How to buy

Let’s get back to real estate. We’ll do this for two reasons. First, houses are about to enter a new phase in which buyers in almost every market of the country get the upper hand. Finally. Second, there’s obviously little appetite on this loathsome blog for posts detailing other investments. No sooner do I tell you about trusts, bonds, ETFs or preferreds than the skies over this site darken with the bodies of a million enraged, flying, doomer rodents.

Clearly I misjudged sentiment. More people would rather fear risk than sup opportunity. They’re happier being negative than positive. After all, what’s the point of earning a nice yield on your investment when the world’s about to collapse into a steaming pile of systemic rubble?

So, as I said some days ago, I give up. Forget I ever told you where to get a decent  return without volatility, how portfolio balance cuts losses by two-thirds, what to pack in your TFSA, or even that I warned you about gold before it plunged $400 an ounce. I’m wasting my time. The blog vigilantes can get stuffed.

This brings me to Tony. Nice kid. Good question.

I’m like a bunch of your readers. I’m late 20’s and right now I’m renting on the Danforth, in an area my girlfriend and I would not currently (maybe ever), be able to buy. We pull in just over 100k a year and in the next 2 or 3 years would probably be interested in a house.

My question to you is simple: How do I know what a good price is?

I’m talking ME, a know-nothing guy who has 15 minutes to walk around a house and then commit to pay for it for almost the same amount of time I’ve been alive. I’m not asking about an area or a timeline. I’m asking about how do I know if it’s GOOD VALUE. If the market drops 15% some houses will be worth it and others will be not. How do I find the house that is a deal or just fair value. I’ve read that 3.3 times your salary is a good place to start, but within that price range how do I pick the good deal over the money pit?

What Tony wants to know is what nine of ten new buyers don’t even think about. Most house-horny young couples spend less time inspecting a home prior to making an offer than they do trying on jeans. They respond emotionally to decorating and appliances, and walk out completely ignorant about the electrical service, survey, heating system or the sales history of the home and demographics of the hood. Then they plunge into a bidding war or are blinded by the romantic notion of chinking long-stemmed glasses before a gas fireplace while wearing their best skin.

Even worse: buying a house which isn’t built after gazing at floor plans and counter top samples in a sales trailer with a consultant in stilettos.

So what should a prospective buyer do before even thinking about an offer? The list is a long one, but here are ten actions:

  • Nothing is more important to real estate than location. So, focus more on the neighbourhood than the interior – you can always change that. Get a city house on transit or a suburban one with arterial access. Check out the neighbours – the population mix, the quality of cars in the driveways, the graffiti, the condition of yards, mean dogs. Find the nearest shopping and learn the school catchment.
  • Get the property’s background, how many owners in the last decade, for example, and successive sales prices. Too much flipping is not a positive, nor is a big price jump since the last guy bought 14 months ago. Your agent can dig this up.
  • Speaking of which, always have your own agent. No exceptions. Never use the guy the sellers engaged to flog the place, since you need your own advocate to negotiate the best deal and represent your interests, as well as ferret out information on comparables and history. By the way, never sign a BRA.
  • Your first visit should be lengthy. Go with a notepad, and a camera. Shoot every room, the panel box, the furnace, the yard, the street. Find out if it has 100 amps or better, gas or oil or heat pump, water or forced air, block or poured foundation. Look for basement damp (don’t forget the flashlight), settling on the driveway or swales on the lot line.
  • If it’s a tract house on a subdivision street, check out other properties for external basement cracks, sagging porches, dried-up window caulking or cement crumbles. Better yet, knock on a   few doors and ask the guys who bought there if they’d do it again. Amazing what you can learn in an hour.
  • Is there a survey? If not, stipulate the owners provide one. If they balk, move on.
  • Never, ever, ever buy a house without an inspection as a condition of the offer. If you’re in a bidding war situation, shame on you. Walk. But if you have to compete, then get the inspection done first, so the offer can be clean. Spend some time finding a good inspector with recommendations and creds, not the cheapest one or your cousin who’s a part-time drywaller. Go with the dude and plan on spending four or five hours crawling around.
  • Never buy a new house from plans, no matter how convincing the salesguy gets. The contract almost always gives the builder unlimited delays, substitutions and changes, while locking you up financially. If you are still dumb enough to do this, get a killer real estate lawyer to review the deal. Yes, before you sign. Duh.
  • Buy the worst house on the best street, no matter what your spouse says. Stay away from corner lots. In a complex, get the end unit.
  • Learn the current property taxes, as well as local tax history. Ask for copies of electric, water and heating bills. Find out the condo or strata fees. Ask about any zoning restrictions, like parking your 60-foot Winnebago in the driveway or having your motorcycle gang over for tea regularly.
  • And, price. Seek motivated sellers, which usually means a stale listing or something with a little hair on it. Find out the DOM, and whether or not the place has been relisted. Get pre-approved for a mortgage. Try to have 20% down to avoid costly insurance. Make a big deposit, so you can pay less (it actually works). And wait.

There’s every reason to believe houses will be cheaper in a year in most places. Which means you can come back and read my coming posts on how to be a ruthless, mercenary, heartless, pitiless buyer.

Just don’t ask me about bonds. I’ll kill ya.


#1 Trailer Park Boys on 12.28.11 at 10:36 pm


#2 First Place on 12.28.11 at 10:38 pm


#3 Darren on 12.28.11 at 10:38 pm

Nice picture!

#4 A Reader on 12.28.11 at 10:43 pm

Great advice, Garth.

#5 TurnerNation on 12.28.11 at 10:43 pm

Gentlemen: some REIT updates here (disclosure: no position).

1. Last Close MRT.UN 12/23/2011 $16.06
Wednesday December 28 2011 – News Release

Morguard Real Estate Investment Trust has acquired a 50-per-cent interest in two office complexes in Calgary and Edmonton, Alta., at a total purchase price of $80.7-million (for the trust’s interest).

The office complex in Edmonton contains 304,000 square feet of leaseable area and is currently 100 per cent leased, with the largest tenant being the Province of Alberta, which occupies approximately 95 per cent of the rentable space.

The office property in Calgary contains 78,315 square feet of leaseable area, all of which space is under long-term lease to a major Canadian engineering services organization.

2.Post says Cdn REIT index far outperforms TSX composite

Wednesday December 28 2011 – In the News

The Financial Post reports in its Saturday edition the Bloomberg REIT index has returned close to 275 per cent over the past decade as of the end of November. The Post’s Garry Marr writes this has easily outperformed the S&P/TSX composite index, which has returned about 110 per cent during the same period. REITs have done extraordinarily well in the low-interest-rate environment because they are able to use leverage or debt to increase their returns. “REITs are leveraged 50 per cent typically. When you put $500 into a REIT investment, you are getting $1,000 in real estate,” says Neil Downey, managing director, global equity at RBC Capital Markets. Of course, you can get even more leverage on residential purchases: up to 95 per cent of a principal residences can be financed with debt. Even condo investments can get 80-per-cent debt to 20-per-cent equity. There are few things to consider before you jump on that housing bandwagon. For starters, the stock market is “very observable,” the analyst notes. Basically, you know the value of your holdings at any moment. Buy an exchange-traded fund pegged to the real estate index and you are getting real estate companies with a cross-section of holdings.

© 2011 Canjex Publishing Ltd.

#6 Alex on 12.28.11 at 10:47 pm

Another useful tip when buying real estate: duplexes and triplexes (and other multi-residential properties) can let you live essentially mortgage free. Income producing property is great. Paying your own mortgage is not. Combine the two.

#7 Darjean on 12.28.11 at 10:49 pm

Sad to hear that you’ll no longer be dispensing financial advice; I’ve learnt a lot and have set up my direct investing accounts. Please reconsider?

#8 Smoking Man on 12.28.11 at 10:53 pm


Over Christmas went over to the sister in laws for a sleep over in her new custom built house, Wow 28 acres 3500 to 4000 sqft bungalow. Done to the nines with the best fixtures and furniture money can buy. Man cave 100 years from the house that had a 80 ft tv. Could go on and on.

Although most of the family is well off, specially me, Everyone but me could not help but feel like a total loser walking out of their. F-en spectacular amazing home.

And un touchable to some 1% ers.

Sis went from being un respected run about a bit of a drug attic, rebel in her youth. Got a Gov’t Job, slept her way up and learned, re married a jock, who gave her confidence, they then started a consulting company. Now everyone in her life kisses her ass. That will were off, but Revenge is sweet.

His man cave is bigger than my bungalow……

Apart from being self made a few times, I have a secret, that only you people will know, not even my wife knows the value.
In my safety deposit box I have treasure, 26 ancient coins from my rich grandfather. Who died in ww2 we went down with his ship….

Just one coin will buy 3 of sister in-laws place’s.

So why have I gone the fake poverty route. ? Why do I do part time consulting work when every dime I make goes to CRA…….

My kids, and ego. I’m the second best , confession my buddy that took the pay cut is the best.

Like sis in-law and my cousin, fellow zillionaires, both while in their twenties where poverty stricken, no parents and poor parents, no education and nothing to fall back on.

Me, I mentored them, got e’m on page that wages suck and are the crumbs of a sale.
You can hire smart people cheap…and on loaned money too.

That’s why they made it. Ok Hard work and passion too.

My kids too will have the trill of the kill……But on there own….They have know Idea.
They think I’m nuts, worried about me and my future, exactly ! their future too.

I am a genus,, But watching the my kids walk out of there wanting what the saw, they will make it. If not they get a coin anyway……

#9 mid-Ontario on 12.28.11 at 10:55 pm

Excellent advice Garth. Nice change of pace.

#10 T.O. Bubble Boy on 12.28.11 at 10:56 pm

Action #11: check out rental prices for comparable properties.

Action #12: never trust flashy renos — that shiny new kitchen is distracting you from the sagging floor, cracked foundation, and hidden asbestos and oil tank.

#11 sid on 12.28.11 at 11:00 pm

what is your issue with corner lots

Too much face time on Street View. — Garth

#12 Mr. Lee on 12.28.11 at 11:13 pm

Mr. Turner:

Is the 3.5 times house hold income still the maximum amount one should fork out for a home?

Thank you

I hope you make a lot. — Garth

#13 ken s on 12.28.11 at 11:13 pm

So…..ANONYMOUS has wiped out the Stratfor Think Tank . This pathetic blog is in good company: Seems y’er nobody, till you get blown up.

Think of those GOP armed forces comittee Gung Ho types, the NYPD Truncheon Goons, The fat stupid
New Yawk Mamma’s Boy Neocons, who could never
hope to shine shoes at Goldmans….

Think of those harrassed Govt of Israel server operators
–who (‘it seems’, :-) ), resorted to Distributed Server
operation (aka the ‘peek-a- boo’ defence): Now you see me, now you dont (–same for Users, unfortunately)
….to avoid the ANONYMOUS code attacking it…..
2 online documentaries describe the steps taken
(in shocking tell-all xxx detail!) of the USA programmers who created the STUXNET Code.
Ummm.. The Israelis made the coffee I guess :-(

But hey, the Iranians have soft landed an American missle drone
by intercepting-interjecting wireless instruction code.
–The NYT finds this too offensive for page 1. (Biggest
Non Event since Hank Paulsons con speech!)

Does that mean that the Iranians control The Whole f*** Mediterranian Area, including the USA CVN ships in the
Straight of Hormuz?? —Invasion? —With What, guys??

There was mumbling about the Chinese and Russians,
Ummm.. –got to cover the embarrasement somehow:-(

So folks, welcome to 2012: ‘Anonymous’ or Iran can shut
down your coffee maker Anytime they want (& gas pump, oil refinery, nuke power, nuke missle,
Internet etc etc. ——ie You.

Most programmers have known this for a decade (s)
But you would ‘Never- Have – Believed – Us.’ Another win
from the Mainstream Media. :-(

Until the US defence dept, congressmen, senators,
regulators, and a million of their go-fers have a rudimentary understanding of the word ‘Infinity’.
we will be ‘protected’ by useless rifle butts and steel
toe’d boots and funky cops.
Infinity = The number of Possible Combinations, Permutations,
and Variations etc in the instruction code running the
content of this screen and yours. That nerdy kid over there playing
the vid game understands this. A massively powerful CPU and memory gives him infinite choice. You dont understand and use this. You understand granite and stainless and phony poricos; -A goopy hunk of chrome
and paint Vanity that says: ‘see how sucessful I am!’
Your MT bank account is a GDP patriotism of the foot
soldier, who is about to be cannon-fodder.

