Good thinking

putin

Enough with global market mayhem, monetary policy and macro stuff. Let’s get back to things that really matter. Like fighting with your idiot family over real estate.

Here’s Kevin. I think he’s hooped:

I desperately need your help.  My wife and her siblings are hell-bent on getting a cottage in the near future (this year or next), and it seems nothing I say can convince them otherwise.  I’ve tried explaining that I feel cottage prices are poised for a sharp decline in the near future, and they’ve countered with examples of how their homes have gone up in value.  I’ve tried encouraging them to rent instead, and they don’t believe the numbers favour renting over owning.  I’ve tried the approach of explaining that I feel my wife and I are already overweighted in real estate in our portfolio just with our home itself (worth $450,000, owing $250,000, with $170,000 in RRSPs and $25,000 in TFSA’s and cash), and that the absolute LAST thing we should be buying right now is MORE real estate.  But nothing seems to be discouraging them. I’m getting badly outnumbered here and I fear it’s going to cost me a fortune. Help. Love the blog, Kev.

We’re probably both wasting our time by the sound of things. After all (unlike a house) nobody actually needs a cottage. The desire to possess one is completely emotional, therefore irrational, driven by want rather than need. It’s all about mythical family bonding, a retreat to simpler, purer times and the recapture of fuzzified childhood memories. These are the things many women are made of, bro. You will not win this.

But if you crave marital strife, Kev, you’ve come to the right place. The arguments against owning a cottage are epic. First, they’re getting harder to finance, with many lenders charging a premium rate for recreational property mortgages, if you can even arrange one. That’s why most buyers leverage their city properties, removing equity to dump into the cabin. Bad idea, of course, because this is non-deductible debt, and amortized.

Second, mortgage rates are rising anyway, which will depress all property values. Third, cottages are a crappy investment, far more volatile than residential properties, vastly more illiquid and definitely falling out of favour. In the biggest cottage market in the country (Muskoka-Haliburton) for example, sales were down 14% last month from a year ago with prices lower by 10.7% in Haliburton and 2% in Muskoka.

Fourth, we’re on the cusp of a major correction in housing everywhere. The first to be hit, and the last to recover, are properties people don’t need. Yes, cottages. Fifth, you can’t afford it. Taking your two hundred grand in liquid assets and plowing it into more real estate is a recipe for family financial heartache. Ask your wife if she’s ever heard of balance, diversification and liquidity. Do it from a safe distance.

Finally, if this cottage thing goes down, do not allow her to get into joint ownership with her siblings. Multiple names on the deed will lead only to future strife and acrimony, and must be accompanied by a lawyerly buy/sell agreement. Remember my cardinal rule: never buy real estate with people you do not sleep with. Soon that might include everyone you know.

Now, here’s Carmen, who has lost his way:

Today my wife and I are considering buying a new-build in the St. Clair West area across from Earl’s Court Park.  There are new town homes there by Minto.  I checked them out.  The unit we want is a 1300 square feet 2-bedroom,1.5 bathrooms plus den and dining room stacked town house facing the park.  There are some good schools around.  The Stock Yards are being built up.  There is access to a 24 hour TTC line that can get you to a subway station in reasonable amount of time and there is relatively good access to the highways.  They want $443K.  This puts me about even with the rent I am paying.  Why does this feel fraught with peril after listening to you on CBC talking about the crazy overinflated house market in Canada?

Because it is. The area’s too marginal a place to drop half a million dollars on a row house. Especially a unit which has no yard, people living on top of you, and a Lilliputian living room. Besides, the development (like all new builds) is made out of pressed cornflakes and glue, skinned with a few bricks, with a life expectancy shorter than the average amortization.

towns  And how, Carmen, can buying a $450,000 stacked condo townhouse be equal in cost to renting one? If you put 30% down, and carried a $336,000 mortgage at 3% the monthly payment would be $1,600, plus monthly fees and taxes, for a total of more than $2,000. But that means tying up $150,000 which represents $900 a month in lost investment income. So you end up living in a townhouse, which is really an apartment, costing you three grand a month, which ate all your savings.

How appropriate this area is named after the cattle-slaying operations that once stood there.

Some things never change.

214 comments ↓

#1 Finally on 06.21.13 at 8:40 pm

My friend just bought a house in East Vancouver(Between Fraser and Main). It’s 86 years old, 24×122 lot, but has been renovated 6 years ago. He paid just over a million dollars. I’ve been telling him not to buy, wait for the market to tank, but he has a baby on the way and rich parents. What can you do? Oh well.

#2 George on 06.21.13 at 8:41 pm

One of these days we in Canada really should have an adult conversation about the total government (federal, provincial, and municipal), business, and household debt that is being built up in this country.

The following statistics are taken from a credit market summary data table released yesterday by Statistics Canada: (The link to this data table is at the end of my post.)

The total debt outstanding in Canada at the end of March 2013 (bottom line of the data table) was $5.33 Trillion. From the end of March 2012 to the end of March 2013 the total debt outstanding in Canada increased by $323 Billion. For that 365 day period the total debt outstanding in Canada increased at a rate of $885 Million per day.

From the end of December 2012 to the end of March 2013 the total debt outstanding in Canada (bottom line of the data table) increased by $90 Billion. For that 90 day period the total debt outstanding in Canada increased at a rate of $1 Billion per day.

http://www5.statcan.gc.ca/cansim/pick-choisir?lang=eng&p2=33&id=3780122

#3 doomsday prepper on 06.21.13 at 8:42 pm

my off grid cottage is where I’ll go when the financial system collapses.

#4 Mark on 06.21.13 at 8:42 pm

I advise this guy to take his cash and run to Central America or South East Asia.

Going partners in real estate with family! Deary me.

#5 Garden Maven on 06.21.13 at 8:46 pm

Just as you were saying: http://www.theglobeandmail.com/globe-investor/cottage-versus-bank-shares-revisited/article12748927/#dashboard/follows/

#6 pathcontrolmonk on 06.21.13 at 8:47 pm

Don Cayo of The Vancouver Sun disagrees, and disses Paul Krugman and the OECD as “worrywarts”. He does have a nice beard though.

http://www.vancouversun.com/business/economy/Forget+gloom+doom+Vancouver+house+prices+tank/8555863/story.html

#7 Freedom First on 06.21.13 at 8:49 pm

Thank you again for your free blog Garth. Not only have I learned good stuff here, but I get a lot of laughs, and, with your post today on the financially illiterate families with only the 1 sane guy dealing with the insane wife and her insane relatives, I get steady refreshing reminders of just how grateful I am for my life. I can’t imagine having a mortgage on a house and using the equity in it to buy a cottage! So overweight RE, and on top of it, buying with people you’re not sleeping with. Another guy with a wife problem, not a financial problem. Poor bast..d. And ladies, I am aware that there is plenty of house/cottage horny males as well. Try to learn if your mate is sane BEFore you marry them.

#8 AK on 06.21.13 at 8:50 pm

#137 Al on 06.21.13 at 3:31 pm
“What does a highly leveraged Apartment REIT like Interrent (IIP.un) do to pay off the investors who are selling it’s shares big time?
Answer sell some buildings to cash buyers fast. Only the good buildings will sell fast and that leaves the trash for the REIT.”
——————————————————————–
WTF? Can you translate it in English?

#9 JimH on 06.21.13 at 8:51 pm

You’re right…
Kevin is hooped.
Carmen is hooped.

Thanks for yet another great post, Garth.

#10 western observer on 06.21.13 at 8:51 pm

Poor Kevin – if he resists he will be labeled a jerk.

If he gives in, it will be his fault for “letting her do it” when it falls apart & drives a wedge between sisters.

If you want to destroy a friendship or family relationship – invest in real estate together.

#11 AK on 06.21.13 at 8:53 pm

How old is Kevin? The poor guy..

#12 beck on 06.21.13 at 8:56 pm

Garth:
Two things

One:
Let’s not be like the cbc and let’s shift our focus outside of toronto for just a minute. What is your prediction for Vancouver’s westside? Will all these crap shack tear downs listed from 1.2-1.5 million come down 30 – 50% over the next three years? We have sold our townhouse and are renting until we can get something under a million. Will it happen?

Two:
I challenge your take on the recovery of the american economy. I base this on Peter Schiff’s “The Real Crash”. Have you read it? My take on his book is that america’s real crash is yet to happen as the gov intervened by printing billions of dollars each month since 2008. (QE) This will only delay the inevitable crash and make it worse when it does happen as the US is now trillions of dollars further in debt and all this so called growth is not real as it is based on bail out money. The indicators of growth are housing and cars, yet this again is just spending money you don’t have. When QE stops the house of cards will crash.

Your take?

#13 Hellforabasement on 06.21.13 at 8:57 pm

A little wet in Calgary today.

#14 Spiltbongwater on 06.21.13 at 8:58 pm

$443K – 30%, and she takes out a $336K mortgage. I am assuming the closing costs are $26K? Who the hell would ever buy in Toronto at all? Must be almost the entire 1% living there.

#15 Divided W on 06.21.13 at 9:06 pm

Sitting on a patio on Bank St in Ottawa drinking a cold beer. Liquid in my glass, liquid financialy. Life is great!

#16 beck on 06.21.13 at 9:09 pm

Garth: further to my skepticism of a US recovery-
I do not see the difference between the US gov printing billions + billions of dollars to prop up their economy and Joe Blow using his Visa to pay off his Mastercard. It’s not based on real growth, savings, fiscal responsibility.

#17 The Propeht Elijah on 06.21.13 at 9:11 pm

Check out Putin’s crib, I think he’s ready to rumble:

http://www.businessinsider.com/putin-palace-black-sea-2011-2?op=1

#18 not 1st on 06.21.13 at 9:12 pm

Owning something you only use a few weeks of the year is pure folly. Lots of places to rent if you book ahead early.

ersonally, I like hotels with room service and no mosquitoes.

#19 DaleFromCalgary on 06.21.13 at 9:17 pm

#3 and Kev: Don’t forget security and caretaker costs for your cottages. Nobody is going to watch your place for free over the winter.

Downtown core in Calgary was flooded today. Skyscraper condos with backup generators in the basement were flooded. Many bridges and underpasses closed; traffic was at a standstill everywhere this morning. I’m glad my house is up on the plateau.

For those of you who are Ontario tradesmen who got laid off from those Toronto condo projects, there’ll be lots of reno and repair work in southwestern Alberta this summer.

#20 TurnerNation on 06.21.13 at 9:17 pm

Attn. Blog Dogs you can spread this weblog’s destiny over social mediums.

Use these hashtags today:

#greaterfool
#wontendwell
#[email protected]
#StephenWho?
#BunkerLife
#TurnerNation
#BikeBabesBalncdPorts
#SmokingMan

Sample usage:
The Cons increased the deficit again!
#wontendwell #StephenWho?
Rather be living in #TurnerNation

Bonus: an apparent archival photo of Bandit as a pup; his training’s put him in good stead.

http://www.quickmeme.com/meme/3uxix0/

#21 Ralph Cramdown on 06.21.13 at 9:21 pm

#2 George — “One of these days we in Canada really should have an adult conversation about the total government (federal, provincial, and municipal), business, and household debt that is being built up in this country. […] The total debt outstanding in Canada at the end of March 2013 (bottom line of the data table) was $5.33 Trillion.”

Land sakes! That’s, like, 11x the amount of current and long-term debt that General Electric is carrying on its balance sheet. GE has slimmed down a bit in the last few years.

If you want to do a serious analysis of Canada’s balance sheet and cash flow, have at it. But pointing at the debt and saying “big number” without looking at the assets or the income seems a bit short sighted. We’re adding debt at $25 per person per day. At what rate is your family accumulating wealth? Mine’s growing a lot faster than our share of the debt.

#22 Victor V on 06.21.13 at 9:22 pm

Rising interest rates: Consumers, investors face sudden shift

http://www.theglobeandmail.com/report-on-business/economy/navigating-the-rising-tide-of-an-upswing-in-bond-yields/article12753654/

Royal Bank of Canada, the country’s biggest mortgage lender, has boosted its five-year rates for fixed-rate mortgages twice in the last two weeks to 3.49 per cent, and has also raised rates on mortgages of other lengths. Rival banks are following suit. These hikes follow a period during which rates sank to new lows, luring more people into the housing market. Such low rates prompted Finance Minister Jim Flaherty to lecture banks at a time of high consumer debt and house prices. Now the market is doing his work for him.

