Some hours ago, this email was shared here – sent by a lost soul currently house-hunting in savage Toronto. “We made an offer on Thursday – there were 9 other offers! Ours was the best but they declined it because they wanted 100,000 more than what we offered. They have now re-listed their house for 730,000 – originally they listed it at 450,000. Crazy!! We wasted money on a home inspection and everyone else that bid wasted their time, their realtors and possibly money on their own home inspections. Totally wrong, greedy and rude!”
Can anyone, even the beefiest, testo-drenched bull on the block, read that and tell us this market can last? Unvarnished greed’s an ugly thing. There are always consequences. Like in Vancouver, where asking $2.1 million for a house like this…
… has led to a 29% crash in sales, a nascent correction and the financial enslavement of an entire (it seems) generation. This is the stuff giving Mark Carney night sweats. A real estate bubble now blowing gas into a credit bubble, turning armies of twenty- and thirtysomethings into bidding-war cannon fodder. After all, when a SFH in 416 costs over $800,000, and the average GTA property (condos included) now tops half a million, first-time buyers either walk away, or do some things which are incredibly stupid.
Like hustling downpayments. As a Vancouver Sun article spelled out a few days ago, life is tough, “for those in the most need: young people, often with student debt and lifestyles that involve a lot of restaurant meals and going to movies once or twice a week.” It’s just so, like, totally unfair.
So where should the homeless get the funds to close a deal? As Vancouver mortgage broker Chris Pughe suggests, “buyers can borrow the down payment through a line of credit, personal loan or possibly cash advances against a credit card.” Of course, how brilliant. Borrow funds at 22% on your Visa, so you can get a piece of real estate with 100% financing.
There’s more: First-timers are being advised to borrow from a bank with a cash-back mortgage. This will avoid having to earn a deposit through working and savings for a few years. How retarded is that?
Or they can borrow from their parents. And if they don’t have money, then they can borrow it. Vancity’s mortgage manager suggests mom & dad tap into their own home equity with a line of credit so they can hand over home-buying cash to their ravenously horny offspring.
So back to Carney. This kind of real estate-induced greed and lust has true economic consequences. Bidding wars, unethical realtors and gluttonous sellers all play a role in pushing home values to extremes. Then idiot buyers, driven by irresponsible lenders and dumbass media, reinforce it with extreme borrowing. Before ya know it, 27% of the country’s whole economy rests squarely on the foundation of hormonal child-adults using credit cards and bank bribes to buy houses without money.
This is USA circa 2005. Carney knows well that once real estate falls out of favour, prices will decline rapidly, leaving all that debt. Owners who felt rich in a rising market will feel hollowed out in a declining one. Consumer spending dries up, and the spiral down to unemployment and recession begins. If you’re lucky, it ends just shy of deflation.
This may be why the economists of Bank of Montreal tried to get some attention this week for a report saying the Bank of Canada will raise rates far sooner than the US Fed.
“Governor Carney asserted in an April 2 speech that ‘the bank will take whatever action is appropriate to achieve the 2 per cent CPI inflation target over the medium term.’ A few days later in an interview,” BeeMo reminds us, “Mr. Carney stated that, under flexible inflation targeting, the bank could use monetary policy to address household debt dynamics (deemed Canada’s No. 1 domestic economic risk), if they were threatening financial stability. This barrage of hawkish rhetoric seems to suggest that rate hikes could be closer than we think.”
Says BeeMo: that means rates start to rise in a year, and by mid-2014 the central bank rate will likely have turned from 1% (as it is now) into 3%. Then the prime at chartered banks becomes 5%, and VRMs will be a little above that – likely 5.5% or better.
On a $400,000 mortgage, currently at 3.2%, with a 25-year amortization, that increases the monthly payment by 27%. Worse, it almost doubles the amount of interest paid over five years – from $59,000 to $104,000.
Deniers come to this pathetic blog to argue this is why rates will never rise – the government wouldn’t risk doing something so unfair and unpopular, let alone with negative economic consequences. But Carney would. In fact, he knows he must. Letting the credit bubble gasify further will only make the outcome worse. And recent changes to the relationship between the government and the central bank mean our blog dog buddy can jack rates without even calling over to Centre Block and risk waking F.
Then again, he might not even have to. Greed and lust are doing a fine job, all on their own.
Living within your means? There’s an app for that.
214 comments ↓
first. doh!
Furst!!!
No. Fail. Go away. — Garth
This will all end badly, homes still selling in my hood in N.Van. 750K for tear down.
i cant resist….first
3 weeks and not one showing! I hope I’m not a year too late!
Thanks for the comment Garth. You may find me annoying but you like me too! We’re like long lost buds.
Keep your DNA to yourself. — Garth
I’m Back
While Rap dancing drunk as shit in the pool in Las Vegas I was talking to some brothers from the south who did not like how friendly I was with their prized bootties. They were cute, and shit disturber I am.
Ya mad as hell at me at first, had I not told them I played poker with 50 cents on my last trip, and Mr happy was broken, especially in the pool I could have been in Trouble. Got them laughing guts out instead. One liked me so mush he offered up one of the herm, I took a pass, Can’t break the code, pay em to go away.
I actually did play poker with 50 cent did not know who that was till I asked my kids.
Why do I keep posting as The SM, saying crazy shit knowing if I am ever exposed, I lose the fun part time gig and a tone of business associates.
Even though I know some know who I am. Why do I take these crazy risks, low boredom tolerance I suppose. Maybe I’m just a gambler looking for the next rush. Or maybe a shitty writer looking for material. It’s got to be one of those. This blog has produced amazing characters
At the pool after I calmed down the brothers we are talking George Zimmerman
WOW based on what they said, George Zimmerman has but one chance, If he goes to Jail he is toast, If he walks the streets he is toast.
George needs to fake his own death, needs an partner, He goes fishing in shark infested waters , the partner shoots up the boat, and George leaves a bit of DNA, and a black panther bumper sticker on the craft, partner takes him to Cuba. Doable I mean he’s 50% Hispanic. He could maybe sneak into Israel with a name like Zimmerman but we all know by now he is only 50% white so that won’t work.
He is so screwed, just like Real Estate Purchasers who by 2014
Speaking of Real Estate, Las Vegas some deals but no more steels, little disappointing.
TORONTO
This is nuts, bidding wars gone mad, 999,000 one block from my poverty shack sold for 1.3
The herd is surprising me, like everything supply and demand rule, I respect it.
MSM talking down the market and debt like mad is not being swallowed by the herd.
Does the Herd price in the CDN dollar, and its relation to variable rate mortgages, hell I don’t know. What I do know the herd don’t scare easily.
Mr. Carney, your move please, good job numbers, a sub par dollar, well?
Are you going to do the right thing?
But if he does then Harpo will be Toast next election.
This is getting insanely interesting.
I would say anyone who lives within their means suffers from a lack of masochism.
And as I believe Garth has said many times, and now many other economic analysts are joining in for the chorus, this insanity will not end well.
No sympathy for anyone who dumps two million on a great big ugly concrete block like that.
I was reading an article earlier about how Mexico is so middle class now. It all sounded good up until the blooper let slip that it’s basically being funded on credit cards. The opium we’re fed by bankers, huh?
This sort of stuff won’t go away until the real causes are addressed. I’m not so naive as to believe that’ll happen while I’m wasting oxygen. Cheers Garth.
If the free markets were allowed in Canada the housing bubble would crash 50% overnight. Take away fascist CHMC and it’s game over. The fascist conservatives hate free markets and democracy as we saw with robo calls. The US with limited free markets corrected the housing bubble but the Canadian fascist conservative hate free markets more then the fascist republicans. Realtors and other vested interests would kick and scream if the free markets are allowed. They know the day of reckoning will come but they want to make as much ill gotten gains as they can before the housing ponzi crashes.
Don’t worry Garth, National Post says we’re worrying over nothing: http://business.financialpost.com/2012/04/10/harbingers-of-doom/
=/
The U.S. Counterfeiter-in Chief has no interest in raising rates “before 2014”. Financial repression will continue.
Every central bank in the world followed the U.S.: (manipulated though they are…) rates everywhere have in recent years approached a nominal zero. In unison, in concert, one after another.
WHY would Mr. Carney stand up on his hind legs and be the first to start raising rates?
They take their cue from the U.S. Period.
And what are Harper, Flaherty and Carney waiting for?
… i guess they are waiting for someone to do something to take the blame for the bursting bubble!!
… and we call them Leaders!!!
Flaherty Says He’s Planning Changes on CMHC Rules
http://www.bloomberg.com/news/2012-04-10/flaherty-says-he-s-planning-changes-on-cmhc-rules.html
Until Mark Carney raises rates or something else happens these fools will continue.
I see it every day big fancy boats, jacked up Ford F-350’s, inflated ego’s fancy vacations.
Shooting their yaps off about “how smart”they are.
If this mess turns out “anything” like ’81-82 there are going to be some sorry, sorry people.
I wouldn’t wish that on anyone.
Take heed of the wise words posted daily young ones.
Go buy a carton of eggs and throw them at the house. Will offer more satisfaction than buying the dump.
my chuckle of the day was listening to the 20 something lady making my six inch ham and cheese sub at the subway in abbotsford bc. she was announcing to all the customers in line that she and her boyfriend (who also works at subway) are saving money to buy a house. not a condo or townhouse, but a house. an other month she said and they plan to buy a new house in abbotsford.
as an american i have heard this type of talk before….it was only six years ago.
remember the story of the two illegals working at a burger king in california. they obtained financing for a $ 700,000 house in the valley just north of LA. it was a story that went viral as the housing market crashed.
one thing is certain in this world….history repeats itself.
PS thanks from all of us in whatcom county for increasing the shopping limits. the more sales tax canadians pay while shopping…the less we have to pay.
The only way to help the the home market to to tax the shit out of capital gains on your 2nd investment home that you do not live in.
Anyone notice Global TV BC was rerunning another RE pumping piece on the 6 o’clock news tonight? The yellow helicopter was there, the “asian” buyers were present and Cam Good who surely must have Global execs on his payroll put in a cameo. And then there was a story about the increased demand on the local Food Bank.
Gotta stop talking the truth Garth, a crash will benefit a lot of people with liquidity.
If you stop talking the truth, then there will be more sacrificial meat for the credit God.
The more painful the crash, the bigger the opportunity for people with liquidity. Just sit back, relax and watch the show patiently.
5yr yields are down 24bps from the mid-march high:
http://t.co/bYZnYruU
A handful of lenders have started cutting fixed rates.
TSX is now in negative territory for the year. Other major N.A. stock indexes are taking a beating too.
Its no wonder real estate is still so popular.
Garth you really shouldn’t use the term retarded like that.
The sarcastic slang light was on. — Garth
Canada is definitely in uncharted territory, the RE bubble has been allowed to morph into a far more dangerous credit bubble. Housing was just one component of the US collapse, what really caused the house of cards to fall was consumer debt. The economy was artificially juiced by consumer spending, once consumers borrowed their brains out and could borrow no more the economy contracted. Once economic growth slowed people stopped paying their mortgages and the whole house of cards came crashing down. Canada is now hovering at the same precipice waiting for the nudge over the cliff. It likely doesn’t matter what brother Carney does at this point.
We weren’t the only ones to bet big on juicing domestic spending in hopes of avoiding recession. Our Aussie cousins did the same thing. We probably just have to look across the pond to see what the future has in store, it won’t be pleasant. Manipulating an economy for political gain always ends badly.
I think Carney should be replaced as BoC Governor. He has kept interest rates at emergency low levels for far too long. The emergency (the collapse of Lehman Brothers) was almost 4 years ago now! I agree the economy isn’t booming but we’re well past the crisis stage.
Last year, he didn’t increase interest rates because he was worried about the Greek sovereign debt crisis. Well, that turned into a big non-event. Other countries (e.g. Argentina, New Zealand) have gone broke in the past and no one batted an eyelash here in Canada.
So my wife dragged me to Michigan over the weekend for her cousin’s birthday. We stayed about an hour’s drive north of Detroit at her cousin’s house in Rochester Hills.
All I have to say is HOLY SHIT. The house (more like “mansion”) was 3600 square feet, used to be owned by a VP at GM. I think it’s one of the biggest houses I’ve been inside in my whole life. The interior of the house was was richly appointed, hardwood everything, marble everywhere, stainless steel, gigantic arched ceilings, a basement with practically an entire other house in it (kitchen bedrooms, showers the works), a storage area bigger than my entire condo in Toronto.
