In the first two weeks of March real estate deals in Toronto were down 11.5%. Sales of single family homes dropped about14%. This is consistent with every other market in Canada. Year/year transactions have plunged from single digits (Calgary) to a withering 40% (Lower Mainland). There is not a single major city or province where the pattern has been breached.
This is spring, and mortgages are 2.99%. Go figure. As night follows day, lower prices trail falling sales. Especially in 2013.
So why would anyone empty their bank account and chunk up on debt to jump in now?
Ask Laura.
Garth, we really need your help. The area of Toronto that we live in is expensive regardless as to whether or not you want to rent or own. We are busting out of our rental apartment and need to move to at least a 3 bedroom home with 2 bathrooms.
I know you have always written that renting is better, but I cannot find a 3 bedroom, 2 bathroom rental in our area for less than $2,500 which would be more money than a mortgage payment. If you can find us one, I’d be happy to rent for as long as possible until these insane house prices come down. We need to be a min. of 10 min walk to the Bloor subway between Spadina and Lansdowne.
I am really nervous about buying because I’m afraid interest rates will go up in 5 years to the point where our mortgage is unaffordable and it also seems just insane for us to pay almost $700,000 to buy a 3 bedroom semi which will ultimately need lots of work over the years because all of these houses are old!
We are not willing to re-locate by the way. Any insights you could offer would be appreciated. We know renting would be a better option, but can’t justify moving to a $2,500/month rental unit when we could be paying a mortgage.
Is Laura a princess? Whining about rents in an expensive part of a city of six million people and refusing to relocate even a few stops down the subway line to help her family finances smacks of Barbie-ism. But I won’t go there. It’s probably illegal.
Let’s just look at the numbers. Can Laura and her subjects actually buy a $700,000 house in mid-town Toronto for the same money as renting a three-bedroom apartment? Would a move like this make sense over, say, five years – “because real estate always goes up”? Let’s see.
Of course, there are few $700,000 single-family homes in this area for sale, and fewer which are habitable (by people), but let’s assume Laura found one. Putting 10% down (more than the average these days) is a $70,000 commitment. Land transfer tax (it’s double in Toronto) adds $20,200, and normal closing and moving costs would be about $5,000. So the cash required is a little over $95,000. Not insignificant.
That leaves a mortgage of $630,000, to which is added about $17,000 for the CMHC insurance premium (this is a high-ratio borrowing, after all). Financed at 2.99% on a five-year, closed mortgage this would cost $3,061 a month. Add in property taxes (about $6,000 a year there) and maintenance/reno costs (at least $12,000 a year for that quality of housing stock), and the monthly is now $4,561.
Whoops. That’s more than $2,500 in rent money, right? But who cares? We’re building equity!
Not so fast. Renters don’t need to put down $95,000 to move into an apartment, so we need to factor in what that amount of money would make if invested (at 7% in a balanced portfolio). That adds another $554 to the true monthly cost, bringing it to $5,115. Double the cost of rent.
Now, about that equity. Over 60 months Lady Laura would spend $307,680 to house her brood. At the end of that time there would be $553,027 remaining on the mortgage. Let’s assume the TD Bank is correct and houses jump in value by 2% per year for the next decade (although the bank does admit there will be falling prices first). After five years the house is then worth $772,856, or $734,213 after the selling commission. Deduct the mortgage outstanding and the initial downpayment, and the remaining ‘profit’ is about $83,000.
Deduct the profit from the $307,680 paid to live in the house and the net amount is $223,694. Meanwhile to rent for five years at $2,500/month would total $150,000. That means renting is about $73,000 cheaper.
But what happens if the house doesn’t increase in value steadily, and the Duchess sells it for what she paid? Then renting wins by $140,000. And if the house declines a modest 5% because interest rates rise by 2018? Then Her Highness would have saved $175,000 by pursuing a rental.
By the way, I didn’t mention other dangers. What if Laura or her man person lost a job, with a $600,000 mortgage hanging in the balance? Or a job transfer came along and the house didn’t sell easily? Or illness struck? What if this hyperventilating little blog is right and the market slags for five years as society chokes on its own debt?
Methinks Laura has drunk the Royal Kool-Aid. And this is why trouble stalks the realm.
221 comments ↓
“We Will Be Slaves for Russia’: Cypriots Warn”
For some reason there is no mention from the Turkish side of Cyprus.
http://finance.yahoo.com/news/slaves-russia-cypriots-warn-165057034.html
Canadian home prices fell in February from January, the sixth straight monthly decline, and February’s price gain versus a year earlier matched January’s modest year-on-year rise, the Teranet-National Bank Composite House Price Index showed on Wednesday.
http://ca.finance.yahoo.com/news/canadian-house-prices-fall-0-2-percent-february-153030721–business.html
how hight will stocks go and are we heading for a long bull market?
I know smoking man’s real identity. Perhaps he can code me a website and take donations to reveal it. Wonder if it’s worth anything at all… Perhaps a nickel?
~Nisjots
#2 tito on 03.20.13 at 7:25 pm
“how hight will stocks go and are we heading for a long bull market?”
20,000 DOW by The middle of 2016. Not in a straight line, ofcourse.
http://finance.yahoo.com/blogs/the-exchange/u-energy-independence-could-know-180316387.html
Basements Suites are the “New Condos” for the $avvy
” La Subterranean ” or “Les Morlocks”
This is spring, and mortgages are 2.99%. Go figure.-G
So sales are down a bit, no damn inventory ls mostly why,
plus daily rants from F and MSM saying RE to much….yet the resiliance of the herd in Toronto is incredable….
Bottom line yes demand is down a bit, but supply is in huge short supply.
PS an other winning day of Forex 7 trades on 1 lots up 600 , this is too easy…….mind you yesterday while in the can , took my eye of the ball, boom down 800. wont do that again……to lazy to put in stops….never again, this stuff moves fast
Check out the Minto owned High Park Village where a three bedroom, 1 and 1/2 bathrooms goes for ~2200, hydro included…
http://www.minto.com/rent-an-apartment-in-toronto/High-Park-Village/main.html
Please note that there are no three bedrooms available right now, but one will certainly be available in a month or two).
Also, they have townhomes which go for less than$2500 (in the first year, anyway).
Expect a yearly increase of 5%…
Hi Garth.
How often should we re balance our portfolios? Thank you for your valuable advice.
When your weightings are out of alignment. — Garth
spoke to a young feller today with a $3k/month mortgage, he is getting 15 hours a week at work and shaking. A mess is what this entire market is and some people are still lobbying for more of it, the suits in Ottawa are a bunch of idiots.
Vlad I liked your post
“JPM and stuff “. . . that allows too-big-to-fail banks as well as many other corporations to reap huge tax benefits by taking out life insurance policies on workers – even low wage workers – and naming the corporation the beneficiary of the death benefit.” Life insurance. I answered my own question from yesterday.
*
5:01 clip Special privileges, but nearly all of the hijackers on 9-11 are free as birds; 1:22 clip Harry Reid says gun control off; F-35 US$400 bln. jet can’t fly in cloudy weather; 2:37 clip Why does Obomba need 1.6 billion bullets?”
……………………………….
perhaps cashing in on life insurance has something to do with a billion hollow points…just a thought
An Alberta Realtor who is honest about the future of Real Estate? Who would have thought.
http://karriflatla.com/sell-your-home/if-you-need-to-sell-your-house-dont-wait/
Pretty entertaining too.
Garth I think you answered Laura’s question very well.
If only she would listen and not commit mortgage sucide.
I would pay for that advise you gave here as you are saving here and many like here much heartache.
The realturds are desperate and starving, I was coming in to my apartment building yesterday and there was this RE agent going to every apartment and leaving a business card. He handed me one I took it as I didn’t want to hurt his feelings. You know where it went in the trash can.
I see desperation and worry from the RE cartel.
Garth, not sure what the big deal is about 2.89 ? If F needs to tell Manulife to stop, he needs to tell a lot of others. We can issue mortgages at 2.89 for good deals today, although 2.99 is what most are getting or 2.94. Biggest red flag for F, and if you have contacts in Ottawa you need to tell them, CIBC offered three clients at our office 2.99 % for 5 yrs AND 2 % CASHBACK to boot….
It is completely insane….home prices in much of TO are in a bubble and this is not good for anyone in the long run…very frustrating to see people with no money gamble on houses with 5 % downpayments (sometimes borrowed if our hunch is correct) thanks to taxpayer gaurantees and interest rates that are robbing the prudent to help subsidize a debt bubble that is imposing a tax on most of us to help make senior finance execs rich and inflate gov’t tax revenues..not to mention inflating the cost of housing (usually 2nd biggest expense after taxes for most households)..a little winded but got to explain a lot..i only see 2/3 insured apps a year from my own clients but do see many apps from colleagues who deal with external referral sources and i can tell you most of these 1st time borrowers are broke.
The gov’t needs to be aware of the market conditions if it is to treat all lenders fairly..
The title for today’s blog is appropriate with the article below.
http://finance.yahoo.com/news/cvs-workers-tell-us-weigh-193756065.html
Holy crap is it ever expensive to own a house!! I guess all those young couples that live for free in their parents basement better live there a bit longer.
I’m looking at renting a whole house in Milton for 1700. Cheap!!!!
Maybe this will help her highness and my lord…
http://visual.ly/canadian-debt-infographic-economy-debt-and-you?utm_source=visually_embed
Laura do the math!
You missed a scenario Garth…
What if the RE market drops 15-25% in the next 5 years in Toronto? Nobody says that can’t happen.
I’m trying not to scare the wildlife. — Garth
#110 Richard and Zeus,
…when you talk the truth here Garth calls you a conspiracy tin foil hat wearing theorist.
Only when that “truth” consists of fact-free innuendo, as in your case
————————————–
Hey Herb
You and your govt buddies are free to present your evidence and collect your 10 grand. You know the saying…..put up or shut up.
Smoking Old Man celebrates Fathers Day just in case, (though low probability).
Written most eloquently, once again.
I wouldn’t sweat it LL, in order for some to succeed, others have to fail. Sorry its you.
“Can Laura and her subjects actually buy a $700,000 house in mid-town Toronto for the same money as renting a one-bedroom apartment?”
Wasn’t her question one which asked about a ‘THREE’- bedroom apartment? Do the numbers still hold true? Is it possible to rent a three-bedroom apartment in that part of T.O. for $2500?
Typo. Corrected. — Garth
Hopefully Laura will drop by the blog and thank you for doing that math for her.
I’m always amazed at how people will drop 3/4 of a million dollars and not sit down for 15 minutes to do the math. Absolutely amazing (and very, very sad).
#17 I’m looking at renting a whole house in Milton for 1700. Cheap!!!!
Considering you’d have to live in Milton, I’m not sure this is such a great idea.
Love the reek of entitlement in today’s post…..”HAVE” to be within 10 minutes of a pricy section of Bloor subway line”. Why praytell is your requirement so narrow?
I suppose 20 minutes walk ( five minutes bus ? ) would result in the death of a loved one, drought and famine, and a tsunami?
Whatever. If that’s what you need, shut up and pay for it!
Accidently read SmokingMan’s comment. What a waste of 30 seconds!
And if the house declines a modest 5% because interest rates rise by 2018? Then Her Highness would have saved $175,000 by pursuing a rental.
if it declines by 10%, she’s broke. well that’s not true because broke means having no money, she will owe $700,000 with no prospect of repaying it.
