The bounce

BOUNCE

One thing I learned in politics (besides how to duck) was the ability to look at yourself as others see you. Sounds small, but it’s big. Most people simply can’t tell when they are being dickheadish, obdurate or churlish. We exaggerate our importance, get emotional and assume our love life, hernia, house, marriage, anxiety, dog, career or puberty is more special than anyone else’s.

But being in politics means constantly assessing how you’re perceived, rather than how you are. It’s not about you anymore, but those who look to you. It’s humbling, especially when you realize how flawed a person you really are – something critics and opponents ceaselessly point out. They had lots of ammo with me.

I thought of this as I read two analyses of our housing market. Most Canadians see it as buoyant, stable and safe. “Already record home prices rise a further 2.3%, but no bubble seen,” gushed a Globe headline this week. National Bank economist Marc Pinsonneault went so far as to say prices can keep rising but they are “not indicative of an overheating market.” At Scotiabank, head egg Derek Holt chimed in with, “we believe that the Canadian housing market will do better than what many observers, including The Economist, expect.”

(The influential global mag has said we live in bubble territory by every measure, and houses here are seriously overvalued.)

Meanwhile, here’s the American view of Canadian real estate: House prices here will fall by up to 15% as mortgage rates rise and supply swells. But what about the recent increase in sales, especially in Toronto, Cowtown and Vancouver?

“I do think it’s a dead cat bounce,” says the chief investment officer of Sun Life Global Investments, Sadiq Adatia.

By the way, for those unfamiliar with the technical term ‘dead cat bounce,’ it refers to what happens when you toss an expired kitty out a high window. It bounces. But it’s still dead.

“I don’t think the demand is going to be there for housing,” says this guy, who manages $6 billion. And it’s useful to ask why – how this view can be so utterly at odds with what bank-paid Bay Street economists are telling people.

From the perspective of others, we’re delusional. The unemployment rate in Canada has been creeping up while that in the US creeps down. Most people believe the jobless number here will exceed that of the States next year for the first time since the dark days of 2008. Economic growth in Canuckistan will be so slow it’s now anticipated the US Fed will raise interest rates before the Bank of Canada does the same – a total reversal of what most analysts believed a year ago. And – most importantly – household debt is killing us, even as most people are blinded to it.

CHART Remember this chart (click to enlarge) from a couple of days ago? Sure you do. It shows what little debt piggies we’ve turned into. And it just got worse.

So, we just hit a new record. The debt-to-disposable-income ratio has notched up again, and it’s pretty much all thanks to more mortgages. Borrowing to buy real estate is rising at an annual rate of about 7%, says StatsCan, and we’re now making payments on $1.11 trillion worth of it. In fact, indebtedness is bloating far faster than incomes or economic growth, after growing more subdued in 2012. Apparently we can’t help ourselves.

The question, looking at the chart above, is whether the red line will keep rising, supporting higher housing house prices, or if it will crest and crash, as did debt levels in the US – sending housing along for the ride. It’s taken five years for that market to struggle from a 30% drop in real estate values to a mere 20% decline. Are we so special that our loans have no consequences?

Nah. We’re not.

The guy now in charge of the central bank, Stephen Poloz, says household debt is the biggest threat to the economy. He worries about that rather than than falling house prices, because the more folks owe, the less they have to invest or spend buying stuff, supporting job creation. Remember, in 2008 it was a credit crisis, not a US housing collapse, which brought the world to the brink.

Days ago a dumper row house in Toronto sold for $470,000 after being for sale for a week at $429,900. There were four offers on a home that last sold 34 months ago for $335,000, and three years prior for $205,000. The winning bidders – two virgins – took an inflated valuation, added 10%, and pretty much ensured they screwed themselves financially. This is what happens when you fail to see yourself as others do.

And here’s the house.

ROW HOUSE

God help us.

226 comments ↓

#1 ILoveCharts on 09.13.13 at 7:28 pm

Slow decline or rapid crash? What do you bears think?

#2 APB on 09.13.13 at 7:31 pm

That cat was the first to bounce out of the float… How about housing?

#3 Randy on 09.13.13 at 7:37 pm

Garth….How can a person expect anyone else to love them …If they don’t have a NARCISSISTIC Personality Disorder ??…………..haha

#4 Thoughts on 09.13.13 at 7:39 pm

Another bidding war in mineola this weekend. There will always be hot areas… Interesting that land is easier to sell then a finished house. Tells me that speculators are still rampant. I reason that people can’t figure out any other way to make money then to be a home builder/flipper… Hence the sales and continued building. Asking prices are getting ridiculous. Check out 57 Cumberland in Mississauga. Asking over $3.1 mill for a 50 by 125 lot! Hello. The torn down house was asking $899k if I recall. It’s not in the lake and it better have some crazy finishes. I actually think everyone is super nuts!

#5 nelson on 09.13.13 at 7:41 pm

Not sure when this one sold but according to the below article a 230 sqft converted garage with no plumbing just sold for 165,000 in Toronto.

http://ca.finance.yahoo.com/blogs/pay-day-/tiny-toronto-home-sells-165-000-171819404.html

what a world.

#6 Victor V on 09.13.13 at 7:42 pm

VIDEO: Canadians vulnerable amid fat debts

http://www.theglobeandmail.com/report-on-business/video/canadians-vulnerable-amid-fat-debts/article14308258/

Folks, this video is priceless. The speaker actually pulls out an actual screwdriver to explain what will happen to indebted Canadians.

#7 FutureExpatriate on 09.13.13 at 7:42 pm

Wait until Mike Holmes or Hilary Farr show up and discover the at least three+ “Ef You” cosmetic renos that ancient place endured over the decades and how much it will cost to make the place even remotely safe and/or warm. Suckers never learn.

#8 Chris on 09.13.13 at 7:42 pm

Garth,

I’ve been reading your blog for a few years now. Watching and assessing. Finally, I have decided to move my TSFA out of my Orange Savings Account and into a self-directed Discount Brokerage Account. Might as well try to make something out of the $26,000.00 I’ve got sitting there. What I want to do is get into a good REIT or ETF, but I don’t know enough about them. I need some advice (for free if you don’t mind helping out a brother). What would you recommend?

Chris

I do not recommend individual securities to people I do not know. Stop asking. — Garth

#9 george on 09.13.13 at 7:42 pm

Latest total government (federal, provincial, and municipal), business, and household debt statistics for Canada (to the end of June 2013)

#10 CrowdedElevatorfartz on 09.13.13 at 7:44 pm

$470k for THAT piece of crap?

Geez, and I thought Vancouverites were delusional….

#11 Chickenlittle on 09.13.13 at 7:47 pm

That house looks like something you’d find in Hamilton on Cannon street. Not pretty. But don’t tell me; it’s near the subway! There’s a fair trade coffee joint nearby. It’s up and coming. There’s rear parking for their bike/vespa/prius.

#12 TurnerNation on 09.13.13 at 7:49 pm

Not about politics but about power this post. The former holds no interest; the latter I have myself.

Canada, a Crown Asset, pins and lynches on the world stage, as statehood reveals.

NDPee gained serious toehold, ’till its leader ‘disposed. The new guy apes, simply. Enter Prince TruD’oh. The red splitter. Grabbed the left – back to the middle. Strategic reefer madness sent the small c crowd scurrying back to S&W and KJV.
Big C split would…lumber back to centre stage. Brilliance.

Quebec: holds the key. A long line of kings: Trudeau Sr., Mulroney, Chretien. This time, it’s different. West knows best. Why.

Quebec: machinations monster onwards.
They tried. Meech Lake, Separation; ice storms, train crash, language laws, election nite shooting, bribery, mob, religious garb law*. Themes: water, hydro, water. Beeline to a key pipe dream, dam it till it’s not withstanding. West knows best.

*Religion: who cares about ye-ole-books-of-fairy tales and cloth garb. Whereas: real religion is man’s ability to say No (whereas all Rhodes lead to Rome). No to the animalistic urges coursing though our veins. Must break that province – with its religiosity. (Iraq much?This was a test. ) We, too, have a large, armed and oppressed indiginous population, spread-out. Now, about those new helicopters…

#13 Smoking Man on 09.13.13 at 7:52 pm

Ok class a Smoky lesson

Look at the red line in the chart.

Now Look at the Blue Line.

Da na na na na na

BATMAN !!!!!!!!!!!!!!!!!!!!!!

#14 Smartalox on 09.13.13 at 7:52 pm

I said it before, the last time that chart comparing Canadian and US debt ratios was posted – if the offset between the two curves is anything to go by, Canada’s correction should be starting very, very soon.

Canada and Canadians are in for a difficult time. The US recovery is due in large part to the US crash: Housing has re-priced itself, and as a result, labor has re-priced itself as well – and jobs are returning as a result.

Just as it was 20 years ago, I fear that Canadians will find themselves looking south at a dynamic economy and wondering ‘why don’t we have that here?’

#15 espressobob on 09.13.13 at 7:58 pm

#8 Chris

You might want to consider ‘couch potato’ investing. Good place to start! ETF’s rock!

http://canadiancouchpotato.com/2012/12/10/passive-investing-the-movie/

#16 Entrepreneur on 09.13.13 at 7:59 pm

Buyers should not rush into buying a house. I will not call a house a home anymore as prices are too high for a
family.

If less people cannot afford to buy then the prices will fall as with every assest. Consumers rule!

#17 Donald Trump on 09.13.13 at 8:05 pm

Toronto has verge-ynz?

Thought it was ill-eagle (except 4 Smoking Homo – Sapien)

#18 Observer on 09.13.13 at 8:07 pm

The guy now in charge of the central bank, Stephen Poloz, says household debt is the biggest threat to the economy. He worries about that rather than than falling house prices, because the more folks owe, the less they have to invest or spend buying stuff, supporting job creation.

Yup, Canada. What a great place to raise a family and have no money left over. On second thought, I think I’ll just stay single in Mom’s basement and keep putting the cheques in the bank (or ETFs)

#19 SilverMeridian on 09.13.13 at 8:09 pm

SilverMeridian Greater Ottawa surReal Estate Update

http://www2.ottawarealestate.org/home/NewsInformation/LatestNewsRelease.aspx

Ottawa’s realtors are rejoicing, this August they have been able to sell 74 residential properties more then the same month in 2012. According to Tim Lee that constitutes a “respectable amount”, hence the headline – “Ottawa resale market is up and up”. When I was reading this, I was asking myself; seriously, 74 properties (not even SFH) for over a million residents market is a “respectable amount”? OREB even throws “properties which are co-operatives, life leases and timeshares” into that mix. Truly, realtors will try to use EVERY opportunity, no matter how insignificant it is, to herald a major break in “downward cycle”.

“Inventory on hand has decreased since last month, and is starting to return to more normal levels,” says Lee. “Ottawa continues to be a healthy, balanced market”.

Indeed, this August inventory of 7200 active units feels a bit smaller in comparison with all time high record of 7500 units clogging up the market just a month before. The fact that it decreased slightly from last month looks very much like a trivial seasonal fluctuation to me (RE activity is simply started to wind down closer to the end of the season), but this year’s August inventory is still well above of 6300 units for sale in August 2012. Is active inventory smaller in comparison with a month ago? For sure. Is it “starting to return to more normal levels”? Not even close. To put things in prospective, here is a list of Residential Active Listings for every August in the past five years: 2009 – approx. 4K, 2010 – approx. 4700, 2011 – approx. 6100, 2012 – appox. 6300, 2013 – approx. 7200.

http://creastats.crea.ca/otta/images/otta_chart04_hi-res.png

Do you see any “return to more normal levels” on that chart? Me nether! This situation illustrates perfectly how some local Real Estate Boards manage to misrepresent information so they could confuse and misinform consumers. OREB, for example, is notorious for hiding monthly stats from their customers so they could continue to make bold and misleading statements like the one above.

#20 CJB on 09.13.13 at 8:11 pm

Here in good old Saskatoon, some new builders are having trouble unloading their inventory (Daytona Homes) and have dropped prices by $25,000.00 and if you buy now you get $10,000.00 towards a new toy for your triple car garage. I wonder what the people think who bought 6 months ago or last year with a home that they paid full price for and now there is a $35,000.00 discount? Can this bubble burst already!!

#21 Paul on 09.13.13 at 8:13 pm

#1 slow decline at first until everyone clues in.

#8 Wait a month before diving in. No one can give you advise, risk tolerance? Long or short term? Growth or income? only you know this. I have done well on my own but you have to do your homework, a whole lot of it.

All this debt, can not end well.

#22 Rabbit One on 09.13.13 at 8:23 pm

Income to R/E price ratio, Rent to R/E Price ratio, both are way out of the fundamentals in Canada.
US followed housing crash after those 2 indicator passed the supporting levels, now US looks much better outlook. (although it will slow due to interest rate increase, but will still go 5~6% growth in residential housing in US)

What made me wondered all the time is why in Canada, people want to deny if housing are overvalued.
Regular folks are convincing other regular folks that we are different.

I own properties, but I don’t care too much, since those 2 are worth less than 50% of my whole assets.

What I feel is in B.C. many low pay jobs here, it’s hard to object your friend, colleagues, family, who hit real Estate jackpot, which gain is impossible to achieve in their life time earnings.

If you are making (ok, top 1%), $300K or more per year, you are not keen on trying making money on R/E.

R/E is low entry, everyone can act like businessman.
Wright the legal contract, talk to the professionals (Agent, lenders, lawyer, accountant, appraiser, inspector), so you become emotional, feeling hot and addictive?

#23 Rabbit One on 09.13.13 at 8:25 pm

Some poster mentioned before, crash is better, but Canada’s housing market maybe slow, no growth for many years, that is a killer.

I suspect it might happen, as I said, many emotional housing market supporter in this country.
Including policy makers, they will do the very best to protect that they were right.

Again, in my opinion, crash is good, like US, we can expect recovery soon.
In Canada, I now doubt it.

#24 Keith on 09.13.13 at 8:31 pm

From Boomerang by Michael Lewis (Liar’s Poker) on the Ireland experience:

“Real estate bubbles never end with soft landings. A bubble is inflated by nothing firmer than people’s expectations. The moment people cease to believe that house prices will rise forever, they will notice what a terrible long term investment real estate has become, and flee the market, and the market will crash.

The Irish construction industry had swollen to become nearly a quarter of Irish GDP – compared to less than 10 percent in normal economy. In parts of Dublin rents had fallen to less than 1 percent of the purchase price; that is, you could rent a million dollar home for less than $833 per month.

