Emails from the edge

Hi Garth: I have some friends in Kelowna, a whole group of them, who have never bought property before, have decided that NOW is the time to do so. The reason? There are dozens of foreclosures in Kelowna right now. They all seem to think they will get a really good deal buying these properties (I have my doubts). I don’t think it’s the time to buy, I think Kelowna’s real estate market (which according to one realtor I know is “dead” and has been for the past few years) still has a ways to drop, but what about buying foreclosed properties? If a property is listed at $259k, is there really a chance of getting a property for $200k? – Ellen

Your friends are about to make a classic real estate mistake, and feed themselves whole to that voracious beast, Mr. Market. Besides, foreclosures in Canada are not the same as foreclosures in the US where chesterfields end up on the front lawn and buyers can scoop up a property in an auction on the courthouse steps. In Ontario they don’t even exist, where ‘powers of sale’ are the route taken when a mortgagor defaults.

In BC you make a formal offer through a realtor for a foreclosure, and if accepted by the vendor (the jilted lender) it goes to court where the seller’s lawyer presents it to the judge. Anybody can attend this hearing and cough up a competing offer. If that happens, the judge sends everybody home to prepare their best shot, which means you having a bidding war on your hands. This almost guarantees your great deal is kaput. You’ll pay market value.

More importantly, Kelowna’s real estate market is a sinkhole. Prices are still too high. The Winnebagos full of horny Boomers from Mississauga and Calgary have halted. The casino sucks. It snows in the winter. And if it weren’t for the hot chick waitresses at Joey’s the best thing would be the Harley dealership.

Hello Garth. I’m a long time fan and hope for some good advice as I can’t seem to find it anywhere.  I am early 40’s, wife late thirties with two rug rats living in GTA.  I own a home outright valued at $550G’s and a commercial property with no mortgage valued at $300G.  I used to run my business from the commercial space but it is now defunct the economy being what it is.  I have no debts whatsoever and have saved approximately $700,000.  We are in need and have been for a while of a larger place, and also would like to move closer to where our kids attend a private school. After months of deliberating I have finally convinced my wife that we should sell both properties and rent a house for two years.  My instincts are screaming at me to do this and have been for a while and I have the belief that time is of the essence.  Here are my choices:

1 Sell it all, reap the proceeds rent a house for $3000-$4000.  Suck up the fact that I am uprooting my family and will likely have to do it again couple of years from now.  Try to live on the proceeds of an invested sum of $1.5M.

2 Sell it all and buy now trying to keep the differential as tight as possible.  This option is on par with swallowing nails for me.  I resent paying top dollar at the top of a cycle.

3 Keep one or both properties and rent them.  Also draw a line of credit on each to the max. amount and invest it.  After this is done buy a place.  Again buying now bugs me as does being a landlord.  Or I could do this and rent.

Please please please help.  This above plays over and over in my mind and I am paralyzed in a state of inaction. I think your answer will help many others by showing them where you come down on these issues.

Yeah, this is a very common problem. Unemployed 40something guys with $700,000 in cash and $850,000 in paid-off real estate. Man, if I had a dime for every time I’ve been asked this question…

Seriously. Dude. If your business went paws-up and you have a family to support, and no income, living in a too-small house, then the first priorities are to reduce costs and generate cash. Renting both properties to get income might be enough to pay for rent and food, but if you think the market has topped out (I do) then why wouldn’t you be cashing in at the top? And where’s the logic in turning around and buying back into the same market, having suffered real estate commission and closing costs?

So clearly, the best choice is to harvest your gains, stop whining,  find a good place to rent for a few years, get a job, cease writing to blogs frequented by basement-dwelling, anti-social, contrarian misfits who all have PhDs in economics, and invest the money. An income-centric portfolio giving 5% would yield $7,000 a month. It’s a bitch, I know.

So here’s my situation.  My fiance and I both have good professional jobs in health care.  We are in our early 30s. He owns a condo in east vancouver that could probably go for 250,000 to maybe 300,000. He bought for 180,000 5yrs ago and renovated.  I am renting.  We have enough in the bank for a sizeable downpayment on a home in North Vancouver.  We are looking to finally consolidate homes and start a family in the next few years. We’ve been looking for 7months and have just been on a 2month hiatus as we got sick of the ridiculousness of the market and people overbidding on shacks and financing some 90yr olds retirement by buying her house which she bought for 90,000 in 1952 for 1.2 Million$ ..you know, the recent Vancouver usual. The market is changing. The new mortgage rules actually suit us favourably as the interest rates haven’t, yet, changed and the other restrictions don’t apply because with our cash flow we could have a Million dollar home paid off in 15 yrs with a 25percent downpayment.  My question is, what do we do?  If I were to buy a home right now, wed plan to stay there for at least 10 to 15 yrs. Rental homes on the North Shore are few and far between. And at some point you want to start your life and settle down. But,as I said, I read your blog and try to stay informed on housing and the economy.  Lots of signs pointing in the direction of not buying. Should we sell the condo and rent? Should we keep the condo, rent it out and rent a home? Should we buy something if we can lowball and get a home that was 1Million earlier now for 850,000?? — Amber

You should stop obsessing about a house, concentrate on your new husband and stay in the guy’s condo, unless East Van is suddenly not good enough. Just because you have enough cash for a down payment doesn’t mean you should make one. And I don’t for a minute believe the tale about justifying a North Van McMansion by saying you’ll be there for 15 years. You sound like the kind of materialistic babe this blog so enjoys ridiculing, who equates getting granite and a mortgage with ‘starting your life.’ I’m sure your hubby-to-be is thrilled with that notion.

Face it, Vancouver is in for a long, grumpy, disappointing, loveless slide. Like your marriage.

180 comments ↓

#1 Hurly on 07.26.12 at 9:00 pm

First………I hope

#2 Suede on 07.26.12 at 9:04 pm

If you rent in North Van you can post pictures on Facebook of you doing the Grouse Grind and hiking the Chief. It’s what the kids these days are doing.

East Van – where dreams were made and were children still live with their parents into their 40’s.

#3 Seven Stars and Orion on 07.26.12 at 9:06 pm

One word comes to mind:

Bazinga!

#4 Potato on 07.26.12 at 9:08 pm

Actually my PhD is in Medical Biophysics. I’m merely an amateur economist.

#5 Devore on 07.26.12 at 9:12 pm

And at some point you want to start your life and settle down.

And what have you been doing with your life so far? I bet your friends, family, co-workers and fiance are thrilled to hear you say that you need to buy a million dollar house to start a life.

#6 Julia on 07.26.12 at 9:21 pm

A colleague told me today that her friends just paid $200k over asking for a house in Toronto (not too far from your office Garth) and they haven’t sold their place yet (same area). Still renovating. All i could respond with was ” oh oh”. She is from out of town and didn’t seem to think it was a problem because it wasn’t Vancouver.

Btw Garth, that last line a little harsh no? Haha.

#7 KG on 07.26.12 at 9:21 pm

the only good thing in this post is the photo.

#8 T.O. Bubble Boy on 07.26.12 at 9:21 pm

Maybe no PhD, but at least a DGFA (Daily Greater Fool Anecdote). Given that our Finance Minister has a law degree and used to be an ambulance-chaser, I’m pretty sure that a PhD would be overkill for trying to understand Canada’s housing market.

Real Estate probably maps more to Behavioural Finance anyway.

#9 JayBe on 07.26.12 at 9:30 pm

Mom! Look! I’m a “Dawg” – just like you!

#10 Thinking of buying in Calgary? on 07.26.12 at 9:33 pm

I speak with several Calgary realtors every month. We talk openly and on a personal level and they tell me what they really think of the Calgary market. It’s understood that they wouldn’t tell prospective buyers the same things that they tell me.

Virtually every realtor has said that they expect house prices in Calgary to decline sharply over the next year and continue down from there. Right now they are advising family and close friends to wait it out for a year or two before buying.

They respect you Garth, even though they would never admit that to another realtor. They get angry when you present the stats and facts without bias, but they know deep down that you are correct about where the housing market is headed.

#11 Foggy on 07.26.12 at 9:34 pm

Today on the stock market the perfect Trifecta of evil – Facebook, Groupon and Zynga – all got “unfriended” big time. Facebook down 9%, Groupon down 9% and Zynga got zinged an incredible 38%. All at the opening bell. The flimsy business models of social media are meeting the harsh realities of Wall Street.

http://money.cnn.com/quote/quote.html?symb=FB&iid=HP_LN

http://money.cnn.com/quote/quote.html?symb=GRPN&source=story_quote_link

http://money.cnn.com/quote/quote.html?symb=ZNGA&source=story_quote_link

#12 Humpty Dumpty on 07.26.12 at 9:43 pm

Hey princess and wankers,

go home and put your lulu lemon pants on, goes for the metro sexuals also…
grab your SB latte or timmies coffee,
get into your red convertable or dodge pick up,
drive up the sea to sky to the tantilus mountain range look out,
get out of the car and walk to the EDGE, then …….

The game is rigged…..

http://kingworldnews.com/kingworldnews/Broadcast/Entries/2012/7/26_Gerald_Celente.html

long, grumpy, disappointing, loveless slide will also test your marriage…..

HD has a sale on nylon rope…..

#13 bruce on 07.26.12 at 9:47 pm

I grew up in N Van 30+ yrs ago – it was over-rated then and is even more over-rated now – plus the taxes to live in N Van’s over-rated old neighbourhoods are far too high.

#14 Sask Girl on 07.26.12 at 9:52 pm

Please do a blog on the Saskatchewan market. Pretty please.

#15 Keeping the Faith on 07.26.12 at 9:59 pm

I like the angle: ornery!

#16 Nemesis on 07.26.12 at 10:01 pm

…”…if it weren’t for the hot chick waitresses at Joey’s the best thing would be the Harley dealership.”… Hon. GT

That reminds me, I really must visit Joey’s. As for Kane’s Harley Davidson… I suspect they’re selling more HD branded bar stools these days than RoadKings (I will confess to a certain fondness for those)… Say, what is it with a MotorCycle manufacturer who also has a furniture line? Could be worse though; Kawasaki manufactures steam shovels, Honda makes lawn mowers and Yamaha assembles sewing machines (their Pianos are quite good, though) and I’d rather not mention Suzuki… BloodyShame about Buell, though. I digress…

…”…blogs frequented by basement-dwelling, anti-social, contrarian misfits who all have PhDs in economics.”…

Not true. I only drank there [LSE] although I did frequent the ‘OldLady’ [ThreadNeedle]. And it’s a SubPentHouse. As for the rest… Nolo Contendere. TeeHee.