I got talking to my wife’s cousin’s husband. Apparently he’s an engineer down there and she works as an RN. I asked him how much this gigantic mansion must have cost him. In one of the best neighborhoods Detroit has to offer, close to the interstate, shopping, best schools, everything you could possibly want …
1.5 million? 2 million? Probaly more! How could they afford this?
They got it for 360k. My jaw literally dropped to the floor. WTF? Sure Detroit may be a pretty shitty city (the core) but the suburbs of Detroit are unbelievably nice … they make our middle class areas in Toronto look like ghetto’s and our rich areas look only middle class.
House after gigantic beautiful house, all at prices that cost less than 500 sq ft in a Toronto condo. It really made me start thinking about what’s really important in life …
As a 1st year university student I always wondered what the harm was in low interest rates. My economics professor harped on the high rates of the early 80s and the harm they did………then I’ll never forget what he said afterwards.
“But I would argue that low interest rates are even more damaging. If rates were to ever go to say 1% it would create a massive asset bubble in housing and consumer debt, which would eventually hammer the economy worse than an 18% rate ever could……but we’ll never see 1% no government would be stupid enough to leave it there for any length of time, so don’t worry about this……other than there may be a question on the test :)”
This was 10 years ago……..and btw it was on the test. I just never thought I’d see it play out in real life!
Good picture. The person who penned the Oscar Wilde quote should be reminded that Wilde died destitute at the age of 46.
I am fearful that this will continue to get out of hand. C needs to keep the household debt levels in check. Unfortunately many are going to end up with most people being in debt until retirement with their 0 down, 30 year amortizations, only to retire with no savings.
“This is USA circa 2005. Carney knows well that once real estate falls out of favour, prices will decline rapidly, leaving all that debt.”
How steep will that decline be? 10%? 20%? 30% 40%?
Bubbles don’t slow bleed.
Over a friendly game of poker I continued to talk to my new American friends. 150k gets you a “nice” detached home there. 200k or more gets you a VERY nice detached home. 80k gets you want 280k would get you Toronto … a decent townhouse. All of these in nice neighborhoods. man I know Detroit has a bad rap, but the suburbs didn’t seem any different from a nice neighborhood in Toronto. Probaly abit nicer in some ways.
Garth- the listing that failed to ignite a massive bidding war was probably this:
http://www.realtor.ca/PropertyDetails.aspx?PropertyID=11723610&PidKey=-1402680106
It makes perfect sense that a realtor would use a quote from that condescending creep Oscar Wilde.
Maybe it was DA.
#11…it may just be that the guy who wrote the financial post article has a house for sale.
they don’t mention you Garth but http://westerninvestor.com/
and page b10 has “Foreclosures spike in okanagan”
I guess they are taking the informed seriously now.
SM- that really you? you sound kinda sober. Agree on your thoughts, GTA getting in-SANE, herd is going banannas. Did a quick walk through in a semi on the wrong side of Roncey (east) this past saturday, bamboo floors, slanted basement, nice renos but still a stones throw away from the dollar store degenerates on Queen west. traded 100 over ask, almost a cool million. If I weren’t so lazy I would actually consider a list myself. Carney will raise 50 in September to end the madness, one shot deal then sidelines to wait for B and co.
#23 Carlyle on 04.10.12 at 10:01 pm
>It really made me start thinking about what’s really important in life …
Being Canadian, right?
Finally! Our friendly Conservative party is going to flood Canada with cheap foreign worker TRADESPEOPLE!!
Jason Kenney made the announcement today, confirming that we’re woefully short on tradespeople and they’re going to fast-track foreign worker tradespeople to the tune of hundreds of thousands of them. He says government should not be determining immigration policy, and that we must allow the business sector to do that. Woo hoo! Cheap plumbers, fitters, welders, mechanics. Cheap basement renos! Can’t wait till the day I can get my basement finished for under a grand, or my brakes done for ten bucks.
So I guess the time to buy bonds are in 2014?
@ #7 smoking man. come clean you Must be carney . Who else could afford that many vacations and be so well informed.
Carney is irrelevant at this point. Debt saturation is complete in Canada. Oil prices and crumbling economies around the world (China, Japan -demand for commodities-) will finish the job, clean and fast. Get ready, ’cause it won’t be pretty. Then there’s 19 trillions in derivatives on the big six’s balance sheets (off balance actually, but still there) waiting to blow sky high once the EU croaks.
35 Bond junkie on 04.10.12 at 10:23 pm
If he wants to stop it dead in the tracks 1% bang. Now
He won’t do it. Under estimating the mob.
The herd is afraid of all forms of investing except for RE we can thank the schooling system for that. My 3 kids in grade 12 did not know what compound interest was, in fact their reading and writing was better when they where 4 years old, wife teaching , than it was in grade 3. That’s when I woke up.
The machine so interested in manufacturing obedient tax farm slaves have done such a good job, that with the power of MSM they have lost control of the herd, they made them too stupid.
Now we can complain about it, or we can profit from it.
Lets make money
#39 Debtfree on 04.10.12 at 10:33 pm
A drunk with voices in his head, LOL
Anyone read the article in Globe and Mail today on the hidden threat of home ownership? It cites an investment advisor in Vancouver referencing a client who couldn’t put anything in her RRSP this year. In fact, he says, the client told him she had to cash her plan in. You think this is the only person out there digging into retirement savings to finance poor financial decisions? Yikes.
@# 32 johnny young . Oscar Wilde condescending ? one of his greatest quotes describes the Canadian indebted most accurately ” I can resist everything except temptation ” end quote .
Great timing on this post.
The question that is keeping me up at night is whether to buy bonds (ETFs) now. The past 2 years have shown optimism fades right around this time of the year and bond prices shot up from their lows – the ones I track – starting this week.
But, If Carney were to raise rates, that would cause a downward move in prices, so… Which effect will dominate? Risk-off sentiment surging vs. BoC rate increase?
What do you think, fellow bloggers?
I remember my friends family had a nice house in the early 80’s and started it at the high 7’s but they always kept the price above market and a few years later sold in the high 2’s. When the market goes down , people just want to wait and get it at a cheaper price and maybe even bypass the broker. The commissions were based on a system where realtors had to work harder for their money and invest into advertising even if the property didn’t sell. I like you have thought the bubble was going to burst many years ago.I am looking forward to the burst so I can move up much more cheaply.
Carlyle,
Thanks for your post, I love to hear those kinds of stories.
Canada is so hooped. I mentioned this before, my sister sold her house in Calgary for $330,000. It was on a 20 ft lot, no garage, backyard on an alley, no trees, right beside bald prairie on outskirts of town, not far from the airport. She had to be coaxed into selling it though because they were underwater at the selling price due to taking out home equity loans while the bubble inflated.
America was on it’s own when it popped in ’05, and Canada will be on it’s own when it pops too. Get ready for a ghetto Canada coming soon.
37 BigAl (Original) on 04.10.12 at 10:26 pm
It’s a race to the bottom, and an opportunity, hire some offshore plumbers find them gigs, and pay em min wage.
Use the brain and don’t compain.
O ya another brilliant rym from the drunking smoking man
Time to start a Rap band..
Anyone who lives outside their means suffers from a lack of imagination even more.
He can’t imagine what will happen next.
BUYER BEWARE. THE BUBBLE HAS TOPPED. SALES ARE FALLING ACROSS CANADA. NOW IS NOT THE TIME TO BUY A HOUSE. I actually have to get a ton of work done today because I spent too much time scratching out nonsense in the comments section of this blog for the last couple of days. It is fun and interesting but not today : (
You are absolutely right everything you say about my generation. They spend $100 a month on cellphones, eat out every day, hit the clubs every weekend, go on vacations multiple times a year, expensive clothes, etc. Most of them live paycheck to paycheck, and the minority who do have savings have GICs or maybe own a condo (and by own I mean the bank owns it because they bought with 5% down). Ask them what the difference is between a stock and a bond, they have no idea. Me, I save almost 80% of my after tax income. I have no debt. I have a pay-as-you-go cellphone for $12/month. I spent $30 on new clothes last year. My grocery bill is $80/month. My TFSA and RRSP are both maxed out (all in dividend paying stocks, only suckers hold ETFs and pay MERs). I never go on vacations, and there hasn’t been a weekend night that I haven’t spent at home by myself since I graduated university. What is the world coming to when people like me are looked down upon and those who spend spend spend are considered cool? I shudder to think about the future of this country.
You mental midgets have no idea how hard it is to be me. Why I spend my time sharing nuggets of golden wisdom with you is beyond me sometimes. I guess I’m just an angel at heart.
In Vegas, I had hotties begging me to tap that at every turn (who cares if some of them were bearded men, what does THAT matter? It doesn’t, as it’s all the same once you really stop and think about it (have you ever – stopped and thought about it I mean?)?
In any event, back here in the GTA, it was hard to get liquored up on Monday, my favourite watering hole was closed for easter – what gives with that? At least the schools were closed, so some young minds were given another day of reprieve from being moulded into tax farm slaves, thank goodness. Supply is being trumped by demand, it’s as simple as that my friends and followers. It’s just basic math. Prices will not stop climbing until that changes.
Now where’s that bottle…..
Smoking Man
Check out the link to Rob Carricks article on “The hidden threat of home ownership” He says that not only are people not saving for retirement due to housing and debt issues but they are also using up existing savings to just get by. In other words, keep the wolf from the door a little longer.
http://www.theglobeandmail.com/globe-investor/personal-finance/rob-carrick/the-hidden-threat-of-home-ownership/article2396551/
Garth, in your opinion, who has more power Carney or F?
Appointed beats elected. — Garth
Garth, interest rates will fall in Canada, esp on the long end. However, the mortgage rate, cost of cmhc, govt sur tax, etc will cause the lending rate to rise. Carney would cause more pain to the country be raising rates to keep the marginal punter out then the destruction it would do on Canada as a whole, you know this. The result will be to keep low rate out of hands of people who can’t take a rate shock. Carney is not talking about raising rates to put the brakes on Canada. Think about it.
How retarded is that? Oh very retarded, Garth, very retarded. You know it. If the Harper CONS fall from this, so be it. Time for accountability. You don’t get your cake and eat it too, well the banks do but that’s another story.
Two more gifts from the “greatest generation” are coming for us all. A bursting credit and RE bubble and insolvent social programs. Gen X wil get stuck with both.
Cameron Muir, chief economist of the BC Real Estate Association was a guest on CBC’s early edition this morning (Apr 10).
I was impressed by his effortless footwork as he deftly stepped around the host’s questions. When asked if it is now more financially prudent to rent rather than purchase in Vancouver he deflected the question to Vancouverites themselves. After all, only they know what is right for them. (Hmmm… what ever happened to “buy now or be priced out forever”?).
In defence of purchasing, Muir said that it does force one to make regular contributions to their future, whereas, renting and investing one’s excess cash requires a form of discipline few people possess.
He feels that the Vancouver market is now flat, price wise, and will remain that way for at least 18 more months before the next up-tick. Regardless, he advises that people should not be thinking about how much their house gains in value per annum but concentrate instead on the rewards of long term ownership in their community.
It was a textbook tutorial in defection, back peddling and ass covering. Yet, he still managed to slip an unmistakeable soft sell underneath it. That’s talent. I guess.
#25 Carlyle on 04.10.12 at 10:01 pm
“It really made me start thinking about what’s really important in life …”
If staying alive is important to you I would avoid Detroit
It’s different here.
#40 Anon
Almost $20 trillion now. http://i39.tinypic.com/2i9nz9y.png
#52 Smoking Man on 04.10.12 at 11:16 pm
Obvious impostor.
@ 57 not 1st . I’m an aging boomer and I’d trade everything I have for what you have . Time and the knowledge that Garth has bestowed on you . Keep your powder dry kid .Your time is coming faster than you think. When we had time .We only had coolade . I envy you . You lucky little so and so .
#53 BC Bring Cash,
Thanks for posting the link to this. The extra whack here is the individual referenced in this article cashed in her RRSP and would have had the tax withheld on the withdraw. What do you think the chances are that upon making the contribution she invested the refunds? I’d bet ZERO likelihood.
#44 Debtfree on 04.10.12 at 10:45 pm
If you’ve seen the play (or movie) “The Trials of Oscar Wilde” I think it explains my comment.
