Four years ago some schmuck flipper with more money than cortex paid $3,125,000 for a two-bedder in a then-soon-to-be-finished concrete finger called Shangri-La. For that he got a unit on the 59th floor with a Miele dishwasher, which is clearly the Goal of Life. Oh yeah, and a great view of the rain falling on downtown Vancouver.

The unit was immediately relisted at $4,288,888 (guess who the target market was?), for a quick $500,000 profit over the final closing cost. But, no takers. After three years of expenses (the monthly maintenance fee alone is $1,825), the place just sold – for three million. The total loss, about half a million.

“So many stories of losses now,” says a well-connected guy who knows.  “And almost every one of the sales in Richmond are now below assessed value.”

It’s not just the rich and greedy being whacked. Young idiots are also doing their bit to ensure future losses. “There’s been a spike in apartment sales in Vancouver in connection with the new rules,” says our source. “How silly people are. If they just waited, they would have had the same payment but on a place 15% less in value. People are really clueless about money actually.”

Actually. Here’s one now.

Hi Garth. While reading your blog generally terrifies me, I’m looking for some honest advice on my real estate situation.

I’m 25 and single, earning about $60,000 a year.  I am paying into a defined benefit pension plan with my employer. I am currently renting in downtown Ottawa for $980 a month. I have no debt, very few other expenses and about $50,000 in savings. Should I buy? If I decide to, I would be looking at a condo of some sort as I want to remain in the downtown area.

Any insight into my situation, however brutal, is appreciated. James.

You deserve to be terrified, kid. Tough to find anything worth buying for less than $300,000 in that area, which means you end up with zero savings, $240,000 in debt and a monthly of about $1,600. So why would you buy when it means your overhead shoots up 60%, your liquid wealth evaporates, you lose mobility and freedom and when a real estate correction of 20% would wipe out your entire net worth, leaving only a mortgage? Is this any way for a federal civil servant to think?

Or perhaps that’s the problem – Ottawa syndrome. I know it’s rampant, but utterly misguided. Of the 300,000 federal civil servants in Canada (there were just 215,000 when Mr. Harper took office) about 19,200 will be turfed this year. Of those, almost 7,000 are in Ottawa. In anybody’s book, that’s a massive layoff, and it looks like this is just the beginning. Will this mean blood running down the gutters of the Glebe? Meh, not yet. But wait. There’s no escape for Ottawa from the same factors affecting real estate everywhere.

I mean, did you catch Phil Soper this week? He’s head pumper for marketing giant Royal LePage, which just warned Canadian housing is “on the tipping point.”

Write this down. Tape it to the glass on your front door, with a lit candle beneath. It’ll help ward off evil realtors looking for listings. Sayeth Soper: “Home prices cannot grow faster than salaries and the underlying economy indefinitely. Some regions have reached or perhaps even exceeded the current upper level of price resistance as buyers have embraced an era of historically low mortgage rates.”

Exactly the message of this pathetic blog, delivered with numbing repetition and far too much scandalous ribaldry. (a) When house prices exceed incomes, it’s only because of new debt. If values don’t continue to swell, buyers are screwed. And, (b) markets climax and collapse not because of external stuff (like F or rate hikes) but when prices get too stupid.

Soper gets it. With regard to the F&P changes to mortgage terms, cash-backs, insurance and borrowing, “the timing,” he says, “was unfortunate.” The reason is simple – prices rose so alarmingly, so quickly (cheered on by Royal LePage) that “the market is slowing of its own accord.” So the changes just now being implemented are nuking affordability for young dorks like James, when the seeds of housing self-destruction have already been sown.

And this is why, more than ever, a whole generation of people need to know there are other places to put money. Other than stocks, GICs and so-called ‘high-interest’ savings accounts. I’m always amazed that most kids I hang with covet real estate and will buy it with 95% leverage, and at the same time are terrified to put ten grand into an equity ETF or some bank preferreds. They have a truly twisted idea of risk.

They want things everybody else wants, and run screaming from stuff in decline. They know zilch about financial assets or how a mortgage works. Debt is an intangible. Only payments are real. And this is why they’re the perfect real estate victims. Why half of all housing transactions in Canada involve first-time buyers.

‘Unfortunate’ does not begin to describe this.

BTW, good news. Unit 5904 in the Shangri-La may finally be sold, but the one next door is available! Four point three million. Hurry.


#1 Randy on 07.10.12 at 9:00 pm

Nic pic….”Ah married….I can see you bending over a hot stove…..but I can’t see the stove”…….Groucho Marx

#2 TurnerNation on 07.10.12 at 9:01 pm

Toronto Realtors in a panic! The latest monthly realty pap:

With the media so negative about the condo market, it is not surprising that many buyers are pausing and trying to ‘time the market’. We know that timing the market does not work for the stock market so why would it work for real estate? We can tell you that prices have been flat over the past six months but they will be significantly higher in five years’ time. The fundamentals for living downtown have never been stronger and it’s not about to change. More and more people want to live downtown and the only affordable option is condominium living. Companies are also moving back downtown to be closer to a younger work force and there are new office buildings planned and under construction to meet this demand which only strengthens the process.

#3 TurnerNation on 07.10.12 at 9:03 pm

We’ve seen several socio-economic phenomena, over the decades:

War brides
Baby Boomers
Latchkey kids.

How about: HELOC kids.

Yes, an entire generation of kids whose parents live on HELOCs. Ending in financial strife.

#4 Mic D'angelo on 07.10.12 at 9:21 pm

Garth, the all time record low Canada 30 year bond is 2.26% today. the Ontario 31 year bond is 3.36%, Ontario 25 year residual is 3.56% and B.C. 31 year bond is 3.20%. I do not see these bond yields changing more than 30 basis points up or down over the next 18 months at least. Real estate in the U.S. crashed on average 33% and U.S. 30 year bonds declined from 5.55% to now 2.60% more than 53% since 2007. A real estate decline of say 15% in Canada would put more pressure on falling bond yields so higher rates will not happen over the next 5 – 10years at least. Japanese style economic policy like quantitative easing and operation twist will just make things worse and a second term of Obama will make a small fire a blaze for the U.S. and the world. Also, do not forget Europe socialist utopia lala land will only make things worse.

A housing correction in Canada will have no significant impact on bond yields. — Garth

#5 Sebee on 07.10.12 at 9:21 pm

First they were pricing low to start bidding wars.

Now they will price high to make buyers feel like they got a deal.

Whoever buys that 4.3m unit next door will offer 3.3 and brag to friends about how he got it for 1m under asking. It must be a deal at 3.3m, right Garth? We should buy it together!

#6 Mike P on 07.10.12 at 9:23 pm

Hi Garth,

any particular thoughts about a bank preferreds ETF vs one or two individual bank preferreds? Fairly reasonable to do either or does ETF win out in most circumstances in terms of moderating risk etc etc?

thanks for any input!

#7 Inglorious Investor on 07.10.12 at 9:25 pm

#208 Canadian Watchdog on 07.10.12 at 7:56 pm

You may very well be correct about real prices. No doubt home prices will have to get back into balance at some point. The question is: how?

You seem to be basing your prediction on current CPI metrics, such that house prices will have to fall in order to balance. Perhaps.

However, I think it is possible that CPI could accelerate for a period of time, such that general prices “catch up” to housing instead. I’m not saying this WILL happen (and at the moment it does not look likely in the very short term), but it’s possible, if, say housing hangs in through the next global cycle and the economy begins a rapid expansion bringing with it much higher general inflation.

#8 Old houses can pay for themselves!!! on 07.10.12 at 9:39 pm

Rught away!!! You can find valuable stuff in the attics!!!

Hey, what do you want? Aren’t people very gullible?

#9 Seven Stars and Orion on 07.10.12 at 9:45 pm

I’m not a fed, but far too many of my family and friends here in Ottawa are. Despite the announced layoffs, they uniformly tell me “house prices will NEVER go down in Ottawa, NEVER HAPPEN”.
I hope for their sake that is true, but I know better.
Still renting.

#10 Adam on 07.10.12 at 9:52 pm

Interesting thing about indexes (and ETFs that track indexes), they returned on average 6-10% per year over the past 100 years.. but there were very few years where they returned 6-10%… this means most years either had dismal returns or had extremely good returns (hence the volatility of the stock market) So index-based ETFs are a great investment if you hold them for 10 years or more… otherwise they are very risky.

#11 TaxHaven on 07.10.12 at 9:55 pm

Forest. Trees. They can’t get it straight:

“Home PRICES cannot grow faster than salaries and the underlying economy indefinitely. Some regions have reached or perhaps even exceeded the current upper level of PRICE resistance as buyers have embraced an era of historically low mortgage rates.”


“If VALUES don’t continue to swell, buyers are screwed.”


“…every one of the sales in Richmond are now below assessed VALUE.”

HOUSING IS A COMMODITY. Perhaps a speculation, but not an “investment”. It’s a constantly fluid MARKET, not some kind of inflation-protected, God-granted certificate of guaranteed worth…

Houses don’t have “values”. They only have PRICES.

#12 Sparky on 07.10.12 at 9:57 pm

This in the local news:

The market here has severely tanked in the past couple of months. Watching the market from last year (
– sales are about half or worse compared to last year
– New listings are the same, or slightly higher
– Price drops are though the roof – often double the quantity of houses sold

#13 blase on 07.10.12 at 9:59 pm

60% housing correction in GTA, Vancouver, and Calgary in the next 5 years.

Interest rate black swan will set it in motion.

Houses will pull a Detroit.

#14 Vik on 07.10.12 at 9:59 pm

Unit 5904 in the Shangri-La may finally be sold, but the one next door is available!
And so is Unit 5903 “Unit #5903 is also selling, would be an ideal for family members looking for living close together.” Ha Ha!!

#15 walter safety on 07.10.12 at 10:00 pm

The way to survive in a concentration camp is to be close to the kitchen.
Ottawa is Canada’s kitchen .
Home prices in Washington have barely moved except at the extreme ends of the market

#16 Mainlander on 07.10.12 at 10:00 pm

Anyone ever wonder why we never see”Phsychic Wins Lottery!” on the front page of the newspaper but guys like Bob Rene are quoted all the time that there is no bubble. Makes you wonder sometimes.

#17 Higher wages =core inflation on 07.10.12 at 10:03 pm

To # 7 Inglorious Investor

The governments try to inflate money supply (quantitative easing mostly through the credit to unsuspecting). E.G. Canadian Government gave rises to non-productive Government workers (more money to chase the same quantity of goods) and created conditions for asset inflation (real estate, gold, crude, etc). This approach is quite risky in my opinion. If things get out of balance (e.g. U.S., Europe) value of asset class collapses and the spiraling down begins. People lose confidence, and consumer confidence is the foundation of consumer economy. It’s more complex than that, but in simple terms I see it in this way.

#18 ANONYMOUS on 07.10.12 at 10:04 pm


Yes folks, welcome to the start of the new recession, only this time the FED doesn’t have any ammunition to stop it.

#19 Little Phil on 07.10.12 at 10:07 pm

#9 – I’m also not a fed in Ottawa, and coming up against the same comments : “Ottawa won’t crash cuz the federal gvt is .”

James; keep renting and read more Garth and about investing (Buy Investing for canadians for dummies!) :D then invest in ETFs through a self-directed investment account like Questrade and be patient! I rent downtown for 850 and happy to be tossing my savings in more investments and watching dividends roll in.

Time is on your side.

#20 b on 07.10.12 at 10:08 pm

Not a public servant myself, but all the public servants I know in Ottawa (some with 30+ years in) say that cuts only ever happen on paper. No way 7000 incomes will disappear from the city, they will just shifted to the most convenient fed balance sheet. Seen people get hired in the very departments that are reported to be shrinking. More useless token govt jobs with full benefits and a salary 15% above private sector to boot. I’m no Milton Friedman, but really starting to wonder what will happen if govt keeps growing like this.

Early retirement or contracting, its all the same bill to the taxpayer. Would love to see a bit of correction in Ottawa but I fairly sure it will come from something else.

#21 Hoof - Hearted on 07.10.12 at 10:10 pm

Shangri-La was hyped as the tallest building In Vancouver, with a hotel component in the lower floors.

Good luck s-u-c-k-e-r-s

#22 Keeping the Faith on 07.10.12 at 10:10 pm

The sad although predictable part of this story as it winds down is just how the Canadian real estate industry will eat its own over the next 24 months.

I received a real estate company’s advertisement today and on the back page there was no less than 75 pictures of realtors. From 22-67 years of age it appeared, descendants from possibly 30 countries around the world and yet they will all be fighting for their collective careers from now until 2014.

A story that is not talked about enough in real estate bubble ‘pops’ is how each realtor, being a franchise owner, must somehow learn to be savvy, calculating and a shrewd business owner. This after being a dull, boring, non-thinking member of society for their entire career. CRA road kill would be a better title.

So where will they end up you ask?

In politics of course or a grade school teacher.
That’s where they all end up when the real estate career comes to an abrupt end.
Poor children of the corn.

#23 PermaBear on 07.10.12 at 10:11 pm

Last several days around Lower Rainland, I have noticed a lot of SOLD signs. I am guessing the great unwashed hurried to close their deals before the new rules kicked in.

#24 TS on 07.10.12 at 10:12 pm

You’re so wrong about Ottawa Garth. Buying in downtown Ottawa (Glebe, Westboro, Sandy hill) has been out of reach of most public servants for a decade now (except those who want to be ridiculously house poor).

Ottawa prices never reached even close to the prices of other cities despite the fact that it has one of the high per capita family incomes in the country. Prices have mostly levelled off except for some up and coming neighbourhoods (Hintonburg / Mechanicsville).

It will be a correction but not severe. And nobody buys houses in the Glebe to live. They buy triplexes and rent them out to hipsters who grew up there and can’t imagine living anywhere else (except they make $25,000 and will never be able to buy).


#25 Montrealer on 07.10.12 at 10:14 pm

can you get these bank preferred through discount brokerage or you need to invest with an adviser?

#26 Little Phil on 07.10.12 at 10:16 pm

Oh, here you go James, good little article from today tp get you started on reading about investing

#27 Smoking Man on 07.10.12 at 10:17 pm

if you have elderly parents, grand parents.

