Parental guidance

Sally has two kids, which is what you call 30-year-olds when you’re sixty. “My partner and I have been following your blog for a few years now and have done what you have been telling people; we bailed out of the Okanagan, sold our house and are back living in Victoria, renting, watching the market and hope to buy, some time up island when the price is right.

But the kids. Problems. They both received an inheritance of a little over a hundred grand a few years ago. The married one immediately (a) bought a big house, (b) got pregnant and (c) is now struggling. “Only getting by,” Mom says, “because of the downstairs suite income.”

Sally tried to talk her out of sticking the windfall in a house at the highest price point in history, and failed. “Not much I can do about that now,” she tells me.

“However, the younger who is single with a good education and job remains renting and has been holding off, still renting a modest suite but is losing patience , the money burning a hole in her pocket and tired of the landlords upstairs; she’s now out looking at condos here.  She has no debt, makes about $50,000/yr and has been approved for a $300,000 mtge.  She won’t spend the entire wad on a downpayment, but I can’t help but be worried and tell her it’s still too soon and the money should be properly invested, but liquid.  Part of the problem is her father, now retired, house paid off, old school, tells her the complete opposite.  I tell her to invest like you have told us, but the word is no longer heard. What would you advise?”

Well, Sally, the first thing to remember is that she’s thirty years old and fully capable of screwing up her life on her own. Didn’t you? It’s called learning. However, if you want to be a helicopter parent (a) call your ex and tell him to get stuffed, then (b) sit your horny daughter down and tell her the facts.

First, the Victoria market (in fact most of BC not already in a real estate recession) is the second last place on the continent any sane person would buy real estate (guess the other). In a couple of days you’ll see just how much listings have increased and sales stagnated when the local cartel releases its numbers. Simply put, delusionally myopic locals have sold each other properties at increasingly unrealistic prices and created a market now unaffordable by national standards.

Sheer real estate greed has managed to turn BC into a destination most Canadians scoff at. Net migration’s gone negative. Vanished are the days when Boomers could cash out of Mississauga or The Peg and move to Victoria or White Rock to retire. Only 2% of Canadians can afford to cough up that kind of dough, and they’re busy buying mansions in Phoenix and Miami for half the price and twice the heat.

So tell the kid her chances of losing her money on a Victoria condo are exceptional.

Second, anyone making $50,000 a year (and netting $41,100, or $3,400 a month) cannot afford a $300,000 mortgage. Just because the blood-sucking bank offers, is no reason to take. Yes, I know – with a 3% VRM and a 30-year am, the payments are only $1,264. Add in condo fees and taxes and at $1,700, it’s not much more than rent.

Not only is that 50% of what she brings home, but after five years of payments (totalling $75,888), the kid will still owe $266,715. And by that time there’s a 100% chance mortgage rates will be far higher, quite likely double that 3%. As interest rates rise, of course, real estate values fall as the pool of potential buyers shrinks.

In fact Bay Street economist Sheryl King reminds us that a stunning 65-70% of all new mortgages are now variable raters – twice the normal volume. As Americans found out, the combination of cheap money and adjustable rates can be deadly. “The U.S. homeowner was lured down a very similar path by the Federal Reserve at the turn of the century,” she says, and when interest rates inevitably rose, real estate was cooked. King says it will take only a 2% jump to “push a fixed rate mortgage beyond the reach of the average homeowner.”

Third, if rates rise, or real estate dips, or the kid gets a job in a real city like Toronto, she might discover real estate’s dirty little secret. Illiquidity. In time she’ll learn that property is a hell of a lot easier to buy than it is to sell. In a down market (the kind Victoria and the province are entering) it can take months, a year or more, to find a buyer – even after a string of price reductions.

So the question is, why would any young person willfully surrender their freedom and mobility to buy exactly the same condo they can rent? Not only does the kid shoulder a fat mortgage which could get wildly more expensive to service (and which rental payments would never cover), but the condo itself can turn into a life anchor. What about job loss? Marriage? Taking your inheritance, fleeing your Sikorsky parents and flying to Spain?

Here’s the advice speech, Sally.

Why buy, kid? Not to live for less. Not to have more choices. Not to lessen risk. Not to reduce debt. Not to have mobility. The only possible reasons are a capital gain, and to impress your friends. The gain can easily turn into loss. And your friends will mature.

Unlike your father.


#1 steve p on 10.31.11 at 9:26 pm

i calculate payments closer to $2000/ month
also you should only spend 25% of income on rent or $1000 month, there are thousands of these condo’s. offer some guy $1000/month for a one bedroom. heck, in the usa they go for $650/month

#2 Smoking Man on 10.31.11 at 9:40 pm

Wizard or Oz.

I watch it yesterday for the first time in my life with the sound on, and not cranking dark side of the moon.

Wow amazing watching it sober…..

The film came out in 1939……….just before ww2 where millions of souls lost their lives, it was probably one of the last movies they saw…. Introduction of color…..
Movie had no pre-paid adds like the star drinking coke, no secret subliminal political agenda….It was pure, and awesome………

Which brings me back to teachers…..On the news tonight some ass hole principle wants to show the baby tax farm slaves and their parents who is in charge, so he bans Halloween costumes….. You can take the uniform off, only if you where black and orange. What? Say again asshole……….

My Parental guidance!!!!!!!!!!!!!!!!

Lucky my kids are done school, I real miss going to the my kids principals office and verbally ripping of his head and excrementing down their neck….Ah the good old days.

On TV in Halifax kids that where caught cheating on test where given a second chance to write them………….Damn good Idea, encourages risk taking. Then we hear from some teachers in the area….that school is not about passing the test, it’s behavior………..And we don’t encourage bad behavior. What?

We will never in our life time have a movie that will blow us away like wizard of OZ. did in 1939 The creativity required to produce a master piece like that , pure of agendas, adds and phy-ops, The kids coming out of our system, will never breach boundaries driven into there young souls which is required to match the impact of that film in it’s time, less for course they smarten up and leave school by grade 8……..Sales –Expense = Profit is the only math they need, they can hire today for next to nothing PHD math dudes if required…………

Then they have a chance to be Free and Create with out boundaries, history does not remember billionaires and trillionaires, but our artists are immortal………..Hale to Roger Waters my hero…………Funny Microsoft spell checker underlines trillionaires like they don’t exist. Bill Gates himself attended Bilderburg meetings but he forgot to get it into the spelling algo on msword…as I guess Bilderburg don’t exist either.

To add insult to injury working and getting a check is not enough to survive today. Every, kid coming out of high school should know how to buy a stock, short a stock, buy bonds and futures even the basics…………………….They only know how to get credit cards.

By design through schooling the status quo does not what any competitors, they want our schools producing servants and the teachers are complicit in this shame………………

SM – Halloween 2011

#3 vyw on 10.31.11 at 9:41 pm

Move in with the older sister and rent a room.

If there’s huge sisterly-love, buy an equal share in the older sis home and live downstairs. Yes, prices will fall but better to save both in one house than for both to be under financial pressure.

But best advice is rent and invest and wait. Victoria is already on the decline price wise – this should be obvious if she is out condo-hunting.

#4 Junkmale53 on 10.31.11 at 9:41 pm

…has been holding off, still renting a modest suite but is losing patience …

Ease her pain, tell her to find something nice for twice the rent. It’ll put that fire in her pocketbook out and save her at the same time.

#5 T.O. Bubble Boy on 10.31.11 at 9:42 pm

The daughter should be able to look down any street in the Victoria area and see For Sale signs starting to get moldy on the lawns of all the unsold properties. That in itself should be enough evidence to convince the girl to wait for this thing to implode.

#6 NoName on 10.31.11 at 9:44 pm


#7 Dan in Victoria on 10.31.11 at 9:46 pm

I wouldn’t buy anything right now in Victoria.
Wait, its rolling over.

And Sally there have been some excellent deals up Island, not sure where you want to go but I found 3 that couldn’t be built by myself for what the asking price was.

#8 Ron Mendelson on 10.31.11 at 9:48 pm

Another great post Garth.

I agree completely, anyone contemplating getting into the market will be better off taking a ‘wait and see’ stance for the time being.

When rates rise, and they will, downward pressure on prices will certainly cause price reductions.

#9 NoName on 10.31.11 at 9:53 pm

where i work we have two tier pay, to workers doing same job are paid two different wage, worker A makes 64k, and workers B makes 50k. worker A is about to retire in 3-5years, worker B is mid 30. What they have in common is that both of them are living on same street… great when young implodes i wonder what will happened to the old… oh i forgot there is mandatory retirement…

#10 NoName on 10.31.11 at 9:55 pm

there is no mandatory retirement… correction

#11 amazing on 10.31.11 at 10:00 pm

how you do it? Amazing how you talk and talk the same thing over and over for the last 4 years and not get tired.

Apparently it takes that much. — Garth

#12 Katie - Oct 28th Email on 10.31.11 at 10:01 pm

I didn’t see the Oct 28th post, which included my email, until today. My email was intended for Garth personally, but now that I see how this blog works.

I do appreciate many of the insightful and constructive comments. However, some of the responses have made assumptions about our life and finances. I did not mention our annual income, nor did I mention how much money we have in other investments. There is no basis for people to comment on what we can and cannot afford. It seems that the stereotype is that 20-somethings all jump into homeownership with 5% down and without accounting for the relevant carrying costs. Also, my question about higher interest rates vs. higher purchase price was an honest question, and not meant to be rhetorical. All this being said, my question to Garth was WHEN, in his opinion, is the market correction going to happen in the GTA? I have been hearing about a correction for over a year, while prices have just gone up. I know that no one can predict exactly WHEN or by HOW MUCH, but I also wonder what the point of all this is if it cannot be quantified in some manner? If the experts do give estimates on timing, but not for free on blogs, then that’s fine. I just find it interesting that when I asked the question of WHEN, many people avoided the question and tried to find ways to pick apart my personal finances and lifestyle.

With about 20% down, I don’t find that the carrying costs are much different between renting and owning a small townhouse in the areas we are considering. If the goal is to eventually buy a home, the longer you wait for the correction, the larger it needs to be to make it worth it. I am skeptical about making up for rent spent with investments. If you know that you need the money within a few years to jump on a correction when it comes, you cannot take on much risk, so how much can you really make? If a correction is coming within a year or two it makes sense for us to wait. If prices are only going to go up for another 5-10 years, the numbers just aren’t adding up to me. Sorry for the long-winded post, but what am I missing?

#13 Don on 10.31.11 at 10:07 pm

Smoking Man.

“encourages risk taking”

Too Funny – lol

If you haven’t already you have to watched CBC’s bit on Canadian Mining Companies on the news tonight. You may want to make sure you are relaxed for this one.

#14 Devil's Advocate on 10.31.11 at 10:07 pm

“Sheer real estate greed has managed to turn BC into a destination most Canadians scoff at.” – Garth

Yup I’d have to agree we got to charging the absolute most the market would bear rather quickly. But wouldn’t any other province have done the same were they as popular?

Interestingly here in the participation of British Columbians buying Okanagan property has declined while that of all other provinces has increased. Albertans last year were responsible for 15.2% of sales in September this year… 18.9%. British Columbian participation fell from 81.6% of sales in September of 2010 to 71.4 in September of this year. So it looks like the only ones we are scaring off is ourselves.

#15 vatoDETH on 10.31.11 at 10:08 pm

I’m not one who can tell you where or how to invest… but WOW, if I had $100k to invest, I’d be subsidizing my rent right now with the investment income. I’d be learning first hand how to make money the right way, padding my TFSA and RRSPs.

Tell her to learn investing. If she has limited knowledge, interest and time to learn investing, then get an investor. She can start with an investor, hopefully learn the ropes and then start doing her own down the road.

If she is subsidizing her rent, she probably won’t feel so burnt on paying for someone else’s mortgage. She will be beating the system! Show her how little she will have paid off in 5 years. Ask her to try investing for a year, it’s not like housing prices will go up.

Suggest that she will have her mobility and freedom! She can ride the gravy train on investments, maybe take a few nice vacations, or even pack her bags to work in Italy? San Jose? Australia? (insert dream country/city name) at the drop of a hat. Even go work in the USA if you can get a job, without getting mauled by angry American citizens for stealing their jobs!!! ;-)

#16 Marc L on 10.31.11 at 10:12 pm

I do not think the father is immature. I think he is just old fashioned. He probably paid 20K for his house in 1960 and now he could sell it for 2M. So he thinks his daughters are idiots for not buying.