It was sustainable so long as it went unquestioned and it went unquestioned so long as it appeared sustainable. After all, once the value of Irish real estate came untethered from rents, there was no value for it that couldn’t be justified. There is an iron law of house prices, the more house prices rise relative to income and rents, the more they will subsequently fall.”

#25 Gor Gon Lin on 09.13.13 at 8:32 pm

#10 CrowdedElevatorfartz on 09.13.13 at 7:44 pm
$470k for THAT piece of crap?

Geez, and I thought Vancouverites were delusional….

____________________________

A place like that in Vancouver would go for 750k easy… 6 months ago you would be looking at 800k+ (my perception is prices are dropping slowly).

Van is far more delusional but TO is definitely catching up.

At least the salaries are higher in TO. ;)

#26 HAWK on 09.13.13 at 8:33 pm

#5 nelson on 09.13.13 at 7:41 pm

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

Be fair; in a world where people pay $$$$ more for a set of wheels like Porches and Lamborghinis, why shouldn’t a large sized garden shed in “The City” command $165K

LOL

#27 45north on 09.13.13 at 8:37 pm

dumper row house in Toronto

I guessing ballon construction, lathe and plaster, 60 amp service (electrical). All the easy fixes have been done, paint walls, insulate walls, add electric outlets as surface mounts, sand floors. Renovate existing bathroom – means take out the old toilet, the old iron bathtub and the old sink, take up the old pine floor boards and replace with plywood. Same sort of thing for the kitchen. you cannot renovate because it’s already been done.

$470,000 so these two very naive and ill-informed people have bet half a million that the housing market will continue to go up!

I’ll bet (my vast credibility) that it won’t

#28 Habs76-79 on 09.13.13 at 8:41 pm

Ok, if I may. A few days ago it was noted in Garth’s post that the avg. detached house price in Vancouver was $620,000. In Toronto $503,000, In Calgary $454,000. Now I seem to recall not oh 3-4 years ago on this site avg. detached house prices in places like Van. topped $800,000. in TO $650,000 and what Cgy, $550,000 or so. Now I’m pretty sure my memory on this is pretty good or close enough to make my point.

So now 3-4 years later we read in Vancouver it’s again $620,000 down from $800,000 or near 30% less. In Toronto $650,000 to now $503,000 or as well near 30% price drop. Calgary from $550,000 to $454,000 or a near 20% drop.

Now again I’m pretty sure my figures are pretty accurate to what I remember over the last few years. So in as such the three biggest RE markets in Canada we have seen quite a big drop in selling price.

Just my 2 cents.

You confuse average overall prices with average SFD prices. — Garth

#29 Ogopogo on 09.13.13 at 8:41 pm

#8 Chris on 09.13.13 at 7:42 pm
Garth,

I need some advice (for free if you don’t mind helping out a brother). What would you recommend?

Chris

I do not recommend individual securities to people I do not know. Stop asking. — Garth

Dude, quit bugging Garth and educate yourself by reading the following books:

-The Money Road, Garth Turner
-The Millionaire Teacher, Andrew Hallam
-The Wealthy Barber Returns, Dave Chilton

You’re welcome.

#30 CantRememberMyName on 09.13.13 at 8:45 pm

I still say that if the majority of people are screwed based on whatever economic theory you prescribe to the govt won’t let them sink. We have been making it up as we go along since the beginning. who says we have to change now? Keep earning, be smart with you cash, and it will all work out for you in the end. 90% of people can be overvalued home owners, who cares about the economy and market, whatever govt is in power still needs them and will cater to them. I’m hammered. :)

#31 It's Different Here on 09.13.13 at 8:46 pm

Majority of my colleague here in the “Land of Living Skies” still keep buying BMW’s and expensive cabins while having 95% financing on their homes. They think that they are richer than ever because of the increasing valuation their most precious investments which is Real Estate. So they spend like there is no tomorrow and think that next quarter they are more richer than ever. One of them shared to me their financial status which I help them try to breakdown their income and expenses and I saw something that will keep me awake at night. They are not saving anything considering that interest rates are at all time low. Imagine if the interest rates creep back to its historical level–this people are toasts.

Multiple them in the millions and they are creating the biggest threat to Canadian economy. The majority of people here in Canada are accumulating not wealth but debt. This is not a good sign when household earns more than >$150K a year and end up saving only less than $500 a month. I can only saw wow. Yes, it is different here. Only in Canada where people earns >$100 a year consider themselves not really doing well.

#32 Bob Copeland on 09.13.13 at 8:48 pm

The more you refer to the U.S. in a positive way, the more I doubt you. Don’t take offense please, but pick something you think is on a positive track, I know, you base everything on the government numbers. I’m studying this stuff now and am ready to debute any issue or government lie.
I need to be able to survive. First Japan, then Europe, then the US then Canada will implode.
Please help us invest for the next 5-10 years. How do we survive the next ten years?
Your smarter then the rest of us. Help!

#33 I HATE BANKS on 09.13.13 at 8:48 pm

[email protected]
I have a big complaint with the banks in general.
I went into the TD to get 15K to take across the street to the Royal so I could send the money to China to pay for a container. Something I have done many times before.
As usual TD says they don’t have enough cash so I say give me a free Bank draft. So they do.
I take it to the Royal in White Rock. They say they want to hold the draft for 4 days. New rules. I say here is the business card of [email protected] of TD. You can verify the draft. (I also went through this, A year ago, and got an account at the Royal so they knew me. I also have a Royal Visa card so I am not a stranger. I have cashed drafts here many times this way.) The Pit bull Manager of the tellers says “no we do not phone verify drafts any more”.
What have we got here.
1. A bank with no money that gives us a piece of paper instead of money that other banks are supposed to respect.
2. Another Bank that decided they don’t respect Bank drafts any more but still sells them to suckers.
3. Banks that want you to call ahead a day or 2 to order a mere 15K. (In the 3rd world where they respect cash you can take out 200k with no notice.)
In the end I had to argue just to get her to call to verify “just this one last time”. I was stuck in the bank for an hour when it would have taken 10 minutes if I took cash over to the Royal.
I called the manager of the branch and she backed up her pit bull 100%, so now I have no reliable way to get money same day to China. The Royal has a special relationship with the secondary bank in China I need to send money to. If I send with TD they have to send it through the Royal adding another day to the process so I carry it across the street.
If we as citizens don’t start using cash again there will be no cash. Banks Governments and Credit card companies are systematically trying to kill cash.
In the end the gov. will lose this one because Bitcoins and other forms of cash they don’t control will take over. (A good thing because they can’t inflate money they don’t control)
A year ago this same Pit bull would not sell me $35.00 USD to deposit to a suppliers account at the Royal. She said I wasn’t a customer and money laundering rules say they won’t sell USD to non- customers. So I went across the street to Customhouse money exchange and bought $35.00 and went back and made the deposit!? The Royal seems to be the most rigid of all the major banks.
I wonder if I should complain to the OFSI or somewhere else. Shouldn’t banks have to carry enough cash on demand or else inform us that our deposits have a term limit on them for withdrawal? Has anyone else had this problem?

#34 Jan on 09.13.13 at 8:53 pm

I guess being a renting loser is so much better, right?
I as a landlord can evict your sorry ass out anytime I want, and out you go, as in OUT.
You call that life??

#35 Herb on 09.13.13 at 9:06 pm

Gee, after reading that first paragraph I thought that this post was going to be about Smoking Man.

#36 Adam on 09.13.13 at 9:08 pm

#34 @Jan

Yeah, and then you’re going to pay the upkeep on your property out of your own pocket. Go ahead, evict me, I dare you.

#37 T.O. Bubble Boy on 09.13.13 at 9:09 pm

@ #8 Chris on 09.13.13 at 7:42 pm
Garth,

I’ve been reading your blog for a few years now. Watching and assessing. Finally, I have decided to move my TSFA out of my Orange Savings Account and into a self-directed Discount Brokerage Account. Might as well try to make something out of the $26,000.00 I’ve got sitting there. What I want to do is get into a good REIT or ETF, but I don’t know enough about them. I need some advice (for free if you don’t mind helping out a brother). What would you recommend?
———————————-
Just wait for a a bit of a pullback, and buy Canadian, US, International, and Emerging Market ETFs.

to make it simple, go for something like:
25% Canada (VCN.TO)
25% US (VTI)
25% Intl (VXUS)
25% Emerging (VEE.TO)

If you want to get a bit more aggressive, I happen to like Small Cap Value ETFs in the TFSA, including:
DLS
EES
VBR

Keep in mind, these are all equity ETFs… if you have no other holdings, you need some income investments for balance (preferred ETF, REIT ETF, bonds, etc.).

Preferreds belong in a non-registered account, to take advantage of the dividend tax credit. REITs also tend to do well in a non-registered account.

#38 T.O. Bubble Boy on 09.13.13 at 9:11 pm

@ #34 Jan on 09.13.13 at 8:53 pm
I guess being a renting loser is so much better, right?
I as a landlord can evict your sorry ass out anytime I want, and out you go, as in OUT.
You call that life??
————————–

Yep.

Keep subsidizing my rent by thousands each month, and I’ll enjoy my millions in the bank.

thanks for playing!

#39 Karlhungus on 09.13.13 at 9:12 pm

I dont understand why you continually talk about “canadian real estate”. No such thing. What does it matter what real estate is doing in Toronto compared to Edmonton?

#40 omg on 09.13.13 at 9:28 pm

#34 Jan – hopefully you bought your rental property some time ago.

I rent in a nice house that the landlord bought 5 years ago and are losing $600 to $800 per month on (remember even if you paid cash that money has opportunity cost).

The RE industry calls these losers holding properties – you do not buy them to make a net, you buy them with the hopes they will go up in value while you hold them (and are losing money every month). Holding properties have work out great for people for the past 20 years – will they continue to work out into the future – who knows?

As for evicting me whenever you want, best have real good and well documented cause, otherwise you are going to go through hell as I take you though the “process”. And if you’re found at fault you’ll end up compensating me. Unless you’re a slum landlord in which case you can usually do what you want because the poor do not know their rights.

#41 eddy on 09.13.13 at 9:28 pm

@ I HATE BANKS ,

I have had similar experiences withdrawing amounts over 3K. I’ve come to the same conclusions as you. I’ve been meaning to post it here. It is without question an agenda. The tellers roll their eyes, breath in deeply, “did you order it?” It’s always the same RBC TD, it’s the same script

Always be polite because they can’t be trusted. Once I gave an earful to RBC telephone rep, she hung up on me , I was later in the branch and the greeter swiped my card, looked at her screen and said “It says here you were rude to phone center rep” Can you believe it? I was not rude , I just raised my voice.

#42 Berniebee on 09.13.13 at 9:28 pm

#34 Jan

Of course, if you evict your tenant, you lose your rental income (Which wasn’t even covering the mortgage and taxes.) …and your sorry ass falls even deeper in debt! Hey loser speculator, how’s life?

#43 Saskatoon-Living on 09.13.13 at 9:32 pm

DELETED

#44 DW on 09.13.13 at 9:33 pm

Looks like one of those Leslieville fixer uppers. More money than sense!

#45 omg on 09.13.13 at 9:34 pm

#1 ILOVECHARTS – I think it will be a long, slow grind down – I am talking a generational shift maybe 10 to 20, even 30 years to the bottom.

There is no catalyst on the horizon that will cause a precipitous drop in prices (not the wimpy 10% – 15% but a real reset back to long run income to price multiples.)

Now if you’re talking interest rates rising 8 to 10 percent things might get interesting – but that’s no where on anybody’s 5 year horizon (other than the gold bugs and zerohedge wackos;)

#46 claire on 09.13.13 at 9:37 pm

#8 Chris
You’ve been given good advice by several bloggers. It’s time to do your homework, either online with canadian couch potato or books at your public library as suggested on this blog. Garth’sbooks are an easy read and touch all basis. No one will care more for your financial status than you do, so start the long road ahead.

#47 Thoughts on 09.13.13 at 9:38 pm

#33 saw someone at the royal bank with the exact problem on Wednesday. They knew him but wouldn’t cash the draft from td for same day cash. This is in Mississauga. He was not a happy camper. Yet Ing bank will let you take a picture of a cheque and they can cash it. Amazing.

#48 marco from Van on 09.13.13 at 9:38 pm

A great example of an accelerated view of what happened in Canada is happening in the UK right now… The government made it easier to get mortgages (with a help to buy scheme). This has created a property bubble in the south east (Where London is located). There average purchase price to average income ratio (in West Kensington where the highest UK average salary is found – GBP 45K/yr/person) is an immense 28.
Carney is “looking” at the situation attentively, but the government is increasingly being slammed for igniting this bubble. I sold my home there a couple of months ago, and the rest of my expat contacts who understand the way investment cycles work when manipulated by intervention and mass hysteria are all selling now…

Canada has had more ongoing manipulation by the government. When it made money so frivolously cheap that only debt is able to finance real estate in the country, all alarm bells should have gone off.

We are ultimately responsible for signing the paperwork that commits us to debt and yet it is only the vast minority that has taken it upon themselves to carry out the necessary due diligence required to understand the full extent of the commitment and its impact on the stability of their own strategic financial platform.

This whole mess has shown us we’re really good at getting ourselves into trouble so long someone else told us it is OK to do so.

Thank goodness nobody told the masses it was OK to jump into the Niagra falls…

#49 Thoughts on 09.13.13 at 9:41 pm

@eddy not even surprised they keep it on file! I withdrew us cash once and the branch manager literally said “that’s enough cash for her”… As if its up to her to decide. It’s very branch dependent. I went to another branch and got more without a single question. It’s my money I should be able to take out as much as I want!

#50 Rabbit One on 09.13.13 at 9:42 pm

I just remember my friend who used to sell real estate in Asisona, he is a dual citizen, and not intend to focusing on Canadian buyers, but ended up with one.

He said, US buyers are risk takers, they understand what is the risk buying depressing Asirona properties, Canadians on the other hand, they want to make sure their property investment is safe.

In that time (2009,10, and 11), it was popular for low-end property ranging $80K to $200K, some former owner (bunkrupt) rents from buyer, not upsetting family and all this kind of junks.
They are pretty normal citizens, just damaged by real estate storm.
Canadian prospect buyers’ common questions are
“Are those tenants reliable?”
My friends secret answer is “more reliable than you!”

