Cherish

Silly Alex. He doubted me. “I have been following your blog since 2008,” he says, “sometimes with skepticism.” You see, Alex lives in Canmore, a too-perfect, mountainy little town where oil-rich Calgary housewives and Toronto financiers go for moist trysts in their cedar mansions. Well, at least until recently.

“We sold a home in Canmore in 2009 wandering if it was the right thing to do,” he confesses. “In 2008 there were 8 properties over a million on the market and if you listed one it wouldn’t last more than a week.  They couldn’t build houses or condos fast enough then.  Now construction has halted and there are 50 plus properties over a million and some on the market for more than 2 years.”

In fact, twenty-nine luxury condos in town are about to be auctioned off after failing to find buyers. The starting bids are about half original asking prices.

Meanwhile the elusive silver-topped, horny-tipped Boomer has also migrated from its favourite roost, Vancouver Island. Yesterday I told you how the housing market is unraveling over on the mainland, with listings soaring and sales diving in Vancouver. But things are apparently worse in the land where the wrinkly people go.

Up-island from Victoria, past Nanaimo, are places like Qualicum, Parksville and Nanoose Bay. Executive subdivisions stuffed with one-level Mansions teeming with potlights, nestle onto endless golf courses. It’s geriatric paradise. Just don’t try to find anything open after 8 pm.

This market is in upscale freefall. Last month there were 484 active listings of single-family homes, and just 52 sales, while price reductions clogged the system daily and 152 new sellers rushed to market. Prices have dropped back to 2010 levels, and are on their way lower.

Why did rich retirees from Mississauga stop buying retirement spreads in places like Canmore and Qualicum Beach? Simple. It’s financial suicide. You can’t expect a couple selling a suburban house in the GTA for $700,000 to buy one on Vancouver Island for $800,000 – not when 70% of retirees today have no corporate pension, and foolishly stuck the bulk of their net worth in a house.

These folks are trapped, victims of their own bad choices. Without liquid assets (only one in four Boomers even has an RSP), there are few options. When they finally sell the family home they’ll need to downsize and invest the difference. Some, losing their marbles altogether, will buy a retirement shack in North Bay just because it’s cheap. Others will opt for a reverse mortgage, ensuring a big, fat surprise for their children.

A bank survey last month found half the people over 55 say their retirement plan is to sell their house, while a third will retire with a mortgage. This means three things. A helluva lot of real estate will be coming onto the market over the coming years, with predictable results on prices. Second, old people with mortgages don’t cruise the Mediterranean, buy 80-foot Winnebagos or join snooty golf clubs. Finally, this could be the death rattle for boat salesguys, cottage area realtors, marina operators, country clubs and communities full of expensive houses nobody wants.

But withering real estate in many parts of the land is just a symptom of something deeper. When seven out of ten people have no retirement pension, and most of them have done nothing about it, you can see how screwed up our future will be. Every day I sit across the table from those who realize they need help, and I wonder what they were thinking for the past forty years. It’s dismaying how many believe they can actually live on CPP or OAS, or that somebody will employ them at age 68.

Everybody under 40 should prepare. Unless you want to become your parents.

We’re entering a time when liquidity will be the most treasured and defensive state, when housing’s no longer a store of value or, in many cases, even tradable. When debt’s an enemy, like greed and lust. When what your dad knew was safe now poses danger. When the very nature of risk has changed.

Question the values of those older than you. Then measure that against their lives. You’ll see why the fairways are emptying.

And what to cherish.

233 comments ↓

#1 TurnerNation on 06.04.12 at 9:45 pm

Cute pic!

#2 Corban on 06.04.12 at 9:46 pm

News Flash: It’s different in Calgary!

30 day median is now at the highs seen back in 2007. Buy now or be forever priced out of the market!

/s

#3 thinker on 06.04.12 at 9:48 pm

How much are prices off the peak in Vancouver??

#4 suede on 06.04.12 at 9:49 pm

Drove up the coastal “highway” from Nanaimo through Qualicum on Friday. For Sale signs littered the view of liquid sunshine. Every couple months I happen to be back it seems there are more and more going up. Very few – if any at all – sold signs this time around that I can remember.

#5 rosie on 06.04.12 at 9:51 pm

Very well put Garth. Freedom 95 could be the new normal.

#6 Jamaican_Gal on 06.04.12 at 9:53 pm

Best picture you have posted to date. Thanks!

Fiiiiirrssssttt…naw, I want respect your wishes. Wuv you, garth!

#7 Slim Jim on 06.04.12 at 9:54 pm

Garth ,

What’s your call, is “C” going to raise interest rates tomorrow?

No. — Garth

#8 RetiredBoomer2 on 06.04.12 at 9:56 pm

here could be my chance to move to the west coast if I can find a sucker to buy in quebec where real estate is still selling and condo mania is rampant.

#9 renters rule on 06.04.12 at 9:56 pm

Nice picture Garth!

#10 Mr. Lee on 06.04.12 at 9:57 pm

Not all parents are financially illiterate…Asian parents from HK (not China) always save for a rainy day and most have a war chest of money to live off of.

#11 phill_d_trill on 06.04.12 at 9:58 pm

so so true… liquidity is the name of the game.

#12 Viegas on 06.04.12 at 9:58 pm

When debating the pending housing decline in Canada, the most common counterpoint I hear is “we are not the US”. Despite the similarities Canada has to the US peak with respect to household debt/income ratios, the path of housing price increases over time, relaxed lending standards and a misconceived notion of non-recourse mortgages, I like to take a different angle.

The US had arguably the biggest housing bubble (perhaps second only to Japan) in the history of human civilization which was fuelled by massive leverage and backstopped worthless paper and derivatives. The worthless paper behind the US bubble was purchased hand over fist by banks and government entities also leveraging themselves beyond any reasonable risk tolerance. The entire financial system was near collapse until money was printed out of thin air to save it. So will Canada experience what the US did? Not on the same global scale, but comparing Canada to the US is also a meaningless argument. What if Canada experiences 75%, 50%, 25% of the effects that the US did? At what point does not being the US matter? Who the hell knows?

Instead Canadians should asking what is going to keep this economy going and housing prices from increasing further? Looking at past housing recessions (early 1980s and again early 1990s) what if Canada faces a housing price collapse this time around how will the BOC rescue the economy? Unlike previous recessions they can’t lower rates much further. Federal and Provincial governments are already running high deficits so economic stimulus programs would put us in further debt and our commodity export boom is facing a major headwind with Chinese and Asian economies decelerating at an alarming rate. Canada is not set up for a soft landing.

#13 T.O. Bubble Boy on 06.04.12 at 10:04 pm

Some interesting news today:

1) Zombie-proof condos: SOLD OUT!
http://ca.news.yahoo.com/blogs/daily-buzz/zombie-proof-condos-sold-kansas-canadians-still-options-195553711.html

2) Maybe HAM buyers around the world are actually Chinese spies?
http://www.tokyotimes.co.jp/2012/chinese-spy-was-making-a-living-in-the-japanese-real-estate/

3) China and India — apparently the BRICs can’t get along?
http://www.financialexpress.com/news/citing-petrol-price-china-warns-citizens-against-travelling-to-india/957704/0

#14 NFN_NLN on 06.04.12 at 10:06 pm

http://www.globaltvedmonton.com/two+dead+one+in+hospital+after+possible+carbon+monoxide+incident+in+edmonton+home/6442652387/story.html

Wait a second. I thought rising home prices could only help home owners – by giving them more equity.

Technically they won since they never left the house (alive).

#15 Hoof-Hearted on 06.04.12 at 10:07 pm

I didn’t SaY…WELL YOU KNOW…starts with “F”

2ND !!!!!- SILVER MEDAL

ps buy silver

#16 Jas Girn on 06.04.12 at 10:07 pm

Great article! What do you think of commercial real estate Garth!

#17 maven19 on 06.04.12 at 10:08 pm

just in time

#18 LH on 06.04.12 at 10:08 pm

Well said! What we are witnessing is the end of suburbia/exurbia, where it takes a Litre of Gas to get a Litre of Milk, and the Manhattanization of C01 (where I can walk to the new Loblaws at Queen/Portland within 2 minutes), C02 south of Dupont, and some other commutable parts of Toronto such as the Yonge subway corridor.

(yes Smoking Man, that includes Mimico and a few other GO train neighborhoods as well)

#19 renters rule on 06.04.12 at 10:12 pm

You Toronto RE investors who think that T.O. is being “manhattan-ised” are beyond delusional…..

Sheesh.

#20 Market Bull on 06.04.12 at 10:18 pm

Well well well.

I wonder what Flaherty meant when he said earlier today that, “Canada has fiscal room to act if it’s needed.”

#21 NAM not HAM on 06.04.12 at 10:20 pm

#3 thinker on 06.04.12 at 9:48 pm

How much are prices off the peak in Vancouver??
_______________________________

Sfh avg down 12.2% YoY
Median down 5.4%

Condos and TH are pretty much flat. Declines are mostly in Van west and DT. Prices won’t tank unless sales completely falls off a cliff. If prices don’t tank by the end of the year, I don’t think it ever will.

#22 furst on 06.04.12 at 10:21 pm

Wisdom – A poem by Furst

Dads across the land, old and wise
Impart stories of wealth, built on real estate highs
They say, buy now or be a poor renter forever
Listen to me child, as I am your mentor
Nothing is worse than not owing a home
No down payment, don’t worry, use a cash back loan
Their intentions are good, straight from the heart
Good children will follow the wisdom they impart

This begins a long and very sad tale
Mortgage payments covers only interest, financing Fail
The feeling of getting ahead is a lie
The kids who bought will be left out to dry
When the market corrects and the only option is to sell
Welcome the cycle of price reduction hell

How, did it ever come to this point they might think?
It happened so fast, before they could blink
Make this a lesson to all the dads out there
Don’t pressure your kids to buy, if you truly care
It won’t end well with increasing debts
May as well tell them to go to Vegas and place their bets

#23 Jon B on 06.04.12 at 10:21 pm

I fear the emptying of golf courses and languishing RE sales will do little to help solve another one of this countries’ ongoing economic problems; lack of competition in major industries like telecommunications and the airlines biz. A consumer base shackled to debt will be at the mercy of big corporations more than ever before. Yet another ramification of the pending RE melt down.

#24 Retired Boomer - WI on 06.04.12 at 10:22 pm

Boomer here.

When did it first on our generation that the pensions were going bye bye? My company -the US Government- changed pension rules in 1987 to a defined contribution plan, from a defined benefit plan. They still maintained a SMALLER defined benefit plan 1% of salary times your years of service. Work 30 years get 30% of your high 3 years salary. Still not bad.

Want to leave half to the wife? That costs 10% of the defined benefit. Want health insurance? You pay your portion of that, too – 25% of the annual cost. My family plan $12,800 so goodbye to 4 grand plus…

There good news was they matched your first 3% of 401K savings 100% and the next 2% at 50%. Still quite generous.

So, when I started there in 1987 I put 10% into the 401K.
Gradually increased this over time to about 14%.

In the meantime, paid off the new house $135K at 1987 prices at 7.5% interest for 30 years. Good thing interest rates, and terms got cheaper over the years. If you never take any money OUT of the dam thing, you CAN pay it off!

So, at 60 said “screw them” and retired with 25 years of service. Yeah, pension is small do the math. Savings however are doing quite well.

No debt, not a BIG income but I don’t play golf, own gold, or keep money in the orange guy’s shorts. How much DO you really need to enjoy life? I’m happy, not having to be a slave to anyone but myself.

#25 Bottoms_Up on 06.04.12 at 10:23 pm

Garth, great entry. It really hammers home the coming demographic shift and that there are big changes brewing. The Boomers have always had that effect — they changed, and change, society with their bulk demand, desires and needs. It’s likely they soon do not need McMansions or crusty old bungalows. In fact I think there will be demand for centrally located condos in big cities, as well as for cheaper housing in smaller cities. Although in the past I have defended the fact that I think a lot of boomers will stay in their houses, well if 1/3rd are planning on leaving, that is quite a significant number, and we can expect boomer homes to sell at a discount to the current price trend.

#26 obert on 06.04.12 at 10:26 pm

Nice photo :)

#27 Not 1st on 06.04.12 at 10:27 pm

Garth, how can the real estate crater in a town like Canmore and Calgary be spared? These places are less than an hour apart. Thats really the same market isn’t it? Interesting and confusing at the same time.

Calgary has more Silverados. — Garth

#28 B on 06.04.12 at 10:28 pm

Garth – what is your take on peak oil and the global energy supply? A lot of indicators are showing we simply cannot extract energy at a rate higher than we are today. If it’s true, this would have far-reaching implications for growth.

I ask because you are generally quite optimistic about non-RE markets, and my gut says it’s not justified in the medium-to-long term (i.e. 5 years+).

We are not running out of oil. We’re running out of cheap oil (and cheap coal). — Garth

#29 Onthesidelines on 06.04.12 at 10:30 pm

Finally, this could be the death rattle for boat salesguys….

Got news for you, used ocean cruising boats have been selling at half price or less for a few years now.

The boomers can’t afford the absurdly high marina fees anymore and are stuck with bluewater cruisers because no youngsters these days dare to walk out mid-career to go bumming around the world on a sailboat for a few years.

#30 Dave2 on 06.04.12 at 10:30 pm

BPOE has left the building.

#31 randman on 06.04.12 at 10:32 pm

One of the funniest and saddest quotes…..

“All the nations where people wear clothing are in desperate trouble. Their debt problems are insoluble and they’re out of accounting tricks. Events are running way ahead of institutions and personalities. ”

http://kunstler.com/blog/2012/06/welcome-to-the-wormhole.html

#32 Not 1st on 06.04.12 at 10:37 pm

After reading this post, I am about to go short real estate and very long viagra.

#33 randman on 06.04.12 at 10:37 pm

” Ever wonder what it might be like to live in a world without consequences? Well, you’ve had a good look at it for more than a couple of years. How did it work out? What did you get away with? And how do you plan to hang onto it?”

For the Boomers

#34 The Gospel of GARTH on 06.04.12 at 10:40 pm

Garth 4:1 “And it came to pass that a young man approached the bearded mystic oracle and asked, “o wise and sagacious one, what must I do to enter into financial bliss?”
4:2 The bearded oracle looked at him with the steady gaze of a sage and replied, “if you want to be a follower of me, sell your house and be liquid and you shall have your reward.”
4:3 The young man shook his head and walked away for he could not part with his house.
4:4 The bearded oracle turned to his followers and said, “the people of this heloc infested land have been warned. A prophet has walked and talked among them. When the day of reckoning comes, they will have no excuse”.
4:5 The followers of the all knowing, all wise sage yelled out, “master count us worthy to escape the coming financial armageddon in this heloc infested land”.
4:6 The bearded oracle cast his gaze on his followers and said, “ye shall all one day be rewarded”.

#35 Ex-Cowtown on 06.04.12 at 10:42 pm

We are not running out of oil. We’re running out of cheap oil (and cheap coal). — Garth

++++++++++++++++++++++++++++++++++++

Exactly the point. And that is why Canmore/Cowtown is hooped. The days of windfall profits are over. There’ll be no more company start-ups where three guys sit around the kitchen table looking at a few maps, pooling their life savings and saying “Drill here!”. Now they need $30 million behind them…. and that kind of money comes with a lot of strings.

