In reverse

Angry, impoverished young snots who come to this pathetic blog to Boomer-bait should buy some shares in HEQ. It’s the perfect play. Hopefully make some serious coin by investing in a company specializing in turning greedy Boomer wealth into steaming piles of debt, erasing decades of mortgage payments, and giving all those wrinkly losers what they deserve for thinking they can coast through retirement while their offspring groan under the crushing tax load supporting them.

This is the ticker symbol for HomeQ Corporation (trading at $6.25), the outfit which owns HomEquity Bank, which is a Schedule 1 Canadian bank specializing in hollowing out Baby Boomers. This is done via the bank’s only product, the Canadian Home Income Plan, which you might know as ‘CHIP’, flogged for years by its wrinkly pitchman, Gordon Pape.

CHIP, of course, is where you go to get a reverse mortgage, roughly the financial equivalent of bending over in a biker bar. You really don’t want to go there.

The topic’s newsworthy this week after some media attention, in light of HomeEquity’s stunning 87% increase in reverse mortgages and as the housing market clearly begins its descent amid an economy losing steam and a world full of risk. As I have been prattling on about for years, the people most in danger are those at or nearing retirement, who foolishly have the bulk of their net worth in a house. Which sadly describes a majority of the 9-million-strong Boomer cohort.

Houses are turning illiquid, which was the point of yesterday’s post. Every month that passes brings more illiquidity as buyers retreat. This is a bitch if you are, say, 60 years old and have a paid-for $800,000 house you can’t sell, and a tenth as much in RSPs or your TFSA. With retirement looming, and 70% of people without any kind of corporate pension, it means many years of KD lie ahead.

After all, CPP/OAS isn’t enough to live on. Actually, it will only pay the property tax, insurance, utilities and maintenance on the average Boomer particleboard McMansion. You still need gas, food, ammo and Viagra. That takes actual money, so 25 or 30 years in retirement could require hundreds of thousands (better, a mill or two). Worse, you could end up with your Boomer butt in an institution. if the current epidemic of dementia strikes. I well remember what $6,000-per-month to care for my father (Alzheimer’s) did to my mother’s finances.

So here comes Pape and CHIP bank. Get a reverse mortgage, they say. Untap that equity and spend it to finance your life. Never pay the money back. Never be taxed on it. Just call now, and find instant redemption for saving or investing nothing, escaping the fate you richly deserve.

It’s alluring, of course.

Old people can borrow against the equity in their homes and receive the money in a lump sum or as income. The maximum take-out of 50% of the real estate’s value, and because it comes as a loan against your principal residence, there’s no tax. The mortgage need not be repaid until some foggy day in the future when you finally find a buyer for the place, or you croak. And if the real estate market crashes and burns, with the value of your home cascading more than 50%, you will not be liable for the difference. (Like you care, if you’re dead.)

Okay, that’s the good part. Now the rest.

Setting up a reverse mortgage is not cheap, and will cost between $2,000 and $3,000. The interest rate on the mortgage you take ain’t cheap, either. Currently it’s 4.75% for a VRM or just a hair under 6% for a locked-in five-year term. Over the next few years, of course, those will be increasing as interest rates normalize.

The worst news is that this is a mortgage. It accumulates interest as ferociously as a traditional home loan. Except here, because you are making no payments, the interest building up is added to the principal amount, so every year you pay interest on a rapidly expanding pile of debt. The HomEquity people tsk-tsk at this concern, saying the heap of indebtedness will be offset by the relentless rise in the value of your home (they’re fond of saying it should be about 6% per year).

Of course, that was then. This is now. And now is worse. We’ll dodge a big bullet if real estate values flatline for the next decade, but in most markets there is a substantial reduction ahead. That, combined with the exponential expansion of the CHIP borrowing, is a slaughterer of net worth. There could be many retired folks snorfling off 50% of their equity, only to see home prices plop enough to eventually suck off every single dollar of value.

This is why a reverse mortgage is toxic. Unless you die. Then it’s all good.

Your estate pays Mr. Pape back. Your Boomer-hating, leeching offspring heirs get nothing.

It’s the perfect strategy, as I’ve said before, if you hate your children. That’s why they need stock.



#1 Kevin on 11.25.11 at 10:22 pm

Garth, Are you long HEQ?

#2 Victor on 11.25.11 at 10:23 pm


#3 First Place on 11.25.11 at 10:23 pm


#4 Rashid on 11.25.11 at 10:25 pm

I’m First!!!!!

#5 disciple on 11.25.11 at 10:28 pm

Kevin on 11.25.11 at 10:22 pm
Garth, Are you long HEQ?

No, he’s just long.

#6 First Place on 11.25.11 at 10:29 pm

I was first!

#7 JO on 11.25.11 at 10:30 pm

CHIP: Can’t Honour Interest Payments….these are deadly products. Most would be better off selling their home for a lower price and investing the proceeds.

Gov’ts/corrupt politicians have promised far too much without much worry about who’s going to pay for all this. Just like Japan and some other nations, watch as generational warfare takes hold over the next 10-15 yrs as taxes are raised and promises cut.

Who was standing up for the majority of us taxpayers who do not have pensions as these sweetheart deals were made ? Answer – no one except vote seeking politicians who themselves are in line to get sweetheart deals from taxpayers.

Most boomers and recent homebuyers (homeDEBTRENTERS) will be in shock in a few years time as they realize the real value of their leaky 4 walled box is at least 20 % less. That ain’t all, property taxes, utilities and other user fees ought to be a least 30-40 % more 5-6 yrs out.

Get ready to bend over all right young ones ( I am under 35), they will complete the scam full circle and make us effectively slaves for these geezers and the younger reckless ones.

#8 disciple on 11.25.11 at 10:33 pm

Garth, I like how you’re looking out for both the boomers AND their kids. Much thanks once again for your time spent on this degenerate blog. (You asked for more love).

#9 les on 11.25.11 at 10:34 pm

I heard you promoting ‘reverse mortgages’ as a way to free up funds for investment purposes at a seminar in Waterloo a few years ago. Is there all that much difference between that and what you are not recommending now???

Wrong guy. I have never recommended these. If you need more from your house, take an equity loan. — Garth

#10 Soylent Green is People on 11.25.11 at 10:39 pm

bending over in a biker bar
oh no, don’t go too far
you’ll take it, take it good
there goes the neighbourhood ♪♫

#11 JohnnyBravo on 11.25.11 at 10:42 pm

Shylock wanted his pound of flesh. But the wily Portia found a loophole that proved the covenant wasn’t kosher.

Now HomEquity Bank found a way around the loophole–– an idea inspired by the nocturnal activities of a certain, suave Transylvanian count.

#12 Cathy on 11.25.11 at 10:48 pm

Read this, Garth:

#13 radio free OJ on 11.25.11 at 10:53 pm

does CMHC cover these mortgages if they go underwater?

#14 Pig Without Lipstick on 11.25.11 at 10:54 pm

We’re out!

We just sold our middle aged bungalow in the Niagara region for a stones throw from what we paid for it in 2007. Just enough to get out with almost 20 grand in equity. Never again will I put my self in so much debt and unecessarily encumber my future again. Many thanks for your persistent warnings about the dangers of realestate. You can add another one to the list of people you’ve saved from spending the best part of their life in indentured servitude.

#15 Beach Girl on 11.25.11 at 11:00 pm

You know who I am talking to.

Okay, will stop the generational bashing.

But where is my last post?

Worked hard all my life, owned a company for 26 years, employed people, am a landlord (not easy) enjoy it though.

But at the end of the day, I will be eating Name Brand cat food, will you?

#16 DM in C on 11.25.11 at 11:02 pm

Sending my FA a note on this today — great idea.

#17 Roial1 on 11.25.11 at 11:02 pm

2Victor on 11.25.11 at 10:23 pm
3First Place on 11.25.11 at 10:23 pm
#4Rashid on 11.25.11 at 10:25 pm

A list of the brain dead!

#18 panopticon singularity on 11.25.11 at 11:07 pm

wow 3 “im the furst” morons in a row. the stars must be aligned tonight.

my company just layed off everyone last week, merry christmas everyone!!! spend spend spend!!!!

#19 VICTORIA TEA PARTY on 11.25.11 at 11:11 pm


Reverse mortgage popularity is the utterly pure description, if not proof, of total panic amongst untold thousands of the loathsome boomer generation.

Those CHIPpers will truly get what they deserve, and not what they want, by plunging into reverse mortgages.

CPP/OAS is more viable if recipients have no debts and can control their expenses, to at least some degree.

The needed balance can be found in secured home equity loans (for a while anyway) whose proceeds will need to be invested in fixed incomes with as high yields as possible without too much risk.

That’s about it, not particularly auspicious, one’s way of life under such circumstances.

But it beats the reverse mortgage which really is a one-way trip to Hell.

Thin gruel: It’s the new way of life that’ll become a lot more popular as Europe, the US, and China continue their economic unravelling.

It’s just too bad that matters financial are not “local” anymore.

Everything is so out there, beyond reach, which means ordinary people have less and less control over everything they say and everything they do.


#20 Timing is Everything on 11.25.11 at 11:15 pm

I don’t hate my kids. But…Do Ma and Pa hate me? Nah, Ma still loves me….I think?

As the stomach turns.

#21 Aizlynne on 11.25.11 at 11:16 pm

Hey Garth.

I just sold my house for a profit of $160,000 and basically lived rent free for the last 10 years!

Housing is still a great investment … IF you know when to buy, and when to sell.

What was the profit after closing and selling charges, taxes, financing and other occupancy costs, plus the opportunity cost of the equity? — Garth

#22 YEG Reader on 11.25.11 at 11:16 pm

I’ve been reading Garth”s website for nearly 2 years now. When I started reading , I planned to retire in 2011, sell my house, where I lived for more than 20 years, and buy a condo. After a few months of reading Garth, I advanced the schedule by a year, sold the house in the summer of 2010 (very quickly, very good price) and rented a condo, and then retired. It is a huge relief to be free of the house, and I’m enjoying the perspectives of people at different stages of life. The blog is now an addiction.

#23 bridgepigeon on 11.25.11 at 11:20 pm

14 Pig; Congratulations.

#24 Hashnugs Inthebong on 11.25.11 at 11:21 pm

Well when our political leaders actually recommend people to get reverse mortgages, what do we really expect to happen.

“They should go to the bank and look at their equity, and see if they can use their equity on a loan. Even seniors can get reverse mortgages — they’re pretty economical,” Coleman said.

#25 rosie on 11.25.11 at 11:23 pm

Beware Papes bearing wrinkly CHIPS, unless there is dip.
Can you double dip?

#26 JohnL on 11.25.11 at 11:24 pm

Victor, First Place, Rashid…….no you’re not!!!!! LOL

#27 LJ on 11.25.11 at 11:26 pm

Love the HEQ idea Garth, but there is something just wrong with it that I just can’t quite put my finger on. And, it is not an ethical issue!!!

It goes something like them trying to liquidate their “assets” in a falling market…

However, paying a maximum of 50 cents on the dollar for for a house, even now, is appealing.

#28 jjpetes on 11.25.11 at 11:59 pm

Garth question: is this good debt?

I have a business I am looking to buying, I’m a gen x’er, This business is a pizza business and generates a good income of about 50k / year for myself after all expenses.

I have looked carefully over the books and the price of the business is fair (1.5 x cash flow) , I will not get into the details of how that formula comes out, would take too long.

The debt I would take on is about 35k to get into the business. Currently I have zero credit card debt and very low living expenses at about less than 300 dollars per month because I have no mortgage, and I do not pay rent obviously.

