I was wrong

shocked

As predicted, the US debt crisis is over. No default. Stock markets surged hundreds of points higher. Gold crumbled. Volatility fell. Those betting against America got creamed again. It’s just so damn disappointing being a doomer these days. All those cases of tuna and baby wipes in the root cellar for nothing.

That anybody’s surprised at this would be a surprise. Hopefully you didn’t wait to invest.

But I digress. Yesterday I said you might be shocked by my words today. Here they are: I was wrong.

First, some context. Daily this pathetic blog has chronicled our nation’s house horniness, hormonal property lust and real estate porn. During more than four years of record-low mortgage rates, serious policy mistakes by government (remember 0/40 loans?), faltering realtor ethics and public delusion, millions of people have shovelled their net worth into their homes. It’s been unprecedented. On average, 70% own houses. Among the wrinklies, it’s as high as 85%. And when seven or eight people in ten are doing the same thing, look out.

House prices have increased about 26% since the blog started, yet incomes are ahead less than 4%. So debt has exploded, After all, the only way people can afford to own things they cannot afford is with borrowed money.

Because more family income goes to debt servicing, less is saved or invested. Hence, 51% of Canadians can’t lay their hands on $10,000 in an emergency, 40% save nothing and half of those on the verge of retirement have less than a hundred grand. The savings rate sucks. RRSPs are shunned. And, for the first time ever, at least a third of people retiring are doing so with unpaid mortgages.

Personal finances have deteriorated as quickly as real estate values have risen. No accident there. We are massively less diversified than in days when fewer people owned homes, when houses cost three times income (instead of 9 or 11) and people actually saved (21% savings rate in 1980, 13% in 1992).

As a result of this obsession with residential real estate – which resulted in up to 70% of condo sales going to speckers and flippers – liquid wealth is draining from the bottom to the top. Ever wonder why the 1% grow fatter while the 99% contemplate a cash flow crunch and crappy retirement? It’s simple. Ever-more-costly real estate has become the opiate of the masses, while wealthy people own liquid assets which pay them. The gulf between borrowers and investors yawns wider each day. Rich folks hold assets. The poor hold debt.

Rich-vs-Poor

Collectively, our behaviour has created systemic risk. I’ve already underscored the debt we carry – $1.2 trillion now in mortgages – all of it at rates which reset a minimum of once every five years. Interest rates will not go lower, only higher. Already this year five-year loans jumped a full 1% – and that increase has stuck. More money for debt payments, less for savings and investing.

We’ve gorged on houses at ever-higher prices. Showed you one of those yesterday – a dodgy row house pushed up 77% in value in two years by unsophisticated buyers using cheap, borrowed funds. The reaction I received from many people was itself revealing. They see irrational gains like not as a sign of danger, but lost opportunity for them. Unaffordable houses don’t matter once you own one.

In a larger way, this is weakening the country as we go from exporters to condo-builders. The charts below, from Business Insider, show how dependent the entire country’s become on a debt-fuelled real estate industry that can deflate in a matter of months, taking prices and jobs with it. Is this really where you want to have the bulk of your net worth?

GDP

Four years ago I believed some things to be self-evident.

Surely most people would understand cheap interest rates were a tool for paying off debt, not gorging on it. Surely they’d know putting all of their wealth in a single asset at one address on one street was a danger. Surely the Boomers would realize what they need for the rest of their lives is income, not a mortgage or a media room. And surely the young would cherish mobility and freedom, over condo fees and chains.

But I was wrong.

Those around you care more about a house than they do about anything. And that will go on, until it ends. Don’t expect gentle.

204 comments ↓

#1 Randy on 10.10.13 at 9:10 pm

The Fed Ponzi scheme continues…

#2 David McBride on 10.10.13 at 9:15 pm

Hm, crappy bungalow in To is ‘worth’ 25 kilos of gold/platinum and over 1.5 tons of silver.

#3 mick on 10.10.13 at 9:18 pm

waaaaa

#4 Westernman on 10.10.13 at 9:19 pm

Garth,
You are both right and wrong – you are wrong about Global Macroeconomics and right about the Canadian RE bubble…
Never underestimate the stupidity of the Canadian public – they will kick this RE can down the road until they can’t get one more inch out of it…
So the crash might be a ways off yet but rest assured it will come… and also rest rest assured the MSM will be reporting sunshine and roses all the way to the bitter end…

#5 Sherwood Park on 10.10.13 at 9:20 pm

Be scared … Be very scared.

http://www.businessinsider.com/3-charts-that-make-us-scared-for-canada-2013-10

#6 KG on 10.10.13 at 9:20 pm

Lets put this on the back burner. What’s new ?

#7 jaguar on 10.10.13 at 9:20 pm

It isn’t just the young that should cherish mobility and freedom. I think it is even more important for those looking at retirement. The young still have time to reinvent themselves. They can start over again. They are in their earning years….
People with a shorter horizon need to make intelligent choices….fate is hunting them.

#8 T.O. Bubble Boy on 10.10.13 at 9:21 pm

As they say, you can’t cure stupid.

It’s ok to be wrong every 10-20 years… the Realtors still remind you of your Nortel predictions too.

#9 Blobby on 10.10.13 at 9:23 pm

Eh? I missed the debt crisis being over?

Last i heard they were still “in talks”, and (from what i could see) the repubs were being asshats still..

#10 T.O. Bubble Boy on 10.10.13 at 9:23 pm

Why is “business equity” so high among the 1%?
Are they all doctors and lawyers?

#11 Cow Man on 10.10.13 at 9:23 pm

Sir Garth:

You graduated 40 years or so ago from the University of Toronto. Did you ever consider doing Post Graduate work, on the topic you write about every day? The title the “Honourable Dr. Garth Turner”, so of suits you. Beard and all, sort of a Bernanke image. Maybe the script would have to be written on the back of your business card as well.

#12 Debt's Dark Embrace on 10.10.13 at 9:24 pm

Nothing will change until interest rates return to historical normal levels, and that will not happen for a very long time.

#13 VT on 10.10.13 at 9:24 pm

Don’t expect gentle.

Does this mean you are now leaning towards a harsher correction than the 15% slow melt you articulated in past?

#14 The real Kip on 10.10.13 at 9:24 pm

You have made a few valid points since I’ve been reading this blog but you’ve been wrong on the real estate Houseageddon.

Oh and by the way, there are more cranes coming. Two of the biggest in Canada will be erected in weeks across the street from Scotia Plaza. They’re in Montreal now and more on the way.

#15 BG on 10.10.13 at 9:25 pm

I don’t want to pay for the mistakes of the mass and the profit of the crooked.

No way I’m sharing my saving with people who lived above their means while I was being frugal. Don’t want to lose twice.

I would leave the country if that happened.

#16 visorman30 on 10.10.13 at 9:26 pm

I recall an earlier post that I interpreted as saying that a cash emergency fund was not necessary when there are inexpensive lines of credit. Did I misremember this or has something changed?

#17 CrowdedElevatorfartz on 10.10.13 at 9:26 pm

No Garth, you weren’t wrong …..just way, way ahead of the curve.

I have tried telling coworkers that this vancouver market is unsustainable.
I sold last Fall, no regrets. Renting and enjoying it.

Dont worry about the 80% that refuse to see or listen. You tried and we all commend you for that.

#18 the prophey elijah on 10.10.13 at 9:27 pm

Garth what do you mean crisis averted no default, I didnt hear anything. What am I going to do with my gold bullion?

#19 Cash is King on 10.10.13 at 9:27 pm

I see what you did there. Very creative. I’m sure the doomers were very excited reading the first few paragraphs.

