What to fear

fear1

Not greed. Not sex. Not even guilt lathered on by your mother-in-law is stronger. The most potent emotion people have is fear of loss. In fact, brain guys claim scientific evidence that people get twice as worked up at the thought of losing money as they do about making an equal amount.  Maybe we expect good things, and are shocked when crap happens.

But it does. And the biggest surprise in 2013 for most people will be the value of their real estate.

Two days ago I referenced the nascent media negativity about housing. Expect this to continue, but at the same time as the real estate industry throws everything it has at misinformation. Realtors know people buy houses for emotional reasons. For the last four years greed and horniness have ruled, bringing inflated values and record debt. Going forward they’re in a sweat that fear of loss will send real estate reeling.

They hate me, of course. Now they can add Maclean’s mag, the latest publication to helpfully rewrite this blog, but with more hyperbole (not to mention the picture).

MACLEANS “A housing correction—or, possibly, a crash—is no longer coming. It’s here,” gushes the current issue. “And you don’t have to own a tiny $500,000 condo in downtown Toronto or a $1.3-million bungalow in Vancouver to get hurt. With few exceptions, the impact will be indiscriminate as the euphoria of rising house prices is replaced by fear. The only question now is how bad things will get. If the decline picks up speed, as many believe it will, there could be a nasty snowball effect. Construction jobs will be lost. Homeowners will end up underwater. Consumers may stop spending… It all amounts to a dramatic reversal of fortune for Canadians, albeit one we brought on ourselves. Back in 2009, our hot housing market acted as a life preserver in a sea of economic uncertainty. Now it feels more like a cinder block tied around our necks.”

Can negative media hasten the correction and make it worse? Probably. Canadians have spent all this time since the 2006 US housing crash convincing themselves it’s different here. Now we have more debt and higher prices than the Yanks faced, stagnant incomes, tighter lending regs and a slower economy. Mix in some panic – not hard after last week’s numbers out of Van and the GTA – and suddenly your mortgage looks like a contestant on The Biggest Loser. No wonder people are in a tizzy about trashing debt.

Franko, for example, says, “Right now I am in the middle of a mortgage that is prime minus 0.65%.  I have 2 years and 9 months remaining. What should I do right now with my existing mortgage?  I want to blend and extend, but will I be able to keep my low rate?  In the long run will I be able to get more savings if I lock in for 10 years, knowing what my payment will be for the next decade and allowing me to keep some hair on my head?”

See what I mean? Fear of higher rates almost three years from now is causing Franko to morph into a financial idiot. His current mortgage is just 2.35%, less than the inflation rate, meaning the bank’s subsidizing him. Far better to keep the cheapo loan in place, invest his money wisely in growth assets for three years, then retire a big chunk of the principal upon renewal. Blending and extending now would goose his rate by a significant amount, wipe out the benefit of 31 months of subsidized living, stretch his debt years into the future and make [email protected] all tingly with anticipation and moist desire.

But wait. Franko has another confession.

“I bought my current condo a few years ago, and now we’re pregnant and need to move out to a bigger place. It’s in a desirable location in Vancouver, so it will be easy to rent, and I don’t want to sell for a loss. How long should we hang on to it, until the market recovers?”

News flash, dude: the market’s cooked for years to come. Despite prices dipping monthly in Vancouver (and soon Toronto), this correction has only just begun. Values are unsustainable based on incomes, economic growth, wage gains, employment levels or migration and offshore investment. There are a myriad of reasons for real estate to lose value, and virtually none why it should recover. The decline we’re starting to witness now will only accelerate after 2015 because of negative demographics, let alone normalizing interest rates and debt deleveraging.

This should be obvious. No asset class rises without end. Especially one whose value is linked to people being horny, greedy and indulgent. By fearing an immediate loss Franko walks into far more substantial future losses. He embodies a human flaw so widespread, it’s the greatest threat to middle class wealth.

But then, when people are misled daily, we should brace for the worst.

Below is a story from Sunday’s Vancouver Sun real estate section, trumpeting that a house sold “for more than $3 million.” It actually changed hands (after 67 days on the market) for $312,000 under asking and at a 2009 price. The responsible headline: “House sells for $600,000 less than assessment.”

When you finally see that, duck and roll.

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204 comments ↓

#1 TurnerNation on 01.06.13 at 8:59 pm

In examining the nature of this weblogs’s fractious gestalt I am finding the Blog dogs sitting in one of three

investor camps:

1. Put every penny into physical gold and silver – the Sock Drawer Myopians

2. Shovel every free cent into your mortgage and GICs ([email protected]’s orange shorts) – the Dysphoric Boomer-Doomers.

3. Run a balanced income producing porfolio and tailor debt spending to your level of income – the Normals.

In short, the life of a metalhead is nasty, brutish, and short.

Really The DSM is of greater use than the CSC on this weblog.

And:

http://www.google.ca/trends/explore#q=smoking+man&geo=CA

Web Search Interest: smoking man. Canada, 2004 – present.

#2 espressobob on 01.06.13 at 9:01 pm

I hate to do this, FIRST!

#3 TS on 01.06.13 at 9:03 pm

Franko,

Listen to Garth. Don’t blend and extend. Put all your money in the next three years into the orange guy’s shorts.

You can’t go wrong.

#4 Randy on 01.06.13 at 9:05 pm

Brahma Bull ?????

I thought they said Mama Bull !!!!

#5 Mithan on 01.06.13 at 9:07 pm

I disagree with you Garth. The greed and horniness has been out of control for 6-7 years, not just 4.

Small point, but a point… ;)

Come to Regina though, it’s different here. Prices are going to increase lots because Regina and Saskatoon are going to be million pop cities in a few months. ;)

#6 DA why don't you mention all the foreclosures in Kelowna too! on 01.06.13 at 9:10 pm

#75 };-) aka Devil’s Advocate on 01.04.13 at 2:24 am

Now DA…are you going to man up here and accept the challenge below or just cower and slither off into the morass you call your ethics.

Here’s the challenge in case you forgot given to you 01.04.13:

“Here’s a challenge for you DA since you’re telling us how healthy the Kelowna real estate market is, why don’t you also tell us the total number of million dollar houses that have fallen into foreclosure from the time they were first listed. Say within the last year to keep the number manageable …. remember to be honest and ethical its part of your New Years resolutions.”

You know DA we’re starting to hold you to higher standards … so far you’re not living up to your New Years resolution…but there is time for you to recover. I’m sure you can do it.

#7 FTP - First Time Poster on 01.06.13 at 9:14 pm

Garth,

I know you’re stance on gold as its been voiced many times. I agree that there will be no global hyperinflation, however, I read an article that succinctly summarized how I feel about gold. To quote the author “gold is not a hedge against hyperinflation, its a hedge against government”. He went on to state it allows you a cushion against gov’t spending, largesse and fiscal irresponsibility. I have to agree with that stance – as I think it meshes well with your stance on the topic too.

Then you are wrong. — Garth

#8 Mark W on 01.06.13 at 9:20 pm

The epicentre of this …

https://riot2011.vpd.ca/

Was one block from this …

http://residencesatgeorgia.com/

Peasants rioting in the streets.

Let them eat HAM.

#9 X on 01.06.13 at 9:23 pm

re #3 – Not to deflate the orange guys ego, but nothing in his shorts grows. Especially your money.

#10 Seven Stars and Orion on 01.06.13 at 9:25 pm

I spoke with a lot of relatives over the holidays, from a tenured Ph.D, indexed fed pensioners, municipal employees, small business owners, and union joe lunch bucket. Everyone thinks I’m a fool for renting/saving/inventing. Every last one of them. You’d think it was 2005 or something.

#11 coastal on 01.06.13 at 9:26 pm

From the previous thread : “How is my credibility impaired by a realtor making a fool of himself? — Garth”

Touche ! His arrogance showed through loud and clear to me. Business must be getting bad in Victoria when Marko the Magnificent had to force himself to go to the dark side to try and drum things up. ;)

#12 Seven Stars and Orion on 01.06.13 at 9:26 pm

I don’t actually invent.
Try invest.

#13 Rob on 01.06.13 at 9:29 pm

Cool thing I noticed. Everyone is now talking, the guy at the gas station, nice lady at the corner store. All weekend I have been talking to people and they are acknowledging a large correction. But they have not realized the big picture and long term effect on employment and the economy.

#14 wes coast on 01.06.13 at 9:32 pm

BC Property Assesment in Burnaby – Metrotown area – is down 13% June 2011 to June 2012. Family member’s condo was assessed at 270K — June 2012: 234K — guessing its gone down further since July 2012 was the when the new mortgage regs started. This proves that while F’s moves were prudent (finally)- they can’t take the credit (or blame) for deflating the bubble. As is typical – government re-intervened too late. This (Canadian) goose was already cooked.

#15 JuliaS on 01.06.13 at 9:34 pm

Only few days ago Vancouver mainstream media has mentioned property assessments going down in 2012. They said that it was not going to affect tax rates. They also said that although assessments used to be able to “justify” land tax increases, on the way down they’re not going to lower taxes. As it turns out, rising taxes had nothing to do with anything aside from government spending. People listened to half-lies and filled in the blanks thinking there was a ling between A and B.

Paraphrasing Michael Badnarik (a former US presidential candidate): “Today taxes may go up, because your house is worth more. If it’s not worth more tomorrow, they’ll go up because it’s Tuesday, and your hair is of a certain color.”

#16 wes coast on 01.06.13 at 9:35 pm

Of note: The Bible mentions the advice ‘fear not’ over 100 times. Fear is evil.

#17 Freedom First on 01.06.13 at 9:40 pm

Balance……check. Diversity………check. Liquidity…….check. Income streams…….check. Debt:$0…….check. Garth’s advice 5*****…….check.

Garth……your blog is a valuable service available to everyone at no cost…….”Priceless”. And I know you follow the financial principles of the wise. This is a fact for all who are financially literate. Thank you Garth, and nowhere else have I read such sound financial advice delivered with such wit, humour, and empathy. As a matter of fact, and for the record, you are much more entertaining and funny than even F, C, H, and the RE industry, combined………but in a really good way!

#18 Northman on 01.06.13 at 9:46 pm

In 2009 as more homeowners found themselves underwater in the United States we learned about “strategic defaults” as many who were still capable of paying chose to walk away. In 2015 there will be many in Canada with mortgages to renew who don’t have any equity or worse, the assessed value will be less than the note due. When neighbors start walking away from their houses the cascading negative effect on price from properties in disrepair will wither the resolve of the next batch of owners set to renew mortgages. It is not a quick down correction followed by some quick upticks and back to even. Remember, a 33% decrease needs a 50% increase to get back to even.

This is not the USA. You can’t walk from a mortgage. The melt will be slower. — Garth

#19 futureexpatriate on 01.06.13 at 9:49 pm

People who need a “hedge against government” would be much better off to find other countries to live in asap.

#20 };-) aka D.A. on 01.06.13 at 9:59 pm

Just in case you forgot

Sustainability 101: Exponential Growth – Arithmetic, Population and Energy

Now go back and look at those charts again.

#21 Dontcallmeshirley on 01.06.13 at 9:59 pm

Are HELOCs being called in as BC market values falter?

They should, at least at mortgage renewal time.

#22 pricedoutfornow on 01.06.13 at 10:02 pm

We rent in Vancouver and need a bigger place. Recently, we went to see a place for rent, a 4 bedroom townhouse. It was for rent for $2000/month. I googled it and turns out it was actually for sale over the summer for astronomical $849,000. A mortgage with $100,000 down, at 3.5% for 25 years would cost you nearly $4,000 a month (plus strata, property taxes etc)-and yet can only fetch you $2000 a month in rent (no, we didn’t rent it, and I saw it advertised on craigslist for a long time before it finally got rented). Why would anybody buy? Oh…right…nobody did and that’s why it was for rent! Goodbye Vancouver bubble!

#23 salonist on 01.06.13 at 10:10 pm

“What are their arguments?”

http://patrick.net/housing/crash3.html

#24 Country Girl on 01.06.13 at 10:13 pm

An example of realtors throwing everything they have at misinformation; from Saturdays Waterloo Region Record:

“However Dietmar Sommerfeld, president of the Kitchener-Waterloo association, said the sales dip in Kitchener and Waterloo may be an anomaly.

The way Christmas holidays fell this year might have caused more people to take a break from house hunting, he said.

“It could just be a unique situation and maybe some of the urgency that people felt before just wasn’t there,” he said, adding that it probably “is too short a time frame” to conclude the local market is going through a downturn.