#23 Ahead of the Curve on 06.21.13 at 9:24 pm

Both those guys are officially doomed. I guess more details on the cottage are required before making any final remarks on poor Kev. While it may be a bad investment, it ultimately depends on the cost. I’ve seen some places as cheap as 50k…
As for Carmen, well, guess he hasn’t been reading the news. 500k for an apartment with only 2 bedrooms sounds like a recipe for disaster. I guess he realizes that, otherwise, why ask you for advise? So in that regard, I give him some credit.

#24 Victor V on 06.21.13 at 9:30 pm

http://www.thestar.com/business/personal_finance/spending_saving/2013/06/21/higher_bond_yields_trigger_hike_in_mortgage_rates.html

The recent increase in mortgage rates by several of Canada’s big banks is likely the start of a slow upward trend, experts say.

Scotiabank, the Royal Bank of Canada, and TD Canada Trust raised rates this week on some mortgages for terms ranging from two to 10 years.

On Friday, the Bank of Montreal said it is hiking the rate for its three-year mortgage by 0.1 of a percentage point to 3.75 per cent. Its new five-year rate is 3.39 per cent, an increase of 0.2 of a point. The new rates take effect on Saturday.

The increases are small — just one-tenth to three-tenths of a percentage point — but economists and industry experts say these may be definitive signs of rates returning to historically normal levels.

“When something is on sale, whether it’s pastrami or mortgages, you buy it. But the fact is you must be prepared for prices to go back to normal,” said Michael Gregory, senior economist at the Bank of Montreal’s BMO Capital Markets.

“Keep in mind that when you refinance a loan, whether it’s a car loan or a mortgage, you may be paying higher interest rates than you are now. Be prepared for normal.”

#25 MarcFromOttawa on 06.21.13 at 9:36 pm

#15 Divided W

James Street Pub?

#26 Mikey the Realtor on 06.21.13 at 9:41 pm

#8 AK

WTF? Can you translate it in English?

———————————

I sense the fear in your heart, with REIT’s dumping I think you know what’s coming next.

#27 TRON on 06.21.13 at 9:42 pm

Kevin you need to look a little deeper into your situation. You’re a man and that means you are the stronger of the species. Tell your wife and her family you’re not going to do it. If you can’t do that then you’ll get what you deserve for not being a man.

I’ve lived my life this way and have been married for over 25 years. Despite what you hear, if you stand your ground you will get your way. Nobody can fault you for protecting your family like a man.

Old fashioned thinking? Yes it is, and it works, so give it a try and see for yourself.

#28 Nemesis on 06.21.13 at 9:55 pm

@Ralph/#21

“We’re adding debt at $25 per person per day.” – RC

[WorldBank] – Poverty headcount ratio at $2 a day (PPP) (% of population)

http://tinyurl.com/2fpho2h

Sorry for the GlobalMacro… think of it as a RealityCheck.

[NoteToGT: Truism, “Some things never change.” For my part, I’d really much rather be telling jokes.]

#29 Derek R on 06.21.13 at 10:01 pm

#16 beck on 06.21.13 at 9:09 pm wrote:
further to my skepticism of a US recovery-
I do not see the difference between the US gov printing billions + billions of dollars to prop up their economy and Joe Blow using his Visa to pay off his Mastercard.

Difference is that Uncle Sam doesn’t have to earn or borrow money. He can print it — legally. But if Joe Blow tries printing money they will lock him up, so he has to borrow it or earn it.

#30 NoOneOfConsequence on 06.21.13 at 10:01 pm

It is extremely unfortunate as to what has happened in Calgary.
Given today’s economic conditions, rebuilding will be challenging. It will be VERY difficult to recover what Albertans have lost.
People think insurance will kick in, but that’s simply not true. Because of the last massive flood in 2005, flood insurance rider premiums have been very high. I would be surprised if more than half the destruction will be covered by insurance.
That leaves a large hole that will need to be filled by with personal savings.
Oh yeah…most Canadians don’t have any.

#31 visorman30 on 06.21.13 at 10:05 pm

Just a question about one of the last statements re: pressed cornflakes. Obviously a play on the quality of the construction but it does bring to mind a question I have.

If I’m looking for a home, what is the best way to evaluate the so-called “bones” of a house? Is there a preferred method to really doing thorough due diligence on a particular property prior to putting in a bid?

#32 Saint Herb on 06.21.13 at 10:08 pm

The post is perfectly timed. We just had another family gathering at my house (rented now) and it was almost insulting how many of my family pointed out that it was not MY house and that I was JUST RENTING it. They were very quick to point out that I did not OWN it. Then the wife joins the party to gang up on the bad husband who won’t buy a house. What is wrong with him, why can’t you find a house, what are you looking for, we will help you find a house, maybe you want too much, why would you rent, you need a house now, your kids need a house now, by the time you buy the house you won’t need it any more, you should look at this house, you should look at that house. I was so mad by the end of the night, I’m still not speaking to my wife. I have a wife problem and a house problem. I’m f#[email protected] sick of it. There is another family gathering at my cousins new 4,000 sq/ft estate home and I said I couldn’t go. I don’t think I would survive the night, or we would be divorced.

#33 alex on 06.21.13 at 10:11 pm

These houses do have a backyard. Simply jump the wall and have a BBQ on the tracks between two trains…

#34 The Man From Nantucket on 06.21.13 at 10:12 pm

Re: Cottage purchase.

Unless you can fit this in under the G-man’s rule of 90, yer friggin’ nutz to buy one of these money/labour pits .

Let’s just consider the price of property tax (and park alone all the other shit like utilities, maintenance, financing, tied-up capital…..),

These burghs up north often hose the shit out of the cottage set. Even a shack with waterfront is going to be $five large a year. A nice home of size to suit multi-family gatherings on a nice lake might easily push $8k

For the price of tax alone one can possibly rent a modest cottage on a nice lake for 5 to 10 cherry-picked weekends.

Bonus – no “obligation” to make that miserable outbound drive just because all of your fun-money is tied up in a pile of logs.

Also need to carry out drunken yardwork for a second home!

#35 Bubu on 06.21.13 at 10:16 pm

#13 Hellforabasement on 06.21.13 at 8:57 pm
A little wet in Calgary today.

———————
An old Bill Cosby Favourite just came to mind ……”How long can you tread water?”

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

#36 TheCatFoodLady on 06.21.13 at 10:24 pm

A few days ago, someone referenced a ‘lexicon’ for this blog. I figured out [email protected] but would very much appreciate the Compleat ‘Tictionary’… if one exists.

TIA

#37 Donald Trump on 06.21.13 at 10:30 pm

How bad is Calgary ?

Talk about “Underwater ” underwater

http://globalnews.ca/video/661728/raw-video-downtown-calgary-flooding/

#38 Rob on 06.21.13 at 10:40 pm

Dont forget strata fees.

#39 Good thinking — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer on 06.21.13 at 10:41 pm

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

#40 Mikeytherealtard on 06.21.13 at 10:41 pm

#26 must be tough times right now eh mikey? Overpriced listings sitting forever, no buyers of overpriced homes, Mortgages getting declined, no commish for you Mikey! Get the resume printed dude, of course you’re a Realtard so you can just leave out the education history unless you think it’ll be useful to include grade school lol…..

#41 TS on 06.21.13 at 10:46 pm

I used to live off off Weston Road and my Dad worked at the Canada Packers Plant at Weston Rd. and St. Clair.

I can’t believe that people want to live there now :)

#42 YouthInAsia on 06.21.13 at 10:47 pm

Hey Garth,

I heard the RE market is so bad now in Calgary, 1000’s of homeowners are already underwater on their mortgages…hahahaha…get it?…Underwater!

What?!? Someone had to say it! ;-) ZING!!!

Moron. — Garth

#43 PesaMingi on 06.21.13 at 10:47 pm

Carmen, Carmen, Carmen…

Earlscourt Park is a nightmare, don’t let your kid go there alone till he’s in his mid-30s. The area is a traffic bottleneck. And worst of all, the Go Train passes within spitting distance of your back door. Why spend 443K to listen to the GO Train comin hurtling by, rattling all the pictures on your wall six times a day?

For 2K a month you can get a loft rental on Lansdowne, far from the Go Train. You can buy the same loft for $450K.

#44 Draga Saveta on 06.21.13 at 11:04 pm

int Herb on 06.21.13 at 10:08 pm

I was so mad by the end of the night, I’m still not speaking to my wife. I have a wife problem and a house problem. I’m f#[email protected] sick of it. There is another family gathering at my cousins new 4,000 sq/ft estate home and I said I couldn’t go. I don’t think I would survive the night, or we would be divorced.

They should be frustrated not you…
If I understand this right, you are too polite to tell them the truth or you are afraid of your wife. Either way I understand that you are telling them that you want to buy a house but you cannot find the right one and because of that you have to bite your tongue.
Get out of the closet :) They will not invite you any more :)

#45 Devore on 06.21.13 at 11:08 pm

They want $443K. This puts me about even with the rent I am paying.

No it doesn’t. Even property taxes and condo fees aside, you are not comparing apples to apples. Unless a miracle happened in the GTA, you are not renting comparable accommodations for the same money.

And an apartment with stairs? Why would you do that to yourself.

#46 Darren on 06.21.13 at 11:09 pm

Garth, This response by you was brilliant on both cottage markets and the st clair west townhome development.
I read your blog daily now. I wish there was more public knowledge of this website, and your average person would read this website daily as opposed to everything else out there etc.
Darren

#47 Donald Trump on 06.21.13 at 11:14 pm

#43 YouthInAsia on 06.21.13 at 10:47 pm

Don’t be an a$$-hole…these people need our help and prayers.

I recall a Christmas night where we had a flood lapping at our front door…. starting to come into our basement……luckily it abated

#48 coastal on 06.21.13 at 11:15 pm

“Don Cayo of The Vancouver Sun disagrees, and disses Paul Krugman and the OECD as “worrywarts”.”

Donny forgot to mention more people are leaving BC than moving here, not to forget the Hong Kong Asians leaving in droves.

#49 AisA on 06.21.13 at 11:20 pm

The longer this drags out, the more the Canadaduh I left behind 6 years ago looks like a Can-O-Greece now that I’m back. Just sayin’…. the similarities are astounding.

RIDICULOUSLY overcompensated public workers, mind boggling actually – compared to what was going on in Greece. Real estate way out of reach of the people who actually need to live here, jobs in the private sector that pay dirt … and a hardcore la la land-nothing bad could ever happen here attitude. I swear I’ve seen this all before. De Ja FML.

#50 Devore on 06.21.13 at 11:42 pm

#32 visorman30

If I’m looking for a home, what is the best way to evaluate the so-called “bones” of a house? Is there a preferred method to really doing thorough due diligence on a particular property prior to putting in a bid?

Most people use a home inspector. Try to not use the one your realtor refers to you, and this is not an area to save money on; this is a big purchase. If you can’t afford it, don’t buy it.

#51 prairie person on 06.21.13 at 11:50 pm

Just went to HBC in Victoria to buy a couple of on sale items. There was no one in the store. Clerks were sitting reading paperbacks, talking to each other. Looked at an expensive name brand frying pan but it wasn’t on sale. Said I’d wait until it came on sale. The clerk said, “I’ll give you twenty percent off.” How desperate is that? I said I’d wait because the sales were usually forty percent off. Since when do the dept. stores bargain?

#52 WhiteKat on 06.21.13 at 11:55 pm

#33 SaintHerb,

Wow, you really are a Saint having to put up with the kind of family ribbing you described.

Hang tight, you know your’re right. The wife will thank you 20 years from now.

#53 Smoking Man's Old Man on 06.21.13 at 11:57 pm

I hope all the single guys reading this blog see the correlation between marriage and misery!

#54 WhiteKat on 06.22.13 at 12:01 am

#45 Dragga Savetta,

Let me guess, you are a realtor, studying part-time to get your psychology degree, just in case, right?

#55 Smoking Man on 06.22.13 at 12:02 am

Yes Thunder Storms Tomorrow

I will be boating…on the big lake

This is why……………..Its how I roll, listen to the words and learn

http://dyslexicsmokingman.blogspot.ca/2013/06/my-code.html

#56 Paully on 06.22.13 at 12:07 am

#33 Saint Herb on 06.21.13 at 10:08 pm

Hey Herb, remember to remind them that they too are renters. They are renting the mortgage money that they used to buy their prized houses. You are simply renting the house. You are all renters, but you are more direct, with no middle-man mortgage mark-up.

