How fragile is the housing market? Consider the following.
Almost two million properties have sold in the last few years to young buyers who raided their RRSPs to find the down payment. As I mentioned yesterday, the Home Buyer’s Plan lets a couple suck $50,000 out of those savings (tax-free), use the money to buy a house and then take 15 long years to repay it. If they don’t, the borrowed money is considered a withdrawal and added to their taxable income.
It’s been a massive boost to the real estate biz, and has undoubtedly added to housing price inflation. It’s also a gift, since the kiddies got a tax refund for making the contribution, which means taxpayers subsidized the purchase.
But here’s the news. The kids are broke.
How else to explain the stunning news that one-half of all the people participating in this plan are not paying the money back into their RRSPs? These million folks have missed payments, ignored them or put forth only partial amounts. As a result, this money is being tacked on to their incomes, taxed at their marginal rates. The only ones being hurt, in other words, are themselves.
Why would almost 50% be defaulting after buying real estate? Simple. They don’t have the money. Most couples bought the greatest amount of real estate they could possibly leverage into, and now can’t come up with the $3,000 a year they owe back into their retirement plans. So it’s cheaper to pay a thousand bucks in extra income tax a year, even when it means they end up with tens of thousands less in the future.
Did I ever mention this won’t end well?
On the same note, this email just went out from Scotiabank loan officers to their realtor clients.
From: Wendy DELETED
Sent: Tuesday, February 12, 2013 2:16 PM
To: undisclosed-recipients:
Subject: RATE DECREASES
Good afternoon,
Scotia has just launched a 2 year rate special of 2.69%!!!! Also the 7 year has dropped by 20 basis points to 3.59% and the 10 year has also dropped by 30 basis points to 3.69%!!!!. The 5 year remains at 3.04% – however, I have done as low as 2.95% on live deals. Have your clients contact me to ensure they are aware of their options and are receiving the best rate. Thanks and have an excellent day.
Do I sniff a whiff of desperation?
As you know, mortgage originations at all of the big banks have basically collapsed. Insiders are shocked at the rapidity and depth of the decline, and have been furiously lobbying F to reverse the slaughter of last July 9th. What was a powerful driver of bank earnings is now sputtering, as BC’s real estate sinks, as first-timers across the country are shut out by shorter amortizations and CMHC changes crucify the top end of the market.
So here are the banks handing out fixed-term funds for less than the inflation rate in most provinces. It’s as close to free money as you will ever get. And it won’t make a spot of difference. Poor Wendy.
However, there will always be enough fools to keep the branches open in London, Ontario. Like Jim. He writes:
I’m surrounding by real-estate agents and well as multitude of friends that are landlords. They say real-estate market here is not as crazy as it is in those other places. The case presented is: buy a property close to a student area (in our case University of Western Ontario and Fanshawe College). You can get the property for $200-350K. After the down payment, it seems you’re extremely cashflow positive ($500-1500 per month – depending on property) including the mortgage payments, property taxes, utilities, maintenance / repairs, etc. I understand it’s not a pain-free investment as tenants can be a handful, but despite these problems, my friends continue being landlords because it does seem like a generally winning strategy.
Right now, I have to admit, I tend to agree with them, despite not owning any rentals. I agree in the terms that I’d better buy a couple properties here and start making that sweet-oh-sweet cashflow.
If Jim is turned on by renting to 19-year-olds away from Ingersoll for the first time, he should knock himself out. And buy lots of bug spray and paint. But from a financial point of view, the returns dangled are unrealistic and seasonal. Insurance and maintenance costs for student housing are high, and (more to the point) the Internet is murdering university campuses. Every year enrollment is sucked off by online offerings which allow people to work and get a degree at the same time, instead of spending big bucks to get bored in a place like London.
Worse, the city is already a declining market. No surprise there with cutbacks at UWO and the area’s hospitals, and the closure in recent years of major auto parts plants as well as the massive Electro-Motive Diesel facility. Sales have been falling on a year/year basis. Home prices tumbled 4% last month alone and condos fell almost 8%.
So, Jimbo, empty your RRSP, then call Scotiabank and get some of that cheap mortgage money to buy a property full of hormones that will be worth less in a year. God knows, they need you.
195 comments ↓
Really? You can learn how to titrate, chelate, and centrifuge online? NOT in a chemistry lab?
Maybe useless arts degrees. Cannot replace applied sciences online. And God help us if you think you can put professional school online as well..
A recent story from a friend trying to sell his house in East Van:
“My wife noticed another house for sale in our neighbourhood that is basically the same 1970s design as ours, same size lot, but has done extensive renovations. We called to ask the price and found out it is about $200k lower than our asking price. We asked the realtor for his opinion and he said, “One they don’t have a south-facing lot, and Two they probably have some financial issues forcing them to sell low.” He then tried to console us by saying, “At that price it won’t last on the market long so we won’t have to worry about it.”
Needless to say, my friend and his wife are completely confused by all this doublespeak by a realtor that thinks this is what the sellers want to hear. Unfortunately, my friend can only see the “paper loss” for selling at a lower price. All I see recently are huge price discrepancies in nearly identical properties.
The day when the traditional campus is seriously threatened by online schooling is far-far away into the future. Otherwise, agree very much with the post.
Some people are getting scammed by these rent to own house schemes. If you can’t afford the down payment -don’t buy, better yet rent .
http://www.cbc.ca/news/canada/british-columbia/story/2013/02/08/bc-renttoown.html
–Kudos to Windsor for getting rid of toxic fluoride. :)
From #1:
“Maybe useless arts degrees. Cannot replace applied sciences online. And God help us if you think you can put professional school online as well..”
Yes, and the Bachelor of Science degree I worked for REALLY helped me out against the other 80,000 suckers like me that learned how to titrate, chelate and centrifuge….Want fries with that?
QUOTE:
How else to explain the stunning news that one-half of all the people participating in this plan are not paying the money back into their RRSPs? These million folks have missed payments, ignored them or put forth only partial amounts. As a result, this money is being tacked on to their incomes, taxed at their marginal rates. The only ones being hurt, in other words, are themselves.
===================================
Translation…if you don’t think the ” powers- that- be ” knew this would happen…… I have a bridge to sell you…(but if you respond now….I will throw in 10 pre sale agreements !!!)
I thought it was mentioned that rates would go up (fixed rates, that is) irrespective of BoC actions.
Yet we see even better rates from the markets these days!!!
Student are not paying RRSP, may be they are contributing to TFSA
I remember in the late 90’s-early 2000’s when I told friends I was going into a trade instead of a “professional” program or worse – get a BA. Many turned up their noses and insisted it was a foolish move. Here I sit, 13yrs later making more than twice as much as them, having more time off and better quality of life. I tend not to bring it up.
Watching the State Of The Union,
Never bet against America!
#1 Ty @ 10:21pm
If universities and colleges were so helpful, why aren’t you in a classroom trying to learn everything Garth has but on his blog?
Some courses are hands on, but many are not; and some things just can’t (or aren’t) taught in school (e.g. everything on this blog). A lot of students have saved time and money by reading and studying at home rather than dragging themselves to a lecture hall with over 500 people in attendance, just to have the professor read the same lesson that’s in their textbook.
As a result, this money is being tacked on to their incomes, taxed at their marginal rates. The only ones being hurt, in other words, are themselves.
Part of me says…Good! They should get hurt for not having any future vision. Cash out the RRSP, by a big house with all the stainless, leased SUV’s and then decide to take time off to have the little one’s. Not to mention job losses, career changes and the gov’t wants their student loans back.
The other part of me says, the youngan’s downfall will affect us all
And yet another one. Really, it’s different here… no really…
http://www.edmontonjournal.com/business/Edmonton+housing+market+ready+push+says+analyst/7954124/story.html
I know you often encourage investing in dividend paying stocks and preferred shares, but what if someone is willing to take on a little more risk, what do you recommend? Would you recommend having 20% small stocks in a portfolio?
No. — Garth
You’ve likely seen this in IE:
Canadians want to save for retirement, but likely won’t: poll
Fewer people planning to save for retirement this year
By Linda Nguyen | February 11, 2013 06:20
A majority of Canadian respondents to a recent poll say they plan on putting money away for retirement this year, but the likelihood of that actually happening is considered slim.
The study, released Monday by CIBC (TSX:CM), found that 60% of those polled say they want to contribute to their RRSP, tax-free savings account or both, in 2013.
Twenty-eight per cent say they plan on setting aside money in both accounts; 19% say they will just contribute to an RRSP and 13% say they will only use a TFSA.
“While it’s positive that so many eligible Canadians plan to contribute towards their retirement this year, we know from previous years that only 26% of eligible tax filers actually make a contribution to their RRSP,” said Jamie Golombek, a managing director of tax and estate planning
…
#10 watching same state of union address and agree with ‘never bet against America’ but not because of this speech – more because the USA is still a nation of entrepreneurs. From what I’m hearing; Obama’s speech is basically socialism 101.
I think the two topics lacking by most people area to abilities and common sense. Seems most people cannot do basic math when it comes to their “investments” and definitely lack logic. Ie… (The market will always forever go up type of logic). Crazy world we live in… And from what I hear talking to people in terms of their finances and what I see on MLS… It’s going to get ugly at some point!