I live in Ontario, but on a trip to Vancouver in Sept, I spoke with a woman in her 70s who bought a large Tudor home in Kerrisdale in 1972 for 40K. She unloaded it to some HAM in July 2011 for 4.1M. So she got over a 100 times her original investment in 40 years (tax free) – Amazing. She is probably the luckiest RE investor out there. She is now renting a condo in West Point Grey for 2K a month. Laughing almost as much as her 4 children who will inherit it all in a few short years.

I also have a friend who’s parents sold their Shaughnessy home in 2009. They bought it in the 60s also and never invested much into the place. It was tired looking but had an impeccable lot facing a park with a view of the mountains. A realtor knocked on the door one day (home not listed) with his black Lexus parked on the street. There were some HAMs in the back seat. They let it go for 2.7M – cheap – I think. (they bought a bungalow in White Rock) I drove by the Shaughnessy place in Sep 2011, it had been torn down and there was a foundation poured that covered almost the entire lot. The HAMs are building a Mega Mansion.

For all of the BS coming with the RE correction. Some people cashed in big time and are sitting on a ton of cash. Good for them.

#17 Don on 10.31.11 at 10:14 pm


Would also like to add – I am seeing a fair number of apartment buildings with multiple vacancies. Every new house comes with a rental suite or so it seems.

But on a good note…my local realtor is positive this will be a good winter for sales.

#18 wither charity? on 10.31.11 at 10:15 pm

My office kicked off their annual charity drive this week. There was a company wide meeting today, with tear-jerking speeches from the charity’s representatives, imploring us to give, give, give.

I was feeling pretty good about giving this year, since the missus and I sold our place last year, pay less to rent than we did on the mortgage, and started saving.

That was until the charity spokesthingy said “with the cost of housing in Vancouver, you know a lot of families are struggling to make ends meet”.

I have to say, it made me reconsider. We will sill donate this year, but be a little more careful about where we send our gift.

#19 Don on 10.31.11 at 10:22 pm

I still remember my late 20’s – remember that 5 years in the future was considered to be a long way off. They want to be where the action is, not in the country, right in the heart of the downtown area within walking distance. (Easier to walk home from the bar,movie, coffee shop, shopping, friends, etc).

The Daughter may be an adult but as a good friend her mother should warn her. Commonsense starts at home.

#20 Moneta on 10.31.11 at 10:23 pm

Movie had no pre-paid adds like the star drinking coke, no secret subliminal political agenda….It was pure, and awesome………
In a 1964 article[5], educator and historian Henry Littlefield outlined an allegory in the book of the late 19th-century debate regarding monetary policy. According to this view, for instance, the “Yellow Brick Road” represents the gold standard, and the silver slippers (ruby in the 1939 film version) represent the Silverite sixteen to one silver ratio (dancing down the road).

Certainly the 1901 musical version of “Oz”, written by Baum, was for an adult audience and had numerous explicit references to contemporary politics,[2] though in these references Baum seems just to have been “playing for laughs.”[10] The 1902 stage adaptation mentioned, by name, President Theodore Roosevelt and other political celebrities.[11] For example, the Tin Woodman wonders what he would do if he ran out of oil. “You wouldn’t be as badly off as John D. Rockefeller,” the Scarecrow responds, “He’d lose six thousand dollars a minute if that happened.”[2]

#21 Tim on 10.31.11 at 10:26 pm

In Vancouver many have been waiting for years for the market to become reasonable and have to live in crappy basement suites or one bedroom apartments. I can see why people get fed up and leave instead of waiting for a 30 percent correction that never seems to come…

#22 johnny5z on 10.31.11 at 10:33 pm

You are correct – the place to buy is where there is blood on the streets – south of the border with easy access via air.

It seems that very few are pricing in the extraordinary low interest rates. Sooner or later, reversion to the mean, and it will be a cruel accounting. It seems that “this time it’s different” has been replaced by “we are different,” (and it won’t happen to us).

#23 45north on 10.31.11 at 10:54 pm

Katie: WHEN, is the market correction going to happen in the GTA?

I don’t know but I can say that we sold the family house in North York 2 years ago and I am glad we did. Of course the when depends on what CMHC does with lending rules and what the Bank of Canada does with interest rates. Sorry, I’m out of the loop. Not to mention the Euro crisis and the Chinese economy.

Katie, I told you to read your mortgage but you didn’t. Find the standard mortgage and read it.

#24 Dan in Victoria on 10.31.11 at 11:01 pm

Katie @ 12
Katie I’m an old timer that has gone through so many real estate cycles its like watching a set of head lights coming at you on an Sask. farm road late at night.
Ones coming, when it’s going to get here, who knows.

Don’t take it wrong but you’re like every other young kid that comes along, impatient and sure of yourself.
Instant answers required with the push of a button.
Did you learn anything from the replies last weekend?

When ? you keep asking WHEN WHEN WHEN , nobody gave me a date and time…
Whats that tell you?

Are you missing something ?
You ask.

Save your post and read it 35 years from now.

#25 sluggo on 10.31.11 at 11:01 pm

Smoking Man, according to some and probably at odds with the opinion of many including the proprietor of this blog, the Wizard of Oz was an allegory of the late 19th-century bimetallism debate regarding monetary policy.

The story isn’t taken literally by the ‘historians’ but things like last week’s Jon Corzine CNBC interview sounding the all is well with MF Global are.

#26 wetcoaster on 10.31.11 at 11:02 pm

I was so happy to hear my daughter say yesterday that her and the new hubby will rent the rest of their lives if they have to. She read one of those many articles out lately that tell the tale of the struggling couples who want in the market but can’t afford it without eating KD every night and the ones who did get sucked in and regret it. These articles and blogs like Garth’s do make a difference to young peoples thinking. As much as I preached the insanity of buying via the Book of Garth, she needed to see/read it for herself for it to hit home.

Was music to my ears as I was worried the friend/inlaw pressure would get to them but they have seen several home owner friends struggling bad, one couple even with a suite rented out. Dad who pushed them into the house is now buying the groceries to keep the kids fed, plus they bought over 4 years ago and make average Victoria wages with nothing to show for it. Victoria could well be the barometer of a serious tank job about to hit.

#27 disciple on 10.31.11 at 11:10 pm

#20 Moneta…. yes, Hollywood deceptively changed the original writing for the subsequent movies to dilute the intended message. They succeeded brilliantly. Finding out the original message is like being told as a child there is no Santa.

#28 disciple on 10.31.11 at 11:14 pm

….”blood-sucking bank”…

Thanks, Garth! Throwing me bones… you’re playin’ with me mind…

#29 mac on 10.31.11 at 11:17 pm

Katie, you foolish girl, you are missing the ability to predict the future. So am I. So is Garth. So is every other reader and poster on this blog.

If we can’t arrange the timing for you, you should just enter the market now and start paying your mortgage. Get out of the basement and on with your life. Like this post says, your life is yours to screw up and you’re young enough for it all to work out in the wash if it turns out you sold your soul for granite and stainless and a view of your neighbour’s yard.

#30 Waterloo Resident on 10.31.11 at 11:25 pm

Hi Garth.

Everyone wants to make money, and I’m sure you are the same way too. So here’s some information on how you can start to make some MONEY from this blog, its advice that comes from the Globe and Mail.

Here’s the link:

Take care.

This is not a commercial blog. — Garth

#31 Amarillo on 10.31.11 at 11:33 pm

Folks are generally in de Nile (little takeoff on smoking man-speak). Hello Ween is a welcome diversion. More and more talk of annuities these days as people look for steady income streams in retirement. Does anyone out there have a good or bad example of how an annuity worked out? The most volatile aspect is longevity.

#32 Hammer1 on 10.31.11 at 11:54 pm

#12 Katie – Oct 28th Email
Sorry for the long-winded post, but what am I missing?
oh you poor thing, you’re new here aren’t you? the dogs will have fun with you…….

#33 Keeping the Faith on 11.01.11 at 12:03 am

#12 Katie

Wipe the tears away and get a clue.
Your post sounds like you are feeling neglected for not having your post accurately answered.

here it is in plain, simple language that even a silver spoon-fed, basement dwelling for free, entitled, scared to take on life, hiding under her mommys skirt, 20 somethings can understand:

“There is no guaranteed timeline for when the housing market will drop” – grow up!

Your insatiable ‘need’ to own real estate has caused you to delay adulthood and live like you’re 14 with your husband in tow.
Are you not embarrassed?

Could you try and pick up an investment book or two and try and figure out how to make your money so that it is working for you?

Wake up!
… and lose the attitude.

As if you come to a real estate blog for financial advice for what to do regarding real estate, are you serious, really?
And then you say “now that I see how this blog works”, you infuriate me!

Does your entitled world need to have a paint by numbers version for blogging too?

Where does your entitlement end?

Entitled to a house to own but not willing to live without to get it, entitled to have your question answered respectfully but not willing to cut the mob some slack, entitled to have everything in life given to you because, well you’re you … are you a kardasian? a hilton? or a lohan?

I guess when you’re raised on these role models in your parents basement, we shouldn’t be surprised that you haven’t moved until you think it’s time for the world to give you a hand out.

seriously, grow up and never come back to this site.

#34 Ronaldo on 11.01.11 at 12:04 am

#19 Don – “I still remember my late 20′s – remember that 5 years in the future was considered to be a long way off. They want to be where the action is, not in the country, right in the heart of the downtown area within walking distance. (Easier to walk home from the bar,movie, coffee shop, shopping, friends, etc).”

Don, I can totally relate to this. I drove through Vancouver from Horseshoe Bay last Sunday on my way back up north to my cottage in the Okanagan.

My career began in Vancouver in 1967 at the age of 21 and I spent 7 years in the lower mainland before being transferred up north. I first lived in a 1 b.r. apartment in the Robson and Bute area which was only a 10 minute walk to work on Hastings.

As I was driving through the city I began reminiscing about those days and how great it was not to have to drive to work every day in traffic. Living downtown was actually quite great really and I can understand young people wanting to reside there. Unfortunately though, the cost to do so nowadays compared to back then would be quite prohibitive. I can’t imagine what that $126 (20% of my salary) rent in the 12th floor of that same apartment would be today in comparison to the salary for the job today. Certainly more than $1000/mo.

#35 been there done that on 11.01.11 at 12:11 am

I’m in Victoria working in property management and if Sally’s daughter wants a different place to live that is NOT a basement suite there are plenty available right now. She shouldn’t have any trouble getting into a professionally managed apt. unless she has pets, in which case she may have to look a little harder. At any rate, she can live in the best neighbourhoods for half the price of a $300k condo.

She can also try It’s a cool website that aggregates all the available internet listings and overlays them on a google map that she can filter for her price range, pets etc.

Good luck!

#36 Nostradamus Le Mad Vlad on 11.01.11 at 12:27 am

“But the kids. Problems. . . she’s thirty years old and fully capable of screwing up her life on her own. Didn’t you? It’s called learning.” — Agreed. Isn’t it better for one to stand back and learn from other’s mistakes? Sure saves a lot of heartache and arguments later on.

“Why buy, kid? Sheer real estate greed. And your friends will mature. (a) call your ex and tell him to get stuffed, then (b) sit your horny daughter down and tell her the facts. Unlike your father.”

Identifying reality (housing melt) from fiction (Poppa’s advice) is fairly easy to discern. She has, he hasn’t.
Stock Markets Some people are caught between a rock and a hard place, such as sheeple who poured their money into a house; One in three US citizens has no cash; Died, RIP European democracy, that is; OWS and the Lucis Trust “Mikhail Gorbachev says ‘Occupy Wall Street’ signals an emerging New World Order.”; Merkel’s U-Turn; Progress? Satyajit Das Global outlook stalls; 25:02 clip John Mauldin on the end of the debt uper cycle; S&P Q3 results; 2012 Could be a down year for some, up for others.

Harper The real face; Fukushima and Belgium phasing out nuke plants; Pix tell a thousand words but the lines at at end are good, and the First Lady is also having a hissy-fit; 2:41 clip Oslo is also letting the loonies run the show; Frankenstein Depending upon one’s POV, Pakistan is not the monster; South China Sea Strangely, that doesn’t belong to the US.

Obomba scandal-free? I tripped over myself laughing so hard; Supermodel Fired What is interesting is that Libya supplies 80% of Italy’s oil, which Gadaafi helped set up; US diplomacy collapsing, as they are declaring wars on almost everyone; Taiwan ‘Quake time, and Chile Volcanoes passing gas.

