Karen’s 28. Her squeeze is 34. “Here’s our crazy idea,” she wrote me, “drop out.”
It’s a radical thought for a couple of urbanites employed in the web design business who think a racy night is diddling with Zoocasa. At least they come here. “Love the blog. Read it for a reality check after searching for 7-figure homes in my T.O. neighbourhood.”
Here’s the crazy idea.
“My husband floated the idea of buying a farm somewhere remote in Canada to grow cash crops and manufacture liquor on site with the produce grown there, beer, cider, etc. For some reason this didn’t seem entirely crazy to me. Particularly faced with the prospect of heading into an unfulfilling job everyday in an economy that is not getting better.
“We have just over $100,000 in savings that we were keeping for a down payment on a house (ha) and don’t plan to do it for a few years to bump that up a bit. If we do make the move, I work as a web designer and writer now and could do it freelance to pay the bill while the crops grow Tell me this is crazy and we can’t do it. Tell me what we should do instead.”
Before that, a word from Franco. I eviscerated him a few months ago on this blog for wanting to move up to a bigger Vancouver condo because he has a wife and newborn. Ending up with a bigger debt on a doomed unit with no savings, I hissed, is the last thing a responsible dad and partner would do. It worked.
“You gave some sobering advice. So I sat on it for a while and thought long and hard. Then my wife said she can’t stand living here. So off we went to find a rental and began the process of dabbling as landlords and putting our place up for rent. After 10 days of no show craigslisters, questionable people from high school who coincidentally showed up to view and rent the place and a realization that unless I cheated on my taxes, I would not be able to break even every month off my rental, I decided to leverage the manipulated news of a housing recovery and put our place up.
“I took your advice and got a real pro realtor. She found a buyer in 12 days. I was relieved beyond belief. Now we are feeling great. We got a 2 bedroom just 4 blocks away in a building with better amenities than the last one and balconies overlooking beautiful English Bay and its stunning sunsets. We now have a bunch of cash, I have a good job which pays 6 figures and I have a beautiful family to hug every day. No Condominium investment will replace that euphoria.
“Since I took your advice and decided you were right, I now start to hope you are a little wrong about the decline targets you mention in your blog. I hope it goes even lower. I hope that sanity and reason are restored in a city where very few people make a mint (legally) to afford the prices that housing costs. I am a convert to your ways. I am not a sociopath, I just think it sucks that the country my parents immigrated to has so lost its ways and its potential. I don’t know why we are so foolish. People who do little “work” can sell concrete, steel and drywall boxes as the answer to some investment wet dream and call themselves professionals. I have family in Germany. You know what happens with apartments there? They stay even or go down in value. Over there, homes are for shelter, not some Tom Vu get rich quick scheme. You want to get rich there, you build the best cars, trains and cranes, not ‘marketing systems’ like Bob Rennie and Brad Lamb. “
See? I’m not such a bad guy. Franco says he’s a Garth convert, and he’s not even ‘a sociopath’. Does an endorsement get any better?
So, I grouped these two notes (both received on Wednesday) because they share the theme of repudiation. You’ll be hearing a lot more about that in the time to come. Looks like things are going to turn out a tad worse than I’d been expecting, or hoping.
Our economy’s shifting into a lower gear, but most people have no clue it’s happening. It’s all around. Big corporate mergers (Loblaws-Shoppers, for example) are defensive moves and presage substantial job cuts. The potash thing this week is a national kneecapping. Torstar profits falling 44% is all you need to know about retailing. Now economist David Madani (Capital Economics) says growth will wither and the real estate soft landing the feds have been planning will end up being hard. “I think people are really under-estimating the risks to the housing market,” he says. “Is no one worried about this?”
Now consider this: 900,000 people work in Canada building houses and condos, compared with just 225,000 employed in the entire energy, oil & gas and mining sector. We’re losing manufacturing jobs at almost 4% a year, and adding drywallers and carpenters at about the same rate. The number of people who work making stuff is at an all-time low. The number of people who work building stuff’s at an all-time high.
So what? So we don’t export stacked townhouses or condos, like we do potash or airplanes. Cheap interest rates, house horniness and a new appetite for debt have massively distorted the Canadian economy. Like Vancouver or Saskatoon, we’re busy building a society in which we’re obsessed with selling each other bigger homes financed by money we borrow, not earn. It’s a house of cards.
Too much money has flowed into one sector, making us dependent on jobs which can only last if the house binge continues. But with record debt levels already here, it cannot. This should be self-evident. Madani’s right. No soft landing.
Franco was smart to exit. The best gift for his family was liquidity.
As for Karen, how can dropping out be crazy when it means debt freedom and self-sufficiency? Contrast your little farm life, a few hours’ drive from the city, with buying a million-dollar house in Toronto and a $900,000 mortgage. When you have digital skills, common sense and the courage to live off the established grid – despite the challenges that brings – why not try it? Besides, if it sucks you can just drink a lot.
It won’t be for everyone. But for many smart people who understand what lies ahead, the newest big idea is living small.
171 comments ↓
I have the lifestyle they want…It’s stress-free…
The shit hits the fan soon !
Besides, if it sucks you can just drink a lot.
It won’t be for everyone. But for many smart people who understand what lies ahead, the newest big idea is living small.
———————————————————-
I’d also suggest making sure some in the local community are “in tune” with your values. One might find themselves very lonely and drinking alone sucks. Love the country, the people, well…at least there are fewer around.
Not what I expected you to say to us who gave up the hustle bustle of corporate life for something more meaningful.
I abandoned my manager position at a Big 4 in downtown Calgary for growing fruit and doing bookkeeping jobs for my neighbours.
I couldn’t have made a better choice for the little ones, despite what my other half thinks.
When you have digital skills, common sense and the courage to live off the established grid – despite the challenges that brings – why not try it? Besides, if it sucks you can just drink a lot.
Garth – didn’t you live somewhat “off the established grid” with your ‘bunker’ in Caledon while posting to this blog 6 days a week? You gave that up for a place in the city… so should we expect to see Karen on the Yonge line in 2 years?
Old news. New bunker. — Garth
There are some crazies (hubris) in Scamcouver that truly
Feel that market will never collapse. Whistler was on the auction block not too long ago. The Olympic village was barely a 1/3 sold during the Olympics. And scamcouver is bleeding jobs to Alberta and Ontario. I doubt anyone will be left to support the hubris real soon!
Karen: Your skills will probably allow you to work anywhere, but have you any skills in running a little farm. Let me tell you something, cows don’t give milk! Running a farm, even a little one is a lot of work, and I would consider all the costs involved and machinery you would need to buy and use prior to “dropping out”!
Franco: you cashed out and are feeling great, now keep that money invested and pray your landlord won’t sell the place you love so much right now and does what you did.
Garth: despite the potash crisis, and the low credit, isn’t there an argument to be made that 250,000 people come to Canada each year and need a place to stay? Plus our economy still relies heavily on exports, and so long as we have cheap access to credit, the horniness may continue…
wow…I just read that this could be a ‘hard landing’…that’s something new. And living small (locally), off the grid, sounds a bit like JHK!
Garth: On the subject of the economy and investing, can you please address what is up with REIT’s. I have a healthy portfolio of them … good ones and all they do is go down … every day. So I bought some Potash at $39 as it was touted as a good entry point … right!
Before you move to a farm and build websites long-distance make yourself aware of the quality of high-speed internet service available in your new locale.
Not what’s advertised, not what’s promised, but that which is regularly achieved. Ask your prospective neighbours. Same goes for electricity.
A hard landing is the only way people in denial will learn. Everyone still believes house prices will continue to rise forever, so whatever happens they deserve it.
This picture has a flashback for me, as all the old rich women from Forest Hill would have high tea at Yonge and St. Clair just north of St. Clair at a restaurant on the west side of Yonge street, at 4:00 PM. as they where so special within the elite society of Toronto.
[…] via Crazies — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate. […]
And for Karen, if she is Ontario, can slap up solar cells all over her little house and barn and sell the power to the grid for $0.80 per killowatt hour for 20 years guaranteed thanks to the provincial fiberals. Be a solar farmer. She wouldn’t be the first.
The still can probably power itself.
“… the newest big idea is living small.”
Sound advice GT. Ms Tsunami and I have been digging through various items accumulated over the years and moving them on.
Less clutter and you end up finding things you forgot you had. (It also prevents having grey hair moments and buying more of what you already own.
We benefit the most from our letting go, the kids get first dibs and are encouraged to take a load with them for the Blue Box…
We “repudiated” a few years back. We now rent a new house larger than the one we had before, have no maintenance issues “(whew!) no worries about $$$. With my work we can live anywhere, so that’s where we went. Tough choice at the time, but my wife and I would “repudiate” again in a heartbeat. Only thing we would have done is “repudiate” earlier and save some heartbreak and time.
Re: Karen
God bless the hipsters wanting to start their own microbrewery! they can say they drank that beer before anyone ever heard of it.
As it says in “Stuff White People Like”,
“Also of note: most white people want to open a microbrewery at some point. One that uses organic hops.”
All joking aside, that sounds like a great idea to move off the grid. I am dying to do the same myself.
Must be a white person’s thing.
GET’N THE HOLE!!!!
er, … I mean first.
It seems theres something in the air? Why do I get the feeling we will see more layoffs from the big corporations becoming headline news? OK maybe I’m paranoid a little. It’s the mindset most will take thats troublesome. Something about deflation?
