Dave’s 30 and just sold his condo in mid-town Toronto. “I paid $286,000 three years ago and just sold it for $349,000,” he says. “I now have $150,000 burning a hole in my pocket to invest in something.”
Smart guy. It’s the time to be selling condos, not buying. It means after closing and selling costs Dave made about $1,000 a month over three years, which cost him $400 in condo fees and taxes. So, he tied up about $150,000 in equity to net $600 monthly, or 4.8% on his money – hardly a bonanza, but enough to subsidize the imputed rent. Now what?
“I’m trying to learn more about REIT’s and which ones are the best and only hold commercial RE. But sometimes wonder if REITs too will fall with a RE crash? I have no clue on who or where to go to invest in preferred bank shares. Wondering if you could point me in the right direction as to what I can do to make this money grow while I wait out the RE correction, hopefully not long!”
I get this a lot. Real estate investment trusts are a fine asset class, and most investors should own a slice. They spin off cash from operations, pay you income and have a decent track record of capital appreciation. Most REIT managers have used this period of crazy-low interest rates to put long-term financing in place, which bodes well for future performance. But will REITs tumble with housing?
No. Trusts that buy office buildings and shopping malls (I wrote last week about Dundee and H&R, for example) have no exposure to residential real estate. So long as people shop and companies occupy space, the cash will keep flowing. As for REITs which own residential rental units, like Boardwalk, the future seems even brighter.
In a housing correction people stop buying houses. When F murders 30-year mortgages and the banks ditch cash-back loans, more families are pushed into rental units. When confidence in real estate wavers, consumers cut back on borrowing to get into homes and start saving and renting instead. So property crashes are just what residential REIT managers dream of – a formula for higher rents and full occupancy.
This is why folks like Dave, who try to self-invest, often self destruct. Making money on a condo in a rising real estate market is one thing. Growing wealth in a volatile world of spinning variables is something else. Like asking, “where do I go to invest in preferred bank shares?” There are literally hundreds of preferreds, from floating to fixed to retractable to convertible. I mean, it’s not like buying a Kia. With the wrong financial asset, regret can take longer to develop. But rest assured, it’ll come in both cases. Get some help.
“By the way,” he says, “I forgot to mention I had my condo listed for a month in July at 369,900 and not even a fly came to view it. I re listed before Labour Day Long weekend for 349,900 and it sold within 2 days on the market.
“Nothing in the high demand area had sold for months and everyone is asking stupid-ass high prices for homes and condos. No one has dropped their price and looks like they refuse too. I have been told I am a fool for selling at the price I got. It kind of puts doubt in my head but then again… A home/condo is only worth what someone is willing to pay for it, I guess I got my worth out of it in just time.”
And here’s why I selected Davey’s letter. Evidence the market is softening to its core is all around us. Those who think Vancouver and Victoria had it coming, but Toronto’s immune, just aren’t paying attention. Asking prices are no longer starting prices. Buyers are demanding discounts or going home. Agents are pleading with vendors to be realistic. And nobody who’s sane believes things will pick up again, just because it’s September.
Meanwhile a melt is clearly under way. Here are the average prices (guava.com) this year for price-changed properties in the 416:
January $778,738
February $863,413
March $869,972
April $861,851
May $884,892
June $859,060
July $828,484
August $690,748
Many weeks ago I told you the market turned quickly at the end of a Spring season characterized by aberrant behaviour – engineered bidding wars, multiple offers, panic buying and sheer vendor greed. Without a doubt, it was the high water mark of real estate insanity, and came just before the feds declared their War on the House, which you previewed here in March.
The plunge in this bellweather category from May to August: $194,000, or 22%.
For those who bought a hundred days ago, let us pray.
168 comments ↓
The Sarge was rotten to the corps too !!!
Hi, can Garth or someone post a video of the Vancouver talk? thanks
I was busy talking. BTW, I will be hosting a similar event in Toronto next month. — Garth
Mr. Turner. Please give us a -night before- prognostication on the Quebec election.
Garth, are you coming to Ottawa? I understand if you don’t.
So, mid-month (Aug 15th), SFH price was $763,603:
http://www.torontorealestateboard.com/market_news/release_market_updates/news2012/nr_mid_month_0812.htm
And, this fell to $690,748 for the whole month? This means that the average SFH was just $617,893 for Aug 16th-31st?!?!?
Garth – can we expect the cartel to show this $690k number this week in their press release?
Garth – I agree that REITs are the way to go.
Hopefully, those that’ve invested in retail properties near the US border won’t be hurt too heavily by increasing cross border shopping attributed to the soaring loonie and a higher purchasing limit.
Some interesting news/stats on Garth’s gift to us all (the TSFA):
http://www.huffingtonpost.ca/2012/07/31/tfsa-benefits-rich-men_n_1724285.html?utm_hp_ref=canada
Garth – should it surprise anyone that “rich white men” (both in the UK and Canada) are getting the greatest benefit from these types of accounts? Should we expect a maximum lifetime contribution limit sometime soon?
Good post.
For this long weekend we had our friends from Philly area visiting us. When I showed them what one can buy here for 540k, they were laughing their arses off. They bought their house for 540k a bit North from Philadelphia about 2 years ago. Just to give you and fellow dogs an idea of their house: 4200 sq ft, and you can park lengthwise 13.5 Honda Accords in their driveway (between the street and the garage door). 1/2 acres of land, one third of which is woods.
Something’s gotta give in Canada.
Cheers.
I still don’t understand why we should buy preferred shares instead of common shares of the big banks. I understand that preferred shares get paid first in the case of a bank collapsing, but is that really a fear with the big Canadian banks?
Am I being foolish by just buying common shares and having my dividends reinvested?
Not if you like more volatility. — Garth
Well Gartho those are some interesting stats on 416 but I haven,t seen any price changes when i
I skim the mls area .. so smoke your stats!!
What was the 416 SFH avg. price for August in 2011?
The house down the road was listed just short of $1.7 and it sold in only a month or so. (Just west of Calgary on 2 acres.) But it is a very nice house on the ridge wilth a view of the Bow river valley and the mountains. I don’t know what they got but it was pretty quick so I assume close to Ask. Another house on the same street has languished at $1.3 for the whole summer. It is also a nice house, but only a wlak out bungalo and no river vally view.
Garth, how come the media hasn’t mentioned about the 22% decline in the 416 area?
Nevermind, August last year was $648,000 so still up 6% Garth…Nothing to see here. Mind you last July was $691,000 so month over month is pretty dramatic. Still rather see YOY comps declining though for something more substanitive.
The one thing that I have trouble reconciling: when people stop buying real estate, a lot of condo speckers and flippers become unintentional landlords…which should work to depress rents and lead to higher overall vacancy rates…that should be bad for residential REITs
@ #10 neo:
What was the 416 SFH avg. price for August in 2011?
clever…. making me go and look it up:
http://www.torontorealestateboard.com/market_news/market_watch/2011/mw1108.pdf
$648,491 on 892 SFH sales in the 416.
That represented a 10% YOY price increase, and 35% YOY sales growth.
$690k would represent approximately a 6.5% YOY price increase and likely YOY sales declines.
22% down from crazy 416 peak set by overly horny virgins in the spring of bidding basket cases is not nearly enough to justify me sending out prayers into the universe. Those suckers deserved it. Lets not forget the ex-owners on the other side of those equations who’s money you are now managing. And now that you illustrate this 22% drop based on these numbers I’d like to sign up for membership in that 50% drop club. Where is the sign up form link?
No one said fiiirrsssssstt yet..so I will
FIIIRRRSSSSSSTTTTTTT
#5T.O. Bubble Boy
You might be on to something there. Last August mid month was $597,000 and it ended up $648,000. The end of the month number almost always goes up by the end of the month. The breaks definitely went on the 2nd half of this August. We would have to see follow through with YOY declines though in September.
edit: I meant the end of the month number is almost always higher then the mid-month number.
Wow – I just noticed the total sales on Garth’s image from guava… 565 SFH sales in the 416 in August, which would be a 37% DROP in sales from August 2011.
scary time to be a realtor.
A neighbour down the road (Durham Region of the GTA) recently sold their home after it was on the market since April. They listed it at 527K in April, reduced to 474K after a few months, then 449K more recently and finally sold it for 425K. So basically it dropped over 100K in four months. That doesn’t bode well for our landlords who are trying to sell the house we’re renting (a similar house) with a similar starting price…..
1 month doesn’t make a trend. Although I like that number. Interesting to see what Vans stats are.
Aren’t Reits gonna get hit when rates rise. As would most bonds and preferreds.
Kilt.
The plunge from May to August: $194,000, or 22%. – Garth
The plunge from May to August 2011: $125,555 , or 16%.
We have to be careful drawing too much from seasonality.
#8 gladiator on 09.03.12 at 9:11 pm
“…………..They bought their house for 540k a bit North from Philadelphia about 2 years ago. Just to give you and fellow dogs an idea of their house: 4200 sq ft, and you can park lengthwise 13.5 Honda Accords in their driveway (between the street and the garage door). 1/2 acres of land, one third of which is woods……..”
What does “a bit North of Philly” really mean?