Tonight I was going to rip LaughingCDN to shreds,
this guy here
Realtors in an all out PANIC! on 07.10.12 at 10:08 am

But I don’t feel like talking real estate at the moment.

My mom is in not good shape, awhile ago I told you about a DR the grim reaper, my scenes where right on.
Years of poker playing.

When I took mom back to Nursing Home they put her on a patch for nasia, I said ok, well turns out grim reaper prescriptioned it. Did not know.

She starts acting weird saying the crazyest shit. so asked the staff to give me a list of her meds.

The Reaper snuck one in. Scopolamine in patch form

I don’t know if I got her off it in time, but one hell of a law suit on the way.

Kids this drug is how they put old people to sleep, pulled out my wife’s dads old charts, 1 week before he died


And after you watch the vid, just think what the machine can do to all of us.

It’s been around for 100 years and know one knows about it

Scary or what

LanghingCDN I have some things to take care of when done.

Youre mine :)

#28 Industrial Guy on 07.10.12 at 10:19 pm

Headline in today’s Toronto Star: “GTA home resale prices overheating due to land shortage: report”. It’s the latest theory forwarded by housing economist Will Dunning.

Didn’t some real estate pumper say the exact same thing about Vancouver just a few months back? It looks like they’re recycling their own marketing BS…..

The article claims Dunning has studied the housing market for three decades. He seems to have missed the whole emergency low interest rates leads to massive bubble thing, eh?

Next, we’ll see a fleet of helicopters full of local RE agents masquerading as home buyers flying out of the Toronto Island airport on Global News.

#29 Smoking Man on 07.10.12 at 10:20 pm

better link Scopolamine

#30 Mic D'angelo on 07.10.12 at 10:23 pm

Garth it is not only a 15% housing correction but overall consumer debt 152% of disposal income which is an all time high will keep all interest rates low. Also, large government budget deficits and debts Canadian, Provincial and Municipal in total over 1.2 trillion dollars in total will be in governments best interest to keep interest rates low. This has been the case for last 16 years.

#31 House on 07.10.12 at 10:28 pm

CBC and CP have reported that equity loans have been reduced to 80 % of the value of the property. How can people not be well informed with such accurate news reporting.

#32 share on 07.10.12 at 10:29 pm

I hate when a newspaper place this kind of articles….unbelievable!–gta-home-resale-prices-overheat-due-to-land-shortage

#33 Mic D'angelo on 07.10.12 at 10:29 pm

Garth, The bond vigilantes are sleeping and world central bankers are using QE and operation twist, bank of england bond buying etc. is keeping interest low and lower for depression style economics. Get used to it investors financial repression is here to stay until 2022
+. Gold Sachs said interest rates by the U.S. Federal Reserve may have to kept at 0%-0.25% range until 2015 now not 2013,2014.

#34 TT on 07.10.12 at 10:33 pm

I had a Re-Max realtor called me on the weekend and told me that he is trying to call everyone in the condo tower to see if anyone is interested in selling. Not sure how/where he got my contact? I thought all realtors are rich and wouldn’t have to work on the weekend. I thought that only normal people like myself have to work hard.
Know a realtor who bragged that she makes 300k a year.
Another one I know who have such an easy life that he’s getting his wife to join the profession.
Is it true?

#35 Canadian Watchdog on 07.10.12 at 10:37 pm

#7 Inglorious Investor

“No doubt home prices will have to get back into balance at some point. The question is: how?”

Three things have to happen: i) CAD dollar needs to be devalued by 20-30% ii) wages decline to boost employment. iii) home prices decline (faster then wages). During this process over the next five years, Canadians will need to tolerate some high inflation and, most importantly, they’ll need to start producing more exportable goods and services. Comments by Carney on this here.

Without all three happening, Canada’s economy will keep sinking into a great depression. It’s as simple as that.

#36 45north on 07.10.12 at 10:39 pm

Smoking Man: I don’t know if I got her off it in time, but one hell of a law suit on the way.

that got my attention

#37 carpe diem on 07.10.12 at 10:41 pm

In Ottawa West’s rural areas, I am seeing a huge inventory of homes that are not moving. Homes on 2 acre lots with snow birds that have big rv’s seem ready to sell but homes are not selling. New subdivisions in Carp and Dunrobin Shores with more for sale signs than families living in homes.

Looking on the other side of the river, Almyer seems like a big red dot on

Ottawa’s demographics is showing a shift of folks heading into retirement. With their kids overborrowing for plastic homes in say kanata, who will be able to buy their homes? Gen-xers already have their own.

When I first moved here, in 2008, I thought there was very little inventory. I thought that due to the stable nature of employment at the feds or consulting/high tech industry, people must buy homes once and do not move for 25 years. That is the case for most people I know here.

If you take a look at the MLS, inventory seems to have tripled. You add in grapevine and it is crazy how my much is for sale.

I believe these are signs of cracks in Ottawa – where prices will never go down.

#38 Farfetched on 07.10.12 at 10:48 pm

I don’t understand why people keep writing you with the same questions. Why don’t they get it? You communicate a pretty consistent message, Garth.

One virgin at a time. It’s my motto. — Garth

#39 Canned Goods and Buckshot on 07.10.12 at 10:49 pm

Soper at least acknowledged some market fundamentals. I listened to Brad Lamb briefly the other morning on CBC. He had the termerity to deny a bubble even exists in GTA housing. He tried unsuccessfully to place most of the blame for the run up in GTA prices on the prov. Liberal policies of creating green belts. What a transparent shill and bagman.

#40 penpal on 07.10.12 at 11:14 pm

@ #27 and # 29 Smoking Whatever

I lost my mother fairly recently, almost same age.

I’d sit and speak with the Dr who made the prescription and only him and have him explain the purpose of every substance they are administering to your mom. Look him in the eye and turn on your BS meter.

Sit back and politely go thru her meds list with him.
Don’t make the mistake of making assumptions and getting pissed until you have all the “professional” answers. Keep it polite and civil and under no circumstances raise your voice or make threats.

Then, weigh your options by what evidence you have obtained or your gut instinct. Bear in mind this is bout your mom and her life, not money and retribution at this point.

Good luck, but I am surprised that you have not taken her to the Mao or the Cleveland clinics given your stated means.


IF you have the money, get her the hell out of an Ontario hospital – the C deficile kills many of the elderly and it is contracted due to bad hospital care. Get her into private care and pay for it.

#41 Can it be? on 07.10.12 at 11:19 pm

Some agents make a lot of money. Some love to brag and most love to not live within their means… Wen times are good, it’s good for realtors, when times change… Watch out it will be a dog eat dog world. Top complaints by realtors 1) there are too many agents 2) people cut their commissions 3) there are too few listings 4) omg people don’t just buy the first house they see 5) people don’t respect agents 6) there are my enough hours to play golf 8) complaining about their brokerage 10) what did I miss. I think there are few ethical agents and the rest will say anything they need to just to sell you the house. I will say the ones I had met in oakville are far better then ones in the rest of the GTA. I could actually have a reasonable conversation with them. We can agree to disagree. With the time that has passed and the arrogance by many realtors I believe people have a built up resentment. I’m waiting for the day that there is a simple fee for a real estate transaction… None of
This massive commission that is outrageous. I firmly
Believe times are changing!

#42 thinker on 07.10.12 at 11:19 pm

The Shanga Shack example is a great one because you have used the “fees” as part of the loss. However, let’s make it real and think about it in our typical condo – If the cost is 300k and your rent is say only 1000$ a month, in 2 years of renting, you would have spent 24k or 8%, so prices drop more then 8%, you should feel proud to buy an older home with someone else’s choices…however, if you keep renting and prices keep going up…as they have the last 5 years – THINK about it, how much have you pissed in renting? vs the owner who paid interest, fees, taxes + appreciation…..

Unless you have a really good rent that can afford some sort of Garth implied timeline, you really need to think about your investments and target to buy a home. I believe Garth is right if you are renting AND using your money to invest and risk taking. Renting and fully taxable GIC waiting for a home price to drop is a losers game. If you have a high rent, you should just buy at some point cause your loss over years will start to make up over 25% of the home price today.

Add to this, family needs, size, growth, fired, etc…The most important point today is you have to use your spare cash left after renting and take some risk, not some GIC/TFSA.

However, a high rent vs ownership, just pay yourself because you overpaying for rent and don’t have enough cash to take risk. This is what we call overpaying for the real estate put option.

#43 Cristian on 07.10.12 at 11:23 pm

I wonder who’s the idiot who paid 3 mils for a 2-bedroom with a view.
I rent in Burnaby, I have a great view, but I don’t spend even 2 minutes a day looking at the mountains or at the lake, after a while this tends not to be very important at all. I find this “view” thing is highly, highly over-rated in BC. I mean, how much time can one spend looking at the same mountains/ocean/etc.???? I really have better things to do with my time.
So paying 3 or 4 million (or even 2 or 1, for that matter) for a 2-bedroom box is just crazy. What is that, 500,000 for the apartment and the rest for the view?…
Thank God for idiots.

#44 Boomer on 07.10.12 at 11:33 pm

# 27 Smoking Man, is that what the drug is labeled in hospitals? I have a friend in crisis now, she has terminal cancer and I don’t think her family are being good advocates. They seem to follow the Doctors advice and not question too much. Has me worried!

#45 Smoking Man Fail on 07.10.12 at 11:39 pm

Smoking Man,

I fully agree, option one (pump up asset prices) is the way things will go.

$ under a mattress will get inflated

#46 Jason on 07.10.12 at 11:46 pm

I’ve been following the downtown Ottawa housing market closely… especially the condo market. The run up in prices over the past 10 years has been like many other urban centres in Canada, and I see no reason why people in Ottawa should feel they are any more insulated from a housing bust than other centres.

Renting in downtown Ottawa is significantly cheaper unless you are paying a 50%+ down payment. The resale market has been almost dead – with inventory steadily growing over the past few months while sales have been in decline. Meanwhile, there are new condo developments approved almost every week! Sounds like a great time to invest, eh?

FYI, I was in a similar situation to James – though looking for a 2 bed condo, w/160k down payment (40% on a 400k condo) and still calculated that renting would be cheaper than owning in downtown Ottawa!

There was a lot of talk of the civil service layoffs affecting real estate – I think it has… a little… everyone who works in the civil service knows people who are impacted or maybe impacted in the next few years. Regardless of the number of layoffs, the civil service is not growing… nor is any other sector in Ottawa. While this is not a trigger for a housing correction, it may make it worse when it does come.

The trigger for Ottawa’s housing correction will be the same as every other urban centre…all of which has been well documented by Garth and many others.

#47 First to last on 07.10.12 at 11:48 pm

Growing up, I always though Canada was the greatest country on earth. Then I grew up, we’re no different than anyone else. In many ways we are far from the greatest country on Earth.

#48 Cy on 07.10.12 at 11:49 pm

The peer pressure involved in buying into the real estate market, hell buying all the new toys (cars, atv’s, flat screens) is incredible. I think that maybe it’s even got worse with my generation (millennials) because we really grew up as the first generation to be bombarded by marketing.

I look around at most of my friends and look at the debt their in and I just think what a waste of a life. Like one of my best friends says “you only have one life, you don’t get a do over” it just boggles my mind that people are so willing to write off the rest of their life paying for something that they could never really afford in the first place. All because they want to feel like they are keeping up with everyone else. Its a self esteem issue at it’s heart and a tragedy.

#49 mpl on 07.11.12 at 12:27 am

Spain pressed to inflict losses on savers

Spain might force preferred shareholders to take losses.
I am not saying this will happen in Canada. But you advocate bank preferreds in your blog. You should also state that preferred shares will take losses before debt does. Most retail investors probably treat them as some kind of a ‘safe’ share. But in reality they are only slightly safer than regular equity.

#50 Inglorious Investor on 07.11.12 at 12:29 am

#35 Canadian Watchdog on 07.10.12 at 10:37 pm

No offence, CW, but what you prescribe is a kind of textbook race-to-the-bottom approach. It’s what everyone is trying to do, and it’s ultimately a losing strategy.

Rather than trying to devalue the CAD and reduce wages, I think we should try to boost productivity and innovation. Canadian productivity can stand to be improved, and I believe it can be with the smart application of technology, and good management and systems. Innovation can be improved also, but we are getting better in this regard.

We’ve used the cheap dollar as a crutch for decades. Despite how smart we like to think we are, the US still has higher per capita GDP, at least the last I checked.

As for exports, I agree totally. We need to access global markets more and reduce our reliance on the US (another crutch).

Canada has great potential. We need to better capitalize on it. It won’t be easy, but nothing really worth having ever is.

#51 Devore on 07.11.12 at 12:30 am

#11 TaxHaven

HOUSING IS A COMMODITY. Perhaps a speculation, but not an “investment”. It’s a constantly fluid MARKET, not some kind of inflation-protected, God-granted certificate of guaranteed worth…

Houses don’t have “values”. They only have PRICES.

Houses most certainly have value. Their value is based on the same thing any investment is based on: the income they generate, ie, rent. Either the rent you’re getting, or the rent you’re not paying. The price is what you pay. The value is what you get. Lately, the price is far too high, but that does not mean houses have no value.

The confusion comes in when people start talking about “assessed value” such as for tax purposes, which is merely estimated price vs comparables, and nothing to do with economic value.

#52 DirkTheDaring on 07.11.12 at 12:41 am

We know what’s coming – it’s already begun as is now obvious. So, my question is how to make a profit from the looming disaster? As crass as it may sound, same is done shorting stocks.
Garth, what is the best approach in your opinion to capitolize what you see in the crystal ball?
Shorting real estate funds is probably not the best approach since they may be too well diversified (commercial properties,etc).

#53 Carpe Diem on 07.11.12 at 12:50 am


Thanks for your analysis! I’m not alone!!!


#54 Property Manager on 07.11.12 at 1:31 am

Sales dropping? Where is the HAM?

From Citizenship and Immigration Canada:

“CIC has temporarily stopped accepting applications for the federal entrepreneur program. Only applications received before July 1, 2011, will be processed. This suspension will continue until further notice…The Federal Entrepreneur Program needs to be re-designed…

Where do entrepreneurs come from?

