Little nibbles

DONUTS

Mortgage rates are poised to rise. Yeah, again. It’ll be the fourth round in the past month, adding another tenth of a point (or more) to five-year money. This is like being digested by ants – an endless ordeal of little nibbles that ends up doing serious damage.

It was only weeks ago a five-year fixed loan could be snared at a respectable bank for 2.89%. Now it’s 3.69%, on its way to within piddling distance of 4%. Those deal-of-a-lifetime 10-year home loans in the 3.5% range are gone. Forever.

But don’t be surprised. I told you this was coming. Get used to it.

On Friday, five-year Government of Canada bond yields pumped up like an blowfish watching Oprah. The yield has exploded by seven-tenths of a point since April – which is an increase of 58%. Because banks fund fixed mortgages in the bond market, they’ve bloated as well – and this has all happened without the Bank of Canada lifting an elegant, erudite, pasty finger.

It makes rubes of those who have been coming to this pathetic site for the past two years saying interest rates will never again increase. In fact, most new homeowners (according to a BMO survey) actually believe mortgage rates will be unchanged when they renew in five years. Can you imagine the consequences of all those 3% mortgages renegotiated at 5% or 6%? The gore will be knee-deep.

This is happening because the US economy is absolutely and irrevocably in recovery – something else the bullion-licking doomsters who come here can’t comprehend. (By the way, gold lost another thirty bucks on Friday, and is headed back into the abyss. Hope you sold last month.)

This is what most people need to know about macroeconomics: Efforts to prime the economy with government money worked.  About 200,000 jobs a month are being created in the States. House prices are rising an average of 1% every four weeks. Car sales are the best since 2007. Homebuilding is back. Unemployment’s at a four-year low. The stock market has risen 140% since 2009, and 14% so far this year. Corporate profits are forecast to swell 5.5% in the third quarter and 11% by the end of the year. Yes, lots of jobs are part-time and more people want to work than have employment, but the improvement in a year is dramatic.

Good economic news means government stimulus will end. That has people bailing out of bonds, which benefited from the largesse – so prices in the bond market are falling, and yields rising. Hence, mortgages are fattening. And that means Canadian real estate’s in the crosshairs.

This will continue, since most poohbahs now agree the final months of 2013 will bring an even stronger US performance, higher rates and a formal schedule for an end to the orgiastic bond-buying program Washington has been on.

But that’s not the worst part, at least for the property virgins whose juices lubricate the housing market in Vancouver, Calgary, Toronto and those other inconsequential cities. Mortgages are not only more expensive, they’ll soon be harder to get.

Quietly last week, CMHC issued new rules for how debt service ratios are calculated, to be enacted by lenders by the end of the year.

For example, if you apply for a mortgage and have an outstanding LOC or credit card debt, then at least 3% of that debt must be included when calculating your ratio (now you can ignore it). For people with HELOCs applying for mortgage renewal, interest-only payments will no longer be accepted when determining what you can borrow. Instead the debt will be treated as if amortized – meaning your debt load goes up and you qualify for less. A new formula is being applied to calculate heating costs which can double or triple the overhead for a property, reducing the amount you qualify to borrow. And there are tougher regs for people who have variable income (like employees who get bonuses or tips), or own rental property. (You can read more here.)

Are these changes going to crash the market? Pshaw. Absolutely not.

But it’s more ants. Add them to the end of 30-year amortizations, rising household debt levels, sticky asking prices, fibbing, discredited realtors and four mortgage rate increases since the end of April, and the answer changes. Every day the beasties multiply and advance, crawling and chopping their way towards the reckoning.

Checked your pants lately?

186 comments ↓

#1 Mark on 07.05.13 at 7:39 pm

I actually believe stricter debt service ratios are long overdue. People unfortunately need to be protected from themselves when it comes to personal finance. Kids should be taught this stuff in high school.

#2 Adam Jensen on 07.05.13 at 7:40 pm

I never asked for this.

#3 dangeresque2 on 07.05.13 at 7:43 pm

Great articles lately (and as always) Garth! Thanks for continuing to provide all of this great information!

#4 Chester on 07.05.13 at 7:46 pm

1st Maybe

#5 Duke on 07.05.13 at 7:47 pm

Last time I checked my pants they were full of gold. Sure it can go under the $1100-1200 cost of production for a while, but it will bounce back. Either that or the mines will close, demand will grow as the price falls and it will go up again.

US oil consumption is directly correlated with GDP. Last time I checked oil consumption continues to decline in the USSA. And the price of oil continues to decline.

I agree with you, stay liquid. A little bit of gold and silver and a lot of US Dollars. Is that liquid enough?

#6 Duke on 07.05.13 at 7:49 pm

sorry price of oil continues to RISE!!! Rising oil means rising mining costs for precious and semi-precious metals.

#7 George on 07.05.13 at 7:51 pm

Garth. With regard to your comment “the US economy is absolutely and irrevocably in recovery”, please check out the following chart of the total credit market debt in the United States versus its gdp.

In addition the U.S. also has many tens of trillions of dollars of unfunded liabilities in their Medicare and Social Security programs.

http://research.stlouisfed.org/fredgraph.png?g=kkN

#8 Vangrrl on 07.05.13 at 7:52 pm

A 65 yr old friend who still has a mortgage (about 140k on a condo she bought a couple yrs ago for 225k or so) is stressed about her debt- 10 grand overdraft maxed, and credit cards a few grand maxed. She’s fit and healthy and still works but struggles to pull together odd jobs, collecting her pension now. I suggested she sell her place but she said ‘It hasn’t risen in value yet’.
Oh oh.
I said it’s not going to anytime soon (and time is not on her side, though I didn’t say that). It’s a one bedroom in PoCo. She used to sell real estate so is big on ‘build equity through real estate’. I tried to explain ETFs, preferreds, to get out of owning and invest what she can but she flat out doesn’t trust the stock market.
I’d be concerned she will read this and recognize herself but I had sent her the link to greaterfool a while ago and she ‘didn’t have time to read it’… I’ll see if I can get her to write you a personal letter, Garth!

#9 CrowdedElevatorfartz on 07.05.13 at 7:56 pm

Financial death by 10,000 ant nibbles……sounds like some sort of ancient chinese torture……..
Wait a minute.
What’s old is new again.

#10 TurnerNation on 07.05.13 at 7:57 pm

Bonds got Dean-ed today.

#11 Dean Mason on 07.05.13 at 8:04 pm

You talk about the younger generations of home buyers as being house horny but now with rising mortgage rates and soon coming to all of Canada falling real estate prices there are others that will feel the financial pain.

I’m talking about baby boomers and seniors that will hold on their properties in a bad real estate market but they still need money since their financial assets are small plus little to no savings.The reverse mortgage with current rates of 5.45% 5 year fixed will rise with mortgage rates going up and by the time they need money it could be easily 7.00% to 7.50%.

I think that is why they call it CHIP,they chip away at your house’s equity little at a time until the lender owns it.A 7.00% mortgage rate compounded for 17 years is 3.1588 times more than triple the original amount you borrowed.

The maximum you can borrow now is 50% of the equity value in your home so for simple illustration purposes a $500,000 house with no mortgage or any debt on the house will be eligible for $250,000.It will be $789,700 owed when the homeowners are deceased,moved out of the house 17 years later. 65 year old year old until he and she is 82 as an example.

This is why I think that the 50% maximum allowed amount that can be borrowed for CHIP is going to have to come down or something else has to give.By the way it’s provided by Home Equity Bank.I guess they know that your home’s equity is now the owned by the bank and gave it the perfect name.

#12 pathcontrolmonk on 07.05.13 at 8:04 pm

You forgot to mention China’s recent “credit crunch” and as the FT put it, their central bank squashing the shadow banking “Ponzi-type” credit schemes.

http://www.ft.com/cms/s/0/db5c83dc-da67-11e2-8062-00144feab7de.html#axzz2YDdHRqNd

#13 Publius Enigma on 07.05.13 at 8:06 pm

“#5 Duke on 07.05.13 at 7:47 pm
Last time I checked my pants they were full of gold. Sure it can go under the $1100-1200 cost of production for a while, but it will bounce back.”

60% of Barrick’s production (i.e the largest senior miner on the planet) can be carried out at $675-$700 per ounce.

You had better check your pants. Again.

#14 Smoking Man on 07.05.13 at 8:10 pm

So dramatic Gartho, yes you called it but, unless the over night rate moves it means nothing, come renewal time for mortgage slaves they go with variable, over night ain’t going nowhere so long has we have negative trade balance..

Love having a life long export development dude running BOC…

#15 Squatter on 07.05.13 at 8:15 pm

But that’s not the worst part, at least for the property virgins whose juices lubricate the housing market in Vancouver, Calgary, Toronto and those other inconsequential cities. – Garth

I see you are a house porn publisher!

#16 In the Valley on 07.05.13 at 8:18 pm

I checked a realtor’s pants. They were on fire.

#17 TurnerNation on 07.05.13 at 8:20 pm

Forgot, this month’s Alberta Venture magazine is again pumping the idea of a Provincial Sales tax. (It’s not different there.) Began soft pedalling it a few issues back.
King Ralph would not be amused!

Anyway, on last trip there this year really enjoyed the newer place, http://calgary.craftbeermarket.ca/
The city is maturing.

#18 Shy Blawg Dawg Too on 07.05.13 at 8:21 pm

All those ‘niblets’ – inflation, no pay raises, door-to-door solicitors, street beggars, nickel and dime games of banks … it never ends!

#19 Dean Mason on 07.05.13 at 8:28 pm

To Turner Nation

Bond prices can go up or down.I am always winning because I am collecting my interest no matter what.I get paid when I am sleeping and sitting on my ass doing nothing.You better watch out.

You could be downtown benched soon.

#20 Dean Mason on 07.05.13 at 8:29 pm

The prior comments was for Turner Nation #10.

#21 bigtown on 07.05.13 at 8:45 pm

In the states some STUDENT LOANS are doubling and in Canada we will soon see many kinds of debt showing big increases.

We have spent the past ten years with very low rates and the whole scenario has changed rather quickly almost the blink of an eye.

I remember back when I started out in the 70’s people on minimum wage buying houses and cars…I am an old boomer now deep into my 50’s.

#22 Freedom First on 07.05.13 at 8:45 pm

Little nibbles:) ……Garth, great article, the truth, and delivered with eloquence and humor as is your trademark. Also, you have an amazing knack for being able to deliver the stark reality facing many Canadians with a kind and tactful manner, another trademark of yours.

I shudder at the thought of me making myself vulnerable to rising interest rates. I equate someone having all of their net worth in one asset as engaging in extreme financial behavior. Add to the fact that many Canadians do this, and also, many Canadians are also leveraged to the tune of hundreds of thousands of $$$$$$ on top of it, at record house prices, and record low interest rates at the same time, and well……anyone can see how kindly Garth delivers the truth to the insane. Garth, sorry, I am trying to learn from you on how to be more diplomatic in saying the truth.

