Dumber than we think

Maybe I was wrong. This could be worse than anticipated. Even the bankers are covering their butts.

A year ago Scotiabank was burning through media bucks telling us ‘You’re Richer than You Think.” Mutual funds. Financial planners. Monster mortgages. Happy customers finding money on the branch floor. Sexy colours. Fuchsia and teal with a hint of aubergine.

  In the next few days you’ll probably catch the bank’s sober second thought campaign. Heavy on babies and rug rats it says, “Richness is: All Around You.” In an age when the 99% wouldn’t cross the street to whiz on the 1%, Scotia explains, “Everyone’s definition of richness is different – so let’s talk about what it means to you.”

Translation: At the Bank we know you’re screwed. But we care. Come in for a free tissue.

The change is a profound one. Getting rich is out. Coping is in. When a growing army of people are anxious about their debts, their jobs, their non-existent savings and pensionless retirements, selling the masses lines of credit, home loans and credit cards is a sunset industry. The real economy is worsening, even as corporations like Apple blow past all profit expectations and stock markets reward the people who actually have money.

As the real estate market corrects, the bank figures, it needs to be on the right side of customer sentiment.

Now some sad folks on this pathetic blog took yesterday’s Fed announcement as bullish news for houses. Pray for them. Lead them not into temptation. For they are fools.

In case you missed it, US central banker Ben Bernanke indicated American rates would not be rising now for about two years. As a result, stocks shot higher since corporate debt will remain dirt cheap, allowing the profit parade to continue. Sadly, the malcontents who love to hang around here because they have a man crush on the host took this to mean Canadian rates will also stay low forever, allowing real estate values to rise without end.

But it means the opposite. Low rates – emergency rates, historically low rates – are something to fear. They’re the last resort of central banks scrambling to keep an economy from sliding into deflation.

Japan is an interesting case in point (and often mentioned here by those who cheer cheap money). A real estate bubble brought on by lax lending standards, a robust economy, rampant speculation and runaway corporate profits in the Eighties pushed Tokyo prices six fold higher. It burst, of course (they all do), taking down the economy and the stock market with it. The government responded by slashing interest rates to an unheard of level – zero. But without more jobs and wage gains, housing languished.

Homes lost 80% of their value, and stayed there for years, not bottoming until 2002. In fact, it took three entire decades for real estate values in 2011 to approximate what they were in 1985. Just imagine if you were the typical horny young Tokyo couple in 1984, throwing everything you had into a piece of property. Or a 60-year-old comfortable with the bulk of your net worth in a no-lose house. What’s to worry, my little samurai? It’s different here!

Central bankers only lower rates when the economy proves incapable of healing itself. After all, cheap money makes people crazy for more of it. Credit bubbles inflate. Asset prices swell. Inflation’s easily created, destroying the value of everybody’s savings and forcing companies to raise prices.

This is why you rarely see such moments. In fact, none of us alive have experienced so many years with a prime rate this low. And now the guys in charge of American monetary policy have announced two more years – totally unprecedented. Totally worrisome. Is this an admission what happened to Tokyo could replicate in Miami or southern California? And do not for a moment underestimate the impact on Canada.

Without a recovering and strengthening America, there’s scant hope for the Canadian middle class, especially when it continues to commit suicide by house lust. The accumulation of debt has been historic. Without growth, employment and fatter paycheques, how will it be paid back? With battered exports, sloth economy and tapped-out consumers why would house prices stay aloft?

Because rates are staying where they are? Give me a break. Dumber than we think.

Nothing in recent months has changed my view. The Fed’s move, along with BeeMo’s 2.99 Special, may have given the condomaniacs, speckers and property gluttons a few more months to take cover. It may send more greater fools into the arms of wise sellers his spring. It may fool the MSM and turn realtors into predators. But it will not change the outcome.

Scotia’s getting ready. Are you?

205 comments ↓

#1 Jack Lemming on 01.25.12 at 10:41 pm

First with Garth’s permission!

#2 Josef on 01.25.12 at 10:41 pm

First!!! OH Yeah BABY!!!!! YEAH!!!!!

#3 Dimwit on 01.25.12 at 10:45 pm

first.

#4 T.O. Bubble Boy on 01.25.12 at 10:48 pm

Garth, Bernanke, Paul Krugman… there must be some kind of secret club of bearded economists.

#5 Duncan on 01.25.12 at 10:49 pm

Every day it gets closer..
http://www.theage.com.au/business/melbourne-full-of-empty-homes-20120125-1qhn7.html

#6 Van guy on 01.25.12 at 10:55 pm

News flash! This isn’t Japan.

Let’s hope not. — Garth

#7 worried sellers on 01.25.12 at 10:56 pm

been hearing alot of talk from people who are looking to sell since they can not afford the payments. People are maxed out and unable to keep up. BIL has been talking about selling as reduced work hours plus increased costs of everything is draining their bank account. He even bought in 2006 and the payments are hard. The reduced rate i believe will not get to many suckers as you hear more and more people talking about how housing prices are crazy and costs of everything is getting to costly.

#8 Jack Lemming on 01.25.12 at 10:57 pm

@ Josef —– you’re second.
Thanks Garth!

#9 T.O. Bubble Boy on 01.25.12 at 10:57 pm

So, 70%+ of Canadian households ‘own’ a house, but 32% of Canadians in their 40s don’t have an RRSP.

I guess this isn’t all the surprising, since 40% of Canadians still don’t know the difference between a TFSA and RRSP.

Does this mean that 8% of Canadian 40-somethings accidentally opened a RRSP?

#10 PermaBear on 01.25.12 at 10:59 pm

Falling salary already a reality in BC…deflation, here we come!

But 3 more years (from now to at least late 2014) of ultra low rate is really concerning to me…

Some people are just so irresponsible……….the humanity…..

#11 Chaddywack on 01.25.12 at 10:59 pm

But Garth……Vancouver media is full of stories about the rich Chinese coming for New Year’s! One realtor even said that he had 4 showings this week all to Mainland Chinese Buyers!!!!!

#12 Dan from Richmond Hill on 01.25.12 at 11:00 pm

So what is the bigest danger: deflation or inflation?

#13 R on 01.25.12 at 11:00 pm

A man with a Hummer and cowboy boots who uses aubergine to describe a colour. That and the portfolio, no wonder the ladies swoon.

#14 Devore on 01.25.12 at 11:01 pm

The change is a profound one. Getting rich is out. Coping is in.

Pretty soon people will rediscover life can be wonderful without a monster mortgage, maxed out credit cards, and HELOC-financed vacations, and that a house, is just a place to live, not a pissing contest.

#15 Lorne on 01.25.12 at 11:01 pm

Financial Advisers….from yesterday:

Since Financial Advising is also a business…someone will eventually offer this deal…maybe at 1.5 or 2% if the portfolio makes a profit….and zero, if the portfolio does not make money….and immediately pick up many clients from even the 1% advisers

Those who think it’s all about performance make a mistake. Be careful. — Garth

#16 Renters Revenge on 01.25.12 at 11:02 pm

“Richness is: All Around You.”
They really are baiting the 99% aren’t they.

#17 PermaBear on 01.25.12 at 11:04 pm

http://www.vancouversun.com/business/High+paying+jobs+decline+self+employment+increases/6052166/story.html

As per post #10…

#18 Rex on 01.25.12 at 11:04 pm

The bearded one, Ben Bernacke, said today that interest rates will not be going up until at least 2014. Read that as interest rates will NEVER go up.

It goes to show you why predicting the future is a loser’s game. Garth is on record predicting higher rates just around the corner. It does not matter what Mark Carney wants, Ben is calling the shots and he can do whatever he pleases.

#19 Peter B on 01.25.12 at 11:05 pm

A fool and his money is easy parted. Some richer fool paid 8 million for a Calgary Condo that isn’t even build yet. Wonder how much it will be worth after the building has it’s first bedbug infestation as most high density condos do.

One more funny think this condo is in the East Village (now re branded bridges) right near the posh Calgary Drop in Centre. A part of the city that is traditionally know for empty mouth wash bottles and a population prone to liver disease.

http://www.calgaryherald.com/columnists/Luxury+Calgary+condo+sells+record+million/6048602/story.html

#20 Mr. T on 01.25.12 at 11:08 pm

Please help, I am addicted to this blog! same message everyday yet I can’t seem to miss it. What is wrong with me? Maybe I need this site to cure my horny addiction to real estate. Thanks Garth!

#21 Fifty Percent Correction Predictor on 01.25.12 at 11:09 pm

Don’t raise the rates. Just give us two or three more years. That’s all we ask for. Then we will get out of your way.

Just let us finish building all the condos in GTA, then you can raise the rates as many as you want, our dear leader.

#22 Josef on 01.25.12 at 11:11 pm

#8 Jack Lemming on 01.25.12 at 10:57 pm
@ Josef —– you’re second.
Thanks Garth!

@ Lemming

You cheated!!! I hope your house drops by 50%.

#23 vatodeth on 01.25.12 at 11:12 pm

More Canadians in low-paying jobs!!!

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/more-canadians-in-low-paying-jobs/article2314165/

Garth, you’ve called this part of the great slow unwinding. I hope you can maintain your modesty! Everything is cyclical. You’ve observed, researched and complied an accurate outlook of the future thus far. I’m sure it has evolved, but you’ve been great. So many negative factors hitting us at once.

I’m prepared for this rocky ride! And I’m gonna ride it and come out ahead! Thanks brah!

#24 DoomedinSask on 01.25.12 at 11:13 pm

They are finally starting to realize this isn’t sustainable in Sask…a little late perhaps?

http://www.leaderpost.com/Incomes+Sask+housing+costs/6049441/story.html

#25 T.O. Bubble Boy on 01.25.12 at 11:15 pm

When were there ever high-paying jobs in Vancouver? Back when there was a NBA team?

#26 Mr. Lee on 01.25.12 at 11:16 pm

Excellent blog post. To the point

Nothing more to add as you said it all the the way it should be said.

#27 Matt on 01.25.12 at 11:17 pm

Garth,

Like the blog, and usually my views line up with yours. But don’t you think the inflation that these low rates will eventually breed will actually help those foolish enough to plunge into real estate in the last few years?

Inflation wipes out savings, but those who have thrown all of their net worth into real estate don’t usually have much in savings. No, it’s folks like us who have been biding our time who will pay that price. Historically high inflation would actually be good for those with a mountain of debt. Which makes these low rates the equivalent of a bailout, yes?

Or am I missing something?

#28 Soylent Green is People on 01.25.12 at 11:19 pm

“The impact of a softening pace of job creation is exacerbated by a worsening level of job quality in the Canadian labour market,” the bank’s economists say in their analysis to be released Wednesday.

That double-whammy hit the pocketbooks of Canadians. As both the quantity and quality of employment fell, “it is hardly a surprise that real disposable income was unchanged in the first three quarters of 2011 — the worst showing in fifteen years,” they said.

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/more-canadians-in-low-paying-jobs/article2314165/
.
.
.

#29 Jack Lemming on 01.25.12 at 11:26 pm

@ Josef
Sorry no house, no job, no portfolio, no future — just this blog and waiting for the rest of you to catch up.

#30 NoName on 01.25.12 at 11:28 pm

MIST READ

http://www.businessinsider.com/you-simply-must-read-this-article-that-explains-why-apple-makes-iphones-in-china-and-why-the-us-is-screwed-2012-1

#31 Comrade-Conrad on 01.25.12 at 11:30 pm

Garth,

What is the possibility that we could have a couple of decades of low interest rates?

Take a look at this chart:
http://www.bankofcanada.ca/wp-content/uploads/2010/09/selected_historical_page1_2_3.pdf

Almost 3 decades of low low rates.

Is this how it has been in Japan for the last 3 decades, rock bottom rates and falling house prices?

Just had a talk with my mom the RE agent. Edmonton is heading for a boom soon or so she says. Going to look at rentals with her, I do not want to bye.

I have spent the last 2 weeks thinking about purchasing a home, and I read your blog daily and that of others, and the conclusion is that the housing prices in Canada are looking a lot like the run up in the US and A, just the propagation delay for the collapse is years.

After reading all this information, and trying to plan to buy a house, with much fear in my heart of a plunge in prices, with the memory of my leverage investment portfolio plunging 50% a few years ago after reading peoples warnings that such a think would occur, I remembered that I said when houses are price at $150 to $180 a sq foot then that would be the time to purchase a home. And if they go lower then that awesome!

Thank you for being the lighthouse is the sea of financial stupidity!

