t say anything at all”. Those are not words I am telling you today but words I am right now repeating to myself over and over and over.
______________________________________________

it might be more appropriate if you repeat to yourself over and over again–“i will not spew anymore bullsh*t on this blog” —-“i will not spew anymore bullsh*t on this blog”

#100 live within your means on 10.29.11 at 2:38 pm

#67 detalumis on 10.29.11 at 9:44 am

20 years ago you couldn’t even get a mortgage in your 60′s they would use 71 as the end day for your amortization. It happened to my neighbour who wanted to buy their first house after 60 (retired minister). She is now 91 and still living in the place.

………………

Mom & Dad moved back to NS in 1977. She was 64 & Dad was 63. When they were younger they had owned 2 or 3 homes. I was too young to remember those times. They could not get a mortgage so my sis & I took out a mtg on their behalf. Mom had the down payment. It was only for – hold on to your seat – $25K. It was really only a small 1 bed cottage with a basement & partially finished attic on the south shore with a beach across the road. The value was in the large lot. They didn’t even own a car. Sis & I did their grocery shopping, etc. and my Mom became involved in all kinds community organizations so her friends would pick her up. And we picked all kinds of berries, made jam and froze some. Dad died 6 years later but he was so happy during that time – sitting on his chair looking at the ocean.

When the mtg. came up for renewal, I convinced Mom to increase her payments, showing her how much she’d save overall. A bro was against it. She followed my advice, thankfully. At 80, still spry but with macular degeneration, she moved in with DH & I for 4 years & then spent a year or 2 in a nursing home. All 6 children rec’d an inheritance. Long story.

#101 Beach Girl on 10.29.11 at 2:38 pm

I feel like Ramboina today. Took my leaf blower outta storage and blew those muther f**ers away. On the neighbours lawn, they are on holidays. I don’t own a huge tree. Feeling empowered. Going to chill and walk the dawg. Was awesomely fun.

OKAY, this is stupid, why is the stock market going up?

Also, might get a facelift, from the guru of surgeons. I don’t want to look like Angelina Jolies grandmother.

Nice day, all.

#102 too much info, lady on 10.29.11 at 3:24 pm

Beach Girl you are making me cringe. this isn’t twitter.

#103 bill on 10.29.11 at 3:24 pm

great advice as usual Garth.
however I am uneasy with sponge bathing your weapon.
perhaps a good high quality solvent to dissolve copper residue then a lubricant would be better?

#104 T.C. on 10.29.11 at 3:31 pm

Why do they have to lesbians?

Fewer shoes. — Garth

#105 Form Man on 10.29.11 at 3:32 pm

#178 yesterday’s post ‘Devil’s Advocate’

I am growing weary of your non-answers. That I was able to render you speechless ( obviously only for a moment ) provides some comfort. I actually don’t need a new marketing team. After selling over 90% of our homes, we are shutting down. We will come back in a few years when things have settled out. Following your reasoning however, would suggest the entire Okanagan needs a new marketing team. You and your fellow realtors can’t seem to move much inventory these days. I wonder why ? Also your own mothership ( CREA ) claims on their website that 5-6 months is a balanced market ( not seven, but good try ). They also claim that inventory above 6 months will put downward pressure on prices. Since the Okanagan has been north of 16 months inventory for over 2 years now, that would explain why prices are dropping. Your assertion that 30% of sellers here are unmotivated ( wildly untrue ) would still leave some 12 months of ‘motivated inventory’. That is still almost double the inventory of a balanced market. Interesting that these armies of ‘unmotivated sellers’ are motivated enough to keep listing. You don’t suppose these ‘unmotivated’ sellers are actually underwater and cannot lower their prices ? Remember, folks such as myself are not naive young buyers. I spend every day in meetings with participants in the Kelowna housing market; bankers, suppliers, trades, and realtors. Overwhelmingly, people are frightened. A very slow market is turning slower, prices are falling, and people are moving away to areas where there are jobs. Sales are now only being made to 2 groups : first-time subprime buyers, and a handful of wealthy cash buyers. The middle class has largely stopped buying. This is the reality in Kelowna. These are facts. Sadly, you are making yourself look like a fool by clinging to the past, and parroting the ‘everyone wants to live here’ delusion. Either start admitting some truths, or find the gonads to render yourself speechless for good.

