The big vultch

An orgiastic day for a Portland realtor starts with seeing BC license plates outside the window. In the last year the number of house-horny Lower Mainlanders snapping up Oregon properties has apparently doubled. Egged on by a strong loonie and flagging American prices, Canadians have been pouring across the border to vultch.

Of course, when you come from a city where the average property costs $756,000 and a SFH goes for a million, Portland looks yummy. The average house there sells for $268,200, which is 27% cheaper than it went for in 2007. Hell, Yankee realtor guy, we’ll take four!

As you may know, this experience is being repeated in a bunch of places. The most popular states for bottom-feeding Canucks are California, Arizona, Florida and Texas – all places where the 2001-2006 real estate bubble blew hard and big. The latest evidence shows Canadians are buying the crap most Americans don’t want – beater single-family homes costing less than $100,000. The majority say they intend using these places as primary residences, instead of renting them out, for example, to gain some income while they wait for the real estate market to rebound.

So, good idea?

On one hand, absolutely. In the past half-century there’s been exactly one occasion when US houses cost half the Canadian average and when the loonie could be swapped at par. That’s now. This has never happened before and a decade hence we’ll be amazed it ever did. Without a doubt, an opportunity to buy low. Americans are sour on real estate after it took a honking big bite out of their net worth, and happy to give their houses away. In fact, 13% of all the homes in America are currently empty.

I’ve told you for the past couple of years how real estate values in the frosty north have only one way to go. Logic, experience and financial acumen lead us to the same conclusion: sell Canada and buy America. New buyers here are being set up for losses. New buyers there, for capital gains.

But there’s always a but. This might not be right for you.

The biggest unknown is how long you need to hold a US property to reap your inevitable gain. Currently, things don’t look great. The latest S&P/Case-Shiller report shows still-falling prices in 19 of the 20 cities tracked. For example prices in Atlanta and Vegas have just hit the lowest point since this mess began. Valuations are back to 2000 levels in many places. Sales are flailing around at numbers not seen for three years, while deals for new homes are the fewest in recorded history.

The real news is nobody expects this to get better for a few years. Millions of new bank-owned houses are about to come on to the market, and a new wave of foreclosures is imminent. This follows a year-long respite while banks were investigated for robo-signing documents that kicked people like you out of their homes without due process.

But whadda we care? We’re northern birds of prey.

Some economists who seem smart estimate prices won’t recover to pre-bubble levels until the early 2020s. After all, it’ll take years yet to find jobs for the millions thrown out of work in the financial crisis, for credit to be extended more widely and all-important consumer confidence to return. Remember, even the lowest mortgage rates in memory have done zip to revive US housing. And this is a country where people can write off mortgage interest and property taxes from their incomes. Still prices drop – down 15% in a single year in Arizona, for example, where there’s a ten-year supply of vacant houses.

So, if you don’t have a decade to wait around, don’t buy.

Other things to worry about include money. Yes, houses are cheap, but you’ll need cash to close the sale and get the best deal. US banks are not hot on Canadian borrowers, which is why so many people are taking equity out of their inflated northern digs to acquire a southern home. That’ll be a gas when house prices here decline. And try convincing CRA you should be able to deduct the interest.

In fact, it’s this non-access to US mortgage money which has so many Canadians buying trash properties. Big mistake. Like acquiring a cheap $85,000 condo in a Florida building which is 60% empty. Imagine how much fun it will be paying the condo fees for all those vacant units!

Things are still worth what they’re worth. Even in the USA.

And watch the tax thing, too. You can’t rent out a house without filing with the IRS. You’ll be subject to withholding tax when you sell, sometimes at both the federal and state levels. You can’t overstay your time down south without risking full tax treatment on global income (including Canada). And now, thanks to Ottawa’s new agreement, every border crossing will be recorded by both countries. Just think where that’s leading us.

Finally, if you still want to buy and hold, get a local agent, a local lawyer and buy title insurance. Unless you understand foreclosures, short sales, points and titling, budget for good help.

The bottom line is that this is a once-only window on America. But it’s not a short-term play, not as cheap or easy as it looks, and laced with considerable risk. If you just want a place to hang out for the winter, rent it. If you think you’re not a mark, think again. If you’ve never wondered why Floridians or Arizonians aren’t buying up unwanted houses, do it now.

But if you yearn for a land where real estate agents pee their drawers a little when they see you, it’s heaven.




#1 First Place on 12.29.11 at 9:29 pm

Yep!!! First Baby!

#2 Stinky the Fish on 12.29.11 at 9:44 pm

Garth has awarded me number 1 commenter of 2011. Thanks everyone for coming out

#3 Vick on 12.29.11 at 9:48 pm

Speaking of peeing drawers (Depends undergarments), my concern is the American boomers’ similar age. What happens when even a small percent begin cashing out of their biggest asset?



#4 kilby on 12.29.11 at 9:49 pm

So many friends have bought both SFH and condo’s in Palm Springs area and Phoenix, nice but a lot of extra hassle if you have a busy life. Also may turn out like our sailboat….Great plans but turns out we don’t use it nearly as much as we thought we would…..

#5 truth hammer on 12.29.11 at 9:55 pm

Yeah baby….living in the USA is not the California dream it was thirty years ago. A Canadian cannot just come and go as they please. A stay longer than 180 days accumulated over any period ( not the six months a year the common misconception states) results in having to file a US tax return on global income. This is no joke…..filing will cost you thousands in accountancy every year you ‘overstay ‘ your welcome.

You cannot cut your own grass or paint the fence or work from home virtually in another country ( Canada) without risking deportation…you don’t have a work visa.

Thousands of of grey haired ‘snowbirds’ are now being hauled out of line at US Border Services because their traditional wintering in Arizona ten years ago did not fetch up a tax return…a felony that doesn’t go away. Canada has updated the US on all historic d financial activity of it’s citizens and the Americans are raking the miscreants in by the bucket. Thank you Government of Canada.

The carrying cost of real estate over a decade long holding period is a mugs game…’s called opportunity loss. There is only one cycle where it is opportune to buy real property…that is when the market is going up…otherwise it’s an alligator from hell…….current prices mean nothing dummy….it’s cheap for a reason.

In ten years you end up with a ten year old dump that needs a reno top to bottom. Like I said…don’t even think about doing the work yourself. You could end up barred from entering the US for ten years…or permanently banned.

I think people have been misled by the artificial market in Canada that has been fostered by a malicious government. People here think that real estate goes up forever. All that has to happen is the government will step in and do something magical…like drop the interest rates to zero everytime the ‘market’ gets into trouble.

The way taxes and inflation are in an upcreep here in Canada you’d better reconsider any frivilous expenditures…..unless of course you’re one of those greasy fat civil servants with millions in pension money to cover up any stupid mistakes you make in your lifetime. The rest of us don’t share your luxury lifestyle.

#6 Frank on 12.29.11 at 10:13 pm

Yup, better to rent in the U.S. than buy.

#7 Smoking Man on 12.29.11 at 10:19 pm

6 ken s on 12.29.11 at 10:39 pm

no idea of what you just said, but…..little voice inside my head said cool……

Don’t know what that means.

#8 Smoking Man on 12.29.11 at 10:25 pm

Garth how the hell do you keep coming up with uniqcish content every day 6 days a week.

I have fans here I try and rattle the minds be a bit funny, push truth and Bull. but man don’t know how you do it.

And just so no one thinks I’m sucking up You’re an ass.

#9 I'm stupid on 12.29.11 at 10:26 pm

#6 truth hammer

Well said.

#10 Deano on 12.29.11 at 10:34 pm

#5 truth hammer,

Uhm, hi. My wife works for the gov. She’s slim, not at all greasy and a total fox. I just wanted to set things straight.

#11 Expat on 12.29.11 at 10:36 pm

Been working on a short sale for a decent <10 year old US sfh. We have been working with a reputable realtor, but it takes longer than you may think to screen the listings as we are going for areas with good current rental cash flow – and many do exist – that may also be a future snowbird location in 15 years or so.

PS, thanks for the private REIT unicorn tip, kind of what I thought they were, Madoff only promised 8%.

#12 bob's my uncle on 12.29.11 at 10:39 pm

According to Martin Weiss, the US of A is doomed. So staying clear of their shacks is a good idea, invest in Canada.

Read at your own discretion.

#13 ken s on 12.29.11 at 10:39 pm

OMG this pathetic blog is becoming a weekend assignment
for shrink interns deciphering the econopsychbabble symptoms of hihiAnxiety –unsupported by the most rudimentary econospeak
This becomes a macrodeflator of the optics and atmospherics of runaway ego expansion into the wobbly parameters of unassigned beta variables…. …..Or,…Um….. something like that.
Just an increase of .01% in bond rates for Bolivia
can send dozens of anally challenged $$ poseurs
into a critical care neuroseizure, the therapy for which is Janis Joplin cooing “Help me make it through the Night”;
Jeez, these, (mostly guys, -econostuff is sort of a semimacho fake for guys who think hockey is less fun than gurls, ( except for the occasional riot**) —but contagen is an equal opportunity disseminator.) [–you like the (brackets?) –get used to it; Life 1.0 is in
brackets: ) –with unannotaded conditionals from which you would flee like a cat from a squad of dogwalkers.]
…..guys forget, that youth, is for getting laid (ask any anthropologist: Nature programs the hormones for optimum fertility.) –but, not to forget the maturation process: fulfilling the fantasies of 19C literature, now defaulted to descriptions of a lost weekend at Hotel California. Same kinks, but worse grammar.
Ya wanna unwind all those brackets? Or run it all together as a lit happening?
Woo, wish I had to lecture today –I am the lecturer, not from hell, but down the hall where they store the basketballs and lost
thongs. I often get the New Canadian E00.0, which is a shock absorber for sweet Asian princesses still looking for a decent Asian BBQ
and a bad boy with a bunged Caddy.
No, I can phake a knowledge of just about anything, to an average audience, —besides, my jokes are better.
Where was I? oh yeah: psychoreconstruction of
burnt out bank of nowhere admin juniors who in a fit of ego inflation takes personal responsibility for
the collapse of the Euro, the price of gold, and ZaZa’s malfunctioning nylons. Actually the last
item is the only important item to a shrink: There
are a zillion ‘Crise de….’ -this or -that, but the only important one is how to get laid, [the proof is
demonstrated by couples thrown together randomly in trenches under the most god-awful shelling, sniping and explosive pounding. They
make love like gods of mythology: all that adrenyln burns like phosphorous in your veins
and neurons.]

–the lack thereof is a multifaceted anxiety, about the size of
the Hubble field of vision in a clear millenium.
Those kind folk at the neuroburn unit will humour
your Euro fantasies but they Know what your Real Problem is, fella.

