Macho in Markham

I’ve never met Tyler, but he probably wears shades on his head, drives an Audi A4, black, with tinted windows, doesn’t own a tie, uses gel and thinks Axe ads are tasteful.

“Are you basement dwelling losers STILL fantasizing about a crash? LOL! I bought my townhouse in markham in 09 for 530k and an identical one a few doors down just sold for over 700! Yeah, RE sure is a bad investment! That’s why I made 200k in 3 years, probably more money than any reader of this blog made in his whole life. Even in case of a 25% crash, I still come out ahead compare to renting. If I listened to Garth I would have thrown away about 70k in rent to rent the same place. 200k vs negative 70k, which is better, hmmm that’s a tough one. Almost every house sold in markham this year sold for over asking (condos excluded). There are still bidding wars going on here, with no sign of it slowing down. Maybe houses sit on the market in whatever hick town you live in, but here in markham (as well as any good part of gta) houses sell in only days, usually for over asking with multiple offers. It won’t stop either because markham gets an influx of thousands of new families every year, who all dream of home ownership and are willing to sacrifice for it. Even in the unlikely event my townhouses drops in value, it will recover fast, and I guarantee you with 100 percent certainty in 10 years it will be worth much more than it is now. Losers.”

Shall we take the Tyler challenge? Relax, it doesn’t involve touching him.

And let’s forget for a moment about the market in Markham, where there are 310,000 residents and 1,600 houses for sale. (That’s twice as many, per capita, as the GTA in total.) Or that in any real estate correction it will be 905 which takes the heavy casualties, while 416 stays in the fortified bunker with the hot nurses. Instead, let’s pretend for a moment that Tyler is not a dink, and this is a serious issue.

So he bought three years ago for $530,000 which, with closing costs, would be an outlay of $540,600. Let’s assume this is a cash deal – no extra costs for CHMC (which would set him back another $14,000) and no mortgage payment. Fine.  Now he sells in 2012 for a gigantic $700,000 – a windfall gain of 32%, or 10% a year. (Markham homes have increased an average of about 5% annually since ’09.)

After selling costs (5% commission) he’s left with $665,500, or a giant profit of $124,900. Not the two hundred grand he brags about, but fat enough. Eat some Audi dust, you mouldy basement-renting freaks!

Well, not so fast. Let’s say Tyler took the $540,600 he spent on the townhouse and invested it in a balanced, diversified, non-cowboy portfolio yielding an average of 7%. In three years he’d have $662,258, for a profit (before tax) of $121,658. So the house wins – by $3,242.

But wait, this is an unrealized profit. Unlike the investment returns, which are immediate, Tyler has to actually sell the house to get the money, and hope he does so at the right moment. “Even in case of a 25% crash, I still come out ahead compare to renting,” he brags. Which is why Tyler, like most Audi owners, is misguided as well as irritating.

Let’s be kind and factor in a market correction of just 15%. After all, following a 32% surge in prices since 2009, how bad could that be?

A selling price fifteen per cent less than $700,000, minus commission yields a net of $565,250. That reduces Tyler’s overall profit to $24,650, which seems to be less than the $121,658 garnered from investing the money in liquid assets. In fact, it’s $97,000 less.

Now, how about the rent factor? Well, a townhouse in Markham rents for about $1,700, which is $1,100 more a month than the cost of paying the property tax, insurance and maintenance on the same unit that an owner would face. So, three years of rent would equal an extra $39,000. Deduct that from the returns provided by the financial portfolio, and renting still wins by about $58,000.

Of course, income from a financial portfolio is taxable (but at a reduced rate on dividends and capital gains), while real estate gains are not. But the above did not factor in mortgage interest or high-ratio mortgage insurance which I’m guessing Tyler’s been paying. In any case, the numbers are compelling. In an exceptional real estate market, owning is marginally better. In a market with even a modest correction, the renter-investor dominates. In any market, being a dickhead is unhelpful.

Finally, to all those who think getting a 7% return on a non-cowboy portfolio of liquid financial assets has been impossible over the last few years, I invite you to return tomorrow.

Bring a loser.

191 comments ↓

#1 mark on 10.14.12 at 8:32 pm

Overly generous to think Tyler bought with cash.

#2 KingBubbles on 10.14.12 at 8:34 pm

So many Tyler’s and so little time

#3 earlybird on 10.14.12 at 8:36 pm

Sacrifice for home ownership…..knock yourself out….Its probably the only thing he knows!

#4 pathcontrolmonk on 10.14.12 at 8:36 pm

The problem is Tyler’s friends are other Tylers, any voice of dissent in his immediate circle would be immediately shunned. The circle of self-delusion among the Tylerites is perpetuated ad infinitum until the correction gains speed and they all start posting their audis for sale on Facebook.

#5 bruce on 10.14.12 at 8:36 pm

what about the four years of property taxes and strata fees he would have also paid out since 2009 ?

#6 unbalanced on 10.14.12 at 8:36 pm

Another fine writing Sir Garth. Can hardly wait for tomorrow. I’m itching to find out how.

#7 Randy on 10.14.12 at 8:38 pm

It appears that our education system only teaches self-esteem and liberalism……..FAIL….

#8 Don on 10.14.12 at 8:41 pm

Tyler
Go out and buy two more and make three times the money!! lol

#9 Boombust on 10.14.12 at 8:42 pm

Tyler’s a dink alright.

#10 CP on 10.14.12 at 8:42 pm

Nice one Garth

#11 charlie sheen on 10.14.12 at 8:42 pm

First…….

#12 TurnerNation on 10.14.12 at 8:44 pm

Sell all equities. We’re going down for a few weeks.

#13 peter on 10.14.12 at 8:45 pm

OMG. That was great. I haven’t laughed so hard in a while. Thanks Garth.
House porn is still alive and well. I’m writing you from Victoria where sellers are stubbornly holding on to hopes of a bounce back in the market. Prices are not down by much and I noticed a bunch of listings expire and a bunch more taken off the market as sellers pray for brighter days ahead. Problem is, the number of new listings keep growing while the pipeline of newly built supply keeps expanding. Can you say double barrel condo plop?
I rent a modest, top floor, 1 bedrom, ocean front apartment for $1,200 per month. Renting vs buying in this town is a no brainer. At least I thought it was. House porn has a powerful allure and has sucked in a generation of people like Tyler.

#14 Jay Currie on 10.14.12 at 8:45 pm

You make a good point Garth; but I have to assume that young Tyler borrowed a goodly portion of his 530. Against the townhouse.

Now, realistically, most banks are in no great hurry to lend the Tylers of this world, lets just say for fun 450k on his signature, no matter how well balanced and diversified the portfolio he proposes to invest those funds in.

So, in practice, the only way Tyler gets funded is the townhouse with a mortgage.

Now, if Tyler had half a clue, he would also be looking at his return on equity which could, in this case, be substantial if he is able to sell for 700. He is a notional 170K ahead (less all the expenses you so helpfully listed) so call it 80. On my assumption of 80 down he has doubled his equity in three years.

Sell, Tyler, sell!

#15 Mean Gene on 10.14.12 at 8:45 pm

“Where ignorance is bliss, ’tis folly to be wise.” I had to look it up, you the man Tyler!!!

#16 Patiently waiting on 10.14.12 at 8:46 pm

Never count your chickens until they leave the coop. I learned this financial lesson around 10 years ago when my coworker was claiming that he was close to becoming a millionaire since he had a bunch of Nortel shares. Paper assets don’t count until the cash is in the bank!!!

#17 kenken on 10.14.12 at 8:47 pm

Why is Tyler reading GTurner blog? why is he emailing?
is Tyler feeling insecure?
btw a townhouse sold for $700K in Markham!!! who in the right mind buys a townhouse at this price in Markham???

#18 Mark Motive on 10.14.12 at 8:50 pm

Came across a recent interview with Garth discussing Canadian real estate.

http://www.planbeconomics.com/2012/10/11/toronto-vancouver-us-real-estate-discussion/

#19 Van guy on 10.14.12 at 8:52 pm

Think again if you think Kits prices will hold.

http://vreaa.wordpress.com/

Just because there are tons of hot chicks in Kits, doesn’t mean prices will stick ol’ man!

#20 lee on 10.14.12 at 8:55 pm

What happened to tyler happens every twenty years. If tyler buys another Markham property today he will lose twenty percent by 2015.

#21 Ralph Cramdown on 10.14.12 at 8:58 pm

Dude, the whole point of buying a ‘town’house is that you’re in TOWN. It’s a tradeoff of land and space for proximity to amenities.

You’re living in a place with a Walkscore of 12 and you can still hear your neighbours humping, if only rarely. And only $530k!

#22 DON on 10.14.12 at 9:01 pm

Tyler gives his insecurities away with the need to further his point based on calling others loosers.

Karma’s a bitch Tyler…a real bitch.

Time for Tyler to put his credit where his mouth is. Show us up Tyler…Leverage and buy another condo, come on MAN-UP.

@ #7 Randy on 10.14.12 at 8:38 pm

“It appears that our education system only teaches self-esteem and liberalism……..FAIL…”

So true and very sad.

#23 Boopsie on 10.14.12 at 9:01 pm

Unfortunately those are typical townhome prices in markham: http://www.realtor.ca/propertyDetails.aspx?propertyId=12370302

#24 Smoking Man on 10.14.12 at 9:08 pm

#12 TurnerNation on 10.14.12 at 8:44 pm
Sell all equities. We’re going down for a few weeks.
…………………………………………………

Just a few weeks?

Trying to nail down this dance move.

PSY – GANGNAM STYLE

http://www.youtube.com/watch?v=kFHshctPO9E&feature=related

#25 Old Man on 10.14.12 at 9:08 pm

Pay attention with the last posting, as forget about the drop in Real Estate values, as to sell out you must factor in another woe for the net called commissions with lawyers and real estate agents; not to mention adjustments – so welcome to hell.

#26 Ray Skunk on 10.14.12 at 9:14 pm

Tyler is conversing from his anus when it comes to his boasts of continuing bidding wars in Markham. I can assure you that this is not the case.

I sold a property in Stouffville 45 days ago – not quite Markham but certainly a high-activity market in the past few years, and arguably more desirable than many areas of Markham (Unionville and the like excluded). There was no bidding war. There were no multiple offers. The property was on the market for approximately 30 days and went for 4.5% below asking – this was a decent, 2 year-old detached home within five minutes walk of the GO station. Other properties rivaling mine were seeing reductions of 5-10% and still not selling. DOMs were huge according to my realtor.

Tyler is living in cloud cuckoo land, or is making it up as he goes along. Me? I’m liquid, sitting on a plump bank balance and renting a new condo – with first refusal to buy it if the owner decides to sell in a year before she loses *all* of her equity. Bring on the correction.

#27 claudius emperor on 10.14.12 at 9:18 pm

The stock markets might correct by 10-20 percents down by the end of 2012. Just don’t sell. Dividend stocks will hold their value.