#32 Junius on 01.25.12 at 11:31 pm

http://www.yattermatters.com/2012/01/vancouvers-divine-numbers/#comments

My monkey is bearish. And cuddly:-)

#33 chubster on 01.25.12 at 11:32 pm

the economy is perfectly capable of healing itself. it’s the intervention that prevents this from proceeding. central banks lower rates to backstop crony institutions from liquidation, as they rightly should be. couple of good segments: bill moyers with david stockman and gretchen morgenson

http://tinyurl.com/7gqthba

#34 gutZ on 01.25.12 at 11:33 pm

GT

I recall many posts (years) ago that you said our situation was not Japan. Your 2012 predictions, only weeks ago, called for minor but rising interest rates in 2012. Courageous as you may be, and I applaud you for it, this shows how difficult, if not damn near impossible, it is to predict the future with much degree of accuracy, even with a good grasp of the macros. I am not sure you are wrong, but many unanticpated curve balls are constantly thrown at us. Thus liquid and conservative are two principles minor league investors should follow in these uncertain times.

I did not say we are Japan. I did suggest that US monetary policy shows Japan is a big topic in Washington these days. — Garth

#35 Don on 01.25.12 at 11:33 pm

http://www.cbc.ca/news/canada/british-columbia/story/2012/01/24/bc-year-of-dragon-real-estate.html

Funny thing – no comments section when I checked?

#36 Paully on 01.25.12 at 11:34 pm

Every night I open up this blog and say to my wife: “let’s see what Garth has to say tonight.”

She says “Let me guess…he says that we’re screwed!”

And I read for a bit and then I say: “How did you know?”

#37 East Van on 01.25.12 at 11:35 pm

The Nikkei stock index hit its all-time high on December 29, 1989 when it reached an intra-day high of 38,957.44

Today it is at 8,838.25

How is this an escape from falling real estate prices?

#38 disciple on 01.25.12 at 11:36 pm

I would agree with an eventual 80% fall in prices. Just like in Japan. Pareto Principle. 80/20 rule. I know this is not Japan but math and insanity are border-less, n’est-ce pas?

“And with as few calories as half a juicy grapefruit” – 1950’s Commercial for Coca-Cola with Cocaine.

http://www.youtube.com/watch?v=EMWhNlx4Msg&feature=youtu.be

#39 kc on 01.25.12 at 11:38 pm

12 Dan from Richmond Hill on 01.25.12 at 11:00 pm

So what is the bigest danger: deflation or inflation?

Can you compare 1933 and 2007?

1933 bankers unemployed… 2007 you’re richer than you think… can you see the difference?

#40 Cookie Monster not Fred Flintstone on 01.25.12 at 11:39 pm

#191 Dumb-dumb?

I’m the Cookie Monster not Fred Flintstone.

The oceans absorb CO2. Google it. Here’s one result.

http://harvardmagazine.com/2002/11/the-ocean-carbon-cycle.html

Who’s the Dumb-dumb now!

#41 LJ on 01.25.12 at 11:39 pm

I believe that “The Ben” promised to keep rates at around 0% for nearly 3 years, not just 2.

Anyhow, any Boomers hoping to retire, or counting on their plans that are heavily invested in bonds, will start jumping ship when they see that their returns are not keeping up with inflation. In short, anyone saving money right now is A) screwed or B) forced to go into stock assets before their yield goes to zero also.

And, for the umpteenth time: Your house is not an asset, it is a liability.

#42 Renting and loving it on 01.25.12 at 11:44 pm

Take heart Garth, I think your message is getting out there.

I had dinner in a Korean restaurant tonight and couldn’t help but overhear one of the guys at the next table lecturing his table-mate. It was almost as if he was reading from a Greater Fool script. Shun purchasing a house, forget GICs, tell [email protected] to get stuffed, liquidity is key, preferreds and ETFs are where its at and taxed at a much better rate. All the talking points covered.

I was going to ask him if he was a “blog-dog” and see if he made the connection, but he left before we did.

Agreed about todays events. Things are getting interesting, that is, unless you’re one of those that are going to be left holding the bag.

#43 Keith in Calgary on 01.25.12 at 11:45 pm

Garath…..

The story line of you post makes me wonder just who really sponsors “Till Debt Do Us Part”……host by Gail Vaz Oxlade on the SLICE channel.

#44 Dan from Richmond Hill on 01.25.12 at 11:47 pm

#39 kc on 01.25.12 at 11:38 pm

You mean, it will be better for average Joe when we will see unemployed bankers?

#45 sam.i.am on 01.25.12 at 11:47 pm

“The accumulation of debt has been historic. Without growth, employment and fatter paycheques, how will it be paid back? ”

I’m going to go out on a limb and say some of it won’t be.

#46 Nostradamus Le Mad Vlad on 01.25.12 at 11:48 pm


“At the Bank we know you’re screwed. But we care enough to screw you out of even more money. They’re the last resort of central banks scrambling to keep an economy from sliding into deflation. This could be worse than anticipated. But without more jobs and wage gains, housing languished. Totally worrisome. And are something to fear do not for a moment underestimate the impact on Canada. But it will not change the outcome.” — That’s because no one knows what tomorrow brings.

By Looking On The Bright Side Of Life, the advice you have given here will be first class for those who live an adequate lifestyle. We could end up being Riders On The Storm, watching events of the world happen as they will. Nothing we can do about them.
*
Oil Spills First, the tub in Italy sank, then this one and today there was an oil spill in Abbotsford. Does Harper think the pipe he wants to come from Alberta to the coast will be built? Double Diamond Recession Cameron says it’s not his fault; 4:45 clip Obomba threatening China; 2:51 clip UK debt hinders recovery (surprising); JPM We’re nice! Honest! We’re the good guys! Obomba Three years in, 21 tax hikes plus other links; Iran Embargo “All the US/EU oil embargo against Iran can do is wreck the already fragile economies of the US and EU. China has already contracted for additional supertankers to bring more of Iran’s oil to China, to power their manufacturing growth (and re-sell refined products back to Europe at a huge profit). This is why the US and EU, having hoisted on their own petard/embargo, have to find an excuse to blitzkrieg Iran and take the oil fields, while making it look like Iran’s fault, to forestall Russia and China entering the war on Iran’s side.” wrh.com; Tax Evaders renouncing US citizenship; Steel Layoffs in UK;
*
Food Allergies Lady blinded by them; Iran Remember Eduard Shevardnadze? Here is the six o’clock news, read by George Orwell; Gluggle “Targeted ads I do not mind, but if they are altering search results for paid advertisers, then they are potentially altering search results for the government, and that is a good reason to stop using Google’s search engine.” wrh.com; Gluggle “Google will soon know far more about who you are and what you do on the Web.”; Class Warfare is another false paradigm; Libya Just like AfPak, Syria and countless others, more progress.

#47 Aussie Roy on 01.25.12 at 11:59 pm

Aussie Update

As the carnage continues, many here still think there is no bubble. Like a bad curry, they expect this down turn to pass, quickly.
REPOSSESSED homes are flooding the market with properties being offered at heavy discounts – some selling for just a quarter of their previous sale prices.

http://www.news.com.au/money/property/cut-price-homes-on-the-market-in-australia-as-receivers-order-fire-sales/story-e6frfmd0-1226252424356

The southern capital’s rental vacancy rate has risen to 4.4 per cent, the result of a surge in apartment building and slowing population growth.

http://www.theage.com.au/business/melbourne-full-of-empty-homes-20120125-1qhn7.html#ixzz1kX46Xfz4

Property buyers strike continues where prices are still too high.

Don’t Buy Now! Property Buyers Strike

https://www.facebook.com/dontbuynow

Ex Treasurer says “Property crash could hurt big four banks. Massive ‘property crash looming’
Australia could end up like EU – Costello

AUSTRALIA will end up in the same economic position as Europe if the government doesn’t start to curb spending, says former Liberal treasurer Peter Costello

http://www.news.com.au/business/australia-could-end-up-like-europe-peter-costello/story-e6frfm1i-1226252080394#ixzz1kX7wOS5q

http://www.news.com.au/money/property/property-crash-could-hurt-big-four-banks/story-e6frfmd0-1226252933883

BUILDING products distributor Alesco Corporation has warned its full year profit could fall by more than a third because of the downturn in home renovations.

http://www.adelaidenow.com.au/business/building-downturn-to-hit-alesco/story-e6frede3-1226253564416

Australia has experienced the biggest fall in imports of mining machinery since the global financial crisis.

One of Australia’s largest freight forwarders of mining and construction equipment, Skelton Sherborne, on Wednesday warned that its shipping index figures contradicted suggestions that the resource boom was charging ahead unaffected by global economic turmoil.

In the last two months of 2011 the number of heavy machines imported into Australia dropped by nearly 62.5 per cent from 4000 machines to about 1500, it said.

http://news.theage.com.au/breaking-news-business/miners-stop-importing-machinery-20120125-1qhi7.html

#48 I'm stupid on 01.26.12 at 12:00 am

Thank god I bought my generator and tuna yesterday.

#49 Bottoms_Up on 01.26.12 at 12:11 am

It’s difficult to see how housing can keep going up, especially in the face of mounting job losses.

And these are just some of the ones we’ve heard about recently:

RIM
Bell
Sears
Service Canada
Environment Canada
Natural Resources Canada
Department of National Defense
etc.
etc.
etc.

#50 Chaddywack on 01.26.12 at 12:11 am

#35 Don

The CBC usually disables the ability to comment on sensitive stories. Generally speaking these are stories relating to gang shootings, sex offenders being released on parole, and Chinese buyer real estate propaganda.

#51 City Slicker on 01.26.12 at 12:12 am

#6 Van guy on 01.25.12 at 10:55 pm

News flash! This isn’t Japan.

Let’s hope not. — Garth
————————————————————
And it’s not the US either. Canada will have their own demise and every indicator points to it being worse.

#52 Devore on 01.26.12 at 12:13 am

#27 Matt

But don’t you think the inflation that these low rates will eventually breed will actually help those foolish enough to plunge into real estate in the last few years?

What inflation? When incomes don’t keep up with inflation, that’s a deflation (of purchasing power). Why would that help debtors, whose debts aren’t deflating along with their wallets?

#53 Bottoms_Up on 01.26.12 at 12:15 am

#35 Don on 01.25.12 at 11:33 pm
————————————-
The newspapers typically only open comments when they feel it serves their best interests. It’s definitely ‘controlled’ media, and quite disgusting really.

There are websites where you can go to debate news stories that don’t allow comments.

Here’s an example:

http://www.reddit.com/

#54 dd on 01.26.12 at 12:22 am

Low rates for at least end of 2014… 3 full years.

It means that the Fed is trying to stoke inflation. They are trashing the dollar on purpose.

#55 Matt on 01.26.12 at 12:25 am

#52 Devore

“What inflation? When incomes don’t keep up with inflation, that’s a deflation (of purchasing power). Why would that help debtors, whose debts aren’t deflating along with their wallets?”

Inflation has nearly always been the result of massive money supply expansion. It’s pretty clear to everyone that central bankers are doing their best to avoid deflation and maintain inflation at their targets (2% in Canada). And when you experience inflation, people’s wages increase by definition. But debt stays the same.

I’m not saying I support it (I’m debt free), just that that is what occurs. Countries often try to inflate their way out of their debt loads. The same effect, which is the likely outcome of the central bank maneuvering, is likely to help individual debtors, right?

#56 kc on 01.26.12 at 12:25 am

44 Dan from Richmond Hill on 01.25.12 at 11:47 pm

You mean, it will be better for average Joe when we will see unemployed bankers?

ya bankers, RE agents, stock brokers and ambulance chasers.

#57 Chris on 01.26.12 at 12:26 am

#53 Bottoms_Up

A fellow redditor eh! They even post garth’s articles there: http://www.reddit.com/domain/greaterfool.ca

#58 VICTORIA TEA PARTY on 01.26.12 at 12:30 am

VICTORIA’S SEPIA-COLOURED RE “INDUSTRY” AND OTHER BOTHERS

All good things must come to an end.

Even if it has a striking “metaphorical” resemblance to a yellowed museum photo of a 19th century shipwreck off the west coast of this lovely island.

Called the Graveyard of the Pacific, hundreds of boats, ships and people have died on those vicious coastal rocks during legendary Pacific Ocean storms.

But thanks to modern navigation technology the old graveyard ain’t what she used to be.

SO…

As that one retires, another one heaves into view. Victoria’s very own Real Estate Graveyard of the Pacific!

WHO’D EVER HAVE KNOWN!

Up until about right now the town that brought real estate smokin’ dreams to new and old homeowners, and profits to zillions of small businesses, is rapidly becoming the joint that fun forgot; a town with no identifiable private sector industry that isn’t somehow connected to government largesse or rich old folks.

PERSON THE LIFEBOATS!

