What can go wrong?

Alex sold his house two months ago for $2.5 million. The buyers were Chinese, from Mainland China. “What else?” he asks. After all, this was West Vancouver. “They wanted our furniture too. We are now renting a furnished house. I have $2,000,000 cash in my account.” Alex, who started reading this blog a few weeks before he pulled the plug, now has a quandary.

Given what happened in the world in the last twenty-four hours, I thought you might be interested.

“My original plan was to wait until prices settled before buying a knockdown and building again,” he says. “But for the last two weeks a feeling has come over me I thought I could never have. Something snapped. I am beginning to hate Vancouver. I use to defend Vancouver to death against the East. Yes, I made lot of money here. But Vancouver is beginning to disgust me. The arrogant, snooty belief that nothing can go wrong here. The multiple offers for homes. The fact there is no industry or decent paying jobs here except if you are a Real Estate agent who drives around in a Porsche and advertises on billboards like a fashion model or actor.”

Alex continues. “Meanwhile we continue to build higher and higher on the North Shore mountains destroying the environment. The Governments have prostituted themselves to the highest bidder, selling citizenship for money and changing the nature of our neighbourhoods. This is not a healthy change. Marine Drive has become gridlocked. Disgusting monster homes with huge retaining walls being built. Everything has become too expensive here and beyond logic.”

Nice problem. Most people don’t have $2 million. In fact, only 0.4% of Canadians do. Most of us have houses, impressive debt loads, scant savings and anxieties. But Alex’s epiphany is worth wallowing in because if the perfect storm now brewing blows doors off anywhere, it’ll be in fatuous, infatuated, inflated Vancouver. Then Calgary, Skatch, The Peg, Mississauga and 416.

Here are the latest reasons to be happy you didn’t just buy a home with 5% down, don’t have all of your net worth in real estate, or aren’t a house-rich, diseased Boomer mulling Freedom 85:

Way, way, way too many of the people in your hood and your city have no business owning a house. That’s the only reasonable thing to think after reading the latest report from the Canadian mortgage industry. If mortgage rates ticked up just 1%, then 12% of families would be unable to make their payments. Presumably they’d lose their homes, forcing those houses onto the market in distress, and help crash property values.

See, F? There are consequences to letting people without money buy real estate, after all.

Speaking of being screwed by basis points, let’s chat about Italy. The country has $2.6 trillion in debt, and a playboy PM who’s a convicted criminal, 75-year-old sex toy and billionaire. Just a few days after we all emoted over Greece, the bond market decided Italy’s toast and sold off its debt so heavily that rates jumped to 7.25%. Just like the house-horny young couples in Milton with big hot tubs and no equity, there’s no way Italy can make the payments after that. Different channel. Same crisis.

The world won’t end over this, but you can count on Europe turning into a zombie economy for at least a few years. This means lower commodity prices, lousy exports for us, and cheaper houses in Alberta (and beyond). Canada is a trading nation, so let’s see how many realtors there are with Porsches and billboards in a year’s time.

Meanwhile, watch America. This is truly shocking. In the last three months house prices fell in 75% of US cities. Down as much as 15% from a year ago in Utah and 18% in Nevada. Worse, real estate is on a death watch now – the number of people saying they intend to buy in the next six months is just 3.9%. Prices are even falling in New York City, where the average home costs $100,000 less than in Toronto. This is what happens when enough people decide an asset is toxic. Like Alex.

More significant is what this does to the economy. As house values fall, all people with houses suffer, but none more than the entrapped. I’ve told you before that 28% of US households (that’s 14.6 million families) now owe more on their houses than the properties are worth – it’s called being under water. As prices decline, this number grows. But consider that to sell a home you need enough equity to pay the real estate fees and to move – about 10%. Based on that, says a mortgage analyst, “over 50 percent of all mortgaged households in the US are effectively underwater — unable to sell for enough to pay a realtor and put a down payment on a new purchase without coming out of pocket. Because repeat buyers have always carried the market as the foundation, this is why demand has not come back. It’s as if half the potential buyers in America died over a two-year period of time.”

This is why F announced yesterday Canada can’t balance its budget.

And speaking of this little paradise, where people actually want to live in Edmonton, seems new housing construction is tanking. SFH starts plopped 9% in the last month, are down by a third since 2009, and running at the lowest level in two years. How can sales be galloping ahead, as we’re constantly told? Because the action has shifted dramatically to the kinds of homes people can afford – condos. Not to worry then? Hardly. Unsold condo inventory is at its highest level in almost 20 years, says Robert Kacviv, of BMO. “If a correction comes” he adds, “condos are looking more vulnerable.”

Did I mention the jobless numbers from Friday – 71,700 lost souls last month? Never mind. Too sobering.

Like I said, Alex. The perfect storm. Stop writing emails. You’re too easy to hate.

228 comments ↓

#1 Peter Goesinya on 11.09.11 at 7:44 pm

first son!

#2 Fiendish Thingy on 11.09.11 at 7:45 pm

Well, I don’t have $2 million, but I do have a chunk of change from the sale of my home that I will be investing in Canada soon…tick,tick,tick…this vulture will wait patiently.

Garth, you’re way early today, you’re going to confuse the “first!” crowd.

#3 Brian C on 11.09.11 at 7:46 pm

First!

#4 Happy Renting on 11.09.11 at 7:47 pm

Last

#5 live within your means on 11.09.11 at 7:58 pm

Alex sounds like a smart guy. On the home front, DH was over helping our neighbour. Her son and wife just bought a house under construction a few streets above us. They’ll stay with their Mom for a mo. or so before it’s finished. They both have well paying, as secure as one can get, jobs and should make out OK. Fairly certain they won’t be paying CMHC insurance.

Night all.

#6 Mr. Lahey on 11.09.11 at 8:01 pm

What Garth is saying ladies and gentlemen is that the shithawks have just swooped in and dropped their loads. The shithawk storm is starting folks, get ready. “Randy pour me some scotch, this is going to get really interesting`.

#7 rana on 11.09.11 at 8:07 pm

Alex shouldnt hate on the city (cause its pretty damn nice here)- he should hate on the peeps that drove Vancouver to this state (Olympics for one- really people thought it was a good idea).
And I am pretty sure “The Big One” will hit and then the rest of the world will be glad they don’t live here.

#8 Dr. Hibbert on 11.09.11 at 8:07 pm

Had F grown a set and administered the medicine years ago the patient would not be in this terminal state. The pain is now going to be excruciating and we have our lovely leaders to thank for pimping ultra low interest rates and a financially illiterate public without any self discipline that swallowed the interest rate koolaid. They tossed Captain Garth out who was the lone voice of reason. This will not end well…

#9 firsssssttttttt!!!!!! on 11.09.11 at 8:09 pm

yeah baby!!!!!!

#10 Onemorething on 11.09.11 at 8:12 pm

Put that cash to work NOW! At least put it in USD for now until you do.

My wife a vancouver native, me a hog town boy cant stand either city anymore. Living in Asia for over 10 years and tropical SE Asia for the last 2+ was the best decision we made after 9/11.

I can tell you bro, a crisp 2M is something you can retire on now in this part of the world. I think most Canadians would rather feel the pain though rather than to do something about it.

This will be true even when the middle class pay for all the debt caused by the 30 years of manipulation by government, banksters, global elite!

But wait dont blame this group for it all, YOU TOOK THE LOAN, YOU TOOK YOUR EYE OFF THE BALL, YOU GAVE INTO GREED!

Anyhow, good move bro! Now you have many options to make more with the RE monkey off your back and the debt goggles removed!

#11 honestweights on 11.09.11 at 8:12 pm

I hate to hate Vancouver because I was born and raised there but when reality sets in, like it did in Alex, it’s the natural destination. The good news is that people can change; the bad news is that Vancouver, in its current condition, sucks.

#12 Webster on 11.09.11 at 8:17 pm

first…

#13 Mark on 11.09.11 at 8:18 pm

First!

#14 Thetruth on 11.09.11 at 8:22 pm

Garth, one of two things is going to happen…

1) real estate in van and t.o. Remains steady due to steady overseas immigration. Outside of these two cities, a melt occurs over many years.

2) a real estate crash like the US southwest occurs. Values in van and t.o. Cut in half in a few years. Massive job losses.

BUT, NO MELT in VANCOUVER OR TORONTO. EITHER A CRASH OR STABLE.

#15 dibbsy on 11.09.11 at 8:23 pm

It’s different in Australia, we have koalas!

#16 ballingsford on 11.09.11 at 8:25 pm

First, I think, but even if I’m not, the problems with Italy and Greece with their money troubles and the Chinese upping the prices of homes in Canada that drives Canadians out of the market is not right.

Even now, I want to eventually buy in the market where I live. I don’t want to live in one of those new homes being built in the burbs of Ottawa, FarrHaven,Orleans, and Kanata.

A few days ago we were at a friends place where they just moved in and I couldn’t believe I could hear the conversation from inside (on an outside windowless siding wall) when I went outside for a cigarette. How do you spell lack of insulation and huge heating costs?

Anyway, a couple of years ago I considered buying a new home in Barrhaven (Farrhaven) and the spouse didn’t want to move there. Now, a couple of years later, she wants to move there because everyone around here is moving there.

WTF?!?!?!

I’m going to stick to my guns and stick around here and hope that what Garth says comes true and I’ll eventually be able to buy a home in this hood!

#17 from kits on 11.09.11 at 8:26 pm

well done Alex…I’ve had a friend in van with the same situation, been trying to convince him to sell. same numbers, same dollars in his pocket

2 million, like winning the lottery! but tax free! gezzz

#18 bridgepigeon on 11.09.11 at 8:46 pm

Garth, I always wondered how you had time to cruise around on your Harley and read all of Nosty’s posts…

No, that’s me writing a blog entry. – Garth

#19 45north on 11.09.11 at 8:49 pm

Alex sold his house two months ago for $2.5 million.

well good for Alex, this is the high water mark

over 50 percent of all mortgaged households in the US are effectively underwater

this is what Mark Hanson said, people can’t move

If mortgage rates ticked up just 1%, then 12% of families would be unable to make their payments. Presumably they’d lose their homes, forcing those houses onto the market in distress, and help crash property values.

which is why Bank of Canada has kept the rates low. I think the Bank of Canada, CMHC and the Conservative cabinet is scared.

#20 Kilby on 11.09.11 at 8:54 pm

Well written today…All makes sense looking at how things are working out. Yes, Marine Drive gridlock is horrible and was not like this only 1 year ago, its changing fast.

Garth, can’t you delete the “firsts”? It’s getting a bit silly now there is a flock of them.

#21 Otto Doppelganger on 11.09.11 at 8:56 pm

I can relate to Alex’ state of mind. I’ve said it before here, having lived in Vancouver for 16 years, the tone in the city is becomingly increasingly polarized.

Most people seem to believe that real estate will either tank or continue to gain in price forever.

Walking down a street, any street in Vancouver has become part spectator-sport (watching peoples’ unique personal interpretations of pedestrian/driver etiquette), part fight for survival (you really, really have to keep your head on a swivel at just about any crosswalk or intersection).

I remember one of Lily Tomlin’s stand-up jokes was something to the effect that they should pair up people in NY who talked to themselves so it at least looked like they were having a conversation with one another.

Vancouver seems eerily similar…an assorted group of folks predominantly obsessed with appearances and looking out for their best interests, living in a two-million strong illusion of community.

#22 bigrider on 11.09.11 at 8:57 pm

Rates on there way down here in Canada thanks to Euro and specifically Italy.

RE prices ,unfortunately, have another leg up.

You will not find a soul here in Canada favouring the financial markets over RE markets anytime soon.

Real Estate roundtable is just rolling over our genuine host unfortunately.

#23 ballingsford on 11.09.11 at 8:58 pm

What’s up with the comments? You can’t see them unless you post.

#24 SLN on 11.09.11 at 8:58 pm

it’s not only in the US that you need a chunk of equity to sell your house to meet closing costs.. the little known IRD (interest rate differential) mortgage penalty is doing the same thing to people with fixed rate loans here in Canada.

class actions are commencing against this usurious bank contortion, however that won’t help anyone who is wanting out right now.

#25 Ronaldo on 11.09.11 at 9:00 pm

From Garths June 15th post

“The house above, at 2556 Trinity Street, frame covered with a coat of stucco, was built 60 years ago. It has two tiny bedrooms, one bath, contains just 940 square feet and is butt-ugly. It was listed in March and sold in two days to a realtor who paid $773,000. Now it’s back on the market, this time aimed at Asian buyers – at the ‘lucky’ price of $888,000.

That’s an increase of 15% in 75 days, and multiple offers are expected. Says blog dog Doug: “It’s one thing for Joe Public to be speculating on real estate, but when realtors are effectively buying and selling to each other pocketing the commissions or cutting them out completely while inflating the price adds another level to the pyramid and one more ball in the air.””

Well, guess what? It’s still for sale. Now for $868,000 and on the market for 205 days. MMMMMM things seem to have slowed a bit in those parts.

http://bchomez.com/2556-trinity-st-vancouver-hastings-east-v897885-homes-for-sale-vancouver-real-estate/

#26 Nostradamus Le Mad Vlad on 11.09.11 at 9:12 pm


Good on Alex. If he were to take that net amount and put it in a half-decent portfolio, he stands to make around $200K / year, and keep 80% or more. His wages are then spendable — keep this dying economy going for a few more years!

From what I have read in this and other blogs, shares are currently 20% or so below market value, so I would adjust your 40-60 split to 15-85, as there seems to be plenty of room for dividend-paying shares to soar.
*
#18 bridgepigeon — Garth is my ghostwriter!
*
#168 Ron — “Perhaps also a warning to China of the consequences if they don’t participate in the EU bailout.” — From my understanding (may be wrong), China is under no obligation to bail anyone out. They have their own problems.

#183 Timing is Everything — “Garth, is this a fetish site?” — Yes, but keep it quiet. We don’t want the P.C. nutbars squirming their way into here and making life miserable for us! This site it 2 much fun for hijinks of all sorts!
*
Update on HAARP’s evil twin, and Rebirth Keith Moon defies the laws of karma for the fifth time.
Update on HAARP’s evil twin, and Rebirth Keith Moon defies the laws of karma for the fifth time.
*
Yes they Cannes? No, they can’t; Wall St. Tax They will find a way to avoid paying it; Omoney Quite clear who funds his re-election campaign; Veterans served the 1% in Fallujah and other places. There was no need for the wars; Lower SS benefits, raise taxes. Guaranteed re-election win! Maryland Tops in millionaires; Merkel Talks on ‘breakthrough’, but to what? The Fourth Reich? Davos TPTB are swimming in their drachmas; Fannie Mae Still can’t control here nymphomaniacal money needs; The Odd Couple Marrying? Chemtrails and derivatives.
*
Fukushima Russian environmentalists are more concerned with Fukushima than we are, but there is nothing anyone can do about it; BP Nice. They blacken the GoM, don’t do a thorough job in cleaning it up, then walk away from it; 4:07 clip Nuke rhetoric; IAEA Same as Iraq; China TV may open US studio; Orwellian State Good call, but it’s already here; Link confirmed between fracking and ‘quakes; Carbonazis win in Oz.