Laura, take $1000 and find a poker game. Call smoking man, he’ll introduce you. Take your lumps in small doses.
It never fails to amaze me that people won’t crunch those numbers themselves.
I know so many people who literally have no money who just bought homes.
Oh, and rent of $2500 surprises you why?
When I last lived in the core 15 odd years ago, I think rents for an entire house in a semi-desirable pocket of C2 were in the same order of magnitude.
2 crappers and 2 tubs might be nice. But you hardly ‘need’ them.
Thanks “Old Man” for helping with yesterday’s picture. As I’m getting up there slowly – mid 20’s – I probable don’t have the same take on the picture as you. I still don’t get yesterday’s picture.
Today’s is of a woman alone on a treadmill. My take on it is that at least she is trying to exercise, even with a chair, when no one else is on a machine trying. How that relates to money though beats me. Better to try a little than not at all?
I think I will use this blog as English homework in trying to find the meaning in each picture. I’m probably failing so far LOL.
About Laura though Mr. Turner. What if she has enough money down to make her payment only 2500$ each month with all your other variables the same. Maybe then its not too bad for her?
Royal Jelly – no clue how that fits in unless you think Laura is a princess (you used the word “subjects”) and if she gets a big mortgage than she needs – ahem – lubrication (jelly??)…. or is my mind in the gutter now??
People love to round down, underestimate and outright omit ownership expenses when looking at the cost of buying. Then they go “oh, it’s only an extra couple hundred”, or “a coffee a day”, or “brown-bag lunch”, or whatever sacrifice, to justify any difference, which is fine, because “you’re building equity”. That’s dishonest. If owning is so awesome, it should stand on its own merits, without having to blatantly make stuff up.
BTW, I’m still reeling after Lululemon recalled my favorite pants. I should sell mine on craigslist for a profit!
#27 NonSmokingMan on 03.20.13 at 8:39 pm
Accidently read SmokingMan’s comment. What a waste of 30 seconds!
……..
Sure sure…. Matrix servant…..
At leased you had enough smarts to use my great name as part of yours guaranteeing the dogs read you drivel.when they use the find function .
Everyone reads smoking man posts.
Laura, now that Garth’s done the maths, it shows you how much you’ve got to spend on a new rental. Think about it: you can now justify spending up to $5,000 per month on a rental because you’ll still be better off than a buyer in your area of choice.
Bear that in mind and go off to hunt down a bigger rental. You should be able to get somewhere nice for that sort of cash.
Good luck.
#34 Devore on 03.20.13 at 8:50 pm
People love to round down, underestimate and outright omit ownership expenses when looking at the cost of buying. Then they go “oh, it’s only an extra couple hundred”, or “a coffee a day”, or “brown-bag lunch”, or whatever sacrifice, to justify any difference, which is fine, because “you’re building equity”. That’s dishonest. If owning is so awesome, it should stand on its own merits, without having to blatantly make stuff up.
…………………………
Been saying that forever on here. If you didn’t chip me so much I would say we’ll done old boy… And pat you on the back..
But you kind of playgerized that from me.
You know that say, copy cats are the best compliment.
There you have your five minutes of fame grant to you by me.. :)
Royal Jelly!
“Royal jelly is secreted from the glands in the heads of worker bees, and is fed to all bee larvae, whether they are destined to become drones (males), workers (sterile females), or queens (fertile females). After three days, the drone and worker larvae are no longer fed with royal jelly, but queen larvae continue to be fed this special substance throughout their development. It is harvested by humans by stimulating colonies with movable frame hives to produce queen bees.”
http://en.wikipedia.org/wiki/Royal_jelly
Just watched the “National” on CBC. Everyone, including two of his own MPs seem to want F to stay out of the mortgage business and let the banks do what they know best, Not one mention of the taxpayers of Canada underwriting all these loans, many high risk. And the banks take no risk…Any saver should be bloody mad about this.
When i was a grad student my friend and i rented an upper 3 bedroom duplex — we used the extra bedroom as an office — just up the street from the Lansdowne subway back entrance, on a nice side street. We paid 1/3 of the rent she is looking to pay. Granted there was only one bathroom and it was over 2 decades ago, but i also lived there briefly with my partner and his two kids and i don’t think rents in that area have increased over 300%.
I rented out my really nice 3 bedroom upper duplex unit in Riverdale for $1500 plus util up until last spring. Sure i could have gotten more rent, if i wanted to rent to three smoking students with pet rabbits and pugs. Not that i have anything against rabbits.
My favorite quote from Ghandi: : “Health is wealth”.
From what I observe from the people I know in my life, people who live a positive lifestyle and enjoy excellent health, are the same people who take the time and effort to look after their finances, and live a long, healthy, happy, and prosperous life.
Then there is Smoking man, still fighting mental health.
CBC today has an article blasting F for what he did with Manulife.
I’ve tried 3 or 4 times to post a comment along lines of “I’m not a tory voter – but this seems to be common sense to me, afterall those mortgages are backed by the tax payer.. You get a mortgage for 20+ years, what happens when (not if) interest rates rise over those 20 years”.. etc etc (usually a lot better worded than that)
But yet the cbc has seen fit to not publish any of my comments thus far (I assume the censor at their end owns property).
While Canada keeps adding stick after stick of dynamite to the housing boom, our hapless opposition leaders sit utterly clueless, lambasting F for his desperate moves to reign in the madness. Meanwhile, Britain has this guy. I swear, hearing this man speak almost brought me to climax: https://www.youtube.com/watch?v=HhGNoZfvRoA
I only follow 416. Today there are NO bungalows for sale in C10 , and C11 (Leaside)
#33 Brunette
Are you sure you are not a Blonde?
I have plugged in the same scenario (2%/y price increase) in my calculator and my numbers are quite different from your $73k cheaper.
http://www.etika.ca/greaterfool/Garth_Calculator.2013-03-20.xlsx
I’ve used the same numbers as you except that I have used true CMHC cost. Also, the $95k invested is compounded to be fair that if you buy you have the full $95k unused for 5 years.
It gives me a difference of $166k cheaper for rent! That’s very far from your $73k. Either my numbers are off or yours are…
I’d like fellow blog dogs to check who’s numbers are right.
you people need to look at the long term price of homes.
Garth has said on his blog many times, those who sold their stocks during GFC made a mistake, those who held on are reaping the rewards today.
Same thing with those who bought in 89/90 just before housing started to crash. They don’t care that 4 years later their home was 25% cheaper, they quadrupled their value today.
No is saying “shoot I wish I bought this house in 94 I would have made an extra 40K” They are saying I wish
I bought another home during the 90s.
And the same will happen in the next 25 years – the fact that someone bought at this peak will mean nothing.
Look at the prices of homes over the last 50 years it has always gone up.
This housing correction will NOT go down to the 08/09 price level.
7% is a gross understatement of the opportunity cost on equity that otherwise would be 10X leveraged. The TSX itself is implying a return of at least 11%/annum (given 2% inflation, 2% real GDP growth) at current valuations. You’d need to add some leverage ontop of that to equal the same level of risk as the 90% downpayment. Therefore the opportunity cost is far worse than even your figures show.
And given that the alternative is a heavily concentrated position in a single piece of real estate, its not reasonable to compare against a balanced portfolio of stocks, bonds, etc.
In case you missed it Smoking Man! Great job opportunity! They even provide training.
Check it out:
http://www.cbc.ca/news/world/story/2013/03/16/mars-one-live-die-mars.html
Best,
HD
#33 Brunette – Is Laura a Princess? It is all a matter of experience and interpretation, but am not going there either. Off to check the opening Asian markets.
My landlady actually wrote me to say she was going to raise the rent because she is losing $150 a month (I’m paying $2500 a month). I told her almost no landlord who is highly leveraged is cash flowing right now and that this problem is her making since she didn’t put enough equity into it. I suggested she pay down her mortgage and things will be just fine. She never raised the issue again.
Crazy how the marketing machine has convinced so many that home ownership is be all, end all.
I’m almost 40 and because of my work, the family and I have moved around quite frequently over the past decade so I’m accustomed to renting now. I’m unsure if I ever want to own, it’s been so nice not having to think about roof repairs or re-grouting the shower. Just pay someone else to do it and live large on the difference.
The stubbornness with folks not willing to drop their asking price seems to extend to landlords as well. I have a friend with a house for rent back in Ottawa which has sat vacant for months because he absolutely refuses to lower his price to something reasonable to get a renter in (he wants 100% coverage of the mortgage). Try as I might, I can’t convince him to take a small hit as the money left on the table since last summer is starting to add up.
Renters are losers, indeed. Losers with more disposal income.
the thing about flaherty and manulife rate is borderline farce
on one hand, there is the argument that since government is insuring mortagages, government has a right to be concerned
then all sorts of MPs, including bernier say that market forces should stay free
but, please, how can it be truly free market if government has a a guarantee for defaulted mortgages, how can one expect a bank to do its utmost due deligance before extending mortgage credit
but again, if government is truly concerned, why does fin minister call manulife? that is so jejune!!
fin minister should change policy and mortgage insurance rules, manulife will fold on its own without flaherty having to call them
it is just circular farce
It’s become Monopoly money. Folks just don’t tune in to the fact that 700,000 is a quarter of a million dollars and their parents generation raised 3 and 4 kids in 700 square feet bungalows with one bathroom. Laura needs ‘at least three bedrooms and two bathrooms! And can’t even take the time to do the math on the payments. When the fecal matter hits the occulating rotator there will be no safety net for these people. There is a great reckoning coming. Garth is like Moses, leading some of us out of the valley of the shadow of financial destruction…..we better all hurry, cause I am hearing the faint roar of the sea behind us……
For every Laura/ Princess/ Barbie there is a Prince/Ken with the same misguided values willing to complain but not wiling to do what it takes to resolve their problem(s). Trust me, I have a step son in his late twenties who proves it along with a friend’s husband.
An issue that is important to many is that the Laura’s of this world still want a “home”, not a rental unit.
There is a price to be paid to have your own home.
Many will sacrifice much to achieve this end.
Often money is not weighted properly when it is cheap and 2.99% or so is cheap. Cheap money is so very alluring and it fogs the brain.
Garth,
Where do you find these photos for your blog?? LOL
“There is not a single major city or province where the pattern has been breached.”
Take a look at Edmonton:
http://edmontonrealestateblog.com/2013/03/edmonton-real-estate-market-weekly-update-march-1513.html
I understand that the long-standing rule-of-thumb for buying vs. renting is that if the house sells for less than 15 times the annual rent, then it is a good idea to buy.
$2500 per month x 12 months x 15 = $450,000.
So if the house costs more than $450,000, don’t buy, just rent.
Either rents have a big rise ahead, or the puffy house prices in the GTA have to fall hard to bring rents in line with sale prices.
Also have a male friend who has bought and sold many houses (upgrade each time) in a short time period. They just bought a new McMansion…new of course while the previous house still sits unsold with an asking of well over half a million, custom built and has been re-listed at least once with a price drop. Do they have the income to support it? Maybe, but I think outgo and in go is close. He and his wife have a ‘financial advisor’ from a mutual fund rep at a well known company. I asked him if he knew what he was invested in or how much he was paying in fees…the answer “no, but that’s his job.” I say nothing and wish him the best.
