Trash talk

Have you noticed? This has turned into one weird blog.

I write about bonds. People rush in to trash them as dangerous. I suggest preferred shares. More trashing. Too risky. Real estate investment trusts? Appalling. Too risky. I counsel against gold. I’m a moron. Equity-based exchange-traded funds? Outrageous. A depression looms. And residential real estate? Pure house lust. Death to greedy owners.

This invective pales, of course, in comparison to the drubbing successful people take here. Posters who say they are high net worth must be (a) crooks, (b) Mainland Chinese, (c) lying, (d) coddled, spoiled brats, (e) unethical traders or (f) elitist 1%ers who should be strung up with mouse cable.

Few who post here seem to believe the rates of return investors collect on mainstream assets like trusts or preferreds. They get their advice from each other, doomer web sites, idiot relatives or [email protected] They see only safe bank products and risk-laden stocks, with nothing in the middle. They chase assets rising in value (witness the metalhead invasion of last summer), and eschew those going down (the relentless negativity over equities). Or they refresh every four seconds at night so they can type, ‘PHIIIIIRST!’ Holy crap.

More people here seem to think we’re about to go over some epochal cliff, than understand these times are transitional. They claim we are Japan (eternal funk with low rates) or America (about to implode) or Europe (think the Costa Concordia). So, what’s the point of trying to put together a balanced portfolio made up of lots of assets with a predictable return, when we’re all going to die and be eaten by Asians?

Some days this is not a lot of fun. But at least (humility clicks in here) I’ve been right.

I told you a year ago to load up on bonds within your portfolio, months before equities plopped, and investors went nuts looking for security. Bond prices jumped as a result, which should have proven fixed income ain’t just for income and doesn’t react only to interest rate changes. The capital gains can be tasty.

Of course this pathetic blog warned the gold bugs to take their profits and rebalance their holdings all the way up. Sane investors would have sold a little at each move higher, maintaining the overall weighting in PMs and pocketing profits from an obvious bubble. Of course, few did. Too bad. Avarice is a bitch.

Last August and September commenters here moaned we were on the cusp of another 2008 after the showboat S&P downgrade of American debt. The US will default, they told you. Abandon ship. But my advice was to hang on, see it as a buying opportunity, and focus on corporate profits. Today that loss is erased. Sellers were creamed. In the wrong way.

For some time I’ve pushed you to go and get real estate investment trusts, preferred shares or other stable, income-producing assets. During that time the REIT exchange-traded fund XRE gained more than 20%, while bank preferreds were rock solid and threw off a 5% yield with minimal tax. The risks posters wailed and moaned about – collapsing banks, bankrupted shopping centres and asteroids – never happened. Just solid returns and no surprises.

And real estate, of course. The most dangerous of assets. While realtors, lenders and condomaniacs pile on here daily to claim I am the God of Dipsticks, house values are crumbling from the edges in. The Okanagan, outer GTA, Victoria, SW Ontario. Now Vancouver sales are slumping while listings pop. Prices in Toronto have eased downward for six months and poor Calgary has no idea what’s coming. Not even a BMO 2.99 Special can save this gasbag.

Most of the problem must be fear. Maybe it’s media-induced. Perhaps there are too many doomer dinks trying to scare people into buying silver. Too many bankers who want you fleeing into the bosomy arms of ‘high-yield’ savings accounts. Could be that too many people who come here have never lived through a recession, stagflation or emulsification. Or perchance it’s Google. In four seconds any fool can find enough bad information to scare the poop out of him. And what if it’s just cynical opposition? Has the Occupy Greater Fool movement started? Are there now hot women in tents outside the bunker’s thick gates?

Dunno. But let’s knock it off.

Here’s the deal. I’ll continue to write this stuff. I’ll be straight with you, nothing to sell, no agenda. When I offer advice, it’s from experience. Take it. Leave it. Whatever.

Just try not to be prickish, scared or threatened. Don’t dis success. Open your mind. Cut the venom. Zip your fly. And accept that we all have things to teach each other. Except me, of course.

PHIIIIRST!

254 comments ↓

#1 TurnerNation on 01.19.12 at 9:04 pm

First?

#2 Curt Duggler on 01.19.12 at 9:07 pm

People need to read more books.

#3 kilby on 01.19.12 at 9:09 pm

Sounds good, I have read your books and read the blog every day. Not everything fits my comfort level but I have applied many of your suggestions , including selling our house in the Okanagan 1 year ago and that WAS a timely thing to do. I will own another home but it is neither an investment and won’t have a mortgage, I just like owning my own home…Thanks for making me think of all the angles, has worked pretty well.

#4 mf on 01.19.12 at 9:09 pm

This has to be the most hilarious picture yet. By the way, thanks for all the advice, and I’m looking forward to your next book.

#5 rower on 01.19.12 at 9:11 pm

Thank-you! You are a voice of sanity in an insane world.

#6 Tiggertoo on 01.19.12 at 9:14 pm

Phirst!

#7 Tania on 01.19.12 at 9:15 pm

Bravo, Garth!

#8 Randy on 01.19.12 at 9:15 pm

First Ten !!!!!

#9 DJ on 01.19.12 at 9:17 pm

The few times I have commented on this site was when we were really slow at work. It is now really busy (Automotive sector, if you can believe that).
Keep up the blogging and great advice.

#10 JP on 01.19.12 at 9:18 pm

First? or not first?

Just kidding Garth. Been following you a while, I am silent but I like your writing.

Thing is, people are not used to seeking facts. They are more content to swap one god (Real estate) with another (precious metal or some other investment).

What you wrote is reality, it worked for you and you shared how it worked. Thanks for that. Might not work for everyone and some might have better returning strategy and what not but they are not sharing it. So no thanks to them.

#11 Westcoaster on 01.19.12 at 9:22 pm

Right on, GT. This from a non-coddled, pull-myself-up-by- my-bootstraps, ethical, WASPy purveyor of investments. I have gone full-on GT having sold 7 properties in the last 5 years and am renting a $1M home for a relative pittance and invested the rest in a spectrum similar to your recommendations. To be honest, so far I haven’t made enormous amounts but I have gained some and I sleep at night.
To those who obsess about precious metals, world catastrophe (financial or otherwise), and love to live their lives in response to conspiracy theories I pity you – there’s much more to life.
#1 advice from most financial advisors – live within your means. Start with that.

#12 Anon on 01.19.12 at 9:24 pm

Load up on bonds, alright! Greek one year; brought me 450% return. Beat that, firsters!

#13 Roger on 01.19.12 at 9:24 pm

I just bought a house in Brampton with a basement apartment. My mortgage is 1600 plus taxes and utilities works out to $2300. My previous tenant is moving with me and paying $1200. My total cost is $1100 including everything. If I were to rent a similar place it would cost at least 1400 plus utilities. So how can i go wrong. I put 20% down (100,000) and i have a couple of investments making me about 6-7%. If you do a bit of both and diversify, you get the best of everything.

I think most people don’t understand but its good to buy a house as long as its not your only investment. If you make a sound decision and not get emotional, a house is not only your home but one day becomes your investment. The idea of having a landlord who controls me and might either sell or loose his home to the bank does not turn me on. I know the average is 3-5 years for a move but i don’t plan on moving that early. So please tell me where is the flaw in this. Why not take Garth’s advice about REITS and Bank stocks and have a principal residence as well…

#14 not 1st on 01.19.12 at 9:24 pm

Garth, even you have to admit there is an undeniable mathematics to the financial world that is unstoppable right now, and that is ever increasing debt piled upon dwindling growth.

Right now the ECB is considering a 1 trillion bailout fund. Some say 10 trillion is needed and 4 or more countries are guaranteed to default at some point.

On the other side of the pond the U.S. crossed the debt ceiling over xmas like nothing and are well on the way to 20 trillion deficits while at the same time carrying as much as 100 trillion in unfunded liabilities on the books expecting a consumer resurgence or repatriated manufacturing thats not coming.

Over in China, the country we all expect to save us, they have obscured their true financials so bad that nobody knew what was going on there until people the visited the empty million apt cities. Planning an economy around 9% growth and then having it fall to 4% is going to be a shocker.

Now, doom and gloom aside, with a real pragmatic approach – how do YOU see this ending well??

#15 Jsan on 01.19.12 at 9:26 pm

More damning reports and the proverbial glass is always half full interpretation from the banks. Apparently an interest rate move of 2 points would “only” be trouble for 2 MILLION households in Canada. Why in the world should anyone be concerned? It’s funny they stop there and don’t keep going with the numbers. What would a 3 or 4 or more percent move do? Think about it, a 2 point move is still well below where rates could someday head.

“TD estimates that a rise in interest rates of two percentage points would mean trouble for about 10 per cent of Canadian households with debt, in terms of meeting their commitments. That, Mr. Alexander said, is because more than 40 per cent of income after tax would be earmarked for debt servicing.

“This is not the bulk of Canadians and it does not suggest a U.S.-style problem, but it does represent close to 2 million households,” he said.”

http://www.theglobeandmail.com/report-on-business/top-business-stories/2-point-rate-hike-would-spell-trouble-for-2-million-td/article2308220/

.

#16 Jsan on 01.19.12 at 9:29 pm

“Our love affair with home ownership might be doomed”

Some very good points that have been brought up continually by Garth.

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/our-love-affair-with-home-ownership-might-be-doomed/article2306454/

#17 Roial1 on 01.19.12 at 9:30 pm

I have not read all of the latest posts so do not know if this has been posted but here it is anyway.

http://investdb.theglobeandmail.com/invest/investSQL/gx.stock_rep?pi_mode=SYMBLIST&pi_type=BASIC&pi_qtime=200211071445090003&pi_sort_col=CUR_RETURN&pi_sort_order=DESC&pi_currency=&pi_param_1=CAR.UN+CUF.UN+NPR.UN+IUR.UN+RRR.UN+SMU.UN+MRT.UN+HR.UN+REI.UN+CAR.UN+CUF.UN+RYL.UN+HOT.UN+LGY.UN+REF.UN+INN.UN+AN.UN-T+AP.UN-T+CWT.UN-T+D.UN-T+PMZ.UN-T+CSH.UN-T+BEI.UN-T+RMM.UN-T&iaction=Refresh
This is a comparison page for “reits”

My wife and I both thank you for the info that you have been giving the last few weeks as we have sore need of this kind of help right now.

#18 Lord Humungus on 01.19.12 at 9:30 pm

Garth, I always enjoy your humour, advice and acid tipped rebuttals.
Keep up the good work and to hell with the nay sayers. You’ll NEVER please them. Nor will they ever admit you might be right.
Keep these daily blogs rollin’

#19 Chaddywack on 01.19.12 at 9:31 pm

HAHAHA! Awesome picture Garth!

I guess it’s hard to drive with all the Amazons in the car, would be quite the distraction :)

#20 Van guy on 01.19.12 at 9:32 pm

People only believe things when it happens. They feel the Internet is full of BS. I’m sure some stuff are BS, but not all. And when shit does hit the fan, they will come back with no anger, but fear and depression. You will need Dr Phil to come help all the people that didn’t listen.

#21 Jsan on 01.19.12 at 9:35 pm

message #13 Roger

“I think most people don’t understand but its good to buy a house as long as its not your only investment. If you make a sound decision and not get emotional, a house is not only your home but one day becomes your investment. The idea of having a landlord who controls me and might either sell or loose his home to the bank does not turn me on. I know the average is 3-5 years for a move but i don’t plan on moving that early. So please tell me where is the flaw in this.”

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

Tell you where the flaw is? Where does a person start? How about your house drops in value by 30-50-% in 5 years and your mortgage interest rate doubles?

Maybe your logic is sound if house prices were reasonable and not their current grossly overpriced state and interest rates were at more historically normal rates verses the extremely manipulated and artificially held down rock bottom with nowhere to go but up rates that they currently are at. Add to this your tenant moves out and you have a hard time getting a new tenant. It has potential disaster written all over it.

#22 Jeannie on 01.19.12 at 9:38 pm

Garth, glad you brought this up. The whole tenor of this blog has changed over the past couple of years.

Gone, are some of the sharpest, savvy, amusing characters on any website, replaced by individuals who’re obsessed with being ‘first’ huh?

I don’t know how long you’ll maintain your patience,
but be assured there are still those amongst us who
are paying attention.

#23 not 1st on 01.19.12 at 9:39 pm

Respectfully, I asked the question again;

– european debt, austerity and defaults
– U.S.A exponential debt, systematic unemployment
– China slow down to reality

How does this end well?

Let me fill in my view. Simply, if you hold to the view that a consumer can be over indebted and get in trouble, then the same holds true for a sovereign. No matter how much they tax or how much austerity they enact, there is no growth scenario that can tackle those kinds of debts.

Europe is largely contained. The US economy is obviously stronger. China’s growing at 8.9%. And I don’t care about your view. — Garth

#24 jess on 01.19.12 at 9:41 pm

China RedPad

Do you think the chinese consumer will one day want to only buy “Made in China”

#25 Cory on 01.19.12 at 9:43 pm

“Don’t dis success”
Many do because they do not understand what you speak of. They truly don’t.

I am tired of trying to explain how money works and how to make it to people. Everyone has different ideas and the bottom line is as long as the end result is you’re making realized gains then who cares how you do it. If everyone did the same thing the markets would never move.

Anyways, I have given up trying to explain how I make our rent+ every year in the market and that all of our earnings from our careers are thus saved. “Cory you’re confused, buy a house!! you’re throwing your money away”

#26 X on 01.19.12 at 9:44 pm

In defence of [email protected], only knows what the bank tells her. Most bank employees have no clue. And the bank tells them what is in the best interest for the bank.

#27 Retired Boomer - WI on 01.19.12 at 9:45 pm

Big G,

This has to be one of the best yet. Your advice has been spot-on for those that would listen. Last year made money in bonds, floated on equity but did collect the dividends of those dividend payers, thank you.

The REIT was up nicely, too.

No metal, no commodities, I would not have a clue about where either is headed. Hold some “convertibles” this year, and so far, looking decent.

Bonds don’t look like they have much price appreciation as interest rates have practically nowhere to go but -up-
someday…

For now, I’ll just relax, think about how to invest that 401-K rollover dough, and take a distribution this year just enough to fill up the ROTH (tax free) funds uncle SAM gives us taxpayers -when the wife still works- to shelter that income for later tax free use, without hitting the next higher tax bracket. Different country different rules, but the blog maestro’s advice still holds up VERY WELL.

Other than the EU question, the US seems to be slowly recovering. Most everything is pointing upward, unusual in an election year. The 3rd year of a presidency is usually the year the economy gets that artificial goose. Easy going, there’s no hurry, besides, over time nobody gets out of here alive, right?

Keep up your grand work, and we’re sorry if we’ve peeved you. Your a much better read than any other financial advice writers. Most of them are so dry you could fart dust!
I’m new to this retirement thingy. Not sure I have the rhythm down yet??

#28 Josef on 01.19.12 at 9:49 pm

I’ll let you have the honorary “FIRST” Today Garth…..but tomorrow lookout man cause I’ll start refreshing at 5 pm. Great sense of humor btw.

#29 not 1st on 01.19.12 at 10:09 pm

Europe is largely contained. The US economy is obviously stronger. China’s growing at 8.9%. And I don’t care about your view. — Garth

There you go again Garth, struck your nerve. I guess on your blog its follow your mantra only and if someone points out anything else, you are doomer that gets called down. Thought this was about learning from each other – so much for that.

Not properly accounting for other economic “gorillas” in the room and just wishing for the best is just walking in greater fool territory like those you condemn.