Sommerfeld said the bigger picture shows a fairly strong and steady market.”

Full article: http://tinyurl.com/azvzv34

#25 Djb on 01.06.13 at 10:13 pm

$3.2M for a house prone to the Fraser flooding combined to an unusaul high tide surge. I thought asian buyers were smarter than that.

I guess the buyer missed the news story exposing the fact that the dyke system in the Lower Mainland needs to be raised. I am sure Faith Wilson kept that newsbit hushed.

#26 tkid on 01.06.13 at 10:15 pm

Garth, admit it, you are simply jealous of this guy.

Yep, the shirt is at least 22k.

#27 Smoking Man's Old Man on 01.06.13 at 10:15 pm

Glad I don’t have a Mother-in-law anymore, man those things are evil.

Why do people buy places and then come looking to you for advice, wtf Franko… You make guys like Smoking Man sound brilliant.

#28 FTP - First Time Poster on 01.06.13 at 10:17 pm

Then you are wrong. — Garth

How am I wrong? You’ve said 5-10% as part of a balanced portfolio. I think its prudent and it is a good hedge against gov’t largesse. You’re both right while for different reasons imho.

#29 };-) aka D.A. on 01.06.13 at 10:19 pm

After doubling $1.00 ten times you have $1,024.00, doubling it another 10 times, to 20 times total, you have $1,048,576.00.

It is simple irrefutable mathematics. Figure it out people.

I have seen real estate prices double from 1981 to 1991 and then again from 1991 to 2001 and then again from 2001 to 2011. Unsustainable? Of course it is! Who said it wasn’t? When will it end? You don’t want to think about that because when it does…

#30 Realtors in an all out PANIC! on 01.06.13 at 10:29 pm

Countrygirl#24

Wow…great find and more proof that realtors are not only liars but in a state of total panic. The housing crash is here and now. Spread the word blog dogs and thank you Garth for exposing the realtors lies.

#31 };-) aka D.A. on 01.06.13 at 10:33 pm

#6DA why don’t you mention all the foreclosures in Kelowna too! on 01.06.13 at 9:10 pm
#75 };-) aka Devil’s Advocate on 01.04.13 at 2:24 am

Now DA…are you going to man up here and accept the challenge below or just cower and slither off into the morass you call your ethics.

Here’s the challenge in case you forgot given to you 01.04.13:

“Here’s a challenge for you DA since you’re telling us how healthy the Kelowna real estate market is, why don’t you also tell us the total number of million dollar houses that have fallen into foreclosure from the time they were first listed. Say within the last year to keep the number manageable …. remember to be honest and ethical its part of your New Years resolutions.”

You know DA we’re starting to hold you to higher standards … so far you’re not living up to your New Years resolution…but there is time for you to recover. I’m sure you can do it.

To answer your specific question would require more work than I am willing to expend for you. Suffice it to say that of the 341 residential units currently listed on MLS at this time in the Central Okanagan for a price of $1,000,000 or more just 6 are court ordered sales. Spin that fact any way you like; it remains contrary to your insinuation.

#32 mel in victoria on 01.06.13 at 10:36 pm

DELETED

#33 Bottoms_Up on 01.06.13 at 10:39 pm

#10 Seven Stars and Orion on 01.06.13 at 9:25 pm
—————————————————
You give no salient facts to indicate whether their advice is sound or not. What type of market do you live in (price to rent ratio etc.)? What is your time horizon for residence at your current location? Do you have a stable job etc. Your friends and family could very well be right.

#34 Cory on 01.06.13 at 10:40 pm

Of course stories in the media will exaccerbate the downward trend in real estate prices. After all, people believe almost anything they read in the news and it’s what helped inflate the bubble to begin with.

Makes sense that what helped it inflate, will help it deflate.

#35 mel in victoria on 01.06.13 at 10:43 pm

And a happy and prosperous New Year to you too sir.

Not a PM blog. — Garth

#36 claudius emperor on 01.06.13 at 10:43 pm

Low interest rates and extensive money printing is not in the cards without some serious consequences.

The bond market has already revolted. If FED keeps printing all the money needed to subsidize the US budget deficit then we will get some significant inflation or hiperinflation for sure very soon.

Pretend and extend has very limited timeframe.

We are either in for some severe depression or some serious inflation. I am betting on the second.

So it seems dividend paying stocks, some high quality bonds and larger international exposure as well as some PM as assurance are the only options.
The higher inflation goes the larger PM exposure.

Uneducated words. When growth resumes and inflation responds, so will monetary policy. You are embarrassing yourself. — Garth

#37 What to fear — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate « The Affluent Boomer™ on 01.06.13 at 10:52 pm

[…] via What to fear — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate. […]

#38 The end is nigh on 01.06.13 at 10:59 pm

It’s only 6 days into the new year, and listings in the Lower Mainland of the Best Place on Earth are already up 600.
This is supposed to be the slowest part of the year, but open houses in Vancouver West already number 150.
Richmond has an inventory of 2,100 properties.
Only 33 sold in December.
This will not end well.

#39 claudius emperor on 01.06.13 at 11:04 pm

You have my deepest respect Garth,

I think there is overestimation and overexpectasions on the real growth in the states.

So far I fail to see growth even with the extreme injections of ‘liquidity’ aka QE.

I personally invest mostly outside of North America, I am putting my money where my mouth is.
At any point I will pick Germany and Austia with prudent fiscal policies and P/E of 10 vs. US and P/E of 18 for S&P.
I have some US and Ca companies but these are mostly internationals, key players in certain industries and energy.

As for the states: I think they are in for some serious trouble. Only the Europe problems sidetracked the investors and helped the states, but that ‘help’ really resulted in very little growth of anything other than the debt.

‘What growth’ as Peter Schif said..

#40 45north on 01.06.13 at 11:05 pm

Devil’s Advocate: just drop the };-) be who you are – Devil’s Advocate

#41 claudius emperor on 01.06.13 at 11:06 pm

Highly recommend: Crash Proof 2.0 by Peter Shiff and all youtube videos of Jum Rogers.

#42 ozy - not really on 01.06.13 at 11:07 pm

For comment below, I say, central banks can change the stimulus going forward (when consumer prices jump 10% a year or 5% a month) – but they CANNOT CANNOT withdraw any of the trillions previousy issues, as those money found already some nice POCKETS. so, is anyone continues to believe in the system, you will get burned badly, and scraps from future bailouts will make your fall easier, but ultimatelly, it will be loss.

It’s hard to place $ now, the lost revenges boys. Gold, houses, bonds, stocks, residential/commercial, REITS, etc, are not worth more than 80% of asking price. Remember that and understand the speculated future, then ultimatelly, 10 y from now, a 40-50% crash in all. So, wake-up, world is flush with $, and is hard to place it safely. This is the reality, even sony can’t deliver enough for demand, they run out of many high-demand products like this:
http://store.sony.com/p/46"-HX850-Sony-Internet-TV/en/p/KDL46HX850
I say: go live your life, have more f-u-n, feel young again and don’t give a shit. Start a political party if you want change, otherwise accept you have been robbed.
================
#36 claudius emperor on 01.06.13 at 10:43 pm
Low interest rates and extensive money printing is not in the cards without some serious consequences.

The bond market has already revolted. If FED keeps printing all the money needed to subsidize the US budget deficit then we will get some significant inflation or hiperinflation for sure very soon.

Pretend and extend has very limited timeframe.

We are either in for some severe depression or some serious inflation. I am betting on the second.

So it seems dividend paying stocks, some high quality bonds and larger international exposure as well as some PM as assurance are the only options.
The higher inflation goes the larger PM exposure.

Uneducated words. When growth resumes and inflation responds, so will monetary policy. You are embarrassing yourself. — Garth
.

#43 claudius emperor on 01.06.13 at 11:08 pm

Very intersting read on the ‘inflation’ aka CPI in the Peter Schiff’s book.

It is basically a scam.

#44 Dr. WAYNE on 01.06.13 at 11:08 pm

#2 espressobob on 01.06.13 at 9:01 pm

I hate to do this, FIRST!

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

… I love to do this, you’re a mindless a$$hole. If you placed ‘a$$hole’ between ‘FIRST’ and the ‘!’ … then self realization is half the battle.

#45 mel in victoria on 01.06.13 at 11:09 pm

“And a happy and prosperous New Year to you too sir.

Not a PM blog. — Garth”

Appreciate that but in yesterday’s post in addition to RE you referenced bonds, stocks, mutual funds and gold and silver…..

Go pump elsewhere. — Garth

#46 claudius emperor on 01.06.13 at 11:11 pm

There is ‘growth’ because of the monetary policies and inflation, not the other way around.

When CPI target ranges are exceeded, monetary policy is used to cool expansionary pressures. That will happen in the US, and to believe hyperinflation will occur is misinformed, whimsical or both. — Garth

#47 Ken R on 01.06.13 at 11:12 pm

Let’s face the facts; Canadians used to be a mild mannered, hard working, and socially caring bunch. We have turned this nation into a greedy, pompous, self indulging group of assholes. We get what we deserve!
Sorry Garth, just venting.

#48 claudius emperor on 01.06.13 at 11:18 pm

Made 30 % + the dividends on spanish ETFs in 6 months…

#49 POOR TO MAN on 01.06.13 at 11:29 pm

This blog is great.

It is a bit too hard to introduce this blog to my friends who all bought their houses recently. Good news is my friends have chosen single detached houses over those stupid condos. Bad news is those houses are even more pricey which means more debt…….

To be true. I am an evil man.
I hope the housing bubble crashing ASAP. LOL

#50 Dave on 01.06.13 at 11:30 pm

I think I might have the lowest mortgage rate in Canada.

5 year variable at 2.05% and it does not come due until July 2016.

#51 Smoking Man on 01.06.13 at 11:31 pm

#13 Rob on 01.06.13 at 9:29 pm
Cool thing I noticed. Everyone is now talking, the guy at the gas station, nice lady at the corner store. All weekend I have been talking to people and they are acknowledging a large correction. But they have not realized the big picture and long term effect on employment and the economy.
…………………………………………………..

If what you say is true where is the listings, i have never seen it so dead, in other words for sale signs…………..

why cant you folks see the obvious

#52 DogWalker on 01.06.13 at 11:32 pm

#7 FTP – First Time Poster#7 FTP – You have been told sir! If you are seeking Gartho to make you feel less dirty to own gold, you are mistaken. You are going to have to go it alone, without Garth’s blessing.

#53 T.O. Bubble Boy on 01.06.13 at 11:33 pm

CMHC, look into a crystal ball:
http://www.businessweek.com/articles/2012-12-11/the-fha-next-government-bailout

#54 claudius emperor on 01.06.13 at 11:33 pm

How could CPI be exceeded? They will adjust the methodology which is already a joke (recommend reading how CPIs are calculated, google it) as to report 1-2 percents inflation, while prices of food, enegry, drugs, health care, education, everything that matters increase by much more than that – by at least 5-10 percents a year…

And what can Fed do: increase the interest rate (not until 2018) or stop printing so US goes into outright depression immediately?

The deficit and the furure unfunded obligations can not be tackled easily. It might be too late already for any reasonable change in policies.

#55 Furst on 01.06.13 at 11:35 pm

#43 Dr. WAYNE on 01.06.13 at 11:08 pm
… I love to do this, you’re a mindless a$$hole. If you placed ‘a$$hole’ between ‘FIRST’ and the ‘!’ … then self realization is half the battle.
____________________________________________
Dr. Wayne, do you have a small broomstick so try to make up for it by trying to make other people feel small? I’m richer, happier and better looking than you.

#56 juno on 01.06.13 at 11:36 pm

Check your property accessments.

Several buddies from work just got their assessment this week.

For a Van Special (1970’s) their value went from 890,000 to 740,000. That is a whopping 150,000 decline in one year. Just wondering what others have been seeing.

Just note, the Banks runs our country. If they can’t sell more mortgages to make money, they will probably milk the existing mortgage owners by increasing rates

Good luck to all you existing home owners

#57 Cowpie on 01.06.13 at 11:39 pm

Many I know in Cowtown had a “frugal” holiday this year. Mainly I am hearing “We had a quiet, low key holiday…nothing big, stayed in town, etc.” Parents report they mainly shopped sales and kept costs down this year…

You never used to hear that in the previous 6 yrs! are we ever TAPPED OUT here. TOO MUCH DEBT, looks like no one partied like it was 1999.

#58 Smoking Man on 01.06.13 at 11:41 pm

#48 POOR TO MAN on 01.06.13 at 11:29 pm
This blog is great.

