Basis instinct

Susan says this mortgage war is making her hot. “Seriously, how can you not love it?” she asks me in an email I swear smelled like Victoria’s Secret Dream Angels Heavenly eau de Parfum spray. (I know of such things.) “How can you not buy something when it’s just 2.99%?”

How indeed? When the evil-doers at BeeMo dropped their five-year fixed rate by fifty basis points, it plunged to a 195-year-low. That’s even before Sherry Cooper worked there. The move was matched within hours by other banks desperate to maintain market share. In fact, cheapo rates broke out for six, seven, even ten-year terms. You can now lock up for a decade at less than 4%. The last time that happened was never.

Over at the Globe they sent out for more Depends.

“There’s a brilliant reason to get into our expensive and quite possibly weakening housing market right now,” finance columnist Rob Carrick gushed. “Why consider buying now? Because you can borrow money at 3.99% or a bit less for 10 years. It’s like freezing time at the exact best moment ever to finance the purchase of a house. If the price of your home declines, it’s bound to be on the rise again a decade from now.”

Well, of course. It’s different here. Canadians have found a secret way to suspend the laws of economics. Any real estate decline will be temporary. All you need to do is make loans cheap enough that everybody continuously borrows, keeping house prices aloft forever and supporting sustainable personal net worth. What’s the problem?

According to the International Monetary Fund and lots of other people whose faces smirk a little when you mention Canada, plenty. This is called credit easing – when commercial lenders ride the bond market and slash borrowing costs. The lower borrowing costs go, the more people borrow (think of a big sale on glazed Timbits). This is not good news in a country where debt has swelled to 153% of disposable income (compared to 146% in the States). Where F is considering killing the 30-year mortgage to stem the housing bloat. And where women get aroused when their men whisper about fixed versus variable.

It’s exactly the infatuation with debt that the mortgage wars are promoting, along with fat house prices, that has the IMF worried about us. “Adverse macroeconomic shocks, such as a faltering global environment and declining commodity prices, could result in significant job losses, tighter lending standards, and declines in house prices, triggering a protracted period of weak private consumption as households reduce their debt,” says the agency.

As this tormented blog has asked, when real estate and related activities make up 27% of our entire economy – and that’s supported by $1.2 trillion in mortgage debt and runaway personal borrowings – how could there not be substantial risk? Isn’t this exactly the pickle America found itself in circa 2006? And once a housing correction starts, shattering the ‘we’re different’ myth, what’s to stop it as people rush to get out from under their ill-conceived loans? After all, six years on, Americans are still searching for the bottom.

No doubt. BeeMo and the boys stepped in it this time. “It could increase the housing bubble,” says economist Sheryl King. “The lower interest rates are, the more speculative demand you will have in the market.” And that’s a sobering thought, when an estimated 80% of all existing condo sales in Toronto, for example, are already made to flippers and speckers.

And where’s the Bank of Canada as the orgy continues? Just days ago Mark Carney warned of our coming condo implosion, and for almost two years has been imploring people to stopping binge borrowing. But this week the central bank once again decided to hold its key rate pat. Like every successful bureaucrat, he’s opted to let a politician wear it. And so the mortgage war just about guarantees F will have to act in the coming weeks.

Meanwhile there’s new evidence even market-share-greedy bankers can be hilarious. Like John Turner (no relation), a big tamale at BMO. When asked why the bank decided to hand over crack cocaine mortgages to a nation of wasted users, he replied: “We’re giving a low rate with a shorter amortization to help people reduce their debt quicker. It’s about doing prudent things for customers that want to be debt-free sooner.”

I ask you. Have you met any modern young couple who, given the choice between granite c-tops with SS apps and debt freedom, would choose the latter? Do they exist?

Some people are arguing this week that the cut-rate loans are an attempt to wean Canadians off those cheap variable-rate mortgages they’ve been in love with, and to lock them up with five-year terms. This way they can be spared the carnage in store when Brother Carney finally grows a set and brings rates back to normal levels. There’s truth in this. But let’s think about what happens in 2016 when somebody with a 2.99% BeeMo Special faces renewal at, oh, 7%. And that will be about the time wrinkly Boomer desperados are trying to turn their fading suburban temples into cash for groceries.

Yes, it’s different here. We’re hooped.

281 comments ↓

#1 Corban on 01.17.12 at 9:54 pm

She’s not wearing a helmet!

I told you this was risky. — Garth

#2 Jack Lemming on 01.17.12 at 9:56 pm

second

#3 Christine on 01.17.12 at 10:03 pm

Man, I need to get back into cycling…

#4 john saccy on 01.17.12 at 10:04 pm

Quick..quick.. see the pic before Garth bows down to the politically correct blog dawgs and yanks the pic off.

#5 Stinky the Fish on 01.17.12 at 10:06 pm

“I ask you. Have you met any modern young couple who, given the choice between granite c-tops with SS apps and debt freedom, would choose the latter? Do they exist?”

Yes, we exist and we are 5-years ahead of the curve. As for all my friends, their pathetic thinking patterns that granite c-tops and SS apps will make them more happier and make life feel fulfilled is almost pathetic as this putrid blog. Simply, my friends thoughts are not as advanced as us.

#6 Randy on 01.17.12 at 10:07 pm

Watched the Inside Job today…It will be hard to ever trust anybody in politics or the investment banking business….

#7 Throwstone on 01.17.12 at 10:08 pm

Seems the banks have a few more cards to play. Should be interesting to watch Flaherty wiggle out of this….

Good post Garth!…

#8 Jimbo on 01.17.12 at 10:10 pm

DELETED

#9 TZM on 01.17.12 at 10:14 pm

Garth, whats your take on the “smith maneuver”?

Don’t do it. — Garth

#10 Smoking Man on 01.17.12 at 10:14 pm

The Close!!!!

Wow 10 year mortgages for sub 4%, The machine anit going to go quietly into the night are they.

Yesterday I get call my older son was taken to the hospital in an ambulance, they said he had chest pains and his heart was racing, he fell down.

The goof just got engaged a month ago, lots of pressure from wify poo to be.

He became a sales manager this week with his new job, he took it just before he was to go to basic training, he ain’t going army anymore.

He is the kind of kid that cracks under pressure, in a good way. He’s creative and has a vivid imagination, bit of a hypochondriac I was thinking.

He folded in the middle of a big presentation. Pitch wasn’t going good, he was a bit nervous. Boss was in the audience. He just collapsed in front of 10 people holding his chest. They called 911.

Ba ahahhahahahahhahahah

I got the call, put the phone down and started laughing my guts out, I knew what happened. Man if you don’t know you’re kids.

My wife and other kids were furious with me……They are to ready to kill me cause I could not stop laughing. My tonsils are still raw and my eyes from laughter tears.

They thought he was having a heart attack.

Ok, 27 a bit over weight, smoker, ya maybe, but extremely unlikely. He has mom’s side Grandpa’s DNA. Cancer will do him in long before his strong heart goes.

That one little bit of brilliant showmanship, got his future bride to be off his back for awhile, and his boss closed the deal today with the sympathy close, and she played it up for all it’s worth. Huge $$$$$

Everyone was asking about him and they want to see him when he’s better. Ba hahahah.

Brilliant

We were celebrating his up coming huge commission chk and his tactics at earls tonight………………..

He was a bit mad at me last night for calling him out, he was still in theater mode, but after a few beers tonight, he confessed. This boy has no vault, and said this one stays in the vault, ok dad.

I said ok, but Gartho’ s Blog, sorry it’s going in. Got kids to teach a real education……

He was crashing badly in the presentation, was worried about wedding, and disappointing his boss on the first big pitch, he didn’t not know what else to do to salvage the close.

I say put this move it in the sales manual… Ba hahahahahhahahahah

I’m so proud……….It cost me a few hours sleep but well worth it.

I love life……………..The early signs of a political carrier I’m thinking.

#11 Debt on 01.17.12 at 10:15 pm

The collapse has probably aleady begun.

#12 not 1st on 01.17.12 at 10:17 pm

Garth, because this is the new paradigm that govts and banks backed us all into. To get money in circulation, then ran interest rates to record lows which in turn spurred massive debt at all levels including sovereign nations and now of they increase it by just a % or so, it all comes crashing down instantly.

Homeowners who are consumers would struggle to pay mortgages, then spend a lot less in the greater economy. Many would just default and say come after me then. Munis and sovereign nations would find a much larger portion of their revenue going to fund debt which would require more taxes or austerity which would just reinforce the effect. As soverigns continue to add debt to bail out each other or their institutions, the S&P will just keep downgrading them every year and their cost of borrowing keeps going up, again reinforcing the effect.

Rates cannot EVER be moved again higher than maybe 3 or 4%. If a 1980s style “bring the stimulus money back home ala 15% rates” is ever considered, the world will blow up immediately. We are well beyond Keynesian theory or any sort of historical reference point for this crisis.

#13 Smoking Man on 01.17.12 at 10:17 pm

I love the pic don’t switch it

#14 Renter in GTA on 01.17.12 at 10:18 pm

The wife and I sold our house…
We are currently renting…
Invested all of the money made + savings with a fee-based advisor, like Garth says…
Couldn’t be any happier with our decision…

When the time is right, we will pull our money out as it is fully liquid… Better getting 6-7% annually than letting it sit in some stupid GIC or Savings account for 2% or less…

Smarten up people… I finally did.

#15 JessicaJ on 01.17.12 at 10:23 pm

Garth, thanks for all the info. Real glad I went ahead and rented a bigger unit instead of purchasing midtown condo. Must be the 10-year mortgage that explains this or I am missing something. This condo at 60 St. Clair was listed since June 2011 at an initial price of $479,900 and after several reductions was $459,900 just a few days ago, today it is $479,900. http://www.realtor.ca/PropertyDetails.aspx?&PropertyId=11373190&PidKey=-83241732

#16 Devore on 01.17.12 at 10:26 pm

Bet the picture gets changed by tomorrow.

#17 Jamie on 01.17.12 at 10:28 pm

I live in Langley bordering (Aldergrove) on the west toast. Two solds on my street in the last 45 days. Big homes 5000 sq.ft. plus with suites on half acre lots. Both sold for 1.3 mil each. It seems the kool-aid is still flowing and reaching the outer limits….literally!!! Garth, is there any way F buries his head in the sand on the mortgage war?

#18 chubster on 01.17.12 at 10:31 pm

there is one bona fide canadian backstop. go dig stuff out of the ground for a living – grow-ops inclus. not everyone can be so lucky.

#19 FTP - First Time Poster on 01.17.12 at 10:31 pm

Second MF Global Unveiled As Canadian Regulator Accuses Barret Capital Of Commingling Client Funds

As the Winnipeg Free Press reports, “One of Canada’s investment regulators has accused Barret Capital Management, a firm specialized in futures and options on metals and other exchange-traded commodities, of using client money for its own purposes. The Investment Industry Regulatory Organization of Canada warned Monday that Barret clients are at risk due to the firm’s “ongoing misappropriation of their money to fund losing trades and ongoing misinformation about the value and holdings in their accounts.” IIROC has set a hearing for Tuesday morning to suspend Barret’s membership in the organization and stop Barret from dealing with the public.

Did someone say that our Canadian banks are fine? We all have to wonder if this is the tip of the iceberg or an anomaly. Something tells me if one can do it – they all can!

Get serious. (1) This small company is no bank. (2) The system worked. Some low-level diddlers were caught, will be thrown out of the industry and clients made whole. — Garth

#20 OttawaLuke on 01.17.12 at 10:32 pm

Do dividends from Canadian REITs get favorable tax treatment?

REITs pay distributions, treated as income. — Garth

#21 Stevenson on 01.17.12 at 10:34 pm

What happens if prices are higher in 2016? Or Better what if prices are higher in 2013 as prices CONTINUE to grow. We will still not be different yet…..

#22 Smoking Man on 01.17.12 at 10:35 pm

#14 Renter in GTA on 01.17.12 at 10:18 pm

About 8 months to early, can’t blame you not everyone is me.

#23 Raging Ranter on 01.17.12 at 10:38 pm

When the evil-doers at BeeMo dropped their five-year fixed rate by fifty basis points, it plunged to a 195-year-low. That’s even before Sherry Cooper worked there.

Are you sure? She’s pretty old.

#24 Freedom first on 01.17.12 at 10:39 pm

So there you have it……..Canada…….the last country to have their very own housing meltdown! Canadians are without question……#1……….”The Greatest Fools”…..

#25 mcsteve on 01.17.12 at 10:40 pm

Garth – is it time to lock in a 5 year term now?

#26 Raging Ranter on 01.17.12 at 10:41 pm

This is called credit easing – when commercial lenders ride the bond market and slash borrowing costs.

I believe they call this “surfing the yield curve.”

#27 waiting on 01.17.12 at 10:44 pm

There’s a sale on glazed Timbits???

#28 X on 01.17.12 at 10:48 pm

I don’t think it will matter if F drop the amortization period to 25 years as long as there are 10 year rates less than 4%.

I do think that the CDN household debt to income ratio will continue to widen, until rates do increase.

re #20 – not if held inside your TFSA

And really who rides a bicycle wearing sandals….

#29 rosie on 01.17.12 at 10:52 pm

Beware the prophets of doom, and the profits from doom.

#30 Waterloo Resident on 01.17.12 at 10:53 pm

See the licence plates on those cars: THAT’s Europe, its not Canada or America, thats why she’s still got some sex-appeal going on there.

Garth, I TOLD YOU that rates would be coming down, didn’t I ?
Well, here we have them.

Now my next prediction is that soon the banks will be PAYING PEOPLE CASH TO TAKE OUT MORTGAGES. Yes, you heard me correct, in about 6 to 9 months from now you will hear about banks offering special offers such as “We’ve got 1.49% financing, come now down to the bank and along with your mortgage we will GIVE you a free BMW 328i ! ( or $40,000 cash, take your pick ).

I swear, that is what we will be seeing soon here in 2012, you just watch !!!

#31 Boombust on 01.17.12 at 10:55 pm

#10 Smoking Man on 01.17.12 at 10:14

Well, well. Aren’t YOU the comedian.

#32 Investx on 01.17.12 at 10:56 pm

“But let’s think about what happens in 2016 when somebody with a 2.99% BeeMo Special faces renewal at, oh, 7%.”

How likely is this, since it was also predicted here that rates would be well on their way up by now, that they couldn’t stay low a la Japan… due to bond market forces?

News flash. This isn’t Japan. — Garth

#33 empty unsold homes on 01.17.12 at 10:56 pm

There are three empty houses on my street in north york where flippers have been unsuccessful in finding greater fools. Anyone buying in this crashing market needs their heads examined . The condo market is nothing but a ponzi for stupid gamblers with no money so says realtor buddy.

#34 Boombust on 01.17.12 at 10:57 pm

“The wife and I sold our house…”

“The wife”? Oh, come now…

He was being formal. — Garth

#35 R on 01.17.12 at 10:58 pm

If anything in my place goes wrong I just tell the guy who pays the property taxes it needs fixing. If I don’t like it, the neighbours, I can move. I don’t need to worry about property values. Renting is good.

Of course it means by Canadian standards that I am subhuman, because I haven’t ‘invested’ in a 500k liability.

#36 Victor on 01.17.12 at 11:02 pm

Some bank executives have recently indicated that they would support Mr. Flaherty taking further steps to tighten the mortgage market, for example by trimming the maximum length of federally insured mortgages to 25 years from 30.

Toronto-Dominion Bank chief executive officer Ed Clark told The Globe and Mail last month that he would not be opposed to the government tightening the mortgage rules further. “If you thought the Canadian economy was strong enough to take another adjustment, then we would say take the 30 [year amortization limit] down to 25 and get this back to where it originally was,” Mr. Clark said.

Bankers also argued that the 2.99 per cent fixed-rate mortgages they have begun to offer, after Bank of Montreal spurred a price war, are not a big problem for consumer debt levels, in part because many Canadians still have variable-rate mortgages that are even lower than that.

“We have been cautioning Canadians for some time that they need to be prepared to have higher interest rates in the future and be aware of the affordability issue that that may create for some Canadians, not to assume that mortgage interest rates will remain low for a long period of time,” Mr. Flaherty said Tuesday. “So we all have to be cautious in our financial planning.”

http://www.theglobeandmail.com/report-on-business/economy/housing/flaherty-keeping-wary-eye-on-housing-market/article2305544/

#37 Chris on 01.17.12 at 11:02 pm

I ask you. Have you met any modern young couple who, given the choice between granite c-tops with SS apps and debt freedom, would choose the latter? Do they exist?

(raises hand) We live in a small town in a $70,000 house ($30,000 owing) and earn $170k pre-tax. Appliances are stainless but the counters are laminate.

We will send food and aid workers. — Garth

#38 john saccy on 01.17.12 at 11:03 pm

http://www.bloomberg.com/news/2012-01-18/china-s-december-home-prices-posted-worst-performance-last-year-on-curbs.html

China Dec. Home Prices Post Worst Performance

#39 LJ on 01.17.12 at 11:03 pm

Well, the banks are just going to turn around and securitize those mortgages and walk away free. Never mind that CMHC (read: the taxpayer) is standing behind these boneheaded rates.