#30 Duncan on 01.19.12 at 10:10 pm

Perhaps we’re ahead of you here in Australia.. it’s only the beginning.

http://www.perthnow.com.au/business/local-owners-looking-at-negative-equity/story-e6frg2ru-1226247640456

The report cited far north Queensland, the Gold Coast and the Sunshine Coast as having the highest instances of negative equity at 20.2 per cent, 14.0 per cent and 13.5 per cent respectively.

#31 Chris L. on 01.19.12 at 10:14 pm

I’m listening.

#32 DonDWest on 01.19.12 at 10:17 pm

I hope the guy in that picture has good insurance.

#33 Victor on 01.19.12 at 10:17 pm

#13 Roger on 01.19.12 at 9:24 pm

I just bought a house in Brampton with a basement apartment. My mortgage is 1600 plus taxes and utilities works out to $2300. My previous tenant is moving with me and paying $1200. My total cost is $1100 including everything. If I were to rent a similar place it would cost at least 1400 plus utilities. So how can i go wrong. I put 20% down (100,000) and i have a couple of investments making me about 6-7%. If you do a bit of both and diversify, you get the best of everything.

I think most people don’t understand but its good to buy a house as long as its not your only investment. If you make a sound decision and not get emotional, a house is not only your home but one day becomes your investment. The idea of having a landlord who controls me and might either sell or loose his home to the bank does not turn me on. I know the average is 3-5 years for a move but i don’t plan on moving that early. So please tell me where is the flaw in this. Why not take Garth’s advice about REITS and Bank stocks and have a principal residence as well…

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

Here’s something to ponder. Housing corrects by a mere 15%…throw in closing costs on the sale, and you’ve effectively lost your 20% down payment. And to be clear, a small dip (~15%) in prices wipes out 100% of your down payment. That is -100%. Total loss.

#34 Prem on 01.19.12 at 10:23 pm

Roger #13

who are you kidding? you must be a realtor or one of the countless many sellers looking for any greaterfool. one can rent a whole house for $1500 and you say someone would rent for $1200 from you? lol brampton is crashing and crashing hard. Thanks for the laugh

#35 Kang on 01.19.12 at 10:33 pm

The best part of living in Vancouver is when it snows and the temperature drops to -10c. The smug look of arrogance evaporaes from everyone’s face as they snap out of their dilusional trance and realize that they paid $1,000,000.00 for a $250,000.00 home and sentenced themselves and their family to a lifetime of debt salvery. The shocking reality sets in they they are giving 90% of their paycheck to bankster vermin for usury payments with the faint hope that an even greater fool will come along next year and pay even more for their 50 year old uninsulated wooden shack.

#36 panopticon singularity on 01.19.12 at 10:34 pm

LOL i actually saw this crash in the picture in person, i have pics of it on my phone, happened on westmount rd in kitchener, what a tool lol…

#37 Caveman on 01.19.12 at 10:34 pm

Garth, love the blog and your books. Keep up the good work and thanks for the great advice. Cheers!

#38 Smoking Man on 01.19.12 at 10:36 pm

Except me, of course

Love it

#39 mcsteve on 01.19.12 at 10:38 pm

It’s hard to deny that you were right. REITS and bonds are fully valued at this point, however.

Gold and oil companies look attractive. Equities are trading at a huge discount compared to the underlying commodities. Big on oil at the right price. I seem to use a lot of the stuff and so do my friends – regardless of the price…

#40 Alberta Renter on 01.19.12 at 10:39 pm

Seeking your opinion

Ok – here’s the situation. I’m employed in a good job in Edmonton and have an opportunity to move to Calgary (different company – lateral move). The remuneration is approximately 15 % more than I am bringing home now.

One my decisions is to rent or buy a condo in Calgary. I checked out the vacancy rates and the Calgary Harold reports 1.9% down from 3.6% the previous year. So what’s going on? Does a lower rate equate to increasing condo prices?

Should I rent or buy …

Heck, should I move away from a comfy lifestyle in Edmonton to downtown Calgary?

#41 rosie on 01.19.12 at 10:41 pm

BEWARE THE PHRRRISSST, and the second. Nobs.

#42 Smoking Man on 01.19.12 at 10:45 pm

#13 Roger on 01.19.12 at 9:24 pm

Good move except one thing……..BRAMPTON?

are you insane, Far away, Blue Collar, Hight Taxes, A Mayor with offshore accts. First place to take a hit in a down turn.

Only Good thing is the east indian community habitating that storeless spral are great people.

#43 disciple on 01.19.12 at 10:45 pm

Garth, I appreciate your optimism. I am an optimist too, but I concede that there are still a lot of problems we are facing. Big problems with:

Debt, health, looming poverty for millions, accelerating moral decay, irreparable gap between rich and poor, increasing concentration of power into fewer hands, and incurably widespread global political corruption.

And that’s just for starters. I won’t mention the drug money laundered through the stock markets or the threat of nuclear oblivion. Ooops…

You see, I love to make my 10% too, but as a member of the younger demographic, I am aware that the present economic system of unequal reciprocity based on the exploitation of the global underclass cannot last much longer. Therefore, you see the general tone of comments changing. Blame me if you have to…

#44 in calgary on 01.19.12 at 10:47 pm

Thanks for sound advice. One thing you got wrong though: I continue to make good money buying and selling real estate (condominiums included) in Calgary.

#45 Victor on 01.19.12 at 10:55 pm

2-point rate hike would spell trouble for 2 million: TD

Last updated Thursday, Jan. 19, 2012 6:38PM EST

“The rising trend in the ratio does, however, flag the fact that Canadians are becoming more leveraged and are more vulnerable to an economic shock than they were heading into the 2008-2009 recession,” he said.

“Personal finances are also more exposed to swings in real estate valuations, as the bulk of debt accumulated in recent years has been mortgage related. To be clear, there is good reason to believe that Canada has avoided the imprudent borrowing and lending decisions in the United States, but this does not rule out the possibility – the likelihood in fact – that Canada will experience a housing correction when interest rates do eventually return to more normal levels.”

TD estimates that a rise in interest rates of two percentage points would mean trouble for about 10 per cent of Canadian households with debt, in terms of meeting their commitments. That, Mr. Alexander said, is because more than 40 per cent of income after tax would be earmarked for debt servicing.

“This is not the bulk of Canadians and it does not suggest a U.S.-style problem, but it does represent close to 2 million households,” he said.

http://www.theglobeandmail.com/report-on-business/top-business-stories/2-point-rate-hike-would-spell-trouble-for-2-million-td/article2308220/

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

That’s 2 million households NOT 2 million people. Just. Think. About. That.

#46 RetiredBoomer2 on 01.19.12 at 10:55 pm

I had REITs for some years and sold them before the crash and gradually sold my longterm goldcorp holding as it hit peaks and then gold stocks lost momentum on gold price increases and then gold tumbled and you gave a warning so I rethought my position and gold went down and closed out my remaining positions that were in our rrsp and put it into a short bond fund xsb.
During the market crash I looked at RioCan and other realestate trusts and there is very little if any growth in income. I added oil&gas trust and have done well. REITS are probably overpriced now look BNS is selling their building to the highest bidding sucker. CAR looks good and some others but they are overpriced and having 5% in REITs is reasonable as it is a bond/equity type security when the time is right to buy some.

#47 darcy on 01.19.12 at 10:57 pm

thanks garth,

i’ve been reading since near te beginning and have appreciated your take on things. I have personally benefitted as well by listening to your advice.

Will you be roviding us with some insight re Master Limited Trusts in the near future?

Thanks and I hope you keep this going for a long time.

#48 Bill Gable on 01.19.12 at 10:57 pm

Please take heart, Mr. Turner, a majority listen, try and add to discourse, and take your wise counsel to heart.
Yes, we have bumps. The trick is, holding your fiscal game plan and get a pro to help. If you don’t have an investment advisor – ask our Host. I think he can help you. :-)

#49 Ben Nevis on 01.19.12 at 11:06 pm

Keep going Garth. This guy has no doubts either. Interestingly … recommended by Rob Carrick of the Globe and Mail:

http://www.doctorhousingbubble.com/canada-housing-bubble-ripe-for-popping-vancouver-housing-bubble-2012-pop-real-estate-canada/

And by the way…you’re also right about Victoria.

#50 Deb on 01.19.12 at 11:14 pm

Have followed this blog for over a year – first time commenting. I appreciate the perspective as there has been very little balanced commentary in the media.

I find the best way to educate yourself is to read and listen to as much as you can and then decide what’s best for you.

I’m hoping the intelligence and maturity of the comments improves.

#51 Xerglacia on 01.19.12 at 11:16 pm

I’m going to post here just this once to ask you to do your best to ignore most of the idiots who post here (especially those who post “First”, since they’re clearly in need of attention). Since I came across your blog a year or so ago, I’ve read it constently and enjoy a differing point of view from most of what is spat out from the banks, realtors, and media.
So even though you may be disheartened, there is a silent majority that read what you have to say and do their best to listen. I, myself, then try to go do a little bit of research with other online tools to verify that the information you’re giving is accurate. And for the ones that I’ve bothered to look into more seriously, yes, your information is accurate, but I can’t just take your word for it otherwise I’m no better than anyone who just listens to what someone else tells them.

Additionally, my wife and I are in our late twenties, early thirties and pull the type of money you’ve been using as examples recently. So those cases/examples are much appreciated.

Keep up the good work, and don’t let the bastards grind you down.

#52 Gary in Kelowna on 01.19.12 at 11:17 pm

Right on Garth. I have followed your philosophy since I saw you speak in Surrey in the early 90’s, it has worked beautifully for us. Thank you. Keep up the good work. Some of us are listening!

#53 S on 01.19.12 at 11:17 pm

Those who know the least have the most to say; think I will just stop reading the comments.

#54 Uki1 on 01.19.12 at 11:26 pm

To #13 Roger :

Hehehe, entire house for $1135 :

http://toronto.en.craigslist.ca/mss/apa/2778428394.html

#55 Snowboid on 01.19.12 at 11:27 pm

#40 Alberta Renter on 01.19.12 at 10:39 pm…

Don’t believe everything Harold tells you…

#56 D from London, ON on 01.19.12 at 11:32 pm

Garth, I love these periodic “State of the Blog” addresses.

Whenever you do them, it seems like the riot police spraying water canon over the unruly masses. AND THAT’S WHAT WE NEED sometimes.

Keep up the good work!

#57 Montrealer on 01.19.12 at 11:34 pm

The picture today is golden!!!!

and #53 S: you can do ctrl-f and just find posts where Garth has replied (searching for “— Garth”), it’S the only ones worth reading IMO.

#58 Cookie Monster burnin' Kus on 01.19.12 at 11:37 pm

Nice post Garth, easy on the gloating though, what’s that saying…. ‘Hubris goeth before a fall’ Global government treasuries are looking pretty toppy-wopply, the Greek holders are looking to lose 75% or more! Juicy capital loses! If it’s too good to be true then maybe it is.

Gold’s not bubbly at all, it’s just resting on its way up a steep climb watching all those global fiats sliding to oblivion.

#59 Mikesinlangley on 01.19.12 at 11:40 pm

To the passive aggressive morons posting on this pathetic little blog, please consider this truism;

“Interest, poor people pay it, rich people collect it…”

#60 chubster on 01.19.12 at 11:46 pm

party on garth. disagree with some of it but love your work. trash talking ~ symptomatic of deep insecurity – excepting some retaliations.

#61 Kurt on 01.19.12 at 11:46 pm

Love the picture!

#62 DUI on Money Road on 01.19.12 at 11:47 pm

#26 X on 01.19.12 at 9:44 pm
——————————————
I know of at least two instances where in order for someone to get a job at a big 5 bank they had to sign a disclosure stating their actions (in terms of helping customers financially) must first be beneficial to the bank (insinuating the banks’ interests come before the customers’).

Sickening.

#63 Van guy on 01.19.12 at 11:50 pm

This is getting ridiculous in Vancouver. Do you want o live in a shoebox built in Surrey? Kit Conds in Kits lol

http://www.youtube.com/watch?v=jmKYBIHd4sk

#64 DUI on Money Road on 01.19.12 at 11:51 pm

And I love the ‘double entendre’ of the picture:

1) ‘First’ driver, declaring their arrival, is then subsequently creamed by ‘Second’ driver

or,

2) ‘First’ driver squeezes in front of ‘Second’ driver as ‘Second’ driver is pulling into driveway, and subsequent eeks out “First”

LOL

#65 Bobby on 01.19.12 at 11:54 pm

Hi Garth,
I for one, certainly enjoy your posts and agree with your views. Diversification, only a certain percentage in real estate, retirement and education savings. My bond funds, .59% MER, are way up this year so am slowly moving into US and Canadian Dividends.
I have found that many people are financially illiterate and it is clearly evident with many in this blog. It is kind of like sex, those who are getting it, don’t talk about it.
Keep up the good work as I’m paying attention.

#66 Danforth on 01.19.12 at 11:55 pm

Many blogs don’t post the FiPo’s (first posters!).
And recurring FiPo’s get banned.

http://www.urbandictionary.com/define.php?term=fipo
:)

#67 lord lucan on 01.19.12 at 11:56 pm

Garth,

Just turn off the comment section of your website.

There is rarely anything worthwhile written, and lots of bile.

I hardly look at the comments, and only did so today because of the topic. I suspect 90% of the rest of your site visitors do like I do.

Your readership will stay the same if you turn off the comments, and you will save lots of precious time not having to read and filter the trash.

If people still want to contact you, they can just e-mail you.

#68 Kalergie on 01.19.12 at 11:58 pm

Keep up the good work. Reading your blog has become a daily routine for me. Thank you!

#69 Alero01 on 01.20.12 at 12:00 am

Garth, I appreciate your efforts and echo the comments of #22 & #51. Please continue educate “the silent majority” as we come here fairly regularly to learn from your experience and wisdom.

#70 Jody on 01.20.12 at 12:00 am

This blog is totally frickin awesome, I may have just awesomed all over myself. Christ all mighty Garth, your sense of humour gets me through the day, thanks. Your mantra of diversify is sage advice. I can’t believe youngins are still house horny, what nitwits. They may end up LLLAAASSSSTTT!! Hey Garth, if ya ever see Sandra Rinomato could you please push her off the building/cliff, out of the plane, please. Can’t help but notice BMO advertising on the Property Virgins website what a coincidence, not! I’ll show her a virgin.

#71 JeiferIMT on 01.20.12 at 12:05 am

Laughed my arse off as soon as I saw the pic for this post. Brilliant. And the post itself is easily in the top ten. You’re starting the new year on a roll Garth, keep up the sterling work!
#30 Duncan – saw that article yesterday and fear that more than a few of my WA pals may go to the wall. Fingers crossed they can absorb the losses.

#72 Jon B on 01.20.12 at 12:15 am

Somebody needs a hug.

#73 NorthOf49 on 01.20.12 at 12:16 am

Benny Tal and two of his sister bank cronies spouting off that its okay to be saddled with debt. So many things wrong with this article, I don’t know where to start. They mention nothing of the strain a lot of young families have in servicing current debt or how a sudden family event or rate increase can leave a family behind on payments. Instead, they tout that asset values provide proper support for debt largesse, like houses are liquid assets or something.

http://www.thespec.com/news/business/article/657962–don-t-sweat-the-debt-experts

#74 Two-thirds on 01.20.12 at 12:23 am

Great picture. At first glance I though the car on the driveway was a Hummer, but that would have just been too funny/perfect to be true. :)

“During that time the REIT exchange-traded fund XRE gained more than 20%, while bank preferreds were rock solid and threw off a 5% yield with minimal tax. The risks posters wailed and moaned about – collapsing banks, bankrupted shopping centres and asteroids – never happened. Just solid returns and no surprises.”