The next 1-3 years however would see big advance in stock markets in preparation for the unwinding inflation.

In credit deliveraging economy with the current levels of deficits: credit based assests deflate, the ‘real’ actives inflate – food, drugs, education, health care costs, enegry.

Can’t stress enough the importance of factoring the high inflation factors in the second half of this decade.

Prepare for it. Now.

#28 Thoughtful Bureaucrat on 10.14.12 at 9:18 pm

Am presently visiting Harlem in NYC. Has given me a new appreciation for how little space one really needs. Our b & b has a bathroom & sink in a closet that is 3 feet wide * 6 feet long, toilet at one end and sink at the other. No problem. Shower is in a separate small corner. The whole brownstone rowhouse is only 20 feet wide. Why are people going into debt to buy McMansions for so much money when utilities keep going up and they get no land? The future looks like Harlem, efficient use of space and efficient public transportation. Over 50% of all Canadians are single. Will a lot of McMansions be converted to become the boarding houses of yesteryear?

#29 Awesome on 10.14.12 at 9:25 pm

Since Tyler is so smart… He should buy more
Condos! I know people that are buying recently purchased over valued homes around the million mark. No one wants Debbie downers opinion… Let them buy. Break out the pop corn and watch. Ignorance is bliss apparently. Not getting caught up in the hype… Priceless.

#30 VT on 10.14.12 at 9:25 pm

#23 Smoking Man on 10.14.12 at 9:08 pm
#24 Old Man on 10.14.12 at 9:08 pm

Smoking Man = Old Man

Busted.

#31 Suede on 10.14.12 at 9:25 pm

When you think you’ve figured it out and are 100% right, on top of the world, making killer cash and you’re just a pawn in the game in reality- is when you land

Ask the two high level RIM execs who demanded flight attendants give them lap dances on a plane. Remember that story? Where’s that company now? They buying any hockey teams?

http://www.cbc.ca/news/canada/story/2011/12/09/rim-execs-flight.html?cmp=rss

Always take heed of caution Tyler. Or you may learn a very expensive lesson like the rest of us already have in boom times. They quickly evaporate paper profits.

#32 Cristian on 10.14.12 at 9:26 pm

“I made 200k in 3 years, probably more money than any reader of this blog made in his whole life.”

Well, Tyler, I am a reader of this blog (although I often don’t agree with Garth) and (sorry to disappoint you, buddy) it takes me about 6 months to make the 200K you made in 3 years.
(Although I don’t really see how you made 200K since the house that sold was not yours but the one down the street. This is a bit like counting your gain before you sold your stock – it’s called paper profit. Try to use that to buy something and you’ll become the laughingstock of everyone you know)

And, oh, did I mention I rent?

#33 TRT on 10.14.12 at 9:27 pm

Some Balance:

Markham is part of the GTA…not some isolated community of 321,000.

Why would Tyler email you that, why not just post in the comments section. That way, you have some anonymity.

I’m watching you. — Garth

#34 Lee from Markham on 10.14.12 at 9:27 pm

I thought Garth will never talk about Markham. I have spent my entire Canadian life in Markham. And I don’t own any house yet. Had a condo and sold it before got hooked to this blog so no credit for that to Garth. Garth gets the credit for keeping me without house now.

I really have to share my experience about Markham to let ppl know what is going on.

We were planning to buy in SouthUnionville, a part of Markham. We were house horny in spring so we visited a cookie cutter house on CABOTO TR, Markham, it was listed at 456K, I asked listing agent, any chance this will be sold below 450K, that’s what I was willing to pay for a house whose backyard ends with Hwy 407. The agent told very rudely, it will be more than asking for sure.

Now we are not buying soon however, I am checking mls 3 times a week. There is another house listed on same street and same size (cookie cutter) MLS#N2478920. Original listing about more than a month ago was 449K, and then it came to 441K and now 429K.

About 30 or so listed in Unionville, only two-three of them are actually lowered their price. That is a beginning but other sellers are not seeing reality yet.

#35 claudius emperor on 10.14.12 at 9:28 pm

BTW Garth, looking at these townhouses in Markham with price of 740 k and walk score of 20…..

Do you still think houses are only 30 percents overpriced?

I would not pay even 40 % of that amount (300 k) for that townhouse.

Saw yesterday advertisement for new development in King ‘township’, north of Vaughan. Starting from 800 k for SFH…

the condo bubble is nothing compared to the above examples I would rather live in a condo at a good location.

#36 houseloser on 10.14.12 at 9:28 pm

dare to compare? $540,600 cash if invest in let’s say Enbridge, in the mid 2009 shareprice is $19.35, you got 23,978 shares, now ENB is at $39.05 morethan doubled the capital and you got $1,090,978. From 2009 to 2012 four years divident everagely $3.20 per year per share so you got $3.20*4*23978=$306,918

Now Total (with dividents keep paying you)=$1,090,978+$306,918=$1,397,896
Nothing to boast for selling a humble 700k less all the fees/tax/commissions has paid for;

#37 TRT on 10.14.12 at 9:29 pm

#28 VT,

Let him have his fun. BTW, he is a young guy.

#38 Rich in Calgary on 10.14.12 at 9:38 pm

He’s made absolutuely nothing.

Tyler? More like ‘Failure’.

#39 Jack on 10.14.12 at 9:39 pm

http://whispersfromtheedgeoftherainforest.blogspot.ca/

Richmond realtor James Wong is back indicating the drop is going to be much worse than people expect.

#40 Jon B on 10.14.12 at 9:43 pm

The ideal strategy is to buy your home in cash; no matter what the market conditions are, and ALSO have a wad of cash left over to invest for growth/preservation. I realize this is not a common scenario of possibility but it needs to get some airtime as this blog often argues that owing a house and investing money as an either/or scenario.

#41 VT on 10.14.12 at 9:45 pm

#36 TRT,

I’m not outing him out of malice. His ramblings are amusing and add a certain je ne sais quoi to this blog. However, he’s been getting sloppy as of late managing the personas and timing of posts.

Couldn’t help myself ;)

#42 TRT on 10.14.12 at 9:45 pm

#32 Garth says,

“I’m watching you. — Garth”

Trigger (Keyboard) Happy? I was just about to post this:

That dude (Realtor Philip Chan) selling his house in Vancouver and featured on CBC The National last month (2575 7TH Ave W, Vancouver, BC, V6K 1Y7, Canada) has lowered his price AGAIN.

In March …$1.79 Million

In Sept … $1.57 Million

Then CBC where he says market will only go down “10-12% from March”.

Now: …$1.37 Million + Free Car.

Can you get off my back now Garth?

#43 Tim on 10.14.12 at 9:45 pm

Your analysis is flawed–you are assuming the dork had $540K to invest. He probably put 10% down, which means he would only invest about 50K. When you realize a profit of $125K over three years from a 50K investment, it is much better than gains from the stock market for the same period.

Leverage cuts both ways. — Garth

#44 ak_forty_seven on 10.14.12 at 9:49 pm

Yikes, I drive an A4! I like the quattro… I have your back Garth….so take it easy …we cut from the same cloth.

#45 Old Man on 10.14.12 at 9:57 pm

#33 Lee from Markam – do you remember Family Trust? Just sit back and do nothing, as this area will too crash. Forget about buying a home for a few years, and relax.

#46 gladiator on 10.14.12 at 9:58 pm

@31 Cristian: ok, hats off to you, mister. You won the contest. Now, share your secret of how you make 400k in a year to support your ballsy claim.
Give enough details so that your story sounds real. And no stories about one-offs, please: you said “it takes me about 6 months to make 200k”, meaning it’s a continuous process, which leads to the conclusion that you keep making 400 Gs per year.
Spill your beans and make us believe you.

#47 Alex on 10.14.12 at 9:59 pm

News from trenches are not so good for Tyler-minded.
Just spoke with a friend of mine who runs business in
Richmond Hill (Markham neighbor). He told me two stories. First story is that he knows very well a lady who
is decorating houses for sellers for a better appeal. Ironically she is busy when nothing is selling and vise versa when everything is selling in bidding wars. Guess what – SHE IS BUSY up to her neck. Funny part out of all
houses that she staged NONE were sold, and she did a lot of them. He told me that she is in disbelieve of what is going on.
Second story is this chap who is looking for a job as he has business management education. Looking for 2 years. Works through agency taking any office jobs that
are available, sometimes 3 jobs per week in different companies. So he said last week he worked in 3 different companies hoping to land there. Not just there
is no positions, but ALL 3 businesses are closing down.
And one more. He worked in IBM in Markham for a few days, out of 7 departments full of web developers who was getting anywhere from 80k-120k only 7 people left,
AND they were already told that their jobs are only till
January.
With this,I wish good like to Tyler-likes to realize their paper gains.

#48 AL on 10.14.12 at 10:03 pm

A townhouse in Markham sounds like hell on earth. I’d rather be in Okotoks south of Calgary at half the price. I’ve been to both and there is no comparison. The GTA burbs were nice 20 long years ago, but its commuter hell now. Half a million to live there, no way.

#49 Doug in London on 10.14.12 at 10:04 pm

I guess Tyler will have to find out what’s coming the hard way. Meanwhile, my portfolio is up about 7% from January this year. Not bad for a basement dwelling loser, and I can pick up and move (although I would like to stay near family here in the Forest City) if there are greener pastures elsewhere without having to worry about selling a ball and chain house. Has anyone here heard the Gordon Lightfoot song Alberta Bound? I’m still contemplating following that lead for a 1 year contract job in Nunavit.

As for the Audi I much prefer my 10 year old Honda, which earlier this year replaced a rusted out 19 year old Dodge.

#50 bricklayer on 10.14.12 at 10:06 pm

how did you get a hold of this picture of mine????????

#51 Old Man on 10.14.12 at 10:10 pm

The owner of Family Trust had a daughter in Markham who moved to Ottawa, and was going ballistic that she was staying overnight with me on occassion, as he knew me well, so said she is legal, so now what? I was a bad boy lol.

#52 T.O. Bubble Boy on 10.14.12 at 10:11 pm

Tyler’s Mom probably bought this place… all of Tyler’s cash was tied up in the A4.

I think that #22 Boopsie is actually Tyler trying harder to prove his point… the $740k townhouse in that link is one of the most expensive in all of Markham. Most are in the 400’s and 500’s.

For all we know, maybe this $270k beauty is more like Tyler’s actual townhouse:
http://www.realtor.ca/propertyDetails.aspx?propertyId=12476413&PidKey=-1302303373

#53 Freedom First on 10.14.12 at 10:12 pm

Tyler, Tyler, Tyler,……some people have humility, some people will learn, and gain humility, and some people stay fools forever. I sincerely hope you learn, as you are in for a rough ride.