Garth; you’re right; there’s still a limited time for speckers here to bail since the gene pool of crazed buyers is out there but also drying up rather quickly.

“RICHNESS, IT’S ALL AROUND YOU.”

That’s right Mr. ScotiaBank.

But its ONLY the banks that are getting rich on the bleached coastal bones of so many financially shipwrecked “homeowners.”

The “all around” yous are left to believe in the Easter Bunny. They’re out of time.

This RE shipwreck will ALSO work its way through Victoria’s “vibrant business lifestyle” of eateries, B&B’s, massage parlours, fingernail polishers, denturists, and other assorted “people services” until the place looks like the Victoria ghost town of 1981! I know, I was there.

ABOUT THOSE FOUR-YEAR LONG RECORD LOW RATES…

Your note of caution that low interest rates are no friend of the working stiff, and investors everywhere, is exactly right.

There is something amazing and alarmingly wrong out there when the head of the most influential central bank (Fed Reserve) says rates will stay low until well into 2014, and that high rates of joblessness and economic stagnation will be with us indefinitely.

IT MEANS THAT THE JIG IS UP! THE JIG BEING THE WAY WE’VE BEEN LIVING!

Between the depression-shackled UK and EU, a slowing China (Baltic Dry Index’s cataclysmic decline is the wakeup call here), ongoing U.S. governmental insanity posturing the American Way of Life, and whatever else economically you want to chuck into this steaming pot of financial ruin, says one thing:

GET OUT OF DEBT NOW!

And the stock market by summer. That’s when those boffo corporations will run out of customers for their products and investors run out of time.

Remember: in the market place there’s the buy side and the sell side. Such a conundrum! It’s a bitch!

#59 Waterloo Resident on 01.26.12 at 12:31 am

Garth; by this summer we will be seeing 1.49% mortgage rates, and home prices in Toronto will be 28% higher on average then where they are now.

This is all due to the fact that the rest of the world is in such a mess that the FED in the U.S. is going to keep rates at zero for the next 300 years. (well, maybe not 300, but it will seem that way.)

Anyways, the truth is that soon people will be buying second homes, third homes, and fourth homes, all because money is free (nearly free), AND rates are at zero. It might be possible that the government will soon be actually PAYING PEOPLE a certain amount to actually go out and BUY A HOUSE, something like NEGATIVE INTEREST RATES ???

Now just imagine that: You go out and buy a $2 MILLION dollar 3-bedroom 2000-sq-foot house in Toronto, and the bank PAYS YOU money each month?

i can see that coming , soon.

#60 Jon B on 01.26.12 at 12:33 am

I’d be interested in learning what really is being discussed and planned for in the top floor offices of the banks. As for the aptly referenced “You’re Richer Than You Think” ad campaign from Scotia; it speaks to the influence banks know they have over the average dumbass. Banksters have made themselves very rich during this debt binge. Can they continue their evil ways throughout a long term deterioration of personal net worth and escalating debt maintenance costs?

#61 CHANGES on 01.26.12 at 12:33 am

I wonder if mainland Chinese investors would leave BC if Jack Layton started to show up at open houses and started a bidding war with them?

#62 Smoking Man on 01.26.12 at 12:37 am

Garth u forgot to mention that jobs are getting shittier, and that lots of folks are going the self employeed road.

The Report said Self emplyeed make less money than full time.

Off cource they do, after psc of the house the car, the boat, the meals, the board meeting in tahitti is written off,
Ya not much income showing, and not much tax being paid.

Glad I’m A POOR SELF EMPLOYED SHLEEP.

#63 nonplused on 01.26.12 at 12:42 am

Hey, welcome to the Tin Foil Hat Club Garth! I knew you were too smart to hold out forever.

But I think it’s worse than you think.

First, if Japan has shown us anything, it’s that ZIRP (zero interest rate policy) does nothing to help. Well, I shouldn’t say nothing, it does avoid the write-down of bad debt. But it does nothing to stimulate the real economy. It turns savers into paupers and destroys capital formation. It drives investment out of the country. It allows bad economic decisions to go uncorrected.

So the economy won’t heal, jobs won’t come back (despite Obamarang’s pleas to the contrary), and real growth won’t resume, at least not here. Maybe in China.

But it’s even worse than that.

ZIRP is not the last resort of the central bankers. Hitting P is. QE2.5 is already underway, and QE3, 4, 5….n are coming. Jim Sinclair has been saying that for years but now even Bill Gross is onboard with that theory. Care to put your credentials up against Bill’s?

The US fiscal deficit is in the process of going parabolic, and ZIRP makes it possible.

But it’s even far worse than that.

Last night, the hopey-changey fearless leader declared war on Iran. Not sanctions this time, war. I can’t remember the exact words, but this isn’t far off: “We will use any means necessary to ensure that Iran does not acquire nuclear weapons capability.” Any means? Like, nuke them first? Is that any means?

So we have a declared hot war. The only question is does it start with a “limited” strike against Iranian nuclear sites, and then we wait for the rebuttal, or does Iran try and pick off a carrier first since they know the strike is coming for sure now. I think the US waits a while to see if Iran can hit a carrier, because the smoking boat and loss of lives will play great as CNN and FOX push the sheeple into accepting all out war. But if Iran won’t go first, the bunker busters go in. Iran has had this coming a long time, and apparently 2012 is the year it goes down.

But it’s even far, far worse than that.

Whether the US goes first or Iran does, it will quickly become apparent to everyone that the only way to keep the Straights of Hormuz open is to use a scorched earth policy against the Iranian military. I expect the US to prevail in no more than a few weeks. But it means Iranian oil production will be offline for a long time. That’s 4 million barrels a day folks! That’s well above OPEC spare capacity.

But it’s even far, far, far worse than that.

China is a major importer of Iranian oil. So is India. So is Greece. So Greece goes bankrupt no matter what, India goes ballistic, and China dumps treasuries in protest. The dollar and the Euro both crater.

So, if you aren’t busy this weekend, hit the Costco and go crazy in the canned food isle. After all, what’s the harm? Food doesn’t get cheaper. And you might not be able to get to the store for a few weeks at some point, assuming they have anything left for you to buy. Think of a US super mart before a hurricane. And once Costco can’t keep up restocking the shelves because people are panicking, it could get really, really ugly.

It won’t last long though, the US will prevail. I’d say have enough food in your house to last a month.

The good news? Afterwards there will be no questions as to whether we should build the Keystone pipeline, develop the tar sands, or use fracturing in oil and gas wells (which we’ve been doing for over 70 years! Sheesh.) now is a good time to go long Canadian oil and gas, but you will have to be patient.

#64 Mel on 01.26.12 at 12:44 am

I have been ready for a long time. I don’t care to wait whatever time it will take. For me, cash flow is KING! I don’t need to own my house to be happy.

House for me is ‘hopefully’ solid waterproof roof over my head. Nothing more. Price is everything. Interest rate is afterthought. If finance supports renting over owning, I will rent for ever, if need be.

I agree, very low interest rates is something to fear. Not something to cheer. It should tell you that our world economy is broken.

#65 Frank on 01.26.12 at 12:45 am

It is different in Canada and the last 3 1/2 years have proven that. Home prices in Canada will most likely cool off, but in no way crash. If someone bought a house in Toronto 5 years ago they will always be ahead. The only danger I see is in the condo market.

We Canadians have been blessed and I do hope that peoples lust will moderate.

#66 BigD on 01.26.12 at 12:48 am

#58 Waterloo Resident on 01.26.12 at 12:31 am

Can I have some of what you’ve had? You passed drunk and delusional about 100 miles back. Next, you’ll start making intentional typos and taking credit for most everything in the world. Oh never mind, we already have a guy for that.

#67 Bottom Feeder on 01.26.12 at 12:54 am

I agree with dd (#54). Bernake knows he has to get U.S. home owners back above water. Inflation is the way to do it and low interest rates are the tool. Add a disruption in oil supply and presto…….late 70’s inflation all over again.

#68 Led on 01.26.12 at 12:54 am

#12 Dan from Richmond Hill on 01.25.12 at 11:00 pm

So what is the bigest danger: deflation or inflation?

Deflation is worse. Inflation happens when people can afford to pay for increases because they make more income and can afford it. What we have is now is stagflation but just for as long as we can afford to keep up with rising food/energy costs. And once we can’t afford any more increases then we will settle into deflation. I figure if gas goes up to $1.50 we are finished.

#69 Van guy on 01.26.12 at 1:01 am

#25 T.O. Bubble Boy on 01.25.12 at 11:15 pm

When were there ever high-paying jobs in Vancouver? Back when there was a NBA team?
——————————————————————-

Yes. When housing was cheaper that lead to a major boom in growing marijuana. Everyone was doing it including firemen, banksters, your neighbor, your uncle, heck your dad (if you’re Asian). Then the boom ended. The new boom created a big profit for these criminals. The underground world in Vancouver grew and grew as competition broke to the streets. Many young asian kids in school dressed in expensive brand name clothes and nice cars funded by their corrupt parents. Yes, money can be made in Van, cuz you don’t get time when you get busted. Hey, why not eh?

#70 CHANGES on 01.26.12 at 1:08 am

Hello Garth
How may I learn how to invest my money the way you suggest on your blog. (starting point for someone new)
I know nothing about the “stock market” or “bonds” or anything you talk about. All I understand from what you write on this blog is that do not buy real estate because it is over valued. Where do you suggest someone young and new start off to understand what you guys are talking about, so I may also invest my money.

#71 Tim on 01.26.12 at 1:24 am

It is different here. It is ludicrous to compare Canada to Japan. Japan has much more corruption and is much more insular. The business community kept things quiet and did not admit many of their failures. They were much slower to respond or even admit there was a crises.

#72 Onthesidelines on 01.26.12 at 1:34 am

Garth wrote: Japan is an interesting case in point (and often mentioned here by those who cheer cheap money). A real estate bubble brought on by lax lending standards, a robust economy, rampant speculation and runaway corporate profits in the Eighties pushed Tokyo prices six fold higher.

Not quite. No discussion of what happened to Japan is complete without mention of the 1985 Plaza Accord which forced the rapid and excessive appreciation of the yen and was the underlying cause of the expansionary monetary policies which resulted in bubbles in both realestate and the Nikkei.

Also, this is not Japan. It’s worse. Japan did not need to borrow from foreigners to contain the mess, and their people had well paying, secure jobs with plenty of money sacked away for when things got worse as, indeed, they did. They had a buffer which arguably is now running out, but neither the US nor Canada has anything close to the national wealth that Japan had when the shit hit the fan.

#73 penpal on 01.26.12 at 1:40 am

The Fed’s low low low interest rate policy is also an attempt to reflate housing prices that have essentially destroyed major US bank balance sheets.

In doing so, it hopes to encourage more lending through those banks to also shore up the economy.

Bernanke is simply doing his masters’ bidding as they allow him to employ his ivory tower economic models to serve the large banks’ interests.

It did not work in Japan nor anywhere else this nonsense has been employed, but what do you expect him to do? Throw up his hands and admit defeat?

American government spending /debt and fiscal and monetary policy are completely out of control and the country will pay dearly this folly.

Unfortunately, so will Canadians, they just don’t realize it yet.

Tick, tock, tick tock……..

#74 Devore on 01.26.12 at 1:55 am

#55 Matt

And when you experience inflation, people’s wages increase by definition. But debt stays the same.

What definition is this? Incomes don’t magically go up by themselves. There is no pressure on wages. Quite the opposite. You are thinking monetary inflation, and for that, money supply in the economy must increase. This is not happening, and if it is Fed’s (and other ZIRP central bankers) intention to do so, they have failed and will continue to fail. Banks would rather lend money to government for a guaranteed 3% than to a small business or to you for 6%. Any additional money injected by government spending is more than offset by deleveraging and cash stockpiling.

#75 Nostradamus Le Mad Vlad on 01.26.12 at 2:03 am


He deserves it (I’m sure); Japan Because of Fukushima (the Stuxnet virus), citizens are screwed; Davos Elephants in the ski lodge? Oblunder With Soros’ help, he is driving the US toward its grave; David Rosenberg Good advice (rent); Fail! As mentioned previously, the west is about to implode; Putin vs. Soros “Putin has also recently confronted Federal Reserve Chairman Bernard Bernanke and told him that the Russian Federation will no longer tolerate the use of individuals like George Soros and Marc Rich in massive foreign currency derivative fraud that is destabilizing the world economy. ”

Zorba’s Payday (not); Super Bowl vs. the market; Reckless rate policy; Netflix Time to take the profits and bail? Buy Gold and Silver; Surreality, believe it or not; Spend Less, which the CPC is incapable of doing; Spread the wealth; 2013 is screwed up time; Eight Industries gone to China, and Seventeen the next ones at risk; About face on Google.
*
Pearl Harbor and Iran False flag? Link in; Regime Change Most Syrians support Assad; Garth and animal lovers — this one’s for you. Weird sounds heard all over the world, incl. Skatch for a few weeks now; 3:15 clip Four things happen prior to a heart attack; CFR and Gingrich “The purpose of the Council on Foreign Relations (CFR) is “to submerge our nation into a socialist, one-world government”, according to an article in the May 15, 1995 issue of The New American, entitled “The Definition of Tyranny”.