1:57 clip Who remembers The Birds, by Alfred Hitchcock? This is called a mumuration (I think); Pakistan flooding. Where’s HAARP and weather modification? The Betrayal Kiss First para. is excellent, and also explains why politicos are no more than a bunch of whining dickwads; Fukushima Spent fuel pool completely exposed; Ahmadinejad Now may be a good time to re-expose Dimona; 5:14 clip 12K trip across the US in five minutes.

#27 WaitingWon on 11.09.11 at 9:21 pm

According to the CBC News, the BofC plans to cut interest rates to 0.25% in the new year. I gather that the bubble pumpers are getting this one final jolt into the housing prices before the explosion. Glad I sold my Vancouver home earlier this year and am sitting on the sidelines.

The BoC does not plan on that, and will do no such thing. It is the wingy thought of one economist. — Garth

#28 Alan on 11.09.11 at 9:25 pm

Let’s see, Alex was happy with real estate in Vancouver until he sold his home cashed in the big check for 2.5 MM and within minutes made the decision he hated Vancouver.

That’s L for LOSER

#29 Kris D. on 11.09.11 at 9:26 pm

Christine Lagarde came out with yet another “world economy in dangerous phase” quote – Aren’t these warnings becoming blase? Smells like IMF/etc know that things are well beyond that point already, but can’t say it for fear of inducing panic. So they keep making the same euphemistic statement dozens of times.

#30 wtf????? on 11.09.11 at 9:26 pm

Alex is maybe suffering from a delusion about Vancrapper being anything other than a stripmall compared to any of the major capitals around the world where lifestyle is far higher. Advertisers have injected euphoria into Alex and made him think that having 2 mill is a big deal….maybe if you’re surrounded by cretins and junkies…like in Vanpukebucket.

Get a life Alex…….watching your house price go up is not ‘making money’ it’s dumb luck….not smarts……have a good look in the mirror. If I had a nickel for every newly minted ‘entrepeneur’ who came into my office fresh from his grandma’s funeral…well you know the rest of the line. Al baby…..try starting a business….you’ll run into guys like me………Bwhahahahahahahaha….nightmare time sweetheart.

Meanwhile I see the pukes and the parasites in the civic service unions are balking on holding the line on taxes for the citizen while adjusting theri own compensation up up up…….wankers.

http://www.vancouversun.com/news/Metro+Vancouver+mayors+balk+holding+line+taxes/5684040/story.html

Occupy Vancouver….you dumb sh*ts…..get you head out and look at who’s stealing your kids lunch money so that they can fund a ‘lifestyle’ for themselves on your back. If it wasn’t for all the excess pumped into these parasites pockets the schools would be new, hospitals too, kids would have lunch programs instead of eating at the Gospel Mission and the seniors wouldn’t be sneaking down to the food bank. Your union leadership are all paying themselves millions while you’re watching the rain come down on your tents….wake the f*ck up !

#31 harden on 11.09.11 at 9:28 pm

Looks like impeccable timing by Alex. I tend to agree also re. our “arrogant, snooty” attitude that he points out, on the rise bigtime here in Vancouver. In fact the belief largely held throughout Canada, that we’re somehow immune to the rest of the world’s misery, is becoming a growing embarrassment for us all (particularly for those who still insist on sewing a little Canadian flag on their luggage when they travel – a sign of somehow being special? – Arrogant and ignorant more like it).

Garth nails it; “we’re a trading nation” – incredibly, a trading nation that thumbs its’ collective nose at our largest trading partner’s RE misery right next door to us.

All the statistics – whether exports or SFH sales – are lagging… things are already changing in BC – just as they already have in China, another one of our larger trading partners upon whom our financial future depends. Well done Alex.

#32 allister on 11.09.11 at 9:29 pm

Maybe our MSM aren’t in tune, but Chinese officials are calling an ace an ace.

http://howestreet.com/2011/11/china-shipping-downturn-hong-kong-recession-credit-squeeze-prompts-suicides-hk-home-sales-fall-over-50-factory-closure-wave-looms/

#33 Humpty Dumpty on 11.09.11 at 9:33 pm

According to Nigel, we haven’t even seen anything yet…

http://kingworldnews.com/kingworldnews/Broadcast/Entries/2011/11/9_MEP_Nigel_Farage.html

Poor sap, 2 mil in the bank is disgusted and now hates V because his kitty just isn’t big enough to build on the NS and turn it into a profit.

Why don’t you just leave and head to Edmonton.
Its neutral for you.. Since you hate the east also.
There will be one less arrogant, snotty metro sexual whinner here who totally contradicts themselves.
Truly Pathetic…

#34 Hoof-Hearted on 11.09.11 at 9:34 pm

How a Financial Pro Lost His House:

http://www.nytimes.com/2011/11/09/business/how-a-financial-pro-lost-his-house.html?src=me&ref=general

#35 McLovin on 11.09.11 at 9:34 pm

DA your response on the last thread was just sad. Your logic is that because Kelowna prices have been going down for four years then the bottom must be in.

Its as if Kelowna is all alone in the universe. When Vancouver and the rest of Canada has a big correction what makes you think that Kelowna will not have another big leg down?

Pump, spin and write as many motivational quotes as you like. You have proved nothing and I disrespect you now more than ever.

You are the quintessential reason why Realtors are universally disdained and loathed.

#36 Devore on 11.09.11 at 9:40 pm

#21 McLovin

You are ignoring the power of positive thinking!

#37 walter safety on 11.09.11 at 9:43 pm

Today I spoke to a man whose brother recently sold his house in Markham . Three Asian buyers sitting out front bringing higher bids until there was only one at $569.
Bro then goes and buys in Maple for a 100 k more.

Same storyteller this time about his daughters school roommate(asian girl) who never had much money in school ,just graduated and buys condo in T.O for $780K ,her parents from Van will be moving in with her.

Does anybody really know what time it is ?

#38 Timing is Everything on 11.09.11 at 9:45 pm

#212 Echo

BTW, it’s a ‘flock of sheep’…not a pack (That’s for wolves)
If you’re gonna try and insult someone, at least get the terminology correct.

Just 4 ewe…

http://www.youtube.com/watch?v=oCRE9qOgbug&feature=fvwrel

#39 jess on 11.09.11 at 9:51 pm

westernman

westernman

The 1903 “fairy lights” of Marie Currie inspired many applied cure alls until 1938 when those darn socialists
using the Food, Drug, and Cosmetic Act banned radioactive consumer products.

Bill Clinton prescription
http://www.nytimes.com/2011/11/08/books/back-to-work-has-bill-clintons-ideas-for-america-review.html

#40 Tim on 11.09.11 at 9:53 pm

And the stock market has held up remarkably well, despite the sheer ineptitude and dithering in Europe and the lack of progress on the debt and job creation in the States, thanks to the the inbred tea party movement who’s only goal is to Bring the Democrats down. If the stock market hasn’t tanked despite what’s happened so far, I think there is a good chance that we’ll have a rally over the next few months. Today was another good buying day.

F can’t balance his budget, and he doesn’t have the balls to stand up to S. The Neo cons inherited a surplus and pissed it away, racking up a 56 billion dollar deficit. It’s good that we’re getting those 100 million dollar a pop fighter jets, they’ll come in real handy when we have Spaniards trying to steal or fish! We can put them in the new prisons that Harper is spending 9 billion dollars on. Is that because this worked so well in the States? lol I guess they’ll be able to pay for some of this with the 700 positions they are cutting from the Ministry of Environment, you know, the folks who conduct research into global warming, with the aim of improving our air quality

#41 T.O. Bubble Boy on 11.09.11 at 9:54 pm

If Alex is in the top 0.4% of Canadians with his $2M in the bank, where would the buyers of his home rank?

Investible assets. Liquid. Real money. Not real estate. — Garth

#42 NFN_NLN on 11.09.11 at 10:00 pm

#10 Onemorething on 11.09.11 at 8:12 pm

I can tell you bro, a crisp 2M is something you can retire on now in this part of the world.

What do you mean now? Can’t you retire on a lot less?

#43 I'm stupid on 11.09.11 at 10:17 pm

Westernman

Why do people always think that removing safety nets will result in a better society. Look at the good old USA, sure there are many nice parts but wonder into the wrong neighborhood and your dead. This is a result of a lack of social safety nets. You make reference to industry moving to Asia, but you have no idea why. You claim it is because of taxes when the truth is far from it. If this were true manufacturing wouldn’t be leaving the US. The truth is that an advanced economy can’t compete with slave labour, irregardless of tax rates or credits. What will you say next, that child labour is ok?

#44 Makaya on 11.09.11 at 10:18 pm

A must read:
How a financial professional lost his house

“I felt we could afford around $350,000. We called a real estate agent named Mitch, who had signs on all the bus stops: Talk to Mitch! He picked us up in a gold Jaguar, and suddenly we were looking at houses that listed at $500,000 or more.”

“Everywhere I looked, people were being rewarded for buying as much house as they could possibly afford, and then some. There was this excitement in the air, almost like static. I started to think that if I didn’t buy a house right then, I would never be able to afford one.
At moments during our house hunt, I felt in my gut that something wasn’t right. We’d go to open houses for $400,000 homes and see lines of couples in their late 20s — younger than we were — waiting to get inside. I kept wondering where all the money was coming from. How did all these people make so much?”

“We ended up buying the house and paid the asking price of $575,000. (When we tried to negotiate on price, the owners were amused; it just wasn’t that kind of market.)

We borrowed 100 percent of the purchase price. In fact, I was told I could borrow even more if I wanted. I had perfect credit and a solid income that was growing. But even so, when the lender approved us at 100 percent, it was more than I had expected. I remember thinking something like “Wow. I guess if they’re willing to lend it to us it must be O.K.””

” In late 2004, a year after buying the house, we refinanced our mortgage with World Savings Bank, which later ended up in the hands of Wells Fargo, using one of the pick-a-payment loans that let you choose your own payment each month.
We picked the lowest possible payment, the one that added to our balance each month instead of subtracting from it. And we added a line of credit with Wells Fargo.
The extra borrowing power was important, because while my income was growing rapidly it wasn’t enough to support all our expenses. (…)
But in hindsight it is clear that we were spending more than we should have on things like recreational gear and family trips for ourselves and our four children.
It was extravagant, but it seemed modest compared to what some of our neighbors were doing. Our house was the smallest model in the neighborhood (though at 3,500 square feet it was hardly tiny), and we drove a Chevy and a VW. Cori and I and some of our friends had a lot of conversations comparing our spending habits to those around us. How can so-and-so afford a boat? How are people buying new trucks and four-wheelers and 5,000-square-foot homes? Do they know something we don’t know?”

“As for our spending, we told each other that we’d catch up later, as my income and the value of our home continued to rise. As late as February 2006, a comparable home in our neighborhood sold for $998,000. We made the classic mistake of projecting recent trends — even extreme ones — into the future.

Guess what happened next?

http://www.msnbc.msn.com/id/45221933/ns/business-us_business/#.TrsoT_RayxB

#45 dd on 11.09.11 at 10:25 pm

Typical … made his money now he hates the place. Shoulds like an a-hole.

#46 Q on 11.09.11 at 10:26 pm

The Perfect Storm is exactly what’s brewing and about to let loose. Canadians deserve everything the get, as they have been warned over and over, as well as having the rare ability to see the future by watching our largest trading partner (11 x our economy and 67% of our GDP) to the South flounder and drown. When the other shoe finally drops, the lemmings will be left standing, confused like deer caught in the headlights…wishing they’d started a torchlight march on Ottawa years earlier. We have allowed ourselves to be governed by self serving idiots, while we greedily consumed everything that wasn’t nailed down like a hoard of gluttonous locusts…all the while feeling as though absolutely everything was our entitlement.

#47 dd on 11.09.11 at 10:32 pm

…but you can count on Europe turning into a zombie economy for at least a few years. This means lower commodity prices….

You have been wrong on this all along. They will keep on printing euros, dollars, Yen, and Yuan. There is no option at this point. Inflation is really starting to pick up. Traders will keep moving out of currencies and into hard assets for a store of value.

Like they did today? Gold down $32. — Garth

#48 Snowboid on 11.09.11 at 10:36 pm

Devils Advocate…

You confuse anger with sympathy. We are only trying to help you cope with your condition –

http://www.mcafee.cc/Bin/sb.html

It is understandable that working in your industry at a time when all hope seems lost, you see the abyss growing closer by the day.

I have followed real estate in the Okanagan for many years now, and read your many Kelowna blog posts prior to your appearances on Prof. Turners’ RE educational site.

You repeat the same BS over and over, for nearly 4 years. You tell us one year you have sold your rental properties, then talk about them again a few months later.

You liquidated all your assets to move away from Kelowna, yet you are still there.

You basically told everyone who you were a couple of years ago, anyone who matched that with information readily available on the internet knows the classic signs of your condition are apparent.

I have no right to judge you as I am far from perfect – but at least I know when to back off when I am wrong.

You continue to delude yourself, but no one else, I’m afraid.

I apologize for the rant, full moon and all.

#49 sol on 11.09.11 at 10:37 pm

The difference between subprime loans in USA and in Canada is in USA the subprime loans were liars loans where the applicant lied about his/her income and got huge loans to buy multiple houses. In Canada the banks actually verifies your employment and gives the loans against it. I know the banks here counts $ 10 can hr retail job as a permanent job. The standards are quiet low.
Unless there is a mass job loss in Canada, the housing market is not going to correct much, other than the fringe buyer who will succumb to the inflation. Interest rates are not going up anytime soon. As we all know people will hold on to their houses until they can’t anymore.
My conclusion is that if there is really a huge correction in the housing prices then that means the Canadian economy is in the crapper. We will be able to buy cheaper houses but then we might be in financial trouble ourselves. Makes me quiet depressed when I think about it.

You obviously know nothing about US mortgage financing. Come back when you do. — Garth

#50 nonplused on 11.09.11 at 10:41 pm

Nice post today Garth.

Today I want to take exception to your soft-peddling of the crisis in Greece and Italy. First, I will concede it’s not the end of the world, all governments who borrow money to fund non-capital expenses eventually go broke. It’s happened before, it’s happening again. Second, it’s happening there and not here, so no worries for us for at least a few more years.