#17 Dan7 on 07.26.12 at 10:09 pm

Peter Schiff sounds just like you Garth

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

#18 Bill Gable on 07.26.12 at 10:17 pm

>> This qualifies – I believe –

“Microsoft’s decision to lay off 35 programmers in Vancouver and axe two of its gaming products underscores concerns that the digital media business in B.C. is having trouble.
It’s also not good news for Mayor Gregor Robertson, who has made the expansion of the digital media industry a key target for the city’s economic commission.
On Thursday Microsoft confirmed that it was axing both its half-finished Flight game and “Project Columbia,” a Kinect-based virtual storybook for children. A free demo version of Flight will remain online. It said the decision to cancel development in the two works was part of the natural ebb and flow of its portfolio.
But it comes after recent layoffs and downsizings by several other Vancouver-based digital media companies. Both Rock Star Games and Radical Entertainment studios closed down in Vancouver in recent weeks. Rock Star is moving to Toronto, lured by generous Ontario government incentives twice what B.C. offers. Radical shut down and laid off 90 people after the failure of one of its major titles, Protocol.
Capcom, formerly known as Blue Castle Games, also laid off 20 people, which it said was “part of its regular periodic assessment of overall studio goals.”
On Wednesday Robertson acknowledged in council the changes in the gaming and digital media industry are affecting the city. He introduced a motion calling on the provincial government to increase the tax incentives it offers to be more competitive with Ontario. B.C. has more than 600 digital media companies that collectively employ 16,000 people and drop $2.3 billion into the economy, according to the Vancouver Economic Commission. Sixty per cent of those companies are in the Lower Mainland/Metro Vancouver.

http://tinyurl.com/cvzsuyp

#19 greed on 07.26.12 at 10:18 pm

North Van = where life begins

I guess for mold and pond….well you get the picture. Wet wet wet just like the…

Anyway my vote is you sell in East Van and a ride the real estate pony in NV. Nothing like being anchored with a huge Moortgage. That creates good tension and you always have the bridge(s) on the way home that may help when you consider what you have done. Yup nothing like settling down.
I am sure your friends will all be envious….from the East.

#20 E on 07.26.12 at 10:18 pm

“Face it, Vancouver is in for a long, grumpy, disappointing, loveless slide. Like your marriage.”

Mean.

#21 White Rock Mom on 07.26.12 at 10:20 pm

Garth you are being a dink today.

Thanks, mom. — Garth/em>

#22 Basement-Dwelling, Anti-Social, Contrarian Misfit with a PhD in Economics on 07.26.12 at 10:20 pm

At least Garth you are giving unsuspecting new readers of this pathetic blog the heads up on who your devoted disciples are!

#23 Min in Mission on 07.26.12 at 10:27 pm

“basement-dwelling, anti-social, contrarian misfits” – GT

I do not live in a basement. All else is pretty close.

#24 Uki on 07.26.12 at 10:28 pm

“Yeah, this is a very common problem. Unemployed 40something guys with $700,000 in cash and $850,000 in paid-off real estate. ”
Rriight, this is very common … PROBLEM !

Not funny. Not funny at all.

Sarcasm, Uki. Google it. — Garth

#25 rp1 on 07.26.12 at 10:29 pm

Love the picture. Self portrait?

#26 ken s on 07.26.12 at 10:38 pm

Hi G-guy:
GREAT PIC. –Hey I Know that lady. She lives 2 floors up — doesnt go out much, but goes for 3 days when she does.
She worked for Homeland Security in Seattle, till
the morphing got to her.
—Cooks a really mean Chilli. Does community work
in La-La: Quiet tennant. :-) Cheers: KenS.

#27 Derek R on 07.26.12 at 10:40 pm

Garth wrote:
cease writing to blogs frequented by basement-dwelling, anti-social, contrarian misfits who all have PhDs in economics, and invest the money.

Hey, that’s unfair! Before I started reading this blog I owned a house just like a normal person! Is it my fault that I’m easily led astray by charismatic, bearded prophets of “not ending well”? Anyway it’s a very nice basement.

#28 Not 1st on 07.26.12 at 10:47 pm

I cannot live on $7,000 per month. a $1.5 million nest egg should be throwing off a lot more cash than that.

#29 Dan in Victoria on 07.26.12 at 10:48 pm

There you go Ellen, front row seat for you to watch how a herd works.
Identify the leaders, watch the followers, see how they make descions.
Watch how the weak follow and try to fit in.
Great entertainment.
Too early to get in.
Patience.

#30 thinker on 07.26.12 at 11:04 pm

And you forget to mention 5yr mortgage rates hit a record low of 2.85% today!!!

#31 IM in C on 07.26.12 at 11:05 pm

Mr. Turner:
Just when you thought journalistic integrity wrt the real estate market couldn’t get any worse, it did:

http://www.thestar.com/specialsections/newinhomes35years/article/1229552–canderel-is-building-the-tallest-residential-skyscraper-in-canada

They even have a link to the sales office in the article!

#32 City Slicker on 07.26.12 at 11:14 pm

It’s almost hard to say the US housing market is recovering with a straight look on your face:

Foreclosure Filings Increase in 60% of Large U.S. Cities

http://www.bloomberg.com/news/2012-07-26/foreclosure-filings-increase-in-60-of-large-u-s-cities.html

#33 acp on 07.26.12 at 11:16 pm

What is this obsession with not uprooting children? I know people that lived in six or eight different cities growing up and they’ve still managed to grow up to become productive, well-adjusted adults. Amazing, I know! I think it’s the adults that don’t want to be uprooted and pack all their $hit in boxes and come to realize how much crap they really have.

#34 a prairie dawg on 07.26.12 at 11:21 pm

#14 Sask Girl

Please do a blog on the Saskatchewan market. Pretty please.

– — –

After the national price melt…

it will be flat in Saskatchewan for a long time. ;)

#35 Snowboid on 07.26.12 at 11:24 pm

#16 Nemesis on 07.26.12 at 10:01 pm…

“And it’s a SubPentHouse”

Hopefully you weren’t the one that caused the big kerfuffle Tuesday night with the atomic BBQ?!!

Kane’s has a pile of HDs in stock – at least 12 new ones.

And it was too bad about Buell – had some beautiful bikes – and with the new one at $40K – whew!

#36 Charles Ponzi on 07.26.12 at 11:28 pm

Don’t buy now.

#37 HC on 07.26.12 at 11:29 pm

This may sound unreasonable to all you ‘I can’t wait to say I told you so’ types, but Garth, doesn’t selling and buying in the same market cycle work the same whether you are in a boom or bust real estate market? I am in a desirable part of the GTA, commissions and transfer tax will exist in 2, 5, 10 years from now, so if I upgrade now to a 4 bedroom from my 3 bedroom (same area)or in a couple years the spread should be the same (% wise). Renting is not an option, I know too many people that read this blog and ones like it in 05-10 that tried to time the market and got proper screwed, leaving hundreds of thousands on the table. Thoughts?

#38 45north on 07.26.12 at 11:36 pm

Yeah, this is a very common problem. Unemployed 40something guys with $700,000 in cash and $850,000 in paid-off real estate.

pretty funny

Julia: her friends just paid $200k over asking for a house in Toronto and they haven’t sold their place yet (same area)

the jokes keep on com’n

greed: and you always have the bridge on the way home that may help when you consider what you have done.

that goes too far

Yamaha: 299 kmh!
http://www.timescolonist.com/news/Speeding+motorcyclist+Trans+Canada+Highway+turns+himself+Kamloops/6988725/story.html

#39 Grim Reaper/Crypt Speculator on 07.26.12 at 11:43 pm

Well, at least we finally have Smoking Man’s family photo.

#40 TaxHaven on 07.26.12 at 11:50 pm

Kelowna? It SHOULD be a small town centred around the lake. Based on fruit growing, with fruit being shipped by rail to market, a little cattle raising and small-town merchants necessary to these activities… It didn’t have a self-serve liquor store until @20 years ago…quiet; nice place to raise kids or retire.

The place where I grew up. We moved there in 1964.

Now it’s a sprawling suburbia of tract homes. But jobs? Everyone sells stuff to someone else: poodle grooming, carpet cleaning, RV dealers, movie rentals, pastic-and-fiberglass power boat sales… With a massive RE and construction habit, the place needs a constant inflow, now stopped, of Alberta and Ontario retirees. And the tourists? Looking for someplace that no longer exists.

But they’d better be prepared to live, poorly, in a highrise condo. And do WHAT? The place is semi-desert: shouldn’t support this population, jobs aside.

What does Kelowna produce better, more conveniently or cheaper than elsewhere? It has next-to-no rail access. Near no major markets. No port, being inland. High Canadian labour costs. No industry. Cold, dry winters. Semi-drinkable pond water from your faucet…

It will be a strange future. Maybe Las Vegas-like, but permanently so… Probably a never-ending backlog of stuff for sale, slumping house prices for YEARS, no quality jobs (or any jobs) and plenty of thrift stores, pawnshops and check-cashers…

Ellen, go somewhere with a future.

#41 Rain bird on 07.26.12 at 11:57 pm

To Not 1st:

What do you mean? How? And also be safe.

#42 An Cat Dubh on 07.27.12 at 12:07 am

Seems to be some price drops among private sellers in Vernon, B.C. Possibly don’t want foreclosure\bankruptcy or are moving to Alta\Sask.
About Kelowna, I know someone who went with his wife to the local Mercedes dealer last year and were looking at a new at the time (2011)convertible with 31K on it driven by the owner’s wife. They also checked the Mercedes dealer in Vancouver and the price was the same with 0 k’s. Seems sunshine tax only applies to wages in the Okanagan.

#43 T.C. on 07.27.12 at 12:10 am

Ha Ha! Foreclosures in B.C.

There is a better way available to anyone. But if you can’t delay gratification for at least one year, or do a little homework on the legislation – like the rubes in Kelowna – you can forget about it.

Or maybe Garth knows?

#44 Mr. Anderson on 07.27.12 at 12:11 am

With respect to a court ordered sale in BC….no conditions, i.e. no inspection, no financing, it’s a cash offer.

#45 Mr. Anderson on 07.27.12 at 12:25 am

Before my last post had not fully read GT’s entire post. To the two professionals in healthcare looking to buy in North Vancouver, bitching about house purchased in 1952 for $90,000.00…..total BS, a house in North Van would have been $10,000.00 in the early 50’s.

#46 Nostradamus Le Mad Vlad on 07.27.12 at 12:28 am


“An income-centric portfolio giving 5% would yield $7,000 a month. It’s a bitch, I know.” — If no one wants it, I’ll step up to the plate — $1.5 mln. invested with a nice monthly payout . . . life’s tuf, but someone’s gotta do it!
*
Shrinking Police Force Drones are better and don’t need paycheques; Vince Cable Replacing Osborne? Depends how many back-handed deals he can swing; Rising profits, rising anger The figures are astonishing, esp. in a double-dip recession; Spain is causing other grief too; Zellers HBC says it will close most the remaining 64 Zellers stores that Target hasn’t bought; Bank Glitches “Millions of bank customers at Nationwide and Natwest were left unable to access cash or found they had been overcharged after severe computer problems hit two of Britain’s biggest banks.”; David Rosenberg on RE; Ivan Boesky = Gordon Gekko Ahhh yes, Greed is Good; Aluminum Ford Arriving shortly? Zynga Insider trading? Start A War hat will help a little; 4Closures Wave coming, and California’s very own wave; Barrick Mine costs expensive; Japan Still alive, but only just.
*
Vitamin E (possibly) may be able to stem Alzheimer’s; Antarctica’s temps. Colder than normal; Iran So is Israel’s Dimonanuke plant, and Syria Russia and Iran stepping up to the plate. Then China comes waltzing in plus Poland US troops there for first time; I’ll Be Home For Christmas Just a reminder that Christmas does, in fact, belong to The Toilet out of which belch forth numerous conspiracy theories; Nutbar City Limits National Geographic photog. takes snaps inside an active ‘cano; Speaking of conspiracy theories, maybe this is what he / she used to do; Crop Circles Would make really nice screen savers or wall paper; US Military and Police Shades of the Eastern bloc; Man Shopping This is his aisle; Vertigo Views from top of skyscrapers looking down; Three Gorges Dam generates a whopping amount of power.

#47 Realtors , Bankers and Mortgage brokers in an all out PANIC! on 07.27.12 at 12:30 am

25% is just to start off the crash. It’s going to be a nasty crash realtors a nasty crash!