#23 Rob on 07.05.13 at 8:47 pm

I was hoping that RE would crash hard and lending rates would stay low like the USA. But if the rates have to go up to kick speed up this crash; so be it.

#24 Duke on 07.05.13 at 8:57 pm

#13 Publius Enigma

“60% of Barrick’s production (i.e the largest senior miner on the planet) can be carried out at $675-$700 per ounce.”

Last time I checked Barrick is unprofitable at $1250! It will be bankrupt at $700 and shut down most of their mines. Where will the Chinese and Indians get their gold?

#25 X on 07.05.13 at 9:07 pm

re #19 – yeah gold and interest from US$, that will get you rich. LOL.

#26 Dean Mason on 07.05.13 at 9:14 pm

#10 watch out you can get downtown benched soon

#27 Duke on 07.05.13 at 9:23 pm

The all-in costs for the three largest gold miners are projected from their annual reports as:

Barrick Gold (NYSE: ABX): $950 to $1025 per ounce
Newmont Mining (NYSE: NEM): $1100 to $1200 per ounce
Goldcorp (NYSE: GG): $1000 to $1100 per ounce

#28 Dean Mason on 07.05.13 at 9:29 pm

To X #25

Go sleep on your bench downtown.

#29 Donald Trump on 07.05.13 at 9:30 pm

This month’s real R/E headline? Benchmark price of a Whistler condo has now fallen 41.2%

http://whispersfromtheedgeoftherainforest.blogspot.ca/

===================================
I don’t understand.

Wizzleturd hosted the 2010 Olympics.

Basically a nothing town meant for hippies high on (fill in the blank_______)

Why wouldn’t people want to invest in RE that is in an overrated sh*thole that had a (2) week party which basically bankrupted the Province.

I gotta get a new Ouija board.

PS anyone’s sister need a date tonite?

#30 Alex K on 07.05.13 at 9:35 pm

#24Duke
Venezuela- they have a shit load of that shiny stuff there

#31 Robbie on 07.05.13 at 9:39 pm

#24 Duke
I Googled “Barrick gold cost of production” and got this recent quote from FORBES about Barrick’s cost of production. Google first, make statements second is my motto!

“The production of gold (7.4 million ounces) and costs ($584 per ounce) were in line with guidance estimates.”

Here’s an April 24, 2013 comment from FORBES about Barrick:

“The company reaffirmed its gold production guidance of 7 to 7.4 million ounces at total cash costs of $610 to $660 an ounce”

#32 Alex K on 07.05.13 at 9:39 pm

to Mikey the realtor,
too bad I can’t comment about your dreams here you looser
Are you going to tell us about that 2 year old listing?
BTW, don’t forget the empties Monday night-South Richvale a lot more money in empties here than you’re making selling nothing

#33 Stenater Duffy on 07.05.13 at 9:39 pm

Send me $90,000 for my problems to go away.

#34 eh, canada? on 07.05.13 at 9:41 pm

#13 Publius Enigma
That’s why their website is using $918 avg. cost for 2012. What do they use to mine? Solar power or oil? If petrodollar breaks (which will and that’s another big reason to buy gold), I will see your funny valuations. :)

#35 darkselling on 07.05.13 at 9:47 pm

You never actually have stats about Calgary but just slip it in every now and then when you talk about overheated markets (Vancouver, Toronto…. oh, Calgary too).

OMG. You mean it’s different there, cowboy realtor? — Garth

#36 observer on 07.05.13 at 9:50 pm

All these little things, until the straw that will break the Camels Back.

The Canadian dollar is now 1.06 to one Greenback. Did you remember just a year ago the Canadian dollar was worth more.

Add that to the formula, if the canadian government doesn’t want to see 1.50 per dollar then guess what interest rate must rise because if you bought the greenback a year ago you will be up by 8%.

I predict 1.10 by the end of the year. Then we can change our plastic dollars to Peso’s

#37 AK on 07.05.13 at 9:53 pm

#31 Robbie on 07.05.13 at 9:39 pm
“The company reaffirmed its gold production guidance of 7 to 7.4 million ounces at total cash costs of $610 to $660 an ounce”
——————————————————————–
Barrick has several mines in Nevada that operate at an average cost of $250.00.

#38 DJB on 07.05.13 at 9:56 pm

The legacy that Carney left behind. He is already putting his cheap interest policy in place over the pond.

#39 HogtownIndebted on 07.05.13 at 10:02 pm

From the mists of time…..a sad conversation relevant for today especially:

FO Nice day

CA Beautiful

FO That’s where old (unintelligible) lives there I guess. What do they call it? High Park?

CA Oh

FO Those apartments there. See them? The high-rise there

FO Yes It looks over the (unintelligible). It’s quite a good view out over the lake there.

SO The housing in Toronto is out of this world. Expensive, yeah.

FO Yeah, expensive all right.

FO Yeah, a lot of people have made a lot of money.

CA Yeah, Ill say.

This was the conversation in the cockpit of Air Canada Flight 621 on July 5, 1970, 43 years ago today, shortly before it crashed, taking 109 souls. Their families are still around us, some commenting recently about finally getting a memorial put together in the crash area which has lately become a real estate development. Not much thanks to Air Canada, which resisted the idea for a long time. I remember clearly the day it happened, as a toddler, the first plane crash I’d ever heard about.

The rest of the transcript is more intense, to much to indulge in here. But the banality of doomed people in a cockpit talking cheerfully about the real estate of the GTA back then strikes me now, from a time when a house could be had here for $30K.

I don’t want to trivialize the painful memories in any way, but it occurs to me today as a kind of grim analogy for our housing situation today. So many across Canada have been riding happily along for years now, indulging in and talking about a real estate bubble, unaware of what may lie ahead.

May the victims of Flight 621 and their families find peace.

#40 Al on 07.05.13 at 10:07 pm

Good time to buy REITs for the rebound

#41 Driesdtl on 07.05.13 at 10:07 pm

The structure of the US “recovery” is based on printed money i.e. tax funded debt and has been for the last 30 years of debt fueled spending. How is a swift structural change to sound economic fundamentals going to take place once this is withdrawn?

#42 Nemesis on 07.05.13 at 10:08 pm

“This is happening because the US economy is absolutely and irrevocably in recovery” – Lord Lunenberg

The GauntletDrops. I’ll get back to y’all…

LateAugust. Or so… Possibly MidSeptember… I cannot rule out being detained at Ellsworth.

http://youtu.be/6bos2ZTGNZc

#43 The Man From Nantucket on 07.05.13 at 10:10 pm

#13 Publius Enigma on 07.05.13 at 8:06 pm

“#5 Duke on 07.05.13 at 7:47 pm
Sure it can go under the $1100-1200 cost of production for a while, but it will bounce back.”

60% of Barrick’s production (i.e the largest senior miner on the planet) can be carried out at $675-$700 per ounce.

$700 was the production cost number I heard as well. Perhaps not much to stop the rocks from rolling down a steep slope to $850 or so, is there?

One expert was calling for a mini run to about $1400 before the plummet.

Such would not surprise me, but I’d say proceed with caution, boys and girls! I might get back into gold one day, but I’m going to confirm the bottom rather than predicting it.

#44 Duke on 07.05.13 at 10:10 pm

#31 Robbie

Read below from the article link on the bottom. The cash costs do not reflect taxes, exploration and administration budgets. Why did Barrick just canned 1/3 of their office in Toronto? That’s like saying: I make 50,000 per year! True but after tax and paying for transportation to get to work you are making $25,000.

Investors and analysts have long complained that the “cash costs” reported by senior gold miners do not reflect the real cost that goes into producing an ounce of gold. The miners have finally done something about it, introducing an “all-in” cost measure that includes sustaining capital, general and administrative expenses, and exploration expenses.

http://business.financialpost.com/2013/02/07/all-in-cash-costs-dont-go-far-enough/

#45 JSS on 07.05.13 at 10:10 pm

Hey you all out there…

Is it still a good deal to buy XRE (REIT ETF) these days?

#46 Duke on 07.05.13 at 10:13 pm

#36

“Barrick has several mines in Nevada that operate at an average cost of $250.00.”

Link??

#47 The Man From Nantucket on 07.05.13 at 10:14 pm

#21 bigtown on 07.05.13 at 8:45 pm

In the states some STUDENT LOANS are doubling

Total value, or average value doubling?

I dunno, is this even news? Economy goes in the shitter, folks get laid off, many of the layoff victims go somewhere to revise and update their obedience certificate.

This parameter might drift back to normal if the recovery keeps steaming ahead.

#48 Mark on 07.05.13 at 10:18 pm

US economy in a recovery? What a joke. Yields are rising in the US because nobody believes there’s a recovery and they want out. Its a debt financing death spiral, similar to what any bankrupt person or company would experience. Not a sign of growth or significant economic performance.

The longer you say that the dumber you appear. — Garth

#49 Donald Trump on 07.05.13 at 10:18 pm

#16 In the Valley on 07.05.13 at 8:18 pm

I checked a realtor’s pants. They were on fire.

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

I think everyone should check their pants…at least on a once -a -week basis.

You never know what you may be “subletting” and not getting a taxable benefit.

#50 FATHER on 07.05.13 at 10:25 pm

GARTH YOU ARE THE TOP DAWG
VERY SMART
DOWN TO EARTH
KINDA LIKE OUR DALAI LAMA
AND TO TOP IT ALL OFF U R SO CREATIVE (awesome pictures everyday)

#51 Tony on 07.05.13 at 10:35 pm

Re: #7 George on 07.05.13 at 7:51 pm

The U.S. is kaput, i sum it up as capitulation of the American workforce. Of course what we see is an unemployment rate which will never fall. The average American worker (former worker) has given up completely forever since jobs are gone forever in America. It’s much the same as the rise and fall of the Roman empire. The U.S. is now a permanent fixture etched in third world status for eternity. A once proud nation where people cared but they’ve thrown all their morals away and just accepted their fate surviving on food stamps and eating out of garbage cans. Yes that is the fate of the average American today.

The average American does not eat out of garbage cans. Your posts have reached comedy status. At least you’re leaving us laughing. Bye. — Garth

#52 Info on 07.05.13 at 10:38 pm

This has to be the most sarcastic blog post you’ve ever wrote.

$104 oil today, as the economy improves, can you see where this is going?

EIA Brent 1987-2013

The floor is yours.

Geopolitical. Yawn. — Garth

#53 FATHER on 07.05.13 at 10:45 pm

eating out of garbage cans, what a MORON, this guy must be sniffing glue

#54 AK on 07.05.13 at 10:52 pm

#46 Duke on 07.05.13 at 10:13 pm
“#36

“Barrick has several mines in Nevada that operate at an average cost of $250.00.”

Link??”
——————————————————————–

“Production at Cortez in 2013 is anticipated to be 1.17-1.24 million ounces of gold at total cash costs of $255-$275 per ounce1.”

Barrick Link

#55 Mr Happy!! on 07.05.13 at 10:56 pm

(By the way, gold lost another thirty bucks on Friday, and is headed back into the abyss. Hope you sold last month.)