Lottery days are over (for now) in Cowtown. If you missed it, just wait for the next crash. Once the bloodletting ceases, it’ll be time for gutsy and visionary individuals to start all over again in Cowtown.

Ever has it been so.

#36 NFN_NLN on 06.04.12 at 10:43 pm

#30 B on 06.04.12 at 10:28 pm

Garth – what is your take on peak oil and the global energy supply? A lot of indicators are showing we simply cannot extract energy at a rate higher than we are today. If it’s true, this would have far-reaching implications for growth.

Coincidentally I spoke with a PetE friend in Calgary regarding the recent down trend in Oil prices. It appears inventory is up. I asked if it was because production is up or demand down…

A little bit of both but mostly that production is up because everyone that was previously drilling NatGas is entirely focused on oil now… and everyone is trying to tap everything. Add to the fact that North Dakota has reserves coming online… they produce 700,000 barrels compared to the oil sands 1.2M. So now N.D. has caught up to roughly half of the “all-mighty Alberta advantage”.

#37 young & foolish on 06.04.12 at 10:47 pm

Only one in 4 boomers has an RSP? Seriously? Wow!
With so many in debt and without money, can deflation be far away?

I guess the demographic shift away from RE will finally allow young families a chance to move into an affordable home.

#38 Arb Watson on 06.04.12 at 10:55 pm

Time to buy a dope car, enjoy life and go on a trip of a life time.

Saving for retirement is for the birds…

#39 Calgary Bubble on 06.04.12 at 10:56 pm

I feel more and more like caving in, and buying a house. It seems like the economy will never be good enough for Carney to raise rates. Just the other day was looking at listings in Calgary and I caught a glimmer of hope, finally a nice house for a normal price:

http://www.findcalgary.ca/listing_detail-7109451.html

But no, its always too good to be true in Calgary. The only way to get a nice house for a decent price is if its a former grow-up and its unlivable.

#40 pound puppy on 06.04.12 at 10:58 pm

Bank of Canada rate will drop tomorrow…yes drop!

Bet? — Garth

#41 phlex on 06.04.12 at 10:58 pm

Garth, how do you explain that with America’s housing market at a multidecade low, a penthouse in New York just sold for a record $90 million? Does this not demonstrate that certain urban markets will hold their value during a downturn in real estate? Can we not expect Toronto and Vancouver to hold their values in the same way?

No. — Garth

#42 Cherish | The Retiring Boomer™ on 06.04.12 at 11:01 pm

[…] As published in The Greater Fool […]

#43 Tim on 06.04.12 at 11:02 pm

Prices certainly haven’t dropped significantly in Vancouver. You still can’t buy a decent two bedroom condo for much less than half a million

#44 Monster Cookie on 06.04.12 at 11:03 pm

We are not running out of oil. We’re running out of cheap oil (and cheap coal). — Garth
—-
Same thing. It is finite so we are running out.
75% of oil is used for transportation fuels. Especially in autos, burning fossil fuels for transportation will soon be like burning kerosine for light, primitive.

Electric drive moving well on a fast track and once it catches on will become very popular very fast. If we can replace 10% of autos in 8 years for urban transport we could be at 50% in 10 years. This is optimistic but I think it could move a lot faster than anyone thinks.

#45 Monster Cookie on 06.04.12 at 11:05 pm

That was supposed to be 10% in 5 years. Bad lighting.

#46 MarcFromOttawa on 06.04.12 at 11:05 pm

“Second, old people with mortgages don’t cruise the Mediterranean, buy 80-foot Winnebagos or join snooty golf clubs.”

I disagree. People young and old have been buying expensive trips and memberships on credit. They re-finance their debts every couple of years and roll into the mortgage.

No wonder they have mortgages will into their 60s.

Oh year, and what’s with the picture Garth? It’s all warm and fuzzy.

#47 Devore on 06.04.12 at 11:11 pm

On a regular basis we have people posting here that no way boomers will sell their houses. Just look at the geriatrics today, they say. They’re not selling. Staying put. But tomorrow never looks like today.

That survey (there were a couple along the same lines actually) puts things in perspective. For over half of today’s boomers, selling their house is the ENTIRETY of their retirement plan. As Garth notes, a third will have a mortgage when they retire. A survey earlier in the year for the red bank discovered 5% expect to retire on lottery winnings. EXPECT! Another several times that number are probably praying for some lucky numbers, no doubt. Almost as many expect their kids will fund their retirement. Over a third expect to work after retirement out of necessity. More than half think they will be able to retire on a mere million bucks. Half of those think $300k is enough. Nearly a third hopes to inherit. More than half can’t even manage to save $4k a year.

These people won’t be itching to sell their house? Lots of years left between now and when they kick the bucket.

#48 spatchy on 06.04.12 at 11:19 pm

Here’s a link http://bit.ly/KHeCO8 to a photo essay on some of the sad stories of people in the US with negative equity in their homes. Eulette Arrington, 89 and Chat 90 years old are underwater by $61,000.

#49 Poorboy on 06.04.12 at 11:23 pm

Since we as a society seem to see fit to protect people from themselves, perhaps it’s time we take personal finances out of the hands of the individual and into the hands of professionals (or a computer algorithm).

God knows they (or it) couldn’t do much worse than what people have been doing to themselves if 3 of 4 boomers doesn’t have an RSP.

#50 noodles 79 on 06.04.12 at 11:27 pm

Besides reading your blog, everyone should watch ‘Till Death Do Us Part’ on Spike. Its the most accurate depiction of todays state of affairs.Everyone is over extending themselves, because theyve been told, over and over again, that,’its different here’ .Ive stopped trying to convince people of what is in store for us,no one wants to listen.Renters have no voice, when peoples priorities are big suv’s and granite countertops.I have given up, they could all burn in debt for all I care.And while theyre burnig Ill be planning my next vacation.
Keep up the good work, its nice having a place to visit, that puts out commen sense.

#51 Poorboy on 06.04.12 at 11:30 pm

#49 Devore

More than half think they will be able to retire on a mere million bucks.

A million bucks + CPP is plenty considering the median household income.

#52 Doug in London on 06.04.12 at 11:30 pm

It appears most people forget that housing is cyclical and goes full circle. According to this article http://www.capradio.org/news/npr/story?storyid=154160951 the worst is over in the United states and real estate is slowly recovering. So what about Canada? We’re about 5 years behind the United States, give or take a year. Connect the dots, and you’ll see what’s coming.

#53 Tron on 06.04.12 at 11:33 pm

#37 LMAO

#54 Smoking Man Fake on 06.04.12 at 11:41 pm

DELETED

#55 DDCorkum on 06.04.12 at 11:47 pm

#7 Slim Jim:

“…is “C” going to raise interest rates tomorrow?”

——————–

Very unlikely. Personally, I think he only needs to do two things:

1) Remind the short-term bond markets that current rates are already at “emergency” levels and unlikely to go lower unless things turn much further for the worse; and

2) Remind the long-term bond markets that the inflation target will remain unchanged for the forseeable future, even if benchmark yields actually trend lower.

#56 Mr Buyer on 06.04.12 at 11:48 pm

#22 Market Bull on 06.04.12 at 10:18 pm
Well well well.

I wonder what Flaherty meant when he said earlier today that, “Canada has fiscal room to act if it’s needed.”
……………………………………………………………….
I think he meant that the bubble has taken on a life of its own as all bubbles do and that no matter how much money you throw at it the bubble will ultimately crash but I could be wrong. What do you think it means? BUYER BEWARE. THE BUBBLE HAS TOPPED. NOW IS NOT THE TIME TO BUY A HOUSE.

#57 DM in C on 06.04.12 at 11:50 pm

#43 phlex
a penthouse in New York just sold for a record $90 million? Does this not demonstrate that certain urban markets will hold their value during a downturn in real estate? Can we not expect Toronto and Vancouver to hold their values in the same way?

Ahahahahahahah sure buddy. New York they ain’t.

#58 John G. Young on 06.04.12 at 11:54 pm

#24 furst on 06.04.12 at 10:21 pm

I wanted to thank your for your poem — it obviously took some time and effort to compose, and it adds class and creativity to the comments. I look forward to more of your creations.

And thanks for the photo Garth.

#59 noodles 79 on 06.04.12 at 11:54 pm

I meant Slice not Spike

#60 Mr Buyer on 06.05.12 at 12:02 am

#25 Jon B on 06.04.12 at 10:21 pm
I fear the emptying of golf courses and languishing RE sales will do little to help solve another one of this countries’ ongoing economic problems; lack of competition in major industries like telecommunications and the airlines biz
…………………………………………………………
I was talking to an Engineer working in the Fiber optic to the home FTTH biz here in Japan. I asked him if fiber optic lines were unusually delicate and he explain that in fact they are not strung in tension and have proven to be very durable. Yet another myth exposed as to why we are using copper over fiber optics. The bandwidth over fiber optic allows for crystal clear high definition (HD) Skype video calls. Would you want the general public to have unfettered access to such bandwidth if you were say a phone company or a cable TV conglomerate? Price fixing is always a concern but bandwidth restriction is the latest tool in monopoly maintenance. The whole country needs to be connected by means of unrestricted (or minimally restricted ) FTTH. Oh yeah…THE BUBBLE HAS TOPPED. NOW IS NOT THE TIME TO BUY A HOUSE.

#61 Observor on 06.05.12 at 12:10 am

But retirees did not stick the bulk of their net worth in a house.

Instead, they bought a house years ago and it happened to soar in value.

If they had few other assets then this unexpected house equity was like winning the lottery. But many are determined not to casht the lottery cheque but instead to wait and see if the market will take the gain away. It might.

Young people are sticking some 40% of their pay checks for the next 30 years into a house. That is an obligation I would never take on. In that situation your boss OWNS you.

In 1995 when I bought my house it was not much more that 1 times our income. Our mortgage was one times and we paid that off in eight years. Also we scrounged up 25% down to avoid the CMHC fee. I have never paid a dollar to CMHC and never will.

I would rent today rather than even consider contracting to pay or three or four times my income on a house.

#62 Musings on 06.05.12 at 12:12 am

This is most salient ‘garthgram’ yet.

Gen “Y” to Boomer-Doomer … “Grand Pa, lack of preperation on your part does not constitute and emergency on my part”

So predictable, yet like a living Greek Tragedy … a highly probable ending.

#63 D-dawg on 06.05.12 at 12:13 am

#46 MC.

If my aunt had balls she’d be my uncle.

Don’t kid yourself. Electric vehicles are a long way off. Gasoline is far more affordable than batteries and for a long time in the future this will be the case. There is no shortage of feedstock to make gasoline.

#64 Lee on 06.05.12 at 12:13 am

Great post Garth, hit a chord.

#65 P & T S on 06.05.12 at 12:15 am

Onthesidelines on 06.04.12 at 10:30 pm

Finally, this could be the death rattle for boat salesguys….

Got news for you, used ocean cruising boats have been selling at half price or less for a few years now.

The boomers can’t afford the absurdly high marina fees anymore and are stuck with bluewater cruisers because no youngsters these days dare to walk out mid-career to go bumming around the world on a sailboat for a few years.

____________________________________________

And if you’re prepared to travel to the Canaries you can pick up even better bargains – seems people plan on “The Big Trip”, leave Europe, then by the time they get to the Canaries realise they are actually not up to the idea after all. It’s always been known in boating circles that the Canaries are where you go to find an “affordable but long-haul sailing equipped” vessel.

Since the sellers are usually “keen to sell” you can drive quite a hard bargain. Everything from 32′ upwards, mono or multihull. Usually excellent builders too (e.g. Nicholson, Bavaria, Westerly, Prout, Nauticat etc.) and usually everything you’ll need (including World coverage nautical charting, HF / MF, liferafts (most will be RORC Spec), pv / wind generation, and very often RO systems.

If you’ve got cash (or equivalent) it’s easy to get a boat for less than 1/3rd of even the cheaperst UK / EU Brokerage rates!!

#66 NFN_NLN on 06.05.12 at 12:15 am

#50 spatchy on 06.04.12 at 11:19 pm

Here’s a link http://bit.ly/KHeCO8 to a photo essay on some of the sad stories of people in the US with negative equity in their homes. Eulette Arrington, 89 and Chat 90 years old are underwater by $61,000.

More schadenfreude
http://america-underwater.tumblr.com/

#67 Gun Boat denier on 06.05.12 at 12:33 am

You dont need 800K to move to Pville/qualicum. Ave price is about 390K after dropping in 09 and then rebounding to 08 level. Sales down from peak but steady last three years.

http://www.vireb.com/index.php?page=20

#68 Soylent Green is People on 06.05.12 at 12:36 am

I have to wonder: just how stupid do the Conservatives think we all are? I can’t even fathom the mindset behind these new calls. They’d insult voters’ intelligence less if they actually went out to Etobicoke and spit on every one of them and then asked for a vote.

http://news.nationalpost.com/2012/06/04/rae-accuses-tories-of-trying-to-shut-down-democracy-with-etobicoke-riding-voter-calls/
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#69 Harlee on 06.05.12 at 12:37 am

#24 furst
That was a pretty good effort. I especially like the second stanza and the last two lines:”…the only option is to sell.” and “…price reduction hell.” .Made me smile. You still need to loosen up a bit but you could be on your way to becoming the ‘Bard of the GreatFool Blog’ :-)

#70 pound puppy on 06.05.12 at 12:39 am

Bank of Canada rate will drop tomorrow…yes drop!

Bet? — Garth

Your on!!

.25

#71 guy from Vancouver on 06.05.12 at 12:52 am

Can someone tell me the definition of upscale market (in Vancouver, anyways?) We’ve kept our eye on, what I would call an average single-detached home in central parts of Vancouver… units that we thought were too expensive when they averaged 850K back in 2006, and now selling for 1.6m. We haven’t seen any type of crash or free fall… so by upscale, if you’re talking about the previously 5m house now selling 4m, I don’t even know what that means… or even if it was 1.6m and is now 1.55m… as if that means the sky is falling.

#72 Thebeliever on 06.05.12 at 12:52 am

Vancouver house prices hit a 10 year low. Reading now on Vancouver province

#73 The American on 06.05.12 at 1:00 am

At #43: Flex, I guess I don’t get it. Why do Canadians keep trying to compare cities like Toronto or towns like Vancouver to megalopolises like New York City? The economic/socio demographic/infrastructure/political/progressiveness/quality fundamentals of the likes of Toronto or Vancouver are extremely different than NYC. I think it goes to show with all the delusion of grandeur and “NYC” comments coming from Canadians to justify prices in cities that are significantly smaller just goes to show how much an American city like NYC is used as the benchmark for critical to qualities.

#74 Nostradamus Le Mad Vlad on 06.05.12 at 1:17 am


“Everybody under 40 should prepare. When the very nature of risk has changed. Second, old people with mortgages don’t cruise the Mediterranean, buy 80-foot Winnebagos or join snooty golf clubs. Others will opt for a reverse mortgage, ensuring a big, fat surprise for their children. When debt’s an enemy, like greed and lust.” — Certainly, if we had gazillions of dollars it would be nice to cruise the Med. Reality says no such luck, ‘tho filling one’s TFSA with ETF’s would help things along nicely.