It is a bit too hard to introduce this blog to my friends who all bought their houses recently. Good news is my friends have chosen single detached houses over those stupid condos. Bad news is those houses are even more pricey which means more debt…
I hope the housing bubble crashing ASAP. LOL

………………………………………………………………..

If your dream came true, the young will be hurt most….
highest rate of jobless.

better off being in the basement with a job, than a homeless person who cant touch bargain real estate

#59 claudius emperor on 01.06.13 at 11:49 pm

# 52 bubble boy: Very interesting comments in the link you posted. One of them:
——————————
Government-guaranteed home mortgages, especially when a negligible down payment or no down payment whatever is required, inevitably mean more bad loans than otherwise. They force the general taxpayer to subsidize the bad risks and defray the losses. They encourage people to ‘buy’ houses that they cannot really afford. They tend eventually to bring about an oversupply of houses as compared with other things. They temporarily overstimulate building, raise the cost of building for everybody (including the buyers of the homes with the guaranteed mortgages), and may mislead the building industry into an eventually costly overexpansion. In brief, in the long run they do not increase overall national production but encourage malinvestment.”

Henry Hazlitt, 1946, Economics in One Lesson

#60 Hoof - Hearted on 01.06.13 at 11:57 pm

Dr. Wayne can break wind to the sound of ” Flight of the Bumblebee ”

All runs in the genes…..

http://en.wikipedia.org/wiki/Le_P%C3%A9tomane

#61 claudius emperor on 01.06.13 at 11:57 pm

Apparently the idiots F and MC do not read the classics in the economic theory.

Oh, I forgot, F has a lawyer’s degree!
And for sure he will retire very soon (he is 63) after ‘saving’ Ca from a crises. Joining Tim Gethner, Sherry Cooper, M.C., Dalton McG, Ontario’s finance minister,… and all other rats leaving the Titanic…

#62 };-) aka Devil's Advocate on 01.06.13 at 11:57 pm

#40 45north on 01.06.13 at 11:05 pm

If that is the greatest critique of my efforts you can muster, I am flattered. I think though that I’d sooner drop the “Devil’s Advocate” and stick with just the devilishly succinct };-)

#63 Rob aka Captian and Mrs slow on 01.06.13 at 11:59 pm

Made 30 % + the dividends on spanish ETFs in 6 months…

I hope that doesn’t represent more than a small portion of your portfolio.

I’m down $1.50 on Penngrowth ( bought at 6.50) but I’m not to worried as it is only 4% of my portfolio and is a dividend paying stock, how safe is the Dividend, don’t know.

Garth while I know ETFs are better I’m like my Dad a buy and hold dividend investor.

#64 Vangrrl on 01.07.13 at 12:06 am

“News flash, dude: the market’s cooked for years to come”…

That’s what I should have said to the guy on the bus whose conversation I overheard a few days ago. His friend asked if he were still trying to sell a property and he replied “Naw, prices are down a bit so we’re going to keep renting it out until they go back up”.
Because of course they will go back up. I sooo wanted to turn around and say “Apparently you don’t read Garth’s blog?”

#65 };-) aka Devil's Advocate on 01.07.13 at 12:14 am

Like Joey Coco, Jamie Starr, Christopher, Alexander Nevermind, Prince Rogers Nelson or The Artist Formerly Known As Prince

#66 claudius emperor on 01.07.13 at 12:14 am

# 62, I advise you to book an appointment with an investment advisor if you have more than a relatively small portfolio. You could contact Garth for example (I am not sure if he offers such advisory services) who I know would give you the best advice if he is willing to take on your case.

There are many things you need to look at when investing in dividend stocks or etfs. Hostroy of past dividens is only one of them.

#67 Nostradamus Le Mad Vlad on 01.07.13 at 12:15 am


“Maybe we expect good things, and are shocked when crap happens. But it does.” — Yes indeed, shit does happen quite regularly. It’s called life!

“No wonder people are in a tizzy about trashing debt. Now it feels more like a cinder block tied around our necks.” — Ummm, duh. Are sheeple finally getting the message that to be debt free is fairly close to heaven? Guess they have been enjoying hell for quite a while now. See response to #10 SS&O below.
*
#10 Seven Stars and Orion — “Everyone thinks I’m a fool for renting/saving/inventing [sic].” — Then you are on the right track to self-sustainability, by going against the herd!
*
Chavez “No wonder the Private Central Bankers want him dead!”; wrh.com. Same with Gadaafi and a few others; 1:27:23 doc. Catastroika, or where the EUSSR and EUSSA are headed, US Rebellion A nation of Sarajevo’s? Communist Party advocating insurrection in US, and Obummer “H.J.Res. 15: Proposing an amendment to the Constitution of the United States to repeal the twenty-second article of amendment, thereby removing the limitation on the number of terms an individual may serve as President.”; Martial law? Plus Another view; Booming Business One sector is dong well; Gold, Currencies and Implosions.

Gold Slide continues; VIX spiraled down last week; S&P 500 What it’s gonna do / not do this year; Inflation Chart since 1775 and the dirty ’30s; Madoff’s Brother Win some, lose some; The Middle Class There is an agenda here, and Agenda 21 is part of that; DC, the District of Criminals Whose fault is it? Mom and Pop calling it quits; Portugal tells EU – IMF to back off.
*
3:52 clip Fracking ‘quakes all over; Iran If a nuke deal is reached, that may drive Noddin’ Yahoo over the edge, as Iran will have nuke power plants for their citizens, but NDAA bans Iran’s Press TV from airwaves; Shrinks post Sandy Hook First few paras are good; Terror Sponsor The US wins hands down; Syria Moscow has taken control of Syria’s chemical facilities for now. Has anyone taken control of Dimona? Frozen Ocean GW or ice age? GW “Were carbon taxes and obedience to a global climate authority not on the line, it would be hilarious to see how the Carbonazis are trying to maintain their global warming hoax in the face of record cold.”; wrh.com and Antarctic Both ends are freezing, so when is the equator going to turn? Pinnacle of Stupidity Climate science (Russia, China, and India all quite cold); Vitamin D and rheumatoid arthritis.

0:30 ad Doritos Super Bowl ad; Packed Gun Show Investigate the medicines instead, such as here; Ecuador President warns of possible CIA attack before elections; IQ myth debunked; War The (almost) final act of broke countries; Every Sperm Is Sacred Large family? 2:06 clip Same as WW2 with the Nazis — ratting on the neighbors and getting paid for it; KFC I used to like their stuff, but after reading this, not so much anymore; Chuck Hagel To be nominated tomorrow (Monday) apparently; 13:10 clip Sheeple’s enslavement, because they are afraid to venture beyond their comfort zones to learn more about themselves.

#68 claudius emperor on 01.07.13 at 12:16 am

There are many things you need to look at when investing in dividend stocks or etfs.

History of past dividens is only one of them.

#69 };-) aka Devil's Advocate on 01.07.13 at 12:21 am

#63 Vangrrl on 01.07.13 at 12:06 am

Who’s right and who’s wrong has yet to be decided within the context of whatever time frame you are betting on.

#70 FTP - First Time Poster on 01.07.13 at 12:25 am

#51DogWalker – Thank you sir, your opinion is neither welcome or respected.

#71 jim on 01.07.13 at 12:30 am

#53 claudius emperor

You are right, CPI is a worthless metric as it is continually ‘adjusted’. You cannot compare it year to year since it is always changing. You will note that the composition of the metric leaves out some key goods that most consumers find absolutely necessary.

#72 Mojo on 01.07.13 at 12:43 am

Here in Edmonton we were approached by a realtor who has an interested seller.

The pitch: ‘the market is falling, you better sell as quick as you can’.

I wanted to ask if they were fans of Garth…or just using the recent media coverage to induce us to sell….

#73 };-) aka Devil's Advocate on 01.07.13 at 12:46 am

#248 Andrew on 01.06.13 at 10:24 pm

Those weren’t cut and paste stats Andrew. Those were statistical graphs generated from MLS database inquiries as defined in the simple parameters of my own inquiry as disclosed below each of the four graphs. No SPIN, just the simple unfettered results of my inquiry. Facts not fiction. But, I don’t expect you to believe me on any account.

Again… http://i47.tinypic.com/2zgrij9.jpg

It’s all good

};-)

#74 Mean Gene on 01.07.13 at 1:05 am

Deering Island is downwind from the Iona sewage treatment plant!!!! 3 million to live with the stench, no thanks.

#75 vatoDETH on 01.07.13 at 1:12 am

“Ontarians and Albertans were the most inclined to live paycheque to paycheque, with 53 per cent lacking a rainy day fund.”

Oh Alberta! You really are different!

http://www.thestar.com/opinion/editorials/article/1310824–our-dangerous-addiction-to-borrowing-editorial

#76 Andrew on 01.07.13 at 1:13 am

DeeAyyy

I can tell you’re having fun with all the bears here, another smug good job!

Now how about those sales numbers?

#77 POOR TO MAN on 01.07.13 at 1:16 am

City of Toronto Detached Prices Down $94,000

http://1.bp.blogspot.com/-sF2-pqIF60A/UOcpOZ8ivYI/AAAAAAAAAo4/hBFN307KBVI/s400/Screen%2BShot%2B2013-01-04%2Bat%2B9.06.17%2BAM.png

According to TREB Market Watch Median house prices in the City of Toronto have fallen $94,000 since their peak in

April 2012. The median price then was $656,000 and this December 2012 it has fallen to $562,000.

#78 Basil Fawlty on 01.07.13 at 1:23 am

“When CPI target ranges are exceeded, monetary policy is used to cool expansionary pressures. That will happen in the US, and to believe hyperinflation will occur is misinformed, whimsical or both. — Garth”

This may no longer be a viable option, since the cooresponding increase in debt payments would be a disaster of epic proportions, given current deficits of over $1T annually.

#79 Tony on 01.07.13 at 1:27 am

http://www.youtube.com/watch?v=qPWz6x1VEp8

frano american uh oh spaghetti ohs

Franko should sell his house or he’ll end up losing it to the bank.

#80 Corey on 01.07.13 at 1:30 am

Anyone have a link to the MacLean’s article? Can’t find it.

#81 Rob on 01.07.13 at 1:35 am

One thing is for sure, we have fewer banks in Canada and if people think they can walk away from their debt and never have it come back to haunt them,,,, good luck with that.

#82 Tony on 01.07.13 at 1:36 am

Re: #7 FTP – First Time Poster on 01.06.13 at 9:14 pm

Two years ago we were told about hyper-inflation instead the world deflated. Now we’re told about quantitative easing or currency devaluations. Things they don’t write about is quantitative easing does *not* work when large scale economies are all devaluing their currencies at the same time. It only works when tiny economies devalue their currency.

#83 hangfire on 01.07.13 at 1:43 am

I lived on the Gold Coast…south of Brisbane a while back…..since everything was on thousands of miles of water front….there was zero premium and zero cache to ‘waterfront’. The petty greed and petulant back sliming zeitgiest of the Canadian crowd is unreal…..I mean really really weeny.

Is it because there is absolutley nothing people have to live for? In big cities there are a lot of people who live without a care about such things. In Vancouver for example..there is no culture scene, no cool neighborhoods, no cafe culture, no art scene, no muscic scene…no fashion scene, no dance, no music, no theaters, no museums, no galleries……the dead zone of the mind has produced this mindless materialism of grasping and hating anyone who has sped past you…even if its only an imaginary gain. I have never witnessed so many low lifes before….anywhere…..and I’ve been everywhere. Is it possible that the politically correct have wiped out every opportunity to be unique……by pushing mall grade pap on the masses?

People who think they won’t have a ‘life’ if they don’t own a condo…are already dead….from the neck up.

#84 Freebird on 01.07.13 at 1:58 am

I can see where some of us would be confused by your advice about VRM’s. In your Dec 30th blog you wrote to lock in mortgages and,

“…If you have a VRM, lock it in by September and go long. If you have a renewal coming up later this year or in 2014, blend and extend.”

As our VRM is currently at 2.25 with 3 yrs/ 6 mths left on a bungalow in what’s considered a good location in Peterborough we were wondering if locking in made sense for us. We bought with 20% down and for much less than we qualified. Our original plan was to take advantage of our low rate and pay more of the principal off as/if we could but after reading your blog we’re now considering investing as you suggest and paying a chunk off at renewal. We have no other debt. Thx for the clarification with tonight’s blog.