#37 Foggy on 11.01.11 at 12:30 am

Good example of the folly of young people and sudden money. 98% will blow it immediately.
However I’m still waiting for more clarity on “N.S.” which you referred to in your blog of October 20th entitled “Next”

Garth Quote:

Some days ago I argued that the stats Canadians are being given by real estate boards, marketers like Re/Max and the Canadian Real Estate Association are meaningless and misleading. They record past sales which in many cases resulted from offers accepted months previously. These numbers are lagging indicators, not leading ones. They offer no map ahead. To suggest so is disingenuous.

Personally I’d rather invest in where we’re going, than where we’ve been. This week it’s initials are N.S.

#38 Humpty Dumpty on 11.01.11 at 1:02 am

He G, you can also suggest sending them back to school for Mr. Flaherty’s federal financial literacy program.
It only cost us 5mil…

After embarking on a cross-country tour, the task force released a report earlier this year that contained 30 recommendations on how to improve financial literacy. It said education, starting as early as elementary school, is the best way to sow the seeds of knowledge and skills Canadians need to save, invest, buy homes and plan for retirement later in life.

My Momma say’s ” intrest payments is the debil”

#39 Van guy waiting on 11.01.11 at 1:11 am

“Third, if rates rise, or real estate dips, or the kid gets a job in a real city like Toronto, she might discover real estate’s dirty little secret.” -Garth

What’s with the “if rates rise” do you feel now that low rates are here to stay?

#40 T. on 11.01.11 at 1:26 am


I loath the day this “pathetic” blog came into my life (a few weeks ago). I haven’t been able to look away, I am obsessed with thinking about debt and how it is consuming our society.

I used to be blissfully happy giving little thought to the issues that threaten to change our society and further shrink the middle class.

So tonight i was excited to sit down, watch TV, and step out of reality for a few hours. However, my temporary joy was ended because my thoughts were turned back to this blog.

As I watched the commercials between my favorite TV shows I took note of a walmart ad promoting the fact that over the Christmas period they are bringing back “layaway”. Basically, this is a way for middle class people who are over stretched as it is to take out a loan to buy their kids Christmas presents. Had it not been for this blog I wouldn’t have given the ad a second thought and would not have seen this as another frustrating example of how our society is consumed by debt.

Thanks Garth for ruining my night and making me think.

#41 Blacksheep on 11.01.11 at 1:44 am

Smoking Man #2, Moneta # 20

I’ve got a great Illustrated version of the story, by Greg Hildebrandt. It’s the original story, silver slippers and all.

When Dorothy approached the gates,

The man asks,

“What do you wish in the Emerald City?”
“We came here to see the Great Oz” said Dorothy.

The man was very surprised at this answer,

“Few have seen Oz,” he said. “But I am the Guardian of the Gates, and I will take you to his palace. First you must put on these green glasses so that the brightness and glory of the Emerald City won’t blind you. Even those who live in the city must wear the spectacles night and day”

Wonder what that exchange in the book refers to?

take care,

#42 enlightened on 11.01.11 at 2:23 am

Katie, if you don’t have the patience to read through Garth’s many blog posts over the years and learn yourself, but simply want someone to tell you “when” and by “how much”, my advice to you is go BUY a house NOW!

#43 Aussie Roy on 11.01.11 at 5:51 am

Aussie Update

RBA cuts cash rate by .25% as housing sales stall, housing starts collapse and the mega mortgaged plead for relief.

New house sales fell in September, falling to their lowest monthly level in more than a decade.

The luck of the Irish

Irish house prices have fallen 44 percent since peaking in 2007 as the ending of a decade-long property bubble was compounded by the global credit crisis and tighter lending criteria by banks.

US goes for a triple dip in house prices

Several factors will be working against the housing market in the upcoming months, including an increase in foreclosure activity and sustained high unemployment, explained David Stiff, Fiserv’s chief economist

#44 Aussie Roy on 11.01.11 at 5:56 am

Aussie Update

There goes the neighbourhood – Keen

The last two days have seen the latest monthly data on credit growth in Australia from the RBA, and the latest quarterly data on house prices from the ABS. Together they confirm trends that I’ve identified on numerous occasions between the acceleration of mortgage debt and the change in house prices.

#45 rosie on 11.01.11 at 6:26 am

Beware Greeks bearing referenda !

#46 David B on 11.01.11 at 6:56 am

We once had a PM who by the way paid down our debt and put billions away for a rainy day even a stand by emergency fund without giving away free money and no money down and 40 year mortgages. In any rate Canadians had it with him and his kind not being able to stand prosperity and they shot the goose and all his little ducklings …. here end the lesson.

Garth T. has spelled out a simple plan for years and it has gone much the same way ….. and those same words spoken by that PM “Hang on it’s going to be one hell of ride” is about to ring again this time from around the world.

Hope y’all have taken a balanced approach while living within your means because this round is just about to start from high atop the big one.

What’s this got to do with Real Estate you say, “Everything” because when governments need cash they get it two ways …. a, raising taxes & b cutting spending. and this looks like an A&B move plus those interest rate hikes Garth has mention effecting everyone’s bottom line …..Food shelter & clothing just in time for Christmas!

This is not doomsday it just a rocky ride say until 2015 or so.

But then what do I know y’all might be getting a
10-15 % raise for Christmas plus a bonus to make up for the past couple or years just to cover the grocery bill.

#47 bigrider on 11.01.11 at 6:58 am

Really, the greeks have the gaal to hold a referendum on Euro bailout plans.

Bye Bye year end market rally.

#48 Alain Savard on 11.01.11 at 7:00 am

I believe the daughter should be free to do whatever she wants with the money. No one knows what real estate is going to do, but with this said, any purchase must be made with the assumption that it is very likely to take over 10 years before it can truly be called an investment after considering buying and selling costs. Buying a home today is like buying a car. You do it because first, you can afford it; and second, either really want one or really need one. Doing it solely to make money is a mistake. Any purchase is guaranteed to be a loss on the short term and a potential investment only 10 + years down the road. If she is okay with that risk then it is nobody’s business to tell her what to do.

#49 bigrider on 11.01.11 at 7:14 am


So much pain globally from such an insignificant country.

Let’s just bail them out and take them over.

#50 Stampede Sam on 11.01.11 at 7:26 am

Don’t know if anyone’s posted this link yet:

#51 Victor on 11.01.11 at 7:33 am

Real estate professionals grow anxious over prospects

Tuesday, Nov. 01, 2011

Canadian real estate professionals are increasingly anxious about the sector’s prospects over the next year, as a sector that has led the country’s economic recovery shows signs of slowing along with the broader world economy.


#52 fancy_pants on 11.01.11 at 7:42 am

#12 Katie – Oct 28th Email on 10.31.11 at 10:01 pm
…Sorry for the long-winded post, but what am I missing?

An agent.

#53 bigrider on 11.01.11 at 7:44 am

A question for you Garth.

If you stick to your advice to keep RE less than 40% of your net worth (60% invested in financial assets) then:

A person with a paid off home, say, worth 800k and 1.2mill in financial assets, would not be able to purchase a rental income property.

Seems a bit extreme, no?

Why would you do that? — Garth

#54 Young Old Fart on 11.01.11 at 7:46 am

Here is my take on things, I dont really care if people agree…..just my POV….

I do not know any millionaires that rent. Period!

I went thru 1982 and all the various “troubles” hence. When it came to real estate, I always locked in long (7-10 years) at a payment I could afford. As in WELL WITHIN MY MEANS! Three times I have paid off mortgages early, and yes, paid the penalties but the profits always offset the hit! But then again, after paying my first mortgage off, I never again paid posted rates but always got a lower “special customer” rate, which I factor in as covering some of the penalty hits.

Now, moving forward to today……

Are we going to have a USA meltdown happen in Canada? No.

We are one tenth of the population for starters, but my thought is this, sure housing prices will drop but by how much? Also, young kids that have bought now, do they have to sell? Think of it like stocks, if you buy a dividend stock at 10 bucks and it takes a 30 percent hit, are you going to sell? Man I hope not! I have a property I put on the market last spring at a 2007 value, no hits, the realtor said if I dropped the price 30% it would sell. Even Then I would still make a 20% profit. I took it off the market for various reasons, main one, didn’t need to sell.

To those that bought a 400k property I say this: be ready to lock in if not already. Lock in loooooongg! Start budgeting BIG TIME and live WELL within your means! Then, in 20 years your will be able to tell your kids……

Can you believe I bought this place for only 400K?????

But then what do I know…..I am a high school drop out!

Drop out that made millionaire by 30, doubled that by 40 and again by 48. Made it in mostly in real estate….

#55 MarcFromOttawa on 11.01.11 at 7:48 am

#40 T.

I think Walmart returning to the days of “layaway” is a good sign in the sense that people are being more conservative with their finances and aren’t binging on credit cards like they used to. The vendor puts the item aside while the customer saves a bit every month and no credit is used.

Although it would be preferable if people shopped locally and with cash.

#56 T.O. Bubble Boy on 11.01.11 at 7:58 am

So much for the VIX going down – damn defaulting Greeks.

#57 bigrider on 11.01.11 at 8:03 am

Boy do I ever want this F-kin RE correction in T.O to start already.

So sick of hearing “stocks are for suckers’ comments from my RE investing and building buddies.

You ignored my previous advice to get new friends. — Garth

#58 Moneta on 11.01.11 at 8:09 am

My market foreast is see-saw movements for a while unless we get huge inflation. I think generalized fraud is the main reason why I just can’t be optimistic about markets.

Risk is completely mispriced and our system is forcing the elderly to go where few retirees have gone before.

This environment is ripe for cheats at EVERY level. If we got Bre-X, Enron, Madoff before it got this bad, imagine what’s next. Thanks to the bailouts’ quick money dispensing techniques, imagine what is going to be coming out of the woodwork within the next couple of years.

#59 Kiron on 11.01.11 at 8:22 am

Katie (and others considering buying a first home)

I have been watching the markets for quite a while. I agree with Garth that we are due for a correction in prices and it could be quite steep in places where people are stretching to own. When? It depends on events. We would already be there if the government hadn’t responded quickly with emergency rates. Unlike Garth, I think we are due for another credit crisis, so I expect rates to stay low for quite a while. It doesn’t meant the price correction won’t happen. It will.

My advice would be to invest in yourself. I wish I had known in my twenties what I know now. Make it a goal that by spring you will know much more about investing and money management than you do now. Get Garth’s latest book and the new one by Chilton (wealthy barber) and read them a couple of times. Get a library card and explore the finance section. Finance has its own language. If you learn how to take care of money now you won’t be easy pickings when people try to take advantage of you and you won’t be helpless down the road if you go through a difficult patch. I am not that old, but I have been surprised looking at my own life and those of friends how often life doesn’t go as planned. Learn now so that you can be ready.

Set up some spreadsheets on your computer. How much will that townhouse cost over time? How much over time will you save if your price is 15% or 30% less? Include interest costs, taxes, transaction costs and maintenance. A “understanding mortgages” book at the library will have mortgage tables and teach you how to use them. With home ownership there is also an improvement cost. Once you change the counter top in the kitchen you find yourself wanting to landscape and change the tiling in the bathroom.

Take the time to learn. You will never regret it.

#60 Kevin on 11.01.11 at 8:22 am

By that time there’s a 100% chance mortgage rates will be far higher, quite likely double that 3%.

Just a minor nitpick, but I don’t think this is as big of a problem as you portray it to be. I only bring it up because this line of reasoning is often cited as a likely genesis of any eventual housing collapse in Canada. However, the numbers don’t bear it out.

You’re right that rates could likely be double in 5 years. You’re also right that the outstanding balance would be $266,715. However, assuming her home is not underwater, she could simply re-amortize it back to 30 years, and at 6%, her new payments would be $1,599. That’s an increase of $335.

Sure, any increase is tough on a household budget. But we’re talking about 5 years here. Is her income really not going to go up by $335/month over 5 years? Using your estimate of $41,100, that’s only 1.9% per year.

While it’s true that some people may be underwater and unable to reamortize back to 30, and some people’s income really won’t be able to keep pace with a 9.8% increase in expenses, but I think we’re talking about a very, very small subset of borrowers.

You conveniently neglected the reality that rising rates bring falling real estate values. The condo might no longer be worth $266,715, hence no refinancing. — Garth

#61 Young Old Fart on 11.01.11 at 8:24 am

…. I can’t imagine what that $126 (20% of my salary) rent in the 12th floor of that same apartment would be today in comparison to the salary for the job today. Certainly more than $1000/mo…..

Even if it was a $1000/month….that would take 60K?

#62 TorontoBull on 11.01.11 at 8:36 am

suggstion to Garth for tomorrow’s posting: VIX chart update

#63 S-J on 11.01.11 at 8:38 am

37. Foggy.

I think Garth is referring to Nova Scotia and the $25 billion shipbuilding contract recently awarded to Irving Shipbuilding in Halifax. It’s going to help the economy of this province. The spin-off from all this will be huge over the next 30 years. More jobs, more houses needed, which in turn could mean real estate in N.S. being a safer investment (pertinent to this blog).

