Careful what you wish for

When Janice sold and went to the bank to pay her mortgage off early, she was calm. When she left, she’d lost it. No wonder. The poor girl was done over by a major bank which shall remain nameless, but whose initials are CIBC.

This is a cautionary tale. There’s a dark side to all that cheap home loan money which has been washing over the country. Did you really think initiatives like BMO’s 2.99 Special were cooked up just so you could save some money? I sure hope not.

Most people understand that getting out of a mortgage is akin to wiggling out of a marriage. It’s usually possible, but often brutal. Common mythology is that your lender will nick you for the equivalent of three monthly payments, but increasingly this is simply not the case. More common is the dreaded IRD – interest rate differential. Typically this means the difference between the mortgage rate and the bank’s posted rate for the same term, over the time left until a renewal. In other words, how much money will the bank lose in interest by letting you off the hook, compared to what it would earn had the money been deployed at current rates?

Simple, right? If rates are higher when you break the mortgage than when you took it, there should be no IRD at all. Just pay three months, and split. But if rates are lower, you have to compensate the bank, which is giving up interest you’d be paying until the term is done.

Fine, thought Janice. This is easy.

She renewed her mortgage just a year ago on a five-year term for 3.69%, with a reinvestment rate for the balance of the term for 4.39%. Janice was happy with that deal, since at the time the posted 5-year rate was 5.19%. In order to keep her as a customer, this unnamed bank chopped a point and a half off the cost. Nice guys!

Since then, rates have eased. The bank today offers a fiver for just 4.04%, which is lower than 4.39%, leading our gal to naturally think she’d be walking away after paying a three-month penalty of $3,500.

Forget that. Instead, she was handed a bill for $12,565, and freaked. Turns out CIBC determined the IRD not as the difference between the rate you were offered, and current rates, but rather the posted rate when you borrowed, and the rate you actually got. For Janice that meant the difference between 5.19% and her 4.39%, over four years left in the term. Bingo. Twelve grand.

Listen to  Janice’s mortgage broker – the person who arranged the loan:

“So the bank has the opportunity to lend out this money returned to them for  4.39% for the balance of the term. By my calculation, the lender would have earned $53,441. if the current mortgage had been left to maturity. As it was paid out early, the lender will earn $12,565.03  plus the interest at 4.39% for reinvesting the funds for the balance of the term of $63,779.  Total- $75,643.00. The penalty is based upon a hypothetical situation and further illustrates the greed of big banks.”

Indeed. It knoweth no bounds. I’m told that at least one lender uses a bond rate (not its own posted loan rate) to determine an interest rate differential. Like I said, a cautionary tale. Never, ever take a mortgage just because it’s got a bitchin’ cheap rate.

Read the fine print. Even better, pay your lawyer to read it. Better still, rent.

Now, a small update on a story I brought you some weeks ago.

You may remember the tale of some sixtysomething Boomers whose only financial asset was a house in the nether regions of Scarborough, which they sold for enough money to pay off all their debts. According to their son (a regular here, which goes to his lack of character) they will end up living in a trailer in a northern Ontario swamp – which he tried to defend as a noble lifestyle choice. I called them financial losers.

Even more interesting, though, are the virgins who bought the aging townhouse for $414,000 – a couple in their twenties.

Son Carlyle has more. “ So it turns out the kids that bought my parents house 414k both work at Costco!  Apparently their parents will be moving in with them (and no doubt covered the down payment).

“Thought you would find this interesting. The house is going to need a lot of “love” over the next few years … A new roof within 5 years for starters … And the furnace blew yesterday (thank god my parents hadn’t cut the insurance). They are damn lucky to be getting out now, with people buying it at a cost that is far more than the house is worth (in my opinion).  I pity the buyers.  So many people not only overpaying for homes but not considering maintenance costs down the road (not to mention much higher mortgage rates — double whammy).”

More time is spent buying shoes and cars than houses and mortgages. As the cost of real estate soars beyond reason, ironically the cult of home ownership deepens. Pressure from peers, parents and society has turned property into a no-risk, no-lose move in the minds of the virgins. Most never think of physical burdens, the magnitude of the debt, or even an exit strategy. An entire generation has never seen real estate turn illiquid or erode in value. So to them, it cannot happen.

That reminds me. I miss being thirty. I knew everything.

215 comments ↓

#1 1st on 02.16.12 at 9:57 pm

1st

#2 TurnerNation on 02.16.12 at 9:58 pm

First?

#3 sam.i.am on 02.16.12 at 10:05 pm

I’m glad you wrote about IRD’s. This has to be one of the biggest scams out there and should be outlawed.

#4 Stinky the Fish on 02.16.12 at 10:11 pm

The bank fees sting. I compared my renting situation with a co workers mortgaged home, he seemed jealous of how much I could save. This guy is a house porn pimp, and I think I’ve convinced him that renting is the better option. But he’s still keeping his house cause of the 2 kids. Renting is such a sweet deal when you write a comparison to owning. These people who buy 2nd homes/condos to rent, dream of only perfect scenarios, without considering the time, effort, money and luck of finding a good tenant who pays in full. It’s better to spend that extra time on human capital, or a small business of your own.

I am sober today. Will start drinking soon. Willeat Campbell’s Chunky Soup soon. Clam Chowder is my fav.

#5 Owley on 02.16.12 at 10:12 pm

Foist?

#6 Boomer parents on 02.16.12 at 10:12 pm

I had a conversation with the parents last night. They are putting there house on the market  next week for about 680. They paid 300 for it in 2001. Moms retired, dad still is still working with no end in sight even though he’s in his mid sixties. The money they walk away with after paying the mortgage and closing costs is all they have for retirement. What are they going to do with that money? They are going buy a condo.
Quotes from my dad “if a buy a condo for 400 and it drops to 200 who cares I still have the condo” ” if we need to move out at some point we will just rent the condo out” and “I am not giving a dime to a financial advisor and the market they are all crooks” and of course “we are not just going to throw our money away on rent”. 

I tried to talk to him about investing the money but he would not even believe you could get a 2-3% return on his money and keep it secure. I talked until I was blue in the face and got no where. They hit the jack pot, are about to cash the ticket and then go and bet it all on double 00.

I even tried to get him to read this pathetic blog. he said ” Garth writes like someone who is trying to sell you something” I guess he does not get your humor Garth. Or your financial wisdom for that matter. 

#7 TurnerNation on 02.16.12 at 10:16 pm

A must-read: tale of disgusting yuppie excesss, in godless Toronto. Read their bios at bottom of article.

http://www.torontolife.com/daily/informer/from-print-edition-informer/2012/02/15/almost-rich/#more

Almost Rich: an examination of the true cost of city living and why rich is never rich enough

An income of $196,000 places you in the country’s top one per cent of earners. But does it make you wealthy?

#8 edmonton mortgage broker on 02.16.12 at 10:17 pm

IRDs calculations are downright criminal in Canada.

and there’s nothing wrong with working at Costco where pay is above average and come with excellent benefits. Supervisers (the one in red vests) are paid about $60-70k here in Edmonton. Dept Managers, over $100k, and General manager, $300k.

Interesting fact. the highest producing Costco in the world is the south Edmonton location. it splits the honor from time to time with Costco Korea. average daily sales of $1m. seems Albertans and Koreans like to shop.

In the US, people would kill to have a job at Costco. won’t be long before Costco positions here in Canada will be coveted…

#9 Maxamillion on 02.16.12 at 10:17 pm

They work at Costco, collecting the shopping carts?

#10 T.O. Bubble Boy on 02.16.12 at 10:18 pm

There are people who actually maintain houses in the GTA?

From what I see in North Toronto, old houses just get demolished and some ugly McMansion pops up in its place.

#11 gladiator on 02.16.12 at 10:24 pm

@Smoking Man: one thing you miss is that printing money is not enough – to have high inflation you also need velocity – you know what that is. People have to spend-spend-spend so that things can be sold at higher and higher prices, so that money floods the economy, but that ain’t happening anytime soon in Canada: we are simply tapped out. My salary increase for 2012 is 2%, but if you follow food/gas/utilities prices, they went up by double digits percentage wise. I am going to consume less simply because my salary now buys less, and I have no debt. Can’t even imagine how families with 2 kids, 100k in gross income (what I get, wifey’s home with kiddies for now) and a mortgage can manage it.
Unless we have an army of horny immigrants with wads of cash invading Canada, we are in for a mama of a crisis in RE. Yes, prepare to pay more for necessities, but discretionary goods are already selling at black Friday prices and even lower. Houses are not that far behind – they have an emotional aspect, which makes their prices sticky.
Bernanke the Printing Warrior has quietly pulled QE2.5 and what’s happening to house prices in the US? They’re still falling. Same happened to Japan and see what will happen to Europe. It’s a preview of what’s in the store for us.
You wrote some time ago that one has look at the whole picture and has to make a bet – right or wrong, but make a damn bet – I took your advice and I am betting on biflation. RE markets are still “frothy” in places, but its days, months or even years (up to 1.5 my bet) are numbered. I was a Garth skeptic before, but now I am on his side in terms of RE bubble.
Just my 2 cents.

#12 Smoking Man on 02.16.12 at 10:27 pm

The more things change the more they stay the same.

A traditional education teaches the opposite, which is why all you tax farm slaves never get very far, vs. a genius drop out like me.

The market unwind will pick up pace at a dizzying rate.

Whatch and learn. Not that you will.

#13 Nick on 02.16.12 at 10:31 pm

End of billions ease $$$ lending in Canada??:

http://business.financialpost.com/2012/02/15/housing-crutch-abandoning-banks/

It will be very good thing for long term economy of our country…

Too much debts by far in this crazy Canadian Real Estate market!

#14 Aizlynne on 02.16.12 at 10:31 pm

I sold my 1998 built house just in time for someone else to start replacing things in it (appliances, carpets, etc.). Young and foolish things they were those purchasers …

#15 CalgaryMatt on 02.16.12 at 10:31 pm

Some perspective from a good realtor in Calgary with whom I sat down for a long-overdue coffee today:

Background:
– He deals with property all over the city, but generally focuses on downtown condo or single family within 15-20min. or so drive from downtown
– Probably ~10-12 closed deals per year, not a huge player (just to put it in perspective)

DISCLAIMER: THIS IS ONE PERSON’S FEEDBACK. Could be an isolated view of the market, take with grain of salt.

Market Feedback:
– Marginal client / marginal buyer for him has been getting into higher and higher risk profile
– Lots of clients (or potential clients) asking about using lines of credit for down payment (illegal), or otherwise committing bank fraud
– Clients looking for 5% down non-occupied rental property (illegal) and who have been told by their mortgage broker that it can be done
– “Nearly every client seems to have an issue lately – no clean buyers or sellers anymore” – personal bankruptcy, one partner has a poor credit rating, very little savings, low down payment (or a combination of these)
– There is still a huge disconnect between would-be sellers and current marginal buyers on price
– Lots of would-be sellers purchased at or near the peak of the market (2006-2007) and are still expecting to at least break-even on a sale. There is a “huge” amount of clients he deals with who will not budge on price, and are waiting for 10-15% appreciation before throwing homes back on the market
– In the meantime, carrying your expenses via rental income is very area-specific. Most of those who are able to carry their property at break-even currently have ex-pat tenants whose rent is paid by oil and gas companies (i.e. they don’t care about the price – one example was a ~1,800 sq. ft. townhome @ 10 minutes walk to downtown which rents for $2,500/month…nuts)
– Anecdotally as well, I’ve got a friend who used to be involved in spec home building in the city and sold all but one property before 2007. Currently carrying one semi-detached home in Killarney area with a $550K mortgage (~$100K in equity) – only reason he can make his payments is a $2,600/month rental fee paid by an oil and gas company for an expat living in the city
– “Only reason most ppl who bought into the boom are not foreclosed-on yet is because of interest rates”. He owns a few rental properties himself and recently renewed after 5 years…monthly payment dropped from 5.5 to 2.75% and his principal being paid off each month doubled (at the same monthly $ payment of course)

Rental Feedback:
– Recently put up a downtown condo for rent – slightly under market rent ($1,300 for a ~700 sq. ft. place @ 15 min. walk to downtown – Victoria Park area) and received 20-25 calls in one day. Said it was similar to boom-era Calgary in 2005-7 where rental market was HOT and prices got ridiculous.
– Large influx of new people in the city, most rent for the first 1-2 years before deciding “what next” – stay or move back to where they came from
– New Keynote condo tower to be built is 80% 1 bedroom suites – start at ~$230K, reasonable view goes for ~$250K (~500 sq. ft) – this is where the demand is currently for condos downtown

Other Feedback:
– Word on the street among realtors is that tightening is likely happening in Ottawa- probably moving to 25-year amortization.
– Unlikely to change down payment criteria since this would “kill the market entirely”

Anyway, thought it was interesting to get his perspective – maybe some of you agree. Again, it is ONE PERSON so take with big grain of salt.

#16 TaxHaven on 02.16.12 at 10:33 pm

“Without vision, the blog dogs perish…”

When commenters here stop scheming, wangling and angling to find new ways to convince themselves that real estate is now somehow financially justifiable if only they can find the “right” property at the “right” price with the “right” financing

(with all their clever and contortionary ways to somehow avoid, deduct or minimize the taxes and costs)

…then I will KNOW that it is worth looking into!

Meantime, I’ll stick with cash, gold and mining stocks.

#17 Corban on 02.16.12 at 10:38 pm

When I was 30 I bought a condo in Abbotsford that is now worth about 25% less than what I bought it for. What housing crash? And now that I’m 33 I still know everything +3.

#18 Ian - Ottawa on 02.16.12 at 10:40 pm

I’m 30 !! And wish I was 29 !

#19 Smoking Man on 02.16.12 at 10:40 pm

#11 gladiator on 02.16.12 at 10:24 pm

Im too shit faced to respond right now hell dont even know what you said

#12 Smoking Man on 02.16.12 at 10:27 pm
My inposter Like what you said dude, going on a vacation soon, take over bro

Just don’t tell em we cant get it up anymore

#20 not 1st on 02.16.12 at 10:44 pm

#15 CalgaryMatt

Thanks for the inside track, but one question, is the cowtown market toast or what?

#21 Canadian Watchdog on 02.16.12 at 10:44 pm

Think you know what a bubble is? Here are institutional definitions.

There are three basic views of bubbles that are held by economists and the general public.

1) The dominant view among the general public and modern mainstream economists, including the Chicago school and proponents of Supply-Side economics, is to deny the existence of bubbles and to declare that what is thought to be “bubbles” is really the result of “real” factors.

2) The second view, which is espoused by Keynesians and by proponents of Behavioral Finance, is that bubbles exist because of psychological factors such as those captured by the phrase “irrational exuberance.”

3) The third view is that of the Austrian school, which sees bubbles as consisting of real and psychological changes caused by manipulations of monetary policy. This view has the advantages of being forward looking and identifying an economic cause of bubbles.

Harvard Law School: Identifying and Deflating Asset Bubbles

“A bubble inflates as public information about an asset class diverges from private information possessed by the public information’s sources. Accordingly, the key to deflating a bubble is to gather relevant private information, compare it to the corresponding public data, and then publish the comparison for all market participants to see.”

http://blogs.law.harvard.edu/corpgov/2009/07/11/identifying-and-deflating-asset-bubbles/

We have all the above, it’s a bubble alright…

#22 Jon B on 02.16.12 at 10:48 pm

In regards to the story about the bank having its way with Janice, would there be anyone – other than the bank’s Bay Street executives who are surely filthy rich – that would argue CIBC and the colluding lot of them are the antithesis of greed and evil? Would it be fair to say the banks are in a position to create money out of thin air (ie debt) and then exploit this capability with the help of the federal government to create their debt slave farms? Am I being unfair? Perhaps all the efforts made by the banks to get people into debt and stay in debt are actually well justified and completely reasonable? Does anyone else fear the influence the big banks will have on people’s lives once rates return to their historic average? The looming housing correction isn’t that big a deal economically, rather it’s a much bigger deal socially.