Like so many as Garth knows, my friend mistakes income with net worth or true wealth.
Rents haven’t changed in Toronto in 20 years for comparable housing (the apartment building that I once rented in costs the identical amount per month as it did in the 90’s).
But – property taxes will go up, mortgage rates will go up, insurance will go up, repairs/maintenance will go up.
Seems like renting is not just the better deal now, but is surely the better deal moving forward.
There are plenty of $2500/month options near the bloor line… a 2-minute kijiji search found several:
http://toronto.kijiji.ca/c-real-estate-apartments-condos-3-bedroom-Newly-Renovated-3-Bedroom-2nd-Floor-3rd-Floor-apartment-W0QQAdIdZ466893273
http://toronto.kijiji.ca/c-real-estate-apartments-condos-3-bedroom-3Br-unit-Bloor-Bathurst-W0QQAdIdZ458168736
http://toronto.kijiji.ca/c-real-estate-apartments-condos-3-bedroom-3-bedroom-main-floor-in-ANNEX-for-rent-W0QQAdIdZ460044020
We watch Aussies and they are watching us:
Canadian house prices fall for 6th straight month: Leith van Onselen
http://www.macrobusiness.com.au/2013/03/canadian-house-prices-fall-for-6th-straight-month/
Laura likely drives miles to line-up for gas at Costco and clips food coupons religiously. All in the name of down payment on that house.
#28 45north
“…if it declines by 10%, she’s broke. well that’s not true because broke means having no money, she will owe $700,000 with no prospect of repaying it.”
Some experts refer to that as simply ‘negative equity’. Sounds better then DEBT (that you OWE). No wonder so many get into trouble. I used to say, use the common sense God gave you, but I’ve learned not all of us got in that line up before we were born. Oy.
Toronto community housing is opening new 3 – 5 bedroom apartments downtown for about 1500 pm. The condos next door are at 650000. We got a three bedroom th on quiet street across from the AGO for 1300pm. So there are nice places that save you money and hassles. Keep looking
The smoking man from The X files was always cool.
I was really hoping that with today’s headline “Royal Jelly” you were going to skewer today’s stunning British budget bombshell that HRM’s Conservative government has decided to pump more than $0.15 trillion into reflating the domestic real estate.
No such luck.
Garth, duuuuude, not even a passing mention? Those nutty Brits are pumping up another real estate bubble, no?
Might Flaherty do the same thing tomorrow? Not bloody likely. But, one never knows in this whacky age.
The Man From Nantucket:
I am moving where I can afford it. I am not quite as picky as the Barbie princess this blog was written for. Besides, I travel for my job and most of the time I am in Waterloo and downtown T.O., so Milton is a nice halfway. Besides, the house is brand spanking new with stainless and potlights. No granite, but 2/3 ain’t bad. Heck, Mark Mcgwire had to go on ‘roids to get to the 1/3 point so I am not doing tooo bad.
“Barbie-ism” You crack me up, Garth!!!!
Hey Garth –
Calgary # 1 city in Canada, based on Money Sense.
Calgary > Toronto.
Gonna take it?
“Everyone reads smoking man posts.”
Heck , I do! And I get a huge kick out of them!
SM and Si from Duck Dynasty..HILARIOUS.
Good stuff. If we’re using TD numbers though, shouldn’t we use them for the balanced return as well? A 60/40 gives us a 5.7% return.
#38 SM,
you need your meds updated. Your Autism Spectrum Disorder is leading to delusions.
#36 Smoking Man on 03.20.13 at 8:57 pm
#27 NonSmokingMan on 03.20.13 at 8:39 pm
Accidently read SmokingMan’s comment. What a waste of 30 seconds!
……..
Sure sure…. Matrix servant…..
At leased you had enough smarts to use my great name as part of yours guaranteeing the dogs read you drivel.when they use the find function .
Everyone reads smoking man posts.
Smoking Man are you a recently landed immigrant? I find your command of the English language on par with some of the ESL students I come across. You really should try to improve your vernacular skills.
#34 Devore — some people can’t be saved. An acquaintance just announced that she’s become a mortgage broker — and she became one because she needed a higher paying job after her & hubby upgraded to a bigger, more expensive townhouse. Good luck.
#33- Brunette. Royal jelly is the enriched food that worker bees feed to select larvae to grow them into queen bees.
#38 Smoking Man: “Been saying that forever on here. ”
I generally don’t read your posts — only read that one because it had Devore’s name at the top, and I had just responded to his earlier post. Seeing your name is usually an automatic skip, and now I’m reminded why.
Great post.
A student’s father just bought a place in Richmond and asked me to help him go over the Strata documents and inspection report (his native language isn’t English so he wanted to be clear on things). An hour and a half later my head was splitting and I was wondering why on earth anyone would ever consider living in a Strata unit. You pretty much need written consent to breathe.
The inspection report was scary too, lots of notes re: water damage and getting more specialists in to look at cracks, etc.
Then a couple hours later some sort of mini typhoon hit Vancouver… haaaa, you’ve got to be crazy to buy here.
Alberta—–Now made up of more socialist pinkos from Sask and BC is now in shambles–Debt will haunt us forever and our free far right wing ways are gone, forever.
This is heart breaking news, our great premier King Ralph is gravely ill, it truly upsets me.
http://www.calgaryherald.com/news/News+Ralph+Klein+grave+condition+prompts+outpouring/8126639/story.html
Long live the king, long live the king!!
#29 waiting on 03.20.13 at 8:42 pm
It never fails to amaze me that people won’t crunch those numbers themselves.
————————
Exactly and it never fails to amaze me that even if you calculate it for them, they think it’s some sort of math voodoo!
Please folks, read the comments under the article, king Ralph represented Joe and Jane six pack, a common man in a common province. He is irreplaceable and Alberta will never be the same.
http://www.calgaryherald.com/news/News+Ralph+Klein+grave+condition+prompts+outpouring/8126639/story.html
Long live the king, long live the king!!
Hey Garth,
Any advice on the market in Grande Prairie? I don’t see many stats but there’s lots of new houses in the low 300’s and many sfh’s in the 200’s. Did this city experience a large correction or did it never really appreciate?
G prime. Just do you rent or own?
Buy your palace in cash?
Well, well, well…
http://www.telegraph.co.uk/finance/budget/9943167/Budget-2013-Millions-get-help-to-buy-new-homes-says-George-Osborne.html
Canadian economy model being exported?
#35 Brunette on 03.20.13 at 8:54 pm
BTW, I’m still reeling after Lululemon recalled my favorite pants. I should sell mine on craigslist for a profit!
====================================
I am part of RuRuRemons quality control /Dancing with the Stars panel.
I am lobbying for fishnet as the main material.
The coming storm:
http://www.theglobeandmail.com/news/british-columbia/vancouvers-vacancies-point-to-investors-not-residents/article10044403/
Garth, I totally think that she is a princess! She didn’t add any details, for example, why does she HAVE to have a 3 bedroom, 2 bathroom house on the subway line between ‘sketchy’ Lansdowne and Spadina. Does she have kids and if so, how many?
I don’t think this lady has ever taken the subway here in Toronto further west than Lansdowne, because she would see some amazing areas such as Bloor West Village by getting off at Runnymede and Jane, Royal York…etc. However, houses there are much more expensive, but renting is not!
My wife and I rent a beautiful, yet small apartment in the Bloor West Village area for $1100/month. We have a baby too, but are happy and content to save for the next 5 years if we have to and then purchase a house.
Our apartment is probably the same size as those boxes in the sky, but we are on a beautiful street with an amazing view, pay far less than even renting a condo and when we park our car, we park on the driveway, not in an underground parking lot, which takes 10 minutes to get to.
There are too many princesses in this world, I’m just glad that my wife is not one of them.
Just so you know Garth, the site that you linked to yesterday from the Whisperer has had the last two posts removed….
quoting from your yesterdays blog…”The leak started here and spread here and now it might as well be here.”
Your second “here” being this site – http://whispersfromtheedgeoftherainforest.blogspot.ca/
….shades of things to come in the RE blogosphere maybe?? Let us hope not.
I have a broken heart tonight. The King.
http://www2.macleans.ca/wp-content/uploads/2011/04/from-the-editor_wide.jpg
RE is to big to fail everywhere. Bail outs given out at drive thru, just get yourself a deep pile of debt.
http://www.telegraph.co.uk/finance/budget/9944172/Budget-2013-Hundreds-of-thousands-of-people-to-be-rescured-from-zombie-mortgages.html
Good luck to the Carney follow-up!
…why do they all want people to be in debt up to their years? Is this the end game to a blow up?
Another well written, concise and informative article. Mr. Turner calculates cost’s that most people don’t even know exist
Such as the cost of capital on $95,000 and the lost investment opportunity cost. These calculations probably never enter the average persons thought process when purchasing a home.
Thanks Mr. Turner
#12 Halifax Observer on 03.20.13 at 7:43 pm
An Alberta Realtor who is honest about the future of Real Estate? Who would have thought.
http://karriflatla.com/sell-your-home/if-you-need-to-sell-your-house-dont-wait/
Pretty entertaining too.
———————————————————-
I would say her reference to Lethbridge is inaccurate. It’s the smaller cities around the larger ones that suffer more. I know of one hood having listings coming online every week, and those don’t even include the houses that are in construction waiting to get the for sale sign out. Just like in California……
This one in Cali was $417K at its peak, and still no takers at even $149:
http://www.zillow.com/homedetails/4456-Brighton-Ct-Hemet-CA-92544/18041811_zpid/
In regards to yesterday’s post; “What F Knows” is that CMHC is already overexposed and he’s goddamned NOT going to let the bankster scum load more bad debt onto CMHC as we enter the teeth of this correction. Good for him. I’d like to see a big chunk of bad debt returned to the banksters after a little auditing of the fraudulent lending practices that spawned it. These scumbags are taking the cream and drowning Canadian taxpayer/bagholders in the dregs.
I love renting our townhouse and investing the rest. There are a few drawbacks though. We recently test drove the fully electric Nissan Leaf. We were just about to lease it but decided to wait one night on it. Turns out that we need to install a 240 volt charger for the car. Can’t do this in our rental because we have a communal underground garage. Renting can be frustrating but at least we’re not enslaved to the bank!
Laura is Italian.
None on 03.20.13 at 8:35 pm
Hopefully Laura will drop by the blog and thank you for doing that math for her.
I’m always amazed at how people will drop 3/4 of a million dollars and not sit down for 15 minutes to do the math. Absolutely amazing (and very, very sad).
Not the people homie, the banks with tax-payer guarantee – what a horseshit that is !!!!!!!!!!!!!!!!!!!!!!!
I will not pay any more taxes – f$$k it !!
Hot on the shiny heels of St. Patrick’s Day
tomorrow is Lepercon Day
Budget survival tip #1
-if after the reading of the budget you suddenly discover your back is against the wall…
You need a bigger house!
Is a realtor required to give out data and past histories on listings when requested by their client?
I smell a whiff of piff in the air. Checking with former co-workers the outlook a couple of quarters out is actually quite grim.
Cancelled, or put on “hold” capital projects, fleet expansions, and the usual & customary things of a business expansion within a recovery.
Somebody is full of Shirt-stiffener here… Where is all the good news based? Certainly not the mid-west of the USA?
Take some of those stock market gains off the table, before they evaporate, please. Oh, and don’t buy any big ticket items unless you have ample cash!