#76 PermaBear on 01.26.12 at 2:03 am

#68 Led on 01.26.12 at 12:54 am

I fully agree with you…it is stagflation in some places and deflation in some others….low interest rate won’t change the occurrence of the events about to happen, it just delays them….

And for those thinking that housing price will go up 200% because they hold the rate for 3 years more? How can that be when people are earning less (both investment and career) and a lot of people are going to retire?

#77 Cookie Monster not Fred Flintstone on 01.26.12 at 2:05 am

#191 The Ocean and CO2 on 01.25.12 at 9:29 pm

Dumber than you think, smarter than you look!

Even if the oceans do expel CO2, as you said yesterday, that would make the problem worse! What a dumb argument against global warming!

That’s why we sit in greenhouses at the beach because it’s too hot in the shade.

And since when was an over-simplified argument a flaw in an argument? Please complicate it for me so I can seem smart too. haha.

—–
Hey Garth, you still think there’s no chance for the USD going to zero in our lifetimes? Odds are getting better! Better get your gold on, Au stocks are looking good, still very cheap cheap.

#78 Ozy - Obviously inflation is worse on 01.26.12 at 2:06 am

#68 Led – you are wrong or do not work hard for your $$$

Obviously inflation is worse than deflation, because robs savers. Now, if you are the debt king or queen, deflation will kill you, but it’s a good thing for people that deserve thier savings to grow in value (buy more)

#79 Retired Boomer - WI on 01.26.12 at 2:14 am

Inflation, Deflation…stagflation Obamanation? Geez!!

As a new retiree, inflation is deadly to a more or less fixed income. Deflation I have had little experience with, but as I see it those with high debt get crushed either way.

Bernanke’s statement about interest rates ASSUMES the US will have Greater Fools of our own, who will continue to lend this nation their excess savings for a pittance for the long term. Gee, would I buy the Bonds of a company who needs to borrow .30 cents of every $ it is spending to finance itself? Heck no. We will have to inflate our way to paying off 15 TRILLION in DEBT. We can’t seem to find legislators who understand the word “NO” when it comes to spending, or setting a “FAIR” tax rates on both earned, as well as unearned income. MY FED tax rate was slightly higher than Mr. Romney’s and, trust me, I didn’t earn 20 million in a lifetime, let alone one year.
It will be interesting to see how long this charade keeps up before we are one of the PIIGS of Europe.
Bonds currently pay next to nothing, but many equities -quality equities pay MORE than 10 yr treasuries.
-At least for now, and you might get price appreciation.

The dirty little secret is inflation in the US last year was much closer to 6% than 3% based on items THIS house buys. That’s food, gas, utilities, insurances, entertainment and taxes. Most items that are mfg (Chinese Crap) didn’t change much at all, but that is a much smaller percentage of our consumption.

Taxes and insurances actually decreased somewhat in 2011.

It is all based on WHAT, and WHO is doing the measuring.

Low interest rates appear to be setting us up for a period of the doldrums. Deflation would be FATAL given our DEBT level as a country. As a cheap retiree looking for interest income, and investment opportunities bring on the DEFLATION -at least for a while.

#80 Canadian Watchdog on 01.26.12 at 2:16 am

Scumbutt is, F plans to tighten rules on self-employed borrowers, or perhaps wants more renters on the market. In any case, I can now project F’s target. http://www40.statcan.gc.ca/l01/cst01/labor64-eng.htm

#81 Arshes on 01.26.12 at 2:25 am

Garth, what do you think about the age factor in regards to the real estate crash? Isn’t the typical real estate cycle – young person gets out of college and rents, then hooks up with sig. other, couple purchases condo/townhouse/starter home, hoping to climb the property ladder, then sells and purchase a SFH, which is being sold by a Boomer who is looking to downsize. That boomer goes to buy a condo/townhouse/smaller house. But the cycle is broken right now. Young people aren’t renting thier buying, hoping to climb the property ladder faster, but eventually there are no more buyers, they can’t sell and buy a condo/townhouse/starter house. The couple can’t sell their condo/townhouse/starter house, because the young one can’t sell his/hers and buy the SFH…..etc….

The market is saturated, no new buyers to perpetuate the cycle. I’m guessing that’s why it takes 10+ years for RE crashes to recover, the ones that are going to start the cycle again are still in high school.

Any thoughts, some are saying that is why Japan is in the RE funk its in, the aging population. 40% (I think) are near or approx. 60. And their aren’t enough young ones to buy the RE available.

#82 Canuck Abroad on 01.26.12 at 2:47 am

“…the guys in charge of American monetary policy have announced two more years – totally unprecedented. Totally worrisome. Is this an admission what happened to Tokyo could replicate in Miami or southern California?…”

*****

Absolutely. America wilfully chose the Japan solution. When the crisis took hold they had two paths to choose from: Japan or Sweden.

The Swedish solution would have involved nationalisations of banks and massive write-offs of toxic debt. The pain for America would have been terrible, but possibly brief. It could be over by now. The bankers would have hated it, and it might have been a hard sell to the average American who views government interference as socialism or communism.

For whatever reason, America chose the Japan solution. Changed FASB accounting rules so mark to market no longer applied to banks. Let them hide their toxic worthless assets instead of writing them off. Gave all the criminal bankers a free pass and guarantees of no prison time so the populace would not notice there’s a problem. They kept the banks alive despite their Terry Schiavo state in the hopes that some day, given enough inflation and green shoots etc etc the would recover. This is precisely the action Japan took with its banks and Japan’s outcome is there for all to see. Not only did real estate never recover but neither did their stock market. Pull up a long term chart and take a look.

America has chosen the Japan solution and will get the Japan outcome. The question really is, “What choice will Canada take when it’s real estate market blows up, and what outcome will it face: Japan or Sweden?”

#83 Not Wondering Anymore on 01.26.12 at 3:02 am

Consistantly low interest rates have had no effect on real estate prices, which have continued a prolonged decline in Japan, the US and now, Europe.

Next up (or rather, down) – Canada.

#84 Canuck Abroad on 01.26.12 at 3:06 am

63 / nonplussed – There will be no war with Iran. Let’s take a look at the wars America “won”. Granada? Panama? Ummm, so okay, America is capable of “winning”when the country is tiny and helpless. America couldn’t even win Iraq and is still fighting Afganistan – you think they have a chance of a good outcome in Iran? Nope. Furthermore, Russia and China and a bunch of other countries rely on Iran for their oil. Choking off their oil supply will be perceived by them as a direct threat to their sovereignty, and all of a sudden America will be facing war with China and Russia too. Still like those odds? Why do you think the war games were recently called off and the rhetoric has cooled? Possibly because America knows (1) they won’t “win” anything (2) they can’t afford another war and (3) Iran is not really working on a nuclear weapon, which was recently confirmed by Leon Panetta and you can find the video easily on youtube. So, enjoy your food supplies, make sure you buy things with a very distant sell-by date.

#85 Ronaldo on 01.26.12 at 3:24 am

#22 Josef – If you have nothing to offer this blog, what are you doing here? How old are you, 13?

#86 villain? on 01.26.12 at 4:10 am

Harper declared in his speech at Davos, Switzerland:” the economy remains his top priority and an upcoming budget will be a “significant milestone” for Canada”.
He also stated that:” – Capitalism, despite criticism, is still the best way to create prosperity — but must be bolstered through proper regulations.”
And that Canada is looking to diversify trading worldwide; especially in Asia’s growing economy, plus closing a free-trade deal with Europe.
“Canada is ready to diversify and sell its oil anywhere in the world.”
———————————————————-
He also will also be talking to European leaders, urging them to finally fix the debt crisis that is gripping the Eurozone before it becomes a global contagion.
As where Germanys Angela stated that;
“European countries would not be able to erase their debts overnight.”
——————————————————
“The IMF slashed the outlook for world growth while forecasting a damaging recession in Europe that will leave no country, including Canada, unscathed.”

Other delegation members to this love fest are:
Finance Minister Jim Flaherty;
Foreign Affairs Minister John Baird;
International Trade Minister Ed Fast;
and governor of the Bank of Canada Mark Carney.

All will be good!

#87 Aussie Roy on 01.26.12 at 4:30 am

Waterloo Resident on 01.26.12 at 12:31 am

Garth; by this summer we will be seeing 1.49% mortgage rates, and home prices in Toronto will be 28% higher on average then where they are now

Now just imagine that: You go out and buy a $2 MILLION dollar 3-bedroom 2000-sq-foot house in Toronto, and the bank PAYS YOU money each month?

i can see that coming , soon.

…………………………………………………………………….

I think your shoe size is a larger number than your IQ.

I see you also realising this, soon, by this summer?.

#88 Last (really middle of the pack) on 01.26.12 at 4:41 am

How is getting individual stock tips from a magazine low risk? — Garth

Point noted Let me rephrase:

If you have a good amount of liquid capital than hiring an for fee investment advisor (like Garth) can be very very helpful. i’ve read his column for a long time and he is very knowledgeable.

But if you don’t have much capital or don’t know much about investing than Canadian Money Saver is a good starting point, is ad free and focused 100% on Canadians.

Regarding individual stock tips from a magazine, it’s a simple tried and true easy to understand plan based on owning dividend stocks. Low risk assuming of course that you not too much into one area (Real Estate Bonds etc)

#89 villain? on 01.26.12 at 4:41 am

Sorry, forgot to add the link:
http://www.vancouversun.com/business/Harper+tout+capitalism+Canadian+World+Economic+Forum/6048709/story.html
—————————————

Anyway, so now I am lost. Looking to buy a house on Van Island, should I wait it out and hope for lower house prices, or should I just go ahead and buy.
If I wait, prices may drop, but with inflation/deflation, so will my cash buying power. Mortgage rates do not apply so no matter there.

Garth?-anyone please?

#90 truth hammer on 01.26.12 at 6:00 am

Yeah..but at least in Japan they don’t have to tear down whole subdivisions like they do in Ireland.

http://news.bbc.co.uk/2/hi/europe/8653238.stm

#91 Ronaldo on 01.26.12 at 6:03 am

To give an idea at how lower mortgage rates have assisted those who purchased up to the peak in housing prices which occured in the spring of 2007 in Alberta for example.

My son purchased a single family home near Red Deer in summer of 2007 near the peak in house prices. A basic 3 yr old home 1150 s.f. full finished basement for $295m. Peaked at $320m.

At the time, banks were offering “prime minus” mortgages as the prime rate was at 5.75%. He was able to get a prime minus .75 variable, 5 yr term. Mortgage was 270,000.

For the first few months annual interest was 15,525 or about 1294/mo. In July the rate went up .25 to 6.00% and increasing the annual interest to 16,200 or 1350/mo.

In Dec. of 07 the rate was reduced back to 5.75%. In Jan. 08 rate reduced .25 to 5.5% and 5 more decreases up to December of 08 took the rate down to 3.00% reducing his annual interest to $8100 or $675/mo.

In January of 09 rate reduced a further .5% to 2.50 and by April of 2009 rate had been reduced to 1.75% making his annual interest cost around $4725 or $393.00/mo. A drop of $957/mo in 18 month.

From that point until Sept. of 2010, the rate had gone back to 2.5% and stayed there until now making his annual interest costs roughly $6500/yr. or about $9700 less than when he initially got the mortgage.

The price of the home in the meantime had dropped back to around $260,000 but has since regained its value and now roughly back to where it was when he first bought in 2007.

The savings in interest costs from the initial mortgage when he bought the house have been a bit of a windfall for him and enabled him to reduce the mortgage amount considerably in that time.

So, for those individuals who stuck with the VRM, they are lauging all the way to the bank right now. For those who fixed in at 6%, they helped the banks make very nice profits.

He is now up for renewal on his mortgage and will be able to obtain a fixed rate 5 yr. for around 2.75% for annual interest costs of around $6700/yr. or around $558/mo. A similar house rents for around $1400/mo.

Even if housing prices were to drop from this point, the savings he has achieved in the 5 yrs since he bought and the savings going forward would more than offset the decline in price imo.

Since buyers prior to the spring of 2008 purchased and qualified at rates of 4.00% and up to 6% or more, this latest offer by the banks is like a gift and they would be fools not to take it if they plan to remain in their homes for several years.

