Déjà vu

Five years ago Jimmy bought his condo in Liberty Village, a hot little enclave which used to be a 19th Century industrial wasteland on the lower west side of Toronto. Now it’s home to more Vespas than Rome. The 31-year-old trendoid paid $286,000 for 750 square feet, but now he’s got a problem.

“We have a 5-month-old baby at home and the wife is talking about moving into a house. But I wouldn’t even consider buying a house right now,” he says. “For almost a decade now I’ve been watching the ridiculousness of people buying homes they can’t afford. People swimming in debt, just because the bank tells them that they can “afford” to carry a ridiculous mortgage with hardly any down payment (which I’ve even seen paid with a line of credit).”

Jim’s big idea is to lease a house, and pay for it by renting his condo. “Seems like a win-win. We get to try living in a house without having to worry about overpaying on this ridiculous market, and someone else can worry about fixing stuff that will inevitably go wrong on a house in Toronto. Plus, we get to hang on to our loft and rent it out indefinitely.”

One interesting fact: he says the condo’s now worth $420,000 – a 49% increase. “I might as well hang on to it, and maybe plan for a significant drop in value. Anyway, thought you might be interested in the approach we are considering. It’s a bit different than the other stories I’ve read on your blog.”

See what real estate does to people? Makes ‘em weird. I’m sure Jim’s condo costs at least $600 a month in property taxes and maintenance fees, plus he has to insure the place and paint it between tenants, so renting it (even with no mortgage to pay) would net $1,200 at best – about one-third of the coin needed to grab a semi in downtown Toronto.

And what about that $134,000 tax-free capital gain? By renting out instead of cashing out, it could start to vanish before his eyes. Meanwhile, selling and investing the $420,000 in a mess of the stuff this pathetic blog has been yapping about lately (REITs, preferreds etc,), he could be getting two grand a month towards house rent.

All that makes sense. Even before what’s coming.

This week, news housing starts plunged last month. It was the biggest one-month collapse since the financial crisis of 2009, and the worst number in 31 months. Overall, the pace of construction tumbled 13% and when it came to condos, it was a 23% freefall. It immediately had all the deep thinkers in the MSM yipping about a rapidly cooling housing market.

About the same time, Brother Carney decided to drop the big one on Royal LePage and Re/Max. The governor of the Bank of Canada has seriously ramped up his warning that little debt piggies could soon become banker bacon.

“The rising indebtedness of Canadian households in recent years has increased the possibility that a significant proportion of households would be unable to make debt payments in the event of an adverse economic shock,” he thundered.

And what does he mean by an economic shock? Two things. Falling house prices and rising unemployment. (And the little devil didn’t even mention his plans to raise interest rates next year.) Carney also clearly plagiarized this blog by reminding the nation that borrowing is increasing far faster than are incomes, and mortgage debt actually bounded higher this past autumn. He could also have mentioned wages are actually shrinking when inflation is factored in, but that might have resulted in mass suicide at CREA.

So, the Bank of Canada now joins the International Monetary Fund, The Economist, Capital Economics and three of the five major chartered banks in publicly stating people like Jimmy have their butts in destiny’s crosshairs. When the inevitable comes, you see, it will come first for Toronto condos.

Said the Big Dog: “Certain areas of the national housing market may be more vulnerable to price declines, particularly the multiple-unit segment of the market, which is showing signs of disequilibrium. The supply of completed but unoccupied condominiums is elevated, which suggests a heightened risk of a correction in this market.”

Just to be accurate, 20,964 spanking new condos were built and sold this year in the GTA, and there are another thirty thousand in the pipeline. It’s widely (and accurately) believed between 60 and 80% of all sales are made to flippers and speckers, both domestic and foreign. The vast majority will end up on the rental market, causing the greatest vacancy glut in modern history. So much for Jimmy’s plan for collecting $1,900 every month.

Why the condo orgy? Price, of course. The average SFH in 416 is $776,000, but the average condo is $365,151. That means trendy young cashless, house-horny, scooter-riding, pansy  twentysomethings can buy units on credit cards, thanks to our kind banks and the government-backed insurance which wipes away lender risk. Besides, real estate always goes up, right?

Well, it used to. Jimmy scored. Condo prices in Toronto swelled 8% last year. But it’s no pattern for the future. In fact, if Europe blows up a little it might be 2006 all over again in Liberty Village.

You’re smart to consider renting, Jim boy. Wise to read this long-suffering blog. And astute to obey your wife’s every wish.

But dump the box. Pocket the profit. And run.

PS: Just received this email…

Hey Garth: I work at CityNews Toronto and just wanted to let you know that we’ll be running a story on our 6pm news tomorrow where a real estate agent says straight out he is worried about a bubble. and has sold and is now renting. The story usually appears on the website later in the night.

Very surprising considering we are also used to reporting what Remax and Royal bank push out as “news”

169 comments ↓

#1 i.see.debt.people.and. on 12.08.11 at 10:24 pm

i.am.firrrst!

#2 mark on 12.08.11 at 10:32 pm

Any concerns?

http://worldhousingbubble.blogspot.com/2011/12/canadian-banks-heavily-involved-in-re.html

#3 disciple on 12.08.11 at 10:38 pm

So, in the end I discovered that of the REITs I looked at today, none of them have exposure to the residential RE market, but many are saying that the shoe will fall in commercial as well. I dunno, maybe, but it would have to be quite a credit squeeze that would affect consumer spending over an extended period of time. Didn’t take long for Kitchener retail to nosedive following the RIM bloodletting…

At my young age, perhaps best to leave these in a TFSA with DRIP if available?

#4 First Place on 12.08.11 at 10:42 pm

First Again. YES!!!

#5 rosie on 12.08.11 at 10:44 pm

Beware bankers pumping condos. Actually beware bankers.

#6 Onemorething on 12.08.11 at 10:45 pm

“But dump the box. Pocket the profit. And run.”

It’s that simple! But you wont do it Jimmy, you just like to hear yourself talk!

#7 The Original Dave on 12.08.11 at 10:47 pm

great post G !

#8 LH on 12.08.11 at 10:47 pm

First to say this: Garth, are you willing to bet in public that C will raise rates before he cuts them?

1:1 odds

I put my twoonie on the “cut” first

#9 Dylan on 12.08.11 at 10:49 pm

I like your post today. wait til it gets bad.

#10 Nick on 12.08.11 at 10:50 pm

Right you are!

#11 WI BOOMER on 12.08.11 at 10:58 pm

Run, Jimmie RUN !!! Sell that Box before its down to what you paid, or less. When housing cracks, its uglier than humpty-dumpty’s shattered noggin’.’

Here in the United Snakes we thought we knew everything, people bought bigger, on less. Some were smart, kept what they had, paid it off. Now 29% owe more on their Boxes than what they’re worth. While that’s a natonal sign of iodiocy, its not respected by international borders. Some places the village idiots are even more underwater, like my friend in Nevada bought for 308K now worth 105K under water? Yeah…I can’t measure this is phantoms but it would be advantagous to just “walk”” but, they’re class people and will own up to their folly.
Yeah, dump the Box, invest the winnings, and watch your kid grow up in a rented home, they never know the difference anyway. Will you be wise??
I’m betting “NO”

#12 Mr. Lahey on 12.08.11 at 10:59 pm

Ballingsford #157 and #160

Your posts are hysterical! Looking forward to seeing you at the FASTPGFBDCParty. Yes Bubbles will indeed make for a great house guest. I wish you all the luck on your request to Beach Girl. Assuming she is a girl and not marrried…

#13 Kevin on 12.08.11 at 11:10 pm

Why is Carney fearful for Canadian households?

The scary graph of household debt to gdp
http://tinyurl.com/7clp4lm

Canadian household debt is now over 90% of GDP. The reckless Americans were just over 90% when their bubble burst.

Here is a graph of consumer and mortgage credit year over year growth from Jan 1990 to Oct 2011.
http://tinyurl.com/85vqqqm

Consumer credit has slowed to a crawl, but mortgage credit is still humming along at just over 7% year over year, not “significantly down” like CMHC would like the public to believe.

Canada’s housing and credit bubbles are on the edge of a cliff.

#14 not 1st on 12.08.11 at 11:10 pm

Developers here in Regina talking across the board increases of 8-10% in 2012, mostly due to trades falling behind demand from the poor construction weather we had in the past 2 years. Might it be time to bail and take some off the table??

#15 Stinky the Fish on 12.08.11 at 11:11 pm

I usually find something that I quietly disagree with but this time I am in complete agreement. Toronto condos will be the first hit in our real estate capsizement. That is coming from the mouth of Stinky the Fish so you gotsta believe it.

To Jimmy. I usually don’t suggest people to sell, but only in the case of GTA condos, sell now. Before the boat capsizes from down under

#16 Usuk on 12.08.11 at 11:12 pm

#4 First Place on 12.08.11 at 10:42 pm
First Again. YES!!!

Haha, u suk. Loser.

#17 Dan in Victoria on 12.08.11 at 11:12 pm

Take the money Jim. Know when you have a winning hand.
Wife is already scoping out houses.
Resistance is futile.

#18 Stinky the Fish on 12.08.11 at 11:14 pm

@LH

I agree that cuts before hike. I want in on any bets Garth decides to take.

#19 gladiator on 12.08.11 at 11:18 pm

Garth, Bernanke said he will keep rates low. the ECB just lowered the rate by 25 beeps recently. If Carney increases the rate, it will put Canada at a huge disadvantage compared to the whole world, so he won’t do it as soon as you think.
One more thing: if you want to get more optimistic – take a stroll in the Yorkdale mall. My wife had trouble finding a parking spot and the amount of people inside was unbelievable! However, when you see all these little grasshoppers spend-spend-spend, you get kinda optimistic about Canada’s economy: the consumer will save this country; there’s still plenty of money to be spent; retailers are making a killing this season, so there’s nothing to worry about! ‘/ sarc off

#20 Bottoms_Up on 12.08.11 at 11:19 pm

In terms of the condo market and rents falling in Toronto, what do people think is a fair value for a decent location?

Do we go back to 2008 valuations? 2006? 2000? 1995?

#21 Stinky on 12.08.11 at 11:23 pm

Funniest comment I’ve read on RE in Canada

“Please. Everyone knows housing prices will double every 5 years to infinity. Eventually Canadian real estate will be worth more than the rest of the world combined. We’re that special.”