Is it really comparable to a house in Toronto or inner GTA? Or is this heading into the mountains of Pennsyl-tucky?
(guessing GTA is what you might be comparing to, but your post doesnt say).
Anyway, I’m just curious what’s the apples to apples comparison. If I go 45 to 60 miles past the outskirts of Toronto, I’d also get a fair bit more real estate for my half million.
So, what’s a 2500 sq. foot house in a safe urban neighbourhood on the subway or SEPTA rail fetch?
Avg price down in 416 could just mean that there are fewer expensive home sales, non ?
“No. Trusts that buy office buildings and shopping malls (I wrote last week about Dundee and H&R, for example) have no exposure to residential real estate. So long as people shop and companies occupy space, the cash will keep flowing. As for REITs which own residential rental units, like Boardwalk, the future seems even brighter.”
And to think just a few weeks ago you were commenting on the vacancy rates along Robson Street.
REITs don’t own storefronts. — Garth
The plunge from May to August: $194,000, or 22%.
I checked out
http://guava.ca/indicators.html
and then realized that August isn’t there yet, holy cow May to August 22% decline!
as Mr Lahey says ” the shithawks are coming”
Dave’s a spekker. If he sold after 3 years, he really didnt have any need for that condo. He bought when he was 27. Now he has money “burning” a hole in his pocket. Total spekker.
8 gladiator – Do you think philly is a good deal? I’ve got a
1/2 acre, lots of trees, and over 3Ksqft. MV is about $400k on VI. Strange that so many think VI is overpriced.
I saw the comment on Victoria but, so far, there doesn’t seem to be any panic selling. I’ve come across one “price reduced”. They’re still bldg condos. Bldg some SFH’s in the neighborhood. Had to buy and tear down a lot with a house to do that. It’s like things have slowed down but not much has changed re behaviour. More places for sale in prime locations like James Bay. I’ll be glad to see the latest figures for Victoria and environs. The bldg of the “Uptown” mall is going full blast and the Hillside mall is bldg. Those of course were planned and financed some time ago and it’s toolate to stop, I guess. Went to buy some major items for the house. No bargains. No mark downs.
Hang on!! I’m looking at the stats and wow!! They are badly skewed by the fall off at the $1 to 2 million and $2 million +price levels.
In reality … If you look at the market levels which are experiencing the most traffic …. $0 to $400,000K, $400,000 to $500,000K and $500,000 to $700,000 …. average prices seem flat. Only slightly up or down.
Once again proof average averages are a useless stat when you don’t have a nice bell curve to work with.
Sorry, I don’t see a fire sale starting here yet (sorry doomers)…well, unless you want a $2 million dollar home.
Where did anyone say ‘fire sale’? It’s a correction, of unknown depth. — Garth
@#13 Shane: it’s because there hasn’t been a chance for the numbers to be made public yet. Almost all of that decline is in August, which won’t be officially announced until tomorrow. Even then, it may not get much press until the year-over-year numbers turn that negative.
1. I don’t trust those numbers at all. Same acreage lot is listed on mls for 69000, but advertised on kijiji for 39000???
2. What is the price to build house. I guess 1000$/sq m? because modular homes are sold for that price
Material 400 and workforce 600?
Reits own malls…which are multiple storefronts. light industrial reits…are there any ?
There are hundreds. Try Google. — Garth
REITs don’t own storefronts. — Garth
Garth – So long as people SHOP and companies occupy space, the cash will keep flowing..
Many REIT’s own malls whether small strip malls or large malls…
They don’t own stores on Robson, where rent escalation has taken its toll. — Garth
DELETED
The credit growth in China have been slowing down greatly since 08 April and their ability to ease monetary policy is constrained by outflow
http://static.alsosprachanalyst.com/2012/08/image104.png
It means those Chinese officals have less corrupted bank money to fill the Canada RE Bubble in the near future, especially for those big big big expensive houses.
It is no surprising that the high-end house prices have been dropping in fastest speed right now comparing to the other price ranges. We just need to wait the local buyers waking up.
They don’t own stores on Robson, where rent escalation has taken its toll. — Garth
I understand that, I can go in to detail and tell you more about rents along Robson Street , but that is not my point. You said yourself “So long as people SHOP and companies occupy space, the cash will keep flowing.” What you are seeing along Robson Street is happening in a lot of places, it is just the beginning.. I know you don’t agree with me, but commercial real estate always lags behind the residential sector..it is just a matter of time before the REIT’s start to take a hit..
Disagree. Only if there is a recession, which looks increasingly unlikely. — Garth
The only question I have is the math, the fellow in this article didnt mention how much he put down, which I assume would be less than $150k, the actual downpayment plus costs would in fact be the equity he had tied up. The $150,000.00 profit less costs would seem to be the number that should be used against the initial investment plus carrying costs to calculate true rate of return on this investment, no?
Yes. Was done. — Garth
Ayn Rand Army (previous post),
I want to be clear that I don’t agree with you. I have no time for Ayn Rand, her theories or who she was a a person. The idea of an “Ayn Rand Army”is absurd as she was elitist and profoundly undemocratic. Furthermore her attempts to create a utopian world based on “objectivism” was not just misguided but psychotic.
Our choice is not between big government and no government but good government and bad. The attempt to limit government always plays into the hands of the powerful and the criminal. The withering of the democratic state in the US has seen the rise of a criminal element on Wall Street and destruction of the middle class. Less government will mean more power to the elites. This is not what I am advocating.
Hey Garth, where can I find average sale prices for Vancouver now that REBGV is workin’ the HPI voodoo?
I really do hate to say it but I had a look at Hong Kong land and condo prices today and it makes canadian idiotic real estate prices look cheap.
http://realestate.classifieds1000.com/Hong_Kong
#15 Paully on 09.03.12 at 9:35 pm
The one thing that I have trouble reconciling: when people stop buying real estate, a lot of condo speckers and flippers become unintentional landlords…which should work to depress rents and lead to higher overall vacancy rates…that should be bad for residential REITs
………………………………………………….
This certainly does happen but I wonder about the frequencies. Another dynamic is supply demand curves for quality renters and rental units. In Japan rents have decreased since the bubble collapsed. Quality renters become a real concern.
Smoking Man
Garth, is your buddy Carney going to raise interest rates on Wednesday? He’s hinted at it.
He told me ‘no’ while in the hot tub this past weekend. — Garth
The average price over the short term does not determine what the market is actually doing. YoY, average price is more accurate. In Van, the average price jumped 100k MoM. But Van sales have tanked. Just a hair over 1600 sales for Aug. The average price just made many bulls happy for the short term, but Van is screwed. Moi in all areas have jumped significantly. Van sfh moi now sits at 12.4. Richmond sits at 22. Homes over 1 mil in Richmond, moi is 33.
Funny thing about Quebec. With tonight’s election and all.
Here in France, that province of ours seems to be recognized as a country already, judging by the display of flags….
http://theceliachusband.blogspot.fr/2012/09/quebec-is-country.html
#10 christiano
No one cares about the houses that do not sell, and the average price does not count them.
Garth, re: Toronto presentation. Are you going to use a body double this time ? Things can get pretty hairy in the 416.
You should at least get the elite Amazonians to display a few assault rifles this time, no ?
Heard Prince George has had a flood of listings.
“Garth, is your buddy Carney going to raise interest rates on Wednesday? He’s hinted at it.”
Not a chance. A reduction in the BoC policy rate is far more likely in the next few years as the CAD$ continues to surge, and the economy goes into a consumer-led recession.
There will be no BoC rate cut. — Garth
No worries the Chinese are still coming, its just he Hot Asian Money (HAM) is now SHAM, stolen hot Asian money.
Up to a million Chinese public servants have sent hundreds of billions of stolen money offshore and its heading to Canada and the US about $120 Billion stolen in 2011.
So no worries your new neighbor is going to be some communist party official who has absconded with loot stolen from China, party on.
http://brontecapital.blogspot.ca/2012/06/macroeconomics-of-chinese-kleptocracy.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed:+BronteCapital+%28Bronte+Capital%29
http://www.zerohedge.com/contributed/2012-09-03/thieving-thieves
At # 8 Gladiator.
Sir, I do believe if you buy a house a “bit North of Toronto”, you are also likely to afford a mansion at 540K.
When your friends from the States are able to buy a lavish place well inside Philly, NYC, Chicago, etc, then the comparison would be more meaningful.
Cheers,
Hawk
#15 Paully
Two things will happen in the short term: demand will slow, and supply will increase. Demand will slow, because even though you’d think it would go up (due to fewer households buying and renting instead), there will be lower household formation as general economic conditions (due to RE being such a large share of the economy). With such high ownership rate, so much demand brought forward with low interest rates and low downpayments, there just isn’t this huge pent up demand for housing. Lower incomes spell lower rents. Rents are bounded by local incomes. Not interest rates. Not inflation. Not bank account balance. Incomes.
More supply is just a no brainer. Unintended and reluctant landlords who dreamt of fabulous riches from flipping. Overleveraged families renting out their basements to strangers. Condo projects converted to rentals (you can find those in every major city already).