Governments are no better, except perhaps
the Persians who have a long long history of envisioning
Other Worlds. The Chinese are good at this too, but
they are not allowed anywhere near Beijing (they are
terrified of that kid/ programmer at the game) (-they
have reason)

So folks Happy New Year! If you have begun to feel
that those nerdy folks and their funky friends KNOW
SOMETHING that you do not, you are right. (But you
still wont believe, will you), even with this Sesame
explanation. The ‘Mideaval Money Lenders want you
to keep your Mideaval Vanities: a bigger mansion, a bigger
carriage, a bigger wedding, an exclusive useless degree.

BTW folks —the Wonks dont have a f* hope or prayer.
—#OWS— knows this –the rest Dont …………..[yet]
‘…… Expect Us: ‘ :-}

Cheers: Ken S in LaLa – Van :-)

#14 Mark on 12.28.11 at 11:14 pm

#8, you’re insane to leave that much ‘wealth’ in a so-called “safety deposit box” at a bank.

#15 not 1st on 12.28.11 at 11:15 pm

Garth, an interior corner lot is highly desired if its not on a busy intersection with a 4 way stop or lights.

Here’s why:

1. one less neighbor to worry about.
2. you can build the house in either of two directions/configurations
3. you have access to the backyard to park stuff like an RV
4. usually a city street light out in front
5. much more street parking
6. you can build a detached garage in the back

This only holds if the lot is buried deep inside a subdivision. If its on a main drag thats going to get busier, then skip it.

#16 bob's my uncle on 12.28.11 at 11:15 pm

well Tony, let me put in a couple of cents as I am a pro in RE. The market is doing well regardless of what you hear on this pathetic blog. There are no houses on the market worthwhile looking at right now, the only thing for sale are the chicken coups and they are far from attractive. There is a huge lack of inventory when it comes to resale housing.

A buyers market is a fallacy and a dream for most basement dwellers and renters of all sorts, at best the market will be an equilibrium but will not sway one way or another, what does that mean? it means prices are sticking for most areas, Vancouver and Toronto will keep on appreciating in 2012 and so you are out of luck on the dream of 3.3, but it is always wise to get in as RE is the only thing that will appreciate in the long run. The stock markets are rigged and are manipulated big time by hedge funds, mf companies etc,etc…stick with RE as its much safer.

The Re/Max angel just granted you your wings. — Garth

#17 Jackie on 12.28.11 at 11:15 pm

Is it me or Smoking Man out to lunch?

Its been a while since I read such false hubris amidst some non-sensical diatribes.

He really does have verbal diarrhea.

He really should get some shares in an aluminum foil company. It will save on the cost of all those tinfoil hats.

#18 not 1st on 12.28.11 at 11:20 pm

Condo tips;

1. never buy in a wood building, find something concrete, its worth it.
2. end unit high up as you can afford not facing the parking lot
3. always visit the place after work when people are actually home. (same for houses). You will be able to find out quickly what goes on the street, what types are coming and going and what illegal substances might being smoked on site.

#19 TryingToGetOutAlive on 12.28.11 at 11:21 pm

thank you for the great blog entry mr turner. i am in a similar situation as tony and will be saving this info in a txt file for later use!

and thank you also to the smoking man, i always look for your comments as well!

#20 InvestorsFriend (Shawn Allen) on 12.28.11 at 11:22 pm


A couple of days ago I pointed out that in Canada you can, in theory, lock in a mortgage interest rate for 25 years. But it would cost you 8.75% and you would or could face massive penalties to get out of the mortgage if need be. Few would ever take such a deal when the alternative is five years at 4.0% or variable rates currently at 3.1%.

BUT in the United States they can lock in for 3.9% for 30 years AND face little to no penalty to get out of the mortgage if need be.

Now, U.S. banks could never take the risk of offering 3.9% for 30 years AND giving customers the right to pay it off without much penalty. Banks can’t do this because they fund mortgages with short-term deposit money.

So, U.S. banks sell those mortgages to investors and the investors take the risks of the early payout (or maybe Fannie Mae and Freddy Mac take some of that risk, I have not been able to find out).

Anyhow the point is, wouldn’t it be great if Canadians could lock in for 30 years at around 4%? Surely we have investors here who would fund that deal as opposed to investing in 30 year Canada bonds at 2.5%. The mortgages would be guaranteed (against default) by CMHC.

This seems like a win-win situation. Canadian investors would get access to 30-year government guranteed fixed interest somewhat higher than 2.5% (but face some early payment risk).

Canadian homeowners could lock in for 25 or 30 years at record low interest rates (and get out with minimal penalties if need be).

If the Americans can get this deal, why can’t we? In fact forget about why we don’t get it now and let’s work on making it happen.

This would remove a huge financial risk from today’s home buyers.

I am pursuing this with CMHC and the Canadian Bankers Association.

I have never seen this issue even mentioned in the Financial Post (which I have been reading for many years).

It’s in The Bank Act. — Garth

#21 @Bloor on 12.28.11 at 11:30 pm

Clearly I misjudged sentiment. More people would rather fear risk than sup opportunity. They’re happier being negative than positive. After all, what’s the point of earning a nice yield on your investment when the world’s about to collapse into a steaming pile of systemic rubble?

I don’t think “more” people are happier being negative then positive. Only those that take the time to post idiot comments that were related to your last post. Keep up the balanced commentary. I have been reading and following you since way back to Toronto Sun days, all your books and now this blog. I’ve done quite well following your advise.

#22 JohnSaccy on 12.28.11 at 11:35 pm

Practical and sound advice, Garth. Thanks.

#23 InvestorsFriend (Shawn Allen) on 12.28.11 at 11:36 pm


Regarding the fact that Canadians pay 8.75% for a 25 year locked in mortgage, while Americans pay 3.9%, Garth says simply: “it’s in The Bank Act”.

Okay, maybe it is. I did point our Royal Bank is offering 8.75% locked for 25 years so that can’t be illegal.

Securitisation of Canadian mortgages is also not illegal.

Maybe CMHC is not invloved in RBC’s deal (maybe these are convential mortages (less than 80% loan to value ratio and no CMHC insurance involved)

Maybe someone out there can research this. I am trying. This is freakin’ important.

I will (and must) accept a brush off from Garth but not from CMHC or the Bankers Association.

If need be The Bank Act can be changed.

This could avert a financial disaster if Garth is right that rates are set to rise in a few years.

#24 AACI-Okanagan on 12.28.11 at 11:40 pm

#15 not 1st on 12.28.11 at 11:15 pm

Garth, an interior corner lot is highly desired if its not on a busy intersection with a 4 way stop or lights.

Here’s why:

1. one less neighbor to worry about.
2. you can build the house in either of two directions/configurations
3. you have access to the backyard to park stuff like an RV
4. usually a city street light out in front
5. much more street parking
6. you can build a detached garage in the back

This only holds if the lot is buried deep inside a subdivision. If its on a main drag thats going to get busier, then skip it.

I am with Garth on this one, market evidence supports , Garth and I on this one; you are forgetting set backs are greater on a corner lot as you get dinged by both streets; depending where you are, you may not get access from the other street and you are exposed on two sides whether the streets are busy or not. Corner homes have a higher break in %. Now if you are buying a commercial property, then a corner lot is probably better.

Garth, you forgot a key one in your list, if you can wait, buy in the fall.. golden rule, sell in the spring buy in the fall..

happy new years

#25 Min in Mission on 12.28.11 at 11:44 pm

Holy smokes, Just on instinct we got 7 out of 10, when we bought our house! And I thought it was just common sense. Yeah, I know. Common sense would have gotten us all 10.

#26 Angela on 12.28.11 at 11:54 pm

Nice blog tonight, Garth, some meat to chew on. Love these ones. Thanks!

#27 AGIC on 12.28.11 at 11:54 pm

from previous :
AGIC: “Timing your purchases (buy low, sell high); and
Capital gains (tax wise as well) are the primary goal, and yield/income is secondary. NEVER fall in love with any investment because of its income stream”

Unless you want income. (And that’s why lots of people invest.) — Garth

Garth, I have to admit, I’ve got so excited, that you even bothered to reply, I dare to bring it over again.
Timing purchases (buy low, sell high)= don’t loose your capital (a Great Oracle of Omaha’s rule #1).
Yes, I want, and in a stage, that I need an income; but to loose any of my saving/capital is not acceptable or desirable.
With greatest regards,

#28 AACI Home-Dog on 12.29.11 at 12:03 am

Along with a building inspection, get a professional appraisal. It will (should) be full of the useful data Garth mentions that you need to know. It can also subsequently be used to secure a mortgage.

#29 Realtors in a panic on 12.29.11 at 12:03 am

Is it any wonder why out of work realtors like bobs my uncle and investorsfriend have all the free time in this market which has clearly slowed down with many price drops. BTW the condo market in Toronto has stalled. Many flippers are trapped and countless condos are empty with no buyers or renters. The worst part is thousands of condo keep hitting an over built condo market. 2012 Toronto could easily see a 15-25% drop.

#30 Abitibi Doug on 12.29.11 at 12:06 am

Well, some of us here on this loathsome blog have an appetite for information about trusts, bonds, ETFs or preferreds.
As for buying houses, why give up my mobility? There was a good article in The Globe, Business Section about many Americans who are tied down by a house that’s dropped greatly in value so they won’t move to fill a job elsewhere, and that is a drag on the economic recovery.
Say, I wonder if someone’s in dire need of my skills out in Alberta?

#31 Smoking Man on 12.29.11 at 12:08 am

#17 Jackie on 12.28.11 at 11:15 pm

Out to lunch tots, Im in orbit
Jackie is obviously a newbee on here

#19 TryingToGetOutAlive on 12.28.11 at 11:21 pm
Your taking a chance.

Jackie would pick 1. Yesterdays post

#32 JCinNS on 12.29.11 at 12:08 am

Great, practical advice, thanks Garth.
Btw, I’m part of the silent majority or readers who appreciate your investment advice and wisdom. I read daily, buy never bother reading the comments. Thank you. Please don’t stop.

#33 Trailer Park Boys on 12.29.11 at 12:10 am

aha GFB losers….

…… we were phyyyyrrrsszzzttttt.

Quit watching porn and Monster Truck rodeos

Ewe snoooze? Ewe …. ummm……. errr ….whatever.

Anyway….anything East of Eastern Canada is Lobsterikhstan.

#34 Bottoms_Up on 12.29.11 at 12:13 am

#24 Min in Mission on 12.28.11 at 11:44 pm
6/10 but I still think we did well.

I like the suggestion about the lengthy visit with a camera — good for recall and for possible legal protection in case the sellers try and pull a fast one on you somewhere.

A little anecdote — a neighbour has had their town for sale for a few months (in Ottawa), it was stale for a bit but they recently sold in a bidding war and got over asking. It’s interesting b/c during the stale part of the listing I would have thought the market has turned, but during the bidding war it looks like the market is hot. Proof in principle that anecdotal evidence is always tenuous at best.

#35 Smoking Man on 12.29.11 at 12:13 am

#21 @Bloor on 12.28.11 at 11:30 pm

I met suck ups like you at the xmass party

#36 TheRealTruth on 12.29.11 at 12:15 am

Medicare premiums set to rise in BC. Yes, these are mandatory…

A related story you may want to read if at all you’re concerned:

#37 Bottoms_Up on 12.29.11 at 12:17 am

#27 AGIC on 12.28.11 at 11:54 pm
I think the thinking is that one CAN get a stable income stream while taking a low level of risk on the capital. That’s what REITs and preferreds and bonds can provide, for example.

#38 Montrealer on 12.29.11 at 12:20 am

I love corner lots, as long as the main street does not have a stop (too much noise from cars).. corner lots allows to have the garage facong the side instead of taking all the front space… plus more windows on one side.

#39 Jon B on 12.29.11 at 12:23 am

Great post. There is an appetite for this type of very useful advice. Forget about bonds and bank preferreds. Wrong kennel of blog dogs.

#40 AGIC on 12.29.11 at 12:30 am

Happy Easter on 12.28.11 at 10:26 pm
“A passer-by said “Happy Easter” to me today.
He wasn’t joking.
Canada’s in bad shape.”
Are you kidding? Why Canada? Did you see today’s early news? Holy Land/Bethlehem
Couple years ago visited Jerusalem’s Holly Sepulcher church with 4 religious denominations there, with four of everything, like in a communal kitchen. Just imagine tension there!