#54 T.O. Bubble Boy on 10.14.12 at 10:20 pm

Another reality check for Tyler — I have a co-worker trying to sell a condo/townhouse right now, and it has been months with still no offers. According to this person, the market for anything that isn’t a detached SFH is simply dead.

#55 T.O. Bubble Boy on 10.14.12 at 10:21 pm

(in Markham)

#56 Rainman on 10.14.12 at 10:23 pm

hey Garth – firstly, Tyler is a dick… this was easy pickins, not your best.
As a couple others have mentioned, he probaly only invested 50K to make a pretty good profit potentially. I only say this from personal experience. We bought a place back in 2003 for 405K with 10% down. We didn’t anticapate on our property more than doubling? so yes, a little lucky walking out of there with more than 400K in our pockets. No way I could have made that in the stock market or other investments.
I do agree with you there is a crash of sorts coming, you just need to be aware of the surroundings and don’t think RE will go up forever.
We are renting now, but will own again one day as we enjoyed that. Timing is everything.

#57 woper_holic on 10.14.12 at 10:26 pm

Unfortunately those are typical townhome prices in markham: http://www.realtor.ca/propertyDetails.aspx?propertyId=12370302

——————————————————————

What a f#%kin’ heap of crap…worthless. Can buy a mansion in California for less than that.

#58 45north on 10.14.12 at 10:29 pm

Tyler: but here in Markham houses sell in only days, usually for over asking with multiple offers.

Tyler, you are in for such a surprise. Did you read what Lee from Markham wrote? How about this for a test: look into what he’s saying. Look at a few listings, phone the real estate agents, just say you’re looking. They love to talk. Give it a little time. Report back here in two weeks.

#59 Angel on 10.14.12 at 10:31 pm

I feel bad for Tyler’s new neighbours, 1., ’cause this obnoxious a-hole is their neighbour, and 2., because they bought a townhouse in the middle of nowhere for 700K. Oh, no, wait, Mississauga is the middle of nowhere. That makes Markham the outskirts of nowhere.

#60 Angel on 10.14.12 at 10:32 pm

Unfortunately those are typical townhome prices in markham: http://www.realtor.ca/propertyDetails.aspx?propertyId=12370302

Oh, gawd, if it weren’t for the attractive brick facade I’d think I was in Clayton Heights.

#61 KG on 10.14.12 at 10:33 pm

Waiting for tomorrow. I will bring myself in.

#62 Dan7 on 10.14.12 at 10:39 pm

Garth 7% is way too conservative my CAGR over the last 4 years is 17.5% with dividends…….is that good :)

#63 GTA Girl on 10.14.12 at 10:46 pm

$500k + to live in Markham? In a newly built town home probably next to a farmers field.

If it was newly built I can guarantee that behind the walls is little to no insulation. With builders garbage pushed between walls, ceilings

If it has a flat roof anywhere, the moisture barriers are cheaply laid, and have been probably leaking.

The cement is inferior, with too much water in the mix…(Tyler, look for cement dust/crumble on exterior base walls).

And the shared roof is not properly insulated, with cheap particle board. Many roof repairmen won’t step foot on new rooftops without a good safety inspection. Notorious.

Drywall buckled. Uneven floors. Cheap windows, that have already lost their seals. Bad furnace air venting. Squeaky floors due to bad place floor joints.

Garage isn’t properly insulated from main house. Sinking garage floor.

This is the type of bad construction routinely being done on new builds in last 3 years.

And the ever present, MOLD.

Unfortunately with the funny practices of York Region council, development has been fast tracked. Local municipalities cannot keep up with inspections….or..the inspections are half assed or a overlooked formality.

I wouldn’t touch a new build, especially a town home or semi, anywhere in the GTA built in the last few years. Too many idiot sons, or former nightclub owners and anyone with a investor cluster calls themselves ‘Developers’.

It will soon be the new dirty name to be called.

#64 Hawk on 10.14.12 at 10:47 pm

#14 Jay Currie on 10.14.12 at 8:45 pm

==========================

Good post, the chap ‘Tyler’ seems a young, brash dude whose just lucky the market rose in the last few years and is riding the wave.

But no bank will lend him a large sum of money to invest in a stock portfolio, banks are likely to only lend against hard assets.

The thing is, real estate is by it’s nature a long term investment. Unless you’re a renovation pro, operating in a rising market you are unlikely to make money in RE in the short run. Most people see a decent gain over decades.

However, the operative assumption of most posters on this blog is that the average individual who opts to rent and not buy RE will be smart and vigilant in overseeing financial investments to achieve a 7% compounded return.

I seriously question this assumption IT COULD BE FATALLY FLAWED for many………… years ago I invested in both mutual funds, through a financial adviser and also in RE. About 13 years later today, my land would be worth a lot more, my funds if I cashed are -17K (negative returns) . I admit I messed up with a poor financial adviser but this belabors my point…………..whose to say that anyone investing in stocks is going to better at it, than Real Estate? If anything RE has an advantage of making the average person more focused and disciplined in paying of a mortgage, whereas some one rent free has a much greater natural urge to party with the excess cash saved, rather than invest it consistently month over month?

All that said, this is definetely not the time to buy RE, but rather buying on a dip about 12 months from now would be a good investment for the average person in the long run IMO.

Now if someone’s a stocks or derivatives wizard good for them………..but somehow I doubt “the average Joe / Tyler” fits that description.

#65 FTP - First Time Poster on 10.14.12 at 10:55 pm

Your US Counterpart has recently posted his analysis of the reason for rising home prices in the US. Good reading:

http://www.doctorhousingbubble.com/feudal-system-real-estate-wall-street-new-landlord-entry-level-buyers-bidding-wars-2012/

#66 wes coast on 10.14.12 at 11:02 pm

Funny thing about Tyler – he went to the casino – put the chips on black and won once – and now he’s cocky and acts like he’s donald trump. Tyler , if you knew prices would shoot up in 3 years – why didn’t you buy 10 townhomes, flip them , and pay off your mortgage? Why – cause you didn’t buy that place knowing you’d make money. You did what the CIBC commercial told you to do. Good for you for making some equity. But any dick can bet on the right horse by mistake. Let’s see you repeat that success then come back and gloat. If you had any financial sense you’d have sold your townhome at the top – banked your profit and waited for the next opportunity – but – CIBC didn’t tell you to do that. So you sit, patting yourself on the back for a lucky draw once on your life, and all the while your chips dwindle and you think strutting your shit will cover the fact that you’re sinking. Leaving the casino breakeven after being up 200k is the same as losing 200k – Loser! ;-)

#67 OlderbutWiser on 10.14.12 at 11:23 pm

Just got back from spending the weekend at my Aunt and Uncle’s in Keswick. They are in their 70’s. We were talking about investments and they think that RE is a good investment right now. I tried to talk some sense into them but they said, and I kid you not, “real estate always goes up”. These are well educated people. She was a teacher and he was a principal. Of course both are retired now with DBP plans so not really savvy investors.

They had owned about $125,000 Gov’t of Ontario bonds that were yielding 9% maturing in 2025. Some stupid broker convinced them they should sell the bonds and then put them into Bond mutual funds!!! They think they now have less risk – cus they are “diversified” – OMG! I almost fell off of the chair. I asked them what the mutual fund MER was and they said “the broker said that we don’t pay him, the fund pays him” so apparently they think that the mutual fund doesn’t cost them anything.

Oh, and I told them, that if the bond fund is yielding them 4% and the MER is 1%, that they are paying 25% of their income to the managers of the mutual fund. I also tried to explain the investment risk to them… what is that saying again….oh yeah, something about a fool and his money….

I am amazed at the number of people that will make no effort to educate themselves before making decisions about their investments. These people have all of the time in the world but won’t crack a book. Oh well, I tried. Keep getting the word out there Garth, you have no idea of the number of idiots that need a lesson.

#68 buy low on 10.14.12 at 11:25 pm

10 of us will be tuning in on a big screen web enabled TV tomorrow to learn – do we have to pay anything?

#69 Old Man on 10.14.12 at 11:25 pm

#48 Doug in London – do not sign a contract for the pie in the sky with a salary that looks good without looking at the living costs first, as could be a trap.

#70 Hammocked_Up on 10.14.12 at 11:30 pm

Mathematics and prescient scenarios have no place in discussions about housing. How dare you, sir.

#71 Mark on 10.14.12 at 11:35 pm

The TSX would need to triple to match the sort of inflated valuations that are present on real estate. This is actually a fairly likely scenario over the next 5-10 years, while real estate stagnates or falls. Could we be having this same conversation, a decade from now, with the ‘greater fool’ being the stock owners who stubbornly refuse to sell the TSX when it hits 40,000?

After all, the average Canadian house has no cash reserves and trades at a P/E of around 30-35X earnings. The average TSX stock has roughly 20% of its market cap in cash and trades at a P/E of around 12.

Buying stocks on leverage right now could be like loading up on Vancouver real estate in 2002-2003 on lots of credit.

#72 Old Man on 10.14.12 at 11:36 pm

#62 GTA GIRL – I agree, as you are one smart lady.

#73 THE CELIAC HUSBAND on 10.14.12 at 11:41 pm

The numbers thrown around here for shelter are reminding me of a Monopoly game. 500K, 700K, 120K profit.
How did we end up here? Speculators? Real value increase? I have no idea. It all feels surreal to me.

I am just glad my family is/was flexible enough to escape that sort of race for the most basic need. A place to hang your hat.

#74 Mr Buyer on 10.14.12 at 11:54 pm

7% non-cowboy, you now have my attention. I have been agonizing over 5% and the inherent risks but 7% is a nice inducement. I have to do something different but I do not want that different to be losing half our money on investments.

#75 Mr Buyer on 10.14.12 at 11:58 pm

As for particle board, I have been lead to believe that modern particle board often bears heavier loads and lasts longer than plywood of the same thickness. I have had bad luck with it in the past but I guy I trust says it is the way to go with sheathing.

#76 Devore on 10.14.12 at 11:59 pm

Every bandwagoneer is a winner when the bull market roars. Lets see how many of them get off at the right stop.

#77 AACI Home-Dog on 10.15.12 at 12:11 am

#66OlderbutWiser…said…

I am amazed at the number of people that will make no effort to educate themselves before making decisions about their investments. These people have all of the time in the world but won’t crack a book. Oh well, I tried. Keep getting the word out there Garth, you have no idea of the number of idiots that need a lesson.

I say…

That’s a good thing…if everyone was “smart”, good gains would be more difficult for everyone to obtain !

#78 Click Here, its different on 10.15.12 at 12:16 am

If there’s somethin’ strange in your neighborhood
Who ya gonna call?
(Garth Turner!)

#79 Roial1 on 10.15.12 at 12:26 am

#74Mr Buyer on 10.14.12 at 11:58 pm
As for particle board, I have been lead to believe that modern particle board often bears heavier loads and lasts longer than plywood of the same thickness. I have had bad luck with it in the past but I guy I trust says it is the way to go with sheathing.

