Family planning

parents

The bungalow must have been fetching back in the day. Lately it’s little more than dozer fodder, which is why a couple of west end developers have been sniffing at the bushes. Anna won’t sell and take the money, however, not while her Mikey’s still at home, feeding the washing machine, emptying the table and borrowing the Toyota.

Anna and her husband, Sergei, have a grand total of $90,000 in a taxable payment coming from a former employer’s pension plan. That’s it, plus his CPP and some part-time wages. In their mid-sixties, they obviously need to dump the house, invest the money, move and punt Mikey. After all, he’s 26.

“What were you doing at twenty-six,” I ask her. “Married and working,” she says. Exactly my point.

Anna says it’s different now. Mikey can’t afford rent on the money he makes, so he’s going back to school. He’ll be there when he’s thirty and finds his first gray chest hair. I ask the parents if the kid understands their precarious financial position, and the fact they’re running out of money.

But I know the answer. Most families would rather share a disease than talk about money. So the parents inch towards penury, the thing in the basement feels entitled to meals and laundry service, and the future goes untended. Just another household on the edge, prisoners of their own destructive emotional baggage.

My encounter came to mind yesterday as I read through what can only be called a shocking report from the Ontario Securities Commission’s educational arm. The OSC’s Investor Education Fund interviewed 1,500 homeowners, all over 50 and half retired, about their houses and their preparedness for the rest of their lives.

If you’re a clinger like Mikey and think Boomers are the chosen tribe, think again. Here’s what the regulators found.

  • 20% of these fifty-plus people have no idea how much they’ve saved.
  • Half think their savings, whatever they are, will be gone within 10 years of the last job.
  • 40% have less than $100,000. How long will that last?
  • 41% say they’re not willing to sell their house, borrow against it, downsize or rent.
  • A quarter expect to retire with debt, a third of whom have no idea how they will pay it off.

Now, remember what I told you yesterday? This year (first time ever) there will be more wrinklies than kids. Over 70% of Boomers don’t think they can retire at 66 and three-quarters plan on working, sucking up jobs their kids want. This is a social and economic tsunami in the making, and at the heart of the mess is real estate.

Simply put, this is what happens when an entire nation goes horny for houses, does next to no financial planning, confuses investing with gambling, equates property with security, swallows huge amounts of mortgage debt and is financially illiterate. At this point there’s nothing which will rescue most Boomers, or deflect the spray about to hit their kids. Real estate values will decline, the economy will stumble and demographics will taketh what it gaveth. This is precisely why smart people will break from the herd which is now thundering busily towards the cliff.

Here’s what I suggested for Anna and Sergei: List the house immediately, since the third week in February constitutes the ‘spring season’ in Toronto, as it does in Vancouver. It could be the last decent one for years to come. Don’t cheap out with a FSBO, but go full-bore MLS to ensure the place is marketed properly by the best agent in the hood.

Rent a nice two-bedroom condo for two grand a month and be done with endless repairs, property taxes and insurance (and Mikey). Invest the house proceeds in a balanced portfolio (half growth assets and half fixed) which includes ETFs, preferreds shares, REITs and some fatter corporate bonds, with lots of geographic and sector diversity. Better still, get a smart person to do it for you and deduct the fees from your new income.

Dump $51,000 of this in two TFSAs, taking taxable assets and making them tax-free. Put another $25,500 in a TFSA under Mikey’s name, on the condition you’ll tell his parole officer about the carjacking if he touches it. Ensure you have a tax-efficient monthly income stream coming in to pay the rent (if set up as return of capital, and it’ll be tax-free).

Now you have balance, diversification, liquidity, tax avoidance, wealth, freedom – and you live in a better place.

As for Mikey, he can start a blog on parasites.

215 comments ↓

#1 Big Sexy on 02.25.13 at 9:30 pm

Shitty situation.

Dare I bring down the anti-first gods’ wrath upon me?

First?

Thanks for the info Garth!

#2 TurnerNation on 02.25.13 at 9:34 pm

I voted NDP in the last three Federal elections because I live(ed) in Layton’s and Olivia Chow’s ridings and they helped advance those ridings’ local causes, and because I believe in having a strong opposition (to wit: Jack nearly made it in), and mainly because I saw from day one that H is brutal wolf in sheep’s clothing.

I’m just going to claim a buch of stuff on this year’s tax returns. The forms are, like, sooo confusing!! Dependents? 0 or 10?

#3 European on 02.25.13 at 9:35 pm

Totally disagree with your suggestion to kick the kid out. This (stupid) North-American model is precisely what makes it so unsustainable.

Build brick homes, make them last for generations, and focus on building stuff that lasts.

Most Canadians spend half their incomes (on average) on shacks that they’ll outlive.

#4 Miko on 02.25.13 at 9:35 pm

http://www.youtube.com/watch?v=gWvjbQdsdLE&feature=youtube_gdata_player

“some listings are out to lunch,they have effectively taken themselves out of the market, so real inventory is actually quite low…..investors and first time buyers have the advantage right now”

well this is just classic….

#5 KDawg on 02.25.13 at 9:38 pm

The Canadian house price bubble is deflating already – although in a world of money printing, Canada may actually be one of the safe havens of future (i.e. the Canadian dollar).

I would foresee a slow deflation of property prices rather than a big bust.

#6 AK on 02.25.13 at 9:42 pm

#1 Big Sexy on 02.25.13 at 9:30 pm

“Dare I bring down the anti-first gods’ wrath upon me?

First?”
——————————————————————

So, you made it. Was it worth it?

#7 Gladiator on 02.25.13 at 9:44 pm

If boomers bought their houses tens of years ago at reasonable price to income ratios, if they had the best ride up in the stock market and the economy as a whole and they still are in such dire situation, what can we say about nowaday’s virgins, buying houses at multiples of 8 times yearly family incomes, facing anemic economic growth, over-leveraged consumers and moribund job markets? “Screwed” is a very diplomatic word.

#8 Big Sexy on 02.25.13 at 9:46 pm

#3 European

“Totally disagree with your suggestion to kick the kid out. This (stupid) North-American model is precisely what makes it so unsustainable.”

I agree. But the current growth in urban sprawl is even more unsustainable. To live in the city core is slightly better.

#9 Fbomb on 02.25.13 at 9:47 pm

Garth, what is your opinion about where commercial properties are headed? I have an opportunity to buy into a Medical Arts Building 12 stories and about 45% occupancy with construction finished early 2014. For the space I want it’s about 350 -370 K . The realtor states the space will probably rent for $35/sq. ft. triple net. This will be a start up business for me so I am a bit leery of taking on such debt to start. Of course the realtor thinks I can flip it in a year or so if the biz fails(not really a palatable option for me). Just your thoughts on commercial RE in the lower mainland now or in the near future would be appreciated. Thanks and love your blog!!

Isn’t starting a business enough risk? — Garth

#10 Big Sexy on 02.25.13 at 9:50 pm

#6 AK on 02.25.13 at 9:42 pm
#1 Big Sexy on 02.25.13 at 9:30 pm

“Dare I bring down the anti-first gods’ wrath upon me?

First?”
——————————————————————

So, you made it. Was it worth it?

——————–

Not really actually… Bit of an anti-climax.

#11 Gabriel on 02.25.13 at 9:51 pm

Why a two bedroom for 2 people with no kids? why rent a condo?

There are plenty of one bedrooms in nice rental buildings (not condos) that can be rented for ~$1,000.

The smaller rental unit it’s also easier to clean.

Yes, that’s the point of life. Less cleaning. — Garth

#12 Rand man on 02.25.13 at 9:51 pm

The real skinny on US real Estate…

“The answer is NO. The contrived elevation of home sales and home prices has been engineered by the very same culprits who crashed our financial system in the first place. This has been planned, coordinated and implemented by a conspiracy of the ruling oligarchy – the Federal Reserve, Wall Street, U.S. Treasury, NAR, and the corporate media conglomerates. Ben’s job was to screw senior citizens and drive interest rates low enough that everyone in the country could refinance, attract investors & flippers into the market, and propel home prices higher. Wall Street has been the linchpin to the whole sordid plan. They were tasked with drastically limiting the foreclosure pipeline, therefore creating a fake shortage of inventory. Next, JP Morgan, Blackrock, Citi, Bank of America, and dozens of other private equity firms have partnered with Fannie Mae and Freddie Mac, using free money provided by Ben Bernanke, to create investment funds to buy up millions of distressed properties and convert them into rental properties, further reducing the inventory of homes for sale and driving prices higher. Only the connected crony capitalists on Wall Street are getting a piece of this action. The Wall Street big hanging dicks have screwed the American middle class coming and going. The NAR and media are tasked with what they do best – spew propaganda, misinform, lie, cheerlead and attempt to create a buying frenzy among the willfully ignorant masses. The chart below reveals the truth about the strong sustainable housing recovery. It doesn’t exist. Mortgage applications by real people who want to live in a home are no higher than they were in 2010 when home sales were 33% lower than today. Mortgage applications are lower than they were in 1997 when 4 million existing homes were sold versus the 5 million pace today. The housing recovery is just another Wall Street scam designed to bilk the American middle class of what remains of their net worth.”

http://www.theburningplatform.com/?p=49703

#13 Smoking Man on 02.25.13 at 9:57 pm

20% of these fifty-plus people have no idea how much they’ve saved.
Half think their savings, whatever they are, will be gone within 10 years of the last job.
40% have less than $100,000. How long will that last?
41% say they’re not willing to sell their house, borrow against it, downsize or rent.
A quarter expect to retire with debt, a third of whom have no idea how they will pay it off.
……………………………………………………………….

So much for our Education System…………

#14 lotuslander on 02.25.13 at 9:59 pm

#3 European

Agreed…it’s good to get beyond the North American nuclear family ideal. Here on the west coast we have a lot of Asian influence, and it is evident that a lot of people benefit from a strong extended family support network. Our daughters are welcome to stay at home as long as they like. Perhaps someday they will reciprocate should their parents ever need a place to stay.

#15 Djb on 02.25.13 at 10:03 pm

FBomb, did you stop to consider how your R/E gets compensated, he tells you to buy and makes half the commission and if you are forced to flip it back out after ine year guess who you are going to call. Cha-ching extra commission for your R/E agent. He wins you lose

#16 DocInWaitingRoom on 02.25.13 at 10:05 pm

SP500 down 2% financials down 3%, velocity of money completely down, debt maxed out, along with VIX completely up. Globe and Mail Business section saying borrowing is way down. Watch out a crash or at least a MAJOR correction looming on the markets as well. Hope to buy some low PE stocks when they fall down to earth as well as a home in a few years.

Patience is key almost lusted wanted a “fixer uper” near the subway line (only $300k down from $460k), despite a poor foundation, dated construction quality, poor energy efficiency, probably rodent infested as well. Almost, but not quite. I’ll stay a virgin a lot longer, like wives you just have to wait for the right one not settle for the first one.

The S&P is down two points after the best year opening rally in 16 years. Imagine. — Garth

#17 Chickenlittle on 02.25.13 at 10:11 pm

This looks good on the Boomers. They always accuse us younger 30 and 20 somethings of wanting what we can’t afford. Fine, but they want to retire early, and since when is early retirement a worthy goal? Who do they think they are? Are they too good to work like the rest of us? Why do they STILL have mortgages? At least a lot of people my age try to pay theirs off early, even though it’s not even worth it to do that at this point in time.
I’d like to transport these people back in time to their grandpa and great-grandpa’s time and see what they would have thought of “freedom 55”. BS, is what they would have said. So real life came back to bite them on the ass, boooooohooooooo! Welcome to reality my friends. Thousands of years of people who worked far later into life will be waving at them from heaven, while the Boomers rot in financial hell. Whatever.
Please forgive me, I have a wicked sinus cold and it’s made me really grouchy. The drugs are great though. Now I have an inkling of what SM feels like when he’s sober.

#18 Herb on 02.25.13 at 10:13 pm

Long legs – short attention span.

#19 Mocha on 02.25.13 at 10:16 pm

Dr. Wayne,

I’m a supporter of your efforts, but all that seems to be happening is that a couple of them sit around all day checking the site for new updates that they can “first”. If anything, it has become worse since you started trying to shame them. In their minds, they have succeeded in getting the attention that they so desperately crave. Come to think of it, I’m also giving it to them. I better not ever post on this subject again.

P.s. You know that it’s just the same couple guys posting under different names…

#20 Smoking Man on 02.25.13 at 10:17 pm

My BS call of the building industry in THE USA. Yet I was the nut job in the house.

On Jan 22 I posted this.
http://dyslexicsmokingman.blogspot.ca/2013_01_01_archive.html

Today about a month later…………………….

http://finviz.com/quote.ashx?t=hd

and
Home Builder Index, any one see batman. more of a camel toe…

http://finviz.com/quote.ashx?t=XHB&ty=l&ta=0&p=w

and

http://finviz.com/quote.ashx?t=ITB&ty=l&ta=0&p=w

Maybe I should write a book….

Ironically due to not being schooled I lack the discipline to follow threw and write a book.

Yet if I went to school I would have never acquired this super human knowledge.

A Paradox of some sort…..

Is that not Ironic….

#21 fred munster on 02.25.13 at 10:18 pm

“Ensure you have a tax-efficient monthly income stream coming in to pay the rent (if set up as return of capital, and it’ll be tax-free).”

Garth,
What is “return of capital”? And how is it tax free

Money the CRA considers is principal and not earned income is untaxed when it leaves a non-registered account. Your advisor will set this up and ensure compliance. — Garth

#22 blase on 02.25.13 at 10:19 pm

It’s truly amazing that schools don’t incorporate financial literacy into math curriculums. Imagine how much better people would be if they learned about interest rates, compound interest, bond pricing, analyzing stock statistics, markets, and how banks make their profits off of gullible people who think they have your best interests at heart. I would be surprised if more than 10% of Canadians had read a book about investing or taxes in their entire lives. Too busy watching hockey games or Vancouver housewives.