Good one !!! Thank you!
Halleluja.
I am not a sociopath, I just think it sucks that the country my parents immigrated to has so lost its ways and its potential.
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Amen.
Garth,
How do you suppose one capitalizes on today’s market? RE is no investment at these loony prices, commodities are rigged and pure gambling, US stocks at all time highs, IT stocks with PE multiples of 150+ (I’m looking at you facebook), bonds with depressingly low interest rates in a rising rate environment….where does one invest today??
Happy real estate agent surrounded by bidders on the Leslieville property?
When you have digital skills, common sense and the courage to live off the established grid – despite the challenges that brings – why not try it? Besides, if it sucks you can just drink a lot.
———–
It won’t be for everyone. But for many smart people who understand what lies ahead, the newest big idea is living small.
————–
Another Amen!!!
Great post tonight Garth
It always seems as though you want Canada to falter and the US is some kind of relative to Allah and is only headed for good things. Even though it might appear so, it is for all the wrong reasons such as QE and now Bernanke’s desired legacy before he is fired in January ’14. He obviously really wants to end QE ( to hell with the bond market and the consequences of higher rates too soon) and his tenure appearing like the savior of the world with his loose monetary policies before he goes back to teaching. No inflationary pressures?? really?? have you bought bananas lately or filled your Hummer?? Paid your rent? how about utilities??
Anyways, I do not disagree about the fact housing is yet another illusion of wealth and should be put to its death immediately to end this charade so we can begin to mend. However, I question your comment on retailing. Many US retailers are moving north….well known and established retailers. Do you think they haven’t done their homework and are just moving in on a whim? Do you think they do not know Canadians are at record levels of household debt but are still coming? They must see something we do not and have more confidence than you or I.
While we always hear about how right you are, there has been nary a mention about your favored REIT’s that are still taking it on the chin part deux.
Don’t expect anything to change in the real estate market until at least after the next federal election. Can’t have the sheep going to the polls feeling poorer now can we….
Oh and btw, Bernanke’s legacy is “bankers can steal from people and destroy lives, not get punished for it, and the country will survive via printing presses/taxpayers.” Great lesson. With that kind of enabling watch for history to repeat itself.
You mean you haven’t loaded up on this REITs yet? — Garth
David Madani a few years back said Canadian housing prices on average will fall 25% when it’s all said and done.This does not mean Vancouver,Toronto,Calgary,Edmonton,Montreal etc. will not drop 35%,40% or more.
The old expression holds true here,the bigger they are the harder they fall.Real estate is local so any economic or specific industry troubles like Potash Corp. in Saskatchewan will make the real estate decline guessing game more difficult to predict.
“the newest big idea is living small ” – well, that was well said. I’m lucky to get out of Vancouver RE in 2012 – just lucky, we just wanted to move closer to kids’ schools . We moved into a co-op in great area and loving it. Things are just STUPID in Vancouver to the point that even some well educated folks can’t see that ” the party” is over !!!
If you believe:
– RE is rediculously overpriced and not a good investment currently (canada)
– it would be dumb to buy US equity and all time record highs and don’t believe the ‘recovery’ is for real (see all time food stamp usage, housing rebound fueled by ‘investors’)
– interest rates are never going above 2% ever because it would ruin the economy
– MERs are too costly in canada to make a buck in any investment portfolio (I am not a do-it-yourself investor)
Where should I invest?
I am leaning towards short term GICs at thier inflation losing rates and just waiting until opportunity comes about. I fear though this may be 5 years away and by then my food bill will be $10 for milk.
News flash: there are other assets than stocks and GICs. Sheesh. Have you learned nothing here? — Garth
My parents spent over thirty years making a living east of Calgary doing almost exactly as Karen describes, though you can replace booze with pickles and jams. My father’s health woes will finally push them into a bung elsewhere. Karen, if you felt like heading west, I know of a place with twelve acres, irrigation access and equipment, and a commercial kitchen and sales area attached to a bigger house than you could ever imagine finding in Toronto.
You may also be pleased to know that in Alberta, at least, you can get a licence to sell fruit wine at farmer’s markets.
Now, if Alberta isn’t to your taste, you might benefit from attending farmer’s markets somewhere you might want to end up, and strike up conversations with the oldest stallholders. Going by my parents and their friends, nobody’s kids want to inherit those businesses, so they might be interested in selling at an entirely reasonable price, perhaps with some mentoring thrown in.
Now they are starting to talk about 200 square foot ‘mini suites”, here in Dampcouver.
OK. Let me tell you something – I wondered why Parisiens spent so much time “Out and About”. Why? Because their average apartments are the size of Flaherty’s underwear.
People go stir crazy, so they eat at their favourite bistro and party too. Hard to have a cocktail part in a 450 square foot apartment, that was originally built for servants quarters – like many of the 3rd, 4th and 5th floor apartments that were built in the 1860’s, in Central Paris.
So, sure, go small – but find an area with places to go and people to see or you’ll wind up like smoking man.
Reading your blog has changed me and made my life easier Garth, thanks:) …….Relatives and friends, who have a good idea of my financial beliefs, well, now I am able to watch them take massive mortgages, some who are even “selling up”, some take helocs to renovate their mortgaged house, and not because the house needs it, wife just wants a nicer bathroom and kitchen, some taking helocs to buy, not 1, but 2 new vehicles, and both have to be SUV’s. Throw in a holiday to Europe on top of it, and that is living the good life. No worries …..well, not for me anyways:) . I no longer care what others do. I know nothing, except that living debt free, being balanced, diversified, and liquid works well for me…….my name says what I believe-“Freedom First”. So glad I can come to your free blog, it really is a refreshing break from a financially insane world.
http://recharts.blogspot.ca/2013/07/416-sfh-sales-and-stats-2013-07-31_31.html
http://recharts.blogspot.ca/2013/07/416905-condo-sales-and-stats-2013-07-31.html
Loved the post, especially telling Karen to go for it.
In fact everyone should go for it.. Can always get a job if you screw up..
Mind you, who serve me at the LCBO if everyone went for it.
OK bad idea..
Work dogs work..
I’m already “livin’ small”. Renting an in-law suite just outside Cowtown, 50% travel for work so the per diems already pay the rent (just have to shop @ Sobeys when on business as opposed to eating @ the Keg). Car, gas, tele, Internet expensed to company. With exception to a small entertainment expense I allow myself, net income is almost all savings.
Livin’ small is actually quite liberating as clutter is replaced with cash position.
Look at the potash chart folks…. POT.TO … THIS IS WHAT HAPPENS WHEN FEAR HITS THE MARKET… Take note Mikey the Realtard :)
It will be no different with Canadian RE. Just a bit longer than 2 days for a 25% crushing…. No matter, it will be painful folks.
“renting is the new cool”,now we can add “newest big idea is living small” whole heartedly agree Garth!Now if those prices on acreage up the sunshine coast would moderate I may be tempted back into home ownership,lets see,small comfortable home,wood fireplace,photo-voltic panels,garden space,wild game and as much sea-food as one could desire … hummm come on 50% realestate reset!
It’s a radical thought for a couple of urbanites employed in the web design business
the key word being employed
to stay employed you have to keep up with technology and have actual clients. Stay in Toronto, keep up with technology, keep your clients, find new ones. None of that means buy a house
farming, er agriculture not so easy. Easiest thing is to find yourself competing with old money. I’m thinking of a man who sold his (milk) quota. He’s semi-retired raising crops on good productive farmland, with barns and equipment he actually owns. With a family that’s totally familiar with farming. Don’t kid yourself Karen.
Dale in TO: So I bought some Potash at $39 as it was touted as a good entry point … right!
pretty funny
http://recharts.blogspot.ca/2013/07/416-sfh-sales-and-stats-2013-07-31_31.html
http://recharts.blogspot.ca/2013/07/416905-condo-sales-and-stats-2013-07-31.html
http://recharts.blogspot.ca/2013/07/905-sfh-sales-and-stats-2013-07-31.html
Gee Golly it is awful about the Potash story …now Garth is it a good time for us boomers to get down and hold our noses and buy the shares of Potash with its reasonable yield over 4%. I must confess being one of those GIC I’m not worthy types.
Also back to the boomer set: it’s ok to encourage the kids to get out there and live their life and move out of their parent’s bungalow. Maybe Canada is unaffordable but so many other countries are dirt cheap and even Canada if you are able to embrace small town living the reward is “small town price.”
Mr Turner: I waited a long time not to be First! Also isn’t Karen doing a musty basement dweller, sitting out the period. Waiting for the opportunity and the circumstances to change?
On this page scroll to the bottom and see the 5th line of the table
http://recharts.blogspot.ca/2013/07/416-sfh-sales-and-stats-2013-07-31_31.html
Must be a picture of Bandit’s birthday, or Bar Mitzvah, or puppy school grad, etc.
Karen, to help with your decision, I’d suggest viewing the Canadian movie/documentary: “To Make a Farm”.
Crazy Cat Lady meet Wacky Dog Guy. Even pictures on the wall, natch.
One word for Franco: Schadenfreude
The RE agents here in Alberta maintain you got it wrong Garth and they are celebrating higher than last year monthly sales and prices like there’s no tomorrow. (Some with Garth-bashing blogs- You know who you are FirstPlace Bob).
It’s clear that buyers are buying the hype, but I wonder what will be the tipping point? When will it become clear to buyer’s that they’ve been played and what will the indicators be?