Is this good debt to get into? When you say “eschew debt” would this be considered a good debt to take on, rather than a bad debt like a mortgage at this time or credit card debt as an example of bad debt.

In your opinion, is this a debt I should consider since it will cash flow to me from a business every month about $4200 clear after I pay all expenses and loans etc?

My thought is it would be, as paying back the loan in the low interest rate environment with future inflation devalued dollars would be a good debt.

What do you think? Good idea or no…

Your thoughts greatly appreciated,


#29 International Man on 11.26.11 at 12:01 am

We’ve all heard of these ghost cities in China. I came across this article this week about the ghost city Ordos finally facing home price declines.

If these Chinese real estate declines establish themselves as a trend, do you think that will make HAM flee Vancouver? Or in a great stroke of irony, would HAM double down on Vancouver, perceiving it to be the last bastion of real estate safety in the world?

#30 OZY -WHO CARES? on 11.26.11 at 12:01 am

Not interesting at all, WHO REALLY CARES about these boomers boomers boomers?

#31 jess on 11.26.11 at 12:02 am

Big Bank Exit From Reverse Mortgages Opens Market to Specialists ……/big-bank-exit-from-reverse-mortgages-open…Cached
You +1’d this publicly. Undo
8 Aug 2011 – Regulatory changes in the aftermath of the housing meltdown have helped drive big banks and small brokers out of the reverse-mortgage

#32 T.O. Bubble Boy on 11.26.11 at 12:29 am

Newest director of HOMEQ? None other than Conservative MP Stockwell Day:

(Do we still have to refer to him as “Honourable” when he promotes scams like this???)

#33 April on 11.26.11 at 12:30 am

#12 – Cathy. I find it hard to believe that new homes aren’t selling because of HST. The sale of homes, old and new, in many places across Canada has slowed right down and as far as I know HST is not the problem. More likely outrageous asking prices. Maybe Doug Day needs to face the fact that he has had his run up in this housing boom which is now correcting and he needs to lower his expectations from here on.

#34 piker on 11.26.11 at 12:32 am

It sure is going to be mess when all those boomers houses who have reverse mortgages, coupled with deferrals on their property taxes in BC, realise there isn’t any other equity to tap.

#35 Smoking Man on 11.26.11 at 12:36 am

Boomers rock

#36 The thing in the basement on 11.26.11 at 12:40 am

So did CHIPs ever work? Well they’re a lot less damaging when the value of your house continues to climb, and those were probably the conditions when these things first came out.

Lets say $500k house now. Take reverse mortgage for
$1000/mo for 10 years at 6%. Total value of mortgage in 10 yr about $164k. If house increases 3%/yr during that time its value is $672k. No nomimal money lost. Extend both to 20 years you owe $455 and house value is $900k.
You’re now falling behind.

But should your house price stagnate for 20 years…….

#37 RM in Oakville on 11.26.11 at 12:52 am

Garth would you please delete the comments from the morons who have nothing useful to contribute to this “pathetic blog” other than to holler that they’re “first/furst/no I’m first/FIRSSSSSSST!!!!/no you’re not, I’m first” ad nauseum? Seriously people? It’s like kindergarten.

Of course I say this at the risk of encouraging said morons to do more of the same. Garth I hope you eliminate useless noise like this.

#38 Nostradamus Le Mad Vlad on 11.26.11 at 1:04 am

Gordon Pape and HEQ are giving a standing ovation for giving them free publicity. Advertising costs wouldn’t have bought them this! They must be salivating at the thought of swallowing up more money!

Most people, if they have an ounce of common sense, can take care of themselves quite nicely, by using a TFSA to its full advantage, staying outta the home buying trap and thus avoiding debt completely by renting.

Warren Buffett started delivering newspapers at a young age, and via self-discipline (probably instilled in him by parents and teachers), life turned out quite nicely for him.

Following his principles — buy low, sell high (not too difficult to learn) — anyone can invest $5K in shares of a junior mining co. at 25 cents, then sell them in a few years at $5. Do that for a decade or two, all the while putting profits into a non-registered plan, one can lead a reasonably good life come retirement.
#14 Pig Without Lipstick and #22 YEG Reader — Nicely done!
Thomas Cook bailed, but workers lose; Austerity Cuts When they arrive, they will be so big that most won’t even know what hit them; Done like Dinner It’s almost over; Germany No intervention in ECB; Eurogeddon Like a nice brandy and port, it’s over; 0:47 clip Shoppers fighting over $2 waffle maker; Fair Trade Way better than free trade.

DIY Bank stress tests; Monty Python’s The Plan restructured, 62.5% RE crash in Erdos, a Chinese ghost-town; Wall St. backed documentary; First UK casualty of 2012?
The Mayans Second reference to 2012 found; Yoga is Bad? Pedophilia must be good then; Petition to pepper-spray Fox anchor, who said it was ok; Chevy Volt At least the battery catches fire; RCMP spying Yes, Canada is a police state, but the m$m chooses not to call us that; Treating Cancer bypassing big pharma; 12:30 clip US is a war-hungry drunk — Mike Gravel; Putin’s return Not good news for Obomba.

Freezing Brinicle under Antarctica; Exaggerated CC fear-mongering; Stock Up for ‘quake; HAARP Interesting theory; Russian warships off Syria (update), Link in Process of WW3, and CFR, a.k.a. the New World Order; Symbol Libya just won’t quit; Target Iran But first, China and Russia; Chavez Coffee and toilet paper — what a mix! Free Syria and Free Libya are the US and others.

#39 WI BOOMER on 11.26.11 at 1:09 am

Reverse Mortgages???? Are you serious?? I used to see actor Robert (what’s his name) flogging those losing things.

Please don’t tell me sane Canadians are buying into that Crap too???

#40 Hoof - Hearted on 11.26.11 at 1:11 am

Hey Vlad ( and others…)

Ever seen this?

” The New Order of Barbarians ”

circa 1969……

#41 Tim on 11.26.11 at 1:19 am

Gordon Pape is a dork

#42 JB on 11.26.11 at 1:29 am

Short HEQ? Mkay

#43 Devore on 11.26.11 at 1:31 am

#21 Aizlynne

Although Garth is being a little short with you, he is right. Take your $160k, subtract transaction costs, property taxes, land transfer tax (if paid), structure insurance, all maintenance, repairs and renovations (lawn mowers, fence paint, etc), and opportunity cost of your downpayment and principle repayment over the years. If you’re still ahead, you’ve been living “for free”, congratulations. 10 years ago was generally a good time to buy a house in Canada.

#44 Ammo & Viagra on 11.26.11 at 1:39 am

good post tonight Garth sonny !

Disciple #5..I almost spit my dentures out

#45 Nissan Boy on 11.26.11 at 1:52 am

CPP/OAS isn’t enough to live on

Actually my parents are on CPP/OAS/GIS and they’re doing just fine. It’s enough to pay all your bills as long as you don’t take any expensive vacations or have any expensive hobbies. Of course, the tax on their 200k house isn’t what you’d pay on a 800k house, but then if you’re retired there’s no need to remain in Toronto where houses are so expensive, 200k still buys a very nice house in smaller towns (eg Leamington).

#46 Sue on 11.26.11 at 1:56 am

Augh!!!!!!! You did it again, Garth! And in the first sentence, no less!!

Must. Stop. Reading. This. Blog.


#47 Hammer1 on 11.26.11 at 2:00 am

Garth, are you mad at Westie cuz he insulted our B-girl ?..

#48 Canadian Watchdog on 11.26.11 at 2:08 am

I read a survey report last month and saved this chart below. All countries labeled in purple (except Japan), happen to have a large rural population who culturally store their wealth in gold. When asked about what age they plan on retiring at, the gold buying countries were far more optimistic then others.

#49 BPOE on 11.26.11 at 2:14 am

No flatlining of houses in BPOE. Only HST issues as the rollback gets figured out. It’s called the “Pause that Refreshes”. A developer in Richman is itching to get a block of 2 million dollar homes built but is waiting for the HST to be rolled back. This is major coin on top of your purchase in BPOE. When HST is rolled back we ROAR! CHIP is great by the way. Blow it all out at the end of the day. The RENTER AGAIN HAS NO SUCH OPTION!!!!!!!!!!!!!!!!!!

#50 Jane on 11.26.11 at 2:17 am

Garth, any comments on RBC’s latest affordability Stats? Just propaganda? I can’t believe they are calling Canada (with the exception of Vancouver ) affordable or Slightly unaffordable.

#51 raider on 11.26.11 at 2:17 am

Since we are already in touchy territory by profiting on the demise of boomers with HomeQ, I am wondering who securities/makes profits from Payday loans?
These positions would complete the hedge against boomers, fresh property virgins, and whoever is in the 5-35 mortage camp.

#52 Harold Svenson on 11.26.11 at 2:20 am

Nothing wrong with a reverse mortgage if one doesn’t have heirs such as children. Why leave a huge estate if you don’t have to? I have no children and intend to die broke.

Further to yesterday’s post, these people that aren’t getting viewings or offers on their listed property are obviously asking too much. Anything will sell for a price, including real estate.

#53 DonDWest on 11.26.11 at 2:38 am

After cashing out on silver; I’m currently in the process of designing a “baby boomers getting older” portfolio. It’s an idea I had for a long time.

Basically, the concept was to invest in the following:

-Nursing homes
-Funeral homes
-Wheel chairs
-Kraft Diner
-Titanium (metal used to make geriatric devices)
-Embalming fluid
-Medical equipment
-Hearing aids

I didn’t consider investing in reverse mortgages – thanks Garth.

The real money, though, will come depending on how the political winds howl. If the baby boomers of the left paradigm ever succeed in legalizing euthanasia (they have been pushing it for a while); I have a few entrepreneurial ventures that come to mind. . .

#54 Fortune500 on 11.26.11 at 2:47 am

Long time reader, first time poster. Thanks for all of the insights Garth. I have been bearish on Canadian housing for some time, but something about these reverse mortages has had me wondering if we may actually see prices hold for decades to come. If interest rates stay low enough to keep tempting the majority of my sheep generation to slaughter, and Canada continues to be a better bet for foreign investors as a result of our commodity situation, these reverse mortages may be the last piece of the ‘holding-prices, perfect storm’. Here’s my thinking … If a significant number of those 9 million boomers have no choice but to go for a reversed mortage, won’t that involve these same boomers staying in their McMansions longer? Perhaps until they die? Many Canadian RE Bears point to a major upcoming Boomer sell-off, as they downsize, go into nursing homes or head south, as a reason to expect falling prices. I’m starting to wonder if Boomers will hold on to their homes just as they are holding on to their jobs past the expected point of retirement. Won’t this continue to limit supply and maintain these prices? Any thoughts?

#55 Tom from Mississauga on 11.26.11 at 2:53 am

More debt to keep the housing rally going. Why not.

#56 Bailing in BC on 11.26.11 at 3:15 am

#12 Cathy

Doug Day is a prat and suing people is his hobby.

That said, the uncertainty of when the HST will be reversed, is doing more damage than the tax itself.

#57 Jimbo on 11.26.11 at 3:30 am

>It is a huge relief to be free of the house.

Yes, free of home ownership.

And here’s something I don’t understand. Most young couples who plan on having a family immediately feel the need to buy their dream house. But why? We have 3 young kids. They slime the walls with jelly and peanut butter, put dents in walls and furniture, track dirt all over the place, miss the toilet when they pee, and leave messes everywhere. Cleaning up after them is a full time job.

Why… WHY would anyone want to subject their beautiful new dream home and primary asset to that kind of abuse??

We sold our condo and started renting several years ago. I LOVE renting our old tear-down house at this stage of raising kids. We don’t have to worry about damage. The landlord doesn’t care, either, since he intends to develop the property when our long-term lease ends in a few years. And we have nowhere to go but up.

