Ready?

ready

“I enjoy your daily blog,” says Carmen, who’s probably lying, “however I would like to know if you take your own advice.  How many homes do you own right now and do you live or rent in your primary residence.  Are you in fact taking your own advice by getting out of real estate and renting?

“One question for you, I own a $400,000 semi in Aurora and if it loses 25% due to market correction am I really any ahead or behind.  Also Is 25% being optimistic or completely out of touch?

“Bought in 2003 for $240k.  Current value between $380 – $400k.  My mortgage payments (at 3.09% on $240,000, year 2 of 5) are $1000 and to rent anything comparable in Aurora would be $2000 a month.  After you take in account the selling cost right now and then the buying cost in the future, I don’t know if I would have any benefit to sell right now. By the way, my wife and I are in our 30s and have $120k in RRSPs between us. How are we doing?”

First we deal with you, C. Then me.

The correction in Canadian real estate is well advanced, but still not that obvious to most people. They won’t actually clue in until they decide to sell and can’t, or start reading about month/month price declines. Both are coming. There’s no option. Debt’s gone up and jobs are going down. Mortgage rates have tanked, yet house sales are decreasing. The decade-long bloat in real estate is reverting.

But don’t just take it from me, as infallible as I am. Here’s Brad Lamb, for example, hi-rise king (who told an Ottawa audience last week to buy lots of condos or ‘eat cat food in retirement’), admitting to Bloomberg that most Toronto developers, “have their hands in their pockets right now.”

In other words, a major driving force of the GTA market – multi-unit high-rises (there are 159 towers being built) – is in serious shape. There are more than 21,000 new, unsold units available and another 61,000 under construction. Meanwhile over 6,500 existing condo owners are desperately seeking buyers on MLS, and thousands more online. Last month just 1,266 sold, an 18.6% decline from March of 2012. Sure sounds like a two-year supply to me, even without any new units being built. Conclusion: price plop.

As you might imagine, projects are being quietly dumped. Like Lumen (30 storeys) and 365 Church (29 storeys). Sales were already falling before F’s mortgage changes (and the end of cash-back down payments) eliminated many of the young & horny nine months ago. So, forget that soft landing. And the cat chow.

What about the larger market? After all, SFH prices have not retreated and bidding wars still erupt among those still scouring through a paucity of listings. Where does Carmen fit into this?

David Madani would warn him, bigtime. He’s chief economist at Capital Economics who thinks housing prices will be 25% lower in a few years, amid 8% unemployment and a persistent budget deficit in Ottawa (so forget that promised doubling of TFSA contributions). The economy will stall out, and real estate will be at the centre of the swamp: “Historically housing markets are either overbuilding or underbuilding and this boom we’ve been in the last decade has been enormous,” he just told Canadian Press, “and that why I think the correction process will be fairly severe and protracted.”

So, Carmen, here you are with a house bought a decade ago for $240,000, on which you owe $240,000 (how did that happen?). You think it might be worth $400,000, and wonder if a 25% haircut means anything. Well, that would shave $100,000 off your net worth – greater than the entire liquid wealth you already have in RSPs (since it’s taxable). You live in a 905 commutershed town, where declines will be more pronounced than in the city, and it’s a cinch your mortgage payments will rise upon renewal.

So, if you’ve earned $160,000 in capital gains tax-free profits, why not take them? It’s the residue of an era now ending. Can you really afford to give up that windfall, which would take you decades to replace through employment earnings? As for monthly cash flow, add to your mortgage (actual cost, $1,100) property taxes and insurance ($400) plus maintenance/repairs ($200) and the house requires $1,700. For fifty bucks more you could rent thisrental

That would change your financial profile considerably: $280,000 in liquid assets which, if invested properly to yield 7-8%, could be a million upon retirement. But if you retain the house, and keep paying the mortgage, in two decades you’ll have… a paid-for house – which may be liquid, maybe not. Me? I’d rather have the cash, throwing off $70,000 or $80,000 a year. Add in CPP, and the two of you garner a lifetime retirement income of a hundred grand, plus retain a big pot of money.

Speaking of me (thanks for asking), I rent my principal residence in the big city. I am liquid, diversified and balanced. I own a secondary property, with 12% of my net worth in real estate.

I know what’s coming.

254 comments ↓

#1 Steve French on 04.11.13 at 8:28 pm

YES! First!

OMG its so good to be me sometimes…

#2 Marko Juras on 04.11.13 at 8:28 pm

Garth, what’s your net worth?

You first, realtor dude. Say, didn’t I ban you? — Garth

#3 Yellow Rox Rock on 04.11.13 at 8:32 pm

Garth,

If you keep responding to the people who are obviously trying to troll you, you will only encourage more of it. You were immune to it for so long, but yesterday’s post drew you in. Fighting against trolling is an impossible battle to win.

With respect…

#4 Randy on 04.11.13 at 8:33 pm

I love liquid assets too….Just don’t buy them at the LCBO…..

#5 Zack on 04.11.13 at 8:34 pm

Garth, I’ve been reading your blog since 2011 and I mostly agree with your views and advices regarding real estate. My only note would be your inconsistency about the future of mortgage rates. Previously you were talking that mortgage rates would definitely go higher in the second half of 2013, now you say that the hike will probably be delayed until 2015 or even later. I believe that the low mortgage rates are the No. 1 culprit for these crazy prices and that the house prices will continue moving up (though maybe with a slower pace) until the mortgage rates increase. Am I right about this?

Rate hikes have been delayed because the economy’s weakened. I have been consistent, but not omniscient. — Garth

#6 Sacola on 04.11.13 at 8:34 pm

Please let me be Fuuuuuuuurrrrsssttttt

#7 drox on 04.11.13 at 8:37 pm

Funny story. My parents put in an offer on an investment condo (a much older building in the beaches area).

Listed $229, and despite my pleas not to, they offered $220 a paltry 4% short of asking. The offer was rejected and my parents walked.

I told them it was the luckiest thing that has happened to them recently.

Two weeks later, and it’s still on MLS

#8 blase on 04.11.13 at 8:38 pm

In Barrons’ online version today. Are you ready homeowners?

Goldman: Rates Will ‘Rise Significantly’ Over Next Several Years

Goldman Sachs Asset Management says in a paper today that 2013 will likely mark “the start of a prolonged and potentially significant rise in US rates”:

[A]ll of the major factors that have contributed to the low rate environment in the US and caused it to persist for many years are turning and US rates are likely to rise significantly over the next several years.

Goldman says continued Fed bond purchases may contain upward pressure on rates in the near term but that “the growth rate of official demand for Treasuries has likely peaked.” Goldman adds that rate normalization “may be delayed in other major developed bond markets” but that “rates in most major markets are at or near a long-term bottom.”

Much of this comes by way of a pitch for an unconstrained fixed-income investing approach that reduces duration risk and looks to diverse, global yield opportunities for positive total returns even while rates are rising. As for the prospects of traditional fixed-income investing, Goldman’s not so upbeat:

We believe total return prospects in traditional fixed income portfolios are modest in the best case, and more likely negative. Traditional fixed income portfolios, benchmarked to the Barclays US Aggregate or similar indices, are concentrated in interest rate risk. Investors adopted this approach during a 30-year bull market in interest rates. As a result, traditional fixed income allocations have generally provided income, diversification and positive total returns. We do not believe a fixed income allocation concentrated in duration risk offers the same potential today.

#9 AVG_Canadian on 04.11.13 at 8:38 pm

Hi Garth,

Any take on Alberta RE scene…. we are (family of four, mid-30s & 2 under 10) “thinking about” ownership after years of renting since we came to Canada. I always reckoned with this moment lull in the market before the sh*t storm of correction.
I am a tradesman & she is a RN… starting (hopefully) to see some dough rolling in…. should we continue renting, if so what would be a good balance of savings & or investments VS. down payment. I am thinking not putting all our eggs in one basket of down payment…. Also at that point what kind of Life Insurance (or any other insurance) would you suggest…. Thanks a lot!

#10 Yeah on 04.11.13 at 8:39 pm

Second!!!!

Stop it. — Garth

#11 Realturd on 04.11.13 at 8:39 pm

I am what is affectionately known as a Realturd on this blog by many…great advice Garth, I agree with a correction that you’re predicting and cash now with a 7-8% return is fantastic. I do what I do, don’t pretend that the market is going any higher and welcome a reduction in prices…especially for fools paying $700k+ for a town home in Vaughan that will drop like a rock soon. My favourite of all is the builders making huge returns with very little increase in their costs to build….but for the last 10 years…greater fools lined up and bought them. I’ll be there when they have to sell at a loss and only doing my job.

#12 NonSmokingMan on 04.11.13 at 8:39 pm

I don’t get it. If they like their place and don’t plan to downsize or upsize in a few years what’s the point of selling? House should be a place to live and not treated as an investment. The problem we have is exactly related to that attitude. Stop RE speculations now!

You don’t need to bury cash in a house to live in a home. — Garth

#13 Condo Minion on 04.11.13 at 8:39 pm

Watch out for pellets from the sky tonight in Toronto. Not crappy condo windows this time, just ice pellets. Winter is baaa-aaaccck.

(although a friend in the construction business tells me some builders are quite worried about more possible glass shattering events over the next 24 hours, not a great vote of support for the build quality of all those lookalike towers downtown)

#14 Tom Vu on 04.11.13 at 8:43 pm

This sign in the blog photo implies the Dog is a member of the NRA and can talk.

” If you want my gun, you will have to pry it from my cold dead paws “. Grrrrrrrrrrh.

#15 Derek R on 04.11.13 at 8:51 pm

#9 NonSmokingMan on 04.11.13 at 8:39 pm wrote
House should be a place to live and not treated as an investment.

That is exactly how a renter looks at it. An owner not so much. Renters don’t care whether their homes go up or down in value as long as the landlord doesn’t raise the rent. Owners do care.

So renters aren’t treating their homes as investments whereas many, not all, but many owners are.

#16 TurnerNation on 04.11.13 at 8:51 pm

E. Splott’s funds went splot.
A bit of onomatopoeia.

#17 TurnerNation on 04.11.13 at 8:53 pm

“I rent my principal residence in the big city.”

Is Garth living in godless Toronto now? Still within the GTA (Garth Turner Area)?

#18 Arse on 04.11.13 at 8:59 pm

This year, we are going see some crazy things happening!!!

#19 Vandamncouver on 04.11.13 at 9:02 pm

Garth,

I’d love for you to do a posting regarding this increasing gap between the wealthy and non-wealthy specifically relating to Canada. You’re post yesterday touched upon this, by how about a full post on it. Your thoughts on how this happened, and what younger Canadians like myself (29yrs old) can do to prepare.

Thanks!

#20 Timbo on 04.11.13 at 9:07 pm

http://www.bbc.co.uk/news/business-22116270

“The cost of the rescue has risen to 23bn euros ($30bn; £19.5bn) from 17.5bn euros, according to Cyprus’ creditors.”

Now that is a hole to dig out of….

http://www.reuters.com/article/2013/04/11/us-economy-usa-poll-idUSBRE93A0K020130411

“Economists in a Reuters poll taken after the latest job report ratcheted up their forecasts for first quarter growth to an annualized 3 percent from the 2 percent forecast last month.

But that pace is not expected to last, slowing to 1.6 percent in the second quarter before picking up to 2 percent for the rest of the year.”

Japan style growth straight ahead…….

#21 DaleFromCalgary on 04.11.13 at 9:08 pm

#9 – You asked if you should buy in Alberta.

What kind of tradesman are you? Plumbers and furnace techs can always get by because no one puts off unplugging a basement drain or fixing a furnace at 02h00 on a -30C night. Carpenters and electricians depend more on construction and renovation, both of which go into decline with the general economy. Your wife is an RN, not the greatest job after Redford’s budget a few weeks ago.

What part of Alberta do you live in? The oilsands work is mostly outsourced these days, both design and construction. Conventional oil doesn’t require as many people as it used to. My company owns and operates about fifty wells with four guys and one receptionist/clerk. Speculators are the majority of buyers way out in the Cowtown suburbs. The University City condo towers ran full-page ads for weeks offering discounted prices.

#22 Smoking Man on 04.11.13 at 9:12 pm

No worries if the dog don’t take its meds,

now, if he takes his meds stay out of movie theaters, or elementary schools..

#23 Squatter on 04.11.13 at 9:12 pm

>>Here’s Brad Lamb, for example, hi-rise king (who told >>an Ottawa audience last week to buy lots of condos or >>eat cat food in retirement’)…

Garth, I think you made a typo: isn’t his name Brad Sheep? or Brad Wolf? or something like that…

#24 Joe Somebody on 04.11.13 at 9:12 pm

#2 Marko Juras on 04.11.13 at 8:28 pm

Marko, I think you incorrectly phrased your question.
I bet, you wanted to know how big Garth’s fire hose.

#25 Kingbubbles on 04.11.13 at 9:12 pm

Garth,

Got any tips for folks that want to rent a primary residence? Some people are not comfortable with making a deal with someone who might just sell in a year.

#26 Mocha on 04.11.13 at 9:13 pm

@#3 Yellow Rox:

I noticed the same thing in some of yesterday’s later postings. Hang in there Garth! You’re nobody on the Internet if you don’t have haters.

#27 Post Haste on 04.11.13 at 9:16 pm

Garth, lovin your blog – I just have to add a comment to your piece a few days ago regarding bankruptcy.

I gotta set the fact straight as some in here have it all wrong – there are 2 options when seeing a Trustee in Bankruptcy – Consumer Proposal or Bankruptcy filing. Proposal usually make up 85% of all signings.

If you think you can walk into the office and think filing a bankruptcy is a quick and cheap way out – your sadly mistaken. Each Trustee must determine if you can do a viable Proposal first (which is calculated as your fees are an overal % of your total unsecured debt load – while factoring in any realizable assets and income). If the individual refuses to file a proposal – a bankruptcy will be filed – but the Trustee will issue a opposition with the bankruptcy court before discharge and counter that in their opinion – that a viable proposal could have been made instead.

Many employers are using credit scores as another criteria in granting employment – having an R9 could kill your dreams.

File a bankruptcy a first time – 9 months minimum – 21 months if your income is above the standards – 2nd timer is a minimum of 24 months – try a 3rd time – and you get an automatic court date – try explaining to the court why you keep filing – they just may impose a order that you pay off the entire debt you accumulated –

There really isn’t a free lunch as some were claiming – try using your credit card just before filing – the creditor will be filing an opposition to your discharge on the grounds of fraud – they will get court approval that you weren’t planning on paying it off and that constitute fraud.

I just had to point out some issues that were way off the mark – hopefully this sets the facts straight.

ps. A trick some are using if they have equity – they have a buddy who works in home improvements and slaps on a construction lien – presto – free as a whistle – it’s sneaky – but legal.