#20 NotAGreaterFool on 10.10.13 at 9:27 pm

So what exactly are you saying? Slow, long thawing off is what I understood. What is your outlook now?

#21 Victoria Real Estate Update on 10.10.13 at 9:29 pm

Victoria’s housing market has been extremely weak for years. However, this weakness has not really shown up yet in terms of actual house prices because of dramatically declining interest rates since 2008.

That house prices in Victoria will correct dramatically is a certainty.

In 2008, 5-year mortgage rates were at 5.89%. Very recently, 5-year rates were at 2.64%.

House prices in Victoria are currently at (approx.) 2008 levels.

In 2008, it was only necessary for rates to be at 5.89% to maintain prices. By 2013, it was necessary for rates to be at (an historically low) 2.64% in order to maintain the same (2008) price level.

House prices in Victoria have already “crashed”. Call it an “invisible crash” if you want. The exact wording doesn’t matter.

In effect, buying power has increased dramatically (doubled?) since 2008 and that should have resulted in much higher house prices. However, that didn’t happen. Instead, Victoria’s housing market went through an “invisible crash”.

With rising (or even steady) 5-year rates going forward, house prices in Victoria will fall dramatically, reflecting the losses of the “invisible crash” that Victoria’s housing market has already undergone.

Girls and guys, do not buy a house in Victoria right now. If you do, you will be forced to watch house prices decline dramatically and you will be in a position of negative equity for many years. Financially, you will be forced to face the same devastating consequences of buying near the peak that millions of American families have since 2006.

Much lower prices are just around the corner. Wait it out a bit longer. It will be well worth it.

Until next time – Cheers!

#22 Derek R on 10.10.13 at 9:30 pm

So forget soft landings then. Well, that makes sense.

#23 patiently waiting on 10.10.13 at 9:30 pm

The charts are from Ben Rabidoux, who should get the credit, not Business Insider.

Here’s the source. Argue with them. — Garth

#24 Smoking Man on 10.10.13 at 9:30 pm

Four years ago I believed some things to be self-evident.

Surely most people would understand cheap interest rates were a tool for paying off debt, not gorging on it. Surely they’d know putting all of their wealth in a single asset at one address on one street was a danger. Surely the Boomers would realize what they need for the rest of their lives is income, not a mortgage or a media room. And surely the young would cherish mobility and freedom, over condo fees and chains.

But I was wrong.
………………………………………………..

Garth your not wrong, it’s going to happen, you just suck at timing it.

That’s why I’m around……

#25 Debt's Dark Embrace on 10.10.13 at 9:31 pm

Nothing will change until interest rates return to historical normal levels, and that will not happen for a very long time. And the 5 year mortgage rate is meaningless to this bubble if short term mortgages are available at 3%.

#26 NorthOf49 on 10.10.13 at 9:32 pm

And on it goes, until it doesn’t. Hamilton/Burlington posted significant sales gains in September over last year. Anyone and everyone with a time-limited mortgage approval ran out and bought any junk under $750K they could find. The over-$750K market, however, is as cold as my dog’s nose, like this place:

Was $899,900 in the Spring. Now $799,900
http://www.realtor.ca/propertyDetails.aspx?propertyId=12857601

#27 Smoking Man on 10.10.13 at 9:32 pm

Good vs. Evil

Yesterday a Sinful Man (bible thumper I’m thinking) challenged me to define Good and Evil.

That’s not easy to do, any label invented by man has a purpose, it’s design is to limit debate, crush the talking points and arguments. Labels put the debate in the context of you’re either with me, or against me.

If you are fortunate enough to own the microphone it’s easy, this group is evil, this one is good.

One can be my friend, the other will be my enemy. Sing along my happy herd.

All without knowing or talking about the wonderful colorful details between the black and the white.

It’s all about control.

One mans freedom fighter is another mans terrorist. Those are labels too.

Conspiracy Theorist
Anti Semitic
Towel Head
The N word
Realtard
Bankster
Tin Foil Hat

To me in business, I want take as much loot from my prospect as possible, at the same time I want him to walk away so happy he even offers up his youngest daughter in appreciation to the good I just delivered. That’s Good. That’s f-en selling.

Evil is when my customer wants to castrate me, my kids and behead my wife after the trade. That’s steeling.

Conclusion,
Good is when you’re with us and our gang.
Evil is when your with them in that gang.

I am with neither.

I’m with me, my wine, my smokes, my dog, my imagination, my wife, and the universal consciousness consolidator.

Got to go, got my dog (Toy Poodle) a new toy,
I’m her throw bitch.
She’s at my feet crying, pay attention to me daddy. Throw my toy.

Ok sweetie………….

#28 AK on 10.10.13 at 9:33 pm

#61 Waterloo Resident on 10.10.13 at 12:51 am
“AMERICA IS GOING TO DEFAULT: trust me on that.”
====================================

Gee. I am shaking in my boots.

#29 AK on 10.10.13 at 9:34 pm

The Rich Are Getting Richer

#30 ILoveCharts on 10.10.13 at 9:36 pm

When the housing market crashes, will CAD drops against the USD?

I’m 50/50 right for now my CAD and USD investments. Thinking of putting more money into USD.

#31 Cindysue on 10.10.13 at 9:37 pm

Mr. Turner. I look at your web site from time to time. I’m a stock broker/ analyst with very large firm for 20 years now. I’m surprised by the comment you make time to time about the stock market and precious metals. You seem to have an agenda. Is that right? But is that fair to your followers, many seem to believe every word you say especially real estate .The stock markets on Thursday had become very over sold and you’d have noticed this if you watch the VIX and other indicators and was ripe for move up. And this happened Mr. Turner not because new buyer came in but because of many short covering and many of my clients did. Gold was hit by very large sell orders on the CME at 15:20 ET, which for whatever reason seems to have been orchestrated for whatever purpose I’m not sure…but the stops come in as the price drop… I think next week the stock markets will reverse back down……but who knows… you and I don’t….Perhaps GS and JPM will tell us..ha, ha. We will know very soon. Maybe Sir because I don’t agree with you I won’t get on your site..

We accept even stock brokers. Just genuflect. — Garth

#32 Stay at home mom on 10.10.13 at 9:37 pm

Exactly why we continue to squeeze ourselves with a 2 year old into a 2 bedroom apartment. Rent control has infuriated our greedy landlord, but we refuse to leave so we can continue to save save save. We have zero debt and zero intention or dumping our hard earned money into a money pit of a house. The bank wanted to give us an obscene loan of 800k which would eat up most of our cash flow. We will continue to deal with a crazy landlord and having to hook up the apartment size washer to the kitchen sink indefinitely until house prices get deflated. Thanks for your perspective, Garth. It’s so easy to get swept away in it all without a good reality check. Keeping expenses low has allowed me the freedom to stop working so I can spend this time with my child.

#33 Jsan on 10.10.13 at 9:41 pm

Living the Canadian dream.

An acquaintance I know moved himself and his family to this country only a few years ago. They arrived on this shore leaving a life that would make the poor in this country seem rich. They arrived practically penniless, saving for years just to earn enough money to afford airline tickets to get here. Fast forward 2.5-3 years. They now own a brand new vehicle, a brand new 1600 square foot house with the big screen TV and have very quickly accumulated more than allot of people who have lived here for half a Century.

Don’t get me wrong, they are hard workers but middle class at best. What they have quickly learned since arriving here is that you don’t need money to instantly get everything you ever dreamed of. We have banks who will guarantee that anyone, no matter how little time they have been here or how how lean their credit history is are welcome to load themselves up to their eyeballs in debt.