#23 Mocha on 02.25.13 at 10:20 pm

“The S&P is down two points after the best year opening rally in 16 years. Imagine. — Garth”

Meanwhile, central banks in the east continue to stockpile that commodity which must not be mentioned (unless in a negative light) on this blog.

#24 blok existentialist on 02.25.13 at 10:23 pm

Speaking as a parent of young adult children, I have to say your photo offering is a charming portrayal of the current generation and their priorities.
And only a tad unfair … site commentators have done everything but hang boomers in wicker cages and set the heaped logs alight in recent days. Do hope I’m not putting a new idea into their heads.
So thank you, Garth, for having the journalistic integrity to be unfair to everybody.
I haven’t visited this site in over two years (too busy taking Garth’s primary advice to heart and thinking/working for myself). I am considerably more economically stable and diversified than I was then. Still miles to go before I sleep or drop dead, whichever is first. But I’m highly pleased to see that everyone is quarrelling as usual.

#25 Chickenlittle on 02.25.13 at 10:25 pm

BTW: Garth’s post on September 26, 2012 – I just read it again and if that post did not convince someone of the folly of buying a condo or other RE, then we are all screwed as a society. I’m going to send it to my aunt right now.

#26 Shawn Allen on 02.25.13 at 10:27 pm

COMPETITIVE WORLD

In most respects, men, especially, are very competitive.

On my commute each day I am constantly passed as every guy seems to think speed limits are for wusses, yellow lights mean step on it, and neither darkness, nor snow and ice nor sleet shall keep a testosterone driven guy from getting “there” first.

Competition may also play a part in guys wanting to display their large houses, trucks and other toys.

But maybe most did not notice the competition to accumulate some wealth.

But ultimately at 55 or so they find themselves choking on the financial dust of those boring accountant types with their little cars and more modest houses who they suddenly realize are WAY ahead on the road to financial freedom.

They won the race to the next stop light and forgot about more important races.

#27 blase on 02.25.13 at 10:29 pm

Great post Chickenlittle, so much truth in there!

My dad retired 5 years ago at 65, no pension, little savings, a massive mortgage, and his younger 55+ wife planning to work beyond age 65. How does this make sense in any universe??? Guess dad watched too many freedom 65 commercials on TV and thought the world owed him a retirement. If he would have gotten a part-time job and saved $1,000/month, invested in preferreds at 5% for 5 years, he would have $86,000. That would buy a lot of cans of cat food.

#28 Asse on 02.25.13 at 10:33 pm

Anyone notice the dollars freefall? Ain’t gonna end soon. Real estate may be the least of your worries. Livings gonna get expensive. Interesting times

#29 ozy -someone has to loose: Y-O-U on 02.25.13 at 10:41 pm

Someone has to loose: Y-O-U, all of these manouvres…

http://www.marketwatch.com/story/us-stocks-rebound-from-weekly-drop-2013-02-25

Gold up stocks down, inflation will be rampant once all $$$ are parked in the right pockets….the lower class will get nothing but despair.

It’s gonna be a rip-off for the history books.

To fool more and silence the massess, new gadgeds will be sold at low prices and a new war will be started again.

Prepare, get the hell out of all this “free economy” shit, settle down and live your life, it will most likely be over sooner than later, not wanted to be gloomy, but a solid call to action.

#30 Smoking Man on 02.25.13 at 10:49 pm

#17 Chickenlittle on 02.25.13 at 10:11 pm
This looks good on the Boomers. They always accuse us younger 30 and 20 somethings of wanting what we can’t afford.
………………………………………………………

Not you fault, or the boomers. You just had the misfortune of being born at the end of a cycle.

Money is like a black hole, the more it consolidates and becomes centralized it’s gravity gets stronger. Till one day its deprives the slaves of food and says “Let them Eat Cake”

You know what happens after that……

Is that a drone over my house. O Oh

#31 Weedeater on 02.25.13 at 10:51 pm

Denial is a wonderful place to be but the food and accommodation sucks.

Mikey can stay if he shares the rent and household expenses. Go back to school? Why? so he can be an Assistant Shift Manager at McD’s instead of Manager?

#32 Fisher-man on 02.25.13 at 10:53 pm

#11 Gabriel on 02.25.13 at 9:51 pm

Why a two bedroom for 2 people with no kids? why rent a condo?

There are plenty of one bedrooms in nice rental buildings (not condos) that can be rented for ~$1,000.

The smaller rental unit it’s also easier to clean.

Yes, that’s the point of life. Less cleaning. — Garth

Agree.
Less time for cleaning more for fishing :)

#33 Turner Nation's Nation on 02.25.13 at 10:56 pm

@28

it’s not in free fall, nor will it be. it is, however, considered to be a “second-tier” currency, which means that it gets hit whenever a bump to the economy comes along and investors flee to what they perceive as a less risky currency. the US dollar is up against almost all of the most frequently traded currencies this year.

factors working against us at the moment:

– lower GDP than estimated

– sinking commodity and energy prices (including potential demand for our oil)

– foreigners becomming aware of our housing bubble

– BOC pledge to keep rates lower for longer

#34 Bottoms_Up on 02.25.13 at 10:57 pm

But, Garth, 26 is the new 16, and 60 the new 50. What’s the worry??

to: #202 Herb on 02.25.13 at 12:48 pm

I would definitely work with that real estate agent because they boldly tell the truth. But it’s not a mystery that houses are taking longer to sell in Ottawa. Well- priced and updated houses are selling lickety-split. Prices have come down from their highs about a year ago, mainly due to the banks tightening up lending. What’s nice about this is that well qualified buyers are no longer competing with sleaze. Thus, they are getting a discount on the prices because there are less people buying in their price bracket. How long and deep the discounts go though is anyone’s guess (and it’s definitely going to be different in different cities…Ottawa won’t be as severe as some)….

#35 T5>myT4 on 02.25.13 at 10:59 pm

Testosterone is also what built the world, including you.

#36 Peaches Geldof on 02.25.13 at 10:59 pm

Shame on all of you for mocking my picture. There was a child there too! And he was belted in. Do you all hate children!?!?

You are so judgmental Garth. That was a very important call (it came to me, after all, not to some bearded twit from the convict colonies)

My son Astala Dylan Willow Geldof-Cohen will be just fine, thank you very much.

Did you like my shoes? Only 300 quid. Daddy bought them. Yes, I know it’s Christmas. Every day. :)

P.S. If you really knew real estate, you ‘d tell your clients to register all their property in the British Virgin Islands like daddy did.

Astala Dylan Willow Geldof-Cohen

#37 Bottoms_Up on 02.25.13 at 11:01 pm

#22 blase on 02.25.13 at 10:19 pm
————————————–
Schools nowadays actually do incorporate financial literacy into their teachings. Any teachers on this blog care to enlighten us on more specific details?

#38 Bottoms_Up on 02.25.13 at 11:05 pm

#17 Chickenlittle on 02.25.13 at 10:11 pm
———————————————-
Why do humans always try to draw lines and divide? Did you know that Somalia is one of the most (genetically) homogenous populations, yet they have the most clans? Do you think you, or any other group of humans would have done things differently had they been born as a ‘boomer’? And same goes for boomers hating on the younger generations…do you really think you’d be different had you been born into a generation of texting, PS4’s and 3D tvs? I think not.

#39 Lost Soul on 02.25.13 at 11:07 pm

#5 KDawg on 02.25.13 at 9:38 pm

” The Canadian house price bubble is deflating already – although in a world of money printing, Canada may actually be one of the safe havens of future (i.e. the Canadian dollar).
I would foresee a slow deflation of property prices rather than a big bust.”

I think that Canada is immune from what would possibly effect the rest of the world is a myth! I know its different here!

http://www.resourceinvestor.com/2011/06/03/canada-is-no-haven-from-us-dollar-collapse

Another bullion-pumping site. — Garth

#40 Basil Fawlty on 02.25.13 at 11:07 pm

Is there a possible connection between strong stock markets and the printing of one trillion dollars per year in the US?

#41 Spiltbongwater on 02.25.13 at 11:09 pm

I just hope my 55 year old lady friend croaks before I do and leaves me her money. That is pretty much the extent on my retirement plan.

#42 Bottoms_Up on 02.25.13 at 11:11 pm

Yes, that’s the point of life. Less cleaning. — Garth
————————————————–
Garth, your perspective and priorities have changed the way I look at life. I’ve spent years here but I still learn a lot (and I don’t mind having to put up with SM’s camel toe to get to it).

#43 Mic D'angelo on 02.25.13 at 11:14 pm

Garth, return of capital is not a completely income tax free strategy. You still have to pay capital gains on the growth of the investments when sold or transferred to a non spouse and upon death of a non spouse. I know what I am taking about. You can say it is a reduced income tax strategy at maximum 25% capital gains income tax rate instead of interest income maximum 50% income tax rate in Ontario.

It is not like TFSA’s that are completely income tax free for the original holder of the TFSA until his/her death or it is cashed in. After the death of the TFSA holder or it is cashed in, it is taxable at a certain marginal income tax rate which depends if it is dividends,capital gains,interest etc. This is only if it is in a non-registered account and not reinvested in a TFSA,RRSP,RESP. Each plan has it’s own separate tax laws which affect the income taxes you would pay.

This is why TFSA’s are limited to $5,500 because all types of governments would lose too much income tax revenue and it’s easy to open a TFSA anywhere.

ROC is tax-free in the example cited. — Garth

#44 Hilarious on 02.25.13 at 11:18 pm

Garth,

I met my wife while travelling in Russia. While I was there, I saw countless girls who dressed and looked just like the woman in your photo; from the hair style and leopard print bags, right down to the ever present phone on the ear and wearing heels to walk the baby. And yes, they are sexy in their ways.

Then I noticed that your subjects this post are named Anna and Sergey. So… I’m wondering if you used “russian” as one of the words in your search criteria :)

#45 Randy on 02.25.13 at 11:20 pm

I thought that the original Freedom 55 program was based on the idea that your life insurance would be paid up by the time you were 55….Only teachers and public servants got to really pack it in at age 55….haha

#46 KF on 02.25.13 at 11:23 pm

Garth,

I’ve recently started reading your blog. Thanks for the additional fodder in dealing with my Boomer parents! I’m 29, my husband is 30, we have a high family income (I’m an investment banker, he’s a physician) and no kids yet, I manage our investments, but — gasp! horrors! — we’re renting our house in Toronto and my mother will never shut up about how we’re throwing our money away (and this even after I was polite enough to keep my mouth shut when helping her understand why having her TFSA in a bank savings account was not a good idea). Reading your blog is giving me new, fun rejoinders for family dinners.

Send Mom over. We’ll fix her. — Garth

#47 AK on 02.25.13 at 11:23 pm

#266 John Dominsas on 02.25.13 at 9:52 pm

“To Macrath #247, A.K.
Have you noticed that most Canadians that sipped the KOOL AID and believed it tasted great, like buying houses to big that they could afford,buying mutual funds with annual 2%-4% MERS, investing in stocks and the most recent 2 or 3 years explosion of buying ETF’s.
——————————————————————-

Fair enough. Keep doing what you are doing.

I was just curious as to why you do not diversify your portfolio.

#48 Snowboid on 02.25.13 at 11:26 pm

The tale of the lonely open house realtor…

http://www.vancouverobserver.com/city/realestate/real-estate-brokers-nightmare-empty-open-house

#49 Good Authority on 02.25.13 at 11:28 pm

“…since the third week in February constitutes the ‘spring season’ in Toronto, as it does in Vancouver.” – Garth

Tough go this year in TO what with another snow storm headed your way. The poor results in 2013 will definitely be written off as non-indicative of a trend due to unseasonable weather. And all will feel good … until March results arrive.

Garth – Sergei will also be eligible for OAS – you always leave out that windfall for non-savers.

Since when is $500 a month a windfall? — Garth

#50 juno on 02.25.13 at 11:30 pm

Interesting article Garth. It make you think why these Wrinklies got loans in the first place.

When I first Bought my house they did tons of calculations like.

1) how much income your taking in,
2) total assets, cars etc…
3) But most importantly, if you 58 years old , they calculate that your income has the possibility of stopping because your going to retire. (or forced retirement) .

I remember filling in tons of forms, getting revenue Canada statement and showing car insurance and verifying there was no leans or loans on it.

But today, they don’t care if your 25 or 90 they will give you the loan cause CMHC takes the risk.

Most of these people should of never been given a loan in the first place. The should put the full blame on CMHC, and bankrupt them. AFter the 600 billion dollar is spent. Force existing home owners to deal with the banks or the italian mob. Sure its going to cobble the market, but it will clean out all the bad loans.

#51 Mister Obvious on 02.25.13 at 11:31 pm

Re: Booting The Kid Out.

For myself and my contemporaries it actually was vastly different. After graduation, none of my peer group could have conceived of living in our parents homes a single day longer than we absolutely had to.

It had nothing whatsoever to do with financially unburdening of Mom & Dad. In fact, had they given us our own basement bedrooms with private entrances and left us alone (except calling us for dinner) we probably would have settled in forever.

My father had the good sense to make life intolerable for me the moment I was capable of flying the coop. Don’t get me wrong, I respected the man and consider him a full-fledged Canadian war hero. But from that point on we would be like gasoline and fire. In hindsight it is 100% clear he had my best interests at heart. And probably his own as well.

The same story was playing out in my friends houses. There was only one way out. We banded together and rented accommodation anywhere we could. If that meant a two bedroom dump in North Surrey in 1969, then so be it!