We’ll buy someday when the kids are older and more responsible. Until then, I feel the freedom.

#58 Ravishing Rick 3000 on 11.26.11 at 3:32 am

Surrey Fraser valley is worse than Vancouver for house crazies….there are groups of 30 something’s who are going so far as to start MICs and I met one the other day that wanted launch his own REIT. The top is in? I hope so, otherwise everything I was taught in school about asset valuation and economics was wrong!

Where is adam smith’s invisible hand?

#59 GTA Girl on 11.26.11 at 6:02 am

People are using CHIP to do renos on their homes. This would make a little sense if it were to retrofit bathtubs/stairs and widening doorways for wheelchairs… No..for spa bathrooms, landscaping.

Or worse, for vacations.

CHIPS are known in the financial world as Eve’s apple. Sounds good, until you do the math or wake up one day, have a stroke and need long term care.

People who sell it are unethical Devil Spawn.

#60 TheRealTruth on 11.26.11 at 6:09 am

Alzheimer’s is a devastating illness.

At least we share something in common Garth!

It will affect RE greatly in the medium term. Just not yet. Wait till about 2020.

#61 detalumis on 11.26.11 at 7:05 am

Don’t cry for me Argentina. Let’s say I am the hypothetical boomer with my 800K paid off house and 100K RRSP/TFSA. I then have to dump my house for 400K leaving me sitting on what, 500K in assets. Okey dokey, I will then scoot over into my town’s geared to income senior building – let me check, yes it’s still there, smack dab in between million dollar condos, nice view of the lake, subsidized transit at the door with special buses to take me shopping and to pick up my uber cheap meds and visit the doctors many times a month. It will cost me okay maybe what $700 a month – assets not counted here for senior subsidies like they are if you are say 45 and lose your job.

Okay then poor, poor pitiful me we only will get say around $2,700 a month taxfree, a little bit of CPP, OAS, a bit of GIS if I’m still living with the “little lady” there, we have about $2,000 a month after paying our rent, not touching my 500K in assets. Then the little lady needs to go to LTC. Will I go and spend 6K a month like you did making the mistake of thinking that a marble lobby means better care or will I put her in one of the town’s two homes instead, the ones that are affordable on nothing but OAS/GIS and that the seniors here like better because they have lots of volunteers, the food is better and people “live longer”.

One thing I will be sure to do my friend is play the poverty card and I am sure I will do it very, very well but it sure ain’t me you should feel sorry for, I may be eating KD but it will be homemade mac and cheese and it’s really, really good if you use 5 year old Balderson – you should try it sometime – don’t feel sorry for me but instead you need to feel sorry for the young people who will be supporting my lifestyle.

#62 househornyhousewife on 11.26.11 at 8:39 am

Hey Garth,

Not all of us have children you know (by choice). Personally, if I could time my saved up assets and investments to expire at the exact moment that I (and my husband) do, I would consider this a huge success .. and this includes my house.

Reverse mortgages are not necessarily a bad thing, like anything else. It simply has to be used in the right circumstances and for the right reasons. For example, I have used credit cards for years and years and have never paid a cent in interest because I pay my balance back in full everytime. Others have no problem paying loan shark rates to credit card companies and are therefore being financially raped every single month.

My only issue with reverse mortgages is the interest rates (but often the published rates are not the best rate that you can get, depending on your financial situation … banks are dying to enslave you and you can use this to your advantage sometimes). However, if in the far off future (hopefully) I want more moolah and I can time the reverse mortgage properly to give me income payments that I never have to pay back then woohoo. I am dead, have taken back 50% of the equity in my home without the headache of selling it, AND it’s no longer my problem.

I will most likely not need this kind of a product in my retirement years (if all goes according to plan) but it is nice to know that such a product exists if I need it. One never knows.

To all of those who have invested all of their net worth in their house and must now retire, I really don’t have much sympathy. Most of those baby boomers lived during times when investments were making a bundle in interest and if at that time they chose to invest in mortar and brick, well so be it. I am in my forties and have never had the chance to see my investments make nearly as much as what those boomers had the advantage of seeing (at least not yet).

One makes choices and one has to live with the consequences. Qu’est sera sera.


There is no instance, other than total real estate illiquidity and no income, in which a reverse mortgage makes sense. (Ignore my credit card comment. Cerebral flatulence.) — Garth

#63 allister on 11.26.11 at 8:43 am

It’s been known for a long time that reverse mortgages are a equity drain through compound interest.

What does amaze me is that they still find customers who sign up for these things.

#64 allister on 11.26.11 at 8:55 am

#28 jjpetes

there are two kinds of debt

1. BAD DEBT buys cunsumer items that are depreciating in value and provide no income.

2. GOOD DEBT provides income that can cover the debt payments and a return on the original investment.

Your plan sounds like good debt.

#65 allister on 11.26.11 at 8:59 am

#28 jjpetes

One more thing – ask to see the last 3 years business income tax statement. Thats what the real business income is.

All businesses try to show the least income for tax reasons.

#66 MarcFromOttawa on 11.26.11 at 9:20 am

#28 jjpetes

A 35K loan in order to purchase a business valued at 1.5 income (if this is truly the case) is a great deal (depending on the terms of the loan).

There has to be something you’re not telling us caus borrowing 35K at close to prime in order to make 50K per year is a no brainer.

#67 eddy on 11.26.11 at 10:18 am

I agree with Garth, take an equity loan, or even sell and downsize is better.
‘perverse mortgages’ would be more apt. It’s seniors abuse. If we had a government these would be illegal.

#68 Beach Girl on 11.26.11 at 10:36 am

#35 Smoking Man on 11.26.11 at 12:36 am

Boomers rock

Right on brother. Just a joke. The phrase. But this man has got it right, below. Remember everyone one was called SPORT. That’s when a sport was a sport…

#61 detalumis (read that post)

I have neighbours in government housing right on the beach. Going to partee with them today. All you have to do is lose everything. Sounds harsh. But it is truth. They seem happier than most of my striving friends. One does not need an Escalade. We laugh and they tell me they are set for life. Of course, we all go there and bring spirits, because they have a relaxed lifestyle and spectacular view and a fire pit. I never envy people. But their friendship is a lot more fun than my stressed out serious friends.

If you aren’t relaxed at fifty give up. More fun. I totally get that.

Personally, I can’t do that, so I run the house for unwed fathers. House is full. Live for free. Lots more of them down the pipeline. January and February are usually the busiest months. When nothing is getting paid. Visa etc. Everyone wants to run away. You can’t.

#69 InvestorsFriend (Shawn Allen) on 11.26.11 at 11:16 am


These legal products have their place.

How pathethic that boomers expect an inheritance and would not like to see their parents spend their equity.

A real man stops sponging from his parents at some point.

You all sound like socialists and communists today.

No they don’t. An equity loan is far less costly and more efficient. — Garth

#70 Waiting For The Sun on 11.26.11 at 11:20 am

((( As for you not paying interest on your credit cards, interest is charged form the date of purchase, not the date of the statement. Hence, inescapable cost. Guess they got you on that one, eh? — Garth

Read her message again Garth. She said that she pays off her entire balance each month, hence no interest. Hardly “inescapable” when by paying off the balance you escape the interest costs.

Most cards start the interest clock when you buy something. Do that in the 14th of the month and you will incur interest until the statement is generated. Why would they give you a free loan? — Garth

#71 jess on 11.26.11 at 11:27 am

Kaesong Industrial Complex -44,000

gets the made in s. k. but really made in north korean sweatshops .25cents /hour although the prison population can do better at 10 cents.

quantity becomes quality

#72 Mike on 11.26.11 at 11:54 am


Where is the Kraft Diner? I’d like to go there, is there one in Whistler?

#73 Daisy Mae on 11.26.11 at 11:57 am

EDDY: “‘perverse mortgages’ would be more apt. It’s seniors abuse. If we had a government these would be illegal.”


We’ve always had ‘snake oil salesmen’ and that won’t stop. People have to use their heads, do their homework.

On another matter, Walmart is having their version of BLACK FRIDAY this weekend. People are lined up at the door, clutching their brand new Walmart credit cards issued just yesterday, ready to rush the aisles to buy electronics….and they ARE flying off the shelves.


#74 Kilby on 11.26.11 at 12:00 pm

#61 detalumis.

Are you a friend of DonDwest? By your information and attitude you must be what? 32 years old?

#75 Bottoms_Up on 11.26.11 at 12:02 pm

#6 First Place on 11.25.11 at 10:29 pm
There is such a thing as a cue you know. So, you were actually “second idiot”.

#76 Bottoms_Up on 11.26.11 at 12:09 pm

#28 jjpetes on 11.25.11 at 11:59 pm
Pizza business in canada is good obviously if you make good pizza and have a good location.

But to make $50,000/yr is it worth it? For example, what hours are you going to work, and will it be 7 days a week? What type of vacations will you have? Your busy times will probably be lunch time, and Friday/Saturday nights, do you really want to sacrifice those good hours of your life to make probably what works out to be $12/hr?

#77 Darjean on 11.26.11 at 12:21 pm

Garth – are you being faceticious or are your sincerely recommending HEQ as a good investment?

Me? Facetious? — Garth

#78 Bottoms_Up on 11.26.11 at 12:23 pm

#37 RM in Oakville on 11.26.11 at 12:52 am
I second that motion. I think that if one has nothing to contribute to this blog (slander, advice, opinions, anecdotal tales, links to news articles, links to mls, humour etc.) then they should be DELETED.

I guess writing in “FIRST!!” is kinda humourous in an idiotic sort of way.

#79 Ret on 11.26.11 at 12:25 pm

Rather than a CHIP, get a $100,000, interest only HELOC on your house from the nice lady at the bank. You will only have to pay $200-240 a month in interest. Interest rates will be low for years. (Yeah, right.)

Treat yourself. Get that Bimmer, Mercedes or Audi now. It is your money and you’re not going to move anyway! Oh, and don’t tell the kids.

#80 Bottoms_Up on 11.26.11 at 12:28 pm

#57 Jimbo on 11.26.11 at 3:30 am
As a relatively new parent, with 12 years renting experience, and a little over 2 years ‘home debt-renting’ experience, I can tell you it would be hard to go back to renting.

As you know, your kids come first, and having a stable home is important.

Yes, you have a long-term lease. But, your landlord can actually kick you out of your home, if they want to occupy it themselves, or if they sell it behind your backs.

I think it would be hard to live with that type of uncertainty.

#81 CrowdedElevatorfartz on 11.26.11 at 12:28 pm

@#49 BPOE
You frisky little monkey ! How on earth did you escape from your cage? Come HERE you cute little cherub! BAD BPOE ! Naughty boy! Back in your cage you go without dinner….
Tommorrow the “obedience” refresher lessons begin again. Dont forget to bring your kneepads

#82 live within your means on 11.26.11 at 12:39 pm

#52 Harold Svenson on 11.26.11 at 2:20 am
Nothing wrong with a reverse mortgage if one doesn’t have heirs such as children. Why leave a huge estate if you don’t have to? I have no children and intend to die broke.

We have no children, but we’d rather sell low and rent than ever consider a reverse mortgage. DH has, jokingly, said that when he’s old and frail, he’ll hire a good looking caregiver ’till the money runs out. I don’t care cause I won’t be around then. LOL

However, both of us want to change our wills in case something should happen to both of us while travelling. My changes have been ‘noted’ but am still waiting for DH to make his. He can be such a procrastinator about certain things. Just put a sticky note on his laptop.

#83 joe on 11.26.11 at 12:49 pm

Garth, you need to add a “new window” code to your links on these blog posts/replies so people don’t leave the site …where’s your brains??

