The kid defence

“I read your blog daily,” says Paul, which certainly raises questions about his mental stability. “Occasionally I see you answer emails that have been sent to you. I’m wondering if you’d lend your perspective on my own situation.” Of course. I was running short of victims.

Turns out Paul is 38, wife’s 36, kid is 3. They make big bucks – $225,000 between them – have about $200,000 in registered investments (RSPs, RESP, TFSA), no debt and a nice car ($20,000 owing). “It’s my one indulgence,” he says, not being entirely truthful.

They live in an urban semi, now worth $600,000, in a good Toronto hood, with $170,000 owing on it. But house horniness has struck their perfect lives. And, shamelessly, Paul is using the infamous Kid Defence.

“My daughter is approaching school age,” he opines, “and we’d like to get her into a better catchment area. If we lived a few streets south we’d be in one of the best in the city, but those houses carry a significant premium. A detached house would be nice too. I’ve crunched the numbers a bunch of times. With agent fees and land transfer taxes it’ll run me about $60k to move. All told I’ll end up with about $340k cash in hand if I sell. Any house we are considering would cost at least $800-900k. Let’s say this puts my new mortgage at $500k. I can carry that with almost no difference in cash flow, but something doesn’t seem right. I’ll be free of my current mortgage in about 8 years if I stick with it. If we move, I’ll have that noose around my neck for a long, long time.

“What do you think? We’d be putting a large downpayment down on a new house (even if the market corrects we are unlikely to ever be upside-down on it). I can afford it.  But I don’t need it. I think we just want it.  My rational side (which usually wins) is saying stand pat. You’re fond of saying, Canada is no different. I’m no different either, right?”

See what I mean? In this email the kid gets 11 words and the rest is all about money, desire, lust and guilt. Paul and his wife want more, have the cash flow to get more, but are still sentient enough to smell danger. Damn good thing. Houses have messed with their heads.

For example, how do you carry a $500,000 mortgage “with almost no difference in cash flow” from one sitting at $170,000? Probably by taking advantage of lower current rates, and plugging in to a 30-year amortization. This is short-term thinking, since mortgage rates are destined to be higher in five years when the loan comes up for renewal.

By the way, with a current VRM at 3.2% this loan would cost about $2,200 a month on a 30-year mortgage. After 60 months Paul would have shelled out $75,881 in pure interest, and still owe $446,141. Isn’t amortization fun? Instead of being mortgage-free within a decade, they’ll owe close to $400,000. With luck it will be gone by retirement.

Paul and Mrs. will have bigger property taxes on a SFH than a semi, as well as higher insurance and maintenance. The kid will also get more expensive. And they’ll need a designer dog. BTW, how much better could public schools be from a hood of expensive semis to one of average singles? When you use your daughter to justify tripling family debt, is this child abuse?

Of course the big danger is buying at the top of a market destined to correct. If history were to repeat, that $900K house could end up dipping to $650K and stay there for years. That’s a loss of $150,000 in equity, or 44% of the money invested – but the full debt would remain. If it were a financial portfolio, instead of a house, Paul would probably moult.

So it comes down to assessing the odds of this happening – this correction. Either the Toronto real estate market acts like every other market on earth during all of time, or it’s different and rises without end. Hmm. Hard to know.

But here are two new clues.

Building starts numbers came out this week, and they were fat. More construction than at any time in almost six years, and the bulk of it is condos, most of them in the GTA. There are now 85,000 units being planned, built, pre-sold or marketed. But at the same time (as I mentioned here previously), 15,000 of those which are already constructed sit empty. Unsold inventory. Up 27% in a year. One bank economist were so far today as to say, “This is the ghost city phenomenon.”

Even F bitched and moaned a little two weeks ago, dissing builders who keep selling unbuilt units and dumping supply into a market which will soon be unable to absorb it. “I do worry about the last person buying a condo in Toronto,” the caring little pecker said, “and people getting caught.”

Speaking of the feds, here’s the week’s second new warning sign: reports today that Ottawa  has been mulling selling CMHC and getting the hell out of the mortgage insurance business.

According to the ex-chairman, Dion Chiesa, the agency’s board has already debated the move, as housing prices surge into bubble territory and CMHC holds almost $550 billion in insurance, much of it on high-ratio, high-risk mortgages. This equals a stunning 31% of the entire Canadian economy – much of it borrowed by horny people without experience or personal savings who wanted granite countertops, bought high, never read their loan docs and worry a lot about colour palettes.

Maybe it’s just me. But I wonder what those board members know.

So, Paul baby, make your choice. It’s real simple. Stay in your perfectly fine house and be financially and emotionally secure. Or man up and roll the dice.

Be mindful your daughter’s watching.

291 comments ↓

#1 Westernman on 05.08.12 at 8:58 pm

FURRRRRRRRRRST!!

#2 Form Man on 05.08.12 at 9:00 pm

I thought we would be into correction by now in the GTA. This is actually getting scary……..

#3 Nick on 05.08.12 at 9:00 pm

No housing bubble in Canada??

“CMHC’s total insurance-in-force, which represents the
risk exposure of the CMHC Mortgage Loan Insurance
Activity, increased to approximately $567 billion
in 2011, approximately 10% higher than the total
insurance-in-force of $514 billion at the end of 2010.”

http://www.cmhc-schl.gc.ca/en/corp/about/anrecopl/anre/upload/2011-CMHC-Annual-Report.pdf

#4 MarcFromOttawa on 05.08.12 at 9:01 pm

Am I?

Could I?

Will I be first?

#5 Chaddywack on 05.08.12 at 9:03 pm

But who the heck would buy CMHC? Are there Greater Fools in the finance world too?

#6 T.O. Bubble Boy on 05.08.12 at 9:03 pm

It is sad when $225k/year in income doesn’t even get you out of a semi-detached house in Toronto.

If Canada’s “Top 1%” is around $170k/yr, how ridiculous is it that 99% of households in Canada can’t afford anything better than an “urban semi”?

#7 Devore on 05.08.12 at 9:08 pm

A better school isn’t going to make Paul’s daughter any smarter, or a better student. Vast majority of it is parents, environment at home, and the kid’s attitude. Forget the coveted catchment, start building that RESP instead of paying off a mortgage into your 60s.

#8 T.O. Bubble Boy on 05.08.12 at 9:09 pm

Anyone who states that CMHC is run “more prudently than a bank” doesn’t read their annual reports.

How could you forecast $50B in mortgage securities for 2011 in your plan, and actually have $120B?

Are there no controls in the management of this “business”?

And — even worse: I bet the “managers” in this business get higher bonuses for throwing tax dollars at more and more risky mortgages?

#9 Makavelli on 05.08.12 at 9:09 pm

I’m surprised you didn’t reccomend Paul to sell his semi and rent. And take the money from the home to invest in a balanced portfolio. 350k at 7% will take care of rent. If Paul stays, he loses that money when the market tanks.

#10 Steve Thompson on 05.08.12 at 9:10 pm

A rule of thumb states that, in general, housing should not cost more than three times household gross income. Any housing market that is priced above that valuation is generally considered unaffordable. A study by Demographia shows that just over one-quarter of Canadian real estate markets are considered affordable using that measure as shown here:

http://viableopposition.blogspot.com/2012/03/canadas-real-estate-market-sustainable.html

In Paul’s case, his new multiple of housing price to income will be well in excess of 3. Not only that, but the market that he is buying into has an unsustainable multiple of 5.5, suggesting that price realignment is likely to occur.

#11 jon on 05.08.12 at 9:11 pm

I think you meant $750k

#12 Devore on 05.08.12 at 9:12 pm

BTW, the decision should have nothing to do with whether real estate is set to correct or not. It has to do with what is best for the child. Will someone please think of the children, instead of getting horny over bricks!

#13 Smoking Man on 05.08.12 at 9:14 pm

Garth said

Up 27% in a year. One bank economist were so far today as to say, “This is the ghost city phenomenon.”

This morning, media outlets, including the Financial Post, picked up and ran with a research note from Scotia Capital citing statistics that said up to 25% of condos in Toronto remain empty after being sold. The note referred to the phenomenon as creating a “ghost city.”

The Scotia note cites the Canada Mortgage and Housing Corporation as providing the 25% estimate. But as CMHC explains, it does not track data on how many condominiums in Canada remain unoccupied after being sold.

The Scotia Capital note was citing comments made by Shaun Hildebrand, senior analyst for the CMHC in Toronto, during a conference in Toronto last year. According to an article from mortgagebrokersnews.ca, Mr. Hildebrand had said that up to 25% of Toronto’s condo market is “investor owned.”

Investor owned is alot different than empty

How ever condo market is nut would not touch it with a 10 foot poll right now

http://business.financialpost.com/2012/05/08/torontos-condo-market-not-so-ghostly/

Urbanation numbers: unsold inventory is 27 per cent of newly-built units. — Garth

#14 Pops ol' limey whiffa on 05.08.12 at 9:14 pm

Suave pairs like you want to make a next move.. but one of you checks with Garth first. Whose wearing the pants? Why deny yourselves the existing mortgage?
Who you striving to impress – family, neighbours, work colleagues?

#15 Phil Indablanque on 05.08.12 at 9:18 pm

Dear Garth,

I’m really hungry and have a nice turkey and havarti sandwich and a travel mug of coffee. Should I drive over to Starbucks in the Beemer and buy my lunch?

#16 torontorocks on 05.08.12 at 9:22 pm

how about Genworth or that new Canada Mortgage Insurance Company that everyone in the mortgage underwriting business is jumping to? can they pick up the slack? do they get government guarantees? I already hate having my tax dollars backstop the CMHC; will I also be backstopping private companies?

#17 Island renters on 05.08.12 at 9:25 pm

How about staying put and investing the $75,000 that would have gone to interest into an resp?

#18 Bottoms_Up on 05.08.12 at 9:25 pm

Paul, you didn’t get to where you are today by taking massive risks. Don’t do it. Sacrifice now, and you will be rewarding yourself in the future.

There are a lot of great schools everywhere in Canada — man, we live in one of the highest educated, lowest crime countries…I’m sure your daughter would be going to a great school with great teachers in your current catchment area.

#19 eviee1973 on 05.08.12 at 9:25 pm

Why don’t they force Canada’s chartered banks to purchase CMHC?

#20 Jessica6 on 05.08.12 at 9:25 pm

@devore – absolutely a better school does not make a better school.
If it was REALLY all about the child getting the best start, rather than prestige, one of the parents would stay at home with the kid; they could certainly afford to.

#21 Jessica6 on 05.08.12 at 9:26 pm

I mean a better school doesn’t make for a better kid…

#22 Smoking Man on 05.08.12 at 9:28 pm

CBC has a story on why Condos suck in the mroning, just saw the commercial.

The machine needs to get the slaves under control, before the ask for raises

#23 Bottoms_Up on 05.08.12 at 9:28 pm

So 85,000 condos plus 15,000 empty…that’s 100,000.

Toronto is about 2,500,000 people…or, 600,000 families.

So there is now, or will be, available 1 condo up for grabs for every 6 families. Hurry, buy now before someone from the other 5 families gets it!!

#24 Freedom First on 05.08.12 at 9:28 pm

Garth, you are getting soft:) ………your reply to Paul was out of character…

Great article Garth! Got me thinking. Canadians, well, people in General. How they think. Now stop, have a look at the third world countries and their standard of living. Okay, now, what is it in wealthy countries, where even couples with a $225,000 a yr. income,will even consider taking on a lifestyle which will stretch the family finances? ……when already their lifestyle is the envy of the vast majority of the world. Garth says house horny…..and I do like that term, as the term I would use is not able to be published here, as it would be deleted:)

#25 Bottoms_Up on 05.08.12 at 9:33 pm

#6 T.O. Bubble Boy on 05.08.12 at 9:03 pm
———————————————-
Another question to ask: how many people would actually be able to afford to buy the home they currently live in? I know my parents and my inlaws couldn’t…

The thought actually makes me sick to my stomach….all those unsuspecting virgins taking on debt they will never repay, and buying homes from people who wouldn’t be able to afford the home they are selling….

#26 TurnerNation on 05.08.12 at 9:34 pm

Blog dog currently reporting live from BPOE/Vancouver.

A staggering amount of co,mercial For Lease signs present in downtown (near waterfront) and in Yaletown. Very noticible. Sinclair Centre mini mall is a virtual ghost town.

ps. still short silver via ZSL.US.

#27 pathcontrolmonk on 05.08.12 at 9:35 pm

That would be Dino Chiesa, as in dinosaur, perhaps you were listening to the Titanic soundtrack while writing?

#28 ken on 05.08.12 at 9:36 pm

Wonder why you only get e-mails from people making an income of 200000dollars up? Lets hear from the real people.

#29 northerner on 05.08.12 at 9:40 pm

There is another way! Move to the area you want to live and rent for at least 3 probably more like five years, sell your current residence asap and invest the money. Down the track once the depression has well and truly established itself in Canada like every other country in the western world, you can then buy in the suburb you want without a mortgage, IE cash! But by then everyone will know that

A) Housing is not an investment, it is an expense

B) Renting is a good deal, the landlord pays all the taxes and maintains the property.

C) If you need to move for whatever reason it’s cheap, way cheaper that selling and repurchasing.

D) You can screw the Landlord for a lower rent because you have money and hopefully still a job where 15 – 25% of the population wont have.

Good luck Paul, do your research, look at what’s happened in the rest of the world, and think with your head not your heart

#30 Ric in gta on 05.08.12 at 9:44 pm

I can say I did move for my 3 kids, in 1990 so they could be in the better school. It did cost us dearly but today we knew with all the kids out of the house
it was time to sell, we sold January 2012 now rent a new semi in a very nice area. You have to do what makes sense for your family, but it will cost you in sleepless nights and limited vacations. As long as you keep the focus on your family, and sell as soon as they leave for university, you will be okay.

#31 thinker on 05.08.12 at 9:47 pm

Few points on this CMHC story,

1) Garth the book of ~ 600B is not high risk, LTV is about 55%
2) Besides the Canadian Pensions running a joint venture to take on the book, a half trillion book of business could only go to the largest players in the world
3) An IPO could never happen, because the stock would be priced at zero, the amount of cash held against this monster is not enough to get any high yield investor in
4) This scenerio would then kill the Canadian Financial Sector and Covered bond holders. As we did see Financials get crushed in Canada today at a thought the free puts could vanish and they could be facing another AIG
5) at the end, it doesn’t matter, the government would need to bail out the AIG of Canada to save the banks and it would end up back on books of the taxpayer.

They could raise the costs of insurance and build a higher holding vs the book to get the public markets interested and then adding a fannie type “kinda” will help, issue bonds, stocks and prefs and hope for the best.

It would best be situated at a team of large pensions.

I said, “CMHC holds almost $550 billion in insurance, much of it on high-ratio, high-risk mortgages.” This is a true statement. — Garth

#32 Kurt on 05.08.12 at 9:49 pm

Dammit, you guys can afford private school! F*** the catchment area, buy a premium education for a fraction of the cost! That’s an investment that will continue to pay off for decades!

#33 Kurt on 05.08.12 at 9:52 pm

“Wonder why you only get e-mails from people making an income of 200000dollars up? Lets hear from the real people.”

Real people can’t afford a house anymore, so they don’t read real estate blogs.

#34 Smoking Man on 05.08.12 at 9:58 pm

#28 ken on 05.08.12 at 9:36 pm
Wonder why you only get e-mails from people making an income of 200000dollars up? Lets hear from the real people
……………………………………………………………

You too can make 200k if you stopped working and started thinking.

It’s all about the deal. In the 90’s I just went bankrupt, Specking on real estate. Feds introduced the GST, which halted all trade, My retail sales went in the toilet, my whole sale customers stopped paying. lost the houses, Went down fast.

The few nickels I had left, I boarded a Jet to Singapore, trying to land a gig, found myself a week later in Bangkok brothel with the manager of the wiser lock division for Thailand.

He was not allowed to sell this side of the pacific. But he could sell to his brother in law, who could then sell to me. Cut a buddy into the deal back home to finance it. And we all made millions till wieser found out, destroyed the supply chain.

200k if that’s your ceiling go throw a rock through the window of the nearest school.

#35 TurnerNation on 05.08.12 at 10:01 pm

Ha! The dog in today’s photo has Hare in Awful Places.

From the weekend posts:

“#139TurnerNation on 05.05.12 at 6:12 pm
Attn. new blog dogs. The following usernames are still available:

Hair in Awful Places
Smoking Manchurian candidate
Ersatz emoter
Glandular Guy
Shirley Cooter
O Bubbleheads
Track 6er
Never used yellow highlighters
Beach West girl
Batman ears

Reserved: Blog Dog Carney”

#36 TurnerNation on 05.08.12 at 10:04 pm

Still LMAO at the double entendre. :-)))

Original source:

http://www.greaterfool.ca/2012/02/03/wrinklenomics/

“One of our myths is that the government will look after you when you wrinkle and shrivel and grow hair in the awful places”

#37 Jan Etter on 05.08.12 at 10:08 pm

“#7 Devore on 05.08.12 at 9:08 pm
A better school isn’t going to make Paul’s daughter any smarter, or a better student. Vast majority of it is parents, environment at home, and the kid’s attitude. Forget the coveted catchment, start building that RESP instead of paying off a mortgage into your 60s.”

I agree that parents, environment and home and a child’s attitude are strong predictors of academic success. However, a better school may make a child a better student, since a school with a good reputation tends to attract more engaged and involved parents, generally speaking more stable home environments and perhaps better attitudes towards school because of the child’s peers.

A smart kid will be a smart kid in most schools. A marginal student that has a tendency to be influenced by his/her peers may benefit from a “better catchment area”. In my experience the schools/catchment areas with better reputations become a self-fulfilling prophecy as they attract parents that are concerned with the quality of the education their kids receive, are more involved with the school, hold the teachers and administration to a higher standard, have the luxury of time to volunteer and the financial resources to commit to fundraising activities to purchase educational resources that “poorer” schools can’t afford (e.g. tablet computers, smartboards). The child’s peers will tend to be more focused on academics because of their parents’ influence.

These are of course broad generalizations and it’s difficult to quantify the difference these factors make in a child’s academic success but I believe the choice of school can make a difference to many children.

#38 X on 05.08.12 at 10:09 pm

People just don’t get it. C and F can talk all they want. Actions speak louder than words. If they want consumer behaviour to change they will have to change rates, rules, regulations…

#39 piker on 05.08.12 at 10:11 pm

If it’s really about the kid, rent a mailbox in the catchment area and drive the kid to school.

#40 martin9999 on 05.08.12 at 10:24 pm

Mr. Turner you thing its a good time now to buy some indices? or should we wait a bit more.

sp500 its down almost 5% i dont think its gonna get any cheaper then this. sure greece its done but who cares.