Welcome to Canada land of cheap and easy credit. As stated many times before, this CANNOT end well!!

#34 Rob on 10.10.13 at 9:47 pm

Well, I’m curious as to which of the these will eventually burst first – The Canadian RE bubble or the Excited States Debt Ceiling bubble. And burst they will at some point. If it should be the latter then the former won’t really matter.

#35 Victor V on 10.10.13 at 9:48 pm

For the inquiring minds that want to know, I have located Smoking Man. Here he is, finally unmasked:

https://medium.com/i-m-h-o/af078a64fbeb

#36 JimmyJoe on 10.10.13 at 9:51 pm

Hey big guy!! I have some land here in the Okanagan I’ll sell you for raising tomatoes…..this land’s been dong far better than your recs…

#37 Smoking Man on 10.10.13 at 9:58 pm

#29 AK on 10.10.13 at 9:34 pm
The Rich Are Getting Richer

Yes we are, we gamble, we take risks, balls the size of china, our adversaries are the schooled, the feminized male,

We are smoking men.

get over it

#38 dienekes on 10.10.13 at 9:58 pm

Thus is why the rich do not care about the poor.
I now know why. The poor, middle class included, will always be poor, because they make stupid descisions. No matter how much money is shoveled at them.
They could have eliminated debt on cheap interest, instead they enslave themselves.

#39 John in Mtl on 10.10.13 at 9:58 pm

I’m starting to think this game can really go on for a very very long long time. Just months after reinflating their housing gasbag, the UK is being touted as a miracle of economic recovery. Of course, seems 99% ignore that its the taxpayer that is on the hook if anything goes wrong, and Murphy’s law is never far away.

At any rate, if things deteriorate in Canada because of real estate indigestion, fellow Carney has the magic solution to get out of that recession. We might see 1-3% mortgages yet again!

Article quotes: “When George Osborne, Britain’s finance minister, announced last March that the Treasury would provide unprecedented guarantees to support the reintroduction of 95 percent mortgages — which had been eliminated by prudential bank regulation — he immediately transformed Britain’s economic prospects”.

“If additional government borrowing (to stimulate the economy to grow – comment is mine) is unacceptable for political reasons, while large-scale business borrowing is unlikely because of weak demand, then a boom in household borrowing will do almost as well.”

“Recessions are caused by excess savings and this means that higher borrowing, whether by the government through fiscal policy or by the private sector through the housing market, is a necessary condition for economic recovery.”

Full article here: http://blogs.reuters.com/anatole-kaletsky/2013/10/10/learning-budget-lessons-from-japan-and-britain/

And so, debt peonage carries on; the boom-bust rollercoaster is a built-in requirement for the system to run; being prudent and sagacious is good for the individual but bad for the whole. No one wants to admit that the whole system of the economy (unlimited growth forever on a finite planet) is flawed and they will do ANYTHING to keep it going.

And I’m beginning to think it will succeed, in my lifetime anyways.

#40 Cici on 10.10.13 at 9:58 pm

#15 BG

I agree, I’ll be on the same plane or train as you.

#41 Got out in time on 10.10.13 at 10:00 pm

Garth
Your advice is not wrong. It is just too prudent for current inhabitants of Canada since majority is not willing or wanting to understand risks with owning property at the present time. There where warnings as early as 2002 stating inherent risks in owning property in USA prior to housing crash and yet people kept buying.
http://www.cepr.net/index.php/publications/reports/the-run-up-in-home-prices-is-it-real-or-is-it-another-bubble/
It takes a big man to do what you did here tonight(albait I believe 100% in your point of view you are just early in your predictions). Housing crash will happen in Canada sooner or later. Only difference is that it later starts the worst is going to get and that’s all to it.
Enjoy the journey called life, you have done more than your share. Property virgins are in god’s hands now and we all wish them best of luck.

#42 T.O. Bubble Boy on 10.10.13 at 10:02 pm

Maybe this is what Garth means by “liquid assets”:
http://www.cnbc.com/id/101102372

#43 bigtown on 10.10.13 at 10:03 pm

Immigrants moving to Canada are under the impression that Canada is a large country with tons of space…they will be really upset when they come to Toronto and see we live in itsy bitsy teeny weeny mini 400 sq. ft. condos and there is no sun due to all the condo towers and no parks and the traffic and the noise and try to get on the subway…the crowds. Sort of sounds like India without the good weather.

#44 ole Doberman on 10.10.13 at 10:04 pm

Looks like they’re still talking, nothing is been resolved:

http://www.cnn.com/2013/10/10/politics/shutdown-showdown/index.html?hpt=hp_t1

What gives, Garth?

“As predicted, the US debt crisis is over. No default.”

What part of ‘no default’ don’t you understand? — Garth

#45 Cici on 10.10.13 at 10:05 pm

#16 Visorman30

“I recall an earlier post that I interpreted as saying that a cash emergency fund was not necessary when there are inexpensive lines of credit. Did I misremember this or has something changed?”
_____________________________________________

Yes, you remember correctly, but no, nothing has changed.
Garth doesn’t believe in letting money languish around earning nothing in savings/emergency fund accounts. Instead, he recommends putting all good hard-earned money to work in investment accounts, i.e., a conservative, well-diversified portfolio earning at least 5%. The idea is to keep the money liquid, and earning enough to grow while outpacing inflation.

#46 Vamanos Pest on 10.10.13 at 10:11 pm

#31 Cindysue
If you’re going to accuse people of having an agenda, at least be fair and state what that agenda is. I assume from your comment it’s regarding precious metals and stocks (since that’s what you talked about after the ‘agenda’ comment. With respect to those, Mr. Turner has spared his followers from a ~40% correction in gold in the last couple years, and enjoyed substantial growth in the US equity portion of the balanced portfolio this year, and steady growth overall since he started the blog.
Since you mentioned Real Estate, I’ll mention that my portfolio is up a lot more than real estate since I’ve been following Garth.

If that’s being ‘unfair to his followers’ then I hope he continues to be unfair.

All the best with your ‘VIX’ and ‘oversold short covering’, or whatever.

#47 Bob Copeland on 10.10.13 at 10:13 pm

President Obama turned down the 6 week offer of extension. But I sleep well knowing the Democrats will save America’s financial system from those evil tea party idiots by doubling the debt. Like you say about real estate, it will go on until it ends. Don’t expect gentle.

#48 Retired Boomer - WI on 10.10.13 at 10:13 pm

Let us HOPE interest rates go up another 1% shortly. QE easing would help. Maybe a REAL attempt to balance the US beget.

Oh, fat chance of THAT. Excuse that silly idea.

Nothing gets RE cooler than EXPENSIVE borrowed money.

Ask me if I care if more than a few get crushed by the squeeze?

Nope

#49 groovin123 on 10.10.13 at 10:18 pm

The US Debt crisis is over?… I must’ve missed the part where they paid back the ~17 trillion dollars.

I have yet to hear any single argument detailing how that will end well.

Severe inflation, or debt restructuring(default) is how it ends. The only question is when.

Nope. Growth generates the ability to service debt. — Garth

#50 Basil Fawlty on 10.10.13 at 10:18 pm

Great, not only does the US get to borrow and print a couple trillion annually, but the doom-o-meter has been placed in a museum right beside the girdles.

Hang on space travellers we have entered a parallel universe, where it is possible manufacture candy out of horseshit.

#51 Denni_Parkinson on 10.10.13 at 10:19 pm

#31 Cindysue

A couple of weeks with the U.S. Congress at each other’s throats made shorting a no-brainer. Foreshadowing of a mini-extension of the debt ceiling by a couple of days also made today’s short-covering (or yesterday’s straddle/strangle) a no-brainer.