Here is where I disagree: The revolving debt crisis in the developed world is going to have a major impact on the boomer generation. When these countries go broke, the are not going to be able to fund the retirement and health care schemes the boomers have lived their whole life counting on. Heck, these governments are going to have a hard time keeping the roads working and the police cars full! There will be turmoil. Nobody will care how it affects Generation X as usual and generation Y and the Millennials don’t have much money yet so they will hardly be affected. But the boomers are going to take it in the shorts.

But anyway, it’s something we have to go regardless, because all government debt eventually defaults, save the example of debt specifically undertaken to fund a war and you win the war.

Government debt is unrepayable. The government can’t pay it back. The reason is simplicity itself: They don’t have any money. Governments do not intrinsically have any money save property taxes. Oh sure, they can tax the population to get some money. But if they can tax the population enough to cover expenses, why would they borrow? Just raise taxes now. So why don’t they just raise taxes enough to cover expenses and not run a deficit? Well, some countries do just that but most modern developed countries have social systems the costs of which exceed the ability of the population to fund concurrently. So they borrow. But if you cannot raise taxes enough to fund current expenses, how on earth are you going to raise taxes enough to both fund expenses and pay back the debt? You cannot. So the debt just grows and grows until one day tax receipts fall due to some unforeseen problem that affects the economy, and the debt defaults.

It’s simple really. Don’t lend money to people or governments that don’t have any income. Taxes are not income (except property taxes, and maybe royalties), they are a shared distribution of expenses.

And besides anyway, taxing people to pay debt is morally wrong. The lenders have it coming. What they did by lending to governments in the hopes that the government would extract taxes at gunpoint to pay them back plus profit is evil and they deserve what they are going to get.

When this is all over, hopefully what everyone will learn is that non-capital expenses must always be met out of current revenue, whether you are a person, a corporation, or a government, and anything else is not just stupid it’s morally reprehensible.

#51 Crazy on 11.09.11 at 10:47 pm

According to the CBC News, the BofC plans to cut interest rates to 0.25% in the new year.

The BoC does not plan on that, and will do no such thing. It is the wingy thought of one economist. — Garth

Hey Garth, what would happen if the BoC does cut rates?

Monkeys would fly out of your orifices. — Garth

#52 bsallergy on 11.09.11 at 10:52 pm

Goodness so much hate for one dampcouverite who has finally understood that he lives in an overpriced provincial backwater. There really is nothing like the sight of the north shore from Kits. Ugly condos and houses creeping up the mountains. Glorious!

#53 Occupy Everything on 11.09.11 at 11:02 pm

“Most people don’t have $2 million. In fact, only 0.4% of Canadians do.” – Garth.

So, is that 1 out of every 400 people? What if you NPV teacher’s pensions? I gotta figure each and every teacher retires with a pension that has an NPV (net present value) well north of a million dollars, even if it’s not quite 2 million. And with the risk free rate now 1%, I bet it is closer to 2 million than 1. And not to pick on teachers, but what about all the other civil “servant” pensions? At 1% the NPV on $50,000 a year for life with a CPI index is pretty high.

Heck, what if we NPV CPP? Sure, $1200 a month doesn’t sound like much, but for 20 years with a 1% discount factor it’s up around $250,000 NPV.

Now why don’t we NVP unemployment insurance, welfare, and health care?

See? You really are richer than you think. Much richer. Too bad everything costs so damn much now that everybody has at least $250,000 in guaranteed income.

If Occupy Wall Street really is going to eat the 1%, nobody is ever going to be able to retire. If you don’t have a government or union pension, $2 million really isn’t that much. It shows just how sad of a state we are in.

Investible assets – liquid, in the bank or invested. Not in a house. Not in promises of future payments. — Garth

#54 Occupy Everything on 11.09.11 at 11:07 pm

How about that, it’s 1 in every 250 people. Seeing as many of us are children or students and theoretically have no money, that doesn’t sound so bad to me. And since many people are married and report the assets together, well heck 1 in 150 people might actually own half of 2 million. Canadians really are richer than we think. What are we protesting about again?

Garth, are you sure that stat is right? I know you always source your data, but still. Smells funny.

Are

There are 282,000 people with $1 million in investible assets. Half of that with twice as much. — Garth

#55 Mister Sanity on 11.09.11 at 11:13 pm

#29 wtf???

I don’t think your jealousy could be any more apparent. I didn’t get the vibe that Alex thought he was ‘making money’, just that he was smart enough to cash out at the right time. Lucky that he gained so much equity? Sure – that part I agree with. But definitely smart to cash out. Do you bash lotto winners as well? Probably, since you bash those that’ve inherited their money. Entrepreneurship is the American/Canadian dream and can make you rich. But just because other people fall into their riches doesn’t mean the ones who earned it have also earned the right to criticize their good fortune.

#56 SpaceMonkey on 11.09.11 at 11:18 pm

0.4% of Canadians have $2 million? Wow… that is way higher than I would have ever guessed.
That’s roughly 4 people with $2million for every house in Vancouver isn’t it?

#57 Patz on 11.09.11 at 11:25 pm

By the numbers

US
46 million people on food stamps
14.6 million families underwater on mortgage
14 million unemployed rate is 9% but U6 is 16% (U6 counts everything U1 leaves out like people who stopped looking for work).

US is leading indicator, Canada is trailing (but will catch up).
Can you say Whoopee!

#58 Occupy Everything on 11.09.11 at 11:26 pm

Here is a source.

http://en.wikipedia.org/wiki/Millionaire

Puts “millionaires” at about 0.8% for Canada, so 0.4% for “multi millionaires” seems reasonable.

Folks, we all have at least $250,000 coming to us from the government, and 1 in 100 is a millionaire. We’re not only richer than we think, we are bloody loaded!

#59 Homeless pigeon on 11.09.11 at 11:26 pm

MOLE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! (taunting expression meaning “ha, ha!”), you BC RE bulls and your banker cronies, you tearers-down, crass profiteers, landlord-flippers, house-abandoners, competitive materialists! The reckoning is coming.

#60 french revolution on 11.09.11 at 11:29 pm

garth, you make a good point–that as things get worse, more and more poverty stricken dudes (and dudettes) are going to start hating those who have.

like good ol’ alex.

here’s hoping we can avoid a french revolution, head-lopping fiasco in the years to come.

p.s. fortify the bunker…now.

#61 kc on 11.09.11 at 11:33 pm

Now (today) that reads like the old Garth from …

http://www.greaterfool.ca/2009/05/25/why-is-this-man-smiling/ ….”

I rest my case.

#62 Mark on 11.09.11 at 11:34 pm

Canadian real estate will fall if Lehman 2.0 happens. This time Europe, China’s biggest customer, is imploding. If China’s biggest customer implodes, China stops buying Canadian raw materials. Canadian exports drop and so does the Canadian economy.

Think gold is the solution to all this economic destruction? You better know what you’re doing.

http://seekingalpha.com/article/295567-how-gold-performs-during-a-financial-crash

#63 Jas Girn on 11.09.11 at 11:38 pm

With each passing day, Garth’s predictions are coming true. I have always known that RE prices in most of Canada was an illusion anyway. Growing up in Asia and seeing so many bubbles burst there, I have common sense. Haha.

#64 Mortgage Mark on 11.09.11 at 11:45 pm

Now who wants to get a house 0 percent down? You know you will have to pay a higher interest rate, but folks are saying rates will be going up soon, so you wont have a sense of shock when they do.

Who remembers that idiot? I hope he has fallen off the planet. U-N-BELIEVABLE. Anyways, Ive only been waiting a year, and I hope this correction starts soon. I have bought 15 boxes cocoa so I can warm them up and watch the show. Time to deleverage and start chopping some heads.

#65 Elmer on 11.09.11 at 11:51 pm

I’m surprised you neglected to mention an issue far more serious than Italy or Greece – the Israeli airstrike on Iran which is imminent. Iran has vowed to block the strait of hormuz which carries gulf oil to the rest of the world, and retaliate with its own strike against Saudi Arabia, Israel, Iraq, Kuwait, and Europe. The effects this could have on the markets are unimaginable. Perhaps it would be a good idea to stay in cash right now until the whole thing is over.

#66 Xindai Shan on 11.09.11 at 11:53 pm

Hi Garth,

Great post, but wrong picture. When you reference a zombie economy, you should post the picture of Sophie Zombie – the cute Vancouver doctor that dressed as a zombie realtor for a charity walk. Much better than fat guy on a Harley. :)

#67 JohnnyBravo on 11.10.11 at 12:01 am

Money managers bullish (“Not a bear among them”?), largely thanks to the latest ‘October surprise’. But the market peaks (in March for the TSX, May for the S&P) have not been surpassed. In fact, it’s a clear downtrend since then.

As one analyst points out, October’s action looks like ’73 just before the bear clawed the market down into the abyss of ’74. A call to short the market in October was reaffirmed today (probabilistically). Stop at 1360 S&P cash.

If Greece was a powder keg, Italy is a freakin’ neutron bomb. For Berlusconi to signal he will step down, it must be hopeless. In Italy, he is king. Kings don’t abdicate for mere financial crises. As one market watcher summed it up: “Too big to save. Too big to fail.” Is this priced in? Was Lehman? Was AIG? They said yields of 6% on Spaghetti bonds was the point of no return. Today they hit 7%+.

Europe, as we know it, is finished. They can print money until the ECB collapses from exhaustion, but it’s hopeless. The only chance is to spread the cost globally. But will the rest of the world be willing? Canada already said, “no.” But don’t think for a minute that was the last word. Hide your money. They will be coming for it. Good chance the term ‘Eurozone’ is about to get redefined. If an out of box solution is not found, the only choice is to either crash or burn. Take your pick.

#68 Devil's Advocate on 11.10.11 at 12:05 am

#39Snowboid on 11.09.11 at 10:36 pm

I give up. You are too smart for me. I am no match for you.

#69 Nostradamus Le Mad Vlad on 11.10.11 at 12:09 am

“Monkeys would fly out of your orifices. — Garth” — Thanks for reminding me to check my root canals and more!
*
Adults Only! How money junkies have fun; 2:35 clip Four 2nite’s viewing pleasure, why the dollar and euro are guaranteed to collapse; Foolish Spending Not sure whether this is economic or not, so I’ll leave it here and and this; Gold Price Suppression Help! Help! I’m being repressed! BoA Is there any good news to report about them? Statistics Love ’em, hate ’em.

China Crash RE tanking fast; One Quadrillion Yen Japan’s debt is a tad high, no? Klooless In Cansas or something in that order; Sovereign Debt is the west’s problem, so let the talking heads / spin doctors fix it.
*
NWSO The elite’s plaan for a new world social order; Landfills Cheaper than a funeral; 12:03 clip Using the Arab Spring to control Eurasia; Cluster bombs “Why this is especially evil is that the United States, during Afghanistan, made the cluster bomb sub-munitions with the same color and type face as the emergency food packets being air dropped on towns. So kids who could not read English picked up the cluster bomb sub-munitions thinking they were food and blew their hands off.” wrh.com; Not paying ‘Occupy’ groups send a message to the IRS; 3:37 clip CIA torture? Nah! We’re the good guys!

Arctic This will bring an interesting development to Russia’s view; Odear Obomba But his re-election campaign funds are already overflowing, so it seems he is reliant upon illegal immigrants’ votes; Vulnerabilities Garth, double check the lock on the entrance to the barn door (sorry, bunker); No Honey? Better to go to a Farmer’s Market, or buy it directly from the source; Fructose just as addictive as cocaine; Vitamin D scores again; Harper A majority has turned him into a weird person, alright.

#70 Maxamillion on 11.10.11 at 12:14 am

You think all those wealthy immigrants are coming to Canada to buy your million dollar shack. United States looks to compete against Canada for wealthy immigrants.

http://ca.news.yahoo.com/blogs/canada-politics/united-states-looks-compete-against-canada-wealthy-immigrants-150455114.html

#71 Devil's Advocate on 11.10.11 at 12:15 am

Ever wonder why Garth calls this a “pathetic blog”? He gives ample hint but most do not listen.

Most posters on this “pathetic blog” completely miss their fearless leader’s instruction hearing only what they want to hear and then twisting that to suit their own bias.

I know well how frustrating it must be for him.

#72 1% increase in interest rates on 11.10.11 at 12:24 am

Canada’s house if cards would come crashing down with 1% increase. Do people expect rates to stay this low for 30 years? I know people who are maxed out at these rates. Is it any wonder why realtors post on thus blog in fear? Tic toc tic toc …crash.

#73 EJ on 11.10.11 at 12:28 am

#25 Ronaldo on 11.09.11 at 9:00 pm

“this time aimed at Asian buyers – at the ‘lucky’ price of $888,000.”

Is this really the mentality of these Vancouver speculators? “Lucky” numbers?

A definite facepalm moment. When these people start losing money due to the market cratering, what are they going to be blaming for all the “bad luck”? The fact that their neighbour’s pink flamingo faces East instead of West?

#74 Carp on 11.10.11 at 12:44 am

#16 ballingsford

Barrhaven is a dump of suburbia in the middle of farmland. You might as well go to Kemptville and live a nice rural life.

Just on kijiji there are over 100 (mostly townhomes) for rent. I’d imagine most rentals are that owners can not sell. Lowball them.

In Kanata it is worst. 139 for rent – mostly townhomes and rentals.

I’ve been renting a rural place a year and now a new place (in Carp). see no value in buying a place you can not rent for monthly expenses.

As for new SFH – wow plastic boxes built in days worth 500K+ overlooking the Carp dump .. awesome on a windy day!

As for older homes in places like Nepean or inside the greenbelt – the cash required to fix a place outweighs renting and waiting for prices to fall when all the geezers can’t sell.

Lastly, Barrehaven schools are not rated high with Frazer institute versus Kanata or Orleans!

Lastly, quit smoking, its a waste of money!

#75 Ryan on 11.10.11 at 12:45 am

What happens to the Canadian real estate market when the rates go down to 0%? Does the bubble still burst or does it get even more inflated so that it will burst in 5 years when rates finally go up and totally collapse the economy?

#76 Timing is Everything on 11.10.11 at 12:59 am

Buy low. Sell high….Got it.