A public service announcement by an idiot
–
Is Royal Jelly a reference to Kate Middleton’s ‘bun in the oven’, aka a jelly wobble tester? “But I won’t go there. It’s probably illegal.” ‘Nuf said!
*
Today’s Wise Words from the KDC: “Things do not happen. Things are made to happen.” — John F. Kennedy. No one knows what tomorrow brings.
*
#11 Smoking Man — Yep, and see China (first link or two). They may be preparing to do the splits in ‘Nutcrackzyer Suite!”
*
Cyprus – NZ Like AIDS, it’s contagious; China’s first debt default Harbinger? Plus Suntech; China The dangers if China flatlines; EZone will be decided by Russia, so is this why Russia – US Prepping for war. The US may reinstate the draft? Congress making sequester cuts permanent; Turkish Cyprus on alert over money; Cyprus – Russia If the Russians leave, Greece and Turkey could go to war and kill the island completely; Spanish Safe located in mattress; Oz insolvencies Record number; eversal of Fortune Cyprus / Cypriots; Annoyed Hedge funds; How broke is Detroit? See for yourselves; Cycles; Mark Zuckerberg This is what disciple used to post about; Five to the pi of self Too old to figure it out; Argentina Inflation 26%, bring in gold; Retiremment Crisis is Here Butt biter.
*
United China and Russia; Groupthink and this. Clear reason why everyone should take the m$m with a pinch of salt; LuLuLuLuemons See-thrus pulled from shelves. Where has all the fun gone?! Hello boys! I was not included o this billboard, much to my disgust; Giant Brothel Loaded with good food and drink; The Great Train Robbery Ronald Biggs lets a two-fingered salute fly to the establishment; Prawn Katsup? Adam Lanza At least some are questioning it; Telekinesis Add to the list of new things; Rebirth Each will prove to themselves the reality of karma and rebirth, but only in the lower psychic regions, not the higher spiritual ones; Depop. agenda quickened; Billary Hacked emails re: Benghazi sent to RT; Medicare Pay cut for docs; FedEx, UPS packages The WH is schizophrenic paranoid; Fox Fair and balanced BS; Spying Warrantless GPS tracking; 20 Scary Food Fudgies It’s all synthetic; Big Brother The UK has only just realized this; GW First day of spring, and Please Freeze Me!
They talk about China’s empty ghost cities, I guess what’s happening in Vancouver should be expected when Real Estate becomes nothing more than a Casino. Toronto is probably much of the same, it just hasn’t been realized yet.
“Vancouver’s vacancies point to investors, not residents”
“Nearly a quarter of condos in Vancouver are empty or occupied by non-residents in some dense areas of downtown, a signal that investors play a significant role in the city’s housing market.
And the city overall has a much higher rate of empty apartments and houses than other Canadian cities, with a rate closer to places like New York and San Francisco at the height of their mortgage crisis in 2010.”
http://www.theglobeandmail.com/news/british-columbia/vancouvers-vacancies-point-to-investors-not-residents/article10044403/
Oh, more data leak
http://statscentre.rebgv.org/Service/s/uqJ-6Wd#.UUdxXzaAO7U.twitter
Anyone have avg & median?
“I know you have always written that renting is better, but I cannot find a [rental] which would be [less] money [per month] than a mortgage payment.”
“can’t justify moving to a $2,500/month rental unit when we could be paying a mortgage.”
Absolutely unbelievable.
Stunning.
Personally, I can’t justify renting a hotel room. That costs more per room per night than if I were to buy the hotel and make nightly payments for the rest of my life. I don’t want to throw my money away.
If you want hot nurse…..you must be patient.
Ah yes, royal problem. Moving stuff.
Mine is how to invest the cash I would otherwise use to purchase a luxury car – in cash.
I decided instead to take the 2% financing deal for 48 months from the dealer and invest the cash in a simple ETF portfolio (TFSA).
My current planned allocation is 50% preferreds, 25% corporate bonds, and 25% REITs – should kick 4% annually or better with relatively low risk.
Any thoughts from the readers on other (better) allocations to take advantage of the cheap financing? I could buy cash now, but when credit is cheap, why not invest instead and collect the spread?
So yes, serious problem this one – made worse by struggling to choose the exterior colour that best matches the gorgeous leather & wood-trimmed interior…
Ah, the tough, pitiable life of a renter!
Re: #3 tito on 03.20.13 at 7:25 pm
A better question would be how fall will stocks fall? With forward earnings estimates about a least double what will actually happen in the future stocks will fall minimum 50 percent. Present P/E ratios are already a total joke (in excess of 23 to 1) so more like a 70 percent fall from present values
@#19 Mithan
What if the RE market drops 15-25% in the next 5 years in Toronto?
—————————————————————
“What if”? More like “when” and then some.
[…] via Royal Jelly — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate. […]
#27- I agree.
#36- I see your name and pass right by as it is a waste of my time reading your crap.
#16 chickenlittle on assignment on 03.20.13 at 8:02 pm
I’m looking at renting a whole house in Milton for 1700. Cheap!!!!
……………………………………………………………………..
$1700 is not cheap. It is terribly expensive. You can live in Tokyo for $1700 rent…
royal jelly ts made by bees.it gives you energy when excersing.so headline should read, NEEDS ROYAL JELLY.
Thank you, Garth. Great post!
Young kids are getting brainwashed by everybody around… If bank tells you that you can afford $600,000 mortgage, it doesn’t really mean you can afford ALL THAT DEBT. It only means that you can afford first few payments until you need to go buy some groceries.
Yesterday NoDebt made a comment about setting priorities right. Good point. Put two high-earners in debt prison for 20+ years and the debt can be paid off. What about kids?… Wooden toys? Bread and water? What kind of life is it going to be?
Just reading this letter breaks my heart. People are absolutely clueless and naive about RE.
#26 The Man from Nantucket
Not to mention the plagues of locusts and rivers of blood.
#33 Brunette
If you finding the pics too hard to interpret maybe you should change you name to “Dumb Blonde”
#33 Brunette
Yeah I don’t get it either, an overweight person exercising , trying to get healthy. The pic is just mean. It’s very inappropriate .
Hey Garth, here’s an interesting article about how stats that are used everyday in the news, such as, “the average” price are misleading. Sure it’s from Cracked.com, but it’s a light read.
http://www.cracked.com/article_20318_the-5-most-popular-ways-statistics-are-used-to-lie-to-you.html
And speaking of jelly…..
http://www.youtube.com/watch?v=C1Zp7vfyew8
Why is this blog so addictive? Sure Garth’s text is pithy and colourful; sure Garth’s financial advice is excellent but there is more. Garth has tapped into the old movie genre from the thirties typified by the perils of Pauline. You know, the one where each episode ends with the damsel in distress tied to the railroad track or about to go over a waterfall. You have to wait a week to see the next episode to see how disaster is avoided.
The damsel in distress is of course the Canadian housing market. The perils are numerous and of course the plot unfolds over months and months. Unfortunately this particular drama will probably not end well.
Have a seat folks, cause this is about to become a royal pain in the a$$….
InvestmentNews added a warning from FINRA, the chief regulator of the brokerage industry: “Last month, the Financial Industry Regulatory Authority Inc. took the unusual step of issuing an investor alert about the vulnerability of bonds and bond funds.”
“Many economists believe that interest rates are not likely to get much lower and will eventually rise. If that is true, then outstanding bonds, particularly those with a low interest rate and high duration, may experience significant price drops as interest rates rise along the way.”
http://www.marketwatch.com/Story/story/print?guid=911B07CE-90C2-11E2-8A9D-002128040CF6
You think its tough to find rentals for a good price in that neighbourhood, try finding a house for that mythical 700k. Go ahead, log onto mls.ca and plug in Toronto C1 and have a little look. First of all there is nothing near the Spadina end (duh!). There are a handful of mediocre looking places between 700k and 750k, maybe the Duchess was hoping to lowball and get a “bargain”. Seriously, it’s depressing seeing how ugly these crap little houses are and realising someone is actually willing to part with 3/4 million bucks to “own” one. These houses should be selling for 400k max. And that’s after your currency crashes.
Laura may have seen the last 5 days on ABC,CBS,NBC the great real estate pusher Dean Graziosi. Everyone can make money with or without money. People just want to believe that there is some easy way to make money in a short period of time like 1 week. Dean says give him a week to make money on your first deal and you don’t have to wait 6 months to find out if it works.
Also, I keep seeing by at least 3 celebrities on U.S. television that a government insured reverse mortgage can give you tax-free cash and you can stay in your home as long as you live there. A loan is not income because you must pay it back with interest. If you get sick and must move to a nursing home the company will sell it to recoup it’s original money plus interest accrued over the years that is compounded.
I heard the fees are between $8,000 to $10,000 just to set it up. Even worse the fees are rolled in the reverse mortgage total and the balance grows with compound interest too until death or sale of the home. This could all be avoided for most people if they just didn’t put all their savings and income into a home that is too big to afford and maintain over their lives.
People have to wake up and start saving more,investing in assets that generate interest,dividends,capital gains and other income. I think that smart people close to or at retirement should have 3 to 4 times in financial assets versus their home’s value.Investments like bonds,strip bonds,dividend paying shares,GIC’s,MBS monthly pay,TFSA’s and small RRSP’s $100,000 or less only.This way they will not need to get a reverse mortgage and avoid being in debt like a large number of seniors today.
#74 yink
Smoking Man are you a recently landed immigrant? I find your command of the English language on par with some of the ESL students I come across. You really should try to improve your vernacular skills.
Nope born in Canada, grade 13 high school English 80s
Ever cross you mind, I go out oof my way to be sloppy
Rebellion and litigation interpretation, So far ahead of you fools you have no idea……
Never mind being priced out of the city, try the country.
http://www.theglobeandmail.com/life/home-and-garden/real-estate/some-vancouver-workers-have-been-priced-right-out-of-the-country/article8970952/
Did you hear that the Cyproit banks that were suppose to have opened last Tuesday, that was then postponed to open today, has now been postponed to open NEXT Tuesday?
Scary stuff.
Most of the cry baby’s on hear are, fence sitting non risk takers who since 2008 bet sitting on the fence waiting for Re to come crashing down
Well you bet wrong, but focus all your frustration at a SFH 416 bull.
You went against the trend, and lost. Learn from your mistake..
Today logic would dictate going long on the USA Greenback is insane as the printer is on 24/7 but the world herd likes it..
Lot of loot to be made off the energy of a running herd..
It doesn’t need to make sense.. Trend is your friend…
#119. “These houses should be selling for 400K”, don’t hold your breath waiting. Really. Subway walkable locations with shopping at the end of the street are not going to fall in price. The reason is scarcity. A generation ago every city had plenty of streets with stores at the end of each block and plentiful transit nearby. My childhood neighbourhood in Hamilton looked like that, now it’s a boarded up mess, no grocery stores, just like a whole lot of other places.
We have plenty of selection if you want a garage with a house stuck on the back but nothing if you want to experience the same life available to almost all city dwellers in 1955. In my town of Oakville the most expensive houses are “walking distance to downtown”.
I don’t think it’s being a princess to want this sort of lifestyle, the Emperor’s New Clothes thing is that so many people pretend that it’s not important. The biggest demand for these actually come from the kids who grew up in the suburbs and get a taste of a lifestyle that was denied to them by parents who moved to the strip mall wastelands “for the sake of the children”. If I was a kid I would rather grow up in Manhattan than in Milton.