Eventually though, trends will reverse as economy improves. Life goes on. For landlords, good news. Tenant quality will improve drastically. People who would have normally bought a condo because banks were shoving money in their hands, are now looking for an apartment.
As a tenant, you can take advantage of this temporary situation. You can find a nice place from a wide array of choices you will have available. Hammer down the price. Then let rent controls give you a ride for years as you enjoy your below-market price living arrangements.
If prices fall far enough for long enough, we’ll even see developers building apartments for REITs, instead of condos. Ultimately, lower real estate prices are good for REITs (and for Canada). REIT units are priced based mostly on the income they can generate, not on the price of their assets. But if they’re badly capitalized and financed, they’ll be hurt as much as any business would.
“There are literally hundreds of preferreds, from floating to fixed to retractable to convertible.”
Garth, does your book “Money Road” explain these type of preferreds to help determine which type is best for various scenarios?
Garth you say REIT’s will only take a hit if there is a recession.
But you are predicting a RE correction at the same time.
How can there be a RE correction with unknown depths but no recession??? If majority of people’s wealth is in their homes then a RE correction would hurt their consumer confidence which would then spin off on the spending at these comercial property’s owned by REIT’s?
9 Troy:
I still don’t understand why we should buy preferred shares instead of common shares of the big banks. I understand that preferred shares get paid first in the case of a bank collapsing, but is that really a fear with the big Canadian banks?
Am I being foolish by just buying common shares and having my dividends reinvested?
Not if you like more volatility. — Garth
————————————–
But you don’t get the benefit of dividend increases. And if you plan on holding for the long term, volatility isn’t as much a concern.
24 neo:
The plunge from May to August: $194,000, or 22%. – Garth
The plunge from May to August 2011: $125,555 , or 16%.
We have to be careful drawing too much from seasonality.
———————————————-
Thanks for looking that up and putting it into perspective, Neo. I was wondering how meaningful this stat was.
Oh yes, I agree. There’s a significant correction for homes at the $1 to 2 million and $2 million +price levels. That’s for certain.
There really isn’t any movement either way at the $0 to $400,000K, $400,000 to $500,000K and $500,000 to $700,000 price levels .. so far.
I agree with your thesis that there will be a major correction in time. It’s just not happening in any significant number right now if this report is correct.
In retrospect, using the term “Fire Sale” wasn’t a wise choice of words. It was meant to be …. incendiary.
My comment was directed towards some of the “doomers” who frequent the site and have predicted a rapid 40% to 50% fall off.
I’m sorry for the misunderstanding.
I am wondering if the election tomorrow will crash real estate here in Quebec, or it will pick back up… many realtors are admitting to reporters even the market in plunging-only because of the election of course (and student protests). http://www.cbc.ca/news/canada/quebecvotes2012/story/2012/09/01/quebec-votes-real-estate-pq.html
–
“I mean, it’s not like buying a Kia. Get some help. The plunge from May to August: $194,000, or 22%. For those who bought a hundred days ago, let us pray.” — Will praying help? Once everything else has been tried, praying would be the last resort. Why not invest in Kia?
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#239 Nemesis on 09.03.12 at 9:03 pm — “Not a lot of MapleTrees in the Okienogan eh, Nostra?”
Not a heck of a lot, but some. When the sappy syrup is mixed with brandy, vodka, rum (light and dark), gin, Kahlua and a few other things, shaken not stirred, it produces a remarkably good nightcap, lasting a few weeks!
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DIY Investing Cdn. style; Moody’s and EZone cuts EZone outlook, and Factories crumbling; China Bad debt problems; Chinese factories; September Sell in May and go away, but here is the other side of the story plus (Sweet) Sixteen Reasons; Fiscal Cliff Is the fiscal cliff three inches high? Asian Export Machine going down, and China Same story; Bain Capital and Morgan Stanley; Walmart Target’s prices are competitive; Frank Giustra Big bet on inflation; Truckloads of Cash I’d like some, please.
Robson St. storefronts? No. England; Loooonger Work Hours Things are harder for people now; Buying Ireland US investor; UK, German Chinese and US factories producing an awful lot of nothing; RBS Large lawsuit; Cool bananas but soaring fruit prices; Signs of Life or dead cat bounce? China A British perspective; One Hyde Park Sixty five mln. pounds; Google Lotsa lawsuits.
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Ninja Flying sideways while breaking the sound barrier; China Using a cruise ship to carry troops and tanks; Alaska Storing an emergency food supply; REALITY New third party in the US? Twelve Most Advanced nuke subs in the US fleet; Stuxnet and its henchmen; Flesh eating seagulls near Argentina; One Ton Cheeseburger Not for the heart of faint; 0:58 clip Breakdancing with legs on fire. Sounds too much like hard work; Shamborghini Chinese replica; Armenia and Azerbaijan What’s the betting the CIA and Mossad are behind this; The Enforcers Global UN police force protecting the elite; Eureka! Active sun and solar storm; Power to the bloggers!
40 Junius – yes, no, kinda, not really. I dont see how telling me what colour I can paint my house stops criminals.
Gartth- It means after closing and selling costs Dave made about $1,000 a month over three years, which cost him $400 in condo fees and taxes. So, he tied up about $150,000 in equity to net $600 monthly, or 4.8% on his money’
Your calculation of return assumes he had this profit tied up from the day he bought the property, which makes no sense, assume the property appreciated 50K per year and re-calculate and you will get a much higher rate of return and a more realistic scenario
For the younger generation reading, you should know that you got screwed by the government and the older generation . Read this for explanation of how they created this housing bubble at your expense:
http://www.newworldparty.org/2011/04/housing-most-manipulated-market-in.html
(Canada’s manipulation is in bottom half)
You need to complain to your politicians about it, otherwise you will simply continue to get screwed. There are links at the bottom of that blog that can help you find your politician.
Bahaha! Smoking Man, what can you be possibly try to say that keeps getting you deleted? Just tone it down a bit. Like, instead of saying “Ass”, say “bum” MmmKay?
Here, let me try.
Garth, I never believe what those numbers that TREB publishes. They’re used to manipulate people and give sellers an over-inflated confidence to what their house is worth. With TREB’s number crunching, slight of hand method of determining the average price for SFH, I honestly think they’re pulling their numbers out of their bums!
See? Was that so hard? I said nothing rude, was respectful while contributing to Garth’s blog, and probably turned on some chicks so that the next time I’m at a party and reveal myself (first figurative and then literally) the real party starts.
#47 THE CELIAC HUSBAND on 09.03.12 at 11:43 pm
Funny thing about Quebec. With tonight’s election and all.
Here in France, that province of ours seems to be recognized as a country already, judging by the display of flags….
http://theceliachusband.blogspot.fr/2012/09/quebec-is-country.html
………………………..
Hi CeliacHusband
Read you blog from your post from the other day. I’m interested in all things from France.
My PIL’s live in France & we visit them at least every 2 years. From my experience, travelling in France for the last 25 years, most French people know very little about Canada other than Quebec. The majority of TV programs on French TV are only about Quebec. And, French people we know speak little English. Most took German as a 2nd Language. Probably has changed with the younger generation.
BTW – read your Blog & congratulate you on your renos. Seems you did better with ‘trades people’ than the couple in ‘A Year in Provence’ which I loved watching.
We’ll spend a month next summer travelling around France, if all goes well. Will finally get to stay with people we know in Bordeaux & Arachon & visit Cap Ferrat, & again with cousins in south of France & friends elsewhere. We take off from PIL’s home for many days at a time, otherwise we’d go nuts. We use Renault Eurodrive – best deal if travelling for 3 weeks or more.
Look forward to reading more on your blog.
#47 The Celiac Husband
Amusing post. However, I wouldn’t read too much into this. It is probably an error made out of ignorance. I will never forget when my European uncle asked my husband and I if we had our Québec passports before heading back home. I had to tell him that we had Canadian passports since Québec is a province within the country of Canada. Oops.
#7 T.O. Bubble Boy
Strange article that you highlighted. I am quite sure that the truly rich do not give a flying fig about TFSA’s In their high income bracket, they have much better tax shelters available to them than something that will shelter income from a measly $5,000.00 per year (a few hundred thousand over their lifetime). Things like foreign investments, corporate income shelters and holding companies, family trusts etc.. Lower income earners do not have TFSA’s most likely because they are too busy using their money for expenses to even save money in the first place. Perhaps many don’t even know or understand how TFSA’s work (they don’t have personal accountants). TFSA’s are still a good investment tool for everyone, including low income earners. You know what they say, “You can lead a horse to water …”
Garth, good luck with your real estate predictions. Keep in mind that your predictions are made on the assumption that people will behave logically: they will not be able to afford a house so they will be forced to rent … hmm … OR … they will find other borrowing sources (parents, shadier lenders, deal with sellers directly etc..), move in with their parents, combine forces and purchase multi-generation properties, begin to expand outward and live outside of the more expensive cities, put off that divorce or separation in favour of more secure living arrangements etc..
Just because the US crashed the way it did, doesn’t mean we will too. We are Canadian and we will find a way to do it differently. Not saying that prices will not stabilize in the big cities, as I am sure that they will (they must). Not saying that short term speculators and many condo owners will not suffer in the near future (unless they temper their future decisions with wisdom instead of greed). Change is inevitable, that is definite. What form that change will take … well we will soon see.