#22 Don on 12.08.11 at 11:24 pm

Well Garth…

Two years ago there were limited places to rent in Victoria, now with all the helper basement suites, condos, houses and most notably apartments for rent – all over the place. A new 2 bedroom condo downtown going for $950 a month. I called the guy cause I couldn’t believe the add. Turns out he was moving back to England and needed to rent out the place. It still amazes me that some people believe prices will continue to increase. If their logic is correct than sooner or later you will need 10 million to buy the average house. When confronted with this piece of logic the hampster seems to start to turn the wheel again until overload sets in and ignorance is their safety button. I just heard from a realtor recently that he expects the market to pick up in the winter months. That’s when I gave him the deer in the headlights stare and said, “if you believe it – it will happen”. The smart ones see the trainwreck coming and are trying to jump.

It really saddens me that most will have to learn by trial and error – and that the people they trusted led them to the cliff.

Now the talking heads are changing their tune. Going to be a lot of angry young people soon.

#23 Stop buying and watch it crash on 12.08.11 at 11:33 pm

Everyone knows the housing market is a ponzi. Bankers , mortgage brokers , and even realtors know it but they make a living lying to you. They even think you are stupid and for the most part canadians are stupid. You think any of these people are buying today? No way , in fact many realtors I know have sold their flips out. If only some of you knew how much the re industry is laughing at the sheep of today.

#24 Onthesidelines on 12.08.11 at 11:36 pm

You’d think that a glut in rentals would put pressure on prices and, ultimately, on the profitability of apartment REITs…yes?

No. Different demographic markets. — Garth

You call that a conversation?
Surely you can spare a few more words to clarify the point you’re making.

Study the REIT holdings. I know it involves actual work, but you can do it. — Garth

#25 Smoking Man on 12.08.11 at 11:38 pm

None of you bubble heads get it, including Gartho

The heard does not look at Price to Income when they sign zee-papers.

They look at Rent vs Mortgage, don’t consider othet costs, blinded by Granet.

Right now Mortgage look damb good vs rent. Who wants to live next door to low lifes….

Hence RE rocks in they little minds. Get Enough little minds they make a market.

Not one of you bubble heads and basment dwellers comment on the gift I gave you…

http://www.romspen.com/

10% returns, year after year, I got % big ones in there. But no you chicken shits wont even investigate has the word Mortgage.

Thats why Im rich and your poor

#26 Uh Oh Canada on 12.08.11 at 11:39 pm

My bet is on interest rates dropping or staying the same for next year- although I personally want to see a rate hike. C is well aware that sustaining the bubble is less painful than seeing it pop. Consider the low interest rate as government aid to those in debt. This is less of a headache than massive bankruptcy and foreclosures.

No rate drop. — Garth

#27 Stop buying and watch it crash on 12.08.11 at 11:42 pm

Yorkdale mall is full …. crazy full of window shoppers. It’s hard to move around but once in the empty stores you pick and buy with no line ups. The only sales is from the food court or food related sales. Asked a few employees how are the sales and the one word used over and over is SLOW! The economy is in bad shape and everyone is feeling it. Drive around Toronto or GTA and see the many empty closed stores for lease signs everywhere. Not a sign of a booming economy where consumers are spending.

#28 Canadian Watchdog on 12.08.11 at 11:44 pm

Say goodbye to your purchasing power everybody. The CAD is about to plummet. http://i39.tinypic.com/2s9rhbn.png

Good Luck Carney.

#29 Sams Mango on 12.08.11 at 11:47 pm

So Garth if this is the case, and condo’s get dumped, these expanding family folks will need to live somewhere – where do they go?

#30 House on 12.08.11 at 11:57 pm

What is your definition of “thundered”? To others it sounded more like a squeak. I am sure that he will be allowed to raise interest rates after 2016, if Stevie has reducted the Deficit. After all we can count on Stats Can to create low inflation rates and new self-employed jobs.

#31 Steven Rowlandson on 12.09.11 at 12:08 am

Why the condo orgy? Price, of course. The average SFH in 416 is $776,000, but the average condo is $365,151. That means trendy young cashless, house-horny, scooter-riding, pansy twentysomethings can buy units on credit cards, thanks to our kind banks and the government-backed insurance which wipes away lender risk. Besides, real estate always goes up, right?

People must be absolutely retarded to pay so much for so little, especially on credit at the bottom of an interest rate cycle.

#32 Unhappy House hunter on 12.09.11 at 12:12 am

Just read the Bank of Canada’s warning, Jimmy should too. By the way thank you for blogging my story on Tuesday, it’s “Tony’. Well I am not really a Tony, but thanks just the same.

#33 nonplused on 12.09.11 at 12:14 am

Nice post again tonight Garth. But I think the fuse that sets off the fireworks is still the Vancouver condo market. The Bank of Canada makes it’s decisions for Toronto, not the “western territories” (said with a Jean Chretien like accent). Mark Carney couldn’t give a rat’s ass what’s going on west of Ontario, so just as trying to save the rust belt in the east drove things to the moon in the west, when things out east normalize the west will get killed. It’ll be 1982 all over again.

#34 Nostradamus Le Mad Vlad on 12.09.11 at 12:56 am


“And run. Pocket the profit. You’re smart to consider renting, Jim boy. But dump the box. Wise to read this long-suffering blog. And astute to obey your wife’s every wish.” — Not sure if Jim should obey — there has to be a rational exchange of ideas for the betterment of the whole.

So dump the box ASAP. That was easy, wasn’t it? Renting offers freedom. Owning enslaves one to bondage. Choose wisely, as life is short.

“. . . disequilibrium . . .” — That’s a big word, possibly containing at least one syllable, but implies precisely what? We’re screwed? Known that for a couple of years now.

“. . . little debt piggies could soon become banker bacon.” — Count me in for an extra-large bbq’d spam and crispy bacon sandwich, with honey mustard as an accompaniment!
*
#13 Kevin — “Canada’s housing and credit bubbles are on the edge of a cliff.”
— plus —
#29 Canadian Watchdog — “The CAD is about to plummet.”
— equals —
#17 Dan in Victoria — “Resistance is futile.”

Nicely summed up in three words or less — Resistance Is Futile. It appears we have decapitated our leg to spite our face, and there’s only one wheel on the wagon now.
*
3:47 clip The police state protects the 1%; 5:43 clip GS dictatorship (Hitler’s dream); Build-My-Burger Italian cash gone? HSBC in UK Yes, they’re sharks, and Loan Sharks; Labor Force Austrians, Greeks and Brits. finish in top three; Lights or Candles? Electric rates are blasting off; Skilled Immigrants Interesting that BC wants to bring in workers. There’s enough unemployment in this province for apprenticeships to be given out to locals.

Vein Scanners In a previous link Thursday, it said Italy had done away with cash, and this article seems to elaborate further; Household worth plummets — US Fed; US Cities High – Low employment stats; Forbes gives nice account of Ron Paul; USAF “Obama Admin Bans US Aircraft Maker, Favors Non-US Firm with Ties to Iran on Light Aircraft Project”; 8:27 clip Krugman vs. Ferguson — stimulus or austerity? Toilet Paper Restrictions in Spain’s schools. Austerity and stuff; Euro Fanning the flames, and Giving up Sovereignty to save the Euro; European banks have 1.5 tri. in toxic assets, ‘tho only the Irish seems to be named here;
*
FEMA Camps “The government is not even bothering to hide the FEMA camps anymore. All those who have said it was only a “Conspiracy Theory” are now seeing it is real.”; Kissinger Associates Oil, guns and more; Defense Contractor ditches Microsoft’s Cloud; New Zealand Growing food becomes govt. privilege rather than a human right; The Confederation Bridge wasn’t the only one to have excessive wind power today; UFO, giant star or Harper’s vain ego? Fukushima Diary ‘Everything is out of control’ (two languages); Iran Clip. Spy drone brought down undamaged by Iranian military.

Montana illegally enforces Agenda 21 on citizens; Hungary destroys all Monsanto GMO corn fields; Full Lunar Eclipse when we can see the DSOTM in glorious nothingness! False Censorship Remember Dajaz1.com? It was one of the sites seized over the Thanksgiving holiday weekend back in 2010.

#35 George the American on 12.09.11 at 1:04 am

Sams Mango on 12.08.11 at 11:47 pm
So Garth if this is the case, and condo’s get dumped, these expanding family folks will need to live somewhere – where do they go?
——————————————————————

That’s what people were saying in the US at the top of our housing bubble. People where in bidding wars for everything and now there are MILLIONS of empty homes/condo’s and millions are under water. Are Canadians really that ignorant not to understand what a housing bubble can do and this even after watching it happen to the US and other parts of the world. The question is how clueless can Canadians be to their own housing bubble? It’s like watching the same movie and expecting a different ending.

#36 Kathy on 12.09.11 at 1:06 am

Sams Mango(#30)-I thought same:people must live somewhere=rents will go up.No honey it won’t happen.Those who won’t be able to sell will try to rent out.What happened to our neighbors?Where did they go?Mom and dad?

#37 45north on 12.09.11 at 1:12 am

Jim’s big idea is to lease a house, and pay for it by renting his condo. “Seems like a win-win.

Jimmy, here’s two things you need to do: read your mortgage.

Second, find out what is happening in the US right now. Its all on the internet, if you don’t like one source find another.

Jimmy you won’t do either one. Cause you too damn smart. Lets see how smart you look in a year – December 2012.

#38 Edmonton Dave on 12.09.11 at 1:15 am

Was in the mall yesterday, not the MAUL, but a smaller one, so quiet you would think it was summer. 3 young kids (workers) idling in a phone store, bored to death, nobody to serve. Empty stores, wow, I’m glad I’m not in retail !!! Really quiet in Oilberta as far as I can see.

#39 From kits on 12.09.11 at 1:16 am

t-minus 30 days till listing…it feels like we are swimming upstream with the decision…does that make it right

we’ve been successfully brainwashed by this blog

#40 Waterloo Resident on 12.09.11 at 1:18 am

What to see what’s happening to the European mess right now? : Take a look at the Interest rate on 1 year government bonds of Greece, it up to almost 400% !

Yeah, that’s right, is at 350% right now.

http://www.bloomberg.com/apps/quote?ticker=GGGB1YR:IND

#41 Victor on 12.09.11 at 1:21 am

#26 Smoking Man

I like your posts but no thanks on the pumping…even if your intentions are good, you’re naive to think anyone should be listening to anonymous online touts.

#42 HouseBuster on 12.09.11 at 1:22 am

The bubble can’t go on forever. Get out while you can.

#43 BC Bring Cash on 12.09.11 at 1:23 am

Jimmy’s description of people buying Condo’s in Liberty Village on lines of credit as a down payment is old news. Back in the days of the 1980’s for example the 2nd & 3rd mortgage options was the name of game. Anything to get a mortgage to finance the purchase.