#23 Tax Farm Slave (with great job and benefits) on 02.16.12 at 10:53 pm

#6 Boomer parents on 02.16.12 at 10:12 pm
———————————————-
Your dad is not all wrong in his thinking. Owning a piece of real estate can be an asset, and can be rented out down the road for income. So he should buy very wisely, something in a high demand area with low maintenance and condo fees.

This matches with WB’s investment strategy, which eerily sounds a lot like what Garth talks about:

http://finance.fortune.cnn.com/2012/02/09/warren-buffett-berkshire-shareholder-letter/?iid=SF_F_River

#24 Smoking Man on 02.16.12 at 10:53 pm

Oh my god………. what is it with my offspring

I pull out my black berry from my top pocket

40 bucks hits the ground, re paymant from a loan to one of my basment dweller kids.

Does my dog Sofia not put the loot in her mouth and march off,

hahahahahhaha

I have created an other one….

Fake smoking man top that one dude

#25 Ontarian in Cowtown on 02.16.12 at 10:56 pm

I agree with #15, I’m on a month-to-month lease and my rent was just raised (only by $50, first time in 3 years), so I had a look around for places – wow rental open houses for my market (2bdrm, ~650-800 sq ft) are nuts! There is so little available right now. I’m staying put, and watching the chaos unfold. Still have friends deciding to buy in Mackenzie Towne and Aspen Woods, unfortunately… feel a bit sorry for them.

#26 Kootenay Mom on 02.16.12 at 10:57 pm

Overheard at the Cafe just today:

” Yep, still have the two houses – been trying to sell the first one but nothing is moving…. Luckily the tenants rent the first one which covers expenses, but Just. It’s for sale but nothing is moving. You know, I also have many other friends here in the Kootenays in the same boat, with two houses, with both up for sale, but nothing is moving……. ”

Been wondering what the word on the street was lately in the Koots, (we are so grateful to be Renters).

#27 [email protected] on 02.16.12 at 10:58 pm

Garth wrote – “Read the fine print. Even better, pay your lawyer to read it.” Can the mortgage contracts be altered? I was under the impression that these were standard forms full of shady industry clauses that the banks/lenders hatched together without the ability of the customer to negotiate them out.

#28 McLovin on 02.16.12 at 11:00 pm

#200 Devil’s Advocate on 02.16.12 at 7:52 pm
DELETED

Is DA banned?

Shall we vote? — Garth

#29 ozy - if you want to break your mortgage on 02.16.12 at 11:04 pm

Read your mortgage contract, the details could cost you

http://business.financialpost.com/2011/10/21/read-your-mortgage-contract-the-details-could-cost-you/

Traditionally, if you want to break your mortgage, you have to pay three months’ interest or the interest rate differential (IRD), which is supposed to reflect how much money your financial institution will lose by you backing out of your contract.
“The rub with a lot of lenders is how do you calculate the interest rate differential,” Mr. Bridge says. “There is always something in the contract.”
However, Mr. Bridge says starting in 2005, CIBC used vague-enough language in contracts that allows it to calculate the IRD “as they see fit,” leaving the consumer with no way to challenge that penalty.
CIBC has yet to respond to the lawsuit in court, but did respond in an email. “CIBC believes this suit to be without merit and we intend to defend ourselves vigorously,” spokesman Rob McLeod.
The lawyer maintains that in addition to deciding the rate on which the penalty is paid, CIBC is asking clients to pay the penalty in present-day dollars – again, something not spelled out in the contract.
“The mathematical formula is invalid. What they do is future value. They add up the stream of interest payments over, say, the next three years if you are two years into a fiveyear mortgage,” Mr. Bridge says, adding you are then asked to pay it all up front.
These are not small amounts.
The representative plaintiff is a single mother in Vancouver whose marriage broke up, forcing her to get out of her mortgage. The penalty was $47,000 on a $450,000 mortgage that had eight years left on it.
His case is only about the two issues – the vagueness of the contract language and the mathematical way interest is being calculated – but Mr. Bridge concedes they are two of many issues that have sprung up over the years when it comes to mortgage-contract interpretations.
One ongoing issue that has occurred relates to variable rate mortgages that allow you to lock in at any time during the term, which is usually five years. How do you calculate that rate? Is it the posted rate that is usually well above the discounted rate, or are you guaranteed a certain number of basis points off the posted rate if you lock in? If the bank promises to give you its best rate if you decide to lock in, what does that mean?
“That’s the problem, these are contracts of adhesion, like an insurance contract with a bunch of boiler plates that you can’t negotiate. It’s like ‘here are our terms,’ ” says Mr. Bridge, who understands why clients don’t all read the details. “I don’t know many lawyers who read [the contracts] either.”
Vince Gaetano, a mortgage broker with Monster Mortgage, says mortgage-contract language has been at the centre of a number of disputes.
He says consumers should pay close attention to the prepayment clauses in their contracts. If you have, say, a $300,000 mortgage with terms that allow you to prepay up to 20% a year, you could pay that prepayment first and any IRD penalty would only apply on the $240,000 left.
“When a penalty is applied, they should be discounting the penalty by that 20%,” says Mr. Gaetano, adding consumers can just prepay that amount by using another source of capital like a line of credit.
On a $300,000 mortgage with a 4.79% interest rate, the three-month penalty – what people usually pay – would be $4,790. If you can pay the 20% first, you save $958.
“I don’t know about you, but I have to make $2,000 to save $900, so it’s a lot of money,” Mr. Gaetano says.
Saving some money at some point should be more than enough motivation to read your contract.

#30 Sebee on 02.16.12 at 11:07 pm

Time for all the banks to throw some marketing dough to this pathetic blog and sush the guy costing them profits.

I understand you are a man of means but may I offer to broker a deal? What’s your rate for the top page space? Are advertorials on the menu? ;-)

#31 Maxamillion on 02.16.12 at 11:09 pm

Everyone wants your money for nothing.

Real estate agent sues client for commission. No sale, but agent still gets $9,446.

http://realestate.yourmoney.ca/2012/02/is-commission-without-a-sale-fair.html

#32 Smoking Man on 02.16.12 at 11:09 pm

Real Smoking Man:

I’m no match!

Love your blog/recordings of your comments. You have some interesting/great ones there!

Have a great vacation.

#33 eviee1973 on 02.16.12 at 11:28 pm

Calgaria here, as per Matt’s statement, as a under one year resident of Calgary, I came out for a two year adventure, and will happily be returning home to NS in 2013. I love my backwards, racist, redneck province surrounded by the Atlantic Ocean. Where else can you find a hometown mayor who publicly condems homosexuals, and be bashed as a white male anglophone for dating outside the white female anglophone crowd.

#34 Aussie Roy on 02.16.12 at 11:29 pm

Aussie Update

Property bubbles have an uncanny knack of following a particular pattern. At first, nothing, then prices rise and optimism begins, turning to euphoria as property becomes a ‘sure thing’ and people develop a strangely selective memory. This time, they say, for some reason, things are different. Except they aren’t. In Australia, the mining boom is no panacea for high household debt and the amount of equity redrawing that has been going on by some just to make their mortgage payments – a bit like a snake eating its own tail.

http://safetybear.voot.com.au/?p=93

No Dutch Disease in Australia: RBA

Yeah right, no housing bubble either.

http://www.news.com.au/business/breaking-news/no-dutch-disease-in-australia-rba/story-e6frfkur-1226272942927

Realtors facing reality

How such a successful and well-known brand could cease to exist is the subject of much speculation within the industry. Many suggest the agency that was No. 1 in Balmain for years had lost a lot of business to its rival Cobden & Hayson, and was now in financial difficulty.

”The mail is they were tapped on the shoulder by the bank,” one insider said.

http://theage.domain.com.au/real-estate-news/rivalry-suppressed-as-boutique-agency-swallowed-whole-20120210-1sjrt.html

Moody’s puts big banks on review for downgrade
114 financial institutions in 16 European countries on review as well

http://www.marketwatch.com/story/moodys-places-more-than-100-banks-on-review-2012-02-15

New American Dream is renting to get rich

http://www.reuters.com/article/2012/02/15/us-housing-americandream-idUSTRE81E1LG20120215

#35 Devil's Advocate on 02.16.12 at 11:31 pm

#28 McLovin on 02.16.12 at 11:00 pm
#200 Devil’s Advocate on 02.16.12 at 7:52 pm
DELETED
Is DA banned?
Shall we vote? — Garth

Excellent move Garth. Thank you my friend. };-)

#36 Van guy on 02.16.12 at 11:31 pm

Smoking Man,

What the heck do u do for a living? I wanna be like u!

#37 Onthesidelines on 02.16.12 at 11:35 pm

Yet, you are still asking why “trust’ in any financial so-called professionals has totally evaporated.

#38 Kootenay Ma on 02.16.12 at 11:37 pm

Pic is HilArious

… my two youngest used to get into the maple syrup….

#39 Bill Gable on 02.16.12 at 11:40 pm

I will say it again, MORT GAGE = FRENCH for Death Contract.

Rent. Or, for Gosh sakes, get a lawyer to go over the mortgage with a fine tooth comb.

Lawyers, guns and Money.

Zevon, Bless him, was right.

#40 Arshes on 02.16.12 at 11:51 pm

Looking for a financial planner for my parents who are gonna retire this year. Can any one recommend anyone here in Edmonton????

Contact me offline at [email protected]. I will try to help. — Garth

#41 CalgaryMatt on 02.16.12 at 11:55 pm

#20 not 1st

Time will tell I guess – didn’t ask too much about the current pace of the market, more about general trends and shifts in behaviour he is seeing. I think it’s interesting that the marginal buyer is getting sketchier.

Those who we know that have money are in no rush to buy (some have gotten married over the past two years, and are still happy to rent a condo downtown for ~$1,300-1,600/month).

We moved here from Ontario post graduation in early 2008. Of the friends my lady and I have made since moving to Cowtown, a very small percentage have purchased a home. The demographic I’m referring to is late 20’s (26-29 years old) making ~$90-$130K+/year (all-in). They have the financial capacity to purchase, but are sitting on the sidelines.

Question marks about future valuation aside, we are in no rush to plunge into the market either. Jobs, bonuses and long term incentive plan is all tied to oil & gas sector. Good chunk of the portfolio is tied to the oil & gas sector (Garth – send your wrath, but it is the only sector I can semi-understand and am linked into) so why would we tie up every penny we’ve saved to date into an already overpriced block of particle-board. Plus, we like the mobility and lack of “ball and chain” it provides. We’re both open to living in another city in the near future (internationally), so why marry ourselves to an expensive and potentially illiquid anchor in Cowtown.

Did some serious work for about one year evaluating potential rental suites (duplex or triplex where we would live in one of the units) as an investment – had a very hard time making anything cash flow if modeled out semi-conservatively. Modeled in carrying costs, renovation fund, rainy day rental fund, property management fees (assuming we would leave the city in 1-2 years), 1 month/year of vacancy, flat growth in rental rates. @ 10%-12% down, would not cash flow or would only cash flow on a 35-year variable mortgage.

Comment from my realtor friend today was that rental opportunities that cash flow are few and far between. Most of the stuff he’s seeing is in the Forest Lawn area (ghetto of Calgary) where you don’t really want to live. Tenant selection is key, risk is elevated – hence reward is still there. Sort of.

More of a ramble than an answer to your question, sorry.

#42 VicBC on 02.17.12 at 12:10 am

Interest rate differential

Back in 93 my parents sold their home, before the closing date they talked with their bank (RBC) about paying off their mortgage, they where informed that they must pay the IRD. My Mom had worked in the financial field and she had read that in Canada by law one only had to pay a three month penalty to break a mortgage. At the time we had a family member in Parliament so she asked him to dig this info up for her, which he did. When the time came to pay off the mortgage she informed the bank that they were not required under the Canadian mortgage act to pay the IRD. They payed out the mortgage with a three month penalty and no IRD.
I’ve wonder for years now why a class action suit hasn’t happened over this.
She did say if you change your original mortgage the banks will add a phrase which indeed will make you liable for the IRD

I’ll ask her for the info and try to post it this weekend

#43 City Slicker on 02.17.12 at 12:20 am

I know of one Calgary condo I was spot checking:

Mar – $446K
Aug – $419K
Nov – $398K
2012 – $375 sold

Things are slowly happening. But what will be the telling tale that the bubble officially burst? How was it known in the U.S?

Thx

#44 Trailer Park Boys on 02.17.12 at 12:23 am

We and Conky think we understand “the guy in orange shorts”reference.

It’s any idiot that lives East of Manitoba and West of Quebec.

PS Not rocket appliances…and shows why passing Grade 10 gets the chicks excited.

#45 bcpaul on 02.17.12 at 12:24 am

Devil’s Advocate is none too stable emotionally. So I say he fits right in this cadre.

#46 uk lad on 02.17.12 at 12:27 am

Since the bubble burst in the uk house prices are down 15-25%, i just purchased a property to rent out ,( no mortgage ) 33% off the asking price, 7.8%rental yield.

at the risk of being classed as a doomer i thought it would be interesting to point out that for people like myself who hold their wealth in gold ( physical bullion ) , the average house price in the uk has collapsed an astonishing 78% since 2005.

I lived in toronto 1986 – 1997 through the last boom / bust, once again joe public has been sucked in by the bankers and come the crash( inevitable) the sheeple get fleeced.

By the way Garth, there is a property cycle, around 18 years from peak to trough to peak, give or take a year or two each time, it is well proven using historical data going back 400 years. suggest anyone interested reads the works of economist Fred Harrison.

Think about it, house prices peaked in Toronto 1991/1992 peaking again around 18 years later.

cheers

#47 Steven Rowlandson on 02.17.12 at 12:29 am

I don’t buy what I can’t afford and I don’t try to borrow ridiculous amounts of currency to buy stuff either…..
That is the price of solvency.
I guess others have to find out the hard way.

#48 Expat on 02.17.12 at 12:30 am

I’m curious what CHMC covers, but too lazy to look it up. If a homeowner walks, does mortgage insurance also guarantee the interest income?

Draconian compared to a conventional mortgage in the states, what’s the deal? Barriers to competitiion in Canada to keep out those damn foreigners, or regulations in the states to prevent the same cash grab?

#49 Two-thirds on 02.17.12 at 12:31 am

IRDs seem like financial IEDs – well, except for the “improvised” part.

Another financial IED may be the fate of 2007-vintage mortgages being renewed this year. Thus far it seems that 40-year amortizations are being respected. So even if the loan is upside down (as are many in AB), in 2012, the mortgage payer gets a longer amortization than the maximum currently available CMHC-insurable term AND lower interest rates than in 2007.

If that is the case, then it appears that F and C may have succeeded in shielding fools from the consequences of their actions back in 2007 (i.e., the peak in RE prices in AB) and since (HELOC-addiction).

Garth, would you consider doing a post on what exactly are the rules/consequences for 2007 upside-down mortgages being renewed in 2012? Or has your elfin pugilist succeeded in soft-landing the RE market?

Is renewing a 2007 upside-down mortgage another potential source of anguish for the masses in markets like AB?

#50 Tony on 02.17.12 at 12:54 am

What ever happened to an assumable mortgage? Either pay cash for a house or get a loan from a friend.

#51 Tony on 02.17.12 at 1:00 am

Re: #40 CalgaryMatt on 02.16.12 at 11:55 pm

All of Alberta costs much less to buy than to rent. The same can’t be said of most of the other main cities in Canada.

#52 Ozy -HELL, I am not bailing out Canada Mortgage and Housing Corporation on 02.17.12 at 1:08 am

HELL, I am not bailing out Canada Mortgage and Housing Corporation, the bank-rupter-s should be broken down in pieces/assets/buildings and sold to pay for the MESS.