I DID!!! At $1400.00 :)))

Now I have a fat envelope of cash waiting for gold to hit $200.00 and I’ll buy back in!!

Uh…when will that be????

#56 Ronaldo on 07.05.13 at 10:57 pm

#24 Duke –

”Where will the Chinese and Indians get their gold?”

At the rate Barrick stock is falling, I expect they’ll probably buy the company. It’s a bargain right now.

#57 Mikey the Realtor on 07.05.13 at 10:58 pm

#32 Alex K on 07.05.13 at 9:39 pm

to Mikey the realtor,
too bad I can’t comment about your dreams here you looser
Are you going to tell us about that 2 year old listing?
BTW, don’t forget the empties Monday night-South Richvale a lot more money in empties here than you’re making selling nothing
—————————————-

I’ll tell you what my dreams are so you don’t have to stress those 2 brain cells you have left thinking about it, it’s to make a lot of money and live on a nice island far away from ‘loosers’ like yourself, I hope that helps.

If you want to contribute to my dreams then start packing up those empties you’ve been going on about and start saving the money for a nice down payment instead of spending it on your daily crack fix.

#58 JimH on 07.05.13 at 11:05 pm

Just a note on the fall of gold, and the goldbugs’ forecast of the soon to come “bounce”.

Gold touched $1900 in the summer of 2011. It has dipped to $1200; a decline of ~$700 or 36%. To regain $1900 from $1200 now requires an increase of $700 or 58%.

Should gold dip further to $950, it will have lost 1/2 its value or 50%. To regain $1900 from $950 requires a gain of 100%.

There is an old expression that these simple numbers explain beautifully; “Bulls always have to take the stairs up, while the bears always take the elevator down”.

#59 David W on 07.05.13 at 11:05 pm

Great post. My mortgage broker called me today to preapprove again to lock in a decent rate for a fee months as they’ll keep shooting up.

#60 FATHER on 07.05.13 at 11:08 pm

u guys r hilarious

#61 JimH on 07.05.13 at 11:11 pm

Mikey the Realtor is just an amateurish TROLL…

C’mon, folks!

#62 Charles Ponzi on 07.05.13 at 11:18 pm

It sure does feel like 1932. Keep singing for the U.S. ‘recovery’ Garth:

Happy days are here again,
The skies above are clear again
Let us sing a song of cheer again —
Happy days are here again

All together, shout it now —
There’s no one who can doubt it now
So let’s tell the world about it now
Happy days are here again

Your cares and troubles are gone —
There’ll be no more from now on!

Happy days are here again,
The skies above are clear again
Let us sing a song of cheer again —
Happy days are here again

Amazing to see the fear muppets invade this blog, hoping for crisis so their gold will revive. So many unhappy people awaiting misfortune. — Garth

#63 Waterloo Resident on 07.05.13 at 11:21 pm

Garth said: “It makes rubes of those who have been coming to this pathetic site for the past two years saying interest rates will never again increase.”

oops! I’m guilty of being one of those guys. Now I’ve got egg on my face.

#64 Bubble, What Bubble? on 07.05.13 at 11:24 pm

#53 FATHER: eating out of garbage cans, what a MORON, this guy must be sniffing glue
__________________________________________
it is just a metaphor, as it can be easily seen… there is no need to call someone m….n for using it… the whole US recovery is a methaphor if you look at it less enthusiastically… though… never mind

#65 Little nibbles — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer on 07.05.13 at 11:33 pm

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

#66 Piccaso on 07.05.13 at 11:49 pm

Todays house horns are like yesterdays gold hoards.

Oooooops

#67 Alex K on 07.06.13 at 12:24 am

Mikey the realtor
being lonely and without a prospect of any sales your desperation is starting to show.
Everyone here knows you’re a big looser.
wishful thinking about making money because people like you never make it, you hear me Mikey NEVER
Keep dreaming because that’s all you’ll ever do “LOOSER”

#68 James on 07.06.13 at 12:33 am

And now for my weekly plea for some kind of comment on Regina. Prices fell y/y for June, for the first time in a very long time.

Any comments Garth pretty please?

#69 Save the fees on 07.06.13 at 12:34 am

#45 JSS on 07.05.13 at 10:10 pm
Hey you all out there…

Is it still a good deal to buy XRE (REIT ETF) these days?
——————–

Why not just buy their top holding (rei.un) or holdings, and save on the 0.55% MER? Also, higher dividend.

http://ca.ishares.com/product_info/fund/holdings/XRE.htm

#70 Smartalox on 07.06.13 at 12:40 am

What we have here is a case of ‘time-dependent combinatorial complexity’, where the word “complexity” is shorthand for ‘probability of failure’.

When dollars exceeds costs, the probability of failure is low; but then the rules start to change: no single change will increase complexity to a critical level, but over time, the complexities combine to increase the probability of failure to the point that failure becomes a certainty. Often, the combination of complexities is unnoticed, especially when the complexities are inter-related, like the way that taxes or interest are proportional to the value of the property,

The solution to unsustainable levels of time-dependent combinatorial complexity is to ‘re-set the system’, usually by re-setting the value of the single largest contributor to the complexity.

In the case of housing affordability, the largest contributor is high housing costs – with housing prices the preferred candidate for a re-set.

#71 angela on 07.06.13 at 12:41 am

#48 Mark on 07.05.13 at 10:18 pm

US economy in a recovery? What a joke. Yields are rising in the US because nobody believes there’s a recovery and they want out. Its a debt financing death spiral, similar to what any bankrupt person or company would experience. Not a sign of growth or significant economic performance.

The longer you say that the dumber you appear. — Garth

Garth the last I checked a person with lots of debt(usa)and poor credit (S&P downgrade of usa)with an unstable job(outsourcing at record levels )pays more money to borrow money ,isnt that the same situation for the USA with their bond yields rising i think Mark has a perfectly logical statement why do you continually bash people with perfectly logical thoughts on the usa you seem to buy into all facts on msm in usa but cry phoney numbers if its canadian like the jobs # and realestate #s ya the us isnt corrupt at all lol they report only real facts i might be wrong but yeilds are rising because countries like Japan are dumping to raise capitol to increase stimulus (hence the Nikkei rise in the last few months) and soon to join china will start selling bonds sue to their liquidity issue .Seems like a perfect economic shitstorm brewing but who knows maybe im just dumber than Mark

#72 young & foolish on 07.06.13 at 12:41 am

Another great post … way to go Mr. Turner!

#73 Unpoovvio on 07.06.13 at 12:43 am

#45 JSS on 07.05.13 at 10:10 pm

Is it still a good deal to buy XRE (REIT ETF) these days?
=============================
Who knows, I am down ~12.5% on XRE not including puny distributions. Word on the “street” is that they have further down to go. Fortunately I “only” have 10k invested in XRE. Unfortunately I’ve been shanked on all other yield investments. A lot of damage in May & June that will take at least a year to recover from. All I wanted was to collect divs & int, it’s like this market wants to force one to daytrade.

#74 GarthVader on 07.06.13 at 1:00 am

>>about 200,000 jobs a month are being created in the States.

Most of which are part-time. And half of which are absorbed by immigration.

>>House prices are rising an average of 1% every four weeks.

Or rather, they were. Given the bust in mortgage applications, don’t expect that to continue.

>>Car sales are the best since 2007.
Actually the only bright spot in an otherwise sharply deteriorating economy.

*Facts*, Garth, we need *facts*, not vague opinion.

#75 Basil Fawlty on 07.06.13 at 1:08 am

“About 200,000 jobs a month are being created in the States”

I believe it was Samuel Longhorn Clemens who said; “there are lies, damn lies and statistics”.

US job growth is seeing increases in part time work and diminishing full time positions. In addition, look at the type of positions being created; service industry, retail and government etc.. While manufacturing positions continue to decline.

Although, maybe we have entered a new paradigm where increasing oil prices and interest rates, lead to a rising stock market.

#76 Sacola on 07.06.13 at 1:53 am

The U.S. is ripping it up on one of its last credit cards while it crumbles like Rome.

Sorry Garth, your bullish view on the U.S. will come back to haunt you.

#77 Godth on 07.06.13 at 2:05 am

#38 DJB
“The legacy that Carney left behind. He is already putting his cheap interest policy in place over the pond.”

how naive are you? do you really think that one man sets policy on that big a stage? do you think that the low interest rate policies we’ve seen, and the subsequent housing bubbles and bursts, all happenened in concert as a result of individual policy makers? seriously? have you not heard of the BIS? you’re getting the BIS, like it or not, then you get the IMF—ed.

#78 Bo Xilai on 07.06.13 at 2:14 am

“Efforts to prime the economy with government money worked.”
—————————
It worked in the same way as setting fire to your load bearing walls to keep the house warm during the winter…

#79 Yitzhak Rabin on 07.06.13 at 2:15 am

US Savings rate is falling and consumers still up to their eyeballs in debt now face higher rates. The 10 year hit 2.74% today. Once again, manufacturing lost jobs and the trade deficit is among all time highs.

Car sales, employment, house prices and CNBC bobbleheads all seemed optimistic in 2007. Turns out the prosperity was phony and not based on healthy fundamentals.

I wonder if anything is similar today?

The enormity of the debt will make this crash much worse. The Fed will really be boxed in this time. Allow a much great depression to run its course, or inflate the currency to oblivion.

Canadian housing isn’t the only sector addicted to cheap credit. Don’t forget the entire US economy.

#80 HeartoftheWorld on 07.06.13 at 4:27 am

OK, Garth, you win. 2008 is over. The good ole USA is booming like nobody’s business — who really believes that outside of you? The numbers (on inflation, unemployment, and pretty much everything else) are completely cooked these days, and all markets (LIBOR, FX) are manipulated. Since the ‘green shoots’ era, back in 2009, we have heard nothing except how brilliantly the US economy is doing. Just don’t think about the number of people on food stamps — has hit 70 million yet? Or of the millions who have given up looking for jobs.

Yes, bond yields are up in the US and prices are DOWN. Does this mean that the economy is roaring ahead as you say? (which is not what common sense tells me); or does it mean that the manipulators are finally losing control of things? When the bond rout really gets going, $trillions will be vaporised… One thing about genuine free enterprise is that it does ‘self regulate’ rather effectively (only, however, if you don’t think about the costs that aren’t factored in, like costs to our shared environment). But managed economies, like the present day US economy, or the indeed the former Soviet economy, have a nasty way of imploding unexpectedly. Are we seeing the first tremors now?

Yes, Canadian mortgage rates are up. Does this mean that the Bank of Canada will raise prime? No signs of that on the horizon. Mr. Carney (remember him?) has just promised to leave the UK prime at near zero until well into 2014, as I recall. So, if Canadians don’t pay through the nose for ‘rate insurance’ from the banks (i.e. ‘lock in’) they should be fine. It’s the same old song: if the Bank of Canada raises prime, it will create the housing market implosion it is desperate to avoid. Where am I wrong?

