Seriously.

Here I am

Mortgage rates will be puffing again in a few days. As I said. This comes atop hikes announced last week and the one before. There are more to come. The days of the 2.89% Big Bank five-year fixed loan are kaput. You will never see them again.

On Wednesday the yield on five-year Canada bonds spiked, as did US Treasuries. Bond prices fell and bond mutual fund owners were stung. That was no surprise. When bond prices crested about a year ago, investors piled on. In both Canada and the US retail investors pushed bond fund sales to the top of the chart, doing what they always do – chasing yesterday’s winner.

Now bodies are piling up at the exits. Last week alone sheeple cashed in $13.46 billion worth of bond funds in the States. It was the biggest exodus since (you guessed it) the final weeks of 2008. Some things are so predictable.

Why’s this happening? What comes next?

The US renaissance I’ve been telling you about for the past year (house sales, car sales, new jobs, energy rebirth) is now hot enough that Washington can dial back the stimulus spending. So the central bank will probably taper down its bond-buying program within six months (the news came Wednesday). In other words, that gush of money which has created a big demand for bonds, upping their prices and crashing their yields, will soon dry up.

Lots of consequences. Interest rates will go bloat as bonds deflate. That’ll attract money into bonds from stocks, which will temporarily puddle. Mortgages, funded in the bond market, will swell further. When it’s clear US growth will continue without stimulus, equity markets will rebound. But the outcome will suck in Canada.

Unlike America – and as BeeMo’s top economist confirmed in a Toronto speech this week – we’re going to get rising interest rates, but without more jobs or higher wages. “For a number of years Canada was outpacing the U.S., and now we’re in a situation where there’s just a lot more pent-up demand in the U.S. than there is in Canada,” said Douglas Porter. “Our consumer has tapped out, there’s not a lot of room for domestic spending to grow, and we think that the tables have turned and that’s going to be the story for the next number of years.”

Porter told a hushed room that the Bank of Canada will be hiking its trendsetting rate by a half point next summer, perhaps a full year before Americans follow suit. But between now and then, it will be the bond market, recovering from four years of crazed over-stimulation, that ups mortgages and hoops housing.

And it will. Despite what you are now being told.

A Globe column just published argues that higher mortgage rates are to real estate what Axe is to babes. But it’s a fail. Without the inflation, jobs and salary gains a growing economy brings, higher loan costs only make housing more unaffordable. And in a country with a weird 70% home ownership rate and record mortgage debt, higher rates whack the biggest pool of buyers left – the cashless virgins.

And here’s Toronto mortgage broker Dave Larock blogging away with this premise: “Rising interest rates generally occur in a healthy economic environment where future price inflation is expected, making them a by-product of positive economic momentum. While it certainly is true that higher rates increase borrowing costs, this generally happens in periods with rising incomes, higher levels of employment and increasing consumer confidence. To take our contrarian thinking to its logical conclusion, we should all be rooting for higher interest rates. Seriously.”

Poor Dave. Should get out more. Seriously. While the Dow is up 16% this year, the TSX is ahead 0%. While real estate here is 1% higher, US prices increased 11% in12 months. While our Alberta oil gluts and prices fall, the US is again exporting the stuff. There’s virtually no growth in Canada, little inflation and wage gains are less than the cost of living. We already have house prices 150% of those to the south, where there’s ten times the population. And higher mortgages will be good? And did I mention 63,000 new condos coming to Toronto? Or the real estate rot already festering in BC and the Maritimes?

There’s no doubt what’s coming. It won’t be a crash. No TV reporters shoving mics in the faces of the middle-class homeless. No foreclosure sales on the courthouse steps. No streetscapes of boarded-up McMansions with fading For Sale signs and weeds full of used needles. No drama or viz. Just a steady, protracted, relentless slide backwards to reality.

A house isn’t a right. Kids don’t deserve homes nicer than their parents. You should need money to buy something. Wealth is earned, not borrowed. The goal of life is not stuff.

We lost our way, thinking otherwise.

Not long now.

244 comments ↓

#1 T.O. & GTA bidding wars debunked June 19 on 06.19.13 at 8:50 pm

http://recharts.blogspot.ca/2013/06/gta-condos-bidding-wars-debunked-jun-19.html
http://recharts.blogspot.ca/2013/06/to-sfh-bidding-wars-debunked-jun-19.html
http://recharts.blogspot.ca/2013/06/gta-sfh-bidding-wars-debunked-june-19.html

#2 Stink on 06.19.13 at 8:53 pm

And now Garth and I would like to welcome everyone to the comments section

#3 vatodeth on 06.19.13 at 9:03 pm

Excellent article today! Thank you Garth!

#4 I don't think they can stop the condo market on 06.19.13 at 9:06 pm

Garth, I don’t see this happening in Toronto:

There’s no doubt what’s coming. It won’t be a crash. No TV reporters shoving mics in the faces of the middle-class homeless. No foreclosure sales on the courthouse steps. No streetscapes of boarded-up McMansions with fading For Sale signs and weeds full of used needles. No drama or viz. Just a steady, protracted, relentless slide backwards to reality.

Not with the condo market. And Bank of Canada might be right, that will affect the economy. The RE investors with assets in the lower segment of the market won’t last a year.

#5 Goldy Goldbug on 06.19.13 at 9:07 pm

Just wondering if you could elaborate on who is buying the homes in the U.S. Seeing as real estate is your expertise, could you tell me how many families are actually buying homes. I have other knowledge that states that major fund company’s are buying billions worth in homes for the typical family to rent.

There are institutional buyers, the largest of which purchased 30,000 homes. This year over 5,000,000 resales homes will change hands. Figure it out. — Garth

#6 TurnerNation on 06.19.13 at 9:08 pm

Know of a guy, married, late 20s, just maxed out buying a slightly used 905 McMansion. Still owns a small rental property rented out. Sold another small one, paid off some loans.
Now running a double-digit reno program on the new abode. You guessed it – granite. Indebted to perfection.

The missus’s income is often sporadic. Vacations galore. Renewal time will be fun.
Indebted, to perfection. This won’t end well.

#7 TurnerNation on 06.19.13 at 9:11 pm


“Vancouver brokers and promoters gathered yesterday to hear ideas and complaints about regulators at the second of Joe Martin’s Venture Company Association meetings. He called it “Stopping the strangulation by regulation,” and offered presentations by Vancouver IR man Don Mosher, Calgary broker Darrin Hopkins and newsletter writer John Kaiser. Mr. Mosher predicts the lack of money being raised by juniors this year could affect Canada’s GDP as early as this summer; Mr. Hopkins predicts the TSX-V will be dead in five years; and Mr. Kaiser highlights the low prices of TSX-V listed juniors. More than 80 per cent are trading at 20 cents or less and 759 companies have less than $200,000 in working capital. Financing has dried up, he said. To help solve the problem Mr. Kaiser suggests regulators simplify reporting rules and lower investor eligibility thresholds. That way a broader pool of investors could buy treasury stock.

© 2013 Canjex Publishing Ltd.”

#8 No Longer Innocent on 06.19.13 at 9:11 pm

So how do we cashless virgins get ahead? Invest in US and Foreign markets?

#9 Smoking Man on 06.19.13 at 9:13 pm

Yes it looks like promising, but don’t expect an overnight hike without an export surplus.

For my kids sake hope rate spikes scare enough people into listing and get some momentum going on price declines,other wise I will never get rid of the basement dwellers, my kids. They have real problem with land lords.

But even so, herd in 416 entire self worth and presived social status is the home they own and will sacrifice huge just for bragging rights over basement dwelling peers.

So best for me to push text encription, help a son that sells alarm systems door to door, and he kills it. Absolutely one the hardest sells jobs there is

2 years of Smoking Man training in the field..

He’s ready for the next faze …..

Keep your eyes on Lang and O Leary over the next few weeks when he’s on…

#10 AB on 06.19.13 at 9:20 pm

A house isn’t a right. Kids don’t deserve homes nicer than their parents. You should need money to buy something. Wealth is earned, not borrowed. The goal of life is not stuff.

That about sums it all up.

#11 Renter's Revenge! on 06.19.13 at 9:22 pm

It seems like supply and demand for investments has at least much impact on market prices as underlying fundamentals. Maybe I’m stating the obvious here.

#12 Dean Mason on 06.19.13 at 9:23 pm

The 10 year U.S. bond is 2.32% and 30 year 3.42% today.These are still dismal bond yields.Just to reach year 2000 levels the U.S. 30 year needs to almost double to 6.74% and almost two and three quarter times for the U.S. 10 year bond.

If you look at the last 10 years there has been a higher range of 4%-5.50% for Canada,U.S. bonds 10-30 years.This will be the case over the next 10 years.If we see 5.50%,it will not last long. Every time they reach a higher level it is for months not years.

It will be more like 4.00% to 4.25% in the next 1 to 2.5 years and thereafter 4.75% to 5.00%. Just going back to 2007-2008 levels,back to square one.If things turn for the worse or the economic indicators are much slower then we will be stuck in 2.80% to 3.50% on the U.S. 30 year,1.75% to 2.50% for the U.S. 10 year.

Things have to get really bad if we will see a 1.50% U.S. 10 year and 2.35% U.S. 30 year.

#13 gladiator on 06.19.13 at 9:31 pm

Garth, maybe you meant to say that Canada’s home prices are almost 100% higher than in the US (just look at the graph you posted 3 days ago), and they must fall 50% from current levels to match the US ones?
Moody’s expects a 44% fall in Canadian home prices on average, which is not far from 50.

#14 Freedom First on 06.19.13 at 9:33 pm

Great post Garth!

Yes, if the interest rates can hurt you, if the price of housing can hurt you, if the direction of the stock market can hurt you, if the price of gold and silver can hurt you, and if any change in your income happens and you are in a stage of immediate or quickly happening emergency, you are not doing it right. Garth has been spelling out for years now on his FREE blog, how to be financially prudent.

#15 Cowpoke on 06.19.13 at 9:34 pm

Sounds like we’re ‘f’d’ in Canada and sounds like anyone who bought RE in the last 5 to 7 years is going to be f’d by the banks, ie interest rates going up, values going down, assessed values less than original purchase price and mortgage balances. Nice job you Canadian Bankers! Morons! Don’t be surprised when its your turn to get your butts kicked. Cause your next! I assert that there exists conditions under which people must change their government.

#16 Randy on 06.19.13 at 9:37 pm

Chickens coming home…..to roost…..

the last 20 years have been another bubble…haha

#17 Mel on 06.19.13 at 9:43 pm

Sorry, do not agree again. Higher interest rates are the result of peaking economic cycle. Feds just confused the system a bit longer. U.S. IS ALREADY IN A RECESSION! No recovery going forward.

Once stocks sell off, where do you think money will go?
In U.S., one in five jobs created were under $10/hour. How is that going to effect future housing with higher interest rates? How about going down again.

In the coming months, stocks around the world will drop at least 50% from their highs. Interest rates on a 10 year U.S. Treasuries will be 1%.

I am buying bonds. Bond bubble is not over yet!

Good luck with that. — Garth

#18 T.O. Bubble Boy on 06.19.13 at 9:46 pm

A house isn’t a right. Kids don’t deserve homes nicer than their parents. You should need money to buy something. Wealth is earned, not borrowed. The goal of life is not stuff.

Well, even if kids don’t deserve homes nicer than their parents — many kids have the exact same home as their parents, since they can’t afford to move out!

#19 Boombust on 06.19.13 at 9:47 pm

On a NATIONAL scale, you’re probably right about there being no real estate C R A S H .

However, in Vancouver (all market are local!)…the crash is already happening.

#20 T.O. Bubble Boy on 06.19.13 at 9:54 pm

On the topic of mortgage rates and home prices: sounds like RE professionals are now talking out of both sides of their mouths…

On one hand, you have realtors and mortgage brokers claiming that high-priced homes are still “affordable” because of the low rates and low carrying costs. Then, on the other hand, you have these realtors saying how higher rates will mean house prices go up?

Which is it, RE cartel??? Do the record low rates mean high house prices, or do higher rates mean high house prices?

#21 Smoking Man on 06.19.13 at 9:55 pm

#14 Freedom First on 06.19.13 at 9:33 pm

Great post Garth!Yes, if the interest rates can hurt you, if the price of housing can hurt you, if the direction of the stock market can hurt you, if the price of gold and silver can hurt you, and if any change in your income happens and you are in a stage of immediate or quickly happening emergency, you are not doing it right. Garth has been spelling out for years now on his FREE blog, how to be financially prudent.
………

Crossing the street can hurt you, it’s all about risk vs reward…the only sure variable is the unknown.

Places your bets, may the force be with you…

Works for me…

The loser is the one that never bets.

#22 Dave on 06.19.13 at 9:57 pm

Luxury home being auctioned off in Kelowna with no reserve!

http://www.youtube.com/watch?v=2V7jLQVXRhc

#23 Stinks on 06.19.13 at 9:57 pm

Reminds me of the comedy stand up George Carlin about “stuff” – http://www.youtube.com/watch?v=MvgN5gCuLac

#24 AK on 06.19.13 at 10:01 pm

#8 No Longer Innocent on 06.19.13 at 9:11 pm
“So how do we cashless virgins get ahead? Invest in US and Foreign markets?”
——————————————————————–
Insurance companies perform well in a rising rate environment.

T.MFC
T.PWF
T.SLF
N.MET

#25 Smoking Man on 06.19.13 at 10:03 pm

#13 gladiator on 06.19.13 at 9:31 pm

Garth, maybe you meant to say that Canada’s home prices are almost 100% higher than in the US (just look at the graph you posted 3 days ago), and they must fall 50% from current levels to match the US ones?Moody’s expects a 44% fall in Canadian home prices on average, which is not far from 50.
………….

Don’t want to hurt your feelings but you are not being objective in your analysis, you compare Canada to USA,
The most dumbed down population via the educational industrial complex known to man.

What happens when you compare Canada to London, or Hong Kong, Canada sure look cheap.

I Remember how Moodys got in right in 2007.

Lucky for them mortals have short memories, not I

#26 Gerryantics on 06.19.13 at 10:05 pm

Stagflation

#27 Smoking Man on 06.19.13 at 10:06 pm

#18 T.O. Bubble Boy on 06.19.13 at 9:46 pm

SO TRUE…..

#28 T5_INCOME on 06.19.13 at 10:08 pm

How will the retail real estate sector hold up ?

My REITS took it on the chin today.

Ignore it. Sideswiped with bonds. — Garth

#29 Cash is King on 06.19.13 at 10:09 pm

Toronto mortgage broker Dave Larock blogging away with this premise: “Rising interest rates generally occur in a healthy economic environment where future price inflation is expected, making them a by-product of positive economic momentum”

Under Mr. Larock’s economic understanding, the early 80’s must have had the healthiest of positive economic momentum ever recorded.

#30 Smoking Man on 06.19.13 at 10:11 pm

DELETED

#31 EvilMagpie on 06.19.13 at 10:12 pm

Is there any sense to add inverse bond ETFs like TBX and TBF at this point to counteract declines by REITs?

