Seduction

Last week a guy Jay works with pulled him aside, showed him a listing and asked what he thought about buying a house. It was a bung. Three bedrooms, $379,000. In Ajax – about an hour’s commute from work in Toronto. Jay gulped.

His colleague’s been with the company less than a year, has a wife and two daughters, no savings and takes home a piteous $2,400 a month. His reason for buying: more space than the 2-bedroon, $1,000-a-month apartment on the subway they now occupy.

“I immediately broke down the numbers for him,” Jay says, “and showed him that after mortgage payments, property tax, utilities, internet, cell phone, Go train passes, house insurance and food, he would blow through what he makes and still come up short. This doesn’t include any money being saved for his daughters’ university, or for when his pipes burst, or his basement floods, or car payments, or his wife’s birthday, or when his family’s current wardrobe no longer fits.”

Ever the buddy, Jay spelled out that if he stayed put he could save $400 or $500 a month. He reminded him his kids will need college tuition in eight years, and without any savings he’s in no position to help them.

“All in all, by the end of our conversation I had him convinced,” he said. “Friday morning, he pulled me aside, and said ‘Please don’t be mad, but I bought the house. I close on January 15.’ I congratulated him on making a major decision, and wished him well. All the while I kept thinking about how glad I was that I found your blog, and have been following your advice.”

This is what real estate does. It blinds, deceives, seduces, infatuates and addicts. It makes buyers believe alchemy has turned their debt into security. It defeats reason. It leads conservative people into extreme risk. It stirs the loins of emotion, and logic is dashed.

That Jay’s pal would succumb is sad, but common. That a major bank would give him money to buy a house costing 13 times his take-home income is appalling. Those who continually argue Canada has no subprime lending practices are out of it. When someone with no savings, no cash, three dependents and $2,400 a month income is given $370,000 to buy a house they cannot afford to carry, there’s nothing about Canadian banking to be proud of.

Three thousand clicks west, a new survey (Ipsos Reid) has just found a quarter of retired people in BC think they’ll run out of money. Worse, 44% of everybody is worried they won’t be able to support themselves after they stop working. Of course, BC also has a negative savings rates. That means people are spending, on average, about 9% more than they earn. Thank God that She created lines of credit.

Tom is sixtyish. Rents a swishy place in a glass tower in downtown Van and has his wealth in liquid assets, smugly invested. “A lot of my friends (mostly poor media types) are in deep trouble,” he says. “I have friends that are selling their possessions to make payments. One gal had to be talked out of a reverse mortgage yesterday. I begged her NOT to do it and explained the basics and directed her to your blog. The scary part is, I tell people the truth and they look at me like I am from Mars.”

As we all know, real estate did this to BC. The average SFH is now $1.1 million in Vancouver, and $592,034 in Victoria. The average family makes $83,300 and $76,600 respectively. Figure it out. If real estate values were to fall by 25%, or even 15%, there’d be a social crisis. Global TV would have a kitten. Whole condo towers would be full of under water owners. People with the bulk of their net worth in a house would suddenly understand how Americans felt when their market tumbled.

US house prices are back at 2003 levels. All the money that was made, has been lost. Just the debt remains. Homeownership peaked at 70%, like Canada, and will fall to 62% in a few years – where it was in 1963. The government there has spent trillions in incentives, inducements, tax breaks and grants to breathe life into the housing market, which once accounted for a dangerous 20% of the economy (exactly like ours today).

But a pile of money is no match for emotion. Housing burned millions of Americans, and they want nothing more to do with them. Twenty-four million households owe more than they own, and can’t afford to sell. Retirement dreams have been squished, and young families’ equity erased. Renting is cool, liquid, free, mobile, modern. Owning is what your parents did. Losers.

Real estate is the most emotional of assets. It’s also the most expensive thing any family will buy. This is a very bad combination. So this pathetic blog will continue to bleat away, warning of the inevitable and praising liquidity.

Jay’s friend will learn what Tom’s friends are discovering. There are consequences.

197 comments ↓

#1 Tim on 12.04.11 at 9:41 pm

What about all of those new hi rise glass tower condos that have been built in the last 7 years. An inspector recently stated that most will need repair after about fifteen years due to condensation. Aren’t the glass tower hi rises the majority of what has been built in places like Yaletown and downtown TOronto? Who is going to buy them when they start to have problems?

#2 squidly77 on 12.04.11 at 9:42 pm

Renting is cool, liquid, free, mobile, modern. Owning is what your parents did. Losers.

Catchy and just too true.

#3 Newbie on 12.04.11 at 9:44 pm

First

#4 Van guy smokin now on 12.04.11 at 9:50 pm

Great post again

#5 S on 12.04.11 at 9:51 pm

Our famility income is 160K and I choose to rent. For $1600 in the GTA you can get a really amazing condo. If it happens to leak, is poorly built or the maintenance fees sky rocket, it is not my problem.

I can pick up and move when the lease runs out with only 60 days notice. I don’t have to sweat selling a house in order to move.

When you work out the maintenance fees and mortgage costs of a typical condo in the Toronto area it works out that the landlord is subsidizing me.

I think that there is a lot of speculation and emotion in the market at the moment and I am convinced that this will not end well when the mortgage rates rise.

#6 Ben on 12.04.11 at 9:58 pm

You should see how many people in the U.S. live in hotels/motels/extended stays. It blew me away when I first came from Edmonton to Dallas for work. Then again $750 a month for a box that includes utilities/internet/cable/swimming pool and breakfast isn’t that bad.

#7 Conservative Housing Mortgage Con (CHMC) on 12.04.11 at 9:59 pm

the harper (CHMC) has ruined Canada. The police should arrest every Conservative who supported this criminal ponzi for short term political gain. I thought the CONservatives supported THE FREE MARKETS . If this is ture the CONsocialists need to get rid of CHMC. lol Conservatives = consocialists which is socialism for the rich (banks)

#8 International Man on 12.04.11 at 10:00 pm

Garth,

How about an update on the role of CMHC? Talking about the maximum billions of mortages it can guarantee, etc. Is CMHC close to that cap? What does that mean for housing? How has the magnitude of guarantees changed in the past decade? Etc.

#9 Crazy on 12.04.11 at 10:10 pm

Garth, How much does the guy’s wife make? Was that calculated in too?

Nothing. — Garth

#10 Merridith on 12.04.11 at 10:20 pm

I can’t stand all these examples of the mathematically challenged!!!!!!!

#11 Crazy on 12.04.11 at 10:20 pm

Owning is what your parents did. Losers.

You are half-right. They were not losers, but yes they were owners; Not debtors. Unlike many today. That is the differene.

Remember Garth, you are an owner.

How can that sentence be misread? — Garth

#12 TheRealTruth on 12.04.11 at 10:21 pm

The problem is people that bought houses in the last couple decades seem to be the winners….

Those that didn’t buy are at a disadvantage …and rents will continue to rise…. people like Garth will continue to by multi-family properties!

This is why people continue to buy. Those that condemn buyers are renters (most blog dogs). Would a homeowner ever condemn them? Think about it!!

26 days till the new year…no correction in 2011.

Around 3-4 months till spring and there will be no correction in Spring 2012.

But wait until Autumn of 2012… LOL

#13 Harry in Saskatoon, no bust here, maybe next year, or the year after on 12.04.11 at 10:23 pm

No bank in Canada will approve a $379,000 mortgage with $40,000 income.
RBC calculator at 2% over 30 years with 5% down 2% interest rate over 30 years =$185,000 max mortgage allowed.

Either
– wife must be working
– a big down payment
– Jay is yanking your chain.

Don’t get out much, do you? — Garth

#14 Bobby on 12.04.11 at 10:25 pm

Here in Victoria, I saw a condo development where they will now throw in a new Kia Soul if you buy a unit.

Why? I thought real estate always goes up. I think a realtor told me that.

#15 Taipan on 12.04.11 at 10:29 pm

Garth, just another very very sad story.

I’m in the development game – but not your normal archetype developer. Booms and bubbles are bad because they are followed by busts.
Much of what we have seen is the bringing forward of future demand into the current period.
That is when developers go broke or their income dries up for years. (Anyway that’s my issue and ill deal with it as I understand what is going on and I’m prepared.)
BUT!
When and as all these markets crash who will these people blame?

The government?
Society?
The developer?
or themselves?

Because this is where we are heading. Millions of people worldwide have negative equity or are already broke.

In Canada and Australia these people who purchase, will be looking for somebody to blame and there will be a massive amount of emotional energy released (anger, depression, mood swings, divorce, broken families).

#16 TheRealTruth on 12.04.11 at 10:29 pm

Since this blog is so pro-immigration…

I suggest we:

– double immigration levels to around 560,000 per year.
– double temp immigration levels to 440,000 per year.
– give a pr card to anyone who buys a house and keeps it for 5 years.

Happy Junius? Now all renters can go to bed knowing they did the right thing. Lets bring more people here…it won’t affect RE at all. Who’s with me??

I know the Banks, Telecoms, RE lobby are. And i also got most blog dogs. The irony! lol

#17 OwlEyes on 12.04.11 at 10:29 pm

I have seen people close to me ALMOST get talked by a real estate broker “friend” into a horrible condo deal in Regent Park of all places. There was a huge push to get him into a prebuild 1br for about $260K! That’s a quarter of a million dollars! Who would have thought a room in Regent Park could be so costly!

#18 Standard Deviation on 12.04.11 at 10:29 pm

Just completed reading an article that showed Canadas Total Debt (Govt, Corp, Individual) over 300% of GDP that does not include future pension liabilities which balloons it even further.
To me this looks like the Thelma and Louise approach to debt management and we are already over the cliff with Gravity driving the bus. The question I have is if debt can never be repaid is it ever?

#19 Steve on 12.04.11 at 10:30 pm

” Owning is what your parents did. Losers.” that statement is not backed up by facts and demographics. In fact the silent generation- the parents of the boomers did incredibly well in real estate buying in the 30,000 range and now selling in the 750+ range. yes they made affordability difficult for back end boomers but again even the early boomers have done very well. Many are using real estate to fund their retirement.

The reference was US. Read more carefully. — Garth

#20 Dad on 12.04.11 at 10:33 pm

With the wife making nothing and being a SAHM, maybe the better calculation would have been the maintenance and child support when she meets a doctor/lawyer/millionaire handyman on her next girls night out.

#21 Not 1st on 12.04.11 at 10:35 pm

Why do people with pathetic incomes insist on living in the most expensive area codes in Canada. Sorry, if your take home is a few G a month, VC or GTA are not for you. Try Lethbridge or Brandon instead or better yet Windsor.

If you want to live in those expensive area codes you need to go in with a plan and that includes 2 parents working and little johnny or jill being raised in daycare.

I can understand people wanting to live in VC just because its temperate and beautiful, but Toronto? Whats it got? hottest summers, cold winters and a lot of arrogance. Not worth the financial suffering this chap is going to have.

#22 OwlEyes on 12.04.11 at 10:40 pm

#1 Tim on 12.04.11 at 9:41 pm
” Aren’t the glass tower hi rises the majority of what has been built in places like Yaletown and downtown TOronto? Who is going to buy them when they start to have problems?”

Tim, that is a very good question. In addition, due to shoddy construction in recent years, they have given people a new kind of random death to worry about.
http://www.cbc.ca/news/canada/toronto/story/2011/08/15/tor-falling-glass.html

#23 Nick on 12.04.11 at 10:43 pm

I’m a renter in Los Angeles and exactly zero of my house owning friends are trying to convince me to buy. The subject only comes up when I speak to my friends in Canada. They can’t understand why I rent and think I’m crazy.

#24 bcc on 12.04.11 at 10:48 pm

thanks for the great post again, Garth.

from an online ad, found this http://attainablehomescalgary.ca site. first I thought it’s some mortgage incentive but it’s actually a new initiative from the city of Calgary ‘helping’ the middle income family. the 10% gifted down-payment becomes a forgivable loan. and the more shocking thing is, seems like the gift is good for buying development projects from Cidexhomes.com . can someone who know more about this let us know more?

#25 Tony on 12.04.11 at 10:55 pm

Someone should have told him when home values fall usually the price of rent also falls. The problem with housing in America is property taxes are still increasing as property values fall. If values rise property taxes will rise exponentially and listings will flood the market again causing a second leg down in the housing market.

#26 Aussie Roy on 12.04.11 at 10:55 pm

Aussie Update

It leads conservative people into extreme risk. It stirs the loins of emotion, and logic is dashed.

One word, “Delusion”.

A Wake up call for Aussie banks

Australian banks have been money-making machines because they have paid low rates to bank depositors and supplemented their consequent low Australian deposit base by borrowing between 40 and 50 per cent of their funding requirements from the global wholesale market. (It’s currently around 40 per cent). The banks have then used their fund avalanche not so much to support businesses, but to fund houses. Australian dwellings have become among the most expensive in the world because of the widespread availability of bank credit.

Free subscription required. http://www.businessspectator.com.au/bs.nsf/Article/Australian-banks-Standard–Poors-SP-downgrade-euro-pd20111205-P8RP2

THE peak spring selling season for property has finished and it’s been pretty ugly.
Signs of the slowdown in residential property values include low auction clearance rates and falling prices.

http://www.news.com.au/money/david-and-libby-koch/sell-your-house-in-a-tough-market/story-fn7kicty-1226213550182#ixzz1fcoJMdMt

Builders Shrink ‘Great Australian Dream’ as Priciest Home Market Falters.

http://www.bloomberg.com/news/2011-12-04/builders-shrink-great-australian-dream-as-housing-falters.html

#27 Kathy on 12.04.11 at 10:56 pm

We are immigrants.From Europe.States were first(1999-2008).Since 2008 we live in Canada(GTA).We had 3 properties in US(bought between 2002-2004).From our own experience: it is easier to by currently in Canada than than it used to be between 2001-2006 in States.No, don’t worry we didn’t buy yet. :) We won’t do the same mistake again.What can be better than freedom?Building equity?Good luck!

