Revenge

This week the Real Estate Institute of Australia came up with a great idea. Let young people raid what little retirement savings they have to buy a house at inflated values. That way they can shun diversification, take on a massive amount of debt, restrict their freedom and mobility and participate in the expected collapse of Aussie housing values.

Best of all, it’s a Canadian idea!

“With the number of first-home buyers participating in the housing market declining considerably over the past two years, it is crucial that we look at ways to assist this group to enter the market,” says REIA acting president Pamela Bennett. “There is proof that the scheme is working in Canada and we should be drawing on this success to assist first home buyers in Australia.”

And, Skippy, is it ever working. RRSP contributions are steadily declining, savings rates have plunged, personal debt has exploded, mortgages have hit $1.1 trillion, and house prices have squirted higher with a vengeance. In fact, Canadians have become so adroit at blowing air into the housing gasbag that the Brits are also aping us. As I told you days ago, PM David Cameron has just announced the government will allow 95% mortgages with taxpayers covering the risk (just like here). Enough of those stuffy Limey banks with the 20% down payment rules. Let’s get with the program.

But what’s this?

The influential Guardian newspaper has been reading this pathetic blog. How else to explain this editorial which craps all over the Rt. Hon. Mr. Cameron?

The government, by contrast, seems to have abandoned the idea of rebalancing the economy in favour of a policy designed to suck up to the baby-boomer generation by underpinning house prices, while throwing a bone to the housebuilding lobby. It is pandering to the blatantly erroneous belief that rising asset prices are a good thing for the economy while falling house prices are a national disaster.

Here’s the reality. Britain has had three bouts of rapid house-price inflation in the past 40 years, and all of them have been followed by painful busts. There has been no improvement in the country’s underlying economic performance since the journey into bubble land began in the early 1970s; on the contrary, growth rates are slower, the manufacturing base has shrivelled and the trade gap has ballooned.

The winners in this game have been the middle-aged and the elderly, who have seen the price of their assets rocket; the losers have been the young and the less well-off. There has been inter-generational larceny on a grand scale, and at the end of it Britain is a shrunken state pitifully dependent on the churning of real estate.

Of course, the editorialists have it right. The worst thing any government can do is make buying a house with no money easy. An entire generation of dewy young horny things has been seduced into thinking granite and stainless naturally follow training bras and skateboards. Our fixation with real estate is sucking the financial juice out of the young and transfusing it into the prunish, vaguely hideous hides of the Boomers. Worse, the kids are being set up for a crunch which could take until mid-life to get over.

But enough theory and hateful words that make you think. Let’s emote. Here’s Jeremy.

“Okay, I read your blog everyday, and it makes me want to sell my mid-town toronto house more and more.  I know one can’t “time the market”, but the “but it’s different” here in toronto seems to be holding true for some strange reason.

“I bought my house at $450K 6 years ago, and it is now appraised (I’ve been speaking with agents about selling) at circa $800k…  A bigger house up the street just listed at $1.45 and sold for $200K, yes $200,000 more than the asking price.  Is this the free market dictating the price of housing?  I think I’ll be a greater fool to NOT sell.  I’m thinking to listen to you and rent, it could never cost as much to rent as to own, but again, can this inflated bubble really stick and I lose further upside on my house? The government seems to keep blowing air into the balloon, and it’s gotta pop soon.  I’m in my 40s a recruiter, and I see what even high level executives make, it ain’t enough to sustain a 800k mortgage…  Is everyone making $500K a year in toronto, or am I just crazy?”

Jer, you’re absolutely right to question the psychology of the herd. The average 416 SFH now costs eight times the average income. Salaries are stagnant, so rising prices are financed with more debt. Not a sustainable situation. There will be economic revenge.

You’ve made a tax-free gain of $350,000, equivalent to earning and paying tax on $500,000 over the past five years. Why wouldn’t you harvest that profit? Investing the total funds that your house sale nets (even in stable, boring preferreds yielding 5%) would likely pay all your rent. You live for free. Have a pot of liquid wealth. No property tax. No insurance or maintenance. No mortgage. No worries about what’s coming. No revenge. No Nortel moment.

It’s not different in Toronto, or Vancouver. Or Melbourne or London.

Take the money. Ditch the risk. Pity the young.

235 comments ↓

#1 Not on the boat. on 11.23.11 at 6:57 pm

Can I be first today?

#2 Kevin on 11.23.11 at 6:57 pm

Good advice, Garth. I certainly hope Jer takes it seriously. I hate crowd mentalities and this silly-*ssed real estate bubble is due for some major corrections. Take the money and relax, Jer.

#3 horsey on 11.23.11 at 7:01 pm

First?

#4 Bill Gable on 11.23.11 at 7:02 pm

No sweat Mr. Turner = all is well……NOT…just as you have been trying to get through out thick skulls –

To Whit:

“Bank of Canada governor Mark Carney said Wednesday the central bank is standing fast to its price-stability policy and will keep lending rates near historic lows to limit the impact of a global economic downturn.

“We make monetary policy in the real world, where shocks are a fact of life,” Carney said in the text of a speech delivered to the Board of Trade of Metropolitan Montreal.

“That is why the bank responds with a flexible approach, taking decisions guided by considered analysis and informed judgment rather than mechanical rules.”

Carney’s comments follow a recent five-year recommitment by the central bank and the Finance Department to a so-called “inflation-targeting regime,” first adopted in 1991, as the main tool for guiding the economy.

“It is our job to anticipate potential shocks, analyze their impact on economic activity and inflation in Canada, and set monetary policy consistent with achieving the (central bank’s) two per cent inflation target over time,” he said.

“This ultimately remains the best contribution that monetary policy can make to the economic well-being of Canadians.”

The deteriorating state of the global economy has forced Canada to lower its own growth estimates and push back its timetable for eliminating the government’s budget deficit amid threatening signs of economic and financial instability in Europe and elsewhere.

Concerns over Europe’s debt crisis were heightened earlier Wednesday when China said its purchasing manager’s index declined in November, pointing to a sharp contraction in the manufacturing sector of the world’s second largest economy.

Meanwhile in Germany, the economic engine of Europe, fears grew that the eurozone debt contagion was spreading to that country after a disappointing auction of German bonds.

“The global economic outlook has weakened considerably and financial market volatility has increased, owing in particular to the ongoing European sovereign debt crisis,” he said.

“European authorities have announced important plans to provide time to re-found their monetary union, but acute strains persist. At this point, the crisis appears barely contained.”

http://tinyurl.com/7fyocjz

#5 U-The Man on 11.23.11 at 7:06 pm

It seems that Conservative governments have become proliferate spenders of future generations’wealth and taxes. The only beneficiaries of these policies are the realtors, the speculators and the Banks. Carney added fuel to the housing fire/bubble by saying interest rates will still low forever. Ha, at least until he gets a better job somewhere.

#6 NOBODY on 11.23.11 at 7:07 pm

Garth, why are you on top of the truck?
PETA boy?

#7 Junius on 11.23.11 at 7:18 pm

Another great post Garth.

It just continues to shock me the state of leadership in the world today. Just shocking how extend and pretend has become the new normal in the Global order.

#8 clem on 11.23.11 at 7:18 pm

Just read the comments from yesterday. People seem really fussed about someone buying and selling real estate at a profit.

It’s really hard to make it these days, people that have some success should be respected not hated. If you’re not handling your financial affairs with the view of making money, then what are you doing it for?

#9 Nostradamus Le Mad Vlad on 11.23.11 at 7:22 pm


Would these two be of any significance? “For an Italian, that’s lousy mock Italian. — Garth” and #77 Jody — “. . . a giant pink dildo.”

An Italian MaMa

Mrs. Ravioli comes to visit her son Anthony for dinner. He lives with a female roommate, Maria. During the course of the meal, his mother couldn’t help but notice how pretty Anthony’s roommate is.

Over the course of the evening, while watching the two interact, she started to wonder if there was more between Anthony and his roommate than met the eye.

Reading his mom’s thoughts, Anthony volunteered,

“I know what you must be thinking, but I assure you, Maria and I are just roommates.”

About a week later, Maria came to Anthony saying,

“Ever since your mother came to dinner, I’ve been unable to find the silver sugar bowl. You don’t suppose she took it, do you?”

“Well, I doubt it, but I’ll email her, just to be sure.”

So he sat down and wrote an email:

Dear MaMa,

I’m not saying that you ‘did’ take the sugar bowl from my house; I’m not saying that you ‘did not’ take it. But the fact remains that it has been missing ever since you were here for dinner.

Your Loving Son
Anthony

Several days later, Anthony received a response email from his MaMa which read:

Dear son,

I’m not saying that you ‘do’ sleep with Maria, and I’m not saying that you ‘do not’ sleep with her.

But the fact remains that if she was sleeping in her OWN bed, she would have found the sugar bowl by now.

Your Loving MaMa

Moral: Never Bulla Shitta your MaMa.
*
What a glorious day, full of emptiness with nothing to do except cause trubble. The markets may come and go, war may / may not happen, but life is a blast.
*
“Have a pot of liquid wealth. No property tax. No insurance or maintenance. No mortgage. No worries about what’s coming. No revenge. No Nortel moment. Let’s emote. And, Skippy, is it ever working. But what’s this? Best of all, it’s a Canadian idea!”

Skippy the Batgong! Holy sheepshit baby, that’s nice! And a Kanayjun thought it up! I’m beside myself with that intelligence!

#10 DondWest on 11.23.11 at 7:31 pm

I hate the baby boomer generation with a passion!

The reason why I hate the baby boomer generation comes down to one subject matter: housing costs. This is nothing short but economic warfare, in the tune of economic sanctions placed on the young for simply being young.

In Canada; the baby boomers in many geographical areas are effectively charging 400 times more adjusted for inflation on the sale of a home vs. the time they first bought it. By committing to such actions, the baby boomers are sending a clear message: I don’t love my children. Let’s call a spade a spade; “home equity” is merely an unconstitutional tax on the young.

The past ten years I’ve noticed a huge wealth transition. Money that used to go to salaries is now going towards real-estate and stocks. People such as me, aged 29, are priced out of the rising real-estate/stock values and can only work for diminishing wage returns. Sure, I can play the game as a casual investor by buying a few cheap stocks and trading silver, but none of the returns I receive are exactly life changing because I simply don’t have the funds to support much volume. The movement of wealth away from income and into assets represents a large transition of wealth from young to old; and it’s simply unacceptable. What makes it even more unacceptable is it rewards people for not working; and punishes people for working. When my father can earn more than me in investments/real estate, effectively sitting on his romp, than I can earn in 60 hour work weeks, what incentive is there for me (or other people of my generation for that matter) to work hard? The truth of the matter is people have earned more money the past 10 years by simply sitting in a house; than a lot of people who actually took the risks to build a viable business. This too; I feel, is simply unacceptable.

To make matters worse, the boomers brag about their fortune and the misery of their kids. They believe it’s an accomplishment to simply be born in an era where all assets were cheap and to subsequently watch them appreciate tumultuously during the past 20 years. They tell me I should “quit whining.” Then in a pig headed undertone, they suggest that if I were smart; I should have bought a house 20 years ago. Of course I couldn’t buy a house 20 years ago because I was in grade school. They also seem to think that if I work longer than 60 hours, spending yet more time on this depreciating return that is wages; that this will somehow lift me out of poverty. Make no mistake, baby boomers revel in the permanent young underclass of rent slaves. They love to see the young dish out 50% of their wages in rent, while they sit comfortably on the sofa. Baby boomers, they’re always a grasshopper, never the ant. It makes them happy to see people younger than them suffer; in part because it makes the baby boomers feel younger to see people younger than them so miserable.

Capitalism doesn’t work when it comes to housing. Capitalism only works when people have a choice whether to buy the product. When it comes to shelter, people have no choice; they must either buy or rent. You can’t opt out of paying for the product when it’s overpriced. This means the current generation of homeowners can overcharge everything equally; thus inserting an effective monopoly on high housing costs. Effectively this leaves those who are born later in the game holding the bag. Real estate is a generational pyramid scheme.

What needs to be done is for the young to have options opting out of the “free market” that’s failing them in regards to housing. They should have the option to build colonies outside the cities; and to build their own communities. We shouldn’t be forced to play the real estate game. We should be allowed to use housing for its actual purpose; housing our families.

Land shouldn’t cost anything, and the wholesale value to build a house isn’t any more than 50K. It’s ludicrous that young people have to pay 10 times the wholesale value of a house because everyone else is offering the same ridiculous 10 times the wholesale value of a house. Any other business that offered their products at 10 times wholesale value would run out of business. Let’s put it this way; if every single computer shop decided to conspire together and equally charge $10,000 for a computer laptop; nobody would buy computer laptops. That’s because people have a choice; computers are a luxury. If laptops get too expensive people won’t buy. Therefore businesses must competitively keep costs down. The opposite is true for housing. Free market housing success involves keeping prices artificially high on the consumers; and developers actively collaborate to insure this reality. If young people were given an option to break free from this market by building houses off our own sweat and tears; our future would still be a lot of hard work, yet hopeful.

As far as I’m concerned, any suggestions to house my generation within the current capitalist system are moot point. Obviously the real estate system is profitable without the need for first time buyers; so there’s no incentive for the capitalists to change their ways. I don’t even look at real estate magazines anymore or scout the market. It’s like getting coal in your stocking every Christmas. There’s no market for me.

I can’t exactly be entrepreneurial and take advantage of the huge market demand that isn’t being met; because I don’t have the capita to start a home development business. Unlike other businesses, you can’t “bootstrap” your way up in home development. You need to take the traditional route of taking out a huge bank loan; and banks won’t loan out millions to young people. Think of it; an entire generation that needs to be housed yet can’t afford it. You would think entrepreneurs with money would be jumping all over this opportunity. Sure, they may make less profit per sale, but the sheer volume would more than make up for it. Unfortunately, it seems those with money lack the tact to take advantage of the situation. On the other hand, people such as me, who have noticed this untapped market, simply don’t have the funds to realize our dreams. And no; silly condominiums are not the answer.

Young people simply need an alternative out of free market capitalism when it comes to real estate. Either we take the socialism route of getting the government to force the baby boomers to charge no more than 30% of someone’s wage on rent/mortgage (not likely to happen); or we take my colonial advice, which allows the youth to establish colonies on offered crown land.

Of course, there will be many forces preventing us from doing so, such as environmental groups who will argue we need to protect the moose, skunks, racoons, and foxes that are more numerous in Canada than people. I often find such people who make such arguments fall into two groups. The first group are well heeled baby boomers that already got in the real estate market when it was cheap; and want to see their housing values rise. The second is a brainwashed kid, usually from the same baby boomer parent I mentioned previously, who believes his “austerity” is for the “benefit of the environment.” Perhaps before this young person so blazingly accepts a diminished living standard; he should expect the same sacrifices from his own parents. Here’s a hint, ask them to give up the house (at a fair price), there’s no reason why a retired couple needs 3-4 bedrooms.

Based on my previous paragraph, anyone can easily see I have no respect for the corrupt nature of today’s environmental movement. So anyone who wishes to challenge my arguments using an environmental rebuttal; you’re just breathing excess Co2.

If people want to accuse me of being bitter or jaded; I confess to being guilty as charged! None the less, whether I’m bitter or jaded matters little, all that matters is the truth. The fact of the matter is my parents’ generation has priced their own children out of shelter in the name of greed. This is a heinous crime; a crime that I consider unforgivable. Even if it were to change tomorrow, I would still in no way be compensated for the valuable years wasted. I will not forget. This experience will always be reflective in my decision making, now and in the future, in working, voting, economics, politics, finance, etc. The baby boomers can call it whatever they will when I make that statement; just remember you reap what you sow. . .

If the idiot young would stop buying from the greedy old we might get somewhere. — Garth

#11 R. Olausen on 11.23.11 at 7:32 pm

A house versus it”s equivalent in fiat money is the proposition that is in question. The reason such a high house price is in effect is many people see the large bag of fiat lose value faster than the bricks. Well the bricks people may be glad that the fiat paper folks on this sight are so sure of themselves. I believe in letting other people hold the paper while I sit surrounded in bricks. One thing more, in this discordant world, Canada is the pick of the litter.

#12 T.O. Bubble Boy on 11.23.11 at 7:44 pm

How desparate are the UK and Aussie governments that they look at the Harper/Flaherty “home renovation and cheap debt” economic action plan and think “that’s exactly how to grow an economy!”?

There are only 2 things holding together the Canadian market:

1) Rates are so low that the 0%/40-yr and 5%/35-yr mortgages from the 2006-2007 era are still able to refinance when the 5-year term is up.

2) Vacancy rates are so low in Toronto that *most* condos can still be rented out… not necessarily at a high enough rent to cover all costs, but high enough to keep the owners above water as they wait and hope for the condo to rise in value.

#13 Fixed Income? on 11.23.11 at 7:51 pm

That photo is soo staged. For the real thing, try this: http://www.progressiveboink.com/jon/images/calvinhobbes/jon5.GIF

#14 JP on 11.23.11 at 7:56 pm

Thank you Canada,

Thank you for teaching us the way to poverty.

#15 Lvl 85 Orc Warrior on 11.23.11 at 8:13 pm

I can’t put my hoof on it but that picture looks staged…

#16 Banker Billy on 11.23.11 at 8:14 pm

A banker friend of mine told me that in the recession of 90, banks kept 1000s in their homes and didn’t foreclose even though payments were not being made. The banks realized that dumping all these homes would tank the market and opted for keeping the debt slaves in until the recovery, maintaining the home, paying the property taxes and still on the hook for all they borrowed.

#17 Nonno Nicola on 11.23.11 at 8:19 pm

Heya Bigga Rider, I see a you pissed off a Signor Turnero with your commento. I no a sure if you a reada my risposta to your a commento abouta da real estata and what a makes a Toronto a differento from all da othera paesi you mentiona. Go backa anda reada ita and no pissa Signor Turnero offa, capice figlio mio?

#18 Okanagan Renter on 11.23.11 at 8:23 pm

Crikey! Talk about a Freudian slip there, Mrs. Bennett:

“There is proof that the SCHEME is working in Canada and we should be drawing on this success to assist first home buyers in Australia.”

The Oxford English Dictionary cites one of the meanings of “scheme” as follows: “To lay schemes; to use ingenuity, resort to contrivance; to devise plans, esp. underhand or with sinister motive.”

Need one say more? Garth goes transcontinental — Crocodile Dundee & Limey Petes everywhere beware!

#19 Mr. Lahey on 11.23.11 at 8:24 pm

Jim Lahey here Garth. I am tedious but your writing about the same theme for three years is not?