I live in the Kitchener area and I have been renting for approximately five years. My wife is actually depressed since we have two new children and not enough space. She wants to ‘grow roots’ and enjoy living in a beautiful owned house. A beautiful house in this area is approximately $500000 either including upgrades or already upgraded/new. It is amazing that for this amount of money you get a normal lot size (~45′ x ~110′) and a decent, but not too interesting house. I have been avoiding the impending purchase but I may just buy the $500K house before my wife just gives up on me. What is the worst that can happen? It loses $100K in value? This waiting and sort of being on hold is not good either. I just hope that the last few years of living modestly pays off and that the seemingly majority of people who are leveraged to their neck get what they deserve (not that I am being too judgmental 8-D).
#52 Smoking Man on 04.10.12 at 11:16 pm
You mental midgets have no idea how hard it is to be me. Why I spend my time sharing nuggets of golden wisdom with you is beyond me sometimes
……………………………………………………………………….
I just wanted to highlight this “nugget”. I ran a fly in fly out rafting company in Canada a hundred years ago and I was telling a story to some Indians that lived on the reservation I was at. Anyways I was saying that there I was at a stop light digging a giant nugget out of my nose and I looked over to see a really pretty lady driving a silver jag sitting at the light beside me and staring right at me. Well the Indians got a chuckle out of that and started calling me nugget after that. Your nuggets of wisdom reminded me of that.
#57 Not 1st on 04.10.12 at 11:43 pm
The term “greatest generation” refers to the generation that grew up during the Depression and fought in WWII, not to the Boomers who are in part responsible for the “gifts” to which you refer.
#51 Cheap Phil
Exciting life you lead! I bet you’re REAL fun to party with.
Interesting that Oscar Wilde quotes sell houses, while Olivia Wilde is an actress on House.
Kinda like Beatles songs selling VW beetles, or remaking Hitchcock movies as porno.
” Mr. Flaherty characterized Katimavik, with an annual budget of $15-million and 1,100 volunteers billeted yearly across the country, as involving “a very small number of participants at an excessive per-person cost.”
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Mr flaherty is unable to balance his own office budget:
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Finance Minister Jim Flaherty couldn’t keep his own office budget in the black last year, published figures suggest.Flaherty breached Treasury Board guidelines by overspending by more than $430,000 last year, according to government documents.
Flaherty spent $2,868,222 on his ministerial office in 2009-10, while Treasury Board rules cap spending for ministers with extra regional responsibility and a parliamentary secretary at $2,437,370.
http://www.ottawasun.com/news/canada/2010/12/06/16450811.html
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As someone who is renting after selling 2 years ago (and no I didn’t reap a windfall….property transfer / realtor fees eat up a massive amount of $$$ when you buy/sell 3x since 2000)… I’m now renting and rebuilding the warchest. So where is the best place to get investment advice in Vancouver? I’ve read Garths books but still don’t know where I can get financial advice that I can trust. The Investment advisors I’ve spoken too come across as flaky as realtors, and anyone affiliated with a big firm just seems to want to get you buying their “products”. Any suggestions???
Here’s proof that Garth’s allocation of 25% of net worth in RE isn’t just some greaterfool.ca myth… apparently a bunch of ultra-rich 1%-ers also maintain approximately 25% of assets in RE:
http://www.theglobeandmail.com/globe-investor/investment-ideas/thane-stenner/what-high-net-worth-investors-are-doing-right-now/article2397332/
Yup. He’ll increase interest rates by 0.25%. That should do it.
Garth, probably C will increase a mortgage rates only, as Fisher (B of Israel) did.
He limited the variable rate mortgage – no more than 33% of your morgage amount.
Carlyle,
I did a google search on properties in Rochester Hills, MI. What I found was that the $200,000-$250,000 are priced about a $50,000-$100,000 less than a comparable property would fetch in Windsor, Ontario. Nothing to blow your mind, just a better deal.
One thing I’ve generally noticed in you get a much bigger piece of land in many areas of the States.
The house my sister sold in Calgary a) wouldn’t be built in the states, especially in a rich city b) would cost about $60,000 in the rochester hills, max.
3% rates are the devil.
…as are 40 year mortgages and no-down mortgages.
I stand corrected. Anyone want to see what a street looks like with a house for $289,000, just go to google street view and enter this address:
6886 Forest Park Drive, Troy MI 48098
Here’s the listing: http://www.trulia.com/property/25155611-6886-Forest-Park-Dr-Troy-MI-48098
I WANT TO LIVE THERE. It’s a much better street than the best street I could find in Windsor, which has million dollar houses listed.
Better weather too I bet.
Hey Garth with interest rates rising does a banks profitability increase because of the additional interest they collect on the mortgages?
Even if loan growth stalls would the banks offset those losses with higher interest?
#51 Cheap Phil
You need to be looked down upon. There’s a limit to how much of a no-fun loser you need to be to properly save for the future.
Also, you can’t have kids with your hand, so maybe you should stop acting like such a pompous douche and live a little.
24 Loan money to anyone
New Zealand has never gone broke as far as I am aware. Source?
I’m so happy I had the brains to resist the pressure and probes from my parents and friends and realtors.
I’ll keep renting until the housing market mayhem stops. I hope it stops soon here in Regina! Lots keep telling me it’ll never stop, but we all know it will. The question is when? Regina seems to be going strong, but so many people seem to be getting in way over their heads. It’s Regina of all places!! It shouldn’t be more expensive than Calgary or Edmonton!
#32 John G. Young on 04.10.12 at 10:17 pm
It makes perfect sense that a realtor would use a quote from that condescending creep Oscar Wilde.
Maybe it was DA.
——————————————————————–
He was a little F**K*D up but did some great work…”Crome Yellow”
The realtor likely got it out of the “Quotable Quotes for Business” guide.
Big Al @37
Half the tradesmen I know here in Victoria are under employed at this time.
Further up island you go the worse it gets.
I have friends (trades) phoning me looking for leads.
Painters , plumbers, carpenters, electricians, drywallers….
I have one friend who is an absoulute master at woodwork, beautiful work, he’s in his early sixties. Nada. No work. He’s always busy…..
I have one small job lined up, thats it, no calls, no nothing.
This is as slow as I have seen it in a long time.
Seems odd to me that we need more skilled trades.
How about we try to get our own people working first.
Yes, my generation is being debt enslaved by the means of basic shelter, but the individual is powerless to stop it. Why?
Anyone from my generation WHO DARES to speak out is immediately labelled as “too negative.” The slaves are being used to police the few slaves who have an independent mind. It’s the “plantation effect.” Daily, I face unrelenting assaults from the positivity army!
I’m told over and over again, “have a positive attitude and it will all work out in the end,” “Canada is the best place on Earth,” “we’re all so blessed,” “the key to success is having a positive attitude,” etc. It’s enough to make me want to puke!
The problem is the whole self-esteem everyone is a fricken winner movement bestowed upon my generation. Nobody resists – that’s just too negative!
Maybe if critical thinkers were allowed to advance into positions of power, instead of people who wave for the camera and put on a pretty optimistic puking smile, we wouldn’t be in this mess.
Looking at overseas markets, Asia is down hard, commodities are bouncing and there’s no doubt both Europe & NA will open lower.
While this site is a great source of information, both from Garth and some posters, I also peruse other websites. I found a presentation from Peter Schiff who presents some great arguments on why the US Fed Reserve is wrong in their assumptions. It’s worth an hour of your time.
http://reason.com/blog/2012/04/04/peter-schiff-the-fed-unspun-the-other-si
What I find to be sound financial advise is to:
1) Not invest in RE unless you’re already in at much lower prices;
2) Use the low interest rate environment to eliminate debt – including mortgage debt;
3) Beyond paying down debt, save for the future including the kids RESP’s and in your TFSA.
4) Spend your hard earned dollars not on stuff, but on enriching your life in memorable ways
Greetings and thank you Mr. Turner for your insight.
Thanks to all the contributors for their feedback and opinion. All of this has great value for those of us that critically analyze beyond the surface of all information being disseminated.
This is my first post and hopefully not my last.
“Says BeeMo: that means rates start to rise in a year, and by mid-2014 the central bank rate will likely have turned from 1% (as it is now) into 3%”
And then “Beemo” woke up. Dream on if you think the BOC move anyway near that far without the US fed moving first. They SHOULD. But they wil not. No. Way.
#36 AG Sage on 04.10.12 at 10:25 pm
#23 Carlyle on 04.10.12 at 10:01 pm
>It really made me start thinking about what’s really important in life …
Being Canadian, right?
————————
That one’s standard of living is directly associated with the cost of real estate be it to rent or buy. That debt is evil and will sink a person … especially the amounts that Canadians are taking on. That what a home is “really” worth often has nothing to do with what it costs.
That mansion house in Rochester Hills my wife’s cousin was living in … it originally was originally listed at north of 700k. It sat on the market for 2 and a half years and multiple price drops … eventually sold to my wife’s cousin last year for 360k . The husband told me he went in with a lowball offer thousands less than the listing price and his offer was accepted almost immediately.
A vision of the future of real estate in Canada?
@not 1st: the boomers are not the greatest generation. The greatest generation was the generation before. Those that survived the great Depression, won the second World War then built industrial economies that were the envy of the world for 50years. The boomers came up, inherited everything, and promptly set upon each other, lying cheating and stealing in a race to the bottom.
A classic pattern of unearned privilege: having done nothing to earn their fortunes, and lacking the courage, skills and fortitude to earn them, they feel that they must protect their positions from any and all threats of challenge or change.
If a 12 year old get’s it, what’s everybody else’s excuse? No really, it’s not THAT complicated – you are being ROBBED.
12 Year old explains the Canadian Banking System Theft
http://www.youtube.com/watch?v=axS-QdUkMqk&feature=share
Please share this!
#25 Carlyle
Yesterday, somebody wrote a post about how there will not be a crash. The fact that there are more families with duo incomes, and there are many high paid professionals such as doctors, lawyers, CEO’s, etc who can really afford these high priced homes. Yet, are there no doctors, lawyers, CEO’s in Detroit? How come these high paid professionals with duo incomes didn’t prop up the house prices there? I would imagine that with a doctor’s salary and Detroit’s real estate prices, they can virtually purchase the entire city. Why would the VP at GM sell such a beautiful mansion for next to nothing (relative to Vancouver prices)? If it could happen there, is it different here?
Aussie Update
* Can you spot the trend?.
* SYDNEY
Mounting credit card bills drive bankruptcy boom in western suburbs
http://www.smh.com.au/money/mounting-credit-card-bills-drive-bankruptcy-boom-in-western-suburbs-20120410-1wn1f.html
* MELBOURNE
MELBOURNE’S south-east has the highest tally of bankruptcies in Victoria, according to figures that have for the first time provided a breakdown of where financial stress is greatest in the state.
http://www.theage.com.au/money/southeast-worst-hit-by-bankruptcy-20120410-1wn2i.html
The Australian Bureau of Statistics (ABS) released the February Housing Finance data this morning, which registered large falls
http://www.macrobusiness.com.au/2012/04/nsw-kills-housing-finance-recovery-by-leith-van-onselen/
It’s not prices going down, its the valuers?.
Valuers should not become scapegoats for frustrated property owners, particularly those in struggling residential markets, according to the incoming president of the Australian Property Institute
http://theage.domain.com.au/real-estate-news/property-valuers-unfairly-blamed-by-owners-20120411-1wpi5.html
Mining boom slowly turning to bust?.
Queensland
Queensland coal mine run by an alliance of BHP Billiton and Mitsubishi will be closed, according to a statement released by the operators ahead of another round of industrial action tomorrow.
The alliance said the Norwich Park mine would close indefinitely after a seven week review could not find cheaper ways to run the mine.
http://www.theage.com.au/business/bhp-announces-qld-mine-closure-20120411-1wpsk.html
Another great quote:
“I am not young enough to know everything.”
O.W.
hey cheap Phil can you give me tips on cutting down on my grocery bill. ty
Cheap Phil you sound like a really fun guy. I can see why you would be spending every single weekend night at home by yourself. To each his own I guess.