“Our economy’s shifting into a lower gear, but most people have no clue it’s happening…”
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This is so true. People are absolutely clueless. I have two friends — both Harper supporters which explains a lot — that truly believe we’re doing great. I could suggest they give their heads a shake…..but what’s the use? Can’t fix stupid.
So much for the business channels on TV. No mention of potash cartels, Russian sales to Chinese, artificial price setting etc. and then out of the blue…SHAZAAM!
The end of potash as we know it?
http://business.financialpost.com/2013/07/30/potash-uralkali-prices/
#34, I agree totally. The RE game has been aided and abetted by the banks and all levels of government for so long, that there will be little to no window of time for speculators to get to the exits. Growth has basically stalled, wages in real terms are probably dropping for anyone without a government job, and yet RE prices keep going up.
Tulips and Titanic come to mind.
Now economist David Madani (Capital Economics) says growth will wither and the real estate soft landing the feds have been planning will end up being hard. “I think people are really under-estimating the risks to the housing market,” he says. “Is no one worried about this?”
me too
I think people are really under-estimating the risks to the housing market. Comparing Canada to the US, I assume that the banks are prepared – no robo-signing, mortgages are properly registered, no MERS. I mean they had damn well better be ready. Politically there is no sign of it. The danger is HAMP .
http://en.wikipedia.org/wiki/Home_Affordable_Modification_Program
that is Canada will adopt a program like HAMP.
My plan is to give a family $1000/month for a year. After they lose their house. The bank has to mark down the loss.
Garth – you write a lot about real estate and stocks.
Many thanks.
But can you please take some time to write about entrepreneurship such buying an existing business or starting a new business; and whether or not someone should just stick to their day job.
thanks!
I grew up on a cattle ranch near Red Deer and have some advice for city slickers who design Websites and want to do it from a farm: don’t.
If you have any kind of livestock, you must check on them twice a day even if you have stomach flu, there is a howling blizzard, or both. You must know how to clear a plugged sewer drain. You must know how to service a furnace that quit on a -25C night when the serviceman won’t come out because the roads are blocked by snow drifts. You must know how to change an oil filter on a tractor. It doesn’t matter how hard you think you work now or how many Pilates you do, you won’t find out what real physical hard labour is until you begin living on a farm.
Stay in the city and rent. You’ll be much happier.
This message written by a farm boy who became a city slicker the first chance he got.
Still say the Potash thing was all rigged. I am sure the truth will ooze out.
Re: Construction…IMHO they have basically absorbed future demand.
The way I see it, the doors were opened to foreign investment so that the locals would build up from house envy to house horny. They took the bait.
Now the SHTF.
The Gov’t is promoting these mega projects,and trades training, but that’s another warning sign.
#28 Dean Mason on 07.31.13 at 7:29 pm
================================
I agree, but think it will work the reverse way. There are still many houses in Toronto, that sell in the $400K – $600K range.
But places far out in Burlington, Milton and others are selling for very high prices given their distance from the downtown core. When the economy contracts I think the suburbs will be harder hit than the core. The people in the core also have some access to mass transit, the far suburbs have very little.
I grew up on a dairy farm, with quota land cows etc.
You think housing in canada is inflated it doesn’t look like it next to the agriculture business.
Farm Credit Canada practically gives money away to farmers and the price of land has skyrocketed.
There is a huge bubble in farmland as well,
Add to that the solar/wind money they give to the farmers and it went up further.
I don’t see this ending well either
#27 Cory: “Do you think they haven’t done their homework and are just moving in on a whim? Do you think they do not know Canadians are at record levels of household debt but are still coming? They must see something we do not and have more confidence than you or I.’
A couple of undeniable truths.
1-He who dies with the most toys dies.
2-Time is priceless.
I just returned from Puerto Vallarta where there are thousands of foreigners who have opted out of the gotta have more scenario.
Many have bought small inexpensive or expensive condos or houses which they manage and rent out.
They are all over the place, living a cheap lifestyle with great perks and the opportunity to do things now instead of at 65.
Days turn into weeks which turn into years and before you know it your in could’a should’a land.
I thought it interesting that only 10% of Amercians have visas, gotta think outside of the box.
Adios
#27 Cory: “Do you think they haven’t done their homework and are just moving in on a whim? Do you think they do not know Canadians are at record levels of household debt but are still coming? They must see something we do not and have more confidence than you or I.’
**********************
Chrysler comes to mind. Years ago, they were in trouble. Years later, they were in trouble again….
FYI
land that 15 years ago sold for 1500 per acre is now selling for 5500 per acre
House Prices Driven up by Investors (Speculators)
The first time I heard that was probably about 1978 when I first started reading the business news.
Houses are unaffordable? The first time I heard that was about the same time.
These uncertain risky times? The first time I heard that was also around the time I first started reading the business news.
The future is uncertain? same
Jobs are scarce? same time
Big corporations are ripping us off? same
price of gas is way too high? same
Parents generation had it easier? same (well except for those that got killed in the wars and never became parents)
Rents are too high (same time)
Cost of living is too high? same
In all that time I saw the quality of houses (and certainly the size) and the quality of living and the leisure time grow and grow, along with the whining.
It will never change.
Kudos Garth! Great post!
Exactly the decision my wife and I made 3 years ago. Move out of Vancouver, leave its promises, jobs and opportunities behind and settle back in rural Okanagan.
Sure.. not the same as Vancouver, the beaches here are too clean and the water is too fresh and warm to enjoy in the summer. And the traffic, don’t even get me started on the 15 minute commute into Kelowna. Crowds.. what crowds? Paper thin condo walls, not here.. but I guess we have learned to live with it all.
We can actually afford the Audi in the driveway, we actually have the time to put the boat on the lake more than 2 weekends a year.. We can afford to ski with no lift lines, fresh powder and no bus loads of tourists ruining the hill. I don’t remember paying to cross any bridges either last time I drove on 97, then again I don’t get out much.
Point being, if you are settled in the city on the 20th floor in your newly bought 980 sq ft paradise consuming every last $ you make your fate is sealed.. add that to the list of worries while try to sleep with the traffic right out your window.
http://mayer320.wordpress.com/2013/07/28/these-things-never-really-end-well/
#49 Daisy Mae on 07.31.13 at 8:53 pm
This is so true. People are absolutely clueless.
……….
Thank god they are, it’s hard enough to make a buck under globalization, clueless people are sales, and sales is where loot is made.
“As for Karen, how can dropping out be crazy when it means debt freedom and self-sufficiency?”
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Garth, you are being disingenuous. Karen’s savings of $100k won’t go far in buying a farm and setting up a microbrewery or hard cider operation. In Karen’s case, dropping out with $100k will not translate to debt freedom and self sufficiency in farming.
Sounds great, but in the farm area where I grew up, the banks were the real owners of the farm equipment (despite the farm boys inheriting the farm).
Unlike much housing today, with farms you often get what you pay for; cheaper farms usually mean less topsoil or more untiled swamp.
While I agree that Karen is young enough to “go for it”, and why not….farming is not like playing the casino at Vegas….Mother Nature is far more expensive and far less forgiving.
Grew up on a farm…been there done that, but ok I’ll give Karen and her hubby the long shot odds. Maybe hubby has experience we don’t know about. Maybe they’re smarter than all the farmers I knew. And just maybe they’ll have the best time they’ve ever had blowing $100k to find out.
It’s a big country. Look around. — Garth
#37 PotashBust on 07.31.13 at 8:11 pm
Look at the potash chart folks…. POT.TO … THIS IS WHAT HAPPENS WHEN FEAR HITS THE MARKET… Take note Mikey the Realtard :)
It will be no different with Canadian RE. Just a bit longer than 2 days for a 25% crushing…. No matter, it will be painful folks.
—————————————
Keep dreaming potashbust aka mikey the retard, it will be a very long time before you ever leave your mom’s basement.
“You want to get rich there, you build the best cars, trains and cranes…”
So true! Getting rich in Germany (and most of Europe) does not necessarily involve RE, for better or for worse. Some of my friends there (manager at Opel; veterinarian with his own Praxis; software company owner) are doing very well, in the >€200,000/year area and are not interested in buying RE. All of them are renting great properties in the Oberbayern area, near the Alps, with great mountain views, 1h from Salzburg and Munchen, 2h from great ski resorts, 5h from Venice and the Italian Riviera.
For the money they would have to pay to own, they could travel to all of the above and many other destinations, sleep at the nicest hotels and have great fun for decades, during their six week vacation.
Meanwhile we are jeopardizing our children’s future to be the proud owners of wood, chipboard and plastic houses that will need major renovations every two decades.
#30 Looking for opptys
Maybe you should work on DIY investing! Not a big deal to build a diversified portfolio covering equities & fixed income. Thats the easy part. Rebalancing and Compounding gets a little tougher! Don’t underestimate those two! Overlook the market hype and make some profit! I’m sure Warren Buffet would approve.
#60 mortgagebrokeron on 07.31.13 at 9:18 pm
Are there buyers for farms then? Farms in the Niagara region sit for sale for about a year, granted that’s when I checked three years ago. Is that price increase everywhere in Ontario?
As for the wind/solar farms, back in 2010/2011the Niagara region utility’s capacity was full. They couldn’t absorb more power generation until their capacity to absorb increased. I don’t think the gov’t is paying the 80 cent per kWh that was touted three years ago. I could have signed up in 2010, but the 25 year commitment spooked me at the time (extraneous circumstances with anxiety back then). Ontario Hydro pays the US to take our excess power, I question whether Ontario Hydro welcomes the extra power generation.