Garth, this is of course a factual statement and true to boot.

It just sounds so uncomfortably similar to popular (and factual) RE-friendly arguments like:

“Real estate prices have gone up by x% since y period; even with the risks of rising interest rates, peak debt, and the impending RE correction, but this never happened. Thus, RE has given great returns and no surprises during that time.”

Of course the main differentiator here is liquidity. But this is lost on those that need it most. Pity.

I’m interested in purchasing some REITs but they seem pricey right now. Is it worth waiting for a pullback, or is buying them now (at seemingly dear prices) a good idea, assuming they are anticipated to hold well in the foreseeable future?

#75 Island girl on 01.20.12 at 12:24 am

I was going to post you a question, but perhaps I will just email you, the more advice you give the more interested I become. I have realized that perhaps I can do something about the state of our finances. Please keep posting what you know!

#76 Al on 01.20.12 at 12:28 am

@#40,
Moving from Edmonton to Calgary. Be warned the few Edmonton people miss Edmonton as at least it is friendly. You can rent any style at a decent price. The many Toronto people here like it though, its a great place to bank money. Its not a great place to make money off real estate though.

#77 HouseBuster on 01.20.12 at 12:28 am

Garth, you’re the only one that tells the truth. That means something.

#78 Mr Buyer on 01.20.12 at 12:40 am

You know maybe I am a little denser than I first suspected but I can not help wondering why all these successful income generating entities need to have investers and pay out huge sums of money in dividens in the first place? I mean if they are flush with cash why on earth have investors in the first place? It is like paying off the minimum on a credit card is it not?

#79 Kasia on 01.20.12 at 12:41 am

Yesterday evening.Phone’s ringing…”…so,if your debt is more than $10,000 we can help. …How much? $367?????”.He hung up before I confirmed.
30 minutes later phone’s ringing again:” I’m calling from…(something about windows and doors).Am I speaking to homeowner?” -“No”.-“So,can I speak to homeowner,please?”-“No,because homeowner doesn’t live here.”-“Are you renting?”-“Yes”.He laugh and hung up.
About hour later phone is ringing again.This time I wasn’t going to pick up,but caller ID showed our friends number.-“We’ve just bought a house!You should do the same!You loosing so much money every year!The prices go SO up!The rates are SO great!”

Guys,what’s wrong with me?

#80 Tony on 01.20.12 at 12:44 am

I was just watching CNBC today and one of the commentators said the obvious. Stocks valuations are totally out of with profits. Now America nowadays would tell you anything. Mark to market or anything they can dream up to skew profits. Europe tells the truth so they likely are looking at a depression not a recession. Stocks have been manipulated with anything you can dream of since around 1993. Half of Americans still own stocks. Until the percentage of people owning stocks drops to 15 percent or less stocks markets have nowhere to go except down.

#81 nonplused on 01.20.12 at 12:53 am

Garth, I am going to disagree with tonight’s post being one of your better ones. I know you are to some extent trying to keep the comments section up to the standards of the blog itself, and perhaps shield the Amazonian security detail from some of the more outlandish ideas the same way we try and prevent children from watching porn (even though they find most of it by following their parents “history”), but it won’t work. Human nature is what it is, and if you allow people to talk you are going to end up hearing what is going on between their ears. Thus, be careful what you ask for.

And part of it is the nature of an anonymous forum. Even I from time to time espouse opinions here that I would never espouse with my actual name attached to it. Most of the time it’s hyperbole, but I certainly wouldn’t say it that way if I was going to be quoted.

And then you have the trolls, MSM operatives, banksters, CIA, Pentagon, and Mark Carney (as BPOE) all posting stuff meant to “frame the discussion”.

If you want to clean up the comments section, you have to make it members only, and then have a suitable membership test. I suggest proof of purchase of one of your books. I only have Greater Fool and a signed copy of Money Road which I keep in a glass display case mounted on the wall above our bed, right over the wall mounted lube dispenser. Since codes weren’t issued you could use random questions like “Page 58 paragraph 2, complete the following sentence…”. Heck, if you did that for every comment it could be like a little Bible study program.

Alternatively block the email addresses you really don’t like, and use a confirmation system. But don’t block me!

#33Victor

Garth sometimes makes a similar example to yours, that a 20% downward correction in housing results in a 100% loss for someone with 20% equity, but that is only true if the house is your only asset and you need to sell.

Let’s say instead we have a fellow who has a $500,000 house with a $400,000 mortgage, but also has $400,000 in investments (GarthPlan ™, kicking off say 6%). What happens to him if his house drops 20%? That’s a 20% loss to him, not 100%.

What if the fellow has his mortgage “to himself” using a self directed RRSP? Say he has 20% equity and owes his RRSP the other 80%? What’s his loss? 20%.

So the “total loss” argument only works if the house is the only asset, and is highly leveraged. Incidentally the same thing can happen in any asset class if you use leverage (borrow money) to invest. For example my broker seems to make about 2/3 the value of my cash account available as margin. That means, if I were so inclined, instead of buying $100 of gold and silver (to bung Garth up) for every $100 I have, I could buy $166 worth, borrowing the $66 from my broker. But this creates the same problem only of smaller magnitude; for every $10 gold goes down, I loose $16.60. Of course the opposite is true as well, as it is for home owners. The major problem for most home owners is that they are much more highly leveraged than that, and have no other assets, as Garth has been religiously pointing out.

So a person with a diversified portfolio in a GarthPlan ™ can own a house and not face a total loss. Even Garth seems to have a house in the Jungle of TO somewhere, a bunker, and 1 or more revenue properties, in addition to his GarthPlan ™ portfolio. Real estate is dangerous, but you also need some. How much depends on your status in life, as Garth has explained with his “80 minus your age” rule. Hope I got the rule right Garth, I’m working from memory.

#82 Blacksheep on 01.20.12 at 12:56 am

Garth,

Your pathetic blog attracts lost souls from the system’s economic counterculture, sorta like, your Indiana Jones and this is the Temple of Doom!! Even bet the whip and hat are standard Amazonian fare.

I’m surprised, when you’re surprised that we all don’t play nice or buy in. Most here won’t speak their mind at the average social function, so we come here to get abused.

I came for the intellect, but stay for the crazy.

take care…Jones
Blacksheep

#83 Soylent Green is People on 01.20.12 at 12:56 am

(think the Costa Concordia

I didn,t want to lol but i sort of did, sorry

.
.

#84 Lee on 01.20.12 at 1:03 am

#35 Kang

“The best part of living in Vancouver is when it snows and the temperature drops to -10c. The smug look of arrogance evaporaes from everyone’s face as they snap out of their dilusional trance and realize that they paid $1,000,000.00 for a $250,000.00 home… ”

Right on, across the pond in Victoria it is much the same thing. I work with a score of other well paid professionals and am the only one who rents. Any of them that bought in the last 5 years are mortgage maxed, and with the drop in rates are planning to borrow more since it’s ‘a good time to buy’ and upsize. They can’t afford not to work away every summer for the next 30 years, not for me.

Garth, great blog. I was directed here a few days ago and spent hours reading previous posts in delight. Learning about the markets at a young age and getting my butt handed to me by the markets for the last decade at least taught me something. My first question nowadays is ‘how am I getting my money back from this investment?’ which leads to dividends, bonds, and preferreds, sounds familiar. Not ‘oh, I’ll sell in 30 years.’

I do have enough gold, scotch and ammo around for a rainy day. Not because I consider it likely, just because I was a Boy scout.

#85 Blacksheep on 01.20.12 at 1:03 am

Disciple, from a few days back.

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

#86 Tams on 01.20.12 at 1:06 am

um… I’m new… and blonde… so I gotta ask:
What does [email protected] mean?

#87 Joseph [Original] on 01.20.12 at 1:09 am

Watch Out For 2013

There are 40 elections in 2012. Everybody is going to do their best to get us through the election. Watch out for 2013. – Jim Rogers in Economic Times

#88 Devore on 01.20.12 at 1:19 am

#73 NorthOf49

Instead, they tout that asset values provide proper support for debt largesse, like houses are liquid assets or something.

Brother Carney has already opined on asset-based lending:

http://watch.bnn.ca/headline/december-2010/headline-december-14-2010/#clip389237

#89 Carp on 01.20.12 at 1:27 am

#24 jess – last time I checked Android is from Google and pretty much from the USA.

#90 FTP - First Time Poster on 01.20.12 at 1:36 am

Garth,

Finally left the -30 chill in Edmonton last nite & am now relaxing in the Grand Cayman at the end of a busy day. Along with the usual tourist pamphlets you get at the airport, I picked up a RE rag out of curiosity.

A nicely built, fully furnished 3000 sq ft, 3br/3bath house on half an acre WITH a pool………$600,000 CAD. Wtf – on the vast plains of the Cdn tundra, the same house would be well north $1MM, probably starting at $1.2 Here in a gorgeous tropical country with no income tax, RE doesnt have the allure it does in Canada.

So it’s true – we as Cdns are better – we know how to polish a turd

#91 Corban on 01.20.12 at 1:37 am

@#40 Alberta Renter

Looking at listings and you can rent a three bedroom, three story townhouse in a quadplex on centre and 12th NE for $1400. Will take you 20 minutes to walk downtown. South of downtown in the new condo developments, the same money will get you a two bedroom condo and about 20 minutes walk to downtown. Personally I’d live in Mission/Erlton, or Kensington if I was working downtown. Mission/Erlton and Kensington you’re right on the river pathways and ctrain. You can walk to dozens of restaurants and there is a safeway in each area.

#92 Dr. WAYNE on 01.20.12 at 1:43 am

I second ‘lord lucan’ … turn off the ‘comments’. Those who enjoy writing encyclopedia comments can go elsewhere. Those who simply are interested in ‘first’ need more medication. And those with useful things to say can simply say it to themselves and be happy they have the intelligence to do so.

#93 Devore on 01.20.12 at 1:44 am

#78 Mr Buyer

You know maybe I am a little denser than I first suspected but I can not help wondering why all these successful income generating entities need to have investers and pay out huge sums of money in dividens in the first place?

And how will they raise capital to generate all that income?

#94 Van guy on 01.20.12 at 1:47 am

I’ve lived in Richmond from 1990-2008. When I was in elementary, our classroom of 30 had about 5 Chinese. When I entered high school in 1993, there were more Chinese students but from Hong Kong. Now when I’m in Richmond, I feel like I’m in China. Almost every Chinese person is speaking mandarin. So likely mainlanders. Every Chinese restaurant is packed on Fridays and weekends. Most new Chinese restaurants opening in Richmond are either Beijing or Shanghai style foods. So definitely there has been a lot of immigration to Richmond.

#95 dave in calgary on 01.20.12 at 1:50 am

#13 Roger,

You forgot to add the maintenance on your house, and the 6-7% you’d be earning on the 100,000 down payment you made ($500 per month) if you had of invested it with your other investments.

Risk? Your tenant could move out and you can’t find someone suitable. Interest rates could rise and up goes your mortgage. House prices could drop 10% and you just lost $50,000.

I think you bought into a lot of risk with little reward.

#96 michael smith on 01.20.12 at 2:08 am

Garth,
how about getting more specific advice like what you should put in your RSPs or TFSAs – or should you even have those?
Dividend paying shares, REITs, bonds etc?
what would be a good balance?
If this covered in your new book – will buy it if it does.
If its just general the ‘world is going to end’ get out of real estate crap like everything else, why bother?

I think everyone who reads this pathetic blog by now should know Real Estate is not the greatest investment in Canada today. If you don’t just go back and read the last 100 blog entries.

So lets move beyond Real Estate and get into WHERE exactly people should have their money and in what portions.

#97 Basil on 01.20.12 at 2:13 am

I disagree that gold is in a bubble for a variety of reasons. The main reasons being that gold is not widely held by investors, governments continue to print and Europe is no where near contained. The banking system there is a disaster.
If gold is in a bubble, why hold any?

#98 Marcello -People need to understand on 01.20.12 at 2:25 am

People need to understand, some advice is good at certain time, don’t hold one accountable if you decide to act 1 year later or forget to get out timely.

For example, REITS and Bank Preffereds are less worth buying now, than in August 2011. Be smart.

#99 Vulture Fun on 01.20.12 at 2:26 am

I continue to visit your website, Garth, and recommend it to my friends because you offer great insights, like the Jan 15 – 16 blogs on the possible downside of RSPs. According to today’s blog, you’ve been right about everything 100% of the time. Congratulations! But wait, didn’t you predict a rise in interest rates was just around your corner? We’ll all try very hard (as you have) to forget that prediction. And your continual precious metal bashing is curious. Take a look at 10 year charts for silver and gold and tell me again how badly they suck. What’s been the 10 year performance of the S&P 500? 0%. So an ETF (suggested by you for peasants with under 1 mil) in a very broad index like the S&P would have left someone flat for a decade. Admitting a mistake now and then would not in any way diminish your reputation or the admiration you attract from compound Amazons and blog dogs alike.

#100 thankfulandsilent on 01.20.12 at 2:28 am

Your posts like this worry me. Without brown nosing too much, I want you to know that this blog and your advice has changed how I think about not only houses, but money and wealth in general.

I read each day and appreciate the crap you put up with to help people like me.

I hope you don’t stop any time soon.

#101 Michelle on 01.20.12 at 2:41 am

Love, love your picture today Garth!

A nasty flu bug knocked me off my feet for two days, but since I’m self-employed I felt compelled to drag my butt into work today while still coughing up a lung.

Taking responsibility for one’s own financial situation isn’t always easy, but it has to be done and there’s no point whining about how hard it is. (Plus, we doctors like spreading germs…it’s good for business).

I can always count on your posts to give me a good therapeutic chuckle :)

#102 Chris from New Zealand on 01.20.12 at 2:45 am

I love your blog.

#103 kc on 01.20.12 at 2:52 am

“Here’s the deal. I’ll continue to write this stuff. I’ll be straight with you, nothing to sell, no agenda. When I offer advice, it’s from experience. Take it. Leave it. Whatever.”

You have to admit thou Garth, writing this stuff must be better than a “silenced” con-back bencher.
He with the pen can make the rules.

cheers

#104 rentin on 01.20.12 at 2:54 am

a quote from my realtor’s newsletter (sometimes you get a good one)

Of some concern is that fact that in 2011, 4.5% [almost 1 in 20] of all MLS sales in the Central Okanagan were homes that were in Foreclosure. The foreclosure sales trends have been as follows 2005, 2006, 2007, 2008 [all less that 1/10 of 1%], 2009 – 2.2%, 2010 – 3.9%, 2011 – 4.5%…a little scary?

#105 Waterloo Resident on 01.20.12 at 3:13 am

Yeah, yeah, yeah.

I was going to post a whole bunch of comments about how Garth is right, but what’s the point, nobody’s going to read them anyways.

Take care and pleasant dreams!

#106 Trailer Park Boys on 01.20.12 at 3:40 am

We’re pissed (and also angry BTW)

We took a number….was that the Boxing Day sale..or oWTF is the difference…everything on this blog is either 1/2 price and/or half- assed.

The REIT in my dogs house is doing fine, all cash and no bounced SPCA cheques ……..yet

#107 Hoof - Hearted on 01.20.12 at 3:45 am

Does this make ANY sense?

Capstan plan back on

http://www.richmond-news.com/Capstan+plan+back/6021409/story.html

By Alan Campbell, Richmond News January 19, 2012

A massive city centre residential development, shelved during the recession, is back on the table.

The City of Richmond pulled the plug on the former Sun Tech City proposal — which stretches from No. 3 Road to Garden City Road, and Capstan Way to Sea Island Way — in 2009 after the three-strong group of developers couldn’t live up to the rezoning agreements due to the global economic downturn.