#106 Moneta on 10.29.11 at 3:37 pm

Ask your friends in their formerly 300 K houses how they like paying taxes and insuring their now “appraised at” 600K houses which they ‘couldn’t afford to buy at these prices’, but are stuck with carrying costs that reflect these nosebleed valuations!
——
I did a market segmentation of the West Island circa 2005.

Those living in the 600K-1 million areas were averaging 120K income per year. Those in the 275K-400K areas, 100K per year. So basically, the extra 20K, or 10.4K net, went to pay the mortgage and those 60K+ SUVs and the expensive vacations. The debt in the lower areas were quite low and in the 600K+ areas, very large.

Taxes in the 600K have gone from 4K to 10-12K per year and I can only imagine how many more of those McMansions will soon hit the market as there are already tons for sale.

#107 Moneta on 10.29.11 at 3:40 pm

63 American – there must be something different here if we havent cracked (yet). Can we pinpoint any one event which acted at as the trigger in the US collapse?
—–
Yes. ARMs started to reset. When this happened Canadian debt was still manageable. Now we’re up to the yin yang in debt, like the US was in 2005.

#108 Bill Gable on 10.29.11 at 3:55 pm

Besides Mr. Turner’s worthy tomes – I have just re-read “Black Swan”- Taleb.
A Black Swan is an event that comes out of the blue, when markets and us bipeds least expect it.
I believe we have already suffered the Black Swan, to end all Black Swans = Fukushima.
My question to you is – the radioactive garbage is poisoning the Northern Pacific and currents will bring the garbage ashore all along the West Coast and ultimately swing and bury Hawaii’s western beaches in this stuff.

Posted by one of our smart dawgs earlier – read how hotspots are popping up in Tokyo – and how TEPCO has LIED about cesium and radiation levels from the start.

My question is = where is the mainstream press on this?

I can see the ads now : For Sale = only marginally radioactive! 3 Bedrooms, and a yard to add to your rad count!

Offers?

Thoughts?

#109 BPOE on 10.29.11 at 3:55 pm

Time to take your meds American. Canadians are smart. WE don’t have over 30 million unemployed and over 150 million making 30 grand or less! Plus interest rates are low for decades to come coupled with the richest investors of the world banging down or door. You should come visit. Entire neighbourhoods where houses are being bulldozed and mega houses built and everything over 1 million. American yearns to be Vancouver. Rich, beautiful and perfect and everyone wants to dance with her. You don’t get it, EVERYONE wants to live here but SOME Canadians choose not to because they cannot afford the dream. Americans with their high unemployment and low income can’t afford her period.
********************************
The American on 10.29.11 at 9:16 am
#30: Victoria Tea Party, very nice post. You nailed it. The real estate collapse in the U.S. was the procuring cause of the American economic collapse. Greed and poor lending standards were the procuring cause of the real estate collapse.

I hate it, but it is indeed coming to Canada too. Nothing is different there than from what happened in the U.S., other than the fact Canada has even higher consumer debt levels, lower savings rates than Americans, income gaps widening the fastest in the entire G20, and all loans in Canada are the equivalent to the low-interest/low-money-down ARMs that reset and got the U.S. into this mess in the first place. Rates don’t and won’t stay low forever. When they do raise, not if, it will wipe out families and households in the blink of an eye. If rates don’t raise, the implications on the Canadian economy in the long-run will be horrific. This is a real Catch22.
.

#110 InvestorsFriend (Shawn Allen) on 10.29.11 at 4:12 pm

ONLY IN AMERICA?

Moneta at 107 mentions that ARM (adjustable rate Mortgages) resets as a trigger for the U.S. housing collapse.

I agree.

Adjustable Rate Mortgages in the U.S. were truly awful. They were NOT floating rates like we have in Canada. They were teaser rates like 2% or 3% locked in for 3 years or five years (when the standard 30-year rate was say 5%) and then they would Adjust to say 6%.

People who could not afford the standard 5% for 30 years took the teaser 2 or 3% and hoped that in five years miraculously they could afford 6%. It worked oklay in a steeply rising market because they simply sold the house for a gain after 3 or 5 years.

Canada never had quite that flavour of madness.

But we do have a system where almost no one is locked in for more than 5 years. If we ever get a big rise in interest rates, many people will be toast having to sell into a falling market when they can’t afford the mortgage upon renewal.

It’s a mathematical fact that at higher interest rates the price that can be paid for a house using 30% of income as the maximum payment declines. With dramtically lower interest rates house prices rose due to increased affordability. If interest rates rise significantly, house prices WILL fall.