#77 BPOE on 11.10.11 at 1:16 am

Folks, everything I say has been proven true. Only The american (small a) and April golden showers disagree.
Folks, this young man made out like a bandit making lots of money on real estate and in his work (LIKE EVERYONE ELSE DOES HERE) . Now he says he hates Vancouver. I GUARANTEE you he will be back. Why? He doesn’t want to be left behind. In fact tonight he is second guessing himself. Folks he writes this because he is WISHING properties to go down. Why? He wants back in
********************************************
I use to defend Vancouver to death against the East. Yes, I made lot of money here. But Vancouver is beginning to disgust me. The arrogant, snooty belief that nothing can go wrong here. The multiple offers for homes
********************************************
Folks, like I’ve been saying in a nutshell America sucks. It’s broke, it’s people are unemployed and they can’t generate enough cash to afford Vancouver. At the end of the day the people of American don’t possess the intellectual capital to afford Vancouver. America squandered their wealth – TRUE FOOLS
******************************
Meanwhile, watch America. This is truly shocking. In the last three months house prices fell in 75% of US cities. Down as much as 15% from a year ago in Utah and 18% in Nevada. Worse, real estate is on a death watch now – the number of people saying they intend to buy in the next six months is just 3.9%. Prices are even falling in New York City, where the average home costs $100,000 less than in Toronto

#78 Devore on 11.10.11 at 1:24 am

#44 Makaya

I felt very much like that guy when I was buying a condo. Wondering how people can be affording to buy all this expensive real estate. I never heard of 5/35, zero down, cash back, 0/40. For nearly two years, I’ve had drilled into my head that Canadian banks were much more prudent than the US ones.

Three years later I sold at a small loss. So much for always going up.

#79 bridgepigeon on 11.10.11 at 1:39 am

65 Elmer. Can’t happen without US approval and involvement. Iran is way too strong militarily fortunately for them.

#80 dd on 11.10.11 at 1:49 am

Like they did today? Gold down $32. — Garth

Yup. One day makes the market. Funny you sound like a lot of the globe and mail writers You and the Globe have been calling a top in gold since $1000. What is it today $1750? Get over it. You are dead wrong – the numbers prove it no matter what you write.

I merely pointed out a wrong premise. Deal with it. — Garth

#81 dd on 11.10.11 at 1:52 am

Oh PS,

There currently are bank runs in Greece and Italy. Customers are pulling their deposits out of the banks. This is not reported in the main stream press, but it is reality.

#82 T. on 11.10.11 at 1:59 am

As I was reading your post I turned to my partner and read the following statistic you posted “If mortgage rates ticked up just 1%, then 12% of families would be unable to make their payments.”

She had absolutely no idea what the impact of this could be and her response was “couldn’t they just make more payments for longer?” I tried to explain that mortgage periods are fixed and that once their rates change this 12% would not be making enough money to make their payments and put food on the table (not to mention that these are probably people who already have 30 year mortgages) I was met with the sound of crickets and dropped the subject.

I raise this because my partner is a very bright person and in fact she recently received her Phd to prove it. The problem is that debt is a part of our culture which makes even smart people do stupid things; so many people do not understand how risky it is to live beyond their means. My generation (25-35) has no idea how the world works having never had to solve a financial problem on our own.

In some ways the 12% are the lucky ones since their choices will be made for them by the harsh reality of the situation. The other 87% are going to be in for quite a lifestyle change…

#83 BPOE on 11.10.11 at 2:05 am

Great News out of Asia and Italy. Bodes very very well for Vancouver
******************************************
http://www.marketwatch.com/story/asia-markets-sink-amid-fresh-europe-woes-2011-11-09

#84 beaker on 11.10.11 at 2:11 am

I had a similar epiphany over 5 years ago when I was at a party with close friends and they *insisted* that you cannot go wrong with real-estate – it always goes up in value… Well something clicked and I had a contrarian moment – I did some research and stayed away from purchasing a home. That person that insisted recently defaulted, nearly lost his marriage and now has bad credit and can only rent now. I pitty the fools!

#85 Daija on 11.10.11 at 2:20 am

Ah Barrhaven ! I grew up kitty corner across the cornfield from Barrhaven. I even remember when Barrhaven Was a cornfield. Manordale was a little haven before the freeway went in, growing up beside the park, climbing trees, that’s what I remember. Many many more houses now. Was all fields and trees then.

#86 Not 1st on 11.10.11 at 2:37 am

Garth, why is it the developers can go full steam ahead building and not worry about holding the bag? Aren’t they the first in line to get crushed when the music stops, like Toll Bros in the U.S. was, who subsequently received a bailout.

http://www.calgaryherald.com/business/Toronto+tower+builder+eyes+three+Calgary+projects/5682105/story.html

#87 jon on 11.10.11 at 2:43 am

What were alex’s cost, did he really buy a house for 300k with no mortgage in west van and hold it for 20 years and pocket 2 million? I am sure he made money but his numbers seem a bit off? what were holding costs for 20 plus years when he might have got a house for 300k in west van?

#88 Morry on 11.10.11 at 2:49 am

Buy High and sell even higher

#89 dd on 11.10.11 at 2:54 am

It is plain, trash the US dollar, all other hard goods go up.

http://goldsilver.com/video/james-rickards-currency-wars-heating-up/

#90 the Phantom on 11.10.11 at 3:56 am

#44 Makaya…

Hi Garth and fellow bloggers:

#44 Makaya…

Hi Garth and fellow bloggers:

One thought came to mind this late prairie evening as I read what the contributor had to say about the rampant materialism so evident in some parts of the country and circles of society.

This reminds me of the gauche insecurity demonstrated by the “nouveau riche”. Dr Roy Vogt (Economist) shared this story with the class in 1994. Seems there was a younger man in a certain neighbourhood who was enjoying a high level of prosperity and purchased a new boat for himself and had it parked in the driveway like many others on his street.

Not too long after, while he was walking outside this young man asked him,” Hey how do you like my new boat?”

Not meaning any harm, Dr Vogt replies, “What, that puny thing?”

It was a joke and not meant to offend anyone but wouldn’t you know, about 24 hours later, the boat that was the object of some gentle teasing was gone and it was replaced by a new boat, a much larger boat; some behemoth that completely filled the driveway of this young man’s house. Dr Vogt’s belief was that the incredible insecurity this man had over the acquisitions he presented was so large that a slight of his possession only prompted him to buy larger and faster.

Apparently just keeping up with the Jones’ is passé and has been replaced by outdoing, out-owning and out performing them at every step so as to preclude some gentle teasing and good natured fun from time to time as well.

To this personal experience and to the story related by Makaya…the only fitting response is the old (biblical, I think) truism that “blessed is the man who wants what he has.”

the Phantom

#91 Bilbo Bloggins on 11.10.11 at 4:11 am

Garth, when you write phrases like “interest rates ticking up 1%”, that’s confusing.
To some it might mean a fixed rate going from 3% to 3.03%.
Maybe you could using basis points instead.
ie. rates ticking up 100 basis points

Anyway, sorry to nitpick. Please do carry on!

#92 wtf????? on 11.10.11 at 4:50 am

Is Greenpeace just a front for the pro Arab oil lobby? You’d be led to think that with all the stupid things they say.

http://www.vancouversun.com/business/Believers+massive+renewable+energy+expansion+smoking+dope+energy+agency/5683793/story.html

Our Hydro bills in Canada are based on what the leaches in the civil service plan on stealing from the taxpayer, not what energy costs to produce. If the anti Canada Greenpeace lobby wants us to shelve the 14 trillion dollars trilion dollars trillion dollars ( get it?) the oil sands is worth to the Canadian economy then where are they planning to raise the money to pour into the civic leaches pensions?

I just paid my ‘hydro’ bill here in BKK…..less than $10 for the month of October…for air, lights and water services…..whats the differance…doesn’t Thailand have to generate all it’s own power from coal generation? The multi billion dollar mega projects for hydro investments made by the taxpayers of Canada go stright into the pockets of the leaches who are all paid six figures and up working for the government ( BC ‘s crown corp had to report having over 6000 in this high end bracket) …thats why I pay $10 a month and you pay a thousand….because civil service unions don’t exist here….and the taxpayers get a big break…….they get to pocket more of their money and live better without beggaring themselves with debt.

#93 gtrz4peace on 11.10.11 at 5:40 am

OK, weighing in — recent US immigrants to Vancouver. Alex should take up some expensive Yoga training with his newfound wealth, and stop “hating” a geographical place that made him rich with no effort on his part. Right…Some people are never satisfied.

It truly is beautiful here. For those of us from frozen prairies the relatively mild Pacific NW weather, the mountains, ocean and giant trees are special. Incredible parks on Vancouver’s North Shore, and prior to Fukishima it was one of the cleanest places in North America overall.

The snobby attitude is a problem, but not all that different from LA, so this may partially be a “west coast” thing. Perhaps after the bubble pops Vancouver may emerge as the sort of Green City many want it to be. Or not.

The real estate bubble and the government selling citizenship to an international criminal cartel? Now that is a problem, but as much to do with the Federal as Provincial governments, at least that is the way we see it.

As FZ used to say, “Stupidity is like hydrogen, it’s everywhere.”

#94 Aussie Roy on 11.10.11 at 6:02 am

Aussie Update

“Slow melt”, now where have I heard that before?.

In the meantime I thought I would provide some charts comparing owner occupier housing finance for existing houses, in both volume and dollar terms, to AFG’s mortgage volume figures as this seems to be a good indicator of where the market is heading in the short term. Obviously these figures are before any effects, if any, from the latest rate cut.

http://www.macrobusiness.com.au/2011/11/afg-vs-oo-housing-finance/

MELBOURNE’S once booming house-and-land market has gone from being in overdrive to a slump in the space of a year.

At its peak in 2010, home buyers were purchasing about 1400 lots a month for homes in new suburbs like Wyndham Vale in Melbourne’s west and Clyde on the city’s south-east fringe.

But now land sales have slowed to about 600 lots a month,

http://www.theage.com.au/victoria/citys-land-sales-plummet-to-sevenyear-lows-20111109-1n7eu.html#ixzz1dIMhTpuh

This afternoon, Roy Morgan released its first consumer confidence survey since last week’s rate cut and it shows a small deterioration. Obviously much of the gain transpired in advance. Will be interesting to watch as Europe descends

http://www.macrobusiness.com.au/2011/11/consumer-confidence-falls-on-rate-cut/

Did I mention the largest mortgage providers in NZ are Aussie banks.

NZ’s housing slide a pointer for Australia?

http://www.theage.com.au/business/nzs-housing-slide-a-pointer-for-australia-20111110-1n828.html

#95 Debt's Dark Embrace on 11.10.11 at 7:13 am

hahahha. You are too funny. Iran would be completely crippled within 24 hours if they tried it.

#65 Elmer on 11.09.11 at 11:51 pm
I’m surprised you neglected to mention an issue far more serious than Italy or Greece – the Israeli airstrike on Iran which is imminent. Iran has vowed to block the strait of hormuz which carries gulf oil to the rest of the world, and retaliate with its own strike against Saudi Arabia, Israel, Iraq, Kuwait, and Europe. The effects this could have on the markets are unimaginable. Perhaps it would be a good idea to stay in cash right now until the whole thing is over.

#96 X on 11.10.11 at 7:39 am

Aside from the desperate need to stimulate the economy at all costs, and in a time of widespread debt problems, it is a little surprising that our government hasn’t done more to protect the public from taking on debt that they will be burdened with potentially for the rest of their lives.

To buy a home with 5% down, borrowed or not, is still alot of leverage, and risk. The minimum down payment needs to rise, so that individuals and families do not have to have their own austerity measures in the future, to avoid losing their homes.

#97 David B on 11.10.11 at 7:53 am

Got a bad case of Christmas Car Fever, having settled well kind of on good quality used one I e mailed my long time banker, just to see how much I could get. I do have lots of L of C to buy new ….(emergency use) in any rate: up to $25K @3% 25.1 to 35K @ 2.75% ….Hello? I am retired even when I was working they would not give me this and approved via e mail!

Looks like I will keep my good ode Honda and save …. so I understand just how people are getting sucked into Real Estate …

#98 Tim in Victoria on 11.10.11 at 8:34 am

“This is why F announced yesterday Canada can’t balance its budget.”

Yet harper’s conservatives have no problem in continuing to spend more than they bring in. Instead of increasing the number of seats in Parliament for example, they should be decreasing them. How about reducing wasteful spending within government?

They always say they have to reduce services and programs. But they never mention their own spending. Let’s talk salaries, tax-free expense accounts, pensions, parties, travel, pomp and pagentry. Reduce it all during these tight times. Lead by setting a good example.

#99 bigrider on 11.10.11 at 8:36 am

Help me to understand…. anyone.

Europe is mired in debt ,yet because of this fact, stocks of companies flush with cash and cheaper than they have ever been since WWII, which are growing there earnings by leaps and bounds, fall in value .

Now, as of today, houses in Canada, equally mired in excessive debt ,continue to rise in price???

I was sitting under an apple tree yesterday and when an apple dislodged from a branch, instead of falling on my head, it floated straight up.

#100 Andrew on 11.10.11 at 8:42 am

If mortgage rates ticked up just 1%, then 12% of families would be unable to make their payments. Presumably they’d lose their homes, forcing those houses onto the market in distress, and help crash property values.

Garth I just heard this am , that rates will be going down in canada .. Sounds like the party wil continue..
Will this mean higher Realestate prices are coming…

Will we ever get a break

Rates are not going down. That was one speculative comment from one economist. There is no substance. — Garth

#101 fancy_pants on 11.10.11 at 8:45 am

grew up in Vancouver and we moved out of the province shortly before Expo86. Housing prices were normal until then. That event was the first pump on house prices there.

Anyways, honestly don’t miss the climate (too wet) as there are no real seasons to speak of. Ontario may have McGuilty but at least it has seasons.

There is no escaping F and MC show though. It may have looked ingenious in their little political circle keeping the economy afloat since 2008 with give away rates and 0/40 mortgages but now what? uh oh. scratch..scratch..scratch. hmm.

Alex, “go on, take the $ and run.”

#102 D on 11.10.11 at 8:57 am

“The world won’t end over this, but you can count on Europe turning into a zombie economy for at least a few years.”

I’m not a doomer, but have you heard about MAED? (Mutually Assured Economic Destruction).

It’s based on the fact that all the worlds economies are very closely tied together, that is something big (like Europe) goes under, so does everyone else.

Definately not a time to own gold, seriously. It won’t hold today’s value in a generational depression. (but it might be worth $200oz)

#103 jess on 11.10.11 at 8:59 am

Χρεοκρατία hreokratía

it is interesting that low rates are now viewed as bad times.
=====

westernman

I fail to see the humour when a boys early education is rape . Are you a distressed security flipper “vulture”
Liberia ordered to pay ‘vulture funds’ over 1978 debt
Author: BBC News
Dated: 26 Nov 2009

The UK’s Odious Debts
November 22, 2010
http://www.monbiot.com/2010/11/22/the-uks-odious-debts/

=====
In international law, odious debt is a legal theory that holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation, should not be enforceable. Such debts are, thus, considered by this doctrine to be personal debts of the regime that incurred them and not debts of the state. In some respects, the concept is analogous to the invalidity of contracts signed under coercion.

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

A consortium of organisations [Jubilee USA Network, Africa Action, and European Network on Debt & Development] scolded the IMF for its failure to reach an agreement to clear the arrears owed by Liberia, a necessary step that allows the country to access life-saving debt cancellation.