We all had crappy jobs we hated paying minimum wage with dipshit bosses. We complained bitterly to each other but then got up for work at 6:30 AM anyway.

It was not always peaceful but we had to learn to cooperate. Two to a bedroom, doing our own laundry, buying and cooking our own food, being broke most of the time and tolerating each other’s childish behaviour. But we all knew it was infinitely superior to the alternative. Returning home. That was simply out of the question. We had no choice but to get on with our lives.

Now we have people in their twenties who think their parents are just ‘older buddies’ (albeit with considerably more money to throw around). Meanwhile the parents are fully complicit in this unnatural state of affairs believing they’re helping their kids while in fact hindering their growth.

#52 Thornhill in denial on 02.25.13 at 11:35 pm

This is what I call a fail. The building is still a hole in the ground and there are units for sale already at ridiculous prices.
http://www.realtor.ca/propertyDetails.aspx?propertyId=12773553&PidKey=-1236538288

$555,900
MLS® N2545573
2 Beds, 2 Baths

maintenance will go up for sure, and the number of mosquitoes in the summer will keep the owner busy

#53 Solex on 02.25.13 at 11:39 pm

#7 Gladiator

It’s insane isn’t it???

I’m a big beleive in natural selection but as a young 20 something I fear that our government will not be so pragmatic and all I’ll be seeing is higher taxes to bail out these people.

#54 Snowboid on 02.25.13 at 11:41 pm

Rent-to-own in Kelowna, from our almost favorite RE pumper…

http://www.castanet.net/news/Investment-Real-Estate/87795/Rent-to-own-good-or-bad

I especially love the tribute to the poor folks that are ‘underwater’ and if they can’t get a loan from loved ones to survive – how about the Honest Hazzi rent-to-own plan?

After all, they can offer “…honesty, transparency and integrity…”

#55 Mr Buyer on 02.25.13 at 11:44 pm

Say what you will but families staying together longer is an effective strategy and the Japanese do it full bore.
There is no reason why this family cannot cash out and rent together. If this guy is going to stay on in the house and care for the parents in their old age then that is another effective family solution to another big financial problem. They should at least begin preparing for infirmity by widening doors where necessary and yes a large number of Japanese families keep parents at home with them in their parents house that they take over. Slagging on kids staying with parents is so 1980s. The reality is there will be much more of this going forward because it is effective (the hanger on that is hooked on star trek playing video games in the basement and to good for the mundane world is a tired stereo type). I would like to see how guys like me would handle starting out in this economic environment (actually I am going to pretty much have to do that in my 50s when I eventually return to Canada).

#56 Solex on 02.25.13 at 11:48 pm

I run a growing business on Vancouver Island and have hired ~10 employees in the last 18 months. We get lots of resumes from people in their late 50s and 60s – presumably these people retired in the last 5-7 years, have seen that the money’s running out and need to get back into the workforce again… Lot’s of overpriced real estate on the Island, lts of retirees and not many jobs…

#57 Elmer on 02.25.13 at 11:49 pm

The reason 26 year olds can’t find good jobs is because all the old boomers refuse to retire. Even if they find an entry level job, they can’t get promoted to better paying positions while boomers are still occupying them.

30 years ago a reasonably intelligent young person could expect to find a decent job, and afford a decent house after a few short years of saving. Not possible anymore thanks to the boomers.

So maybe instead of blaming young people for mooching off their parents, blame yourself for creating this situation that prevents us from being able to live a normal life like you could. Every generation has worked hard to give their children more than they had, but we are the first generation to have it WORSE economically than our parents’ generation. Thanks a lot!

#58 HAWK on 02.25.13 at 11:50 pm

#211 Ralph Cramdown on 02.25.13 at 2:01 pm

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

Gold per Wikipedia was $37 in 1970 and is $1595 today. That’s a continuous 9.6% compounded rate of return.

Sure, I expect the stock markets beat that but pretty much nothing else, certainly not bonds or Real Estate.

What’s the basis of your claim that only “dead cash” yielded less than Gold?

#59 NAGA on 02.25.13 at 11:54 pm

Garth this post got me thinking – what if I was 25 again what would I do.

I graduated in 1979 – had a debt of approx 4$k to repay. Worked 3 jobs and saved for both RRSP and half a 25% downpayment for first house in 1983 ($20K which included $3K grant from feds and $5k loan from province). Got married in 1984 at 28. That first house is worth today about $425K…..regret selling it in 2003….

I have a 25 old year kid that is engaged – graduated and we helped to make sure no debt on graduation. Working various jobs but still trying to land “career” job. With partner planning to hitch up permanently – still called marriage I guess.

Wondering if better off renting and investing or buying.

Buying looking at TownHomes or properties in the $300K to $400K – advising them to avoid Condos. They can get 2.89% mortgage for 5 years and beg parents and gradparents for help with downpayment (Not an option for me back in 1983). Carrying costs of mortgage about $1400/month to $1600. Rent something reasonable like you say probably 1800 to 2000 per month….this is in GTA.

Do you really think that they will be able to save and invest the difference if they rent?

If they buy in a reasonable area/location for their price range and reasonable carrying costs – which may see a short term drop in price – in the longer term are they going to be better off or slaved to continuing to pay rent and spending like those 41% percenters that have no pensions and going into retiremnt with a mortgage?

While I appreciated your columns back in the 80’s – “Real Estate News” where I believe you trained for your current blogging role – I know what I did then and probably would do the some today…..but as I tell my kid buy smart….

#60 Shea on 02.26.13 at 12:02 am

I thought I would use this blogs wide reach to ask for some real estate advice.

In July we took possession of a new build. The advertised square footage from the agent (who worked both ends of deal)was 1438. Yesterday I was making plans to finish the basement and I realize the home is much smaller than I thought (-160 square feet). This is based on gross square footage as measured from outside walls.

Just wondering if anyone out there had experience with this type of situation. If so, what are my options? Any advice is appreciated. Thanks!

#61 run away on 02.26.13 at 12:10 am

I agree with #12, I moved to thailand, new wife, 34 hotty, 50g for a nice 3 bed room all cement house, it cost me 1 dollar for my favourite Thai noodle soup, feed 12 at the floating restaurant, 60 bucks plus drinks awesome. how they make money!!!!!!no winter, and the hospitals are the best BAR none, got some dental work done the other day, total cleaning and replaced one cap $30 BUCKs.
our CDn dollar 30 time Thai money. Oh and the banks pay 8 %on my money, NICE……
cheers
Enjoy Your retirement, I am fifty.

#62 M on 02.26.13 at 12:12 am

@ #57

The reason why grads and twentysomethings don’t have good jobs is because they study crap topics. When I graduate in April I will have my choice of employer because I simply planned ahead(energy engineering) – and I’m in the GTA. I’m getting tired of all my generation complain about no jobs etc..How in bloody hell can you complain when you live in Canada. You can make a living playing poker if you tried hard enough for petes sake. Stop whining start grinding

#63 Jace on 02.26.13 at 12:12 am

#40 Basil Fawlty on 02.25.13 at 11:07 pm
Is there a possible connection between strong stock markets and the printing of one trillion dollars per year in the US?
****
Yes, the stock market is a barometer of inflation. Just look at the graphs of indices, or posters in your financial planner office. Remember those hockey stick graphs? That’s why Garth says diversify, buy a basket of stocks/etfs. I think he even didn’t mind a little bit of gold.

#64 Mic D'angelo on 02.26.13 at 12:27 am

Garth, The 30 year U.S. Treasury bond was 3.23% just 5 days ago. It is currently 3.048% at this time and falling.Provincial strips from 10+ maturity have all fallen 16 basis points with the longest end 3.87% to 3.70%. Garth, they are at it again. The central bank interest rate bond rigging manipulators. I will ask you for a prediction? When will we see 9.00% government strip bonds again. It is 19 years since we say these bond yields.

I am tired of all so called financial analysts,experts,economic professors telling me that interest rates are going to rise. Stop fooling people once and for good.

Multiple names, zero credibility. — Garth

#65 Raj on 02.26.13 at 12:28 am

I agree that mikey should go out. First of all we should fix definition of kids here. Over 18 should not be called kids.
Parents do respect and government spoils them by giving OSAP. With this kind of loans and money students think spending money is their right and enjoying youth is a privilege. They think spending 3000 on a birthday party is normal and after two years of university they realize they want to do something else in their life.
If immigrant student can come here, pay international fees by working part time under the table. Why can’t Canadian student do that.
If they get education hard way they will never be house horny, never pay ever increasing tution fees, and never go on vacation on credit card. All the mikey’s are spoiled and need a good kick behind their you know where I mean

#66 Grim Reaper/Crypt Speculator on 02.26.13 at 12:41 am

Finally….

………….back to some soft porn.

Keeps one feeling young and alive !!!

#67 White Rock Mom on 02.26.13 at 12:42 am

I took my kids to McDonalds for lunch. McDonalds has a current promotion giving away free small coffee. I was surprised how many seniors were drinking free coffee and not eating or drinking anything else. One couple was splitting a muffin.

I always thought that seniors were the wealth folks. They benefitted from lower income taxes,lower property taxes, no HST and no GST. Buy a house 40 years ago for $35,000 sell it today $1,500,000. Where did the dough go? I rant…

#68 Bottoms_Up on 02.26.13 at 12:52 am

#60 Shea on 02.26.13 at 12:02 am
—————————————–
You’ve been duped by law, the laws recently changed and they can now claim garage square footage as being part of the house. I also think they can get away with claiming deck space, but on that I’m unsure.

#69 The Man From Nantucket on 02.26.13 at 12:56 am

#57 Elmer on 02.25.13 at 11:49 pm
The reason 26 year olds can’t find good jobs is because all the old boomers refuse to retire…………

This is a pile of warm crap in every sector except possibly government and quasi-public oligopolies.

I’ve been watching lots of boomers taking the layoff sold as a face-saving “early retirement”.

The youngsters that are doing most the same work for 2/3 or less remain safely employed……and now the road to promotion is more open.

This is where it turns for those youngsters that can spot it.

#70 Mocha on 02.26.13 at 1:10 am

@58 Hawk:

I tried to call him on that yesterday. His reply was less than satisfactory.

#71 Robbie on 02.26.13 at 1:13 am

#60 Shea

First, I would advise all Buyers not to have a Realtor do “both ends” as the Realtor cannot give complete advice to the Buyer if he/she is representing both Buyer and Seller (some jurisdictions do not allow “dual agency” such as you describe). Second, once you have your Realtor “Buyer’s Agent”, make sure the dwelling is measured if there is any question in your mind.

However, for you it is too late for that, so you may wish to check with a lawyer and find out what you can do about the missing square footage. Often the listing will have “weasel words” saying “Buyer should ensure square footage if important” or something like that. However, if it is a townhouse or condo then the square footage should be a matter of record. If it is a new build, then try to get a copy of the plan/blueprints. You may have a case for misrepresentation.
Good luck!

#72 Mr Buyer on 02.26.13 at 1:15 am

If everybody studied great subjects there still would not be enough great jobs to go around. It all boils down to out hustling the next guy and catching a lucky break or knowing some one with somebody needlessly left out in the end.

#73 Freedom First on 02.26.13 at 1:48 am

#17 Chickenlittle

You are one angry little girl/boy. What does “retiring early” have to do with anything? That is the thinking of a good little worker slave. Ever think about achieving “financial freedom”? What does age have to do with it?

Things that keep people (you:) in a childish stage of anger: Self-pity, envy, criticism, blame, judgementalism. Grow up……..Freedom First.

#74 prairie person on 02.26.13 at 1:53 am

The current situation is not new. Ten years ago when I was still working, I was hiring part time workers. All professionals. All contract work. A decade before that the hires were new, inexperienced. Ten years ago it was professionals who had held senior positions and believed the freedom 55 lie. Two or three years of being retired and they were willing to take jobs that paid a fraction of what they had been earning. I didn’t have enough jobs to go around. I had to say yes, you have tremendous qualifications and experience but there aren’t any jobs. It felt like something out of the
Great Depression. Even educated people fall for promotions. Now, it’s those ads about reverse mortgages. Some people criticize those who get taken in but most people just work at a job, do a good job, raise a family. Everybody isn’t a banker or a math whiz.

#75 Nostradamus Le Mad Vlad on 02.26.13 at 2:06 am


“This is a social and economic tsunami in the making, and at the heart of the mess is real estate. Simply put, this is what happens when an entire nation goes horny for houses, does next to no financial planning, confuses investing with gambling, equates property with security, swallows huge amounts of mortgage debt and is financially illiterate. As for Mikey, he can start a blog on parasites.”

It also implies an “Us Against Them’ mentality, which, by itself, will completely mess this country up. Can’t speak for the US or Mexico, but chances are there is a fair amount of anger directed toward boomers, for not taking full advantage of the opportunities we all have, and had.