So, briefly: Economics for Tech Dummies and other Unidentified Malcontents.
–in just 2 principles: (See, we are already into
advanced simplification –if only Keynes had known…..
–I– There is only ONE bottom line : –>ONE. Uno. Un. Eine: ARE YOU HAPPY: Yes? No?

In the Heirarchy of Bottom Lines (Canlit calls this
construction a juxtaposed dichotomy (but WTF
do they know beyond navel lint and bigger budgets) —this is at the Top Always Was, Always will be.

–2– There is only ONE investment: TIME
-use it or lose it, or lose ALL. Waste it = a wasted life. Use it = anything is possible (see happiness above)

As ‘Alle Menchen Bruder Sein’ descends into
The 1812 Overture: British Grenadiers, French Musketry, Italian Alpine troops, German Cannon, Spanish cavalry, Portugeuse gallions. Greek sloops.
–dont sweat the quadrillions this way or that,
-remember the above, it saves time, because
the above is All You Can do, or ever Could do
When it all crashes I will sell you a seafood springroll with prawns, shrimp, maybe an oyster -scallops are extinct for the 99%, spring onion, celery and parsley, pepper, minced leek, beansprouts, a touch of minced jalapino and garlic in oil, splash of wine, soy sauce, 5 drops of vinegar 20 grains of br sugar melted Brie or Swiss wrapped in buttered spinach with a cool glass of Sautern, lemon wedges on the side. Perfect for your favorite log at English Bay or a T.O. Island afternoon.
or a go&go-back ferry ride.
If it all crashes, the going price will be $50 paper, $25 gold. or DIY ‘peanuts’ (ground fresh roasted
almond in the spring roll?) ( there is no upper limit to DIY: Any & All DIY), it just takes Time. But I wont be rich. I will be happy -even if I have
to give you the pastry free.

(Riot**) Hey there is an upside to da riot. It was an
all gender, all races, all religions, all nationality, non economic or other discriminatory separation. When we in
La-La act like Slobs, hey, we do it Together. So there, T.O., we may not be the best –but hell we sure can Rationalize with the best.

cost of van riot = $$$ 1 million
cost of Steevies’ look-at-me Econ / 20 nation conf.
= $$$ 1 B-i-l-l-i-o-n (artificial lake and all)

Jim Chu is the best cop in Canada maybe N.A. : 1 million solicited photos: a prosecutor’s dream: Free!

#14 Nemesis on 12.29.11 at 10:44 pm

Clearly, KS – you’ve been reading too much SmokingMan (albeit, I would be the first to concede that when lucid, he can be quite amusing)…

Nice one, GT. You know… you really should put this ‘show’ on the road. With video, of course.

#15 Tim on 12.29.11 at 10:44 pm

I can’t see any point in buying unless you would move to the States, as it is still cheaper to rent, there is less unknowns and less hassle. In many of the nice areas of the States-NY, San Fran, nice areas of San Diego, property is still expensive. Why not move to Costa Rica, where the literacy rate is higher, there are fewer guns, fewer strip malls, fewer Republicans, fewer tax hassles…

#16 LJ on 12.29.11 at 10:47 pm

ken s: after that rant, you missed a bracket…..

#17 mel in victoria on 12.29.11 at 10:53 pm

If you have a few $$$’s to risk you might want to buy back into gold at abt 1520( 38.2% fib retracement) hit 1523 today, closed 1549…or try for silver at 26…….but likely won’t be filled..touched it briefly today, closed 27.70….be careful…don’t get greedy. If you make a few bucks,take your profits…metals like all current markets are very volatile and can drop like poop from a long legged cow…

#18 smartalox on 12.29.11 at 10:55 pm

Scenes from the US Southeast: spent the holidays with my wife’s aunt, uncle and family. Parents in their 50s, 3 kids to put through college. House in a new, picture perfect suburb 60 minutes out of town, bought for 650k, six years ago. They figure that their house is now worth 475k, which is about what’s owing on the mortgage. So it’s not like they’re under water – except that the road to their sub is lined with signs trumpeting New Construction! Custom Homes! Starting at 200k!

Dad gets up at 5 to beat the traffic, gets home around 7. Next month, his office will move to cheaper rent, and his commute will double. Mom telecommutes, but also has to fly to meetings almost every week. The airport is an hour away in the other direction.

Oh, and pay no attention to those tar-paper shacks with all the cars and confederate flags out front, that you can see from the road through the trees, or butting up against the new junior high. Meth and moonshine, maybe, but at least they’re not… You know.

#19 Garth...question... on 12.29.11 at 10:58 pm


Not quite sure what you mean by:

“Just think where that’s leading us.”

#20 Jan Etter on 12.29.11 at 11:02 pm

#5 truth hammer on 12.29.11 at 9:55 pm
“The way taxes and inflation are in an upcreep here in Canada you’d better reconsider any frivilous expenditures…..unless of course you’re one of those greasy fat civil servants with millions in pension money to cover up any stupid mistakes you make in your lifetime. The rest of us don’t share your luxury lifestyle.”

Perhaps you can clarify who you are demonizing and blaming – all civil servants? Only those who have a pension that will generate income equivalent to “millions” in privately-owned income-generating investments at market rates? Fat people? Greasy people? Fat and greasy people?

Too bad you have to feel and incite anger and resentment towards others.

Am I correct that you think Jack was full of it?

“My friends, love is better than anger. Hope is better than fear. Optimism is better than despair. So let us be loving, hopeful and optimistic. And we’ll change the world.”

#21 John Saccy on 12.29.11 at 11:04 pm

Off-topic but very funny verbage about Repubs in USofA

Thu, 12/29/2011 – 18:18 | 2020602 kill switch
kill switch’s picture

All indicators point downward, I tell you. On the lobotomy box the other night I stumbled on what seemed to be sock puppets standing behind rostrums and hypnotically intoning “The American People…the American People…the American People.”

Puzzled, I speculated that it might be a troupe of performing autistics, but soon understood that it it was a debate among Republican candidates for the presidency. Why use people, I wondered? We could do it as well in software. Computer graphics, small recorded vocabulary, narcotic rhythm. Easy.

Someone named Romney was speaking. I checked the Wicked Pedia to see what manner of wight he might be. No surprises. Pampered rich kid, apparently not too bright, mediocre student in fancy private schools. A Mormon. Only one wife, though. A former missionary in France. It might have been worse. We could have bombed St. Denis.

I thought of all the Mormon missionaries I had seen in various countries, black-suited in Taiwan in August, peddling around like bicycle-borne undertakers, earnest, solemn, living in some eerie head-bubble inaccessible to outsiders. Oh help.

I’m going to become an ant, I decided. It would be less embarrassing. I don’t know how to go about it, but there must be a way. I’ll live in one of those high-rise mud nests in the Australian desert, except I think those are termites. How can they be termites with no wood to eat? Maybe they have it shipped in.

Among the American-Peoplers was Rick Perry, a Son of Texas in the mold of Bush II, dumb as turnips, inarticulate, a wing-nut Christian. I guess he’s waitin’ for thet ol’ Rapture-suction to whoosh him up to drink Lone Star with Chay-suss. Poor Chaysuss. Rick wants to invade Mexico militarily, but only with the permission of the Mexican government. Thoughtful of him to ask.

Does he speak Spanish? No. English? Almost. Any experience outside the US? No. Doesn’t need it. He has a direct line to God, who presumably speaks to him slowly, in words without too many syllables.

“The American People. The American People. We have to get America back on track. The Ordinary American. We have to get back to American Values. The American Dream.”

What the hell is the American Dream, I wondered? Seven credit cards maxed-out, living paycheck to paycheck, upside down on the mortgage in a boring house you don’t really like, a job you hate but the retirement plan gotcha, your little boy buzzing on force-fed Ritalin, wife and daughter gobbling Prozac and everyone wondering, “Is this all there is?”

Actually, yes. Well, maybe a week at Disneyland with that stupid mouse.

Then Michele Bachmann, clueless evangelical daffodil. Complete ditz-rabbit. May God save us from Christianity. Brighter than Perry, but so is anything not actually inanimate. Not visibly intelligent enough to disqualify her for election, but maybe she is dissimulating. No experience in the world that I can see.

“America was not created to be a nation of followers,,” Romney told his followers. The key to election seems to be to tell Americans how wonderful they are, stroke them like cats, avoid puzzling them, and keep saying “The American Dream.” Tell them that we’re a country of rugged individualists, just like Davy Crockett and Dan’l Boone. Probably we should wear coon-skin hats.

Somebody asked Romney, will he attack Iran if it doesn’t obey Washington? “Absolutely,” responded this apostle of the Church of Latter Day Pattons. Japan’s oil comes through the Straits of Hormuz, which his hearers believe to be a brand of beef stew. No oil, no Japan. No matter. “The American People….”

I’m going to slit my throat. Do ants have throats? A country of 315 million, nuclear-armed, able to wreck other countries it has never heard of in minutes, and the candidates sound as if they were addressing a warehouse of stuffed animals. This is the best we can do?


The American People. The American Dream. We must turn this country around. Ok, then the East Coast would front on the Pacific. Why would that be better? It’s probably some sort of real-estate scam.

Newt Gingrich. At least he’s been to school, though he’s smart enough not to emphasize it. The American People. The traditional values that made this country grate. Great. America is not a desperately sick over-policed welfare state collapsing into the Third World. No. Everything is as it always was. All we need is the Newt World Order and we will leap tall buildings at a single bound.

He too wants to attack Iran. The man has the military grasp of Tinker Belle. Grrr, bow-wow, woof.

Maybe instead of an ant, I’ll become an aardvark. Though I’m not sure what one is. I need a change of phylum. What do cephalopods eat?

At least we no longer have that low-wattage high-school cheerleader turned moose-huntress. Stuffed animals fore and aft, I tell you. Contemplating Obama, I swore I’d never vote for another black president. After Bush II, I swore I’d nver vote for another white one. My options were narrowing. Now I’m thinking Obama or Herman Cain. Slick Empty in the great White Yurt on Pennsylvania Avenue is still corrupt and invertebrate, but now only starts small wars, as in Uganda. Cain makes pizzas and seems to be a human being. It’s a novel concept but these are trying times. Besides they say he did sexually inappropriate stuff to some gals who want to be on talk-shows and get book contracts. Good for him. I’m going to start a group called Men Mad at Sanctimonious Priss Spigots. Cain can be a Founding Fondler.

Except for Cain (I think) and Ron Paul, the candidates all want to attack Iran. Rick Santorum too. I guess it’s a manhood issue. Maybe we could buy them codpieces instead. Michele could get hers from Victoria’s Secret, with sequins and flowers. Most of this crew were of military age during Viet Nam. How many served? Ah. Umm. Uh. Urg. A pack of martial dwarves without the tiniest freaking idea why the Pentagon can’t beat Iran.