For those people who bought in the bubble areas of Vancouver, Victoria, Toronto at the low rates and peak prices will not see any gains even with locking in to the BMO teaser rate of 2.99%. These markets will likely see a flood of listings coming onto the market by the speckers and others who have not been successful in selling their properties in the past few months.

This may end up being the final nail in the coffin for the inevitable bursting of the bubble. With so many listings coming into the market and a shortage of qualified buyers, the markets will be ripe for a major plunge by the summer of 2012. Only time will tell.

#92 Last (but a bit further down than before) on 01.26.12 at 6:08 am

http://vreaa.wordpress.com/2012/01/25/maple-ridge-renter-comes-out-ahead-of-buyerseller-over-5-years/

Sadly very few people save the difference when renting is cheaper

#93 Kip on 01.26.12 at 6:33 am

What? So we get more of the same? Governments around the world printing money?

That’s good if you own but bad if you sold and are living in ma’s basement based on bad advice from this pathetic blog!

The US Fed is getting ready to start the engines, I mean printing press.

#94 Kosta on 01.26.12 at 7:14 am

It’s the beginning of the end!!!!!!!!!!!!!!!!!!!!

Housing prices are set to free fall!!!!!!!!!!!!!!!
http://www.theglobeandmail.com/report-on-business/top-business-stories/canadian-home-prices-dip-for-first-time-since-fall-2010/article2314582/

#95 Newbie Investor on 01.26.12 at 7:42 am

Translation: At the Bank we know you’re screwed. But we care. Come in for a free tissue. – Garth

I love it!!

#96 sam.i.am on 01.26.12 at 7:44 am

Not Canada, but still interesting.

This story goes contrary to Garth’s earlier assertions that rents fall with the housing market.

Boston Apartment Rents at All-Time High
http://www.boston.com/realestate/news/articles/2012/01/26/home_prices_may_still_be_down_but_boston_rents_hit_an_all_time_high_in_2011/

Not what I asserted. — Garth

#97 Bigrider on 01.26.12 at 7:53 am

News flash this isn’t Japan.

Garth- ” let’s hope not”

If you even remotely think that a deflationary disaster like Japan is around the corner, then ask the guy with the orange shorts how long you can lock into a GIC .

Bad advice. If we have asset deflation we’ll still have price inflation. — Garth

#98 NoName on 01.26.12 at 8:02 am

#92 plz add property tax, and monthly payment
To your calculations and show us a real numbers. Renter does not pay for those 2 expences, and dont forget to throw in price for new garage door opener as good measure. I rented before we purchase our house in 2005 and I’ll tell you one thing I learn, my total month obligations for rent was 1300 back in 2005. (heat, hydro,and parking included) when we moved in house mrtg payment was 1100 + 300 tax + 120 gas + 110th hydro and new garage door opener 250. Dont get me started with furniture…

#99 brad in saskatoon on 01.26.12 at 8:20 am

hey all.
so was wondering what the impact on the canadian economy will be if our houseing does fall? will it effect canadian stocks, like oil or uranium or even potash stocks. it is just in these times where do you want to put cash besides under your mattress?
also with no mortgage on principle residents and and 1 rental property , would it be smart to borrow money against them and invest in markets that will be yield higher than the 3.0% you can borrow at now, i would like to have my money working for me .
whats the thoughts from all you smart investors who now how to make a dime turn to a quarter.
i see i can get good returns back from bank preffered, but my only problem is why does the price range on bank prefs from 25.00 up too 28.00 per share i understand some pay higher dividends but if the bank calls these back the pay book value of 25.00 for them , any thoughts on these and on etfs would be great as the yields look high on etfs but am i missing something i seen bmo has a etf that was yielding like 7-8% now why would they be willing to lend money at 3.0% and pay 7-8 % on a fund .
i must be missing something .
thanks all
brad

#100 pbrasseur on 01.26.12 at 8:33 am

Garth – For Canada it may be worse than you think indeed.

But it’s not because of the US, not because of Europe or any other places. It’s because of us. Because our own productivity sucks.

Misallocation of capital (everthing goes to RE) is part of the problem.

#101 GTA Girl on 01.26.12 at 8:37 am

#71 Tim;

Dear Tim, it may be true we are less like Japan in some ways. Japan was smart enough to be insular to keep out China interests in Oder to retain their sovereignty.

But do not for a minute believe Canada is any less corrupt. We have the worlds drug trade in our hands, being one of the biggest drug hubs. Money laundering is rampant. There’s a reason Toronto and Vancouver have so many Bentleys, condos and high end retailers.

White collar crime in Canada is often ignored or receives a slap on the wrist.

The Italian government says that outside its own borders, Canada is 2nd, and refuses toco-operates. Organized crime deportations.

http://www.nationalpost.com/news/story.html?id=78bf4dea-ad71-4ecb-ba1d-d6c18fb311cf&k=20772

The RCMP refused to offer protection to the Italian prosecutor who is investigating organized crime and is offered security in every other city he visits.

Then look at some of the dealings with our federal govt and the Montreal port. Or the donor lists of some of our federal ministers.

Let’s not forget the recent SNC Lavalin/Gaddafi stories.

Canada is no longer “Canada the Good”

The corruption is rampant. And the government is feeding us stories and partisanship to cover the tracks

#102 House on 01.26.12 at 8:47 am

Aren’t we lucky to have a Minister of Finance and a Governor of the Central Bank who are smart enough to manipulate monetary and fiscal policy so as to achieve a soft landing. ( This is sarcasm. )

#103 OttawaRenter on 01.26.12 at 8:51 am

Bahahaa! Great pic, Garth. I have this mental image of you sneaking around in urban camoflage sliding effortlessly and unseen through hospital corridors and private birthday parties with a pen camera hidden in your pocket protector, waiting patiently for those priceless moments so you can jettison them into infamy.

#104 househornyhousewife on 01.26.12 at 8:54 am

Garth,

All this means is that what went unrealistically too high will now come back down to reality. This is not at all surprising. If it happened in Japan and it happened in the US, what makes us immune ? Our wonderfully solid banks ?! Our government that guarantees consumer real estate debt ?! Spider Man ?! Wonder Woman perhaps ? … Come on ! We are just as vulnerable as those other economies. These nations also happen to be our trading partners which also makes things much worse for us.

I am quite sure that Europe is toast for at least the next while and the U.S. will also take some more time to crawl out of its hole. The middle east … well that’s always been a mess and will continue to be so for quite some time. Australia is going through the same bursting bubble so it has no magic immunity either. Africa … not likely to come into much growth in the near future. That leaves the Indian and Chinese economies to come into their own “industrial age”, that is if they are going to follow the same path as the other so called “wealthy nations”. This is perhaps where we will be seeing economic growth occurring, as more of this “under the poverty line” population moves into bigger cities and starts earning more money making all of those Walmart and Dollar Store “chachkas” that a lot of us buy (and will be buying since we won’t be able to afford better). These people will become bigger consumers of goods and eventually services and I have a feeling that companies will be flooding into this market if they want to see growing profits. Our western economies will be shrinking while theirs are growing … much to the detriment of our planet since this means more cars, more destruction of natural habitat and more consumer garbage.

This is not necessarily a gloomy outlook on the future. Just that things will be changing quite drastically over the next little while. I personally have my money on the US and would look to them to see what they come up with. Already we can see a drastic change in the population’s way of thinking .. the reigning in of debt and more careful spending habits are taking precedence over instant gratification at any cost. THIS is what Scotiabank is seeing and realizing where WE will be in a very short time. All you have to do is to look over the border at our brethren. THAT’S where we are headed. Those of us that are prepared will manage to weather the storm and those that aren’t are in for a very rough ride. Survival of the fittest.

HHHW

#105 Buyright on 01.26.12 at 9:01 am

Although I agree with most of what you preach, I think we are diff than Japan.
We have
Oil
Lumber
Potash
Minerals
and lots of Land

#106 Bond junkie on 01.26.12 at 9:02 am

Garth, shhhhhhhhhhhhhh, don’t tell anyone.

BMO changes Low-Rate Mortgage offer to 3.49% – Discretion will be available to allow smooth transition

TORONTO, January 25, 2012 – BMO announced today that it is changing the following rates effective January 26, 2012:

Fixed Rates: To: Change:
5 year low rate fixed closed 3.49% +0.50%

#107 daystar on 01.26.12 at 9:03 am

The more people flip and buy homes at current valuations, the more and more at risk Canadians become to rate hikes. Emergency rates not only delay the inevidable but make for a harder landing when the time comes to take our lumps. It leaves one to ask, how much impact will the fed rate have on the BoC rate over the next 2 years to come? My thoughts are that Mark Carney won’t have to raise rates while fed rates remain artificially low but I’m open to hearing why I could be wrong. Thoughts anyone?

#108 Toon Town Boomer on 01.26.12 at 9:08 am

I would like to know the same thing poster#70 (Changes) asked, where do you begin?

#109 Alistair McLaughlin on 01.26.12 at 9:19 am

#55 Matt, inflation is very uneven. Not everyone’s incomes will keep up. Inflation (much like the inflation in the RE market of the past decade) tends to redistribute wealth, often in very arbitrary and unfair ways. It is this uneven and arbitrary effect on wealth redistribution that makes even a moderate amount of inflation (i.e. anything greater than 3%) so insidious and so damaging to long term economic prospects.

#110 jess on 01.26.12 at 9:20 am

labour arbitrage and tax rules subsidized offshoring
a bunk bed in a dorm, 57cents /hour , QUICKLY wash biscuit down with cup of tea.
Hurry up and innovate one must get their product to market quickly!

…explain why the ECB required the Irish people to bail out a bank’s uninsured creditors

#111 TurnerNation on 01.26.12 at 9:31 am

omg – 800k (if you include the 2 land tfsr taxes) for a small 100 yr old Leslieville tar paper shack! Check the outside picture.

http://www.forsalebyowner.ca/listing/house-for-sale-toronto-ON/2152

#112 TurnerNation on 01.26.12 at 9:41 am

Bidding war on obtouse box house:

http://www.torontolife.com/daily/informer/to-market-to-market/2012/01/25/rohan-walters-house-sold/

Just a week after hitting the market, architect Rohan Walters’ house on stilts has already sold to a couple with two young children, who reportedly paid over $400,000 for the property (a chunk more than the asking price of $349,000). Despite a dearth of closets and a minuscule kitchen, the house received six bids, including one that was “significantly higher” than asking, according to the Toronto Star

#113 Matt on 01.26.12 at 9:46 am

#75 Devore

Deleveraging and cash stockpiling are short-run responses which result in a shrinking money multiplier. I am talking about the long run. Sustained increases in CPI are accompanied by wage increases. How could it be sustained if there were no wage increases to feed it?

#98 Alistair McLaughlin

That makes a lot of sense. High inflation in the aggregate would probably not be distributed evenly as you say, and would benefit some debtors and hurt others.

#114 sam.i.am on 01.26.12 at 9:47 am

The assertion I was referring to:

“By the way, as prices fall, so do rents. ”
http://www.greaterfool.ca/2011/10/18/how-it-ends

Then put it in proper context. The statement was about Toronto, where there are more new condo units than any other city in NA. “By the way, as prices fall, so do rents. It’s estimated that somewhere between 80% and all of the new units coming to market are being bought by amateur speckers, convinced they can flip them for a cool buck. But as the city saturates and cools, many will turn into reluctant landlords – happy to find a tenant at any price who will help defray staggering property tax and condo fees which in many buildings now equal the market rent.” — Garth

#115 big T on 01.26.12 at 9:51 am

if Japan is the future, has home ownership/renting
ratio changed during deflation?

#116 OttawaRenter on 01.26.12 at 9:59 am

Because Vancouver over-priced real estate just isn’t enough……http://ca.shine.yahoo.com/vancouver-eatery-says-100-hotdog-infused-2-000-114210201.html

(Its a $100 hotdog)

#117 sam.i.am on 01.26.12 at 10:03 am

OK, I’ll be sure to do that in the future. Thanks for clarifying.

#118 TurnerNation on 01.26.12 at 10:04 am

Richeness all around us! Yes – slaves, pause from your work and gaze across the field toward your plantation owner’s house.
Our Glorious Leader’s fighter jets streak overhead. Our troops high step it down main street and at hockey games. What an impressive display of military might. N. Korea? Iran? Nope Canada.

Preserving “our way of live”, as our taxes, food, fuel, hydro is set for further double digit rises in the coming years. The robberbarrons will eat well.