For now however, those with big mortages affordable only at low rates go along with a sucess that is like my plan to live forever… so far, so good.

Amd maybe rates will stay low for many years due to the fact that we actually do live in a world of plenty that is awash in money to be loaned out.

#111 Van guy waiting on 10.29.11 at 4:33 pm

#87 Timing is Everything,

Vancouver weather is wet, but not frozen. When it’s snows here, it usually means a transition from cold to wet and rainy. Yeah it sucks, but the rest of Canada is in a deep freeze. Vancouver is not BPOE, but probably best city in Canada.

#112 2deep on 10.29.11 at 4:33 pm

@98 Westerman

Clearly you do for taking the time to respond. Shouldn’t you be busy breeding with your cousin?

#113 Ben on 10.29.11 at 4:38 pm

BPOE is it still raining?

#114 DM in C on 10.29.11 at 4:44 pm

We’re looking to vultch a foreclosure property on our street — typical listings are @ $420k or so, but this one has some remedial work to be done (that we can do ourselves), so are bidding $350k. Well within the 3-3.5x mortgage limit. We can afford it on one salary, with rates increasing. That’s if the bank wants to deal. Nice spot on a crescent, with green space behind and no one in the front. Mortgage + taxes @ 20yr amort = rent pymt, so with our annual bonus can pay off in 13 years — 15 years before retirement. We already pay for all utilities on the rental, and will still afford 20% savings + home maintenance fund.

Sometimes it just makes sense.

#115 Westernman on 10.29.11 at 5:03 pm

2 deep,
Practicing your White Knight routine are you?

#116 Waterloo Resident on 10.29.11 at 5:25 pm

GOOD HIGH PAYING JOBS ARE COMING SOON !

And believe me, when the Canadian economy perks up then young people WILL have the money to spend, and with all that pent up demand, they WILL be spending !

( Of course, maybe that hit on the head has me hallucinating ? )

#117 2deep on 10.29.11 at 5:40 pm

Westerman

Just tired of jerks like you who offer nothing constructive (in posts here or in society in general).

I know you get a kick out of bashing everyone and then cowering behind the anonymity of the internet and that’s fine your entitled to it. It just reflects on the defectiveness of your genetics.

#118 Timing is Everything on 10.29.11 at 6:09 pm

#111 Van guy waiting

When I say we moved—>We moved to Victoria (Saanich Peninsula – Central Saanich – bunker acreage) As good as it gets…in Canada.

Had the fortune (misfortune) being born in Regina. Go west young man. Alberta’s not even a ‘nice place to visit’, especially coming from Skatch…Same cow crap, just higher and deeper. We like our bunker. I know…It sucks to live here when we could have just stayed on the prairies and had the easy life. It’s just our lot.

My guards are not lesbian or Amazon though. Three ARE former realtresses (what are the chances?) …I think they’re all bi and from Germany…?

Gotta go move some azaleas…later.

#119 Westernman on 10.29.11 at 6:13 pm

2Deep,
Sounds like what you are really trying to say in your own primitive way is that you are intimidated by my surprisingly accurate and insightful assesment of some of the left-wing counter-culture Canadian fruitcakes … like you for example.

#120 BPOE on 10.29.11 at 6:29 pm

They’re COMING!
and we have so little land. This isn’t Seattle folks – you can build forever out here. Its called supply and demand
http://www.vancouversun.com/business/billion+people+earth/5627728/story.html

#121 penpal on 10.29.11 at 6:48 pm

@ # 106 Moneta

Smart girl.

You get it.

They didn’t and will need to sell or find a second job or three if they want to keep up with the Joneses (or keep their houses period).

What a bunch of insecure, social climbing a-holes, eh?

Living in houses they can’t really afford (if they want to retire with anything), spending money to impress people that they don’t know.

HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHHA!!!!!!!!

IDIOTS

#122 The thing in the basement on 10.29.11 at 6:48 pm

107 Moneta 110 Shawn – Thanks for your input. I have
read that in other sources, though I’ve also heard of an
economic downturn in one region/industry as triggering
it, though I cant recall what it was.

It seems these ARMS were designed to fail. There was almost no way they could last.

#123 penpal on 10.29.11 at 6:57 pm

@ #96 D A

Your posts confirm it as fact, especially after reading Form Man’s intelligent rebuttals of your RE blather at posting # 105 tonight.

I am convinced.