Pointing out a potential drop and eventual [quick] recovery of the markets to the masses however, was the real value to be gleaned from the last few of Garth’s web-lications.

#52 groovin123 on 10.10.13 at 10:20 pm

Actually, nevermind, I know when it ends – when government revenues cannot even cover the interest on the debt.

#53 ripped on 10.10.13 at 10:20 pm

Remember the 19% era, eventually subsidized to 12% by the gov?

Of course you don’t, your all 30 ish to 40ish at best with half a million dollar mortgages.

LMAO

#54 Jon B on 10.10.13 at 10:22 pm

It might be self-evident that this binging on debt will end when rates go up. But you/I might be wrong on that too.

#55 Weedeater on 10.10.13 at 10:26 pm

Like the frog in the pot on the stove, the temperature is rising and those with most of their net worth in RE will be cooked before they realize what’s happening.

#56 HAWK on 10.10.13 at 10:29 pm

#33 Jsan on 10.10.13 at 9:41 pm

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

Your acquaintance if he loaded up on debt without any equity (skin in the game) is still much sharper than many others. If things go south, he can declare bankruptcy and doesn’t have too much to lose. Those that take on hugh debt while having substantial equity are the ones that risk the most.

#57 ripped on 10.10.13 at 10:33 pm

Eventually the pendulum swings

#58 Shawn on 10.10.13 at 10:38 pm

DEBT TO EQUITY RATIO

Groovin123 says:

I must’ve missed the part where they paid back the ~17 trillion dollars.

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

So put this $17 trillion into context. How much do you think the Unites States is worth? What is the wealth of it citizens? (All of which can be taxed away if ever needed). What is the market value of all the Federal government assets?

U.S. GDP is around $15 trillion a year. So if the government decided to tax an an extra 15% of GDP it could pay off that deficit pretty fast. (8 years)

#59 Notta Sheeple on 10.10.13 at 10:40 pm

If a man speaks the painfully obvious truth in a forest and ninety percent of the self-indulgent, crack-addicted locals choose not to hear it, does that mean he makes no sense?

#60 Notta Sheeple on 10.10.13 at 10:42 pm

#32 Stay at home mom on 10.10.13 at 9:37 pm
=========================

Excellent post. You rock, mom.

#61 jj on 10.10.13 at 10:42 pm

#31 Cindysue on 10.10.13 at 9:37 pm

Glad you are not managing my money. You? YOU? Manage money at a “very large firm” and you think we have a market held hostage to JPM & GS?

Gold sold off and its being orchestrated. Oh I see, green men and tinfoil in your world? Invest in Alcoa. And whom is exactly pulling the strings? Every time I get into this debate in a chat room there seems to be always a lack of something called PROOF. Imagine that. Imagine you Imagining things that somebody somewhere is magically controlling the markets at their very will, GARBAGE. You conspiracy clowns all belong in the same trailer in Alabama, should be set on fire and thrown over a cliff.

That is complete nonsense. The indexes are in an uptrend, end of story. What did you think was going to happen when the potential for a debt ceiling resolution makes the news?

By the way, I have some advice for you. As an independent trader DO NOT THINK. What is the prevailing trend? What is the data stating? That is all you need to know.

What about PM’s? Gee do you think they are still in a downtrend? I don’t know Bob, stand back 20 feet from a weekly chart and the line goes from the upper left hand corner to the lower right. DONE. That’s all you need to know. Therefore we are in a, wait for it, DOWNTREND in PM’s.

You got your clients Shorting this market? Are you insane? You sure cannot be managing big accounts. The market is barely even down 5% from the highs and your covering your shorts? You must be churning the hell out of your accounts by over trading.

So, as goes for housing in Canada, it will probably go higher. Again, WHY? Comon you know the song by now, rinse repeat.

Forget fundamentals, consumer confidence, debt levels blah blah blah blah blah. I have heard it ALL. All of it, “This cannot be because of …” or “That cannot be because of…” or “This is happening because of…”

I have news for you. Its all CRAP. All of it, And anyone telling you why a market is doing X is a Charlatan. All you need to know is that what is the prevailing trend is, and what the big money is positioning themselves in and that’s it. END OF STORY.

I am up very comfortably this year.

For those trying to give reasons why a market is doing whatever its doing OR why a market is DUE FOR (oh christ the DUE FOR’S) a downtrend or uptrend trying to catch falling knives or stopping rockets; I see the following:

http://i26.photobucket.com/albums/c142/Codeman_2SLO/GIFS/bs-Flag.gif

Let this be lesson number one from a trader that actually makes money.

#62 will on 10.10.13 at 10:45 pm

Rich folks hold assets. The poor hold debt.

Yup. The rich get richer and the poor get poorer. That’s because the poor are stupid.

#63 Obvious Truth on 10.10.13 at 10:45 pm

It’s hard to explain investing in yourself to people using logical math. They don’t get it. They like the comfort of the herd and advertising. They get advice from the wrong people. Namely the bank. They like to be a part of what everyone is doing.

That’s why being a contrarian works in matters of finance. After all rebalancing a portfolio is in a sense being a contrarian.

Housing in many Canadian cities has been out of control for years. This type of mis allocation of money never corrects gradually. 20 percent is a myth.

Housing will blow through 09 with 07 being the first stop. You just can’t fight mean reversion and add a little in for over correcting human nature.

Remember that a quick correction in housing is still measured in years because of the type of asset it is and the the fact that most people who own it have no financial sophistication.

The social implications for people who bought places like the one featured yesterday will be severe. They will go no bid. But all of us will feel it to some degree.

Those of us who have owned property for a long time will wait. We will buy the correction. Good properties in good neighbourhoods will cost less than the pile of bricks in leslieville. Word on the street is that mortgage money isn’t flowing like it used to. Refinancing is no longer a lock.

Don’t throw in the towel Garth. Don’t let the market flush you out. We have a lot of wealth to gain as we look towards great deals in real estate.

Short xfn may be setting up for spring. After the new money push. Canadians love investing in banks and the best performing funds will be full of them. Housing will not thaw with the earth next year. Smallest real estate insert ever in local paper. Toronto peripheries always show stress first.

With a quick turn in inflation all bets are off. Just have this feeling on it. No big bets yet. Let’s keep our eyes peeled.

It may be time for people to finally learn about math. Like my dad says. Nobody builds your house for you; you have to learn how to do it yourself.

#64 I_like_tea on 10.10.13 at 10:49 pm


What part of ‘no default’ don’t you understand? — Garth

The part about polarization becoming so pervasive, while Congress (opposite of pro-gress?) members are proving a point, that the U.S. financial system goes over a waterfall.

#65 RichHill - RichVale Girl on 10.10.13 at 10:50 pm

#24 Smoking Man

Garth your not wrong, it’s going to happen, you just suck at timing it.

That’s why I’m around……

Dear SM, When do you think it’s going to happen?

#66 HDJ on 10.10.13 at 10:52 pm

Perhaps you should be a little less enthusiastic in marketing your educated guesses – they have an impact on the lives of others. During this blog’s lifespan it’s likely that many Canadians acted upon your advice (sell, rent, invest) and sold their homes. Unfortunately, in doing so they lost out on large increases in property value. Yes, they’re responsible for their own erroneous housing decisions, but your assessment of the housing market trend was wrong and you egged them on.