#81 willworkforpickles on 07.06.13 at 5:10 am

The financial crises is indeed still very much alive and still very much with us in N.A.
In fact, it is only going to become much much more worse in a relatively short period of time – (2yrs).

#82 Buy? Curious? on 07.06.13 at 5:32 am

So you’re saying better to buy now? Garth, that’s awesome advice! I’m going to buy a single family home, near a good school, and rent it out to a young family who will never be to afford to buy a place! Hahaha, Hipsters, Millennials, and GenXer’s, you’re the new poor!

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

#83 daystar on 07.06.13 at 7:45 am

Ok, some of us should probably chill before we melt down in our heat! This blog has had several themes of which, its been dead on and saved folks from major grief if they’ve listened so lets examine them:

1) Interest rates will rise, first in the bond markets.
2) Go long with 10 year terms if you can.
2) The future of Canadian housing is in trouble.
3) The true real estate numbers are buried in lies.
4) The U.S. economy (and housing) will recover.

I can add a few more, the loonie will continue its slide as the U.S. economy recovers, gold’s reign is done, Alberta politicians are not much more than corrupt oil lobbyists and the Canadian economy is headed for the toilet for several years regardless of what the rest of the world is doing. Our government and financial policies have been so self serving that this consequence is unavoidable now and interest rates are most definitely the trigger and it should come as no surprise but not so strangely, it does.

I can go on about what the ugly consequences will be with the loonie dropping hammering commodity values while its too soon for manufacturing to rebound and service, now 70% of our economy, gets drubbed by a crack coked, wreckless credit expansion that would make the demons of greed blush in the banking industry but do I need to?

The signs are everywhere. 165% household debt to GDP, up from 115% in just 7 short years while incomes rose a mere 8% is a tell all. Credit expansion was built on cheap rates, not incomes and that spells big trouble for what I guess to be 1 in 10 Canadians that are likely to lose their homes over the next 7 years who have borrowed to buy ultra high valuations run up by low rate saturation and a greedy RE/financial cartel.

What is my own take on it? Try 8% mortgage rates at the banks within 4 years. I’m calling for 5% prime at the BoC and a 3% spread with our chartered banks and yields in the bond markets come first, as they have lately and it will cream the dummies floating with variable rates. There will likely be an overshoot with rates flirting with double digits within 5 years. This, btw, is the consequence of a U.S. recovery that folks say doesn’t exist coupled with a Canadian government balance sheet that is far from rock solid and I haven’t scratched the surface with what will happen with trade.

I will remind readers… 29% of Canadians float with variable rates. Close to 60% use 5 year terms and the smart ones who listened to the wisdom of this blog, the other 7% or so, took 10 year terms. Its not hard to see why now with the rear view mirror is it? A one percent increase in the bond markets, just like that, in what, 2 months, can reveal just how quickly it can change. There is only one direction rates are headed, its not down, and what’s to come (a continued U.S. recovery as a whole regardless of how dysfunctional some of the systems in the U.S. actually are, hey, what has housing done? Is it generating a wealth effect in the U.S.? Is credit expanding? Are incomes expanding? Is employment expanding? Are trade deficits falling? U.S. recovery doubters, use your heads!! What is the result of a U.S. recovery to Canadians? It’s not good and one has to think currencies and yields to see it or you will get swept away with the tide.)

So yeah… maybe Garth could brush up on his manner’s and sell it sugar coated and sweet. Perhaps that’s the high road when dealing with all the one segment fanatics, “the road to riches is real estate! No, its gold! No, its stocks! No, its commodities! No, its ETF’s! No, its bonds! No, its the U.S., whatever we do, just don’t diversify, get fanatical and pick a one hit wonder!!!” There is, unfortunately, a problem with watching folks trying to inflate their self worth with non diversity and the belittling the thoughts and deeds of others to build themselves up. It just doesn’t work to sit there and watch them fail, as much as some deserve to because, like as not, such individuals are our aunts and uncles, grandpa and gramma’s, moms and dads, brothers and sisters, cousins, peers at work and sometimes even best friends and its our inherent right to wave the red flag when we knowingly watch someone who, even if we don’t care about them, someone else does which should be enough to motivate us to wave that red flag when we see someone throw their lives away on stupid, narcissistic histrionics and so, we must speak plain with a language that our disordered’s can understand. :)

On this note, I will light a candle… a vigil in memory of those who have fallen because they craved salt instead of sugar and looking for the salty old veterans of the game who held high, that lantern that lights the path in dark times, found none and lost their way. The lost souls, I will remember them. Yea oh yea, praise diversity and true self worth that comes from seeing the big picture for all that it is from the individual to the universal, Lord praise be and may God bless this blog.

#84 neo on 07.06.13 at 7:47 am

“This is happening because the US economy is absolutely and irrevocably in recovery” – Garth

Yet we still have “emergency rates” for 5 years and counting. If the recovery was “absolute and irrevocable” emergency rates would no longer exist.

Bond markets first, central banks second. Learn a few things. — Garth

#85 bigrider on 07.06.13 at 8:02 am

http://www.thestar.com/life/homes/2013/07/06/greater_toronto_real_estate_market_intensification_drives_prices.html

Prices for real estate going higher for the GTA according to George Carras president of realnet Canada Inc.

You have been schooled Garth.

By a man whose income is derived from real estate, writing in the ‘Homes’ section? You’re funnier than usual. — Garth

#86 John on 07.06.13 at 8:04 am

Many listings in Richmond Hill languishing after months on the market. One home nearby which was a rental was deserted by the tenants. When the owner was alerted they chose to list it…about 5 months ago. It sat and was delisted. The listing agent has returned to freshen up the place presumably to relist. The agent himself was painting the exterior of the home. This is what all agents should do to actually earn their fat commissions but actually shows a level of desperation.

Garth, I am with you on everything you say EXCEPT the notion that USA is in recovery. That just doesn’t make any sense. If the Fed scheme did actually work as you say then every other nation will attempt to re inflate which is just more disaster. China is in the process of bypassing the USD as reserve currency and many countries are taking the bait. If the US is genuinely recovering they will have to stop QE and address their debt and deficit. How do you expect them to ever get that under control when they are facing a worst crisis that Greece or Portugal?

#87 jerry on 07.06.13 at 8:38 am

Congratulations on winning the Top Personal Financial Blog!!

…….now what to do with the $100 prize……….Reits……ETF…….Wine……table dances……

Big announcement coming soon. — Garth

#88 Ret on 07.06.13 at 8:49 am

I planted some of those. Timus Hortonius Sour Cream multipliers.

They haven’t sprouted yet. What did I do wrong?

#89 Andrew on 07.06.13 at 9:12 am

Not seeing any correction in Toronto or the GTA , prices haven’t bugded much supply still low..

so why ten with all these chnages no correction yet people speack of a 10-15 percent correction..

even if we get a 10-15percent ,, thats not much , considering how far we went up.

even mention by this summer we should start to see
a softening in prices .. seems it keeps being pushed forward..

what gives

#90 Ret on 07.06.13 at 9:18 am

I can’t wait for the US bond markets to open Monday. The 10/30 yr. yields really popped on Friday and a lot of bond holders and funds who were thinking a range of 2.40-2.50 on the 10’s, got spanked. The trend line looks like there will be another trip to the woodshed next week.

Talk of 5% mortgages in the US for increasing numbers of borrowers next week.

https://www.usbank.com/cgi_w/cfm/personal/products_and_services/mortgage/interest_rates.cfm

No rotation between US bonds and equities on Friday. Both went up.

Will the improving US economy spill over and help us float our boat? Yes, but IMHO it will be a very small boat.

#91 Jarey22 on 07.06.13 at 9:39 am

Hi Everyone,

I’m new here. Just thought I would share this link I found on the financial post website this morning. It is an interesting read for the contrarian investor. Have a great weekend.

http://www.moneynews.com/MKTNews/billionaires-dump-economist-stock/2012/08/29/id/450265?PROMO_CODE=1393F-1

#92 Basil Fawlty on 07.06.13 at 9:45 am

“Bond markets first, central banks second. Learn a few things. — Garth”

300 Trillion in interest rate swaps third?

#93 Derek on 07.06.13 at 9:51 am

Great post, insightful as usual. I’m with the others though, claims of sustained US recovery just don’t make any sense. Not because I’m an ‘America hater’, I love America, but because the facts simply do not support that.

17 trillion in debt, continued losses of manufacturing, cost of living rising, unemployment still in modern-era record territory, massive deficits yearly, and social programs threatening to grow larger than the entire economy. There has never been such a bad recovery. When you say they ‘primed’ the pump, this implies their is fuel in the tank to make the mower subsequently run. You don’t know that until the priming stops and you give it a pull, which they have not yet done. Gov didn’t ‘prime’ the pump, they just stole fuel from the neighbour, watered it down and managed to cut a few lanes, and have no plan for when it runs out.

That doesn’t mean investors can’t recognize that enormous government funding of the economy can temporarily give them returns. But it does mean it’s not real prosperity. When you have to spend a trillion bucks more than you take in every year, that’s not real prosperity. Huge portions of the US economy are now state-run and while you can ride the wave a make a bucks on the stock market, that is not a path to prosperity in the long or even intermediate to short term.

Smart people buy a recovery. We seem to have an acute shortage here. — Garth

#94 jess on 07.06.13 at 9:56 am

access to info act

“Canadians should have access to the documents that substantiate expenses that are being expended by parliamentarians,” says Legault. “When that is the case, it actually acts as a deterent on behaviour…

…”Key changes that Legault wants to see brought in include bringing all institutions that spend taxpayers’ money under its umbrella. She also wants to be granted order-making powers. Those powers would give her office more teeth in demanding that government departments comply with orders to hand over requested documents.

Under today’s legislation, it’s often the Federal Court that is pulled into the process to make departments comply with requests, a process that is too costly for many to pursue.

“Access delayed is access denied,” Legault says
cbc.ca

#95 craig on 07.06.13 at 9:57 am

GDP 1.8%

Inflation 1.4%

Growth…recovery?

#96 Evangeline on 07.06.13 at 10:05 am

((Why not just buy their top holding (rei.un) or holdings, and save on the 0.55% MER? Also, higher dividend.))

but why buy it at all if its share price will go down as long as interest rates rise? yield alone isn’t a good enough reason imo

#97 Evangeline on 07.06.13 at 10:33 am

#73

((All I wanted was to collect divs & int, it’s like this market wants to force one to daytrade.))

that reminds me of a line from an article about the Japanese economy that has stuck with me over the years — … little old ladies are being forced to day trade just so they can eat …

#98 George on 07.06.13 at 10:36 am

Garth. Whatever you do with the $100.00 first prize for winning the Top Canadian Finance Blog for 2013, I wouldn’t donate it to the Conservative Party of Canada. I don’t think these folks are spending their donators money too wisely.