#57 Arshes76 on 06.22.13 at 12:11 am

#5 Garden Maven on 06.21.13 at 8:46 pm
Just as you were saying: http://www.theglobeandmail.com/globe-investor/cottage-versus-bank-shares-revisited/article12748927/#dashboard/follows/
—————————————————–
Loved the article, really amazing. Millions of dollars on one investment of $ 26,000

#58 bob on 06.22.13 at 12:24 am

Echo Garth’s sentiment — don’t buy/sell with siblings, be it real-estate, cars, time-shares, or anything else. No good can come of this. If you sell a car cheap to your brother/uncle/aunt, you think you did them a favor. The car breaks down, and they think you sold them a lemon.

Now multiply it 20x with real-estate.

#59 lucyj on 06.22.13 at 12:25 am

Kevin, the easiest word to spell in the English language and the hardest to say is no. But you sir must say it.

#60 Heather Nova on 06.22.13 at 12:51 am

Moron. — Garth

Terrific and accurate response to #43 YouthInAsia. Can we includeDale in Calgary and Daisy Maeas well?

#61 45north on 06.22.13 at 12:57 am

Saint Herb: St. Hubert QC? There is another family gathering at my cousins new 4,000 sq/ft estate home and I said I couldn’t go.

ya gotta stand your ground Saint Herb. What about a little research what does the 4000 sq ft estate home cost? What about comparables? Don’t show your hand – start with 5 year fixed mortgages versus variable rates. CMHC versus 20% down. Throw in an off-hand but on the mark estimate of the monthly mortgage payment. Municipal taxes, talk about services, compare with other near-by municipalities. Ideal time to bring in politics – see who bites. At no time present your opinion about the likelihood of prices going up.

#62 Tom from Mississauga on 06.22.13 at 1:02 am

Mortgage to buy a cottage that I can’t go to cause I gotta be at work to pay it off? NUTS!!! Going to 3 cottage rentals this summer. Been to in upper NY state. Loved it. Haliburton in July and Bancroft in August. Rent a couple cottages with the wife to ‘get a feel what for want’. Then just keep renting them. Works.

#63 east van on 06.22.13 at 1:49 am

http://business.financialpost.com/2013/06/21/world-faces-perfect-storm-as-liquidity-dries-up/

#64 Franken sense on 06.22.13 at 1:52 am

Lol. Steven segal was recently in Chechnya. Gives cred to the pic, but only a little.

#65 Mitch on 06.22.13 at 2:05 am

You should do a piece on Grande Prairie. The only sane place to buy a house (income:price ratio)

#66 Jenny Wilde on 06.22.13 at 2:20 am

>>But that means tying up $150,000 which represents $900 a month in lost investment income.

And you know an investment which will produce 7.2% return indefinitely for the next twenty or thirty years? If you advise people that this is possible you are completely dishonest.

(a) I said nothing about 20 or 30 years. (b) A conservative, balanced portfolio simply based on indices returned 9.25% last year. You need to stop getting advice at the bank. — Garth

#67 Derek R on 06.22.13 at 2:22 am

#37 TheCatFoodLady on 06.21.13 at 10:24 pm wrote:
I figured out [email protected] but would very much appreciate the Compleat ‘Tictionary’… if one exists.

Indeed one does. That would be… *** The GarthFAQ ***

#68 winterpeg on 06.22.13 at 2:25 am

“The arguments against owning a cottage are epic.”

So true. Besides just buying the thing, be prepared to have your illusions of family togetherness when you start deciding on “who gets the cottage when”, how the work on it such as hooking up the water, repairing screens, docks etc, etc, etc is divvied up (it is never equal), and sharing the cost of maintenance and taxes. Sibling issues are magnified with shared ownership of a cottage, (unless you’re from a lucky family who possesses some conflict resolution skills). And be prepared when the next generation comes along starting out with the teen agers and 20 somethings who are clueless as to how much responsibility a cottage is.
Kevin needs to grow a set on this one. If his family must have a cottage, rent one. WWWAAAYYYY less aggravation.

#69 Doug in Victoria on 06.22.13 at 2:43 am

Re: #33 Saint Herb

Do your family members who “own” their homes have mortgages? If so, they don’t own a damn thing!

I think you should go to your cousins, compliment them on their house and casually say “you own this outright don’t you?” And look shocked when they admit to a mortgage. Then start asking all the family if they have mortgages too, and look horrified, especially at such extravagance when they clearly don’t have the means to live this lifestyle and are having to “rent” money to pay for it.

#70 Tony on 06.22.13 at 3:14 am

Re: #43 YouthInAsia on 06.21.13 at 10:47 pm

DELETED

#71 Tony on 06.22.13 at 3:23 am

Re: #38 Donald Trump on 06.21.13 at 10:30 pm

Not too many people out in Calgary have heard of bricks. Maybe brick houses would hold up much better than water rot wood. Calgary it seems never learned from all the floods down in America. Any way you look at it, it sure is nice seeing Calgary flooded and with more rain in the forecast just makes things better and better.

#72 broadway skytrain on 06.22.13 at 4:13 am

#1 Finally on 06.21.13 at 8:40 pm
My friend just bought a house in East Vancouver
—————————
#down near MSJ hosp, central , or south van?

———————–
What is your prediction for Vancouver’s westside? Will all these crap shack tear downs listed from 1.2-1.5 million come down 30 – 50%

——————————
#no way, never. more people with $$$ here every year. small but more importantly SHRINKING supply of houses/crapshacks on the westside. every year hundreds of van sfh are lost to duplex/multi dev. zero new ones added.
east side crapshack demand still very hot. very hot.
barring a GFC sequel demand will continue
—————————————

Owning something you only use a few weeks of the year is pure folly
————————–
#Cottage success secret#1- a useful rec property is close/accessible enough that you can enjoy any/all wknds you wish, or even half a weekend

\Cottage success secret#2 – strongly avoid any place that puts you in heavy traffic with the ‘herd’
—————————————————-
Don’t forget security and caretaker costs for your cottages. Nobody is going to watch your place for free over the winter.

cottage success secret #3- pay for the waterfront/view/dock/natural location not buildings- a primitive cabin/shed requiring minimal care/no worries with a million $ view that can’t be stolen or vandalized is best. or a location remote enough (island?)you can leave stuff unlocked. – these are cheaper and taxes are way lower

but DO NOT buy with FAMILY!!! and buy no more than you can pay off in 5-10yrs max
;

the benefits for young kids can be huge.

#73 Dean Mason on 06.22.13 at 4:14 am

Provincial strip bonds 2030-2035 maturity dates are 4.25% to 4.35%. If it continues like this 4.75% to 5.00% will not be far off.Long term provincial strip bonds have about a 0.85% point or 85 basis points above 5 year fixed mortgage rates.

This means if we get a 4.85% longer term provincial strip bond yield, 4.00% 5 year fixed mortgage rates are just around the corner.

#74 BillyBob on 06.22.13 at 4:45 am

That’s why I’m staying put in the expat life for awhile longer. I’d love to move back to Canada but when you see it from outside it’s borders and in context in the rest of the world you realize how it’s just waiting for it’s correction. The anti-US ranters go on about the Fed “printing money” yet see no problem with the artificial wealth of Canadian RE…?

It’s very hard to see a bubble when you’re inside it. Very obvious when you are outside watching it inflate. I lived through the GFC in 2008 in Dubai, where property values dropped by 60-70%. Travel constantly to all of the places that have been hit, UK, Spain, Ireland, Greece, US, etc.

Canada is special, to me as my home country. But not exceptional economically, and I think it’s rather large liabilities are about to be exposed.

#75 World Traveller on 06.22.13 at 7:32 am

#33 Saint Herb on 06.21.13 at 10:08 pm

Since they are so hell bent on you buying a house and that it’s such a great investment, tell them to buy one and you’ll rent it from them, that should shut them up.

#76 jaguar on 06.22.13 at 7:53 am

**Not too many people out in Calgary have heard of bricks. Maybe brick houses would hold up much better than water rot wood. Calgary it seems never learned from all the floods down in America. Any way you look at it, it sure is nice seeing Calgary flooded and with more rain in the forecast just makes things better and better.*****

Careful Tony…your envy is showing. We know all about bricks in Calgary. Especially where they are manufactured and what they cost.
In less than two weeks the Calgary Stampede Parade will celebrate the city of Calgary. It will occur on time after the citizens clean up their city. No complaining, they will just roll up their sleeves, dig in, and get the job done.
This is the west. In this respect it truly is ‘different out here’. We don’t gloat at the misfortunes of others out here.

#77 Bottoms_Up on 06.22.13 at 8:12 am

Garth properly addressed the financial side of it, but buying a stacked townhouse is not the best idea if you plan on having kids. No backyard, and you’ll be do your living on one floor once you have kids. What’s the size of one floor in a stacked townhouse? 200 sqft?

#78 Mikey the Realtor on 06.22.13 at 8:35 am

#41 Mikeytherealtard on 06.21.13 at 10:41 pm

#26 must be tough times right now eh mikey? Overpriced listings sitting forever, no buyers of overpriced homes, Mortgages getting declined, no commish for you Mikey! Get the resume printed dude, of course you’re a Realtard so you can just leave out the education history unless you think it’ll be useful to include grade school lol…..

_____________________________________

I’m flattered that you attempted to name yourself after me but your spelling is as atrocious as smoking man’s. My resume is always ready for deployment, are you hiring? I can see that you’re concerned so please feel free to get in touch with me and I’ll put you in your dream home, that would become a win win situation for both of us.

#79 Lola on 06.22.13 at 8:48 am

#19 DalefromCalgary
“For those of you who are Ontario tradesmen who got laid off from those Toronto condo projects, there’ll be lots of reno and repair work in southwestern Alberta this summer.”
————————–
Don’t count on it Dale. Overland flooding is not covered under most insurance policies. It can be purchased separately, but it’s expensive so most people don’t.

Now considering Alberta is a non-recourse province, how many of those homeowners do you think are going to pony up and pay for repairs out of their own pockets? I’m betting that a whole lot of them, especially if they have a large mortgage, will simply walk away, with nary a glance, and let the banks deal with their ruined properties.

#80 Ret on 06.22.13 at 8:49 am

#74 Dean Mason

Have you got a link to a site that shows the yields for strip bonds? I can find regular bond yields but not strip bonds. Much appreciated in advance.

#81 T.O. Bubble Boy on 06.22.13 at 9:00 am

The insurance hit from the Calgary flooding looks like a big one… more headwinds for Canada’s big banks?
(at least the ones that are heavy into homeowner insurance, like RBC and TD?)

#82 Ralph Cramdown on 06.22.13 at 9:07 am

I think anyone being goaded by his wife to buy a cottage with family ought to relax and screen “Soprano Home Movies” — S6E13 of The Sopranos. A classic.

#83 Ralph Cramdown on 06.22.13 at 9:30 am

#80 Lola — “Now considering Alberta is a non-recourse province […]”

Only for conventional mortgages (i.e. below 80% LTV) but that’s a good point.

#84 Leo on 06.22.13 at 9:43 am

What I don’t understand, Garth, is why you represent the lost investment opportunity (900$ a month on 150,000 investment) as a fact, to be taken into calculations of the costs of the townhome? Who can guarantee that income? Are you even allowed, as financial advisor, to guarantee income from financial assets, whatever they are? Isn’t it the same as what you love to criticize when you talk about condo investment promotions?

Nobody guarantees returns, but $150,000 sitting idle in real estate equity over a number of years represents a lost income or growth opportunity. That should be self-evident. Over the last decade, even including the 2008-9 crash, a balanced portfolio returned close to 7%. It is a legitimate cost consideration when assessing real estate. — Garth

#85 Marshy on 06.22.13 at 9:51 am

Don’t do it Kevin …. I sold a cabin last year that I owned for 2 years and was lucky enough to break even on the transaction. After 2 break ins and numerous maintenance issues I had to get out. Your wife and her siblings are caught up in the fantasy of an idyllic cabin life that doesn’t exist … I know, as I fell for it myself. You also have the added problem of joint ownership with relatives that is fraught with potential problems.

The two happiest days in the life of a cabin owner are the day it’s bought, and the day it’s sold.

#86 Sebee on 06.22.13 at 9:55 am

Look…MSM is reporting we love RE more than Leafs or hockey. Finally we know why the MLSE build condos. Diversification.

http://www.citynews.ca/2013/06/21/canadians-are-real-estate-obsessed-survey-suggests/

#87 Post Haste on 06.22.13 at 9:57 am

In less then 2 years – we will have our first home paid off in full. Yes sir, it will take us 12 years to pay this puppy off. My brother paid his off in 8 but he also sacrificed big time to do it. Not everyone who has a mortgage is taking out the full term.