I don’t negotiate with terrorists. — Garth

#32 Smoking Man on 06.19.13 at 10:19 pm

Deleted,

Ya that was a law suit waiting to happen, thanks garth, just slightly passed the wine zone, I’m done for the night.

Good post tonight, was anticipating more of a roster.

#33 JSS on 06.19.13 at 10:22 pm

“higher mortgage rates are to real estate what Axe is to babes”

I vehemently disagree Garth.

As a male, I’ve been getting alot of babes from Axe. It’s just that I’ve been attracting a lot of male babes.

#34 retired Boomer - WI on 06.19.13 at 10:25 pm

Stuff IS the goal. Your STUFF could be your spouse, your kids, your car, furniture, house…. you screwed up there.

Why else would you strive? Wanna help the losers on skid row? You nice benevolent boob, you. Me, I worked hard for my STUFF, and I’ll share it with whom I please, when I please. Should I croak before divesting my STUFF who gives a rip?

Practical people control their STUFF, the STUFF doesn’t control them. Includes the number of kids, the number of spouses, the number of drinks, etc.

Time for me to fire up a fat boy and STUFF myself

#35 JSS on 06.19.13 at 10:25 pm

At what point do I buy Barrick Gold (ABX) shares?
They’re paying 4.4% dividend, at almost its lowest share price in 52 weeks.

Gracias.

Grab some Bre-X while you’re at it. — Garth

#36 Just a question on 06.19.13 at 10:31 pm

I have an interesting situation developing where I live. My old landlords sold the house where I rent. It’s an old bungalow in Calgary and yesterday I met my new landlord. By the way, the house is apprised by the City at around 380k, was advertised as 498k and sold 490k.

Well, he wants to tear the house down and have the permit in about a month to do so. There were a couple of other folks yesterday around the house that seemingly do this tear down and build two new houses on the same ground together. I talked to them and to be honest I am a bit worried about what is going to happen. I know I have three months to move out but putting a lot of stuff that was said yesterday together I am worried I may have a not very pleasant time living there anymore. They told me they will come every day from now on to do work. I showed them the ceiling problem I have, part of it is coming down. They want to come on Saturday to fix it up. Afterwards I thought when you want to tear down a house, why offer to fix items? Today, one guy was doing continuing mowing the lawn in a fashion that was lots of noise making and a bit inefficient to be honest. He tried to burn the wet grass pouring gasoline on which caused quite some smoke. The realtor who sold the house gave me a call saying they may have conditions in mind that I might not like and to get in touch with the tenant board. I am a bit worried and would appreciate your advice. And how do you best protect yourself from unfair practices to make someone leave? Thanks in advance!

Just move. — Garth

#37 Tired of the "Its Different Here" Mantra on 06.19.13 at 10:38 pm

Garth,

You are absolutely right. Wealth is earned, not borrowed. Here in Canada people in the last 5 years has become delusional more or so here in the prairies where people thinks that we are now the center of the world and the new middle east because of our “resources.” So they think that there is no risk in over leveraging and thinks that in a few years time it will be at the same level of what “New York,” “Tokyo,” and “London.” People wake up the time of over exuberance is starting to end. Government are trying to slash down spending in health care and other unsustainable program. People should wake up because the coming reality is something that is not pretty if you borrow your way to luxury. The generation of “I want now” has put our future in dire risk and the same time those parents and MIL that thinks that renting is throwing money away should think otherwise.

I don’t know how people here in these damn frozen hell thinks that we are immune, maybe it is because of their long standing bitterness of being least loved place in Canada.

Yes definitely “Its Different Here.” A different pain. I will be watching from the sidelines.

#38 Thoughts on 06.19.13 at 10:40 pm

Craig,
Tell us then.. if it’s not the US.. who will be the power?
“Just a question”- seriously move.. why go through the stress of this situation.
Spoke with my investment guy today and he is saying the same thing Garth has been saying. Interest rates going up.. we already see that. Things that are affected by this go down… this will continue. Fingers crossed putting off the purchase to “move up” from this paid for house to a bigger Mcmansion will be the right decision. Investments are looking on track.. so far so good.

#39 Smoking Man on 06.19.13 at 10:43 pm

#36 Just a question on 06.19.13 at 10:31 pm

You had to write an essay on that, then ask Mr peacock what to do..

I’m thinking you got a PhD in something..

#34 retired Boomer – WI on 06.19.13 at 10:25 pm
Like your style, I just did, you happy swaps desk, it’s your fault.
:)

#40 Mercy on 06.19.13 at 10:44 pm

My friend with her new husband just bought a million dollar home on a street near Little Italy (how???). They renovated the basement and are now messaging everyone they know on FB if anyone wants to rent their basement for $1800 a month. Wtf?? It’s a BASEMENT. I mean it’s got some fancy new appliances and pot lights, but still, it’s a basement. For that price you can rent a tiny condo somewhere but at least it would have WINDOWS??

It’s a basement!!

#41 Gen Y on 06.19.13 at 10:46 pm

Oh the irony. I flipped through Moneysense when I went grocery shopping today, saw two articles encouraging people to purchase real estate: one on rental properties and one on cottages/vacation homes.

#42 Unknown Marketer on 06.19.13 at 10:48 pm

Just bailed on my last piece of real estate..sold for assessed value and considered my self VERY LUCKY. Was willing to dump at any price. No mortgage and low 7 figures. Now in cash and renting. Take away home equity and autos and most Canadians are broke or in the negative. You can make money in any economy but I do have to say I don’t agree with everything Garth says ( but hey that what makes market )..but he is 100% bang on with what is coming and average Canadian is NOT going to take this advice. Thanks Mr Turner..you did help nudge me along quicker. Have spread the word about the blog and will continue to do so… again well done.

I know of what I speak on the ground in Condo Central – Vancouver.

#43 not 1st on 06.19.13 at 10:49 pm

Talk about obfuscation.

The real story today was the fed just even hinting about easing the easing and the stock market craters. Yup, the recent run up sure is made of corporate profits and strong economic indicators….my a**. The whole thing is a house of card held up by air.

#44 Heather Nova on 06.19.13 at 10:51 pm

Just move. — Garth

Not so easy to do in Calgary. There’s nothing to rent. Vacancy rate is almost zero. The rentals you see on Kijiji and Craig’s list are mostly crap. Any decent house is $2000/mo minimum.

#45 EvilMagpie on 06.19.13 at 10:56 pm

Not sure if I understand. Finance books suggest that sectors with negative correlation coefficients be purchased together in order to reduce risk. Is it the case the inverse bond ETFs and REITs are actually slightly positively correlated (and I haven’t taken the time to plug enough data into MATLAB or an online calculator to say one way or the other) or are the MERs of inverse bond ETFs too high to make them worthwhile? Or should I go back to reading Chapter 3?

#46 Stupesing in Cabbagetown on 06.19.13 at 10:59 pm

A few weeks ago my friend’s 26-year-old son sent him a text message that read “if you were a good father you would give me $20 thousand so I can put a down payment on a new build in Guelph.”

Now, my friend has been living on his savings since he lost his job in IT some years back and, at 60 years of age he has been struggling to find the means to earn a living. Wisely, he said no. Now he is the pariah of the family.

The son does not live in Guelph. He is in the armed forces and does not even live in Ontario! After much tantrum throwing he managed to get the money from somewhere – maybe his mother, maybe his grandparents. News is he bought a place and it will be ready in the fall.

You are so right Garth. Wealth is earned, not borrowed. What kind of parent gives a young man money he has not earned to go into decades of debt servitude to buy an overpriced property at the top of a credit bubble?

Methinks this young man is going to learn a hard lesson.

#47 Oliver on 06.19.13 at 11:00 pm

Started reading this blog and now am a little concerned. I have 100k (approx 20% of total investments) of my rrsps in a premium bond fund. I do this as part of a strategy to hold various different types of investments.

Are you saying I should sell this fund and buy something else????? I am 50 years old and this money will not be touched for another 20 years.

#48 Seriously. — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer on 06.19.13 at 11:01 pm

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

#49 EIT on 06.19.13 at 11:03 pm

“The goal of life is not stuff”

Spirituality is struggling, it needs a psychedelic boost. DMT injection anyone? Define the goal of life after that trip!

#50 Gg on 06.19.13 at 11:05 pm

Wealth is earned, not borrowed.

LOL. Is this not QE and US budget deficits? Oh … But it will be dialed down in a years time. What BS.

#51 TheCatFoodLady on 06.19.13 at 11:06 pm

#34 – no one denies stuff is what we strive for – whatever form ‘stuff’ takes for us. We all like stuff; that’s not the problem.

The problem is, it’s too easy to get stuff. Oh silly me – I thought the record low interest rates were a fantastic time for people to pay down debt – especially pricey consumer debt. To my dismay I saw all around me, people of all ages & economic situations go on a spending frenzy. Why not? It was CHEAP to finance stuff on a credit card or LoC. And the banks happily advanced more & more credit.

Results? Record levels of household debt. Wages aren’t increasing & working hours are, if anything, being cut. Never mind many being ‘one lost paycheque from disaster’, I know people who are 1 missed DAY from calamity. They’re tapped out on credit, are using payday loans & STILL keep trying to spend.

Ads are big on the “you DESERVE XXX!” schtick.

You deserve what you can earn & pay for – period. If you’ve got it, it’s paid or you’re in a comfortable position paying for it… most excellent. If not, good luck.

#52 Tony on 06.19.13 at 11:10 pm

Re: #5 Goldy Goldbug on 06.19.13 at 9:07 pm

No one is buying homes in America. Foreclosures continue to explode to the upside. The syndicates who mistimed the market will be on the hook for billions of dollars worth of loses.

The U.S. fed tells more lies than Bre-x and Cineplex combined. The fact is America is kaput and can only put on a brave face as they try to come up with some sort of an explanation to the citizens but they try to wait as long as possible. Interest rates will plunge in America and in Canada as both countries fall back in recession.

Annualized home sales in the US are running just below 5,000,000, or more than 10 times that of Canada. ‘No one is buying homes in America’ is the kind of statement that makes you look foolish. — Garth

#53 not 1st on 06.19.13 at 11:11 pm

So collecting dividends from the comfort of your sofa is now considered earning wealth?

#54 Canadian Watchdog on 06.19.13 at 11:16 pm

China weighted-average overnight repo rate hits 13.1%, highest in more than 10 years.

This is a massive move. Something is going on.

#55 Mister Obvious on 06.19.13 at 11:22 pm

#43 Heather Nova

“Not so easy to do in Calgary. There’s nothing to rent. Vacancy rate is almost zero. The rentals you see on Kijiji and Craig’s list are mostly crap. Any decent house is $2000/mo minimum.”
—————————–

Here in Vancouver $2000/mo would be a pretty sweet deal for a decent house. We think in terms of maybe $2500 for a good 2BR apartment close to downtown.

Still, that easily beats ‘owning’ a few cubic feet of rapidly depreciating, non-resalable airspace for upwards of half a million. Provided that is, that cash was properly invested.

#56 Basil Fawlty on 06.19.13 at 11:24 pm

“When it’s clear US growth will continue without stimulus, equity markets will rebound.”

Good luck with that! They are using the “stimulus” to help buy their own bonds. No stimulus will be the economic equivalent of going over Niagra Falls in a barrel. Ouch!

#57 The Canadian on 06.19.13 at 11:25 pm

Garth as usual I disagree with your Yankee shillness.

Alberta oil glut just surged from $50 to $89 a barrel. Meaning the US is back to importing most of it as their hyped up shale oil play died fast and hard. Wall Street fooled some but not the smart ones. So much for oil independence.

And interest rates don’t only go up in healthy economies, what we have coming is stagflation. 1979-80 saw the best example of this as interest rates had to be jacked up to prevent hyperinflation, it left the economy in tatters but it’s just called taking a step back if you want to move two forward – something our leaders today didn’t have the balls to do, like Volker in 79-80. A deflating economy with rising prices from QE – makes sense don’t it…..and the QE continues.

“This year over 5,000,000 resales homes will change hands. Figure it out. — Garth”

Source please?

PS – USD losing reserve status daily:
“IMF Confirms Chinese Yuan/Renminbi Set to Become a Global Reserve Currency”

http://peakoil.com/publicpolicy/imf-confirms-chinese-yuanrenminbi-set-to-become-a-global-reserve-currenc

This will all be coming to a head soon.

#58 DV01 on 06.19.13 at 11:31 pm

You’re right about IR’s rising but for the wrong reason, IMO. Under the false assumption of growth in the U.S., the FED is merely jawboning rates up to quell over valued stock & housing markets. U.S. stocks are +80% correlated to QE which places them roughly 35% above economic fundamentals & corporate valuations. Employment improving? Cmon, if the participation rate continues at its current pace they would be at zero unemployment within a year. Housing? Yes, off the lows, in subprime death zones, most are all cash deals, large block purchases. Organic demand? non-existant. Hot money chasing artificially tight supply thanks to foreclosure stuffing. Auto sales? Good luck with that. Most cars get stuffed onto dealer lots and magically show up as sales. Yes, housing & auto sales are a part of a very large U.S.economy…but they’re not THE economy, far from it. Manufacturing (remember that?) non-existent at sub 50 ISM & heading lower. You need to understand something. There is no U.S. recovery. It’s a mirage. There is no decoupling or escape velocity for the U.S.. China maintains the same illusion of over 7% growth when we clearly see indicators, like electricity demand, plummeting. The Eurozone is in a forced recession/depression and (don’t fool yourself) getting worse. The entire ring fenced monetary union will continue to force its members to clean up their balance sheets. Banks are insolvent. Sovereigns are insolvent. Their People are insolvent. Many more bail-ins to come. Political Union is the goal. Much more pain to come in Europe…and the U.K.. Japan is beyond basket case status as the Yen carry unwinds in the face of Abes 2-2-2 plan, the ONLY reason why EZone bond rates have been on a steady decline, lulling people to believe their crisis is over. Not even close. Emerging economies are falling apart with inflation biting and markets dropping. China is currently (last 2 weeks) experiencing a nasty liquidity problem. Youth unemployment around the world is at epic levels and getting worse. GeoPolitical red lines are being crossed daily. IR’s are going to go up all right, everywhere around the globe…but it won’t be from “growth”. How absurd. Throw in an oil spike for good measure and we’ll soon see just how “robust” growth is. Canada? Housing? Slow bleed? LoL – there’s a great big deleveraging world out there beyond our borders and it’s ugly. FED Tapering? Ha! Careful what you wish for. We’ll soon see just how much volatility has been suppressed. It’ll happen so fast and violently you’ll wet your pants. Don’t kid yourself. Nothing, and I mean nothing, is as it appears to be. All assets up and down the liquidity pyramid are miss-priced. Hold Debt backed assets? Good luck. Risk, everywhere, is so underpriced no one knows the real value of anything. It’ll come down to “return of” vs “return on”. Bonus: it’s all going to happen much sooner than most think.