I couldn’t take it. Before Ron Paul began to speak I went out for a gallon of Padre Kino red and an IV drip. I thought it might hold me over until I figured out how to become an aardvark.

After all, Ron Paul is tiresomely predictable. He would say hateful anti-American things. You know, we should get out of damn-fool wars, pick the military leech off the back of the republic, dismantle an empire that bankrupts the US, and end our perpetual state of martial priapism against Iran. Completely unelectable. A commie, I figure.

#22 InvestorsFriend (Shawn Allen) on 12.29.11 at 11:05 pm


I agree with Garth here.

Buying a U.S. house as a pure investment is probably way too much hassel.

But if you are a snowbird and prepared to use the house three months or more out of the year, then now is a Golden opportunity. It’s a generational opprtunity.

A retired senior I know well vacationed in Florida annually for about 20 years. Over the years he found that the houses were too expensive to buy and he rented for a number of weeks or months each year. Last year at age 79 he plunked down cash for a beautiful six year old 4 bedroom house in Tampa Florida. He knows a bargain when he sees one. He’s there now. Christmas day the temperature was 80 degrees F.

In this life, take opportunities when they are in front of you. Don’t act with wild abandon, but also don’t be overly cautious in life.

I will go on the record as predicting the Case Shiller home price will be higher this time next year. But for a senior that does not really matter. What matters is the houses are bargain priced and easily affordable for many. Don’t buy to sell in a year. Buy with a view to using the house for years to come.

#23 Dave From Calgary on 12.29.11 at 11:05 pm

There’s a strong correlation between an appreciation in the Canadian dollar and a “risk on” environment. Risk on will most likely ensue once there’s a recovery in housing in the states – but during this recovery, won’t your gains in housing just be diluted by an appreciation in the Canadian dollar vs. the USD?

#24 Angela on 12.29.11 at 11:14 pm

Yesterday and today’s taste a lot like book excerpts. Maybe Garth did take the week off after all.

#25 InvestorsFriend (Shawn Allen) on 12.29.11 at 11:20 pm

LOCK IN YOUR MORTGAGE RATE for 8.75% in Canada and 3.9% State-side.

Yesterday posted a link to an international monetary fund report that listed some of the reasons why Canadians are blocked from accessing reasonable long-term locked in mortgage rates.

The author of that paper basically tried to get CMHC and Bank of Canada to fix the problem.

He responded to an email from me today and he had been unaware that interest differentials apply in Canada. He focused on the three months interest which applies if the mortgage is locked in longer than five years and only applies after you first pay it for five years (before that, the interest rate differential applies if higher).

Anyhow if you agree it is an outrage that Canadains must pay 8.75% to lock in a mortgage rate for 25 years while Americans can get locked in for 3.9% (30 years) then why not let CMHC know:

at [email protected]

or the Canadian Bankers Association at:

[email protected]

And here is the proof that we must pay 8.75% to lock in

I am trying to get the Financial Post interested but so far no luck.

Canadians seem to just accept these things… But I am going to pursue this.

#26 ken on 12.29.11 at 11:23 pm

Re:The Big Vultch. Very interesting and logical,I have wondered a great deal regarding this topic but never have I read any commentaries until now.Really great information to think about.Thanks.

#27 Peter NYC on 12.29.11 at 11:24 pm

My advice to Canadians Have one clear reason why you are buying in the US. Is it income (and possible cap appreciation) – or do you want a place to bake in winter. Do not attempt to combine the two that is the classic Canadian gaff. The best income opportunities ate places you will never ever want to live in. If income is what you seek take the time to find a good rehabber outfit that is committed to managing your ppty for you. Make sure they have at least 50 ppties under management today that’s a good critical mass.

Residency risks are overstated in this blog. The greater risk is US estate taxes on death. The formula is unfairly applied to Canadians. Either buy in an llc and forego favorable cap Gains treatment – or buy us an irrevocable family trust- or just buy a small life insurance policy to use to apply against estate taxes.

If you want a place to bake in the winter don’t buy unless you are rich (and have money to throw away) it isn’t worth the headache to have a second home that far away. You are far better spending time at bed and breakfasts.

Garth very good posting – definitely excellent income opportunities here. I stayed out of the real estate buble except my modest NY home. I have been buying in the US with abandon.

#28 Peter NYC on 12.29.11 at 11:33 pm

Investors friend

I admire your spunk!!! Keep fighting this. Canadians are being completely hosed here. I am a dual can/us living in the states 12 years. I am taking out as many 30 year fixed as I can getting ready for the great inflation that’s is coming. After 4 mortgages it’s pretty tough to get rates much lower than 5.25%. But still this is so much better than anything Canadians can get over a long term. I have tried to get my US lenders to lend to Canadians – no can do. Canada has a more stable financial situation / bank regulation / and bond market they should be just as entitled to 30 year fixed
Money but the aren’t. Not many people in financial circles in Camada are even aware that Canadians are being screwed.

#29 JSS on 12.29.11 at 11:38 pm

“…so many people are taking equity out of their inflated northern digs to acquire a southern home. That’ll be a gas when house prices here decline.”

Garth, what does the bank do if this happens? Does the bank reduce the HELOC line if the house price declines?

Lines of credit are demand loans. They can be called at any time, but this is an unlikely event. — Garth

#30 Arse on 12.29.11 at 11:51 pm

If you think this funk in the U.S.A. is going to last only few years you are wrong. Look at what happened in Japan. America’s best days are gone for ever. America will be a major economic nation for some time, but it is in a gradual decline now.

#31 Valkyrie on 12.29.11 at 11:53 pm

The four most expensive words in the English language are, “This time it’s different.”

~ Sir John Templeton

#32 oslec on 12.30.11 at 12:01 am

Hey Garth, can you just use your real name instead of your pseudonym “First Place”. It sucks playing for 2’nd place every time :=)

#33 not 1st on 12.30.11 at 12:10 am

I think I would rather buy a REIT than dabble my toes in the U.S. property cesspool. Much less risky and less possible land mines to look out for. Plus Garth forgets to mention managing a property from 1000 miles away ain’t the easiest thing so you might need a property manager who will take 10% of your rental earnings.

Also, its funny Garth didn’t point this out but its very hard to evict a bad renter in the U.S. It can take up to 6 months to get them out if they decide to frustrate your efforts in the courts. All they have to do is file a little paper work for free to contest the eviction. All the time they get to stay in your comfy little rental and probably peeing on the carpets every day. Imagine fighting that battle from here in Canada.

#34 Randy on 12.30.11 at 12:16 am

About 40 years ago my parents bought a property in a development near Orlando….They rented it out for about 15-20 years…They decided not to move to Florida….We sold it but the Cdn Dollar was down in the high 68 cent range….When they sold it after taxes and other fees they still lost money…lesson learned…

#35 Uh Oh Canada on 12.30.11 at 12:16 am

I’ve been saved by Garth twice. First, on buying a home locally. Second, on buying in the States. Garth has eliminated my desires for both and has helped me to be content while I wait. The wait would’ve seemed too long if it wasn’t for these excellent posts.

Wait, Wait, Wait.

Thanks again Garth.

#36 gtrz4peace on 12.30.11 at 12:22 am

Great points! Being from the US I also have to scratch my head when people say they will use their newfound southern pieces of red, white ‘n blue paradise as primary residences. Are each and every one of these people folks with no health conditions? Or people who never need to work again and can afford a hit of tens of thousands of dollars for medical expenses?

Cause there still is no real resolution to the lack of healthcare in the US. Perhaps all these folks intend on working at Walmart? Ooops – crappy to zero healthcare benefits when the bedpan hits the fan. Or Starbucks dream “part time job”.

Those are scams where they give you just enough hours to work you good ‘n hard, and NOT enough hours to qualify for healthcare in a majority of cases where there is chronic illness. From personal experience, having looked at every possible US option for those with “pre-existing conditions”, if it sounds too good to be true it always is.

One person in their late 40’s paid $1000 per month just for the privilege of being allowed on their state’s Blue Cross Plan for people with pre-existing conditions. These plans are always major medical only, no dental or vision benefits, no trips to the massage therapist or naturopath either. Just $ 12,000+ per year to know if you need surgery or tests, you will hopefully get them.

Add these costs up over years, and the US is not so inexpensive. Unless you come in with one of those nice jobs that still offer good health benefits. But there are millions, and millions out of work in the US and the numbers are daunting.

So what are your odds of landing that job with the great healthcare benefits?

While President Obama’s healthcare legislation was an improvement over the present system, I am told by folks in the insurance industry there are loopholes big enough to drive a truck through, if the insurer does not wish to pay for your medical expenses. That is because the legislation was largely written by the industry. I am not here to debate how good or bad that was, it is just a fact.

And if the hardline right wing nutjobs take the White House they will simply get rid of Obama’s “socialist” healthcare law and everything goes back to corporate, for profit control.

So just don’t plan on having any health problems in the US, and you are fine. NOTE: This is NOT to say Canada’s system does not have many problems. However, the right to see a doctor if you are a citizen without being “denied coverage” is not one of those problems.

For now.

#37 not 1st on 12.30.11 at 12:27 am

Financials eh? Wouldn’t touch em with a 10 foot pole. See the YOY share price performance of these stalwarts;

BofA: -60.38%

Citi: -44.76%

Goldman Sachs: -46.41%

JPMorgan: -23.03%

Morgan Stanley: -45.24%

RBS: -50%

Barclays: -34.32%

Lloyds: -63.02%

UBS: -29.33%

Deutsche Bank: -28,55%

Crédit Agricole: -56.04%

BNP Paribas: -37.67%

Société Générale: -59.57%

#38 45north on 12.30.11 at 12:36 am

Smartalox: Scenes from the US Southeast

you know every time I go to a place, it shows me that my image of it was wrong . I’ve never been to “The South”.

John Saccy: Do ants have throats?

no they don’t, they are in fact quite unlike people

article in the Ottawa Citizen: “On the central bank’s Christmas list is continued borrowing by Canadians who can afford it and less borrowing by Canadians who have already pushed themselves to their limit,” Shenfeld said.

Read more:

well Shenfeld, I think a card would be just fine or maybe a short message:

“Merry Christmas Mark Carney”

#39 C K on 12.30.11 at 12:58 am

Speaking about vultching, I know where I’d spend my $750K, how about for a bunker in the Adirondacks?

Garth, I think this may top your bunker, this one is complete with a cabin up top, and another home underground – when it’s time to dig into the KD. It’s a former Atlas F missle base that’s converted to a home. The price has just been “drastically” dropped from $4.6M to $750K – a great vultch!

Listing details here if you’re interested in trading in your bunker in the Big Smoke:

If you splurge a bit more you can also get your very own runway and adjoining hanger. Maybe trade in the Harley for a Cessna?