Any recommendations which ETFs to buy?

“Alex lives in Canmore, a too-perfect, mountainy little town where oil-rich Calgary housewives and Toronto financiers go for moist trysts in their cedar mansions.” — Twin Peaks Part Deux?

“. . . or that somebody will employ them at age 68.” — Well, Here’s a hint.
*
#227 AACI Home Dog on 06.04.12 at 8:36 pm — Hello AACI HD. Yep, few days ago. Soros, Obomba, the R’s and R’s and more — they are busting a gut laughing. More to come on the world scene, ‘tho. Cheers!

#21 Timing is Everything — “A double double sno-cone is in order.” — Hi TiE. See following — Starbucks Giving Timmie’s a run for their money? Plus this.

#36 The Gospel of GARTH — Nice paraphrasing and good choice of words!
*
Germany’s Wealth Transfer Guess the R’s and R’s would have a say in this, and Soros EU could become German empire; QE3 and Hyperinflation; Sleepyheads Mini portfolios; 2008 was a practice run; Chinese output grows; QE for lunch on Thursday? Taco Bell New record? Japan — Survival and Japan — TOPEX Survival; Groupon Another Bre-X in the offing; Arise, sheeple! The Fourth Reich Addendum to what was said earlier.

Central Banks Doesn’t say for how long, ‘tho; Financial Education fir fifth graders. Damn good idea — should have happened decades ago; Surprise Fall April US factory orders; Exploding Derivatives and JPM and PIMCO Crash of gargantuan proportions? China GM and Ford’s pensions jubilee; US$ Tipping Over? Link in with chart, and Cdn. banks bailed out?
*
Edison’s 1888 to-do list; 18:49 clip WWF and Monsanto. Hypocrisy gone nutzso; Socialism / Marxism Unfortunately, that’s the way TPTB are taking us; High Speed Rail Another reason why politicos should be eliminated. They love spending taxpayers’ money, but arguing about the process; Pink Slime or Strawberry Smoothie? Hmmm; Light-emitting Diodes are very efficient; Monsanto Five million Brazilian farmers sue, and Californa could force the rest of the US to label GMO foods; Farthest known galaxy discovered What’s beyond it? Mysterious Phenomenon The Arc of Venus; New Mac? Cosmic Explosion a thousand years ago; Civil War in the Vatican; Bigger and better China; Surging Global cancer rates; Arachnophobia These are real killers.
*
disciple — Are you Becoming Mainstream in your thoughts? Or are they catching up to you?

#75 Van grl on 06.05.12 at 1:19 am

Oh Garth- I think it’s official.
Best photo ever :)

#76 Not So Zombie on 06.05.12 at 1:23 am

Mid-Vancouver Island, there is more and more of this kind of add: ”Assume my mortgage with nothing down!
. All you need to do is qualify. This is not a scam I just want to sell my home ASAP.”

http://nanaimo.kijiji.ca/c-real-estate-houses-for-sale-Assume-my-mortgage-with-nothing-down-W0QQAdIdZ385300977

#77 Aussie Roy on 06.05.12 at 1:32 am

$$$BPOE#1 on 06.04.12 at 1:45 pm

Folks, nothing goes straight up or straight down. this is the pause that refreshes. HST debacle almost finished being ironed out. Check out west 2nd by World Class Oly Village towers going up everywhere. It just keeps getting better everyday
…………………………………………………………………………..

Translation – Monty Pythons Black Night

Folks, folks, it’s only a flesh wound.

http://www.youtube.com/watch?v=dhRUe-gz690

#78 Aussie Roy on 06.05.12 at 1:34 am

Aussie Headlines

Housing prices on the slide

TWO separate reports have painted a grim picture of the real estate market in Tasmania, against a backdrop of job security fears and tighter bank lending criteria.

While RP Data-Rismarck recorded an 8.9 per cent fall in the median sale price to $350,000 in the year to May, the Real Estate Institute of Tasmania report for April revealed a 2.9 per cent decrease in the annual median to $360,250.

The RP Data-Rismarck home value index suggested that the market had not responded to the 0.5 per cent official interest rate cut to 3.75 per cent by the Reserve Bank in May. REIT president Adrian Kelly said job insecurity, tighter bank lending and the general pessimism about the Tasmanian economy was weighing on the market.

http://www.themercury.com.au/article/2012/06/05/334591_real-estate-news.html

#79 Onemorething on 06.05.12 at 1:37 am

Freedom 95 haha, death will come long before that!

#80 George on 06.05.12 at 2:11 am

Hi Garth,
You say that 70% of retirees today have no corporate pension, and foolishly stuck the bulk of their net worth in a house.

These folks are trapped, victims of their own bad choices. Without liquid assets (only one in four Boomers even has an RSP) So how does this dire situation square with
Stats Canada figures which say that the average income of
Elderly families in 2009 was 55200 dollars AFTER TAX
Could you explain

#81 GeneticistX on 06.05.12 at 2:15 am

I was in a motorcycle course this weekend and a RE agent was also in the course. I asked him “how many of your buyers are putting down 20% or more on the purchase of their house?” His answer was quick and confident “Less than 20%”.

So what we’re sitting on here is a bubble, without a doubt or something that could get very very ugly. If (and when) prices do start to drop 10-15%, 80% of new buyers are going to be underwater in their new diggs.

#82 Michelle on 06.05.12 at 2:21 am

“Some, losing their marbles altogether, will buy a retirement shack in North Bay just because it’s cheap.”

Hey… don’t diss North Bay!
I have some relatives buried up there!
(and yes, some of them were without marbles)

#83 Nick on 06.05.12 at 3:16 am

To the people comparing Toronto to Manhattan, etc : there is no New York in Canada. There is no Beverly Hills in Canada. It’s that simple. Thank you and have a great day.

#84 The Real Jimbo on 06.05.12 at 3:17 am

For the 29 luxury condos… “The seller has also established an unpublished minimum selling price (Reserve Price) for each home. The Reserve Price is not the Starting Bid. In order to become the winning bidder of a home, a bidder must have the highest bid, and meet or exceed the Reserve Price.”

So it’s not true desperation. It sounds more like an attempt to create an emotional bidding war that hopefully pumps up the price to the reserve – which I bet is very close to the asking price. If that ploy doesn’t work, then there will be no sales.

I’m looking forward to the day when the desperation is real and the auctions start at nil with no reserve price.

#85 Freedom First on 06.05.12 at 3:28 am

#34

Thanks for the laugh of the day:)

Garth, yes, a lot of the boomers are hooped. And the ones I talk to, they will not believe that RE can have a big drop in Canada. Like with any other bubble asset, only a few get out alive…..oops,sorry:)…..I mean in time….and a lot of the boomers kids……they drank the same kool aid…..

#86 Buy? Curious? on 06.05.12 at 4:09 am

What the…? What kind of picture is that? When I come to this site, I want to see some nerd motorboating a large breasted woman, not some girl in a wheelchair affectionately hugging a horse! Gawddamnit! With this impending crash you’ve predicted that will wipe out alot of people, you’re not getting soft on us? Don’t put up “cute” pictures.

#87 Mr. Lahey on 06.05.12 at 6:05 am

#58 Mr Buyer

As others have pointed out to you, almost everyone on this blog is a real estate bear and yet you keep repeating your mantra to us. Does preaching to the choir resonate with you? Even Ricky is getting irked with your repetitiveness.

#88 Not Even the MSM Believes the RE Index on 06.05.12 at 6:19 am

http://business.financialpost.com/2012/06/04/fewer-homes-selling-in-vancouver/

I almost fell out of my chair laughing at this quote from the article::

“The (Real Estate Board of Greater Vancouver) board’s benchmark price index for all residential properties in Greater Vancouver was $625,100 in May, a 3.3% increase from a year ago. Detached home prices jumped 5.1% from a year ago to $967,500, apartments increased 1.7% from a year ago to $379,700 and townhome property prices rose 0.9% in May from a year ago to $470,000.

However, using actual average prices instead of the index, average detached home prices are down 12.2% from a year ago, townhomes are down 0.2% and condominiums are off 1.1%.

When is Consumer and Corporate Affairs going to force these SOB realtors to stop lying????

If McD’s advertised their burgers as “100% Beef” and testing came back showing they were made of pigs ears, McD would be in trouble. Why not the Realtor Associations?

Liar Liar Pants on Fire!!!!

#89 Mr. Lahey on 06.05.12 at 6:19 am

#24 Wisdom A poem by Furst

I hope you will be bringing your collection of poems to the SASTPGFBDCParty and do some readings for all the blog dogs and residents of Sunnyvale. Bubbles is really getting into your poems and says he wants to meet this poetic blogger.

#90 TurnerNation on 06.05.12 at 6:43 am

RIM and FB trading at all-time or multi year lows. The two most popular stocks for retail investors. Junk. Not investment grade.

#91 pbrasseur on 06.05.12 at 7:24 am

Is it just me that find that picture sad?

But it sure is a great metaphor about the relation between Canadians and their real estate…

#92 bigrider on 06.05.12 at 7:47 am

God I wish everyone would just stop with this whole “manhattinization of Toronto”.

Toronto will never be New York.

RE is more expensive in New York for many reasons ,one of them is because average incomes are much, much higher. Ownership levels of RE in New York also much lower than T.O.

Toronto is closer to being the next Detroit than New York.

About 37% of New Yorkers own, compared with 64% in the GTA. — Garth

#93 D. Suzuki (Dwayne) on 06.05.12 at 8:06 am

#46 Monster Cookie

There are several problems with the electric car scenario. One is that none of the major car manufacturers have to date been able to make a hybrid car at a profit. The 13 million barrels of oil burned every day in the North American vehicle fleet contain a lot of energy. If we want to charge up those cars with electricity, we are going to need as much power each day as nearly 2 million North American homes would use is a year. Electric motors are more efficient than internal combustion engines but the power plant that generates the electricity is not that much more efficient. Or necessarily cleaner when it comes to greenhouse emissions. We are currently close to peak capacity on the electrical grid in North America without all these future electric cars driving around. Even if we decide to go ahead and build all these new electric power generation plants what will we run them on? Coal? I think (or hope) not! Nuclear power plants? They take on average take 17 years to put in place and the toxic waste generation problem has to be addressed. So you see it is not as simple as you propose.

#94 Tonino, Nonno Nicola's Grandson on 06.05.12 at 8:20 am

#94 Big Rider

Hi Big Rider. Nonno is off on a cruise with Nonna but he told me to check any posts by you and to keep you on the straight and narrow (for the record, I am sick and tired of reading him all these friggin books by Jack Schwager on the markets to him but he keeps telling me he can’t read English and he only went to grade 5…)

First off, incomes in Manhattan, not all of New York are higher on average than Toronto. To say incomes in New York are higher on average would be to include the other boroughs and I can assure you that they would not be higher on average. House prices in the other boroughs are also probably lower or the same on average than Toronto (think Bronx, Brooklyn, Staten Island and Queens). As much as I am a real estate bear as well, Toronto is not going to be the next Detroit. Even the bearded oracle who writes this blog and with whom you go motor biking on the weekend has never stated Toronto would be the next Detroit. Do you forsee homes being sold for a $1k in Toronto like the crack shacks in Detroit? What will happen to all your rich builder buddies? Are you secretly hoping to scoop up 100 homes in Toronto for $100k and become a real estate tycoon? Anyhoots, gotta go and report to Nonno that I commented on your post. Hope he’s proud of my effort.

#95 timbo on 06.05.12 at 8:20 am

http://www.businessweek.com/articles/2012-06-04/falling-oil-prices-are-no-mystery?r=read

“With speculative money pouring out of the oil market, the price is closer to reflecting supply-demand fundamentals. And that means the world’s two most traded oil contracts should continue to fall in price through the summer, analysts say. Religare Capital Markets forecasts that Brent crude, the benchmark for more than half the world’s oil, will fall to $90 a barrel by September, and that West Texas Intermediate should fall to $80.”

that sounds about right as long as the savings is passed on to the consumer……

http://www.bloomberg.com/news/2012-06-04/fedex-to-take-134-million-charge-as-24-cargo-jets-are-retired.html

“FedEx Corp. (FDX) retired 24 jets to cut capacity in the U.S. domestic Express division as a slowing economy saps shipping volumes for the operator of the world’s largest cargo airline”

Shipping volumes falling, hmmmmm……..

#96 Gypsy Kid on 06.05.12 at 8:23 am

Both my father and my FIL lost money in idiotic real estate investments when they were younger.
They are hounding us these days to “invest” in real-estate. My response, “umm…because it worked out so well for you???” We actually have to supplement their income now. Go figure…

#97 timbo on 06.05.12 at 8:41 am

http://www.telegraph.co.uk/finance/debt-crisis-live/9311334/Debt-crisis-Live.html

“Eurozone private sector activity suffered its worst monthly slide in nearly three years in May, the full Purchasing Managers Index published today showed, with “alarmingly steep” declines in Spain, Italy and France.

The Index compiled by the London-based research firm Markit fell to 46 points in May, down from 46.7 in April in what amounted to the fastest rate of decline since June 2009. Any score below 50 indicates economic contraction.

Today’s reading showed German output fell for the first time since November and that downturns in France and Spain accelerated, with Italy firmly mired in a steep downturn. France posted a 37-month low of 44.6, with Spain languishing on 41.2. Italy’s score rose, but only to 43.5. ”

Emergency meetings are the new catchword and a new shade of lipstick will soon be announced for the old sow in the corner. ……….;)

#98 Mr Buyer on 06.05.12 at 8:44 am

#89 Mr. Lahey on 06.05.12 at 6:05 am
#58 Mr Buyer

As others have pointed out to you, almost everyone on this blog is a real estate bear and yet you keep repeating your mantra to us. Does preaching to the choir resonate with you? Even Ricky is getting irked with your repetitiveness.
…………………………………………………………….
WARNING: THE FOLLOWING POST CONTAINS A WARNING TO BUYERS THAT HAS BEEN REPEATED MANY TIMES. IF THIS REPETITIVENESS IS EVEN IN THE SLIGHTEST IRKSOME BE ADVISED THAT TOTAL DISREGARD OF THIS POST AND ANY FUTURE POST BY ONE MR BUYER WOULD BE MENTALLY HYGIENIC. FEEL FREE TO BLOW RIGHT BY AS MOST DO….
I have to write a few lines in small case otherwise my usual warning to buyers may get lost in the warning to readers of my usual warning to buyers. I have heard your warnings and I am somewhat fearful of getting tossed off the island but the real estate boards keep repeating the same stuff over and over and you guys seem alright with that. Hey wait a minute. Are you guys real estate types. You guys are so sneaky. Anyways here goes. BUYER BEWARE. NOW IS NOT THE TIME TO BUY A HOUSE. THE BUBBLE HAS TOPPED. SALES ARE FALLING ACROSS CANADA.