#59 The Canadian on 06.19.13 at 11:34 pm

#42 not 1st on 06.19.13 at 10:49 pm

Talk about obfuscation.

The real story today was the fed just even hinting about easing the easing and the stock market craters. Yup, the recent run up sure is made of corporate profits and strong economic indicators….my a**. The whole thing is a house of card held up by air.
——————————————————-
Agreed. And the sad part is they’ve been saying this since QE #1 in 2009, only today’s buzzword is “tapering” as the old buzz of “exit strategy” wore of and didn’t fool the public anymore. With 700 trillion + in derivatives floating around QE will have to go for another 500 years, and that’s if they ante up along the way. Sheesh.
Only way out is a system reset, cause in addition the national debt will balloon to 30 trillion by 2020.
But by this time the USD will have long been isolated as a toxic rat with others such as the BRICS long taking over. So obvious.

#60 lucyj on 06.19.13 at 11:46 pm

Wealth is earned, not borrowed. I wonder if politicians could grasp this concept?

#61 Retired Boomer - WI on 06.19.13 at 11:51 pm

#50 CatFoodLady

The Low Interest Rates WERE a GREAT time to pay down debt…not ADD to that DEBT.

When I built my home in 1996 my mortgage was 7.5% In the years since I refinanced that home FOUR times each at a lower interest rate. Every time, the Bank asked me “would you like to take money out? My answer: NO!!

The idea was to pay it off, as FAST, and as CHEAPLY as I humanely could. Today, it is 100% paid off. Could I have maybe “better” invested the money? Maybe, but the peace of mind has no tangible price, besides I have adequate reserves today.

Well, we can all over indulge can’t we? Be it food, drink, drugs, whatever…it need not be a vice per se.

People make choices, sometimes mediocre ones, sometimes bad ones, sometimes fatal ones. Whose at fault there?

Wages are stagnant here in the US. Inflation is rather tame just now, but for how long?

Investments (equities) have been on a tear since 2009.
DEBT is always troublesome, best to eliminate it, or at least minimize it if you are able.

Despite the advertising, the reality is “You don’t deserve
S**T unless you can PAY for it.”

#39 SMOKING MAN

– Always a good way to relax after a Wednesday evening at the pub…..where did I put those tunes???

#62 An Cat Dubh on 06.20.13 at 12:27 am

Oil glut causing falling prices, not in BC, especially in the Brokanagan where it is $1.43. More expensive than Vancouver where it is about a penny less and in Victoria where the lowest price I saw was $1.31. Plus the restaurants here have better prices and bigger portions for the most part. Gas in Penticton went up 16 cents in one month while Oroville Washington went up 7.6 cents.

Real Estate in the Okanagan still is way overvalued. Many think the huge increases the past few years are the new bottom line.

#63 Observer on 06.20.13 at 12:48 am

Remember the (EMERGENCY) low interest rates were used as a TOOL to stimulate the Economy.

With higher rates, and no growth, it only means one thing, less businesses borrowing because it will affect their balance sheets, especially when people has no money to spend, then companies will hunker down and hope they can survive the hurricane.

This in turn will lead to less Private sector jobs and probably more job loss. This feels like the 1980’s with only one differences. This time 70% of the people are DEAD broke and have absolutely no savings. But in the 80’s people still has savings and money.

Garth is right we don’t have a real estate bubble, But instead were going to have a “REAL ESTATE CRATER”!!!

#64 Maka on 06.20.13 at 12:52 am

Garth,

I have a mortgage of 170K at variable rate of 2.25%. Renewal comes in 3 years. Do you think it is a good idea to lock it for 10-year at 3.59%?

Thanks.

#65 DJB on 06.20.13 at 12:57 am

Garth: This paragraph is almost gospel.

A house isn’t a right. Kids don’t deserve homes nicer than their parents. You should need money to buy something. Wealth is earned, not borrowed. The goal of life is not stuff.

We lost our way, thinking otherwise.

Those who know, know. The rest are being led around by the marketers.

#66 daystar on 06.20.13 at 1:02 am

Excellent piece, Garth. What I keep wondering is, will higher interest rates be enough to breed a recession in Canada outright, regardless of what the rest of the world is doing, what kind of rise in rates are we talking about, what the split will be (BoC and the big five spreads from there) and what kind of timeline are we realistically dealing with to create the multi year recession that I believe will come for Canada… ?

There are consequences to bad government and banking policy and we are all, as Canadians about to find that out. There are limits and we went past them, I think, years ago. It can take a decade to see it, but… we are on the edge of it now. Stagnant incomes. Bloated household debt levels. Public debt swelling by over 40% since Harper. Household debt swelling from 115% to 165% of GDP since Harper and that’s a lot considering how GDP has grown. Incomes growing a mere 8%… since Harper going back to Jan of 06′. Trade deficits becoming the new normal:

http://www.theglobeandmail.com/report-on-business/economy/canada-trade-deficit-jumps-in-april-on-record-imports/article12330045/

That’s 16 straight months of trade deficits for Canada. Housing is on the skids, debt levels are saturated, we’ve got sellout governments with no sovereign energy plans, a weaker future loonie softening mining revenues, what is going to keep this economy going? Jobs? Where? All I see are harder times ahead in every sector. Everywhere I look, the future is dark for Canada and I have to strongly suggest its because of failed leadership over the last 7 years at the highest levels and it shows in rear view mirror policy and shrinking market share of what Canadians own and control. Its always been about market share and we are failing miserably compared to our international counterparts. Interest rates are the catalyst for it all to blow up in our faces, its just a matter of time and I would say 2 years from now, there will be few optimists in Canada as we all find out how vulnerable to debt we truly are as a whole. Interest rates are the trigger as we all know.

#67 Tom from Mississauga on 06.20.13 at 1:32 am

Don’t listen to the Canadian banks, watch them. BMO maybe knew the US was going to do better when they bought Marshall & Ilsley in Wisconsin for $4B. I agreed with BMO when I bought their stock.

#68 Kingarthur on 06.20.13 at 1:33 am

I confess I’m confused at this point. Trying to make sense of a volatile market, guided by my guru the “G-man” , hanging on to my REITS and market index funds, some short term bonds and a bunch of cash. International funds?
Married twice, second time to my neighbourhood; can’t move, I like it too much.

#69 West Vanner on 06.20.13 at 1:33 am

No, life is not about stuff, amazing how many think it is though, whether real estate stuff, Car stuff, some will even stoop to buying KIA’s, Hundai’s, Oh and don’t get me started on Foresters. Is it a god given right that you hold up traffic if driving one of those things? Buy a KIA then we all know what to expect, Jeez.
I digress, Women are the worst for ‘Stuff’, they accumulate it like they can’t die without it. God knows what they think happens to it after that. I have a boat full of it.
I still think you are full of aps btw…..

#70 Steve on 06.20.13 at 1:50 am

“Kaputt” not “kaput”

#71 Uwinsome on 06.20.13 at 1:50 am

“While our Alberta oil gluts and prices fall, the US is again exporting the stuff.”

Gee Garth, you had me with all your other negative comments about the Canadian economy – but then you had to go and exagerate yet again.

Actually the differential between WTI and WCS is below $10 – the lowest in several months. The only reason Alberta has a bit of a glut right now is because the production numbers are up and predicted to rise a lot more. Pipeline decisions will be coming soon, railway shipments are growing – the glut is diminishing.

Yea I know oil production in the States is up, but where is this so called export (that you speak of) of their oil going?

#72 happy renter on 06.20.13 at 1:56 am

Bailing out corrupt banks,pumping 85 billion dollars a month into the stock market and the fed manipulating interest rates to make a strong recovery.Come on, who are you foolin?Trillions in debt with no concequeces?

#73 Mark on 06.20.13 at 1:58 am

“Insurance companies perform well in a rising rate environment.”

Depends upon what’s in their portfolios and their net exposure to the market. Its definitely not a rule of thumb, by any stretch of the imagination, that pensions/insurance companies will perform better in a rising rate environment. Potentially quite the opposite depending on positioning.

#74 Yitzhak Rabin on 06.20.13 at 2:08 am

Bond yields will keep going up, up up. Don’t underestimate what this will do to the US economy. Particularly to the housing market and government debt (all levels).

Normal families are still priced out of the market down south. Higher rates will could mean another leg down in the housing market. Especially if all these hedge funds buying up residential homes don’t realize the expected cash flows and have to pay higher interest on the leverage they used.

I know you hate gold, but what do you think about oil, natural gas and related companies? West Texas Intermediate continues to hover near $100 and yields are higher than your precious REITs and preferreds.

#75 Buy? Curious? on 06.20.13 at 2:08 am

Hey Garth, great post but could one of your classic zinggers, “A house isn’t a right. Kids don’t deserve homes nicer than their parents.” have the word “house” replaced with “university”? I mean, how in world is someone coming out of university going to be able to afford anything more than a vegetarian meal followed by a latte?

http://www.youtube.com/watch?v=wvQR93C6n2E

It’s a cold world out there, my fellow Canadians, and we need to huddle together, look out for each other. That’s why, we need to surround ourselves around Rob Ford! He needs us and WE NEED HIM!

http://www.youtube.com/watch?v=z8EpSdyB0zY

#76 cynically on 06.20.13 at 2:38 am

I never knew you had so many Harvard economists on your blog. Some are agreeing with you while others disagree vehemently yet they all read the same facts and figures being put out by the governments and financial institutions. Reminds me of the old adage that if you laid out all economists in a row they would point in all directions. Never more true on this blog but I’m with you on this one and we’ll see how right we are by the end of the year or sooner.

#77 Canuck Abroad on 06.20.13 at 3:06 am

25 Smoking Man – “…What happens when you compare Canada to London, or Hong Kong, Canada sure look cheap…”
***
SM, I can’t believe you wrote something that dumb. Despite your dyslexic, alcoholic gambler schtick, you aren’t generally clueless. And then you compare Canada to London and Hong Kong? WTF? Not even Toronto is comparable to either city, not in its wildest dreams. And Vancouver’s bubble is a global joke. Mocked ’round the planet.

Back to the bar, SM.

#78 skip on 06.20.13 at 3:30 am

Yo bro the only thing driving house prices and purchases in the USA is financial houses looking to park their money. The USA is not growing bro, it’s stagnant just like the rest of the Western economies. Growth under 5% is useless. That’s why the Capitalist constantly need lower taxes, wages and production costs. Obviously this form of wealth generation can’t countinue as we are witnessing.

In your world the US is growing. In the world of reality they are on the war path around the globe using their military to control markets that their economy was able to do before.

RIP, USA. your economic theory of capitalism is junk science to begin with.

#79 Not a Belieber on 06.20.13 at 5:09 am

This stunner recently sold for $900k … and is/was renting for $900/month (utilities included)! As Nelson Muntz from “The Simpsons” said, “HA-HA!”

http://susiegoodallrealestate.com/listing/33-2238-folkestone-way-west-vancouver/

I came across this place in May when I was looking for a place to rent. Too bad public transit sucks in that neighbourhood.

#80 Shouldn't be new anymore on 06.20.13 at 5:38 am

Garth, again, just to let you know many people especially the young people do owe you a lot for this blog. I hope you had been around in those days….

I remember my last purchase of RE because of “no easy renting”, it was a prolonged ordeal. Instead of buying at the peak, I bought just catching an already 50% dropped knife. However, just couple months into our owning, me and my husband started to regret, but no way out as the price was still dropping.

The first day after I moved into my apartment, I immediately got a complaining letter about “noise” from the homeowners below us. I was very confused at first as not only we hadn’t done anything other than normal “living”, me and my husband didn’t even have kids. Then we found out our apartment, I believed supposedly an investment property, have been kept vacant for a few years. The tough part was, our fellow homeowners below, who were school teachers, paid 200% over our price for their apartment which was the same size as ours. Yeah, people with union or government jobs could tide over the bubbles but they couldn’t help whining as it was still very painful.

Other than pages and pages of gut-wrenching and annoying letters of complaints of “noises” slipped into our mail-box every now and then, we also received “For Sale” flyers maketing some upper floor apartments with 30% bigger in size but 10% cheaper than our purchasing price, and also low-rent rentals. Then again, we found out how tough daily traffic could be from our apartment to our work place which we had assumed it to be “acceptable” before we bought….

My advice for those who find “renting hard these days”, move to somwhere rental properties abounds, and close to work even it may mean you’ve got to pay a bit more. So, if you need to move again, it only means a few floors down or down a block, not much harm though. And then some time later, you may be surprised by the “renters wanted” flyers for a cheaper rent. And, people say high-end properties are different. Yes, of course, they will drop much later into the downward trend!

BTW, I find it very curious why anybody could be so pissed, other than Garth as this is his blog, by someone marking his “first” comment here. Not everyone are so rich to invest, to purchase property or have so much experience to share. That doesn’t mean they are losers, they can be just some new guys who have some interests in learning from this blog. Would people also be so pissed off when strangers just say “Hi!” or “How are you doing?” to them?

#81 Stickler on 06.20.13 at 6:41 am

@ #34 retired Boomer – WI on 06.19.13 at 10:25 pm

Stuff IS the goal.

Why else would you strive? Wanna help the losers on skid row? You nice benevolent boob, you. Me, I worked hard for my STUFF, and I’ll share it with whom I please, when I please. Should I croak before divesting my STUFF who gives a rip?

——————————-

Quite the role model you are…
You got yours, so everyone else can suck it right?

Great example of what is wrong with people these days.

#82 bigrider on 06.20.13 at 6:45 am

Lots of focus on a bond market correction on this blog while the equity market correction which is coinciding with it, is largely ignored.

Technically, this ‘correction’ is quite ominous, given the complacency being signaled by the vix.

#83 Buy? Curious? on 06.20.13 at 6:56 am

#76 Canuck Abroad on 06.20.13 at 3:06 am
“… And Vancouver’s bubble is a global joke. Mocked ’round the planet.”

Really? Vancouver’s bubble is global joke? I don’t remember hearing the laughter when I went to Europe.

And mocked around the planet? Maybe on yours, but here on Earf, I don’t see Turks giving a turd about Canada or the great Sarah Silverman dedicating 10minutes of her act to mock Canadian real estate (though if she did, it would be hillarious!).

So get back on your ex-pat horse, stop worrying about Canada and making lame comparisons to cities that have had at least a 500 year head start on Toronto which happens to have the most fantastic mayor “the planet” has ever known.

#84 neo on 06.20.13 at 7:04 am

Getting ever so close to the 2.4% 10 year bond and $1,000 gold that will cause that major correction in equities I was talking about last year. It has taking longer than I expected, but then again, not as long as it is taking GTA house prices to come down.

#85 maxx on 06.20.13 at 7:15 am

#51 TheCatFoodLady on 06.19.13 at 11:06 pm

Excellent post. I too saw lower rates as a huge opportunity to trash debt. I also smelled a very large rat starting back in about ’04-05, when you practically couldn’t avoid bumping into all of the offers to extend credit, at almost every bank, shop and big box store…..and the advertising was sickening. Smiling, delirious fools peeking into their attics, slobbering at all of that great “home equity”.