#40 Nostradamus Le Mad Vlad on 12.30.11 at 1:25 am

Strange pic, but this is a strange blog. Nice post, but not our cup of tea. Happy where we are.
Oil up Near US$100 / brl.; Brazil Avoid the pic, this is economics; Same as US Businesses sliding after Xmas; Greek Families abandoning kids; Morgan Stanley cutting jobs; BRICs = NWO; Euro Banks hoarding cash and PMs; Centralized or globalized Europe? 17:05 clip Entertaining. Garth won’t buy into this.

Mass Exodus To where? There are no new good jobs being created in the west; The Economist on Ron Paul “Among the Directors of The Economist are Sir David Bell, a trustee of Common Purpose, and Lynn Forester de Rothschild.”; Default Bring it on; Algorithms Nice chart, too complicated for me; Garth Moonlighting? Motivation Lose your weight or lose your money; One Fingered Salute “Look folks, it’s simple — what the IMF wants, what the banksters want, here, there, everywhere, is the same thing: Your money, as much as they can get, and they don’t care what happens to you.”; China Using the withdrawal method; Long Clip Collapse of the Soviet Empire — An insider’s view; Gold Bubble and Soros.
Smoking Man SOPA seems quite nasty, and here. Plus, and the NDAA Bill is totalitarianism, and Overlooked Language in 1540 and 1867; 8:18 clip Ron Paul in 1998 saying the UN looked at disrupting the US; Anorexia Children as young as three being treated. A further example of what the withdrawal of money does; Liverpool Thatcher was told to cut Liverpool adrift in 1981, but she was an Ironing Lady, watching the pennies while governing; UK – US Dumping their vets onto the street.

Drones and HAARP ‘Quakes in Iran soon to come fromm HAARP? Nukes Russia – US – China. Iran is taking care of its own; Stuxnet (courtesy US and Israel) has some family members; Letter to farmers and consumers; Gun Control and Second Amendment Obomba – Soros want gun control, gun and ammo sales have skyrocketed; Pakistan ignores US, honors deal with Iran; US missile sub “Obsoleted by the START II treaty, these Ohio Class ballistic missile submarines were converted from being able to fire 24 Trident MIRV ballistic missiles to firing 154 Tomahawk cruise missiles which can also be nuclear armed.”; Privacy Invasion starting 2012.

#41 Sue on 12.30.11 at 1:49 am

#4 Kilby:

My hubby would love to buy a sailboat –

What do you have, and how much?

#42 Cannikin on 12.30.11 at 2:05 am

Hi Garth,

Despite what you might think in your previous post, some of us do listen to your investment advice.

I’ve made a hefty return on CIBC preferreds. is being called at the end of January.

Thanks for the excellent advice and keep up the good work!

#43 Bill Gable on 12.30.11 at 2:25 am

Buy in Los Estados Unidos and good luck. Family member is finding out the hidden hooks of being an Alien owning in the States and is suffering buyers remorse, big time.
Tricky enough at home.

I think people have lost their minds. I keep seeing friends walking into minefields that would scare Jesse Livermore.

#44 Daystar on 12.30.11 at 2:27 am

A bit of spin and propaganda for some readers to mull over (I know, its off topic). So… as seniors age and scale down (or hit the retirement home), how is this good for housing? How (I know, we’ve covered this one to death or should have) can over 20% of our GDP coming from housing be good for our economy? Clearly 20%+ isn’t sustainable. Ask every nation who’s gone through a real estate bust (y’know, the one’s bloated with public debt and if not on the top ten list for sovreign debt crisis’s, headed there). Same trademark story, housing represents the high teens in GDP (if memory serves me well, the U.S. never hit this high a percentage of GDP with their housing boom, didn’t they peak at like 17%?) and if by some chance governments were dumb enough to juice the market to over 20% extremes, it went beyond ugly. Ask Iceland. Ireland. Portugal. Spain.

Doesn’t past tense, rear view mirror and memories of hard economic times set to repeat come to mind when reading spin from links like this, we can put the horse in front of the cart, right?

#45 Mark on 12.30.11 at 3:24 am

InvestorsFriend (Shawn Allen), you’re so silly. 30-year mortgages have destroyed the finances of the US government and were only viable due to the existence of Fannie Mae/Freddie Mac. If anything, the government should be withdrawing itself completely, in both Canada and the USA, from financing private sector purchases. The injustice is that Fannie, Freddie, and the CMHC even exist at all, as these entities divert capital away from productive things, and towards more housing.

#46 BC Boy on 12.30.11 at 3:43 am

We live in a very interesting era.

#47 Ben on 12.30.11 at 4:21 am

Back home to Deadmonton for Xmas from Dallas. Went out for a few beer to the local Franklins Inn in Sherwood Park. I paid $8 for a draft beer! You have got to be f %&*ing kidding me? I can buy a case of beer for $10 in Dallas.
Talking to this forty something divorced bi$ch, higher then a kite on herself. Ya ya.. blah blah… I own a 2300 sq ft home worth $500,000… blah blah… I asked is it a two story? She said ya… I asked her if it was on a zero lot line? She seemed confused so I asked her if she could pass a cup of sugar to her neighbour from her kitchen window? She didn’t answer. LOL
Talking to other people, it is pure oil, gas and pipeline conversation. There is dick all else here, I’m already bored.

#48 new-era on 12.30.11 at 6:24 am

Take a look at the Japs.

Low interest rates has slowly ate away at their economy.

Instead of a sudden descend followed by a recovery.
Japan has spend the last decade descending. Now they are finally hitting a credit and debt crunch and is looking at a further descend.

As long as interest rates remain low, the US will follow in the Japanese model.

#49 Jas Girn on 12.30.11 at 6:28 am

This is unrelated but I would vote for both Garth and Ron Paul. Lol.

#50 new-era on 12.30.11 at 6:30 am

#38 45North

Read more:


Interesting article but it looks like CMHC is playing both sides. Forecasting a 2% rise in price. I find it interesting that just several months ago they were fore casting 12% then 10% and now 2%. Wonder how they come up with these voodoo figures. Can’t be scientific or statistical analysis.

#51 M. on 12.30.11 at 6:34 am

Garth, You repeatedly insist that homes under $100,000 (whether in Canada or the US) are garbage. I have to ask respectfully… Have you travelled across Canada or the US by car and visited all the rural homes that are under 100k (or more importantly the towns or villages where they reside)? Isn’t it also subjective as to what each Canadian might consider a worthwhile home? While I can’t personally speak for what exists south of the border, I can say that parts of PEI (Morell, Montague and much of Eastern PEI), Nova Scotia (the Annapolis Royal region for one), New Brunswick (Woodstock area), Quebec (the Laurentians i.e., Val David, and the Eastern townships bordering Vermont), and southern Manitoba (villages neighbouring Brandon) have some very attractive properties. True, some towns are a little stand-offish to outsiders, but has i.e., Toronto been that friendly anyhow? Besides, it’s all about integration and flowing with the cultural nuances of an area in rural Canada. You make friends by being flexible/friendly. I know PEI particularly well, and the province as a whole offers terrific value. I bought a fixer-upper for next to nothing and sold it for double in Morell. Do you know Lakeside? Well, I’d suggest that you go and look at it – the beach will blow your mind – it’s 20 minutes from Charlottetown. There are several heritage homes under 100k there. My main concern is that when you suggest that it’s not possible for Canadians to purchase already existing affordable housing stock, you end up indirectly jacking up the housing market (however small or large your impact may be). I think if Canadians had the same aggressive attitude that they have when they shop for so many other less valuable items when they are out house hunting, perhaps our overall property market wouldn’t be as inflated as it is today. What about the good old-fashioned ethic of saying “that’s BS; I’m not paying that much for this; what a rip-off; the housing pushers can go screw themselves…” Canadians seem to be like passive zombies ready to forget the pricetag of a house, but ohhhh wait, that gas, it’s gone up three cents and then we’re upset. P.S. I recognise that some homes under 100k need cosmetic work, but really, are Canadians that lazy and ignorant these days that they can’t pick up a screwdriver or a ‘1-2-3 Steps to Home Repair’ guide from Home Depot to learn how to change a light fixture? Our rural ancestors from the local police chief to the local blacksmith built their homes themselves from scratch! And, even today, many rural Canadians still build their own homes themselves.

#52 James Carter on 12.30.11 at 6:42 am

An excellent and enjoyable article! The parallel between the Canadian and Australian property markets is unnerving. Actually, substitute ‘Canada’ with ‘Australia’, or ‘Vancouver’ with ‘Sydney’, and the article would be just as accurate.

The housing sectors in both Canada and Australia are ultimately doomed. The party’s over. Here in Australia vendors are removing their overvalued houses from the market and leasing them instead, because nothing is selling, at least not for the ridiculous prices the owners expect, and auction clearance results have dropped to dangerously low levels.

Australia and Canada have both been running Ponzi schemes with our housing assets. This is ultimately very damaging for our future, and totally unsustainable, when each spare dollar of disposable income is wasted on overvalued homes and excessive debt, while young families battle to find affordable shelter and speculators hoard the real estate stock!

I wonder about the psychology of property bulls and property investors in this environment. Do they really think this is a new paradigm where housing bubbles never burst. Reading the spruikers comments below, you’d have to say so!

If these people are still living in such a world of delusion, what hope is there for society. Can the ‘Occupy’ protests ever change the minds of people who are that sure the bubble is a myth?

Let’s hope we can change their outlook. For if we can’t, Australia and Canada are doomed.

#53 House on 12.30.11 at 7:12 am

I don’t know about house prices, I was young then and stuffing money in an RHOSP to vulch in the 1980’s, but in 1973 you could get 1.06 US for a Canadian buck.

#54 Devore on 12.30.11 at 7:19 am

#20 Jan Etter

You people are so easy.

#55 The American on 12.30.11 at 7:29 am

At #23: Dave from Calgary, in answer to your questions, NO. The CAD will not continue to appreciate against the USD. In fact, the CAD has been depreciating for the past few months gainst the USD. This trend will continue. The CAD will be aother $0.08-$0.11 less in value against the USD this time next year.

#56 SB aka Mr. B. on 12.30.11 at 7:35 am

Hi Garth, just had to add to one of your lines in this blog.

Unless you understand foreclosures, short sales, points and titling, budget for good help….or if you have a relative (someone you trust) that is living in the US that is actively buying SFH’s from the bank (foreclosures). Investing in though’s individuals might be an option.

#57 Debt's Dark Embrace on 12.30.11 at 7:39 am

If home and property values decline by say 25% and the owners are underwater and banks hold a mortgage on those properties, what happens to the value of bank stocks Garth ? Just wonderin’…………

#58 Canuck Abroad on 12.30.11 at 7:57 am

Garth you are correct to raise the tax issues but you are missing a couple of equally big problems.