#85 Kits on 01.07.13 at 2:19 am

We went to see a rental property in North Vancouver. Two real estate agents (with several kids) are renting the house. They have not paid the rent in two months and have been asked to leave by the landlord. The future prospects for the careers of a significant percentage of Vancouver real estate agents in not good.

#86 Dr. WAYNE on 01.07.13 at 2:19 am

54 Furst on 01.06.13 at 11:35 pm

Dr. Wayne, do you have a small broomstick so try to make up for it by trying to make other people feel small? I’m richer, happier and better looking than you.

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

Ha !!! I think I just pissed myself from laughing … And you’re so full of sh++ your eyes are brown … just saying ….

#87 dosouth on 01.07.13 at 2:24 am

};-) aka Devil’s … whatever – you must really enjoy making yourself a target, but your intrepid attempts at survival remind me of a poem of which, like you and your stats, I paraphrase – from Wikipedia and Spike Milligan:

The boy stood on the burning deck
Whence all but he had fled –

Twit!

#88 TCH on 01.07.13 at 2:34 am

A site such as Zillow.com sure would help some simple minds visualize what could happen to their RE values in Canada if all goes south for one reason or the other…..no smoke screens/dummy stats by realtors. Just facts.
Take a look at my Vegas experience here, as I just surfed up my old digs.

Bought in December of 2000, sold 27 month later for a nicer, higher price. Yes, I sold WAY ahead of the curve and left oodles of money on the table. But still. Then leased it back for 24 month for a fraction of the actual carrying costs.
The 2006 sale was internal, they transferred the property into a trust fund.
Looking at today’s value, being basically the same as 8 years ago, even less. Could that happen in Canada? Not sure.

The house next door (2212) is an even more extreme case.

http://theceliachusband.blogspot.fr/2013/01/zillow.html

#89 Mr Buyer on 01.07.13 at 2:38 am

#20 };-) aka D.A. on 01.06.13 at 9:59 pm
Just in case you forgot
………………………………………………
Canada is the 2nd largest country in the world with the population that lives in and around Tokyo. There is no shortage of land.

#90 Jane24 on 01.07.13 at 2:56 am

To DA, your message was as follows:

“To answer your specific question would require more work than I am willing to expend for you. Suffice it to say that of the 341 residential units currently listed on MLS at this time in the Central Okanagan for a price of $1,000,000 or more just 6 are court ordered sales. Spin that fact any way you like; it remains contrary to your insinuation.”
——————————–

The glaring problem with this statement to me is that there are actually that many high-end houses for sale in such a low income part of Canada. I have family in both Vernon and Kelowna and they are all under-employed and so is everyone locally that they know. University degrees are wasted there.

So who is going to buy this vast number of million dollar houses? Don’t say retirees as so many other places in the world that are so much cheaper to retire too.

Cheers

#91 villager on 01.07.13 at 3:48 am

Vancouver olympic village 600sqft 1bdr assessment: 2010: 418k, 2011: 385k, and just got the 2012 assessment: 366k.

#92 kansai92 on 01.07.13 at 4:04 am

A soft landing is like the Sasquatch.
People talk about it, people believe in it.
But no one’s seen a real one.

#93 Mic D'angelo on 01.07.13 at 4:21 am

Garth, you will see that interest rates will stay low until 2015 because the interest bearing investor knows to dred the fed. He is the biggest money manipulator in history B.B. ahead of G.S. Real estate is getting what is deserves as those that were laughing at me when interest rates dropped for the last 17 years from 9.6% to 3.50%. It is now their time Japanese style with 20 years of sushi and still no recovery. Sarania.

#94 cynically on 01.07.13 at 4:27 am

Finally someone in Canada noticed it – Juno in #55 said that the banks run the country and he is right. The big 5 plus one are a financial oligopoly and have been for many, many years getting stronger over tme by limiting what would be foreign competition in general banking such as individuals’ accounts. One foreign bank did get in the door but is not considered part of the “big six” but does carry checking and savings accounts. Their influence with the government however is zero.

#95 happy renter on 01.07.13 at 4:38 am

Interest rates will not go up for a long time.Just look at Japan,thats what Canada wants for its people.Rates may go even lower,like prime rate at 1.5% -2%.

#96 Jooks on 01.07.13 at 5:03 am

I’m so blessed and happy to be renting with the hubby in Vancouver. $1200/month, 3Br, beautiful upper suite near the skytrain and great location.
I had a friend who bought a condo this year in Richmond but it’s too small so she stays at her parents most of the time. What’s the point of buying a box then? There is no closet place for the new fiancé too.
Another couple bought a condo in Coquitlam few years ago but its too far from where they work. So they are both still living with their own parents. How sad is that? They’re getting married this year so I hope they will finally live together cuz their place is collecting dust.
Man, what’s wrong with these people? They make such stupid and poorly calculated decisions!
I’m so glad that I’m cautious with my money.
Sincerely,
Not HHHW

#97 Humpty Dumpty on 01.07.13 at 5:15 am

CW…. appreciate your response.

Not sure how Bc poses a threat to the US, yet I do agree this is going to get alot of peoples attention in the next 2 years.

http://www.runtogold.com/2012/12/during-2012-fiat-currencies-and-gold-collapse-against-bitcoin/?awt_l=L5Hwx&awt_m=JDZSnk.kZbfdxm

Trace has a great quote,
“The system will not collapse but evaporate”.

#98 Buy? Curious? on 01.07.13 at 6:42 am

Garth, check out this article about locksmiths in Pamplona refusing to do the dirty work of banks on foreclosed homes. Awesome!

http://www.guardian.co.uk/world/2013/jan/05/pamplona-spain-banks-homes

And check out this clip from one of soccer’s greatest legends. Awesome squared!

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

Oh, and one more clip. It explains how everyone’s actions seem to even out in the end. I think. I was smoking marijuana at the time.

http://www.youtube.com/watch?v=iOucwX7Z1HU&feature=player_embedded

Legalise it!

#99 The real Kip on 01.07.13 at 7:11 am

“If the decline picks up speed, as many believe it will, there could be a nasty snowball effect. Construction jobs will be lost”

Wow, construction workers are going to feel it now? Well, that is serious isn’t it? And worse, it’s only 2-years away say you and your source? I guess I should worry then eh?

So write to Maclean’s. — Garth

#100 Canadian Watchdog on 01.07.13 at 7:23 am

#97 Humpty Dumpty

Not sure how Bc poses a threat to the US

It doesn’t take much in today’s world for new ideas to go viral. If BitCoin can maintain its purchasing power against currencies, it will first be the currency of geeks, then many more will follow.

You definitely need to get out more. — Garth

#101 Ralph Cramdown on 01.07.13 at 7:43 am

Even if core CPI was a completely nonsensical number derived from astrology and haruspicy, it would still be useful as a predictor of future central bank policy, as long as the bank relied on it as a measure of inflation. Since the bank does in fact use it to decide on monetary policy, it matters not a whit whether YOU think it’s accurate.

#102 Tony on 01.07.13 at 7:56 am

Re: #90 Jane24 on 01.07.13 at 2:56 am

Homes just don’t drop 50 to 70 percent overnight. Give it a couple of years and you’ll see well over a hundred of those listings will be court ordered sales.

#103 Tony on 01.07.13 at 8:07 am

Re: #80 Corey on 01.07.13 at 1:30 am

http://m.publishing.rogers.com/macleans/share/2013-01/06a_biz_housing.html

#104 The Bear on 01.07.13 at 8:56 am

Hey Garth

Great article and advice as always.

Building my own portfolio.
Any Stock and ETF suggestions?!

No. I don’t know you, and therefore cannot recommend. — Garth

#105 EIT on 01.07.13 at 9:02 am

DELETED

#106 Goldie on 01.07.13 at 9:03 am

Garth, I find it inexplicably flattering that you delete all of my gold-themed posts. Normally that would bother me, but for some reason it doesn’t with you. Perhaps I simply love this blog too much to care….?

Not a gold blog. But, make my day. — Garth

#107 Goldie on 01.07.13 at 9:13 am

As long as you see them , that’s all that Really matters to me. Peace to you and the ‘zons.

#108 gladiator on 01.07.13 at 9:19 am

A little anecdote:
“A young father was bragging about how he teaches his kids about finances: each kid has 3 jars and all the money they get, they split into 3 parts: 10% go into the “charity” jar, 20% go into the “savings” jar and the other 70% go into the “expenses” jar – that’s instilling financial discipline into his kids from an early age and would keep them out of trouble later in life. To which another father said: they should have a 4th jar named “taxes” and 30% of the money should first go into that one, then into the other 3.”

Now, let’s factor in taxes: making 100$ vs losing 100$. Taxes, say, are 30%. When I lose, I lose after-tax money, because lost pre-tax money is just unearned money. I had to make before tax 142.86$ ~ 143$ in order to get 100$ of after-tax money. So, choosing between making or losing 100$ is choosing between making 100$ or losing 143$ (both on pre-tax basis). I have to be 1.43 times more fearful at losing 100$ than at earning the same pre-tax amount.

I know that these studies are done using symbolical amounts (Daniel Kahneman’s books are quite entertaining, actually), and that the people tested are aware that they are in an experiment; however, there’s quite a lot of truth to what they find.

#109 Herb on 01.07.13 at 9:22 am

#80 Corey,

you’re going to have to do some painful digging, like read the comments of the previous thread to find a couple of links.

#110 EIT on 01.07.13 at 9:28 am

DELETED

#111 EIT on 01.07.13 at 9:36 am

Did CSIS make you sign something? its ok you can tell us.

#112 Jim Lahey on 01.07.13 at 9:40 am

#43 Dr. Wayne

“I love to do this, you’re a mindless a$$hole. If you placed ‘a$$hole’ between ‘FIRST’ and the ‘!’ … then self realization is half the battle.”

Ah yes, the demented “Dr.” Wayne is up to his spewing out invectives to the fun posting firsts. He relishes his self imposed role of monitoring firsts on this blog. I suppose he even gets some sick pleasure from others hurling invectives back at him. Gives his otherwise worthless life some meaning. Be patient with him folks, he is a sad soul indeed.

#113 Dr. WAYNE on 01.07.13 at 9:47 am

Great photo …

BULL: “Howdy partner”.

COWBOY: “Don’t piss me off”.

#114 };-) aka D.A. on 01.07.13 at 9:53 am

#75Andrew on 01.07.13 at 1:13 am
DeeAyyy

I can tell you’re having fun with all the bears here, another smug good job!

Now how about those sales numbers?

My sales numbers? Of what value would knowing that be to you? What do you do for a living and what do you earn by doing it?

In the Central Okanagan the average REALTOR does about 0.0125% of the gross business available (HINT: There are approximately 800 REALTORS doing business in the Central Okanagan). I do, and am happy doing, about six times that which the average agent does in the specific market segments in which I specialize, however my business plan and budget, to keep things interesting, is to do, but not predicated on, eight times that which the average agent does. My area of specialization is unique and far more than just financially rewarding. My clients are happy to pay what I charge for what I do. That said, if they object they don’t get to be my clients in the first place (see last line of following paragraph).

This does not make me a “record breaking top producer” nor do I care to be known as such. My business is very focused on two specific segments of the market in which I specialize. I don’t seek business outside my areas of specialization although 25% of my business does come from other sources which I am happy to be of service to. I refer to my colleagues that business I do not want which; is beyond my area of expertise that another I know is better equipped to handle, or is such business as I do not care to take on – be it the product or the person who wants to buy or sell it.

That is about all I am willing to disclose of my personal business

#90Jane24 on 01.07.13 at 2:56 am
To DA, your message was as follows:

“To answer your specific question would require more work than I am willing to expend for you. Suffice it to say that of the 341 residential units currently listed on MLS at this time in the Central Okanagan for a price of $1,000,000 or more just 6 are court ordered sales. Spin that fact any way you like; it remains contrary to your insinuation.”
——————————–

The glaring problem with this statement to me is that there are actually that many high-end houses for sale in such a low income part of Canada. I have family in both Vernon and Kelowna and they are all under-employed and so is everyone locally that they know. University degrees are wasted there.

So who is going to buy this vast number of million dollar houses? Don’t say retirees as so many other places in the world that are so much cheaper to retire too.

Cheers

Good observation, although Kelowna has long been host to such a paradox yet it continues continuing on just the same. There is a great deal of wealth in this city. Kelowna is not so much a place to earn money as it is a place to spend money.

That said the 341 listings currently on the market for the asking price of $1,000,000 or more represents less than 10% of the total residential listing inventory. And, really, a $1,000,000 home isn’t anything so special these days as it once was.