Sorry to break it to you buddy, but…

YOU D A, ARE A REALTURD!

My condolences to your family, but mostly to your clients, presuming you have any.

You poor, poor sod.

#124 penpal on 10.29.11 at 7:00 pm

@ # 96 D A

I repeat, Realturd!

#125 VICTORIA TEA PARTY on 10.29.11 at 7:07 pm

#109 BPOE

My oh My. Where does the sun NOT shine in your bright shadowless existence?

Are you perhaps of a similar mindset to the following gentleman of history?

That would be Captain Edward Smith. He was nicknamed the “Millionaires’ Captain” because members of Britain’s “Upper Crust”, wanted him to command “their” ocean liner, when they travelled to the colonies to check up on their investment portfolios to perhaps decide whether a whiff of grapeshot (Napoleon’s favorite mob-clearing elixir) was required to jack their profits.

There was a problem here, though, with this Smith chappie.

The last group of upper crusters who travelled under his command, were all aboard the TITANIC!

The skipper became a reverse Captain Highliner, sort of for the fishies, and some of those surviving upper classers may have experienced their own personal whiffs. Karma? Perhaps!

BPOE, here’s the deal, Mr. Sunshine: the point of #63’s well-put comments, and my perambulations, is that no one can judge an economic collapse by the prattle and whine that always precedes it.

But trust in God it shall arrive when you most don’t want it to. For you that maybe the day the repair man has to fix your sunlamp!

But if you tune in to nature, and yes, the financial world is a part of nature, just as a Cat 5 hurricane is (I experienced a Cat 1 during a North Atlantic crossing aboard a small Cunarder 56 years ago, and it remains the single most terrifying experience of my life) then you handle the “noise” with care and you batten down your bloody hatches when things just don’t SEEM TO LOOK RIGHT.

Timing is everything alright. Yepper.

That and preparing for the worst.

The Yanks won’t get out of their real estate hole for decades. And you think we’re somehow exempt? And you believe interest rates won’t rise ever again?

BPOE: too much sun, it’s burning you in places where it shouldn’t. See a quack. Get some salve. Right away!

#126 InvestorsFriend (Shawn Allen) on 10.29.11 at 7:07 pm

HOUSE PRICE AND OTHER BUBBLES

Here is a relevant quote from Benjamin Graham, in his book The Intelligent Investor.

“The speculative public is incorrigible. In financial terms it cannot count beyond 3. It will buy anything at any price if there seems to be some “action” in progress”

This from the last page of Chaper 17

That was included in Graham’s last edition of the book completed in 1972. Since then, nothing has changed in this regard. (Except the ability of the specualtive investing public to count even as as high as 3 seems exaggerated. After all speculative investors don’t use math at all, they rely on Technical Analysis – if it’s going up buy, if down, sell, actual value does not come into that thought process)

#127 La Di Da on 10.29.11 at 7:11 pm

Who is this BPOE character? Why does he hate Americans so much and why is he so vile toward us? Is he real? I take a lot of offense to his rude behavior and slanderous commentary that doesn’t seem based in anything concrete. Opinions are one thing but this person seems a little out there. He must be some of the Canadians my husband refers to as mud slingers. It has not been my experience in Canada to come across these types of people all the time but I must say speaking anti American garbage is all over the media in BC. I haven’t notice it THAT much in Ontario. My husband is Canadian from Toronto and I am American from NYC, but we choose to live together in San Francisco in the Presidio Heights neighborhood because we prefer West Coast life style. We could very easily afford Vancouver if we wanted to move there but we don’t see the point because it has nothing to offer that we don’t have already. I am not bragging but our home value is probably in the neighborhood of $4 million and we both have great jobs. So do most of the people we know. I saw plenty of poverty in BC when we left the cities too and it does exist everywhere. I guess that blows BPOE’s theory that everyone wants to live in Vancouver and all Americans are poor and out of work. We wouldn’t live there on a bet after visiting it because it does not have a pulse. Nice enough town sure, but it really isn’t a world class city. Seems like there are a lot of unspoken issues there that nobody wants to admit to or wants to confront. We know we have our issues but at least we put it out there. If we had to move to a Canadian city we would move to Toronto or Montreal. I prefer Montreal over Toronto and he prefers Toronto. Both are nice though, but the winters would kill us. He says he would never go back even though I would support him if he decided he needed to. My husband Mark says both countries are great in their own rights including places and people and I agree with him or I wouldn’t have married a Canadian in the first place. He prefers SF for North American cities and so do I. Apparently so do the 4.3 million people who live in the area and trust me when I say so many of them could afford Vancouver too but would never choose to move there. I guess it just goes to show to each their own.