Great article on chip!

#84 XIU, all day long on 11.26.11 at 12:56 pm

#57 Jimbo – eh right on, Jimbo! couldn’t agree with you more here!! Kids are a terror on a house… I was a terror on my parents’ house, my kids will be a terror on my house… why would you want to devalue your primary asset that way? Unless your kid is a genius fraudster, it’s hard for them to devalue your balanced portfolio…

#85 Hashnugs Inthebong on 11.26.11 at 12:56 pm

As for you not paying interest on your credit cards, interest is charged form the date of purchase, not the date of the statement. Hence, inescapable cost. Guess they got you on that one, eh? — Garth

Huh? There is a grace period if the balance is paid in full on or before the due date. I buy $50 dollars in gas with my credit card, I pay $50 dollars at the end of the day. Not sure what you mean about inescabable cost as I pay 0% interest on all my credit cards.

Sadly, you do not. — Garth

#86 C on 11.26.11 at 1:05 pm

The plunge continues….

Listings in Burlington, Ont “House” $300K to $400K:

Nov 6th, 2011 301
11th 294
12th 289
15th 294
16th 286
17th 284
18th 244 !!!
19th 272 ???
23rd 256 !!!
25th 246
26th 238

FYI——-> November 26th, 2010 362

#87 live within your means on 11.26.11 at 1:10 pm

#53 DonDWest on 11.26.11 at 2:38 am
After cashing out on silver; I’m currently in the process of designing a “baby boomers getting older” portfolio. It’s an idea I had for a long time.

Basically, the concept was to invest in the following:

-Nursing homes
-Funeral homes
-Wheel chairs
-Kraft Diner
-Titanium (metal used to make geriatric devices)
-Embalming fluid
-Medical equipment
-Hearing aids

I didn’t consider investing in reverse mortgages – thanks Garth.

The real money, though, will come depending on how the political winds howl. If the baby boomers of the left paradigm ever succeed in legalizing euthanasia (they have been pushing it for a while); I have a few entrepreneurial ventures that come to mind.

Very funny. I’m all for legalizing euthanasia as I’m a commie, pinko liberal as opposed to a fear mongering, secretive, unaccountable, spend thrift CRAP party.

Just the latest example:

#88 jess on 11.26.11 at 1:13 pm

Statistics Canada to make all online data free
National Statistics Council, which opposed scrapping the long-form census, applauds the move.

By Carl Meyer

#89 Humpty Dumpty on 11.26.11 at 1:14 pm

A real estate bubble is not only an economic problem, it is also a social disease that can do a great deal of harm and a ticking economic time bomb.

Its going viral G….

2012 just may be the year some of your pathetic followers reverse their empty life styles and move back home with their mamma….

P and G may do well through all of this. Depends sales and toilet paper would increase, since their leech sucking kids try to convince them that Gordon is a reasonalbe guy. After all he’s on TV. Im with granny on this one.

#90 Junius on 11.26.11 at 1:15 pm

#29 International Man,

I don’t see the Ghost Cities themselves as having a direct impact on the HAM situation. More likely it is a symptom of the over extending building across all of China that will soon bring on a national decline of housing prices and bank woes.

The primary driver of HAM is the desire of a segment of the Chinese population to leave China and come to Canada for a better life. Often times it involves a hedged bet where the father stays in China and the mother and children live in Vancouver.

We saw this phenomenon in the 1990s prior to the change over of Hong Kong to China. There was a rush of money in the years running up to the change for fear of how life would change in Hong Kong. After things normalize in Hong Kong the tide slowed and many people returned to Hong Kong.

The long range issues will revolve around the political and economic situation in China. If China continues to progress it may be that the HAM slows and reverses as all the action will be in Asia. It is clearly a complex and fluid situation.

However nothing changes the fact that the idea of HAM in the abstract is a bigger driver then the reality. HAM still represents a much smaller portion of acquisitions in Vancouver or Toronto then the pumpers like BPOE will want to admit. The belief of an unending movement of wealthy people to our shores is fundamental to their fear and hype message regardless of the facts.

#91 Junius on 11.26.11 at 1:18 pm

#49 BPOE,

Wow. He even admits to a slow down. Where are the boatloads of HAM? Shopping in the US on Black Friday?

You called it a ““Pause that Refreshes”.” Well, you would know lots about that because that is all you have been selling since the moment you arrived here.

#92 The thing in the basement on 11.26.11 at 1:31 pm

48 Watchdog – life expectancy varies widely amongst those countries. Malaysia, Indonesia, India all have much shorter expectancies than Western Europe, Canada etc. The chart should be re-adjusted to reflect total years in retirement, or a ratio of retirement vs working years.

#93 Seven Stars and Orion on 11.26.11 at 1:57 pm

Apropos of nothing, I might be missing something here, totally plausible, but as far as I can tell, I haven’t paid a cent of interest on my use of a credit card for years. We put just about everything that can be charged on it. We have a grace period with the bank, and if the statement balance is paid off in full, no interest is charged. Not a shabby amount of “reward” (haha) dollars too. It’s a convenient way of keeping track of household spending for a skinflint like me, and I’ve been told using it responsibly helps with credit ratings. Am I missing something here? The looks I get paying for baby butt rash cream with a visa while wearing worn out clothes would be worth a few bucks of interest a month though.

#94 live within your means on 11.26.11 at 2:01 pm

#60 TheRealTruth on 11.26.11 at 6:09 am
Alzheimer’s is a devastating illness.

At least we share something in common Garth!

It will affect RE greatly in the medium term. Just not yet. Wait till about 2020.

My younger sister’s FIL had Alzheimers. Fortunately, he was WW2 vet and the govt. cared for him in a wonderful, small setting for many years. His wife died several years later from cancer. Neither smoked or imbibed much. I, my DH & older sis attended her funeral in Mtl with an ‘open’ casket. I never again looked at someone in an open casket. She was literally a skeleton covered by some skin. They were both extremely fun loving & caring people. I prefer to remember people as they were. Anywho, all in our family will be cremated. My family knows that I don’t even want an obit. in the paper. If DH wants to hold something like a ‘wake’ fine.

On this sunny day, what a bizarre topic. I hope to be around for several more years.

#95 Doug in Victoria on 11.26.11 at 2:06 pm

“Most cards start the interest clock when you buy something. Do that in the 14th of the month and you will incur interest until the statement is generated. Why would they give you a free loan? — Garth”

Any credit card I know of DOES give you a free loan if you always pay your balance in full, otherwise you pay interest from the date of purchase. They hate people who always pay their balance and refer to them as DEADBEATS.

#96 what kind of credit card are you using Garth? on 11.26.11 at 2:08 pm

I think you’ve puzzled a few of us here who use our cards for everyday stuff, pay off the balance in full when the bill comes, and there is never interest on any of the purchases.

I can attest to this, doesn’t matter if I spend $2,000 or $8,000 per month, as long as it’s paid in full one never pays any interest.

I think the confusion is based on the fact that, if one does NOT pay it off in full, the interest will accrue from the date of purchase of each transaction.

I am pretty sure this is also the case if you have a brain cramp and take a cash advance.

In both those cases you will get nailed.

that is my understanding anyways.

#97 Deliverator on 11.26.11 at 2:22 pm

Love the HEQ idea Garth, but there is something just wrong with it that I just can’t quite put my finger on. And, it is not an ethical issue!!!

It goes something like them trying to liquidate their “assets” in a falling market…

However, paying a maximum of 50 cents on the dollar for for a house, even now, is appealing.

The issue for you, I think, is the opportunity cost on the money lent. It’s not 50c/dollar, it’s (50c+compound interest)/dollar. As Garth pointed out, that can add up in a hurry.

#98 Hashnugs Inthebong on 11.26.11 at 2:25 pm

Sadly, you do not. — Garth

Garth, read up on grace periods regarding credit cards. I pay 0% interest and use my credit cards as short term free loans. If I was being charged interest, I would simply use my debit card for all purchases. The only cost I can see from using a credit card is the mark up the vendor adds into the price to cover the % fee the credit card company charges the vendor.

“The grace period of credit cards is the amount of time over which a company allows credit card holders to pay their balance in full without charging any interest. This period is very important for each card holder as it has impact on what he is charged. The grace period starts from the billing date up to the maximum number of days allowed before interest is charged. Usually, it is set at a minimum of 21 days. However, this may vary from one company to another. Creditors that offer longer grace periods (e.g. 30 days) are to be preferred because they give card holders more time to pay the balance.”

#99 Snowboid on 11.26.11 at 2:32 pm

#70 Waiting For The Sun on 11.26.11 at 11:20 am…

You are correct, the only time I pay interest from the time of expenditure to payment is on cash advances.

Only use those when I want to quickly transfer cash from Canada to US, and minimize charges by making payment same day as advance.

Not only do I not pay interest on regular purchases, I also have a no-fee dividend card that pays on average $ 250 a year.

So indeed I am getting ‘borrowed’ money for free, as well as a bonus dividend.

GT, I will email a copy of my latest statement if you want proof.

#100 GregW, Oakville on 11.26.11 at 2:32 pm

Hi Garth, Someone may be interested? 5pm on TVO.

Today’s lecture presents a gloomy view of the future of liberal democracy by someone who fought for it under the Communist rule in Hungary, when doing so required intellectual sophistication and personal courage. Gaspar M. Tamas is a Hungarian philosopher who has changed his political outlook in face of what he has experienced in his home country. No longer a supporter of free market individualism, he sees the democratic experiment in Eastern Europe a failure.

Even more depressingly, he suggests that the undoing of liberal democracy in Central Europe foretells of a breakdown of democratic and liberal practices elsewhere.

Thusly the title of his lecture is: The failure of liberal democracy in Eastern Europe and everywhere else.

#101 live within your means on 11.26.11 at 2:34 pm

#61 detalumis on 11.26.11 at 7:05 am
Don’t cry for me Argentina. My absolute favourite song. Second best is Edith Piaf’s “Non, Je ne regrette rien’

I’m also a big fan of many French singers – Charles |Aznavour, Gilbert Becaud, even Graeme Allwright, a New Zealander who moved to France years ago and sings in French. My BIL invited him for dinner one eve in Mtl. I LOVE his music. I have an old tape of his that DH made for me 27 yrs ago.

Signing off.

#102 on 11.26.11 at 2:48 pm

Rick…Adam smith’s hand is formed into a fist and his elbow getting cocked…

#103 Signpost in the bushes on 11.26.11 at 2:53 pm

Interest is not charged directly to the credit card holder on credit card balances paid in full before the due date! The merchant will be charged 2-3% on the transaction, sometimes more! Perhaps this is what you are alluding to(?), or perhaps you are holding the “wrong” card(?).

#104 maxx on 11.26.11 at 3:07 pm

#81 CrowdedElevatorfartz on 11.26.11 at 12:28 pm

LOL!!!!!!!!!! So cute and rib-cracking hilarious!!!

#105 Timing is Everything on 11.26.11 at 3:30 pm

#57 Jimbo ‘We’ll buy someday when the kids are older and more responsible. Until then, I feel the freedom.’

Jim, that’s why ‘unfinished’ basements and ‘vinyl flooring’ were invented. A house is shelter…. rented or mortgaged or owned. Kids or no kids.
3 young kids…Freedom—>fuhgeddaboudit.

#106 The thing in the basement on 11.26.11 at 3:56 pm

“Most cards start the interest clock when you buy
something. Do that in the 14th of the month and you will
incur interest until the statement is generated. Why
would they give you a free loan? — Garth”

Some clarification is required. While the interest ticker
may start, it is forgiven if the balance is paid off in full if
your previous balance was zero. If you pay off the
balance after carrying it for more than one statement period, you will get an interest charge on your next statement.