#29 waiting on 03.20.13 at 8:42 pm
True. Kids in grade school could be taught to use a Business Analyst calculator using variables relevant to them. 10 seconds or less and your done crunching costs. I never leave home without one.
Has it ever occurred to these people that Toronto is a really expensive place to live. They’re willing to spend $700K for a crappy little house in the “heart” of the big smoke. But they’re not willing to inconvenience themselves by moving to the suburbs where houses and rents are 1/2 that price. You can take the GO Train in from Barrie. And no, I checked, you don’t need to purchase your own personal train. Just get a ticket and a good alarm clock.
#69 Chickenlittle
I kid.
I’ve lived lots of places in the GTA, from the core to the edge of the ~45km ring around 416.
If Milton gives you what you need, fantastic.
#44 blase on 03.20.13 at 9:13 pm
Thanks so much for sharing this. Best coffee break I’ve spent in decades.
#48 Realtor # 1 on 03.20.13 at 9:18 pm
Oh, right. The RE industry will absorb all of the job losses and restore the economy to its original lustre through increased indebtedness.
Double bottom usd/cad jobs report out at 8:30 I’m betting huge that frankenstats say big job gains…. Truth logic not in play.
Picture: Scared Princess = Royal Jelly (legs).
Got this in my email from a you-know-who:
“Canada is one of the best countries in the world for home ownership. We are now clearly the fastest growing nation in the G8 regarding immigration as recently reported in the Globe and Mail. Canada is setting its sights on an annual immigration of 400,000 people by 2016 up from the current 320,000.
The demand for home ownership across all provinces will be significant for decades. As Canadians we can feel confident that our home will continue to be a place where we raise our families, have our dreams come true and remain a cornerstone of our life long financial wellbeing, despite what the media would like us to believe.
The U.S. economy is showing signs of consistent growth with housing starts and new jobs leading the charge. This of course bodes well for us and is particularly welcome news for our manufacturing and resource sectors.
So the economy on both sides of the border looks promising, immigration will continue to add to the growth of Canada and interest rates are historically low. Regardless of what some might want us to think Canada is Still the Best Place to Own a Home!
If you know anyone who is looking to buy a home, it’s important that they get pre-approved today! The spring market is fast approaching and there is evidence everywhere of a pent up demand. Having that pre-approved mortgage in hand can give someone the advantage over other buyers. “
A rental apartment for $2500 per month is not a fair comparison to the cost of buying a house. the property type is not the same. if the budget is $2500 per month, thats good enough to but a decent apartment, on the flip side $3500 per month is a more realistic cost to renting that 3 bedroom home, the price gap to rent vs buying the exact same property is really not the far apart.
Your work is not yet done here, Garth –
http://fullcomment.nationalpost.com/2013/03/20/andrew-coyne-jim-flaherty-adds-150b-to-national-mortgage-then-lectures-on-evils-of-too-much-debt/
I rent a great old bungalow just a few subway stops west at Royal York. $1800/mo and my rent hasn’t gone up in 3 years.
Yep, renting is for losers.
Ottawa Citizen editorial: Mortgage meddling: While we can sympathize with Flaherty’s desire to slow housing prices and rising household debt levels, his tactic this week was meddlesome and undermines the rule of law and the role of Parliament.
http://www.ottawacitizen.com/opinion/editorials/Editorial+Mortgage+meddling/8127963/story.html
well it’s not as if the Ottawa Citizen doesn’t know about the role of CMHC. here’s Andrew Coyne who’s column appears in the same day:
The whole system of mortgage insurance, as administered by the Canada Mortgage and Housing Corp., is riddled with implicit subsidies that encourage excessive risk
http://www.ottawacitizen.com/news/national/this+talk+about+household+debt+little+galling/8128677/story.html
well Andrew you are getting close to the truth. How about this “The whole system of housing in Canada, from the owners, to the builders, to the banks, to the real estate agents and to the newspapers that advertise real estate is underwritten by CMHC. This whole system has pushed up prices and is the source of excessive risk.”
RE: Maxx
No kidding eh? What a breath of fresh air. It’s amazing when you see someone actually speaking truth to power. It’s such a rarity these days.
I agree with Garth, too many people think rent and mortgage payments are the “same”. Just because say your mortgage is lower than rent it doesn’t mean you should buy. It is two different things. But too many people say go buy because renting is more expensive – but they don’t factor closing/housing cost and the fact they have leveraged up.
Up huge…….
The whole point of my rant today is, showing by example. That yes the world is fd, people lie scam and cheat… But to sit in stands everyday batching and complaining is a mugs game.
If your money’s scared go with garth nice and boringly safe. If your young not much to lose take big ass risks.. Time is on your side.
But don’t trade forex, I have amazing powers of observation, I have deep in sites to the market, bloomberg terminal, I know when the machine is living and telling the truth… I’m only at the 60/40
Chirp away leaf fans……
Camel toe extra?
#48 Realtor #1
” They don’t care that 4 years later their home was 25% cheaper…”
Your argument would be terrific…if this was 1965.
But in this millenium, people never stay in a job for life. They change jobs, lose jobs, and have to move to another city for jobs.
What happens if I lose my job in four years, and can’t afford the payments on my now 25% discounted house? I have to sell my house, AND come up with a big check to the bank for the loss in equity.
And as for prices always going up, what you really know (or should know) is that in the long term, houses always go up at about the rate of inflation. Because house price increases in Canada have far exceeded inflation for far too many years, they are guaranteed to return down to the the inflation curve. At this point it’s only a question of how fast and for how long.
We won’t be the first country to see prices fall for a long time.
The USA had it’s boom and then house prices went into the dumper over six years ago, and still have not recovered. I wonder, with their still shakey economy, how many Americans have lost their jobs and houses over the last six years?
Boom and bust has happened in Ireland and Spain too.
In Japan, the housing crash started in 1991, and they STILL have not even come close to recovering to 1991 prices. That’s 22 years. Imagine paying your huge mortgage over 22 years, knowing that your house is worth a fraction of what you are paying for. Knowing that you can’t sell your house voluntarily, because your house will sell for far less than your mortgage balance. I have the feeling that antidepressant sales in Japan are booming.
And now in Canada, we are finally number 1.
(Just like you, Realtor #1!)
According to the The Economist magazine, Canada now has the most over priced real estate in the world.
Advice for those considering buying their first house:
Buy shares of Eli Lilly instead.
They make Prozac, the best selling antidepressant in the world. You’ll feel much better in four years.
This is a stunning statistic: There are so many investor-speculator-purchased condo units sitting vacant and un-tenanted in Downtown Vancouver that it is equivalent to 35 towers 20 floors apiece just sitting empty. You can visualize that in your mind! Vancouver is being hollowed out!
http://www.theglobeandmail.com/news/british-columbia/vancouvers-vacancies-point-to-investors-not-residents/article10044403/
F adds 150 billion in new debt to the national debt for the next generation of taxpayers to hoist…….EI numbers are being manipulated ….and Dalton McGuinty moves to impose his ideology on future generations by appointing judges before he leaves office…….and anyone thinks Canada won’t end up like Cyprus? Its only a matter of time.
http://business.financialpost.com/2013/03/21/eurozone-admits-being-in-a-mess-over-cyprus-in-call-sets-monday-deadline-for-bailout-deal/
Time for the RE agents to downgrade to KiA’s now. Suckers, no more undeserved BMW’s for you. I wonder what your next career choice would be with a resume full of lies. Target is hiring.
To the Rambling man. Don’t you ever get tired of blowing smoke. You should hear yourselv. Go two facebook. Air your thoughts their.
Who wants others to be smater?!
“It’s not your spending that’s the problem, it’s your income” – Churchill
Well it seems the bidding war that was happening on Sunday night was a con. It turns out only one bid came in and at $20,000 less then their $500,000 asking price that was supposed to generate a feeding frenzy. The landlord even phone to give us a heads up to start packing our bags. Needless to say we are back to the showings and all that goes along with it. My wife does realize now is not the time to buy but how much more can we take. Yesterday we looked at another rental. A HUGE 5400sq ft home, about 4years old and asking $3000 per month. We have a well trained family member so that may be a draw back.
Tomorrow is my wifes 50th and I have yet to get her a gift. (she has everything, BMW,trips,dog,and she doesn’t want anymore jewellery as she says she has to much already). So I asked her what she wanted and here reply was a house and peace and quiet. Well she is not getting either as her surprise party is Saturday. (My secret should be safe because she doesn’t read this blog).I will let you know if I am still married after Sunday.
Garth, many people with kids need to be a “minimum” distance to certain stops because they have daycare spaces that open at certain times leaving only minimal time to get to work on time.
It sounds like this person is working their location to their schedule and around their daycare space availability, some of which can take years to obtain.
In simple economics one locates the business or the labour in the optimum place on the triangle between the market, the resource and the factory. sounds like this is what she is doing. I know, I’ve been there, where the only available daycare spot dictated the neighbourhoods we could live in and still get to work on time.
Hey Garth,
What do you think about Alberta? It’s been quoted as the Lone Shining Star by TD.
http://www.huffingtonpost.ca/2013/02/27/calgary-real-estate-housing-mls-growth_n_2776008.html
I have an analogy, hope ~~o=== Man doesn’t say I’m plagiarizing. People in TO buy RE like they drive in a winter storm. While most drivers who are aware of their surroundings drive with caution, there’s always the odd erratic moron speeding because he can, driving in a for bye for (Smoking Man jargon). A few kms down the road you see this idiot derailed in the ditch. Moral of the story, if you’re in a hurry to buy a house these days, you’ll end up in a ditch soon after. Speed with caution these days, you might slide.
There he is. Striker, you’re coming in too fast!
I know, I know!
He knows, he knows.
Over & Out
Budget 2013: George Osborne pins hopes on housing boom…Taxpayers will underwrite the mortgages of hundreds of thousands of home buyers and take stakes in newly built houses in a £15.5 billion attempt to stimulate the struggling economy, George Osborne has announced
http://www.telegraph.co.uk/finance/budget/9944688/Budget-2013-George-Osborne-pins-hopes-on-housing-boom.html
A comment following the article about the scheme:
Michaelbarningham–Today 05:58 AM
Fix the economy with, wait for it,- another housing boom? This individual cites history as his university justification. Clearly, his area of expertise must be Greek mythology (ancient and modern), recent British history, obviously played no part whatsoever in the curriculum of his education. But lets move away from the sound bites of budget day, and look at the substance.
I have worked overseas in design and construction for the last thirty six years, and right now, a building boom (followed by bust), is the last thing the UK needs.
So, lets take a long term look at who will this ‘panacea for all ills,’ benefit?
Where are these houses going to be built? With a massive employment imbalance, I do not see developers exactly rushing to the North of England to build all over Ilkley Moor. Now unrestricted, they are going to develop where the land costs are lowest, and the sale price is highest, for maximum return. The removal of planning regulations will mean even less agricultural land and fewer leafy lanes in an already congested South East. They also seem to have a suicidal penchant for flood plains of rivers. The clue is in the words flood plain.