#3 Gladiator on 02.12.13 at 10:33 pm
The day when the traditional campus is seriously threatened by online schooling is far-far away into the future. Otherwise, agree very much with the post
*******************
I thought the same way until recently, but already for any labless courses you can already take online and stay in your parent’s basement and not pay rent. You can even take a couple of courses and work part time and enjoy your life. Provinces are looking at some k-12 online.
I’m sure it is coming, they need to decrease infrastructure and maintenance costs it’s the next real savings initiative. Not saying it is in the best interest of the students, most decisions are not.
I already take courses online, do not have to listen to someone go off for an hour and waste my time getting to class. For labs – I’m sure they will figure something out I’m sure.
Ummmmm..,..yeah. When you are begging investors from Saudi Arabia to invest in your projects in Toronto?
http://www.arabnews.com/empire-seeks-attract-saudi-investments
even brought out someone to explain Canada’s taxation…..avoidance?
http://middleeast.empirecommunities.com/event-details/
And looking to build big beautiful condos in Dubai?
10 years too late
Based on the pic, I though the title would be: You’re doing it all wrong.
“What was a powerful driver of bank earnings ”
RE spreads were barely contributing to earnings, and certainly were declining for years. But really, this moment probably marks the end of spread compression for the banks. The earnings reports in the coming months are probably going to be accompanied with very large dividend increases. Payout ratios at the banks are rising as there is no need to hoard capital to write more loans.
I think online university education will be more prevalent in the future … within existing bricks and mortar campuses. Think of Chem 101 or Math 101. The prof. basically lectures to 200 students and there is no interaction (OK, some answer questions mid-lecture, but that is very, very rare). That part can be online. Tutorials and labs obviously are in person.
The benefits: the best professor (even if not affiliated with the university in question) records the lecture and students get to benefit from the best lecturer (remember those hard to understand profs? Gone). Campuses save money on professors and big lecture halls too.
Cons: students aren’t disciplined and will watch youtube alongside the lecture. Such students shouldn’t be in university in the first place; should be in trades. More realistically, labs and tutorials will keep students up to date with lectures.
Heard a conf call today, BAX futures are apparently pricing in a .75% rate hike into June 2014.
Instead of declaring the 3K contribution is to pay back 1/15th of the 50K, could a couple pay 3K into RRSP, claim the contribution for that year, and use the 1K refund to pay the tax on the unreturned HBP RRSP? Would this even be a financial strategy?
“….So here are the banks handing out fixed-term funds for less than the inflation rate in most provinces…”
————————-
And, to make up the difference, the Banksters will be soon be mailing out their annual April 1st set of “changes” (they never have the balls to use the word “increases” in their brochures) to their copycat fee stuctures, subjecting their plethora of unknowing profit prostitutes, aka customer base, to fee increases of 3x to 10x the rate of said inflation.
#19 GTA Girl
Good link.
#24
Instead of declaring the 3K contribution is to pay back 1/15th of the 50K, could a couple pay 3K into RRSP, claim the contribution for that year, and use the 1K refund to pay the tax on the unreturned HBP RRSP? Would this even be a financial strategy?
Sorry, no. You cannot claim the payback for the HBP as a contribution for this year. Any repayment is taken off the top of a year’s contribution.
@ #22 Spiltbongwater – Hellz to the no, man. If you don’t repay the HBP in that year, you lose the contribution room. Also, you wouldn’t even get a refund since you’d have $3000 more income to declare which would completely negate the deduction from the RSP contribution. WORST IDEA EVER, bro.
#25 Bang on Muddy Waters.
Every quarter, the banksters profits = user fees.
The rest of banking pays for the utility bills.
DELETED
18 Don – VIU?
24 Spilt – sounds like a wash
Mortgages and homes are the lifeblood of the banking system, the backbone of a large part of the economy, and a large portion of the collateral supporting our inflationary monetary system.
The tax laws and lending regulations surrounding real estate reflect the “collusion” between the banks and the government. (In the US, the entire scheme was blown so far out of proportion heading into 2007, it nearly destroyed their entire financial system.)
For F to change the rules back in the summer, things must have really gotten out of hand––of course it was their fault to begin with. Realtor’s can scream all they want, but F changed the rules because the banks told him to. Or at least, they did not oppose the decision.
In the meantime, my sympathies to people like Ms. Wendy DELETED. I can only imagine the pressure she must be under to sell, sell, sell. But I feel even more sympathy for the already over-indebted people who will take the bait of seemingly lower rates.
One thing you learn dealing with banks. The carrot they dangle in front of your face is always accompanied by a large stick just this side of our ass.
“Heard a conf call today, BAX futures are apparently pricing in a .75% rate hike into June 2014.”
Don’t trust that illiquid “BAX” futures market. It was doing that ‘pricing in a hike’ nonsense 2 years ago, yet nothing happened. If anything, BoC policy rates are set to fall in the next couple of years as the RE industry in Canada crashes, per Garth’s predictions, in response to the deflation induced by such.
Love the term “landlord”. More doublespeak along the lines of “homeowner”. If they were actual landlords, they’d be collecting land tax. Instead landlords are typically nothing more than “lumberlords” or “concrete-box-in-the-sky-lords”. Homeowners – if they owned homes, they’d be not paying taxes. Instead they’re renters who pay a lump sum up front in exchange for a fancy equivalent of a nobility title.
I’d love to be a real car owner, which is to be able to sell it, while still collecting payments as long as the buyer lives, reserving the right to confiscate the vehicle back if he misses as much as a single payment… or gets behind the wheel intoxicated… or for whatever reason I feel like inventing.
Various thoughts:
After watching Obama’s speech it’s hard to imagine anyone betting against America.
If the median family income is close to the cost of living in most places, I can see why half of Canadians don’t make RRSP contributions – they simply don’t have the money.
I thought you had the choice to designate all or part of your RRSP contributions as HBP repayments. In any case, missed repayments would cancel out deducted contributions on your tax return, making Spiltbongwater’s strategy pointless.
I had a beautiful Old English Mastiff like that maybe a hundred years ago (more like 24 years ago really). He was a calm beautiful dog that could crush my arm in his powerful jaws. A poorly trained pit bull in the neighborhood growling and terrorizing kids at the end of his leash as his drug dealer master walked him around the neighborhood made the mistake of clamping on to my dog’s paw. My dog wanted to play with the pit bull but the poor pit bull was way to uptight for that. In any event my Mastiff let out a yelp and then lifted his paw up to his huge mouth and placed the pit bull’s entire head in his mouth and clamped down (no growling or attitude or anything). Well the pit bull sounded like a little puppy that just got it’s tail stepped on and it let go, dropped its tail and rolled over. My dog just looked at the pit bull. The owner was furious. Anybody that says pit bulls do not let go is sadly mistaken. The Mastiffs fell only to the big cats in the Coliseum and the occasional bear. They are not aggressive in any sense of the imagination but they are loyal and protective. Children, women first, in that order. They simply stand between the children and danger unless the danger becomes more pressing, then a little woof (hey I see you do you see me), followed by a small bark (stop now). I never saw it ever go beyond that as it only happened once when a drunk was stumbling around my friend’s kids at the park downtown. The drunk sobered up and the dog retreated when I said relax (he knew I was aware and yielded). I guess they have nothing to prove. Terrible arthritis later in their short lives are their only glaring faults (you grow accustomed to the drool, and the Old English mastiffs do not drool like the bull mastiffs do).
I told you interest rates are going down… Scotiabank knows the real value of cash.
So I took my yearly stipend out of my IRA in January. Now, the balance is at the highest it has ever been. What’s up with that? Could be times are not nearly as bad as reported, as the markets have rocked this year.
Maybe I better take next years allocation out just to be “safe?” Naw, that’s why I have an emergency fund.
Anyhow, this retired stuff is very good. Have hit the land of “critical mass” where my investment returns now provide me with my needed income. Any other sources are mere gravy. See, savings (outside of the house) does work. Boomers have a grand retirement.
Speaking of online education. It’s just one more reason real estate may become a bit less valuable in the future. The world is becoming increasingly virtual, and less and less “physical.”
3D printing is but one excellent example of this. Soon, many products will not be constructed on an assembly line, transported great distances, and stored on shelves. Rather, they will simply exist at binary data in computer memory, and downloaded into physical reality on demand.
Just imagine the implications for industrial and commercial real estate (as well as a whole host of other things). It could lead to a paradigm shift the likes of which occur only every 500 years.
Repair paradise and put up a park in that lot? Or (sadly) more houses? Of course, the houses will be made by 3D printers.
This just in>
Canadians who owe over $16,000 onn their credit card debt qualify for a 65% drop in ther debt obligation.
This makes me feel like the greater fool for not binging out on cheap credit loke everybody else and enjoy life like the people around me who have done just that.
Tuesday, February 12 2013
Do You Qualify?
Approval in 30 seconds or less.
Full Name:
E-mail:
Phone:
Mobile:
Estimated Debt:
Select an amountLess then $10,000$10,000 – $20,000$20,000 – $30,000$30,000 – $40,000$40,000 – $50,000$50,000 or more
TIME IS RUNNING OUT!
–
offer ends 02/14/13
Get out of debt and save thousands!
$45,000 Debt
REDUCED TO $15,750 !
$29,250 Saved
$30,000 Debt
REDUCED TO $10,500 !