Stuff is OK if you have the $ to pay for it. But it rocks if you source it ex retail, save up to 95% on it and consequently hold on to all of your precious savings. Doubles the pleasure, at least. Let those who insist on “new” shoulder the burden of retail profit and you get to harvest the gold of savings.

For most, saving is so much harder than it was. Jobs are fewer, more precarious and of lesser quality. So, to those who saved when times were fat and happy, bravo! you’re brilliant.

The somewhat contrarian process of saving is tedious, but the results are extremely sexy when adverse economic conditions manifest.

If interest rates do increase, savers will loosen the purse strings again. Debtors…..not so much.

#86 unbalanced on 06.20.13 at 7:20 am

Welcome back Daystar! I hope you stay around for awhile. Your posts are a pleasure to read. Too many loose cannons around here.

#87 maxx on 06.20.13 at 7:55 am

#65 daystar on 06.20.13 at 1:02 am

“There are consequences to bad government and banking policy and we are all, as Canadians about to find that out. There are limits and we went past them, I think, years ago. It can take a decade to see it, but… we are on the edge of it now.

Public debt swelling by over 40% since Harper. Household debt swelling from 115% to 165% of GDP since Harper and that’s a lot considering how GDP has grown.

All I see are harder times ahead in every sector. Everywhere I look, the future is dark for Canada and I have to strongly suggest its because of failed leadership over the last 7 years at the highest levels and it shows in rear view mirror policy and shrinking market share of what Canadians own and control.”

No accident that the US-EU trade agreement was signed and that the Canada-EU agreement is in a “holding” pattern.

Huge disconnect with the way Canada trashes it’s beautiful, precious ecology for the sake of low-quality oil. Canada is mismanaging it’s wealth. On so many levels, and to the detriment of it’s children.

#88 bguy1 on 06.20.13 at 8:02 am

So, if one is about to create a portfolio, buy bond ETFs or wait?

Wait. — Garth

#89 jess on 06.20.13 at 8:07 am

24 AK on 06.19.13 at 10:01 pm

have you read this:

Governor Cuomo Announces Investigation Uncovers Billions of Dollars in Hidden Shadow Insurance Risk that Could Threaten Policyholder and Taxpayer Interests
Printer-friendly version
Shadow Insurance Diverts Reserve Buffers Used to Pay Promised Life Insurance Claims to Policyholders
Albany, NY (June 12, 2013)

Background on DFS Investigation into Shadow Insurance

In July 2012, DFS initiated an investigation into shadow insurance at New York-based insurance companies and their affiliates.
Insurance companies use shadow insurance to shift blocks of insurance policy claims to special entities — often in states outside where the companies are based, or else offshore (e.g., the Cayman Islands) — in order to take advantage of looser reserve and regulatory requirements. Reserves are funds that insurers set aside to pay policyholder claims.

In a typical shadow insurance transaction, an insurance company creates a “captive” insurance subsidiary, which is essentially a shell company owned by the insurer’s parent. The company then “reinsures” a block of existing policy claims through the shell company – and diverts the reserves that it had previously set aside to pay policyholders to other purposes, since the reserve and collateral requirements for the captive shell company are typically lower. Sometimes the parent company even effectively pays a commission to itself from the shell company when the transaction is complete.

This financial alchemy, however, does not actually transfer the risk for those insurance policies off the parent company’s books because, in many instances, the parent company is ultimately still on the hook for paying claims if the shell company’s weaker reserves are exhausted through a “parental guarantee.” That means that when the time finally comes for a policyholder to collect their promised benefits after years of paying premiums — such as when there is a death in their family – there is a smaller reserve buffer available at the insurance company to ensure that the policyholders receive the benefits to which they are legally entitled….read more at
http://www.governor.ny.gov/press/06122013cuomo-announces-uncover-insurance-risk

#90 Bigrider on 06.20.13 at 8:08 am

Wow ,how can every single asset class be declining in price, including REITs , EXCEPT Toronto housing prices..LOL

Financial assets all the way for me still but then again, I liked the movie Titanic as well .. LMAO

The lack of confidence on this blog is amusing. — Garth

#91 bguy1 on 06.20.13 at 8:10 am

“So, if one is about to create a portfolio, buy bond ETFs or wait?

Wait. — Garth”

Also wait to buy REIT ETF, Preferred ETF, and Equity ETFs, or proceed?

They’re on sale, but bottoms are only obvious in the rearview mirror. — Garth

#92 TurnerNation on 06.20.13 at 8:28 am

Calgary house rentals…tight? Wanted outstrips Offering. Rarely seen balance.

http://calgary.kijiji.ca/f-real-estate-house-rental-W0QQCatIdZ43

Offering (958)
Wanted (1339)

Vs. Toronto:

Offering (2966)
Wanted (473)

Vs. GTA:

Offering (8237)
Wanted (1314)

#93 gotthardbahn on 06.20.13 at 8:32 am

Hey Garth –

‘The US renaissance I’ve been telling you about for the past year (house sales, car sales, new jobs, energy rebirth) is now hot enough that Washington can dial back the stimulus spending.’

I don’t have quite the same amount of faith as apparently you do in Mr. Obama and the Democrats in Washington nor Democrats at the state level, i.e. California &c. These guys will find some way to bugger everything up – count on it.

#94 Steven on 06.20.13 at 8:54 am

“A house isn’t a right. Kids don’t deserve homes nicer than their parents.”
In the light of the above statement may be youngsters should run away from society, its government, jobs and real estate market and live like animals in the north woods. Human society as we know it has nothing to offer except debt slavery, crappy pay and too many laws that make the immoral legal and ordinary stuff a crime. Time to pull the plug!

Are you an entitled brat? — Garth

#95 amazon girl on 06.20.13 at 9:00 am

Terrific post today Garth,whem you write like this…….
It melt me away….

Thanks

#96 GOLDFLUSHED on 06.20.13 at 9:08 am

GOLD AND SILVER DOWN THE TOILET! COULD SEE SUB $1000 GOLD END OF YEAR!

#97 Union Jack on 06.20.13 at 9:12 am

How strong is the economy Canada’s Mark Carney leaves behind?
The incoming Bank of England governor has a fine track record, but to what extent has it been burnished by the demand for Canada’s natural resources?

http://www.guardian.co.uk/business/2013/jun/16/mark-carney-takes-over-bnank-canada-economy

Garth could you please give your honest as always view on this article at some point.
I Want to move from UK to lower mainland, BC. Is it worth me working and waiting here a few years before I move and purchase a house over there, As not to lose my shirt in housing spiral down.

I can’t see UK getting any better anytime soon, it’s so bleak here, low wages, houses are still expensive even though they a have gone down 10%

Thanks again Union Jack.

#98 GP on 06.20.13 at 9:13 am

“This year over 5,000,000 resales homes will change hands. Figure it out. — Garth”

Source please?
——–

here’s one:

http://www.realtor.org/news-releases/2013/05/pending-home-sales-edge-up-in-april

#99 Nemesis on 06.20.13 at 9:14 am

Hmmm… I say, OldPol – could you please run that “orderly transition” scenario by us once again.

I may have missed something the first time. ;)

#100 Ralph Cramdown on 06.20.13 at 9:20 am

Note to self: What looks like panic on the one day S&P 500 chart is barely noticeable on the one year chart. Note to goldbugs: Better keep scaling out to the five or ten year chart to get the same effect.

#101 Standard Deviation on 06.20.13 at 9:21 am

I remain agnostic on any economic outcome given the rigged system we currently operate under.
There is something fundamentally distorted with a model that requires people to spend more borrowed money on consumption to bring prosperity to the nation? I think a new economic model needs to be considered here.

#102 bguy1 on 06.20.13 at 9:37 am

“So, if one is about to create a portfolio, buy bond ETFs or wait?

Wait. — Garth

Also wait to buy REIT ETF, Preferred ETF, and Equity ETFs, or proceed?

They’re on sale, but bottoms are only obvious in the rearview mirror. — Garth”

How about using a laddered Bond ETF (1-5 year) to reduce the risk of capital losses from bonds?

#103 :):( Ying Yang on 06.20.13 at 9:38 am

#9 Smoking Man on 06.19.13 at 9:13 pm
So best for me to push text encription, help a son that sells alarm systems door to door, and he kills it.

SM you are a little behind times with text encryption, Phil Zimmerman did it back in 1991 and it free. Its called PGP.
http://www.openpgp.org
Another freebie is OTR.
Its been done and done again. My brother in Hong Kong says not worth putting time and effort into these programs as too many are free. Good luck with Keys.

#104 Not 1st on 06.20.13 at 9:41 am

Just think for a moment what the USA would look like if all that stimulus spending had gone into infrastructure instead of the stock market. There would have been millions of jobs created. It would truly be riding the economic renaissance that Garth thinks he sees.

But alas, 2.5 trillion went nowhere but to keep rates low to encourage another housing bubble cause people feel rich when there house goes up.

#105 Grantmi on 06.20.13 at 9:44 am

Gold toast!!

http://scharts.co/11PPJon

#106 The American on 06.20.13 at 10:15 am

At #13: Gladiator, I’d listen to Moody’s. Moody’s is spot-on accurate with the assessment of valuation with respect to the Canadian housing market. 44% decline on AVERAGE. Oh, it’s already happening. Also, for the non believers, three years from now the Canadian economy is going to look like armageddon compared to the U.S. economy at its lowest. Mark these words. You can’t expect to come out unscathed, especially when you’ve behaved worse than any other nation in the G20 with respect to its housing market, lending standards (yes, Canada has been up to it’s eyeballs in sub-prime and sub-standard lending practices), and nearly 40% of your economy is hinged at some level on the housing market. DUH!!!!! Talk about not learning a damn thing from the rest of the world. Squandered opportunity.

#107 Retired Boomer - WI on 06.20.13 at 10:19 am

#80 Stickler

YEAH I got mine. YOU can get yours, too. It is called working, saving (no matter how small at first), and living within your income.

I also believe we should help those less fortunate, but do not believe in giving a drunk a drink.

Unfortunately, I know of no “Get Rich Quick” scheme that works. Crock pots work in investing, microwaves don’t.

Besides, those who “win” a lottery tend to be at the same financial level, or worse a mere 5 years hence.

Gaining wealth slowly also has the uncanny ability to “educate” the owner of that wealth over the entire accumulation process.

All I can do is hope the younger ones find out about it before they make tragic errors with their money / credit / debt.

It is NOT readily taught in school

nuff said

#108 broadway skytrain on 06.20.13 at 10:21 am

its murder out there, the only thing getting pummeled worse then xre,t is anything gold related

#109 Post Haste on 06.20.13 at 10:28 am

I realize that you get what you paid for – but could anyone enlighten me on investing my zero growth RRSP into a possible REIT or preferred shares that I can just purchase and not worry about for the next 20 years but provide a somewhat decent return..or at least something that is above inflation ??

Thanks Garth for providing a awesome site for Canadians coast to coast..you rock my friend!!

#110 Mike2 on 06.20.13 at 10:33 am

@107

“its murder out there, the only thing getting pummeled worse then xre,t is anything gold related”

It’s a buying opportunity… haha

:-(

#111 Grantmi on 06.20.13 at 10:57 am

All i can think of today is Sammy Davis Jr. doing the skit – “Here comes the judge… here comes the judge!”

http://youtu.be/3hIcKkKID8k

But instead of “Here comes the Judge!” it’s “Here comes the Fed!!”

Thanks for all your efforts Uncle Ben… but this will be your swan song before you get your ass kicked out the FED door!

Hope the goldbuggers took their profits last week.

#112 Seriously? on 06.20.13 at 10:58 am

StatsCan Report Just Released Today:

Household debt-income ratio falls in last two quarters.

Also from same report released today, “Canada’s ratio of household debt to net worth has in fact fallen to 23.6 percent in the last quarter from 24.1 percent in the second quarter of 2012 and 24.4 percent in the fourth quarter of 2011.”

http://www.bnn.ca/News/2013/6/20/Household-debt-income-ratio-falls-in-last-two-quarters.aspx

#113 not 1st on 06.20.13 at 10:59 am

its murder out there, the only thing getting pummeled worse then xre,t is anything gold related

=====

I seem to remember Garth clearly saying that REITs will survive and thrive even in the midst of rate increases and a housing correction. Doesn’t seem like thats the case.

Of course they will. A few days or weeks means nothing to serious investors. What a pantywaist. — Garth

#114 Spiltbongwater on 06.20.13 at 11:01 am

After the huge selloff the last couple days the powers that be are crashing this into the ground. Time to abolish the American dollar and usher in the New World Order folks, smh at you idiots that didn’t think our government wouldn’t kill every one of us in this country…see you all in hell or at our local FEMA camp.

#115 Timing is Everything on 06.20.13 at 11:07 am

#89 Bigrider

Self-described real estate obsession highest in Toronto at 47%, survey indicates…

http://tinyurl.com/mc2uz2a

obsession: a persistent disturbing preoccupation with an often unreasonable idea or feeling

http://tinyurl.com/36b6a78

#116 Chickenlittle on 06.20.13 at 11:09 am

#10 AB

“The goal of life is not stuff.”

Tell that to my generation (the late 20s, early 30s). The purchase of a house has almost become as important a “developmental milestone” as learning to walk or talk. If you don’t buy a house you’re considered “developmentally delayed.”

Whatever.

Erikson’s developmental stages will soon be changed to accommodate this new thinking. Instead of “intimacy vs. isolation”, we will have “owner. vs. renter”.

#117 gerryantics on 06.20.13 at 11:16 am

Yellow petunias!

The full time bar tender merely “talks” about maybe depends sorta we might sometime we don’t really know when we are thinking of reducing a pint by a few drops and the US Economic Renaissance pulls a potty cryfest.

What will happen when if maybe the money printfest addiction credit market party really does start closing down.

#118 melinvictoria on 06.20.13 at 11:18 am

Man some of my REITs taking a real beating. Hope this blood bath ends soon. XRE might be worth a nibble…falling knife?

#119 Mike T. on 06.20.13 at 11:31 am

#113 Spiltbongwater on 06.20.13 at 11:01 am
After the huge selloff the last couple days the powers that be are crashing this into the ground. Time to abolish the American dollar and usher in the New World Order folks

I think you have it all wrong. The New World Order is gonna be called ‘the plan that defeats the NWO’ and all the sheeple will rejoice, not knowing once again they have been duped.

And it is not going to happen in our lifetime…too many of us are expecting it. The name of the game on Earth is deception and mis-direction.

That is what makes it so much fun…for those who know how to play. For everyone one else it is a fabulous learning opportunity for the soul.

Be thankful above all else.

#120 Gloria White on 06.20.13 at 11:39 am

Can anyone tell me honestly why does Garth REGULARLY flip flops on topics he previously so cleverly wrote and predicted?