The CC companies make a few percent on every purchase where their card is used meaning it affects the retailer’s bottom line. Unless a retailer gives a cash discount, you
could argue this amount is spread over all puchases, so we are all effectively paying for the use of the cards
whether a balance is carried or not or even if we pay cash.

#107 Smell The Coffee on 11.26.11 at 4:00 pm

But the pizza business.

It is depression preferred food and mostly a cash impulse business. Only make good tasty low priced pizza with home delivery, because lazy people in boom times stay lazy people in depressions.

Also you have more equity than the 20 biggest banks in Euroland.

This is why we are in a depression. The banks have no money in them. None, nadd, ziltch.

Following stats by

Sone Leigh statisics “track record is pretty good–we (Automatic Earth Web Page) predicted that Dexia was the most vulnerable bank outside of the PIIGS back in July. If the eurozone crisis continues to escalate, we will see more and more banks bow to the pressure of exposure and become unable to borrow money.

The worst 20 cutoff for our test ended up being exposure equal to about 175% of common equity, but it really gets out of control once you get to the PIIGS banks (#1-9). But Dexia’s fall suggests that bank vulnerability is already seeping beyond the periphery into the core (#10-20).

20 – Royal Bank of Scotland Group (UK)
PIIGS Exposure as % of Common Equity: 175%
19 – Landesbank Berlin (Germany)
PIIGS Exposure as % of Common Equity: 179%
18 – Barclays (UK)
PIIGS Exposure as % of Common Equity: 189%
17 – Landesbank Baden-Württemberg (Germany)
PIIGS Exposure as % of Common Equity: 230%
16 – DZ Bank (Germany)
PIIGS Exposure as % of Common Equity: 239%
15 – KBC Bank (Belgium)
PIIGS Exposure as % of Equity: 247%
14 – Credit Agricole (France)
PIIGS Exposure as % of Common Equity: 293%
13 – Deutsche Bank (Germany)
PIIGS Exposure as % of Common Equity: 327%
12 – BNP Paribas (France)
PIIGS Exposure as % of Common Equity: 358%
11 – Commerzbank (Germany)
PIIGS Exposure as % of Common Equity: 462%
10 – Dexia (Belgium)
PIIGS Exposure as % of Common Equity: 552%
9 – Banco Santander (Spain)
PIIGS Exposure as % of Common Equity: 953%
8 – Unicredit (Italy)
PIIGS Exposure as % of Common Equity: 1,070%
7 – Bank of Ireland (Ireland)
PIIGS Exposure as % of Common Equity: 1,385%
6 – BBVA (Spain)
PIIGS Exposure as % of Common Equity: 1,566%
5 – EFG Eurobank Ergasias (Greece)
PIIGS Exposure as % of Common Equity: 1,601%
4 – Intesa Sanpaolo Group (Italy)
PIIGS Exposure as % of Common Equity: 1,638%
3 – Banco Popular Español (Spain)
PIIGS Exposure as % of Common Equity: 1,927%
2 – Banca MPS (Italy)
PIIGS Exposure as % of Common Equity: 4,666%
1 – Allied Irish Banks (Ireland)
PIIGS Exposure as % of Common Equity: 33,352%

Go long bank stock…if you have a financial death wish.

Ya don’t think this will pull pull Canuk banks down at some point and go back to 10% mortgages soon?

No bank account is an island.

#108 Hammer1 on 11.26.11 at 4:05 pm

We should cut the firsszzt ! people some slack..they are just the eager beavers hovering around this site at 10 ish every the folks waiting outside the beer store every day at 12..I see no problem with it. have a gggreeaattt! weekend

#109 Victoria on 11.26.11 at 4:24 pm

Fortune 500,

I was reading an article about Baby boomers and how they are in dential about getting older. This was in MacCleans October 25th I think. Anyway, 1/4 of people 63 already have Alzheimer’s . Health and dementia will start failing for many and there is not a lot they can do about it – even if they think they can. The idea of working later and later is not going to be an option for many or even staying in the house. There is not much you can do for many types of cancer and really not much about demtia.

On that note – have a happy day everyone!

#110 cxcroney on 11.26.11 at 4:36 pm

Garth, people who have credit cards that pay interest from the day of purchase have the wrong cards. There are alternatives out there . I haven’t paid a single penny of interest on my Mastercard in the last 30 plus years and it does not have an annual fee either. I do know people who like to brag about their Gold this or Platinum that and having to pay 50 to 100 annual fees. Just like buying too much of a house give some that entertainment factor/ego boost when they lament about their payments/maintenance, etc. They are telling you that “I can afford to complain. You can’t!” Very annoying people but they complain with such a sincere tone of voice.

#111 Jimbo on 11.26.11 at 4:36 pm

#80 Bottoms_Up…

>Yes, you have a long-term lease. But, your landlord
>can actually kick you out of your home, if they want
>to occupy it themselves, or if they sell it behind your

Oh no they can’t. I had our lawyer and the Tenant Resource and Advisory Centre review our lease before signing. At one point the landlord did list the place for sale without our knowledge. He assumed the buyer would continue the lease, but the realtor was under the impression that a buyer could kick us out simply by paying us an amount equal to the balance of rent remaining on our lease. My lawyer gave him a call to straighten him out.

A long-term lease gives a renter security. As a matter of fact I have more security than a homeowner because I have the right to sublease and leave at anytime. Thus I retain my freedom AND liquidity.

And with regards to the “stable home” for kids that results from ownership, tell that to all the homeowner families in the US who have been forced out of their homes in the last few years.

#112 Michelle on 11.26.11 at 4:48 pm

@#45 Nissan boy-

You are right to say that the CPP/OAS/GIS programs are designed to give seniors a basic minimum standard of living which prevents poverty. However your parents’ situation includes some luck. They have a paid-off, modest house in a small town where taxes are low. If someone does not own a house, then they have to pay full rent, and that might stretch the budget further. City rents can be more expensive, and even if they leave all the people they know to go to a small town, rental units are more sporadic to find.
If the retired person needs to get to doctor’s appointments etc… it can be hard to afford a car, and public transportation, or even taxis in very small town are not easy to find.
Extra expenses, like dental bills, eyeglasses, hearing aids, walkers, etc… are not fully covered by the government and can be very expensive.

Your parents live as a couple and therefore can combine their government incomes and daily living expenses. A single person does not have as much to live on, and unless they want to advertise for a roomate, life can be really tough. If they didn’t spend approx. 40 years in the workforce (due to raising kids etc…), then they won’t get the maximum CPP payments either.
For the above reasons, single women (whether widowed, divorced or never married) have the highest rate of poverty among seniors.

Government pensions suffice, as long as mental or physical healthcare needs don’t arise, if someone can split expenses as a couple, and if someone is lucky to have affordable rent and transportation costs and a network of friends and family to help with daily needs.
As a single woman who’s lived both in the “boonies” and in the city, I know I don’t want to be plowing my driveway, lugging home and assembling my Ikea furniture, and trying to get myself to surgery or chemotherapy appointments all by myself on a fixed government income. I already know how expensive eyeglasses, dental work, and medications not covered by health plans can be as I have not been so lucky with my health. I also know how crappy the basic minimum nursing home care can be if you don’t have extra money to upgrade.

My mother came from a poor “mixed-race” immigrant background and grew up in the depression era. She taught her daughters not to wait for prince charming, but to rely on supporting themselves throughout their life. Most importantly, she taught us to fear poverty and to live under our means, while helping others who are struggling to escape poverty. Her favourite phrase was “It’s your own God-damn fault!”

We’ve all since thanked her for her “tough love” :)

#113 Timing is Everything on 11.26.11 at 4:59 pm

#70 Waiting For The Sun
#96 Snowboid

U R correct. They also waived the annual fee of $75… ‘indefinitely’.

#114 In Garth We Trust on 11.26.11 at 5:54 pm

#175 Jimbo from yesterday.

Friedberg is indeed a master of the market and this doesn’t mean he is never wrong but his track record over 40 years is almost without equal. You cannot be “lucky” for 40 years Jimbo. That would be a deviation so far from the norm as to be statistically impossible. Plain and simple he is good at what he does. He is a very wealthy man but retiring to an island is not something he will ever do, trading will always be in his blood. I have met him and know traders within his organization.

#115 InvestorsFriend (Shawn Allen) on 11.26.11 at 5:56 pm


Well, if so, start your own bank and lend cheaper. These reverse loans require NO payments. That is a different product than an Home Equity Line of Credit.

Stop being socialists. Let freedom live.

P.S. Garth

There is no interest on credit card bills paid in full monthly. Have you even got a credit card? It sounds like not.

#116 Bottoms_Up on 11.26.11 at 6:23 pm

#97 Snowboid on 11.26.11 at 2:32 pm
Hate to break it to you, but where do you think that ‘free’ ‘bonus’ ‘dividend’ money is coming from?

It’s coming from higher prices of goods that we buy, because credit card companies charge merchants per transaction. And it has been shown that merchants pass those charges onto the consumer.

So, although you are getting a bonus dividend on your credit card, you and I are paying higher prices for goods.

So those that pay by cash get screwed. It’s a stupid, upside-down system.

#117 Bottoms_Up on 11.26.11 at 6:28 pm

#85 Hashnugs Inthebong on 11.26.11 at 12:56 pm
Garth, they’ve got you on this one. As long as the balance is paid in full by the statement date no interest is charged.

#118 GregW, Oakville on 11.26.11 at 6:31 pm

Hi #97 Snowboid, You may not be seeing the cost directly in black and white. But we all pay some extra because companies pass on the expense in the prices. Actually the place I buy my drinking water from, no longer take credit cards or debt cards, due to the high fees the credit card company required her to pay them just for the privilege of being able to let some people pay without cash or checks.
I don’t thing small companies and corporation are eating the fees. They just hide them in the prices for the good and services you buy. Of course if your selling stuff, be it by phone or over the net you may choose to use the cards and so figure in the cost in the markup or the goods and services. You end up paying for the privilege, the card companies make some money and of course they just love it when you don’t pay off the card every mount!

Speaking of mark ups in Canada. My wife just got a new book shipped up from the states and the total cost to her still was less than if she bot it here! I’d assume the profit margins of book sellers in Canada must be pretty good?

#119 househornyhousewife on 11.26.11 at 6:41 pm


What the heck are you talking about ? (re your reply to my post #62)

Yes interest on credit card purchases is charged from the date of purchase and not the date of the statement (of course it is since this is when you “borrowed” the money) but you only pay interest on purchases if you don’t make your initial payment in full and on time and NOT if you pay your statement in full by the due date.

I have never paid fees to own a credit card nor have I ever paid interest on any of my purchases. I buy today with my credit card and pay the full balance later when my statement requires that I pay. I therefore have never paid interest on any of my purchases. No they absolutely have never gotten me, now or ever. Of course if you want to get nit picky, stores have to pay to have payment by credit card available and they pass this onto consumers … but this cost is assumed by ALL consumers and not just the ones who pay by credit card.

Agreed with you on reverse mortgages but it is nice to know that they exist if one is ever in a bind and one cannot manage to sell their home. More options are better than less. Home equity loans would require payments whereas a reverse mortgage would not. One must always weigh the pros and cons in their particular situation I suppose and choose the best option under the circumstances.



#120 GregW, Oakville on 11.26.11 at 6:43 pm

Hi #106 Hammer1, I agree. And the frenzy today just made me laugh. Especially as it appears…

#121 jess on 11.26.11 at 7:03 pm

Often times it involves a hedged bet where the father stays in China and the mother and children live in Vancouver.

…they like the permanent resident card since it is useful in other countries.