#28 Mr Buyer on 12.04.11 at 10:58 pm

If that guy was making 2400 a month in TO he must have been scraping by, even just renting. I have been doing guestimations and the cost of living is truely shocking for no good reason. The second largest country in the world with a population about the same that lives in and around Tokyo. Talk about private interests reaching around the population to exploit the wealth of the country. Do not get me wrong, as part of the great unwashed I could see myself lying about expecting my “fair share,” but we are clearly at the other end of the spectrum now. Our way of life has been preserved for decades by home equity loans. Another more sophisticated blogger put it very nicely the other day on this blog. Privatized profits and socialised losses. I said it before, preserve and expand health care while training many more doctors. DO NOT surrender health care. We have to keep our eyes on the ball over the course of the climax of the current crisis. I pay around $400 a month for health insurance and 30% of the bill each time I use the health care system in Japan. There are cashiers and check out lines at the hospital. That means an ear ache often means $100 out of my pocket. Do the math on a more serious reccurring illness and even the loftiest of numbers thrown around on this blog will not suffice. We are in for trying times ahead. 99.99999% of people do not just drop dead. It is often a long drawn out process. Do not allow the kind of war time triage that has been passed off as our health care system of late continue. In closing, what is with the price of chicken, milk and bread? It is cheaper in Japan. WTF? PS. All the numbers are gross estimations, I will likely have to revise many up and down upon close analysis. And contrary to popular belief, public health care in Canada costs way less per person than private health care in the US. It is often way cheaper for a government agency (even one FILLED with layabouts) to buy equiptment and utilise it than for private intrests to buy the same eqiptment, take profit, and utilise it.

#29 Samson on 12.04.11 at 10:59 pm

“Owning is what your parents did.”

Well said, Garth.

I don’t know about the loser part. But I am pretty sure that blindly following the same plan as our parents did is a recipe for trouble.

It ain’t the same game anymore. Owning is about to become a lot more onerous. And not just owning houses, in my opinion – but practically anything you can’t fit in your back pack.

Long live liquidity – the friend of mobility.

Now if somebody would invent a comfy bed that fits in my back pack…

#30 Snowboid on 12.04.11 at 11:01 pm

#1 Tim on 12.04.11 at 9:41 pm…

The longevity of condo construction has been an issue, especially in BC, since the first ‘leaky’ condos were identified.

Now it seems it isn’t just the building envelope, but the entire building that may be falling apart.

I can safely say extensive research should be done before buying one (don’t trust the strata minutes either) and a truly independent inspection should always be a condition of sale.

On a lighter note, one of my favourite RE disaster blogs is from around here, with the best of the worst photos ever used in RE ads:

http://uglyhousephotos.com/wordpress/

And they wonder why they don’t sell…

#31 Stinky Shorts on 12.04.11 at 11:02 pm

I call BS on the article. It reminds me of those playboy stories people submitted and as a 13 year old would believe every word of it. So this guy walks into this bar and 3 hot chicks just jump all over him…pllleaazzzz!

I have never come across any friends, family, co-workers who will tell me what they make, what they want to buy and how they will commit financial suicide. If this supposed guy makes $2,400 each month – his first problem is he shouldn’t be telling anybody that wage – that’s probably someone in the $35K per year bracket.

If this story has any merit – then as tax payers we are all gonna get a nice surprise within a few years as the government spends billions covering shortfalls from banks who made these outrageous loans to begin with.

This is what the occupiers should have really prostested about – letting banks make irresponsible loans and know 100% they are not liable for one single cent if it goes belly up.

I don’t write the stories. Just report them. — Garth

#32 Bottoms_Up on 12.04.11 at 11:07 pm

Ok, I now have another beef with the credit card companies.

Anyone else seeing this?

They now apply monthly payments as a ‘ratio against the outstanding balances’.

Thus, if one has $4000 debt on their credit card at say 1.99% (from the use of an access cheque), and $1000 at 19.99% from regular purchases, the first $1000 you pay back to the credit card reduces the respective balances to $3200 (1.99%) and $800 (19.99%).

These new rules thus effectively ‘block’ the higher rate until one has enough money to pay off the entire balance.

I mean, how low can they go? These companies are blatantly stealing from people with these tactics.

Is there anything we can do to stop this other than never using these eff’ing cards again?

#33 Tony on 12.04.11 at 11:07 pm

RE: #15 TheRealTruth on 12.04.11 at 10:29 pm

In case you haven’t noticed the unemployment rate is increasing in Canada. There isn’t even jobs for people who already live here.

#34 pjwlk on 12.04.11 at 11:11 pm

I spoke with my BIL this evening who currently lives in “the Peg”. I asked him how the RE market was doing. He said that demand is still outstripping supply and that there are still multiple offers and houses and they’re selling for over asking.

He also claimed that rental vacancy rates for decent digs are at about 1%. He mentioned that there are a lot of substandard crappy & derelict houses that people are renting because of the lack of supply.

On another note. Apparently Milton area homes in the 450k range are still being snapped up like crazy. According to this guy sales of homes priced above 450k have slowed.

#35 Ozy - we need those people on 12.04.11 at 11:21 pm

We need someone buying no value cardboards for big $$$. I repeat, we need someone buying no value cardboards for big $$$.

If all people would be smart, it will be neck breaking competition around here, do we realy want that? No.

Please let the mid-lower/young class continue on day-sleeping & dreaming in pink colours, let the wifes’ wishes come true, as they wish.

We want a nice life in 2020 in Canada, so those people need to keep buying.

Bankrupcy is still legal and could be exercised if needed, not that I wish it to anyone.

Success to all!

Sir. Stand back from the keyboard. Do it now. — Garth

#36 OttawaMike on 12.04.11 at 11:23 pm

Herb, over the weekend.
You posted 2 very good links. Well worth clicking.

#37 Renters Revenge on 12.04.11 at 11:26 pm

I lived in the US for a few years and rented while there. My white collar upper middle class neighbors welcomed me as one of their own and respected my decision to rent. Here in metro van my framing-carpenter and carpet-cleaning neighbors think I’m crazy to be renting and look down their noses at me. House prices average about 600-700k in both neighborhoods.

#38 OttawaMike on 12.04.11 at 11:28 pm

I just got off the phone with my former Ozzie exchange student from 2008.
He is returning to Canada for a one year working holiday in 2012. Currently pays $2200 AUD to rent an 1100 square foot bungalow in the western Oz town of Perth.

He considers Ottawa rentals a bargain.

#39 Mr Buyer on 12.04.11 at 11:32 pm

Among the estimations I was carrying out recently was that of internet connectivity, television service, and phone service. These numbers are appauling and often for old technology. IT development is being hamstrung on many fronts by private intrests. The cost to the public to access these services is outrageous. Even a government agency FILLED with layabouts could offer these services with current and evolving technology at a hugely reduced rate (if user fees should even be applied). How do we pay for it? With a fraction of the money currently being thrown down the black hole that is private enterprise in this sector. FIBER OPTIC is an old technology now, there is no technical reason why every house is not connected. Debt is undermining our ability as a nation to take such measures in our own interest.

#40 George on 12.04.11 at 11:34 pm

If people were smart they would stop buying and watch the house of cards come crashing down. Wages are flat and going down. How will Canada compete with American workers who can work for 20-30% less and afford twice the house and lifestyle? Buddy lives in chicago and just bought a house in an area similar to northyork for $266k which would sell here for 600-650k . Buddy makes more or less what i earn per year and the banks in US still gave hIm a hard time. In Canada my broker fogged the mirror and i can borrow 600k. He is an ex-pat and asks how can the conservatives continue to support and allow this housing scam to continue? If only it were easy to leave this stupid country for a better life as Canada is a debt trap. Family keeps me here but the temptation to live a better life keeps me thinking. Conservatives have ruined a generation they have ruined my life.

#41 OttawaMike on 12.04.11 at 11:36 pm

According to this article, Turner makes upwards of $80k/yr moderating this blog:

http://www.businessweek.com/magazine/comment-moderator-the-dirtiest-job-on-the-internet-12012011.html

(I fixed my web link address in my user name above)

There isn’t enough money to compensate for editing Westernman or Disciple comments. — Garth

#42 bcpaul on 12.04.11 at 11:43 pm

#12 TheRealTruth on 12.04.11 at 10:21 pm

26 days till the new year…no correction in 2011.

Change name to BlindedByTruth

#43 Keeping the Faith on 12.04.11 at 11:44 pm

#5 S

I couldn’t agree with you more.
You’ve described the exact way we feel about our renting situation except that our incomes are slightly different.
The amazing part is that everyone around us see us as ‘Total Contrarians’ and they are very happy to spend every last dime they earn on their housing.

Strange times we live in.
We will look back at these next few months as the “Zero Gravity” weeks before reality kicks in.
Like a bad ride at the PNE.

#44 Mr Buyer on 12.04.11 at 11:45 pm

Student debt is another blight that saps the vitality of our nation. Why on earth Universities in Canada are not open and free is another mystery to me. For every million that take up space in our institutes of higher learning it only takes one that “changes everything” to bring new wealth to a country. Many countries know this very well. This is common sense but the intoxicant of debt makes it sound like fools gold. Where do we get the money for this? From the black hole that is intrest servicing student debt. It is not time to contract to support present drains upon our culture but rather time to see them for what they are. There is much to do. We must support our young through this turmoil. For those that will speak of the dangers of socialism I will have to agree with most of what you say but clearly the corporate socialism we are now experiencing is asymetric in reguards to risk and reward. The big question and challenge still remains though. How to maintain a motivated populus in a more social environment. Clearly a creative hybrid needs to evolve from this mess. The stakes are high and it is looking more and more like we are on the wrong course.

#45 gtrz4peace on 12.04.11 at 11:53 pm

To #21 Not First

You are so smug and so wrong. What makes ANY community strong is its diversity — a mix of incomes, a mix of professionals and blue collar workers, and people who ask if you want to “supersize that.”

To say if you make a “few grand a month. VC is not for you” is as simplistic as it is snobbish. Guess what, you could be make “a few grand a month” at some point too. The lesson of the US right now shows that anyone can be “taken down to size” and that is why so many of those on the streets around the world are NOT just people with “pathetic incomes.”

VC is being ruined as this diversity flees a city gripped in an absurb housing bubble. But the real loss has nothing to do with brick and mortar houses — the real loss is diversity, is people, is community.

My hope for you is that you will find yourself in the “other person’s shoes” and enjoy your mile-long walk in them.

#46 gtrz4peace on 12.04.11 at 11:54 pm

Correction in my comment (typing fast) it should read: You could be making”

#47 Stupesing in Cabbagetown on 12.04.11 at 11:58 pm

#21 Not 1st – My daughter, raised in Toronto, moved to Vancouver four years ago. Yes, Vancouver is beautiful and yes, the climate is mild, but she tells me that the main difference is that people in B.C. only gather in protest. In Toronto they gather for Caribana, Word on the Street, Afrofest, Woofstock, Pride parade, Buskerfest, Taste of the Danforth and so many other celebrations, not to mention food, music and dance at Harbourfront, in the Beaches and at numerous locales around the city. Toronto has its redeeming qualities.

#48 The thing in the basement on 12.05.11 at 12:01 am

There isn’t enough money to compensate for editing Westernman or Disciple comments. — Garth

BEST

ANSWER

EVER

#49 Echo on 12.05.11 at 12:02 am

#20 Dad:
That’s uncalled for. Grow up or project your crap somewhere else.

#50 cool on 12.05.11 at 12:06 am

BIG BIG discount from builder in SYLVAN LAKE….

http://reddeer.kijiji.ca/c-real-estate-houses-for-sale-Immediate-Possession-AMAZING-PRICE-REDUCTION-Abbey-Showhome-W0QQAdIdZ335989926

Why?

#51 Elmer on 12.05.11 at 12:16 am

Someone bringing home $2400 a month CANNOT get a 370k+ mortgage, there must be more to this story (eg generous cash gift from parents or something like that).

Go visit a mortgage broker. — Garth

#52 Junius on 12.05.11 at 12:21 am

#12 # 16 TRT,

In one post you suggest there will be no correction but in the other you are advocating massive increases in immigration levels to pump up Re: prices. These posts are minutes apart? Do you think anyone is fooled by your nonsense?

#53 Jon B on 12.05.11 at 12:23 am

#15 Taipan – You raise a good issue. I think the blame game will be the next major segment after negative equity sets in for millions of newly minted home owners. I’d also add another target to your list; the big greedy banks. I bet they are already prepared to deal with this crisis from both a financial and public relations standpoint. I bet they see what’s coming as clear as day. It seems most of the culprits in the US have escaped punishment for their role in the US sub-prime mess of 2008. Our Canadian two-tier justice system will likely ensure nobody is help accountable when the stink hits the fan here.

#54 Junius on 12.05.11 at 12:32 am

#44 Mr. Buyer,

Yes, student loan debt is a huge problem. In the past we have discussed how much it resemble aspects of the housing bubble. In particular how the cost of education has risen by the amount of access to debt that students have and not by the financial value of the education. Debt wins again.

There are studies in the US that even show that, on average, a degree in law is not worth the debt needed to achieve it. Sad but true.

#55 commercial question on 12.05.11 at 12:38 am

Garth,

I’m a long time blog fan and cult follower. In the past you’ve talked a bit on commercial real estate, but haven’t said much on the topic recently. I was wondering if you could devote a blog post (or just a few words) on your views on commercial real estate, especially in the downtown Toronto core. I am considering selling a portion of my commercial portfolio and I’m curious if you’re just as bearish about this sector. Thanks

#56 Van Man on 12.05.11 at 12:46 am

Squamish drive-by (coming home from Whistler today)… and the Taco Bell’s been boarded up! What next? Locusts.