#41 Patiently Waiting on 12.29.11 at 12:33 am

I have to agree with Jackie . . . if Smoking Man can’t find something useful to contribute to this blog please find somewhere else to post your useless drivel . . . Hey Garth, maybe you can have a “Survivor Day” on the Blog so we can give Smoking Man the boot, along with the idiots who keep trying to post first ? . . .

Jackie on 12.28.11 at 11:15 pm
Is it me or Smoking Man out to lunch?

Its been a while since I read such false hubris amidst some non-sensical diatribes.

He really does have verbal diarrhea.

He really should get some shares in an aluminum foil company. It will save on the cost of all those tinfoil hats.

#42 Mean Gene on 12.29.11 at 12:36 am

Mr. Turner keep on plugging REAL investment information, if people are too simple to grasp the concept of diversified investing then it’s their own tough noogies.

So far I haven’t seen comments concerning being a member in a credit union (VANCITY) and the benefits it offers??

#43 meslippery on 12.29.11 at 12:36 am

The name is Bond, James Bond licensed to kill.

#44 Nostradamus Le Mad Vlad on 12.29.11 at 12:46 am

“Second, there’s obviously little appetite on this loathsome blog for posts detailing other investments. I’m wasting my time. The blog vigilantes can get stuffed. Just don’t ask me about bonds. I’ll kill ya.” — I prefer investment advice to RE, but whatever comes my way, that’s fine.
#171 Happy Easter on 12.28.11 at 10:26 pm — See here and here. The west is out to lunch, alright.

#8 Smoking Man — “Ok Hard work and passion too.” — Damned right. Hard work never killed anyone. Good post.
Sudan Another one leaves the US$ to join China’s yuan; 3:26 clip Ex-GS employee says war coming toward end of 2012, and CFR Time to attack Iran; Xmas Sales won’t save stores from closing; Gold Chinese Central Banker says gold is good, and Japan – China Japan to bankroll China, but Japan is broke. Maybe that is why they have begun a new economic accord; Re-introduction of a gold standard instead of a one-world currency? Anything is possible; US loves to criticize others.

Skewered “Actually, The Fed claimed it was not bailing Europe out in direct conversations with Senators at a closed-door meeting.”; 2012 Equities are really good; Dividend Monsters Buy four, avoid one; Shipping Recovery next year, but Bailouts continue; Mistrust; BRICs update; USE or EUSSA? 3:34 clip US middle class on streets; 1:29:27 documentary Gold going higher?
2012 = 1099 Back To The Future; 0:50 clip So much for religion being the opiate of the masses. FOOD FIGHT (NOT)! New Breakfast Food Not from McDonald’s; USPS Being wrecked deliberately; Libya Another perspective; Lil’ Ms. Lucifer Condi Rice is back; Resurgence of Agent Orange; Siberian Tigers living in NE China; Putin Stamping his authority; China launches rival to GPS, less dependent on US.

Not sure whether this defection reflects on Bachmann or supports Ron Paul; Gas Pipeline ok’d by Turkey; TPTB will get nasty if Ron Paul wins Iowa; Alll Roads Lead To World Govt. Whether achieved or not is quite different; Iraq Implosion imminent; Anonymous Survival guide for civil unrest; Replacing Workers Robots — automation — arriving shortly; China is right again. he west is interfering.

#45 Michelle on 12.29.11 at 12:59 am

A corner lot in a suburban neighbourhood usually invites local kids (and adults) to tresspass and cut across your lawn every day.
The extra cost of building a secure fence around the entire perimeter will dissuade a lot of buyers…not to mention the cost of landscaping if you desire some visual privacy. A corner lot often doesn’t make for very usable yard space.

#46 SocialistinVic on 12.29.11 at 1:01 am

I went and decided to invest my house down payment in more education and now have a job in senior health care. After a career as an indentured servant to the arts (books! how crazy was that?) I now at least have a pension started, meet kick-ass old people and am saving again — now for your liquid recommendations. Reading your blog regularly helps assuage that “missed the boat” feeling during coffee break talk about real estate. I read it regularly and never comment, but you sound a little fed up lately so want you to know how much your advice is sincerely appreciated! THANK YOU!

#47 Gord In Vancouver on 12.29.11 at 1:01 am

More great news out of British Columbia

British Columbians face MSP increase in New Year–british-columbians-face-msp-increase-in-new-year

#48 Harlee on 12.29.11 at 1:44 am

#41 PW. What’s with all the Smoking Man bashing going on here? The Smoking Man is an Individual, a real Thinking Man,rather than a drone of the world.We need more like him.
Mark Twain said that when he died that he’d like to meet old Lucifer and “shake him by the tail”. That’s what I’d like to do with S.M. someday….
And no….I’m not sukking upp !

#49 nonplused on 12.29.11 at 1:45 am

Ha ha, Garth, I have a signed copy of Money Road so I can review the bulk of your ideas even if you quit writing about them here! Ha ha ha ha! Foiled again, my arch-blog nemesis.

Gold still looks pretty good trend channel wise but it was way over bought at $1900/ounce. All my ounces are sub $800 so I am not to worried… yet. And I also started with it closer to 10% of my portfolio, the higher end of your range, so I won’t loose everything if it goes back to $400 an ounce. Which I doubt. But stranger things have happened. I do need to rebalance eventually though. Lord, one more shot at $1900! Please! Actually I think $1900 was an anomaly, years early, I’ll take $1800.

I want to review my recent purchase with your points:

1. Train, check, 10 minutes away park to park. Arterial access check, ring road complete. Neighbours check, they all have more money than me. Mean dogs check, school is 200 meters away all mean dogs have been rounded up by the county.

2. History check, bought from original owners. Makes sales history tough to analyze, as there was none, but there were a couple of zoning documents where the price had to be stated. Not helpful as there were no transactions.

3. Had my own agent and when I mentioned that I didn’t want to sing a BRA as per your instructions he started swearing about how lousy he thought those were and he didn’t ever need one all his clients trust him and he trusts them and blab la bla but no BRA, he didn’t want one either, thought it soiled him or something.

4. Lengthy visit, but on the other hand this tips off your agent. We’d been through literally 50 houses where we weren’t there 15 minutes because they were junk. But we stayed nearly 2 hours in this one, so my agent knew he had a hit. He started trying to close. Not always the best.

5. Not a tract house, an acreage. Restrictive covenant is a bit of a bitch but it means no dirt bike tracks in the neighbours back yard. However, due to the era it was written, it appears I can build a quad track.

6. Did ask for a 1% inspection as the only condition. (i.e. had to find 1% of the sales price in costs to back out of the deal. Couldn’t back out because the Sub-Zero ice maker was leaking and making solid ice in the bottom of the freezer, which cost $350 to fix it turns out.)

7. Obviously not from plans. We were looking at what we bought.

8. It is the worst house on the street. These other suckers here probably go for 2 million, especially the ones across the road with the valley view. We only see the mountains.

9. I can park the Winnebago. There are restrictions about where and how, but I assume since the previous owners were parking a diesel bus I’m ok to park the 26 foot 5th. And there is lots of room in the driveway for probably 50 motorcycles if you and the gang want to drop in Garth.

10. It was a stale listing, but for most of the time it was listed I wouldn’t look at it because it was over what I had allocated I would be willing to pay. Way over. I didn’t even really know it was listed because I just wasn’t looking at those houses. Then it dropped into my range, and I did what you said, sizable deposit, only condition a 1% house inspection, quick possession (it was empty at this point), suck up the Kubota and zone stereo and whatever wasn’t out yet, and take another 12% off.

But in the end of the day, here is where your advice doesn’t cover, Garth. The guy counter-offered, and well, we were dealing. And while I am dealing, my wife is bawling her eyes out because she is so happy or hopeful. And of course I am having a bit of whiskey because I am thinking close, but no cigar. Back and forth. More crying. The usual real estate agent bla bla “He’s not willing to get cut in half again, this is his final offer”. “Ok, its $4000 now, lift him.” In the end of the day I think I ended up a full $44,000 over what I wanted to pay. But my wife was just bawling she was so happy, the deal was done in her mind. And then when we struck a deal she has being peeing honey every since.

Not saying what the price I paid was or what house I bought, but Garth, as you always say, real estate is the most emotional of assets. Even when you try and follow the Garthman’s advice, the wife is going to come a crying and suddenly raise the price of the house by a bunch.

And I am still going to loose a bunch of money if I have to sell this place in the next 5 to 10 years. But I am getting 3.2% as compared to renting! Not Money Road, but better than the Orange Guy’s shorts.

So, what about bonds? I think I prefer REITs.

#50 vatodeth on 12.29.11 at 1:55 am

I want more financial advice. I appreciate it. I’m barely getting started into investing and I have a lot to learn.

I am listening to your advice, because you are a seasoned professional. I would like to have more reliable sources such as yourself, so I could come up with my own strategies, but at the moment you seem to be the main mentor.

Thank you Sir Garth Turner!

#51 obert on 12.29.11 at 2:11 am

How to buy…
Thank you!

#52 Ben on 12.29.11 at 2:18 am

A corner lot is triple the snow to shovel.

#53 truth hammer on 12.29.11 at 2:30 am

3.3 times earnings a good place to start looking….Bwahahahahahahahahaha …sure Tony…but only if you start looking in 1957. Right now in Vancrapper you will ‘start looking’ for a condo at 12 times earnings and a SFH at 20 times.

Vanbunghole is the domain of super pumped civil servants who don’t ever have to save a dime because the generous tax payer will fork over millions after retirement. Next is the quasi legal dope business where free cash flow is dumped into real estate with no interest of origin from either RCMP or CRA. Next we have the Chinese bank administrative, police and military thieves dumping billions into the Canadian money laundry through ‘investments’ as immigrants to Canada.

Tony…you don’t stand a chance. Your money is earmarked for the union Christmas Party and general slush fund..forget trying to save…..there are too many special interests in government angling to steal everything you have. Look at whats happened to the seniors…do you think the same thing won’t happen to you?

Garth…the reason people don’t have any patience for the very proper ‘yield’ income of 5 to 6% you suggest is that inflation is running at 20%+++++ in real terms. Us normals ( the people who aren’t already rich like you) have to take extra risk in order to actually make money and as such are prepared to suffer the vagaries of the short term market in order to make longer term capital gains. Lets face it…..buying bonds long term is just another way to commit slow motion financial suicide when the government is printing 29% more paper every year as they did this year and averaging 15% M3 over the past ten. 5% just doesn’t cut it…what you’re talking about is short term capital preservation……long term growth in an international portfolio is the only way to go to beat the system.

#54 Jane on 12.29.11 at 2:36 am

Thanks for the great list, Garth. Most couldbe used when renting, too. Just one question.

Buy the worst house on the best street, no matter what your spouse says. Stay away from corner lots. In a complex, get the end unit.

Please explain this point… Thanks!

#55 syd on 12.29.11 at 2:48 am

yes no bond talk and no comparison to u.s real estate. i wanna know Canadian real estate fate only.

#56 Tim on 12.29.11 at 2:59 am

With the 13 year bull market just starting to turn, why should anyone buy, even a year from now?

#57 Bobby on 12.29.11 at 3:18 am

Great advice Garth. When I bought my first home I first wandered over to the prospective neighbor to have a little chat. Realtor didn’t like it especially since I didn’t include him.
It is amazing what you can learn from the neighbors. Divorce sale, owner lost their job, company move, etc, etc, neighbors love to talk. In my case the home had been originally purchased as a rental and the wife hated the whole ordeal and just wanted out. My offer reflected that idea!

#58 Tony on 12.29.11 at 3:18 am

More silent majority here, G. Keep talking. we’re listening.

#59 Waterloo Resident on 12.29.11 at 3:28 am

Garth, its a good thing that you have stopped talking about stocks (equities) because it looks like a trend is going to happen that will make your predictions look very ‘uncorrect’. Let me explain what I just read:

– 4 major Canadian economists predict what will happen over the next few years as the Canadian economy improves and Canada is faced with the headwinds from the European debt crisis.

((( “First of all, as our economy improves our interest rates might increase a bit, but not noticeably, what will happen is we will suffer job losses due to the economic problems faced by the trading nations that we trade with. Normally this would foreshadow a softening of the housing market but with such a glowing view of our primary investments (houses) Canadians will prefer to unload their RRSP investments in equities and pump this cash into their primary investments instead (their houses). As a result of this, we see the equity markets continuing to under-perform over the next 5 years while housing should continue on its meteoric bull run for another 5 years, fueled almost entirely from the withdrawals from stock investments. ” )))

You know, I don’t want to be against the trend here on this board but what they said does make lot of sense, Canadians are just NUTS about houses and they will liquidate ALL OF THEIR STOCK HOLDINGS in an attempt to be able to continue paying their mortgages, even as they lose jobs over the next few years.