Where and when are the utilities, basic infrastructure, and services going to be expanded to accommodate this proposed housing expansion? When I construct overseas, the first things to go in are the utilities and basic infrastructure, foreign governments insist on this. In Britain, the practice has been, and continues to be, construct and sell the ‘fast buck’ houses first, (to guarantee lobbyists, sorry I mean developers, their cash), and wait and see what impact they have on the existing services and infrastructure. Then do a band aid job to attempt (and fail) to cope with the congestion and pass the true costs on to the existing ratepayers. The only thing that will ever actually get done will be the expansion of the numbers employed in local councils, (to cope with diversity). The ridiculous ‘energy,’ transportation, and flood protection policies, engaged in by your equally ridiculous numbers of Quango’s, make you practically unique in the developed world.
Who is going to build them? I have noticed on visits to the UK, that many of the few current construction jobs, are not even advertised in Britain, and if you care to walk past the fenced in areas of current construction sites, you will find that even many of the security personnel are not British. Where I work governments insist through visa quota, that only locals are employed. With removal of your borders, the whole of Eastern Europe is now local. Thank you Mr. Blair. The Developers are large consortiums with CEO’s who are responsible to their shareholders, asking those amongst them who are still British, to put country before company, would be like asking turkeys to vote for Christmas. (Am I still allowed to say Christmas in Britain)? They hire and pay through agencies, not even based in the UK . Current experience shows that there will be very little employment boost for local building firms, so, much of the capital of any employment in this area, is going to go overseas, both directly in agency pay, and indirectly through generous British welfare benefits. They even bring their own shops and busses with them, the trickle down effect to existing local economies will be minimal.
Who is going to buy them? Young couples on minimum wage? A Tsunami of EU immigrants? Who knows?
Who is going to ‘lend’ the money? Why. – the banks, from money you paid to them, to bail them out of their last visit to the casino.. Oh what a surprise.
Who is going to guarantee payment over the twenty something years of a mortgage agreement? Young couples on minimum wage? A Tsunami of EU immigrants? Banks with prudent lending policies? A LibCon government of a bankrupt country, with two years left to run? Well, that just leaves you, – and your children.
Surely, you are not surprised are you?
Fix the economy? They can’t even fix their expenses without getting their
their fingers caught in the till.
———
I don’t have an answer to today’s financial dilemma. I can’t even find a place where I’d get a 7% ROI. The good news is that if the real estate market died, I’d surely get 50% of the value of our house which we built ourselves from being a hole in the ground. However, we’re too old to build another one and we’d be in dire straights finding a place to live based on our very small fixed income. Sorry for posting a long article, but believe it contained valuable information (however, absolutely NO solutions!)
LOL, in one of the posted articles I saw an ad for a TREB website called homefindsyou.ca. In Soviet Russia…
Anyway, Laura is further proof of the same point I’ve been whining on about. A significant fraction (maybe majority?) of people are irresponsible idiots. If the policies allow it, they will use cheap credit to price out prudent people. We need policies that make mortgages available without allowing the idiots to become debt slaves.
I think Calgary and Edmonton house prices will rise close to Toronto prices.Vancouver prices reflect a supply and demand for what people can afford ie many high income earners in the city.
March 21, 2013 — The City of Toronto’s Executive Committee has approved a motion that takes City Hall one step closer to beginning a phase-out of the Toronto Land Transfer Tax.
Specifically, the Executive Committee directed City officials to report back, in July, with a plan to start reducing the Land Transfer Tax by 10 percent.
#68 The Patient
That’s not enough money to pump anything. Just political theater to make the politicians be seen as “doing something about it” before election season begins. These kinds of buyer subsidies we have seen in the US, and locally in Canada, and they don’t accomplish much of anything.
Today, Canada is about to get F’d up. LET THE ELFIN DIETY SPEAK!!!
Laura have a longshot for you if your looking for a change, but you will have to compromise for a two bedroom highrise apartment to park for a few years.
The location is less than a 5 minute walk to the subway station, metro grocery store, and shoppers drugmart; not to mention so much more.
Ok, the market for a 1 bedroom is $1,230 which includes all except hydro, and if you have a car the underground parking is $100, so do the math. I bet if a two bedroom is available with parking the total cost will come in about $1700 a month depending on unknown factors.
Laura if I read you correctly busting out is really to buy a home, as why not stay where you are? Perhaps you don’t own a car, or are you house horny? In any case you might want to check out 10 Walmer Road for a new lifestyle experience and enjoy exploring the area for the next few years, as change is always good.
How much did manulife get from that special facility 3b?
..arms length /spirit laws need a stick since the art of persuasion and shaming lists failed.
… the OECD is funded by taxpayer contributions from developed countries…
http://www.leftfootforward.org/2013/03/taxpayers-money-being-used-to-fund-tax-avoidance-schemes/
#141 Smoking Man on 03.21.13 at 9:45 am
Up huge…….
“Time is on your side. But don’t trade forex, I have amazing powers of observation”
An argument from authority?
The basic structure of such arguments is as follows: Professor X believes A, Professor X speaks from authority, therefore A is true. Often this argument is implied by emphasizing the many years of experience, or the formal degrees held by the individual making a specific claim. The converse of this argument is sometimes used, that someone does not possess authority, and therefore their claims must be false. This may also be considered an ad-hominen logical fallacy.
In practice this can be a complex logical fallacy to deal with. It is legitimate to consider the training and experience of an individual when examining their assessment of a particular claim. Also, a consensus of scientific opinion does carry some legitimate authority. But it is still possible for highly educated individuals, and a broad consensus to be wrong – speaking from authority does not make a claim true.
This logical fallacy crops up in more subtle ways also. For example, UFO proponents have argued that UFO sightings by airline pilots should be given special weight because pilots are trained observers, are reliable characters, and are trained not to panic in emergencies. In essence, they are arguing that we should trust the pilot’s authority as an eyewitness.
There are many subtypes of the argument from authority, essentially referring to the implied source of authority. A common example is the argument ad populum – a belief must be true because it is popular, essentially assuming the authority of the masses. Another example is the argument from antiquity – a belief has been around for a long time and therefore must be true. However, I digress Smoking Man please continue with your amazing powers of observation. Best of luck in the Forex venue you may require more than your amazing powers as even Superman was vulnerable to Kryptonite!.
That is the same advice I gave my buddies in Vancouver a few years ago. He couldn’t decide on $3000 rent vs $2800 mortgage. After I factor in all the cost, his wife got angry :-)
#132 FarFlung
The “narrative” is Teranet trails by months. Fact. No one is saying they’re wrong.
You enjoy setting strawmen on fire?
I just took a look at this Vanier Institute Report on Canadian Family Finances. http://www.vanierinstitute.ca/modules/news/newsitem.php?ItemId=421#.UUsq4uL4Bj
It paints a grim picture for future home prices and retirement by 65. The big problem is the amount of income required for housing and that real estate has accounted for nearly all the net worth increase for the average Canadian since 2000. A lot of boomers are going to need handouts after they hit 70 – dementia is going to be a huge problem.
In my opinion, the easy money has been made in the US real estate market. From what I can tell, the plan to buy a house, renovate and rent has crested. The US speculators are facing marginal net returns from renting so it is approaching time to sell. When the hedge funds spin out their US rental properties as public investment vehicles, you will know the game is over for rising US RE prices and making money on rent. http://seekingalpha.com/article/1286861-housing-misguided-optimism-continues-unabated
#127 Mr. Frugal – take the GO Train from Barrie –
I am not sure if you are a current rider, but I would like to enlighten those who think it’s the better way (it obviously does have it’s perks).
A monthly pass costs $387
1hr 40 minutes ride per way (+3hrs per day)
5 trains per day – 1st train leaving each morning is 5:20am – last train returning from Union arrives at 7:50pm
Numerous delays due to weather, switching problems, ice jamming doorway, and if you get a jumper – count on at least a 4hour delay (3 people have taken their lives in the past 6 months).
And the most important one – hopefully the person sitting beside you doesn’t talk loud, snore, smell, or x-large that they edge over on your side –
But driving has it’s own issues too!!
Garth,
It might be an overly simplistic solution, but why don’t they just abolish the CMHC, or at least cap the mortgage guarantees? (to say $500k) With banks actually taking risk on their b/s, rates should go up for those loans with high LTV (like it happens in the real world), limiting borrowers from taking on too much debt, and likely normalize house prices with the removal of the funds flow.
Here is the intrinsic problem with renting a home from a landlord, as there is the basic rent, but the utility costs in most cases are passed unto the renter to pay, as will be not his or her problem. This additional cost must be factored into the equation to calculate the total cost of renting a home.
#167 Vinny on 03.21.13 at 12:36 pm
_______________________________
Vinny, and everyone else ‘mad’ at CMHC and the banks regarding mortgage risk,
The banks will not take on the risk as it is specifically against their raison d’etre, so without governement backing all the risk goes on borrowers in the form of interest rate and terms. Without CMHC (or equivalent) then the mortgage market would be much different. Yes there would be the potentially positive side that people would be less able to over-extend themselves; however, the determined ‘fools’ among us will simply sign up for the higher interest rates that would then be available on the market. Probably also in collateral loan structures that screw the borrowers even more. Besides, we are already headed into a period of time where prices will ease, and the housing industry will be slowed, thereby impacting the whole economy. More rule changes are not likely to be helpful.
The point is, you get the good and the bad with CMHC backed loans, and you get a different flavour of good and bad without them. Most of the ‘arguments’ presented here only look at 1/2 of the situation. Garth’s approach makes sense: Teach people what fools they have been, and save many from similar fate in the process!
I am watching this Cyprus scenerio carefully as have a few dollars in play, and here is my take. Europe has said do what we want or all bets are off, as if you go down we could care less. Cyprus has gone to Russia for a bailout, and they are not forthcoming, and what are we talking about here like $15 billion? This is a drop in the bucket for Europe or Russia.
Here is the problem. If a bailout occurs there will be a run on the banks, and the total deposit money is not there, so $15 billion is gone in a NY minute, and nothing left anymore for the real balance. I believe the Russians know this, and when the time is right will step in as a central bank to take over for the good of Cyprus to hoop the gas fields; kick out the British military, and establish their own naval base of operation; it is called a Geo Political Coup.
A close up view (for any who haven’t found the site already) of the carnage on the left coast…
http://vancouverpricedrop.wordpress.com/
* Popcorn highly recommended… but save a little for Fs ‘big shoe’ later!
* Check out the investment property income lies the (desperate) agents are now foisting on the public
It’s obvious. She’s gonna buy, and regret.
Some people just cannot resist the urge to destroy themselves nesting.
#100 Nostradamus Le Mad Vlad on 03.20.13 at 11:52 pm
–
Is Royal Jelly a reference to Kate Middleton’s ‘bun in the oven’, aka a jelly wobble tester? “But I won’t go there. It’s probably illegal.” ‘Nuf said!
*
Today’s Wise Words from the KDC: “Things do not happen. Things are made to happen.” — John F. Kennedy. No one knows what tomorrow brings.
*
#11 Smoking Man — Yep, and see China (first link or two). They may be preparing to do the splits in ‘Nutcrackzyer Suite!”