#128 leo on 10.29.11 at 7:18 pm

This system is a sham. The banks want us to lose our shirts.

http://www.youtube.com/watch?v=JXt1cayx0hs&feature=related

#129 brainsail on 10.29.11 at 7:24 pm

#110 InvestorsFriend (Shawn Allen)

“ONLY IN AMERICA?

Moneta at 107 mentions that ARM (adjustable rate Mortgages) resets as a trigger for the U.S. housing collapse.

I agree.”

I agree to disagree. It was what came first, the chicken or the egg? The day that house prices stood still was when things changed. Financial institutions allowed home owners to easily obtain mortgages based on the trend that values and incomes will continue to increase.

Owners started to walk from their homes when they found out that they were underwater and could not refinance. The foreclosure exposure to the financial institutions resulted in a massive credit freeze, followed by a drop in consumer spending. Corporations and businesses felt the effects and closed plants and laid off employees.

So, the canary starts to choke when house prices peak and start to fall and then unemployment numbers rise. The only way that Canada can survive this perfect storm is that household incomes start to magically increase to offset the afforability index.

#130 Davey Boy on 10.29.11 at 7:39 pm

I don’t feel I’m made of the right stuff to continue to live in the BPOE, don’t like wearing spandex and don’t like jogging with little flashing lights strapped to me. Just doesn’t seem normal. Anyway, like the idea of living in the interior, Kelowna,Vernon,Kamloops, anyone with feedback which area is more preferred thanks in advance.

#131 jess on 10.29.11 at 7:41 pm

city slicker
Mr. Shiff said the fed caused the Great depression?

As I read the history I thought that, “The Reconstruction Finance Corporation (RFC),” an agency of the TREASURY , was the key intstitution in restarting the banking system after the bank holiday. NOT the FED.

#132 Van guy waiting on 10.29.11 at 7:45 pm

HAM strikes again!!

Richmond Parc Riviera condo sales started today. Looks like HAM is very interested. About 60 high end vehicles In the lot and people filled the presentation center. With Richmond resale tanking, these people are damn horny!

#133 jess on 10.29.11 at 7:59 pm

City Slicker you may like to read this just to broaden your view

Title
Sources of Financial Fragility: Financial Factors in the Economics of Capitalism

http://digitalcommons.bard.edu/cgi/viewcontent.cgi?article=1068&context=hm_archive

#134 Stinky the Fish on 10.29.11 at 9:19 pm

I love ya Garth. This blog is HARDLY pathetic. Speculators are of many in Canada. Loook at this forum topic – http://canadianmoneyforum.com/showthread.php?t=9167

People don’t know accounting and don’t know what the fuck they’re doing. This is late what’s happening in America..

“I came across a nice rental property,with 2 suites in a very good area of the city. The purchase price would be around $380,000. Considering this will be a rental property, I would require 20% down payment. I’m going to use my line of credit (interest at prime) for the $76,000 and mortgage the rest at 2.49% for 2 years and possibly consider a variable mortgage after 2 years (unless I can secure a low term rate). Monthly payments with only these loan amounts would come to around $1,400 to $1,500 per month. Property taxes and insurance would add an additional $275- $300 per month. Therefore, the total montly cost would be $1,800. I can rent upstairs for $1,200 and downstairs for $800 per month. Would this be a viable investment? I look forward to your input. Thanks ”

ABSOLUTELY PATHETIC. It’s going to happen 2012. You’ve got this one right

#135 Bill Gable on 10.29.11 at 9:21 pm

SFCA has areas that make me wonder if men are sane. Try commuting from Walnut Creek!
The bums downtown rival Vancouver.
Vancouver is a TOWN. San Francisco is a CITY. Big Difference.
People in Vancouver are also insecure. They think that people actually cares what happens here.,
Surprise! No one gives a damn – folks have their own lives,
If you like Regina, Bradenton Fla, or Caledon Ontario = cool – enjoy.

#136 Dorothy on 10.29.11 at 9:48 pm

#130 – Davey Boy

I’ve lived in all 3 of those places, and my first choice would be Kamloops. Particularly if you are looking for a completley different lifestyle to the one you describe. Check it out, I think you’ll like it.