You know, everywhere I read there are articles about the Boomers, Generations X and Y, and the Millennials. It appears there is a class war going on. Don’t know how it got started/perpetrated, and don’t really care. What there is, is a blame game and a judgementalism going on that is quite silly really:)….. I see the fools, the ignorant, and the not caring/no empathy/no compassion from every generation. As well as the lazy, entitled, and the ever growing # of obese in every generation. The fact that is the most depressing, is, that in the U.S., the whistle blowers on the coming mortgage/financial crisis, were the ones who were attacked and derided. Now, we have the same thing in Canada, although, with F an C at least sounding the alarm, even after their hand in helping start the housing run up in prices, and let us not forget the elitist/snotty/shrieking Sherry Cooper, who, now that she has sold her mansion, is also sounding the alarm, even though she sounds like it pains her to warn “the peasants” in her eyes. My main point, is that every generation is just not that astute, and, I would dearly love to add, it does not matter who you vote for, as the politicians have always lied at election time, and never do what they ever promised. I mean to offend no one, but could care less if I do. The people offended are the problem. Sorry can’t do nothing about it, but please know, that there is many people like Garth, who, even though he is desperately trying to save people, he, and many others are going to make out just fine no matter what happens, but all of you that argue his message, are screwed. It will be hard to watch….but it won’t be me either. I do care, and have empathy and compassion for all of those in Canada about to be slaughtered, the same as I feel empathy for the Americans and others who have already been beaten up and unmercifully fleeced.
#51Cheap Phil
You sound like a real catch.
Aussie Update
When debt demand falls, so do house prices.
After all it’s a debt bubble, isn’t it?.
The number of home loan approvals fell for a second consecutive month and should make an interest rate cut in May more certain, economists say.
Australian Bureau of Statistics data shows the number of home loans approved in February fell 2.5 per cent.
http://www.smh.com.au/business/home-loan-approvals-continue-to-fall-20120411-1wpiq.html
Investing
CASH v (Melb) PROPERTY, and the winner is?……
Melbourne Australias HAM capital.
http://bubblepedia.net.au/forums/viewtopic.php?f=15&t=13#p389
ya but watch what happens next, the old fogies will have to give up their doe when they go, and it will blow for the young in tow.
hahaha
debt free and loving it, but this will affect us all. don’t you know…….
go
Don’t miss this point here. Prices are higher since last year and we expect prices to keep going up and push this possible correction down the road AGAIN. Another win for RE market and wrong again for our “speculations” here.
“This is USA circa 2005. Carney knows well that once real estate falls out of favour, prices will decline rapidly, leaving all that debt…”
******************************
So, if governments ’round the world including our very own ‘cons’ are so damn smart why did they allow this to happen? What WERE they thinking? Boggles the mind….that they followed each other down the same path. Governments thought they were clever but ultimately they were all simply ‘greedy’ and now ‘fearful’….so just what has been accomplished?
Nostradamus on holiday?? Missing the strange but interesting links . . . . .
For those who were not around to experience previous real estate corrections, in the early 1980s and early 1990s, it might be worth asking and learning from someone who has.
Something wicked this way comes.
Like I said many times here this bubble won’t pop until the herd hits the credit wall. That wall can be hit in many ways, intervention from Ottawa, ofsa, or plain stupidity. The run up in Realestate will run down the same way, the only difference is the pain it will cause everyone else.
Garth,
AMEN to today’s blog. Totally agreed with you about the poor spoiled brats’ lifestyles … TOTALLY ! My husband and I are financially comfortable after many years of busting our butts and my husband still brown bags it to work (as do I). I cannot believe how many of the new generation think they are suffering just because they have to cook a meal at home one night a week. Not eating out everyday can save one hundreds of dollars every month (not to mention it can also save your health) and an entire generation doesn’t get this. No sympathy from my end.
Who the heck uses their credit cards to finance a house ? Are you serious ? I’d love to see that ! A credit card is only good for one thing and that is so that you don’t have to carry loads of cash in your pocket AND so that you get a few more weeks to pay off your purchase. I have never paid a credit card company a penny of interest and my credit cards have no yearly fees. It’s free credit ! Anyone that would pay those loanshark interest rates is crazy and using credit cards for a downpayment on a house … well I have never heard of such idiocy before.
I am not sure that rates will rise as much as you say though, Garth. Indeed I think they will rise so that the borrowing will begin to slow down but since 2 points may very well destroy many households, perhaps the government will use other tools. Here are some ideas:
1. Raising the age people can legally borrow money for a house from the age of majority to say age 30 … this is around the time reality hits most people and they start to behave with a little more common sense (of course, I’m just joking with this one but why not ?).
2. Requiring that banks charge mortgage interest rates in accordance with risk, even when said mortgage is insured by the CMHC … so a twenty something in poor financial condition would have to pay a much higher interest rate … this may make them think twice about that house since their monthly payments would be enormous and this is the only thing most people look at when seeing if they can afford a place (not kidding about this one).
3. Making a 20% downpayment compulsory. No cash back no bullshit. If you don’t have 20% to put down, no house ! Period ! (again, serious !)
4. Making people under the age of 40 who wish to take on a mortgage take a compulsory course on household money management. This is akin to when young people get married in a church, the church makes them take a marriage course … same thing. No course, no loan ! Of course they would also have to pass a test at the end (might be kidding but perhaps not).
5. Showing youngsters without any money who wish to borrow, what can happen if one does not spend wisely … perhaps by visiting 60 somethings who have gone through this situation .. this can be combined with the money management course (this may not work since most young brats will think that it will never happen to them ’cause they’re SPECIAL).
6. And of course the government can always use taxes to persuade people without money not to borrow … the use of RRSP’s to finance a home, even the insuring of risky loans by the CMHC etc.. can be abolished.
Why hurt the rest of us ? If the government wants to target bad money managers and get them to stop putting our economy at risk by borrowing their lives away then it should target THEM and not everyone !
HHHW
Markie knew all this in Two Thousand and Nine and sat on his hands. Woulda,Coulda, Shoulda. If credit cards can charge 22%, what excuse is there for low rates? There is an honest realtor?
Carney does not walk the talk since you first said he would do something Ions ago. These and other such listings are not the Canadian norm …. makes for good reading (kinda boring really) BNTL addictive like SOAP. The real interesting news is Europe and France in particular, will Hollande win? Will the French put the streets when he must do other than he has preached. Will Greece and Italy coupled to Spain and Ireland make headlines again. And then there is Obama, the courts and that very rich dude who like to make strapping the family dog to the roof a Caddy the in thing. Yes some Real Estate is beyond belief and should be corrected “BUT” their will always be fools and that good ode line ” A fool and his money are soon parted” Hey let it be, let them go for it, it feeds the economy just like the broke USA spending a couple ot “$T’s on 24/7/365 day elections. ( H, is doing a good job here as well btw)
When these shoe boxes crash, in pounce the rats and re-sell/rent to even greater fools and so goes the RE shell game with fools and their money aka borrowing powers. Rich and wise money people listen, read and invest wisely and cover their debt very wisely.
Have a good one y’all …. me I just live in little ode house (MF) and drive a used car (Honda) and now saving my nickles Hey I am now saving 5 times as much!
Dan in Victoria,
When they say we need trades, they mean in the oil fields. Problem is, people like your friends don’t want to move to fort mac, since, well, it sucks. but the money’s there.
Mark “bankrupt canada” Carney knows Canadians will borrow until they are bankrupt. The same thing happened in the US as people borrowed until good bust. Like smokingman tells you that people are stupid puppets easily brainwashed. Mark wants to bankrupt Canada and be will get his wish. Mark hates free markets as well as the conservatives who Imo are fascists.
Love the (manipulative) signage!
Realtards are so transparent. The corollary to this snippet of silliness is that anyone living within their means to the other side of 50 can let their imaginations run “Wilde” later on.
Keep your friends close and your realtard closer.
Starting to think maybe it’s time to borrow until I go bankrupt. The plan is to borrow and then convert into USD until the stupid fascist conservative bankers refuse to lend more money which I then go bankrupt and leave fascist Canada. Who wants to be a corporate indebted slave in fascist Canada? If you think this is not a fact in Canada you are very confused with reality. Borrow as much as you can and then go bankrupt. They want go bankrupt canada might as well steal all you can.
Economically raising BoC rates is not the smartest thing to do as it would also affect businesses, I believe if Mark Carney does it, it will be because no other solutions are offered by elected officials (F) and he’s pretty desperate.
The best solution would be to slowly exit from back stopping mortgage credit. The target should be household debt and credit, exclusively, not businesses credit (just look in France and Spain to see what tough business credit can to to an economy…)
If I was Mark Carney F wouldn’t be my best friend right now….
#104- that ‘wall’ you speak of is still about 2-3yrs away.
I was trying to read some good comments but then came accross SMOKING MAN’s post. DUDE, what are you on? I am now closing the page.
Dear BMO,
Be first mover and push your rates up if you are so worried. Stop asking the Governement to do your dirty work. MANAGE THE BUSINESS!
#7 Smoking Man
You don’t sound like the Smoking Man I knew.
#51 Cheap Phil
Nice try. Some of the blog dogs took your bait.
Carney ! and the perpetual emergency flexible inflation plan. Ya I`m convinced already.
Just did my taxes. Just love those bond capital gains ,the preferred dividend income and the income splitting. Thanks for the great blog Garth !
ROTFLOL. See, USA does not view Vancouver as a “world class” destination.
“The Globe and Mail reports in its Wednesday edition that as Air Canada applies to launch new flights from Vancouver to Washington, D.C., rival U.S. carriers are painting the city as a small “local market” that is not on the same scale as San Francisco. The Globe’s Brent Jang writes Air Canada is seeking U.S. approval to introduce daily non-stop service between Vancouver and Reagan National, backed by glowing letters of recommendation for Canada’s West Coast, including one from B.C. Transportation Minister Blair Lekstrom, who touts the ability to “ski, golf and sail on the same day,” and its “remarkable dining.” However, six American rivals are objecting to Air Canada’s plans, saying Vancouver would be merely a pit stop in the Canadian airline’s plans to siphon traffic from the U.S. capital and send passengers to Asia, bypassing U.S. connections. San Francisco International Airport is much busier than the B.C. terminal, said Virgin America, which is pushing for its San Francisco-Washington service and playing down Vancouver as a local market. JetBlue Airways also takes a shot, saying Vancouver’s “local market is not large enough to support daily non-stop service” on Air Canada’s proposed schedule.”
© 2012 Canjex Publishing Ltd.
The seasonally adjusted annual rate of housing starts was 215,600 units in March, according to Canada Mortgage and Housing Corporation (CMHC). This is up from 205,300 units in February.
“The upward movement in March was largely due to an increase in multiple starts, particularly in Ontario and the Prairies. This was partly offset by a decrease in multiple starts in British Columbia and Quebec, while single-detached starts decreased marginally country-wide,” said Mathieu Laberge, Deputy Chief Economist at CMHC’s Market Analysis Centre.
The seasonally adjusted annual rate of urban starts increased by 4.2 per cent to 192,100 units in March. Urban single starts moderated by 2.4 per cent in March to 68,000 units. Meanwhile, multiple urban starts were up by 8.3 per cent to 124,100 units.
Toronto condos. Exactly what you should be worried about (if you just bought one). — Garth
so the Dog that is all bark and no bite is giving warnings again? Oh no! He can take his wagging finger elsewhere. When someone with balls speaks we will listen.
Thieves in disguise is what they are. Indirectly stealing from the have’s for the sake of the have not’s. Raise the f*n rates already and let the chips fall where they should.
#90 — 12 year old Economist.
Brilliant! Recommend everyone should spend a few minutes and watch this . The root cause of our problems are the Bankers .
Now you sound like a 12-year-old. — Garth
What if the banks simply got together to fix this themselves? Ignore the central rate; they can all simply agree to jack up mortgage rates (variable and fixed) by a predefined amount. They will make more $ but hey, that would be their reward for stopping this nonsense.
This RE bubble is the gov’ts fault not the banks. The gov’t sets the rules of the playing field. People will be people (greed), that is a constant and the gov’t should know this and set the rules accordingly. And banks will be banks, their goal is to make $. The gov’ts job is to set the rules so these RE bubbles don’t happen on this scale. They failed .
And right now the gov’t leaders seem happy to stand around playing scratch and sniff games.
As a Realtor in T.O. for the last 20 years, I have seen a few cycles play out and I couldn’t agree more that this one will end badly for a lot of people. It’s undoubtedly a combination of a lot of factors that is driving this insanity to new levels every day. I see inexperienced agents dealing with over eager buyers who think that money is free and greedy sellers who are more than happy to take advantage. But not all of us are ramming kids into overpriced homes. Quite a lot of us here are doing our jobs ethically and with the long term in mind. I get up each morning and shake my head at some of the reported sold prices. The ones that garner the most headlines are surely ridiculous and a result of the “bait and switch” tactics that both the sellers and realtors chose to employ. The system needs to change and more transparency needs to happen. This cycle has gone on too long and isn’t healthy for any of us. We can only hope that we have the first “soft landing” in the history of real estate.