#41 Narrowgate on 05.08.12 at 10:26 pm

“Better school”, that’s nothing but real estate agent hype to engineer higher prices in certain neighbourhoods. It’s Kool-Aid. It’s white people stuff.
Who says the school is better? How do you KNOW the school is better? Are the teachers better at that school instead of the teachers at the school your kid is currently at? No, this “better school” argument in Toronto is thinnly disguised WASP code for “I want my kid to have white friends and grow up with other affluent white kids. There’s too many lower class or brown/asian kids that don’t speak English at home at “that” school. The “better school” isn’t like that and my kid will fit in better and I’ll get to feel more comfortable. You bought the house before you had a kid and didn’t realize at the time but now you do, just admit it, Paul.

#42 Maxamillion on 05.08.12 at 10:26 pm

Look at the photo carefully, we need more condos in Toronto. Which one do you want?

http://www.flickr.com/photos/cobby17/6848413138/sizes/l/in/photostream/

#43 somecatchphrase on 05.08.12 at 10:41 pm

1. Paul would do well to consider sending his daughter to a private school. Catchment area wouldn’t matter, and, it sounds like it would be more economical, not to mention a better education for his daughter than any public school.

2. Who in their right mind would buy CMHC? That would be the greatest fool of all.

#44 Big Mike on 05.08.12 at 10:42 pm

TURNER NATION it is a hare piece!!

While I’m here some ome must have mentioned Diane Francis and the condo flipping scam. Easy money buy now.

#45 Xindai Shan on 05.08.12 at 10:45 pm

To Paul (in the case you don’t move.)

To Paul (in the case you don’t move AND you want your daughter in the better school.)

Well before your daughter gets into the school system, make a formal request to get her “optional attendance” in the better school. You might be surprized at the results. If you get nowhere, spend a few bucks to get an experienced education lawyer to give you advice and draft a letter as a next step. Respectfully and politely escalate your case and become a thorn in the superintendent’s side.

If you hold your ground and give sufficient time, school boards will often take the path of least resistance and buckle. Boards are not confrontational and try to avoid lawsuits. TDSB is in a position of weakness because they are hemorrhaging students out of their system. They are actually in the process of cutting teachers.

There are students in optional attendance programs all over the province.

FYI, There is a good school two minutes from my house, but TDSB wanted to bus my daughter to another school because it was full. My lawyer put an end to that nonsense quite quickly.

More on optional attendance:
http://www.tdsb.on.ca/help/#

There are lawyers to help 5-year-olds get into public schools they don’t qualify for? We’re more screwed than I thought. — Garth

#46 its starting .. on 05.08.12 at 10:49 pm

realtors now agree in Vancouver that the boom is over

http://tinyurl.com/7eq9gn7

A house on the 3000 block of West 24th Anenue, first listed at near $4.5-million six months ago, sold on April 15 for $3.35-million.

Fresh statistics from the Greater Vancouver Real Estate Board show the number of sales on the west side is down by nearly 40 per cent for the first four months of the year. Only a third of the nearly 400 homes listed in April have sold – one of the lowest rates in the region.

Realtors say the slowdown appears to have resulted from a combination of tighter lending practices by local banks, which now want proof of income to service large mortgages, more restrictions on how much capital can be taken out of China, and fewer immigrants.

#47 earlymidlifecrisis on 05.08.12 at 10:51 pm

Agreed- a better school does not make a better person. It has to do somewhat with parenting and a lot with plain old disposition. There’s an awful lot of people out there that had great parents who didn’t turn out so well. Also a lot of people with horrible parents who have really done well for themselves. A private tutor could be hired for a hair of what it would cost to move.

#48 Kim on 05.08.12 at 10:56 pm

Why doesn’t the banks and CREA buy CHMC and make all the profits? Imagine the government forcing them to buy? How much kicking and screaming would they do? Amazing how they lie to the masses knowing full well canada is in a housing bubble so big it became a ponzi scheme. The house of cards is going to come crashing down and 50% drop is very possible in the cards.

#49 Cory on 05.08.12 at 10:58 pm

But Garth, I don’t think you know much about real estate, especially in Calgary….it ‘is’ different here as you can see

http://calgaryrealestatereview.com/

#50 Harry Palms on 05.08.12 at 10:59 pm

Narrowgate sez ……….”No, this “better school” argument in Toronto is thinnly disguised WASP code for “I want my kid to have white friends and grow up with other affluent white kids. There’s too many lower class or brown/asian kids that don’t speak English at home at “that” school. ………

There’s some truth to this.

Free tip for concerned xenophobic parents:

Cheapest way to negate an ESL problem in your home school is ship your rugrats off to French immersion.

Can’t do anything about the brown/asian kids, but that’s perfectly OK. The ones at French immersion have parents who give a crap and want better……I can relate.

#51 Skip Breakfast on 05.08.12 at 11:03 pm

Ken (#28) asks to hear from the “real people”–as in those making less than $200,000/year. I think I’m one of them. We make less than $50,000/year between the two of us! I’m essentially unemployable, for various reasons. So when we realized we could take a significant amount of cash “off the table” we knew it might be a once in a lifetime opportunity.

We weren’t smart. We were lucky. But I will say we were willing to go against the herd. We bought the house no one wanted, at a time when no one was hot for real estate (at least not in our neighborhood). And we sold when everyone else was saying that real estate was the way to make you a millionaire. I’ve since learned that it’s called “contrarian investing” and it’s one of the few ways you can actually get rich. Moving with the herd is dangerous. Listen to Garth and get out while you can. Come back another day when things aren’t so frenetic and distorted. Stop and smell the roses and get off the wild ride that is heading right for a cliff.

We bought our Toronto home in 1999. At the time, we were shocked by how “cheap” the house was, after being immersed in Vancouver’s property market for the previous 15 years, which even the early 90s seemed financially out of reach. Without any stars in our eyes, and certainly no thought about a “return on our investment”, we bought the dump no one wanted and turned it into our home through our own blood, sweat and tears. We loved our house.

Cut to 2010, and the house had quadrupled in value. Prices seemed completely distorted. The house down the street that had sold for $500K the year before seemed outrageous at the time…and it was now commanding $800K. How quickly the benchmark shifted for what we all considered a “reasonable” house price.

The 2008 financial crisis was our wake-up call. It told us that something was wrong with the system where everything is bought on seemingly infinite credit without real increases in productivity or underlying wealth. When things (apparently) “settled down” post 2008, we believed we had dodged a bullet. Markets came back, and we quickly sold our beloved home and banked a lot of equity.

We now rent in a sunnier part of the world. What I find most interesting is how quickly our point of view changed. I admit I cried when I left the house. We’d had some great times in those walls. But, I’m afraid, it’s that emotional attachment that can blind us to making sounder financial decisions. In fact, it only took a few weeks and we were past it. We were on to a new adventure in life with some security knowing we could afford to live for a long time on very little salary, as long as we protected the equity we had taken out of the market. The fact that prices have apparently increased even more in the past 2 years doesn’t bother us one bit. We feel it was better to be 2 years too early, with cash in the bank, than a day too late and stuck in something we couldn’t sell, lamenting the lost opportunity to realize some true financial security.

I love our new rented house. We painted it and made it our own. We have a garden and are steps from a beach. It costs us a tiny fraction to rent, versus what it would cost to carry a mortgage, pay property taxes and pay maintenance. Someone else is taking the risk for us. We feel empowered and free. We’re unencumbered and nimble. We can take advantage of opportunities as they arise. I can work part-time, making minimum wage, and it’s largely pocket money.

I fear that everyone who believes they’re rich on paper, because their house has increased in value, is going to get sorely burned. Because only a tiny fraction of them well step out of the madness and actually realise that profit. You’re not a millionaire if your house is worth a million bucks and you have a $900K mortgage. In fact, I don’t think you’re a millionaire if your house is worth a million and you have NO mortgage. Until you realise that supposed “profit”, it is just a notional, abstract value that looks nice on paper. You can’t eat it. The value of the shelter (warmth and protection) is only a fraction of what you’re counting on here. The very few smart ones will extract the ridiculous equity from the over-valued real estate market, and sit back and realx. They will detach themselves from all the emotional fog that keeps people in their homes they’re convinced they can’t live without. Only a few smart ones will reject the supposed status that home ownership provides. It’s a status that I envisage will be more like a boat anchor around a lot of necks, as people find themselves stuck in quickly depreciating properties.

#52 furst on 05.08.12 at 11:08 pm

#1 Westernman on 05.08.12 at 8:58 pm

How dare you take my line!!!! FUURRRRST!!!

#53 disciple on 05.08.12 at 11:13 pm

Careful with which RESP you sign up for… it may be better to buy dividend stocks on sale like a client of mine did with Atria ten years ago. But stay well away from Facebook. Looks like Zuckerfraud didn’t show up for his scheduled stop in Boston: http://online.wsj.com/article/SB10001424052702304363104577392123342009202.html

Perhaps it’s because the word is out that Ann Coulter is his MOM and Max Keiser is his UNCLE…
http://xdisciple.blogspot.ca/2012/05/ann-coulter-is-zuckerbergs-mom-max.html

#54 LuckyRenter on 05.08.12 at 11:14 pm

Bloomberg: By Andrew Mayeda – May 8, 2012 12:01 AM ET

Canada Housing Bubble Concern Shown in Insurer Query: Mortgages

Anyone trying to understand the concern over a potential housing bubble in Canada need look no further than the debate among government officials over whether to exit the mortgage insurance business.

http://www.bloomberg.com/news/2012-05-08/canada-housing-bubble-concern-shown-in-insurer-query-mortgages.html
—————————————————————
Too little and too late.This will not end well.

#55 TOUGH TIMES on 05.08.12 at 11:16 pm

Garth you are bang on everytime.

* Paul should go for it and load up on the debt. The sooner CHMC gets tapped out the faster and harder the crash will be in RE as there will be NO MORE FREE MONEY for the underclass to buy RE with 5% down, Zero down etc. mortgages. Currently Real Money cannot compete with NO MONEY RE Virgins.

* CDN’S will still continue to lose jobs. You wait and see when the construction industy slows down and the negative feed back loop starts into the CDN economy. Good buy good paying jobs. We can’t even compete against the US now as our labour, RE etc is to expensive. The factory worker in Ohio can now work for $13.00 and buy a nice home for $100,000K. Good luck Canada in competing with this.

* Have you driven around, 75% of all commercial property is up for lease or sale now.

* Europe might implode, which will freeze up lending globally again, very possible!

* 70% of CDN already own a home, how many more can we sell??? 70% of CDN are living pay cheque to pay cheque, 50% have no pensions. BOTTOM LINE, CDN’s are so SCREWED IT IS NOT FUNNY ANYMORE.

* Austerity will start to kick in hard core at every level. President Harper alone is firing 40,000K at the federal level. All other provinces and cities will start to do the same.

For the HGTV virgins sitting on the side lines this is what you have to do. I am tracking several areas and there are many PC (price changes – drops), empty homes coming on the market (POS – Power of Sale) etc. Use your god damn brains. Have a RE used car salesman send you listings for a particular area if you see a house you fancy, low ball it by a couple of $100,000K (Do this yourself from the comfort of your home 1st plug in MLS Number and e-mail the god damn Realtard as the agent working for you will not do this for you!!!!!). You will be pleasantly suprised some RE agents want to play with your offer. BOTTOM LINE THE CRASH HAS STARTED!!!! Paul please buy the bigger home and join the rest of the Bank Debt Slaves and speed up the CHMC crash for me will you. This is FREE advise for all you HGTV virgins with your big $200,000K salaries with no brains etc. From my experience most people are plugged into MSM – Main Stream Media, and it becomes too late for them and they lose everything if they listen to MSM. People cannot think logically anymore.

Garth thanks for the great work and where do you find all these HGTV House Porn Virgins that make $200,000K??? Must be a gov’t worker or something?

#56 Winterpeg on 05.08.12 at 11:46 pm

Re: Steve Thompson #10; “viable opposition blogspot”

I see Winnipeg is 15th on the affordability list and is categorized as “moderately unaffordable” I would agree with that for the most part. That posting was in March and now we’re into full Spring, so the average price of 210,000 which the blog listed might have crept higher.
I, like hapless Paul dream about something bigger. The place I looked at today was $279,000, albeit in a nice “character” neighbourhood. It was 1100 sq ft (built 1927) The agent said they could have priced it for a bidding war, but decided to price it for what they thought they could get for it. Whatever you say, Mr agent. I talked to him about the market possibly taking a downturn and he didn’t deny it. So the drums are starting to beat and word is starting to get out there even in Winnipeg.
I will stay put in my 1910 house instead to “going for the upgrade”. If I did buy in, my taxes would more than double, for starters.
Hope you make the right decision Paul.
We all dream something a little bit nicer, but a new reality is upon us and it’s best to heed the warning.

#57 Calgary Car Guy on 05.08.12 at 11:58 pm

#51 Skip Breakfast

Thankyou for that great post. It was certainly one of the best I’ve read on this blog for the last couple of years. Congratulations on your financial savvy while at the same time realizing what are truly the finer things in life.

#58 Devore on 05.09.12 at 12:11 am

#43 somecatchphrase

1. Paul would do well to consider sending his daughter to a private school. Catchment area wouldn’t matter, and, it sounds like it would be more economical, not to mention a better education for his daughter than any public school.

Good point. Private school in BC will set you back $10-15,000 a year, which is way cheaper than buying the house. To rub some salt into the wounds, in many so-called good catchments in Vancouver, the schools are so overbooked they’re busing kids to other schools. So much for that idea.

http://www.ourkids.net/school/refine-school-list.php?id=22

#59 Smoking Mans evil twin on 05.09.12 at 12:19 am

People that brag about 200K incomes are full of sh*t….(unless they work at Fort McMurray McDonalds)

#60 Lance on 05.09.12 at 12:20 am

Paul,
Stay in your current house, get that mortgage paid off.
Forget the better catchment area for a public school. Send her to private school instead. Money well spent.

#61 Wes coast on 05.09.12 at 12:21 am

Even if CMHC is sold the tax payer is screwed. CMHC will default on its obligations in a crash which means the liabilities the banks assume they don’t have would hit their books. Then they will need a bailout from taxpayers to remain capitalized which means the tax payer gets it in the end regardless.

As citizens we need to demand that any bailout means current bond holders and shareholders of Canada’s banks lose their investment first and then the tax payer bailout should amount to a take over of the bank at firesale prices. Keep them tax payer owned until they are stable and start issuing ipos to new shareholders. The taxpayer should profit not suffer from this mismanagement of risk.

#62 cb on 05.09.12 at 12:29 am

puff daddy is at it again…smartest alcoholic/pothead/slut monger in the world…smokie, why are you so bitter? what bothers you puff-ter??? you should set up work shops on how to sell house alarms door to door- help everyone get rich hahaha…

#63 jess on 05.09.12 at 12:33 am

ResCap was one of the largest originators during the housing bubble of subprime and Alt-A mortgages rescap

vultures are circling

http://www.bloomberg.com/news/2012-05-08/ally-gets-nod-for-rescap-filing-as-u-s-seeks-repayment.html

#64 An Cat Dubh on 05.09.12 at 12:46 am

I was talking to someone in Vernon, B.C. todya who sold his house 3 months ago for $400K and is moving out at the end of the month. He said if he sold it today he would get $345K. His home 5 years ago was appraised at 500K. He bought the place in 1989 for 50K, so even adjusting for inflation he came out ahead.

#65 BC Bring Cash on 05.09.12 at 12:55 am

Check out a link that confirms China has a RE bubble of its own. Dark new buildings at night. Maybe that’s why the HAM have decided to stay out of Vancouver.
http://globaleconomicanalysis.blogspot.ca/2012/05/china-architect-comments-on-dark.html

#66 dino on 05.09.12 at 12:57 am

what a croock @!!!!!!!

#67 Van grrl on 05.09.12 at 12:57 am

“I read your blog daily,” says Paul, which certainly raises questions about his mental stability.

——
Garth, you are tooooo funny!!!

#68 TRT on 05.09.12 at 12:58 am

Greater Toronto built almost 30,000 housing units last year. Population growth indicated 45,000 new housing units needed to be added per year over the next few.

Demand is and will be there if you look at the Math. Even with the tens of thousands of condos coming online next year, they will be occupied in no time.

Not pumping but someone explain the discrepancy!?

It is what it is. Cue the blind.

#69 totalchaos on 05.09.12 at 1:00 am

“Better catchment” is a bit of a joke. I live in the “best” catchment of my city and pulled my kids to send them to an inner city school. Way better teachers, resources and support, and a principal who can think outside the box. I discovered that the “good” school looks so good because half the students have tutors weekends and evenings.

When you are willing to go into debt for the swankiest house with the shiniest stainless and the trendiest colour palette, you better have the smartest kid decked out in the latest runners.

#70 Van grrl on 05.09.12 at 1:14 am

#41 Narrowgate and #50:

What on earth are you two going on about? Perhaps you’re focussing on Toronto, but in Vancouver the west side “wealthier” high schools are full of Asian students, either esl or Canadian born. Caucasian kids are a minority pretty much everywhere.

#71 SophieZombie on 05.09.12 at 1:17 am

Freakonomics ! will answer the question about good school, having books at home & Baby Mozart: it is the parents (socio-economics status) who makes the kid successful, not the school.
By the way, how would you feel if your new home was re-zoned out of the good school area ? Or the school was downgraded (by MacLean ?) Very expensive investment…

#72 BC Bring Cash on 05.09.12 at 1:22 am

Here is more proof that HAM (hot asian money) is not supporting the Vancouver housing market.
http://whispersfromtheedgeoftherainforest.blogspot.ca/2012/05/media-says-ham-is-fizzling-out.html

#73 frozen trumpet on 05.09.12 at 1:46 am

#46 its starting .. on 05.08.12 at 10:49 pm

…and from the realtor explaining why the Vancouver market is down, “Banks are now requiring borrowers to disclose incomes and assets before mortgages are approved, as of the last six weeks,”

NOW requiring?

#74 I'm a multi-millionaire and I'm not buying in Canada..yet, but I took Garth's advice and bought in the US! on 05.09.12 at 2:08 am

Garth you mention that the CHMC is holding almost $550 billion in insurance, for some reason I thought read somewhere it was holding approx 1.2 trillion.

I’m sure you’re right and I’m wrong, but could you correct me if I am. I’m a big boy, just want to get my facts right.

#75 Tony on 05.09.12 at 2:10 am

Just like the people in America Paul will likely be working ’till the day he dies constantly cursing his own stupidity for not selling his house. Well he’s not the only one. I guess this is the reason most people die broke. One really stupid decision at the worst possible time.