#28 Smoking Man on 04.11.13 at 9:17 pm

#3 Yellow Rox Rock on 04.11.13 at 8:32 pm

Garth,If you keep responding to the people who are obviously trying to troll you, you will only encourage more of it. You were immune to it for so long, but yesterday’s post drew you in. Fighting against trolling is an impossible battle to win.With respect…

………….

What’s a troll,
some one who disagrees with you, how simple minded.

#29 Little Orphan Annie on 04.11.13 at 9:20 pm

Rate hikes have been delayed because the economy’s weakened. I have been consistent, but not omniscient. — Garth

ZIRP has been and will be here for a very long time. It is to reward speculators and punish savers. This is the ideology that greenspan invented.

#30 steve p on 04.11.13 at 9:24 pm

Rate hikes have been delayed because the economy’s weakened. I have been consistent, but not omniscient. — Garth

Garth, mortgage rates are set in relation to bond yield rates in the bond market (typically 1.7 % added to the yield to get mortgage rate) With the United States having a U500 billion dollar trade deficit annually the exporting countries central banks have no other option than to purchase USA bonds to balance the payments. The purchasing of bonds pushes bond prices up and yields down. The bond market sets rates not the bank.

Ya think? — Garth

#31 Smoking Man on 04.11.13 at 9:24 pm

I am now revising my call for indefinite low rates.

With the RBC igate gate….. All big firms, who don’t want to get on social media sites list will be distancing themselves from off shoring, in fact I can see some big ads, coming out (WE DO NOT OFF SHORE JOBS) put pressure on the Labour market….

Like I say always BOC only spikes rates when the Labour pool shrinks.

RBC

#32 Julia on 04.11.13 at 9:25 pm

Did you say http://www.365churchtoronto.com/ is going to be cancelled, Garth? Wow!

#33 Smoking Man on 04.11.13 at 9:25 pm

RBC set the tone today and all big banks will fallow.

#34 Yellow Rox Rock on 04.11.13 at 9:28 pm

#28 Smoking Man:

I thought everyone already knew what it meant but here ya go:

In Internet slang, a troll (pron.: /ˈtroʊl/, /ˈtrɒl/) is someone who posts inflammatory,[1] extraneous, or off-topic messages in an online community, such as a forum, chat room, or blog, with the primary intent of provoking readers into an emotional response.

Your response to my comment could be considered trolling.

#35 Realtor on 04.11.13 at 9:29 pm

big risk to sell and hope it goes down 25% C.

Look at all those people who sold during the 08/09 Crash, Big mistake, they lost 30-50%
or all those people who have been waiting since then reading this blog they will end up buying a home no where near those prices.

Like Garth said those who sold their stock during the GFC made a mistake, if you they had held on to them they would have recovered the losses and made gains.

The real issue is that with 5% to sell and 5% to close you need to time the market perfectly. Lets say it goes down only 20% and you think 25% and all of the sudden it starts to recover move up a quick 5%, how much will you have really made? And how will it feel paying someone else’s mortgage. (not everyone is renting at a loss)
Take the equity out of your home and use to it buy a rental when the housing crash hits (NEXT YEAR).

#36 Smoking Man on 04.11.13 at 9:31 pm

Rate hikes have been delayed because the economy’s weakened. I have been consistent, but not omniscient. — Garth

I just Google omniscient it said omniscient = Smoking Man

#37 Dust in the wind on 04.11.13 at 9:33 pm

16 TurnerNation on 04.11.13 at 8:51 pm E. Splott’s funds went splot.
—————————————
It is actually up today.

#38 Rob Smith on 04.11.13 at 9:35 pm

#28 Smoking Man on 04.11.13 at 9:17 pm

What’s a troll,

———————————

look in the mirror

#39 izzo on 04.11.13 at 9:37 pm

Garth,

Again great post, however what is the wisdom in jumping into the market at the highest its ever been. I understand what you are saying regarding diversity in the portfolio but doesn’t it make sense to wait for a better entry point? Why are you preaching following the herd in this case?

Do you believe that we are going into a secular bull market?

Regards

It takes months and months to build a portfolio. — Garth

#40 LJ on 04.11.13 at 9:38 pm

Why does everybody love fully taxable RRSP’s and count them at full face value?

These are fully taxable investments and when it finally dawns on the government that they are actually broke, they will likely raise the tax rates, particularly on this vehicle that, incidentally, has a huge and captive capital base.

#41 Bill Gable on 04.11.13 at 9:38 pm

Mr. Turner: Seems some folks are not getting the message.

Canadians’ unrelenting passion for sun and sand has helped drive a 12 per cent increase in Florida real estate over the last two years, according to a BMO report.

More than 500,000 Canadians now own property in what was one of the hardest-hit U.S. states in the 2008 housing meltdown. And snowbirds remain the biggest foreign purchasers of Florida real estate despite a surge in interest from Asian and South American buyers over the last year or so.
(*hmmmmmm)
Canadians are already seeing payback from their purchases, says the BMO Financial Group report released Thursday.
The price of a single-family home has climbed 12 per cent since April 2011, with the worst of the collapse now well behind the U.S., according to a recent S&P Case-Shiller study of U.S. house prices.

http://tinyurl.com/cb3hsnh

#42 Smoking Man on 04.11.13 at 9:39 pm

#34 Yellow Rox Rock on 04.11.13 at 9:28 pm

So you chirp garth about responding to trolls, yet you do it by responding to be… Ha ha

I new you would I’m omniscient……. :)

#43 a prairie dawg on 04.11.13 at 9:39 pm

3 Yellow Rox Rock

Garth,

If you keep responding to the people who are obviously trying to troll you, you will only encourage more of it. You were immune to it for so long, but yesterday’s post drew you in. Fighting against trolling is an impossible battle to win.

With respect…

– — –

Yup. Just delete the peckerhead 4chan types…

#44 Dust in the wind on 04.11.13 at 9:40 pm

As for offshoring/outsourcing: there are probably over 1 million outsourced service jobs in Canada with around 300 k foreign temporary workers on site.

In the states multiply by 10.
Big companies in US slashed millions of highly paid jobs, one company in the states I worked with outsource 5 000 IT (only) jobs to India and Ireland.

The blame of course is for the governments allowing it.
Their corporate friends need cheap labour.

People are not seen any more as asset but as liability for the companies. Hence the pensions plans disappearance, literally work locals to death, I actually new somebody who died/stroke while troubleshooting 48 hours production issue without break.

#45 furst on 04.11.13 at 9:42 pm

I’m back so here we go…… FURRRSSSSTTT!! Often imitated, never duplicated. Yeah BOYYYY!

#46 Dust in the wind on 04.11.13 at 9:43 pm

I was told: sorry, no increase, no bonus from now on but you would at least keep your job (for now), don’t think about your colleagues, they are gone anyway, just work hard, train the offshore guys and be happy.

I said; thanks, but No thanks,

The project collapsed.

#47 Garth's Landlord on 04.11.13 at 9:43 pm

Speaking of me (thanks for asking), I rent my principal residence in the big city. I am liquid, diversified and balanced. I own a secondary property, with 12% of my net worth in real estate.

—–Garth

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

Listen..I gave you a good deal on the basement suite.

Please don’t fire up the Harley and Hummer at 3:00 AM

Also : I didn’t know you subletted the bathroom to Smoking Man. Tired of his mooning the moon and forgetting to flush.

Damn Tenancy rules…

#48 Joe Somebody on 04.11.13 at 9:45 pm

#32 Smoking Man on 04.11.13 at 9:25 pm

Nothing will happen. I’m in IT and worked in RBC, BMO and BNS. Those guys outsourced like a crazy and they’re on the hook right now. They can’t breach the contract with iGate. It’s gonna cost a lot.
Indian company that is working with BNS rented 1 bedroom apartment and filled it up like a tuna in the can.

#49 Andy on 04.11.13 at 9:46 pm

I became a Canadian citizen today been in the country 4 years now..was lucky to find your blog in 2009..So got a Canadian Financial Crash course from your blog.. my wife has been here longer she had 10K of TFSA money in ING & she owned a condo which I advised her to sell in 2011 & we are so glad we did & invested the money & last i checked made 7 % on it..because I did not buy a house I could invest in a small business & I have increased my cash flow..My wife just asked me when are we going to buy a house.. I say NEXT YEAR…
This is my first comment on your blog..
I think coz your advise is free a lot of people dont value it…Start charging a subscription fee..
Now I know what is cash flow
Thank you Garth..

#50 KG on 04.11.13 at 9:49 pm

@#36:
I just googled Smoking Man and why does it say Greater Fool

#51 :):( Ying Yang on 04.11.13 at 9:52 pm

You have often mentioned “the Kool-aid” is this you?
Smoking Man and the account of the experiences his band of Merry Pranksters. Smoking Man traveled across the country with the Pranksters in their day-glo painted school bus named “Furthur”. Smoking Man and Pranksters became famous for their use of LSD and other psychedelic drugs in hopes of achieving intersubectivity. The Electric Kool-Aid Acid Test chronicles the Acid Tests (Parties in which LSD laced Kool-Aid was used to obtain a communal trip), the groups experiences with famous groups and individuals, including famous authors

#52 QQ on 04.11.13 at 9:55 pm

renting eh? nice to know that Garth put his money where his mouth is.

#53 Smoking Man on 04.11.13 at 9:57 pm

38 Rob Smith on 04.11.13 at 9:35 pm#28
Smoking Man on 04.11.13 at 9:17 pm
What’s a troll,———————————look in the mirror

……………………..

Man I’m not worthy
Rod, what a devastating blow you just hit me with.
Can I ever recover,

Contribute something intelligent if you ever want me to honor you with a response….

#54 AK on 04.11.13 at 10:02 pm

#21 DaleFromCalgary on 04.11.13 at 9:08 pm
“The oilsands work is mostly outsourced these days, both design and construction.”
——————————————————————–
To workers from Bangalore with temporary visas?

Heck, even Harper admitted today that there appears to be an issue.

#55 MultiCulti on 04.11.13 at 10:02 pm

Rate hikes have been delayed because the economy’s weakened. I have been consistent, but not omniscient. — Garth

Garth, mortgage rates are set in relation to bond yield rates in the bond market (typically 1.7 % added to the yield to get mortgage rate) With the United States having a U500 billion dollar trade deficit annually the exporting countries central banks have no other option than to purchase USA bonds to balance the payments. The purchasing of bonds pushes bond prices up and yields down. The bond market sets rates not the bank.

Ya think? — Garth

Hey, what about when the central bank is the bond market, and it creates its own demand for bond ?

#56 CaptainObvious on 04.11.13 at 10:04 pm

I know someone at a law firm in Toronto. A large percentage of their business is in real estate transactions and financing, especially condo developments. Work related has ground to a halt. Many projects that were beginning are now being shelved. It’s a minor catastrophe for the firm, which is being forced to evaluate if it should drop staff, and it has definitely curtailed any plans to hire. This is real people, get ready for it.

#57 Smoking Man on 04.11.13 at 10:04 pm

#51 :):( Ying Yang on 04.11.13 at 9:52 pm

Yink what If I told you I’m a super famous author maskarading as a dyslexic psychopath, who’s had drunkin writers block. And is in dire need for inspiration, would you by that story……

#58 Spiltbongwater on 04.11.13 at 10:05 pm

I think by the time I have a million kicking out 70-80K the government won’t give me any CPP as I can fend for myself. CPP, OAS etc will be the seniors welfare cheques by the time I am 70 to be able to collect.

#59 Fiscal Cliff on 04.11.13 at 10:05 pm

‘Garth, wealth is concentrating and the middle class is being expunged. Financial systems and regulations are enriching predominantly the top 1%. US Quantitative Easing alone is indirectly giving billions of dollars a month to the top 1%. The discussion of fairness is pointless. But then again, All is Fair in Love and War.’

Now talk about people without money borrowing 95% of the cost of a house they’ll never afford. Victims? — Garth

———————————————————

I’m not defending the ‘victims’ of the F’s 30+ year amortizations, 5% down mortgages. They never should of come to fruition, especially in a ZIRP world. Nevertheless, greed is an inordinate desire that influences our choices and actions. People borrowed 95% of the cost of a house they never could afford, Harper got his majority, Canadian Real Estate bubbled and household consumer debt soared.

As you so eloquently stated ‘The decade-long bloat in real estate is reverting’. Let the games begin.

#60 Need Sleep on 04.11.13 at 10:06 pm

I was surprised to see this…http://homevalueswinnipeg.com/winnipeg-neighbourhoods/royalwood/luxury-winnipeg-home-sales-slow-to-crawl-waiting-for-spring-to-arrive/?post_id=5355&search_category=&search_label=&author=&no_redirect=true

According to homevalueswinnipeg.com there were no luxury ($500k+) sales in Winnipeg during the first week of April. We were told that starter homes had the biggest slow down in March but maybe that will start to spread to other homes now.

#61 Mocha on 04.11.13 at 10:12 pm

yellow rox and smoking man:

Although we today use “troll” as a noun, the term originally dates back to the days of usenet when it was used as a verb. A person would be trolling (fishing) for comments with a post. It quickly took on a negative connotation because those who did it tended to be negative with the types of responses that they were seeking.

Somewhere along the line the term morphed into the noun that we use to describe an ugly, angry creature that hides under a bridge and waits for unsuspecting victims to come skipping along. This definition works just as well in my opinion.

#62 45north on 04.11.13 at 10:19 pm

Speaking of me, I rent my principal residence in the big city. I am liquid, diversified and balanced. I own a secondary property, with 12% of my net worth in real estate.

I know what’s coming.

which sounds pretty scary

God help us

#63 Suede on 04.11.13 at 10:21 pm

This is why BitCoin is going nowhere. The Winklevi are in on it. They couldn’t take FB to a new level….

http://dealbook.nytimes.com/2013/04/11/as-big-investors-emerge-bitcoin-gets-ready-for-its-close-up/

#64 Smoking Man on 04.11.13 at 10:24 pm

Get ready for it.
Its coming people.
Get out of the way.

Bubble heads what if it doesn’t happen, the big correct. The crash mageton.

5 years from now sfh bungalows in gta selling for 1.2

Your going to look pretty stupid at the Christmas dinner…

It is a possibility, with Japan and the USA debasing their money all that has to happen is boc say hey those prices are trying to get an export advantage over us….

Well before A light years past Z I am a Smoking Man

#65 HAWK on 04.11.13 at 10:28 pm

<<<<>>>>

Yes, and while some are indeed to blame for buying thing they can’t afford, many others are quite guiltless and they live responsibly and are suffering only because of ridiculous price increases in essentials (food, clothes, energy, communications) that enrich the 1%.