As Boomers retire (and crap in their depends), they won’t be downsizing their homes, no, instead they will be selling their investments in stocks and pumping this cash back into their homes.


#60 ken s on 12.29.11 at 4:49 am

Smokin man: I havent seen a pilot trailing 200 feet
of flame since taking the last Concord out of Orly.
Your comments revive that memory. Did you bung
a fuel tank from runway debris dropped by one of those
AA crates?

Truly off the wall bloggers are as hard to find today, as a truly dirty mind: Its the therapy that
muddies an otherwise natural phenomena, like a very erotic cloud formation without the need for a Rorshach
interpretation. Keep a few ganglia attached to the food
tract huh?
Um… you do the Burning Man every time: -Do you have
Any protoplasm of high carbon content left to fry? You say that you have lotsa dough, but it sounds like your
kitchen is a ditto of a Hong Kong ‘pharmacy’ my ex Gf
patronized: You had to step over 20 dead pigeons and
an occasional toy poodle just to get near the front door,
after which the fumes from hooch and smack and speed,
mostly obviated the need for anything beyond a glass of
clean water (that was waay expensive, but kept the
still running) Bodies were stacked conveniently inside the door, for the HK ambulance service
pickup twice a day. Sort of DHL- DOA- COD pay per corpse.

You have I think, missed a small logic point in your frequent flyer activity: With all that loot, how can you
possibly enjoy it in a smash&crash lifestyle? I know,
within the bubble it is impossible to know anymore,
bur work on it.

Sisters Evangeline and Magdalena
say the rosary for you, and light a candle, the alternate
significance of which, is unknown to their benign disposition.

Cheers guy, stay alive huh? KEN S.

#61 Devore on 12.29.11 at 4:53 am

#20⁠ InvestorsFriend

As Garth notes, it’s in the respective countries’ banking legislation.

Instead of endlessly whining on this blog about it, you should be asking why do Americans think they are so special with their 30 year mortgages, not why Canadians can’t be like them. How does that help you anyways?

#62 Devore on 12.29.11 at 5:06 am

#36⁠ TheRealTruth

Medicare premiums set to rise in BC. Yes, these are mandatory…

As are income taxes (set to rise, also mandatory). Surely good news for real estate.

#63 Jas Girn on 12.29.11 at 5:14 am

Garth, bring back the bonds advice! Damn it, lol.

#64 Onthesidelines on 12.29.11 at 5:16 am

Would be nice to see a similar rule-of-thumb checklist of dos and don’ts on investments, as well. Which stats/data to look at and how to interpret and weigh them when considering various asset classes.

Also, just one point about the previous posts on investing. My personal take is that the challenges you received on the blog re your investment advice were all-in-all a positive thing which many here probably appreciated. It’s always beneficial to have some push-back in this sort of place to counter the tendency towards sheepish, unquestioning mimicking and idolizing. As frustrating as it must be for you to deal with others questioning your expertise, I am rather disappointed that you do not see enough value in it to continue to discuss various investments again.

Why? You already know everything. — Garth

#65 SLN on 12.29.11 at 6:26 am

As someone who has lived in two homes on corner lots I agree with Garth on this… extra snow to shovel, extra vehicle noise, both of our homes had fire hydrants at the corners, less privacy. We will not buy another one unless the circumstances are just right, but it’d take an extremely special house for that.

#66 Smoking Man on 12.29.11 at 7:22 am

#41 Patiently Waiting on 12.29.11 at 12:33 am

Perhaps in you next life “Patiently Waiting”

You might want to try “Aggressively Taking”

Ah The schooled………………………

#67 GregW, Oakville on 12.29.11 at 8:13 am

Hi All, re: “Second, there’s obviously little appetite on this loathsome blog for posts detailing other investments.”

If you’d like more details about other investments and reducing your tax load legally, you would dew well reading Mr. Garth Turner’s latest book “Money Road”!
(You might use some of that Xmas cash or book gift card you received to buy it with. And I understand the nominal cost may help pay for this ‘free’ blog too. )

I just finished plowed though it cover to cover (finally). And it was painless. (Way better than those TV commercials.) I’m still trying to find a way to convince my wife she need to read it to. She’s like fictional novels better. It seems. I guess not being informed is bliss? Why no one tried teaching this stuff to us in high school is a sham.
I wish I had taken the time to read “Money road” cover to cover much much sooner

Mr. Turner(Garth), Can we still talk?

#68 Bob Copeland on 12.29.11 at 8:34 am

OK OK Your were right. Damn, I’m taking a hit on gold.

#69 Canuck Abroad on 12.29.11 at 8:38 am

Toronto madness – $2.3 million for a semi above a shop. Okay its a nice semi and your own shop but still…

#70 T.O. Bubble Boy on 12.29.11 at 8:59 am

@ InvestorsFriend (Shawn Allen)

If the banks were to start pushing for 30-yr term mortgages, I’m pretty sure that this would not happen while rates are at all-time lows.

imagine if all $1T of Canadian mortgage debt was locked in under 4 percent for 30 years? Yes – I agree that this provides economic security to the general population, but we’re not the ones lobbying Flaherty every day. The banks would put up a big fight to prevent this. Look to that 8.75 percent rate from RBC to see why.

#71 bigrider on 12.29.11 at 9:12 am

There is so much conflicting information being doled out by so many “experts” you dont know who to believe anymore.

Take the issue of gold and gold stocks. It so happens our host has been correct, at least in the recent near term, to exit. What to do now ? Some experts are as staunchly bullish as they have ever been ,others are saying the long term run is over.

Take real estate. Our host has been calling for a correction for a long time, only to watch prices climb ever higher. Some “experts” calling for a decline others say so long as interest rates remain low and immigration high, prices move ever higher.

Take financial markets. Talk about contradiction. We either have the cheapest bunch of equities globally since WWII or macro issues will make them much, much cheaper over coming years..

Take high yield assets, reits, preferred’s etc much loved by our host. Huge love for these everywhere. Crowded trade ?? bubble talk in the space already.

Who do you believe? And more importantly how lucky does anyone feel they will be, to be on the right side of any of these trades??

Good luck to all. I know I could use some .

Gold is globally valued. Real estate is locally valued. You cannot compare advice on the two. — Garth

#72 bigrider on 12.29.11 at 9:19 am

Buddy of mine bought three rental properties in the Dufferin and St Clair area in 2008 (C3 area on MLS map). After repairs and renos each cost in and around 300k a piece. Turned them into multi unit rentals all cash flow positive.

Does not know anything about financial markets but has some investments in financial assets after consulting with an advisor.

Can you all guess where he has done better ?

A Clue for the daft: each of those units can easily fetch 500k today in addition to having mortgage debts aggressively reduced since point of purchase by renters.

Go tell him a real estate price correction is coming. See if he cares

#73 Kip on 12.29.11 at 9:30 am

With the exception of your ad ice on the BRA, your advice is the same as any GTA realtor would give.

I’ve never heard it. Do you give such information to your buyers? — Garth

#74 truth hammer on 12.29.11 at 9:35 am

The 2012 tsunami of taxation is building a head of steam..–expect-higher-payroll-taxes-in-2012-taxpayers-group-says?bn=1

And where..pray tell…does all the extra ‘revenue’ go? Let me guess….inflation indexed civil service pensions…COLA’s for civil ‘servants on the payrolls of the nation. Special interests get paid off for political complicity not to buck the status quo.

Workers and seniors get screwed while civil servants get fat and have their outrageous wages protected….nice. Hey …you heard it here first….100% of your pay stolen in direct and indirect taxation means absolute poverty for the average joe.

I’ll just bet you don’t have a pension guaranteeing you millions when you retire………… how long do you stay quiet?

#75 Tom from Mississauga on 12.29.11 at 9:52 am

Well I’ve liked the bond, preferred, REIT, dividend, commodity advice I’ve gotten here. Too bad for those doomers dissing it, having to work for every penny they earn. I’m in the financial market 100% clipping interest (ZCM) and dividends (ZUT) both of their yields beat my mortgage rate. The best commodity ETF I’ve found is ZEO. It has the best yield and growth potential of the ones studied.

#76 pbrasseur on 12.29.11 at 9:54 am

“Clearly I misjudged sentiment. More people would rather fear risk than sup opportunity.” – Garth

No kidding?

Why do you think 10 year treasuries yield is less than inflation?

Trouble is people mixup volatility and risk. Those are two very different things.

Real risk is not having the money you count on in 10 or 20 years. Right now the more risky assets are long term gov. Bonds and houses. Shares of great businesses are the most volatile but the least risk.

#77 allister on 12.29.11 at 10:00 am

“No sooner do I tell you about trusts, bonds, ETFs or preferreds than the skies over this site darken with the bodies of a million enraged, flying, doomer rodents.”

GT – I would like to hear more about your thoughts on liquid investments so please continue.

As an example, I would like to know what you think about ETFs that buy the TSE market or bank stocks only, and then sell calls/buy puts to enhance income?

Stay far away. — Garth

#78 disciple on 12.29.11 at 10:03 am

Tiger, tiger, burning bright,
In the forests of the night,
What immortal hand or eye,
Could frame thy fearful symmetry? – William Blake

To see a World in a Grain of Sand
And a Heaven in a Wild Flower,
Hold Infinity in the palm of your hand
And Eternity in an hour. – William Blake

A very talented visionary and word arranger. Was probably into the hallucinatory herbs, but then again, sugar is also a drug, as much as any substance that crosses the blood/brain barrier. Humanity and the earthly flora have an inseparable bond, our history and destiny can only be found through “pharmakia”. These substances can help us to bust open that parturient communion with the other dimensions. But once you make the fantastic leap to the other side, you no longer need the herbal boost, and can do it at will. At this point, you have resumed full control of your own mind. The secret societies have made use of this information for thousands of years but kept it hidden from you. The most potent forms of hallucinogenic narcotics are toothless unless they are able to elicit a response from the neural transmitter/receiver we call the brain.

The human mind itself is the last frontier of the third dimension, but the first frontier for what lies beyond. Our discovery of the infinite realities of the universe are only just beginning…

#79 gentleInvestor on 12.29.11 at 10:08 am

Housing inspectors are useless, even ones that are recommended and well rated. Conflict of interest. Too picky, piss of the realtors, too lax, piss off the clients. They tend towards too lax in my opinion.

Spend a bit of time and learn about what you need to inspect. It won’t take long.

My number one recommendation: learn about moisture, how it moves, where it comes from and how it affects a house. Nothing is more important than looking for and anticipating the actions of water: from vapour to wind driven rain to hydrostatic pressure.

#80 allister on 12.29.11 at 10:25 am

#17Jackie on 12.28.11 at 11:15 pm
#41Patiently Waiting

Until you two realize that everyone else is there for your entertainment, you won’t be happy in this world – so leave Smokin Man alone and enjoy the pictures he paints.

#81 Jeff on 12.29.11 at 10:35 am

Maxed out Canadians are having an effect on the economy. People are spending less. Maybe the big box stores are doing well i do not know but the mom and pops are hurting. My sales are down 30% from last year and talking to others its the same story. Buying RE? people do not have $100 to spend. The economy is doing bad unless you believe the happy talk on tv. Lets hope for a better new year.

#82 Ian on 12.29.11 at 10:45 am

No your blogs on investments are good too. I’ve enjoyed DRIPS (Dividend Reinvestment Income Plans) with SPP’s (Share Purchasing Plans) through my 20’s with great success. Happy New Year!

#83 Randy on 12.29.11 at 10:49 am

Garth….Thanx for your input on alternative investments….still trying to get over my paranoia that thos markets are all rigged….

#84 john on 12.29.11 at 10:50 am

I’ve wondered for Tony’s question whether this works as a kind-of valuation based on the property taxes. Where property taxes = Current value assessment (“CVA”) x mill rate (I think that’s the term, it’s currently 0.00835 for City of Toronto).

So if you know the property tax, you simply divided property tax by the mill rate to obtain the supposed CVA. In my view the CVA would be an inflated number since it’s the municipality’s interest to jack up the CVA.