#99 Mr Buyer on 06.05.12 at 8:59 am

I find myself reading a good deal of massaging of the situation with this impacting that and the other thing effecting this when the general public really likes it a little more short and sweet. That is why the poor souls often wind up being taken in. They quest for a distilled understanding of a complex situation but are often served distillate that has been at the very least spiked and skewed by vested interest or even outright misrepresented. Fortunately the latter stages of bubbles are very simple creatures and the chances of misleading somebody by telling them that a bubble crashes are almost non-existent. While the road there can be very interesting and close examination of the intricacies of this road to collapse would make for great comments I think the poor dude actually thinking about buying a house and falling upon this blog and then my goofy comment has probably given up reading this very comment by now. Hence…BUYER BEWARE. THE BUBBLE HAS TOPPED. NOW IS NOT THE TIME TO BUY A HOUSE. SALES ARE FALLING ACROSS CANADA.

#100 Gotthardbahn on 06.05.12 at 9:01 am

Hey Turner – Easy for you to say. How long were you in Parliament? Coupla terms? So you got that nice fat MP pension payable in full starting at age 55. A sweet deal that, courtesy of all the boomer taxpayers out here you consistently dump on.

For nine years I was an MP or minister, and my pension is $26,000, which I donate. — Garth

#101 Mississauga Mel on 06.05.12 at 9:09 am

#19 LH

“Well said! What we are witnessing is the end of suburbia/exurbia, where it takes a Litre of Gas to get a Litre of Milk, ”

Beg to differ but in my neck of the woods of Mississauga, I can walk to a Loblaws, Home Depot and Canadian Tire and a Go Station in 10 minutes (walking not driving). I can’t speak for the MarkHAMites or the Stoufvillians though.

#102 Toronto_CA on 06.05.12 at 9:20 am

“Stats Canada figures which say that the average income of
Elderly families in 2009 was 55200 dollars AFTER TAX
Could you explain”

I’m no statistician, but as in the cases of net worth, I’m assuming the average may be heavily skewed by the top 2% of wealthy seniors who hold 80% of the wealth or something insane like that. You may want to look at the median income for seniors.

From 2009, for instance:

“For senior unattached individuals, the median (income) rose 4.5% to $23,300.”

Also, the people who are seniors/retired in 2009 wouldn’t include the bulk of boomers who are just retiring now, possibly?

#103 OttawaRenter on 06.05.12 at 9:20 am

#36 The Gospel of GARTH on 06.04.12 at 10:40 pm
________________________________________
Awww, man, did this blog just become a cult?!?! If so, I’m out.

#104 Kenny Banya on 06.05.12 at 9:22 am

NYC is the world capital of: advertising, jazz, modern dance, journalism, finance, classical music, photography, hip-hop, publishing, sports, the diamond trade, theatre and architecture. It’s home to the Fed, the UN, the Guggenheim, the Met and the US Open.

Not to mention that it’s 5x as big (~20m in the metro area), with 10x the amount of subway lines and stations.

Toronto is the world capital of… CBC producers? Highways in need of repair? Crumbling semi-detacheds?

The places that got really, really punished in the bubble were the 2nd tier markets that thought they were prime-time: Phoenix, Miami, Charlotte. Toronto is way closer to those than NYC, just stop.

#105 Market Bull on 06.05.12 at 9:25 am

@bigrider wrote: “Toronto is closer to being the next Detroit than New York.”
_____________________________________________

Really? That’s a rather spurious remark.

No one is saying that Toronto is New York. At least not right now. The question to ponder is whether the trend in Toronto is toward that of New York. Without question it is.

Toronto is building a dense core of high-rises around the financial district, much like Manahattan.

In the same vein, new single-family dwellings are becoming rare and very expensive.

More and more people, especially those who are new to Canada and to the city of Toronto, will be forced to rent, as it will simply be prohibitively expensive to purchase.

People are forgetting that Toronto is at least 100 years behind New York and other major world cities – but catching up fast.

That doesn’t much like Detroit to me.

#106 Ralph Cramdown on 06.05.12 at 9:25 am

The next time someone compares GTA prices with NYC’s, tell ’em you can get more for your dollar in Staten Island or Queens than you can in Etobicoke or Scarborough. I think those oft stated GTA comps, and the even loonier comps that Vancouver boosters spout (Monaco? Really?) just show how unhinged people (who obviously don’t travel much) have become.

#107 furst on 06.05.12 at 9:25 am

#60 John G Young #71 Harlee #91 Lahey

You made my day. Here’s what I’m gonna do. Gonna quit my job and be a full time poet. My boss is not the boss of me!!!!

#108 housedoc on 06.05.12 at 9:28 am

Horse=house.
Paraplegic from riding accident.
Still loves the horse.

#109 Frank le skank on 06.05.12 at 9:33 am

It appears that Garth was right, someone owes him some cash. The interest rate did not move due to increasing instability in…………… you guessed it, Europe.

http://www.montrealgazette.com/news/canada/Bank+Canada+holds+interest+rate+sees+deterioration+financial+sector/6731914/story.html

#110 Toronto_CA on 06.05.12 at 9:38 am

Although I don’t see why everyone is saying that people on this blog are comparing Toronto and Vancouver (?) to NYC or other large world cities like it; it does remind me of a humourous anecdote.

When I was an expat in Bermuda, other expats from Europe and Australia would ask me and other Canadians what Toronto was like as they’d never been (and why would they?).

A few times when out with fellow Canadian expats (who did not grow up in Toronto but rather Atlantic Canada or the prairies) would reply to them “oh it’s like New York”. /facepalm

It turns out the people saying this had never been to New York. I lived in New York for 6 years from 86-92 and go there quite often, and live in Toronto now, so I feel I can compare the two accurately. Toronto is NOT and will NEVER BE “like” New York City (or London or Hong Kong or even Sydney ffs). I am ashamed for any Canadian who thinks it is or thinks the GTA real estate prices are justified to be on a NYC level.

The only city Toronto compares to accurately is Chicago, in my mind (albeit I think Chicago is nicer, that could be grass is greener syndrome). And in Chicago you can get a very nice house/townhouse/condo for a fraction of what we pay here.

#111 cramar on 06.05.12 at 9:46 am

Thanks to those who posted links to underwater U.S. RE. It is gut wrenching to read real stories of people who were once just calmly paying off their mortgages. This one should be a sober warning to all those contemplating buying a condo—especially in TO.

“Some people say that homeowners are underwater because they took out loans that were larger than they could afford and bought homes that were more than they needed. My condo is now worth half of what I paid for it five years ago. Why? Did I take an unnecessary shortcut so I could fulfill my dream of living in a penthouse suite, have a yard big enough to build my own Neverland Ranch or because I had to keep up not only with the Joneses, but with the Gates as well? Well, you tell me. The home I bought is a third floor walkup studio condo that is less than 500 square feet. I didn’t take out a home loan so I could revel in the luxury of the life of the 1%. What I did do was fail to predict the abrupt end of a century long trend of increasing home values, and purchase a home about five minutes before the housing bubble burst. “

#112 Gun Boat denier on 06.05.12 at 9:58 am

72 pound puppy – you lose!

http://business.financialpost.com/2012/06/05/bank-of-canadas-interest-rate-decision-what-the-analysts-say/

#113 cb on 06.05.12 at 9:58 am

Hongcouver housing news from The Province newspaper…http://www.theprovince.com/business/Housing+sales+Metro+Vancouver+year/6729033/story.html

Prarie oysters beware!!!!!!!!!!!!!!!!

#114 blase on 06.05.12 at 9:58 am

Just read this ditty from Charlie Munger at the Berkshire Hathaway gathering:

“Munger: Canada had a more responsible system and had almost no problems. We departed from morality and soundness and the government was part of this. It was wrong not to step on a boom that was full of fraud and folly. Apparently, Alan Greenspan overdosed on Ayn Rand when he was young. A lot of damage was done by letting craziness go unchecked. We had no choice but to nationalize FNM and FRE.”

Comment Garth? ‘)

Read more: http://blogs.rhsmith.umd.edu/davidkass/uncategorized/notes-from-2012-berkshire-hathaway-annual-meeting/#ixzz1wvXYtE9Y

#115 dd on 06.05.12 at 9:59 am

Bank of Canada.

Oh look … interest rates on hold (again). Rates will be low for as far as the eye can see. Why? Because the US rates will be near zero for the next decade (just like Japan). There is no recovery in the US. None and will not be until debt is washed from the system.

DD

That’s not what the BoC said. — Garth

#116 Aussie Roy on 06.05.12 at 10:00 am

Aussie Headlines

I guess Canadians get told there is no subprime type lending there, just as we do here in Australia.

Although O’Donnell earned no income and his wife Jill made just $23,000 a year, the couple was provided, via Streetwise, with a $500,000 loan against the family home to invest in a mooted property development.

Soon afterwards the O’Donnells faced financial ruin. Streetwise had folded, the property the O’Donnells thought they were buying never materialised, and when they were unable to meet loan repayments, the lender who had ultimately provided the loan sought to repossess their home.

Now the O’Donnells have become the face of Australia’s growing mortgage problem, seeded during the heady days of the last property boom.

It is emerging that Australian lenders were engaging in many of the same imprudent, subprime-style lending practices seen in the US. However, unlike many cases in the US, local courts have been finding in favour of borrowers who have been stung by imprudent lending practices.

http://www.theaustralian.com.au/news/features/the-motgage-sting/story-e6frg6z6-1226383950929

Generations, renting or buying?.

LISTEN up: If rent money is “dead” money, it’s no more “dead” money than mortgage interest. So, that is what you compare.

http://www.news.com.au/money/generations/generations-renting-versus-buying/story-fn7ki9pl-1226382221226

#117 John on 06.05.12 at 10:27 am

Not 1st wrote:

“After reading this post, I am about to go short real estate and very long viagra.”

——

You know, you’re on to something. It sure would be grewt to run with that all the way to cause and effect, “big picture” style.

The deflated masculine is the underpinning of what’s coming to fruition now. Speaking of the idea of deflation and all things related, it’s not surprising we have stimulous for the fake “too big to fail”…viagra. Potency at all costs.

What’s the alternative? Being a man and bringing that kind of community, action, responsibility and even asking for help ( the good kind), is way too hard.

Thus the viagra world.

Imagine what women are feeling today. All they can do is push for more “power” and control ( which they would get immediately…what man feels good about impotence).

The women are unsatisfied, don’t see a “hard no” in sight, and rightfully don’t respect or trust “men”. Some haven’t seen one in years.

The real estate bubble and all things related are a lot easier to understand when looking at the social dynamics of Canadian society. Quite amazing really.

#118 Steven Rowlandson on 06.05.12 at 10:36 am

When there is a failure to be paid enough to meet the challenge of the real estate market then there is no real limit to how far real estate prices can drop. I am expecting all the price increases since the mid 1960s to be wiped away before a bottom is found and sanity in the market restored. The seniors, boomers and their followers are in for one hell of a financial bitch slapping.

#119 Jamaican_Gal on 06.05.12 at 10:40 am

Dire prediction:

“The head of the World Bank, Robert Zoellick, is about to step down after a 5-year term. That means he can say what he really thinks…

Financial markets face a rerun of the Great Panic of 2008.”

http://business.financialpost.com/2012/06/05/markets-face-a-rerun-of-the-great-panic-of-2008-world-bank-boss-warns/

#120 Mr Buyer on 06.05.12 at 10:48 am

#107 Market Bull on 06.05.12 at 9:25 am
@bigrider wrote: “Toronto is closer to being the next Detroit than New York.”
_____________________________________________

Really? That’s a rather spurious remark.

No one is saying that Toronto is New York. At least not right now. The question to ponder is whether the trend in Toronto is toward that of New York. Without question it is.

Toronto is building a dense core of high-rises around the financial district, much like Manahattan.
………………………………………………………………..
So this is where the bubble propagators are making their last stand. Toronto, the Manhattan of Canada. The real estate is on fire capitol of Canada. The last bastion of insanely destructive rising real estate prices. Well dig in Market BULL. The fire is well and truly underway. Eat, drink and be merry for the bubble has topped and sales are falling across Canada. BUYER BEWARE.

#121 halejon on 06.05.12 at 10:49 am

I have next to zero interest in real estate, but your excelling writing and style kept me interested and reading long enough to learn something that might help me some day. My one quibble is “teeming”, not “teaming” with potlights. Yes, I’m an English major. Yes, this also explains the lack of money and therefore interest in real estate/retirement plans.

Re the typo: current language auto-correction programs are the bane of a writer’s existence. I catch what I can. Thanks. — Garth

#122 Tom from Mississauga on 06.05.12 at 10:49 am

The insanity continues. My colleague that thinks I’m stupid just bought a house in Mississauga. He couldn’t get a car loan in 2009. I list this weekend!

#123 halejon on 06.05.12 at 10:50 am

Wow. ‘Excelling’ writing. Providing yet another link in the chain of explanations from incompetence->lack of employment->lack of money->lack of interest in real estate. ;)

#124 Market Bull on 06.05.12 at 10:54 am

TREB monthly stats – hot off the press:
_____________________________________________

“TREB reported 10,850 transactions through the TorontoMLS System in May 2012 – an 11 per cent increase over the 9,766 sales in May 2011.”

“The average price for May 2012 sales was $516,787, an increase of 6.5 per cent compared to $485,362 in May 2011.”

“New listings were up substantially on a year-over-year basis in May – rising by more than 20 per cent to 19,177.”
_____________________________________________

My take is that if listings keep rising at this rate, prices will have to moderate – which is a good thing in the long run and far more sustainable.

#125 J.I.M. on 06.05.12 at 10:55 am

My parents were selling their Halifax SFH in Halifax back in 2005. It was a 4 bedreoom built in 1978 in an infill subdivision. It was a spaciolus 4 bedroom on a large lot. My parents had kept the house up to date. The realtor told them it showed exceptionally well, and was ‘priced to sell’. Lots of viewings – but no offers. Eventually my parents started to ask questions. The reason why no buyers- there were no children on the street for a potential buyer’s children to play with. After 35 years the subdivision had aged as the people who originally bought , aged. It now was filled with 55 year plus empty nesters!

Just a little something to think about to all you people out there who think that the house and neighborhood you bought in will be as attractive to a potential buyer 30 -40 years from now as it was to you.

#126 Linda on 06.05.12 at 11:01 am

#103 Mississauga Mel

I think a lot of people live within walking distance of a grocery store, but how many of us actually walk there?

When is the last time any of us walked to Home Depot? That would be like walking to IKEA.

We are slaves to our cars.

#127 GTA realtors in a Panic on 06.05.12 at 11:13 am

#113 Toronto_CA

The only city Toronto compares to accurately is Chicago, in my mind (albeit I think Chicago is nicer, that could be grass is greener syndrome). And in Chicago you can get a very nice house/townhouse/condo for a fraction of what we pay here.
_____________________________________________

Toronto is close to Chicago and yes I think Chicago is BETTER then Toronto. You can buy in a young and sheppard like part of Chicago for $300K and not the $800-$1 million plus it would cost in bubble Toronto. When the crash takes hold Toronto will be equal to or below chicago.

#128 truth hammer on 06.05.12 at 11:17 am

Traditionally prices have always started to fall from the top down…that’s where the leverage used to be. Nowaday, because of the ZIRP leverage has become a ubiquitous feature to the RE landscape. From where I sit I see that some of the traditional features aplly….the working stiff is going to try and hang on to the barn in the burbs in spite of being underwater 20% or more…..they’ll dig in and eat shoe leather for a few years….so they think. The high end however is in a differant pickle as alway…….they see the downside as a gaping maw which a) may be invested eldewhere…and b) money they’ll never recover…..this is why we see the market at the top dying on the vine while the mortgage market is still in denial…..just wait for things to catch up…they always do.