Also, he mentioned, bankrupt former-owner comes to the open-house (as a tenant), with flashy BMWs, SUVs, etc. And they proudly says “this is all paid for”, I can see the similar future in this country, too?

#51 Rich Renter on 09.13.13 at 9:46 pm

#34 Jan
“I guess being a renting loser is so much better, right?
I as a landlord can evict your sorry ass out anytime I want, and out you go, as in OUT.
You call that life??”

Hey Jan…

FYI- there are rules to protect renters from landlords like you. I’m the kinda renter (an educated one) who will make sure it is very, very difficult for you to evict me…just because:)

P.S. I don’t rent anything built after 1991…rent control in T.O. is awesome!

Just wondering what it is like running around fixing stuff and being beholden to your responsibilities as life slips away…

http://www.ltb.gov.on.ca/en/Key_Information/STEL02_111483.html

#52 JonB on 09.13.13 at 9:49 pm

Everybody should stop what they are doing and go read Andrew Coyne’s new column where he absolutely lays waste to the “chicken little” crowd

But you won’t ……keep on trucking on your pessimistic fairland

One of Andrew’s weaker efforts. Net worth is high because of inflated real estate values. Once prices normalize, the debt will remain. Mr. Coyne will regret some words. — Garth

#53 Nemesis on 09.13.13 at 9:56 pm

It’s Friday.

‘Chillax’ [as a certain PM is wont to do].

No not that one. The other one. Ours.

Who – as it happens – was BusyBBQ’g at the same venue owned by the former MLA who graciously fell on his sword for everyone’s favourite InternationalGoToplessDay Premier…

[CBC] – Stephen Harper in B.C. for pipeline push

http://www.cbc.ca/news/canada/british-columbia/story/2013/09/13/bc-harper-kelowna-pipeline.html

I digress.

Aside: For those of you who worry about such things… FearNot: the PM SwoopedIn on the SmallOne today, effectively saving us a Bundle’OToonies.

In other news, the tarmac at CYLW was FullToOverflowing with the assorted detritus of the NetJetSet… including more than a few registered to shadow corporations in Utah and Delaware. Naturally, we won’t talk about the TurboProp from Houston. WillWe?

Enough.

PartayLikeIt’s69[55?]… ThisIsVeryRare. So, like, Groove.

YouToo, SM.

http://youtu.be/TVE0wuh8BXw

NoteToGT: Bo? Yes I did. I think it was the RailWayClub. I’m not sure who was more wasted.

#54 Smoking Man on 09.13.13 at 10:01 pm

#35 Herb on 09.13.13 at 9:06 pm
Gee, after reading that first paragraph I thought that this post was going to be about Smoking Man.

Don’t worry Herb back on the book again. I will mail you a free copy seeing that you love me so much.

Here is a treat first paragraph

“To make serious loot you need to have dominance over others, you must be the ruthless master, them the obedient dog. It’s the only way it worked 1000 years ago, only way it works today, and the only way it will work in a 1000 years from now. More on that later, but it’s the theme of this thing your reading. Got a problem with it slave.

What part of the red bold letters on the cover that said no refunds did you not understand?

It’s amazing.

The bounty on bugs bunny’s head after this one hits the shelves will be priceless.

#55 HDJ on 09.13.13 at 10:11 pm

“It’s humbling, especially when you realize how flawed a person you really are – something critics and opponents ceaselessly point out. They had lots of ammo with me.” Garth.

“Modesty is only arrogance by stealth.”
― Terry Pratchett, The Long Earth

“Try not to be a dick.” — Garth

#56 Sebee on 09.13.13 at 10:13 pm

…are being dickheadish, obdurate or churlish.

Not only a source of info, opinion, logic but also a language lesson with some unusual words used today. I had to look up dickheadish.

#57 Obvious Truth on 09.13.13 at 10:16 pm

That looks like a down the street of the one I grew up in. 40 years ago those homes were crappy starter homes where people could save and aspire to more.

Now people are aspiring to spend their lives paying for it 3 times over.

Again as I’ve said of many such places Garth posts. I wouldn’t take that place for free. My parents having been in the country six months in 69 knew that was no place to live for long. My dad was in construction and wouldn’t spend two cents on it. Said it was garbage but was easy to save money. Less than slum rent.

Don’t finish the basement. It floods relentlessly. Sewage and rainwater mix is pleasant.

Has anyone else had enough of mainstream Canadian bank economists? Do they actually believe what they are saying? They’ve been calling for rate hikes for four years. Really? And they keep getting promotions. Is it any wonder Canadian finances are a messs. They are supposed to be the gatekeepers of our financial system. Ever think about how much they’ve cost people.

On the eve of the Lehman anniversary are they any different than Dick. Nobody calls them out. Like they’re untouchable? How could we have known?

What a joke. The human cost will be high. Families will be broken. Self esteem and dignity for many will be destroyed. Household formation delayed. Lost opportunity. A generation that cant say this is no place to live for long.

Our leaders bear responsibility but we will all bear the burden.

Tone on the blog is denial. The obviousness will come in time. The truth……..

On rates. Some are now doing the taper backpedal. No inflation. Spikes are deflationary. Evidence, GDX up with gold getting spanked, EEM up, used to be bond equivalents BCE TRP RY XRE?

Some get a little extremist about the whole thing but have good insight. Check out Mish on India housing tonight. It’s the bubble blueprint.

Just add debt. Wash, rinse and repeat.

#58 Bob on 09.13.13 at 10:24 pm

“It’s humbling, especially when you realize how flawed a person you really are – something critics and opponents ceaselessly point out. They had lots of ammo with me.” Garth.

“Modesty is only arrogance by stealth.”
― Terry Pratchett, The Long Earth

“Try not to be a dick.” — Garth

—————————————

One of your best replies Garth! Has to go in your next book.

#59 sheane wallace on 09.13.13 at 10:25 pm

Dollars are IOUs backed by another IOU, bonds. Bonds are in a huge bubble. That’s a predicament, not a problem. Problems have solutions.

Dollars are backed by the sovereign issuer’s power to tax. It is unlimited. — Garth

#60 w-hat on 09.13.13 at 10:45 pm

For anyone under 30 – the first two paragraphs of this post apply to, and will directly affect your success in any undertaking.

#61 Yuus bin Haad on 09.13.13 at 10:46 pm

Nice day, if it don’t rain.

#62 Sydneysider on 09.13.13 at 10:48 pm

That house would go for $700K in Sydney.

#63 sheane wallace on 09.13.13 at 10:51 pm

Dollars are backed by the sovereign issuer’s power to tax. It is unlimited. — Garth
…………………………………..
It is actually limited by the:
1. Real GDP.
and
2. The constraints placed on the GDP by the debt and unfunded liabilities.

What you get for your currency (not money, money allow for preservation of value) depends on the real economy that is tanking due to the debt, deficits, outsourcing. Just a look at the reduction of energy consumption is sufficient to see where the real (not nominal) GDP is going.

The trick of downplaying inflation results in reporting higher real GDP than it actually is.

One big lie and everything is rosy… Until it is not. It is like the Romans counting counter-fitted debased coins at the fall of Rome’s empire at nominal value… read about Diocletian…

You sound like a metalhead, and I feel your pain. But states still have unlimited power to tax, and bonds have zero to do with it. — Garth

#64 souvereigninternational on 09.13.13 at 10:53 pm

“It’s taken five years for that market to struggle from a 30% drop in real estate values to a mere 20% decline.”

Garth, after 5 years and adjusted for inflation it is still 30% roughly. It just looks better. I fully expect greater fools in TO saying in 10 years from now “look my house is still worth e.g. 500K and at least I did not throw away money on rent like you”. They will only look at absolute numbers of $.

#65 doccalgary on 09.13.13 at 10:59 pm

“dead cat bounce” is the term used to qualify a sudden increase in value of an asset that has lost value dramatically in a short period of time. Another term commonly used would be “don’t catch a falling knife”.For a gentlemen who preaches liquid assets, you should know better Garth….
Best

This is identical to explanation I furnished: “it refers to what happens when you toss an expired kitty out a high window. It bounces. But it’s still dead.” — Garth

#66 Shawn on 09.13.13 at 11:05 pm

THE VALUE OF A DOLLAR

Dollars are backed by the sovereign issuer’s power to tax. It is unlimited. — Garth

**************************************
I would say that is correct if you replace the first word, dollars, with “government bonds”. Its government DEBT that is backed by the power to tax. Dollar bills are not a true debt of the government because there is no obligation to redeem them, ever.

Dollars are not redeemable for anything but other dollars which have no fixed value in terms of purchasing power.

Dollars have value because: 1 The government accepts them for payment of taxes
2. Everyone in “the market” accepts them in return for goods and services (though they are free to demand more dollars tomorrow for the same goods or services.

We rely on governments to make sure dollars are a short term store of value by preventing rapid inflation. We don’t worry about long term inflation because we can invest our dollars to protect against that.

We all value dollars because they can be used to pay taxes or buy goods and services also because they can easily be invested to offset inflation.

All of the above is excellent and is working very well and supports our amazing standards of living.

#67 sheane wallace on 09.13.13 at 11:06 pm

You sound like a metalhead, and I feel your pain. But states still have unlimited power to tax, and bonds have zero to do with it. — Garth

—————————–
It depends which metals…
BBL and RIO are doing and will be doing just fine.

States have very limited power to tax in real values/terms, (not in abstract numbers) and the bonds have everything to do with it as if you can’t tax in real terms and can’t sell bonds, there are no deficits, hence no consumption and 70 % of the economy goes down the drain. The ONLY way to support the consumption is the massive money printing and bond buying by the Fed which weakens the dollar in long run hence bond problems become dollar problems.

There are no productivity gains (as there is no production left, just consumption).

#68 REALLY??? on 09.13.13 at 11:09 pm

When I saw the pic of that dump I could not believe it sold for $470!!!! I hope there are plenty more virgin morons out there.

#69 sheane wallace on 09.13.13 at 11:11 pm

Where I am going with this is that if this insanity with 0 interest rates continues, then buying real estate now and being able to hang in (if interest rates go down as you say) will be seen as huge win after 8-10 years. When a cup of coffee would be 8-10 $.

Any rate adjustment now will be modest and temporary after the bond market’s recent overreaction. Long-term, rates will normalize. — Garth

#70 Cici on 09.13.13 at 11:19 pm

Ach mein lieber Gott!

What has got into the Canadian water supply? Or is it the cannabis?

I may not be brilliant, but the people buying up these dumps at inflated prices make the rest of us look like super geniuses.

Stupid is as stupid does…70% of Canadians were homeowners…what’s the percentage now…90%?

When will this debauched party finally end?

#71 Obvious Truth on 09.13.13 at 11:19 pm

JonB “pessimistic fairyland”

Still in ridicule stage. Garth is just doing math. None of this is personal.

Nobody tells you there’s a correction happening. You have to figure it out on your own. That’s what separates winners and losers. Buy fear sell greed. Easier said than done for most. Most like safety in numbers.

The winners ride with you and split as your eyes get big with the prize at the finish line. You are too euphoric to realize you can’t beat anyone because you are now racing yourself.

When Andrew Coyne is on a panel discussing how the election will be won on who is trusted to get us out of this mess you’ll be listening and wondering how to vote.

A few of us will be listening and hear the starters pistol.

#72 sheane wallace on 09.13.13 at 11:20 pm

Any rate adjustment now will be modest and temporary after the bond market’s recent overreaction. Long-term, rates will normalize. — Garth
————————–
Impossible, because the economy can not sustain the debt and unfunded liabilities combined with 6-8 % interest rates.

It is either default on or devaluation of the debt.

There is no bond overreaction as the Fed’s mop is covering the bond market secretly. Who bought the 60 something billions in bonds sold by foreign nations in June alone?

#73 dominion on 09.13.13 at 11:22 pm

Is that the electrical meter right by the front door?

Classy.

#74 REALLY??? on 09.13.13 at 11:23 pm

Hey Jan #34!!!….XXXXX!…kiss my azz!!

#75 sheane wallace on 09.13.13 at 11:25 pm

All of the above is excellent and is working very well and supports our amazing standards of living.
——————————————
Until the petrodollar dies and we run out of foreigners to subsidize us.

#76 Sam on 09.13.13 at 11:25 pm

I must say the new houses mentioned in Saskatoon don’t look particularly outstanding for being north of $500 K.

http://www.daytonahomes.ca/listings/saskatoon?sort_by=field_community_tid&sort_order=DESC

#77 Chris on 09.13.13 at 11:26 pm

I do not recommend individual securities to people I do not know. Stop asking. — Garth

Fair enough. We’ve actually met at one of your talks in Calgary once (but you wouldn’t remember that), and I would be willing to get to know you if you would like to. It could be the start of a beautiful relationship!

#78 sheane wallace on 09.13.13 at 11:37 pm

OMG:
Now if you’re talking interest rates rising 8 to 10 percent things might get interesting – but that’s no where on anybody’s 5 year horizon (other than the gold bugs and zerohedge wackos;)
………………………………………………..
If printing continues there would be significant inflation
and run our of bonds.

If printing stops there would be default based on skyrocketing interest rates and run out of bonds…

One can only stretch ‘elastic’ money that much. Watch when they break.

#79 Tony on 09.14.13 at 12:09 am

Re: #8 Chris on 09.13.13 at 7:42 pm

Buy some Uranium One 7.5 Pct Conv Debentures (UUU-DB-A.TO)

#80 Smoking Man on 09.14.13 at 12:09 am

Any rate adjustment now will be modest and temporary after the bond market’s recent overreaction. Long-term, rates will normalize. — Garth
…………………………………
Garth saw batman.

5 more pages done. No holding back, No censorship. probably going to need to self publish, no main stream publisher will touch it.

No extremist publisher will touch it.

Must budget for some body guards, Mohammad, Moses’s and Jesus Christ will be coming after bugs bunny.

#81 R on 09.14.13 at 12:12 am

Hi garth

I understand 5 year fixed mortgage rate depends on Bond market and Bank borrows from it
How about vrm where do Banks borrows forum variabile rate mortgage so confused

#82 canadians maxed out on 09.14.13 at 12:19 am

Jan #34

I think you are a clueless spectacular who does not understand the reality of being a landlord with a dead beat tenant. If the dead beat knows what they are doing they can live rent free for 6 months of which time you need the money to pay your mortgage. Don’t think it is easy and if your are a rookie you could get a rude awakening. I’ve heard of cases lasting a year. Yes a year.