Canadian home prices to tumble 25% in long-term: Capital Economics report

http://ca.news.yahoo.com/canadian-home-prices-tumble-25-long-term-capital-221329056–finance.html

#48 Chaddywack on 07.27.12 at 12:39 am

Amber sounds like the kind of chick that this blog told me to avoid!

Folks, don’t date Vancouver girls named Amber. Sometime known as Vambers.

#49 Carpe Diem on 07.27.12 at 12:48 am

North Vancouver is not some awesome place to be.

1. It has the Trans-Canada splitting the city.
2. The ports to the north of the Trans-Canada suck.
3. The folks that just could not afford West-Vancouver in the best areas.
4. The people in between that believed the hype and have shitty little homes.

And then there are landslides

http://www.dnv.org/article.asp?c=1030
http://www.cbc.ca/news/canada/british-columbia/story/2008/07/25/bc-northvancouver-landslide-report.html

I looked at two places in North Vancouver that looked nice. One place my kids could potentionally fall 100s of feet + the property could eventually drop the same.
The other home was no better, with the mountain that could slide down on my home and family (as it did a couple of addresses down the road).

I chosed the swamp (Richmond) until that option ran its course and I am now in Ottawa … such a nice place.

For Visitors:

Skip Capilano to visit a suspended bridge (its a tourist trap) …. Lynn Valley is a jewel for North Van and free.

#50 wes coast on 07.27.12 at 12:53 am

Amber’s situation is very similar to what seems to be a vast majority of home buyers in Vancouver. Dual income justifying an enormous mortgage. The calculations are all based on the presumption that both parties will maintain their jobs in their geographic area indefinately. We speak of a housing correction in 2 dimensional terms. Housing crashes – all else stays the same. This is risky. Governments have become addicted to the tax revenues all this debt fueled activity has created – especially in BC. What happens when all these construction labourers are layed off; when building permits tank; fees for government inspections fade away; rising property tax revenues reverse? That’s when government programs (health care for one) start to look really fat and in need of trimming, downsizing, and outsourcing. Just look to Ontario – the left leaning Ontario Liberals are targeting union government worker defined benefit pensions:

http://blogs.windsorstar.com/2012/07/26/province-to-alter-public-pensions/

My point is this, how many Lower mainland families could continue paying their mortgage if one spouse lost their job? I don’t have hard numbers to back it up but anecdotally, it seems to be a large pool of folks that have left themselves no breathing room. I don’t know about starting a life – sounds more like the beginning of the end.

Good luck Amber.

#51 Calgary Resident on 07.27.12 at 1:00 am

I have to disagree with the earlier comments of “Thinking of Buying in Calgary”.

Most of the realtors and residents here don’t respect you Garth. Nor do the Federal Conservatives from these parts.

They think that you are a nutter, and that you are obsessive compulsive about a housing crash, and that you repeat things on your blog over and over and over because you are crazy deep down. Really. No joke.

Most of them look at your track record of making bad predictions over the past 5 years versus CREA’s excellent track record, and they laugh at you.

Not only that, but they get a real kick out of how you pontificate to the masses in that “It shall be thus, because I deem it so tone”.

When you said things two years ago like, “Of course, interest rates have nowhere to go but up”, and then two years later they haven’t moved up, it makes those boldly asserted God-like truths of yours seem pretty cheap.

Reality bites Garth. So does your track record.

#52 bill on 07.27.12 at 1:02 am

http://www.asphaltandrubber.com/bikes/ktm-690-duke-track/

#53 Nemesis on 07.27.12 at 1:05 am

@45North… Yamaha? Puleez!… @ 616km/Hr Italy’sFinest have settled that argument…

http://tinyurl.com/cwagosn

PS – @SnowBoid… Nope. Not me. I have to provide Fortis with 2 weeks notice prior to ignition of my 12GWatt Weber to enable PipeLine pressurization maintenance from ElBerTah to YVR… and I missed the deadline for this week’s treats… Drats.

#54 Burnaby Bob on 07.27.12 at 1:14 am

What’s with the broad in Vancouver thinking that life needs a house to get started? What’s she been doing for the last 30 some odd years that does not involve being alive? I think people (mostly women) have seriously delusional fantasies about how much better they imagine their lives when they own a house. In reality you’re just on the road to being like your boring and divorced parents. Oh snap, they’re not even married yet. I’d rent a couple years after getting married, and start off co-owning something smaller like a couch or bar of soap.

#55 jbizzle on 07.27.12 at 1:20 am

garth, i second the motion of doing a blog on saskatchewan. regina is getting out of control with prices, and saskatoon has been for a while now. i’m hoping to see a massive drop, but i get a feeling that it may be a while for it to happen. i never thought i’d see the day when real estate was this crazy. i’d love to hear what you think about the “booming” prairie province. thanks

jamie

#56 Freedom First on 07.27.12 at 1:22 am

Garth, the last two lines on the blog today……priceless!

To clarify…..I am a previous homeowner….now renting in a very high highrise, 1 floor from the top. I chose this lifestyle for the freedom, economic sense of it, location, and of course the view, which is spectacular, plus…..when I look down from the balcony, I can see all of the for sale signs:)

#57 Fabrega on 07.27.12 at 1:32 am

“Face it, Vancouver is in for a long, grumpy, disappointing, loveless slide. Like your marriage.”

Now Garth…you do not had to be mean.

#58 Patiently Waiting on 07.27.12 at 1:32 am

What is so great about North Van anyways? For some reason Amazons have a perception that it is a luxury to live on the NorthShore Mountains.

Many people don’t realize that the average yearly rainfall in North Van. is double that of YVR which is just 30 kilometers away. YES DOUBLE. And people complain about Raincouver.

I told this to a co-worker who has lived in North Van. all her life and she didn’t even know.

#59 Fabrega on 07.27.12 at 1:39 am

ooops!….have to be mean

#60 Aussie Roy on 07.27.12 at 2:46 am

Aussie Headlines

For the past two years, Australian households have been squeezed by a price vice that can be described as “inflation in all you need and deflation in all you own.”

So, is this the end of the price vice for households? We are in a sweet spot, yes, with quiet inflation and only a slow melt in asset prices. But at this stage I remain of the view that the end of our great correction is some way off. Although I expect inflation to remain subdued, and house price falls to be moderated by interest rate relief, moderation of the underlying debt mountain has a long way to run. Moreover, over the longer term and although there will be fits and starts, it is likely that the declines in our export prices to China have only just begun.

http://www.theage.com.au/business/is-this-the-end-of-the-price-vice-for-households-20120727-22yhc.html

Nightmare on Reality Street: The true cost of owning your own home

Latest Australian Bureau of Statistics figures show three in every 10 households suffer mortgage stress.

http://www.news.com.au/money/nightmare-on-reality-street-the-true-cost-of-owning-your-own-home/story-e6frfmci-1226436386572

Young Aussies banking on an inheritance

ONE in seven Gen Y Australians are relying on an inheritance to fund their retirement.

http://www.news.com.au/money/superannuation/young-aussies-banking-on-an-inheritance/story-e6frfmdi-1226433628823

#61 Superman on 07.27.12 at 2:57 am

Lots of stupid comments today from stupid people. Garth, I think you make the mistake of mentioning Saskatchewan in your post. It would explain all the posts..

#62 Motzu on 07.27.12 at 4:37 am

Im sick and tired of post like this one.

“Me and my husband are so rich and we are so awesome. Now we want a barbie colorfull perfect house as a background for our facebook pics to our awesome friends. But just to male sure, Garth, tell us if its hip and cool to buy or hip and cool to duck and wait. Because you are so “indie” and your opinions are so “the next shit” …”

Those people dont have a fucking clue the huge mess their race will leave behind them.

They just dont give a shit about kids in the 20s or 30s unable to buy a house and have a little hope like their parents did, most of them having been raised in a 50K$ house now signing for 75% of their total income for the next 25 years.

You know what ? Buy the house. Call your realtor right now, even if its 3 am.

#63 JULNICAN on 07.27.12 at 6:21 am

well since this blog has now morphed into a Dear Abby column for lack of a real estate correction, I wish to tell my story:
I am seeing this girl at work. I am also married. I do not love my wife any longer. I am in love with my coworker: she is 10 years younger and she, too wants to leave her boyfriend. How should we tell our spouses?
please help.
Desperate in a Toronto condo.

#64 John on 07.27.12 at 6:24 am

“Face it, Vancouver is in for a long, grumpy, disappointing, loveless slide. Like your marriage.”
—–

Excellent, I love opinions that talk about social context. By the way, speaking of context, Goldman Sachs et al
( that drove the Vancouver bubble) have the propoganda arm of their syndicate raging. See the “Battle for Damascus” stuff? Crime syndicates understand raw power, fear and greed. They know no bounds. They could “clean up the equity imbalance” quickly. Messy…but they seem up for it.

Speaking of social context of course….just to stay on the same page. Assuming relevance is important.

#65 maxx on 07.27.12 at 7:03 am

Garth: bulls-eye re Amber.

Reminds me of the old expression: “get them by the balls and their hearts and minds will follow”…. the RE cartel and financing industry have certainly done a spectacular job of that. (“Buy now or buy never”, “RE always goes up”, “There are no really good properties left”, “own for the price of renting”, ostracizing renters, endlessly promoting the “luxe” culture to idiots with a steroidal sense of entitlement, etc.).

I’m convinced that most of the great brainwashed will house-obsess until the day they die, no matter what the cost to them. Cat food canapés anyone?

You often rail about people tying up most of their assets in real estate. I agree, but I also see that far too many Canadians define their self-worth and social stature through bricks and mortar.

#66 Bob Copeland on 07.27.12 at 8:01 am

“Face it, Vancouver is in for a long, grumpy, disappointing, loveless slide. Like your marriage.”

Damn Garth, I love this blog. I’m an American so I don’t belong here but to miss reading it is like no morning coffee!

#67 jerry on 07.27.12 at 8:03 am

BUYER’s Agent:

Maybe you could discuss this in a future section. Prices won’t necessarily fall until a buyer makes the lower offer and has it accepted by the seller.

Do “buyer’s agents” have access to motivated sellers wherein the agent knows that the seller won’t dick around with a bunch of sign backs?

I think possibly many potential buyers remain intimidated about making lower offers and then moving on if the offer isn’t accepted. With the prospect of 15-25% corrections in play, does a buyer simply wait for more years or does a buyer find the rational seller and get a discount deal today?

Who/what are buyers agents?

#68 2centsCdn on 07.27.12 at 8:09 am

Amber …….. so typical.
Steal that million dollar house for $850K (what? only a $600K mortgage?) “start your life and settle down”
Why does that sound like a death sentence to me? I don’t know … people (mostly women) live their life in “visions and dreams” ….. sitting hand in hand in front of their “million dollar” home. (a million dollars still seems to be the popular number). With two perfect kids (one boy, one girl) a perfect dog, a black Mercedes for him and a white Range Rover for her. Oddly, that dream never seems to allow bills and debt to enter into it (heck dreams are supposed to be nice right?)

What’s that old saying? A woman worries about the future until she’s married, a man doesn’t worry about the future until he’s married.

#69 Aussie Roy on 07.27.12 at 8:23 am

Aussie Headlines

Financial Self-Defense During a Deleveraging Cycle

However, when expert money managers all agree on the great prospects for an asset, the price of that asset has likely changed to make the expected outcome unlikely. In the last decade and a half, the US has seen two popular investment vehicles become disasters for people’s savings. Most recently was real estate, which everyone (including Fed Chairmen) knew never goes down.