I’m fascinated. Tell me more. — Garth

#121 screwed on 06.20.13 at 11:48 am

The royalty wants their cake and eat it too now.

Made rich(er) with trillions from thin air which haven’t lost much value in real terms (purchasing power), the royalty now suggests they want to earn higher interest on all this bogus wealth they created over the last 5 years.

Ouch, this will not end well as the majority of debt slaves will opt to default (as they should) rather than feeding the beast.

When “equity” (perceived) of the “asset” melts away, only a fool will continue to pay for their personal shackles in debt prison.

As defaults make the rounds, the royalty will kick and scream but what can they do? They can use the stick after they’ve used the carrot to get everyone into the game.

Canada’s real estate gamble is a bait and switch game. From the introduction to 40 yr amortizations, low rates to an artificially created and politically driven recession, this game has it all.

#122 -=jwk=- on 06.20.13 at 11:58 am

This year over 5,000,000 resales homes will change hands. Figure it out. — Garth”

Source please?

Google “us home sales 2013” Read any of the top ten hits…

#123 Joe on 06.20.13 at 12:06 pm

CIBC pumping 3% cash back.
I know of 2 people in the last month who have negotiated large mortgages for well below the posted bankster rates.
There are no financial rules except to brainwash the public that he who dies with the most toys wins.

#124 CalgaryRocks on 06.20.13 at 12:13 pm

#115 Chickenlittle on 06.20.13 at 11:09 am
#10 AB

“The goal of life is not stuff.”

Tell that to my generation (the late 20s, early 30s). The purchase of a house has almost become as important a “developmental milestone” as learning to walk or talk. If you don’t buy a house you’re considered “developmentally delayed.”

This is because your generation (I’m 41, so I guess I don’t belong) is eating table scraps while the boomers and to some extent some genXers eat foie gras in the form of defined benefit pension plans, good jobs that provide decent experience and money, benefits etc…

My parents bought and sold 4 houses in 2 different countries (all at a profit) by the time they were in their early 40s. While raising kids and working on their lucrative careers.

I graduated with not even 10K in student loans and within 3 years in the field I was making 6 figures. Not many new grads can say that nowadays. Oh, and I was earning that in US$ when the US$ was 1.65C$

My mom was running multi-million dollar projects in her mid 20s. As was my dad.

Sorry for your luck, generation Y. Maybe next time the Royal Bank exports your jobs to India you’ll get off your IPhone long enough to do something about it. Or maybe not.

#125 Mister Obvious on 06.20.13 at 12:16 pm

#115 Chickenlittle

” The purchase of a house has almost become as important a “developmental milestone” as learning to walk or talk. If you don’t buy a house you’re considered “developmentally delayed.” “
————————

That’s how my generation once viewed the importance of getting a driver’s licence and a car. Anyone, male or female, who failed to achieve that goal was considered at least ‘developmentally suspect’.

Fewer and fewer people seem to care about that now. In some circles it’s almost uncool. The same attitude can easily come about home ownership. It may take a few years of declining RE valuations but that process seems to be underway now.

#126 Heather Nova on 06.20.13 at 12:28 pm

Just move. -Garth

I didn’t realize how prescient my comment was last night. Garth was responding to a Calgarian, telling him to find new rental accommodation. Sorry Garth, but it isn’t that simple.

Today’s paper featured this article:

Calgary’s rental apartment vacancy rate is the lowest in the country with average monthly rents increasing the highest, according to Canada Mortgage and Housing Corp.

In its spring Rental Market Survey released Thursday, the agency said Calgary and Edmonton had the lowest vacancy rates in Canada in April at 1.2 per cent followed by St. John’s (1.5 per cent).

The major centres with the largest increase in fixed sample average rent were Calgary (7.2 per cent), St. John’s (5.5 per cent) and Regina (4.7 per cent), said the CMHC.”

The advice stands. — Garth

#127 Smoking Man on 06.20.13 at 12:32 pm

Ying Yang

Of course they are free, and all vulnerable. Do you not think NSA can decrypt, this is all about the pitch and distribution method. It’s key, pun intended

#128 Bigrider on 06.20.13 at 12:34 pm

#89 Garth to Bigrider- “The lack of confidence on this blog is amusing”

I am confident that if the fed cuts back or eliminates it’s “asset support” strategies that all financial assets will decline.

Today is an example of just what the threat of such
will do to the market

Ever heard of profit-taking? — Garth

#129 Canadian Watchdog on 06.20.13 at 12:36 pm

Lots of headwinds ahead for US stocks. First, the bulk of furloughs (part of defense spending cuts)  began this month and is expected to show up in employment data in the next few employment reports. Second, 35-40% of S&P earnings come from outside the US, of which the bulk is from Europe whose consumption is steadily declining while emerging markets face high inflation. Lastly, margin debt used for securities has exceeded 2.5% of GDP. The last two times it exceed this percentage stocks declined rapidly afterwards as more margin calls force large sell offs that in turn, trigger sell stops to the downside.

Without the Fed's commitment to do "whatever it takes", stocks are likely to keep falling.

Of course they won’t. — Garth

#130 Doug in London on 06.20.13 at 12:56 pm

@gotthardbahn, post #92:
Your timing is off. The last guys in Washington, up until early 2009, were the ones that successfully found a highly effective way to bugger things up royally. Now the new guys in Washington, namely the Barack Obama Administration, are left with cleaning up the mess and it lokks like they’re doing an excellent job of it. The mess was so bad that any progress at all in fixing would be an outstanding achievement. Don’t take my word for it, the U.S. economic recovery speaks for itself.

It’s also worth noting that last year Warren Buffett and Uncle Garth predicted the U.S. economy would recover while many others, including Brother Carney, predicted it would stay in the doldrums for many years to come.

#131 TurnerNation on 06.20.13 at 12:59 pm

Last line says cryptically “Not long now”. indeed.

Bonds, even red today.

#nowheretohide

Only VIX, USD.

(Oops this isn’t tweeter or FB)

#132 Mike on 06.20.13 at 12:59 pm

#128 Canadian Watchdog
……………………….
Without the Fed’s commitment to do “whatever it takes”, stocks are likely to keep falling.

Of course they won’t. — Garth
………………………..
That doesn’t sound convincing Garth :) Simply “of course they won’t” without any reasoning? What else, other then the pumping from the FED is going to keep stocks at this elevated level?
Undue faith in the magic of the FED is the number one reason we got here, the economic news have been dismal lately.

#133 frank le skank on 06.20.13 at 1:00 pm

#105 The American on 06.20.13 at 10:15 am
Well said…. the fact that this has already happened all around us should have at least opened peoples minds to the possibility of a RE crash in Canada. Apparently we’ve smarter than everyone else.

#134 M. Oak on 06.20.13 at 1:00 pm

>>The US renaissance I’ve been telling you about for the past year (house sales, car sales, new jobs, energy rebirth) is now hot enough that Washington can dial back the stimulus spending.

Not even close:
http://www.zerohedge.com/news/2013-06-19/recovery-bernanke-believes

>> the central bank will probably taper down its bond-buying program within six months (the news came Wednesday).

Wrong again. It’s not stopping for another year.

You use Zero as a source? Wow. — Garth

#135 Canadian Watchdog on 06.20.13 at 1:14 pm

Missed this one yesterday.

New home sales remain low in May

GTA sales down 30% y/y in May. High rise down 32.7% y/y, low rise down 26.4% y/y.

#136 Dupcheck on 06.20.13 at 1:18 pm

The markets got rimmed today! I wonder why all the sudden. Maybe it is a good time to buy some.

#137 The Mummy on 06.20.13 at 1:23 pm

#117 melinvictoria on 06.20.13 at 11:18 am
Man some of my REITs taking a real beating. Hope this blood bath ends soon. XRE might be worth a nibble…falling knife?
———————————————————
It will end when uncle Ben stops talking “tapering” smack and ante’s up on the QE. Can you imagine what would happen if he actually did it. Back to 2008.

#138 VT on 06.20.13 at 1:23 pm

#28 T5_INCOME on 06.19.13 at 10:08 pm

How will the retail real estate sector hold up ?

My REITS took it on the chin today.

Ignore it. Sideswiped with bonds. — Garth

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

Ignore indeed.

Had some extra cash in the ol’ TFSA and bought up a bunch of D.UN which is now yielding 7%.

How can anyone justify putting cash into a high interest saving account to get 1%, when there are so many income producing vehicles paying 4% + such as this one?

If individual equities aren’t your thing, just take the opportunity to add XRE to add more REIT income. Pays over 4% and is well diversified.

#139 JSS on 06.20.13 at 1:32 pm

Buying XRE turns out to be useless. It just keeps dropping and dropping.

#140 bill on 06.20.13 at 1:38 pm

Hi Garth
I see the ‘chicken little’ types are out in force today.
BOO!!

#141 Chickenlittle on 06.20.13 at 1:39 pm

#123 Calgary Rocks

“Maybe next time the Royal Bank exports your jobs to India you’ll get off your IPhone long enough to do something about it. Or maybe not.”

Actually, all of the people they interviewed at RBC regarding the job exports were people OLDER than I am.

http://rabble.ca/babble/canadian-politics/rbc-bank-firing-canadian-workers-and-hiring-temporary-foreign-workers-work-

This article says the most of the workers were in their late 50s early 60s.

You are 41, so you may have kids. All of this applies to them as well, not just those of us 8-10 years younger. In fact, they may have it even WORSE by the time they grow up! So go ahead and laugh at us, but by the time your kids get older you’ll be singing a different tune.

I’m also not sure which group I fall into. I’m a 79er, so I’m in no mans land.

PS: I do not have an IPhone. I’m not hipster enough.

#142 jess on 06.20.13 at 1:39 pm

£58 million in unpaid tax???

..”Employ-E had about 60,000 low-paid temporary workers on its books, who it supplied to recruitment agencies throughout the UK.”

http://www.scotsman.com/business/management/agency-goes-bust-owing-58m-in-tax-1-2971736

#143 Chickenlittle on 06.20.13 at 1:39 pm

Sorry “the” should be “that”.

#144 Mike on 06.20.13 at 1:40 pm

Why do you keep on deleting my comments Garth ? :)
I simply asked you to explain your “Of course they won’t” comment. Why won’t stocks decline? What will keep them from falling other then Uncle Ben’s never before tested experiment based on … who knows what? :)

I deleted nothing. Your comment was unworthy of a more fulsome response. — Garth

#145 zeeman1 on 06.20.13 at 1:44 pm

Garth, I generally agree, but the only reason new car sales have picked up is because dealers are offering 8 year payment plans.

Without that kind of stretched payment plan car sales would be in the gutter.

Even people I know with lots of money now cringe at spending good money on cars, as they’re staring to be viewed as disposable nuisances, and housing, food and taxes are eating up everything else.

Interesting but irrelevant. A sale is a sale, keeping plants open and people employed. — Garth

#146 Roy on 06.20.13 at 1:46 pm

OSFI: Transition to higher interest rates could be “very painful.”
http://www.theglobeandmail.com/report-on-business/top-business-stories/transition-to-higher-interest-rates-could-be-very-painful-osfis-julie-dickson/article12034154/

20% of Canadians could not handle a 2% rate increase. Only 48% of households in Vancouver could afford their homes if rates when up 2%.
http://www.canada.com/business/mortgages/refinancing/What+your+mortgage+rate+went+points/6373794/story.html

Tell that to all these Vancouver Flippers already in big trouble in Downtown and Coal Harbour.
http://vancouverflippersintrouble.wordpress.com/2013/06/19/big-trouble-in-coal-harbour/

Poloz says Canada’s relative good economic fortune through the downturn rests largely with households that took on personal debt.
http://www.huffingtonpost.ca/2013/06/19/stephen-poloz-debt-business-spending_n_3466662.html

Debt= positive economic growth
Paying for that debt= no ever considers money might cost more in the future here. Buy now or be priced out forever is the only motto you need to know the last 10 years

But Poloz thanks Canadian debt addicts for saving the economy with all these nice artificially maintained emergency low rates. Banks are very happy they have made record profits quarter after endless quarter on your back.

Average adult in BC carries nearly $40,000 in non-mortgage related debt.

Hope that bond market doesn’t continue to have a meltdown. Canada: approaching big slowdown, BC: nearing the precipice of disaster.

#147 jess on 06.20.13 at 1:48 pm

payroll parasites (tax dodge)
http://blogs.mirror.co.uk/investigations/2013/05/16m-black-hole-as-payroll-para.html

#148 TS on 06.20.13 at 1:54 pm

Without the Fed’s commitment to do “whatever it takes”, stocks are likely to keep falling.

Of course they won’t. — Garth

I think it is right, and it applys to property market also.

#149 Mike on 06.20.13 at 1:55 pm

Why do you keep on deleting my comments Garth ? :)
I simply asked you to explain your “Of course they won’t” comment. Why won’t stocks decline? What will keep them from falling other then Uncle Ben’s never before tested experiment based on … who knows what? :)

I deleted nothing. Your comment was unworthy of a more fulsome response. — Garth
………………………………………..

I see, your blog of course Master LOL.
Keep on telling us what you see through your rosy glasses instead :)

#150 Calgary Rip Off on 06.20.13 at 2:03 pm

“There’s no doubt what’s coming. It won’t be a crash. No TV reporters shoving mics in the faces of the middle-class homeless. No foreclosure sales on the courthouse steps. No streetscapes of boarded-up McMansions with fading For Sale signs and weeds full of used needles. No drama or viz. Just a steady, protracted, relentless slide backwards to reality.

A house isn’t a right. Kids don’t deserve homes nicer than their parents. You should need money to buy something. Wealth is earned, not borrowed. The goal of life is not stuff.”

This is the best post in a while.

People need to revise their thinking. Security financially or otherwise is not good. Learn to appreciate what you have now. Learn how to use things you have as tools in different ways for different things. Example: I was dissatisfied with guitar picks, so I made my own, out of a Canadian Loonie. The mortgage I purchased had a built in vise in the garage, so I took the Loonie, put it in the vise, and filed in down to just how I wanted it. This feeling is like a million bucks, and it cost me only a dollar. Its important to pay attention to those small things in the environment that will benefit you. Its those little things that matter and in turn those small victories lead to small smart decisions which in turn lead to major victories.

At no time in history has so much information been available about anything and so much available period: Each day I live like a king: Fresh food, clean water, no threat of death from warfare, a job where the pay is good, soap for cleaning, medicines if needed.

For those of you who read and play games, consider the ultimate in brain training: Wei-Chi, the 2500 years old board game. I use this on my lunch hour to learn the art of negotiating and anyone humble enough to admit they must learn negotiating skills will use this game as training for that, like they do in Japan. There are free sites for correspondence games for which a person can train over time: http://www.wuzheng.me or http://www.dragongoserver.net Wuzheng is based in China, so you can see the intensity with which native Chinese think, and on dragongoserver chances are you will get to play someone in Novosibirsk or Krygystan over time. Understanding negotiating with these people is always profitable. Hopefully someone reading this will benefit from wei-chi as much as I do.