$19,500 Saved
QUALIFIED DEBTS:
Credit Cards
Personal Loans and
Lines of Credit
Collections and
Repossessions
Medical Bills
Business Debts
NOT Qualified:
Lawsuits
Tax Debt and
Back Taxes
Auto, Student, or
Government Loans
Utility Bills
Mortgages or Home
Privacy Policy
This is my last dog story. I went to the grocery store to get a bone for my Mastiff one day. He was chewing on the steel legs of the kitchen table and moving the whole table around the kitchen while doing it. I told the butcher I had a huge dog that was taller than me when he stood up and put his paws on my shoulders. The butcher’s face lit up and he said “just a sec.” He came back with the bone from upper part of the back leg of a cow complete with the knee and cartilage as well as a huge tendon. He wrapped them up and gave them to me. The butcher said the dog is good for a month now, its free and come back again. Well after saying many thanks I headed home and gave the bone and tendon to my dog. The dog ate the tendon like it was a marshmallow right in front of my eyes and then laid down in front of the huge bone put one paw over the bone to steady it and started pulverizing it. The bone was gone six hours later. I have no idea what happened to it but he chewed through a good part of it right in front of me so I cannot believe it but he likely ate the damn thing.
#34 JuliaS on 02.12.13 at 11:56 pm
No one in Canada truly owns property. I hope that takes allodial off your mind.
How can someone with a mortgage not be able to come up with 3 grand in a year to fund the RRSP? One slight gust of wind and they’re F*%$^ed!
Last little bit of too much information. If you get a Mastiff make sure you get a shovel and bring a garbage bag on walks because they poop a huge amount. Better yet, do not make the poor guy live in the city.
Back to the great dog photos :)
Now I’ll read the post…
“I remember in the late 90′s-early 2000′s when I told friends I was going into a trade instead of a “professional” program or worse – get a BA. Many turned up their noses and insisted it was a foolish move. Here I sit, 13yrs later making more than twice as much as them, having more time off and better quality of life. I tend not to bring it up.”
And you probably have a mind-numbing, repetitive, boring job…that’s why they have to pay you so much
The following quote is from Dr Paul Craig Roberts former Assistant Treasury Secretary, Phd Economics ; “I think we have three of the biggest bubbles in history. The bond market, stock market and the U.S. dollar . . . and something is going to go.”
Canadian real estate is not the only bubble being ignored.
Don’t 1st time home buyer’s plan users have 15 years to pay back the loan? If they have 15 years to pay, how can the defaults of today be attributed to the recent run up in real estate? Or must minimum payments be made every year, so that missing any minimum payment is considered a default?
There’s a problem out there alright. Just opened my annual mortgage statement for 2012 and see the following changes in the small print. “Effective April 1, 2013 the fee charged for each payment returned by your financial institution or where there is insufficient credit available for transactions drawn on your line of credit account will increase from $25 to $45.” Guess that the way to deal with people who are having money problems is to charge them more!
#37 Sidera
You are clearly and obviously right. No need to be a Noble Prize winner to see that the rates will never go up. Printing money, keeping the rates low, attracting speculative capital flow – that’s all what elite can do to stay “lord of the ring”
Response to #39
You bring up a good point. Garth talked about Best Buy not too long ago and the problems it was having. One of major downfalls of Best Buy is people are buying online vs in store. They can go in Best Buy and shop but when it comes time to buy they go online to Amazon and make their purchase there at a much cheaper price.
Sounds a lot like the fools who rent out condos and houses in Hamilton only to find out their deluded thoughts don’t sway markets. When prices fall they fall hard as these so called owners at least for now until they lose their houses to the bank will find out. Why these people are dafter than the last of the greater fools still buying housing today.
#31 Gunboat denier on 02.12.13 at 11:40 pm
18 Don – VIU?
24 Spilt – sounds like a wash
*******************************
UVIC, UBC, and one back east.
Garth, I can only hope the Australian Government, Opposition and the various Real Estate Institutes have not been reading your blog in the past 48 hours.
They’ll be getting policy ideas!
Took a look at the furst 30 or so comments tonight. Really impressed with some of the points made. Don’ agree with all necessarily, but all were creative and demonstrated original thought and ideas. This, more than anything, will prevent you from being the greater fool. Good job tonight everyone!
Re: #38 Retired Boomer – WI on 02.13.13 at 12:13 am
It’s my guess the huge sell-off in the stock market will occur at the very end of this March and all through this April. In the meantime expect to see the DOW at exactly 14,000 on the nose each business day from now until then. If you aren’t going to sell your stocks at least hedge them.
#5: BSc alone won’t get you anywhere – it’s a stepping stone. Even I knew that ten years ago. It was step 1.
If I hadn’t gone the BSc/professional school route, I would’ve gone trades for sure had I not been terrible at manual labour.
#9
Great on you. You sound like a hard worker. Keep it up. Unbelievably, some of us that went to university actually have jobs and are doing well too!
#12
Where did I say that they teach everything in school? I just said you can’t replace applied sciences online…because you cannot.
In my most recent check in on the White Rock market, sales are down a little over 70% for single family homes as compared to the same 30 day period last year last year – no HAM in site yet …
Also, I noted that there were about 100 homes for sale that were either: vacant, the seller was a licensed realtor, or the listing agent noted in the remarks that the seller is “Motivated” or comments like “Seller Will Look At All Offers”… Things are starting to get interesting …
http://mlslink.mlxchange.com/DotNet/Pub/EmailView.aspx?r=386036056&s=BRC&t=BRC
But here’s the news. The kids are broke.
—-
No, they are not. Because you are not one of them. What you dont get is: The thinking, of the idea, of being rich, and getting there quick; has changed.
Jimmi your double top trade idea sucks. Get a better job !!! Duke and Devon sucks. to many wanna bessss
I avoid people who are “landlords”. All they ever do is either: try to persuade me that I should do it too, or, and this is most of the time, they are whining about all of their many many many RE problems. I much prefer the much more diversified, balanced, and liquid income streams. I have never been a guy who is bothered by headaches…….perhaps because wisely choose not to invite them into my life. As a matter of fact, I avoid complainers as much as possible. Love your blog Garth……keeps reminding me how good I have it, and not to screw it up. Basically, to sum it up, most people with financial problems have the same problem, which only has to be discovered by looking in the mirror.
Re: #35 Renter’s Revenge! on 02.12.13 at 11:59 pm
I’d mortgage the farm and bet against America, heck opportunities like this don’t present themselves all the time.
We are Three years into a fixed 5 year term @ 4%.
Is now a good time to blend and extend back to a 5 year term with Scotia and be at about 3.6%?
We don’t have plans to move in the short or mid term.
If you can buy a rental property with $50,000 down and its cash flow its a no brainer.$50,000 in a GIC at 2% is peanuts.In 20 years you will at least pay off the house and sell it for cash in your pocket.
I lecture in person at a bricks and mortar university but my best friend is a cyber lecturer for a regular university.
What does she teach online – a Master’s in Nursing and she usually does it from Florida in the Winter.
It looks like the post did not go through. basically, my points were real estate has too many legal, tax, maintenance, repair, H.S.T problems. Property taxes are going to go up much faster than the last 17 years with falling property assessment values of at least 25%.
Everyone is making money but the homeowner ,5% to 10% closing costs every time when buying and selling a property. I heard from a friend in Ottawa that the left wants to introduce a Federal infrastructure tax but it is third Federal land transfer tax in disguise.
It looks like to me that a property as an investment is a bigger target than many other investments. I would rather make my net 3.81% interest on my TFSA and other investments. I have a house to live in and that is enough real estate for me. I do not want to pay three land transfer taxes. The Ontario liberals jacked up electricity rates now and in the future and added new taxes in Toronto (Toronto Land Transfer Tax) and H.S.T. in Ontario.
I have bought provincial strip bonds for the last 12 years some at 6.70% and just 3 years ago 4.74%. The 3.81% is lower but is net of fees at least.
Anybody notice the boy’s look in that picture?
Jan #40 You rack up debt and than get a 65% cut to your debt. The debt was racked up because of useless non- income producing assets. So how did you win. This will not help your future retirement income needs or future expenses. Basically, don’t pay your bills by racking up debt you know you can never pay back. You are just as bad as credit cards charging 18% to 33% interest. I guess your partners robbing Peter to pay Paul and we are paying for it.
Now you know why I never bought credit card, student loan, sub prime mortgage packaged bonds. I know how the game works. enjoy your life until you lose your job and can’t borrow anymore.
A Currency War will kill us. Well no shit sherlock Carney. You got Canada into a situation where a rise in interest rates will kaboosh the nation.
http://www.cbc.ca/news/business/story/2013/02/12/pol-cp-carney-finance-committee.html
If Europes or the US gets the act together and one of those nations start raising rates to reflect inflation Canada’s Doom. The currency hedge fund manage will look at canada collection 1.25% , zero growth, mabey even a real estate bubble. To an nation like Greece, Euro, US. Once they show growth they will be shorting canade, or sell canadian dollars to buy other currencies to get a better rate of return.
This f$$K$$g problem….
currency wars destroy wealth. Currency wars have a disproportionate impact on the poor, as they don’t hold assets whose value is inflated in nominal terms and that could buffer some of the fallout. Central banks don’t cause real wars. But monetary policy has a profound impact on the social fabric. Abstract theories about how aggressive monetary action are the remedy to depressions ignores the heavy social toll currency wars have on people. For those that argue that the social toll of a depression is greater, we respond that the best short-term policy to address economic ills is a good long-term policy. We cannot see how currency wars can be good long-term policy.
http://www.merkinvestments.com/insights/2013/2013-02-12.php?registered=yes&utm_source=cc_newsletter&utm_medium=email&utm_campaign=2013-02-12-insight
I love how realtors defer the blame as to the causes of real estates impeding crash. Land Transfer Tax, bad weather, The Pope all seem valid reasons as to why some people have their houses sitting on the market for weeks instead of days or that can’t the price they want. Well, listen up folks! Those days are over! Who wants to live in a space slightly larger than a jail cell and pay for the privilege to?