Folks, stop working when you can, retire early, take unemployment every so often, place 20K each year in RRSP, do your own business, in a shell: forget about paying Taxes.

HELL, I am not bailing out Canada Mortgage and Housing Corporation. The gang of 40 thieves should do it, from thier proceds.

HELL, I am not bailing out Canada Mortgage and Housing Corporation. Do you?

#53 nonplused on 02.17.12 at 1:20 am

Oh come on, Garth! Everyone has one or two things they don’t know by 30! 16 is when you know everything, 80 is when you finally admit you know nothing, and it looks like a stock index chart in-between, only trending down like Nortel or RIM.

I remember seeing a comic on TV many years ago belittling his dad for knowing nothing when the comic was young. Now that the comic was older he mused at how far his dad had come. We all think we know everything just when we don’t have any appreciation for how much there is to know, and how much it changes, and how poor our perceptions are.

You no more want to be 30 again than the rest of us really want to be 20 again. But I note the Amazon security detail is closer to 30 than (insert Garth’s age here). This speaks to what we all really want. Men anyways.

#54 Nostradamus Le Mad Vlad on 02.17.12 at 1:25 am


“Better still, rent. There’s a dark side to all that cheap home loan money which has been washing over the country. That reminds me. I knew everything. So to them, it cannot happen.”

Banxters. Not much more need be said about GS, JPM, Bernanke, Paulson, Carney, Volcker etc. Giving them credit, they do follow their master’s orders, belching out doublespeak to sheeple.

Out of chaos, order. All in all, in another 75 years or so, none of this will matter.
*
#207 Smoking Man — “Keep them coming bro” — U betcha!

Note that Gary Carter, catcher for the Expos, N.Y. Mets and others finished down here and moved back into the next worlds today (malignant brain tumor). Nice guy, 57.
*
Trusting Banxters and David Cameron’s friend does a naughty; Crude Up Iran stopping exports to parts of Europe; Aggregate Bond Performance Weird chart; Cooked The EZone may be gone shortly; Big Banks Remember the original AT&T was broken up? Give bad service, raise profits; Ahhhh yes. If I had a million dollars; Perverted Logic Gas above US$4 gal.? Drummond Report on pensions; Video and text links in Lotsa money and gold.

EU Car sales plunge; FRL sux; 4Closures are surging in US; Bernanke supreme socialist; Devalue the US$ The US Fed is already doing that; Sugar Crash Heard of sugar highs, not crashes; Rome? Prbably not; Art Cashin “But the traders Cashin has talked to think that it’s just the tip of the iceberg.” (Greece); Further reading Links in; Oz Employment Which way? Buying Gold? Prefer silver, lithium and thorium; Greek default here soon.
*
Fukushima Three ‘quakes in four hours, and Over 30K square kms. of radiation blankets Japan; Siberian explosions Link in; Azerbaijan What will Azerbaijan receive if the US causes trouble in Iran? Curried Chicken and rice is gorgeous, and may be good for us; 1:08 clip Soros endorses Romney, but if Kissinger told Chinese govt. officials that Jeb Bush will be installed, who to believe? Steven Colbert suspended? FEMA Monitoring itself or citizens? Private Prison Company That’s why a dictatorial police state is being set up in NAmerica.

Greg W., Oakville — One possible, not proven reason for Judge Napolitano’s firing from FOX; Apple launching new OS software, and Ten Top Features.

#55 Preciousss on 02.17.12 at 1:25 am

It is amazing how much rent money (and salary) the oil and gas companies will pay for mediocre talent, many of whom function in a redundant capacity.

#56 Divasonic on 02.17.12 at 1:47 am

Hi Garth,

We got absolutely CREAMED by CIBC on account of the IRD – to the tune of $45K. After we threatened to call every media outlet known to man (as well as OSFI and our MP) the CIBC ombudsman agreed to reduce the charge to about 30K. How nice of her…

We had to sign a confidentiality agreement so we wouldn’t talk about how we were raped.

As if!

I would really encourage Janice to push them as hard as possible to get them to give her some of HER money back.

Thanks,

Divasonic

#57 Crash Callaway on 02.17.12 at 2:27 am

#15 Calgary Matt wrote:
“Some perspective from a good realtor in Calgary with whom I sat down for a long-overdue coffee today”

Ha Ha… I’m still in stitches over the good realtor in Calgary part of that sentence.
Hope Matt got a good de lousing after that coffee

#58 Rantanplan007 on 02.17.12 at 2:29 am

CalgaryMatt:

Good points.

I live in Keynote myself. I pay for $1600 a month for a 630 sqft condo. But I’m happy. The unit I’m renting right now sold for around 400k 3 years ago, in KeynoteOne.

The same floor plan in KeynoteTwo (under construction) is about 100k less. The elevators suck, but the location is fantastic, and the quality is.. slightly above average.

#59 The Thing in the Basement on 02.17.12 at 2:38 am

41 Vic – CMHC insured mortgages used to have that clause. I think it disappeared in the late 90s.

#60 Devore on 02.17.12 at 2:39 am

#27 [email protected]

Can the mortgage contracts be altered? I was under the impression that these were standard forms full of shady industry clauses that the banks/lenders hatched together without the ability of the customer to negotiate them out.

You can negotiate anything you like.

#61 Golden Stu on 02.17.12 at 2:49 am

I beat the RBC…..

when we sold, they hit us with the 3 month interest penalty.

However we were paying the mortgage, bi-weekly. So which ever muppet working in the bank looked at the papers said

3 x payments = penalty

small victory, but a good one

#62 Tax Farm Slave (with great job and benefits) on 02.17.12 at 2:53 am

#41 VicBC on 02.17.12 at 12:10 am
————————————-
They changed the law. That’s why there hasn’t been a class action lawsuit.

#63 Tax Farm Slave (with great job and benefits) on 02.17.12 at 3:00 am

Shall we vote? — Garth
—————————-
Keep him. Just get him to stop fighting with the other dogs. DA don’t take the bait!

#64 John Ratadlin on 02.17.12 at 3:12 am

Japan has one of the highest debt to GDP ratio in the developed world and their interest rates on Japanese bonds are 1%-2%. It looks like slow, torturous pain for everyone. Food and energy prices are a world market so deflation like Japan has will not change this. A few last things taxes are going much higher over the next 10-12 years H.S.T. 17%, Highest marginal income tax rates Ontario 51.41%, Quebec 57.7%, Alberta 43.5% etc. Higher income tax rates on dividends Canadian 35.56%, higher C.P.P. and E.I. contribution rates at least 49% over next 12 years. Higher gasoline, tobacco,liquor taxes etc. Also, new taxes like road tolls, new user fees and RRSP, RRIF tax rules to tax trap all the retirees. Look at history every 20 years or so new, higher, taxes and fees just spring up. They could put a April Fools Day Tax!AFT?guess what %

#65 Dorothy on 02.17.12 at 3:27 am

I’ve paid off several mortgages during my lifetime, and never once have I run into a situation where I got ripped off in the way you describe. But I always dealt directly with my bank, not through a mortgage broker, I never had a very large amount remaining to pay off, and I always read my mortgage document carefully prior to making the prepayments. Anyway, I dug through my files and found the papers on the mortgage I paid off most recently (last year) and according to what I’m reading, the bank will only go after the IRD if the current interest rate is HIGHER than the rate of your mortgage.

Here’s the quote:
“Interest Rate Diffential Amount” means the amount of interest, calculated at the Differential Interest Rate on the amount of Fixed Rate Debt that you prepay, for the remaining Term. The Differential Interest Rate is the difference between (A) the Fixed Interest Rate (in the above example 3.69%) and (B) the current interest rate for a Similar Mortgage (in the above example 4.04%). A Similar Mortgage is a mortgage offered by the Bank that has a fixed interest rate and a term closed to prepayment tht is closest to the remainder of the Term. The current interest rate for a Similar Mortgage is the Bank’s non-discounted posted rate less any rate reduction or discount received by you for a Fixed Rate Debt, and is determined on the earlier of the date of the prepayment or the date the Bank issues a valid discharge statement. If the Fixed Rate Debt has been re-financed and additional funds advanced using a blended rate of interest (including advances under the Bank’s portability provisions), then the rate reduction will be the weighted average, based on the dollar amount, of the most recent rate reduction or discount received by you prior to the re-financing and the rate reduction on any additional funds advanced at the time of the re-financing.

So, by my calculations, unless that last paragraph about refinancing applied to the lady, her IRD would have been 4 years worth of interest @ 0.35% on the amount she prepaid (the balance of her mortgage).

However, if the POSTED rate for a 4 year term was the 4.04% quoted above, then the 1.5% reduction she originally received should have been factored in, bringing it down to 2.54%. As that is lower than her original fixed rate amount she would not have been subject to the IRD but to the 3 month penalty. Because the mortgage document states the bank will apply the HIGHER of the two.

As not all banks use the same wording in their mortgage documents, I should tell you that the one I quoted from was from TD. But maybe this is just one more reason people should shop around before they buy a mortgage.

#66 Kip on 02.17.12 at 4:39 am

“The poor girl was done over by a major bank which shall remain nameless, but whose initials are CIBC.”

I broke a mortgage 2-years ago and only paid the 3 months interest plus a discharge fee and that was with CIBC (1st Line). I guess greed is taking hold everywhere. That does seem like a heavy penalty though.

#67 Barb on 02.17.12 at 5:08 am

According to a good friend of mine who’s a Real Estate Agent in Vancouver, there’s a shortage of properties in Vancouver and North Vancouver. The inventory is very low.

#68 househornyhousewife on 02.17.12 at 8:00 am

Garth,

Business is business. I am the absolute last person to be condoning a bank’s actions as they are indeed the blood sucking, selfish bastards that everyone thinks they are. They are ruthless .. that’s business and all the more reason to watch them carefully rather than trust them implicitly.

Janice signed a contract which undoubtedly told her all of this. If she chose to disregard it then she risked much and now has to stand behind whatever she signed.

She locked in at 3.69% at a time when the bank’s posted rate for anyone walking in off the street would have been 5.19%. The way the bank figures it, if they had not loaned her the five year term, they could have loaned it to this other fictitious person at the 5.19% rate. This opportunity cost has to be assumed by her since she wants out of the contract.

Fair enough. She made an error in not reading the fine print and now has to pay the price. However, if I were her, I would haggle with them and tell them that if they did not do something to make thinks more “kosher” then she would take every penny that she has in that bank (bank accounts, investments, credit cards, RRSP’s etc..) and transfer it to one of the other bigger banks next door. If they still don’t listen, then I would follow through with my threat, move everything over and consider it a lesson well learned for the future.

Business is all about power and leverage. Janice may also want to seek out a journalist in a major newspaper who is interested in telling her story. Bad publicity is another wonderful power tool.

HHHW

#69 eddy on 02.17.12 at 8:37 am

as usual, the bank gets the goldmine, we get the shaft
this practice would be illegal, if we had a government.
=withdraw today, avoid the run

The Deflationary Undertow Before The Inflationary Wave –

http://gonzalolira.blogspot.com/2012/02/deflationary-undertow-before.html#more

#70 tkid on 02.17.12 at 8:42 am

Voting DA off the island!

No offense dude, but you post way too freakin’ much.

#71 tkid on 02.17.12 at 8:46 am

Broke a $70 mtg, paid $6. Was with HLC

#72 Tax Farm Slave (with great job and benefits) on 02.17.12 at 9:00 am

#31 Maxamillion on 02.16.12 at 11:09 pm
———————————————–
How’s that money for nothing?

From the article:

“Since the agent had worked exceptionally hard to bring in an offer (at the full listing price), the judge agreed that he should indeed be paid his commission.”

If I was an agent and spent my resources to bring in multiple offers, and to negotiate an offer at full list price (for a piece of land), and the seller backed out ‘just because’, I’d be extremely pissed too. The agent did their job and should be compensated.

#73 Kevin on 02.17.12 at 9:19 am

“Never, ever take a mortgage just because it’s got a bitchin’ cheap rate.”

Wait … didn’t Janice get into trouble because rates dropped? Isn’t the lesson here that you should only take a mortgage because it’s got a cheap rate? If Janice had gotten a mortgage with a “cheap rate,” and rates rose, she wouldn’t be in any trouble at all. As you said, the IRD wouldn’t apply, she’d just pay her 3 months’ and be done. I don’t understand how your advice above follows logically from Janice’s situation – it seems to directly contradict the lesson.

The point was (I’m sad I have to even make it) that a mortgage is complicated and the rate is but one factor to consider. Before you get in, know how to get out. — Garth

#74 Kevin on 02.17.12 at 9:25 am

One trick to (at least partially) mitigate an IRD penalty is to take advantage of any pre-payment allowance room. Most mortgages permit you to make extra payments of up to 10-15% of the original loan balance. In contrast, any breaking penalty (IRD or 3 months’ interest) is calculated on the outstanding balance.

In addition, you can often make “double-up” payments that do not count towards this prepayment room.

So if you know you’re going to need to break your mortgage a few months down the road, start doubling-up your payments, and then right before you break the mortgage, max out your prepayment allowance, even using (hopefully cheap) borrowed money to do so. This gets the “outstanding balance” against which the penalty is calculated as low as possible, minimizing your penalty. Then as soon as you’ve sold the home, repay the loan you used to make that huge lump sum. Ideally, you would only have borrowed that money for a month or two, so the interest you paid on that loan would be drastically less than the penalty you would have paid had that money been left in the mortgage when the penalty was calculated.

#75 TurnerNation on 02.17.12 at 9:31 am

Oh dear. Giant Squid (GS). Blog Dog Carney also is ex-GS.

“Canada Pension Hires Ex-Goldman Sachs Banker Mark Machin as Asia Unit Head

Canada Pension Plan Investment Board, the country’s second-biggest retirement fund, tapped a veteran investment banker to head its Asia-Pacific unit as it seeks to increase investments in the region.”

#76 Sticky on 02.17.12 at 9:39 am

Its a sad day when everyone is “happy” to “only” pay a 3 month penalty… and that is brushed off as somehow being okay. Sheesh.

Look into an open mortgage and negotiate the rate down. Then you will be even more happy to “only” pay a couple hundred in fees to end early.

#77 RKnUSA on 02.17.12 at 9:46 am

Yes CDN Banks, the chosen ones

in Canada consumers have no protection if someone gets a hold of your bank card PIN and withdrawls money, I know because I suffered this loss, whereas in the States the consumer is protected and not liable for any unauthorized use of a bank card

it is time for CDN banks lose their privileged class status at the expense of the CDN consumer

#78 Joey on 02.17.12 at 10:04 am

“More time is spent buying shoes and cars than houses and mortgages. As the cost of real estate soars beyond reason, ironically the cult of home ownership deepens. Pressure from peers, parents and society has turned property into a no-risk, no-lose move in the minds of the virgins. Most never think of physical burdens, the magnitude of the debt, or even an exit strategy. An entire generation has never seen real estate turn illiquid or erode in value. So to them, it cannot happen.”

-Garth, thank you for this concise summary of how I have been feeling for some time. It is so nice to see it articulated amongst the other BS out there in the media and the general public. This pathetic blog has become required reading for my peace of mind and affirmation that there is still some sane people out there speaking honest and unfiltered opinions.

#79 Gotthardbahn on 02.17.12 at 10:14 am

That business about the CIBC and the IRD – this is truly disgraceful. ‘For what matters’ indeed!