HHHW
#40 Junius on 09.03.12 at 10:58 pm
Ayn Rand Army (previous post),
I want to be clear that I don’t agree with you. I have no time for Ayn Rand, her theories or who she was a a person. The idea of an “Ayn Rand Army”is absurd as she was elitist and profoundly undemocratic. Furthermore her attempts to create a utopian world based on “objectivism” was not just misguided but psychotic.
Our choice is not between big government and no government but good government and bad. The attempt to limit government always plays into the hands of the powerful and the criminal. The withering of the democratic state in the US has seen the rise of a criminal element on Wall Street and destruction of the middle class. Less government will mean more power to the elites. This is not what I am advocating.
—–
Oh Junius, you really stuck your foot in your mouth with your inverted totalitarianism post. I’m on to you buddy.
You are correct though, she was indeed not a fan of democracy, but was a supporter of individualism and the republic of the United States.
A big government is also a bad government. A good government is a small and effective government that does not sell favors.
You should listen to her talk at West Point and the Q&A.
This woman had the courage of her convictions. The utopian world you speak of for her is/was the USA. Listen and learn. Last i checked, the US history and principles were real and successful. Unlike you and your communist ideology that fails every time.
Come to the light….
http://www.aynrand.org/site/PageServer?pagename=reg_ar_pwni
When confidence in real estate wavers, consumers cut back on borrowing to get into homes and start saving and renting instead.
You can’t rent & save here in Saskatoon. Landlord’s here are asking an arm and a leg for their rentals.They don’t want your kids or your pets either, but they will take a year of post dated cheques.
#45 Angel: “Garth, is your buddy Carney going to raise interest rates on Wednesday? He’s hinted at it.
He told me ‘no’ while in the hot tub this past weekend. — Garth”
Good one Garth!
“The only way that REITs would do badly is if we went into a recession…and that is increasingly unlikely.”
To paraphrase.
It’d be good to keep things simple here. The argument is that for the next several years, commercial real estate is going to be all topped up…people renting…and shopping.
And oh…let’s not forget…the wave of effect from the bursting credit bubble ( housing as a lead hand) won’t damage the “economy” enough to hurt the shoppin’ and rentin’ in commercial real estate.
And the shoppin’ and rentin’ will keep rolling in cash flow… in spite of the impossibility of real jobs coming back to NA or deleveraging of 10’s of trillions happening over the next few years.
Your “investment” advice regarding REITs is wrong on so many levels, that there is almost nowhere to start. This creates confusion, allowing the “confident voice” to be heard.
You know, in the past, you could make the argument that sovereign debt need only be serviced. That’s how Goldman Sachs et al snowed the muppets ( a favorite term for investors).
So, hold your nose, and confidently shout out that this practice can go forward into the future…for five years. Try 10. Do it while jumping behind a couch.
That “servicing debt” argument alone busts your case. Take it off the table and REITs stink. The whole system is stinking.
You’re putting out wishful thinking and psuedo action for muppets. Nothing more.
People aren’t muppets and have options. We’d have to start there. It seems you’re not going to land the plane with your argument, instead favouring a “fuel issue”.
@ #38
Disagree. Only if there is a recession, which looks increasingly unlikely. — Garth
*************************************
I hope you are right. I see, first hand, a lot of companies cutting back the last few months, some severely so. Even more then in 2008.
Look at the realtors posting once again in a panic trying to down play the 22% crash of prices from may to end of August. The crash is here and now and getting worse and looking at the desperate realtors posting on here should make it clear just how bad the RE has gotten. Realtor smokingman is so enraged with Garth posting the truth that he resorts to vulgar language. Bloggers go out there and let everyone know about Garths blog and the truth and facts realtors do not want them to know. Judging from the huge 22% drop in prices and over 30% drop in sales one can understand the panic from realtors. It’s going to be a nasty crash realtors a nasty crash.
@66 live within your means.
thanks for Blog comments, renos had some hiccups, i.e. all work stopped for 4 weeks in Augsut,but overall indeed, we did OK.
Mind you though, the house was OK to begin with, not a pile of rocks in the country. Heart attack would be the result.
When in Bordeaux, drop note, we are 70 minutes from downtown
@67 House Horny Housewife
our daughter just started school today and yes, German is still on the curriculum. Luckily her father is Austrian.
Oh, one more thing, “Viva le Quebec!” C’mon separatists! Show the world the path to peaceful independence. I’ll still come to visit, even bring my passport to give some glorified security guard something to do. Alberta, are you watching? Taking notes? Newfies, you’re not allowed lunch breaks. You may forget everything taught prior to your break. Oh Quebecers, you’re always so quick to “hop” on and off the bandwagon.
Garth, What about Quebec based REIT’s, specifically Cominar REIT? It seems that even commercial or rental Units will be effected by the mass exodus after the PQ win today.
Hi Canada Watchdog
Can you share your investment strategy. What is your % allocation between various investments.
My understanding is that the government capped foreign home ownership to 700 a year in Vancouver. That filled up by February. That is a policy change that talked about much but the implication has been enormous.
#58Investx
I’ve seen seasonality and sales declines head fakes in the past. The only this I will take seriously going forward are a spike in inventory and declines YOY. Everything is just noise and fodder for Garth to make blog entries. That sais, this housing bubble is about 30 months pregnant. So it’s due… (-:
“We had a $1 million assessment in one year, from September 2010 to August 2011, said Golam Chowdhury, adding owners paid as much as $1,200 a month for maintenance during the special assessment. There were also several unpaid bills, he said.
Chowdhury, a software developer who has been calling on politicians to amend the laws to better protect condo owners, said the alleged fraud had forced some owners into bankruptcy.
“Our property value has depreciated by almost 50 per cent,” he said. “It’s been a really tough time.”
A majority of the condos where Channel Property Management worked are owned by immigrants, who are still shaken up by what happened.
“We thought it (a condo unit) was a good investment,” said Maria R., who lives at 2121 Roche Ct. in south Mississauga. “It wasn’t.”
Condo fees have gone up about 25 per cent in the past year, she said.
http://www.thestar.com/news/gta/crime/article/1250545–fraud-forces-condo-owners-to-pay-thousands
=======================
Sadly, this will not end well.
Gold and silver showing strong technical signals for continued upside.
No gold bug here ,just saying.
That crystal ball of yours Garth could need a tuneup.
” He who lives gazing into a crystal ball is destined to eat shattered glass”
What a single asset class does is irrelevant to the investor with a balanced and diversified portfolio. People make the same emotional mistake with PMs as with housing. — Garth
@25 Hugh. The house is in Warrington. Within SEPTA rail fetch. 22 miles from downtown Philly, where they work.
“Disagree. Only if there is a recession, which looks increasingly unlikely. — Garth”
A bad Europse situation (eg Greek and Portugal default) coupled with a domestic house market correction would do it for Canada, in my opinion.
It is not unlikely we will have another recession as that is a certainty; it may be unlikely we will have a recession in 2013 though. Time will tell.
#67 House Horny Housewife on 09.04.12 at 3:09 am
ON TFSAs, if the cap is increased to $10k a year as Harper promised once the budgets are balanced, down the road this is not going to be trivial in terms of tax shelter for the upper middle class and higher.
The USA version of the TFSA (Roth IRA) is income capped so that those making $125k a year can’t contribute (okay, there are ways around it like a non-deductible IRA conversation to a Roth but that’s because they forgot to close the loophole).
$10k a year or $20k a couple a year adds up pretty quick if you know how to invest it; and rich people will find a way to minimize tax with every tool at their disposal. The taxable income free nature of the TFSA could lead to rich people collecting OAS or GIS that really they shouldn’t be able to.
A $50k a lifetime cap is ludicrous, but I could see an annual income cap, say no contributions if the person makes over $200k/year or something.
Holding significant cash in a TFSA at today’s anemic interest rates is kind of stupid, btw. If you’re maxing it out better to open a brokerage account and try to get some real return. The name of the account should have been Tax Free Retirement Account or something, sticking the word “savings account” in it leads way too many sheeple to think it has to hold ING type high interest savings accounts only.
#83 Garth to Bigrider- ” people make the same emotional mistake with PM’s as they do with housing”
Not a chance. You are dead wrong with that.
No way we will get 70% ownership rates with PM’s, ever, no matter how high they go. You will never get the same allocation of an individuals net worth to PM’s or anything else for that matter, as you do with RE.
Nothing enjoys the same emotional response as real estate.
Nothing is so religiously believed ,revered and as so widely accepted as the continued appreciaiton of real estate.
You blew it on that Garth, with all do respect.
One per cent of people own PMs and 70% own real estate, which is a given. The similarity I referenced was to the depth of emotional attachment the house-horny have to homes and the metal-horny have to gold. Just climb down. — Garth
To Nostradamus Le Mad Vlad:
Thanks again. It’s a confusing multi-faceted picture out there…and we’re mere humans. All those links are from a variety of sources, so an “overall feel” ( even gut feel) can emerge.
One of the things I look for here is your articles and the results of daily reading.