The snow will be blamed for bad housing numbers in February but then the Tipping Point has arrived! Poor is the new Black, for at least 15 years.
(That wasn’t to gloomy, was it?)
http://www.youtube.com/watch?v=ettre2Uz6bs&feature=player_embedded#!
B.A. is a joke of a degree and an incredible waste of money and time and human potential. If you read the newspaper, read wikipedia, and have an interest in your surroundings you are at the same level as someone holding a B.A. Whats worse is that when I took a BA course in political science, if I didn’t conform to the socialist ideology of the professor I would get a low mark. So not only is a B.A. useless, but you get brainwashed.
I would say that most degrees in university are pretty much useless in the workplace. The younger people have been suckered into the education establishment, much like average canadians have been suckered into a mortgage of a depreciating asset. The brainwashing has been so bad and so complete of the masses that they actually think there home is an investment.
“I remember in the late 90′s-early 2000′s when I told friends I was going into a trade instead of a “professional” program or worse – get a BA. Many turned up their noses and insisted it was a foolish move. Here I sit, 13yrs later making more than twice as much as them, having more time off and better quality of life. I tend not to bring it up.”
Its not hard making more than twice the minimum wage. As an engineer with a BSc I earn 10x the minimum. Even then its paltry next to some of the MBA friends I have. Good luck on not having a BA though but frankly your trade probably owes itself to engineers ;)
buy a place the banks says you can afford.
Over the next 2 years, rack up your line of credit and credit cards due to the extra expenses of owning. Refinance and pay off the debts. then do it all over again.
This is what all my friends do
Blogger digs out the fake Chinese buying spree for Chinese New Year being flogged in Vancouver media this past week.
http://whispersfromtheedgeoftherainforest.blogspot.ca/2013/02/media-manipulation-you-decide.html
Turns out, it’s an employee of the RE marketing company
In high demand university cities rents aren’t seasonal — landlords make students pay the entire year, even during the summer when they may go back home to their parents. Also, those cash flow numbers do work if you are able to convert rooms/basement into rental (legal?) bedrooms and put down a substantial down payment (but then you could achieve similar returns on the stock market). With tens of thousands of students attending the bigger universities I don’t see demand ever waning for rentals within walking distance. These universities also have graduate students that do research that need places to live and easy access to their labs.
#74 led on 02.13.13 at 6:14 am
—————————————-
I think Garth is right, first timers are tapped out. But as you point out, those a little older than first timers are also tapped out, because they’ve been living off of the appreciation in real estate.
I am probably considered to be in the upper middle income bracket and trying to get through the daycare years I wonder how people did/do it? It’ll be many years before paying back debt accumulated for childcare, and the only way I can think of people having done this and stayed solvent is that they were able to refinance their debts every couple of years.
Then I also look at my future and know there will be no things such as cottages or boats or Harley’s or yearly extravagant vacations — the prices of these things are probably going nowhere but down.
Typical inexplicable psychology:
Solar Industry + Government Stimulus (ontario) = doomed to failure + tax syphon
RE Industry + Government Stimulus = Rainbows + LSD
So, Jimbo, empty your RRSP, then call Scotiabank and get some of that cheap mortgage money to buy a property full of hormones that will be worth less in a year.
The rules of the HBP stipulate that the money can only be used for a primary residence – not a rental. And it’s only for “first time” buyers, meaning neither you nor your spouse have owned a home in the previous four years.
I made no reference to him using the HBP. — Garth
Poor fools for robbing their future (RRSP’s) to pay for their house lust. The even sadder part is they probably “saved” no more than 20% in taxes when they contributed to their RRSP and later when in default they will pay 30% or more as their marginal tax rate has undoubtedly risen. The only winners are the banks, RE crooks and the government. My kids suggested this scenario and in clear terms I told them they were nuts to consider it. Thankfully they still rent and have their RRSP’s in tact (along with TFSA’s). Thanks Garth for helping me save them from themselves.
#2 pathcontrolmonk
Your realtor is an idiot. “Won’t have to worry about it”? Has he heard of comparables? South facing… who gives a crap, it’s Vancouver, I don’t think he’s looked out of his window in the last 5 months.
#77 Bottoms_Up — I am probably considered to be in the upper middle income bracket and trying to get through the daycare years I wonder how people did/do it?
It’s a lot easier on one income than on two. I’m assuming you’re on two. Does the lower income contribute significantly more, after tax, than daycare costs? If not, the economy is benefiting, but you’re just spinning your wheels. Do you have collision coverage on your cars? If so, they’re too new — sell them and buy lesser chariots. Shop for groceries instead of just buying them. Those are the big items, after housing. And it never hurts to look at the income side of the equation. Could you be earning more and spending less if you relocated? Changed employers? Got new skills for a promotion? Just walked in and asked for a raise? And if you have any savings, make sure they’re working hard for you. Because if not, they’re probably working hard for me or somebody else on this blog.
It would be nice to know how many of those who knock BAs actually have one.
This landing is not easy. As I never even take a Tylenol. I could never be a drug addict. Feel nauseous.
They say, those who can’t, teach. I remember that from somewhere.
Of course, those young people can’t pay back their RRSPs or they would not have borrowed against them in the first place. Hardly rocket science.
Rental properties. You have to have skin in the game. Or you will freak out. Of course, people are going to hate you, wreck the joint. The key is, rent under market value, so the renters think they are winning. That is not rocket science either.
What I find completely amusing, as I have several credit cards, which I barely use. They keep trying to poach each others deficit at 1.9%. This is madness. I like it.
But, when I get ultra bored I screw around with telemarketers.
WOW, I feel like puking. but notice, how nice I am being.
You can even take a couple of courses and work part time and enjoy your life. Provinces are looking at some k-12 online. #18 DON
That would be great for high school students who don’t want to stay in school. It would free up a lot of their time so they could actually find out what they’re good at and pursue some of their interests, while still getting the “obidiance certificate”. (SM spelling).
They could also do it at whatever time they want. Not everyone is a morning person, especially teenagers! I think that is a great idea!
“The human animal is a learning animal; we like to learn; we are good at it; we don’t need to be shown how or made to do it. What kills the processes are the people interfering with it or trying to regulate it or control it.” John Holt
…Or those dumb questions after every chapter. Why can’t students come up with their own questions?
#37 Sidera-“Scotiabank knows the real value of cash.”
That’s right. They’re richer than we think.
How else to explain the stunning news that one-half of all the people participating in this plan are not paying the money back into their RRSPs?
Maybe some are taking your advice. Why put it back into your RRSP only to have to pay tax later to withdraw it? I used the HBP and did not pay back while I was a stay at home mom with no income (other than draining my RRSP at a rate so as not to pay income tax).
#75 GTA Girl The good news is that these lying frauds have been exposed .. The real estate industry is crawling with disgusting parasites !!!
“renting to 19-year-olds away from Ingersoll for the first time”
Hilarious! And completely correct.
I disagree when you say that London is boring- you’d do well to go down to Richmond some Saturday night in April or September (though no time in between). But, yes, it’s in decline. The council there for years has been in developers’ pockets, and likely spend as much time rubber-stamping subdivisions on prime agricultural land as they do anything else (don’t count on downtown renaissance or industry opening up by the 401).
Everyone there seems now convinced that you can somehow base an entire economy on one university and a couple of hospitals. No normal jobs- landlord in the university zone and the price you pay will have unreasonable expectations baked-in. Anywhere else in the city, it’s a pretty fair chance any tenant you find will be unemployed, or soon to be.
Mr. Buyers, Grim Reaper, why the analogies, metaphors, disguised threats? Why not just talk in person with him who makes you scared? You have nothing to worry about with him. The authorities maybe, but him, no. And no, he didn’t tell the ‘authorities’ but they know.
#24 Spiltbongwater
…
…
Now read again what you just wrote… very slowly.
Garth when you say taxpayers subsidized the purchase. in regarding to the RRSP home buyers plan that might be a stretch; no less so than saying taxpayers subsidize anybody else when s/he deposits $ to RRSP.
Sure they are getting the windfall now, but will not reap the tax breaks when filling it back up for the next 15 years. It it is not really on the taxpayers back.
not to mention those folks are often in higher tax brackets down the road and crappy ones when the house is purchased.
#73 shAwk on 02.13.13 at 6:09 am
yes I agree, there are some degrees/professions that pay off: engineers, accountants, doctors, lawyers, programmers to name a few but the mainstream ones are for most part won’t land you a high paing job: arts, history, language, geography, sociology, psychology etc.
To all the nay sayers, I said for the most part – there are exceptions.
The key to success is to possess a marketable skill. Trades get you this as do some degrees. For the rest, do you want fries with that?
Try not to expose my witness protection, but I played that rental game in London.
Was cash flow positive for 5 months.
Then the lipstick wore off, I was never cash flow positive again, a lot of old infrastructure in that city.
Most of the tenants were great, but one of them only wanted me to speak with their lawyer.