#76 BTFD on 05.09.12 at 2:15 am

Garth, why are you wearing a green superhero suit discussing the BTFD strategy?
http://m.youtube.com/watch?v=jllJ-HeErjU

#77 99% on 05.09.12 at 2:17 am

#19 Eviee1973
“Why don’t they force Canada’s chartered banks to purchase CMHC?”

Brilliant!!! Would F, C, or even H please step down and let someone else with half a brain take over.

#78 Tony on 05.09.12 at 2:18 am

Re: #40 martin9999 on 05.08.12 at 10:24 pm

Stocks follow commodities down. When commodities fall stocks almost always fall. Look for a much larger fall in commodities.

#79 99% on 05.09.12 at 2:24 am

Paul – remember Steve Job’s parents did move to a better neighborhood just so that he could get into a better school. Look what happened to Steve. If they didn’t struggle to buy that house, perhaps the world wouldn’t have Apple today. So it really is for the greater good of the entire world that you go and buy this house in a better school catchment. If you don’t do it, you may just regret it in 20 years when your daughter is pole dancing cause her parents wouldn’t move.

#80 Really on 05.09.12 at 2:27 am

Paul (and a majority of your readers) are not going to like this comment.

Instead of moving into a better catchment that is going to cost a bunch more money and change their financial trajectory, they should aggressively pay down their existing mortgage as fast as possible. Then the mom should quit her job and become a stay at home mom. That will give their child something 10 times better than sending it to day care or finding a better catchment.

#81 anon on 05.09.12 at 2:31 am

My advice to Paul – find a friend who lives in the area and use their address when you sign your daughter up for school. Once she is in – she won’t be asked to transfer. Much cheaper if that is the main reason you would like to move.

#82 NFN_NLN on 05.09.12 at 3:02 am

I fail to understand why we don’t just let nature run its course?

Besides, this guy can afford to take a beating. If you stop him, all you’ll get is some other family taking his place. A family that may actually be worse off.

Speaking of people who can afford a financial beating. Is there any way to sell the CMHC debt to the Chinese? The US did it to everyone else… why can’t we?

#83 futureexpatriate on 05.09.12 at 3:09 am

“Better” schools are rarely better.

Less diverse is NEVER better.

#84 ANONYMOUS on 05.09.12 at 3:25 am

Ah, don’t worry so much.

In two year’s time all of those condos will be sold to investors and the prices will be double , maybe even triple, what they are selling for now.

We are in a real estate bubble, where homes go up, but for some odd reason the stock market has been crashing lately ?

#85 Canuck Abroad on 05.09.12 at 3:40 am

Paul, Toronto has some good private schools. Fees are less than $50k per year. Stay where you are and enrol your daughter in one of these schools, if all you really are interested in is her education. Sounds expensive but compared to what you will lose on the new house, plus all the extra interest you will be paying, its not so bad. Plus it will look nice on here CV some day.

#86 Canuck Abroad on 05.09.12 at 3:59 am

Interesting charts below. Canadians please note: Vancouver is not the same as New York. Toronto is not the same as New York. Vancouver is a small regional city in a country most of the world has only heard of.

I travel a lot. Whenever I bring up Canada, people always react by mentioning the Rocky Mountaineer. Never Vancouver. Never Toronto. You people who live in these cities need a reality check.

Anyway, the charts…

http://vreaa.wordpress.com/2012/05/08/usa-rent-vs-buy/

#87 Ben on 05.09.12 at 4:05 am

#6 T.O. Bubble Boy on 05.08.12 at 9:03 pm
It is sad when $225k/year in income doesn’t even get you out of a semi-detached house in Toronto.

If Canada’s “Top 1%” is around $170k/yr, how ridiculous is it that 99% of households in Canada can’t afford anything better than an “urban semi”?
…………………………………………………………………….

Well said!

#88 Canuck Abroad on 05.09.12 at 4:10 am

#9 Makavelli / The renting option may not work in Toronto due to supply issues. I am frequently checking mls and viewit to check for rentals in Toronto (long story). To find a high quality detached house in a specific catchment area may be tricky. Paul is still much better off to stay put. His child is only 3!!!. The quality of her school is not going to matter much for several years, by which time prices may have come down a fair bit. Or if the private school option is a non-starter and education is what really matters, hire her a tutor. But I think we all know that her education is not the real driver here.

#89 Ben on 05.09.12 at 4:36 am

EDMONTON – Edmonton-region homebuilders are much busier than they were a year ago, with housing starts in April up 27.6 per cent from 2011.

April starts in the Edmonton census metropolitan area totalled 967 units, up from 758 units the previous year, the Canada Mortgage Housing Corp. said Tuesday.

In the single-detached market, which tends to be less volatile than the multi-family sector, builders started 493 units in April across the region. That’s up 13 per cent from 436 single starts a year earlier.

For Edmonton alone, builders broke ground on 313 singles in April, up nine per cent year-over-year.

“This is the fifth consecutive month where starts were higher on a year-over-year basis,” said Christina Butchart, CMHC’s senior market analyst for Edmonton.

Multi-family starts in the CMA in April rose 47 per cent year-over-year to 474 units.

“With 1,596 units to the end of April, multi-family starts across the Edmonton CMA were almost 50 per cent higher than the first four months of 2011, accounting for half of all housing starts so far this year,” Butchart said.

For the year to date, total housing starts in the Edmonton CMA jumped 36.5 per cent to 3,172, up from 2,323 for the first four months of 2011.

“Housing starts in Alberta for April came at 35,300, which is 70 per cent higher than a year ago,” said ATB Financial economist Will van’t Veld.

“This indicates that this spring construction season is as hot as its been since the boom years. Unlike the rest of the country, Alberta home prices have remained relatively flat for the past couple years, but clearly market prices are still sufficiently high, thanks to the last boom, to induce continued strong housing activity.”

He said Alberta’s strong economy and low interest rates are driving strong real-estate activity.

Housing starts in Canada shot up by 14 per cent in April to 244,900 units on a seasonally adjusted annualized rate basis) — the highest level seen since the pre-recession days in September 2007, said economist Dina Cover of TD Economics.

http://www.edmontonjournal.com/business/business/6586381/story.html

#90 Ben on 05.09.12 at 5:06 am

Hey Gold Bugs

Gold crashes through $1,600

#91 Beach Girl on 05.09.12 at 6:27 am

#35 TurnerNation on 05.08.12 at 10:01 pm

Ha! The dog in today’s photo has Hare in Awful Places.

From the weekend posts:

“#139TurnerNation on 05.05.12 at 6:12 pm
Attn. new blog dogs. The following usernames are still available:

Hair in Awful Places
Smoking Manchurian candidate
Ersatz emoter
Glandular Guy
Shirley Cooter
O Bubbleheads
Track 6er
Never used yellow highlighters
Beach West girl
Batman ears

Reserved: Blog Dog Carney”

____

I realize this is a dig. But I don’t understand it. Please explain. This is twice now. Just curious, not that your opinion carries alot of weight.

Got 2 new Hydro Men on board. The girls are going to show off the swimming wear. We are all going shopping and for lunch to buy new bathing togs Saturday.

Met the most amazing Aryan Man on the weekend. Massive, about 20 years older than me. I called him an old Nazi. He is in love. This will be a short timer. The Flame got jealous.

So the stock market tanked, been there, done that. Makes one fretful. but life goes on.

#92 Ralph Cramdown on 05.09.12 at 6:38 am

ps. still short silver via ZSL.US

Why would you do it that way? Short a silver fund. You get borrowed cash for free, the management fees, and a side bet on whether there’s actually fraud going on in the paper silver market as the “physical metal only” nutters have been claiming.

#93 David B on 05.09.12 at 6:40 am

Nothing changes, nothing changes …. most if not all working class people can not stand “Prosperity” that is why they find themselves living with “Austerity”

It seems like yesterday y’all tossed out a man who had billions in savings in your bank account for a 2% cut in the GST ……. which btw lead to this blog full of bleeding hearts.

#94 Onemorething on 05.09.12 at 6:54 am

And this is just another example of how F*cked Up we’ve become! Be different and WIN big!

#95 The real Kip on 05.09.12 at 7:09 am

“There are now 85,000 units being planned, built, pre-sold or marketed”

We are going to be be busy that’s for sure. As the stock markets boil dry over more Euro crap billions will be pulled from markets. Much of that in Canada will pour into real estate. I hope we have enough!

Spoken like a true construction guy. Nothing beats self-interest. — Garth

#96 PAUL on 05.09.12 at 7:16 am

Thanks for all the comments. I’d like to clarify a handful of things
– I don’t want my daughter to go to a better school so she can hang with other “white people”. You assume I’m white, maybe it’s the income? Now who’s the racist. My kid hangs out with people from every corner of the world. We live downtown, it’s sort of inevitable and one of the best things about Toronto.
– Speaking of income, you can’t throw a stone downtown Toronto without hitting someone in the head who makes 100k. The 225k is also a family income, my wife and I both work. I appreciate it is good money.
– We have a 30k RESP for my daughter, which I consider pretty good for a 3 year old. I manage this myself, along with all our other savings. We are continuing to build this.
– I appreciate the options some people have posted re: school. Private school is something I have considered, so is sending the kid to the local school.
– I know selling and renting is the best option, but it’s not a lifestyle I’m interested in. This is my own bias
– I don’t think we’ll be moving ; )

Thanks for the comments and thanks for the perspective Garth.

#97 bigrider on 05.09.12 at 7:42 am

Financial markets getting crushed , once again , for the umteenth time this decade means housing prices still have some steam left in this insanity we call the GTA…I grudingly have to admit.

Rearview mirror investing …the king of all investing strategies for the avaerage schmuck out there.

The S&P 500 is ahead 8% this year. How is that ‘crushed’? — Garth

#98 richard on 05.09.12 at 7:44 am

WOW! LOL

DA, in regards to my simple comment, made a couple days previous, that Pammy will NOT be confused for the model in the photo, or make other posters cry, you replied with nearly FIFTY lines of insults (wild chaotic jibes at my life…which were humorously inept….not too insightful), and rantings about your marriage.

How very ironic, and telling, that you would say it must be on my mind! Sore spot indeed…which of course, is why YOU kept trying to overcompensate in threads past about your “hot” wife!

Nobody cares about your wife…nobody cares that she is far from a supermodel…nobody cares that you are unhappy. At least have the respect to stop talking about her.

You have never been man enough to stick to your various vows to stop coming to this site….at least be a man and partially shield your wife’s reputation from your juvenile acting-out on this site.

#99 Victor on 05.09.12 at 7:49 am

#79 99% on 05.09.12 at 2:24 am

Steve Jobs was a college drop-out.

#100 Victor on 05.09.12 at 7:51 am

‘Canadian condo craze’ gets crazier

May. 09, 2012 7:37AM EDT

Starts of multiple units, which include condominiums and apartments, climbed a sharp 27.4 per cent to 158,500, the second-highest monthly reading on record and a reflection of what Scotia Capital economist Derek Holt termed the “ongoing Canadian condo craze.”

Overall starts have now increased in seven of the past eight months, playing into concerns that the condo market is headed for a serious correction as developers continue to build. Canada now has the highest stock of unsold condos since the early 1990s, Mr. Holt said. A burst bubble would ripple through the economy.

The data put to rest “any doubts that Canada’s housing market, at least in certain sectors and cities, is at risk of overheating,” warned Bank of Montreal analyst Robert Kavcic.

http://www.theglobeandmail.com/report-on-business/economy/housing/canadian-condo-craze-gets-crazier/article2426997/

#101 bigrider on 05.09.12 at 7:52 am

#34 Smoking man.

I would love to hear you elaborate on the 90’s RE losses.

I suspect a greatnumber of the bloggers here are under 40 years of age and have never experienced a real estate meltdown like we saw in the early nineties.

I bought a condo for 152k back in 1988 . Same unit a year and a half later selling for 219k so I go to list only to beserved with a letter from builder to de-list or face lawsuit(back then you needed to actually take occupancy before you could sell). By the time I got occupancy they were selling for same I paid ,around 1991.

I sold the damn thing for 138k in 1998 after nothing but tenant hellish experiencing and monthly shortfall of around a 100 a month.

My experience pails in comparison to many small builders and amateur RE speculators/landlords lost it all.

Never f-in again.

#102 its starting... on 05.09.12 at 7:56 am

#41 Narrow Gate

You are exactly right, good schools don’t mean better teachers. It means bitchy parents.
If you want your child to get A’s go in every reporting period and complain.
Then you will see your child’s marks increase. Teachers will give students in higher socioeconomic areas better marks because the parents are all over them if they get anything less than a B. Its easier to give a child an inflated mark than to deal with a bitchy stay at home parent. My sister is a teacher in North Toronto and she says that teachers will always give higher marks just to avoid a confrontation.
Poorer communities its different they get what they deserve because no one will complain and be a pain for the school year.

#103 Market Bull on 05.09.12 at 8:01 am

Numbers don’t add up.

$600K property with $170,00 owing leaves current equity at $430,000. $60k to move? Even at full commission of 5% that’s only $30k plus legals and LTT on new purchase, which is nowhere near an additional $30k.

Even it it were true, $430k minus $60k to move leaves $370,000 not $340,000 – where did an additional $30k go?

Fuzzy logic? Or just really sloppy accounting?

LTT alone on a $900K purchase in Toronto is $28,200. You are the fuzzy one. — Garth

#104 bigrider on 05.09.12 at 8:01 am

Garth to Bigrider- “The S&P is ahead 8% this year, how is that ‘crushed’ ?”

Once again Garth, there you go cherry picking. You need to stop doing that, it is misleading to the uninitiated on this blog.

The S&P exposure in a properly diversified and balanced portfolio would represent only a small fraction of total exposure.

TSX slide from peak last year around April,2011 is over 20%, venture exchange is a train wreck over same time period and lets not even talk about the MSCI.

Listen ,your 40/60 portfolio has worked to preserve capital, perhaps, but you can kiss goodbye to bond ETF’s holding things up going forward. Dead capital at best.

These rolling, 20%+ corrections in the markets aren’t helping any of the retail investing public out there, hence the net outflows from financial equity markets year after year.

(a) The bond market is fine. (b) Preferreds are doing fine. (c) REITs are fine. (d) The S&P – the broadest measure of US markets, is up 8%. (e) Of 440 US companies reporting Q1 profits, 66% beat estimates. (f) A diversified, balanced portfolio is fine. Once again, where’s the ‘crush’ or the ‘train wreck’? — Garth

#105 Regan on 05.09.12 at 8:01 am

For $200K you can get the kids private tutors, take them around the world on holidays, attend every art gallery, science fair, band camp that could enrich their life and still have enough left over to pay for a graduate level education. Buying a house for a good elementary school is nuts. Besides, there’s optional attendance.

#106 fancy_pants on 05.09.12 at 8:03 am

Ottawa has been mulling selling CMHC…

hey, the good news is the gov’t finally has some experience to fall on. The golden boy has dappled in the questionable trade of chopping up subprime mortgage debt and selling them as packages of sunshine. Experience at the helm!

or we can always stay on course with the little pecker and close our eyes, plug our ears and say “la,la,la,la”. it will all turn out fine.

#107 bigrider on 05.09.12 at 8:07 am

#95 The Real kip- Garth response “spoken like a true constrcution guy”

Unfortunatley Garth, he is probably correct in what he is saying.

This is how the public is viewing the allocation of their respective resources:

What has worked – what hasn’t worked X my rearview mirror = Toronto/Vancouver real estate

In any event , the net result of equity market outflows means that some of these dollars will find there way into RE.

This is simply a fact.

Since when was the public right? — Garth

#108 Fred on 05.09.12 at 8:07 am

If I was in Paul’s shoes with the family income being $225k / year, I would be working on getting my daughter a little sister or brother, or two. No house could compete with that. But, each to their own.

#109 Gypsy Kid on 05.09.12 at 8:18 am

We went from a below middle-rank school to the top public school in Ontario.
The only difference was the “crazy” parents in the top rank school.
If your child is smart and focused, she’ll do well no matter what. If you’re that concerned, send her to a private school for now, and for high school, send her to the home “public” school, which most kids in your neighboring “catchment” will end up in anyways…

#110 Smoking Man on 05.09.12 at 8:25 am

#62 cb on 05.09.12 at 12:29 am
puff daddy is at it again…smartest alcoholic/pothead/slut monger in the world…smokie, why are you so bitter? what bothers you puff-ter??? you should set up work shops on how to sell house alarms door to door- help everyone get rich hahaha…
…………………………………………………………………..

Laugh now my boy, cause if you don’t get with the program you will be crying.

Not mad, Trying to save all the negative out of the light posters. Everyone else is overhead which will find the cheapest labour market.

In the new world order only revenue generators (Sales) and owners will prosper.

As far as door to door sales re son. He will never go hungry. A paid real Education, not cookie cutter obidiance training that people line up for.

He’s doing so well the owner is going to partner up with him to start a new office.

#111 Regan on 05.09.12 at 8:26 am

My advice is my plan too – by the way. I’ve shopped around in my target school district but the prospect of the $500K mortgage it would take to get there makes me sweat. And any educator will tell you that the home environment is where most learning takes place. When I look ahead in my school district, an interesting thing happens – all those ESL students struggle in the early years and pull down the EQAO scores, but by high school my area has morphed into one of the best high schools in the city. See what challenge can do? If your kids don’t need English-immersion, then you can send them to French immersion to get the same challenging experience. I’m going to wait until there’s a definable problem, like the kids are sinking, or getting bullied or something, before rearranging our lives for a theoretical ‘better education.’

#112 The real Kip on 05.09.12 at 8:28 am

#2 Form Man on 05.08.12 at 9:00 pm

“I thought we would be into correction by now in the GTA. This is actually getting scary……..”

You are in the same business as I am. You should get your ass to GTA and join the party. I intend to ride this gravy train until the wheels fall off and that won’t be this year!

We’re blue collar baby, no need to theorize on why it is, just stuff the bank accounts.

#113 disciple on 05.09.12 at 8:35 am

Victor – Both Jobs and Gates are characters played by actors…evidence will be forthcoming likely very shortly… your world is an illusion.

#114 Do you love CMHC? on 05.09.12 at 8:35 am

CMHC’s annual report reads like a defence of its practices.

It’s not often a Crown corporation bangs its drum loudly, appears to question market sentiment and misrepresents the central bank’s monetary policy – all in the same day.