Yup. True. BUT! not if it gets wet during construction.
It gets real crappy real fast when wet.
Make damn sure that the wrap is well done and ALL staples are well tapped. THIS IS CRITICAL!

#80 Bryan on 10.15.12 at 12:32 am

I love the situation we are in now. It is so damn hard to qualify for a mortgage, forcing the perpetual renters to be forever priced out in a big city like 416. At the same time, people with existing mortgages can enjoy this low interest rate for a long time. By the time rates normalize, the tenants would have paid off their properties.

I wish you luck being liquid. I would rather pay the bank 2.15% to use your money (for which you probably get 1.05%) and invest it in providing shelter for you so i can take your rent check every month and build equity for myself.

I always tell my tenants that i think real estate will definitely crash by at least 90% when i stop by to pick up my rent check. I even refer them to this blog. After all, i want them to have some hope in the future so they can be motivated enough to get out of bed every morning to go to work to pay my mortgages.

It’s going to be a nasty CRASH, renters, a nasty CRASH.

#81 Nostradamus Le Mad Vlad on 10.15.12 at 12:43 am


“. . . while 416 stays in the fortified bunker with the hot nurses.” — Would this be a reference to SMan’s extra-curricular activities / lifestyle? It certainly sounds like it!

“Unlike the investment returns, which are immediate . . .” — That’s what I like, instant cash either to use at a store or to further investments. Obviously, the fed. and prov. govts. are not here to bail us out, so we have to help ourselves, be self-dependent.
*
Dead or Dying and it can’t come quickly enough; Massive Withdrawal Method Friday just passed; UK tells EU in no uncertain terms; Stop aid for rich One of the better ideas to come from a politico since Garth launched the TFIA; The Jobless Generation These are the ones who are taking over from us. Or not; Canada – EU Trade Deal Harper’s plan is working out very well, as he is systemically destroying Canada and its inherent sheeple slowly but surely, and 25:38 clip Harper and the CPC destroying First Nations; China shuns IMF; Fiat Currency and police state; John Mauldin Chonic deflation; Who is driving world stocks higher? Any guess is good; Separation’s high cost; Fiscal Cliff Smart money ain’t so smart; Sunday Post #2 Ditchmond plummeting; Wall St. Nightmare in October; Belgium’s Secession, UK threatening to go and Texas seceding. Odg, this is so much fun!

China not responsible for US trade deficits, and IMF tells Japan I would telllll the IMF to take a flying leap; JPM Sleazebags Ltd.; No Food Day Portent of the future? Bernanke, China and Brazil; Flirts; Spaiin – US fiscal cliffs may spark volatility; What Would Happen if every debt in the world were paid off by Friday? The IMF, ECB, US Fed and other monopolies wouldn’t be needed, that’s for sure; Steinway Survived and still makes beautiful pianos; 32:48 clip Silver shortage imminent. This goes with the previous post, where a whole lotta silver mysteriously disappeared Friday.
*
9:52 clip Overpopulation is a myth, except for the idiots who live among us; Jimmy Savile may have molested corpses (nothing proven yet), but they wouldn’t care — they’re in the next worlds now; Holy Money Proof that limeys are fruitcakes; Short clip Start ’em young; Does Cookie Monster live on Mercury? It appears so; Obomba – Israel Interesting if he does win; Shamoon Virus Coming soon to infect a computer near you; Social Media Not good for one. Avoid it; Numbnutz Par Excellence What do they all have in common? Earth seen from 80,000 feet.

#82 Jay Currie on 10.15.12 at 1:14 am

GTA Girl – you nail it. With the best will in the world 90% of the contractors building “new” are under huge cost constraints. Even if they want to do it right they don’t have the headroom.

If you buy a “brand new townhouse” you are reaping the whirlwind of how construction practices have drifted in a booming market. Worse, you will have no idea what to look for. (About the only good news about the concrete coffin condos is that it is actually pretty tough to screw up concrete and rebar; but you can bugger up the curtain wall as so many Vancouverites have found out to a 20-40k cost.)

Renting has the great advantage that when the ceiling leaks it is the landlord’s problem. No insulation, move. Furnace sucks? Move.

There are great old houses which will be going for a song in a couple of years. Wait.

#83 cowpie on 10.15.12 at 1:57 am

#23 Smoking Man on 10.14.12 at 9:08 pm
#24 Old Man on 10.14.12 at 9:08 pm

Smoking Man = Old Man

Busted.
______________________________________________

On a totally unrelated topic, tonight I was driving in from NW Cowtown and saw…

A fancy new pick up being driven by an attractive late 40ish blonde. An early 50ish distinguished bearded gent was in the passenger seat. The license plate read “SMOKNMN” !!!!!!

SMOKING MAN SIGHTING! He’s REAL!!!!!! Or there’s two SM’s lurking out there. A disturbing trend, perhaps. We should all take comfort that there were no testicles hanging from his pickup truck, or at least that I could see.

#84 Nubbers on 10.15.12 at 2:47 am

Its totally worth hearing about people like Tyler if it means we get back to pictures with girls in bikinis (which I now understand to be an allegory for house horniness).

#85 Canuck Abroad on 10.15.12 at 3:08 am

Markham is a good part of the GTA? Wow, I learn something new every day at Garth’s blog.

Somebody would have to pay me 530k to live there. To each his own I guess…

#86 Havier on 10.15.12 at 3:14 am

Tyler did it without having to put the full $540k down but to reap the 7% in your investment comparison he’d have to have the full $540k… It’s a flawed argument your presenting as he, and the majority of other home buyers, do not have $540k just sitting around to invest while they do the ‘smart’ thing and rent. What you should be using is his downpayment as your base figure in your investment scenario — even if he had enough to clear cmhc insurance theres no way at 7% he would make anywhere close to what he made in his real estate investment. Kudos to audi boy.

#87 Canuck Abroad on 10.15.12 at 3:21 am

GTA Girl, great post and reminded me of the first home I bought. Four story townhouse in Fulham London. Knew nothing about houses, just expected the radiators to be hot and the taps to produce water etc etc. The place was starting to crumble when I bought it despite being not very old. Had to replace the boiler the first winter. The top and ground floor were seemingly freezing all the time, so we pretty much lived on the middle two floors. At one point I put in new flooring on the ground floor (there was no basement) and when the builders lifted up the kitchen floor I was horrified to see bare earth and rubbish form the last builders. No insulation at all. Explained the cold. Sold before the next winter and have never lived in a new build since. Highly education but expensive project, that one.

#88 dropping like a Baumgartner on 10.15.12 at 3:38 am

“Vancouver condos about to pull a Baumgartner – SFH holding altitude”

east van crash report – midnight oct15/12

sfh in grandview-woodlands inventory remains very tight – ask prices holding up so far – a cool mil gets you way ugly;
http://www.realtor.ca/propertyDetails.aspx?propertyId=12344512&PidKey=506456033

or way old;
http://www.realtor.ca/propertyDetails.aspx?propertyId=12430605&PidKey=-780362702

downgrade a bit to small,old and ugly for only 850!
http://www.realtor.ca/propertyDetails.aspx?propertyId=12454913&PidKey=-258918830

what seems to have changed the most, is the time to sell. Instead of a week or 2 , some signs stay up for 3 or 4 weeks before getting sold. Bidding wars are so last season though.

Condos however are dead according to my realtor ski partner and the number of new units going in around oly village is HUGE.

Supply of one type going up fast, and of the other going steadily down for 50+ years now. ergo sfh outside the uber bubbly areas (west side) will do just fine. If you want a house in van and can time it perfectly you may get 10-15% off todays prices, but we all know mkt timing is a tough game.

#89 Buy? Curious? on 10.15.12 at 4:19 am

Garth, what you fail to realise is that this $500k that Tyler used to buy his place in Markham wasn’t earned at all. It was either loaned to him by the banks or given to him by his family. So if he made $125k over 3years or $65k, who cares? The only work he did to get that money was a few strokes of a pen. What bank or family member is going to give you $500k to put in a REIT, bond or preferred share? Even if in the worst case scenario, he loses all the money, what’s the worst that could happen? He’d have a bad credit score, garnish his wages? Oooooh, scary. They can’t throw you in prison. I think Tyler has made a wise decision. Why don’t we ask him in 10years, 15years how he think he did in the ol’ buying vs renting scenario?

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

#90 Picasso on 10.15.12 at 4:43 am

See…. Tyler is an owner so he’s a pumper.

Same as Yahoo Finance or InvestorsHub stock boards.

LOL

#91 Pr on 10.15.12 at 6:24 am

…I made 200k in 3 years, probably more money than any reader of this blog made …

Yes you are right and wath scare me the most is a intire nation think its normal!!
So naive Canadians!
Get the bank of Canada out of this country and take back the control of ,the money$curency, to the people. Interest rate so low for so long will destroy the economy of this country, 100% sure!

…few doors down just sold for over 700 000$…
Easy to achief this number at 2.8% interest. Now try to sell this price but at 8.5% interest rate! IMPOSSIBLE!

#92 I'm stupid on 10.15.12 at 6:26 am

#73 Mr Buyer

Why do you fear losing? Remember that the reason you try to have a balanced portfolio is to reduce downside risk. If you have money that is intended for retirement and you are more than 10 years away from retirement you should have equities. If you have a relatively secure job your portfolio should reflect that as well. Paper gains and loses are just that, over 10 years the dividend payments alone will return over 30%.

#93 Rob now in Nova Scotia on 10.15.12 at 6:47 am

Garth,

That’s a lot of assumptions: no CMHC (how many buyers do that) and paid cash with no mortgage (wow, how many buyers do THAT?). It would be helpful to see these same numbers with mortgage payments factored in.

I like the pic and adding some flavor to the pics again. Can we see that swimsuit issue soon?

#94 Sarabeth on 10.15.12 at 7:16 am

I wonder what Tyler pays in property taxes that renters don’t pay?

I also wonder about the upkeep/maintenance costs too… Again, costs a renter does not pay.

#95 Enz on 10.15.12 at 7:39 am

Here are some stocks I am currently shorting big time; reits; boardwalk, Calloway, northern properties, home capital, genworth capital. Any one have any good shorting ideas? Would luv to short the crap out of chmc subprime mbs…
Enz Mississauga

#96 robert james on 10.15.12 at 7:53 am

Bearish Richmond realtor .. Taken from the real estate talks forum ..http://richmondbcrealestates.com/?p=832

#97 Ralph Cramdown on 10.15.12 at 7:53 am

As for particle board, I have been lead to believe that modern particle board often bears heavier loads and lasts longer than plywood of the same thickness.

But would you buy this boat?
http://www.saintcustomboats.com/MissOSB.html
http://www.boatcan.com/showboat.php?ad=1242160836

I guess it’s a better nautical construction material than Chinese drywall, but I’d be staying close to a muster station. The man who commissioned it went broke due to the US housing bust, and I’m pretty sure the boat sold for nowhere near the asking price.