I rent now.
London is an excellent city to live in.
#24 Spiltbongwater
I get what you are after and if you had enough $ you could essentially do this… however, before you think you make off like a bandit, you are only postponing the taxbreak b/c eventually you will have a crapload more $ to unload from the RRSP than perhaps you even wanted in there but managed to stuff in to get the ‘benefit of the fabricated loophole’ that you thought existed.
You will be paying the tax at some point.
http://whispersfromtheedgeoftherainforest.blogspot.ca/2013/02/more-on-mac-story.html#comment-form The media were caught up in these bare faced lies.. Nice to see them exposed !!
First time home buyers are tapped out… There have been very few points in history where you could say that young people were in a position that they are not stretched financially… I mean doesn’t it make sense… How is a 25yr old supposed to be on equal financial footing to a 50yr old?
#91 fancy_pants on 02.13.13 at 9:24 am
I take your point, but with a regular circumstance if you take the RRSP out early you pay tax AND a penalty the year you take it out. With the Home Buyer’s Plan, you pay no tax or penalty when you take it out. A tax on 1/15th of the amount would be applied if you didn’t pay it back each year, versus tax on the whole amount if you took out the money to buy a car or a trip to Australia.
So in that sense, Garth is correct in saying it is a subsidy directly for home buying. The penalty and delayed timing of the tax payments is beneficial for home buyers, no penalty and quicker payment of tax for non-home buyers who withdraw.
Still a bit buzzy. Anyone know when they are airing the National Westminister Dog show? I am being nice.
#88 Re: London
“The council there for years has been in developers’ pockets, and likely spend as much time rubber-stamping subdivisions on prime agricultural land as they do anything else (don’t count on downtown renaissance or industry…).
Everyone there seems now convinced that you can somehow base an entire economy on one university and a couple of hospitals.”
Ditto for Hamilton only we have 2 universities. It isn’t working here either. Only 46% of males in this city have full time jobs. See the comparison to the 1978 number in the article.
http://www.cbc.ca/hamilton/news/story/2013/02/10/hamilton-part-time-job-rates-jump.html
A good little article about ETF vs mutual funds.
http://www.theglobeandmail.com/globe-investor/funds-and-etfs/etfs/low-fees-low-risk-etfs-blaze-past-mutual-funds/article8465115/
My mortgage broker – who emailed me in desperation last week to ask if I was going to be buying again soon – is announcing on LinkedIn that he has a large chunk of his office for sublet.
Make of that what you will.
Been reading ths blog for a while now and really enjoy it.Not sure whats happening in oshawa since this city has the highest unemployment rate in canada but the re sells pretty fast here and in the last year or so bidding wars is not uncommon.Sold our house last fall,renting with a huge bank account and dept free…life is good!
#85 and others
Moving forward after 31 years of teaching high school I can assure you that on-line learning at that age level will produce of even more illiterate, lazy and narcissistic generation than we have now. Post secondary is another issue, after all they’re paying .
I am still stoned, and do not like it. I remember going to the BIGWIN INN as a child. I met a lot of First Nations People. All of us children had fun. Rode horses. I still retain my friendships with my First Nations friends.
Unrelated, but, if you are bored, and need a ride out, visit Mary. She runs a convenience and bakery near the ferry to Cardinal Island. Mick Jagger and the boys hang out there. Best beach in Ontario. she makes the best meat pies in the world. Say G sent you.
42Inglorious Investor:
“No one in Canada truly owns property. I hope that takes allodial off your mind.”
*********************
So…’freehold’ and ‘leased’ is basically the same. ‘Leased’ merely has a time frame attached to it — typically 99 years. No big deal. However, realtors like to make a big issue about this.
Just as sellers like to price their homes with numerous ‘eights’ — $888,888. ‘Eights’ in the physical address can influence HAM buyers.
What’s with the knocking of a BA as being useless? I have a Bachelor of Applied Science and Engineering from UofT now work in telecom.
A BA did not get you a job, but it would have been impossible if I didn’t have one. Like most job, the reason I was accepted was my knowledge of the industry, experience (paid work and passion projects), and my personality.
I look back at my time at UofT as extremely valuable and worthwhile experience that taught me engineering fundamentals and how to learn, as I haven’t stopped learning new things since I started my career.
#14 Mike on 02.12.13 at 10:48 pm
I know you often encourage investing in dividend paying stocks and preferred shares, but what if someone is willing to take on a little more risk, what do you recommend? Would you recommend having 20% small stocks in a portfolio?
No. — Garth
Why not? Micro and small caps can boost returns without adversely affecting volatility (there are studies). You can even add those asset classes using your beloved ETFs. It’s another way to diversify.
TEMPLE
#97 Toronto_CA on 02.13.13 at 9:47 am
Let me start by saying I used the program @15 yrs ago and it does help purchase a house.
Having said that, it is not a subsidy or handout of any sort. The gov’t/taxpayer is not giving you anything you won’t be paying back directly or indirectly. You are simply deferring taxes until later. Does it help you pay for your first down payment on a house – absolutely.
A tax on 1/15th of the amount would be applied if you didn’t pay it back each year
Spreading it over 15 years doesn’t change that fact that you will be forgoing tax savings (likely foregone better savings) for the 15 years you are paying your RRSP back. 1/15 x 15 yrs = all of it. Or let’s be wild and pay it all back in 5 years. hmm. 1/5 x 5 years = all of it.
Damn, the math keeps getting in your way. Your ‘subsidy’ is being paid back over time.
not sure what penalties, Australia or a car has to do with this but I’m pretty sure if you spend it all on online courses you may get a decent tax break with your 2202A
,regards
I made no reference to him using the HBP
Sorry, I thought the “empty your RRSP” comment was a reference to employing the HBP, since the post started out with a discussion of it, and I didn’t think you would actually suggest raiding your RRSP of taxable income, so I presumed you were recommending he use the HBP.
I will post a link to an interesting interview about the End Game, when the global economy is headed.
The insidious thing is it is going on under our noses, built up incrementally , then the trigger gets pulled..too late.
When Vladimir Putin says the U.S. is endangering the global economy by abusing its dollar monopoly,” Bloomberg reports this morning, “he’s not just talking. He’s betting on it.”
#96 Wes Mantooth — First time home buyers are tapped out… There have been very few points in history where you could say that young people were in a position that they are not stretched financially
That’s true, but there’s a big difference between being tapped out with a 6% mortgage and being tapped out with a 3% mortgage, especially if your rate isn’t fixed for the entire amortization and you’ll have to renew at prevailing rates down the road.
…Insiders are shocked… and have been furiously lobbying F to reverse the slaughter of last July 9th.
If F back pedal and bring back this 30 years mortgage, With those stupid prices in Toronto and Vancouver and else where, its time to split the provinces of Canada. Foolish idea, but its got to stop. Dont forget in USA 3 generations of Money as vanish withe the real estate crash of 2006. So serious legal action got to be taken.
Thanks all, That is what I figured it would work out to be a push.
If a couple used 50K RRSP HBP if they decided to have children, would it make any sense for the the stay at home parent to pay any portion back to their RRSP as with no income the tax penalty would be very small or non existent?
$95 Robert James – We should all send them the link. Some have.
#73 shAwk
Totally agree. Further to my fellow engineer, I’m sick of hearing about people crying about how difficult it will be to go to university because of tuition. Ever heard of OSAP and other grants. I too went to university, got OSAP to pay for it, finished school, repaid OSAP and have a great career. What’s so difficult in that? Stop whining. If you’re lazy, go on welfare, don’t blame the education system. Next, online degrees will never mean as much in my opinion as a tangible degree from a school you physically attended. You gotta do the time (duke it out in the lectures, long nights, cramming) and hear it from the horse’s mouth (professors, fellow students, faculty). You can self-learn to paint or play an instrument or take photographs, good luck to human kind when people are self-learning to construct buildings or highways or bridges or electrical grids or sewage systems or dams or cars or ships or planes.
Striker, listen, and you listen close: flying a plane is no different than riding a bicycle, just a lot harder to put baseball cards in the spokes.
Over & Out
Is it just me, or do others get pissed when they see the Scotiabank ad : YOU’RE RICHER THAN YOU THINK ?
This ad fuels idiocy and irrational thinking on the part of impressionable, ignorant, and delusional folk who are convinced they have the means to have anything they want. “If my bank says I’ve got the money, well, let’s buy it.”
This manner of marketing brought the US housing market to its knees, and is doing one hell of a good job here.
#82 Ralph Cramdown on 02.13.13 at 8:41 am
————————————————-
Thanks for all those considerations, yes those are the types of things that I roll around in my head at night. Two household incomes that are roughly equivalent, therefore we’re actually still (slightly) ahead every month with both of us working. Paying through the nose for insurance, and yes 1 car would be much cheaper than 2 but life in the burbs with kids makes it almost a necessity to have 2. If prices (for everything) in Canada continue to rise I will seriously consider a relocation…perhaps even to the States. Someone on the blog basically stated that young people have always been tapped out, there is a major difference from the past when the young faced a future of increasing wages and asset prices, versus today where they face stagnating wages and asset depreciation.
To add to today’s discussion about schooling. Some time ago I read a quote that said:
“Formal education will make you a living, self-education will make you a fortune.”