So, as you are reading this blog, even if you haven’t decided whether you accept endogenous money or debt deflations, you are doing something more useful than reading the Wall Street Journal. Outside-the-box information is valuable – it is not priced into the markets. Where you can destroy yourself is when put borrowed money into a popular economic or investing idea that turns out to be wrong (like the “New paradigm” internet stocks in 1999 (RIP by 2003), buying housing in the US during the bubble (RIP by 2009) , believing in the capital asset pricing model or the Black Sholes option pricing model (RIP with the LTCM failure in 1998).

Next, know the difference between investing and speculating. People liked to say that they were “investing” in stocks in the 1990′s or in housing in the 2000′s, but this was a misuse of the word. People buying during these bubbles were banking on asset price rises, with no rational basis for believing the discounted cash flows of the company could justify the current price. If you have bought an asset without regard to discounted cash flows and need the price of the asset to rise in order to make money, you are not investing; you are speculating.

http://www.debtdeflation.com/blogs/2012/07/27/the-investors-corner/

It’s worth reading again…….

If you have bought an asset without regard to discounted cash flows and need the price of the asset to rise in order to make money, you are not investing; you are speculating.

#70 Timbo on 07.27.12 at 8:30 am

Love the picture Garth. Is that you in your riding gear?

http://www.guardian.co.uk/world/2012/jul/27/germany-eurozone-crisis-business-slowdown

“Puma said that second-quarter sales in Europe, where it does half its business, dropped by 3%.

“Growth in Europe has stopped,” chief executive Franz Koch told reporters on Thursday. “We believe that the macro economy will not improve, if anything the opposite will be true, especially here in Europe.”

Damn , and here I thought higher unemployment would increase profits…………

http://www.ft.com/intl/cms/s/0/dc5f49c2-d67b-11e1-ba60-00144feabdc0.html#axzz21pCatRxi

“I talked with some of my more experienced colleagues about this. They told me banks misreported the Libor rates in a way that would generally bring them profits. I had been unaware of that, as I was relatively new to financial trading. My naivety seemed to be humorous to my colleagues. ”

Banks lie? Say it is not so…………..

http://www.businessinsider.com/maria-bartiromo-and-barney-frank-cnbc-interview-2012-7

“I don’t take kindly to being called a non-adult. You know, you remind me sometimes of what your colleague Joe Keenan said when I tried to get the conversation more thoughtful… he said ‘oh this is cable TV, not C-SPAN…I want to talk seriously about the issues… you keep changing the subject.”

Hypocrisy pointing fingers at each other. Barney taking actual real questions from Maria who specializes in selling lipsticks for pigs…….

#71 Steve on 07.27.12 at 8:35 am

#38 HC on 07.26.12 at 11:29 pm

HC, If you are staying in the RE market, costs of the transaction aside (some costs are calculated on the sale price/mortgage amount), selling and buying back in immediately is essentially the same when prices are high or low. There are differences of note such as the actual dollars of differential between properties (rather than %) will be less in a lower market and that will be important for everyone sensitive to mortgage amount. You appear, however, to be pre-supposing that it is always a good time to own real estate, and that is what you need to question.

If you have a $400k house now and it drops, for example, 25%, then you have lost $100k. If you trade up to a $600k house and it drops 25%, then you have lost $150k. (Your mortgage stays the same size during this 25% drop – your debt does not swing with the RE market!) It is reasonable to assume that your mortgage on the second place was about $200k more, so your debt went up $200k and your loss is $150k. At least if you stayed in the first house, your mortgage did not increase (HELOC idiocy aside).

From a financial point of view, one would be far better off to sell now (cash in capital gains) and then rent until AFTER the suggested 25% drop in house prices, until it makes sense to buy back in. You have no mortgage and no sharply depreciating asset during that time and instead you should have some money to invest. You let some other ‘fool’ eat the losses on RE.

There are also non-financial benefits one could argue either way, but not being underwater on your house with a large mortgage in a market where you may be forced to take the loss (if you MUST sell) is acutely undesireable to most, at least those not in denial.

Compare the outcomes by looking ahead several years at the difference in your projected net worth, just be thorough in the analysis…

#72 Hoser on 07.27.12 at 8:54 am

“Start a life” is code for “I don’t want to work anymore.”

Somebody has to look after that million dollar house. It’s a full-time job, ya know.

#73 Stupesing in Cabbagetown on 07.27.12 at 8:59 am

#66 maxx “..far too many Canadians define their self-worth and social stature through bricks and mortar.” Unfortunately, so true. They spend money they don’t have to buy stuff they don’t need to impress people they don’t know.

I heard an ad on the radio the other day. Apparently children raised in homes “owned” by the parents have higher self esteem than those raised in rented homes and therefore do better in life. Isn’t that the ultimate manipulation?

#74 Timbo on 07.27.12 at 9:06 am

http://www.cnbc.com/id/48350928

“Consumer spending, which makes up about 70 percent of U.S. economic activity, increased at a 1.5 percent rate, a step down from the 2.4 percent pace logged in the previous three months.”

Still growing but the hill is steep and the legs are tired..

http://www.bbc.co.uk/news/business-19009751#

“The country’s unemployment rate rose to 24.6% during the April to June quarter, up from 24.4% during the previous quarter.

and…

http://www.reuters.com/article/2012/07/27/us-spain-banks-idUSBRE86Q07W20120727

“Spain has forced banks to write down 80 billion euros ($98.4 billion) of losses on bad property investments by the end of the year in a move aimed belatedly at recognizing the effects of a 2008 property crash.

R/E crashes are not fun and it’s not getting better…..

US GDP exceeded expectations, leading to a higher market opening. Growth is slow, but it is growth. Only fools would not understand where this is headed. — Garth

#75 cramar on 07.27.12 at 9:19 am

40s something…

“Try to live on the proceeds of an invested sum of $1.5M.”

Most of the people in Canada would love to have your problem! Tough life isn’t it?

#76 BradJLambofGod on 07.27.12 at 9:37 am

Greaterfool correspondent here reporting live from “demand areas” in 416… same old story here.

Friends of friends bid over asking, around $900k total, for a house in a cool (read: run-down) west side neighborhood.

Nondescript semi-detached I pass on my evening run just sold for $82k over asking.

Pre-construction 2 bedrooms around the corner are listing for $700k and are almost all sold.

Next block over there is a 1 BR condo on the market for $800k.

General sentiment is that it’s a good time to buy because prices are down 1% from last year.

Looooong way from the bottom here.

Remember dear reader, you heard it here first. Off the record, on the QT, and very HUSH-HUSH.

@ Hoser

So so so true it’s ridiculous. A relative has been unemployed for years, minimal job prospects, minimal education, minimal initiative. Instead of focusing on improving skills, getting educated, etc he has decided that if he can just own real estate the puzzle will be solved. No longer does the job come before the house, the house replaces the job.

#77 Ret on 07.27.12 at 9:38 am

SIL & BIL live in Fl. and got a great deal on a Sebring property in 2007. She paid $211,000 for a property that had been Zillowed at $282,000 2 years previously in 2005.

The similar house next door to them sold 3 mo. ago for $115,000. Who would have thought?

Check out this one. Sold for $220,000 in 2007. Yours for 121,000 but Zillowed at $111,200 on a 10,000 sf lot. It looks like a decent neighbourhood too.

http://www.zillow.com/homedetails/4642-Tarrega-St-Sebring-FL-33872/45138499_zpid/

As I see it, I get “paid” hundreds, if not thousands, of after tax dollars for every month that I wait to buy.

Condos, SFH prices, rents, and commercial properties are are loosely price correlated to local, provincial and national price trends. If SFH prices drop in T.O., the price of a condo in Barrie or Hamilton is influenced similarly in some small measure.

When shiny new condo rents in T.O. drop due to oversupply, who will be renting moldy basements in a SFH for $1200 mo.? Prices for SFH will be affected negatively as SFH owners compete for less desirable and financially stable cellar dwellers to help pay their mortgages.

Thank you Scott McGuillivray on HGTV. Those home owners you helped now owe another $40,000 for that reno and their places are being trashed by low life that they can’t evict without spending thousands in legal bills.

Price adjustments on million dollar homes along Lakeshore in Oakville are affected by the rents from illegal basement suites in Leslieville. They thought that they had nothing in common!

Sorry Saskatoon, but Canadian RE valuations are all interconnected in some measure whether you wish to acknowledge this fact or not. You will soon get a lesson in what an arithmetic mean is and you won’t like it.

#78 big town on 07.27.12 at 9:39 am

To the lucky family man with the two rug rats; know that at present with two babies to squeeze your life is as good as it gets.

I am an old geezer boomer with offspring….what they will REMEMBER is you giving them hugs not the STUPID GRANITE AND STAINLESS STEEL…also dear dad I am now a grandparent and I am always buying gifts so keep some cash back. Remember overinvest in the hugs and keep the money in the bank.

#79 Stoopid Idiot on 07.27.12 at 9:48 am

Here is the latest from John Williams’ http://www.ShadowStats.com.
– Durable Goods Orders in Second Straight Quarterly Contraction
– Household Income Still Bottom-Bouncing
– June Home Sales Fall-Off, Quarterly Growth Slows/Contracts
“No. 458: June Durable Goods Orders, Home Sales, Household Income”
Web-page: http://www.shadowstats.com

Foreclosure Filings Increase in 60% of Large U.S. Cities

http://www.bloomberg.com/news/2012-07-26/foreclosure-filings-increase-in-60-of-large-u-s-cities.html

#80 Stoopid Idiot on 07.27.12 at 9:53 am

Then this

Pending Sales of U.S. Homes Unexpectedly Fell 1.4% in June
Michelle Jamrisko – Jul 26, 2012 7:14 AM MT

http://www.bloomberg.com/news/2012-07-26/pending-sales-of-u-s-homes-unexpectedly-fell-1-4-in-june.html

#81 Daisy Mae on 07.27.12 at 10:03 am

#41 TaxHaven: “The place is semi-desert: shouldn’t support this population, jobs aside.

What does Kelowna produce better, more conveniently or cheaper than elsewhere? It has next-to-no rail access. Near no major markets. No port, being inland. High Canadian labour costs. No industry. Cold, dry winters. Semi-drinkable pond water from your faucet…”

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

Well, aren’t you a little ray of sunshine? Our drinking water is just fine. Our winters are mild, compared to the rest of Canada. The Okanagan is making a name for itself with our budding wine industry — specifically, our ice wines. Labor costs? Same across the country. Yeah, we inland — so is most of Canada.

Kelowna is a lovely place to live!

#82 This is Wonderland on 07.27.12 at 10:05 am

#79 big town on 07.27.12 at 9:39 am

I vote this the best post of the year!

#83 Nemesis on 07.27.12 at 10:21 am

Broken links are so annoying… Eat your heart out, Yamaha…

[VisorDown/UK] – Italian Police fine Moto Guzzi rider Paolo Turina for 383mph [616km/hr] speeding offence

http://tinyurl.com/cvcrkoj

#84 Aussie Roy on 07.27.12 at 10:23 am

Aussie Headlines

Residential developer AV Jennings fears it will plunge into the red with a net loss of up to $32 million as people continue to put off buying new homes.

AV Jennings delivered the warning on Friday as it revealed it would have to write down the value of its assets by between $32 million and $37 million.

AV Jennings, which is 50 per cent owned by Singaporean property developer Simon Cheong, in February reported a 71 per cent slide in first half profit to $3.32 million.

http://finance.ninemsn.com.au/newsbusiness/aap/8506560/av-jennings-faces-32m-fy-loss

#85 Daisy Mae on 07.27.12 at 10:26 am

#52 Calgary Resident: “Most of the realtors and residents here don’t respect you Garth. Nor do the Federal Conservatives from these parts.”