Anyhow, most homes in Toronto are listing at a price about 150% higher than CVA…

…but I thought that might be a way to get a feel for valuation of a property.

#85 bob's my uncle on 12.29.11 at 11:00 am

#29 Realtors in a panic

There will be no price drops, the minute there is even the illusion of one there will be international investors flying in to buy. The market is doing well overall.

Jane/Finch area is a good place for many on the blog to start their RE venture, not the best neighbourhood but a condo could be had for under a $100k.

I hope that many of you stay away from reits as I have warned about them, the age of the internet is destroying brick and mortar businesses. The speed will pick up in the next few years as your reits decline slowly.

#86 househornyhousewife on 12.29.11 at 11:17 am


That’s what you get when you try to advise a mass public audience. Some of us are more risk averse than others. But I am sure you already know this.

Good general house hunting advice to the novice but I still think that you are a bit dated when it comes to some of your recommendations.

For one thing, looking for damp in the basement and all of that other stuff … for heaven’s sake don’t try to be your own inspector, just get one who is good.

Hey kid, if you want to buy a house, it will DEFINITELY have problems, no matter how many inspections you get on it and no matter when it was built. New houses, old houses .. whatever. They cost. My old house has an unfinished basement and the walls sweat. It is a hundred years old so OF COURSE this is the case. No French drains in those days. The walls sweat when it rains a lot, so what ? If one never wants to finish the basement and simply leaves it that way, the stone walls will continue to sweat and dry for another hundred years. The house is also built on blocks. Again, so what ?! The house has been adjusting for a century and will continue to do so for centuries to come. These issues have been the least of my problems. Why on earth would you keep from buying your dream house over certain problems that are either fixable (often by the seller himself) or not a problem at all. Just get a good inspector and then decide what to do when you get the report. Certain things you can live with, others you can’t. No house is perfect so don’t go looking for one that is.

Also, buying the crappiest house in the best neighbourhood ?! Are you serious about that one Garth ? That’s looking at property from a strictly financial perspective and the dumbest advice for buying a home that you are going to be living in (now a rental property, that’s another story). It’s a sure way for you to have to move out of the damned place in the next few years instead of buying a house that you truly love and whose attraction will hopefully stay with you over many satisfying years. The home has to suit your lifestyle. If you plan on having three kids then make sure you get a four bedroom, two bathroom place with a reasonable backyard. If you plan to remain childless and love to cook and give dinner parties, then get a beautiful large master bedroom with a gorgeous ensuite and an open concept main kitchen, salon and dining area.

Don’t go putting your money on a shitty two bedroom, one bathroom crapheap that you and your spouse cannot stand simply because it’s in the best neighbourhood. That’s like telling someone to go and get married because even though you cannot stand to be near the guy, he hangs around with a cool crowd.

That being said, location is ultimately the biggest consideration. You are definitely on the ball on this one. If you cannot afford to buy something that suits you in a decent neighbourhood then wait until that opportunity presents itself.

One other thing I would add. Try to stay away from the McMansion thing. You know, those developments with homes that look just like each other, one next door to the next ? I would tend to think that, like condos, in terms of value, these are not a good idea. Uniquely attractive features in a property are always a valuable thing. Of course they have to be attractive to most people in addition to yourself if they are to have any future saleable value. And I don’t mean granite countertops but rather things you cannot purchase .. such as mature trees, a nice view, a private layout, being next to a quiet park or something like that ..

Not sure about the stale listing advice either. All depends on the individual market. Sometimes there’s a damned good reason why a listing is stale and that reason is not something you may want to find out AFTER you’ve signed on the dotted line. Some stale listings are simply because they are overpriced, in which case you may be able to haggle it down since the seller has probably softened up somewhat with time. However, other stale listings are hiding something in the closet and you had better be damned sure you’ve done your homework before stepping foot in that one. A good agent should be able to help you on this one so be sure to get an excellent one that comes highly recommended. They will be able to tell you WHY the place has been on the market for so long and you can go on from there.

And for heaven’s sake, that whole crap about affording a house that is worth 3.5 times your income or whatever. That’s just a stupid blanket rule that does not apply to every case. Use your brains and look at your own situation separately from everyone else’s. Applying a stupid rule like that to someone who is 20 years old and to someone who is 55 years old to me is really assinine. I am looking to move to another house and I am in my forties. I would therefore definitely go for something that I can pay off by retirement so 3.5 times our household income is out of the question no matter what our dumbass bank manager says.

Work out a budget .. a good one that includes EVERYTHING (savings for retirement, emergency fund etc..) and you should be able to come up with an affordable number. And yes, a 20% downpayment is a MUST. If you don’t have at least that then you cannot afford to buy. Oh and if your job is not a stable one then don’t buy just yet or you will find yourself in a bind having to sell at any price and loosing money. Pretend you already own that home and see how well you would fare with your current finances .. and don’t be overly optimistic, rather the reverse.

Doesn’t anyone think for themselves anymore ? Do we really need all of these guru type blanket rules to tell us what to do ?


#87 Harvard Grad on 12.29.11 at 11:18 am

Garth, I understand your reluctance to post investment views – but on the flip side, your website to begin with does attract the “glass half empty mentality” crowd. I do tend to share the views of those who post a more negative view. Until the debt issue to addressed without sweeping it under the rug, I don’t any investment is fool proof – I would rather sit on idle cash then lose my cash in our corrupt system.

I appreciate your insight, it has brought a new understanding in the investment arena. I had read an article in the Globe (believe it was monday) wished I had saved it – they were commenting on REIT’s and a few of them were overvalued as what the writer claimed that everyone and there grandmother owns..its prime for a fall…what ever that means.

Garth, thanks for all your excellent posts, even on my business trips I try to catch up on your site, the Best Canadian site for finanical information without all the bias BS out there.


#88 bob's my uncle on 12.29.11 at 11:20 am

“Garth….Thanx for your input on alternative investments….still trying to get over my paranoia that thos markets are all rigged….”

Randy, I wish I could say that its just paranoia but its not. The markets are definitely rigged, the prop desks of GS and ilk have taken control. Invest in only what you can control and that is RE.

Unadulterated crap. You just lost whatever credibility your realtor-approved posts left in doubt. — Garth

#89 Amarillo on 12.29.11 at 11:25 am

To Jackie & #41 Patiently Waiting. Regarding your criticism of Smoking Man, your comments remind me of the old saying, “… any jackass can kick a barn down but it takes a carpenter to build one …” SM is insightful and interesting; what have you contributed besides your shrill shrieks of alarmed primates? Leave the artist alone.

#90 Susan from London area on 12.29.11 at 11:28 am

Fine you turn me into a believer than you dump me. This last post is Real Estate 101, been there done it, now looking for advise on the next step trying to play with the big boys dividends ect. I realize your just spouting your frustration at the generation xer’s , but I’m looking forward to when you write what your civil rights allows, “Freedom of Speach”. Happy new year!

#91 Carol on 12.29.11 at 11:41 am

I’ve been reading you for about 6 months now and I’ve never taken you for a whiner….so why start now? For every one of thoses know-it-alls that is giving you the gears about where to safely invest, there are 10 of me who appreciate the information and are looking into making changes in their finances because you seem to actually give a shit. So, don’t let those loud mouths make your dick shrivel, because, if it came down to it, I’m sure your kahona’s are bigger.

Thanks for your time, efforts and info!!

I love it when you talk to me that way, Carol. I was just hoping for some stroking. — Garth

#92 bigrider on 12.29.11 at 11:44 am

Garth to Bigrider in #71 -” Gold is globally valued. Real estate is locally valued. You cannot compare advice on the two.”

I am not sure to what context your answer to my #71 post pertains too Garth.

I am simply saying that there are many conflicting opinions from experts. You have had an opinion on both gold and real estate here in Canada. What difference does the valuation parameters make whether it is global or local. Experts have an opinion on both. You have had an opinion on both. You have been somewhat right on the short term in one(G) and so far at least, somewhat wrong in your opinion on the second (RE).

I just think that being successful in the investment arena seems to involve a great deal of “luck” in addition to hard work and intelligence , for lack of a better term.

My insistence on being well diversified in my own financial pursuits seems to be born from necessity, necessity because of my lack of that ‘luck’ factor that some others seem to have, others who always seem to be swimming downstream with a tailwind.

Back to you from someone who is always swimming upstream with a headwind.

#93 Deb on 12.29.11 at 11:51 am

I know that my comment is not entirely on the subject of today’s post, but something happened over Christmas which I would like to share. If this were a phone call, right about now I would say, “Please, Garth, don’t hang up”, because my thought has to do with my Grandma’s teeth, specifically, her gold fillings and her future plans for them.

To make a long story short, a few weeks ago Grandma told my Mom and Dad that when she passes away, she wants the grandchildren to have all of her gold, meaning her jewelry. My little brother (I’ll call him Gold Bug) is obsessed with money and follows the stock market a lot. He told me that the price of gold is high and wondered if Grandma might give us a little something as an early gift?

This Christmas, during dinner, Gold Bug asked Grandma if she had anything in particular planned for her fillings? Grandma looked startled, Dad turned red, and Mom told Gold Bug to help her in the kitchen right away.

Mom was really mad and scolded Gold Bug for being rude at the table. She then asked how he knew about Grandma’s gold fillings in the first place? He said that he could sometimes see one of them in the right light when she smiles a certain way, or when she laughs out loud. He said he now knows for sure how many gold fillings she’s got.

He explained that before dinner, when Grandma was sipping her glass of sherry, he started telling jokes to get her to open her mouth wider, so that he could get a good look. By the time he got to his Stephen Harper impression (Grandma is a Liberal), Gold Bug said he had “a positive ID” of seven gold fillings in total: three upper bridge and four lower.

Garth, my question is, don’t you think my brother is being a little pushy here? Shouldn’t this be something that Grandma should decide on her own? And this thing about an early gift, is that done very often in many families? If so, and if it has anything to do with teeth, I think it’s kind of creepy.

I just hung up. — Garth

#94 Last on 12.29.11 at 12:15 pm

Hey Garth please please don’t be put off by this enraged, flying, doomer rodents pleading doom and gloom, there are a dozen of us boomers looking for good unbiased advice for everyone of them. it’s just we never comment so you never heat from us!

Even if we don’t follow your advise 100% it greatly influences us.

Better yet do what Daring Fireball did and close your blog to comments, it will give you more time with those Amazonion girls you hang with:)

And if that’s not clear enough please continue to post on what to invest in

#95 Last on 12.29.11 at 12:15 pm

PS excellent post forwarded it to a real estate broker fiend of mine

#96 Happy Easter on 12.29.11 at 12:32 pm

#44 Nostradamus Le Mad Vlad vs. #40 AGIC

The former gets it; the latter doesn’t.


Thanks for the posts Nostra–made me laugh.

#97 Stephen on 12.29.11 at 12:46 pm

I’m actually looking for articles about where to put my money, Garth, as I am convinced I don’t want to hold more real estate. I was wasting time over the past year in bank recommended mutual funds, but am now looking for other options. ETF indexes appeal over the very long term, preferreds are nice, but like everybody I want a good return… not easy in an era of slow or no growth…

#98 Denisa on 12.29.11 at 12:53 pm

I’m still on the “money Road” with or without your direction in 2012. Buckled up for the wild ride ahead.Thank you so much for your advice.
Happy New year.

#99 VicHouseOwner on 12.29.11 at 12:57 pm

great post on buying a house. Please don’t stop posting on how to invest wisely!

#100 mousey on 12.29.11 at 12:57 pm

Re: The House Inspection
When my husband and I bought our first house – the ugliest house on a lovely street – we had no idea about any of the nuts and bolts. I was mortified by our complete lack of knowledge so I went with the inspector as he went through the house. He showed me where the main gas shut off was, the electrical box, the water line, the hot water tanks, the attic space, the vents, the drainage system, etc. We bought the place and I immediately bought a tool box and filled it with tools. Absolutely you need to go through any house you may want to purchase. Don’t just hire the inpsector – go with the inspector. I would also very strongly recommend taking the spouse with you. I didn’t and I was designated Ms. Fix it for the first few years. After wrecking a bunch of stuff and almost electricuting myself, the spouse became a little bit more involved as in we started hiring trades people to help us.

I agree with the poster that said every house is going to have problems, especially if you are buying at the low end and are buying an older house. Yes, you will be doing stuff on your own because you have no money, but these little enterprises will provide you and your spouse with great war stories to share with newbies and friends.