And you are here… why? — Garth

#20 TaxHaven on 11.23.11 at 8:25 pm

Aren’t you the one who’s mortified at the thought of any price DEflation?

You’re fortunate indeed to have all the governments on your side.

Isn’t it about time they just got out of the way? House prices are unjustifiably high. But so are car prices, salaries, government spending, health care costs, college fees and just about everything else.

Why go on supporting such things as minimum wages – rigging the labour market – and government stimulus spending?

Why not just end all the hiding, extending and pretending and let the WHOLE LOT crash down to a state of cash-only affordability – which is where it should be given the dearth of REAL savings?

Let’s see who’s been swimming naked. I’m sure we’ll find it’s just about everyone.

#21 Joe Q. on 11.23.11 at 8:36 pm

Garth’s correspondent writes: “Is this the free market dictating the price of housing?”

It’s the market, but it’s hard to claim that it’s “free” when prices are so tightly linked to mortgage credit availability (itself a function of government and central bank policy) and pricing information is guarded by a professional cartel of brokers.

#22 Smoking Man on 11.23.11 at 8:38 pm

I so can’t wait for the economy to tank……………………….

Wah Wah Wah the media lies, no kidding………Takes one to know I say.

If you’re in the news business a reporter and you come out with some ridicules things like Housing is way over priced, A crash is coming, well first thing that’s going to happen is a paying advertiser that makes it’s money from real estate is going to call the business manager and you’re going to get beotched slapped… It’s a fact…….

Listing to the radio 640am and 1010am talk shows: Topic those pathetic losers at Occupy Toronto. All the callers calling adding there 0 IQ to the debat. Fact of the matter is over the last 30 years the investment class, the class I work for and participate in has raped the working Man. I loved bucking rivets in an airplane wing, I was darn good at but realized 20 years ago my standard of living was tanking to real inflation, could not survive If I did not evolved, and evolve I did.

So hear I am working on bay street part time charging a sick rate, swing trading making sick returns, yet I am blue collar inside……

And I listen to these oblivious callers on the talk shows bashing unions, bashing protesters not realizing they are the midgets on all fours taken it from behind by a big basterd elephant, and smiling and obeying at the same time.

When the time comes those are the people in my cross hairs, they are the ones I will take advantage of and feel good about it…….Fn Idiots……………

#23 Tony on 11.23.11 at 8:38 pm

Jeremy doesn’t seem to know the meaning of “dumb luck”. If he sells before the collapse then he can tell all his friends that are broke in the future that it was just dumb luck i hadn’t a clue what i was doing.

#24 MarcFromOttawa on 11.23.11 at 8:41 pm

Preferreds and REITS will go down in value if the supposed interest rate hike ever comes to fruition.

Preferred prices will drop, yields will not. REITs would not be impacted. — Garth

#25 Herb on 11.23.11 at 8:41 pm

There has been inter-generational larceny on a grand scale, and at the end of it Britain is a shrunken state pitifully dependent on the churning of real estate.

Can you imagine reading something this in a Canadian editorial? So Great Britain still has journalists prepared to speak truth to power. Rule, Britannia!

And goosing the housing market with impossible mortgages guaranteed by the taxpayer is no longer done only in Canada. Pity.

#26 Islander on 11.23.11 at 8:51 pm

If you are wondering why financial asset prices have rebounded so strongly from their 2009 lows, it helps to discover the most important economic story in decades that has been entirely ignored by the msm. Here is a link to Sen. Bernie Saunders report on $16 Trillion in completely secret payments from the Federal Reserve to financial institutions around the world. Consider that Citigroup alone received $2.5 Trillion… more than the entire annual tax revenue of the US! The most interesting question is how these institutions were able to hide these massive amounts in their accounting without massive fraud. Also interesting is that despite the fact that this information comes directly from the GAO(Government Accountability Office), rather than some unverifiable source, I challenge you to find a single mention of this story anywhere in the msm. Cnn? CNBC? CBC? Bloomberg? Anyone?!

http://sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3

Tinfoil alert! — Garth

#27 Van guy waiting on 11.23.11 at 8:57 pm

Hail King Carney! Wait, the moose got him 

#28 Nostradamus Le Mad Vlad on 11.23.11 at 9:03 pm


France’s AAA rating going, and German bonds spurned; Europe Industrial orders slump; Record Vote “Which I think are the only nations on Earth not enslaved to the IMF!” wrh.com; Banxters destroying America; Let off Occupy Albany has second group of protesters given the all-clear; Global Debt Check the chart; Current Accounts Country-by-country.

JPM sued This must be Sue City; Municipal Bankruptcy “Home to 660,000 people, Jefferson County . . .”;
*
4:30 clip Medvedev goes ballistic; Russia warns US, Israel against attacking Iran, Link in US carriers near Iran, Russian warships off Syria, and US ceases observing arms treaty; Revolutionary Railroad being developed in Russia; Syria No fly zone; Russia Targeting missile sites; Libya The west’s looting continues, and Libya Post-Gadaffi, lynchings and beatings; Coins from 17 AD found under Jerusalem’s west wall.

Popular mom and pop biz. shut down by the DEA; Political IQ Rick Santorum doesn’t have any; Ten min. clip The speech Hitler gave which we weren’t supposed to hear. Notice the similarities to today. “We will force this war upon Hitler, if he wants it or not.” — Winston Churchill (1936 broadcast) and “This war is an English war and its goal is the destruction of Germany.” — Winston Churchill (- Autumn 1939 broadcast); Maine suing farmer for selling raw milk; Fake iTunes Arrested? The company broke in illegally; Vioxx Merck has their wrists slapped; Police State unifying the resistance? ehavior Modification We’re not behaving very well.

#29 Smoking Man on 11.23.11 at 9:05 pm

Canadians we are a funny lot we are.

Most of us guys grow up playing hockey, and we know the rules, some one cross checks you in the face on open ice, the gloves are coming off and you lay down a beating…

Thanks to our school systems obedience training , when it comes to finance, the 20 something’s today, get cross checked, hit from behind in to the boards , kicked in the face, kicked in the coconuts, punched in the face and spat on. How do you react, you call a talk radio show and praise the goons that idi it to you, and make fun of the ones trying to help you.

Canadians are to stupid see a bubble, they will happily suffer hence no crash in real estate………

#30 Smoking Man on 11.23.11 at 9:16 pm

#10 DondWest on 11.23.11 at 7:31 pm

So you hate the boomers, I ‘m a boomer, what are you going to do about it…….

Dude it’s your generation feeding the low end of the market that is the problem. The stupidity of your gen and the one before is the reason you are priced out….

Grow some nuts go demand a raise….or you’re taking the customer list and 1/2 your companies customers.

That’s how it’s done grass hopper…Quit bitching…………

#31 DM in C on 11.23.11 at 9:18 pm

DondWest;

Well said. I couldn’t agree more. As to Garth’s point — the young need to stop buying at these ridiculous prices.

#32 DondWest on 11.23.11 at 9:20 pm

“If the idiot young would stop buying from the greedy old we might get somewhere. — Garth”

I have no choice but to buy overpriced housing from baby boomers either way; what demographic do you believe the majority of landlords fall under? What I’m I supposed to do? Pitch a tent in a park in the name of protest? Oh wait a minute. . .

Besides, there are not any young buyers in my region anyways. Why? You wouldn’t find anyone under the age of 40 here. They’re all boomers flipping houses with each other.

Being born later rather than sooner is proving to be a goose egg. It’s like playing a game of monopoly; and coming to the table late. All of the properties are already bought. All you can do is pass/go. You have no chance in winning; so why bother?

Let’s face the facts here, by the time this housing market corrects; I’ll be well past the age for having kids and simply too old to care. And we wonder why our birth rates are so low? Victim of bad timing; I turned 18 the minute this bubble started.

I suppose my only option is to take my 100K in savings and blow it on some boat. Fill the boat with wood and maybe a solar panel. Then build a small house on a remote island far away from all this mess.

#33 Smoking Man on 11.23.11 at 9:25 pm

#28 Nostradamus Le Mad Vlad on 11.23.11 at 9:03 pm

WW2 I know Im not going to spell this right sound it out
Da-Ju-Voo

#34 DondWest on 11.23.11 at 9:37 pm

“DondWest;

Well said. I couldn’t agree more. As to Garth’s point — the young need to stop buying at these ridiculous prices”

Been over this point already; we have no choice but to buy or rent at inflated prices. Shelter isn’t a luxury item; you can’t simply opt out of paying.

#35 Bottoms_Up on 11.23.11 at 9:38 pm

#205 Dr. Cornwallis on 11.23.11 at 6:46 pm
—————————————————
Sure, you can cram condos downtown, but at least the burbs could have 1/4 acre sized lots and everyone would fit just fine. The problem is people are commuting 2 hours each way and coming home to a 30′ by 50′ lot. Ain’t gonna last long.

#36 Devore on 11.23.11 at 9:48 pm

#10 DondWest

Capitalism doesn’t work when it comes to housing. Capitalism only works when people have a choice whether to buy the product. When it comes to shelter, people have no choice; they must either buy or rent. You can’t opt out of paying for the product when it’s overpriced.

What a load of bull, and I hope that’s copy pasta, because I can’t believe you would spend so much time to write that.

Counter-example: food.

What’s different between food and shelter?

No one’s ashamed of buying food from a grocery store, instead of owning the farm. But when it comes to shelter, you’re throwing your money away unless you own the house.

No one mortgages their grocery bill. It’s a cash business. But people borrow a significant portion of their lifetime earning power (at compounding interest), with little money down, to buy real estate. I don’t see much “capitalism” in the real estate and mortgage market. But I see plenty of government policies, incentives and subsidies designed to keep goosing prices ever higher.

Those making the rules, not those following them and being shaped by them, are largely responsible for the problems you are seeing.

#37 wtf????? on 11.23.11 at 9:51 pm

UK, OZ, CAN , US all got soaked in the Keynsian nonsense that was set up after WW2. The idea was to expand government revenue by 2% p/a. Too bad 50 years went by and the systemic inflation target has now compounded exponentially…..who said the politicians are the best and brightest? Too bad they can’t do simple financial math……you remember your rate tables hopefully….no?

The same Euro centric generated G8 policies created the disindustrialization of the west through the sustainable development model. Our eager beaver Trudea couldn;t screw the pooch fast enough….but then he inherited millions and never worked a day in his life.

This is where the west sends capital to the developing world to advantage the low cost labor forces and keeps the recycled commodity/material costs of inputs down. Theory goes that everyone benefits because we raise the standard of living in the developing world by leveling out the western standard then ‘they’ recycle the money back into the western economies intellectual sector. Well….that didn’t work did it…..

China is not sending our money back are they? This sustainable development model has simply meant that our politicians have hollowed out the western industrial sector, screwed the middle class and made the Chinese rich, by leaving the west jobless and without prospects except to pick the bones of the citizenry for the scraps of flesh they haven’t already taxed away.

How were we supposed to fund this massive cash drain from us to ‘them’? We created smart little ideas like ‘the kyoto accord’……taxing energy consumption in the west and sending the ‘carbon credits’ to the ‘east’ so they could replace the dirty industries in the west with green industries in the east…..except China wasn’t playing the game fairly…..and becomes the largest industrial polluter on the planet. More car smog generated in Beijing in one day than comes out of the dirty dirty oil sands in a year! Funny how the fact that climate change has been occuring for millions of years but has suddenly become a problem for the western economies since the 70’s onset of a political dogma borne out of LSD and socialism? Coincidental…..just a bit.

So whats happened to the economies of the west..we don’t manufacture….we give away IP and capital to people who don’t pay it back…..and now we rely solely on soaking the elderly for their savings and driiving up personal debt into an ersatz bubble of real estate based consumer ‘wealth effect’ consumerism…

This like the Keynsian perpetual inflation machine model which was designed by limited minds to last a limited time can only end up with an entire society so debt encumbered that no possible future can sustain the payments for the leasing, mortgages, cost inflation etc etc etc with massive increases in taxation……..and you thought George Orwell had a nightmare.

Of course todays politicians will all be living on fantasy island with their fat sucking pensions and never have to answer for their miscalculations and may I say…..misdeeds?

#38 john m on 11.23.11 at 9:51 pm

I am totally blown away by the stupidity that abounds in the real estate sector.. a clearer lesson could never be learned than what happened to our neighbors to the south by adopting the same policies. Propaganda from a leadership with the qualifications for an entry position in any industry certainly should not influence anyone but the mentally challenged.

#39 Bottoms_Up on 11.23.11 at 9:54 pm

#174 Guan-Di on 11.23.11 at 4:10 pm
——————————————–
You’re kidding right? To get the Quebec government-subsidized $5/day daycare in Gatineau you have to know somebody. It’s a lottery, not a sure thing, and there is a LONG waiting list, I have looked into it.

And homes are definitely NOT 1/3 the price than the Ottawa side. Perhaps a 10-20% discount.

Gatineau (245k town, and 589k house):

http://passerelle.centris.ca/Redirect2.aspx?CodeDest=ROYAL&NoMls=OU8591129&Source=WWW.REALTOR.CA&Langue=E

http://passerelle.centris.ca/Redirect2.aspx?CodeDest=EGPTECH&NoMls=OU8641066&Source=WWW.REALTOR.CA&Langue=E

Ottawa (299k town, 569k house):

http://www.realtor.ca/propertyDetails.aspx?propertyId=11066882&PidKey=-1146142651

http://www.realtor.ca/propertyDetails.aspx?propertyId=11275330&PidKey=1049786167

#40 noodles 79 on 11.23.11 at 9:57 pm

Its funny that the same people complaining about the higher price of goods, are the same people bragging about the increase in the value of their homes.What ever happened to stabalizing inflation?These days, instead of increasing interest rates to slow things down,their letting people mortgage themselves to death.Dont the old rules apply anymore? I guess not,The new rules are, let it go on and on, and let people think their rich on paper, so that inflation can flurish. Somebody changed the rules, and thier not for the benifit of the masses.You know when the crash is going to happen?When people finaly realize bragging rights does’nt buy you a gallon of gas!

#41 McLovin on 11.23.11 at 10:04 pm

DondWest good post.

I don’t know if you have to wait that much longer for a major correction. A person with $100K and no debt could be in a really nice position in the next few years.

#42 Okanagan Renter on 11.23.11 at 10:04 pm

#32 DondWest: Your previous posting, a thoughtful meditation on the wreckage left to our generation in the wake of boomer greed was spot-on. I would weigh in, however, on your latest comment:

“I have no choice but to buy overpriced housing from baby boomers either way; what demographic do you believe the majority of landlords fall under? What I’m I supposed to do? Pitch a tent in a park in the name of protest? Oh wait a minute. . .”

“No choice”? As the curmudgeonly Sartre once said, there is always a choice! You can….wait for it…RENT! Or at least rent until you hear the thud of real estate hitting the ground as the lemmings begin to fall off the cliff.

Bide your time. Be patient. Invest your 100K wisely. This too shall pass…

#43 Ding on 11.23.11 at 10:08 pm

bidding war still going on in Richmond Hill and Markham, just bring the interest rate to history normal level. damn it.

#44 Seven Stars and Orion on 11.23.11 at 10:16 pm

DondWest,

I’m a few years older than you are, but I agree with a lot of your post. Worked my ass off for years playing their game like a sucker and now it’s prolly too late for me to breath easily , financially speaking. I got married and started a family anyway. Sure, my mom gives me grief for wearing pants with patches and shoes with worn out soles because we save and invest our incomes. Screw them and their mountains of made in China crap. We rent the best place that makes financial sense, and live our life the best we can, like every generation before us. We may never have the quantity of opportunity that our parents had, but we surely live better than the generation before them, and we certainly appreciate the small joys of life a lot more than those boomers who would screw each other over for a percentage. That bitterness is just going to eat you up dude, let it go.

#45 Not 1st on 11.23.11 at 10:26 pm

Anybody that would buy an RRSP is a full out retard. tax deferral right to the time when the boomers will be raping the health care system and few people working. What do you think tax rates are going to be in 10-15 years. Personal taxes never go down.

#46 Stevenson on 11.23.11 at 10:44 pm

We will have a correction and everybody in debt is doomed, but it won’t be that bad either. You can play it safe but Toronto 416 prices will be sticky. Seems pretty easy to cover the story either side it tips.

#47 Westernman on 11.23.11 at 10:48 pm

DondWest,
I have news for you…boy…the world doesn’t owe you a damn thing.You best learn that – it’ll save you a shiteload of headache and heartache in the future.

#48 Mister Obvious on 11.23.11 at 10:54 pm

#10 DondWest

That must have taken some time D. Up late last night? How old are you anyway? Twenty four?

I was a proverbial ‘bitter young man’. I’d love the opportunity travel back in time to visit my sulking self at the age of 24. My first order of business would be to give myself a cuff up the side of the head. Then I’d advise myself to embrace a little constructive pragmatism in a world where others care nothing about my advancement. “You’re going to get to that point eventually” I’d say to me, “so you might as well begin now. Tempus fugit, son”. But I doubt I would have listened.

Yep, I’m a boomer. And yes, there was, and still are, a gazillion of us. We were absolutely chomping at the bit to get out and start our lives. Anyone still living with mom & dad after the age of 20 was considered mildly retarded. We all rented. We did this for a very long time. Home ownership was an impossibility anyway. But no matter, we had more immediate problems.

The world I sought so desperately to join was not anxious to bring yet another punk like me on board. To say prospective employers were disinterested is to be charitable. The prevailing attitude was that I had nothing whatsoever to bring to the table, which in hindsight I can see was fairly accurate. Self loathing was encouraged at every step and I bought heavily into that concept.

I hated them too, whoever they were. Apparently the miserable old buggers holding the reins of power at that time had been present at some kind of world-wide depression and subsequent global war. Their air of superiority infuriated me. The crippled old sods were holed up in warm offices while I packed bricks around outside in the rain.

At about the age of thirty it dawned on me. Nobody ‘out there’ cared in the least about my future, my security, my employment prospects, my comfort, my happiness, my needs and aspirations. (Well, to be honest, my mom did but she wasn’t hiring). Shock of all shocks! It was all down to me. I had to educate myself and start anew on the long slow road to where I though I deserved to be. That ate up the next thirty years.

It turns out the old adages were true. You need to face this world as it is, not as how you wish it were. You need to do the usual things: Work hard, sacrifice, learn not to follow crowds over cliffs (the central message of this blog), grow your savings, live within your means, be patient, be careful, be cautious, and be smart. Above all, expect others to always look out for their own interests and get that simple fact of human nature working for you instead of against you.

Quit pouting and get on with more productive things. Tempus fugit, son.