#44 Van guy blazin kush on 12.09.11 at 1:32 am

#134 Grantmi on 12.08.11 at 4:39 pm

Garth, for us iPad or tablet users. And chance of adding a home link at the bottom of your main page?

Makes it easier to get back to the beginning then fingering up the screen.

Answer:
Tap the page heading on top of the address bar to get back to the top. It’s getting to the bottom to input a post that’s the problem.

#45 darko on 12.09.11 at 1:33 am

“… selling and investing the $420,000…”…But what if Jimmy still owes a bulk of that original house cost – a much more likely scenario than having the box paid off in 5 years? The price gain alone, plus a small down payment, is hardly an investment that could generate bulk of a house rent…

#46 earlymidlifecrisis on 12.09.11 at 1:35 am

According to local news, condo starts in van are up while housing starts are down. Even with the slowdown i still see buildings going up everywhere there’s room and the COV changing zoning to accomodate higher density plus the big city hall push for laneway houses.

#47 Carlyle on 12.09.11 at 1:46 am

You’d think that a glut in rentals would put pressure on prices and, ultimately, on the profitability of apartment REITs…yes?

No. Different demographic markets. — Garth

———-

But if there is a glut of condo rentals that will drive rents down. 1 bdr Apartments in the GTA that arent ratholes rent for 900 – 1000. 1bdr Condos rent for 1200 – 1500 depending on location. If condos drop by even a couple 100 a month in rent wouldn’t people in apartments start looking at moving up?

#48 jungdung on 12.09.11 at 2:00 am

Hey ‘First Place’, google ‘histrionic personality disorder’ to find out what you’re first at.

#49 Popeye the sailor man on 12.09.11 at 2:04 am

I got off my ship in a North Vancouver ship yard and then sat in the Vancouver airport by my gate for three hours, I played with my smart phone, and read the paper, and watched the four vender stalls selling toys, jewellery, and other trinkets. The only one that got off his chair was the toy sales person to demonstrate his toys, but I did not see a single sale out of all four. Of course I could of missed a few but the point is I watched people avoid even making eye contact with the venders. Even the employee for the fancy sitting lounge was outside trying to draw customers in like he was a promoter for a XXX peepshow.

Fast Food, newspapers, and beer was the only thing moving as far as I could see. I got two of the three and got a free tour of the vacant lounge.

#50 CHMC + Mark "the Talk" Carney = Housing bubble on 12.09.11 at 2:14 am

Canada’s housing bubble has gotton to such stupid unthinkable levels that the gutless Mark “the talk” Carney feels the need to slow the bubble from getting out of hand. The problem Mark “the Talk” Carney is it’s to late. I know of three people with no saving and indebt paying their mortgage using their HELOC. Yes Mark “the talk” Carney you helped distory Canada. These people will walk. The worst part is if you don’t stop lending to more deadbeats the crash and debt left over will just get that much bigger. People will borrow and borrow until they are maxed out and bankrupt. Are you bankers really that stupid? Mark Are you that stupid? Mark do you even understand economics? Mark did you not see what happened in the US? Mark how does a stupid man like you get to run the BoC? Being in the Bigboys club must be nice. Bush jr is in your club?

#51 Jane on 12.09.11 at 2:23 am

Garth, would you please write more on the reasons rates will rise, and likewise why they will not fall? Thanks.

Done. — Garth

#52 home Inspection Victim on 12.09.11 at 2:23 am

EverEverybody out there buying a home built between 1982 and 1995, take another $20,000 off your bid. Those Poly-B lines are an upcoming problem, some insurance companies are already willing to loose business before they insure it. If the Home Inspector tells you it’s Poly-B, fail the inspection and insist the house be re-plumbed before you consider buying. PEX is still ok (year 2000+ in North America, long history in Europe.)

#53 Free Market on 12.09.11 at 2:40 am

The downturn has begun. I’ve had two realturds cold call me asking for referrals to people that may want to BUY or sell. Also I asked a realtor if they would write up a offer 50% of asking on some land. Didn’t get laughed at!

#54 Jimbo on 12.09.11 at 2:48 am

I’ve done well, financially, and retired a decade ago at a very young age. Since then I’ve grown my portfolio considerably.

Along with many good decisions, I’ve also made many mistakes along the way. Someone asked me recently what my biggest investment mistake has been. I only had to think about it for a second before coming up with my answer… My #1 mistake in all my years of speculative investing (and I’ve sadly made this mistake several times) is to not recognize when it is time to take the winnings and run.

Jimmy, you won. Danger lies ahead. Cash out. Take the money. If you don’t, in a couple years you may look back and think, “I threw away a $134K tax free profit because I knew better. What was I thinking?”

Move on to other investments – and stay diverse and liquid. Real estate is not the only game in town.

#55 new-era on 12.09.11 at 3:34 am

Keep your condo, and buy several more.

Someone has to fuel this housing bonanza!!!!

Give this thing several good last humps.

Therefore we can get a greater fall. and a Crater landing instead of a hard landing!!!

#56 new-era on 12.09.11 at 3:40 am

BTW Garth, don’t think Carney will raise interest rates,

You’ve been saying it for quite some time, but nothing.
I believe its the right thing to do, but I also believe we have gone too far into debt to get ourselves out.

The only thing “POLITICALLY” the government can do is to kick the can down the road until we run out of road.

#57 Aussie Roy on 12.09.11 at 4:36 am

Aussie Update

Garth hope that Harley doesn’t need new wheels soon.

In another blow to Australian manufacturing, US motorcycle producer Harley-Davidson will close its South Australian subsidiary producer of cast wheels and wheel hubs, New Castalloy.

http://www.smartcompany.com.au/manufacturing/20111209-harley-davidson-shuts-south-australian-manufacturing-subsidiary-over-200-jobs-to-go.html

There goes another 40,000 jobs

AUSTRALIA’S jobs market is weakening as businesses look to cut costs to cope with a worsening global economy, economists say.

http://www.news.com.au/business/lose-their-jobs-as-business-cuts-costs/story-e6frfm1i-1226217151731#ixzz1g1YqtKea

How about those Aussie Banks, the RBA sets interest rates don’t they?.

THE ANZ Bank has moved to sever the long-standing link between Reserve Bank decisions and movements in mortgage rates, saying its interest rates will now be reviewed each month, independently of the central bank.

http://www.smh.com.au/business/anz-vows-to-go-its-own-way-on-rates-20111208-1olg5.html#ixzz1g1Z7Qtfh

A LEADING insolvency expert has warned next month will be the crunch time for many retailers feeling the pinch of higher costs and a downturn in consumer spending, with Christmas and post-holiday sales crucial for generating cashflows and keeping creditors at bay.

http://www.theage.com.au/business/make-or-break-time-for-retailers-20111208-1olf9.html#ixzz1g1ZPdZcO

Aussie retailers blame online shopping – Productivity commission say “your dreaming”.

In a move that will disappoint many sections of the retail lobby, including veteran Gerry Harvey, the Commission says even dropping the threshold to $20 – thus meaning most overseas internet purchases would need to be processed for GST – would not be cost-effective.

http://www.smartcompany.com.au/retail/20111209-productivity-commission-shoots-down-online-gst-argument-but-pushes-for-changes-to-postal-costs-trading-hours-and-zoning-laws.html

It’s a 10 – 10 months of steeper house price falls than during the GFC.

October saw the 10th consecutive month of home price falls. That’s the same number of months that prices fell during the GFC, when prices fell just 2.7% peak-to-trough on a seasonally adjusted basis. So the current decline from peak – 4.0% at the capital city level – has exceeded the falls experienced during the GFC.

http://www.macrobusiness.com.au/2011/12/rp-data-october-housing-market-overview/

No bubble, house prices only ever go up except the last 1o months, we are now at the bottom because it’s different here.

Must be the Kangaroos – LOL.

#58 Pr on 12.09.11 at 4:43 am

So many lies every where!-remax,royal lepage,C-21 crea: real estate never go down…bla, bla, bla. -Mf global; 1.6 BILLIONS missing from accounts, no main stream media talking about that! humm very stange. Thank god we have internet, this blog and news like RT news. And Those girls at,RT news, are HOT. And the news they provide are absolutely the truth,witch in this time of age is difficult to find. Watt a win win situation!

#59 Beach Girl on 12.09.11 at 5:10 am

#160 ballingsford

I will put your offer up for consideration. Now, I will not tolerate any form of Bullshit from the male gender. So, maybe you should think your proposal over. Plus, the nasty Jack Russell is my priority. It will probably be there, long after you are gone. But let us be optimistic.

I am not a firm believer in true love. But maybe we could provide Bubbles with a more stable environment. Nix A on the cats. (rodents).

As for Liberty Village, what a hellhole. Just Parkdale renamed.

#60 Onemorething on 12.09.11 at 7:07 am

Sams Mango on 12.08.11 at 11:47 pm

So Garth if this is the case, and condo’s get dumped, these expanding family folks will need to live somewhere – where do they go?

They go somewhere with rent less than 2K and and extra bedroom where else!!!!

#61 Robert Dudek on 12.09.11 at 7:12 am

Say goodbye to your purchasing power everybody. The CAD is about to plummet

If it did that would be great news!

#62 Mr. Lahey on 12.09.11 at 8:10 am

#26 Smoking Man

“Thats why I’m rich and your poor.”

Smoking Man o Smoking Man. Why do you assume all of us are bubble heads and all of us are poor? My net worth puts me in the top 1% sir. You have to stop your generalizing or you are going to offend all the blog dogs at the FASTPGFBGCParty!

#63 young & foolish on 12.09.11 at 8:14 am

Sure, bankers know what’s going on …. debt slavery has made a quiet comeback (will you feed the rentiers?)

Beach Girl says “As for Liberty Village, what a hellhole. Just Parkdale renamed.”

Parkdale used to be for the well to do, suffered a downturn after they built the Gardener Expressway, and is now making a slow comeback. Call it the dynamism of a living city. Let us know where you’re camped so we can come and dump in your neck of the woods!

It’s never been a better time to be a renter!

#64 Mr. Lahey on 12.09.11 at 8:19 am

Greetings everyone. Jim Lahey here, organizer of the FASTPGFBDCParty. Plans are going full steam ahead and I just got off the phone with the bearded one who says his jig steps are down pat. He keeps pestering me about how many blog dogs are going to be there and I have assured him that plenty are coming though a few have yet to respond. Ricky made it to Westernman’s farm late last night. Westernman was very hospitable and made Ricky dinner and a gave him a hot thermos of coffee for the drive back east which Westernman pointed out to Ricky (we don’t want Ricky ending up in BC with Westernman’s tractor). So all is going according to plan. Ricky is on the road back to the park and Ron Paul has asked for directions. He has no idea the fool he is going to be made out to be by our fearless leader the former right honourable Garth Turner, guru of financial gurus, all knowing, all seeing sage. There are still some trailers left for reservations blog dogs so please respond. The last addition to our star studded cast of performers and speakers is none other than Rita MacNeil who will be singing her Christmas carol program. See you all there!