Recently I’ve been thinking the Big Five banks are TOO big and oughta be broken up. Remember all the stockbrokers there once were in Canada? Or the trust companies like Royal Trust, Canada Trust, Crown Trust and the like? All gobbled up with Ottawa’s blessing. Or perhaps Ottawa was told – by the Big Five – to stand aside while they gorged themselves. Whichever, only a fool thinks Ottawa controls these guys – it’s the other way around. Julie Dickson tells the banks what to do? As the ancient Greeks would say: HAH

#80 Bond junkie on 02.17.12 at 10:17 am

I’ve said it before and I’ll say it again, the market for SFH in core GTA is and will remain ROCK SOLID for the forseeable future… ROCK SOLID. http://www.theglobeandmail.com/life/home-and-garden/real-estate/buying-and-selling/the-toronto-housing-market-comes-to-an-early-boil/article2339828/

#81 OneMoreThing on 02.17.12 at 10:21 am

An entire generation has never seen real estate turn illiquid or erode in value. So to them, it cannot happen.

That reminds me. I miss being thirty. I knew everything.

Me too Garth!

I’d like to think of it as a painful lesson of “Not Knowing what you dont know!”

Simple manipulation is all around us but this type of manipulation to the masses and the bailouts of the elite is purely criminal!

Wishing for 30 again only in the hopes that we went back with some common sense!

#82 Aussie Roy on 02.17.12 at 10:23 am

Aussie Update

Yes, I know, no bubble in Australia, never was, never will be, it’s different here. Well most places here.

PROPERTY industry figures show the median house price in Catherine Hill Bay has plummeted 35 per cent in three years.
Realestate.com.au figures show the bay’s property prices fell from a median of $675,000 in 2008 to $442,000 last year.

The figures show the property market hit a median peak of $1 million in 2004, before falling sharply the following year.

Since the global financial crisis hit in 2008, prices have fallen further.

http://www.theherald.com.au/news/local/news/general/catherine-hill-bay-property-values-plummet/2458515.aspx

#83 Nate on 02.17.12 at 10:26 am

This is exactly how RBC screwed me over when I sold my 230K condo and broke the 5 year locked mortgage after 2 years. After the sale was completed I owed the bank $10,800. They have this dandy calculation formula that works only one way, the banks way.
Yeah the bank and the real estate agent made all the profits, not me, I was in the hole. Thanks to the greedy bastards that the government supports so dearly.

What can hard working people do to stop crooks like the banks and real estate agents from taking such a large cut?

#84 Shawn Allen (Not The Investor's Bestest Little Buddy) on 02.17.12 at 10:28 am

When dealing with the banks, you have to understand their language, and their way of doing business. As Garth mentioned, get advice from a lawyer, but since the majority can’t afford any, try making it up. Use phrases like “minimal exposure to leverage” “How many basis points are we talking here?” or “Durka Durka”. Ah yes, “Durka Durka” How many times has that phrase saved me?

See how it works for you and ladies, You’re welcome.

http://www.youtube.com/watch?v=UK0Vo-rK1dM&feature=related

#85 Young Old Fart on 02.17.12 at 10:32 am

#27 [email protected] on 02.16.12 at 10:58 pm
Garth wrote – “Read the fine print. Even better, pay your lawyer to read it.” Can the mortgage contracts be altered?
===================================

No, they can’t. The problem is stupid people that trust [email protected] and sign their life away…..

#86 Torquemada on 02.17.12 at 10:32 am

Listen to Janice’s mortgage broker – the person who arranged the loan:

“So the bank has the opportunity to lend out this money returned to them for 4.39% for the balance of the term. By my calculation, the lender would have earned $53,441. if the current mortgage had been left to maturity. As it was paid out early, the lender will earn $12,565.03 plus the interest at 4.39% for reinvesting the funds for the balance of the term of $63,779. Total- $75,643.00. The penalty is based upon a hypothetical situation and further illustrates the greed of big banks.”

To me this is a better illustration of the incompetence and uselessness of mortgage brokers (assuming that this broker didn’t explain the mortgage discharge fee calculation to his/her client prior to signing her up for the loan.

#87 AM on 02.17.12 at 10:34 am

Re: IRD…I have a personal story from a few years back that also involved that name withheld bank (starts with CIBC).

When 5 yr rates were becoming available below 4% a few years back, I thought I should renew early and pile in my LOC. I needed to get my financial house in order. Basic refi right? Expecting a little ‘good customer relations’ I thought I could blend and extend to get a rate better than what I had at the time but not as low as I could get if I was just getting a new mortgage. With two years left on the current mortgage they say “no it doesn’t work that way. Pay us the penalty and we will go from there”. These guys just upped the rate on my LOC by 1% a few months earlier and I was expecting mortgage rates to start climbing as well.

Feeling burned at this point, I do a cost benefit analysis over five years and included the penalty $9,000+. At the end of the day I did pay the penalty because it made sense with the lower rate over the 5 year period, but since they more or less gave me no good options to save money I took my business across the street and managed to get better rate than they could offer.

I will never do business with CIBC again, and as Garth alluded to, be aware of what you are signing up for cause the bank owns you for the full term of the mortgage.

#88 Smokanagan on 02.17.12 at 10:37 am

Ah yes, cue the whining about greedy banks. As a shareholder of CIBC I have a smug smile reading this post. If you enter a 5 year contract and break it after 1, you should expect to pay more than measly 3.5k. [email protected] needs to be paid for all her hard work!

#89 Ronaldo on 02.17.12 at 10:39 am

#68 – HouseHornyHousewife

”Fair enough. She made an error in not reading the fine print and now has to pay the price. However, if I were her, I would haggle with them and tell them that if they did not do something to make thinks more “kosher” then she would take every penny that she has in that bank (bank accounts, investments, credit cards, RRSP’s etc..) and transfer it to one of the other bigger banks next door. If they still don’t listen, then I would follow through with my threat, move everything over and consider it a lesson well learned for the future.”

This strategy would likely work with a credit union today but with the big banks, unless she has a pile of cash, I doubt that they would give it a second thought. People are just a number with them nowadays, they are simply ”Too Big To Care”.

#90 Ronaldo on 02.17.12 at 10:50 am

#67 Barb –

”According to a good friend of mine who’s a Real Estate Agent in Vancouver, there’s a shortage of properties in Vancouver and North Vancouver. The inventory is very low.”

When the reality that the market is declining finally hits people between the eyes, those who got into the market with little or nothing down will be rushing to the exits knowing that the longer they hang on, the bigger cheque they will have to write to the bank to get out of the trap they are in. Most will be trapped and the banks know this.

When it does happen, it will be like the horses coming out of the gates at Exhibition Park. Wait a few more weeks. Use your imagination on what will happen next.

#91 Kilby on 02.17.12 at 10:58 am

Maybe instead of totally banning some of the more combative, verbose posters, limiting them to 200 words would be a compromise?

#92 from kits on 02.17.12 at 10:59 am

interest rate history since 1780…
http://jugglingdynamite.com/wp-content/uploads/2012/02/long-term-rates-since-1790.png

some sound advice attached on dealing with your debt today attached to the photo

http://jugglingdynamite.com/

get rid of your cheap debt while you have the chance!

#93 refinow on 02.17.12 at 10:59 am

if a mortgage is in default, the maximum mortgage penalty the bank will charge is 3m interest.

No IRD on power of sales.

What would be interesting is to test the bank’s theory of being in arrears.

Lady with the $12K penalty, what if she stopped paying her mortgage 3 months earlier, let it go 3 months behind. then pay it in full…. Bank might have only charged he the 3 months interest.

Kind of makes you wonder…

I do know there are lobbiest taking on these rediculous mortgage penalty calculations…

#94 The Thing in the Basement on 02.17.12 at 11:03 am

68 HHHW – if her bank holdings were of any size, she shouldnt have needed that big mortgage! Banks dont care. Best to get a quick legal opinion on the IRD then take them to small claims just to be annoying.

#95 Daisy Mae on 02.17.12 at 11:05 am

#49 TWO-THIRDS: If that is the case, then it appears that F and C may have succeeded in shielding fools from the consequences of their actions back in 2007 (i.e., the peak in RE prices in AB) and since (HELOC-addiction).“

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

What the government is and has been doing, is wiggling out of the mess they alone created in Canada. They haven`t succeeded at anything.

#96 Kevin on 02.17.12 at 11:14 am

@Two-Thirds:

“Is renewing a 2007 upside-down mortgage another potential source of anguish for the masses in markets like AB?”

Only if they want to change lenders.

Banks can offer whatever amortizations they want. 25-year, 40-year, 80-year, whatever. The rules only say that CMHC will only insure amortizations of up to 30 years.

CMHC is required on new loans with less than 20% loan-to-value.

Renewing a loan is not a “new” loan, and thus does not need to qualify for CMHC. The existing CMHC coverage simply continues.

These are not new rules – this is how it’s always worked. The people you describe will be fine if they simply renew with their current lender. They will not need to requalify (or pay) for CMHC, they will not need a property appraisal, they can stick to their original 40-year amortization plan, regardless of the current value of the home. All that changes is they get a new, cheaper rate. Again, this is how it’s always worked.

The only time they would face a problem is if they wanted to change lenders. Then they’d need a new appaisal, they’d need CMHC again (which would force them into a shorter amortization schedule than they’d been paying) and if they were truly underwater, they would not get approved anyway.

So they’re stuck with their current mortgage holder, but otherwise, they’re not in any trouble at all. In fact, because rates have dropped, their payments will get smaller when they renew this year.

#97 refinow on 02.17.12 at 11:15 am

#86.

Being a mortgage broker myself please do not paint us all with the same brush.

I agree there are some really bad unexperienced agents out there, just like in real estate we require little more than a pulse to obtain a license, but after 20 years in the business i can assure you, that rediculous answer would not have come from me.

Side note…

If that same lady had just recently taken the BMO 2.99% 5 year mortgage and walked in to pay off her mortgage, she would have had an even bigger surprise….

BMO would have to inform her that she “CAN’T PAYOFF” that mortgage… with or without a penalty.

yes this is not a misprint.

There is a hidden clause contained deep within the paperwork that says that mortgage can only be paid out prior to maturity with a bonified sale, (at which time the greater of penalty calculator would kick in….) or if the client is deceased…

Death or Sale, that is it….

So Janice would be stuck paying that mortgage until maturity which would cost her a hell of a lot more then the $12k penalty….

Buyer beware, this was why I was selling the 4 year 2.99% without that clause to all my clients instead.

BMO just invented the “Hotel California clause”…… “You can check out any time you want….But you can never leave… !!!”

#98 Herb on 02.17.12 at 11:24 am

Time to repeat the recent Cologne Carnival joke I posted a few days ago: Remember the good old days, “… when the bank robbers worked on our side of the counter?”

Must give a nod to the bank I’ve dealt with on four mortgages discharged early over the last 30 years, RBC. Not a single hiccup.

#99 jess on 02.17.12 at 11:30 am

Nostra D

…all that is needed is a robo signing president with enough digits to hold a pen.

Norquist: Romney Will Do As Told
by David Frum Feb 13, 2012 9:45 AM EST

Norquist:
“All we have to do is replace Obama. … We are not auditioning for fearless leader. We don’t need a president to tell us in what direction to go. We know what direction to go. We want the Ryan budget. … We just need a president to sign this stuff. We don’t need someone to think it up or design it. The leadership now for the modern conservative movement for the next 20 years will be coming out of the House and the Senate.

Pick a Republican with enough working digits to handle a pen to become president of the United States. This is a change for Republicans: the House and Senate doing the work with the president signing bills. His job is to be captain of the team, to sign the legislation that has already been prepared.”

http://www.thedailybeast.com/articles/2012/02/13/grover-norquist-speech-cpac.html

===

Justice officials were annoyed by Hummler’s writing a “Farewell, America” letter to Wegelin clients after the UBS settlement in 2009, according to people familiar with the matter. A Justice Department spokesman declined to comment. In the letter, which was posted on Wegelin’s website, he scolded the United States for “breathtaking moral duplicity in maintaining enormous offshore tax havens in Delaware, Florida and others of its states” and urged clients to sell any U.S. securities they owned given heightened Internal Revenue Service scrutiny of tax dodgers.

Hummler’s letter was taken as an invitation for tax evaders to take their funds to Wegelin while UBS and other banks swept their accounts clear of tax offenders, several Swiss private bankers said. Hummler’s error, rival Swiss bankers say, was in thinking Wegelin was safe from a U.S. indictment just because the bank didn’t run any U.S.-based branches.”

=
Western Entanglements
“However we regularly review and take legal advice to ensure our compliance with sanctions legislation. We remain confident that BP is in full compliance with all applicable sanctions regimes including UN, EU regulations and US law, and will remain in compliance,” he said. “We continue to monitor the situation closely.”

From British island to Asian
National Iranian Oil Company (NIOC), dissolved its base on the Channel isle on January 8 with a “certificate of continuance” that indicated it would move to the tax haven of Labuan, an island off the coast of Malaysia

#100 Kevin on 02.17.12 at 11:31 am

There’s an awful lot of vilification of CIBC going on here today. I just want to point out – this isn’t unique to CIBC. EVERY mortgage lender in Canada does this (and I don’t just mean the big banks – I mean every single financial entity that offers mortgages). It’s standard operating procedure.

It’s not even really unreasonable, when you think about it. You entered into an agreement with a lender. They fronted you a bunch of cash, with the expectation of making a return on it. Now rates have dropped, and you want out of the deal. So what – the bank should just quietly surrender the rest of the interest they expected to make (and you signed a promise to pay!), because … you’re a nice person? That’s no way to run a business.

How are Garth’s much-vaunted “bank preferreds” supposed to keep paying us 7% if they routinely let people walk away from their obligations? You can’t have it both ways, people!

Read what you sign. If you don’t like it, don’t sign. Pay cash for your house, or suck it up and play ball. Don’t complain when you’re held to the rules you agreed to.

#101 Kilby on 02.17.12 at 11:38 am

Victoria and all surrounding municipalities, including Sooke.

2,879 active listings. Last 7 days, 86 sales.

39 – listed 30 days or less.
30 – ” 30 to 100 days
17 – ” over 100 days

#102 Canadian Watchdog on 02.17.12 at 11:38 am

#96 Kevin

What happens when someone refi’s with negative equity?

#103 robert james on 02.17.12 at 11:39 am

#26 Kootney Mom My guess would be that the Koots will get whacked the same as the Okanagan.. Greed and Stupid is a bad combination…I knew a guy here in the Okanagan back in the 70`s that would loose everything when ever BC went into recession..He bragged about using other people`s money.. Every time the little twit went broke he became ” Born Again” .. LOL Pigs always get slaughtered..

#104 Mister Obvious on 02.17.12 at 11:54 am

#911 Kilby

“Maybe instead of totally banning some of the more combative, verbose posters, limiting them to 200 words would be a compromise?”
———————-

But then you would also have to limit them to one post per day. That’s far too much ‘administration’ to spend on disruptive people.

#105 Frank on 02.17.12 at 11:57 am

What is happening in Kelowna with record number of foreclosures a sign of things to come, or is this just a localized event?

#106 Snowboid on 02.17.12 at 12:08 pm

Shall we vote? — Garth

Given that I decided a few months back to ignore all of his posts, doesn’t matter to me.

Based on the overwhelming response to your question it appears most others ignore as well.

#107 disciple on 02.17.12 at 12:14 pm

Ecclesiasticus 21:8 (Septuagint – Apocrypha), “He that buildeth his house with other men’s money is like one that gathereth himself stones for the tomb of his burial.”

Romans 13:8, “Owe no man any thing, but to love one another”

Nehemiah 5:3-5, “…We have mortgaged our lands, vineyards, and houses…We have borrowed money for the king’s tribute, and that upon our lands and vineyards…and, lo, we bring into bondage our sons and our daughters to be servants, and some of our daughters are brought unto bondage already: neither is it in our power to redeem them; for other men have our lands and vineyards.”