#49 DondWest: Free Market Capitalism in Canada? Are you serious? on 11.23.11 at 11:02 pm

DondWest:

You had me until “Capitalism doesn’t work when it comes to housing.”

Free Market Capitalism in Canada? Are you serious?

Dude, you are talking about a government that buys General Motors, bails out banks (yes, we did), runs the insane CMHC (for the benefit of private institutions), builds a fake-lake for the G-20, offers real estate tax incentives out the butt-hole, tax credit home renovations, “greenification” kick-backs, subsidized housing, crazy income taxes, sales taxes, property taxes, school taxes, baby bonuses, welfare, etc. etc..

This ain’t free-market capitalism, buddy.

#50 Unistar38 on 11.23.11 at 11:05 pm

#43 Ding,

I do not see the bidding wars at all in Richmond Hill and Markham. Do you speak from your experiences?

#51 45north on 11.23.11 at 11:07 pm

Nostradamus: Never Bulla Shitta your MaMa.

pretty funny

DondWest: I hate the baby boomer generation with a passion!

The reason why I hate the baby boomer generation comes down to one subject matter: housing costs. This is nothing short but economic warfare, in the tune of economic sanctions placed on the young for simply being young.

that’s what it looks like. I’m a baby boomer and I benefit from rising housing costs. But it’s not my fault. What – the average house in Toronto is 5 times average salary and its my fault? The average in Vancouver is 10 times – does that raise the severity of the charges?

I have told my children not to buy. I have maintained this position at some cost. I see their frustration, they are young and strong. They have been told that they deserve to have their own place. The government, CMHC and the banks tell them go and buy. Even their parents but not me.

#52 DonDWest on 11.23.11 at 11:09 pm

“What a load of bull, and I hope that’s copy pasta, because I can’t believe you would spend so much time to write that.

Counter-example: food.”

We do have certain laws in place, although not always enforced that prevents a grocery store from pricing milk double the amount the next day. Can’t say the same about housing.

#53 Makaya on 11.23.11 at 11:09 pm

In Canada, we also immigration from China to fuel the ridiculous price of real estate. Below are abstracts from a Business Week article…

China’s Super-Rich Buy a Better Life Abroad

“Self-made millionaire Li Weijie runs his own ski and golf resort outside Beijing and considers himself a patriot: A lifesize statue of Mao Zedong on a four-meter base towers over the entrance to his resort. What would Chairman Mao say if he knew Li was the proud holder of a Canadian residency card? “I wanted access to the education system and health care of a developed country,” says Li, 43, whose other businesses include one of Beijing’s largest private taxi companies, two car dealerships, and a real estate company. Li now has a $6 million house on Vancouver’s Westside, known for its rich Chinese. His wife tools around Vancouver in a black Maybach while his 20-year-old son drives a dark gray Maserati to classes at the University of British Columbia. His wife and son live in Canada full-time. ”

(…)

“So why are they looking at residency abroad? The top motive cited is to pursue better educational opportunities for their children, according to the Bank of China-Hurun and China Merchants-Bain surveys, as well as comments from émigrés.”

(…)

“He says that if things got ugly, the rich would be targets not just for being rich but for their close connections with the government. Most of China’s wealthy have an “original sin,” or some illegality relating to earning their “first bucket of gold,” says Yang.”

(…)

“A serious issue for both the Chinese applicants and their prospective host countries is the origin of their wealth. To ensure that those with criminal backgrounds aren’t let in, and to make sure they’re truly affluent, officials of the U.S., Canada, and other countries want thorough documentation of their assets. That can be difficult. “Wealthy Chinese almost all have a history of evading taxes,” says Gao Tong, who emigrated to Boston six years ago and is now setting up his own immigration services company called Harmonia Capital USA, with his brother, a wealthy Shanghai businessman. “They fear getting caught if they have to report their income globally.”

Some middlemen collude with clients to forge documents, say Well Trend executives, since many émigrés don’t have papers to prove the origin of their finances, or they may have gotten rich through illicit means. “There are more than a few bad apples,” says Victor Lum, a vice-president at Well Trend and a former Canadian visa official. “USCIS takes allegations regarding EB-5 program malfeasance very seriously,” USCIS spokesman Christopher Bentley wrote in an e-mail.”

http://tinyurl.com/87r8gl9

#54 bigrider on 11.23.11 at 11:13 pm

#17 Nonno.

My comment that got censored had nothing to do with your post about why T.O is different.

By the way Nonna, your response last time was disappointing. You said T.O was different several times (gold land etc.) but did not specify why.

Yes ,I’m too lazy tonight to bother with the mock Italian.

Well, maybe not.

See Nonno, ” you shoulda tanks a God you liva at a da times you did, perche dis timesa r very diffarenta, capice”? no inflationa facile for la terre sole per la mangiare..ci capito?

See Nonno, il scuola di asino was enough back in the fifties ,sixties, seventies and eighties no education you have job easy, put money in bank maka lotsa interesta easy. Now, MBA have lousy job, no easy money in bank ifa u sava good and stocka marketo drop,drop as does all the terra everywherea in world except a bella Toronto…yet.

Nonno il tempo itsa change… li ‘inverno e qui.

#55 Canadian Watchdog on 11.23.11 at 11:20 pm

One thing I learned many years ago—”You can’t bet against a printing press and win.”

After reading today’s press release from the BoC on inflation targeting, I’m nearly convinced they will have to devalue (a la Japan) our currency by buying dollars in the open market. Don’t believe it? It’s all ready to go.

http://www.bankofcanada.ca/rates/exchange/foreign-exchange-intervention/

#56 John on 11.23.11 at 11:28 pm

I just sold a rental condo in Edmonton I bought a yr ago, I feel so lucky, got an offer on the 1st day that was 20K more then I paid for it last year, no other offers, the condo market is bad, I thank my lucky stars, I rally think Edmonton prices are going down further as the world econolmy slows down, with everyting thats happened in the last two years one thing hasn’t changed a bit, all govts are carrying too much debt and they are now coming up against the brick wall formed by bond buyers who are getting nervous about govt bond yields continually going up as bond prices go down. They now want to see some real plans on how governments plan to pay borrowers back without going into a debt deflation spiral. Its all very interesting and scary at the same time

#57 Halcyon99 on 11.23.11 at 11:37 pm

@37

The Canadian oil sands emit 40,000,000 tons of C02 per year. Also, the Chinese are years ahead of Canada/US in car emission standards. Look it up. They don’t have greedy lobbyists betraying the common good and demanding high carbon emitting vehicles like we do. Canadians are the biggest polluters in the world per capita, so your whole argument is a wash.

And China has tried to send the money back, but has in the past been repeatedly rejected/denied. For example, heard of the Futurewei debacle ? Many big Chinese companies, beyond those buying real estate/natural resources, have tried to set up tech shops in Canada only to be slapped down by red tape.

Instead of whining about the Chinese, encourage your countrymen to get meaningful globally competitive educations and stop being so generally clueless about finance/international business

#58 Fleabitten Monkey on 11.23.11 at 11:54 pm

Interesting the Aussie lady termed it a “scheme” working in Canada. Is it just me or am I the only one who thinks of a “scheme” as plan with a negative outcome for someone?

#59 HouseBuster on 11.23.11 at 11:56 pm

Make no mistake, house prices in Canada are going to drop by 50%.

#60 WI BOOMER on 11.23.11 at 11:57 pm

Soverign Debt anyone? We are FULL of it here in the US.
So is the UK, Greece, France, Italy, ad nauseum. WHO stands behind their Bonds? Their TAXPAYERS, right.

US-Fannie-Mae, Freddie Mac (those tits-up Gov’t guaranteed mortgage lender / buyers guarateed by the full faith & credit of the US Gov’t? WHO is that? The Tax PAYER, right.

CHMC-Canadian guaranteed mortgages..by WHO? The TAX PAYERR, right.

All have in common the poor work-a-day tax payer at the end of the line. We mostly don’t think about what our duly elected representatives, or the agencies they have installed are doing in OUR names. While I absolutely believe here in the U.S. we made a big error in enacting tax cuts in the early 2000’s and then starting two wars, not as yet concluded, we have the inept politicians clamoring for more, and extended TAX CUTS. I doubt we can even restore our old 1999 tax rates, still low by comparisson to others. How do we pay 15T even at 2%??

So, if you’re drowning in DEBT now the curent advice is to borrow more to dig the bottom out of the hole. Yeah, makes NO sense. I am currently out of the markets, after the EU finally pops, either by war, or actually looking themselves in the mirror and saying “we Fook-ed up” remains to be seen. Ditto for all the other over-leveraged people mentioned.

NOTHING brings down prices quicker than a lack of demands for the product. Can ALL the would be buyers NOT buy a home for a couple of years? That will shake up FEAR in RE faster than any interest rate cuts, or idiotic gov’t programs that entice risky borrowers.

I will be buying more stocks, later….after another 1-3M points are shaved off the current market…I CAN wait!!

#61 SV on 11.23.11 at 11:58 pm

I know it is a Canadian blog, but still would be interested in your views re: Australian RE. It is different here, ie the interest rates are much higher than in Canada. What is your take – is our debt reckoning nigh or would we first go through a low-interest period that will suck in more people into housing debt?

#62 Renters Revenge on 11.24.11 at 12:00 am

I like the title of tonight’s post.

#63 Kurt on 11.24.11 at 12:10 am

JEREMY! Bulls make money, bears make money, pigs get slaughtered! You are thinking like a pig. Sell NOW!

#64 somecatchphrase on 11.24.11 at 12:16 am

#10 DondWest on 11.23.11 at 7:31 pm

Overall, a very good rant, however, don’t blame free markets for the current state of real estate markets in Canada. We don’t have a free market for real estate in this country. We have the CMHC. Without the CMHC, this “inter-generational larceny” would not be possible.

#65 JohnnyBravo on 11.24.11 at 12:18 am

It’s bad confluence of factors:

• Governments and banks desperate to keep the debt machine running faster and faster to stave off deflation.
• A generation of spoiled mooks and midriffs who believe a house, two Beemers and a nanny named Nani are basic human rights.
• And a growing mistrust of financial markets, banks, politicians, money managers, insurers, and just about anyone dealing in ‘paper’.

When the gov is giving it away, and they all but outlawed moral hazard, and banished risk on a favoured asset, what do you expect? What bothers me most is what this is doing to MY money and the money of other prudent, hard-working Canadians.

Also, is it just me and my view on homes, but my wife and I bought our first (and current) home back in 1998, just before the market began accelerating into the crazysphere. Our home is probably worth almost double what is was back then, but it doesn’t make me feel any richer. You know what my wealth effect is? More cash, and stuff that can be turned into cash quickly and for more today than what I paid yesterday.

#66 Unoccupy Wallstreet on 11.24.11 at 12:22 am

“No Nortel Moment.” – Garth

Garth, you are so 2000’s. In 2011, we say “No RIM moment.”

Oh well, at least Gary B. is pleased.

#67 Okanagan Renter on 11.24.11 at 12:23 am

#58 Fleabitten Monkey:

“Interesting the Aussie lady termed it a “scheme” working in Canada. Is it just me or am I the only one who thinks of a “scheme” as plan with a negative outcome for someone?”

No, I made the exact same point in post #18.

#68 Just a Tech on 11.24.11 at 12:29 am

As a young person I think we have no one but ourselves to blame. Every generation has faced its set of challenges. My parents often speak of hardship they faced when they bought a house or renting a pad and not having a pot to piss in. Having said that, the geyser’s aren’t off scott free. They caused alot of sh*t and the fact that they haven’t saved a dime, and out sourced all of our work really screwed us over for the future. But in all honestly, it’s time to put the modern warfare down and turn youtube off for a few minutes. It’s time to stop being so bloody apathetic. I used be in the same state of mind until i realized we gotta put our time in too.

#69 WI BOOMER on 11.24.11 at 12:36 am

#10 DondeWest

I am a Boomer. I was born 11 years into the “Boomer” generation. Let’s get a few things straight.

1. My generatiuon had to compete with fewer and lower paying jobs in the late 60’s-70’s than any generation prior. Too many of us, we had to achieve to get ahead, nolt screw one another for 1% get real here.

2. Wages and housing were less costly. Interest rates were much higher 8.25% on my first home where I put down 30% (1976) to get THAT break. Ok, we did sell and move several times. Never “made” money on RE next place took any profits with its higher costs.

3. Last home WE built on our own selected lot in a small town. (1997). Home was 3 x my income then, with 20% down at 7.25%. Interest rate at last refi 4.25% never took any money out, and now its MINE. (yes, there are the $3,000 taxes a year we must pay plus utilities)

Don’t whine. You are 29. How cheap CAN you rent a dump where you live and SAVE up a BIG down payment?
I mean in a DUMP! Live cheap, drive a beater (no car payment) live like no one else, so later, you can live like no one else. Give it 3-4 years. You’ll still be young enough for a family, and good luck. There is STILL no free lunch.
Every generation has had its challenges. Boomers who are debt strapoped will never survive well on old age pension. Healthcare worries abound.

My son is 35, he does not own a home eiher. With the economy of late, and continual lay-offs that’s probably a good thing, but that’s his choice not his sentence. Here it pays to rent in 2011.

#70 From kits on 11.24.11 at 12:39 am

thank you for posting..my wife and I have been asking ourselves the exact same question for the last month…as per jer

#71 Rich Renter on 11.24.11 at 12:41 am

We are so screwed its not even funny.

#72 Smoking Man on 11.24.11 at 12:45 am

#59 HouseBuster on 11.23.11 at 11:56 pm

50% Hum……

Herd dynamics……not a concept you understand

You Dumby

#73 Foggy on 11.24.11 at 12:54 am

Ah Dondwest – my little injustice collector. You remind me of the “Occupiers”. All rant and no substance. You would impress people more if you tried to improve your life instead of writing a long thesis of complaining. However with your bleak and bitter personality I suspect the one thing you won’t be occupying, is a vagina.

#74 VancouverJoe on 11.24.11 at 1:02 am

To #8 clem “…people that have some success should be respected not hated.”

Should the drug-dealers and porno-businessmen be respected as well? They make way more money than realtors do.

Not the amount of money should be respected, but try to guess what?

#75 pablo on 11.24.11 at 1:05 am

Our whole world is teetering on the abyss, our financial systems are rife with corruption, greed, fraudulant accounting and business practises. Our governments passing legislation at the whim and for the benefit of the international banking cartel. People suffering world wide; loosing their livelihoods, their familes, their homes and eventualy their lives. Governments beating and shooting their own citizens for daring to speak up as they’re being led to slaughter on the golden alters of greed and avrice. Intergenerational sniping, finger pointing, anger and hatred rising.
With all this going on all around us and poor DondWest still hasn’t been told by his parents why he had to ride the short bus to the special school, or why he still, at 24yrs of age, can’t wear big boy pants.

While I considered persuing this further, far too many of my peers have preceeded me so eloquently.

When britan and australia both praise cda and are following our economic lead; we clearly must have been chosen by the powers that be: to be the last domino to fall.
Carney going off to run one of the world bank divisions, and with former goldmansachs wunderkids also assuming positions of power and influence in europe, and the usa over the past many years; it would appear that the banksters are getting their ducks in a row before the final blitzkreig starts. I wonder how long it will be before they announce one world bank, government, armed forces and police to keep us all in place. (No garth; not a member of the tinfoil hat brigade, and definitely not a schill for the banksters.)

#76 Carp on 11.24.11 at 1:23 am

I assume CPI numbers do not include home prices. If the BoC’s objective is to keep inflation under 2% but home price increase by 10%+ per year, how can MC honestly say this? Most folks pay 30% of income for their mortgages (unless in Vancouver and then it 70+%.)

#77 martin on 11.24.11 at 1:27 am

Learn more. Bond prices rise when equities fall. REITs have risen smartly, and pay good income as do many solid income trusts. Preferreds have maintained value and pump out a continuous dividend. Diversified. Balanced. Effective. Just as I said. — Garth

— Dow Jones REIT Index just close negative as well today garth at: 830.14$ (-24.64) (-2.88%)
what are you talking about?!

I’ve never recommended US REITs. — Garth

#78 Jimbo on 11.24.11 at 1:28 am

#10 DondWest…

I’m in my mid 40s and completely agree with most of your points.

For years I’ve asked older friends, “What GOOD comes from these high house prices? Sure, the Boomers feel rich and successful, but there is a huge price paid by our younger generations. They can’t afford a house unless they commit to becoming debt slaves and taking the chance of being financially wiped out should this market ever correct. The young have to defer marriage, defer having kids, and defer their dreams because they can’t get past the first hurdle of home ownership.”

Canadians would have been way better off if this real estate mania had never happened. Instead of counting on their house value for retirement, Baby Boomers would have saved, lived below their means, and diversified their assets. Small business would have been the path to achieving wealth rather than non-productive speculation, which would have strengthened Canada’s economy. And, finally, our kids would have had a future.

#79 Van guy waiting on 11.24.11 at 1:29 am

#29 Smoking Man on 11.23.11 at 9:05 pm

Are you smoking pk over there?

#80 BPOE on 11.24.11 at 1:41 am

Carney has made it perfectly clear that NO INTEREST RATE HIKES are happening for a LONG LONG TIME. Renters go wait another 10 years to buy when your magical price drop of 20% happens. BOTTOM LINE YOU ARE 10 YEARS CLOSER TO THE GRAVE. The buyer who made some additional payments lowering their amortization to 20 years IS HALF WAY TO HEAVEN while the RENTER IS HALF WAY TO HELL. 10 years renting from now with NOTHING TO SHOW and the BUYER is 10 YEARS TO FREEDOM. Give your head a shake. Get out to BPOE. Get where HAM, RICHMAN and PersiaCash is POURING IN. When you own a peice of BPOE you will know what Truth is, What peace of mind is , True Bliss and you will Lord over your fellow human beings knowing you STAND for SOMETHING, that you took ACTION. Otherwise wait on the sidelines for another 10 years. You could of been a CONTENDER all along

#81 meslippery on 11.24.11 at 1:49 am

Smoking man # 22
When I was young and some one said (CIRCA 1980)
You can make $20.00 Per hr riveting I might think OK.
Now 2011 Do you still get $20.00 did it keep up with house
prices , Inflation?

#82 InvestorsFriend (Shawn Allen) on 11.24.11 at 2:09 am

TIME FOR A LITTLE SUNSHINE ON THIS DREARY BLOG

There is at least SOME good news.

The Q3 loan delinquency rates have just been released by the Federal Reserve. ALL the figures are better. This is now five quarters in a row of improvement. Somehow, someway, Americans are managing to pay their loans on time to a greater extent than they were in the last 15 months. Yes, the delinquencies are still relatively high, but they are improving. Hopefully, it’s not because the banks have loaned people new money to pay old debts, thought at probably is a part of it. The bottom line, is that this is a positive indicator.