#83 morry on 09.14.13 at 12:22 am

God help us.

#84 Son of Ponzi on 09.14.13 at 12:33 am

Dead cat bounce?
Also, cats can’t swim.

#85 young & foolish on 09.14.13 at 12:45 am

.. the $470K “dump”, the renters who think the landlord is subsidizing their rent, the brown-nosers and the boasters, …. yes sir, this comment section is full of geniuses ….

It’s why we come here!

Thanks Garth

#86 Second Class on 09.14.13 at 12:54 am

Was just in the US. In utah the realators are such rockstars still they get their own license plates with the big R on them.

Regular non delusional americans do see how Canada looks like tge US did before the crash. Stories they tell are exactly how it is here. Two new cars, new house, raising a family on two average salaries. It just doesnt compute.

#87 blase on 09.14.13 at 1:09 am

To “Jan”,

Thanks for adding your ridiculous comment earlier. I had a good laugh at your expense!

#88 i love libraries on 09.14.13 at 1:41 am

A good dose of humility does indeed help us see ourselves and the world much more clearly. Thanks for the reminder

#89 Vamanos Pest on 09.14.13 at 3:38 am

#34 Jan
Have you ever tried to evict a tenant? Not easy. Tenancy legislation is provincial, so it is possible you are a landlord in a jurisdiction where eviction without cause is doable, but in my province, it’s next to impossible.

Gotta go, my toilet’s flooding. Oh, wait, not my house and not my problem. I’ll just let the landlord know, and if there’s a lot of damage, I’ll just move. Hope the 400$ damage he keeps covers the repair bill. Sucker.

#90 JUNO on 09.14.13 at 4:05 am

Has anyone thought what will happen when govt gets a reduction in revenue due to lower housing prices (property taxes) and less and transfer revenues due to less sales.

Our government is already in debt and is quite a burden on the tax payers. going to be interesting times when the ball begins to drop!

#91 Derek R on 09.14.13 at 4:17 am

The cat shouldn’t have bought this boat

#92 Notta Sheeple on 09.14.13 at 5:13 am

“…..how this view can be so utterly at odds with what bank-paid Bay Street economists are telling people…. ”
=========================

Easy answer. The Big Six banks have become so addicted to the crack cocaine of record bank profits they wouldn’t dare acknowledge the fact that their so-called ‘strong’, ‘buoyant’, housing market is crippling the labour competitiveness of this country.

Over-priced Canadian housing requires over-priced Canadian wages, and we can’t afford to manufacture anything in this country anymore. As Garth correctly pointed out, “…The unemployment rate in Canada has been creeping up while that in the US creeps down…”

Were it not for our hewers of Canadian wood, drawers Canadian oil, and refiners of Canadian rock, this country would have become a third world ghetto a long time ago.

#93 Pr on 09.14.13 at 6:12 am

Bring a bigger cash down, a real one, like in 1998, 10% cash down from the buyer and jack up the interest rate and their you have it. Affordable price will come back. Nothing magic.

#94 Rob on 09.14.13 at 7:34 am

@ Chris nr 8

Check out Canadian Couch Potato or Andrew Hallan’s website for everything you need

Rob

#95 Buy? Curious? on 09.14.13 at 7:37 am

Hey Garth! My neighbour is trying to sell their house. They’re having an Open House this weekend. Should I wear clothes?

#96 Brian Romanchuk on 09.14.13 at 8:00 am

#81 R
I understand 5 year fixed mortgage rate depends on Bond market and Bank borrows from it
How about vrm
—————————
Banks can borrow in the bond market or by 5-year GICs to get fixed funding for fixed mortgages.

Bank deposits and savings accounts are short-term funding, which are matched to VRM’s floating rates. They also can issue short-term debt in the money markets (i.e., what money market funds hold) which are also matched to VRM’s.

However, the bond market is not completely independent of what the central bank is doing. The 5-year bond yield represents the market’s best guess of the average of the central bank rate over the next 5 year, plus a fairly small risk premium.

#97 dienekes on 09.14.13 at 8:06 am

#20 CJB on 09.13.13 at 8:11 pm
I was looking at those houses online of Daytonas in Saskatoon. There prices seem to be lower per square foot then a lot of the local builders in Saskatoon like Royalty Construction. And still they are not selling. I was talking to the owner of Royalty, a while ago and he mentioned things are not moving.
I have made 6% discounted offers on houses in Saskatoon, and one idiot realtor, Clark Dziadyk, actually asked me “how can you lowball a house like that without looking at it first.” What..I’m going to offer 6% over asking when I see the bathroom backsplash?? This guy was one of the biggest morons I ever talked with.
And 6% below asking is a lowball? I think he just couldn’t calculate the real dollar amount.

#98 dienekes on 09.14.13 at 8:12 am

#76 Sam on 09.13.13 at 11:25 pm
“I must say the new houses mentioned in Saskatoon don’t look particularly outstanding for being north of $500 K.”

They are all crap, square boxes, no corners, with the entire house over the garage to limit cost per square foot. Same ugly crap as Calgary and Edmonton.

#99 Big Al (New) on 09.14.13 at 8:25 am

This cat has a way to go yet as a friend two days ago boasted that his son and daughter in law won a bidding war in Winterpeg in buying their first house. Jesus H Christ a bidding war in Winterpeg and he was happy they one.

#100 Entitled Conservative Senator on 09.14.13 at 8:47 am

Garth has shown clearly that housing costs are out of touch with reality. Now can’t you all see why your humble public servants need to have principal residences so far from Parliament Hill?

http://www.youtube.com/watch?v=x4o-TeMHys0

Have some empathy, little people. Thank heavens we Senators can also legally collect fees from corporate directorships while we serve Steve-O’s,…er…the public’s interest.

In spite of the tremendous hardships we face on your behalf, I will keep my triple chin up as I head towards the parliamentary cafeteria, and the future.

I am prorogued, until next time blog dogs…….

#101 Ralph Cramdown on 09.14.13 at 9:44 am

#32 Bob Copeland — “The more you refer to the U.S. in a positive way, the more I doubt you. […] First Japan, then Europe, then the US then Canada will implode. Please help us invest for the next 5-10 years. How do we survive the next ten years?”

We get a lot of strange ones around here, but yours has to be one of the strangest. You don’t believe Garth’s macro forecasts, but you want him to design an investment plan for you based on your forecasts? If you want to be an iconoclast, do your own homework and come up with your own plan.

Alternatively there’s a huge subsection of the internet that says it’s all going to hell and you’ll need gold, guns, dried beans and seeds, water purifiers, magnetic repellent devices for extra-terrestrials and so on, all of which they’re willing to sell you in exchange for those soon-to-be-worthless piastres if you just provide your credit card info. Think about it.

#102 Herb on 09.14.13 at 9:45 am

#80 SM,

suggestion for you: forget the line you seem to be taking and self-publishing your book.

Find yourself a nice nom de plume, and rewrite it as a novel, The Memoirs of Caligula, for instance. You can insert any number of examples of how to treat people as shit, celebrate greed (as in charging admission to orgies), and generally doing what you want to do. Leave out some of the messy parts, but let your imagination run free. That way, you’ll make it interesting and marketable, have publishers line up, score a hit, and your 22 fans will get the message.

Don’t bother paying me. I’m not for sale.

#103 Buy? Curious? on 09.14.13 at 9:48 am

There is no god. If there was one, we wouldn’t need this blog.

#104 Rabbit One on 09.14.13 at 9:49 am

> 33 IHATEBANKS

If you really want to give bank staff hard time, send “client feedback” to Customer Care, or RBC Ombusman. Banker’s direct manager may protect bank staffs, but Customer Care cannot. They must reply to you, also demand improvement to the staff and its manager.

It used to be $10K cash limit per day, reduced to $5K, now $3K. It maybe further reduce to equal to your ATM cash withdrawal limit. ($1K to $1.5K for many folks)

I heard similar stories what you’ve through.
Bank Draft – 3 days hold, they won’t verify, why?
They don’t want to assume liabilities, $15,000, so give you customer inconvenience.

This is also manualization, bank staff just have to follow the manual, no exception to all branches, strongly enforced.
Don’t treat your 15 years known client different from complete stranger worked into the branch today.

Btw, keeping lots of cash at the branch is a “cost” to the banks. So, they won’t do this any more.

#105 Rabbit One on 09.14.13 at 9:50 am

Just to add, if you send complain to the bank, use
“Customer Experience” word, it works

#106 Steven on 09.14.13 at 9:52 am

One of those virgins better be making $78.34 an hour or better or he is definitely screwed. $470,000/6000 man hours= $78.34 per hour to buy the house. What a lucky thing it is for banks and realtors that home buyers don’t think about making enough per hour by one person in order to safely buy a home. Garth are there very many home buyer syndicates in Canada yet? At these prices one would think it was a standard operating proceedure for a whole group to pool their income to buy properties and live communally while the property is paid off by the group.

#107 jess on 09.14.13 at 9:57 am

….the world has millions living in tents … in just three years look what was accomplished!

http://www.dailymail.co.uk/news/article-2360182/Take-look-inside-worlds-biggest-building-Chinese-dome-houses-shopping-centre-Mediterranean-village-water-park–ice-skating-rink-multiple-hotels.html

#108 CrowdedElevatorfartz on 09.14.13 at 10:07 am

@#101 Entitled Con

THAT video was hilarious.

#109 Obvious Truth on 09.14.13 at 10:23 am

#98

This is the problem. The appropriate discount is 50%.

Simple math. 500k mortgage at 2.5% is roughly $1000 per month in interest

At 6.5%, roughly 3000 per month in interest.

That was a decent rate 10 years ago.

Ten year bond rates at about 4.5% create this triple of interests scenario.

Anyone who thinks they should buy a house in Canada today is crazy. This is the time to reduce exposure and/limit your housing risk.

Still believe rates can’t go anywhere for a while but a couple of years is not that long in housing terms. And you can see that not far from here is very destructive. When they legitimately go up and FED has to raise overnight rate to to say they need to combat the inflation they created it will be way too late.

It’s unpredictable exactly when this happens but it will. Governments need inflation because their debts are too big as well.

If wages go up 20% that equals a lot more tax money that pays for more interest on their debt. It will help you too if you are not in denial and take simple steps to prepare.

That’s why the juicy 10 year of late was a great opportunity. Manage risk and probably benefit from inflation.

It’s as they say a no brainier. You’ll be 100% right on that over 10 years no matter what happens.

Remember that it’s the fabric of your life, family and opportunity you need to protect. Finances impact all of these.

The opportunity recently was to borrow cheaply to invest. That is coming to an end. Witness the bond blowout.

Wait for the next opportunity which will be to take advantage of possible inflation. Did anyone notice Buffet buying oil assets? What he buys in the next 6 months will show his hand about what he thinks of the next 5 to 10 years. He never gets that time frame wrong.

That’s the appropriate time frame for all of us.

#110 vawr on 09.14.13 at 10:35 am

#53 nemesis

Your pompous drivel is annoying.

#111 jaguar on 09.14.13 at 10:49 am

#85 – Cats can’t swim? Tell that to Momo, the cat who swam his way out of a drowning pickup truck in High River during the flood. He swam better than his owner.
For all the bashers of Banks, try and remember if you have mutual funds you are a shareholder, and those underpaid bank staff and doing their level best to protect the shareholders from scams being run by very bad people. You really have no idea as Banks don’t go on rants about it. Keep you money under your mattress or in some little credit union if you’re offended.

#112 rosie "moving forward" in the knowledge that, "this won't end well" on 09.14.13 at 10:51 am

#108 jess

Looks can be deceiving. http://news.nationalpost.com/2013/09/14/shadowy-chinese-billionaire-behind-worlds-largest-building-vanishes-amid-corruption-scandal/

#113 HogtownIndebted on 09.14.13 at 10:52 am

No wonder Winnipeg’s RE market has gotten so hot, in spite of the absence of major employers, resource industries etc…

It’s the designer tap water!!!!

It’s now the same beautiful earthen colour as granite countertops!

http://www.cbc.ca/news/canada/manitoba/winnipeg-s-brown-water-poses-risk-biologist-says-1.1705731

These are kitchens to die for!!!

It really is different there; onward and upwards realtors and you house horny prairie dogs ;)

#114 Ogopogo on 09.14.13 at 10:56 am

#34 Jan on 09.13.13 at 8:53 pm
I guess being a renting loser is so much better, right?
I as a landlord can evict your sorry ass out anytime I want, and out you go, as in OUT.
You call that life??

I was about to say “don’t feed the troll”, but I see I’m too late. The fact that the turd blossom “Jan” hasn’t replied to any of the posts taking on the ridiculousness of his/her/its anti-renting screed proves my point. My guess?

(drum roll, please)

Yet another angry, frustrated realtor.

#115 Ralph Cramdown on 09.14.13 at 11:01 am

#33 I HATE BANKS — “I went into the TD to get 15K to take across the street to the Royal so I could send the money to China to pay for a container. Something I have done many times before.”

There’s no way around the fact that a customer known to the branch for years who has more than sufficient funds on deposit to cover an irrevocable foreign wire transfer is a GOOD RISK, while a customer — even if known to the bank — who doesn’t have sufficient funds in the institution but presents a negotiable instrument which may or may not clear is a BAD RISK.

As we move to a more cashless society, banks are going to be holding less daily cash on average, except just before Christmas when all the grandparents line up for new bills to distribute.

Having sufficient funds on deposit at the institution doing the wire transfer is a cost of doing business. If I was going to try to negotiate a counterfeit draft, I’d do it just as you tried to — get a real draft for the same amount at a bank across the street, and encourage the target bank to call to verify when I present the fake one. Banks have been doing this business for centuries, and people have been trying to scam them for just as long.

https://www.google.ca/search?q=counterfeit+bank+draft

#116 Smoking Man on 09.14.13 at 11:04 am

#103 Herb on 09.14.13 at 9:45 am

Starting to like you, Herb.. Can I make it 23 fans?

Its like a biogaraphy, except the story is so un belivable people will think its fiction.

Im not looking to sell millions, that will bring fame, end my descrite adventures with short term rentals.

The objective is to make a few smoking men. If we were all smoking men, who would wash our cars, serve us meals.

Its not for everyone

#117 Musty Basement Dweller on 09.14.13 at 11:06 am

#34 Jan
“I guess being a renting loser is so much better, right?
I as a landlord can evict your sorry ass out anytime I want, and out you go, as in OUT.
You call that life
=========
Hey Jan, you sound like a classic arsehole landlord.
I hope you never discover what a few gallons of black lacquer paint can do to your walls and probably stinky carpets in your unit. Oops sorry I meant I hope you DO discover.