A realized capital is far more valuable than an illusory one. The sellers are not the ones taking losses. — Garth

#67 Infused with Opiates on 10.10.13 at 10:53 pm

10 TOBB – no, not many doctors or lawyers, but many
mid-sized private businesses with inventory, plant,
equipment, etc.

#68 Bobby on 10.10.13 at 10:54 pm

For #21 Victoria real estate update.

Couldn’t agree with you more. I’m looking at condos here in Victoria and the market is in tough shape. New buildings that are sitting half empty after a year on the market. Lots and lots of empty condos.
Looked at one unit and it was a dump. Realtor said the price was firm, so I said thanks I will keep looking. Oh, received an email saying I should make an offer. Duh!
I will buy when the price is right.

#69 TnT on 10.10.13 at 10:55 pm

Hi Garth

Can it be that immigration has delayed you being right?

Yeah yeah I know there’s no supporting numbers for this but we just don’t seem to be running out of buyers.

#70 Mr. Frugal on 10.10.13 at 11:01 pm

Seems like a few of these folks need to read “The Richest Man in Babylon”. Personally, I would sooner live a modest life than try to impress my neighbours. I’m pretty sure the neighbours don’t care.

#71 ripped on 10.10.13 at 11:02 pm

#60 jj

Great post

#72 NotAGreaterFool on 10.10.13 at 11:04 pm

Canada Emerges From “The Housing Market Correction No One Noticed”

http://www.royallepage.ca/realestate/news/canada-emerges-from-the-housing-market-correction-no-one-noticed/#!

It must be true. Check out the source!

#73 A Yank in BC on 10.10.13 at 11:06 pm

It’s a little known fact, (and one that would surprise almost all Canadians I think).. that housing in the US appreciated in value at an average rate of only 40 basis points (0.40%) per year from 1905-1996. Then politicians in Washington decided that everyone should own a home, and they repealed long-standing legislation that then enabled the banks to go crazy lending out money for mortgages (with little risk to themselves).. even to those who clearly couldn’t afford what they were buying. For the next 8 years, housing in the US appreciated at a rate of 13.50% per year. Most were giddy about it. After all, it was “different” here. Then in 2006 the wheels started coming off (as they had to eventually), and within two years the World itself was looking into the abyss, largely because politicians a decade before had decided that all should own.

Gee.. anybody see any parallels up here in the Great White North?

Oh Canada.

#74 JOHN777 on 10.10.13 at 11:08 pm

http://rt.com/business/china-usa-bonds-default-980/

Key creditor China begins acting to hedge against US default

The Japan Securities Clearing Corporation (JSCC), the clearing house in Japan, said it was getting ready for “anything that might happen”.

Duh. It’s what financial entities do. — Garth

#75 Waterloo Resident on 10.10.13 at 11:09 pm

I sure hope you are correct.

#76 Bottoms_Up on 10.10.13 at 11:11 pm

you’re not wrong Garth, you’re just not right yet. and think of all the people you’ve helped and/or saved.

#77 Ralph Cramdown on 10.10.13 at 11:13 pm

I’m continually surprised at the proliferation of US debt doomers here. I believe that they’re out there, but find it hard to believe that they’re so willing to continually show how uninformed they are, even pseudonomously.

If you want to claim that the US will become unable to service its debt, you need a basic understanding of the government’s actual and potential revenues, and its actual and potential expenditures.

– taxes as a percentage of GDP are very low compared to historic levels, and compared to other first-world countries which aren’t self-destructing.
– military spending is high, in absolute terms and as a share of GDP.
– etcetera

If you can read basic balance sheets, cash flow and income statements, it’s pretty obvious that the US is in no danger of being unable to service its debt. The big items on the federal government’s balance sheet are far easier to grasp than your average bulge braket bank’s are. God help you if you can’t understand and are managing your own investments.

If you have even an inkling of a grasp of international trade, you understand that China’s choice is between selling stuff to the US and being paid in greenbacks with which they can buy T-bonds, or not selling to the US at all, and China can’t afford not to sell to the US.

The Republicans have loaded bullets in all six chambers, cocked the revolver and pointed it at their collective temple, warning that they’ll pull the trigger unless certain demands are met. The opinion polls are now in, and we are witness to the spectacle of a Congressional committee asking the Treasury Secretary if he can pay bondholders but withhold payment for social security recipients. The Democrats are looking on, awestruck, but remembering the maxim “never interrupt your adversary when he’s digging himself a hole.”

#78 Notta Sheeple on 10.10.13 at 11:14 pm

#61 will on 10.10.13 at 10:45 pm
“…….The rich get richer and the poor get poorer. That’s because the poor are stupid……”
=========================

Good evening Mr. Prime Minister. Welcome to this evening’s Blog.

How’s that whole in-Action Plan working out for you?

You know, that Record-Unaffordable-Housing-Temporary-Foreign-Worker @ 15%-Less-Than-Market-Wages-Action-Plan.

Yeah, that Plan. Not so good, huh?

#79 Bottoms_Up on 10.10.13 at 11:16 pm

#52 ripped on 10.10.13 at 10:20 pm
—————————————
and you must be 75-ish and to you the price of bread is suppose to be a dime and whomever heard of financing a car? well, what is this world coming to?

#80 Freedom First on 10.10.13 at 11:20 pm

Bubbles always get bigger than anyone expects.
When Bubbles pop, the bottom is always lower than anyone expects. Always. No exception.

Balance, diversity, liquidity, and no debt. Takes patience and discipline. Freedom First.

#81 The R on 10.10.13 at 11:21 pm

After reading the headline , and then seeing the dogs ( is that smokeey, beach women and Mr. Vlad ?)
I guessed the topic would be about a nasty rumor engineerd here, about how everyone would be getting forced into a maxuinm 25 year ammortazation.( maybe in another post 4 years from now.)

Questions – Are realtor comminsions counted against profit when selling a investment condo.? can they be ?
Has an Canaidian ETF ever gone belly up ?

request- can you start charging a small fee ( real money not coins of old )for us to pay in order to leave a commet or question ? maybe get some of the wanna bees, tree huggers,basment dwellers etc..to think twice before telling us their daily activites…

on second thought scratch that–why mess with a good thing…

#82 Catalyst on 10.10.13 at 11:27 pm

I agree with alot of your analysis but this idea that “when interest rates are low its an opportunity to pay off debt not gorge on more” is nonsense.

Low rates make everything suddenly ‘affordable’ since you only need to manage the payments. You incorrectly make the assumption that everyone strives to pay back debts that they owe. I know several people with the logic, “What happens if it all goes tits up and you cant pay it back?”, claim bankruptcy and all debts are automatically paid off. You think someone is going to live like a peasant for 10 years and live within their means to pay back all their debts the old fashioned way? your crazy.

The ONLY reason housing collapsed in the USA was because banks tightened up lending; in Canada, there is no reason to tighten lending because CMHC guarantees it all.

Stop calling for a housing correction until they do something about this monster they created because it destroys free market economics where a lender is forced to due diligence and offset their risk by charging interest.

#83 bullshitallergy on 10.10.13 at 11:38 pm

Honestly Garth everything is backwards. Governments have cut taxes and increased spending when times are good instead of raising taxes and cutting spending to cut the deficit or public debt. Most people seem to think that emergency interest rates are the norm. I can only hope to expatriate when I retire to not be stuck paying for all the losers who took on debt they couldn’t really afford.

#84 HDJ on 10.10.13 at 11:42 pm

” Perhaps you should be a little less enthusiastic in marketing your educated guesses – they have an impact on the lives of others. During this blog’s lifespan it’s likely that many Canadians acted upon your advice (sell, rent, invest) and sold their homes. Unfortunately, in doing so they lost out on large increases in property value. Yes, they’re responsible for their own erroneous housing decisions, but your assessment of the housing market trend was wrong and you egged them on.”