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

The ‘cons’ track record re 0/40, 5/35 and 5/30 amortizations, 100% financing and all the rest of the crap speaks for itself, so who cares what they think?

And we know realtors are sleazy, so what is your problem?

Bottom line is that quoting Jack Nicholsen: “They can’t HANDLE the truth!”

#86 Herb on 07.27.12 at 10:26 am

“Most of the realtors and residents here don’t respect you Garth. Nor do the Federal Conservatives from these parts.” – Calgary Resident @ #52

Oh Garth, how can you live with that condemnation? Being disrespected by realtors and Federal Conservatives, no less. Ah, I see it: you are watching reality approach those asses!

I am crushed. Leave me alone to sulk. — Garth

#87 IM in C on 07.27.12 at 10:30 am

Here is an article on covered call ETF’s

http://www.theglobeandmail.com/globe-investor/funds-and-etfs/etfs/covered-call-etfs-beware-the-gap-between-expectation-and-reality/article4443542/

#88 Daisy Mae on 07.27.12 at 10:30 am

#52 Calgary Resident: “Most of them look at your track record of making bad predictions over the past 5 years versus CREA’s excellent track record, and they laugh at you.”

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

Absolutely unbelievable….you must be a disgruntled realtor?

#89 mousey on 07.27.12 at 10:30 am

Garth has a pine cone up his rump today. Don’t get too insulted by the tone Amber. On the house buy…don’t do it, the prices are coming down and you will do better next year or the year after.

#90 Grantmi on 07.27.12 at 10:32 am

#14 Sask Girl on 07.26.12 at 9:52 pm
Please do a blog on the Saskatchewan market. Pretty please.

Move!!!!

#91 luke8929 on 07.27.12 at 10:35 am

Wow, single digit IQ’s and six figure bank accounts, sounds from their descriptions they are .gov employees or rely on the .gov for funding, ie healthcare. This is going to take a long time to correct, that swamp is really going to take a while to drain.

#92 Daisy Mae on 07.27.12 at 10:37 am

58Fabrega on 07.27.12 at 1:32 am

“Face it, Vancouver is in for a long, grumpy, disappointing, loveless slide. Like your marriage.”

“Now Garth…you do not had to be mean.”

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

Garth is not ‘mean’. He is amazingly tolerant, actually. It’s probably more exasperation, than anything….

HOW many times does he need to explain?

#93 2centsCdn on 07.27.12 at 10:37 am

#79 big town
Thanks ….. you’re right. So easy to get side tracked with complex intertangled man made crap. Hug your loved ones, live within your means and enjoy life. That’s what it’s all about.

#94 Mixed Bag on 07.27.12 at 10:55 am

#34 acp on 07.26.12 at 11:16 pm

Agreed. When I was a kid, I would have liked very much to move to a new neighbourhood, meet new people. There was a family across the street, but the kids didn’t play with us, parents probably didn’t want them associating with someone not of their cultural background.

Oddly enough, we’re still in the neighbourhood, and there are homeowners who have been here from the 50’s, some still original owners.

To Unemployed 40-something: you know what to do, you’re just paralyzed by fear. I understand the feeling, but now that you’ve got buy-in, go for it, and look forward to the freedom of being untethered. What if an opportunity came up for a 1-year contract in a new city, or country even? That would be a wonderful educational opportunity for your kids, just being exposed to something new. Good luck.

#95 Mixed Bag on 07.27.12 at 10:57 am

#79 big town on 07.27.12 at 9:39 am

Great advice.

#96 Interesting Times on 07.27.12 at 11:17 am

Here’s another good one…

Recently Renovated, New Shingles, Two-Unit Dwelling From A 1989 Building Permit, Separate Utilities, Prime Leslieville.

May 25: $579,900
June 17: $569,900
June 24: $559,900
July 5: $556,900
July 19: $555,900
July 26: $555,600
July 27: $579,000

Umm, what? They couldn’t sell it at $579,900 so they kept dropping their price with no takers until one day they decided it really was worth $579,000. Too bad nobody else does. Nothing worse than a cheap, crappy reno.

I really don’t understand their psychology.

http://www.realtor.ca/PropertyDetails.aspx?PropertyID=12050152&PidKey=46679003

#97 Dupcheck on 07.27.12 at 11:25 am

There are 3 million unemployed people in France. Greece is bankrupt, soon will be Serbia, Spain, Italy…etc. Hold on to your money it is not time to jump in.

#98 neo on 07.27.12 at 11:26 am

US GDP exceeded expectations, leading to a higher market opening. Growth is slow, but it is growth. Only fools would not understand where this is headed. — Garth

Last year this time when we were also growing at a 1% handle in GDP, all you kept talking about was corporate profits at “all-time” highs as the panacea. Now we are sitting on another 1% handle in GDP and corporate profits are eroding as well as top line growth and consumer spending given retail numbers are retrenching yet the stock markets are ignoring earnings and consumers. Stocks are made up off companies and the behaviour of consumers Garth and collectively they aren’t doing well right now. The GDP number was weak overall in terms of tangible economic expansion and only marginally better than the 1.4% consensus. It’s a “hopium” QE trade/Central Bank voodoo. Plain and simple. Oh, I know where this is headed.

Be as depressed as you wish. Growth is growth. — Garth

#99 Smoking Man on 07.27.12 at 11:30 am

#48. LaughingCON.

Why don’t you put you’re money where you mouth is.

Biggest real estate investment CO in Canada is
RIO.UN

Short it boy
Dare You, Double Dare You.

Do you even know what a short is?

You don’t have the nuts, you’re only interest is to see your sister go down

#100 Timbo on 07.27.12 at 11:39 am

http://www.guardian.co.uk/world/us-news-blog/2012/jul/26/mitt-romney-britain-gaffes

“From criticising the biggest sporting event Britain has held in over 40 years, to “looking out of the backside of 10 Downing Street”, Mitt Romney’s first foreign trip of his presidential candidacy hasn’t gone quite as well as he might have hoped. As the former Massachusetts governor continues to gaffe his way across London, here’s a round-up of Romney’s red-facers. So far.”

Talk about shooting yourself…..roflol :)

#AmericanBorat has gone viral on twitter. You just have to love politicians, right Garth?…….

#101 Derek R on 07.27.12 at 11:43 am

#38 HC on 07.26.12 at 11:29 pm wrote:
I know too many people that read this blog and ones like it in 05-10 that tried to time the market and got proper screwed, leaving hundreds of thousands on the table. Thoughts?

That was written with the smug infallibility of hindsight but misses the point totally. Selling up and renting isn’t about “timing the market” to get the highest price possible. It’s about peace of mind.

Sure, you won’t win thousands if the market rises next year. But you also won’t lose thousands if it drops. And you won’t lose sleep at night wondering which it’s gonna be either.

That’s the beauty of selling up and renting. It makes the risk more controllable. If I want to gamble a little I can buy a lottery ticket. If I want to gamble a lot I can buy a bucketful of them. Or I can play the stock market. But I don’t need to gamble with my home every day whether I want to or not.

#102 Bob on 07.27.12 at 11:54 am

I’m going to disagree with Garth on his advice to the 40something unemployed guy with 1.5m. If you sell everything, you are out of one asset class – real estate. To get Garth’s 5% yield, you take on market risk and you’ll have $4000 in rent expense. You never know what landlords may do – they’ll sell anytime they want to and you could uproot in 6months. You could have crappy landlords who don’t fix the broken washer or stove.

I’d sell the commercial property and stay put in your current one… assuming you like your current one. If you don’t, then yeah, sell all and rent like Garth said.

#103 Smoking Man on 07.27.12 at 12:03 pm

Correction on last post. For LaughingCON

Its. REI.UN. Company RIOCAN

#104 Bob on 07.27.12 at 12:12 pm

To add one more comment to my previous comment — we’re not talking about selling your current place and renting a similar place. It sounds like you are living in a small place and want to upgrade by renting.

Therefore, when you do decide to buy, you are going to be buying a more expensive place, say 50% or more. (You wanted bigger AND closer to your kids private school.)

So look at it another way – if you keep your current 800K place, if markets crash 35%, you are POTENTIALLY losing 280K. It’s a big number, but factor in your closing, moving, inconvenience and renting costs… and soon, you’re talking maybe ~120K or , which is only ~8% of your portfolio. Stick it all in the stock/bond market trying to achieve 5% and you could easily lose just as much in 2 years.

Main point — keep your place, you’re still in the real-estate market, living within your means, and diversified… just in case Garth is wrong, with ample equity to still pounce if the real estate market crashes.

But definitely get some cashflow (i.e. get a job)

#105 Snowboid on 07.27.12 at 12:13 pm

#52 Calgary Resident on 07.27.12 at 1:00 am…

I hear grape Koolaid is the preferred Cowtown beverage of late.

Drink up!

#106 DonDWest on 07.27.12 at 12:16 pm

People tend to overlook the social aspects in owning Canadian real estate. My generation faces high societal pressure to buy no matter the circumstances, and often the reasons are convoluted and not indicated on this blog.

Yes, there’s the pressure from baby boomer parents, but what is often overlooked is the pressure from baby boomer EMPLOYERS. Let’s face it, the boomers own most of the businesses and chances are your employer will be a boomer. I wish this were not true, but that’s the equivalent of wishing away gravity.

What I’ve discovered in regards to baby boomer employers is that they tend to not put much value in hard work and skills. Baby boomer employers detest critical thinking with a passion.

When looking at a job applicant, in particular a young applicant, they tend to put more value on personality, attitude, compatibility, likability, etc. Suffice to say, the baby boomer employer would rather hire a young “drinking buddy” than a competent employee, because hanging around the young “drinking buddy” makes him or her feel younger. A big part of being that “drinking buddy” is going to the “right” college and owning real estate. You can perhaps get away with doing just one or the other, but not both. Doing either or will amount to a hefty load of debt and doing both may just financially sink you in a bottomless pit.

The baby boomers attach a lot of prestige based upon the real estate that you purchase and the college that you attend. And unfortunately, they do most of the hiring. Only someone who is younger than a baby boomer can truly understand where I’m coming from; refusing to buy decent real estate can seriously hurt your employment prospects (address is included in resumes) and prevent you from getting the much needed promotions.

I’ve noticed something over the years; people who make much higher salaries than me have certain blindness when it comes to going massively into debt. This has led me to believe that baby boomer employers inadvertently put value into employees who go into debt. My guess is their cultural obsession with a college education and real estate ownership has much to do with it.

Garth, you can suggest people to avoid the debt traps, but if the social stigma causes people to take a huge hit in their incomes, is it worth it? Capitalist corporations reward sheep thought; not creativity. Is avoiding real estate worth it; if it means passing up that 150K a year job and settling for 40K for the rest of your life?

#107 Buy? Curious? on 07.27.12 at 12:17 pm

“Duh, *finger up nose* Garth, I’m wondering if I should buy a condo or not.”

Why do publish idiots like these who ask you the same asinine question over and over again yet my slightly offensive request for you to write a post on inheritance is banished to the doldrums of your server and filed under “CuckooBird”. You let comments like the one today @52 who called you crazy and Mikey the Realtor who said your willy is tiny, but I call today’s post weak and *poof* nothing? Cmon Garth. I don’t understand where your boundaries are. You’re like this girl I dated that made me pull my socks up to my knees before we made love. I didn’t get the reasoning behind it but we sure did have fun.

http://www.youtube.com/watch?v=SOR_y__-Ikk

#108 agioblue on 07.27.12 at 12:18 pm

Motzu @ 62
It is the 20-30 something high-expectation underachieving ‘I’m entitled to everything’ little bastards aided by their enabling like minded asshat parents who have been the biggest driver in this current Real Estate balloon so your anger is misdirected. And no, you do not get to blame the banks or the Government for letting the dummies or their parents get into more debt than they ever should’ve. So fuck ’em.
For over a decade money has been artificially cheap, lending standards lax and the ‘I’m entitled to everything’ factor has risen exponentially.
Buying a house is supposed to be hard and no one is entitled to dick.
All of em should be happy mommy popped them out in a country where they can even snivel about this crap without getting shot. Fear for the 10 year olds.