#119 Waterloo Resident on 01.26.12 at 10:34 am

Correction:

BMO changes Low-Rate Mortgage offer to 1.89% – Discretion will be available to allow smooth transition

TORONTO, January 26, 2012 – BMO announced today that it is changing the following rates effective January 27, 2012:

Fixed Rates: To: Change:
5 year low rate fixed closed 1.89% +0.50%

#120 Macrath on 01.26.12 at 10:38 am

70 CHANGES
109 Toon Town Boomer

The City is a learning program developed by the Financial Consumer Agency of Canada (FCAC) and the British Columbia Securities Commission (BCSC). It teaches young people financial skills that they can carry with them throughout their lives.

http://www.themoneybelt.gc.ca/theCity-laZone/eng/login-eng.aspx

All of Garth`s excellent books are available at the municipal library. The older ones are still relevant and informative. Also read the classic The Wealthy Barber.

#121 Jonnay on 01.26.12 at 10:40 am

I always enjoy reading your blog; this article is no exception.

But if the Fed has keep the interest rate at Tokyo level for 4 years and promises 2+ more, then isn’t the risk that they’ll be at zero forever, just as it has been in Japan?

Certainly we can see there is simply too much debt in the developed economies and no willingness to allow big defaults, instead allowing the economies to barely grind along, with progressively more 99%ers falling through the cracks while the privileged few get rich from neverending bailouts?

#122 Kris on 01.26.12 at 10:42 am

Is Carney hopelessly tied to Bernanke, or is there any scope whatsoever that Cdn rates actually go up before 2015?

#123 FTP - First Time Poster on 01.26.12 at 10:43 am

Garth,

You message over the past 3 years has been the same & while sound, there are other ways of ensuring financial security.

Having a young family, I cant do this yet – but for those who have the cash & lifestyle, this is what I plan on doing:

– Sell current property in Canada, vacation in economically & politically stable countries seeking Real Estate that is undervalued: Argentina, Paraguay, Vietnam, Phillippines, etc.

– Purchase said property, spending winters there while investing remaining $ as per Garth’s advice

– Rent in Canada during summer months, using investment returns to offset costs

Rinse & Repeat

Sitting here on the beach in Grand Cayman, watching how others live & what they deem as important – its clear that as Canadians, our values have gone askew. Here, family is important as are relationships. There are no locals plinking away on their iPads, ignoring those around them. No one is fearful of police or security – they’re here to assist, not supress.

The recent low rate announcement by the fed, to be followed by Carney no doubt – is a blessing. It gives you another chance to get out.

#124 disciple on 01.26.12 at 10:44 am

#114 Matt… “Sustained increases in CPI are accompanied by wage increases.”

Okay, now that I’ve stopped laughing… You must be one of the 20% who works for the gov’t… You are confusing asset deflation with price inflation, which are occurring simultaneously right now. Some refer to this as stagflation, but I refer to it as “the banksters are having their cake and eating it too, with a double scoop of neopolitan, topped with whipped cream and a cherry on top”

Howard Johnson’s hotel business started with ice cream: http://en.wikipedia.org/wiki/Howard_Johnson's

And here’s one well-paid bank worker who recently left banking to start making ice cream.
http://www.bbc.co.uk/news/mobile/business-16450031

#125 disciple on 01.26.12 at 10:47 am

I’m on to something! Ice cream and banking…

http://learnenglish.britishcouncil.org/en/magazine/ice-cream-and-banking

#126 eaglebay - Parksville on 01.26.12 at 10:49 am

#49 Bottoms_Up on 01.26.12 at 12:11 am
“It’s difficult to see how housing can keep going up, especially in the face of mounting job losses.”
———-
About job losses, there are 250,000 unfilled jobs in Canada as per recent reports in the press.
Government jobs? Too many and useless.
Sears? Mismanagement and uncompetitive.
And so on and so on.
You’ve been brainwashed.

#127 eaglebay - Parksville on 01.26.12 at 11:00 am

#60 Jon B on 01.26.12 at 12:33 am

Tell me something, what would you do without the banking system?

#128 Ret on 01.26.12 at 11:08 am

#102 GTA Girl -So true about corruption IMHO!

And don’t forget the municipal building inspectors that sign off on all those new homes. I said, “sign off,” not “inspect.” Fraud or corruption?

Anybody with half a brain can drive through any of the new home surveys in Hamilton or Burlington and see all kinds of blatant building code deficiencies and you won’t even have to get out of your car.

Don’t expect the municipality to help you out with the problems after you move in. Builders and developers own City Hall. They paid for the permit, they get to call the shots.

Mike Holmes did a show on a 7 year home in Milton. Who signed off on that one? I often wonder what the neighbours in the sub-division think when the see the show and the same builder built their place? No doubt the same building inspector too!

http://miltonsearch.com/2011/02/04/milton-familys-home-featured-on-holmes-inspection/

#129 DonDWest on 01.26.12 at 11:10 am

If Scotiabank adopts the marketing slogan, “you’re in greater sh** than you think,” I just may switch banks.

#130 eaglebay - Parksville on 01.26.12 at 11:12 am

#69 Van guy on 01.26.12 at 1:01 am

Change your name to “Looney bin guy”.

#131 BPOE on 01.26.12 at 11:21 am

Like’ Ive said before this ain’t America folks. This is how BPOE rolls
**************************************
OttawaRenter on 01.26.12 at 9:59 am
Because Vancouver over-priced real estate just isn’t enough……http://ca.shine.yahoo.com/vancouver-eatery-says-100-hotdog-infused-2-000-114210201.html

(Its a $100 hotdog)
.

#132 BPOE on 01.26.12 at 11:25 am

Not only is our real estate going higher everyday but our parking is the highest in North America as well. Why? Because we can afford it

Vancouver has the highest peak on-street parking rates in North America. Jerry Dobrovolny, Vancouver’s director of transportation, said the city, which already has one of the most “progressive” on-street parking policies on the continent

#133 Dr.NickRiviera on 01.26.12 at 11:27 am

One hundred and twenty sixth!!!

#134 gladiator on 01.26.12 at 11:36 am

If I want to slaughter free-roaming animals, the best way to do it is to corral them into a fenced area and kill as many as I want/need.
The ever-dropping mortgage rates in Canada look to me like tptb are “corralling” into debt as many people as possible, so that they have them by the balls and when rates go up, the masters will be able to manipulate the sheeple in any desired way. The only thing that sheeple will have in mind at that time is huge loads of debt, which translates into obedience to the maaaasters.
Sorry, I’m not a tin foiler, but just can’t help but notice this huge trap capturing naive and innocent (future) victims who currently think they’re winning the game…
The free cheese is only in the mouse trap.

#135 John Prine on 01.26.12 at 11:39 am

#71 Tim.

Real estate boards, developers, Global Television, banks, Ministers of finance are some of the people here that are not admitting we are in trouble, Flaherty is just “kicking the can farther down the road” , prolonging the inevitable and making it worse…Just like Japan.

#136 eaglebay - Parksville on 01.26.12 at 11:43 am

#92 Ronaldo on 01.26.12 at 6:03 am

There are no houses near Red Deer that are worth $295,000.
Now, your son benefited from the government interfering in our economy.
Look at the other side of the coin. The investors (savers) have been ripped off by the government confiscating their right to a real and decent interest rate on their investments.
Some win and some loose.
There are two sides to every transactions.
Your son gained and you lose.

#137 Joe Bloggs on 01.26.12 at 11:56 am

Hey, Garth! It looks like now you are starting to get it. Wising up. It’s about time. Not like before with your famous – do not bet against america – lecture.

Never bet against America. — Garth

#138 Keith on 01.26.12 at 12:02 pm

Garth,

Any suggestions how to short the RE market? I know your book has some ideas about using one’s own home to short, but how about more generic shorts? Home builders? RE companies? Are all the mortgage companies taxpayer protected?

Keep up the fight!

#139 C on 01.26.12 at 12:03 pm

From MLS.ca

Burlington, Ontario House/Detached Price range $400,000 to $550,000 2 or more bedrooms 2 or more bathrooms:

January 5th, 2012 384
6 387
7 392
10 402
11 407
13 420
16 421
17 425
19 434
20 437
21 443
24 451
25 459
26 462

It’s like the game Cliffhanger from The Price is Right.

#140 Pr on 01.26.12 at 12:14 pm

Man, those in power, must thing that the majority of us, most be domer than dom! Nobody see a problem with a, simple house, be part of a national casino. Sleep well, the prices are going up, again this year! No interest hike in the near futur. Nothing to be fix… just like they want. Now, go buy a house, Lucky you!

#141 tkid on 01.26.12 at 12:17 pm

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/boomers-punch-drunk-on-household-debt/article2315580/

#142 Van guy on 01.26.12 at 12:22 pm

#130 eaglebay – Parksville on 01.26.12 at 11:12 am

#69 Van guy on 01.26.12 at 1:01 am

Change your name to “Looney bin guy”.
—————————————————————–
You’re the one stuck on the island. I feel sorry for your children.

#143 tkid on 01.26.12 at 12:23 pm

Same report, different newspaper:

http://business.financialpost.com/2012/01/26/boomers-drowning-in-punchbowl-of-debt/

#144 eaglebay - Parksville on 01.26.12 at 12:27 pm

Interesting site to learn about money.

http://www.getsmarteraboutmoney.ca/

Also http://www.investopedia.com/

#145 TaxHaven on 01.26.12 at 12:33 pm

“…cheap money makes people crazy for more of it. Credit bubbles inflate. Asset prices swell. Inflation’s easily created, destroying the value of everybody’s savings…”

Funny…

Gold (supposedly another “commodity”!) – and even gold stocks -are rising in a rather spritely fashion again even as the TSX flops…

Could be that the promised negative-real-rates-for-the-next-three-years really mean

…”money”-printing.

#146 John saccy on 01.26.12 at 12:43 pm

US housing revisits milestone..sarc off

http://www.zerohedge.com/news/2011-new-home-sales-fall-record-low-median-new-home-price-lowest-october-2010

#147 Patiently Waiting on 01.26.12 at 12:55 pm

115 – Good point, its hard to say how a real estate crash will affect specific rental markets.

Like many place in the US, Boston has a lot of vacant housing that was intended to be sold as investments but now sits vacant. For some reason, some empty housing isn’t going on the rental market, at least for now. I’ve heard that it might be the banks holding back foreclosed inventory.

At the same time, it will take some time for purpose-built rental housing to meet demand, as it probably wasn’t built for many years due to high land prices.

Boston has an additional fairly unique problem for an American city right now. It must have a strong economy thats attracting migrants from elsewhere. Increasing populations of grad students was mentioned the article above.

The interesting question for Canada is how easily will spec-built housing become rental housing? Should we be doing everything we can to entice or push owners of spec properties to not keep their properties empty while they watch those properties decline in value?

Is it true that, unlike the US, banks have every reason to unload foreclosed properties to claim their CMHC insurance? This would hasten the passing (at lower prices) of housing inventory into the hands of those who might rent it out for reasonable return, increasing the vacancy rates.

Vacancy rates are starting to decrease again, after skyrocketing, in the more popular parts of Vancouver. My theory is its more people not buying and renting instead. Further out in the Fraser Valley, tenants have the upper hand and will for a long time IMHO, as vacancy rates in places like Abbotsford are among the highest in Canada.

#148 cowtown cowboy on 01.26.12 at 1:00 pm

#19 Peter B on 01.25.12 at 11:05 pm A fool and his money is easy parted. Some richer fool paid 8 million for a Calgary Condo that isn’t even build yet. Wonder how much it will be worth after the building has it’s first bedbug infestation as most high density condos do.

One more funny think this condo is in the East Village (now re branded bridges) right near the posh Calgary Drop in Centre. A part of the city that is traditionally know for empty mouth wash bottles and a population prone to liver disease

That condo is no where near the East Village, do a little DD before looking like a fool, if they’re spending $9mil on a condo do you really think they have any cash flow problems….that’ chump change to some of those players.

I was at a reception the other night where a couple of O&G boys donated $10mil to my school to fund a Leadership initiative. It came about because they were disgusted at the lack of leadership during the financial crisis. I guess it is up to me and my cohort to right this ship!
I estimate that there was at least $1billion in net worth in that room. The wealth in Calgary is truly immense, we just don’t need to have a reality show to prove it.
Live long and prosper! (move to Calgary!)

#149 Tony on 01.26.12 at 1:17 pm

What Ben Bernanke failed to tell the public was rates won’t go up for the next 30 to 40 years since America is a sinking ship with corrupt accounting rules and story tellers. As the baltic dry index falls off a cliff and natural gas plummets the spread between the liars and the real world widens.