Even down in Shelburne there is excitement due not only to this ship building contract (Irving has upgraded their shipbuilding facility down there to help with the additional work). There is another big company (aquaculture) on the brink of moving there.

All they need now is the ferry to return to Yarmouth (which everybody thinks will be next year).

Life is looking rosier for N.S.

#64 disciple on 11.01.11 at 8:48 am

Oz… as in ounces of gold. The voice behind the thundering loudspeakers is just a …. wait for it… little old man. Get it? The hidden meaning is that there is no such thing as money… gold included. The real THING is the man. You are money. Where have I heard that before?

#65 disciple on 11.01.11 at 9:05 am

Was watching Kevin O’Leary on CTV last night between candy handouts. To paraphrase him, “the MF bankruptcy is a good thing, it will weed out the weaker links, people will learn valuable lessons, and I don’t care because I don’t own them. But the system still works.”

My comments follow:

Why do cut-throat capitalists always feel the need to defend their idea of capitalism? As if the majority who are not exploitative capitalists will one day decide that billionaires like him should lose their fortunes and give it to the masses? Fear. Fear of losing their big pile. Fear of having had wasted their lives accumulating it. (They have wasted their lives, no question, so I guess the fear is in realizing the truth of this fact). Fear of realizing they have wasted valuable time. Fear of being wrong. When you have spent your life believing so strongly that you were right. That is the reason they feel the need to defend their version of capitalism.

But capitalism has many shades. Indeed, it is the natural tendency of human culture. To grow, to expand, to change, to get better. But don’t confuse this natural process with the degenerate form of dog-eat-dog-I-will-rip-out-your-heart-and-eat-it-while-you-watch-me-as-you-slowly-die capitalism.

Whenever someone feels the need to say, “but the system still works”, you know that it is a statement of guilt. Because why would you need to defend something that is naturally occurring? Do you say, “the system of education still works” because people eventually learn how to read and write? Do you say, “the system of healthcare still works” because there is a child relieved of pain today?

So, Mr. O’Leary, your words betray you. How many Mr. O’Leary’s are there on this blog, I wonder?

#66 bigrider on 11.01.11 at 9:09 am

#53 Garth to Bigrider- “why would you do that”

Well, I would imagine it would be for the revenue stream from rental income. The property would have to have a yield of at least 8% bare minimum , I would say net 3% after all expenses paid.

Much like buying a class A preferred, you would not be looking for any upside necessarily via cap gains on the property, just the yield.

After all, you have said yourself you own RE for investment purposes and that you buy and sell.

It would seem ,based on your advice/formula, that most everyone would not be able to own a second property as only extremely high net worth people could do so.

Just saying.

I have not done so(purchased a second property) as I am not comfortable but just posing the question

You do not have to re-roof a preferred or fix the toilet in an income trust. — Garth

#67 disciple on 11.01.11 at 9:12 am

#54 Old Fart… thank you for helping to create the biggest bubble ever… real generous of you. Enjoy your millions in South America. :) :) :) And your advice to follow in your footsteps is also appreciated, as I’m sure it comes from the deepest, most sincere part of your heart. And I’ll take your word for it that you don’t care if anyone agrees with you. Because of course, that’s the reason you are posting on this blog.

#68 bigrider on 11.01.11 at 9:13 am

#54 Young old fart.

You should buy some RE today ,at today’s prices and see if you get same doubling rate over the next same time period as before.


#69 Kiron on 11.01.11 at 9:18 am

Big Rider
Despite the headlines, the real problem isn’t Greece.

First – Ireland, Italy, Portugal and Spain are eyeing any concession given to Greece and will likely down the road ask for the same treatment. Those are much bigger problems (especially Italy) and will be very difficult and painful to address. The credit markets are continuing to price this in.
Second – With the recent decision to declare the 50% haircut on privately held Greek bonds to not be a credit event (meaning that the insurance the holders bought won’t pay) it means the only way to protect against loss is sell soon before things get worse. It will make it near-impossible to sell 1-1.5 trillion euros worth of bonds which is the big solution going forwards. They had problems selling 5 billion yesterday – only sold 3 billion and for a shorter duration.
Third – the banks in Europe are structured differently than the ones here. Many are probably functionally insolvent right now or would be if they marked some of their assets to market. There are signs of a recession starting in Europe. More of their assets are going to go bad and they have few reserves backing them. They have been told to find more money to back their loans, but rather than selling shares/ownership, they are scaling back in loans, selling parts of their businesses and changing the models that they use to define risk. That is why there is and will continue to be a credit crunch in Europe. (The banks won’t lend, so businesses and individuals won’t be able to borrow and that will have serious effects on the economy – liquidity dries up.)

Banking is global. Pain in Europe will cause pain in the rest of the world too. Greece is like a domino causing all the rest to move.

#70 bigrider on 11.01.11 at 9:31 am

#57 Garth to Bigrider -“you ignored my advice to get new friends”

Yes I did. I like the fact that I have a post secondary degree and that most of these builder friends are high school dropouts.

They often have very complex questions, ” like how to find a ferrari dealer on the internet “, or what ‘carbon fibre’ is when they take delivery of a new lamborghini.

One of them did not know what Kobe beef was when he ordered it at Harbour sixty for $480 bucks.

They need me to answer these somewhat complicated questions for them.

#71 bigrider on 11.01.11 at 9:35 am

#66 Garth to Bigrider – “ need to re-roof a preferred or fix a toilet”

You are absolutely correct and hence my apprehension over the years to rental property ownership.

I can’t help but feel I am missing out however as so many around me have done well.

I really wish you offered a service on how you do it as that would be a service I would be willing to pay you for.

#72 disciple on 11.01.11 at 9:35 am

“The downside risks are tilted toward the negative side”. I’ve heard this repeated so often lately in the MSM. My question is, how can downside risks EVER be tilted to the POSITIVE side? Anybody? Devore?

#73 Moneta on 11.01.11 at 9:36 am

Unlike Garth, I think we are due for another credit crisis, so I expect rates to stay low for quite a while. It doesn’t meant the price correction won’t happen. It will.
Not necessarily. Right now everyones global money is flooding Canad as we are seen a s safe haven.

If Canada’s economy gets ugly, if China slows, US beocmes protectionsit, and Cdn consumer drops, foreigners could panic and bond vigilantes could very well push yields up without any of Carney’s help.

#74 neo on 11.01.11 at 9:36 am

Garth, I believe you were saying I have no idea what I was talking about.

Well the VIX is back at 36 now two days after your ill timed post that I pointed out for various reasons that I am being proven correct, again. I said it would take 2 weeks so I was wrong about that (Humility)(-:

Neo 1
Garth 0

Two days? Seriously? — Garth

#75 Moneta on 11.01.11 at 9:40 am

Fear. Fear of losing their big pile.

Have you rubbed elbows with guys like him? Right now they feel NO fear whatsoever. They are on top of the world totally out of sync with the rest of the people. Like Marie-Antoinette.

Marie-Antoinette’s attitude works 99.9% of the time. Time will tell if we will enter the .1% zone.

#76 Katie on 11.01.11 at 9:41 am

“Oh you silly, spoiled little girl, then WHEN doesn’t matter. Just go rent and wait. It doesn’t matter that your carrying costs will be the same because you will invest and make money on your investments! Geeze someone teach this girl about investing! Then when the correction happens you will have lots of money to buy. Even though the housing market will be in a slump, and likely the economy too, your investments will be great! You’ll get an investment advisor and you’ll read lots of books and you’ll get great returns.”

What many posters don’t understand is that I WANT to be wrong. I would have no problems renting for 5 years or more if I felt that I would come out ahead. I just haven’t seen anything to convince me yet (in my own spreadsheets and scenarios and in print). I’ve been investing for 5 years, and I continue to learn about investing on an ongoing basis through books, magazines, and the net. I think a financial advisor is the next step. Thanks to those who took the time to write helpful posts. To the rest, how do questions manage to spark wildly wrong assumptions?

#77 eaglebay - Parksville on 11.01.11 at 9:47 am

#62 S-J on 11.01.11 at 8:38 am

Careful, most of that $25 billion will not be spent in Nova Scotia. Only good if you’re a welder.

#78 eaglebay - Parksville on 11.01.11 at 10:01 am

#65 disciple on 11.01.11 at 9:05 am

There you go again. You see black and doom.
O’Leary doesn’t feel guilt or fear. These people could loose it all and do it all over again.
Tell us one thing in O’Leary’s statement that isn’t true.
Your idea of capitalism is far out.
There’s no such thing in Canada. Only a pretend capitalism.

#79 disciple on 11.01.11 at 10:04 am

Some inside info follows below. I can’t reveal my sources so don’t bother asking me. Retail spending is curtailing drastically at these urban centres:

Winnipeg, Surrey, Lethbridge, Calgary, Victoria

I expect the disease to spread to Central and Eastern Canada over the winter after Xmas…

#80 Kilby on 11.01.11 at 10:08 am

I would wait another year in Victoria, as in Victoria, Esquimalt, Oak Bay, Saanich and View Royal there are 1,728 listings of which 726 are apartment units. Last week only 35 of these sold.

Nothing over 1 million sold in the last week either and the top 5 most expensive averaged 142 days on market compared to only 43 days with the next 5 lower

#81 Michael Hawk on 11.01.11 at 10:13 am

The replies of Dan in Victoria and Keeping the Faith to Katie are great. You guys read my mind… Garth, I love this blog. Can’t start my day without a coffee and greaterfool… This blog is so good that it even has the ability to satisfy women and send them right to sleep (Euro Girl… lol)

“When ? you keep asking WHEN WHEN WHEN , nobody gave me a date and time…
Whats that tell you?
Are you missing something ?
You ask.”

“There is no guaranteed timeline for when the housing market will drop – grow up!”

Hahaha that’s awesome. For some reason I think Katie will be a homeowner pretty soon.

Hey Katie, here’s what some “Industry Experts” have to say regarding this matter. As clear as a river of Bacardi… make the plunge niña !

“McAllister had advice for prospective homeowners in their 20s who are questioning whether they should wait for prices to come down. Don’t wait, he said; borrow from mom and dad.

And he warned against selling hoping to get back into the market later.

‘Affordability is one of the main concerns in this market and I think will continue to be over the rest of my life.'”

Read more:

#82 Tim on 11.01.11 at 10:16 am

Almost half of China’s wealthiest want to emigrate

God help us in Vancouver, so much for that correction…

#83 Les Pervis on 11.01.11 at 10:20 am

I like reading your blog, and I admire its goal and your dedication to its message, but sometimes you go to far. What’s the point of your advice if you lace it with personal insult?

If Sally forwards this post to her younger, single daughter, the daughter will read right up to, “Like your father,” and then write off all the good advice simply because of the gratuitous personal insult. Disrespect adds nothing to your message.

That was a third-party voice. Read more carefully. — Garth

#84 Not 1st on 11.01.11 at 10:23 am

Garth, I am afraid you have an upcoming date with Mr Black Swan.

He is going to put a nice little wrench in your equity pumping efforts one day.

I do not pump equities. I pump a balanced, diversified, income-generating, tax-efficient approach to investing. Why is that so difficult for you to get? — Garth

#85 MoneyMyHoney on 11.01.11 at 10:27 am

Yesterday: VIX measures volatility
Up and down motion in the markets will continue and will end up in a full blown loose motion by 2013. The derivatives crap is 10x the world GDP. So, don’t expect any cure any time soon. Leaders can make all the rosy statements, it won’t take the stink away.

#86 disciple on 11.01.11 at 10:30 am

#75 Moneta… “Marie-Antoinette’s attitude works 99.9% of the time. ”

what do you mean by ‘works’? I don’t think we agree on definitions.

O’Leary’s success depends entirely on the Exclusive Socialism for the rich that occurred in 2008-2009 and that is continuing as we type, which allows him to collect on the dividends and coupons. The Emperor has no clothes.

So, tell me again, what “worked”? That exclusive clubs and gangs screwed non-members of the club, yet again? Well, that has happened throughout recorded history, well before Adam Smith. It has NOTHING to do with capitalism.

#87 refinow on 11.01.11 at 10:35 am

I just love the “not in my backyardigans” who continue to skip play.

Especially the ones from BC.

Looking at a BC home that in 50 years went from $40,000 to $4,000,000 illustrates how dillusional the housing market has gone.