<<<<>>>>

Well it might one day come to war, as it has in the past. Then as a great American said…………”in war there is no substitute for victory” and people fight accordingly.

We must hope the madness stops before we get to that.

#66 Yellow Rox Rock on 04.11.13 at 10:29 pm

@Smoking Man #42

Good point. Normally I skip over anything written by you or any of your alaises. I saw my name at the top of your post this time so it was different.

I promise that I’ll try harder to ignore you in the future as per your recommendation. As long as you don’t address me specifically at the top of one of your spam…err i mean responses, it should be easy to do.

#67 Aaroneous on 04.11.13 at 10:30 pm

Been reading your blog for years and tonight’s was one of your best!

#68 Axxman on 04.11.13 at 10:30 pm

#60 Need Sleep – I think we’re seeing the same thing in the GTA. Mid-month numbers should be out next Wednesday. Top 3 excuses for slow month-to-date sales to be used by TREB: 1) The massive Toronto ice storm keeps buyers off the road 2) The temporary foreign workers from RBC are being sent home leaving a gap in the market 3) General malaise in the GTA brought on by the Blue Jays soft start to the season. Excuse you won’t hear – the market is softening.

#69 45north on 04.11.13 at 10:31 pm

CaptainObvious: Many projects are now being shelved. It’s a minor catastrophe for the firm, which is being forced to evaluate if it should drop staff, and it has definitely curtailed any plans to hire. This is real people, get ready for it.

that got my attention

#70 Matt on 04.11.13 at 10:38 pm

Garth,

I would love to see a focus on the Ottawa housing market in one of your posts. I am so tired of locals saying “Ottawa is different”. I don’t think it’s different here.

Of course not. Sales are down 15.9%. — Garth

#71 Humpty Dumpty on 04.11.13 at 10:43 pm

This is on its way…

TIC…TIC…TIC: The Ominous Warning in Foreigners’ U.S. Bond Positions

http://www.cyniconomics.com/2013/04/11/tictictic-the-ominous-warning-in-foreigners-u-s-bond-positions/

#72 Toronto_CA on 04.11.13 at 10:45 pm

#64 Smoking Man on 04.11.13 at 10:24 pm

For prices to rise that much you’d have to see inflation go up, which would lead to interest rate which would dampen house prices because no one could afford the payments. So…not.

If interest rates could go down 4 or 5% like they have in the run up, you’d have a point; but they can’t get any lower than 2.79% or whatever record low it is now. Price appreciation above inflation is done.

#73 White Rock Mom on 04.11.13 at 10:45 pm

Patiently Waiting, I saw your figures from two days ago. Now that sales are worse than spring 2009 I hope prices will drop below 2009 values. I guess prices have a long way to go still. That list you posted on 29 Ave is a good start 15% drop!!! I have to wonder who these folks are and how delusional are they? Do people that buy $3,300,000 property really buy them in Surrey? Five short blocks away from Walmart?

#74 Humpty Dumpty on 04.11.13 at 10:46 pm

Followed by this….

Are Individuals The Property Of The Collective?

It should come as no surprise then that most academics and prominent mainstream talking heads often sing the praises of collectivism as the inevitable champion in the war between cultural engines. Collectivism always presents itself with the flair and sexiness of the “new”, or the progressive, while individualism tends to wear the unpleasant battle scars of hard earned principles and heritage. Collectivism is the hot looking but mentally unstable bombshell blonde making promises of excitement and long term comfort she has no intention of keeping. She is so seductive not because she has any profound inner qualities, but because she has a knack for letting you believe she is exactly what you fantasize her to be. Only when it’s too late do you realize she’s a psychopathic pill popping man-eater…

http://www.alt-market.com/articles/1437-are-individuals-the-property-of-the-collective

#75 Smoking Man on 04.11.13 at 10:46 pm

#66 Yellow Rox Rock on 04.11.13 at 10:29 [email protected]

Smoking Man #42Good point. Normally I skip over anything written by you or any of your alaises. I saw my name at the top of your post this time so it was different.I promise that I’ll try harder to ignore you in the future as per your recommendation. As long as you don’t address me specifically at the top of one of your spam…err i mean responses, it should be easy to do.

……..
I only have one alias, it’s smoking man….

Egnoring me is such a wise decision as I have a horid record of calling stuff on here. A wise choice….

#76 Shawn on 04.11.13 at 10:53 pm

WHO’s NOT GETTING THE MESSAGE? (AND JUST WHAT IS THE MESSAGE?)

Bill Gable at 41 said:

Mr. Turner: Seems some folks are not getting the message.

Canadians’ unrelenting passion for sun and sand has helped drive a 12 per cent increase in Florida real estate over the last two years, according to a BMO report.

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

Ummm, Bill, THAT was the message. About two years ago Garth said, as I recall: Buy America, Sell Canada.

Smart Canadian who were isn a position to do so (retired snow birds) did the right thinga nd bough U.S. sun destination homes at fire sale prices.

What did you think the message was when U.S. house prices were well below replacement costs?

Doomers at that time were saying that the U.S. house prices would keep falling. They were dead wrong.

#77 Smoking Man on 04.11.13 at 10:57 pm

#72 Toronto_CA on 04.11.13 at 10:45 pm

Your fundamentaling me. If you where a chic I might like that..

Read the herd….

#78 Shawn on 04.11.13 at 11:00 pm

BRING ON THE TROLLS

Yellow Rox Rock at 34 says:

In Internet slang, a troll (pron.: /ˈtroʊl/, /ˈtrɒl/) is someone who posts inflammatory,[1] extraneous, or off-topic messages in an online community, such as a forum, chat room, or blog, with the primary intent of provoking readers into an emotional response.

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

Interesting… I thought the raison dete of posting was pretty much to get an emotional reaction out of someone and then check back to see how agitated the target gets in his response.

Trolling as you call is at least half the entertainment value of this blog.

When you post something here, you run the trisk that others will call you out if they disagree.

New definition (as suggested by Smoking Man) : Troll: what some people call anyone who disagrees with them on the internet.

#79 AK on 04.11.13 at 11:06 pm

More than 500,000 Canadians now own property in what was one of the hardest hit U.S. states in the 2008 housing meltdown.

http://www.thestar.com/business/real_estate/2013/04/11/canadians_now_the_biggest_foreign_purchasers_of_florida_real_estate_bmo.html

#80 The Man From Nantucket on 04.11.13 at 11:19 pm

#53 Smoking Man on 04.11.13 at 9:57 pm
………………
Contribute something intelligent if you ever want me to honor you with a response….

————————————————

The ironing is delicious :)

I love you for your insight from a different plane of reality, Smoking Man. Don’t ever change.

#81 blok existentialist on 04.11.13 at 11:20 pm

Speaking of Owsley acid flashbacks, a red flag went up today as per a potential house buy I am considering.
Can anyone tell me if multiple outlets in an unfinished basement in an approximately 150 square foot area — far too many to indicate future plans of a suite in the basement– and there are more than sufficient outlets elsewhere in said basement — hint that the place may have been used for a methane grow op? Or was some amateur merely growing himself a little smoke in one small area of the basement?
There is a fan in the basement as well, but that could as easily be for sending heat from the woodstove up the stairs. There is no hole cut in the floor, or black mold (which would indicate a marijuana grow op), but still …. eight regular electrical outlets mounted at the same height and equidistant in a 150-foot space????? Lots out there about marijuana grow ops, but not much on methane. And sledders (current absentee owner) are notorious here for being party animals. Any feedback on this appreciated.

#82 OttawaMike on 04.11.13 at 11:21 pm

In response to the funny picture warning of the mentally ill dog with a gun:
Severely Mentally Ill(SMI) humans are over 11x more likely than the general population to be a victim of a violent crime and 6x more likely to be murdered.

About 8% of the SMI have propensity to become violent “when they don’t take their medication” but it almost always involves the complication of a co-morbid condition such as alcohol or illicit drug use.

If we can reduce the stigma it will reduce the statistics touted above.

#83 Dr. Wayne on 04.11.13 at 11:23 pm

#1 Steve French on 04.11.13 at 8:28 pm

YES! First!

OMG its so good to be me sometimes…

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

Unfortunately, the mentally defective are not discouraged from breeding … ergo, Mr. French …

#84 Freedom First on 04.11.13 at 11:27 pm

240,000$ mortgage on a property purchased 10 years ago for 240,000$. Makes perfect sense today, as it is the new norm. Canadian debt levels at 165% prove this to be true. Heloc’s, mortgages, loc, 8 year car loans, credit card debt, pay day loans, all are out of control.
I think that the majority of people could not handle having a 6-7+ figure net worth and be debt free at the same time. I also think that the majority of people are comfortable being in 5-6-7 figure debt, while having little net worth at the same time. Strange world.

Garth is an excellent example of financial literacy, and how he does this very helpful blog day in and day out, amid the constant ignorant arguing against sound financial principles, and the RE cartel and it’s support influencing no conscience abusers, is truly astonishing!
I truly appreciate your blog Garth, and it has helped me in so many different ways I did not know would take place. Keep up the good work Garth, informative, witty, and inspiring in so many ways. Thank you.

#85 T.O. Bubble Boy on 04.11.13 at 11:28 pm

Garth – are you back in the old ‘hood (Leaside)? You seem to always have Leaside stats handy.

A useful barometer. — Garth

#86 richard on 04.11.13 at 11:30 pm

Garth, if you happen to have 150,000 in cash doing nothing in a bank, would you enter the market a this moment? Seems to me that would be buying high at this moment. No to mention following the herd. What do you think?

#87 Tom Vu on 04.11.13 at 11:43 pm

A “Comeback” in Name Only

http://www.city-journal.org/2013/cjc0410bw.html

Quote:

Inconveniently, however, Krugman’s Sunday column appeared a few days after state auditor Elaine Howle released a report showing that California has a negative net worth of $127.2 billion. Howle’s assessment didn’t even take into account the state’s unfunded pension liability, which may be as high as $500 billion. Even worse, the day after the Times ran Krugman’s piece, a federal judge allowed the city of Stockton’s bankruptcy to proceed. What should we make of these apparent contrasts?

Quote:

According to the U.S. Census Supplemental Poverty Measure, California’s poverty rate is the nation’s highest. And though the state accounts for about 12 percent of the nation’s population, it hosts more than 32 percent of its welfare recipients.

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

I think Beach Boys, maybe Cher too… are going to move to Manitoba…..Saskatchewan if really desparate.

Re -do songs about surfing on snow in August. Cowabunga penguins !

#88 land_guy on 04.11.13 at 11:52 pm

To, Smokingman:
No worries if the dog don’t take its meds,
now, if he takes his meds stay out of movie theaters, or elementary schools..

Meds are bad for all, and I agree you have to be in biz today to get ahead, f**k them all and play the game or you will lose here. India has a lot of brilliant minds and I am going to play biz down there if I have to…..buy and sell is the key…I agree!!….

#89 Ready? — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer™ on 04.12.13 at 12:13 am

[…] “I enjoy your daily blog,” says Carmen, who’s probably lying, “however I would like to know if you take your own advice.  How many homes do you own right now and do you live or rent in your primary residence.  Are you in fact taking your own advice by getting out of real estate and renting? Continue reading → […]

#90 Mike on 04.12.13 at 12:18 am

Its funny how everyone wants acknowledgement that their market is going to tank. Then Garth says, don’t worry, plenty to go around. When housing sucks, the economy will suck. Even though it is not something to look forward to, the Canadian economy needs to take a few steps back before it can move forward.

#91 Dean Mason on 04.12.13 at 12:30 am

To Steve P #30
If you look today 5 year Canada bond yields are 1.23% and 10 year Canada bond yields are 1.78%. 5 year fixed rate mortgage rates are 2.75% to 3.09% and 10 year fixed rate mortgages are 3.69% to 3.89%. This is a 1.52% to 2.11% added on top of 5 to 10 year Canada bond yields.

Today you can do an financial arbitrage with 5 year GIC’s. ICICI bank pays 3.15% for TFSA’s,RRSP’s. Instead of paying down more on your mortgage every year say $11,000 you could put it in $5,500 TFSA,$5,500 RRSP at 3.15%. The $11,000 would compound at 3.15% and be worth $12,845.14 in 5 years.

If you don’t care about a longer than 5 years you could buy provincial strip bonds at 3.75% for 20 years hold them to maturity. The $11,000 provincial strips after 5 years would be worth $13,223.10 and at maturity 20 years the $11,000 would be worth $22,969.67.

If you want to get a higher yield you could buy corporate strip bonds for 20 years depending on the issue or company get about 4.85%. The $11,000 compounded at 4.85% after 5 years would be worth $13,939.10 and held to maturity 20 years it would be worth $28,363.60.

If you took a combined asset mix approach you could put a with 25% in 5 year GIC 3.15%,37% in 20 year provincial strip bond at 3.75%,38% in corporate 20 year strip bond at 4.85%. The combined yield would be 4.018% so the $11,000 after 5 years would be worth $13,499.40 and after 20 years held to maturity it would be worth $24,185.92.

I would rather invest the money than pay down a 2.75% to 3.09% 5 year fixed rate mortgage when you could have financial assets and not all your net worth tied up in a house or real estate. You need financial assets outside your real estate to make sure you have income when one is near retirement 60 years or older.

#92 Piccaso on 04.12.13 at 12:33 am

Ha Ha … 11 out of 87 posts made by who?

#93 The funky traveler on 04.12.13 at 12:53 am

I’ve certainly been noticing the lack of realtors who once had a hard on for Sir Garth, commenting as frequently here anymore.

#94 Dan7 on 04.12.13 at 12:59 am

Garth is 1 million enough to retire on in lets say 25-30 years? After you adjust for inflation it wont be worth very much. Unless we have deflation.

What would be the ideal amount to retire on in 30 years if you want to live an above middle class life style? $1, 2, 3, million

#95 rentin on 04.12.13 at 1:07 am

12% Garth? According to your age rule you have invested too much, or are younger than you look….

#96 Tony on 04.12.13 at 1:23 am

Re: #8 blase on 04.11.13 at 8:38 pm

If Goldman says that you can be assured rates will be significantly lower a few years from now.

#97 Tony on 04.12.13 at 1:28 am

Re: #9 AVG_Canadian on 04.11.13 at 8:38 pm

Keep renting all of Alberta real estate will plummet in price along with the rest of the country. Here’s some inside information about insurance. The house always wins meaning if you take out any type of insurance you lose.

#98 bill on 04.12.13 at 1:39 am

bloc existentialist
methane grow op? really? or did you mean they were burning propane to produce co2?