When I rented – I had the worst luck with neighbours – renters don’t give a sh&t about fellow tenants and can make life miserable. I rented for 6 years before we bought – I figured I paid $79,200 over that time to pay someone else to live under “their”roof. Home ownership has actual caused us to start a forced savings account – and now we have some nice coin in the bank – will be mortgage free which will provide extra cash each month and the best part of all of this – I don’t answer to anyone about rent payments or looking at a bleak future – owning is excellent if you consider some basic financial questions – to simple –

#88 TheCatFoodLady on 06.22.13 at 10:00 am

#72 – Tony – tell me, when you’re not be a raving snot, do you torture small animals? No matter where anyone lives, if they own or rent, how sophisticated they are as financial planners & investors – events such as this where you may have lost almost everything is a kick in the cojones.

#68 – Derek R: Thanx muchly!

#89 Ralph Cramdown on 06.22.13 at 10:30 am

#89 Post Haste

Congratulations on being two years away from having a paid off house. And to your brother for paying it off in eight. It’s too bad you couldn’t have forced yourself to save more earlier — you’d be in even better shape. My non-registered portfolio generates 166% of my family’s all-in housing costs after tax, and that isn’t including the wife’s or the registered stuff. Since we live on considerably less than our employment income, all that and more is getting reinvested. We’ve already paid off our house, and we haven’t bought it yet. N.B. our employment income is way below average for the neighbourhood we’re living in.

I realize that many people find it hard to save without the threat of foreclosure, but don’t tar everyone with the same brush. And again, congratulations.

#90 Macrath on 06.22.13 at 10:34 am

Sold the cottage and invested for income now I relax at the BPOE !

http://www.thetroubleshooter.com/BPOE

#91 Donald Trump on 06.22.13 at 10:43 am

#73 Tony on 06.22.13 at 3:23 am

Re: #38 Donald Trump on 06.21.13 at 10:30 pm

Not too many people out in Calgary have heard of bricks. Maybe brick houses would hold up much better than water rot wood. Calgary it seems never learned from all the floods down in America. Any way you look at it, it sure is nice seeing Calgary flooded and with more rain in the forecast just makes things better and better.
===============================

They usually rate actuarial probabilities ie one incident ie major flood in 100 years, earthquake every 200 years.

People will settle is areas for a number of reasons, and near rivers and waterways is common. It is clear in Calgary a lot of land is at or near the same grade.

People in more isolated areas may be told never build there again.
Calgary is not going to move. It doesn’t matter what the building is made of , the vast majority of building are not designed to withstand a flood.

People that used cheap OSB in their homes have a much great loss , that crap swells when wet and delaminates, these homes may be total writeoffs.

#92 AK on 06.22.13 at 10:51 am

#26 Mikey the Realtor on 06.21.13 at 9:41 pm
“#8 AK

WTF? Can you translate it in English?

———————————

I sense the fear in your heart, with REIT’s dumping I think you know what’s coming next.”
——————————————————————–

Hey Mikey,

If you think REIT’s are dumping, wait and see what happens to you housing sector.

#93 Canadian Watchdog on 06.22.13 at 10:55 am

#81 Lola #85 Ralph Cramdown

"Now considering Alberta is a non-recourse province, how many of those homeowners do you think are going to pony up and pay for repairs out of their own pockets?"

Alberta flood victims mostly out of luck with insurance

But, but…

Government programs are in place to cover damage for which insurance is not readily available, such as overland flooding. Property owners can call 1-800-377-6378 to reach the Insurance Bureau of Canada with questions. The bureau is a national industry association representing Canada's private home, care and business insurers.

The government and construction industry are smiling right now. This is just another opportunity for them to award themselves contracts at taxpayer's expense.

#94 Julia on 06.22.13 at 11:12 am

Good thing it’s different here…

US cities with the most abandoned homes:

http://www.usatoday.com/story/money/business/2013/06/22/cities-with-most-abandoned-homes/2447613/

#95 The Mummy on 06.22.13 at 11:14 am

An interesting perspective on Canada and HAM, any thoughts?:

“No fate of Canada can be properly discussed without inclusion of China. It is the biggest single factor in the evolution of the great nation to the north. In my view, the influence of China will act like a great carving knife. The Western provinces gradually have become Chinese colonies, vis-a-vis minerals & resources. The Chinese already own every major Canadian seaport facility on the Pacific Ocean, and own an increasing commitment of energy and agricultural output. My full expectation is for Canada to split into East versus West, two governed nations that emerge from crisis. The West will be rich in natural resources, will operate with large surpluses, but will be unwilling to pull along the damaged Eastern provinces. The East will be racked by debt and destroyed economic structures, whose industries will be in disarray. Labor problems will be common. The Eastern provinces gradually will falter from the industrial side. As whiplash, any rising Can$ (from falling USD) will cripple the Ontario manufacturing sector. The effect has been very clear for the last several years, as efforts to maintain parity at 100 have been fierce. ”
-GJA

GJA, whoever that is, pulled it out of his butt. — Garth

#96 happy renter on 06.22.13 at 11:18 am

Life is to short to be married and a slave to a big mortgage for a crappy house.Work in Fort Mccmurray for 7 months the head down to Mexico for the winter.Live for under $1200 a month and make a little money swing trading the stock market.Only bad thing is golf is expensive.

#97 Karie on 06.22.13 at 11:28 am

I am so sorry to hear about the floods in Calgary. 2 of my 3 children were born there. All 3 areas we lived in while there were evacuated. Our first home was made of wood, but someone tore it down to put up a new infill last year.

Kevin, I have always dreamed about owning a cottage too. I have an idea for you that I noticed several families doing when we rented one year for a week in Muskoka: Families rent for the whole summer, you may also be able to rent for a month or 6 weeks or whatever. They then go back and forth to the cottage all summer in between work, etc or stay all summer or just part of the family is there at a time. You come and go whenever you please. The cost would depend on how many people or where you want to rent – side by side cottages or one huge cottage, etc.
Feels like you own it, you don’t pay insurance, repairs or maintenance and hopefully everyone is happy!

#98 Leo on 06.22.13 at 11:30 am

Nobody guarantees returns, but $150,000 sitting idle in real estate equity over a number of years represents a lost income or growth opportunity. That should be self-evident. Over the last decade, even including the 2008-9 crash, a balanced portfolio returned close to 7%. It is a legitimate cost consideration when assessing real estate. — Garth

So has real estate become more expensive in the past. Do you want to take that into consideration as well? Beginning 2000 how much real estate has grown in price, 7-10% a year(including 2008-9)? I bought in 2008, before the recession, and already have half of the current cost of the house in equity (around 300K). What would I have made, had I invested my 50K downpayment, instead of buying? Another 30K (maybe, if I’m lucky)?

Balance, diversification and liquidity. Those are the goals. — Garth

#99 Julia on 06.22.13 at 11:37 am

#71 Doug in Victoria &
#77 World Traveller

Hah! Good ones!

#100 Macrath on 06.22.13 at 11:38 am

Dear Garth,

A couple of questions.

1) re: global market mayhem

I`ve invested in some SWZ (managed) and they are not producing much in dividends for the fees. Then there is Ishares EWL (Passive Index) producing steady divedends and a lower MER. I`m considering dumping the high priced help. Comment ?

2) Re: posting pictures

How do we post a picture link with our comment without wanton promotion of our own domain?

#101 YouthInAsia on 06.22.13 at 11:54 am

@#48 Donald Trump, #62 Heather Nova, #72 Tony, and Garth

#1) I have no sympathy for anyone anytime, neither do I expect it. I believe “location, location, location” has proven itself time and time again. I’ve lived on higher ground my whole life…FOR A REASON!

#2) They won’t get my help directly, indirectly through my taxes I’m sure they’ll get it. Prayers? Yeah…that’ll help! Money helps more though…….

#3) Heather, I thought I told you to move two days ago? I guess I was right! You should still…well at least to higher ground if you haven’t already!

#4) Learn to have a sense of humour people. Life lifts you higher when you take it lighter!

#102 Renting and Loving It on 06.22.13 at 11:54 am

#33

Your family sounds like several friends of mine who seem to ask “how do you like RENTING” every time I see them. I finally decided to shut them up by saying that I love it and ask if they have a point to continually asking. I told them that I live rent free because the money I got from the sale of the house generates more than enough income to pay my rent and I’m fairly well set up to retire tomorrow if I want. That wiped the holier-than-thou expressions off their faces.

Plus, I live in a house that would be over 500K to buy (and would never pay that much for it).

Like others have said, a mortgage is just renting money from the bank with a hefty premium.

#103 Just Say No on 06.22.13 at 11:59 am

home ‘ownership’ is when you can do what ever you want with your paycheques and you do not have to sell your soul to you employer! Renting allows you to lay on the couch on your days off if you like and things still get fixed.

#104 Musty Basement Dweller on 06.22.13 at 12:02 pm

This post I really rings true in terms of the frustration of trying to teach spouses and family members math. I’ve concluded that they don’t want to learn the math, the emotions are just too powerful. Fortunately I don’t have a spouse to have to convince. For other family members, I just nod and say “oh yeah” when they talk about things like buying a condo in Vancouver as an “investment”. lol, lol, lol. I can’t wait to watch this play out and the reactions of these idiots when it does.

#105 Old Man on 06.22.13 at 12:13 pm

I had to laugh at a comment that cottages on islands will have no break and enters, so tell that to the people up north who pay highly for insurance and are being taxed to death. I guess this person never heard about boats or that in the winter lakes do freeze over with access by walking or something called a ski-doo; the crooks love to work at night with nobody around.

#106 Old Man on 06.22.13 at 12:41 pm

Mr. Turner talks all the time about the cost of money be it in home equity, in a bond or GIC, or elsewhere. Not just the cost of money, but rather the loss of income opportunity not being in the right place at the right time to rationalize the net outcome which includes the taxation as well. Now with a balanced portfolio that needs to be adjusted or weighted from time to time; this protects the capital from economic shocks.

The key to investing involves taxation, patience, and having a balanced portfolio that must be adjusted on a quarterly basis, more or less. The net return is of utmost importance going forward for taxation, as in any business the gross matters not, but the net after tax return on capital is the bird to watch. Now for those that want to buy a family cottage, the nightmare is death, and that is another story, as the heirs will fight over it for years with no happy ending.

#107 Mikeytherealtard on 06.22.13 at 12:46 pm

#80 spoken like a true realtard….enjoy the welfare line this year…gonna be rough mikey!

#108 DreamingInTechniColour on 06.22.13 at 12:49 pm

Watch out for used cars and trucks from a flood zone…

http://www.thetruthaboutcars.com/2012/11/hammer-time-the-used-car-flood-after-sandy-and-how-not-to-get-soaked/

#109 Tony on 06.22.13 at 12:56 pm

Re: #95 Canadian Watchdog on 06.22.13 at 10:55 am

Only stupid people take out house insurance.

#110 US Debt on 06.22.13 at 1:01 pm

#30 Derek R
“Difference is that Uncle Sam doesn’t have to earn or borrow money. He can print it — legally. But if Joe Blow tries printing money they will lock him up, so he has to borrow it or earn it.”

Not entirely true that the US does not have to earn it. True, it can create as much money as it wants, but it cannot guarantee the value of those dollars (as Greenspan recently stated). The value is essentially set by the health of the US economy and others faith in its wealth. If confidence is lost, then the US can print as much as it wants – no-one will want them. Basically, the US has to work on confidence and not over print. If you could do it indefinitely, why have an economy at all…? Why even have debt instruments like treasuries – just pay bills with printed money.

#111 Old Man on 06.22.13 at 1:20 pm

Here is my story about Lake Rosseau back many years ago, as spent my childhood up there during the summers. The year was about 1965 as was still in highschool in Montreal, as had part-time jobs making money, so wanted to buy me some property, as had some cash, and will name the names.

I stayed at Lakeside Lodge as knew the previous owner who sold out but had two homes nearby, and it was Lloyd who has known me since I was 5 years old, and said give me a boat, as want to look for some property with a forsale sign. I had been driving boats on that lake since I was 7 years old, so he gave me a good one.