After the auctions kick in and prics are reset 50% or below ‘the real estate mans appraisal’ then we’ll see the roll over. This will be an act of capitulation…..it doesn’t happen all at once…..we’ll need to see plenty of bad news in the headlines first……then the lemmings will all jump off the cliff at the same time.

I speculate that the bad news is bubbling to the surface in Ottawa and will be baked very soon. The plan is always to get the bad news out of the way at least 18 months before any anticapation of an election comes down the pipe. So…by that measure expect things to become very ugly….and attached to some external causes that F & H will point to as the prime cause for the malaise……redirection and misdirection are usable tactics.

The EU boil seems like a candidate for the skunkwork….QE3 will likely cause more pain in every way….a likely scapegoat…..with the new excess paper flooding…..fixed income people look out…the negative yields on bonds are not an accident.

#129 John on 06.05.12 at 11:22 am

Linda wrote:

“When is the last time any of us walked to Home Depot? That would be like walking to IKEA.

We are slaves to our cars.”
———

The vast majority of what’s in Home Depot and Ikea was manufactured by slaves. Not “sort of slaves”, real slaves.

As far as your car is concerned, did you see this half hour video? It’s too simplistic, probably managed by people with an agenda, and has some big holes…but still:

http://www.youtube.com/watch?v=VOMWzjrRiBg&feature=youtube_gdata_player

Any thoughts on our “real estate” scam? Do you think that it’s driven by forces from inside Canada?

To be fair, a woman who is living in a de-polarized society, absent of leadership…and trying to find identity in a very insecure environment, it’s just as ( if not more) difficult for her as it is for the slaves making nearly everything she touches.

The most frightening of all? Witnessing a man who sees himself as a eunoch ( he’s not) sign on to Goldman Sachs et al cheap dough…using a “house” as a vehicle.

That’s her nest. Nice place for kids huh?

The good news in all this is that finally realizing it makes community VERY attractive. Natural. A place to feel real belonging, polarity and security. Not perfect of course, but this Goldman thing is way out of hand.

DON’T YOU THINK???

#130 eaglebay - Parksville on 06.05.12 at 11:26 am

The Marina Group is optimistic about the boating industry’s future. In April, the B.C. Yacht Brokers Association said that 31 vessels costing more than $100,000 each had been sold in B.C. since January. Total sales value was $10.5 millions.

#131 coastal on 06.05.12 at 11:27 am

“It’s a reality of the market — you can’t have double-digit increases forever,” he said. “We’re not seeing the large offers, and the multiple offers.”

Distribution phase to the suckers at the top is complete, now phase 2 kicks in where the sheep get their ass handed to them. Make up as many convoluted Mensa charts to explain affordability and flat lining prices forever but it’s not that complicated geekoids. The sheep are maxed and no new lambs are being allowed into the slaughter. Game over.

Read more: http://www.theprovince.com/business/Housing+sales+Metro+Vancouver+year/6729033/story.html#ixzz1wvt8cmTV

#132 Toronto_CA on 06.05.12 at 11:30 am

Re May GTA stats:
“New listings were up substantially on a year-over-year basis in May – rising by more than 20 per cent to 19,177.

My take is that if listings keep rising at this rate, prices will have to moderate”

Listings are increasing huge (‘substantially’) every month, as everyone says “wow I better get out now, bad sh*t is going down soon”.

This influx of suppy will have an effect on price alright. I don’t see ‘moderate’ tho I see bubble burst. Especially for condos. Just wait until the tens of thousand condo units being built flood the market…

#133 "Toronto Star" Comments on 06.05.12 at 11:31 am

Hilarious how the Toronto Star disallows comments on ALL of their online real estate “news” articles.

The cat is almost out of the proverbial bag.

#134 Dorothy on 06.05.12 at 11:33 am

Where do statistics showing very few Boomers have RRSP’s come from? I am a Boomer who has both a paid for house, AND an RRSP, as do most of my Boomer friends.
We’re not rich, most of us come from a “blue collar” background, but we have learned to be thrifty and not to squander what we have. No granite countertops and SS appliances for us!
There will always be those in ANY generation who spend more than they earn, but where do the statistics come from that show the Boomer generation has a higher proportion of these types than the younger generations? Because I’m not seeing it in my own circle of friends.
I haven’t lived in cities where house prices rose at spectacular rates, so I’ve never looked on my house as a way to make money. I’ve always viewed it as a roof over my head, that my husband and I get pleasure out of fixing up to look the way we want. We’ve never had the luxury of having enough money to overspend on our home, and have done many, if not all, of the renovations and regular maintenance ourselves.
Over the years we’ve contributed slowly to what is now a very modest RRSP, and feel that the combination of that, together with our paid for home and debt free status, sets us up well for a comfortable, if not wealthy, retirement. And we know many others of our generation who are just like us.
So again I ask, where do the statistics come from that say otherwise?

The average RRSP has less than $45,000 in it. Enough for a couple of years. How much is in yours? — Garth

#135 Sunshine Blower on 06.05.12 at 11:35 am

20000 listing surge in May in the GTA. End is nigh.

http://www.thestar.com/business/article/1206031–toronto-real-estate-s-sudden-surge-in-gta-homes-for-sale?bn=1

#136 Market Bull on 06.05.12 at 11:35 am

The RBA (Reserve Bank of Australia) cut its benchmark interest rate today to 3.5 per cent, having sliced half a percentage point off the rate last month.

It’s not working. — Garth

#137 LuckyRenter on 06.05.12 at 11:40 am

1. Canada building permits drop 5.2% in April

The value of building permits issued in Canada dropped by 5.2 percent in April from March, pulled down by weaker construction intentions in Ontario, Statistics Canada said on Tuesday.

2. Baby steps to EU bank union come too late for crisis

3.Spain sounds alarm on credit

4.Bank of Canada holds rates, softens tone

5.China’s economy slowing down

6.Banks, energy stocks, weigh TSX down

7.Home Capital CEO: there will be no housing bubble in Canada

This will not end well.

#138 truth hammer on 06.05.12 at 11:40 am

Negative Bond Yields are an indication of what the smart money thinks……here is what the players are doing behind the scenes.

http://www.examiner.com/article/market-rumor-pimco-and-jp-morgan-halt-vacations-to-prepare-for-economic-crash

This should dove tail nicely what we already know. Save your cash friends…the boogey man is coming. The crash in investment markets was somewhat a savings grace in ’08 when the market crashed…..this time real estate will be crashing simultaneously and the poop will really be in the fan.

I pointed out yeaterday about the Minsky Moment manoeveur the governments are trying to engineer. I think I know why…do you?

If you just bought a house…….f**k are you ever in trouble!

#139 Bashful renter on 06.05.12 at 11:46 am

#41 Calgary Bubble on 06.04.12 at 10:56 pm

Other than this small bud of info:

1500+ sq.ft home in the great community of Evanston. This home is a former grow-op and will need remediation. No interior access to the property is available

#140 Investx on 06.05.12 at 11:52 am

Well, well, well… rates remain unchanged again and aren’t expected to rise anytime soon:

“OTTAWA — Citing worsening conditions on worldwide financial markets, the Bank of Canada kept its trend-setting interest rate steady at 1 per cent and played down the need for rate hikes in Canada in the near future.”

http://www.thestar.com/business/article/1205948–window-closing-fast-on-carney-s-itch-to-raise-interest-rates?bn=1

Prolonged rates… kinda like Japan.

Prolonged until October, maybe. But irrelevant nonetheless. — Garth

#141 VICTORIA TEA PARTY on 06.05.12 at 11:54 am

DECISION TIME AT THE BoC

Walking a monetary tightrope while our fiscal tightrope frays at the edges, thanks to trading partners’ sliding economies, makes Mr. Carney’s paycheque seem a tad small these days.

The press release accompanying the BoC decision to keep monetary policy steady, at this time, gives a very alarming picture of what Canadians face in relation to the global financial train wreck that keeps on keeping on.

SOME DIRECT QUOTES FROM THAT RELEASE

OTTAWA – “…The outlook for global economic growth has weakened in recent weeks. Some of the risks…remain skewed to the downside…leading to a sharp deterioration in global financial conditions.

While the U.S. economy continues to expand at a modest pace, economic activity in emerging-market economies is slowing a bit faster and a bit more broadly than had been expected…and have reduced commodity prices…”

HERE AT HOME

“…Although economic growth in Canada was slightly slower than expected in the first quarter, underlying
economic momentum appears largely consistent with expectations. However, the composition of growth is
less balanced…”

THIS IS AN INFLATIONARY WORRY

“…In particular, housing activity has been stronger than expected, and households continue to
add to their debt burden in an environment of modest income growth…domestic financial conditions remain very stimulative.”

FISCAL STIMULUS NOT GOING TO HAPPEN? ONLY F. KNOWS!

“…The contribution of government spending to growth is expected to be quite modest over the projection horizon, in line with recent federal and provincial budgets.”

AS NOTED ABOVE WE’RE IN TROUBLE BECAUSE OUR TRADING PARTNERS ARE!

“…The recovery in net exports is likely to remain weak in light of modest external demand and ongoing competitiveness challenges, including the persistent strength of the Canadian dollar.

The Canadian economy continues to operate with a small degree of excess capacity…Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent.”

INTEREST RATE INCREASE WATCH CONTINUES

“…To the extent that the economic expansion continues and the current excess supply in the economy is gradually absorbed, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate…The timing and degree…will be weighed carefully…”

NEXT MEETING

“The next scheduled date for announcing the overnight rate target is 17 July 2012.”

No predictions here.

#142 disciple on 06.05.12 at 11:57 am

Release the howoounds!
http://www.thestar.com/business/article/1206031–toronto-real-estate-s-sudden-surge-in-gta-homes-for-sale

#143 arctodus on 06.05.12 at 12:03 pm

We are not running out of oil. We’re running out of cheap oil (and cheap coal). — Garth

Finally…halleluah…..you do get it my man…..

Just not sure if you understand the true “grab you by the short hairs” ramifications of it…..sociopolitically speaking…..

Short answer…civilizational collapse….ongoing as we speak.

That is not a reasonable conclusion. — Garth

#144 ferret on 06.05.12 at 12:07 pm

Calgary Realtor Bob Truman made an accusation that your site “masqerades as a porn site” Garth.

His dimentia has gone overboard. He may sue you for having more traffic than him. LMFAO.

#145 Tom from Mississauga on 06.05.12 at 12:07 pm

PS. There are now 7 listings that are all ‘flips’ within walking distance of my place in Lakeview Mississauga. They were bought in mostly 2011. Some have been listed since Feb like W2296640, W2292896 but there’s also W2369713, W2371532, W2360218, W2382321 and W380225.

#146 Mixed Bag on 06.05.12 at 12:11 pm

How will “starter” homes fare? (I hate that term, but it seems to be commonplace). Bungalows at 1000 sq ft, for example. I seem to remember Garth posting a while back that those won’t lose value as much, as two ends of the demographic will be looking for those.

#147 Inglorious Investor on 06.05.12 at 12:13 pm

Paul House (how appropriate for this blog) Executive Chair of Tim Horton’s says the loss of high-paying jobs in Ontario is affecting Tim’s business.

So sales of coffee-to-go are slowing, yet home prices in the GTA are higher than ever. Could this be considered a bearish divergence?

#148 Mr. Lahey, Sunnyvale Trailer Park Supervisor on 06.05.12 at 12:19 pm

#100 Mr. Buyer

Your point is taken and let me assure you I am a real estate bear and not a friggin agent. As my handle reads, I am the proud supervisor of Sunnyvale Trailer Park which is filled with affordable real estate (trailers) that allow for pollution free breathing (the clean Nova Scotian air) and the absence of traffic jams (except when Ricky and the other motley crew of Sunnyvale get into a car pile up) Sunnyvale real estate beats renting or owning a regulat SFH. Having said that, my point, to repeat, is that you should direct your energies to blogs, programs, etc., that pump real estate rather than a blog whose contributors are overwhelmingly bearish on real estate. You do understand the concept of preaching to the choir do you not?

#149 Inglorious Investor on 06.05.12 at 12:20 pm

“[…] current language auto-correction programs are the bane of a writer’s existence.” — Garth

Hear! Heer!

#150 Dorothy on 06.05.12 at 12:22 pm

“The average RRSP has less than $45,000 in it. Enough for a couple of years. How much is in yours? — Garth”

My husband and I have almost $300,000 saved in our RRSP’s, and the majority of our investments over the years have been in 5 year GIC’s, although about $20,000 is in TD “e” funds. We did dabble in the stock market a little around the time of the “crash” (late 2007 to mid 2010) and managed to get out with a very small profit (about $1500), but for the most part we don’t invest in what we don’t understand, so we stay away from stocks and bonds.
We’ve always lived beneath our means so that we can pay our bills (hence no debt) and put a little away each month for our retirement. And, provided we don’t lose our jobs between now and turning 65, we’ll be OK (but only just)financially once we retire. So, our biggest worry right now isn’t what will happen to the price of our home, it’s whether or not we can stay employed until we’re eligible to pick up our pensions.
Many of our friends are in a similar situation to ourselves, so I don’t understand where the “statistics” you quote are coming from.
The Boomers main concern right now isn’t the cost of housing, it’s the fear of being laid off and not being able to get another job. Because if that happens, and we end up having to live off of our savings for a few years until we can pick up our pensions, THEN a lot of what you have to say about living out our lives in poverty may well come to pass.

#151 Ralph Cramdown on 06.05.12 at 12:24 pm

Toronto is building a dense core of high-rises around the financial district, much like Manahattan.

You should read the papers more. Toronto’s financial district almost got packed up and sent to London UK last year. Want to know what we’d be if that had happened? Think a regional banking centre, like Charlotte NC.

TREB monthly stats – hot off the press:
[…]
My take is that if listings keep rising at this rate, prices will have to moderate

Your take is a day late and a dollar short. Read TREB’s release from a month ago, and compare the numbers. Hint: The average April to May price increase for the previous 8 years was 1.2%.

Here, I’ll help you:
GTA Average price April: $517,556 May: $516,787
The rare and coveted 416 detached April: $831,214 May: $820,816

This in a period of low inventory, frantic bidding wars, good weather and low mortgage rates. Buy suckers, they aren’t making any more of them, apparently.

#152 Canadian Watchdog on 06.05.12 at 12:24 pm

What TREB’s headline number didn’t report, lies in the details.

Toronto C01 Condo Sales http://postimage.org/image/dp7h1l7sr/
Toronto C01 Active Listings http://postimage.org/image/l80rrt135/
Toronto C01 Sales To Listings Ratio http://postimage.org/image/5dcoqfxkd/

C01 is now ground zero.

#153 Peter on 06.05.12 at 12:28 pm

Hey I live in North Bay and there are no cheap homes here. The price is up to twice that of what you could find in many small U.S. cities.