Thank you for the caring comments. I am sure you will be still be in business long after the baiters-and-switchers are gone. — Garth
Anyone who lives within their means suffers from a lack of income and survives on the basis of austerity.
It is easy to indulge ones imagination if one has lots of money. When the massive amounts of money needed to live in society like the average person are not there then one has to survive based on ones meager earnings.
Ones imagination becomes focused on not spending so much and keeping debt to a minimum if one borrows at all. To such a person money is a hard to come by resource that must be conserved and not wasted.
That is why wealthy people and lawyer politicians are unqualified to be finance ministers and secretaries of the treasury. They do not think money is a scarce resource that must be conserved and are accustomed to spend every cent and more that comes into their hand because they think there is no end to the income of government or for themselves. Government debt is proof that they are wrong and unqualified for their jobs.
What of the real estate market? I would say that the price is evidence that too many well paid people let their economic ability inspire them to throw all caution to the wind and pay too much for too little. They made the error in assuming that their financial power and glory is permanent and that all others are in much the same position as themselves. Clearly a reality check is in order. Conformity and continuity bias can be hazzardous to your wealth.
#116 South of 49 on 04.11.12 at 8:15 am
#7 Smoking Man
You don’t sound like the Smoking Man I knew.
DON’T FEED THE TROLL!! real or not, both the same.
Steven Rowlandson: That is why wealthy people and lawyer politicians are unqualified to be finance ministers and secretaries of the treasury. They do not think money is a scarce resource
nor do civil servants
Nonsense. — Garth
Emergency interest rates seem to be holding across the world (yet you’ve been warning us for YEARS that they’re going to go up “soon”, Garth) and the finance minister isn’t willing to impose pesky regulations on mortgages and loans… It’s gonna take something else to bring the housing market back to fundamentals.
Like greed and stupidity? — Garth
#25 Carlyle
The only problem with their $360K house is probaly the taxes. I bet they are reaching 12K/year.
My aunt lives in Dearborn MI. Her house is worth about 140K and their taxes are 5K/year.
US property taxes are deductible from federal and state income taxes. So, you can reduce them by a third. Plus your mortgage interest is fully tax-deductible. Plus your mortgage rate will not change for 30 years, and is currently cheaper than Canadian five-year money. Make all the excuses you want, we are not even close in terms of comparative values. — Garth
Well let me tell you, its different here in Winnipeg…no bidding wars here…lol. Have a good laugh at the idiot who bought this POS!
http://www.winnipegfreepress.com/business/fixer-upper-attracts-unprecedented-72-offers-selling-prices-around-the-city-146514615.html
#83 Dan in Victoria on 04.11.12 at 1:30 am
It’s not that we need more skilled workers, it’s because some folks out there want more skilled workers that will work for $15 an hour and less benefits.
eagle eyes: I would imagine that with a doctor’s salary and Detroit’s real estate prices, they can virtually purchase the entire city.
key word being imagine
You’ve been Cited!.. again. According to the Montreal Gazette your a “Noted Pessimist”
http://www.montrealgazette.com/business/fp/money/Nowhere+Canada+mortgage+rates/6370057/story.html
They do not think money is a scarce resource
nor do civil servants
Nonsense. — Garth
as a civil servant of 37 years, I see a disregard of money as a scarce resource. Treasury Board’s Common-Look-And-Feel standard increases the cost of internet publishing:
http://www.tbs-sct.gc.ca/clf2-nsi2/index-eng.asp
you might think that “increase” would mean a 10% increase. No it means doubling the cost. Internet publishing is very cheap, witness this blog. The need for perfect bilingualism increases the cost and the need to make all documents accessible to the visually handicapped increases the cost. Treasury Board does not care if the underlying information is incomplete or wrong. Well there are over a million pages on government web sites, much of it should not be translated – for example scientific papers. Maps are maps, just because blind people cannot see them doesn’t mean nobody else should. Huge resources are poured into the common-look-and-feel without examination. The government is not managing its resources.
Gotta love those mortgage brokers!
Mortgage brokers are living, walking proof that “god” (please substitute your personal deity here) has a sense of humour.
At #129: Cory, PLUS, millage tax rates vary GREATLY from city to city in the U.S. For example, in Dallas, TX, one may pay around 3% of assessed value for the home. So, a $300,000 home would run roughly $9,000/year in property taxes. A $300,000 pac in Seattle, however, would run less than 1% of the assess value, or around $2,800/year. Property taxes are fully deductible in the U.S., by the way, as is mortgage interest expense.
#134 45north on 04.11.12 at 10:19 am
It’s always the few that ruin it for the whole. For example say hypothetically a blind woman who sues the gov’t b/c she couldn’t apply for some job on the internet. Seriously? Likley would be one of those people who thinks the world owes her for her disability.
But this doesn’t make the civil servant loose with $, it is the whole gov’t framework that is loose with $
#24 Loan money to anyone on 04.10.12 at 10:00 pm
Very few bloggers are seeing what I’m seeing. Lets begin first with the cost to borrow as this is going over everyone’s heads. Mark Carney is in the enviable position as a central banker to not have to buy Canadian debt with federal dollars (like QE and credit easing in the U.S.), meaning its not costing Canada to borrow cheaply like we are now and much of this debt is at 10 to 25 year terms so what you are all asking or saying is that we shouldn’t borrow so cheaply, but make it more expensive than we need to for the sake of housing which could be far more easily controlled with fiscal policy (Harper government). This is huge point and its going over everyone’s heads.
I ask you… why pay more for to service credit when we just don’t have to? The critics will bleat on about how cheap rates encourage more consumer debt and it does… but why isn’t fiscal policy (duh, our elected government) handling this? F has total control over CMHC and OSFI in case people haven’t figured this out yet.
A strong case can be made for the borrowers who don’t buy houses ok? Natural gas is at 2 bucks now and will be in the basement it looks like, for years to come. For readers who don’t know what this means, it means that $2.75 gas is generally break even for natural gas. Few corps can make profit at 3 bucks. Without hedges and cheap loans, many of our corps won’t last in a scenario like this meaning they need help and it begins with central bank rates. Does anyone have a clue as to how large a commodity sector this has been for Canada? Its huge.
Gas isn’t the only sector on life support. Manufacturing is as Ontarians well know. Canada has lost 500,000 manufacturing jobs over the last 5 or 6 years, a product of a high loonie erasing our competitive edge. What has fiscal policy done with this? Sadly far less than they should. We talk about lower corporate tax rates but some sectors don’t need it (like oil) and others are getting slaughtered needing much more and it shows. So I have to stress why, once again, most of you are wrong to blame monetary policy here. This problem with housing has always been fiscal. It was fiscal in the U.S., its fiscally a mess here in Canada and its fiscal everywhere else there was and is a RE bubble as well.
Lets talk about geopolitical risk for a moment to wake you all up as to why Canadians should be concerned with Europe:
Greece has never been the worry. The concern is Italy and Spain both defaulting bonds within 2 years and possibly France within 5 years with the U.K. still an unknown depending on how their housing bubble unwinds.
https://www.cia.gov/library/publications/the-world-factbook/geos/it.html
Spain? (click on nation and economy) 13th largest economy in the world (comparable to ours) and suffering from a obese, bloated RE/credit bubble that by comparison blows ours away. Those few of us in the know who thought fiscal policy in Canada is poised to run housing into the ground with 40 and 35 year amortizations? Spain’s elected government(s) introduced 50 year mortgages with near zero rates. Intergovernmental debt to GDP numbers are the only numbers that aren’t a total bust but these numbers are rising fast and bond maturities all to short and common. RE oversupply is butt ugly and construction, their main source of income in the RE overdevelopment boon heyday now… a total bust.
Italy?
http://en.wikipedia.org/wiki/Economy_of_Italy
8th largest economy in the world, 10th if you go with real GDP. This isn’t another Argentina and its bond issues are severe. Bond maturities are short and sensitive to an already stressed economy which is showing no signs of recovery. Italy is the big worry of which I predict will begin bond defaults in the summer/fall of next year. If Italy falls, Spain is likely to follow and then France has to deal with 400 billion euros of default coupled with likely recession. (check out their largest trading partners readers)
France? If France goes down its endgame. France is technically considered to be a nation that is too big to fail.
http://www.reuters.com/article/2012/04/10/us-france-economy-bof-idUSBRE8390CW20120410
How are they doing? Oh, running up intergovernmental debt to GDP at a 5.7% clip. Their intergovernmental debt to GDP should be well past 90% at years end and if Italy and Spain face bond defaults, France will be around 110% debt to GDP, mired in recession and poised to become the next Italy. Too big to fail?
http://en.wikipedia.org/wiki/Economy_of_France
5th largest nominal economy in the world. More nukes than any other nation. 3rd largest defense spender. I can go on, but readers should get the drift. France has a chance of bond defaults north of 50% within 5 years.
Readers, thats just Europe! Singapore, Belguim, Portugal, Egypt, too many African nations to count and what of the U.S.A.? 7 to 8 years away from hyperinflation and they’ll be joined by Japan. Is this sinking in yet? Do you all seriously believe that Canadian housing is the only thing that gives Mark Carney night sweats? And I haven’t even begun to talk about war.
I’m blown away by how commentors bleat on about how this is ALL Mark Carney’s fault when completely ignoring Fiscal policy (y’know, the dummies in parliament hill) and offering not one shred of evidence to support their uneducated guesses. Typical herd mentality if I ever saw it. One dumps on the banker in a fine suit and they all do because its so popular right? About as popular as young folks using a credit card to buy a house, I’d say.
Oh, I could go on, fill this comment section with so much more but why bother? Its already in the archives. Why repeat for those who never got it the first time. In closing, y’all want to know why Garth calls this blog pathetic? Over and over? Do I have to spell this out for readers too? It should be clear as day.
Oh, and for the dummies who disagree with what I’m saying with nothing more than insults, slander and slur with no links or evidence, you are dealing with someone who is thick skinned and bearing large tusks. I suggest for your sakes to get over yourselves before you get hurt. I can so easily hold up a mirror to your faces that won’t shatter upon reflection.
Paul @131
EXACTLY.
I am suspecting that people are working 24/7 in order to sustain their life style hence nobody has time to read any of the unedited news to form their own opinion… They are simply ingesting the bits and pieces that are quoted on the CP24 style of news which report on the either negative news such as violence (never negative financials pertaining to Canada) or spin stories such as real estate being the best investment alongside your new shiny leased vehicle.
101 Daisy Mae on 04.11.12 at 5:45 am:
So, if governments ’round the world including our very own ‘cons’ are so damn smart why did they allow this to happen? What WERE they thinking? Boggles the mind….that they followed each other down the same path. Governments thought they were clever but ultimately they were all simply ‘greedy’ and now ‘fearful’….so just what has been accomplished?
What has been accomplished is a transfer of wealth from the middle class to the rich. The rich get richer, and the middle class becomes disenfranchised.
Blase @108
Did a sentence myself in the oil fields. Yes I could see that type of thinking up there.
Have a few friends there right now, one buddy flies out to go fishing down here as often as he can.
Hates the weather there but hes working….
#136 The American
I’m sure you aware of the following but just in case.
Property taxes also vary according to individual state income tax rates. Here, in Cenral Texas, our $380K home is taxed at about 2.2% or $8.3K/Yr. Higher than other cities in the US but Texas does not have a state income tax making it a wash. The money has to come from somewhere to pay for state services.
R.B. Bennett was elected Conservative Prime Minister in 1930, just in time for the great depression. He took the “tough it out ” attitude to the times. The end result, after his defeat in 1935 , the country did not vote Conservative again for an entire generation. Indeed, my Mother recalls my Grandmother announcing that she would not vote Conservative ever again!
No government wants to be at the helm if and when the real estate market in Canada crashes and burns. That’s why F is trying to deflect to the banks. He is doing everything in his power to bring the market in for a soft landing and will continue on this path. Don’t expect rates to rise signifigantly anytime soon! Don’t expect him to address the issues that are fueling the RE market , like 5% down , cash back payments, etc. To do that will burst the bubble.