(But could someone please alert the market about this so my Wells Fargo and Bank of America stocks can go up!). Actually I am not sure the market pays much attention to these quarterly figures because I believe there also exist monthly reports from other sources that are a bit more up to date. But it is good news for sure.

http://www.federalreserve.gov/releases/chargeoff/

I continue to susect that U>S house prices bottomed about five months ago, which is what the Case Shiller (non-seasonal adjusted) figures show. Even a couple of Home Builder stocks are stirring from the depths.

#83 martin on 11.24.11 at 2:31 am

If the idiot young would stop buying from the greedy old we might get somewhere. — Garth

— well all the ‘idiot young’ would buy from the greedy old because they are not all financial adviser or financial pro’s. they buy because of the propaganda going on, and thus so far real estate in canada has worked very well.

— today i went to lease a house. listing for 1750$ plus utilities which equals around 2000$ all together. to buy that house will cost you leveraging 400k-440k with your 20k down after transacion fees. monthly payments on the property would be just around 2000-2200 including everything.
now, to do the math for this simple step doesnt take a genius and the young figures out that he will be in a better shape to own this house down the road as he will have something rather then just leasing the property. in addition to the above said: because of the propaganda he feels and thinks that the govrnment will always keep the rates low to support the economy.
always remember: the average young person doesnt specificly know much how a fiscal economy, inflation, deflation etc works.
and for the ones that know the theory that a house should be worth x time of income percantage they are always screewed as the government works for the benefit of the average. and someone who is timing real estate market like garth, he will always be wrong because he is ahead of knowledge wise comparing to the masses. and as time goes, he will be more wrong. because, personally i think real estate is negatively correlated to Garth’s knowledge. reason being: he knows to much and he is way ahead of the game.
again, as the gornment doesnt work for Garth or his students on this blogg but for the masses and immigrants coming to the country.

#84 Harlee on 11.24.11 at 2:44 am

#48 Mr. Obvious
A very well-written and thought-out post to a young man who has yet to learn about the world. And I have no doubt he will learn. We were all in our early 20s at some time and we to had a lot to learn -the “school of hard knocks” it is.
I read somewhere that a man doesn’t really “grow up” (mature) until he’s at least in his mid- 30s,and I believe there’s some truth to that. Unfortunately our “culture” doesn’t always encourage maturity.
Well, I won’t rattle on about all that,but thanks again for the post…

#85 Not Wondering Anymore on 11.24.11 at 2:59 am

#34 Dondwest

Bear in mind the Boomers will not reap any profits on their real estate, until they actually SELL it (and taking into account all the money they’ve thrown away on mortgage interest,maintenance, repairs,taxes and empty units, that they paid over their lifetime, along with limiting their flexibility and other options in life).

Instead of looking at purchasing real estate as a lost opportunity, you should view it at this juncture as dodging a bullet, be thankful, and enjoy your freedom.

Your demographic can profit instead from the next bubble emerging in essential needs – health care.

Pursue a career in any area of this, and you can overcharge Boomers BIG TIME to make your own fortune! Simple demand and supply.

#86 Humpty Dumpty on 11.24.11 at 4:41 am

Bullwinkle and his mates….

Hey G maybe you could be the next Dudley Do-Right who is always trying to catch the evil Snidely Whiplash.
You’ll have a great story line.

http://www.washingtontimes.com/news/2011/nov/21/making-money-disappear/

I guess Rocky went to get some more beer…

#87 NoName on 11.24.11 at 4:57 am

#10
“hate” is a strong word, but baby boomers did more bad than good. They outsourced their own jobs, teach their kids that house is an investment, and the best things they ever come up with is industry wide acceptance of TEMP WORKER. Now same people are complaining about sh!ty jobs their kids have. Here at work is acceptable protocol is to lay off temp day before stat holiday and get same person back day after, just not to pay 90~something $ IN vages… What do I need to open Temp agency?

#88 Popeye The Sailor Man on 11.24.11 at 5:36 am

Well Garth,

I sold a rental in Langford near Victoria in 2005 once the tenants left and I fixed it up, and made some money. We were thinking of buying another to rent and fix up but I could not find any good values that would draw rent in to cover expenses and lost opportunity costs. The market in Victoria after dropping from the mid 90’s to 2000 had gone up for 5 years. I figured the market would have a year or two of modest gains only not a long enough time to ensure a winning bet. So I took the money and used it else ware.

The lending rules changed big time over the next year or two and the real estate market booooomed on upwards. Where I had to put 20% or more down and pay based on a 25 year mortgage to hold an investment property now people could buy with 5% down or less, pay interest only at rates my mortgage table book did not bother making tables for, and/or have 40 year mortgages. If I knew the effect that these rule changes would have I would have held the property longer or bought again.

So my point is if England and Australia are planning to copy this program, can we expect these two markets to booooom for a few more years before they bust again?

A twenty something with a good job could bet big on two properties wait for the gains over 3-4 years sell one and pay off the first. Or cash out both near the top or just past the peak and do OK and pocket 10-15 years of income. If the bet is wrong they go bankrupt rent for 7 years while the market unwinds and buy again nearer the bottom.

#89 Aaron - Melbourne on 11.24.11 at 5:56 am

Aussie Aussie Aussie Oi Oi Oi.
/Chant along with me

Lets also not forget that about a year ago Aust Prime Minister Julia Gillard was calling for replicating CMHC!

Our bleating RE Cartel will stop at nothing to pillage the fortunes of anyone foolish enough to swallow the bait. Now they are targeting those born to the late genX an genY cohort by *advocating* on their behalf in financial matters – forget the income to house price abberration down under – just borrow from your future instead!

Once upon a time I felt frustrated and wished that the Govt would open up the facility for me to use MY OWN MONEY (my superannuation fund comprising 17% employer contributions and 8.5% pre-tax self contributions over about 8 years amounted to >$100k AUD) to fund the 20% deposit on a place to call my own.

Now i realise that if this was to go through, all it does is put me on an even keel with every other over-leveraged boomer who has used the tax structure of a Self Managed Superannuation Fund to jump head first into the Aussie property market at the expense of totally wiping out one’s future security in retirement.

Nah thanks. I’ll take prudent lending and a wind back of the negative gearing gravy train instead.

Maybe we (Aust GenX) should push for the TFSA as part of wider tax reforms and a general increase in the Superannuation Guarantee from 9% to 12% – a hot topic here at the moment.

http://www.theaustralian.com.au/national-affairs/industrial-relations/not-happy-julia-unions-flag-superannuation-fight/story-fn59noo3-1226204173254

Help me Obi-Wan-Garth, you’re our only hope! School us about the TFSA and how we can get this up and running in Oz.

Aaron

#90 Aaron - Melbourne on 11.24.11 at 6:18 am

Just thought I’d add, I’m on holidays down in Tasmania and it seems that half the state is for sale!

Who will buy, what supports the local economy, where will the money come from?

Tassie Real Estate Trouble where are you????

#91 Beach Girl on 11.24.11 at 6:31 am

#10 DondWest

You have been very entertaining tonight. Your anger cheers me up. But….

#48 Mr Obvious

Spells it out like it was, is. I am a boomer. Do you actually think when all of us angry young long haired stoners went up against this crowd, we had it easy.

These were the hardest people on the planet. There was no sympathy there. Sink or swim. And back in the day they could call a retard for what it was.

They had fought in wars, were imprisoned in prison camps. Fleeing every kind of shit possible. And you are pissed you can’t buy a house.

Gen Nothing

#92 NOBODY on 11.24.11 at 7:21 am

#59 House Buster wrote:

“Make no mistake, house prices in Canada are going to drop by 50%.”

Is that a gut feeling?
Please expand on subject as to why prices will crash. Offer current conditions, premise, trends, patterns, etc.
If it’s only an opinion, you know what they say: everybody got one…

You sound like Carioca canuck. Don’t know what happened to the poor guy.

#93 David B on 11.24.11 at 7:34 am

Breaking News:

Fitch Ratings has downgraded Portugal’s debt to junk status from BBB minus.

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

Not to worry …. thats all over there …. here at home in Canada let the good times roll …. buy Real Estate why save your money … soon that $1.45 M shack will be worth $1.75 M! with people lined up to buy ….

LOL …. can you believe all that is going on ….

BTW “Happy Thanksgiving” to our pals south of border and all the smart ones who moved north.

#94 Cow Man on 11.24.11 at 8:02 am

#10 Dondwest

And the worst thing is we boomers won’t give up their jobs to make room for the new generation. Greedy we are.

#95 House on 11.24.11 at 8:19 am

“The SCHEME is working in Canada” emphasis added says it all.

#96 Aussie Roy on 11.24.11 at 8:24 am

SV on 11.23.11 at 11:58 pm

I know it is a Canadian blog, but still would be interested in your views re: Australian RE. It is different here, ie the interest rates are much higher than in Canada. What is your take – is our debt reckoning nigh or would we first go through a low-interest period that will suck in more people into housing debt?

……………………………………………………………………..

It’s a GLOBAL debt binge, if house prices have gone up more than incomes, then it’s a bubble.

No it’s not different here.

Well OK it was, but only till it wasn’t.

#97 Aussie Roy on 11.24.11 at 8:36 am

Aussie Update

Garth nice coverage on our PM’s stupidity. Must keep that bubble inflated, too many votes at risk.

When you have such a great choice of apartments able to be rented at HALF the price to buy, why buy?.

Melbourne listings for rent grow 22% in 30 days.

http://www.realestate.com.au/rent/property-apartment-in-melbourne%2c+vic/list-1

Australian banks are preparing for a potential freeze in global funding markets as Europe’s worsening stresses threaten to send the world’s financial markets into a tailspin.

Renewed funding pressures for the big banks, which need to raise $16.3 billion over the next two months, are likely to make it tougher for business and some consumers to access credit.

http://www.macrobusiness.com.au/2011/11/the-credit-crunch-is-coming/

A good old fashioned “land bubble”.

Late last month I published an article entitled Land Deflates, which showed how the growth of Australian house prices over the past 15 years has been caused almost entirely by rising land prices rather than construction costs. The article also showed that Australian residential land values are now declining after peaking in 2010 (see below chart).

http://www.macrobusiness.com.au/2011/11/the-great-victorian-land-bubble/

The house ATM has run out.

EVERY month a whole street of NSW families lose their homes – with thousands more facing a meagre Christmas as they scrape to keep a roof over their heads.

New data reveals 80 houses are seized a month, while up to a third of people in the worst-hit suburbs are struggling to pay rent.

Private rental stress has spread across NSW, where up to 50 per cent of families suffering housing stress cannot afford essential items.

Latest figures reveal the number of people having their homes seized by banks has soared 22.5 per cent this year.

http://www.dailytelegraph.com.au/news/sydney-nsw/on-struggle-street-mortgage-and-rent-stress-leaving-families-homeless/story-e6freuzi-1226203080919

$2 billion has been wiped from the value of assets in the nation’s sovereign wealth fund, prompting its board to reduce the exposure to Australian equities as part of a strategy to protect it from the turmoil gripping world markets.

The Future Fund revealed yesterday that it suffered a 2.9 per cent loss in the September quarter that cut the value of its assets from $75.39bn to $73.18bn.

http://m.theaustralian.com.au/business/markets/sovereign-wealth-fund-dumps-shares-as-2bn-lost/story-e6frg916-1226180028310

Future Fund chairman David Murray says Australia is ignoring the lessons of the unfolding situation in Europe.

Mr Murray said Australia had to stop copying the European Union, citing labour conditions as one example where changes Down Under had given workers too much.

http://news.smh.com.au/breaking-news-business/murray-says-aust-ignoring-europe-lessons-20111124-1nwph.html

#98 Guan-Di on 11.24.11 at 8:58 am

#36. Devore:

“No one mortgages their grocery bill.”

Sure they do, they put their groceries on their credit cards, run up said credit cards to the max for five years then consolidate said credit card debt into their mortgage renewal for the next 20 years… it is done every day, not a smart thing to do by any means, but people do it!

#39: Bottoms-Up

1) None of the houses you are looking at are in “Gatineau sector”, you are looking in “Hull sector”. I sold my decrepit 2 bedroom semi detached in Ottawa with no parking and a leaking basement for $225,000. I bought a 4+1 bedroom, 2 storey detached with a finished basement in an older neighbourhood walking distance to grocery stores, parks, theatres, libraries, restaurants, doctors, schools you name it for the same price. Comperable neighbourhood comperable house in Ottawa was $500,000. So do the math, we had $100K to put down on a $225K house Mortgage = $125K, vs. $100K down on a $500K house Mortgage = $400K… so tell me, what is the difference in the mortgages? Almost 4 times? Yeah, that’s what I thought!

2) Obviously you did not look into the daycare situation very carefully since it is $7 a day, not $5. And even if you do not get a subsidised spot, prices of non-subsidised spots are a lot lower than in Ottawa, have more government oversight into standards and you get a LOT more back come tax time. Plus you get two child benefits, one from Canada and one from Quebec.

If you have two kids, moving to Gatineau until they move out to University will save you serious cash in the long run, then once your body starts to fail on you, cash out your completely paid for house and move to a condo on the Ottawa side. Easy peasy! So sit and bitch about how everything in Quebec is a scam if you want, but trust me, every time I hear about Ottawans bitching about the price of daycare and buying $600K houses I just sit back and laugh.

#99 Mr. Lahey on 11.24.11 at 9:04 am

Jim Lahey here Garth. Sorry, it was the booze speaking…

#100 Nonno Nicola on 11.24.11 at 9:08 am

#54 Bigga Rider

Figlio mio you hava lotsa pointa. Nonno Nicola gonna considera youra pointsa after I geta backa froma da banca. Good lucka to you Bigga Rider in dese darka daysa.

#101 Bottoms_Up on 11.24.11 at 9:08 am

#57 Halcyon99 on 11.23.11 at 11:37 pm
————————————————-
If that’s true (and you believe Eurozone math) then the same amount of conventional oil (harvested many times over by various countries around the world) spews out 32,000,000 tons of CO2 per year.

Not exactly saints are they?

#102 CTO on 11.24.11 at 9:18 am

Garth

Considering the “loose” ethics of central bankers and government leaders of these times and loose monetary policies, (low interest rates for sooo long now, printing money, etc), I can immagine rates at some point before the end of this decade going sky high.

Is this just pie-in-the-sky from some financialy uneducated individual like myself? or is this gut feeling well merited.

Doesn’t the cycle have to ballance itself out over time!? and what/when will be the catalyst? Is it too late?

#103 Katz on 11.24.11 at 9:20 am

The market is definitely squeezed by idiots, speculators and house-poor boomers. It is time to just move out of the area: SW Ontario or Atlantic Canada or whatever. Make arrangements about working from home, fly in from Timmins couple of times a month (Porter now flies 3 times a day) or find a job in Halifax. Take a salary loss but save a fortune on the house. Leave the idiots to rot here.

#104 bigrider on 11.24.11 at 9:28 am

#65 JohnnyBravo.

Excellent post. Your point of view echos mine .

#105 Hammer1 on 11.24.11 at 9:33 am

#10 DondWest
sorry, I couldn’t read your entire post,but I got the idea
Try to reason this out. This is a cycle that has taken place before. There are always winners and losers and it’s so unpredictable.

If you are a student of Garth’s great work, you will know or soon will, that this isn’t over yet.
As Garth has written many times, many many of these boomers, who now feel very smug and secure, will be trapped in an asset class that will not yield what they were expecting.

Just sit tight and just do the best that you can and your time will likely come.. you can change it and be more diversified and not follow the same failed path.

#106 amazing on 11.24.11 at 9:37 am

I guessed interest rates would be a lot higher than today, I guessed last spring we would see home prices go down…..I got tired because nothing make sense anymore. In Markham, chinese people keep buying homes…..strange economic world we are living here in canada.

Do those ‘chinese people’ come from China, or from Richmond Hill? — Garth

#107 JohnnyBravo on 11.24.11 at 9:55 am

Dondwest,

I suggest you learn a bit of history. Even if you go back just 100 years or so––that aught to be enough to stir you out of your persecution complex.

#108 Hammer1 on 11.24.11 at 9:55 am

#22 smoking man
And I listen to these oblivious callers on the talk shows bashing unions, bashing protesters not realizing they are the midgets on all fours taken it from behind by a big basterd elephant, and smiling and obeying at the same time.
====================================
bravo, well written

#109 Sean on 11.24.11 at 10:00 am

#10 DondWest on 11.23.11 at 7:31 pm…

Dude, Dond… I feel your pain, somewhat… but

“Capitalism doesn’t work when it comes to housing…”

Dude, Socialism doesn’t work when it comes to housing! That is the moral of this god damn story. Central banks pushing rates artificially low, meaning negative real rates… socialized risk and privatized gain thanks to CMHC… idiotic stimulus aimed at making housing affordable, which of course does the opposite.

This misconception that we should blame capitalism, that we even have capitalism, for Christ’s sake… it’s the same flaw that dogs the Occupy movement… simply no understanding of the underlying causes.

It should be “Occupy Pennsylvania Avenue” and “Occupy Sussex Drive”… Wall Streeter’s wouldn’t get anywhere without the corrupt collusion of the government.

So yeah, Dond, I sympathize… but if we’re going to get anywhere, we need to understand the problem better.

#110 Nuke It on 11.24.11 at 10:00 am

Home owners are all closet renters inside. It’s pretty simple, anyone who owns or mortgages where they live and worries about the streets market value is dreaming of the day they unload and are free to rent. To actually feel and see the wasted capital in their home come to life.

Everytime the price of real estate has gone up, the renter is making money on a true opportunity cost calculation. And unlike the poor holder of the property title, the renter takes that gain right to the bank.

It has been more than a decade since the homeowner was even close to being on par financially with the renter. Today the gap between the homeowner and the renter is so extreme, there is no historical precedent for it. Unfortunately for the homeowner, they are milked and bled through mortgages, taxes, insurance, maintenance, etc. etc. they will never be allowed by to be free and that gap will continue to widen.

The homeowner will be free once, the value of the home they live in returns to a simple 3 times salary and the carrying costs are once again below the rent equivalent. Until then, these poor homeowners will continue to have their proverbial liver eaten out each day.

#111 P F Murphy on 11.24.11 at 10:12 am

Isn’t it about time that the government passes a law that you can drop the keys at the bank and forget about the house? Seems that’s a law we should get on the books now before the rush! I wonder what the 1%ers would have to say about that. No, I don’t; not really!