#65 Ralph Cramdown on 12.09.11 at 8:26 am

In terms of the condo market and rents falling in Toronto, what do people think is a fair value for a decent location?

Umm… you have to decide for yourself. But know that, after people pay dumb high prices for property, and the market flames out, prices often drop through “fair value” down to “stupid cheap.”

#66 Bond junkie on 12.09.11 at 8:32 am

If there’s even a hint of a reasonable correction across this great nation (10-15%) Flaherty and friends will get the IMPP rev’d up again in no time. The correction is happening now, believe it.

#67 neo on 12.09.11 at 8:37 am

at #2mark on 12.08.11 at 10:32 pm
Any concerns?

http://worldhousingbubble.blogspot.com/2011/12/canadian-banks-heavily-involved-in-re.html

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

Hypothecation you say? Shhhhh…Don’t wake the natives…PFFTTT..Nevermind, they wouldn’t be able to wrap their heads around it even if they tried, which is why the banking system gets away with it and other egregious behaviour in the first place. Don’t look for Garth to write a post about it either.

I just heard we all die. Is that true? Should I worry? — Garth

#68 Bond junkie on 12.09.11 at 8:54 am

ps- Beachgirl you’re so clued out it’s painful. The folks currently residing on Close/Dunn/Cowan et al have more character in their nail clippings than the drones paying over a million to live in an ancient mould ridden box on Kenilworth or Waverley. White porches, lulu, strollers and starbux, the modern facade of sophistication. Enjoy it

#69 X on 12.09.11 at 9:14 am

Jim, please have your wife read the responses. It is easier for your sake. Far too many young couples have no idea that the debt they are taking on for their homes will take them almost their entire working lives to pay off. Do you really want to work to pay off your home.

#70 housedoc on 12.09.11 at 9:26 am

Liberty Village has added, and continues to add, TONS of new units since Jimmy bought in.
That means lots of competition selling OR renting.
Trendoids for sure.

“….more Vespas than Rome”. Hilarious!

#71 Fred on 12.09.11 at 9:47 am

What if…..

Canadian (and Australian) housing gets a boost from a mass exodus of refugees from Japan. The six reactors at Fukushima seem to be getting close to the so-called China Syndrome and radiation is climbing 60 miles away in Tokyo.

And……

Sovereign debt forgiveness leading to a 50% haircut for all holders of government debt. Not just Greece, but quite possibly all dollar debt in the US and Canada.

Two blacks swans on the event horizon?

#72 jess on 12.09.11 at 9:50 am

Warnings who really heeds em’?

Internal control redirected to the marketing relationship damage control department (extend and pretend)

http://www.cbsnews.com/8301-18560_162-57336042/prosecuting-wall-street/?pageNum=2&tag=contentMain;contentBody

#73 Jimbo on 12.09.11 at 9:54 am

Does anbody know the number of people defaulting on their mortgages here in Canada? Are we starting to see increases?

Not the issue. It is negative equity. — Garth

#74 fancy_pants on 12.09.11 at 9:57 am

the stars are beginning to align folks. A lot of sorrow is coming to the RE realm of this country

Ironic they call that condo development Liberty village. Our new anthem may ring anew something like the US…

“the l-a-n-d of few free, and the h-o-m-e of the slave.”

#75 fancy_pants on 12.09.11 at 10:12 am

#37 Smoking Man on 12.07.11 at 11:59 pm
Westernman was very hospitable and made Ricky dinner and a gave him a hot thermos of coffee for the drive back east

damn it. I thought it was him. Apparently Ricky does not like Westernman’s coffee. why I oughta…

..I was working out my ostrich last night, performing vigorous jogs on the back roads, preparing him for the journey to the land of misfits for the FASTPGFBDCParty.

Well, wouldn’t you know it, at about half past the hour a guy drives by and tosses hot coffee out the window at my ostrich. Hot coffee right in the eyes! He reared but my savvy riding skills kept Ollie under control.

To make a long story short, we may miss the party b/c Ollie may no longer be able to make the trek. If I’m not there in person I will be in spirit. Say hi to Rita for me.

ps. keep Rita from the rice cakes if you are making them this year (she loves them but is allergic)

hugs and kisses for all, fancy and Ollie.

#76 Mr. Lahey on 12.09.11 at 10:12 am

#74 Jimbo

“Does anbody know the number of people defaulting on their mortgages here in Canada? Are we starting to see increases?”

Jimbo not a single person has defaulted in Sunnyvale Trailer Park. We all have trailers ranging in price from $20k to $40k (this is the one with the granite counter tops that the bearded oracle is staying in during the FASTPGFBDCParty). We are liquid and have entrusted our funds to Ricky who had a stellar year shorting everything connected to Europe. Hope to see you at the bash!

#77 fancy_pants on 12.09.11 at 10:13 am

#65 Mr. Lahey on 12.09.11 at 8:19 am
Westernman was very hospitable and made Ricky dinner and a gave him a hot thermos of coffee for the drive back east

damn it. I thought it was him. Apparently Ricky does not like Westernman’s coffee. why I oughta…

..I was working out my ostrich last night, performing vigorous jogs on the back roads, preparing him for the journey to the land of misfits for the FASTPGFBDCParty. Well, wouldn’t you know it, at about half past the hour a guy drives by and tosses hot coffee out the window at my ostrich. Hot coffee right in the eyes! He reared but my savy riding skills keep him under control.

To make a long story short, we may miss the party b/c Ollie may no longer be able to make the trek. If I’m not there give everyone a hug for me.

luv, fancy and Ollie.

#78 The American on 12.09.11 at 10:15 am

At #36: George, holy crap, man. Are you new here? I post on here every now and then, but I haven’t seen you before. You posted almost verbatim what I’ve been saying for months and months. It is truly amazing to see the ignorance spewing from the Canadian market. Maybe they cannot see the forest through the trees. Its actually much worse in Canada than it ever was in the U.S. on a number of levels from household debt levels, emergency rates, the Canadian STANDARD of subprime lending (little to no money down, rates reset every 5 years… yes, that is how it is done across the board in Canada. At least was was an option in the U.S. that many opted not to go for. Those who did opt for it got burned badly), everything is about real estate there right now. EVERYTHING. The definition of insanity is doing something the same over and over and expecting different results. If this definition is true, then Canadians are indeed insane as this movie’s played out several times over the past 5-6 years across the globe.

I’m in Seattle, George. What market are you in?

Also, in response to Sams Mango… Here is the answer to your question – What will happen when the bubble bursts in Canada is the same thing that happened in the U.S. and across the globe. You’re not any different, and no, you’re not special by ANY stretch of the imagination. You’ll have singles, couples, and entire families all shacking up with friends, neighbors, family, and extended family. Jobless rates will increase, spending will halt, consumer confidence will decline, and thus the downward spiral Garth has spoken of will ensue.

Vacant inventory will sky rocket, first starting with condos, then more noticeable in the peripheral neighborhoods of urban centers across the country, then ultimately hitting some urban centers all together. For example, we all know Toronto has condo sells to flippers at least 70%+. And in Vancouver, but nobody seems to want to admit it, it is at least the same amount of speculators. Anyone ever been through downtown Vancouver at night time? Its a friggin’ GHOST TOWN and maybe 15%-20% of the condo lights are ever turned on. Not only does this make for an incredibly boring experience, but it is depressing too. FLIPPERS AND INVESTORS OWN MOST OF THEM. No doubt about it. This is actually about DOUBLE what was seen in Miami, FL. Now, you do the math. Its going to be a blood bath in Toronto’s and Vancouver’s condo market. No way around it. I laugh my ass off every time I hear some speak of a “soft landing” in Canadian real estate. What’s even more interesting is I’m hearing it less and less now. People are starting to get their heads around the notion that it is going to be bigger, much bigger, than ever expected. It is called the quiet before the storm.

#79 Mr. Lahey on 12.09.11 at 10:18 am

#60 beach Girl

Good morning Beach Girl. Have you reconsidered your joining Captain Garth in the opening jig?

#80 disciple on 12.09.11 at 10:18 am

#68 neo… who would be dumb enough to put their money in financials? Divest yourselves of CIBC, RY, and the rest of the criminal syndicate. Then, perhaps, they will finally leave… (I can dream, can’t I?) Look for companies and index funds that have cash flow combined with low P/E. And don’t forget about the dividends.

#81 Dr.NickRiviera on 12.09.11 at 10:19 am

Eighty fourth!!! Yeah!!! Whooohoooo!!!!!

Seriously, what with the obsession each and EVERY DAY with all you “firsters”. Go find some Justin Bieber blog to occupy and leave us alone.

#82 Burnt Norton on 12.09.11 at 10:34 am

Look, it’s Garrett O’Turner, your long lost Irish cousin

(warning NSFW – spirited language / strong Gaelic accent)

Speaking of Déjà vu, this could be 2014 on the streets of St. John’s, NFLD…

http://www.youtube.com/watch?v=koY6kXhQDQo&feature=youtube_gdata_player

#83 Peter (NYC) on 12.09.11 at 10:43 am

to 36 George the American and 79 The American

I just got my US Citizenship 2 weeks ago – am planning to move back to Toronto in about 2 years time – agree with you both – housing is INSANE in Canada and I laugh at every suggestion for why prices will continue to levitate. Have been selling off my mother’s realestate slowly over time. Funny you should mention Georgia – I just picked up 2 single family homes in Ellenwood GA this week both cost $80,000 a piece both already have renters lined up to pay $950 per month to live in them. When I talk to Canadians about looking to the south to find real investments that work in real estate they look at me like I have an arm growing out of my head ” you will never get the appreciation that you can get buying in Vancouver or Toronto ” – to hell with appreciation – I like getting a 9% net net in my pocket (tax free even) each and every year for the rest of my life and then some !!!

#84 HolyCow on 12.09.11 at 10:46 am

Canada’s Housing Bubble has surpassed the US bubble.

http://www.newworldparty.org/2011/11/bubbles-extreme-maker-and-breaker-of.html

“…from the above chart that Americans’ household debt to income ratio peaked at approx. 124% in 2007-2008, coinciding with the peak of their housing bubble and fake economy. After the bubble burst, they have deleveraged down to approximately 105%.