“The IMF and its main shareholders ought to be ashamed of their broken promises to Liberia,” said Emira Woods, Board Chair of Africa Action and Co-director of Foreign Policy in Focus, arguing that the country has met all of the onerous requirements demanded by the IMF to access debt cancellation, and yet Liberia has gotten nothing in return.

Liberia’s debt to the IMF, the World Bank, and other creditors totals more than $4.5 billion.

However, much of this debt is “odious or illegitimate” in nature, having been run up by the brutal regime of Samuel Doe, with no benefit to the people.
http://afrol.com/articles/27201

============
Face value ?
has been in sovereign debt, most recently those of Argentina and Congo-Brazzaville, through its association with the ‘Kensington International’ fund. In 1995, Elliott bought $20 million face value of defaulted Peruvian bank debt. After extensive litigation proceedings Elliott won a court award of $58 million for these debts, including past due interest. More recently Elliott bought $32.6 million in loan debt incurred by Congo-Brazzaville, allegedly for less than $2.3 million.[4] In 2002 and 2003 a British Court awarded Elliott more than $100 million for these debts, $39 million of which was subsequently recouped by interception of proceeds of the sale of oil by the Congo to Glencore International, a Swiss commodities and raw materials supplier.[5]

#104 Waterloo Resident on 11.10.11 at 9:02 am

LET THE BIG BANKS ALL DIE, thats the best medicine for us all ! (I’m talking about America here, not Canada.)

America needs to lets its biggest banks fail, it’s a simple as that. If Bank-of-America has problems then the FED should simply let it fail, no more bailouts. Iceland learned from its lesson that its far better to let the biggest banks simply go bankrupt WITHOUT any bailouts and now their economy is on the mend. America’s economy got bank bailouts but the economy is still suffering. A bailout for the carmakers is different because there is intellectual capital and physical machinery there, something that would take decades to replace, but banks are not like that, they are just a pile of debt, something that can be replicated easily.

So, if / when Bank of America goes belly up in the next 12 months, don’t give it a $50 Billion dollar bailout, simply let it go bankrupt and take the entire American financial system with it, in 2 to 3 months the financial system will come back to life healthier than ever before.

Here’s the link to the article that proves what I have just said:

http://news.yahoo.com/key-lesson-iceland-crisis-let-banks-fail-003849604.html?source=patrick.net

#105 Waterloo Resident on 11.10.11 at 9:06 am

You know, a lot of Americans bought a house that they could not afford and now they are sitting in those homes for the past 2 years rent and mortgage FREE ! Those homes were foreclosed but for some reason the home-buyers have never been given an eviction notice.

My prediction is that this will be the exact same thing that will happen here in Canada too, so my advice to EVERYONE is to go out and buy a house they darned well know they cannot afford, and when mortgage rates go up simply STOP MAKING PAYMENTS on the house.

You won’t be thrown out of the house, no, in fact you will continue to live in that house for the next 20 years “RENT FREE” ! That’s whats happening in America and I’m pretty sure that’s whats going to happen in Canada soon too.

#106 TurnerNation on 11.10.11 at 9:09 am

Everyone’s buying BMWs! I have four co-wokers (earning 75-95k range) who got into BMWs within the past month.

A new 335i, a 2 year old 335i (these are twin turbo types), an older 320i, and a new 328i.

Not sure if leasing or buying, but on a no matter what the all in monthly fees for payments, gas, insurance must be closer to $700-800 for a newer 3-series.

#107 CTO on 11.10.11 at 9:15 am

#82 T

“If mortgage rates ticked up just 1%, then 12% of families would be unable to make their payments.”

“my partner is a very bright person and in fact she recently received her Phd to prove it. The problem is that debt is a part of our culture which makes even smart people do stupid things; so many people do not understand how risky it is”

Diddo! My wife the same, she is a CGA, but has no idea about the risk in todays economics. I do not believe that risk management is an effective subject in the business schools today!

As well, the optimism is outragous! Most that have something to gain are spinning “warnings” into positive news, like the line at the top. Example: Susan Pig in todays Toronto Star spins the report into people are paying down their debts at record pace!, with a don’t worry, we have it all under control type of flavour to it.

These reports are the coal mines Canary!

#108 dd on 11.10.11 at 9:41 am

Oh look, the ECB is the market maker for Italian debt. In other words, no one else is buying their bonds. money printing all over again. Watch this move to France next. Gold should do very well in the coming months if this is the only option open to euro debt.

#109 Crazy on 11.10.11 at 9:52 am

Monkeys would fly out of your orifices. — Garth

How RUDE!

#110 Herb on 11.10.11 at 9:57 am

If Ottawa blog dogs think Borehaven is bad, they should have a look at what the philantrophic Greenbergs’ Minto has built in the Avonlea development in Orleans. A cement box in the sky would be preferrable to a particleboard “townhouse” in that rabbit warren.

Tried to deliver something to the daughter of a friend who just “had” to buy a townhouse there, and could not find her house despite having a street name and house number. But I did find claustrophobia. And the daughter of the friend wants out after a few months.

(Did not link to Google Maps because the sat image only shows part completion.)

#111 April Showers on 11.10.11 at 10:33 am

#77 BPOE NOTHING you’ve EVER said has EVER been proven true. You hold all the signs of a narcissistic and delusional lunatic. Again just because you write it it does not make it true. Americans could annihilate us in the blink of an eye if that’s what they wanted to do. But they don’t want to do that. They like us and we share more in common than we give credit to. Truth is we are more American adverse than they are Canadian adverse. See I’ve lived there in several cities like San Francisco, Austin, Seattle and Chicago. Americans are awesome – AWESOME – people contrary to what many of us snoots think. They are a little gruff and forward at times but would give you the shirt right off their backs when it comes down to it. Besides what’s so wrong with someone being straight forward with you? I’ve never met an American who has anything bad to say about Canadians. Its the other way around and maybe this behavior says a lot about us. I had to learn the hard way we aren’t so perfect you know. BPOE is obsessed with Americans for whatever reason and maybe it is just an expression of how badly he wishes he were one himself. You would never be able to pass the U.S. Citizenship test BPOE because you are way too stupid, so you can give up that dream already. Why else would anyone continually compare his home to a completely different country ALL THE FREAKING TIME and then try to put that country down? BPOE are you jealous and feel like the ugly fat sister who never gets any attention at the dance and the U.S. is the beautiful skinny one who is constantly in the spotlight and is being asked to dance by all the handsome men? Frankly that’s just the way it is. You need to learn to get over it because that’s how it will always stay. The U.S. is going to get bad press as would be the case for any country in their position of power and wealth. Just the way it is. It isn’t perfect but its a pretty damn nice place to live with pretty damn nice (and extremely smart) people living there. BPOE this is why their immigration TRUMPS the hell out of our immigration. EVERYONE wants to live in the U.S. – not Vancouver. If it isn’t the U.S in power then it will be China. Yeah get your head around that for a minute and let me know how in the world we would be better off.

BPOE and if America sucks as you put it then we must be the pathetic turd it is sucking on because we are barely on their radar. It is a far more complex society and political system than what you or most of us understand which is why I would venture to say I don’t believe you’ve ever been South of our Canadian border. I defer to yesterday’s commentary where after having lived in the U.S. I can truly state the real money, brains, power, and innovation go to the U.S. Vancouver is nice by the Canadian standard but it does not hold a candle to places I’ve lived prior in the U.S. You know it is true BPOE or you wouldn’t be running so scarred. You wouldn’t obsess over it so much if you weren’t losing so much business to the U.S. right now. You’ve continually posted about the HAM in Vancouver and it does exist but even I have seen it cooling myself. I do hear some are finding loopholes to enter the States instead of here. Is this your fixation with why America must be so bad? Are you trying to convince and scare readers not to leave Vancouver? Yeah, I think that is a huge part of it. You fail and you fail miserably.

I don’t give a damn about our housing stats that have been PROVEN to be inflated and twisted. Your industry loses all credibility when this happens. It raises questions in the minds of the consumer and depletes market confidence. Vancouver prices are falling BPOE. Most everyone knows it now so the cat is out of the bag. Nobody has the guts to admit it or talk about it. So every time you think America is losing value in their RE market just know we are adversely and directly affected by it. We are not so special and I have seen how the game was played in San Francisco. We are repeating the same game almost identically but with far more egregious behavior. Here is my guarantee to you BPOE – Whatever the markets have fallen there is what the market will fall here. We’ve skated by with our noses in the air. Do you know what happens when people act like that? Oh yeah they slam right into a tree and that is what we are doing now. I can feel it and I know the signs after living through it once already.

#112 Daisy Mae on 11.10.11 at 10:33 am

“See, F? There are consequences to letting people without money buy real estate, after all.”

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

He is such a fool. I can’t stand to even look at the little twerp. And I won’t read about him. What he has done to Canadians is absolutely disgusting.

#113 Willa on 11.10.11 at 10:40 am

There are lots of Vancouver refugees here in Eastern Ontario. Most of them young and fed up.

#114 Junius on 11.10.11 at 10:41 am

#49 sol,

There are thousands upon thousands of housing loans in Canada that were made on fraudulent or exaggerated claims of income and earnings. There have been stories for years on this Blog and elsewhere about them. You will see them appear as the market collapses.

Poor lending standards always emerge in hot markets. They are a symptom and not the underlying cause which is cheap credit.

#115 Junius on 11.10.11 at 10:47 am

#83. BPOE,

There are days when your idiocy even exceeds your arrogance. This post confirms this is one of them.

Italy and China tanking hurts everyone including Vancouver Re. No more Ham coming at this rate.

Your notion that the world’s economy is a zero sum game is deeply naive. No one with evev a shred of undertsanding could see the US economic struggles as being good for Canada. You epitomize the insular and ignorant Vancouverite that Alex and i are sick of.

#116 bigrider on 11.10.11 at 11:03 am

I am so f-in sick and tired of the people around me telling me that houses are good, safe, sure investments and that the stock market is ‘rigged’ and full of ‘scammers” (recent comments from aquintances)

Nobody and I mean nobody on this site wants house price declines more than I do (bloodbath more like it). I would pray to the Gods or write a cheque for it if it would bring it on already.

Before I am attacked, I own 3200 sq ft in an expensive area of the GTA completely outright with more in financial assets.

The Greater Fool support and self-help healing circle group meets Tuesday nights at the Legion. Drop by. — Garth

#117 Junius on 11.10.11 at 11:11 am

I agree with the sentiment that Alex has about Vancouver. I have beome very saddened over the past decade as I have watched the same attitudes take hold and change the City for the worse.

Vancouver has always been a bit of a “pump and dump” business community with the mining stock promoters of the 70s and 80s famously ruining the VSE with insider trading scandals. There has always been a sense that good business was more about concept than management.

I work in the media sector which in Vancouver includes Film, TV, Gamesr and a host of newer media companies in the emerging digital era. I hoped along with many that these new industries could propel Vancouver closer to what they have in Seattle and San Francisco with their deep pool of world class companies.

Over the past decade our momentum has been sapped by the focus on housing. Many start-ups simply cannot afford Vancouver and much of the best young talent has left for other locations. It is very frustrating to watch.

However the housing boom and the focus on “get rich quick” schemes by our government has sapped much of the focus, money and energy needed to move Vancouver in this direction. We have been distracted by a dangling shiny lure that is now turning to rust.

#118 BPOE on 11.10.11 at 11:13 am

Nobody stops HAM. Nobody. Vancouver is a beacon for the world. It transcends HAM. HAM is only one factor. West Vancouver for example has a higher percentage of people from the Middle East than HAM money. This creation of unaffordable homes for Canadians was created by the Canadian Government. The Conservative government will never turn off the taps to foreign investment. People like the american post links to Asia housing dropping possible 5 to 10%. But he doesn’t get it and never will. Not everyone is a speculator with 5% down. Many people are ultra wealthy and this is whom BPOE caters to. Fools like April Showers wonder why I rail against America. It’s because of ignorant posts by the american of how great Seattle is and how Vancouver is a poor cousin but he’s got it totally backwards. Your “no more HAM coming” comment proves you are a disciple of the american and are lost in the wilderness
****************************************
Junius on 11.10.11 at 10:47 am
#83. BPOE,

There are days when your idiocy even exceeds your arrogance. This post confirms this is one of them.

Italy and China tanking hurts everyone including Vancouver Re. No more Ham coming at this rate

#119 Crashing Yuppy on 11.10.11 at 11:16 am

This will not end until interest rates go up. Until that happens you can wait until eternity for falling prices.

It is not in Govt interest for housing prices to go down therefore they will artificially hold rates down until they are forced at gunpoint to raise them.

Very simple. Until then buy nothing.

#120 Junius on 11.10.11 at 11:18 am

#113 Willa,

Yes and more coming. In the past month i have spoken to 3 couples under the age of 35 who are looking to move East in the New Year. They are all smart, educated and employed but they are fed up with not being able to get ahead. None of them own Real Estate. 2 couples are looking at the Maritimes.

#121 Aussie Roy on 11.10.11 at 11:56 am

Aussie Update

USA

Anyone else notice it seems to be taking the same amount of time for the US house bubble to completly deflate as it took to blow up?.

Is this the future of the Aussie and Canadian housing markets?, 10 years or so of slow steady declines.

Chicago
Foreclosure activity rose 7% in October compared with September, a sign that lenders are picking up the pace after foreclosure processing problems caused delays, RealtyTrac said Thursday.

Last month, foreclosure filings were reported on 230,678 U.S. properties, according to RealtyTrac data. Filings include default notices, scheduled auctions and bank repossessions.

http://www.marketwatch.com/story/foreclosures-jump-7-in-october-from-september-2011-11-10?dist=beforebell

#122 Peakoilist on 11.10.11 at 11:56 am

Garth, you know Christmas is just around the corner. Have you sent out the invitations for the 1st annual blog dog Christmas function at the bunker? Don’t worry, we can do sort of a pot luck theme and BYOB, so minimal planning on your part really. Let us know what you think..

I’ll alert the Amazons. — Garth

#123 Junius on 11.10.11 at 11:56 am

#118 BPOE,

Your comment on HAM underscores your completely naive understanding of the conomy. You provide direct evidence once sgain as to why you remain the poster child of all that is wrong with Vancouver.

You seem to think thzt economic growth comes from attracting money from around the globe instead of developing a productive economy. You remain hopelessly clueless.

#124 JohnnyBravo on 11.10.11 at 11:57 am

#116 bigrider on 11.10.11 at 11:03 am

First of all, be careful what you wish for. The kind of correction you seem to be doing rain dances for will not happen in isolation of the rest of the economy. If housing crashes, the economy will be going with it. Now, that may not matter to you personally, I don’t know.

Second, how much of a correction would you need to make you happy? 10%? 20%? 50%? Over what time frame? If you are waiting to pounce for investment purposes, as I suspect, factor in the opportunity costs of waiting, such as lost cash flow, building equity, etc. What’s your investment time frame?