#118 Retired Boomer - WI on 09.14.13 at 11:18 am

I like the picture of the row house. Reminds me of the US row houses circa 1910-1925. Balloon construction, compact space. In my hood you would be hard pressed to get more than 50K for a dump like that with less than 1100 sq ft finished.

The price is not the issue, it is the value.

Each of us decides what is most important to them. I can not determine what is best in your circumstances, nor can you in mine.

I know what I hold dear. You do as well. Choices, choices. Circumstances change, even faster in these hectic days, so be flexible. Nothing limits your ability to flex with change more than debt. Be aware is all i am asking.

#119 Montreal govt mislead on 09.14.13 at 11:27 am

Here’s the situation in Montreal according to the municipal govt web site: “Contrary to popular belief, buying a single-family home in Montréal can be very profitable. … To get an idea of both families’ financial assets, we must check the progressive value of their homes. The value of the Arsenaults’ home is likely to increase by 5 percent per year, while the Beauséjours’ home will increase by 4.3 percent, using the average indexing rates registered over the past 15 years. These rates were calculated using data from the Greater Montréal Real Estate Board. … Living in Montréal is possible … and it pays!”

http://ville.montreal.qc.ca/portal/page?_pageid=5097,27769607&_dad=portal&_schema=PORTAL

#120 Murray on 09.14.13 at 11:49 am

I have to admit that I agree that housing prices are way out of wack, however, what’s the alternative? If you don’t own a home or condo, then you have to rent. And, if you rent, you’re paying someone else’s mortgage, so where is the advantage to renting?

Basically, renting is just paying some else’s mortgage, taxes, and other costs. So what’s the advantage to renting IF you can afford to own?

I still think for young people, the best choice is to own as long as they can afford the cost, taking into account rising interest rates and other increasing costs, however, for older people – say 55 and over, it might not be a good idea to own as they may have to wait too long to get a return on their investment.

Renting is half the cost of owning in most cities. When houses stop appreciating, ownership is pure risk. You have much to learn. — Garth

#121 LS in Arbutus on 09.14.13 at 11:56 am

Meanwhile in the US…..

A great number of Americans are redefining the American Dream. That was the takeaway from a recent Credit.com poll, which showed that nearly one in four people between the ages of 18 and 24 defined the American Dream as being debt-free. Shockingly, that’s more than those who dream of owning a home.

http://blog.credit.com/2013/09/new-american-dream-not-what-you-think/

This from a country where 6 years ago they were just as out of control as Canada. What happens here when Canadians eschew debt?

#122 GoWestYoungMan on 09.14.13 at 11:56 am

There are still places where buying makes sense. Like Grande Prairie, AB. You can still buy a decent house here for 270k and rent it out and be cash flow positive right off the bat.

There are very few places to rent due to influx of people coming for the (ridiculously high) paying oil patch jobs.

A 250k mtg is $1300 monthly (25 yr, 3.8%). You can get $1000 rent for a basement suite and another $1500 for the main floor. Take off taxes and you’re still clearing $1000 a month and taking very little risk. After all if the market crashes who has paid for the mortgage? Your renters, God bless ’em.

#123 HAWK on 09.14.13 at 12:06 pm

#76 sheane wallace on 09.13.13 at 11:25 pm

I agree about the Petro Dollar, but I think it will be quite a while before the reserve currency status breaks. Will it even be in our lifetimes?

For now it seems that the US is quite on the upswing even if the beneficiaries are only the infamous “1%”.

#124 rosie "moving forward" in the knowledge that, "this won't end well" on 09.14.13 at 12:16 pm

Nice pictures of real estate in the Southwest. Plenty of deals to be had. http://www.wired.com/rawfile/2013/09/michael-light-aerial-photos/?mbid=social11892404#slideid-55591

#125 don on 09.14.13 at 12:18 pm

#34 Jan on 09.13.13 at 8:53 pm

I guess being a renting loser is so much better, right?
I as a landlord can evict your sorry ass out anytime I want, and out you go, as in OUT.
You call that life??
*******************

Have you tried kicking someone out of your potentially bank owned, about to depreciate property? In a year or two you’ll be begging for good renters. So many people have second bank owned properties. What happens when they all compete for renters.

A business owner can kick a customer out of their store also, what happens then……..NO BUSINESS FOR YOU. Happy balance for everything. Soon people will understand that interest rates will rise forever….DON”t lock in now when you can borrow at a higher interest rate later…………..lol

Chant it and they will believe it.

#126 JimH on 09.14.13 at 12:22 pm

There seems to some common mis-understandings about the so-called US “Housing Crash”.
It appears that many posters could benefit from a look at this chart, which compares the price histories of housing in various American cities.

http://vancouverpricedrop.files.wordpress.com/2013/08/graph.png

As you can see, the decline in house prices from peak required over 30 months to reach bottom. The so-called “crash” took place over a two-and-one-half year time frame, during which time many buyers caught “falling knives”.

Note also that the depth of the decline also varied greatly by location; house prices in the New York and Boston dropping ~ 20%, while house prices in cities located in southern climes really got the axe. (Note the drop and serious lack of recovery in Lost Wages, Nevada)

Many people are asking for a prediction for the timing of the bottom in Canadian housing. It seems any bottom (as well as the depth of the decline) is also largely dependent on location, general macro-economic conditions and their impacts locally, GDP and population growth and the timing of the peak. Peaks in Canadian house pricing may be found here:

http://www.chpc.biz/plunge-o-meter.html

Hope some find this helpful!

#127 Dan on 09.14.13 at 12:34 pm

I’m a fool for not jumping head first into that dumper townhouse on the Danforth last year. I should have known that renting is for losers.

This farce of a housing bubble could conceivably go on for much longer than anyone anticipates – much like the current American equities market.

Syria seemingly resolved, taper lite, and debt ceiling a non-issue: I wouldn’t be surprised to see the Dow go parabolic to 18,000+ and gold plunge to $1000 within a year.

I’m still bullish on gold longer term and am holding on to my mining ETFs (still in the green – barely), but it could get even uglier soon in metal land.

#128 bill on 09.14.13 at 12:38 pm

#85 Son of Ponzi on 09.14.13 at 12:33 am

http://www.cbc.ca/news/canada/calgary/swimming-sensation-momo-the-cat-escapes-alberta-flood-1.1370290
That cat was throwing a bow wave you could surf on….

#129 Alex K on 09.14.13 at 12:56 pm

about bank drafts
each draft has a carbon copy if you present them both there should be no issues.

#130 Post Haste on 09.14.13 at 1:11 pm

We bought our first and only home in 2002 – 1 hour north of the big smoke, price $209,000 for a 2400sq detached on a 60ft lot. Reason for this – wife wanted nothing to do with living in an apartment which was the only realistic thing we could buy back then if we wanted to stay closer to the city.

Fastforward – looking at possibly selling and moving to the west part of Burlington, a job relocation would provide a pay increase of nearly$25K more each year..looked at some prices – 40 year old ranch style bungalow going for $540K – that’s out of the question, still looking.

I did a recent comparable of home prices, I was stunned, I assumed I could get $345K on a good day – a similar home to ours just sold for $425K – wtf – how! Our home is on a court, larger lot – this house that sold had a built out basement, besides that – identical to ours.

The story goes – hoards of Toronto homeowners are selling while prices are high – and moving north where they can buy a home with cash and some extra in the pocket. I have had 3 agents knock on my door the past few months asking if I was thinking of selling, their claim was they had buyers eager to purchase. Garth is right – segmented markets, up here – it’s mind numbing – and scary!!

#131 Murray on 09.14.13 at 1:27 pm

You say that “renting is half the cost of owning in most cities.” Does that mean that owners of rental properties are losing that much?

As an owner of a rental property in Victoria, I have to disagree. The rent my tenants pay more than covers the cost of my line of credit, plus the cost of the difference between the LOC (at 70%) and the total cost of the property (based on the same interest rate as the LOC), as well as the taxes, insurance, condo fees, maintenance, etc.

When the interest rates go up and any other costs, so will the rent (as I have done in the past). Am I missing some point? Thanks.

#132 Mark W on 09.14.13 at 1:30 pm

http://www.winnipegfreepress.com/local/all-this-fuss-for-700-people-223729881.html

“Despite millions in grants, a slew of building projects and significant hoopla, there are only 700 more people living downtown than a decade ago.
That’s according to new data from the 2011 census, and it’s a disappointment for urban advocates.”

MAYBE IT’S ALL THE CRIME IN DOWNTOWN WINNIPEG?
IS THERE ARE SHORTAGE OF LAND IN MANITOBA I DO NOT KNOW ABOUT?
FIFTEEN MINUTES BY CAR AND YOU ARE OUT IN THE SUBURBS AND AWAY FROM THE GRIME AND CRIME OF DOWNTOWN WINNIPEG.

#133 Snowboid on 09.14.13 at 1:53 pm

Do you like RE agents who sound like Arnold Schwarzenegger on meth?

Then it’s time for the latest installment of news and views from Kelownas’ most enthusiastic duo…

http://www.youtube.com/watch?v=J-eSrCj7Oxw

#134 Donald Trump on 09.14.13 at 2:20 pm

#108 jess on 09.14.13 at 9:57 am

IMHO, China is building a bunch of Disneylandish potemkin villages.

Like Japan, the Banksters want to westernize them so they lose old roots and established culture.

Stalin says it takes only one generation.

That’s what is going on globally, the REAL agenda.

#135 Old Man on 09.14.13 at 2:32 pm

Now keep your eye on the protest marches in Montreal over the new Bill presented by the new political party in power which is Fascism in nature that can crash the Real Estate market in a heartbeat there. Let me give you a history lesson about Montreal, as know it well. Montreal during the 1960’s was the commercial and financial capital of Canada, as Toronto was nothing. Then came the separatist movement in the very early 1970’s, and $billions left for Toronto, as this alone made Toronto great, at the expense of Montreal and Quebec in general. Will history repeat itself? Those left behind in Montreal especially on the west island could not sell or give their home away at any price for many years; no buyers to be found, as all the big money went to Toronto.

#136 Daisy Mae on 09.14.13 at 2:34 pm

#16 Entrepreneur: “If less people cannot afford to buy then the prices will fall as with every assest. Consumers rule!”

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

We really DO have the power. Too bad we don’t make the most of it.

#137 Cristian on 09.14.13 at 3:09 pm

Garth, a few days ago you were dissing a blog dog who was questioning your “7% balanced portfolio” theory.
Well, here’s the returns of the five Illinois state pension funds (first figure is the assumed rate of return, second is the actual 5-year rate or return and the third the actual 10-year rate of return):
TRS: 8.5%, 4.1%, 6.0%
SERS: 7.75%, 3.1%, 4.5%
SURS: 7.75%, 5.3%, 6.1%
JRS: 7.0%, 3.1%, 4.5%
GARS: 7.0%, 3.1%, 4.5%
(Unlike you, I am going to provide the source of the information – Governor’s Office of Management and Budget)
I would say that a pension fund is the definition of a balanced portfolio, wouldn’t you?
So where is your 7%?
When you look at the plans’ five-year returns, note that these funds had the benefit of a 140% US bull market over the last four years, and their ten-year returns had the benefit of two bull markets and just one bear market (though it was a savage one).
So you may want to revise your 7% magic number.

Institutional pension managers do not run balanced funds, but are far more heavily weighted in fixed income, for obvious reasons. Poor argument. — Garth

#138 Musty Basement Dweller on 09.14.13 at 3:22 pm

#132 Murray on 09.14.13 at 1:27 pm
You say that “renting is half the cost of owning in most cities.” Does that mean that owners of rental properties are losing that much?

As an owner of a rental property in Victoria, I have to disagree. The rent my tenants pay more than covers the cost of my line of credit, plus the cost of the difference between the LOC (at 70%) and the total cost of the property (based on the same interest rate as the LOC), as well as the taxes, insurance, condo fees, maintenance, etc.

When the interest rates go up and any other costs, so will the rent (as I have done in the past). Am I missing some point? Thanks.
==========================
Murray to do a proper comparison between renting and owning you need to look at the total cost of ownership including all costs of ownership (not just the monthly financing costs) and missed investment opportunity on the capital that you have tied up.

I think you will see that it is far more costly to own than to rent if you do that analysis.

As a general rule, if the market is not appreciating, it is almost always more financially attractive to rent than to own.

If you feel the Victoria market is increasing or even stable maybe owning is a good thing. To me it seems the fundamentals are way out of whack there and real estate is only going one way for the next several years.

#139 Snowboid on 09.14.13 at 3:25 pm

#132 Murray on 09.14.13 at 1:27 pm…

You should consider yourself lucky, one of the chosen few!

Although condo values in the Okanagan are much worse than Victoria, the number of condos sold since 2007 that show a net profit to landlords is close to nil.

In Victoria we only saw rents in our area (inner harbour) around $ 2000 a month for properties valued at around $750,000 – not sure how you can make any profit unless you purchased a long time ago,

You can’t raise the rent more than allowed by RTB, not based on your cost increases.

So yes, you are missing some points.

You’re welcome.

#140 coastal on 09.14.13 at 3:26 pm

The longer the market losses keeps chipping away and the flippers and new buyers whose friends made easy cash see there is no more serious money to be made in real estate with rising rates, then down she goes. The big moves down are coming, for now we settle with the appetizers. Every previous recession or stock market crash was followed with lowering or stable rates, never rising rates. Whole new ball game.

#141 deaner on 09.14.13 at 3:27 pm

Random question: Why is 10+ acres of land so cheap in New Brunswick and Nova Scotia relative to everywhere else in Canada?

#142 Freedom First on 09.14.13 at 4:27 pm

#86 young&foolish

Yes, and when it comes to being a genius, it is easy to see that you are #1.

#143 Victor V on 09.14.13 at 4:29 pm

Check out this piece from a realtor pumping cottage ownership in the Globe and Mail:

http://www.theglobeandmail.com/life/home-and-garden/real-estate/i-want-a-cottage-where-should-i-buy/article14316729/

#144 Why deny ? on 09.14.13 at 4:35 pm

For all of the HAM deniers:

http://www.macrobusiness.com.au/2013/09/chinese-buying-unprecedented-sydney-property/

check out the example listed in the article where a 1.something million dollar house sold in bidding for a million dollars over the asking price! All bidders were Chinese. You can also see comments written by our aussie counterparts that express much of the same frustration that we in the lower mainland of BC feel.