#150 eaglebay - Parksville on 01.26.12 at 1:18 pm

#143 Van guy on 01.26.12 at 12:22 pm
“You’re the one stuck on the island. I feel sorry for your children.”
———-
I’m on the Island by choice.
Unfortunately the children are in Vancouver, Toronto, Edmonton and Atlanta.
So, Looney bin guy, what now?

#151 Tony on 01.26.12 at 1:30 pm

Re: #139 Keith on 01.26.12 at 12:02 pm

I’ve shorted XCEED Mortgage Corporation in the belief the share price will ultimately go to zero.

#152 Kevin on 01.26.12 at 1:33 pm

From the CIBC report about boomers being drunk on debt

“And housing price gains do not really add to national well-being to the same extent as gains in other asset prices. As Bank of England Governor Mervyn King once pointed out, leaving aside foreign purchasers, a rise in house prices is mostly a transfer of wealth to those who own a house.
Net financial assets are therefore a better measure of household wealth, and on that score, results have been disappointing, with no growth since 2006.”

Yikes, the average house price in Canada has increased from about 250k in Jan 2006 to about 360k in Nov 2011, a increase of 44%, but since the increase in house prices was from the result of an increase of mortgage debt, and any increase in income growth was more than likely offset by the increase of people borrowing against their homes, there has been no net financial gain. And when the increase of house prices stop, the increase of mortgage and consumer credit will continue. The reason for this is because house prices are so high compared to incomes, that Canadians have to throw so much debt at houses just to keep the prices afloat. That is why most people are mistaken in the “soft landing” theory of flat house prices and rising wages will correct the market over the next while. Wages need to catch up to debt loads. And man Oh man, are wages far behind.

Consumer credit has increased by 53% from Jan 2006 to Nov 2011( from $317 million to $485 million).
Mortgage credit has increased by 66% from Jan 2006 to Nov 2011 ( from $662 million to $1.1 trillion).
Total household debt has increased by 62% from Jan 2006 to Nov 2011 ( from $980 million to $1.59 trillion)
The average Canadian house price has increased by about 44% from Jan 2006 to Nov 2011.
The increase of the average Canadian weekly wage, just under a robust 20%.

Looks like the “wealth” created by the increase of house prices has been an illusion.

#153 Kris on 01.26.12 at 1:55 pm

Wonder where we are on that Tokyo curve. With historically low rates for 7yrs or more.. God help us if we’re near the bottom of that ramp-up.

#154 Air on 01.26.12 at 1:56 pm

For those who has Debt-ness all Around You and want to reduce your debt.

http://www.fcac-acfc.gc.ca/eng/resources/consumerAlerts/alerts_posting-eng.asp?postingId=393

#155 Trev16 on 01.26.12 at 2:02 pm

“Maybe I was wrong. This could be worse than anticipated. Even the bankers are covering their butts.”

Garth,

It seems you are waking up to what many of us have been trying to express on your blog. With so many countries now NOT using the US reserve currency for trading throughout the world…..the writing is more on the wall than ever before. The numbers reported out of the states are all lies….C’mon an 8% unemployment rate….gimme a break.

Also it won’t be long before you figure out that the so called tin foil hats on FEMA camps were right and they are planned for all the Americans who are to be arrested. Who can argue now with the Passing of the NDAA which allows the US military to arrest Americans and hold them indefinitely without a lawyer or trial.

Lastly, how long will it be before the Web is shut down for Websites who are exposing the TRUTH!!!! Yes I know the argument for SOPA was because of copyright issues for Hollywood……………..but the reality is they want to shut down websites who are providing real information on what is really happening and apparently hasn’t been approved to be released throught Mainstream Media.

Cheers,

Trev16

#156 Daisy Mae on 01.26.12 at 2:26 pm

Frank on 01.26.12 at 12:45 am
“Home prices in Canada will most likely cool off, but in no way crash.”

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

I believe Garth has repeatedly referred to this as a ‘slow melt’….not a ‘crash’.

The Chinese and their THE YEAR OF THE DRAGON is bringing another upsurge in RE sales in West Vancouver…driven by emotion.

#157 Daisy Mae on 01.26.12 at 2:31 pm

#70 CHANGES: “Where do you suggest someone young and new start off to understand what you guys are talking about, so I may also invest my money.”

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

Buy his books and re-read yesterdays’ post.

#158 John Prine on 01.26.12 at 2:43 pm

#127 eagle bay-Parksville.

Beginning to think that you must have been fired from a government position, just too far out there for having no government involved in anything. Bet you are a Kevin O’Leary fan……..

#159 Yvonne on 01.26.12 at 3:08 pm

We are … # 3 !!!

“…Low-Wage Lessons

January 2012, John Schmitt
Over the last two decades, high – and, in some countries, rising – rates of low-wage work have emerged as a major political concern. According to the Organization for Economic Cooperation and Development (OECD), in 2009, about one-fourth of U.S. workers were in low-wage jobs, defined as earning less than two-thirds of the national median hourly wage (see first figure below). About one-fifth of workers in the United Kingdom, Canada, Ireland, and Germany were receiving low wages by the same definition…”

#160 Kevin on 01.26.12 at 3:09 pm

Garth,
a little mistake in my #153 post

The increase of the average Canadian weekly wage from 2006 to 2011, was about a robust 17%. ( not just under 20% as I previously mentioned)

Some more indicators for income.

The increase of personal disposable income for all Canadians was 18% from 2006 to 2010.

The increase of labour income for all Canadians was 14% from 2006 to 2010.

One question that I have is how much have the credit and housing bubbles inflated wages in the past few years? These two partial drivers of wage growth can not continue too much longer.

#161 dd on 01.26.12 at 3:24 pm

Thinking ahead …. the yuan will become the world’s reserve currency. It will offically be backed by gold.

You wish. — Garth

#162 Beach Girl on 01.26.12 at 3:28 pm

#130 DonDWest on 01.26.12 at 11:10 am

Liking this….

If Scotiabank adopts the marketing slogan, “you’re in greater sh** than you think,” I just may switch banks.

Also liked the free cheese only comes with the mouse trap.

A few friends here last night, who actually have money. All thinking of bailing out on owning condos and houses. All children moved on. Suburbs suck for older people. They only exist to raise children and drive grocery getters (Mommy Wagons). Would never been seen in one of those, even in the day.

I am staying put.

Actually, if I rented a condo, no one would like me or the dog. I have weird friends, stay up too late. And they are never going to heat the swimming pool to 86 or let Miss Daisy swim in that. I have lived too long for other peoples rules. Especially if I had to pay for that privilege.

Have thoroughly enjoyed this winter, so mild. Wishing everyone well. I am mellowing. Bad sign.

#163 jess on 01.26.12 at 3:44 pm

Investigation of title insurance kickbacks.

Erin Tolls captive insurance investigation

http://www.denverpost.com/ci_15044549
title companies paid for lavish open houses with catered food and drinks where real estate agent previewed properties undertanding that whoever handled the sale would get their client to buy insurance

In the book,Free Lunch, page 145 ,David Clay explains.
David C. Johnston – 2008 – Business & Economics – 336 pages
bought the insurance through land title companies for a tiny fraction of what the … One of the big five land title companies, LandAmerica, tried to stop Toll’s investigation. … went to higher-ups in Colorado state government hoping to shut Toll down. …

#164 eaglebay - Parksville on 01.26.12 at 4:18 pm

#159 John Prine on 01.26.12 at 2:43 pm

Never worked for the government and never will.
I’m self employed and Kevin O’Leary is great.

#165 Canadian Watchdog on 01.26.12 at 4:30 pm

#161 dd

“Thinking ahead …. the yuan will become the world’s reserve currency. It will offically be backed by gold.”

The RMB doesn’t need to be backed by Gold to be a World reserve currency. It just needs to accepted by the majority of nations as the official currency of trade. It’s already in the works. http://www.bbc.co.uk/news/business-16571765

More interestingly, one of Canada’s greatest economist is behind it all.

#166 Tony on 01.26.12 at 4:33 pm

Re: #82 Arshes on 01.26.12 at 2:25 am

Good guess on Japan one of the main factors for the fall in real estate never to recover is the falling birth. One of the lowest birth rates in the civilized world.

#167 Dorothy on 01.26.12 at 4:38 pm

Every day I read about the financial crisis that is unfolding all over the world. And every day I read about how consumer debt is going to result in a worsening of what is happening. However, I read very little about how corporate and individual greed, combined with bad government policy, got us into this mess in the first place.

It’s almost as if by focusing on individual consumer indebtedness, the powers that be are trying to deflect attention from the irresponsible, sometimes criminal behaviour of those at the top, the so called “elites” who are primarily responsible for what has happened.

We, the ordinary people, are so focused on our own financial futures that we are not demanding accountability for what has happened from those who contributed to it the most. Consequently, many who should now be facing jail time for their behaviour, haven’t even been charged.

The whole world has been brought to it’s financial knees, and the ones who are going to suffer the most are the ones who had no control over what happened. At the same time, the ones who benefited the most from the circumstances leading up to the financial crisis, are continuing to benefit from the fallout. How can this be?

It’s happening because we, the ordinary people, are not demanding our governments do whatever it takes to prevent this kind of fiscal irresponsibility in the future. Canada needs to become more aggressive about routing out and punishing white collar crime. It needs to make sure banks and other financial institutions are regulated sufficiently to make sure they are financially stable. And the provincial governments need to start consdering what’s best for their country as a whole, rather than for their own provincial self interests. I’m thinking primarily of the idea of a federal securities commission here, rather than the hodge podge of provincial regulators we have now. It’s time Canada brought itself into line with the rest of the world in matters like this. But it can only be done with provincial co-operation. When are our provincial governments going to start seeing the big picture as opposed to their own little power circle?

We also need free trade within our own country. It’s ridiculous that we negotiate free trade with other countries, while still having all kinds of impediments to trade and labour mobility within our own borders. But again, it will only happen when our provincial governments put the good of the country ahead of their own unwillingness to reduce their own little power base.

I am a Canadian who wants what’s good for Canada as a whole, and I’m tired of these power hungry politicians who put themselves and their desire for power ahead of their own country. We ordinary people need to send that message to government, and to keep ON sending it until they begin to listen.

#168 BPOE on 01.26.12 at 4:45 pm

Hey Canada. Ol Harper got another trick up his sleeve. TSFA’s and OAP and 67 instead of 65

#169 Mixed Bag on 01.26.12 at 5:24 pm

That picture is so sad …

#170 Van guy on 01.26.12 at 5:42 pm

The dragon effect on RE is bs. How are sales doing in China? Us Chinese invest when we know there’s opportunity to make $.

#171 Timing is Everything on 01.26.12 at 5:46 pm

Directory of Financial Taglines…

http://tinyurl.com/7cn3d59

#172 harden on 01.26.12 at 5:50 pm

#157 Daisy Mae

re Year of the Dragon and “upsurge in sales”…

Upsurge? Show us supporting data… or an example, at least.

While realtors would have you believe otherwise, the January data so far indicates that sales are falling and listings are climbing. But hey, them planeloads of HAM landing here everyday should save us all… anytime now… zzzzzzzzzzzzzzzzzzz

#173 I'm stupid on 01.26.12 at 5:52 pm

Has anyone read this gem? It seems gloom was so 2011. It’s dooms turn to shine for 2012. The article speaks for itself. No need to add to it.

http://www.thestar.com/iphone/Business/article/1121611

#174 Canadian Watchdog on 01.26.12 at 5:58 pm

#167 Dorothy

“However, I read very little about how corporate and individual greed, combined with bad government policy, got us into this mess in the first place.”

People still don’t get it and will always point fingers before looking at themselves. Nobody put a gun to anybody’s head and forced them to take on more debt. What became the ‘norm’ was a broken system, that turned into a trend of phony wealth that’s been euphoric until now.

I’m afraid it’s far too late to blame the government and banks,—you’re better off warning others and voting a new government next election.

Does it have to get worse Garth?

#175 triplenet on 01.26.12 at 6:06 pm

#84 Not wondering anymore said:

Consistantly low interest rates have had no effect on real estate prices, which have continued a prolonged decline in Japan, the US and now, Europe.

Whaaaaaat?

#176 Stevenson on 01.26.12 at 6:25 pm

Oh wait…did something the macro environment out of our control continue inflating the RE market?? Oh no!! my properties continue to inflate?? damn..i should of sold a year ago! Just as I have mentioned before…we can’t predict what happens in the macro environment. You can’t time anything perfectly but what you can do make use of the opportunities you get. Read the buying signals…. Anyone can say oh sometime in the future in an undetermined time range something will happen.

#177 Ronaldo on 01.26.12 at 6:29 pm

#168 BPOE – “Hey Canada. Ol Harper got another trick up his sleeve. TSFA’s and OAP and 67 instead of 65”

With the oldest of the boomers having reached 65 last year and receiving their OAS, they along with anyone else now receiving the OAS will likely be grandfathered. I believe the income level at which clawbacks occur is around 67000 or so.