#98 TurnerNation on 10.15.12 at 7:55 am

#23 Smoking Man here’s an unwarranted tip.

Buy Jan or April puts on DOL.TO.
US dollar stores were hammered last week: Dollar general, Family Dollar, Dollar tree et al. DOL.TO hit all time parabolic high recently, pulled back a bit. Looking for a pop this week to buy the puts. Downside target $56.

#99 House Horny Housewife on 10.15.12 at 7:59 am

Garth,

You forgot to factor in the bragging rights of ownership and the right to decorate the place in wall to wall black leather with sequins and chrome molding.

I hear the Audi chicks dig that .. ;)

HHHW

#100 Smoking Man on 10.15.12 at 8:26 am

97 TurnerNation.

Don’t think that’s a wise bet. But then again I wrong once or twice a year.

# 82. Cowpie.
You have just put every bearded 50ish dude under the micro scope at the Gatho show next week. Where is my razor.

#101 Gypsy Kid on 10.15.12 at 8:28 am

we have an audi a8…why is everyone dissing audis???

#102 Realtor # 1 on 10.15.12 at 8:32 am

notice how Garth did not talk to the point of buying in 09 and even with a correction i’m still on top.

I told you so.

Prices will not go down past the 08/09 correction.
That was the time to buy.

#103 maxx on 10.15.12 at 8:41 am

I wonder how many RE debt slaves will never know the feeling of financial independence?

Going forward, it looks likely that tax and energy increases will pick up the slack at mortgage renewal time, if not interest as well. Better hope madly that there is no major life event to upset the tenuous balance.
Tyler is simply hanging on to the mirage….with a vengeance toward those who are liquid and nimble.

I suspect that people who enslave themselves to RE have no idea what it is like to have actual cash growing and working for them- producing income, every single month of their lives.

#104 EIT on 10.15.12 at 9:02 am

The markets susceptible to the highest gains is also vulnerable to the highest losses. All part of something called risk. It’s not just a boardgame.

#105 claudius emperor on 10.15.12 at 9:16 am

Ouch:

OTTAWA (Reuters) – Canadian household debt is far higher than previously thought relative to income, Statistics Canada’s historical revisions showed on Monday, heightening pressure on policy makers to address what they have called the biggest domestic danger to the economy.
And the rate was still rising to a new record in the second quarter — before the tightening of mortgage insurance rules. The household debt-to-income ratio jumped to 163.4 percent in the second quarter from 161.8 percent in the first quarter, according to revisions made to bring the agency’s methodology in line with updated international standards.

http://ca.finance.yahoo.com/news/canada-revisions-show-household-debt-124303560.html

#106 a prairie dawg on 10.15.12 at 9:16 am

#87 dropping like a Baumgartner

– — –

Go Felix!

http://www.businessinsider.com/gif-of-felix-baumgartner-jumping-from-space-2012-10

#107 martin9999 on 10.15.12 at 9:23 am

What Garth doesnt understand is that people that buy houses dont have wealth and they see the only way to built it is by buying a house.

I understand quite well, and try daily to educate them. — Garth

#108 Smoking Man on 10.15.12 at 9:34 am

Straight of the press. Finacial post. Canadians in more dept than thought.

Lmao. Translation. The engineerd housing soft landing not working. Track 6ers don’t beilive or care what BOC says.

With dept at 1.6. C is hand cuffed to the bed. Remeber George Castanza.

Rates to stay low to infinity.

#109 Patiently Waiting on 10.15.12 at 9:38 am

It’s now official, Canadians have surpassed the the debt to income ratio US consumers had just before their housing market imploded . . . . ever get that sinking feeling . . .
———————————————————
Canada’s household debt is far higher than previously thought relative to income, Statistics Canada’s historical revisions revealed on Monday, heightening pressure on policy makers to address what they have called the biggest domestic threat to the economy.

And the rate was still rising to a new record in the second quarter — before the tightening of mortgage insurance rules. The ratio of household credit-market debt to disposable income jumped to 163.4 percent in the second quarter from 161.8 percent, according to revisions made to bring the agency’s methodology in line with updated international standards.

Under the old method, Statscan had reported a ratio of 152.0 percent for the first quarter.

The agency revised the ratio for 2011 to 161.7 percent from the previously estimated 150.6 percent.

The debt ratio is a key measure of the vulnerability of households to financial shocks, whether from a loss of income or a sharp fall in housing prices. A Statistics Canada analyst said the Canadian household debt-to-income ratio was well above that of the United States.

http://www.bnn.ca/News/2012/10/15/Household-debt-to-income-ratio-keeps-rising.aspx

#110 LuckyRenter on 10.15.12 at 9:59 am

Household debt-to-income ratio keeps rising!!

Canada’s household debt is far higher than previously thought relative to income, Statistics Canada’s historical revisions revealed on Monday, heightening pressure on policy makers to address what they have called the biggest domestic threat to the economy.

And the rate was still rising to a new record in the second quarter — before the tightening of mortgage insurance rules. The ratio of household credit-market debt to disposable income jumped to 163.4 percent in the second quarter from 161.8 percent, according to revisions made to bring the agency’s methodology in line with updated international standards.

Under the old method, Statscan had reported a ratio of 152.0 percent for the first quarter.

The agency revised the ratio for 2011 to 161.7 percent from the previously estimated 150.6 percent.

The debt ratio is a key measure of the vulnerability of households to financial shocks, whether from a loss of income or a sharp fall in housing prices. A Statistics Canada analyst said the Canadian household debt-to-income ratio was well above that of the United States.

http://www.bnn.ca/News/2012/10/15/Household-debt-to-income-ratio-keeps-rising.aspx

This will not end well !!

#111 Regan on 10.15.12 at 10:23 am

There’s one thing about doing post-mortem math on any decision – you can make the theoretical numbers beat out your real outcomes by just choosing the right scenario. I doubt Tyler would have put down half a million in a wise investment. I also doubt he’s selling right now, and no decision can be truly weighed until it’s run its course.
I’d be more convinced by looking at how the average investor has done versus the average home owner and I think we all know home owners have made out like bandits in the last few years. And, like many people have mentioned, you can’t get a cheap loan to speculate on an investment UNLESS it’s a house. However, as Garth mentioned, leveraged speculation cuts both ways, thus the issue of risk emerges. Usually, it’s exactly that kind of ‘lucky fool’ news that means the latecomers to the party are about to be the greater fools. It’s why I hesitate to follow Garth’s advice about REITs and preferreds – haven’t they already had their run-up? Isn’t everyone chasing dividends as the latest means to get some decent use of your capital in these low-growth times?

#112 refus on 10.15.12 at 10:28 am

It seems Garth has ignored the tools of leverage. Yes people can end up underwater, but it worked out for Tyler. Lets be honest here and not skew reality. If Tyler had 500K cash to buy the house. He would most likely put 20% and borrow the rest at record low interest rates. Then invest the remaining 400K at your balanced portfolio. Now that the house has appreciated to 700K and he pockets the 200K “TAX FREE” btw.

Garth you are probrably thinking leverage real estate is gambling and well you maybe right. The question now is who was the winner though? Tyler sure has the bragging rights.

#113 The real Kip on 10.15.12 at 10:35 am

Rock on Tyler! Markham is going to grow even more and should hit 500,000 people within 10 years or so. Overall, there will be upward pressure on housing in Markham.

#114 Just Park It on 10.15.12 at 10:36 am

An Audi A4 is a beautiful piece of Germn machinary – it’s not for everyone, but if your budget can handle it – you will experience a whole new level of driving (yes, a bicycle will get you there also – but if you can indulge, this is pure bliss).

I think Tyler is either fishing or just a punk out of school – I had dinner at a downtown resturant last week – and all those young hotshot brokers beside us – talking like the flow of money will never end – guess what boys – I had been a stockbroker in the late 80’s (and it was exactly like the movie with Charlie Sheen in Wall Street). It does consume you – but eventually everyone falls on their face, that is life – we learn from our mistakes. I would be actually worried if I didn’t fail or struggled at a job or business –

I actually am more shocked at people’s response to Tyler then his comments. Why do people get so worked up from a poster. Anger is a person’s mechanism in deflecting self-worth and doubt, chill, don’t let others steal your energy.

If you sat beside a guy on the bus, would you raise a stink if you overheard his comments. So why here – I love Garth’s blog for the entertainment value – I base my financial welfare on personal values and paid expertise. I let the net be my source of entertainment.

Good Job Garth!!

#115 fredflinstone on 10.15.12 at 10:46 am

Canada revisions show household debt much bigger than thought

Canadian household debt is far higher than previously thought relative to income, Statistics Canada’s historical revisions showed on Monday, heightening pressure on policy makers to address what they have called the biggest domestic danger to the economy.

The revisions show the ratio in 2011 was 161.7 percent instead of 150.6 percent as previously estimated.

http://ca.finance.yahoo.com/news/canada-revisions-show-household-debt-124303560.html

#116 Cristian on 10.15.12 at 10:54 am

“@31 Cristian: ok, hats off to you, mister. You won the contest. Now, share your secret of how you make 400k in a year to support your ballsy claim.”

Have you heard of physicians?

#117 mythbuster on 10.15.12 at 10:56 am

Garth, in the late 1990’s I started worrying that the financial world had ‘too much paper assets’ and too little real ones. In 2003 I became really worried of a coming financial tsunami. In 2008 I thought ‘this is it’. And while it was in the USA, Canada that was supposed to be ‘the same as the USA’ was not. It came out unscathed.

Since 2009 I thought Canada is machinating a much worse collapse because we have to be worse off than the USA, or else we cannot compete. I saw all the sovereign moves to encourage debt and mortgages as part of the ‘scheme’ (deliberate or not? I don’t know).

We are at the precipice now, probably, maybe, possibly, perhaps, sometime… in the future… I don’t know anymore.

What I do know is that Canada has not yet experienced the USA-like melt.

And I also know that financial markets are investments only if they pay dividends or generate yield. The rest is gambling.

I look forward to see how you eliminate gambling from your investments prescription that you said you’ll deal with tomorrow.

#118 Tony on 10.15.12 at 11:01 am

Prices in Markham fell about 3 years ago at which time nothing was selling. The average half a million dollar house from 3 years ago is selling for around 625,000 dollars. Houses did sell after the mortgage rules changed but homes are sitting on market now with no offers. Sellers have not cut prices yet but will of course as the other cities are falling. Like i said when Stouffville gets shellacked or drops around 30 percent over the next 15 months or so Markham will likely drop 20 to 30 percent over the same time period.

#119 T.O. Bubble Boy on 10.15.12 at 11:05 am

Here’s a fun interactive map:
http://www.cbc.ca/news/interactives/housing-canada/

Look at Victoria — average price down $18k (almost -4%) in 1 month! (PEI is even worse)

#120 ozy - Mark-ham??? on 10.15.12 at 11:09 am

1. Now, Mark-ham and Rich-Mond Hill – we all know will be toboganning 30% from OBSCENE prices for NO TOP VALUE. Obviously those aging houses with wood structure can’t grow in price forever. No arguments here I hope.