(I don’t know what will happen to RE prices, but I would not be at all surprised if the so-called correction turns out to be a long, inflation-adjusted erosion where nominal prices don’t collapse, like in the US, but just peter out so that real values decline over a long time frame.)

Third, no one can predict the future of housing prices in terms of the size of the correction and the timing. Don’t let that deter you from investing if you think something is a good investment for you based on your risk tolerance, time frame, asset allocation, etc. At the end of the day, you don’t need crystal balls. You just need balls.

#125 The InvestorsFriend on 11.10.11 at 12:02 pm

Garth said:

“I’ve told you before that 28% of US households (that’s 14.6 million families) now owe more on their houses than the properties are worth – it’s called being under water. ”

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

AND it’s interesting to note that these people have NONE of their net worth in real estate. (In fact less than none.)

So a better measure than how much of your net worth is in real estate is how much of your ASSETS are in real estate.

When you put zero down on a house that is none of your net worth. But you are at RISK for the entire value of the house.

You might want to strive for no more than about 50% of your ASSETS in real estate by say age 50, And certainly by 65.

If at 50, you have little equity in a house but a big mortgage your risk is proprtional to the value of the house. If you have no equity in a $400k house ($400k mortgage) and you have $100k in financial assets thismeans 100% of your net worth is in financial assets, none in the house, but 80% of your assets and 80% of your risk would be in real estate.

So, it’s not about net worth in real estate, it’s about how much of your assets are in real estate. Comprehende?

As Buffett has said of a certan balance sheet, the assets were suspect, but the liabilities were solid. (The mortgage exists unchanged even if the house value plummets.)

#126 Aussie Roy on 11.10.11 at 12:02 pm

Satyajit Das author of Extreme Money
The Masters of the Universe and the Cult of Risk

Interview – On the Edge

http://www.youtube.com/watch?v=6iXhAPTGyfQ&feature=player_embedded

Why Europe’s Plan to End the Debt Crisis Can’t and Won’t Work – Satyajit Das

http://www.prudentbear.com/index.php/featuredcommentaryview?art_id=10594

#127 Peakoilist on 11.10.11 at 12:08 pm

So a banker has been installed as the new Prime Minister of Greece. How convenient. Where was democracy? Did we all miss something? Are we relieved or alarmed?
When this contagion finally makes its way to our shores and the IMF bails out Canada, will Mark Carney be installed as our defacto Prime Minister?

#128 JohnnyBravo on 11.10.11 at 12:10 pm

#106 TurnerNation on 11.10.11 at 9:09 am

All the matters is the monthly payment. Don’t fret, with every Tom, Dick and Joey buying these things, Beemers and Mercs don’t have the same caché they used to have. Laborghini Aventador? Now, your talking! Or you can always get a Hummer. You won’t beat the BMWs, but maybe you can drive over them.

#129 Form Man on 11.10.11 at 12:10 pm

excellent post Garth !

#216 Devil’s Advocate on 11.09.11

Gosh ! my inocuous comment seems to have really touched a sore spot with you. Your excessive outrage is all out of proportion. A skilled interrogater would be intrigued. It is possible you have something to hide, but I for one, do not believe someone of your integrity and ethics could conceivably engage in anything of the sort. I believe your short fuse can be attributed to the constant strain you endure as you slog up the wrong road; continually batting away inconvenient statistics, and searching in vain for buyers. The pressure is almost unbearable for you, I imagine.
In response to your other assertion, your lack of reading comprehension is apparently matched by your paucity of legal knowledge. I did not name any names in my true and valid statement, so there is no possibility I have slandered or defamed anyone. I suggest you not be so obvious about your discomfort around this issue, lest people get the wrong idea……..

#130 eaglebay - Parksville on 11.10.11 at 12:14 pm

#40 Tim on 11.09.11 at 9:53 pm

Tim, I’ve been looking all over the Internet for info about new prisons being built. Could not find anything. Could you clarify?
As for the Ministry of the Environment, they probably don’t have a clue. It’s not global warming, it’s called climate change and if I’m correct the climate has been changing for millions of years.
I think that you’re just mouthing off.
Some people believe anything and are opposed to everything. What an attitude.

#131 Westernman on 11.10.11 at 12:22 pm

Jess,
You just love the nanny state – don’t you?
You better hope it all holds together or you will be one helpless lamb looking for a wing to get under. How’s it feel to be completely dependent on Government? Empowering, huh?
Good thing thing our forefathers weren’t like you-we would have no country.

#132 Westernman on 11.10.11 at 12:26 pm

I’m Stupid,
You sure are. As far as I’m concerned have all the free government welfare hand outs you want – oops, I mean “Safety Nets” just as long as I don’t have to pay for them – I’ll provide for myself, thanks. Thats the problem with you socialist do-gooders – your grand plans for utopia always require vast amounts of ” other peoples money ” extracted by force of government.

#133 Ronaldo on 11.10.11 at 12:37 pm

http://www.researchinchina.com/news/NewsInfo.aspx?Id=25274

Sound familiar?

#134 Mister Obvious on 11.10.11 at 12:44 pm

#82 T

“I raise this because my partner is a very bright person and in fact she recently received her Phd to prove it.”

———————–

A PhD says little about how ‘bright’ a person is. I have known and worked with many. As a group they all tended to fall somewhere within the normal curve of intelligence.

In other words, some were indeed extremely bright while others were quite uninspired, unmotivated and unaccomplished. What many of them excelled at was obtaining a PhD.

#135 Westernman on 11.10.11 at 12:53 pm

Jess,
Why don’t you concern yourself with things that matter? Don’t you have anything constructive to do?
Maybe you are part of the “idle rich ” ?

#136 Westernman on 11.10.11 at 12:56 pm

Waterloo Resident,
On the subject of buying huge exspensive houses one cannot afford … why don’t you try it out first and let us know how it turns out?

#137 GTA Girl on 11.10.11 at 12:56 pm

Bigrider: I bet that I’m your neighbor

#138 brainsail on 11.10.11 at 1:00 pm

#129 eaglebay – Parksville

“By the numbers: How many new prison beds are coming to your part of Canada?”

http://news.nationalpost.com/2011/09/24/by-the-numbers-how-many-new-prison-beds-are-coming-to-your-part-of-canada/

#139 Devore on 11.10.11 at 1:09 pm

#86 Not 1st

Brad Lamb has jumped the shark. That is a ridiculous article.

#140 Sumadartson jr. on 11.10.11 at 1:10 pm

Uhhhhhmmmmm….lets see now.

….Alex loves West Vancouver while owning a home.

….Now Alex hates West Vancouver after he sold for net $2 million.

Alex wants to buy back the same home for 50% less so he’ll say anything now to get RE prices down.

…Garth, your readership on this blog is what?….one in a thousand who is on par owning $2 million dollar homes?

Why don’t you talk about the coming of Lower Mortgage interest rates across Canada?

#141 leafsfaninyvr on 11.10.11 at 1:11 pm

Again, your arguments are bolstered by self fulfilling prophesies. Anybody can cherry pick through emails and offer them up as trends.

That was compelling. — Garth

#142 Van guy waiting on 11.10.11 at 1:13 pm

My friend bought not too long ago in Coquitlam. He had 80k dp on a 630k home. He makes 50 k a year. In order for the bank to approve the loan, he needed a co-signer. He has no other loans and very good credit.

He bought a home costing almost 13 times his income. What did he expect? — Garth

#143 eaglebay - Parksville on 11.10.11 at 1:14 pm

#96 X on 11.10.11 at 7:39 am

Isn’t it up to the buyers to have much larger downpayments? Nobody has to follow the rules set by CMHC or the Government.
People don’t think.

#144 Bill Gable on 11.10.11 at 1:25 pm

BPOE is driving me nuts. None of your pseudo babble adds anything to the conversation.

Your attitude, sadly, reflects a lot of the Bimmer driving, Latte inhaling, morons here in Dumbcouver.

I’ll say it again – Vancouver is a BACKWATER.

This Province is run by Snooki and soon enough we’ll be the second most polluted place on Earth, given Fukushima garbage coming our way – and the badly thought out Kitimat LNG terminal.

Just wait ’til it springs a leak and takes out more of our fragile water ecosystem.

#145 eaglebay - Parksville on 11.10.11 at 1:28 pm

#107 CTO on 11.10.11 at 9:15 am

CGAs are glorified bookkeepers. Trust me, I train some of them.
As for the Phd, it only proves that one can go to school a little longer.
I deal with MBAs and CGAs on a daily basis.
Professionals are not trained the way we were years ago.
Been there, done that.

#146 Westernman on 11.10.11 at 1:30 pm

Bill Gable,
Don’t take BPOE seriously…he’s like the crazy uncle every family has – for entertainment value only. His posts make me laugh, they are so far over the top. Try looking at it that way.

#147 Devore on 11.10.11 at 1:46 pm

#123 JohnnyBravo

bigrider is trolling. I thought that was obvious.

#148 Form Man on 11.10.11 at 1:48 pm

#131 western man

actually if we only had people like you instead of Jess, we would have no country………..

#149 AM on 11.10.11 at 1:53 pm

#145 eaglebay – Parksville on 11.10.11 at 1:28 pm

“Tim, I’ve been looking all over the Internet for info about new prisons being built. Could not find anything. Could you clarify?”
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Try Googling “CONSERVATIVE’S PLAN TO BUILD PRISONS”
23,300,000 hits. Did you spell prison correctly in your search?

#150 disciple on 11.10.11 at 1:59 pm

In celebration of Nutbars everywhere: Nutbars Unite!
http://www.youtube.com/watch?v=0KmfE7B0aP4

Nutbar: related to FUBAR, Nut.Beyond.All.Recognition

Chris Hedges smacks down Kevin O’Leary nutbar remark:
http://www.huffingtonpost.ca/2011/10/14/oleary-nutbar-ombudsman_n_1011373.html

Busted Nutbar and Grill Facebook: http://www.facebook.com/pages/Busted-Nut-Bar-Grill/108254585862559

#151 Beach Girl on 11.10.11 at 2:14 pm

Looks like interest rates are going down. Don’t owe so off to work I don’t go.

No they are not. — Garth

#152 JohnnyBravo on 11.10.11 at 2:27 pm

#147 Devore on 11.10.11 at 1:46 pm

If he’s trolling, he’s persistent. I think he’s serious, based on his past comments in which he constantly harps on waiting for this perceived prophesied correction and his love/hate relationship with RE. He needs advice. Either that or a swift kick in the butt.

#153 tom noble on 11.10.11 at 2:28 pm

2 mil only 0.4%? you failed to MENTION gov pensions,
if you include the equivalent of Federal, provincial, and municipal employees pensions. In this investment enviroment these are all worth 2 mil.

OCCUPY THE GOVERNMENT IS MORE LIKE IT

The reference was to investible assets. Not disappearing pension plans. — Garth

#154 eaglebay - Parksville on 11.10.11 at 2:31 pm

#136 brainsail on 11.10.11 at 1:00 pm

Just drove by William Head in Victoria. Didn’t notice any construction at all.
In total the numbers seem quite small.
Considering that not much work on the prisons have been done in years and a big increase in our population.
With overcrowding in most facilities, I can see that some of these repairs and expansions were long overdue.
It should create more long overdue jobs.
I don’t see anything wrong with this situation.
No wonder the liberals managed to balance the books. They didn’t do any necessary infrastructure repairs.

#155 bigrider on 11.10.11 at 2:37 pm

#116 -Garth to Bigrider.

LOL.

#156 eaglebay - Parksville on 11.10.11 at 2:39 pm

#149 AM on 11.10.11 at 1:53 pm

They are not building, only planning. We all know what usually happens with government planning.
Just like F’s last update on the budget.
Do not take political talk as fact.
We shall see.

#157 bigrider on 11.10.11 at 2:45 pm

#124 JohnnyBravo.

My wish for a housing price correction has nothing to do with me wishing to invest in RE and everything to do with eliminatiing the house humping assertions by those around me that RE is always a safe, preferable, best performing asset class over financial ones.

No other motive, please believe me.

As for the size of the correction I wish for and the extent to which it spills to other parts of the economy..I wish for enough of a drop such that the obsession with RE ends (whatever amount is required for that similar to the U.S I guess as the house obsession sure has ended there). As for spill over effect into the broader economy, well, everything else seems interlinked anyway, so one more torpedo..I say bring it on !

#158 45north on 11.10.11 at 2:46 pm

InvestorsFriend: the assets were suspect, but the liabilities were solid

pretty funny

#159 bigrider on 11.10.11 at 2:49 pm

#137 GTA Girl to Bigrider-“I bet Im your neighbor”

Well GTA girl, give me a clue? Major intersection enough.

I will certainly do the same.

#160 bigrider on 11.10.11 at 2:52 pm

Hey ,what is it with all this BMW bashing.

Some of us have them fully paid for with money to spare you know.

Not all of them are financed.

#161 bigrider on 11.10.11 at 2:54 pm

#147 Devore

The only troll on this blog is Devore.

He has the big hairy feet along with the short stature and big ego.

#162 disciple on 11.10.11 at 2:54 pm

Bill Gable,
Don’t take Westernman seriously…he’s like the crazy uncle every family has – for entertainment value only. His posts make me laugh, they are so far over the top. Try looking at it that way.

We wouldn’t have a country without selfish pricks. Now, that, my friends, is funny…

#163 disciple on 11.10.11 at 2:57 pm

eaglesbay wrote – CGAs are glorified bookkeepers. Trust me, I train some of them.
As for the Phd, it only proves that one can go to school a little longer.
I deal with MBAs and CGAs on a daily basis.
Professionals are not trained the way we were years ago.
Been there, done that.

And then: AM with the zinger: #145 eaglebay – Parksville on 11.10.11 at 1:28 pm

“Tim, I’ve been looking all over the Internet for info about new prisons being built. Could not find anything. Could you clarify?”
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Try Googling “CONSERVATIVE’S PLAN TO BUILD PRISONS”
23,300,000 hits. Did you spell prison correctly in your search?

—————
Yup. Google training is really harder than it used to be – We see only what we want to see – disciple.

#164 Kevin on 11.10.11 at 2:58 pm

@nonplused:

“Taxing people to pay debt is morally wrong. The lenders have it coming. What they did by lending to governments in the hopes that the government would extract taxes at gunpoint to pay them back plus profit is evil and they deserve what they are going to get.”

People who buy Canada Savings Bonds are “evil?” Uhm, that’s my grandparents you’re talking about. They thought they were just making a safe, conservative investment that also helped their country.

#165 Westernman on 11.10.11 at 3:00 pm

Form Man,
Actually it is people like me who make anything constructive happen at all in this country. If you think that a nation of bleeding-heart, politically correct, marxist, social engineer crybabies actually produce anything of value to a civilization you are one toke over the line… boy.