#57 Not 1st on 12.05.11 at 12:48 am

To #21 Not First

You are so smug and so wrong. What makes ANY community strong is its diversity — a mix of incomes, a mix of professionals and blue collar workers, and people who ask if you want to “supersize that.”

__________

This is not a social justice blog. I wish we could all live on love and happiness, but reality dictates if you can’t afford something, you don’t buy it, whether thats a new benz or wanting to live in the GTA.

#58 Jay on 12.05.11 at 12:50 am

Hey it’s the Jay from the article. I can’t give too many specifics as I am the guy’s boss, but when he announced it to the rest of the office everyone was equally shocked he took the plunge.

The listing is off MLS, but doing a cursory search I found other properties listed in the same price range, same area, and the guy is going to be paying $4k a year in taxes (more than in Markham, or other, more centrally located suburbs).

The wife doesn’t speak english, or if she does, not very well. He hasn’t been in this great nation of ours for very long either. I’m not sure if he’s taking a mortgage from the bank, or what interest rate he’s getting but he was grinning quite widely when he came in the next morning to tell me he bought the place.

When I was 22 and still in Uni, I was making around $50k, freelancing in the media industry. It was paycheque to paychecque, so I wasn’t exactly sure what my annual income would be, but that’s when I first figured it was time to move out. I went to RBC and asked how much I could get on a mortgage. The pre-approval came back. At 22, freelancing in pretty cut-throat industry, and still a student, I could have taken a $240k mortage… from Royal Freaking Bank.

So when other commenters are crying foul, I know first hand: the banks are not your friend.

#59 Mister Obvious on 12.05.11 at 12:54 am

Where have all the gold boosters gone?

#60 dddd on 12.05.11 at 1:17 am

Bottoms_Up on 12.04.11 at 11:07 pm
Ok, I now have another beef with the credit card companies.

Anyone else seeing this?

They now apply monthly payments as a ‘ratio against the outstanding balances’.
——————————————————-
visa charges interest? really?
i thought they just gave out interest free loans every month- it’s why i use it for a 1.39 coffee at mcD , groceries, big buys and ALL other purchases(less costco and weed)- never paid a penny in interest and get loans 2-3k/month

also – AZ sucks donkey ba**s -stay away – been stuck here -tucson- 3 days, rained 2, cdn cold today. city is unsafe to bike around, border ptrl w snarling dogs on hwy and all over, houses only cheap in areas you don’t want to live, decent areas have had small drops according to locals
nazi facist police will JAIL you for a joint(i hear), yet it is unsafe to be out at night. sick mentality.
at least chaining a dog is illegal and the catcusseses?? are cool

#61 Canadian Watchdog on 12.05.11 at 1:27 am

No worries Garth, CMHC has it covered as Karen Kinsley said.

CMHC MBS Issuance Contracting http://i42.tinypic.com/o06oau.png

Once those mortgages start going in arrears, CMHC has to pay the net interest spread on CDS—that’s when the fun begins.

As for our major banks, all but TD have joined the Federal Reserve Bank of New York’s primary dealer list in preparation of unloading their toxic MBS exposure via repo swaps. TD applied in 2009 and still hasn’t been approved.

Wondering what the Fed is looking at? Look below.

CMHC MBS Exposure http://i43.tinypic.com/11l1spk.png

TD will be Canada’s Lehman.

#62 dddd on 12.05.11 at 1:28 am

A cactus (plural: cacti, cactuses or cactus)
for the spelling police

#63 Nostradamus Le Mad Vlad on 12.05.11 at 1:31 am


“I immediately broke down the numbers for him,” Jay says . . . — Except the numbers that matter most — what happens if he loses his job? With the better half earning nothing, EI benefits only last a year or so, what do they do after?

Of course, they could always switch place. He becomes Mr. Mom and she goes off to work.

“. . . there’s nothing about Canadian banking to be proud of. This is what real estate does. It blinds, deceives, seduces, infatuates and addicts. It defeats reason.” — Greed (for the banxters) is the number one priority for them, and is why a stop should be called to this excessive lark.

“US house prices are back at 2003 levels.” — Can’t recall which poster has said that housing is going back to 2003 levels, and he / she is right. Canada usually lags a few years behind the US, so we’re on target.

“Renting is cool, liquid, free, mobile, modern. Owning is what your parents did. There are consequences.” — There are always two sides to every story, but again I would rather pass the home over to someone who needs it, and rent. No taxes, maint., just tenant insurance.

Use TFSAs to build up a nice retirement plan.
*
#181 Snowboid on 12.04.11 at 10:37 pm — A business friend, now retired once said Mike Harcourt was one of the best premiers BC had ever had, nothing wrong with him at all.

Glen Clarke is a different matter, however.
*
3:07 clip China the savior of the EU? “These could be tactical investments to prevent Europe from backing any US/Israeli war. If we’re economically dependent on China, it’s harder to gain European support for a war.

“2. Italy has the world’s 4th largest gold reserves… so China could take her gold rather than buying bad debt. Either way, China wins.” wrh.com; Gold Another central bank buying up plenty of the yellow stuff; Save Italy, SEC does nothing, Bank Nationalization, Detroit, Naughty Word You know the economy is f(*ked when . . .; Prepared Be prepared; Gun Sales Surge.

Unemployed “Totally wrecked lives”; 6:19 clip Hmmm. Bring next year on! Chinese Toy Factories It’s not only the banxters; Merkel Control freak? May be; Who Owns Whom? “When you have great wealth the potential for great theft is ever all so present.”; Freezing the UK out (blackmail); Mgmt. vs. Unions 2012 will be an interesting year, in more ways than one; IMF + US = Austerity America.
*
This would be a major bombshell if true — US meddling in Russian elections; Conspiracy Theories Would you believe people are actually paying attention to David Icke? (At last); 2:22 clip Ron Paul vs. The Donald . . . no contest; 9:02 clip The deception of m$m and prediction; 1:06 clip Newt Gingrich wanted FEMA-led DHS in March ’01; Af’stan Trillions “The Pentagon wants the world to know: When the American military stops spending billions per week in Afghanistan and eventually goes home, the Afghan economy is gonna be totally fine. After all, they’re sitting on trillions in mineral deposits, just waiting to be mined.”; Sirhan Sirhan Just as L.H. Oswald had nothing to do with JFK’s death, neither did S.S. with RFK’s. The Kennedy’s wanted to end the US Fed; Common Cold Possible remedy. A cold can be good for one, ridding the body of toxins.

Pluto Nice place for a holiday, wouldn’t want to live there; Something doesn’t smell right; Egypt El Baradei outed as western stooge (he is); Depop. Reading first few paras. is interesting; Eight Families rigged oil game; Community Outreach Watch out for CSIS, RCMP and others.

#64 Raj on 12.05.11 at 1:42 am

Ok please tell me what’s wrong with this picture. 20% down. Basement income of 1200 per month. Total cost to me with mortgage, tax, insurance, utilities 2000. So my net cost is 800. Rental minimum is 1500. I don’t care if the market goes down as it’s my home. I can’t rent cheaper. Please tell me why I should not buy the beautiful bungalow with a double car garage nice lot for 420000.

#65 Vigilante on 12.05.11 at 1:51 am

Go visit a mortgage broker. — Garth

Totally agree… In my opinion I can afford a mortgage of $400K. A broker approved me for more than a million dollars. More than 10 times my income. I can totally believe the story.

#66 Cristian on 12.05.11 at 2:04 am

“Thank God that She created lines of credit.”

Not that this is pertaining to the topic of the post, but for anyone who ever bothered to read the Bible in any language, God is a “he”. He may be a “she” only for feminists or dyslexics.
However, if anyone has a problem with “he” and insists using the pronoun “she”, there is the noun “Goddess” that goes with it:
“Thank Goddess that She created lines of credit.”

Genesis 2:
By the seventh day God had finished the work he had been doing; so on the seventh day he rested from all his work.

#67 DML on 12.05.11 at 2:08 am

Las Vegas,ground zero for U.S. housing collapse.

From the article:

In the meantime, Mr. Henderson wishes he knew seven years ago what he knows now.

“At the time,” he said, “everybody said prices will keep going up, and eventually they’ll plateau, but they’ll never come down — that’s what everybody said.”

http://www.post-gazette.com/pg/11338/1194175-455.stm

#68 LB on 12.05.11 at 2:10 am

They “owe more than they own”.

That one phrase sums it all up and will soon become the epitaph of mortgaged debtors across Canada.

#69 Van guy smokin now on 12.05.11 at 2:13 am

I’ve believed that Vancouver has bubble trouble since 2007. Funny thing is, I just discovered greaterfool.ca like 2 months ago. Damn right this site has scary facts for home owners and for ones that want to own. This site has not only scared the shit out of me, it’s got me addicted. My wife thinks I’m an idiot for being here daily. I just need this party to end so I can prove to her why we shouldn’t buy. Garth, I’m hooked on your unbelievable posts and I hope we can prove to these other Canadians that we are not different, eh?

#70 Backbacon Crusader on 12.05.11 at 2:26 am

#34 pjwlk

I live in the ‘peg, and as I make way above average here in the city, and housing prices are still relatively normal (lots of places to be had at a reasonable 3x family income), I have been keeping an eye on the market closely.

Your brother in law is wrong on a few counts. Yes, there are still bidding wars in some areas of the city…the lower end. He’s right, rental supply here is exceedingly tight, and no new rental units in quantity or quality have come on the market in years, while previous rental units are rapidly being turned into condos. For renters in this city, just getting a place can be a miracle.

That said, middle class to upper class folks are rapidly looking at overpriced crap. Waverly West (which I mentioned here previously) is STILL sitting there on MLS with a gross oversupply compared to the rest of the city, largely because it’s a 3000+ new home subdivision of 450k homes in a city of 650k people where family income averages 70k. Last week, I saw 38 listings in MLS alone (never mind developer sales through agencies that are still out there), this week it’s 27, whereas similar sized subdivisions generally have 5-12, tops. In fact, the most desireable area of the city thats moderately affordable for the middle class (River Heights) is about 4 times the size of Waverly West, and yet has only 20 listings on MLS and there’s no new builds there like Waverly West.

#71 Van guy smokin now on 12.05.11 at 2:26 am

Garth,

From an ex politicians point of view, why is Canada so lenient on criminals in this country. I heard, because they are actually contributing to help the economy. They do spend big $, as I see quite often a criminal pulls out a fat wad if cash to buy his girlfriend a $2500 hand bag at LV. I’ve even seen a a car dealership, a lady paid cash yo the company with stacks of $20 bills. Apparently, criminals flock to this dealership to buy cars with drug money. It’s so easy to spot a criminal in Van.

#72 janet on 12.05.11 at 2:34 am

It’s not just Canada! Have a look at what’s going on down here in New Zealand or Australia, and you’ll see the same blindness of “But property never goes down!”. One of my family members is an architect in Melbourne ( Aussie) and even she, at 55, has gone further into net debt with a little buy-to-let apartment, at a price that she quietly admits, she can’t afford. But without it, there is no retirement fund. Heaven help the Antipodese WHEN property prices eventualy submit to the inevitable.

#73 Bring It on 12.05.11 at 2:37 am

Elmer #51

Mortgage broker here in Victoria approved me for $425,000 with 5% down payment on $2800 take home. Payments $1938 month. Came to my senses and continue to rent. I think many people have mortgages like this and are barely treading water.

#74 TheRealTruth on 12.05.11 at 2:47 am

#52 Junius

Not as bright as I thought ………

#75 TheRealTruth on 12.05.11 at 2:49 am

#52 Junius

said “advocating massive increases in immigration levels to pump up Re: prices.”

Who said immigration has anything to do with house prices ;) ?

#76 kilby on 12.05.11 at 2:49 am

#51 Elmer. I know a friend, single woman, no income, not much of a credit history that has had $400,000 mortgages TWICE….just looked until she found one and it was not hard to do, this in Vancouver . I have worked with a few 30 something couples that are making $2,500 a month payments……..In the Okanagan! Under water now but still dutifully making payments.

#77 new-era on 12.05.11 at 4:01 am

I lived in the US for a few years and rented while there. My white collar upper middle class neighbors welcomed me as one of their own and respected my decision to rent. Here in metro van my framing-carpenter and carpet-cleaning neighbors think I’m crazy to be renting and look down their noses at me. House prices average about 600-700k in both neighborhoods.

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

I tell my co-workers the old rule of 40. They should have their house paid off by 40.

Then I ask them what the hell they been doing with their money.

I sold all my houses and townhouses not because of Garth, but because my gut feel says the downside risk over weighs the upside. Rent a nice place for dirt cheap. I’m cash rich, with a good balance of equities,interest bearing vehicles, backup up with a portion of gold, silver, platinum and commodities. (Diversed and position my portfolio to be recession proofed or liquid enough to re-position with the extreme uncertainty.)

#78 new-era on 12.05.11 at 4:10 am

Interest rates will not be the killer of this market.

I believe most canadians cannot substain their current debt. They are currently funding their debt with more debt. If housing prices keeps on rising they can keep up the charade.

– But when housing prices flat lines or starts falling, then they will start missing payments.
– As more payment get missed, bank will chase and foreclose these properties.

– Government will force the banks to keep interest rates low, because they know the end is near during these times.

– Banks will recognize the risk start making it harder for people to get a loan.

– Then people will panic and start low balling their neighbours. All it takes is the first one or two to sell at a lower price to get the ball rolling.

– Then we will begin to see negative equities on their houses and people will have to decide on of making payments or throw a hail mary party because they know they are bankrupt.

– then we will compare ourselves to the US, and australia as we prepare for years of downside action!!