#69 T.O. Bubble Boy… Olivia Wilde took her stage name from Oscar Wilde. And, oh yeah, did I mention that Olivia Wilde is actually Angelina Jolie in disguise? Goggle it. You will have night sweats.
The reason for central bank rates in the developed world are 0-1% is because they are trying to prevent deflation. This is the reason for all the money printing, QE, LRTO, whatever you want to call it. The reflation of assets, real estate, etc. is to counter the deflation from debt deleveraging, falling asset prices, etc. Some economists like Paul Krugman have opined that the developed world has been in a depression since the global financial crisis. These are unusual circumstances, so don’t count on Carney going against the grain of the US Fed to raise interest rates before Helicopter Ben, who as a scholar of the Great Depression concluded that the mistake made by the Fed during the Great Depression of the 1930s was that it tightened too soon.
As a boomer I now understand the true cost of living in Canada in terms of cost of living and available career opportunities. Young Canadians should look at immigrating for better lower living costs and better job choices. There is no reason for young skilled twenty or thirty somethings to limit themselves to “overpriced Canadian real estate and underwhelming job choices.”
I regret not seizing the opportunity. My dad immigrated from ukraine to Canada when he was 5 but that was back in the 20’s and when he retired he had 2 pensions and lots of assets and 7 kids. This is not available now in Canada.
Interesting infographic via G&M:
http://www.ratehub.ca/mortgage-blog/2012/03/canadian-housing-market-will-cool-not-crash-infographic/
Posted a few times – realtor porn. — Garth
#138 daystar… You are incredibly and unnecessarily long-winded. Again, you concede the fact that the politicians are beholden to the central bankers.
You asked “why isn’t fiscal policy (duh, our elected government) handling this? F has total control over CMHC and OSFI in case people haven’t figured this out yet.”
My dear daystar (Venus worshipper), trust me. We have this figured out quite well, and we know who really wields the economic power as you have also conceded, and this is why we can place the blame squarely on the man responsible: Carney.
And your decoy references to credit problems in other countries only underscores another confession of truth on your part; that is, that Carney is making it easier for the commercial banksters to shuffle their phony baloney money around through Canada that much easier and for less cost. And the housing bubble and ensuing Canadian debt problems will prove just a bonus for his bankster friends and puppets in our government.
Thank you for proving yourself wrong… again.
Your serve,
disciple.
I don’t think rates will go up. Housing will decline from debt saturation alone and Carney will keep rates low to temper the decline. But it won’t be pretty.
The other contrarian view:
http://dailyreckoning.com/buy-a-house/
My real estate agent just told me how so many of his clients are in financial trouble… An then he proceeded to tell me that real estate is not going down lmao… Seriously. Oh and not only are things great in the GtA but they are perfect in Vancouver too… That’s what he knows…. I’m thinking why would you sell these people homes… Ps. He is also lending his clients money now… Wow…
Carney knows what to do, but what’s actually going to make him do it? Four reasons:
First, he knows first hand what the Low (almost Zero) interest rate policies of Greenspan for an extended period can do to create a housing bubble.
Second, he is the Big Chief over at the Financial Stability Board. A nasty housing bubble burst would not look too good for a Banker who was put into the position just to avoid such a major economic shock to the financial system.
Thirdly, I believe before the Budget speech, he must have warned F. If F is not willing to use the mortgage financing specific tools such as downpayment minimums and amortizations, that the Central Bank will use the interest rate hammer which could harm other parts of the economy.
Lastly, he has to protect Canada’s reputation as a country that weathered the Global Financial Crisis relatively well. If he fails, it wouldn’t look too good on his resume for future postings at the IMF or the World Bank.
merging
http://www.economist.com/node/21552196
==========================
http://www.orangefield.com/about-orangefield-group/news-and-updates/orangefield-expands-in-luxembourg/
http://www.fidelico.com/2012/2/15/fidelico-merges-with-orangefield-group
INTEREST ONLY LOANS…
It was one of those interesting, yet brief, chats of the sidewalk cafe variety in this funny little town that caught my attention earlier this week.
A representative of one of our country’s great big chartered banks was “hinting” that “they” are encouraged to tout interest-only various consumer loans.
Hmmm, I opined in return, “but wouldn’t that result in eventual debasement of such customers’ credit scores if they NEVER repaid any of the principal? In other words how would the banks know the future credit risk of said customers and the effects that would have on banks’ bottom lines?
To which the reply came, that this particular person encourages customers to make both interest and principal repayments because it bothers that person’s conscience.
I was happy to hear that, because this career bankster knows that higher rates are coming and is fully aware of the difference between that bank’s consumer lending policies, our country’s monetary policy and the discomfiting ramifications extant when such financial collisions occur.
WHICH LEADS TO THIS
These next few lines perfectly depict the consumer entitlement society that has been bred through years of low interest rates.
Low interest rates are like free booze for alcoholics in that they tear away at a society’s fabric and bring discord down to the family level because these low rates stoke poor people into thinking that they can be rich by borrowing themselves into the next cosmic black hole. And they have been doing that in droves!
Re-read these few lines of Garth, and remember them:
“…As a Vancouver Sun article spelled out a few days ago, life is tough, “for those in the most need: young people, often with student debt and lifestyles that involve a lot of restaurant meals and going to movies once or twice a week.” It’s just so, like, totally unfair…(that they can’t go out and borrow 100 per cent of their next purchase — a home!)”
That says it all.
At least our local bankster also knows, for whatever good it may do, ultimately.
Note to Mr. Carney…raise rates so that you can then “Tear down this debt wall.” (Apologies to Mr. R.)
#65 Robo Monkey.
You’re going to buy a half million dollar house at the absolute peak of the market due to pressure from a woman and then you say you want over leveraged idiots to get what’s coming to them?
Garth, can you start having posters pass an IQ test before they post?
138 day star
Michael Perelman has written fairly extensively on the uses and aims of the federal reserve. He has a piece on the most recent monthly review that you may find interesting to say the least. It has to do with the connection between interest rates and labour discipline. Take a gander if you have time.
Hi Everybody! I just paid my Rogers bill so I have access to the internet now. The library no longer lets me use their computers citing excessive pornography searches. I can’t go back.
Did you hear about all the hoopla about racism in the States? *burp* If I was in the States, I wouldn’t give a rat’s ass if some was black, white, yellow, red, brown or pink. It’s true. I grade school, I had a few black friends and one of them was even a girl. I still dream about her. Once you go black you can never go back, kind of like the libraries.
Anyways, I was playing solitaire and I heard this crazy music and guess what happened? I was going to scratch my ass but my hand missed the top of my track pants and went behind the cushion and I found some change. I was scratching for a while before I noticed. I think it was about $0.50. See? I’m the luckiest guy in the world. It’s all about perspective. Think about it. Some people would kill to be a celebrity (whoops, I hope I didn’t out anyone.) Oh, and I’m the smartest *barf* man in the world.
As for for real estate, Gartho, you’re only half right. Technically, only 50% wrong. It’s all about making money. I make about $700 a week pan-handling. Some goes to rent, some to bills but most to booze. Did I mention How lucky I am?
Do you know of any single ladies that don’t mind facial hair and a touch of BO?
Increase interest rates? The US Fed purchased 61% of US Treasury Bills in 2011 to keep interest rates down. Its the only thing keeping their economy from cardiac arrest, since foreign bond purchasers would demand higher interest rates. If ex GS Carney increasess CDN rates the dollar goes up and our economy tanks.
Garth, do homes over a million usally come done more in price then homes under a million?
Shane
#105 househornyhousewife
“I have never paid a credit card company a penny of interest and my credit cards have no yearly fees. It’s free credit !”
Not quite free. The credit card companies charge vendors a fee for their services. The vendors in turn do what they can to recoup it from you. Cash will get you a better deal in some cases (but of course, not when buying sundry items at, for example, London Drugs).
That said, I admittedly also use my credit card just like you. But I’m not under the illusion that its completely free.
In Mexico we would say “bueno suarte” (*good luck) to anyone that buys in RE in Ditchmond. (* that is a swamp, south of Vancouver, built on alluvial soil, and home to YVR).
I spent two hours begging a young couple to NOT bid on a piece of junk Condo development (to be finished in 2014), and the wifey wouldn’t hear of it. Here it comes – “we don’t want to be priced out forever, and we are wasting our money on rent, we are throwing our money away”.
I pointed out that a lot of smart people rent (ahem), but she would have none of it. I waited for her hubby, a friend of my Son, to pipe in, and he sat there looking like a donkey at a horse show.
Some people live up to the herd complex, in spades.
By the time this dump is built (OMG) – we will all be glowing in the dark from Fukushima, anyway.
I gave up, and paid for their Timmy’s, and left, with explicit best wishes.
You can’t reason with some folks.
I tried.
Meanwhile, I have changed my investment strategy, and am investing in farmland, with a small part of my portfolio.
Stock Markets are doing a face plant in Europe (here comes Spain, Italy and Portugal) – and soon coming, the heavily weighted commodities driven TSX, is going to make a lot of people wish they had won Lotto Max.
Times are changing fast. Be nimble or die.
#124 good, if only all real estate agents could get it. I am
Constantly amazed by the ones that keep saying it will only go up. I congratulated the mom of
My agents on her child’s success, she admitted that the agent has not been busy for the last
Few months. Appearances are everything.
@162 bill ..that’s a good reason for crusty cluck putting more cash into abbotsford airport . But then most of the savvy drive just over the border and fly out of U.S. ports . Yvr is taxing themselves right out of business. Crusty I think flies a broom.
DonDWest #84,
The problem is the whole self-esteem everyone is a fricken winner movement bestowed upon my generation. Nobody resists – that’s just too negative!
Maybe if critical thinkers were allowed to advance into positions of power, instead of people who wave for the camera and put on a pretty optimistic puking smile, we wouldn’t be in this mess.
I understand your frustration. The ‘everyone is a winner’ attitude has its origin in the new age movement and is an example of how a society in decline is programmed to think the opposite is true. People in general seem to be far less principled. What is ‘the right thing to do’ means what is good for their wallet and that can change by the day or even by the hour.
For some, accumulating wealth is an obsession and for others they are more concerned about survival. When faced with a choice of either sticking to one’s principles or getting what they want or need, the principles will go out he window more often than not. But, this is the situation many have found themselves in, and that is compromising one’s better nature because of fear of not having enough of whatever that may be. Through fear, the human spirit is undermined, and this is not by accident.
The positive characteristics of humanity are being debased. A free and prosperous people is a happy people. Take those away and frustration soon turns into despair. Governments know this so more laws are created to control the people. This causes a negative feedback loop where yet more laws are introduced to control a progressively unhappy citizenry. Soon all kinds of accusations and labels ending with ‘ists’ are levelled at those who speak out.
People need to realize that the Harpers, Obamas, Merkels, Camerons, Bernankes, Carneys, and so forth are merely pieces on a chessboard. They are the ones in front that are there for us to air our grievances to. It doesn’t matter who they are, it is the position they hold that is significant. They are like players on a team which play the game (system) taught and dictated to them by their ‘coaches’. They have as much pull in world affairs as a babysitter does when the parents are out for the evening. They take care of the menial tasks but important policy is dictated to them and their cohorts in other countries, ie; other Central Bankers and Presidents and Prime Ministers. It is just made to appear that they are making the decisions because they are the conduit to the citizenry elected (heads of state) by the citizenry. That is why they often appear to be inept and make unwise often nonsensical decisions. Why, because certain policies are intended to benefit certain underlying often long term agendas not known to the public and in most cases, maybe not even the leaders themselves.
These ‘leaders’ knowingly or unknowingly take their orders from their bosses who are unelected and have no allegiance to any country or people. Who are they? What are they? When human beings are viewed how we humans view sheep or cattle, it is worrisone. One must wonder how far removed from humanity the hidden puppetmasters really are and what is ultimately in store for us, The People.
Daystar: you are dealing with someone who is thick skinned and bearing large tusks.
who thinks he is an elephant
Bill Gable: we will all be glowing in the dark from Fukushima
Fukushima is a total disaster but I am not too concerned for my son and his wife who live in Vancouver. The Pacific Ocean is very big. Arnie Gundersen has taught me a lot about nuclear power plants:
http://www.fairewinds.com/home
The mortgage pimps are obviously doped up on Carney’s ass gas. The media’s published list of ‘how to finance a mortgage’ is devolving and can only end badly. The last immoral suggestion to truly enslave the horny househunters will be for them to become involved in part time prostitution….after all…it’s perfectly legal……and if you work hard…..voila…the mystical downstroke will appear…..and you’ll be off to condo land……
Brad……Bob…take note….there will also be boys at the party…………even ugly guys with money can buy in to the new scheme eh?