#109 Bill Gable on 07.27.12 at 12:25 pm

They should have a course in Grade, oh, 11 – “MONEY – FOR DUMMIES”.
Think of he time Mr. Turner would save.

Some of the stuff I read makes me shake my head, and wonder if there are little people behind the Roses on my roof garden.

Folks – BUYING NOW? ARE you certifiable?

Don’t listen to Realtors = their job is to sell RE = and get you into a life of “interest” larvae for some lending institution.

Mr. Turner – your patience with some of these questions and the maroons that yell “FURST”, must be enough to make wish you could sic Bandit on some folks. (*nicely, of course).

#110 Buy? Curious? on 07.27.12 at 12:34 pm

Garth, you show more appreciation to free speech than any other news/media outlet and I thank you.

#111 John on 07.27.12 at 12:36 pm

Be as depressed as you wish. Growth is growth. — Garth
——–
Actually depression can be a positive process if it runs it’s course ( leading to real, purposeful action).

Your comment “growth is growth” is the underpinning of how we got here ( plus complicit “muppetry” and it’s social dynamics).

The “throw off” comment for the poster simply telling it as it is didn’t fit well…and it showed.

This time, however, you indicated perfect alignment with the problem. Denial.

Denial comes before depression, so there may be useful pathology there. It remains to be seen.

#112 AprilNewwest on 07.27.12 at 12:38 pm

Bob #103 – Bad advice.

#113 Joe_Blown_Away_By_High_Housing_Costs on 07.27.12 at 12:42 pm

#59 Patiently Waiting: You are absolutely correct that North Vancouver gets more rain than other parts of the Lower Mainland. I can’t find any good links right now for a precipation map of the Lower Mainland but many people would be shocked to know the tremendous geographic variation of rain in different parts of Metro Vancouver. Parts that are north and east get more rain than parts that are south and west. This is because clouds coming in from the Pacific hit against the north shore mountains and drop their rain there. So North Vancouver and Coquitlam are the rainiest suburbs in Metro Vancouver. Conversely, the south east lies within the rain shadow from Vancouver Island. Air is descending down from the Vancouver Island mountains and does not drop as much rain. So it is true what they say about Tsawassen–it gets the least amount of rain than any other part of Metro Vancouver. In fact all of Delta gets less rain. Richmond also gets a little bit less rain than other parts. I’ve lived all over Metro Vancouver. Right now I am living in Surrey and I notice there is far less rain here than in Coquitlam. South Surrey/White Rock would also be a good place to get less rain.

#114 Gordeaux on 07.27.12 at 12:45 pm

@Smoking man… if it is REI.UN, isn’t that sort of an apples/oranges comparison? Your nemesis is talking residential real estate, and you’re daring him to short commercial.

#115 neo on 07.27.12 at 12:47 pm

Be as depressed as you wish. Growth is growth. — Garth

I’m being honest. Where is the growth in earnings? You are an investor, correct, not a trader? You can’t pontificate about “record profits” to justify elevated stock prices yet ignore it when it turns the other way. Besides, your growth even in GDP has been declining since Q4 last year. So even your GDP growth on a trend basis is wrong. The GDP number in and of itself doesn’t mean as much as the trend, you know that. This is all about risk Garth. You HAVE to identify and assess risk to properly invest. That risk is not being properly priced into this market because of Central Bank intervention. Good news and stocks go up and bad news and stocks also go up because more intervention is coming.

#116 Editor on 07.27.12 at 1:08 pm

#107 Rent in a higher-prestige area – the address still goes on your resume.

#117 Blue Monster Lover of Meats and Vegetables on 07.27.12 at 1:13 pm

#96 Mixed Bag on 07.27.12 at 10:57 am

#79 big town on 07.27.12 at 9:39 am

Great advice.
—-
Jesus Christ. It was a very nice comment but don’t people know this, does anyone have any common sense or does it always need explaining? Ah ha!

Here’s some advice, breath in and out at regular intervals. Sleep at night. Eat three meals a day and rain is wet. Geesh.

#118 Roial1 on 07.27.12 at 1:30 pm

Garth, Hipothetical question:
You have bought into a condo complex that is NOT all sold.
There are 6, of maybe 46 units, that he holds.
The developer is not paying any condo fees and refuses to do so.
This is several years into the ownership.
Are the sold units to pay all costs for the condos?
Even his? (This is a golf coarse condominium set up,
so fees are high.)

#119 gladiator on 07.27.12 at 1:49 pm

I was with my kids at the playground, and got to talk to a young mommy about kids, daycare, school teachers. So when she heard we rent, she took her kids and left.

That’s when I understood we are low-lifes around here in North York…

#120 vic_guy on 07.27.12 at 1:51 pm

@ 114 : Joe

“at the base of Grouse Mountain on Redonda Drive in North Vancouver, rain gauges fill much higher. The North Vancouver weather station averages 2477 mm, over eight feet, of precipitation a year. North Vancouver gets twice the precipitation of the Vancouver airport, and considerably more than even Abbotsford.”

http://www.currentresults.com/Weather-Extremes/Canada/wettest-cities.php

#121 Newwest on 07.27.12 at 2:07 pm

#59 and #114 – Re: vancouver rainfall – the rough ‘rule of thumb’ is that the north shore gets twice as much rain as 22nd street in vancouver and white rock gets one-half as much rain as 22nd street.

#122 Triplenet on 07.27.12 at 2:14 pm

# 45 Anderson

With respect to a court ordered sale in BC….no conditions, i.e. no inspection, no financing, it’s a cash offer.
—————————
You can be as wrong as you want but why share it with everyone?

#123 Marnic on 07.27.12 at 2:21 pm

The 40s dude…

“Please please please help. This above plays over and over in my mind and I am paralyzed in a state of inaction…”

I guess if you ever needed a reminder that a truckload of money won’t help you this is it.

#124 Steven Rowlandson on 07.27.12 at 2:29 pm

Garth how did you get a picture of the god of democracy, communism and the new world order?

#125 Linda Pearson on 07.27.12 at 2:31 pm

#79big town on 07.27.12 at 9:39 am

How wonderful is the way you think! I absolutely, totally agree with you.

#126 sue on 07.27.12 at 2:39 pm

#120 Gladiator
I hear ya!! I rent and invest with Garth. I am so happy with that but my son always gets questions about why we don’t own a big house…sigh He said, “Well, you will be underwater soon with your mortgage and cash is king….” lol He’s 11. (yes, we talk about this stuff ALOT) He usually gets a blank stare.

#127 Herb on 07.27.12 at 2:51 pm

#119 Roial,

practical answer: have the condo corp hire a lawyer and sue the developer/owner to seize one or more of his units for condo fees owing to the corporation. As a minimum, the condo corp should register the fees owing on each unit as a lien against that property and prevent its sale until the lien is paid off.

A lawyer is a key requirement to advise the condo corp of its rights and duties, clarify any questions of ownership and registration of units in arrears, and to reassure the condo corp. If this has been going on for years, it will definitely need a lawyer to put lead in its pencil.

#128 live within your means on 07.27.12 at 3:08 pm

#87 Herb on 07.27.12 at 10:26 am
“Most of the realtors and residents here don’t respect you Garth. Nor do the Federal Conservatives from these parts.” – Calgary Resident @ #52

Oh Garth, how can you live with that condemnation? Being disrespected by realtors and Federal Conservatives, no less. Ah, I see it: you are watching reality approach those asses!

I am crushed. Leave me alone to sulk. — Garth

As always – a great response.

#129 Lostinthewilderness on 07.27.12 at 3:13 pm

Yoy Garth, I currently have a financial dilemma.Renting a loft (thats the upper floor of as barn) in the wilderness of the north.Have managed to save a small fortune of $1864.cdn.My income is about $367. a month from farm chores for the farmer who owns the barn loft .Having an affair with the his wife and she wants me to move to Lac La Biche with her and the twins.I don’t want to go because I’m in love with a farmers daughter in the next township. She’s 30 years younger than me and believes I’m all she wants in a man!.
Recently I’ve been offered a good deal on a 1968 Dodge dually with a Cummins diesel.
My delemma…… should I buy the truck?

#130 zeeman1 on 07.27.12 at 3:17 pm

#103 Bob.

What the hell kind of house would cost 4K/month to rent?

#131 Stickler on 07.27.12 at 3:30 pm

“Growth is growth. — Garth”

US enters official recession, announcement in 2013…there is no real growth.

#132 Stickler on 07.27.12 at 3:38 pm

@ Vancouver-ites re rain…

If in City X it rains 100mm in 1 day, then 0mm the rest of the month it is sunny. Total monthly rain 100mm.

Vs

Vancouver area it rains a fine mist of 3mm every day for 30 days all the while it is gray. Total monthly rain is 90mm.

The Vancouver-ite would brag that it rains more in City X then Vancouver.

Everyone else knows the reality.

#133 Stickler on 07.27.12 at 3:43 pm

Re Address on your resume…put this:

Your Name
Your City, Country
Your phone number
Your email

Problem solved….now over to wiki answers to help those poor souls.

#134 jess on 07.27.12 at 3:45 pm

chief visionary officer

KITCHENER — A one-time financial planner faces fraud and theft charges after $30 million in investments were lost.

Waterloo Regional Police have arrested Daniel P. Reeve, 52, of Collingwood. He faces criminal charges of defrauding the public and theft over $5,000.

Police are investigating complaints that a financial advisor convinced up to 175 potential victims to contribute to private and public investments from 2006 to 2009. It’s alleged the investments were misrepresented and money was misappropriated.
http://www.wrps.on.ca/news/police-charge-collingwood-ontario-male-fraud-offences

Is this of the same
special millionaire edition
author,educator and entrepreneur
http://www.exchangemagazine.com/html/newpublic/Xmedia/ExchangeMillVolOct07/pdfs/ExchMillionaire_pgs01-17.pdf
http://www.themillionaireinyou.com

#135 Questioning Calgary stats on 07.27.12 at 3:47 pm

#52 Calgary resident

Garth was bang on with his predictions in the past. He accurately predicted the 2008-2009 price crash across Canada that was in full swing for 6 to 8 months before the government intervened to stop it.

Prices in Calgary dropped about 20% and most other cities dropped about 15% before the intervention.

His predictions were accurate in the past and this gives him much credibility.

Did you or the CREA predict the massive intervention that took place to stop the crash in 2009?

I challenge you to come up with a logical explanation that convinces us that prices will not drop as a result of the changes to the mortgage rules.

#136 Stickler on 07.27.12 at 3:51 pm

@#131 zeeman1 on 07.27.12 at 3:17 pm

#103 Bob.

What the hell kind of house would cost 4K/month to rent?
————————-
One that costs >$Million.

$4,000 X 12 = $48,000

$48,000/$1,500,000 = 3.2% (ignoring property taxes, maintenance, mortgage interest if any). Terrible return if the house costs $1.5 Mil.

#137 Ogopogo on 07.27.12 at 3:59 pm

Garth, thanks for featuring Kelowna. I’ve been on a vacation from commenting (too much work this summer), but haven’t missed reading a single blog entry or comment.