#122 Joe on 11.26.11 at 7:29 pm

#28 Good to get into business and this would normally be considered good debt. However, if we go into a recession owning a pizza restaurant may not be a good investment. Do some adjustments on how a 30% reduction in revenue would effect your purchase decision.

#123 Westernman on 11.26.11 at 8:09 pm

Well, well, well. I just thought I’d stay out of the fray for the day to see what this pathetic blog would make of itself…
I have to say without ol’ Westernman to add color and spice things up a bit that this is one boring blog-BIG time boring.
As I suspected it soon degenerated into a bunch of meek,passive,politically correct Canadians trying to out-nice each other. What a surprise! About as much impact as an unmade bed…
Ya’ll miss me dontcha?

#124 Kermit the Pig on 11.26.11 at 8:12 pm

“Most cards start the interest clock when you buy something. Do that in the 14th of the month and you will incur interest until the statement is generated. Why would they give you a free loan? — Garth”

Any credit card I know of DOES give you a free loan if you always pay your balance in full, otherwise you pay interest from the date of purchase. They hate people who always pay their balance and refer to them as DEADBEATS.


Lol lets see if infallible Garth does his research and actually admits he was wrong – I doubt he will, likely just ignoring these posts until the subject changes.

Btw that article is BS – credit card companies still make heaps of profit off these so-called “deadbeats”. They are safe, easy money. I spend $40k on my MasterCard every year. 2-3% transaction fees the credit card companies take on that is quite substantial. They would love is everyone carried a balance but they know not everyone does. Rather than ignore that market, they put together cash back , rewards, etc to make money off these folks via transaction fees. They market to these people, not hate them!

Sadly we’re all overpaying by 3% in most cases. By our walmarts have already increased their prices to account for transaction fees, so ultimately we are paying the cc companies out of our own pocket. That 1% cash back is only a fraction of the price you’re really paying. Better than nothing.. Best bet is to shop where cc are not accepted, or where you get 2-3% off for paying cash or debit..

#125 jason on 11.26.11 at 8:14 pm

Hi Garth,

The 87% increase actually occurred in 2010 over 2009 levels. See


I am aware. And current numbers duplicate. — Garth

#126 Nostradamus Le Mad Vlad on 11.26.11 at 8:19 pm









Thought for the day:


#40 Hoof – Hearted — Fascinating link. Never heard of them before, so it’s really interesting to get an overview of what they represent. Thx for the link! Good to see you’re still around. Keep posting!
The Great Gold Heist and there was never any input from taxpayers; Big Box Stores Money-junkies hate it when people shop local; Black Friday Becoming way more daft each year; Euro Collapse UK given five bln. pound bill to bail out Spain; Eurozone Banxters and GS rule the roost. The rest are puppets; Nine ways the banxters are also using the US as a punching bag; Congress create perpetual interest-only debt.
3:59 clip NATO – US – UN are at it again, this time in Pakistan, but at least Pakistan has told them to go suck eggs; Cyber War The UK has hardly got any military machines left; ‘Net censorship Crusades to protect us from ourselves, and 130 Domain names seized; The Terminator (self-aware robots) are alive and well; Destroying the Evidence CC scientists want to get rid of the factual data; Killer Drones being used against NAmerica.

France Just as they did in Libya, now Syria; Libya attacking Syria? “Translation: NATO is very keen to use its poster-child proxy of the month, Libya, as its way of toppling the Assad regime.”; Dictatorship How the US treats its own citizens, akin to the USSR; UK nukes “Is the UK frantically trying to find out where they were sold on the “Black Market”?

#127 BPOE on 11.26.11 at 8:24 pm

HST is a big deal in BPOE as BILLIONS sit on the sidelines getting ready to BUY. The HST removal will cause BIG cash savings for owners in the winners circle. This is why upcoming stats will show new homes not moving quite as fast as before. Let’s face it most buyers are willing to wait a few months to saves 10’s of thousands of dollars on tax
Junius on 11.26.11 at 1:18 pm
#49 BPOE,

Wow. He even admits to a slow down. Where are the boatloads of HAM? Shopping in the US on Black Friday?

You called it a ““Pause that Refreshes”.” Well, you would know lots about that because that is all you have been selling since the moment you arrived here.

#128 jess on 11.26.11 at 8:29 pm

westernman, trichet,cato seem to all share similarities with the Irish.

Crisis past to inform the present
Published in the Financial Times, 1998.02.20

#129 Onemorething on 11.26.11 at 8:42 pm

Reverse Mortgage is a TRAP!
Home Equity Loan ONLY IF NEEDED!
Gordo Pape has been slogging Canadian Financial Advice to the Silent Generation for as long as I can recall!
Simple advice for simple people.

Sell the damn home if you can now, grab the equity and rent you damn fools!

#130 Onemorething on 11.26.11 at 8:50 pm

“What one does see, again and again, in the history of financial crises is that when an accident is waiting to happen, it eventually does.”

#131 NoName on 11.26.11 at 9:10 pm

Suck to be them…

…Kangbashi was built to house one million residents, but so far only 20,000 have moved in…

…The buyers were China’s cashed-up new middle class. The country’s poorly-regulated stock markets, along with controls on investing overseas, have made second, third and even fourth homes a popular store of wealth…

#132 Devore on 11.26.11 at 9:13 pm

#80 Bottoms_Up

But, your landlord can actually kick you out of your home, if they want to occupy it themselves, or if they sell it behind your backs.

No they can’t.

#133 Seven Stars and Orion on 11.26.11 at 9:28 pm

#104 The thing in the basement

So in effect all consumers are paying for my “free” use of a credit card account. Astonishingly, I have yet again failed to connect the dots and follow the money trail to it’s obvious conclusion. Realizing one’s own foolishness leaves a sour taste in one’s mouth. Back to dividing cash expenses in mason jars I guess.

#134 I'm stupid on 11.26.11 at 9:34 pm

#28 jjpetes

I’m going to give you a piece of advise, please let me know that you got it.

There are many factors you need to look at to make that decision. Here are a few

1 Often times these places go for sale within 2 years of leases coming due. You need to check this because your profit will evaporate if rent increases and income doesn’t. Speak to the landlord to see what the increase will be.

2 How many hours are you going to work for 900-1000 per week? Can you get a job with no risk to gererate this income.

3 What is the future potential of this business? Have sales increased over time or are they flat or declining?

4 How long have the financials reflected a profit of 50k if it’s one year walk away it’s a trap. The books are cooked to increase price.

6 What are the start up costs of this business? With 50k profit per year at a price of 75k you might want to start up on your own since the profit is so tiny.

Most important don’t get screwed.

#135 Devore on 11.26.11 at 9:38 pm

#116 Bottoms_Up

So, although you are getting a bonus dividend on your credit card, you and I are paying higher prices for goods.

So those that pay by cash get screwed. It’s a stupid, upside-down system.

The words “don’t hate the player, hate the game” come to mind. We pay the CC vendor surcharge whether we have a money back CC or not. I’ll take my money back.

#136 Maya on 11.26.11 at 9:52 pm

There goes the “immigration will keep house prices high” argument down the drain …

#137 nsqt on 11.26.11 at 10:15 pm

Reverse Mortgage…………another sly and sneaky form of elder abuse……praying on the weak , vulnerable and lack of knowledge that some elderly person(s) may have…..

#138 Junius on 11.26.11 at 10:28 pm

#127 BPOE,

Let’s face it. You are reaching again. Keep squirming pal and enjoy the ride down!

#139 brad in saskatoon on 11.26.11 at 10:54 pm

#132Devore on 11.26.11 at 9:13 pm
#80 Bottoms_Up

But, your landlord can actually kick you out of your home, if they want to occupy it themselves, or if they sell it behind your backs.

No they can’t.

and why can’t they . only have to give 2 months notice to break the month to month rental contract .

also i think we get the point everyone about the credit card and interest debate , sounds like a bunch of schools girls fighting over your dolls.

#140 Duisburg on 11.26.11 at 11:06 pm

#18 City Slicker on 11.24.11 at 11:17 pm
I wonder where gold will go when Europe falls apart?

One bank now targets it at $1,425. A mighty fall. — Garth

I just read your response to the above. LOL Your Kidding me right?? One bank now targets…blahblahblah. And do you think there is one bank who now targets higher real estate prices?? Of course. and you expect me to buy your argument ‘One Bank targets??’ Not a very good point or example.

With that said, I do agree with your housing thesis and always have…that the shit will hit the fan. But your lack of knowledge of Gold and Commodities is laughable!!

I’ve been right so far. Hope you sold at the top. BTW, I referenced a target. If you disagree, explain. — Garth

#141 The thing in the basement on 11.26.11 at 11:20 pm

133 7*&O – I dont think I’ve paid cash or cheque for food, fuel or electronics in over a decade. Also pay cell bill online with card, buy CDs etc. Not sure on the
transaction fees for groceries as it is the retailers card
(though still an MC) and we get “points” and I bet
Petrocan, Walmart and Future Shop all get better
transaction charges than what I get with my small

#142 meslippery on 11.26.11 at 11:26 pm

# 116 Bottoms up

Years ago (Many) I was booking a room in Buffalo.
$25.00 a nite cash.
I handed them my visa Oh thats 15% more.Now we get
1 or 2 % for using a credit card I will take it unless I
get a better deal for cash. Its hard to find sometimes.

#143 Bottoms_Up on 11.26.11 at 11:55 pm

#111 Jimbo on 11.26.11 at 4:36 pm
#132 Devore on 11.26.11 at 9:13 pm

Well, looks like you both need a lesson on eviction (in Ontario):

Q9: When can I be legally evicted? And what can I do about the eviction?
A9: If you have been given a Notice of Termination by the landlord, you should immediately contact your lawyer or the local Community Legal Clinic in all cases. Legal Aid Ontario community legal clinics provide mostly free services to lower-income people and families.

And yes, you can be evicted any time, even in the middle of winter.

The landlord can evict you for the following grounds:

Nonpayment of rent on the day it is due. The landlord can give you a Notice of Termination, but it can not take effect until the 14th day after the notice is given, (or only 7 days if you pay your rent on a daily or weekly basis). This notice must include the fact that this termination can be avoided by paying the amount due before the date it is to take effect.

If you are a tenant in subsidized or public housing and provide false information on your income or the incomes of those living with you, or changes to those incomes as per Section 60;

If you do illegal acts or allow someone to do illegal acts on the grounds or anywhere in the building. Section 61 says this is the case if you commit such act. It does not state that it is necessary for you or the other person(s) to have been found guilty in a criminal court, so if this follows the protocols of the previous law then it is likely it only has to be proven to the satisfaction of an adjudicator of the Landlord and Tenant Board;

Section 62 on damage says if you, other residents of your unit or your guests wilfully or negligently causes undue damage to your apartment, the building or property you can be evicted. The notice of termination of your lease must state how you can remedy the situation and thereby prevent the eviction; Section 63 may also apply;

If you, other residents of your unit or your guest “substantially interferes” with the reasonable enjoyment of the building for other tenants as per Section 64 or in the case of a building with 3 units or less where the landlord also resides under Section 65;

If you, other residents of your unit or your guest impair the safety of any person in the residential complex as per Section 66;

If the number of persons occupying the rental unit on a continuing basis results in a contravention of health, safety or housing standards required by law, under Section 67, on overcrowding;

Animals can be a reason for eviction if the Landlord and Tenant Board is convinced that the tenant is keeping an animal and that the animal(s) is substantially interfering with the reasonable enjoyment of the premises, causes allergic reactions, or is inherently dangerous to safety.