” A realized capital is far more valuable than an illusory one. The sellers are not the ones taking losses.
— Garth

Garth, Sell five years ago for $700,000, or wait four or five years and sell for $882,000 (26% increase). That’s a $182,000 tax-free gain, or the loss if you sell too soon.

The same money in a balanced, diversified liquid portfolio would have returned double that. Stop being a one-trick pony. — Garth

#85 Canadian Watchdog on 10.10.13 at 11:43 pm

#75 Ralph Cramdown

If you have even an inkling of a grasp of international trade, you understand that China’s choice is between selling stuff to the US and being paid in greenbacks with which they can buy T-bonds, or not selling to the US at all, and China can’t afford not to sell to the US.

Wrong. China has other options.

China signs second-biggest swap line with ECB

(Reuters) – China accelerated plans to internationalize its currency on Thursday by agreeing to swap euros and yuan with the European Central Bank in a deal that is set to be China's second-largest to date.

The bilateral currency swap agreement between the European Central Bank (ECB) and the People's Bank of China (PBOC) is valid for three years and has a maximum size of 350 billion yuan, or 45 billion euros ($60.8 billion).

The deal is the latest of a string of currency swaps that China has created with other nations to promote usage of the yuan in global commercial and financial transactions, with the ultimate goal of rivaling the dollar as a reserve currency.

"The emphasis is on renminbi internationalization," said Louis Kuijs, an RBS economist in Hong Kong.

He said currency swaps also provide central banks with additional liquidity in times of financial emergencies, though this function is of secondary purpose in China's swap agreements.

The swap deal with the ECB is China's second-biggest with a foreign central bank, after South Korea's 360 billion yuan swap line. China also has a 400 billion yuan swap agreement with Hong Kong.

#86 MiniMe on 10.10.13 at 11:48 pm

I was wrong: As predicted, the US debt crisis is over. No default.
Tell that to the zerohedge guy. We are following his tweets too.
He does not seem to agree with you.
Oh yes and you forgot the US recovery and the fabricated job numbers.

And yes the stock market is in a bubble too. Last week I pointed you to a post where Buffet and other two guys were explaining this.
As far as I remember they were saying that nobody would pay dividends 8% when the interest rates are 4% simply because they could use the banks to get the money and buy their own stocks.

No matter how little I like this, RE will stay up for a longer time simply because the rates will not come down unless a catastrophic event occurs. It seems that both, the emerging economies and the more advanced economies will be facing problems if this bubbles get out of control. As long they will be able to maintain a low rate they will do it.
That will reinforce the position of investing in RE and this will continue indefinitely, accompanied by the sceptre of inflation sooner or later. That would be the only escape route for US and that would work only if the rest of the world does not decide to dump the USD.

#87 timmy on 10.10.13 at 11:48 pm

“House prices have increased about 26% since the blog started, yet incomes are ahead less than 4%. So debt has exploded, After all, the only way people can afford to own things they cannot afford is with borrowed money.”

They’ve gone up a lot more in Vancouver than 26% in the last 4 years.

#88 young & foolish on 10.11.13 at 12:45 am

Inspired post! It’s why we come here! Can you imagine reading this in the MSM?

Contrarians invest for growth.

#89 Suede on 10.11.13 at 12:47 am

“Will capitalist economies operate at full employment in the absence of routine intervention? Certainly not. Are deviations from full employment a social problem? Obviously.”

—Janet Yellen, 1999

“If it were possible to take interest rates into negative territory, I would be voting for that.”

—Janet Yellen, 2010

“When the goals conflict and it comes to calling for tough trade-offs, to me, a wise and humane policy is occasionally to let inflation rise, even when inflation is running above target.”

—Janet Yellen, 1995

Fed Head Yellen, according to my paid source, has always voted for monetary action & easing since she’s been a part of the Fed.

Take home message to you kids:

Stock markets are going through the roof!

However, eventually she will realize that she can’t keep rates low when equities are ripping ahead and no one wants to buy their bonds.

Get the cash registers ready!

#90 ripped on 10.11.13 at 12:48 am

#77 Bottoms_Up

Nope, only 57ish but around long enough to see more then one trend in a real estate market.

My first purchase at 28 was a condo for $69K (assumed 13% mortgage) which I ended up walking away from.

If I remember, the falling knife found the condo floor at $25K and I directly assumed the mortgage (didn’t have to qualify) on a 3 bdr house with dbl garage I bought for $63K

#91 Tony on 10.11.13 at 1:15 am

Re: #18 the prophey elijah on 10.10.13 at 9:27 pm

The odds of a default are zero or gold would be shooting to the moon. Yesterday was just the idiots buying stocks that will fall between 50 and 80 percent in the future. Morons chasing a mirage.

#92 Mr Reality on 10.11.13 at 1:22 am

It is hard to predict stupid people. It is hard to predict what an algo driven stock market will do day to day.

It is easy to predict what excess debt can do, its slavery and you run out of options to manage it when too much is accumulated.

Living below your means and never paying a cent if interest is freedom.

#93 jim on 10.11.13 at 1:24 am

“Nope. Growth generates the ability to service debt. — Garth”

I don’t agree with this at all. The interest payments from debts go to the large institutions that fund government spending – namely, the large banks. I see a world in which the banks are increasingly powerful, owning just about everything. (e.g., see the recent study on the network structure of corporate share ownership).

Even if you are right, growth cannot continue indefinitely. Limiting factors include diminishing returns on extracting natural resources, environmental degradation, etc etc. Not that Marx did much of anything right, but his observation that capitalism depends on perpetual exponential growth might be a good one. No closed system can sustain unlimited exponential growth.

#94 Ralphypoo on 10.11.13 at 1:27 am

#75 Ralph Cramdown

The US is not China’s biggest trading partner – it’s Europe. China is also perfectly capable of letting it’s currency rise and consuming it’s own production (as opposed to getting dollars which are becoming increasingly worthless). The US is vendor financing for China’s products; it cannot pay for the products without borrowing money. Without raising the debt ceiling the gig is up, as we can clearly see. No increase, no payment.

However, if you believe that ever expanding debt and continuous (and to be increased) QE is healthy, then I can’t help you.

#95 Tony on 10.11.13 at 1:50 am

Re: #57 Shawn on 10.10.13 at 10:38 pm

You also have to remember America lies about their GDP on the high side and also lies about their national debt on the low side. How long America can prolong the inevitable (stave off permanent bankruptcy) is an educated guess. A year a couple of years maybe more maybe less.

#96 Jane24 on 10.11.13 at 1:51 am

the words you are looking for Garth are

HUMAN GREED

always been a deadly sin.

The answer is always in the Cdn govt’s hands – tighten up the mortgage regs good and proper. But they are too close now to the next election to take the risk. So if they stand back now and it explodes on its own, they can say that they tried.

#97 Babblemaster on 10.11.13 at 2:07 am

#80 Catalyst – “The ONLY reason housing collapsed in the USA was because banks tightened up lending; in Canada, there is no reason to tighten lending because CMHC guarantees it all.”

————————————————————

That is a crucial point (but only 25%). As well, interest rates are extremely low and will probably continue to be so for a loooong time. And, as well, Toronto has massive immigration. These are immigrants that have no fear of debt and that, in many cases, pool their resources to buy RE. For these reasons, I now have to conclude that 416 RE is destined to continue its upward price trajectory for a long time. It appears that is the way the feds want it.