Do you think that same BC home purchased today for $4,000,000 will increase by same 100X in the next 50 years and be worth $400,000,000.

Go for it… Becuase real estate only goes up in value..

#88 Regan on 11.01.11 at 10:35 am

I’ve been telling people the market will tank for several years now. People won’t take your advice if it’s not answered by a clap of doom from heaven and instant fulfillment, so I’ve adopted a different approach.
Tell your daughter to buy something when it makes sense, i.e. if she can find a place to buy where the total cost of living in it (mortgage, taxes, utilities AND maintenance) isn’t more than 10 times the annual cost of a similar rental – the key being ‘similar’ because people contemplate buying things they’d never rent and vice versa. It might make her realize that once upon a time, you purchased a home because it was cheaper than renting in the long run.

#89 disciple on 11.01.11 at 10:38 am

#78 eaglebay… doom and gloom? No, those are your friends, not mine. It’s your fear of doom, that causes you to be so callous. Should we be surprised that nobody is criticizing the networks for allowing O’Leary to whine on national television that “the only thing that matters in life is money”. This is what people are hearing, this is what young people aspire to?

And my idea of capitalism is far out? No, buddy, I agree we don’t have capitalism in Canada, the version portrayed in the movies and on the MSM is not reality. Instead we have exclusive clubs, gangs, and mind control. Capitalism must be inclusive for everyone. In true honest capitalism, central banking is not necessary. That is the dirty little secret.

#90 disciple on 11.01.11 at 10:49 am

You want to work hard, work smart, earn the trust of your fellow man, dream big, produce, build, create? Excellent! But is that what our educational system is helping bring about? That has an easy answer. You see, that is what capitalism is. That is what we need. That is what we don’t have. What we have is the belief that the evil potential of the human spirit must always be kept at bay through a central authority. Pure nonsense. It’s an excuse and cover for the evil practice of mind control.

True and lasting success is built on community trust, not individualistic greed. It does not involve a central authority, corporate secrecy, or unequal reciprocity. It involves simple fairness. You may not want to bake bread, so leave it up to someone who does. This is the essence of capitalism. Competition is good for everyone involved in the system. Not because it weeds out the weaker link, but because it adds synergy to the creative process to eventually create breakthroughs. Most people look at it through their distorted education, so they cannot see clearly the intended goal – to know thyself.

#91 Aussie Roy on 11.01.11 at 10:52 am

Aussie Update

“CHOICE” – The people’s watchdog

Real estate’s influence on newspapers

Should you believe everything you read in the property section of your newspaper?

CHOICE investigates.

Page 1 – The big sell

Real estate sections in newspapers seem to be getting bigger, despite the fact that print media advertising revenues are steadily declining, along with circulation figures.

Through this investigation, CHOICE has found the distinction between advertising and editorial in the real estate press is largely absent. The industry has argued that the property section is commercial, but this distinction may not always be clear to consumers.

Vested interests CHOICE has found examples of real-estate industry professionals portrayed as ‘everyday’ men and women in positive property market stories.
Perks including favourable profiles and overseas junkets, provided by newspapers in return for real estate agencies reaching sales targets.

No room for criticism The relationship between media and real estate is apparently so cosy in some instances that big spenders are kept happy at all costs. – Four pages

Choice Australia

#92 refinow on 11.01.11 at 10:58 am

#60 Kevin… You are missing a few other items as well. When have you ever seen condo fees remain stagnant over a 5 year period.. Likley a $100 a month increase over 5 years….Property taxes on a $300,000 condo would start out at about $3600 per year and over 5 years would likely increase by at least another 100.00 per month. Heat and Hydro is showing the possibility of close to a 60% increase, so oops there goes another $100.00 per month.

Food and gas prices will also rise again a conservative $100.00 per month.. So now we are up another $400.00 per month plus your $335.00 so that is now $735.00.

These are of course after tax dollars we are going to use to cover these increases so gross up by atleast 25% so now we are are at $918.75 per month increase X 12 = $11,025

Still sounds doable?

What about her car that is now 5 years older…. Oops ther goes another $450.00 per month.

Now she needs to get a $17,775 raise….

Roll in a few credit card balances over the next 5 years, and we might as well call it an even $20,000 increase in her salary to keep her nose just above water and maintain her middle class status.

Okay now I am bumming myself out.

#93 Young Old Fart on 11.01.11 at 10:58 am

How many Mr. O’Leary’s are there on this blog, I wonder?

OH OH…..YOOOOOHOOOOOO!!!!!!!!!!!!!!!!!!!!


#67 disciple on 11.01.11 at 9:12 am

#54 Old Fart… thank you for helping to create the biggest bubble ever… real generous of you. Enjoy your millions in South America. :) :) :) And your advice to follow in your footsteps is also appreciated, as I’m sure it comes from the deepest, most sincere part of your heart. And I’ll take your word for it that you don’t care if anyone agrees with you. Because of course, that’s the reason you are posting on this blog.

OH…..I’m sorry……you were saying?


#68 bigrider on 11.01.11 at 9:13 am

#54 Young old fart.

You should buy some RE today ,at today’s prices and see if you get same doubling rate over the next same time period as before.


I did…..and it will. Last purchase was new house for 250K that is situated less than a km from homes going for a Mil. In 20 years, what do you think it could be worth?


#76 Katie on 11.01.11 at 9:41 am

Good for you! You are on the right track!

Contact Garth and put in the subject line: Private and Confidential! He is the guy you want managing your money!


#79 disciple on 11.01.11 at 10:04 am
Some inside info follows below. I can’t reveal my sources so don’t bother asking me.

Your buddy from Tim Hortons who saw it on Global???
How is that VW of yours running? ;o)

#94 Aussie Roy on 11.01.11 at 11:05 am

Aussie Update

Govt’s can always prop up the market if it slows.

Can they?.

Building your own home used to be the great Australian dream, but the State Government’s $10,000 Building Boost grant incentive is failing to entice buyers to the market in southeast Queensland.

Today marks the halfway point for the six-month program and the State Government has only approved 379 ($3.8 million) of a paltry 1113 applications – sparking calls from builders to increase the amount of the grant.

Building approvals at a 10 year low.

#95 neo on 11.01.11 at 11:06 am

Garth, I believe you were saying I have no idea what I was talking about.

Well the VIX is back at 36 now two days after your ill timed post that I pointed out for various reasons that I am being proven correct, again. I said it would take 2 weeks so I was wrong about that (Humility)(-:

Neo 1
Garth 0

Two days? Seriously? — Garth


Didn’t your 20% drop in the VIX take like 2 days. Yet you felt compelled enough to write a post indicating the worse was over and full bull steam ahead? You can’t have it both ways. You are a balanced portfolio investor. Why do you even care about a 2 day move like you are a day trader and make sweeping proclammations about the deriction of the market based on a weak indicator when you really should be paying attention to the credit markets (bonds and CDS) to get a real sense of things as an investor and not a trader. Seriously.

My post reviewed market activities since the beginning of August. Two days? Seriously? — Garth

#96 raider on 11.01.11 at 11:18 am

A funny story for HAM and real-estate… When is that going to happen in Toronto & Vancouver XD

#97 Tony on 11.01.11 at 11:35 am

#40 T. on 11.01.11 at 1:26 am

Just sell all your Canadian real estate and rent. You don’t have to remember much else.

#98 Ronaldo on 11.01.11 at 11:36 am

#40 – T – “As I watched the commercials between my favorite TV shows I took note of a walmart ad promoting the fact that over the Christmas period they are bringing back “layaway”. ”

T, I had forgotten about that scheme until I read your post. I recall my mother talking about the “layaway plan” she had with Eatons back in the 50’s and 60’s. Being on the farm with 6 kids, not much money for Xmas presents so the “layaway plan” was what was used. I think she also called it a “revolving account”. The problem was, it took her 21 years to finally pay off the balance. She was 45 at the time and I remember her saying, “I finally paid off my Eatons account”. Can’t imagine how much interest must have been paid on it in all those years.–wal-mart-revives-layaway-plan

#99 Ronaldo on 11.01.11 at 11:41 am

#47 – Bigrider – “Really, the greeks have the gaal to hold a referendum on Euro bailout plans.”

Democracy in action. When the decisions are too tough to make you throw it out to the herd so that when the SHTF and things go to hell in a hand basket, you have someone to blame.

#100 Van guy waiting on 11.01.11 at 11:49 am

Vancouver sfh up in october???

Look at sales, then prices. — Garth

#101 Dan T on 11.01.11 at 11:50 am

What the hell is up with Greece?

#102 Peakoilist on 11.01.11 at 11:52 am

#73 Moneta
you’re becoming more momma bearish as of…

#103 disciple on 11.01.11 at 11:54 am

Some of you yesterday scoffed at my notion that money used to be notches on a stick. But it’s true. It also used to be blocks of salt, from which we derive the word, salary. It can take any form, but what is verily being traded, is trust, hope, kindness, encouragement, reward, celebration, and many other things that represent the fullness of life, of consciousness, of sound mind, a piece of God Himself. I’ve come to understand, as I’ve shared on this blog, that the original sin was in twisting this understanding of God and money.

#104 Form Man on 11.01.11 at 11:57 am

Aha ! ‘Devil’s Advocate’ reappears !
Obviously was unable to locate his missing anatomy parts, so once again attempts some sort of diatribe, ignoring facts and wandering around in the murk of his right wing ideology.
It is certainly true that the deregulation of the mortgage industry in the U.S. began under the Clinton administration. It was given real momentum, however, by George Bush Jr. Combined with interest rates that were lowered to juice the economy after 911, the stage was set for a bubble, and we all know how that ended. Harper and Flaherty, being great fans of all that George Bush ( and Ayn Rand ) championed, quickly followed suit when they took power in 2006. Because the Canadian mortgage industry is heavily backstopped by CMHC, H and F have been able to blow Canada’s bubble even bigger than America’s ever was.
That you can somehow believe that we are all better off for this deregulation, indicates the immensity of your delusion. Dismissing criminal behaviour ( fraudulent liar loans etc ) as ‘good old free enterprise’ is the hallmark of the unethical.
Kelowna, bastion of right wing dinosaurs, serves as a great example of everything wrong with your thinking. Why is this Conservative city suffering such a dismal economy ? why did the bubble burst here first ?
All taxpayers (and Canada’s economy) are better served by prudent, (and enforced), regulations in the finance industry. That is a fact, not an ideal.

#105 Peakoilist on 11.01.11 at 12:01 pm

#78 eaglebay – Parksville
I watch Kevin’s show quite regularly..prefer the momma bear Amanda(she has the heart there)
a few months ago he declared how he is heavily invested in China..basically, as long as he’s making a huge killing, he doesn’t care that many Chinese are still eating rice and hunting rats.. straight from his mouth on national TV.
I know a lot of that is just TV theatrics, but under it all there’s a lot of truth…so you’re right ,no guilt there.

#106 Ronaldo on 11.01.11 at 12:02 pm

#61 – Young Old Fart – exactly, if the ratio to income for rents was the same as back then…..same as ratio to income for houses…..what took .3 times (one monthly income) to hold a mortgage back then now takes .7 times (family income) to buy the same thing in Vancouver. I suspect that rent would be much less than that, maybe $2000 or .4 of monthly income vs the .2 back when I was renting. Renting still far better deal.

#107 Ronaldo on 11.01.11 at 12:22 pm

#61 – Young Old Fart – my curiosity got the best of me so I googled the address of the apartment I rented back in 67 for $126/mo and according to the link below, the rent today is $910.00. So, $1000 was pretty close and based on a salary of $60,000 today which would be pretty close to what it would be for the same job back then, we are looking at .18 of monthly salary for rent. Cheap, Cheap, Cheap.

#108 wetcoaster on 11.01.11 at 12:28 pm

Why doesn’t Canada just buyout Greece and put it on the CMHC tab ? What’s another 700 billion at this point ? We’re good for the hundreds of billions already on the CMHC books right ?

Then we could all have instant citizenship with tax free deals galore and we can all retire at 50 with a full pension. No wonder Carney thinks this referendum’s a great idea.

#109 Bill Gable on 11.01.11 at 12:29 pm

The Greeks have really thrown a wrench into the Markets.
I still think we have choppy water ahead, and will for awhile yet.

#110 Robert Dudek on 11.01.11 at 12:32 pm

Generally speaking, one should fear when the VIX is low for an extended period of time: the probability of a crash on the horizon increases.

Having a moderately high VIX is actually a good sign.

#111 Kayak Freddy on 11.01.11 at 12:37 pm

I need to share a little unknown (or don’t care to know) fact about real estate. I have been wondering since 2005 why the markets in North America have been on a tear, yes, the States faltered and Canada kept moving forward – how, why!