#112 Regan on 11.24.11 at 10:15 am

#36 Devore – what’s the difference between housing and food? You can’t hold a lifetime supply of food. Even if you own a farm, you produce annual crops that need to be sold annually according to market prices.
The problem in housing is that there’s no balance between housing as an investment and a basic need. The old ‘commons’ of wild spaces where the down and out could go to eke out their existence and gather firewood are long gone. Poverty is a cruel cycle when you can’t afford the entry level cost of a place to live, and how will you get work when you can’t wash yourself or organize your life in a home?
Dondwest – there ARE alternatives. Co-op housing and co-housing exist in fairly large percentages in the housing supply in many northern European countries. When 20% of housing stock is market-rent co-op with a portion of units set aside for low-income residents, it takes the edge off some of the wilder swings in the property-as-investment market. I think CMHC should focus its attention on creating this kind of stabilizing effect in the market instead of fueling inflation.
And for everyone who can’t fathom what kind of housing exists between 100 story condos and miles of single family McMansions, just look at my neighbourhood in Cabbagetown or Riverdale or a lot of European cities where mixed-use development is the norm; SFH next to 4-5 story townhomes and lo-rise buildings centered around park space and small commercial strips on the main roads. Enough population density to warrant useable transit services and support small businesses so residents can walk to a restaurant, store or movie theatre. Million dollar homes are across the street from me, as well as half million townhomes and there’s a scattering of cheaper lo-rise condos and mixed-use co-ops for renters too. Mixed use building creates a sustainable community. The single-use developments of the past, like St. Jamestown’s ‘luxury condos’ and Regent Park, have been a disaster. Those miles of homes in the suburbs will suffer the same fate.

#113 Gord In Vancouver on 11.24.11 at 10:23 am

More proof that Garth was right.

Average weekly payroll earnings decline in September

http://www.ctv.ca/CTVNews/Canada/20111124/average-weekly-payroll-earnings-statscan-111124/

Reverse mortgages are set to rise, unfortunately

http://www.theglobeandmail.com/globe-investor/personal-finance/rob-carrick/reverse-mortgages-are-set-to-rise-unfortunately/article2246786/

#114 MC on 11.24.11 at 10:38 am

Garth,

The problem, in my opinion, began at the moment when a house ceased being a home and became a consumer good.

Those who I work and socialize with talk more about their Wolf grills, stainless steel fridges and hardwood floors than they do about the things that make having a home wonderful (family gatherings etc.).

Here in Montreal, the “it” thing to do now is to bum it at your parents for two years, put a down payment on a pre-construction condo and wait for your bundle of joy to be delivered. Now you have a mortgage and have lost most of the freedom being young gives.

But for someone my age, a single family detached home is nearly unattainable. Will this be corrected by the coming market crash? I am unsure.

On the one hand boomers could hunker down and refuse to sell, paying off their mortgages as usual. This would likely keep the supply limited and prices stable-ish. However, this scenario depends on the assumption that these boomers are not relying on their homes as a source of retirement savings or income. And considering the stats Garth posts regularly…boomers haven’t saved enough.

On the other hand, boomers, after a year or two of steadfastness, beginning to see their retirement slip away will all sell in a mass panic to rid themselves (hopefully) of whatever housing debt they have which will have the obvious effect of depressing housing prices. Add in the fact that young people are having a tough time in the job market (as boomers will never retire..) prices are likely to stay low for some time for mid-end SFH.

At the high end (I’m talking areas like Westmount/Outremont for those who know Montreal), prices will drop but not as precipitously as the average home (on a % basis) as houses here are mostly owned by families with real wealth. Although the market for their cottages in the townships may take a hit, their invested assets will give them comfort and not force any sales.

This making any sense Garth, or have I had one too few coffees this morning….

PS – Ever thinking of doing an article on dividend stocks? I’m sure many people would appreciate a primer. Cheers!

#115 Buy Low Sell High on 11.24.11 at 10:39 am

Once one internalizes that house prices will be falling over the next 5 years, then, you won’t be in a hurry to buy one. It’s only the phrase “buy now or be priced out forever” that stirs horny young people to do some something emotionally charged misstep like getting into a bidding war on a property. Add in a few spurring comments from a real estate agent and you have a new high water house price mark on the street! House prices do go down contrary to anyone’s belief who was born later than 1975. There was a 7 year downtrend from 1989 to 1996 and wouldn’t it have been better to buy in the mid nineties than in 1988 or 1989?

#116 big T on 11.24.11 at 10:41 am

surely boomers did a little breeding, and will pass on
some very nice inheritances to their offspring, not
all contributers to this blog can be penniless orphans,
generational wealth is never part of their equation!
neither are huge cash donations when that first house
is purchased, particularly recent immigrants, and for
the record boomers had divorces, lay-offs, bankrupts,
etc, nothing new, you to will survive, so get real.

#117 disciple on 11.24.11 at 10:51 am

DondWest… hey little brother! Awesome rant, and I completely sympathize with you. I am a little older (Gen-X), so my viewpoint forms a bridge between the boomers and your Gen-Y. But your anger is misdirected. If only you knew all of this economic quagmire was intentionally created… in order to succeed now, you must put aside all you have been taught by your elders to expect in life, and make your own way. This would include abandoning your greed. Can you do that?

The boomers have nothing further to teach you, being completely devoid of any spiritual underpinning, lost in the artificial world of materialism, they cling to their erroneous ethical beliefs, like children who would cry if their stuffed toy was snatched away from them at night. The older my parents get, the more I see how similar they are to 8-year olds. But I respect them and love them, but the world belongs to me now, so I should always strive to be a good steward and not only find the Middle Path, but also walk it, not for monetary gain, but rather for the cause of destiny.

Mister Obvious… you make some very good points; however, what you fail to realize, as many of your peers also fail to acknowledge, is that the social contract was a myth all along, and your pile of wealth you now smugly sit on, is as illusory as the belief in never-ending cheap energy, for as Not Wondering Anymore points out very cleverly, you will eventually pay for your now waning belief in the power of wealth generation by inflationary asset appreciation (RE, etc…). That too, is a myth.

Beach Girl, I’m sorry, I don’t know how to say this, but you are not the type of boomer who would put out DondWest’s fire of indignation, so please, don’t make the situation worse by your blabber. Fighting in wars makes you stupid, not hardened, not intelligent. Not anything to be proud of whatsoever. There is a reason they use a poppy as a symbol and it’s not what you think.

#118 Maya on 11.24.11 at 10:52 am

Everyday when I think we couldn’t get any more screwed as a society of consumption addicts, I discover that the money lenders always have more tricks up their sleeves.

http://www.theglobeandmail.com/globe-investor/personal-finance/rob-carrick/reverse-mortgages-are-set-to-rise-unfortunately/article2246786/

I have referenced reverse mortgages often. They are to be avoided at almost all cost. — Garth

#119 NoName on 11.24.11 at 11:00 am

If you ask baby boomer can your child aford your house, and answer is yes, there is 99% chance that he lives in Hamilton…

ok ok.. i wont quit my day job!

#120 thinktank on 11.24.11 at 11:12 am

Question for ya Garth – but before I ask – I am a big fan of your work – honestly I agree with 95%+ of what you write about each day. Its been a LONG time since I posted but given the markets are closed today in the U.S. I felt compelled to ask you what YOU would do in todays current real estate environment. First things first – I OWN and live in Oakville – bought in ’95 and mortgage free by next year – so all is fine with me – our next door neighbours son is a different story. He just got married this year and is living with his new bride with Mom and Dad to save $$. Understandable. They (the newlyweds) have a joint income of about $100,000 a year … not too bad for a young couple starting their careers (25 & 24 years old) so … lets say they squirrel away $2000 a month – not bad and possible – thats $24,000 a year x 4 years is about $100k – heres the problem
a) who wants to live with Mom and Dad for 4 years
b) average town home is Oakville is anywhere from $350-$450,000 (Ive seen townhomes in Oakville for as high as $700k+ ) but lets bring it back to reality and go with an average $400k purchase price. You are ALWAYS addressing NOT putting all of ones eggs is one basket and yet RESPONSIBLE purchasers should come to the table with a MINIMUM of 20% down – thats $80k on a modest $400k townhome but yet … that would also represent 80% of this young couples net worth. YES YES I know .. returns on the $100k saved would give them more via a diversified and balanced portfolio of possibly 5-7%/annum – but remember – they are STARTING with about $24k a year (and I do know the power of compunding as well). I think you get where I am going with this. even PRUDENT responsible young adults trying to approach this the correct way are behind the 8 ball if one were to use this hypothetical $100k correctly (once saved) and please … dont say “move to Guelph or Waterloo” etc. – not an option moving so far out is simply NOT in the cards for some when the very jobs they have are in the GTA. And Garth .. I painted you a decent and realistic scenario – what about the young couples who are trying to save for a home RESPONSIBLY – NOT trying to buy in over their heads – but have to pay RENT given that living with parent is NOT an option. Saving $2000 a month is even MORE difficult now!!! you are ALWAYS telling your readers most cant even make their monthly BILL payments let alone save $2000 a month and paying rent

Im really curious to see how YOU would approach this – as you know $400k is NOT all about granite and stainless steel – its a modest starter townhome – can ya see WHY so many young people DO go in with 5-10% downpayments – I dont agreee with it either – especially at these price levels – but what does one do

If you actually take the time to answer this – thanks Im sure MANY of your readers would benefit from your advice on this one.

Home ownership is neither a right nor a requirement for a happy life. If you can’t afford a $400,000 townhouse, or buying one would materially increase your overall financial risk (with no diversification and no savings), then don’t do it. Real estate has turned into more of a want than a need. Renting is a totally viable option, like this. — Garth

#121 fancy_pants on 11.24.11 at 11:14 am

I would dare to suggest that RE is not the greatest of our worries folks. (although I still hate the bastards who primed and continue to pump the bubble)

The EU is a financial wreck that will soon derail. You thought 2008 was a scare? Things are going to get very messy in 2012. It will ripple across the globe. Fall-out everywhere.

Let’s hope F*ckushima or another large scale natural disaster doesn’t add to this.

#122 Hammer1 on 11.24.11 at 11:27 am

#105 Hammer1 to #10 DondWest

“many many of these boomers, who now feel very smug and secure, will be trapped in an asset class that will not yield what they were expecting.”
=========================
The theme of this post is revenge and we all know that revenge is a dish best served cold. right?

In your mind, to make you feel better, you can envision the housing correction as your own personal revenge on those old wrinkly boomers(Garth’s words), and how you will be a winner vultching those properties at fire sale prices. Winning!

or you can make a voodoo type punching doll to vent your frustrations on them.

#123 live within your means on 11.24.11 at 11:36 am

#73 Foggy on 11.24.11 at 12:54 am
Ah Dondwest – my little injustice collector. ……..
However with your bleak and bitter personality I suspect the one thing you won’t be occupying, is a vagina.

…………….

One of the best lines I’ve read lately. LOL

…………………..

I don’t think that the majority of we ‘boomers’ who bought homes 20 – 30+ years ago considered the purchase as an ‘investment’. Rather, it was a ‘home’ in which to bring up a family. Is it the fault of the ‘boomers’ that home prices increased as they have over the last X number of years? I don’t buy that theory. I put the blame on the current govt’s. policy starting with 0 down/40 yr mortgages and allowing CMHC to assume the banks’ risks. I also lay blame on the MSM who rely on RE pumpers for ad $$$ and the global ‘dumbing down’ journalist standards.

#124 disciple on 11.24.11 at 11:40 am

In many ways, my trip last week was a fact-finding mission, a trip back in time, to try to understand more first-hand the birth of the mind-set of the boomers. I am sensitive to the danger of putting ALL boomers in the same box, but, to be sure, the last 50 years were a time of immense change. In fact, it was a time of many tandem periods of change of ever increasing complexity and intensity. So many avenues of interruption, so many possibilities of breakthrough, so many battles for supremacy, so many ways in which the minds of the young were fashioned in every which way.

There was so much promise of a better world, a more humane world, but the grip of the ancient Secret Societies proved too powerful, and those conscientious boomers who would have made a lasting difference, were “suicided” or killed off by crazy lone gunmen. Soon, the ever-encroaching duality of the will to meaning versus the will to pleasure was fought every hour of every day in the minds of each of our parents, producing moments of sheer brilliance as well as moments of absolute horror. Our hospitals are filled to the brim with casualties of this mental anguish, forever roaming in that dimension we call dementia.

From the smoke and ashes of this great war for the mind, arose as triumphant, the only survivors, the belief in materialism (70’s and 80’s), the belief in liberally regulated capitalism, and in Jimmy Page’s and Aleister Crowley’s Do What Thou Wilt, this is the whole of the Law. The belief that the system will and does work and that we must continue to believe in it, while sustaining our greed and ignoring rather than conquering our fear.

Along now comes disciple. There are many more of me. We understand that everything is indeed an illusion. The world is ours to create, it is not inherited. It is what we make it. We understand there are very influential secret societies whose heritage springs from ancient times, and that the real enemy is our ignorance of our enemy.

Our enemy relies on us to continue to play the game, to continue to stay on the farm, to continue to produce without enjoying the benefits, to continue to live out the patterns of our forefathers because “it is the right thing to do”. Shall we say to our children, that we stood by and did nothing as the world continued on the same path as it has for millions of years, while we had the power and wisdom to change it?

My parents don’t have to say it. I know it already. They are waiting for me to do something different, like their parents waited for them. But it comes in steps. Indeed, the harvest is plentiful, but the labourers are few…

How can I loosen for you, the chains of belief that stop you from reaching for the stars? That stop you from discovering the Mars base that is tens of thousands of years old? Ooops…

#125 Peakoilist on 11.24.11 at 11:40 am

#117 Disciple
“and your pile of wealth you now smugly sit on, is as illusory as the belief in never-ending cheap energy,….”
==============================
whaaaa! I don’t believe it, are you finally come over to the Light? I mean in terms of peak energy/oil?
You’re already a pretty enlightened guy….

#126 Daisy Mae on 11.24.11 at 11:41 am

MISTER OBVIOUS: #10 DondWest

“That must have taken some time D. Up late last night? How old are you anyway? Twenty four?”

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

All very, very well said. Every generation has had its cross to bear. Life simply isn’t easy. Let that resentment go…and get on with it.

#127 Peakoilist on 11.24.11 at 11:44 am

Disciple, I realize I just opened a can of worms..please keep your retort short and sweet..unless of course you’re agreeing with me :0)

#128 Bruce County Girl in Ft. Mac on 11.24.11 at 11:59 am

Garth, is it different here in Ft. Mac? I know you said some time ago that the oil is lubricating the real estate market, but I keep wondering if there will ever be a correction?

#129 zeeman1 on 11.24.11 at 12:07 pm

#57 Halcyon99

How much is the Chinese government paying you to spout off like that? Visit any Chinese city and tell me they have stricter emissions standards with a straight face.

#130 T.O. Bubble Boy on 11.24.11 at 12:08 pm

Renting is a totally viable option, like this. — Garth

Sure – that rental *seems* viable, but did you notice the ANGRY DOG ACROSS THE STREET?

Looks like a wolf to me. With a gland problem. — Garth

#131 Robo Monkey on 11.24.11 at 12:10 pm

I like the following statement from Doug Casey regarding people like him, Garth and me.

Doug Casey : I keep telling people I have no crystal ball, but they don’t listen. Nobody has a crystal ball. But, perhaps paradoxically, I also keep giving people advice because they ask; and like anyone, I’d like to help – but those people rarely listen either.

Giving advice is temporarily gratifying to the giver, because it makes him feel like he knows something – for that moment. But it’s ultimately frustrating because few receivers ever use advice. People generally have to make their own mistakes.

#132 zeeman1 on 11.24.11 at 12:16 pm

#109 Sean

Agreed, government is the real issue but most of the protestors would drop everything in a second for a government job. Blind hypocrites, all.

#133 Daisy Mae on 11.24.11 at 12:34 pm

Just heard on the news: “Wages across Canada are plummeting….to levels not seen since the Depression….”

#134 Beach Girl on 11.24.11 at 12:42 pm

#10 DondWest

I am starting to believe the herbs of today are stronger than my generation.

Get over it, your personal self centred anguish. Our parents fought in a World War, not skirmishes. That was survival of the species. And to think someone spawned you. Shameful.

Did someone take your tent down.

#135 Patiently Waiting on 11.24.11 at 12:43 pm

10 DondWest – Keep in mind that rents are not relatively more expensive today than they were in past decades. Rents and incomes go together. I walk around my neighbourhood in suburban Vancouver and see several vacancy signs. You can rent an old 1 bdrm in Tricities for about $700/month, which is the same exact rent I saw in 2007.

I’m GenX and I hate boomers too. I’ve skipped from career to career at least three times, trying to get around the Boomer logjam. Burnt myself out working long hours in what turned out to be a futile efforts. Now, I’m taking life easy. Modest income and modest rent. Live for today, try to put something aside. If you can save at all, you’re ahead of the mindless debt zombies.

And don’t think you’re missing out in some “True Bliss” like our resident comedian BPOE claims. Home ownership means dreading the mail every day, because there is always something to pay. Could be taxes, could be mortgage renewal, could be that line of credit you took out to pave the driveway, could be insurance, and it goes on and on. As a renter, you pay the fixed amount once a month and you’re done with it. If you can’t afford the fixed amount, you move somewhere cheaper in a matter of weeks.

Anyhow, the final joke might be on the boomers. When they turn to the younger generations to fund all the government stuff they’ll depend on, they’ll discover they can’t get blood from a stone.

#136 disciple on 11.24.11 at 12:48 pm

#127 Peaky… no worries, I’m not a believer in Peak Oil conspiracies, but I do realize that the 50’s suburbian dream is based on cheap supplies of it. I believe that the supply will eventually be restricted, not because of scarcity, but for other reasons, politically naughty by nature. A new system of social organization will emerge.

#137 thinktank on 11.24.11 at 12:57 pm

a pretty simplistic answer – I could have told them that – although I am not sure I agree with the your answer – I thank you none the less – I know you are swamped with emails etc.