#52 luke8929 on 09.03.12 at 11:55 pm
Chinese SHAM, blah, blah, blah.
Your examples are about a very few bad Chinese.
There are crooks in any countries and you’re generalizing.
HAM didn’t make that much difference to the Canadian RE market overall.
Don’t bet against the Chinese
To the core… evil… Herbert Walker Bush is really Joseph P. Kennedy Sr… faked his own death…
#68 Randroid’s Army,
You said, “The utopian world you speak of for her is/was the USA. Listen and learn. Last i checked, the US history and principles were real and successful. Unlike you and your communist ideology that fails every time.”
Funny how you have to call someone a communist when they are actually exposing the opposite perspective. However don’t let facts get in the way of your arguments.
The founders of the US were specifically against the ideas of an Ayn Rand and other utopian believers in the rule of one type of human over the other. It is Rand and thinkers like her that ushered in the totalitarian movements in Nazi Germany and the Soviet Union.
The founders of the US understood our limitations as human beings and set out to create a government that divided power to ensure that no one perspective could dominate all others. They understood our limitations in a way that Rand, her followers and the current ideologues in the US right do not.
Can provide information on ETF reits for cdn and US real estate?
Same for preferred shares, what about ETFs for preferred bank shares?
Garth, expect prices to surge once the QC election is over, there’s gonna be an exodus coming from the east seeking overpriced canadian real estate. Anything is better than living under a PQ govt.
I wouldn’t put my worst enemy in a Canadian REIT. When investing the first thing to look at is risk. Right now nothing is more risky than Canadian bank shares, Canadian realtors and Canadian REIT’s. If you have to buy REIT’s buy American REITs. The Canadian dollar should plunge after the U.S. election making them a good play on the Canadian dollar.
http://www.remonline.com/home/?p=13147
With all do respect you are getting way ahead of yourself here. The numbers you have posted does not mean that prices in 416 area have dropped!!!
I have been looking at young and steels area for a while now and I still have not seen any price reductions yet.
By the way silver is on a nice run.
Ninety percent of technical analysts all say the same thing. QE3 before the U.S. election is political suicide. If you don’t sell commodities before the September meeting odds are you’ll get killed quote “holding the bag”.
Victor: Our property value has depreciated by almost 50 per cent
good post Victor
Re: #82 bigrider on 09.04.12 at 8:13 am
You have to factor in all the lies about the upcoming August jobs report. This close to the election in America guarantee they’ll lie like a rug. So one this is a negative for QE3 before the election as well as it would jeopardize the re-election of Obama. Odds are heavily stacked QE3 will *not* take place before the American election this November.
Pauline Marois is as fake as nails. She’s Jo Frost, super-nanny. That’s what whiny Quebec kids get. It’s all an inside joke to these people. I will post the evidence later today to my blog. Get the word out to the people of Quebec!
According to this ‘Global House Price Watch’report, Canada has the 3rd highest house price to income ratio globally and the highest house prices to rent ratio.
http://www.prakashloungani.com/2012/09/global-house-price-watch.html
Garths response to Bigrider in #86 on similarity of metal horny and house horny people.
Believe what you will Garth, but if gold were to take a dumping for a few years straight, those horny for it would quickly lose the hard on for it.
If houses declined in value ,those horny for them would step up to the plate and buy more. Canvas a couple of doors in Woodbridge ( learn some Italian) and tell me otherwise.
House horny people have a permanent hard on . They have swallowed the whole bottle of Viagara and will never seek treatment.
Gold humpers..the equivalent of a teenage boy with his pants down in the basement of his girlfriends house. Girls father walks in unexpectedly and party is over.
You need help. — Garth
luke8929, May the Force be with you.
Officially, as far as this blog is concerned, what you are writing about doesn’t happen and even if it did it does not have an effect on real estate in Vancouver.
Officially, as far as this blog is concerned, the multi national cultural take over of Canada is a good thing.
Officially, as far as this blog is concerned, if you raise any concerns about the moral and ethical characteristics of offshore “investment” you run the risk of deletion.
Officially, as far as this blog is concerned, China is no more corrupt than Canada. Therefore, the “chinese laundry” to which you refer does not do business in Canada and by extension the people that come here from China are “clean”. :)
Unofficially, as far as this blog is concerned, the only people that do “laundry” in Canada ride steel horses and sport some type of ethereal flight devices.
Control/Alt/Delete
Any body got a gold tooth, wedding jewellry, etc they can spare?
Almost finished gold plating my last batch of Tungsten Bars.
Hi Garth,
Aside the real estate, Can you please let us know if Quebec goes out of Canada, what happens to bank common stocks? Will it damange for long term? What happens to the debt and bank’s asset?
Thanks for taking time,
We’re waiting out the European crisis hoping to buy something in Europe. Particularly south of Portugal in the Algarve (a favorite of the Brits) , Spain near or in Barcelona, or South of France (still expensive).
We’re also eyeing Greece’s exit out of the Eurozone and a possible crash of it’s currency for some good deals. I speak French and Spanish but not Greek or Portuguese (although Portuguese would be easy enough to pick up)
We have European passports and location independent revenue streams. It seems like a no brainer.
Compared to buying in the US it’s easier for us because of our European passports. We’d like to live there full time.
To #91 Nervous
On the TSX, there are funds of REIT’s. One is IDR.UN run by Middlefield which has similar such groupings in sectors other than real estate (e.g. AEU.UN, a Middlefield energy fund of trusts). Yield on IDR is above 7%, some of that ROC, which reduces your ACB. As always, investment is at your sole and final discretion.
There is always a way to play the risk, get a yield and be diversified. Buying individual REIT’s is OK, I have a lot of them. But I keep IDR because it holds the really big ones (HR, D, REF) which I could never afford.
Good luck.
Tony #96 and #98..Comments re QE3..
I posted this yesterday which offers a different view on whether or not there’ll be another QE..
“Quebec won’t separate but QE3 is almost a certainty.
Bernanke believes QE1 and 2 worked, many disagree, even some Dems… The US remains in the Post Op recovery room and at any time could still fall off the table and croak….the US economy is tenuous at best…
Recently, Romney announced he’d like to pink slip Bernake if he won the election even though some of his advisors suggest Mitt keep the ol’ fart on… So, obviously job security for Bernanke is at best shaky should the Bible Belt erupt ecstatically late in the evening on November 6th….Of course one way to help secure his job is for the Dems to win.
US unemployment remains a major issue …officially 8-9 % ..those are the gov’t numbers, the official ones… but the real ones are more like 12-14% .. Unemployment is a huge headache for the Fed….and Obama.
Personally, after watching the GOP Convention last week, here’s my preference in terms of who should be running for Pres of the USA given what we’ve seen paraded on TV the last while…in descending order; Romney’s wife,then Ryan, next Clint and finally the Mutt!!
Man those bible thumpers have a rough road to hoe, they know it and Obama knows it but they (the Dems) can’t take any chances…
Even though the odds presently are a bit in favor of Barack, anything can happen the next few weeks to scuttle the Dem’s ship; a black swan (whatever the hell that is) ,Israel nuking Iran with oil shooting to $250.00 barrel (that would cook the Dem’s goose so now I know where the expression black swan came from….over-cooked goose) ..earnings unexpectedly start to go south, more serious issues develope with the PIIGS , and on and on…
Bernanke wants to keep his job as much as Obama loves his so until the election on November 6th, the US economy HAS TO LOOK GOOD for that to happen…..gonna be a lot of surprises and opportunities the next while… are you ready to take advantage of them?? We saw some of them get a little perky last week.
The last 2 QE’s gave a temporary boost to the markets and in my opinion there’s no doubt there’ll be another one announced this month (Sept)…. Which investments would benefit? ……..likely many of the ones which did from the previous…but in all likelihood any stimulus program will have less impact this time and be less enduring than the 2 previous unless QE 3 is mindboggling in magnitude……then we’re in real trouble…. but, in the meantime, it should allow Obama another 4 years of racking up frequent flyer miles on Air Force One and Bernanke won’t have to go back to teaching, for a while anyhow…That’s the way I see it.”
(thanks Garth)
$369,000 reduced to $349,000 is a significant drop???
Get real…you haven’t seen nothing yet! Wait ’til real estate junkies realise Peak Credit is here.
And…who said aanything about “residential real estate” falling? It will, but so will commercial RE when the reality of falling incomes hits consumer spending.
#59 Industrial guy
“There’s a significant correction for homes at the $1 to 2 million and $2 million +price levels. That’s for certain.”
—————————————————————–
Industrial Guy is . . . here are examples of reductions in the White Rock area in the 1 – 3 mil price range . . . most reductions are over $100,000.
http://mlslink.mlxchange.com/DotNet/Pub/EmailView.aspx?r=1982762438&s=BRC&t=BRC
Stats are also in from the Fraser Valley Real Estate Board for the month of August – Sales are down 20% YOY. The correction is begining though many are unaware of it . . . and local media are afraid to talk about it as Realtors account for most of their ad revenues. There is also a few sales to HAM (though even the they are low balling) . . .