#151 TorontoBull on 06.20.13 at 2:03 pm

@garth
so you don’t use LFS (statistics canada) as a source, you don’t use zero hedge as a source, what are your sources then?

I make everything up, like them. Real time-saver. — Garth

#152 YouthInAsia on 06.20.13 at 2:15 pm

@ #125 Heather Nova on 06.20.13 at 12:28 pm
Just move. -Garth

I didn’t realize how prescient my comment was last night. Garth was responding to a Calgarian, telling him to find new rental accommodation. Sorry Garth, but it isn’t that simple.

Today’s paper featured this article:

“Calgary’s rental apartment vacancy rate is the lowest in the country with average monthly rents increasing the highest, according to Canada Mortgage and Housing Corp.

In its spring Rental Market Survey released Thursday, the agency said Calgary and Edmonton had the lowest vacancy rates in Canada in April at 1.2 per cent followed by St. John’s (1.5 per cent).

The major centres with the largest increase in fixed sample average rent were Calgary (7.2 per cent), St. John’s (5.5 per cent) and Regina (4.7 per cent), said the CMHC.”

The advice stands. — Garth
__________________________________________

Vacancy rates are only looked at by the poor and the invested…

Stop being a Calgarian! Move somewhere where it pays more or are you one of those “brats”…you’ve never hurt before that’s your problem…but my hair stylist is in Calgary…but the mountains are beautiful in Calgary…it’s such a clean city…blah blah blah

Find another job somewhere else that pays more and lower your expenses…you must sacrifice to build wealth…life isn’t about acquiring things, being comfortable, and floating through it like a sheet in the wind… it’s about sacrificing things that may mean a lot to you and taking the chance, getting your butt out of bed to do a job you may not even like, and putting up with people and circumstances that you’ll never understand, but always always always making the best of EVERY situation so when Karma comes around to greet you it gives you what you’ve always asked for…freedom!

But what do I know, I’m just a millionaire in my late twenties…and ohh yeah…I rent!

Great post Garth once again! Keep up the great work!

#153 CalgaryRocks on 06.20.13 at 2:18 pm

#140 Chickenlittle on 06.20.13 at 1:39 pm
#123 Calgary Rocks

“Maybe next time the Royal Bank exports your jobs to India you’ll get off your IPhone long enough to do something about it. Or maybe not.”

Actually, all of the people they interviewed at RBC regarding the job exports were people OLDER than I am.

This article says the most of the workers were in their late 50s early 60s.

You are missing the point. The older workers were replaced with younger lower paid workers (that’s always happened, sorry but if you’re 60 and are doing a job that a 20 year old can do, you’ll get canned sooner or later )

– PS, Previous statement, does not apply to civil servants, clearly. LOL

What is new is that the lower paid replacement workers are NOT Canadian. Thus, that experience is now acquired by a foreign worker rather than a Canadian Gen Y.

So your generation serves lattes and the foreign workers get experience that they will be able to use to grow in their career.

You are 41, so you may have kids. All of this applies to them as well, not just those of us 8-10 years younger. In fact, they may have it even WORSE by the time they grow up! So go ahead and laugh at us, but by the time your kids get older you’ll be singing a different tune.

I’m also not sure which group I fall into. I’m a 79er, so I’m in no mans land.

PS: I do not have an IPhone. I’m not hipster enough.

I am not laughing. I am just saying that you are not crazy. The boomers are not working ultra hard or are ultra smart to get all the benefits that they enjoy and that are not available to you.

They were just born at the right time and are such a huge voting block that everyone kisses their ass.

The statement ‘life is not about material things’ is, IMO, just BS to distract you while they run away with what’s left of wealth and stick your generation (and futures ones as well) with the bill.

#154 KommyKim on 06.20.13 at 2:20 pm

RE: #101 bguy1 on 06.20.13 at 9:37 am
How about using a laddered Bond ETF (1-5 year) to reduce the risk of capital losses from bonds?

Take a look at the Bond ETFs “Weighted Average Yield to Maturity” and it’s duration. You’ll see it’s around 2% for a 2.5 year time-frame. Not much better than a GIC in a tax sheltered account and terrible in a cash account. (You’re taxed on the coupon rate, and unless you have something to offset the Bond’s capital loss with, you make less than a GIC of the same term in a taxable account.)

#155 maxx on 06.20.13 at 2:23 pm

#106 Retired Boomer – WI on 06.20.13 at 10:19 am

“Gaining wealth slowly also has the uncanny ability to “educate” the owner of that wealth over the entire accumulation process.”

Fiscal poetry. Very well put- and inspiring. Thanks RB.

#156 Ralph Cramdown on 06.20.13 at 2:32 pm

#143 Mike — “I simply asked you to explain your “Of course they won’t” comment. Why won’t stocks decline?”

Nobody can say with certainty that stocks won’t continue to decline. All you can do research, figure and bet. Today stocks, bonds and gold are all down a lot. There is no scenario where this makes sense, so at least one of those markets is on sale. Think we’re going to have a weak economy but a strong dollar and low inflation? Buy bonds. Think we’ll have high inflation and a weak dollar? Buy gold. Think things are going to get better? Buy stocks. Have no clue? Sit on cash and lose a risk-free 1-2% per year.

Personally, I see a drumbeat of good news in the US economy. I doubt that the non export oriented sectors of the Canadian economy are going to hold up, as I believe the Canadian consumer is about tapped out. Everybody has already discounted Europe going nowhere or worse for a number of years. China may or may not blow up — there’s a lot of rottenness there, but their #1 trade partner is recovering.

I think the greatest fallacy going is that we are living in uniquely horrible and uncertain times, and previous generations just stuck their money in stocks or bonds and it magically grew and grew and grew. Read some older books on investing or economics and you’ll discover that inflation and deficits are always a worry, disruptive technologies are going to make everyone rich, or poor, &c &c.

If you can’t find undervalued assets when everyone (on this blog at least) is running around screaming like their hair is on fire, you’re not looking hard enough. Me, I’ve spent all morning pulling loose change out of the couch and other places so I could buy more stuff while it’s on sale.

#157 Stickler on 06.20.13 at 2:33 pm

@ #106 Retired Boomer – WI on 06.20.13 at 10:19 am

…you completely missed my point. Figures.

#158 coastal on 06.20.13 at 2:40 pm

Boardwalk REIT down 4% today, almost 15% in a few weeks Emerging Markets ETF down another 4.3% for the day and similar 15%, hmmm. Relax, and don’t be a panty waist.

#159 fancy_pants on 06.20.13 at 2:43 pm

#47 Oliver on 06.19.13 at 11:00 pm
this money will not be touched for another 20 years.

in theory but never say never. two guarantees in life: death and taxes. just ask the folk in Cypress.

#160 AK on 06.20.13 at 2:47 pm

Fed Is Creating an Economic Illusion: Peter Schiff Talking smack again.

#161 CantRememberMyName on 06.20.13 at 2:47 pm

So I wonder, what do you do with a day like today when everyone is panicing that there is no Pineapple Coke? I would think buy. But tomorrow there may be Papaya Coke and the markets will rally 800 Points. Sell. Funny stuff these markets. Ditzier than my ex-ex-ex-ex-ex-ex girlfriend. But I still love the advise here.

#162 45north on 06.20.13 at 2:52 pm

Stupesing: if you were a good father you would give me $20 thousand so I can put a down payment on a new build in Guelph.

the young man needs his fathers caution – he should have asked for it instead

News is he bought a place and it will be ready in the fall.

Guelph Ontario is basically a bedroom community to Toronto. Google Maps shows 1 hour 11 minutes to 315 Huron Street in Toronto – in current traffic (I used to work at 315 Huron Street). This young man is going to find out that it’s easier to buy than sell. Worse he’s in the army and is not going to be posted to Guelph. You would think he knows that.

#163 Old Man on 06.20.13 at 2:52 pm

Nothing to rent in Calgary? I am crying a river of tears, so when things are tuff; the tuff compromise and buy themselves some time to find a house. Go park in a sublet somewhere; call a real estate management company to see if any sheriff evictions are coming up; and think out of the box. There was a time that the best apartment building in Toronto had near zero vacancy rate with a doorman, and wanted in, but the waiting list was long.

He said we just had a small bachelor come up, but you can sleep there for free, as in two weeks the sheriff is doing an eviction on what you want, so we will shift you, and rent the other out in 24 hours. I slept on the floor like a dog with no furniture, but got want I wanted in the end as made a deal. The margin calls are going out so might see a market bounce soon; it is going to be a wild ride. XRE is looking interesting!

#164 TheCatFoodLady on 06.20.13 at 2:58 pm

#61 – Retired Boomer – WI. That’s awesome & I’m not disagreeing one bit with your approach. Why would I? It worked for you. Your home is paid off & you have reserves. Peace of mind is a valuable intangible.

I have absolutely nothing against stuff. My beef is about people who feel they’re entitled to stuff simply because they want it & can borow for it without thinking through debt service ratios & all that boring stuff.

#84 – maxx. I LOVE off retail. I live near a strip mall that contains nothing but off retail stores, many of them from very good, (quality), brands. I’ll admit to feeling more than a bit smug when I can buy a pair of $100 retail slacks for $7. I use the cheapest grocery store around. When I shop, I’m not interested in pricy ‘atmosphere’ or obsequious service. I’m price oriented – have to be.

Watching the markets today – the business channel talking heads all look like they need IV Ativan or something. Got a call from my bank – my last GIC, (don’t hit me Garth – I hadn’t really started THINKING yet when I bought it), is due next Thursday – which other one did I want? I don’t.

I told them to park it in my investment account. I’ve mentioned my balance was way out of whack. I sold out of a few positions over the last days – ahead on all of them. I’m staying on the sidelines until the markets stop stroking out. Then I’ll go in in a far more balanced & hopefully rational way. I’ll confess to holding a few positions that are barking a bit right now. But even big dogs get sore throats.

If there’s one sad & sorry thing I know about myself it’s that acting without thinking, for me, is generally a road to disaster. I’ll stay partly on the sidelines for a while, then try to

#165 TheCatFoodLady on 06.20.13 at 3:01 pm

Oops: “I’ll stay on the sidelines a while”…

then try to find the value & buy into it.

#166 broadway skytrain on 06.20.13 at 3:01 pm

“Me, I’ve spent all morning pulling loose change out of the couch and other places so I could buy more stuff while it’s on sale.”
——————-
your about 2000 dow points early if you bought stocks

#167 Joe on 06.20.13 at 3:01 pm

Euro GGB going sky high.
This farce is going to have its day of reckoning.
Soon the can will hit the wall.

#168 John S on 06.20.13 at 3:07 pm

Fed Seen Tapering QE to $65 Billion at September Meeting
http://www.bloomberg.com/news/2013-06-20/fed-seen-tapering-qe-to-65-billion-at-september-fomc-meeting.html

This is what drives equity markets. Not the organic growth or P/E as you often declare, Garth. Understand that you have been calling for correction since sometimes, but the reasons were not mentioned other than normal market action.

The FED is the market.

#169 DV01 on 06.20.13 at 3:09 pm

Lower paper gold prices are a gift. The lower they go, the better they look :-)

FYI: Gold has ZERO yield. It IS yield

Enjoy

That’s brave of you. — Garth

#170 The Mummy on 06.20.13 at 3:24 pm

Bonds, equities, gold etc all sliding fast and in free fall soon. Bernanke will call another meeting to announce $100 billion + a month QE, then watch gold take it’s place as king and the USD sinks into the abyss.
Your mummy says got gold?

Mummy’s hooped. Gold off a hundred bucks in a day. Zowee. — Garth

#171 DV01 on 06.20.13 at 3:27 pm

day 1 – Bearish Headlines… day 2 – Margin Calls

#172 bill on 06.20.13 at 3:29 pm

Ralph said:
”Me, I’ve spent all morning pulling loose change out of the couch and other places so I could buy more stuff while it’s on sale.”
you too?
I am sitting here looking at the cash I have left and wishing it was bigger amount .way bigger even.
c’est le vie.

#173 Willy2 on 06.20.13 at 3:30 pm

Mr. Turner,

Quote: “The US renaissance I’ve been telling you about for the past year (house sales, car sales, new jobs, energy rebirth) is now hot enough that Washington can dial back the stimulus spending.”

Don’t believe a word of it.

There’s a reason why real estate is up. Those ultra low yields on T-bonds. Investors (wrongfully) think that rental real estate will provide them with a steady income. But rising yields is actually a killer for real estate.
On top of that, the Obama administration has plans to increase taxes by some $ 1 trillion. Predominantly by reducing tax deductions across the board, including for mortgage payments. Didn’t you notice ?

Fear and denial are romping on this blog today. Fun to watch. — Garth

#174 WhiteKat on 06.20.13 at 3:31 pm

Re: #78 Skip

Rating agencies such as Fitch are beginning to understand the unintended consequences of the FATCA blowback and what that will mean for US business, exports and even American financial institutions as investment dollars move else where.

Highlights from article titled “Congress is scheming to export IRS meddling overseas”:

“The idea (of FATCA) was to prevent Americans from using hidden offshore trusts to evade taxes… Under FATCA, every foreign financial institution, and every foreign firm that has American taxpayers as beneficial owners, must now verify the American-held accounts are in compliance with the legislation. Failure to comply results in a withholding charge of up to 30 percent on any income and capital payments the company might receive from the United States.”

“The cost of compliance is astronomical, as foreign banks must re-tool their computer systems. One Swiss expert estimates implementation would run $200-500 billion just so the IRS can collect $870 million a year, by the Joint Committee on Taxation’s estimate.”

“…foreign banks may respond by spinning off subsidiaries that won’t deal with U.S. financial instruments at all. If this happens, the inevitable long-term effect on the U.S. financial industry will be negative. Wall Street became a global financial powerhouse, just as London and Hong Kong have, because of its open and fair regulatory and legal frameworks. As the U.S. environment becomes more hostile and rapacious, financial transactions will move to more open markets. The result will be loss of the comparative advantage we’ve long enjoyed in the provision of financial services.”

Read more: http://www.washingtontimes.com/news/2012/jan/4/tax-haven-wars/

#175 DV01 on 06.20.13 at 3:34 pm

Looks like 3:30pm Ramp Capital is getting a margin call.

Good times, good times…if you were long Volatility that is.

#176 Old Man on 06.20.13 at 3:37 pm

Do not be fooled by the TSX index appearing that the world is coming to an end. There are certain indexes in Canada that are weighted more than others which creates an illusion, as we are a resource country for the most part which distorts things a bit. Now lots of stuff is being sold off to cover margin calls, and it creates a witch’s brew. I am going to make a move today, but tomorrow is Friday, so will pick my target and go for a 50% buy for a base on something before the market closes. Now if this is not the bottom will do a cost averaging when it becomes appropriate.