#99 Buy? Curious? on 04.12.13 at 4:34 am

Hey! My little Weimaraner-looking blog dogs, on the Greatest Canadian Blog since The Friendly Giant fan page, check out the trailer for a documentary on what it’s like to be poor in ‘Merica due to the financial crisis of 2008. Just because it hasn’t happened here, doesn’t it isn’t going to happen. (Damn that was deep!) All it takes is one, maybe 2, bad financial decisions and you are up Schitt’s Creek with out a paddle and some wetnaps. (old stripper tip from my Chippendale’s days.)

http://www.youtube.com/watch?v=NbxQpCq21l0

#100 Ballingsford on 04.12.13 at 6:24 am

Got a call from one of my banks last night BMO. Outsourced voice on the line trying to offer me a higher interest amt on a cash back card for a $79 annual fee.
Did I give her an earfull? Damn right I did. BMO, I didn’t think you’d stoop so low. Business must be getting tough since the lower mortgage rate scheme didn’t last too long.

#101 Ralph Cramdown Ⓤ on 04.12.13 at 6:46 am

#94 Dan7
Just read “The 7 Most Important Equations for Your Retirement” and you’ll be able to answer these questions for yourself, given your specific needs and assumptions. Or follow the somewhat simpler maxim “more is better.”

#102 Mark on 04.12.13 at 6:48 am

Consider this…

If Japan blows up, the Yen tanks against all currencies. Global economic trouble would mean Canadian exports and the CAD fall.

Kyle Bass: The Beginning of the End is Here for Japanese Government Bonds
http://www.planbeconomics.com/2013/04/kyle-bass-beginning-of-end-is-here-for.html

So Canada could be hurt by a double-whammy: declining exports and a domestic housing contraction.

Recall that the only thing saving the Canadian economy from the domestic woes of the 1990s was the global economic boom.

#103 Ralph Cramdown Ⓤ on 04.12.13 at 6:50 am

“methane grow op?”

I think he meant a methamphetamine lab. 5 seconds of google reveals:

http://www.ktvb.com/news/How-to-test-your-home-for-meth-contamination-149606465.html

#104 jess on 04.12.13 at 7:30 am

ahead of line

…acquiring Singaporean PR(permanent resident ) status. …Li is reportedly an investor with The Enterprise Fund II (sponsored by IE Singapore, the national agency under Singapore’s Ministry of Trade and Industry), having sunk S$1.5 million into it.

http://therealsingapore.com/content/how-did-wanted-china-fugitive-be-granted-singapore-pr

#105 jess on 04.12.13 at 7:49 am

order

…”As the judge in the US District Court commented about the investors who took part in the 2005 and 2010 bond swaps: “[they] bargained for certainty and the avoidance of the burden and risk of litigating”. However, the hold-out creditors’ strategy and the decisions of the US courts could now put at risk that certainty by disrupting the payment flows due to those who participated in Argentina’s restructurings in 2005 and 2010.”

http://www.iif.com/emp/principles

principles for stable capital flows and fair debt restructuring
impact of CACs on credit default swaps (or CDS).
http://blogs.reuters.com/felix-salmon/2012/02/29/how-greeces-default-could-kill-the-sovereign-cds-market/

Germany is the first country to have passed legislation to implement a form of model collective action clause into national law. From 1 January 2013, all euro area sovereigns will be required to include the Model CAC in both international and domestic government securities
http://europa.eu/efc/sub_committee/cac/index_en.htm
http://www.bloomberg.com/news/2012-03-09/greek-debt-deal-might-trigger-3-billion-of-default-swaps-under-isda-rules.html
http://www.ey.com/LU/en/Services/Tax/Tax-Library

#106 EIT on 04.12.13 at 7:51 am

“… In the popular mind, however, economics has greater pretensions. It has moved into the void left by the decline of religion and the moral consensus; and it is increasingly seen as the main preoccupation of public policy, a panacea for social ills, the source even of private contentment. From being a technical subject, explaining human society in the way that medicine explains the human body, it threatens to become an end in itself, laying down goals, motives, incentives. …” -Norman Davies, Europe A History

#107 Timbo on 04.12.13 at 7:58 am

http://www.bloomberg.com/news/2013-04-11/imf-trims-u-s-growth-outlook-in-draft-report-citing-fiscal-cuts.html

“The U.S.’s fiscal tightening that took effect last month will restrain consumption temporarily, the report said. The global economy will expand 3.4 percent this year, compared with 3.5 percent forecast in January, according to projections in the report. The 17-nation euro area will contract 0.2 percent”

Japan said it’s only ‘temporarily’ 20 years ago……..

http://www.bloomberg.com/news/2013-04-11/wells-fargo-401-k-loans-jump-28-as-older-workers-borrow.html

“The number of people taking loans from their 401(k) retirement accounts increased 28 percent in the fourth quarter from a year earlier as older workers tapped their savings, according to Wells Fargo & Co.”

must feed the beast. Selling the grandchildren will be next.

#108 Small Town Steve on 04.12.13 at 7:58 am

http://m.youtube.com/#/watch?feature=related&v=91_5YxmJ9Ic

Theme song to the new Vikings mini series on HBO.
#99 a more fitting link..lyrics can be applied to “house horny sheeple as well…

This will never end ’cause I want more
More, give me more,give me more..

#109 AK on 04.12.13 at 8:09 am

#91 Dean Mason on 04.12.13 at 12:30 am
“If you took a combined asset mix approach you could put a with 25% in 5 year GIC 3.15%,37% in 20 year provincial strip bond at 3.75%,38% in corporate 20 year strip bond at 4.85%. The combined yield would be 4.018% so the $11,000 after 5 years would be worth $13,499.40 and after 20 years held to maturity it would be worth $24,185.92.”
——————————————————————–
Are you back again?

Yes, with real inflation running at north of 5%, you are really way ahead of the curve. :-)

#110 AK on 04.12.13 at 8:17 am

#84 Freedom First on 04.11.13 at 11:27 pm
“Garth is an excellent example of financial literacy, and how he does this very helpful blog day in and day out, amid the constant ignorant arguing against sound financial principles, and the RE cartel and it’s support influencing no conscience abusers, is truly astonishing!”
——————————————————————–
That’s what makes this blog so unique and interesting.

#111 David W on 04.12.13 at 8:24 am

I’m in my mid 20s and feeling the presure to buy. Both my siblings bought this year and my in-laws would like us to get a place cuz it would be a step closer for them having grandkids. I’m not interested in sinking a tonne of $$$ in a sinking asset and living house poor. Houses prices better drop soon!

What is a reasonable price to pay per sq foot for a condo and condo fee?

You relatives want you to buy a house in your 20s and assume massive debt so they can have grandchildren? Buy them a dog. — Garth

#112 Randy on 04.12.13 at 8:30 am

The Fed and the Banks need to keep printing money and keep interest rates near zero or else the tide will go out and their will be massive defaults all around the world….Banks World-wide have been corrupted by politicians….Keep on spending….resurrect Keynes…haha

#113 Timbo on 04.12.13 at 8:35 am

http://www.telegraph.co.uk/news/worldnews/middleeast/iran/9985757/Iranian-scientist-claims-to-have-invented-time-machine.html

” Ali Razeghi, a Tehran scientist has registered “The Aryayek Time Traveling Machine” with the state-run Centre for Strategic Inventions.

The device can predict the future in a print out after taking readings from the touch of a user, he told the Fars state newsagency. ”

Become a real estate know it all, damn……..

http://www.businessinsider.com/march-retail-sales-2013-4

“Excluding autos and gas, sales fell 0.1%. Economists were looking for a gain of 0.3%.”

ouch…thank goodness the sequester will layoff enough people so they have time to spend….good times…

#114 Robert on 04.12.13 at 8:55 am

Just amazed on how negative most posters on this site are. Petty jealousy. Very sad. It must be tough to sit for months and years waiting for a big drop. Ha ha. What a way to live.

#115 blok existentialist on 04.12.13 at 9:17 am

Ha, ha. Freudian slip. I don’t like drugs. Yes, I meant meth lab. Thanks for response.

#116 T.O. Bubble Boy on 04.12.13 at 9:21 am

@ #111 David W on 04.12.13 at 8:24 am

I’m in my mid 20s and feeling the presure to buy. Both my siblings bought this year and my in-laws would like us to get a place cuz it would be a step closer for them having grandkids. I’m not interested in sinking a tonne of $$$ in a sinking asset and living house poor. Houses prices better drop soon!

What is a reasonable price to pay per sq foot for a condo and condo fee?

Buying a condo now would ensure that you CANNOT afford kids for several additional years… rent a house in a neighbourhood you might consider raising a kid in if you want the “grown-up experience”.

#117 jess on 04.12.13 at 9:30 am

One of the primary reasons municipal bonds are considered separately from other types of bonds is their special ability to provide tax-exempt income. Interest paid by the issuer to bond holders is often exempt from all federal taxes, as well as state or local taxes depending on the state in which the issuer is located, subject to certain restrictions. Bonds issued for certain purposes are subject to the alternative minimum tax.
================
Definition of ‘Special Assessment Bond’
A special type of municipal bond used to fund a development project. Interest owed to lenders is paid by taxes levied on the community benefiting from the particular bond-funded project.

Investopedia explains ‘Special Assessment Bond’
For example, if a bond of this sort was issued to pay for sidewalks to be re-paved in a certain community, an additional tax would be levied on homeowners in the area benefiting from this project. Area homeowners get nicer walking paths, and they will probably see the value of their property increase accordingly, but this comes at a price. Their property taxes will increase to pay the interest owed to the bondholders by the municipality.

============
MUCKRAKING ALERT: Detroit spent $45 million on sidewalk ramps to nowhere while sinking into debt
March 19, 2013 by Steve Neavling

privatize the sidewalks? create alternative walk of fame… fossilized prints ….opportunity for smoking man –i read that coders are getting hollywood agents. ;^)
————-

#118 Morgan on 04.12.13 at 9:32 am

Carmen – Garth noted “$240K mortgage on a $240K house? – how did that happen?” This question needs an answer. How DID that happen? When you have access to credit like a HELOC, did you run it up? Or were you bundling prior debts, such as a student loan, into a cheaper loan?
If you have a hard time saving money, then cashing out your house to “invest” may well leave you with easy access to your cash. Behaviourally, people who tend to spend ‘easy money’ keep doing so until accessing the money is no longer easy. On the extreme end, I have a friend who uses her tax returns to pay off her debt (she has a very good job and earns well, but has OCD and can’t stop spending. She deliberately doesn’t fill out her returns so she doesn’t know the amount of refund she will get, and then uses it to get her out of trouble when she’s run up her cards again). It’s an insane plan by normal money management rules, but she at least is smart enough to know she can’t be allowed near money without wanting to spend it (the problem would be much easier to solve if the credit card companies didn’t keep offering her new credit). Anyway, most people find reasons to spend money when they feel rich. If this at all sounds like you, then investing may well turn into “investing” and leave you broke in 10 years. If you have a hard time budgeting, or if your work in insecure and you have to dip into equity to keep a roof over your head from time to time, then you may be better off keeping what equity you have locked away from yourself and focus on using your cheap monthly living costs to get rid of that debt or diversify your assets. If you do decide to sell and invest anyway, be sure to keep the money separate and relatively difficult to ‘borrow’ from.

#119 Holy Crap Wheres The Tylenol on 04.12.13 at 9:36 am

#36 Smoking Man on 04.11.13 at 9:31 pm

Rate hikes have been delayed because the economy’s weakened. I have been consistent, but not omniscient. — Garth

I just Google omniscient it said omniscient = Smoking Man

I just Googled omniscient and it is a direct representation of God. He is the Alpha and the Omega. Revelation 1:8
I am Alpha and Omega, the beginning and the ending, saith the Lord, which is, and which was, and which is to come, the Almighty.

So therefore Smoking Man = Omniscient
Omniscient = God
God = The Alpha and the Omega
Alpha and the Omega = Smoking Man
Smoking Man = Christianity

So what say ye seer of all past, present and future? I thought you where an atheist or perhaps just an agnostic!

#120 Steven Rowlandson on 04.12.13 at 9:38 am

What ever you do don’t accept Bitcoins as payment for a house. http://www.telegraph.co.uk/finance/economics/9987664/Bitcoin-trading-halted-after-panic-sell-off.html

They are not a proper store of value and the Bitcoin system is vulnerable to hackers and other man made and natural hazzards.

#121 -=jwk=- on 04.12.13 at 9:38 am

@ Kingbubbles #25

Tips on finding a good rental?
Use a professional landlord, not a hobbyist. Your LL should be in the business of renting homes, have a portfolio of at least 10 homes s/he has owned for at least ten years. Being a realtor is a bonus. They should know good plumbers, applicance stores. Ask them. You should be able to drive to their references, see the reference houses yourself and talk to the other tenants.

Do not expect granite, pot lights and silver applicances. Those are amateur, flipper status symbols. expect realtivley modern (10-15 years) kitchen and bath, with white or no appliciances. Wall/Floor coverings/fininsh may not be to your taste but you are welcome to change them. If you are going to live somewhere 5-10 years, why not put in carpets you like? They’ll be worn out by the time you move out anyway. Furnace and A/C will be solid but hot high effeciency, likely newer mid efficieny of older ‘high’ efficiency standards of the day. Why? They are trying to make money from your rent, not capital gain. So these things are a good sign someone is paying attention the bottom line and not making a capital gain bet. ie they aren’t look to sell!

be prepared to take ownership. You will never hear from your landlord. ever. In the city of toronto LL are quired by law to do the yard work. I signed a lease stating I would do it. Why? I can do a better job than the minimum they were doing for the previous tenant and I like yard work. I hope this frost wont kill the new blueberry bushes we planted last weekend :(. Got cuc’s , corn and tomatos ready to go in the ground soon and the tulips we put in when we moved in last fall are up a few inches already.

Go pro and you’ll be fine. Look on realtor.ca. If they are pro, it will be on there. Even get a realor and have them look for you.

#122 -=jwk=- on 04.12.13 at 9:38 am

What you get for 995k in USA:

http://www.nytimes.com/2013/04/11/greathomesanddestinations/real-estate-for-995000.html?hp

It’s different here. Really.