Read more: http://www.ottawacitizen.com/business/CMHC+annual+report+reads+like+defence+practices/6589370/story.html#ixzz1uNKwVTlq
Read more: http://www.ottawacitizen.com/business/CMHC+annual+report+reads+like+defence+practices/6589370/story.html#ixzz1uNKg09la

http://www.ottawacitizen.com/business/CMHC+annual+report+reads+like+defence+practices/6589370/story.html

#115 bigrider on 05.09.12 at 8:55 am

#107- Garth to Bigrider-” Since when was the public right”

Never meant to imply that the public is right. My comment was directly related to the comments made by The real kip in #95.

The fact remains that as equity markets continue to struggle and the retail investors continue to withdraw en mass from the financial markets, some of that money will find it’s way into asset classes that have worked.

#1 in that category has been GTA and Vancouver RE.

Therefore The real kip has a point.

#116 Mr. Lahey, Nemesis of Ricky, Julian and Bubbles on 05.09.12 at 8:58 am

#101 Big Rider

Your bad experience with a condo cannot be translated to single family homes in Toronto which have posted mind altering results in the past decade/last couple of years. As your builder buddy you mentioned yesterday demonstrated. He made a cool million in four friggin years! Your error was similar to what people do in the stock market. One experience clouds their view of the whole market. Why haven’t you invested with the real estate crowd you hang out with? Don’t any of them every take in partners?

#117 neo on 05.09.12 at 9:05 am

Ahem…

Just for the record. Since we had that discussion about bonds yields where I said the 10 year would reverse at 2.4% and would never be allowed to rise as you’ve suggested and equities would be sacrificed in the process. Where are we now? Ten year at 1.80%. That is a huge move in such a short period of time. Equity markets have been turning over as well. Oh and Europe isn’t fixed or stable as you’ve also suggested. The only thing equities, commodities and treasuries respond to is stimulus aka money printing not actual demand..REAL consumer demand based on rising incomes and savings is what will provide a sustainable recovery. There has been too much global deleveraging and balance sheet damaged realized or yet unrealized for this to occur. Again I expect to see Gold at $1,000 later this year which will provide a buying apportunity for it and equities when we start seeing those 400-500 point down days again…

Tempus Fugit…

#118 Jim Lahey on 05.09.12 at 9:07 am

Ricky brought over a book from the 80s (yes, Ricky went back and got his grade 10 and can now read) by Alvin Toffler, self proclaimed futurist. In it he mentioned that inner cities of major North American cities would become wastelands in the next few decades. He might have been right on some American cities but Alvin baby, how wrong you were in the case of Toronto. Talk about a bad call, the total inverse of what has happened. If Jeff Rubin’s prediction comes true of soaring oil prices in the future (unlike Toffler I think will be proved correct), the inner city, with subway access and bus transit will only command an even greater premium.

#119 bigrider on 05.09.12 at 9:13 am

Garths response to Bigrider at #104.

It would take to long to reply to each of your points properly but a) the bond markets in fine ? I hope you are referring to corporates only because yields below 2% on the governments is anything but fine. d) S&P is up 8% this year…yes but flat more or less for PAST 12 YEARS. c) reits are fine..yup you nailed that one..checkmark..real estate once again b) preferreds are fine..most so far but drain on companies resources will not be sustainable without some measure of growth in corporate profitability..growth non existent , return on corporate assets horrible,think insurers for one e) 440 reporting companies beat estimates by 66%- Yes and I could pass any test you gave me ,effortlessly without study if the passing grade was 10% instead of 50%.

Here is my list a) TSX down 22% approximately from peak April 2011 b) venture exchange almost- 50% c) MSCI -30% approx. d) gold and silver stocks-decimated
e) buying interest drying up month over month f) lowest instituional ownership of equities in over 30 years.

Listen Garth, my net worth tiltied towards financial assets so I`m on side with you but picture you paint a little to rosy when backdrop has been these past ten to twelve years.

I would add that if declines continue and heaven forbid a repeat of 2008-9, RE will be main benefactor

Every time markets go down 5% you get your shorts in a twist. I pity whoever looks after your money. Hey, is that you? — Garth

#120 Daisy Mae on 05.09.12 at 9:19 am

#19eviee1973 on 05.08.12 at 9:25 pm

“Why don’t they force Canada’s chartered banks to purchase CMHC?”

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

Wouldn’t THAT be poetic justice!

#121 };-) aka DA on 05.09.12 at 9:20 am

“So it comes down to assessing the odds of this happening – this correction. Either the Toronto real estate market acts like every other market on earth during all of time, or it’s different and rises without end. Hmm. Hard to know.” – Garth

Uhhhhh…. Well Yaa. Housing prices will continue to rise without end just like everything else. It’s called inflation. Buying and owning a home is a hedge against that inflation as you anchor the cost at today’s prices. Trust me, in the long term, real estate prices will continue to go up just like most everything else.

I know you have your own fancy calculations to prove how owning a home isn’t a very adequate hedge against inflation but, despite that, a lot of people on earth have successfully maintained parity, if not enjoyed lucrative gains, through means of homeownership without end thus far. Why do you think that might be different in the future?

Why would housing not, at least, maintain parity with the rise in the cost of everything else? Renting subjects you to having to encur those increases. Buying, to a substantial degree, anchors you at the cost you got in at.

Yes there will be ups and downs in the market along the way just as there have been through all time. But I’m talking about a long term hold here to the Blog Dawgs who, like most everyone else, tend to be short term thinkers.

There is ALWAYS a reason not to buy in; housing prices are too high, or interest rates are too high are but two of them. But what do you expect you are likely to think, in retrospect, if you still have not bought 10 or 20 years from now?

#122 The real Kip on 05.09.12 at 9:22 am

#115 bigrider on 05.09.12 at 8:55 am

Most average people who have invested in stocks have long lost the stomach for the roller coaster rides we have seen on markets. When people see fat cat execs pulling in millions while stock prices collapse (Nortel, Worldcom, Enron) they bail and a lot of that money is sitting in real estate as you have stated.

#123 Randy on 05.09.12 at 9:28 am

A CMHC IPO could be almost as good as Facebook…haha

With all the low rate mortgages, it’s very risky….I wouldn’t take shares for free….

http://www.calculatedriskblog.com/2012/05/mba-mortgage-purchase-activity.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29

#124 Randy on 05.09.12 at 9:30 am

McGuinty says we should make another big investment in the Ontario Auto Industry…..haha…..

#125 };-) aka DA on 05.09.12 at 9:31 am

#25 Bottoms_Up on 05.08.12 at 9:33 pm

#6 T.O. Bubble Boy on 05.08.12 at 9:03 pm
———————————————-
Another question to ask: how many people would actually be able to afford to buy the home they currently live in? I know my parents and my inlaws couldn’t…

The thought actually makes me sick to my stomach….all those unsuspecting virgins taking on debt they will never repay, and buying homes from people who wouldn’t be able to afford the home they are selling….

Interesting reaction. And what, exactly, is it that worries you so that you actually get sick to your stomach?

For those who are selling it was not when they bought so unlike it is today for those who are buying. The daunting task of buying your first home has never been, for most, considered an amazingly affordable decision. On the contrary, for most, it is the single largest expense they will ever incur. But like those from who they are buying, someday, they too will reap the rewards of their foresight.

#126 Islander on 05.09.12 at 9:37 am

#104 Big rider: I believe You are right, and that Garth is right!!!

It is called obfuscation. You can substitute the alternate word “mistruth” which means the same thing; Any statement which follows a line of reasoning which deliberately leaves out important factors in order to emphasize an “agenda” I believe constitutes a prevarication. It may be wise to recognise that in this world in general a lot of statements may in fact do just that, and to reason accordingly.

#127 Just a Tech on 05.09.12 at 9:38 am

Paul needs to read freakonomics. Living in an wealthy hood, and attending the best public school, and going to ivy league universities is no determination of intelligence. Turns out, it’s based on the IQ of the parents. If Paul blows his secure foundation for a stupid house then maybe it doesn’t matter where the daughter goes?

#128 };-) aka DA on 05.09.12 at 9:42 am

#7 Devore on 05.08.12 at 9:08 pm
A better school isn’t going to make Paul’s daughter any smarter, or a better student. Vast majority of it is parents, environment at home, and the kid’s attitude. Forget the coveted catchment, start building that RESP instead of paying off a mortgage into your 60s.

It’s always the parents who don’t need to who show up at parent teacher interviews.

Kinda gives you reason to worry about to whom the future of the other kids is entrusted don’t it. Ironic thing is those parents too aspire to have the best home they can – it just too often takes a back seat to cigarettes, boze, drugs and other such endulgences

#129 };-) aka DA on 05.09.12 at 9:48 am

#2 Form Man on 05.08.12 at 9:00 pm
I thought we would be into correction by now in the GTA. This is actually getting scary……..

I remember, about four years ago, feeling just as paranoid. I honestly thought we were headed toward an economic apocolypse. Actually started preparing for it – sold out and got rid of all debt. Then it infact happened – The Economic Crisis (T.E.C.2008) and for a very short time I was patting myself on the back for having been so astute, but then it began to sink in, slowly but surely. The Economic Crisis wasn’t nearly so devastating as we feared it might be and while I got out on a high reinstating myself is proving difficult. I speculated and lost. I thought things were going to be worse than they were. I was wrong despite being right.

But don’t dispair Form Man the real one might be just around the corner eclipsing that of 2008 by a long shot and catch me by surprise. “SURPRISE!!!” – smack upside the head. Could happen – but I’m not thinkin’ so… but don’t take offence – it’s me, not you. };-)

Timing has a lot to do with the good outcome of a raindance

#130 };-) aka DA on 05.09.12 at 9:59 am

According to the ex-chairman, Dion Chiesa, the agency’s board has already debated the move, as housing prices surge into bubble territory and CMHC holds almost $550 billion in insurance,

Brilliant move! Neither fiscal nor monetary policy is going to let some air out of the housing bubble without adversely affecting other sensitive markets. What we need is some good old propaganda to cool the markets. Not a bad plan, not a bad plan at all. Except for one minor problem. Real estate markets across the country are very regional (Duh) and as such some are stable while others are irratic.

How do you isolate propaganda that it does not adversely affect the stable real estate markets?

That’s already been considered and it’s been determined that the housing market, en-masse, can afford a little steam let out of it while other sensitive markets can not. It is believed that a wholesale housing market crisis is far less likely than a financial market crisis so that is where they will focus their propaganda despite that some regional markets will suffer unwarrantedly.

It may not be carried out so overtly but this is essentially what happens. Corrupt? Not at all – simple political economics.

They are creating a market correction through the mere warning (propaganda) that one is about to happen. Would it happen if they didn’t spread rumor of it? Maybe… but probably not nearly so fast as the government has determined it needs to happen.

Propeganda… more than just the useful tool of totalitarian states.

#131 Q on 05.09.12 at 10:02 am

Good idea for the gov to sell the CMHC, as long as they don’t follow their usual corrupt and/or inept path and sell to an insider (bank?) for 10 cents on the dollar and then continue to guarantee the coming losses at taxpayer expense.

#132 Timmy on 05.09.12 at 10:04 am

Do you all think that F and the gang in Ottawa will allow the housing bubble to pop uncontrollably? As what they have done before, lower the down payment to 0 again and increase the amortization period to 50 years and increase CMHC limit to $1.5T should solve the bubble problem in the short term. At that time, every dogs and cats will be able to buy real estates. What the heck that they care? The bubble will eventually popped when the next guy is in charge…

#133 Form Man on 05.09.12 at 10:06 am

#112 Kip

You are kidding right ? I live in the Okanagan. I would have to suffer brain damage to trade this for the GTA…….
Besides I am very busy right here. I do pity you however.

#134 };-) aka DA on 05.09.12 at 10:08 am

“Even F bitched and moaned a little two weeks ago, dissing builders who keep selling unbuilt units and dumping supply into a market which will soon be unable to absorb it. “I do worry about the last person buying a condo in Toronto,” the caring little pecker said, “and people getting caught.””

Now you know he could do something about it if he wanted to. He has the power. It’s just that the costs of saving that “last person buying a condo in Toronto” would far outweigh the benefits of letting the market take it’s natural course.

I do believe Flaherty is compassionate toward that “last person” and is giving fair warning but beyond that his hands are tied as he must consider the bigger picture.

Yes that market will correct. We won’t know exactly how long it will take to start let alone how long it will last once it starts but we do know it’s going to happen – eventually. And the government propeganda team is doing their best to help it along in a manner that does not require fiscal or monetary policy changes which might affect those so essential other more sensitive domestic financial markets.

So have a little sympathy for Flaherty… he must sincerely feel bad that he is going to let happen what will and some will be hurt by it. He has no choice really – it’s for the greater good.

#135 J.I.M. on 05.09.12 at 10:09 am

Why not just send your kids to private schools ?

#136 };-) aka DA on 05.09.12 at 10:13 am

I said, “CMHC holds almost $550 billion in insurance, much of it on high-ratio, high-risk mortgages.” This is a true statement. — Garth

I’d be interested in knowing your proof source, for I’ve been led to believe it not so bad. I understood many of the mortgages have been paid down over time and of those at risk CMHC is on the hook for the loss not the whole mortgage amount but rather merely the shortfall at disposal. Surely those properties have some market value. But I could be misinformed… so if you’d care to share…

The proof was published here hours ago. A quarter of the entire book has a LTV in excess of 80%. — Garth

#137 };-) aka DA on 05.09.12 at 10:16 am

#90 Ben on 05.09.12 at 5:06 am
Hey Gold Bugs

Gold crashes through $1,600

And what does that tell you? Cold it be that market tension over the prospect of world economic concerns is easing and people are pulling out of that considered safe refuge of gold?

#138 };-) aka DA on 05.09.12 at 10:17 am

I wonder how history will interpret this pathetic blog… ?

It will be awestruck. — Garth

#139 blase on 05.09.12 at 10:26 am

#41 Narrowgate:

“code for WASP, wanting white friends, etc”

VERY TRUE. Calgary’s mayor Nenshi was raised in Marlborough, in the “ethnic” N.E. of Calgary. He went on to Harvard from there. Meanwhile, I attended a high school in Preston Manning’s riding, nary a visible minority. Lots of old, burnt-out teachers who because of their age had landed jobs in the school of their choice.

I believe that the schools in the non-white areas seem to be filled with young, eager, hard-working teachers, and very motivated children of immigrants. The richer public schools are full of entitled children and older, tenured, often burnt out or lazy teachers. I’ll definitely have my son in a public school with a good number of motivated first-generation Canadian kids.

And he’ll be learning French in immersion, unlike the clueless 90% of parents who don’t see the value in being billingual.

#140 John Prine on 05.09.12 at 10:28 am

North Vancouver

499 condos currently listed
Last 7 days, 20 sales.

Is this an overheated market?

#141 Cristian on 05.09.12 at 10:29 am

Unusually quiet about the stock market, are you, Garth?
No more celebration of the market being 20% up from the lows of October’11…?
I don’t expect my comment to be posted, it probably “doesn’t contribute anything new” as you put it a while back as a (poor) excuse for censoring what you don’t like. (I guess posting “Phurst!” brings something useful to the discussion) :-)

Corrections are normal and welcome. No big news here, unless you bought gold at $1,900 and silver at $50. — Garth

#142 Jonny on 05.09.12 at 10:32 am

The upper unionville release is coming close…2 weeks. Should I go? I am getting all sweaty and indecisive….arrghhh. I need to calm down and think this through. I don’t need this. But if I don’t buy, the houses will keep going up and up and I will be the laughing stock of my town. arrghhh. Ok I need a moment of silence…..damn I can’t help it. I am going to the trailer and I am buying one…..screwwww ittt.

#143 blase on 05.09.12 at 10:32 am

People, the whole back-and-forth with DA is sooo old. Give it a rest. If you don’t like what he says, just ignore him. If you pour fuel on his fire, maybe something he is saying is touching a chord of truth.

Let’s keep this blog on topic, not about some guy’s wife.

#144 Joseph Rudolph on 05.09.12 at 10:33 am

Question: when housing corrects, what will the Banks do with Home Equity Lines of Credit customers that no longer have equity in their homes? If the LOC is backed by equity in the house, how will the bank respond to housing correction? I assume that when people attempt to renew their mortgages they will be hit with higher mortgage and borrowing rates (switched to unsercured LOC), but in the time between housing correction and mortgage renewal, this risk will be on banks books… Will the Banks wait until mortgage renewal to adjust?

Nothing happens. You don’t get to borrow 100% of your equity. — Garth

#145 Timmy on 05.09.12 at 10:34 am

#118 – Now is not overheated. Now is total collapse.

#146 Skyce on 05.09.12 at 10:34 am

Canada Housing Bubble Talk Dismissed

The head of Canada’s biggest bank and one of the country’s leading developers said the housing market is not in a bubble…

http://mobile.bloomberg.com/news/2012-05-09/canada-housing-bubble-talk-dismissed.html

Well, that’s it then. Blog over. — Garth

#147 Mixed Bag on 05.09.12 at 10:36 am

Paul –

1) How many successful people do you know who went to a ‘good’ school, and can say that that made the difference? You may as well exclude the private school types, chances are, their parents connections were as much a contributing factor as the school.

2) Your daughter is only 3. Do you really think there will be much difference in the kindergarten & primary programs between the two schools?

3) Work smarter, not harder. For the money you’d spend on a mortgage, you can enroll her into arts, music or sports programs, get private tutors, or even Montessori and still come out ahead.

#148 cramar on 05.09.12 at 10:42 am

The S&P 500 is ahead 8% this year. How is that ‘crushed’? — Garth

“It ain’t over till it’s over.” – Yogi Berra.

We are only in the bottom of the 4th inning Garth.

Meaningless. — Garth

#149 };-) aka DA on 05.09.12 at 10:44 am

#125 };-) aka DA on 05.09.12 at 10:17 am
I wonder how history will interpret this pathetic blog… ?

It will be awestruck. — Garth

Just in case I will, with your permission, continue to provide a contrarian point of view that future historians might know things are/were not so bad as this pathetic blog suggests.

#150 truth hammer on 05.09.12 at 10:47 am

Maybe if Paul wasn’t so cheap he’d put his daughter into a good private school instead of considering the ‘fight club’ complex of the public school system. There are no ‘cachement’ restrictions if you pony up the school fee’s for a good private school. Look at the statistics….kids graduating from public school are far less likely to go on to university than from the private. The quality of their educational experiance is much better as well. The public system is manned by dreary socialists that prod the kids with socialist propaganda and leftist liberal ideology. Paul…give your kid a chance in life instead of thinking a big car makes you a better person……that and a hockey jersey will get you nowhere. Get your priorities straight man.

#151 Steve on 05.09.12 at 10:54 am

145 Skyce on 05.09.12 at 10:34 am

The Titanic was thought unsinkable, and former President Clinton once said: “I did not have sex with that woman”…

History is full of examples of proclamations that are commonly believed or are made by purportedly credible individuals that have been subsequently proven incorrect or untrue.