Times change, of course (evolution). Most composing rooms I used to work in are gone now, replaced by newer and more efficient technology.
*
Macy’s Possibly Martha can meet with Jerry Springer and Dr. Phil for counselling? Russia and Kazakhstan increase gold holdings for fourth month, and China supporting BRICS; The Keynesian Depression; A World Without the 1% Major changes coming? Bulgaria Not only Spain and Greece having riots; Coupon Clipping Trouble, but Poll of Economists disagree; China’s Dubai Empty; Living Well on US$14K / yr. (no debts); 35 countries need China to keep growing, but what if China stalls? One Thing to kill the EZone; 1:17 clip F35 Stealthfighter, cost is greater than Australia and all grounded.
*
Hirohito and Hitler Neither wanted war with the US or UK, yet both have been held up as evil. Each will have to find their own truth; Oregon Rainwater A day or two ago, a link said the state had taken all the rainwater rights. Now a man is in jail for having a lake on his property; China and the BBC The Beeb is ticked off; Pearls of Wisdom Good job he didn’t swallow it; 33:24 clip New and free energy which may make militaries obsolete, plus article here; Fish ‘n’ Chips The chips seem to have eyes on; Comic Books Heck, there are changes happening here as well; Homeschoolers barred from sporting events, while illegals allowed to play; 13:29 clip Delete FBook? 8:21 clip Not sure if this is true. Says Vatican, Harper and Queen guilty of crimes against humanity; End of the line for Catholicism (almost); Jimmy Savile and the Cardinal Child molestors love each other; Newtown, Conn. Why the secrecy? 40:08 doc. Nutricide; Autism and collapsing bees. Monsanto was one link, but there may be others.

#76 Westcdn on 02.26.13 at 2:09 am

The Italian election results are intriguing. Could this be the beginning of a revolt against the established system? The outcome has certainly introduced uncertainty in the financial markets as evidenced by falling prices, particularly banks. Even gold got a boost which is not a surprise. The danger I see is that the Italian voter may choose revolution over debt work out. This would not end well. The good news is here is the chance for the politicians to shine and propose the reforms needed for all Italians. The reforms could show the way out of the sovereign debt problems to the rest of the world. The bad news – I think most politicians are spineless weasels (there are some good ones) who only want to system to continue running.
Anyway, it is just my opinion which is wrong more times than I wish. I am curious if this voter movement fizzles or strengthens in the European countries under “austerity” – my code word for more tax less benefits. These are the kind of events that change my plans.
Thanks to the person who provided the link to Garth’s FAQ.

#77 Gunboat denier on 02.26.13 at 2:20 am

51 Mr O – good comment. The deal for me was I was out
the door at 18 unless I went to school. I went to school.
Even came back at 25 for more school, and the deal was
still on. Oldest sister took first option. Middle sis did
second option like me.

55 Mr B

…”the hanger on that is hooked on star trek playing
video games in the basement and to good for the
mundane world is a tired stereo type……”

The thing in MY basement is REAL. DAMN REAL. AND PATHETIC.

#78 unbalanced on 02.26.13 at 2:39 am

To # 17 Chicken Little. Did you want some whine with your cheese!! Just be happy.

#79 Bill Gable on 02.26.13 at 2:44 am

The federal government is writing off another $231 million in unpaid student loans this year from more than 44,000 cases, meaning taxpayers are on the hook for more than half a billion in uncollected student debt over the past few years.

Supplementary spending estimates tabled Monday in the House of Commons by Treasury Board president Tony Clement call for an additional $231.2 million in the current 2012-13 fiscal year ending in March to write off 44,048 debts related to Canada Student Loans.

“Amounts being written off are debts for which all reasonable efforts to collect the amounts owed have been exhausted,” explains the 145-page supplementary spending estimates.

The new cash for 2012-13 is on top of nearly $312 million on the books from the 2011-12 fiscal year to cover unpaid Canada Student Loans from 98,448 debts dating back more than a decade.

Read more: http://tinyurl.com/ahcvpgc

#80 Canuck Abroad on 02.26.13 at 3:08 am

51 Mr Obvious, agreed. I grew up in the middle of nowhere northern Canada and couldn’t wait to leave. Shared a tiny wretched 1-bed basement flat at Yonge & Finch to start out, with another kid from my hometown. During university my summer breaks were spent sharing with friends of friends of friends and so on. Spent one summer renting a room in a frat house on St George. It was actually fun.

Kids today don’t seem to be very resourceful. A little more scouring of craigslist and creative thinking would go a long way.

#81 Devore on 02.26.13 at 3:42 am

#60 Shea

Just wondering if anyone out there had experience with this type of situation. If so, what are my options? Any advice is appreciated. Thanks!

What’s the contract say about size? Square footage? Dimensions of rooms?

#82 maria on 02.26.13 at 3:54 am

Y’all need to realize that not all boomers are perfect. My parents were hippies who grew up believing in free love and they were all “f the system!” until the system f’ed them up.

Now I have to read blogs like this just to understand what they did wrong. Because they sure as hell never taught me what to do right.

#83 Jane24 on 02.26.13 at 4:07 am

The problem with all this advice to work till you are 70 plus is, where?

Why should an employer pay a 60 year old with 40 years of experience $60,000 a year when they can get a tech savvy 25 year old with more energy for $30,000?

I know quite a few 55 plus people looking for work right now and there is very little out there. Such seniors have high expectations and/or need good money to pay debts and an established level of living.

Best plan is always to cut your coat to the cloth asap rather than try to find more cloth.

We moved our boomer parents from a four bed detached home to a three bed townhouse to a one bed plus den flat to a nursing home. They fought us every move with cries of ‘why don’t we shell out’. I still shudder to think of those years.

#84 doug on 02.26.13 at 4:21 am

#64
Multiple names, zero credibility. — Garth

Could you actually answer his question Garth? It’s a valid one. You’ve specifically called for interest rates to rise numerous times over the years since I’ve been reading this blog and they haven’t.

Oh, they will. And I hope you’re ready. In the meantime anyone who believes stagnant rates are good news is an economic ingenue. — Garth

#85 Small Town Steve on 02.26.13 at 5:49 am

http://finance.yahoo.com/q/pm?s=THD
Hmm 33.51% 3yr average.

#86 detalumis on 02.26.13 at 7:23 am

#83 Jane24 If I were you I would get myself some serious DNA testing, the oldest boomer is 66 so if you have 2 “boomer parents” in a nursing home at that age you likely have the genes for early onset Alzheimer’s, ALS or Huntington’s. The average nursing home resident is well over 80.

#87 Asse on 02.26.13 at 7:30 am

#33
I’m aware of the factors that affect the dollar…what do you expect to see changing/improving in the foreseeable future?
I’m also aware of what a low dollar’s effects will be on our economy,and pocketbook

#88 rosie "moving forward" on 02.26.13 at 7:44 am

Oh the humanity. “TheMan” is alive and well in Brampton. Some politicians just don’t like freedom, bunch of communists. As usual, still moving forward. http://www.thestar.com/news/gta/2013/02/25/brampton_orders_monster_home_torn_down.html

#89 jess on 02.26.13 at 7:59 am

sick

“Optional Collateral File Creation services can be performed as needed”

see DOCX Document Fabrication Price List…
Foreclosure lawyer releases bombshell industry catalog and price sheet for fabricated documents used by Wall Street Banks in America’s mortgage foreclosure fraud mills

http://4closurefraud.org/2010/10/02/psst-hey-you-yea-you-i-got-just-what-you-need-lender-processing-services-docx-document-fabrication-price-sheet/
http://dailybail.com/home/bombshell-check-out-this-industry-catalog-and-price-sheet-fo.html

#90 Julia on 02.26.13 at 8:03 am

I have boomer friends who say “who cares if I die in debt, they won’t come after me then”.

#91 House on 02.26.13 at 8:25 am

” is financially illiterate” who do you mean Cabinet Ministers, Economists (including Bank Economists), Banksters, Financial Advisors, University Business Professors or the average citizen who never received training in the manipulation of economies , interest rates and financial instruments.

By the way, Sal says you are wrong Canadian housing is affordable except of cource Toronto and Vancouver. But how do you save for retirement when you are spending FORTY per cent of your income on a house. Guess the literate ones haven’t addressed that one yet.

#92 T.O. Bubble Boy on 02.26.13 at 8:25 am

Gotta love those Big Bank analysts…
http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2013/02/what-rates-could-do-to-affordability.html

Apparently Canadian RE is still very affordable…. *IF* you assume an average house price of $361,523 and household income of $75,300.

Hmmm – if 90% of Canada doesn’t have houses that cost $360k, how is this report accurate in any way?

Are “average” families living in 500sqft condos now?

#93 rosie "moving forward" on 02.26.13 at 8:46 am

#57, #59

I concur. Renting and doing whatever it takes helps young people move forward. Renting, I found, was a wonderful way to get your priorities in line. I’d like to share with the blog memories from my youth. http://www.youtube.com/watch?v=jc0RJhH2FkI

#94 EIT on 02.26.13 at 8:57 am

Here is the game plan for Mikey: Parents. You sit him down and tell him all about your financial pains. Break the kid down as much as you can, tell him that you will have to sell the house (mention how much you love the house), make him cry, and leave the future a resounding question mark. When he is shattered, a shadow, dust… hand him over to me. And I will give you back a man.

#95 AK on 02.26.13 at 8:59 am

Parents Robbing Retirement To Pay For College

http://finance.yahoo.com/news/parents-robbing-retirement-pay-college-102814231.html

#96 Sebee on 02.26.13 at 9:02 am

Seriously though…why does thr globe cover the same subject as here over and over again day after?

http://m.theglobeandmail.com/globe-investor/personal-finance/nearly-half-of-baby-boomers-dont-plan-to-downsize-report/article9057428/?service=mobile

I think it is time you update the footer Garth. ..it still says copyright 2012 and obviously your unprotected work is globe’s source.

#97 Ralph Cramdown on 02.26.13 at 9:09 am

#60 Shea

If square footage was important to you, you should have had your lawyer put it in the contract, and measured when you did the PDI. If there’s literature you can find giving the incorrect dimensions, maybe you’ve got a case for misrepresentation — and you’ll be able to sell it to the next sucker with an ad that says “1438 sqft (as per builder)” otherwise you’re SOL, I’d say. Class action suit with your neighbours? Cut the boards for your basement reno shorter?

#98 NovaWatch on 02.26.13 at 9:15 am

Wow, if you want the in-depth scoop on the Nova Scotia Real Estate market, listen to this guy sitting in his car:
http://www.youtube.com/user/InvictaProp/videos?view=0&flow=grid

His latest rant is that you can’t listen to ‘headlines’ and who cares about Toronto and Vancouver, they’re not Halifax! You want to raise your family in Halifax!

#99 young & foolish on 02.26.13 at 9:29 am

Yeah, Jane 24 is right ….. where are all those jobs for the over 55? Where will all those cash-strapped boomers find work? I too see them being shown the door to “early retirement”.

As for housing, well, like Garth says, it’s an emotional issue, and as such, will always be desirable. When prices do fall back a little, I am sure plenty of people will rush in to buy.

Finally, people who are nearly broke have no money to invest in the markets even if they wanted to.

#100 MC on 02.26.13 at 9:31 am

I get scared when very high paid people in this world (CAs, CFAs, etc.) don’t have a penny saved at 35 and if they do, put it in a savings account.

Rich by 30 people. Power of compound interest.

#101 bigrider on 02.26.13 at 9:37 am

#46 KF- Garth’s response ” send mom over. We’ll fix her”

You ain’t fixing nothing. Mom’s Italian.

Have some cannolies out and get ready for an earfull.

#102 Grantmi on 02.26.13 at 9:48 am

U.S. going back to a gold standard…

http://bloom.bg/125Hc6n

He’s lost it. Again. — Garth

#103 Tyrone Asauras on 02.26.13 at 9:52 am

#100MC on 02.26.13 at 9:31 am

What the hell kind of CFA uses a savings account?

#104 Foolish Fool on 02.26.13 at 10:01 am

#96 Sebee on 02.26.13 at 9:02 am

…and Calgary Herald too…
http://www.calgaryherald.com/business/Nearly+half+Baby+Boomers+have+intention+downsizing/8016925/story.html

#105 NoName on 02.26.13 at 10:03 am

2 friend meet in the park:
– Hello
– Hello
– How are you?
– I have two sons preschooler .
– How old are they?
– The multiplication of their ages equal to number of pigeons around the bench.
– This information is not enough to me.
– The eldest of them looks like a mother.
– Now I know how old your children.

How old are the children???

#106 Buy? Curious? on 02.26.13 at 10:03 am

Hey Garth! Guess what. My neighbour down the street is putting his house up for sale. They just finished sticking the sign in (Sounds like Bees Wax). He’s an older guy, mid 60’s, widower, nice person who walked his dog twice a day. I’d say hello when we passed each other on the sidewalk. Well, they’re having an Open House this weekend and I’m going to film it, pretend I’m in the market to buy. Though I’m wondering if you, Garth Turner and the GreaterFool.ca had any direct or indirect influence on his decision to sell?

http://www.youtube.com/watch?v=fiKu1yN3I4U

#107 AK on 02.26.13 at 10:08 am

#76 Westcdn on 02.26.13 at 2:09 am

“Anyway, it is just my opinion which is wrong more times than I wish.”
——————————————————————–
And you will be wrong, again. :-)

Look, the same story will be unfolding as did Greece and Spain a few months ago.
There will be a lot of noise over the next few weeks and at the end, Germany will step in and guess what?

#108 AK on 02.26.13 at 10:26 am

#102 Grantmi on 02.26.13 at 9:48 am

“U.S. going back to a gold standard…”
——————————————————————-

I don’t trust anybody who wears a bow tie. :-)

#109 Shea on 02.26.13 at 10:26 am

#81 Devore

What’s the contract say about size? Square footage? Dimensions of rooms?
——————————————————
The contract keeps referring back to plan number of the blueprints. There is no actual reference to square footage.

#110 Ralph Cramdown on 02.26.13 at 10:30 am

#58 HAWK — “Sure, I expect the stock markets beat [gold’s 9.6% compounded rate of return] but pretty much nothing else, certainly not bonds or Real Estate.”

You guys live on a different planet. If I’d put 25% down on an apartment building in 1971, the mortgage would have been paid off by 1996 and I’d own a building worth about 60x my initial investment, plus all the net rents since 1996 and some from before then. That’s how ultra-conservative real estate investors roll. The merely conservative would have done a cash-out refi at some point and bought another building.