PW
interest rate swap
floating rate structured repackage asset-backed trust securities certificates or strats
By FLOYD NORRIS
Published: August 2, 2012
http://www.nytimes.com/2012/08/03/business/a-wells-fargo-security-goes-wrong-for-investors.html?_r=1&pagewanted=all
===========
Under current law, SEC civil penalties are capped at $150,000 per offense for individuals and $725,000 per offense for firms.
“If a fine is just decimal dust for a Wall Street firm, that’s not a deterrent,” said the bill’s co-sponsor Iowa Republican Chuck Grassley in a statement. “A penalty should mean something.
In a recent SEC settlement cited by Grassley and the bill’s other co-sponsor, Rhode Island Democrat Jack Reed, former Bear Stears hedge fund managers were forced to pay civil penalties totaling about $1 million, following their indictment of defrauding investors out of $1.6 billion.
http://www.investorprotection.com/blog/
Nostradamus,
Thanks for the articles!! Some are worthwhile some uninteresting but nonetheless right after Garth’s sarcasm one of the few highlights of the blog
Garth, expect prices to surge once the QC election is over, there’s gonna be an exodus coming from the east seeking overpriced canadian real estate. Anything is better than living under a PQ govt.
Yeah right Joe. Those “rich” Quebecois have tons of money remaining from equalization payments.
It will be hard to compete against the Americans with so many willing to work for less. This is why my job is going to Portland.
http://www.bloomberg.com/news/2012-09-04/food-stamp-use-climbed-to-record-46-7-million-in-june-u-s-says.html
#33
Property contains accommodation which is not authorized. Bring your fuzziest clients they will love it.
#109 patiently waiting on 09.04.12 at 12:29 pm
What the heck does the realtor mean by bring your fuzziest clients? Is he talking facial hair, or does he want to see the clients with their pants down?
Only if there is a recession, which looks increasingly unlikely. — Garth
Garth! Every day you paint a gloom and doom picture for real estate and you think that can happen without a recession? I don’t see how. As for REIT’s, XRE has had incredible gains and dividends in the last 4 years. There has to be a flip side to that. Buying now would be foolish.
So don’t. — Garth
let me get this straight ,if people are spending then how can they be saving ??????
About the TFSA (Turner Free-Savings Account). Or, as H and F would rather know it:
Turner-Free Savings Account.
Most Canadians are easily spending enough, weekly on Alcohol and Cigarettes for easily funding a TFSA fully – to the tune of 5k.
Most often, “Poor” or “below povery line” in Canada means enjoying full cable TV, Blu Ray player, Hi Speed internet, laptop, weekly alcohol, cigarettes, and a newer gas guzzling F150.
My point is poor ain’t poor while in a First World country. Unlimited health care is another bonus.
We have discovered the Sasquatch of Oversupply:
http://a4.sphotos.ak.fbcdn.net/hphotos-ak-ash3/557293_433483976692974_542247666_n.jpg
#82 Big Rider
“He who lives gazing into a crystal ball is destined to eat shattered glass”
Technically speaking Big Rider, crystal is not glass as it lacks a crystalline structure. That aside, stop doubting the bearded mystic oracle, all knowing, all wise, prognosticating soothesayer without equal, denouncer of parliamentarian peckerheads and peckerettes, former minister of national revenues, NYT bestselling author, Harley riding, Amazon bathed and protected lone voice of reason in the HELOC infested wasteland of Canada. Some respect is in order. Sheesh!
Over on the Junior Board…shock and awe reading:
http://forums.redflagdeals.com/first-time-home-rental-property-buyer-v-s-trading-equities-1223858/
There are many others I am sure.
Upping the TSFA limit to 10k? Don’t count on it. Still wating for the “Elected Senate”. Not stacked full of partisan cronies.
Fool me once, shame on you…
As we’ve seen these Con demagogues are not the brightest bulbs in the bunch. They stay addicted to their narrow belief system. In their world the Sun still revolves around the Earth because, hey, the church says so.
NERVOUS MARKETS, WHAT’S NEXT, OH GREAT ECONOMIC SOOTHSAYER?
Karl Denninger’s Market Ticker blog is saying the US is back in recession (not that it ever really pulled out of the original one – 2008, as far as I’m concerned!).
According to this quote from The Institute for Supply Management™ Manufacturing Business Survey Committee…it “registered 49.6 percent, a decrease of 0.2 percentage point from July’s reading of 49.8 percent, indicating contraction in the manufacturing sector for the third consecutive month. This is also the lowest reading for the PMI™ since July 2009.”
Writes Denninger:
“…Three is a trend; we now have the third month confirmation to go with the regional Fed surveys. Anyone arguing that a recession is not now baked into the cake is simply arguing against all historical references and drinking Kool-Aid.
In contraction were New Orders, Production, supplier deliveries, customer inventories, order backlog, exports and imports. Worse, prices increased (from decreasing sharply) and employment slowed in advancement while inventories advanced (which is bad, not good.)
So why isn’t the market down 300+ on what is a clear recession signal? Simple — everyone assumes “The Fed will save us” with more QE.
Hint: They may QE, but it won’t save anything; QE is counter-productive as it simply depreciates the currency and credit currently in the system, thus destroying purchasing power which in the end is all that matters to the economy. As your purchasing power is destroyed your ability to drive economic activity is also destroyed.
Our Lily Pad is being choked off and we had better start killing off those lilies or we’re all dead…we must reduce the debt by more than 50% systemically over the amount of time it is doubling, or we must cease adding new debt immediately — or we’re done.
The game is up and Bernanke’s thesis has been invalidated.
CONCLUSION?
By the middle of this month, America’s central banker will like announce more QE. QE has been entirely problematic so far since it was first inflicted on the world, a few years ago. It caused commodity prices to jack-up bringing about the Arab Spring and the troubles now extant in Syria and look at Egypt now becoming an Islamic dictatorship with a military armed to the teeth by the US! QE also trashed China’s trade with the EU, since the EU was itself trashed with higher commodity prices and its own QE.
A little printed money? What the Hell. We’re all going to Hell here this fall, anyway.
In this context Canada’s real estate industry is so done like dinner. Sure there will be some “sunny” days in some markets, but eventually the sun will set on them all.
How will the REITS do? We’ll see. And our banks? they just cranked up dividends. Could that be a sell signal?
Keep some cash on hand for some great market bargains. Watch US, EU, and Canadian bond markets. If they implode, then following the resulting higher interest rates we will definitely be living in interesting times.
A 20% YOY decrease in sales and demand combined with a significant increase in supply does anyone really have to ask themselves if the market is healthy? Predictions are not easy and rarely does anyone find the exact top or the exact bottom and to be honest this is not important. What is important is that you see the trend and pay attention to it. I give Garth credit as in his analysis he uses logic to tell us that the trend has changed. This weekend i was at a barbecue and the subject of real estate came up. I was shocked to learn that three of my neighbors, all baby boomers are actively looking to downsize. I was shocked but then again i thought back to Garths thoughts on the BB Generation and the pending supply of homes to be sold in order to diversify. Owning a smaller home with cash in the bank sounds like a more secure retirement. Now add a declining trend and it is not difficult to see that in time these boomers will get anxious and will cash out as time is not their friend. Spoke to another BB couple in Vancouver who sold three properties, two in Vancouver and one in Victoria and used the proceeds to buy a townhome cash and put the rest in the bank. His words were we will now die in this townhouse and our children will decide what to do with it when we are gone. Another BB out of the RE market forever. Now multiply this by the number of BB’s and ask yourself what will this do to demand. Watch for the trend, listen to common sense, weigh the facts and live with the consequences.. Just read that immigrants into Canada who have been deported have been recieving welfare long after they have been deported. Oh yes the cost to Canadian tax payers is $50,000 for every denied application to immigrate. Times that by the 169,000 denied applications and tell me how truly healthy the Canadian economy really is..
http://www.pattayamail.com/moneymatters/it-s-a-mad-mad-mad-mad-world-part-1-16129
Garth, would you please comment on this opinion from South East Asia (Thailand)?
These guys have a pretty good inveastment history.
Al
Garth, back in the 90’s Martin put a special tax on mega bank profits. I’m looking for what exactly happened on that, can’t find anything. Curious cause the big 5 just made $7.8 B in a quarter and there has been no blowback from the media or from anyone I know. In fact, a self admitted NDPer on my hockey team DEFENDED the banks profits to me. Have I gone pinko? Has Canadian society really changed as much as I think here?
Re: YESTERDAYS DISCUSSION
Out West we really could care less if Quebec stays or goes. Hell we really don’t give much a damn about anything East of Saskatchewan. Those Saskatchewan folk are, by and large, just so darn nice. Here in the Okanagan Valley we are replacing the Quebecois pickers with better skilled, harder working, more amicable Mexicans.
I’ve not been to Quebec… yet. I hear it is nice. When I do go I’d rather it be a different country I can respect than a region that does not respect that which I come from.
Parochial. No wonder they don’t care about you, either. — Garth
ireland-
Irish commercial real-estate prices have plunged by two- thirds from its 2007 peak, according to Investment Property Databank Ltd., while residential property has halved in value, the Central Statistics Office said Aug. 30.
Irish commercial real-estate prices have plunged by two- thirds from its 2007 peak, according to Investment Property Databank Ltd., while residential property has halved in value, the Central Statistics Office said Aug. 30.