#137 2deep on 10.29.11 at 10:28 pm

Westernman,

You’ve never presented any assessments here insightful or not, let alone left or right wing. Just primitive ahole comments because you get a rise out of pissing people off and it gives you a sense of control and importance when people respond to you.

I know it’s not your fault that you’re genetically wired for that kind of enjoyment (much like pedophiles, serial rapists, zoophiles etc.) If I were a lefty as you indicate I would feel sorry for you, want to see you rehabilitated, and have laws put in place to prevent mothers like yours from drinking during pregnancy. Frankly, I’m not, and I don’t care.

#138 poco on 10.29.11 at 11:07 pm

132 Van guy waiting
Richmond Parc Riviera condo sales started today. Looks like HAM is very interested. About 60 high end vehicles In the lot and people filled the presentation center. With Richmond resale tanking, these people are damn horny!
______________________________________________

that might be encouraging to the Real Estate board as there were a total of 2 new condo sales for October (up to 25th) in Richmond

the sales to listing ratio is hovering around 5 to 6% for all listings
the average and median ask and sales prices are down considerably

#139 OttawaMike on 10.29.11 at 11:18 pm

I used to date a 6 foot tall Amazon girl. Legs right up to her neck.

Trust me, the worst thing you can call a tall girl is an Amazon unless you like to get a beat down from her.

Tall girl is acceptable though:
http://us.longtallsally.com/

Many of these ,er, tall girls have trouble finding clothes that fit and a man that is taller or even the same height so their dating pool is limited.

#140 45north on 10.30.11 at 12:00 am

the American: talking about interest rates: When they do raise, not if, it will wipe out families and households in the blink of an eye.

yeah, it will, which will also precipitate a political crisis

Bill Gable: I believe we have already suffered the Black Swan = Fukushima.

My question is = where is the mainstream press on this?

Arnie Gunderson knows and says a lot about Fukushima:

http://www.fairewinds.com/home

Mainstream Media? They are just not there.

La Di Da: Who is this BPOE character?

very little is known about him, he’s kind of a one dimensional cartoon character unlike Superman who came from Krypton and whose father was Joel. We don’t know BPOE’s father and we don’t know where he comes from. BPOE is defined by a very shallow support of Vancouver. He doesn’t know much about any other city, he doesn’t recognize common valuation criteria such as price versus monthly rent or price versus income. He shows little or no knowledge of history, could not compare the growth of Vancouver to Toronto or Montreal. His knowledge of geography seems limited to Vancouver. He is aware that it is a port on the Pacific Ocean. He could not name 12 other nations that also border the Pacific Ocean. Nor could he name another ocean. He is aware that Vancouver is part of Canada but is a little fuzzy on where the Province of British Columbia fits in. BPOE is a cartoon character with no background, no experience and almost no knowledge.

#141 Davey Boy on 10.30.11 at 12:12 am

Thanks Dorothy :)

#142 Humpty Dumpty on 10.30.11 at 12:43 am

When Angela Merkel warned last week about the possible end of the blessedly long post-war peace in Europe, she meant that the failure of the euro (and thus of the EU project) would precipitate economic chaos and possibly lead to war. But she and her colleagues seem oblivious to the resurgence of hostility that is being brought about by every move closer to “successful” European integration.

http://www.telegraph.co.uk/finance/financialcrisis/8857533/This-was-the-week-that-European-democracy-died.html

And most of you pathetic bloggers are only concerned with is, should I buy or sell…Maybe rent… Up or down..
What do you think G… Help pls..
My husband, my wife, my realtor.. my neighbour… my advisor…. blabla bla bla..

The Largest DEMOCRACY in the world is in the process of being abolished. Who do you think is next in line…

#143 MarcFromOttawa on 10.30.11 at 7:20 am

#129 brainsail

I like your analysis. The feds are going to try and monetize their debts. They will inflate their problems away until the day the middle class starts making a bit more money. They day the average incoming starts going up will raise interest rates claiming “inflationary pressures”

#144 maxx on 10.30.11 at 7:28 am

#23 GregW, Oakville on 10.28.11 at 11:27 pm

Brilliant lecture. One of the very best TVO has aired in this series.

Government policy vis-a-vis banks MUST change.