*
Cyprus – NZ Like AIDS, it’s contagious; China’s first debt default Harbinger? Plus Suntech; China The dangers if China flatlines; EZone will be decided by Russia,
http://wallstreetpit.com/99238-chinas-first-debt-default-harbinger-of-end-of-credit-bubble/
So let me get this straight, If China starts to default on their loans then, the US and Europe will suffer, If the US and Europe suffer then they can not help the Cypriots, if the Cypriots do not tax the banks then the Russians are happy, if the Cypriots do tax the banks then the Russians are going to suffer, if the Russians suffer, then they are going to make the Germans and the rest of Europe suffer, if the rest of Europe suffers then the US will suffer, so then if the US suffers they can not purchase any cheap Chinese goods, so then the Chinese suffer and defaults on more loans, so then the US and Europe suffer more,,,,,,,,Oh I get it now were all fu*^ed, OK got it! Thanks for the link Vlad!
#162 Holy Crap – Smoking Man knows the play I made but didn’t have the rocks for it all, and love to see CND up and EURO down, as am in the money bigtime with USD/EURO to sell the EURO short with a factor. There is nothing guaranteed in life, so might close out my contract tonight to take some cash off the table.
#165 Westcdn on 03.21.13 at 12:28 pm
I just took a look at this Vanier Institute Report on Canadian Family Finances. http://www.vanierinstitute.ca/modules/news/newsitem.php?ItemId=421#.UUsq4uL4Bj
It paints a grim picture for future home prices and retirement by 65. The big problem is the amount of income required for housing and that real estate has accounted for nearly all the net worth increase for the average Canadian since 2000. A lot of boomers are going to need handouts after they hit 70 – dementia is going to be a huge problem.
There is a hot line for this issue!
http://www.youmail.com/community/greeting/monty_python_alzheimer_answering_machine?vp=full
I just notice, their is less people on this blog, screaming: houses always go up in value.
The issue of ” rent ” versus ” buy “.
Like Garth promotes stay liquid. I would say to include expeditious mobility, perhaps nomad.
Times are too uncertain….like living near a rumbling volcano.
Renting is the new owning. Have wings, not an anchor.
Bernanke States Cyprus Style Depositor Haircuts Possible in US if Events in Europe Become Contagious,
http://www.abovetopsecret.com/forum/thread934774/pg1
Here we go… at yesterday’s FOMC press conference Ben Bernanke stated that Cyprus style “haircuts” are possible here in the US.
In other words… “Yes, we can and will steal money from people’s bank accounts here in America if we need to.” This certainly isn’t surprising to me, but I have to question his motive in saying this. Just the other day the Obama Admin stated that such a thing isn’t a possibility here in the US, but the one man with access to EVERYONE’S bank account says that it is. I believe that Bernanke said this to see if anyone out here in the land of “Real Housewives” is paying attention. I would bet that they are not.
… the fools of the universe theme song
“deteriorata.”
http://www.youtube.com/watch?v=Ey6ugTmCYMk
Glad that readers are picking up on that G&M article about specuvestors in Vancouver. Now that these big fish are hooked, it’s time to jack the taxes on these vacant properties. Vacancies only, though: properties with signed leases filed with the tenancy office would be taxed at the normal residential rates.
Taxing empty housing stock would reduce the burden placed on the small businesses and merchants that recently saw double-digit tax hikes in the city of Vancouver, either by increasing revenues, or encouraging occupancy to patronize local businesses.
Such a tax might help address homelessness in Vancouver, by encouraging more rentals, lowering rents and encouraging higher income renters to vacate entry level housing.
Of course it might never come to pass. Vancouver’s property taxes are collected by the province, which relieves city politicians from having to be creative or resourceful when it comes to sources of revenue, and the provincial bureaucracy isn’t concerned with local policies on homelessness.
It’s always somebody else’s problem.
Chicago teachers get notice of school closings
http://news.yahoo.com/chicago-teachers-notice-school-closings-135826568.html
CHICAGO (AP) — Chicago teachers, students and parents began learning Thursday whether their schools are among those the city plans to close as part of a cost-cutting plan that opponents say will disproportionately affect minority children.
Chicago Public Schools, the nation’s third-largest school district, hasn’t said how many schools or students will be affected.
Administrators identified up to 129 schools that could be shuttered, although the total number is expected to fall short of that number.
The district says many of those schools don’t serve enough students to justify remaining open, and that the closures will help it deal with a $1 billion budget shortfall and better allocate its resources to students.
The pending closures have been the subject of highly charged community meetings all over the city. Critics say that, among other things, the closures will threaten the safety of students who may have to cross gang boundaries if their schools are closed and that they will cause major inconveniences for families.
Chicago is among several major U.S. cities, including Philadelphia, Washington and Detroit, among others, to use mass school closures to reduce costs and offset declining enrollment.
Should we be worried about this whole Cyprus stuff? Don’t want to lose my shirtt
#168 Old Man,
and who do you suppose pays the utility costs of an owned home?
I sold my property two years ago , started renting . but this is really really back experience ( economically it may sound workable , with balanced portfolio etc . bala bla..) But , I keep paying the mortgage for the landlord and he kicked me out after one year lease , sold his house because he is getting $50K profit. now moving on to another house , if he gets a better price he will sell it too. I am uprooting my kids from school to school and having all my family suffer ….. bottom line : DO NOT SELL YOUR PRIMARY RESIDENCE if you can afford. Period.
“Just rent and wait” is easy advice to give, but if it’s a house you’re renting, rather than an apartment, take a moment to consider the kind of person you will likely be renting from. That means someone who thinks it’s a good idea to hold onto a house and rent it out.
Canadian rents are very cheap right now compared to purchases. (The Economist’s figures estimated that our house prices are 71% too high compared to the traditional ratio of house price to rental.) That means that anyone who has purchased a house with the idea of renting is probably a deluded idiot – otherwise, they’d consider the falling market and bad capitalization rate and find a way to unload their white elephant house onto a bigger idiot.
I recently offered to rent a good sized Oakville house. Lovely location, but cheaply done “luxury upgrades”. It hasn’t sold at close to a million (shocker). It’s been empty for many months. The rent on a one-year lease was around $3300 a month. Will you take $3000? “No! Not a penny less!” I asked about a two year lease (after all, it might take the market a while to fall, and I don’t want to move twice). The owner says that will cost $3700 a month, because “it means I can’t sell list for two years”. (Wrong, actually – you can list a property with a lease – the lease goes with the sale). His lease required a key deposit (illegal) and postdated cheques (also illegal). With 60 days notice, the lease gave the tenant the right to continue the lease month to month (but this is automatic in Ontario, even without notice). All in all, the owner seemed to have no clue about the rights of a tenant in Ontario.
As house prices fall, these are the kinds of landlords a house renter must deal with – would-be property flippers who couldn’t sell and imagine they are waiting out the current slump. When prices fall further, they will resent their tenants for not covering their equity losses, and plead poverty when maintenance is needed. (A friend is renting a 1.5 million dollar east Oakville home, and has had crazy maintenance problems from day one.) These landlords are the kinds of people banks eventually foreclose on – and foreclosure is one thing that will end a residential lease.
Garth’s advice on this blog has been consistently excellent. If you can deal with the hassle, sit tight, rent and wait. But after sampling some of the landlords I’d have to deal with if I rented a house, I’ve ended up buying a modest home (with cash). I got a very good price, but unless yearly house prices declines are under 5%, I think I will still lose money this way, compared to renting and investing. I’m paying the extra to avoid the hassle and risk of dealing with idiot landlords. The only idiot I’ll have to deal with is me.
Am currently listing to Mike Rivero on RBN:
He’s pretty good at deciphering global and domestic events.
Pretty packed show, which I will try to link to archives later.
He is still on..click on the link then onto the link on upper RHS
http://www.republicbroadcasting.org/
====================================
ALSO:
Live streaming from Cyprus
http://www.cybc.com.cy/en/index.php/tv?id=91
#150 – This is my story.
”I will let you know if I am still married after Sunday.”
First thought that came to my head. I wonder how many marriages fail because of this lust for real estate.
two faced language
http://www.sueddeutsche.de/wirtschaft/deutsche-milliardaere-in-steueroase-porsche-pich-und-quandt-in-panama-1.1628885
Germany’s offshore money and the hacker who helped expose it
By Tim Fernholz — March 21, 2013
http://qz.com/65290/germanys-offshore-money-and-the-hacker-who-helped-expose-it/
http://ohuiginn.net/panama/
…search by the name of the company. If you want to find somebody who is dodging tax or doing something else dubious, you really need to search by director’s name.
This tool fixes that problem. I’ve scraped all 600,000 company records, going back 30 years, and indexed by directors.
http://ohuiginn.net/wp/?p=205
http://www.investigativedashboard.org/2011/03/how-to-fish-for-people-in-panama/
Everyone seems to be taking a shot at Smoking Man today.
In his defence, I don’t equate literacy with brains/drive/accomplishment. Some of the smartest cookies I’ve ever known figured out how to cut the system completely and then USED the system without buying back into it.
This is what he’s getting at when he says he’s not a member of herd.
I can think of many great writers who couldn’t spell/write worth beans … or did so deliberately to emphasize their meaning as opposed to the pretty packaging. What they were saying was so profound that they will be remembered long after the rest of us are dust.
Granted, I sometimes feel like I’m mumbling my way through Finnegan’s Wake when I read through SM posts, trying to pick out the sense of what he’s saying … but what he does say is often wisdom.
I can spin-doctor language with the best of them, but when it comes to money I am a self-admitted financial illiterate. SM is not.
With respect, I think it’s not so much drinking the Kool-Aid as just forming expectations based on past experiences. Really, for the past 10+ years there has been very little downside to do just as Laura is proposing to do. When house prices were escalating 10+% per year, it’s the cautious, careful folk who were the fools. (I count myself as one of them!)
Sure, the Tsunami is coming, but Laura doesn’t see that. If anyone she knows has been burned by real estate, she probably doesn’t know about it, (few people talk about those things openly – setbacks are always spun as something positive, like, “rightsizing”) but I bet she knows many, many women with beautiful homes, (albeit with huge mortgages) who gloat about how wise it was to buy when they did.
#189 blok existentialist on 03.21.13 at 3:46 pm
Everyone seems to be taking a shot at Smoking Man today.
====================================
Yeah can you please ask him to stand still ? We keep missing and run out of ammo soon.
#167 Vinny – there is a funny trend happening outside of CMHC that worries me…it’s older people taking on debt for their dream house. These would not be CMHC deals. They might look like this – A couple in their late 50’s, early 60’s buying their dream house for say $1million. They have $500,000 to put down (so no CMHC) and borrow on 25 year amortization to make it work. Their current income can support the payments, but they will no doubt retire well before the loan is paid. The bank should turn it down based on the lack of ability to pay through the entire term but if they did, they would get slapped with an age descrimination suit. From a risk point of view, it is not an imprudent deal for the bank because 50% down is low risk, and the short term payment proospects are good. There is a lot of this going on with no way to stop this stupid borrowing. Can’t point to the banks or CMHC – just the dumb borrowers. I don’t know how you fix stupid.
Imao as with F’s new budget to balance such with a surplus in 2015 he is living in denial, as dah he has not discounted the mess that will occur with the Real Estate industry which amounts to a huge amount of economic activity, as such will melt down the GDP, and unemployment will rise with entitlements kicking in to drain the system. F lives in a dream world and must resign.
The rent vs. buy thing for SFHs in Toronto is not straightforward. If you do a rough “draw an area” look on realtor.ca to select almost all of Toronto proper (even going up to the 401, Etobicoke, as far East as Victoria Park), there are a grand total of 47 SFHs for rent under $3k / month, with at least three bedrooms. Set that price to “unlimited” (no option to choose anything in between unlimited and $3k) and there are 130.