Conservatives Planned To Pay Mike Duffy’s Expenses, But Price Was Too High: Reports

http://www.huffingtonpost.ca/2013/07/05/conservatives-mike-duffy-expenses_n_3548587.html

#99 TheCatFoodLady on 07.06.13 at 10:55 am

I’m not prepared to give up on any economy just yet. I’m no student of history or finance but even my limited exposure to the major themes makes a few things clear. We’re living in a time of many fundamental transitions – major cycle shift if you will. Just as the Industrial Revolution hugely transformed how we worked & lived, this new age of the internet is creating profound changes.

Look at what’s happening in the world of media. Books, newspapers, CDs & other forms of hard copy media production & distribution are fading fast. The companies still doing well are those such as Amazon who realized they could could sell online, cutting out layers of storefronts & expensive staff. Get a good production/shipping network, make sure your website has the features making it easy for purchasers to naviagte & you’re laughing. Meanwhile, book stores, CD shops & hard copy newspapers are languishing.

An increasing number of types of goods can be bought online for those comfortable with that method & increasingly, people ARE comfy with it. I know a lot of younger people who simply use brick & mortar stores as visual aids. They’ll check style, size, colour & construction of items wanted, then go home & promptly order them online for less.

From a pure producer/consumer point of view, the changing dynamics are fascinating to follow. Automation continues to streamline manufacturing as well rsulting in fewer jobs. Many of those still requiring human imput have been offshored – it’s cheaper.

That doesn’t mean jobs are dead – they’re simply changing. There’s still a huge & increasing need for skilled trades. Health care, law enforcement & yes, those nasty service jobs are still out there. Opportunities abound for those with enterpreneurial spirit. It’s about adapting, not capitulating.

As to investing – sure it’s an ugly world out there – when hasn’t it been? The basics don’t change though. Spend less than you earn. Enter into debt carefully; very carefully. Pay it off quickly. SAVE – even a little bit triggers an urge to pile up more. Invest rationally.

But a well diversified, solid portfolio – expect to make mistakes. Learn from them. If in doubt – WAIT. Have a solid core of basics – no matter how bad the economy, people have to eat, clothe themselves. They need to buy drugs, transport themselves.

I’m probably one of the least ‘financially blessed’ people here & a dumb bunny to boot. I spent 5 decades happily making most of the big financial mistakes leaving me without a litterbox to squat over. Thankfully – no debt – zero. A little chunk of change invested. Living well below the poverty line but with needs covered & wants ruthlessly controlled – practice for the cat food years! Not complaining – when you’re close to the bottom rung of the socioeconomic ladder, every step up is REALLY appreciated. So is learning to truly appreicate what really matters in life – family, friends, giving back to the community – even in small ways & being grateful to live in a country so rich in natural & human resources.

#100 Timing is Everything on 07.06.13 at 11:07 am

#78 Bo Xilai

Ha! Good one…

http://tinyurl.com/lctv8jo

#101 D.D. Corkum on 07.06.13 at 11:11 am

#11 Dean Mason on 07.05.13 at 8:04 pm

Actually, Garth touched on that subject a couple years ago. Here’s the link:

http://www.greaterfool.ca/2011/11/25/the-leveler/

Side note — wow, I’ve paid attention to this blog for two years now? Time flies.

#102 Doug in London on 07.06.13 at 11:19 am

@Duke, post #6;
Although this blog isn’t a gold blog, there continues to be a lot of talk about gold here. One kind of gold that’s been going up in price these days, as you say, is black gold. That should be good news for my XEF and TD Energy Fund. Maybe I’ll cash some in and buy more cheap REITs, preferred share ETF’s, or utility stocks. Then again, maybe not. Instead I might wait for interest rates to go up more and thus for bond funds to go on sale. As for buying a house, you’ve got to be joking!

#103 Mr. Monday Night on 07.06.13 at 11:22 am

Buy? Curious? on 07.06.13 at 5:32 am

“I’m going to buy a single family home, near a good school, and rent it out to a young family who will never be to afford to buy a place! Hahaha, Hipsters, Millennials, and GenXer’s, you’re the new poor!”

————————————————————–

Tell me how renting over buying a house at a ridiculous price equates to poverty.

You assume that buying near a good school gives you a license to print money. Based on this economy, you assume too much.

Writing off an entire generation that hasn’t even had a chance to get off the ground? Are you a boomer with no kids? The Millennials thank you for the positive thinking and good karma.

#104 JimH on 07.06.13 at 11:28 am

# 83 daystar

Nice post! Thanks!
But the naysayers, doomers fear-mongers and inflationistas wil remain unconvinced. They choose ideology over knowledge, fiction over facts and blind conviction over any disciplined search for reality. It has become their fundamentalist religion.

When they do run up against anything remotely positive, they immediately brand it as “a lie”. The USA is in recovery, fragile and gradual as it might be in the face of global headwinds. Friday’s market action, wherein the dollar spiked and gold crumbled signaled that investors are still voting for gradual growth and recovery over inflation and recession.

Cullen Roche quoted Wayne Gretzky the other day… “you have to skate where the puck’s going, not where it’s been”.

Garth summed it up beautifully:
“Smart people buy a recovery. We seem to have an acute shortage here. — Garth”

#105 Herb on 07.06.13 at 11:43 am

So Garth gets top financial blog honours for Greater Fool. Quelle surprise!

Where did Smoking Man place?

#106 Bargains everywhere on 07.06.13 at 11:55 am

#67 Alex K on 07.06.13 at 12:24 am

You know, Alex, if you’re going to call someone a “LOOSER” in capital letters, at least spell it correctly, otherwise you look like the loser. It’s spelled “LOSER”.

#107 Tony on 07.06.13 at 12:09 pm

Re: #104 JimH on 07.06.13 at 11:28 am

DELETED

#108 Old Man on 07.06.13 at 12:12 pm

#103 Mr. Monday Night – he made a good point, but he needs to do a combo when the time is right by buying a home in a good neighbourhood in proximity to a university and other schools. Just the perception of rental income will support value, and during the big one during 2008/2009 saw this happen, as homeowners just yawned at a small adjustment.

#109 Spiltbongwater on 07.06.13 at 12:14 pm

Garth, do you think you should offer Mike Duffy some finanacial advice? From the looks of it, he makes 130K + pork barrelling, but somehow doesn’t have 90K sitting around. Think he might be spending more then he is saving. Good thing we have these sorts of people taking sober second looks at federal budgets and all.

#110 geelemitti on 07.06.13 at 12:21 pm

yes a financial recovery not economical recovery

#111 father on 07.06.13 at 12:24 pm

#64 moron moron moron

#112 Old Man on 07.06.13 at 12:42 pm

This is a tip for you that live in the larger cities, and perhaps your home has a granny suite off the basement level that sits vacant with a separate entrance, but you want no longterm tenants. There will be several theatrical performances taking place, and the actors come from all over Canada that cannot afford a hotel room at $200.00 a night. They have a registry for short stays or longer at homes with nice, private, and reasonable accomodations. Bet you never knew this, and becomes a win win situation for all; this gives you additional cashflow, and the opportunity to meet interesting people in the performing arts who will cause no trouble.

#113 Piccaso on 07.06.13 at 12:43 pm

WOW…

There’s sure a lot of people on the defence for low interest rates.

Why does it even matter?

It didn’t mean shit to me when I was young and mortgaged and rates were bouncing between 8% and 10%

Then again my mortgage was 50K and not 500K

LMAO

#114 bob on 07.06.13 at 12:44 pm

The wife and I are getting lubed up for an open house today.

#115 Grantmi on 07.06.13 at 12:52 pm

AH! Ozzie Jerkoff is on Michael Campbell’s CKNW talk show AGAIN this morning.. and saying BUY BUY BUY!!!

The bottom is in in the BC Interior and the Gulf Islands…

Why MC keeps having this idiot on EVERY WEEKEND.. is beyond me.

#116 JimH on 07.06.13 at 1:05 pm

A good chart showing housing’s reversion to the mean can be found here. Bad news for those who think real estate “always goes up!”

http://www.ritholtz.com/blog/2011/04/case-shiller-100-year-chart-2011-update/

#117 Old Man on 07.06.13 at 1:17 pm

I knew this high level cop who was over his head with credit cards, and bailed him out with a mortgage with a floating rate over prime to pay off these debts, and it was a good mortgage for 1% over bank prime. Him and his wife were blowing money like there was no tomorrow, and saved his life. Now, they had a great gig with the class A hockey teams in Ontario, the one just below the bigtime stuff, as was on a registry to have team players taking overnight stays at their home with a nice cashflow. :) I am sure he declared this all on his tax filing, but never saw it.

#118 Canadian Watchdog on 07.06.13 at 1:19 pm

From crunching some quick numbers today, it appears this half-year's detached sales for Toronto 416 activity was very different from last year when bidding wars were running across every MSM headline. As seen on this chart, what's been keeping prices above water is the mere fact that sellers have been hiking listing prices way above normal. The spread on the chart shows average listing prices in H1 have increased $107,390 (14% y/y) while average sold prices have increased by $30,580 (4% y/y). In other words, every $35,000 increase in listing price received an extra $10,000 sold. The average SP/LP last year in H1 was 104% while this year dropped to 95%. A lower ratio and higher average sold price confirms that gains on sold homes are largely driven by higher listing prices, not bidding wars.

What this really implies is a market of home hoarders and sellers collectively hiking prices against buyers. What would instigate sellers to hike prices that much? I can only speculate and call it an after-affect of last year's bidding wars, i.e., neighboring homeowners know the home down the street sold for 120% over asking last year — they too begin listing at bidding war asking prices as a benchmark, collectively forcing buyers who wish to live in that area to pay a hefty premium. Who's paying that premium? That's for another post.

On a larger observation, Toronto 416 H1 dollar volume (actual money transacted) came in at $5.16 billion, down 9% compared to last year at $5.66 billion. This number can't lie about market conditions, nor can it be manipulated. Sure, more dollars can flow to preferred home types over others, or certain areas, however, when overall dollar volume is contracting, the market as a whole is still declining. This means less dollars for sellers and less commissions for agents. 

At some point in the future, contracting dollar volume in Toronto's unaffordable market for first time buyers will lead to liquidity problems for sellers. Two months ago in an interview with Reuters, Mark Carney stated that between sometime in late 2010 to present, the number of household mortgages on variable rates "fell off a cliff" (Carney's words) from about 2/3 to 10% of all mortgages in Canada. (If you're buyer on the sideline, this data gives some insight as to when the next bulk of mortgages will renew) Despite more homeowners locking into fixed lower rates, monthly living  expenses are rising faster, offsetting any savings on mortgage payments. Household expenses and balance sheets matter. Pay attention to them.

Overall, my concern is the major decline in new housing sales. This has serious ramifications with knock-on effects from developer/lenders' balance sheets to employment. The difference in new housing sales to resale (basis) is a major indicator of future price expectations. If a 76% homeownership market really believes home prices are going higher, then they would be buying new homes. And they're not.