As you well know .. the argument is “renting is throwing away money” … the hypothetical $2000 a month SAVED is now gone to rent.. the whole reason for staying with parents. Where now does this little nest egg of savings/investments come from if about -$1700 is eaten in rent??? Even if homes drop a modest -10%, that is a $360,000 purchase price and with a PRUDENT (as you always suggest) 20% downpayment we are still talking $72,000 …. again I ask … WHERE is that downpayment $$$ to come from if the couple rents. AND if they can actually rent AND save that … hell it would in all likelihood be EVERY DOLLAR they earn (after taxes of course) and then we are back to your steadfast position “DONT INVEST ALL OF ONES NET WORTH IN A SINGLE ASSET CLASS” … i.e. real estate

real world scenarios of the “best practice” approach as you constantly try to teach us on this blog ,dont seem very practical for this or ANY young couple who like all of us would LIKE (they DON NOT have the attitude that it is their RIGHT – just their wish) to purchase a home someday – just NOT after 8-10 years of renting …. hence why you have this bubble – and for what its worth – as I said earlier – I AGREE with your approach to investng (although I am trader by profession) but by my quick and dirty calculations … your approach would have them able to buy in about 12 years AFTER taxes are paid on their income while renting at about $1750-$1800 a month and trying to prudently save/invest whatever is left …. hmmmmm – theory and reality dont seem to get along too well in this current environment.

#138 Westernman on 11.24.11 at 12:58 pm

Peakoilist,
Disciple is an enlightened guy??? He’s a tinfoil hat nutbar is what he is.

#139 DM in C on 11.24.11 at 1:05 pm

“That must have taken some time D. Up late last night? How old are you anyway? Twenty four?

Ah Dondwest – my little injustice collector. ……..
However with your bleak and bitter personality I suspect the one thing you won’t be occupying, is a vagina.

…………….

One of the best lines I’ve read lately. LOL”

Well, I’m 40, have a vagina and I agree completely with him. There more who do than you think.

#140 Westernman on 11.24.11 at 1:11 pm

DondWest,
As a boomer I’m here to inform you that you are NEVER getting what I worked hard for until I am damn good and ready to sell it to you. Not one minute before.
And for you and your ilk the price is gonna be to the moon Alice!
Put that in your pipe and smoke it you snot-nosed little commie.

#141 bill on 11.24.11 at 1:33 pm

I guess they’re drinking moose head eh?

dondwest – go read elements of style [ Strunk and White]. Thanks!

#142 Grimbot on 11.24.11 at 1:37 pm

Hey Garth….the link will take readers to some updated information that salaries in Canada are falling behind inflation….another indication that the housing bubble prices are not sustainable.

http://finance.sympatico.ca/home/wages_falling_behind_inflation_report/f1b9248e

#143 live within your means on 11.24.11 at 1:37 pm

#91 Beach Girl on 11.24.11 at 6:31 am

Do you actually think when all of us angry young long haired stoners went up against this crowd, we had it easy.

These were the hardest people on the planet. There was no sympathy there. Sink or swim. And back in the day they could call a retard for what it was.

They had fought in wars, were imprisoned in prison camps. Fleeing every kind of shit possible. And you are pissed you can’t buy a house.

………………….

Totally Agree Beach Girl with your message. Most of my g’friends were war refugees.
……….

As a boomer, one of 6 children, none were ‘angry young long haired stoners’ tho. Times were tough financially. Two older bros went into the military at a young age ’cause Mom & Dad couldn’t afford anything else. Eldest sister started full time work at 17, eventually became Credit Supervisor at Holt Renfrew in Mtl. I babysat every afternoon after school at 13 for a wonderful couple. Younger sis & I worked Thurs., Friday eve’s & Saturdays at dept. stores in Mtl. while in high school. Bought even my winter coats. Most of my friends did the same. We were not the ‘privileged’ generation. I lied 1 summer to get a full time job when I was in grade 10. Pretended that I would not return to school. Manager told me I should reconsider. He felt good when, at the end of summer, I said he was right. BTW, he also told me that I did in 3 days what others did in 5 days. My generation had a ‘work ethic’ back then.

My DH spends many hours on his own time creating programs to automate all kinds of mundane tasks for school board secretaries, backups, create ‘proxy’ servers, etc., etc. and to increase efficiency of his techs and reduce their mundane tasks. His immediate boss is against his efforts as it might mean that some techs might lose their jobs. DH was assigned the biggest High Schools/feeder schools in our municipality this year. His ‘big’ boss wanted him to provide his programs to all the other supervisors, many of whom my DH says are totally lazy or just plain incompetent. DH said No, because at this time they would only criticize and not offer ‘positive’ suggestions. He has provided his programs to one of his colleagues – a gal that is smart and offers positive suggestions.

#144 Halycon99 on 11.24.11 at 1:44 pm

@129

Well, educating yourself could be a start:

http://www.theicct.org/info/documents/PVstds_update_apr2011.pdf

The US is years behind the rest of the developed world, including developing countries like China in new car emission standards. Fact: in Mainland China you see primarily 4 cylinder, newer cars. Fact: in Canada you see far more older cars, including a far greater share of SUVS, trucks, and other high polluting vehicles.

The laughable thing about smug Canadians criticizing China for its pollution emissions is the fact Canadians are the highest per capita polluters in the world. Get a clue. Thanks.

#145 Bill Gable on 11.24.11 at 1:44 pm

Dondwest

Look up the word “coddle” – than realize you are owed nothing, you earn it.
Not all Boomers were raised with a silver spoon or have a piece of crap in Brampton they are goinf to sell and retire on.
A lot of us people actually worked for a living. I started when I was 14 and had three jobs at once.
The years went by without vacations, and the big toys.

Now all my Boomer buds that bought the big house are broker than church mice, have no savings – I tell them all to write Mr. Turner and get help.

No free lunch, Sonny. Never has been. Try out the Stagflation 70’s for a start. Man!

#146 sam.i.am on 11.24.11 at 1:50 pm

Comments on here are getting kinda mean spirited lately. Is that a barometer of anything?

#147 GregW, Oakville on 11.24.11 at 2:44 pm

Hi Grath, Two links.

Did they ask you to be one of the speakers at this?
Maybe they should have. Maybe next time.

For thirty-five seasons the Canadian Club, in partnership with the National Post, has started each New Year with an economic forecast luncheon with an expert panel reflecting on the economy, the markets and political issues that will affect Canadians in the year ahead.
http://www.canadianclub.org/Events/EventDetails.aspx?id=3174

I just saw this interview on BBC HARDtalk today and thought some others might be interested?

Economist Steve Keen is one of the few economists to have predicted the global financial crisis and now he says we are already in a Great Depression. He says the way to escape it is to bankrupt the banks, nationalise the financial system and pay off people’s debt.

He admits what he is advocating is radical but says it is time governments gave money to debtors to pay down debt instead of to creditors such as banks who have held onto it. ~3-1/2min.
http://news.bbc.co.uk/2/hi/programmes/hardtalk/9641873.stm

#148 Westernman on 11.24.11 at 2:45 pm

sam.i.am:
Comments are getting mean lately because of the sheer audaciousness of some of these self-appointed income redistibutors making their appearance on this blog. People like this 20-something, wet behind the ears, know-nothing creep like DondWest should be set straight in the strongest possible manner or his kind will spread like a virus.
Words that his father should have spoken to him but didn’t.

#149 zeeman1 on 11.24.11 at 2:51 pm

#129 Halcyon99

That doesn’t change the fact China is the worlds biggest polluter and will be for a long time to come. Your using 1 report as evidence of the contrary and ignoring the fact most Chinese vehicles on their roads don’t even have catalytic converters. Also, they are building a new coal fired plant every 3 weeks or so. Their school system produces unquestioning belief and basic technical prowess in their population and is nothing to be envied. They haven’t invented anything new in centuries, if not millennia.

#150 bigrider on 11.24.11 at 2:54 pm

#10 Dondwest.

You have ruffled many feathers on this blog..good for you..that is what it’s about.

Speaking as a middle aged man(not a boomer) with a family and a fully paid home with financial assets exceeding it’s value I believe you have made many salient points, hence the backlash, but you have gotten one thing wrong.

You will be able to buy a home one day and possibly soon enough.

Garth’s response was on the money but to add the old guard, (boomers) who have had a much easier time financially because of the obvious tailwinds after WWII, will learn the hard way that there may be no buyers for their over priced homes as numbers of people behind them are fewer.

80 year olds will find two storey 3000sq ft McMansions impossible to live in and maintain soon enough.

Your time will come. Patience is a virtue although I have little..LOL

#151 Regan on 11.24.11 at 3:02 pm

Ah Dondwest – my little injustice collector. ……..
However with your bleak and bitter personality I suspect the one thing you won’t be occupying, is a vagina.

Ah, patronizing ageism, objectifying sexism and ‘I’m a real man’ gender-role bullsh*t all in a single sentence.

FYI people over the age of 30 – remember how university was $1000/year and you could save up over the summer to pay for your courses? Well, these days, people borrow to pay tuition and graduate with $50,000 in debt – more than most of us had for our first house. Young people have a right to be pissed about being SHUT OUT of getting a home. It’s not just that they are renting, it’s that they can barely afford rent because they have mortgaged-sized student loans to pay off. How are they supposed to do that on a $11/hour job that is never full-time hours or has benefits, or better yet, is an internship where they work for free? There are bigger debt problems in our society than just housing.

#152 eaglebay - Parksville on 11.24.11 at 3:17 pm

#144 Halycon99 on 11.24.11 at 1:44 pm

Canada is the second largest country in the world.
Our percentage of the world’s “pollution” is extremely tiny. We have to travel long distances and the climate tends to be on the cool side.
Different scale, different problems.
Boy, the coocoos and nutbars are sure out today.
It’s not even a full moon yet.

#153 Regan on 11.24.11 at 3:21 pm

and because I apparently can’t post enough today – http://www.economist.com/node/21540231 interactive graph about global housing prices

#154 DonDWest on 11.24.11 at 3:25 pm

DondWest,
“As a boomer I’m here to inform you that you are NEVER getting what I worked hard for until I am damn good and ready to sell it to you. Not one minute before.
And for you and your ilk the price is gonna be to the moon Alice!
Put that in your pipe and smoke it you snot-nosed little commie.”

It’s nice to know Westernman so rigorously supports the ponzi-scheme that’s the CMHC; and he supports the idea of people getting rich without having to lift a finger through housing appreciation.

The world is backwards; I’m the CAPITALIST, you sir, ARE THE COMMUNIST! You’re (along with many baby boomers) just too stupid to realize it!

This is a battle between those who want to work and live decently (the young); and people who want to get rich without having to work (you). You have a culture of entitlement.

#155 Devore on 11.24.11 at 3:30 pm

#112 Regan

You can’t hold a lifetime supply of food. Even if you own a farm, you produce annual crops that need to be sold annually according to market prices.

Last I checked, houses depreciate. What that means in practical terms is they need to be maintained, repaired and kept in good condition. Additionally, there are such things as taxes and utilities. All these have to be paid for according to market prices.

#156 Devore on 11.24.11 at 3:40 pm

#52 DonDWest

We do have certain laws in place, although not always enforced that prevents a grocery store from pricing milk double the amount the next day. Can’t say the same about housing.

There are laws in place around real estate and housing as well, such as rent controls.

But this is just a red herring. You’re actually becoming hysterical. Which means you need some facts and logic.

No one doubles their rent overnight. Not unless you’ve been paying WAY under market rents to begin with. Sauder Business School tracks rents in major cities across Canada, and they say rents have been flat or FALLING for 10 years. So just because someone MIGHT conceivably be able to double the rent, they’re not doing it. Even where there are no rent controls at all (such as renter leaves and unit becomes rentable again), landlords aren’t raising rents.

No one buys a house, then turns around a relists it for double the price. If you add in renovation, carrying and transaction costs, real estate flippers don’t make very much money.

Fact is, rents track incomes very closely. If incomes aren’t going up, neither are rents. That’s because rent is a cash business. Ditto for food. Not because government says so to protect the little people.

Fact is, house prices reflect very closely something we call affordability. How much money are people able to borrow and service monthly. And in case you haven’t noticed, falling interest, increasing amortization periods, removal of lender risk, and loosening borrowing regulations means people can afford much much more than they used to be able to. Costs have been drastically lowered, as have barriers to entry, which arguably have been removed with zero down mortgages.

None of this has anything to do with “unfettered capitalism” or “rampant free markets”, and all of it has to do with government regulations, which specify the exact minutia of how all this activity is allowed to take place.

#157 fancy_pants on 11.24.11 at 3:42 pm

#144 Halycon99 on 11.24.11 at 1:44 pm

all Canada has to do is take school buses and volkswagens off the road = Emmisions problem solved. but maybe that’s just me talking. your mileage may vary.

#158 The InvestorsFriend on 11.24.11 at 3:52 pm

Sam.i.am at 146, it’s just the fact that many people ARE mean-spirited pricks especially when they can speak anonymously.

Also most people are not very smart. (50% are clearly of below average intelligence and 50% – not necesarily the same 50% however — are below average as achiivers in life – and many in both groups are bitter about it).

Well I guess some of us can be mean-spirited pricks even when not anonymouse…

This IS an entertainment Blog right?

#159 new_era on 11.24.11 at 4:00 pm

The reason why I hate the baby boomer generation comes down to one subject matter: housing costs. This is nothing short but economic warfare, in the tune of economic sanctions placed on the young for simply being young.

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

I’m a boomer, and I love you gen-x (morons)

burb from Karl Bass: (sound familiar)
=========
Those who made the risky bets have diverted the risk to others: taxpayers or the general public who holds currency. The gains from the bets are private, and theirs to keep, but all the losses are distributed to the public via government bailouts or money-printing. The first shifts the losses to the taxpayer, and the second shifts the losses to everyone holding the currency being devalued.
========

I use to own several houses and rent the units from 1983 to 2005. then things got nuts. You can sell the place and make more in interest via GIC or corp bond or dividents then renting (without being a slave to your renters)

So I did. Now I have no houses diverse portfolio (including a portion of it in GOLD – to protect against the scenerio that the US or canada decides to turn on the printing press and create money out of thin air) .

Collecting Wads of cash. And waiting, or trying to decide if I want to get back in sometime in the future, or picking a spot to buy a recreational property someplace where the ecomony has completely tanked and you can pick up a sweet deal for pennies on the dollar.

Hey don’t blame us, its the idiots who bid up the housing prices to the stratesphere.

#160 jess on 11.24.11 at 4:11 pm

automatic cuts to the pentagon
http://tpmcafe.talkingpointsmemo.com/2011/11/22/the_great_rope_a_dope_trick/

Republicans want to undo Pentagon cuts after supercommittee fails

President Barack Obama later said he would veto any attempt to undo the spending cuts. “There will be no easy offramps on this one. We need to keep the pressure up to compromise, not turn off the pressure,” he said.

Read more: http://www.politico.com/news/stories/1111/68859.html#ixzz1eeZQsXqQ

#161 whiteshoes on 11.24.11 at 4:16 pm

I am awaiting the next CMHC boondoggle- Rental LOC’s 100% backstopped by the taxpayer. This would permit renters such as myself to move up to fabulous new leased digs by borrowing hundreds of thousands of dollars fully insured by CMHC to inflate the rental market, and make our rental rates the envy of the G8!

Imagine what I could be renting for 4 grand a month! If my future earnings don’t exponentially multiply, no problem- I don’t have to pay anything back, just a sweet bankruptcy, and all is forgiven.

Although this sounds ridiculous, it probably has more validity than the last few years of insured mortgages. How would it really differ from whats happening now?

#162 Westernman on 11.24.11 at 4:17 pm

DondWest,
Hey fool, it’s not up to some half-wit liberal twit like you to determine the value of actual tangible things – the MARKET will do that – not you… get it?
You seem to be suffering from protracted adolesence.

#163 Form Man on 11.24.11 at 4:19 pm

#140 westernman

we realize you are suffering from serious anger and delusion issues; but seriously, if Canada is such a bad place to live, no one is stopping you from leaving. In fact we actively encourage you……..assuming you can find a country that will take you, which seems highly unlikely. Also there is the small matter of a minimum level of intelligence and maturity required to travel on your own…….
Perhaps you can find an adult to supervise you. It is never too late to make an attempt…….
failing that, then there is always deportation ( a rather pleasing thought )

#164 Easternman on 11.24.11 at 4:28 pm

#140 Westernman

You crack me up cowboy! Your retorts are on par with our fearless leader Garth.

#165 DonDWest on 11.24.11 at 4:35 pm

“Comments are getting mean lately because of the sheer audaciousness of some of these self-appointed income redistibutors making their appearance on this blog. People like this 20-something, wet behind the ears, know-nothing creep like DondWest should be set straight in the strongest possible manner or his kind will spread like a virus.”

Where did I ever argue redistribution of wealth in my posts? Point it out, if you can’t, please remain silent.

#166 The InvestorsFriend on 11.24.11 at 4:36 pm

PRICE CONTROLS – BUT NOT WHAT YOU THINK

Number 52 DonDWest said We do have certain laws in place, although not always enforced that prevents a grocery store from pricing milk double the amount the next day.

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

Actually, my mis-guided friend a store can charge ouble for Milk next day if it wishes. It’s COMPETITION and the capitlaist system that prevents it from doing that.

BUT in Canada would you believe there are MINIMUM prices for Milk at least at the wholesale level. The farmer is prevented from selling cheaper. (I know for sure this is the case in Alberta at least., not maximum prices but MINIMUM, than you government for protecting us from cheap Milk)

You would be surprised just how socialist a country we are when you dig into it.

#167 Herb on 11.24.11 at 4:44 pm

Reading some of the CPC-angry anti-boomer comments, I am forced to conclude that ignorance indeed is bliss. Otherwise there wouldn’t be so many people so eager to display their ignorance.

#168 Junius on 11.24.11 at 4:52 pm

DonDWest,

I find this entire “Capitalist vs. Communist” thing all very tired and unhelpful. If there is one thing we should take away from the current financial crisis it is that our current ways of looking at and labelling our social models need to be re-evaluated. Here are a few things to consider:

1) The notion that we have or desire so-called “Free Markets or “Unfettered Markets” is false. We do not have them and we do not want them because they become gamed by those who control the purse strings. What we desire are Competitive Markets which require companies to compete but also set out laws for competition. In many ways it was the absence of these rules and the absence of fair enforcement of rules (ie no fraud prosecutions) that has broken down the credibility of the system.

2) Whatever we call our current prevailing economic model – I will call is NeoClassical – it is flawed. It is clearly flawed because it believes it has all the answers to our troubles but has clearly failed. This failure is rooted its hubris for believing that it is all predictive and knowing of the world’s economy. It has also failed because it is based on the notion that humans are “rational” actors when in fact we are clearly not rational in the sense it presumes.

All of this is to say that there are no simple answers. Free Markets theories are flawed because they presume that markets are competitive and people are rational. Meanwhile true Socialist or Command economies fail because markets are too complex and people too irrational to predict. We need to finally admit that our economy is not predictive and our own actions are not always governed by rational actions.