If Canadians aren’t scared then they are not paying attention.
I agree with the comments of many on this website. If you are thinking of living small in rural Canada – then do your research. I grew up on the farm, and while the housing was cheap, the air clean, and neighbors were friendly, there are far too many factors that make farming stressful, expensive, and full of risk. My parents had four bright children who all left the farm to pursue university degrees and careers which did not involve the risk of farming. While we all miss the open spaces, we don’t miss the financial stresses we watched our parents deal with.
Karen – if you can work from anywhere that has an internet connection why WOULDN’T you do what you are proposing?
After all the doom and gloom and idiots that write into Garth with their dumb ideas about real estate it is refreshing to actually see a good idea for a change!
Go for it and I’ll take a few pints of cider off your hands when you’re set up.
It’s a big country. Look around. — Garth
Your a genius gartho, now let’s look at this,
109 acres, you plant corn, every twenty sqft oops how did that pot plant get there…
Don’t have a calculator handy but that crop could yield the cost of house in one harvest
Love the idea…… Just don’t it once.
“It’s a big country. Look around. — Garth”
———————————————————-
Well I know, based on reading your blog, that one must take care to translate real estate bumpf. When I read a real estate posting for a farm property in N.S. that’s listed for $99k and described as “100+ acre parcel of mixed trees, field and river”, I think about rocky grazing land bordering a swampy floodplain. Remember, I grew up on a farm and we used to snicker and take great delight in reading realtor sales listings for neighbours farms. One might well ask why aren’t they already growing an orchard for cider apples, if it’s so golly gee darn profitable to do so…..similar to what others on this blog have said about the “flipper” house you mentioned in yesterday’s posting; same principle applies.
That said…Karen, if you are reading this…ask yourself the most important question, “are you running from something or running to something?” If you are running to something then you are running with the odds.
I disproved your assertion of no working farms in established areas for under 100K. It took one minute. Suggest you deal with your own devils. — Garth
#61 & #62 Shawn
Could not agree MORE!! The more things change, the more they stay about the same. RE is overpriced currently, not necessarily so stocks.
So where did you expect to find that free lunch? I never expected to find one, just worked hard to pay for my own.
Save, Invest – it still works!
#66 Marginal on 07.31.13 at 9:39 pm
A friend of mine moved out of the GTA, with his family, to Nova Scotia, and set up a brewery with his business partner. It was an investment in time, money, and energy, no doubt, and let’s not underestimate that. And, they are a little older (40-ish). The brewery was only recently completed, but best of all, the beer is now for sale.
Am I allowed to post the link, Garth? (If only to prove that it can be done).
http://boxingrock.ca/
http://www.thelandproject.com/ontarioland.html
Off the grid?
Bark, bark, woof, woof, ruff, ruff! Sorry just couldn’t resist. Sitting here in Oakville down by the lake drinkin good scotch with an old friend. Decided to pull a Smoking Man!
66 Marginal
Much wisdom there. Having said that they could always find an small acrerage to rent and give it a whirl for a year or two as a trial run, and keep the stash. If they feel it’s for them, great, if not call it an adventure.
Toronto Star, 31 July 2013:
“The United States wants its police officers to be exempt from Canadian law if they agree to take part in a highly touted cross-border policing initiative, an internal RCMP memo says. … The debate over whose laws would apply to U.S. officers working in Canada raises important questions of sovereignty and police accountability, says the briefing note prepared for RCMP Commissioner Bob Paulson.”
The Canadian Civil Liberties Assn are concerned about it too. Apparently US border police would be allowed to make 50 mile incursions into Canada. If this is true, that’s pretty much into every major city in Canada.
More on this can be read at:
http://www.cbc.ca/news/politics/story/2013/07/31/pol-cp-us-police-sovereignty-cross-border-rcmp-memo.html
http://www.thestar.com/news/canada/2013/07/30/us_wants_exemption_from_canadian_law_for_crossborder_officers_rcmp_memo_says.html
The link to CCLA on this issue:
http://ccla.org/canada-u-s-security-perimeter/
This is mest up, I can pick 9 Award all on a rigid slot machine in Vegas, I consistently bet, guess the right way in the markets, I make money effortlessly, I see trends long before anyone.
I just killed the bottom of my last bottle of wine and I can’t figure out what’s keeping the fridge door from closing.
The more I tried the worse it got.
Spent 10 minutes, left the task to the wife….
2 second later it’s closed, I’m sitting here in an insane rage, she won’t tell me where I screwed up.
Time for Jack
Just saying…
Maybe this will become fashionable and keep housing prices up. Occupy Passively!
http://www.cbc.ca/news/business/story/2013/07/31/business-debt-poll.html
We sold our farm last year. After 33 years of home ownership, decided to throw caution to the wind, rid ourselves of all our stuff and just let life unfold. With 40 days to close we sold off all machinery, emptied the outbuildings, hubbys workshop, basement and house! Sold, donated, scrapped, burned, purged. The little we kept fit on 7 utility shelves now stored in MIL’s basement. Our mortgage free home was costing us over $2000. per mth: taxes, insurance, utilities, maintenance etc. It now costs us about half that as we travel, renting off season cottages and condo in Florida. Kijiji is a wealth of short term rentals. Even dog sat for a week! In our mid fifties and feel like 20 again! Liquid, balanced, diversified. Thanks Garth.
#55 Hawk
I think that like the last real estate beating in 1989 to 1995 the more expensive homes were hit more percentage wise.Condos are even more at risk with an over built inventory amount in Toronto by 35,000 to 40,000 units.
There will always be a few exceptions.Remember the price declines don’t have to be sharp and fast.We could see 5-6% annual price declines for 6,7,8 years not necessarily a 35% to 40% 12-18 month real estate beating.
I agree that as car prices,gas,insurance,depreciation,maintenance,repairs,registration etc. increase over the next 5,7,10 years those cities and parts of cities that have mass transit will have an advantage when comparing transportation, living costs and housing costs.
“I disproved your assertion of no working farms in established areas for under 100K. It took one minute. Suggest you deal with your own devils. — Garth”
————————————————————
My apologies, I did not see a “working farm” in the real estate link that you provided, since the listing only mentioned a farmhouse with acreage. Sadly there are many of those….the best ones with only 100 acres are hobby farms.
Sorry, I don’t see the devils either ;-)
Loved the bog tonight. Garth. I totally agree with the living small concept.
But the part I can’t reconcile, with your theory, is trying to save a few bucks. You’re always beating up on Kias and Costco. Why? Aren’t these a good way to save a few? How do Hummers fit in to this whole scheme?
Yes! Drop Out!
Totally doable – LOCAL is trending.
And, Karen, don’t listen to the pessimists that grew up on a ‘farm’. I grew up on a farm too. Way back in the day, farmers grew quarters upon quarters of wheat and/or shipped hundreds of finished cattle every year – never knew where the product went – we were still in a colonial mentality….just did what we were supposed to..
Now, it’s the smaller organic growers and market gardeners who are really showing what independence and creativity can do.
Lotsa’ Courage and Luck! Just do it!
West Vancouver home sales are still on the upswing…
A home purchased on Queens St. West Van., May 2012 sold in July 2013 purchase price $1.7 sold price 2.1
Lots of homes listed but no noticeable decline in price.
Lets see what autumn 2013 shall bring. The feeling here is we still have asian buyers and flippers… West Vancouver is due for a rude awakening…
Re: #23 Capitalist on 07.31.13 at 7:24 pm
Buying stocks long and selling stocks short that pay no dividends in equal amounts has always worked throughout the ages. This will work in the future as well.
RE: #81 WhiteKat on 07.31.13 at 10:52 pm
“The United States wants its police officers to be exempt from Canadian law if they agree to take part in a highly touted cross-border policing initiative, an internal RCMP memo says.
The Canadian politicians who agree to this should be tried for treason.
Time to literally repel borders!
Re: #23 Capitalist on 07.31.13 at 7:24 pm
Anyone could have bought Shaw long and shorted Telus given what happened with Rogers and Bell. Dsl is dead just like in America and with almost everyone moving to cable internet like what happened in America years and years ago. With bundled services this was plain for everyone to see. Note the people out west figured it out about 2 years too late as Shaw’s share price should have gone up about 2 years ago not just recently.
I like the comment about checking this blog after searching the 7 digit listings on mls. I think this blog is a great way to sober up after a romp on the cartel’s website.
@ #76 retired WI Boomer said: “So where did you expect to find that free lunch? I never expected to find one, just worked hard to pay for my own.”
You didn’t work on Wall St!
Some farms I found across the nation for under 100K:
http://www.realtor.ca/propertyDetails.aspx?propertyId=12684367&PidKey=1371633342 – Dairy farm close to Yarmouth, NS.
http://passerelle.centris.ca/Redirect2.aspx?CodeDest=RCIIQ&NoMls=MT8390191&Source=WWW.REALTOR.CA&Langue=E – Dairy farm close to Sherbrooke, QC.
http://www.realtor.ca/propertyDetails.aspx?propertyId=13222018&PidKey=86445630 – 200 acres of land approximately 2 hours from Portage La Prairie, MB.
http://www.realtor.ca/propertyDetails.aspx?propertyId=13364007&PidKey=-1244666929 – 49 acres close to Annapolis Royal, NS.