Your pet rock doesn’t pay dividends, but it makes you INSANE IN THE BRAIN.

#111 Shea on 02.26.13 at 10:48 am

#97 Ralph Cramdown

If square footage was important to you…..
——————————————————
Lesson learned. However, I don’t feel there should be much leeway for new builds with regards to how much square footage is being advertised. I basically looked at the solds on my street and checked price per square foot before making my offer.

I overpaid by about 11% or $37000. Quite the heartbreak when redoing the old net worth calculations!

#112 Shea on 02.26.13 at 10:57 am

#68 Bottums_UP

You’ve been duped by law, the laws recently changed and they can now claim garage square footage as being part of the house. I also think they can get away with claiming deck space, but on that I’m unsure.
————————————————

If an unheated garage or porch in frigid Manitoba can be considered as part of living area, I’d be shocked. I’ll definitely check what a lawyer has to say about this.

#113 Mic D'angelo on 02.26.13 at 10:58 am

I did not know there is a limit on this blog. i posted 4 separate times but only 2 times were posted. I guess when someone does not agree with you it’s better to censor them.

When you post multiple times under different names, making the same points to support arguments put forth by your alter ego, you have abused the right to contribute. — Garth

#114 Gunboat denier on 02.26.13 at 11:03 am

95 AK – “Kippers” – Kids In Parents Pockets Eroding
Retirement Savings.

#115 NOTTOSURE on 02.26.13 at 11:04 am

Wow todays news ringing in my ear. Garth I have a pension that will be 2700 a month at age 6o plus cpp and al the good goverment stuff a house worth 450-500 thousand my age is 55 this year wife 43 this year she as a small 60 rrsp and adds max to her tfsa each year now. I have a small 40 thousand in rrsp. I was thinking with the suite rent and all I could keep the house and be ok as the income from that could be 1200 a month at retirment. Think I should sell it has 30 thousand owing on it.

#116 Holy crap Wheres The Tylenol on 02.26.13 at 11:07 am

Oh how I have heard this story before.

My brother-in-law has four children of whom one lives at home full time and the other pops in and out depending on how his monetary situation is. Two of his four children were child prodigies in sports of which my sister and brother-in-law invested all of their time and effort to promote. I have no issues with them in sports and they were extremely athletic in nature. I did however often ask my family what was their back up plan for the future with the children. To which I was told the boys are the best on the team and will get picked up by a U.S. collage. Never happened! Their oldest a girl was talented in soccer and could easily make the Olympic team she was that good! She decided however that a backup plan was to get a degree. She is now a business manager at a large food corporation. She told me that her plan of attack was to get involved in a company that was somewhat recession proof. She argued that one thing we will always need is food. Smart girl! The second oldest son has a generally talkative nature and is now involved in sales at an electronic store. Sales is something that you can not educate no matter what university or collage you attend. It is either in your nature or not! His forte was electronic gadgets and computers so he has a general interest in what he does for a living. The third and fourth sons have barely a high school education and have been in general labor or warehouse work on and off for seven years now. Now on the bright side since they were living at home one would think they had saved some cash. Nope not a pinch, nothing, zero, zip nada. One in fact has some debt. They will probably be at home until my sister and here husband are in their eighties and require assistance. Now on the beneficial side my sister and her husband are quite affluent so there is no issues with cash. The two sons have no plans for their future and appear to just flit from job to job on an ongoing basis depending on what companies require general labor. Oh yes I forgot to mention that my sister and her husband have a huge bungalow in Oakville. Quite ironic isn’t it! Here is one instance where I would say education could improve the sons’ odds. I have mentioned to my sister to get them into a trade through collage. She said the sons don’t like to use their hands. I said for crying out loud they used their muscles their entire life playing sports. We are short trades people and this is a marketable skill set. I have an acquaintance whose son is an electrician and he is making good cash some years over $100K, not bad compared to minimum wage and an unsure future in a warehouse.

One more thing my friends’ son moved out and has his own residence!

#117 Penny Henny on 02.26.13 at 11:28 am

#213 Penny Henny on 02.25.13 at 2:26 pm

“Dr. WAYNE is AK.
Same poster.”
——————————————————–
AK
LOL.. No, we are not one of the same, but I Thank You for the complement.

——————————————
That last statement in itself is so sad.

#118 Dupcheck on 02.26.13 at 12:12 pm

This is a golden quote from Garth:

“Boomers sucking up jobs their kids want. This is a social and economic tsunami in the making, and at the heart of the mess is real estate”

It will always be true until the boomers go and the housing stabilizes.

#119 AK on 02.26.13 at 12:15 pm

#117 Penny Henny on 02.26.13 at 11:28 am

“That last statement in itself is so sad.”
—————————————————————–

Have some sense of humour. :-)

#120 Mike on 02.26.13 at 12:17 pm

#113 I did not know there is a limit on this blog. i posted 4 separate times but only 2 times were posted. I guess when someone does not agree with you it’s better to censor them.

When you post multiple times under different names, making the same points to support arguments put forth by your alter ego, you have abused the right to contribute. — Garth

How ironic is it that someone who criticizes others for lack of transparency uses a made up second person to substantiate their claims. Talk about lack of disclosure.

#121 Thomas Malthus on 02.26.13 at 12:17 pm

good post, funny but not really.

Is this blog turning into an undercover recruiting ground for the malthusians?

“The power of population is indefinitely greater than the power in the earth to produce subsistence for man”
by Malthus T.R. 1798.

#122 Snowboid on 02.26.13 at 12:18 pm

Royal LePage report headline states “Most Baby Boomers Have No Intention of Downsizing, According to Royal LePage National Survey”

Funny, the actual report figures below the article shows 54.5% are planning to downsize.

Nothing like contradicting yourself within the same article.

http://www.royallepage.ca/en/media/130226-most-baby-boomers-have-no-intention-of-downsizing.aspx?toolstips=1052&relatedcontent=1074

#123 Sean on 02.26.13 at 12:21 pm

Hey Garth,

In your last entry you said

“built-in demographic time bomb would cause real estate values to crumble and financial markets to rise.”

Can you go into more details on what will make the financial markets rise? If things are crashing won’t they all go down or will people who are currently investing in housing and jacking up the prices so me (<30) can't afford a place to live in Toronto will dump their properties before the full fall and put their investment dollars into financials?

Are there other reasons?

#124 betamax on 02.26.13 at 12:22 pm

Headline: “Nearly half of Baby Boomers have no intention of downsizing”

Translation: Nearly half of Baby Boomers still in deep denial about their retirement finances.

http://www.calgaryherald.com/business/Nearly+half+Baby+Boomers+have+intention+downsizing/8016925/story.html

Notice the svelte and healthy couple in the picture — oh yah, that’s representative.

#125 betamax on 02.26.13 at 12:24 pm

Other translation: Over half of Baby Boomers do have intention of downsizing.

But hey, why alienate realtors & developers buying ads?

#126 Waterloo Resident on 02.26.13 at 12:26 pm

Sorry but I’ve got news for everyone:

Yes, the property bubble is deflating, but as you can see from the 2% correction in the markets yesterday, the stock market bubble has started deflating as well, and it looks as if we can see a continued slide in share prices for the next 24 to 36 months, with equity prices staying flat to trending lower for the next 15 years.

Like you said last year, right? — Garth

#127 mel in victoria on 02.26.13 at 12:29 pm

Garth……would appreciate why my last post might have been offensive or violated your rules. I know that any gold negs get posted and the pros can be wobblers but my last one was just a question to the bashers…

Not a gold blog. — Garth

#128 Daisy Mae on 02.26.13 at 12:38 pm

79Bill Gable: “The federal government is writing off another $231 million in unpaid student loans this year from more than 44,000 cases, meaning taxpayers are on the hook for more than half a billion in uncollected student debt over the past few years.”

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

Are the feds still doling out student loans, cash up front? I knew one kid personally many years ago who took the money and blew it on a vacation.

Stupidity all around….

#129 The Prophet Elijah on 02.26.13 at 12:41 pm

Fed chairman Ben Bernanke plays down rubbish talks of easing of stimulus:

http://www.ft.com/home/us

For those who think the US is in recovery and feel stimulus will be withdrawn.

#130 bigrider on 02.26.13 at 12:42 pm

No downsizing gonna occur in downsview, rexdale, north etobicoke or woodbridge..nope nadda, not a chance.

Give you all a clue why.

Think grapevines hanging off the back porch and garages full of tomatoes getting ready to maka the sauce.

#131 maxx on 02.26.13 at 12:45 pm

#22 blase on 02.25.13 at 10:19 pm

It’s truly amazing that schools don’t incorporate financial literacy into math curriculums.

Bang on….fortunately, some are now starting to.
In my case, I learned mostly from my parents. Countless discussions at the kitchen table about how to make the money stretch to the next paycheck. They were not rich, on one salary and four bambinos, but they never had a penny’s worth of debt, ever. Best thing that ever happened in terms of my financial education. The rest is useful for work, and keeping the synapses crackling, but for the most part, simple window dressing.
What parents and schools also need to offer their charges is the excitement of trashing debt, saving money, learning how to keep it and making it grow. When you are trying to climb your way out of debt at 25, 30, 40 and beyond you’ve cut your future wealth by one serious amount of coin.
Imagine what a six year old with a basic understanding of interest rates could accumulate growing up. Kids are smart, they can do this.

#132 Rusty Venture on 02.26.13 at 12:47 pm

Technically, I’m a boomer and I intend to downsize, in this context:

I’m going to downsize from a double-car garage to a single-car garage when I’m too old to ride a motorcycle and have to sell the stable, and then I’m going to move to a townhouse or condo when I’m too feeble (minded?) to cut my own grass or shovel my own snow.

I need a place to keep my stuff, to paraphrase George Carlin…

#133 mel in victoria on 02.26.13 at 12:49 pm

Last post should have read…..would appreciate KNOWING why my last post…..

#134 Dr. Hoof-Hearted on 02.26.13 at 12:50 pm

#75 Nostradamus Le Mad Vlad on 02.26.13 at 2:06 am

Oregon Rainwater A day or two ago, a link said the state had taken all the rainwater rights. Now a man is in jail for having a lake on his property;

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

I’ve followed this story too. Pretty pathetic. However people need to wake up and review Agenda 21.

The Maurice Strong and Al Gore types are seeking a One World Gov’t aka global communism. Every measure is to ultimately herd the people into dense farms called Cities.

If they don’t poison the groundwater via frakking….they will set in motion powers to keep certain lands” people free”.

They are removing peoples ability to be self sufficient and hence more reliant on what the state allows.

#135 AK on 02.26.13 at 12:54 pm

#123 betamax on 02.26.13 at 12:22 pm

“Notice the svelte and healthy couple in the picture — oh yah, that’s representative.”

———————————————————–
Hey, what’s “Smoking Man” doing in Calgary? Ah, nevermind.

#136 Daisy Mae on 02.26.13 at 12:54 pm

#90Julia: “I have boomer friends who say “who cares if I die in debt, they won’t come after me then”.

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

And I know boomers who didn’t plan for retirement — spent every dime — because they figured the government would look after them.

#137 Victor V on 02.26.13 at 12:57 pm

http://www.thestar.com/business/real_estate/2013/02/26/baby_boomers_may_be_planning_to_move_but_not_into_condos.html

Realtor Cindy Daly, a baby boomer herself, says most boomers she knows simply can’t fathom downsizing yet — they need the space in their often mortgage-free homes for grown children trying to get on their feet, or aging parents too frail to live on their own.

“I’m finding that more people are staying put,” said Daly.

#138 bbrodriguez on 02.26.13 at 12:59 pm

Garth, you once called me out for ageism, but how fair is it for you to describe a 26 year old living with his parents a a parasite? When your average baby boomer was 26, all you needed to get a job was the ability to fog a mirror. If you’re a boomer you probably graduated university with a dozen job offers and effectively zero student debt. This 26 year old graduated with 2 years salary in student loans and nothing but dead end jobs, if you’re lucky. What did we all expect would happen?

You have no idea what job-seeking was like as a massive cohort of Boomers overwhelmed the market. Typical. — Garth

#139 The Prophet Elijah on 02.26.13 at 1:00 pm

51 Mister Obvious on 02.25.13 at 11:31 pm Re: Booting The Kid Out.

For myself and my contemporaries it actually was vastly different. After graduation, none of my peer group could have conceived of living in our parents homes a single day longer than we absolutely had to.

It had nothing whatsoever to do with financially unburdening of Mom & Dad. In fact, had they given us our own basement bedrooms with private entrances and left us alone (except calling us for dinner) we probably would have settled in forever.

———————————————————
I agree with your sentiment, however due to cost of living and tough finding good paying jobs after graduation it might be in the best interest of parents to have kids room and board until they can get themselves on their feet, not forever of course.
Look how many families have to make due living with their parents after the US housing/foreclosure crash.
Just saying times are way different than in 69′.
It doesn’t benefit the parents or kids with massive debts, where is the quality of life in that.

#140 Nemesis on 02.26.13 at 1:00 pm

@Nostra#75…

Gotcha! [FuggedAbout Quark/Adobe… RealMen use Paige/Linotype]…

http://tinyurl.com/cmk9sn9

#141 Alex N Calgary on 02.26.13 at 1:04 pm

I’m gonna assume you spoke to the people and the kid is a leech and isn’t paying rent. Jobs are tough to get in Toronto for younger people without(and even with) a degree. Just like you said, older people are holding onto jobs that this couples kid should be getting into. With the economy suffering its a good time to go back to school, I just hope if he doesn’t have money to help out that hes doing things to help maintain the house and clean to repay his parents generosity.