2. However, many if not most immigrants came to internationally acclaimed olimpic Kanata for material values, like gold and bricks, and to reproduce themselves (obviously, and nothing wrong ). No mistake here. The problem is that despite point#1 above, they will be dragged to buy at top prices. Of course, that’s why it is called a HUNT TRAP: you want the aged cheese mouse, come here in the metal cage and get as much you want. Your mice brothers are here too. Come, the cheese melts so instantly, there is some with chocolate, vanilla and mall shopping ‘fun’ too, anything you want.

3. Conclusion: Don’t be a SEAL BABY on ice around here folks, the savage hunters and will trap you badly, same as 300 years ago.
Run away and save your life ( Forget MARK’s HAM :)). No arguments here I hope either :)

#121 PoorgEoisie on 10.15.12 at 11:13 am

I did a little Internet markham perusing surprisingly, I did not find many 700k townhouses leading me to believe Tyler has one of these sweet 699k-ers

http://www.zoocasa.com/en/real_estate/1915418-29-Earnshaw-Dr-Markham-Ontario-L6C0E4

Brand new build down the street for 595

http://www.zoocasa.com/en/real_estate/1711327-Bishop-Gates-at-Victoria-Square-Markham

Or if you can’t afford to share walls with a neighbour you can settle your shame in these SFHs

For 649
http://www.zoocasa.com/en/real_estate/1363697-8-Chatelaine-Dr-Markham-Ontario-L3S3S9

For 669
http://www.zoocasa.com/en/real_estate/1881874-33-Silkgrove-Terr-Markham-Ontario-L6E1P7

628k
http://www.zoocasa.com/en/real_estate/1858802-87-Codlin-St-Markham-Ontario-L3S3S4

Markham is chock a block with detached homes listed under 700k. Tyler tap on your bedroom wall and ask your neighbour how to say “we’re f$&@ed” in mandarin.

#122 Tyler on 10.15.12 at 11:29 am

Well, this one hit a little close to home… I’m an Audi driving Tyler…. but I’m no dickhead…. :)

#123 Tony on 10.15.12 at 11:29 am

Re: #70 Mark on 10.14.12 at 11:35 pm

Your offspring and likely their offspring probably will die of old age before the TSX ever sees 40,000. Now is the time to short the TSX with the index declining around 50 to 80 percent in the next couple of years.

#124 Sebee on 10.15.12 at 11:33 am

WOW!

>Today’s G&M article:
The ratio of household credit market debt to disposable income climbed in the second quarter of the year to 163.4 per cent.

Debt burdens, a huge issue in Canada, were also revised up, meaning the latest second-quarter number compares to 161.7 per cent for 2011, rather than the previously reported 150.6

Just incredible! Until money in hand stops competing with borrowed money the insanity will not end.

#125 Doug in London on 10.15.12 at 11:34 am

I logged on to my trading account and see some nice dividends coming in today. If stocks drop more, I will use those dividends to buy more cheap dividend payers. So I wonder, what kind of dividends are being paid by Tyler’s overpriced house other than a place to live?

#126 Bottoms_Up on 10.15.12 at 11:35 am

A townhouse for 530k? That’s enough to buy 2 SFHs in most Canadian markets.

And 700k for a townhouse? That’s enough to buy a great single in Ottawa (houses that lawyers, doctors and upper government officials buy), or 2 singles in the Ottawa burbs.

I think Markham is in for a rude awakening.

#127 Joe on 10.15.12 at 11:37 am

#56 …. gotta love how the BS just flows from these agent writeups on the listings nowadays…”Prestigious Kylemore Community” ??? LOL ….seriously …I see this all the time now in the GTA “Prestigious” …where? in the middle of nowhere 45 mins or an hour from the city? .Does smelling manure in your neighbourhood mean this now?? Prestigious ????

Cant wait for a nice 25% correction at least.

#128 Bottoms_Up on 10.15.12 at 11:39 am

#94 Enz on 10.15.12 at 7:39 am
———————————-
I hope not. Garth posted awhile back on how some of those should fair well in the future.

#129 Bottoms_Up on 10.15.12 at 11:42 am

#90 Pr on 10.15.12 at 6:24 am
——————————————
Exactly. He’s not thinking/asking WHY did my house go up in value $5,000/month for the past 3 years. WHY should I expect this to continue? How is it possible for it to gain this much so fast?

#130 Canadian Watchdog on 10.15.12 at 11:50 am

#97 TurnerNation

Shorting DOL is a bad idea.

#131 KG on 10.15.12 at 11:58 am

“BMO’s economists added that part of the reason the month-over-month data appears more positive is that there were 20 weekdays this September, compared to 22 in September 2011.”
——————
Let me forewarn Oct has millionth of a second less as compared to last year because of less moving trucks on the road are not slowing down the air currents.

#132 KG on 10.15.12 at 12:02 pm

I thought the banks have no skin in the game, so why are they trying so hard ?

#133 John Smith on 10.15.12 at 12:11 pm

Hello Garth! I’m new to the blog but have been really enjoying it since I found it around a month ago.

After reading your post from 14/10/2012 I’m curious about the numbers you used and was wondering if I could get some clarification. It seems that if one was buying with a mortgage vs. cash down the result might be different. Just wondering if you could provide some insight into this for me.

Here’s my own calculations:

Buying at 530,000 at 5% down with CMHC (4% interest, as of 3 years ago, and a 30 year amortization):

CMHC and closing costs are roughly about half of your downpayment at 5% right? So downpayment is $26,000 and closing costs and CMHC are around $13,500.
So total mortage should be about $516,750.

After 3 years he will have paid down some principal and his mortage should now be $488,168. So if he sells for $700,000 (665,500 after closing costs) his gain would be 665,000 – 488,168 = $177,332

Monthly mortgage payments should be $2457 and as indicated in your post the property tax, insurance and maintenance should be around another $600 per month = $3057 per month total in financing the house. Over those 3 years that should be $110,052. Subtract that from the gain of 177,332 and the net gain should be $67,280 over those 3 years.

If you look at the 15% price correction, the gain should be 595,000 – 488,000 = $106,832. Take off the financing costs of $110,052 again and we arrive at a loss of $3220 over the 3 years.

Comparing it to renting now. At $1700 a month the total cost should be $61,200 over 3 years. This is where it gets weird because assuming he didn’t have over half a million to invest at the time he would have to borrow the money to invest to try and get that 7%. So for simplicity, lets say he gets the exact same rate and loan as his mortgage. So for some reason a bank has decided to loan him $516,750 at 4% and he immediately invests it into something that gains 7%. So again, for simplicity, he’s gaining a total of 3% per year. After those 3 years that shoud’ve increased to $564,667 or a gain of $47,917.

If you then take into account the cost of renting, it’s another net loss – albeit bigger, of $13,283 over the 3 years.

So is there something I’m doing wrong here (I’m sure there must be, just how big of a mistake, heh)? It seems to be that unless you have half a million dollars lying around that renting is worse is either case, even with the 15% correction.

Thanks for any clarification!

#134 Mackie on 10.15.12 at 12:34 pm

I had to laugh about the fella who said the teacher and principal were smart. They are among the most financially illiterate people I know. They just sit back and collect the big pensions and never need to learn anything about investing. The only thing they need to know is how to screw the taxpayer.

#135 Investx on 10.15.12 at 12:45 pm

41 TRT on 10.14.12:
That dude (Realtor Philip Chan) selling his house in Vancouver and featured on CBC The National last month (2575 7TH Ave W, Vancouver, BC, V6K 1Y7, Canada) has lowered his price AGAIN.

In March …$1.79 Million

In Sept … $1.57 Million

Then CBC where he says market will only go down “10-12% from March”.

Now: …$1.37 Million + Free Car.
————————————————–

This is false.

This current 1.37 million is not a new price drop. It has been listed at that price ever since the CBC piece aired. Additionally, the CBC piece stated prices WITH the sales tax – this current price you listed is without the sales tax, and so, basically the same last price listed before.

In any case, he still hasn’t sold it, reflecting the weakening market in Vancouver.

#136 NFN_NLN on 10.15.12 at 1:08 pm

http://www.cbc.ca/news/business/story/2012/10/15/household-debt.html

Family debt-to-income ratio hits 163% in 2nd quarter

#137 Spiltbongwater on 10.15.12 at 1:16 pm

#130 KG on 10.15.12 at 11:58 am “BMO’s economists added that part of the reason the month-over-month data appears more positive is that there were 20 weekdays this September, compared to 22 in September 2011.”
——————
Let me forewarn Oct has millionth of a second less as compared to last year because of less moving trucks on the road are not slowing down the air currents.

November will be great because it gets 1 more hour when we fall back to standard time.

#138 Investx on 10.15.12 at 1:17 pm

“Finally, to all those who think getting a 7% return on a non-cowboy portfolio of liquid financial assets has been impossible over the last few years, I invite you to return tomorrow.”
——————————-

Garth, I’m assuming you are including capital appreciation in that 7% return, as the average dividend paying stocks/dividend ETFs and preferreds are certainly not yielding that much.

#139 Country Girl on 10.15.12 at 1:28 pm

#158 TRT on 10.13.12 at 7:18 pm
According to Farm Credit Canada, farmland values rose 8.6% across Canada in 1st half 2012, 16.3% in ON, 10.3% in MB, 9.1% in SK, 6.7% in AB http://t.co/0RMWy66g

#140 Grim Reaper/Crypt Speculator on 10.15.12 at 1:30 pm

Old age is wasted on the young….thankfully

#141 eagle eyes on 10.15.12 at 1:38 pm

DELETED

#142 Canadian Watchdog on 10.15.12 at 1:44 pm

Ex-construction boss implicates Laval mayor, parties at corruption inquiry

“I fixed contracts. I financed political parties. I corrupted bureaucrats.”

BTW, here’s Flaherty’s construction campaign contributors.

#143 dosouth on 10.15.12 at 1:47 pm

#134 Investex – Splitting hairs

– even though you acknowledge the market is getting weaker, you are probably an investor/owner who is in denial. Otherwise why waste time re-quoting the truth – just like I am…..

#144 kreditanstalt on 10.15.12 at 1:47 pm

Both the 7% guy and the dink are still losers when real price inflation in necessities is factored in.

Hardly. — Garth

#145 dosouth on 10.15.12 at 1:51 pm

#134 – Investex – splitting hairs

– you must be an investor in denial. Otherwise why would you be wasting time re-quoting statistics that still show a weakening market (you did make a vague note of that)

Hope you don’t loose too much in the reality of today’s marketplace…..

Denial is the first step to …..