However, two of those three companies this week submitted to city council’s planning committee rezoning applications to build high-rises, which could eventually contain 3,250 homes.

As was the case three years ago, approval of the project will depend on the developers — Concord Pacific and Pinnacle International — stumping up the $25 million to pay for the Capstan Canada Line Station.

The larger of the two applications, called Concord Gateway and Pinnacle Centre — has Concord proposing to construct a series of high-rises with 1,245 condos across eight acres. Pinnacle, meanwhile, envisages 200 units to kick off a 1,700-unit grand plan.

The main focus of the high-density projects, being referred to collectively by the city as Capstan Village, is on the pedestrian, hence the priority of building a new Canada Line station adjacent to the development.

The push for high-density neighbourhoods and encouraging public transit is all part of the city’s grand city centre area plan (CCAP).

The developers will get a density bonus — allowing more homes than usual to be built on a certain lot — once they agree to pay for the station.

==================================
WTF are they thinking…the market is dying….

#108 Jane24 on 01.20.12 at 4:05 am

Gosh this site is getting busy. Over 80 comments already in and only 3 am in Ontario right now.

Having just returned to England from a week’s vacation in New York City, let me say that despite Canadian delusion – there is not a single WORLD CLASS city in Canada.

Garth is right. World class, as in RE can never fail, is a whole different category.

Cheers

#109 Aussie Roy on 01.20.12 at 4:07 am

Aussie Update

Mr Wirsz advises Fortune 500 CEOs and fund managers on investing in real estate.

He predicts that a flood of properties will begin to hit the market in Australia from next year as investors scramble to bail out, leading to a property crash of magnitude the country has not seen before.

“Right now is not a time to be buying real estate in Australia,” Mr Wirsz said.

http://www.news.com.au/money/property/bloodbath-to-hit-australian-real-estate-property-analyst-jordan-wirsz-says/story-e6frfmd0-1226248472949#ixzz1jz2MCNE0

Channel Seven’s Sunrise host David Koch and his wife, Libby, have put the boot into the struggling Gold Coast and Sunshine Coast markets by warning property investors to steer well clear of these two coast locations.

As part of their 2012 outlook the Kochs note “the property catastrophe underway in places like the Sunshine and Gold coasts” and “slowly deflating residential property values”.

http://www.smartcompany.com.au/property/20120120-kochie-to-property-investors-avoid-catastrophic-gold-and-sunshine-coasts.html

About 70 per cent of Australians are buying their own homes, compared with 66.3 per cent in the US, according to census data. The quest to own rather than rent has contributed to surging household debt, which, as a proportion of disposable income, tripled over the past 20 years to 150.8 per cent in the quarter ended September 30, according to central bank data. That compares with 133 per cent in the US at the height of the subprime-mortgage boom.

The median price for houses and apartments across all regions in Australia was $315,000 as of November 30, according to RP Data. That compares with $147,800 in the US, Zillow.com figures show.

http://www.smh.com.au/business/hammer-falls-on-real-estate-auctions-20120120-1q93p.html#ixzz1jz2rfANR

Sydney rental vacancies on the increase

http://www.news.com.au/breaking-news/sydney-rental-vacancies-on-the-increase/story-e6frfku0-1226248891074

GLOBAL UNCERTAINTY: Australian recession fears as jobs dry up

http://www.news.com.au/business/gripped-by-recession-fears-as-jobs-decline/story-e6frfm1i-1226248897891#ixzz1jz3FRZhc

First, we do have a very narrow boom going in mining. Sure it’s big but it’s a sectoral boom, not a national one.

Second, we are not exceptional to the effects of the new global era of debt-conservatism. Australian households are still up to their eyeballs in debt. They know it. Global markets know it.

Third, and following on, we are caught in a big economic adjustment that has hardly been mentioned, the deflating the millennium credit bubble based around housing and consumption. The size of this bubble was enormous and the new mining boom simply cannot support it.

In short, as one narrow boom inflates and one much broader bubble deflates, we are seeing the economy seeking a new equilibrium that is leaner and less labour-intensive, less spending driven and more more savings and investment oriented.

http://www.macrobusiness.com.au/2012/01/mining-boom-rhetoric-dies-with-job-cuts/

#110 Last on 01.20.12 at 4:07 am

@13 Garth has said to own a house, only that it shouldn’t be more than 30% of your net worth, obviously putting down a decent downpayment is a smart way to go. Owning a house and being frugal can go hand in hand if your careful

PS love the pic

#111 Mel on 01.20.12 at 4:31 am

” Europe is largely contained”. Sorry, I do not agree with that at all. We are soon about to witness European countries, mostly in the south, to default on their debt. Most of them will leave euro.

Concerning U.S., the country will be in recession by the end of this year, including Canada.

Oil will fall to around $45/barrell by next year. I would not buy preferred Bank shares of any kind. I want to see how they will be impacted by loan defaults. Either way, they are too expensive for me at the moment.

#112 Zed in Geneva on 01.20.12 at 5:22 am

I see the infatuation with real estate as instant wealth perception. Somebody goes to the bank, borrows money and gets a house/condo and suddenly he/she feels rich since he/she only looks at the resale value but not the debt associated with it.

When a person invests as Garth is recommanding, it takes time, i know from experience, a lot of time to have a nice number to show for all the effort. No instant wealth but happiness with freedom from work, but it takes time! Instant gratification took about 15 years in the investment world for a regular Joe like me.

#113 Chris scott on 01.20.12 at 5:30 am

These “first” posts are really tiring, worse when they have nothing to say. If one tried this childish behaviour within a voting system they’d be down-voted to oblivion, hidden from view.

Firrrrrst impressions: it’s hard to take you seriously when you force one to imagine you’re 15 years old, home alone in your parent’s dark basement lying naked on a bed of corn-chips, surrounded by empty Pepsi cans as you tackity-tack-tack filthy fingernails on your crumb-filled keyboard bathed in your monitor’s glow:
[f5]
[f5]
[f5]

Maybe I’m wrong about you, but you gotta help me out and give me a better image.

#114 Onemorething on 01.20.12 at 6:14 am

Home Ownership – A new and realistic view from MISH contributor stating the following! Arent you just a bunch of renters anyhow?

“The only long-term durable solution to the unreal estate mess is to cease further securitization by agencies and shut them down.

It’s time to concede that “homeownership” is a fraud.

When there is $16 trillion in mortgage and consumer debt outstanding and an estimated $16 trillion in residential unreal estate value, with the risk of another 20% decline in prices, there is no “ownership”.

Rather, virtually everyone with a mortgage is renting debt-money from a lender and leasing the land from a local taxing authority.

The mortgagees have a “dead pledge” in the value of the debt owed, not an “asset”. The lenders and taxing authorities are the “owners” of a lien (a bond or constraint on the real property), which entitles them to income in the form of compounding interest and tax receipts in perpetuity. ”

http://globaleconomicanalysis.blogspot.com/

#115 Sky on 01.20.12 at 6:54 am

To the comment board bitchers :

So, do you guys also waltz into a hopping busy restaurant and barge into the kitchen and demand the chef change the menu? Because that’s what you’re doing here.

You’re asking chef Garth to change the menu to suit your OWN delicate palates. Screw the rest of the diners. I suggest that if you don’t like the spicy cuisine served up here that you find a different diner and leave the rest of us to chow down with gusto.

This comment board is an eclectic, dynamic mix of RE fever, gold fever, GEN X/Y, boomers, retirees,trials and tribulations, the good, the bad and the ugly. Garth allows the posters enough slack so that the board doesn’t sink to the dry level of an inbred debate over the merits/demerits of a 25 basis point increase in interest rates.

Whether you realize it or not, this comment board is a true Zeitgeist. Keep posting , people. Don’t let the bah-humbuggers put you off. This is Garth’s kitchen and he decides who gets the chop-chop.

Speaking of chop-chop- I learned many years ago that if you piss the chef off too much you can expect to be chased through the kitchen with a meat cleaver ( true story, circa 1972, Prince George, Inn of the North. The chefs were Chinese and could barely speak English. The meat cleaver sliced through the language barrier nicely. To this day I’ve never been able to find cuisine that matched their quality ! )

#116 plain_janey on 01.20.12 at 7:10 am

Don’t let the attitude of some posters get to you! Thanks for taking the time to write this blog because otherwise we’d just be stuck with this sort of biased information all the time:

http://www.moneyville.ca/article/1117945–2012-economic-forecasts-canada-best-place-to-be?bn=1

#117 plain_janey on 01.20.12 at 7:21 am

Love today’s pic btw

#118 Sky on 01.20.12 at 7:38 am

@ lord lucan & Dr. WAYNE – This comment section is NOT compulsory. It’s NOT mandatory. You can simply read Garth’s post and move on.

So the question is : why are you 2 on the loose in here?

#119 TurnerNation on 01.20.12 at 8:26 am

But, from an early age we are programmed into believing that only First matters!

There’s no such thing as a 2nd Place Stanley Cup, is there…

Winning is all that matters. Consistently dominating and beating. See: Enron. The best and the brighest programmed minds did this.

Even our own Glorious Leader exhorts us into war-making and displays of power.

#120 pbrasseur on 01.20.12 at 8:28 am

To be fair doomers ans weirdos are not just here, thet’re everywhere, on every blog.

All over you’ll find plenty of people without much knowledge making bold statements about where the world is going.

Then what do you expect?

That’s called democracy

What it not Churchill who once said “the best argument against democracy is a 15 minute chat with the average voter”?

#121 TurnerNation on 01.20.12 at 8:29 am

How’s that 2% GIC treating ya? Exclusing important items from Core Inflation only proves this number’s uselessness. Who are they fooling. Our leaders love hoodwinking us. It’s a ritual. Their power is based upon it.

Canada December Inflation Slows to 2.3% as Gasoline Price Increases Ease
By Greg Quinn – Jan 20, 2012 7:21 AM ET

Canada’s inflation rate slowed more than economists forecast in December as increases in gasoline prices continued to fade and automobile costs fell.

The consumer price index increased 2.3 percent in December from a year earlier following November’s 2.9 percent rise, Statistics Canada said today in Ottawa. The increase was the smallest since February and below all 23 estimates in a Bloomberg News economist survey with a median of 2.7 percent.

The core inflation rate, which excludes eight volatile items such as gasoline, slowed to 1.9 percent from November’s 2.1 percent pace. Economists had a median forecast of 2.2 percent for core inflation, with the result slower than all estimates.

#122 Rental monkey on 01.20.12 at 8:42 am

[email protected] 113:

Well said, if the Willy Winers cant handle the awesome divirsity this blog allows, they can beat it.

And for the guy whining about the first poster bring 15 year old kids in the basement; are you for real dude? I dont think there are ANY 15 year olds on this blog. They have other things to waste their net time on. Think T&A.

And what happened to Mr. Miserable himself: did Westernman get the shoe for good?

#123 shanks on 01.20.12 at 8:56 am

ah REITs…. an investor should always be cautious of profiting from the misery of others:
http://www.cbc.ca/news/canada/montreal/story/2012/01/19/canada-transglobe-apartments.html
profits may be good, but if they are obtained “fraudulently” then what good are they? anyone who invests in companies that act this way should consider themselves as guilty as the CEOs who decide they prefer profits over the health wellbeing and happiness of their customers. Personally, if i were one of those renters, I would just not pay rent… i guess here in montreal renters have recourse via the rental board. if you landlord does not repair major things, you dont pay rent!

#124 Kevin on 01.20.12 at 9:01 am

Sounds like a fair deal, Garth. I’ve been guilty of some overly-conservative investment return expectations, and to be fair, it’s not out of fear or doomerism – it’s based on books and commentary from industry experts. Specifically, John Bogle (index investing beats active investing), Warren Buffet (5% return above inflation should be your expectation going forward), and Burton Malkiel (there’s no such thing as a free lunch – risk premium is real. If 1 asset returns 7% [preferreds] and another only returns 1.5% [GICs], it’s because it MUST represent a higher risk).

In the future, I’ll make more of an effort to cite such sources in my comments.

#125 Steven Rowlandson on 01.20.12 at 9:07 am

And residential real estate? Pure house lust. Death to greedy owners.

Death to greedy owners? Far too quick and painless Garth. A slow grinding period of lets say 5 years of lower bids that amount to a 90% or better loss of real estate value or market price would be a more appropriate torture and redress for their previous orgy of greed and speculative avarice.

My 71 yr old,” I believe in the system and I don’t want to hear about any problems”, Mother just bought a 315 grand patio home in Comox BC and is putting her old house on the market this spring to pay for her new home. If she pulls it off she should count herself lucky.
All Glory is fleeting. Here today and gone tomorrow.

#126 Dorothy on 01.20.12 at 9:10 am

Those of you who are concerned about ethical investing might want to watch “Marketplace” tonight. They’re doing a show on apartment buildings that are owned by REIT’s and how it appears that pleasing the investors is a greater priority than pleasing the tenants.

Many of the tenants in these buildings are unhappy because the buildings are so poorly maintained. Watching this show should make those of you who are angry at the “greedy” property speculators equally angry at the “greedy” REIT investors. It also might make some of you think twice about selling your home in order to become a tenant yourself.

I’ve never advocated home ownership for those who can’t afford it, but for the rest of us it sure beats being at the mercy of some unscrupulous landlord.

#127 JL on 01.20.12 at 9:23 am

i went to an open house last week, signed in, and this is what i received a couple of days later, from the realtor:

“Welcome to my network of informed buyers who are interested in updates and insights about our real estate market! I’ll be touching base often over the next several weeks, and if you have any questions or concerns about our local real estate market, I’m here to help!

Let’s begin with an overview of why NOW is a great time to buy a home:
1. Homes are more affordable than they’ve been in a long time.
2. Mortgage rates hit record lows last year and are expected to rise as the recovery gains traction.
3. Home prices appear to have stabilized.
4. Financing is readily available for qualified buyers!
5. Homeownership is the key to financial stability and wealth building.
If you or anyone you know would like to learn more about opportunities in the current market, I’d love to help!

can you believe it?? i didn’t want to be on his mailing list to start, but after reading that, i emailed immediately to be taken off his list.

and no, i’m not house horny or undiversified!

#128 Mixed Bag on 01.20.12 at 9:31 am

Garth, today’s Dilbert is for you:

http://dilbert.com/strips/comic/2012-01-20/

#129 michael smith on 01.20.12 at 9:39 am

North America stock markets are going to fall, and when they do – they will be 10x more spectacular than the fall of Europe.

Its a giant Ponzi scheme with the US government playing the part of Bernie Madoff.

Every company is cooking their books, the CEOs and top brass have to … otherwise they would be out of their jobs and millions in bonuses.

Even the basic of financial audits would take these companys down – but the US government cant, because to take these companys down would mean millions more would lose their jobs. Oh you could slap them on the wrist, but that would be about it.

Really big companies like GE are almost untouchable, they employ too many people.
They can come up with whatever figures they really want, no one can challenge them.

#130 Ballingsford on 01.20.12 at 9:40 am

Thanks for laying it on the line Garth! You have more respect from us blog hounds than you think and many of us thank you for your postings! You really bring reality to an insane world!

Keep up with your wonderful insights and information!

#131 The Dividend Yield Investor on 01.20.12 at 9:41 am

Is it “Miller Time” or is it “Recession Time?”

You be the judge!!

http://www.hussmanfunds.com/wmc/wmc120109.htm

The dividend Yield Investor
Atlanta G.A.

#132 Mike Rotch on 01.20.12 at 9:44 am

Vulture Fun on 01.20.12 at 2:26 am
“………So an ETF (suggested by you for peasants with under 1 mil) in a very broad index like the S&P would have left someone flat for a decade……..”