#119 Bargains everywhere on 07.06.13 at 1:25 pm

#113 Old Man on 07.06.13 at 12:42 pm

Yes, that’s true. A friend’s son is a dancer and performs in theatrical productions across Canada. He is a nice young man and is always needing short-term accommodations in various cities while the production is running. Sometimes it’s very hard to find something suitable and safe for the short term.

#120 Old Man on 07.06.13 at 1:58 pm

I am going to tell you all a story that nobody will ever know about, and the year was 1975. This young man walked into my office, as he and his wife wanted to buy a home, and he looked like someone off the street. I took them all, so asked him the basic questions, and said go to a bank or a trust company as charge fees as you will get approved.

He said heard you were the best, and cannot provide an employment letter to anyone for my income, so can you get around this all, as want prime rate 5/25 just like anyone else. I said ok put the cards on the table, and he was working for the RCMP undercover, so made a phone call to a Trust Company on Bay Street who knew me well, and phoned someone with a verbal on the employment and income.

There is no mortgage deal that cannot be placed and I just charged him 1% for my placement. I swear this guy looked like a biker, but was doing a public service for Canada in the dark, so he and his wife were able to buy their first home at prime rate.

#121 Timing is Everything on 07.06.13 at 2:04 pm

#111 pinstripe

Alberta, just send the receipts to Ottawa. You’ll be reimbursed, come hell or high water.

Keep up the good work,
Steve

#122 TurnerNation on 07.06.13 at 2:36 pm

#29 Donald Trump

When I was in Whizzler Q3 2011 I overheard a waitress saying she was just approved to buy a condo. Geez.

“Hey Meester how much is your Wheestler”?

The flagship Creekside commercial property is reduced from 1.9 mill. 10 years of continuous prop tax hikes will do that. BPOE.

http://www.whistlerlistings.com/commercial.php?action=details&com_id=41&com_status=Active

#123 AK on 07.06.13 at 3:34 pm

#125 JimH on 07.05.13 at 9:39 am
#79 Dean Mason on 07.03.13 at 1:30 am
“I read from an disclosed source that July-5-2013 U.S. jobs report is coming in weak as June is typically a slow month with summer variances.
It could come in at 95,000 to 115,000.If this is true watch out on Friday.”
=====================================
“Was this “disclosed source” scribbled on the back of a Mayan Calendar, or did you just settle for a coin-toss?”
——————————————————————–

It was probably a Dartboard. :-)

#124 Donald Trump on 07.06.13 at 4:39 pm

Hey !

Some cop stole my donut seeds !

#125 What about CMHC? on 07.06.13 at 4:42 pm

Calgary flood update:
Zoo staff risked own lives in daring animal rescues…
As the Bow River flooded the African Savannah area of the zoo – just one of the low-lying areas that saw as much as four metres of water pour in — two deadly hippos were in danger of escaping.

in other news…

The Calgary Zoo laid off 287 staff members Wednesday as it faces $50 million in damages and $10 million in lost revenue after devastating flood waters washed over the facility last month.

#126 Stickler on 07.06.13 at 4:49 pm

Net full time jobs for June declined (meaning more full time job losses then full time gains).

Net gains were see in part time.

No need to sugar coat it. It is what it is.

#127 Donald Trump on 07.06.13 at 4:52 pm

#123 TurnerNation on 07.06.13 at 2:36 pm

Re Whistler:

The legend in its own mind called Whistler seemed to take off in the mid 1980’s when Intrawest came in.

The Coquihalla Highway was built around the same time….as was Expo 86

Connection? IMHO the offshore investment (ie Hong Kong) was foreseen far in advance by the big players. They wanted a means to funnel money from those that cashed out..ie to buy Whistlers condos go to Okanagan.

Now, we simply look at the ends of the $$$ pipeline(ie Whister Okanagan to see if the prices are sustained. If not, this implies that as the peripheral markets are collapsing, it will ultimately eat away at the epicenter. That’s how I see it.

pS duly note that Intrawest sold out its large Whistler holdings just before the 2008 collapse. Saw it coming?

#128 daystar on 07.06.13 at 5:02 pm

#104 JimH on 07.06.13 at 11:28 am

Gratitude’s back at you Jim! Thanks for the chuckles. The U.S. isn’t perfect, obviously. They’ve got their issues, they’ve got their flaws and fleas and all the other f’s to go with it but they are recovering economically. Housing valuations, the one nemesis that has been the thorn in their side, the credit staple of the middle and upper classes, is, for lack of a better word to describe it, “strong” and this in itself will create a wealth effect that makes American’s spend and that will create jobs as it is doing right now.

http://www.theglobeandmail.com/report-on-business/economy/housing/us-home-prices-soar-122-in-may-from-a-year-earlier-biggest-gain-in-7-years/article12915695/

The U.S. recovery is more credit driven and not the backbone manufacturing jobs in droves that benefit nations over the long term that pseudo macroeconomists like but hey, the world was built on credit. As long as the right ratio of credit is borrowed to create new money and its properly regulated, credit is not necessarily a bad thing! Most definitely there will be more employment going forward and that has the potential to increase average incomes which is what the U.S. (and Canada) needs most of all given their variables to work with.

A recovery is most definitely happening in housing, commodity production and financials, that spells more investment, stronger markets, more trade, more domestic demand, a stronger dollar and a stronger dollar by itself cheapens commodities and imports which help manufacturers offset a stronger currency, while buying power pops for consumers. Its all looking good right now in the U.S. and the key to it is stronger RE values better leadership and a currency holding its own.

I feel compelled to take the time to point out to readers that the current Obama administration isn’t making the same mistakes Bush made with financials (and then some). Regulations are much improved (they are actually existent) and the mere fact that rates have risen with housing values should signal to those in the know that the “adults” are in charge. Housing has taken a run up in value, it needs to be tamed so as not to blow another bubble, rates are the best way to slow it down in the U.S. and that’s happening or perhaps its best said, “being allowed to happen” and that show’s a maturity at the highest levels of leadership.

As for U.S. public debt and federal deficits, certainly I want to see a great deal more done than what has been done but the mere fact that housing has surged in value in the U.S. should not be taken lightly. When America spends, the world does well and right now, American homeowners across the board are richer. This means a wealth effect and a higher tax base that follows and I can’t stress it enough as well, that the U.S. is also experiencing an energy renaissance. They are, in nominal dollars, still the world’s #1 manufacturer, the largest exporter of agricultural commodities and have the world’s largest economy in nominal dollars. As large as some of their problems truly are, one shouldn’t lose sight of the facts that the U.S. has some large plus’s. Like Rome, they are an empire but these folks aren’t drinking wine out of lead cauldron’s just yet. (not en masse anyhow) Don’t count our neighbor’s out and whatever we do readers, don’t bet against them. They need dummies in charge to do that and that just isn’t the case.

Now Canada on the other hand… :)

And I hear ya on your message with ideology, Jim. The moment we attach pride or self esteem/worth on opinion that might have been right at the time but becomes quickly dated, that’s the moment we miss the train leaving the station. In the context of macro economics, we can’t rear view mirror it, we’ve got to know where the herd is going next and be well aware that there are others smarter than us who really do know where the herd is headed. Its not a pride contest, its analytical, logical and few if any, will get it all right, not something to base one’s self esteem on. Those who are after self worth/esteem should think balance with an egalitarian view and love in their hearts. Its not a competition, just be an equal and stop the abuse! It doesn’t get any plainer than that.

Cheers!

#129 brainsail on 07.06.13 at 5:25 pm

Anyone know what is really going on about the train accident in Quebec? Early reports said LNG tankers then crude oil from Canada going to the US and now it’s crude oil from North Dakota. No reports on casualties and they are saying it was caused by a runaway train with no operator onboard. Bizarre reporting!

From Central Texas our hearts go to the victims.

http://www.reuters.com/article/2013/07/06/us-train-idUSBRE96505L20130706

#130 George on 07.06.13 at 5:51 pm

Mayor Ford (The world will remember) by Jenny James

(Skip the commercial)

#131 Smoking Man on 07.06.13 at 6:41 pm

#105 Herb on 07.06.13 at 11:43 am

So Garth gets top financial blog honours for Greater Fool. Quelle surprise!Where did Smoking Man place?
……….

Ha, dead last herb.. Now run along and get your vitamin b12 shot.

Holly smokes herb does my blog resemble even remotely a financial blog. Dyslexic smoking man.

My other one I’m partners with does really good, ever hear of Tyler Durden

Probably not gramps…

#132 Smoking Man on 07.06.13 at 7:06 pm

Having a cocktail with drew carry on the 29th floor at senica, he thinks I’m funny. Lmao.

He’s on stage in an hour.. I’m in front row.

Not bad for a rivet bucker I’m thinking…

#133 Smoking Man on 07.06.13 at 7:30 pm

DELETED

#134 Woudn't Be So Smug on 07.06.13 at 7:35 pm

Garth….the one fact that I do not hear you address is how the US with a $17 trillion debt, and with GDP at 2% could service their debt with interest rates rising? One could suggest that the Fed will have to increase stimulus to keep the bond market in check so that it doesn’t implode?

#135 Woudn't Be So Smug on 07.06.13 at 7:46 pm

I would also add…if you are willing to accept the wager…that 2 months from now the US stimulus will be at the same or higher levels than they are now. Will you take that bet Garth?

#136 Debtfree on 07.06.13 at 8:00 pm

Some of us did get it way back in relative terms when the the Canuck buck was way up . You said sell Canada and buy America . That piece of advise worked not only for real estate . The spread is 10 plus percent alone .

#137 KommyKim on 07.06.13 at 8:00 pm

RE: #131 George on 07.06.13 at 5:51 pm
Mayor Ford (The world will remember) by Jenny James

You’re kidding right? He is the stereotypical corrupt fat cat, exactly opposite of what the lyrics say. Or is this an attempt at sarcasm?

#138 AK on 07.06.13 at 8:15 pm

#95 craig on 07.06.13 at 9:57 am
“GDP 1.8%

Inflation 1.4%

Growth…recovery?”
——————————————————————–
The rearview mirror is not very clear.

Construction crews already are back to work
Construction crews already are back to work

#139 Marginal on 07.06.13 at 8:22 pm

#131 Mayor Ford…..skip the commercial.
………………………………………………………………..
George, are you a political troll on a personal finance blog? Of course we can skip the commercial (election campaign commercial) by skipping the whole video!

#140 Victor V on 07.06.13 at 8:51 pm

PRICE CHANGE #2 – 161 Crescent Road – ROSEDALE

http://themashcanada.blogspot.ca/2013/07/price-change-2-161-crescent-road.html

I really, really thought this 7+3 bedroom, 7 bathroom house on a 52.75 x 165 foot lot was going fast and over asking.

It is a big, beautiful old Rosedale home with a coach house. And though some readers have mentioned that it is on a busy street, it is somehow kind of an easy house to not see. There are trees on either side of the property that blocks it off from the street.

Plus, it has a coach house so how often are you using the front door anyhow?

But maybe the kitchen sink placement isn’t the only odd thing about this house because it didn’t sell fast or way over asking.