A fabulous Canadian success story that made Billions $ for its investors, no failure there, Blackberry changed the world. But now its over. Good Bye Yellow Brick Road
Goodbye. http://finance.yahoo.com/q?s=BBRY
FB has lost 20% in the past weeks and very likely will go lower. http://finance.yahoo.com/q?s=FB
Bubble alert!! http://finance.yahoo.com/q?s=LNKD
—————-
Its really quite sad and almost un-Canadian watching the barrage of mis-information and perhaps lies coming from the real estate industry. http://whispersfromtheedgeoftherainforest.blogspot.ca/2013/02/more-on-mac-story.html#comment-form
Seriously folks its sad to watch an industry behave in this manner. http://whispersfromtheedgeoftherainforest.blogspot.ca/2013/02/more-on-mac-story.html#comment-form
I have an interesting perspective on university. I am a self educated individual with 15 yrs experience in my field and am just NOW (read one month ago) going back to get my degree. I don’t need the “education” but I do need that piece of paper. Unfortunately I have gone as far as I can go with my self education. That piece of paper will mean and additional $15-60K for me. I’m tired of ineptitude bypassing me because they have it and I don’t. Now that I see what it is all about, I know I was right to choose to self educate. Much more challenging and interesting than regurgitating BS that I disagree with. Over and over I find issues with my texts and the things they say – that are in direct contrast to the REAL world and how it REALLY works. But I will jump through the hoops, memorize their BS and make more money.
I never cared much for money as I have lived a very interesting life – swimming with wild dolphins and travelling this world. But I have children now and I don’t want them to miss out on opportunities bc mommy didn’t want to play the game.
@77 – we have young children of daycare age as well. My hubby chose to change careers so he can 20hrs/week and some eves/weekends to reduce the burden of childcare. With kids, you have to be flexible :) You know what they say about the willow tree!
Astronaut down on 02.13.13 at 12:29 pm
Sadly, to few people believe in investing in themselves, I spent my entire twenties and early thirties, either attending or paying for my education. Being in the building trades pays quite well, combine the trade certification with some engineering education and the world truly is your Oyster.
“At a time when economic concerns continue to plague so many markets and industries in Canada and around the world, Edmonton continues to be bulletproof.”
Darell Cook
Edmonton Real Estate Board President
Real Estate Weekly, Feb. 2013
How’s that possible? Isn’t the government about to drop an economic bomb on the province with the next budget this spring? A budget with so much bad news in it that the premier went on TV as some sort of attempt to warn people
This is outright BS beyond belief!
But you know what?
Many fools are gonna keep listening to realtor idiots like this and keep right on buying because this is a province and city in total denial.
#105 Daisy Mae on 02.13.13 at 11:06 am
“So…’freehold’ and ‘leased’ is basically the same.”
No. It’s more complicated than that. Basically it’s “ownership” vs. the right to use. Google “freehold vs. leasehold” to start.
I just read an article about a R.E. “price protection” idea:
http://www.buyerprotectionplan.ca/
Any thoughts?
#117DR. WAYNE on 02.13.13 at 12:35 pm
Is it just me, or do others get pissed when they see the Scotiabank ad : YOU’RE RICHER THAN YOU THINK ?
—
To Dr. Wanker
FIRST of all why do you let things like this bother you?
Is this the FIRST time you felt this feeling or has there been others?
Maybe when you feel like this you should take two aspirins FIRST thing in the morning.
Your FIRST concern should be your own health and happiness, and then the happiness of your family, all the way to your FIRST cousins.
And remember he who laughs “opposite of FIRST”, laughs loudest.
Penny Henny
#103 Rosie
Glad to hear you are moving on. Sounds like you should never have been teaching with such an attitude.
Humpty # 70,
“Currency wars have a disproportionate impact on the poor, as they don’t hold assets whose value is inflated in nominal terms and that could buffer some of the fallout.”
“Central banks don’t cause real wars.”
“But monetary policy has a profound impact on the social fabric. Abstract theories about how aggressive monetary action are the remedy to depressions ignores the heavy social toll currency wars have on people.”
—————————————————————-
If the suffrage of the masses, can not be remedied, the blame will be placed with someone. (other than the current political management) This is historically when the finger pointing begins. ‘They are the reason, for your pain’. Currency wars lead to trade wars, which lead to real wars. We know war is a business. Hopefully we can rise above the missteps of our past.
http://www.warisbusiness.com/
take care
Blacksheep
DELETED
Realtor.ca has been down all day…a sign of the apocalypse?
Bottoms_Up: Two household incomes that are roughly equivalent, therefore we’re actually still (slightly) ahead every month with both of us working.
Elizabeth Warren says that where the traditional family had to have 52 pay checks to meet the mortgage the new family has to have 104. She also goes into the cost of two cars: 58 minutes
http://www.youtube.com/watch?v=akVL7QY0S8A
Hey, any good deals on car insurance. My Daddy knew Tommy Thompson, richest man in Canada, at the time. Total miser. He told us young un’s belongings own you. They do. Would not even attempt to move my house insurance, and I own 5 of them. Pissed off, but still being nice. Oh, I named my youngest after him. Thomas, he is beautiful and better than me. Also, I have an Alexander, and yes he is superior. But not to me.
Have not seen barely a single rant from Smoking Man today. Miss his enterprising mishaps and dyslexic journeys through the realm of Smokainia Land.
This is for you buddy!
Roses are red Violets are blue I”m a dyslexic squiddlepiddleblurm!
Did you hear about the atheist dyslexic? He didn’t believe there was a dog.
Did you hear about the dyslexic devil worshipper? He sold his soul to Santa.
Did you hear about the dyslexic pimp who bought a warehouse?
Dyslexics have more fnu!
Dyslexics of the world, untie!
Why is dyslexia so hard to spell?
‘I realized I was dyslexic when I went to a toga party dressed as a goat.’
Did you hear about the paranoid dyslexic? He always thought he was following someone.
If you’re cross-eyed and have dyslexia, can you read perfectly?
how can bank make money if rate is so low ?
#46 Tim on 02.13.13 at 12:27 am
I recall a good friend who went into law.
when last seen he was a drone in one of canada’s major lawfirms here in Vancouver. I was servicing one of our products and ran into him at his desk…..you would think with 21 years [at that time] under his belt he would get a bigger office. instead of a glorified cubicle….
anyway those of us who worked in the local sawmill made more money ,had longer vacations and far more time with our various families.
sawmills are noted for boring repetitive work but a major law office appears to be just as boring if not more boring.
but it is never an easy skate in life…those with only a months less seniority than myself were laid off with some regularity .especially in the early ’80’s [a time that reminds me of now for some reason…]
so I would have to say that luck also plays its part…
If you quit school and headed west from some place outside of Winnipeg in the summer of ’68 ,you could get married have a family and pay off your house in richmond bc and be in a position to profit in the aforementioned dirty ’80’s…. the individual whom I allude to eventually bought a very nice chalet [5 bedroom house just upslope from the bottom of the wizard chair on blackcomb…] that was later sold for a handsome profit. with hardly any education at all just to underline it a bit.
mind you he wasn’t stupid either. that helps.
not like me I bought motorcycles…..had fun though.
Bottoms Up;
there is a major difference from the past when the young faced a future of increasing wages and asset prices, versus today where they face stagnating wages and asset depreciation.
++++
Talking with a friend about just that today. We both have 18 year olds. Jobs are scarce, even with post-secondary. Where she is (ONT), there is competition for Tim’s and Starbucks and most jobs require completion of post-secondary. It’s no wonder kids stay home in their 20’s — with student loans, they can’t afford to move out. Then in their 30’s, it’s marriage, kids and buying an excessively overpriced house (hey, our first in ’99 was $75k — wasn’t THAT long ago), and be in debt the rest of their lives.
Wasn’t hard to convince mine to get off that treadmill. I hope the lessons (learn a trade, renting is great for the bottom line, buy what you can afford, want vs need) we taught, stick.
Glad I’m not 18 now. I get worried and I’m 42.
Disgraceful: RE agents possing as buyers in Vancouver.
http://whispersfromtheedgeoftherainforest.blogspot.ca/
How can a young family with daycare costs get ahead? Food and shelter have essentially sucked every after tax penny. Every month families dip into credit just a little, until it is overwhelming. And that isn’t a cause of frivolous spending. I think it is time the Government helps the poor struggling families with a bit more than a RRSP transfer to HBP. The real estate industry and government has prospered so much in the last few years, it would make sense to transfer some of that wealth to help lower income families.
Inflation, lol. Only in their mind.
http://themashcanada.blogspot.ca/2013/01/sold-212-pape-avenue-leslieville.html#!/2013/01/sold-212-pape-avenue-leslieville.html
This house was listed at $699,900. It had last been listed in 2010 for $575,000.
It just sold for $757,500.
Alberta is a province of whiners. And pejoratives.
Spend like a drunken cowboy, broke now.
This time will they still blame lefties/liberals/trudeauites/limp wristers/tree huggers?
#127 Teve Torbes on 02.13.13 at 2:10 pm
I’ve been on it intermittently today and haven’t seen it down.
Garth…Need your advise. Sold my house following insight in blog 2 years ago. I am a happy renter. Waiting for market correction.
Never contributed to RRSP. Have a bonus coming up 5K and split on where to put it go RRSP pre-tax or FTSA? Thanks buddy.
Is Toronto a “world class city” ?
I would like to get some opinions.
I say no but there sure is a ground swell of media and other touting us a such.
For those who think it is, why?