Maybe so. But then again, if the Queen had balls she’d be the King.

If you followed the G-man’s model, wouldn’t you have:

-avoided buying that ETF when it was overbought?

-not been “all in” like many of the gold bugs and real estate addicts….only had a sane percentage of the growth/equity part of your portfolio in this?

-have been re-balancing multiple times over that decade and, one hopes, may have sold part or all of that ETF at profit to free funds for re-balancing?

-had some gold and maybe silver (5 to 15%), and taken profits on the way up to keep the balance.

Taking any one financial instrument, or any one class of investment, and indicating that it did not do as well as some other is a useful history lesson to investors (if you can spot why, it may help you buy better things later). That said, none of it proves Garth Turner is wrong…..he never said “go all in on this asset instead of having any of that…..”

Going all in on any one class is educated gambling (sometimes educated anyway), nothing more.

If you get gold in the $400s, you might win big. If you buy an assload of Nortel at like $75 and miss the peak…..well, maybe you don’t win big.

#133 eaglebay - Parksville on 01.20.12 at 9:48 am

#32 DonDWest on 01.19.12 at 10:17 pm
“I hope the guy in that picture has good insurance.”
———-
Negative again. It’s only a car.
The guy is probably having a good time. Obviously.

#134 CalgaryRocks on 01.20.12 at 9:53 am

Rather, virtually everyone with a mortgage is renting debt-money from a lender and leasing the land from a local taxing authority.

Thus, logically, since my biggest expense is in fact income taxes NOT property taxes, and not even the mortgage, then I should just stop working and go on welfare.

This would be way more efficient and in fact, since I won’t have a house to pay I could just rent a room somewhere and spend my time watching TV, waiting for my welfare cheque so I can get me some, KD, beer and cigs.

Yey, the life.

#135 JayDee on 01.20.12 at 9:59 am

Life’s hard. It’s even harder when you’re stupid.

#136 disciple on 01.20.12 at 10:07 am

#85 Blacksheep… thanks, yes, I saw your original posted link a few days back. Much appreciated.

#92 Dr. Wayne… Congratulations. You wasted 50 words and 5 seconds of our lives to say absolutely nothing of any worth to anybody. Look up the meaning of hypocrite and shill and then look in the mirror. And go medicate yourself.

#113, #116 Sky… Bazinga!

Don’t worry, everyone. My intuition based on yearly cycles suggests to me there will be a pullback in equity prices this month or next, and come March, get ready to load up on dirt cheap assets… perhaps housing included. But I could be wrong… I am… sometimes, you know… you know?

#137 dmno on 01.20.12 at 10:10 am

A person can’t please all the people all the time. And please people, stop kissing his ass…Gaawd!

#138 Scott on 01.20.12 at 10:12 am

Are MLPs a good investment?

#139 eaglebay - Parksville on 01.20.12 at 10:15 am

#78 Mr Buyer on 01.20.12 at 12:40 am

I agree with you as far as being dense.
No investors means no banks.
Guess who own the banks.
Without a return on my investment why should I invest in a bank.

#140 jess on 01.20.12 at 10:19 am

Friday, Jan. 20 at 8 p.m.
Trouble For Rent
Leaky roofs. Mouldy walls. Broken doors and windows. Would you want to live in such a place? Probably not. But some tenants of one of Canada’s largest landlords have had to endure those conditions for years. Now, Marketplace is exposing renters’ horror stories about a multimillion-dollar company that just hasn’t seemed to care.

In “Trouble for Rent,” Tom Harrington meets tenants of a national rental company and uncovers a disturbing history of unhealthy homes, poor maintenance and corporate callousness. On hidden camera we hear what tenants are told when shopping for a new apartment and with the help of experts we put apartments to the test. What we find is troubling so we go looking for answers from the people at the top.

#141 eaglebay - Parksville on 01.20.12 at 10:23 am

#81 nonplused on 01.20.12 at 12:53 am

Mr Kissass, try harder. You’re still not making any sense.
Grade school math isn’t doing it.
What an exciting person your are.

#142 Junius on 01.20.12 at 10:26 am

Chinese property market in crisis. Note estimates are that more than 50,000 Property Agents have lost their jobs.

See link below:

http://interests.scmp.com/international-property/china/mainland-property-market-in-crisis?utm_source=property_edm&utm_medium=cpc&utm_content=Mainland-property-market-in-crisis&utm_campaign=property20120120

#143 Fat Charlie on 01.20.12 at 10:30 am

I’m still trying to figure out the physics of that picture.

F-it, I’m going back to the posting with the chick on the bike. THAT picture I understand.

Great blog Garth.

Most viewers who get the message likley don’t post. We come here to read about all the naysayers with their crash and burn strategies. It’s like a car accident or reality TV…tough to turn away.

#144 Randy on 01.20.12 at 10:40 am

While interest rate hikes could be a big problem for individuals with mortgages and debt I am more worried that our governments will be raising our income and property taxes if debt charges must be paid with higher interest rates….along with higher energy costs due to stupid green & socialist energy policies along with a variety of user fees required by our failing healthcare and education systems…..The increase in costs is going to be hyperbolic !!!

#145 eaglebay - Parksville on 01.20.12 at 10:41 am

#109 Mel on 01.20.12 at 4:31 am

Doomer predictions. You’re quite the entertainer.
Being such a fun guy (fungi) I predict that you’ll be divorced before the end of the year.

#146 disciple on 01.20.12 at 10:43 am

Interesting info on hydrogen peroxide:

http://www.food-grade-hydrogen-peroxide.co.uk/

Whenever you hear about the latest meningitis outbreak, do you ever think about the vaccines that contributed and/or caused it? Of course not… On the one hand you have a 30 billion dollar industry, and on the other, a few cases of death. Evil wins. Disregard the CDC website info, it’s bunk junk science. Save the children.

http://vactruth.com/2012/01/19/baby-dies-after-first-shots/

#147 Junius on 01.20.12 at 10:43 am

#107 Aussie Roy,

Great selections of posts today. It appears that with China and Australia well into housing bubble bust mode there remains but one country left in the world that is left as “it is different here.” Canada is clearly next. We won’t have long to wait as it does appear the hissing sounds we heard in 2011 are moving to a full out pop for 2012.

#148 GTA Girl on 01.20.12 at 10:55 am

I greatly enjoy most of the comments on this blog, and love the posts…especially being in the financial world. It’s always helpful to get a different perspective.

Even with the doomer comments and ‘Firsts’, this blog generates far better comments than the Toronto Sun.

The Sun story could be about vegetable gardening, and the comments will degenerate into someone yelling about Commies and leftist baby killers….makes you shudder that these people walk amongst us

#149 eaglebay - Parksville on 01.20.12 at 10:58 am

#124 Dorothy on 01.20.12 at 9:10 am
“Those of you who are concerned about ethical investing might want to watch “Marketplace” tonight. They’re doing a show on apartment buildings that are owned by REIT’s and how it appears that pleasing the investors is a greater priority than pleasing the tenants.”
———-
CBC BS. This show only mentioned a couple of bad cases. The hired help or custodians are mostly responsible.
The REITs have to be responsible and manage their properties in such a way that the tenants are satisfied.
Without tenants there’s no investors and therefore no REITs.
You should watch National Geographic instead.

#150 DRNR on 01.20.12 at 11:03 am

Hi all – I’ve been reading the blog daily for over a year. After seeing the results of the advice of GT vs [email protected], I think I know where to hedge my bets now.

I want to open a joint self-directed TFSA that offers access to the ETFs, REITs, preferreds etc. that Garth preaches.

GT can you or the blog dogs help suggest a couple of the best ones and why you think so? Thanks.

#151 harden on 01.20.12 at 11:07 am

more HAM on the way to YVR.. and hey, realtor gets free advertising aimed at her Asian clientele in this local newspaper “story”… only in Vancouver!

http://www.theprovince.com/business/Asian+investors+looking/6025444/story.html

#152 eaglebay - Parksville on 01.20.12 at 11:09 am

#127 michael smith on 01.20.12 at 9:39 am
“North America stock markets are going to fall, and when they do – they will be 10x more spectacular than the fall of Europe.”
———-
Are you for real?
North America is the economic engine of the world.
In any market there are winners and losers. You are obviously a loser.
Ever heard of due dilligence?

#153 Wage Slave on 01.20.12 at 11:10 am

43 disciple on 01.19.12 at 10:45 pm

You see, I love to make my 10% too, but as a member of the younger demographic, I am aware that the present economic system of unequal reciprocity based on the exploitation of the global underclass cannot last much longer.

Well said, disciple, and this is just it: For all of G’s bluster (and transparent posts to encourage ass-licking comments), he can’t ever admit that he has a very narrow definition of success. Or that there a lot of people who have tough lives not because of their own choices, but because income and class issues are worldwide, and systemic.

I’m actually of two minds about the whole thing, because I have used some of Garth’s advice to my benefit. But I do believe that you can take the man out of greedy politics, but you can’t take greedy politics out of the man.

#154 eaglebay - Parksville on 01.20.12 at 11:16 am

#138 jess on 01.20.12 at 10:19 am

What does a rental company has to do with a professional and well manage REIT?

#155 Smoking Man on 01.20.12 at 11:21 am

67 lord lucan on 01.19.12 at 11:56 pm SAID
Garth,
Just turn off the comment section of your website.
…………………………………………………………………..

lord lucan Perhaps you should change your name to Lord Boaring.

When you say turn off the comments I get an image of you in my mind, this is what I see.
A thin man, glasses when you were 5, you followed the rules like a fool and discovered later in life that rule breakers are well ahead of you. You resent that discovery always obeying your teachers waging your tail like a good dog. You hate your job, but will never grow cahonas to do something about it. You’re married your wife runs the show. You never get drunk. Or experiment with mind altering drugs. You lack creativity, Love the cops. And took great joy when the 1000 people at the g20 got rounded up, rights tossed out the window. Definitely not a Ron Paul Fan.

I’m close aren’t I

#156 Hemlo on 01.20.12 at 11:35 am

Tams, [email protected] is “The Nice Lady at The Bank”

#157 kimi on 01.20.12 at 11:41 am

I loved the last bit you wrote Garth.
Thats real Enlightenment.

#158 45north on 01.20.12 at 11:44 am

This has turned into one weird blog.

well not as weird as zerohedge which has a cast of cartoon characters who write their own lines

contrast with thehousingbubbleblog where there is a core group that actually know one another.

Garth, I would be willing to meet with a group in Ottawa

#159 young & foolish on 01.20.12 at 11:45 am

For every “winner” there has to be about 25 losers …. ha!

#160 Another_Perfect_Day on 01.20.12 at 11:58 am

Hello, Garth! I’ve been reading your blog for over a year, and greatly appreciate the work you do. Being self-employed and a renter in downtown Toronto, I’ve long given up on the possibility of ever owning a traditional domicile, so I’m considering other alternative options – kit houses, houseboats, etc. as potential means to own the roof that will keep me from freezing in my (hopefully eventual) ripe old age. I think you’re on to something about fear. Insecurity is nothing new, but I suspect the society-wide onset of BMS (Boomer Mortality Syndrome) is infusing the current outbreak with a particularly fine edge of paranoia. In any case, I was sent a link to this tumblr this morning, thought you might enjoy it:

http://fmlistings.tumblr.com/

Thanks once again for sharing your insights!

#161 Alistair McLaughlin on 01.20.12 at 12:09 pm

So that’s what happened to Joseph!! He was “FUUURST!!!” to the garage last night, and is now in traction, unable to operate his laptop.

#162 Daniel on 01.20.12 at 12:22 pm

Calgary homes down about 5% y/y, condo’s 10% y/y

http://www.findcalgary.ca/page_content-19.html

#163 disciple on 01.20.12 at 12:24 pm

#151 Wage Slave… thanks for the feedback. Like I pointed out to Peakoilist, Garth Vader has no obligation, either morally, or logically to admit anything. But of course, he does know the problems we are mired in. Trust me. Anybody that can stare down the Big Bad gov’t and in their own House to boot, is worthy of our admiration and has something to teach us. Even he may not know the monster he has given birth to.

You must read between the lines, my friend.

#164 disciple on 01.20.12 at 12:29 pm

Happy Birthday!

(If it’s your birthday)

#165 Victor on 01.20.12 at 12:37 pm

Direct Energy cuts 500 jobs as it moves headquarters from Toronto

The Canadian Press – 1 hour 29 minutes ago

TORONTO – Direct Energy is cutting 500 jobs in Canada as the company shifts its headquarters from Toronto to Houston, Texas.

A spokeswoman says the headquarters, in the east end of Toronto, will be closed over the next 12 to 18 months while the company completes the move.

About 300 of those jobs will be relocated to Texas.

In total, Direct Energy, one of North America’s largest energy and energy-related services providers, will still have about 2,000 employees in Ontario.

The company also operates approximately 4,600 producing gas wells in Alberta.

http://ca.finance.yahoo.com/news/direct-energy-cuts-500-jobs-150540305.html

======

One has to wonder how many of these folks are heavy in debt and/or have heavy mortgages to carry. Hard to pay the bills when you lose your job.

#166 disciple on 01.20.12 at 12:41 pm

I will post one more “pointless” post just to help get the count to surpass 200 today… oh, I guess this is the one then…

Dis-ease is virtually always caused by a lack of nutrients. The source is internal, not external. Stop being fooled like guinea pigs by the medical mafia.

Just like the fact that NOT ONE person has been charged or investigated for the economic crash of 2008-2009, similarly there has NEVER been ONE death due to vitamins or minerals. As sure as taxes:) Start your re-education here: For Michelle et. al. and other shills on this blog, catch me if you can…

http://orthomolecular.org/history/index.shtml

#167 Devore on 01.20.12 at 1:00 pm

#124 Dorothy

I’ve never advocated home ownership for those who can’t afford it, but for the rest of us it sure beats being at the mercy of some unscrupulous landlord.

So… move?

#168 Devil's Advocate on 01.20.12 at 1:01 pm

#167Realtors in a Panic on 01.19.12 at 6:44 pm

Why would realtors post non-stop all day if the RE market was doing well? The fact is realtors and bankers are in a panic that Canadian RE has started a US style crash. When the stock market starts crashing in a few weeks followed by continued layoffs , strikes and the possibility of the euro break up will make it 2008 all over again. The higher they can manipulate the markets higher the more you can profit on the way down. Realtors have much to worry about.

You just don’t get it do you? REALTORS® are not in a panic. REALTORS don’t give a rat’s ass what the price of real estate is doing beyond ensuring they convey that information to the public that they know what the real market value is of the real estate they are considering buying or selling.

Quite frankly REALTORS® would be elated if prices would drop through the floor, other than what that would do to the general economy, as then another bubble would begin to form as buyers who otherwise might not buy began to buy thus increasing demand and starting another feeding frenzy. But, sadly, that just isn’t going to happen. If it did the ensuing feeding frenzy would push prices right back up again.

Hey, I’m not saying these sustained lofty prices are right, but nor are they wrong. This is a free market which reacts to a multitude of economic variables – many a combination of which we have not seen before. Who is to say that the price of real estate needs to come down? Maybe there are other factors in the equation that need to be adjusted to bring about the ideal state of equilibrium you seek.

The price of real estate is a consequence of many influencing factors. A change in any one of those factors can and will impact the price of real estate one way or another. Most certainly an increase in interest rates would cause the demand and subsequently the price of real estate to fall. On the other hand an increase in people’s incomes would likely cause an increase in demand for real estate and subsequently a rise in the price. Look at what is happening in Halifax in anticipation of the spin off due to the recent award of the naval ship building contract or Fort McMurray where you pay $500,000 plus for a home with a foundation of Michelin rubber underneath it. Yes these pockets of opportunity are all too rare but who is to say something might not arrive on the doorstep on your neighbourhood soon. Could happen and believe me there are a lot more trying to make it happen than there are fearmongers like you.