If F doesn’t put an end to the insanity this spring, I’m cashing out and moving to Guatemala where I can watch the eventual carnage from afar.

#40 MkUltra on 01.17.12 at 11:14 pm

Horny buyer

It’s horny buyers like this who played their part in Toronto’s silly condo boom…

http://realestate.yourmoney.ca/2012/01/should-you-be-able-to-back-out-of-a-deal-if-the-going-gets-tough.html

Ps. It’s okay to horny…just don’t be a horny buyer

#41 Smoking Man on 01.17.12 at 11:15 pm

#10 Smoking Man on 01.17.12 at 10:14

I am, notice Don’t talk about middle kid. If I die an early death it’s cause of him

#42 Jsan on 01.17.12 at 11:16 pm

People have to realize that all that this last huge low mortgage rate push from the banks will do is create a much greater void once the prices begin to fall. It will pull in a few more stragglers who have been sitting on the fence leaving even fewer buyers once the prices begin to tip. It really is good in the long run for those who are holding out for future bargains in my opinion.

Just as in the US, those who were very patient eventually reaped the rewards.

#43 DebtToDeath on 01.17.12 at 11:17 pm

you know that bankers and politicians are brothers behind the scene, they print money from thin air to rob ordinary working people and if people default they still can rob them (tax payers) through the CMHC.

#44 Keeping the Faith on 01.17.12 at 11:19 pm

“Have you met any modern young couple who, given the choice between granite c-tops with SS apps and debt freedom, would choose the latter? Do they exist?”

Yup, Miss Faith and I.
250K pre-tax, rent, invest 50% of take home, retirement at 45 …

#21 Stevenson, you’re a joke.

#45 Makaya on 01.17.12 at 11:19 pm

Garth, I didn’t know you had an appetite for French women… this one comes from the South, near Montpellier ;)

By the way, if one wants to see how crazy the Toronto condo market is, he/she just has to look at p15 of the economic dashboard of Toronto. There were, in Nov 2011, 136 towers under construction there, to compare with 98 in NY, 89 in Mexico city and 22 in Chicago…

http://www.toronto.ca/business_publications/pdf/economic-dashboard.pdf

#46 Uh Oh Canada on 01.17.12 at 11:21 pm

Okay Garth,

I admit that I have thousands invested with the orange guy rotting away at 2%. You’ve convinced me that saving is for fools, but investing at 6% and above is wise. So what do I do now? Did you ever do a post on how to find a good trustworthy advisor? Our area of Montreal was recently devastated by a million dollar ponzi scheme- which means I’m scared of financial investors. Help!

#47 Shameless on 01.17.12 at 11:22 pm

I don’t understand how banks can suck and blow at the same time. You have the President of BMO and RBC talking about the housing market and how worried they are about it and not 3 days later they are dropping their fixed rates. Garth does this mean we are gearing up for another hot spring market. We are thinking about listing our home and our agent says they are anticipating 2-3% price increases this spring because of these new rates in Mississauga.

#48 Smoking Man on 01.17.12 at 11:23 pm

DELETED

#49 Kris on 01.17.12 at 11:24 pm

10yrs at 4% is very, very difficult to resist. In 10yrs a family who plays their cards right can make a serious dent in their mortgage principal, such that rates at renewal time (2022) become a non-issue.

I’m a diehard RE-skeptic waiting 2yrs for a correction.. But these unbelievable rates have rattled me – This move by the banks may have just pushed any correction out by another 5yrs.

#50 Appraiser on 01.17.12 at 11:26 pm

P.S – It’s BASIC INSTINCT, not basis.

I don’t believe it… — Garth

#51 Devore on 01.17.12 at 11:28 pm

#32 Investx

How likely is this, since it was also predicted here that rates would be well on their way up by now, that they couldn’t stay low a la Japan… due to bond market forces?

And 20 years of falling real estate prices is good news for mortgage renters how, exactly? Goldilocks economy with low rates and bursting prices only works for a couple of years. Rates are low because growth is low, growth is low because the economy is sick.

#52 The Lioness on The Cheese Grater on 01.17.12 at 11:32 pm

Guess that cyclist needed to get a better grip on the bicycle seat.

#53 Rain bird on 01.17.12 at 11:40 pm

Garth,
Sorry to tell you – but your theory ain’t working’.

There is no end to low interest rates – 2016? give me a break!

#54 Fool in the GTA on 01.17.12 at 11:45 pm

Garth – we’re eagerly awaiting your case on why it makes to invest in apartment, shopping mall, commercial and seniors housing REITs.

PS: don’t change the picture.

#55 Smoking Man on 01.17.12 at 11:46 pm

#49 Rain bird on 01.17.12 at 11:40 pm

Dude me the one and only famous smoking called 2014 it’s going to happen.

I know stuff

#56 Polk on 01.17.12 at 11:49 pm

I always wondered how the 150% is calculated. If one’s disposable income is $50K, he owns $153K? Does that include mortgage? Can’t be…..?

#57 Smoking Man on 01.17.12 at 11:50 pm

48 Smoking Man on 01.17.12 at 11:23 pm

Deleted Know u laughed…….

You have a weakness for stuff below the top of the butt and above the kness

#58 KingBubbles on 01.17.12 at 11:51 pm

Cheeky Monkey

#59 HDJ on 01.17.12 at 11:51 pm

Watching today’s news about Mitt Romney, his tax returns and his confession about paying only about 15% in taxes (just like Warren Buffett, who shamefully admits the same) really ticks me off. Same situation for the wealthy in Canada, I presume. Isn’t it about time the government taxed everyone using the same yardstick? Shouldn’t all types of income be treated equally by the tax collector? Seems to me the tax system has been created in favour of a minority – anyone surprised? Why should individuals who generate their revenues from GICs, bank accounts and salaries pay proportionately more in taxes? The whole tax system is a scam designed to benefit the top and squeeze money from the middle and bottom. To minimize taxes, it shouldn’t be necessary to hire a professional investor who can play the system for me and fill out a ridiculously intricate tax return on my behalf.

#60 Smoking Man on 01.17.12 at 11:53 pm

#53 Rain bird on 01.17.12 at 11:40 pm

Gartho is one man vs the machine what do you expect

#61 Mel on 01.17.12 at 11:59 pm

Well, what do you expect when Banks are as much addicted to mortgage lending, as their customers.

And what is the Government, Bank of Canada doing?
Well, nothing of course! Just a cheap talk warning us about our bad debt habits. As usual, nobody will do anything. The almighty hand of gravity will eventually take care of it.

This country will NOT escape the ruin of mortgage debt. It is only a matter of time, unless you believe that we are different here. I don’t!

#62 rp1 on 01.18.12 at 12:05 am

“I ask you. Have you met any modern young couple who, given the choice between granite c-tops with SS apps and debt freedom, would choose the latter? Do they exist?”

We exist, but I’m telling you now, we don’t have the income to pay for this. You’re screwed.

#63 TheRealTruth on 01.18.12 at 12:08 am

Well, a friend just bought a 1 million dollar home with property in Langley. Going to keep present house and rent it out. His reasoning is interest rates aren’t going up significantly anytime in the forseeable future.

Another friend’s dad just bought 5 acres in Langley. They have a house in Richmond they say is worth 1.7 million.

Still another friend moved in with his bro’s family so they could save on living expenses. They just bought two more rental houses.

Another friend and his brother just sold a house they built for $50,000 profit. They have just signed on to buy two more lots.

Lots of people are buying because of the 2.99 and 4% mortgages. I have yet to meet people who say everything is going down. Only people are those on this blog. Makes me wonder whether we are all just pessimists on this blog.

Either these people will make the best investment decisions or they will be financlly ruined; one or the other. However, they have been winning up until this point.

#64 shanks on 01.18.12 at 12:11 am

a sure sign something is up in the housing market:
a sudden uptick in the amount of people selling large quantities of hardwood flooring on craigslist… seems like some people who bought a bunch to renovate are deciding they need to cash out rather than spend more and finish their “dream house”.

#65 nonplused on 01.18.12 at 12:16 am

That girl has one heck of a nice bike! It’s nice to see you are giving the security detail a bit of R&R once in a while Garth.

The girls at work are all cranked up about the 2.99% 5 year too. They aren’t cranking up their skirts or anything, but I know of at least one persuing the mortgage. In her case it’s propably a smart thing to do, she plans to hold the property it will be applied against for a long time. She’s refinancing a variable.

#66 Canadian Watchdog on 01.18.12 at 12:27 am

The idea that F can turn the housing market into another flying turkey is absurd. Any reform or regulation change regarding home lending rules will not be intended to inflate home prices, rather a managed retreat to bolster falling prices. The reason? Well, if F feels like he can borrow more bonds to promote Canada Action Plan Version 3.0, he’s got something else coming…

There was a reason why Carney recently hired S&P’s David T Beers as a special adviser—this is the man behind America’s AAA downgrade back in August 2011, and I have no reason to doubt Canada’s (along with provincial) ratings was widely discussed between these two elitists. Furthermore, a few months after Carney retained Beers, we got word that S&P put the province of Ontario on negative outlook. If we’ve learned anything about rating agencies over the past few months or week, when they revise their outlook to negative, means a downgrade is imminent.

So what’s the problem? Around 30-35% of Canadian federal and provincial bonds are held by foreigners, and with the Canadian economy now contracting into a recession (eh emm depression), this has them very concerned as Canada will need to prove it can make whole on its future bonds, without borrowing more to some degree. If for any reason, Canada does not boost its economy, somehow–someway, foreigners will start dumping bond holdings that will send yields surging resulting in higher borrowing costs. Do we want to go down like Europe? F will let us know soon…

So how does Canada keep its revenue flowing when most of its revenue comes from personal income tax that will decline when jobs and incomes shrink? This is the great conundrum. Besides oil, minerals lumber, a few high tech gadgets and some auto parts, Canada also exports, well, nothing. If only we could export our houses…

We’re at the precipice of hard times and have overstretched ourselves into a mountain of debt that must be repaid. How this goes next, nobody knows. As the solution is a problem, and the problem has no solution, aka the death spiral.

Great pic Garth.

#67 Al on 01.18.12 at 12:30 am

F & H should be personally liable for bailing out CMHC when it goes bust rather than us taxpayers!

#68 TheRealTruth on 01.18.12 at 12:33 am

What would the following policy change do to housing?

Eliminate amortizations that go beyond Age 65 of the purchaser with a 30 year cap.

So if you’re 40. The max amortization you can have 25 years.

Comments?

#69 Led on 01.18.12 at 12:34 am

still think rates are going to rise? we are Japan and this is the new normal. expect 10 years of low rates, cause our economy couldn’t handle anything else. same for europe and the states. how do you know when it is going to change? you will start seeing raises again.

#70 dutch4505 on 01.18.12 at 12:36 am

big deal about 4% for 10 years. where I live I can get a 30 year open mortgage for that rate. no renewals…fixed rate. plus i get to deduct interest, property taxes and fire insurance premiums. guess what? real estate prices are still falling. when the market turns low rates are not going to create confidence and reverse a slide downward.

my opinion did not go over well with my canadian brother in law in port moody bc. just visited him last weekend. he still thinks his 700 sq ft home that is 80 years old will go up in value from his recent purchase price of 600K to over 1 million within a few years. but then he thinks china is now the new world superpower…so what do I know.

#71 zman on 01.18.12 at 12:37 am

hi

F has said that he will not interfere with the housing market as he sees that prices are coming down
so i dont think that he will limit amortization to 25 years

#72 Peter Pan on 01.18.12 at 12:49 am

When the evil-doers at BeeMo dropped their five-year fixed rate by fifty basis points, it plunged to a 195-year-low. That’s even before Sherry Cooper worked there.
———————————–
Garth, there are parts of Sherry Cooper which are younger than 195 years, like all the plastic parts from her surgeries…

#73 Rich Renter on 01.18.12 at 12:50 am

Excellent post, it’s good to be back.

#74 Stupesing in Cabbagetown on 01.18.12 at 12:56 am

#56 Polk – wrong-o. If one’s gross income is $100 thou, then the debt would be $150 thou (multiply by 1.5). Your math showed a 300% income to debt ratio, though maybe that’s where some will be eventually.

#75 Investx on 01.18.12 at 1:04 am

How likely is this, since it was also predicted here that rates would be well on their way up by now, that they couldn’t stay low a la Japan… due to bond market forces?

News flash. This isn’t Japan. — Garth
———————————————-

Ahh… so “it’s different here”.

The point is, this blog predicted that rates would be well on their way up by now, given no chance to remain low thanks to bond market forces.

That hasn’t panned out, so how likely will the 7% by 2016 be?

#76 Canadian Watchdog on 01.18.12 at 1:04 am

#67 Al

Bank executives in Switzerland and Brazil are personally liable for mishandled losses.

#77 Don on 01.18.12 at 1:10 am

“I ask you. Have you met any modern young couple who, given the choice between granite c-tops with SS apps and debt freedom, would choose the latter? Do they exist?”

We are sitting on the sidelines and my lovely wife is pregnant and nesting but thankfully for me she is taking economics and accounting so there is no pressure at all to act. We have a game plan and it doesn’t include overwhelming debt even if we can afford it. Not going to happen.

And a kind reminder to all those talking heads spouting out low interest rates for 10 years. I believe the rates are still low in the US and yet their house prices are still finding the bottom. You can lock in for ten years at low interest rates but your house value might/will decline. Interest rates are but one factor, running out of greater fools is the final end game.

Nothing like evaluating all the factors, no no just stick with the one that appeals to you and talk it up. The real problem is the loss of critical thinking.

How do you tell a family member to wait a couple more months, especially when we have seen prices stabilizing, like watching fire works …up up up……and down down down. How to tell when one is a new realtor and expert in real estate economics. Suggestions ??? Anyone.

#78 Nostradamus Le Mad Vlad on 01.18.12 at 1:22 am


“. . . F will have to act in the coming weeks. I ask you. Yes, it’s different here. We’re hooped. But let’s think about what happens in 2016 when wrinkly Boomer desperados are trying to turn their fading suburban temples into cash for groceries. Do they exist?” — Not after 2016 they won’t.

“. . . real estate and related activities make up 27% of our entire economy – and that’s supported by $1.2 trillion in mortgage debt and runaway personal borrowings . . .” — Isn’t this where the IMF steps in and forces us to do an Ireland, becoming a dependent, crippled slave-for-life? Or do we do an Iceland and tell them to go f#*k themselves?

BTW, when was the last time F acted like a grown-up instead of a spoiled brat?
*
#10 Smoking Man — “The early signs of a political carrier I’m thinking.” — In the name of dOg and Glazed TimBits, don’t do it! Much better here!

#35 R — “Of course it means by Canadian standards that I am subhuman, because I haven’t ‘invested’ in a 500k liability.” — Congrats! You’re abnormal! Isn’t it great, swinging from tree to tree dressed in women’s clothing and hanging ’round in bars?!
*
Nortel Cooking the books? Shades of Bre-X; 2:41 clip JFK, RFK and Martin Luther King apparently were all murdered for the same reason — they were going to shut down the US Fed; PoliBusinesstics They do mix; Two examples of Govt. waste; Free pass for terrorists? Smaller harbors left unmanned; Bank Bonuses Can’t (or won’t) lend to small businesses; EU Big Bazookas bazookered; Gold US$2K / oz.? Right To Work vs. free bargaining states; Lord Rothschild My manna from heaven; Oil prices up; Eleven bln. pound Smart Meter fiasco; Swimming Freely Underwater homeowners.

Payday Lending Profiting from poverty; Nightmare Appraisal Incl. pic; Blue Collar Jobs going; US not so screwed? Crash time? Money Can buy happiness, but Consumer Credit defaults rise; Communication Breakdown Esp. if the EU secedes from itself; US$100 / brl. oil Try two hundred when / if war starts; Cardinals Fang and Biggles in the EU; Abandon Ship!
*
Fukushima New pix of bldg. 4; Russian Military In case anyone forgot; EU Secession; 1:19 clip Alberta’s forests demonically possessed or strange sounds? Plus Further explanation on sounds; The US, a.k.a. The Fourth Reich and The US is no longer the land of the free, and neither will we soon (links in); Porridge and other things the canny Scots have done for us; Vitamin D helps eyesight in elderly; ACLU and Obomba Most of the civil liberties are gone now; Monsanto Livers and hearts may be affected; Imposed War with Iran may be imposed on Obomba. Hence, he is only the showman for running the country; CC Climate change? This is a new one.

Growing Meat A new type of Monsanto? Cyborgs Something to do with brains; Asteroid Loaded with precious metals set to pass by soon; Control Freaks Happening across the globe.

#79 Jon B on 01.18.12 at 1:31 am

The banks are all about the creation and maintenance of their lucrative debt slave farms. A unique modern concept combining old school financial bondage with the yearning to keep up with the Joneses through endless material acquisitions.

#80 Dumb Canadians on 01.18.12 at 1:31 am

To #24 Freedom first:

You are right.

Banks love Canada; we are the stupidest people on the planet.

Case in point:::::::::::::::::

This is also hilarious!!!::::::::::

#50 Appraiser

P.S – It’s BASIC INSTINCT, not basis.

I don’t believe it… — Garth

#81 Mister Obvious on 01.18.12 at 1:36 am

A very memorable post tonight. I can see referring to it again and again.