@anthony 106. Remember when you were up studying and there wasa huge party going on next door? You were getting a BASc, they were getting BA. Big,big difference.
#10 Oakville Owner and the state of the union
combined reporting
DC’s Large Surplus Was Aided by Efforts to Close Corporate Tax Shelters
February 11th, 2013 | by Ed Lazere
Combined Reporting is one of the two core components of Unitary Taxation. (A combined report on an international basis is a single set of worldwide consolidated accounts in each country where it has a business presence; the other key component of unitary taxation is the apportionment of global profits out to the different jurisdictions to tax at their own rate.)
http://taxjustice.blogspot.ca/2013/02/sudden-jump-in-dcs-tax-revenues-helped.html
#127
Not moving on, moving forward. Did you teach? Remember high school do ya. Well it has changed, as has everything.
115 Aprilnewwest – correction. We should all send the link to CTV. Some have.
The OECD has also in the past spoken repeatedly about the perils of ‘double taxation’ of corporations due to overlapping tax claims of different jurisdictions, but has been far less interested in talking about ‘“double non-taxation” – that is, where the corporation gets taxed nowhere. …
base erosion and shifting profits
http://www.oecd.org/ctp/BEPSENG.pdf
A few engineers on the boards today high on the smell of their own flatulence.
I went to college and the military and now @ 32 all of my peers are PEng. How does 4 years of math problems prepare you to answer emails all day and manage a project budget?
It turns out that most of what engineers do in my field can be done by anyone with a modicum of intelligence (I’m proof of that) and none of it has anything to do with what they learned in university.
From my desk the only thing separating trades people and engineers is ego and student debt. Salary and responsibility, not so much.
.#75 GTA Girl
‘golden cube award’ red carpet gala …host an award show get some sponsers highlight your brand
rinse lather repeat.
#140 TurnerNation
Listings in proximity
Feb-11 E2042373 117A A PAPE AVE $869,000
Apr-11 E2070750 117A A PAPE AVE $829,000
Sep-12 E2467734 117A A PAPE AVE $899,000
Mar-12 E2314436 135A A PAPE AVE $779,900
Mar-12 E2321878 135A A PAPE AVE $779,900
#141 TurnerNation
“Alberta is a province of whiners. And pejoratives.
Spend like a drunken cowboy, broke now.”
It ain’t the average person that crapped in the nest,
it’s Red Allison who acts like the spendthrift spouse
who trashes the family finances then comes back
when caught out and asks what “we” can do to fix
things. Same applies to the mayor of Calgreedy.
Shameful, wanton and totally destructive.
On a personal level i lived throught this scenario and
it almost killed me. The hardest part was getting out
and having to leave my three kids behind.
This time i have no problem leaving Alberta and
absolutely no allegiance to it. I have already quit the
rat race and dropped out. What i don’t make in dollars
i don’t spend (nor need to).
For anyone that wants one, i have a barely used
hamsterwheel in the back yard free for the taking.
I tell the truth, and get deleted. Bummer. Garths’ secret agents don’t let you get past. He does not analize all this shit, even I don’t. Am pissed off and might give up. Waste of my time.
Try saying something without profanity. It might help. — Garth
Was there anyone, I mean anyone at all, in government who actually thought of the possible consequences of the Home Buyer’s Plan?
As for being bored in London, it’s your fault if you are bored as there’s plenty to see and do in London if you actually get outside every now and then. However, as Garth and some comment posters have pointed out the local economy leaves much to be desired for job seekers. I’m glad I kept my RRSP’s in investments rather than cash them in to buy a house here. It’s great to have the mobility to pack up and leave if the pastures are greener elsewhere.
I’ll reword the question asked in a recent posting: did anyone in government, other than Garth, consider the possible consequences of the Home Buyer’s Plan?
#137 VanRant The great thing about having a forum like Garth`s is that the whole country learns about disgusting scumbags like these two and people can use caution when dealing with any RE agents… The internet is a great thing !!
As a newly minted professor in a community college and coming off 35 years in the working world I can tell you that close to half of my first year students would not stand a chance in on line learning. They do not have the discipline and want things handed to them. They were looking for short cuts though and reluctant to do the grunt work necessary to develop the skills required in future courses and the working environment.
Community colleges tend to hire professors that have been successful in their area of expertise and hence can transfer that to their students. I am not sure that is the case at Uni. Also I have met some students who did the lecture circuit at Uni for 3 or 4 years and now are at Community college to actually learn the skills required to get a job.
#112 DR. WAYNE on 02.13.13 at 12:35 pm Is it just me, or do others get pissed when they see the Scotiabank ad : YOU’RE RICHER THAN YOU THINK ?
This ad fuels idiocy and irrational thinking on the part of impressionable, ignorant, and delusional folk who are convinced they have the means to have anything they want. “If my bank says I’ve got the money, well, let’s buy it.”
This manner of marketing brought the US housing market to its knees, and is doing one hell of a good job here.
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Dr you have never heard of “YOLO” amongst our youth -you only live once. You know what that means, buy that boat, car, house, vacation asap before you die. God forbid you went through life not enjoying it. LMAO!
We know the end will be nigh when advertisers start using such a slogan.
#105 Daisy Mae
They most certainly are not.
As they should. As the end of lease approaches, it is clear the value of real estate is rent value.
#137 VanRant
That’s what’s needed more. Expose the lies and fraud. Forget the stats.
#144 BigRidger
According to Wikipedia Toronto is an Alpha city.
http://en.wikipedia.org/wiki/Global_city
#139 richmond bc
They’re getting ahead BECAUSE they have daycare. Presumably, the extra income more than covers the daycare costs, which means they are getting ahead vs having one parent stay home.
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#70 Humpty Dumpty — “currency wars destroy wealth.” — Hi HD. See first link on Russia and China being the two largest buyers of gold, possibly going to a gold-backed currency and the second clip on Libya, why NATO and TPTB destroyed it.
#78 EIT — “RE Industry + Government Stimulus = Rainbows + LSD” — Good one. The RE industry can also be applied to car makers and others who have since fown off to greener pastures.
#110 Dr. Hoof Hearted — “The insidious thing is it is going on under our noses, built up incrementally , then the trigger gets pulled..too late.” — Ahh yes — when TPTB pull the rug out from under our feet when it is least expected. Yep, shit happens!
#117 DR. WAYNE — “Is it just me, or do others get pissed when they see the Scotiabank ad : YOU’RE RICHER THAN YOU THINK ?” — Not at all.
In fact, the saying is correct if one is able to ignore [email protected], and go with Garth’s ideas (1) or working with good cheap stocks (2), and cashing out at $10 – $20 in a TFSA. That’s one way of finding financial freedom at 55!
#133 :):( Ying Yang — “Roses are red Violets are blue I”m a dyslexic squiddlepiddleblurm!” — Damn funny one-liners! I understand SMan is down in Florida, playing with some empty Space Shuttles. He’ll be back.
#159 The Prophet Elijah — “Dr you have never heard of “YOLO” amongst our youth -you only live once.” — Then they will get an interesting surprise when they finish down here, move back into the next worlds and find out where they’re going next.
*
Umm, Gold Russia and China are now the world’s largest buyers of gold, One hour doc. West exits stage left and One Hour doc. Libya’s gold.
*
Quake-O-Mania Links and clip in. HAARPs big brother? 6:13 clip Censored SNL clip on Chuck Hagel; 3:13 clip Is the sun liquid? gdO’s patting Pope Benny on the rack; Dogs As smart as humans? For example — Multi-lingual parrot At least it’s not dead; Mayday! Sweaty farm animals on board! New Super Volcano? That will mess things up a bit; Claustraphobia? The year’s weirdest excuse (so far); Five Foods that kill cancer; Chipmunk Cheeks It’s all in the eyes; Veggie Gardens Will Big Brother require registration? Plus 3:42 clip Utah; One ton croc Kicked the proverbial bucket; Tunisia The Pythons filmed “Life of Brian” there. Said it was the happiest time of their lives, but not Bulgaria; Then there is Turkey. “Turkey is supposed to be the launching point for the invasion of Syria. If Turkey decides the US is no longer a friend, this ‘complicates’ things.” wrn.com; Clip Kannaduhhh’s Frankensteer. Monsanto and Cdn. beef team up; Feb. 16 All 50 states haviing a national protest against Obomba; Wanted: Dead, not alive; DHS and map Keep an eye on your cell phones and laptops.
Bigarider no Toronto is not world-class.
Here, many condos and restaurants named are after world cities.
Elsewhere have you ever seen a place named after Toronto? Why would they?
Even our national pizza digs are “Boston”.
Canada is haven to ‘eponymonality’. (I made it up.)
Eponymous and banal meet.
Beach girl why not start your own weblog up. Like Smoking man’s. We can follow your profane rants from afar.
Who knows it could become the next Frank magazine?
Beach Girl…..
Go watch Sound of Music
” YOU’RE BITCHIER THAN YOU THINK “
#23 TurnerNation on 02.12.13 at 11:15 pm
Heard a conf call today, BAX futures are apparently pricing in a .75% rate hike into June 2014.
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Told ya, told all of you…….
Bidding wars are back…..O LaughingCon come out, come out, where ever you are………….
Thanks Dalton McGuinty!!!!
Here is what our premier has done for Ontario in the past seven years!!!!!!
This was his “no tax increase” election campaign.