I am reluctant to believe those with a reason to be biased…we all should be until there is sufficient corroborating evidence.

All depends on how one defines sinking or sex, no? — Garth

#152 };-) aka DA on 05.09.12 at 10:54 am

#146 Mixed Bag on 05.09.12 at 10:36 am
Paul –

1) How many successful people do you know who went to a ‘good’ school, and can say that that made the difference? You may as well exclude the private school types, chances are, their parents connections were as much a contributing factor as the school.

2) Your daughter is only 3. Do you really think there will be much difference in the kindergarten & primary programs between the two schools?

3) Work smarter, not harder. For the money you’d spend on a mortgage, you can enroll her into arts, music or sports programs, get private tutors, or even Montessori and still come out ahead.

Oh, oh let me answer those…

1.) “Connections” are made in the “better catchment areas” just as you say they are in the “Private Schools” – maybe not to the same degree but enough to make a difference.

2.) Are you kidding?!? Like compounding interest it is never to early to start your children down the right path.

3.) On the “work smarter not harder” you have a good point but do not let thinking you are smarter hold you back from working as hard as you can. There is no “smarts” which will out-do good old fashioned hard work. Hard work beats smarts every time. On using the savings to be had by not upgrading catchment areas to enroll their daughter in some outside programs I refer you back to my address of #1.

“Don’t let your schooling get in the way of your education” – Mark Twain

Don’t you have some houses to babysit? — Garth

#153 Mark on 05.09.12 at 11:01 am

#90-Ben
Hey Ben, why don’t you tell me why gold is falling, instead of just stating what’s obvious?

It’s falling because investors still wrongly think there is security in the USD. How long can this go on? Maybe weeks, months, I doubt another year, then gold and silver will really soar.

Gold and silver are not in a bubble, will be some day, aren’t yet. It’s easy to see this, how many people do you know who actually own any physical metal? Less than 5% I’m certain.

Hell, the visitors to this blog seem somewhat financially literate, how many of them have any physical metal. A handful at best, how can this be a bubble?

If you’re saying the price is falling, you’re obviously right. If you’re saying this is proof both gold and silver bugs have the fundamentals wrong, then you’d better tell Garth he’s wrong for calling a real estate bubble in the midst of rising prices.

I sure hope you took those PM capital gains last year when I suggested, maintaining a weighted position. — Garth

#154 The real Kip on 05.09.12 at 11:01 am

#122 Form Man on 05.09.12 at 10:06 am

So sorry but judging from your previous posts that there was some sort of meltdown in the BC construction industry and you were in hard times.

It appears all is well and don’t worry about GTA, the industry is running flat out and it’s not just condo construction.

#155 };-) aka DA on 05.09.12 at 11:03 am

Those who are not parents will not understand the whole “catchment area” thing. Becoming a parent is a paradigm shift of incomprehensible proportions to those who are not.

Might also explain a lot of the, considered by non-parents, irrational behaviour of parents in matters of real estate.

If you are not a parent don’t even bother weighing in on such debate as you are, no offence, not qualified.

#156 maxx on 05.09.12 at 11:08 am

“Houses have messed with their heads”

So true…..many of us don’t even realize it.

#157 };-) aka DA on 05.09.12 at 11:09 am

#133 Form Man on 05.09.12 at 10:06 am
#112 Kip

You are kidding right ? I live in the Okanagan. I would have to suffer brain damage to trade this for the GTA…….

TA DA!!! (no pun intended };-) aka DA)

Form Man and I have found something we both agree on! Amazing!!!

#158 jess on 05.09.12 at 11:11 am

Could putbacks happen here?

Definition of ‘Mortgage Putback’
The forced repurchase of a mortgage by an originator from the entity currently holding the mortgage security. A mortgage putback is most commonly required due to findings of fraudulent or faulty origination documents in which the creditworthiness of the mortgagor or appraised value of the property are misrepresented. Investopedia explains ‘Mortgage Putback’
Following the collapse of the American real estate market in 2008 and the subsequent financial crises that followed, it was found that mortgages and mortgage-backed securities had been widely dispersed throughout the financial system and that the validity of many mortgages and documents were questionable with regards to lending standards, income verification and appraisal values. Many mortgage security holders demanded mortgage putbacks by mortgage originators who had not completed their due diligence, or in some cases had blatantly defrauded the industry.

Read more: http://www.investopedia.com/terms/m/mortgage-putback.asp#ixzz1uNvPxWsl

==
Ugh? Underwriting flaws? What about the liar loans. How would increasing price change behaviour?

Mortgage Putbacks Must Change, Former Freddie Credit Chief Says
By Jody Shenn – May 8, 2012 5:32 PM ET

Fannie Mae and Freddie Mac should charge more to guarantee mortgages if lenders make loans with underwriting flaws, rather than punish banks after debts default by demanding repurchases, according to Freddie Mac (FMCC)’s former chief credit officer.

http://www.bloomberg.com/news/2012-05-08/mortgage-putbacks-must-change-former-freddie-credit-chief-says.html

#159 Steve on 05.09.12 at 11:17 am

Yes Garth, it depends on one’s definition, but even Clinton did not believe his own twisted perspective.

Hiding behind word games was just an attempt to obscure things, much like the bankers and developers are attempting to keep their game alive by denying/obscuring that the first cars on the RE roller coaster have already clicked over the Apex of the track…

Everyone have their arms up? Ready to scream?

#160 cramar on 05.09.12 at 11:20 am

#148 cramar on 05.09.12 at 10:42 am
The S&P 500 is ahead 8% this year. How is that ‘crushed’? — Garth

“It ain’t over till it’s over.” – Yogi Berra.

We are only in the bottom of the 4th inning Garth.

Meaningless. — Garth

————-

EXACTLY! Being up 8% this year is meaningless over the long term. What counts is where the market is Dec. 31, 2012.

No, your comment is meaningless. Fear is so 2008. — Garth

#161 };-) aka DA on 05.09.12 at 11:20 am

#156 };-) aka DA on 05.09.12 at 11:05 am

Don’t you have some houses to babysit? — Garth

Last night and today off… };-)

Your comment is awaiting moderation.

But always on call in case of sunch emergency as an offer that needs my personal attention.

#162 Jim on 05.09.12 at 11:21 am

#41:

““Better school”, that’s nothing but real estate agent hype to engineer higher prices in certain neighbourhoods. It’s Kool-Aid. It’s white people stuff.”

Uh, you obviously don’t know asian parents. White people stuff indeed. The young asian parents that I know in Toronto (and we aren’t talking a small sample) are obsessed with choosing the proper school. I’ve had to endure one fellow’s quest for a school for a year now, as he scouts the various private school options in Toronto.

Asians want schools with rigorous programs, good support, and populations made up of kids from families who also value hard work. Several have said that they want to avoid schools with black children at all costs. (Some have cited the underreported but surging number of black-on-asian assaults in US schools as a rationale).

#163 jess on 05.09.12 at 11:28 am

bra with “air conditioning” i’ll pass but that hover car i would go for that !

The People’s Car Project is an initiative launched by VW in China to design the new people’s car. The company invited people to submit ideas to its research and development arm in China.

The hover car would use electromagnetic levitation.

http://www.cbc.ca/news/offbeat/story/2012/05/09/video-hover-vw.html

#164 Living in AB on 05.09.12 at 11:29 am

CMHC says not bubble in Canadian market…what say you…..

#165 Arshes on 05.09.12 at 11:30 am

#155 };-) aka DA on 05.09.12 at 11:03 am Those who are not parents will not understand the whole “catchment area” thing. Becoming a parent is a paradigm shift of incomprehensible proportions to those who are not.

Might also explain a lot of the, considered by non-parents, irrational behaviour of parents in matters of real estate.

If you are not a parent don’t even bother weighing in on such debate as you are, no offence, not qualified.
——————————————————-
So if i’m not a parent i’m not qualified to comment how buying a house and the financial constaints that come along with it can mean no money for the kids college fund? Or no funds for extra-curicular activites, or vacations and maybe no funds for retirement which means depending on your children for support in old age???

Sure i’m ok with that.

I have no children who are gonna suffer because of my financial mistakes. So biggie for me.

#166 Mixed Bag on 05.09.12 at 11:31 am

#152 };-) aka DA on 05.09.12 at 10:54 am

The one point I will agree with is the social networking benefit of the good catchment area. Spend the ~12-15K on Montessori, maybe some other ‘tony’ activity and you’ll have your social networking connections.

On the rest you do not need to lecture me. We are not in the best catchment area, but our kids are raised by both parents and extended family is very nearby. No daycare needed due to, fortunately or unfortunately, depending on how you look at it, different working shifts. I work enough extra hours and did so in my childless years, we do not need more time away from our young children at this point in their lives. What they need most of all is their parents, not the catchment area.

As you said:
“Don’t let your schooling get in the way of your education” – Mark Twain

#167 Dorf on 05.09.12 at 11:35 am

Just avoid a catchment area that has a high concentration of stupid people. If you are already living in a middle class area then your kid is going to school with their peers, the same people they will end up working beside. Unless your kid is exceotional, they will not be held back. If your kid has an IQ north of 140, rent an apartment and put them in the fastest moving program you can find. Don’t overthink it.

#168 };-) aka DA on 05.09.12 at 11:41 am

#98 richard on 05.09.12 at 7:44 am

And on the ongoing debate about my wife – Just to be clear;

She is 5’7″ tall, weighs in at 130, short dark amazon hair, long legs that make a perfect ass of themselves and wears smaller sizes than most highschool girls. She has a kickass attitude if you push her to it although she’s the most diplomatic person I know at all other times. She’s more a Halle Berry than Pamela Anderson type. She thinks herself shortchanged in the buxom department but I’m not nearly quite so regressed as many here believe so I’m not at all disappointed.

So speculate all you want… those who know, know. Flaunt her… hell ya! I’m damned proud of her. And she’s one of the most intelligent people I’ve ever met.

On matters of real estate she has consistently demonstrated an incomprehensibly keen insight and foretelling that has proven time and time again to be accurate… It’s that infallible gut instinct of hers which has taught me to trust my own.

Now, as blase said at #143;

People, the whole back-and-forth with DA is sooo old. Give it a rest. If you don’t like what he says, just ignore him. If you pour fuel on his fire, maybe something he is saying is touching a chord of truth.

Let’s keep this blog on topic, not about some guy’s wife.

#169 maxx on 05.09.12 at 11:42 am

#19eviee1973 on 05.08.12 at 9:25 pm

Brilliant idea….but sell your bank stocks first!

#170 };-) aka DA on 05.09.12 at 11:45 am

Now that I must have sufficiently antagonized the Blog Dawgs (and maybe given them a thing or two to “think” about? ) it is time for me to go play in the Best Place on Earth on this my day off. };-)

#171 Daniel on 05.09.12 at 11:59 am

The funniest thing about this scenario:

Paul, making over 200k is questioning the rational.

Two (married, or living together) twenty-somethings working in call centres (or banks as tellers, or whatever) are buying these houses because they can ‘afford’ the $3000+ in mortgage costs per month.

Hysterical – this will not end well.

#172 PAUL on 05.09.12 at 12:02 pm

@Truthhammer- I don’t think anyone’s ever described me as cheap, and to be frank the idea of moving to a better catchement was one of many options we have on the table, private schools included. Also, a nice car most definitely doesnt make me a better person, but I really enjoy owning and driving it, and most importantly I can afford it (and private school if we go that route).

I am mostly happy for the perspective re: what people percieve to be “good” schools versus “bad” schools. It’s given me some things to think about. I agree that the most important varible on a child’s education is home life – my daughter is in good hands dear bloggers, so do not fret.

This is what I wanted to hear, believe it or not. I just needed that last bit of “gotta have it” kicked out of me. I think the mission has been a successful one.

#173 live within your means on 05.09.12 at 12:03 pm

Totally Off Topic

Just read a story that touched my heart and I personally experienced. I was encouraged to sue the medical specialist or take him to the Medical Board or whatever it’s called, but I knew what a long drawn out & expensive proposition it would be. (Went through it with a Condo BoD’s years before.) I knew I had to concentrate on fighting only 1 battle. Ten yrs later I’m glad I made the choice I did.

Please check out http://thechronicleherald.ca/novascotia/94432-missed-diagnosis-spurs-parents-to-act

and

http://projectjessica.ca/

Garth – Understand if you don’t want to post the above as it’s totally off topic.

I

http://thechronicleherald.ca/novascotia/94432-missed-diagnosis-spurs-parents-to-act

http://projectjessica.ca/

#174 Phil on 05.09.12 at 12:06 pm

Loss of 150k or 250k?

#175 Jane on 05.09.12 at 12:10 pm

Paul,
A few things to consider:
A study here in BC showed our average school kids do better in Uni because they have had to be more self motivated than the private school kids.
The “rich” private school kids have lots of emotional problems (parents never around, raised by nannies).
Rich private school kids get big allowances (parental guilt?) and substance abuse is a huge problem.
Parental involvement is often a material pissing match, not true time spent with the kids.
Private school education is excellent; there is a cost beyond tuition. My SIL went to Vancouver’s “best”.
Schools are good because of the current teachers, administrators, parents and kids. Change any of those factors, the school dynamic could also change significantly. I know, I am a teacher.
You want the best bang for your buck? Find a way to have a parent at home with your child. Keep your kids attached to you, get involved in your kids school, take them to the aquarium, museums, traveling, expose them to the world. Did I mention have a parent at home? A new mortgage means nothing to your child.

We sold and moved our two young boys in Feb 2011 and they were pumped about crawling in and out of moving boxes, making forts with the empty boxes. They could care less where their bed is as long as Mom and Dad are in the picture. Our rented house turned out to be horrible, so we just moved again. Boys are not in the least traumatized. They again got to play in all theses boxes, and we’re pumped about the moving trucks and crew! They are happy in our (brand new) rented house because it has all their toys in it.
You don’t need to take on a huge mortgage for your children. Tht is a crutch for your own desires. BTW, I no longer need to work, my husband works less, we have more money and more time for our kids since selling our place and going back to renting, and we live in Kits in Vancouver.

#176 John G. Young on 05.09.12 at 12:12 pm

#155 };-) aka DA on 05.09.12 at 11:03 am

“If you are not a parent don’t even bother weighing in on such debate as you are, no offence, not qualified.”

Not your call to make.

Also, I — like every other person in the world — was once a child; I had parents; and because I have some degree of intelligence and EMPATHY, I was able to learn through observation what being a parent involves.

How dare you.

#177 Phil on 05.09.12 at 12:14 pm

@41 Narrowgate, try telling that to my Ethiopian coworker who gives me the hard sell on private schools DAILY. Your post is racist pure and simple. White people are inherently racist right? A character trait based soley on their ethnicity?

#178 bill on 05.09.12 at 12:16 pm

if you are worried about the whole derivative thing ,have a look here. seems to be a lot of them…

http://demonocracy.info/infographics/usa/derivatives/bank_exposure.html

#179 Market Bull on 05.09.12 at 12:17 pm

TREB market stats for April show 6% of all transactions in the GTA were for $1million or more.

The largest segment of buyers was once again represented by the $200,000 – $399,999 price category, with 38% of all transactions.

At the other end of the price spectrum, only 5% of all sales were under $200,000.

#180 anon on 05.09.12 at 12:30 pm

#80 Really on 05.09.12 at 2:27 am
Paul (and a majority of your readers) are not going to like this comment.

Instead of moving into a better catchment that is going to cost a bunch more money and change their financial trajectory, they should aggressively pay down their existing mortgage as fast as possible. Then the mom should quit her job and become a stay at home mom. That will give their child something 10 times better than sending it to day care or finding a better catchment.

^^ I will agree and disagree. I agree with the notion that having more dedicated attention from an adult (or adults) in the house would probably be far more beneficial. The only thing I disagree with is the fact that you defaulted to the ‘Mom’ staying home. Garth made no mention of whom the primary bread winner is – that should be a driving force behind that decision. Men are just as capable as women at looking after children :) The other option is they could share in just having extra time off with their daughter. So they both keep their jobs, but adjust slightly which would mean less pay for both, but more time at home with family.

#140 John Prine on 05.09.12 at 10:28 am
North Vancouver

499 condos currently listed
Last 7 days, 20 sales.

Is this an overheated market?

^^ lots of homes seem to be selling fast and for over asking around the 1.2/1.3 mark as well. Would love to see some stats as our realtor mls updates are the only thing we are receiving.

#146 Skyce on 05.09.12 at 10:34 am
Canada Housing Bubble Talk Dismissed

The head of Canada’s biggest bank and one of the country’s leading developers said the housing market is not in a bubble…

http://mobile.bloomberg.com/news/2012-05-09/canada-housing-bubble-talk-dismissed.html

^^ love that the main participants in this dismissing the ‘bubble’ talk are a developer, someone from a mortgage company and someone from a bank. Biased much? People are morons if they buy this BS.

#155 };-) aka DA on 05.09.12 at 11:03 am
Those who are not parents will not understand the whole “catchment area” thing. Becoming a parent is a paradigm shift of incomprehensible proportions to those who are not.

Might also explain a lot of the, considered by non-parents, irrational behaviour of parents in matters of real estate.

If you are not a parent don’t even bother weighing in on such debate as you are, no offence, not qualified.

^^ I don’t often agree with your posts, but this one I will (save for, perhaps, the last sentence). I don’t think you can get it until you are a parent. People can comment away, but until you have been there done that, you can’t truly understand. The thing is, if one KNOWS they are paying a premium for something like catchment area – it is not irrational (though, in certain markets in Canada ready to burst it might be!). They have put an economic value on it and are agreeing to pay a premium. There are intangibles that people pay for in buying housing – it’s not simply like buying a stock. I have to say, in Pauls case, if 50K a year is actually the tuition of a private school then it seems like buying in a better catchment area might not be a bad alternative. Especially if they plan on having more kids! Out here private is about 15K a year, and public has open catchments though you don’t get guaranteed a spot if you are out of neighbourhood (though people are rarely turned down). The key is to consider all your options and make an informed choice.

#181 sid on 05.09.12 at 12:30 pm

I went to a public school filled with brown people and I turned out just fine. Had no problem getting into the university of my choice. If your kids are bright, have a good work ethic and are exposed to knowledge outside of the classroom they will get ahead educationally no matter what school they attend.

#182 };-) aka DA on 05.09.12 at 12:33 pm

DELETED

#183 };-) aka DA on 05.09.12 at 12:41 pm

#166 Mixed Bag on 05.09.12 at 11:31 am

Just to be clear, my wife and I made huge sacrifices that she might stay at home throughout our childrens most formative years on up to graduation from high school. We did so despite both having student loans that would choke a horse back then at interest rates of over 18%. Our first home carried a mortgage at over 15% interest. That first house was high ratio financed and it was in the considered “best school catchment area of the city”.