I think the family model is kinda broken in North america as some other people have pointed out, living in a city we’re so seperate from other people, hardly know our neighbours. Too tired after the commute and long hours at work to go and visit friends, locked off in our our little winter boxes dreaming of buying a farm and getting away from all this (have you seen what farmland costs in the bubble? its outrageous) the decline is clearly happening in Calgary and AB though, they can even jack gas prices as high as they can, it won’t matter.

#142 Big Fan of this Pathetic Blog on 02.26.13 at 1:05 pm

What a disturbing photo, a good choice.

#143 Dr. Hoof-Hearted on 02.26.13 at 1:13 pm

Titanic the sequel: Would-be passengers offer up to $1M for passage on replica ship

http://life.nationalpost.com/2013/02/25/titanic-the-sequel-would-be-passengers-offer-up-to-1m-for-passage-on-replica-ship/

#144 Canadian Watchdog on 02.26.13 at 1:25 pm

#110 Ralph Cramdown

If I’d put 25% down on an apartment building in 1971, the mortgage would have been paid off by 1996 and I’d own a building worth about 60x my initial investment, plus all the net rents since 1996 and some from before then.

I’ll call you on that one. Show your calculations with price and rent data.

#145 OkanaganInvestor on 02.26.13 at 1:35 pm

#75 Nostradamus Le Mad Vlad on 02.26.13 at 2:06 am

Thanks Nostra,

Keshe, the world’s present day Einstein, is a global game-changer and the other video explains what Western society is focused on, as our economy collapses:

33:24 clip New and free energy which may make militaries obsolete, plus article here
13:29 clip Delete FBook?

Meanwhile, below is an explanation of the arranged exit of the Fed, starting in mid-March:

http://www.activistpost.com/2013/02/waking-dreams-end-unpleasantly.html

You actually read that conspiracy crap? — Garth

#146 Ralph Cramdown on 02.26.13 at 1:40 pm

Sure, many boomers aren’t planning on moving, and of the ones that are, many aren’t planning on downsizing. They’re probably planning on losing some weight, though, and that won’t happen either.

Sure, people turning 65 today can expect to live another 20 years, on average. But for every hundred of ’em, one won’t live to see 66.

#147 Richard and Zeus on 02.26.13 at 1:48 pm

I made a comment on advisors which was not called for and apologize. Zeus and I are so bitter with being taxed, fee’d and MER’ed to death by banks, instruments and govt’s that we lumped in the good work some advisors do to steer people towards ETFs, bonds and other instruments that provide income.

While we in our home are still against paper investing and will “make money by…..making more money (business)” there is certainly a place for people with good jobs and need help growing their incomes in ways other than business cash flow.

Thanks for your great blog Garth.

#148 mel in victoria on 02.26.13 at 1:50 pm

Garth…You frequently make provocative, invective comments regarding gold, metal heads, etc so is one not to assume some reply is welcomed or do you just like to hit and run? Personally, I have very little invested in the metals but do see their potential and on occasion have offered an opinion usually with supporting evidence but the post is frequently deleted. …Guess this one will be deleted too..

This is not a gold blog and incessantly selling PMs, which are deadeningly volatile and non-income-producing, to a wide audience of people ain’t gonna happen here. Get used to it. — Garth

#149 Richard and Zeus on 02.26.13 at 1:53 pm

#3 European on 02.25.13 at 9:35 pm
Build brick homes, make them last for generations, and focus on building stuff that lasts.

Most Canadians spend half their incomes (on average) on shacks that they’ll outlive.
—————————————————–

Unfortunately……..you are talking about a custom home that will cost 100% more to build. Only a small portion of the public has cash for this. Most homes today are glue, sawdust and plastic junk.

#150 Ralph Cramdown on 02.26.13 at 2:01 pm

#143 Canadian Watchdog — “I’ll call you on that one. Show your calculations with price and rent data.”

You just want to know where I got my data, you data junkie you.

Well, I’ll tell you, I fudged it. I don’t have time to do detailed research just to smack down goldbugs’ silly claims, so I just used TREB’s average price data for homes as a proxy.
1971 $30,426
1976 $61,389
2011 $465,412

About 15x, 60x with 4:1 leverage. PLUS the net rents. Problems? Sure. Investment real estate isn’t as overvalued as residential right now, but on the other hand, TREB’s current price includes condos, too. In hindsight, 1971 was a spectacular year to invest in rental property, as the nominal price of EVERYTHING — including rents — doubled over the next five years. Hmm, statscan says inflation was only 49% from 1971-76, but the point still stands.

Do you actually doubt that income property performed that well over the time period, or did you just want the data source?

#151 Dorothy on 02.26.13 at 2:07 pm

My spouse and I are Boomers who have absolutely NO intention of downsizing our home until we’re too old to stay in a house anymore. And the majority of our friends feel the same way.
The idea that we will downsize merely to get cash out of our home doesn’t wash in a falling RE market. Why sell just to lose money?
I live in a neighbourhood where there are a lot of folk who are 80+ who are only now starting to sell and move into premises that require less maintenance. So, if the Boomers follow their example, I don’t think we’ll be seeing a lot of mass selling until 2026 or thereabouts.
Current economic conditions have resulted in a softening in RE prices, but the situation is NOT going to be exacerbated by Boomers cashing out in the immediate future.
Consequently, a lot of you folks who are living in basements waiting for a RE crash, are going to be waiting down there for an awfully long time.

#152 Dupcheck on 02.26.13 at 2:12 pm

#55 Mr Buyer

I agree with what the Japanese do, but I am not sure if it will work in North America, because people here have bigger egos and we race to red lights. Japanese are very respecting and obedient culture, we are more arrogant and careless about family values. When was the last time you talked to your parents to ask how are they doing? I bet you the Japanese talk to them every 2-3 days.

#153 The Prophet Elijah on 02.26.13 at 2:32 pm

#147 mel in victoria on 02.26.13 at 1:50 pm Garth…You frequently make provocative, invective comments regarding gold, metal heads, etc so is one not to assume some reply is welcomed or do you just like to hit and run? Personally, I have very little invested in the metals but do see their potential and on occasion have offered an opinion usually with supporting evidence but the post is frequently deleted. …Guess this one will be deleted too..

This is not a gold blog and incessantly selling PMs, which are deadeningly volatile and non-income-producing, to a wide audience of people ain’t gonna happen here. Get used to it. — Garth
———————————————————-
Gold will be the asset that will balance out central banks toxic balance sheets and debt as a result of 2008.
Still trying to figure out which anti gold cartel payed Garth out….

#154 The Prophet Elijah on 02.26.13 at 2:36 pm

….. the decline is clearly happening in Calgary and AB though, they can even jack gas prices as high as they can, it won’t matter.

———————————————————
And isn’t gas always the double edge sword, the higher the price the less disposable income which doesn’t help the middle class.

#155 HAWK on 02.26.13 at 2:37 pm

#102 Grantmi on 02.26.13 at 9:48 am

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

I am in favor of holding some gold in a portfolio but a Gold standard is not feasible. It’s too difficult to sustain in this day and age.

#156 OkanaganInvestor on 02.26.13 at 2:37 pm

#144 OkanaganInvestor on 02.26.13 at 1:35 pm
#75 Nostradamus Le Mad Vlad on 02.26.13 at 2:06 am

Thanks Nostra,

Keshe, the world’s present day Einstein, is a global game-changer and the other video explains what Western society is focused on, as our economy collapses:

33:24 clip New and free energy which may make militaries obsolete, plus article here
13:29 clip Delete FBook?

Meanwhile, below is an explanation of the arranged exit of the Fed, starting in mid-March:

http://www.activistpost.com/2013/02/waking-dreams-end-unpleasantly.html

You actually read that conspiracy crap? — Garth
____________________________________________

Edgy….I have a motorcycle licence too!

#157 Stoopid Idiot on 02.26.13 at 2:41 pm

Enjoy… spells it all out nicely. And yes… we aren’t finished yet

http://vimeo.com/54817244#

#158 Edmontonian on 02.26.13 at 2:41 pm

In Edmonton here, I see that the Condo Prices per square foot are DOWN almost 20% since the peak price in July 2007, and sales for the month of Jan 2007 compared with jan 2013 are now DOWN a whopping 66%. And this is with 3% mortgage rates versus 7.9% mortgage rates in 2007!

Reading you article makes me realize how overpriced condos and houses are in Edmonton. We’re in a housing bubble here, although not as bad as Montreal, Vancouver or Toronto-we’re still in for a huge correction!

#159 Stoopid Idiot on 02.26.13 at 2:45 pm

http://www.jsmineset.com/

Debt is the very essence of fiat. As debt defaults, fiat is destroyed. This is where all these deflationists get their WRONG direction. Not seeing that hyperinflation is the process of saving debt at all costs, even buying it outright for cash. Deflation is impossible in today’s dollar terms because policy will allow the printing of cash, if necessary, to cover every last bit of debt and dumping it on your front lawn! Worthless dollars, of course, but no deflation in dollar terms!

CIGA FOA

The Forces That Will Reverse Housing’s Recent Gains
by Charles Hugh Smith

Monday, February 25, 2013

Executive Summary

• Intervention in the housing market by central planners is experiencing diminishing returns
• The four major trend reversals most likely to depress housing prices in the coming future
• The power deflationary force of reversion to (or perhaps below?) the mean
• Why demographics do not support rising prices
Part I: The Unsafe Foundation of Our Housing ‘Recovery’
Overdependence on subsidies, debt, and unfounded optimism
What could go wrong with the housing ‘recovery’ in 2013?
To answer this question, we need to understand that housing is the key component in household wealth. And, that Central Planning policies are aimed at creating a resurgent “wealth effect,” as follows: When people perceive their wealth as rising, they tend to borrow and spend more freely. This is a major goal of U.S. Central Planning.
Another key goal of Central Planning is to strengthen the balance sheets of banks and households. And the broadest way to accomplish this is to boost the value of housing. This adds then collateral to banks holding mortgages and increases the equity of homeowners.
Some analysts have noted that housing construction and renovation has declined to a modest percentage of the gross domestic product (GDP). This perspective understates the importance of the family house as the largest asset for most households and housing’s critical role as collateral in the banking system.
The family home remains the core asset for all but the poorest and wealthiest Americans. Roughly two thirds of all households “own” a home, and primary residences comprised roughly 65% of household assets of the middle 60% of households – those between the bottom 20% and the top 20%, as measured by income. (The U.S. Census Bureau typically divides all households into five quintiles; i.e., 20% each.)
Since housing is the largest component of most households’ net worth, it is also the primary basis of their assessment of rising (or falling) wealth (i.e., the “wealth effect.”) No wonder Central Planners are so anxious to reflate housing prices. With real incomes stagnant and stock ownership concentrated in the top 10%, there is no other lever for a broad-based wealth effect other than housing.

More…

http://www.peakprosperity.com/blog/80555/unsafe-foundation-our-housing-recovery

More crap. — Garth

#160 Herb on 02.26.13 at 2:48 pm

#148 Richard and Zeus,

“Most homes today are glue, sawdust and plastic junk.”

That’s why they’re so cheap to buy, right Zeus? Without intending to, you are pointing out an instance of the entrepreneurial greed that screws far more people than the public service you blame for everything. But it’s in pursuit of private profit, so it’s all good.

#161 HAWK on 02.26.13 at 2:52 pm

#110 Ralph Cramdown on 02.26.13 at 10:30 am

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

I don’t know where you live, but in the GTA according to TREB’s records the average home price between 1971 and 2012 has increased approx 17 (NOT 60) times. Gold achieves 43 times.

Yes there would be some rental income that Gold would not bring, but you can balance that against property taxes, maintenance costs etc.

http://www.torontorealestateboard.com/market_news/market_watch/historic_stats/pdf/TREB_historic_statistics.pdf

#162 Taxila on 02.26.13 at 2:55 pm

November 24, 2011
What return of capital means to fund investors

By JOHN HEINZL
Many people think they getting their original investment back, but that’s not necessarily true

If I invest in a mutual fund that pays return of capital (ROC), I have to deduct the ROC from my adjusted cost base (ACB). That much I get. But what happens the day after ROC distributions result in the ACB equal to zero? Since all of my original capital is back in my hands, do I still have all of my shares intact in the account? That doesn’t seem right.

Based on the e-mails I get, return of capital is one of the most difficult concepts for investors to wrap their heads around.

Let’s start with a basic definition: Return of capital is the portion of a distribution that does not consist of dividends, interest or realized capital gains. For example, if a mutual fund pays $1 in distributions but only makes 90 cents in interest, dividends and capital gains on investments it sold during the year, the remaining 10 cents will be classified as ROC.

ROC is not immediately taxable. Instead, it is deducted from the investor’s ACB, which gives rise to a larger capital gain – or smaller capital loss – when the investment is ultimately sold. So ROC has tax advantages.

Many people think of ROC as getting their original investment back, but that’s not necessarily true. It’s more accurate to say that ROC comes out of your original investment plus the growth of that investment, which together constitute your capital. In other words, ROC may also reflect unrealized capital gains, or paper profits from securities that have risen in value.

Example: An investor buys a fund with a net asset value (NAV), or price, of $10. We’ll assume the fund earns no interest or dividends, but over the course of a year the value of its holdings rises by 10 per cent, pushing the NAV up to $11.

In this case, we’ll assume the fund does not sell any of its holdings, and therefore has no realized capital gains. It does have $1 in paper profits, however. If it distributes that $1, the entire amount will be classified as ROC, but the investor hasn’t eaten his original capital: He’s got $1 in his pocket, and the fund’s NAV is now back to $10 – or $11 minus $1 – the same as what he paid.