#145 GregW, Oakville on 10.30.11 at 7:30 am

#108Bill Gable, re: F, Black Swans and other stuff.
I thought everyone knew if you can’t see it, smell it or taste it; it can’t hurt you or your unborn!
I’ve come to realize the mass media isn’t meant to always inform you of what you need to know. Don’t worry be happy is often the massage. TPTB understand it’s easier and more profitable for them to work on distracting the masses and manufacture consent.
Most of the people working in the mass media aren’t doing this on purpose or knowingly, I hope.
To keep receiving that nice pay check to not look very deeply at issue you’d better keep TPTB happy with that message you put out. Sometimes they manage to snick information out without losing their job.
IMO

#146 MarcFromOttawa on 10.30.11 at 8:23 am

#142 Humpty Dumpty
The Largest DEMOCRACY in the world is in the process of being abolished. Who do you think is next in line…

Costa Rica?

#147 GregW, Oakville on 10.30.11 at 9:03 am

Hi #144 maxx, I believe they are airing it again today at 5pm, if you’d like to see it again, with out downloading it on line.

#148 GregW, Oakville on 10.30.11 at 9:10 am

I saw this head line today.

Armed citizen militia group US Border Guard shows up at Occupy Phoenix to protect free speech rights.

I hope ‘everyone’ stays cool and no blood is spilled.

#149 eaglebay - Parksville on 10.30.11 at 9:30 am

#142 Humpty Dumpty on 10.30.11 at 12:43 am

You must be British to spew out such garbage.
The end of the EU project would make each individual vote much more democratic, instead of a dependence on other countries voters.
You must get your info (brain washing) from the mass media.

#150 Hammer1 on 10.30.11 at 11:09 am

Why do they have to lesbians?

Fewer shoes. — Garth
==========================
they also fix things around the bunker..great with powertools..

#151 pablo on 10.30.11 at 11:34 am

http://ca.news.yahoo.com/house-values-skyrocket-vancouvers-cambie-corridor-023606538.html

I keep reading on this blog about how it’s tanking in budville, if this is an example of how it’s not different out there, I dearly wish I had the same depressed market in my town!!!

#152 Van guy waiting on 10.30.11 at 11:49 am

#138 poco

Resale properties are Flooding the market in Richmond. Out of the 942 detached listed, 600 were listed over 1 mil. The remaining were mostly in their 800’s & 900’s

#153 The thing in the basement on 10.30.11 at 12:01 pm

140 45 North – “jor-el” – get your trivia right!

#154 Van guy waiting on 10.30.11 at 12:15 pm

Poco,

Where did you get the stat for the 2 new condo sale? I got the resale stat from mlslink.mlxchange realtors site.

#155 Sue on 10.30.11 at 1:08 pm

#130 Davey Boy,

I would stay away from Kelowna – giant strip mall – and Kamloops – pulp mill smell is overwhelming at times –

Vernon is between two beautiful lakes and minutes from Silver Star, some of the best skiing (downhill and cross country) anywhere. Access to good organic food, a range of activities, cultural and otherwise, plus you’re roughly an hour from Kelowna or Kamloops, if there’s something you really want to experience in either of those cities.

I’ve worked and lived in the Thompson-Okanagan region for the past 20 years.

#156 Westernman on 10.30.11 at 2:31 pm

2 Deep,
I see you think you are a geneticist and a liberal social engineer… it’s people like you that have ruined this country. You are a mangina who probably cowers before your wife (who wears the pants in the household I’m sure).
When people like you get things screwed up enough(we’re nor quite there yet) people like me have to be summoned to put things right again. I kind of like what a guy said on here the other day about new age metrosexuals like you … his comment was “let ’em sink”.
I think that what productive people with skills should do when your ilk come a’callin for repair.

#157 Bill Gable on 10.30.11 at 3:00 pm

Now the Vancouver Province must be taking cues from Mr. Turner.
New series on DEBT in BC – it’s a “Tsunami” of debt that is going to crush the unwary:

“B.C. residents give themselves poor marks when it comes to financial literacy, according to a poll done exclusively for The Province by Ipsos Reid.

The poll of 1,376 adult British Columbians shows that only half of us save anything on a regular basis. It shows young adults fighting just to meet their day-to-day expenses.

It shows that a quarter of B.C. residents don’t believe they will save enough money to cover their retirement years.

Financial experts say that unless we can change our spending and saving habits we’re headed for trouble.

“We need to get scared and I think we’re going to get scared as these problems finally become known and understood,” says Robert Ironside, a finance professor at Kwantlen Polytechnic University.

“The average person in B.C. and around the world has no idea yet what is coming — which is a tsunami of debt-related problems.