Once we realize this then we are freed from the constraint of believing their is one Universal Theory that, once found, is going to solve our problems. All we have to do is convince others of the rightness of our position and then all will be solved.

3) Many people here slam them but I believe that the basic beliefs of the Occupy Wall Street group are correct. My view of the core belief comes from the most popular sign: “You Got Bailed Out, We got Sold Out.” I think that is the anger you are expressing along with all of Generation X, Y and the Millenials at the Baby Boomers. It is true. However simply recognizing it is not enough.

The question now is what do we do as a society to get through this period so we can change the world for the better? How do we sweep away what is wrong and corrupt and rebuild things a new way without falling back on the old, tired labels and discredited theories?

#169 jess on 11.24.11 at 4:53 pm

aussie dollar ?
http://m.smh.com.au/business/world-business/chinas-manufacturing-in-sharp-fall-20111123-1nu3j.html

#170 Canadian housing frothier than U.S. at peak: Economist on 11.24.11 at 4:59 pm

Canadian housing frothier than U.S. at peak: Economist

http://www.theglobeandmail.com/report-on-business/top-business-stories/canadian-housing-frothier-than-us-at-peak-economist/article2247829/

Canada’s housing PONZI is bigger then the tip top monster US housing bubble. …WOW

#171 OnlyTheBankersLaugh on 11.24.11 at 5:04 pm

DonDWest on 11.24.11 at 3:25 pm

As said a few times, it is not necessarily boomers that made this boat float so high. As mentioned, Harper/Flaherty minority saw CMHC as a vehicle to make the majority feeling “richer than an idiot would think” or simply fat, dumb and happy listening to MSM that real estate is going up, up and up. The fact that most boomers did not need 2 degrees to get an entry level job was certainly on their side and pricing at 3 times income with one income earner enough to fund was another but that’s not really their fault.

What has been some weakness on boomers part recently during the 0/40 and emergency rate era which has created Hindenburg Realtor (which “little circus Carny” is trying to blow bigger with emergency short rates forever) is the fact that they are succumbing to the whines of their 20 something offspring for a downpayment and working more years or just handing kids minimum downpayments because housing just goes up in the long run which is definitely their experience. The fact that it’s increased exponentially while wages freeze does not make a difference to the average boomer as they only look at their experience and not how things are changing. Some of those boomers will be crushed along with their kids as they couldn’t afford to take a mortgage on their house to fund their kids education and down payments. I see this situation of overleveraged parents regularly to help their kids who have 2 degrees.

I think it’s pretty simple to lash out generationally at each other but some things are different nowadays compared to those days and even hard working kids come into interviews with resumes that would blow away those reading them and are turned away as there is someone better! I don’t think that would ever happen in 1975. Over, OTBL

#172 Westernman on 11.24.11 at 5:08 pm

Form Man,
I may move someday, but not now, I’m having way too much fun teasing the monkeys.
The idea of a free man really irks you, doesn’t it? You are like a man on a chain gang watching a successful man drive by in his new car… just eaten up with jealousy, envy and resentment.
But I suppose you have your wife to assuage your feelings of inadequacy and to whisper in your ear ” you are a good and compliant slave ” …

#173 Westernman on 11.24.11 at 5:12 pm

DondWest,
You have made it clear to all you are a loser … you may now retire to your parents basement and play your video games while planning your escape on your solar-powered boat.

#174 OnlyTheBankersLaugh on 11.24.11 at 5:12 pm

Herb on 11.24.11 at 4:44 pm

Really? Conservatives are great? And how exactly do you see the CPC helping the situation going to 0/40 mortgages when it was clear the USA was starting to tank and over the course of many years of keeping emergency rates even though we weathered the storm through financial crisis in Canada saying how great we were compared to the rest of the world? Not sure how the CPC guys really helped? How many jobs out of the Action Plan for billions and billions?

I hope Flaherty, Harper and Carney are remembered for what they did in full view with many warnings to our country when this thing unwinds and leaves many far underwater.

OTBL

#175 DonDWest on 11.24.11 at 5:19 pm

“DondWest,
Hey fool, it’s not up to some half-wit liberal twit like you to determine the value of actual tangible things – the MARKET will do that – not you… get it?
You seem to be suffering from protracted adolesence.”

So one day you’re complaining Canada is a socialist cesspool; then the next you’re claiming it’s a capitalist paradise? So the system is only capitalist when it benefits YOU; and socialist when it doesn’t benefit you? You’re willing to play this little flip flop just to patronize me? Are you certain you’re not running for a local MLA’s office?

#176 Okanagan Renter on 11.24.11 at 5:20 pm

#151 Regan wrote:

“Young people have a right to be pissed about being SHUT OUT of getting a home. It’s not just that they are renting, it’s that they can barely afford rent because they have mortgaged-sized student loans to pay off.”

Thanks for bringing up a fact that hitherto hadn’t been raised in this thread or elsewhere. As someone who graduated with 48K in student loans despite holding multiple jobs as an undergrad, I think your point is spot-on.

Though life has taught me not to see things as black & white (e.g. boomer = bad), I’m so often met with boomer derision at the financial cesspool my generation (Gen X) inherited that it’s hard not to resent the collective attitude of many boomers.

#177 Canada a house of cards on 11.24.11 at 5:24 pm

Housing I would guess makes up more then the 20% of the economy. Everywhere I go i see Flippers working and fixing up a places. One can drive through almost any street and find a flipper. It’s crazy as once this bubble pops unemployment will rocket higher. The Cons are stupid morons who have ruined Canada on a house of cards. How many will walk away bankrupt? You can bet the banks will scream for billions in bailouts once people walk from their homes a credit card debts.

#178 clem on 11.24.11 at 5:44 pm

74 VancouverJoe:

Should the drug-dealers and porno-businessmen be respected as well? They make way more money than realtors do
__________

if their businesses are legal, then yes!

but i wouldn’t compare buying and selling your principal residence akin to selling drugs or porn.

#179 BPOE on 11.24.11 at 5:50 pm

Short stocks??? You betcha
http://www.moneycontrol.com/news/commodities/declinecommodities-is-artificial-jim-rogers_623464.html

This not a time to buy stocks, Rogers added, and says he is shorting the asset class.

“This is like the 1970s, in the 1970s stocks did nothing. Commodities went through the roof. I`m short stocks and long commodities for the most part.”

#180 Harvard Grad on 11.24.11 at 5:54 pm

Let’s all just blame everyone else for our shortcomings. Geez, have Canadians become a bunch of sniffling buffoons who sooth their inferior complexes by blaming others. The boomers were part of the greatest demographic movement in modern times. As they moved through the cycles they have brought about a profound change. Some better, some obviously not so positive. Get a grip people, those who write such garbage that they “hate” boomers are pathetic.
You probably hate children, other religious groups, minority groups and so on .. look within yourself and that is where the true inadequacies are spurned.
If you don’t like something, well do something about it. Priced out, so rent – what’s the deal here. In the 50’s only those who were truly wealth actually owned homes in Toronto. Life went on – those boomers who were just kids back then worked to get where they are.
If you really want a dose of reality – take a trip to Haiti and come back and tell us how unfortunate you are… we truly are doomed if the majority think like you.

#181 Westernman on 11.24.11 at 5:56 pm

DondWest,
Let me assure you of one thing, you little weasel, my success has been totally,entirely and completely due to my personal efforts. My success is not because of government or society but in spite of it.
I do like the idea of running for MLA though… sweet fancy Moses that would be entertainment!

#182 The Original Dave on 11.24.11 at 5:59 pm

Hey G, there’s an article in the globe titled ‘German Bond Yields Are Saying Something Scary’. Damn, if this is all going to hit Germany as well, I’m not sure where it all ends.

I’ve been reading ‘This Time Is Different’ – which goes through hundreds of years of government defaults. It seems Germany has always been pretty sound.

Any opinions on this? I don’t understand the bond market like I should.

http://www.theglobeandmail.com/globe-investor/markets/markets-blog/market-view-video/video-german-bond-yields-are-saying-something-scary/article2247639/

#183 Form Man on 11.24.11 at 6:17 pm

#172 westernman

you clearly have no idea who I am, and that is extremely amusing. I am actually quite happy and free. You, on the other hand, are to be pitied. A frustrated, ill-tempered, immature bigot. you think that is freedom ? you are a slave to resentment and anger. society has cast you out and you are lashing back, eyes blinded with tears of rage.

#184 jess on 11.24.11 at 6:24 pm

cash back scheme (FBI.gov)

The defendant recruited straw buyers and worked with an escrow officer in the scheme to defraud and then benefitted from their involvement in the scheme. Most of the properties were purchased or attempted to be purchased for in excess of a million dollars. Following the funding of the loans, the defendant received “cash back” or proceeds that he used to live a lavish lifestyle and further perpetuate the scheme. All of the homes purchased through the conspiracy have been foreclosed or sold at a loss to the lending institutions. The conspiracy resulted in approximately $5,000,000 in loans obtained by fraud and an actual and intended loss to lending institutions of nearly $6,500,000.

#185 Van guy waiting on 11.24.11 at 6:45 pm

#156 Devore on 11.24.11 at 3:40 pm

“No one buys a house, then turns around a relists it for double the price. If you add in renovation, carrying and transaction costs, real estate flippers don’t make very much money.”

You’re an idiot for making this statement. If you saw my post on Tuesday, a home bought for 600k in van, sold for 1.2mil one year later. Flipping makes big $. Just not now.

http://samsharmahomes.com/solds.html

#186 Herb on 11.24.11 at 6:49 pm

#174 OnlyTheBankersLaugh,

Good Lord, man, what in my #167 or any comment over the years gives you the idea that I think that the Cons are great?

Their distinguishing characteristic is anger at everything except their masters and fellow travellers. The 0/40 showed that they are a danger to the national interest, and their constant ranting, distortions and downright lies make them a disgrace to the democratic process.

That’s what I think about the CPC! Better not ask me what I think about the LPC whose ineptitude has kept the former in business.

#187 Kevin on 11.24.11 at 6:54 pm

Based on the average of the two measures, home prices are overvalued by about 25% or more in Australia, Belgium, Canada, France, New Zealand, Britain, the Netherlands, Spain and Sweden (see table). Indeed, in the first four of those countries housing looks more overvalued than it was in America at the peak of its bubble.

http://www.economist.com/node/21540231

#188 Westernman on 11.24.11 at 7:02 pm

Form Man,
Eyes blinded by tears of rage? Good grief you are overly melodramatic… you should cut back on your afternoon T.V. soaps, your estrogen level is rising to dangerous levels.
You’ll soon be eyeballing women’s handbags in the mall and buying Barbara Streisand C.D.’s.

#189 Peakoilist on 11.24.11 at 7:07 pm

#136 Disciple.
ok..we’re getting closer … not bad, not fantastic, but ok answer. cheers D.

#190 Kilby on 11.24.11 at 7:18 pm

#10. DondWest.

I am 60 and don’t know anybody who “brags about their fortune” I didn’t even have a house until I was 34…Rented because couldn’t afford to buy. We moved from Victoria to the interior so we could afford to buy and when we did we had 12.5% mortgage. Had weekly payments and tried to put a few thousand at the end of the year. We didn’t make much money back then so everything seemed too expensive, I don’t remember who we blamed……….

Buy a nice boat (they are really cheap now) for $30K, then live aboard marina in the middle of any city with water, pay $500 – $600 moorage and you have the best location in any city for less than rent. Lots of smart “Echo” are doing it.

#191 VICTORIA TEA PARTY on 11.24.11 at 7:19 pm

#144, #152

I hope Halycon99 reads eaglebay-Parksville carefully.

Canada is not the world’s greatest, or even near perfect, air polluter.

How is it that a country, whose net area is 99 per cent devoid of all humanity, except for daring travellers traversing those wide-opens out there, become one of the world’s greatest polluters?

This is the tattered and arrogant ongoing “legacy” of the ageing hippies and other government grant-sucking zombies of the environmental movement.

They hate being told they’re wrong and, when hoisted upon their own petards, generally retreat into that old canard of pollution on a per capita population basis as compared to (and then fill in the blank) some other country.

Similarly, some environmentalists also like comparing Canada to other countries on a political basis.

For example Canada is “bad” because it “fails the grade” over some environmetnal “ill” like the oilsands because of our Tory government; whereas some other country, is “good” and “passes” some “test” because it has a left-wing government, Norway as an example, whose oil and gas industry is NEVER criticised.

I think just about all Canadians are concerned about their environmental impacts on their country, especially those who travel across vast distances on land, truckers being one example.

They know that vastness doesn’t equate into harming their space. It equates into respecting their space while being in complete awe of some of the scenery they encounter.

Those who work the land, farmers, also know about the environment; big time.

Vaccuum-packed lattee-swilling city-slickers, on the other hand, could do a little farming! Ignorance is their long, strong suit, I’ve discovered.

#192 Junius on 11.24.11 at 7:21 pm

#181 Westernman,

At least DonDWest is smart enough to understand that his generation is getting screwed and much of it is because of hubris and greed of your generation. As Gen X I have watched the locust known as the Boomers burn down the house my entire life.

#193 Onemorething on 11.24.11 at 7:25 pm

Maya et all!

Reverse Mortgages while a last resort will be the only way for boomers down the road and retiries to access money to live!

This will also be another great cash grab for the bank as setup fees alone are massive.

Instead of reverse mortgage, sell your home (if you still can even if you have to drop the price aggressively) and rent.

Few will do this but it’s the sure fire way to leverage your retirement funds, have divendends pay your rent and protect your capital.

The banks will be re-accessing you every 4-6 months when the downward spiral hits on RE and reverse mortgages will get VERY UGLY! Quickly collect more funds.

The government will re-access your home value likely every two years for taxation purposes. Slowly collect more funds.

Either way, you will bail out the banks for defaulted mortgages via your taxes. Remove what you can be taxed on, and they wont get you.

Sell, Rent, Invest, Divest of Taxed Lifestyle, Live off Divendends!

#194 Form Man on 11.24.11 at 7:25 pm

#188 westernman

I guess we will add homophobe to your long list of failings. You definitely are a stereotype. We can only guess as to what horrors you must have endured in your youth; that have led to all this repressed anger and sexuality. Gather yourself together. There are support groups who can provide help to you ( I don’t mind my tax dollars funding your treatment, just as long as you are making progress). We all wish you the best.

#195 Junius on 11.24.11 at 7:26 pm

#180 HG,

You said, ” The boomers were part of the greatest demographic movement in modern times. As they moved through the cycles they have brought about a profound change.”

Correction: A large demographic does not make them a great demographic. They followed the “Greatest Generation” who won the war and built the economy during the 50s and 60s.

It was the Boomers who are primarily responsible for unraveling it. Is this the “profound change” that you mean? Let’s call a spade a spade here. The Boomers have been a disaster. Peace, Love and Understanding was forgotten long ago.

#196 jess on 11.24.11 at 7:26 pm

How do utilities and pipelines convert the burden of corporate income taxes into a benefit, whether temporary or permanent?

By David Cay Johnston
http://blogs.reuters.com/david-cay-johnston/2011/11/08/you%E2%80%99re-paying-taxes-so-why-aren%E2%80%99t-energy-companies/

#197 Peakoilist on 11.24.11 at 7:30 pm

westernman, are you at the beginning, middle or end of the boomers? i’m right at the tail end….’61

#198 BPOE for money laundryers and drug dealers. on 11.24.11 at 7:36 pm

Really, doesn’t everyone but BPOE already know this. To think that a bunch of moneyed elites have chosen Vancouver as the preferred place to live in the world is beyond the comprehension of anyone with the so called room temperature IQ. I used to think that we have an immoral government to let it happen, but in some ways those senior mandarins are very clever. All that foreign money acts as a no cost stimulus and eventually it will be lost in the system when those million dollar properties sink back to 200K. In the mean time, a lot of Canadians have become rich beyond there wildest dreams and a lot of those important family wage jobs have been created. It’s almost as brainy as the Americans paying for their bloated living standards by having the reserve currency – it really does boil down to “you send us your oil / consumer goods and we’ll give you numbers in a bank account that must be eventually good for something”.

Tell me if I’m wrong, but the first step towards a viable career for 90% of the MBA’s or technical Phd from UBC, the best and the brightest, is buying a one way plane ticket to somewhere either east or south from the BPOE.

#199 Peakoilist on 11.24.11 at 7:38 pm

#180 Harvard Grad
If you really want a dose of reality – take a trip to Haiti and come back and tell us how unfortunate you are…===========================
so far the best post today..a sort of Big Picture kind of analysis that I think all of us can ponder, young and old. We get so used to the way things are here , that we forget how the rest of the world gets along. I won’t say Canada is the best country because I hate blind Patriotism and flag waving, which can turn into Nationalism, where governments can fall to crazies.

#200 Westernman on 11.24.11 at 7:40 pm

Form Man,
How about I take your tax dollars for nothing at all in return…since you are representative of the average Canadian you shouldn’t mind being robbed at all…in fact Canadians seem to enjoy getting ripped off.
And you, Junius ” locust known as the Boomers burn down the house my entire life” Christ, we have a whole wheelbarrow full of high school drama majors on this blog tonight. Junius, you should have taken more math and shop classes in high school, then at least you would have some sort of marketable skill instead of a penchant for the theatrics of a teenage girl… Junius, meet the drama queen known as Form Man…you two can meet in the evenings to practice your scipted lines.
Don’t forget the classic ” The MAN is keepin’ me down!” cry.

#201 Westernman on 11.24.11 at 7:46 pm

Peakoilist,
’58, right in the meaty part – not showin’ off – not fallin’ behind lol

#202 Kilby on 11.24.11 at 7:52 pm

#195 Junius

Peace, love and understanding may have been forgotten by some, but not by all, don’t compare everybody with the people you must associate with. The age group that I see taking advantage of “easy money” are realtors, developers and contractors. and most of them are in their 40’s if you look carefully. Don’t know which cohort people born in 1970 are included in.

#203 Kaganovich on 11.24.11 at 7:56 pm

Investors Friend

Have you heard of correspective pricing? A common feature in oligopolies.

Why did cookie monster change his name to westernman?

#204 billy contore on 11.24.11 at 7:56 pm

ok time to shut this blog down. You are just depressing people. We all know there is a real estate crash coming.
Do we have to read about it?

#205 terces on 11.24.11 at 7:56 pm

Garth, REIT’s definitely have risk. The real estate they hold is subject to cap rates changing just like every other piece of investment real estate.

For the uninitiated, cap rate is simply a way of expressing the return that a owner would get from net rent on a fully paid property. A higher cap rate means a lower value on the property, and a lower cap rate as we have today means a higher value on the property.