The result… two young adults we are exceedingly proud of who are well educated and embarking upon being valued contributing members of society.

#184 John G. Young on 05.09.12 at 12:44 pm

#170 };-) aka DA on 05.09.12 at 11:45 am

“…it is time for me to go play in the Best Place on Earth on this my day off. };-)”

12:33 pm DELETED

I thought you were leaving?

Good riddance.

#185 Parent 2B on 05.09.12 at 12:47 pm

re: John Young #176, you’ll figure it out when/if you ever have children. Good luck with your learning.

#186 Blacksheep on 05.09.12 at 12:47 pm

DA,

#90 Ben on 05.09.12 at 5:06 am

Hey Gold Bugs

Gold crashes through $1,600

And what does that tell you? Cold it be that market tension over the prospect of world economic concerns
is easing and people are pulling out of that considered safe refuge of gold?
————————————
DA, it’s OK if you don’t understand, just say nothing,
but with this, your just embarrassing yourself.

take care
Blacksheep

#187 };-) aka DA on 05.09.12 at 12:48 pm

#182 };-) aka DA on 05.09.12 at 12:33 pm

DELETED

Dang… and I thought that retort to John G. would be well understood and appreciated by many.

But I get it. Don’t want to offend lifestyle choices and really, I must admit, it was petty on my part. };-)

I do dare maintain though that John G. nor anyone else who has not yet had children could not possibly know what it is to have children. It’s a game changer of incomprehensible proportions.

Try not to be an idiot. We all support the school system. — Garth

#188 Daniel on 05.09.12 at 12:51 pm

Metal…

Think the biggest problem with people that like Gold and Silver is that they like it too much.

Willing to put all their money in Gold & silver (usually not physical, but maybe a little) and they think diversifying is buying some CEF.A, or G along with their junior silver stocks with no mine by amazing drill results from their three rigs in Northern Alaska. That they think will turn into 10 bangers.

Anyway – I like Silver, think it’s undervalued relative to the historic price with gold (ratio usually about 15:1). There could be supply issues in the future and there may be manipulation…but

I still only have 10% of my NW in physical, and about 5% currently in stocks, 40% in a house (happens to be in Penang, MY) and 45% in cash (ready to use some of this in the next few months as prices continue to drop).

Anyway – metalheads – diversify, keep about 50% in cash, sell half your stock whenever it doubles (happens with the junior silvers), don’t get greedy. This is probably landing on deaf ears as most metalheads put all thier money in stock and are sitting on 50% loses.

So this is for next time, silver/gold will go back up, sell some next time (don’t keep thinking you’re going to miss the boat when gold spikes to 5k and silver to 200!!!) They won’t, it will be gradual, but you have got to play the ups and downs and stop making 200%, losing 60%, making 150%, losing 50% etc.

Long gold/silver, but not betting my entire future on it.

#189 SRE on 05.09.12 at 12:52 pm

Het,

Didn’t you hear?–There is no bubble; RBC says so, so it’s gotta be true right?
http://business.financialpost.com/2012/05/09/rbcs-gordon-nixon-weighs-in-on-housing-bubble-furor/

#190 John G. Young on 05.09.12 at 12:53 pm

#180 anon on 05.09.12 at 12:30 pm

“People can comment away, but until you have been there done that, you can’t truly understand.”

I don’t agree, but if that’s true: cuts both ways.

#191 };-) aka DA on 05.09.12 at 12:58 pm

#176 John G. Young on 05.09.12 at 12:12 pm

A child can not know through mere observation what being a parent involves… it’s way deeper than that.

Lifes most valuable lessons are not learned by observation but by doing. To even suggest you have learned by observation demonstrates your immaturity.

By stating such claim you are insulting your parents and demeaning the job they did in raising you John G. Young.

How dare I? I’d say how dare YOU!

“Don’t let your schooling get in the way of your education.” – Mark Twain

#192 zeeman1 on 05.09.12 at 12:59 pm

#139 Blase.

The only value to raising a bilingual child (in french) is if you’re prepping them for employment in the civil service, TVO or CBC.

Otherwise, all that French simply takes time away from the other stuff.

But I’m sure you want your kid to be a wealth creator instead of a parasite paper shuffler.

#193 vancouversuburbanite on 05.09.12 at 12:59 pm

I completely agree with #7 Devore. Both of my children went to public schools in the suburbs. One graduated from Georgetown University and U of T Law. The other is doing a PhD at Berkeley.

#194 };-) aka DA on 05.09.12 at 1:05 pm

Try not to be an idiot. We all support the school system. — Garth

Idiot?

We all support the school system yes; but not necessarily by choice but rather mandatory taxation. It’s a good thing because even they who would not otherwise support the school system benefit by having a better educated populace. I’d suggest that it’s probably they who otherwise would not support it who actually benefit most in that regard. Imagine where this country would be if they had their way…

#195 John G. Young on 05.09.12 at 1:06 pm

#185 };-) aka DA on 05.09.12 at 12:48 pm

“Dang… and I thought that retort to John G. would be well understood and appreciated by many.”

I’m sure it would. There’s a lot of hate on this blog. Thanks for stirring it up — again.

“I do dare maintain though that John G. nor anyone else who has not yet had children…”

Why do you assume that I haven’t had children?

BTW see my post #188.

Get it?

#196 John G. Young on 05.09.12 at 1:08 pm

#186 };-) aka DA on 05.09.12 at 12:48 pm

“Try not to be an idiot. We all support the school system. — Garth”

Yes indeed.
Thank you for pointing that out.

#197 Steve on 05.09.12 at 1:09 pm

Look! Bank economist says prices are going to soften!

http://www.bnn.ca/News/2012/5/9/Home-prices-to-soften-10-CIBC.aspx

Division in the ranks?

#198 anon on 05.09.12 at 1:11 pm

#189 John G. Young on 05.09.12 at 12:53 pm
#180 anon on 05.09.12 at 12:30 pm

“People can comment away, but until you have been there done that, you can’t truly understand.”

I don’t agree, but if that’s true: cuts both ways.

^^ Then I agree to disagree. Everyone who has had a child has seen both sides – so I don’t get what you mean by “it cuts both ways.” Umm, nope, in this case it doesn’t. Sorry John, I actually enjoy your posts most of the time, but have to agree with DA on this one. I do defend your right to comment away on the topic, but if you are commenting, without child, you have a limited perspective *shrugs*

#199 };-) aka DA on 05.09.12 at 1:14 pm

#185 Blacksheep on 05.09.12 at 12:47 pm
DA,

#90 Ben on 05.09.12 at 5:06 am

Hey Gold Bugs

Gold crashes through $1,600

And what does that tell you? Cold it be that market tension over the prospect of world economic concerns
is easing and people are pulling out of that considered safe refuge of gold?
————————————
DA, it’s OK if you don’t understand, just say nothing,
but with this, your just embarrassing yourself.

take care
Blacksheep

Oh please do tell wise one: What is it I don’t understand that is exemplified in my suggestion that many investors in gold seek it out as a safe haven in times perceived as troubled waters ahead for a fiat currency based economy?

OK not so much fun here anymore. Time to get out and play on this my day off… Yes John G. me escaping through deflection again – or simple abstention.

#200 Blacksheep on 05.09.12 at 1:19 pm

Paul,

I will share my experience with our daughter attending 5 years of public elementary fine arts school. The parental income levels of the children was not relevant. The children thrived because the parents cared, even though some faced long commutes to get their kids to class. Many of the mothers (some fathers) were very involved in school activities. Most of the families that attended, were single income, as the child was more important
than the money. Our daughter thrived in this nurturing, bully less environment. A buddy had his daughters in a French immersion school, with the same experience.

It’s not about catchment location or income, it’s about involved parents, that make the child, the priority.

take care
Blacksheep

#201 Lostinthewilderness on 05.09.12 at 1:28 pm

Kelowna abandoned condo project gives whole new meaning to flocking to your presale.In this case it adds body to your latte and fig salad with raisen vinegarette.
Have a feeling this may well be the scene next year for the GTA and GVRD with seagulls filling the void.

http://www.theprovince.com/news/Diners+under+siege+from+birds+abandoned+condos/6590786/story.html

#202 John G. Young on 05.09.12 at 1:43 pm

#197 anon on 05.09.12 at 1:11 pm

Thanks for your post. I’m glad that you enjoy some of mine, and hope you may find some value in them.

What I meant by “cuts both ways” is this: if you assert that I can’t understand your experience as a parent unless I myself am a parent, then it follows that you can’t understand my experience unless you yourself have had that experience.

I could be clearer with you about what I mean by ‘my experience’, but I’m doing my best to try to not awaken the haters.

Hope you understand.

#203 andrew toronto on 05.09.12 at 1:48 pm

DOWNTOWN TORONTO CONDO MARKET STILL POISED FOR LONG TERM GROWTH

1) People want to live downtown. This demand is fueled not just by immigration but by lifestyle changes of younger generations who much prefer Starbucks to shovelling snow.
2) Prices for detached and freehold properties are rising so rapidly that condo living will be the only affordable option to live downtown
3) Public transit outside of the downtown is terrible and it will be years before the problems are solved. The solution is to live downtown and walk or bike to everything.
4) As gas prices continue to increase, commuting will be more and more expensive. The solution is the same – live downtown.
5) Utility costs are rising rapidly and the most cost effective housing to combat these costs is condo living.
____________________________________________
I work downtown toronto and I can tell you these condo’s are going up like no tomorrow 40 stories each at every concievable corner one could think of . Constrcution is going gangbusters… I guess everybody loves that cheap money and wants a condo.

I guess Carney and Flathery should visit toronto more. if this is not a bubble , then I give up..

Canada is so screwed

#204 John G. Young on 05.09.12 at 1:49 pm

#198 };-) aka DA on 05.09.12 at 1:14 pm

“OK not so much fun here anymore. Time to get out and play on this my day off… ”

So soon? But you’ve only posted TWENTY-TWO TIMES this morning.

#205 Form Man on 05.09.12 at 1:50 pm

#154 Kip

The housing market in the Okanagan is definitely suffering hard times. My business is mostly serving the commercial/industrial sectors. The mining industry is providing a lot of work at the moment. Be careful of having all your eggs in the condo market…….if you fall on hard times I may have a crane operating job for you constructing mine buildings……

#206 Canadian Watchdog on 05.09.12 at 1:52 pm

#179 Market Bull

I believe this is the chart you’re looking for. http://i50.tinypic.com/2s7uqgl.png

Pretty amazing. Enjoy it while it lasts.

#207 John on 05.09.12 at 1:58 pm

Paul is asessing his “needs” and has no idea what he wants and is overwhelmed by what “others do” and the 27 new “things he can do better” and all the “new options” he can have in front of him.

I don’t know what anyone else thinks, but doesn’t he sound like he’d be a target for a Cosmo subscription?

Maybe give him 6 new investment options and 21 new ways to save. And 14 advantages he’d “enjoy” in retirement.

It doesn’t seem to matter what he does, as a man he isn’t asking any relevant questions. Unless we all want to pretend he can join “sidelines” and avoid “financial” disaster.

Sure…he could make better “financial” “decisions” ( in a ponzi scheme world economy? Huh?), but it wouldn’t even touch the underpinnings of the problem. The same underpinnings that allow him to be an “unwitting” member of the bottom part of the ponzi derivatives pyramid scam.

Just sayin’.

Maybe he could just unwind with a 3 season box set of Sex and the City and mull it over a while.

You don’t solve an identity crisis with financial planning that leaves the problem intact, although it’s usually involved as a secondary issue
( much like eating greens and brushing your teeth is connected to being a well-rounded man).

#208 Form Man on 05.09.12 at 2:01 pm

#129 DA

you are confusing the Okanagan with the GTA. The Kelowna market has already suffered a substantial correction , down over 20% from 2008 and continuing to fall. The GTA will do the same thing. What part of this are you struggling with ? Perhaps you are too distracted by your hot wife to concentrate……..the boom is over DA, you screwed up big time……

#209 Mark on 05.09.12 at 2:02 pm

#185-Blacksheep
Gold and silver are down for the same reason stocks are down, people are MORE worried about the world economy. They just haven’t figured out the USD isn’t the safe haven.

When investors realize the Fed is going to print to infinity, where does the money go then?

#210 andrew toronto on 05.09.12 at 2:05 pm

Housing bubble talk dismissed amid Toronto ‘condo craze’

Participants at Bloomberg’s Canada Economic Summit in Toronto said talk of a housing bubble is overblown.

http://www.thestar.com/business/article/1175563–housing-bubble-talk-dismissed-amid-toronto-condo-craze

I guess we are different :(

#211 Lorne on 05.09.12 at 2:10 pm

#102 its starting..
My sister is a teacher in North Toronto and she says that teachers will always give higher marks just to avoid a confrontation.

Hardly a true statement….I have never done this….nor, I am sure, have most teachers!!

#212 The real Kip on 05.09.12 at 2:14 pm

#204 Form Man on 05.09.12 at 1:50 pm

Thanks for the offer if needed and you never know. I am currently building condos because the money is better but in 35 years I have worked every sector of construction except pipeline, never worked pipeline.

I can locate you here but right now there is scoot of commercial work happening and if city council has it’s way here there is 8.5-billion dollars earmarked for transit. If that cuts loose we will be swamped again.

It’s good to talk to blue collar people here. My take on it is, as long as I have my two hands I will make out fine, they have always come through for me.

#213 Van grrl on 05.09.12 at 2:20 pm

#176 John G Young:

“Also, I — like every other person in the world — was once a child; I had parents; and because I have some degree of intelligence and EMPATHY, I was able to learn through observation what being a parent involves.”
Touche~

#177 Phil:
We could start a whole other blog on that topic- don’t even get me started :) Cheers!

#214 joe on 05.09.12 at 2:20 pm

aka DA, what the hell are you babling on about? housing keeping up with inflation, dont you live in the Okanagan? Here in Calgary I have friends that bought at the peak in 07 that are upside down owing more on their mortgage then the value of the property and stuck in it as a result, and even if values came up to 07 levels there would still be realtor fees and closing costs to get out. What Garth is saying is ‘right now is not a good time to buy’ and the various calculations which he demonstrate reinforce that statement. Its time to wait out the storm and stay liquid till the market corrects, then it will be a good time to buy.

#215 John G. Young on 05.09.12 at 2:20 pm

#193 };-) aka DA on 05.09.12 at 1:05 pm

“Idiot?”

Idiot: noun
1. Informal . an utterly foolish or senseless person.
2. Psychology . (no longer in technical use; considered offensive) a person of the lowest order in a former and discarded classification of mental retardation, having a mental age of less than three years old and an intelligence quotient under 25.

#216 };-) aka DA on 05.09.12 at 2:25 pm

#202John G. Young on 05.09.12 at 1:43 pm

I could be clearer with you about what I mean by ‘my experience’, but I’m doing my best to try to not awaken the haters.

Hope you understand.

And on that matter John G. you have my utmost respect and sympathy for what you must endure. As I mentioned I have gay friends who rank high among they I most respect as people. They do not flaunt their lifestyle – with them it is a non-issue and so it is with their non-gay friends of which I am one. We joke back and forth just as any other group of guys might and from time to time even ridicule one another in mocking fashion of those lifestyle choices. But we each know it is in fun and that there is mutual respect in our friendships.

I can’t help but think if you would just let it go a bit you might find your own acceptance in this still homophobic but rapidly changing world. How can you expect anyone else be comfortable with who you are when you yourself are not?

#217 bill on 05.09.12 at 2:29 pm

”It’s a game changer of incomprehensible proportions”
only for you da … many parents and non parents comprehend parenting quite well. its not rocket science.

#218 };-) aka DA on 05.09.12 at 2:32 pm

#213joe on 05.09.12 at 2:20 pm
aka DA, what the hell are you babling on about? housing keeping up with inflation, dont you live in the Okanagan? Here in Calgary I have friends that bought at the peak in 07 that are upside down owing more on their mortgage then the value of the property and stuck in it as a result, and even if values came up to 07 levels there would still be realtor fees and closing costs to get out. What Garth is saying is ‘right now is not a good time to buy’ and the various calculations which he demonstrate reinforce that statement. Its time to wait out the storm and stay liquid till the market corrects, then it will be a good time to buy.

Many people, my wife and I included, bought in times of the very peak of the market. We have since seen prices rise and fall but overall they have risen – substantially I might add. We did so with intent of a long term hold. In retrospect it worked out rather well. Had we waited for the “perfect time” we might still be waiting.

Again, you cannot time the markets with any degree of assured accuracy; to try is nothing short of sheer speculation. The best thing you can do is formulate a long term plan and stick to it.

#219 McLovin on 05.09.12 at 2:36 pm

DA has once again taken over the blog.

Perhaps we can rename it? DA is the greaterfool?

#220 Van grrl on 05.09.12 at 2:37 pm

#197 Anon
Of course John’s perspective would be limited with regards to raising children (if he doesn’t have any) but that does not in any way lessen the value of his opinion on a topic related to education/schooling.

I’m not sure what the point of “you can’t truly understand” means. No one who does not have a child is claiming to understand what it means to have one!! Nor do many of us want to, thus the choices we make :) In the same way, you cannont “understand” another person’s life experience, be what it may, and that’s fine. Having said that, we are all people and we should all respect one another’s opinions when it comes to various topics; today it happens to be about “catchment areas”.

#221 anon on 05.09.12 at 2:45 pm

#202 John G. Young on 05.09.12 at 1:43 pm

#197 anon on 05.09.12 at 1:11 pm

Thanks for your post. I’m glad that you enjoy some of mine, and hope you may find some value in them.

What I meant by “cuts both ways” is this: if you assert that I can’t understand your experience as a parent unless I myself am a parent, then it follows that you can’t understand my experience unless you yourself have had that experience.

I could be clearer with you about what I mean by ‘my experience’, but I’m doing my best to try to not awaken the haters.

Hope you understand.

^^ I *think* I do now. Thanks for clarifying. Some of the comments directed towards you by ‘the haters’ really do sadden me. We haven’t come far as society have we?

#222 joe on 05.09.12 at 2:52 pm

One more thing aka DA

The following chart shows where Calgary RE (which is similar to the Kelowna chart) is in comparison to inflation, seems like we are doing a repeat of the plateau before the crash in ’81.

http://img85.imageshack.us/img85/4922/calgaryinflationadjustede7.png

PS- the good news is, youll be enjoying a lot more days off in the BPOE soon enough.

#223 ric in gta on 05.09.12 at 3:01 pm

hi Garth
does “};-) aka DA ” not have a life out side your blog
very boring!