CIC Entrepreneurs come from all over the world. Currently, the majority of entrepreneurs are from China, Taiwan, Korea and Hong Kong, but there are also large numbers of them applying from the Middle East and elsewhere…

CIC has decided to issue a temporary pause on new federal IIP (Immigrant investment program) applications in order to manage existing inventory pressures…” (IIP as of July 1, 2012)

YIKES! Talked to an Asian realtor today who said he understands if no new policy is developed within six months, the numbers for “entrepreneurs” will go back to what they were before the moratorium…ergo HAM.

Prick then reinflate the bubble by allowing HAM back in? Maybe F and H think they have a rabbit in the hat after all…

#55 Not 1st on 07.11.12 at 1:35 am

Garth dont you ever get any inquiries from the 1% crowd? What are they doing?

#56 Tron on 07.11.12 at 1:36 am

#24 TS…’despite the fact that it has one of the high per capita family incomes in the country.’

I puked in my mouth when I read that.

#57 Dodged-A-Bullit-In-Alberta on 07.11.12 at 1:39 am

Greetings: When the wife and I walked from a condo deal in Calgary, 3 years ago, it was because I read the documents. There were design problems with the comple. Existing owners were looking at special assesments, in spite of funds that had already been set up. Exfoilating concrete in the detached garages, leaking patio doors and windows. Engineering report done without anyone taking a ladder and walking on the roof. At least with a SFH the owner has the ability to make financial decisions. Condos anywhere in Canada are a financial death trap. My son and his wife flogged their condo 2 years ago, I helped get it ready for showing. They lost money on the deal, carpet, baseboards, doors, painting, etc. cost more than the equity built up, even with the inflated Calgary market. Dad worked for free and provided a piss pot worth of tools..I rest my case.

#58 Gunboat Denier on 07.11.12 at 1:41 am

32 Share – try reviewing the affordability studies at demographia to get a better understanding of prescriptive land use policies and there effect on the real
estate market.

#59 SewageVancouver on 07.11.12 at 1:50 am

There are definate disadvantages to living in Vancouver 1) Car insurance is sky high
2) Gas is no better
3) Groceries are not any cheaper
4) Smells like sewage a lot of the time
5) Last but not least, living in a pigeon hole for 1 million

If I had a million dollars I would buy you a house, that was the size of a garage. If I had a million dollars I had to eat craft dinner as I had to walk to the store as gas cost more….

Anyone else care to share?

#60 John on 07.11.12 at 1:51 am

Sayeth Soper: “Home prices cannot grow faster than salaries and the underlying economy indefinitely.”

Good enough. Let’s go to the underlying ecomomy shall we? If not, when?

Here is the underlying economy (in large part) of the Canadian real estate sector…potentially linked to:

1. Slide up
2. Creep up
3. Boom up
3. Slide down
4. Creep down
5. Crash down
7. Flatline
8. Up and down
9. Blown up
10. Whatever

So which of the ten are driven by the following paradigm? What’s the real game…

Comments? Looks like a very legit article.

#61 rana on 07.11.12 at 2:55 am

Lemmings. Most are lemmings. You try to tell people but they dont listen- most are ignorant. Just shake your head- its sad when its people you care about that lose.

#62 Pat on 07.11.12 at 3:04 am

penpal wrote:

“No, actually no one in Canada is “paying me”.
I’ve made my own paycheck for about 35 years or so, in my own business and funny, no one ever sent me a cheque unless I did something to EARN it.”

Ha ha, that’s too funny to let go.

So when somebody (perhaps the governmental worker HD) sends you a check in exchange for your services, he is not paying you??

What your statements seem to imply (can’t be sure because of your inability to express yourself clearly) is that unlike governmental employees, everybody working in the private sector provides valuable service.

So here’s is a challenge for you amigo.
For every governmental job/service that you can show me to be useless, or grossly overpaid, I’ll come up with one of similar “value” in the private sector (shall we start with Miss Bunny “making her own paycheck” :)).

#63 Tony on 07.11.12 at 3:20 am

Re: #24 TS on 07.10.12 at 10:12 pm

Only people with snow shoveling as a hobby would live in Ottawa. Ottawa real estate will fall more than 40 percent from top to bottom.

#64 Buy? Curious? on 07.11.12 at 3:36 am

First of all, I want to thank Garth, (again) for being patient and tolerant with some of the posters on this blog. I know times like these can be frustrating and you need a place to vent but try to tone it down a bit. I, for one, am guilty of going off, saying that mortgage brokers, realtors, etc, are greasier than a massage table in a Spadina second floor apartment on a Saturday Night, but Garth can properly edit my post so that the point is made without offending all the old people that read this blog. Old people are sensitive.

As for today’s post, Ottawa is a big toilet bowl, speculators get no sympathy (ever sit at poker table with Chinese guys? They’re always, always “All in!”) and Smoking Man is surprisingly making good points.

#65 LuckyRenter on 07.11.12 at 5:22 am

New mortgage rules lost on many Canadians

While Finance Minister Jim Flaherty is hoping his recent tightening of mortgage rules will apply the brakes to hot real estate markets, a new survey by Bank of Montreal shows that many Canadians are simply not paying attention.

Nearly half of those surveyed by BMO say they are unfamiliar with the new mortgage rules.

Most Canadians could not say what the maximum amortization period — the amount of time it will take to pay off a mortgage — was for government-backed mortgages. Only 45 percent of those asked identified it correctly as 25 years.

More than a quarter of those surveyed still thought the maximum amortization period was 30 years.

Yet 66 percent of those surveyed claimed they were up to date on the latest mortgage rules.

The survey comes after Flaherty last month announced a number of changes to government-backed mortgages. The changes kick in on July 9.

#66 Timbo on 07.11.12 at 5:44 am,0,5646419.story

“San Bernardino on Tuesday became the third California city in less than a month to seek bankruptcy protection, with officials saying the financial situation had become so dire that it could not cover payroll through the summer.”

Leading the way down the rabbit hole………

“We have entered these so-called yo-yo years. We have been seeing weaker and weaker expansion since the mid 1970s. We have not been freaked out by it because the business cycle has been pretty mellow over the last 20-25 years. Until now.

‘So if you have a more volatile business cycle and low growth, you get more recessions and you start to destroy people’s ability to earn. In particular, when we talked slower expansion, we’re not talking GDP, we’re talking jobs, too. In particular you’re seeing no jobs growth.”

What? Massive credit expansion with no real wage growth will not save the day? Darn, economics is hard…

#67 Keeping the Faith on 07.11.12 at 6:43 am

#42 thinker

You really need to do your home work on investment strategy, portfolio and risk management and opportunity cost.

Once you do that, come back and respond.

Until then it’s the teacher from Charlie Brown talking “waaaa waaaa waahh waahhh”

#68 Keeping the Faith on 07.11.12 at 6:47 am

#46 Jason

What you fail to understand is that even if you have 50% down payment, renting is still cheaper.

The reason you ask?
Answer: the 50% down payment is NOT paying you!
It’s tied up in your 1 single piece of real estate and is going to depreciate over the next decade, bad investment.

Real answer, renting IS less expensive then buying in Ottawa no matter what the downpayment.
Think total investment portfolio, not separating investments from housing.

#69 detalumis on 07.11.12 at 6:48 am

#27 Lawsuit sure what a great idea, who benefits “you of course” and taxpayers be damned. In Ontario the taxpayers fund each LTC bed at a cost of $41,245 a year that’s free and clear we don’t make you pay back the money when you inherit your dear mom’s estate. We have a system where people can dump their parents in these homes and then complain to high heaven about the nasty care, how their diapers are only changed 7 times a day and not 8.

Guess what your mother is dying, do you not understand that? Does it make you feel better to have her linger for a few years so that you can visit every weekend and complain about the nasty care she is receiving? There is no quality of life as we know it once you reach old-old age. As a person with no kids I will prepare my own drug cocktail so I don’t end up in one of these places because your mother made the mistake that most seniors do and that is not planning for living too long.

I suggest everyone read Susan Jacoby’s book “Never Say Die” before they retire and take your head out of the sand and learn the reality of what old-old age really is.

#70 TaxHaven on 07.11.12 at 6:59 am

#51 Devore

Of course! But lately not many people are buying houses with the intention of renting them out…

Otherwise houses are NOT an investment. They are a consumable one lives in, or a speculation on price increases. (Like my gold.)

These are not days for “investing”: in these completely, utterly and fully government- and financial sector-manipulated markets, we’re all forced to become speculators now…

#71 Heather on 07.11.12 at 7:07 am

Hey Garth — I’ve been waiting to hear your thoughts on Ottawa. I’m in Centretown on a good street. I own one side of a heritage semi — renovated, 2 bedroom, nice little yard and parking. I’m in with about $120k in equity and a mortgage under 300k. I paid $420ish in 2010. My total payments including taxes are $1700. My job is pretty stable — I’m a senior mgmt for a large employer (not-feds) and earn about $154k annually. Here’s the rub — I’m 52 years old and single.

I’ve looked at selling (there really isn’t any single family inventory for sale in Ottawa Centretown), but to rent something nice in central neighborhood (please don’t tell me to move to Barrhaven) I’m looking at rents of $1100 – $1600 for a 1-2 bedroom. And of course, there is the pain and suffering of putting up with crummy landlords.

Yes, I know there is the cost of maintenance on my property, etc. but I am trying to figure out what to do — and if I sell then where to put my equity. I don’t expect to live here after I retire, but have been thinking may be I should get out now.

Your thoughts?

Impossible to comment without knowing how much liquid wealth you have in addition to the RE equity, as well as your expected pension benefit. — Garth

#72 Randy on 07.11.12 at 7:40 am

What happens to the economy when the wealth effect from rising real estate prices goes away…..

#73 Dontcallmeshirley on 07.11.12 at 7:44 am

MCAN Mortgage Corp. diluting their shares, seemingly in a scramble to raise $$$. Selling options is the corporate equivalent of pawning family heirlooms. Yikes!!!

#74 Zed in Geneva on 07.11.12 at 7:48 am

The recent changes to the mortgage rules only make sense because under the old rules, the canadian goverment was getting way too exposed to overleveraging with CMHC. The new rules will help reflect the real cost of financing an item (house, car, vacation) either via mortgage or heloc. Now the people who want to buy will pay the real cost and not be subsidized by the banking system. Renters will not be at a disadvantage compare to owners due to unrealistic/below cost financing. I do not wish ill on anybody, only fairness. Being a renter at the present time, I see the future as more balanced because people will not be as easyly coersed into buying and at the same time be less of a potential victim by overpaying for lodging. People have the tendency to overspend on everything around a house, like bigger BBQ than needed or spa that is so seldom used.

#75 Heather on 07.11.12 at 7:51 am

Garth — Just to add to my post above. I have no debt other than my mortgage and about 300k in savings. I only recently started earning the kind of salary I am making now. I don’t know — bail now or wait it out for 10 years or so when I retire. Looking forward to your depressing answer!

Okay, that’s one part of the equation (300K is not that impressive at age 52, with your income). Now, the pension? — Garth

#76 penpal on 07.11.12 at 8:14 am

@ # 62 Pat

Firstly, are you or have you ever been a snivel servant or government employee of any kind?

Let’s you be upfront and let people know your potential bias before going off on me.

My businesses have been B2B (internationally) and property development. As a private businessman, I used my own capital and acumen to create value daily, like businessmen do all over the world.

I used my own capital and initiative to make a modest financial success of my working life. I made my own job and worked each day to keep it, knowing that I had to perform and provide in business if I wanted to get paid. And in doing so, I paid taxes to support the overpaid bureaucracy that tried to thwart me at every turn. That’s right, in case you don’t understand, I created value / wealth and the taxes I paid generated the pay for snivel servants who ‘regulated’ me, but provided NO support and few helpful deductions

To answer your challenge on remuneration is very straightforward, no doubt to your chagrin.

EVERY government job is OVERPAID in Canada by definition.

If they are not, then why on average do public sector employees make 15% to 50% more in wages than their private employment counterparts. When you add on pensions, which most Cdn private workers don’t have, and medical / health benefits, the difference is substantial.

Are not wages set in the private sector for positions through the open and free market in labour? This is what my ‘headhunter’ friends tell me in job placement.
It is what sets the level of remuneration and is ultimately the arbiter of what a position pays.

Why then does the government statistically pay more when the remuneration level has been set lower for the same occupation in the private sector?

And don’t even attempt to talk to me about ‘special knowledge’ of the snivel servant – most are essentially clerks of one stripe or another and anyone can handle the nature of the ‘work’.

And the word “overpaid” does not exist for someone who understands how the real world works and is in the private sector. Generally the more you sell, deal, build allows you to make a bigger paycheque and that payoff is the incentive.

What are your incentives in the public sector? Will people ‘go elsewhere’ if they are not happy with the service. The populace is ‘stuck’ with you and can’t get a competitive alternative. Doesn’t sound like much incentive to do much more at your job does it?

So here is a challenge for you;

1) if you are a gov’t employee, tell us your occupation, your wages and benefits (all) and compare your position’s Total remuneration with that which the private sector would pay.

2) if you are not a gov’t employee, do as in 1) but compare your private position with the public sector analog.

Perhaps you are unaware of the discrepancies between the TOTAL remuneration between private and public pays, but I doubt it.

#77 HalifaxEd on 07.11.12 at 8:16 am

@#12 Sparky

That “puff piece” is not unlike the CBC report from a few months ago where bidding wars were erupting and houses were selling for 10-15% over asking, even before signs went on the lawns. All based on one property on one street in one neighborhood. The reporter was practically peeing himself with glee over the apparent impact of the “Shipping Boom” ™.

A quick peruse of Viewpoint tells a different story. But that would involve so-called “reporters” doing more than simply parroting what they are spoon fed by the real estate agents.

#78 penpal on 07.11.12 at 8:31 am

@ # 48 Cy

I think you raise an excellent point about keeping up with the herd in many ways.

I might go a little farther though in saying that these ‘consumers’ buy so rabidly and without a thought to consequences because they are feeding their insecurities and/or egos, which makes theirs an inherently emotional response which is not conducive to making good financial decisions generally.

I really believe that personal insecurities and out of control egos are some of the real culprits in this RE disaster. As they work on a subconscious level, most people don’t understand the import of the decisions they are making today as the ego demands its ‘satisfaction’

Of course, in hindsight, few will be intellectually honest enough with themselves to admit this – it will all be someone else’s fault of course.