#154 disciple on 06.05.12 at 12:29 pm

#141 truth hammer… that website, examiner.com is Cointelpro fo’ sho’… spreading fear and confusion. Don’t be fooled, man. I have been and continue to be very critical of William Gross and I’m planning to look into PIMCO and possible fraudulent associated activity therewith…

#155 timbo on 06.05.12 at 12:30 pm

http://www.bbc.co.uk/iplayer/episode/b01j5h51/Analysis_Steve_Keen_Why_Economics_Is_Bunk/

sleeping with the fishes – BBC audio of Steve Keen.

http://marginalevolution.com/blog/archives/3272/

“In case of Greece, largest drops in deposit/GDP occurred in Q3 of 2010 (-9.43% drop) and Q3 of 2011 (-9.7%) and aside from suspicions of seasonality (7.3% drop in Q3 of 09), none of these drops are monthly as noted in the IMF study.

According to Bloomberg (video below), the largest deposit drain, $142 billion euros, came out of Spain with a total of $204 billion fleeing the PIIGS.”

Safety is key when the boat is sinking…..

#156 pound puppy on 06.05.12 at 12:36 pm

Dang lost it…I guess I must now unquestioningly become one of your subservient amazonians.

Perhaps a foot rub?

#157 Tony on 06.05.12 at 12:42 pm

Re; #12 Viegas on 06.04.12 at 9:58 pm

The bubble is larger in Canada than it was in America at the very peak of their market. The only difference here is the spread between the rich and the poor isn’t as great as it is in America. That should help cushion some of the fall.

#158 Arshes on 06.05.12 at 12:47 pm

#137 Dorothy on 06.05.12 at 11:33 am
Over the years we’ve contributed slowly to what is now a very modest RRSP, and feel that the combination of that, together with our paid for home and debt free status, sets us up well for a comfortable, if not wealthy, retirement.
———————————————————
Curious as to what a “modest” RRSP is ? My parents is about $300,000 which i dont believe is enough for retirement. Even with thier mortgage free home, my parents will probably run out of money, before they’re 80. And we live in Alberta where the cost of living is less than BC.

#159 Mike on 06.05.12 at 12:48 pm

OK, can someone explain something to me. I think I understand all the lingo in this blog except for when Garth refers to “Amazons”. I don’t think they are in this post, but they keep coming up, and I haven’t a clue why. Somebody pls help!

#160 99% on 06.05.12 at 1:03 pm

My family has a double income and we still find it hard to get by. The bills are always stacking up and our expenses are very low compared to most others that we know. I just don’t know how the average family gets by? Everything has gone up lately –
1. To fill up a family minivan you need to pay more than $100.00 which will be gone within 6 days if you are frugal.
2. Since they installed Hydro smart meter, my bill has doubled.
3. Now they want to charge for every cable box and station, so my cable bill has tripled.
4. Standard grocery staples such as milk and butter has increased.
5. All kids expect to own a cell phone like it’s a god-given right.
6. Insurance costs have increased.
7. Rents are astronomical because RE has skyrocketed.

No wonder interest rates can’t go up, otherwise everyone would be f**ked.
……yet my income has stayed the same.

#161 GTA realtors in a Panic on 06.05.12 at 1:13 pm

Like I said GTA realtors in an all out PANIC!

http://www.thestar.com/business/article/1206031–toronto-real-estate-s-sudden-surge-in-gta-homes-for-sale?bn=1

Every realtor knows housing prices in the GTA are in a HUGE BUBBLE never before seen in Canadian history and NO realtor will dare justify the prices using even manipulated numbers as they now don’t make sense. The GTA housing bubble needs to crash 50% just to get back to normal averages.

#162 Intuitive Missus on 06.05.12 at 1:19 pm

From the Toronto Real Estate Board today. Note the comment about the rise in the number of listings – more than 20% YoY!!!

Strong Sales and Price Growth in May

June 5, 2012 — Greater Toronto REALTORS® reported 10,850 transactions through the TorontoMLS system in May 2012 – an 11 per cent increase over the 9,766 sales in May 2011. Sales growth was strongest in the ‘905’ regions surrounding the City of Toronto.

“Sales growth in the ‘905’ area code was stronger than growth in the City of Toronto across all major home types. While lower average prices are certainly one factor that has contributed to this trend, recent polling also suggests that the City of Toronto’s land transfer tax has also prompted many households to look outside of the City for their ownership housing needs,” said Toronto Real Estate Board (TREB) President Richard Silver.

New listings were up substantially on a year-over-year basis in May – rising by more than 20 per cent to 19,177.

The average price for May 2012 sales was $516,787, representing an annual increase of 6.5 per cent compared to $485,362 in May 2011. Price growth continued to be driven by the low-rise market segment.

“Strong competition between buyers seeking to purchase low-rise home types drove strong price growth in May. However, if new listings continue to grow at the pace they did in May for the remainder of 2012, the annual rate of price growth should begin to moderate on a sustained basis,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

#163 Steven Rowlandson on 06.05.12 at 1:20 pm

Finally, this could be the death rattle for boat salesguys, cottage area realtors, marina operators, country clubs and communities full of expensive houses nobody wants.

Close Garth. I think people will want all these things however it is a question of price relative to one income not family income. The use of the term family income ought to be considered profanity.
If the income isn’t there then the price must fall in order to clear the market. After all people can not be expected to give all their income to the banks and governments and live off of nothing and not have families. You have to have a margin of safety and balance or you have financial abuse and gross indecency like what we have had for the last 30 to 50 years. At some point it has to end for the good of the species.

#164 EB on 06.05.12 at 1:26 pm

#158 99% – cut your cable TV connection, it’s more than doable these days. You can buy something like a Boxee box plus their over-the-air HDTV receiver for two months cable payments or less (depending on what packages you have), then subscribe to Netflix for next to nothing. That plus the internet in general and you have access to everything you could possibly ever want on TV, for next to nothing other than your internet bill.

It does entail changing your relationship to the TV a bit, but once you get used to it you’re saving thousands of $ per year that used to disappear on garbage you didn’t watch.

#165 Frank on 06.05.12 at 1:29 pm

The good old days of predictability are gone.

#166 Arshes76 on 06.05.12 at 1:33 pm

.#137 Dorothy on 06.05.12 at 11:33 am
Over the years we’ve contributed slowly to what is now a very modest RRSP, and feel that the combination of that, together with our paid for home and debt free status, sets us up well for a comfortable, if not wealthy, retirement.
———————————————————
Curious as to what a “modest” RRSP is?

My parents are 65 and 67 and they have $300,000 RRSP and a paid off house. But will probably run out of money before 80. And we live in Alberta where the cost of living is lower than in BC.

#167 Dorothy on 06.05.12 at 1:39 pm

“Curious as to what a “modest” RRSP is ? My parents is about $300,000 which i dont believe is enough for retirement. Even with thier mortgage free home, my parents will probably run out of money, before they’re 80. And we live in Alberta where the cost of living is less than BC.”
It all depends on what other retirement income people have due. How much do your parents expect to receive from OAS and CPP, and do they have any sort of company pension coming? The other thing to consider is how much money they need to live on each year. Lifestyle choices are a big determinant as to how much retirement income people require. For example, we only have basic cable, never rent movies, and read a lot of books from the library. We also only have one vehicle, and it’s an old one (2004). We rarely eat out, and never buy convenience food. I make a lot of casseroles using cheaper cuts of meat, and we only drink alcohol on special occassions. We play the occasional game of golf, but always on inexpensive courses, and most of our recreation is swimming at our local pool, going for long walks and bike riding.
My point is that if you live modestly, have no debts, and some savings, you won’t starve in your golden years provided you aren’t forced to dip into your savings ahead of time. We don’t all need a million bucks in order to retire. But if people who are in their fifties and sixties get laid off and are unable to find new jobs, so have to start dipping into their retirement savings in order to survive, then obviously their retirement funds won’t last as long as they otherwise would have.
So I repeat, the biggest threat to the Boomers right now is fear of losing their jobs before they are ready to retire. Admittedly if they DO lose their job, then they might begin to wonder if they can sell their home to supplement their income, but I don’t think that will be a consideration for many if they manage to stay employed. Because many of us are already living in the house we’d like to retire in.

It is hard to imagine a nice middle-class retirement lifestyle for two people on government assistance (CPP, OAS) plus $300K in taxable savings. — Garth

#168 Rusty1 on 06.05.12 at 1:39 pm

#150 @Mike;

Garth ‘tongue-and-cheek’ has Amazons waiting on his every need and desire. Think Hugh Hefner with a beard…

In reality, most women I’ve seen riding pillion on a Harley are wider than they are tall. Think vertically-challenged Amazon…
:p

#169 new_era on 06.05.12 at 1:44 pm

I still can’t over the CBC affordable housing report from CBC. Yeah I want a life sentence in the yukon. I can totally see yuppies living up in the harsh north environment. Average price just over

http://www.cbc.ca/news/canada/north/story/2012/05/28/north-housing-affordable-territories.html

I work up north for 1.5 years 2 summer and 1 winter (when I was young). Made good money company paid for living expense. Winters are 3/4 of the year. All my co-workers became alcoholics and chain smokers. All women (3 of them) up there had facial hair.
“IT FELT LIKE A LIFE SENTENCE”

Take a look in the states

http://money.cnn.com/galleries/2012/real_estate/1205/gallery.home-prices/2.html

When the cost for a house is about 8X more than the us with the same or better climate, you know there’s going be a correction.

#170 timbo on 06.05.12 at 2:06 pm

http://www.ritholtz.com/blog/2012/06/uncollateralized-bwdgtfbcwt/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheBigPicture+%28The+Big+Picture%29

Now there is a coupon screaming value….;)

#171 Daisy Mae on 06.05.12 at 2:18 pm

#51 PoorBoy: “…they (or it) couldn’t do much worse than what people have been doing to themselves if 3 of 4 boomers doesn’t have an RSP.”

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

They knew better. They just didn’t care. I remember many years ago overhearing many boomers state: “I’m not going to worry about it — the government can take care of me!” (chuckle)

And they then proceeded to spend every penny they earned….

#172 CK on 06.05.12 at 2:22 pm

housedoc on 06.05.12 at 9:28 am

Horse=house.
Paraplegic from riding accident.
Still loves the horse.

– Ding! U win!

#173 Linda on 06.05.12 at 2:27 pm

#132 John

All I think about our “real estate scam” is that there is one. I am grateful for having found this blog, as it saved us from being a greaterfool back in the fall of 2010.

I don’t advocate driving the car for every little errand and activity. I love to walk and do so at every opportunity. I even still have my grandmother’s collapsible, metal grocery buggy. Remember those? They were quite common back in the 70s.

But I will confess that I drive to Loblaws because it is more convenient. I haven’t visited a Home Depot since selling our first home a few years back, and personally, I can’t stand IKEA. I don’t even eat their meatballs anymore.

I rely on my car to get to work because it’s too far to walk and no public transit runs out there.

Sure, bringing back simpler living and a sense of belonging and community sounds great. Where can I find this? I’ve been looking for it my whole life long.

I agree with a previous poster (forgive me, I can’t remember which one) that said the bogeyman is coming.

The bogeyman is really just man stripped of all his conveniences, fighting to cover his basic material needs: food, clothing and shelter.

#174 Linda on 06.05.12 at 2:33 pm

#167 EB

I second what you said. We have done this, and it did take a bit of adjusting. Very happy, now!!

#175 Devore on 06.05.12 at 2:36 pm

#148 Tom from Mississauga

The flipper binge of last year is now bearing fruit. Gotta hold it for a year so you can say you live there and sell with no tax on gains.

#176 Daisy Mae on 06.05.12 at 2:38 pm

24furst on 06.04.12 at 10:21 pm
Wisdom – A poem by Furst

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

Furst! I’m impressed! ;)

#177 The American on 06.05.12 at 2:40 pm

At #135: Toronto_CA, you are absolutely correct. Keep in mind also that many of the towers in Toronto you see already coming out of the ground will never be completed. Instead, you may see half-built buildings and holes in the ground sitting vacant and idle for years to come, much like happened in areas of significant condo development like Miami. It really is an ugly situation.

#178 Mike Rotch on 06.05.12 at 2:43 pm

@49 Devore:

You don’t think a million dollars is enough for a couple to retire on?

I’m not necessarily disputing this, I’m just interested to hear why you feel that way.

I formed my own thoughts.

If you can get 5% return on investment, $1M can be looked at as $66K per year for 30 years.

I sort of figured that with this, with a bit of help from CPP, and without a mortgage or other crushing debt, you could probably find a way to get by on a million……………

If you also have a modest home you can sell for downsizing at some point in or before the retirement, say $400K to $600K future dollars, you can live better, or longer, or some combo thereof.

Either way, if you get a million liquid a$$et$ into your accounts, a huge chunk of the population will be worse off than you, so it’s probably not a bad goal.

Certainly beats a retirement plan of “sell my house”.

#179 2centsCanadian on 06.05.12 at 2:45 pm

I never really did understand the theory behind a house covering one’es retirement. When people have spent an average of say …. $60,000/yr to live (insert your number here) …. and their house is worth $800,000 ….. there are several options. (1.) buy that little house on the quiet street that every boomer will want and probably pay at least 3/4 as your McMansion. And only have 2-$300K to live off of (which is 5 yrs of bare existence at $60K living expense .. not counting old age security .. lol). 2. Sell your place and rent in a part of town you probably swore you’d never live in (with about 9 years of bare existence at $1,500/rent +$60K + old age security to live off of). 3. Move to the middle of freakin now where and buy a cheap little house for $150K and live a bare existence for about 10 years at $60K expenses).

There just isn’t enough money in just a house to buy many years to live off of. Even when you throw in some investment income. Which ain’t much.

Anyway you look at it … most people will NOT be able to live where and how they are now. Not even close. 90% will have to move somewhere else, and take a giant life style hit.

95% are screwed. My calculation was with a paid off house.

#180 bigrider on 06.05.12 at 3:07 pm

#96 Tonino ,Nonno Nicola’s grandson.

My comment about Toronto being the next Detroit was a sarcastic one meant to illuminate the fact that we are no closer to being New York than we are Detroit. You took it literally. Oh well. Something tells me you can do better than that ..to pretend you did not see the sarcasm.

To be clear, my comment regarding incomes being higher in New York was meant for the inner areas around Manhatten where that is the case. Not the boroughs and hills ( or Ghettos..).

I noticed you did not comment on ownership rates being less in New York(opps sorry Manhatten) then T.O. If you notice Garth gave supporting data.

Does that mean you do not have a means to refute that argument ?

In case you need clarification ,with ownership rates at 37% there are a whole lot more potential buyers (63%) then if ownership rates are up at (67% already in T.O case)

Maybe you can get some help form Nonno.

#181 bill on 06.05.12 at 3:14 pm

she sold the house, put all the money on the horse with the nicest name and the nag came in at 20 to 1 odds.
they lived happily ever after.

#182 Bigrider on 06.05.12 at 3:33 pm

#108 marketbull to bigrider- ” spurious remark.. No one saying that T. O is New York but ask yourself if it’s on it’s way .. No question it is.. 100 years from now we will be”

That’s about the number of years it will take for these prices to make sense as well.

Anchorage is on it’s way to becoming the next T.O , also in about a hundred years.

Looks like you have been taken to task enough by others with this ludicrous pump pump pump propaganda your RE industry consistently spews.

Try traveling to NY then tell me we are anything close.