#79 LAST on 12.05.11 at 4:32 am

Wow!!!!!! you really notice inflation when you’ve been gone 10 years, when we left Canada 40 grand was considered an above average wage. I still find it hard to believe that the minimum wage in Ontario is like 10 dollars an hour!

#80 Onemorething on 12.05.11 at 6:04 am

Jay your friend is doomed anyway but nice try!

Tom is riding the liquidity high! SO AM I!

As for the parents well mine were depression children, paid off the 13K house in Burlington in 1954 and even though the house is north of 700K they dont want to leave.

I cant blame them and they have north of 60K per year saved for OLD AGE they say.

When your 85 and still living off your pension and CPP for the last 25 years I told them they should right a book or at least be showcased by the TURNER!

#81 Onemorething on 12.05.11 at 7:02 am

sorry write a book!

#82 uklurker on 12.05.11 at 7:38 am

I read your blog every day. I avoided buying in the UK for 9 years as I felt the market was appalling value. I was waiting for a crash…but it never happened. It probably is now, but very slowly.
I bought a house in Barrie a few weeks ago. I got a 10% discount on asking price. The mortgage is just over 2 times my income with 20% down, my wife doesn’t have to work. I work from home with trips to the airport or toronto. OK, it snows a ‘bit’ in Barrie, but that’s a small sacrifice to pay for good value property in a nice neighbourhood, with lakes, forest and lots of restaurants etc on your doorstep. There’s even a theatre!
I bought fully expecting to lose some money, at worst all of my deposit, over the next 5-10 years, but here’s the thing…I plan on being here twenty, paying it down in ten, all the time saving etc. I don’t care if I sell for a profit in the future, I’m planning on stuffing as much into RSPs, REITs saving plans etc that I won’t be relying on home equity to pay for my retirement.
In my mind there are parts of Canada that still represent good value (not the GTA or BC), and if you’re looking for a home, with good quality of life and you can afford it…might as well just go for it.

#83 Tripp on 12.05.11 at 7:45 am

@ #28 Mr Buyer on 12.04.11 at 10:58 pm

Due to the nature of my profession I worked in several European countries, all of which have a better healthcare than Canada, with faster delivery, shorter waiting times, larger coverage.

That is not to say ours is way worse, but there are several areas where we are lagging behind. Last summer in Gatineau the ER waiting times were exceeding 27 hours. So much for “world class”.

Endless comparisons with US are useless and counterproductive, the world is so much bigger than North America. Most European countries have successfully implemented a two- tier system without the endless ideological debate. The systems have been in place for decades, and they work.

For more data, please check

http://www.fcpp.org/files/1/ECHCI2010%20Final.pdf

#84 Dom_Now_in_Zürich on 12.05.11 at 7:59 am

Here is an interesting European pespective on household debt. The comments where debt is = to pension plans is interesting.

Would be fun to see how high housing in Canada would go if we adopted interest only loans :-) might bring the sizzle back.

http://online.wsj.com/article/SB10001424052970203752604576640662346325544.html?mod=WSJEurope_hpp_LEFTTopStories

#85 Kip on 12.05.11 at 8:59 am

Maybe Jay’s wife should get a job. There are lots of them in Ajax and then he could upgrade sooner!

You’re worrying people again Garth!

Kip

Jay’s friend’s wife. Now you’re worrying me. — Garth

#86 Mr. Lahey on 12.05.11 at 9:16 am

Top o the morning to all ye blog dogs. The invitation is still out to all to come to the first annual Greater Fool Blog Dog Xmas party in Sunnyvale Trailer Park. A very productive weekend was had. Ricky and Randy strung lights from trailer to trailer and a massive 50 foot Xmas tree was put up in the middle of the park and decorated. Bubbles, Corey and Trevor went deep into the Nova Scotian forest to cut this monster down (they planted several new ones as replacements). There has been confusion in some of the blog dog replies and that is over the bearded one debating Flaherty. Many have asked why Santa is debating Flaherty and over what. Folks, the bearded one I am referring to is none other than the sagacious one, the former right honourable Garth Turner! Santa is Santa and will be referred to as such. BTW, Mr. Collins (the burger stand man)has graciously offered to be Santa for the party due to his naturally protuding stomach. That’s it folks, keep the responses coming. Barb, Randy, Julian, Bubbles, Ricky and the rest of the Sunnyvale Trailer Park gang await your responses.

#87 Nonna Nicola on 12.05.11 at 9:19 am

Heya Bigga Rider, where you go? Some of da people tink you are a mia but I tink you a gotta come a backa so da people no tink you are a mia. I hopa you making da moneta with da real estata and dat is why you a not been here for a while. Nonna Nicola is a worried about you Bigga Rider.

#88 Mr. Lahey on 12.05.11 at 9:26 am

Jim Lahey here Form Man. I am not sure if you read the blog over the weekend but Westernman, in a sign of Yuletide peace and harmony has decided to change the wrestling match to the biblical admonition of turning your swords into ploughshares and wants to have a plowing/ploughing contest instead. Now he may have the advantage due to his agricultural background but I think you should once again rise to the occasion and accept as you did the first time. We can fly you and Westernman out together on the same flight so you can be acquainted prior to the challenge. Ricky has graciously offered his former weed field for the contest. Sunnyvale Trailer Park’s slush fund is paying for all our guest speakers as well(Sir Garth, Disciple, Smoking Man).

#89 Mike Rotch on 12.05.11 at 9:30 am

OwlEyes on 12.04.11 at 10:29 pm
“………..prebuild 1br for about $260K! That’s a quarter of a million dollars! Who would have thought a room in Regent Park could be so costly!”

No kidding!

Not too long ago, as a student, I rented a great 1bdrm in a beautiful old building by the North side of Alan Gardens.

4 month lease, $575 plus hydro per month.

So, even if that den among the crackheads is now worth $1000 per month (doubting it, but haven’t shopped rentals in years)…..well, the alternative is a better deal than buying a tin-and-glass box in the sky for $1100 per month……..and then being responsible for fees, taxes, and in-unit repairs on top of that!

#90 TurnerNation on 12.05.11 at 9:40 am

A few months ago my credit card (zero balance currently) sent Balance Transfer cheques. 11.99% until March 2010. I didn’t bite.

Then last week they sent 0.0% until April 2012 with a 1% processing fee. Thank’s so much, 10k free money until April 2012. And yes I am in a position to pay it all back when rate reverts.

My other credit card sent the same offer last month – 0% for 6 months, 1% processing fee. You simply write the cheque into your own name and deposit into your bank.

Each card has a limit of 10k for me; I’m not a big roller and I live below my means (condo renter, no car).

#91 Steven Rowlandson on 12.05.11 at 9:44 am

Renting is possible given the right terms. Owning and paying for a SFH is possible only if the price collapses by more than 90%. Otherwise your pay better be the same as the prime ministers or your in deep trouble.

#92 Mr. Lahey on 12.05.11 at 9:51 am

Jim Lahey here again folks. Just talked it over with Barb (the owner of Sunnyvale Trailer Park) and she is willing to offer up 6 trailers to any blog dog that is interested. $30k will give you a place of residence in one of the most loveable trailer parks this side of the Atlantic. Further, trailers will be made available for rental purposes during the annual Xmas party. The finest one of course (granite counter tops and a marble shower)has been reserved for the bearded one. Sorry blog dogs! Even Flaherty will have to settle for the regular trailers. Replies are being accepted!

#93 Ammo & Viagra on 12.05.11 at 10:01 am

Rule #2 for posting on this blog:
“Abusive, obscene or disrespectful commenters will not be published, and are subject to banning from this forum.”

Westernman is clearly not following the rules….if he was still in highschool (questionable) , he would have been expelled for cyber-bullying by now, just like all the bitchy girls.

Garth??? DELETE button?

#94 Ammo & Viagra on 12.05.11 at 10:15 am

Mr.Lahey
is there a cheap motel close by? or a b&b, any good breakfast places? Just wanna be sure if I have to bring my sleeping bag and coleman stove.

#95 jocelan on 12.05.11 at 10:17 am

Garth, will you stop with the “pathetic blog”? You know perfectly well, its brilliant. ;)

#96 househornyhousewife on 12.05.11 at 10:20 am

Garth,

You are WRONG. Owning your own home IS BETTER than renting. HOWEVER, if you cannot afford to own, you have no choice but to rent. I don’t understand what is so difficult to understand here. In addition, if you are buying real estate for investment or speculative purposes then you are taking A LOT of risk during these uncertain times. DUH !

For centuries people have had to accept the fact that there are people who are rich and others who aren’t. Most people fit into the latter group and therefore have to prioritize certain things and put their money on those things.

If you chose to have two children then feeding and clothing those children is your number one priority. As soon as you decided to throw that condom or birth control pill in the garbage, you made that choice. If you only make about $25,000.00 per year, then your wife has to get off her butt and find a job because $25,000.00 a year does not a family support (apartment or no apartment). This family is in dire straits even without the house much less with this new fixed (!) debt.

I have no sympathy for this new generation of people who thinks that everyone is entitled to have two children and own their own home at the age of 22. This is not a right by any means and if you are willing to believe a real estate or bank managing putz with horns growing out of his head over your own common sense then … what can I tell you, you deserve what you get.

What pisses me off the most is that my tax dollars are going to bail morons like this out when the shit hits the fan. God forbid that we have to face an “austerity package” in the future like many European countries are facing right now and that people who did things prudently will end up having their tax contributions increased even more in order to make up for Mr. and Mrs. Idiot and their two kids.

I married and decided not to have children for a reason (freedom). My husband and I are also being careful about our financial planning because we want to continue to enjoy a certain standard of living even beyond retirement (or to have the option of retiring earlier). I do own a beautiful house and am looking for a nicer one (on a lake) but I KNOW what I can afford and despite the fact that I have seen really gorgeous multi million dollar properties that I would kill to live in, I have not put an offer on these because I know I cannot afford it, period. I have also decided to sell my first house (which is paid for) in order to put a downpayment on my second one and significantly reduce my mortgage amount even though the idea of having a city and a country house would make me think I am Rockefeller reincarnated. Let’s get real people ! I have also been watching the market for quite some time because I am seeing greed and avarice reign supreme with people asking sometimes three times what their property is actually worth. Patience is difficult but in this game it is ESSENTIAL.

I am busting my hump to get what I want in life.

All I need is for this new generation of idiots to come in and ruin it all because I have to adopt their children and give them the house they cannot afford with increases in MY taxes.

And you want me to feel sorry for this idiot ? No way ! What I want is the CMHC to shut down TODAY and for those a-holes to take their chances on the real market without being subsidized .. like everybody else.

What next, free Audis and beemers for 18 to 20 somethings whose parents cannot afford to buy them a car ?

HHHW

Your opening statement shows prejudice. Owning is not better than renting in all cases. That’s like saying everyone should have children. I thought you were sharper than that. — Garth

#97 edmonton mortgage broker on 12.05.11 at 10:21 am

#51 Elmer on 12.05.11 at 12:16 am

Jay’s colleague likely got a mortgage via a mortgage broker or mortgage specialist in Toronto where taxi drivers moonlight as mortgage professionals. it’s a cut throat business these days and there’s no doubt, even if he was making $10,000/yr, there’s a broker/specialist out there that could get him the mortgage at a major bank. the world is not black and white.

#98 wtf????? on 12.05.11 at 10:22 am

zoom zoom….. a metaphor

http://www.hindustantimes.com/world-news/RestOfAsia/4-mn-lost-in-most-expensive-car-crash/Article1-778122.aspx

#99 Mr. Lahey on 12.05.11 at 10:52 am

#94 Ammo and Viagara
“Mr.Lahey is there a cheap motel close by? or a b&b, any good breakfast places? Just wanna be sure if I have to bring my sleeping bag and coleman stove.”

None of the above are necessary! Sunnyvale is dipping into our slush fund and all blog dogs will be given trailers for accomodations at insanely low rates. This will be one big happy blog dog reunion/Xmas party. You may end up sharing a trailer with some of the more illustrious commentators on this blog. After staying in one of our lovely trailers, you may even want to purchase it for the great price of $30k. Imagine the liquidity you will have and not have to pay rent!!! Is this not the ultimate financial move?? To boot you may have Bubbles and his kittens living next door. See you at the party!

#100 If real estate values were to fall by 25%, or even 15%, there’d be a social crisis – “I have friends that are selling their possessions to make payments. The scary part is, I tell people the truth and they look at me like I am from Mars.” | Va on 12.05.11 at 10:54 am

[…] Americans felt when their market tumbled. – story relayed by, and commentary from, Garth Turner at greaterfool.ca, 4 Dec 2011 Share:TwitterFacebookRedditStumbleUponDiggLike this:LikeBe the first to like this post. This […]

#101 Dad on 12.05.11 at 11:15 am

#49 Echo

Sorry if the truth hurts friend. Just under half of all marriages end in divorces, and wives initiate or force the husband to divorce at least 70% of the time.

You do the math. You have a better chance of getting heart disease than a successful marriage, and that ignores whether you are happy in the marriage or not.

This guy is going to have major money problems, and his wife is going to bail on him long before Jay does I can tell you that.

#102 jess on 12.05.11 at 11:20 am

dissent tax troops

http://www.thisismoney.co.uk/money/news/article-2069929/Rebel-tax-office-staff-ready-blow-whistle-inept-HM-Revenue-amp-Customs-bosses.html?ITO=1490

#103 Macrath on 12.05.11 at 11:35 am

Curious ! What is the percentage of people that actually own their homes ? their vehicles ? their SS appliances or the shirt on their back ?

#104 dogman01 on 12.05.11 at 11:56 am

Thanks DML on 12.05.11 at 2:08 am

Great Article; Debt +unemployment = smoking life crater

“I see the face of a person who says ‘I’ve been a plumber for 36 years in this town, I’ve never been out of work, and first I lost my job, and then I lost the boat, and then I lost the vacation home and then I lost my wife, and now I have lost my home and I’m being sued by a credit card company and I don’t know what the hell I’m going to do’ — that’s what we see here.