#79 fancy_pants on 07.11.12 at 8:36 am

it’s different in Halifax b/c a realtor says so.
tongue in cheek – take 2.

#80 fancy_pants on 07.11.12 at 8:39 am

#71 Heather on 07.11.12 at 7:07 am

my 2c (worth as much) – move across the river

#81 penpal on 07.11.12 at 8:54 am

@ # 69 Detalumis

You have written probably the most insensitive posting that I have read on this blog since inception.

As everyone reading this blog knows, I am no fan of Smoking Man. However, after his recent post, even I cannot find the heart to do anything but wish him well with his mom. I lost mine recently so I feel bigtime for what the guy is going thru.

You, on the other hand, I have nothing but contempt for given your total lack of empathy and the callousness you display. About as warm as a snake and with the same charm.

And, by the way, SM and his mom probably are within their rights to complain – their taxes paid for that hospital bed MANY times over, I am certain in their long lives.

You mention that you have no children and my guess is that you do not have a significant other or loved ones in your life. If this is so, then you cannot fathom what it is like to stand by powerless while someone’s life, WHO YOU LOVE DEARLY, comes to an end. Also, if this is so, you know a poverty of the soul that could explain your bitterness.

#82 Steven Rowlandson on 07.11.12 at 8:59 am

What of those who like real estate and paper assets?
To quote Richard Daughty ,” They are all freaking doomed!” Actually he would have used we instead of they as he was probably thinking of society as a whole.
In my view people have to find out the hard way as most of them reject revealed truth infavor of the politically correct propaganda from their peers.
Experience is a cruel teacher.

#83 Buy? Curious? on 07.11.12 at 9:04 am

Yo! Trix are for kids and condos are for suckers! Check out what the CBC just published on their website 10mins ago!

“Hey Condo Dwellers! I’m the developer who sold you that condo. You want your money back? Hmmm, Let me think about it.”


Garth, you’ve been warning people for over 4 years now. There’s nothing else you can do for them. Though I didn’t heed your advice, bought in May, and hope to pay the place off when the parents die. It’s not the nicest of wealth management but who said Life was nice.

Smoking Man for PM!

#84 disciple on 07.11.12 at 9:06 am

Breaking… For all you silverbugs out there… Remember that whole Andrew Maguire silver markets manipulation event where he got sideswiped by a car, supposedly? Complete fakery. How do we know? Well, it just came to light a few moments ago that Bart Chilton, a commissioner on the Commodities Futures Trading Commission, to whom Maguire reported the alleged silver manipulation in the markets, is none other than Will Ferrell. I kid you not. Another fake media event.

#85 Smoking Man on 07.11.12 at 9:08 am

#69 Detalumis

Your god damn going sue. We have a high functioning 88 year old has a minor surgery a bit weak after but recovering fine. Then out of the blue they take her to hospital to do an xray. She gets addmited and put in the accute care for the old where their is a Dr who’s main funcion I beilive is to put old people to sleep. She was doing fine and recovering till some numb nut decied to take her out

As bazzar as this may seem I will find out in court.

As far her loot tool it 4 years ago and qudropled it.

And your right she is dying now.

#76 Penpal


#86 disciple on 07.11.12 at 9:10 am

Monster hasn’t commented in a few days… must be still reeling from the Helen Thomas is Ayn Rand blockbuster… Deprogramming… one person at a time…

#87 Country Girl on 07.11.12 at 9:28 am

#27 Smoking Man
Thank you for warning people about this.
Your mom’s story is similar to what happened with my dad earlier this year. The same drug was given to him when I (POA) stepped out for a break, and I only found out when I requested the records after Dad died.

#88 truth hammer on 07.11.12 at 9:35 am

25….$60,000….defined benefit retirement dreams……this says it all about Canada’s failing economy and raging national debt……for what……labour peace? If we want peace with labour we should ‘invest’ in more prisons for the malcontents when they decide to hold the traxpayer hostage whenever they try and disrupt the already arduous life we have trying to pay for all this crap.

Meanwhile…..the recession on MainStreet ( Robson actually) is in full swing……the media whores just won’t release the details.

Everytime that reality hits we see this phenomena……you can fire a cannon down Robson without hitting anyone…..especially tourists….they are just not coming……….yet the condo pimps are advertising like crazy that ‘prices are going up’.


#89 Dupcheck on 07.11.12 at 9:36 am

A house is a place to live and not an asset. It becomes an asset after it is sold (assuming that you will make positive money on it taking in account all the taxes, maintenance put in during the years, adding inflation on it as well, mortgage interest lost). A lot of people think houses are assets. Get it right people, if it takes money away from your pocket it is an expense. If it puts money in your pocket it is an asset.

#90 Country Girl on 07.11.12 at 9:36 am

Re: Scopolamine
Forgot to mention, my dad received an injection of this drug; died within minutes.

#91 John S on 07.11.12 at 9:39 am

#15walter safety on 07.10.12 at 10:00 pm
Home prices in Washington have barely moved except at the extreme ends of the market

A plunge of 20%+ in DC is hardly a ‘barely moved’ market.

#92 Shocked on 07.11.12 at 9:45 am

#69 detalumis at 6:48am

Couldn’t believe what I read, it was absolutely disgusting. What the hell is happening to people/society?

#93 Grantmi on 07.11.12 at 9:56 am

Love this from the Re-Max report!!!

We can tell you that prices have been flat over the past six months but they will be significantly higher in five years’ time.

“Significantly Higher”. Wow.

Some of the greatest minds in economic fields and politics said there was nothing to worry about back in 2007. That there was no bubble or contagion in the stock market or real estate.

Yet. Folks are going to believe this companies desk jockey’s writings.

We’re doomed!!!

#94 Herb on 07.11.12 at 10:07 am

#76 Penpal,

“EVERY government job is OVERPAID in Canada by definition.”

Says it all right there, doesn’t it. Since you must have written the Dictionary of Business and Government you rely on yourself, forgive me if I take that definition with a ton of salt.

Since you really want to know, I spent 31 years as an Infantry officer. Is that snivelling enough for you? And do you know why I became a “government employee” and “snivel servant”? Because I could not stand the lack of integrity I saw in the Toronto HQ of the major international corp for which I worked, had the feeling that there must be more to life than separating a customer from his money, and could not stand people whose only yardstick was their personal gain indicated by their bottom line or paycheck.

#95 torontorocks on 07.11.12 at 10:24 am

Sue Smoking Man. And good luck against the powerful OMA that sits and defends what is malpractice occuring in our hospitals wholesale. I get fired if I use my best judgement which turns out to be multiple losses. they get nothing. I have family and friends that have been killed by the doctors and nurses at Etobicoke General and York Finch, morgues instead of hospitals.

#96 bigrider on 07.11.12 at 10:28 am

Garth to Heather- ” 300k savings not very impressive at your age and salary ”

You really should blog one day on where an individual ‘should’ be in terms of savings at given ages and salary.

Been here a long time and although you often comment on the failings of various individuals on saving/investing, you provide no numerical framework.

Maybe you could for instance use age 30, 40 50 and 60 and then perhaps use salary amounts of 50k ,80k and up just as an example, to ascertain how much an individual at each stage should have accumulated.

This way the knock against someone like Heather could have a benchmark or framework for reference for the rest of us plebes.

Just a suggestion

That’s hardly a ‘knock.’ Heather will live 30 more years, so if she does not have a fat pension, she will run out of money. Best she knows now. — Garth

#97 Toronto_CA on 07.11.12 at 10:40 am

#89 Dupcheck on 07.11.12 at 9:36 am

An asset is a resource controlled by the entity as a result of past events or transactions and from which future economic benefits are expected to flow to the entity.

A house is most certainly an asset, as long as you can live in it, sell it, rent it out or in some way gain economic benefit from control of it. If you can’t do any of those things with it; and won’t be able to in the future, then it’s no longer an asset.

As assets go tho, a house is not very liquid and has high carrying costs. And as we’re about to find out, can be just as volatile as the stock market in some locations.

#76 PenPal, more posts like that please, less diatribe and vitriol. I’d love to hear Pat’s rebuttal. Here’s some fun commentary for you both:

#98 Toronto's Condo's Set To Crash 70% on 07.11.12 at 10:40 am

Toronot’s condo’s are set to crash 70%? I think the prices will fall 70% as well. LOL Toronto condo’s are going to fall HARD!

#99 Sparky on 07.11.12 at 10:54 am

They are trying to pump Halifax all over the place right now:

That’s one comment from one realtor. More journalism to be proud of! Go online and look at the market for yourself ( Quite a different story. — Garth

#100 Canadian Watchdog on 07.11.12 at 10:59 am

#50 Inglorious Investor

“I think we should try to boost productivity and innovation”

If we don’t have free capitalism (no bailouts), productivity and innovation will never grow. That’s reality.

#101 Kim on 07.11.12 at 11:01 am

Buy? Curious? on 07.11.12 at 9:04 am Yo! Trix are for kids and condos are for suckers! Check out what the CBC just published on their website 10mins ago!

“Hey Condo Dwellers! I’m the developer who sold you that condo. You want your money back? Hmmm, Let me think about it.”


To buy a condo is to be a sucker. Many young kids are now financially trap unable to sell and unable to afford the payments. Two co-workers and two girlfriends have been unable to sell with one condo on the market for over 6 months and two price drops. Inventory continues to increase in all four buildings which are all in T.O( downtown). They are all complaining about new listings and all the negative news of the housing market. Now with falling glass they are going crazy. It’s funny how they would do anything to get into the market and now they gone crazy with worry to get out before they lose it all. Doesn’t look good for the condo market in Toronto and wouldn’t be surprised to see market prices get cut in half.

#102 AG Sage on 07.11.12 at 11:05 am

Smoking Man,

Sorry to continue the OT, but the drugs situation with the elderly IS insane. It’s not just staff making end of life patients easier on said staff. Even for people still mobile and relatively healthy, it’s a money/bonus driven over-prescribe nightmare where the patient quickly loses all ability to advocate for themselves. I watched a friend of my parents devolve from vibrant elderly woman who had just hiked the mekong delta the year before into a paranoid, frightened and confused woman, just because of the fifteen meds they had piled on her. Took a county advocate to overcome the angry angry doc who was cashing out on her through the drug companies.

It’s a huge waste of money (often public money) and a huge waste of people’s last precious time. Watching this happen scared the bejeezus out of me.

Rant off. Sorry.

#103 Herb on 07.11.12 at 11:06 am

Severance Pay, Again.

While I’m incensed about people who know nothing of the work and remuneration of the public service except their conviction that the work is too light and remuneration too heavy, let me return to the matter of severance pay.

My good friend Daystar suggested a couple of days ago (#246 daystar on 07.08.12 at 10:03 pm) that there was something about severance pay that I missed. Well, I didn’t get what I was supposed to have missed, but did not flame back because we have too many personal feuds on this site already. However, Dan Gardner has just written an article on severance pay that summarizes the problem neatly:

Now, if there is anything Dan Gardner doesn’t get either, I trust that someone will straighten out both of us. And yes, I got severance pay when I retired from the CF, as I had known for decades I would, so I had some idea what I was talking about, and no reason to be envious.

#104 AG Sage on 07.11.12 at 11:09 am

>#91 John S on 07.11.12 at 9:39 am

Something weird about DC’s market. Still well above fundamentals and blowing the bubble back up again. Banks just like lending there, unlike everywhere else in the country right now. If I fabricate a tinfoil hat and put it on, I’d say the banks are trying to keep TPTB happy there and are lending on looser standards.

#105 daystar on 07.11.12 at 11:12 am

#94 Herb on 07.11.12 at 10:07 am

I think I owe you an apology btw, I quizzed you a while a back and it didn’t come out right. Er, um, uh… sorry :)
And yeah, people seem to measure each others worth with digits, whats up with that? Body part, I get but worth? lol

#76 penpal on 07.11.12 at 8:14 am

Required reading

Perhaps PP, you’re reading (and believing) Lorne Gunther and abusing caffiene? (thats a nasty one, psychotropic some say)

#106 Toronto_CA on 07.11.12 at 11:19 am

#101 Herb on 07.11.12 at 11:06 am

Good column, Herb. If it had been me running things, I would have paid out early like the Harpo Government did *without* giving EXTRA severance to those laid off for real in the austerity budget moves. Make the severance pay for the severances.

I’d also not have given those who stayed working but received severance something in compensation (the .75% raise) for paying it out ahead of time and ending it for new union hires going forward. If this required legislation to do properly, put it forward. The tax paying private sector workers would ALL have approved such a move.

If this lead to strikes, good luck getting the non-public sector taxpayers to support your strike given the struggles of your average private sector worker and the current debt laden Federal balance sheet and budget.

But I conceed, the main fault is obviously not with Harper, it’s to whichever government put in this ridiculous undefendable benefit in the first place. Thank god it’s gone.

#107 calgary64 on 07.11.12 at 11:22 am

i just hope i do not die a virgin!

#108 sue on 07.11.12 at 11:28 am

AG Sage
You are right. I am a pharmacist and I am disgusted by what I see on a daily basis. Stay the EFF away from Rx drugs, take natural supplements, eat CLEAN. “An organic apple a day keeps the pharmaceutical companies away” :)

#109 Inglorious Investor on 07.11.12 at 11:28 am

#100 Canadian Watchdog on 07.11.12 at 10:59 am

“If we don’t have free capitalism (no bailouts), productivity and innovation will never grow. That’s reality.”

I hear ya. That’s a huge and very important topic that I don’t have the bandwidth to tackle today.

#110 Timbo on 07.11.12 at 11:29 am

“World oil demand growth will slow in 2013 from the already weak 2012, OPEC said on Wednesday, citing Europe’s debt worries, a faltering U.S economic recovery and deceleration of growth in emerging markets.”

China is not going to take up the slack? And here I thought we were about to taste $150 barrel oil……..

“U.S. wholesalers’ inventories increased by 0.3% from the prior month to a seasonally adjusted $484.13 billion, the Commerce Department said Wednesday. Economists surveyed by Dow Jones Newswires had forecast a 0.4% gain.

Sales for wholesalers were down 0.8% in May to $409.63 billion. That was the steepest decline since March 2009.”