The Kelowna market is on a death spiral. The flipped shack whose price declines I so lovingly tracked here for months has been pulled from the market. Seller is in a state of denial and possibly shock. This is the same shack I once had a shouting match with DA about. Now it’s sitting there empty and unwanted.

I learned a lot about the foreclosure procedures from this entry. This is definitely NOT the time to buy in Kelowna.

BTW, the waitresses at Earls are the hottest!

#138 Davey Boy on 07.27.12 at 4:06 pm

Ah, marriage, real estate fools pale in comparison to these fools. Take an honest look around, how many truly happy couples do you see/know. Unfortunately, I think the majority have to learn the hard way. I believe in the future relationships will change dramatically, instead of marriage or cohabitation people will just “date” indefinitely which will not only keep things fresher, it won’t be financially devastating when/if the dynamics of the relationship change.

#139 Stickler on 07.27.12 at 4:11 pm

@ Amber in Garth’s Blog
“We have enough in the bank for a sizeable downpayment on a home in North Vancouver. We are looking to finally consolidate homes and start a family in the next few years.”

>> That’s great, except for the fact that you feel that mentioning “North Vancouver” is important.

…”because with our cash flow we could have a Million dollar home paid off in 15 yrs with a 25percent downpayment. ”

>> So I assume you can come up with $250K for the 25% downpayment with a combo of equity in “his” condo and cash, or just “his” condo. Either way sounds like you have nothing left.

>>Move into “his” condo, and since you wont start a family for a “few years” you have time to save more and wait out the real estate decline.

#140 deja view? on 07.27.12 at 4:17 pm

The pic was obviously taken in Vancouver’s Commercial Core. lol. The devil is often seen riding the bus there.
As to Amber. Wow! That was a happy homemaker body slam.
After your observations she might need a couple of weeks of psychiatric councelling.
Being supportive, her fiance might even want to join her.

#141 jess on 07.27.12 at 4:18 pm

#52 Calgary Resident

….ceterus paribus

#142 Someone from TO on 07.27.12 at 4:46 pm

Not sure if it’s the best place to post a question like this.
Before the bust in U.S. i was able to find a lot of useful data on housing market there.
For example, 46% of properties bought in 2006 were 2nd or 3rd properties (investors), X% of mortgages were 0 down interest only, X% of mortgages over $300,000 or $400,000, etc.
Data that gives a better picture than just looking at average price, number of sales, etc. and provided by independent economists or investment advisers that had no interest in continuing the housing bubble.
Does anyone here (Garth included) know where we can get that kind of data for Canada?

Thanks.

#143 Canadian Watchdog on 07.27.12 at 5:04 pm

#143 Someone from TO

There is no such data. Canada is a socialist country were information and prices are dictated to muppets.

#144 daystar on 07.27.12 at 5:08 pm

#107 DonDWest on 07.27.12 at 12:16 pm

Is it a materialistic phenomenom of baby boomers in particular or is it something that hits all materialistic middle aged generations since the dawn of time and is predictably, especially in the age of mass media, fed and exploited?

Materiality is nothing new to humanity, at least, from what history has taught me. What’s happening today and you’ve alluded to it, is the corporate mindset that has become more and more mainstream since the birth of capitalism. Lets remind ourselves that for profit goals tend to be motivated and feeds off of materialism. Its not as though profit is a bad thing, but it can be a bad thing if its made through the exploitation of others and this is where I tend to think social engineering has had a major effect on what society values most.

http://en.wikipedia.org/wiki/Social_engineering_(political_science)

If you followed the links below Karl Popper, you would get a good idea of where I’m coming from, Don.

Cheers

#145 IM in C on 07.27.12 at 5:10 pm

@139 Davy boy
It was the actress Katherine Hepburn (I think) who said it the best:
Men and women should live in separate houses, but visit each other often!

#146 Pat on 07.27.12 at 5:13 pm

I’m curious, Garth, are all people who write to you for advice dumb, or you only post emails from dumb people?

#147 REDMA on 07.27.12 at 5:14 pm

If you are trying to get out of a presale contract in BC,research “Real Estate Development Marketing Act”.

Long story short you can rescind / cancel your presale if the developer has not filed the requiste paper work with the office of the superintendent of real estate and/or the purchaser. Usually after a material change in the development.

In a recent case a people were able to rescind a presale contract, even after they completed on the contract and lived in the unit for 4 years!! Kicker – they were refunded the purchase price…

Note to self… Thank me later…

http://www.bht.com/tw_0040

#148 IM in C on 07.27.12 at 5:18 pm

@137 stickler
The going rental rate for a SFH in Toronto is $2500 – $3000/ month, pretty much irregardless of what the house is ‘worth’.
Example – my niece rents a 3 bedroom bungalow in the Woodbine Kingston Rd. area of Toronto. It’s c/w attached garage and finished basement for $2700/ month plus utilities. The landlord cuts the grass and shovels the snow. He also replaced the fridge when it broke. – A similar house down the street sold last year for $850k

#149 Vik on 07.27.12 at 5:29 pm

S&P cuts outlooks on Canadian financial firms

“A prolonged run-up in housing prices and consumer indebtedness in Canada is in our view contributing to growing imbalances and Canada’s vulnerability to the generally weak global economy, applying negative pressure on economic risk for banks,” said S&P

http://www.marketwatch.com/story/sp-cuts-outlooks-on-canadian-financial-firms-2012-07-27?link=MW_latest_news

#150 Canola on 07.27.12 at 5:40 pm

“Just because you have enough cash for a down payment doesn’t mean you should make one. ”

Ahhhh Garth, golden words. I told pretty much the same thing to a co-worker a couple of weeks ago, trying to convince him not to buy a house here in Regina. He just looked at me confused and said that he was not going to gamble away his money on stocks or stuff like that. He explained why RE in SK is … yes, different… Natural resources, the lagging prices argument, the irish and filipino immigration argument, and finished it off with a couple of success stories from some friends who have been riding the wave up, have bought then sold and made some profit.

I tried explaining the facts, but I could sense tension forming up. Decided to change the topic. It is amazing how herd mentality can affect an individual’s thought process. It is even more amazing how powerful the concept of being a home-owner is. You can present all sorts of facts advising against buying a house. People just don’t care… at all. “Pride of ownership” above everything else… including financial freedom. So sad, so prevalent. Feels lonely sometimes… I love liquidity, but apparently nobody else does.

So the sprawl keeps growing here in all four directions. Young couples keep putting 5% down (borrowed) to buy 550K cookie cutter houses beside the airport (for real), or condos that have yet to be built. I have met very few RE bears here. I would say 80% of my co-workers (young company) and friends are renting from the bank. The commonalities are amazing:

-No older than 35
-Amortizations no shorter than 25 years
-Borrowed downpayments
-Car Loans
-HELOC’s
-Baby, or baby on the way
-Increasing rates are no risk cause you just increase the amort period and the monthly payment stays the same (yeah, heard that one many times already)
-Prices won’t go down
-Most of them want to “move up” in a couple of years.
-Very little understanding of the RE bubble in the U.S. yet all of them say emphatically that “that will never happen in Canada”

-They can’t understand why I still rent an ugly boardwalk and haven’t bought and think I spend my down payment on hookers and blow. We’re all good friends though :-)

When it hits it’s gonna be like Tod Bertuzzi sucker-punching Steve Moore in 04. They won’t see it coming, and it’s gonna be deadly. Cause everything is perfectly fine, until it isn’t.

Go Riders !!!

#151 Elchavo on 07.27.12 at 5:56 pm

#147 Pat

“Think about how stupid half of the population is, and realize…”

you know the rest

#152 Mr Buyer on 07.27.12 at 6:02 pm

Looks like GOOGLE is getting into the Fiber Optic to the home (FTTH) business. Finaly an internet company providing internet access.
http://ca.reuters.com/article/technologyNews/idCABRE86P1PC20120727
1 gigabit per second. Lets lobby the government to disallow TV and Telephone companies to provide internet service so an internet company like GOOGLE ACCESS can provide Fiber Optic to the home (FTTH) with no caps and blazingly fast service

#153 Hoof-Hearted on 07.27.12 at 6:13 pm

RE: Kelowna

It never has nor ever will provide well paying jobs. Its a desert by a lake.

When I was younger,..in the early 1970’s my Dad’s employer, an RV company, based in Richmond was lured up to Kelowna with a huge Gov’t subsidy . We didn’t go….. he quit….and we stayed in Richmond.

Coquihalla Hwy was built as a huge subsidy to Kelowna, and IMHO was built so Vancouver area people could cash out with HAM $$$$ and have somewhere to go . That’s due to the Bennetts (Ex Premiers..father W.A.C. and son Bill ) who were based out of Kelowna.

That artery and its blood flow is now shrivelling up….its pretty obvious.

Years ago……early 1990’s we drove into Kelowna one evening and saw this huge protest..people with signs protesting about sex crimes….”Take Back the Night”…etc. YIIIIIKKEES

The town will end up one big ghost town full of empty homes….sorry no evidence to the contrary.

#154 Stickler on 07.27.12 at 6:18 pm

@#149 IM in C on 07.27.12 at 5:18 pm

@137 stickler
The going rental rate for a SFH in Toronto is $2500 – $3000/ month, pretty much irregardless of what the house is ‘worth’.

—————–
>>> Ack! Even MORE terrible investment then. I sold my investment condo for the same reason. When I bought it would cash flow positive (slightly) with 20% down…flash fwd to last year and for me it would be cash flow negative (with taxes & maint increases over 7 years) even though I put 20% down and paid the mortgage for 6 years….I kept scratching my head why I had 3 offers the first weekend it was for sale. There is NO way an investor could make any money on it…the poor couple that bought it will be sorry I think.

#155 Smoking Man on 07.27.12 at 6:29 pm

I love how every one on here is so eger to give others agenda driven advice. Live within your means. Sell now. Boycot

I’m the only one on here that gives real non agenda advive and coaching. Humaniterian I guess. Real world experiance good advice. Been to the phsyical and mental ends of the univerce.

But I’m home ownr who is bullish on long branch. Off with smoking mans head

#156 Bob on 07.27.12 at 6:36 pm

@131 zeeman1, @137 Stickler, and @149 IM in C

The $4000 rent was based on the Garth’s blog/email. I didn’t make up that number. Further, we don’t know what city this is. His current place is already 800K. If kids go to say private school, a house (and larger one at that) in that neighborhood is very likely to cost more than 1.5m.

Not at all unreasonable for $4000. Therefore, the recommendation I gave was to say live within your means, don’t sell and go around to “rent an upgrade”…

#157 Stickler on 07.27.12 at 7:07 pm

Hi Smoking man. I like a lot of your posts, but don’t agree with your long branch call. It is a poor man’s beaches…and know that the beaches is among the most leveraged neighborhoods in the GTA. Much of the long branch housing stock is junk, and will only be attractive in a growing economy when it makes sense for massive renovation or demolition. Now is not that time.

#158 Stickler on 07.27.12 at 7:11 pm

@ #157 Bob on 07.27.12 at 6:36 pm
The $4000 rent was based on the Garth’s blog/email. I didn’t make up that number. Further, we don’t know what city this is. His current place is already 800K. If kids go to say private school, a house (and larger one at that) in that neighborhood is very likely to cost more than 1.5m.

Not at all unreasonable for $4000. Therefore, the recommendation I gave was to say live within your means, don’t sell and go around to “rent an upgrade”…

———————–
Agree that $4000/month should be for a place that “costs” $1.5Mil+ better to rent that then buy…as that rental rate is piss poor (for the owner) for any house $1.5Mil or less.