#166 disciple on 11.10.11 at 3:10 pm

I think Weensterman could use some ayahuasca therapy, as airing on CBC’s the Nature of Things tonight.

http://www.cbc.ca/natureofthings/episode/jungle-prescription.html

But of course, I know he’ll be busy with “more important things” like watching re-runs of Deliverance off his antenna set-up.

#167 David #3 on 11.10.11 at 3:18 pm

#50 nonplused on 11.09.11 at 10:41 pm

This explanation is so clear and logical! I think I’ll have your post framed!

#168 Ray on 11.10.11 at 3:31 pm

Garth – which report cites this reference?
“after reading the latest report from the Canadian mortgage industry. If mortgage rates ticked up just 1%, then 12% of families would be unable to make their payments. ”
I googled and couldn’t find any such report. Thanks.

CAAMP. — Garth

#169 Dorothy on 11.10.11 at 3:32 pm

Every time I turn on the TV these days all I hear is bad economic news coming out of Europe and/or the States. Ditto whenever I pick up a newspaper, or surf certain sites on the web (this one included).

I used to feel very optimistic about my upcoming retirement (in 5 years). I have no mortgage, no debt, a very modest company pension, and an equally modest RRSP. But nowadays, after being bombarded with all this doom and gloom, I’m getting so discouraged and depressed about the future I feel like blowing my brains out.

I’m not a financial whiz. I hear what Garth is saying, but don’t really know how to actually implement a lot of his advice. In my area, good financial planners are only interested in working with the very rich, and the kind that would work with me are, for the most part, offering very questionable advice. I went to one guy who advised me to put virtually all of my savings into dividend paying equities and, while I may not be all that financially savvy, I don’t think that’s very good advice for someone my age. Because, if the market tanked, I wouldn’t be in a position to hang in there for years until things improved.

This planner said that it wouldn’t matter if the market tanked because I could continue to live off the dividends even if the stock wasn’t worth as much as when I bought it. But surely, if the economy continues to worsen, there’s a possibility that the dividends could be cut or discontinued? This guy thought not, because that didn’t happen during the crash of 2008/9, but isn’t he making the same mistake of thinking that “past performance is a good indicator of future performance” ?

I’m at the point where I don’t know who to believe, or who to trust. I’ve tried educating myself in order to go it alone with my decision making but frankly the more I read, the more confused I become. For every piece of advice out there, there is a conflicting piece of advice. I think the real problem is that NOBODY really knows what’s going to happen, because the entire world is in uncharted territory economically.

But for someone like me, heading into an uncertain future at a very vulnerable stage in my life, the prospect is terrifying. And extremely depressing.

#170 disciple on 11.10.11 at 3:56 pm

Canned News: News from a can. If you ever had any doubt the media is in the business of mind control…

http://www.brasschecktv.com/videos/news-media-corruption/if-you-ever-had-any-doubt-the-media-is-controlled-.html

It may not surprise some of you at all, that the media is in the business of the manufacturing of perceptions. It takes a late night comedy show to demonstrate this. The joke, though, is on you. Sad…

#171 disciple on 11.10.11 at 4:08 pm

What can possibly go wrong?

Everyone has voices inside their head. Most often these voices are silent. Your brain is an antenna picking up the wavelengths of various signal transmissions of the collective human consciousness. But accidents involving your brain organ can bend that antenna in various ways and tune it into other wavelengths. A lot of us do need a smack upside the head…

Like, for example, this burly rugby player having a stroke after a freak gym accident, wakes up gay and becomes a hairdresser…
http://www.dailymail.co.uk/health/article-2058921/Chris-Birch-stroke-Rugby-player-wakes-gay-freak-gym-accident.html#ixzz1dDyMyJOi

#172 Westernman on 11.10.11 at 4:19 pm

Disciple,
You shouldn’t be watching CBC ( Communist Broadcasting Corporation ) … bad for you.

#173 disciple on 11.10.11 at 4:25 pm

#164 Dorothy… you have nothing to fear. With no mortgage and no debt, you are in the top 1% in the world. Don’t succumb to greed, you just need enough money to last until you’re ready to move on to the next world.

Having said that, dividend-paying stocks are rock solid, because you don’t have to worry about a “crash” which is very unlikely anyway, because it’s the dividends you’re after for a type of aggressive fixed income, and not necessarily capital appreciation. But you need a financial advisor you can trust. Perhaps you have a family member who knows someone? Or a friend that can direct you to someone? If not, Garth is known around these parts as trust-worthy.

At the end of the day, you have to act, or not act. What will worrying do for you? I always tell people: everyone will always need to buy stuff. Put your money in actual wealth-producing businesses that make something, and not in financial parasite zombie businesses that only SUCK. Look at where it got Europe and the US. Limit or eliminate your investment in any mutual fund, or group benefit or RRSP that has any exposure to credit risk or derivative risk, and you will be fine, just fine.

And don’t forget to give to those less fortunate. And that doesn’t have to be money.

#174 Westernman on 11.10.11 at 4:26 pm

Dorothy,
The best thing to do is just give up and join the circus.

#175 triplenet on 11.10.11 at 4:35 pm

#82
A Phd.
She’s not going to teach….is she?
Oh oh.

#176 Form Man on 11.10.11 at 4:41 pm

#165 western lad

you seem to have a rather small, closed mind, however I will always defend your right to proclaim your smallmindedness. it is your right, and enshrined in our constitution by the Liberals…..

#177 disciple on 11.10.11 at 4:47 pm

The longest journeys and the most prosperous adventures begin with a single step. The sooner you get started, you sooner you will finish. Life is what you make it, metaphorically, and if you know me at all, I also mean it literally. You create your own reality. Life is a hologram, and so is DNA. Life is potential, life is a promise you made to yourself before you existed.

I know that last statement doesn’t appear to make any sense, but you have to suspend your 3-D prison for a moment to let it have a chance to soak into your psyche. All matter is 99.9999999999999% (or so) empty space, and yet this mouse in my hand feels so damn real. If humans did not exist, neither would money, or any of the countless abstract notions we think are REAL but are not. There is a reason human childhood is incredibly long compared to our fellow species. The end goal of all human activity is contemplation. A return to self.

#178 bigrider on 11.10.11 at 5:05 pm

#152 Johnnybravo- “swift kick in the butt”

No, don’t need that at all. I will be fine whether RE doubles from here in price or halves in price.

My assets and portfolio very well balanced.

Perhaps you may need some foot in the bum yourself, or alternatively, some reading comprehension courses.

#179 Westernman on 11.10.11 at 5:09 pm

Form boy,
Just remember – if you don’t draw the line against the liberal propaganda somewhere one ends up like you…believing in fairy tales. An open mind is O.K. unless you open it up too far – then your brains fall out and you lose them…like you for example.

#180 Van guy waiting on 11.10.11 at 5:14 pm

#169 Dorothy on 11.10.11 at 3:32 pm

I feel the same as u do. There’s so much mixed news. But there is more bad than good. But for RE, I believe more and more each day that its in trouble.

#181 Westernman on 11.10.11 at 5:16 pm

Disciple,
MOST of your “statements” don’t make any sense. They are the disjointed,mad ramblings of an over-the-hill hippee who never really amounted to anything and has taken up street corner philosophy to dull the pain of non-achievement. You should blend in quite well with the vast majority of Canadians though…

#182 bigrider on 11.10.11 at 5:17 pm

#169 Dorothy.

Do not take any advice from any Canadians of Asian, Italian, Russian, Jewish, Hungarian, English, Indian ,Dutch or anybody from Australian backgrounds.

In addition, ignore advice from anyone living in Canada who is a mother or father in law, a home owning neighbor or condo(not conga) line junkie. Nobody in finance or any gainfully employed people either.

They are all going to tell you to buy another house as an investment .

LMAO.

#183 jess on 11.10.11 at 5:24 pm

… what do you mean the founding fathers? could you please tell me whose thoughts their thoughts were based on?

#184 JohnnyBravo on 11.10.11 at 5:26 pm

#157 bigrider on 11.10.11 at 2:45 pm

Why not just focus on your investments and let others worry about theirs. Have the courage of your convictions to do what you feel is best for you. Let them gloat. Who cares; it’s not your money in any case. There’s an old Italian sort-of proverb that says,”Mio nonno campo fino a cento anni perche si faceva i cazzi suoi.”

#185 Form Man on 11.10.11 at 5:38 pm

#180 western infant

you are parroting tired, worn out cliches……..the last refuge of an ill-informed idealogue. I prefer sparring with slightly higher achievers……

#186 Marc L on 11.10.11 at 5:45 pm

I am collecting some money to send Westernman to therapy?
I know that no one likes him. But perhaps we can save this blog from all of the hatred, destructive comments and cynicism.
Anyone want to pledge?

#187 harden on 11.10.11 at 5:47 pm

“more listings should keep prices more stable”

– apparently the law of supply and demand does not apply in RE.

In the same column from the Vancouver Courier newspaper (note author is a real estate agent)… a suggestion we buy now while condos (and money presumably?) are still cheap:

http://bit.ly/tVkJc5

#188 jess on 11.10.11 at 5:47 pm

heck no I was hoping you would invest in my super hedge fund called, Womb of Wombs! It is a bond database with all the children’s names are held on the planet.

Although, I must warn you studies have shown that love and compassion cause addiction and can cross the blood /brain barrier infecting the brains of other investors. Spin off the infection and sell to the natural remedy market. This by-product induces competition to the stimulant market producing lower margins, forcing investors into the Womb fund. The product will need protection and therefore strict enforcement terms on issuance.
NOTE: WARNING THIS PRODUCT IS NOT TO BE BOUGHT OR SOLD INTO GLOBAL WAR MACHINE If any child ends up in the global war machine database and by way of cross reference to our database we will take the matter up to the WTO where our trade lawyers WILL EXERCISE OUR PROPRIETARY RIGHTS.

Trading may be halted under the rules of the SEC, but this creates more upside since, as wombs, we are bullish and will hold on to them for the long run.

#189 I'm stupid on 11.10.11 at 5:48 pm

Westernman

Your a fool in your thinking and I’m going to show you why. Your theory only looks good reading it from front to back it does not work the other way. You say I can have all the “safety nets I want as long as you don’t need to pay for them, you will take care of yourself”. I don’t want to pay taxes nor does anyone else but they are necessary. What if nobody payed? Do you like garbage collection or would you rather roll around in your own filth like a pig? Is public transportation a waste? Should we let fires put themselves out? If you choke on a chicken bone the ambulance is not going to come. What if you were crippled by a hit and run driver, should we let you die in pain? What if your child was born with down syndrome should the doctor come into the delivery room with a gun and put the child down? Be careful what you wish for because you might one day get it. Is our system perfect? No, but the goal is to balance the conscience of society to fund projects that are otherwise impossible without government. The true problem is efficacy.

#190 Ausben on 11.10.11 at 6:07 pm

Hello Garth,

Can you provide a link to the latest mortgage report you mentioned in this post.

Thanks,

Ben

CAAMP. – Garth

#191 bill on 11.10.11 at 6:12 pm

”Actually it is people like me who make anything constructive happen at all in this country. If you think that a nation of bleeding-heart, politically correct, marxist, social engineer crybabies actually produce anything of value to a civilization you are one toke over the line… boy.”

western person have you ever been anywhere outside the institution your in?
you wouldnt know a marxist if he [or she ] bit you on the nose.
anyone who complains that canada is a ‘Marxist’ country is delusional.
a Marxist country would look like the old soviet union.
you know a place where a major canal that was built with forced labor that could literally be lined with the bodies that built it. as in dead bodies.thousands and thousands of them…
you are either a troll or just plain ignorant [or both I suppose] .
people like you contributed nothing to what makes Canada such a great place to live.you are completely in the way.
you plainly need more than a toke .inhale this time…

#192 Beach Girl on 11.10.11 at 6:12 pm

Really not so funny. But one of my neighbours dusted out a few years back. Divorce, lost job, crazy child support. He is now a Financial Advisor with Investors Group. What horseshit.

Actually phoned me and asked if I needed his help. No I said, but I have a big cardboard box in the garage if he needs it.

Do not be taken in by these thieves.

#193 bill on 11.10.11 at 6:20 pm

”then your brains fall out and you lose them….”
ah I see your brains fell out when you opened your mind.
bummer.
Plainly you are wrong about Form Man as he makes a lot of sense to me,unlike you.
its different for the rest of us eh? we open our minds and our brains dont fall out , we get smarter. too bad about you man.

#194 GregW, Oakville on 11.10.11 at 6:22 pm

Hi Garth, Just in case someone is interested.
Hon. James Flaherty Canada’s Finance Minister
Nov.25, 2011 11:30AM (Registration/Doors Open), 12:15PM (Speech) LOCATION – Fairmont Royal York Hotel, Ballroom TICKETS – $75/$65 Members; Tables of 10 $750/$650 Members
http://www.canadianclub.org/Events/EventDetails.aspx?id=3171

#195 Nostradamus Le Mad Vlad on 11.10.11 at 6:23 pm


Very, very creamy. Thrombosis and hemmorhoids whipped together with a bernaise sauce, that is.

Our CFP sent out a mass e-mail this morning, detailing what is happening in Europe and how it affects us (it doesn’t for now). A few quotes:

“One of Greece’s major exports is olive oil, so I am in the dark how that is affecting the price of our bank stocks!

“Canadian banks, which are still our major holdings, have once again gained record earnings, but the stock price itself has decreased. Royal has actually increased the dividend it pays on its common share, and is buying back its’ own shares. I am sure they are not doing that because they think their stock price will decrease over the next couple years.

“Since our biggest holding in most of our portfolio’s is Royal Bank stock, I have done a comparison, utilizing the TSE and the actual portfolio funds we hold.

“As the world markets rollercoaster around, a lot of the big daily drops or gains have little or no effect on our holdings.

“So, basically we have not made a lot of money over the last year! Conversely, we have not lost a lot either, and as all of our investments are still paying out the monthly dividend, we are actually purchasing good stocks at bargain prices, yet still maintaining our dividend status.”

Like R.E.M.’s song, we are Shiny Happy People, unlike the brass monkeys (sheeple) in the video.
*
#178 disciple — “All matter is 99.9999999999999% (or so) empty space . . .” — Such as the creative white space between my ears!
*
Good Marketing Manchester United are pretty good on the field, probably better off it; EU Debt Anchor Too heavy to lift; Weak Bonds 30-year auction; CDU Changing the rules as they go along.
*
Volcano Sunrise Apocalypse Now? No. Too soon; IAEA Nuke Dud Dennis Ross fired; The 34Boats Last fall, a link stated 34 US warships and others were headed for the Gulf of Aden.