Read more: http://www.post-gazette.com/pg/11338/1194175-455.stm#ixzz1ffyg6h9u

#105 happyplace on 12.05.11 at 12:01 pm

I found out the hard way recently that it is not good to have cash in the bank if you are a dual Canadian/U.S. citizen.

#106 Ralph Cramdown on 12.05.11 at 12:04 pm

Ok please tell me what’s wrong with this picture. 20% down. Basement income of 1200 per month. Total cost to me with mortgage, tax, insurance, utilities 2000. So my net cost is 800. Rental minimum is 1500. I don’t care if the market goes down as it’s my home. I can’t rent cheaper. Please tell me why I should not buy the beautiful bungalow with a double car garage nice lot for 420000.

So buy it already. But don’t forget vacancy allowance (at 5%, being a basement, $60/mo.), maintenance (every house needs a new roof and furnace every 20 years, $50/mo. just for that), opportunity cost (the $350/mo you could be earning on that DP), and the slight possibility that, at some time in the future with negative equity, you won’t be able to move without bringing a cheque to the closing table.

And that’s if you’ve got GOOD tenants. With 70% of households now owning, and the remainder displaying a marked preference for above ground digs, what kind of quality tenants are you expecting?

#107 Snowboid on 12.05.11 at 12:07 pm

#60 dddd on 12.05.11 at 1:17 am…

AZ sucks?

I agree the weather has been cold, certainly not Canadian cold – unless you go to the high country. Although our bougainvillea did freeze last year, it is back in its’ glory again. The neighbours citrus trees seem fine as well, but they are expecting another freeze tomorrow night (-1C). High temps are supposed to be back around 21-22C by next week.

Tucson has always been a bit colder than Phoenix, and RE more expensive. Phoenix was the main area hit by the bursting RE bubble, hence the bargain pricing.

We cycle regularly – and have a 35 km bike trail nearby as well. Border patrol had one checkpoint on the highway just north of the Mexican border, we certainly have not seen them ‘all over’.

Every city has its’ bad areas and your comments could apply to most cities in Canada and the US, except there aren’t too many Saguaro cacti.

I guess your expectations were a bit high (or you were), this is usually the coldest time of year to visit. If had come even three weeks ago you would have enjoyed 26-27C temperatures.

Better luck next time, sorry you didn’t enjoy your visit!!

#108 Form Man on 12.05.11 at 12:09 pm

excellent post Garth.

The commenters that do not believe Canada has a subprime mortgage issue have definitely not been paying attention. It is real, and it is certainly fueled by CMHC insurance.

#164 Harlee yesterday
I think you might be correct in your diagnosis…..westernman is suffering from acute male menopause..( also he despises himself because of his secret wishes to be a woman )

#88 Mr. Lahey

westernman has duped you. he has no intention of showing up for the ploughing match. he is far too much a coward. In the spirit of sportsmanship, however, I propose that we hold the ploughing competition with heavy horses rather than tractors. This would be environmentally friendly, and a tip of the hat to our industrious farmer ancestors. To handicap myself, and give westernman a fighting chance, I shall load extra cases of scotch on my plough.

#66 Cristian

God is most certainly a woman. No man possesses the sense of humour required………

#109 Mister Obvious on 12.05.11 at 12:17 pm

#66 Cristian

Thanks for reminding us to observe correct gender when referring to the creator of this zoo.

#110 TaxHaven on 12.05.11 at 12:21 pm

“…if he stayed put he could save $400 or $500 a month. He reminded him his kids will need college tuition in eight years, and without any savings he’s in no position to help them.”

See? SEE?

Jay is like most Canadians. His standard of living (vis-a-vis his parents’) is being ratcheted DOWN.

But does he accept this?

No. He tries to prop it up – with DEBT.

Jay’s friend, not him. Class needs a lesson in reading comprehension. And don’t move your lips. — Garth

#111 Leafsfaninyvr on 12.05.11 at 12:30 pm

I don’t write the stories. Just report them. — Garth

Isn’t that what they call heresay or conjecture? I know this is only “a pathetic blog” but don’t you have some sort of responsibility to actually make sure what you are reporting is true? How does this make you better than GlobalTV who you crucify for simply reporting what CREA pumps out?

I corresponded with the person whose employee was featured in the blog. There was no indication of deceit or exaggeration. There is tremendous value in such peer-to-peer sharing of experiences, which makes this form of communication, and journalism, unique and worthwhile. You are entirely free to buzz off and watch TV. — Garth

#112 househornyhousewife on 12.05.11 at 12:36 pm

Wo-w Garth,

Quite obviously I did not express myself adequately in my last post.

I did not wish to say that owning is for everyone and I thought I made that clear. In case I didn’t:

– if you cannot afford to own you MUST rent
– the CMHC should be shut down permanently
– we need to stop subsidizing 20 somethings in
purchases they obviously cannot afford

By saying owning is BETTER than renting I meant to say that it is more satisfying to own than to rent. Believe me, I have had to put up with so many jerk off landlords in my life, I am extremely happy to finally own my own property.

My post was meant to express the exact idea that owning is NOT for everyone and that if financial means do not permit, one has no choice but to rent. People who cannot afford to buy must therefore suck it up and rent until they are able to own.

When it boils right down to it, would you rather have a landlord or your own property that you can do anything with ? The choice is obvious. However, if you cannot afford it (mortgage, taxes, maintenance, emergencies, insurance etc etc etc..) then don’t be an idiot, rent !

I hope my message is now clear.

HHHW

#113 Burnt Norton on 12.05.11 at 12:38 pm

#96 househornyhousewife on 12.05.11 at 10:20 am

Monday morning tirade?

Wife and I make mid-six figures and pay less to rent than we would pay the bank in interest for a mortgage on a home that has tested historical peaks in value and is now depreciating. The difference is being invested in diversified liquid growth assets.

I don’t have to rake leaves, shovel snow, mow lawn, pull weeds, replace appliances, hire plumbers, electricians, carpenters, roofers, or pay rising property taxes.

Care to elaborate on exactly why / how owning is BETTER than renting in this scenario?

(crickets)

Nah, didn’t think so.

#114 sam.i.am on 12.05.11 at 12:53 pm

#106 happyplace care to share the details?

#115 Brad in Calgary on 12.05.11 at 1:16 pm

There are consequences.

Exactly.
Hopefully you remember those 3 words the next time you tell people not to bet against our neighbours…
What that country has done is the same as what North American individuals have done, just on a much bigger scale.
Gorged on debt.
So consequences for both.
Simple.

#116 joe the broker on 12.05.11 at 1:18 pm

Im a mortgage broker in Toronto and would love to know which bank branch did this mortgage for him. Do you know Garth ?

I’m gonna guess RBC for now as they’ll do pretty much anything which requires some income rule bending aka fraud. This guy Jay is gonna be power of sale in no time.

#117 tkid on 12.05.11 at 1:21 pm

#64 Raj, don’t forget taxes on that $1000 a month. It gets added into the income you make and you will pay income tax on that rental. If you deduct 40% from your rental income, and the numbers still work out …

#118 Mr. Lahey on 12.05.11 at 1:22 pm

#109 Form Man

A most excellent idea! I have just dispatched Ricky and Cyrus (can you believe these two arch enemies working together as a display of xmas yuletide spirit?) to pick up a couple of Clydesdales from a local farm. Indeed, in tribute to the hard working ancestors who tilled the land from sunrise to sunset behind a horse and plough. This will really enhance the whole blog dog get together as I line you and Westernman up for the ploughing contest. “Gentleman, start your horses!” Let us give Westernman the benefit of the doubt and that he will indeed appear and perhaps even let the yuletide comaraderie that is developing with this first annual Greater Fool Blog Dog xmas party enter his rugged individualist spirit. This could be a transforming experience for Westernman. His ticket has been mailed out and yours has as well. Thanks for once again rising to the challenge Form Man. The case of scotch handicap is very witty!

#119 Mr. Lahey on 12.05.11 at 1:31 pm

#104 Johny Bravo

Jim Lahey here Johny. I haven’t heard whether you are coming to the Greater Fool Blog Dog first annual xmas party so this is your formal invite. You are a good blogger with good insights so I have decided you will be the referee in the Westernman/Form Man Clydesdale ploughing match. An offical striped referee jersey will be given to you and of cours a whistle to start this event. For this you also will be sent out a plane ticket (the Sunnyvale slush fund has been very well invested. Ricky shorted a bunch of Euopean bonds and we have made a killing.) See you at the bash Johny!

#120 Linda Pearson on 12.05.11 at 1:56 pm

#66Cristian on 12.05.11 at 2:04 am

#109Form Man on 12.05.11 at 12:09 pm
God is most certainly a woman. No man possesses the sense of humour required………

#110Mister Obvious on 12.05.11 at 12:17 pm

Genesis 1:27
So God created mankind IN HIS OWN IMAGE in the image of God he created them; MALE AND FEMALE HE CREATED THEM. (emphases mine)

Looks like we all might be right!

#121 Disciple's Replacement on 12.05.11 at 2:05 pm

#66 Christian..
The good folks that wrote the bible were all men and saw the world through a paternalistic lens..it just made it easier for a Subject. They also, at that time, didn’t know that the sun is a star and we are revolving around it..
My god is an It..

#122 Shahid from Gaza on 12.05.11 at 2:05 pm

Unemployment in Gaza city is 25%. Median income in Gaza is $800 per year. 2 bedroom in Gaza city – $900,000. House price-to-income ratio is 1:1100. In addition you will have a free food from flotillas.

http://www.marketplace.org/topics/world/gaza-real-estate-premium

In light of above the cost of RE in Canada is not so bad.

#123 888realtor on 12.05.11 at 2:09 pm

A new report from the Organization for Economic Co-operation and Development finds that the gap between the rich and the poor just keeps getting wider in Canada
http://news.sympatico.ctv.ca/home/oecd_report_finds_income_inequality_rising_in_canada/8e314dfa

#124 Ammo & Viagra on 12.05.11 at 2:17 pm

#96 HHHW
“Garth,
You are WRONG. Owning your own home IS BETTER than renting.”

Your opening statement shows prejudice. Owning is not better than renting in all cases. That’s like saying everyone should have children. I thought you were sharper than that. — Garth

Touche……Garth…..

#125 Herb on 12.05.11 at 2:24 pm

Real estate in Kattawapiskat is not on the horizon of this august blog, but if you are interested in the difference between fact and spin, have a look at this:

http://fullcomment.nationalpost.com/2011/12/04/brett-hodnett-the-real-math-behind-attawapiskats-90-million/

#126 Ralph Cramdown on 12.05.11 at 2:26 pm

we need to stop subsidizing 20 somethings in
purchases they obviously cannot afford

Superficially, it seems like the CMHC subsidizes 20-somethings, by allowing them to borrow at a lower rate than an otherwise sane lender would demand.

BUT, how does the qualifying process work? “Brittany and Joshua, with your combined earnings of $70k and your downpayment of diddly, we’ll lend you $200,000.” Predictably, they blow the whole enchilada on something small and dumpy, but that’s OK, because they only plan to stay there a few years. If the interest rate had been higher, the bank would have lent them — and all couples like them — less, and sellers of houses like the one they bought would have had to accept less money. Brittany and Joshua still have to repay whatever they borrowed, plus interest. Who really got subsidized here, the buyers, or the sellers?

#127 Muzza on 12.05.11 at 2:26 pm

Hey Garth,

This whole real estate sh*t storm scenario in Vancouver seems more like a seige – on one side the ‘doomsayers’ and on the other the property owners in league with the devil (real estate agents) both claiming the world turns for them. For instance, btw, I read your blog often, a co-worker turned me on to it, now I need my daily fix – I had a friend visit from Vancouver the other day, we were skiiing in Whistler, and I asked him what he thought of the market, whether the bubble is going to burst etc etc, he said emphatically that there was no way in hell’s half acre that it was going to; is this denial or bravado on his part, what is the truth and why hasn’t the sh*t hawk come home to roost yet !? I mean this is kinda like waiting for the second coming of Jesus – in Vancouver, no less(at least one person will be turned into a pillar of salt if so…); in this instance you’re the apostle John screaming from the mountain top, repent, repent, the end is near ! Apologies for the bible reference and hell scenario. Anyway, thanks for educating the potential, and averted horny house owner wannabe’s. Cheers.

#128 Ammo & Viagra on 12.05.11 at 2:33 pm

Mr. Lahey
What happens if we all get down there and suddenly see a huge freakin flock of shithawks flying in from the east..I think we need a contingency plan..

#129 Herb on 12.05.11 at 2:34 pm

#121 Linda Pearson,

what an elegant solution to the gender of God dilemma, proving us all to have been created bisexual! The Jesuits need you!

#130 Macrath on 12.05.11 at 2:48 pm

FYI
TORONTO (Dow Jones)–Royal Bank of Canada’s (RY) latest poll of Canadian homeowners found that 41% are now mortgage-free, the highest level since 2006.

I`m impressed !

#131 Ammo & Viagra on 12.05.11 at 2:49 pm

Wendy Mesley on the National last night suggested that we allow the native people that live on reserves, like Attawapiskat, to buy homes and have mortgages..I couldn’t believe what I was hearing..I think Wendy has lost it ! Stupid! How would they pay a mortgage??
if you don’t want to watch the whole, it’s at 6:30 minutes.
http://www.cbc.ca/video/#/News/TV_Shows/The_National/1233408557/ID=2173712911

#132 Tom on 12.05.11 at 2:58 pm

That the Canadian real estate market has been manipulated into a bubble of epic proportions is obvious.

You have made that point admirably and repeatedly.

My suggestion/request Mr. Turner, is what happens when this massive bubble bursts as it inevitably will do?