Glenn Orchard had 1500 frontage forsale and the price was $15,000 down by the channel connecting two lakes, but only had $4,000. I was a fool, as could have made on offer with a VTB first, and bet he would have accepted it, but did not know this stuff. Knowledge is power, and lost $millions, as the mortgage payment would have been easy with my part-time work. :(

#112 Donald Trump on 06.22.13 at 1:30 pm

The $40M mansion no one wanted is being demolished

Read more: http://www.canada.com/business/Estate+demo+mansion+wanted/8394890/story.html#ixzz2Wy1ZKaVe

This 32,000-sq.-ft. Georgia mansion took $25 million US and more than four years to build when construction started in 1988. The $25 million US went toward — for starters — the formal gardens, fashioned after the famous Butchart Gardens near Victoria and planted with 100,000 annuals every spring and fall throughout the French, Italian and Asian-inspired areas. On the 60-acre property there’s a three-acre man-made lake and an 18-hole, par-72 golf course.

======

By the early 1990s, the estate was listed for $40 million. Michael Jackson was reported to be an early bidder and wanted the 32,000-sq.ft. residence to be a surprise for then-fiancee Lisa Marie Presley. Jackson didn’t buy, and the estate remained on the market for nearly 17 years before entertainer Tyler Perry purchased it for just $7.6 million in 2010.

Perry wanted to tear it down, and held an estate sale in which everything from chandeliers, hardwood floors, and mouldings to windows, art and garden fountains was up for grabs. Stripped of its luxury finishing, the mansion is now undergoing demolition.

“It’s heartbreaking to see it like this,” says Cal, who explains that the current demolition photos were taken by someone who sneaked onto the property.

“This mansion didn’t get the exposure it deserved, especially near the end when it could have been saved,” says Cal.

#113 Mike T on 06.22.13 at 1:35 pm

The two happiest days in the life of a cabin owner are the day it’s bought, and the day it’s sold.

same with boats I’ve heard

also

100 – Leo

if you have not sold your house you have not made anything….lotsa folks claimed to have ‘made a killing’ on gold, but they never sold it to realize a profit….so there’s that.

#114 Eileen on 06.22.13 at 1:57 pm

My friends are beginning to feel the squeeze. They are recent homeowners of cheap pre-fab homes in Halton and have cushy salaries and every weekend when I invite them out for dinner or drinks they reply with “sorry, have to save money now” …

#115 AK on 06.22.13 at 2:01 pm

Sanchez Energy Drills More Wells In Eagle Ford Shale.

Welcome to the The New America

#116 Old Man on 06.22.13 at 2:11 pm

Now have given some thought about those that want to buy a family cottage; now is not the time to buy, and such can be anywhere. It will be become a family gem for a growing family to pass unto their kids with so many memories and great fun, but death will become a problem to pass this memory to the kids, and their kids.

The capital gains problem needs to be looked at with great care; not to mention the heirs fighting, so might have a longterm solution, with a cottage asset so loved to be established forever within the context of kids and grandkids going forward as a special asset. Not sure about this all, but this is something to consider.

Why not buy a future family summer home in Trust with a Corporate Sponser? This can be done with rules that must be executed for all future heirs to abide by from generation to generation with clauses that are revocable, and some irrevocable at the discretion of the Trustee under the Law.

#117 Donlad Trump on 06.22.13 at 2:12 pm

Calgary Saddledome is flooded…up to the 10 th row..saw a photo on facebook..one major indoor pool.

#118 Mister Obvious on 06.22.13 at 2:27 pm

#89 Post Hast

There is nothing inherently wrong with your personal home ownership story. I could tell a similar story myself.

I don’t know about your case but my story began when houses cost about three times the average wage. Paying the mortgage off in 12 years, as I also did, was within the realm of possibility. At the end of that time the value of my SFH had increased fourfold. Ten years later it had doubled again.

My Nortel moment had arrived. It was time to harvest gains. Tax free. I never cheered the insane speculation that drove the price of houses to unsustainable levels but I didn’t want to be holding my own stucco tulip bulb on the trip back down. Clearly, it was time to get out.

Queue the present. In Vancouver today you can purchase a two bedroom condo for about 600 thousand. That’s maybe ten times the average wage.

And that’s a condo. It’s merely a block of air in the sky. Not really a home in any traditional sense. Plus, you risk a joining strata council peppered with lunatics and no hope of selling for many years. (And what about purchasing a single family home? So far off the chart it’s comical.)

OK, that’s Vancouver and that’s condos. Things may be vastly different in Brandon. And there’s the lesson. Real estate is a local phenomenon. You should not own real estate anywhere and at any cost, just as you should not purchase equities at any price.

I wonder, do you read Garth’s words at all? Things don’t rise forever. Renting too much money from the bank is bad for your health. Investing is not gambling. Capital has real value and produces real income.

Home equity is illiquid, incurs myriad carrying costs and, these days, is very risky. One should not count upon it as a financial plan. Emotion and money do not mix well. Balance, liquidity and diversification are the cornerstones of the new economic reality as we move deeper into the irrationality of the twenty-first century.

These things remain true in spite of home ownership success stories from decades past such as yours and mine.

#119 Donald Trump on 06.22.13 at 2:39 pm

#103 YouthInAsia on 06.22.13 at 11:54 am

Hey no problem….I was like you once…then I entered pre-school.

PS Has your Mom and/or sister got a date tonite?

#120 Mortgage Madness on 06.22.13 at 2:51 pm

Doesn’t increasing fixed mortgage rates simply push potential mortgagors toward variable products?

#121 Mister Obvious on 06.22.13 at 2:56 pm

#199 Old Man

“Why not buy a future family summer home in Trust with a Corporate Sponser? This can be done with rules that must be executed for all future heirs to abide by from generation to generation with clauses that are revocable, and some irrevocable at the discretion of the Trustee under the Law.”
——————

That really does sound like lawyer heaven. Here’s another alternative:

Why not let kids grow into adults with the education they need to make their own contemporary life plans without being joined at the hip to the obsolete dreams of previous generations?

#122 Mikey the Realtor on 06.22.13 at 3:13 pm

#109 Mikeytherealtard on 06.22.13 at 12:46 pm

#80 spoken like a true realtard….enjoy the welfare line this year…gonna be rough mikey!
——————————————-

Thanks for your great insight, my suggestion to you would be to get out of grade school before getting entangled in adult conversation, it reduces your chances of looking like an a$$hat.

#123 TurnerNation on 06.22.13 at 3:19 pm

#38 that video is shocking. I lived in Calgary for a few years – late 90s – in its Downtown and NW areas, so have some idea but not so much about the SE quadrant that’s mainly affected.
Returned there for business trips many times over the years. Last month in fact.

Think of all the people who can no longer drive to work even; their cars are gone. Economically, has the impact been yet felt?

Stacked: The Lambster is completing his stacked towns Broadview/Queen. Same price even smaller.
Located beside a run down Legion and a short stumble up the road from Jilly’s adult entertainment spot.
Are you a smoking man?

http://www.realtor.ca/propertyDetails.aspx?propertyId=13324225&PidKey=-892428635

http://www.riversidetowns.com/flash.php

#124 ritenote on 06.22.13 at 3:20 pm

Hi Garth,
Couldn’t help but notice the startling resemblance between you and Steven Seagal….have you been moonlighting in Hollywood?

#125 Old Man on 06.22.13 at 3:26 pm

Caesar just made an announcement that Calgary has been cancelled for him to make his Reform speech to rally his idiots for the big convention. Now where is he going now? I heard a rumour that he wanted to go to Halifax, and the people said not here, as he wanted to see Lunenburg to piss someone off. I say Caesar go to Montreal and do your gig there, and see what happens, as they are waiting for you.

#126 MrHulot on 06.22.13 at 3:36 pm

Seagal is a dead man

#127 TurnerNation on 06.22.13 at 3:37 pm

Rent a stacked on St. Clair W., for $1750. That’s all it’s worth, bro.

Quick search for Stacked:

http://toronto.kijiji.ca/c-real-estate-house-rental-Live-in-a-new-2BR-TownHome-in-St-Clair-west-W0QQAdIdZ495374849

Brand new stacked town home available now. Located just south of St Clair on Caledonia. 2 bedroom, 1 full bath. 890 + sq ft of living area with 9′ ceilings, plus 250 sq ft terrace for outdoor space

– Reduced from 1800, same ad:

http://toronto.kijiji.ca/c-real-estate-house-rental-Brand-New-2-Bedroom-Townhome-Available-Immediately-W0QQAdIdZ490504081

#128 Casual Observer on 06.22.13 at 3:41 pm

I was pressured a couple of years ago by a realtor friend who was trying to “sell” me on the idea of buying RE. I told him that I thought we were closer to a top than a bottom so I thought I should wait. He kept pushing, saying that prices were “guaranteed” to keep rising.

So to shut him up, I gave him a proposal. I offered to put up 50% of the purchase price, and pay half of the other expenses (taxes, insurance, etc.) I would pay for utilies and get to live in the place.

He would get to keep all of the capital gains, but if there were losses, they would come out of his half of the equity. He could buy me out (at my original cost) at any time if he needed to sell.

Since the going rental rate for the house was about half of the ownership costs, I figured this was a fair deal for both of us. It would be no different than buying the place and renting it out, except he’d only have to come up with half of the purchase price, but was getting to keep all of the future gains.

The look on his face turned sour, so I asked why? If the price is guaranteed to rise like you say, then this should be easy money. He conceded that, “There are no gurarantees in life.”

When I pressed him to put his money where his mouth was, he folded. He never pressured me again.

#129 jaguar on 06.22.13 at 3:48 pm

All this talk about Alberta being a ‘non recourse’ province and people walking away from their troubles doesn’t address the fact that in recent years one of the most popular mortage products for those with 20% down has not been conventional mortgages, but collateral mortgages. That fed the appetities of people who like a big line of credit that they can continually wrack up on their shopping excursions to Costco. Don’t be so sure you can walk away unless you don’t have any other assets. Those big bad banks ( the same ones you entered into a business contract with so willingly when ‘you needed them’) may just decide it makes more sense to sue you, obtain a court judgement, and go after your assets. Lots of big houses along the river in Calgary. Built and owned by a lot of people who have good jobs, money in the bank, and other assets. The same ones they disclosed to their bank when they applied for financing.
Homes along the river in inner city neighbourhoods have a high ‘land value’. You follow?

#130 Gunboat denier on 06.22.13 at 3:58 pm

117 Eileen – maybe they gave purchasing a house a
higher priority than dinner out. Why not have them over for a BBQ?

#131 Spiltbongwater on 06.22.13 at 3:59 pm

Vladimir Putin has 2 things that I don’t have, a job, and a superbowl ring.

#132 Donald Trump on 06.22.13 at 4:07 pm

Is Calgary 2013 the new New Orleans ?

Curious how this will unfold.

After Katrina went through New Orleans, it appeared that Gov’t incompetence was the norm…yet a lot of martial law was imposed.

Even moreso, was this event HAARPed?

#133 Vamanos Pest on 06.22.13 at 4:14 pm

#89 Post Haste
You’re argument shares a few things in common many others who can’t be convinced that buying might be a worse decision than renting. I’ll point out a few…not that you asked.
First, you bought your house 12 years ago. At the time, that was a great idea, and you did very well on it. But I bought gold 12 years ago and I did really well too. Does that mean it’s a great idea in 2013 to but gold? We’re at a different point in the cycle, and great advice in the year 2000 could now lead someone to disaster.

Also, are you suggesting that I won’t end up with bad neighbors as long as I buy and don’t rent?

And fellow tenants? My fellow tenant is my wife. If I have a problem with fellow tenants it’s nothing buying a house would fix.

Now, you mention ~80 grand in rent over 6 years. What did you pay in interest the following 6 years. I’m sorry, is money spent on rent somehow less gone than money spent on interest?

As for forced savings, that argument actually does hold water…if you need forcing. I don’t.

Finally, you don’t have to write a rent cheque once your clear of the mortgage, which does sound nice. But if instead of the big down payment and plowing money into a mortgage, you built a portfolio, than the monthly income from that might pay the mortgage for you. Either way, our ‘cost of shelter’ is covered before we get up in the morning (except in your case you still have property taxes and maintenance.

All I’m saying is the buy vs rent housing argument is not an absolute. It’s relative to market conditions. And market conditions strongly favor not buying real Edgar right now.

#134 steve p on 06.22.13 at 4:15 pm

#130

Carmen stacked worth [email protected] % rate-$388 at 4%rate
combined salary $93k

#135 Kent on 06.22.13 at 4:17 pm

Here’s something to consider if you decide to rent instead of buy. You’re landlord tells you he never intends to sell the place you’re renting so long as you wish to stay, then informs you out of the blue he has someone who wants to buy. You then have to scramble in a tight (no, none-existent) rental market to get out in 60 days. Don’t do what we did and try renting in a small town.