Growing up in my childhood in the 1980’s on a ranch in Alberta, many people from urban centers have very little knowledge of rural lifestyles. I’m guessing probably less than 20 percent of all people live in rural areas in Canada. Farming is very expensive in comparison to the past and many farmers have gone large scale due to the competitive nature typical of any business these days. My dad bought 4 quarters (640 acres) when he was age 28 back in the 1970’s after working only 10 years in Alberta’s oilfields at the time. That would be literally impossible in similar situation today unless came across a massive amount of money. Many people were the same and he is not unique.
Just a few points:
1) a quarter of land in AB (160 acres) goes for 250K to 850K+ depending on bush, pasture, cultivated, and urban influence. A typical farmer may own 2 to 20 quarters. A full time farmer probably owns at least 4.
2) equipment is not cheap – toss in at least 500K to 1.5 million. Cattle farmers may be on the low end apart from other type of farming, to grain farmers on the high end.
3) if you decide to be a cattle farmer look at least 100 -500 head of cattle at 1000 dollars a head. i.e. 100K to 500k.
4) If you do not own any land you will need to rent – look at approx. 15k per year for 1 quarter of land.
5) Repair costs on equipment to fix tractors, haying equipment, buildings etc. add in at least 10k per year.
6) Veterinary costs, pesticides, all cost money.
Also, there are many people in their 60 – 70’s that have heaps of land and have owned it since the 1960’s i.e. 2/3/4/5/6 quarters. I was looking at one county map in Alberta to see who owns the land and there are very few people besides this demographic group for ownership. Unless you done well financially that own at least a quarter; apart from generation hand down.
There you go – for any young guy who wants to make a go at farming you will need at least a 1 million bucks in AB (that is on the low end). However, there are many different types of farming, bees, dairy, vegetables, etc. The scenarios change. However, expect to pay close to 1 million dollars for a dairy quota pending on the size of your herd minus buildings, equipment, etc. That being said you will need to find someone willing to sell their quota. I probably opened up a can of worms of the naysayers on these costs but these are very typical costs and just brushed the surface.
Garth said: “Before that, a word from Franco…
I don’t know why we are so foolish. People who do little “work” can sell concrete, steel and drywall boxes as the answer to some investment wet dream and call themselves professionals. ”
It gets better Franco… Wall Street banksters do even less “work” yet make billions.
And Garth says it best: “…we’re busy building a society in which we’re obsessed with selling each other bigger homes financed by money we borrow, not earn. It’s a house of cards.”
Yep, house of cards all right – all of it. But that’s the game. Play it, or be played!
#77 Beer & Cider, Cider & Beer
Yes, wineries and microbreweries are popping up everywhere in ever greater numbers (golf stars and actors investing as well). Just back from Niagara-on-the-lake last week and Prince Edward County two weeks ago and all I can say is bring money if you want to drink local! While consumption of these commodities is relatively stable regardless of the economy, I’m not sure that premium brands at elevated price points will have staying power in the event of a downturn or continued high level of indebtedness. As I recall, the writer of the Millionaire Next Door book asked one of the millionaire interviewees about his favourite brand of libation ( expecting to hear scotch) and received this reply, “My two favourite brands are Bud and free”.
However, farming is an entirely different proposition….as other posters have noted, risky at the best of times.
Well if the Canadian Association of Accredited Mortgage Professionals (aka CAAMP) are predicting 190,000 job losses by the end of 2015, then that is a recipe for a hard landing.
In US terms that would be almost 2M jobs lost, or a 2008 crisis done Canadian style. The CAAMP figure does not include the fact that a job loss in one sector affects multiple others in other sectors.
So all praise the overweight and overbloated housing sector gas bag, enough to blow apart the Canadian economy. RE is a much larger industry percentage here than it is in the US.
Scotiabank said “correction” is to happen in mid-decade.
Canadians don’t realize the trouble they are in and won’t realize it until the proverbial brick hits them in the head.
witty definitions taken from the “Urban Dictionary” website……..
Bored to debt – when you’re so bored with life that you just spendmoney to make your life seem exciting.
Caraoke – singing to karaoke songs while driving
Cellfish – a person who talks on their cellphone in public and annoys others
Cheapuccino – buy your cappachino at a 7-11 instead of StarBucks, for half the price
Chiptease – when you buy a bag of chips thinking it’s full, and find out it’s half full
ReadersBlock – like Writers Block – you cannot for the life of you pick up a book and read it.
Regret Ceiling – The point at which one stops feeling remorseful regarding a thought, comment or action.
I have been living Karen’s anna-be lifestyle for years. I highly recommend it. No stress. And enough dollars from freelance to be in Europs for a month where they don’t think home owning is a constitutional right
Germany is a great place to live. As is most of Europe.
The caveat though, if you are an Entrepreneur, willing to work hard for yourself, not for the company, you are better off in North America.
People don’t just become farmers. That’s a tradition handed down in families. If you have been fluttering away on a keyboard all your life, how are you gonna fix the well or repair your home. You ready to live without garbage collection or snow removal or safe city water? You prepared to live 100 miles from a police station or hospital.
These are just urban dreamers who haven’t got a clue what’s like to make it on your own. Stay in the city, it’s all you know. 2 years in the country and you will be done. Farming is for resilient people not wannabe urban escapees.
And Garth why don’t you point out some research or analyst who was telling the world that potash price is set by some obscure cartel in Central Asia. You still going to defend the stock market after that one. POT was as blue chip as they come. Rigged is the only conclusion.
Just want to make the point that leaving the market and renting, even if housing is declining, only makes sense if the rents are reasonable vs owning. This works in TO and Van where prices make rents a bargain. Not so true here in Regina where rents are Toronto-level or worse. But housing is half to 1/3 that of TO. A 3 bedroom 1700 sqft two new home will cost you $500K here. Renting that same home would be 3500 per month. When your vancancy rate is basically zero, rents are the worse bet.
How am I dealing with it? Living back at home with parents for now, with $250K in the bank. Eventually they will get fed up with me, at which point a house is still probably the better financial decision.
Karen has only $100,000 of her own money. How can she buy a farm and have financial freedom on that? Tried buying a farm lately? Apparently not in Ontario, that’s for sure.
As for Franco, since he seems to have such distain for Canada, he should go to Germany with his family if it’s so much better there!
Just read the comments about farming and brought to mind a friend who inherited 100 acres near Sarnia from his grandfather. He built a nice house there and of the four boys (now men) that grew up there, none are interested in taking on that farm even for free unless it’s to stick a for sale sign on it and cash out.
Go ahead Karen, buy a farm, you’ll love it! Hahahaha!
Why bother coming here to be cruel to others? Without dreams there is only existence. — Garth
…so 5 years ago, we had peak oil, and now the story is ample oil, oversupply etc. etc. (even in the midst of a supposed USA growth boom?) It’s hard to believe that there is not an indiscernable advance guard that joins together to push these stories for the express purpose of generating volatility profits.
#103
“POT was as blue chip as they come. Rigged is the only conclusion.”
I found one or two analysts online who before the crash advised staying away from POT because more competitive prices were a threat.
The best way to drop out as you say would be to buy a boat and anchor her in out in English bay. Or by an RV and live out of there. I saw some program on TV that had some web designer type doing just that. It’s ultimate freedom until kids come along.
Just now, read post. (Was fixated on picture!).
Everything old is new again: “Turn on, tune on and drop out.”
…
In past I have mentioned the “Calgary Trade”; ‘short sell’ whichever name appears on Saddledome.
Let’s see…2000: Canadian/Air Canada went bankrupt; next up Pengrowth’s stock fell from 25 down to $5, where it remains; now it’s Scotiabank’s turn. BNS.
#7 Ahead of the Curve
== isn’t there an argument to be made that 250,000 people come to Canada each year and need a place to stay? ==
LOL you are good with Math?
I came to Canada 1989, population 29.5 mil then
Just few years later like 2010 population reached astonishing 32 mil.
and every year number of newcomers start at 180K but end up with 250k at the end…
I think Canada is overpopulated … LOL
Hey who let that guy crash our party?
I hope he’s housebroken!
RE:#91 KommyKim “The Canadian politicians who agree to this should be tried for treason. Time to literally repel borders!”
RE: #81 WhiteKat “The United States wants its police officers to be exempt from Canadian law if they agree to take part in a highly touted cross-border policing initiative, an internal RCMP memo says.”
KommyKim, Did you know the IRS is putting more and more armed agents in the field? How long before armed IRS agents in Canada start knocking on doors within 50 miles of the border? And meanwhile most Canadians sleep. The simple fact that there are people thinking that “this is OK” makes me wonder. I don’t think that Canada’s sovereignty means much to those kind of people any longer. How long before all the US law enforcement and military decide that Canada is fair game and ripe for picking off to become the 51st State in the Union?
“Liquid, balanced, diversified” ….
oh, and “the newest big idea is living small”
These have ALWAYS been contrarian positions in our society of consumerism and boundless growth/expansion.
Just sayin’ …. but it’s disingenuous to expect this ship will turn around any time soon. Especially if you’ve served in government and know very well how our system works … the insiders never lose.
#102 Meanwhile in Europa,
you never mention two caveats in your praise of living in a European country: you’d better speak the local language (for survival and prosperity), and you’d better meet residency requirements (unless you already have a European passport or are married to one.)
Has anyone seen or heard of BPOE ( Best Place On Erf) in the past 12 months?
I thought I spotted him the other night in Richmond but it was just a skunk climbing out of a garbage dumpster. Similar smell.