#196 brainsail on 11.10.11 at 6:26 pm

Oh, oh Alberta.

“Keystone pipeline delayed by Obama until 2013”

http://money.cnn.com/2011/11/10/news/economy/keystone_pipeline/index.htm?iid=HP_LN

#197 grouchpeach on 11.10.11 at 6:27 pm

The house that we have been renting for the past 14 months since we sold our home in an upscale area of the GTA has sold and is closing in mid-February. We are actually considering putting an offer on something in the next few days because we (finally!) saw something that we liked and the price was less than half of what we got for our house last year. It is just outside of the GTA.

We do not have a buyers agent in the area that the house that we are looking at is. We called the listing agent directly from the information on the MLS and went and saw the place last weekend. We are going back to see it again on the weekend. Is there anything that I should be careful about with the dual agent situaiton? My thinking is that I may be able to save some money on the purchase price if she doesn’t have to split the commission – though I also know that her loyalty will be conflicted at best and likely totally on the sellers’ side.

Any thoughts or advice?

#198 bigrider on 11.10.11 at 6:27 pm

#185 JohnnyBravo.

Bravo Johnny some good advice for sure. I know the proverb of course..it’s a good one.

Let me tell you that I do have the courage to follow my own convictions and have done so. RE less than 40% of my net worth.

I would argue that a CMHC insured mortgage is my money in an indirect sense ,but that is a whole other discussion.

However, Johnny, I thought the purpose of this blog was to share ideas, housing or otherwise and from time to time, as is evident among the posters, to poke a little fun at the irony all around us , as our host does, and each other.

If the purpose is to do whatever each of us wishes too ,then allow me to visit here, as do you , to discuss some of the obviously vacuous behaviour most of the those around us are exhibiting when it comes to their respective finances and their obsession with housing.

#199 Devil's Advocate on 11.10.11 at 6:33 pm

Think GLOBAL…

http://www.remax-western.ca/blog/remax-lanches-global-listing-website/

#200 René Kabis on 11.10.11 at 6:41 pm

I have been looking at comparables for my home town of Kelowna BC. I have been examining U.S. cities that fit us to a T – similar demographics, similar desirability, similar “4 seasons playground”, similar economic structure. In fact, aside from the fact that they are not Kelowna, pretty well similar everything.

And the sad thing is, none of these comparables have crashed by anything less than 60% in value. Some are now seeing average home values down 80% or more from their 2005/2006 peak. And the most alarming thing is that the rate of decline in all of them has yet to begin decelerating. That is, their housing collapse has yet to reach the halfway point. They still have a looooooong way to go.

Does this mean we will see Kelowna home values plummeting by 80% or more? Who knows. But when the “window of affordability” (set by the 5 housing fundamentals, the 50-year trendline and the average wage of the average Kelowna *family*) demands that Kelowna home values must fall by a *minimum* of 68% just to reach the *upper edge* of that window, there is a really big chance that the comparables I have looked at are a pretty darn reasonable model for Kelowna’s future.

Oh, and btw – that “window of affordability”? The average Kelowna home, in 2011 dollars, should sit between $135,000 and $175,000. When taking inflation into account, this is the range in which Kelowna home values have sat for ≈95% (i.e., two standard deviations from the trendline) of the last 50 years.

For anyone who bought in Kelowna after 2004, and are not planning on holding it for 50+ years: be sure to pack your parachute. It’s gonna be an ugly ride down, and it’s gonna hurt the most at the bottom.

And don’t count on ever breaking even — I strongly suspect that anyone over 30 who bought in the last few years may never realize their after-inflation purchase price within their lifetimes. This housing bubble has been unprecedented in terms of its size — nothing within the last ≈120 years has come even close. In fact, we have to go entirely /outside/ of housing – such as the Dutch Tulip mania – to examine incidents of comparable magnitude.

#201 CalgaryRocks on 11.10.11 at 6:49 pm

Not 1st on 11.10.11 at 2:37 am
Garth, why is it the developers can go full steam ahead building and not worry about holding the bag? Aren’t they the first in line to get crushed when the music stops, like Toll Bros in the U.S. was, who subsequently received a bailout.

http://www.calgaryherald.com/business/Toronto+tower+builder+eyes+three+Calgary+projects/5682105/story.html

He won’t break ground before 70% of them are pre-sold. So we will see how that goes.

#202 Westernman on 11.10.11 at 7:10 pm

I’m Stupid,
” What if” a meteorite came out of the sky and landed on you? Maybe we should establish a tax for the prevention of meteorite strikes on wayward and delinquint children? Also, what about the pregnant Cambodian whales? We should immeadiately establish a federal tax for the maintenance and care of these unfotunate mammals… pony up Mr. I’m going to save the world from itself.
Why don’t you try some self-reliance instead of advocating for more taxation?

#203 Westernman on 11.10.11 at 7:14 pm

Marc L,
Thanks buddy, when you get the ball rolling I’ll give you a P.O. Box where you can send the cheques.
Might just work… Canadians are always willing to throw their money away…

#204 Westernman on 11.10.11 at 7:17 pm

Form Child,
Run out of logical, reasonable, common sense rebuttals huh? Didn’t take long… you may now go back to reading comic books.

#205 BPOE on 11.10.11 at 7:21 pm

New townhouse development in Richmond on a busy corner at Granville and Railway Avenue. Just built a few months ago and 90% sold and this in a “falling bubble” market.

#206 Patiently Waiting on 11.10.11 at 7:22 pm

#202CalgaryRocks on 11.10.11 at 6:49 pm

Not 1st on 11.10.11 at 2:37 am
Garth, why is it the developers can go full steam ahead building and not worry about holding the bag? Aren’t they the first in line to get crushed when the music stops, like Toll Bros in the U.S. was, who subsequently received a bailout.
____________________________________________

Developers go full steam ahead because every project is financed to the hilt, they draw as much fees out of the project as possible for mamagement, contruction, and marketing, and each project is set up in a separate legal entity (Limited company with limited liability). Unless there are personal guarantees (so depends on the developers clout with his bank) there is little downside – even if the project goes belly up he could potentiall have profited significantly through various mark ups on the land, and management fees. Why not get as many projects through the pipeline while the cycle is still good and bank credit is easy to get?

#207 Elmer on 11.10.11 at 7:24 pm

65 Elmer. Can’t happen without US approval and involvement. Iran is way too strong militarily fortunately for them.

hahahha. You are too funny. Iran would be completely crippled within 24 hours if they tried it.

You two are missing the point. Whether Iran or Israel is stronger is irrelevant, the point is that a major conflict in the middle east involving many countries and significantly restricting the flow of oil would devastate the global markets.

#208 noworries on 11.10.11 at 7:36 pm

Looking at that waterloo/kitchener area and there are the same # of listings as there were this spring. People dropping their prices but no one is buying. Price drops that i have seen range from 50K – 250K for homes priced less than 800K..

#209 Pr on 11.10.11 at 7:58 pm

What can go wrong? When 70% of the nation think real estate is the only way to invest and know nothing about money!
http://www.youtube.com/watch?feature=player_embedded&v=JN5q_0H41VE#!

#210 ballingsford on 11.10.11 at 7:59 pm

#74 Carp,

Thanks for your comments. I agree that suburbia is not the way to go. Hoping though that I can find a nice home in a former Italian neighborhood that doesn’t require a lot a of work. The homes were built solid then.

I’ll have another smoke and ponder your suggestions.

#211 I'm stupid on 11.10.11 at 8:20 pm

190 efficiency sorry

#212 pjwlk on 11.10.11 at 8:30 pm

#119 Crashing Yuppy! I remember you from the early days of this blog. Love the handle. Where ya been fella?

#213 The Original Dave on 11.10.11 at 8:46 pm

#116 bigrider on 11.10.11 at 11:03 am

——————-

BIGRIDER, I understand where you’re coming from. I remember, you’re Italian – just like me. Yay. I know how bad it is for you. The people on this blog that aren’t of Italian background couldn’t possibly comprehend how much of a religion real estate is. The Chinese have nothing on Italians when it comes to worshiping houses. I have a function on Saturday and I will be pestered and asked about where I’m living followed by ‘When are you buying?’ and so on.

It really is bad. Slowly but surely I’m cutting back on the family functions. Not sure why my business is now theirs.

Bigrider, I know what you’re feeling! Not fun at all.

#214 Daisy Mae on 11.10.11 at 8:57 pm

“….and a playboy PM who’s a convicted criminal, 75-year-old sex toy and billionaire….”

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

Has the world gone completely nuts? How do things like this happen? Are we so utterly and completely STUPID?

#215 The Original Dave on 11.10.11 at 9:05 pm

”Mio nonno campo fino a cento anni perche si faceva i cazzi suoi.”

———————————————–

Amen!

Let me translate for the non-Italians. ‘My grandfather lived to 100 because he minded his own business.’

There is one swear word in there that just doesn’t translate properly into the phrase.

#216 Devore on 11.10.11 at 9:06 pm

#197 brainsail

“Keystone pipeline delayed by Obama until 2013″

Can’t go upsetting the green contingent right before an election, now can we?

#217 Nostradamus Le Mad Vlad on 11.10.11 at 9:12 pm


Greece was an appetizer, Italy (plus France and Spain) could rival Halley’s Comet crashing into us; 5:33 clip New buzzwords; 6:58 clip Currency war; Fannie was just given another US$7.8 bln. bailout; Counterfeiting Read it and laugh / cry; Too big “Reports that Germany and France have begun talks to break up the eurozone amid fears that Italy will be too big to rescue.” The beginning of the end; Lost Jobs 500K in tourism, thanks to TSA; OWS Oakland Lotsa tear-gas being bandied around; The BTD (Bank Transfer Day) seems to have had an effect on too big to fail US banks; Suicide For hearing about a job loss? The negative karma isn’t worth it.

BoA How Not To Make Friends; Leveraged Buyout using stolen money; 2:49 clip The real Occupy demands; APEC “My guess is that Hu Jintao will be told that unless China starts buying US and Europe debt again that the Chinese stock market will be taken down, with last night’s 5% drop a warning shot across the bow. Problem is that China does not react well to being threatened!” wrh.com; Bankruptcy due to greed;
*
Fukushima debris arrives this week; 2:07 clip El Hierro has a new sister (island)! 1:08 clip Alaska super storm. It is quite noisy; Russia – China No new Iran sanctions, but Israel to strike Iran by Dec.? Two months? “While the American kids are still stuck in Iraq, right in the path of the Iranian counter-attack.” wrh.com; Obummer Wouldn’t bet against it; Prisoner Charge “This idea will flop, because for 99% of those people in jail, being able to earn $142 a day would have kept them from a life of crime to start with!” wrh.com.

Fossil Fuels or Fools? Not necessarily; Palestine and UN The sub-head is good; Nuke Power Plants between Russia and Iran; 0:52 clip Rick Perry’s brain freeze in slo-mo action; Fahrenheit 11-11-11 “World War I, then known simply as the world war or the great war, had been marketed as a war to end war.”; Still Scarred Pix of landscapes from WW1; Baxter Flu “Planned obsolescence in the medical care industry?” wrh.com; Hail St. Al “And only last year Al Gore was saying that snow was a thing of the past!” wrh.com; Suuuicides and Suicide caused by tanking economies; Free Range Chickens Not always; Gardasil Interesting to see the eventual outcome of this.

#218 pjwlk on 11.10.11 at 9:22 pm

Just spoke to a homeowner in the new area of Waterdown (Ontario). She told me that houses are selling regularly within a week of their listing.

#219 Van guy waiting on 11.10.11 at 9:27 pm

#206 BPOE on 11.10.11 at 7:21 pm
New townhouse development in Richmond on a busy corner at Granville and Railway Avenue. Just built a few months ago and 90% sold and this in a “falling bubble” market.

And when was the start of the sales? I believe that was last year sometime. Well guess what, Richmond new sales have been dead for the last few months. Shitloads of new condos and town homes to be completed in the next 1. I’m in Richmond everyday and it’s been booming with developments everywhere. Come back here when you know what’s really going on in Richmond. This is going to be hit hard when this baby starts to pick up steam. Toast buddy, Effin toast. Greedy mofos driving up prices 27% in 1 year alone!!! That’s ridiculous.

#220 Devore on 11.10.11 at 9:39 pm

#214 Italian Crybabies

Oh no, peer pressure!

#221 T.O. Bubble Boy on 11.10.11 at 9:41 pm

@ #206 BPOE:
New townhouse development in Richmond on a busy corner at Granville and Railway Avenue. Just built a few months ago and 90% sold and this in a “falling bubble” market.

Once again, you’re full of crap. These are all “sold” to flippers who now can’t sell on the resale market from what I see:

There are 26 for sale on this realtor site alone (most sitting empty based on the pics):
http://www.realestatevancouver2010.com/homes/richmond-granville/V908088/

#222 bridgepigeon on 11.10.11 at 9:45 pm

Westerngirl, ok you win. Now will you let it go…

#223 GTA Girl on 11.10.11 at 9:53 pm

BigRider: Mjr Mack and Islington

…and I understand completely your frustration. I live in the centre of Developer Mink Mile.

But the trades are questioning that it can’t continue.

#224 BPOE on 11.10.11 at 9:57 pm

27% you say in 1 year!!! You see folks if Richmond BC drops 5% next year, the american, april showers, junius and their ilk will be pounding the drum that the bubble is imploding. What they don’t understand is that 27% is FOR ONE YEAR. A drop of 5% next year would mean the investor is still up BIG TIME. How many American markets went up 27% last year (cue cricket sounds) And why as Junius states their is no industry here, no economy are prices soaring 27%? That’s right – It’s BPOE
************************************
Greedy mofos driving up prices 27% in 1 year alone!!! That’s ridiculous

#225 BPOE on 11.10.11 at 9:59 pm

The reason some townhouse sales were slower than usual to start was because of the HST debacle.

#226 Tony on 11.10.11 at 10:09 pm

He can tell his grandkids he broke the bank while the rest of the world went broke on real estate at the same time.

#227 edmonton guy here on 11.10.11 at 10:57 pm

I see a parallel with Alex’s feeling with myself Here in Edmonton. Being born & raised here I always defended the city. Now, I realize how bad it’s gotten. The Conservative Government have deregualted so many things like electrcity, the water etc, prices have soared to North America Highs here. Poverty is ip form 10% to 20% now in Edmonton-worse than th US! It’s time to move out of here!

#228 disciple on 11.11.11 at 11:26 am

#182… Westernman…. Did you say something? If you want my help, just ask. You are a typical product of trauma-based mind control. You were abused in some form or another as a child. But you can break free if you let me help you. I will teach you to fish. Abandon the path that leads to perdition. Your belligerence betrays your fear of yourself. There is hope for you and all your compatriots stricken with the same affliction, and it lies hidden within you. There is no external battle, it is internal.