Canadians’ household debt to income ratio continued soaring to 150%…”

#85 noracharles on 12.09.11 at 10:55 am

But you see, according to Matthew Slutsky, president of BuzzBuzzHome the BoC guy is sooo totally wrong dude….(dripping sarcasm here)…to quote the him from the recent globe and mail article “We are expecting to see some epic and mind-blowing new condominium buildings and sites coming to market in 2012, specifically centred around Toronto’s Yonge Street and the 905 region.”
So sad. I’ve heard a lot of things said about boring glass shoeboxes (who actually designs these? Can it be called design when it looks exactly like the one next door – all phallic glass?) in the sky but epic and mind-blowing is a new one.

#86 Mr. Lahey on 12.09.11 at 11:14 am

#84 Peter

Good for you Peter! Why are Americans so daft as to pay you $950 a month for an $80k property? Has credit completely dried up? BTW are you coming to the FASTGFBDCParty? We would love to have some Wall Street types there. Our fearless leader is going to kick back and let loose with a jog to start the Hoedown! Hope to see you there!

#87 thinktank on 12.09.11 at 11:17 am

Bulls Eye … fabulous post Garth … factual and on point (are you anything but ??!! LOL ) – I live in Oakville and in a time when you dont expect to see a lot of for sale signs – Im seeing plenty. There are 2 ways to look at this in my humble opinion given that MOST people would NOT chose to list in the Christmas season;

1) an optimist would say “no one really wants to BUY at this time of year – who want to move in the dead of winter” (assuming a 30-60 day closing ) – “this will turn around in the spring”

2) the pessimist would say “why is the house STILL for sale – assuming you DIDNT just LIST at this time of year I am going to assume its been listed for a while – say late Sept. thru to mid October – and if so by default you have evidence of a slowdown. No buyers or we WOULD being seing more SOLD signs.

Personally I think it’s the latter and in the words of George RR Martin and his masterpiece book – Game of Thrones –

“WINTER IS COMING”

#88 Mr. Lahey on 12.09.11 at 11:21 am

#78 Fancy Pants

“To make a long story short, we may miss the party b/c Ollie may no longer be able to make the trek. If I’m not there give everyone a hug for me.”

Damn that Ricky!!! It’s hard to change a shit leopard’s spots! My heart felt apologies and please try to make it out. I will personally see to it that Ricky apologizes. You don’t want to miss the FASTPGFBDCParty!

#89 Mr. Lee on 12.09.11 at 11:33 am

Come to Calgary. According to Presstitute central (Calgary Herald) sales of homes in Calgary for November reached its highest in 5 years. All is well in Cow Town folks……jobs, sunshine, harps and good times.

#90 Rob M on 12.09.11 at 11:38 am

I have been trying to convince one of my friends to sell his condo-townhouse in Toronto for some time now they are probably up about 75k.

His logic is as follows “If prices come down, then we’ll be able to move and buy a nicer house when that happens.”

really???

What about losing all that equity, why not crystallize those gains and rent a place for 2-3 years. Why not invest the net proceeds in a balanced portfolio as Garth says and watch this massive bubble deflate?

The sad thing is there are a lot of people like this who will suffer when the inevitable occurs.

#91 Daisy Mae on 12.09.11 at 11:39 am

GLADIATOR: “However, when you see all these little grasshoppers spend-spend-spend, you get kinda optimistic about Canada’s economy: the consumer will save this country; there’s still plenty of money to be spent….”

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

It’s borrowed money they’re spending…

#92 Bond junkie on 12.09.11 at 11:46 am

#79- The American

Kinda ironic that the pot is calling the kettle black, no? From what I’ve read, and correct me if I’m wrong here, is that Seattle has been one of the most well insulated markets in your entire country, peak to trough about -15%. That’s hardly enough to cover transaction costs here in Toronto. My guess is that if and when the alarm bells start ringing, the 416 will have a similar experience to your market in which case housing stays EXPENSIVE, even if it’s down 20%, big deal. And if the houses are stupid, condo prices will also remain elevated as they are the only marginal alternative to living life on the GO train or Gardiner. The 905’ers on this blog already know all about that. Don’t get me wrong, I’m not trying to assert that 416 is in a class by itself, it’s simply the best Canada has to offer and is miles apart from Miami. Apples to apples my friend.

#93 Brad in Calgary on 12.09.11 at 11:49 am

“adverse economic shock”

“his plans to raise interest rates next year”

Those things won’t happen together.
Unless you think inflation is going to get out of control, which I know you don’t.
So let’s keep the obvious contradictions to a minimum please.

#94 Beach Girl on 12.09.11 at 11:57 am

#52 Jane on 12.09.11 at 2:23 am

Garth, would you please write more on the reasons rates will rise, and likewise why they will not fall? Thanks.

Done. — Garth

__

I am interested as well.

____

#64 Young & Foolish

Beach Girl says “As for Liberty Village, what a hellhole. Just Parkdale renamed.”

Parkdale used to be for the well to do, suffered a downturn after they built the Gardener Expressway, and is now making a slow comeback. Call it the dynamism of a living city. Let us know where you’re camped so we can come and dump in your neck of the woods!

_____

WOW, your moniker is correct.

I used to own a real 3 story SFH on Cowan Avenue, not a Condo box.

What a complete shithole. Low level prostitutes, drug addicts, basically ill equipped mental people with next to no assistance. Immigrants on Dunn Avenue, getting fleeced by landlords in sub housing, with zip prospect of making it good. I know these people. A lot are suicidal. And the cold from the water, when you come from a warm climate. Eating out of dollar stores. Nice to enjoy your life in that environment.

Slow comeback, are you nuts. That will never happen in your lifetime. I thought that 30 years ago, it is worse now.

That is a real vibrant area Moron? Young trendies also get older, and realize where the hell am I living? Notice buddy and wife and child can’t wait to get out.

Dynamism of the city, do you think you are playing a part of that. Only thing in Liberty Village is a grocery store, LCBO, gym and some faltering restaurants, and all the young trendies who grew up in the suburbs avoiding the true down and outs.

Regarding my address, I own 5 properties, which one are you interested in?

_____

#69

Bond junkie on 12.09.11 at 8:54 am

ps- Beachgirl you’re so clued out it’s painful. The folks currently residing on Close/Dunn/Cowan et al have more character in their nail clippings than the drones paying over a million to live in an ancient mould ridden box on Kenilworth or Waverley. White porches, lulu, strollers and starbux, the modern facade of sophistication. Enjoy it

___

Miss Daisy and I are quite content.

Oh, as for character of the poor residents of this totally crap area of the city. They also have more vomit, snot, phlegm. It is truly disgusting down there, are you serious?

#80 Mr. Lahey on 12.09.11 at 10:18 am

#60 beach Girl

Good morning Beach Girl. Have you reconsidered your joining Captain Garth in the opening jig?

___

Now, calm down. If I said I was going to attend your shindig, I will. You sound like an anxious beau begging for a date at the prom. RELAX.

#95 ADI T on 12.09.11 at 12:03 pm

People are tempted to call ‘idiots’ the ones who believe the prices would go up forever. I think, this is not fair.

There is lots of frustration related with this housing market but remember, the ones who you are calling ‘idiots’ might be just victims. The ‘idiots’ can be your friends or your relatives and their beliefs have been manipulated by the current system.

There are lots of really smart people who are making really bad financial decisions and they are far from being idiots.

On the other hand, even the ones who avoid loosing value in this housing market, have good chances to be tricked into other economic traps of this system.

So… don’t laugh too early. One day you might well qualify into ‘idiot’ category… :)

#96 Living in AB on 12.09.11 at 12:11 pm

I feel no pitty for the speckers. They are the reason for this mess.

#97 a prairie dawg on 12.09.11 at 12:12 pm

#85 HolyCow

Canada’s Housing Bubble has surpassed the US bubble.

– – –

That’s because we’re winners and it’s different here. :|

Oh, and I also have a toll bridge for sale. Cheap.

#98 Sean on 12.09.11 at 12:14 pm

I’m 25 and rent a downtown condo in Toronto. We pay 2300 for a 2 bed/3 bath/2floor unit and the list on mls of similar units in the building are 540k+

All my friends also rent. We make decent incomes between 60k to 100k. All of us share either two or three bedroom places.

It is a fact that ever single one of us rents from a foreign investor. My landlord has parents in China and they own a couple 500k+ units. Other have middle eastern and various Asian owners. The rich building I live in is mostly rented by young people, I know from speaking to them they all rent.

What are we supposed to do? A decent small unit should run me 180-240k max (3 or 4 x income?). Getting constant pressure from family to stop wasting on rent but the prices just seem insane. Sometimes we seem like suckers paying the landlords mortgage, but thinking long term, who wants to pay these prices on a 20-30 year mortgage???

#99 Form Man on 12.09.11 at 12:14 pm

#167 Devil’s Advocate yesterday

glad to have you back buddy !

I thought you were signing off this blog for good ?
sorry to hear that the slow sales market has caused you to have to downsize your automobile. What happened to the ever increasing volumes you were crowing about earlier ?

Mr. Lahey

here is hoping you extend an invite to DA to the christmas party ( he definitely will need financial assistance to attend, he has fallen on hard times lately )

#100 Peter (NYC) on 12.09.11 at 12:23 pm

#87 Mr. Lahey – I don’t understand FASTGFBDCParty – in case it was not a joke.

There are any number of cities in the US today where a home built in the last ten years can be bought for $85 – $110, 000 and can be rented out for $950 per month. Atlanta, Phoenix, Jacksonville, Columbia SC – I mention only these three because these are cities that have real economies that support their underlying fundamentals – I wouldn’t buy in Las Vegas or some other places. Real Estate down here is a four letter word. People laugh at you if you suggest to invest now. Which tells me that it is probably the right time to be stepping in. I think people will one day have the same attitude in places like Woodbridge ON, Kelowna, and other towns that have homes in nosebleed territory – only then will I buy there. Right now I am scouring the US looking for distressed deals – taking out as many Fannie Mae loans as the US Treasury will provide. It’s crazy down here. They will give you up to 10 loans backed by Fannie Mae. 30 years fixed at 5.25% meaning that for 30 darn years you know exactly what your monthly payments will be.

Rental demand is HUGE down here. People are dying to walk away from their underwater homes and step back into the comfort and familiarity of renting. Percentage homeownership for the first time is dropping.

It’s very easy to make money in income properties in the US today. There are so many new companies being formed in so many states that I visit. All have same thing in common – young ambitious man in late 20’s buying up REOs fixing them up – renting them to well screened tenants – and then selling them at a 40% mark up to guys like me who want the exposure but don’t want to play landlord.