#98 Waterloo Resident on 10.11.13 at 3:06 am

In the K-W area I see wealth: nice cars, nice houses, high-pay construction jobs. Now really, how can you fault a wonderful life like that.
Would you rather have people suffering in poverty instead?

#99 willworkforpickles on 10.11.13 at 3:21 am

The richer nations of the world are moving out of US dollars . Time to get out of US dollars while they are still worth something than to be left holding a much devalued currency in the next few years. Interest rates are going to rise to pay the debt even with continued (electronic) money printing. The US dollar will be much devalued against the other leading currencies and will be swept into a downward spiral it will not avoid or continue to sidestep . Nothing is going to change with Bernanke on the way out with Obama’s new puppet… Yellen – being pretty much a BB carbon copy, picking up from where Bernanke will leave off.

#100 willworkforpickles on 10.11.13 at 3:47 am

Canadian real estate of late is like 2 guys each with a shovel in hand…..with one way down in the hole with a cement block chained to his ankles shoveling like mad and the other on top shoveling it back in. Topside is old man time…down in the hole is newt the newb.
-Now the question is…..who can shovel fastest.

#101 Fortune500 on 10.11.13 at 4:14 am

I am amazed at all of the posters who come on this board and throw paper housing gains over the past 4 years in Garth’s face. How is this a victory for you or the person in question, really? At the moment, housing around you just keeps going up, which means you need those gains just to move up the property ladder because the homes you want to upgrade to have also gone up by similar amounts.

All it does is increase your property taxes, and leaves you servicing massive debts. Sorry, half-million+ mortgages are not healthy in the long term. Flipping only works if you are taking that money out of the game. The vast majority are not.

Unless you move to a rural part of Canada, or relocate to Ecuador, Mexico, etc. all we are doing is putting your money back on the table and placing higher bets. And like most gamblers, few no when to ‘fold them’.

If things remain as they are your children will be forced to pay 15-20x their income for their homes (or live with you), pay even more property tax, take out loans to buy there cars (because so much is going to simply have a roof over your head). How is this some kind of victory? Unless salaries are rising to justify these gains, you lose in the long run

As Keynes rightly states, “Markets can remain irrational longer than you can remain solvent” So Garth has been wrong about when, it doesn’t mean he is WRONG.

Ever played musical chairs?

#102 Fortune500 on 10.11.13 at 4:16 am

Sorry, ‘know’ when to ‘fold them’. Need coffee …

#103 Buy? Curious? on 10.11.13 at 6:20 am

Whoa! Whoa! WHOA! Did I just read what I thought I read?

“House prices have increased about 26% since the blog started, yet incomes are ahead less than 4%.”

It’s a good thing I listened to my wife instead of you, Garth.

*sigh* Maybe you’re not as perfect as you say you are? The feelings I had when I found out there was no Santa Claus and that Darth Vader was in fact Luke Skywalker’s father is all coming back to me. It’s sad.

http://www.youtube.com/watch?v=lrZyMptC2eQ

In the same period of time (since March 2009), stock markets are ahead 150%. Ask her about that. — Garth

#104 meslippery on 10.11.13 at 6:29 am

#87 Ripped
on a 3 bdr house with dbl garage I bought for $63K

———-
My question is what line of work at the time purchase?
Would that same job today allow you to purchase that
same house now at todays price?
It you answer No that is the root of the housing problem.

#105 Habitt on 10.11.13 at 7:34 am

Hi Garth. You have been telling people for years to not put all their eggs in one basket and what to do to avoid the pitfalls of doing so. I have turned dozens of people on to your site here. Sadly very few are paying attention. You can lead the herd to water… I’ve read your books and read this blog daily. Youre a very successful person that is giving back. I could go on but to put it bluntly. Thanks Garth. You’re helping a lot of people.

#106 B on 10.11.13 at 7:46 am

Looking at that 40 year BOC interest rate chart petted in comment 21, there has been a strong downward trend for the past 30 years! What’s the driving force behind this, and what reason is there to suspect that it will change? Isn’t it a natural result of comptetitive devaluation in an international marketplace?

#107 B on 10.11.13 at 7:47 am

*petted = posted

#108 Fan of the Bearded Mystic Oracle on 10.11.13 at 8:06 am

#102 Buy Curious

:*sigh* Maybe you’re not as perfect as you say you are.”

You are wrong cowboy! The bearded mystic oracle, all knowing, all wise, all encompassing, denouncer of parliamentarian peckerheads and peckerettes, fierce and stalwart opponent of the real estate propagandists, fearless enemy of the real estate cartels that stock this land, NYTimes bestselling author, Harley riding badass surrounded, protected and bathed by buxom Amazons, tea leaf reading sage, former minister of national revenues, lone voice of reason crying out in the financial wasteland of Canada and last but not least, an all round jolly good fellow, is indeed as PERFECT as you originally suspected! Sheesh!

#109 Buy? Curious? on 10.11.13 at 8:08 am

“In the same period of time (since March 2009), stock markets are ahead 150%. Ask her about that. — Garth”

I’ll try but we’re getting ready for Thanksgiving. I’ve got the family coming over for dinner. By the way, can the stock market handle dinner for 15 this Sunday?

Oh and where will the stock market be in 2020 (since March 2009) %1500+?

Tortise and the Hare, my man, sure and steady, I’m not in it to come first, I’m in it to enjoy the race.

Obviously, I’m not encouraging anyone to buy house now. A little panic should keep rates low for a little while longer, create a sense of lack of supply, then *BOOM* sellers rush in 6 years from now when I plan to sell.

It’s not just about Buying Low and Selling High, The difference in a winner is deciding When.

(Whoa, that just blew my mind)

http://www.youtube.com/watch?v=7WOI1Ce5L4A

#110 maxx on 10.11.13 at 8:17 am

We accept even stock brokers. Just genuflect. — Garth

LOL…cute

#111 eddy on 10.11.13 at 8:26 am

The title ‘I was wrong’ is pretty clear, yet some moonies here cling to the dogma like sheep. Real Estate is a feet on the ground activity not for Monday morning quarterbacks. (who of course never lost a game) You can’t win a game by sitting on the side lines

The value of houses has not gone up, only the cost, paid with a currency which is being aggressively devalued by a ‘government’ owned by banks.

#112 Hrundi V. Bakshi on 10.11.13 at 8:42 am

Garth, you are not wrong IMO. RE will crash. Those who feel they are richer than they think have not crystallized a gain until they sell. They ramble on about increased equity, then eat into it with HELOC’s to furnish their dream. They buy cars with zero down financing and 8 year loan payments. Yup, livin’ the life! To predict the actual timing of an impending meltdown would require you to be clairvoyant. If you could pull that off, I suggest you start a new blog posting stock picks to short.

The average consumers spending habits are a mirror image of the perverse logic of QE.

The difference is that the music will stop for Joe consumer before it does for the FED. Joe consumer can’t argue with his wife about raising a household debt ceiling when the bank account runs dry.

When the race for the exits begins, it will turn into a stampede.

#113 maxx on 10.11.13 at 8:55 am

Not easy, being a canary in a coalmine. Your logic and the evidence to support it is flawless Garth. Who can time anything- luck, perhaps.

So much ineffectual meddling with taxpayer money by TPTB. Rivers of wealth destruction.
Corporations are hoarding cash and not spending for very good reasons, and governments are throwing money at them, hoping that they will “increase productivity, innovate and create jobs”. Not going to happen. People aren’t buying like it’s 1999. Businesses will simply put that cash behind the wall into savings. That type of corporate behaviour speaks volumes.

This is no time to be acquiring more debt (especially mega-debt) and/or piddling away what wealth you have accumulated.