The general feeling is that this massive amount of Chinese money floods into and then completely distorts a real estate market. Even Hong Kong has changed the laws to limit investment from mainlanders in an attempt to curb explosive speculation. When will we?

Make a free country less free at your peril. — Garth

#145 Mike T on 09.14.13 at 4:35 pm

121 Murray

you are missing a lot

calculate the loss of equity young people will suffer if they enter the market now based on a 15% correction

way better to rent at half price and invest the difference that it would cost to own in an actual balanced market

*****
this takes discipline and it is not automatic
young people may still spend all their disposable income and not save squat negating the renting advantage…..but that’s not the point
*****
i rent a 2007 build 1 bdrm condo for $800 all in

i promise you it costs the person that owns it more than $800/month, lots more

#146 espressobob on 09.14.13 at 4:36 pm

# 128 Dan

Sector ETF’s can be painful! Broader based ETF’s already hold ‘miners’, and pay dividend. This can provide one with a good nights sleep.

Timing sectors & commodities are better left to the pro’s, but then again maybe noy!

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

#147 I HATE BANKS on 09.14.13 at 4:39 pm

#73 SHAWN
BANK DRAFTS…
I guess things change… Bank Drafts are becoming obsolete as is paper money for that matter.

What I was getting at was how compliant Canadians are about lousy bank service and the limits they place on our money.
If you have been practically anywhere in the world, you would know that people in other much poorer countries would not tolerate such poor service.
Who are they to make you drive to 2 banks to get your money. What a farce!
How you can tolerate this and defend it is beyond me.
We should all demand that all banks fund us fully on demand or else we should be made aware that our accounts are not really liquid on demand. Then good banks that are willing to give us our money on demand will get our business.
Did you know you cannot use a debit card in a competing bank.
They will not accept money in that form so all that is left is Cash if you need to transfer large amounts Now, Today, Not tomorrow.

#148 I HATE BANKS on 09.14.13 at 4:46 pm

#105 Rabbit One on 09.14.13 at 9:49 am

> 33 IHATEBANKS

If you really want to give bank staff hard time, send “client feedback” to Customer Care, or RBC Ombusman. Banker’s direct manager may protect bank staffs, but Customer Care cannot. They must reply to you, also demand improvement to the staff and its manager.

Thanks for the tip. I will try it.

#149 I HATE BANKS on 09.14.13 at 4:53 pm

#116 Ralph Cramdown

Then what do you suggest we do when we need our own money today and the bank says condescendingly “you can have only $3000.00 today little boy”.

A draft means the money is protected in the source bank and is on hold. A simple pin number on the draft should be all the cashing bank needs to call the source bank to verify it is OK.

Still I prefer cash, It is fast and needs no phone calls and wait time.

#150 Old Man on 09.14.13 at 4:58 pm

#142 deaner – it is a secret as with my research in Nova Scotia the farmers are growing crops that are unique, and all are doing well within the community, and this is one hell of a place to live the good life for a move. Nova Scotia is unique in so many ways as the quality of life with ambiance transcends the norm that the rest of Canada simple does not have. The farmers that have small acres are doing well selling their goods into the market place.

#151 I HATE BANKS on 09.14.13 at 5:01 pm

#130 Alex K on 09.14.13 at 12:56 pm
Re:#33 about bank drafts
each draft has a carbon copy if you present them both there should be no issues.

Sorry Alex but you are mistaken. I had everything with me Both copies. My withdrawal slip from TD. I had an account at Royal and I had a Visa with Royal. I also have a history of other drafts and were transfers they saw and had on file.
They spent an hour reviewing and only with much busy talk they relented and agreed to call the source bank to verify. “just this once and never again”.
I can only say these people are extremist bankers!
Saying “no” to them brings satisfaction.

#152 Joseph R. on 09.14.13 at 5:16 pm

#136 Old Man

Good. Let the people that believe the media-generated fears leave the city. Great cities are built by the builders and colonialist; not cowards that believe the nonsense TV tells them or have chosen to live on fear.

Toronto was a big city for a long time: the PQ did not built Toronto. The St-Laurence seaway, the auto industry,… The Toronto Stock exchange was already the biggest in Canada by 1934:

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

You think Toronto is doing great? Ha! How’s the forced agglomerations of its suburbs working out? How is the reputation of Toronto on the world-scale compared to Montreal?

If you want to make an analogy: what caused the massive population flock to Calgary in the 2000’s? Why do I fine lots of Ontarians in the West now?What is a political party in Ontario?

#153 Smoking Man on 09.14.13 at 5:51 pm

DELETED

#154 45north on 09.14.13 at 6:05 pm

Rabbit One: I just remember my friend who used to sell real estate in Asisona

there is no Asisona

#155 Old Man on 09.14.13 at 6:11 pm

#153 Joseph R – I have no idea what you are talking about, as during the 1960’s Montreal was the commercial, manufacturing, and financial capital in all of Canada. I split in 1969 with a transfer from one University to another as saw what was coming, and Toronto was a joke as compared to Montreal; my buddy who came with me said omg Toronto is the pits, so now what. I said looks bad, so lets hit Yonge street and get some action on a Friday night, and it sucked bigtime.

#156 Shawn on 09.14.13 at 6:13 pm

BANK BASHING…

Yeah, read the terms of your account, the bank does not have to give you $10,000 on demand.

Don’t like it? Keep your cash under the mattress. (What is your address again?).

Wealthy people generally have no issues with how banks work. Poor people do. Cause or effect?

#157 Joseph R. on 09.14.13 at 6:16 pm

Other “dead cat bounces”:

Potash stocks, members of Canpotex: Mosiac corp., Agrium and Potash Corp.

Silver prices

#158 TurnerNation on 09.14.13 at 6:25 pm

Inflation: Dunk of Devon’s finger food menu (generic pub grub) was at 3 items for $14 (seen on web site currently). Currently, in-house menu version says $17!
20% diff?

#159 45north on 09.14.13 at 6:34 pm

Victor V: from your link: The ultimate goal is also to see your property value increase during the time you own it.

the phrase “the ultimate goal is also” is a big contradiction. The ultimate goal can be to have fun or it can be to see your property value increase. One or the other.

#160 Ralph Cramdown on 09.14.13 at 6:42 pm

#138 Cristian

Not that I have any reasons to cast aspersions on Illinois’ state pension funds, but that state seems to have a lot of corruption. Is it possible that the pension fund managers weren’t picked according to skill, or have had to fund hidden ‘costs?’

http://www.calpers.ca.gov/index.jsp?bc=/about/facts/home.xml
Calpers’ 1, 3 5 and 10 year rates are 12.5% 11.1% 3.1% 7%

OMERS:
http://www.omers.com/pension/Investment_Strategy_and_Performance.aspx
2012, 2011, 4 year, 10 year 10.03% 3.17% 8.90% 8.24%

Ontario Teachers’:
http://www.otpp.com/investments/essentials
2012, 2011, 4 year, 10 year 13% 11.2% 12.9% 9.6%
But I’m surprised to note that they currently use leverage

#161 Big Sexy on 09.14.13 at 6:48 pm

POT is not a dead cat bounce. It is a low-cost producer of a product needed to feed the world. And it yields nice too.
POT is a long-term play, and this crash in price is but a blip on the radar

#162 Ralph Cramdown on 09.14.13 at 7:04 pm

#150 I HATE BANKS — Then what do you suggest we do when we need our own money today and the bank says condescendingly “you can have only $3000.00 today little boy”.

I told you already, for your situation. You keep the money in the bank that’s going to wire it on your behalf. Or you could have TD wire your money to Royal via SWIFT. Or call a few days ahead. Or establish C-R-E-D-I-T at the wiring bank. Then you can use that credit for the wire, at the same time depositing a cheque from your other bank so as to incur no interest. Or establish credit with your supplier in China. Or keep $20k under the bed and endure the hairy eyeball and some FINTRAC paperwork from the bankers when you show up with cash in a garbage bag.

You have to understand that when some schmuck wanders in off the street with $15k in cash or a bank draft and asks that it be wired to China immediately, it sets off alarm bells. Even if he has a credit card. Money laundering? Criminal activity? Fraud? Most legitimate businessmen organize their banking affairs such that they don’t need to demand large quantities of cash with no advance notice, or wire transfers without corresponding cleared assets on deposit. You need to figure out how to do that.

#163 john w foster on 09.14.13 at 7:05 pm

#90

That’s easy – your tax rate goes up. The big faux truth from the region here in halton is that the tax rate has been steady. Of course, but taxes are way up since assessed values are way up while the rate has stayed the same.

#164 Westernman on 09.14.13 at 7:10 pm

[email protected]#103
Yeah, you are for sale Comrade Herbie – it’s just that nobody is interested…

#165 Nemesis on 09.14.13 at 7:39 pm

@SnowBoid/#134

Yikes! That was scary!

WolfHomes? More like BlitzKriegGrundbesitz.

Where are the ShmengeBrüder when you really need them?

PS – there’s a particularly entertaining Arnie anecdote i would love to pass along – but can’t, for reasons of propriety… But I can tell you this: Arnie – in the HeatOfTheMoment – forgot to remove his WireLessMike prior to a HastyLiaison with an AspirantStarlet in his trailer… during the Vancouver filming of, “The Sixth Day”. The crew was so impressed with what they heard, they commissioned TShirts emblazoned with Arnie’s SignatureSalacious Importunings and wore them OnSet the following day.

#166 young & foolish on 09.14.13 at 8:29 pm

“The ultimate goal is also to see your property value increase during the time you own it.”

Nice, but not necessary …. the ultimate goal is to get someone else to pay for your property.

#167 Kothar on 09.14.13 at 8:30 pm

#138 Getting your data from John Mauldin are we?

#168 Smoking Man on 09.14.13 at 8:46 pm

#162 Big Sexy on 09.14.13 at 6:48 pm

POT is not a dead cat bounce

I dont know about that, works for me.. Mexican

#169 Donald Trump on 09.14.13 at 9:01 pm

Make a free country less free at your peril. — Garth

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

I agree 100%

PS: please point out a free country. I can’t think of a single one.

#170 Smoking Man on 09.14.13 at 9:23 pm

DELETED

#171 Doug in London on 09.14.13 at 9:34 pm

@Smartalox, post #14:
That’s exactly what I thought. The higher cost of housing translates into higher wages, so jobs migrate to the United States. That’s why, for example, Caterpillar Diesel left London and moved to Muncie, Indiana. There’s all this talk on this site of how when housing prices come within sight of reality it will be harmful to the economy. That may be true in the short run, but in the long run it will be the BEST thing to happen to Canada since Confederation in 1867. The percentage of the labour force in construction will be lower when that happens, for the simple reason there will be FAR MORE jobs being created in other sectors of the economy.

#172 M I K E on 09.14.13 at 9:49 pm

Here’s a gem in T.O

Surprised didn’t get multiple offers!!!

http://ca.finance.yahoo.com/blogs/pay-day-/tiny-toronto-home-sells-165-000-171819404.html

#173 Robbie on 09.14.13 at 9:59 pm

#138 Cristian

Rate of return for BC Teachers’ Pension Plan for 2012 was 10.4 % and 10 year rate of return was 7.3%. This certainly supports Garth’s 7% per year and pension plans tend to be invested quite conservatively.

#174 Herb on 09.14.13 at 10:25 pm

#165 Westernmoron,

I see you’re still a moron. Comradely greetings anyway.

#175 Ret on 09.14.13 at 10:27 pm

#164
Property taxes in Burlington in the Halton Region are 20-30% less than in Hamilton. Most of my friends in Burlington pay less on their $450,000 pile than I pay on my $325,000, 1945 home by McMaster. I’ll be in for $3750 this year. Without my successful MPAC assessment appeal, I would be over $4000 this year.

Inept local government, thousands of poor people, and a broken down infrastructure cost big $$$ at tax time. Outta here to Halton (Burlington/Oakville) in the spring.

More break-ins, assaults and crime around Mac than we have seen in 28 years. Home and auto insurance are also both less in Halton even though it is closer to Toronto.

#176 Snowboid on 09.14.13 at 10:38 pm

#155 45north on 09.14.13 at 6:05 pm…

I think Rabbit 1 meant Asirona.

#177 Snowboid on 09.14.13 at 10:48 pm

#166 Nemesis on 09.14.13 at 7:39 pm…

Despite the near comical presentation (maybe on purpose) they continue to be top ‘producers’.

Maybe they made their mark for the sale of Arnolds’ Okanagan home (legend has it AS had a property near OK Centre).

#178 SilverMeridian on 09.14.13 at 11:06 pm

#20 CJB on 09.13.13 at 8:11 pm

“Here in good old Saskatoon, some new builders are having trouble unloading their inventory (Daytona Homes) and have dropped prices by $25,000.00 and if you buy now you get $10,000.00 towards a new toy for your triple car garage. I wonder what the people think who bought 6 months ago or last year with a home that they paid full price for and now there is a $35,000.00 discount?”

Here in Ottawa, Mattamy Homes is doing the same thing! I started to keep track of new home prices in the “Special Savings” section of their website not too long ago, and observed them routinely dropping prices on some of their homes in Monahan Landing development.

For example, on the website printout from April 7, 2014, model Regal elevation B was advertised for $469,990, down from the original price of $484,990. Now, in the Construction Specials handout I picked up from the sales office two weeks ago, Regal B (identical sq. footage) is listed at $449,990. Another example, on the website printout from June 8, 2013 model Elm A is advertised for $379,990, down from the original price of $399,990, in the Construction Special handout the same model (same sq. footage) is now 369,990… It takes them, on average, a year to build a house in Ottawa this days. By the time you are ready to move in, you may discover that identical house is going for 20 to 40 K less then you paid just a year ago!

#179 Canadian Watchdog on 09.14.13 at 11:12 pm

#174 Robbie

Rate of return for BC Teachers’ Pension Plan for 2012 was 10.4 % and 10 year rate of return was 7.3%

Sure, as long as they can keep a portion on long-term liabilities and contingent exposure off the books by hedging with derivatives, it's all good, until something happens and their counter-party says: "Sorry, we don't have the wherewithal to pay that. It was just a book entry."

Stiffed.