#101 on 12.29.11 at 1:07 pm

Investors Friend, some info here:

#102 Arse on 12.29.11 at 1:25 pm

Doomers will be right in the intermediate to longer term. They will have the last laught. Crony Capitalism will fail. Resources on earth are finite and has peaked. Capitalism is dependent on infinite growth. Infinite growth with finite resources is not possible. Printing money out of thin air is only going delay the eventual collaspe of the Crony Capitalist system, but it will collapse eventualy. There is no savings on the part of governmet and private citizens. Debt continues to pile up. No manufacturing. A massive amount of unfunded liabilities by all levels of government that continue to skyrocket. Private debt ballooning. Eventualy this thing will collapse. Not now, but after 10 years, possibly after 5 years.

You made that up. But it was scary. — Garth

#103 InvestorsFriend (Shawn Allen) on 12.29.11 at 1:32 pm

Number 29 Realtors In a Panic

Wonders “”why out of work realtors like bobs my uncle and investorsfriend have all the free time in this market”

InvestorsFriend (Shawn Allen) is neither a realtor, out of work, nor a condo pumper.

#104 Foggy on 12.29.11 at 1:37 pm

The only negative thing I heard about corner lots, a long time ago, was that you would get car headlights shining through your windows at night as people made their turns at that intersection. I guess the sweeping searchlights through your living room could get tiresome after a while.

#105 Blacksheep on 12.29.11 at 1:39 pm

Come on people, do you really think Garth is going to stop
promoting the four letter words, (investment acronyms) that are in the “system” ?


Somewhere, in tomorrows blog will read:

“Back, by overwhelming demand, every thing
you ever wanted to know about, ****.”

take care,

#106 Victor on 12.29.11 at 1:40 pm

Gold heads into 2012 at a five-month low after peaking at more than US$1,900

The Canadian Press – December 29, 2011

The price of gold is heading into 2012 at a five-month low after peaking at an all-time high above US$1,900 per ounce earlier this summer.

The precious metal is falling, with the February gold contract on the Nymex down $31.40 to US$1,532.70 — although it remains well up from where it began the year at just under $1,400 an ounce.

Dennis Gartman, publisher of a widely followed investment letter, believes the run-up in the price of gold is over.

He says investors are realizing the austerity measures to deal with a government debt crisis in Europe will be deflationary — not inflationary — and are selling gold, a traditional hedge against inflation.

Gartman also says hedge funds that were betting the price of gold would head even higher are also selling their positions, pushing the price down even further.

#107 LearningFast on 12.29.11 at 1:41 pm

Garth, thanks so much for a great post – I will be bookmarking this one for when the market starts to drop and I go in for the kill.

#108 InvestorsFriend (Shawn Allen) on 12.29.11 at 1:44 pm

MORTGAGE MADNESS 8.75%, only in Canada you say

Some progress…
CMHC is looking into this for me.

Disciple at 61 suggests I chalk it up to different banking legislation in the two counties and stop whining about it and wonders how it would help me.

Well Deciple, it won’t likely help me, I have no mortgage. I would however get great personal satisfaction if I could help to get 25 year locked in interest rates lowered from 8.75% to something close to the 4% that Americans enjoy. And to get it with reasonable pre-payment terms. I’m now on this like a dog with a bone. I will not drop this issue.

T.O. Bubble Boiy at 70 figures the banks will never offer it when rates are low.

Good point, but think about one bank coming out with this. What a public relations coup it would be. Banks just want to make their spread. If idiot investors will accept around 3% for this (with CMHC guarantee) and the banks take that in and loan it back out at 4.5% or so they would be happy to do that. Making 1.5% on your own money sucks. Making 1.5% on investor money leveraged up 10 times is sweet.

I’ll keep you posted on my quest to save thos Canadians with mortgages of 3 times income and more from the massive long-term risk of higher interest rates that they face.

Well, I am off now to place a call to the top dogs at Royal Bank.

#109 Realtors in a Panic on 12.29.11 at 1:45 pm

Realtor bob’s my uncle you are so delusional and clueless to reality. You are a mindless RE chearleader pumper AKA a Realtor who has a vested interest and can not explain away the facts. You sound like the American Realtors before their crash. The fact is Canadians are in THE MOST DEBT in all the G20. The fact is Canadians are in MORE DEBT then the Americans were at their housing bubble peak. Realtors want people to believe the laws of economics do not apply to Canada. It’s different …LOL BTW..I am sure you have heard about investors/HAM backing out of deals . Also the condo market in Toronto is at a stand still and worse thousands of condos keep hitting the market. Maxed out Canadian plus high costs plus lower take home pay equals a housing crash worse then the US. No wonder Realtors are in a panic posting of Garth’s blog. If RE times were good they would be here. Look out below.

#110 R2D2 on 12.29.11 at 1:46 pm

Shameless O’Flairity and Christine Lagarde are advising EVERYONE to give to the International Monetary Fund in order to help all those poorly managed countries whose leadership was democratically elected.

Meanwhile, all large international department stores are offering holiday specials on SPIN-DRY appliances.

#111 MrHulot on 12.29.11 at 1:46 pm

#93 Deb

Grandma also has some organs she probably doesn’t use much anymore. Run that one by your brother.

#112 Okanagan Renter on 12.29.11 at 1:52 pm

#93 Deb

This is one of the funniest posts I’ve ever read here! I almost choked on my muesli. Read it aloud to my wife and she’s still guffawing (and now she thinks she knows why I’m always reading the blog).

On a separate note, by way of an erratum, in my last post I wrote that “This blog is now one of my many addictions.” I meant to say “MAIN addictions.”

Ok, question to anyone who cares to answer: which online brokerage would you recommend? I’m split right now between TD Waterhouse (for TD’s cheap e-Series mutual funds) or Scotia iTrade (for low MERs). I’ve “invested” with fake money on Questrade but found their website a bit dated, like circa 1998. Thanks in advance for any input.

#113 R2D2 on 12.29.11 at 1:58 pm

Der Spiegel Spieks …,1518,806046,00.html

“In an interview with SPIEGEL, the 76-year-old takes stock of his career and the current crisis shaking Europe. The three main constants he has seen in the world, he says, are “money, avarice and greed.”

#114 Marie on 12.29.11 at 2:08 pm

“Clearly I misjudged sentiment. More people would rather fear risk than sup opportunity. They’re happier being negative than positive. After all, what’s the point of earning a nice yield on your investment when the world’s about to collapse into a steaming pile of systemic rubble?”

I’ve listened and thank you. Thing is lots of people want to know what to do with smaller amounts, like say $50,000, what to put into the TSFA specifically with that.

#115 R2D2 on 12.29.11 at 2:09 pm

Lagarde rings a Euro alarm bell

Yet again. — Garth

#116 Michelle on 12.29.11 at 2:14 pm


Tell your brother that when he’s ready to sell one of his kidneys on the black market for $10,000, then grandma might consider relinquishing her gold fillings.
Geesh, after that story I’d tell grandma to bequeath everything to charity…your brother has some nerve!

#117 Dragonslayer on 12.29.11 at 2:16 pm

Garth, I am hoping you are tongue in cheek about not giving any more financial advice.
A lot of us do appreciate the info and hope you will keep providing it.
Have a great New Year!!!

#118 Habbit on 12.29.11 at 2:18 pm

Another fine post Garth. Thanks. A few things to add. Don’t buy in the winter, or if there is a lot of snow around. Not only can you not see the landscaping you can’t see the condition of the neighbours and the neighbouhood in general. Ask for location of utility lines. They may have to be moved should you want to erect another structure like a garage or addition. Here in the Queen city you cannot have a garden shed over them. If you are a looking for a modest home 1000sq/ft or so find out if there is any low cost housing on the street or surrounding area. You do not want to buy beside one of these. Have a great day eh!

#119 kilby on 12.29.11 at 2:24 pm

#15. Not first.

Remember in most municipalities the homeowner is responsible for keeping the sidewalks in front of their homes snow free during winter months, corner lots can be a lot of work depending where you live…..

#120 SRV ES339 on 12.29.11 at 2:24 pm

… you also warned us about gold before it went up $400… but I guess it’s your blog, so you do the editing

I’ve recommended maintaining no more than a 5% PM weighting. When it rises to an overweight position, you take profits to restore. I counseled that repeatedly as gold values advanced. It was, as we now know, good advice. — Garth

#121 TooShytoBuy on 12.29.11 at 2:26 pm

Thank you Garth and Thank you House Horny Housewife… Very good info that I personally need right now. I’m in Calgary and feel it is extremely tough to find something to buy. 20% down is tough also. Not sure if I can wait for that. Too many noise complaints in my condo right now.

#122 Mike Rotch on 12.29.11 at 2:27 pm

I already bought a house, and God willing, I won’t be buying another property anytime soon. .

All things considered, from a black-hearted economist’s view, this “investment” is costing me more than it’s worth. (I treat it as a place to live, and at best a store of some value that will hopefully, over the long run, pace inflation).

My contemporaries who borrowed themselves into ruin “buying” into hotter markets than I did are frigging loony and will suffer for their recklessness.

If I ever have to relocate for economic reasons, I’m just praying I can sell without losing my downpayment plus premium ownership costs….dare I hope into the end of this bubble or the middle of the next! I certainly will not be house shopping wherever I move to!

Anyway, now I’m off the market (unless some jackass just happens to show up with an offer that results in a profit after all costs).

Since my RE is nothing but a source of minor angst and a roof over my head, I would much rather hear about REITs, preferreds, bonds, tax-efficient investing, macro-economic theory, etc. Blog on!

Recently received a cold-call from an RE agent. He opens with “Sir, I have a buyer for your house, are you interested in selling”

I loved the dead silence at the other end of the call when I responded “A buyer? Wow! So what’s the offer worth, and when are you planning to present it?”

#123 IIOinGVRD on 12.29.11 at 2:28 pm

Hi Garth,

I have a quick question. You’ve said, I think, that a 15% overall correction in Canadian RE is possible and would be devastating. I would like to know what you think the correction will be in the city of Vancouver proper, excluding the suburbs but including all forms of residential real estate. If you have separate numbers in mind for condos and SFHs that would be helpful to me as well. Thanks. Love reading your blog.

#124 SRV ES339 on 12.29.11 at 2:29 pm

… btw, very good buyers checklist

#125 msbboomer on 12.29.11 at 2:29 pm

I very much enjoy your free blog Garth; it is the only one I’ve found that deals with Canada’s economy, etc. Thankyou for your time and efforts. I have looked for your explanation on current global debt and why it doesn’t or won’t have a devastating effect on us. I don’t understand why such huge debt won’t catch up with us, and how we function with it now. I don’t think I am alone with my thoughts, and would appreciate a simple explanation on how global society works using debt as a major force. It seems to me that debt is increasing, and that enforces my fears as a possible ‘tinfoil hatter’, rather than a believer of human ingenuity and caring. I would very much appreciate your input on this, or a link, etc, thankyou so much.

Public debt’s largely irrelevant so long as it can be serviced. — Garth

#126 I'm stupid on 12.29.11 at 2:42 pm

Smoking man

This ones for you.

so you must think I’m really stupid.

#127 Mike Rotch on 12.29.11 at 2:44 pm

Re: 69 Canuck Abroad:

Toronto madness – $2.3 million for a semi above a shop.

In a past life, I rented a bachelor two blocks west at Homewood.

Have to wonder why anyone with $2.3M to spend on a home would buy here, rather than in a neighbourhood with real prestige……and whose neighbours won’t smoke crack on your porch if given the chance.

Downtown East ain’t the nice part of town!

#128 bridgepigeon on 12.29.11 at 2:57 pm

Especially in small lots like beach in TO, talk to neighbours (plural), where one wack job seems to wreck the lives of many neighbours. Also very important here is talking to neighbours about termites (aside from getting house inspected for this), I’ve seen the results several times.
On condos, the firefighters ladder goes up 17 stories I believe.

#129 Blacksheep on 12.29.11 at 2:58 pm

Like Ricky said:

“I’m not the kind of person to say atodaso, but you know what? Atodaso, I-****ing-atodaso.” (I told you so)

“Finance Minister Jim Flaherty says Ottawa would be open to paying into a bailout fund for Europe administered by the International Monetary Fund — as long as it was supported by the other G20 countries”

Our taxation “system” being put to good use.

take care,

#130 Bill Gable on 12.29.11 at 3:03 pm

The best Home buyer primer I have ever read.

Thanks a bunch.