“The merchants of the Italian city states and of the cities that were members of the Hensiatic League rejuvenated general European trade in the twelfth and thirteenth centuries, following its almost total abandonment after the fall of Rome. These traders took precepts from the ancient law of the Romans Empire, adapted them to their times, and created customs of trade and ways of doing business that became accepted among the merchants of all Europe. And hence, this body of business, or commercial law, obtained the name Law Merchant. The law of agencies, sales, negotiable instruments, insurance, carriage, debt, guarantees, soffage and transit, liens, partnership and bankruptcy, was made by these traveling, international private merchants.” – Fundamentals of Business Law, 1950.

#108 Kevin on 02.17.12 at 12:14 pm

@Canadian Watchdog:

“What happens when someone refi’s with negative equity?”

With the same lender or with a new one?

If they stick with the same one, nothing happens. They just get a new rate and a new monthly payment, same amortization, life continues as normal. No appraisal is done, so “negative equity” doesn’t mean anything because the bank doesn’t know (or care), as long as you keep paying your monthly.

If you tried to switch lenders, I’m guessing you’d have to write a cheque to cover the difference, and bring you back into a positive-equity situation, but I’ll admit I’m just guessing on this part.

#109 FTP - First Time Poster on 02.17.12 at 12:16 pm

I have one simple question for everyone out there burned by the big 5. Why isn’t everyone taking our money and investments out of the hands of the big 5 and giving it to the local Credit Unions?

I had a mtg with Scotia and while I didn’t have any issues with it, my investment account was getting fleeced by their brokerage fees. I remember paying $300 for one transaction! I got fed up and moved it to Qtrade – a little known company w. great service. Flat fees, no BS and best of all, no feeding the Big 5!

#110 T.J. BONES on 02.17.12 at 12:20 pm

Sir Garth: Today on the CBC website / Business area, they have an item financial Guru’s top picks for reading. Your old friend Sherry S. Cooper is included. All the other celebraties have their names boldly pronounced, but not Sherry’s. HeHeHe. Beware Sherry S. Cooper, thirteen letters!

#111 disciple on 02.17.12 at 12:26 pm

To continue today’s history lesson:

“Notable among the Norman influences after 1066 was the written credit agreement, Shetar, or Starr, as it appears in English documents. The basis of the Shetar, or Jewish gauge, was a lean on all property, including realty, that has been traced as a source of the modern mortgage. Under Jewish law, the Shetar permitted a creditor to proceed against all the goods and land of the defaulted debtor. Both movable and immovable property was subjected to distraint.

In contrast, the obligation of knight service, under Anglo Saxon Norman law, barred a land transfer that would have imposed a new tenant, and therefore, a different knight owing service upon the lord. The dominance of personal feudal loyalties equally forbade the attachment of land in satisfaction of a debt; only the debtor’s chattels could be seized.” – Judith Shapiro.

In other words, personal debts could not be attached to property before the Shetar, so it was a weapon of socio-economic change that tore the fabric of feudal society and established the power of liquid wealth in place of land holding.

Traces of the Shetar procedures survived for centuries in English law. A sealed debt continued to be discharged only by a deed of release or by cancellation or destruction of the debt instrument. The practice of debt cancellation by requiring return of the pes of the chirograph continued from 1194 until its abolition by statute in 1833. Most important, the encumbrance of real property permitted by the Jewish law of the Shetar had been adopted by English law.

Bonds contained the traditional Hebrew formula of pledging “all my goods, movable and immovable.” Creditors had the statutory right to execute against the debtor’s land. No longer were personal obligations and rights in land rigidly separate. A small but significant principle of Jewish law wherein personal debt superceded rights in real property had become the law of the land.” – Georgetown Law Journal.

#112 Bridgepigeon on 02.17.12 at 12:30 pm

Let DA stay, he’s harmless.

#113 Kilby on 02.17.12 at 12:30 pm

#67 Barb.

North Vancouver has 732 residential listings right now and there was only 45 sales last week. Look at all the empty condos at the foot of Lonsdale, like a ghost village.

#114 Ronaldo on 02.17.12 at 12:35 pm

#103 Robert James – The Koot and the Okanagan have always been, at least in the last 40 yrs that I’m aware of, the place for the “BOM”, Big Oil Money, to come to. We can still see the residue of this all along the Westside Rd where several developments are awash with unsold lots developed back in the 70’s. Many of which were purchased by the BOM. With the boom and bust in the oil industry the way it was, many of those lots were walked away from. No shortage of land for sale there. Wonder how they are making out selling the cottages at Secret Cove and La Casa.

#115 Preciousss on 02.17.12 at 12:54 pm

Fake Bonds (Whoda thunk)?

http://www.bloomberg.com/news/2012-02-17/italy-police-seize-6-trillion-of-fake-u-s-treasury-bonds-in-switzerland.html

#116 AACI Okanagan on 02.17.12 at 1:00 pm

#210 Devil’s Advocate on 02.16.12 at 8:33 pm

#198JRoss on 02.16.12 at 7:34 pm

I understand what AAIC was saying.

The fact is that when I do a market update for my listing clients I do search for properties which have been resold in a given period of time to exemplify what the market has done. Most recently I did so for a listing not so far away from that you mention on Curlew Drive (which is an interesting case example in its own right BTW. There is a lot more to THAT story than you seem to be privy to).

Anyway you would be surprised how difficult it is to find, especially in the more traditional established Okanagan Mission areas, properties which were bought at the peak of the market and then sold more recently for much less if any.

There is one I can point you to located at 4362 Kensington Drive in Kelowna’s Okanagan Mission area which was bought for $635,000 on February 16, 2007 (pretty much the peak of the market). That property was sold by the then buyer on July 5th of this year for $1,127,500.

sorry for bringing this up in a different thread Garth but I just wanted to point this

DA, by posting that example , Kensington Drive just proves to me that you don’t understand the concept of the pair set analysis, here I thought you learned something yesterday.. what you are missing and do not mention is the changes the property has under gone since 2007. When the house sold in 2007 it was 1612sf in size. When it sold in 2011 it was 2445sf in size. The property was completely redone to include an upgraded salt water pool, extensive concrete patio areas (3700sf) , a new master bedroom addition, it was basically a new house. I spoke to the appraiser that knows the property well and he informed me that there was over $500,000 in reno alone since 07. If you are going to use the pair sales, then the house has to be unchanged or little changes.

Regards

#117 Sticky on 02.17.12 at 1:03 pm

#100 Kevin:

It is a shame that banks run the world. Most of a CAD bank’s profit come from retail & commercial banking…which is the spread between their costs and what they gouge from the Canadian consumer. Record profits recently.

Sticking to an agreement is reasonable. The agreement and fees, and practices -> Unreasonable.

Outsourcing banking operations to India while increasing costs to Canadian consumers -> unreasonable.

Just wait until they outsource standard accounting and legal tasks to India as well (if they haven’t all ready). Lowering costs yet again while they continue to gouge the Canadian consumer, and receive back door support from the Canadian taxpayer.

Bullish for their stocks, Bearish for Canadians.

#118 Mr Buyer on 02.17.12 at 1:16 pm

#100 Kevin…I am quite certain everybody here would love to pay cash for a house but the banks you are speaking on behalf of have tilted the playing field so severely over the past few decades that it is highly improbable a person has the option to pay cash. This in effect is a monopoly in that financing has become a requirement as a direct result of banks financing house purchases so much so that the conditions of financing can more or less be dictated to the client seeking said financing. Do not like our terms, we do not care, you must borrow because we inflated prices so you have to borrow. This is not freedom to choose in any reasonable sense. I like the deriding of the beggars as well, nice touch. Suck it up, play ball, get with the program more or less or do not “BUY” a house. It is interesting that the mortgage types didn’t try to inflate something less crucial to survival such as tulip bulbs once again. There would probably be an infinitely higher chance of people saying to the lenders, thanks but 70 to 90% payment above and beyond the purchase amount is highway robbery. No, there are goods and services that by their very nature are less of a choice. I think we will always have these make money off of lending money types but I see little reason why we should not restrict their activities to financing goods and services of a purely luxury nature. This would free up tons of cash. When I get the time I would like to do a rough estimation of the amount of cash spent servicing interest on mortgages in our great country year in year out and into the foreseeable future.

#119 jess on 02.17.12 at 1:20 pm

emerging
Most OTC derivatives will be relegated to being traded on exchanges e.g. State street – The swap execution facility, named SwapEx. “Most” but what is excluded?

===========
Bright line not in the mind?
Orange county’s financial wizard of the 1990’s ,bet on interest rates staying low did not pay off for residents. Although, a mental incompetency defense
allowed for no jail time . County voters rejected a tax increase to pay off the debt. Ultimately, repayment was financed by recovery bonds and a settlement from Merrill Lynch.
http://www.youtube.com/watch?v=O0kGWHq3Fe0

====

As banks find it difficult to find credit worthy borrowers, they are using their fund to trade derivatives to drive profits
November 24, 2009
http://www.henryckliu.com/page211.html

#120 AtomicPaws on 02.17.12 at 1:22 pm

Ummm…..

A group of traders and brokers had successfully managed to manipulate key interbank lending rates that affect loans around the world, one of the banks being investigated has told Canadian regulators, the Wall Street Journal reported on Friday.

I have a feeling this is going to be a big deal…

#121 Junius on 02.17.12 at 1:37 pm

#68 househornywife,

You said, “Business is business. I am the absolute last person to be condoning a bank’s actions as they are indeed the blood sucking, selfish bastards that everyone thinks they are. They are ruthless .. that’s business and all the more reason to watch them carefully rather than trust them implicitly.”

But why? Banks do not operate in a free market. They are chartered and have a license to operate within a regulatory system that is supposed to support the economy. They literally have a license to print money. Do you not think that they should have rules preventing them from being so predatory?

I am pretty tired of people not realizing that our largest corporations from our big banks to big media to pharma to oil to food do not play by the rule of the free market. They make the rules or bend them to their needs in ways that is not just anti-competitive but against our collective good.

When will people wake up? Create a regulation that allows home-owners to pay off their mortgages for no or a small penalty. What is wrong with that?

#122 guy from toronto on 02.17.12 at 1:45 pm

question for Turner Nation, if the CPP is the second biggest retirement plan in Canada, what could the largest one possibly be? I cannot imagine. Any idea?

I did find this on wiki “In June 2011 the Canada Pension Plan Investment Board had $153.2 billion in assets under management” and shockingly, the Ontario Teachers plan has 2/3 of this amount! “The Ontario Teachers’ Pension Plan is one of Canada’s largest institutional investors having reported C$107.5 billion in net assets on December 31, 2010”

Crazy. So the teachers in Ontario alone have 2/3 as much money as everyone in the entire country. wow. And they get CPP too!

But cannot find the biggest fund.

Garth? Bueller? Anyone?

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

#75 TurnerNation on 02.17.12 at 9:31 am
Oh dear. Giant Squid (GS). Blog Dog Carney also is ex-GS.

“Canada Pension Hires Ex-Goldman Sachs Banker Mark Machin as Asia Unit Head

Canada Pension Plan Investment Board, the country’s second-biggest retirement fund, tapped a veteran investment banker to head its Asia-Pacific unit as it seeks to increase investments in the region.”

#123 arctodus on 02.17.12 at 1:53 pm

#26 Kootenay Mom,

Just what is the economic base of Cranbrook anyway?

It is the biggest dive I have ever seen and if I hear one more person wax eloquent about the “outdoor lifestyle” I will puke all over their shoes.

I want to rent a small house so that I can visit my toddler son (his mom is a classic useless hippy chick from that burg) but the prices that are being asked for are so far from reality that I just walk away.

#124 Kilby on 02.17.12 at 1:55 pm

#109 First Time poster.

Around 15 years ago and having service problems both with CIBC and the Royal we switched to a local independent credit union and it has been the best thing we ever did.

They have profit sharing, every year you get 10% to 15% of your interest earned or paid on mortgages back. We get between $200 and $400 back (we don’t have mortgages) This more than covers our yearly service charges of $180.

Anybody with over $100K on deposit gets a premium of about one half a percent on terms, GIC’s etc..

As we no longer live in the town where the credit union is located we do all our business via e-mail with somebody we know, no muss no fuss.

Not all credit unions are this good, when looking ask about profit sharing and other perks.

As well, you vote for directors every 3 years and can interview any potential candidates at public, informal gatherings.

#125 AtomicPaws on 02.17.12 at 1:56 pm

Remember a time when…

“To browse the 19th-century Canadian art at Ottawa’s National Gallery is to enter a cheery land of carousing French habitants, axe-wielding pioneers and heroic warriors. Fresh from the crowded art colleges of Europe, Canada’s earliest painters could not resist framing their new adopted home in glowing terms. But when painter George Angus Reid, the son of Irish immigrants, sat down in 1890 to sketch his diploma work for the Royal Canadian Academy, he dredged up one of the most painful experiences of his youth: The day the family was forced to mortgage their western Ontario homestead.

A “mortgage was a last resort,” wrote art curator David Burnett in 1990. By calling a banker into their home, Reid’s family had effectively signed away control of their destiny, forever to languish under the “shame and stigma of failure.” The darkness and misery of Reid’s Mortgaging the Homestead stands in stark contrast to the bright, majestic paintings hung around it. Reid’s family patriarch sits slumped and defeated before a banker, his head in his hands. Seated against a wall, two grandparents dressed in the styles of the old country stare forlornly at the floor. Their gamble for the Canadian dream has failed.”

http://news.nationalpost.com/2012/02/11/canada-founded-on-misery/

#126 Nostradamus Le Mad Vlad on 02.17.12 at 1:57 pm

#47 Steven Rowlandson — “I guess others have to find out the hard way.” — Got that right. Goes with . . .

#64 John Ratadlin — “It looks like slow, torturous pain for everyone.” — Both of you are right.

#75 TurnerNation — “. . . tapped a veteran investment banker to head its Asia-Pacific unit as it seeks to increase investments in the region.” — Possibly the TPTB realize that things are changing faster than anticipated, and are setting themselves up accordingly.

The cycle change, of which most know nothing to very little, will be complete shortly, within a couple of decades or so.

#85 Young Old Fart — “No, they can’t. The problem is stupid people that trust [email protected] and sign their life away…..” — Key word is stupid, and no govt.. can legislate away stupidity.

#99 jess — Great links. Goes back to when G.H.W. Bush was ‘elected’ — he was never elected, all president’s and leaders have been placed there by TPTB for their own greed.

Obviously, the west is no longer a democracy. It has become a pig and sheep farm, where all are slaughtered equally.

#112 Bridgepigeon — “Let DA stay, he’s harmless.” — Agreed.

#127 Kevin on 02.17.12 at 2:02 pm

@Mr Buyer:

“you must borrow because [banks] inflated prices so you have to borrow. Suck it up […] or do not ‘BUY’ a house. “

Newsflash: You’re on “greaterfool.ca.” What you just wrote is the theme song of this whole sorry blog.

You’re right! One of the reasons housing is so expensive is because of lax lending by banks. If you don’t like it, don’t buy a house! Rent instead! You make it seem like that’s an absurd suggestion. But isn’t that exactly what Garth has been saying daily for several years now? Where do you think you are? I feel like I’m taking crazy pills!

#128 Do you own a bank mr? on 02.17.12 at 2:06 pm

To: # 100 Kevin guy,

How about when you loose your job, and you need to sell your home and break the mortgage. Should the banks be greedy then? Should they make undeserved money on you? Should the bank, real estate person, and the gov, walk all over you when someone looses a job? And they are at risk of loosing the family too?

Think again before you speak. We all know that the laws mostly protect the big corporations with money and fat layers. The rest of us are just new slaves of society because we have given banks, gov, and real estate monopolies too much power to abuse. Well my friend time has come to fight back the greediness and the injustice.