#224 stickler on 05.09.12 at 3:02 pm

@#212 Van grrl

re parenting, etc…
“We could start a whole other blog on that topic- don’t even get me started :) Cheers!”

No doubt!!
…someone should start a blog about uptight Toronto helicopter parents. You know the type that has everything that opens and closes professionally protected before the baby can even hold its head up.

The kind that try to have some intellectual discussion with their 4 year old child in the middle of the grocery store about why it is inappropriate to express, with great emotion, the desire for the latest breakfast cereal.

…i could go on and on, and on…hilarious these parents are.

In the spirit of the blog…yea go into 20+ years of debt so your 3 year old child can go to a “better” public school…if you need to ask that question then you deserve what you get.

I know the finger paints at the “better” school will result in a much better life down the road.

Studies also show that if your counters are not granite, your child is doomed to a life of disappointment.

Hilarious!

#225 brainsail on 05.09.12 at 3:10 pm

It doesn’t matter how you got your education or what level you reached. It’s the moment that that you realize that you have learned how to learn.

#226 disciple on 05.09.12 at 3:17 pm

#214 JYG (con’t) Idiot?

3. Someone who continues to read about a pet goat while under domestic terror attack.
4. Brushing your teeth with rat poison and expecting a good outcome.
5. Putting Bernie Madoff in charge of the world’s most powerful military force: http://xdisciple.blogspot.ca/2012/05/leon-panetta-and-bernie-madoff-are-same.html

#227 Shawn @SIDONIEYANG on 05.09.12 at 3:18 pm

Great article as always, Garth.

My question is… why hasn’t the various Canadian housing markets plummeted any faster?! They should be dropping like rocks right now! Even Vancouver isn’t dropping as fast as it logically should be…

#228 Blue Monster Lover of Meats and Vegetables on 05.09.12 at 3:21 pm

Are people are still having children! I thought that whole ancient practice ended when we legalized abortions last millennium.

To each their own, if some people insist on wasting their money on birthday parties, Christmas presents, quickly outgrown tiny clothing, cakes and candies. They probably have a puppy dog too! I hope he’s getting a good trainer!

Does the dog in the picture get to eat the rabbit when you say OK?

#229 Canadian Watchdog on 05.09.12 at 3:24 pm

#208 Mark

The USD is still a short-term safe haven. Gold ETF holders should have hedged already using a long USD ETF.

#230 kelownaboy on 05.09.12 at 3:28 pm

So what’s the meaning of mortgage in french:
Mort gage = Death pledge
Funny why people want it soo much.

#231 DDCorkum on 05.09.12 at 3:41 pm

#19 – “Why don’t they force Canada’s chartered banks to purchase CMHC?”

————

How exactly do you ‘force’ a bank to buy something that is toxic? Last I checked we are a free country, not some dictatorship.

Furthermore, have you considered the impacts this would have on our economy?

#232 MoneyMyHoney on 05.09.12 at 3:54 pm

My suggestions as follows:
1. Sell the house
2. Invest the spoils wisely (don’t let it go to negative territory)
3. Find the geographical area of the school that you are looking for
4. Move to a decent rental in that area.
5. House lust :-( Zip up for the next two years
6. After two years, re-evaluate your lust, see whether you still have the drive to go after a falling housing market.
7. Evaluate your evaluation again and then make a decision.

I am following the above and moving in July to a rental townhouse. The area has an excellent school and it is North of Toronto.

#233 Smoking Man on 05.09.12 at 3:54 pm

212 Van grrl on 05.09.12 at 2:20 pm

212 Van grrl on 05.09.12 at 2:20 pm

I look at Video’s of my kids when they were under 3 years old.Their personality Characteristics have not changed in 25 years. Same kids just not as cute.

Parents and Teacher can only mess with the belief system. (Working for someone and being a slave is good, being self employed and stretching truths is bad)

How they associate pain and pleasure, can be messed with.

Morality is fluid and based on environmental variables. If you are a born killer, no parent or teacher will change that. If you a door mat, same holds true.

#234 bigrider on 05.09.12 at 4:02 pm

#116 Mr Lahey to Bigrider-

All good points and to address them yes I have flipped some houses early on (2004/5/6) . I stopped as I believed then that house prices were at peak and increases were not sustainable(how wrong ..eh)

As to my error to poor condo experience clouding my judgement, no not at all actually as my own residence was a very timely purchase (2002) and a rental I sold way back when (2006) all profitable moves.

Builder buddies very big and do not need partners however have been instrumental in the few flips I have done.

Anyway, I still concur with Garth that assets in financial asset classes a better bet than RE in T.O and Vancouver,longer term, at least at this juncture.

We shall see however, since no one can predict future

#235 bigrider on 05.09.12 at 4:11 pm

#119 Garth to Bigrider- “Everytime market goes down 5% you get shorts in a twist. I pity whoever looks after your money.. hey is that you`

Yes I take care of my own money and have done just fine.

No pity required but you Garth need to maintain some objectivity and realism with regard to financial markets .
To continue to paint the rosy picture you seem to do ,or at least cherry pick that which is most constructive to your case without a view to history is most unfair to your readers who may not have the financial acumen nor historical knowledge.

Look ,financial markets have sucked since turn of the century, period.

Let`s hope next ten years are not so bad and I agree probably won`t be.

How is that for optimism and the untwisting of my shorts

I figured you were your own counsel. Too bad. — Garth

#236 Devore on 05.09.12 at 4:40 pm

#155 };-) aka DA

Might also explain a lot of the, considered by non-parents, irrational behaviour of parents in matters of real estate.

Same kind of irrationality that makes people spend $1M on a tear down? Just because they managed to have children, does not make their irrational behaviour any more valid. The “catchment” rationale is wildly overblown. You don’t want to send your kids to a gang-infested cesspool, sure, but lets keep things in perspective here. You’ll do much better for your children downsizing your life and having a stay-at-home parent, then stretching to buy a toehold in some mythical catchment (which in 10 years may well be mediocre instead of highly rated).

#237 Devore on 05.09.12 at 4:47 pm

#209 andrew toronto

Housing bubble talk dismissed amid Toronto ‘condo craze’

Participants at Bloomberg’s Canada Economic Summit in Toronto said talk of a housing bubble is overblown.

“Real estate developers and financiers (as well as CMHC, run by developers and financiers) unanimously proclaim: keep buying condos”.

#238 live it up on 05.09.12 at 4:50 pm

Paul, we brought into a good school area for 700K four years ago with a 500K mortgage. With our family income of just $120,000, currently 427K mortgage left.
At today’s fixed 5 year rate of 3.49%, just 250K mortgage left in another 10 year. By 2022, my house could be worth one cool million dollars. I would upgrade anytime when I can make my mortgage payment. It’s like investing in RE without dealing with a renter.

I think you came to the wrong blog. The therapy session is two URLs down. — Garth

#239 bigrider on 05.09.12 at 5:07 pm

#217 AKA DA.

With all due respect DA, your comment about you and your wife buying at highs and lows in the RE market and eventually everything working out such that prices moved higher..

I would ask you to have that discussion with an American, Irish man and now a Spaniard.

I would think these people will be waiting for their children to reap higher prices for the houses they bought at their peaks in housing bubble, long after they are dead and gone.

Again, T.O and Vancouver are inexplicable anomolies..thus far

#240 Debtfree on 05.09.12 at 5:11 pm

From the CEO of elad the builders of the emerald city complex in TO today on bnn . There is no bubble . The housing market is very stable . Emerald city . Just the name itself is laughable . Sould be battery chicken city in the sky .

#241 This is Wonderland on 05.09.12 at 5:12 pm

#210 Lorne
My sister is a teacher in North Toronto and she says that teachers will always give higher marks just to avoid a confrontation.

Hardly a true statement….I have never done this….nor, I am sure, have most teachers!!
—————————————————————

Sorry Lorne but its standard practice even in our Colleges.

I’m a mature student at Sheridan College in Brampton, my first term I was shocked at how many students would demand a better grade from the teacher after an exam; something that was unheard of when I was first in school. I asked one of the kids about it and he told me that his mom would always keep in touch with all his teachers and demand a higher grade for him and apparently it worked! As he said to me “it’s perfectly normal”

http://www.youtube.com/watch?v=BLW0MnqH0r8&feature=related

#242 bigrider on 05.09.12 at 5:14 pm

#234 Garth to Bigrider-” I figured you were your own counsel .Too bad.

Yup .I know how to buy XBB and luckily know which preferred issues to buy without the addition of the 1% FA fee.

Did my CSC 15 years ago just for kicks after my honours degree in economics.

#243 Harlee on 05.09.12 at 5:21 pm

#229 bigrider
Please don’t twist -or untwist-your shorts for Garth or for ANY of us. Personally,with aka DA and John Young fueding, disciple popping up all the time with truths that shock me and Blue Monster’s scary karma this blog site is stressful enough without anyone adding to it by abusing their underwear .
Saskatoon Shines ! -I’m going to look at antique books at the bookstore and then buy an ice cream at the Dairy Queen. Fie on all of you !(except Garth,of course -he’s cool). :-)

#244 I'm stupid on 05.09.12 at 5:22 pm

They make big bucks – $225,000 between them

The way people are throwing $1million around today 225k is the new poverty line. This couple should be getting social assistance.

#245 Mingeford on 05.09.12 at 5:24 pm

Courtesy of Mortgage Trends:

CMHC by the numbers

CMHC profit in 2011: $1.53 billion
Profit to taxpayers since 2002: $16 billion
Total insured units in 2011: 630,957 (This was 11% below plan “due to a weaker than anticipated homeownership market, the impact of changes to the Government’s guarantee parameters, and a slight drop in CMHC’s market share.”)
Portion of insurance aimed at under-served markets: 46.5% (This includes large multi-unit residential properties, nursing and retirement homes, and homes in rural areas and smaller communities.)
Reduction in refinance volumes following the new 85% LTV limit on insured refinances: 22%
Expected capital by year-end: Greater than 250% of OSFI’s required minimum (CMHC estimates its capital to be roughly 211% of OSFI’s recommendation, as of Jan. 1, 2012.)
CMHC arrears rate: 0.41%
Average lag between arrears and claims: ~1 year
CMHC’s stated probability of insolvency: Less than 1 in 200 (The “tail risk” includes ongoing negative GDP growth, unusually high unemployment and “significant house price depreciation lasting for a number of years.”)

The “typical” CMHC-insured borrower

Average outstanding mortgage amount: $162,157
Average equity: 44%
Borrowers with 20%+ equity: 75%
Borrowers with less than 10% equity: 8%
Insured borrowers with homes more than $400,000: 13%
Average credit score: 724
Borrowers with a credit score >= 700: 76%
Portion of insurance that’s high-ratio: 50%
(Pierre Serré, VP, Insurance Product and Business Development, notes that the majority of CMHC-insured buyers are first-time buyers and there has been no deterioration among these borrowers as measured by standard risk metrics.)
Ratio of high-ratio mortgages with fixed rates: 75%
Ratio of high-ratio mortgages with terms >= three years: 88%
Portion of high-ratio borrowers ahead of their scheduled amortization by 1+ payment(s): 33%
Average amortization at time of approval: 25 years

#246 Nostradamus Le Mad Vlad on 05.09.12 at 5:38 pm


#196 Steve — “Division in the ranks?” — Indeed. That was the point that Smoking Man and I briefly touched on the other day. TPTB have introduced “Confuse-A-Cat” time, so hardly anyone knows what’s going on anymore. Hence divisions here, there and everywhere.

#208 Mark — “They just haven’t figured out the USD isn’t the safe haven.” — Try the renmibi. Iran takes that for oil instead of petrodollars.
— and —
#223 Canadian Watchdog — “The USD is still a short-term safe haven.” — Short-term, yes. Medium- to long-term, probably not.

#242 Harlee — “. . . scary karma this blog site is stressful enough without anyone adding to it by abusing their underwear .” — I always viewed this as a stress-free site, where posters are free (within guidelines) to abuse their underwear anytime!
*
In the KDC yesterday, a report said property taxes may rise 20% or more, over the next five years. Not a lot, but all levels of govt. are nickel and diming us to death. 130 staff are being let go in the medical field — something to do with AdvoCare. As far as I know, those 130 are all union members.

Guess someone has to pay their bloated salaries.
*
A trip around Paris from the top of the Eiffel Tower.
*
Money Junkies Pic.
*
Fukushima Twisters All sorts of things going on there; 4:59 clip Pentagon wants to encircle Russia. Napoleon and Hitler invaded Russia at the onset of winter, and both lost big time. Strike three?

#247 anon on 05.09.12 at 5:38 pm

219 Van grrl on 05.09.12 at 2:37 pm

#197 Anon
Of course John’s perspective would be limited with regards to raising children (if he doesn’t have any) but that does not in any way lessen the value of his opinion on a topic related to education/schooling.

I’m not sure what the point of “you can’t truly understand” means. No one who does not have a child is claiming to understand what it means to have one!! Nor do many of us want to, thus the choices we make :) In the same way, you cannont “understand” another person’s life experience, be what it may, and that’s fine. Having said that, we are all people and we should all respect one another’s opinions when it comes to various topics; today it happens to be about “catchment areas”.

^^ I am confused. Did I not respect his views? I may not agree with them, but that does not mean I don’t respect them. I must also respectfully disagree that others are not claiming to understand what it means to have one (actually my response was directed towards a PP that did assert to know) . I was responding to that PP BUT I was not asking that they do not comment, I was simply pointing out that when they do, they should recognize they do have a limited view point.

#248 its starting on 05.09.12 at 5:41 pm

#210 Lorne
its a very true statement

she was an RCA at several different schools and she said teachers would get anxious around the time the reports go home and ask her to change the mark (always a grade higher)

just because you don’t, doesn’t mean others don’t do it.
if changing a C to B will negate a confrontation , you bet they will.

#249 I'm stupid on 05.09.12 at 5:43 pm

Smoking man

I just figured out who you remind me of. Your the greater fool equivalent of Forrest Gump. I hate ripping on people but come on. Did you teach Elvis how to dance too?

#250 Westernman on 05.09.12 at 5:58 pm

John G. Young @ # 202,
Why on God’s green earth would anybody WANT to “understand” your “experience”…

#251 DM in C on 05.09.12 at 5:58 pm

#218

It’s his pattern. Soon he’ll be talking about how we don’t appreciate his efforts and that he needs to take a break from this ‘pathetic blog’

I still don’t know why he was let back in. Must have missed that posting. And after I promised in March to retweet all of Garth’s blogs. Not enough followers yet, I guess.

#252 Gypsy Kid on 05.09.12 at 5:58 pm

People of all races can be racist…white, black, yellow ,red,and green. No race is an exception.
HOWEVER, it is currently the white race (especially in North America/Europe) who hold power over economics and politics. Hence, when people in power choose to discriminate, there is a detrimental effect.
Having said that, one should be free to celebrate one’s culture and choose to be near who they please. I am more comfortable with certainraces but have friends from all backgrounds. My observation is…there are ignorant people everywhere, as there are some super people in this diverse city- Toronto.
I personally think its weird that some people ONLY want to hang around with people of their own race…grow up.

#253 Investx on 05.09.12 at 6:00 pm

Interesting info in the G&M article someone posted above:

“Banks are now requiring borrowers to disclose incomes and assets before mortgages are approved, as of the last six weeks,” said west-side realtor Marty Pospischil, who specializes in selling single-family homes owned by long-term residents. Last year, he says 90 per cent of his 100 house sales were to “offshore buyers” – people not living here yet, who flew in to buy. This year, it’s less than a tenth of that. “We’re now seeing a 50-per-cent collapse rate in deals, when it’s usually more like 5 per cent,” he said.

http://www.theglobeandmail.com/news/national/sky-high-housing-prices-in-vancouvers-west-side-short-lived/article2424414/?utm_medium=Feeds%3A%20RSS%2FAtom&utm_source=Home&utm_content=2424414

Hmmm… could those offshore buyers be Asian buyers this blog was in denial of?

#254 truth hammer on 05.09.12 at 6:22 pm

On the subject of ‘school cachements’. To the chagrin of the teachers unions it is still possible to find out which schools are performing and which ones aren’t. Stats don’t lie…people do. Here in BC we have the Fraser Institute that publishes the raw performance stats to show that all schools are not equal. Why risk your childs future on the say so of a union rep when they tell you to poo poo the data publishes by the nasty accountants. I mean really…..why should the teachers union care if the Fraser Institue publishes their findings if schools were all equal? The answer is that they are clearly not.

Anyone considering moving anywhere in Canada should first study the success rates of individual schools….not the sq ft…not the proximiy to S-Bucks…..commuting time….not the granite counter tops etc. Find out which school your child has statistically the best chance to succeed at and locate there.

Of course theres the naive argument that a childs success begins and ends at home……this is half baked…..as your child grows his/her social group far outstrips the influence of the parent. If you dodn’t understand what peer pressure is…you’d better bone up. Trust me….when your child is in Gr 6 and above……he’s not ‘you’re little buddy’ any more and you better learn how to parent. At thirteen you become the childs legal guardian and policeman…..let your guard down and watch what happens…….this is not the 1950’s anymore. Has anyone checked on the entrance requirements for a Canadian university recently? The competition is fierce.

This idea that a child will succed rich or poor is bunk…..do you want your kid doing a sleepover at a crack heads house…despite your good intentions…..are you experianced with picking out crack heads out of the crowd…..theres a better chance you’ll find them in the inner city. Sure..quote the stats of drug use in affluent areas….it’s worse in the bad area’s by a mile. Keep your child away from all forms of low life……and stupid idea’s….like socialism and the one village philosophy. Teach them that the tax man is evil and they should question everything that comes out of government.

Look at some of the articles written by people who got sucked into the ‘our neighborhood’ propaganda of the Woodwards building hype. The parents are finding they’ve moved into a war zone….is that what you want for your kid….really….for a ‘good location’ and a politically correct pat on the bum? Get your head on straight…you’re parents now….not some dopey dipwad in a hockey jersey.

#255 richard on 05.09.12 at 6:23 pm

#143 Blaze

You’re absolutely right. I wish DA would stop disrespecting his wife by bringing her into his ridiculous act.

If you’re a regular reader, you can see that over the years, I’ve almost always ignored him, but when he kept bringing up his wife, knowing who they are, I got annoyed.

Nevertheless, nothing can stop him from lying, and indeed, this does give him the attention he wants.

#256 richard on 05.09.12 at 6:24 pm

PS. Hey DA…just for the record (you have boasted about this many times), just how LONG have you been in the real estate business? LOL

#257 John on 05.09.12 at 6:25 pm

Bill posted the derivatives link below ( end of post).