#131 bob's my uncle on 12.29.11 at 3:04 pm

“Unadulterated crap. You just lost whatever credibility your realtor-approved posts left in doubt. — Garth”

The reality of it is crap, I agree.

1000 point drop in the infamous flash crash of 2010, proof that a small fraction of players can turn the table over in a matter of minutes. The SEC did have many ‘stories’ though.

#132 bob's my uncle on 12.29.11 at 3:07 pm

#109 Realtors in a Panic

Please present the factual information you have about HAM dumping condos, I’m interested in seeing it.

#133 InvestorsFriend (Shawn Allen) on 12.29.11 at 3:22 pm

MORTGAGE MADNESS at 101 posted a link explaining resons why Candain mortages are generally not available with the rate locked in for more than five years. Thank you.

Apparently it’s mostly because Canadians can get out of the mortage after 5 years on payment of a maximum of three months interest. And because bank deposits longer than 5 years are not CDIC insures.

Okay, but in the U.S. the banks are not allowed to charge interest differentials at all and yet those U.S. banks offer 3.9% locked in 30 years. And they are not funded by bank deposits but rather by selling the mortgages to investors.

We could do it too with some type of securitisation that passes the early payment risk on to investors, just like in the States.

And yes mortgage securitisation created some problems in the U.S. but that was about liar loans and teaser rates, it was not due to securitisation as such, just bad securitisation.

#134 Benny Hill on 12.29.11 at 3:33 pm

congratulations !

a useful post…its good to get rid of tunnel vision isn’t it?

Yes. I am happy for you. — Garth

#135 Kevin on 12.29.11 at 3:42 pm

Isn’t this like the bartender warning that the customer has drank too much?

CMHC warns on household debt

Here is year over year mortgage debt growth from Jan 2010 to Oct 2011.
1/1/2010 6.60% 1/1/2011 7.50%
2/1/2010 6.80% 2/1/2011 7.30%
3/1/2010 7.10% 3/1/2011 7.90%
4/1/2010 6.70% 4/1/2011 8%
5/1/2010 7.30% 5/1/2011 7.60%
6/1/2010 7.30% 6/1/2011 7.30%
7/1/2010 7.10% 7/1/2011 7.20%
8/1/2010 7.30% 8/1/2011 7.30%
9/1/2010 7.20% 9/1/2011 7.20%
10/1/2010 6.90% 10/1/2011 7.50%
11/1/2010 7.20%
12/1/2010 7.10%

Here is a graph of year over year mortgage debt growth

From my vantage point, the mortgage rules really have had no bite. House prices have still climbed to even more unaffordable heights in many places. The mortgage rules have not gone far enough, people can still borrow crazy amounts of debt. And Canada still has 0 down and cash back mortgages and through a loophole investors only need 5% down, not 20%. Tighter rules are needed or eventually the pressure of too much debt will weigh down the market by itself. Mortgage debt growing at over 7% year over year is higher than inflation, incomes and GDP growth and is totally unsustainable.

#136 Vigilante on 12.29.11 at 3:45 pm

bob’s my uncle….

Are you talking about Bob Truman ???…..Yuck, I feel sad for you.

#137 SRV ES339 on 12.29.11 at 4:05 pm

“I’ve recommended maintaining no more than a 5% PM weighting. When it rises to an overweight position, you take profits to restore. I counseled that repeatedly as gold values advanced. It was, as we now know, good advice. — Garth”

So… in a $200K portfolio, that’s a $10K PM investment and a huge $2K loss (?) through the most significant correction in a 10 year bull PM market… but I guess the “$400 correction” approach is bettter for business.

Believe it or not, some of us “Mom’s basement” dwellers are capable of selling the corrections (actually multiple entity collusion) and buying back once the fun and games are about over (been 100% cash for weeks now waiting for Ben to warm up the printer… or more to the point, just admit it’s already hard at work bailing out Europe).

You’re a speculator. I’m an investor. Capital preservation is a higher goal than greed. — Garth

#138 Prem on 12.29.11 at 4:16 pm

Brampton looks like a horrible car crash. Angry red dots everywhere and no I am not talking about people. Though one could say many are angry and worried about being unable to sell in this falling market. Nothing is selling and it seems many want out. Many are living on the edge but not need to worry. I am sure they will charge their credit cards and fly away as some have aready.

#139 bill on 12.29.11 at 4:25 pm

#93 Deb on 12.29.11 at 11:51 am
we always extract the gold and silver fillings from aged family members with a good set of smaller vice grips just before putting them on the ice-floe .
hope this helps….

#140 waiting on 12.29.11 at 4:29 pm

I agree with what you said except for staying away from corner lots. After looking at many houses in 2004, I found them all dark and gloomy because here in Vancouver (at least on the east side), the standard lot size is 33×122 and you are sandwiched in with your neighbours. I finally found a house on a great corner lot that sat up high and was across from a church. It allowed us the extra parking we needed and the house was flooded with light on three sides. Many homes in Vancouver have “in-law” suites which means high density and challenging parking.
The house like everything else in Vancouver appreciated in value dramatically in the past years and we sold in the spring and are now renting and waiting. I’m taking your advice and planning not to have all of my money tied up in one asset as it has been for so many years.

#141 not 1st on 12.29.11 at 4:30 pm

Garth, opinions on Calgary condo market? They kept building a lot of these right from 2008 to today. Lots of rental supply now. Prices have already pulled back a lot – is there more to go and will the decline outpace SFHs?

#142 sue on 12.29.11 at 4:43 pm

HHHW #86
A little preachy around the edges there…just sayin.

#143 C on 12.29.11 at 5:14 pm

Hey Garth,

Where did you find those maxi sized broads ?
Even in my part of southern Ontario is hard to put so many together at any one time.
Are they recently unemployed remax agents looking for new jobs ?

#144 flash on 12.29.11 at 5:16 pm

I have lived in 2 corner lot homes in the burbs and never considered an inside lot when looking. I appreciate the elevated amount of privacy. We are looking into the side of a home rather than abutting multiple backyards. This means less backyard noise (dog, kids, lawnmowers). Both homes had an extra 15 feet of frontage (space!) and a tonne of extra side yard space for kids and gardens etc. for the same price of a comparable inside lot…nice trade off for some extra grass and snow to look after…

#145 TheGees on 12.29.11 at 6:17 pm

Hi Everyone

Just want to mention that my brother, Jim and I are devoted readers of this blog. Thanks Garth and others on this blog whose comments have been…invaluable.
More of our stories to share shortly… Happy New Year !

#146 salonist on 12.29.11 at 6:19 pm

coin: something valued or used as if it were money in a particular sphere.

#147 P & T S on 12.29.11 at 6:25 pm

“Check out the Neighbours” – we used to need to use binoculars, since ours were 2.5km distant! Mind you in Central Australia (e.g. Far West NSW, Southern NT and Far East WA, your nearest neighbours will likely be >> 100km distant!).

As an aside what’s the “real” situation in Oz? MSM (via Internet) seem to still be feeding the Masses with “all’s going to be rosy” but Xmas communications from former workmates suggest this is a load of tripe, and that Retail has had another very bad “Spending Season”.

It would need to get VERY CHEAP INDEED for us to put up once more with the incessant bureaucracy endemic in the “Switzerland of the South”, so unless we see “decent” RE approaching 1 x annual mean income we’re staying put!

#148 Kip on 12.29.11 at 6:32 pm

Just watched a CBC year end interview with Jim Flaherty (Power & Politics). He’s a good man, smart and we’re lucky to have him.

Why do you continue to delete my posts? I did not think you were that thin-skinned.

This is not a political blog. Nobody cares if you like F. — Garth

#149 bob's my uncle on 12.29.11 at 6:35 pm

#138 Prem

Nothing is selling in Brampton because nothing is for sale, inventory is low. In fact inventory is low all over the province, many have decided to not sell and hold off for the spring market.

Hedge funds are betting on US housing, I guess Canada will go along for the the upside of course.

#150 Blacksheep on 12.29.11 at 7:14 pm

“You’re a speculator. I’m an investor. Capital preservation is a higher goal than greed. — Garth”

“Gamble all you want. Smart people don’t. — Garth”

So…if one speculates on PMs ,
one is behaving greedily and lacks intelligence?

take care,

If you speculate on anything you’re a speculator. Good luck with that. — Garth

#151 Andrew on 12.29.11 at 7:23 pm

How to buy: Move to Montreal where houses are 1/2 the price of Toronto.

#152 Smoking Man on 12.29.11 at 7:27 pm

#151 bob’s my uncle on 12.29.11 at 6:35 pm

Wow you are right. Very low inventory, as I predicted.

When you have negative population growth, prices go down. When you have massive population growth prices go up.

BOC, CMHC,F the media are all talking down RE for good reason…..

Rates going no where, Jobs yet to see them go….

Talk the market down to keep it stable…

#153 Blacksheep on 12.29.11 at 7:39 pm

Thanks for the: Things to do when buying list.
Wrote it down on the phone, for future reference.

take care,

#154 jeff on 12.29.11 at 7:44 pm

#138 Prem

Brampton is so bad that the Brampton RE board is known for holding back the sales numbers. Visited BIL and couldn’t believe the sea of for sale signs. BIL regrets buying in Brampton as sales and prices are down. He likes to blame a group of people then place the blame an overvalued RE market.

#155 Smoking Man on 12.29.11 at 7:44 pm

Oh Boy………SOAP becoming a law. what’s it mean..

Say some was to post a link on here… Like so…

Some one in the US can say it’s copy written….

Then Garth’s site goes down for months…….

It’s coming……………..

#156 Nostradamus Le Mad Vlad on 12.29.11 at 7:50 pm

Well, no snow, about 10C and the Pineapple Express keeps chugging thru. Not complaining! The skiers, snowboarders, etc. have their fun higher up.
Civilization Collapse Incl. the economy, but think back to Lech Walensa and how the Solidarity movement began; Italy Unsustainable Cut back on the pasta! China – Japan Pact Unless Japan sinks first; MF Global “Was it those ‘evils of serious and far-reaching consequence’?” Cracknuts “The U.S. government has already conceded that the end is nigh—and behind the scenes—they have been bracing for the fallout of a large-scale economic breakdown for several years.”; 2012 Predictions Before and after various uprisings / downsizings.

Jobless Claims Rise “These are the Christmas shopping season workers being let go, along with the massive store closings which are starting to happen as retailers who bet their survival on a strong Christmas season find they have lost their bets and are forced to shut doors.”; 7:19 clip Seven scams; Pink Slips making their rounds.
9:05 clip Ron Paul and voter fraud in Iowa; Voter Fraud To prevent a Ron Paul victory, and 1:47 clip Resignation of Bachmann’s chairperson, and endorsing Ron Paul; Russia spanks the US; 8:37 clip “Tehran is holding large-scale wargames in neutral waters near the Hormuz Strait.” — Note the word neutral, and possibly this where the 34 warships were headed to a while back; 4:07 clip UK war on free speech; Civil Liberties What dubya began, Obomba finishes; Global Murder, Inc. Obomba, drones and the like; Mexico The US must have its hands in everyone’s pants; Dictatorship Can’t leave the country? Mitt Romney campaigning with KKK slogans (the Nazis return); Human Sacrifice? Drug-driven medicine.

Lebanon PM There is no concrete evidence of The Toilet here; Your Memory in a bowl of Jell-O; 9:26 clip The smallest V12 engine in the world; Iraq – Libya Same deal — neocons in; Blind and Deaf Most can’t see beyond the end of their noses; US selling weapons to Iraq? They’ve just destroyed the country and sell them more weapons to blow themselves up.

#157 your aunt Julie on 12.29.11 at 7:52 pm

To bob’s my uncle:

Yes, Bob is your uncle and i am your aunt Julie, for now ! We have both supported you in all your endeavers up until this point but this scheme is not working out like you told us it would. We didn’ want to lend you the $20,000.00 in the first place and your uncle Bob said it was a hair-brained idea to start with.

Your uncle Bob said you were getting into the condo market too late and trying to flip an expensive condo like you were planning on buying would take a long while to unload. He told you the market had cooled but you went ahead and made the purchase (with our down payment) anyways and now it sits along with thousands of others. Unwanted by anyone.