Now I would be the first to admit that the economic variables at play currently tend to suggest prices are not going up any time soon. But, on the other hand, since the big scare in 2008 unit sales volumes and prices have remained, for the most part, stable. That tells me something encouraging for demand to have stayed so strong under such adverse conditions. We will get through this in due time, probably a lot sooner than you think. When we do we will be better for it. An education is a bargain at any price and I think most would agree this has been an expensive education so, even though we may not think so as yet, must eventually prove a worthy one.

Speaking of all the variables which impact the value of real estate; the one to watch in this whole scenario is rents. Rents are relatively fluid compared to the other components of the housing market equation. And rents are, as so often pointed out on this “pathetic” blog way disproportionate to the acquisition cost of the property to be rented. I’m just sayin’; rents are far more fluid and controllable by landlords than interest rates or the job market. You figure it out from there. Maybe look into how the two danced with one another during the last go around.

I’m not forecasting I’m just sayin’ some things you ought to consider before shooting off your mouth making your own forecast.

Question:

“Will real estate values go up or down?”

Answer:

“Yes.”

#169 Canadian Watchdog on 01.20.12 at 1:13 pm

For you Garth. http://www.newswire.ca/en/story/907973/canadian-retailers-face-pressure-cooker-year-ahead-ernst-young

“While the Canadian marketplace saw a number of retailers go out of business in 2011, consolidation and restructuring will become more commonplace in 2012. Some retailers are weakened by the recession and will need to restructure or to sell. ”

As long as they pay the rent, until they can’t.

Fear, fear, fear. So far, groundless. — Garth

#170 Mike on 01.20.12 at 1:18 pm

A reputation based comment system with logins, threading and moderation would probably make things a lot better. Don’t let the trolls get you down.

You don’t have to custom-code this stuff either, there are good prepackaged tools like disqus.com used on CNN and other troll heavy sites.

The comments here are valuable, but a lot of good comments get drowned out by the crazies.

#171 Timing is Everything on 01.20.12 at 1:27 pm

Snowboid et al….

Just went to Barrett-Jackson…Pickups are hot this year…

http://tinyurl.com/732h8on

‘Is Housing Glut over?’ in Phoenix. I doubt it, but maybe slooowly turning (in ‘theory’ anyway)…

http://tinyurl.com/8xyzkar
http://tinyurl.com/7edy782

Went to the Redwing/Coyote game last night. Pretty much a sell out crowd. There are signs, however…

http://tinyurl.com/7hvljqr

#172 Wayne on 01.20.12 at 1:36 pm

I’m not sure which I like more about this blog: your photos, your writing skill, your humour or the actual advice? All I can say is thanks for everything!

#173 Devil's Advocate on 01.20.12 at 1:41 pm

BTW

I am sure this will lead to a good discussion if not howling …

Of the current listing inventory I am carrying close to 50% are new clients who bought sometime near the peak of the market and are now under water, not so much because the property dropped in value as they borrowed more against them than the lender should have allowed.

“Short sale” is not a Canadian term but suffice it to say that closer to 20% of the sales currently taking place are what you might call that – where the seller has to bring a check to close the deal. There is no negotiating with the bank. The banks have all the security they need from CMHC insurance on down to and including recourse. Which begs the question; is our banking system that much better than that of the U.S.? Certainly for the banks it is! No accountability there is there?

You gotta feel sorry for some of these “Greater Fools”. And there-in is where some of the pups and poodles garner a glimmer of my respect as I suspect many may be of this unfortunate group. Yes it was of their own folly but should not the banks who turned a blind eye to the risk be held accountable to some degree? They are not, not even remotely. And being privy to some of their more recent conduct I would suggest their panache toward any degree of social responsibility is diminishing yet further. Indeed they grow more arrogant and ignorant in consequence to the international praise bestowed upon them by their envious banking partners in other countries around the world.

The bank is not your friend. But they are a good redistributor of wealth from the poor to the rich.

“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” – Thomas Jefferson

#174 Alex B on 01.20.12 at 1:42 pm

Great post today! I admit to writing some negatives, but I really appreciate your viewpoint. I think there are lots of options for people with substantial capital. But as Roger points out in an early post, being subject to some landlord who sells when they want (happened to me, do you enjoy spending 30hrs making the house perfect again to get back your security deposit entirely on their descrition? or how about people wandering through your private residance look at buying it, making comments on your messyness, and displacing you constantly) fun stuff right? how about how crappy your rental is, massive air leaks, open pipes (mice runnign wild) horrible furnace wiring. Welcome to rental land, I can see why people buy, even knowing its a risk, to escape all the BS associated with rentals.

Ultimatly if you plan to stay in your house for 20yrs or so, and you have to pay rent anyways, so what if you lose 10% and your downpayment, unless we experience a massive correction (Garth says it wont’ happen) are you going to lose over 20yrs? Diversify, have other investments for sure, but rent over buy, long term, its hard to see the advantage. EXCEPT if the market is truely on a knife edge now, which is hard to know.

Still, paying 400k for a rathole, teardown in a poor neighborhoud in Calgary, no way no how…

#175 Arshes on 01.20.12 at 1:45 pm

#124 Dorothy

I’ve never advocated home ownership for those who can’t afford it, but for the rest of us it sure beats being at the mercy of some unscrupulous landlord.

———————————————

Are there not city regulations when it comes to rentals? Dont minimum standards need to met? They should call thier city hall about these issues. And people, whether renting or buying should really take the time and effort to research the place they intend to live.

#176 Form Man on 01.20.12 at 1:50 pm

#167 DA

While it is true that realtors make commissions regardless of whether the market is going up or down, a falling market makes it harder to convince folks to buy. This can be seen in the unit sales in DA’s hometown ( lower than they have been for at least 10 years in spite of population growth). It should also be noted that if we had a true ‘free market’, mortgages would be insured entirely by private companies, not Canadian taxpayers. The Harper government encouraged subprime mortgages and hung the risk on the taxpayers. Without this sort of reckless and stupid behaviour, it is unlikely Canada’s housing bubble would be as big.
On another note, DA’s comments critizing developers using ‘in-house’ marketing need to be responded to:

In the case of a housing development, there is much better continuity of service from a sales force that works only for that development, and hopefully for the duration of the construction timeline. MLS realtors have constantly changing loyalties and commitments, making life frustrating for both the developer and the buyer.

#177 brainsail on 01.20.12 at 1:52 pm

#164 Victor

You said… “About 300 of those jobs will be relocated to Texas.”

I read… “The company’s Canadian headquarters will be closed over the next 12 to 18 months while the company completes the move to Texas where Direct Energy plans to add about 300 people.” There is a difference.

I read… “

#178 Arshes on 01.20.12 at 2:06 pm

#168 Canadian Watchdog on 01.20.12 at 1:13 pm For you Garth. http://www.newswire.ca/en/story/907973/canadian-retailers-face-pressure-cooker-year-ahead-ernst-young

“While the Canadian marketplace saw a number of retailers go out of business in 2011, consolidation and restructuring will become more commonplace in 2012. Some retailers are weakened by the recession and will need to restructure or to sell. ”

As long as they pay the rent, until they can’t.

——————————————————–

Lol people are funny with thier short term thinking aren’t they? If retailers profits drop suddenly they can’t pay thier rent? Do they understand those profits are after rent is paid? That retailers are in the business of making profits and they will adapt to the economic enviroment? They won’t won’t lie down and take it, ifthey’r profits drop? That companies spend tonnes on money on Point Of Sale systems to keep track of sales trends? That they watch what is happening in their stores and act accordingly ? Unless the company carries a large amount of debt that can’t be sustained in a downturn, these companies will pay thier rents.

#179 a prairie dawg on 01.20.12 at 2:14 pm

#119 TurnerNation

Excluding important items from Core Inflation only proves this number’s uselessness.

– – –

sarcasm on

Removing those ‘volatile’ items like food and fuel from the inflation calculations just flattens the curve.

It’s not like everyone in Canada has to eat or drive. lol

sarcasm off

#180 Devil's Advocate on 01.20.12 at 2:17 pm

RE: my previous post

But you will not hear too much of this (my condemnation of the banks) from my fellow REALTORS®. Why? Because we sell the banks foreclosures and bank foreclosures, for the most part, are a dream date listing as they must be sold. That being said the banks are a pain in the ass to deal with. Why are they a pain in the ass? Because they are insured and have recourse! Yes they want the property off their books but the bureaucracy of the banking system and belligerence of these players who have no skin in the game, to a large degree, exempts them from accountable conduct.

#181 a prairie dawg on 01.20.12 at 2:17 pm

#147 GTA Girl

makes you shudder that these people walk amongst us

– – –

or drive, or vote, or reproduce…

#182 Freedom first on 01.20.12 at 2:20 pm

Smoking Man #154…….Smoking……getting drunk and mind altering drugs……..Man…..you are one sick hombre.

#183 smartalox on 01.20.12 at 2:26 pm

@ #164 Victor:

So any direct energy employees that are moving to Houston get to sell their Toronto homes at Toronto prices, pocket tax-free gains, and with closing costs under-written by the company, and buy homes in Houston for hundreds of thousands of dollars less?

Score! Even with a pay cut, the one-time windfall makes it an attractive proposition. No wonder it’s not the only company I’ve heard of that is abandoning Canada for cheaper pastures in the USA.

This will be the lasting legacy of the Harper government’s refusal to rein in Canada’s costs of living, and in particular, housing: the abandonment (some would say systematic dismantling) of Canada’s competitive assets.

By allowing house prices to rise, it’s made markets with lower labour costs (people willing to work for less, because they pay less for shelter) more attractive to large companies. This, and the loss of the advantages offered by a low dollar, and the establishment of low-cost health care in the US are the nails in the coffin of Canadian competitiveness.

#184 Bill Gable on 01.20.12 at 2:56 pm

Really starting to get steamed at people taking immature shots at our host.
To #154 – please stick to the topic and drop the invective. I think Mr. Turner deserves thanks for trying to help people save themselves from themselves.

If you have nothing but invective and dross to add – find another blog.

So many of us consider this place important to our financial health.

#185 Form Man on 01.20.12 at 3:07 pm

#172 and #179 DA

wow ! you are sounding an awful lot like a Liberal lately ! perhaps reason is beginning to win out over ideology after all………

#186 Devil's Advocate on 01.20.12 at 3:08 pm

” #175Form Man on 01.20.12 at 1:50 pm
#167 DA

While it is true that realtors make commissions regardless of whether the market is going up or down, a falling market makes it harder to convince folks to buy. This can be seen in the unit sales in DA’s hometown ( lower than they have been for at least 10 years in spite of population growth). It should also be noted that if we had a true ‘free market’, mortgages would be insured entirely by private companies, not Canadian taxpayers. The Harper government encouraged subprime mortgages and hung the risk on the taxpayers. Without this sort of reckless and stupid behaviour, it is unlikely Canada’s housing bubble would be as big.

On another note, DA’s comments critizing developers using ‘in-house’ marketing need to be responded to:

In the case of a housing development, there is much better continuity of service from a sales force that works only for that development, and hopefully for the duration of the construction timeline. MLS realtors have constantly changing loyalties and commitments, making life frustrating for both the developer and the buyer.

There you go again Form Man talking with your head up your ass. You don’t know shit even with your head so far up your ass.

#1. Sales volumes in Kelowna are NOT lower than they have been in 10 years. Granted they are back to pre-bubble levels and have maintained steadily so since 2008.

#2. The Canadian taxpayer does not insure the banks… the borrower insures the bank. The high ratio borrower is required to pay the insurance premiums that save the banks harmless should the banks decision to lend to that borrow prove faulty. Now you tell me who, directly, pays the insurance that saves you harmless be it homeowner or general construction liability.

#3. Your comment that “there is much better continuity of service from a sales force that works only for that development, and hopefully for the duration of the construction timeline. MLS realtors have constantly changing loyalties and commitments, making life frustrating for both the developer and the buyer.” is laughable Form Man. The real reason is because a REALTOR® is bound by fiduciary duty to show the client other alternatives that might be better for them than your product. Clearly it is obvious you are frustrated that your product has not been able to compete under such circumstances and by-passed by those REALTORS® clients who were not cornered and potentially lied to, if only by omission, by you and your “sales” staff.

#187 Devil's Advocate on 01.20.12 at 3:19 pm

Further to my comments at #2 in my response to Form Man the insurance premiums CMHC charges the high ratio buyer are substantial and in all probability enough to cover the normal delinquencies they might expect. That at this particular time in history there are a higher number of defaults I would expect you will begin to see CMHC scrutinizing the past lending practices of the banks and denying them coverage in some cases as is their right to do. In any event in the vast majority of cases CMHC is not insuring the full mortgage value but rather just the shortfall upon disposition, which is why it is the bank that generally retains conduct of sale.

#188 City Slicker on 01.20.12 at 3:22 pm

Garth Turner for Prime Minister!

#189 Devil's Advocate on 01.20.12 at 3:26 pm

And before I head off to my next appointment, I would like to point out Form Mans own, all-be-it unwitting, affirmation that developers, unscrupulous developers anyway, tend to employ their own “sales” force of individuals who will care for only the developer’s best interest. These are not generally REALTORS®. We did not trade mark the word REALTOR® for no good reason. One of those reasons is to disassociate our membership from such “sales” people. Believe it or not and much to Form Man’s chagrin, we (REALTORS®) are not here to sell you something we are here to help you buy something.

#190 BOB on 01.20.12 at 3:28 pm

I agree with Dorothy. We saw last night the consequences of have return REIT’s.

#191 villain? on 01.20.12 at 3:33 pm

Suggestion for those who are not interested in the comment section.

Don’t read it!

And more so – don’t post on there!

#192 disciple on 01.20.12 at 3:48 pm

#183 Bill Gable…”So many of us consider this place important to our financial health.”

I wouldn’t consider it a stretch to also consider this blog vitally important to my mental health! I mean what, with all the subversive mind control of the “Real Estate Industrial Complex” thrust upon us daily…I find it necessary to come here to decouple from the insanity. It isn’t just a pleasant distraction any more…damn.

#193 BPOE on 01.20.12 at 3:52 pm

Junius this is Canada not China. BPOE attracts the creme de la creme from Asia and all other Countries of the world. BPOE DOES NOT ATTRACT INTERNATIONAL SPECULATORS PERIOD!
Junius on 01.20.12 at 10:26 am
Chinese property market in crisis. Note estimates are that more than 50,000 Property Agents have lost their jobs.

See link below:

http://interests.scmp.com/international-property/china/mainland-property-market-in-crisis?utm_source=property_edm&utm_medium=cpc&utm_content=Mainland-property-market-in-crisis&utm_campaign=property20120120
.

#194 debtified on 01.20.12 at 4:01 pm

#13 Roger on 01.19.12 at 9:24 pm

I just bought a house in Brampton with a basement apartment. My mortgage is 1600 plus taxes and utilities works out to $2300. My previous tenant is moving with me and paying $1200. My total cost is $1100 including everything. If I were to rent a similar place it would cost at least 1400 plus utilities. So how can i go wrong.

Just wondering…

So, you are renting out part of your house for $1,200. A similar house would have cost you just $1,400 to rent. Your share of the cost (mortgage + utilities – rent income) is $1,100 (plus maintenance, btw). Why didn’t you just rent the house for $1,400 and have the same (apparently clueless tenant) pay you $1,200? This way your cost would have been just $200 instead of $1,100. Plus you get to save your down payment and not have to worry about maintenance.