#123 jess on 04.12.13 at 9:42 am

http://www.irs.gov/pub/irs-soi/12insprbulhignincome.pdf

High-Income Tax Returns for 2009
Statistics of Income Bulletin | Spring 2012

http://www.thefiscaltimes.com/Articles/2013/04/11/Why-More-Affluent-Americans-Pay-No-Taxes.aspx#page1

#124 Holy Crap Wheres The Tylenol on 04.12.13 at 9:44 am

Virtual money is like virtual sex, feels the same way when you are getting screwed!
This Bitcoin Ponzi scheme is going to bite some holders large. Winklevoss twins have the capital however they would be better off putting their real cash back into Facebook.

http://blogs.marketwatch.com/thetell/2013/04/12/high-atop-rocky-mt-gox-winklevoss-twins-are-millionaires-for-now/

#125 jess on 04.12.13 at 9:58 am

King of the tanker trade

Norwegian-born Fredriksen is a shipping tycoon whom Forbes described as “King of the tanker trade.” He became a Cypriot citizen in 2006 to benefit from Cypriot tax laws even though he reportedly lives in The Old Rectory in Chelsea in the UK…Until 2006 Fredriksen’s main holding company, Greenwich Holdings, was based in Cyprus, and in 2006 it paid a dividend of US$ 4.5 billion. The dividend went to a Panama-company with undisclosed owners. It has been impossible to confirm who actually received the money…read more
http://treasureislands.org/a-way-to-help-pay-for-cyprus-bailout/

#126 Tax Evasion on 04.12.13 at 10:07 am

#49 Andy:

If you are duel, check out whether your country still requires you to file taxes. If so, get your assets out of that country. The IRS has no jurisdiction on Canadian soil, if USA is previous country. When getting a passport, get a Canadian one, so USA cannot track you. If you dont owe taxes in USA, save your time and energy and lose the IRS. The only two countries requiring tax filing when not a resident are USA and Libya.

#41 #41 Bill Gable:

Be careful: If you have substantial presence in the USA(183 days min every 3 years) the IRS can go after you as a resident, even if you are a Canadian. This is something to think about, as the IRS likes to harass dual citizens in Canada. One way around it as a dual in Canada of course is to keep a Canadian passport, so if you are detained in the USA it will create a major international incident if the IRS decides to harass a Canadian. Given that the USA is becoming more and more of a fascist police state I wonder why any Canadian would ever set foot on American soil.

#21 DaleFromCalgary: Alison Redford likely set projections with oil forecast at >$100/barrel and as a consequence there looks like a major problem exists. The problem is getting the oil out of Alberta to refineries not lack of supply. USA pipeline will liven up economy if it goes in. Good info about trades, thx.

#127 Timbo on 04.12.13 at 10:09 am

http://www.cnbc.com/id/100637441

Consumer Sentiment Disappoints, Index Falls to 72.3 in April Vs. 78.6 in March

A little disappointed? Go out a buy something, its our only hope……

http://uk.reuters.com/article/2013/04/12/markets-oil-idUKL3N0CZ13620130412

“The IEA now has virtually the same view on demand as OPEC, which in a report on Wednesday lowered its consumption growth forecast to 800,000 bpd. The EIA on Tuesday lowered its estimate by 50,000 bpd to 960,000 bpd.”

Time to throttle back production…. No worries…..yet.

#128 Tony on 04.12.13 at 10:36 am

For all the uninitiated this Monday is April the 15th in America. It will also be the continuation of the long bear market that began way back in 1990. You will learn the teeth of the bear.

#129 Tariq on 04.12.13 at 10:36 am

Garth,

You never said anything about real estate in St. John’s Newfoundland. You never included data from here in your blog. Here bubble is still expanding. No sign of prices fall so far. Why? What is driving this bubble? Thanks

#130 Dr. Wayne on 04.12.13 at 10:37 am

#10 Yeah on 04.11.13 at 8:39 pm

Second!!!!

Stop it. — Garth

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

For such a brilliant mind as yours Mr. Turner, I am totally amazed that you have not figured out that by DELETING those who post FIRST, or any bastardized version of this irritation, will undoubtedly cease this annoying habit when their childish goal is unfulfilled … why do you persist in allowing this, even following your request for termination??? You are not dealing with highly evolved entities. People with this mentality are beyond reason … it’s like training a dog (my apologies to all dogs) … they will learn, but require handling by a strong, consistent ‘master’. NOT???

#131 Grantmi on 04.12.13 at 10:39 am

WOW.. Gold rocks getting kicked in the nads this morning!!

down -2.1% this morning! Will it break $1,500???

#132 GTA Girl on 04.12.13 at 10:45 am

Dear Robert #114,

It would be rude of me to call you an idiot.

I’m sorry that the downtown condo sales centre you work in is empty, barren and devoid of the once hedonistic developers that you’ve leeched yourself to. You believed that listening to old Pet Shop Boys tune, Opportunities, that played in your condo bosses AstonMartin was a template to success.

But now your boss has his tail between his legs and taking more frequent trips to the office slick marbled toilet and his eyes are bulgy and manner is twitchier. Somehow the glam is gone and you’re now in some surreal better dressed version of the last few frames of the movie Trainspotting.

It won’t get better, Hun. Your developer boss is now avoiding phone calls from numbers with a Moscow/Bulgaria code. He’s on the phone to his father who is beginning to see his son as a F*ck up. Begging for money to cover the trades for his condo in the middle of a swamp in north Oakville.

We are all not bitter. Most of us own property. But we all see clearly the circus sideshow that development and investor money has made it. Logic has flown out the window. This ponzi of housing scam now threatens legitimate sound economics. And the people who will suffer most will be those trapped by the lies, the free banking money and the noose of debt.

So go get another espresso from the sales office $10k shiny silver Italian coffee machine…before it’s ripped out of the wall by your boss’s creditors.

Ouch. — Garth

#133 LP on 04.12.13 at 10:56 am

#126Tax Evasion on 04.12.13 at 10:07 am

When getting a passport, get a Canadian one, so USA cannot track you.
******************************
Perhaps you might be wrong on this point. I read not long ago that the US has taken for itself the “right” to the passenger manifest of all flights that overfly any of its territory including islands and protectorates, even if your flight doesn’t land at any point in the trip. That being the case you would be tracked regardless of your citizenship of record.

#134 LP on 04.12.13 at 10:58 am

Regarding my post above, I meant that your flight would not land in US territory. Of course one would hope to land, somewhere, eventually. :>)

#135 AK on 04.12.13 at 11:05 am

#131 Grantmi on 04.12.13 at 10:39 am
“WOW.. Gold rocks getting kicked in the nads this morning!!

down -2.1% this morning! Will it break $1,500???”
——————————————————————
Without a doubt. It will be below $1,000.00 later in the year.

#136 Bandiguile on 04.12.13 at 11:07 am

For all gold bugs out there today, one word: “lol”

http://www.zerohedge.com/news/2013-04-12/first-bitcoin-now-gold-all-alterantive-currencies-must-be-crushed

#137 AK on 04.12.13 at 11:12 am

#128 Tony on 04.12.13 at 10:36 am
“For all the uninitiated this Monday is April the 15th in America. It will also be the continuation of the long bear market that began way back in 1990. You will learn the teeth of the bear.”
——————————————————————-
No way, Tony.

The Dow is heading to 20,000, Bud.

Now, the TSX is a different story.

With Gold going to $600.00 and Oil down to $42.00, the post-mortem is being prepaired. :-)

#138 Tony on 04.12.13 at 11:29 am

Re: #91 Dean Mason on 04.12.13 at 12:30 am

I’d really like to know if anyone has actually gotten 3.15 percent interest over 5 years on a TFSA or an RRSP at ICICI bank? The forms you fill out show no rate of interest at all and you can’t contact the bank online.

Why would you put a savings vehicle inside a TFSA? — Garth

#139 onetimecheck on 04.12.13 at 11:30 am

Looks like someone took the RAID sprayer to the gold bugs today.
“ONLY RAID KILLS THEM DEAD”
R.I.P

#140 Robert on 04.12.13 at 11:32 am

GTA Girl # 132

Wow that is the best you can come up with? Accusing me of working for a realtor? Lol. You sound very defensive. I actually sold my condo listening to Garth years ago (not blaming Garth) and have been renting ever since. The sad fact is that most people here are very bitter. Story after story about how I know someone who is a lawyer and they are laying off people because of real estate or i went to the mall and it was empty. This is going to end bad. Lol. So bitter and very sad. If the mkt dropped big most of the idiots here would be too scared to buy anyway.

#141 AK on 04.12.13 at 11:36 am

#132 GTA Girl on 04.12.13 at 10:45 am

Wow. That’s why I love this blog.

I know some investors that had some money on the project below. For some reason some think it’s different here.

http://www.vegasinc.com/news/2013/mar/27/unfinished-henderson-condo-project-vantage-lofts-s/

#142 GTA Girl on 04.12.13 at 11:40 am

Robert? I’m thrilled for you. I just ordered a latte in complete celebration of your journey.

And yes, Robert. It’s the best I can come up with.

Take your little nest egg and buy yourself a little sense of humour, wear it around your neck, so all the other little Roberts can look up to you.

Have a nice day, Robert.

#143 Old Man on 04.12.13 at 11:40 am

Gold will take a dead cat bounce, as stop loss orders are being triggered taking all for a little ride. Just shows you how fast things can change with speculation, as a bubble can burst quickly.

#144 lawboy on 04.12.13 at 11:41 am

The worst thing about this weather is that it is going to be used by the realturds as the reason for a lousy spring market….

#145 GTA Girl on 04.12.13 at 11:43 am

I’m having fun Garth.

I picture you in five-inch heels standing on a prone man’s chest. — Garth

#146 GTA Girl on 04.12.13 at 11:45 am

AK, that photo on the post you linked, is the most depressing thing.

It looks like the GTA.

At least Vegas doesn’t have an ice storm in April

#147 Joe Cocker on 04.12.13 at 11:47 am

Silver down 5 %, gold 4 % today.
Silver could probably hit bellow 20s. Gold probably bellow 1200. Soon.

There was a theory that somebody (with the proper means, well to ‘print’ and allocate currencies) has long term strategy on crashing commodities so that somebody can buy them at rock bottom prices. After which they could skyrocket.

So I am preparing the cash and will sit on the sidelines for that action.
If I am correct that will be the opportunity of a lifetime, worth waiting for.
Strategically energy – oil and gas are the places to be in long run, based on fundamental long term shortage. Russia could be a huge, great buy very soon.

But first I believe the stock market will go up as some additional QE is pending announcement, I feel very soon as the US numbers are not good.

I sure hope the metalheads on this site took my advice. But I know they did not. Sad. — Garth

#148 Jimmy on 04.12.13 at 11:48 am

“I know what’s coming.”

The hubris of many economics pundits leads them to believe that they can predict the future accurately based on past information. It would be wise simply to say, “I predict that housing prices will moderate based on these variables.” However, that gets less attention than saying “big housing correction around the next corner!” and won’t net you nearly as many basement-dwelling followers desperate for a housing crash.

Housing constitutes but one facet of anticipated future events. — Garth

#149 Grantmi on 04.12.13 at 11:50 am

bitcoin = gold

#150 Piccaso on 04.12.13 at 11:52 am

Gold is getting HAMMERED again

#151 WhiteKat on 04.12.13 at 11:52 am

@Tax Evasion (#126)

I am one of those Canadian/USA duals you refer to – born in USA to Canadian born parents, but left USA as an toddler when my parents divorced. At 50 years of age, I just found out that all these years I was supposed to be filing not only US tax returns but also annual reports detailing every single ‘foreign’ account I have. All my Canadian accounts are considered ‘foreign’ by the USA even though they are in Canada where I live. There are HUGE penalties for not having told the USA about these so-called ‘foreign’ accounts.

I might just forget about it all at this point in my life, but cannot because starting 2014 all financial institutions in the world will be forced by a new US law FATCA(Foreign Account Tax Compliant Act) to hand over my information to the USA or be stuck with 30% withholdings of their US sourced incomes. Guess who the banks are going to care about? – not me that is for sure. Guess who the Canadian government is going to care about – not me – it is prepared to break our own Charter of Rights and agree to hand over my account details to the IRS so the banks don’t have to. The banks just have to find out WHO its dual citizens are and report to the CRA who in turn will report to the IRS.

In order to get out of this mess, I have to enter one of various ‘amnesty’ programs(tax evader that I am), to catch up on past returns and FBARs(foreign bank account reports) at the cost of 5K+. I have to hope that I don’t get hit with penalties for past failure to file even if I do enter one of these amnesty programs. Then I have to continue to file yearly after that until I have filed for enough years that I can renounce US citizenship (you cannot renounce unless you are up to date on your tax reporting).

There is a US/Canadian tax treaty that limits some of the double taxation, but not all. For example, RESPS, TFSAs, RRIFS, unemployment and disability benefits, to name a few are taxable and not allowable as ‘foreign income exclusion amounts’ on your US tax return. Canadian mutual funds are considered ‘passive foreign investment income’ and subject to insane taxation and reporting requirements as a way to discourage investment in non-US vehicles.

In summary, as I near retirement, I find out I am screwed by the country I was born in, but do not consider myself a ‘citizen’ of because USA says it owns a piece of me. Hiding my meager retirement savings under my mattress sounds good about right now.

#152 Ray Skunk on 04.12.13 at 11:55 am

@ 111
I’m in my mid 20s and feeling the presure to buy. Both my siblings bought this year and my in-laws would like us to get a place cuz it would be a step closer for them having grandkids
———————————————————-

A condo is not a good idea if kids are on the horizon within the next 3-5 years. You WILL want to move out.

Condos are for the young and single, the old and simple or the middle aged and unwanted.

Every couple I know who have tried to make a family fit in a condo end up moving out – paying early cancellation on their mortgage and realtor commission. With the market now stagnant at best, don’t do it. Hold on to your money, grow it and buy a small SFH in the burbs if children is your goal.

#153 Toronto_CA on 04.12.13 at 11:56 am

#132 GTA Girl on 04.12.13 at 10:45 am

Now THAT was good.

#154 Greg on 04.12.13 at 11:59 am

Hark gold is cratering! The shiny yellow metal is growing tarnished! All the goldbugs are screaming as per Golem in LOTR “my precious, my precious!!!!!!”

#155 Joe Cocker on 04.12.13 at 12:01 pm

I sure hope the metalheads on this site took my advice. But I know they did not. Sad. — Garth
———————————————–

If it was a free market I would disagree to some extent but as most market are very heavy manipulated by central banks and investment banks I think you Garth are absolutely correct and deserve recognition.
You have my hat down.

The question is long would we defy gravity (oil down over 3 % today).

#156 Ray Skunk on 04.12.13 at 12:02 pm

@ 88
Garth, if you happen to have 150,000 in cash doing nothing in a bank, would you enter the market a this moment?
——————————————————–

Assuming you’ve maxed out your TFSAs and want to remain pretty liquid, open up a trading account and self-trade. I personally recommend TD, but that’s because I bank with them so management is easy.

Put $10k each into 15 diversified ETFs. Once you have >$50k, trades are $10 each so you may want to diversify further with $5k per ETF. As per Garth’s previous recommendations, I’d look at US-dividend based ETFs such as ZDY.