Another decline? We need more helium in this balloon…

#111 Pat on 07.11.12 at 11:39 am

@ #76 penpal,

Thank you for the entertainment, you did not disappoint in any way.

As for what I do – I’m an anonymous dude so feel free to compose about me whatever you wish; it would have the same credibility as if “Pat” wrote it.

And finally, if you want to be taken seriously, avoid gems like this one:
“EVERY government job is OVERPAID….
If they are not, then why on average do…”

#112 John on 07.11.12 at 11:42 am

Randy wrote:

What happens to the economy when the wealth effect from rising real estate prices goes away…..


There it is. Everyone wants to ignore real information…but talks about the greater fool? Huh?

Once the Globe and Mail is starting to fake “analysis”, it means a diffuse “Plan B” is underway.

That said, there’s about a 400% increase in real info on the blog, and no longer a doomer or conspiracy theorist in sight. Soon the real info is going to make it into discussion.

Uncomfortable. Hard to suck and blow at the same time.

#113 Canadian Watchdog on 07.11.12 at 11:43 am

#76 penpal

“If they are not, then why on average do public sector employees make 15% to 50% more in wages than their private employment counterparts.”

Because private sector workers don’t collectively demand higher wages. Cheap credit has allowed them to consume more without demanding higher pay from their employers.

#114 Herb on 07.11.12 at 11:49 am

#105 Daystar,

I knew from the language that you were not quite yourself that day, which really did “give me pause” in firing back.

Good links, but what we’re dealing with is a deliberate groundswell propagated by Right Wing business and political interests (same thing, aren’t they?) to keep private sector labour costs down by reducing the “unjustifiable” pay and benefits of the public service, levelling the presumed “playing field” that way. And facts and logic will not prevail against it.

#115 cramar on 07.11.12 at 11:52 am

#43 Cristian on 07.10.12 at 11:23 pm

I wonder who’s the idiot who paid 3 mils for a 2-bedroom with a view.
I rent in Burnaby, I have a great view, but I don’t spend even 2 minutes a day looking at the mountains or at the lake, after a while this tends not to be very important at all. I find this “view” thing is highly, highly over-rated in BC. I mean, how much time can one spend looking at the same mountains/ocean/etc.???? I really have better things to do with my time.
So paying 3 or 4 million (or even 2 or 1, for that matter) for a 2-bedroom box is just crazy. What is that, 500,000 for the apartment and the rest for the view?…
Thank God for idiots.


That is an interesting point. In reality, having a view of the mountains is much better than viewing another high-rise or someone’s bathroom window 2 meters away (is this an Ontario thing?). But never considered that a view of mountains might just get routine. The best views seem to be of water if you get the right spot.

A relative once owned a condo on St. Pete Beach in Florida. You never got bored with the view. There were always sailboats, motor yachts, fishing boats, cruise ships and freighters going by. You would see some go out in the morning then return at evening. Then there were the dauphins at evening and those gorgeous sunsets over the water. And at night ships with lights on. You could always tell the cruise ships, lit up like a casino.

I still remember decades later of hearing an awful racket. It was one of these enormously long wooden cigar boats (the kind the drug runners use to use). He was just going by under part throttle then opened it up. I’ve never forgotten that view complete with sound! I guess, one of the real benefits of condo living is the right view.

#116 Toronto_CA on 07.11.12 at 12:17 pm

#115 cramar on 07.11.12 at 11:52 am

I worked in Bermuda for a few years in my early 20s as an articling student with Deloitte. When I first moved there I was convinced I had to live on the ocean, as looking out over the tropical blue waters and pink sand could NOT be beat. After about 6 months tho, I grew rather indifferent to the view of the ocean. I know there’s a psychological term for this indifference to repeated exposure. That said, I think living in a basement suite or looking at a smoggy factory (like Hamilton’s steel areas on their harbour–barf) would get depressing.

#117 American Werewolf in BC on 07.11.12 at 12:21 pm

#35 Canadian Watchdog on 07.10.12 at 10:37 pm
ii) wages decline to boost employment


Why must this happen? Why can’t the expectation of profits decline to boost employment? Why is one sacred and the other expendable?

Even Adam Smith recognized that high profits were much more problematic than high wages. The business community is always “silent with regard to the pernicious effects of their own gains. They complain only of those of other people.”

#118 cramar on 07.11.12 at 12:23 pm

Seems not just the RE in BC, but even mushrooms are highly inflated.

#119 Herb on 07.11.12 at 12:24 pm

#106 Toronto_CA,

severance pay is “undefendable” only if you do not believe that retention of personnel is important. As hard as it may be to admit, public servants who do more that cook, sweep, hammer or shuffle files, exercise responsibilities that are not comparable to private sector “equivalents”. Continuity and professional development are important, and there is something called “corporate memory” that is missed only when it’s gone.

Treasury Board used to be the arbiter that kept public service pay, benefits, job classifications and working conditions reasonable and comparable to the private sector. If it cost money, they had the final say and had to be convinced. I say “used to be” because I’m not sure what the Harper Government has done to it. Since there are things the government could have and should have said in defence of the public service but did not in the face of some unreasonable attacks, I’d have to say that the government is following Harper’s actual economic/political action plan, which may not necessarily be in support of the public good.

#120 Doug in London on 07.11.12 at 12:31 pm

@Cy, post #48:
Exactly my observations about the Millenial generation. In April I heard David Chilton (author of the Wealthy Barber) speaking and he said (also in his recent book) the happiest people were not those with the most stuff, and I would agree fully with that idea. The Millenial generation, however, does not understand this idea for the most part. The good news is if you have that rare ability to think and make decisions for yourself you can avoid the money troubles this generation is experiencing.

There’s much mention of the Ottawa housing market here, so I’ll enter my 2 cents worth. in the mid 1990’s when the federal government was cutting back jobs, the tech sector, mainly in the west end, picked up the slack as it was the beginning of the tech boom. Good timing saved the market. In 2001 the tech wreck came along with layoffs in the tech sector. Low interest rates, as well as the federal government hiring many of these people with information technology skills, came to the rescue. It worked out good for these new hires because, although most made less money it was steady work, with working a normal 40 hour week so they could actually have a life. Imagine that! Wow, I actually have time to see what Ottawa-Gatineau and area has to offer! It worked out for the government also, as they got these skills at fire sale prices. It’s a rare example of when government actually gets it right. Oh, what a coincidence, it was when the government was Liberal and not Conservative. Fast forward to the present and future, what if anything is going to take up the slack when the government cuts back spending this time?

#121 Jim Lahey, Sunnyvale Trailer Park Supervisor on 07.11.12 at 12:39 pm

#96 Big Rider

“You really should blog one day on where an individual ‘should’ be in terms of savings at given ages and salary”

Here you go Big Rider, from the book The Millionaire Next Door, a formula to determine what your net worth should be at a given age and income level. Please note, Ricky, Randy, Julian, Bubbles and the rest of the Sunnyvale gang are all UAW (under accumulators of wealth). Only Barb is a PAW. Let me know how you rank.

Under Accumulator of Wealth (UAW) is a name coined by the authors used to represent individuals who have a low net wealth compared to their income. A $250,000 per year doctor is an “Under Accumulator of Wealth” if his/her net worth is less than the product of their age and one tenth of his/her realized pretax income.[1] Take for example a 50-year-old doctor earning $250,000, according to the formula she should have (50*250,000*10%) or about $1.25 million in net worth. If her net worth is lower, she is an “Under Accumulator”. The UAW style is based more on consumption of income rather than on the method of saving income. Prodigious Accumulators of Wealth (PAW) is the reciprocal of the more common UAW, accumulating usually well over the product of the individual’s age and one tenth of his/her realized pretax income and are usually considered to be millionaires; however, not all are.[2]
The authors define an Average Accumulator of Wealth (AAW) as having a net worth equal to one-tenth their age multiplied by their current annual income from all sources. E.g., a 50-year-old person who over the past twelve months earned employment income of $45,000 and investment income of $5,000 should have an expected net worth of $250,000. An “Under Accumulator of Wealth (UAW)” would have half that amount, and a “Prodigious Accumulator of Wealth (PAW)” would have two times. This metric has been criticized since, for example, a 20-year-old making $50k a year should have a net worth of $100k to be considered an “average accumulator of wealth”. That makes little sense since it would take a new graduate years of strong savings and investments to accumulate that amount. The formula fails to take into account compounding interest; younger people up to age 45 or so will generally have much less as a % of income than older wealth accumulators due to compounded growth.

#122 American Werewolf in BC on 07.11.12 at 12:40 pm

#78 penpal on 07.11.12 at 8:31 am
I really believe that personal insecurities and out of control egos are some of the real culprits in this RE disaster.


While that is a tidy conviction fitting nicely into your worldview, let me assure you that humans have always been this epically stupid. Throngs of the not-so-best and not-so-bright have always wanted to borrow vast fortunes, buy an estate and form their own well-deserved sovereignty.

What’s changed? They’ve finally been allowed to by a private market facing zero risk and vast rewards. That, not human ego, is really the variable this time around. A combination of activity between the government and the banks, along with the media to perpetuate this stupidity, has created a perfect storm; the only ingredient they need is the ever predictable element of human stupidity.

#123 Toronto_CA on 07.11.12 at 12:41 pm

#114 Herb on 07.11.12 at 11:49 am

“Good links, but what we’re dealing with is a deliberate groundswell propagated by Right Wing business and political interests (same thing, aren’t they?) to keep private sector labour costs down by reducing the “unjustifiable” pay and benefits of the public service, levelling the presumed “playing field” that way.

That’s one view. I would say it’s about an ever growing public sector that is being less productive with more people, coupled with malingering far higher than in private sectors and until recently ever growing “perks” that make no sense, such as severance for people not severed from their jobs.

I do agree with you that private sector workers should get better benefits and paid more and not settle for less; I myself do pretty well because I ask for what I want and if I can’t get it I go work for someone else who will pay it. I set my price. And I’m worth it. Certainly global outsourcing has taken much of the power away from the workers.

What I don’t like is the attitude that if you don’t get something (like bankable paid sick days for Ontario Teachers, something that doesn’t stand to scrutiny) that it’s okay to hold the public at large hostage by striking to get what you want.

You’re mad at your employer, so you inconvenience people who are forced to pay taxes and have no alternative to your services.

And this is why many many many people are sick of public sector unions.

Joe Q Public, who works 45 hours a week all year long without paid overtime – no summers off – and has a DC plan and takes ~2 sick days a year paid; sees teachers threatening to strike because they can’t get 100 sick days paid to them when they retire (coupled with they don’t get fired for anything:–bad-teachers-ontario-s-secret-list , a great DB pension plan, summers off–not to say teaching isn’t a worthy profession, clearly it is, but it is well paid work in Ontario with great benefits let’s be clear).

It is hard to support people who have it much better than you then take it out on you, an innocent tax payer, to get back at their employer.

Not just Right Wingers feel this way. Premiere Dalton is fighting the teacher’s unions now trying to get rid of this perk and freeze wages (like the MPPs have for 5 years) until his government is less bankrupt. He’s hardly “Right Wing”, and neither am I.

But if it makes you feel better to paint us all with this brush, have at it. Apologies in advance for pointing out teachers, I thank all you good ones for your hard work and hopefully you don’t have to strike this fall.

#124 Snowboid on 07.11.12 at 12:58 pm

#42 thinker on 07.10.12 at 11:19 pm…

Buying a condo is a high-risk proposition – even if the price is right.

Using your example of a $ 300K condo:

20% down, balance of $ 240K at 4% over 25 years – $ 1262 per month
Strata fee – say $ 250 a month, taxes – $ 175 a month, maintenance – $ 100 a month.

So over 24 months you have spent $ 42,888 to purchase vs. $ 24,000 to rent. If you factor in lost earnings on the $ 60K and the $ 19K saved by renting the ownership costs are even higher. But wait, don’t forget the $ 24K you suggest is lost in price decreases.

Oh rats, also forgot that there are no controls on strata fee increases or special assessments. Normally this wouldn’t be a serious issue, but condo complexes in BC don’t have a very good track record.

One large luxury complex in Kelowna is having renovations done less than four years after it was completed. There are systemic issues with plumbing and HVAC, sure to see major repairs in a few years.

One can conclude that renting a condo will continue to be a better option than purchasing for some years to come.

Investing as Prof. Turner suggests, while renting a condo, is hardly a risk when compared to purchasing the ‘box in the sky’!

#125 Investx on 07.11.12 at 1:00 pm

#49 mpl:
Spain pressed to inflict losses on savers

Spain might force preferred shareholders to take losses.
I am not saying this will happen in Canada. But you advocate bank preferreds in your blog. You should also state that preferred shares will take losses before debt does. Most retail investors probably treat them as some kind of a ‘safe’ share. But in reality they are only slightly safer than regular equity.

Hopefully it will never come to that in Canada.

But who knows? Those who held income trusts had faith that they’d be favourably taxed until the laws changed and they became taxed like corporations (recently).

#126 penpal on 07.11.12 at 1:01 pm

@ # 113 CDN Watchdog

While I cede you your point on feeding the populace cheap debt (in deference to the banks) to compensate for no wage growth, I think it is unlikely that alone has held back private sector wages to the degree it has.

People in the private sector hardly would ask for higher wages when they see their neighbours’ well paid jobs disappear. If it is demonstrably not there to get (think high unemployment and replacing 55 yr olds with 25 yr olds at half the wages), people won’t ask for more.

Having said that, surely the powerful unions and their threats to stop critical services has scared Canadians into outsize wages and benefits for them, no question.

Having said that, regardless of the reasons, I think you agree by your posting that gov’t employees are indeed paid more than their private economy counterparts.

#127 Timbo on 07.11.12 at 1:08 pm

“Give a man a gun and he can rob a bank. Give a man a bank and he can rob the world.”

feeling a little cheated………………….

“The housing market has turned—at last.

The U.S. finally has moved beyond attention-grabbing predictions from housing “experts” that housing is bottoming. The numbers are now convincing. ”

Great news finally. Lets go out an shop……………..