I am afraid I just got suckered into this. This can’t be serious.

Hey, Garth. I just bought some REITs today. Thanks!

#195 Deano on 01.20.12 at 4:04 pm

Please tell me I’m not the only one to post this….

http://www.youtube.com/watch?v=hqOn5XEm86A

No, you’re the 89th. — Garth

#196 Timing is Everything on 01.20.12 at 4:15 pm

I ‘almost contemplated’ deleting this pathetic blog from my bookmarks forever. Too much negative energy was seeping in. A timely post Garth.

The internet (search engines) has changed the world. Instant information. Boo! Then what? One must then be able to ‘process’ that information and put it into some sort of context that is meaningful (makes sense) to them.

Oh, get away from the internet, including this blog and the MSM once and a while. You need time to process.

The ‘real’ world ain’t that bad. Not bad at all.

#197 Alistair McLaughlin on 01.20.12 at 4:25 pm

#124 Dorothy

I’ve never advocated home ownership for those who can’t afford it, but for the rest of us it sure beats being at the mercy of some unscrupulous landlord.

Easier to get away from an unscrupulous landlord than an enormous mortgage on an equity-negative house. This platitude you keep espousing is getting tiresome. Your advice may have been correct a decade ago, but not in this market. Not anymore.

#198 oslec on 01.20.12 at 4:36 pm

KASIA,
Yesterday evening.Phone’s ringing…”…so,if your debt is more than $10,000 we can help. …How much? $367?????”.He hung up before I confirmed.
30 minutes later phone’s ringing again:” I’m calling from…(something about windows and doors).Am I speaking to homeowner?” -”No”.-”So,can I speak to homeowner,please?”-”No,because homeowner doesn’t live here.”-”Are you renting?”-”Yes”.He laugh and hung up.

About hour later phone is ringing again.This time I wasn’t going to pick up,but caller ID showed our friends number.-”We’ve just bought a house!You should do the same!You loosing so much money every year!The prices go SO up!The rates are SO great!”

Guys,what’s wrong with me?
_________________________________________
Kasia,
I think you are suffering from a disease called called “Renteritis.” It is a socio-economic disease that has a leprosy like effect. It is usually noticed by DEBT Renters who think they are better than you. They will make fun of you and ostracize you. Sometimes the DEBT renters will try to cure you by referring you to a specialist called a Realtor. This realtor will try to sell you the cure, apply healing herbs and scented aromas to relieve you of your pain. You will also get a free calendar. Please refrain and refer to Dr. GT’s blog.
As Dr. GT says, the best cure is moderation and a well balanced portfolio. Drink plenty of fluids to keep you liquid. However a nice vacation somewhere warm where your own amazon (could be a rental =)) hands you a cold beer, while while she feeds you steaks and lobsters can alleviate the pain. While doing this, give your DEBT renter friends a call while they are eating KD by the fireplace (saving on gas bill) in the middle of winter. Tell them where you are and what you are doing, then ask them what they are doing. Before they answer, hang up the phone. You know what their answer will be, “It’ll keep going up!!!”. Your pain will quickly subside, just don’t P-O the amazon

#199 DM in C on 01.20.12 at 4:40 pm

#117:
Winning is all that matters. Consistently dominating and beating.

That about sums up Calgary — from the traffic to the malls to the mortgages.

#200 TheRealTruth on 01.20.12 at 4:54 pm

Interest rates to stay at current level or lower well into 2013 as reported by the media today after Inflation data we all know is ‘adjusted’.

Rates will not go up anytime soon…so hold off on that 2.99% 5 year rate. Bubble will stay iinflated until an external shock if it ever happens.

#201 Wage Slave on 01.20.12 at 5:12 pm

If you have nothing but invective and dross to add – find another blog.

I assume you were referring to me (that’s comment #152, hoss). And no, I don’t think I will find another blog; like I stated previously, I too find GT’s tips useful.

I actually respect the guy more now that he’s let some criticism through that has to do with how people are treated (empathy vs. labelling those who make financial mistakes “losers” or “stupid”) rather than disagreements about ideologies (market vs. metalheads for instance).

He is moderating these comments, after all. We all know he can fight his own battles, and has no compunction about not publishing comments he doesn’t like.

So take it up with him if you don’t like it. I suspect you won’t, though; you like the taste of poop too much.

#202 AprilNewwest on 01.20.12 at 5:22 pm

#183 Bill Gable. Well said. I’m with you.

#203 KingBubbles on 01.20.12 at 5:26 pm

Housing still bubbliciuos in Winterpeg:

http://www.greghamilton.ca/Blog.php/category/Market+Updates/winnipeg-residential-sales-december-2011

It must be different here ;-)

#204 Randy on 01.20.12 at 5:37 pm

It’s usually only progressives and liberals who demonize and insult people who state facts or tell the obvious fact or the truth….

Ontario Liberals are still in power because they avoid all truth about the economic realities and fiscal problems that we face in Ontario and focus on the BOOGYMEN…..Mike Harris….Tim Hudak…..

It also helps to have a SuperPac like the Public Service unions spend $9 Million to help you do this….

#205 Snowboid on 01.20.12 at 5:42 pm

#124 Dorothy on 01.20.12 at 9:10 am…

At least you are consistent, however fallacious your beliefs are!

#206 Marina on 01.20.12 at 5:58 pm

Garth,

I came to Canada from Russia and put my money into Russian bank that gives me guaranteed 12% return on my cash deposit so your balanced portfolio making 7% in dividends doesn’t seem very attractive – sorry.

Canada is screwed up – all I can say.

#207 Canadian Watchdog on 01.20.12 at 6:00 pm

#186 Devil’s Advocate

MBS issuers and CMHC have a bilateral premium, whereas the banks (issuer) pays a premium towards insuring securitized mortgages, like any insurance policy. However being a bilateral premium, means in the event of mortgage payments in arrears or defaults (foreclosures), CMHC must pay the net interest spread to cover losses. Therefore, if enough mortgages are to default, CMHC’s capital (being leveraged 25:1 and only having 11 billion in equity to cover 800 billion liabilities) would be wiped-out.

This would leave Canadian taxpayers to bailout CMHC, sending our debt-to-GDP ratio to over 90% (my estimates). This doesn’t include long-term off balance sheet liabilities such as social insurance, healthcare, ect.

Read more on CMHC here http://www.parl.gc.ca/HousePublications/Publication.aspx?DocId=5097272&Language=E&Mode=1&Parl=41&Ses=1

#208 haha on 01.20.12 at 6:02 pm

mr. turner, just keep posting your thoughts and opinions on things about our economy, and investment opportunities and liabilities. im pretty sure most readers of your postings really appreciate you taking the time to discuss these matters.

and a big thank you, to you and scott for setting me straight on managing my money.

bp

#209 Devil's Advocate on 01.20.12 at 6:02 pm

#175Form Man on 01.20.12 at 1:50 pm
#167 DA

While it is true that realtors make commissions regardless of whether the market is going up or down, a falling market makes it harder to convince folks to buy. This can be seen in the unit sales in DA’s hometown ( lower than they have been for at least 10 years in spite of population growth). It should also be noted that if we had a true ‘free market’, mortgages would be insured entirely by private companies, not Canadian taxpayers. The Harper government encouraged subprime mortgages and hung the risk on the taxpayers. Without this sort of reckless and stupid behaviour, it is unlikely Canada’s housing bubble would be as big.

On another note, DA’s comments critizing developers using ‘in-house’ marketing need to be responded to:

In the case of a housing development, there is much better continuity of service from a sales force that works only for that development, and hopefully for the duration of the construction timeline. MLS realtors have constantly changing loyalties and commitments, making life frustrating for both the developer and the buyer.

#1. Kelowna Real estate volumes are not the lowest they have been in 10 years. They are back to pre-bubble levels which I would suggest is a good thing and they have been consistent for the last four years which I would suggest too is a good thing.

#2. The Canadian Taxpayer does not insure the banks. High ratio buyers are required to have insurance which that borrower pays for to insure the bank against loss should the borrower default and the property need to be foreclosed upon by the bank that might subsequently be sold for less than the bank is owed. In such event CMHC makes up the shortfall. CMHC insurance fees are not cheap and would amply cover such insured losses in normal market conditions. That these might be considered riskier times I would suggest that CMHC is very likely to start scrutinizing the past lending practices of the banks and where they see lax lending deny them coverage as is their right to do so.

#3. The reason Form Man and other such developers do not hire REALTORS® is because a REALTOR® has a fiduciary duty to find the very best property for their client which might not be that developers product. By hiring an in-house “sales” staff that are not REALTORS® the developer can be reasonably sure that their “sales” staff, who cannot by law “sell” anything but the property of their principal will do whatever they can to “sell” the prospective buyer on that specific property their principal is trying to “sell”.
A REALTOR® is not a “sales” person. A REALTOR® is an “agent”. There is a big difference. We don’t “sell” you anything. We help you buy the very best property that meets your expressed wants and needs. Clearly Form Man’s product hasn’t been able to compete on the open market such that he has had to contrive other means with which to trap.

#210 Form Man on 01.20.12 at 6:04 pm

#185 DA

I might remind you that there are reading literacy courses available at the college etc ( they even admit realtors ). What I said was that total unit sales ( not dollar volume) are lower than they have been in at least 10 years ( courtesy of OMREB ). This is a fact, although facts obviously are not your strong point.

CMHC is backstopped by the Canadian Government, which raises its funds from the Canadian taxpayers. Are you suggesting some other country’s taxpayers will come to the aid of CMHC ?
Your comment that CMHC will certainly tighten their standards once they realize their error, shows you have a fundamental lack of business acumen. That is classic ‘barn door closed after horse gone’ thinking ( which you share in abundance with Mr Flaherty).

There will be differing opinions regarding in-house sales staff, however I can tell you, feedback from our buyers has been overwhelmingly in favour of our staff, and quite negative toward the treatment they received from ‘commissioned’ realtors……….

Lashing out with personal insults rather than offering rational rebuttals means you missed the point of Garth’s post today entirely

#211 Snowboid on 01.20.12 at 6:06 pm

#170 Timing is Everything on 01.20.12 at 1:27 pm…

I agree, as well not as many micro-cars as last year and seemed to be a pile more high-end vehicles – like the two lines of 30ish cars just to the west of the auction floor.

Of course the midway atmosphere of BJ takes a bit of getting used to, but I wouldn’t miss if for anything!

We have noticed some properties in our area selling for prices they certainly wouldn’t have got this time last year – maybe up 10%.

Still a long way to go down here, but at least some positive indicators.

#212 debtified on 01.20.12 at 6:06 pm

#113 Sky on 01.20.12 at 6:54 am

To the comment board bitchers :

Whether you realize it or not, this comment board is a true Zeitgeist. Keep posting , people. Don’t let the bah-humbuggers put you off. This is Garth’s kitchen and he decides who gets the chop-chop.

Nicely said. Even the ones writing “PHIIIIRST!” put a smile on my face as I begin reading the comments. Nice way to lighten things up a bit at the onset with some immature comic relief. Unfortunately, there are some who take these people (and BPOE) seriously. They are the ones who ruin the experience for me. There is nothing more stupid than engaging a serious argument with someone who is obviously acting stupid.

#213 ts harpoon on 01.20.12 at 6:17 pm

Garth,

Your help is appreciated. Keep up the great work.

Thanks.

#214 Devil's Advocate on 01.20.12 at 6:21 pm

Sorry for the duplicate entry of my last post. I thought my post at #185 had been censured for some reason.

#215 michael smith on 01.20.12 at 6:21 pm

yep North America stock markets could never crash – 2008 was just a hiccup – back to blind faith, fundamentals be damned. thank you.

The only ones who lost in 2008-9 were the sellers. Equity markets have recovered, and balanced portfolios are ahead 15% from pre-crisis levels. The odds of this being repeated in the near future are about zero. There’s better stuff to worry about. — Garth

#216 Form Man on 01.20.12 at 6:51 pm

#212 DA

hint : when one has backed one’s self into a corner, lashing out with wrong and immature atacks is unlikely to improve your situation. I can only presume the stress of trying to uphold several years worth of illogical thinking has affected you. Focus on facts over ‘gut instinct’, and reason over rage, and things will begin to get better for you. By being truthful from the start you will need to spend far less effort ‘covering your tracks’ afterward ( where is westernman to rein in my overuse of cliches ?)
Finally, in the interest of free enterprise, what is wrong with CMHC getting out of the business of insuring mortgages altogether ?

#217 Deano on 01.20.12 at 7:05 pm

Please tell me I’m not the only one to post this….

http://www.youtube.com/watch?v=hqOn5XEm86A

No, you’re the 89th. — Garth

I’ve become what I despise. My misery is complete.

#218 Van guy on 01.20.12 at 7:13 pm

I’m pissed off now. Developers are taking over BK on Main st!!!! I love my munchie foods!!!

#219 SRV on 01.20.12 at 7:35 pm

“The only ones who lost in 2008-9 were the sellers. Equity markets have recovered, and balanced portfolios are ahead 15% from pre-crisis levels. The odds of this being repeated in the near future are about zero. There’s better stuff to worry about. — Garth”

Since “Trash Talk” is the soup du jour, let me say “baloney” to that comment… the Fed had to print $15 Trillion to pull that rabbbit out of the hat, and if you think the financial system is out of the woods you are delusional my friend.

A year from now you will still be in paralysis, while the economy inches ahead. — Garth

#220 new_era on 01.20.12 at 7:37 pm

#209 Form Man on 01.20.12 at 6:04 pm

#185 DA

I might remind you that there are reading literacy courses available at the college etc ( they even admit realtors ). What I said was that total unit sales ( not dollar volume) are lower than they have been in at least 10 years ( courtesy of OMREB ). This is a fact, although facts obviously are not your strong point.

CMHC is backstopped by the Canadian Government, which raises its funds from the Canadian taxpayers. Are you suggesting some other country’s taxpayers will come to the aid of CMHC ?
——————————————–

CMHC is canada Fannie and Freddy.

They guarantee risky real estate bets to people who doesn’t have money.

They allow people with next to nothing make huge leverage loans to maximum their profits with minimum risk. Except mabey their credit ratings, but its the tax payers which has to fork out for their losses.

Its a canadian problem. No other country really cares. Take a look at freddy and fanny, no other country is bailing them out. Its a USA problem

#221 Devil's Advocate on 01.20.12 at 7:39 pm

#209 Form Man on 01.20.12 at 6:04 pm

You might be wise to take that reading comprehension course as well Form Man for what I said was, “Sales volumes in Kelowna are NOT lower than they have been in 10 years. Granted they are back to pre-bubble levels and have maintained steadily so since 2008”. Or in the case of my subsequent post, “Kelowna Real estate volumes are not the lowest they have been in 10 years. They are back to pre-bubble levels which I would suggest is a good thing and they have been consistent for the last four years which I would suggest too is a good thing.” I said nothing about “dollar volumes” which agreeably are higher. Please peruse those posts once again so that you understand.

On CMHC… we will just have to wait and see won’t we? Personally, being far closer to the issue at hand, I don’t see there being as much as problem as you might. Despite the alarming inventory of distressed properties I personally have listed and that close to 20% of all those being processed board-wide are “distressed” many of those sellers are actually finding way to come to the closing table with cheque in hand to make up that shortfall. That says something don’t you think? It says to me the problem is largely being dealt with before it ever gets to the bank or CMHC. I don’t think it is such a concern that the taxpayers will ever have to bail out CMHC nor do I think they would tollerate it if it was ever even suggested – especially after having observed what happened south of the 49th. However Canadian Watchdog’s comments at #206 have caught my attention and I am interested in perusing that information in combination with the latest CMHC financial statements.