US residential property has massive title issues. There are literally millions of homes with no clear title because of MERS / robosigning. And horror stories of houses being seized by banks because some past owner defaulted. This is covered regularly on Yves Smith’s Naked Capitalism blog.

And on top of that there is the problem of the US becoming a fascist police state. Do you really want to be groped, prodded, scanned and interrogated by the TSA every time you go to visit your “investment”. Seriously, why not vacation just a little further south in Central or South America? The prices are equally good.

#59 yorel on 12.30.11 at 8:20 am

A Canadian buying property in Florida had better check the property taxes and the insurance costs. Of course, you may have trouble even getting insurance. Better factor in those costs when you’re thinking of your great deal.

#60 Stinky the Fish on 12.30.11 at 8:32 am

Who would win in a fight?

1. Diaper boy and baby –

– or –

2. These sad sapps walking down the street –×765.jpg

Cast your vote today. I vote #1

#61 Ret on 12.30.11 at 10:09 am

Foreign immigrants/Permanent residents should also be filing global income tax statements in Canada too IMHO. They are supposed to, but nobody in CRA really checks countries outside of the US. Both of my Permanent Resident neighbours have rental properties, one in Greece and one in China and who knows if they claim that income or not?

I guess that CRA has so much of my tax money, that they don’t need any tax revenues from my neighbours’ foreign holdings but I’m sure that they claim every cent of their foreign rental income anyway. Right.

The US has got it right on this one. Those who benefit from Canada and live here should be paying tax on their global income or face stiff penalties and a criminal record. CRA loves to take on Canadians over every dollar, but fails to go after those who do not report foreign income or properties. Families are dropped off here and living in million dollar houses while claiming to have no income. Amazing.

Just try that, “I live here with no reportable income,” nonsense in the US. Believe me, you do not want to mess with US tax authorities or you may never see your place in Arizona again. The US actually enforces their tax laws. You lie, you leave. Forever.

As a tax cheater, you will have committed a federal crime against every citizen in America. You are lower than scum. These US tax guys have no heart. It is all so un -Canadian.

Being an immigrant to Canada does not mean you’re a tax cheat. You sounds like a xenophobe (or jealous). — Garth

#62 Trev16 on 12.30.11 at 10:11 am

American #54

In fact, the CAD has been depreciating for the past few months gainst the USD. This trend will continue. The CAD will be aother $0.08-$0.11 less in value against the USD this time next year.


Are you kidding me???? US dollar will continue to show strength even though its debt and obligations are now hitting 100 trillion.$100_Trillion_in_Debts_%26_Obligations.html

More than likely there will be a bank holiday in the US sometime in 2012 as the US needs to reset its currency value. Here is a clip of VP Joe Biden discussing the option of a bank holiday with Corzine a few years back.

It’s all good.



Of course there will be no bank holiday, no US currency reset, no hyperinflation. Don’t bet against America. You’ll lose. — Garth

#63 Buy in the US, rent in Canada on 12.30.11 at 10:52 am

#5 truth hammer on 12.29.11 at 9:55 pm

Truth Hammer is misinformed about the majority of his posting. I have bought and sold many houses in the US; its just a process like any process, you learn and understand it. Its actually a very simple process. Truth Hammer sounds like a realtor trying to scare his customers that are fleeing to the US.

Currently I just bought a beautiful 3 bedroom, 2 bathroom house in Florida on the Gulf Coast as a winter retreat. It has 80 feet of seawall with sail boat access to the Gulf in minutes, new pool, new kitchen, granite and stainless steel, crown moldings, pot lighting with dimmer switches, new casings and doors, new bathrooms, new roof, new hurricane impact windows, double car garage on .25 of an acre with an irrigation system. All this for $260,000, that’s value – price is what you pay, value is what you get.

If you want excellent information on this subject read the book “South of 49: The Canadian Guide to Buying Residential Real Estate in the United States” It’ll tell you everything you’ll want to know.

I agree with Garth, you must have the capital to hold the property at least 10 years. The other aspect is location, location, location. But buying now in the US is absolutely the right move to make. In fact I’m thinking of buying another house, if the location and the price is right. Purchasing value and at a discounted price is how you make money. You make your money on real estate going in, not coming out – so make sure the price you pay is right one.

One last thing if you’re contemplating buying a house in Canada right now, you should look at this sight and plug in your numbers

Buy in the US, rent in Canada – for now.

#64 Rob on 12.30.11 at 10:53 am

Garth… please put up a scan of the Toronto Star Business section December 30th with Year of the Highrise and the bubble crashing in to the tower… That image is not available online and is so very unusual for a major paper to publish.

#65 jess on 12.30.11 at 10:59 am

John Saccy

page 64 and read the comments from Mr Romney’s economic advisor in regard to this paper (S&L fiasco ) by GEORGE A. AKERLOF University of California, Berkeley PAUL M. ROMER University of California, Berkeley Looting: The Economic Underworld of Bankruptcy for Profit

Lincoln Relators
pay taxes no /pay fines yes ?
SEC’s Division of Enforcement, Robert Khuzami, said, “Our in-depth investigations have uncovered pervasive corrupt practices in the municipal securities reinvestment market, and we are requiring financial firms one by one to step up and pay the price for their misconduct.”

GE Funding Capital Market Services acknowledged that some of its traders entered agreements to manipulate the bidding process for municipal investments and related contracts, among other activities, the Justice Department and SEC said.
Eighteen people including the former GE staffers have been charged and nine have pleaded guilty.
GE Healthcare settled claims under the federal False Claims Act for a period of billing Medicare from 2000 to 2003, where Myoview was allegedly diluted in order to maximize doses available per vial and patient injections, inflating Medicare’s reimbursement.

How Corporations Pay More for Lobbyists Than in Taxes
December 20

#66 Van guy blazin kush on 12.30.11 at 11:01 am

Will the Okanagan see a 10 year supply soon? Currently at 17 moi.

#67 Trev16 on 12.30.11 at 11:03 am

Of course there will be no bank holiday, no US currency reset, no hyperinflation. Don’t bet against America. You’ll lose. — Garth


Time will tell. I think more and more people are ignoring the talking points from mainstream media that a turn around or green shoots are just around the corner. Just look what the US government is doing that is not being reported by mainstream media and that should give you a pretty good idea where this is all heading.



#68 Ret on 12.30.11 at 11:10 am

My belief was that anyone, foreign or Canadian who lives in Canada should pay taxes to Canada on their global income from all sources or face strict penalties.

Taxes are a cost for enjoying the benefits of living in Canada. Those who do not disclose foreign or domestic income for that matter, are tax cheaters.

I see obvious tax abuses and a lack of CRA enforcement on the whole global income concept. This makes me jealous?

#69 truth hammer on 12.30.11 at 11:12 am

Regarding #60 …only the diseased and twisted mind of a politically correct citizen hater would deny that what Ret has stated is the truth. This is a country OF immigrants…..not a country FOR foriegn nationals to take advantage of because of the weak kneed politically correct cry baby third party monsters who can’t speak the truth when they see it.

There are plenty of published stories about welfare cheques going into the mailboxes of multi million dollar houses. The people who collect the free dough call it ‘dim sum money’ ….the freebies are a joke in that community….they think we’re stupid……and that has also been published. Stop berating , name calling and censoring people for telling the truth. Your inept politics and political views are also a matter of public record…..and not too kindly spoken of I may add…from both sides of the floor I remember…..Let the citizens speak…..oh wait…..didn’t the past government pass laws against free speech on topics that didn’t agree with their agenda? Isn’t that what you’re doing when you denegrate someone elses observances?

#70 detalumis on 12.30.11 at 11:19 am

#22 I’m sure being 80 and buying a big home in Florida is a really smart thing to do. Most people sell at that age not buy, you know when the health premiums to live outside the country in the winter go through the roof. A lot of kids consider inheriting such a property more of a millstone than an asset. Anybody considering that and in denial of old old-age should read Susan Jacoby’s book Never Say Die before they sign on the dotted line.

#71 This is Wonderlan on 12.30.11 at 11:41 am

Looks like someone got caught up in her own game and is crying foul….people have absolutely no shame.–star-exclusive-angry-trump-condo-buyer-wants-out

“I don’t belong in Trump tower,” says the woman who has bought, renovated and rented out several homes, but never condos. “I thought I’d be able to get a Trump tower suite for less than everybody else. I didn’t think I’d get rich. I just thought I’d make a little money and maybe have a place to retire someday.”

#72 This is Wonderland on 12.30.11 at 11:44 am

this is my favourite part.

Talon chief executive Val Levitan, defends the sale, saying he had a “moral obligation” to let Zak — “and a few other customers” — buy a unit and flip them for their own profit.

“Adina has been with me for 11 years. She is a very dedicated person who I wanted to do a favour for . . . Sometimes you make an exception. The world is not black and white.”

#73 zeeman1 on 12.30.11 at 11:49 am

#20 Jan Etter.

Jack WAS full of it, and you know it. Publicly financed government pensions don’t generate anything, they just take money out of my pocket and put it into yours. As you probably work for the government I’m not surprised you don’t understand.

#74 Canuck Abroad on 12.30.11 at 11:52 am

62 – thanks for the buy v rent calculator. That is awesome! (Even better is I am ahead by nearly 60k every year by renting, and at no time in 30 years am I ahead by buying). Sweet!

#75 Devil's Advocate on 12.30.11 at 11:53 am

#41Sue on 12.30.11 at 1:49 am
#4 Kilby:

My hubby would love to buy a sailboat –

What do you have, and how much?

Ahhhhhh, finally something really interesting on this pathetic blog.


Do some research on a post 2001 Catalina 320. Best bang for the buck in a “couples” cruiser. Has a full sized island bed in the forward cabin, outstanding fit and finish in the spacious cabin, nice and beamy, a gorgeous boat attainable for under $100,000. But beware there is nothing thing the pups, poodles and Garth loath more than boats which are an undeniably worse return on investment than houses – unless you consider the “fun factor” as clearly you must if you are into boats.

Power boaters have somewhere they want to get to, sail boaters are already there.

Happy sails to you. Buy that boat – time’s a wastin’.

#76 Cal Gal on 12.30.11 at 12:04 pm

Jan Etter, (regarding Truth Hammer)

Once you started defending civil servants and spouting off, ‘love don’t hate’, I really did not bother reading your post in detail. I thought Truth Hammer’s post was excellent and you missed the point if you are going to focus on the civil servant issue. Of course all of them are not evil, but you know what? Politicians and civil servants are certainly not doing well for us in Canada or around the world for that matter, so we should be angry!
Think of how much they would hurt us if we allowed them to get away with anything they wanted, because we should love them!!
Maybe in utopia we would all love everyone and be equal, but lady get a grip-do you live in the real world or are you one of those fat cats yourself?
I thought Truth Hammer was a really good post and it was interesting to read! It is better to think this way than naively assume all is well in the world today…

#77 Sky on 12.30.11 at 12:07 pm

Desert Underwater: TV special on the Las Vegas housing bubble by investigative reporter and C2C fill-in host, George Knapp.