It was first listed in May for $3,295,000.

It didn’t sell and the price was dropped in June to $3,150,000.

It still hasn’t sold and the price has been dropped AGAIN…

To $3,095,000.

I REALLY thought this one was WAY under priced.

Hmmm.

#141 Mike on 07.06.13 at 9:09 pm

The way I look at it is, if a financial crisis ensues, we’re all screwed anyway. If it doesn’t, I make lots of money. Invest when things go down in price, and don’t worry how much farther it “could” go.

#142 AK on 07.06.13 at 9:30 pm

CREA says 2014 will see a strong rebound.

#143 Humpty Dumpty on 07.06.13 at 9:50 pm

In Italy, the tragic stories of suicides apparently linked to the deep recession are becoming all too frequent.

Last month, a former factory worker hanged himself near Turin because he could not find work, his relatives said. In May, a young man committed suicide outside of Rome shortly after he lost his job. The next day, Italian President Giorgio Napolitano begged the government to deliver “the utmost attention for situations of greatest malaise and need” to help stop the wave of suicides.

http://www.theglobeandmail.com/report-on-business/international-business/european-business/in-italy-a-sense-of-desperation/article13043093/

But don’t be surprised. I told you this was coming. Get used to it.

#144 Realtor on 07.06.13 at 9:51 pm

We’re we not having the same conversation last summer
About the amor rate going down to 30 years and yet it did nothing to precipitate a crash.
Since 08/09 home prices have risen 30%, it appears that prices will NOT reach the 2010 level.
People are willing to give more of their monthly pay to pay for a mortgage ( 50% )
No price this Q1 or Q2 more importantly no big surge in listings. For prices to drop rates will need to in the 4s.

#145 JUNO on 07.06.13 at 10:22 pm

The US may or may not be in recovery, but it doesn’t matter. Because Canada is in way worst shape than the US is right now.

The bit the first bullet and markets corrected. I may go down still but Canada never fell and has a much bigger distance to fall than the US

#146 Smoking man on 07.06.13 at 10:34 pm

Gartho why man,why do you keep protecting me. I take god on in thunderstorms on wee boat. You think I’m afraid of machine.

I’m board man, drunk, Wana fight..

You that afraid of heather, she died in Highlander.

#147 cynically on 07.07.13 at 12:17 am

#136 Wouldn’t Be So Smug – It wouldn’t be right to empty your kid’s piggy bank to make a losing bet with Garth and you will lose.

#148 MUNIR on 07.07.13 at 1:10 am

All I can contribute here from scamcouver is the following.
People are asking way too much for bulldoze jobs type product throughout the east vancouver, burnaby, south vancouver, richmond, new westminister, surrey north, and surrey south. North and West Van are purely for rich people. When people say that Vancouver real estate is now defined by dog kennels, those that remain within 500-900 square feet for up to 15-30 years of their waking life for over three quarters of a million dollars where the incomes are not even remotely present I say this whole city is absolutely positively screwed. Not just a little screwed, but screwed for life. There is no way anyone in Vancouver can afford those exponential increases on dog kennel lifestyle living. Moreover. Schools are seeing an all time low in enrollment all throughout downtown Scamcouver. Must be all the affordable housing?? What a bunch of gargabe. Vancouver is poised for a major collapse in home prices, 50-60 percent declines heading for equity rich boomers.

#149 Donald Trump on 07.07.13 at 1:27 am

When you have a bottomless pit of debt , how could there not be a soft landing ? (accounting for air resistance of course)

#150 lookoutbelow on 07.07.13 at 1:28 am

Garth, you say: “Corporate profits are forecast to swell 5.5% in the third quarter and 11% by the end of the year.”

Really, thought you were smarter than that. By the way, if that even comes to pass, it certainly won’t be because of increased revenues. It will be because of cost cutting, as usual. You need to answer one question and that is:

How can the US outperform when both China and Europe are close to a recession and Japan is trying the biggest mother of a QE program ever attempted by an advanced economy?

BTW, Mortgage refinancings have ground to a halt because of the increased mortgage rates and the auto sector will be hit next as the shorter term rates move higher in the US. You also know that Bernanke is not happy about the rise in the 10 Year Treasury rates as it threatens an ever fragile recovery.

The profit forecast is from a broad survey done by Bloomberg. Unlike you, I did not make the facts up. — Garth

#151 Bailing in BC on 07.07.13 at 3:18 am

Squamish Data for those who are interested

http://vancouverpeak.com/Thread-Squamish-Data

#152 Wouldn't Be So Smug on 07.07.13 at 7:18 am

#148…Cynically….wow….didn’t realize that Garth had groupie’s? Is that all you have to offer? How about at least providing a rationale? The US has built up a massive unsupportable debt when GDP is 2% or less…we are already seeing the bond market price in inflation. Is Garth going to now suggest that we do not have inflation? So Cynically…let’s hear your rationale for why the Fed will be able to taper without all markets imploding? Did you see the stock market reaction to the mere mention of tapering last week?

#153 NewYork Minute on 07.07.13 at 7:57 am

#133 Smoking Man on 07.06.13 at 7:06 pm
Having a cocktail with drew carry on the 29th floor at senica, he thinks I’m funny. Lmao.
He’s on stage in an hour.. I’m in front row.
Not bad for a rivet bucker I’m thinking…

My brother works at Seneca dip$hit no 29th floor. Where do you get this stuff!

#154 neo on 07.07.13 at 8:47 am

Look at this chart and tell how long you think this US “housing recovery” meme will last?

http://www.fool.com/investing/general/2013/07/06/fridays-catastrophic-surge-in-mortgage-rates.aspx

It is about the rate of change. Looks like things turned south in May and will become obvious to most in a few months.

You over-estimate the impact of a 0.4% change in mortgages which are fixed for 30 years when real estate prices are still 21% below 2005 levels and home ownership levels have dropped 6%. But at least you are consistent. — Garth

#155 Daisy Mae on 07.07.13 at 9:39 am

#87 jerry: “Congratulations on winning the Top Personal Financial Blog!!…….now what to do with the $100 prize……….Reits……ETF…….Wine……table dances……”

Big announcement coming soon. — Garth

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

I do recall making my suggestion…from a womans’ point of view. And you DO want to score points?

#156 Daisy Mae on 07.07.13 at 9:41 am

With Dorothy. Guess I should clarify…

#157 Craig on 07.07.13 at 10:03 am

#139 AK on 07.06.13 at 8:15 pm #95 craig on 07.06.13 at 9:57 am
“GDP 1.8%

Inflation 1.4%

Growth…recovery?”
——————————————————————–
The rearview mirror is not very clear.

Construction crews already are back to work
Construction crews already are back to work
===============================

OH OK

GDP was projected to be 2.5

Initially they said it came in at 2.4

Then a month later revised it down to 1.8

Oops

Since you guys love playing with percentages – that is a GDP miss by over 25%. Now go crunch some numbers and tell us what that miss equates in dollars.

HUGE !!!!!!!!!!!!!!!

Then minus inflation and you have growth at .4%

This is a recovery worth cheering about?

As the year proceeds I predict a GDP around 1% not the 3% the US experts were predicting.

QE in the Fall to save the US, as they have no other choice. They sold out their people years ago.

For those who seem to think that just because things happen in the US that they’re going to happen here, are soooo out of touch. The US had a complete financial meltdown, bailed out ot the tune of $10’s of Trillions of dollars and their house prices only dropped what 35%.

You think that’s going to happen here?

Have another one….

#158 CrowdedElevatorfartz on 07.07.13 at 10:04 am

@#130 brainsail.
Total agreement. The reporting was brutal.

Apparently the train was a “driverless” runaway train. The previous shift had stopped the train on a siding, locked it and left. Another shift was expected to arrive and take the train further down the track. Somehow, part of the train seperated and rolled downhill for several miles picking up speed until it derailed …. at 1am …. in the middle of the downtown core (bar district) of Lac Megantic.
I will be amazed if the final death toll is only one person.

#159 Smoking Man on 07.07.13 at 10:12 am

#154 NewYork Minute on 07.07.13 at 7:57 am

It was 27 floor, on the best of days this key board is challenging, after a few cocktails, good luck.

Last month I could have had drinks with the rolling stones
In the lofts at MGM

But could not make it down that weekend…

But why would you believe a self contest super lier.

#160 neo on 07.07.13 at 10:30 am

Look at this chart and tell how long you think this US “housing recovery” meme will last?

http://www.fool.com/investing/general/2013/07/06/fridays-catastrophic-surge-in-mortgage-rates.aspx

It is about the rate of change. Looks like things turned south in May and will become obvious to most in a few months.

You over-estimate the impact of a 0.4% change in mortgages which are fixed for 30 years when real estate prices are still 21% below 2005 levels and home ownership levels have dropped 6%. But at least you are consistent. — Garth

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

Excuse me? Where do you get a 0.4% change in mortgage rates from? Did you even look at the chart? In May, a 30 year mortgage could be had for 3.3% now it is closing in on 5% a couple months later. For housing to truly recover they need wage inflation. That’s the key piece that will support higher interest rates.

#161 Gunboat denier on 07.07.13 at 11:04 am

149 Munir

“Schools are seeing an all time low in enrollment all
throughout downtown Scamcouver.”

Apparently not

http://vancouver.24hrs.ca/2013/03/05/no-room-for-vancouver-kids-in-downtown-schools

#162 Kent on 07.07.13 at 11:32 am

If you check the MLS right now, you’ll find there are NO residential properties for sale in most of the country, including the lower mainland of BC and all of Essex county. They’re such screwups, and for this, you pay a 6% commission.

#163 AK on 07.07.13 at 11:35 am

#161 Smoking Man on 07.07.13 at 10:12 am
“Last month I could have had drinks with the rolling stones
In the lofts at MGM

But could not make it down that weekend…”
——————————————————————-
Speaking of MGM, it’s current stock price is a bargain. I am expecting high 20’s within the next 18 to 24 months.

#164 JimH on 07.07.13 at 11:52 am

#159 craig
on US GDP: “… Then a month later revised it down to 1.8
Then minus inflation and you have growth at .4%… &etc.”
====================================

FYI Craig, you do not subtract inflation from “Real GDP” growth. You are wrong to do so, as it skews your numbers AND therefor your thinking!

Inflation has already been accounted for in the Real GDP growth estimate of 1.8%

Your “prediction” that there will QE throughout the fall is no prediction at all! “Tapering” is not the same thing as “Eliminating”.

#165 Herb on 07.07.13 at 11:58 am

#154 New York Minute,

he’s wired into the universal consciousness coordinator.

#166 panhead on 07.07.13 at 12:02 pm

#160 CrowdedElevatorfartz on 07.07.13 at 10:04 am
@#130 brainsail.
Total agreement. The reporting was brutal.

Apparently the train was a “driverless” runaway train.