“POT was as blue chip as they come. Rigged is the only conclusion.”
It still is… for a mining company. ‘Blue chip miner’ is a bit of an oxymoron. They’re all cyclical and subject to well-known risks like flooding, government expropriation and labour risks etc.
If you own individual stocks and are properly diversified, POT should have been no more than 5% of your portfolio. Even at that weight, your research should have included the market structure and the capacity and cost basis of other major producers. Stuff happens, and your portfolio takes a 1% hit. Re-evaluate and decide whether you want to buy more, hold or sell. But crying that the market is rigged? There’s a nice lady at the bank who will sell you a three year GIC that pays 1.6%, backed by the government.
POT is a lesson in why retail investors should not buy individual equities. While Potash lost 23%, the ETF containing the 60 largest companies (including POT) lost just 0.8%. — Garth
City folks want to buy a farm, and farm folks want the city. I guess it’s a sustainable cycle. Personally, having spent my formative years on a patch of dirt, I believe most of what one needs to know about farming is summarized nicely in Genesis 3.
Which album was that? — Garth
@#105 106 The real Kip
You’re so sour, you must be Scottish.
Ben Dover an Phil McCavity are relatives?
Karen — if you guys are willing to roll up your sleeves and make it work and you enjoy the work — what’s the downside? With high speed internet available everywhere you can write and tweak your customer’s websites in between chopping wood and checking on the latest batch of hootch! Sure beats paying a million for a fixer upper in T-O with no parking. More power to you …
“#120 CrowdedElevatorfartz on 08.01.13 at 9:12 am
@#105 106 The real Kip
You’re so sour, you must be Scottish.
Ben Dover an Phil McCavity are relatives?”
Sorry Fartz, but I’m Canadian, 4th generation and like this country just the way it is.
Why bother coming here to be cruel to others? Without dreams there is only existence. — Garth
And without equality, there is only conflict.
Slightly off topic, but It looks like Trans Canada Pipeline is pushing a west east line carrying 1.1 million barrels per day. Check it out:
http://news.ca.msn.com/top-stories/transcanada-moves-forward-with-west-east-pipeline
This is big news for Canada and northern development if this line goes ahead. It could also partly explain the reason for Obama being pro environment with Keystone at present. A third component in all this is the potential for fracking gas in Eastern Canada to make up for the lost nat gas going west/east with the conversion of TransCanada’s gas line to oil. Some gas will be recovered at eastern refineries but eastern gas production needs to ramp up before this gas line is switched over. It will be interesting to see how it all shakes out, but a continued energy production renaissance in the U.S. will test American infrastructure beyond capacity without Keystone. Canada has to start looking at other market alternatives for production out west, including meeting its own domestic demand in the east.
Canadian markets should rally behind this in a big way especially in light of what the future of Canada’s currency is and who stands on the wrong side of this issue once again? Try the sellouts, Harper and his Conservative judge Redford. Easily bought, no vision, they should have been removed from power years ago.
Garth. Love this blog and your writing. But supporting the idea of buying a farm with 100k. Come on! Farm land is a bubble right now too. Prices bid up over last 5 years due to commodity bubble. Latter is bursting and so too with the other. Only farm she will get without going heavily into debt will be the one that raises pigs that fly.
That depends entirely on the region. Expand your horizons. — Garth
Ralph C, your answer to the POT fiasco is “stuff happens”? That’s a total cop out. People are actually supposed to find research that would explain the complex pricing dynamics between several world stage cartels? Seriously?
Lets tell the truth for a moment. Truth is there is garbage like this hiding in lots of stocks and the analysts will never tell, neither will the CEO. POT has been featured dozens of times on BNN and its was always two thumbs up around the horn. Don’t come and bash realtors when the same sales job is being fed to the average joe daily on equities.
And while ETFs may soften the blow, that doesn’t change the fact that the overall market is a black box to most.
great post!
The speed which society races on is getting to be too overwhelming for a vast majority. Bigger. better, faster, go, go go. Information overload.
SIMPLIFY will be the new sexy of tomorrow.
CalgaryFloodBoom: “It’s clear that buyers are buying the hype, but I wonder what will be the tipping point? When will it become clear to buyer’s that they’ve been played and what will the indicators be?”
I agree on the surface with your argument, and there are some subtle differences with reality: 1: It doesnt matter what realtors say if market values dictate a mortgage the same as rent and the person buying the mortgage has many years left to rent/buy. 2: If you can renew on the mortgage when it is due and you fit #1 why wouldnt you buy the place. 3: No matter what someone says, unless interest rates go up say 3-4%, this disaster forecast here isnt going to happen because people will continue to find out a way to buy properties.
What really are the choices in Calgary? You can continue to pay rent given that you want the chance to move if need to, but be aware of no renters price controls, and you must have money left over to invest. If you are not saving a downpayment for a house it is possible, however if you are saving and renting at the same time you more than likely wont have cash to invest at all.
Calgary is a very very scary place. Traffic, cost of living, weather, floods. Consider wisely before you come here.
Hey Smoking Man!
I was just thinking how we haven’t heard from Laughing Con in a while.
Do you think he got a job?
Or maybe he just caved and bought a place.
I wonder???
Penny Henny
Here’s the crazy idea.
“My husband floated the idea of buying a farm somewhere remote in Canada to grow cash crops and manufacture liquor on site with the produce grown there, beer, cider, etc. For some reason this didn’t seem entirely crazy to me. Particularly faced with the prospect of heading into an unfulfilling job everyday in an economy that is not getting better.
I had dinner with an old friend from university last night at Beccofino’s down here in Oakville. BTW Great place. Excellent food, decent wine lists. Anyway he brought up this exact subject of purchasing an winery somewhere locally and just cutting back to live out the rest of his life in the splendor of his own vineyard. To which I reminded him that was where the “Don” retired to his vineyard to live out the rest of his life. Vito Corleone collapses and dies in his garden while playing with Michael’s son, Anthony. I asked him if he could live in the slow lane? I also reminded him that the best way to lose a couple of million dollars is to purchase a winery. He doesn’t know the first think about farming, growing grapes or the business of vintners. We went back to his place on the lake and opened a bottle of Glen Grant single malt Scotch. It was dated 1970. I had a great time drinking 43-year-old Scotch. We pretty much finished all of it. He told me that it runs around a grand for a bottle to which he said its only money and spending the money on something that make him happy is what it is all about. So here’s a toast to the future owners of a small winery somewhere in Southern Ontario! Hopefully I can visit and drink his wine but I prefer his Scotch!
YatterMatters is showing sales of detached houses up 59% YoY. Avg house prices are up 100K YoY.
#125
An interesting take on an old forecast. Who to believe? http://www.marketwatch.com/story/the-return-of-dow-36000-2013-08-01
Have you ever tried pulling weeds out of your garden? It is hard back breaking work. Now multiply that with 20 times harder for a larger scale “farm”. It is not easy. Do your research before. Smart investing can be a better choice if you know what to do. Garth’s advice is a good start into investing.
POT’s expensive unless you grow your own. I sold 4 of my gold teeth on ebay last night. Huge bidding war. I won. I smile like a Detroit pensioner now but at least I have a few bucks.
Dreamt last night that the gdp gets revised in Aug to under 1.
1 x’s nothing is nothing. usa in trouble no matter what the market says.
Big difference between a farm for 100k and land for 100k.
#125
“And while ETFs may soften the blow, that doesn’t change the fact that the overall market is a black box to most.”
Stockchase is a good site to get a freebie macro view of specific equities and ETFs because the analyst/pundit opinions there while short are so diverse they about cover every point, good and bad. There’s a nice blend of independent and affiliated analysts represented as well. Never ever go only by the Stockchase blurbs, it’s just a good starting point for ideas. (I’m in no way affiliated with the site.)
Karen has the right idea of packing up and leaving Toronto, if they are doing web design work which can be done anywhere. However, as a lot of commenters have warned, owning a farm can be a lot of work and tie you down, not to mention less time for designing web sites. Another option is to move to a smaller town where the cost of living is much lower. Have a look on Kijiji and compare rents in various towns and smaller cities. It all depends on what your preferences are. How about Ingersoll or Chatham in the Southwest? How about Belleville or Kingston in the east? How about Coldwater or Burk’s Falls in the near north, or somewhere in the Niagara Region? There’s a lot of choice out there, and no rule that says you must live in overpriced Toronto.
#75 Marginal on 07.31.13 at 10:27 pm
Yup. The previous owners of our farm had orchards. Then the cannery in southern Ontario closed. (I don’t remember the story behind that). Now the orchard is gone and the land is rented. BTW, do you know where I can get information on typical rental rates across regions?
When will the world run out of “Greater Fools”?
I had thought of doing what Karen is thinking about a couple years ago. Currently work in Toronto and was traveling a lot for work so was never home and the rat race was starting to get to me.
Since I originally grew up on the east coast and have a lot of family back that way I started researchiong properties back that way.
I found one that was really interesting. It was 65 acres, house was off the grid – it had solar panels, wind turbine, tempcast fireplace, well water, and a generator for back up power if needed. A three bedroom house, large garage, greenhouse, and a sugar shack. Yes a sugar shack. There were a lot of maple trees on the property where they collected maple syrup each year.