( Parts 2 & 3 can be found underneathe the video. Escape from full screen mode first.)

Although he doesn’t mention it in the vid, George Knapp himself bought a foreclosed home and is now worried over who REALLY holds the title. Be very careful when purchasing a USA foreclosure!

#78 Alberta Ed on 12.30.11 at 12:09 pm

Portland also has a terrific book store, PLUS solar-powered street trash compactors.

#79 OttawaRenter on 12.30.11 at 12:19 pm

Just because you buy a house in another country, does not mean you have any legal right to enter that country. Being from North of the US border, rather than from South of it, doesn’t make you any less of an illegal immigrant when you are living there without proper paperwork. And it will take you years to get residency papers, unless you already have a job there.

Recently a coworker’s sister crossed the border (which she has been doing several times a year for ten years for work related travel). She had given a friend a ride, and the friend had accidentally left her bottle of prescriptions meds in the car. When they found the ‘illegal’ pills at the border the sister was arrested and imprisoned for 5 days, and is now banned from ever entering the US again.

You are not guaranteed entry into the US just because you own a house there. All it takes is a border guard with a bad day and a bad attitude, and you may never see your house again.

Financial advice aside, my advice is, unless you have dual citizenship, stay out of the real estate market.

#80 Cal Gal on 12.30.11 at 12:22 pm

John Saccy (re:#21)

At risk of sounding like a surfer,
gotta say it,
Totally awesome post!!

#81 Devil's Advocate on 12.30.11 at 12:29 pm


“ there is nothing the pups, poodles and Garth loath more than boats which are an undeniably worse return on investment than houses – unless you consider the “fun factor” as clearly you must if you are into boats”. – D.A.

And, really, can not the same be said of houses?

There is a “fun factor” in owning a home – a sanity saviour so to speak. Clearly if the mindset on this “pathetic” blog is any indication, generalization though it may be, of what the typical renter’s constitution resembles vs. that of the typical homeowner – well, really, need I say more?

There are a lot of similarities between owning a boat and owning a home. Most on this “pathetic” blog just don’t get it. Boat ownership need not be so costly you can get into a sound older sub-thirty foot Catalina for under $10,000. And, believe it or not, you can get into home ownership for less than 3.5 times the average Canadian household income. You just have to dispense with the pretences. But beware… even some boats come with stainless, granite and hardwood. };-)

#82 Pr on 12.30.11 at 12:37 pm

…while they wait for the real estate market to rebound.

Wath a loser investors they are! 10 millions house are in the 2 sets of books of the banks, and their are coming in the next 2-3 years in the market as foreclosure on top of the one you have now!!! IMAGINE NOW THIS REALITY WITH A HIGHER INTEREST RATE!! And job employment crashing more!!!! You 60 years old will be long gone before this think is over!!

#83 househornyhousewife on 12.30.11 at 12:40 pm

“Things are still worth what they’re worth, even in the USA”

Never have truer words been spoken. CAVEAT EMPTOR.

If anyone can find me a beautiful, fully renovated beach house on the ocean somewhere … sitting on at least a full acre of land … for a steal, call me. Otherwise, let the garbage lie where it fell after the crash.


#84 doctore on 12.30.11 at 1:09 pm

Did everyone know that today is F’s birthday!

Send him a greeting! [email protected]. — Garth

#85 futureexpatriate on 12.30.11 at 1:11 pm

We bought our brand new central Las Vegas townhouse in 1988 for $88,000. The current zillow value is $56,200 and nothing is moving anywhere close to that price. The association is owed tens of thousands in dues from people who walked away from the places and the rest of us have to make up the difference with increased dues. Half are vacant.

How, pray tell, is that Las Vegas figure anywhere close to 2000 levels in the real world? According to my calculations and experience, it is more like 1979.

#86 freedom1 on 12.30.11 at 1:28 pm

By far one of the best ideas spoken. Fools rush in…

After all, you don’t need to look farther than the fact that if the locals, who know the scenery, economics and the gentry aren’t buying these properties, they’re likely finding a convenient sucker in you.

It’s not like the people over there have suddenly become the indigent – the whole lot of them.

These properties are worth what you are paying for them. But their real value is probably even lower. The best of the deals are those that never even come into the market. They get snapped up before anyone ever hears of them

#87 Steven Rowlandson on 12.30.11 at 1:44 pm

Garth it is way too early to vultch the real estate market in north america. Prices are still in orbit and have not come back down to earth yet. Stay liquid and if you have precious metals don’t sell yet. It is still too early.

#88 VICTORIA TEA PARTY on 12.30.11 at 1:57 pm

#21 John Saccy

Your’s is a lengthy anti-Republican Party rant to be sure. So, my guess is that you’re an Obama-ite!

So what’s he done for you lately?

Most Democrat Party supporters fall back on the old excuse: the “Obama can’t fight Wall Street” canard to justify his basically on-point Republican set of railway tracks that he’s been rolling along on now for three years, except, of course, for his imposition of all that socialist stuff!

You can’t fight Wall Street, DC, the Pentagon, the American Elites, and their legions of serfs, in other words.

Nor can the Republicans!

So, who can?

Whether some gun-totin’ Texas cracker or a hot-yoga polished-up NYC yuppie, there’s no chance for a reversal of fortune, the American Empire is in that deep a pickle.

America used to be great.

Now it is in such debt thanks in part to an entitlement attitude, aided and abetted by 216-thousand DC lobbyists, and their special interest groups.

Their marching orders keep their Congressional and Administrative peons living in circumstances beyond their wildest dreams.

That means the rest of the population will be primarily a nation of wind-suckers.

Having abused their “can do” heritage and blown their wad on too much crap, real estate and wars, it’s probably time for an empircal “stand-down”, hand the relay stick off to someone else who really wants the brass ring.

So…enroll your brood in Mandarin, Russian, Portugese and or Farsi language classes. Meet the new boss, not the same as the old boss.

This one comes with no Liberal Democratic Values! Distat all the way, something US Democrats seem to just love these days!

#89 Amarillo on 12.30.11 at 2:07 pm

#21 John Saccy. Nice piece. I too (like a growing number of young Americans) like Ron Paul.

Dr Paul’s positions represent what Einstein said, ie, today’s problems are so complex that they cannot be fixed with the kind of conventional thinking that produced them in the first place.

Dr Paul is unconventional – good! – but the truth-hungry youth instinctively know he is right.

If the American youth coalesce around Dr Paul, it’s goodbye to the other candidates including the well-meaning but convention Obama.

But knock the US all you want, at least they fully discuss their issues in public – including the toughies like abortion.

Not like Canada where we (media included) are so afraid of hissy fits by the pc–police (teacher-unions, pro-choicers, fembos, ndp’s, lefty-media, human-rights tribunals, etc) that many issues can’t even get on the table. What happened to freedom of speech in Canada?

Over to you, Truth Hammer. You’re right! A large portion of Canadian tax revenue goes to the special-interest group which is government workers, a well-meaning, largely productive but overpaid labor group.

But name-calling is ineffective. Instead, we must (and soon will) elect leaders who can negotiate a salary & benefit haircut for government workers. Nothing personal. It’s simply a justice issue.

In the meantime, and on behalf of all justice-loving Canadians, I challenge Sid Ryan and other union leaders (including teacher-union executives and Canadian Wheat Board executives) to come to this site and publicly disclose what we are paying you.

I suspect that many Canadians would reach for their barf-bags when they hear the numbers.

Again, these are justice issues. We’ve all got a lot ti be grateful for as Canadians. Happy New Year everyone.

#90 InvestorsFriend (Shawn Allen) on 12.30.11 at 2:18 pm


Number 45 Mark said:

30-year mortgages have destroyed the finances of the US government and were only viable due to the existence of Fannie Mae/Freddie Mac. If anything, the government should be withdrawing itself completely, in both Canada and the USA, from financing private sector purchases. The injustice is that Fannie, Freddie, and the CMHC even exist at all, as these entities divert capital away from productive things, and towards more housing.


Mark, it may be true that CMHC and Fannie Freddie should not exist.

But no, it was not the 30-year mortgage that caused a problem at all.

In fact it was mortgages made to people who could not pay that really caused the problem. It was liar loans and sub-prime loans and lack of income verification. When these people did not pay that is when the crash started.

The U.S. has not thrown out the 30-year locked in mortage “baby” with the fetid subprime “bathwater”. Nor will it.

While Fannie Freddy insure payment and continue to do so when income is documented, it is investors in the U.S. who in the free market give money to fund 3.9% mortgages and these investors in the free market accept the pre-payment risk. The only government involvment is in providing the mortage insurance and in regualting practices. The U.S. government does not lend the money. It does lend its credit rating.

#91 on 12.30.11 at 2:43 pm

#78 said ‘You are not guaranteed entry into the US …’

True, and a major consideration is, one has no real recourse should an issue come up. I held off obtaining Dual until one day I ended up in secondary at a land crossing in NY. That experience made me really think about what could happen if I was denied entry (as a green card holder). Wife, kids, house, job all in jeopardy. We’re all DC’s now and there are some tradeoffs to that, but no border stress and family unity is assured.

I can’t imagine anyone without immigrant status buying property in the US unless they really know what they are doing. I would advise any Canadian family or friends who ask to carefully consider all the risks and perhaps find other ways to invest. Some really good opportunities for those who can do it though.

#92 Nariman on 12.30.11 at 2:56 pm

Gold ends 2011 up 10% on the year, up for the 11th straight year. I love this blog but tune out completely when Garth mentions ‘the metals’.

That’s 14% lower than it was when gold pumpers flooded this site, and I told you to take profits. Don’t hate me because I’m right. — Garth

#93 Last on 12.30.11 at 3:08 pm

Good Grief I don’t understand Canadians!!!

Talk about preferreds or RIETS or Bonds and your typical enraged, flying, doomer rodents go nuts, danger Will Robinson, Danger!!!

Yet they think nothing of plopping down borrowed variable rate money to buy a declining cash flow negative asset.

Tell them that they can invest that money at a tax advantaged (see the eyes glaze over) vehicle and then rent a beautiful place for less than owning

But as we all know renting is throwing your money away


PS when is we getting that perferreds post????

#94 "Absolute" Crap on 12.30.11 at 3:13 pm

How do people fall for this tripe!

Subliminal messages in the bad techno. score?

It’s my only explanation.

#95 dd on 12.30.11 at 3:22 pm

the us dollar is being reset on a daily basis. us currency will buy 50% less goods in 5 years, it is the mandate of the us fed.