Well, I think I heard the most logically explanation a few weeks back. In Toronto (as probably in most Canadian cities) there is one real estate agent in particular of Persian decent who’s been hungry to have as many units on new construction sites set aside for him. What’s his secret, foreign interests. The world outside Canada has political strife, unbalanced wealth distribution and a newly added factor, lack of attainable resources (drinking water). Well, this agent has thousands upon thousands of eager clients who will buy condo’s in cities like Toronto. They “Invest” into this country which provides them a right to become a Canadian Citizen – Now, they have no immediate plans on relocating while their source of income derives back home. So, they will rent out these units to cover costs (not that it really matters, it could sit empty).

So now I see the domino effect, as Condo’s sell at ease in Toronto, those living within the city are slowly getting priced out and are forced (such as myself) to buy on the outskirts – if you look at historical rates of home ownership – how has the last 10 years been such a dramatic uptick – well, at the same time the government has introduced the “invest in Canada and receive your free citizenship papers” act.

What most people fail to realize, this country is a political oasis compared to most parts in the world, we have plenty of land and most importantly, resources, where we will never go to war over drinkable water or worry about crop depletion.
Call it what you want, yes the market needs a correction – but I have been reading comments since 2005 – and the party just keeps going on. I am not telling anyone to go out and buy – but those holding their breath for a return to normal market conditions will be holding for some time….

#112 Boycott on 11.01.11 at 12:41 pm

Looks like Greeks don’t want to pay the other 50% too…
Smart move ??

#113 Timing is Everything on 11.01.11 at 12:41 pm

#12 Katie…

#1 People will always try to persuade you to their point of view because that is what (all) they know.
#2 Take full responsibility for your life and your destiny will be created by you.
#3 It’s never too late to make a better decision.
#4 This pathetic blog is for entertainment purposes only.
#5 KD builds character.

#114 Devore on 11.01.11 at 12:50 pm

#54 Young Old Fart

I do not know any millionaires that rent. Period!

That’s great, if you’re a millionaire.

I think you got your cause and effect reversed.

#115 neo on 11.01.11 at 12:50 pm

My post reviewed market activities since the beginning of August. Two days? Seriously? — Garth


Don’t backpedal now, you placed the emphasis on the next 30 days NOT the past 90 days.

This is what you wrote:

“It’s called the index of fear. The VIX measures volatility or, more precisely, the expectation of market uncertainty over the next thirty days. Investors gauge the craziness and risk of the world, then forecast how much the S&P 500 (the broadest stock market index) will move over the coming month.

This may sound decidedly unsexy, but it matters. The VIX has just plunged as never before. Check this out:”

You went on to point out the 20% drop the past two days was “the greatest amount on record” and would be a precursur to a market rally going forward. Your conclusion was hyperbole and I pointed out why and I was correct as the markets have spoken.

#116 Fabrega on 11.01.11 at 12:50 pm

#79 Disciple & #80 Kilby

Victoria is a disaster in the making. Food and everything going up. Frozen or stagnant wages.

#117 young & foolish on 11.01.11 at 1:02 pm

“You do not have to re-roof a preferred or fix the toilet in an income trust. — Garth”

Good thing everybody does not agree, or the only rental units available would be with social housing!

BigRider …. buddy, your wealthy investor with the paid off house and 1.2mil in assets would use leverage to buy investment property (never his own cash)

#118 fancy_pants on 11.01.11 at 1:04 pm

move over Sherlock, we have the Hammer (MC)

decipher this into a weather forecast: a mix of sun and cloud with a few localized showers. Warm with a chance of frost.

And really when he gives this comment?

“People should look at their ability to service [debt] at a more normal rate of interest,” Carney said.

Thanks Peter. Stop crying wolf and maybe people will listen.

#119 Makaya on 11.01.11 at 1:06 pm

Yesterday, we had an exchange about the VIX. I said:

“VIX is, like the majority of indicators, a lagging indicator, which means that it describes what happened in the past and doesn’t predict what will happen in the future.”

To which Garth humbly replied:
“The VIX indicates expectations of volatility as an index option on the CBOE. It is therefore not a lagging indicator. Everything you said after that is moot.”

And in the post, Garth wrote:
“Today the Vix has slumped to 25. In fact, last week the index of fear withered the greatest amount on record, dropping close to 20%. The doomers drove themselves home to the suburbs.”

What happened today?
The VIX has jumped 22.36% (!) today, at 36.66. This jump is a reaction to the Bankruptcy of MF Global and more importantly, to the decision of the Greek Prime Minister to organize a Referendum on the EU Bailout.

As I said yesterday, the VIX is a lagging indicator. The future can’t be forecasted with data from the past. Today is the proof of it.

The VIX is an option index. Period. — Garth

#120 Beach Girl on 11.01.11 at 1:13 pm

Kinda pissed off today, all the MCAP crap is going out. Telling me what my property evaluations are. Talked to a neighbour, he tried to fight, end up paying more. I think MCAP should buy my properties for what they are saying they are worth. Bastards, that is out and out theft. Want to drown the “F” in the swimming pool.

Also, there are crazy ads out there, for people to buy their Christmas dinners on a payment plan. What is that? If that were me, I would head down to the nearest shelter and feed the family for free. Probably more interesting company.

They mention Christmas might not be such a giving time this year. The consumer is tapped. Well this consumer only gives cash, and only if you are nice to me. I don’t waste money on cards, wrapping, tape and my time. Might still hit the shelter.

#121 Uh oh on 11.01.11 at 1:23 pm

There goes the shadow banking system

If Europe is fixed, why are people going broke holding European debt?

MF bet $6.3 billion on debt plays. This was trading, not holding. — Garth

#122 Devore on 11.01.11 at 1:25 pm

#107 Ronaldo

That building is 40+ years old, and has barely been updated. If you want a modern look, modern layout, modern amenities (such as in suite W/D) in downtown, it will cost you $1400 and up for 1 bedroom. You have to compare like to like. In 67, that was a nice place?

#123 bigrider on 11.01.11 at 1:32 pm

#93 Young old fart to Bigrider.

The homes going for 1 mill today will be lucky if they are worth same in 20 years. Use 1989 RE correction as your guide. Took 14 years for market to fully recover. This RE bubble has been far worse. In the meantime, make sure you factor in all your costs and opportunity costs as well, you RE humpers never make those calculations properly.

So, your 250k today ;lucky if you get it back in nominal terms, never mind real.

#124 Devore on 11.01.11 at 1:35 pm

#111 Kayak Freddy

Really? All those millionaires buying 400sqft condos so they can one day come back to live out their days in the lap of luxury. That’s the master plan?

#125 Makaya on 11.01.11 at 1:40 pm

First you say:
“It is therefore not a lagging indicator.”

And then:
“The VIX is an option index. Period.”

Why is it so hard for you to admit it when you’re wrong?

The VIX, like the vast majority of indicators, is meaningless because it’s lagging. You used it in your article yesterday to make your point about the end of the crisis until the next one. In your own words:
“So the crisis is over, at least until the next one. (…) So did the Euro disaster, as bondholders take a haircut and the bailout pot grows”.

Well, I guess the euro crisis is not over after all. Too bad the VIX couldn’t tell that to us on time yesterday…

The VIX is an option index. What do you not understand about that? — Garth

#126 bigrider on 11.01.11 at 1:49 pm

Talk about a Real estate deal of the millinea !

Why don’t we prudent Canadians buy all of Greece’s land mass and place the cost on the back of our federal gov’t(er CMHC). After all, according to Young old Fart , RE only goes up in the long run.

They have some beautiful beaches and land masses much better than raincouver.

#127 bigrider on 11.01.11 at 1:55 pm

Garth, sorry bud, but VIX is a lagging indicator. Makaya has it right.

Low VIX ,say 20, think of selling,.High VIX, say 40, think of buying. 80 plus VIX late 2008 into early 2009 meant buying opportunity of a lifetime.

The VIX is an index option. Sheesh. — Garth

#128 Mister Obvious on 11.01.11 at 2:06 pm

Hey y’all. The Greeks called. They want to mull things over a while and get back to us later.

You gotta admire that.

#129 Moneta on 11.01.11 at 2:19 pm

75 Moneta… “Marie-Antoinette’s attitude works 99.9% of the time. ”

what do you mean by ‘works’? I don’t think we agree on definitions
Works for the 1%. 99.9% of the time, the eocnomy works for the 1%. the 99% going up over the last 60 years was colletral damage. LOL!

And in France, after the revolution, the poor got even poorer BTW.

#130 Moneta on 11.01.11 at 2:20 pm

the 99% going up over the last 60 years was colletral damage. LOL!

#131 Makaya on 11.01.11 at 2:20 pm

The VIX is an option index. What do you not understand about that? — Garth

Will you also tell me that the Relative Strength Index – RSI is also not an indicator?

Maybe you should explain why VIX is not an indicator then…

#132 T. on 11.01.11 at 2:40 pm

#55 MarcFromOttawa

Do you actually believe that people who use a plan like this are using their credit cards less?

If people were that smart things like this wouldn’t be necessary because a) they would be able to get a line of credit from their bank at a better rate then what walmart offers or b) they would do the responible thing and put money aside in a sack each month to save for Christmas.

There is a reason why deparment stores offer credit cards and financing plans, they know people are going to keep living beyond their means and consuming as much as possible and that they can make huge profits of the intrest charges.

#133 Marc L on 11.01.11 at 2:43 pm

Anybody else think Justin Trudeau is an ass wipe?

#134 Young Old Fart on 11.01.11 at 2:44 pm

#123 bigrider on 11.01.11 at 1:32 pm
#93 Young old fart to Bigrider.

…In the meantime, make sure you factor in all your costs and opportunity costs as well, you RE humpers never make those calculations properly.

No problem there. Its a beaut, brand new in Mexico, by the beach and costs $2300US all in to run for a year!

And just to be clear…..I don’t “hump”RE. I am not a realtor nor work anywhere in that field. I just made a good part of my fortune with it! Right place at the right time I suppose!

#135 Young Old Fart on 11.01.11 at 2:59 pm

#126 bigrider on 11.01.11 at 1:49 pm
… After all, according to Young old Fart , RE only goes up in the long run.


So tell me when it has not? In the long run?

The problem here is all the doom and gloom! I heard that shit in 82, in the early 90’s, tech crash and now after the recent troubles.

Now people are whining because they listened to all that crap and didn’t buy when they should have or wanted to and missed a run. I have read about people that had wanted to buy back in 08 but held off. Had they bought, locked in for 10 years with a proper budget they would not be nail biting now!

I’m not saying what to do because I dont give a shit what other people do. I have tried to give advice to close friends but they don’t listen either for whatever reason. I can totally see Garth just shaking his head at some of the comments, maybe even mine. I am not the smartest cookie in the bag (although my IQ was tested twice at 136) but I know what has and still does work for me. The secret is hard frickin’work! I learnt it when I was 10 years old. There was something I wanted bad and asked my Father for it, he said no problem, can you pay for it? He said that he worked to put food on the table and pay the bills. If I wanted something special I should go find work and earn my own money. CLICK!!!

At 11 I had a big paper route and was mowing neighbours lawns ect ect…. Today I see parents handing everything to their kids and then wonder why they are complete f#%kups and can’t handle their money…..

#136 DM in C on 11.01.11 at 3:11 pm

Wow disciple — 11 posts today and counting — you must be looking to unseat DA — don’t you have a life?

#137 Foggy on 11.01.11 at 3:15 pm

Re 63 S-J:

“Life is looking rosier for N.S.

I live in Nova Scotia btw and am well aware of the ship contract for Halifax. And I also agree with others that the spinoff will be more like 20% to benefit NS, and the rest will be outsourced elsewhere (steel plate, engines, engineering etc).

What I was getting at was Garth’s take on this and where would be the opportunities in the future in Nova Scotia. For example – if retiring from BC/Ont, buy in the Annapolis Valley and have a nice wad of cash left over to live on. Or maybe not. Maybe taxes will go up sharply to fund old infrastructure to keep up with population growth. Or not.
I thought by Garth’s specific reference to NS he might expand his perspective on that. Every other opinion has been from the forum members or the media, but not him.

Patience. — Garth

#138 Ronaldo on 11.01.11 at 3:29 pm

#122 Devore – “That building is 40+ years old, and has barely been updated. If you want a modern look, modern layout, modern amenities (such as in suite W/D) in downtown, it will cost you $1400 and up for 1 bedroom. You have to compare like to like. In 67, that was a nice place”

It was alright, not great. It’s a concrete building. What can you do to make it look any better…….so you slap a coat of paint over the drywall and change the appliances and fixtures…big deal does that make it worth $400 more…doubt it anyway at $1400 it would still be cheap rent at .28 of salary.