#82 Alan on 01.18.12 at 1:37 am

Love to say, I was right again. Rates will remain low for the next couple of years. Jaw-boning by F and the rest of the govy’s and banksters is meant to keep us all in cautionary mode. That’s the best they can do. The Canadian economy is completely dependent on Housing, construction and related industries. Can’t deny that and F can’t screw with it.

Like I said, property values will not tumble until interest rates go up -significantly. It’s now cheaper to buy than to rent in the right places.

#83 daystar on 01.18.12 at 1:37 am

http://money.ca.msn.com/investing/news/breaking-news/government-ready-to-intervene-on-housing-but-not-now-flaherty

Flarhety sez he won’t do anything with respect to CMHC regs, pointing to a softening market even though rates are expected to remain low for the time being and household debt rise higher.

I really have to wonder if F ever knew what he was doing this whole time. Our feds (Canadian federal government) could have asked themselves for once if there was any truth whatsoever to CIBC economist claims that loans here in Canada are “safe” because of earnings support (which apparently must be recession proof or something in a climate where housing directly supports over 20% of our GDP, ask Spain how safe they thought they were in the early part of the last decade). They could be asking whether or not young couples today are putting themselves at risk buying homes at or near the zenith peak of their values a a time when interest rates have nowhere to go but up (ah… for several years now).

I also can’t help but be amused as to why some homeowners think that Canada is not vulnerable to higher rate hikes in the future as well. Public debt continues to soar ever higher (never mind household) and surely the average Joe would combine the public debt levels of federal/provincial/municipal debt to GDP levels, compare this number with the rest of the nations world wide, take a look at how much of this debt is foreign owned and judge for themselves what kind of shape Canadian currency is in, what levels of risk our future borrowing will be reflected by with assessed risk and how prone to higher rate hikes we really are especially after 2012 when the U.S. government is done tinkering with their own treasury bonds.

What, the average Joe hasn’t done this? They don’t know what intergovernmental debt to GDP ratios are in this nation? The average Joe doesn’t know what percentage of our public debt is foreign owned? The average Joe doesn’t realize where we stack up in comparison to the rest of the western world? The average Joe doesn’t know? And yet… the average Joe assumes interest rates will stay low indefinitely without knowing the answers to these questions? The average Joe enters into this market ’cause the neighbors are, thats the information the average Joe uses to make a decision, just follow the herd?

God help us all.

#84 Duncan on 01.18.12 at 1:50 am

I’m 39 and still rent a house with a leaky roof as it’s near work, and use $10 k-mart applicanes, a 28 year old car in the driveway. I only buy near-expiry half proced groceries. and make about 100k a year before income tax.
I live in Australia, so I’m getting 5.55% on my savings.. I’m told I’m crazy and should invest it in equities or property.

I only come here to escape their un-reality.

#85 Soylent Green is People on 01.18.12 at 2:16 am

Sweet chheks. Well there.s one thing HarperCon would never think to touch.
.
.
.
.

#86 Aussie Roy on 01.18.12 at 2:17 am

Aussie Update

2012 is the time to buy says spruiker, the public say “you’re dreaming”. – Comments are better than the article

http://theage.domain.com.au/real-estate-news/2012-the-time-to-buy-20120113-1pxy7.html

The bond market can smell the Aussie bubble.

The big four banks are under pressure not to pass on any further official interest rate cuts, after Commonwealth Bank of Australia paid a hefty premium on Tuesday to raise a ­mammoth  $3.5 billion in the first local ­auction of “covered bonds’’.

http://afr.com/p/business/financial_services/funding_costs_threaten_rate_cuts_p8Xgvy4W4invL2dRiUamsK

And again

http://www.smh.com.au/business/markets/covered-bond-auction-a-fizzer-for-cba-20120118-1q59v.html

Spruik -a- doodle- doo

I’ve been watching the odd episode of Your Money, Your Call over the last month or two. What has caught me with the property edition is the lack of callers and emailers per episde. Now they are lucky to get more than a few per episode, and instead they spend the rest of the time spruiking the market. Tonight was particularly bad, with the usual “experts” – a Century 21 guy (slicked back grey hair, looks a right salesman), Chris Gray and a much subdued guy from RP Data.

Some of the more comical claims tonight were (paraphrasing):
“The auction clearance rates are really in the mid-50s, because on the reported auctions on the day don’t include sold after, especially as they are sold in the next week or so”. (The RP Data guy let this one through to the keeper, even though he surely must’ve known it was rubbish.)
“The property market on the TV shows look bad because it’s a public sales environment, and no-one likes public speaking so the real buyers stay away.”
“The property market is just riding a wave, waiting to go, but the only thing holding it back is all this negative sentiment around.”
There was also a bizzarro section where they tried to make more properties for sale (higher listings) a positive thing.

http://www.simplesustainable.com/topic/4394-your-money-your-call/

WORLD BANK CUTS GLOBAL GROWTH OUTLOOK, SEES EURO-AREA RECESSION

http://www.zerohedge.com/news/world-bank-cuts-economic-outlook-says-europe-recession-warns-developing-economies-prepare-worst

Baltic dry index back below 1000 on falling demand and increased shipping availability

http://www.bloomberg.com/quote/BDIY:IND

#87 T.O. Bubble Boy on 01.18.12 at 2:44 am

@ #69 Led
am still think rates are going to rise? we are Japan and this is the new normal. expect 10 years of low rates, cause our economy couldn’t handle anything else. same for europe and the states. how do you know when it is going to change? you will start seeing raises again.

How’d that work out for Japanese house prices?

exactly.

#88 T.O. Bubble Boy on 01.18.12 at 2:48 am

I agree with the posters who have highlighted the fact that variable rates have been far lower than 2.99% since ZIRP came in around 2008-2009. I had a sub-1.5% mortgage for a couple of years when Carney had 0.25% rates.

However, given the bizarre Canadian affinity for fixed rate mortgages, I can see these price wars triggering a bit of an uptick.

I wonder if the slow December/January in the RE market scared BMO into this move?

Keep the dream alive! Debt ponzi scheme forever!

#89 DoseofReality on 01.18.12 at 3:02 am

7% in 2016?

Please pass over some of what you’re smokin.

#90 daystar on 01.18.12 at 3:18 am

http://money.ca.msn.com/video/?cp-documentid=fbc4c05c-f989-420c-aec3-167075134bea

“we think by and large, people make pretty good decisions over their own personal finances”.

Say, didn’t we hear the same fluff from analysts in the U.S. prior to their housing crash?

“Our loans are quality loans supported by earnings”

We heard that too.

http://money.ca.msn.com/video/?cp-documentid=fbc4c05c-f989-420c-aec3-167075134bea

A summary of the mood for the time being?

#91 new-era on 01.18.12 at 3:19 am

Why lock in now. Crazy Bro Carney might even reduce rates to 0% or even give you cash back.

Just to keep the real estate bubble alive

#92 truth hammer on 01.18.12 at 3:25 am

#69….no rate increase…expect a pile on of public debt……..much higher taxes………think of political expediancy instead of finance when you say Canada. I agree…..we’re hooped…..but not for the reasons suggested. Real Estate is just the tip of the ice berg. Retirement should be spelled ‘offshore accounts’.

#93 Beach Girl on 01.18.12 at 3:26 am

WOW, I am impressed and pissed off at the same time.

Mortgage rates were never this low when I was paying my nest off. I know I could realize a wonderful profit in selling my abode. But I love it.

Garth has his Amazons, but I have a home for unwed fathers, who tend to my salt water pool.

Nice summer visuals, not going to get that in a condo.

Oh Herb, you were right, the pot roast added a nice touch. Alas, that hasn’t happened yet.

You were suggesting he might be a Metrosexual. Isn’t that the subway (quite phallic).

In my day you were Hetro or Homo Sexual. Please try not to confuse me.

Your friend. The dog likes him. Keep you posted.

#94 Victor Burnaby on 01.18.12 at 3:55 am

The episode should be called “BoC and Beemo vs. Gravity”. Have ya heard the rubber band theory? screwed deeply this time.

#95 LALA on 01.18.12 at 3:57 am

Do I need to point out that the americans can lock in at 4% for 30 years? doesn’t seem to helping out much there.

#96 Not Wondering Anymore on 01.18.12 at 4:12 am

Low rates for 10 years may just be the first step to more of this kind of “credit easing”.

When my parents bought their first homes beginning in the 1950’s’, there was only the “amortization” of a mortage for 25 years, no renewable “term” every 1,3,5 or 10 years, at varying interest rates. The interest rate on mortgages was also set for 25 years.

We may be heading back to that kind of bank policy, but it will not stop the upcoming massive decline in Canadian real estate values. Because of the excessive amounts of mortgage and household debt relative to income,along with escalating job loss, it will just be further entrapment of those who are engaged in (or can be lured into) it.

#97 Dorothy on 01.18.12 at 4:25 am

I think Carney has no choice but to keep interest rates in line with those offered by our trading partners. As long as interest rates remain low in the U.S. and Europe, so will ours.

I also believe that we are currently in a period of deflation, which is being masked and kept in check by the low interest rates.

So yes, house prices will continue to fall in most markets, along with most other hard asssets, but that doesn’t necessarily mean they’ll fall to the low levels most blog dogs are hoping for. And interest rates WILL stay low for a very long time to come. Bankers wouldn’t be offering such low rates for such long terms if they were expecting rates to rise. My guess is that you won’t see a substantial rate increase for at least 5 years.

All that said, if you don’t want to remain a renter for another 5 to 10 years, and can afford to buy, I’d be inclined to bite the bullet and take advantage of softening prices and low interest rates. Just make sure to be prudent, and not get yourself in debt over your head. If you can’t afford it, don’t buy it!

#98 Where's The Money Guido??? on 01.18.12 at 4:32 am

Re: 19 FTP – First Time Poster on 01.17.12 at 10:31 pm
Second MF Global Unveiled As Canadian Regulator Accuses Barret Capital Of Commingling Client Funds
As the Winnipeg Free Press reports, “One of Canada’s investment regulators has accused Barret Capital Management, a firm specialized in futures and options on metals and other exchange-traded commodities, of using client money for its own purposes. The Investment Industry Regulatory Organization of Canada warned Monday that Barret clients are at risk due to the firm’s “ongoing misappropriation of their money to fund losing trades and ongoing misinformation about the value and holdings in their accounts.” IIROC has set a hearing for Tuesday morning to suspend Barret’s membership in the organization and stop Barret from dealing with the public.
Did someone say that our Canadian banks are fine? We all have to wonder if this is the tip of the iceberg or an anomaly. Something tells me if one can do it – they all can!

Get serious. (1) This small company is no bank. (2) The system worked. Some low-level diddlers were caught, will be thrown out of the industry and clients made whole. — Garth

Also Re: Renting and waiting # 128,
“Another client gave Barret $10,000 with assurances
it would be invested in gold and silver bullion. Instead, alleges IIROC, the money was invested in
the futures and options market, and was all lost.”
———————————————
Why? The firm was caught, will pay the price, and all clients made whole. Sounds like the system works. — Garth

What body covers the losses by the client?
Thanks in advance.
take care,
Blacksheep

In the case of insolvency, the Canadian Investor Protection Fund (CIPF). — Garth

I beg to differ. When TSHTF in 2008, I tried to cash out my mutual fund from Credential Securities (thru Vancity) in September before I lost my dough because I saw the writing on the wall from the August ABCP debacle and it took over 5 Months to get my money, after the fund slid another 25%. They tried everything in the book to delay paying me out. So I write letters to the BC Securities Commission, IIROC, Mutual Funds Dealers Assoc., OBSI (Ombudsman For Banking Services and Investments) and CIFP. They take another 6 months to come up with the answer of there’s nothing going on and kicked me to the curb. There is nothing they will do for you and the perpetrators will get off scott free (as long as they quit). This was all proven on CBC’s Marketplace (or is it the Fifth Estate) segment a couple years ago.
I then went to Vancity’s shareholders Annual General Meeting and tried to call them on it and they wouldn’t let me speak (which every shareholder has right to). The next day I pulled all of my money (and whatever else I had in there) out of Vancity. You know, when I was closing my accounts, they even tried to keep my shares money, the slimeballs, all the time feigning ignorance. SLEAZY SCUMBAGS !!!!
The head of the Ontario Securities Commission is a former BMO CEO, so we know where the buck stops, and it’s not in your pocket.

There is no relation between you choosing a bad mutual fund company and the CIPF or Barret Capital. BTW, did you seriously cash in your assets when the market crashed in 2008? Guess you like to buy high and sell low. — Garth

#99 re-expat on 01.18.12 at 4:57 am

I was listening to Ozzy Jurock on CKNW last Saturday (nothing better to do with my time), he said there were 158 properties for sale on Saltspring Island for less than $300,000.

Then I went on to MLS.ca checking out Saltspring island houses for less than $300,000 and came up with only 12 listings.

Sure, not all listed properties are under the MLS. But wow, what a discrepancy for such a small area. I am more apt to believe Ozzie’s numbers given what I’ve seen and heard from people living on Saltspring.

Makes me wonder what the true number of house or inventory is on the market for sale.

Reminder to self: don’t waste time with the MLS

#100 Not Wondering Anymore on 01.18.12 at 5:05 am

Very pleased to hear Smoking Man’s son did not join the armed forces. With such a creative disposition and talent it sounds like his gifts would be better suited in service of the vulnerable, of kids, and of the young at heart.

The question is,can Dad put aside his own prejudices to recognize,value,support, and encourage him as a prospective, likely “alternative” (and perhaps Drama) teacher?

#101 Canuck Abroad on 01.18.12 at 5:28 am

So, Ottawa is going to re-re-inflate the housing bubble that should have corrected in 2008 and then in 2012. Damage deferred for several more years and all you homedebtors are saved yet again. Party on!!!

#102 Steven Rowlandson on 01.18.12 at 6:41 am

Lets see now most canadians, the government, banks, house debtors and realtors are in denial that real estate prices can and will come down to late 1960s/ early 1970s levels where mens pay is today. Mens pay today is 40 or 50 years out of date relative to real estate prices. Got some bad news for canada. Men earning 10 to 20 bucks an hour can not live in canada because real estate costs too much! Who the hell do you people think is going to buy your over priced real estate?

#103 martin9999 on 01.18.12 at 7:47 am

But let’s think about what happens in 2016 ”’

i am glad i am gonna read garth hopefully, till 2016

#104 Ben on 01.18.12 at 7:53 am

I can’t F’ing believe I left 72 degrees to come back to the most God foresaken, uninhabitable, coldest place on earth. Where 1,200 sq ft 2 story card board boxes on postage stamp size lots go for $400,000+.
Give my head a shake!

#105 David B on 01.18.12 at 8:25 am

It’s different here in Canada than the USA & beyond!

And on another front, power bill for electrically heated home here in good ode Nova Scotia is about to rise $95 a month … 9.1% increase plus 7% weather increase plus something called forward averaging …. and hey lets not talk water …. that is even worst.

So get out there and buy and then now and help lower these costs. I am sure that is the way it works …. is it?

#106 Rudolf on 01.18.12 at 8:31 am

That the manipulative real estate fraternity is trying to squeeze the last cent of commission out of the changing housing market is no secrete. But it is even more appalling when sophisticated banks are lowering their mortgage rates to lure the last unwashed masses into buying overpriced homes before the real estate hype is finally coming to its predicted end.

#107 Bond junkie on 01.18.12 at 8:36 am

There are better odds of you becoming Prime Minister by 2016 than a 2011 mtg resetting at 7%… just sayin’.

#108 House on 01.18.12 at 8:38 am

It’s not Laws of Economics. It is Laws of Finance. There are no Laws of Economics, just a bunch of confused theories.

#109 househornyhousewife on 01.18.12 at 8:44 am

Good post today Garth.

John Turner’s comments had me rolling on the floor. How generous of the banks to think of us little people and unselfishly try to get us out of debt sooner .. yuk yuk.

Who knows, maybe we will have 20 year locked in rates at 3% in the near future … wouldn’t that be nice ? Have to admit this is making me salivate. Now if only a house at a reasonable price would come on the market where I am looking (instead of overpriced “compromise” properties).

If the time isn’t right, it isn’t right. We need both the lower long term interest rates AND reasonable asking prices. When that happens, I’m in all the way. I don’t have all of my net worth in real estate and know what I can afford so to me, these market occurences are just a sign of things to come … opportunities for some and disaster for others. In the market I am searching, houses have been sitting on the market for YEARS and if people want to sell, they will have no choice but to get real … eventually …

HHHW

#110 Gypsy Kid on 01.18.12 at 8:58 am

Garth, I started reading your blog since last July. It was just in the nick of time because I was ready to make an offer on a cottage we were only going to use for ten days a year at the most. The argument was, “I want a cottage just because I could…” No logic or reason behind it. Just a growing desire for one.