On the notion that “there are so many other places in the world that are so much cheaper to retire to”; I’ve personally been looking into that quite a bit lately and, although my own retirement is not for quite some time yet, I am finding it is not nearly so simple a choice as you make it sound. Ironically, with age comes clearer vision on many things to which youth is blind. I’m not going to get into a lengthy dissertation on the matter of the many obstacles to retiring in other countries. Suffice it to say Jane that, I am confident, Kelowna will continue to enjoy a healthy demand by retiring Canadians from all corners of this country and even attract a good number from other countries all of whom consider the relatively high price of admission well worth it.

#115 Westcdn on 01.07.13 at 9:56 am

I just received my proposed property tax assessment. My assessed value increased 2% and my net tax payable declined about $100 – woo-hoo! Then, for the first time, I checked my neighbours’ assessments on the city website. It appears to me that my assessment is relatively high. There are a couple of homes of the same builder and design that were assessed 10 % less. I live in a 40 year old neighbourhood. Most of the houses on my street have been renovated to include open concepts, hard wood floors, tiles and granite counter tops. Oddly, they got sold to younger people just after the renovations were completed. However, none of those homes included any exterior structure improvements. I, on the other hand, decided to make a few minor interior upgrades and replace the original windows with high energy efficient versions.
I know I will not get my money back on the expense. It was simply a lifestyle choice where I forfeit a couple of trips to sunnier locals. I like the new windows. The winter cold spots have disappeared and they improved the curb appeal of my home. Therein lays the rub. I suspect my assessment has been unfairly influenced by curb appeal.
I am reminded of England history where the Crown instituted a window tax. Glass was very expensive at the time and the existing crown servants thought windows were a sign of untapped wealth. Ergo, let us tax windows because the owners are those who have money and can pay. The result was that the loyal subjects removed windows from their homes and boarded up the space. For a long period, few English homes had windows. Eventually the tax was repealed.
I noticed on my “proposed” assessment that it will cost me $30 to lodge a complaint. Given the mill rate, I need a $5,000 reduction in my market assessment to break even. Even though I have no action plan other than whining and pointing fingers, I think the $30 will be well spent for the education alone.
Meanwhile, my trust in government is further reduced. How many other things have they done which commit me to pay or act against? I am in the camp that believes government is a necessary evil in order to keep a society orderly and make one law for all. Today, you can compare governments to the mafia in regards to running gambling, drugs and prostitution and providing protection for a “piece of the action”. Would we be worse off with less government? Are we on the downward slope of diminishing government returns? They will argue they are taxpayers too, but that idea holds little water with me. (Sigh, I would have enjoyed being a fireman)
Thoughts du jour,

#116 fancy_pants on 01.07.13 at 10:07 am

absolutely – fear of loss is the greatest emotion which makes folks make bad decisions. Given many folk made a bad decision buying at the top, there is good argument that many more will make a bad decision on ride down, propelling prices below equilibrium.

#117 };-) aka D.A. on 01.07.13 at 10:13 am

correction:

“In the Central Okanagan the average REALTOR does about 0.0125% of the gross business available” in my previous post should have read “0.125%” not “0.0125%”

#118 CrowdedElevatorfartz on 01.07.13 at 10:18 am

@#73 Meane Gene

“…is next to the Iona Sewage treatment plant….”

Deering Island is also right next to the runway of the Vancouver International Airport. 3rd busiest airport on the west coast of North America. Stinky AND noisy.

Oh and did I mention the Fraser river is prone to floods ?

3 Million for a noisy, smelly, flood prone house.

Well done pretentious buyer, well done.

#119 futureexpatriate on 01.07.13 at 10:22 am

#26 – You think anyone who would own this shirt would be happy? Worrying 24/7 about someone hitting him over the head with a bat? Keeping a staff of at least 80 happy and not want to kill him? Worrying about someone kidnapping his wife, kids, and three girlfriends for ransom? Because it’s already happened?

That is NOT a happy life. And that doesn’t even begin to go into the karma earned by HOW that money was made or at the suffering of how many people.

Money is merely a tool, and to those who are given much, much is expected. And 22k shirts (either for yourself or others) aren’t one of the items on that “what goes around comes around” list.

#120 House on 01.07.13 at 10:24 am

Do people actually read McLean’s or The National Post anymore?

#121 Smoking Man on 01.07.13 at 11:00 am

Long time dogs
a perfect batman just formed on TSX….. NEVER BEEN THIS GOOD…..

For those of you new here, get someone else to explained….

#122 };-) aka D.A. on 01.07.13 at 11:01 am

#90 Jane24 on 01.07.13 at 2:56 am

Also Jane you might be interested to know that while in Kelowna there are 6 (1.76%) of the 341 million dollar plus listings currently listed as Court Ordered Sales, 127 (4.32%)of the other 2,940 listings priced under $1,000,000 are court ordered sales. In other words; it’s not the high end which is plagued by foreclosure nearly so much as the lower end.

#123 Gunboat denier on 01.07.13 at 11:05 am

80 Corey – 151 last thread

#124 claudius emperor on 01.07.13 at 11:09 am

# 101 Ralph Cramdown
Even if core CPI was a completely nonsensical number derived from astrology and haruspicy, it would still be useful as a predictor of future central bank policy, as long as the bank relied on it as a measure of inflation. Since the bank does in fact use it to decide on monetary policy, it matters not a whit whether YOU think it’s accurate.

———————

Actually it does matter big time as we are already running out of stupid people (aka greater fools) that trust such statistics, the bank itself and it’s currency or gov. bonds.

Hence the ultimate currency and bond market failure which is a drama in the making at this point at few places…

Once confidence is lost and a currency is perceived as a worthless piece of paper then watch out. Hard assets (not credit driven though) will thrive.

#125 };-) aka D.A. on 01.07.13 at 11:12 am

#90Jane24 on 01.07.13 at 2:56 am

And that lower end insolvency rate is consistent below the $500,000 mark too with 103 (4.55%) of the 2,263 listings in that price range being court ordered sales.

On all accounts, a lot less, I imagine, than the person who first made the insinuation it was a horrifically large number muar have thought it would be. Less, in fact, than I thought it would be. Not really a significant number at all really, unless, of course, you are one of those unfortunate few.

#126 Eaglebay - Parksville on 01.07.13 at 11:20 am

#81 Rob on 01.07.13 at 1:35 am
“One thing is for sure, we have fewer banks in Canada and if people think they can walk away from their debt and never have it come back to haunt them,,,, good luck with that.”
__________________
You wanna bet?

#127 wxman44 on 01.07.13 at 11:23 am

Once again Garth I think we all get your message..try a little diversity here. We all know you think real estate will crash, gold and silver are horrible investments and REITS/preferreds are the way to go. Enough with the stories about Toronto and Vancouver condos..seriously how many more stories do we need from you stating the same thing. If anyone reading this blog doesnt get it by now then there is no further point hitting them over the head with a brick.

May I suggest you talk about some other markets besides Toronto (southern Ontario) , Vancouver, Victoria and Calgary. How about strategies for people to sell their house in weak markets..more discussion on how to convince so many families to sell now and rent?

#128 claudius emperor on 01.07.13 at 11:25 am

BTW some banks are easing (including M.C., The Man who will fix Bank of England) the inflation targeting from bellow 2 percents for example to over 2-3 percents (based on the flawed CPI) and even say that even that inflation does not matter as they would target a jobless rate and not inflation from now on…

Of course no one is willing to buy GB bonds since so their bank is monetizing all the deficit through money printing…
So watch out.

#129 AK on 01.07.13 at 11:30 am

#43 Dr. WAYNE on 01.06.13 at 11:08 pm
#2 espressobob on 01.06.13 at 9:01 pm

I hate to do this, FIRST!

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

“… I love to do this, you’re a mindless a$$hole. If you placed ‘a$$hole’ between ‘FIRST’ and the ‘!’ … then self realization is half the battle.”

Cassic – LOL :-)

#130 Antoine on 01.07.13 at 11:33 am

Quick question :

What do you guys think the effect of lower RE prices and associated national trauma will have on rent prices? I’m thinking support for higher prices, as people won’t want to buy, but at the same time, support for lower prices as people become landlords without wanting to.

Thoughts?

#131 claudius emperor on 01.07.13 at 11:48 am

I don’t want to be giving F ideas here (as he might be reading this blog) but I would not be surprised to see in my pay cheque few years down the road a charge: CHMC debt retirement (as I see Ontario Hydro debt retirement on my electricity bill…) or variations of it, for example mandatory purchase of gov. bonds for 10 or 15 percents of one’s salary that goes to cover various debts and deficits, bonds that could be bringing 1 percent yearly interest for example, payable in 20 years with a real inflation north of 5 %.

#132 Bottoms_Up on 01.07.13 at 11:57 am

#121 Smoking Man on 01.07.13 at 11:00 am
————————————————
Is that a batman or an upside down one?

#133 Stoopid Idiot on 01.07.13 at 11:58 am

#49 Dr. Wayne
#86 Dr. Wayne

Hi Garth…. Thought maybe you were addressing First’s on Friday as no one posted… What was nice was no hearing from the good Doctor… But here we are and as he said, “ I love to do this”. Sadly he contributes little to your Blog and to allow him to do so is certainly your prerogative. None the less I do find his post’s malicious in intent and offensive…. Could you delete them

#134 goldenfox on 01.07.13 at 12:00 pm

Canada’s big banks are bleeding us dry. Up to about 1971 our national debt was minimal because it was financed by the Bank of Canada and the interest payments were directed back to the taxpayers. Then for some strange reason the debt was transferred to the big banks like TD and billions of interest payments were now siphoned to the big banks. Note the chart of our national debt in the following article,

http://www.webofdebt.com/artic

Absolutely false. — Garth

#135 goldenfox on 01.07.13 at 12:04 pm

http://www.webofdebt.com/articles/canada.phprevious link is bad…try this one

http://www.webofdebt.com/articles/canada.php

#136 Hoof - Hearted on 01.07.13 at 12:35 pm

Deering Island

http://mapcarta.com/24220094

Wave hello / goodbye to the pilots…..

Your human waste? who needs a pipe…haul it next door

#137 Andrew on 01.07.13 at 12:40 pm

DA,

Very good demonstration of your abilities to answer a question in great detail while artfully dodging the actual question at hand.

Classic realtor SalesSpeak.

Of course we know you’re doing great, that was a given. But what I am interested in actual numbers. Now I don’t need to know dollar values just the numbers.

Simply put, how many sales per month? Start with the past year and let’s continue to track forward into the new year.

The value of this to all of us blog dogs, is that we would get an “inside” view if you will, as to how a successful realtor such as yourself is doing in a market that we all are believing is trending down and is at risk of a severe correction.

I would be happy to supply you with my employment information, but I’m not sure how a $20.00/per hour clerk’s financials is relevant to the discussion.

Ooops! Now you got my numbers, now let’s have yours.

And remember to repeat the mantra:

“Houses Cost TOO MUCH”

“People have TOO MUCH DEBT”

and as out bleoved host reminds us over and over.

This Will Not End Well.

#138 Suede on 01.07.13 at 12:48 pm

Some very thoughtful analysis showing the rate of deceleration comparing Vancouver to various US housing markets when they were deflating.

First table at the top of the site

http://vancouverpricedrop.wordpress.com/

(I have not verified the numbers, digest at your own diligence)

#139 Mad Scientist on 01.07.13 at 1:12 pm

If I can share my wisdom (or what I believe to be right) – if interest rates are at all time lows and the call that the economy is on the rebound – well, if that were true – rates would be on the upswing already.

Someone used the analogy of a super tanker, a change in direction on the rudder will have the effect miles away. So interest rates don’t rise when the economy has steamed forward – it moves when most would be scratching their heads as to why the government made such a bone-head move –

If rates are as good as dead for the next few years only tells me that the economy is in dire shape – life support and printing presses to keep a heart beat going – again -IMHO

#140 GTA Girl on 01.07.13 at 1:15 pm

Hearing that a few flashy condo developers who’ve been living large arenow scrambling for cash.

Cashing in investment portfolios and their parents life insurance policies…the banks won’t let them leverage. People want tone paid….or..they intend to stash it away before they dissolve their smaller companies.

Also, that big construction trade guy in North GTA had locks put on his warehouse by creditors. Place holds millions in tools, machinery. Creditors trying to sell contents. But those that are interested in buying are getting discouraging middle of the night phone calls from motorbike aficionados , who are buddies of the bankrupt fellow.