We knew the idea of your uncle Bob and me walking up and down the street in front of your highrise would not drum up any business and those sandwich boards you made us wear, advertising your condo were extremely heavy for two oldies like us. We did it to help you and we thought it was a way to get back some of our 20,000.00 we lent you, but at $6.00 an hour we’ll both be dead before the condo sells. We got a lot of funny looks when we first started with the sandwich boards, and after the sign you put on the top corner “reduced” we got a lot of smiles and this past week when you added “again” to the reduced sign we got a lot of laughs. Many orientals laughing, holding their stomachs as they walked by….why would that be…we didn’t understand

We have followed this Mr. Turners blog as you told us you would be posting on here and trying to pump up the condo housing market and have come to the conclusion that it isn’t working for you on the blog either…..we figure at least 95% of the people that read or submit posts there know that the market has corrected and is not like it was a few months back when you came up with this flipper thing……the other 5% don’t care too much about the housing market and don’t have the money to buy anyways , so your uncle Bob and I think you should pack it in on Mr Turners blog and move from our house into the flipper condo, get a second job to pay the mortgage(real estate agents don’t make much as you know) and pray to the heavens we don’t become the US of A

signed your aunt Julie
ps the sandwich boards are in the garage

#158 Cato on 12.29.11 at 8:03 pm

Great advice Garth.

Tony and others who plan on shopping for a house in the next few years would be well served to look to the California real estate experience over the last 3 or so years.

The best real estate investments over last few years weren’t necessarily the properties with the biggest price discounts. I sat next to a San Diego realtor on a plane a few weeks ago and chatted about the market in his area. Good neighborhoods with good schools in good locations are in demand. Buyers are gravitating towards neighborhoods, not houses. Doesn’t matter how deep the discount on the McMansions in suburban wastelands no-one wants to look at em. The McMansion is unsellable while the post war bungalows in need of work but in good locations are approaching prices last seen in 2007. Anyone in these areas for the most part has been made whole since the crash.

When the melt does come to Canada where you buy will probably be far more important than what you buy. A modest house in a good neighborhood with little discount will likely far outperform in the long term a pristine house with heavy discounting in undesirable neighbourhoods. I think the most undesirable of all are the poorly thought out suburban wastelands. No matter how deep the discount, when the bubble pops no-one wants to live there. A good deal can make for a bad investment.

#159 Hoof-Hearted on 12.29.11 at 8:12 pm

Just got back from a drive down Granville in Vancouver

(7) ” SEVEN” houses in a row ” For Sale” by one realtor near 45th and Granville….signs have been their month

#160 from calgary on 12.29.11 at 8:16 pm

#141 not 1st

5% increase is what i am betting on (buying/selling in calgary for 25 years and yet to make a wrong call). cheers!

#161 Expat on 12.29.11 at 8:41 pm

Garth,hopelessly off-topic and a day behind,

Any opinions on the private REITs posting ads on the G&M? Promising >10%returns?

I have a unicorn for sale. Cheap. — Garth

#162 Tony on 12.29.11 at 8:46 pm

There’s also another rule of thumb which is never pay more than 100 times the monthly rent for a house, apartment or townhouse. In the 1970’s the rule was never pay more than three times the husband’s gross yearly salary for a house, apartment or townhouse, depending on the income. If you follow these rules it gives you a general guideline even if the bottom falls out of the market and you lose your shirt by still paying too much and following these rules.

#163 Smoking Man on 12.29.11 at 8:57 pm

#158 Nostradamus Le Mad Vlad on 12.29.11 at 7:50 pm

9:05 clip Ron Paul and voter fraud… Nice

Makes me think of today’s pic…..Closer than you think

#164 thinker on 12.29.11 at 9:02 pm

These guys agree with Garth on price drop, but warn on REITS

#165 the Phantom on 12.29.11 at 9:16 pm

Hi Garth, fellow blog dogs and lurkers everywhere!!!

I wanted to wish everyone a Merry Christmas (belatedly of course) and a Happy New Year. I wanted to share a few items that I felt were relevant to today’s material. You can NEVER go wrong with a pre-purchase inspection report and predicate the offer upon a satisfactory review. Our first place was a retrofit condominium in Winnipeg and Qualico was the agency that oversaw the “transformation” from rental units to condominiums. What a horror! We bought upon a floor plan and took options that in retrospect were overpriced and poorly done. The entire debacle was sub-contracted out to loser druggies and after we moved in, I discovered drywall dust, drywall and drywall screws in the cold air return vent, the bath tub upstairs leaked through the kitchen floor beneath because the seal on the overflow plate was never put on, the air conditioner failed the first time we really required it since the unit was never sealed properly and all the Freon leaked out over the winter. I could go on as there were other deficiencies however, my point here was we learned and when we moved out, the house we purchased had a complete pre-purchase inspection report. As you mentioned Garth, the guy spent better part of the day at our home and inspected everything from the basement to the attic and in between and we knew EXACTLY what we were buying and what items needed attention immediately and some time into the future. We put down 25% down payment and although $66,000 seemed like a King’s Ransom in the mid 1990’s it really pales in comparison to what some of our friends and colleagues carry today.

Have a great evening all…
the Phantom

#166 the Phantom on 12.29.11 at 9:18 pm

Correction to my last, the water from the tub leaked through the kitchen ceiling, not the floor as stated.

Sorry for any confusion that may have caused.

the Phantom

#167 Sp on 12.29.11 at 9:26 pm

A lot of BS on corner lot from those who do not live in one. It all depends on the location. I live in one for more than 20 years near the entrance of a division. At night (as I am writing), you can hear pin drops. What problem with the head light shining in the room?? What break in?? These come from misinformed people who never actually live in one. The good thing about corner is that you have to worry about one neighbor. One less grow op or teenage drug addicts or gangsters to worry about. Hey you don’t what your investment to go down in half cos of your neighbor do you? You never know what you can get from your neighbor these days.

I forgot another rule: Never buy a corner lot in a neighbourhood with grow ops, teenage drug addicts or gangsters. — Garth

#168 bob's my uncle on 12.29.11 at 9:30 pm

#159 your aunt Julie

Auntie, I’m a little embarrassed that you would come on the blog with untruths, but I cant get mad at you, auntie. I spoke to nanny last night and she was telling me with great despair that your illness is in fourth stage now and they still have not been able to locate the street person that you wrote the $20k check to. Uncle should of been keeping an eye on you, but of course his bottles are his first priority as we all know.

#169 TurnerNation on 12.29.11 at 9:36 pm

#69Canuck Abroad on 12.29.11 at 8:38 am

A perfect segue to my next thought: the other HAM (Hot *Anglo* Money) will love this house!

Yes, as a WASP I know that nothing is more “correct” and brag-worthy than a house with vaguely British accents (no pun).

HAM have bid up houses in areas like Bloor West, Annex, Beaches, and even Leslieville. And of course, in Forest Hill and Rosedale.

HAM go nuts for 80+ year old brick row houses. Large wooden window frames? Stained glass accent in front door? Instant bidding wars!!
So cliched, so predictable.

Audi A4s and Subraru wagons clutter HAM streets. Expect large “SUV strollers” parked on the front porch.

#170 TurnerNation on 12.29.11 at 9:39 pm

#72bigrider on 12.29.11 at 9:19 am

big-a-rider you shoulda loaded up on PBN when it was $10, as I suggested. ;)

.08/month dividend!
W. Brett Wilson (Dragon) joined their board now.
The stock marceta.

#171 TurnerNation on 12.29.11 at 9:45 pm

#77allister on 12.29.11 at 10:00 am

XWB appears attractive (9% yield on BMO Covered Call ETF) but let me tell you a story about XCM, now YCM.X.

Purportedly, they bought CIBC stock and wrote calls for income purposes.

Well, here’s the chart if you dare to peek. It got Enronitis.

#172 45north on 12.29.11 at 9:46 pm

aunt Julie: the sandwich boards are in the garage

pretty funny

Prem: Brampton looks like a horrible car crash. Angry red dots everywhere

Jeff: talking about Brampton: Visited brother-in-law and couldn’t believe the sea of for-sale signs. He regrets buying in Brampton as sales and prices are down.

and here’s Tony September 2010: Mississagua and Brampton will be the last two cities in the country to tank.

and I said: Pick half a dozen commercial plazas in Brampton. Every month check to see how many spaces are vacant.

how ya do’n Tony?

#173 TurnerNation on 12.29.11 at 9:47 pm

I meant ZWB is the symbol.

#174 45north on 12.29.11 at 9:53 pm

TurnerNation: HAM go nuts for 80+ year old brick row houses.

they will have to forego renumbering

#175 Westernman on 12.29.11 at 10:11 pm

Todays posting is a good one… just skimming through it I wonder… has anyone mentioned that if you buy now, no matter what the inspector finds or doesn’t find, and irregardless of corner lot etc. you will be buying at the top ( or near the top ) of one of the most overinflated real estate debaucles ever seen and the ONLY way to go after that is down. That wouldn’t matter if you were buying a small ticket item but the numbers on these houses is beyond any semblance of reason.
Bankruptcy court will be in the future for many of you…

#176 TurnerNation on 12.29.11 at 11:02 pm

176 45north on 12.29.11 at 9:53 pm

If they prefer, buy nearly new houses in bulk:

“HAM go nuts for 80+ year-old brick row houses.”

(A hypen here or there…)

#177 disciple on 12.30.11 at 12:04 am

Turnernatio, ZWB is a slight risk, it’s success depends on volatility. There are better bets for similar yield among individual stocks and without MER. I would stick with the major index trackers for ETFs for wealth preservation or simply to beat inflation, but for higher growth in 2012 and beyond, you may need to play with junior oil and gas, copper, and emerging markets. But this is more long-term. Right now, Eagle Energy etc… have found loopholes in F’s anti-trust tax law, so one should also continue to milk the REITS and business trusts while one still can…
Have a good night. – disciple

#178 Terence on 12.30.11 at 2:22 am

Garth you don’t know shit!

Then I’m pleased to meet you. — Garth

#179 O=E+R on 12.30.11 at 2:26 am


Outcome=event + response

#180 allister on 12.30.11 at 9:07 am

#173TurnerNation on 12.29.11 at 9:45 pm

You are right, I was talking about ZWB. I actually bought it on Dec 19th for $13.54. Its $13.80 now and I got the dividend to boot, so it’s worked so far.

The reason I bought is that the TSX is down about 15% since April and I thought that may be a good low for awhile.Before buying I overlaid ZWB on a TSX chart and its mirrored the market. I’m just trying to get a nice dividend and watch the market for strength and weakness. Also into HEX for same reasons.

I use the charts for entry and exits, so I’m not married to the holdings. I don’t hold in declining markets no matter what the dividend is. I will sell if need be.

#181 eaglebay - Parksville on 12.30.11 at 11:31 am

#153 Andrew on 12.29.11 at 7:23 pm

So are the jobs.

#182 Jessica6 on 12.30.11 at 12:46 pm

“I forgot another rule: Never buy a corner lot in a neighbourhood with grow ops, teenage drug addicts or gangsters. — Garth”

Never buy ANY lot in that kind of neighborhood. Most break-ins are committed by people who live within a couple of blocks from you. I found out the hard way living off Main St. in Vancouver.

Avoid as Garth said, neighborhoods with graffiti, no yard maintenance, a lot of low-end sports taverns, places with bars on the windows or nasty dogs.
Also avoid townhouse complexes with a high proportion of renters or single parents where the units feel like they are too close together as they could well be fine now but a slum in ten years.

Absolutely nailed it that it’s better to buy a lousy house on a good street than a great one on a lousy street. Though this is contrary to what any psychologist will tell you, it is still good advice.

#183 Jessica6 on 12.30.11 at 1:22 pm

I’d also add, in telling a good house from a bad one:

Avoid basements with dirt floors. Most of the time there will be damp and musty and most certainly cold.

Avoid low basements or houses with crawl spaces. Everyone I know who didn’t get a house with a decent basement regretted it unless they had several extra bedrooms to store all their crap instead.

Avoid electric/baseboard heat – too expensive, or a house with a furnace that is more than fifteen years old.

Be very wary of basements with a fresh coat of paint or lots of shrubs close to the house outside that appear to be hiding the foundation.

Best time to go house-hunting is around the ‘spring melt’ or even a really good spell of rain – great time to see how the roof, basement, eaves troughs and back yard hold up to flooding.

For reno/flips, look closely at finishing details, such as the edges of new carpets or flooring, new fixtures and so on. Look for any hints that they went with whatever was cheapest and easiest, or whether there are signs of good workmanship vs someone who did a half-assed job.

Live somewhere there are nice areas to walk close by, be it a park or a few shops or even just roads with side walks.