I could have sold my house in Toronto (almost completely paid off) and bought this place and would have had no debt. It was very tempting but in the end I wasn’t ready at the time. And for those who say since I am not currently a farmer it is hard work. I know the work that goes into running a farm as my brother has a 200 acre farm back east. He raises at least one cow a year to butcher for meat. He has his two separate gardens that produce more food than he and his family can eat – they actually can there vegetables after harvest. He did all this while working full time. He didn’t run the farm for money, he did it because he enjoyed it. And when he started, he knew nothing about farming or raising animals, but he learned. Now he is retired and he still runs the farm as it is what he enjoys.
Sadly while agricultural real estate is productive and useful, it too is overvalued nearly everywhere on a national scale. Cheapo interest rates are part of it. Another is crop insurance. The farmer’s lobby has succeeded in getting this jacked up year after year in nearly every province. It forces would be buyers to overpay for marginal land. Half the time a crop is only put it to collect it as the land’s yield is not profitable without it. Taxes are going up on it too. With a looming provincial debt problem don’t expect subsidies like that to continue forever.
In addition, web designers should probably know something (a lot would be better) about farming before diving in to something like they propose. Maybe start with gardening.
#53 Dale is absolutely correct about the actual day-to-day on a farm. My parents farmed, my in-laws still do, and we live in the City. Naturally. There are some rural folk who prefer the lifestyle (or don’t know anything else), but generally you leave the country for the city and not the other way around. Brother-in-law farms “organic” (whatever that means), and it is a brutal lifestyle. Irrigating is tough tough work, and you don’t have a choice in a year like last year. You can learn how to fix a tractor, but it’s not fun. Nor is figuring out what is wrong with the septic on a holiday.
Someone mentioned the land bubble, at least partly caused by the myriad agricultural subsidies Canadians for some reason support. Land in southern Ontario can go for 8 or 10K an acre near urban centres (I mean like Woodstock or Brantford…), so it’s probably not a great time to be buying land.
Eventually, urbanites in the developed world will abandon their primitive nationalist notion of “food security,” and begin to end the subsidies and market controls, and give poor farmers in the developing world the chance to compete- and win. We’ll probably have very little farming after that, but that’s not a big deal. Comparative advantage. BUT, land will come way way way down in price, and for those who did not buy early (preferably inherited it) it will mean they are completely hooped.
You know, if it wasn’t for having to pay the bills we’d be raising micro pigs. Smile or laugh but cleaner than dogs and cats, smarter and weigh in at around 12 pounds. Sell for around $1500 each and make better friends than most __________ (insert your choice here)
Good luck Karen and spouse – go for it!
70 Mixed Bag on 07.31.13 at 10:00 pm
You are correct, some areas of the province will not accept more power feeding in to the grid. The microFIT (<10kW) program was actually just closed to new applicants earlier this week- all the capacity was allocated. It will probably be opened again in the future.
80 cent per kWh prices are gone. For solar, it is 55 cents now, which is exceedingly high. For wind, it is 12 cents, roughly the same as a consumer actually pays.
You're right about Ontario giving away (or sometimes even paying the States to take) hydro. However, this is overnight at the lowest of the low usage periods. This is because we have so much baseline (particularly nuclear) capacity, whose production can not be easily reduced in off-demand periods. Part of the solution to this problem will be to increase solar production, which will obviously only produce electricity during the day.
Farmland everywhere in southern Ontario is extremely expensive.
Calgary Rip Off,
See that’s the problem. The realtors have all that covered.
But in my opinion, I believe most buyers are standing on the edge of a cliff, that is, buying into an overpriced, overheated market that virtually guarantees most people will suffer financially.
I don’t care if you have the money and make “six figures” as it seems everone out there makes.
There are no good deals out there in the sense of value for money. I see worn out old houses being sold for 2 3 times the price from just a few years ago. Not reno’d, just junk and people celebrate the “great deal” they got. Collectively we’ve just been stupid and short-sighted.
I’m not anti-realtor who cares about them? I’m anti stupid.
“Eventually, urbanites in the developed world will abandon their primitive nationalist notion of “food security,” and begin to end the subsidies and market controls, and give poor farmers in the developing world the chance to compete- and win. We’ll probably have very little farming after that, but that’s not a big deal. Comparative advantage. BUT, land will come way way way down in price, and for those who did not buy early (preferably inherited it) it will mean they are completely hooped.”
The developing world will never replace our food production ever. They can’t even feed themselves now, don’t know how to store or refrigerate properly and on top of that, they are adding another 3 billion people to the planet. You really want to get your food from some backward town in China or India?
No, we will be feeding them, not the other way around. Don’t short land yet or you might get your hat handed to you.
Move to Vancouver Island, still some cheap land in off the grid places, AND then grow medicinal marijuana. Huge, legal business that is just starting to take off… now that is farming potential!
beyond gold and real estate, the bigger picture of investing in current times:
http://armstrongeconomics.com/2013/08/01/tangible-v-intangible-money-why-times-have-changed/
#124 Castaway – the trick with farming today is discount the traditional crops and livestock as that is where the competition lies. Find a product with a demand to grow or raise something unique with a market ready to buy at a premium. I am hiding out as my entire apartment building has been posted warning that for a period of 5 days there will be some drilling noise. Rogers is here to upgrade their equipment for tv and computer systems. :(
Garth;
In this post and previous ones you paint a dim picture of the Canadian economy going forward. I wonder, do other analysts not see trouble coming as you do? Or do they see it, but not want to spook people, which would cause them to spend less and in turn make the economy even worse?
Last but not least I read an article in Globe Drive about how Canadians for the most part aren’t buying small econo cars (which are better and more fuel efficient than ever before) and are buying more trucks and SUV’s instead. What’s going on here? If the economy is really that bad, and fuel prices higher than earlier this year, why aren’t more people buying more fuel efficient (and thus cheaper to run) cars? I’m obviously missing something here.
@Rational Optimist, post #142:
You’re quite right about farmland in Southern Ontario being outrageously expensive. That’s why some Mennonites in Kitchener area and Midwestern Ontario have sold their farms and moved up to the north shore (Desbarats, Bruce Mines, Thessalon area). I wouldn’t be surprised if they probably also see climate change making the near north a better place to farm. Just because they avoid living in the modern world doesn’t mean they don’t know what’s going on and see a good opportunity.
Anyone else see this one?
http://www.cbc.ca/news/business/story/2013/07/31/business-housing-capital-economics.html
Excerpt from the article:
“Madani, who is the global forecasting firm’s chief economist in Canada, says the main reason is that the country’s housing market is poised for a correction. Most forecasters have pencilled in a soft landing, although the Bank of Canada lists the possibility of a sharp housing fall as the No. 1 domestic risk to the economy.
“‘I think people are really under-estimating the risks to the housing market,’ said Madani. ‘Is no one worried about this?'”
Dabbling in cash crops is like dabbling in brain surgery. It will fail miserably, and in fact, faking qualifications for either of them is equally difficult. The main difference is, no one will die pretending to be a farmer. So, kudos to them for trying. And even when it flops, they’ll be carrying a lot less debt on a “little farm in the middle of nowhere” than they would on a million dollar crack shack in Toronto. Plus, they’ll have spent a few years surrounded by nature, with neighbours who are more interested in trading recipes and gardening tips than talking about their home equity or their investment property or their latest junket to a Mexican resort. A nice reprieve from big city life for sure. That alone is worth the risk. Good luck to them.
“the newest big idea is living small.”-said the man !!
That isn’t a woman talking
As for farming, your first season you will discover that you don’t know what you don’t know. The second season, you will find that you now know what you don’t know. The third season, you’ll be ready to start !
@75 and 136
The cannery in the Niagara Region closed bcause it is cheaper now to import canned peaches and pears from South Africa then it was to produce them right here.
My grandfather was a crofter, when he gave the family farm to my uncle, they turned it into an agra business.
#92 Tony
DSL is doing just fine for at least a few more years. Meanwhile, TELUS has an aggressive fiber build out, a capital intensive undertaking that will have an impact on the share price, as the payback will take many years.
I just saw the latest Shaw marketing. “Record 6 shows at once.” Who is the target market for this? What kind of people need to record 6 shows at once, then have time to watch them all? The unemployed?
For those in Ontario who are thinking about farming, Farm Start (supported by the provincial and federal govt. among others) has a lot of good programs for beginner farmers or those considering it. They offer inexpensive short one day or weekend courses on various topics, along with mentoring programs, seed capital etc. It is meant for people with non-farming backgrounds who want to enter the sector. Their website is very informative.
http://www.farmstart.ca/
Also check out http://smallfarmcanada.ca/ which is a magazine aimed at small scale farmers.
There is actually a growing trend of younger urban people abandoning the big city to return to the land. If I were to do it, I would consider setting up a market garden growing only organic herbs and vegetables. It takes a while to get certified organic but once you do, there is a growing market for the products and they sell at a premium. You don’t need a lot of acreage to earn a living as long as long as you only grow premium and/or unusual vegetables. Follow the ‘100 mile rule’ and look for a farm no more than 100 miles from the perimeter of a large city and you can sell your products to the fancy restaurants etc. there. If you are a good farmer and a decent salesperson you can develop relationships and become the supply channel to various restaurants and enterprises. Hard work but I think it’s definitely doable.
http://news.nationalpost.com/2013/06/07/the-allure-of-manure-growing-numbers-of-young-urbanites-drawn-to-farming/
#142 Rational Optimist on 08.01.13 at 11:52 am
Thanks for your reply. Solar power generation on farmland, just due to the acreage, generates in the MW range, so I think that was a different program than MicroFIT. I always questioned why the gov’t would pay such a premium on electricity, as it was a money loser, and ultimately, it’s the tax payer paying to subsidize this price. It didn’t make sense to me, unless, of course, that was a policy not based on sense.