There are other grounds for eviction, such as if the landlord personally needs the apartment to live in, if they are demolishing the building, converting the building (such as to a condominium) or doing such major repairs or renovations that they need your unit vacated. As unscrupulous landlords could falsely use these other situations as an excuse for eviction, contact your legal advisor or legal clinic immediately, and if you are certain they are in violation of the law the Investigation and Enforcement Unit, at 416-585-7214, or outside of the 416 calling area, toll free at 1-888-772-9277. See Sections 72 through 75 in Part V of the Residential Tenancies Act and it might be an idea to read all of this part of the Act.

#144 Sams Mango on 11.27.11 at 12:01 am

Homes are only cheap/falling where nobody wants to live. Try buying a home in core Toronto and Vancouver, no inventory.

#145 meslippery on 11.27.11 at 12:07 am

Yeah I dont get it.

#146 AGIC on 11.27.11 at 12:12 am

#28 jjpetes , listen to #134
plus look around the proposed business, and see how many chain-store pizza places (Boston Pizza, Little Caesar, Spalumbino, etc) are near by, as it is going to be hard to compete with them.
If the place is a small private outlet, owned by ethnic people, then majority of their clientèle will be lost, as most of the time friends & family come to eat and socialize.
As #134 said: “…don’t get screwed.”

#147 Stuck in Northern BC on 11.27.11 at 12:43 am

Just curious:

I am an only child and both parents are deceased, wife and I have no kids. What if we enroll in the CHIP program who pays if we both die?

#148 Aizlynne on 11.27.11 at 1:15 am

Garth, that WAS my profit ($160G) AFTER closing costs, realtor fees, home touch ups/staging. Occupancy costs were less over the 10 years that what I would have paid in rent. The home was only 3 years old when I purchased it so I have put nothing into the home. Oh, well I did spend $250 to have the furnace and ducts cleaned!

#149 Nostradamus Le Mad Vlad on 11.27.11 at 1:15 am

Social Slashing Harper is doing the same here, the BC Libs. started under Gordo Campbell; 21:12 clip Production is slowing; 14:44 clip Creating a lawful banking system, which won’t happen as crooks are running the show, but How the world’s economy is saved! Link in, lotsa cheers; Link in Sprott is buying US$!.5 bln. worth of physical silver, so look for it to jump; The Servant becomes the master.

Blame it on the Bossa Europe; Oh The Horror, Merkozy Proposes Marriage, Car Sets Mall On Fire, 6:05 clip (everyone’s contagious), Climate taxes soaring in UK — who benefits; Prepare for Collapse, Foreign Office warns; Glimpse into the future. Couple of charts and text.
Humanity Shopping is more important than helping people; WW3 China vs. US? Accurate Forecasts The Japanese govt. still doesn’t get it; NATO cuts off its nose to spite its face, and this is the reason why; BBC backtracking on GW; Banned Criminals and cyber bullies thrown off the ‘net; Oz Get children immunized or else.

#150 LB on 11.27.11 at 1:27 am

#53 Dondwest

There you go. Using your entrepreneurial skills to capitalize on existing demographics to identify future demand, rather than lament, lag and lose.

You’ll always do well if you zig when they zag.

#151 O=E+R on 11.27.11 at 2:03 am


#152 coastal on 11.27.11 at 2:29 am

Ozzie Jurrock is up sh*t creek. How CKNW can still have him on the air pumping his crap every week is disgusting.

#153 DML on 11.27.11 at 2:38 am

The Economist,

Euro collapse immenent….

#154 Jane24 on 11.27.11 at 4:32 am

I would be very interested if folk could go to any open houses they drive by today and check out the situation.

RE is local and I would like to know what is actually happening in your area.


#155 scib on 11.27.11 at 5:15 am

Want a little anecdotal evidence of Chinas’ slowdown.
In the last 10 years I have entered China 47 times and have endured the longest bank lineups in my life in the largest industrial market town in the interior of China. Usually I have to take a ticket and wait for 45 minutes to get a teller.
Well this trip I am completely dumbfounded. I walked into the main Branch of the Bank of China and there was….no line up. None whatsoever. In addition I entered another branch of the same bank in a suburb that I frequent and was all alone at 3:00 pm. Now usually I have to protect my space in line at this branch from aggressive line crashing Chinese citizens. For the first time in my whole China experience I saw no customers in the bank. That means no bubble money and no business. Wait for the deflation to start.

#156 Canuck Abroad on 11.27.11 at 5:15 am

From the economist (and mish):

“…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.

Another concern is that Australia, Britain, Canada, the Netherlands, New Zealand, Spain and Sweden all have even higher household-debt burdens in relation to income than America did at the peak of its bubble. Overvalued prices and large debts leave households vulnerable…”

#157 Canuck Abroad on 11.27.11 at 5:20 am

Be sure to look at the table in the Economist link I just posted. You will see that Canadian real estate is the MOST OVERVALUED compared to rents of all the countries surveyed.

#158 Aussie Roy on 11.27.11 at 6:56 am

Aussie Update

VICTORIA’S only Super Saturday of the year, with about 1000 properties put to auction, has failed to rally homebuyers as sales plummeted to the lowest clearance rate in eight years.

IT WAS billed as ”Super Saturday” but turned out to be more like soggy Saturday for Sydney’s auction market.

MELBOURNE’S real estate slump has spooked sellers into pulling their houses from auction on the biggest weekend of the year.

Just half the properties going under the hammer have sold in the past four weekends – the worst run of auction results in seven years.

THE chance of a pre-Christmas official rate cut has increased significantly as the European debt crisis begins to hammer Australian banks.
But whether banks decide to pass on the joy to home owners is another matter.

#159 Aussie Roy on 11.27.11 at 7:04 am

Aussie Update


There are several signs that change is in the air but keep an eye on the whole picture.

A lot more people would be millionaires if the knack for picking the bottom of the property market was a widespread talent. It’s not.

Even experts can be certain the market has hit rock bottom only in hindsight, after clear-cut evidence the real estate cycle has lifted a notch or two and prices have begun to head north.

Yes we have those here already calling a bottom.

Trying to find on the net, todays TV news.

Aust Govt revenue down $10B – less capital gains tax received. Govt will slash spending to cover shortfall.

Aussie banks struggling to get access to funds due to Euro crisis, credit squeeze in Aust soon?.

#160 Devore on 11.27.11 at 9:14 am

#143 Bottoms_Up

Well, looks like you both need a lesson on eviction (in Ontario):

Of course you can be evicted for non-payment of rent, or being a nuisance to other residents or conducting illegal activities. It is (or can be, depending on the level of knowledge and perseverance of the tenant) a very lengthy process (4 months at least). I certainly hope you don’t think you are making some grand statement or educating me by informing that a renter can be evicted if he doesn’t pay rent. No duh.

For the rest of your examples, one word for you: lease. A lease can only be ended when unit is needed for landlord’s own use. A sale of the property does not qualify as landlord use. If you care about where you live and don’t wish your life disturbed for petty reasons, get a lease, multi-year if you want, and renew it before it reverts to month-to-month.

Interview your prospective landlord, and make an educated and realistic (not wishful) guess as to whether he’s a long term investor, or just wants someone to pay his expenses until he tears the place down in a few months.

#161 Devore on 11.27.11 at 9:17 am

#147 Stuck in Northern BC

What if we enroll in the CHIP program who pays if we both die?

The estate.

#162 Bonds are Bust on 11.27.11 at 9:46 am

You might think a Eurobond is a good idea Sir Garth but the majority of Germans do not as revealed in a recent poll.

Nobody voted for the GST, either. — Garth

#163 Easternman on 11.27.11 at 9:47 am

I agree Westernman, the blog has become very bland without your witty retorts. Roll up the sleeves cowboy and enter the fray again. I have my popcorn ready.

#164 Daisy Mae on 11.27.11 at 9:53 am

XIU: “Kids are a terror on a house… I was a terror on my parents’ house, my kids will be a terror on my house… why would you want to devalue your primary asset that way?”


They don’t have to be. Mine weren’t.

#165 Darryl on 11.27.11 at 10:05 am

interest is charged form the date of purchase, not the date of the statement. Hence, inescapable cost. Guess they got you on that one, eh? — Garth

Only if you don’t pay the whole amount by the due date. Been doing this for years and have never paid interest.

#166 Raj on 11.27.11 at 10:35 am

Aussie Roy,

I like this

“Real Estate Buyers Agents Association of Australia president Warwick Brookes said savvy buyers should jump into the market.”

#167 Beach Girl on 11.27.11 at 10:44 am

#147 Stuck in Northern BC on 11.27.11 at 12:43 am

Just curious:

I am an only child and both parents are deceased, wife and I have no kids. What if we enroll in the CHIP program who pays if we both die?


Guru Garth, what is the answer?

The reverse mortgage works the same as a regular one. The debt is registered against the property. The executor must pay it off, presumably through proceeds from the estate, including the house sale. — Garth

#168 Sky on 11.27.11 at 10:58 am

I’m with the group of folks who don’t pay credit card interest charges provided the bill is paid on time and in its entirety. Yet, Garth maintains that we DO ,in fact, pay interest.

What’s going on here? I think there’s a simple explanation. A bunch of us non-interest payers have somehow slipped into an alternate dimension. Planet X effect?

I’m not crazy about that explanation, though. Because I’m still experiencing the same crappy Canadian winter weather at my end. Perhaps Garth slipped through? How’s the weather at your end?

Seriously: Merchants pay percentage fees to credit card providers ( mainly merchant discount rates/interchange fees).These fees then get invisibly passed onto the consumer in the form of a higher cost of goods.

Interchange fees are a separate issue from interest rates paid by consumers to the card companies.

Care to enlighten us, Garth?

I misunderstood the context and replied incorrectly. — Garth

#169 Jeff on 11.27.11 at 11:03 am

Garth, i thought it was only my in-laws that did such foolish things….they did the reverse mortgage thing this year, went on 2 trips….we’re shaking our heads….they are sooo screwed, and my wife is sooo freakin’ mad at them….sigh

#170 eaglebay - Parksville on 11.27.11 at 11:07 am

#28 jjpetes

You’re getting terrible advice on this blog.
Chicken advice. Not very entrepreneurial or innovative.
You’re buying a location and an existing customer base.
Next, do you have self confidence in developing the business further? Could you increase sales? The extra volume will make you more money as your basic expenses would already be covered.
Recession or not, some business entrepreneurs can still make good money. People have to eat.
Do not listen to the chicken little advice on this blog.
Go talk to a real businessman for advice. They’re all around you.
Investing in a profitable business is always a good debt, if you get the proper advice and self confidence.
This blog is wrong, not a good sign and not a good place for you to start a business.

‘This blog’ made no comment on the issue. If you mean ‘contributors to this blog’, say so. — Garth

#171 Lawboy2001 on 11.27.11 at 11:12 am


As another poster indicated as well, a landlord cannot evict a tenant during the term of a fixed term tenancy, for the purposes of occupying the home themselves. This power is only available if the tenancy is a month-to-month tenancy. Hence, the value of a long term lease for those who are looking at renting as an alternative to owning.

#172 eaglebay - Parksville on 11.27.11 at 11:14 am

#135 Devore on 11.26.11 at 9:38 pm

The merchants are also charged a fee on so called debit cards.
These are some of the costs of doing business.
Of course, to be profitable, a business has to pass all their costs along to the customers.
That includes the PST, payroll taxes, income taxes and many other taxes by any other name.
Tax the rich and the greedy “corporations” and see who pays the bill. Shortsighted.

#173 eaglebay - Parksville on 11.27.11 at 11:20 am

#137 nsqt on 11.26.11 at 10:15 pm
“Reverse Mortgage…………another sly and sneaky form of elder abuse……praying on the weak , vulnerable and lack of knowledge that some elderly person(s) may have…..”