#128 daystar on 07.11.12 at 1:09 pm

103 Herb on 07.11.12 at 11:06 am

I knew it, knew I overstepped it a bit. :) Glad for your tolerance and understanding, old friend. I took in your link and I just assumed prior that benefits are up for negotiation the same time wage contracts are. I was likely wrong (oh, the humanity) with that assumption but unions can open existing contracts for amendments at any time they please so I think a deal could have been struck to save the taxpayers from this one but the optics of this around the “Harper hates me” buttons, yeah… the timing of that one. You are right too, concerning your point that Harper has increased civil service employees. In 2004, we had 235,000. Now we have 290,000 not counting expected layoffs.

I was looking at Canada’s 2012 budget yesterday and Chapter 5 table 1:

… has the breakdowns of cuts. Overall, department budgets are being cut 6.9% to reduce the fiscal budget by 1.9%. Overall budget expenses are projected to be $245 billion so it shaves $4.65 billion from expenses according to these numbers. To do as some suggest, balance through civil service cuts, you would have to lay off 25% of the civil service or more while hoping revenues outperform and hope the nation could function with oh, say, half the miltitary we have now and 1 of 4 less staffers.

I will remind readers that our federal government IS the largest employer in Canada. The private system just can’t absorb the human resources that are freed up from a layoff of this scale and magnitude. Some departments are already hit hard, there’s nothing left to squeeze. I can’t see it coming from departments like the RCMP, they’ve already been cut to the bone. Anyone ever see an RC travel in pairs?

Where F is going to make an attempt to balance bugets, presumably for an election 3 years away is with tax increases to peronal income tax next year. Personal income tax revenues are projected to increase by 11% over 2 years with little tweeks like EI contributions being increased by 15% for workers over 2 years according to the numbers in table 6.5 of the 2012 budget. Where will this revenue come from? Growth? Or taxes…

This revenue could surface if projected nominal GDP in table 2.2 was realistic:

It isn’t. GDP is estimated at $1765 in Q1 but its actually fallen in Q2 because GDP is nominal (priced in U.S. dollars) and our loonie has fallen. Estimates are inline with this year but not next. F has GDP projected to grow by $77 billion for 2013 or 4%. The only way that can happen is if commodities soar (and the U.S. dollar falls or loonie climbs, pick ’em). Thats not what the market is pricing in.

We shall see.

#129 Buy? Curious? on 07.11.12 at 1:12 pm

@101 Kim,

Carley Rae Jeppsen me.

I spoke to a friend who lives a few floors above that crash and he’s so worried. He paid $249k for his 2 bedroom. He was thinking of selling just before the PanAm games but he thinks that gamble isn’t going to pay off. I suggested that he start a grow-op but like Smoking Man says, he’s a track 6’er.

I’m 6ft, 182lbs, bench press 250lbs and have a full head of hair. How can you not love that?

#130 Buy? Curious? on 07.11.12 at 1:14 pm

Oh, I forgot Katie Holmes should get in touch with Garth!

Team Katie.

#131 Dupcheck on 07.11.12 at 1:17 pm

#97 Toronto_CA

A house is only an asset if you have a crystal ball to go with it. I suggest you read Rich Dad Poor Dad and understand the real definition of what an asset is. It is nothing what a RE agent or a Banker makes it to be. Please read it that book from Robert Kyosaki

#132 penpal on 07.11.12 at 1:17 pm

@ # 111 Pat

Just about what I’d expect from you given the tone of your previous posts.

You are disingenuous and unable to accept FACTS which counter your argument. You won’t even confirm or deny that you are a gov’t employee so one could establish the extent of your bias, or if it was a factor.

Making the excuse of maintenance of anonymity is risable and laughable – you are already posting anonymously and there are over 3 million gov’t employees in CDA – like anyone would bother finding out who you were in the first place given your poor postings.

You challenge me on a point and I give you a fairly complete answer. I put a similar challenge to you and you can’t even be bothered to acknowledge it.

No, you are not worthy of debate by me, so you are dismissed.

#133 bigrider on 07.11.12 at 1:22 pm

#96 Garth to Bigrider- “Thats hardly a ‘knock…best she knows now” in reference to 300k not being enough.

I agree and I apologize for the poor choice of words in the use of ‘knock’.

I still think you would do many who read your blog a lot of good if you were to provide concrete amounts, at differing ages and salaries as to what you believe to be adequate to determine success in the saving and investing arena.

If 300k was not a ‘good’ total for heather at age 52, what is?

#134 daystar on 07.11.12 at 1:24 pm

#114 Herb on 07.11.12 at 11:49 am

You just put it better than I could, I quite agree. (just to add, the numbers (235,000, 290,000) I gave were direct civil service employees. Military, police, crown corp are excluded)

#135 penpal on 07.11.12 at 1:25 pm

@ # 97 Toronto CA

Thanks for the link, much appreciated.

Just underscores that even in sick days, the gov’t employees are way ahead of the private sector and that absenteeism too has an economic cost that can be measured to determine total compensation rate differentials.

#136 Mark W on 07.11.12 at 1:34 pm

All these glass towers in Vancouver built in the last 20 years.

Did everyone forget that Vancouver is in a major earth quake zone.

Richmond is actually below sea level and if it were not for the dykes and those pumps going 24/7 Richmond would FLOOD!

Back in the 1960’s Richmond developed as a cheaper alternative to Vancouver, mostly working class.

A small older house on a 33′ wide lot in Vancouver was the same price as a full size home on a large lot in Richmond that was brand new.

It was less desirable become everyone knew the risk of flooding which happened in 1950 … hence the building of the dykes to defend Richmond.

In the bad old days Richmond used to be referred to as “Ditchmond” because huge drainage ditches ran down almost every street.

Most of them have been covered up now, but the drainage is still there, and the pumps never stop.

Vancouver is mostly on a higher ridge beyond the flood plain of Richmond and Delta … but great if you are a farmer with moist land for growing potatos, cranberrys, and other crops where moisture content is needed.

Half of Richmond is still on agricultural reserve because if it was not it would be developed in about 15 minutes.

Close to the “dyke trail” ….

#137 penpal on 07.11.12 at 1:36 pm

@ # 94 Herb

I don’t consider military personnel to be snivel servants, so hold your fire, doesn’t apply to you.

(In fact, if I were you, considering the crap pay that you got for essentially pledging your actual life to your job, I’d be TOTALLY PISSED that some clerk functionary whose greatest career danger is a paper cut, makes multiples of your pay!)

#138 Toronto_CA on 07.11.12 at 1:36 pm

#131 Dupcheck on 07.11.12 at 1:17 pm

Robert Kiyosaki is, well.. watch this

I can’t stand the man. Thank you for trying to teach me the REAL definition of an asset tho. All those years of expensive accounting education were wasted on me. It’s a wonder I passed the UFE!

#139 American Werewolf in BC on 07.11.12 at 1:39 pm

I don’t understand the hate going on here. You get much better retirement, vacation, benefits, salary, etc, being the CEO of a large multi-national corporation. I just don’t have that option. Instead, if I ever get a chance to get away from self-employment, Im going to ride the public service gravy train because its available.

Now, while no one here would refuse taking over Exxon (and yes, you all pay that exorbiant salary), it seems everyone wants to deride public jobs because they are “better” than your own.

Look, if you are jealous and you can’t beat em, join em. One way or another, we pay everyone’s salary, so make sure you are getting the best lot for yourself while you can. With the energy you all waste bitchin and moanin about it….

#140 Felix Seto on 07.11.12 at 1:43 pm

Garth, Roubini says the perfect storm will hit in 2013 and to get out of the world markets:

What do you have to say about that?

Looking to buy some ETFs for my kids RESP. What do you recommend? BMO, Ishares, Horizons, etc?

Thanks, I love you Garth!

#141 penpal on 07.11.12 at 1:45 pm

@ # 93 Grantmi

If anyone registered as an investment advisor / broker in Canada uttered that comment about prices of anything five years in the future, they would be liable under law and if pressed, would absolutely lose their registration and be open to lawsuits of all kinds.

Yet a RE salesperson takes a 6 week course and they can say what they want?

I think this should be all you need to know about the RE sales industry in Canada _ CREA has the stroke and the consumer gets screwed.

#142 Hicksville Alberta on 07.11.12 at 2:02 pm

While we are on the Government Services ranting, there is absolutely no reason why a whole bunch of these jobs at all levels of Government ought not to be outsourced to more cost effective countries like India, Philippines, Thailand, etc.

Much much cheaper than bringing in so many immigrants from these same countries to fill the same jobs at bloated Canadian prices and probably much more managerial effective as well.

What’s good for the Goose ought to be just as good for the Gander.

Also it helps Third World Development which ought to be worthy of at least a few Orders of Canada to the worthy souls that propagate and implement such changes for the Good.

#143 futureexpatriate on 07.11.12 at 2:07 pm

Wonder if donations to their Holmes foundation will make up for the inevitable complete loss of subsidizing gov money to produce their shows. Mike Holmes, indeed, all of Can HGTV may disappear without a trace in the blink of an eye. Back when there were four networks in the US and not a single satellite dish in Canada, subsidizing Canadian content made sense. Hasn’t made sense for decades, but for the lobbyists. And it’s not likely the economy will allow Canadian HGTV to go the way of US HGTV with primarily vanity 100% paid-for shows (and the rest Canadian content).

#144 IM in C on 07.11.12 at 2:12 pm

Re: the unit next door in the Shangri-la
Oh look, it’s vacant!
Do I understand this right, taxes and fees on this unit are $2987/month? I’m betting they couldn’t rent the place for less than $2500/month

#145 Canadian Watchdog on 07.11.12 at 2:13 pm

#117 American Werewolf in BC

“Why can’t the expectation of profits decline to boost employment?”

Because the only incentive and fiduciary duties of a corporation is to make profit for their shareholders. No profit. No capital. Perhaps a new type of corporation is needed; one that gives more rights and ownership to the workers. France recently proposed a law that forbids CEOs from paying themselves more then 20x the corporation’s lowest salary. This is a good rule.

“Even Adam Smith recognized that high profits were much more problematic than high wages.”

Indeed he did— under the circumstances that ‘profits of stock’ must fall or rise with a free market rate of interest. We don’t have a free market nor do we have free rates. What we do have is crony capitalism. So the theory of Marxism was born and derived from where Smith left off on that note.

#146 Bigrider on 07.11.12 at 2:21 pm

# 121 lahey-

Interesting formula although some weaknesses in it for sure as pointed out.

PAW as far as the formula is concerned.

#147 tkid on 07.11.12 at 2:34 pm

Can we do a poll? It would be interesting to get an idea of what kind of savings Garth’s readers have. Given the formula from Sunnyvale are you UAW, PAW, or average.

I am UAW.

#148 Canadian Watchdog on 07.11.12 at 2:35 pm

#126 penpal

“People in the private sector hardly would ask for higher wages when they see their neighbours’ well paid jobs disappear.”

Perhaps now, but why is it that they didn’t demand for higher wages when they seen corporate profits skyrocketing? Because they borrowed to consume what stagnating wages didn”t paying for.

“Having said that, surely the powerful unions and their threats to stop critical services has scared Canadians into outsize wages and benefits for them, no question.”

Actually no. Unions are weaker then they once were. This is one major reason why inflation (the money supply) hasn’t trickled down into public or private wages like the 30s and 70’s. Not yet anyways.

Cheap credit has deluded the working class to borrow rather then demand higher wages. It’s as simple as that.

#149 jess on 07.11.12 at 2:57 pm

Yesterday marked “D-Day” in the Italian premier Mario Monti’s battle against tax-evaders with officials clicking the switch on a powerful new computer system that will rummage around people’s bank accounts, in a major push to claw back the country’s mission billions.

The trillion-byte-per-second machine, called Serpico – an acronym for “services for contribuenti” (or taxpayers) – will certainly have its work cut out.

Italy loses at least €120bn a year in unpaid taxes. Last year, 15 million people claimed a net income of zero. It is this group that Serpico will target…

#150 TNT on 07.11.12 at 3:01 pm

HAM’s latest trend, going to good ole USofA, California’s a hit. Not sure why it’s nothing like Vancouver with its endless sun and surf, cheap housing and affordable staples. That HAM’s not so dumb, maybe thats why they have so much cash.

#151 Toronto_CA on 07.11.12 at 3:10 pm

#121 Jim Lahey, Sunnyvale Trailer Park Supervisor on 07.11.12 at 12:39 pm

That formula you quote has been derided by most personal finance people for years. It’s linear, and doesn’t measure anything in a meaningful way.

Try using it on a 25 year old and it is nearly impossible to be an “average” wealth accumulator. Trying using it on a person about to retire and it calls them a PAW when they should be called average.

25 year old, has just graduated university by the Millionaire Formula should have 2.5 times his GROSS INCOME saved up to be an AVERAGE wealth accumulator? Even though he’s only been out of school for ~2 years? Huh?

A 65 year old man, about to retire, earnings now 65k a year, needs to have assets worth 845k to be a SUPER wealth saver.

This formula works okay for middle aged people but it is useless for young people or old people and in general. And that’s without even taking into account that if I quit my job today and go work for minimum wage I’m suddenly a much better person by the standards it judges.

The formula is stupid and too simple to be useful. The book itself is an interesting study of a particular time in the 1990s but nothing more, though yes the cliches that you should live within your means and not judge a book by it’s cover are good. With the RE bubble everyone is a millionaire next door in Canada anyway.

#152 American Werewolf in BC on 07.11.12 at 3:11 pm

#117 American Werewolf in BC

Because the only incentive and fiduciary duties of a corporation is to make profit for their shareholders. No profit. No capital.


I didn’t say no profit, just as you didn’t suggest we need to practice slavery (or did you?). I am speaking of reduced profits; the entire notion of perpetually high returns for investment leads to not only disparity, but eventual stagflation from a stunted working class that can no longer contribute to a healthy marketplace.

The distribution of the wealth created by everyone via production is subject to objective analysis, and over the last decades, statistics irrefutably show the owners of capital are taking the largest piece of the pie. Is it any wonder that businesses cannot muster enough demand for their products to support their workers’ wages? It is the workers themselves who must create this demand, but cannot surely afford to do so without easy credit and a HELOC.

“In reality high profits tend much more to raise the price of work than high wages” – Wealth of Nations

#153 Ed from TO on 07.11.12 at 3:15 pm

Hey Garth,
can you deep 6 penpal.
his is becoming very annoying.