#125 Not 1st — “People are actually supposed to find research that would explain the complex pricing dynamics between several world stage cartels? Seriously?”
Yes, seriously.
If you want the market’s return, you buy a low cost broad index ETF, and get it. Stock market returns over the long term have been superior, even accounting for crashes, frauds and surprises.
Today, there’s only two reasons to buy individual stocks: Either you have so much money that it’s cheaper than paying the low fees of index ETFs, or you aim to outperform the broad market. Expecting to outperform the broad market without doing a lot of in-depth research is nuts.
And I’ll tell you something. I knew about the Canpotex marketing pool before this news; if you’d been reading the Canadian business papers religiously, you’d have known too. I didn’t know about the similar Eastern European pool, but that’s because, Potash not having met my superficial investment criteria, I’d not researched deeper.
I can make fun of real estate agents all day long. Shall I dig up articles about condo owners around Niagara St. in Toronto complaining about the nearby hog slaughterhouse’s stink and noise. To paraphrase, “I bought in February and my agent didn’t say anything about it.” To which I’ll add that their condo probably doesn’t make up only 5% or less on their portfolio.
P.S. I bought POT today and sold it again. Made a tidy profit. Gambling? Only Garth and the Smoking Man know for sure, but I didn’t buy it when it didn’t meet my criteria, I did when it did, and I was willing to sell when opportunity presented itself. You can’t do that with a house.
“POT has been featured dozens of times on BNN and its was always two thumbs up around the horn.”
You’re watching tips on a channel that a fair fraction of Canadian households receives, and an even bigger fraction of active investors watches. Based on those tips, you were trying to trade ahead of who, exactly? The objective is to do the research and buy the stock when nobody’s got anything good (or anything at all) to say about it. When all the analysts say buy, you sell it to the boobs who are watching the tube.
HOOOOOLY, Vancouver sales up 40% year over year from last July if this site is correct.
http://greaterfoolvancouver.blogspot.ca/
a) The herd is scooping up places before mortgages expire and the fixed rate scare gets more intense or
b) just how she goes sometimes…
“The Greater Fool Vancouver RE Blog”? Should I sue? — Garth
or
c) almost everyone who has thought of buying is now in.
People:
Karen doesn’t want a section of land. At least that’s not how I read it. She wants a more local, simpler life. If we had all considered this decades ago, we might not be in the greed-driven mess we currently reside, globally.
You also fail to realize people can, and do, make it in and around small towns. I don’t think Karen’s looking to live 100km from the nearest village.
Small, 5 acres farms are not the same hastle as large, industrial farms, which have ruined the food supply, the ground water, and the entire rural landscape. We need to go local. This can be done in urban areas (read Jane Jacobs) and near smaller towns and villages.
Interesting the concept of farming for most people, means the large, industrial traps that pushed many good people, many good families, off the land. I’ve lived in the city, the burbs, and in rural settings. The burbs are the problem. Rural Urbanism may help cities, if people embrace it. Small town living, though never perfect, certainly has it’s advantages. Time. Space. Peace. Quiet. Time for reflection. Recollection. And so on.
Nature Deficit Disorder. Look this up. Another disadvantage to our current way of living.
Karen – all the best. I think you’ll be realistic. Don’t believe your simply some dreamer, some idealistic person who hasn’t researched and consider such a lifestyle change.
So if Karen and her squeeze don’t buy a farm, what do they do with 100 grand, or what does Franco do with his cash? No, I’m not going to suggest buying POT (I mean the company, not weed), but a good place to invest some of that money is REITs while they’re still on sale (Boxing Week in August?). As of today CAR.UN is near its 52 week low, with a yield of 5.4%. As for XRE, it’s quite cheap also with a yield above 5%. Why would anyone not want to scoop up such great bargains?
If Karen and her squeeze still want a farm they could really “drop out” and join those Mennonites around Bruce Mines area!
Newsflash people. The real estate market will correct, then it will level off, then it will rise from the ashes – Hallelujah Brother !!
Same for stocks, gold teeth, oily underwear. It’s a merry go round and round, all you need to do is hop on. I want the horsey with the blue hat and big teeth.
Nothing new here folks, in fact its been going on for over 100 years. Amazes me when they say, it will not end well….it will never end, that’s the point.
Pick your poison and Ride Sally Ride.
Now put the straw down and back away from the iPad. — Garth
Sorry for the OT, Garth, but I just HAVE to share this with everyone:
http://news.yahoo.com/google-pressure-cookers-backpacks-visit-feds-140900667.html
Now, shall I be paranoid about being watched?
#148 Doug in London
Very few people consider the operating costs of the vehicles they have shortlisted, including things like gas, maintenance and insurance. (Also see how people buy houses, they just look at their mortgage monthly.) Once they buy, they are stuck with their choice, and demand for these things becomes inflexible; they find the money by cutting back in other areas if needed.
One of the fallacies of personal transportation social engineering (such as through gas taxes) is that when people have to get somewhere on a regular basis or ad hoc, they will use the most CONVENIENT means of doing so, not the cheapest or “greenest” one, which in vast majority of cases means a car, regardless of fuel prices. When Lower Mainland brought in their “revenue neutral carbon tax” on gas, I predicted it would have no impact on how much people drive. Unless the price doubles or triples very very quickly, people will just eat the extra cost well before changing their behaviour, and that includes existing car owners as well as new ones.
@#138 Bluenoser
Hmmm 65 acres with solar, wind and generated power nice. Where abouts in Scotia bye?
The Cape or the Valley?
Us inquiring Herring Chokers wanna know…..
@ The Real Kip.
4th generation or not, yer still sour…….
We rent on four acres with 1.5 acres in grape vines. The place is owned by city slickers as a wine making hobby. I think they got more than they bargained for even with this small scale. It’s like watching a tragic comedy. There’s working hard and there’s working smart, some never understand the latter it seems. Within two years the place, despite much work and money, is falling apart but then we’re talking about people who took two days to find the well when the pump quit (who buys a place without knowing where the well is?) and are overextended gambling on multiple properties, squeezed harder than the grapes.
We grow a garden. There’s definitely a learning curve even with that modest proposition. I’d love to scale up with a greenhouse etc. on my own property but I certainly wouldn’t want to overextend myself (death to small business start-ups) nor rely on the produce for necessary income, simply gravy from enjoyment.
The local Saturday “farmers market” in town is growing by leaps and bounds every year, more local, organic produce appearing all the time. Many appear to be making a go of it from these labours on smaller acreages. Interesting to watch how people are responding to contemporary pressures.
Yesterday, I said the US economy is not as good as I thought, so no QE stopping for now.
See what happens today?
Stock market up and bond rates up….
Nobody believes anything I say.
I’m thinking of resigning now …
I’ll move to BC and grow pot.
At #81: WhiteKat, you said, “Apparently US border police would be allowed to make 50 mile incursions into Canada. If this is true, that’s pretty much into every major city in Canada.”
That’s very true. Why is it do you think most of the Canadian population live within 50 miles of the U.S. border anyway? Hmmmmmmmmmmmm. Please don’t use the excuse that “Canada is not inhabitable above a certain parallal.” I’ve heard that one a million times, and it gets very old. You should try telling that to the Danes, the Swedes, the Dutch, etc.
permaculture is the future!
It’s not possible for a sociopath to know they are a sociopath.
I figured the picture on sight. But I’ve done a couple McGuiver’s myself.
TOT – Just wanted to share my experience with my chiropractor who uses the latest technology.
http://www.newfamilychiropractic.com/treatments.html
I was in agony for a few hours each morning for several months w/sciatica. Questioned myself ’till the last week whether I could travel to France for a month. I did, but had a hard time each am. Family & new net friends were so understanding. So many great memories.
I’ve had 3 sessions w/chiro that uses this technology & what a difference. I can now get out of bed each morning & not be totally bent over & in extreme pain. I also had to go for an Xray on my neck before he started treatment. Found out I had degenerative disc disease & arthritice.
BTW – I’ve been to Chiros, Phios, etc. for several years but never rec’d relief. I don’t expect that I’ll be able to take care of my gardens, but I’d like to be able to pull out a few weeds. LOL
#153 IM in C on 08.01.13 at 1:28 pm
@75 and 136
The cannery in the Niagara Region closed because it is cheaper now to import canned peaches and pears from South Africa then it was to produce them right here.
My grandfather was a crofter, when he gave the family farm to my uncle, they turned it into an agra business.
Was that Brights Cannery by any chance in the Niagara Region? My fathers brother worked there way back when.
BTW People I would venture to guess if any of you have tasted the crappy fruit that comes in from these other countries lately. I just bought some blueberrys last week and did not pay attention to where they came from. They came from New Jersy now thats not a third world country but Holy Crap did they taste like @#%$#$%^. Actually they had very little taste and I commented to the Mrs that these where almost tasteless not like the blueberrys you get locally. She commented that the apples last week where the same and when she checked them she noticed they came from Chile. I can hardly wait for my corn and potatoes to come from China or India. You know I don’t mind paying more money for better quality produce that is locally grown. I understand that in the winter you just can not get some produce locally but for the rest of the year no way. We are going to have to pay more attention to where our food comes from. God help us when Canada fully imports most of our food from these third world countries that have very little in the way of qualitly control.