You are a delusional metalhead. — Garth

#96 Amarillo on 12.30.11 at 3:23 pm

#47 Hi Ben. How does a Canadian get a green card to work in the US these days? If you have any words of advice, please write me at [email protected], thank you.

#97 Westernman on 12.30.11 at 3:38 pm

A general note on public servants…
Truth Hammer and some of the others on this post have it right – public ” servants ” ( more like public gluttonous pigs ) are paid about twice what they are worth – on average –
In addition the benefits they rake in ( big vacations, all the holidays etc. ) are also about twice what the private sector worker gets. And the retirement gold mine – wow! –
Canadians pay for this ridiculous B.S. It comes out of your pockets people – to keep the public ” service ” entitement kings and queens living the good life while you pay taxes out the ass to make this happen.
How do you feel about this Canada – like it, huh?

What do you believe we should be paying teachers, nurses, paramedics, firefighters and soldiers? — Garth

#98 InvestorsFriend (Shawn Allen) on 12.30.11 at 4:08 pm


Not First at number 37 observes taht bank shares were WAY down in 2011 and then indicates he would not touch them.

Interesting. Some of us go a little deeper and actually look at fundamentals when we invest. So called “Technical” investors (chart readers) attempt to follow the smart money, Fundamental investors attempt to BE the smart money. Having a brain, I opt for that latter.

Technical Investors amnd momentum investors litterally buy high and sell low.

It’s the same attitude with houses. Canadians are happy to buy houses at record high prices. Americans are scared to buy at half the price.

It is a great pleasure to compete in such markets.

#99 Homer on 12.30.11 at 4:10 pm

Shawn Allen – Mortgages

I’ll take a stab at this – I think it’s mainly the liquidity of the bond market.

Mortgage backed securities are a complicated beast i.e. they can act like a 2 year bond if interest rates go down (everyone prepays) or a 10+ year bond if interest rates go up. Investors generally don’t like that kind of uncertainty in a fixed income investment.

The optionality of pre-payment means most buyers will hedge the risk by shorting other bonds, or using futures, etc.

And not just once – every time the interest rate curves shifts or twists, the risk of prepayment changes, so the hedge has to be adjusted – more buying and selling of other instruments.

To work, these other instruments – bonds, futures, options, banks willing to do forwards etc – have to both exist and be highly liquid, so constant rehedging is not prohibitively expensive.

I think the US is the only market to have these 2 conditions – Canada certainly does not (way too small). I did a quick of UK websites, a country with a much more sophisticated bond market than Canada’s, and mortgages there look like Canada’s in terms of length.

#100 poco on 12.30.11 at 4:23 pm

I guess it might be a bad time to say I just heard that many Municipal and government pensioners will be receiving a cost of living allowance of 3.2% for 2012

#101 Westernman on 12.30.11 at 4:30 pm

” What should we be paying our teachers, nurses, paramedics etc”?
Answer: What they are worth and not a penny more.

Cop out. Tell me what the teacher of your children should be paid, the man who may pull you from your wrecked car or the woman changing your IV drip at 2 am. Be constructive, not destructive. — Garth

#102 the biggest looser? on 12.30.11 at 4:36 pm

Is It Better to Buy or Rent?

Had to repost this from someone above…

wow is this good…….

In almost all cases, put in your numbers then set the house value % increase you think….. then know even just 1% off it?

in even the most optimistic cases most houses are a huge tinder box of doom :-)

Just reading the Big Short by Michael Lewis (great book), it is exactly this sort of calculator that the smart guys back in 05 we using to predict the current US housing woes!

Houses in Canada dont even need to fall to be (mostly) a very poor investment.

#103 InvestorsFriend (Shawn Allen) on 12.30.11 at 5:02 pm


Homer at 98 makes intelligent points about why Canadians have to pay twice as much for a 25 year locked in mortage versus Americans (8.75% here, 3.9%, there AND they get much better prepayment rights).

Sure maybe our bond markets are not as sophisticated.

Homer wants to give up and chalk it up to the small size of our market.

I am not giving up. Despite our smaller size our 30 year bond rate is lower than that in the U.S.

You can talk about investors hedging away the risk of pre-payments. Well at some point someone in the United States market is accepting that risk.

Many people and institutions would I think invest in 25 year Canadian government (CMHC) guranteed mortages and accept the pre-payment risk. Investors would get 50 or 100 basis points higher than the government bond yield. And it’s not such a huge risk for an investor to get his money back early. And many people would not pay it off early. What really is the risk of lower interest rates from this point forward?

When all those homeowners in the U.S. refinanced down to lower rates in the past 20 years, someone someplace got their money back early. They lostout on the higher interest rates they ahd hoped to collect for 30 years. We never heard much about it.

Anyhow Homer, while your post is quite intelligent, I am looking for solutions here. Excuses won’t do.

I am on this and I have John Kiff at the International Monetary Fund emailing me and he is interested in revisiting his previous discussions with CMHC and the Bank of Canada on this matter. I am not fooling around here.

#104 Westernman on 12.30.11 at 5:10 pm

O.K. Mr. Turner… I expected that response.
They should be paid what they are getting paid right now … minus 15%.
If they don’t like it they can head for the exits…they know where they are. Hundreds would be lined up to take the position at the now reduced rate.
The 15% saved should be returned to the Canadian taxpayer whose money it is in the first place, I might remind you… not funneled into yet another useless government agency or bureau ( also known as make-work project in the private sector lexicon ).
This 15% would also apply to MLA’s and MP.
I believe that answer should be concise enough for you.

#105 on 12.30.11 at 5:37 pm

#95 Take a look at

#106 Devore on 12.30.11 at 5:54 pm

What do you believe we should be paying teachers, nurses, paramedics, firefighters and soldiers? — Garth

I recon they’re paid enough ;)

But what about the other 99% of them who are not teachers, nurses, paramedics, firefighters and soldiers?

#107 Westernman on 12.30.11 at 6:32 pm

Now, now Devore… you know nobody else in society matters except public service workers. Shame on you for suggesting the serfs should get some consideration as human beings of some worth… this is Canada after all and the belief that all things good and pure absolutely MUST come from some bereaucrat sitting in a building far away is enshrined in the Canadian psyche.
I mean god forbid someone should take some personal responsibilty for their own life…

#108 Tom from Mississauga on 12.30.11 at 6:36 pm

Hi Garth
Can you add a couple of US REIT’s or REIT ETF’s on your next post about this topic. Just for us little guys that want in on the action and are discount online brokerage cowboys.

#109 Hicksville Alberta on 12.30.11 at 6:42 pm

#103 Westernman — Bok, Bok, Bok – You’re chickening out with that number.

Try at least a one third reduction in wages and benefits for most of the public sector at all levels in this country as well as a very serious reduction in pension benefits together with termination of a significant number of employees and antisocial “social” legislation and rules, etc that have been imposed on the remaining populace for starters.

As for the elected bunch their remuneration and perks should be cut by at least the same and their pension and so called termination benefits cut by at least as much.

There are way too many vested interests that rule by the power of the pen that the hive has been infected by way too many drones and pretty soon there won’t be enough honey bees left to produce the honey for the drones to feed off.

You and i may not be able to do anything about it but at least i have basically quit spending and gone to the “Tune In, Turn Off, and Drop Out” mode, and perhaps if more and more went to this mode there would be enough of a “correction” that some of these changes would be made.

#110 Temonos on 12.30.11 at 6:50 pm

@103 -westernman

Why 15%? wouldn’t it be better for the taxpayers to just pay them minimum wage? As you said, we could just fire them if they don’t work hard enough and replace them easily…..

Your conciliatory tone towards public sector mocks those hard working private sector workers

#111 Timbo on 12.30.11 at 6:51 pm

interesting video to ponder. Draw your own conclusions.

#112 604 on 12.30.11 at 7:10 pm

#106 westernman
I mean god forbid someone should take some personal responsibilty for their own life…

Take some of your own advice and take responsibility for yourself that your not getting paid what you think public servants are getting paid and move on from this subject.
You actually think reducing wages by 15% will make things all better?
If you think its so terrible here in Canada go to another country and see how their public servants are treated with less pay. Do you think those public servants care as much to do a good job? The police are corrupt (yes more so than here), nurses are worked hard paid little and don’t care about their jobs or patients. The govt doesnt care about health care or what the police are doing. Figure it out man.

#113 Westernman on 12.30.11 at 7:37 pm

Hicksville Alberta & Temonos,
I was going to suggest your plan Hicksville but I didn’t want to shock the blog host too much – after all we are guests here. But you are correct 15% is not near enough but it would be a start – when you go to eat a giant ham it’s best to take one small slice at a time – if you catch my drift.
And you, 604, actually I don’t have a thing against useless people being paid ridiculously high wages and pensions – as long as I don’t have to shoulder the load for their priviliged existances. If you want to pay my share to keep these millstones in luxury then be my guest.
And by the way Mr. 604 I have lived in several country’s and Canada’s civil servants aren’t all that great… so if anyone needs to ” figure it out ” it’s you. I suggest you get out of your mom’s basement and get out in the world and open your eyes.

#114 I'm stupid on 12.30.11 at 7:56 pm

Hi Garth

Can you comment on the legal actions against Trump Towers in Toronto? More specifically what are the implications of “buyers” getting their deposits back based on delays and the impact it will have on the soon to be falling condo market?

#115 Habbit on 12.30.11 at 8:42 pm

#45 Mark Fannie and Freddie are government sponsered enterprises (GSE’s) whose mandate was to support the market for middle and low income buyers by buying up mortages from lenders and then repackaging them as securities. These companies were privatized and profit driven with their top execs taking home grotesque bonouses based on the companies profitability. When the Clinton administration repealled the Glass-Steagll Act of 1933 that was brought in as part of the new deal to control excessive risk taking this deregulated the financial sevices industry and let them run wild in the name of profit. Wall street got it’s way and the name of the game was profit and incentive bonuses. As we now know this led to the debacle that has caused so much pain for so many. MBS,CDO,CDS and all the rest of it. Point is the imperfect system WAS working. Fannie Mae CEO Frank Raines was paid 36 million for his last 3 years of service before he was forced out due to accounting scandal. He also received a 25 million pension, 8.7 million defered compensation plan and 5.5 million in stock options. The two companies were bailed out by the government to the tune of 200 billion. See the problem here? Not to be outdone Citigroup received 50 billion in bailout $ and a guarantee of 306 billion for toxic securities on it’s books.Trillions went to other huge firms including Goldman Sachs, AIG, BofA, JPMorgan, LCTS ect . All of this and the CEO’s and their lackeys made out like bandits. To suggest as some of TPTB are that the poor were responsible is nauseating. The process began in the Reagan years and continues into the Obama presidency. The same people responsible for the fiasco are still in control and still making $. As George Bush asked of Treasury secratary Henry Paulson (former CEO of Goldamn Sachs) how could this have happened?! It happens when government and big business are one and the same. Companies are now sitting on billions and 45 million American people rely on food stamps. And we worry about RE going down 15%. This will not end well.