#136 No Longer Innocent on 06.22.13 at 4:39 pm

#138
If you have a lease the landlord can’t kick you out even if he sells the new owner would have to honour the lease…… If you want to stay in your rental with rent control always sign a lease!

#137 Heather Nova on 06.22.13 at 4:41 pm

#103 Euthanasia

#3) Heather, I thought I told you to move two days ago? I guess I was right! You should still…well at least to higher ground if you haven’t already!

Hey, moron, you’ve got me mixed up with someone else(not surprisingly). The guy you were responding to was actually #36Just a question on 06.19.13 at 10:31 pm

From your comments, it would appear that you already tried to euthanize yourself and failed. Too bad the gunshot left you brain-injured.

#138 CalgaryRocks on 06.22.13 at 5:20 pm

#91 Ralph Cramdown on 06.22.13 at 10:30 am
#89 Post Haste

Congratulations on being two years away from having a paid off house. And to your brother for paying it off in eight. It’s too bad you couldn’t have forced yourself to save more earlier — you’d be in even better shape. My non-registered portfolio generates 166% of my family’s all-in housing costs after tax,

LOL why do you always need to turn everything into a pissing contest.

When I had my paid for home, my all-in housing cost, was 250$ in property taxes / insurance and 400$ fund for emergencies.

But my wife paid half so I was only responsible for 325$. Geez. Tough life. A Walmart Greeter job or way better, a 60K portfolio / each would cover that for the rest of our lives. Pocket change. No worries, easy breezy.

To each their own.

#139 Devore on 06.22.13 at 5:26 pm

#63 45north

Ideal time to bring in politics – see who bites.

Ideal time to do nothing. Don’t stoop to their level, and mind your own business. Politics, religion, real estate… don’t even start.

#140 CatFoodLady on 06.22.13 at 5:30 pm

The smell of testosterone – it is strong!

#141 Devore on 06.22.13 at 5:32 pm

#73 Tony

Brick construction is not well suited to Calgary climate. And while you’re being a dick, if you live on a flood plain, you’re gonna get flooded every few years. Been happening in Calgary ever since the first settlements. Downtown, Inglewood, lower part of Bridgeland, no surprises there.

#142 Kent on 06.22.13 at 5:50 pm

#139 No Longer Innocent

We haven’t had a lease in four years. My son wants to finish hs here, and there’s no place to rent and only crap to buy. Rock and a hard place.

#143 Mike T. on 06.22.13 at 6:03 pm

In lieu of the Jays epic win streak here is an early evening laugher

The three starting pitcher for the Jays this weekend were/are

Dickey
Wang
Johnson

Some truths are better than fiction

#144 Realtor on 06.22.13 at 6:03 pm

The GTA still holds strong.
People are renewing their mortgage at a cheaper rate,(if they could afford their home in 2008 they will afford their home today and the same those renewing in 2009).
The new mortgage rules did little to change the housing market (definitely not cause crash) and anecdotally speaking sellers are not desperate
and waiting patiently for buyers to give in.

Again in previous crashes there was a spike interest rate or high unemployment here there is neither.
Lenders are still willing to lend and even offer 30year amor rates and as long a lenders lend we will not be short of buyers.

Lets say there is a 15%(or 85K) drop in home prices, on average thats a saving of 400$ a month. Do you really thats whats stopping people from buying?

#145 Mr. Frugal on 06.22.13 at 6:09 pm

Who in their right mind would spend $450K for a stacked townhouse in Toronto? Who would raise a family in a house without a yard? I would suggest commuting. Move to Bolton or Orangville or Milton and get on the GO. You’ll save a fortune and the kids won’t need to wear body armour to school. Everybody wins.

#146 Mike T. on 06.22.13 at 6:21 pm

‘was this event HAARPed’

that would be my guess

the weather people are already calling this a perfect storm

Katrina was a perfect storm, as was Sandy just last year

and before the anti-tin foil hat brigade swoops down, the US readily admits it has the technology to do such things, and have done so since at least the 60s.

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

from the article:

‘Operation Popeye goal was to increase rainfall in carefully selected areas to deny the Vietnamese enemy, namely military supply trucks, the use of roads by’

So, umm yeah, likely HAARP’ed – to further US interests? that part cannot be confirmed

https://en.wikipedia.org/wiki/High_Frequency_Active_Auroral_Research_Program

#147 Devore on 06.22.13 at 6:53 pm

#111 Tony

Only stupid people take out house insurance.

Maybe you should read the fine print on your mortgage.

#148 Smoking Man on 06.22.13 at 7:16 pm

My earlier post, clip of grass roots, is so significant to the creation of wealth. Yet when mortals and normals look at it they think that’s no responsible.

In my life on many occasions I have been sucked down the vortex of dispare and poverty only to be farted out the other side, sliding down a magnificent rainbow into a pot of gold…

The attitude of that song is what makes people successful and wealthy. Look around to your friends that made it. Bet the craziest buggers have done the best. The ones that have not, they have a pocket protector and a sharp pencil.

Don’t get me work, Sharpe pencils are useful.

Taking the eye ball out of a rival moving in on your turf.

Sha la la la live for today..

Disappointed in the storms today, try again tomorrow.

#149 Donald Trump on 06.22.13 at 7:19 pm

Remember:

An “intellectual” is someone who uses $5 words and can smell $20 in your pocket a mile away.

#150 JimH on 06.22.13 at 7:35 pm

#12 & #16 beck
Sir,

In all kindness, you are making yourself look bad, and in the process, giving terrible advice to others.

This may come as a terrible shock to you, but the US Federal Reserve DOES NOT ‘print money’; you glibly seem to equate this with ‘QE’, which is an asset swap, and an electronic one at that, between the Fed and the private sector. Go do some honest, and difficult research. Cullen Roche has some good stuff, and some links to others here:
http://pragcap.com/the-best-of-tpc

Please do yourself a favor and give it a try. Modern monetary theory (much less the practice and praxis of the same) is not at all easy to understand; it takes work and a high degree of discipline, but thankfully, not a lot of smarts. Mostly hard work, concentration and study. Yes, the old gold standard made understanding the valuation and even the function of ‘money’ (in all its vicissitudes) much easier, but that, my friend is your problem.

Five years ago a hyper inflationary tornado was forecast by many, including Peter Schiff. For five years, we have in fact been on the brink of a deflationary vortex. (European efforts at austerity have exacerbated this downward pressure, and have failed miserably. At the present time, we are seeing several variants of ‘QE’ taking shape throughout the EU as they desperately try to repair the damage. (they will fail miserably) You might note that none of the EU nations are asking Peter Schiff for his expertise here!

This could have some thing to do with his track record, which is abysmal.

http://www.economicpredictions.org/peter-schiff-predictions/index.htm

Now, for the last time, the Federal Reserve DOES NOT ‘print money’!

And, for God’s sake, read somebody, anybody, rather that some cheap shill like Peter Schiff who has cost his own investors (and those silly enough to believe in him) untold fortunes.

As for the US economy, well, my friend, price is the one and the only thing that pays. If you have sat on the sidelines since 2009 reading the ‘doom and gloomers’ like Peter Schiff, then you have really missed out on at least one of the great investing opportunities the markets have presented to us in the last 80 years. Yes, this long running bull market may well be becoming long of tooth, and ready for a correction, but by God, it’s been a grand ride for some of us.

I sincerely hope you take exert as much time and energy into planning and scheming and creating a viable watch list of good ETF’s, div stocks, and even some decent bonds if you want long-term exposure, representing some promising sectors for the next leg up. (yes, it will come, sooner rather than later: money never sleeps and the alternatives to the US economy are few and far between, and even riskier than listening to Peter Schiff.)

Back in my youth, we had an expression; “Free your mind and your ass will follow”. I hope you do so.

Price is the only thing that pays! Good luck!

#151 Daisy Mae on 06.22.13 at 7:40 pm

#116 Mike T: “The two happiest days in the life of a cabin owner are the day it’s bought, and the day it’s sold.

same with boats I’ve heard.”

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

Boats and recreational vehicles. So much money tied up. It doesn’t warrant the cost. Boats at the BC coast require a lot of maintenance. The salt water can wreak havoc.

Personally, I wouldn’t want to feel I HAD to go to a cabin every summer ‘just because’. I like to travel and explore!

#152 Daisy Mae on 06.22.13 at 7:50 pm

#119 Old Man: “Why not buy a future family summer home in Trust with a Corporate Sponser? This can be done with rules that must be executed for all future heirs to abide by from generation to generation with clauses that are revocable, and some irrevocable at the discretion of the Trustee under the Law.”

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

Why not forget all this…and just don’t buy a cabin?

#153 Smoking Man on 06.22.13 at 7:52 pm

One more thing before I get shit faced and get smacked with garthos delete button is this.

The majority of you posters on here have not seen the light.

Those damn banksters, realtards, MSM

The problem ain’t with them it’s you. They figured out how to play the game, or game the game. You believed in all your conditioning, and angry at those who make it.

I have a new name for you people.

Nego’s negative energy go’s opportunity.

That’s right, you Nego’s don’t get it.. You need a connection to the universal consciousness consolidator, Nego’s put a force field around themselves blocking out the positive energy, the rocket fuel of success.

The I can download it better and belive it.

All my teaching falls on deaf ears..

I’ll keep trying…

Bar tender, another please……. :)

#154 Canadian Watchdog on 06.22.13 at 7:57 pm

Is this why more realtors are showing up on bear blogs?

CanEquity Monthly Volume History of Mortgage Applications from Ontario Link

#155 Smoking Man on 06.22.13 at 7:59 pm

The I can download it better and belive it

How the hell did that get into my Last post..

Time for me and the crazy voice inside my head to have a chat… Wtf

#156 Daisy Mae on 06.22.13 at 8:03 pm

#133 Gunboat denier: “117 Eileen – maybe they gave purchasing a house a higher priority than dinner out. Why not have them over for a BBQ?”

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

Last time I went to a restaurant the charge for 6 ounces of wine was $8. Never again….have your own BBQ!

#157 Daisy Mae on 06.22.13 at 8:10 pm

#138 Ken: “You’re landlord tells you he never intends to sell the place you’re renting so long as you wish to stay, then informs you out of the blue he has someone who wants to buy.”

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

Happened just recently to my neighbours daughter and family. They ‘rented to own’ from a lawyer…who sold the house from under them. No recourse, of course. They’ve now ‘rented to own’ a B&B. Gone from bad to worse….

#158 Derek R on 06.22.13 at 8:29 pm

#112 US Debt on 06.22.13 at 1:01 pm wrote:
Not entirely true that the US does not have to earn it. True, it can create as much money as it wants, but it cannot guarantee the value of those dollars (as Greenspan recently stated).The value is essentially set by the health of the US economy and others faith in its wealth.

Disagree there. The value of the dollars depends upon the existence of something essential that they (and only they) can be exchanged for. Inside the US those things are housing, food, fines and taxes. Outside the US they are oil and American goodwill.

If confidence is lost, then the US can print as much as it wants – no-one will want them. Basically, the US has to work on confidence and not over print.

Printing is only one side of the equation. The other side is debt and taxes. Any time the US wants to raise the value of the dollar, it just needs to raise interest rates or taxes.

If you could do it indefinitely, why have an economy at all…? Why even have debt instruments like treasuries – just pay bills with printed money.

Treasuries act like voluntary taxes sucking money out of the private sector. Their interest payments give people a reason to want the dollars printed by the US earlier. That’s why they’re needed.

#159 maxx on 06.22.13 at 8:46 pm

#107 Old Man on 06.22.13 at 12:13 pm

True. Cottages on islands!
Fire trucks might have a wee bit of a problem getting there- police, ditto. Response time? See what the insurance companies have to say about it.
Repairs? Stuff to dump? Lovely to schlep materials back and forth in the boat repeatedly.
What if a break in happens when you’re there? Yelling “help!” might be a waste of breath. Where do you run to?
Not a chance in Hades.
A “specialty” property with a non-negotiable package of lifestyle considerations. Good for dreamers I guess.

#160 espressobob on 06.22.13 at 8:56 pm

Had a property in Haliburton some time ago, what a pain in the ass. Old septic bed, Oil heating, leaky basement, sagging roof, and non-stop problems too long to mention. Black flies, deer flies, & mosquitos bigger than Mike Tyson! What the hell was I thinking????