#101 Mr. Lahey on 12.09.11 at 12:36 pm

#87 Mr. Lahey

“Our fearless leader is going to kick back and let loose with a jog to start the Hoedown! Hope to see you there!”

Sorry folks but so there is not misunderstanding among the blog dogs attending the FASTPGFBDCParty the fearless leader of this blog, the bearded Harley riding oracle, all knowing, all seeing sage, Mr. Garth Turner will be doing a jig not a jog to start off the Hoedown. My apologies for any misunderstandings!

#102 Mr. Lahey on 12.09.11 at 12:38 pm

#91 Rob M

“What about losing all that equity, why not crystallize those gains and rent a place for 2-3 years.”

Or better yet Rob, why not invest in Sunnyvale Trailer Park where for $25k you can get yourself a great trailer with great misfits neighbours and to hell with renting! Come on down to the FASTPGFBDCParty and see the place for yourself!

#103 BPOE on 12.09.11 at 12:51 pm

If I’ve mentioned this a 1000 times. Canadians have no business taking on large debt. Vancouver is for the PROS who have CASH on hand. I feel sorry for the Canadian. They are what is called the weak bid and will be mopped up quickly by the REAL money that is attracted to BPOE

#104 Suede on 12.09.11 at 12:55 pm

Smoking man,

Your 10% per annum private mortgage investments are paid in monthly distributions as interest income – Not the most tax efficient solution.

Also these types of investments aren’t necessarily open to every Joe Sixpack as you need to be an accredited investor: Have over $1M in financial assets (non-RE) or have made $200-300k over the last few years, to name a few criteria. It’s enough paperwork and requirements to scare off the crowd to their local Term Deposit vendor.

Accredited = sophisticated enough to realize what they are investing in.

It’s to protect the company issuing the paper.

#105 live within your means on 12.09.11 at 1:11 pm

#80 Mr. Lahey on 12.09.11 at 10:18 am

Have you considered creating your own website. Sorry, but you’re polluting this one.

#106 Bond junkie on 12.09.11 at 1:15 pm

Beachgirl, last I will say on this topic. Next year I recommend you take a stroll down your old street on Halloween night to witness the dreadful eriosion that has enveloped the west end. It’s more colourful and safer than most streets you’ll find in Leaside. And wtf is the point of living in the city anyways if your ultimate goal is to insulate yourself from everything that resides within it?? Might as well ride the GO w/ the rest of the drones and save your $. Garth great post as always, I think you’ll have a hard time arguing with the fact that what you have been talking about for the past 3yrs is currently well under way across most parts of the country. The ‘correction’ is now. And yes, I HAVE been reading. Peace out

#107 GPC on 12.09.11 at 1:52 pm

“I almost think that the market is resting after the maelstrom that has occurred in the past five years,” said Mooney.

Edmonton Real Estate Board President Chris Mooney’s month end comments, posted December 5, 2011

#108 Daisy Mae on 12.09.11 at 2:00 pm

Living in AB on 12.09.11 at 12:11 pm
“I feel no pitty for the speckers. They are the reason for this mess.”

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

The Conservative government and their irresponsible decisions, is responsible for this mess.

#109 CrowdedElevatorfartz on 12.09.11 at 2:05 pm

@#107 BPOE
“Vancouver is for the PROS who have CASH on hand. I feel sorry for the Canadian. They are what is called the weak bid and will be mopped up quickly by the REAL money that is attracted to BPOE”
++++++++++++++++++++++++++++++++++++
ahhhh yes the mocking tones of the “superior intellect” aka BPOE.
Let me guess. You flash your “RoRex” out your leased Lambo driver side window whilst cruising at 30kmh up and down “Rob-some” St. Oh Look! You just passed the Star-Buck$! Stop! Pay $2 for 15 minutes at the meter and hurry in to buy a $5 coffee.
ahahahahahahahaha.
We talked about your spend thrift ways before. Back in your cage and no supper for you.

#110 Two-thirds on 12.09.11 at 2:06 pm

#158 betamax on 12.08.11 at 8:33 pm

Good point. The C hinese are hoping for a soft landing, but it increasingly looks like this will not be the case (even according to MSM):

http://business.financialpost.com/2011/12/09/risk-of-china-hard-landing-rising/

Too bad some may qualify this as “doomer talk.”

Many “D’s” are circling around the globe, waiting to land:

– Debt reduction
– Demand destruction
– Deflation

#111 Ammo & Viagra on 12.09.11 at 2:13 pm

#87 Mr. Lahey,
I dunno, I can’t see garth jogging anywhere..lol

Damn weapons keep falling out of my holsters. — Garth

#112 GTA Girl on 12.09.11 at 2:16 pm

#86 The BuzzBuzz Home dude (Slutsky) had it out on twitter with another condo pumper from UrbanNation (@benmyers) yesterday. Was documented by a Globe & Mail reporter, who has been speaking very Garth-esque words.

From: @syladurantaye Steve Ladurantaye (Globe & Mail)
And a hearty #FF to @islutsky and @benmyers29, for no other reason than they may start bickering again and you can watch in real time.

If you follow Steve’s Twitter feed you will now see them arguing.

Steve documents the exchanges here: http://ladurantaye.tumblr.com/post/13954077800/condo-guys-bicker-over-condos

Things must be bad if these two condo pumpers are arguing publicly.

#113 Ammo & Viagra on 12.09.11 at 2:16 pm

sorry mr.L i just read #102

#114 Junius on 12.09.11 at 2:22 pm

U.S. Household net worth down $2.4 Trillion last quarter, Real Estate down $6.6 Trillion. More to go.

http://www.calculatedriskblog.com/2011/12/q3-flow-of-funds-household-net-worth.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+CalculatedRisk+%28Calculated+Risk%29&m=1

#115 Bill Gable on 12.09.11 at 2:32 pm

TTMAR -take the money and run. Do you see that blinding light ahead? That is a train. The debt train, and it is about to eat a huge hole in a lot of people’s fiscal existence.
One small Victory for Mr. Turner – my Doctor has been reading this blog since I got her talking RE last year.
She sold yesterday. Killer, clean deal. Buyer from Russia. Cash.
HRM is now big -this city is awash in Russians looking to invest.
How do you say sucker in Russian?

#116 zeeman1 on 12.09.11 at 2:34 pm

“That means trendy young cashless, house-horny, scooter-riding, pansy twentysomethings can buy units on credit cards”

Garth, you just described most of the people in my neighborhood.

#117 Junius on 12.09.11 at 2:34 pm

#104 BPOE,

You said, ” Vancouver is for the PROS who have CASH on hand.”

The PROS with cash left Vancouver long ago. All that are left are the Wannabes like you are your type. You are delusional.

#118 spaceman on 12.09.11 at 2:40 pm

I have a good, if not great Realtor, I joked about a “Rich Dad seminar” I had been to, and he opened up about his Real Estate Experience. He has taken the seminars, “How to get rich quick” So his take ? 2005 to now, bought 6 properties, condos mostly, but got tired of renting them out, sold every one of them, (didn’t ask how much he made) the last one was his own house, sat on the market for 4 months, price drop 3 times, sold
for $350,000 original asking price was $425,000.

When a Realtor is dumping all his property holdings, you know the gig is up.

PS this is in Victoria.

#119 pablo on 12.09.11 at 2:43 pm

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.-garth- from previous post; seduction. About time you had something to say that I can whole heartedly agree with.

All banksters should be jailed.

#120 zeeman1 on 12.09.11 at 2:43 pm

Smoking Man.

10% guaranteed returns? Really? Madoff anyone?

By the way, your investment buddy protege you mentioned yesterday – those guys are a dime a dozen and begging to take pay cuts these days so no surprise he stayed at his firm.

#121 RL on 12.09.11 at 2:50 pm

So you have all these condo buildings with maybe 30 to 40% occupancy – with the developer paying the strata fees on the un-occupied units – who pays when the Developer goes under – do the people in the 30% of the occupied units have to come up with that.

How long are the Lenders going to pay after the developer defaults – Sounds like the Leaky Condo fiasco out West some years back

Taxes, Utilities, Maintenance fees, Contingency Funds still have to be paid…

#122 jess on 12.09.11 at 2:52 pm

leisure society has arrived!

Upgraded Asimo: Most Advanced Robot Ever 2011

http://www.youtube.com/watch?v=ITbSBhhEiZo

#123 Bottoms_Up on 12.09.11 at 3:07 pm

#79 The American on 12.09.11 at 10:15 am
———————————————
I’ve got a question for you.

Why do you care so much about Canadian real estate?

#124 Mr. Lahey on 12.09.11 at 3:11 pm

#106 Live Within Your Means

#80 Mr. Lahey on 12.09.11 at 10:18 am

“Have you considered creating your own website. Sorry, but you’re polluting this one.”

Well live within your means sorry you feel that way. You are the first to say so and the gent who runs this blog has yet to tell me but if the majority feel that way well by all means once the FASTPGFBDCParty is over I shall pack my bags and leave!

#125 Mr. Lahey on 12.09.11 at 3:21 pm

#101 Peter

“Rental demand is HUGE down here. People are dying to walk away from their underwater homes and step back into the comfort and familiarity of renting. Percentage homeownership for the first time is dropping.”

Thanks for the explanation Peter. My question still remains. Can these same tenants not access credit at 5.25% because at that rate they would be better off buying a $80k-$100k home than renting it for $950 a month. How much could a 5.25% mortgage be on a $80k home? $400 a month? Less than half of the $950 a month they are paying in rent. It is good for you to be sure and congrats but can’t these folks see how they are wasting double their mortgage payment each month in rent? Even ultra doomer Marc Faber thinks these types of homes are great buys. They are not going to $30k for sure. The FASTPGFBDCParty stands for the First Annual Sunnyvale Trailer Park Greater Fool Blog Dog Christmas Party. Hope to see you there!

#126 Mr. Lahey on 12.09.11 at 3:25 pm

#100 Form Man

“Mr. Lahey,here is hoping you extend an invite to DA to the christmas party ( he definitely will need financial assistance to attend, he has fallen on hard times lately “.

Any and all blog dogs are invited in the spirit of the season Form Man. We will definitely provide whatever assistance is needed as I have already mentioned, good ol Ricky, en route back from Westernman’s farm had a stellar year with the Sunnyvale Slush Fund. For a Grade 10 dropout he really clued into the financial markets. See you at the Hoedown Form Man.