#129 Devil's Advocate on 02.17.12 at 2:06 pm

#116AACI Okanagan on 02.17.12 at 1:00 pm

DA, by posting that example , Kensington Drive just proves to me that you don’t understand the concept of the pair set analysis, here I thought you learned something yesterday.. what you are missing and do not mention is the changes the property has under gone since 2007. When the house sold in 2007 it was 1612sf in size. When it sold in 2011 it was 2445sf in size. The property was completely redone to include an upgraded salt water pool, extensive concrete patio areas (3700sf) , a new master bedroom addition, it was basically a new house. I spoke to the appraiser that knows the property well and he informed me that there was over $500,000 in reno alone since 07. If you are going to use the pair sales, then the house has to be unchanged or little changes.

Yes the property has received several significant updates much of what was there at the time of the most recent sale was there before the then sellers sold including the pool and much of that square footage. Don’t believe me check out the previous listing of that home (MLS 9160898) in which it mentions that “wonderful POOL and LAWN areas…substantial upgrades incl lots of HARDWOOD…NEW furnace…NEW c-air” and specifically states the then finished square footage was 2,900 square feet NOT the 2,447 you were led to believe, as for 3,700 square feet of new concrete patio – big deal. I would suggest that most of the renos amounted to little more than a “lipstick and rouge” make-over. As for the seller having spent $500,000 on upgrades and renovations – I doubt it very much. Do you have any idea what $500,000 will buy you in new home construction. If they had spent $500,000 they would have been way further ahead tearing the existing structure down and starting over again.

If you would like proof sources drive by such properties as some of those on Hobson Court, Knowles and or Bonjou Road in the general vicinity of that subject home. I do have some real experience with construction costs and you can build a pretty decent home these days for something close to $140.00 per square foot including all the trimmings of hardwood, granite and stainless. In other words $500,000 would get you a brand new 3,500 square foot home. Call such reputable builder as Rykon Construction to confirm as I know they quoted a client that amount per square foot (all in BTW) closer to the peak of the market and construction prices have only come down since then.

You don’t know what you are talking about. Check out the FACTS I state above.

But seriously I am growing tired of this nitpicking and defending truths amid such an ignorant narrow minded audience which chooses to hear only what they want to hear and not that which they need to know in order to make informed decisions going forward. So go ahead and believe what you want to believe it really isn’t going to make as much difference to me as it will to you.

You just called your colleagues on this blog, “an ignorant narrow minded audience.” Yesterday you called someone you disagreed with a “frigging dip shit”. Seems like time you shoved off. — Garth

#130 Kevin on 02.17.12 at 2:06 pm

@Junius:

“When will people wake up? Create a regulation that allows home-owners to pay off their mortgages for no or a small penalty. What is wrong with that?”

Banks would jack up interest rates in order to compensate for the losses when people break mortgages penalty-free. The days of 3.50% mortgages would be a dreamy memory, and 5+% mortgages would be as low as they ever get.

Personally, I’d prefer the low rates we have today, and the penalties. There are ways around the penalties, like, say, don’t take a 5 year term if you think you might be selling in a year or two. Or get a fully open mortgage instead of a closed one. Take a shorter term. Lots of options, but they require people to use their heads a little bit. I’d much prefer that option to the one where we all have to pay higher rates for mortgages, in order to protect a few short-sighted people who couldn’t be bothered to read the fine print on the biggest financial transaction of their lives.

#131 Leo on 02.17.12 at 2:09 pm

Dear Garth, It is clear that you have not rented in the last 20 years. While I appreciate your advise that at the distended bubble buying is foolish, however, if you had rented you would know that renting is not that easy. I have no choice for due to a job disability I can’t buy a house. Renting sucks, you are very limited in selection, landlords are normally crooked, a 12 month lease means nothing unless you are the tenant for a landlord can sell the place and give you the boot in 3 months, and during the time it is on the market you could have people in you “home” every day with 24 hours notice. Rentals are generally run down and cheap, the list goes on and on. So while your advise to rent is prudent you could use a shot of reality. I will bet a years salary buy how easy you make it sound that you have not rented in a very, very long time….

My last rental terminated in 2010. — Garth

#132 jess on 02.17.12 at 2:11 pm

ANNEXURE B (1-12)
page 310- 321
SUGGGESTED CHANGES TO REGULATION
This Appendix summarizes our suggestions for changes to the regulatory language of the
Proposed Common Rules. Italics denote suggested additions, while strikethroughs denote
suggested deletions.

http://www.occupythesec.org/letter/OSEC%20-%20OCC-2011-14%20-%20Comment%20Letter.pdf

#133 45north on 02.17.12 at 2:16 pm

Douglas Porter (BeeMo Economist): The housing market currently looks well-balanced and is broadly moderating.

http://mcaf.ee/ynqsb
(Winnipeg Free Press)

which is pretty much what David Lereah said as the US market collapsed

(2nd attempt to post)

#134 First to last on 02.17.12 at 2:20 pm

Hey Garth I see you’re on Twitter now in case you miss Parliament Hill don’t forget to #TellVicEverything

#135 Devil's Advocate on 02.17.12 at 2:27 pm

#112Bridgepigeon on 02.17.12 at 12:30 pm

Let DA stay, he’s harmless.

Thanks for the support… I think? But you are doing me no favour by posting such comment.

I want to break my addiction to this “pathetic blog” and the best way for me to do that is to know there is no one here with such open mind as to consider the alternate points of view I offer. It’s been more than three years that Garth and the pups and poodles have been predicting anything from a 15% price capitulation (which has already happened BTW Garth) to total economic annihilation.

What most do not realize, as Garth could confirm, is I was three years ago a lot closer then to the median opinion you share today. But it has been three years people! The human race is not hell bent and intent on a suicide mission. We are doing all we can to improve things not degrade them. This recession may take longer to recover from – indeed it already has, but recover from it eventually we will and I fear for your sake a lot sooner than you think.

We are seeing some positive signs in our marketplace already this year. Think back to 1981, the market did not then fall back so far before picking up steam again. What makes you think for sure this time will be any different? Why waste your life waiting for predictions to come true. What is real is here and now.

Good luck to you all – seriously you’re going to need it because your speculative predictions are nothing more than a gamble.

#136 Herb on 02.17.12 at 2:40 pm

… our largest corporations from our big banks to big media to pharma to oil to food do not play by the rule of the free market. They make the rules or bend them to their needs in ways that is not just anti-competitive but against our collective good.

– Junius at #121

Ah, the inner workings of “capitalism”. Isn’t it grand? Now if they’d only make business a “free for all” for all, us little big guys could grab a big little bank manager by the throat and do some serious negotiating. But, alas, there are rules and regulations against that.

#137 Van guy on 02.17.12 at 2:47 pm

#67 Barb on 02.17.12 at 5:08 am

According to a good friend of mine who’s a Real Estate Agent in Vancouver, there’s a shortage of properties in Vancouver and North Vancouver. The inventory is very low.
_____________________________________________

See, even realtors lie to their friends. Instead of listening to people, research yourself. Go to the rebgv stats package and there you will see that January stats for Van west were ugly. Almost 2000 total listings while 190 sold. What do you believe now? Richmond had 920 sfh and sold 69. My god who is this realtor?

#138 Sitarow on 02.17.12 at 2:47 pm

The cats out of the bag now :)

http://www.bloomberg.com/news/2012-02-17/canada-housing-poised-for-severe-drop.html

#139 First to last on 02.17.12 at 2:48 pm

#TellVicEverything Very funny he waded into a poll full of piranhas they may be small but they’re going to devour him one bite at a time.

#140 AACI Okanagan on 02.17.12 at 2:50 pm

#128 Devil’s Advocate on 02.17.12 at 2:06 pm

Why do you always keep back peddling?? Yes the home in 2007 had a pool, yes it was updated, however the new owners decided to reno it again. They changed the pool to salt water, the landscaping added an addition, which you pointed out that I was under by 500sf +- (which supports my point more). The point is this sale had major changes to it and that is why you cannot use it as a pair sales. That is the point.

I have seen people burn through $500,000 easily on a home, I have seen landscaping tickets of $200,000+ .. as far as Rykon is concerned, I speak to Kim on a regular basis, in fact I speak to the majority of builders out there, i have to, it is my job..

anyway I am done arguing with you. I can only wish to be as knowledgeable as you, however I won’t let it ruin my week -end.

#141 Devil's Advocate on 02.17.12 at 2:50 pm

You just called your colleagues on this blog, “an ignorant narrow minded audience.” Yesterday you called someone you disagreed with a “frigging dip shit”. Seems like time you shoved off. — Garth

Last time I checked a “colleague” was someone united in a common purpose and respecting each other’s abilities to work toward that purpose. Clearly that is not so of me and the pups and poodles.

As for my “shoving off” I sincerely do hope so.

#142 First to last on 02.17.12 at 2:51 pm

pool sorry

#143 Bill Gable on 02.17.12 at 2:53 pm

I am sick of DA. So much good from so many, but not this cretin.
Let’s boot him. Bye, I won’t miss your rude comments.

#144 Canadian Watchdog on 02.17.12 at 3:08 pm

#135 Devil’s Advocate

LOL.. Have fun DA..Don’t hit the door on your way out!!

#145 Kevin on 02.17.12 at 3:10 pm

@Do you own a bank mr:

“How about when you loose your job, and you need to sell your home and break the mortgage. Should the banks be greedy then?”

If by “greedy,” you mean “hold you to your word,” then yes, of course they should.

Are you suggesting that the banks should consider each case individually and show mercy under dire circumstances? You lost your job, so you shouldn’t have to pay the penalty. My kid was sick, so I shouldn’t have to pay the penalty. My parents blew all their money on vacations and BMW’s and shouldn’t have to pay the penalty. Who gets to decide when a sob story is sad enough to warrant a break? Who makes sure that people with similar sob stories get similar breaks? And is it an “all-or-nothing” deal, or does the unemployed guy get a 50% break on his penalty, but the divorcing guy only gets a 25% break?

Can’t you see what a nightmare such a model would be?

Far better to keep it fair and objective. You signed the deal, banks are in it to make money not provide charity, so keep your word. If you lost your job and have to sell your house, then hopefully the equity from the sale covers the penalty. And that’s assuming you were a profligate spendthrift grasshopper who failed to set aside an emergency fund, as every single financial planner on the planet recommends.

You’re not entitled to wiggle out of your obligations just because you’ve got a sob story. You’re not the only person who’s faced hardship in their lives. How you deal with it (as opposed to crying and whining for a bailout) reveals your strength of character and integrity.

#146 disciple on 02.17.12 at 3:14 pm

#122 guy in toronto… I believe CPP is the largest fund. According to this, Ontario Teachers had 120 billion AUM at EOY 2006 (page 22), but only 108 billion at EOY 2010 (page 37). They lost 12 billion dollars while the CPP gained about 50 billion. Interesting. I’ve never inquired as to CPP’s holdings. They seem to be buying up real estate domestic and abroad…
.
http://www.towerswatson.com/assets/pdf/5351/TW-PI-300.pdf
http://www.watsonwyatt.com/europe/research/pdf/PI_300_Analysis_2007.pdf

#147 Uh Oh Canada on 02.17.12 at 3:16 pm

I vote DA off. I don’t read his comments really…I’m just tired of scrolling down so much on my iPod. That being said, I’m sure we’ll see DA comments in the future under a different alias.

#148 Van guy on 02.17.12 at 3:26 pm

Bloomberg says RE is toast.

http://www.bloomberg.com/news/2012-02-17/canada-housing-poised-for-severe-drop.html

#149 Paul on 02.17.12 at 3:29 pm

#131 Leo

Renting has it’s drawbacks. So does home ownership. I’ve done both and was a landlord once too. For any renters out there, a word of advice. Use a property management to find you a nice place that way if the landlord is not a nice person, they will deal with it. Not you. Just rented a 2200sq ft 1 year old 3 bedroom with all the bells and whistles on an acre 40 min from Victoria for 1400. Includes a riding mower!

#150 JRoss on 02.17.12 at 3:31 pm

DA,

You paint yourself as though you are Galileo arguing to the Pope about the Earth and Sun. You are not.

If I take you at your word, you are a moderately successful agent in a small, pleasant, but insignificant town. Nothing wrong with that, but you are not Warren Buffet.

If everyone disagrees with you, perhaps the mind that needs opening is your own.

#151 John G. Young on 02.17.12 at 3:32 pm

#112 Bridgepigeon

Let DA stay, he’s harmless.

I guess you’ve never crossed paths with him.

Anyway, he seems to lack the intestinal fortitude to leave of his own accord, so I vote that we help him in this regard.

#152 First to last on 02.17.12 at 3:35 pm

Fits well with today’s topic actually careful what you wish for Vicky…

#153 Timing is Everything on 02.17.12 at 3:37 pm

#66 Kip

“This client was fortunate to have closed his mortgage at FirstLine instead of directly with CIBC”

‘The Sting of Bank Penalties’

http://tinyurl.com/88moz5n

#154 GPC on 02.17.12 at 3:40 pm

Latest comments from the Edmonton Real Estate Blog’s Weekly Update:

“Our agents are very busy showing properties, but our clients are finding the good ones sell very quickly, and often with multiple offers…there does seem to be a lack of really good properties for sale at the moment, so when something really good comes up it goes quickly.”

I guess the market’s hot in Edmonton again! Multiple offers to be followed by the bidding wars!

Yeah right.

Since these realtors and the RE industry in general won’t provide the raw data, I have to question the numbers in the sales reports they post.

Is no one paying attention to the shakey foundations of this market at all?

Oh and Hi Edmonton Real Estate blog fans, sorry that I don’t agree with anything the salespeople who run this blog say. They are not your friends they are trying to sell you stuff and take your money.

Please don’t threaten to sue me again, you know free speech and all that…!

#155 bill on 02.17.12 at 3:46 pm

DA I thought your latest effort could be tightened up a bit…..

”Thanks for the support…
I want to break my addiction to this “pathetic blog”.
three years ago I was a lot closer then to the median opinion you share today.This recession is taking longer to recover from.
Good luck to you all ”

#156 jess on 02.17.12 at 3:56 pm

civil servant ?

The Guardian’s revelation that the practice of paying people who are, in effect, senior civil servants through their personal service companies is widespread across Whitehall is shocking at a number of levels. It is shocking because, as HM Revenue & Customs says on its website, it is the duty of an employer to determine the proper status of their employee and in particular whether they are self-employed (a term, they make clear, that also covers those working through a limited company) or not…

http://www.guardian.co.uk/commentisfree/2012/feb/16/health-department-corrosive-tax-abuse

More than 25 senior staff employed by the
employed by the Department of Health are paid salaries direct to limited companies

In the uk senior civil servants – are those who make policy in Whitehall.

#157 VT on 02.17.12 at 4:01 pm

You just called your colleagues on this blog, “an ignorant narrow minded audience.” Yesterday you called someone you disagreed with a “frigging dip shit”. Seems like time you shoved off. — Garth

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

+1

#158 Devore on 02.17.12 at 4:14 pm

#108 Kevin

“What happens when someone refi’s with negative equity?”

With the same lender or with a new one?

If they stick with the same one, nothing happens. They just get a new rate and a new monthly payment, same amortization, life continues as normal

One of us is misunderstanding what “refinance” means. No one will let you refinance an underwater loan, unless you square it up with a lump sum payment. But if you are current with payments and good credit risk, you will get your mortgage renewed by the current lender.

#159 Devore on 02.17.12 at 4:34 pm

#135 Devil’s Advocate

Good luck to you all – seriously you’re going to need it because your speculative predictions are nothing more than a gamble.

So long as renting remains cheaper (in some cases vastly cheaper) than owning, there is no gamble. Only gamble is betting on rising prices.