#146 TJM on 10.15.12 at 1:57 pm

Garth,

I enjoy your blog. Looking forward to the discussion on how to get 7% on a non-cowboy diversified portfolio. But using the last couple of years as an example is unhelpful. The very diversified, non-cowboy portfolio I almost invested in in 2006 would have just broken even this year.

I would like to know how one could allocate his/her money today, at another market peak, and reasonably expect 7% going forward.

Nonody gets 7% a year, every year. Some are flat, some great. The key is a predictable return over a set period. — Garth

#147 Bottoms_Up on 10.15.12 at 2:08 pm

#46 Alex on 10.14.12 at 9:59 pm
———————————
this is why this blog is valuable, along with the aged wisdom from Garth, we get to hear ground level stories of what is really going on….stuff that rarely makes it in the MSM.

#148 NorthOf49 on 10.15.12 at 2:10 pm

Went to an open house yesterday on Hamilton West Mountain. It was an FSBO priced at $649,900. Two storey 4 bedroom custom built home. The owner took us through the place and gave us a feature sheet. On the feature sheet the price showed $749,900 but it was crossed out and written in pen beside it was the new price $649,900. The owner saw that we noticed it and she said that she had to do a major price change because she works in mortgages at a big bank and her branch was seeing no action in $400K+ mortgages. She didn’t go into detail why (no demand, end of the 30yr, CMHC denials, ?). However, lots of action in $250K-$350K mortgages. Basically, she re-priced to improve her chances at selling to a move-up buyer in this lower mortgage range since the upper range is now dead.

One example does not a market make but its interesting to see what’s now happening behind the scenes in the mortgage market.

#149 Dupcheck on 10.15.12 at 2:13 pm

Lets not even talk about home maintenance since 500K will probably buy you a dump in Markham. Tylor, you are delusional. Buy a calculator and crunch those numbers were you include taxes, maintenance, amortization, fees, bells and whistles, Audi as a driveway decoration, and its notorious maintenance costs. Crunch the numbers and see if you really get ahead.

#150 Dontcallmeshirley on 10.15.12 at 2:34 pm

You’re off the path with this post Garth.

Isn’t your standing advice to those with unrealized RE windfalls to cash in and use the $$$ as an income generating portfolio to fund rent?

And in this post you’re diminishing Tyler’s windfall?

From a cash flow perspective, given that he used leverage, he’s far ahead of anyone who rented out of earned income for the last 3 years.

I don’t get it.

#151 Smoking Man on 10.15.12 at 2:44 pm

Why all the Tyler bashing.

Tyler you capital gain was tax free.

When my dad bought his first house he had 3 mortages on it. The maket was in the top cycle sort of like now.

He over paid for a property at Dovercourt and collage that had enough room to park 10 cars.

He got hosed. Paid 15k

#152 Julia on 10.15.12 at 3:06 pm

Another article about the new Canadian debt report from Stats Canada — this one from BC.

http://www.vancouversun.com/business/fp/yourmoney/Canadian+families+debt+worse+than+expected+housing/7392384/story.html

#153 Mike on 10.15.12 at 3:11 pm

Dear Tyler,

May the Infinite Creator bless your soul and guide you on your path. I am afraid you have deviated in a most catastrophic way.
This character illustrates exactly why this situation we are in is by design, designed to bring out the reptilian part of our being.
The Reptilian brain is about survival. If the buttons are pushed correctly you can make people greedy, selfish, un-kind, generally completely misreable to be around. (Note: Mammalian brain activation would make you compassionate, loving, kind, and cooperative)
Whether you agree or not, there seems to be an invisible hand, hidden hand, shadow government? that seems hell-bent on keeping us locked into this reptilian way of thinking. It is up to you to recognize this and make the changes. Yes I know it’s hard, there is a mainstream media, and now a fear based ‘alternative media’ that is complicit with the agenda, television and movies that do nothing but promote fear and hate and selfishness (think Survivor, or GASP My 16 yo is pregnant and so am I!), not to mention extremely poor food choices that dilute our collective ability to make quality choices and decisions.

You get to choose. I made my choice and I’ll bet that my Mondays are better than lots of folks’ Christmases.

Remember that all truths come to pass in 3 stages:

Violently denied
Ridiculed to death
Accepted as being self evident

I have long ago forgiven your ridicule Mr Tyler, lots of us will have compassion for you, but probably not enough to go around until more people wake up.

Smile everyone!
it’s never as good as you think therefore it is also never as bad as you think.

Thanks for the space Mr Turner.

#154 Norton72 on 10.15.12 at 3:12 pm

#139 – Grim Reaper/Crypt Speculator
“Old age is wasted on the young….thankfully”

Actually…
“Youth is wasted on the young…
…retirement is wasted on the old”

Too many people will be unable to enjoy what should be their Rancho Relaxo years. Working longer…lingering pain and injuries to fully appreciate a cool and decent non-working life.

#155 Steve on 10.15.12 at 3:28 pm

Garth, will you be addressing what factors have kept RE in Canada going up and up years longer than the USA next Tuesday?

From Sept 26, 2008 Blog entry:

Average house price in the city of Toronto
Aug. 2006 $344,419
Aug. 2007 $381,681
Aug. 2008 $377,990
Volume of sales
Aug. 2006 2,706
Aug. 2007 3,243
Aug. 2008 2,437

SOURCE: REAL ESTATE BOARD

From October 23, 2012 Blog entry:

In its reporting this week the Toronto Star said, “Toronto continues to record strong price gains.” But here are the monthly averages for a single-detached home in 416:

January — $742,993
February — $818,815
March — $816,169
April — $831,214
May — $820,816
June — $803,671
July — $752,431
August — $746,300
September — $781,826

Not sure (not stated) if the 2008 numbers are SFH only or more types are included?

Today’s topic addresses the unwarranted and misguided thinking of the naive, and as you clearly state, there is no reason to believe that money was made by your overly confident and derisive letter writer. Most likely he will end up in a loss position (when he sells); however, the market’s refusal to turn (up until now) does impact on the credibility of your argument to GET OUT OF RE before it is too late. I, for one, would love to hear what has sustained the rise, and why things are now different. Is this just a pause while everyone adapts to the new rules, or is it the final straw?

Looking forward to the 23rd!

#156 Gregor Samsa on 10.15.12 at 3:36 pm

News from my trench: the job market in Canada seems to be experiencing significant softening. Of course this is anecdotal, but in August I was looking for a job and was receiving several calls a day from recruiters and employers. Due to timing issues I had to stop looking in August but resumed my search now, in October. Same person, same resume, but now I get ZERO calls a day and am not hearing anything back from jobs I apply to.

http://ca.reuters.com/article/businessNews/idCABRE89E0W220121015

This news story corroborates my experiences, saying that business outlooks in Canada are worsening and employers are thinking conservatively.

#157 Ronaldo on 10.15.12 at 3:36 pm

#122 Tony –

Re: #70 Mark on 10.14.12 at 11:35 pm

”Your offspring and likely their offspring probably will die of old age before the TSX ever sees 40,000. Now is the time to short the TSX with the index declining around 50 to 80 percent in the next couple of years.”

Who wudda thunk that from the summer of 1982 when I was midway thru my working career that I would see:

1. The DOW go from 777 to 14198 in 2007 18x
2. The TSX go from 1260 to 15073 in 2007 12x
3. Gold go from 322 to 1895 in 2011 6x
4. Silver go from 5.80 to 49.44 in 2011 8.5x
(currently only about 5.5x)
5. Mortgage rates and savings rates drop 90%
6. That this beautiful home across the street from where I once lived and that was custom built in 1976 for around $175,000 would only be selling for twice that amount today. (36 yrs later) Location I reckon.

http://www.realtylink.org/prop_search/Detail.cfm?MLS=N222376

#158 Sotiri on 10.15.12 at 4:04 pm

Canadian households are even more in debt than anyone imagined, according to a revised Statistics Canada calculation that gives a more accurate picture of family finances.
The revision shows debt growth over the last decade that looks “eerily similar to the U.S. experience, just before their dramatic housing bust,” said David Madani, an analyst with Capital Economics.
“Overall, this supports our bearish view that Canada’s housing boom is unsustainable and the eventual correction, which we think is already underway, is likely to have a material negative implications for growth,” he said.

Read more: http://www.ctvnews.ca/canada/canada-s-household-debt-hits-record-high-new-statscan-figures-show-1.996273#ixzz29OrGvOMn

Read more: http://www.ctvnews.ca/canada/canada-s-household-debt-hits-record-high-new-statscan-figures-show-1.996273#ixzz29Oqu7Ud7

http://www.ctvnews.ca/canada/canada-s-household-debt-hits-record-high-new-statscan-figures-show-1.996273

#159 Bigrider on 10.15.12 at 4:14 pm

#150 Smoking man..

Your dad made a poor decision.

At that time, he could have bought the S&P for same amount and have a lot more than he does now with that property.

I have an uncle with a piece of land he bought for 700k back in 1972 worth about 35 million today.

Great investment but coca cola, pepsi ,proctor and gamble, TD, Royal, list goes on and on ,all better than the 50 times his money deal on land over same time period.

Enough with this biggone ,RE worshipping era already please.

#160 NewWorldPartyDotOrg on 10.15.12 at 4:36 pm

Even if the bubble does not burst, don’t think everybody is wealthy because house prices are so high. Most of their wealth can be temporary and fake, as was the wealth of Americans, Spaniards, Irish and Japanese.

Also, this is important to understand:

Let’s say house prices have gone up by $200k. This does not mean everybody made $200k. If only 5% of the owners sell, prices can drop by 10-20%. As in ANY market, including the stock market, you do not need 10% of the owners to sell for the price to drop 10%. If 50% of the owners try to sell, prices will drop by FAR MORE than 50%. Therefore, it is impossible for every homeowner to lock in their $200k profit. Only the ones who sell now, can lock in that profit.

http://www.newworldparty.org/2011/11/bubbles-extreme-maker-and-breaker-of.html

#161 Contrarian on 10.15.12 at 4:38 pm

I gotta chime in about leverage.

Look, when you can get a loan for 2.25%, it simply does not make sense to purchase a home with cash. You’re better off purchasing it with 5% down and pay the CMHC insurance (which is 2.75%). If you invest the rest of your money at 7% as Garth suggests, then you’re still making 2% on the 95% remaining.

Another reason this is a better approach is that you’ll be more diversified and liquid.

#162 Mister Obvious on 10.15.12 at 4:57 pm

#152 Mike

So young Tyler is a victim of “extremely poor food choices”. That’s pretty funny. I’d like to use it sometime, if you don’t mind.

#163 happy renter on 10.15.12 at 5:03 pm

Wow the gta has been a nice jackpot of cash for the ones who bought in 2009 just like Vancouverer.With only 5% down,many people walked away with lots $$$$$!!!!!Nice going.I missed the boat on the gta market.