$150k invested should get you around $600 a month in dividends alone.

Collect dividends for next couple of years as RE corrects, then make your move.

#157 WhiteKat on 04.12.13 at 12:03 pm

@Tax Evasion #126

Oh yeah, forgot to mention, USA is the only country in the world (other than Eritrea, not Libya as you mentioned) that practices CITIZENSHIP-BASED TAXATION rather than residency-based taxation.

US taxes people it considers ‘US persons’ (dual citizens, ex-green-card holders, tardy snow-birds) on their world-wide income irrespective of where they actually live in the world or where there income was derived.

This is such a unique taxation policy that it is no wonder, dual Canadian/US citizens have been caught off guard with the new FATCA law. Approximately 1 million of us here in Canada are about to be thrown under the bus by our own government.

#158 Small Town Steve on 04.12.13 at 12:05 pm

#132 GTA Girl on 04.12.13 at 10:45 am

You are awesome!

Within 1day of when I began reading this pathetic blog I immediately dumped all my silver, today I feel vindicated! Thanks Garth!

Bitcoin is next, sadly I know a few that own it. Hopefully they had the sense to dump it..

#159 WhiteKat on 04.12.13 at 12:15 pm

@Garth,

I wish there was an edit function on this site. I hate it when I look back at something I posted and notice obvious mistakes that are too late to fix (‘an’ instead of ‘a’, ‘there’ instead of ‘their’, etc).

#160 Grantmi on 04.12.13 at 12:16 pm

WOW.. looking at the volume so far on GLD.. today’s trading volume 3 hrs in.. .. looks like it’s going to take out Aug 28th, 2011’s HUGE dump!!

http://scharts.co/YvqwTr

Gold Boys… you better shore it up here!! Or good-bye (or Good buy.. one of them)

#161 sciencemonkey on 04.12.13 at 12:24 pm

One thing I’m struggling with is whether I want to move to ‘merica for job opportunities. What’s stopping me is it seems like it is more of a police state than Canada, and I am concerned about health care costs as well.

My parents are from the USA, and when I was born here they obtained a US birth certificate for me. This is a tough decision because if I do file with the US, I could spend years waffling and paying US taxes. However, if I don’t file I’m pretty much removing the possibility of ever moving there, or as WhiteKat is saying have big withholdings on US investments. At least the foreign-earned income exclusion seems like it would cover my unimpressive salary.

http://www.investopedia.com/ask/answers/07/taxtipforeign.asp

#162 WhiteKat on 04.12.13 at 12:24 pm

@All,

For those of you who are happy you are not a ‘US person’ and that FATCA doesn’t affect you, think again.

The procedures and computer systems changes required to implement FATCA as insisted upon by the USA, is costing our financial institutions millions of dollars that YOU as a tax-payer and account holder are paying for. By the way, most of the IT changes are being outsourced to India.

Also, this invasion of privacy and discrimination of a sub-class of Canadians is a slippery slope. Today it is me, tomorrow it is you.

#163 PTDBD on 04.12.13 at 12:25 pm

I say, I say again, are you listening now? Get that tangled root of grey hair out of your ears and listen…..

60 PTDBD on 05.26.09 at 2:13 pm
To those expecting the inevitable interest rate increases, remember that those came about as natural balancing reactions to market forces in a relatively “free market” economy. Circumstances have changed and so have the rules. Interest rates could be held at zero for years until all “savings” are squeezed out.

In today’s extraordinary manipulated financial environment, I wouldn’t expect a balancing out of anything unless the whole confidence game edifice collapses. Ironic isn’t it….no balance until the tilting gyroscope goes bonkers.

#164 Ralph Cramdown on 04.12.13 at 12:28 pm

Funny Bloomberg headline: “John Paulson to Start Fund to Reduce Clients’ Tax Bills”

What, another one?

#165 not 1st on 04.12.13 at 12:29 pm

No worrys about Canada says the guy from Canaccord.

If the U.S.A is truly resurgent then we are so inextricably bound to them that we can’t not have a major boost. Don’t know if he meant in areas other than housing.

#166 Tom Vu on 04.12.13 at 12:29 pm

#145 GTA Girl on 04.12.13 at 11:43 am

I’m having fun Garth.

I picture you in five-inch heels standing on a prone man’s chest. — Garth

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

Does wearing a tin foil hat and standing on head count?

#167 Canadian Watchdog on 04.12.13 at 12:31 pm

#150 Piccaso

Gold is getting HAMMERED again

Yes it is. A clear signal that something in the banking system is very very wrong, just like in 2010 and 2008. The Fed will respond with more QE, like every time.

Those who understand this free trade pattern can earn a very hefty profit.

More of your bad advice. — Garth

#168 MP on 04.12.13 at 12:35 pm

151 WhiteKat

I feel for you. Same here, US citizen in Canada, but only for about 6 years. FBARs gave you a window to catch up on them and not face penalties. Luckily I found out about it in time over a year ago. That window is over.

I collapsed my TFSA last year and sold all my Canadian mutual funds, per advice from my Canadian finance guys. It sure pays to have help on your side. I’d thank Garth for giving me the confidence to go find someone to help manage my money.

It is amazing how much onus is on a citizen these days, but hey, who else should it be on? Sure would be easier if we played nicer across the 45th parallel though.

#169 Julie on 04.12.13 at 12:36 pm

DAM those Central Bankers are dumb…..good thing they are not in charge of our money with all the gold they are buying. Oh wait……

http://www.marketwatch.com/story/gold-prices-slip-with-weekly-declines-in-sight-2013-04-12

#170 Old Man on 04.12.13 at 12:38 pm

#151 WhiteKat – I would not panic as this is what you must do to ascertain the true picture; the reality vs a potential illusion. Make an appointment with a huge accounting firm, and the top 30 can be googled for an initial assessment for all locations in Canada. They will or should have USA tax experts in house depending where you live, as had to do this myself with USA stuff in order to get it right with Canada which involved complex financial matters.

#171 wassup on 04.12.13 at 12:41 pm

2 days ago I warned of impending bad reports from consumer spending in the USA . That economists using six month figures are using old news. You need to keep a pulse on what’s happening now. Consumer activity is still volatile. Today’s reports are calling it. The pace has revived a tiny little bit but it still looks shaky. We shall see in Canada soon, with RE the way it is, I’m not thinking it will be good.

#172 Julie on 04.12.13 at 12:52 pm

I agree whole heartedly with Garth about metals although I am still perplexed that the Central Bankers are buying gold…….if it is so stupid to buy.

That being said…..if gold/silver drops below 1000/18 I will be a “speculative buyer” with “risk” capital.

#173 PTDBD on 04.12.13 at 12:55 pm

One more…Written 4 years ago….how times have changed!

#61 PeckedToDeathByDucks on 10.20.09 at 1:35 pm
Study: Internet ‘Altering Our Brains’…

“People who read the above article also showed interest in how the Large Hadron Collider was ‘being sabotaged from the future and how Obama team controlled the media.”

is the first sentence that sputters out of his chickenlips. I hadn’t seen the guy in nearly a year and now there he was vibrating his drumstick fingers on the bar table with renewed, bug-eyed, hyperactive intensity.

How you been? I asked Chickenlittle’syoungerbrother. I haven’t seen you since I went for a p and you had disappeared. The bartender said that you were screaming about nefarious black helicopters as you raced out the door. Last time here, the Garth told you to take your meds because of all your yelling about some sort of Pandemic being engineered in the near future. Are you more at ease now?

“At ease? Ease? Ease rhymes with bees. Have you heard what’s happening to the bees? The bees will bring us to our knees! Food gone within months. And the pandemic…haven’t you heard? Nurses in California striking. It’s not going to end well. You keep hearing that the wurst is behind us. What kind of perverted talk is that? There is no wurst. It’s all baloney.”

Trying to help, I pointed out to him that the the Internet was like a large lunatic room with strangers going in and out yelling confusing inanities and perceived certainties at each other. Nobody every really listened and understood. See…there goes some guy flashing signs:
“Beware the Financial Undertoad”.
“You are the Wallet of Last Resort”
“Hep me Flaherty, I’m as short as you.”
What the heck does all that mean?

“Mean? Mean? Yea, that’s the word. Ugly, nasty, predatory, selfish, lying, stealing mean. How else can you explain it? The chasm between the rich and poor grows. London housing prices are hitting new records while their government is in the biggest financial, money-printing mess ever. Apple makes record sales and revenues attributed to back-to-school sales, while unemployment and foreclosures increase and Detroit can’t afford to bury their unclaimed dead. They manufacture a homeless girl doll that lives with her mother in a car..the price $89. Speculators are buying foreclosed homes in Vegas a dozen at a time while the homeless go to shelters. Financiers are reaping record bonuses with the proceeds from the money used to bail them out. Wasn’t that money supposed to be for the home owners? Luxury car sales are doing well. Obama’s throwing parties and travelling in style while their deficit balloons. He wins the Nobel Peace Prize as things go boom. Banks too big to fail are even bigger now. Canada has a deficit that’s getting even larger while the Harpo plays piano. Canadians see this and say…hmmm, he’s not that bad after all. Yea, mean is the word.

There were chicken feathers snowing all around us. He took a deep breath……

#174 VT on 04.12.13 at 12:57 pm

This post is dedicated to the gold pumper who was saying that yesterday was a great day to load up the truck and buy Barrick:

http://ca.finance.yahoo.com/q/bc?s=ABX.TO&t=5d&l=on&z=l&q=l&c=

#175 FullOfFear on 04.12.13 at 12:59 pm

“I own a secondary property, with 12% of my net worth in real estate.”

Does that include your investments in REITs? And while you’re being open about your investments, how about telling us your percentages among the asset classes.

#176 Dr. Hoof - Hearted on 04.12.13 at 1:01 pm

#25 Kingbubbles on 04.11.13 at 9:12 pm

Garth,

Got any tips for folks that want to rent a primary residence? Some people are not comfortable with making a deal with someone who might just sell in a year.

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

Tough Call:
I agree with what =jwk= at post #121 says, but the owners of multiple homes bought waaay back when it made sense, whereby rent could cover the mortgage with perhaps a minor subsidy.

Many of those types are now quite elderly, and will get into estate situations. I mean, does it make sense…for example…. if someone bought a house in the 1970’s for say $60,000, its now worth say $1 Million NOW,…the market is going to correct downward..lets say to $700,00….don’t the numbers crunch to say time to sell ?

That’s my prediction.

#177 Suede on 04.12.13 at 1:05 pm

“I know what’s coming”

A big drop in the price of Gold.

Support broken. A-ya-yay. A nice onomatopoeia. What a great word.

#178 Old Man on 04.12.13 at 1:05 pm

Now will relate a story which involves the difference between retaining the services of a financial advisor who has knowledge and experience vs some idiot who calls himself such, as you get what you pay for in the end, and will do such with a tailor as an example.

There are many who call themselves a tailor, but are not and con the public for quality work and pay more for garbage. My tailor is from Italy, and at one time was a clothing designer who came to Canada. I have pants that need to be cut, and he uses a special machine for stitching that will never come apart, and he charges less than the market.

Any tailor who wants you to put the new pair of pants on for a cutting to do the shoe and soap gig is not a real tailor. This guy laughs about it all, and simply does a measurement in seconds while standing, and all comes out perfect. The same can be said for a financial advisor, as knowledge and experience is everything and I hope you understand my point.

#179 onetimecheck on 04.12.13 at 1:15 pm

Look’s like RAID got the “gold bugs” today.
RAID “kills them dead”.
R.I.P

#180 Hawk on 04.12.13 at 1:19 pm

Garth,

What does the impending doom have in store for real estate agents?

#181 Frank le skank on 04.12.13 at 1:24 pm

#142 GTA Girl on 04.12.13 at 11:40 am
Roberta seems to have some anger issues of his own, what a hypocrite.

#182 TomJefferson on 04.12.13 at 1:24 pm

Are REITs a good buy right never given the impending real estate crash and general move away from bricks and mortar shopping to online?

Talking about ‘REITs’ is like talking about ‘stocks.’ Depends which ones. — Garth

#183 Canadian Watchdog on 04.12.13 at 1:26 pm

Merrill Lynch said to have sold 4 million ounces of gold futures at today’s open. That’s worth about $6 billion in contracts.

#184 Bigrider on 04.12.13 at 1:30 pm

Garth , I’m surprised you deleted my earlier post this morning. I thought you might be somewhat lenient with regard to it in that it is a glowing endorsement of your financial success.

Anyway, no matter.

Crazy about you GTA girl. Were you at the church that past Wednesday, in the heart of “little Italy North” by any chance?

#185 spaceman on 04.12.13 at 1:41 pm

“I would rather invest the money than pay down a 2.75% to 3.09% 5 year fixed rate mortgage when you could have financial assets and not all your net worth tied up in a house or real estate. You need financial assets outside your real estate to make sure you have income when one is near retirement 60 years or older.”

But its not a 5 year fixed rate mortgage, its a 25 or 30 year mortgage. The question everyone seems to miss is “How much interest will you be paying after 5 years?”

If you have a huge outstanding balance on your mortgage after the 5 year period? And interest rates ramp up to 6 or 7%, you are paying thru the nose when you could have payed off the principal.

If you are going to invest the difference at 7%, keep it outside RRSP, prefered shares in a liquid TFSA, therefore at time of renewal you keep the option open to buy down your principal. Most mortgages, even closed will allow a 10% lump sum payment, that will go a long way to curb carrying costs on a 6% mortgage.

#186 Blacksheep on 04.12.13 at 1:48 pm

“I sure hope the metalheads on this site took my advice. But I know they did not. Sad. — Garth”
——————————————————
I ignored your advise to sell @ $ 950 and rode it to peak, then dumped my one Canadian Maple coin, around $ 1650. Hoping we close under $ 1500 to scare the sh*t out of paper holders, then maybe we can get some real significant price reductions.

I trust your wisdom on many things, but not bullion, as your systemic views distort your perspective.

Too bad. I have consistently counseled rebalancing of a gold position. You would have done well. — Garth

#187 Blacksheep on 04.12.13 at 1:49 pm

Grantmi 149,

“bitcoin = gold”
——————–
Your embarrassing yourself.

#188 Ralph Cramdown on 04.12.13 at 1:50 pm

#163 PTDBD — “In today’s extraordinary manipulated financial environment, I wouldn’t expect a balancing out of anything unless the whole confidence game edifice collapses. Ironic isn’t it….no balance until the tilting gyroscope goes bonkers.”