#160 villain? on 02.17.12 at 4:43 pm

http://www.reuters.com/article/2012/02/17/us-usa-bonds-forgery-idUSTRE81G11620120217

More worthless paper floating around

#161 maxx on 02.17.12 at 5:01 pm

#11 gladiator on 02.16.12 at 10:24 pm

“……..printing money is not enough – to have high inflation you also need velocity…”.

Excellent point and that is the nexus of the current fiscal impasse. Addiction to currency velocity defines the aggregate of bad decisions and current fiscal disaster created by TPTB and by extension, the finance industry. Fiscal “engineering” was meant to fill coffers faster, but ended up foisting austerity measures on those who faithfully paid their taxes.
My rate of saving is intact and will remain so, whatever SHTF. People are increasingly paying attention to the incredible number of ways they can save a fortune on everything they need. If the government sucks our spending power away, ways must be found to make and keep what wealth we have. I shop where I can get up to 95% discount and/or where there are no taxes. I also love sticking it to retail which has been hoovering “consumers” for ages. I return anything which is not in perfect nick. No exceptions.

#162 Two-thirds on 02.17.12 at 5:04 pm

@ #96 Kevin

Thanks for the answer.

It seems to me that the key to secure the longer amortization is to not increase the loan value upon renewal.

From the CMHC site FAQ:

http://www.cmhc-schl.gc.ca/en/corp/faq/faq_008.cfm

“I already have an insured mortgage. How will these changes affect me?

CMHC mortgage insurance is good for the life of the mortgage.Borrowers renewing an insured mortgage will not be affected by these changes. For example, if a borrower had a 40 year amortization and there are 37 years remaining on the mortgage, the mortgage can be renewed with a 37 year amortization, as long as no new funds are being added to the mortgage.

Will the new refinancing rules allow a borrower with a mortgage above 85 per cent loan-to-value (LTV) to refinance by extending the amortization period?

No. Effective March 18, 2011, borrowers will not be permitted to refinance a mortgage above an 85% loan-to-value, unless the borrower has a binding refinance agreement dated prior to March 18, 2011.

Will the new parameters apply to assignment (“switch” or transfer) of a previously-insured loan from one approved lender to another?

No. As long as the loan amount and amortization period are not increased, the new parameters will not apply to a switch/transfer/assignment of mortgage to a different approved lender.

If I sell my current home and buy another, will the new parameters apply if I transfer the outstanding balance of my CMHC-insured mortgage to the new home?

As long as the outstanding balance of the insured loan, the loan-to-value ratio and the remainder of the amortization period are not increased, the new parameters will not apply when the CMHC mortgage insurance is transferred from one home to another.

What if I need to increase the amount of my insured loan when I sell my current home and buy another?

In this situation the new parameters will apply for any insured loan.”

From these answers, it seems that transferring an insured loan to another lender can be done “as long as the amount and amortization are not increased” – ergo, if the new lender is okay with offering the same amortization as the original, it can be done.

Refinancing a loan could be trickier, if this is done to roll debt into the mortgage (at a lower rate: 2007 vs 2012) upon renewal. If this causes the “outstanding balance of the insured loan” to increase, then the old amortization cannot be offered (for an insured loan).

At least this is how I interpret their rules.

The conclusion here is that the tightening of the rules last year will let those who are renewing in 2012 to keep their original amortization as long as the loan amount is not being increased upon renewal. And, at a lower rate to boot.

Thus, 2007 mortgage owners, even those who are currently in negative equity, are being shown mercy by F – provided they are not refinancing a loan higher than the original amount.

This sounds a lot like a successful soft-landing, letting those in negative equity keep their long amortization, a lower interest rate, and their house.

Win-win for all, the bank keeps getting interest payments, CMHC does not have to pay default insurance, and the poor saps get to keep the house.

Bravo, Misters F and C, way to shield the sheeple!

Wish you would do the same for us savers/investors.

#163 Kevin on 02.17.12 at 5:06 pm

Canada Housing Poised for ‘Severe’ Drop
http://www.bloomberg.com/news/2012-02-17/canada-housing-poised-for-severe-drop.html

(Check out the excellent infograph on this link)

“Canada may be on the cusp of a “severe” housing correction as real estate investment surges above a tipping point relative to economic output, according to George Athanassakos, professor of finance at the Richard Ivey School of Business.

The CHART OF THE DAY shows Canada’s housing investment as a percentage of gross domestic product, and the declines in inflation-adjusted house prices that follow when this ratio tops 7 percent.

“Eventually, everything boils down to demand and supply,” Athanassakos said in a telephone interview from Western University in London, Ontario. “Whenever this ratio goes over 7 percent, it signifies overinvestment in housing and two or three years later, we have a severe correction.”

Canada’s housing market is booming as historically-low interest rates fuel purchases, driving up home prices and adding to record household debt. Canada’s ratio of housing investment to GDP has averaged 5.8 percent over the last 50 years and is currently at about 7 percent, based on Statistics Canada figures as of the third quarter of 2011, Athanassakos said. Housing investment includes spending on new homes, renovations and real estate transaction fees.

U.S. housing prices plunged by a third between the peak in July 2006 and November 2011, according to the S&P/Case-Shiller Composite-20 Home Price Index. By comparison, Canadian housing prices rose 30 percent in the same period, according to the Canadian Real Estate Association.

“We have experienced bubbles and busts before in Canada, it’s nothing new,” Athanassakos said. “I don’t know why this time would be different.”

#164 Junius on 02.17.12 at 5:11 pm

#130 Kevin,

I understand your position. You are not wrong.

My point is simply that the degree of extraction that the financial services industry hurts the overall economy. I don’t understand why we would allow it.

How can people argue that taxes need to be lowered so people have more money to spend but they allow credit card companies to charge 30% interest and other bank charges to exist that extract billions of dollars out of the economy.

It only make sense when you consider who has the political power. The notion that our banks need to be massively profitable regardless of how much it costs our society is destroying our economy. It used to be that banking was a safe but dull business to be in. It should be that way again.

#165 Junius on 02.17.12 at 5:17 pm

Re: DA,

On balance I would want him to stay because he often has intelligent insights and can be objective. However he does slip quite a bit into Realtor mode which can be annoying and second rate.

If he could maintain his more thoughtful voice I would welcome him as we need more contrarian opinions that are thought out as opposed to the BPOE spew and the other Re: industry shills.

#166 Snowboid on 02.17.12 at 5:24 pm

#124 Kilby on 02.17.12 at 1:55 pm…

Around 1975, after eight years as a loyal customer of CIBC, I was turned down for a mortgage – despite a stellar credit record and secure employment.

It was suggested I have a chat with a local Kelowna CU, and a day later I had the paperwork started to purchase our first home.

I never forgot that, and have been a credit union customer since then, including on Vancouver Island. Other than some not too stellar performance from their insurance divisions (Vancouver Island only), the service is phenomenal.

Having said that, we will be wrestling control of our investments back between now and mid-April when we plan to seek the professional services of the great Professor.

Maybe [email protected] won’t be as friendly then, we will see…

#167 Form Man on 02.17.12 at 5:31 pm

I vote we keep DA. He provides me with endless amusement.

#168 DUI on Money Road on 02.17.12 at 5:40 pm

You just called your colleagues on this blog, “an ignorant narrow minded audience.” Yesterday you called someone you disagreed with a “frigging dip shit”. Seems like time you shoved off. — Garth
—————————————————–
Yep, it’s time for him to go. He’s blown his stack. He could not withstand the bark of the dogs.

#169 Kevin on 02.17.12 at 5:43 pm

Related to that Bloomberg article
This just adds to the growing wave of “housing bubble, overvalued and record household debt” sentiment sweeping the market place.

The long term average of residential investment as a percentage of GDP is 5.8%. Canada is over 7% right now.
http://tinyurl.com/882hvec

The long term average of construction employment is just under 6% as a percentage of total employment. It is at 7.4% now.
http://tinyurl.com/78u66nc

The FIRE and Construction Sectors make up 27% of Canada’s GDP. Up from the average of 24% between 1997 and 2003.
http://tinyurl.com/7pempbk

Here I have charted housing starts and annual population growth since 1948. For housing starts to stay constant and keep construction related employment at sky high levels we will need more than 1% population growth to offset the housing dump the boomers will unload in the next few decades.
http://tinyurl.com/6un54z6

Or instead of listening to the warnings we can listen to CAAMP http://www.caamp.org/meloncms/media/Housing%20and%20Mortgage%20Impacts%20FINAL.pdf

Where they say because the housing market is on solid footing, there is “considerable room to tolerate higher interest rates.

And they also say this:

The Canadian housing economy is safe and stable.
 At the peak of the US housing boom, approximately 20 to 25% of all US housing sales were for investment purposes. In contrast, CAAMP estimates that 2 to 3% of Canadian home sales nationally are investment properties.
 Home equity is growing rapidly. Canadian mortgage holders are repaying their mortgages more rapidly than is required.

Sorry CAAMP, I’m allergic to koolaid.

#170 P & T S on 02.17.12 at 5:50 pm

Interesting re. Account Closing Charges applied by Canadian banks. We closed our Mortgage in the UK (Halifax Building Society) some time ago and were charged nothing above what we owed. Their “Not-so-small print” Contract clearly stated a scaled penalty for closure within 10 years of the initial loan, so it was simply a case of waiting 10 years for the final payoff.

Maybe the Canadian banks are a bit more crafty, but our clear experience in the UK was that most mainstream Lenders were quite “up-front” with important details (including the detail that if the property prices fell we’d be expected to cough up the difference – a la margin call!) Fortunately this never happened to us, but I wonder if this is happening to later entrants right now (in view of the catastrophic falls in prices we’ve seen in the UK since 2005!)

We all are living in “Interesting Times”!!

#171 mad vancouver on 02.17.12 at 5:58 pm

http://www.youtube.com/watch?v=Xk3j6g50Krs

CHMC video

#172 Ralph Cramdown on 02.17.12 at 6:11 pm

How can people argue that taxes need to be lowered so people have more money to spend but they allow credit card companies to charge 30% interest and other bank charges to exist that extract billions of dollars out of the economy.

I think you’re confused. The money doesn’t disappear. It goes into my pocket, and the pockets of all the other bank shareholders (including you, if you’ve got mutual funds or a pension). When we spend it on stuff, it goes back into the economy.

#173 meslippery on 02.17.12 at 6:44 pm

Here

first, if you are in a 10 year fixed rate mortgage, and your are at least 5 years into the term, then the maximum penalty is 3 months interest (this is a little known fact… Section 10 of the Interest Act of Canada).

http://canadamortgagenews.ca/2010/01/29/how-to-reduce-mortgage-penalties/

#174 Milk Man on 02.17.12 at 6:57 pm

People have jobs and interest rates are lowest in history. Severe crash will happen in Vancouver and Toronto and a low correction is other canadian cities only when the interest rates rise dramatically. Until then its all mute, because people are willing or able to service their debts.

#175 harden on 02.17.12 at 6:59 pm

Garth, the ‘doll house’ you referenced in a post quite a while back.. in Vancouver has been re-listed to hit the HOT spring market! new improved price for this “Adorable ‘West of Granville’ Reno’d beauty!”
LMFAO!!

http://www.realtylink.org/prop_search/Detail.cfm?MLS=V931738&REBoards=All&From=MLS

#176 Junius on 02.17.12 at 7:07 pm

#172 Ralph Cramdown,

You said, “I think you’re confused. The money doesn’t disappear.”

Someone is confused but it is not me. It mostly goes to banking higher and higher bank salaries and bonuses.

The point is that it is not productive. It is extractive. It takes away from putting money towards creating valuable things and puts it into the pockets of those who have the power to extract it.

Why is this concept so difficult for people to grasp?

#177 Junius on 02.17.12 at 7:10 pm

#169 Kevin,

Excellent post. Very well done.

#178 EdmontonJim on 02.17.12 at 7:17 pm

Shouldn’t the penalty be explicitly laid out in the mortgage contract? Better yet, reverse the system from penalty to reward (its a better way to influence behavior). It would work like this:

The ‘Penalty’ fee is tacked onto the loan principle. The contract states that at the completion of the contract term, the lender will remit the amount of the penalty plus interest to the borrower.

It would work out to exactly the same thing financially, but it would ensure both parties had exactly the same information at all times.

#179 AtomicPaws on 02.17.12 at 7:19 pm

#169 Kevin…

“Where they say because the housing market is on solid footing, there is “considerable room to tolerate higher interest rates.”

So…when we hear that one way to curb the growing household debt in Canada (at 153%) is to raise interest rates…but that if they do that people won’t be able to afford payments on their huge mortgages, LOC’s or credit cards…

How does that equal ‘stable footing’?? LOL

More in the news…Canada is poised to offer Greece a bailout package of 170 billion…

Any thoughts on what happens when Greece does tank?? (Which I believe they will, no matter how much money the more ‘reponsible nations’ inject to bail them out).

#180 coastal on 02.17.12 at 7:33 pm

re; DA, I vote to turf him. His lack of logic and cockiness do not lead to intelligent discussion in the slightest. He’s in denial that a crash or major correction can,will,or has happened. Sick of these types on here.

#181 Van guy on 02.17.12 at 7:37 pm

Garth,

Will we avoid a recession when the correction is in full swing? I work in logistics and we are running about 60% of pre GFC levels. And the companies around us are about the same or worse. And the correction hasn’t even started yet.

#182 coastal on 02.17.12 at 7:44 pm

DA says :”We are seeing some positive signs in our marketplace already this year. Think back to 1981, the market did not then fall back so far before picking up steam again. What makes you think for sure this time will be any different? Why waste your life waiting for predictions to come true. What is real is here and now.”

It’s junk like this why DA needs to go. Housing fell back 30-50% then bounced back after several years post 81 cause they dropped interest rates from 19% to 13%. What will they do now ? From 3% down to zero like Japan ? we know how that turned out.

This half wit agent doesn’t understand basic economics and is the last one to be preaching like he is a professional when it’s clear he’s not.

#183 GregW, Oakville on 02.17.12 at 7:52 pm

Hi #106 Snowboid, It’s too easy to say you just “ignore them”. Least we forget that our wise and enlightened human host Garth still must read them all before he post the comments. I feel he deserves a medal or something for all his valiant efforts!
But maybe I shouldn’t be commenting on the validity of some ones commentary at all, as I was once on the knotty list myself.

#184 Ralph Cramdown on 02.17.12 at 8:20 pm

#176 Junius,

From the bank’s point of view, banking is productive. They lend money, they get it back with interest and fees. In my neighbourhood, they don’t burst out onto the sidewalk and press-gang unwilling citizens into borrowing money. Customers are either borrowing money with the hope of increasing it (making it productive for the customers, too) or because they’re willing to pay a bit extra for the privilege of consuming Tuesday’s earnings today.

Yes, it costs money to rent capital. It’s completely bizarre that you’d be complaining about this IN THE MIDDLE OF A CREDIT BUBBLE. Money hasn’t been cheaper or easier to obtain in my lifetime. Nonetheless, if you want to “fight the power,” feel free to lend YOUR money to friends and strangers without charging interest or fees.

#185 Nostradamus Le Mad Vlad on 02.17.12 at 8:25 pm


George Carlin quote — “Women are crazy. Men are stupid. The main reason women are crazy is that men are stupid.”

Why do only 10% of men make it to heaven?
Because if they all went, it would be Hell.