Absolutely amazing graphics. Just a great way to silence the absurd argument that the entire housing ponzi isn’t built on this. You’ll notice that there are no legitimate arguments to “shoo” what this means away.

A few have appeared on the blog. One person pointing out how it’s the “job description” of a central banker to etc. etc.

With the presence of derivatives ( as clearly outlined in the link), there is no possible way out of admitting the obvious. Which is why it won’t be admitted. If you present the obvious to someone sporting a fanatical belief system, standing at your door, over and over….what is the results.

Wait. Let’s get “Canadian fair”. I mean this whole derivative thing might be a fanatical belief system too…right? Maybe the coming derivatives caused housing crash too? I mean who can “time the market”, right?

Hey…lets pull out the convenience bag. This is all DOOMER talk. Wow.

In this link, scroll all the way down to the bottom and there is a picture of one of the Goldman Sachs gang members ( just a hired gun..a technocrat…nonetheless…have a look).

His name? You guessed it. Mark Carney. By the Goldman Sachs building(s). Now the buildings are really big, but if you look…there he is. Standing on guard. He might only occupy a pixel or two on your screen, but sure as shootin’ he’s there.

http://demonocracy.info/infographics/usa/derivatives/bank_exposure.html

http://demonocracy.info/infographics/usa/derivatives/bank_exposure.html

#258 };-) aka DA on 05.09.12 at 6:27 pm

#235Devore on 05.09.12 at 4:40 pm

…lets keep things in perspective here. You’ll do much better for your children downsizing your life and having a stay-at-home parent, then stretching to buy a toehold in some mythical catchment…

Just to be clear, I very much agree with you on this point Devor as exemplified in my comment at #183. It is just a house. Do the best you can but don’t make the kids pay in any way for your material lust.

#259 syd on 05.09.12 at 6:33 pm

There is no bubble. Toronto star says..

http://www.moneyville.ca/article/1175563–housing-bubble-talk-dismissed-amid-toronto-condo-craze

#260 Wow! on 05.09.12 at 6:35 pm

#241 bigrider

Interesting exchange. I for one enjoyed it. Could do without he personal jabs, but it seems to be part of the game here.

#261 Can it be? on 05.09.12 at 6:46 pm

#175 Jane. It really annoys me when moms come on a blog and get on their high horse about how a mom should stay home with her kids. Maybe a career mom who also spends time with her kids is actually a better mom then one who stays home… Who knows… But the righteousness is ridiculous. My husband and I are the product of two working parents and have both achieved success and doctorates. I think our parents spent plenty of time with us, provided us with superior educations and examples of hard work. It was also nice not to be poor. Enjoy your time at home… But stop with the idea that you can’t have both… It’s a poor example for kids, especially for daughters. Life is a balance.
Everyone should focus on the topic of the blog. Ie. Real estate… Stay focused people. I for one have given up the house hunt. Decided I would plant some flowers… Hang a few new paintings I got and just enjoy this summer with the family… The decline will happen eventually contrary to popular belief outside of this blog. Then we pounce on the deals :) with our saved hard earned cash.
On a side note… Seems the bidding war the other night on the house next door didn’t work out, no sold sign.

#262 Rob .T on 05.09.12 at 6:56 pm

#51 Skip Breakfast

You pretty much summed it all up for us. Great read, thanks. I want to be just like you one day

#263 };-) aka DA on 05.09.12 at 7:13 pm

#207Form Man on 05.09.12 at 2:01 pm
#129 DA

you are confusing the Okanagan with the GTA. The Kelowna market has already suffered a substantial correction , down over 20% from 2008 and continuing to fall. The GTA will do the same thing. What part of this are you struggling with ? Perhaps you are too distracted by your hot wife to concentrate……..the boom is over DA, you screwed up big time……

I screwed up? I market properties in accordance with what the market dictates Form Man. It doesn’t make any difference at all to me if the market is up down or sideways. I don’t speculate on the future and I do not long for the past. I deal in what is here and now – what a home will sell for today. I can’t screw up as I deal with what is real not conjecture.

My clients may have screwed up which is often why they hire me – to help them make the best of their screw ups and reset a realistic base going forward. They need to be brought to the reality of this day – not when they bought and not some distant hoped for future.

It is hard to screw up dealing in the facts of the present Form Man. This is how I get paid the big bucks, by checking emotion at the door and bringing objectivity to the table.

#264 John G. Young on 05.09.12 at 7:30 pm

#220 anon on 05.09.12 at 2:45 pm

Yes, you understand.

“Some of the comments directed towards you by ‘the haters’ really do sadden me.”

Although I do assume that there are many on this blog who are in silent support — including, I am sure, our host — please know that it is important for me to ‘hear’ it stated.

Thank you.

“We haven’t come far as society have we?”

Actually, I think that as a society we have in fact come a long, long way; as someone who grew up in the 60’s and 70’s I’m always struck by how sexual orientation is basically a non-issue for younger people. In some ways I envy them.

Cheers,

John

#265 John G. Young on 05.09.12 at 7:42 pm

“And on that matter John G. you have my utmost respect and sympathy for what you must endure.”

Riiight… which is why you posted a hateful comment that the person who moderates this blog was compelled to delete — remember “I thought that retort to John G. would be well understood and appreciated by many”?
Wonder how all your “gay friends” would feel about that…

What I “must endure” is duplicitious, patronizing a-holes like you.

No, wait, not “like” you — YOU.

#266 Skip Breakfast on 05.09.12 at 7:52 pm

#51 Rob T. — Thanks Rob, I hope that little window on our own experience in real estate is helpful…but I hope I left the right “take-away” in my post. I know we won this real estate lottery. We were lucky. But I do not believe it will happen again. I do not believe we will see that sort of run-up in prices within our lifetimes. If you look at the historical prices in any market, including Canada’s, the run-up has been an anomaly. Exponential price increases in ANY market invariably wind up in the same place….DOWN! And so when you say you “hope you want to be like me” I hope you don’t see buying real estate (or keeping your real estate) as the key. Quite the opposite. The only way to win that big is to find the next bubble, and it won’t be real estate. Ideally, it’s not a bubble you find either, but an honest to goodness business with true underlying value, and you have the foresight (and luck) to get there early rather than late. If you already have real estate and it has gone up in value, then anyone can be like me–the ironay is that so few will do it before the correction comes. If you already have real estate and it has not gone up that much because you bought high, I’m afraid the best course of action is probably to cut your losses and get out now while you can…unless you don’t need that money in the future. If you love your house and it doesn’t matter what it cost you, then it doesn’t matter. But if you’re like the “ordinary” person–such as we are–who doesn’t make $200,000 per year, then I think you’re hard-pressed not to do the smart thing and avoid hanging on to a boat anchor. Unlike Garth, I’m only a bit more pessimistic about the whole scenario, because I see the pressure on prices coming not from rises in interest rates (which definitely might come) but from increasing unemployment. Can you afford to hold on to the boat anchor if one of you loses your job?

#267 brainsail on 05.09.12 at 7:55 pm

How timely…

“Making $300K and getting financial aid for a first grader”

http://money.cnn.com/2012/05/09/pf/private-school-financial-aid/index.htm?iid=HP_River

#268 Nostradamus Le Mad Vlad on 05.09.12 at 8:00 pm


8:13 clip Expose on the Cdn. banking system; Billionaire Soros See the headline. Jeb Bush has his own backers as well, and 30K – 100K Russian troops in next seven months; Ending the Euro “Germans are unhappy about bailing out European countries, and Europeans in general are unhappy about paying the heavy price of ‘ austerity’ for something banks did to them. And behind it all is the “eleventh marble”; slavery to a private banking system that by design produces more debt than money with which to pay that debt!” wrh.com; Bankruptcy Trends; Banxters and Guillotine; USPS losses Taxpayers on hook; Tight Budget Collapsing society or collapsing economy, they’re both collapsing; Expansion Three Chinese banks in US, but Millionaires please temporarily leave; Ph.D with Foodstamps Smoking Man is right — education is not the best advantage.
*
The Second Coming isn’t too far away! Plus Oops! The Toilet (al Qaeda) works for the CIA and Mossad; Assad “This is being blamed on Assad, but again, why would he do such a stupid thing as to attack a United Nations convoy? Like Ahmadinejad, Assad does not want a war; it is being forced on him by outside sources.” wrh.com; NDAA’s Amendment It gets worse; 4:50 clip Bill Gates’ vaccines work wonders; Global Cooling “Lake sediment proves sun cooled earth 2,800 years ago – and it could happen again soon.” and Climate Change “A few brave men and women is all that is needed to bring down an evil empire.”; Africa’s Profits are natural resources; Angry Voters Yet people still run for office; Fracking German govt. opposes it. Maybe because of the ‘quake line there? Mass. Bake-Sale Ban “The easiest way to curb obesity is to remove the chemicals added to our food that make people want to east more, with Monosodium Glutamate and Aspartame being two of the worst offenders, beloved by food corporations because they increase consumption and sales and lead to great profits.” wrh.com, and Pineapple Tasty and better than aspartame; Busybodies The Nazis did the same thing in WW2; Japan bails out TEPCO.

#269 Ballingsford on 05.09.12 at 8:01 pm

Spouse wants to buy a home.

I want to stay put and rent.

The neighborhood is excellent, close to all the shops and the neighbors are great.

Close to my son’s school. Walkable, but he mostly takes the bus.

Close and a short drive by OC Transpo to my work.

All utilities, included including parking for about #1100/month.

Living in the burbs would depress me I think. Longer commutes and not having the enjoyment of living so close to the arboretum. Love walking there with my son and talking to him about nature (plants, insects, reptiles, fish, etc.).

What’s my point though you might wonder?

My point is not to get caught up in the housing frenzy! I’ll rent and stay where i am until the dust storm settles. Things will correct across all jurisdictions. I could easily move to the Suburbs, but why would I want to. No thanks!

#270 Skip Breakfast on 05.09.12 at 8:01 pm

Actually, I’d like to re-phrase my last sentence. The real estate correction will come no matter what interest rates and unemployment does. Both/either of those things will make a crash come harder and faster. I think it will come on its own accord DESPITE low interest rates and strong employment (even though we might end up with neither very soon!). Indeed, it is the inevitable swing in sentiment that will crash prices, as humans are herd animals and we will catch wind of fear soon enough, just as we all caught the greed and speculation bug. Fear will crush prices, as there is a rush for the exits, no matter what interest rates or employment does. I’ve learned that such is the fundamental nature of exponential run-ups in markets. They crash, plain and simple!

#271 Garth's Rhetorical Efficacy on 05.09.12 at 8:03 pm

From today’s “Toronto Star”:

“”Participants at Bloomberg’s Canada Economic Summit in Toronto said talk of a housing bubble is overblown.

“When we look at the overall marketplace, there might be pockets of vulnerability but we remain quite comfortable,” said Gordon Nixon, chief executive officer of Royal Bank of Canada “Frankly, I’d like to see the rhetoric come down a little bit.””

You know they’re talkin’ ’bout you, bro!

Tone it down, man! :)

#272 MarcFromOttawa on 05.09.12 at 8:04 pm

#249 Westernman

Go back to your hicktown or I’ll send the ghost of P.E.T. after you.

#273 Eagle eyes on 05.09.12 at 8:14 pm

Richmond BC MLS stats May 8th:

New Listings: 63
Price Reductions: 16
Sold: 15

#274 Ian on 05.09.12 at 8:16 pm

Garth may be right about a coming real estate crash see http://www.leap2020.eu/English_r25.html .
“The Canadian real estate insanity, a repetition of the US mistakes – Towards a 15% to 25% fall in prices from 2013”
Maybe selling & renting in the interim is not such a bad idea . However I would be cautious about putting too much money in the stock or bond markets . Gold is a better & safer bet given the financial catastrophe bearing down on us. “The Canadian real estate insanity, a repetition of the US mistakes – Towards a 15% to 25% fall in prices from 2013”.
With regard to the kids . Look into getting them a second country citizenship somewhere like Argentina or Chile. With the current rate of 3rd world immigration to Canada & low birth rate among whites .Whites will be a minority in a generation or two. This is now unstoppable & I am not sugesting that this is a bad thing for everyone , but your descendants may need somewhere to escape to, and there is no harm in thinking ahead .

#275 Smoking Man on 05.09.12 at 8:35 pm

#248 I’m stupid on 05.09.12 at 5:43 pm
Smoking man

I just figured out who you remind me of. Your the greater fool equivalent of Forrest Gump. I hate ripping on people but come on. Did you teach Elvis how to dance too?

Even Stupid people Stupid, should get the value out of my next Lesson and brag fest.

Keep you eyes tuned to Garths Bat Channel.

#276 Smoking Man on 05.09.12 at 8:41 pm

#267 Nostradamus Le Mad Vlad on 05.09.12 at 8:00 pm

You are one sharp dude, love the links, thanks for the PHD one.

#277 Can it be? on 05.09.12 at 8:42 pm

Heard from a close friend that apparently the problem with the real estate market is that there are just too many agents…. That’s why agents are not making as much money.

#278 };-) aka DA on 05.09.12 at 8:43 pm

DELETED

#279 Skip Breakfast on 05.09.12 at 8:49 pm

Gold exhibits the very same exponential price rise as real estate. So, I don’t agree it’s safe at all! Who knows what gold will do, but there is huge risk of collapse when prices have run up that quickly. In fact, given how much more volatile gold is (one can sell it in minutes with simple call to one’s broker), it is already revealing its potential downside, losing 20% from its high in a very short period of time! The time to buy gold was before everyone was already rushing in there–back when it was $250 an ounce and no one wanted to touch the barbarous relic. Today, everyone is talking about gold. Maybe there’s more bubble left in it, but the really good time to buy was at its low, not its all time high!

#280 Smoking Man on 05.09.12 at 8:49 pm

#248 I’m stupid on 05.09.12 at 5:43 pm
Did you teach Elvis how to dance too?

Did not teach Elvis how to dance, but The catching mechanization on the Canada-arm on the space shuttle. Mine.

Engineers at Spar Aero Space at my cottage . I was about 13 to 16 years old. My RC plane crashed, had a mounted camera, the camara smashed to bits. Walked in with all the plane and camera bits in a box looking for glue. Saw what they were talking about. Pulled the Camera diaphragm out the box and said, think this will work.

Rest is history.

#281 Form Man on 05.09.12 at 8:50 pm

#262 DA

you have been proven consistently wrong on every point you have debated with me over the last couple of years………every single one. I hope the people paying you ‘big bucks’ for such disastrous advice are getting a refund……….

#282 };-) aka DA on 05.09.12 at 9:02 pm

Strike that last post of mine if you haven’t already seen fit to do so.

DELETED. I’m striking them all. You used up three months’ worth of space today. See you in August. — Garth

#283 Ret on 05.09.12 at 9:08 pm

#253 Truth Hammer

I agree with most of what you wrote but this,

“Has anyone checked on the entrance requirements for a Canadian university recently? The competition is fierce.”

It is a body count. More bodies, more money for bigger pensions and pay raises. All are welcome. After your kid’s beer and fine arts degree, they’ll probably be drug and/or alcohol dependent and have joined an underground anarchist group.

The recent student riots in London and Montreal were disgusting. Here is a video of a typical Saturday night around McMaster. It was posted today on You Tube by a local resident who has had enough.

http://www.youtube.com/watch?v=UM3AEPFZO2o

Stupid me. I went to university, lived in poverty and studied my ass off. I worked just as hard to pay off every cent of my student loans too.

#284 jess on 05.09.12 at 9:27 pm

It marks the first time Canadian authorities have laid gangsterism !

=
A nationwide takedown by Medicare Fraud Strike Force operations in seven cities has resulted in charges against 107 individuals, including doctors, nurses, and other licensed medical professionals, for their participation in Medicare fraud schemes involving approximately $452 million in false billing. This coordinated operation involved the highest amount of false Medicare billings in a single takedown in strike force history.(fbi.gov)
=============

executive chairman of Spain’s Bankia
42b in “troubled” assets

#285 Marcus on 05.09.12 at 9:53 pm

Ian- You should consider building a rocket ship for your terrified white descendants. That way if Chile is a little too third world they can take Grandpa Ian’s rocket to a new white frontier in space. They will be forever grateful.

#286 Rob .T on 05.09.12 at 9:59 pm

Finding the next bubble. I thnk about it all the time. I often tell my wife the next time in the future that we see another bubble in real estate or gold we will capitalize. When the time comes it’s always hard to put most of your hard earned money in one basket. But one must realize that a bubble takes years to form and you can smell it way in advance. SKIP BREAKFEAST where do you think our money should be? I’m thinking about shorting REITS.

That would be dumb. — Garth

#287 Blue Monster Lover of Meats and Vegetables on 05.09.12 at 10:35 pm

DELETED. I’m striking them all. You used up three months’ worth of space today. See you in August. — Garth
——
Well it’s about time!
Garth if you’re ever captured by the enemy and torchured or water boarded, i know you can take it, your tolerance is incredible. Take it easy on the Amazons.

Smoking Man, thank you for the Canada arm.

#288 truth hammer on 05.09.12 at 11:17 pm

#283 RET…I appreciate your overview from the perspective of someone who’s been there. I do know for a fact that in BC at least there are far more applicants than seat available. The ‘body count’ seems to be in the number of foriegn nationals they are selling seats to and stuffing the classrooms to the rafters. I read a book recently ‘why being smart is not enough’ that had some very good data on Canadian university entrance stats.

#289 TurnerNation on 05.09.12 at 11:24 pm

#91Beach Girl on 05.09.12 at 6:27 am

It’s not a dig. Smoking man is always talking up the west side (Humber, Long Branch) as the next Beaches area. So, we have room for a Beach west girl on the blog…

#290 LB on 05.10.12 at 1:27 am

Government has the ability to change immediately any terms of CMHC re: mortgage insurance, in the same way it has the ability to change immediately any government policies, laws, regulations, taxes, clawbacks, etc.

The people just have to demand it, most recently effectively demonstrated by Europeans and Quebec students.

#291 Skip Breakfast on 05.10.12 at 8:58 am

Rob. T — I don’t think Garth would agree with where I think your money should be. I like his advice regarding bank preferred shares, insofar as they’re one of the “safer” investment proposals out there. Personally, I’m an advocate for overly safe at this juncture. I think there’s a lot of abnormal risk everywhere. So without being specific, I recommend investigating the kinds of investments that will offer you a return OF your money, rather than a return ON your money. When some of this crazy risk settles out, I’m going to look more seriously at yield. Right now I’m just scared to death of it. I’m not a player or a gambler. I feel I have done well getting OUT of real estate, and want to be cautious about what I get into next. I’m happier being ultra-safe at this time, and I’m not really worried about yield at the moment. Garth is obviously waaaay more insightful about where money should go if you want some kind of yield.