Thank god I found this blog. You saved us grief and money.
I love real-estate, but I’ve been re-thinking my love of real estate, etc…since last July. Instead, I’m focusing more attention on our portfolio and learning about different strategies and “tax-avoidance”.
We are in our mid-40’s. Our house all paid for and a large investment portfolio. Maybe one day we will buy a second property, for recreation or for investment purposes, but for now, I read your blog everyday and silently breath a sigh of relief that you devote your time to this “pathetic blog”.
Also, we have a son in early ’20s who has a disability. And I think it has been a quiet obsession of mine to buy him a small condo/house so he wont have to worry about housing. I think now that it is better to rent long term for him. This way he wont have to worry about anything except paying his rent. He can call the landlord to fix things when things break, etc…
In any case, I’m not buying now even if the interest rates are all time low. I’ll give it more thought.
Thank you again Garth for this blog and for bringing back my ability to think critically regarding real estate and investing.

#111 Joe q on 01.18.12 at 9:02 am

The spin coming from the real estate boards and the MSM is hitting an all time high. This time TREB adjusting (see: manipulating) 2011 data so that this year shows an “increase in sales!

http://www.theeconomicanalyst.com/content/treb-taking-page-nar

#112 TurnerNation on 01.18.12 at 9:04 am

Small kind of off topic reminder into the winter season…do not believe our media or its robberbarron contributors and government abetters. Remember that flu shot you lined up for, when the flu panic was initiated?
Killing us softly….

http://www.bloomberg.com/news/2012-01-18/roche-tamiflu-s-effectiveness-unproven-due-to-hidden-data-researchers-say.html

Roche Holding AG (ROG)’s Tamiflu antiviral treatment may not be as safe and effective as the Swiss drugmaker says, according to independent researchers who asked the company to publish data withheld from public review.

While Tamiflu helps flu sufferers feel better an average of 21 hours more quickly after initial symptoms, it didn’t reduce the number of people who went on to be hospitalized, researchers at the non-profit Cochrane Collaboration said today in a report. Though stockpiled to prevent the spread of flu, the drug hasn’t been proven effective for that purpose, the British Medical Journal said in an article published with the Cochrane report.

#113 Herb on 01.18.12 at 9:12 am

You’re getting cheeky again, Garth.

#114 Herb on 01.18.12 at 9:14 am

#10 Smoking Man,

I predict a great future for that boy – as your successor at Greater Fool.

#115 R2D2 on 01.18.12 at 9:26 am

ABSolutely great ABS !

http://www.youtube.com/watch?v=g5R1mTyYMuU

#116 eaglebay - Parksville on 01.18.12 at 9:37 am

#61 Mel on 01.17.12 at 11:59 pm
“Well, what do you expect when Banks are as much addicted to mortgage lending, as their customers.

And what is the Government, Bank of Canada doing?”
———-
Who do you think told the banks to do so?
Who do you think manages our “free economy”?

#117 Standard Deviation on 01.18.12 at 9:40 am

If the laws of physics prevail and energy always goes down its gradient, then what we are seeing here is the financial institutions of this country removing what remains of any survival instinct in the younger generation. In the day when interest rates averaged 9% – 10% a mortgage was a long term risk that drove you to continue working and saving so as to pay your monthly obligations, all the while being aware that interest rates can always go up and housing prices can a. Now it is being sold as a transitional moment in life with only an upside. If our institutions don’t protect us from this stupidity then what hope is there?

#118 Standard Deviation on 01.18.12 at 9:41 am

please add “always go down” it somehow disappeared from the last post.

#119 Darryl on 01.18.12 at 9:41 am

Banks will make a killing this year on refi fees. Anyone with a mortgage and a brain would go fixed at 4% . Lump sum payments every year and bring that big mortgage way down. Or retire it.

This could be a chance for the over levered to get into a more stable situation. If you are variable you should be able to go fixed no charge.

Not sure if this very low very long term rate is some how manipulated by gov or banks (or both) . Bravo if it is.

Just need a hard core education campaign to keep the newbees out now. That might be tough though . if I had 4 % 10 year motgages when I was young, I may have loaded up.

#120 eaglebay - Parksville on 01.18.12 at 9:48 am

#68 TheRealTruth on 01.18.12 at 12:33 am
“What would the following policy change do to housing?

Eliminate amortizations that go beyond Age 65 of the purchaser with a 30 year cap.”
———-
That’s called discrimination.
Most people over age 65 are more financially responsible and more financially capable than the younger generations.

#121 The Dividend Yield Investor on 01.18.12 at 9:51 am

If you think rates are low now, you will be singing “Limbo, Limbo, how low can you go!!”

Any one who thinks that Canadian interest rates are going up anytime soon is sadly mistaken.

The direction we be definitely to the southward direction. However, this does not portend well for the Canadian real estate and economy. This is symptomatic of an economy that is cooling off and most importantly is in the last stages of a private debt death binge.

Fortuitously the Canadian government has its debt load at a reasonable level. Why is this important? Not because the banks will get into trouble as here in the USA or Europe; it is quite simply “Deflation!” They will fight it with all the tools at their disposal. Which will be SPEND, SPEND, and SPEND MORE!!

Deflation is defined as the “Contraction of money and debt.” Pushing asset values down, down and down! I’ll discuss that explanation of this phenomenon and its pros and cons, at a later post.

As Canadians “pull hard on the reins” of their spending, your economy will go into recession and when it recovers it will be that of SLOW growth. That is where the government spending will come in, in an attempt to replace private spending.

The news flow here in the U.S. is positive; however in the next 4 to 6 weeks this will change to a negative tone as we move back into recession. This WILL NOT be deep or prolonged contraction; it will be a mild 1/2% to 1% GDP decline over two consecutive quarters. However, the EU will be smashed!

One of two items will occur in relationship to the coming lower rates:

One – Canadian real estate will begin it’s long awaited roll over in the price, due to a poor economy and excessive debt load.

Two – God forbid that the house horny folks go on a one last gasp debt based orgy of biblical proportions. If that happens [too hard to predict], when the RE “blows off” a one to two year depression will follow.

All of this mayhem brought to you “By your friendly government.” Sell your house yesterday to a greater fool and get liquid fast. Then move in with Garth to save additional money, don’t worry he has plenty of room and he makes great pancakes for breakfast!!

Good Luck and Good Morning,

The Dividend Yield Investor
Atlanta G.A.

#122 OttawaRenter on 01.18.12 at 10:00 am

Garth, I agree with #46 Uh Oh Canada. It would be nice to have advice on how to pick an advisor. I obviously am not asking you to do leg work for me, but information on a list of questions you can ask an advisor to see if he knows his stuff; or cues you can use to decide when to run away from shady characters. If that is something you would consider for a post, it would be greatly appreciated. (Unless its in your book, which I have just ordered.)

I apologize to all you know-it-alls on this blog for my extremely elementary question, but not all of us are as old or savvy as you (and you know who you are, because you thought about posting something derogatory the moment you read my post.)

It’s a good question, and I will address it. — Garth

#123 Stevenson on 01.18.12 at 10:09 am

#44 Keeping the Faith

Yeah I am the joke…just better off. So far my choices of RE investments have proved me well.

Every year you keep the faith. If you were a supporter of not buying RE when times were bad, well then your faith has failed you bud.

It’s also not what you say, but who it’s from that makes a difference.

#124 tammy on 01.18.12 at 10:22 am

would you be able to expand on why the Smith maneuver doesnt work and how to begin using ones rrsp’s as your own mortgage provider. Is this in your latest book?

Smith’s strategy is based on dynamic mutual fund returns plus a systematic withdrawal schedule. In a low-yield world, you can forget that myth. As for RRSP mortgages, yes, in the book. — Garth

#125 Joel on 01.18.12 at 10:27 am

looking forward to post on how to pick an investor. thanks

#126 Stevenson on 01.18.12 at 10:28 am

Ever wonder why Vancouver is such a hot destination for people to buy RE? Wealthy people don’t complain and they move to places where there is good quality of life. Vancouver sits at 5th place among the world. Don’t just blame HAM.

http://www.mercer.com/qualityoflivingpr#city-rankings

#127 R2D2 on 01.18.12 at 10:40 am

#122OttawaRenter on 01.18.12 at 10:00 am

I apologize to all you know-it-alls

Don’t bother to apologize … We took up Harper’s ironclad promise to PROTECT Income Trusts … Market Face Value ( in total ) declined 19% during the overnight October 31 2006
( 19% x $35 Billion ) and we took a bath of $140K

Other Harper – Flim Flam Shameless O’Flairity scams

1. PRPP’s – voluntary for employee & employer

2. TS = FA – that’s the correct acronym because the TS is equal to FA.

#128 Devil's Advocate on 01.18.12 at 10:48 am

“I have yet to meet people who say everything is going down. Only people are those on this blog. Makes me wonder whether we are all just pessimists on this blog.” #63TheRealTruth on 01.18.12 at 12:08 am

Finally someone on this “pathetic” blog gets it with an unexpected epiphany opening up their mind to a whole new realm of possibilities! Kinda like having your ears pop and suddenly hearing all the subtle nuances of the music or maybe more aptly described as; finally pulling one’s head out of their ass.

#129 gladiator on 01.18.12 at 10:55 am

@122 Ottawa Renter: the first thing to check if the advisor is worth anything, is to see if he/she has a framed Canadian Securities Course certificate on the wall. If that joke of a certification is something he/she is proud of, then run away from there.
Google its image to see how it looks like.

Garth will do us all a great service by suggesting what to ask an advisor before we entrust him/her our hard-earned money. Eagerly awaiting the list of questions.

Actually the CSC course is an excellent primer, but only one of several courses an advisor must have. Of greater consequence is experience, tax knowledge, performance and a caring approach. Never engage an advisor who is not fee-based, has anything to sell, collects a penny in commissions or doesn’t practice active management. More later. — Garth

#130 Devil's Advocate on 01.18.12 at 11:03 am

#21 Stevenson on 01.17.12 at 10:34 pm
What happens if prices are higher in 2016? Or Better what if prices are higher in 2013 as prices CONTINUE to grow. We will still not be different yet…..

#44 Keeping the Faith on 01.17.12 at 11:19 pm

#21 Stevenson, you’re a joke.

Notice how Stevenson qualified his statements with the conjunction “if”. Now IF you would pull your head out of your ass, you too might see a new realm of possibilities worth considering.

#131 Ian - Ottawa on 01.18.12 at 11:05 am

At this rate, BMO will finally be on track to offering their 5 year negative 2.99 Fixed. What are your thoughts on the Canadian Tire Dollar trading above the Carney one we have now?

#132 lunchlady on 01.18.12 at 11:16 am

Hi Garth,
Would you be able to tell me if there is something to invest in with small amounts like 10,000 to 15,000, rather then leave it in with the nice banker dude? Thanks for your excellent advice. Have passed your blog on to quite a few people already.

Of course. Open a self-directed trading account and buy two or three ETFs, such as equity, preferred or REIT-based. — Garth

#133 jess on 01.18.12 at 11:19 am

And the data doesn’t include 2nd liens
middle income 40 60th percentile 40-65k

Jan. 4 2012

Housing Market Conditions
House Prices and Implications for Household Wealth
House prices for the nation as a whole (figure 1) declined sharply from 2007 to 2009 and remain
about 33 percent below their early 2006 peak, according to data from CoreLogic. For the United
States as a whole, declines on this scale are unprecedented since the Great Depression. In the
aggregate, more than $7 trillion in home equity (the difference between aggregate home values
and mortgage debt owed by homeowners)–more than half of the aggregate home equity that
existed in early 2006–has been lost. Further, the ratio of home equity to disposable personal
income has declined to 55 percent (figure 2), far below levels seen since this data series began in
1950…

This substantial blow to household wealth has significantly weakened household spending and
consumer confidence. Middle-income households, as a group, have been particularly hard hit because home equity is a larger share of their wealth in the aggregate than it is for low-income households (who are less likely to be homeowners) or upper-income households (who own otherforms of wealth such as financial assets and businesses). According to data from the Federal
Reserve’s Survey of Consumer Finances, the decline in average home equity for middle-income homeowners from 2007 through 2009 was about 66 percent of the average income in 2007 for these homeowners. In contrast, the decline in average home equity for the highest-income homeowners was only about 36 percent of average income for these homeowners.

http://www.federalreserve.gov/publications/other-reports/files/housing-white-paper-20120104.pdf

#134 PTDBD on 01.18.12 at 11:20 am

Never, ever, never will interest rates go up again…this is working way too well for the select few.

Now the IMF wants more funds from its members (cough up Canadian taxpayer) to keep the debt cycle going.

Those that have the big bucks, and can control the risk through political influence are reaping 7% from their bond investments in debt countries. The longer the debt circle is continued, the more they can collect from maturing bonds. Why do you think the European debt crisis has been stretched out for so long?

Have a listen to this BBC piece about the life style of the superich…The Wealth Gap
http://www.bbc.co.uk/podcasts/series/docarchive

the million dollar necklace, the gilded era of aristocracy, inequality of living standars, etc.

#135 R2D2 on 01.18.12 at 11:21 am

Sage advice … Look for a GOOD advisor and then ( only then ) pick out a great restaurant to celebrate.

http://www.youtube.com/watch?v=AbE-bC2hn4c

#136 maxx on 01.18.12 at 11:22 am

#50 Appraiser on 01.17.12 at 11:26 pm

…as in “BASIS POINTS”…..and INSTINCT being a knee-jerk reaction to a drop in them by the house horny….

#137 onemoretime on 01.18.12 at 11:34 am

While I don’t think that it’s necessary for people who rent versus buy have such harsh words for each other, I find this article rather interesting from one of the main U.S. pessimists….
http://www.huffingtonpost.ca/2012/01/17/nouriel-roubini-canada-optimistic_n_1212084.html?ref=canada

#138 Waterloo Resident on 01.18.12 at 11:35 am

Here in Waterloo I’m looking at several $3 Million + 3-bedroom homes for sale. They seem to be selling fast, a bidding war going on, so I don’t know, I might just be FORCED to step up to the plate and make an offer on one before prices head up any higher.

There is only one such home for sale in the area, so you are lying. But let us know how it turns out. — Garth

#139 Barrie Dog on 01.18.12 at 11:36 am

On a previous blog you said you should never take a 10 year mortgage.

Does the 3.99% for 10 years now make sense given here the rates will eventually go?

I do not recall making that statement. Better to take teh 2.99% fiver, invest the difference and crash the loan upon renewal. — Garth

#140 Devil's Advocate on 01.18.12 at 11:41 am

Seems to me more and more of the pups and poodles grow weary as they impatiently await their next helping of Alpo while taunted by the sight of the neighbours pet being fed roast beef.

#141 brainsail on 01.18.12 at 11:43 am

“World Bank warns on risk of global recession”

http://money.cnn.com/2012/01/18/news/economy/world_bank_recession/index.htm?hpt=hp_t3

#142 refinow on 01.18.12 at 11:53 am

Top 5 reasons we should all drink the kool aid.

http://www.youtube.com/watch?v=hfa1cvtP0WA&feature=player_embedded#!

shameless…

but at least she is easy to look at… right up Garth’s ally…

#143 Canadian Watchdog on 01.18.12 at 11:53 am

Live press conference by Governor Mark Carney at 11:15 ET.

Webcast
http://download.isiglobal.ca/bocbdc/2012-01-18.html

#144 Pascal on 01.18.12 at 11:56 am

Nice photo !
From South of France, along the Mediterranean sea (as shown on the ID of one of the car). Likely in Summer with the beach not so far…

#145 Devil's Advocate on 01.18.12 at 12:02 pm

Good post!

“We are surrounded by people like ourselves, but if you go out there [in] America … there is a vast underclass of people who absolutely don’t have the skills to compete in this global economy,” he said. “Unless you do something about education, about skills, about human capital, these are people who are going to be lost forever.” – Nouriel Roubini

Education is a bargain at any price. Invest in yourself. Open your mind. But, to quote Samuel Clemens, “Don’t let your education get in the way of your learning”

“It’s a mixed bag; it’s a glass that is half full, and half empty,” he said. “There’s certainly plenty of downside risk and things can go wrong, and I’ve been writing about them. But there are also a number of positive things about the global economy, so I think that it would be a fair assessment to think also about the things that can go right.”- Nouriel Roubini

http://youtu.be/XQ7z57qrZU8
Christopher Walken… Can that guy dance or what!?! Worth a “listen”.

#146 live within your means on 01.18.12 at 12:03 pm

#104 David B on 01.18.12 at 8:25 am
It’s different here in Canada than the USA & beyond!

And on another front, power bill for electrically heated home here in good ode Nova Scotia is about to rise $95 a month … 9.1% increase plus 7% weather increase plus something called forward averaging …. and hey lets not talk water …. that is even worst.

So get out there and buy and then now and help lower these costs. I am sure that is the way it works …. is it?

……………..

Hi David

I don’t always read the CH online and stopped subscribing to it as they screwed us years ago. Can you explain what the 7% weather charge is all about?.

We heat with electricity. In 2010 we put in an Electrical Thermal Storage unit by Steffs down in the basement (we have a split entry) and this year we put in a smaller unit on the main level to take advantage of Time of Day billing. Our home is ‘toasty’ & I actually have to turn the temp down at times – that’s saying something for this retired boomer who feels the cold to her bones!!! We used to partially heat with a wood stove downstairs. But a full cord of wood went from $145. in 2000 to $240 in $2010 when we last bought wood. Yes, I kept track of prices. We still have a few cords in case of an electrical power outage or want to burn a few logs in our fireplace upstairs.