#183 Devore on 06.05.12 at 3:36 pm

It is hard to imagine a nice middle-class retirement lifestyle for two people on government assistance (CPP, OAS) plus $300K in taxable savings. — Garth

And as per the surveys conducted by banks recently, a quarter of boomers approaching retirement believe that is precisely all they need. And if they round up, squint their eyes just right, and sell off the Beatles records, they’re almost within reach of it.

#184 Snowboid on 06.05.12 at 3:46 pm

#170 Dorothy on 06.05.12 at 1:39 pm…

Even in the land of cheese and fall fairs, you may have under-estimated your retirement costs – unless you have good company pensions. Remember that $ 300K is taxable – and if converted to a RRIF will only provide about $ 1000 a month (from about 71 to 96).

Looking at this report, although six years old – shows some glaring issues around bankrupt seniors…

Report on Seniors’ bankruptcies (2006): http://tinyurl.com/7ptkw7m

The following report outlines some of the cost increases over the last nine years – which will likely continue. Although CPP and OAS are indexed to CPI that measure ignores many costs that will become substantial over the years.

Report on Canadian Family Finances (2011-2012): http://tinyurl.com/bnrnr2t

If your biggest worry is ‘how to retire’ if you lose your jobs then I think you are in a far riskier situation than you let on.

Your simplistic plan sounds great, but I don’t see anything in there that accounts for aging issues (how to maintain home and health) – especially as these services continue to be centralized in larger cities.

I think the biggest worry should be how your retirement income will keep pace with the ever-increasing costs – no matter where you live.

#185 ozy - TO better than NYC on 06.05.12 at 3:50 pm

Toronto is mucho bettar than NYC ’cause there are tons of do-nothing paper-work jobs here downtown (and the country is not engaged in multiple wars (a.k.a. criminal activity overseas).
Maybe 1 million easy jobs that anyone can do, but they are paid 100000+ (if you add bonuses, benefits, etc).
So, for God sake, finally stop asking why prices are bearily bearable in TO (so high).
I would call these people smart corporate& govt cashers, congrats brothers, but sorry, you can’t have nice housing for free. Because it’s to many of you out there, the System has to collect back, to be able to pay you next year.
OK, bonas: 10% RE price correction by year’s end. Then 10% increase to recover the price drop over next 5 years combined. Take it or leave it :)

#186 Devore on 06.05.12 at 4:01 pm

#181 Mike Rotch

You don’t think a million dollars is enough for a couple to retire on?

I’m not necessarily disputing this, I’m just interested to hear why you feel that way.

A million bucks in the bank will put you in the very rarefied company of people who have money. At 5% yield, after taxes, and with CPP/OAS if/as you qualify, will allow for an ok lifestyle in retirement. Remember, without work consuming 10 hours of your day, other activities will need to fill the time, before you lose your marbles. Trying to save money by moving somewhere cheaper comes with its own costs, such as access to healthcare.

So it’s kind of a minimum. Unless your investment can keep pace with inflation over your 20-30 years of retirement, you will have to begin eating into the principal, which will rapidly snowball and whittle it down to nothing. Not only do you need income from your million (taxable), you also need grow it at least at the pace of inflation. I say “at least” because you can safely build into your financial plan decreasing real contribution from government supplements.

From your 1 million, combined income and growth puts you at 8%+ annual yield, meaning you’re beating the market and all pension funds consistently for decades at a time, good luck with that.

Aside from math not adding up, my other problem with the “1 million is enough” is that the people saying it have nowhere near this amount of investable money available, and are not on track to get there by retirement.

#187 2centsCanadian on 06.05.12 at 4:03 pm

It’s funny ….. 10 or 20 years ago the scientists talked about us flying space ships and living in pod-like buildings.

I think the way this “boomers/economy/wages/cost of living/and life style” thing is heading …. we will all be living closer to town and city centers in smaller (but nice) appartments and walking or riding bicycles to the market for our grociery stores (think of France in your WW2 movies : ) Which might not be a bad thing compared to the histeria/calamity/stress so much of us go through each day now on the hamster wheel of life.

#188 Van grrl on 06.05.12 at 4:04 pm

“Prolonged until October, maybe. But irrelevant nonetheless. — Garth”
—————————
It is October, isn’t it??
Oh wait, no. That’s just the weather here in Van :(

#189 99% on 06.05.12 at 4:07 pm

#167 EB Thanks for the advice re my cable bill.

Now all I have to do is find a Youtube video on how to do at home Orthodontics for both my kid’s teeth. (Unfortunately they have both inherited my family’s horrific overbite)

Then maybe my kids can also sign up for an Online University Degree from an accredited University of Bangladesh.

With at home dentistry AND an online degree my kids will be able to find a significant other quite easily.

Hey, perhaps I can afford stainless steel and granite renovations after all.

#190 Kenny Banya on 06.05.12 at 4:13 pm

For the people talking “soft landing” and 10% correction, think about whether that would make the slightest bit of difference to most buyers.

The average SFH in 416 is about $830k (from Ralph Cramdown’s comment above). A 10% drop makes it $747k. Still not remotely in the universe of affordable for 98% of people.

Most of those houses cost ~$250k five or six years ago. When they get back around $250-300k, young families like us will start shopping. Until then these “minor corrections” make zero difference. Even 30% wouldn’t make my neighborhood anywhere near affordable.

#191 truth hammer on 06.05.12 at 4:15 pm

$300,000 in rural Alta , drawn down at 1500 p/m + OAP & CPP X’s 2 should have been enough to go sideways ( after taxes) for around 17 years. There would certainly be no frills. No taking the grandkids to Maui for the summer.

The bugaboo in the equation is that these are 2012 numbers. If hyperinflation ( as guaranteed by todays BOC announcement) in food and all other consumables is constant at the five years rate of 21% p/a then $300,000 will be cut in half over the same perod of time.

Don’t expect a raise in the entitlements because the liar smurf king insists on official inflation being reported at 1.9% p/a…which we all know is complete BS.

The unions and utilities know that Fart face Flahrety and Carnage Carnage are liars so don’t expect the civil servants to lie down and not recieve thier indexed entitlements. The other little Crown Corp unionized troughs have been running up ( gas , heating & electric) at 14% p/a….more in Ont and BC than elswhere.

Ask any fixed income senior now at what the ZIRP has done to their shopping list, lifestyle and ability to pay rent. Hyperinflation is not a politically correct word in Canada but truth is where you look…….like the fact that the Mangotta ( sic) dismemberment killer and his victim were homsexual lovers….as reported in the BBC and US news but not a peep about this insight in Canada. The truth isn’t allowed here.

So…..no…$300,000 is nowhere near enough to retire on even at a poverty level existence in rural level Alta……not because the couple hasn’t been smart….or didn’t save.. ( c’mon at 50% direct taxation and 30% indirect who can save in Canada) . They will end up in poverty because the government has purposely manipulated the trap for people just like this. It is the union movements sole goal to strip weath from all savers and redirect wealth into the pockets of the union elites. No one who doesn’t have a civil service indexed pension will be able to retire with dignity. The ZIRP has been designed to force people to sell their savings into the market so that REV Can can redistribute the money into union pensions.

#192 Arshes on 06.05.12 at 4:16 pm

#170 Dorothy
It all depends on what other retirement income people have due. How much do your parents expect to receive from OAS and CPP, and do they have any sort of company pension coming? The other thing to consider is how much money they need to live on each year. Lifestyle choices are a big determinant as to how much retirement income people require.
———————————————————
My parents already get approx. $1800 a month for CPP and OAS. Yes lifestyle is a big part of it, but you forget about medical, or living assitance when your older and no longer can cook or clean for yourself. Or what about long term care? People are living longer, and if you make it 80 good chances are your gonna make it to 90. And the cost of home assistance is not cheap. My bosses parents are in their 80’s. One had hip surgery so limited mobility, the other actually broke thier back. Your retirement plan is good, but what about 7-10 years after you retire or 5-10 years after that???

#193 Dorothy on 06.05.12 at 4:16 pm

It is hard to imagine a nice middle-class retirement lifestyle for two people on government assistance (CPP, OAS) plus $300K in taxable savings. — Garth

It’s all a matter of how you define “a nice middle class lifestyle”. Two people who have been working all their lives can expect to receive $12,911 from OAS (in today’s dollars), and if the hubby gets full CPP and the wife gets half that amount, they can expect to receive $16,992. That makes a joint income of $29,903. If they draw down on the capital in their $300,000 RRSP at a rate of $10,000 a year, it will last them over 30 years, or until they are approx. 87 or 90 depending on how they invested it. That means they’re pretty much guaranteed an income of $39,903 a year. While the RRSP income is fixed, the CPP and OAS income will be indexed, at least partially, to inflation.
The lower income will put many into a much lower tax bracket than they were previously in, plus they will be able to claim the age amount on top of their personal amount. So taxes will be minimal.
Assuming this hypothetical couple has no debt and lives very modestly, I think they’ll do OK

Thirty thousand a year in a decade (let alone now), half of it from government largesse, is a failure. This is what you reap for being a GIC investor. Sadly. — Garth

#194 Victoria on 06.05.12 at 4:20 pm

In Victoria we are getting listing and listing for homes $900,000 and up. I wonder why these people are selling …

Moving cities, Divorce, Death, can’t afford it anymore, seeing the writing on the wall. Probably a combination of everything. Nothing is selling.

#195 An Cat Dubh on 06.05.12 at 4:24 pm

I wonder how long reverse mortage firms will stay in business or keep financing with a huge amount of oversized ugly Mc Mansions coming on the market in the next few years

#196 Arshes on 06.05.12 at 4:27 pm

@ Dorothy.

Voluteer some time at a hospitals geiatric ward and maybe you’ll understand the cost of retiring AND getting older.

#197 Country Girl on 06.05.12 at 4:31 pm

“As well, the Bank of Canada, which has a policy setting rate of one per cent, is in position to cut interest rates further if the situation warrants. The central bank and Ottawa also have the same tools they used in 2008 and 2009, including clearing mortgage securities off bank’s books, to inject liquidity into the system at their disposal.”
(From yesterday’s news;
http://www.therecord.com/news/business/article/737452–flaherty-says-government-would-respond-with-stimulus-in-another-slump)

Garth, does this mean BoC might raise the CMHC ceiling to “take mortgage securities off bank’s books”?

No. The move in 2008 was to have CMHC buy mortgage portfolios form teh chartered banks. — Garth

#198 Jamaican_Gal on 06.05.12 at 4:37 pm

Furst, I though you were our esteemed Village Idiot and here you are waxing poetic! I am confused!

You are a true poet; your tumble of words mesmerize and illuminate…

Please, I beg you, do not encourage him. — Garth

#199 torontorocks on 06.05.12 at 4:39 pm

The Monaco-ization of Vancouver is what? buildings around a port/harbour? Like port credit, hamilton harbour, cherry beach? I’m in Cannes now, spent the day in San Remo…yesterday Monaco. If prices in North Bay are through the roof, is North Bay the next what? Moscow? St Petersburg? Its debt, dummy, 100 percent debt.

And LH – you are not living in the Soho or the meatpacking district just because quality meats kills pigs down the road. Sorry kids- get out and see the world. Then talk.

#200 Canadian Watchdog on 06.05.12 at 4:44 pm

#199 Country Girl

Try not to get confused. CMHC ‘is’ the government that is essentially bailing itself out.

#201 EB on 06.05.12 at 4:48 pm

“It is hard to imagine a nice middle-class retirement lifestyle for two people on government assistance (CPP, OAS) plus $300K in taxable savings. — Garth”

The cold equations are what they are – the notion of what constitutes an acceptable middle-class lifestyle is simply doomed for most Canadians. Plans and priorities will have to change.

It is just barely possible for the readers of this site (higher income, forward-planning, proactive) to rescue that ideal for themselves provided they got started on the process decades in advance, having happily gotten their heads on straight much earlier than evidence says people usually do.

Either way human nature and math say the Golden Years Retirement vision isn’t happening for most people – it’s probably important to start thinking about what that world is going to look like.

#202 Observor on 06.05.12 at 4:50 pm

How much is enough?

As with all of the best things in life, you will never have or get enough.

The more you have the more you want, it’s human nature.

I was talking to a used car saleman the other day, aged 54.

We got talking about investments and he said he had built up a lot of asetts in csh and real estate and he felt that in his case he needed $4 million to retire in two years at age 56.

Just one man’s opinion.

I can gurantee you that there are people who make $2 million per year who seriously wonder how anyone gets by on less than $1 million per year.

I just want a chance to prove it for myself that money can’t buy happiness. (Maybe not, but it’s a chance I’m willing to take).

#203 Heinz Skitzvelvett on 06.05.12 at 5:09 pm

http://www.kitswest.com/ownvsrent.html

Oh, Kits West, were it just that simple.

#204 J in Calgary on 06.05.12 at 5:38 pm

I don’t know what kind of retirement people are talking about here. My father has been retired almost 10 years and has hardly drawn down his RRSPs. Maybe $5000 a year but he makes it all back in dividends and for extra income I put him into a TFSA where the dividends don’t get re-invested but get paid to his bank account. My mother is retired as well but luckily has a government pension plus her RRSPs. Her TFSA is set-up the same way as my fathers and her RIF payment is $300 a month. Everything is paid for including the winter home in Arizona. I believe as long as people were frugal in their working years, they will continue into retirement. We never got anything as kids (4)except for essentials. My parents have everything they need and more. If I could just convince them to sell their house and come live with me the 6 months they are in Canada, they would be able to cash in on their over valued house and have the liquidity in the bank.

#205 Nostradamus Le Mad Vlad on 06.05.12 at 5:40 pm


#175 CK — That is one way of interpreting the pic. Another way is to look at the horse as liquidity, and the lady in a wheelchair (house) as having the freedom to enjoy both aspects of life.

#181 Mike Rotch — “If you can get 5% return on investment, $1M can be looked at as $66K per year for 30 years.”
— and —
“It is hard to imagine a nice middle-class retirement lifestyle for two people on government assistance (CPP, OAS) plus $300K in taxable savings. — Garth”

Similar to what I figured out, except I worked with Garth’s 40-60 plan, an 8% / year return, equal to approx. $80K / yr., divided by 12 months = $6,500 with the original $1 mln. untouched.

For 30 years, + / -, that would be sufficient for one or both of us. How the $1 mln. arrives is quite another matter! Good post.

#205 Observor — “How much is enough?” — Depends on needs vs. wants. See Mike’s post above.

#206 Mikey the Realtor on 06.05.12 at 6:07 pm

another prediction gone wrong, your bud carney is not giving you any breaks at all. You should do a poll to see for how long people will believe your misguided predictions.

Actually I predicted the BoC rate would remain unchanged. It is. Try to work on that anger. — Garth

#207 OlderbutWiser on 06.05.12 at 6:27 pm

Heheh Ovservor, it is all relative. I have over $2 million in stocks and bonds (mostly dividend paying stocks), $1.5 million in a farm just north of Toronto and $600k in a Toronto condo. I want to retire in 6 years and feel that I will need at least $4 million in a stock/bond portfolio to do this since I have no corporate pension. I have no debt and I am saving every penny that I make. We live frugally, have no cell phones, one car, we play golf at public courses, no custom made suits, we walk to work etc. We are going to put the farm on the market but keep the condo until we retire and then sell it also. You may laugh but I worry that I will not have enough for a comfortable middle class retirement either. I look at my grocery bill each week and it has almost doubled in the past year. The inability to comprehend the insipid effect of constant inflation will be what ends the “comfortable” retirement dreams of the vast majority of Canadians. I would be terrified to have only $300,000 in an RRSP. No offense intended.