The budget of $2,500 / month for a decent SFH in a central area is just not realistic. In nicer neighbourhoods, it is more like $3,500 – $4,000 / month. In really good neighbourhoods, more like $6k / month.
If you’re willing to live in an apartment rather than a house, the choice is obviously much broader, but it’s just not realistic to suggest that renting a house in Toronto is as cheap as Garth often claims.
#144 Q on 03.21.13 at 9:54 am
This is a stunning statistic: There are so many investor-speculator-purchased condo units sitting vacant and un-tenanted in Downtown Vancouver that it is equivalent to 35 towers 20 floors apiece just sitting empty. You can visualize that in your mind! Vancouver is being hollowed out!
http://www.theglobeandmail.com/news/british-columbia/vancouvers-vacancies-point-to-investors-not-residents/article10044403/
.———————————————————
Not suprising, all you have to do it look at the skyline at night and see the lights are turned off in most of them, meaning there is no one actually living there. There is something about Chineese and ghost cities.
The worst part about the Cypriot Bank mess is that the ‘friends’ of the bank were warned before the event, and BILLIONS left the island.
New Zealand has admitted it has a confiscation routine in place, since 2011.
Wait a minute here! This is a Sovereign government taking money to bail out Banks that have been making record profits, while leveraged to the ears?
Where the my check of thanks when they were making record gelt? Oh right, my Bank Shares.
This could be a festering wound and one that bears watching. How would you like your Government to say = thanks for the money…your POOR Banker is having a tough time.
Man. Insanity.
We’ve seen this before – 1930’s Weimar Republic, comes to mind.
ps. Boy has Vancouver slowed to DEAD astern, Captain. Waiting for the RE horde to start turning in their licenses and start looking for work at Wal-Mart.
#189 Blok Existentialist,
woulds you mind naming one of the “many great writers who couldn’t spell/write worth beans” who actually got published?
Rumours that the US banks may limit withdrawals.
What happens in Cyprus does not stay in Cyprus.
Rumours you started? — Garth
Consumer proposal/bankruptcy trustees must be making a humongous pile of money, as it seems that with every passing week, there are increasingly more television commercials for their services.
A growth industry no less!
Let’s see….a new acronym might be: FIRED: Finance-Insurance-Real Estate-Debt Management.
Yep, as some previous poster said, pinkos and lefties have ruined AB, it sure has nothing to do with the incredibly arrogant, ignorant population in this province. Who think its SO very different here, Oil and Gas is always in need, we’re so important on a world stage, everyone wants to move here for jobs, on and on and on.
This provinces downfall will be its incredible arrogance, I mention to people everyday here about the low price of export bitumen and the how the pipelines to cure this are going to get held up, looking for a long while. We could be in major job problems, blank stare back at you. No connection between housing, oil and gas, massive borrowing, and the concept that all the temp. laborers and people from other provinces will Bail at lightning speed when things go bad here, we’ll have 10,000 + vacant houses in Calgary alone.
Oh Ralph Klein, so wise….what a joke
XIU down 1.82%, Bitcoin CAD up 14% today.
#194DJG on 03.21.13 at 4:45 pm
……If you do a rough “draw an area” look on realtor.ca to select almost all of Toronto proper (even going up to the 401, Etobicoke, as far East as Victoria Park), there are a grand total of 47 SFHs for rent under $3k …….
A smart guy like you is aware that rentals are advertised in lots of places other than realtor.ca
I set some kijiji parameters of 10km radius from Toronto centre, $2500 to 4000, and I got 8+ pages of hits.
It doesn’t even matter though. Our subject is whining that she can’t find a full sized home in a prime area for less than $2500.
OK, so what? Many lifetimes ago I was paying $600 for a nice bachelor unit in a semi-seedy ‘hood, and later $1100 for a modest 2-bedroom in a better hood.
It’s central Toronto, 1500 square feet of space and your own ground level entrance in walking distance to the subway costs a bunch.
Anyway, what makes me laugh is the way she presents this to Garth to seek justification to buy.
Like, have you ever read this blog??
Are you seriously expecting him to declare “For your situation, it makes absolute sense to buy!”.
#189 blok existentialist on 03.21.13 at 3:46 pm
“the existential attitude”, or a sense of disorientation and confusion in the face of an apparently meaningless or absurd world.[5] Many existentialists have also regarded traditional systematic or academic philosophies, in both style and content, as too abstract and remote from concrete human experience
Brilliant, you I would be frightened to play poker against, why? Speak well are more educated than schooled, yet I know you are a good reader of character, the fact you read that irishmen’s book, impressive.
Herb you lazy ass, Google dyslexic authors.
@192 Axxman
No problem fo rthe banks.
The mortgager put more than 20% down so therefore is not required to take out CMHC. The bank can and will take out low risk (low fee payment) CMHC insurance on the laon and pay the fee. That’s how banks can and do give +10 year mortgages to people in their 50’s and 60’s
#197 Herb – William Faulkner, F. Scott Fitzgerald, Earnest Hemingway, and many more, as their writings had to be edited before being published. They had this problem with speeling and grabmer.
http://www.news1130.com/2013/03/21/large-number-of-vancouver-condos-sit-empty-report/
Vancouver condos sitting empty.
HAM & Champagne.
Take your money out of realestate (banks to), if you where planing to sell in the next 5 years. Its obvious the risk, dont trust to much the government to tell you in advance whats coming. The Cyprus crisis is a fantastic example of what can happen. Do like the banks.
Who looks for rentals on MLS????????????
Looking to rent from the same people who brought you half-million dollar lots with ‘things’ that pass for homes sitting on them????
Total facepalm.
Re Empty Condos
Way back, BC Hydro did a study and determined their were approx 18,000 empty condos in Vancouver…based on the meter readings.
The parameter used was they figured at minimum a fridge was running, and the average KW/H useage of a fridge or less was the demarcation point for what they considered was a vacant condo.
However, no one needs to keep a fridge plugged – in , its a simple matter to deactivate and vent it.
One wonders what these utilities must project for revenue, though there is a minimum charge.
liar logs
The Delaware investigation began in October 2012, after several crew members of the M/T Nordic Passat provided the Coast Guard with a thumb drive containing photographs and video showing how illegal discharges had been sent overboard through the ship’s sewage system. They also alleged that sludge had been put into the ship’s cargo tanks and that logs showing sludge had been incinerated onboard had been falsified. The charges involving the M/V Cape Maas stem from a whistleblower report to the Coast Guard when the ship visited the port in San Francisco. He provided a video showing the operation of the oily water separator pumping overboard without the use of the oil content monitor to detect and prevent oil from being illegally discharged.
Shipping Corporations to Pay $10.4 Million for Environmental Crimes on Four Ships (doj)
You know Garth, I followed you since 2008, and I only listen because I see your wisdom, and your knowledge on real estate is very good. I can tell you that I sold my properties in both Surrey, and Vancouver back in 2011 and left British Columbia as I didn’t see any real benefit in staying invested in a poorly positioned market. Incomes have simply not kept up to the rate of housing inflation in Lower Mainland and now my family back home tells me how smart I was because they cannot sell their home for any real gain. Now is horrible in the Lower Mainland. I don’t believe for one second as some of your bloggers have said that 1.7 million dollar post world war II dumps on 60 foot lots in Killarney and other rich areas will sell like crazy. I just don’t see it. Thank you Garth, you are a great man, and a huge benefit to those that have listened to your wisdom over the years.
@#202 Tyrone Asauras: I agree that the question is pretty silly. However, the point about high rental costs for SFHs in Toronto is an interesting one to explore. We often see information quoted here about multiples of rents as an indicator that housing is grossly overvalued. Where I live in Toronto, average SFH prices are about $1.25 million based on data from Jan 2012 to date. The typical $1.25 million house rents for about $6,000 / month (I looked in this area at literally everything that was for sale or rent before buying).
Price / rent ratio is about 17.4, and the fancy NY Times calculator (http://www.nytimes.com/interactive/business/buy-rent-calculator.html?_r=0) spits out “buying is better than renting after four years”. Still very expensive, and still better to rent, but not as horrendously out of whack as one might expect.
#115GC and #33 Brunette: “Yeah I don’t get it either, an overweight person exercising , trying to get healthy. The pic is just mean. It’s very inappropriate.”
****************
That woman is sitting there, like a lump of lard. She knows what she should be doing….but she’s not doing it. Her intentions are ineffective. LOL
#204 SM and #206 Old Man,
c’mon guy(s), I didn’t ask you about authors with dyslexia. Blok Existentialist defended SM by putting him into illustrious company, and I asked him to name one of the many great writers “who couldn’t spell/write worth beans” and got published.
Every writer is “edited”, but what he wants to say has got to be good enough, worth the effort of correcting, and capable of being fixed. If he has a handicap, he has to deal with it, or at least try to deal with it. If he doesn’t, there is no point in decrying those who refuse to accept him as the genius he considers himself to be as losers.
Perhaps SM should turn his multifarious ramblings into a manuscript “as they are”, submit it for publication, and let us know how he makes out.
@ #213 DJG on 03.21.13 at 7:16 pm
@#202 Tyrone Asauras: I agree that the question is pretty silly. However, the point about high rental costs for SFHs in Toronto is an interesting one to explore. We often see information quoted here about multiples of rents as an indicator that housing is grossly overvalued. Where I live in Toronto, average SFH prices are about $1.25 million based on data from Jan 2012 to date. The typical $1.25 million house rents for about $6,000 / month (I looked in this area at literally everything that was for sale or rent before buying).
Price / rent ratio is about 17.4, and the fancy NY Times calculator (http://www.nytimes.com/interactive/business/buy-rent-calculator.html?_r=0) spits out “buying is better than renting after four years”. Still very expensive, and still better to rent, but not as horrendously out of whack as one might expect.
_______________
$1.25M house for $6,000/month?!?!?
What area of Toronto is that?
I’m in North Toronto, and there are many houses that sell for $800k-$1M or more, yet rent for approx. $3,000-$3,500/month.
For example:
$3,000/month
$3,300/month
$3,500/month
and – for sale:
$869k
$899k
$979k
Your $6,000/month looks about $2,000 above market.
“Byrdes of on kynde and color flok and flye allwayes together.”
http://www.guardian.co.uk/business/2013/mar/19/kaupthing-executives-indicted-for-market-rigging
@ #168 Old Man on 03.21.13 at 12:48 pm
Here is the intrinsic problem with renting a home from a landlord, as there is the basic rent, but the utility costs in most cases are passed unto the renter to pay, as will be not his or her problem. This additional cost must be factored into the equation to calculate the total cost of renting a home.
____________________
Are utilities free if you own a home?
#168 Old Man,
and who do you suppose pays the utility costs of an owned home?
=========================
Taxpayers. Because only highly paid govt workers can afford homes today.
@#216 T.O. Bubble Boy: You’re posting $800k houses renting for $3,500 / month. How is a $1.25 million house at $6k / month $2k over market? Have you actually been through the process of trying to find something?
#218 & #219 – just buzz off as you are taking all out of context for someone who rents a home as compared to someone who is renting an established apartment with a corporation ownership, as the net cost can become a different equation.
Move back in with your parents and bank the money.
Garth, you are the best. You never cease to amaze me.