About the water rates – disgusting. They encouraged us to put in 6 lt toilets, etc. I actually bought two 3/6 lt ones & now they’re screwing us. I have another toilet to buy, if DH ever gets his act together, but won’t go for a 3 lt one this time because of HRM. Kelley will be voted out next time.

#147 HSC on 01.18.12 at 12:13 pm

I’m wondering if home prices in Toronto will ever be affordable. Even if prices decline by, let’s say, 15%, this will presumably be offset by higher rates.

I was playing with a mortgage calculator today in order to get a better understanding of this situation. As a starting point, I assumed a mortgage of $500,000 (which I chose at random because it’s a nice round number… but it’s not unrealistic given the price of a house in Toronto). You can presently lock-in at 3.83% for 10 years through large brokers (on a 25 year amortization). This results in a monthly payment of $2584.

Now imagine the universe normalizes a bit, home prices drop by around 15% and rates rise to 5.5%. The result? A monthly payment of $2594. Virtually unchanged.

So what would it take to get a 15% reduction in your monthly mortgage costs, in the event that rates rise to something a little closer to normal? To get an idea, let’s assume rates rise to 6% (I’m being an optimist here, as Garth referenced 7% in his post. And frankly, 7% is probably closer to the historic norm.) A $345,000 mortgage at 6% results in a monthly payment of $2207. That’s roughly a 15% reduction from the $2584 mentioned in the first scenario (500,000 borrowed at 3.83%). So using this as an example, if rates were to rise to 6%, the mortgage amount would have to drop by about 30% (from 500k to 345k), in order to get a 15% reduction in monthly mortgage costs.

Obviously I have oversimplified a lot (not factoring in downpayments, for example). But I believe the fundamental point remains valid. A drop in the price of homes is likely to be offset by a rise in rates. So unless we are anticipating a full-blown crash (30%+ price drops), I don’t see any significant improvement in affordability on the horizon.

Garth, what are your thoughts on this? Will homes in major markets like Toronto ever be affordable, or will rising rates nullify any drop in prices? And if the scenario I described is correct, what’s the best move for a rational investor? Is it best to remain a renter indefinitely?

The price of nothing has risen without end. Take the blinders off. — Garth

#148 Van guy on 01.18.12 at 12:22 pm

Blurrrgh
Woke up to a major snow storm (1cm) -9 C
What’s going on here?
It’s definitely different this time

#149 Cookie Monster burnin' Kus on 01.18.12 at 12:24 pm

Today’s post is a real crack up.
There are cracks in the economy.
Things aren’t always what they’re cracked up to be.
I think a real crack-up is coming.
Cracks are showing.

#150 888realtor on 01.18.12 at 12:41 pm

Some time ago, during Toronto Jewish Film Festival there was a poster displayed in the city saying: “It’s never too late to discover your inner Jew!”

Time’s changed, Harry Potter is not on the agenda anymore, he simply lost to a RE Investor. A flipper is a new hero! And now it’s time for a different slogan:

“It’s never too late to discover your inner speculator!” Enjoy Low Interest Rates! Flip and happiness will be on your side!

What a cute, little idea of the nimble conservative government to consolidate people around notion of greed and quick profiteering and what a noble mission to lead such people to the glorious future!

No doubt it gives all the rights to teach other nations what the true democracy is. At least explain them if they too stubborn to understand.

… sorry for the sarcasm… I am so envious… I’ve missed the boat… I am still renting

What boat? The Costa Concordia? — Garth

#151 Spiltbongwater on 01.18.12 at 12:44 pm

I do not recall making that statement. Better to take the 2.99% fiver, invest the difference and crash the loan upon renewal. — Garth

On the blog dated March 21st, 2009, you wrote that because of the premium in cost you should avoid 10 year mortgages. The premium has now shrunk considerably.

As well from Blog dated March 20th, 2009 looks like the greaterfools who were playing mortgage roulette, have turned out to be winners. They have seen their asset appreciate, and if smart can lock in their VRM into lowest fixed loans in history.

Your question was about taking a ten-year loan. My answer stands. — Garth

#152 steve on 01.18.12 at 12:51 pm

“Reminder to self: don’t waste time with the MLS”

– so where else do you go?

#153 DG on 01.18.12 at 12:53 pm

I can’t wait to listen to my mother in law and all my mortgaged friends berate me in the spring when prices rise again. there is still room for the market to go higher although it will eventually tumble…badly. Personally i have been seeing my friends -the baby boomers’ kids, getting hitched and feeling the need to get a mortgage because renting is “throwing your money away”. You should see the look on their faces when I try to explain that my rent is cheaper than what they pay in interest every month. I have been reading this blog and following its message for four years now, holding off on taking on $400,000 of debt. I have paid a mere $40,000 in rent in that time and real estate in calgary is pretty much the same price. Not sure if I’m ahead or behind, but being debt free and paying pennies for rent instead of a big ass mortgage payment every month feels okay to me.

Looking forward to the post on picking a financial advisor, I need to start making a little more than inflation with my orange dollars…unfortunately, almost all of my savings is in RRSP’s as I had company matching my contributions, was young and didn’t understand everything about them, etc. Garth, how can I get these working harder for me?

btw, when did the comments section of this blog become a place for people to bully and generally p*ss on other people because they don’t have the same views on financial planning? where did all these wretched accountants come from? perhaps it has something to do with the fact that real estate hasn’t come down yet and the faithful long time followers are choked because theyve seen others take on big risk in real estate and so far it has paid off? food for thought

#154 Bigrider on 01.18.12 at 12:54 pm

Garth I’m surprised you made no mention of the lady who appeared on CFTO news yesterday evening who after being the winning bidder out of 15 paying 425 thousand above asking on a home
stated almost verbatim on camera ” we are so happy , seems you can’t lose buying real estate”

Do you need a better reason not to watch the TV news? — Garth

#155 AprilNewwest on 01.18.12 at 12:55 pm

#140 Waterloo Resident. Your posts are usually pumping real estate. I wonder why…………realtor?

#156 Ryan the Thirtysomething on 01.18.12 at 12:58 pm

Is there anything we dirty renters can do to take advantage of such low interest rates? I have no interest in buying, I mean more from a borrowing to invest standpoint. Or does the bank not want to talk to you unless you are investing in granite and stainless?

#157 disciple on 01.18.12 at 1:01 pm

Nimrod, who was born on December 25th, the High Sabbath of Babylon,became the first man to rule the whole world. The legendary symbol for Nimrod is “X.” The use of this symbol always denotes witchcraft. When “X” is used as a shortened form meaning Christmas, it actually means “to celebrate the feast of Nimrod.” A double X, which has always meant to double-cross or betray, in its fundamental meaning indicates one’s betrayal into the hands of Satan. When American corporations use the “X” in their logo, such as “Exxon,” the historic Rockefeller firm of Standard Oil of New Jersey, there can be little doubt of this hidden meaning. Can anyone tell me what is referred to in the photo on the homepage of this financial firm, the Nimrod Group?

http://www.thenimrodgroup.com/

#158 a prairie dawg on 01.18.12 at 1:05 pm

#133 bob’s my uncle
Realtors have nothing to do with overpriced RE.

– — –

Except the ones who collude with developers and stage phony line-ups at pre-sale condo developments.

Or the ones that pull listings off the MLS when they don’t sell, so they can re-list it to hide the fact that it was overpriced and had no offers.

Or the ones that buy and flip properties directly to customers themselves.

Or the ones that tout, “buy now or be priced out forever” or “it’s a good time to buy” during a bubble.

Right… And I have a toll bridge for sale on a busy highway.

You got one part correct though. In the not too distant future, “Realtors have nothing to do”, will be an accurate statement.

#159 David B on 01.18.12 at 1:07 pm

So it really is different here eh.

Nouriel Roubini: Canada’s Economy ‘Sound,’ Housing Bust Not In The Cards

From Huff Post

#160 Canadian Watchdog on 01.18.12 at 1:08 pm

Get a loan and buy some Gold.

TD Joins London Bullion Market Association as Full Member
http://research.tdwaterhouse.ca/research/public/Stocks/NewsArticle/ca/TD?documentKey=100-355c2307-1

http://i40.tinypic.com/eb4h1g.png

#161 detalumis on 01.18.12 at 1:16 pm

#68, #120, they used to have a cap on amortizations, couldn’t exceed 70, my neighbours ran into it when he retired as a church minister after moving around a lot. They are now both over 90 and still living in the same home and they told me they were turned down for a mortgage by RBC. There used to be rules about how much of the wife’s income could be included as well because it was assumed that the little lady would quit work eventually. Single women buyers also were nonexistent. If we went back to these rules housing prices really would collapse.

#162 Kris on 01.18.12 at 1:19 pm

The Govt and banks may have planned this together.

The banks drum up more business by offering a lifeline to over-extended Cdns to jump from variable to fixed. It’s the same rate (3%) so why wouldn’t someone lock-in now?

What does the Govt get? Well, with most mortgage debt parked in fixed rates, Carney has the freedom to increase PRIME without the worry of mass foreclosures & social unrest. At least for 5yrs.

#163 bill on 01.18.12 at 1:23 pm

DA
looks like the whole market is caving in.
even the banks have finally noticed and are performing stress tests to see if they can survive….
doesnt sound good to me or anything like a good time to buy.
being realtors you guys have a vested interest in touting the market.

#164 a prairie dawg on 01.18.12 at 1:26 pm

#142 Devil’s Advocate

“being fed”

An apt choice of words in any commission sales realm.

#165 Bottoms_Up on 01.18.12 at 1:30 pm

#56 Polk on 01.17.12 at 11:49 pm
———————————–
Yes, that’s how it is. Younger folk typically have larger mortgages (and/or car payments/LOCs), older folk much smaller ones or none. Thus, the average debt-to-disposable income is about 3x (probably around 6x for youngins, 1x for oldies).

#166 David B on 01.18.12 at 1:30 pm

#145 live within your means on 01.18.12 at 12:03 pm

Will try …

I am also a retired “Senior Boomer” bin down the road and electric heat is only way .. also have wood stove for emergency only …(Too much work and dirty) enough of that.

My wife called NSLP to see what she should expect the end of January … $95/month increase!

I believed what I read in newspaper it would be about $10-15 month increase … $95 never!

Just so happens the Top Dog (Dexter) is my MLA so I called the Premier’s Office … short conversation ( nice lady) and she told me someone would call me back.

So then I decided to get my ducks lined up and called NSLP … again nice lady,

9.1% is what they settled on for us taxpayers

She told me there would a 4% additional weather increase ( Hello weather increase? … it seems they make adjustments bases on the weather predictions ???) at that point I told her I had called the Premier s Office .. she said plse wait, then came back and said it was 7% ..

Now I was told they went back 3 years to find a good average payment and then added the the 16.1% “Bingo” $275 for David ….

We will be fine albeit not happy but I do feel bad for many who are now finding it rough.

#167 kc on 01.18.12 at 1:32 pm

#156 DG on 01.18.12 at 12:53 pm

“I have been reading this blog and following its message for four years now, … btw, when did the comments section of this blog become a place for people to bully and generally p*ss on other people …”

It took you 4 years to figure this out??

#168 HDJ on 01.18.12 at 1:33 pm

Roubini estimates that Canadian house prices could correct by as much as 10 %. “I don’t think the bubble is so severe that you will have a real huge housing bust, as long as the economy continues growing at reasonable rates.”

#169 DonDWest on 01.18.12 at 1:35 pm

“Most people over age 65 are more financially responsible and more financially capable than the younger generations.”

More financially responsible – based on what I’ve seen in terms of vacations and lotto tickets; I would have to say no.

More financially capable – yes. You’ve received a mass influx of unearned wealth through appreciating real estate values. Us young people on the other hand actually have to work.

#170 Alistair McLaughlin on 01.18.12 at 1:38 pm

@#159 Ryan, Is there anything we dirty renters can do to take advantage of such low interest rates?

That renters are excluded from access to these low rates is our reward. Just stay out of debt and be glad you did.

#171 eaglebay - Parksville on 01.18.12 at 1:55 pm

#173 DonDWest on 01.18.12 at 1:35 pm
“Us young people on the other hand actually have to work.”
———-
Glad to hear that you’re doing your share of “work” for your country. Could you and your “young” generation work harder.
It would help the country’s GDP and guaranty us boomers better pensions and government help in the future.

#172 Devil's Advocate on 01.18.12 at 2:01 pm

RE: #148 HSC on 01.18.12 at 12:13 pm

The price of nothing has risen without end. Take the blinders off. — Garth

Really? Are you quite sure?

Putting the subject of real estate aside for just a moment, when was the price of gasoline at the pump less expensive than it is today? When last could you buy a loaf of bread for less than a buck? Can you remember when you’d have thought paying $2.00 for a bottle water would have been ludicrous. Have you tried to put air in your tires lately without having to plug a quarter or two into a vending machine? Hell, have you never gone shopping with Dorothy?!?

To carte blanche say “the price of nothing has risen without end” is to speak blindfolded let alone with blinders. We have not yet arrived at such a destination as to unequivocally be able to say that. While certainly such things as real estate have their ups and downs over the long haul real estate prices have seen nothing short of an upward climb from the day we squatted in uninhabited caves to today’s McMansions.

Everyone should get used to the fact that in this world of increasing human population the things you want are going to get cheaper but the things you need are going to become so expensive you cannot afford those things you want. You may “want” stainless, granite and hardwood, but what you “need” is a roof over your head and, trust me, that roof is going to become increasingly more expensive.

The price of real estate may abate for a short time giving you opportunity to get into the market. When that opportunity might present itself is another pure speculation. That opportunity might, in fact, be right now as prices could be poised to rise – “could be”. Certainly these ultra-low interest rates will not last forever but while they do you know they are going to increase demand and you know what an increase in demand does to prices… right?

So maybe, just maybe, this is just such an “opportunity” for some. Who really knows for sure? History however has proven that, thus far despite short periods of capitulation, the price of some things such as real estate, have risen without end. To pontificate that the future might end on a negating note… well… I rest my case as it must then be the “end” in order to categorically say that and, while I don’t know about you, I ain’t done yet.

#173 Devil's Advocate on 01.18.12 at 2:04 pm

#161a prairie dawg on 01.18.12 at 1:05 pm

Seriously, it’s called “marketing” and no one is holding a gun to your head.

Grow up and take some responsibility for your actions. Don’t believe everything you are told. Educate yourself but know you can not know everything and so must take it upon yourself to enlist a wise counsel.

#174 Devil's Advocate on 01.18.12 at 2:11 pm

#166bill on 01.18.12 at 1:23 pm
DA
looks like the whole market is caving in.
even the banks have finally noticed and are performing stress tests to see if they can survive….
doesnt sound good to me or anything like a good time to buy.
being realtors you guys have a vested interest in touting the market.

Not so.

A good REALTOR® sees their best vested interest in providing the very best information they can to a client that the client might make their own best informed decision and thus return when next they need to buy and/or sell in addition to becoming such an advocate that they refer to that REALTOR® many friends, family and co-workers in the interim.

#175 Bill Gable on 01.18.12 at 2:13 pm

Agent called me yesterday and basically asked if I knew anyone interested in the place we just left. He sounded desperate. I told him that paying 958 k for a one bedroom is not on the radar of any sane human. I also mentioned the $650 a month maintenance fees etc.
I said we are happily renting, and plan to stay that way.

There are a lot of folks sweating this – even on a snowy day here in LaLa Land.

#176 mythbuster on 01.18.12 at 2:15 pm

Garth: “I ask you. Have you met any modern young couple who, given the choice between granite c-tops with SS apps and debt freedom, would choose the latter? Do they exist?”

Answer: “Yes, they exist. Where they are… no one knows.”

(Paraphrasing Jackie Mason’s joke about the existence of ‘nice’ Jewish women.)

#177 Devore on 01.18.12 at 2:20 pm

#126 Stevenson

Vancouver sits at 5th place among the world.

What happened to #1?

#178 Devil's Advocate on 01.18.12 at 2:23 pm

The price of nothing has risen without end. Take the blinders off. — Garth

Maybe what you meant was “bubbles don’t last and can end badly” with which I must agree – for some; they who be Greater Fools leading up to and contributing to the formation of the bubble. But they be those who speculate and I think we both agree to speculate is a short term venture with definitive end – an end that can unfold badly.

#179 HSC on 01.18.12 at 2:28 pm

The price of nothing has risen without end. Take the blinders off. — Garth

—————
I am in no way suggesting that prices will rise without end. In fact, I expect prices to drop. What I’m asking is whether this drop will be offset by a rise in mortgage rates, thereby eliminating any chance for improved affordability.

That’s a fallacious argument, dispelled here more than once. A foundation of success is less debt, not less expensive debt. — Garth

#180 a prairie dawg on 01.18.12 at 2:30 pm

#168 bob’s my uncle

That’s not leverage. Paying shills to pretend to be buyers is called fraud and coercion.

And yes I do own a house. And yes it’s value has gone up. But I have never thought of using my house equity to ‘leverage’ a lifestyle I can’t afford. Nor do I expect it to fund my retirement. Nor is it a major component of my net worth. It’s just a place to live. And I don’t borrow against it to buy toys I can’t afford just because rates are low. Canada is not immune, and will pay the economic price one day soon. This merry-go-round ride will end. Badly for some.