Oh, it’s extraordinary, is it? Different from the Mississippi Bubble, The South Sea Company, the US’s Legal Tender Acts, the PWA and the WPA under the New Deal, the Office of Price Administration during World War II, War Bonds, Bretton Woods, Johnson’s Great Society programs, the Nixon Shock, the Hunt brothers, OPEC, 6 and 5, Paul Volcker and John Crow, the currency snake and George Soros, Reaganomics, the Plaza Accord, the S&L crisis, Alan “Double Bubble” Greenspan and his band of merry deregulators, and Dick “deficits don’t matter” Cheney?

We can debate how sustainable the current situation is and how it’s likely to correct, but to suggest that we were living in some laissez-faire Xanadu until a few years ago is unsupportable. There’s nothing extraordinary about low interest rates when unemployment is high and inflation is low.

#189 Richard in Kelowna on 04.12.13 at 1:53 pm

Gold and silver now at long term support levels. Let’s see if they hold and if so could be a bottom and both should move up nicely from here. Lot will depend on what the large Specs and Commercials( check COT Reports) have been up to this week as they’re the ones who for the most part determine the metal prices. Pessimism in this sector is extreme. Next week is going to be interesting.

#190 jess on 04.12.13 at 2:02 pm

WhiteKat

why didn’t you give up your us citizenship?
http://travel.state.gov/law/citizenship/citizenship_776.html

http://www.forbes.com/sites/timworstall/2012/05/12/saverins-citizenship-renunciation-before-facebook-ipo-will-increase-not-reduce-his-tax-bill/

http://www.dailymail.co.uk/news/article-2145747/Facebook-founder-Eduardo-Saverin-BANNED-U-S-renouncing-citizenship-save-millions-tax.html

#191 Tyrone Asauras on 04.12.13 at 2:06 pm

#86richard on 04.11.13 at 11:30 pm
Garth, if you happen to have 150,000 in cash doing nothing in a bank, would you enter the market a this moment?

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

I’m clearly no Garth, but I’m gonna say why not?

“the market” can be an awfully big and loosely defined place.

So, what’s in Garth’s portfolio? According to him, he has:

– equities – Canadian, American, International

– preferred shares (CDN banks etc.?)

– REITs

– Bonds

– Gold or other PM?

-“alternative strategy” type stuff?

He has stated that he prefers ETFs to individual stocks for those with net investables of less than $1M. Guessing he works similarly with the fixed income fraction.

Might be late to the party for US equities, but I would guess that you could comb the other sectors, screen for good buys, and place orders for some of the stuff that will be in your portfolio.

I’d figure that getting yourself all in, and balanced might take a year or two.

#192 Bigrider on 04.12.13 at 2:17 pm

Ok, gonna risk getting my head chopped off by the bloggers and host on this site.

Panic, pandemonium selling today in the gold space.

Would it not be prudent to swim against the grain and take a modest position?

That worked well with Bre-X. — Garth

#193 Dandy Dan on 04.12.13 at 2:28 pm

Reading for a long time altho have drifted away of late; as much as my family of 4 have been waiting for some kind of correction i have seen some signs but mostly just more of the 2-4% bi-annual increase in prices here in Coquitlam. Crummy houses in crummy neighbourhoods are inching and settling at $450,000+ range, while decent homes in decent neighbourhoods continue to push above the $625,000 threshhold. I hope you are right (altho realize it means pain for others — and I hope they are leveraging themselves for that to ease the shuffle) but still don’t see it here.
Could it be that there are some areas insulated better than others? And why here, if so?

#194 Dr. Wayne on 04.12.13 at 2:29 pm

#145 GTA Girl on 04.12.13 at 11:43 am

I’m having fun Garth.

I picture you in five-inch heels standing on a prone man’s chest. — Garth

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

Wait a minute … I get chastised by the moderator for trying to help this blog out by outing a$$holes who post FIRSTS … and Sir Garth posts erotic-image suggestions which would invariably turn on the goobers on this blog who post FIRSTS and would have a difficult time standing up from the computer without some embarrassment (probably NO embarrassment) … go figure.

#195 Dr. Hoof - Hearted on 04.12.13 at 2:52 pm

DELETED

#196 AK on 04.12.13 at 2:54 pm

#86 richard on 04.11.13 at 11:30 pm
“Garth, if you happen to have 150,000 in cash doing nothing in a bank, would you enter the market a this moment? Seems to me that would be buying high at this moment. No to mention following the herd. What do you think?”
——————————————————————–
You can start with a Global Dividend ETF.

Global X SuperDividend ETF – NYSE :SDIV

Close to 8% dividend.

#197 AK on 04.12.13 at 3:07 pm

Things are looking up for North America today.

We already know about Gold.

OIL is also taking a shit kicking.

And even outsourcing to Bangalore has seen better days.

http://finance.yahoo.com/blogs/the-exchange/infosys-plunges-weak-revenue-outlook-174848832.html

#198 Old Man on 04.12.13 at 3:08 pm

This is a sad day in Canada as made a fortune with ABX over many years trading this stock with plays, as knew when to buy and sell, as was the horse to ride. I took a look and it was selling for $23.22 which takes it back 15 to 20 years with charting. This is beyond the pale, as know the total cost; not the cash in cost which is about $1700 for a troy ounce of gold. Will I buy? No as things have changed, as many mining companies in Canada will have to shut down.

#199 Ogopogo on 04.12.13 at 3:08 pm

OMG alert for Kelowna real estate horror show watchers:

Remember the crack shack, bought and renovated by a flipper, whose gradual price declines I so lovingly tracked last yeart? (e.g. http://www.greaterfool.ca/2012/03/21/the-free-fall/)

Well, the jokers never sold the place and now have re-listed it at the comically priced $555,000. At least they have a sense of humour. The 2 buildings barely visible in the pic behind the house are populated by a motley crue of crackheads and petty criminals, by the way:

http://www.realtor.ca/propertyDetails.aspx?propertyId=12811607&PidKey=-1196403955

Let the tracking commence anew. Spring quagmire is in full gear in Kelowna. I almost miss DA, almost.

#200 Bigrider on 04.12.13 at 3:20 pm

#192-

Like I said, CHOP !

#201 WhiteKat on 04.12.13 at 3:26 pm

@ScienceMonkey,
If you were born in USA, and have not been filing US tax returns or filling out annual ‘foreign bank account reports’, you need to do some more research on how this affects you before the banks start actively searching for ‘US person’ clients. Starting Jan 2014, new account openings will require proof of non-Us citizenship (ex. passport with Canadian birthplace). Starting Jan 2015, existing accounts will be searched. Please check out: issacbrocksociety.ca for lots of helpful information.

@MP,
You said, “It is amazing how much onus is on a citizen these days, but hey, who else should it be on?”
Why should I have the ‘onus’ to pay US taxes on Canadian earned income when I have lived in Canada all my life minus a few months as an infant?
If a Canadian moves to the US, Canada does not expect annual tax returns of income earned in the US which is intuitively a fair policy (called residence-based taxation followed by all modern countries). Not so in USA which is unique in the world with its citizenship-based taxation policy dating back to the civil war.

@Jess, I did not give up my citizenship because I had no clue USA had this unique policy of citizen-ship based taxation until recently when USA enacted FATCA to catch all us wealthy tax-evaders (said tongue in cheek as this is the party-line). To me, being born in the USA was nothing more than an interesting fact of my birth. Giving up US citizenship now, requires me to be up to date on my US tax returns which will costs $1000’s in accounting fees, risk of penalties for prior non-filing, cashing out RESPs, TFSA’s, and Canadian mutual funds, etc. BTW, if the US finds out you are giving up citizenship for tax reasons, then they won’t let you give it up.

#202 Goldfinger on 04.12.13 at 3:28 pm

Gold bugs are jumping off balconies today…

#203 Blacksheep on 04.12.13 at 3:58 pm

“Too bad. I have consistently counseled rebalancing of a gold position. You would have done well. — Garth”
———————————————————–
Bought @ $ 850, sold @ $ 1650. I’m happy with my return. Rebalancing is for those whom lack conviction in their calls. So gold is on sale, are you or any of the Dogs buying today? Didn’t think so. My biggest mistake was buying only one, one ounce coin : )

Lots references to the ‘herd’ lately. A relevant, blast from the past.

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

#204 not 1st on 04.12.13 at 4:01 pm

#196 AK on 04.12.13 at 2:54 pm

You can start with a Global Dividend ETF.

Global X SuperDividend ETF – NYSE :SDIV

Close to 8% dividend.
_____________

No dividend tax credit my friend.

FIE/FIE.A is an ETF of all Canadian banks and a few resource companies – 7.50% and tax efficient to boot.

#205 Ralph Cramdown on 04.12.13 at 4:08 pm

Goldbugs, I just want you all to know that I feel your pain. I covered a short position a few days ago.

#206 Publius Enigma on 04.12.13 at 4:18 pm

“#187 Blacksheep on 04.12.13 at 1:49 pm
Grantmi 149,

“bitcoin = gold”
——————–
Your embarrassing yourself.”

My dear Albert.

You’re embarrassing yourself, Albert.

You’re.

You are.

#207 Don on 04.12.13 at 4:27 pm

I thought this wasn’t a Gold Blog lol

#208 Evangeline on 04.12.13 at 4:39 pm

Bigrider,

((Could it not be prudent to swim against the grain and take a modest position?))

a lot of people say that when it comes to investing, it’s smart to be a contrarian. I guess that’s true until it isn’t. :)

I’ve been wondering what will happen when Helicopter Ben turns off the taps come summer.

#209 jess on 04.12.13 at 4:44 pm

201 WhiteKat
oh…were you a fee based consultant /professional whose certification was held offshore ?

#210 KingBubbles on 04.12.13 at 4:44 pm

A successful stockbroker parked his brand-new Porsche in front of his office, ready to show it off to his colleagues. As he got out, a truck passed too close and tore off the door on the driver’s side. The stockbroker immediately grabbed his cell phone, dialed 911, and within minutes a policeman pulled up. Before the officer had a chance to ask any questions, the stockbroker started screaming hysterically. His Porsche, which he had just picked up the day before, was now completely ruined. When the stockbroker finally wound down from his ranting and raving, the officer shook his head in disgust and disbelief. “I can not believe how materialistic you stock brokers are,” the cop said. “You are so focused on your possessions that you don’t notice anything else.” “How can you say such a thing?” asked the stockbroker. The cop replied, “Don’t you know that your left arm is missing from the elbow down? It must have been torn off when the truck hit you.” “My God!” screamed the stockbroker. “My Rolex!”

#211 AK on 04.12.13 at 4:57 pm

#204 not 1st on 04.12.13 at 4:01 pm
“No dividend tax credit my friend.

FIE/FIE.A is an ETF of all Canadian banks and a few resource companies – 7.50% and tax efficient to boot.”
——————————————————————
You don’t like Global diversification?

#212 espressobob on 04.12.13 at 5:01 pm

#86 richard
#191 Tyrone Asauras

I’m no Garth either. Rebalancing your holdings as time goes by eliminates the need to time the markets.

An even easier solution is to have a chat with a “fee based” advisor. Hopefully one who has no use for mutual funds! Good luck.

#213 Blacksheep on 04.12.13 at 5:03 pm

Publius Enigma 206,

You’re embarrassing yourself, Albert.
You’re.
You are.
————————————–
Your new here, Flav ?

Correct my grammar error. Thank you.

Do you have a relevant opinion on the intangible Bitcoin digital currency collapsing and if it should be somehow compared to the tangible asset Gold, that is long held buy sovereigns and central banks, world wide?

Plaese exkuse ani futhr speeling erors. Disclexia ruuns in the famili.

#214 The Prophet Elijah on 04.12.13 at 5:04 pm

#192 Bigrider on 04.12.13 at 2:17 pm
Ok, gonna risk getting my head chopped off by the bloggers and host on this site.

Panic, pandemonium selling today in the gold space.

Would it not be prudent to swim against the grain and take a modest position?

That worked well with Bre-X. — Garth
———————————————————
Today was the blow off bottom, next up the V recovery. Remember one thing in 2 years gold will be priceless and the only asset you will want to hold.

You’ve lost 18% this year. — Garth

#215 Doug in London on 04.12.13 at 5:11 pm

So it appears house and condo construction either is slowing down or soon will. Well, look an the bright side. Since the middle of the last decade many employers have been bellyaching about how they have trouble hiring fully trained trades persons. With construction slowing down, that problem will be taken care of. It will be just like how before the tech bubble burst it was hard to find information technology people, but after the bust there was an oversupply of them.

Yes I know this blog isn’t a gold blog, but there has been much talk about the yellow metal lately. Some of you think that the recent drop in price signals a time to buy. Maybe so, but keep in mind how many people thought this time in 2001 was a good time to buy on the dip and get into tech stocks or funds. I made that mistake too, buying into science and technology funds around that time thinking I was getting a bargain. Well, they kept dropping and only now am I breaking even. Actually I lost, as that money could have been better invested elsewhere. Buying on the dips is a good idea, EXCEPT when a bubble is collapsing.

If you absolutely MUST buy a yellow metal, buy bright yellow uranium oxide, or companies that mine it. Say, did you know Cameco (CCO) is on sale for about 19 bucks a share?

#216 observer on 04.12.13 at 5:17 pm

Garth Right now our debt levels is at 165%. We should have a poll on what our debt levels will be by the end of the year or quarter.

I figure we’ll be at around 172% by year end

#217 WhiteKat on 04.12.13 at 5:22 pm

@Jess, You said: “oh…were you a fee based consultant /professional whose certification was held offshore ?”

No, I have never worked or earned any income of any kind in USA. I am a Canadian (born dual) who was born in the USA. My ONLY connection to the USA is that I was born there. I left with my mother as an infant to return to her home in Canada when my parents divorced and I have lived in Canada ever since. My US birthplace is what makes me a US tax-payer, according to the USA.

#218 The Prophet Elijah on 04.12.13 at 5:30 pm

You’ve lost 18% this year. — Garth
———————————————————
You were telling people the same when gold pulled back to $700 in 2008/09. Then it tripled from there, just like it will triple from here. Sorry Garth you will lose.

How many times do you metalheads have to be told about rebalancing? Whenever an asset makes highs, you harvest gains, and retain your core weighting. How hard is that to understand? — Garth

#219 Rob Smith on 04.12.13 at 5:43 pm

53 Smoking Man on 04.11.13 at 9:57 pm

Contribute something intelligent if you ever want me to honor you with a response….

—————————–

that’s rich coming from a guy who spews nothing but but gibberish, pull your pants up, turn off the porn, take a shower and get out of your mom’s basement for a change.

….and change that month old t-shirt will ya, the mustard stain are turning green.

#220 Ballingsford on 04.12.13 at 5:45 pm

As a service to fellow blog dogs I just thought I’d let you know that KIA again has their ‘dare to compare’ event.