Gambling casinos and card games in Woodbridge never just stay a ‘hobby’

#141 Hoof - Hearted on 01.07.13 at 1:32 pm

Studies on rats have shown that given a choice between drugs or food, the animals will choose the drug.

Drugs were chosen over food even to the point of death.
It was concluded that we are all at risk to the allure of drugs

This conclusion failed to take into account that these rats were treated poorly and housed in tiny cages

When the experiment was repeated rats in a space 200 times larger with food and items for play they displayed little interest in drugs

Destructive behaviour is often a relation to an abhorrent environment

The War on Kids: The Definitive Documentary on the Failure of the Public Education

http://www.youtube.com/watch?feature=player_embedded&v=i-tAQ56-gaA

==================================
Condo -=your personal FEMA camp

#142 dontcallmeshirley on 01.07.13 at 1:37 pm

Vancouver Sun published a nice, simple map of changes in market value assessments. Vancouver and Richmond are negative.

HELOCs will get called in. How could they not?

http://www.vancouversun.com/business/Home+values+drop+significantly+some+parts+most+assessments+largely+unchanged/7766137/story.html

#143 AK on 01.07.13 at 2:11 pm

#133 Stoopid Idiot on 01.07.13 at 11:58 am
#49 Dr. Wayne
#86 Dr. Wayne

“Hi Garth…. Thought maybe you were addressing First’s on Friday as no one posted… What was nice was no hearing from the good Doctor… But here we are and as he said, “ I love to do this”. Sadly he contributes little to your Blog and to allow him to do so is certainly your prerogative. None the less I do find his post’s malicious in intent and offensive…. Could you delete them.”

Dude, you need to lighten up.

#144 Mixed Bag on 01.07.13 at 2:14 pm

“Blending and extending now would goose his rate by a significant amount”

In you’re post of http://www.greaterfool.ca/2012/12/14, you recommended blending and extending, but here you say no. Obviously there’s a tipping point where blending and extending does not apply, but it’s not obvious where the tipping point is.

Although I do see that Franko’s 2 yr and 9 mos. are outside of your “if your mortgage has a year or two yet to go, consider a blend-and-extend” suggestion.

Any clarity is appreciated, as this blending and extending is a new concept to me. Thanks.

Where is the logic in taking on a higher rate for the longer term in order to avoid paying a higher rate for the longer term? Better to invest and pay down a lump sum on renewal. — Garth

#145 Ogopogo on 01.07.13 at 2:23 pm

#114 };-) aka D.A. on 01.07.13 at 9:53 am
#75Andrew on 01.07.13 at 1:13 am
DeeAyyy

Suffice it to say Jane that, I am confident, Kelowna will continue to enjoy a healthy demand by retiring Canadians from all corners of this country and even attract a good number from other countries all of whom consider the relatively high price of admission well worth it.

So what you’re saying DA is that you’re willing to bet on the Kelowna market at the expense of your clients, who will bear all the risks and consequences in the inevitable RE correction under way. It’s all roses and cotton candy with you realtors, isn’t it?

It is curious how your words betray you without your even realizing it. Is it any wonder that realtors enjoy a reputation several notches below used car salesmen?

#146 claudius emperor on 01.07.13 at 2:36 pm

# 141: skeptical,
Add to that:

– Increases in the retirement age (2 yeas for now, more to come…). Decreases in the real benefits, incentives to retire later or never…
– Nasty EI changes that makes it difficult to collect EI benefits.
http://ca.finance.yahoo.com/news/contentious-changes-employment-insurance-come-effect-sunday-193446101.html
– Federeal government job cuts.
– Zero interest rates at a time of significant inflation (inflation tax).

What comes later is:
– benefits and healthcare cuts
– CHMC tax (mark my word).
…. You name it.

It is very strange that at the same time when the government is giving away cheap money to people that have no income so they could buy expensive houses insured by the taxpayers so developers and banks can profit at no risk they are inflicting austerity on the regular working people.

Here is also the job posting for the new BC head:
http://ca.finance.yahoo.com/news/bank-canada-seeks-leader-courage-stand-160525103–business.html

I guess anyone can apply? Right…

Its seems all is F’s fault after all:

The Bank of Canada describes itself as having “considerable independence” from the federal government, compared with other federal institutions.

But the governor must consult regularly with the finance minister, and the government has the power to override Bank of Canada monetary policy.

#147 Andrew on 01.07.13 at 2:42 pm

DA,

Garth Says:

“Realtors know people buy houses for emotional reasons. For the last four years greed and horniness have ruled, bringing inflated values and record debt.”

When I consider what you write, I get it. For those few smart realtors (and I mean few) the ride down can be as lucrative as the ride up was. You just have to make sure you position yourself right and everything will be just fine.

The stuff you come up with definitely messes with the heads of the doomers who might think “What if he’s right?” Your points are lucid, you poke fun at us but never attack and that’s why Garth welcomes your posts when the other realtor’s who attack get deleted.

Masterful.

Must say not a bad plan, kind of evil, but not a bad plan.

#148 Nonno Nicola on 01.07.13 at 2:43 pm

#140 GTA Girl

“Hearing that a few flashy condo developers who’ve been living large arenow scrambling for cash.”

Thanks for the update on the construction front. “There will be weeping and gnashing of teeth in the streets of Woodbridge…” Hey Bigga Rider, you have any updates of your own?

#149 Herb on 01.07.13 at 2:48 pm

#121 Smoking Man,

you’re right. Great-looking ears, this will be interesting.

#150 Holy Crap Wheres the Tylenol on 01.07.13 at 3:03 pm

Walking downtown on the weekend just had to notice the super condos rise up towards the heavens thinking to myself “here comes Gods wrath.” Havoc is about to play itself out as these mighty towers of opulence and grandeur are about to be struck down by the Almighty’s right hand. Towards the western horizons in the neither regions of Long Branch towards the far lands of Port Union in the east elsewhere to the Northerly Scary lands of Jane Finch the harbinger of death awaits. The death dealer is mounted on his stead and that stead breathes not fire but an unwinding of time. The clock shall run backwards and so shall the prosperity. First the death dealer shall unleash his fearsome wrath on the cities and afterward his traverse to the kingdom shall come swiftly. All will burn and wither in his path. The profits (Garth) have been forewarning us this for years. If you did not head the premonition then you are not going to ride to glory on the roads paved with gold. (Maybe gold is not a good analogy) however you get the point. I am sure that if you have not believed in the word of the profits then your humble abode is about to be dragged into the depths of Mordor!

#151 Freebird on 01.07.13 at 3:13 pm

@#145 Mixed Bag

Glad to see we weren’t alone in our confusion re “blend and extend.” In my earlier comment I quoted from Garth’s Dec 30th blog where he gives the same advice but I’m not sure he reminded readers of the caveat of being within 1-2 yrs of renewal. My husband is skeptical of investments returning enough after advisor fees, MERs, taxes and inflation to show a measureable difference over paying the mortgage down even on our low rate but he is open to hearing someone out. We are on target to sell our business soon so for us there could be a large lump sum to work with…definitely warranting good advice. We’ll see what the future brings to all this year.

A diversified, fairly conservative portfolio last year yielded over 10%. Mortgages were available at 3%. Buy him a calculator. — Garth

#152 };-) aka Devil's Advocate on 01.07.13 at 3:16 pm

#137Andrew on 01.07.13 at 12:40 pm

How successful a realtor might be has absolutely everything to do with how hard he or she works and practically nothing at all to do with the state of the market.

Real estate can be the best paying hard work you will ever find, or it can be the most costly hobby you’ll wished you’d never started.

Real estate is NOTHING at all about or like what most people think.

#153 Stoopid Idiot on 01.07.13 at 3:19 pm

AK is Dr. Wayne

#154 goldenfox on 01.07.13 at 3:56 pm

http://www.webofdebt.com/articles/canada.php

Absolutely false. — Garth
…………………………………………………………………….
So according to you paying billions in interest to Canadians is bad…..paying instead to private banks is good?

Interest is paid to bondholders, not to banks. — Garth

#155 };-) aka Devil's Advocate on 01.07.13 at 4:07 pm

#146Ogopogo on 01.07.13 at 2:23 pm

#114 };-) aka D.A. on 01.07.13 at 9:53 am
#75Andrew on 01.07.13 at 1:13 am
DeeAyyy

Suffice it to say Jane that, I am confident, Kelowna will continue to enjoy a healthy demand by retiring Canadians from all corners of this country and even attract a good number from other countries all of whom consider the relatively high price of admission well worth it.

So what you’re saying DA is that you’re willing to bet on the Kelowna market at the expense of your clients, who will bear all the risks and consequences in the inevitable RE correction under way. It’s all roses and cotton candy with you realtors, isn’t it?

It is curious how your words betray you without your even realizing it. Is it any wonder that realtors enjoy a reputation several notches below used car salesmen?

I do have to get back to work but not before I address your rebuke.

Yes Ogopogo, I am willing to bet on the Kelowna market. But that does not, by any stretch, mean I advise my clients to do the same.

I have no crystal ball. All I have, which others may not, is the education and experience to do for my clients what they cannot for themselves. They make the decisions I merely help them acquire the information they need in order to make ‘well informed decisions’ and then carry out their orders of instruction toward achieving their goals. I don’t always agree with what my clients choose to do but, if it is legal and they insist, I am duty bound to do my best to help them achieve their goal after explaining all the associated risks they might not be aware of.

You need to understand that in explaining all the associated risks I cannot go so far as to unduly change their mind for I have no crystal ball and what they foresee could come to be even though today I might disagree. And so too does it work if there is something I think they should do that they do not want to.

On the car salesman thing: I respect car salesmen and saleswomen but they are not at all like a REALTOR®. A REALTOR® is an agent of their client (principal) in the purchase and/or sale of real estate and has a legal obligation (fiduciary duty) to their client above all. A car salesperson, typically, is an employee of the dealership and you are a customer. The car salesperson, in most every case, does not work for you they work for the dealership.

#156 Dr. WAYNE on 01.07.13 at 4:42 pm

#133 Stoopid Idiot on 01.07.13 at 11:58 am

Dr. Wayne

None the less I do find his post’s malicious in intent and offensive….

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

Purely a subjective assessment … and it’s your ‘prerogative’ to read or ignore, conclude maliciousness, and/or offensiveness. I will conclude, as is ‘my’ prerogative, you have no sense of humour.

#157 Spiltbongwater on 01.07.13 at 4:50 pm

#157 };-) aka Devil’s Advocate on 01.07.13 at 4:07 pm

A Realtor works for him/her self not for a client. When I made an agreement to purchase, then found out the property had been listed for 6 months previous, I questioned why my Realtor did not inform me of the listing history, I was told “you didn’t ask for a listing history, so I didn’t provide one to you”. Does that sound in any way that a Realtor is working in the best interests of the client, or in the best interests of themself to have a sale get made? Just LOL at Realtors working in the best interests of their client.

#158 espressobob on 01.07.13 at 4:59 pm

# 43 Dr. Wayne,

Thank you for your kind words. As for me being an a$$hole well the thing is, I already know that! Also a big and complete one to boot. It took many years and a lot of hard work to bestow such an honour!

But I am jealous, It seems your a natural. But I will endeavor in your teachings as I consider you as my mentor. Sincerely.

#159 Old Man on 01.07.13 at 5:04 pm

aka Devil’s Advocate – not too sure about car salesmen vs Real Estate salesmen, or the women if you will as cannot leave them out. First of all both work for commissions, thus are agents working for a principal. I have personally found most Real Estate agents nothing more than scrum and bandits, but there are exceptions to the rule. Most of them just hustle up listings, and walk away for someone else to do the selling as could care less.

#160 Craig on 01.07.13 at 5:15 pm

Looks like a job for the Honorable Garth Turner.

http://ca.finance.yahoo.com/news/bank-canada-seeks-leader-courage-160525007.html

#161 Andrew on 01.07.13 at 5:16 pm

Exactly right DA,

Success in any market that’s what this is all about, got it.

I was reading some past comments from realtor Bob in Calgary and Realtors Sheldon and Sara in Edmonton and guess what same realtor SalesSpeak! They have the FACTS about the local market, they are not trying to SELL you anything, in fact they would talk you OUT of buying if they didn’t think it was a good deal for YOU! Buyers aren’t clients, they’re FRIENDS! Your house isn’t someone’s paycheque, it’s your home!

Anyway….
I am still looking forward to your sales numbers when you decide to put ’em up for us. Please don’t bother with the percentages and skate around mumblings. Look it’s not that hard, how many sales per month? 1? 5? 10? a billion?