#177 DV01 on 06.20.13 at 3:38 pm

If you suppress volatility long enough, when the ‘event’ happens it is greater than the sum total of all the suppressed volatility over time. It is the qualitative shift in the market participants’ belief systems that literally flips a switch overnight.

#178 Canadian Watchdog on 06.20.13 at 3:46 pm

#155 Ralph Cramdown

I don't know about you, but to me the big picture is clearer then ever. If stocks are down nearly 3% just on news of the Fed tapering QE from $85B to $65B, then what happens when they really withdraw? And if they don't and continue to create another massive bubble in stocks — then withdraw — who do you think will look responsible for the crash?

The last thing the Fed and Congress wants is another black swan situation where they would have to bailout banks again. This would cause a massive public outrage and end many politician's careers as we know it. There's more a stake here then just money. It's about power, control and central bank credibility.

The Fed is reaching its limits and is likely thinking more about the unintended consequences vs benefits of QE. You can only point to obfuscated unemployment charts for so long until some congress representative posts a giant participation and employment rate chart on a big screen in front of Bernanke and asks, what about this? Silence.

All the Fed has done is bought themselves time. Not a recovery.

#179 Nemesis on 06.20.13 at 3:48 pm

@Ralph/#155

“Personally, I see a drumbeat of good news in the US economy.” – RC

[WSJ] – Caterpillar Global Sales Down 7% in 3 Months to the End of May

…”May sales in North America, the company’s largest geographic market, dropped 16% from a year ago after falling 18% in the April period and declining 11% in March. North America had been Caterpillar’s most resilient market until this year.”…

http://tinyurl.com/njcj788

Ooops.

#180 Godth on 06.20.13 at 3:51 pm

Unleash the margin calls. Yeeehaaaw

#181 DV01 on 06.20.13 at 3:54 pm

Lower paper gold prices are a gift. The lower they go, the better they look :-)

FYI: Gold has ZERO yield. It IS yield

Enjoy

———————————————————-

That’s brave of you. — Garth

———————————————————–

Brave? Not at all. We are living amidst the biggest economic experiment in history with vast amounts of variables. No one is ever going to tell you something is wrong or point out the incredibly epic disconnects between fiction and reality.

#182 WhiteKat on 06.20.13 at 4:08 pm

“Share prices in Swiss banks plummeted Thursday, a day after lawmakers in Bern rejected a deal with Washington to halt potentially ruinous US legal action against banks suspected of stashing cash for US tax dodgers.” http://www.thelocal.ch/20130620/swiss-banks-slump-after-lex-usa-rejection

Rejecting US threats, the Swiss National Council tossed “Lex USA”. The big question now is if the US will follow through with its threats of destroying 18 banks, and how many innocent people will be harmed in the process. Yesterday, Postfinance expressed great fear that it might be the target of US wrath since it is one of the last banks which still accepts US clients living in Switzerland.

The general view in Switzerland seems to be that if some banks did wrong, then they should be held responsible for their actions without the parliament being involved, while those in favor of Lex USA generally feared the American blackmail.

Read more here:

http://www.swissinfo.ch/eng/politics/Swiss_parliament_kills_divisive_US_tax_bill.html?cid=36198434

http://www.swissinfo.ch/eng/swiss_news/US_tax_bill_rejection_fails_to_ignite_press.html?cid=36208750

#183 Ronaldo on 06.20.13 at 4:13 pm

”They’re on sale, but bottoms are only obvious in the rearview mirror. — Garth”

Garth, looking at bottoms through the rear view mirror could result in a crash or rear-ender. Make sure you have your helmet on.

Lots of bargains out there today.

#184 Ralph Cramdown on 06.20.13 at 4:18 pm

#165 broadway skytrain — “your about 2000 dow points early if you bought stocks”

How much do you stand to gain if your prediction comes true in the next year?

“I’m always early” — Jim Rogers
“You want to be very fearful when others are greedy and very greedy when others are fearful.” — Warren Buffett
“Buy at the point of maximum pessimism” — Sir John Templeton

Sure, you think everything’s going down the shitter. But so does everybody else, apparently. Are you early, or late?

#185 Donald Trump on 06.20.13 at 4:20 pm

Vancouver? not bad City…..but who let in the a$$holes from Toronto? You can tell them a mile away.

#186 Mike on 06.20.13 at 4:22 pm

Stocks Elevated?

Mike at 131 asks:

What else, other then the pumping from the FED is going to keep stocks at this elevated level?

***************************************
#169 Shawn

Elevated based on what? Is not the P/E close to historic levels? And interest rates at emergency lows can support P/E much higher than average.

Stocks near an historic peak? So what. They retain earnings and so stocks on average reach new historic peask every few years. Over time an historic peak cannot signify elevated since all historic peaks are ultimately surpassed.

Stocks not much higher than year 2000. So how is that elevated? 13 years of little growth is elevated? How so?
…………………………………………
Shawn, good luck to you.
I hope you’re not fully invested, although it sounds like you are, and convinced even that stocks will go higher LMAO :)
If the market really had been going up on earnings then it wouldn’t be getting hammered right now.
What changed since yesterday? Did earnings disappoint in the last 24 hours? NO. There is a slight hint that QE is ending soon, that’s it … a slight hint. OMG the world is ending LOL.
It’s all about the stupid expectation that you can pay a higher price, the FED will levitate things LOL, nothing to do with PE.
Financials, REITs selling off finally, they have way to go but will catch up with the materials and PM sectors.
Do you really think that North American markets are immune and wont’ follow China and Japan into the dumpster? Good luck with that.
Credit markets in China are getting close to a Lehman moment … big load of Sh…t is about to hit the fan!

No, it’s about investors taking their profits after a 16% market gain in 2013. Now it’s up 12.5%, and a lot of people are wealthier. — Garth

#187 happity on 06.20.13 at 4:22 pm

“that gush of money which has created a big demand for bonds” – demand by whom?

The Fed purchases >70% of all US gov treasury issuance because there is NO DEMAND for paper that the US gov cannot pay back, they crossed the rubicon of debt repayment a while ago. If interest rates rise to 6%, half of all taxes collected will be needed just to service that year’s gov debt.

“When it’s clear US growth will continue without stimulus” – and there is the rub.

Greenspan was stimulating since the 1990’s, and the fed has never stopped, the credit bubble has ransacked various markets/assets. And today the whole world has joined the credit orgy. Japan will die from impotence in the next 2 years, recently China’s liquidity is imploding with SHIBOR on a hockey stick curve, and Europe is a 3rd world country based on unemployment trends. Who in the world is going to buy USA manufactured goods and save the day, Singapore?

#188 Donald Trump on 06.20.13 at 4:25 pm

The Forced Depopulation of America’s Rural Areas

http://www.activistpost.com/2013/06/the-forced-depopulation-of-americas.html

Agenda 21 policy calls for dramatically increasing urbanization and forcing indigenous populations out of rural areas and into densely populated stack-and pack micro apartments controlled by technocrats with the ability to control every aspect of one’s life. When completed, this lifestyle will be a hell on earth.

In Part One, I detailed how the Chinese government, under the direction of global corporations like Goldman Sachs, is instituting a mass relocation of its population from rural to urban.

At the point of a gun, the Chinese military is forcibly removing one million Chinese farmers per month from their rural homes and forcing them into the massive ghost cities from which China has spent nearly $3 trillion to construct.

The Chinese government, Hank Paulson and other globalists falsely claim that the mass relocation of Chinese farmers is necessary to fuel the Chinese economy. Yet, there are no jobs available to these Chinese farmers when they arrive in the ghost cities. Strong industry and the need to fill positions is what drew Americans into the cities during our industrial revolution, not the other way around as the globalists are claiming is the case in China. What we are witnessing in China is the beginning of the implementation of the Agenda 21 creation of massive megacities complete with stack-and-pack micro apartments.

etc. etc.

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

Just as I suspected.

These ain’t homes, they are vertical FEMA camps

#189 happity on 06.20.13 at 4:33 pm

S&P 500 down 2.5% in 4 hours at the mere mention of the word taper.

Now there be a demonstration of confidence of the US Economic Renaissance.

Traders taking money off the table. Duh. — Garth

#190 Observer on 06.20.13 at 4:41 pm

36 Just a question on 06.19.13 at 10:31 pm.

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

Its all part of the game. He just can’t come inside the house without your permission. But If I was you, just don’t pay the rent. File a complaint about the disturbance, have him start the kick the tenants out procedures. That normally takes 2 weeks warning and another 6 weeks giving you 2 months of free rent. (but you will lost 1/2 month rent in down deposite

If the Landlord give you bad references, file a grievance and have him explain everything in court. Gives you ample time to find a new place.

Why are you so attached to this place, its not your. Shit happens!

#191 jess on 06.20.13 at 4:49 pm

The $4.7-trillion-a-day unregulated currency market
Traders Said to Rig Currency Rates to Profit Off Clients
front- running …collusion?
http://www.bloomberg.com/news/2013-06-11/traders-said-to-rig-currency-rates-to-profit-off-clients.html
==

#192 The Mummy on 06.20.13 at 4:55 pm

#167 John S on 06.20.13 at 3:07 pm
Fed Seen Tapering QE to $65 Billion at September Meeting
http://www.bloomberg.com/news/2013-06-20/fed-seen-tapering-qe-to-65-billion-at-september-fomc-meeting.html

This is what drives equity markets. Not the organic growth or P/E as you often declare, Garth. Understand that you have been calling for correction since sometimes, but the reasons were not mentioned other than normal market action.

The FED is the market.
———————————————————
Only 44% think he’s cutting eh. Guess the other 56% call bull sh#t. I say he’s going to ante up to $150 billion instead. Ben isn’t leaving his post with with a collapsed bond market on his record.

#193 happity on 06.20.13 at 4:58 pm

Yup, that rally of the S&P 500 since the start of the year was all about earnings and fundamentals, right?

As of the end of Thursday the S&P is ahead 12.5% for 2013. Oh, the pain. — Garth

#194 Happy & Mtg Free in BC on 06.20.13 at 5:03 pm

Why is a 1% fee-based advisor so hard to find? I’m in Abbotsford, BC if anyone knows of one??? So frustrated!

#195 DonDWest on 06.20.13 at 5:04 pm

“A house isn’t a right. Kids don’t deserve homes nicer than their parents. You should need money to buy something. Wealth is earned, not borrowed.”

Retirement isn’t a right. Oldies don’t deserve a retirement by extorting from their own kids by inflating the housing market and taxing us to oblivion.

#196 Dean Mason on 06.20.13 at 5:15 pm

Provincial strip bond yields are really rising in the last few weeks. 2027,2028,2029 provincial strip bond are 4.00% to 4.09% and 2030,2031,2034,2035 provincial strip bonds are 4.19% to 4.24%.

These are 70% to 88% more than most 5 year GIC’s, ING Direct 2.25%,State Bank of India(Canada) 2.50%, Comtech C.U. 2.50%,Meridian C.U. 2.25%, Alterna Savings 2.30%,Manulife Bank 2.35%.

When you take compound interest into account it’s 108% to 138% more than 5 year GIC’s.

#197 Smoking Man on 06.20.13 at 5:21 pm

Ha, every asset class bitch slapped, except for Canadian Real estate, and USA cash..

Go figure….. Lmao

To embarrassed to post my results re long UsdCad. Bet

Like rubbing salt, and iodine in a bubble heads eye ball.

Nothing burns savers more than when a foot lose gambling, drinking man, makes easy money breaking all the rules and laws of obedience training…

Ahhhhh

#198 Devore on 06.20.13 at 5:28 pm

#20 T.O. Bubble Boy

Do the record low rates mean high house prices, or do higher rates mean high house prices?

Yes.

#199 dienekes on 06.20.13 at 5:31 pm

62 An Cat Dubh
Gas is its own commodity, more factors affecting price then just oil. USA is exporting 30% of there gas production. One of the largest recipients of those exports is Venezuela of all places. Exports are going to increase further.

And all this talk of the yuan being the worlds reserve currency, what a joke. What are people smoking when they come up with this stuff? Chinas a puff.

#200 Mikey the Realtor on 06.20.13 at 5:34 pm

“Ever heard of profit-taking? — Garth”

how do you know it was profit taking? or did you make it up on the fly?

Try not to be an idiot. I know it’s taxing. — Garth

#201 Old Man on 06.20.13 at 5:36 pm

Canada Bonds as a buy is a fools paradise because the interest is fully taxable, and if interest rates adjust in the future which is a given – you will lose on the capital depreciation of your invested capital if you blow them off. Yield goes up, and capital bond prices goes down, so you have lost money on a disposition.

#202 Yellow rox rock on 06.20.13 at 5:39 pm

Gold, silver, and platinum took it hard up the backside today. Most things did actually.

#203 Old Man on 06.20.13 at 5:52 pm

Where did the gold bugs go ^o^, as am looking hard so will take another look with my bifocals ^o^o^ and see them not. Guess they are eating cake somewhere down the street and crying in their beer.

#204 Devore on 06.20.13 at 6:00 pm

#44 Heather Nova

Just move. — Garth

Not so easy to do in Calgary. There’s nothing to rent. Vacancy rate is almost zero. The rentals you see on Kijiji and Craig’s list are mostly crap.

So? Is he homeless? He’s got several months to find a place.

#205 DonDWest on 06.20.13 at 6:02 pm

Do you know how I respond to people who tell me “life isn’t about stuff”?

I answer, “good, then you”ll have no problem handing me over your stuff. Oh, you’re not willing to do that? Oh, that’s right, you’re just being a condescending jerk again.”

9 times out of 10 when you encounter a person who tells you life isn’t about stuff – they’re passive aggressively making life all about stuff – they’re pointing out they have way more stuff than you.

It’s a jab of the class warfare variety. It gets a reaction out of the “lesser classes” who are understandably aggravated by the remark. People then see the reaction from the “lesser classes” and then subsequently accuse the “lesser classes” of class warfare. It’s the equivalent of delivering a nasty cross check from behind while the referee isn’t looking – and then angling yourself in front of the referee just in time when the person you cross checked retaliates.

It’s wise to seriously question the integrity of a rich man who claims life isn’t about stuff. . .

Of course it isn’t. It’s about time. Hope you learn that before wasting more of it. — Garth

#206 Smoking Man on 06.20.13 at 6:04 pm

Watching TV, they say 83 precent of Canadians obsessed with real eastate,

The herd

Wonder how many MSM reporters I have influenced and gave Em ideas for stories….

#207 Scott (GVRD) on 06.20.13 at 6:20 pm

Garth,

Can you provide some advice about buying preferred shares? Their volume (especially the bank prefs) and order sizes are quite low. Do you have any tips on how to get your order through*?

* I assume that one sure way is to bid high, the same or higher than the ask amount.

Cheers

Get an advisor to do it. There are advantages to being part of a block purchase. — Garth

#208 broadway skytrain on 06.20.13 at 6:30 pm

It’s wise to seriously question the integrity of a rich man who claims life isn’t about stuff. . .