Alpo vs. pot roast indeed….

#181 DonDWest on 01.18.12 at 2:30 pm

#175eaglebay – Parksville

“Could you and your ‘young’ generation work harder.
. . .guaranty us boomers better pensions and government help in the future.”

Someone can’t make the connection – someone doesn’t understand that work ethic and financial personal incentive are closely correlated. Why should I work harder just to feed the boomers at my own personal neglect? Unlike many young people; I do work hard, then again I’m a sucker.

#182 refinow on 01.18.12 at 2:34 pm

BEWARE OF THE BMO 2.99%…….

This is the ultimate bait and switch job.

Sure the rate is 2.99 % maximum amortization is 25 years, no real issue by April 30 year am is likely toast.

But the the DIRTY LITTLE SECRET is that is a new form of CLOSED mortgage. You can only get out of that mortgage with a bonified sale. You can not leave BMO for the full 5 years. No if’s but’s or maybe’s…

So in 2 years time you need to refinance, you can only do it with BMO, BMo knows this and guess who might not be offering significant discounts since they know you cant leave. Now you have officially locked out any other lender’ rate offer for you mortgage.

Let’s say in 3 years time it look’s like rates will finally start to go up, so you want to early renew your mortgage, same problem, doesnt matter what the competition is offering, you are in stcuk with what ever BMO feels like offering you….You can’t leave unless you sell.

Next scenerio, say you lose your job, and have 50% equity in your home and want to refinance, but BMO declines you for the mortgage increase. Even though there are a lot of other lenders willing to increase that mortgage you can’t leave BMO, no you are stuck getting a 2nd mortgage at 12-16%…

Client’s have never been in that possition of handing complete control to the Bank for the full term of the mortgage. Very scary !!!!!

I like to call it the “Hotel California” clause….You can chaeck out any time you want, but you can never leave !!!!

#183 DonDWest on 01.18.12 at 2:39 pm

#181Devore

Vancouver went from 1st to 5th strictly due to declining real estate values. The proof is in the pudding. When you conduct surveys asking rich people “what is the best place in the world to live?” Of course they’re going to respond the area where there mansions have seen the highest real estate gains. The rich are money centric; they view the world through that lense. The truth of the matter is a super rich globalist has the resources to turn any place “heaven on Earth” via his own dime. He doesn’t need Vancouver to do it.

#184 a prairie dawg on 01.18.12 at 2:45 pm

#161 a prairie dawg

Seriously, it’s called “marketing” and no one is holding a gun to your head.

– — –

Most of the examples I stated have nothing at all to do with marketing. You know better than that. And I stopped believing any advertising when I was 15, back in the 70’s. Caveat Emptor dude…

Are you just mad that the WR Bennett Bridge is backed up and no one is rushing out to buy today?

#185 John G. Young on 01.18.12 at 2:46 pm

#185 DonDWest

I think “someone” was being ironic.

And I think “someone else” didn’t get it.

#186 live within your means on 01.18.12 at 2:51 pm

#170 David B on 01.18.12 at 1:30 pm
#145 live within your means on 01.18.12 at 12:03 pm

Will try …

I am also a retired “Senior Boomer” bin down the road and electric heat is only way .. also have wood stove for emergency only …(Too much work and dirty) enough of that.
…………………
Agree.

Wife called NSLP to see what she should expect the end of January … $95/month increase!
……………….

Assume you mean NS Power. I also read that if you heat with elec. You could expect that increase.
…………….

I believed what I read in newspaper it would be about $10-15 month increase … $95 never!
……………..

I figured that amount was only for people who heat with oil!!!
……………..

Just so happens the Top Dog (Dexter) is my MLA so I called the Premier’s Office … short conversation ( nice lady) and she told me someone would call me back.

So then I decided to get my ducks lined up and called NSLP … again nice lady,

9.1% is what they settled on for us taxpayers

She told me there would a 4% additional weather increase ( Hello weather increase? … it seems they make adjustments bases on the weather predictions ???) at that point I told her I had called the Premier s Office .. she said plse wait, then came back and said it was 7% ..

Now I was told they went back 3 years to find a good average payment and then added the the 16.1% “Bingo” $275 for David ….

……………..

Weather increase – LOL – we are being screwed by NS Power. Regret having sold our shares in Emera.
……………….

We will be fine albeit not happy but I do feel bad for many who are now finding it rough.
…………………

We will be OK but I too feel bad for so many. |Heating oil prices raised a lot lately. Chatted with a neighbour this am & ended up talking about heating, water, etc. They’re not hurting financially. Her hubby was under the impression he could just sign up for Time of Day electricity rates, based on what he read in the CH. Sent her a few links. We put in 2 STEFF units in the last 2 years (not via NSP) & took advantage of fed & prov. plans to improve house heating and water efficiency. And now we’re being penalized for reducing both. Seems one can’t win.

#187 Devil's Advocate on 01.18.12 at 2:59 pm

That’s a fallacious argument, dispelled here more than once. A foundation of success is less debt, not less expensive debt. — Garth

Not meaning to take your response to HSC’s comment at #183 out of context, I am compelled to chime in and argue that debt, responsible debt, has a rightful place in our economy which (our economy) without it (debt) our economy would fail miserably. Consequently I don’t see why HSC’s comment “What I’m asking is whether this drop will be offset by a rise in mortgage rates, thereby eliminating any chance for improved affordability” deserves such dismissal.

There are certainly challenges on the horizon, but so too are there many ready to take whatever measures may be necessary to overcome them. Who is to say they will not be successful? Those challenges may, in fact, dissolve on their own accord. What HSC suggests may warrant consideration by some, not all but some. After all, how many home owners today got into their first home even as recently as 10 years ago without a mortgage and without thinking at the time what an onerous commitment it was? Yet today very, very few would regret having done it.

Think about the duration of economic cycles past. Is there any reason to expect we will deviate from those patterns in the long run? Home ownership is a long term gig. As this most recent cycle started so too will it end. Who is to say when that will be or for that matter that it has not already started to end laying the ground for the next.

Oops… pager is relentlessly summoning me back to work.

#188 Pr on 01.18.12 at 3:03 pm

Imagine that, Canada real estate will be the Mother of all bubble in the world! What a amazing place to be, its -15 degree below freezing point today, plus the wind (-23c).

Carney and Flaherty; thanks for keeping this market boiling!

#189 Kris on 01.18.12 at 3:07 pm

#139, #162, #172. Re: Roubini.
Lest anybody read the headline and paint Roubini as a bull on Cdn RE..
When Roubini says “no bubble”, he means a US-style bubble with millions of foreclosures, and a bloodbath in prices (50%). Garth has said often enough, that scenario was never on the cards for Canada, anyway.
Roubini admits “frothiness” in Cdn housing, and his 10% estimate for correction is arguably in the ballpark of Garth’s 15%.
Roubini quotes steady economic growth as a condition for Cdn housing holding up, while admitting headwinds from Europe, China etc could well turn things sour here.
All in all, he seems a cautious bear (not a cautious bull) on Cdn RE – maybe not as vehement a bear as some.

#190 Kevin on 01.18.12 at 3:13 pm

@Polk:

“I always wondered how the 150% is calculated. If one’s disposable income is $50K, he owns $153K? Does that include mortgage?”

150% of $50k is $75k. And yes, that includes a mortgage. On its own, this isn’t bad at all. The problem is that this is an average. Renters, students, senior citizens, and rich people owe a much, much lower multiple. That leaves the stretched-to-the-limit middle class leveraged far beyond what they can sustain, to bring the average up to 150%.

#191 live within your means on 01.18.12 at 3:14 pm

#146 Pascal on 01.18.12 at 11:56 am
Nice photo !
From South of France, along the Mediterranean sea (as shown on the ID of one of the car). Likely in Summer with the beach not so far…
………………

Hi Pascal

My French hubby & I were in the south of France last summer and visited Montpellier & other areas. Unfortunately, over the last 25 years that I have been visiting France with hubby (at least every 2 years) many of the French children & adults have been increasing in size due to family time constraints, lots of prepared foods, etc.

Hope Garth doesn’t change his photo. DH would love it.

#192 not 1st on 01.18.12 at 3:16 pm

Garth, I set up a juicy dividends portfolio, maybe you can comment;

TransCanada Pipelines
Enbridge inc.
Enbridge Income Fund
Enbridge Energy partners
Extended Care REIT

Not super diversified but I picked the pipeliners because they are utilities and their revenue is not tied to the commodities they carry. They get paid on capacity not matter what oil or gas prices do.

#193 Herb on 01.18.12 at 3:18 pm

#93 Beach Girl,

thanx for the update, I was wondering how/if you were making out.

I place ‘metrosexual’ outside the hetero-homo spectrum. To my mind, a metrosexual is someone who is more interested in looking good than in being bad. You are just going to have to try harder to find out, Beach Girl, for find out you must. The snow he shovels for you will disappear, and then what will you do with him!

#194 Kevin on 01.18.12 at 3:18 pm

@HDJ:

“Shouldn’t all types of income be treated equally by the tax collector?”

Of course not. If I earn $100,000 at my job, I pay $20,000 in taxes. If I take the remaining $80,000 and stick it in a savings account earning 1%, then a year later, I’ve made $800. Why should I pay tax on that $800? I earned it using money that was already taxed. How many times should money be taxed to keep things “fair?”

Incidentally, this is currently exactly how the system works. We already do “double-tax” money in this manner.

All income is taxable. But smart people invest for dividends and cap gains, not interest or rent. — Garth

#195 Devil's Advocate on 01.18.12 at 3:26 pm

#188a prairie dawg on 01.18.12 at 2:45 pm
#161 a prairie dawg

Seriously, it’s called “marketing” and no one is holding a gun to your head.

– — –

Most of the examples I stated have nothing at all to do with marketing. You know better than that. And I stopped believing any advertising when I was 15, back in the 70′s. Caveat Emptor dude…

Are you just mad that the WR Bennett Bridge is backed up and no one is rushing out to buy today?

Not mad at all prairie dawg. As a matter of fact, as per my previous quote “pager is relentlessly summoning me back to work”, two of which are people wanting to do something NOW because of those newly introduced reduced interest rates.

With regard to “Caveat Emptor” you might want to check out it’s applicability to the buying and selling of real estate in Canada – it doesn’t and that too keeps me employed.

No matter how hard you try prairie dawg you just can’t knock me off my game so might as well give it up and do something constructive like improving your situation instead of trying to degrade mine.

#196 Kevin on 01.18.12 at 3:30 pm

@new-era:

“Why lock in now. Crazy Bro Carney might even reduce rates to 0%”

What does Mark Carney have to do with fixed interest rates? The Bank of Canada sets the overnight lending rate, on which variable-rate mortgages are based. Fixed-rate mortgage rates are set on the bond market, which has nothing to do with Mark Carney or the Bank of Canada.

#197 Abitibi Doug on 01.18.12 at 3:30 pm

I’m surprised and quite disappointed that Rob Carrick actually suggested getting into the overpriced housing market, as he otherwise seems well informed and gives good, sensible advice. Perhaps that should tell you something, namely that even when the normally cautious people throw all caution to the wind and say go for it, that everyone is deceived and the correction is coming soon. Say didn’t that also happen in 2000 with tech stocks?

#198 Abitibi Doug on 01.18.12 at 3:33 pm

Further to my above comment I forgot the ridiculously obvious, namely that it’s different here in Canada.

#199 Snowboid on 01.18.12 at 3:39 pm

What’s with the RE pumpers’ fatuous comments today? Maybe it’s too cold?

The sheer desperation of government, banks and the RE industry is so obvious even the most ‘house-horny’ should be able to see it!

Thank you Prof. Turner for your sane musings in the face of the wandering flock.

#200 Joe on 01.18.12 at 3:45 pm

#196 not 1st:
Garth, I set up a juicy dividends portfolio, maybe you can comment;

TransCanada Pipelines

——

let’s see how this will play out now… in a not-diversified portfolio

#201 Kevin on 01.18.12 at 3:46 pm

Mel wrote:
“Well, what do you expect when Banks are as much addicted to mortgage lending, as their customers.”

Yes, because the banks clearly understand that the way to make huge profits is by lending money basically for free.

eaglebay wrote:
“And what is the Government, Bank of Canada doing?

Who do you think told the banks to do so?”

Now I’m confused. Are the banks lowering their rates to historic lows because they’re addicted to the huge profits they make by giving away free money (still not sure how that works), or because the government secretly ordered them to do something unprofitable, and they all just passively complied?

#202 Montrealer on 01.18.12 at 3:56 pm

@ #122 OttawaRenter
Garth will answer your question soon, but if you’re interested in more, there is a great book that has a whole chapter on the subject of choosing your advisor. It’s called Wealthbuilding and it’s written by a Canadian – Kurt Rosenreter. I have found a ton of good info in that book (not just about advisors but also about tax planing, estate planning, etc).

#203 An Cat Dubh on 01.18.12 at 3:57 pm

Obviously the banksters are trying to get people hooked on “cheap money” and when it’s time for renewals, the rates will be higher. Kind of like the heroin sellers do to addicts.
The pics is European(thumbs up), you won’t see women this slim too often in the west, especially the USSA.

#204 a prairie dawg on 01.18.12 at 3:57 pm

#199 Devil’s Advocate

DA, I’m not trying to degrade your situation. But you shouldn’t be defending the shoddy sales practices of others, and call it marketing.

Now go handle your sales calls. lol

#205 poco on 01.18.12 at 4:03 pm

#164Van guy on 01.17.12 at 7:49 pm (from yesterday)
Poco,
Did I answer your question correctly on the weekend? I was waiting for your answer. I gave you 2 days to dig yourself out of the snow.
____________________________________________
busy -busy-busy—digging myself out of the snow on the weekend in that winter wonder land of Kelowna-or as some say winter wasteland
you got just about everything about that property correct except when it was originally listed and the subsequent price drops until the owners went into foreclosure–still a good buy at 20k to 30k below the present price
i pretty much get anything i want regarding prices from my friends and one relative in the “business” but it takes a lot of time, though you say you have everything at your fingertips.
might i say you should be telling all the dawgs on here more of what’s really going on in the housing market–from reading the posts on here today, there are still many that have little idea of how far certain areas have dropped in price.
you do that and you can change your name to “The Wiz”

#206 zeeman1 on 01.18.12 at 4:08 pm

#10 Smoking Man.

Funny story but your kid should have been fired instead of collecting a commission cheque. Why would a new employee even be allowed at a critical presentation?

#207 Canadian Watchdog on 01.18.12 at 4:12 pm

For every non-professional market investor on here who thinks they have a chance, allow me to remind you of the fundamental model that ALL funds operate on, and is the reason why your investment will get smoked as soon as one Hedge Fund/Bank hits the firesale button.

Watching the market going up lately? All is well? Watch this video at 18:22 http://www.youtube.com/watch?v=ed2FWNWwE3I

And anyone who was trading during 2008 remembers how the market went bid-less within minutes, forcing stocks (including REITs) to a lower and lower asking price to the bottom.

This is how wealth is transferred, so stay away if you don’t know what you’re doing.

You are a fearmonger. There’s more risk for the average person by staying in cash, and running out of money, than there ever will be by investing sanely. — Garth

#208 zeeman1 on 01.18.12 at 4:13 pm

#59 HDJ.

Flat rate income taxes will not be introduced anytime soon precisely because they are, by definition, the only FAIR tax.

#209 disciple on 01.18.12 at 4:16 pm

#201 Abitibi… if you dig out more info on Rob Carrick, you’ll find his Finance Opinion qualifications lacking. He’s a reporter, a media spinster. IMHO, because of his large audience, your real rulers ensure that his opinions are formed for him.

http://www.robcarrick.com/about/

Be careful out there…

#210 Form Man on 01.18.12 at 4:18 pm

#199 DA

is your pager summoning you to ‘buyers lined up to get into Kelowna’ or ‘buyers desperately trying to leave Kelowna because the environment is too competitive for them to survive’…………?

#211 Rick on 01.18.12 at 4:31 pm

98% of net worth in real estate. Sell or refinance and then invest in ETF’s/REITS/Corporate Bonds etc. These interest rates sure make it tempting.

#212 GTA Girl on 01.18.12 at 4:36 pm

Attaching a story some of you may have seen when it was published in the Toronto Star over the holidays.

http://www.moneyville.ca/article/1108178–highrise-sales-set-records-in-2011-but-what-lies-ahead

Its a group of big time developers at the Star’s Editorial table discussing the future. I re-read it and snickered. They carry out all the usual reasons for a rising market, immigration, low interest rates, boomers etc.

They then diss economic warnings concerning Toronto’s condo market.

Not one of them, except maybe Freed, live in a condo.

Their voices are similar to those selling Florida swamp land.

Most just work for the large developers, one is a marketing guru/developer and two are daddy’s boys.

all selling snake oil.

#213 Daniel on 01.18.12 at 4:39 pm

Hi Garth,

Love the site, don’t agree with you on some things but still appreciate your insight into the housing market. I have a question for you though. What happens to lenders when there is no fear of default? Judging from BeeMo’s comments, they have no worries of giving mortgages to deadbeats, the are worried about loosing market share. Makes me sick. So who again is on the hook when this toxic waste bubbles to surface. Because if it is the Feds, they don’t have the resources to bail them out without our currency going fubar.