If you break it down monthly for us than we can make graphs and charts to track the market and if things are looking up by the end of the year maybe we’ll get off your back.

Oh and apologies about the Evil part, but your moniker kind’ve lends itself to the association.

#162 Old Man on 01.07.13 at 5:33 pm

Imao, just a memo on the debate with aka Devil’s Advocate. The owner of a car dealership has a contract with the car maker, and as owner becomes the Principal for all his staff. There are two classifications of staff; one is formal employees such as auto mechanics, body shop workers, parts people, and those who supply administrative duties on a salary with defined benefit deductions.

Now the sales staff selling new and used cars are not, but might be taking a draw against commissions, and if lucky might have a few deductions, but not mandatory. Thus the sales staff are, in effect, agents working for the Principal on commissions earned, but are NOT formal employees on a salary basis.

#163 };-) aka Devil's Advocate on 01.07.13 at 5:45 pm

#159Spiltbongwater on 01.07.13 at 4:50 pm

While ‘caveat emptor’ is not typically so applicable to the purchase of real estate, yours appears to be more a poor choice in REALTORS® for which the legal term does most certainly apply.

While providing a complete MLS listing history on the property being contemplated is a standard business practice for many of us, at best, it might only imply a level of seller motivation or lack thereof.

Was it (the property you bought) on the market for a higher price or lower back then? What did the market do between then and when you bought it? Or is it something which happened in the market after you bought it that is of most concern?

Sounds to me like, for one reason or another, you aren’t so happy with your purchase and trying to unload some of that buyer’s remorse on your agent. Sounds like your agent, while they did no apparent wrong, wasn’t all that they could have been. Again for that poor choice ‘caveat emptor’ does very much apply.

Maybe next time you will choose your agent more carefully.

#164 Contractor on 01.07.13 at 6:09 pm

Hey Garth,

Sorry, but I need to correct something…

You wrote ” There are a myriad of reasons for real estate to lose value”.

Properly written, it’s “There are myriad reasons for…”

Sorry, it’s a grammar police thing. Drives me crazy.

But I love you, man!

#165 salonist on 01.07.13 at 6:10 pm

TRT on 01.07.13 at 1:30 am
Only thing worse than the “Firsters” is that “Panic “Guy. The Lowest IQ and most creative award goes to…..drum roll….

the space bar counter?

#166 T5>myT4 on 01.07.13 at 6:14 pm

Just an anecdotal field report:

Friend of mine listed his home FSBO this summer at $779,000. Despite great traffic through his home he was unable to sell. A soft offer came through at $749,000 but failed. He then listed with an agent in the fall and it is STILL on the market, now priced at $719,000 with very little interest.

His home is located in Mississauga, ON.

#167 Humpty Dumpty on 01.07.13 at 6:22 pm

U guys are halarious!

There are Mad Men then there are Mad Scientist from MIT

http://www.financialsense.com/contributors/cris-sheridan/sci-finance-great-cybernetic-experiment

“Computation lies at the heart of understanding all physical and biological systems. Many solutions to the most challenging problems of our lives, our work, and our world, therefore, are based in computation. MIT’s Computer Science and Artificial Intelligence Laboratory (CSAIL) studies this vast, compelling field in an effort to unlock the secrets of human intelligence, extend the functional capabilities of machines, and explore human/machine interactions. We apply that knowledge with a long-term lens to engineer innovative solutions with global impact.”

This is “What not to fear”, but comprehend CW…

Chapeter two tomorrwo…

#168 Paul on 01.07.13 at 6:23 pm

#114 };-) aka D.A. on 01.07.13 at 9:53 am

That said the 341 listings currently on the market for the asking price of $1,000,000 or more represents less than 10% of the total residential listing inventory. And, really, a $1,000,000 home isn’t anything so special these days as it once was.

Like when they were $2,000,000?

#169 Bill Gable on 01.07.13 at 6:25 pm

How absurd are Vancouver Properties?

(*Hint $650 K for a basement suite?)

This is from MSM – GlobalTV – you have to see this video and I hope you are sitting down.

People have lost their minds, here in a City with no jobs, crap climate and the worst traffic congestion in North America.

Ready?

http://tinyurl.com/aotvp7l

#170 Dr Waynes patients on 01.07.13 at 6:49 pm

Dam…..we have been in the waiting room for 4 hours. …and all we hear through the door is some a$$hole laughing and having their receptionist type glib plagiarized quotes.

#171 mark on 01.07.13 at 6:53 pm

I’m not sure who is more stupid, the idiot who writes it, or the morons who actually print it!

“if you’re creditworthy you can throw your down payment on a VISA at 20 per cent interest.”

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/5-ways-around-tough-new-home-down-payment-rules/article6970799/

#172 Ogopogo on 01.07.13 at 7:01 pm

#157 };-) aka Devil’s Advocate on 01.07.13 at 4:07 pm

Yes Ogopogo, I am willing to bet on the Kelowna market. But that does not, by any stretch, mean I advise my clients to do the same.

I don’t always agree with what my clients choose to do but, if it is legal and they insist, I am duty bound to do my best to help them achieve their goal after explaining all the associated risks they might not be aware of.

Other commenters have addressed the used car salesmen point, so I’ll stick to my main bone of contention with you. How can you explain to your clients “all the associated risks they might not be aware of” if by your own definition you hardly see any risk at all? Either you’re deliberately avoiding the obvious decline in property prices in Kelowna so as to be able to say to your clients in good faith “all’s well” or you’re being disingenuous. You seem to be a fairly savvy fellow, so I’d be hard pressed to believe that you don’t know the danger of buying in this bubbly market, which has been deflating since 2008 but still has a long way to go.

#173 Snowboid on 01.07.13 at 7:02 pm

#162 Andrew on 01.07.13 at 5:16 pm…

I started reading the posts of the “Gold Standard” of realtors a few years back on a Kelowna forum, where his sparring and comments were exactly the same as today – and with the same frequency (when he wasn’t pouting).

These included posts where he supplied an email address to all, told everyone (with an IQ above 50) who he was, and bragged about his other investments – rental units, B&Bs, etc.

Then he suddenly announced his imminent departure from Kelowna, forever, and his sale of his rental properties – as well as closing the B&B.

I believe he did shut down the B&B, but had some rental properties advertised last year (unless he was acting as a property mgr), and is still in Kelowna four years later.

His flip-flops are notorious, but is at least consistent in his delusions about RE in Kelowna.

I don’t believe he is here for any other reason than attention, and I for one stopped responding to his posts.

So don’t hold your breath waiting for an honest answer, he would love to tell you more, but would only dig a deeper hole than he is in now.

#174 Patiently Waiting on 01.07.13 at 7:02 pm

#143 dontcallmeshirley on 01.07.13 at 1:37 pm

Vancouver Sun published a nice, simple map of changes in market value assessments. Vancouver and Richmond are negative.

HELOCs will get called in. How could they not?

http://www.vancouversun.com/business
====================================

Can anyone in the banking industry answer the above? Are those with existing HELOC’s in place safe, or will the banks pull back the reins now … how are existing HELOC’s to be impacted by what is goin on with falling market values, including the new mortgage rules …?

#175 Ogopogo on 01.07.13 at 7:04 pm

@#171 Bill Gable on 01.07.13 at 6:25 pm

That video made me puke in my mouth a little. The worst is seeing that portly talking head saying with a straight face “that’s nice” to a property not fit to house a family of crack heads! Global has no ethics whatsoever, even as the headline promises to exposwe “absurd properties”.

#176 Snowboid on 01.07.13 at 7:09 pm

#174 Snowboid on 01.07.13 at 7:02 pm…

Also, don’t believe for one minute the line about ‘fiduciary’ duty.

I have personal experience (albeit back in the 1980s) where a Kelowna agent (now deceased), agency and the RE board proved that there is no such thing if money (or loss of) is involved.

I do admit that we had good ‘luck’ with the agents we worked with in the past, especially the discount operations – but the bottom line is they are salespeople first and always first.

#177 Snowboid on 01.07.13 at 7:13 pm

Responding to myself? WTF? With apologies… too may cheap Coronas – must sign off before I start sundang lick smojin marn…

#178 Stoopid Idiot on 01.07.13 at 7:17 pm

Is the threat of shadow inventory truly manageable?
Jan 03 2013

With housing markets, the elephant in the room is shadow inventory. Much has been written about the subject over the last several years. It’s been portrayed as an apparition among the housing bulls, as if the millions of delinquent mortgages simply don’t exist. Most bulls comfort themselves with fanciful notions of loan modification programs succeeding and some simply denying there is a problem at all. Well, there is a problem. Lenders underwrote trillions of dollars worth of mortgages to people who couldn’t or wouldn’t pay them back. Contrary to the popular myth in the mainstream media, it isn’t a problem of a few unemployed prudent borrowers temporarily unable to keep up with their mortgage payments. The few successes in the loan modification programs served that small group. The problem is the millions of Ponzis who can only pay their bills if a lender gives them more credit. Ponzi borrowing became a lifestyle choice during the bubble, and it’s the Ponzis who are persistently delinquent and won’t survive the amend-extend-pretend dance. Giving Ponzis a reduced payment doesn’t solve their problem. They can’t afford a payment, even a reduced one, without fresh infusions of credit. The shadow inventory problem is an indirect measure of Ponzi behavior. The fact that it has been so persistent shows just how widespread this behavior is.

More~

http://ochousingnews.com/news/is-the-threat-of-shadow-inventory-truly-manageable

#179 goldenfox on 01.07.13 at 7:18 pm

http://www.webofdebt.com/articles/canada.php

Absolutely false. — Garth
…………………………………………………………………….
So according to you paying billions in interest to Canadians is bad…..paying instead to private banks is good?

Interest is paid to bondholders, not to banks. — Garth
;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;

Either way, that is well over 30 billion a year diverted from the taxpayers, unnecessarily. That money would buy a lot of healthcare, infrastructure etc.

#180 espressobob on 01.07.13 at 7:23 pm

#173 Mark

Totally share your fustration. The way I figure it Someone in debt is a slave to their master.

#181 robert james on 01.07.13 at 7:39 pm

This is a realtors response to the Macleans article.. Now that looks like a face you can trust .. LOL http://www.shuchatgroup.com/Blog.php/my-response-to-the-macleans-magazine-cover-article

#182 Dr. WAYNE on 01.07.13 at 7:41 pm

#160 espressobob on 01.07.13 at 4:59 pm

# 43 Dr. Wayne,

Thank you for your kind words. As for me being an a$$hole well the thing is, I already know that! Also a big and complete one to boot. It took many years and a lot of hard work to bestow such an honour!

But I am jealous, It seems your a natural. But I will endeavor in your teachings as I consider you as my mentor. Sincerely.

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

Now here is someone who appreciates and accepts his station in life … AND, obviously, appreciates talent. Now all we have to do is work on the FIRST addiction, and all will be well. By the way, it’s ‘you’re’ not ‘your’, second paragraph, first sentence …

You’re welcome.

#183 TEMPLE on 01.07.13 at 7:44 pm

#164 };-) aka Devil’s Advocate on 01.07.13 at 5:45 pm

Maybe next time you will choose your agent more carefully.

Really, DA? You think that it was the buyer’s fault that his real estate agent provided bad service?

Personally, I expect a professional level of service from a professional, and more importantly, adequate recourse when I don’t get it. That is probably asking too much from a profession in which someone who barely graduated from high school can be selling real estate in a matter of months.

Your vehement defence of real estate sales suggests that you see no conflict of interest between commission driven income and what you are calling fiduciary duty. It’s kind of jarring and more than a little terrifying.

TEMPLE

#184 Andrew on 01.07.13 at 7:50 pm

Yeah Snowboid, I know, but oddly enough my beef is not with this guy specifically.

He’s just representative of the industry as a whole.

Everything he says is fine in a normal market, but this is far from a normal market.

You know I’ve had a lot of friends caught up in the RE frenzy of the last few years and everytime one of them buys a place I asked them “So did you get a good deal?”

Answer in each and every case…
No.

#185 Old Man on 01.07.13 at 7:55 pm

#168 T5>myT4 – you must pay attention to what Garth has always said, as some areas are better than others. Now the area of Mississauga is vast, and some will go down hard with huge asset devaluations with years of meltdown activity, but other areas will take a mild hit why? There are areas in Mississauga with wealthly prime sections that will weather the storm just fine, so no area can never be painted with the same brush as location; owners; and residential quality will rule on any downturn in the economy.