Same goes for the younger generations. It’s called no money down mortgages and lifetime amortization.

#174 Ronaldo on 11.27.11 at 11:24 am

#54 – Fortune500 – “I’m starting to wonder if Boomers will hold on to their homes just as they are holding on to their jobs past the expected point of retirement. Won’t this continue to limit supply and maintain these prices? Any thoughts?”

Was wondering about that myself. If the boomers are anything like their parents were/are and end up living in their homes until they are forced to leave “kicking and squealing” you have a good point.

Like many of the boomers parents I know, including my own parents who were 86 and 89 who refused to go into a home until forced to, this flood of homes coming onto the market may not come to pass and the increase in the reverse mortgages we are now witnessing may be proof of that.

It would be interesting to know what the average age of the people taking out reverse mortgages is. My parents sold their home about 5 years before entering a care facility and never once entertained a reverse mortage. They managed on the small pension my father got from his municipal job plus OAS, CPP and GIS and lived quite well. Proceeds from their home was invested in dividend paying investments which they slowly divested through gifts to their 8 children. I too believe reverse mortgages can be a terrible trap and there are better alternatives out there. Pape should know better.

#175 eaglebay - Parksville on 11.27.11 at 11:28 am

#152 coastal on 11.27.11 at 2:29 am
“Ozzie Jurrock is up sh*t creek. How CKNW can still have him on the air pumping his crap every week is disgusting.”

Ozzie pays the bill. What do you think?

#176 eaglebay - Parksville on 11.27.11 at 11:38 am

‘This blog’ made no comment on the issue. If you mean ‘contributors to this blog’, say so. — Garth

I say so.

#177 The Original Dave on 11.27.11 at 11:50 am

#80 Bottoms_Up

But, your landlord can actually kick you out of your home, if they want to occupy it themselves, or if they sell it behind your backs.

No they can’t.


Yes, a landlord can. Did it myself in the past. We had a tenant that was doing some strange things and we wanted them out. We gave them 3 months notice so that I could move in. They took us to court and lost.

#178 Snowboid on 11.27.11 at 11:55 am

#116 Bottoms_Up on 11.26.11 at 6:23 pm…

You brought a tear to my eye, for a short moment anyway. Since I am not a ‘Tony Soprano’ type, I don’t normally carry more than $ 100 cash at any one time.

Last week spent a few thousand at a couple of stores, may have been a bit risky walking around with a briefcase full of bills – not to mention a bit suspicious? Cheques are an option, but we only hold enough in our US account to pay home-related bills.

I also mentioned the use of cash advances – saved us several times in our travels when it was too slow to use a wire-transfer and impossible to withdraw that amount of cash from ATMs.

Since paying by cash is neither practical nor safe, why not take advantage of a card that pays a dividend and has no fee?

#118 GregW, Oakville on 11.26.11 at 6:31 pm

Okay, I get it – the costs are passed on. But isn’t this the case with everything? I don’t mind paying cash or using cheques for smaller purchases, but there are other advantages to credit cards such as fraud protection and additional warranty coverage.

You are spot on about Canadian markups, I don’t mind paying a small percentage to account for market differences and shipping – but some differences are ridiculous.

I regularly compare our purchases here and the Canadian prices – often 45% higher or more up north.

#135 Devore on 11.26.11 at 9:38 pm…


#179 Okanagan Renter on 11.27.11 at 12:04 pm

Props Garth for clarifying your position on credit card fees (#168). I actually pay annual fees on my Aventura MC, but no interest whatsoever as I pay off the balance in full at the end of each month. I more than benefit from the $120 in annual fees with the air miles I receive on the card by putting everything — an I mean everything possible, even a stick of gum — on the card. With this strategy, I’ve saved hundreds, nay, thousands of dollars on trips all over the world.

I wouldn’t recommend it unless you’re a hard core traveler or like to pay fees for nothing.

#180 jess on 11.27.11 at 12:28 pm

Anschutz Company v. Commissioner, 135 T.C. No. 5 (2010)

Variable Prepaid Forward Contract Tax Strategy

A Family’s Billions, Artfully Sheltered
new york times

#181 jess on 11.27.11 at 12:35 pm

Nobody pays that (35%tax)

Inside the Accountants’ Playbook
Background on four strategies that American companies use to reduce their taxes.

#182 down and out on 11.27.11 at 12:42 pm

End Game ,health problems forced parents into retirement home ,no home care could deal with them needed 24 hour watch (stroke ,heart condition,) ,house finally sold on emptying out place realized how desperate situation was, too many rooms of useless furniture but not too worry has family came out of woodwork to claim and raid stuff .If only they downsized sooner and could enjoyed a little more leisure instead of fixing roof ,lawncare,trying to pretend they all is well etc. Now we were lucky to sell in this market seeing we had to maintain a empty house all summer ruining some of our vacation but that is life .Morale is this story is too be repeated by many Boomers fooling themselves thinking the family compound is necessary and not a option.

#183 CrowdedElevatorfartz on 11.27.11 at 1:01 pm

@#127 BPOE “Let’s face it most buyers are willing to wait a few months to saves 10′s of thousands of dollars on tax”

Trouble is, most developers cant AFFORD the wait. Admit it you cute little butterball. Sales have plummetted….Developers are screaming bloody blue murder here in the Lower Painland.
And, if by your erroneous statement,”… wait a few months…..” you mean March 2013. (Which is when the incompetant, unelected bimbo of a Premier has announced the govt will rescind the most hated tax this Province has ever seen)
Good luck with that. By March 2013 this real estate market will be like a pig on a bonfire ie; well done.
Enjoy your delusional dithering. Eventually I’ll get you back in the cage and the only gold you’ll enjoy will be when I unzip my pants and…………

#184 JohnnyBravo on 11.27.11 at 1:21 pm

“Nobody voted for the GST, either. — Garth”

This touches on one of the issues not being FULLY explored in the mainstream media: the people vs. the oligarchs, or the governed vs the governors. (Sure, it’s hard to ignore a popular movement like “Occupy X” but it never really got to the heart of the matter the way that past struggles, such as the fight over the issue of central banking in the US, did.)

Without getting into who is to blame for the crisis, the current struggle could be defined along those lines, as shown in Greece, Italy (to a lesser extend) and now again in Egypt.

Any visible plans by the “govs” (e.g austerity, euro bonds, etc) would fail to launch if the people put up enough resistance and viable alternatives existed. It would not be easy because there are very powerful, entrenched interests here; but it is possible.

Ultimately, the govs require the consent (or acquiescence) of the people in order to continue to gov and maintain the system. Gandhi showed how one form of popular resistance could be effective.

Don’t look at Canada as a benchmark. Canadians, in general, are passive lemmings––until you mess with their cable.

#185 Art_Vandelai on 11.27.11 at 1:23 pm

Interesting Economist article – home prices in Canada when measured vs. rents most overvalued among major countries. However vs. income levels, we compare pretty well with most of Europe.

#186 Timing is Everything on 11.27.11 at 1:42 pm

#174 Ronaldo asked “It would be interesting to know what the average age of the people taking out reverse mortgages is.”


#187 gladiator on 11.27.11 at 2:46 pm

@155 scib: ok, I am no tin-foiler and stuff, but what you wrote was scary… no… it was SCARY and quite a sign for Canada as a resources exporter and a HAM destination.
I stacked up on pop-corn corn. Let the show begin!

#188 gladiator on 11.27.11 at 2:55 pm

I misunderstood the context and replied incorrectly. — Garth

Tip-o-the-hat, Sire. Admitting you weren’t right adds to your image and earns you the respect of your followers.

#189 Q on 11.27.11 at 2:56 pm

Kudos Garth, finally someome writing about that toxic vermin Mr. G. Pape and his travelling carnival of fleece. This bastard should be tarred, feathered and run out of town on a rail. Reverse motgages and the shylocks that pump them should be illegal (if our government cared), as the average boomer is either too dense and/or desperate, to understand or calculate the true cost of this “legal theft”. I’m sure that Mr. Pape sleeps well at night, knowing that he will soon have all the home equity from the “single digit” boomers and I’ll bet that he’s heavily invested in low end retirement hovels as well. Anyway, with any luck at all, the beginning real estate “adjustment” will actually be a total collapse in excess of 70% and Mr. Pape will end up bankrupt and as a client in one of his own former hovels.

Your comment was edited to remove the worst of its vitriol. Remember that as long as their are fools willing to borrow on these terms, there will be opportunists making the loans. — Garth

#190 bubu on 11.27.11 at 3:02 pm

3 rental properties…. how are the banks lending money to these people?

#191 Jimbo on 11.27.11 at 3:15 pm

#139 brad in saskatoon…

>and why can’t they . only have to give 2 months
>notice to break the month to month rental contract .

We’re talking about leasing, not month-to-month. If you hold, for example, a 1 year or 2 year lease on your rental, the landlord can not kick you out before the end of that lease even if he is selling or moving in himself.

If it were any other way, why would anyone lease? Leasing provides you with security PLUS, as a renter, you have the right to leave by subleasing anytime. So you also have freedom to move.

#192 Q on 11.27.11 at 3:22 pm

As for all the conversation here regarding the rather pathetic CPP/OAS ammounts…if you want to fix the system, then allow politicians to receive only the same pension entitlements as the people they are supposed to represent….and then just sit back and watch how quickly the enormously generous increases occur.

You might wish to know that the average MP pays more into their own pension plan in one term than most Canadians contribute to CPP over a lifetime. — Garth

#193 Silver on 11.27.11 at 3:22 pm

after reading all this ….
going to watch that thing called the Grey cup???

short change of direction…
visiting brother In-Law decided I needed to see a Football game,…
so at 53 here I go to See the pinnacle of Male bonding
in Vancouver….and go for Free….some people at work will be so pissed as they paid good coin to go…and I don’t even care and have no idea whose playing…Heh,HEh, HEEE….
feel like I’m going to some Sacred Mystic Rite…in a cave….
From the Bunker in Vancouver
wonder if we will see any cops around??????

#194 Dorothy on 11.27.11 at 4:14 pm

I have a dividend paying credit card which pays me 1% cash back on all of my purchases. I always pay my monthly bill in full, and haven’t paid a penny interest in 35 years. Using my card is convenient, and saves me carrying a lot of cash.

But that said, when I’m making LARGE purchases (such as appliances) I can usually negotiate a 3% discount if I’m willing to pay cash rather than use my card. So I make the deal, go to the bank to get the money, and then return to the store to complete the purchase.

For those of you who don’t have enough money in the bank to do this, if you learn to save the amount needed before going to buy the item, you’ll find your a lot better off financially in the long run.

#195 Timing is Everything on 11.27.11 at 4:32 pm

#193 Silver

Take an umbrella. $563 million and the roof leaks. Quick, call Mike Holmes…

Leak update…

#196 Steven Rowlandson on 11.27.11 at 5:40 pm

As a boomer that was priced out of Canada by other boomers, seniors and realtors I have the same problem as the children of the boomers.
That problem is how to obtain the basics of life or better with out getting ripped off and abused by financial terrorists, rip off artists and financial sodomites.

Living cheaply and saving in the noble metals is a first step in the right direction. This is a correct first step because the paper floggers and debt mongers hate it so much.
Now about those who indulge in reverse mortgages.
They may be technically with in their rights but they are not part of the solution to the problems faced by their children. The wealth of the family should stay in the family to aid its members and not go to the tax man, realtor and bankers.

#197 betamax on 11.27.11 at 6:10 pm

#155 scib

— Thanks for the view from ground zero. It may be anecdotal, but it’s extremity is telling. It confirms what my wife’s relatives back in mainland China are saying: the bloom is long off the rose and rot has set in.