#161 Chickenlittle on 06.22.13 at 9:01 pm

#33 Saint Herb:

“your kids need a house now, by the time you buy the house you won’t need it any more”

Why do your kids need a house so bad? Are four of them sharing a bed? Do you live in a cardboard box? Do they have shoes to wear to school? Are you forced to send them to work in the mines while your home owning friends and relatives live a life of ease? Is their growth stunted? Do they have learning disabilities or behavioural issues because they live with a “deadbeat” dad that forces them to live in a rental home? Do people point and laugh at you when you walk down the street? Do you wear a bag over your head?

I feel your pain! My husband and I just rented a new townhouse after renting a basement apartment for two years. I was in school and we wanted to live well within our means because I wasn’t working. Sounds horrible doesn’t it?
Well, when we moved we had people tell us that they were glad that we finally “grew up” and bought something. Boy, were they disappointed when I told them we were renting the place. I told them I would never buy a townhouse. They were not amused.

Whatever.

#162 Oceanside on 06.22.13 at 9:11 pm

#154 Daisy Mae on 06.22.13 at 7:40 pm
#116 Mike T: “The two happiest days in the life of a cabin owner are the day it’s bought, and the day it’s sold.

same with boats I’ve heard.”

********************************************
Don’t forget Range Rovers and, some say, Harleys..

#163 Chickenlittle on 06.22.13 at 9:12 pm

#148 on moving to Milton:

I don’t know about that. I just moved there. It is boring, and all of the goofy I’ll-never-grow-up-so-my-parents-bought-me-a-place-so-I-would-get-the-hell-out-of-their-basement-and-now-I’m-going-to-annoy-my-neighbours-with-my-loud-music-and-obnoxious-friends 30 somethings live there.

Oh ya, it’s great! :P

#164 Smoking Man on 06.22.13 at 9:14 pm

DELETED

#165 Derek R on 06.22.13 at 9:15 pm

#153 JimH on 06.22.13 at 7:35 pm wrote:
Modern monetary theory (much less the practice and praxis of the same) is not at all easy to understand; it takes work and a high degree of discipline, but thankfully, not a lot of smarts. Mostly hard work, concentration and study. Yes, the old gold standard made understanding the valuation and even the function of ‘money’ (in all its vicissitudes) much easier, but that, my friend is your problem.

True. People would do well to follow your advice and learn more about this MMT stuff. It may not be the whole story but it’s a big part of it.

And in my opinion the only thing that makes it difficult is that you have to unlearn a bunch of stuff which you thought was true but isn’t. That’s harder than learning new stuff.

#166 AK on 06.22.13 at 9:19 pm

#12 beck on 06.21.13 at 8:56 pm
“I challenge your take on the recovery of the american economy. I base this on Peter Schiff’s “The Real Crash”. Have you read it? My take on his book is that america’s real crash is yet to happen as the gov intervened by printing billions of dollars each month since 2008. (QE) This will only delay the inevitable crash and make it worse when it does happen as the US is now trillions of dollars further in debt and all this so called growth is not real as it is based on bail out money. The indicators of growth are housing and cars, yet this again is just spending money you don’t have. When QE stops the house of cards will crash.

Your take?”
——————————————————————–
Sorry to hear that you wasted your money on Peter Schiff crap.

Never bet against the U.S. Fed.

Back in 1980, many bet against Paul Volcker and lost their shirt.

And as JimH pointed out in post #153, many have been losing their shirt betting against Ben since 2009.

Good Luck to you.

#167 Smoking Man on 06.22.13 at 9:23 pm

DELETED

#168 Smoking Man on 06.22.13 at 9:34 pm

DELETED

#169 Smoking Man on 06.22.13 at 9:35 pm

This keyboard is possessed it’s messing up all my words.

#170 lee on 06.22.13 at 9:37 pm

It’s not right to look at an etfs distribution yield without accounting for return on capital. Many spit out hall of the dividend on the form of returning you your capital. In reality then, most etfs aren’t doing half as well as they say. They all publish the breakdown of the dividend payouts

Vacuous comment. ETFs do not conduct business, make profits or pay dividends. They pass through from companies held. — Garth

#171 AK on 06.22.13 at 9:51 pm

#73 Tony on 06.22.13 at 3:23 am
“Not too many people out in Calgary have heard of bricks. Maybe brick houses would hold up much better than water rot wood.”
——————————————————————–
Hey Tony,

I thought you worked in construction, Bud.

You know about Bricks and extreme cold weather? :-)

#172 Cici on 06.22.13 at 9:59 pm

I have to say, I love cottages. My ex’s family had a cottage, and I loved it and cottage life more than him.

We went up there every weekend with his family (aunt, uncles, cousins), and even when we weren’t getting along, we were having a great time. BBQ pit, pure lake and clean and private lake to swim in. Going back to the city was always such a drag.

Emotional my arse. I’d rather have cottage than a house.

#173 Herb on 06.22.13 at 10:18 pm

#157 Canadian Watchdog,

that link tells a better story than all of CREA’s fiction.

#174 Herb on 06.22.13 at 10:22 pm

#156 SM,

yes, bar, be tender to our poor, despondent SM.

#175 lee on 06.22.13 at 11:00 pm

Garth,

A lot of investors I believe do not get that part of the “distribution yield” on an etf is return OF capital. As time passes, more will learn this, and get a better picture of what the returns on etfs really are. All I am saying is that the returns are not as good as most people think they are. I think the industry known this and is happy people do not educate themselves better. By the way, I have been accussed of worse than making vacuous comments.

#176 neo on 06.22.13 at 11:22 pm

No it does not. It expands its balance sheet. — Garth

Oh my, that’s rich. So its balance sheet pre-crisis 2008 was $500 billion and now it is $3.5 trillion. Where exactly did all that money come from Garth. Enlighten us all! For the general population it is called counterfeit, for The Fed it is called “expanding the balance sheet”.

#177 Piccaso on 06.22.13 at 11:36 pm

#156 Smoking Man on 06.22.13 at 7:52 pm
One more thing before I get shit faced

———————————————————-

Well said… made me laugh cause i’m 3/4 there.

#178 a prairie dawg on 06.22.13 at 11:45 pm

#129 MrHulot

Seagal is a dead man

– — –

You mean he’s “Marked for Death” lol

#179 Smoking Man on 06.22.13 at 11:50 pm

After the rain, splashing my bare feet in puddles, tree debris sticking to the bottom of my feet. I’m wasted listing to Cohen on the head phones, watching all forms of humanity attempting to walk home wasted, love long branch, way better than young and Lawrence..

Ahhhhhhhhh

#180 Smoking Man on 06.23.13 at 12:42 am

DELETED

#181 Donald Trump on 06.23.13 at 1:14 am

Geez:

How many times has Smoking Man been FIRED …err “DELETED” on this one post ?

PS: Good thing he i$ related or Garth or hi$ a$$ be on the $idewalk

#182 JimH on 06.23.13 at 2:14 am

#153 JimH on 06.22.13 at 7:35 pm

Now, for the last time, the Federal Reserve DOES NOT ‘print money’!

___________________________________

so how does the Fed buy $85B a month in Treasuries and Mortgage backs? of course it prints it.

No it does not. It expands its balance sheet. — Garth
====================================

Only the United States Treasury prints US currency, and it protects that function rather jealously. Ben Bernanke has no access to those printing presses.

Perhaps a big part of the problem here is that the financial pundits and many investing blogsters love catchy, snappy ‘bumper-sticker’ phrases and would much rather toss out a false and misleading phrase like ‘Fed money printing’ than struggle with the many complicated intricacies of the actions of the Federal Reserve since the summer of 2008. (to be fair, no doubt Ben Bernanke has regretted many times the quote that earned him the moniker, ‘Helicopter Ben’!)

For that matter, the phrase “QE” is much handier to banter about than “Expansionary Monetary Policy”!

Yes, the Federal Reserve does directly exert controls over the money supply, and yes, for the past several years has attempted to stimulate the US economy by increasing the money supply. It has employed most but by no means all of the tools in its bag of tricks to do so.

It has lowered the Federal Funds Rate; the rate at which banks loan each other money overnight, thus making it cheaper and easier for banks to maintain their reserves and loan $$ to each other. This gives banks the liquidity and the right (but not the obligation) to loan $$ to you and to me. It makes credit, at least in theory, ‘easier’.

The so-called ‘open market operations’ are the next step and are an escalation if you like of said expansionary monetary policy. Treasury notes (and other assets and asset classes… even those god-awful mortgage backed securities) are swapped from banks in exchange for credit; and yes, the Federal Reserve does create that credit literally out of thin air. This is what is implied by ‘expanding the balance sheet’.

As you know, the Federal Reserve has also sold short-term notes to generate revenue to be used for the purchase of longer termed Treasury Notes. This has been going on for some time also. There have been other innovations also.

Yes, it’s true that most of the Fed’s energies over the past five years have been geared towards injecting more credit into the financial system. But they have not done so by ‘printing money’, a la Weimar Republic.

The US$ remains well within its 25 year trading range and is still, to the chagrin of the doom&gloom metal heads, very much in demand globally. American corporations have consistently been criticized over the past few years for being “cash cows” and hoarding both Treasuries and dollars. This would be a curious practice indeed if there was any fear of substantial currency debasement. (I have heard no reports of them hoarding gold, BTW)

There have been debates over the pros and cons of the Fed’s actions since 2008, and rightly so. But from where I sit, I believe that the expansionary monetary policy as enacted by the Federal Reserve has been successful in preventing a deflationary depression in 2008, and has been successful in stimulating substantial economic growth in virtually every sector of the US economy.

Go Bruins!

#183 Squatter on 06.23.13 at 7:06 am

#153 JimH on 06.22.13 at 7:35 pm
This may come as a terrible shock to you, but the US Federal Reserve DOES NOT ‘print money
————————————————–
I don’t care what Peter Schiff says, I don’t think we will get hyperinflation…I am not a doomer … but QE means the Fed is creating 85 billions of new money out of thin air every month and adding it to some account. It is equivalent to PRINTING physical money.
By the way, every time a bank loans you money for a mortgage, they borrow this money from the Fed who have to create new money, pretty much like printing money too…

#184 JimH on 06.23.13 at 8:38 am

#188 Squatter
“By the way, every time a bank loans you money for a mortgage, they borrow this money from the Fed who have to create new money, pretty much like printing money too…”
======================================
Please tell me you’re not serious?

#185 Bottoms_Up on 06.23.13 at 8:42 am

#180 lee on 06.22.13 at 11:00 pm
—————————————
Return OF capital from an ETF is not “return of your own money”, but return of the capital from the underlying companies….it’s a dividend payment, and the dividend comes from earnings….I think you’ve misread something somewhere….

#186 AK on 06.23.13 at 9:37 am

#188 Squatter on 06.23.13 at 7:06 am
“By the way, every time a bank loans you money for a mortgage, they borrow this money from the Fed who have to create new money, pretty much like printing money too…”
——————————————————————–
LMFAO….

#187 Derek R on 06.23.13 at 10:14 am

#188 Squatter on 06.23.13 at 7:06 am wrote:
…every time a bank loans you money for a mortgage, they borrow this money from the Fed who have to create new money…

You really need to learn how endogenous money works. Then you would know why that comment is so ridiculous.

#188 Squatter on 06.23.13 at 10:17 am

#192 AK on 06.23.13 at 9:37 am

#188 Squatter on 06.23.13 at 7:06 am
“By the way, every time a bank loans you money for a mortgage, they borrow this money from the Fed who have to create new money, pretty much like printing money too…”
——————————————————————–
LMFAO….
**************************************
Laugh all you want, but it’s true.
And when you repay the mortgage, it’s like the central bank was burning physical money.
Actually it’s just numbers in computers, as it would not be practical to print and burn money all the time!

#189 Mikey the RealTard on 06.23.13 at 10:59 am

Mikey you’re screwed….all you realtards that lived off Canadian RE in this bubble are officially toast. Now you have to find a job without any education. Try looking t McD’s , Starbucks, Walmart, get your resumes ready kid. The real world of careers where you actually EARN MONEY require an education beyond grade 12 underwater basket weaving. LOL.

Only in real estate can a retard like yourself get a license to lie about home values and then proclaim to be a real estate “expert” on their biz card!! The funniest part is all the idiot clients you have found , luckily, that actually believe your bullshit. There are people actually more delusional than yourself. Amazing.