#116 live within your means on 12.30.11 at 8:44 pm

#100 Westernman on 12.30.11 at 4:30 pm
” What should we be paying our teachers, nurses, paramedics etc”?
Answer: What they are worth and not a penny more.

Cop out. Tell me what the teacher of your children should be paid, the man who may pull you from your wrecked car or the woman changing your IV drip at 2 am. Be constructive, not destructive. — Garth

Gees Westernman – How would you feel if your wife or child were diagnosed with 3rd or 4th stage cancer & cut off the ‘drip’ ’cause her shift was up.

#117 Mike Rotch on 12.30.11 at 8:45 pm

Garth says:
“What do you believe we should be paying teachers, nurses, paramedics, firefighters and soldiers? ”

I’ll play:

I don’t begrudge their salaries and hourly rates. No one can argue that they’re not professionals, or at very least, highly skilled labour. At that, $40 per hour / $80K per year and up seems fair. Of course, I’m also figuring that the compensation package includes benefits (vacation, health plan, sick leave, etc.) comparable to a “good” private sector employer provides.

No grudge on that part of the package.

Now, what’s a kick in the balls to every other taxpayer is that, on top of this perfectly fair compensation package, the rest of us have to fund their retirement.

Through their risk free and generous DB pension plan,
they get to sock away a relative pittance, and have their complete retirement covered very handsomely…..

I got out my handy cigarette pack and hacked away at some numbers. If you assume 6% return on the investment and 30 years of life after retirement, the employer contribution vs. the employee’s for Gov’t Ontario and OMERS looks like basically 3 for 1.

If the administrator screws up and fails to make 6%,shucks, the taxpayer has deep enough pockets to make the 4:1? 4.5:1? contribution. Betting the administrator gets their bonus and raise that year too.

Someone told me the Fed plans are somewhat more generous.

In the private sector, few other than CAW types can dream of this, and for how long will they have it this good…..

So, my first shot at this – make it so these guys have to pay for their retirement exactly the same way I do – out of my own pocket, with a modest annual RRSP contribution depending on how well my division does.

If that happens, I’ll cheerfully accept their wages and other perqs, indexed to YOY increases in CPI.

#118 Habbit on 12.30.11 at 9:22 pm

What should public servants be paid? Good question. Are some of their wages and benefits too high or are some in the private sector underpaid? The answer likely lies somewhere in the middle. What about small business people. I recall years ago the president of the Sask federation of labour was saying no small business owner should make more than 100K per year!! A disaster would have unfolded had she got her way. I have an example fellow blog dogs to share with you all.
My sister worked for the Fed’s and retired at 55 with 32 years of service and a 64K pension with a COLA clause. Her pension is a defined benifit plan (I wish) while those who are fortunate enough to have a plan have defined contribution plans. Major difference is with the DCP when the cash is gone it’s well gone. With a DBP you get paid till ya croak. To be accurate her pension is blended with the CPP so she will NOT receive it. Should she apply for it her pension would then be reduced by the amount she receives from CPP. She had a 2 year college education and then was hired by the Fed’s. In her defense she worked her way up and I’m sure worked hard. When she left the gov’t she was hired back as a part time consultant to the tune of 40K per year. Sweet me thinks considering the average familly income is what 65K? She also received a 50K golden handshake. This entire issue is complex and no redi mix solution but I feel it will become a major isuue in the near future. Let’s not forget the billions that companies receive in incentives. The whole package has to be looked at at the same time no?

#119 truth hammer on 12.30.11 at 10:07 pm

#62…BTW…I got my information directly from THE expert on cross border accounting……the now passed David Ingram of CENTA. If you’re not currently under review by the IRS/INS… shouldn’t think you won’t be as the data bases catches more and more unsuspecting Canadians every year. Your next trip to the airport could be the beginning of the nightmare…..or the next…..innocent Canadians are finding out every day.

#120 Corey Kaye on 12.31.11 at 12:19 am

Thanks Garth! Love these posts, it’s something that i’ve thought about, more than once.

#121 isleofvanman on 12.31.11 at 12:24 am

The US is clamping down on foreigners… the recently introduced ‘substantial presence’ test adds up time spent in the US over the last 3 years which if it exceeds 183 days then the visitor is required to pay tax on all income earned, including outside of the USA.
The formula takes all the time from the current year + 1/3 of days spent in prior year + 1/6 of the days in the year prior to that. If the sum adds up to 183 then you’re SOL.
Then there’s the medical BS there… I personally know a Canadian who was billed 200K to remove kidney stones! This person was living down there and had coverage… but the insurance companies found a way to weasel out. What a nightmare.
A friend of mine down there pays 800$ month for medical coverage. That rate has been rising considerably over the last few years. The deductibles are harsh there too. No wonder Americans can’t afford to keep their homes.

#122 Buy in the US, rent in Canada on 12.31.11 at 10:35 am

#118 truth hammer on 12.30.11 at 10:07 pm

Now you’re being silly. Like I mentioned in my earlier posting, if you follow the US’s rules you’ll be fine. Its a process, a very simple process. Snowbirds have been coming to the US every winter for decades and spend billions here. Its a time honoured tradition and the US is thankful for it. The US is not going to turn 99.999% of snowbirds away, especially from one of their strongest allies and trading partners. To the – Snowbirds don’t brake the US laws and you’ll be fine.

I’ve lived and worked here in the States for over 20 years; returned to Canada recently to take up residency, but like to get out of those brutal winter months. I see absolutely no problem in the present or future for Canadian purchasing US real estate – know the rules and you’ll be fine.

As I said in my earlier post @#62:

Buy in the US, rent in Canada – for now

#123 Regan on 12.31.11 at 11:07 am

Anyone who thinks that paying public servants less is a good idea has never been to a country where these jobs aren’t considered ‘good jobs’ that people strive for. They are mired in corruption and incompetency and bring the entire mechanism of governance to a standstill.
As for the thought that hundreds more will line up to do the job for less, actually… no. In many cases the attrition rate of these jobs is already terrible. Going through huge supply and demand cycles leads to a shortage of critical services. It’s shortsighted and just plain stupid to pretend to apply ‘market forces’ logic to government services – for starters, it’s a monopoly buyer by definition with fixed needs for many critical services. Many services, even mundane ones like processing passport applications, can’t function on a weekly price fluctuation or labour shortage. Sorry, we can’t respond to your 911 call, we don’t have any qualified bidders on that job yet. How many mayors have tried to privatize some service like garbage collection because a private company tenders an offer to do it for cheaper… and the moment the city has sold off its fleet and laid off the staff, the prices get jacked through the roof because of.. oh wait, market forces again. The single buyer has no recourse. You could try tendering to a multitude of companies to create competition, but the overhead of that complex ecosystem is also pretty wasteful. In-house, stable and trained staffing has its overhead costs, but it also has value. There are some things best done in-house and some thing better done by the creative destruction of private markets and I’m happy to debate which is which, but the hate-on for unions and government workers is ridiculous.
Truth is, health care, infrastructure and education are our government’s biggest expense and we get it way cheaper per capita than in semi-free market places like the U.S. The single buyer does a good job at negotiating on our behalf, better than we would by clipping vouchers for 10% deals off our next ambulance ride. Real savings come from improving the systemic factors – but you’ve have to actually have an interest in policy analysis instead of easy one-liners to accomplish that.

#124 Snowboid on 12.31.11 at 11:51 am

#120 isleofvanman on 12.31.11 at 12:24 am…

While you are partly right, you miss the point of the substantial presence test. If your ‘substantial’ presence is in Canada, you fill out an IRS f8840 form as an exemption – simple – no taxes paid.

Medical, sure it is expensive – but never had a problem with our extra insurance (about $ 200 a month for the two of us) . Met a couple of idiots here who don’t have the insurance because they insist their provincial plan covers them – but they are the exception.

As ‘Buy in the US, rent in Canada’ has said – just follow the rules – the same as living (renting or buying) in any other country around the world.

As far as our experience buying in Arizona, we did follow all the ‘rules’ and most of the points covered by Prof. Turner.

Our positive experience is matched by the dozens of fellow Canadians in our area. Most of them bought winter ‘escapes’ and didn’t look at the purchases as investments. But a few have have multiple investment properties, and in the case of the Vancouver RE agent we met last week, are here to purchase on behalf of their Asian clients.

The comments section of this posting is littered with misleading statements – bottom line, don’t rush into any RE purchase – whether here or back in Canada.

To those upset RE agents in BC, sorry – but when a SFH vacation property here costs less than a trailer on leased land there – what would you choose?

Happy New Year!

#125 Snowboid on 12.31.11 at 12:02 pm

#122 Regan on 12.31.11 at 11:07 am…

Great post, the BC public service was decimated starting in 2001, all for the sake of privatization.

The conversion costs of this failed strategy will never be recovered, and the so-called savings never realized.

The wholesale sell-off of provincial assets and resources is a most shameful act – even good ol’ WACky Bennett is rolling in his grave!

#126 Westernman on 12.31.11 at 2:38 pm

Well, well , well…
I asked how Canadians like getting bent over the rain barrel and cored out ( via taxation ) to pay for self-entitled new-age royalty ( public servants ) and I got my answer – they think it’s just effing dandy thank you!
The average Canadian is a snake oil salesmans wet dream without doubt.

#127 Tony on 12.31.11 at 3:51 pm

If you’re a foreigner and have a capital gain you pay through the nose. You can thank the Japanese who tried to buy up all of Hawaii for that one. Ronald Reagan did it to protect America.

#128 John on 12.31.11 at 5:03 pm

Garth- ‘If these thirtysomethings have no mortgage, earn $150,000 a year and save a third of that, where’s the rest going?’

Garth, you are always pointing out the after-tax returns on investments and yet you fail to recognize or differentiate between their before tax income of 150K (which is what everyone referrs to when they state there earnings) and there after tax savings (I doubt they are referring to before tax savings). They are probably clearing 100K after tax and so are saving 1/2 of their take home pay, not sure how much is left of they are living on $50K a yr (“where’s the rest going?”).

#129 Steven Rowlandson on 01.01.12 at 5:47 am

John what makes you think 30 somethings are generally making much more than 15 to 30 grand a year? If businesses paid their workers enough to live in Canada they would be bankrupted. $150,000 a year?
Maybe for elite workers and specialists but not for the average skilled and unskilled laborer or tradesman.
A lot of people in north america are living in a dream world John and it is about to turn into a financial and political hell on earth.