————————————————————

I am a locomotive air brake mechanic, this should never happen. All trains now are equipped with event recorders (black boxes) that are connected to a “penalty brake” system that applies the brakes automatically to the whole train if the operator does not respond in a matter of a few seconds. If a train is separated (train break) the brakes will apply to both halves by themselves, that is if the air system is fully charged and all the cars are “cut in.” Something smells here but the event recorder will tell the story … this is a RR’s worst nightmare.

#167 Agio on 07.07.13 at 12:12 pm

Your friendly bullion dealer here. As much as I love all of you fanatical believers of the shiny stuff my conscience has steered me to a most terrible place. Facts
1. Gold & Silver were stagnant for 25 years prior to the bubble. Through that period , which had mucho inflation, interest rates that would bankrupt most of you today and a fair amount of world instability it did dick. So, like housing this time it’s different?
2. If you think oil is going to rise, well sell your metal and BUY OIL because the entire world needs oil but it does not need gold or silver.
3. Throughout the years when PM’s were stagnant not once did I ever hear of India or China bitching that they couldn’t make stylin baubles for the masses. And yes Gold lovers, that’s what gold’s primary use is, jewelry.
4. If you think it’s going to rise in value, in what? Fiat currency? Hell you claim not to believe in it so that makes it worthless right?
5. Quit assuming everyone else gives a shit about either gold or silver given less than 1% own any substantial quantity (most of you don’t even make the 1%) and are unlikely to dive into it given quite a few got gang raped over the past 3 years getting frisky listening to the clownboats on the internet and other media.

Lately we’ve had a lot of ashen faced sellers as it seems retailers aren’t quite yet ready to take PM’s for payment and the spouses are bitch slapping them. In many ways it’s enjoyable to see a cocky male sneak into our store to get that useless fiat crap for his shiny after being soundly thrashed by his female partner It’s borderline orgasmic when the smarter half drags the believer in by the ear to dump the pretty stuff. I have to go into the private office when that happens as my sympathetic face is worn out.
As always, we’re here to serve you and your PM needs. God bless you.

#168 steve p on 07.07.13 at 12:38 pm

really good comment by smoking man #14

#169 steve p on 07.07.13 at 12:39 pm

ps excellent post garth

#170 Old Man on 07.07.13 at 12:53 pm

The Rolling Stones last month (June) at the MGM? Here I thought the only MGM they hit was Vegas on May 11th and 12th. I learn something everyday, so must be slipping a bit.

#171 Craig on 07.07.13 at 12:56 pm

Recovery….LMAO….I know this graph is BS…the author is an idiot….his feet stink and he drives a Kia.

The total amount of money the U.S. government
has either borrowed or owes retirees exceeds the
size of the economy of planet Earth.

http://www.antolin-davies.com/conventionalwisdom/governmentdebt.pdf

#172 daystar on 07.07.13 at 1:05 pm

#162 Making it up as I go… on 07.07.13 at 10:23 am
Good morning

Right now, the fed has been buying $80 billion worth of bonds on a monthly basis. This will shrink, by how much its hard to say but one has to remind themselves that even with expected higher tax revenues and spending cuts kicking in, the fed can’t go to zero. It’s deficit spending and that means a need to borrow beyond the bond markets as yields won’t be enough I don’t believe, to generate what they need. If it was, that would be great but I don’t believe there’s a chance of that so I can’t see central bank rates soaring to 6% this year or next… or next.

Higher rates will most definitely eat into revenues and compound their fiscal equation but only at the long end of the timeline. It comes when bond matures and debt rolls over or fresh debt is added to the pie so its not as big a problem as people think and financials in the U.S. are in much better shape now than people think. Banks have had 5 years of profits to strengthen their balance sheets since 08’and its much better regulated than before. Hard asset values and credit as a whole has gone through a major reset and they have climbed off their lows enough that higher rates won’t knock values down again. Its not like Canada, they have 30 year terms there. Its values in Canada that are at big risk to devaluation from higher rates. Rates have nowhere to go but up and values have nowhere to go but down. The U.S. system can handle rate hikes. In Canada higher rates are big trouble and we’ll see this theme playing out in spades going forward.

#173 Outtahere on 07.07.13 at 1:05 pm

Given that interet rates are set to rise…should I go for an early mortgage renewal to grab that 10year rate at 3.99% and pay the IRD (still 9 months left on my current mtg) or wait until next year?

#174 darkselling on 07.07.13 at 1:31 pm

I like that you just came in with some random comment calling me a cowboy realtor without actually answering the question.

Compared to Vancouver and Toronto Calgary’s market is affordable. Incomes are higher and housing costs are lower. Even with this minor bump in rates that will likely continue. Vacancy for rental properties is low, active listings aren’t particularly high, there’s neighborhoods within palatable driving distance from downtown that are easily affordable and the employment is strong.

The comments from your last story (I think) about the realtor talking about properties being bought quickly is accurate but not to the extent that the paper might have made one believe. And that has nothing to do with “realtor fraud” more to do with the way paper’s like to report things now “dramatically”. I know two families that bought new houses because theirs was flooded. These are millionaires that just thought “screw this, I’m going to buy a new house for x million so I have somewhere to live for the next few months”. Given I knew of two people that did this and one family that just hired a contractor and left to France for the summer I’m sure there’s plenty more than just went and bought a new place ASAP.

The people that are hard done by are the renters that are left wondering if they should rent a new place in an already tight market (getting worse) or ride it out until they could get back into their apartments, condo’s or homes. I don’t think the “buying rush” is applicable to those folks who are the majority.
Anyway, your postings like the globe and mail are Toronto and Vancouver specific and then group Calgary into that out of laziness. I had a relative who priced his house low in the spring because they thought real estate was slow and sales were few and far between because they read the G&M which is eastern biased and then include Vancouver. Too bad the realtor just wanted a quick sale and the place lasted 24 hours because of the low price and had 5 bids and one 5% over list which took the house. In the market area he was in Calgary was experiencing a bit of a boom (whether it was warranted or not) and as such the relative got less than they could have.

Point being – show some proof Calgary sucks and is overpriced before lumping it in. That’s all I’m suggesting. I don’t think things are overpriced at all. I live in a $350,000 townhouse 18kms from downtown that is 1,500 sq. ft. close to transit and has a double attached garage and own a SF rental that’s 1,900 sq. ft. backs onto a park and is 14.6 kms from downtown that I paid $450k for and more than cashflows and will for the next 5 years before I move there.

You’re a realtor. You say it’s different in Calgary. So, what did I get wrong? — Garth

#175 Old Man on 07.07.13 at 1:43 pm

We all have lots to be proud of as Canadians and every night watch a movie on the net; last night being I’ll Always Know What You Did Last Summer, and hit the web to read each bio (2006 release). There was this young actress that caught my eye who was born in Toronto, and raised in Leaside ; her daddy was well known, but never heard of her.

Get this: she has done 20 films, and 34 TV shows thus far. This is a huge accomplishment at such a young age, so we in Canada can be proud, as we have great talent in this Country that needs to be recognized in the arts. Caesar is cutting back in financial programs to support the youth in Canada, and I say it is time at the polls to kick him under the bus, and send him packing.

We in Canada need a leader with a vision; not some clown making speeches about the $90,000 saying he knew nothing; everyone knew but me, and not my fault but it was others who did this all. BS

#176 Donald Trump on 07.07.13 at 1:49 pm

#161 Smoking Man on 07.07.13 at 10:12 am

Last month I could have had drinks with the rolling stones In the lofts at MGM

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

I think you mean “losing your marbles”, instead of referring to prancing geriatric hippies.

#177 Mr. Monday Night on 07.07.13 at 4:07 pm

#106 Bargains everywhere on 07.06.13 at 11:55 am

“It’s spelled LOSER.”

—————————————————————

I think LOOSER is part of the vernacular here now within the confines of this pathetic blog, along with such catchphrases as “this won’t end well” or “it’s different here in Calgary”.

While we’re on the subject of correcting grammar and spelling, shall we discuss the unnecessary quotation marks you’ve given “LOOSER”?

#178 cynically on 07.07.13 at 5:04 pm

#153 WBSM – first off, what is this groupie’s that Garth might have had? A disease? He probably doesn’t know he had it either. As for why I believe the guys at the Fed know what they are trying to do and you don’t is because they’ve had many years’ experience in economics and finance and are graduates from some of the best universities in the country, not just one year in econ or finance 101 as many of the naysayers on this blog seem to have had. I also believe our host has been exposed to financial matters for some years. He and the Fed may turn out to be wrong but the signs are there for a turnaround and although I’ve had more than the aforementioned college courses, I don’t feel qualified by that experience (years ago) to pass judgement on today’s happenings. I do feel strongly however, that if QE fails it will be more a political reason than an economic one as the teaparty group in the Congress will do anything, including bringing Obama and the country down, in order to set their policies in place. This I would bet my own piggy bank on. Yes I did see the reaction on Wall Street last week and I took advantage of it – hope you did too. Salud.

#179 Form Man on 07.07.13 at 5:30 pm

#182 Old Man

I could not agree more. Harper’s proverbial chickens are coming home to roost……..

#180 Squatter on 07.07.13 at 5:34 pm

Garth, I’m seeing a subliminal message in your picture:
Let’s buy Tim Horton’s stock!

#181 Devore on 07.07.13 at 5:53 pm

#166 Gunboat denier

Or you could read the next sentence, “Across the district, meanwhile, the board has seen a 1% decline in enrolment annually.”

“Downtown” is not the same as “Vancouver”.

The district is considering all kinds of options, including closing/consolidating schools, or transporting in students from other regions.

#182 espressobob on 07.07.13 at 6:04 pm

Donut seeds??? Nice going Garth!! You had to give Hortons that idea!

#183 Alex K on 07.07.13 at 6:19 pm

#106 Bargains everywhere
Perhaps the most misspelled word ever.
Do you come to this blog to spy and check on spelling?
What are you doing here you “loser”
Now that’s better

#184 Daisy Mae on 07.07.13 at 7:10 pm

#99 CatFoodLady: “An increasing number of types of goods can be bought online for those comfortable with that method & increasingly, people ARE comfy with it. I know a lot of younger people who simply use brick & mortar stores as visual aids. They’ll check style, size, colour & construction of items wanted, then go home & promptly order them online for less.”

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

Yes, but the consumer still wants to touch, to feel. It’s a basic need. Retailers will simply become more competitive out of necessity. Chapters, for instance, is as busy as ever in spite of all the available electronics — people still prefer to thumb thru a book.

#185 Gunboat denier on 07.07.13 at 7:22 pm

188 Devore – the initial reference was to downtown.

Many school districts face similar challenges. Even if
enrollment over all were increasing, the demographics of neighbourhoods change. Children grow older and move
on, but parents stay in their house leaving existing
schools vacant for years, while still requireing new schools to be built in more recently developed areas.

The reason I was interested in the intial comment was a story I saw a year or two ago. Apparently an influx of young condo-dwelling familes in DT Van had created a
demand for primary schooling where little had existed for years.

#186 Daisy Mae on 07.07.13 at 7:43 pm

Is it my imagination or are posters becoming increasingly angry?