#164 Victoria correcting on 10.15.12 at 5:10 pm

In 2009 there was a Canada-wide housing crash in full force. The only thing that stopped it was an unprecedented, dramatic, emergency intervention which suddenly allowed the least qualified to become qualified for mortgages. This, of course, boosted house prices across most of Canada, until now.

If the free market had been left alone in 2009, this Tyler guy would have been under water the day after he bought. Clearly dumb luck is the only reason he is currently able to show some paper equity instead of being under water. He probably has no idea that the massive intervention of 09 saved his bacon. If he was so smart, he would know this.

#165 jess on 10.15.12 at 5:30 pm

good grief …computerized robo signing!

http://www.nakedcapitalism.com/2012/10/so-where-is-schneiderman-computerized-robosigning-has-made-its-debut.html

===
Grover Norquist lake analogy
http://mediamatters.org/blog/2011/11/27/norquist-dredges-up-shallow-lake-analogy-to-cri/182554

OR
Baby-Sitting the Economy
The baby-sitting co-op that went bust teaches us something that could save the world.
By Paul Krugman|Posted Friday, Aug. 14, 1998, at 3:30 AM ET
http://www.slate.com/articles/business/the_dismal_science/1998/08/babysitting_the_economy.html
==
building seattle
modular
http://welcomehomb.com/

#166 joe on 10.15.12 at 6:50 pm

good for you tyler, now do you have the balls to cash out on those gains, or are you just gonna sink with the ship

#167 2centsCdn on 10.15.12 at 6:56 pm

Tyler hasn’t made ANY money. He hasn’t sold. He’s actually PAYING a lot of money for shelter in Markham, nothing more. Anyone who didn’t live in a growth town around 1992 has no idea how fast things can change and go bad.

#168 TurnerNation on 10.15.12 at 7:05 pm

Dolton McGuilty resigned (Ont.)!! Now who’s behind door #2 another fiend?

#169 tkid on 10.15.12 at 7:08 pm

Dalton McGuinty quitting as Ontario Premier.

When the going gets tough … and it is going to get tough in Ontario for whichever poor bastard is next sworn in as Premier.

#170 Devore on 10.15.12 at 7:16 pm

#108 Patiently Waiting

Amazing what you can accomplish with a little tweak to a formula, a stroke of the pen. Makes you wonder about things like savings rate, CPI, and many other figures we keep track of over decades.

There was recently a major change to the way banks have to calculate personal debt ratios (I wonder if this is the same change) and all the graphs with that metric have a sudden jump, with a (*) note saying something that used to count as X now counts as Y and so must be included, etc. But unless someone goes back and reconciles all the historical data to match the new formula, any comparisons between the two data sets are meaningless.

This is one reason why sites like Shadow Stats are so important, because they actually do that, while official sources do not. It’s this kind of laziness, intentional or otherwise, which is dangerous. In the example I, sort of, described (sorry, shoddy memory today), there is an obvious jagged break, but what if the transition is very subtle, like with the new HPI?

#171 Devore on 10.15.12 at 7:29 pm

#106 martin9999

What Garth doesnt understand is that people that buy houses dont have wealth and they see the only way to built it is by buying a house.

Of course they don’t. But they could build the exact same wealth by instead setting aside and investing the same amount of money they’re putting into principal repayment over 25 years. And their money would be in liquid investments which could be momentarily shifted out of overvalued assets into undervalued assets, and rebalanced as needed to reduce risk, instead of tied up on one hunk of bricks and lumber.

Somehow, paying rent is throwing money away paying someone else’s mortgage, while paying interest is building wealth, when it’s precisely throwing money away and paying the bank CEOs salary.

The only way you’re building wealth and getting ahead by buying a house is when house prices rise faster than inflation. And when the price goes down, you’re never quick enough (or willing to entertain the notion) to cash out and redeploy into other investments.

While you might be able to borrow a small amount of your house equity to invest, you’re just arbitraging interest rates so your upside is severely limited, and, when house prices go down, guess what happens to that HELOC.

#172 Saskatoon Housing Bubble on 10.15.12 at 7:44 pm

Garth,
here is the graph with the numbers that Stats Canada has revised in regards to Canadian household debt to income.

http://2.bp.blogspot.com/-RUnzgpGzXeM/UHyafVP799I/AAAAAAAAD1w/yRAHiDl1ifY/s1600/Canadian+Household+Debt+to+Personal+Disposable+Income.jpg

#173 TurnerNation on 10.15.12 at 7:45 pm

SM, CW, my DOL.TO chart. I smell a double top.
After a parabolic move.

http://tinypic.com/r/m73w42/6

#174 TurnerNation on 10.15.12 at 7:46 pm

Trying another link for the chart:
http://i49.tinypic.com/m73w42.png

#175 Nostradamus Le Mad Vlad on 10.15.12 at 7:52 pm


An excellent read today.
*
25:37 clip Harper livid (good) about First Nations trip to Iran; Greek Hyperstagflation Selling expired food products, The IMF and World Bank Using mid-east wars to strengthen control and 3:48 clip GS message to Spain. Warning: Loud and proud, like AC/DC; IMF Meeting Lotsa friction, but no traction; Never, never, never give up but we’re losing a lot of our rights, freedoms and financial freedoms along the way; Civilization “Nonsense. The private central bankers won’t survive the crash. But civilization does not reside solely in a bank vault!” wrh.com; 1:14:06 doc. End of Liberty, and using inflation is one method; GS “It wasn’t just Greece who Goldman helped gain entry into the EU by hiding billions in national debt, Great Britain was playing games hiding debt with Goldman’s help as well.”; Debt Slaves Destroyed Rome before, killing the west now; 16:12 clip What does a collapse look like?
*
Fast Travel “Wow! That IS fast!” wrh.com. MSNBC screwed up, but they’re m$m, and can be forgiven their oversight; 40:56 clip Romney exposed. Talk about having no one to choose. Why bother voting? The game is rigged, with one half (Obomba) taking America down the Marxist path, and the other wiping Israel’s butt, and The Romney Men Six filthy rich businessmen who will do anything to get him elected; Vaccinations Why do govts. care so much about vaccinations? Plus Special Herbs, not vaccinations; US interference “The purpose of attacking Syria is simply to get Iran militarily engaged, because the two countries have a mutual defense pact.” wrh.com; BP Macondo not dead, oil still seeping into GoM; Iraq buys Russian weaponry.

#176 Click Here, its different on 10.15.12 at 8:18 pm

#79 Bryan

You have tenants that give you monthly payments so you can keep up with the mortgage. Great for you.

You understand that 90% of the homeowners do not have tenants and monthly payments ?

You know that right ?

And you know that they, the young recent buyers, might get a financial uppercut that might knock em off for the rest of their active life ?

You know that ? Right ?

And that we absolutely do not give a flying (deleted) about how successful you might be ? Because you are not the subject of this coming crisis ?

You know that ? Right ?

#177 TRT on 10.15.12 at 8:57 pm

Country Girl #138

Sure, but I am only concerned about farms within 100km of Regina or any other city. Your stats indicate a bull run continues for farm values but your stats include the farms in the corners of the provinces. Higher price increases near the cities.

But good you hilighted that this farm boom is just a big as the housing boom!

#178 CrowdedElevatorfartz on 10.15.12 at 9:05 pm

Where oh where is BPOE?
I miss the dwarfish black leather clad little freak……..spanking him was soooo easy.

#179 Led on 10.15.12 at 9:06 pm

did Garth forget about crediting this guy for what he would have paid in rent? he did get to live there a few years.

I hear Markum is the new manhatten

#180 };-) aka D.A. on 10.15.12 at 9:18 pm

I took a different approach to this site the other day. Frustrated after having little success trying to convince a seller they needed to get real on their price I suggested he and his wife check out http://www.greaterfool.com to get an idea where the buyer’s heads are at in today’s market. Thanks to Garth and the blog dawgs, today they agreed to reduce their price big time. Only problem is; they no longer want to buy after their current house sells.

#181 Investx on 10.15.12 at 9:29 pm

#142 dosouth on 10.15.12 at 1:47 pm
#134 Investex – Splitting hairs

– even though you acknowledge the market is getting weaker, you are probably an investor/owner who is in denial. Otherwise why waste time re-quoting the truth – just like I am…..
———————————-
You are wrong about me, and
I’ve simply addressed the truth about a listing… Which you haven’t refuted, yet you have an issue with it?

Seems like you’re the one in denial.

#182 Smoking Man on 10.15.12 at 9:37 pm

#158 Bigrider on 10.15.12 at 4:14 pm

Beilive it or not I agree

But who has the discipline to do that, you get married and wife y poo wants this and that and starts tapping your loot.

You can get away with if you keep her dumb down, keep your loot hidden and working for you.

But then that’s just down wright e moral.

but the second she knows about it’s game over the spending starts

Better to have the loot locked up in a house and be e-liquid

I will last longer

#183 Investx on 10.15.12 at 9:41 pm

#144 dosouth:
#134 – Investex – splitting hairs

– you must be an investor in denial. Otherwise why would you be wasting time re-quoting statistics that still show a weakening market (you did make a vague note of that)

Hope you don’t loose too much in the reality of today’s marketplace…..

Denial is the first step to …..
——————————-
The property in question did not drop.
Deal with it.

#184 Smoking Man on 10.15.12 at 9:41 pm

#172 TurnerNation on 10.15.12 at 7:45 pm
SM, CW, my DOL.TO chart. I smell a double top.
After a parabolic move.

http://tinypic.com/r/m73w42/6

…………………………………………………………..

Interesting. How close is the 50 day moving average to 200?

My problem is don’t know the sector that well.

Here is one, Short apple, long Samsung. My new Galaxy 3 kicks the crap out of my sons iphone 5

#185 Paul on 10.15.12 at 9:41 pm

Land for Sale. $10. You read it here first!

http://www.ctvnews.ca/canada/manitoba-town-revives-fortunes-after-selling-land-for-10-1.995772

#186 tisparro on 10.15.12 at 9:49 pm

wow that guy real lucky in markham

#187 OlderbutWiser on 10.15.12 at 10:13 pm

Devore #170 – Man, did you ever hit the nail on the head…..and so eloquently written….do you have your own financial blog?

#188 Canadian Watchdog on 10.15.12 at 10:14 pm

#173 TurnerNation

That’s not a speculative bull run, rather the result of stealing profits from Shoppers Drug Mart et al. Chart Dollarama is a recession-proof stock when being cheap is the only option for indebted consumers.

#189 futureexpatriate on 10.16.12 at 2:41 am

You could SMELL that photo….

#190 Devore on 10.16.12 at 6:00 pm

#185 tisparro

Thanks, I do try. I don’t think I explain things very well, but I practice and have my own blog, but it’s not for public and I won’t be posting it here.

#191 TurnerNation on 10.16.12 at 7:48 pm

Bad news, the A4’s been confirmed as a “girls” car. Along with the BMW 3-series. Better luck next time.