#214 Ogopogo (né Okanagan Renter) on 01.18.12 at 4:40 pm

#203 Snowboid
What’s with the RE pumpers’ fatuous comments today? Maybe it’s too cold?

And I thought I was the only one that had noticed. Is it just me or is there also a whiff of cockiness coming out of pumpers’ comments? Trust a realtor to try to spin cognitive dissonance into “logical” argument. My guess is that their flagging self-esteem is being buoyed by the latest smoke-and-mirror rates designed to draw in the last few in the herd, who would otherwise have cushioned the bubble deflation.

#168 bob’s my uncle’s hilarious attempt to spin unethical marketing practices in condo sales shows beyond a shadow of a doubt why most realtors rank right alongside used car and snake oil salesmen.

#215 allister on 01.18.12 at 4:42 pm

#69Led on 01.18.12 at 12:34 am
still think rates are going to rise? we are Japan and this is the new normal. expect 10 years of low rates

DO YOU THINK WE ARE JAPAN 1989 OR JAPAN 2012???

BIG DIFFERENCE THERE !

#216 maxx on 01.18.12 at 4:42 pm

#186 refinow on 01.18.12 at 2:34 pm

…… “You can only get out of that mortgage with a bonified sale. You can not leave BMO for the full 5 years. No if’s but’s or maybe’s…”

Yikes! No big mystery as to which way it thinks the RE market will go….

#217 Arshes on 01.18.12 at 4:46 pm

#212 zeeman1

Flat rate taxes don’t work, because it punishes the poor, and middle class and rewards the rich. When you create a flat tax, people always assume that the tax will be approax. the middle rate ie 20% (the rate for middle class, after all things taken into account) but people who are rich, they’re tax rates go down, but for the poor, they’re tax rates go up.

But to make up for the fact the gov’t loses lots of money when they decrease taxes for the rich, and gain only small amounts increasing the tax for the poor, they need to increase that rate. So it may be something like 25% for example. So in the end the middle class and the poor lose, and only the rich win.

#218 Devore on 01.18.12 at 4:49 pm

#191 Devil’s Advocate

Consequently I don’t see why HSC’s comment “What I’m asking is whether this drop will be offset by a rise in mortgage rates, thereby eliminating any chance for improved affordability” deserves such dismissal.

Because if you care to stop being a dork for 30 minutes, you might try to look past the monthly payment.

Smaller debt at higher interest is ALWAYS preferable to higher debt at lower interest, even if the monthly payment (“affordability” as you call it) is the same, resetting rates being the most obvious reason.

Meanwhile, renting is cheaper than owning everywhere in civilized BC, the more expensive the house/condo the bigger the difference.

Debt has a place in the economy where it produces positive returns, and pays for itself, such as for capital projects. Otherwise you are simply stealing from your future production in order to consume (since you’re not producing) in the present.

#219 HSC on 01.18.12 at 4:52 pm

That’s a fallacious argument, dispelled here more than once. A foundation of success is less debt, not less expensive debt. — Garth

————-
I did not suggest taking on excessive debt merely because it is cheap. I asked a question in an attempt to initiate an intelligent discussion of whether the anticipated drop in prices would tranlate into any actual improvement in affordability. You’ll note I asked whether the rational choice would be to remain a renter, even in the face of a price drop. So my argument may in fact align with your own.

But rather than provide any meaningful insights, you chose to respond with abrasive and dismissive comments. Perhaps this is why the comment section of your blog has failed to become a forum for intelligent discourse. If you cut short any attempt to discuss the economics of housing, then the comments section will continue to be of interst only to people spouting guns ‘n’ gold prattle, and social misfits declaring themselves “First!” (which never gets old).

Keep your shorts on. Several times on this blog the calculations have been published showing a home bought for a lower price at a higher mortgage rate was a better builder of wealth than a higher-priced property with cheaper financing. I’m sure you are capable of running the numbers yourself. My statement is correct. — Garth

#220 debtified on 01.18.12 at 4:53 pm

A foundation of success is less debt, not less expensive debt. — Garth

It bears repeating…

Unfortunately, our state of affairs shows a lot more willingness from people, businesses and government to take on more debt to achieve success in both (a) getting out of the mess we/they are currently in and (b) basing our/their future prosperity with.

Garth, have you ever considered (or wondered) the possibility that debt accumulation can go on increasing in perpetuity? I know it sound preposterous but it’s exactly what’s been happening since debt was invented and there are no signs for it changing. There are defaults and deleveraging here and there but overall debts continue to accumulate.

I mean, really, what’s the difference between 150% vs. 200% (or 1,000%) debt-to-income ratio as long as the ability to service such debt is maintained? It’s apparent that lenders (i.e. banks) and policy makers (i.e. BoC and Government) are hell bent in making sure that such ability to service debt is maintained.

Just playing devil’s advocate…

#221 Arshes on 01.18.12 at 5:13 pm

#198 Kevin:
If I earn $100,000 at my job, I pay $20,000 in taxes. If I take the remaining $80,000 and stick it in a savings account earning 1%, then a year later, I’ve made $800. Why should I pay tax on that $800? I earned it using money that was already taxed. How many times should money be taxed to keep things “fair?”

———————————————————-

How is that double taxation? The $800 is income not taxed previously. And the $80,000 is is already taxed and wont be taxed again. Do you understand the concept of double taxation??????? If this was truly a double taxation situation, you could take this argument to the Tax Courts, but you wont, cause its not.

#222 Kris on 01.18.12 at 5:16 pm

#205 Kevin.

The banks weren’t forced to drop rates. They got elbow room to drop rates bcuz the bond market adjusted likewise.

Seeing the bond market comply, probably one bank was tempted to use the elbow room – All it takes is one bank. Recall, mortgage demand has been slowing past few months, anyway, so it’s not like banks are dropping prices amidst stable demand.

The Govt has (hopefully!) strategies to deal with household debt in all scenarios – Some scenarios would be more painful than others. In this case, the Govt is probably sighing with relief, since low fixed rates buys 5yrs for debt-stretched Cdns, while also allowing BoC freedom to adjust rates without inducing mass foreclosures.

What about 2017? If people are diligent in their payments next 5yrs, likely less Cdns exposed to debt than now, and less severely too.

What about home values in 2017? This is a whole different topic. Arguably a home is NOT a great investment, not any more. But chances are, most Cdns see a house as part investment, part lifestyle choice. They may not particularly care if their house doesn’t appreciate in 5yrs (they hope it does, in 15yrs!) – as long as their debt load is manageable & predictable while they raise their kids in good school zones. With 4%-10yr deals, the debt load may be very predictable.

#223 Van guy on 01.18.12 at 5:17 pm

Poco,

No matter what anyone posts regarding the shit hole the Tri-cities is in, there will be always be morrys, DA’s, and stevensons around. I’d really like to look at Kelowna numbers, but the mlslink is not a part of the Omreb. So I can see the rest of BC numbers. Look, if there are people that don’t believe this blog, good for them. Anything said in this blog will have no effect on RE. It will happen on its own.

#224 Onthesidelines on 01.18.12 at 5:21 pm

All income is taxable. But smart people invest for dividends and cap gains, not interest or rent. — Garth

Interesting fact. Always makes me wonder why nobody ever questions the fairness and, indeed, the validity of these sort of taxation rules. Why would the government punish those who prudently invest in interest bearing bonds or rental properties and reward those who speculate on the stock market.

Whose interest is served here? Seems to me the whole system is manipulated and rotten to the core.

The system rewards those who invest in companies which create jobs and boost national productivity. Putting money in the orange guy’s shorts or having a rental condo is of far less societal value. Hence different tax treatments. — Garth

#225 Devil's Advocate on 01.18.12 at 5:21 pm

#214Form Man on 01.18.12 at 4:18 pm
#199 DA

is your pager summoning you to ‘buyers lined up to get into Kelowna’ or ‘buyers desperately trying to leave Kelowna because the environment is too competitive for them to survive’…………?

Lol………. LOL.

While I do very clearly recall stating that I would no longer indulge you by responding to your childish transparent antagonizing little jabs aimed at prompting inane argument between us let me point to the truths hidden within the fallacy of your most recent comment.

1. Buyers are lined up to get into Kelowna which is precisely the reason why…
2. It is so competitive here.

Do not confuse the condo market with the single family resale market Form Man. Too many fall prey to the misconceptions perpetuated by the combining of the two and speak of the “general” state of the real estate market. Taken individually the single family resale market is doing just fine. On the other hand take out that single family resale market from the overall numbers and it is clear how bad the condo sector is.

I’d gladly trade a whole building of strata unit listings for just one single family residential.

Oh and Form Man, what kind of product was it you contributed to the Kelowna market during those exuberant bubbly times? As I recall you mentioned that you now ply your trade elsewhere since, essentially you and your cohorts have left this market exploited so that you have had to seek “greener pastures” to rape and leave fallow. And where might they be, those greener pastures? Why don’t you pack your bags and live there if it is so much better? Or do you just not want to shit where you eat?

#226 neo on 01.18.12 at 5:41 pm

You know what I love about this chart.

http://www.bloomberg.com/news/2012-01-18/s-p-500-profit-season-has-worst-start-in-years-chart-of-the-day.html

The “expectations” they are based on were steadily ratcheted down and the majority of corporations STILL couldn’t beat them in Q4….

Shhh. Don’t let equities find out.

Then again this is a Buzz Lightyear market on no volume so who cares right? Infinity and beyond…

Tempus Fugit…

Actually analysts are expecting profits to increase by 9%. — Garth

#227 Stevenson on 01.18.12 at 5:47 pm

#181 Devore

Can you afford to live in the #1-4 on the list? Also how is immigration process. It can’t be easier then passing over 800k for a few years in trade for Canadian citizenship.

#228 JRoss on 01.18.12 at 5:47 pm

DA,

“Buyers are lined up to get into Kelowna which is precisely the reason why…”

There is a three year backlog of 1M houses?

It is not competitive in Kelowna. There is a crappy tourism based economy. There is a difference.

In your world, Oprah has a vacation pad in Maui but chooses to work in Chicago because she can’t hack the competition on the island.

Perhaps the head that is up an ass is yours.

“in addition to becoming such an advocate that they refer to that REALTOR® many friends, family and co-workers in the interim”

If the dreck you spew is any indication of your abilties, then it is a good thing your postings here are anonymous.

#229 Canadian Watchdog on 01.18.12 at 6:04 pm

Actually analysts are expecting profits to increase by 9%. — Garth

Like how more then half of corporate earnings are missing analyst’s calls.

#230 neo

Today’s Bloomberg headlines.

Reality: S&P 500 Profit Season Has Worst Start in Years.
Denial: S&P 500 has best start to year since 1987.

#230 Devil's Advocate on 01.18.12 at 6:07 pm

But Form Man there is a question that has been gnawing at my curiosity for some time now; what made you choose the moniker “Form Man”? It seems to me that most choose a moniker that has some relevance to their being in some way.

From my considerable experience in the building industry, and trust me my experience in your industry far outweighs that of yours in mine, the title “Form Man” came about more recently with the exuberant construction industry time of post 2003. Prior to that time concrete finishers often themselves laid the forms for the pour. But with increasing business and time constraints that task was downloaded to a new construction entrepreneur – one who specialized in placing forms and nothing more. Now as practical a business plan as this was in its day, it did prove to be short lived as with the slowing of the construction industry concrete finishers took back that task once again including it in their list of services. No one, I think, would have made a fortune placing forms in any event.

Is your so apparent bitterness a consequence of the short lived useful life of your limited skill?

As I recall there was actually such an individual who named his business just that “The Form Man”. Might that have been you? If it was you certainly you should be commended for have improved your lot in life so as to be living on an at least $2mil bought and paid for Lake Okanagan waterfront property as you so claim. Well you didn’t say it was $2mil but we both know such property cannot be had for less and if so certainly not a habitable one at that.

Maybe I am wrong as I simply put 2 and 2 together to come to a most logical conclusion. Why don’t you tell us Form Man? Or “Form Boy” as the case may be?

Yours truly “Devil’s Advocate”… you figure it out };-)

#231 bigrider on 01.18.12 at 6:13 pm

As if the obsession with ‘investing’ in condos and other forms of bricks wasn’t enough.

Those who have liquid wealth are choosing more and more to avoid a diversified portfolio of financial assets to invest in second mortgages that routinely pay anywhere from 10 -15%. I know of many who are doing so in greater numbers.

Good luck with your mantra of 6% dividends from preferreds and REITS Garth.

Second mortgages? Are you serious? — Garth

#232 Devil's Advocate on 01.18.12 at 6:15 pm

222Devore on 01.18.12 at 4:49 pm

So many errors, so little time. I will have to pass on yours.

#233 Onthesidelines on 01.18.12 at 6:18 pm

The system rewards those who invest in companies which create jobs and boost national productivity. Putting money in the orange guy’s shorts or having a rental condo is of far less societal value. Hence different tax treatments. — Garth

Yeah, right. It’s all about those “job creators.” People still believe that sort of BS?

Who else creates jobs? Stop being a bitter old fart. Or, better, invest. — Garth

#234 Van guy on 01.18.12 at 6:21 pm

JRoss,

Are u Justin from west van?

#235 Blacksheep on 01.18.12 at 6:33 pm

Disciple #160,

I researched your link to Joseph P. Farrell provided recently. I viewed a few of his videos.
I found a video, I believe to be relevant to Dr. Farrell’s work.
Link: http://www.youtube.com/watch?v=Bl5dZxA-rZY

take care,
Blacksheep

#236 Devil's Advocate on 01.18.12 at 6:37 pm

#218 Ogopogo (né Okanagan Renter) @ #218
and a prairie dawg @ #161

FYI; Most developers hire their own sales force as to list with a REALTOR® binds them to the REALTOR® Code of Ethics. The REALTOR® Code of Ethics is strictly enforced such that but a very rare few would contravene it and risk losing their licence. They who would we would be most interested in learning of that we might quickly expel them from our ranks before they tarnish our reputation further.

Now maybe you can disassociate those despicable marketing practices from those of professional REALTORS®. If you truly still believe it was a REALTOR® who acted in such a manner of false pretence we urge you to prove it by bringing it to the attention of those who have authority over such matters. If, on the other hand, you are not so sure that you could or are willing to pursue and prove it to be an actual REALTOR® well then maybe you should shut up instead of acting like a couple of gossip spreading school girls.

REALTOR® – we didn’t trademark the word for no good reason.

#237 Snowboid on 01.18.12 at 6:43 pm

#218 Ogopogo (né Okanagan Renter) on 01.18.12 at 4:40 pm…

Exactly, just makes sense to continue to rent in the Okanagan (as we do).

The Okanagan seems to have a disproportionate number of RE pumpers off their ‘meds’.

Anyone with Grade 2 math (which I have) can figure out renting a condo or house is the only safe move for the foreseeable future!

#238 Devil's Advocate on 01.18.12 at 6:45 pm

#232JRoss on 01.18.12 at 5:47 pm

Please always feel free to pass over my posts with nary a passing glance. I will not be offended. But if you do read them take this one to heart..

Indeed there is three years inventory of $1mil plus homes for sale. That someone did once buy them must tell you something. And as Ophra may have a vacation home in Hawaii so too do many Canadians have one here in Kelowna. Think about it J… think about it…

#239 Devil's Advocate on 01.18.12 at 7:09 pm

Well it’s been fun but I must now take my leave, mount the heated saddle of my Bavarian bred steed (so cliché eh?) on this first truly cold winter day here in God’s country ;-) and brave those elements as I have appointments commencing in a few short minuites to show properties I’ve been researching while conversing with you all. I’ll not be back at my desk ‘till late this evening so don’t expect a reply to your condemnation until the wee hours of tomorrows morning… you got it – rust never sleeps as rarely do I. Mmmmhahahahahahaha };-)

#240 Nostradamus Le Mad Vlad on 01.18.12 at 7:13 pm


Loadsa interesting comments 2day. Is that b’coz it’s too damned cold out to do anything worthwhile?
*
Five min. clip Someone here mentioned a flat / fair tax. This Ron Paul’s take; NASA Instead of reaching for the stars, they’re reaching for resumes which is curious. After the last space shuttle landed a few months ago, there were mass layoffs; Economic Decline The new normal; UK 43% say can’t afford heating bills; Greek rescue blocked; EZone collapse UK preparing; US Treasury and Pensions “Because after all, debt owed to bankers is MUCH more important than debts owed to the people!” wrh.com; China and Russia cuts US holdings; Hungary, like Iceland has told the IMF to go stuff itself; Europe’s Black Swan Any day now; Iran cracking down on dollar trades; Silver Shortages and gold ballooning.
*
5:48 clip Ron Paul exposes the neocons and their global agenda; 4:20 clip SOPA explained in an easier manner, but Abandoning SOPA? Biological weapons; The Salala Massacre “Just as we have seen in the criminal, genocidal attack on Libya, NATO forces are providing military and logistical support to their ground-based proxy armies – in this case TTP terrorists.”; Iran Russia calls it right; CC It’s cooling / warming down / up at the same time, and PNW snow.