#127 SLN on 12.09.11 at 3:39 pm

Anyone know where a regular Canadian can get information on Canadian Banks? ie: exposure to foreign markets, loan-loss ratios, the results of the latest stress-tests, third party risk in regards to the Euro crisis, etc?

our banking system in notoriously opaque, but we get these vague assurances about their soundness.

I found a little bit of data on our loan-loss reserves as compared to those of other banks and that data was troubling. But, after days and days of searching I can’t find anything else that is solid.

thanks.

#128 sam.i.am on 12.09.11 at 3:40 pm

Hey Peter NYC – Sounds interesting. I am same as you recent DC looking to return in a few years. I do have an interest in RE investing but do not want to be a landlord. Sounds like there are ways around active management. Care to share details, or provide pointers with more info?

#129 Beach Girl on 12.09.11 at 3:40 pm

#107 Bond Man

I rented an apartment for 6 months in 2010, on Springhurst Avenue for myself and a business partner as we had a large contract. That area is the most depressing site in the city. At least I could leave. Only good thing there was an Indian take out. Rest sucked.

You might like it, to each his own.

#130 Junius on 12.09.11 at 3:40 pm

An interesting stat out of the Fed report I posted at #115. I bet the numbers are similar in Canada:

“Note: about 30.3% of owner occupied households have no mortgage debt as of April 2010. So the approximately 52+ million households with mortgages have far less than 38.7% equity – and, according to CoreLogic, about 10.7 million households have negative equity.”

So roughly 1/3 of the population is mortgage free. However most of those with mortgages have little, no or negative equity. Scary stuff.

#131 Junius on 12.09.11 at 3:43 pm

#36 George the American,

You asked, “Are Canadians really that ignorant not to understand what a housing bubble can do and this even after watching it happen to the US and other parts of the world.”

The obvious answer is Yes! Of course, many do not believe that but I would bet if a poll where conducted the majority would believe it is different here. Which is why were are going to be in so much trouble.

#132 gladiator on 12.09.11 at 3:44 pm

sucker in Russian is “loh”, as in “Loch Ness”

#133 45north on 12.09.11 at 4:06 pm

#51 Mark Carney: Mark did you not see what happened in the US? Mark how does a stupid man like you get to run the BoC?

that’s harsh

just a minute we just had a federal election and in Ontario we just had a provincial election. You would think that someone would have mentioned the housing bubble. Not a word.

what about the NDP, what about the Liberal Party? not a word

what is Mark Carney going to do – unilaterally raise interest rates to 2%? stop the housing market dead in its tracks? create a depression? He would rather not. Maybe he will wait for a total shit storm our of Europe, then raise interest rates to 2%.

#134 45north on 12.09.11 at 4:24 pm

The American: talking about how the Canadian housing market is going to pop:

People are starting to get their heads around the notion that it is going to be bigger, much bigger, than ever expected. It is called the quiet before the storm.

well maybe they are starting to get it but most don’t. Most people think that they can vote in somebody that is going to fix it. It’s more than think. Belief in the housing market is a core belief. Politicians know this. They know it in their heads, their hearts and their toes.

#135 An Cat Dubh on 12.09.11 at 4:48 pm

I read this in a real estate magazine from the Okanagan a couple of days ago.
-In Penticton, a top end property that listed for $1.4 million in 2009 sold recently for 730K. Nearly 50% drop. A local realtor believes price drops are probably over, as he says that a property he bought for 215K a year ago sold for 216K. (I would have got more of a return by hiding the $$ under a mattress). I wonder if he believes in the flying spaghetti monster also :).

I like the pic of the piece of crap Dog Neon, one of the worst cars made in the last30 years. Say good riddence to Neon.

#136 Bottoms_Up on 12.09.11 at 5:41 pm

#120 pablo on 12.09.11 at 2:43 pm
——————————————
I can’t believe that those numbers are true.

I bet if we knew the entire story it would sound differently.

Such as: they have a co-signer, or the monthly income is actually double that etc.

#137 China Bubble Bursting on 12.09.11 at 5:47 pm

http://www.cnbc.com/id/45610526

Headline news on CNBC! Now thats not good!!

Didn’t the chinese also love buying in Toronto and Vancouver ??? Look out below!!!

#138 Abitibidoug on 12.09.11 at 6:01 pm

I live in London and got into a conversation at work with a younger guy (mid 20’s) who has been contemplating buying a house on a piece of rural property near Lucan, north of the city. I believe the asking price is in the mid 300’s. I advised him to look at this sad, pathetic blog before acting in haste. There, I did my good deed for the day, possibly saving him from a big financial headache.

Yeah, who needs friends anyway? — Garth

#139 Peter (NYC) on 12.09.11 at 6:13 pm

129 sam.i.am

Sure – happy to give you insights into some of what I do.

If you would like a starting point try http://www.jasonhartman.com listen to his podcasts. he’s pretty good at connecting people to the various turnkey rehabbers throughout the country. You will be paying him a commission for every property you buy.

If you don’t want foreclosure type properties – Here is a neat little student housing community that I bought into. Not the highest return – not like buying foreclosures – but this is the most headache free realestate that I ever purchased in my life http://www.retreatcolumbia.com/ the salesperson there is Brandy Bradley she recommended the 5 unit – I bought two – sellers were keen to negotiate on price – I have never had so much as a slight headache on either one. I basically bought insurance for each signed the paper work and just get a check each month for doing nothing. When the units went on sale in 2008 they were all sold in 60 days. Now Columbia SC as a whole is suffering from the housing collapse. Some investors want out b/c they need to free up some of their debt in order to qualify for other types of loans. These aren’t distressed properties b/c they cash flow quite nicely. The unit I paid $235,000 for generates monthly rental of $2,450 (gross).

I hope this is helpful – I am looking forward to the day that these deals appear in Canada.

#140 Smoking Man on 12.09.11 at 6:15 pm

Just figured out who is going to win US election next year

Obama……..

This is who it’s going to play out, Paul wins the Republican Ticket. Trump then throws his hat as an independant. Splits the right….

My Change wins………again

Watch and learn

#141 Smoking Man on 12.09.11 at 6:17 pm

Does not matter, taking to some banksters at lunch today.

Europe is taking us all down………

This is going to get ugly………

#142 a prairie dawg on 12.09.11 at 6:20 pm

#26 Smoking Man
None of you bubble heads get it…

– – –

So how are the bubble heads supposed to navigate around FAQ answer Number 1 on that website? Most blog readers aren’t accredited investors, and don’t have the kind of net worth required. It kind of makes the advice you gave less helpful than you thought.

http://www.romspen.com/investing/faq/default.aspx

Frequently Asked Questions

1. Who is qualified to invest in the Fund?
The Fund is open to accredited investors. To qualify as an accredited investor one must satisfy any one of the requirements of the applicable securities legislation “Form Schedule A”.

#143 Peter (NYC) on 12.09.11 at 6:23 pm

126 Mr. Lahey,

Your question is a good one. Simple answer is that when the investment manias turn into depression the pendulum always swings from one extreme to the other. There are deals out there right now here in the USA that just make no sense at all because they are priced so low. Any investor worth their salt with cash to invest would be nuts not to jump on it. But the mania is over – and like I said real estate in the US is a four letter word. People are afraid of what might happen to them so the buyers have disappeared.

I work on Wall Street – all of my friends are leveraged to the hilt. Not many people have money to throw around – private school for the kids, health insurance etc… there is a dirth of investors out there. Plus lots of people (myself included) have suffered real declines in their own property – so asking them to invest in my real estate – even if it is a great deal – is just so very distasteful to everyone – Canada will get there soon too I’m sure of it.

Lastly – the people who are leaving their homes typically do so under the burden of overall financial pressure. Many bought their homes with $5000 down and the home once costing $150,000 is now worth $85,000 (if they can find a buyer). Typically this individual will be bankrupt and if in a non-recourse state has walked away from his or her financial obligations to continue paying the mortgage. Short answer is NO they ABSOLUTELY do not qualify for the mortgage today based on financial/credit history. Phoenix would look very different today if the locals could get their hands on credit to buy up some of these insanely low priced deals. This is what a total collapse/meltdown in housing looks like. The only buyers out there are the lucky folks with cash or borrowing capacity. I have no cash right now to use as a downpayment – but as soon as I get some when my bonus gets paid in February – you know exactly what I’m buying !!!! This is precisely what Garth refers to in Money Road as Vulture Investing. I am not a true vulture because I am not buying from the bank – not my cup of tea – I am happy to pay a mark up and be the second man because this is not my main line of work – I need others to do all the leg work for me.

#144 Smoking Man on 12.09.11 at 6:26 pm

USA is Going Nazi

In support of this harmful bill, Sen. Lindsey Graham (R-S.C.) explained that the bill will “basically say in law for the first time that the homeland is part of the battlefield” and people can be imprisoned without charge or trial “American citizen or not.”

Read more: http://www.businessinsider.com/secret-bill-to-be-voted-on-today-would-allow-the-military-to-sweep-up-us-citizens-at-home-or-abroad-2011-11#ixzz1g4wW4pQr
http://www.businessinsider.com/secret-bill-to-be-voted-on-today-would-allow-the-military-to-sweep-up-us-citizens-at-home-or-abroad-2011-11

This is where they will keep them, but o ya Garth says FEMA camps don’t exist….

Contract tendering

http://static.infowars.com/2011/12/i/general/kbr-doc.pdf

This is not a tin foil futures, or lick-Ron-Paul blog. Knock it off. — Garth

#145 Two-thirds on 12.09.11 at 6:41 pm

#135 45north on 12.09.11 at 4:24 pm

The American: talking about how the Canadian housing market is going to pop:

People are starting to get their heads around the notion that it is going to be bigger, much bigger, than ever expected. It is called the quiet before the storm.

well maybe they are starting to get it but most don’t. Most people think that they can vote in somebody that is going to fix it. It’s more than think. Belief in the housing market is a core belief. Politicians know this. They know it in their heads, their hearts and their toes.

————————————————-

Perhaps it has something to do with this research:

“Study Finds Ignorance Is Bliss, and Then Some
By Rick Nauert PhD Senior News Editor
Reviewed by John M. Grohol, Psy.D. on November 22, 2011

Study Finds Ignorance Is Bliss, and Then SomeTroubling new research suggests that the less people know about important complex issues such as the economy, energy consumption and the environment, the more they want to avoid becoming well-informed.

Researchers also determined that the more urgent the issue, the more people want to remain unaware.”

http://psychcentral.com/news/2011/11/22/study-finds-ignorance-is-bliss-and-then-some/31768.html

#146 Peter (NYC) on 12.09.11 at 6:45 pm

Garth please correct my last contribution to your blog the following:

so asking them to invest in my real estate – even if it is a great deal – is just so very distasteful to everyone – Canada will get there soon too I’m sure of it.