Right now, depending on the type of real estate, cap rates could be anywhere from approximately 5% to 10% with most trending in the 6% to 8% range.

Right now interest rates paid on GIC’s etc is very low – 1.3%. Some day in the future, as has been in the past, GIC’s could be paying 8% or 10%. Why would anyone invest in real estate with a lower return?? The answer is that they will not, and cap rates will be forced to rise.

When interest rates rise, cap rates will rise, the values of any commercial real estate whether it is held in a REIT or not will fall, and in the case of a REIT the values of the share will be at significant risk of falling.

Just look south of the 49th if you do not believe me.

REITs don’t buy duplexes or strip malls. The ones to invest in own downtown office towers, mega-malls and tens of thousands of apartment suites. Very stable. — Garth

#206 Junius on 11.24.11 at 7:57 pm

Great piece from Washington’s Blog on those things most Americans (including OWS and Tea Partiers) can agree starting with NO MORE BAILOUTS:

http://www.washingtonsblog.com/2011/11/a-majority-of-americ

#207 JRoss on 11.24.11 at 7:57 pm

“We moved from Victoria to the interior so we could afford to buy and when we did we had 12.5% mortgage.”

So you stretched to get into a mortgage 1986 and then it got progressively cheaper everytime you renewed, with interest rate ~10% less than when you first bought. Aren’t you smart. Perhaps you can tell all of us stunted GenX slackers how to accomplish the same thing now.

#208 Nostradamus Le Mad Vlad on 11.24.11 at 8:00 pm


“First you forget names, then you forget faces. Then you forget to pull up your zipper . . . it’s worse when you forget to pull it down.” Unknown.

2:56 clip Some of you may remember the debate between John Cleese, Michael Palin, the Archbishop of Westminster and Malcolm Muggeridge re:the Life of Brian. Organized religion, for all the wars it causes, is one of the biggest con jobs, or jokes on earth.
*
#193 Onemorething — Excellent post!
*
A nice, diverse set of opinions today.
*
Ireland It would be interesting to see if Ireland pulled an ‘Iceland’, esp. after Sarkozy forced them to vote a second time on joining the EU; 2:30 clip Pilgrims and property owners; Starving Troops US military; Portugal General strike.
*
8:47 clip Libya – Syria parallels, except the Russians are waiting for US – NATO – UN to attack, which provokes retaliation; Cold War The USSR is being re-birthed; Spin Doctors Trying to justify on dying economies; 1:48 clip MEast stuff; Fatah and Hamas New era of co-operation; Climategate 2.0 The BBC is impartial? Hardly; Non-violence as a powerful weapon.

Good Manners don’t cost nuffink, do they? 7K held Gadaafi was not like this; Health Costs Something is wrong here; 4:06 clip No war with Iran until elections, but what happens if aliens (“Independence Day”) take over the planet before then? Oregon stops all executions; Conspiracy Theories? Bah! Humbug!

#209 allister on 11.24.11 at 8:13 pm

DonDWest,

Who sets the price? The buyer? the seller?

An old saying is that something is only worth what someone is willing to pay for it.

I can’t believe fools with handfuls of the banks money actually get in bidding wars – like we are running out of land or something. If I was looking to buy a house and some other person was outbidding me, I’d let him have it. There is always something for sale, whats all the hysteria? But then again, I’m a boomer.

Seems to me the it’s the buyers bidding up the prices and they aren’t all boomers.

#210 allister on 11.24.11 at 8:15 pm

Just watched the US TV news. Good gawd. They were interviewing a bunch of 20 somethings with their tents pitched on the cold sidewalk in front of Best Buy.

They look so stupid to me. But then again, I’m a boomer.

Occupy Best Buy! — Garth

#211 Junius on 11.24.11 at 8:23 pm

#181 Westernman,

Here is your hypocrisy in a nutshell.

You said, “my success has been totally,entirely and completely due to my personal efforts.”

I see. Did you build the schools you were (presumably) educated at as a youngster? Did you invent all of the technology that made your life possible from running water to electricity to computers? Did you create the legal system? Are you a police officer, fireman and garbage collector?

I see. It was all your doing right. Existing society didn’t have anything about creating the environment or opportunity for you.

And you wonder why we criticize this mentality that is so prevalent amongst your generation?

#212 stage1dave on 11.24.11 at 8:31 pm

I’m also tired of the continual left wing-right wing paradigm, & the further distraction of labeling people commies, socialists, anarchists, or whatever. FCS, let’s move on!

Anyone who thinks those tags are still relevant should register as a U.S. presidential candidate & join the televised farces known as “debates”.

Proposing “solutions” based on a particular ideology almost always leads to disaster. If you’re basing a solution to a problem affecting a large group of people (or one that might) the only workable fix is one that solves the problem for the majority of the people most of the time.

Not the richest, not the politically well-connected, not the best looking, etc. I’m not going to belabor this point btw.

This is the core of what the Occupy Protests are about…where it will lead is anyone’s guess, mine included. The “generalization” of the protests in age of “specialization” is what’s causing confusion; and usually done without a “leader”, thereby trashing the whole order/authority-authority/order corporate catchetism model. Another novel idea…

Incidentally, most of the economic activity discussed on this board (despite it’s participants belief in “free enterprise”) is made possible by a governments’ ability to regulate something called aggregate demand. We may be “free” to invest where we choose, but we ain’t free to dictate the outcome! The fact that certain wealthy cliques of society can indeed do that (or appear to have done so) is having some interesting trickle-down consequences. (I was hoping to sneak RR in here somewhere)

It’s not “the government” that’s the entire problem here; that these cliques have control of channels thru which the government clearly operates is. (this is part of what’s called “conspiracy theory”)

I think dondWest raised some valid points, & I appreciate his anger (that’s so refreshing) but blaming an entire generation ain’t the solution. Lots of boomers like me still have long hair, fast cars, loud guitars, & great taste in women! I haven’t borrowed money from a bank in over 20 years, refuse all CC enticements, in short I spend my own money & make my own way. I only invest in things I can enjoy daily.

Some days are better than others, but usually that’s all up to me & how I approach it.

Finally, IMHO, a great start to a better world would be to diagnose all psychopaths & sociapaths as early as possible; after completing a rudimentary education all of them should be farmed out to mandatory employment in plumbing & heating supply warehouses or some equivalent.

Frankly, I’m tired of watching them on TV or dealing with them in whatever authority position (however menial) they’ve inevitably gravitated toward.

#213 Darlene on 11.24.11 at 8:35 pm

My, my, what’s up with all this generational bashing today. It’s all about diminished expectations. Well suck it up buttercups. You can blame anyone you want but it’s your responsibility to adapt and overcome.

Take that anger and put it to something productive. Stay true to yourself, never compromise your principles, or else you wind up a lonely, angry, bitter man like Westerner.

#214 Blacksheep on 11.24.11 at 8:45 pm

All the Venom here today, has spurred me to share my beliefs.

Any Human alive today is a product of successful genetics going back 100’s of generations. Many struggle with the fact man is an animal, with certain drives that have helped ensure our survival.
Food, shelter and the desire to reproduce are at the root of our needs.

Some people feel lost, trying to discover “what is my purpose” in life?

Reread the first paragraph, to find the answer to the above question. We have been programmed by the doctrine repeaters, as was our ancestors, from birth to be a good citizens, based on social expectations. In our world, perceived success generally comes via financial gains, giving the victor, Independence, lifestyle and power.

Food, shelter and the desire to reproduce, are a very basic version of: Independence, lifestyle and power. When we look at an ultra successful Alpha man or woman, there’s a high probability their indoctrination didn’t take very well due the influence of a nonconformist mentor.

We have all seen the bankers sipping champagne on Wall Street, looking down from ivory towers at the OWS protesters and laughing, as the young masses cringe with disgust.

The people sharing the banker’s insight, understand, they see the world as it really is, not as the masses were sold it to be. They’ve realized many of the rules don’t apply, see opportunity for gain everywhere, yet have no expectations of fairness from life.

All the while, the sheep in the street know something is not right, but can’t do anything but voice their grievances, like a pack of adolescent wolves yelping from the periphery, as the Alpha male & female eat.

The scheme of life, our capitalistic mentality, this survival of the fittest is at the very core of our success as humans and will not be denied.

Today’s blog….has generations blaming each other for their plight. The Boomers are too greedy & Gen Y are too spoiled.
This anger is misplaced, as we are expirencing what authors Strauss & Howe’s have labelled “The Fourth Turning” from 1997. The book reviews the past 500 years and the cyclical nature of generational influences. It attempts to explain how approximately every 80-90 years the cycle refreshes to start a new.

A child raised in the 1930’s depression, will have a much different mind set/values/expectations as an adult, than say a child born in 1990’s with a barrage of new technology and very high living standards.
Little Suzy didn’t understand why great Grandma used to hoard all that jarred/canned food in the basement, but we know why.

Like many have stated here recently, most don’t
recognize the farm or fences that is the system and continue to drudge along through life, because they don’t know what else to do.

In order to leave the farm, one first must accept it’s existence.

take care,
Blacksheep

#215 Sue on 11.24.11 at 8:51 pm

Garth:

I have a great deal of admiration for your intelligence, wit and writing style. I am, however, growing weary of the ever-more-clichéed phrase: “this pathetic blog”. Surely a man of your considerable literary acumen can come up with other – and hopefully less self-deprecating – adjectives to describe your Herculean efforts. Thanks for everything you do.

#216 Sue on 11.24.11 at 8:51 pm

Having said that, if by the word “pathetic”, you’re commenting on those of us who READ this blog and comment here, that’s another matter entirely!

#217 Okanagan Renter on 11.24.11 at 9:08 pm

I just heard the old Barenaked Ladies classic on the radio and thought how quaint it all sounds now:

If I had a 1,000,000 dollars
I’d buy you a house.
If I had a 1,000,000 dollars
I’d buy you furniture for your house (maybe a nice chesterfield or an ottoman).

#218 Linda on 11.24.11 at 9:12 pm

Because of all the boomer bashing on this blog today, I encourage you all to get your hands on the Thirtysomething DVD set and watch the popular tv series than ran from 1987-1991.

It epitomizes the whinging and self-entitlement issues of the boomer generation.

I confess, I was entralled with it when it first aired. I was still in high school back then and yes, naive. Well, perhaps I still am. All I do know is that now I find the series obnoxious and difficult to watch.

#219 Daisy Mae on 11.24.11 at 9:48 pm

SUE: “I have a great deal of admiration for your intelligence, wit and writing style. I am, however, growing weary of the ever-more-clichéed phrase: “this pathetic blog”. Surely a man of your considerable literary acumen can come up with other – and hopefully less self-deprecating – adjectives to describe your Herculean efforts. Thanks for everything you do.”

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

I totally agree. There is nothing ‘pathetic’ about this blog. It’s wonderful. And I’ve learned alot. Keep trying to enlighten others — most still have their heads in the sand. But Garth never gives up!

#220 Bottoms_Up on 11.24.11 at 9:50 pm

#151 Regan on 11.24.11 at 3:02 pm
————————————-
I think you mean people over 60.

I’m over 30 and paid around $4000/yr tuition. My friend who graduated in ’01 had $100,000 student debt. Still paying it off to this day, and he has two little mouths to feed.

#221 Peakoilist on 11.24.11 at 9:51 pm

#216 Sue
I think that’s what Garth means…

#222 a prairie dawg on 11.24.11 at 10:01 pm

No one in Government seems concerned with fixing anything. It’s all just a big game of RISK to them. Pass the economic hot potato, and hope you don’t get burned. Just keep patching “the beast” until it’s the next guy’s problem. The poor SOB’s that will get railed in the history books, will be the one’s who are in power when the whole thing goes belly up. (just like Greece, and Italy) And that’s just so far…

By the the time H, F, and C retire we’ll be screwed.

Sorry, that’s as optimistic as I get today…

#223 Habbit on 11.24.11 at 10:09 pm

#10 Dondwest Control your emotions. I recall in 72 my parents (your generations grandparents) bought a house for 23K in Ottawa. Sold 7 years later for 60K. My inlaws bought a cottage on the big Rideau in 80 for 66K right on the lake! 15 years later it sold for 360K when they could not look after it anymore. Put my familly right out of the market. WE could only dream and still do. We are boomers that experienced what YOU are now. As this blog has identified, most boomers have 80% of their wealth tied up in RE and the prices have nowhere to go but down. Get it? They are not sitting as pretty as you think. Don’t forget your generation is the most educated ever and will be receiving the biggest wealth generational transfer of all time. Think about that. Grow a set and be thankfull you are where you are. Never forget why we have freedom here. It was won at a bloody cost and you are the beneficiary. Got it?

#224 Robert on 11.24.11 at 10:10 pm

The property bubble we’ve experienced in the “First World” has been the by-product of lax lending promoted by our respective governments. No accident, but most likely an attempt to devalue our respective currencies in order to re-balance the Yuan-Dollar-Euro ratios. Without actually cranking up real printing presses, the commercial banks have been able to exceed fractional reserves with the collusion of our respective central banks. Here in Canada, the relaxation of lending oversight, foreign ownership and residency has just been another a means to sustain the bubble and prolong the lifespan of the current administration. In reality, I suspect we’re living through an undeclared currency war. (…way better than a real shooting war though).

#225 Habbit on 11.24.11 at 10:26 pm

#73 Foggy Priceless. Thanks had a great laugh.

#226 Joe on 11.24.11 at 10:39 pm

What about Inflation!! If this come back with a rage then all those that took out massive mortgages will benefit!! 800,000 mortgage but how big will this seem with 5% inflation over 10 years? Will wages keep up with inflation!

We seem to have inflation along with low interest rates which didn’t occur in the late 80’s where you had high inflation and very high interest rates. Will this protect the housing market having low interest rates and rising inflation? or will the bubble burst just on a bad job market and low consumer confidence.

Worry more about deflation. — Garth

#227 The thing in the basement on 11.24.11 at 10:47 pm

208 Mad Vlad

“A nice, diverse set of opinions today.”

You remain the nicest conspiracy theorist on this blog! Keep the links comin’.

218 Linda – Never watched it. Not Dallas, Hill st Blues, St Elsewhere either. Desparate housewives definitely.

#228 The thing in the basement on 11.24.11 at 10:54 pm

167 Herb – your comment could be interpreted as saying
those who are angry with the CPC and hate boomers are
ignorant. Hence OTBLs response @174.

I dont think that’s what you intended.

#229 The thing in the basement on 11.24.11 at 10:57 pm

168 Junius – good, thoughtful post (the old junius). The
ones following, not so much.

#230 commercial insulation services Alberta on 11.25.11 at 12:59 am

i was thinking to make my home and need best construction experienced persons and thanks GOD i find you .

#231 DonDWest on 11.25.11 at 1:03 am

#209 “Who sets the price? The buyer? the seller?”

The biggest myth going is that buyers set the market. It’s based off the assumption that the people who play the market behave rationally. The times – they’re a changing.

I have a friend in the UK who lives in an area that has several 60’s/70’s large family homes for sale. They’re mostly populated by a single person aged in their 70’s and 80’s. They have been outrageously priced – on sale for five years. All of the furniture in the homes hasn’t been updated since the 70’s. The homes are not maintained and are literally falling to pieces. In the name of greed; the sellers refuse to adjust the prices to reasonable levels. This is why Garth is wrong. This is what we’ll see in Canada. The fact of the matter is there won’t be a housing crash until many baby boomers are lifted off a gurney.

Sure, resort second home areas such as Kelowna will take a huge fall. I expect all “retirement villas” to take a huge fall as well; seeing that the concept will never materialize.

You see, my emotionally laden post had one purpose – to prove just how stubborn people are. The stubborn attitude that you have witnessed on this blog will certainly resonate in real estate. The fact of the matter is baby boomers are a stubborn lot – they have too much pride to admit a mistake. Mark my words; they will never sell at a loss. Therefore, we won’t have a crash.

If you truly believe that buyers control the market; then perhaps you could care to explain how I won an auction for a house ($90,250); yet the baby boomer seller crossed his arms and said “no way.” That doesn’t seem like a “buyers control the market” to me. . .

I would be better off building my own home on the outskirts of the city out of stacked shipping containers and mobile homes. Would be much cheaper – sturdier and bigger – than the overpriced particle crap the generation before me are selling.

#232 DonDWest on 11.25.11 at 1:32 am

By the way – I want to clear up a view misconceptions.

You can definitely tell you have a man or woman beat when they resort to nothing but personal attacks and fail to address the issues at hand, but if you insist:

1. That I come from a privileged background – false. My parents are upper middle class, but they kicked me out of the family home when I turned 18 and didn’t even finish high school.

2. That I live with my parents – false, see point 1.

3. That I never worked as a teenager – false, see point 1. I’ve been working since I’ve been 16.

4. That I never served in the military – false. Rather not talk about it.

5. That I inherited money from my parents – false. Again, back to point 1. My parents are not dead yet; and rest assured they won’t leave anything to me when they pass the oxygen.

6. That my parents handed me large sums of money – false.

7. That I have a “useless liberal arts degree.” – false. I don’t have a college degree.

8. That I’ve never worked manual labour jobs – false.

9. That I’ve never “occupied a vagina.” – false. I’ll remember that line though.

10. That I’m presently involved in the OWS protests – false. I merely stated that in satirical jest. If the OWS protesters camped out in protest of housing costs – their protest might make a little more sense.

11. That I’ve splurged all my money on video games, toys, I-Phones, fancy cars, etc. – false. I have a 1999 Samsung in my pocket. Where do you suppose that 100K in savings came from? It comes from saving 10K each year; not hard.

I thought this blog was supposed to be about the housing bubble? Not the intricacies of my brilliant life. I understand that I’m so beautiful and worthy of all your attention, but I can only handle so much smothering.

#233 Phoeey on 11.25.11 at 3:21 am

“my success has been totally,entirely and completely due to my personal efforts”
Rubbish. Unless you grew up on a deserted island then 99.999% of your “success” is due to the society in which you did it.
You remind me of Doug Casey’s ilk. They rail against the USA and Canada as being run by terrible governments yet where do they choose to run their cute little freedom conferences? That’s right – USA and Canada are the places they choose. Why? Because the USA and Canada have strong governments that have created a safe environment to run self-congratulatory conferences.

#234 Herb on 11.25.11 at 8:28 am

#228 The Thing In The Basement,

you’re right. But the “CPC-angry” was intended to qualify the anger as CPC-like, and not as directed at the CPC.

I forgot The Reader Over Your Shoulder.

#235 Herb on 11.25.11 at 9:00 am

#232 DonDWest,

this comment certainly explains the passionate “inter-generational” anger of your #10, but it doesn’t justify it on factual grounds.