#241 JRoss on 01.18.12 at 7:14 pm

DA,

Your post are too good to pass up. Gold, Jerry, gold.

“Indeed there is three years inventory of $1mil plus homes for sale. That someone did once buy them must tell you something.”

That speculative manias drive people to do dumb things?

That a realtor will try to sell you a pup tent in a hurricane?

Once upon a time people paid handsomely for condos in Las Vegas. You may have heard of it, it is that vacation place that people around the world actually know about. What does that say about Kelowna’s future?

Think about it, DA, think about it.

#242 Form Man on 01.18.12 at 7:22 pm

#229 DA

your memory and/or reading comprehension is disastrous. Go back and read my posts. In Kelowna I am building a gated SFH for retirees ( on deeded land ). My moniker has nothing to do with what you think.
I am amused though, with how obsessed you are with who I am……….
( I thought you were going to give up on the childish personal attacks and insults ? )

What makes you think I purchased waterfront property recently ? ( try about 20 years ago )

#243 tkid on 01.18.12 at 7:27 pm

#77 Don, ask your relatives if they regularly get stuck in the slow lane at the supermarket – you know, the one that looked like the best lane at first. If they answer yes, then they are doomed.

They will buy when they should have sold, and they will sell when they should have bought.

#244 Abitibi Doug on 01.18.12 at 7:30 pm

@Canadian Watchdog, post #211 said: This is how wealth is transferred, so stay away if you don’t know what you’re doing.

Yes, indeed, that is how wealth is transferred. Patient, long term investors bought stocks at fire sale prices from those who panicked and CHOSE to sell stocks at those cheap prices during the shakeup of 2008-09.

@disciple, post #213: good point you make. Obviously it isn’t wise to base investment choices (including housing) on one persons opinion.

#245 GregW, Oakville on 01.18.12 at 7:34 pm

Hi #1Corban, That is funny! Worthy of first post.

#246 Waterloo Resident on 01.18.12 at 7:44 pm

Earlier I lied, I said : (“Here in Waterloo I’m looking at several $3 Million + 3-bedroom homes for sale. They seem to be selling fast, a bidding war going on, so I don’t know, I might just be FORCED to step up to the plate and make an offer on one before prices head up any higher.’)

But the truth is that from what I see, the craziness that I see, it feels like this MOST of the time. What i just described is what it feels like when I see other nutbars bidding for homes, spending WAY more than what those homes are worth. It just makes me shake my head in disbelief !

And the worst thing is that I don’t see this craziness ending anytime soon, I see this BUYING PANIC continuing for another 5 to 10 years MORE. You might wonder HOW IS IT POSSIBLE? Well, here in Canada we really don’t have any other industry other than government and housing/construction, we don’t have much of an export sector other than exporting our natural resources, so the government will do EVERYTHING POSSIBLE to keep our construction/home-building booming. And if that means PAYING PEOPLE CASH to buy a home then that is exactly what the government will be doing once 98% of all Canadians already own a house. We will be offered cash incentives to buy a second and third ‘investment’ home.

If you think that this all sounds way over the top, then let me ask you what will happen to the government’s cash-flow should our housing sector and all the associated jobs / income that go with it die? Yeah, its not pretty is it?

I think that Canada’s only hope is for some smart Canadians to start building pre-fab homes and then start EXPORTING these to other countries, that will be our one true export business: The EXPORT OF HOMES that we build for other countries. (not the U.S. of course, but other places in South America might be possible.)

#247 guy from toronto on 01.18.12 at 7:51 pm

Devil’s Advocate uses a pager?!?

That is so awesome. Just like Liz Lemon’s boyfriend in 30 Rock. Hehehe.

“Oops… pager is relentlessly summoning me back to work.”

#248 Form Man on 01.18.12 at 7:53 pm

#246 JRoss

well said……

#249 DonDWest on 01.18.12 at 7:53 pm

“Who else creates jobs? Stop being a bitter old fart. Or, better, invest. — Garth”

I don’t know, how about scientists, artists and entrepreneurs?

The stock market is truly nothing more than a rich man’s poker game. If you’re not already rich; you’re going to the table with few poker chips. The odds are truly stacked against you. The stock market doesn’t create jobs in and of itself. It’s a game I do however play; only because I’m forced to thanks to inflation and low interest rates. . .

Financial markets match those who have capital with those who need it. Like scientists, artists and entrepreneurs. This blog has turned toxic stupid. — Garth

#250 Victoria on 01.18.12 at 7:56 pm

This came from Sotheby’s in a British News paper about the safe havens to buy …
1 Canada
The US housing market is in intensive care. One-in-four homes is in negative equity and mortgage foreclosures are rising. But across the border in Canada, the story is very different. The Canada Mortgage and Housing Corporation predicts sales and prices will rise by up to five per cent next year.

#251 micbeeth on 01.18.12 at 7:57 pm

What the FFO? How to gauge a REIT’s profits

“How can a real estate investment trust pay out more in distributions than it makes in profit?

RioCan REIT has a payout ratio of about 110 per cent. This isn’t an immediate problem for the company, because many investors elect to reinvest their distributions in additional shares, which means they don’t have to be paid in cash. ”

http://m.theglobeandmail.com/globe-investor/investor-education/investor-clinic/what-the-ffo-how-to-gauge-a-reits-profits/article2193660/?service=mobile

No tenants no problem!

#252 TurnerNation on 01.18.12 at 8:08 pm

BPOE? A targeted hit at Sheraton Wall Center’s restaurant (I’ve stayed there in the past):

http://www.cbc.ca/news/canada/british-columbia/story/2012/01/18/bc-wall-centre-homicide.html

#253 neo on 01.18.12 at 8:08 pm

Actually analysts are expecting profits to increase by 9%. — Garth

You mean the same analysts who said a company like Alcoa would have 20 cent EPS only to revise it down to 3 cents a couple weeks before their announce and then have said Alcoa “beat” expectations. Yes, veeeerrry credible group those “analysts” are…. 4th quarter results were terrible Garth, even with all the lowered expectations. So you “record corporate profits” line in 2011 went out with a wimper.

Tempus Fugit…

Bloomberg polled 9,000. You polled yourself. — Garth

#254 JRoss on 01.18.12 at 8:22 pm

“REALTOR® Code of Ethics”

That is an oxymoron.

#255 I See London, I See France, I See a Little.... on 01.18.12 at 8:39 pm

Uhh… no I don’t. But I’m OK with that.

And it’s not Basis Instinct, or Basic Instinct… It’s BASEST Instinct.

#256 TurnerNation on 01.18.12 at 8:40 pm

Smoking man, you could hold a Blog Dog meetup at the Duke. For those who wish to hear your tall tales and to swap stock picks (no YLO!). ;)

#257 Ex-Cowtown on 01.18.12 at 8:42 pm

FYI; Most developers hire their own sales force as to list with a REALTOR® binds them to the REALTOR® Code of Ethics.

++++++++++++++++++++++++++++++

Realtor Code of Ethics? Now that’s an Oxymoron.

#258 Bill Gable on 01.18.12 at 8:56 pm

Big Rider – SECOND Mortgages?

Ever hear the word tranche?

Bear Stearns?

Oy, gevalt.

RUN!

#259 eaglebay - Parksville on 01.18.12 at 9:14 pm

#238 Onthesidelines on 01.18.12 at 6:18 pm
“Yeah, right. It’s all about those “job creators.” People still believe that sort of BS?”
———-
You’ve probably been on the sidelines all your life.
Now, instead of bitching, tell us who actually creates real productive jobs.
I must have missed something along the way.
O great smart one.

#260 Stupesing in Cabbagetown on 01.18.12 at 9:15 pm

#122 OttawaRenter – Here is some good information about how to do a background check on an advisor: http://wheredoesallmymoneygo.com/how-to-do-a-background-check-on-your-advisor/ . Weeding out the baddies is a good start. Why the regulators don’t make this information more readily available is a puzzle to me.

That information is unfortunately useless in finding a competent advisor. — Garth

#261 Keeping the Faith on 01.18.12 at 9:16 pm

#126 Stevenson and #131 DA

hey losers … “retire at 45” and I’ve never invested in real estate, always rented … try and beat it, I dare ya.

#262 jess on 01.18.12 at 9:18 pm

we need a job bubble….

“We could ship TVs west to east from the middle of the country, which gave us reason to choose Canton, Michigan,” he said.

What’s more, the company’s owner is from Midwest, an adequate facility was found and the state’s workforce was appealing.

“You have skilled labor there that is looking for work and we’re so happy to help provide jobs for that population,” Kazhdan said.

And the jobs that are coming are more than just assembly.
=====

The Big Short was The Big Illegal Short
FBI.gov.
“The charges unsealed today allege a corrupt circle of friends who formed a criminal club whose purpose was profit and whose members regularly bartered lucrative inside information so their respective funds could illegally profit. And profit they allegedly did—to the tune of more than $61 million on illegal trades of a single stock—much of it coming in a $53 million short trade. Here, The Big Short was The Big Illegal Short. We have demonstrated through our prosecutions that insider trading is rampant and has its own social network, a network we intend to dismantle. We will be unrelenting in our pursuit of those who think they are above the law.”

FBI Assistant Director in Charge Janice K. Fedarcyk said: “The FBI has arrested more than 60 people in ‘Operation Perfect Hedge’ to date, and this initiative is far from over….”

#263 Smoking Man on 01.18.12 at 9:18 pm

#261 TurnerNation on 01.18.12 at 8:40 pm

Im In
But
Not at Duke to close to my garden.

South Side Johns on lakeshore is better.

#264 Smoking Man on 01.18.12 at 9:20 pm

SOPA

Funny when a greek person hears that. It means Shut Up, or Be Quiet. Or Put a Sock In it…

#265 AACI Home-dog on 01.18.12 at 9:21 pm

even with a thong that would be a good picture….aahh, the french…(sigh)…

#266 Realtors in a Panic on 01.18.12 at 9:21 pm

wow…..so many realtors on this blog. Realtor buddy says the RE market is dead. The whole industry is in a panic of a US style housing crash. The banks did a stress test and started to pee their pants. Why do you think bankers and realtors with the help of the media are going all out to mislead the public of the current housing freeze. Look at the realtors on this blog and all their panic postings.

#267 eaglebay - Parksville on 01.18.12 at 9:24 pm

#254 DonDWest on 01.18.12 at 7:53 pm

With every transaction in any market there’s a seller and a buyer. One makes the money and the other one loses the money. It’s like everything else in life. A person buys too high or sells too low.
I assumed that you’re on the losing end.
Is your wife still around?
Now, get off this blog and get to work. Hard work.

#268 DonDWest on 01.18.12 at 9:26 pm

“Financial markets match those who have capital with those who need it. Like scientists, artists and entrepreneurs. This blog has turned toxic stupid. — Garth”

Chicken and the egg.

Are you implying that if the financial markets ceased to exist tommorow we would have no jobs? Somehow I doubt that; historically speaking financial markets are relatively new.

You never cease to amaze. Are there many more like you? — Garth

#269 TurnerNation on 01.18.12 at 9:32 pm

#213disciple on 01.18.12 at 4:16 pm

I ignore him. He is a light-weight along the lines of InvestorsFiend.

#270 Victor on 01.18.12 at 9:32 pm

#159 Ryan the Thirtysomething on 01.18.12 at 12:58 pm

Is there anything we dirty renters can do to take advantage of such low interest rates? I have no interest in buying, I mean more from a borrowing to invest standpoint. Or does the bank not want to talk to you unless you are investing in granite and stainless?

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

I borrow from TD at 3% via my margin account and earn 5-8% on my holdings (pipelines, financials, REITs).

Bonus: I get to write off the interest I pay on the investments, while paying the lowest tax possible on my gains, given they’re dividends.

#271 Terra No-more on 01.18.12 at 9:34 pm

Hi Garth

Love cheeky cyclist above.. keep em coming. Some of us pervXXXX deviants are visiting your blog for ulterior reasons.

#272 Where's The Money Guido??? on 01.18.12 at 9:35 pm

Re: There is no relation between you choosing a bad mutual fund company and the CIPF or Barret Capital. BTW, did you seriously cash in your assets when the market crashed in 2008? Guess you like to buy high and sell low. — Garth

Well I tried to get out before the crash, as I said I initially tried to get out in September 2007 right after the July-August ABCP collapse and Vancity-Credential kept up the delay game until late February 2008 resulting in a 25% loss.
And here’s an item for you to peruse…..It’s crooked and slanted for people in the know, and you know it……And you belittle yourself by trying to suggest otherwise.

http://www.investorvoice.ca/PI/3475.htm

Regulators share blame for ABCP collapse, Flaherty says

KEVIN CARMICHAEL
April 12, 2008 at 1:02 PM EDT
Federal Finance Minister Jim Flaherty signalled that provincial securities regulators deserve blame for the collapse of Canada’s asset-backed commercial paper market, and said they and the firms they oversee will be will be subject to scrutiny as he pushes Canada’s financial services industry to upgrade its standards.

And it has been proven since then that Flaherty has done diddly squat.

Hard to believe you. A clear order to sell your fund units would have been executed the same day unless the fund had closed redemptions. — Garth

#273 neo on 01.18.12 at 9:38 pm

Bloomberg polled 9,000. You polled yourself. — Garth

Polled what? Profits in the 4th quarter were weak. Very weak. Analysts and people such as yourself were forced to take the rose coloured glasses off the second half of the year and drastically in many cases revise down EPS forecasts for the 4th quarter and Wall Street still couldn’t jump over a phone book. The media for the most part including you have chosen to ignore that fact but sure didn’t ignore the euphoria on the way up. Just keeping it balanced Garth. Now let’s see what Q1 and Q2 2012 have to say. The percent beating the street has declined in every quarter in 2011. It was just that Q4 was drastically lower.

#274 DonDWest on 01.18.12 at 10:02 pm

“You never cease to amaze. Are there many more like you? — Garth”

Not everyone believes in trickle down Reagenomics. Yes, it’s amazing and yes there are many more like me.

Sobering. — Garth

#275 bridgepigeon on 01.18.12 at 10:04 pm

Okanagon living?… We’re considering moving there from southern Ontario. Lots of talk from there today. Is this a good place to raise a child, have a good life? I’m a contractor who always gets busy fast, we want an outdoor lifestyle with some city comforts. Thanks Garth for the range of discussions allowed on this blog.

#276 Ogopogo (né Okanagan Renter) on 01.18.12 at 10:04 pm

#241 Devil’s Advocate
#218 Ogopogo (né Okanagan Renter) @ #218
and a prairie dawg @ #161

FYI; Most developers hire their own sales force as to list with a REALTOR® binds them to the REALTOR® Code of Ethics.

Thanks for the laughter on this, the snowiest of days in our dreary grey Kelowna. First of all, you make the “REALTOR® Code of *cough* Ethics” seem like it’s the same as the Hippocratic Oath (more like the hypocritical oath *chuckles*). Second, you’re picking on myself and prairie dawg while leaving your comrade-in-arms bob’s your uncle off the hook when it was he in fact who praised the sleazy condo sales tactics as a legitimate realtor strategy.

Did you tell your prospective buyers today how sunk the Kelowna market is? Honestly.

#277 45north on 01.18.12 at 10:46 pm

refiNow: BEWARE OF THE BMO 2.99

pretty funny, remember that commercial “when banks compete you win” well it was a lot easier to believe that than to actually read your mortgage

Canadian Watchdog: I watched the youtube quants thing. All of it.

#278 Don on 01.18.12 at 10:55 pm

#DonDWest
Not everyone believes in trickle down Reagenomics. Yes, it’s amazing and yes there are many more like me.

Sobering. — Garth
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The only thing that trickle’s down from the top in BC is brown and it doesn’t smell good. More measurements need to be taken before I will believe in the trickle down theory it’s been definitely used as an excuse to cut. Or at the very least if it works it’s definitely not running on all eight cyclinders more like 3 or 4.

#279 a prairie dawg on 01.18.12 at 10:58 pm

#241 Devil’s Advocate

A friend emailed me this today. I wasn’t going to post it initially, but since you mentioned ethics…

http://cnews.canoe.ca/CNEWS/Crime/2012/01/18/19261576.html

#280 R C on 01.19.12 at 12:23 pm

“I ask you. Have you met any modern young couple who, given the choice between granite c-tops with SS apps and debt freedom, would choose the latter? Do they exist?”

Ok maybe 35 doesn’t qualify as young, but I represent the sector of people out there who, once student loans were paid off, missed the housing boat and are now sitting on a half “decent” down payment but not falling for the insanity out there! First time buyers with any ounce of critical awareness are sitting on the curb, head spinning, watching, waiting, confused. The down payment’s sitting in savings deposits, as after seeing friends loose bundles in the past few years I’m reluctant to invest. We all want a place to call our own, but not all of us “young” (youngish) folk are blinded by bling and crappy renos. What to do? Sit tight? Forget about owning, for ever? R, Toronto

#281 TurnerNation on 01.19.12 at 8:40 pm

285R C on 01.19.12 at 12:23 pm

Why waste that money on a house? USE your money to make money. RE is at a cycle high now.

I’d regret tying up even one penny of my hard earned money in a house (bank owns most of it, really).