Bottom line: The fund’s NAV will not fall as long as interest, dividend and capital gains – whether realized or unrealized – match or exceed the amount distributed over the long run. Only when distributions exceed the total return of the fund will the NAV erode.

Now, to your question about the ACB. Given enough ROC payments, it’s theoretically possible for your ACB to fall all the way to zero. But as I’ve just explained, that doesn’t mean the fund’s NAV must also fall to zero. The NAV may fall, rise or stay the same – it all depends on whether the fund has been distributing more or less than its total return from all sources.

For tax purposes, the important thing to know is that if your ACB does fall to zero, any subsequent distributions of ROC would be treated as capital gains. In this case, you wouldn’t deduct them from your ACB, but would pay tax for the year the distribution was received.

Why is ROC suddenly taxable in this situation? Well, think of it this way: If your ACB has fallen to zero, that means you have already gotten back an amount equal to your original investment. Any further distributions of ROC must therefore reflect unrealized capital gains, and the Canada Revenue Agency taxes them as realized capital gains when paid

That’s all fascinating, but I did not suggest they buy mutual funds. Nor should you. — Garth

#163 Rick Perry on 02.26.13 at 3:05 pm

I think Garth is kind of biased in this post, he makes great points about Canadians not ready for retirement, but he points all the blame on them. Its not entirely there fault, granted I believe in personal responisiblilty and no bailouts, but it was the Bank of Canada that kept interest rates at unreasonably low rates making it easier for people to lend money and buy homes. The government encouraged consumerism and leveraging, and now most Canadians have been suckered into a trap effectively making them debt slaves to the banks.

Also the statement claiming there are more old people than young people, where’s the source on that one? I personally feel that if your under 50 and in good health your young…

#164 Snowboid on 02.26.13 at 3:11 pm

#150 Dorothy on 02.26.13 at 2:07 pm…

“…Why sell just to lose money?…”

It’s not just your age that will determine whether you can stay in your ‘owned’ home, but whether you can afford it.

There is no question services (municipal, health, etc) will be cut at the same time as taxes, fees and utility costs skyrocket.

This will be worse in smaller communities as essential services (health, etc) are centralized in the larger cities (e.g. Kelowna). This is already a problem in some towns where emergency health services are no longer available, or don’t operate 24/7.

BTW, we are several floors above the basement, and while waiting for the RE ‘crash’ we are…

…patient as ever.

#165 Canuck Abroad on 02.26.13 at 3:12 pm

136 Victor V – the problem is the size of most Cdn condos (esp Toronto). The new-builds are tiny and were geared towards speculators who could flip them or rent them out. They are not fit for actual living in, except for maybe by the very young who have no stuff. No grown up wants to live in such a place – you can’t properly entertain, or have weekend guests, or have grandchildren to visit. If the boomers need to cut their shelter costs, there are other ways besides cramming into a tiny condo.

#166 richmond bc on 02.26.13 at 3:12 pm

In some cultures, it is very acceptable for many generations to live together. In fact it makes perfectly good sense to me. When I had kids I had to stop working to look after them. But my friends who lived with their parents (in a very large home) could continue working knowing that their kids were well taken care of. The grandparents loved the kids and looked after dinner every night. My friends did not have to look for a babysitter to go for a night out. It’s a good model to look at rather than mock.

#167 juno on 02.26.13 at 3:14 pm

#92 T.O. Bubble Boy on 02.26.13 at 8:25 am

Gotta love those Big Bank analysts…
http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2013/02/what-rates-could-do-to-affordability.html

Apparently Canadian RE is still very affordable…. *IF* you assume an average house price of $361,523 and household income of $75,300.

===============
What are the banks suppose to say. Their business is to sell those freakin mortgages and CMHC and the tax payer backs up their twisted decision. Base on your article I did some quick research

For 361,000 that can buy you a condo. But don’t forget the Condo fees which are average

Just took a scan at http://www.mls.ca to see what out there vs craigslist to see whats being rented
==========
1 bedroom metrotown 700/month
http://vancouver.en.craigslist.ca/van/apa/3644341609.html

325,000 ==> 217/mth
325.000 + cmhc + transfer and buying fees (let say 10,000) I’m sure it more but whatever!
Property taxes approx 1200 if owner or 2400 for investment 100 or 200 / month
0 down at interest of 3.25%
335.000 x .0325 /12 Mnth/yr ==> 908 per mnth
Add 217 stata fees
add 200 property tax
==total 1325 / month You would be saving 625 per month (note no principal has been paid, its interest only without amoritization)
http://www.realtor.ca

/propertyDetails.aspx?propertyId=12769595&PidKey=-117589895

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

Right downtown by stanley park 880/month

http://vancouver.en.craigslist.ca/van/apa/3626084140.html

368,000 1brd 315/mth at approxiately same location
http://www.realtor.ca/propertyDetails.aspx?propertyId=12715488&PidKey=-871816365

368,000 + 10,000 = 378,000
@3.25% == 1024/mnth
Strata = 315
Property = 200
==> 1538 per month vs 880 difference is 658 /mnth saving .

Yesterday there were approxiately 10 pages 1000 ads on craigslist just in the vancouver region.

Average for 1 bedroom is approx 500 to 900 avg 700
for 2 bedroom from 900 to 1500 avg 1100.

As more condo not selling and used for rental, I can see a huge flood of rental units forcing competition to lower rental prices.

#168 Canadian Watchdog on 02.26.13 at 3:16 pm

#160 HAWK

Yes there would be some rental income that Gold would not bring, but you can balance that against property taxes, maintenance costs etc.

Correct. Ralph tends to exclude reality in his calculations.

#169 Sebee on 02.26.13 at 3:21 pm

Oh sh t! Negative interest rates???

http://www.telegraph.co.uk/finance/economics/9895068/Bank-of-England-mulls-negative-interest-rates.html

#170 DonDWest on 02.26.13 at 3:25 pm

#127 Daisy Mae

Yes, the government still hands out cash for student loans up front in a given semester. I at one time received $6000 dollars. Rather than spend it on worthless school; I quickly dropped out and spent it all on silver rounds. Sold the silver rounds a few years later and doubled my money. Paid back the loan shortly afterwards and the government never suspected a thing.

#171 Canadian Watchdog on 02.26.13 at 3:27 pm

Taxpayers on the hook for $540-million as Ottawa writes off another 44,000 unpaid student loans

This what the next decade or two will look like in Canada, and the best part is you’re paying for it.

#172 bill on 02.26.13 at 3:36 pm

#137 bbrodriguez on 02.26.13 at 12:59 pm said :
When your average baby boomer was 26, all you needed to get a job was the ability to fog a mirror. If you’re a boomer you probably graduated university with a dozen job offers and effectively zero student debt.

well there young fellow ,you could not be more wrong. I was born in 1954. this is the peak of the boomers.
my grade 8 home room class had 56 kids in it.
I seem to recall 12 classes of grade 8 students in 1968-69 at my high school. in 1973 I went out into the cold cruel world to seek employment that simply was not there.
I was finally, gainfully employed in 1976. up to that point it was very sporadic and the jobs [spraying urethane foam] were most unpleasant. not to mention hard to get a paycheck out of some of those ’employers’
when I finally got a job in the sawmill close to home I thought I had scored big.
unfortunately that wasnt the case. layoffs were the norm as the economy was not doing so well.
and by 1980 the writing was on the wall : a major recession unlike any save the folks who went through the ’30s.
All my friends that bought a house lost it.[at my sawmill, three people committed suicide due to these financial problems] Companies that had existed since my fathers youth folded.
trucking companies and forwarding companies ceased to exist [west way ,bergs, johnsons etc]. I remember this well as a couple of my mates who were salesman at” westway ” knew the company was folding so the meals and drinks were on the company account….
as I recall some of those salesman didnt find work until 1986.no one was buying so its hard to sell stuff.
yeah we had it easy… not

#173 bill on 02.26.13 at 3:40 pm

oh and kids :
when Garth talks about the big impact on future home sales by boomers?
he aint kidding. its a lot of people.

#174 AlexS on 02.26.13 at 3:49 pm

Garth, did I understand correctly that Anna & Sergei have annual income of 90K coming out of an employer’s pension plan, or that a total they have saved in an employer’s pension plan?
Thx

Commuted value, not income. — Garth

#175 Bill Gable on 02.26.13 at 4:17 pm

Mr. Turner – you have been TRYING to knock some sense into people – and then I read this:
“Baby boomers may well be on the move over the next five years, but don’t expect them to be downsizing to condos, according to a new report by realtor Royal LePage.
“They love their garages and their yards,” says Royal LePage CEO Phil Soper.
In fact, they love them so much that 40.6 per cent of 1,011 boomers surveyed for the study said they plan to move out of the family home to another house — some 25.9 per cent into one of a similar size and almost 18 per cent of them into something even bigger.
While 54 per cent of boomers surveyed said they do intend to downsize, less than a quarter (22.9 per cent) are looking to condominiums or apartments, the report notes.
That could mean lights out in more than a few of those glass-and-steel units over the next decade, given that Generation Y kids born between 1980 and 1994 were also part of the survey and made it clear they don’t plan to be living the high life in the bustling downtown forever.
Expect a rush to the suburbs over the next few years as they hit their child-bearing years: Almost 77 per cent of the Gen Ys surveyed said they will be looking for townhouses, bungalows or single family homes and less than 25 per cent of them close to downtown.”

Oy Gevalt.

Link: http://tinyurl.com/acjul8n

#176 HAWK on 02.26.13 at 4:27 pm

#149 Ralph Cramdown on 02.26.13 at 2:01 pm

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

LOL – Thanks for coming clean about the 4:1 leverage.

Newsflash: Leverage can be applied to Gold too and a 4:1 lever on that would have returned 172 times return between 1971 and 2013.

Next time compare apples to apples.

#177 Sebee on 02.26.13 at 4:30 pm

#170 Canadian Watchdog

Lights in the Tunel?
Race against the Machine?

New gaol, to have the best educated unemployed and underemployed.

#178 HAWK on 02.26.13 at 4:57 pm

#170 Canadian Watchdog on 02.26.13 at 3:27 pm

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

Agreed, the price to be paid for BIG Government.

#179 Good Authority on 02.26.13 at 4:59 pm

Garth – Sergei will also be eligible for OAS – you always leave out that windfall for non-savers.

Since when is $500 a month a windfall? — Garth
——————————————————
CPP looks after most of your rent and OAS helps with the rent too and it supplements what you get from the food bank. Any job you can scrounge allows you to live the better life with cable.
Is there more to live for?
What am I missing?

#180 SRV on 02.26.13 at 5:13 pm

Yes Anna and Sergei, sell the house and rent (so far so good) and invest proceeds in a balance of stocks and bonds (hmmm).

Bond yields at all time low with nowhere to go but up (and Garth agrees). Meanwhile stocks tanked at even a hint that QE may end (it was of course a bogus plant to cool commodities and give Garth another “I told you so” moment… DOW down 250…oops). So, Ben has to assure all he was just kidding (my bad) today, and we have a 100 point recovery (it’s magic)!

Yes Anna, sage advice indeed… put your life savings in Ben’s hands! I mean, what could possibly go wrong?

Return of 7% over the past nine years, including the GFC. That’s what a balanced, diversified portfolio does, kicking out income. — Garth

#181 DM in C on 02.26.13 at 5:28 pm

“Current economic conditions have resulted in a softening in RE prices, but the situation is NOT going to be exacerbated by Boomers cashing out in the immediate future.
Consequently, a lot of you folks who are living in basements waiting for a RE crash, are going to be waiting down there for an awfully long time. ”

Wow, Dorothy, you are getting more strident as time passes.

My basement is reserved for my Boomer parents. I don’t expect they’ll last an awfully long time though.

#182 Ralph Cramdown on 02.26.13 at 5:36 pm

#172 HAWK — “Yes there would be some rental income that Gold would not bring, but you can balance that against property taxes, maintenance costs etc. […] LOL – Thanks for coming clean about the 4:1 leverage”

OK, I call BS. You can’t possibly be as dense as you appear to be.

#183 Westernman on 02.26.13 at 6:06 pm

blase @ # 22,
There’s a reason financial literacy is not taught in schools – sheeple are far easier to fleece if they are financially ignorant ( and ignorant in general ).
The school system ( brainwashing centers ) are the way they are because your owners want them that way…

#184 Landlessinvan on 02.26.13 at 6:36 pm

Garth, Who and what is the guy in orange shorts? I have never understood this.

#185 jess on 02.26.13 at 6:53 pm

the angry comedian

http://www.beppegrillo.it/

http://www.beppegrillo.it/en/
http://en.wikipedia.org/wiki/Beppe_Grillo

=
do you think ‘kiss my ass day” will catch on?
http://www.spiegel.de/international/europe/analysis-of-italian-election-outcome-a-885740.html

#186 Ralph Cramdown on 02.26.13 at 6:58 pm

#150 Dorothy — “My spouse and I are Boomers who have absolutely NO intention of downsizing our home until we’re too old to stay in a house anymore. And the majority of our friends feel the same way.”

Oh, of course. But your circle of friends, over the next ten years, will likely experience:
– a bimbo eruption leading to a divorce or two
– an early death, perhaps from heart attack or cancer
– perhaps a business failure leading to bankruptcy
– an early forced retirement with subsequent inability to find another position that pays as well
– maybe a case of alzheimer’s requiring expensive institutional care
And I suspect that if you checked the liens on your ten closest friends’ houses you’d find at least one surprise.

It isn’t that all boomers will suddenly wake up and say “sell!” Just that more of them will be selling than buying, more downsizing than upsizing. Some of it will be planned, some won’t. The kids that are entering their prime homebuying years are graduating with more debt to higher unemployment and there’s fewer of them. Since they’re the ones who should be buying the homes from the people who are going to want to buy your homes, I think you can see the problem.