What happens to CMHC and the money that the Cons have allowed and encouraged through their banking policies to be loaned out so very inappropriately?

Who’s going to foot that bill and HOW will it be done?

Seems obvious that through CMHC the taxpayer is on the hook one way or another.

Surely you have insights into what the Harper thugs will do to force innocent tax payers to pony up for the stupidity of the flippers and losers?

Clearly this ain’t America. People can’t just walk from their mistakes like our friends to the south can do.

It really IS different here.

So how will this play out beyond the obvious bubble burst Mr. Turner?

To me THAT’s the multi-billion dollar question.

Perhaps you could venture an opinion? Take this mess beyond the obviously approaching bubble burst and give us some thoughts on what happens AFTER IT BURSTS?

Your insight would be helpful and greatly appreciated.

#133 Form Man on 12.05.11 at 2:59 pm

#130 Herb

you are our hero

#134 Mr. Lahey on 12.05.11 at 3:03 pm

“Mr. Lahey What happens if we all get down there and suddenly see a huge freakin flock of shithawks flying in from the east..I think we need a contingency plan..”

Fear not the shithawks o ye of little faith. I understand your concern but matters are in order and there will be no shithawk storm to worry about. The bearded one says he can’t wait to wrangle with Flaherty over the housing bubble and is looking forward to his granite counter topped trailer (Barb has graciously given up the best trailer in the park for our fearless host Sir Garth). Disciple says his joint lecture with Smoking Man is going to be mind altering in its scope and depth. Smoking Man will be addressing the issue of how to stop being a bubble head and slave to the system. The park is in a virtual frenzy in anticipation of this august group of presenters. Johny Bravo please confirm if you will accept our invitation to referee the ploughing match between Westernman and Form Man. “Ricky move that tree over a few feet.”

#135 Pat on 12.05.11 at 3:11 pm

#96 househornyhousewife wrote:

“… I married and decided not to have children for a reason (freedom).”

Not having children is good for the planet. But the lives of those without children seem so trivial…and their personalities selfish.

(Let’s see on how many toes I’ve stepped now.)

#136 I'm a banana on 12.05.11 at 3:13 pm

What’s with all the Garth brown-nosing?

“Catchy and just too true.”
“Great post again”
“BEST ANSWER EVER”
“Touche……Garth…..”

You know, based on the comments here, you don’t need to suck up to get posted, so unless you’re trying to butter up Garth for an MLM pitch, you’re probably wasting your time.

BTW Garth, I have a great offer for you – just take 5 bucks, put it in an envelope, and send it to me. Then send my name and yours to 5 of your friends, and well, you get it. Riches await us.

ps. Yes, I’m jealous. Sprinkle all those beautiful a$$-kissing comments my way y’all – I’m hungry for love!

#137 sam.i.am on 12.05.11 at 3:14 pm

I think a lesson from the US S&L crisis is relevant to the current mortgage lending situation in Canada:

“By insuring the risk, the government guaranteed that desperate S&L owners and managers would engage in ever more risky investments, knowing that if they were successful, the institution would be saved, and if unsuccessful, their depositors would still be bailed out.” source: wikipedia

#138 rana on 12.05.11 at 3:14 pm

That’s like saying everyone should have children. I thought you were sharper than that. — Garth

Well Garth, most people that have children shouldn’t have had them (don’t get me started that topic). And in today’s real estate market the same is true- those who now own houses shouldn’t. But the reason that people have children they shouldn’t have and own real estate they have no business owning is the same- uncontrollable horniness.

Poor Jay’s friend- he needs some lessons in abstinence from Jebus Garth.

#139 Westernman on 12.05.11 at 3:26 pm

Ammo&Viagra,
Awwwwwww, did bad ol’ Westernman upset you? Tsk,Tsk. Maybe you should go back to watching Mary Poppins if the rough and tumble world of frank talk frightens you so.
Form Man,
Thats about what I’d expect from you – try to plow using a horse instead of a tractor… I’ll tell you what – you use your horse and I’ll use my tractor and we’ll see who gets more done… stick to swilling scotch – thinking is not your strong suit.

#140 Snowboid on 12.05.11 at 3:26 pm

113 househornyhousewife on 12.05.11 at 12:36 pm…

That didn’t help, your message is now crystal-clear. And clueless.

Although it’s fine to own a home, the fact that values are taking a big dive in the Okanagan (including the north), this isn’t the time to buy (nor were the last three years).

It has nothing to do with being able to afford it or not, all to do with common sense.

Out of all our friends in the Okanagan that rent, only one can’t afford to buy (living on CPP and OAP). Especially true with condos or townhomes, let’s see – does it make more sense to pay $ 3000 a month to buy, or $ 1500 a month to rent?

We are very satisfied to rent in the Okanagan, and won’t buy again until the $ 350K condos are down around $250K and we could afford to pay double that in cash.

Your tone is most demeaning to renters, all I can surmise you are a close relative of Westernman!!

Sorry for the rant, cabin fever as it is only 14C outside and didn’t bring my woolies!

#141 Snowboid on 12.05.11 at 3:30 pm

#122 Disciple’s Replacement on 12.05.11 at 2:05 pm…

How true…

My BH, as a former Catholic, was most interested in this story from Slate:

http://tinyurl.com/6wvgqmb

#142 jess on 12.05.11 at 3:43 pm

Wall Street Owns The Country
A Speech by Mary Elizabeth Lease (circa 1890)

..”This is a nation of inconsistencies. The Puritans fleeing from oppression became oppressors. We fought England for our liberty and put chains on four million of blacks. We wiped out slavery and our tariff laws and national banks began a system of white wage slavery worse than the first. Wall Street owns the country. It is no longer a government of the people, by the people, and for the people, but a government of Wall Street, by Wall Street, and for Wall Street. The great common people of this country are slaves, and monopoly is the master. The West and South are bound and prostrate before the manufacturing East. Money rules, and our Vice-President is a London banker. Our laws are the output of a system which clothes rascals in robes and honesty in rags. The [political] parties lie to us and the political speakers mislead us. We were told two years ago to go to work and raise a big crop, that was all we needed. We went to work and plowed and planted; the rains fell, the sun shone, nature smiled, and we raised the big crop that they told us to; and what came of it? Eight-cent corn, ten-cent oats, two-cent beef and no price at all for butter and eggs-that’s what came of it. The politicians said we suffered from overproduction. Overproduction, when 10,000 little children, so statistics tell us, starve to death every year in the United States, and over 100,000 shopgirls in New York are forced to sell their virtue for the bread their niggardly wages deny them… We want money, land and transportation. We want the abolition of the National Banks, and we want the power to make loans direct from the government. We want the foreclosure system wiped out… We will stand by our homes and stay by our fireside by force if necessary, and we will not pay our debts to the loan-shark companies until the government pays its debts to us. The people are at bay; let the bloodhounds of money who dogged us thus far beware.”

#143 Canned Goods and Buckshot on 12.05.11 at 3:45 pm

Herb,

Informative and topical posts: 2 for 2.

#144 OkanaganInvestor on 12.05.11 at 3:50 pm

Doc Willie gives an update on what is happening with our trading partner south of the border. Hope everyone is enjoying the calm in the eye of this hurricane.

“The USEconomy depended upon the housing and mortgage bubbles too much several years ago. It bears repeating until blue in the face. The dumkopf US economists called it the Macro Asset Economy, which sounds better than an accurate description of an inflated asset dependent economy without industry. They gave it blessing. The housing market still has a gigantic hidden inventory held by banks, from the foreclosures. It continues to grow if truth be known. Very few US economist acknowledge that bank held (REO) home inventory prevents the home prices from falling more than already seen. Maybe they expect Fannie Mae to acquire the entire toxic kit & kaboodle. Release the bank inventory and watch home prices decline another 15% to 20%, but it would start the bottoming process. The Case Shiller housing index came out yesterday, again telling a wretched story. Metro home prices are down by 1.0% in the last two months. The home ATM machine is gone. Without a cleared housing market, expect no bottom in home prices. This is basic. Without a housing market in recovery, the USEconomy will languish, falter, and continue its deterioration. The dullard economic analysts still point to new home sales as a barometer, when it is a reverse indicator. The new constructions must halt for five straight years, so as to alleviate the over-supply. This is all utterly basic economics.”

http://www.gold-eagle.com/editorials_08/willie113011.html

#145 happyplace on 12.05.11 at 3:52 pm

#115 sam.i.am – Having lived in Canada for nearly 50 years since the age of 7, I was not aware of the tax filing obligations in the U.S. where I was born. So when my penalty for not filing returns is assessed (even though I owe no back taxes) it will be on all of my savings. If I owned real estate I would have a lot less savings to penalize.

#146 BushiBlue on 12.05.11 at 4:26 pm

The UK has had unaffordable housing for years. Right now the economic conditions should be giving rise to a major downward adjustment of house prices, yet this is not happening.

People are only selling their property when they absolutely have to. If they don’t get the price they want they don’t move. The number of transactions is very low but prices aren’t going down.

The reasons I’ve heard for this is basic supply and demand – immigration and smaller households have created such high demand that the poor old Brits will sacrifice anything (long commutes; small, badly bult properties) to own a place of their own.

Perhaps the same could happen in Canada?

#147 tutatrino on 12.05.11 at 4:46 pm

I’m very surprised to see how many people think Jay is the guy who bought the condo. Reading comprehension got pissed drunk on the weekend.

“‘Please don’t be mad, but I bought the house…”
You just can’t help stupid.

#148 John Reid on 12.05.11 at 4:55 pm

What ever happened to the saying “…you do not qualify for the mortgage bub. Go buy yourself a tent”?

#149 Sean on 12.05.11 at 4:55 pm

Can someone clarify something for me. I don’t own a property and never have.

Are property taxes based on the value of the home at current price or on the value of what you paid for it?

If prices were to drop would the cities be screwed? If its based on value then that would be a huge loss of tax revenue coming in.

Just curious as to how much is at stake in a case like this.

#150 Capilano on 12.05.11 at 4:56 pm

I believe much of the Vancouver market is relying on house prices going up continuously, and many have painted themselves into a corner to avoid being priced out of the market permanently. An unprecedented bull run in real estate in Vancouver over the last 10 years has led many to believe that is the norm in real estate.

When John Paulson (who made billions for his fund betting against US real estate) started shorting the real estate market before the subprime crash, it wasn’t having the immediate effect that he expected. The problem wasn’t the ninja loans, 0% down etc, because house prices were continuing to rise. People were able to borrow against their equity gains. However, when house prices started to stagnate and drip away, that option started to disappear. At this point is when the dream started to unravel.

The USA never passed 70% ownership. Canada is at 70% ownership. Vancouver’s mortgage debt is 70% of income. We’ve never been at this level before. It’s easy for prices to go up if one’s willing to raise their debt to income level, but at some point mandatory spending on groceries etc will limit out that growth. Only rising income levels will help change the balance. We rely on China right now, but how much are they actually in the local market? 10%,15%? Ultimately it’s still locally driven. What happens if they decide to stop buying? What if China doesn’t approve of their money disappearing out of country and makes a policy change? What if there is a currency contagion in Asia like the 90’s? That hurt real estate in Vancouver as Asians pulled money out.

Income levels are decreasing. Taxes, bills are increasing. Quality job creation is very low. Mortgage rates are already at rock bottom. 40 and 35 Year mortgages have been taken away. Global stimulus spending has mostly come and gone. Australia, a resource rich country with a similar population and heavy asian real estate investment, is starting to burst and the seams. This should be a canary in the mine for many here in Canada.

I believe in owning a home, however, there are times when it doesn’t make financial sense. With a 20% correction in Vancouver prices, that’s the potential to wipe off $180,00 of equity off of a typical Vancouver house. How long would it take you to save up $180k off of your paycheque?

No commodity has gone up forever without a correction. Not tulips, not oil, not houses. At some point they always level out, or dip down before moving again. Yes the long term charts point upwards, but that doesn’t mean its a sound investment. Would you be willing to borrow $500k without significant collateral and invest it in oil?You’d probably be extremely nervous and choose against it, but for some reason we are willing to do it with housing. And yes, the banks are giving out massive mortgages above affordability. I was offered $1 million, several of my friends were as well. We could probably afford around $400k. This is not hear say, this is happening in Vancouver. If it wasn’t, no one could buy a place who wasn’t already in the market previously.

Owning a home is great, but timing is everything. Don’t be a bag holder by listening to real estate agents, and mortgage brokers. Just because house prices are up in the clouds doesn’t mean your head should be as well.

#151 Fabrega on 12.05.11 at 5:00 pm

#106 Happyplace

Could you please elaborate?

#152 zeeman1 on 12.05.11 at 5:05 pm

What’s everyone’s problem with Westernman? I like the guy. His posts have bite. No one is forcing you guys to buy what he’s selling. To many Beta males on this site.

#153 Linda Pearson on 12.05.11 at 5:11 pm

#130Herb on 12.05.11 at 2:34 pm

Boy, wouldn’t that be a conversation of several days. Just imagine; a cosy fire, good music in the background and enough Jamieson’s.

You bring the Jesuit. Being Presbyterian, I don’t know any.

#154 OnlyTheBankersLaugh on 12.05.11 at 5:12 pm

http://opinion.financialpost.com/2011/12/02/terence-corcoran-castles-in-the-sky/

Oh dear, BUILD TORONTO – another way to build more condos, create fake corporate profits and get paid their their private partners is what I’m guessing. After episode after episode of local mayors in GTA getting free houses in ugly developments, this is a better strategic plan! We simply need even more government intervention to blow this thing up real good.

#155 Sail1 on 12.05.11 at 5:39 pm

Unbelievable, what homes in the Toronto area are selling for. People have lost their minds.