Suspect that could be lowered considerably to eliminate those with the super duper government pensions and others in the private sector.

Suspect that those reaching age 65 with no other pension except maybe CPP will be topped up with an increase in the GIS to make up for the elimination of the OAS til age 67.

Suspect that he will continue to raise that age limit to 71.

I’m sure the objective is to dissallow altogether those with rich pensions from obtaining the OAS.

Another disincentive for people to save for retirement. Example, the RRSP trap and clawback to the GIS.

Expect that many individuals will say what the hell am I saving for, the guy next door who is spending everything will be no worse off than me in the end anyway.

Better to stuff the cash in a TFSA which does not affect income tested benefits. Given the fact that 70% do not have pensions in this country and the large percentage that have no savings, many people will be relying on receiving the OAS or some sort of assisstance upon reaching retirement age (whatever that may be). So for many, the OAS will be eliminated but for a large group, it will be simply an increase in other benefits and for this group there will be no change. Not sure how much they intend to save with this move but I suspect it could be substantial going forward.

No doubt, many older people will elect to work longer thus exascerbating an already grim employment situation. Good luck with that one Mr. Harper.

#178 Blacksheep on 01.26.12 at 6:46 pm

BPOE # 168,

“Hey Canada. Ol Harper got another trick up his sleeve. TSFA’s and OAP and 67 instead of 65”
————————————————–
That is frig’in Hy-larious! I never let the Gov. get control of my after tax funds AND never planned on seeing one cent from OAP, so who gives a rats.
I guess people on the **** plan will just have to wait.

take care,
Blacksheep

#179 Jon B on 01.26.12 at 6:48 pm

#128 Eaglebay – What would I do with the banking system? I would have them all merge into one humungous bank. Then I’d instruct them all to raise their interest rates to ensure their borrowers are indebted for life without parole. Then I’d jack up user fees. By this time Canadians probably wouldn’t be bothered much because they are used to this kind of stuff; monopolies and all. So then I’d have the bank form a political party and run in the next general election on the platform of if you vote for us we will lower your interest rates on your debts. Within a few years the country will be a bankocracy run by bankers. Actually, forget about all that stuff I’d do, the outcome will likely be the same if we just continue down the current path we’re on. They’re Richer and Far More Powerful Than Anyone Thinks.

#180 Blacksheep on 01.26.12 at 6:52 pm

Or pre tax for that matter.

blacksheep

#181 I'm stupid on 01.26.12 at 6:59 pm

#177 Renold

I’m sure the objective is to dissallow altogether those with rich pensions from obtaining the OAS.

They already do. Sure you may get the OAS cheque, but keeping the money is a different story. It all depends where you fall in the income bracket before OAS and where you are after.

Unless of course you pile on debt to invest in a balanced portfolio and live on dividends while using your pension and OAS to pay the interest. Most won’t and the gov’t knows this so they get screwed.

#182 Arshes on 01.26.12 at 7:14 pm

#167 Dorothy

“We, the ordinary people, are so focused on our own financial futures that we are not demanding accountability for what has happened from those who contributed to it the most. Consequently, many who should now be facing jail time for their behaviour, haven’t even been charged.”

Dorothy, the problem with people is they are NOT focused on thier financial futures. People cant be bothered to care, as far as they are concerned they’ll be ok, no matter what. Ask your friends and neighbours, how many are going to be ok in retirement, how many have enough savings for a month, if they couldnt get a paycheck/pension check, how many would be ok if thier utilities went up or gas prices?

People just don’t care, that’s why they never demand this from their gov’t. They dont care enough.

And you can’t jail people for giving people what they want. These bankers, these Real Estate agents, they give people what they want. People WANT a house and are WILLING to borrow to the hilt to get it, but those people aren’t smart enough to understand the consequences of their actions, so they suffer big time. And if you tell them what they want is wrong or how they get it, they will FIGHT you tooth and nail to keep you from taking it from them.

#183 Ben on 01.26.12 at 7:29 pm

I like the latest Scotiamercial

Targeting the young renter …. when he comes home to find the fridge empty and his buds have eaten all the left over Chinese food and their laying on the couch.

LOL

#184 gladiator on 01.26.12 at 7:34 pm

@173 stupid: the buyers will also have an amazing opportunity to be fried by the powerful CN Tower antenna 24/7, 365 days a year.
A PhD in nuclear physics told me this is no joke and it’s too bad people aren’t told about it.
Do you know where most suicides happen in Moscow, Russia? Within a 2-kilometre radius around Ostankino tower, which has a similar antenna.

#185 eaglebay - Parksville on 01.26.12 at 7:46 pm

#167 Dorothy on 01.26.12 at 4:38 pm

Oh poor Dorothy. Is that your real name?
It’s called democracy. You can blame the voters.
Don’t think that everybody are crooks. There are a few but the majority (democracy) are quite honest.
Be positive. I doubt that you’re married or if you are, your husband must be a saint.

#186 Tim on 01.26.12 at 7:52 pm

hey am I banned for making comments about gold?

Not a gold blog. Buzz off. — Garth

#187 Knucklewalker on 01.26.12 at 7:53 pm

Keeping you wrong a few more months, eh Garth…

How? — Garth

#188 Bast on 01.26.12 at 7:54 pm

OMG – hell has frozen over. Patti Croft – having been loosed from the corporate communication mavens at RBC – has mentioned a “looming housing bubble.” Ack!
http://www.calgaryherald.com/business/Under+used+labour+pending+housing+bubble+problems+Canada+panel/6056952/story.html

#189 Abitibi Doug on 01.26.12 at 7:59 pm

These emergency low interest rates are like when the Costa Concordia (now renamed the Costa Lotsa) rammed into the rocks that tore the hull open, and the crew were running the bilge pumps at full power. All it did was delay the inevitable, and give some people more time to bail out.

Garth said: Never bet against America.
How timely! Recently Mark Carney said the United States economy could stay in this slump for a long time and possibly never recover. A contrarian would look at that prediction and say that is a classic example of the capitulation stage (with maximum pessimism) which occurs at the bottom of a business cycle. Meanwhile, Warren Buffet (a guy whose credibility speaks for itself) said in the most recent Time magazine that he is bullish on America. Something worth noting.

#190 eaglebay - Parksville on 01.26.12 at 8:10 pm

#179 Jon B on 01.26.12 at 6:48 pm

Wrong answer to the wrong question.
The question was: what would you do without the banking system?
Twisted doomer.

#191 Nostradamus Le Mad Vlad on 01.26.12 at 8:36 pm


Good posts 2day, esp. #156 Trev16 and #119 TurnerNation.
*
Iran set to turn off oil taps to Europe. Hell, it’s their oil and freedom of choice, and 2:47 clip; Wil Iran kill the petrodollar? Europe . . . is not in the greatest shape; The US Fed cannot do anything (raise rates) without a FF; 3:54 clip “You can skip most of this clip. Just watch the last 20 seconds to hear Mika shudder in fear. What a corporate media tool.”; New Details How GS killed AIG; The 1% “Davos shocked to hear that poor people exist.”; 19:34 clip Geithner gone after election? Plus 6:34 clip “Guess what that means, Jamie? There’s no JP Morgan. Goodbye and good riddance.”; Top justice officials connected to mtge. banks; RE Loans Anxiety; How oes one know when the button has been pushed too far?
*
Obomba’s dictatorship. Signed a new bill worse than SOPA; 1:43 clip McDonalds changing some of their filler beef stuff; Digital right to be forgotten in EU; Libya “Small price to pay to be rid of that damned Gold Dinar!” — Official White Horse Souse (wrh.com; Disable pcAnywhere software, Symantec advises; Mitt Romney “Hey, it was just an oversight. Really. Anyone can forget about $3 million they left in Switzerland! Honest!” — Mitty the Kid. wrh.com; 0:39 clip Gingrich says Constitution doesn’t matter during War on Terror; Six Million US citizens under correctional supervision; ACTA worse than SOPA; Pic Difference between NDAA and Spanish Inquisition (not Monty Python); Philippines “Is this man totally nuts?!? War with China is a lose-lose proposition.” wrh.com.

#192 Smoking Man on 01.26.12 at 8:36 pm

Scanning MLS No Red Dots in the city in my neck of the woods, just 3, usally about 20. Checked out the old hood, same.

The Tax Farmer’s Dog’s (Media) need to move the herd in order to get some dots going, otherwise, with record low rates, the spring market will be insane.

Just no inventory, and last time I checked, is TO not the place where most new commers settle.

No Red dots Interesting

#193 TurnerNation on 01.26.12 at 8:58 pm

I’m staying in my work RRSP Bond mutual fund while TLT.US (bond ETF) is still above 115.
(We are offered choice of a few dozen funds, only).

#194 SaggyBottomBoomer on 01.26.12 at 8:58 pm

#61 CHANGES

“I wonder if mainland Chinese investors would leave BC if Jack Layton started to show up at open houses and started a bidding war with them?”

I don’t know about the Chinese , But I’d run like hell if Jack Layton showed up anywhere. Zombies scare me.

#195 CrowdedElevatorfartz on 01.26.12 at 9:05 pm

@#133 BPOE
…. a $100 “hotdog” ? Is that what we’re calling what you like to “eat”. Over priced tubesteak with ingredients such as cows lips, tongues and a**holes! Mmmmmm where do I sign up to be fiscally raped? Whats next? $100 cup of meerkat skat coffee ? Ooops, sorry folks, some Vancouverites are stupid enough and visibly ostentateous enough to brag about that too! Thank Kee-rist he lives in Rich-man
Not to mention the most expensive “parking” in North America !
Gee after spending all that money on coffee, lunch and parking where does it leave any cash for bullets for the next drug shooting drive by?

#196 Daisy Mae on 01.26.12 at 9:13 pm

Neighbours have bought a condo (penthouse) at Tuscany Villas in West Kelowna. Remember the auction a couple of months ago, 50% off?

Their home is our first spring listing, and listed by a realtor living in this community…so this will be interesting.

#197 Daisy Mae on 01.26.12 at 9:19 pm

harden on 01.26.12 at 5:50 pm
#157 Daisy Mae

re Year of the Dragon and “upsurge in sales”…

Upsurge? Show us supporting data… or an example, at least.

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

I read the article in the GLOBE AND MAIL, January 26, 2012….. Duh!

#198 Knucklewalker on 01.26.12 at 9:42 pm

How? — Garth

“Nothing in recent months has changed my view. The Fed’s move, along with BeeMo’s 2.99 Special, may have given the condomaniacs, speckers and property gluttons a few more months to take cover. It may send more greater fools into the arms of wise sellers his spring. It may fool the MSM and turn realtors into predators. But it will not change the outcome.”

The above is how. Rev up cheap money when Garth comes close to being right…LOL

#199 Snowboid on 01.26.12 at 10:19 pm

#192 Smoking Man on 01.26.12 at 8:36 pm…

I know where all those red dots went – my ‘summer’ neck of the woods!

http://tinyurl.com/88rcckt

#200 disciple on 01.26.12 at 10:57 pm

#165 Canadian Watchdog on 01.26.12 at 4:30 pm….

The Davos speeches and all other signs do seem to point to the creation of a new global currency but I don’t think it will be the yuan.

Yay! Post number 200… I’d like to thank all of you who made it happen…

#201 Ogopogo on 01.27.12 at 3:24 am

#199 Snowboid
#192 Smoking Man on 01.26.12 at 8:36 pm…

I know where all those red dots went – my ‘summer’ neck of the woods!

http://tinyurl.com/88rcckt

One of those angry red dots is my building, where a desperado owner has been trying to unload a unit for almost a year now. At least 3 price reductions. Let’s see what the spring will bring.

#202 TheRealTruth on 01.27.12 at 5:56 am

Con chatter saying….

Expect 30 year mortgages in Canada at rates similar to the USA in next 1 year. Changes to Bank Act coming.

#203 Keith on 01.27.12 at 10:16 am

re #152 Tony

Hmm. Won’t work. Their mortgages appear to be CMHC backed. also XMC is at $1.18, lower than the minimum for shorts.

thanks but any other ideas?

#204 Abitibi Doug on 01.27.12 at 3:21 pm

What ever happened to those stereotypical Canadians who were good savers? Did they ever exist in the first place, or is that just another urban myth?

#205 Snowboid on 01.27.12 at 4:13 pm

#201 Ogopogo on 01.27.12 at 3:24 am…

Yes, there are a couple there from mine as well – the area certainly has a bad case of measles!

Wonder how much the prices need to dip before it clears up.