Let’s do another comparison:

Bought new condo in N. Van in Dec. 69 for $20,800 PIT & condo fees = $210/mo. .31 of salary. Interest rate 9.5% 14.4% down.

Today – $469,000 (2009 price) PIT & Condo fees = $2500/mo (approx.) 25 yr amort 3.89% 5 yr fixed assuming $400,000 mortgage .50 of salary (todays $’s). And that unit is 41 years old. Seems the dollar has lost some ground here hasn’t it.

Or we can look at another comparison across the bridge near main and 22nd on a 1920’s tear down supposedly valued at 1.2 mil. Same house back in Dec 69 would have sold for around $18,000 and with little or no updating. What makes this one so special? HAM money?

#139 pessimist on 11.01.11 at 3:32 pm

#54 Young Old Fart on 11.01.11 at 7:46 am

Here is my take on things, I dont really care if people agree…..just my POV….

I do not know any millionaires that rent. Period!

There are two in our development of ten units. And we’re not talking in some big city – we’re out in nowheresville. Both got that way through business, not real estate.

You don’t get to be (and stay) a millionaire by throwing away money on things that simply aren’t worth it.

My rental month to month costs are less than 50% of costs of owning the exact same place. Plus I have no expenses to get out of the place. No realtors, no lawyers, just movers.

Just because most people who don’t have money are renters does not mean that all renters don’t have money.

#140 GTA Girl on 11.01.11 at 3:49 pm

I agree w/Devore. Kayak Freddy? Are you also referring to the former disgraced Iranians living in Montreal after their banking fiasco?

Maybe truth to some of the units being sold to outsiders. But buying property in Canada doesn’t get you citizenship. It’s cash/business that speeds up process. A 400sqft condo doesn’t get you a Canadian passport.

The tiny hotel room sized condos are being sold to speckers. The recent volatility of the markets have fueled developers sales teams into spin masters with many retirees, in all communities.

I agree that there must be more that meets the eye w/the vast overbuild and false stats coming from RE crowd.

But it can’t go on and isn’t. Especially when comparing a new planned condo to a resale of a older condo of bigger size in the same area. Older condo resales are going for what vie seen, 20% less. A few old condos in NorthYork are selling for $400/sqft, while new development condo is asking $700/sqft min.

The scam is in the new developments with teeny living space. As though we’re Japan in their glory days. Next developers will be touting the cool hippness of sleeping in a tube bedroom and selling shared communal washrooms.

Resales of condos older than 8yrs are showing the actual worth. Smart buyers are looking at building’s history, maintenance records, financials and board.

The horribly rundown condos near Islington/finch cannot even sell for $50k. Many of these were bought in the mid 90’s for unbelievable $150 k.

These green glass sloppily built developments with their closet sized bedrooms will be an albatross. Tarion will be overloaded, specker run condo boards will be rife w/financial irregularities and lawsuits.

Calling yourself a “Developer” will be on par w/ambulance chasing lawyer.

#141 Ronaldo on 11.01.11 at 3:49 pm

#122 Devore – further to my last post to you. If we were to apply the same interest rate that I paid when I purchased that N.Van condo in 69 at 9.5% it would require .76 of my (gross) salary (todays dollars) or entire net salary to own the same unit. What does this tell you about housing prices and salaries today. It tells me that either the wages are far too low or the prices of the housing is far too high. Guess which one will adjust?

#142 Lorne on 11.01.11 at 3:55 pm

#7 Dan in Victoria
I am also looking to buy up island…and have been patiently waiting. Just wondering where you found those places…and anything else you can tell me…like mls #?

#143 Realitybytes on 11.01.11 at 4:13 pm


Greece should move from the Euro to the Ouzo.

It’s laughable. Over a year now… OVER A YEAR… headline recycling at its best…
It’s fixed
It’s broke
It’s fixed
It’s broke

If I thought there was anyone in the world with this good of a sense of humour, I’d swear it was scripted.
It’s almost enough to make me strap on my tinfoil hat, before I bend over for another type of strap on.

#144 westopia on 11.01.11 at 4:23 pm

“Greece is yesterday – Garth”

LOL! Tell that to somebody with an index fund today. Good on Papandreou for putting it to the people to decide if they wish to be slaves to the IMF.

An index fund holder is not a day trader. Get a grip. — Garth

#145 Van guy waiting on 11.01.11 at 4:34 pm


“Look at sales, then prices” — Garth

I did Garth. 2300 units sold, same as oct 2010. I’m not sure how accurate these #’s are, but we will see in a couple days.

#146 rana on 11.01.11 at 4:35 pm

can you please speak to the millions of stupid women out there who talk their even more stupid husbands/partners into buying homes they cannot afford?
You know the women who claim that raising children is a full time job and they need large homes to “raise” their children. They cannot possibly fathom going back to work; how can they manage work, kids and whatever else they do at home?
I wonder if these women know that children grow up and become (or should become) independent young people who go to school, and are at some point or another capable of caring for themselves?
At best a woman could claim that she would have to stay home for 5 years to “raise” her child- what do you do after they attend school for 6 hours, what happens when they are 10, 11, 12 and want nothing to do with you other than “Mom, I need a ride.”
In any case I tend to see many women who need to keep up with what thjey see their ever so smart, beautiful and successful neighbours are doing- getting married, having 2 or 3 kids, stop working and getting into a whole bunck of debt to buy a house to “raise” their children.
Ignorrance or arrogance? Really a bit of both.

#147 bigrider on 11.01.11 at 4:45 pm

#127 Garth to Bigrider. ” The vix is an option index.Sheesh”

Yes it is but you implied yesterday that a low reading, or declining reading on the VIX since August meant that fear was abating which indeed it was. Your implied wording in your post meant that the ‘doomers’ were wrong to be fearful.

I would argue that the lower the VIX goes the more fearful you should become. Hence the decline in the vix since August and the renewed selling yesterday and today.

VIX up today and yesterday during selling. Start looking at buying.

Lagging. “Capice paisano ” ?

#148 prairie gal on 11.01.11 at 4:53 pm

#54 Young Old Fart:

My significant other is a millionaire and he’s also my tenant.

#149 prairie gal on 11.01.11 at 4:57 pm

Full disclosure: my millionaire significant other does own real estate – not in Canada, though. When he came back to Canada last year his family suggested he buy a condo. He took one look at the quality of the buildings and the price and thought they were insane. “Why on earth would anyone pay that much to live on the frozen bald-ass prairie?” I knew right then and there he was a keeper. :)

#150 bigrider on 11.01.11 at 4:58 pm

young old fart #133 and #134.

You seem very riled up and angry. Was not my intention to cause you this.

RE has enjoyed quite a run from the fifties all the way up until now I suppose. The owners of RE and all those who invested during these past 60 years or so, in inflation sensitive sectors, including equities, made out like bandits ,as it sounds you have.

Young OF, you may find that the next 20 years or more may be quite different. Deflationary in fact, whereby all assets decline in value, RE, stocks, everything.

In such an environment, cash, staples, a generator as Garth has eluded too ,will hold there value while RE declines.

Try to understand that RE has had a tailwind called inflation for many years and now the headwind of deflation may be blowing for years to come instead.

Hard work and saving may have gotten the previous generation a lot further than the same quantity of hard work and frugality will get the next generation.

Just saying.

#151 JRoss on 11.01.11 at 5:00 pm

#131 Young Old Fart

So tell me when it has not? In the long run?

Graph here:

If you bought at the peak in 1728 you only had to wait 280 years to break even, not including realtor fees.

From the article

“So the conclusion is that there are ups and downs, but that over time prices roughly follow inflation. To expect house prices to rise much faster than inflation every year over a 10 or 20 year period without reverting down again does not make much sense.”

#152 And in Calgary on 11.01.11 at 5:05 pm

Garth.. Missed the Conference Call last week. Any chance you might do something like that again in the future?

Yes. — Garth

#153 live within your means on 11.01.11 at 5:15 pm

At 5:30 am while watching TV in my bedroom, I heard a noise outside. Thought it might be someone breaking into a car or something. Went to the window and saw an ambulance in front of my neighbours. Woke up DH and went to the living room window. We knew something was up. Another ambulance arrived and then 2 fire engines – with flashing lights – seemed excessive. DH quickly dressed and was met by another close neighbour. Half an hour later they put him in the ambulance. He had complained of breathing problems during the night. His wife wanted to immediately call 911 but he said no. They originally found a pulse and immediately administered a heart drug & (can’t recall the name) & another 2 shots on the way. He died on the way to the hospital. Crazy because they had just been to their FD the day before. He was 64. His other 2 brothers died of heart attacks in their mid 60’s – one this spring, the other 2 or 3 yrs. ago. Am so upset, as they have been one of our closest neighbours for 21 years. We were there Fri. eve. for a drink. Haven’t called Lorna as there have been many cars at their home since this am and didn’t want to intrude.

Sorry for the long post. It’s been an emotional day.

Thank you for sharing. — Garth

#154 bigrider on 11.01.11 at 5:27 pm

Garth, I got approached by these guys below.

They pay 10 to 11% on money you lend them, bridge financing on commercial developments only.

I know of a few people who are involved, although they know little of the firm. These people have received there respective returns of iinterest reliably with no interuptions.

What do think of this type of investing?

An excellent idea for money you don’t want. — Garth

#155 Form Man on 11.01.11 at 5:41 pm

#146 rana

that is quite the misogynistic rant……you wouldn’t happen to be one of those husbands would you……….?

#156 Pr on 11.01.11 at 5:45 pm

I do not know any millionaires that rent. But i do know some Multi millionaires that rent! Period!

#157 Herb on 11.01.11 at 5:53 pm

#133 Marc L,

no, but it looks like you’re one.

#158 bigrider on 11.01.11 at 5:53 pm

#151 Garth to Bigrider- “an excellent idea for money you dont want”

Could you elaborate on why you are so negative?

They advertise aggressively in Jewish newspapers and have many loyal investors..doctors lawyers etc.

My own GP has been involved for many years and has been quite pleased.

Are they, for lack of a better word, crooks?

I have no idea, but in a world awash in excellent commercial lenders (the banks) and tons of liquidity who do you think this company’s clients are? Why would you freceive a return of 11%? Figure it out. — Garth

#159 Blacksheep on 11.01.11 at 5:55 pm

Greece should be giving every one the middle finger, period.
Then start printing Drachmas again. Get sovereign control back.

I don’t think China is stupid enough to purchase more than a token amount of pig bonds.
It’s beyond the ECB mandate but in the end, will print.

Got gold?

take care,

#160 Ronaldo on 11.01.11 at 6:00 pm

#154 Big Rider – something for you to read.

#161 Devore on 11.01.11 at 6:02 pm

#141 Ronaldo

I have no beef with your conclusion that renting in Vancouver is still affordable, regardless of where you want to live. But you can’t compare a new condo rental to a 40 year old apartment. Is it worth $400 extra? Apparently it is, because that’s what people are paying.

#162 Dad on 11.01.11 at 6:19 pm

I guess that makes the truth misogynist.

Or is it that miso… is a meaningless word made irrelevant by White Knights who see any attempt to hold people accountable, regardless of whether cupcake wants to hear it or not.

Keep in mind that post even says “their even dumber husbands”.

Is that this misandry I keep hearing about in blogs these days?

#163 Euro Girl on 11.01.11 at 6:25 pm

146 Rana:
In spanish, rana means frog. Quite an appropiate name for a chauvinist woman-hater. Will you turn into a prince if I kiss you? On the other hand, I think I´ll pass.

Can we watch? — Garth

#164 new_era on 11.01.11 at 6:47 pm

Here is my take on things, I dont really care if people agree…..just my POV….

I do not know any millionaires that rent. Period!


I happen to know 2 and 8, If you include living with their parents and paying rent to their family or living with several associated family members in a giant house

#165 young & foolish on 11.01.11 at 6:52 pm

So many millionaires on this blog! ….. *sigh*

#166 Marc L on 11.01.11 at 6:53 pm

#157 Herb on 11.01.11 at 5:53 pm

#133 Marc L,

no, but it looks like you’re one.


Oh, really good one – I will not sleep tonight – shame on you. How did you come up with such a great response…
You should have your own blog.

#167 Pr on 11.01.11 at 6:58 pm

Greece will default , there is no way out from the debt , the Greeks may kick Papandreu out he is a communist, anyways his father was the worst communist , and they are going to default and that’s going to be the end of the Euro and the Eurozone they will go back to the Drachma , devalue the new drachma by 50 percent. After those event ,next devaluation, will be your house , every were in Canada.