Man crush. — Garth

#154 American Werewolf in BC on 07.11.12 at 3:20 pm

#144 Canadian Watchdog on 07.11.12 at 2:13 pm
Perhaps a new type of corporation is needed;


When the owners of capital buy the government, I don’t think they will be keen to explore that idea anytime soon. Alas, I think that is is surely need if we are ever to escape this unsustainable modern economy. I wonder if the workers themselves, like a bipolar person, are too addicted to the highs (booms) to commit to something else.

I do like the co-op model myself, where workers can actually earn significant ownership via their labor (major incentive).

Sometimes I wonder if investment should entitle one to perpetual ownership & infinite reward. Why not a bond type system, whereas there is a finite period of reward, which encourages re-investment and innovation in new businesses? Perhaps the only way to “own” should be to labor, and if those laborers can generate the wealth to pay off their investors, they can begin to reward themselves.

Likely, we will all burn up & starve before we explore such heresy like I suggest

#155 John G. Young on 07.11.12 at 3:20 pm

#132 penpal on 07.11.12 at 1:17 pm

“Making the excuse of maintenance of anonymity is risable [sic] and laughable…”

“Risible” and “laughable” are synonyms.

You’re being redundant, as usual.

#156 Dupcheck on 07.11.12 at 3:24 pm

#138 Toronto_CA on 07.11.12 at 1:36 pm

Twist it anyway you like. The CBC story does not mean much about Rich Dad Poor Dad, if you have not read the book do not judge it.

With your definition of an asset, a car can also be called as one, which is bad. A good asset is a real asset a bad asset is a liability that you have a hard time distinguishing. An asset brings you positive gain. How does a home bring you positive gain if you pay for mortgage, taxes, maintenance, bills, etc. Only if you sold that home and made money on it you would be able to call it an asset. Until then it is not one, it is just a shelter and an expense. I know you accountants like to put a home on the asset column, but that does not include a lot of expense factors mentioned above.

I would never hire you as an accountant, you would bankrupt my company.

#157 Timbo on 07.11.12 at 3:41 pm

“Back in late 2010 on the program 60 Minutes , Meredith Whitney (who runs her own advisory firm) famously warned of 50 to 100 “sizable” municipal bond defaults starting in 2011. But essentially none occurred last year.

However in just the last two weeks, three California cities all with populations of more than 200,000 have filed for bankruptcy protection. And in Scranton, Pennsylvania, Mayor Chris Doherty recently slashed public employees’ pay to $7.25 per hour. The city reported it only had about $5,000 in the bank.”

Cities are going broke Ben! Your going to need water bombers full of money this time………………….

“We often joke that there are only two inevitable things in life—death, and taxes. That may be true for us as individuals; but for societies and nations as a whole, the most inevitable and unstoppable force of all is demographics. The rate of population increase and the national age profile are critical drivers of economic growth – since demographics affect both the available workforce, and consumer demand. Canada is about to be hit by a demographic tsunami in slow motion, with profound and lasting impacts on our economy and our society. ”

Man the news just gets better and better………….

#158 TheTruthHurts on 07.11.12 at 3:57 pm

I have been through Shang “Ra” La. They are the WORST built junk with poor workmanship, CHEAP trim and molding everywhere. The doors are like paper. Kitchen is small with useless cheap cupboards. I was appalled!

#159 penpal on 07.11.12 at 4:09 pm

@ # 147 CDN Watchdog

They didn’t demand greater wages as they knew there were no raises to be had regardless of the firm’s surging profits.

Those profits were largely the result of downsizing – when that happens you don’t volunteer to be among the laid off by asking for more money, period!

Concerned about their job security, especially in view of the outsourcing they saw going on all around them, made the work force more compliant and accepting of no raises.

In addition there were spectacular failures of household names like GM and Chrysler – why or how could you agitate for higher wages in that context – you wouldn’t dare as an employee as you were glad to have a job.

While the money they borrowed at low rates may have left them feeling like they were progressing economically, do you not think they noticed the rising prices all around them whether it was real property or their insce, gas, utilities?

They could clearly see the costs of things they needed rising markedly while their wages stagnated and even declined. And still no major wage demands!

If you don’t understand the implications of the global wage arbitrage, the average employee did and did not want to give the company they worked for any excuse to let them go.

They could see their contemporaries scrambling for jobs at as little as half of their old wages. Not a fate they wanted to share.

With respect to the unions, I was referring to gov’t employee unions – CUPE, teachers and the like.

#160 penpal on 07.11.12 at 4:21 pm

@ # 143 IM in C

Why would you be surprised that a $4 million dollar unit would cost that in taxes and maintenance?

Btw, I think its too cheap and that the builder is subsidizing the common fees for 2 years to make it appear more reasonable. This is common practice in Toronto condoland and no one ever raises the question.

I have a buddy with approx $4 million house for sale on Old Forest Hill Rd (very, very good address in Toronto) whose realty taxes for 2011 were over CDN $ 47,000.00.
That is almost $ 4K per month.

Are you not aware that taxes and maintenance are calculated on the assessed “value” of the dwelling and its size? So, a $4 million place is likely to attract 4 times the taxes on a $ 1 million house, etc.

#161 OttawaMike on 07.11.12 at 4:29 pm

Heather’s best hope is to find a guy who has both a rich defined benefit pension plan and a nice rooster.

#162 jess on 07.11.12 at 4:31 pm

The founder of the US broker PFGBest is said to have attempted suicide as it emerged that more than $200m (£130m) appeared to be missing from clients’ accounts.

Russell Wasendorf Sr, a 40-year veteran of futures markets, was found in his car near the company’s Iowa headquarters and is in a critical condition at the University of Iowa Hospitals, according to local news reports.

National Futures Association (NFA), an industry group that also plays a regulatory role, said it had issued an emergency order to in effect freeze PFGBest’s operations after finding that a US bank account the broker said contained $225m in customer funds actually held only $5m. “It appears that PFG does not have sufficient assets to meet its obligations to its customers,” the NFA said


General Motors Will Slash Outsourcing In IT Overhaul

#163 Pat on 07.11.12 at 4:36 pm

I have a suggestion for the folks who get worked up so easily here (hi penpal). Next time you notice you fingers trembling with anger, try plugging a light bulb up your nose. Who knows, you might be able to light it up.

#164 Toronto_CA on 07.11.12 at 4:50 pm

#147 Canadian Watchdog on 07.11.12 at 2:35 pm

Have we in Canada ever had such a long period of pronounced low interest rates? It is interesting (pun) that the effects of low interest/cheap/easy borrowing for years on end can start to have on a society and change things seemingly unrelated. People can now borrow much more than ever before yet pay less interest on it because the rates are so low. And maybe that is affecting wage growth in turn?

#165 Herb on 07.11.12 at 4:57 pm

#137 Penpal,

climb-down gladly accepted, but you’re wrong on another score.

The Canadian Forces in my day were the best-paid armed forces in the world. Those public servants who made more than I did were in higher classifications, as were officers in the CF who were in higher-paid classifications or of a higher rank than mine. And members of the CF in my time made 4% more than our public service equivalents because Treasury Board realized that we were subject to “unquantifiable disutilities” and did try to “quantify” them. Of course there was and is no adequate remuneration for loss of life, except “You’ve done your bit, thank you.”

There are reasons and explanations for everything, some even good. But they’re not found on ideological soapboxes.

#166 Isabella on 07.11.12 at 5:04 pm

Touching on Ottawa, my friend’s girlfriend got a job with the Feds last year. Moving from Vancouver, my friend says she is set on buying a house in Ottawa, because it is much more affordable there.

When I pointed out that prices may drop and when she is relocated to a new city in a couple of years, she may have to absorb a loss on the sale, my friend said this is not true because the Feds cover any loss of property value if this is to occur. Thus there is no monetary risk.

Can anyone confirm if this is true? Do government workers have this shelter and if so, why aren’t we more angry about our tax dollars being used to pay for other people’s dumb decisions? Our tax dollars are already victim to CMHC…

My friend is not financially literate so this claim seems so ridiculous and maybe he understood wrong. I’m hoping someone can confirm it’s validity. Thanks.

Get a new friend. — Garth

#167 Rook on 07.11.12 at 5:10 pm

There’s definitely a big increase in listings in the Gatineau area, especially for condos and semi-detached homes. There’s currently a 12-unit condo building in Hull with 5 units for sale. There’s also an ever increasing number of private sellers (duProprio). I would estimate about a third of For Sale signs in Gatineau are private. The developers are racing to turn any remaining green spots into condo boxes and parking lots, so I think any slowdown in demand will quickly create an oversupply. With the new regulations affecting mostly first-time buyers, the condo market would be the first to see significant price reductions.

It also seems like prices of single-family homes have stalled in the last year and I’m seeing a lot of sellers having to do a price cut before they can sell.

#168 Roial1 on 07.11.12 at 5:18 pm

153American Werewolf in BC on 07.11.12 at 3:20 pm

Likely, we will all burn up & starve before we explore such heresy like I suggest

Sad to say but in this you are “dead right”.
If you where to set up such a co-op company the p-t-b would brand you a “dirty commy” and burn you at the stake.

#169 Bill Gable on 07.11.12 at 5:20 pm

#59 re: Vancouver

An overpriced, rainy hole, full of crooked dope growers, scammers, dumpster divers, pretentious snobs, over HELOC’d idiots, and snobs.

This used to be a bucolic, boring City. Now it is one mess. Just try driving here.

We sold our real estate at the top, because of Garth, and now we rent.

We want to move, but where?

The whole economic system is in dissaray and we can’t decide where we want to go.

My advice? Avoid Vancouver like you would a Stephen Harper rally.

This is and always has been a backwater on the edge of nowhere.

Oh, and BTW, the Shangri-la is in financial trouble.

Many of the presold condos will never be built, and the garbage built in Yaletown are going to fall apart.

This is the bottom line. Get out now.

#170 Isabella on 07.11.12 at 5:21 pm

Garth – I may not have any more friends if I start such a trend! My other friend just bought a half mil condo in Richmond that won’t be finished until 2015. And his girlfriend bought another pre-sale across the street. Another bought a half mil townhouse in North Van and another got a house. And another bought a 600sq ft on Main for $430k. I will watch and wait….. On second thought, maybe I do need new friends.

#171 Westernman on 07.11.12 at 5:22 pm

Pat @ # 62,
Want an example of a useless, grossly overpaid government job … try yours for example…
Then at least the 19,200 mentioned in today’s post … no one will even miss them and life will go on as smoothly as if they never existed…

#172 Heather on 07.11.12 at 5:25 pm

Garth — I have worked my way up to my current position (with a liberal arts degree) and weathered a divorce where I picked up my ex’s debt. I moved back to Canada in 2008 from the US. I sold a house I bought for $120k in Massachusetts (with 5% down) and sold it for $190k. I got out just in time. I was lucky.
However I also lost almost 40% of my 401k in the crash so the 300k I have in hand has been an accomplishment.

I work in the private sector — no company pension — but assuming there is still money in the social security system which I paid into for 25+ years, I will get SS benefit plus CPP and Old Age Pension. I am figuring about $1500-2000 a month in total — not much. I am saving about $2500 a month — $400 of which is paid to a company contribution plan (I am contributing the max and they match $ for $) and the rest going into my RRSP, TFSA, and a market account. I am assuming my retirement life will be modest, but I don’t want to eat cat food. So truly I am wondering if I should get out of real estate and invest elsewhere — taking the savings from the mortage and other house expense and putting it elsewhere. Yes, I’ll be working as long as I can and they will have me.

Hmm… OttawaMike — are you single? ;)


#173 Heather on 07.11.12 at 5:42 pm

Post note:
My 401K is back above 2008 levels and not still down 40%.


#174 jess on 07.11.12 at 5:57 pm

Carousel fraud ringleader jailed for 17 years over reselling nonexistent mobilesFifteen convicted in five trials for faking sale of 4m phones through ghost companies in complex £176m VAT scam
Juliette Garside, Sunday 8 July 2012 20.59 BST

The false trades are believed to have begun with a ghost company based in the UK claiming to have imported thousands of phones from Belgium. Sony Ericsson had just announced its P990 handset, and the company claimed to have imported 90,000 of them. It claimed a further 96,000 Samsung Serene handsets had been brought into the UK.

But the gang had failed to spot a manufacturing delay that meant neither model had left the production line at the time. The phones passed through other “buffer” firms, before being bought by Future.

A chain of five or six ghost companies was created to muddy the waters. More than 5,700 individual trades were recorded, some taking just a day to pass through the entire chain. Future, at the end of the chain, would then claim to have sold the phones to a ghost company in Europe.

Because companies cannot claim the cost of VAT payments back from their European counterparts, the UK tax authorities reimburse VAT on any items bought in the UK but sold abroad. This is done in order to encourage exports.

#175 Canadian Watchdog on 07.11.12 at 6:10 pm

#158 penpal

“Concerned about their job security, especially in view of the outsourcing they saw going on all around them, made the work force more compliant and accepting of no raises.”

I think you’re confusing the macro from micro causes. Corporate profits started soaring when workers began to borrowed more. More borrowing=more profits. However if we had rates dictated by the free markets (without central bank intervention), borrowing would have been restrained. This would have put the interest of corporations to lift wages in order to boost spending. That’s how a balanced economy should work.

#163 Toronto_CA

“Have we in Canada ever had such a long period of pronounced low interest rates?”

Nominally no. In real terms yes. Reference points are 1930-1950, 1970-1980.

#176 dd on 07.11.12 at 6:13 pm

Bill Gross …

The Fed is buying 70-80% of the treasury issuance now.
And that is the only reason why US interest rates are low.

#177 Toronto_CA on 07.11.12 at 6:13 pm

#155 Dupcheck on 07.11.12 at 3:24 pm

Fortunately for me, my definition of an asset meets the requirements of the International Accounting Standards Board and would stand up to an independent audit. The business you do hiring for should probably make sure their accountants use those same definitions, otherwise you’ll be in a lot of trouble. I don’t think I’d like to work at a company that doesn’t call the cars they own an asset on their balance sheet anyway, since I’d lose my professional designation.

I’m sorry you feel you have to resort to Ad Hominem to get your point across. Robert Kyosaki is very divisive.