#187 Freedom First on 02.26.13 at 7:12 pm

With the millions of Boomers now past 60 and entering their sixties, and seeing in print the naked facts about the average financial situation of this generation, the # of Boomers who will have to sell their RE for whatever reason, will significantly affect RE prices in Canada. Garth is writing the truth about this, so, act accordingly if you are vulnerable to this fact, or live with the consequences, and please, when it happens, and you are one of the Boomers caught in the frying pan, try not to make any noise. Thanks. Freedom First.

#188 Chickenlittle on 02.26.13 at 7:15 pm

Freedom First on 02.26.13 at 1:48 am :

My point was that early retirement is a priviledge, not a right. The Boomers are hypocritical because they are trying to escape the natural function of life, which is work, and telling us younger ones that lifes a b*tch, and you had better get ready to work hard, all the while planning their escape to lotus land. But then again these are the same people who advise their kids, who live in an economy entirely different from the one they dealt with, to put all their eggs in one basket via RE and that investing is akin to gambling. New times call for new ideas.
Jesus was right when he said that “You can’t put new wine into old wine skins.” New ideas and geriatrics don’t mix apparently.
If it sounded like I was angry, I was. A sinus infection will do that to a person.
So will having a B.A. and working at Starbucks. Boomers created credetialism. It didn’t exist for them, but it does for us.
I hope I don’t retire until later in life. I would be SO bored.

#189 Tkid on 02.26.13 at 7:19 pm

*Since when is $500 a month a windfall? — Garth*

that was the monthly pension of the gent I replaced when he early retired.

#190 bill on 02.26.13 at 7:24 pm

– an early forced retirement with subsequent inability to find another position that pays as well…

that one hit home ralph….
not to mention my high blood pressure.
yeah a lot of us boomers are going to be making adjustments they never would have thought of.

#191 Musty Basement Dweller Wannabe on 02.26.13 at 7:31 pm

Someone mentioned earlier that the (us) boomers will stay in their owned houses as long as absolutely possible and the big numbers of them liquidating won’t come for at least 10 years or so.

While I can see the math of that opinion, agree to an extent, and understand totally how it can suck to not own your own place, there is another factor or two involved.

I wouldn’t underestimate the desire of many of us to bail from our owned houses before that time. Actually, I’m in the process of doing it right now and had more than 24 real estate agents come through my house today. I’m only in my mid fifties.

Many of us were raised by depression era parents and know the value of a nickel, and don’t really like to see our equity eroding.

#192 ian on 02.26.13 at 7:38 pm

#3 european hits the nail right on the head build houses that last and dont need money constantly pumped into them.

#193 Dr. Hoof-Hearted on 02.26.13 at 7:50 pm

Heard on the News…

Gov’t is looking at re-addressing Gov’t pensions. Something about shifting to RRSP’s

…..gee ….Unacceptable..how can we not afford historical entitlement ? Something wrong with our economy ?

#194 Nostradamus Le Mad Vlad on 02.26.13 at 7:50 pm

#79 Bill Gable — Exc. link. One ponders as to how the US student debt will be handled — a trillion or so, with not many good paying jobs to go to.

#83 Jane24 — “Best plan is always to cut your coat to the cloth asap rather than try to find more cloth.” — “The best laid plans of mice and men . . .”, but I agree — cut excess fat and trim down to a more effective use of space.

#90 Julia — “I have boomer friends who say “who cares if I die in debt, they won’t come after me then”. — So the banks take the life insurance, anything else of monetary value then sell the home (if they can), and leave their children with a pittance.

#121 Snowboid — “Nothing like contradicting yourself within the same article.” — When the m$m does something, it does it very poorly as your llink proves. The left hand doesn’t know what the right is doing!

#133 Dr. Hoof-Hearted — “The Maurice Strong and Al Gore types are seeking a One World Gov’t aka global communism. Every measure is to ultimately herd the people into dense farms called Cities.”

Soros and Obomba are well versed in that having studied Marx, with both admiring China’s communist policies and principles.

It appears all this ‘war talk’ between the US and China is just that — talk, designed to boost arms sales. It will be interesting to see what they do with Iran, ‘tho.

#139 Nemesis — Memories of the ’50s and ’60s! I recall messing up a Ludlow headline machine as an apprentice. Didn’t get splashed by hot metal, but all the apprentices had a lot of fun during those times!

#144 OkanaganInvestor — “Edgy….I have a motorcycle licence too!” — Great link, despite what Garth says!

#182 Westernman — “The school system ( brainwashing centers ) are the way they are because your owners want them that way…” — SMan and you (along with others) may be on the same page, without even realizing it!

#195 Victor V on 02.26.13 at 7:57 pm

#164 Canuck Abroad on 02.26.13 at 3:12 pm

136 Victor V – the problem is the size of most Cdn condos (esp Toronto). The new-builds are tiny and were geared towards speculators who could flip them or rent them out. They are not fit for actual living in, except for maybe by the very young who have no stuff. No grown up wants to live in such a place – you can’t properly entertain, or have weekend guests, or have grandchildren to visit. If the boomers need to cut their shelter costs, there are other ways besides cramming into a tiny condo.

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

Agreed. Shoebox condos (with shattering glass) will be the slums of tomorrow. Certainly not the type of housing down-sizing boomers will seek.

Now on the flip side, low rise condos in desirable parts of any city with some actual living space will likely hold their value.

Just common sense.

#196 Dr. Hoof-Hearted on 02.26.13 at 8:10 pm

#171 bill on 02.26.13 at 3:36 pm

Interesting reminiscing.

I too am a part of the Boomers.

Most Boomers have vivid memories of the cyclical economies. It tends to keep one gun shy, but also acts as a term of reference.

In reviewing economic history, 1973 was a very transitional year.

Late 1970’s/early 1980’s?…very very ugly

The post Boomers….IMHO…have been sucked into a false sense of security along the lines of the Golden Goose.

I think we are seeing a major unravelling now…which some of us have seen before.

In hindsight…true quality of life was much better back on the olde days. Less WAS m-o-r-e.

#197 West Vanner on 02.26.13 at 8:22 pm

I had a ‘Mikey’ a few years ago, I got divorced to be rid of him. The house is sold and now I rent and invest my savings diversely. I like my new SO much better too, win win.

#198 Timing is Everything on 02.26.13 at 8:31 pm

#179 SRV – (it’s magic)!

Ha!

Never believe it’s not so.

http://tinyurl.com/avvzmzp

#199 Richard and Zeus on 02.26.13 at 8:41 pm

159 Herb on 02.26.13 at 2:48 pm
#148 Richard and Zeus,

“Most homes today are glue, sawdust and plastic junk.”

That’s why they’re so cheap to buy, right Zeus? Without intending to, you are pointing out an instance of the entrepreneurial greed that screws far more people than the public service you blame for everything. But it’s in pursuit of private profit, so it’s all good
——————————–
Great job cherry picking Herb. And without doing any research…..I know that “tens of billions” are not WASTED like in the Public Service. Are the houses less quality than older ones? Yes. But unlike money WASTED by the Public Service….you can live in a new house of less quality than older ones……

#200 bubu on 02.26.13 at 8:45 pm

#137 bbrodriguez on 02.26.13 at 12:59 pm said :
When your average baby boomer was 26, all you needed to get a job was the ability to fog a mirror. If you’re a boomer you probably graduated university with a dozen job offers and effectively zero student debt.
————————

You are way off on this one.

Being born and raised overseas, only one kid in my class went to university. There were three more parallel classes in my school of the same grade (yes, three more, so many kids of the same age group were there).
Very few of us made it to a higher school; our parents just did not have the money.
Government help or loans for this simply did not exist.
We graduated at age 15 from high school and were booted out of the house to make our own way in life.
Nothing came easy; we didn’t even have any of the resources that kids have these days.
It was – get out, get a job or training of some sort, if you were lucky enough – that was that.
I don’t know if it was different in Canada, but many people here came from overseas over the years, and they can tell you that “higher education” back then was not anything that was even considerable, due to lack of money.

#201 Swift on 02.26.13 at 8:51 pm

deleting comments is keeping this realtor a lot busier than selling real estate:)

http://www.youtube.com/watch?v=gWvjbQdsdLE&feature=youtube_gdata_player

#202 bubu on 02.26.13 at 8:55 pm

#3European

Considering the prices they are charging in Canada for a pressed cornflakes board house, can you imagine how much a brick home would cost you here?

Ohhhhhhhhh, how I would love to have one of those solid wall homes!

#203 Daisy Mae on 02.26.13 at 9:03 pm

#163 Snowboid: “There is no question services (municipal, health, etc) will be cut at the same time as taxes, fees and utility costs skyrocket. This will be worse in smaller communities as essential services (health, etc) are centralized in the larger cities (e.g. Kelowna).

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

Speaking of Kelowna…the Interior Heart & Surgical Center project is underway at Kelowna General Hospital. No more will patients have to be transported to the coast. BTW, there are only four hospitals in BC capable of performing these procedures….but they are being performed now in Kelowna. We don’t need to wait for construction to complete in 2015. :-)

#204 Daisy Mae on 02.26.13 at 9:08 pm

#163 Snowboid: “There is no question services (municipal, health, etc) will be cut at the same time as taxes, fees and utility costs skyrocket.”

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

Well, that just cuts into our disposable income…we just have to cut back in other areas, don’t we?

#205 Daisy Mae on 02.26.13 at 9:20 pm

#165 Richmond BC: “The grandparents loved the kids and looked after dinner every night. My friends did not have to look for a babysitter to go for a night out. It’s a good model to look at rather than mock.”

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

Hmmm…..yes, we love our grandkids. No question. However, the grandparents have ‘been there, done that’. Generally, we don’t have the patience or the stamina to raise a ‘second family’. I call it a blatant imposition….but hey! That’s just me.

#206 Daisy Mae on 02.26.13 at 9:28 pm

#169DonDWest
#127 Daisy Mae

Yes, the government still hands out cash for student loans up front in a given semester. I at one time received $6000 dollars. Rather than spend it on worthless school; I quickly dropped out and spent it all on silver rounds. Sold the silver rounds a few years later and doubled my money. Paid back the loan shortly afterwards and the government never suspected a thing.

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

I rest my case….

#207 Family planning — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer™ on 02.26.13 at 9:28 pm

[…] via Family planning — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate. […]

#208 Bill Gable on 02.26.13 at 9:30 pm

Just when I thought Mr. Turner had written a gem, he outdoes himself with today’s post.

Wow.

Sadly – I have many friends in the same boat and frankly, it scares me. Yes, scares me. Because of my situation (*full disclosure – Mr. Turner takes care of my Family) – we are ok.

But, my GOD, so many of my cohorts are in a jackpot. After a life of Hawaiian vacations and leased Beamers, how are they going to react to living on Kraft Dinner? * BTW – Canada eats more KD than any Country in the world, already – so what’s coming down the pike is going to make Les Miserables look like Ozzie and Harriet.

The whole meshpookah, bub. It is not going to be pretty.

Wake up – or get trampled. Sorry.

#209 Marshy on 02.26.13 at 9:32 pm

Westernman @182
“The school system ( brainwashing centers ) are the way they are because your owners want them that way.”

Maybe you should have been paying a little more attention in school yourself.

#210 Gunboat denier on 02.26.13 at 10:21 pm

171 Bill – 1959 was the peak

http://www.statcan.gc.ca/daily-quotidien/070921/dq070921b-eng.htm

#211 JeanM on 02.27.13 at 10:47 am

Garth, you once called me out for ageism, but how fair is it for you to describe a 26 year old living with his parents a a parasite? When your average baby boomer was 26, all you needed to get a job was the ability to fog a mirror. If you’re a boomer you probably graduated university with a dozen job offers and effectively zero student debt. This 26 year old graduated with 2 years salary in student loans and nothing but dead end jobs, if you’re lucky. What did we all expect would happen?

You have no idea what job-seeking was like as a massive cohort of Boomers overwhelmed the market. Typical. — Garth

eaxctly!

Born in 1962, it was a nightmare to get jobs with the people ahead of me; graduating in 1982 in the middle of a much worse recession than we had in 2008 (21 percent interest rates) was the cake

you 26 y old parasites are a joke, get a life…

Even with all that, I had a house (a small one) at 25, and had started saving by then; oh, I was married too by then. Sheesh

#212 JeanM on 02.27.13 at 10:54 am

Another thing

When you have a BA, don’t take a worthless subject
AAron Clarey, captain capitalism blog has blog and a book called Worthless! on that very subject
I majored in Accounting and IT in 1979-1982, and been working ever since
You english majors, gay-women studies majors, you’ll get what effort you put in (compared to STEM or business subjects), and that’s nothing; or betetr yet, do you want fries with that? or light/normal cream on your coffee
Sheesh…

#213 bill on 02.27.13 at 11:40 am

thanks gunboat
my personal experience was not quite the same.
I seem to recall them dismantling our portable class rooms by the time that cohort came through….
it WAS some time ago though…
and I would further say they most likely had an even rougher time getting a job.

#214 Diamndmap on 02.27.13 at 12:02 pm

‘I’m afraid of a condo crash’: Canadian real estate investors fret as housing blitz winds down
http://business.financialpost.com/2013/02/27/im-afraid-of-a-condo-crash-canadian-real-estate-investors-fret-as-housing-blitz-winds-down/?__lsa=abe8-5f1a

#215 Ray Blaak on 02.28.13 at 12:38 am

> Dump $51,000 of this in two TFSAs, taking taxable
> assets and making them tax-free.

How does one put that much into a TFSA? By my tax return, I can only put in $5K a year.

Have the rules changed?