#180 Screwed on 09.15.13 at 1:03 am

@I HATE BANKS

Canadian banks suck. What else is new. Just work around it and in your case, use a money broker like VBCE. They take out of your TD account directly and wire to China. http://www.vbce.ca located in Vancouver. Talk to Mark.

What are you shipping from China? Is biz good still?

#181 BC_Doc on 09.15.13 at 2:04 am

Great column. Professor Schiller out of Yale (Irrational Exuberance) is my go-to person when it comes to real estate. RE, he says, is like an inflation adjusted bond over the long term. The short term volatility is pure speculation. The bulb will pop and the result will be ugly. “Reversion to the mean” can be a real bitch if you bought near the peak and RE represents your one big investment.

#182 I HATE BANKS on 09.15.13 at 4:18 am

#163 Ralph Cramdown on 09.14.13 at 7:04 pm
I told you already, for your situation. You keep the money in the bank that’s going to wire it on your behalf. Or call a few days ahead. Or establish C-R-E-D-I-T at the wiring bank.

Well my compliant Canadian friend! Either you work for a bank or you blow them whenever they ask.
Why should anyone have to establish credit at another bank to take his own money there?
Why should I do anything more than identify myself?
And the root cause of the problem if you cared to read carefully is simply why cant the banks keep enough money for this type of withdrawal? As I have mentioned before Most banks in other countries have enough for people to walk in and take out 250k in cash on demand. It costs the banks some money to do this. It is called service.
I should not have to jump through hoops to please them. They are supposed to work for me.

#183 Observer on 09.15.13 at 4:28 am

#172 Doug in London on 09.14.13 at 9:34 pm
================================

No doug higher housing doesn’t translate to higher wages…. Vancouver is an excellent example of that.The high price jobs has moved elsewhere due to higher fixed cost on Companies Balance Sheets.

It translates to higher cost for business.

1) Higher property taxes
2) higher rent to the business owners
3) Lower profits

In the recent years people have been spending like madmen, but the next couple of years will be a true test of endurance for companies. An also not Hydro has been pondering over the idea of increasing Hydro cost by as much as 26%

Over the years govt have been basking on the taxpayers dime as they collected more and more in property taxes as housing prices went up and more buildings got built. And yet they still increased the % they taxed. One must ask what will happen when prices go down and less gets built.

Can we foresee another property tax increase as govt need more fuel to keep on motoring along but cannot find revenues elsewhere.

Oh Robin Hood where are you, The Sheriff has Cometh to take and take until we haven’t any bread to feed thou children!!

#184 I HATE BANKS on 09.15.13 at 4:29 am

#157 Shawn on 09.14.13 at 6:13 pm
BANK BASHING…
Yeah, read the terms of your account, the bank does not have to give you $10,000 on demand.
Don’t like it? Keep your cash under the mattress. (What is your address again?).
Wealthy people generally have no issues with how banks work. Poor people do. Cause or effect?

I’m sorry I am poor. I ought to be ashamed of myself!

Actually, I am a wholesaler to retail dollar stores mainly. 70% of them cannot pay their bills on time. I have to extend credit to all of them or I would have no sales. The government in this country is hostile to small business . They will support a 7-11 employee getting a condo box in YVR for 350k and guarantee the loan to the bank. Why then would a bank ever care to loan money to us losers! You know the losers who create 60% of all jobs in Canada. Small business people. No wonder I have trouble with cash flow. 70% of my customers are late paying me.

#185 Fed-up on 09.15.13 at 6:58 am

@#93 Notta Sheeple on 09.14.13 at 5:13 am

Were it not for our hewers of Canadian wood, drawers Canadian oil, and refiners of Canadian rock, this country would have become a third world ghetto a long time ago.
—————————————————————————–

Don’t worry, we’re well on our way.

#186 World Traveller on 09.15.13 at 7:45 am

#5 nelson on 09.13.13 at 7:41 pm
Not sure when this one sold but according to the below article a 230 sqft converted garage with no plumbing just sold for 165,000 in Toronto.

http://ca.finance.yahoo.com/blogs/pay-day-/tiny-toronto-home-sells-165-000-171819404.html

what a world.
****

Hey, it did sell for 28% below asking, so the bubble has burst, right? right? uh hello?

#187 World Traveller on 09.15.13 at 7:48 am

#184 I HATE BANKS on 09.15.13 at 4:29 am

It was no different in the IT sector, we were providing IT support to SME’s. Finally had to start putting people on contract with prepaid hours, as our receivables were killing us.

#188 jess on 09.15.13 at 9:16 am

Ascaya
ASCAYA – RAREFIED LIVING Las Vegas will never see another place like Ascaya. Nearly one thousand feet above the valley floor. Signature rock walls thirty-one miles in length. This monument of spiraling stone twelve miles from The Strip reveals one of the city’s most distinctive collections of estate homesites.http://www.lasvegasfinehomes.com/new-homes/pending-project-ascaya/ ESTATE HOMESITES

Henderson council candidates fire volleys over dormant hilltop …www.reviewjournal.com/…/henderson-council-candidates-fire-volleys-o…‎CachedMar 24, 2011 – W.L. Nevada, whose principal is a Hong Kong real estate financier, bought the land in the early 1990s and spent $250 million preparing it for …Sales delayed for Ascaya home community | Las Vegas Review …www.reviewjournal.com/business/sales-delayed-ascaya-home-community‎CachedMar 25, 2009 – W.L. Nevada, whose principal is a Hong Kong real estate financier, bought the land in the early 1990s and spent $250 million preparing the …

===========
News for Black Mountain, Nevada, Light’s photos put …Economic Collapse Seen Through Aerial Photos of Abandoned MansionsWired ‎- 2 days ago
Unbuilt Ascaya development looking Southeast after $250 million in mountaintop … In his series on Black Mountain, Nevada, Light’s photos put viewers in the plane with him as he glides over 640 acres of dynamite-flattened hilltops

#189 George on 09.15.13 at 9:28 am

@ I HATE BANKS

I here what you are saying. Ralph Cramdown sounds like a banker. There does seem to be a war on a cash. You should be able to go into your bank and withdraw large sums of cash from your account if you want to. What you intend on doing with the cash is irrelevant. Maybe you just want to get $50,000 in cash and roll around in it on your mattress. It’s your money, you’ve earned it, and you should be able to access liquid cash on demand. Canadian banks suck big time. All they want to do is harass us with telemarketing calls.

Blame anti money-laundering legislation, not the banks. Mr. Harper did this. — Garth

#190 rosie "moving forward" in the knowledge that, "this won't end well" on 09.15.13 at 9:42 am

Once burnt…

http://www.theguardian.com/money/us-money-blog/2013/sep/13/high-mortgage-interest-rates-economic-recovery

#191 Ralph Cramdown on 09.15.13 at 9:48 am

#183 I HATE BANKS — “And the root cause of the problem if you cared to read carefully is simply why cant the banks keep enough money for this type of withdrawal?”

For the same reason you don’t keep $15,000 on deposit at the Royal Bank just in case you need to do a wire, you dumb ass. You’re trying to do third-world style cash banking in a first-world credit economy, and it isn’t working for you. Productive, highly effective businessmen don’t spend their days driving around and arguing with two different bank managers to try to get a transaction done as a cash-carrying nobody — they establish mutually profitable relationships with the bankers they need, and instruct them via telephone, FAX or internet. Who stands in line at the bank anymore? The poor, the old-fashioned, the stupid, the criminal element and small businesspeople who handle cash at retail. Since you’re not the latter, bankers will pigeonhole you as one of the former, and treat you accordingly. Good luck with that.

#192 Donald Trump on 09.15.13 at 9:53 am

@#93 Notta Sheeple on 09.14.13 at 5:13 am

Were it not for our hewers of Canadian wood, drawers Canadian oil, and refiners of Canadian rock, this country would have become a third world ghetto a long time ago.

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

In a few weeks, they will hold ceremonies for the morons who followed orders and took out countries who tried to be sovereign nation republics ,not be beholden to central domestic banks beholden to central foreign banks and be examples to others.

#193 rw on 09.15.13 at 10:18 am

http://www.businessinsider.com/homes-are-not-investment-vehicles-2013-9

#194 Ralph Cramdown on 09.15.13 at 10:26 am

#190 George — “You should be able to go into your bank and withdraw large sums of cash from your account if you want to.”

You can. All you have to do is call ahead, just like you’d have to call your local Walmart ahead of time if you saw a 50″ TV you liked in the flyer, and were planning on driving over and buying 100 of them. If you want instant access to all your money, keep it in cash in a safe.

#195 Penny Henny on 09.15.13 at 10:37 am

The difference between Americans and Canadians.

Americans will give up their house but would never consider giving up the car.

Canadians will do anything they have to in order to keep the house.

Toronto is the slowest inflating bubble I’ve seen. Might not even be a bubble.

#196 Rabbit One on 09.15.13 at 10:40 am

What IHATEBANKS experienced was inconvenience due to procedure changes.
Apparently, he was able to do same transactions before.
What bank staff supposed to do was to do their best to accommodate his request and explain new policy.
There are several ways to help client in this situation, and they neglected to do so.

#197 todays thought on 09.15.13 at 11:15 am

@ralphcramdown…. seriously… chip on your shoulder. First of all having cash in the bank indicates this person is not poor.. and second.. it’s a bank, it should have cash.. and does, but will only give out $3000 at a time to each person.. and it really is silly that you would have to drive around to multiple banks to get cash. When doing something for the first time it’s normal to get frustrated with the system. I found the same problem once withdrawing a larger sum of US cash and also went to two different banks to get the cash. I left it till a couple of days before I left and decided only to use cash after some unauthorized withdrawls on my Visa on the last vacation (one month after I left the US). Decided cash would be less hassle. Visa didn’t give me a hard time about the reversal of charges, it was the inconvenience. Insulting other commentators of the blog the way you do is not cool. Canadians should demand more from their banks. In the US and now ING, you can just take a picture to cash a cheque. Canada is lagging behind the US in terms of efficiency. For the record, I now have private banking.. but didn’t even know how it worked until I switched and my now former branch manager that I left was not happy when I switched and even called me yelling regarding the switch. I am forever grateful to my investment banker for hooking me up with the private banker so I don’t have to deal with the branch level people for important affairs. Obviously there are a lot of bank workers on the blog. The reality is at a certain level of income, investments or liquidity you outgrow what the branch can do for you. Shop your account around and see what your options are.

Once again: this is not a bank initiative. It is the result of Canada’s anti-money laundering and terrorist financing legislation. — Garth

#198 Evangeline on 09.15.13 at 11:16 am

#8 Chris

“I don’t know enough about them. I need some advice (for free if you don’t mind helping out a brother). What would you recommend?”

I’d recommend that first off you realize that you have a great resource in the research department of the discount broker itself, and that you take full advantage of it. It will take some time for you to learn everything that is offered on a daily, weekly, monthly and annual basis but every moment of time that you invest in that project will repay you. To develop trust in the research you are reading, you could make up a mock portfolio of the stocks the house in-house analysts recommend. (Yahoo Finance’s portfolio feature is an easy way to track performance.)

But even before that, before you learn anything else at all, learn the difference between “price” and “valuation”. Just as airplane pilots have to learn to trust their gauges even when the gauges are counter-intuitional to what they personally believe, correct stock valuation serves as an indispensable gauge that helps you avoid investing mistakes such premature buys and/or sells based on the fickle noise of the day.

DIYers trading stocks is a financial death wish. — Garth

#199 CrowdedElevatorfartz on 09.15.13 at 11:46 am

I was at a party yesterday. The conversation inevitably turned to the real estate market.
Person #1, ” I have been trying to sell my condo in Whistler for almost 2 years now. No bites.?”
Me, ” Drop your price”
Person #1, ” Im not going to sell for a LOSS!”
Person#2, ” Dont worry, the market will come back.”
Me,”Have you got 5-10 years?”

Several heads swivelled towards me. Then the heavily mortgaged naysayers exploded with indignation.
“You dont know what your talking about! Its different here. yada yada yada”

So I dropped an SBD and went for another drink.

Oh, did I mention Person #1 was a retired Realtor?

#200 Today's thoughts on 09.15.13 at 12:06 pm

Once again: this is not a bank initiative. It is the result of Canada’s anti-money laundering and terrorist financing legislation. — Garth

Thanks Garth. I got that. Ralph has issues and people are free to shop around for better banking. The changes I’ve made have certainly made my life easier.

#201 Virgins will get roasted on 09.15.13 at 12:07 pm

The majority of buyers in the GTA are clueless virgins, they believe anything the sales guy at the condo developer tells them or the agent trying to push a 1000 year old dump in Leslieville or the Beaches. Couple this with crazy low rates and you have the last 2 years of insanely stupid buyers. Its coming to an end now with higher rates and inflated prices where people actually think a bit longer than 30 seconds about they’re next purchase, but the dumb ones will still be out there, just a few less than before.

Im a mortgage broker for 12 years and ive financed many of these dummies. I get to see all this madness every day!

#202 Keith in Calgary on 09.15.13 at 12:24 pm

Two weeks ago I spent 5 days on a business trip in Bobcaygeon, Ontario……..right in the middle of Kawartha Lakes cottage country……..where shit shacks by the water are listed for $500K and up, and most have been utterly languishing on the market for months, and in some cases, years. Each and every one I drove by looked somewhat decrepit and in need of cosmetic renovations…..granted, viewing something at 30 KMH from 50′ away is hardly the way to conduct an appraisal, but if that was my impression from that distance, who’d want to get any closer eh ?

Next week I am in the heart of downtown Vancouver for 3 days…….and the week after I’m in Kelowna for 5……then, after a 2 week break, off to London, Ontario, for another week.

The one thing I have surmised during my travels and looking at RE all over the country as sort of an after hours hobby, is that anyone who even thinks the market is priced realistically and on solid footing is totally out to lunch. Sure, there may still be pockets of stupidity that exist where the buyers are clinically insane, but they are so few and far between now that the end is truly nigh.

#203 Joseph R. on 09.15.13 at 12:49 pm

#162 Big Sexy on 09.14.13 at 6:48 pm

“According to industry sources, Belaruskali has offered India a new supply contract for the second half of this year at $360 a tonne cost and freight (cfr), down $67 a tonne from H1 2013 contract prices.”

The witch is dead!

Source: http://business.financialpost.com/2013/09/05/potash-prices-set-to-plunge-after-cartel-breakup/

China will try to negotiate for 300 $/cfr with Belaruskali with few months or so,

The Witch is dead ! Yes, the recent upward movement of potash stock prices (POT: 32.49, up 0.71) 2.3 % sounds like a “dead cat bounce” as Potash prices are bound to go down.