#186 jess on 01.07.13 at 8:00 pm

… replace a gun registry with a rogues gallery name and shame?
http://www.telegraph.co.uk/finance/financial-crime/9783979/Tax-fraud-at-highest-level-since-start-of-crisis.html

============
track 9er’s smoking man
Fraud breaks £2bn barrier in highest figure yet for BDO FraudTrackhttp://www.bdo.uk.com/services/advisory/fraud-and-financial-investigations/fraud-and-financial-crime/fraudtrack

#187 jess on 01.07.13 at 8:07 pm

premium, and that’s just how she likes it.

this seems better than the shed that was rented out to a bc couple +two dogs for 500month

…She’s built herself a home of just 93 square feet, well below the 500 square foot threshold that defines a “micro home.” weather channel

http://www.youtube.com/watch?v=O1AiqYDRMXs

#188 };-) aka Devil's Advocate on 01.07.13 at 8:11 pm

#174 Ogopogo on 01.07.13 at 7:01 pm

Reading your post makes me think of Melvin Udall’s (Jack Nicholson) line in As Good As It Gets when approached by a fan and asked “How do you write women so well?”

To which he responded… “I think of a man and … “ Well you fill in the rest. I’m not up to a ‘DELETE’ over such. Google it if you must. Oh hell, here follow this link.

You are a woman aren’t you? Correct? No? I really can’t tell either way.

But in answer to your question it’s called ‘objectivity’. You may not think I have it but that is due to your own prejudicial bias.

And as far as your claim of ‘obvious declines in property prices in Kelowna’ check out these graphs which I posted here yesterday and try with a straight face to make such a bold claim again. Our market has demonstrated a long overdue stability for four years now, neither up nor down to any considerable degree.

Furthermore Ogopogo it is not my place to determine if buying is right or wrong for my client that is for them to decide. What don’t you understand about that for me to try to dissuade someone from buying would be no less wrong than to try to convince you that you should.

I provide the facts prospective buyers and sellers might want to consider when trying to determine what they should do. I check emotion at the door and bring logic to the negotiation table. A concept a pent up house horny effeminate like you I can well imagine might find difficult to understand amid your hissy fit that obviously stems from your anger at being denied the granite, stainless and hardwood you obviously seek.

#175 Snowboid on 01.07.13 at 7:02 pm

Wow, if that is me you are talking about you appear to know more about me than I do myself. Tell me about these Bed and Breakfast properties I apparently own. I wouldn’t want to stay in a Bed and Breakfast, when perfectly good hotels are available or a pup tent on a beach somewhere for that matter. I’ve seen plenty of B&Bs through my business – not impressed not once, not even a little bit. Own a Bed and Breakfast? Are you serious? That’s a hobby at best and certainly not one I’d ever consider.

On that so much more you must have me confused with someone else.

Rental properties? Yes. I am a self professed slumlord and proud of it. I allow pets as I find pet owners are ridiculously emotional about their pets and willing to pay exorbitant rates to have one. Oddly enough those pets typically respect the property more than their masters do.

And my “imminent departure from Kelowna, forever”? LOL. I’ve traveled enough to know that there aren’t many places I would rather be than anywhere in the Pacific Northwest and especially B.C.

You and Ogopogo should get together for an evening of Stitch and Bitch

#189 Tituts on 01.07.13 at 8:11 pm

Garth, you sir are a wise fellow, and from one wise guy to another wise guy I’d like to share a wonderful video from The United States. This video is the tell all tale for what will happen to those fool clowns that remain bullish on Vancouver real estate. Any real estate really across Canada. Carney ought to be crucified the same way. Here have a look.

http://www.youtube.com/watch?v=2NJnL10vZ1Y

Gold is not money. But Ron Paul is a loser. — Garth

#190 TrUe TellER on 01.07.13 at 8:15 pm

Garth: “Can negative media hasten the correction and make it worse? Probably”

Correction: “Can negative media hasten the correction and make it worse? Absolutely”

Perhaps it’s time for Canadians to reload Marshall McLuhan’s “The Media Is The Message” (massage- rub).

Gentle reader, it’s the Media (largely Television and to a lesser extent, Newspapers, Radio, Hollywood etc.) which establishes the “Zeitgeist of the Moment” for a society which increasingly suffers from attention deficit disorder.

E.g. Darwin the Ikea Monkey, Canadian Physco: Luka Magnotta etc., etc.

Think about it…learn. Step out of the Matrix!

#191 };-) aka Devil's Advocate on 01.07.13 at 8:21 pm

#170Paul on 01.07.13 at 6:23 pm

#114 };-) aka D.A. on 01.07.13 at 9:53 am

That said the 341 listings currently on the market for the asking price of $1,000,000 or more represents less than 10% of the total residential listing inventory. And, really, a $1,000,000 home isn’t anything so special these days as it once was.

Like when they were $2,000,000?

I get, and actually do appreciate, the attempt at humor but the illogic of your comment negates it. You do understand… don’t you?

No, probably not.

#192 Nostradamus Le Mad Vlad on 01.07.13 at 8:31 pm


An absolutely hideous day today, with at least half a centimetre of snow. Cars couldn’t climb up trees, pedestrians were bawling their eyes out (thought the white stuff was cocaine), so I had another cuppa and shook my cranium at the trash talk going on.
*
#171 Bill Gable — Good clip. The madness is well along, now it’s time to shovel these numbskulls off the edge and let them swim in their own mess.
*
Spain Locksmiths, families and banks; Executive Order Raising the debt ceiling, and Tax Avoidance on the Rise Gonna cost them a bundle; IRS and the US Fed The more things change . . .; America’s finest city “How bad does it have to get before we say “Enough!”; Direct Investment by China in the US; The Banks Won? Holy macarena, that’s a surprise; NKorea and Germany Germany helping them start; Pound Triple whammy this year;
*
Planned Obsolesence “A total world population of 250-300 million people, a 95% decline from present levels, would be ideal.” — Ted Turner, in an interview with Audubon Magazine; 4:05 clip Texas secession movement gaining a foothold; Brutal Cold Could come in either side, east or west. If there are Arctic outflow winds, it will be Sask., AB. and BC that take it; The Chart anti-gunners don’t want anyone to see, so here it is, Ten min. clip A well-armed society is a polite society, UK is violent crime capital of Europe “The benefits of a gun ban.” wrh.com (‘cuz criminals will always get guns), but Imminent Gun Grab Set in motion by dubya’s daddy and Illinois Dems. back away from gun control; Alex Jones and the TSA; 1:24 clip Ex-Marine compares The Fourth Reich (the US and Germany) with The Third Reich; 25 min. clip “During his first term in office, six whistleblowers have been charged under the Espionage Act for allegedly mishandling classified information. That is twice as many as all previous presidents combined.”; Dr. Oz The great cholesterol myth; Chuck Hagel “AIPAC and the Israeli government lobby were not able to suppress Hagel’s nomination. IF approved by the Senate, Hagel may well be a far more even-handed Sec Def than was his predecessor, something the Israeli government will not like at all.”; wrh.com; Cuba Better, cheaper and more effective health care than ObombaCare; China New anti-satellite weapon; Obomba and 14:13 clip on MSNBC “Well, let’s take a look at this. If the Constitution is simply thrown away, with it goes the entire US Federal Government. After all, the Congress was created and granted authority by the Constitution. The Office of the President derives its powers from the Constitution. If the Constitution is null and void, then so too is the entire Federal Government.” wrh.com; Bitter Coffee Makers are using lower grade beans, other than Arabica.

#193 Old Man on 01.07.13 at 9:15 pm

#191 Tituts – Garth just scored another point as this Ron Paul was conning all in USA as was going to become a saviour running for President, and all got so excited about this all sending him $millions. This was a stage show, as he was TOO DAMN OLD to run for anything; end of story, and just sat back and laughed about it all.

#194 Uwinsome on 01.07.13 at 9:19 pm

2 tallest buildings to be built in Toronto by Vancouver developer – Pinnacle

http://www.vancouversun.com/business/Vancouver+firm+planning+construct+Canada+tallest+buildings+report/7786565/story.html

#195 Bobby on 01.07.13 at 9:19 pm

Irrespective of DA’s boring diatribes, all realtors in the end are paid by the seller so are effectively working for the seller. Some realtors will babble on about being a buyers agent, but they are still compensated by the seller.
Until a buyer compensates a realtor out of their own pocket, they work for the seller.
Yes, I’ve dealt with my share of useless agents. Ironically many of the useless ones I’ve encountered are women. Go figure!

#196 Andrew on 01.07.13 at 9:19 pm

Hi DA,

I can see from all the time spent dealing with the haters you might not have had time for the numbers?

Anytime would be great for us.

Until then, your credibility remains at zero.

#197 robert on 01.07.13 at 9:27 pm

Oh i see only 5% of the currently listed homes in Kelowna are court ordered sales. So Mr. Realtor that means 150 families have walked away from their homes. Be smug all you want Sir as when this spring market gets going there will be many Realtors in the same position. Somehow your patnership with your clients ends the day you collect your commission. Watch for reforms in your industry coming to a courtroom very soon.

#198 Smoking Man on 01.07.13 at 9:35 pm

Vlad Saw another one tonight……………………..

Astronaut Gordon Cooper
https://www.youtube.com/watch?v=dvPR8T1o3Dc

Edger Mitchell walked on moon https://www.youtube.com/watch?v=OO66afmxWKA

Mexican Pilots must see
https://www.youtube.com/watch?v=hKdvBidbwnQ

Vlad when hunting links, try to find good UFO’s

#199 TEMPLE on 01.07.13 at 9:39 pm

#190 };-) aka Devil’s Advocate on 01.07.13 at 8:11 pm
it is not my place to determine if buying is right or wrong for my client that is for them to decide. What don’t you understand about that for me to try to dissuade someone from buying would be no less wrong than to try to convince you that you should.

DA, I have no idea where to start with this. Of course, if you had a shred of ethics and expertise, you would be advising your clients on where, in your expert opinion, the market is heading and encourage them to act accordingly. Otherwise, you are nothing more than a discount broker, taking trade orders on request of the client.

Given the sad fact that a house is generally a person’s most consequential financial decision, I would expect a real estate agent to have a university education in economics, a solid background in personal finance, and a thorough knowledge of real estate value. I’m wrong, of course- someone could get a sales license with just a high school diploma and a couple of months for qualifying. I would barely trust someone with credentials like that to flip my burgers. You work in a filthy industry, so at least be honest about it.

By the way, a flat market is a losing market because of inflation.

TEMPLE

#200 Wayne Gretzky on 01.07.13 at 9:40 pm

I’m with #133 not-so-Stoopid Idiot. Garth, can you please make Dr Wane disappear, he is a troubled and annoying individual. If you don’t, perhaps a good hacker can do some digging then arrange for Dave Semenko and Tiger Williams to pay the weiner a visit. Due to involuntary neuro-linguistic programming, my good Wayne name is now irrevocably linked to a smelly orifice due to this fool.

#201 EIT on 01.07.13 at 10:30 pm

Its funny. really

http://www.youtube.com/watch?v=mII9NZ8MMVM

#202 Freebird on 01.07.13 at 10:40 pm

#152

A diversified, fairly conservative portfolio last year yielded over 10%. Mortgages were available at 3%. Buy him a calculator. — Garth

As I said, he’s willing to hear someone out, preferably in person as part of a detailed consult with a good advisor as you have suggested. If you knew his CV you’d know math is not an issue. He’s just has enough common sense and intelligence to know when he doesn’t know enough to make an educated decision, especially when it comes to our financial future. The lack of both may be why many are in trouble right now and going forward as your blog illustrates. We will be seeking advice…but not a calculator as there are many good ones online.

#203 bclandguy on 01.07.13 at 11:29 pm

#31 DA

Is your head in the clouds? how can the present listing to foreclosure stats have any relevance, wait till March when the new listings soar.

I don’t live or have any interest in Kelowna, however I do know a few friends that are underwater there, one is a son of a very close friend that purchased a condo 3 years ago for 290k, he has a good job and can make the payments, but wants to move. There are several units now for sale in his building and one comparable just sold for around 214k. I feel very sorry for him, he owes way over 214k and is losing sleep.

You must see a lot of people in this situation DA.

#204 Ronaldo on 01.08.13 at 12:33 pm

http://www.tmxmoney.com/en/cpnews/08TB11.html

Good luck to those trying to get mortgages on those overpriced condos. Banks tightening up their lending on these. They know trouble is brewing.