Some 86 percent of Lloyds’ 16.1 billion-pound Irish wholesale portfolio, mainly commercial real-estate loans, was impaired, or unlikely to be repaid in full, at the end of June, the group said on July 26.
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small business ireland…
..” 2003 rents doubled overnight. “You couldn’t get a lease without it being long-term or upward only. The landlords were in total control and if you didn’t agree with the terms, you wouldn’t expand or grow…He feels landlords’ intransigence was driven by banks. “Every time we spoke to landlords they’d say ‘we have to go back to our bank and discuss it’. [The banks] were trying to keep the asset value on the books up – whether they were getting the rent or not, I think the priority was that everything looked all right on paper…”
He feels landlords’ intransigence was driven by banks. “Every time we spoke to landlords they’d say ‘we have to go back to our bank and discuss it’. [The banks] were trying to keep the asset value on the books up – whether they were getting the rent or not, I think the priority was that everything looked all right on paper…”
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gas up rents squeeze
The price increase of 8.5 per cent announced by Bord Gais Energy today will mean the annual gas bill for hundreds of thousands of its customers has climbed by more than €230 in little more than a year.
The Commission for Energy Regulation (CER) gave the green light for the price increase today, and the latest move follows a 21.7 per cent hike rolled out by the State’s largest supplier 12 months ago.
In September of last year, the average annual gas bill for the company’s 440,000 domestic customers was €720. It climbed by €148 to €868 last October and by a further €14 earlier this year. The latest price hike will add a further €70 onto the average annual cost for its domestic customers.
The company said 10 per cent or 42,700 of its gas customers are currently in arrears of more than €100 for a period of longer than 60 days and accepted the latest price increase would put further pressure on tens of thousands of people already struggling to make ends meet.
Gold’s bustin’ out again.
Hope everyone bought at $1530.
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Roial1, the website you linked isn’t working, at all. Even if I google the domain. Must be down, hopefully temporary.
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Junius, I’m on to you buddy. You’re an obvious creator of misinformation who turns facts upside down. Who do you work for, Bilderberg group, Rothschilds, the European Commision, they’re a bunch of communists? Whether you’re a raging socialist, Marxist or full on communist, your objective is all the same. You’re a thief and have the mind of looter and you hate the good for being the good. Ayn Rand talks a lot about your type, hence is why you hate her so much. I’m onto you buddy.
“For those who bought a hundred days ago, let us pray.”
calgary condos up at least 5% since april.
Link? Of course, this hardly relevant to where they are going. — Garth
Regarding #7 and TFSA and huffington post.
It is the fault of the government that people dont have enough $ to put in the TFSA? IF they don’t then so what, they don’t have enough. The article seems to think that it shouldn’t exist or should be capped, because the poor don’t get to fill them up like people who work hard and make $ could.
The same could be said for the RRSP and contribution room. How many people max out their RRSP contributions? Those people that do, should they be shamed, since they have the $ to do so? I don’t think so.
Calgary Rocks
“Compared to buying in the US it’s easier for us because of our European passports. We’d like to live there full time.”
And you gave ME shit for perhaps moving from Calgary to Waterloo? Hypocrite.
Compare this from MARCH 2012
http://vreaa.wordpress.com/2012/03/02/gord-goble-south-surrey-building-blitzkrieg-thoughts-and-images/
with this from SEPTEMBER 2012
http://vreaa.wordpress.com/2012/09/04/gord-goble-postcards-from-the-rubble-of-our-future/
No help needed Garth.
The belief in real estate as the ” no fail” ” best long term” investment trumps any obsession with PM’s , dividend payers, REITs and anything else in the investment world you can think of, period.
If you haven’t observed same living in Canada and especially in the GTA, while writing a blog dedicated to it’s risk and obsession, then you are the one that needs ” guidance”
#74 THE CELIAC HUSBAND on 09.04.12 at 7:25 am
@66 live within your means.
thanks for Blog comments, renos had some hiccups, i.e. all work stopped for 4 weeks in Augsut,but overall indeed, we did OK.
Mind you though, the house was OK to begin with, not a pile of rocks in the country. Heart attack would be the result.
When in Bordeaux, drop note, we are 70 minutes from downtown
………………………………
Might take you up on that. Still looked to me you had a lot of renos to do, & no doubt spent a lot of euros, but the house has ‘great bones’. Nothing unusual for the French to take off for a months vacation but am wondering if that’s still the case due to their economic situation.
#75 THE CELIAC HUSBAND on 09.04.12 at 7:26 am
@67 House Horny Housewife
our daughter just started school today and yes, German is still on the curriculum. Luckily her father is Austrian.
…………………….
DH took German as a second language in school but his twin bro split the time between English & German. My Dad, from Denmark, took German. When the Germans invaded Metz, they brought with them German school teachers & the French language was outlawed in schools. When I first met FIL, he would tease endlessly by mixing German & French in a sentence & still does occasionally.
…………………
More apropo to yesterday’s blog re Quebec election. One of my bro’s (who has a great sense of humour) sent the following email to a sis & niece & bcc’d only me:
“How are you separatists voting? To get the desired results, follow a traditional NS system, vote early & vote often! Bonne chance !!!!!!”
& today followed with:
“It’ll be OKAY, Nova Scotia accepts English speaking refugees, no language test required !”
Actually, my niece is totally bilingual. Her Mom gets by, her Dad is bilingual and her French fiance is also.
Using the TREB’s own figures, the year-over-year price increases are slipping for single family detached homes in Toronto.
In January 2012, average prices were 15% higher than in January 2011. Here are the numbers:
Jan 2012 vs Jan 2011 15% higher
Feb 2012 vs Feb 2011 13% higher
Mar 2012 vs Mar 2011 13% higher
Apr 2012 vs Apr 2011 9% higher
May 2012 vs May 2011 6% higher
Jun 2012 vs Jun 2011 10% higher
Jul 2012 vs Jul 2011 8% higher
Aug 2012 vs Aug 2011 6.5% higher
In other words, after factoring in seasonality, average prices are starting to slip and the market is losing momentum. I don’t see anything that will turn this around as it will only get more difficult to finance as the new regulations come into effect.
It is also interesting to check out guava.ca to see the number of price reductions on listed properties every day. It’s a real eye opener and gives you a good feel for the Toronto market.
I don’t know who is behind guava.ca but I’d sure like to thank them!
I find it somewhat funny but mostly disturbing how the followers of Ayn Rand are at the same time so ignorant but also mean spirited. Can’t they see this in themselves and clue into the fact that it is as a result of the garbage and propaganda they regurgitate? Ayn Randians are boring, brainless and unsophisticated.
Garth,
I think the guy is asking about how to buy the preferred shares since they cannot be bought via discount brokers (?), not what shares to buy…
#101 – Bigrider
”Gold humpers..the equivalent of a teenage boy with his pants down in the basement of his girlfriends house. Girls father walks in unexpectedly and party is over.
You need help. — Garth”
Good one. Could explain Tony’s distaste for pm’s. LOL
once boomed…. TIC’s tenant in common
1031 exchanges, are a form of real estate ownership in which two or more parties own fractional interests in a property. In the early 2000s, TICs entered into a new wave of popularity after a 2002 tax-code change allowed investors to defer capital gains on real estate transactions involving an exchange of properties.
e.g. see DBSI, Inc., .
I am assuming you mean they don’t care about ‘The West’ in general as I personally am unknown to virtually everyone in Quebec.
No offence intended to Quebec by my comments at #126 Garth, we just… really don’t care. If they, by majority, want to leave… let them go. Most failed marriages I have observed can be attributed to a failing of both parties not one or the other.
Speaking of “parochial” I’d say it’s Central Canada which suffers most from that particular narrow mindedness and probably at the core of why so many Quebecois want to leave, not because of anything we out West or they in the Maritimes or Yukon/NWT have or are doing. We all are of more similar mind to Quebec than Ontario.
Like I said, I hear Quebec is nice and look forward to someday visiting there and Nova Scotia and PEI and New Brunswick and Newfoundland. We’ll likely approach from the south and leave that way too for as far as Ontario goes… neh not so much. Manitoba? Sure why not.
Yup I’d say ‘parocial’ aptly describes Central Canada.
Still want to buy an income property?
http://www.thestar.com/yourhome/real%20estate/article/1249186–case-highlights-flaws-in-landlord-tenant-rules
Very scary!
Hang on. Let me help you…
DELETED
#87 John and #111 Adviser — Merci!
#103 Hoof – Hearted — “Almost finished gold plating my last batch of Tungsten Bars.” — Don’t tell me I’ve got lead in my head!
#107 mel in victoria — “Even though the odds presently are a bit in favor of Barack, anything can happen the next few weeks to scuttle the Dem’s ship; a black swan (whatever the hell that is) ,Israel nuking Iran with oil shooting to $250.00 barrel . . .”
One possibility left out is a FF, like 9-11 which would enable Obomba to declare martial law and suspend the election. Alaska has increased the amount of food it brings in (last night’s link).
Politics, generally, are evil because once a person / party has power, he / they are loath to give it up. A FF can happen anywhere, anytime.