“I think it’s very grim.”

Canadians as a whole face unprecedented financial challenges. Late last year, Canadians’ debt-to-income ratio jumped to 148.1 per cent, exceeding free-spending Americans’ ratio for the first time in a ­dozen years.

In other words, for every $10,000 you earn, you owe $15,000.

Thirty-eight per cent of Canadians have no savings at all, according to TD Bank.

The Province/Ipsos Reid poll paints a bleak picture of the degree to which debt has suffused the lives of British

Columbians.

British Columbians regard debt reduction as their greatest challenge. Half of us label it as their top financial goal, the poll shows.

http://tinyurl.com/3okpbsg

#158 NFN_NLN on 10.30.11 at 3:22 pm

#148 GregW, Oakville on 10.30.11 at 9:10 am

I saw this head line today.

Armed citizen militia group US Border Guard shows up at Occupy Phoenix to protect free speech rights.

I hope ‘everyone’ stays cool and no blood is spilled.

The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants.
– Thomas Jefferson

#159 renters rule on 10.30.11 at 3:25 pm

Forget just house prices. The whole house of cards is getting ready to fold:

http://www.theprovince.com/business/moneywise/Average+British+Columbians+unprepared+tsunami+debt+related+problems/5628283/story.html

#160 The thing in the basement on 10.30.11 at 3:40 pm

130 Davey – what’s wrong with spandex and blinky
lights? Worn regularly here in small town BC.

155 Sue – I’ve only overnighted in ‘loops, and dont recall any smell, but I’m a coastal mill town boy, so I have a certain tolerance for it. It doesnt happen near as often as
when I was a kid. The “Smell of money” we used to call
it. Port Alberni was always the worst as its mill is in
town at the head of the inlet in a valley.

http://www.kamloopsnews.ca/article/20110623/KAMLOOPS0303/306239980/-1/kamloops/stench-from-pulp-mill-incredible

#161 Humpty Dumpty on 10.30.11 at 3:50 pm

Didn’t really think you guys read these comments.

English! not even close but Nigel Farge is…

http://www.youtube.com/watch?v=Ii0Yc6_dwyo

Study your history rather than who won the game last night..

Some of You guys are really are beyond pathetic..
I love it…

#162 2deep on 10.30.11 at 4:04 pm

Westernman,

So you’re not denying your mothers alcoholism during her pregnancy with you. Glad we cleared that up.

You can get back to kissing cousins now…

#163 Kilby on 10.30.11 at 4:17 pm

Some real estate figures from BC for the month of October (past thirty days) Residential only.

Victoria, including Vic West.
761 listings
180 price changes
88 sales

Qualicum Beach, town only.
235 listings
36 price changes
19 sales

Summerland.
376 listings
33 price changes
7 sales

Penticton.
779 listings
95 price changes
46 sales

Kelowna, North and South only, not West Kelowna.
418 listings
80 price changes
32 sales.

Nobody is doing well in these markets, despite what the real estate industry reports….

#164 Bill Gable on 10.30.11 at 4:28 pm

This is for you Gold Bugs: Ready?

“But not all glitters in the world of gold. In his seminal book “Stocks for the Long Run” (McGraw-Hill, $35), finance professor Jeremy Siegel reveals what a dollar invested in various things would have grown to, from 1802 to 2006 (yes, 204 years!): stocks, $755,163; bonds, $1,083; T-bills, $301; and gold, $1.95. (Amounts have been adjusted for inflation.)

So, through many wars and economic times even more troubling than those we face today, gold hasn’t proved to be a great long-term investment. Though it surged near $700 around 1980, it spent much of the 1990s between $300 and $400.

In Fortune magazine, David Rynecki noted: “Gold investors are notoriously bad forecasters. From 1985 to 1987, for example, a collapse in the dollar boosted gold 76 percent and had many metalheads predicting an extended rally. Instead, the price fell 15 percent the very next year.”

http://tinyurl.com/6c4tel9

#165 tkid on 10.30.11 at 4:34 pm

Humpty Dumpty, keep the youtubes coming. I really enjoyed that last video.

#166 Westernman on 10.30.11 at 4:49 pm

2 Deep,
I never directly address the spurious antics of retards like you, they only drag you down and beat you with experience. By the way, do you have your wifes permission to be on this blog?

Attack the words, not the person. — Garth

#167 Davey Boy on 10.30.11 at 6:39 pm

Sue, thanks for the feedback. :