Of course it isn’t. It’s about time. Hope you learn that before wasting more of it. — Garth
—————————————————-

peasants, poets and prisoners have ALL time and no stuff.

when i was a starving student there was much time but little stuff.

The goal is time WITH stuff, i like to play w boats bikes and babes full time, THAT is the goal.

#209 melinvictoria on 06.20.13 at 6:35 pm

Wow…guess not only gold bugs having a Malox moment today…….Tomorrow close will be very important….

#210 Makes Sense on 06.20.13 at 6:37 pm

Following this blog and looking into the history of it there is not much coherence of statements of this blog and Mr. Turner with actual realities of real estate in Canada over the course of the last few years. He was wrong most of the last 5 years?!?!?!?

Turner might have some minor valid arguments. Yes but at large he presents a failure to see the grand development of the real estate as it evolved in Canada.

There are forces in the Canadian Market – Lower Mainland/GTA and others that Mr Turner does not comprehend.

FOR Single Family Housing – Freehold:

HAM is the obvious one and it continues to a subdued level. Possibly a minor factor in what keeps prices and sales somewhat stable.

BUT:
Multiple family investment – typically East Indian and Asian of many origins – where multiple generations get together to purchase (and finance) a house. Sometimes 10-15 (related) people living in a 4-6 bedroom house. They all pull together to finance those homes…..Its big and a major force in regards to current sales. One family (2 parents and 1-2 kids)
scenarious are of the past in a SFH!!!

THis for sure in GTA/VAnc/Surrey/Delta etc. Multiple family purchases are a major driving force.

For all the dreamers that anticipate a major drop or collapse in SFH prices. Sorry! You have to continue to rent or squatter under a bridge……..There is too much Indian/Asian etc (combined) family Money and also some remaing HAM to make a dent in the story…………..Sorry.

NOT A REALTOR!!!!

SIGNGED BY A: REALISTIC REAL ESTATE INVESTOR

More like a person who loves to demean and stereotype. — Garth

#211 Canadian Watchdog on 06.20.13 at 6:39 pm

#205 Old Man

Where did the gold bugs go

I would say the coin store but apparently there's now a nice lady at the bank handing out flyers for physical gold and silver investment who can sell them some. Something must be changing because every Canadian bank has either joined LBMA or opened vaults at Royal Canadian Mint over the last year and half.

Hmmm.. Why would Canadian banks bother selling gold and silver if they didn't think there was a market for it? They must know something that the public doesn't because by the looks of this chart, the next great bull is about to commence.

But first, another crisis is needed.

#212 Nosty and The Raging Granny Grantmi in LaLaLand on 06.20.13 at 6:46 pm


#188 Donald Trump — Interesting. In China, this (forced relocation, etc.) from a couple of days ago.

This is what the ghost cities were built for, to accommodate Chinese farmers / citizens, or not being able to grow their own food.

#213 Mister Obvious on 06.20.13 at 6:49 pm

#209 DonDWest

“9 times out of 10 when you encounter a person who tells you life isn’t about stuff – they’re passive aggressively making life all about stuff – they’re pointing out they have way more stuff than you. “
—————-

I would be that 1 guy out of ten who is different. I have very little stuff. I’ve been tossing crap off for years. Either giving it away of selling it for 10 cents on the dollar.

Real Estate? Nope, all gone. Now I rent somebody else’s place. Car? A twelve year old Buick. TV? Ten year old Sony. Furniture? Whatever functions and is comfortable. Nothing special there. Clothes? Don’t get me started. I hate shopping. Especially clothes shopping. I’m down to rags before my wife can drag me into a store.

But I do have some money. It took me a lifetime to get it. It allows me the freedom to do as I choose. You know, posting on blogs and things like that. All day, every day if I want to.

Garth is correct. Freedom. That’s what its about. That’s exciting. ‘Stuff’ gets terribly boring as you grow older. Getting the man off your back and setting your own course is waaaayyy better.

#214 Blacksheep on 06.20.13 at 7:03 pm

“Of course it isn’t. It’s about time. — Garth”
——————————————————–
This fact is lost on 95% of the Cattle, so they enslave themselves for shinny trophies meant to impress others. The sad thing is the only parties being impressed, are the other insecure Cattle.

Systemic indoctrination runs deep.

#215 The Mummy on 06.20.13 at 7:08 pm

#170 The Mummy on 06.20.13 at 3:24 pm

Bonds, equities, gold etc all sliding fast and in free fall soon. Bernanke will call another meeting to announce $100 billion + a month QE, then watch gold take it’s place as king and the USD sinks into the abyss.
Your mummy says got gold?

Mummy’s hooped. Gold off a hundred bucks in a day. Zowee. — Garth
———————————————————
Once the asset allocation changes former bond money will be flowing into PM’s. Come on Garth you know this.

#216 neo on 06.20.13 at 7:09 pm

Interesting but irrelevant. A sale is a sale, keeping plants open and people employed. — Garth

So it is only revelant when leverage produces higher prices and more sales in car sales but not home sales. They are both distortions from the mean. The mean being purchases with actually cash/savings vs credit.

#217 neo on 06.20.13 at 7:14 pm

Hmmmm…So the equity markets selling accelerated as the 10 year crossed 2.4% and peaked when it hit 2.47% and then as it went back to 2.42% the selling pressure relented some. If it continues upward, stocks will continue downward. I’m sure that was all a coincidence right Garth, but it isn’t since I said that would happen.

#218 bigrider on 06.20.13 at 7:16 pm

#186 Garth to Mike- ” no it’s about investors taking profits after a 16% market gain for 2013. Now it’s up 12.5% and a lot of people are wealthier”

Oh Garth, stop implying that a properly diversified portfolio as per your recommendations, is even close to being up 12.5%.

You are cherry picking US indexes and implying that a properly diversified portfolio would have enough exposure in those indices to be ahead that amount.

Before you cheap shot me like ” sorry to hear about your poor performance” or something cheezy like that, you should come clean and explain what a properly diversified portfolio, should be up after today.

I will give all a clue , -10 from G -man implied.

The comment was about “stocks” not a balanced portfolio. The response was correct. The Dow was up 16%, and is now up 12%. This is barely a correction, and I think you should relax. — Garth

#219 happity on 06.20.13 at 7:19 pm

“Traders taking money off the table. Duh. — Garth”

Just another day for traders, wax on – wax off?

Actually around the globe various asset classes have been humped the biggest day in roughly 20 months.

#220 Bill Gable on 06.20.13 at 7:20 pm

The Goal of Life is Not Stuff.

The title of your next Book, Mr. Turner.

#221 Daisy Mae on 06.20.13 at 7:31 pm

#105 THE AMERICAN: “Talk about not learning a damn thing from the rest of the world. Squandered opportunity.”

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Amazing, isn’t it? And these guys are our so-called ‘leaders’….

#222 bob on 06.20.13 at 7:34 pm

Stocking up on canned tuna and started digging a well in my back yard today…..

Overreact much? — Garth

#223 Smoking Man on 06.20.13 at 7:37 pm

#207 DonDWest on 06.20.13 at 6:02 pm

I hope your post wasn’t about me, I’m wealthy but don’t have much stuff, pick up with roll down windows, a wee twenty foot bow rider, and a 900 sf bungalow, and amazing coin collection….

You see things depreciate, I hate that.. Obsessed with avoiding things that suffer depreciation. That’s how one accumulates loot over time and lots of it.

When I brag feast on here I try to inspire the young dommers to take some risks and gamble. I don’t care if they buy a house, bond, or stock. Another obsession, the thrill of victory, it’s addictive.

Any time someone on the street asks me for help, a few bucks a cigarette, a drink. I always do.

People that need to use things to project an certain identity are weak…. 70 precent I’m thinking,

At the tax farm as the bmw’s mercs the morning car show, I look at the loot cars are worth and how I would double the value of that investment, rather than take a 30 precent hit driving away from dealer.

But they compete, using things, I escaped that crapy way of life 3 years ago, never been happier and my rate of wealth accumulation has gone parabolic…

#224 bob on 06.20.13 at 7:38 pm

how long does meow mix keep?

#225 Daisy Mae on 06.20.13 at 7:42 pm

#117 melinvictoria: “Man some of my REITs taking a real beating. Hope this blood bath ends soon. XRE might be worth a nibble…falling knife?”

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I don’t profess to understand investments — that’s why I have Garth — but I do know one thing. Do not follow your investment portfolio on a daily basis ’cause it’ll drive you nuts.

#226 chickenlittle on 06.20.13 at 7:45 pm

#152 Calgary Rocks:

No problem! Its hard to express feelings through type…believe me!

I do agree with you.

#227 Daisy Mae on 06.20.13 at 7:52 pm

#121 -=jwk: “This year over 5,000,000 resales homes will change hands. Figure it out. — Garth”

Source please?

Google “us home sales 2013″ Read any of the top ten hits…”

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Basically what we’re doing is just selling our houses to each other. Just calculate all the land transfer taxes, lawyer fees, and so on….and for what? Bigger and better? Amazing….

#228 Loopback on 06.20.13 at 7:57 pm

The S&P is ahead 12.5% for 2013. Oh, the pain. — Garth

Minus 4% currency devaluation same period.

You sure sound like a sore loser. — Garth

#229 Devore on 06.20.13 at 7:57 pm

#25 Smoking Man

What happens when you compare Canada to London, or Hong Kong

Oh, PLEASE do.

#230 Bigrider on 06.20.13 at 8:00 pm

#221 Garth’s reply to Bigrider.

Fine, I will accept your response and your advice to relax I guess ( I am relaxed)

I would like to throw this out to everyone that after today , a properly allocated investment portfolio will be lucky to be ahead 1 to 3 % and that’s a fact.

#231 Daisy Mae on 06.20.13 at 8:14 pm

#125 Heather Nova: “Just move. -Garth

I didn’t realize how prescient my comment was last night. Garth was responding to a Calgarian, telling him to find new rental accommodation. Sorry Garth, but it isn’t that simple.

The advice stands. — Garth”

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You will find a way…because you have to.

#232 espressobob on 06.20.13 at 8:20 pm

For those of us who took profit earlier, this pullback presents one helluva buying opportunity! Love ‘bargoons’!

#233 Smoking Man on 06.20.13 at 8:23 pm

#232 Devore on 06.20.13 at 7:57 pm

#25 Smoking ManWhat happens when you compare Canada to London, or Hong KongOh, PLEASE do.

What do you want to know, in Toronto we have evolved from a city of rivet buckets to a massively growing financial services sector with good paying jobs. We have positive population growth.

We have gamblers taking risks and starting companies, mostly immigrants, you know what our schools do to locals…..

My point was when practicing self brain washing, expand your scope a bit, don’t compare Florida to Toronto.

One have negative population growth hog town, positive.

That’s your real estate lesson for the day, off to woodbine to throw some money away and help the rexdale economy

#234 Daisy Mae on 06.20.13 at 8:30 pm

#163 TheCatFoodLady: “When I shop, I’m not interested in pricy ‘atmosphere’ or obsequious service. I’m price oriented – have to be.”

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My sentiments exactly.

#235 Daisy Mae on 06.20.13 at 8:35 pm

194 Happy & Mtg Free in BC: “Why is a 1% fee-based advisor so hard to find? I’m in Abbotsford, BC if anyone knows of one??? So frustrated!”

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You’re posting to one! Ever heard of Garth Turner?

#236 Donald Trump on 06.20.13 at 8:48 pm

NASA Puts Up Cash To Create Pizza-Making 3D Printer

http://singularityhub.com/2013/06/14/nasa-puts-up-some-cash-to-create-pizza-making-3d-printer/

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

Move along..all is fine..the future is yours/mine/ ours/theirs

#237 Loopback on 06.20.13 at 8:49 pm

You sure sound like a sore loser. — Garth . . . Right on cue, how predictable, another cheap shot, another cheezy comment.

You can fix that. — Garth

#238 tkid on 06.20.13 at 8:50 pm

Garth, it is looking like 2008 out there. I’m thinking this is my second chance.

When in the next while is a good time to buy, and what are you looking at buying?

#239 Donald Trump on 06.20.13 at 8:51 pm

You’ll Be Able to Buy a 3D Printer at Staples by the End of June

http://singularityhub.com/2013/06/07/youll-be-able-to-buy-a-3d-printer-at-staples-by-the-end-of-june/

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

heheheheh….I know what I am going to build….

#240 Gunboat denier on 06.20.13 at 9:31 pm

197 Dean – the yield on your strips is not guaranteed
unless you hold them to maturity – in your examples a
minimum of 14 years. You cant compare them to a five
year GIC. Also, is not the strip yield calculated with
compounding like a GIC is compounded making your second camparison incorrect?

#241 No Longer Innocent on 06.20.13 at 9:45 pm

#s many above — rant alert

Why do so many seem to think that continuing rising stock markets are a right?

I have no educated opinion on whether markets will crash if QE is tapered off. But I think it is damn ridiculous to expect any government to continuously prop up a financial system just because their general population is too damn greedy to stomach lower financial gains on markets and too financial irresponsible to manage mortgages and proper investment in real estate.

We all need to wake up and realize that we can’t have it all.

If you want a government that will provide you with a guaranteed standard of life and housing vote for the left and embrace social ideals…. if you are going to declare yourself a right wing capitalist then suck it up and recognize that you are on your own. Sometimes you will lose and lose big. Deal with it.

I’ve started investing because I am finally starting to grow up and realize that I need to let go of my socialist leanings and learn how to make money with my money cause that’s how the real world works.

Maybe it’s time some of you learn to let go of mommy’s apron strings.

#242 Kingarthur on 06.21.13 at 12:04 am

#76 Canuck Abroad on 06.20.13 at 3:06 am

Mon ami: I hear the news from France is not so good these days. At least I feel safe on the Skytrain, or anywhere, anytime in Vancouver. Sometimes being “World Class” sucks:

http://newsinfo.inquirer.net/380943/france-cracks-down-on-juvenile-train-robbers

#243 Doug in the South on 06.21.13 at 10:11 am

@Dupcheck, post #136:
You and Ronaldo, post #184 are among a SMALL minority that actually get it. Every financial book I’ve ever read said buy low and sell high. So how, exactly, do you buy low? At times when stocks are low, you won’t see the words BUY STOCKS NOW THEY ARE ON SALE! in big fluorescent orange capital letters on the front page of the business section of the paper, but rather a lot of talk of doom and gloom. Sounds like right now, doesn’t it?

I’ve heard rumours that today is the summer solstice, but with the incredible bargains I’m seeing lately I still think it’s Boxing Week. So given it’s more like summer than winter outside during Boxing Week, I still believe I’m in the South. It’s a good day to take the afternoon off and try surfing at Coco Beach, Florida. I don’t have any plans for New Year’s Eve yet.

#244 Ahead of the Curve on 06.21.13 at 12:16 pm

I’m a new reader to this blog, and just wanted to thank Garth and all the posters for their accumulated knowledge. I’m a new investor myself and am really enjoying the blog posts and the comment section.

This is my first post, but not my last.