Should read

so asking them to invest in any real estate – even if it is a great deal – is just so very distasteful to everyone – Canada will get there soon too I’m sure of it.

I am not in any way associated professionally with any type of real estate sales.

#147 April on 12.09.11 at 6:53 pm

#136
This is exactly what one can expect from realtors as prices decline. They’ll be broadcasting that prices have bottomed and it’s time to ‘jump in” and I suppose some people are gullible enough to believe them and the lying realtors know it.

#148 a prairie dawg on 12.09.11 at 6:54 pm

#105 Suede

I skimmed the comments before posting but I missed yours. My bad.

#149 Al on 12.09.11 at 6:59 pm

The fact that I cannot get a parking spot in the shopping malls on weekends tells me that Ontarians have lots of cash to spend and must be confident of their ability to pay.

#150 i.see.debt.people.and. on 12.09.11 at 7:04 pm

#49 jungdung on 12.09.11 at 2:00 am

Hey ‘First Place’, google ‘histrionic personality disorder’ to find out what you’re first at.

.hey.jungdung.google.’arshole’.to find.what.you’re.made.of. youngDUNG

#151 citynews on 12.09.11 at 7:18 pm

Story on Real Estate has been saved for next week.

MLSE deal was our headliner today.

#152 JR on 12.09.11 at 7:45 pm

#99 Sean
…………………
I am in a similar situation.. But my advice, leave the family emotional nonsense out of the picture. Make your own decisions based on your assumptions, your facts, your situation and your life. Period. I did a simple buy versus rent calculation available on any banking website with basic assumptions for variables. You can do the same on this site for example. https://www.vancity.com/MortgagesRenos/MortgageCalculators/RentvsBuy/
Remember that it never makes sense to buy an asset that will decrease in value in the near future etc..
The results i got show you wouldnt break even in 25 years on your place if you payed half the rent on the place like you do now, and 6 years if you were paying the full 2300 rent yourself… Play with your own variables.. cheers

……………………..
Rent vs. Buy
Your home purchase breaks even in approximately 5.6 years.
This is based on your home’s equity minus a 7.00% sales commission paid to brokers or real estate agents when you sell your home. It also assumes your home will appreciate at 3.00% per year. If you cannot remain in your home for at least 5.6 years you should consider continuing to rent.

We calculated your breakeven point by examining how long it would take to create enough equity in your home to exceed the value of investing your cash on hand. We also accounted for differences in your monthly rent and house payments. If your rent payment is less than your net house payment, we add that monthly savings to your investment. If your house payment is less than your rent payment we subtract that amount from your investment. You may notice that on the schedule at the bottom of this report the investment value can be reported as negative. This happens if your house payment is significantly lower than your rent payment. It illustrates that if you continue to rent the extra cost of renting would, in effect, use up your cash on hand.

Results are based on: (i) the assumption that the rate of interest does not change from the current rate for the entire amortization period, (ii) other assumptions, such as the heating costs for your home, and (iii) information that you provided. We do not guarantee the calculations. Some restrictions may apply.

Loan Information
For $3,213.96 and a down payment of $31,700 you can purchase a home with a price of $540,000. This is for a 25 year mortgage at 4.000% in the amount of $522,278. Total closing costs for this loan are estimated at $42,278.25.

Your current monthly rent is $2,300. The expected inflation rate of 3.10% annually was used to estimate future rent. The rate of return for investments was entered at 6.00% after taxes.

#153 Usuk on 12.09.11 at 7:55 pm

#153 i.see.debt.people.and. on 12.09.11 at 7:04 pm
#49 jungdung on 12.09.11 at 2:00 am

Hey ‘First Place’, google ‘histrionic personality disorder’ to find out what you’re first at.

.hey.jungdung.google.’arshole’.to find.what.you’re.made.of. youngDUNG

—————————–
i.see.debt.people – we all think your contributions are worthless here. Go back to playing video games. Loser. U suk.

#154 Smoking Man on 12.09.11 at 8:08 pm

#145 a prairie dawg on 12.09.11 at 6:20 pm

You lie, they don’t check…

Nor does iteractive brokers
Or CMC markets.

You need at leased 150k
My Youngest got in last year with 50, but they jacked it.

#155 Smoking Man on 12.09.11 at 8:09 pm

#105 Suede on 12.09.11 at 12:55 pm

at 10% today who cares about paying a bit of tax

#156 Smoking Man on 12.09.11 at 8:11 pm

#121 zeeman1 on 12.09.11 at 2:43 pm

He is not he is the best

#157 Nostradamus Le Mad Vlad on 12.09.11 at 8:22 pm


An abnormally pleasant day here. Snow left a coupla weeks ago, ain’t bin back since.
*
5:21 clip Never invest in govts. Don’t trust them, either; Camden Second most dangerous city; Europe’s blithering idiots (good title); Withering Middle Class Will they vote in 2012? Who is Suing Who? Lawyers. a.k.a. fossil fuels, may be among them; ECB getting all hot under the collar; Downgraded French banks, which probably doesn’t mean much; Taxing the 1% at over 80%; 5:12 clip Nigel Farange escapes the Euro trap.

44:09 clip The economic / Euro collapse has been postponed until 2012. Shit, that’s only a coupla weeks away! F. William Engdahl Economic inside job; Underground Economy “Because they are making the official economy look bad!” wrh.com; China Warning signs; Charts Proof is in the pudding.
*
7:19 clip US seeks ‘net censorship; Otrusta “Looking at the Democratic ticket for President, and the emerging GOP candidates for the job, other than Ron Paul (and his chances of emerging as the GOP Presidential candidate are zero, there is no candidate I can vote for in good conscience.” wrh.com; Killer Presidents “It is more than a little depressing to understand, with absolute clarity, that the last two Presidents of this country are unindicted war criminals.” wrh.com; Iran “However, in this, the age of the “False Flag Attack”, some attack could happen to any American asset overseas, with the US attempting to use it as the “justification” for starting a military action against Iran, and with Iran having had nothing to do with it at all.” wrh.com; Tripoli in lockdown NATO – US – UN did a magnificent job; Exxon – Kurd deal “Note that no matter how this shakes out, Exxon still wins.” wrh.com; Pakistan Bloodless coup? Charlie Rangel wants to bring back the draft; Federal Agents after food storage.

1:39 clip “On December 6th, 2011, Los Angeles became the first major U.S. city to call for an amendment reserving Constitutional rights solely for living human beings.”; Microsoft Big brother; Downed Drone reveals covert war ops.; Drunk Congressional Staffers and Twitter don’t mix; Rupert Murdoch lobbies for ‘net restriction; Family Guy writer arrested during Occupy LA.

#158 Al on 12.09.11 at 8:23 pm

The McGuinty Liberals will cap rent rental apartment rent increases at no more than 2.5%. Time to sell the Ontario based Apartment REITs !
http://news.ontario.ca/mah/en/2011/12/ontario-moves-to-cap-rent-increases.html

#159 Al on 12.09.11 at 8:25 pm

http://news.ontario.ca/mah/en/2011/12/ontario-moves-to-cap-rent-increases.html
Ontario to cap rent increases at 2.5%

#160 Mr. Lahey on 12.09.11 at 8:51 pm

#146 Peter NYC

Thanks for the great response Peter. Great insights and food for thought for me to ponder because I have plenty of surplus cash (I am speaking out of the Mr. Lahey character when I say this).

#161 Beach Girl on 12.09.11 at 8:56 pm

Mr. Lahey

Sometimes is is good to enjoy a bit if levity. You are entertaining me, anyway. I think Sir Garth should wear a kilt. Might heightened everyone’s experience. We will get to visualize junk bonds. LOL.

I heard that. — Garth

#162 wheredideverybodygo? on 12.09.11 at 9:00 pm

Hey Al #152

The parking lot of the One-Of-A-Kind Gift show in Toronto the past 2 weeks was packed. The show however, was not. I went twice. Both times on a Friday night, the place was sparse with shoppers. I felt like it was closing time but it was only after 7pm. I thought maybe it was because I chose a Friday both times? But I asked a co-worker how her husband’s booth faired. She said it was a very “soft” market, her husband did okay with an “order” from one of the large retail chains but the booth across from him didn’t have one sale for the whole time they were there. So the appetite to browse is alive and kicking but the purse strings are being held very tight. I wonder what gives? Did a VRM go up and everybody freaked?

#163 neo on 12.09.11 at 9:09 pm

I just heard we all die. Is that true? Should I worry? — Garth

I said hypothecation not hyperbole.

For everyone else on here I would suggest to gain an understanding of what it is….Just in case.

#164 ballingsford on 12.09.11 at 9:11 pm

Down with the speculators and their buying and selling of condos and homes. Time to let them lose their shorts!

Occupy condo anyone?!?! Instead this time instead of the last occupy movement, we’ll have a message that can be qualified and quantified.

No more buying from any of us for at least a year, year and a half, and let those bastards who thought they were smarter than the average Canadian because they think we are naive! Let them rot in bankruptcy hell!!!

#165 T.J. BONES on 12.09.11 at 9:15 pm

Sir Garth : Junius # 131 / 12:09/11/ 3:40 P.M. 52+ million homes or residences in a country of 35+million ? Two homes or residences per person ? Almost ? Am I getting this right? Or are those stats in the US? If that is the case housing should be in the basement for prices versus supply formulation. Garth?

#166 Bond Man 1, Beach Girl 0 on 12.09.11 at 9:18 pm

thank you Beach Girl for reminding me why I live in Parkdale. Bond Man is bang on.

so to speak. as it were.

#167 NotAGreaterFool on 12.09.11 at 9:37 pm

Check out the story by Global News:

http://www.globalnews.ca/economy/6442538452/story.html

Nothing new to readers of this blog in story, but mass media starting to take notice

#168 disciple on 12.09.11 at 9:55 pm

#165 …. Last year I noticed people were increasingly rude in the malls and stores. This year so far, I notice the lack of vehicles in parking lots, even for one of the busiest Walmarts around (no I don’t dare enter one of these, makes me grit my teeth just thinking about it).

#169 a prairie dawg on 12.09.11 at 10:17 pm

#157 Smoking Man

You lie, they don’t check…

– – –

No, actually they lie. It’s posted on their own web site.

Your defense of them, by saying they’ll lower the bar well below their published conditions, doesn’t speak well of their financial integrity either. Sounds more like desperation. Must be running out of high net worth clients.

On that criteria alone, I’d give it a pass.