#190 peter on 06.23.13 at 11:13 am

I want to be a builder, OMG more than 400k for that piece of brick and mortar. I guess many builders became millionaires thanks to the stupidity of many.

#191 lee on 06.23.13 at 11:28 am

#190 bottoms up.

I’ll check again. I hope you are right because if you are I’m retiring ten years earlier.

#192 Squatter on 06.23.13 at 11:34 am

You are delusional. Mortgages are funded by the institutions offering them. You metalheads have lost it. — Garth
————————————————–
No Garth I’m not a metalhead.
I don’t have a bunker and don’t stock months of supply of food. And I am not a racist.
But I have noticed the metalheads have a big propaganda machine, there are even “serious” think tanks who promote return to the gold standard.

If I get a mortgage at my bank, my bank will borrow
approx. 90 or 95% of the mortgage value to the Bank of Canada, and needs 5% – 10% as reserve.
This 90% or 95% of my mortgage is NEW MONEY that didn’t exist before, and goes in the pockets of the one who sells me the house or condo.

You agree on that?

Of course not. The central bank does not fund mortgages. End this useless debate. You are wrong. — Garth

#193 JimH on 06.23.13 at 12:21 pm

#191 you2slow

Please! Go and learn what the term “money supply”, really means! (even ask.com will get you headed in the right direction.) You might even want to compare the M2’s of the USA, China, and the EU. (The St. Louis Fed has the data from the IMF)

You are wrong; “Credit” does not equal “Money”.

If you spend some time with the very chart you provided on the US$ index in your post, you will see that the change in the index from 1974 – 2013 is ~10%; you might also grant the trend since the debacle of 2008 has been UP! This is hardly indicative of a current or an impending collapse. You might also note that the upward spikes in your chart are also associated with recessions, and are not at all good. The only thing remotely “pathetic” about the chart you provide is your own lack of ability to interpret it. Here’s a more current one of $USD: http://stockcharts.com/h-sc/ui?s=$USD

Note the trend. In investing, the trend is the only real friend you’ve got! The trend of the US economy is slow growth and gradual recovery in an atmosphere of global recession. Get over it.

#194 YouthInAsia on 06.23.13 at 12:32 pm

@Donald Trump & Heather Nova

There’s an old saying, arguing with one idiot makes two (I guess in this case three). I don’t possess the same apprehension as you two do…maybe being financially independant has more to do with a positive attitude than it does intelligence…either or I’m certain both of you lose.

I’m done with you two now. Mosquitos buzzing around my head quickly get squatted.

Regards!

#195 observer on 06.23.13 at 12:51 pm

Boo Hoo, the real estate gambles just lost a sweet quart of a mill in a flash. Big babies, are not the banks, which has the tax payers cover any risk!!!

You F-ers wanted to play the game just like stocks get use to Canadian investments VSE, Bre-X, Nortel. Its common for these pump and dump scenerios. If Real Estate was so so safe you thing the Rich will let the poor into it. For every rich guy sitting on top of the Pyramid, you need hundres of the poor suckers support them!

http://whispersfromtheedgeoftherainforest.blogspot.ca/

#196 JimH on 06.23.13 at 1:02 pm

#198 Shawn
Good summary! Thanks!
Readers who want a more in-depth overview can see http://www.investopedia.com/articles/economics/10/understanding-the-fed-balance-sheet.asp

#197 Donald Trump on 06.23.13 at 1:08 pm

#201 YouthInAsia on 06.23.13 at 12:32 pm

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

Sublet that space between your ears.

#198 Old Man on 06.23.13 at 1:14 pm

#200 JimH – my definition of money supply is simple. I open my wallet and if it is full need no supply, but if it is empty like now need some money supply quickly.

#199 Gunboat denier on 06.23.13 at 1:20 pm

200 Jim:

“You are wrong; “Credit” does not equal “Money”.”

Interesting. A topic that has been debated here before. It can be quite moot though, as it is a definition that is being challenged, and not the resulting effects.

The question to ask Jim is “Do you have money in the bank?” If your account statement reads a $1000 balance then most people would say you do. But what you really
have – and you know this – is just a credit. This credit can be used to pay for things. This can be done by cash (an
increasing rarity) or more commonly by interac, cheque
or electronic funds transfer. Therefore, this almost
universal acceptance of credit is certainly the equivalent
of money.

The ultimate test is the issuer and backer of currency
accepts my cheque or fund transfer as payment for taxes.

#200 Ralph Cramdown on 06.23.13 at 1:47 pm

OK kids: Banking.

It’s not that difficult. Really.

First off, what is a bank? A bank is an intermediary that will borrow money from you if you have too much, and pay interest. It will lend money to you if you need it and are worthy. It will charge more interest than it pays on deposits. Some goes to the depositors, some goes to overhead, the rest is profit. This is pretty damn simple.

Fractional reserve banking: In order to prevent a situation where you ask for the return of money you lent the bank and the teller says “Sorry, we’re fresh out, as we just lent the last of it to Jones this morning,” banks hold RESERVES; money that they don’t lend out. Prudent bankers hold just enough reserves — too much and they forego profits, too little and Smith leaves the bank and hollers “they won’t give me my money back” and suddenly everyone wants their money back. Because bankers have sometimes been imprudent, the government sets a minimum on reserves, say 5%. So now banks can only lend 95% of their deposits. If banking wasn’t fractional reserve, banks would have to keep all of the money you lend them, so they wouldn’t make any money lending it out, so they’d have to charge you for the privilege of keeping it safe for you. This is pretty simple.

Sometimes the blue bank finds itself a bit short on deposits and with more people who want to borrow, while the green bank is in the opposite position. Profits are increased for both banks if green lends blue some of its cash for a while. This is pretty simple.

Sometimes the green bank isn’t so sure the blue bank’s loan books are in such great shape and is hesitant to lend to it. If blue can’t borrow, blue will have to call in demand loans or sell assets (i.e. loans) to increase liquidity. Selling assets will likely be at fire sale prices, which could turn a liquidity problem into a solvency problem. Calling loans will disrupt economic activity and lead to borrowers increasing demand for loans at other banks. So we invented the Lender of Last Resort, the central bank. It promises to lend funds to any solvent bank at rates above what that bank could borrow for on the street. This prevents a bank’s liquidity problems from turning into solvency problems, and from spreading to other banks. This is pretty simple.

It’s all pretty simple, and that is how the banking system has evolved over the last five hundred years. Please feel free to look with GREAT suspicion upon sources which claim that that ain’t how it works, even though that is exactly how it has evolved, as any history of banking will tell you. And don’t confuse monetary policy (where the government creates or destroys money in attempt to stimulate or cool the economy) with the central bank’s lender of last resort function.

Banks can raise capital from other sources — in fact they are required to. They can issue common and preferred stock, and of course they can sell bonds, which will likely have to pay a slight premium over whatever the government’s bonds are paying.

#201 Old Man on 06.23.13 at 1:50 pm

I read this debate about the FED, and could care less who is printing or not printing money. This is not the issue, but rather having some dollar bills as an exchange for goods and services. The system works fine for me as throw down a $20.00 to pay for a bill to be paid, and all is well. Try paying with a troy ounce of silver, and see what happens.

#202 Mikey the Realtor on 06.23.13 at 1:54 pm

#195 Mikey the RealTard on 06.23.13 at 10:59 am

you’ll be happy to know that I was turned down last week for a mcd’s job, I was way overqualified. Today I’m here trolling for business.

I wish I could say that re prices will come down to a more manageable price but I can’t, what you and the rest of the people who read this blog can’t comprehend is that re is the only thing that matters to a large percentage of people, in fact there is an article in the NP talking about Canadians being re obsessed and would give up their newborns to keep their house, sad but true.

#203 Keith in Calgary on 06.23.13 at 2:13 pm

An interesting thread subject would be the future of the Calgary and area RE market given the events of the last few days…………..

#204 Old Man on 06.23.13 at 2:17 pm

The money market involving commercial paper for short term loans or longer becomes an eye opener as for a short period of time worked all areas of a major brokerage house as part of my education which was a part-time job. Lets say GM has too much money with $millions in cash, but lets say Union Carbide is a bit short to meet a payroll. So Union Carbide puts out a call for $5 million to borrow for 7 days, and a deal is done between a borrower and a lender with a interest rate to pay and a brokerage fee, and all is well.

#205 Archie on 06.23.13 at 2:23 pm

So is this event going to trigger a housing crash in Canada? Take a look at the properties for sale on MLS in Calgary/Canmore….most of those must be badly damaged.

Especially this gem going for 900K right on the river in Canmore: http://www.realtor.ca/propertyDetails.aspx?propertyId=13280859&PidKey=-376464601

#206 Old Man on 06.23.13 at 2:28 pm

I will tell you one story that I saw which blew my mind away, and will not mention names. It was a religious group of women in Hamilton in 1971, and came to the commercial paper market with $5 million to offer such for a 7 year term for a AAA corporation to bid on this money. Such was done, and then I knew that was in the wrong profession, and should open up a Church as that is where real money can be made.

#207 Wally on 06.23.13 at 2:53 pm

Now, for the last time, the Federal Reserve DOES NOT ‘print money’!
==========================

Splitting hairs there.

The Fed buys bonds from the banks, and in return credits the banks Cash Reserves at the Fed (ie it creates the money by an accounting entry). While this isn’t the same as physically ‘printing’ the money, since the banks can now use these reserves as cash (and lend it out), it works out to the same thing, which is why most people (including leading economists) refer to this as money printing.

The issue is that the banks have been leaving much of the money at the Fed, and not lending it into the economy. So the overall supply of money in the economy (M2) has been flat. If the Fed hadn’t been ‘printing’ this new money, things would likely be worse, and M2 would be falling (deflation).

It is not ‘the same thing’, since printing money for general circulation increases the velocity of money, leading to inflation and currency devaluation (making the metalheads happy). The current actions, as you point out, have not had that result. This is in no way similar to ‘printing money.’ Once again, that is a myth. — Garth

#208 Nemesis on 06.23.13 at 3:16 pm

“There’s no ‘velocity’ without circulation.”

I think I heard on that on TV once, AuldPol… it was probably buried somewhere on an ad for ‘MensProblems’ in the midst of a Lang&OLeary tirade.

#209 Piccaso on 06.23.13 at 3:57 pm

According to TransUnion, the average Canadian’s non-mortgage debt – which includes credit cards, car loans, installment loans and lines of credit – reached a whopping $26,935 in the first quarter. In BC alone, the debt per person has now reached a staggering $38,619, surpassing Alberta’s $36,223.

Factor in housing costs and we’re looking at a country that is living well beyond its means.

#210 Putin sez on 06.23.13 at 4:37 pm

Tell that Steven Seagull to get his hands off the back of my head

My Left hand is an a strategic “vise grip “position

#211 oceanside on 06.23.13 at 4:52 pm

MSM News…Michael Campbell the “finance” expert on Global Vancouver was commenting on the market correction, bonds etc.. this morning and summarized with the fact that this is long overdue and interest rates are now on their way up and we should be prepared.

Was looking at housing stats for Central Vancouver Island yesterday . Over the last three years the sales in April, May and June are down just a bit but sales prices are down around 15% and often more from 2011/2012. Lots of action on good homes in the mid $300,000 range and and under. Over $500K is pretty much dead, the higher end homes have to be at that magic “$499,000” if they really want to sell. The fall market will be interesting.

Looking at Penticton and Summerland in the Okanagan, LOTS of homes on the market for 200 to over 400 days and oddly enough hardly any price reductions, peculiar how one area can be so deluded as to wait for “things to get better” with what is pretty obvious to most…

#212 Canadian Watchdog on 06.23.13 at 4:58 pm

#218 Piccaso

If only we knew how much non-mortgage debt is being used to pay mortgages, because that’s what indebted individuals are likely to do if they can.

When people can borrow by withdrawing cash to pay another debt at the same ATM machine, at the same time, it’s already a crisis.

#213 Always Confused on 06.24.13 at 10:11 am

A cottage is not an investment, it is an expense, better viewed as a toy. But, don’t tell that to someone who has a cottage (well, except me), they will argue until they are blue in the face about how their shitty little place on the lake will make them money. All I say is do the math, addition is not difficult, and numbers don’t lie.

#214 SamaritanSays on 06.24.13 at 12:13 pm

#52 prairie person

Have you been to Uptown recently? I challenge anyone to find a store that doesn’t have massive discounts plastered in their windows. Some as high as 60% off already reduced items! Summer sales or struggling retailers?

Sadly the item I wanted was full price and it was a an item I actually needed :(