We have seen similar tactics perpetrated upon the youth before…such as a certain socialist BC party getting behind a rickshaw pulling business to beef up a failing tourist trade in the 80’s. If Canadian kids can pull rickshaws….why can’t they cut off a slice here and there for the mortgage industry?
Isn’t it amazing how the news articles on these issues all contradict each other? Also… I would not call garth a pessimist, rather a realist!
As the majority of Canadians believe that you can never lose with real estate and its the best investment you can make. (that is because for most people its their only investment period). In the United States the complete opposite is happening, they are talking about a generational decline in housing prices, this after they have already tanked. Yet in Canada as house prices trade at all time highs the majority of canadians think they can only go higher. 40 year olds are willing to lock into 30 year mortgages that they can barely afford now at historically low mortgage rates. This does not add up, buyer beware, this will end badly
http://www.zerohedge.com/news/guest-post-what-if-housing-done-generation
Garth, this is totally off topic: will you buy a hybrid or electric car as your next vehicle ?
Not enough fumes. Or noise. — Garth
#146 Disciple
You’re not arguing the other side of the coin from Daystar.
Daystar’s argument boils down to: Carney would be undermining businesses and governments by raising rates for the sole purpose of cooling the housing market. Using a fiscal as opposed to a monetary approach to cool the housing market is more sensible.
Your argument boils down to: Monetary policy based on inflation targeting is a farce.
I’m man enough to admit I haven’t a clue whether your argument is correct or not, but even if you are correct, that would not imply Daystar isn’t.
Cheers
@Bill Gable 168
FYI
It’s “Buena suerte” :-)
#65 Robo Monkey on 04.11.12 at 12:24 am
I live in the Kitchener area and I have been renting for approximately five years. My wife is actually depressed since we have two new children and not enough space. She wants to ‘grow roots’ and enjoy living in a beautiful owned house. A beautiful house in this area is approximately $500000 either including upgrades or already upgraded/new. It is amazing that for this amount of money you get a normal lot size (~45′ x ~110′) and a decent, but not too interesting house. I have been avoiding the impending purchase but I may just buy the $500K house before my wife just gives up on me. What is the worst that can happen? It loses $100K in value? This waiting and sort of being on hold is not good either. I just hope that the last few years of living modestly pays off and that the seemingly majority of people who are leveraged to their neck get what they deserve (not that I am being too judgmental 8-D).
Hey, give me $300k for my house and you can have a 135′ lot boardering on parkland (a kiddie park), a couple of blocks from public school for your kids, two food stores, and a wonderful neighbourhood in Kitchener for raising kids. Save yourself $200k!!!
While this surely will not end well, I am starting to think it will not end anytime soon, either. Just by the comments left here it is obvious that house lust is alive and well even among those that comment on the insanity in the realestate market. Easy money and debt enslavement is going to be the new norm world-wide, I believe, whether in mortgages or student loans or consumer debt. This form of enslavement has worked on national levels ( read Naomi Klein’s Shock Doctrine) and will no doubt be just as successful with individual consumers.
Living in debt up to one’s ears, trapped in a wage slave reality is going to be the new norm for a generation who have never known otherwise.
No doubt many of you here will jump into the market as soon as you see some degree of pullback in prices regrdless of how indebted that’s going to make you. And, to some extent, seeing how shitty 600-700 sq. ft one-bedroom remodels in the west-end in Van are now asking $1,600- $1,800/ month, I can understand the thinking perfectly.
For working class, wage earners world-wide there is no going back to the economic reality of our parents’ generation. The only going back is to the serfdom of bygone ages which will have to be endured again for a very long time, I fear.
Of course they do!!!! Westwood Pleatue, Vancouver, BC. cira 1999 around when China took over Hong Kong.
HAM money flooded here to escape…. And HAM money went back when China did nothing to HK.
$1,000,000 homes eventually went for $750,000.
Was here… Saw it and witnessed it.
So the answer is YES!!!!!
Come Here!!! Go Away!!!!!
Chalk one up for the good guys.
Julie Dickson appeared on BNN today to talk about the new “guidelines”.
Looks like they’re more than just guidelines.
The mortgage broker chorus is already whining about the 65% cap on HELOCs.
Gotta love mortgage brokers!
To: Glen Smith:
I absolutely agree that there needs to be stricter regulations and greater transparency.
When we were putting in an offer for our house before this one, our agent told us there were multiple bids and we needed to “improve” our bid. I was sitting at home and never saw any documents…same thing with our current house. How do we KNOW that we are actually being outbid??? When we were selling our house, our agent told us not to say a word. He told two bidders that the bid in his hand was higher then theirs. It was NOT. I’m ashamed to this day that we did not open our mouths to correct the mistake. The house was eventually sold to a buyer for the asking amount and it was all good. But I never forgot how shady the real estate business is. And how immoral we became as sellers as well, because of lousy $10 000.
Cheap Phil: you are doing great. I only want to say dont deprive yourself of good nutrition. Not eating out is already a step in the right direction….too fatty and salty.
@ #81 Sask Girl
One of my sons lives outside of Regina, but works in Regina. He says that the shortage of skilled workers is nuts. The resource sector is fueling the demand, including the mega upgrades to the refinery. He works at an auto dealership and dealers are stealing other dealers’ highly-trained mechanics. He says he sees lots of vehicles with out-of-province plates and when he asks what they are doing here the standard reply is “Working at the refinery”. Tradesmen are getting paid 5-figure salaries. THAT is what is fueling the housing in Regina. That will not likely change anytime soon.
Garth & Daystar,
The twelve year old girls, bank system video, has
now been posted here, three times.
This tells me the Dogs are an definitely interested
in what she is saying.
Garth, you have obvious insight to our banking
system. Daystar, you also seem knowledgeable
on this topic. I respectfully request your opinions
on the info she presents. Lets ignore the fact, this
bright young girl, may not be the author of this
speech. Lets ignore minor statistical missteps, that
do not alter,the fundamental message. Oh…and
please, lets leave religion out of it. Please address
the content of her statement. Is it sound or
unsound? If you find her message unsound,
please elaborate why.
Banking is a regular topic/discussion on this blog,
so I figure, who better to ask.
This issue has a bigger impact on our lives than, RE bubbles, interest rates or OAS changes combined and effects every single taxpayer in Canada.
take care,
Blacksheep
This is off subject but thought I’d ask. You have suggested TFSA be used for investing. Can you buy stocks in a private Foreign owned Caribbean company and hold them inside your TFSA?
Why the hell would you want to? — Garth
Moody’s rating agency is calling Canada’s bank sector the soundest in the world and a safe haven for investors.
http://www.ctv.ca/CTVNews/Canada/20120411/moodys-gives-canadian-banks-triple-a-debt-rating-120411/
The banks here are sooooooo solid because they are not lending out money to house-horny unqualified people with little or no money down. No banking problems forcast here folks!
#172 – Buena Suarte it is – me bad. Three years speaking Spanish, living in Mexico and I blew it. You win the prize, thanks.
#170 Jack on 04.11.12 at 2:59 pm
Garth, this is totally off topic: will you buy a hybrid or electric car as your next vehicle ?
Not enough fumes. Or noise. — Garth
——————————————————————
Volkswagen diesel, 140 hp and 240 lb. ft. of torque and 60 mpg highway. Fast off the line, handle well, big fun to drive and have amazing build quality/fit and finish.
US workers pay less for RE and for property taxes in most states. Gas to go to work or to ship your goods is $1.03 a litre. The car they drive costs less as does the equipment and trucks to run their operations. Milk, eggs, cheese etc. are not priced by marketing boards and are 30-40% cheaper. US workers can undercut our wages by 20-30% and still live good.
US workers work longer hours than Canadians, who can’t stop adding more holidays, Family Days etc. to the calendar. (A belated Happy Easter Monday holiday to all of the civil service.) Our productivity is in decline and will only get worse as cutting edge manufacturers and service facilities leave and our workers lose those skills and fail to acquire the new technologies in their field.
http://stats.oecd.org/Index.aspx?DataSetCode=ANHRS
We are bringing Russians to work in PEI fish plants because the locals won’t go off EI? Stop the madness!
http://www.thestar.com/opinion/editorials/article/1157603–ottawa-needs-to-balance-common-sense-and-compassion-in-immigration-reform
Lots of US companies in Ontario are going home with good reason. They have had enough and see the writing on the wall.
If the present trend in the Ontario job market continues for another decade, this province is doomed along with all the RE in it.
If the US rallies and commodities decline, it could be the perfect storm. I will be among the thousands of Canadians crossing the border to buy USD before their CDN falls any farther? I won’t be riding the beaver buck back down to 75 cents. DJIA stock in USD yes. CDN dollar based TSX stocks, who knows?
#150 disciple on 04.11.12 at 12:17 pm
We? You transparently speak for yourself. You offer no proof whatsoever with your own counters because you quite frankly, can’t! And don’t use a misguided 12 year old girl to do it for you next time (speaks volumes on where you draw your conclusions) or you’ll find out why.
Again, you can’t offer links or valid information to prove just why Fiscal policy is in no way responsible because it can’t be done. The BoC has no control over CMHC or OSFI or fiscal policy i.e. public debt demands, they can only react to deficit/surplus spending and keep borrowing costs as low as market conditions will allow i.e. set rates. Live up to your moniker for a change and educate yourself. Here’s a start:
http://www.osfi-bsif.gc.ca/app/DocRepository/1/eng/osfi/osfi_bch_e.pdf
#157 Kaganovich on 04.11.12 at 1:00 pm
I’ve only gotten this far:
http://en.wikipedia.org/wiki/Michael_Perelman
2 minutes are all I could afford right now but my take on it is that his first book is dated (I’m off to the farm at present, I know energy inputs per acre more than most), the rest by their title are anti-capitalist in nature and Marx supportive and based on this alone he sounds pure leftist (which doesn’t necessarily refute his conclusions which I obviously haven’t gotten around to, I’m just sayin’).
I’ll give him some weight tonight but til’ then I have this to say (specifically to readers). Higher interest rates increase the cost of borrowing for us all. I’m not saying by the way and Mark Carney isn’t either, that rates shouldn’t go up with all things considered. No one has even yet asked me what my opinion is on where rates should be set so here it is. Weigh all the facts of what higher rates will impact (government budgets, yes housing and consumer credit, productivity, employment, development, growth, everyone who borrows and saves). Clearly, a large number of us have not. I think Mark Carney should raise rates and do it soon. A half point would be a good pchycological reminder of what elevated borrowing costs will do to everyone (not just those with a mortgage). We need this nudge now regardless of cost, again, a spending paradigm needs to shift and quickly.
Canada is far from full capacity in terms of productivity for reasons I’ve outlined and then some. Its not just a few sectors in commodities or manufacturing. Funnelling unnecessary consumer spending on housing is a big reason why productivity has waned in this nation on its own. One off construction doesn’t cut it. Fiscal policy has created this and those who think it monetary policy is solely responsible can think again, its patently false. Sure, low rates have driven consumers to spend but fiscal policy could have stopped foolish consumer spending in its tracks through governance (regulation) and laws passed in the house of commons. I’ve listed but 2 ways for politicians to do it. (CMHC, OSFI) There are more. The reason why we have a RE bubble and still expanding credit bubble is because our elected government wants it this way. Anyone who doesn’t see this truth are either naive, purposely ignorant or distorting facts out of self interest or just plain lying to themselves and I suggest they self educate because I’m growing fresh out of mercy and I’m way out of time.
Billions in unfunded pension liabilities are about to come home to roost over the next 3-5 years! It’s the elephant in the room that every level of government is ignoring. The OAS changes are chump change in comparison.
In Ontario 1.14 retired teachers to 1 working teacher by 2015! Police officers, fire fighters and Ontario Hydro workers contribute to only a fraction of what is required to fund their post-retirement benefits. Billions upon billions will be required.
The UK and some American states and cities are beginning to deal with this mess.
Guess who is on the hook? You and I !
The fix is gonna be real painful. Public service retirees are going to take less or Gen-X, Y and the Millenials are gonna be forced to pony up the cash.
We won’t mention that many teachers, police, fire fighters and Ontario Hydro workers double dip after they retire to add insult to tax-payer injury!