On your comments regarding your own in house “sales” staff vs. commissioned REALTORS® I will leave for the readers to decide which they might be wisest to trust – one who can only “sell” them one given product and prohibited by law from “selling” them another or another who can sit down with them, listen to their unique and specific wants and needs and then seek to find it for them amongst an inventory of 1,599 Single Family, 1293 Strata, 31 Recreational, 177 Mobile Home and or 732 Lot and Acreage prospective opportunities.

#222 P & T S on 01.20.12 at 7:41 pm

Completely off-topic, but wonder how many are aware that 2012 is 666 years since the start of the Black Death in Europe . . . . . .

Co-incidental, of course ! ! ! . . . . Isn’t it . . . .

#223 Devil's Advocate on 01.20.12 at 7:42 pm

#215Form Man on 01.20.12 at 6:51 pm

It appears there is one point on which we might come to unanimous consensus… that CMHC should indeed get out of the mortgage insuring business and leave it to private enterprise.

#224 Devil's Advocate on 01.20.12 at 7:56 pm

Yes Form Man my warehouse shelves are full with almost 4,000 unique individual properties that my customers might buy while you sit there trying to flog but one apparently not so well received product that clearly has you disenfranchised with doing business in Kelowna – and understandably so. Please tell me again who’s business acumen sucks…

#225 Chris scott on 01.20.12 at 7:58 pm

@Rental Monkey #120
Of course there are no 15 year-olds here; i agree: they’re most certainly, as you say, more concerned with T&A :)

I’m new here, fresh eyes. I envy all of you fortunate to’ve discovered Mr Turner in the beginning. I could’ve averted losing some thousands as I did.

I think this community’s grown too big to manage through this comment system alone, too cumbersome.

I wanna know who I’m talking to. Who are you mr Rental Monkey? Who are you mr Turner Nation?

#226 Cory on 01.20.12 at 8:04 pm

#29 not 1st on 01.19.12 at 10:09 pm

Have you ever heard of the LIBOR or TED Spread? charts say it all right now. Pressure is off in EU……for now….maybe for years….who knows but there are too many govt’s in the world working together to stop any type of crash….last time nobody saw it coming…except me of course.

#227 SaggyBottomBoomer on 01.20.12 at 8:12 pm

#79 Kasia The only thing wrong that I can see is your head isn’t up your &ss like most people, so it’s easier for you to tell which way the wind is blowing. Hang in there. You’re not alone.

#228 TurnerNation on 01.20.12 at 8:22 pm

http://www.blogto.com/city/2012/01/proof_that_toronto_real_estate_has_gone_off_the_rails/

Proof that Toronto real estate has gone off the rails?

Posted by Derek Flack / January 20, 2012

It’s tough to keep track of all the Tumblr blogs that pop up, but every once in a while we run across one that’s worth sharing. Making the rounds yesterday (thanks to a Reddit thread) is the rather narrowly focused FML Listings, the author of which scours the MLS for some of the more ambitious — and quite frankly, ridiculous — Toronto real estate listings. Prospective homeowners probably don’t need a reminder that housing prices in this city are bananas, but it’s still pretty shocking to see the asking prices for some of these places.

The tone and style of the accompanying writing won’t be to everyone’s taste, but for my money the mix of anger and exasperation is right on on point. As it’s only two days old, the site only features about 10 listings as I write this, but given the wealth of outlandish asking prices out there, you can expect it to contain some additional gems before our attention ultimately wanes and we’re onto the next site.

#229 49 on 01.20.12 at 8:25 pm

People seem to be getting upset over the whole 2.99% 5 year fixed rate issue & some claim that it may cause another leg up in prices.
With higher variable rates compared to 6 months ago, affordability based on the absolute lowest available rate has dropped significantly.
Am I wrong here or is no one getting this?

#230 TurnerNation on 01.20.12 at 8:26 pm

Some bullish thoughts re. earnings:

http://alphanow.thomsonreuters.com/2012/01/stock-market-valuations-may-be-low-but-buying-still-has-its-risks/

#231 Daisy Mae on 01.20.12 at 8:39 pm

#171 Wayne on 01.20.12 at 1:36 pm
“I’m not sure which I like more about this blog: your photos, your writing skill, your humour or the actual advice? All I can say is thanks for everything.”

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

Me, too! :-)

#232 Kate on 01.20.12 at 8:50 pm

Marina, you probably forgot or do not want to remember how they took all the money from Russian people. I would never ever put any money into the Russian bank anymore after the millions of poor people were raped of their life-time savings. Go back to Russia and keep enjoying the System. Udachi.

#233 Daisy Mae on 01.20.12 at 8:50 pm

#175 FORM MAN “The Harper government encouraged subprime mortgages and hung the risk on the taxpayers.”

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

I agree. And this just makes me furious.

#234 Daisy Mae on 01.20.12 at 8:57 pm

179Devil’s Advocate on 01.20.12 at 2:17 pm

Why are they a pain in the ass? Because they are insured and have recourse! Yes they want the property off their books but the bureaucracy of the banking system and belligerence of these players who have no skin in the game, to a large degree, exempts them from accountable conduct.

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

I understand your anger and frustration. And I agree.

#235 Form Man on 01.20.12 at 9:04 pm

#232 Daisy Mae

And by juicing the economy with a housing bubble, Harper bought himself a majority. If things go badly for CMHC, the price tag will be in the billions. Will make the Liberal sponsorship scandal look like pocket pennies……

#236 Devil's Advocate on 01.20.12 at 9:14 pm

Form Man

I really would like to cease this petulant bickering between us. The fact is I do respect your industry for the most part with more connection to it than you know. I would rather be thought of as someone who lifts another up rather than putting them down. I’m sure most would agree that it is my constant optimism is what garners more contempt from the pups and poodles than any negativity I spread. In fact there was a time I was more welcomed here – when I shared the woes and warnings of the fear-mongers on this “pathetic” blog. But that was then and this is now three and four years later. Who’d have figured then just when we thought we were surely facing economic Armageddon that instead we’d pull back the reigns and control the beast with a consistent and level hand.

My point is my point in participating on this “pathetic” blog is to try convey a message of hope and confidence to they who see none. Admittedly at times that is a difficult chore and I too succumb to the dark side of this “pathetic” blog. That is why so often I need take my leave for this is most surely such a toxic, dank, dark place that I need a breath of fresh air as such extended absence from time to time does provide.

So I apologize for stooping so low at times as to insult you both directly or indirectly. I know like every one of the other blog dogs you are just trying to do your best. And when someone appears to be more resilient to the trials and tribulations of today’s economy jealousy can get the better of any of us who witness it amid our own adversity.

I think it is time for me to take another sabbatical from this “pathetic” bog to clear my head and check out some encouraging facts that I can share with you upon my return for as it stands right now I’m getting a little pissy with this “pathetic” blog which understandably undermines my whole intent in being here.

So I hope you accept my apology Form Man and others too who I might have offended indirectly. I trust when I do return we can resume our debates with a little more decorum.

#237 Van guy on 01.20.12 at 9:26 pm

Even realtor Larry Yatkowsky is not bullish on Van. Da, any thoughts?

“At this precise moment we really don’t know if there will be a substantial change in our local Vancouver market. Going out on a limb, my take on what I’m seeing says the numbers for January are not going to be pretty. That said, I anticipate that should the expected visitors fail to materialize the adjustment will start on the west side and quickly filter east, south and up valley. By Feb/March if the market has as some suspect, crossed the line into negative territory, we’ll begin to see a picture developing. How big and what that picture will look like be may not be known until we get some hindsight by May or June.”

#238 Canadian Watchdog on 01.20.12 at 9:31 pm

Seems like Ottawa took down the link I posted earlier regarding CMHC. Was working earlier…

#239 eaglebay - Parksville on 01.20.12 at 9:50 pm

#218 SRV on 01.20.12 at 7:35 pm
“Since “Trash Talk” is the soup du jour, let me say “baloney” to that comment… the Fed had to print $15 Trillion to pull that rabbbit out of the hat, and if you think the financial system is out of the woods you are delusional my friend.”
———-
Over the top exaggeration. $15 trillions?
We’re a little sick, aren’t we.
Another sore loser and another winner. Obviously the winner isn’t you.
I’m a winner and I thank you for your cash in the market.

#240 Derek R on 01.20.12 at 9:58 pm

Still no new post? Methinks you are toying with the firsters tonight, Garth! Good man!

#241 Canadian Watchdog on 01.20.12 at 10:00 pm

#175 Form Man

“The Harper government encouraged subprime mortgages and hung the risk on the taxpayers. Without this sort of reckless and stupid behaviour, it is unlikely Canada’s housing bubble would be as big.”

The Canadian government had no choice but to keep interest rates pegged to the US because i) in order to stay competitive in the global market ii) Canada would not be able to sustain its economy if it tightened monetary policy on its own.

When the US advanced into leveraging modern finance, along with globalization, it became a situation where any nation who hit the brakes would crash.

#242 Uki1 on 01.20.12 at 10:01 pm

Where is Nostradamus ?

#243 eaglebay - Parksville on 01.20.12 at 10:02 pm

#234 Form Man on 01.20.12 at 9:04 pm

You have no idea about CMHC. They’re much better funded than you’ll ever know.
You enjoy posting your BS but all you’re doing is mainly a pissing contest with DA. He’s just as right as you think you are.
Who would you have to replace Harper and the conservatives? Give us a smart answer.

#244 Canadian Watchdog on 01.20.12 at 10:19 pm

Chart Of The Day — Average Hourly Earnings http://i39.tinypic.com/9pm33c.png

#245 Bobby on 01.20.12 at 10:44 pm

For #208 DA,

If, as you pontificate, a realtor’s fudiciary duty is to provide their client with the best property, then why do most only show their own firm’s listings? Or perhaps even more importantly, they conveniently seem to omit those listings that are FSBO or belong to a discount broker?
Remember, the buyer’s agent is still paid by the seller, so they do have an obligation to the seller.
I have bought and sold many properties and in only one instance did the realtor really earn their pay. Rather, most were solely interested in their commission. Interestingly, when I sold a property at Whistler the realtor could best be described as pathetic. It is amazing how they respond when you threaten to file a formal complaint.
I see a time, coming very quickly, when both buyers and sellers agents will be paid for their time. It will quickly cull the realtor ranks.
Perhaps you may still be around?

#246 Kevin on 01.20.12 at 11:02 pm

Europe is largely contained. The US economy is obviously stronger. China’s growing at 8.9%. And I don’t care about your view. — Garth
—————————————————————–
I don’t consider myself much of a doomer, however Europe is hardly “contained” the US economy is stronger but that is how my gramps seemed several days before his passing.
China is growing at 8.9% today, but a few years back it was 11%.
And you think that Toronto has overbuilt housing (condo’s) well China has a bit of an glut as well. I mean they have built entire cities that are empty !!
You don’t have to be a doomer, but a reality check is in order here.
Europe is going to have serious problems and there is a realistic chance that Greece is going to default and exit the EU and the Euro. I believe that once Greece leaves a few others will follow. Greece is a hopeless scenerio. The options that they are putting on the table are simply NOT options for that country right now. Germany is not willing to totally underwrite Greece, this is a way to allow Greece to bail and make it look like Greece is the victim. Germany would rather look like the bad guy then throw money down a black hole.
The US economy is not getting much better. All that is happening right now is a small realignment on the employment side. When the financial crisis hit the US everyone was scared sh##less, so they fired every employee in sight. Now a few years later they are hiring enough to meet demand. Once they are better aligned to the current reality the hiring will stop. This is not sustained economic growth.
The US will be into another financial crisis in 24 months or so.
The World won’t end, but there will be days that leaders of certain countries are going to wish they stayed in bed. And that’s the “cup is half full” scenerio.

#247 Rental monkey on 01.21.12 at 12:30 am

@ Chris scott-224

Who am I? Thats easy enough to figure out: go scroll through Garth’s FB friends list. I’m on there. ;)

And FYI the comments section is fine as is.

I do agree with another poster though, where is Nosti?

#248 Ogopogo (né Okanagan Renter) on 01.21.12 at 12:39 am

#235 Devil’s Advocate on 01.20.12 at 9:14 pm
Form Man

I really would like to cease this petulant bickering between us. The fact is I do respect your industry for the most part with more connection to it than you know. I would rather be thought of as someone who lifts another up rather than putting them down. I’m sure most would agree that it is my constant optimism is what garners more contempt from the pups and poodles than any negativity I spread. In fact there was a time I was more welcomed here – when I shared the woes and warnings of the fear-mongers on this “pathetic” blog. But that was then and this is now three and four years later. Who’d have figured then just when we thought we were surely facing economic Armageddon that instead we’d pull back the reigns and control the beast with a consistent and level hand.

My point is my point in participating on this “pathetic” blog is to try convey a message of hope and confidence to they who see none. Admittedly at times that is a difficult chore and I too succumb to the dark side of this “pathetic” blog. That is why so often I need take my leave for this is most surely such a toxic, dank, dark place that I need a breath of fresh air as such extended absence from time to time does provide.

So I apologize for stooping so low at times as to insult you both directly or indirectly. I know like every one of the other blog dogs you are just trying to do your best. And when someone appears to be more resilient to the trials and tribulations of today’s economy jealousy can get the better of any of us who witness it amid our own adversity.

I think it is time for me to take another sabbatical from this “pathetic” bog to clear my head and check out some encouraging facts that I can share with you upon my return for as it stands right now I’m getting a little pissy with this “pathetic” blog which understandably undermines my whole intent in being here.

So I hope you accept my apology Form Man and others too who I might have offended indirectly. I trust when I do return we can resume our debates with a little more decorum.

Phew, what a gasbag! I’d like to translate DA’s jeremiad with a simple phrase:

“Time to bury my head in Okanagan sand once again”.

#249 Onemorething on 01.21.12 at 8:35 am

Phew, what a gasbag! I’d like to translate DA’s jeremiad with a simple phrase:

“Time to bury my head in Okanagan sand once again”.

Or just get his own blog and talk to himself!

#250 Abitibi Doug on 01.21.12 at 11:57 am

There’s been much talk about REITs here lately, and that’s understandable as they pay good income. What about the Trans Globe REIT, which has recently gotten a lot of attention due to unhappy tenants, as some of their buildings are in a sad state of repair? Would it be wise to avoid that one, at least in the near future?

No credible source quoted on this site has recommended it. — Garth

#251 Maria on 01.21.12 at 3:12 pm

Thank you Mr Turner for sharing your knowledge with all of us.

#252 SRV on 01.21.12 at 6:13 pm

“A year from now you will still be in paralysis, while the economy inches ahead. — Garth”

They say timing is everything Garth… link to the “paralysis” in my investment strategy (from Jan 20)… just about a years return in an average Reit, if memory serves me well) – SRV

http://www.kitco.com/charts/livesilver.html
… this just in… Last 10 yrs Dow “inches” up 28%, while Gold appreciates by 486% (paralysis indeed)!

#253 D on 01.22.12 at 11:16 am

Last!

#254 Victor on 01.22.12 at 7:00 pm

Along with citing slumping trade with the U.S. and a debt crisis in Europe, Carney repeated his warning that Canadians are carrying too much debt, and have been for some time.

“Some measures have been taken and they’ve been effective, they’ve helped reduce some of the risks around household debt,” he said. “But . . . household debt is at a new record high. We expect to see the debt-to-income ratio to continue to climb over the course of the next couple of years.”
For every dollar they earn, Canadians now owe $1.54.
The governor also warned that housing prices in some Canadian markets may be overvalued, posing some risk to homeowners.

http://business.financialpost.com/2012/01/22/u-s-economy-unlikely-to-fully-recover-carney/