Have a look.

http://tosolds.ca/?cat=3

#156 Beach Girl on 12.05.11 at 5:40 pm

#131 Macrath on 12.05.11 at 2:48 pm

FYI
TORONTO (Dow Jones)–Royal Bank of Canada’s (RY) latest poll of Canadian homeowners found that 41% are now mortgage-free, the highest level since 2006.
I`m impressed !
___

Sure, what are their lines of credit. Just painting a pig a different colour.

#157 happyplace on 12.05.11 at 5:58 pm

#153 Fabrega – See #146 above.

#158 If real estate values were to fall by 25%, or even 15%, there’d be a social crisis – “I have friends that are selling their possessions to make payments. The scary part is, I tell people the truth and they look at me like I am from Mars.” on 12.05.11 at 6:07 pm

[…] Tom is sixtyish. Rents a swishy place in a glass tower in downtown Vancouver and has his wealth in liquid assets, smugly invested. “A lot of my friends (mostly poor media types) are in deep trouble,” he says. “I have friends that are selling their possessions to make payments. One gal had to be talked out of a reverse mortgage yesterday. I begged her NOT to do it and explained the basics. The scary part is, I tell people the truth and they look at me like I am from Mars.” As we all know, real estate did this to BC. The average SFH is now $1.1 million in Vancouver, and $592,034 in Victoria. The average family makes $83,300 and $76,600 respectively. Figure it out. If real estate values were to fall by 25%, or even 15%, there’d be a social crisis. Global TV would have a kitten. Whole condo towers would be full of under water owners. People with the bulk of their net worth in a house would suddenly understand how Americans felt when their market tumbled. – story relayed by, and commentary from, Garth Turner at greaterfool.ca, 4 Dec 2011 […]

#159 sam.i.am on 12.05.11 at 6:40 pm

#146 happy… that is unfortunate hope you don’t get too badly burned, the root cause is the us tax principle of taxing citizens and perm residents on worldwide income, one of the few (maybe only) country to do so. i can understand why there is so much ire directed towards the us gov. one has to really pay attention to the rules. imo it is unfair to target people who may not have any idea because they like yourself left the us as children. the canadian government should intervene and refuse to share bank information. canada seems to be going in the opposite direction though ergo today’s story where land crossing entry/exit info will be shared.

#160 Humpty Dumpty on 12.05.11 at 6:41 pm

You mean “Semiopaths” & Psychopaths whom seduce with great swelling words and promises…..

http://www.psychopathiceconomics.com/DavosEconomicForum/2011/12/03/psychopathic-economics-101/

#161 Wage Slave on 12.05.11 at 6:44 pm

136 Pat on 12.05.11 at 3:11 pm
Not having children is good for the planet. But the lives of those without children seem so trivial…and their personalities selfish.
(Let’s see on how many toes I’ve stepped now.)

If we’re speaking in sweeping generalizations, then I would contend that it’s those that choose to have kids who seem selfish. You admit that your choice wreaks further havoc on a planet which is a closed system with finite resources, yet you do it anyway. Selfish.

#162 Form Man on 12.05.11 at 6:45 pm

#154 zeeman 1

the problems with westernman are so numerous that we will just name a few to avoid taking up too much blog space:

extremely poor reading comprehension
almost nonexistent spelling ability
apparently limited education
misogynist
bigot
neocon
cheat
non scotch drinker

#163 Macrath on 12.05.11 at 6:46 pm

#157 Beach Girl

TransUnion, a Chicago-based credit specialist, said the average Canadian had almost $26,000 on his or her credit card, bank lines of credit and other borrowing vehicles — excluding mortgages — during the January-to-March period. That amount represented a jump of more than $1,200 compared to the same three months one year earlier.

I would have thought that the numbers were worse. I suppose we could also say that 59% are mortgaged to the hilt, owe well over 26 thousand at usurious interest rates and spend $1.50 for every $1.00 they earn.

#164 Smoking Man on 12.05.11 at 6:49 pm

Beach girl
That’s why no crash in gta only gains. Folks won’t sell if they can’t get there price there is enough demand in the 416 to obsorb anyones property if trey get in trouble. To to 416 to catch up to vancover

#165 Mr. Lahey on 12.05.11 at 6:58 pm

#147 Johny Bravo

“Mr. Lahey, do I also get an Amazon?”

Now now Johny. The Amazons are strictly for the bearded one who will be dispensing his words of wisdom in the flesh, mano a mano for all to hear. I take it you will be the referee even without an Amazon?

#166 Westernman on 12.05.11 at 6:59 pm

Form Man,
Problems? As I read your list I thought you were complimenting me…

#167 Mr. Lahey on 12.05.11 at 7:00 pm

#140 Westernman

“Thats about what I’d expect from you – try to plow using a horse instead of a tractor… I’ll tell you what – you use your horse and I’ll use my tractor and we’ll see who gets more done…”

Now that’s not fair Westernman. Either you both use tractors or you both use ploughs. We need a level playing field for this contest.

#168 jess on 12.05.11 at 7:20 pm

Countrywide protected fraudsters by silencing whistleblowers, say former employees

http://www.iwatchnews.org

proclamations and meaningless business codes of the so called deeply committed

http://www.courthousenews.com/2011/11/30/41825.htm

banks love coal?
http://www.reuters.com/article/2011/12/02/idUS311152209320111202
must be hedging those carbon offsets ;^)

#169 Westernman on 12.05.11 at 7:34 pm

Mr. Lahey,
Gee whiz, Mr. Lahey, I guess you’re right! But it’s 2011 and I’m not plowing with a horse… and Form Man has to get his own tractor – he’s not using mine.

#170 Bill Gable on 12.05.11 at 7:40 pm

Capilano = bright post – well stated. (*If you hang around here, you will meet some smart folks.)
Happy Christmas and again, thanks for the insight.

#171 Jimbo on 12.05.11 at 7:51 pm

Garth I have heard the cities of Kelowna and Edmonton are starting to see sharp drops in house prices. Are there any other Canadian cities starting to see declines as well?

#172 Nostradamus Le Mad Vlad on 12.05.11 at 8:15 pm


#133 Tom — “Seems obvious that through CMHC the taxpayer is on the hook one way or another. ”

Well pointed out. In any event, and as in the US with their bailouts of various organizations, the taxpayers (minus I.T.’s, which C – H – F, purposely lied about) are going to be left holding the bag.

Politicos, lobbyists and banxters have no redeeming qualities about them at all, and should be avoided at all costs.

#152 Capilano — “Income levels are decreasing. Taxes, bills are increasing. Quality job creation is very low.”

Bingo! The removal of money from the system (income levels decreasing, while taxes and bills are increasing) and a lack of good-paying jobs are putting a lot of people in the poorhouse, mainly through no fault of their own. Good post.
*
Brazil cuts taxes “Bomb them! Bomb them! If Brazil cuts taxes and their economy improves (which we know it will) then our people will start wondering why WE don’t lower taxes,and we CAN’T do that or Tel Aviv will be angry and not let me be president any more!” — Official White HOrse Souse (wrh.com); The Toilet returns, but it’s venturing further afield; Claim, not proven Bill Clinton paid US$50K by MF Global; US Fed + IMF = Euro No wonder this ponzi scheme is racing toward hell, but France – Germany may scupper that; Eurozone credit worthiness negative; Clip Countries declare economic collapse after holidays, so they can have their turkey and eat it too; Poverty Child poverty rates up for second year in UK and Poverty, but in working families; 0:35 clip New Ron Paul ad;
*
CC Bay Area’s first freeze; Iran Why expand sanctions? Iran has never threatened anyone; Suicides First, the US military and now, rural living; 4:52 clip Newt — Playing the blame game; 3:19 clip All take, no give between US – UK; Free Military Hardware to police depts.; Gaddafi daughter calls for new revolution; Police Brutality “You know America has become a Police State when our corrupt government hands out sentences worst than murder for . . . Videotaping Police Brutality.”

#173 Van guy smokin now on 12.05.11 at 8:20 pm

This is why Vancouverites think RE is a great investment. Is there another run up in prices from where we stand today?

http://www.yattermatters.com/2011/12/exodus-of-vancouvers-active-listings/#more-27522

#174 VICTORIA TEA PARTY on 12.05.11 at 8:34 pm

EUROPE, BLOODY EUROPE!

“SPIELBERG’S FINEST HOUR”

That’s one critic’s view of American movie director Steven Spielberg’s latest flick “The War Horse.”

It looks like the production will shortly become an Oscar candidate, such is the power of this blockbuster.

Based on a novel by Englishman Michael Morpurgo, the story line concerns the life of a horse, from an English farm, which ended up “serving” both the British and German sides during World War One, on the Western Front, in Europe.

The beast, ripped away from its young owner by the British Army, and drafted into service, lives through the Hell of “No Man’s Land” during which his young owner, also enlisted, searches frantically for his best friend. This is a serious tear-jerker and a metaphor for what’s happening in Europe right now.

…GOING INTO 2012

While this movie will work its way through our collective consciousness, wakingour newer generations to the utter horror and madness that WW1 brought to the world, due to mindless politicking by the then-Euro elites, I see a repetition of history, only one of economic violence and not military adventure, at least for the time being, also in Europe.

SAME CONTINENT, SAME CAPITAL CITIES, SAME VACCUOUS SMUGNESS AND C’EST LA VIE…

This European economic violence went up a notch or two today as ratings agency Standard & Poor’s chucked the following “hand grenade” into the Euro Crisis:

“FRANKFURT (Standard & Poor’s) Dec. 5, 2011–

Standard & Poor’s Ratings Services today placed its ‘AAA’ long-term unsolicited sovereign credit rating on the Federal Republic of Germany on CreditWatch with negative implications….

RATIONALE

The CreditWatch placement is prompted by our concerns about the potential impact on Germany of what we view as deepening political, financial, and monetary problems within the eurozone…(and), Germany’s economic growth outlook…(and)…prospects for a sustained reduction of its public debt ratio…We are therefore reassessing the eurozone’s record of debt-crisis management and its implications for our view on the effectiveness of policymaking in Germany.

IN FACT, 15 EUROPEAN COUNTRIES WERE NAILED WITH THIS SAME EDICT, ALSO TODAY.

The bottom line is this: the merry band of “Merkozy” will apparently come up with a plan to make European “chartered” banks whole again, by giving credence to their worthless holdings of bond bought from Greece, Italy, Spain, Portugal, Ireland, Austria, France and (?) Germany.

The method by which this economic miracle will be wrought, thus making us stock market investors instantly “rich”, is to offer 10 years of severe economic pain and austerity on the denizens of downtown Europe; the one percent getting bailed out by the 99 per cent. And you think that’ll go down well with the peasant classes?

A reminder here: World War One, brought us Bolshevism, (eventually) Chinese communism, Naziism, Italian and Spanish fascism, the Great Depression, WW2, the nuclear bombs, destruction of the Western colonial world. That’s just for starters.

A new World War One, an economic one, is mestasticising as we speak. The outcome will not be jolly.

BTW, one million “British” horses were killed in Europe’s killing fields of WW1. Some 868-thousand British soldiers, virtually all men, died; two per cent of Great Britain’s population at that time.

Other nationalities, and the “enemy” suffering similar ghastly results.

#175 Form Man on 12.05.11 at 8:42 pm

#168 Mr. Lahey

he won’t show up. he is a fraud ( and by suggesting the tractor vs horse, has shown himself to be a treacherous cheater )

#176 live within your means on 12.05.11 at 8:45 pm

#114 Burnt Norton on 12.05.11 at 12:38 pm
#96 househornyhousewife on 12.05.11 at 10:20 am

Monday morning tirade?

Wife and I make mid-six figures and pay less to rent than we would pay the bank in interest for a mortgage on a home that has tested historical peaks in value and is now depreciating. The difference is being invested in diversified liquid growth assets.

I don’t have to rake leaves, shovel snow, mow lawn, pull weeds, replace appliances, hire plumbers, electricians, carpenters, roofers, or pay rising property taxes.

Care to elaborate on exactly why / how owning is BETTER than renting in this scenario?

(crickets)

Nah, didn’t think so.

……………..

Each to their own. I would not buy a home in this market. We bought many years ago and paid it off in 7 yrs with 25% down. Nice, spacious rentals here are really expensive.
…………….

I don’t have to rake leaves, shovel snow, mow lawn, pull weeds, replace appliances, hire plumbers, electricians, carpenters, roofers, or pay rising property taxes.
………………….

Raking leaves, etc. can be good for your health. I know several homeowners, especially my DH, that are very knowledgeable and capable of doing most of the work of the trades that you mention. He’s had certified trades people that have approved his work.

Rising property taxes, etc. are always reflected in rent.

#177 jess on 12.05.11 at 8:49 pm

.#150 John Reid
LIAR LOANS get em out before someone actually reads … haste makes profit!
gresham dynamic – bad chases out the good

overstated income, an overstated appraisal and a fake tenant lease agreement etc

I have to wonder how many liar loans are done here?

Mortgage fraud involved many lenders, former employees say
By Michael Hudson6:00 am, November 22, 2011 Updated: 6:33 pm, November 26, 201

#178 live within your means on 12.05.11 at 9:12 pm

136 Pat on 12.05.11 at 3:11 pm
Not having children is good for the planet. But the lives of those without children seem so trivial…and their personalities selfish.
(Let’s see on how many toes I’ve stepped now.)
…………….

You sound like a typical con bigot who has no compassion. We do not have children, but I can assure you we love, appreciate our nieces and nephews and support them. We are far from selfish. And, how much do YOU donate to worthy causes. I guess our lives are trivial because we love to travel, meet and learn from others.

#179 The thing in the basement on 12.05.11 at 9:21 pm

137 Banana – it goes like this – provide a good link, an insightful opinion or a funny, and you may receive a compliment, a thank you or a blog laugh. Like this:

“Herb, thanks for those last two links”

Alternatively, if your feelings are not in agreement, you could say:

“Thanks for the links Comrade Herb, ya commie”

See? Works both ways.