You owe me one!!!

#221 Dean Mason on 04.12.13 at 5:51 pm

To AK #109
I don’t know what you spend your money on or what your expenses are but I am not paying 5.00% more inflation.My inflation rate is more like 2.50%. The higher priced items like food,energy,medical,utilities,insurance are not a big enough part of my over all annual expenses versus my total investments and income.Show me specific examples of 5.00% inflation on average because that is what they use on all your expenses not just a few of them that you like nit pick.

Please be specific as to your own situation not some general examples.There are things you can do to keep prices in check like buying lower priced substitution products,services and not buying useless things you don’t need. IF you live in a 3000 square foot house or drive a $80,000 a year car than you will always get hosed.

#222 espressobob on 04.12.13 at 5:53 pm

#204 not first

#211 AK

Actually AK, SDIV may be a good choice for a registered account, in a non registered account the CRA doesn’t recognize the dividend and taxes it as regular income.

#223 Al Bundy on 04.12.13 at 6:00 pm

Where is Smoking Man’s weekly forex update? If I’m not mistaken, the last one was posted a few weeks ago…

#224 Publius Enigma on 04.12.13 at 6:07 pm

#213 Blacksheep on 04.12.13 at 5:03 pm

Your new here, Flav ?

Correct my grammar error. Thank you.

Do you have a relevant opinion on the intangible Bitcoin digital currency collapsing and if it should be somehow compared to the tangible asset Gold, that is long held buy sovereigns and central banks, world wide?

Plaese exkuse ani futhr speeling erors. Disclexia ruuns in the famili.
——————

Why yes sir, Albert sir, I am new here. Forgive me for not recognizing you as one of the heavyweights here on this little corner of the internet.

In the future, I shall address you with the respect you deserve, Mr. Einstein.

I will also properly acknowledge your expertise on all matters related to gold.

Additionally, I must ask if I am to excuse the spelling or the grammatical errors in your post?

Or both?

Your post is unclear on the matter.

Thank you.

#225 Dr. Hoof - Hearted on 04.12.13 at 6:10 pm

Drove by that 10,000 mansion in Richmond that was framed, but abandoned with no roof or lock up.

It was left exposed to the elements for approx 3 years.

They demolished all the framing, but left the foundation and are trying to sell it.

#226 not 1st on 04.12.13 at 6:22 pm

#211 AK on 04.12.13 at 4:57 pm

You don’t like Global diversification?
______________

For my dollar, the Canadian market is the best regulated in the world. Too much funny stuff going on in emerging markets and Europe and the USA. If the global economy takes off Canada will reap on commodities anyway.

#227 Herb on 04.12.13 at 6:23 pm

#173 PTDBD,

gee, Ducky, that brought back memories! My response at #104 that day stands.

#228 Dr. Hoof - Hearted on 04.12.13 at 6:30 pm

Also:

One of Richmond’s older Golf Courses (circa 1976) has been sold and will be re developed.

Called the consultant, and said they will look at various other uses, but it will NOT be a golf course.

More evidence that recreational pursuits are a collapsing market.

#229 AK on 04.12.13 at 6:32 pm

#214 The Prophet Elijah on 04.12.13 at 5:04 pm
“Today was the blow off bottom, next up the V recovery. Remember one thing in 2 years gold will be priceless and the only asset you will want to hold.”
——————————————————————–
The market is not agreeing with you.

ABX closed @ $22.94 today. It has not been at this level since :
May 22, 2002 – $22.68

What was the price of Gold in May of 2002??

2002 – $309.73

Very interesing :-)

#230 Canadian Watchdog on 04.12.13 at 6:40 pm

#219 Dean Mason

Show me specific examples of 5.00% inflation on average because that is what they use on all your expenses not just a few of them that you like nit pick.

I track around 5000 rental listings per month (raw data example). Below are Craiglist average offer prices for Toronto 1 bedrooms.

2012 Q1    $1,248
2012 Q2    $1,254
2012 Q3    $1,352
2012 Q4    $1,414
2013 Q1    $1,399 +12% y/y

Note: Average rental expenditure paid by Ontarians in 2011 was $17,380 (StatsCan). That's roughly 40-50% of median single incomes. 

The inflation rate of other basket items I track in the CPI basket looks like this. This is why I laugh every time some muppet investor on here thinks he or she is beating headline CPI with a 5% return. Ask them about stock performance and they'll post comparable quotes within minutes. Ask them how much a 2 bedroom in Toronto costs compared to last year and they're clueless, but will tell you it doesn't matter cause stocks are up!

I assure you all, most of the 'click, click' investors on this blog who think they're winning are only losing money less slowly others. Learn what financial repression is and how to take advantage of it by investing in the real world.

#231 AK on 04.12.13 at 6:46 pm

#221 Dean Mason on 04.12.13 at 5:51 pm
“To AK #109

IF you live in a 3000 square foot house or drive a $80,000 a year car than you will always get hosed.”
——————————————————————–
My house is 2,100 square feet and I drive a KIA. :-)

#232 Victor V on 04.12.13 at 6:51 pm

#198 Old Man on 04.12.13 at 3:08 pm

This is a sad day in Canada as made a fortune with ABX over many years trading this stock with plays, as knew when to buy and sell, as was the horse to ride. I took a look and it was selling for $23.22 which takes it back 15 to 20 years with charting. This is beyond the pale, as know the total cost; not the cash in cost which is about $1700 for a troy ounce of gold. Will I buy? No as things have changed, as many mining companies in Canada will have to shut down.

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

Closed at $22.94, down 8.24% on the day. Ouch.

http://thestockmarketwatch.com/stock/?stock=ABX:CA

#233 AK on 04.12.13 at 6:53 pm

#222 espressobob on 04.12.13 at 5:53 pm
“#204 not first

#211 AK

Actually AK, SDIV may be a good choice for a registered account, in a non registered account the CRA doesn’t recognize the dividend and taxes it as regular income.”
——————————————————————–
I agree with you. I am holding them in my RRSP.
People need to start thinking outside of the box as well and not to hold everthing in Canada just to take advantage of the dividend tax credit.
The share of the Canadian market is only 3% of the global space.
Yes, one can save a percentage or 2 in taxes, but a great deal of capital gains are missed when staying within Canada.

#234 Julie on 04.12.13 at 7:06 pm

This is a sad day in Canada as made a fortune with ABX over many years trading this stock with plays, as knew when to buy and sell, as was the horse to ride. I took a look and it was selling for $23.22 which takes it back 15 to 20 years with charting. This is beyond the pale, as know the total cost; not the cash in cost which is about $1700 for a troy ounce of gold. Will I buy? No as things have changed, as many mining companies in Canada will have to shut down.
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Yes well if LAZY Canadians would use their brains more and MAKE STUFF with the resources they dug out of the ground ( G E R M A N Y ) we would be a MUCH wealthier country…….

#235 Blacksheep on 04.12.13 at 7:26 pm

Flav 224,

So…Nothing on the topic being addressed? Bitcoin and its ridiculous comparison to Gold?

I understand if your not comfortable engaging. Not every body can contribute to the conversation.

“Forgive me for not recognizing you as one of the heavyweights here on this little corner of the internet.”

Aww, stop it, your making me blush.

By the way, thanks for the sweet Bach. Degree cirt, This puppy is going on the wall!

“am to excuse the spelling or the grammatical errors?”
——————————————————-
My mistake. Both, of course. My brother’s dyslexic and my grammar is clearly questionable. Actually, feel free to completely ignore any thing I post, going forward.

I find when new relationships start out on the wrong foot, your better just parting ways.

Have a good weekend.

#236 Tony on 04.12.13 at 7:31 pm

Re: #218 The Prophet Elijah on 04.12.13 at 5:30 pm

Gold has historically been an inflation hedge and has gone up in times of war. The question that should be asked is why has gold held up this long when it should already be below 500 dollars U.S.? Anyone with even less than half a brain should have realized when India bought gold at 1,100 dollars an ounce it was headed for somewhere in the 2 to 5 hundred dollar range U.S.

#237 Smoking Man on 04.12.13 at 7:39 pm

Al bundy you know I’m not home Friday nights Seneca casino.

Tomorrow with full diagnostics, my mistakes, luck and brilliance

#238 The Prophet Elijah on 04.12.13 at 7:44 pm

You’ve lost 18% this year. — Garth
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You were telling people the same when gold pulled back to $700 in 2008/09. Then it tripled from there, just like it will triple from here. Sorry Garth you will lose.

How many times do you metalheads have to be told about rebalancing? Whenever an asset makes highs, you harvest gains, and retain your core weighting. How hard is that to understand? — Garth
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Who says we don’t believe in re-balancing. I’m just saying you were wrong then and you’ll be wrong again.

You don’t get it. Rebalancing at market tops allows you to retain the asset you’re horny about but mitigate risk and harvest profits. But I give up. You appear hopeless. — Garth

#239 Tony on 04.12.13 at 7:54 pm

Re: #214 The Prophet Elijah on 04.12.13 at 5:04 pm

I don’t think you’ve ever seen real panic selling in gold yet. Panic selling would equate to something like a 500 dollar drop in 5 business days. Like i said about one week ago on this blog the next move in gold would be hard down. My posts always get deleted when i write about the stock market falling but in the past years commodities and stocks have moved in tandem. The traders are getting the jump with April the 15th right around the corner.

#240 Tom Vu on 04.12.13 at 8:01 pm

Smoking Old Man….

If you can corner market on bullsh*t….you will be new Worn Buffet.

#241 jess on 04.12.13 at 8:13 pm

whitekat

http://en.wikipedia.org/wiki/Fourteenth_Amendment_to_the_United_States_Constitution

i think FACTA is great

#242 Devore on 04.12.13 at 8:17 pm

#167 Canadian Watchdog

A clear signal that something in the banking system is very very wrong, just like in 2010 and 2008.

Oh, ok, gold up, something is wrong with the banking system, gold down, something is wrong with the banking system. So heads I lose, tails you win?

#243 Smoking Man on 04.12.13 at 8:27 pm

Tom Vu

If your calling me the orocal of bull shit, I take that as a huge complement.

It’s what I do an proud of…

Thanks

#244 Smoking Man on 04.12.13 at 8:34 pm

Got a chic at the bar, eyeing me up, flat shoes, healthy thick relish brown hair, 1/2 my age, her boy friend, Sheldon….

God why did you give me a code……. See you on the lake god, boating season around the corner. Bring on your best thunder storm, dip shit.

You and me are having words, why did you take my dog…

She was almost human, I hate you, you made me cry, I haven’t cried since I was 6…

God you got the wrong man.. I M A SMOKING MAN

#245 Canadian Watchdog on 04.12.13 at 8:35 pm

#242 Devore

Oh, ok, gold up, something is wrong with the banking system, gold down, something is wrong with the banking system. So heads I lose, tails you win?

If you only think of stocks in up or down terms and disregard futures and volatility data, you'll never get it. Gold is always an early indicator a major move, and by the looks of net longs in e-minis, stocks are next.

#246 espressobob on 04.12.13 at 8:49 pm

#233 AK

In terms of asset allocation across all investing accounts it stands to reason to hold CAD equity & prefs in a non- reg account and take advantage of current tax relief, while our government allows it.

With a TFSA or RRSP lets talk global!

#247 Dean Mason on 04.12.13 at 9:19 pm

To AK and Canadian watchdog

There is still no specific real life personal situation example that shows me 5.00% inflation. It looks like you guys are going to have a tough time keeping up with your living costs. My personal situation is that I can still save and invest at least $3,000 a month after all expenses so as I get 4.018% a year currently I will have more than enough money for myself, my family, my grand children etc.

I don’t care about your stats because I have no debts and are growing my assets every year maxing out TFSA’s,RRSP’s,RESP’s and joint non-registered accounts. What matters is my personal economy is working well and that’s all that counts.

You guys are going to have to make 8.00%-9.00% or more a year and are probably using leverage to do this but good luck with your own personal situations. Just by having debt for long periods of time dramatically increases your personal inflation rate and drains your future cash flow and savings.

#248 gtrz4peace on 04.12.13 at 9:49 pm

Garth, you keep coming up with places people can rent for “$50 more a month”. We have not found that to be the case on Vancouver’s North Shore (N Van and W Van). We actually wanted to sell our home but there was nowhere we could rent (lots of stuff and a large dog) within 30 miles of our son’s school for the small mortgage we pay now ($2000 month including all real estate taxes). So blog dogs, find me the 2500 square foot rental in my hood for equal to that…I would sell in an instant.

#249 Canadian Watchdog on 04.12.13 at 10:17 pm

#247 Dean Mason

There is still no specific real life personal situation example that shows me 5.00% inflation.

Because you're measuring prices, not value.

#250 Snowboid on 04.12.13 at 10:17 pm

#199 Ogopogo on 04.12.13 at 3:08 pm…

Interesting, I must say – the RE agents must read from a ‘script’, completely ignoring the reality in Kelowna.

I see the Dukes of Hazzi have lowered the price of their condo flip on Bernard, after lowering it, then raising it – maybe the same ‘script’.

How about the city approving the twin towers for Doyle? Poor condo owners to the north/east/west – if it passes public hearing they will no longer see the sun!

Maybe an untapped vampire market?

Or the massive redevelopment of the Hiawatha!

Who is going to buy these hundreds of new condos?

BTW, any signs of life at SOPA?

#251 bill on 04.13.13 at 2:47 pm

#248 gtrz4peace on 04.12.13 at 9:49 pm

http://vancouver.en.craigslist.ca/search/apa?zoomToPosting=&query=&srchType=A&minAsk=2000&maxAsk=&bedrooms=3&addThree=wooof
if you really want to stay on the northshore you will have to adjust the parameters a bit…

#252 takla on 04.13.13 at 5:02 pm

the paradigm shift has occured.The issuence of debt has reached the point of collapse.this system only works with a thriving ecomony,workers working ,consumeing debt and haveing the ability to repay debt.the “consumer” is strapped…without demand ,commodity prices deflate{except oil due to reserve depletion and NO alternative}realestate,price of new cars,ect heck even the oldest store of wealth{gold\silver} it taking the hit.tighten your belts people

#253 Evangeline on 04.13.13 at 5:09 pm

((It’s why we have the momma of all retirement crises brewing at this very moment, and get worked up about non-stories like RBC’s little imports.))

On a TD-Waterhouse video, some guy, can’t remember his name, said that the super low interest rates are a double-edged sword, harming the corporations they are supposed to be helping. He said that due to the low interest rates, corporate retirement funds are having a hard time earning what they need to earn to meet their payouts.

#254 WhiteKat on 04.13.13 at 6:57 pm

@Jess,

You are confusing FACTA with FATCA. They are not the same!