Combine this with energy inflation and higher interest rates and we are in for one very tough slog.
#113 Bond Junkie
Who knows when that will be. Considering loose lending, 95% financing and historically low interest rates any change can destroy household finances. Look at the US for example, not everyone was so leveraged but when those that were started walking it affected everyone. how much higher can property value go? Even a 5% increase on 800k (sfh Toronto) is so large that it may just collapse under its own weight. Once the flippers and Specer’s stop buying who will?
Some choice quotes in this article just published at The Star:
http://www.thestar.com/business/article/1159857–toronto-condo-surge-disguises-looming-slowdown?bn=1
“Hildebrand stressed that no one is anticipating a crash in condo sales or prices, but rather a slowdown driven largely by the very people — investors — who have been fuelling most of the recent boom by buying up multiple units to flip or rent out for a few years.”
So yah, the investors/speculators aren’t putting money into this anymore but there’s no chance of a coming crash? I guess we’ll see. I think Toronto Condos are going to be hit HARD and there is a large possibility of developments being abandoned once the crash starts (see Florida).
Time will tell.
@Cheap Phil, post #51:
That’s also consistent with my observations about the 20 to 30 year old crowd. They can’t understand why I (at age 51) am so “cheap”, but do just fine living well within my means. In fact, if I bought all this extra stuff, I wouldn’t be any happier. Periodically I explain how I fixed or did something on a budget and people my age are impressed. Meanwhile the 20 something crowd is puzzled, wondering why I didn’t just throw money at it. The reckless spending of this generation has kept the Ponzi scheme going, but in the end it will fall even harder.
@Deb, post #103: I agree with you, history repeats itself and this time will not be different. The only thing humankind (for the most part, anyways) is that we learn nothing from history.
#75 blase
Really, 40% off doesn’t sound like a mind blowing deal to you?
April 5, 2012: Steels Industrial Products LTD., Western Canada’s #1 supplier of building materials has filed for bankruptcy after 55 years in business. http://strategis.ic.gc.ca/eic/site/bsf-osb.nsf/eng/br02793.html
A reminder of how fast BC’s housing correction is hitting the economy. Leverage kills all.
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#48 Smoking Man — “Time to start a Rap band..” — Like this?
#102 P & T S — “Nostradamus on holiday?” — Nah, still here recovering from last week’s excursion. Back to the links!
#146 disciple — “Goggle it.” — Goggle it? I understood the spelling to be Loolge. Got lots to learn yet!
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11:40 clip “With around 20 per cent real unemployment, it’s US joblessness that could prove the stumbling block for Obama’s second term — not foreign policy issues, says Jim Clifton, CEO of Gallup, America’s leading company conducting opinion polls worldwide.” America needs a war more than anything else; Iran halts oil sales to Germany; It Begins A RE crash in China; Alcoa Doing nicely; World Economy in one chart. Highs / lows, positives / negatives etc.; Export Boom in the PNW; Global systemic risk rises again; 2:50 clip 190 tril. $ worldwide debt. Does anyone care? No. It doesn’t include CDS and / or derivatives.
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George Zimmerman facing second-degree murder charge (Trayvon Martin); McLaren F1 vs. Gremlin Not being a gambling connoisseur, I wouldn’t know which to choose; Syria Just as the west did with Libya, now the same with Syria; Putin has hiis own bodyguards.
Robo Monkey @ # 65,
Two new kids and a wife that wants to go half a mil in debt for some piece of shit house in kitchener and you ask ” what is the worst that can happen? ”
Buddy, you are too far gone to help – just go ahead full steam – damn the torpedos…
Yeah, re the quote on the sign, you have to consider the source.
When Oscar Wilde went to his first ballet and saw the ballerina’s dancing ‘en pointe’, he reportedly turned to his companion and whispered, “Why don’t they just get taller broads?”
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BB Toying with the US$? Hasta La Pasta! Dueling economic bojangles; Digitized Royal Cdn. Mint “After all, look how well it worked with BitCoin!” wrh.com; 1:52 clip 99% don’t pay in Greece (use barter instead); US posts biggest budget deficit in history, which is why wars are needed constantly; Libya Oil (and water)? Yes. The IMF took their gold; Chris Martenson says 2012 could be 2008 all over again. Don’t know how accurate or reliable he is.
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5:38 clip Vitamin B17 cancer cure? Requires a trip to a health supplement shop; The Kiwi Govt. has gone completely bonkers; Drug Pic. “This is one of two photographs that the Justice Department was confiscating after it was learned that Jorge, who had donated $20,000 to the Clintons, was a major cocaine smuggler.” The CIA already has one war going (drugs); CC or GW Astronauts condemn NASA for falling to the GW trap; Propanda Hoax Concocted by the west (who else?); Monsanto Always good for poisoning people; Fukushima Fuel Pools Seems worse than Chernobyl; Flashback Virus For Mac users; The Nevada Desert is where fake news happens; Naval Standoff China vs. the Philippines.
@Kman….depends on what kind of assets you have to invest but Nicola Wealth Management in Vancouver is very switched on….minimums I think though are in the 500k range but they are good at what the do which is conservatively and intelligently growing AND protecting your assets
http://www.nicolawealth.com/
I hope the greedy (explitive) seller in Toronto that Garth wrote about at the begining of this post – sells his house for the price he wants. Then, using all of the proceeds leverages it to buy and even more expensive house and holds it into oblivion.
These are the markers of a finished market. It’s coming a lot sooner than we think.
My biggest frustration is that we are all going to pay dearly for the bubble. All of us, even the ones that didn’t go into stupid levels of debt. Our businesses will suffer too. No doubt the government will do something to try and help people who are buried in debt when the housing market starts to crumble. What the government does will affect adversely those without debt. Not fair.
Daystar #138
I do not only blame mark “the talk” Carney but also the fascist conservatives who hate free markets and democracy. If you can’t see this as true then you are a puppet of propaganda brainwashed by media and schooling. If mark would shut up then I wouldn’t blame him but to warn and do nothing is a joke .
Garth (you can post this or just keep it for yourself),
A thought for you – maybe start thinking about the totally “unfair to the prudent people” things that the government is going to try to do to “fix’ the problem once the RE bubble bursts. You can out the government in advance and create more awareness so that Canadians can see the moral hazard and unfairness that is about to happen.
Not even sure you agree with this – but you only have to take a quick look at the US to see where we are going.
JK
#123 FANCY_PANTS: “What if the banks simply got together to fix this themselves? Ignore the central rate….”
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That’s why we have the OSFI. It’s their job. And they’ll do it….eventually.
2.1M for that? HAHAHAHAHAHAHAHAHAHA.
#156 zeeman1
Paying $500K for a house at probably an approximate price peak does seem crazy, but it seems good to float ideas around. It would be approximately 1/3 of my financial worth, but I do like freedom from having the option of working < 12 months per year. Also, I have been guessing a price peak for the last few years which hasn't gone too well.
With regards to passing IQ tests, don't forget that everyone is a genius at something even if it is 'just' being kind.
#173 cramar
Thank you for the option, but I have seen what $300K gets you in this area and it isn't pretty. For only 60% more ….
Just when you thought that F was finally reining in the profligates at CMHC, it’s actually a bait and switch. The 600 Billion that CMHC is carrying for us will be added to using private sector lenders (currently backed by F and co.).
“(Ottawa guarantees 90 per cent of the insurance from the two private-sector players). Now, CMHC is facing growth constraints and Ottawa is expected to increase the amount of insurance in force that Canada Guaranty and its other competitor Genworth MI Canada Inc. can have this year.”
http://www.theglobeandmail.com/globe-investor/canada-guaranty-undergoes-dramatic-turnaround/article2399169/
Yahoo, the party’s not over til the next election.
#158 Smoking Man’s Post – Translated to Reality on 04.11.12
ahhhhhhhhhh Getting Chirped
Yes I’m a celebirty now, guess I got to watch out for stockers.
http://www.ottawacitizen.com/News/Blotter/6441826/story.html
couple can’t sell house…woman badly beaten with baseball bat, and man hangs himself. Ironic that F gave that recent speech in Stittsville?
“Mr.” and “Govenor” for Carney. Isn’t that kind of context a “greater fool” upgrade?
It’s subtle, but I think there’s a much more common understanding that “F” actually means “F-all”. A similar understanding just might happen with Mr. Goldman Sachs Govenor.
Maybe those folks are actually really concerned about getting the economy “back on track”. They’re the right team for the job at hand. I mean anything is possible, isn’t it.
Based on the interesting comments here about RE north of Detroit, just out of curiosity I did a search and found this. If this was in Canada for this price I’d be down tomorrow looking to buy. Unbelievable price!! Is this 1968?
http://www.realtor.com/realestateandhomes-detail/27835-Brush-St_Madison-Heights_MI_48071_M31657-18351?source=web
#202 Robo Monkey
Oh well, beauty is in the eye of the beholder I guess! Good luck.
For Glen Smith,
I’m pleased to see an agent with a sense of fiduciary duty. Unfortunately, given my dealings with realtors. I think of them of nothing more than used car salesmen. You know the ones, where another buyer is coming in a few hours to buy the car at the listed, inflated price.
Once the market turns, and it will, the good agents will be left but many will be forced to seek another short term career.
My concern is for the first time, novice buyer. Who do they turn to for advice, but a commissioned realtor who only gets paid if they buy something. It is a recipe for disaster.
I recall looking at a condo on Mt Washington where the inept realtor said I obviously wasn’t interested as I asked questions. That was in 2004. Supposedly gave me 3 days over the long weekend to decide to buy as he had 350 buyers standing by to purchase. I laughed and left.
Still today, almost 12 years later a number of those units are still unsold. So much for sophisticated advice!
It is buyer beware out there.
Has anyone else
Noticed the numerous realtors advertisements on bus stops, buses, benches, calendars, magnets, mailbox and personal deliveries??? Seems like more then the usual… Does this work?
Everybody waiting for ‘foist’!! LOL
#185 daystar… Your mercy is not needed, thank you. Okay, let’s begin again (shrug): You said, “to prove just why Fiscal policy is in no way responsible”
I am not saying that fiscal policy is not responsible. I am agreeing with this, but I am asking you to figure out why our elected leaders have not done their due diligence and betrayed us to the bankers. Get it now? Or will you continue to ignore this salient point? I’m still waiting patiently, Mr. Banker daystar dude.
Of course, the central bank (consisting of private banking families) will keep rates low to sucker in more indebtedness as long as the gov’t (us, supposedly) allows it and PAYS for it.
The reason is simple: Profit spreads of higher volume on cheap money outweighs lower volume on expensive money. So, Carney and his gov’t puppets are waiting for the optimum inflection point when these two dynamics allow for a smooth continuation of profit spreads. In other words, they are looking for a soft landing, and it doesn’t matter to them if millions still suffer because that wealth will be transferred to them yet again.
No appeal to credit crises outside of our borders needed. It’s simple supply and demand. Another point to consider is that if Carney raised the rate that banks pay to borrow money from those private banking families, the commercial banks would have to charge more to their mortgage victims to maintain the spread. Now, if foreign lenders undercut them, and spread their business to the commercial mortgage business (happening in condo developments right now), he would be slapped silly by his central bank masters.
#166 45north on 04.11.12 at 2:27 pm
Metaphor’s aren’t your strong suit, obviously. (Looks like cruelty is though… not smart)
http://healing.about.com/od/animaltotems/ig/Animal-Totems-Photo-Gallery/Walrus.htm
#198 Mark “the talk” Carney on 04.11.12 at 8:11 pm
If you’re acquainted with my history, you would know I’m hardly pumper for this Harper government. Mark will raise rates soon having said as much right here on greater fool… interesting times ahead.
#54sol on 04.10.12 at 11:18 pm
Garth, in your opinion, who has more power Carney or F?
Appointed beats elected. — Garth
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Glad to see it, our forum host slowly coming ’round. Our “decmocracy” has never been so.
Vote now! For Robberbarron #1 or Robberbarron #2.
If you’re (un)luckly, one contender also subscribes to a rigid religious system of control. Rock em sock em theocracy. Back to the dark ages.
What’s next, a Senate appointment for Don Cherry? That should win some votes from the proles.
Bread and Circuses.
I vote locally. Federal elections are rigged. Proof: if desired results are not acheived the wheel is spun again and again. Witness our four or five “elections” in as many years. The voting lists are rigged as we’e seen, this year.