Please make sure you’re well aware of the criticism that has been leveled against this man in the personal finance world mostly accusing him of pyramid schemes; some further reading:

Now, let’s get back on topic with housing bear market talk:

#178 Jim Lahey, Sunnyvale Trailer Park Supervisor on 07.11.12 at 6:50 pm

#150 Toronto_CA

Well damn it, that is the last time I listen to Ricky on how to determine a proper net worth. Here in Sunnyvale, anyone who can string together a couple of pay cheques in savings is a hell of a wealth accumulator. The very interesting point brought out in the book The Millionaire Next Door is that people who live in McMansions, own cottages and drive the swanky sports cars are not actually very wealthy when you do a serious balance sheet analysis on them. The wealth is illusory, fueled by debt. This is taking place in this very land we call home, Canada as we post. We have become a HELOC infested wasteland and soon we are going to see, a la Warren Buffett’s saying, “who is swimming naked when the tide goes out.”

#179 thinker on 07.11.12 at 6:53 pm

Folks who responded, don’t forget the price can also go up the property, not just down – that is what has happened for the last five years. You all assume it can just go down.

#180 Crash Calaway on 07.11.12 at 6:56 pm

The above pic overwhelmingly shows that there are at least 2 bubbles about to burst in Canada.

Keep buying at own peril!

#181 Subterranian on 07.11.12 at 7:04 pm

>>#25 Montrealer on 07.10.12 at 10:14 pm

>>can you get these bank preferred
>> through discount brokerage or
>>you need to invest with an adviser

You can definitely buy them through Questrade, and presumably other discount brokerages as well…

Be careful of suicide by DIY. — Garth

#182 Nostradamus Le Mad Vlad on 07.11.12 at 7:25 pm

#156 Timbo — Good post. It appears NAmerica is not in the greatest of shapes.

#162 Pat and #94 Herb — “. . . try plugging a light bulb up your nose.” — One of the funniest suggestions I have seen here!
#189 GregW, Oakville — Hi Greg. The weather changes, from baking to frozen somewhat remind me of what HAARP is used for.

As it stands, Monsanto will end up being a major winner, mainly because a lot of farmers are losing their crops (of ordinary seed) by the weather cycles, such as here or here.

The Better Half grows a few veggies yearly — tomatoes, beets, beans, lettuce plus a couple of wild blueberry and raspberry bushes. Keeps her busy, I stay outta the way and eat! Too much for an old fart like me to figure out!
Death Of The Republic “This is a fictional story showing how the last vestiges of the republic, your personal wealth and gold could disappear in 24 hours.”; Compound Interest and the debt bubble; Oz Methinx the Oz govt. finally lost the plot, and the Oz Thought Police; Gibtaltar A beautiful little getaway, but landing by jet is brutal; US$400 Buddy can you spare some cash? Oz Afterlife taxes; Gordon Brown sold gold cheaply to bail out a large US bank; Axe the politicos Sheeple elect them (NOT), only to have them screw us; Using Politics to avoid Libor; Darkness Govts. will pull all types of tricks on their unsuspecting populace in order to justify war; Ohio Doing better than most; It’s Wednesday and time for a new global stinkbomb; 2:07 clip “The CFTC is the get-away driver of the robbery.”
6:30 clip The TPP is a fascist coup; Moscow’s Marines Syria bound, and new air defense system to be delivered and installed; ObombaCare One of the reason’s for allowing illegals into the US; 164 feet away Hidden govt. scanners; Russia – Israel Getting a little testy in the Med.; Court Martialed for refusing a vaccine shot; Putin says west is declining, and he’s right; Agenda 21 and Water; Obomba fighting war against Iran himself; Synthetic Bacteria creating a new Hawaiian ‘Big Island’.

#183 Pat on 07.11.12 at 7:41 pm

@ #170 Westernman,

Did it light up??

#184 An Cat Dubh on 07.11.12 at 7:46 pm

Foreclosures on the rise in the south Okanagan.

Yes I remember a few years ago many said that it couldn’t\never happen here. Just like socialism wouldn’t happen in the USA.

#185 Country Girl on 07.11.12 at 8:05 pm

#69 detalumis
From my dad’s experience with LTC, they only change the diaper 2x per day. Also, they are very profitable for the owners and most owners have political ties.

#186 kegpeg on 07.11.12 at 8:10 pm

Bill Gross …

The Fed is buying 70-80% of the treasury issuance now.
And that is the only reason why US interest rates are low.
And the liquidity the Fed gives the banks turns around and is used to buy bonds. Banks aren’t lending to the average joe anymore.

The so called “safe haven” the media talks about is all a song and dance to try and convince others to do the same.

#187 a prairie dawg on 07.11.12 at 8:37 pm

@ #150 Toronto_CA

Using that formula, this 51y.o. dawg is a double PAW. ☻

#188 HD on 07.11.12 at 8:41 pm

#76 penpal on 07.11.12 at 8:14 am

I create value…blah blah blah….I made my own paycheque…blah blah blah….I created my own international business blah blah blah…I am so successful…blah blah vla

Seriously? Listen to yourself.

No bragging at all.

How can you talk about rational thinking in one breath while vomiting despicable nonsense in the other?

You made all sort of assumptions about me only because I am a public servant. No clue about my background, education, personal circumstance, etc.

Yet, you recanted right away when Herb disclosed his personal circumstances. Every situation is different. Passing judgment on someone based on a little tiny piece of information is not impressive.

You sound like a grumpy old man.

I wouldn’t have any problem with your personal views if they were expressed in a civil manner…but it’s not the case. Why so angry? Why so abusive? Were you abused growing up? It never happened to me so I can’t really relay.

I know you won’t resist the urge to respond to my comment given your personality.

This will be the last time I engage with you on this forum. Discussing with you would be akin to reason with a lunatic and I do not wish to highjack this blog with a useless feud.

So, go right ahead. I am already bent over and awaiting your valuable input.
It’s lubed already…..who knows, I might enjoy it and if you work hard enough we might generate some santorum.



#189 Trailer Park Boys on 07.11.12 at 8:41 pm

Re Gov’t jobs

We noticed reading the “Canadian Rules Gov’t” brochure that there is no Canadian President…..and it does not anywhere exclude being President.

So we are claiming to be Canadian President, sorta like a mining claim. We”ll split the job 3 wayze so as not to interfere with our other ventures. Then we can do all sorts of fun things, like invade 3rd world areas like Toronto

PS we were tired of Garth grovelling to get back into Gov’t, so we”ll find something for him….maybe Blog/REIT Minister and soft – porn critic

#190 Deano on 07.11.12 at 9:08 pm

penpal, you’re delusional.

Gov workers make 15% more? Ok even if they do (and in the US gov workers make less) it would largely be due to the fact that there are no minimum wage jobs working for gov. Compare apples to apples and I think you’d find it fairly comparable. Take for example my friend who is a crown attorney. 130k a year after 12 years. I have another friend who is a corporate lawyer…not even a contest there. The Bay St. man-child makes 300 plus.

it sounds like you should move to Somalia, they have no gov to speak of there…no taxes, no gov workers, no nothing! Paradise right?

#191 Daisy Mae on 07.11.12 at 9:09 pm

#142 FUTURE: “Mike Holmes, indeed, all of Can HGTV may disappear without a trace in the blink of an eye….”


His show isn’t about promoting real estate but rather, exposing shoddy workmanship. And there’s plenty of it to expose.

He simply shows us how it SHOULD be done. Anything wrong with that?

#192 Marshy on 07.11.12 at 9:25 pm

Toronto CA @176 & 138

I agree with what you said about Robert Kyosaki for the most part, but he does have a good argument for determining whether a house is an asset or a liability based on cash flow. His assertion that a rental property is an asset and that a personal residence is a liability was not meant to start as accounting revolution, but to point out that buying a house might not be a good investment. Based on what happened in US and what probably will happen soon in Canada he might be on to something.

And congrats on passing the UFE …. I think that means ‘uniform final exam’ for the CA designation but I doubt that most would know that.

The links to Kyosaki are great … I think his riches come from selling books and seminars to the masses and not from the advice he doles out.

#193 Herb on 07.11.12 at 9:37 pm

#189 Deano,

C-R-U-E-L, but absolutely right. What’s wrong with real piracy in Somalia?

#194 brainsail on 07.11.12 at 9:37 pm


Thank you for taking the time and effort last evening to explain Gross Public Debt vs. GDP numbers. I am surprised that there were no other responses but it was late in the day like I am now. People are busy waiting for Garth’s next poster this time of day.

The numbers are all fuzzy and scary.

#195 John G. Young on 07.11.12 at 9:41 pm

#187 HD on 07.11.12 at 8:41 pm

“Were you abused growing up? It never happened to me so I can’t really relay.”

I was (abused as a child) and never in my life have I lowered myself to the depths that penpal, Westernman and others on this blog regularly plumb. Even if they were abused, they don’t get a pass for their hateful behaviour — what the writer Dominic Dunne termed “the abuse excuse”, used to justify all manner of despicable behaviour.

They’re just evil men.


#196 HD on 07.11.12 at 9:50 pm

#194 John G. Young on 07.11.12 at 9:41 pm

I am sorry to hear about what happened to you.

You are correct tho.

It does not give anyone the right to display such behavior.



#197 John G. Young on 07.11.12 at 10:00 pm

#195 HD on 07.11.12 at 9:50 pm

Thank you, but I just want to be clear that I didn’t mention this incident from my past as a bid for sympathy; nor do I feel that it is any way makes me special — from my past experiences as a therapist I’m certain that far more people than not are survivors of some form of childhood abuse.

I need to say this because in the past, penpal and Westernman and others have accused me of “airing my dirty laundry”, trying to win pity, etc.. These are of course the responses that one expects from abusers — in fact I’m certain they’re composing hateful responses as I write this.



#198 a prairie dawg on 07.11.12 at 10:31 pm

Be careful of suicide by DIY. — Garth

– — –

But they are all legends in their own mind…

-this is the same mentality that leads people to think they drive like a pro on the freeway in their POS daily driver. (pick a city)

-this is the same mentality that makes everyone think they’re good in bed.

-this is the same mentality that is too cheap to pay 1% for professional financial advice, cuz they’re so good at all the other stuff in their life. After all, most were told they were special from a young age.

-they buy ‘anything’ when it’s rising, and think another instant investing genius is born.

Try growing and/or maintaining your assets through a few recessions, and then you might have what it takes. Maybe… Otherwise you are gambling.

You’re not special. Your Mom and your teachers lied.

Are you with me so far?

#199 penpal on 07.12.12 at 12:12 am

@ # 189 Dirtbag Deano

Your ignorance of the real world is appalling.

So bad, in fact, that you have made my argument for me.

Do you not understand that the the Bay st. lawyer gets paid 300k because HE BRINGS IN BUSINESS AND REVENUE and is paid commensurately and that the Crown Attorney has his cases provided to him and he is paid whether or not there are any cases to prosecute?

One is a business man more or less, self employed making his own job and the other guy gets a salary to work regular hours regardless of his work load.

And you tell me to compare apples to apples?

By comparing not only two way different types of law practice, but also the hours that they work?

My guess is that critical thinking is not a strength of yours, but emotional knee jerk reponses come naturally to you as they do with most immature personalities.

#200 Blue Monster Lover of Meats and Vegetables on 07.12.12 at 12:39 am

#86 disciple on 07.11.12 at 9:10 am

Monster hasn’t commented in a few days… must be still reeling from the Helen Thomas is Ayn Rand blockbuster… Deprogramming… one person at a time…

Yes disciple I checked out your piece on Ayn Rand and you have not convinced me, so No Kisses for You!

#76 penpal

Yeah! That’s right!

#201 penpal on 07.12.12 at 1:16 am

@ # 187 HD

Another man crush obviously.

Your last posting speaks very well of your hypocritical nature, crass approach to life and classless existence.

It is actually pretty funny to read given that it was intended to make me look bad yet reflects horribly on you.

#202 Jean on 07.12.12 at 1:19 am

#96 and #121 – I’m definitely a UAW. At 32, my partner and I finished paying off our student loans just last year. Most of my friends are in the same position. My net worth is now about $15k – woohoo! – although I do have about 6 years of pension contributions from various places around and about to add to that. My partner has been at best semi-employed ever since the small company he worked at closed three years ago. But hey: we’re at Net Zero. This is an accomplishment. We’re only just now starting to live, having spent the past 10 years frozen in mediocre jobs or partial employment while paying off crippling debt (and lucky to have that debt, as without it we wouldn’t have the jobs we do have – I got into education, which at least has benefits and I can hope for decent raises eventually. Maybe.) None of us will ever come even close to that ideal ratio of savings-for-our-age. And our parents are busy spending their dwindling home equity on trips to Bali and Italy, so we can’t even hope to inherit. Oh, well.

#203 Blue Monster Lover of Meats and Vegetables on 07.12.12 at 1:24 am

#189 Deano on 07.11.12 at 9:08 pm

penpal, you’re delusional.
penpal, give it up man, you’re outnumbered! The public service have all messaged each other that there’s a live one on Garth’s blog and they’re out in force.

Last time I stood up for freedom and small government they told me to move to Somalia too.

Little do the clowns know that I am in fact planning on leaving but not to Somalia, I’m thinking more like Thailand or Malaysia or Singapore or Hong Kong.

I’ll keep my Canadian citizenship and have no income in Canada and probably stay out of country more than six months etc…. Their rules, I just play by them.

Starve the beast and suck it’s blood, turn the tables before the walls and armed guards are raised to keep you in like East Berlin. Good luck, I hope we make it!

#204 Comment for Watchdog on 07.12.12 at 10:13 am

“Cheap credit has deluded the working class to borrow rather then demand higher wages. It’s as simple as that.”

One of the most poignant and insightful comments I have ever had the pleasure of reading on this pathetic blog.

#205 Westernman on 07.12.12 at 4:50 pm

John G. Young @ # 196,
Still trying to win the ” Indentured Victim” sweepstakes I see… you truly are a pitiful case Johnny Boy… just pitiful…

#206 John G. Young on 07.12.12 at 5:38 pm

#204 Westernman on 07.12.12 at 4:50 pm

Right on cue, and exactly as predicted.

Just pitiful…