#159 Stickler on 07.27.12 at 7:27 pm

The biggest issue I see with a massive decline (like the US, Spain, Ireland, Other) is that most of the population (including commentators on this blog) are so horny for house prices to drop so they can buy.

“OMG” That overpriced old crap house has dipped from $1Mill to $850K what a deal!”

That I do not understand….say prices drop 15% 25% 50% what ever –> why would any sane person be ready to jump in and “vulch”?

…in this event house prices will continue down for some time and languish….the smart money will not even look at this nonsense until it bottoms, and starts a “real” increase.

Guess what???? It costs a lot of money to “hold” real estate. It is not passive income.

If Jim/Jane can rent a nice new condo with pool/gym for $1200/mo, why would they rent your basement? Think about it….this is going to take a long time to play out.

#160 Stickler on 07.27.12 at 7:29 pm

And just to mock people from Vancouver…when have you ever talked to anyone from Vancouver for more then 15 min without them mentioning rain or real estate?

#161 Canadian Watchdog on 07.27.12 at 7:34 pm

Something very strange seems to be happening with Red PIn’s new condo listings (they use a TREB feed plus their own listings from developer’s inventory). Every few weeks I plot a chart of Toronto listings and it appears listings are always being refreshed to 0-1 days on the market. http://postimage.org/image/5132l8y2z/

Anyone who uses Red Pin can check and see many of the new condos listed tend to have 0-1 days on the market.

#162 Stickler on 07.27.12 at 7:55 pm

A funny story to share with you…an associate of mine (in the US) got notice he was being laid off in 2 weeks. What did he do? Immediately got a huge TV & boat on credit (while he still had a job). His comments…while I am unemployed I am going to have lots of time to watch TV and go boating…

#163 Daisy Mae on 07.27.12 at 8:11 pm

127sue “I am so happy with that but my son always gets questions about why we don’t own a big house…sigh He said, “Well, you will be underwater soon with your mortgage and cash is king….” lol He’s 11. (yes, we talk about this stuff ALOT) He usually gets a blank stare.”

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

Keep it up! LOL You’re on the right track and sooner or later, he’ll ‘get it’.

#164 Daisy Mae on 07.27.12 at 8:14 pm

Further to #127 Sue: Maybe HE’s on the right track…and sooner or later, YOU will ‘get it’.

#165 Stickler on 07.27.12 at 8:24 pm

Several posts talked about a current US commercial re home ownership leads to multiple orgasms…

If you own your own home that means your kids will be happier, get better test scores, and be better people all around…better put in an offer now…25K over asking at least.

If you buy that you better take some time to understand statistics. An intelligent person can’t help but see through that one.

#166 cramar on 07.27.12 at 8:26 pm

135 jess on 07.27.12 at 3:45 pm
chief visionary officer

KITCHENER — A one-time financial planner faces fraud and theft charges after $30 million in investments were lost.

Waterloo Regional Police have arrested Daniel P. Reeve, 52, of Collingwood. He faces criminal charges of defrauding the public and theft over $5,000.

Police are investigating complaints that a financial advisor convinced up to 175 potential victims to contribute to private and public investments from 2006 to 2009. It’s alleged the investments were misrepresented and money was misappropriated.

——————————-

Garth always advocates that people should use a professional for investments. Decades ago a friend recommended his investment pro. Daniel P. Reeve. We did so. A few years later after markets were rising year after year yet our investments were static year after year, we pulled our money out of Reeve. I remember his secretary asking me, “Why do you want to cash out now when the markets are up?”

I said, “That is exactly why I’m getting out now! Do you expect me to sell when the markets are down?”

A few years after kissing Reeve goodbye, we heard that he was defrauding investors. Moral… not all investment pros are created equal. Some are not even honest.

Reeve was not an advisor but an insurance product sales guy. He was not even licensed after 2007, which anyone with a phone could have ascertained. And, it appears, a criminal. At least he is now facing the music. I will write in the coming weeks on how to check professional credentials. — Garth

#167 Daisy Mae on 07.27.12 at 8:28 pm

#154 Hoof Hearted: “Years ago……early 1990′s we drove into Kelowna one evening and saw this huge protest..people with signs protesting about sex crimes….”Take Back the Night”…etc. YIIIIIKKEES

The town will end up one big ghost town full of empty homes….sorry no evidence to the contrary.”

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

Give me a break. The problems here are the same as the problems EVERYWHERE.

Kelowna WILL survive and thrive…as will the rest of Canada.

Geez!

#168 DonDWest on 07.27.12 at 9:17 pm

#145 daystar

I have often asked the same question. Are the awkward behaviours demonstrated by the boomers in leadership positions a result of fearing retirement or is it a generational issue?

I’m afraid I must conclude it’s a generational issue. The reason why I’m saying that is because although I’m still young, I’ve been in the labour force for 16 years. I had my first job when I was just 14 and throughout my teens to around age 21 most of my employers were the generation before the boomers.

The difference was like night and day.

A “silent generation” employer would value that I show up every day, thumb my nose down, get to work and avoid drama. A boomer employer, on the other hand, viewed the following as being anti-social, unprofessional, not a team player, unwillingness to solve problems, negative, etc.

My silent generation employers rewarded me with bonus pay in the event I did exceptional work and the company generated a higher surplus in profit than expected. My boomer employers on the other hand, merely dumped any surpluses into dividends for their investors and very rarely offered any incentives based on performance to their workers.

Baby boomers value “corporate fit” above actual competency. This was unheard of when I first started working.

And let’s be honest, the generation of employers before the boomers didn’t give a crap whether you went to college or not unless you wanted to become a doctor or lawyer.

When a person of the silent generation got nervous over retirement, he buried silver dollars in his backyard. A boomer on the other hand bought a second house. . .

I could go on and on, but to make a long story short, I haven’t been able to adapt to baby boomer style management and have suffered greatly for it the past 9 years. It’s embarrassing when I think about it, but adjusted for inflation I made the same amount of money per hour at age 18 as I do now at age 30. I have only just now realized how much crazy money I made at age 18.

I’ve tried to start my own business twice to work around my inability to adapt to boomer management, but ran into scaling and market saturation issues.

When it comes down to it, baby boomers have a unique problem: They want everyone to be their friends. They want to make friends with their kids; and often this is inappropriate. They want to make friends with their employees; and this is always inappropriate. And last but not least, they want to make friends with their banking clerk and real estate agent. This is dangerous!

Running into the same problem today, denied promotion to that management position despite having exceeds expectations in every relevant category because I’m marked developmental in one “key” area. That “key” area is “respect and attitude.” Why do I have a bad attitude? I don’t believe in making friends with my baby boomer managers. I’ve had to watch them hand the position to incompetents who burn out and leave within two months. Baby boomer managers seem to forget that it’s important to get someone who can actually do the job rather than just befriend you. It’s enough to make me want to pull my hair out. I’m getting an ulcer just thinking about it.

#169 Devore on 07.27.12 at 9:27 pm

#119 Roial1

Garth, Hipothetical question:

Hypothetically, it depends on the contract the developer wrote himself.

#170 TurnerNation on 07.27.12 at 10:26 pm

#97Interesting Times on 07.27.12 at 11:17 am

Leaning towards what John talks about, it’s an entitlement paradigm. Soon to change.

#firstworldproblems

We deserve full price for our house. Ours kids are the best. And so on.

#171 Gunboat Denier on 07.27.12 at 11:51 pm

Roial/Herb/Devore

Read mor here – Division 6

http://www.bclaws.ca/EPLibraries/bclaws_new/document/ID/freeside/98043_00

169 DDW – you have a very strange viewpoint

#172 daystar on 07.28.12 at 4:42 am

#169 DonDWest on 07.27.12 at 9:17 pm

I wish I could help you or had some stellar advice but I don’t think I can tell you anything you don’t already know. Don’t wreck your health with stress is the best I’ve got and I feel for your frustrations. Maybe there’s an important lesson to be learned by this that isn’t to costly :)

#173 Darryl on 07.28.12 at 8:04 am

#130Lostinthewilderness

LMOA

#174 sue on 07.28.12 at 8:07 am

Daisy Mae

I think he get’s it and I get it and pretty soon THEY will get it…lol I hope so because I’m getting tired of the bias. In so many other countries, renters are the lucky ones..heck, even Peter Schiff rents. Coming soon to Canada.

#175 TurnerNation on 07.28.12 at 9:22 am

…following with stamping of feet, pulling the listing off the market or firing the realtor. Maybe the realtor will suggest waiting for the “Fall market”, to re-list. As if the current crop of buyers are culturally bereft dullards, unable to grasp the value of your “prime” 15 foot wide dank Leslieville semi.

After all, you bought into Leslieville for the “lifestyle”. Yoga and Zumba classes, Doggie outfitter stores, Ironic indie coffeshops (but not like slacker Queen West’s – no nose rings or indoor tougues allowed). Yours have a vaguely Eurpean flair, natch.

#176 Dr. WAYNE on 07.28.12 at 9:28 am

Greek bananas ?

#177 “We got sick of the ridiculousness of the market. People overbidding on shacks and financing some 90yr-old’s retirement by buying her house which she bought for $90K in 1952 for $1.2 Million.” | Vancouver Real Estate Anecdote Archive on 07.28.12 at 11:58 am

[…] “My fiance and I both have good professional jobs in health care. We are in our early 30s. He owns a condo in east vancouver that could probably go for 250,000 to maybe 300,000. He bought for 180,000 5yrs ago and renovated. I am renting. We have enough in the bank for a sizeable downpayment on a home in North Vancouver. We are looking to finally consolidate homes and start a family in the next few years. We’ve been looking for 7months and have just been on a 2month hiatus as we got sick of the ridiculousness of the market and people overbidding on shacks and financing some 90yr olds retirement by buying her house which she bought for 90,000 in 1952 for 1.2 Million$ ..you know, the recent Vancouver usual. The market is changing. The new mortgage rules actually suit us favourably as the interest rates haven’t, yet, changed and the other restrictions don’t apply because with our cash flow we could have a Million dollar home paid off in 15 yrs with a 25percent downpayment. My question is, what do we do? If I were to buy a home right now, we’d plan to stay there for at least 10 to 15 yrs. Rental homes on the North Shore are few and far between. And at some point you want to start your life and settle down. I try to stay informed on housing and the economy. Lots of signs pointing in the direction of not buying. Should we sell the condo and rent? Should we keep the condo, rent it out and rent a home? Should we buy something if we can lowball and get a home that was 1Million earlier now for 850,000??” — from Amber, via Garth Turner, at greaterfool.ca, 26 Jul 2012 […]

#178 Westernman on 07.28.12 at 3:29 pm

Daystar @ # 173,
Congratulations on your first post of less than 5000 words…

#179 Blue Monster Lover of Meats and Vegetables on 07.28.12 at 6:16 pm

“Thus a lack of future debt accumulation by households implies that the key driver of past real estate performance may no longer be available to stimulate real estate going forward,” say the economists. This is not economic theory. It’s financial fact.

Yep, it’s economic theory that happens to be correct. Unlike many of today’s ‘theories’ which are wrong. Like deflation is dangerous is probably the most ridiculous that people believe because economist say it. Idiots.

Anyway, nice post as usual Garth, really enjoying the humor these days, it’s always fun. KUTGW

#180 deja view? on 07.29.12 at 8:55 pm

newspapers from the edge..
Vancouver Daily Province, RE for sale.

5 bdrm craftsman style house w/ double 50’x120′ lot hdwd floors, double garage, located 4000 block west 18th in Pt Grey. Good condition.
$8500. Wow!

Wanted: Time machine with working forward & reverse gears.
The paper was feb 6 1952, the king had just died.