He increased all the licensing fees from your car to your boat including fishing and hunting.
He introduced the health care premium (not called a tax) some couples pay as much as $1,500.00 a year.
He doubled the price of most lottery tickets. (Not called a tax).
He has put a ECO tax on many containers such as paint cans and window washer fluid most people still don’t relies it is on your bill he kept that one real quiet
He has put a disposal tax on all electronics.
He has put the disposal tax back on tires
Now don’t forget that all except the health care premium are subject to the GST and PST (taxes on taxes.)
And now he has pasted the HST the largest tax on the province ever, the only other tax in Ontario that ever came close to this in the past was the health care premium.
He pasted this bill even though 76% of the people in Ontario were against it.
This HST will provide the Province with an additional THREE BILLION dollars a year.
And now we will have our S.M.A.R.T. meters that we will have to pay rent on and do our laundry in the middle of the night and we are going to pay big time for air conditioning from now on because when we need it the most that will be prime time. As if it costs any more to produce hydro at two in the afternoon or ten at night another tax grab.
Let us not forget the E health scandal with one point two billion dollars wasted and paid out to friends and relatives.
What was Mr. McGuinty’s answer to this (well if the people of Ontario don’t like it they can show it in the next election.) Nice attitude. This was after he fired the CEO and gave her a severance package of three hundred thousand dollars not bad for only having the job for seven months.
Then the windmill power plant he awards the contract to KOREA seven BILLION DOLLARS. One would think that there was some place in Canada or North America that could have built these.
He closed the emergency rooms in Port Colborne and Fort Erie because there is not enough money and there has been two deaths since because by the time they got to St.Catharines it was to late.
But awards a hospital in Toronto three million dollars in the riding where there just happens to be a by- election to replace George Smitherman
He has taken the richest most prosperous province in Canada to one of the poorest and has created a deficit of over TWENTY SEVEN BILLION DOLLARS.
And don’t forget his nice little salary increase of $40,000.00 a year, millions of people in the province don’t earn half that.
All the MPP’S got 14% increase
Now that they all got nice increases he comes out with a new budget and freezes all provincial employees wages for two years.
He has increased the hydro by 10% in April of 2010.
He has increased the tax on liquor and wine by 10% in May of 2010
But mister no tax McGuinty will retire with his nice comfortable pension and all his paid benefits.
I hope this gets passed around the province of Ontario and everybody remembers the way we got screwed by mister McGuinty and the liberal party not one liberal MPP had enough guts to vote against any of the above.
This is not a rant blog.
Beachgirl:
“Am pissed off and might give up. Waste of my time”
Thank god! You have been wasting all of ours with your ridiculous off topic rambles.
DELETED
#124Inglorious Investor
#105 Daisy Mae
“So…’freehold’ and ‘leased’ is basically the same.”
No. It’s more complicated than that. Basically it’s “ownership” vs. the right to use. Google “freehold vs. leasehold” to start.
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More ‘complicated’? Natch! LOL But for interest sake, I will check it out.
What I’m basically saying is that a paid lease for 99 years doesn’t concern me. I won’t BE here 99 years from now…and neither will my kids.
Chances are good the house won’t be standing. :-)
#162 marcfromottawa
Wow thanks for that marc.
I guess it’s onward and upward for RE then… And condos LOL
#134Dean: “How can bank make money if rate is so low?”
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Does anyone give a damn? They just do….
Re Engineers etc.
Highly overrated…usually people that never got dates , watch Star Trek 24/7 , and actually believe man landed on the moon
Only truly meritorious one was the Professor on Gilligan’s Island…….the man could make a Nuclear Bomb out of bamboo,conch shells and coconuts.
#139richmond bc: “How can a young family with daycare costs get ahead? Food and shelter have essentially sucked every after tax penny. Every month families dip into credit just a little, until it is overwhelming….”
********************
An economist once said that working moms who don’t have well-paying jobs are defeating their purpose. Day care costs are insane….
#163 Devore on 02.13.13 at 7:12 pm
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So explain why once kids hit school age that parents no longer have astronomical childcare costs? It’s because the childcare/educational costs of older children is covered by all through property taxes.
It’s not really “getting ahead” when you have to work 3 weeks of every month just to pay your daycare costs. When you average out the ‘extra’ amount earned in a month worked vs. hours worked you’re basically working for about $5/hr. I wouldn’t call that getting ahead, I’d call that scraping by.
#164 Nostradamus Le Mad Vlad on 02.13.13 at 7:24 pm
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WTF ???
#160Devore
#105 Daisy Mae
So…’freehold’ and ‘leased’ is basically the same.
They most certainly are not.
However, realtors like to make a big issue about this.
As they should. As the end of lease approaches, it is clear the value of real estate is rent value.
**************
That’s a no-brainer. Geez….
#143 Diamndmap on 02.13.13 at 3:39 pm
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Put it all in your FTSA (Foosball table savings account).
#139 richmond bc on 02.13.13 at 3:19 pm
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Yep, when banks and oil companies are making billions in net profit every quarter you have to wonder where the equality is going (and where is all that money coming from?). The last time there has been this big a discrepancy between how much the rich make vs the poor it was the 1930’s and then we had a depression.
It appears the frauds are apologetic simply because they got .. Fraud is Fraud.. Nobody cares if you azzholes are sorry!!! http://i.imgur.com/ixZNUMi.jpg
#136 DM in C on 02.13.13 at 2:41 pm
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that’s hilarious because what you’re teaching your kids is what I plan on teaching mine (but we’ve got a 15 yrs+ to get them to 18)…learn a skill that will be in demand….really observe the job landscape (it’s insane and has been insane for a long time to go to teacher’s college — but go and get a nursing degree and you’re set for life).
Don’t worry, 18 is still young and there’s lots of life living for them before they ‘grow up’ or have to grow up. But, they should have a plan as to where their income stream is going to come from in a decade….I didn’t have a reliable income stream until 30…and debt avoidance during your 20’s is key.
Garth is right I going to unload my income property in the university towns. University of Phoenix Online herei come, hell I’m going to rent an Internet link direct to the universities and charge kids for online time!
#168 Smoking Man on 02.13.13 at 8:31 pm
Told ya, told all of you…….
Bidding wars are back…..O LaughingCon come out, come out, where ever you are………….
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Hot air. That’s all. Just hot air. It is over and you know it…
Really, all I said was I know the man in space. The obvious comes to mind. I am being so nice. The dog and I are eating Creamsicles. I could never be a drug addict, I lost an entire day.
I like the CBC, just watched a really stupid show called Arctic Air. The polar bear was the best actor. I would never watch this if I was not under the influence. The Plastic Sturgeon put me down like that polar bear. Yes, I said Sturgeon. This is the best we can do.
The current iteration of online learning may not yet supplant bricks and mortar school but it is a fast evolving field and the writing is on the wall. Computing power has not yet penetrated today’s classrooms simply because present administrators and teachers are straddling the analog/digital epochs. Even the very strategies to teach ideas will change and are in fact changing now. We have the same style lessons recorded on video and transferred to the net presently. While the pause button and google are a revolution with respect to managing cognitive load these developments are only the tip of the iceberg. Think learning objects, simulations, serious games. Teachers will always be required but they will be able to facilitate learning from remote locations without a doubt. Things have changed profoundly. Hell I forgot to teach my son how to tie shoes because all his shoes are velcro. That was a major milestone in my young life. Education will move online, it is just a question of how long the status quo can be maintained now by parties with vested interests.
#116 Astronaut down on 02.13.13 at 12:29 pm
You gotta do the time (duke it out in the lectures, long nights, cramming) and hear it from the horse’s mouth (professors, fellow students, faculty).
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I think you are romanticizing things a bit and students have to teach themselves at least in the sciences at university (in fact, if you want to get ahead it is best to show up already knowing the material). Sure, you can talk to the prof but you have figure things out for yourself at some point. Online, working, cheaper and debt free is the future and will likely be more effective.
[…] via What problem? — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate. […]
Tony #56
Some Hedges in place, and can sell all with a mouse click
always be aware!
Thanks for the advice, it is appreciated!
Speechless
As one of the lucky few Canadians getting a (small) bonus this year, I find it odd that my company will not transfer this $$ into my self-directed RRSP. Instead, I have to allow them to transfer it into the group RRSP (high MER’s,) and then transfer it myself to my own account. Same thing at the wife’s company. Is this unreasonable?
Now there may some of you that think the Old Man is blowing smoke, as the Head Office of H.J. Heinz in the 1970’s was located on Bloor Street just east of Yonge, and the President was Gilbert Morris who lived in Oakville. I was the one who did the the financial analysis on his personal Estate Assets as was his personal advisor; he was a close friend of mine, and when his wife passed away thanked me for doing such a good job.
very interesting
http://whispersfromtheedgeoftherainforest.blogspot.ca/2013/02/tues-post-2-meet-amanda-lee-on-facebook.html
http://whispersfromtheedgeoftherainforest.blogspot.ca/2013/02/tues-post-2-meet-amanda-lee-on-facebook.html
We can add this fraudulent act to the list of other R/E frauds: fake pre-sale condo line-ups, phoney bidding wars, agent misrepresentation of properties, R/E association’s manipulation of sale statistics; phantom “Asian buyers”, the list just goes on and on…
– –
http://whispersfromtheedgeoftherainforest.blogspot.ca/2013/02/tues-post-2-meet-amanda-lee-on-facebook.html