#168 bigrider on 11.01.11 at 7:00 pm

#158 Garth to Bigrider- “… figure it out”

Well, I was actually thinking same thing but thought I might be missing something, or that it was more complicated then that.

If something sounds to good to be true, I guess it usually is.

#160 Ronaldo- Fair enough and link appreciated.

#169 Kilby on 11.01.11 at 7:03 pm

#142, Lorne.

Lots of late 90’s houses (curved top windows, pink stucco) in Parksville and Qualicum Beach in the high $300,000 range (if thats what you like) And lots of choices in the low $400’s. median age in Qualicum is 61 years old. There is talk of closing the high school, these probably affect prices as not a lot for young people.

#170 allister on 11.01.11 at 7:05 pm

#163Euro Girl on 11.01.11 at 6:25 pm you said

” Will you turn into a prince if I kiss you? On the other hand, I think I´ll pass”

I heard another woman say you gotta kiss a lot of frogs to find a prince LOL.

#171 Nostradamus Le Mad Vlad on 11.01.11 at 7:11 pm

An excellent column in today’s Kelowna Daily Courier by David Bond (Economic Letter). The headline is self-explanatory — “Europe could take the whole world down”.

It fits with #69 Kiron — “Pain in Europe will cause pain in the rest of the world too.”
#143 Realitybytes — “It’s fixed – It’s broke – It’s fixed – It’s broke”

What is needed is a catalyst, a starting point where the slippery slope begins, then things topple in quick succession.

The past has gone, it’s water under the bridge. The future remains unknown for a very clear reason — to enable us to learn how to think on our feet, to react to something negative by using the positive, which is freely available to anyone.

So a starting point could be an unexpected cataclysmic event, civil wars, increasing rhetoric re: wars (there are plenty already), bank runs, large bankruptcies, etc.

The thing about life is that no one knows, with absolute certainty, what tomorrow holds, and it makes life so interesting — not necessarily nice, but interesting — how one adapts to life’s changes (evolution).

For a better understanding of life, see #153 live within your means’ post. Condolences to you and yours, LWYM.
“Can we watch? — Garth” — Exhibitionist now?
Rapid Action Appears things may be worse in Europe than previously thought (or the WH), and 3:31 clip Greek govt. collapse imminent; Hidden History Is this being played out right now? 7:59 clip Domino effect, Greece may exit the Euro; 0:45 clip Nancy Pelosi. The less said, the better; Like A Hurricane “Money-junkies are like that. They are addicts and this is how addicts behave.”; Paul VolckerLaughs at Americans not protesting economy.

Civil Unrest Big Brother or Big Sister? Fukushima “Short version: TEPCO was lying. The blogs had the straight dope.”; At last The end of Climategate? David Cameron Another one who wants control of the ‘net; J&J Doesn’t seem to be much wrong with their product; Dictatorship The US is doing to its citizens what Stalin did to the Russians. “The guys telling you those scanners are safe are the same guys who told you Saddam had nuclear weapons!”

#172 Alex Thomas on 11.01.11 at 7:25 pm

Just today the Dow was down over 300 points!

and then we have a former fed chairman laughing at the American public!

#173 live within your means on 11.01.11 at 7:25 pm

#163 Euro Girl on 11.01.11 at 6:25 pm
146 Rana:
In spanish, rana means frog. Quite an appropiate name for a chauvinist woman-hater. Will you turn into a prince if I kiss you? On the other hand, I think I´ll pass.

Can we watch? — Garth


I started to reply to reply to Rana, & said screw it. He’s not worth replying to.

#174 rana on 11.01.11 at 7:26 pm

No I am not one of “those” husbands I am a wife however, and I am a woman hater- a hater of dumb women….. and men.
Like Garth mentioned in his earlier blogs- entitled pricks who think they deserve more than what they have worked for.

#175 jess on 11.01.11 at 7:39 pm

old world MONEY forget the charm

old louisville kentucky see zillow

1330 S 2nd St Louisville, KY 40208
3rd Street Mansion has approximately 8900 sq ft, 12 bedrooms
stabilzing programs for neighbourhoods
neighbourhood stablizer house

#176 Devil's Advocate on 11.01.11 at 7:54 pm

#104 Form Man on 11.01.11 at 11:57 am

I can well understand how someone who has not learned how to compete and must leave to find greener pastures where the pickings are already done and the fruit laid out before you that you might gorge yourself on the bounty.

No one ever said it was easy and it comes especially hard here in Kelowna. This is one tough competitive town – always has been and always will be. I remember when there was but one donut shop doing rather well. Others saw that and soon there was well over a dozen none of which were showing any profit. And then there were but a few again. This was long before Timmy’s. And there are many more such stories. It has a lot to do with the desirability of the Valley.

People from other parts of the country who aren’t ready to retire quite yet come here to “semi-retire”, enjoy the lifestyle and maybe make a little pocket money by plying their trade. They have a little cash behind them and don’t need to have such a profitable business. Unfortunately that unwarranted competition screws it up for those businesses which don’t have the resources to subsidize a hobby. Real estate is a classic example. There are over 22,000 REALTORS in BC that is more than 20% of the 100,000 in Canada total.

It’s competitive –real competitive here in British Columbia. I cannot tell you how many families I have helped move back to from where they came with their tail between their legs because they learnt that the hard way. It is a mean competitive town but there is nowhere else I would rather be.

Ya make yer money where ya has ta and ya spends it where ya wants ta. Kelowna is not the best choice of cities in which you might want to try make money. It’s tough… real tough. As the saying goes “Want to turn your bank account into a million bucks? Come to Kelowna with two million.”

Finally another saying you seem already to have taken the advice of as you ready yourself to leave town “If you can’t take the heat, get out of the kitchen”. Sorry you got a bad taste in your mouth Form Man. But you really cannot blame us for your inability to compete in the free market. Sorry Form Man, I do sense a decent, all-be-it jaded, person behind your words. But you are, clearly, not fit enough to survive this jungle. Beware all others

#177 Smoking Man on 11.01.11 at 7:54 pm

What would I do if I was the Greek Boss. ?

I would take what few billion I had left, I would short, everything and say. I’m going to have a referendom.
Watch the markets tank.

Take my profit and reverse , and say no thats a bad Idea, Market surges. repeat that cycle 6 or 7 times and hello, debt what debt……….

#178 Daisy Mae on 11.01.11 at 8:06 pm

Has it been a long day, Garth?

Ask me later. The Amazons just arrived. — Garth

#179 shanks on 11.01.11 at 8:10 pm

#171 Nostradamus Le Mad Vlad on 11.01.11 at 7:11 pm

#69 Kiron — “Pain in Europe will cause pain in the rest of the world too.”

funny, it seems like Europe has been causing the rest of the world pain for quite some time now (best measured in either centuries or millenia)

#180 Bernie Madoff on 11.01.11 at 8:21 pm

#154 Big Rider

You may have heard of me Big Rider. Funny that you threw out that 11% return because that’s what I promised my clients and they received it for years until…

#181 Nostradamus Le Mad Vlad on 11.01.11 at 8:26 pm

EU leaders try to save bailout deal, Greece “I am going to take a guess here that Papandreou is going to kick out the opposition, declare Greece to be independent of the EU and tell the international bankers to go shove that 11th marble up their sphincters.”; 3:09 clip Student debt over US$1 trillion; Very interesting Ponzi schemes are headed for a bad November. Add to that the tsunami drill on the west coast between Nov. 8-11, the (possible) FCC shutdown of the ‘net at roughly the same time — things are beginning to look like a tossed salad! BoA Screw you (citizens); More PR bullcrap “The baroness is a spook, which may explain why she is suddenly engaging in Russia and China bashing at a time when China and Russia are moving to fill the power vacuum left by the decline of the US and UK.”; SkweeGees It goes with the definition of Boomernomonics; Vicious Cycle in just about anything; 3:31 clip Economic house of horrors; Banks Unabashed greed; Vampire Banks Not sure what proof the alcohol centent is; Pentagon prepares for economic warfare.

EUSSR may be here soon; Libya Nothing like the truth coming out; Cocaine Honduras is the hub; Libya Now the ‘revolutionaries’ are turning on each other; 6:06 clip UNESCO will survive without US’s fiscal obligations; David Cameron As per my last post, Cameron may get his way; Huge Profits “. . . due in part to the skyrocketing sales of death-linked HPV shot Gardasil . . .; Advances UK cops have terrific R&D; DC duplicating itself in Libya; 4:51 clip NATO and the US have completely destroyed Sirte.

#182 Timing is Everything on 11.01.11 at 8:27 pm

#174 rana said “No I am not one of “those” husbands I am a wife however…”

OK, that’s it. Garth, can we watch? Pleeeeze.

#183 bigrider on 11.01.11 at 8:30 pm

#180 Bernie Madoof.

Ya Ya , ok, I got it.

Lots of doubting thomas’s on this blog and here I thought I was the only one.

#184 Timing is Everything on 11.01.11 at 8:46 pm

#180 Bernie Madoff

Bernie, you old dog…Long time no hear. How’s things your side? Did you get that hypertension looked after?

#185 DM in C on 11.01.11 at 8:54 pm


I’m right there with you — Calgary is chock full of those “what do you mean I have to work now that the kids are in school” wives. No use for them whatsoever.

#186 disciple on 11.01.11 at 9:01 pm

#136 DM in Calgary…. Wow, you can count up to 11? Sounds like you have an exciting life…

#187 Young Old Fart on 11.01.11 at 9:05 pm

#148 prairie gal on 11.01.11 at 4:53 pm
#54 Young Old Fart:

My significant other is a millionaire and he’s also my tenant.

So you’re saying he pays you so he can live / sleep ect with you?

#188 Young Old Fart on 11.01.11 at 9:11 pm

young old fart #133 and #134.

You seem very riled up and angry. Was not my intention to cause you this.

RE has enjoyed quite a run from the fifties all the way up until now I suppose. The owners of RE and all those who invested during these past 60 years or so, in inflation sensitive sectors, including equities, made out like bandits ,as it sounds you have.


Nah, I am not angry…..

Yes, I have done well so I worry not about the future anymore. I am pretty much set but thanks for caring….

#189 Terry on 11.01.11 at 9:57 pm

Who is greater fool? the one who bought a house or the who did not buy a house because thinking of housing buble.

It was said that there was housing buble two years ago. Again one year ago. What one will call housing in GTA right now? Any suggestions…..

#190 TurnerNation on 11.01.11 at 11:39 pm

bigrider: run a google search for Concrete Equities

See what you are getting in to.

#191 zeeman1 on 11.02.11 at 3:16 pm

#89, 90 Disciple

Bang on. Most critics AND proponents of capitalism wouldn’t know it in it’s true form if it bit them on the ass.

The possessive of ‘it’ is ‘its.’ When you use an apostrophe, this becomes a contraction for ‘it is.’ Even in capitalism. — Garth

#192 disciple on 11.02.11 at 8:33 pm

zeeman… we are witnessing the end of corporate capitalism, an eroding of the old boys’ club economics. They knew it was coming, so they got busy plundering long ago while the zeitgeist was sleeping.

What we will have very shortly is a Participatory Economics, which allows for and encourages individual contribution but rewards based on the hardship, severity, complication of the work involved. Right now it is completely upside down such that those with an accumulation of nuts, use those nuts to parasitically SUCK the labour and innovation of each individual to their own exclusive ends.

For example, Creativity of the individual and the collective is geared towards maintaining the control by the elite and is concentrated and geared towards ONLY marketing and entertainment (which is just marketing with lipstick), and has produced a healthcare system in which hospitals account for hundreds of thousands of deaths each year. Death by Hospital. Because of loyalty to the bottom line.

Instead, what is politically possible is that we pick up the capitalist ideal from the dustbin of history, and clean it up such that it marries the ecology and well-being of everyone, at the same time that it elevates our collective wisdom and standard of living. Participatory Economics, where everyone is involved in every aspect of society.

Look at unions. They are a completely unnecessary symptom of a disease. They are a reaction to the exclusive economics of the elite, and have come to be used by the elite, in fact, some believe were started by them. I think there is some truth to that. But unions today, tend to target a manager. In an honest system, management is unnecessary, as each person would operate in a self-managed system because they would be responsible for the upkeep of the system. So who would they target for their demands? Themselves.

With great power comes great responsibility. I believe our ancient ancestors wanted us to come to grips with this ultimate dream, before we start to play around with free energy devices and travel the stars.