#180 The Patient on 12.05.11 at 9:23 pm

#12, The RealTruth writes:

______________________________________
26 days till the new year…no correction in 2011.
Around 3-4 months till spring and there will be no correction in Spring 2012.
But wait until Autumn of 2012… LOL
______________________________________

Well, that is the question, isn’t it, TheRealTruth? When’s “it” gonna happen? A lot of people on this blog, including our gracious host, know well the sting of ridicule as they beaver away at their home safebox installations, review their inventory of garden seeds, ammo and toilet paper, and bone up on their Amazonian psychology manuals. Oh the ridicule.

It’s fun to poke fun at the doomers, certainly the intellectually too-big-to-fail non-silent majority on this here blog, a blog that is the online equivalent of a boisterous but friendly 19th century Colorado saloon at 11:59 pm on a summer’s night. And, like Nevada, everyone here is armed, even the non-doomers — the “it’ll all work out fine, you’ll see” crowd.

Been following this blog since August 2011. Sold my brand new 4BR 2100 SF Markham, Ont. SFH 11 months ago after an 81% gross appreciation after six years of ownership. Bought 353. Sold 640. $287k tax free, thank you very much Chinese couple. For the six-year hold I had to pony up $25k-plus in property taxes and $36k for utilities, heat and other carrying costs sometimes included in rent.

But I digress. I got into the market when it was frothing like a pinched garden hose in 2004 because everyone was telling me to, including my prudent, conservative 70-something parents. Even before I found out about you guys here, I was eager to sell in 2010 before “it” happened.

I’m glad I got out in time with my shirt. And then some. Now? I’m The Patient, and I’m not typing from my hospital bed. I’m just waiting for things to come down the big pipe, stateside, eurocside, Chinaside, Iran-vs-Israel-side. Things are looking uncomfortably close out there these days, aren’t they? I felt that I had to get off the train because the RE market was bound to hit the wall at some point, and smudge downward. It hasn’t. Yet. I do wonder if it really will (the doomer’s greatest fear: no crash).
__________________________________

As a follower of this blog for the past three months I waited to post. I wanted to get a sense of the timbre of the debate. A number of you are real characters, that’s for sure. Garth is Garth, but it’s the people at his party here who are also an attraction:

Westerman: Nice chaps, nice gun. Don’t hurt me.

Junius: The gentleman polemicist/gunboat diplomat.

Beach Girl: Plucky, salty, bossy. It’s a She Thang after all. You go girl.

Form Man: Mr. Meat and Potatoes. His guns work fine, wallet’s full of money and don’t try any fast ones, ok?

Mr. Lahey: Dude, I was never a Trailer Park Boys fan but Mr. Lahey was really the star of the show for me. He deserved better than Ricky, you have to admit. Mr. Lahey never had the budget to show how intelligent he was. His stunned moments of personal insight were Oscar grade, though. But, as I say, I wasn’t a fan of the show.

Nostradamus Le Mad Vlad: The town crier with Tourette’s. You worry me, sir. I have a lot of time on my hands, but you seem to have have waaay more. You do realize that polymathia in the 21st Century is a fool’s ambition, yes?

Johnny Bravo: I like your style. Earnest and slickly pendantic, not that there’s anything wrong with that.

And Garth: Good gawd man. You, most of all, know the plight of ridicule’s pin cushion. And yet you go on, hoisted by Amazons through the Jungle of Doubt. I’m half-way through After the Crash and when I was reading the part about suggested bunker inventories I imagined you nestled away in your gated redoubt, bursting with diesel and food and propane and Coleman stoves, and I smiled. You go Garth. Gotta luv ya.

In closing, thanks in advance to the warm welcome here at the We Called It, Folks trailer park. I think I’m going to like it here. There are many rough and rude types about, for sure, just like in Red Deer with their snow machines roaring down the street at midnight Sunday, but there appears to be some sensitive types too, red Torys peaceably sipping their beer and wine, giving nodding respect to the lefties (they need shelter and drink, too, and they’re just over there, cowering on the other side of the basement) . We’re mostly just happy to have a warm bed to crawl into at night in a great country that allows us to buy home safes, garden seeds and Harleys. As H.L Mencken said,

“The basic fact about human existence is not that it is a tragedy, but that it is a bore. It is not so much a war as an endless standing in line. The objection to it is not that it is predominantly painful, but that it is lacking in sense.”

It’s a gong show out there.

#181 disciple on 12.05.11 at 9:33 pm

I guarantee you the best 3:23 of your day: Telemarketing prank… please put down any hot liquids before clicking…

http://www.youtube.com/watch?v=fl5uhjJFTiE&feature=youtu.be

#182 CalgaryRocks on 12.05.11 at 9:49 pm

Our house will be paid off next year. We bought it in 2005, pre Calgary boom. (Which makes us lucky)

Actually the first 5 years we only paid the minimum on it. It’s only been for the past 2 years, or so, that we got serious, since we started earning some extra money from of a side business that we started.

I guess I somewhat credit Garth for scaring us into paying it off with his rising interest rate chatter.

So, we use our main salaries to pre-pay as much as possible and simultaneously build savings in a corp that we will be able to reinvest at some point.

So how do I feel about a paid for house? Well, for one, it makes my main job less important, it makes me want to take a chance on expanding my business instead.

It basically means freedom, for me and my wife to stop worrying about our jobs (and being homeless if we lost them) and move into something that we are passionate about instead.

BTW, a tip for raking leaves. Use your landmower to scoop them up (with the bag attachment). Takes me 20 minutes in the fall and I fill out like 4-5 huge full bags. I don’t have patience for raking them either. LOL.

#114 Burnt Norton on 12.05.11 at 12:38 pm
#96 househornyhousewife on 12.05.11 at 10:20 am

Monday morning tirade?

I don’t have to rake leaves, shovel snow, mow lawn, pull weeds, replace appliances, hire plumbers, electricians, carpenters, roofers, or pay rising property taxes.

Care to elaborate on exactly why / how owning is BETTER than renting in this scenario?

(crickets)

Nah, didn’t think so.

#183 Mr. Lahey on 12.05.11 at 9:57 pm

#181 The Patient

Good to hear from you Patient. You don’t have to be a fan of the show to come to the First Annual Sunnyvale Trailer Park Greater Fool Blog Dog Xmas Party. Since you have now sold your Markham ball and chain you might want to consider buying a trailer in the park while you are here. $30k it will cost you and you then invest your roughly $250k in a balanced portfolio as advocated by the sagacious bearded one. See you at the party!

#184 Mr Buyer on 12.05.11 at 9:57 pm

#83 Tripp…I would not want to go the way of a two teir system but in practice we have one already…the second tier is simply shoot down to the US for treatment if you have the cash…
#162 Wage Slave…
The issue of having children or not is a deeply personal one to be sure. I never liked the idea of finding meaning in life through my children as there is the potential to make the poor darlings responsible for things of which they are not. Having said that, as a biologist passing my DNA along into the next generation makes alot of sense to me and most of my great personal concerns have simply evaporated now that I have kids. I can hardly remember issues and experiences that held so much of my attention for so many years before I had kids. I would also like to say that I have a greater concern for the future, country, and community now simply because I want my kids to have the best chance possible. I spoke of these things before I had kids for sure but I did not truely care as much as I do now.

#185 The thing in the basement on 12.05.11 at 9:58 pm

126 Herb – actually I do thank you for the link. While I
knew the $90M would include more than housing or
municipal-like services, I did not realize the population of
the band – 1800 in the article. That’s $50k per band
member or $10K/yr as I think that was since ’06.
Considering health and education costs that doesnt seem
so unbelievable.

#186 Mr. Lahey on 12.05.11 at 10:02 pm

#170 Westernman

“Mr. Lahey,
Gee whiz, Mr. Lahey, I guess you’re right! But it’s 2011 and I’m not plowing with a horse… and Form Man has to get his own tractor – he’s not using mine.”

Fair enough Westernman. Ricky will get Form Man a tractor and we will get your tractor hauled out here on a big rig in time for the contest. Sunnyvale’s slush fund has had a banner year shorting European debt. Thanks for the response.

#187 Mr. Lahey on 12.05.11 at 10:06 pm

#176 Form Man

“Mr. Lahey he won’t show up. he is a fraud ( and by suggesting the tractor vs horse, has shown himself to be a treacherous cheat>”

Now Form Man I have to believe Westernman is a man of his word as he has said he will come but under the stipulation he use his own tractor which Sunnyvale is willing to haul out here to Nova Scotia (read my above post on how our slush fund can afford to do this). Ricky will get you a wonderful John Deere tractor with a 12 furrow plough hooked up. Should be quite the contest and I hope when it is over you and Westernman bury the hatchet and have a Xmas drink together in the spirit of the Yuletide season!

#188 Herb on 12.05.11 at 10:08 pm

Easy on the compliments, people, or I’ll have to borrow Garth’s No-Cal Shampoo for Swollen Heads.

#189 Nervous investor on 12.05.11 at 10:15 pm

Garth

Can you explain more on what to do with proceeds from sale of real este?

Interest rates will rise, inflation will increase so stock markets, bonds, real estate will tank. What do you do with your cash when this is the future?

Balanced portfolio seems like a dead end for the decade ahead.

Interest rates go up and stocks go down, interest rates go up and bonds go down…..

Get some help. You are confused. — Garth

#190 Nemesis on 12.05.11 at 10:17 pm

“The objection to it is not that it is predominantly painful, but that it is lacking in sense.”… ThePatient

You just need to connect with your inner existentialist, TP.

It may all seem to lack sense… but it can be extraordinarily funny. Even the bad stuff (with enough time/distance).

#191 Herb on 12.05.11 at 11:10 pm

#186 The thing in the basement,

the chasm between reality and government spin is pretty frightening, which is why I found the link important enough to intrude on Garth’s RE etc. blog. When confronted with a problem you can’t gloss over, rely on the ignorance of the voting masses, generate a little smoke, and blame the victims. The SOP (Standing Operating Procedure) of the [Harper] Government of Canada.

Our aboriginal problem in Canada actually would deserve serious and sober consideration. We wanted the land they were on, its furs, timber, mineral resources and hydro-electric power, so, in the best imperialist/colonial tradition, the natives were shunted aside into reservations, where we sort of undertook to look after them if they stayed out of our way. And then we kind of forgot about them since they were out of sight and were paid to stay there. Except we forgot to pay them enough to allow them to replace the way of life we had destroyed.

So now one of roughly 600 reservations has entered crisis mode, and the GOC says that they have given $90 M to that reservation in the last 5 years, implying that the reservation should be flush and happy. And then someone crunches the numbers and exposes the mandacity of the government.

I can hardly wait to see what the Harper Government would do in a real crisis, like a fiscal/RE meltdown of the “white” world.

#192 The thing in the basement on 12.06.11 at 1:18 am

193 Herb – just to clarify

Reserve = Canada
Reservation = USA

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

In the wiki link you may also note the reference to the CMHC.

#193 Okanagan Renter on 12.06.11 at 1:33 am

#141 Snowboid wrote:

“We are very satisfied to rent in the Okanagan, and won’t buy again until the $ 350K condos are down around $250K and we could afford to pay double that in cash.”

My thoughts (almost) exactly, except that we’re holding out for a house.

Two more lakefront properties for sale off Abbot St. this morning. The slide continues apace. Naysayers still pretend the decline isn’t happening. The Kelowna economy is essentially stagnant and we continue to bleed young minds as graduates from UCBO and OCC leave the region as soon as they’re diplomas roll off the press.

Still wondering what will happen to the SOPA condo complex. Will they attract enough clueless Calgarians to sink tarsand dollars into that gaping hole?

#194 Herb on 12.06.11 at 8:39 am

#194 The thing in the basement,

of course you’re right, and “mendacity” is spelled wrong too. Shouldn’t write when the blood is up.

#195 disciple on 12.06.11 at 10:09 am

#181 Patient… why wait to post? Moving forward, just vomit it out, don’t be afraid to take risks. Who in their right minds would care what fools think of you? Waiting doesn’t help anyone, except maybe tigers crouching for the kill in the quiet of the jungle night. Only evil or those who’ve lost their innocence wait… Speaking of that, I do sense a black forest of FEAR in your words. But know this, whether you are a doomer or a cheerleader, nothing really matters, there is no meaning to the universe apart from that which WE give it, because indeed we are the universe. So go ahead and enjoy it while infusing meaning, life is indeed boring without entertainment… that’s precisely why life’s a stage, and we are merely actors…yadda yadda yadda… “told by an idiot, full of sound and fury, signifying nothing” (thanks Earl of Oxford!)

Just try not to cause harm or loss to anyone, through action or through words, and you will have freed yourself from the endless cycle of fear and greed. Walk the path of Hamlet, come to terms with your sins, feign madness to survive the madness all around you, and in the end succumb to the force that gave you life in the first place: tragic comedy. Resistance is futile. Life is a joke, our endless attempts to escape from accepting this reality is the cause of our suffering.

#196 Snowboid on 12.06.11 at 11:19 am

#195 Okanagan Renter on 12.06.11 at 1:33 am…

Buying into a condo complex before completion is something far too risky in my opinion.

Especially in Kelowna. Nice area, though, our first home was a couple of blocks away (now long gone and replaced with condos).

#197 disciple on 12.06.11 at 11:22 am

BBC’s Greece correspondent’s mind goes lollipops after yellow fever vaccination:
“He became psychotic, sobbed and saluted at television pictures of military uniforms during the Royal Wedding and believed he was Jesus. He and his family now believe that the Stamaril inoculation he received was contaminated.”
http://www.dailymail.co.uk/news/article-2069712/BBCs-Man-Greece-psychotic-believed-Jesus-yellow-fever-jab.html#ixzz1fbZ4o2ge