#208 888realtor on 06.05.12 at 6:38 pm

For the last 10 years Canadian economy’s been stimulated through the credits. Credit money has been poured into the economy and the real estate bubble was a necessary tool to accumulate them. The constructed condos and houses weren’t considered for living, they were intended as collateral for mortgages.
Nobody’s cared about the amount of condos or houses built – as long as banks are willing to consider them as collateral – everything is fine. The only thing left was to provide the constant growth of RE prices – and happiness and prosperity are there especially amid financial elite and speculators. Getting RE bubble grows was the main mechanism of getting profit and keeping economy afloat.
Now, when it’s not possible anymore to use credit to pump the economy, what will be the next step… will financial elite peacefully accept a huge benefit loss… is there a new economic model or theory to replace the existing one which is coming to the end.

#209 Dorothy on 06.05.12 at 6:46 pm

“Thirty thousand a year in a decade (let alone now), half of it from government largesse, is a failure. This is what you reap for being a GIC investor. Sadly. — Garth”
The numbers I gave actually add up to closer to $40,000, which is almost $20,000 each, and the bulk of that money will be indexed to inflation.
Taking into consideration the more than $11,000 personal allowance, and the approx. $6000 age amount, together with the $2000 pension amount on money from either an annuity or a RIF (depending on what one decides to do with the RRSP money) any remaining income will be taxed at the lowest tax rate. Therefore, this hypothetical couple will pay little, or no tax. Particularly if they make good use of a TFSA.
With no debt, and a modest lifestyle, they will be able to eat, pay the bills and keep a roof over their head. Swimming and bowling are two low cost activities available in many municipalities. Walking and bicycling are both free. Local libraries supply books, reading groups, videos, DVD’s and internet access, all for free. Volunteer activities abound, and are free. Seniors can lead very active lifestyles at very little cost, if they choose to do so.
As for Arshes comment (#199), if and when a senior becomes incapacitated enough to require long term care, the family home can be sold to cover the cost. A couple retiring 4 or 5 years from now, will likely not need such care until they are around 80, which in our case is 20 years away. Even if house prices DO crash tomorrow, 20 years allows lots of time for recovery. So house prices are not our primary concern at the moment. The fear of losing our jobs before we are ready to retire is a much bigger concern. Because, despite what the government says, there aren’t too many employers out there willing to hire folk who are in their sixties.

#210 Harlee on 06.05.12 at 6:49 pm

“Please,I beg you,do not encourage him – Garth”
Why not encourage furst in his poetry ? It’s certainly an improvement over the kind of posts he was posting here before,and you know what those were…
I say as long as the poems are on topic of this pathetic blog site then furst should be able to post a short poem on each one,especially if they match the theme of that particular blog. It’s harmless.And it might be more interesting than some of the long-winded posts that are sometimes posted. IMHO.

#211 furst on 06.05.12 at 6:50 pm

#179 Daisy Mae and #201 Jamaican Gal
Thanks ladies, it is an honor to have your attention. A poet’s heart is deep. I have many things to share. Poetry is my outlet. World, here me sing.

#212 Dorothy on 06.05.12 at 6:58 pm

Garth referred to CPP and OAS as “Government largesse”.
Canadians have been paying CPP premiums all their working lives, so it is most certainly NOT “Government largesse”. It is a pension plan, and the size of the pension received is dependent on the amount paid in.
Eeven OAS, which comes out of general tax coffers, is funded by the beneficiaries, who are the taxpayers of this country. Because the Government has no money of its own. So using people’s own money to ensure them a minimum income in their old age, still does not qualify as “Government largesse”.
People collectively give the Government money, and then indicate through the election process how they want the Government to divvy up that money. It’s all a matter of priorities which programs get funded and which do not. But if the people, collectively, decide they want their own money used to ensure a minimum level of income in retirement, then that is their choice. It is NOT any kind of largesse, because they are using their own money to fund the program.

It’s a Pay-as-you-go system. Your pension bears little relation to what you contributed. And OAS is straight senior pogey. Neither is any substitute for ensuring that after 65 years of life, you can look after yourself. — Garth

#213 jess on 06.05.12 at 7:15 pm

subprime dividends?

By Taos Turner
Argentina’s Eskenazi family scored the deal of the century a few years ago by putting no money down to obtain 25% of the country’s biggest oil and gas producer, YPF SA (YPF, YPFD.BA).

Repsol regains YPF 6% stake as Petersen Group fails to meet debt payments
http://www.buenosairesherald.com/

Petersen borrowed $601 million from Credit Suisse, $175 million from BNP, $150 million from Itau BBA and $100 million from Goldman Sachs in 2008, according to regulatory filings. It also owes a combined $626 million to Credit Suisse, Itau, Citigroup Inc. (C), BNP and Standard Bank Group Ltd. (SBK) as part of a 2011 loan to buy another 10 percent in YPF, the filings show.
http://www.buenosairesherald.com/

===
In his presentation of the “Enrique Mosconi” report which will be available on the web within the next hours, Kicillof accused Repsol Spanish oil giant of “an irrational use of the resources.”

He blasted Repsol for “expanding internationally” (n.africa?) while not investing in Argentina. “It looked like YPF was a deficient company, producing less and less with fewer resources when the reality was, as the figures show, profits were sky rocking,” the official remarked.

#214 Nostradamus Le Mad Vlad on 06.05.12 at 7:24 pm


Financial Collapse When is sooner or later? 5:55 clip BdB 2012 — interview with Charlie Skelton; Austerity It’s never worked, and it’s not going to now; Obomba’s Panic Button When Soros gestures, he will push it; Retirement 80? So the fat cats on Wal St. can keep working us to death, and keep the wars going permanently; Low Interest Rates not good for a healthy economy; Verizon Nice bonus if you’re management; Sacrificial Lambs PIIGS, UK, NAmerica, France, Down Under and a few other western countries; 4:52 clip 15 things none of us knew (at least that’s what he says).
*
The NDAA Because NAmerica isn’t governed by residents loyal to NAmerica; Oh dear China makes fun of the US’ new US$7 bln. stealth warship; Confirmation of War The US and Oz vs. China, and China – Russia Strengthening ties, due to US’s constant meddling; UN (Agenda 21 or One World Govt.) Free speech not allowed in Yemen? Religious Hypocrisy The word ‘hypocrisy’ appears an awful lot these days; Agenda 21 (UN One World Govt.) Good on Alabama! Libya “Looks like the Libyan people are not quite so happy with their new US-imposed government and their new US-imposed private central bank!” wrh.com; Monsanto Poster shows what they really are — a greedy bunch of bastards, so Ten Medicinal Plants for a garden; Syria Western diplomats tossed (good); Pakistan Now the reason is clear why the US is regularly bombing; High Fructose Corn Syrup still isn’t that healthy for one; Texas voters Purged Just like Florida.

#215 Westernman on 06.05.12 at 7:27 pm

Harlee @ # 213, ” Why not encourage furst in his poetry?”
I refer you to furst at # 214…
Easy stomach, easy now…

#216 Canadian Watchdog on 06.05.12 at 7:47 pm

S&P cuts outlook on Genworth Financial http://www.theglobeandmail.com/globe-investor/investment-ideas/streetwise/sp-cuts-outlook-on-genworth-financial/article4233150/

That’s what happens when you pay for distressed mortgages for free. http://www.genworth.ca/homeownership/c_on-your-terms/HomeownershipWeek_Friday.asp

#217 GTA realtors in a Panic on 06.05.12 at 7:57 pm

#209 Mikey the Realtor

Looks at these angry GTA realtors posting on Garths blog as the housing crash continues to get worse. Toronto realtors have seen a drop in sales and an increase in sellers all the while deals are falling through and the new rules haven’t taken effect. When they do RE in Toronto and Canada are set to crash 50% and every realtor knows it.

#218 Dorothy on 06.05.12 at 8:09 pm

“It’s a Pay-as-you-go system. Your pension bears little relation to what you contributed. And OAS is straight senior pogey. Neither is any substitute for ensuring that after 65 years of life, you can look after yourself. — Garth”
Not true Garth. People who did not contribute fully to CPP do not receive the maximum CPP payout. The amount recieved is directly related to the number of years worked and the amount contributed.
Even OAS is dependent on having worked a minimum of 40 years since the age of 18 in order to receive the max.
As for reaching 65 and not saving enough, people such as myself who used money earned to pay all bills (in full; no debt), put 2 kids through university (no debt for either them or us), pay off a house (no mortgage) and still save for retirement, do NOT deserve to be criticized by rich people such as yourself.
Not everyone has the benefit of the kind of income you’ve made over the years. And not everyone has the knowledge to make the kind of successful investments that you have made. For blue collar workers, such as myself, to do as well as we have done, is no mean feat. And I refuse to allow people such as yourself to demean us.
According to your own statements, my husband and I have above average size RRSP’s, and are in the minority in that we have absolutely NO debt. Yet the modest sum we have managed to save for our retirement is STILL not enough (according to you) to represent anything but failure on our part. If that is true, and we are above the average when it comes to frugality and saving, doesn’t that suggest there’s something wrong with the system?

You misunderstand. You will collect far in excess of what you ever contributed, since the structure of the CPP is pay-as-you-go, meaning your pension benefits today are being subsidized by current taxpayers. Never think you actually ‘earned’ this with your premiums. As for OAS, it is dole. Pure and simple. You contributed nothing. BTW, criticizing me personally for stating an economic fact is beneath you. — Garth

#219 Smoking Man on 06.05.12 at 8:10 pm

Its really hard to write sober, been working on a draft, to post later just can’t get it together.

I noticed 2 ducks in old lake go station for the last two days, using up the pigeon’s turf. words just can’t come together. got 45 min till the LCBO closes. 4 days dry.

What to do?

#220 Tonino, Nonno Nicola's Grandson on 06.05.12 at 8:19 pm

#183 Big Rider

“In case you need clarification ,with ownership rates at 37% there are a whole lot more potential buyers (63%) then if ownership rates are up at (67% already in T.O case)”

Once again Big Rider these stats you and Captain Garth cite are referring to are for Manhattan and not the other 4 boroughs which are on par with Toronto. The potential buyers in Manhattan will never reach 67% because it will always be prohibitive to buy there. Manhattan is an island (literally and figuratively)all on its own. The other 4 boroughs that make up NYC are nothing like Manhattan and cannot be lumped into a general statement of home ownership versus renters average.

#221 Surrey Girl on 06.05.12 at 8:23 pm

# 46 Monster Cookie #65 D-dawg and # 95 D Suzuki (Dawg) I drive an electric (not hybrid) car and I love it. When we ran the numbers for the car we break even in 6 years. The new battery cost projected in 7 years would be about double the cost of an engine rebuild and the savings from no maintenance (that’s right no maintenance) should bring us even for the battery replacement. And I get to look my grand kids in the eye and tell them I did everything I could. I also get to look at the surprised look on the face of the dragster in my rear view as I take them off the light every time. I know this is a financial blog but sometimes you have to put your money where your convictions are and financially it does not cost more even when BC Hydro raise their rates in 2013. Do the numbers.

#222 brainsail on 06.05.12 at 8:30 pm

The differences between Canadian and US news coverage has been discussed here lately. We live in Central Texas and have zero access to Canadian news channels even with 200+ channels and find ourselves overwelmed with the coverage down here about the gay pervert. We normally never ever get news about Canada here unless it is bad news.

#223 John G. Young on 06.05.12 at 8:50 pm

#222 Smoking Man on 06.05.12 at 8:10 pm

“got 45 min till the LCBO closes. 4 days dry.

What to do?”

4 days is great — and it does get easier if you keep going.
Let us know if you were able to make it past LCBO closing time.

Good luck!

John

#224 a prairie dawg on 06.05.12 at 9:42 pm

#209 Mikey the Realtor

The bar is set pretty low for CREA membership isn’t it?

#225 Harlee on 06.05.12 at 10:18 pm

#214 furst
That “World,hear me sing” was a bit out there,but I suppose when the muse is with you AND you’re trying to impress two ladies I’ll sort of excuse it.;-) It takes baby-steps sometimes to reach the stars.

#226 Harlee on 06.05.12 at 10:23 pm

#222 Smoking Man
Four days without a drop is very good. Try to aim for at least a week if you can do it. If longer,then you will be a hero. Good luck.

#227 Gun Boat denier on 06.05.12 at 11:07 pm

212 Dorothy “Walking and bicycling are both free.”

Well, maybe not cycling…..

http://www.bicycling.com/node/60390

Just giving you a hard time. Good posts today!

#228 kkollie on 06.05.12 at 11:48 pm

Garth @ 221

“You will collect far in excess of what you ever contributed, since the structure of the CPP is pay-as-you-go, meaning your pension benefits today are being subsidized by current taxpayers. Never think you actually ‘earned’ this with your premiums. As for OAS, it is dole. Pure and simple. You contributed nothing”

Curiously, what is your take on public sector pensions? It’s pretty good dole if you ask me. We are all well aware that public servants are earning far more in pension payments than they have earned with their premiums compared to what the private sector worker has contributed and will receive. As far as I’m concerned, I believe ALL workers – private and public – should receive a minimum pension based on average income, years worked etc. One pension system for all. Pay the public servants well and let them look after their own additional retirement income, just as private sector workers do, plain and simple.

Oh look! A shiny thing! — Garth

#229 wayoutwest on 06.06.12 at 1:06 am

Some lawyers chase ambulances; some realtors chase old folks:

http://www.theglobeandmail.com/news/british-columbia/land-rich-boomers-buying-nests-for-their-young/article4226095/

#230 D-Dawg on 06.06.12 at 3:34 am

#224 Surrey Girl

I’m not sure what numbers you are doing I but you should probably do them again.

How does an ‘engine rebuild’ come into the equation? What vehicle needs an engine rebuild, ever? I drove my Honda Accord for 300k km with only oil changes and brakes. Smarten up.

BTW…not that it matters…but I’m quite sure you’ll be looking at blue sky in your rear view ‘off the light’ if you happen to meet my 381hp iForce v8.

#231 TurnerNation on 06.06.12 at 8:15 am

#19LH on 06.04.12 at 10:08 pm

Just south of this location, closer to Front St, I notice the new Victory condos, Tridel Reve condos, and dreaded Cityplace condos now listing a tad under $300,000. Previously, all listed at higher price levels. The cracks are forming.

#232 John B. on 06.06.12 at 12:57 pm

By working longer to pay for our excesses and lack of retirement planning, are we denying the next generation our good-paying jobs, and effectively killing the very real estate market that many are relying upon to fund their retirement?

#233 Serbia-Vancouver Lady on 06.06.12 at 2:33 pm

Mom Cut 20 Years in a Week Using This 1 Weird Trick
“Comment Left on: 5/12/2012
at 11:41 PM
As a realtor it’s important to look and feel my best, unfortunately the housing market isn’t doing that great so cash has been a little tight lately. Thanks for the info, looking forward to receiving my trials.”