For the final blow:

Russian tycoon Suleiman Kerimov is selling his stake in potash producer Uralkali (URKA.MM) to investor Vladimir Kogan for $3.7 billion.

Source: http://uk.reuters.com/article/2013/09/13/us-russia-uralkali-idUKBRE98C0NM20130913

Potash will always be required to make fertilizers, that’s not what is questioned. However, the recent break-up of the cartel will force the members to adjust their businesses practices in context of the next reality.

#204 NoName on 09.15.13 at 1:00 pm

it is interesting to see how advances in technology are affecting day to day life especially workers.
Interesting read

http://www.technologyreview.com/featuredstory/515926/how-technology-is-destroying-jobs/

#205 Mister Obvious on 09.15.13 at 1:02 pm

#204 Keith in Calgary

Re: your trip to Ontario cottage country.

In BC, our ‘high end’ cottage country is the Gulf Islands. I spent a few days on Mayne Island in August. I’m a long time visitor to the Gulf Islands and have been observing real estate there since about 1989.

That market is sporadic indeed. I’ve seen comparable building lots go from as little as $15,000 to as much as $150,000 over the last 20 years. However, there has been very little price movement since about 2006.

I’ve never seen so much stock for sale as on my last trip. Every second driveway on Mayne is sporting a ‘for sale’ sign. The eight or so fulltime real estate agents are covered in cobwebs as the listings sheet grows ever longer.

But prices? They are still in the stratosphere. There are no signs of capitulation any time soon.

I have friend with a place on Saltspring Island. Its now in its second year on the market and heading into a third year next spring. He’s come down a little but doesn’t want to ‘give it away’.

Certainly nobody with property on the Gulf Island wants to drop prices now. Most are waiting for the ‘market improvement’ they believe is due next spring.

Myself, I believe the market will improve… for buyers.

#206 Siva on 09.15.13 at 1:13 pm

#196 Penny Henny on 09.15.13 at 10:37 am

Canadians will do anything they have to in order to keep the house.
_____________________________________________

Then why did the RE crash in TO in ’89?

#207 Dan on 09.15.13 at 1:28 pm

#208 Siva on 09.15.13 at 1:13 pm
#196 Penny Henny on 09.15.13 at 10:37 am

Canadians will do anything they have to in order to keep the house.
_____________________________________________

Then why did the RE crash in TO in ’89
*

People tried to hang on the very end! No jobs ,high rates NO CHOICE BUT to walk and leave a trail of tears.

Not exactly. There was no avalanche of foreclosures or defaults. Higher ownership costs brought a reduction in inflated valuations. It’s called a correction. As will happen again. — Garth

#208 Randy the Macho Man on 09.15.13 at 1:32 pm

#199 Evangeline on 09.15.13 at 11:16 am
#8 Chris

“I don’t know enough about them. I need some advice (for free if you don’t mind helping out a brother). What would you recommend?”

I’d recommend that first off you realize that you have a great resource in the research department of the discount broker itself, and that you take full advantage of it. It will take some time for you to learn everything that is offered on a daily, weekly, monthly and annual basis but every moment of time that you invest in that project will repay you. To develop trust in the research you are reading, you could make up a mock portfolio of the stocks the house in-house analysts recommend. (Yahoo Finance’s portfolio feature is an easy way to track performance.)

But even before that, before you learn anything else at all, learn the difference between “price” and “valuation”. Just as airplane pilots have to learn to trust their gauges even when the gauges are counter-intuitional to what they personally believe, correct stock valuation serves as an indispensable gauge that helps you avoid investing mistakes such premature buys and/or sells based on the fickle noise of the day.

DIYers trading stocks is a financial death wish. — Garth

What I have been doing lately is to look at the stocks composing of large ETFs for the different sectors and narrow down my focus of stock selection based on the major components of those etfs. Seems to work well, and you cut out those management fees.

Also, you can learn much from stockchase.com and similar sites.

I prefer to call it “investing” rather than “trading”. If the stock isn’t good enough to hold for the long term, then stay away from it in the short term.

Better still, just stay away from individual equities. Diversification lessens risk and volatility. — Garth

#209 eddy on 09.15.13 at 1:44 pm

I am surprised that anyone here would bother to defend bank behavior. Stockholm Syndrome?

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

#210 Old Man on 09.15.13 at 2:04 pm

I checked out that lovely home that sold for $479,000, and it is a cutie except for the brickwork; not to mention the roofline seems to be a bit off. Hey, wonder if the neighbours are nice and friendly; do they own a pitbull dog. Nice location for investment quality, or is this just a bad dream?

#211 Murray on 09.15.13 at 2:18 pm

I still don’t agree that renting is better than owning. If you own, your paying down your own mortgage and thereby increasing the value of your property over time. Eventually, it will be all paid off and it’s value is certainly much more than what you would have if you rented all these years.

So, as long as you can afford it, and be able to cover the increased cost of interest and maintenance, it’s a win-win to own your own property.

I believe the problem with those that disagree are they are looking at short term situations, but over the long term (20 – 30 years), there’s no doubt owning is far better than renting. Why pay someone else to pay off their mortgage when you can pay your own and reap the benefits?

Yes, you’ll have to put down 10%, or 15%, or more, but the amount you might earn long term with that deposit will be more than offset by the long term dollar benefit of owning your own property.

I really don’t understand why you would want to pay someone else to help them pay off their property if you can pay off your own property. Let’s face it every dollar you pay in rent is lost forever. It’s still the best multi-benefit personal investment you can make, probably even at today’s inflated prices.

Hardly. Why pay off something that will be worth less in the future? Our inflationary days are gone for some time to come. Additionally, the costs of entering and exiting real estate are huge – and few today spend 20 years within the same walls. — Garth

#212 RLeone on 09.15.13 at 2:26 pm

Garth, while I share a lot of your pessimism, you should know that Debt-to-Income ratios are not comparable between the U.S. and Canada. There are some studies out there that try to correct for it (adding back some components, correcting for taxes that go to healthcare, etc), and both countries have a pretty similar ratio right now (yes, it is worryingly still trending up north of the border).

No, they are not similar. — Garth

#213 Dan on 09.15.13 at 2:38 pm

#209 Dan on 09.15.13 at 1:28 pm
#208 Siva on 09.15.13 at 1:13 pm
#196 Penny Henny on 09.15.13 at 10:37 am

Canadians will do anything they have to in order to keep the house.
_____________________________________________

Then why did the RE crash in TO in ’89
*

People tried to hang on the very end! No jobs ,high rates NO CHOICE BUT to walk and leave a trail of tears.

Not exactly. There was no avalanche of foreclosures or defaults. Higher ownership costs brought a reduction in inflated valuations. It’s called a correction. As will happen again. — Garth
.********************************
Right not an avalanche of power of sales but there were many. But even if the bank did not foreclose they ‘walked away’ without their down payment some parents stepped up and covered the shortfall or (hard believe) some agents cut their fees to get them out.As is happening now.

#214 Form Man on 09.15.13 at 3:41 pm

My parents were developers and builders, and I also have been a developer and builder for my entire career ( some 33 years now ). This background gives me some perspective on the market for both residential and commercial development. Buildings are like commodities, they follow a predictable cycle of under and over supply. Their are various ways of determining current supply, and fundamentals always have the final say. There is a certain degree of elasticity in the supply, in that people ‘double up’ in tough times, and conversely create new households in good times. After a period of under supply, there comes a point where end user demand is eclipsed by speculative demand. The amount of continued development after this turning point is directly related to the severity of the subsequent and certain correction. In any case, supply always satisfies demand eventually. By all measures, the Canadian market is now over supplied. The market is not some mysterious thing that cannot be understood.

#215 brainsail on 09.15.13 at 3:42 pm

For all the US doomers out there.

“NEW YORK (CNNMoney)”

“Five years later, taxpayers still haven’t broken even on the $698.2 billion in government bailouts issued during the financial crisis.”

“But we’re getting close. The bailouts, which include money disbursed through TARP as well as other funds used to shore up Fannie Mae, Freddie Mac and AIG, may even show a profit by the time the sixth anniversary arrives.”

http://money.cnn.com/2013/09/15/news/economy/bailout-profit/index.html?iid=Lead

#216 Canadian Watchdog on 09.15.13 at 4:31 pm

BREAKING: SUMMERS WITHDRAWS NAME FOR FED JOB – DJ

#217 Evangeline on 09.15.13 at 4:35 pm

Garth: “DIYers trading stocks is a financial death wish.”

By the opposite token, I don’t believe Chris can prosper as a DIYer if he blindly buys ETFs without understanding what he is doing, which he admits to. Exploring the many-faceted (and free) research offerings of his discount brokerage will teach him a lot about how the markets tick.

Because the issue isn’t ETFs or individual stocks, the issue is understanding, and no one has a monopoly on that. Proven by the fact that there are some DIY investors who post here who do invest in individual stocks and their success in no way resembles a death wish. I don’t think that’s just luck; they know what they are doing.

Large-cap ETFs are a proxy for the economy. Understand that first. — Garth

#218 45north on 09.15.13 at 5:04 pm

Keith in Calgary: Two weeks ago I spent 5 days in Bobcaygeon, Ontario……..where shit shacks by the water are listed for $500K and up, and most have been utterly languishing on the market for months, and in some cases, years.

as Garth says, anyone who has even a whisper of a doubt about paying his mortgage in Toronto has no business buying a $500,000 cottage in Bobcaygeon.

I’m thinking that there are lots of cottage owners in Bobcaygeon who are getting tired of the drive and tired of the upkeep. They want out.

#219 Musty Basement Dweller on 09.15.13 at 5:14 pm

#213 Murray on 09.15.13 at 2:18–
Murray I hear what you are saying about renting versus owning. I have heard the same argument ad nauseum from Realtors and uniformed home buyers who aren’t good at math or business cases. It’s a powerful concept and marketing message, simple and memorable but usually false when it comes to investment advice.

Particularly the notions 1. that money spent on rent is lost forever and 2. why help someone pay off their mortgage when you can pay yourself.

All money spent is “gone forever”. You argue that you have a paid off home at the end of it, which is worth X dollars, which is true.

Those who choose to rent just have X dollars at the end of the same period.

Aside from emotional reasons to own a house, the investment related question is who has more money when the house is sitting there paid off.

Do the full math exercise if you want to look at the investment question. You will most certainly find that in a flat or decreasing market Joe blow renter who doesn’t pee his savings away will have a larger amount of X dollars at the end of the comparative term, particularly if it is 20 or 30 years as you suggest in your example.

#220 Victor V on 09.15.13 at 5:33 pm

http://www.theglobeandmail.com/report-on-business/home-sales-across-canada-rebound-from-slump/article14327210/

The market is bouncing back from the slump that began in July 2012, after federal Finance Minister Jim Flaherty tightened the country’s mortgage insurance rules. His changes included cutting the maximum length of an insured mortgage to 25 years from 30.

“Home prices have awakened from the policy-induced slumber,” Toronto-Dominion Bank economist Sonya Gulati said in a research note on Friday, after the Teranet House Price Index (which looks at 11 Canadian cities) showed an increase in August for the sixth month in a row. Meanwhile, data from the National Household Survey last week showed that the proportion of homeowners who are financially stretched has risen notably since 2006.

“With the housing market showing some renewed life and Canadian household debt burdens still increasing, the domestic risks to the Canadian economy have not exited the building,” Ms. Gulati wrote. The country’s banking regulator, the Office of the Superintendent of Financial Institutions, is still considering changes to the mortgage lending rules that banks must follow.

#221 CONSERVATIVES LOOSE WITH TAXPAYER MONEY on 09.15.13 at 5:50 pm

Virgins will get roasted on 09.15.13 at 12:07 pm The majority of buyers in the GTA are clueless virgins, they believe anything the sales guy at the condo developer tells them or the agent trying to push a 1000 year old dump in Leslieville or the Beaches. Couple this with crazy low rates and you have the last 2 years of insanely stupid buyers. Its coming to an end now with higher rates and inflated prices where people actually think a bit longer than 30 seconds about they’re next purchase, but the dumb ones will still be out there, just a few less than before.

Im a mortgage broker for 12 years and ive financed many of these dummies. I get to see all this
———————————————————-

My mortgage buddy tells me almost anyone with a heartbeat can get a mortgage over the last few years and when I say anyone he means anyone. How true is that?

#222 Form Man on 09.15.13 at 5:51 pm

#218 Canadian Watchdog

That is dramatic and welcome news. Janet Yellen is now the likely ( and better ) choice.

#223 Murray on 09.15.13 at 6:03 pm

You said:
Hardly. Why pay off something that will be worth less in the future? Our inflationary days are gone for some time to come. Additionally, the costs of entering and exiting real estate are huge – and few today spend 20 years within the same walls. — Garth
————————-
Historically, real estate always goes up. Yes, there have been periods where the market is overbought and prices go down, but they always recover and keep going up. Once you enter real estate, you don’t get out, you just upgrade as you go along, and the costs of buying and selling are built into the total package.

If renting is a better deal than owning, I guess the many thousands who rent out their properties are all wrong……I don’t think so.

Then you’re not a landlord. Most subsidize tenants. — Garth

#224 Canadian Watchdog on 09.15.13 at 6:04 pm

#211 eddy

Exactly. That's how financially oppressed people are today, debating whether major banks have $3,000 cash on demand. Now they're trying to push mobile banking so they can fire branch tellers and sit at a desk to click buttons all day.

Pay no attention to that man behind the curtain.

#225 Big Sexy on 09.15.13 at 8:39 pm

Potash will always be required to make fertilizers, that’s not what is questioned. However, the recent break-up of the cartel will force the members to adjust their businesses practices in context of the next reality.

POT can produce at under $300/ton. The new market price reflects the profitability changes, but this is not a move that will kill a multinational corp. $30 range for this stock is an indication that the market already has priced accordingly. 7% dividend = opportunity

#226 Pr on 09.16.13 at 12:33 pm

That is from the CIGM (Chambre Immobiliere du Grand Montreal) first page. So this the news. Nothing to worry here!

Nouvelles en bref

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Première hausse des ventes résidentielles depuis juillet 2012

07.08.13
Première hausse des ventes en un an pour l’unifamiliale!

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Copropriété : augmentation du prix médian et plus faible baisse des ventes

07.06.13
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08.05.13
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