Hi Garth
Today’s photo is gorgeous! Thanks…it reminds me of one of our late dogs; the mahogany and white combo is really striking, isn’t it?
a.k.a. D.A. @ # 126,
Don’t you understand yet? It’s a priviledge for the rest of us to carry Quebec financially on our backs … well, because they are just so special with their “culture”…
We should be honored to work extra to pay for their “uniqueness”.
You weren’t going to use that money for anything worthwhile anyway … just because you earned it with your own efforts is no reason to deny Quebecers’ the use of it…
C’mon man, getting ripped off by the Federal Gov’t and having your life energy confiscated and re-distributed to sacred cows is the Canadian way!
To even suggest otherwise makes you a Neandrathal and a ” hater”…
#136 Go Away Ayn Rand,
You said, “I find it somewhat funny but mostly disturbing how the followers of Ayn Rand are at the same time so ignorant but also mean spirited.”
This is common among all of these right wing nut jobs. The philosophy tries to provide a moral basis that allows you to justify your behaviour.
The danger is that as the philosophy is given a moral force and a fundamentalism that can be used to justify pretty much anything. Notice how it has no nuance or acceptance of the complexity of human affairs or human nature. It reduces every issue to a simple slogan.
#141 Julia
There is risk in everything. With proper screening and procedures (such as certified checks) you can minimize many risks from opportunistic tenants. This just hilites that landlording is not “passive income”, something to do on the side. It is very much hands on and requires constant attention.
Residential tenancy laws attempt to codify common sense. Like legislating fairness and morality, the laws end up complex and full of loopholes, allowing the crooks to make a mockery of them, and leaving the law abiding scratching their heads in confusion.
Tenants can also find themselves on the receiving end of these loopholes, if they are not careful enough in their search for accommodations.
In the end, you should not do business with anyone who seems shady, just to save (or make) an extra buck. You’ll pay for it later, with interest.
Westernman @ 145
Just a few words for you… Bombardier, Doral, Alcan to name but a few. Quebec does have a thriving economy of their own.
Don’t misdirect toward Quebec the wrath of your abhorrence for that which originates from within the borders of Ontario. If they were to offer it to you at cost to Quebec would you turn it down?
But I do hear what you are saying through that thin veil of sarcasm.
#126 DA
It is abundantly clear that DA has never actually been outside of Kelowna in his entire life. Perhaps it is his irrational fear of frustrated buyers circling the city limits that keeps him from seeing the world……
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Inflation Stand back and watch it creep in, and Chart Of The Day 803 years of global inflation; 9:03 clip “How and why the US has been intentionally forced into wars by the New World Order Bankers”; China Rapd downturn; ASEAN and Billary “US reveals ASEAN as neo-imperial consolidation as Clinton calls on bloc to present a “united front” against China.”; Black Hole We’re in an economic one right now; Ebooks Free schooling when the system doesn’t work; Flogging a dead horse or trying to revive the economy; Paying More and Earning Less Student debt increasing; Peaking Three times as many Americans on poverty as finding jobs, and Milk Could be an expense for the unemployed; Spain, followed by Italy, France, UK, Germany etc. The dominoes are teetering, but Greece Expanding the work week? Poland and Bulgaria Deux nyets to EZone; Jim Willie “Willie informed The Doc that it appears that Morgan Stanley was used by the cartel to prevent a collapse in treasury bonds in 2010, and believes that Morgan Stanley was set up at the time by cartel banks as the next major financial firm to fail.”; Deutschmark Still alive after all these years.
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US Military Coup against the WH That possibility also exists; Iran Translation: During its attack on Iran, Israel will flip a couple missiles at US targets (like the USS Enterprise) and blame Iran for it, much as in the middle of Israel’s attack on Egypt, they attacked the USS Liberty and tried to frame Egypt for that. wrh.com; Telemarketing We all have our off days; Obesity and big pharma Note that big pharma quite happily blames individuals; 25:18 clip Headline is self-explanatory, ‘tho it should include the west; FEMA Camps for Fools; Oz Buying drones; Fluoride m$m taking note; Gun Control There are cases when gun control is needed. This wasn’t one of them; Anonymous, the FBI and Apple Computerland is getting slightly mixed up; 4:46 clip NZ troops leaving Af’stan; Northcom Command Hmmmm. Why are troops there? ‘Net Future? P2P, doing away with ISPs.
I wonder why new home horny new home owners not suing their real estate for the professional advise to buy a home at 22% more
S&P downgrades AAA jumbo mortgage bonds
Here we go again. Round 2. Ding ding ding.
#129 Highway 61: “calgary condos up at least 5% since april.
Link? Of course, this hardly relevant to where they are going. — Garth”
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Who cares? All that matters is what people are willing to pay…if they’re willing to purchase, at all.
And, they are not.
I didn’t criticize Calgary on my way out, you did.
#30 Prairieperson
In my area of Victoria (regular middle class family neighbourhoods) I’ve noticed multiple price drops on houses with very little selling. Some houses just disappeared off the MLS. I check it out asap & the sign is gone from the lawn. It did not sell, the sellers took it off the market, perhaps to relist later & have better luck? Not a chance. Some have re-listed as a “new listing” at a much lower price. The sellers need to get more realistic, such as the ones who did sell – at a much lower price than they were asking (according to the grapevine).
This weblog mentioned small cap ETF XCS.TO recently. Today I noticed MDY.US (mid cap ETF) broke upwards strongly. Perhaps the bloated large caps are full.
#136 Go Away Ayn Randians! on 09.04.12 at 5:11 pm
I find it somewhat funny but mostly disturbing how the followers of Ayn Rand are at the same time so ignorant but also mean spirited. Can’t they see this in themselves and clue into the fact that it is as a result of the garbage and propaganda they regurgitate? Ayn Randians are boring, brainless and unsophisticated.
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How have I been ignorant or mean? You’re right, I don’t see it in myself.
Check out this wonderful website and please tell me what you find boring and unsophisticated.
http://www.importanceofphilosophy.com/Chart.html
Yes Junius, philosophy is a moral force. Ethics is a branch of philosophy.
Ayn Rand was a philosopher first, a fiction writer second.
This is my last comment on the matter of Ayn Rand because it is futile to have a true exchange with a Randian.
Ayn Rand was mentally disturbed first and a hack second.
She lacked the integrity to even live her own ‘philosophy’ and had little in the way of moral ethics causing only distruction in the lives of those nearest to her.
Not my idea of a hero or some to be admired and followed at any rate.
100 F – you cant conclude that from the data that is presented. It simply compares the present price to the
historical average of that particular country. It is not comparing ratios between different countries.
Here is a site for the price to income ratio of different countries. Canada well down the list. I cannot vouch for its accuracy.
http://www.numbeo.com/property-investment/rankings_by_country.jsp
Garth, you are reminding me of that religious woman in the movie called “The Mist”..
Ayn Rand was a fake character… She became Helen Thomas.
And so is Junius BTW.
Vancouver Stats are IN!!!
Average price rockets higher…losses of past 6 months erased!…now within record price striking territory!… $1,142,237.
Now, if we had a balanced blog, we wouldn’t have talked about the 19% implosion over the last few months. Are we going to talk about the price increases in the same tone?? We all knew high end home sales skew this average.
That said, i haven’t seen price declines in my area yet…no dips over the past year…just steadily rising higher.
Can’t wait for the Quebec election results !
When much younger and more impressionable, I read and re-read Rand’s opus “Atlas Shrugged” after having already devoured Asimov, Hesse , Heinlein, Tolkien , as well as a smattering of contemporary science fantasy writers. What she delivered was a rather thin comicbook gruel with hints of Horatio Alger and Metropolis. What shocks me now is how seemingly intelligent (and influential) individuals divine philosophical revelations from her meanderings and use them as a rationale for Social Darwinism and “libertarianism”. It could be comical but her fable has grown legs and run rampant through America’s zeitgeist. I’d recommend to any Randians out there to re-read Fulghum and work forward; our world would be much better for it. (He uses smaller words and gets to the point.) Leave Rand in the fantasy section where she belongs.
Truth in Summation of our problem…..
The world will soon wake up to the reality that everyone is broke and can collect nothing from the bankrupt, who are owed unlimited amounts by the insolvent, who are attempting to make late payments on a bank holiday in the wrong country, with an unacceptable currency, against defaulted collateral, of which nobody is sure who holds title.”
– Anonymous
Re:Philadelphia Prices on a SEPTA rail line, safe and with good schools
My sister lived in Wallingford PA, west of the city, walked to the train and they were very happy with StrathHaven HS for their youngest.
This is what 540K gets you:
410-Moreland-Rd_Wallingford PA 19086
5 bed, 4 bath, 4500 sq.ft., .69 acre
http://www.realtor.com/realestateandhomes-detail/410-Moreland-Rd_Wallingford_PA_19086_M32586-20542
This is for the poster who wanted to know about prices in the city of Chicago or Philadelphia. This is a good area of Chicago near the Loop but public school would be an issue:
855 N LaSalle Drive #1
3 bed, 3 bath 2100 sq.ft. is offered at 549K
Canadian prices seem to be at the 2006 California level to me.
#165 Robert,
well said!