Why do men like smart women?
Opposites attract.
*
Central Banks and Gold Purchases up by 500%; Treason Why can’t the same be done to Bernanke, Carney, Geithner etc.? Tough Life Single mother vs. ex-MP; 7:07 clip US govt. lying (all western govts. are lying) about inflation and unemployment; Trader Suspended; Trillions in Fake Bonds Because they couldn’t be sold? Hell Is Cheap Apple’s Chinese production; Hamburgers according to the debt pancake; Another day, another tax TSA; Bank Job smells revolting; 3:31 clip No Euro, no cry; Banker and NAmerica Currently occupied by banxters; Poor America What the BBC doc. didn’t say.
*
Mediterranean “Last I checked, the Mediterranean Sea is still an international waterway!” wrh.com; 0:28 clip Smoking Man — “A reminder that systems to remotely pilot passenger jets were in use back in 1984, so they cannot be ruled out as in control of the planes on 9-11. Dov Zakheim, comptroller of the Pentagon when three trillion vanished, was an executive at a company that made such remote control systems prior to being appointed by George W. Bush to the Pentagon.” wrh.com; Ron Paul pic; Syria – NATO Maybe positive news, maybe scared of provoking Russia and China into fisticuffs, but Spewing forth terror Trash talk; Allies Pakistan (which has nukes) sides with Iran, Russia and ChIndia, and Anti China Clip starts automatically; Climategate “Relinked just because the Carbonazis are unhappy that we are reporting on the hard winter that has hit Europe.” wrh.com and Killing Me Coldly “Serbia has started implementing power cuts in a desperate bid to stave off the collapse of its national grid as the country suffers the effects of days of freezing temperatures.”; FF deception “Meaning they found some loser, gave him cash and a fake bomb, then arrest him for the headlines.” wrh.com.

Stealth Mode How to use the ‘net in stealth mode; 5:24 clip Maine vote fraud uncovered; Fukushima “Fukushima has had 5 major meltdowns now, in a disaster that is making experts say that it is larger than Chernobyl.”

#186 JRoss on 02.17.12 at 8:28 pm

Coastal 182,

That statement by DA is even more wrong than you suggest.

“Think back to 1981, the market did not then fall back so far before picking up steam again”

Adjusting for inflation (I know that makes DA’s head melt), someone who bought a Vancouver house in 1981 did not see any gains for a full 25 years.

http://cuer.sauder.ubc.ca/cma/data/ResidentialRealEstate/HousingPrices/housing-pri-vancouver.pdf

#187 Westernman on 02.17.12 at 8:30 pm

Form Man @ # 167,
DA should stay – you are the one who should go…

#188 dm in c on 02.17.12 at 8:30 pm

So many reasons to vote DA out. Mine is for his repetitive and condescending use of the term ‘pups and poodles’ and his frequent vows to leave and never return. But mostly because I hate scrolling past his multiple posts.

#189 Waterloo Resident on 02.17.12 at 8:31 pm

Everyone is talking about a housing crash, but WHAT HAPPENS when the government continues to kick the can down the road, raises the CMHC ceiling, actually REDUCES interest rates, and house prices continue to rise in the GTA by 10% to 15% each and every year for the next 10 to 20 years?

Tell me what are you going to do THEN, when average house prices are around $10 Million in the GTA and everyone is gloating about how ‘rich’ they are?

When you see houses going for only $800,000 now you finally GET IT; that houses are a bargain at today’s prices and that they will only go up from here.

#190 Leo on 02.17.12 at 8:34 pm

#130 Kevin, right on the nose, Bank fees are exorbitant and by basic definitions usury. How we have gotten to a place where 30% us legal and 18% is normal just shows how corrupt our system is. In my view it is a state of emergency when literally trillions are be extracted out of the economy for simply using money. Ribbit.

#191 Michelle on 02.17.12 at 8:38 pm

@#7- Turner Nation: Toronto Life article on yuppie expenses:

All I can say is “Holy Cow!” when I read how much these people spend on wine each month. I started calculating how many bottles a week they drink, based upon what they said they were paying for an average bottle of wine … their livers are going to be “pickled” in a few more years!

I guess that’s how they “anaesthetize” themselves to the reality of their financial futures :P

#192 Canadian Watchdog on 02.17.12 at 8:44 pm

#169 Kevin

I’ve discovered numerous miscalculations in CAAMP’s reports Here is one from their May report. http://i41.tinypic.com/o8avia.png

Nothing but pundits giving hope to the RE community, Goebbels’ style.

#193 The American on 02.17.12 at 9:07 pm

People should have listened to Garth several months ago when he said buy America, specifically Flordia. 7 of the top turnaround markets in the U.S. are in Florida right now.

http://www.cnbc.com/id/46329421?__source=yahoorealestate%7Cturnaroundtowns%7C&par=yahoorealestate

#194 Daisy Mae on 02.17.12 at 9:10 pm

#181 VAN GUY: “….and we are running about 60% of pre GFC levels. And the companies around us are about the same or worse. And the correction hasn’t even started yet.”

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

What does ‘GFC’ mean?

#195 45north on 02.17.12 at 9:13 pm

Kevin: talking about delinquent mortgages: Far better to keep it fair and objective.

easy to say when default rates are running 0.5%. Wait until it’s 5%, wait until it’s on the top of the political agenda. In the US, political pressure has resulted in all kinds of schemes – none of them successful. The schemes promised to “keep families in their homes” but transferred wealth from governments to banks.

I think that government should help – starting when the bank forecloses and the family moves out. $1000/month for a year. This mortgage modification business offers false hope and has dragged families through the weeds.

#196 guy from toronto on 02.17.12 at 9:19 pm

thx for the input re pension funds, Disciple.

I looked at the Watson Wyatt stuff too. It is hard to believe there is a bigger Canadian fund (in terms of AUM) than the CPP….but I was intrigued because of Turner Nation’s posting where it was specifically referred to as the 2nd biggest in Canada.

I am still trying to wrap my head around the relative sizes of the CPP and the Teachers funds. Incredible that all Canadian workers and future retirees are funded by only $153MM when Teachers alone has $108MM.

I guess it underscores what a pittance the CPP pays out vs indexed pensions based on best earnings, survivor benefits, health benefits etc that the teachers get.

But I am still shaking my head. How can this be so?

And still the Leafs are losers, to boot :)

#197 bill on 02.17.12 at 9:50 pm

JRoss on 02.17.12 at 8:28 pm

Coastal 182,

”someone who bought a Vancouver house in 1981 did not see any gains for a full 25 years.”

it was ugly.
so ugly in fact that three people at the place I was working in committed suicide.
not to mention the ones that barely kept their places by the skin of their teeth.
then the pink slips started.
yeah that whole period of the early ’80’s was rough on a lot of folks.I consider myself lucky as it sure wasn’t brainpower getting me through that time.
my idea of a good investment in 1981 was buying a motorcycle…

#198 TurnerNation on 02.17.12 at 10:06 pm

122guy from toronto on 02.17.12 at 1:45 pm

One the largest ones would include, I imagine:

http://en.wikipedia.org/wiki/Caisse_de_d%C3%A9p%C3%B4t_et_placement_du_Qu%C3%A9bec

“The Caisse de dépôt et placement du Québec (CDPQ) manages public pension plans in the Canadian province of Quebec. It was founded in 1965 by an act of the National Assembly. The name translates to Quebec Deposit and Investment Fund, but it is referred to by its full French name or as “the Caisse” in English.[1]

The Caisse is headquartered in Quebec City in the Price building and has its major business office in Montreal in the Quartier International de Montreal.

The Caisse’s large holdings make it a formidable player in investment markets. It is the second largest pension fund in Canada, with the Canada Pension Plan (CPP) in first place. As of November, 2011, the Caisse’s total assets under management amounted to CA$151.7 billion.”

#199 TurnerNation on 02.17.12 at 10:07 pm

ps I work with Sell Sides, not Buy Sides, so I do not follow asset management.

#200 disciple on 02.17.12 at 10:17 pm

#196…toronto guy… you make a cogent observation. Because of your post today, I’ve been looking at the public holdings, domestic and foreign, of the CPP (growth portion), and some of the choices are baffling… e.g. RIM stands out as woefully overweighted, although it is countered with a lot of Apple, but mostly it tracks the indexes (45% foreign). Really, if you note that most of the bond holdings were in place before active management was pursued more rigorously in recent years, that the performance of the fund overall is simply unacceptable. There’s too much emphasis on Canadian oil and gas, and mining, and re-allocation is severely needed, and soon!

It’s almost like Bill Gross at PIMCO, who it seems is seeking to let retirement savings just slip away (or get stolen, as I would tend to think of it – you know, being disciple and all).

#201 bill on 02.17.12 at 10:25 pm

Westernman on 02.17.12 at 8:30 pm
why dont you join da and leave as well?
bet that would garner a few votes for ‘off the island’ status…
cant you just see the nurses at the facilities they are in trying to get them off the computers?
eventually the orderlies are summoned and its off for a bit of hydro therapy …again.

#188 dm in c on 02.17.12 at 8:30 pm
for me it would be the broken promises….

#202 The Thing in the Basement on 02.17.12 at 10:34 pm

196 Toronto chap – a link for you re CPP investments

http://www.cppib.ca/faqs.html#f2

The CPP was set up as a pay-as-you-go plan where the pensions were paid for by current contributors. Paul Martin was the finance minster who sought to fix it by drastically increasing rates to meet the plan obligations to the boomer demographic bulge.

The current reserve of $150B is still only about $8K per current contributor.

CPP was only ever meant to replace about 25% of
pensionable earnings, which max out somewhere just
about $50k. Total contributions are now 10% on those earnings, with half being paid by the employer. I get the
joy of both.

Now if I save 10% of my income over 35 years invested at 5%, I can draw down 2/3 of my income for 25 years, ignoring inflation. So I will get screwed big-time.

#203 The Thing in the Basement on 02.17.12 at 10:40 pm

200 disciple – reallocate perhaps, but unfortuneately no silver bullet for the fund. $150B is a little unwieldy. Best to stay diversified. I understand we bought Something in Manhattan. Then we take Berlin.

http://www.youtube.com/watch?v=KnsB6VBznBA

#204 Snowboid on 02.17.12 at 10:48 pm

#187 Westernman on 02.17.12 at 8:30 pm…

Go throw some cow pies or something!

#205 jess on 02.17.12 at 10:57 pm

The Irish Times – Friday, February 17, 2012US secrecy law to pile pressure on IFSC

IN JUNE 2007 a senior executive at a Swiss bank boarded a plane in Geneva on route to the United States carrying documents that provided evidence for one of the biggest frauds in history.

Bradley Birkenfeld had a meeting scheduled with the authorities in Washington DC so he could fill them in on how his employer, UBS, was involved on a massive scale in facilitating tax evasion by wealthy US-based clients.

In time it emerged that up to $20 billion in undeclared funds were involved, and up to $200 million a year in fees for the bank.

Since then the bank has put its hands up, paid a fine of $780 million, and, following a vote to allow it to do so in the Swiss parliament, has handed over thousands of clients’ names to the US authorities….

Fatca, or the Foreign Account Tax Compliance Act, was passed in 2010 and is due to begin coming into effect next year. The law is one of the most significant and far-reaching pieces of national tax law ever enacted.

It requires non-US financial institutions and other entities to identify and disclose accounts and other interests belonging to US customers to the US authorities.

Institutions and entities that don’t comply with the new law will face the prospect of having 30 per cent of the income or proceeds they gain from investments in US shares or other assets, deducted at source…..
The Treasury said the five countries – the UK, France, Spain, Germany and Italy – shared the US government’s goal of combating international tax evasion, but that the legislation had raised a number of issues, including the fact that complying with the US law might be illegal for the non-US financial institutions.

The group of countries are now to look at adopting an inter-governmental approach to Fatca in a bid to circumvent this problem and also to reduce the costs to industry that the law creates.

They are discussing a system whereby financial institutions would report to their domestic authorities rather than to the US tax administration, and the domestic authority would then automatically share the information with the US. Not only that, but the system would operate reciprocally between the countries involved.

http://www.irishtimes.com/newspaper/finance/2012/0217/1224311903813.html

#206 Snowboid on 02.17.12 at 11:00 pm

#193 The American on 02.17.12 at 9:07 pm…

Yeah, Phoenix/Mesa is number 2!

#207 richard on 02.18.12 at 12:41 am

Just for the record. Devil’s advocate has done the “I quit…I’ll never post again…you’re all too stupid!” drama repeatedly over the years. He then begins posting under other names before returning.

The blow-up he had here…when confronted, and badly embarrassed by a couple of others with knowledge of the Kelowna market…and thus able to debunk his lies, is similar to what happened to him years ago on real estate threads on local kelowna forums.

He was a regular poster there, but was eventually so eviscerated, he disappeared…and his volume here went up markedly.

And yes….he is a local real estate agent, though for all his bluster, and hypocritical calling out of others, he refuses to admit who he is.

It seems likely he has a personality disorder, narcissistic or otherwise, and is desperate for attention.

#208 Lee on 02.18.12 at 1:48 am

#194 Daisy Mae said “What does ‘GFC’ mean?”

My guess is Global Financial Crisis. Don’t know if they’ve set a time that started, but the first thing I can think of was the bottom dropping out of the asset backed commercial paper market.

Our company’s pension plan is still ‘recovering’ the 300 million that cost them.

#209 TurnerNation on 02.18.12 at 10:15 am

#191Michelle on 02.17.12 at 8:38 pm

I noticed that too. Here on ON the State runs the booze biz, with 50+% tax + mark ups in force. This means the people in the article are paying a voluantary $500 more in taxes each month!

Exactly what the States wants: a numbed out zombie workforce, dependant on booze and cigarettes, buying it all from the State. Cigs are even worse, with 70+% tax rate.

I don’t smoke anything, but it’s worth noting that if someone instead relaxed by smoking a natural herb, the same State would break down their door and put them into a cage. Because there’s no money in it. State rules us by force.

#210 Ogopogo on 02.18.12 at 1:19 pm

#150 JRoss on 02.17.12 at 3:31 pm
DA,

You paint yourself as though you are Galileo arguing to the Pope about the Earth and Sun. You are not.

Best take down of DA yet.

#211 Leonard on 02.18.12 at 11:31 pm

Feels like October 1987, US BLS numbers are not adding up and either are the Canknuckleheads. If Canada can pull 2 million GOOD jobs out of it’s posterior in the next month everything will be fine, otherwise we are all very much screwed. I smell a new, new deal.

#212 Mr Buyer on 02.19.12 at 1:14 am

#189Waterloo Resident…800k houses are a bargain!!! Outlandish. Maybe if the guy at the convinience store is makeing 100k a year. More tripe by the bubble cultivators.
The Bubble has topped…

#213 Mr Buyer on 02.19.12 at 1:23 am

#184Ralph Cramdown…The renting of money as you put it has become a nessesicty due to the actions of the money renters. If you can not see this then I can only assume you are gaining from this obscene amount of money renting. Just dream up a number and I will rush down to the bank to get the cash from the money renter and pick up that house. Oh but wait, I can chose not to rent money and save until I have enough cash to buy a house outright. Hold on a minute, I did just that and when it was time to pick up a place the prices doubled because people were backed by money renters. Give me a break, the industry is paper shuffeling epitomised with obscence amounts of the economy being claimed and NO RISK ASSUMED by the money renters. Sorry, they are middle men in need of being cut out of the picture.

#214 ALBERTAGUY on 02.19.12 at 11:57 am

DA – my vote – off the island

#215 YongeSt - Wake up people! on 02.19.12 at 5:43 pm

Wake up Chinese people! You have been thrown in the dark by years of exploatation there (5000?) under various regimes.
Time to wake-up and think for yourself, is 21st century now.
Stop acting like a herd, throwing yourself off a mounain cliff if others do that.
Grow a brain for yourself and start thinking independently. It is hard?
If you can’t do that, you my friends, will be also burned in Canada!
Don’t tell we have not told you, S-T-O-P BUYING at the TOP!!!
Unless of coure, you like to enjoy the pain and humiliation that will surely arrive from a bad decision: buying overpriced real estate – anywhere in the world! Be afraid, or you might end-up cleaning other people houses for 1 dollar an hour (to pay your debts)

http://www.chinalawblog.com/2011/12/the_impacts_of_chinas_real_estate_crash_a_hard_rain_is_gonna_fall.html