#114 Darren Gough on 10.11.13 at 8:59 am

Yes Garth you were wrong about housing and you may
be wrong for a long long time more to come. The new
Fed chairwoman thinks inflation is a “humane” way to solve the debt crisis. They want to increase and inflate the debt away. They will print baby print. So maybe inflation will fill the gap in house prices before they have a chance to fall. The Fed will keep the plates spinning for ever. Mega inflation is the only way out and they will get it come hell or high water.

News flash: this is not the US. — Garth

#115 pbrasseur on 10.11.13 at 8:59 am

Garth – You were wrong, like most of us, in timing the end of the bubble.

Many things contributed to delaying the inevitable. First the massive involvement of the federal government and BoC in 2008-2009. Then the flight so safety from investors across the world scared by the many crisis in Europe which drove bond rates way down. Not to mention the behavior of the FED.

The question is: what’s to prevent this bubble from popping now?

#116 ripped on 10.11.13 at 9:00 am

#103 meslippery

I’m a journeyman tradesman, but my wage sure hasn’t more then quadrupled like housing has in that time.
My wage hasn’t even doubled.

That house I bought for 63K was 128K new so it lost half it’s value or everything it had gained during that early 80’s boom in a matter of two years but condo’s just got annihilated.

#117 HotInHere on 10.11.13 at 9:09 am

A one day equity rally? Quick!!

Buy Stocks now or get priced out forever!!!

#118 Steven on 10.11.13 at 9:19 am

Hello Garth.
Debt crisis over? Some how I missed the news report video showing President Obama paying the national debt off in cash. Would you be good enough to supply us all with a link please? As long as there is a debt there is a debt problem Garth. The financial world as you know it survives not on sound fundimentals but on popular BS being believed by the majority and therefore propaganda is required in order to make the public believe lies and disbelieve the truth as much as possible. Where is the reciepts for all the national debts paid in full , where is all the legendary gold and silver hoards? Lets see it all in all its glory! No statistics, no rumors about Yamashita’s gold hoard or the silver oozing out of the cracks in London side walks.
Show us the goods or if you like the money! No more politically correct BS.
The truth is Garth that the bull market in gold and silver is still on but is under attack from politically correct enemies and the debt crisis is still a serious problem. None of the problems have been solved and fair market value or exchange rates between PMs and fiat has not been reached. The world of government and finance is BS and the lying propaganda continues in support of the BS. The BS must end Garth!

You metalheads never give up. I admire that. Like Custer. — Garth

#119 Obvious Truth on 10.11.13 at 9:33 am

#31. Sorry not short covering yet. Market gapped up and never came in. I know they are hoping for a weekend train wreck to save them.

Shorts will be covering at new highs. I love these guys.

The chase will be on. There are no sellers this year.

#120 Joe Bloggs on 10.11.13 at 9:34 am

“… As predicted, the US debt crisis is over.” – really, Garth? I kind of missed that…
Just a suggestion – do not rush things, all in good time…

#121 jess on 10.11.13 at 9:45 am

Speech

The Economic Outlook and the Role of Monetary Policy

March 25, 2013 Printer version

William C. Dudley, President and Chief Executive Officer

Remarks at the Economic Club of New York, New York City

…”the Dodd-Frank Act allowed banks to pay interest on corporate deposits, and those depositors, because they deposit large amounts, are likely more interest-sensitive, than individual depositors. Furthermore, the wholesale money market is intensely competitive, and, as evidence that reserves are distributed across banks in a way that reflects competitive considerations, note that currently, reserves are held in disproportionately large amounts by Foreign Banking Organizations. The reason I think this happens is that those FBOs do not have to pay the FDIC assessment fee on their liabilities (as they hold no U.S. deposits). That suggests that all banks face competition in attracting liabilities to match their reserve holdings, and that the FBOs, because they face a lower cost in doing so, have managed to attract those deposits at a faster clip than domestic banks. This is the sort of competition that I expect to see that will result in the interest on reserves being passed through by banks to their customers and to the broader economy.”

http://www.newyorkfed.org/newsevents/speeches/2013/dud130325.html#footnote15

#122 Ralph Cramdown on 10.11.13 at 9:55 am

#117 Steven — “The truth is Garth that the bull market in gold and silver is still on but is under attack from politically correct enemies and the debt crisis is still a serious problem. None of the problems have been solved and fair market value or exchange rates between PMs and fiat has not been reached.”

I think your charts are upside down if you think the bull is still on. If you gave the average man in the street a big lump of gold, he’d sell it and buy something he REALLY wants with the money received. If you gave it to a wealthy person, he’d sell it and perhaps buy something that produces an income.

Here’s the article of the day:
http://www.theglobeandmail.com/report-on-business/economy/economy-lab/unfortunately-skeptics-have-reason-to-doubt-official-statistics/article14815029/

“Inflation is not the same for everyone. If you have plenty of discretionary income to spend on flat screen TVs, clothes, and big houses heated with natural gas, inflation is tame. But if you’re scraping to get by and facing rising prices for food, rent, child care and public transportation, inflation is crushing you.”

Do goldbugs skew poor, or just miserly? INSANE IN THE BRAIN

#123 JSS on 10.11.13 at 9:57 am

Anyone a fan of Dundee REIT (D.UN)?
Around $28/share, paying 7.9% dividend, monthly distribution.

Looks really enticing, but seems too cheap to be true, at its 52 week low.

Or – is there a hidden message in its price, that a dumbo like me can’t figure out.

#124 PoltawaDiva on 10.11.13 at 9:59 am

My father would say, “Why are the poor stupid? Because they are poor. Why are the stupid poor? Because they are stupid.”

That about sums up the whole situation of 90% of the people.

#125 Blase on 10.11.13 at 10:03 am

Legions of geezers grasping at straws, hopeless Y’ers stuck in equityfree sinkholes, no more money left to borrow, government crisis, Harper retires to Texas north, you won’t recognize canada in five years.

#126 just checking on 10.11.13 at 10:15 am

Garth, Did you intend to allow such a violent comment:

#60 posted by jj on 10.10.13 at 10:42 pm
You conspiracy clowns all belong in the same trailer in Alabama, should be set on fire and thrown over a cliff.
(in reply to #31 Cindysue on 10.10.13 at 9:37 pm)

It is comfortably within the boundaries of bad taste. — Garth

#127 Ottawa on 10.11.13 at 10:44 am

Hi,

does anyone know the process of importing a prefabricated/modular home from the US? A well equipped 4 bedroom bungalow from Clayton Homes costs around 56 000$.
http://www.claytonhomes.com/
http://www.forestriverinc.com/housing/
(all companies owned by Warren Buffett)
They can build it to Ontario Building Code(or any code). It is just a matter of transporting the modules-no more than 10K, building a basement-around 20K, installation 3K. Overall cost well under 100 K. The manufacturer price of the modular homes has not increased in the last 10 years. Once built It is like any other on-site built home. I can imagine it can sell for at least 3 times the amount. (Lot price can vary depending on location).

#128 Nemesis on 10.11.13 at 10:48 am

“Duh. It’s what financial entities do.” — HonGarth

PositivelySublime, AuldPol… For example:

[Barrons] – J.P. Morgan Reports Loss After $9.15 Billion Legal Expense: CEO James Dimon Says Quarter Was Marred by Large Legal Expense

…”The New York bank on Friday reported legal expenses related to everything from trading losses linked to the so-called London Whale to mortgage litigation of $9.15 billion. That drove the bank to a loss of $380 million, or 17 cents a share. That compared with profit of $5.71 billion, or $1.40 a share, a year earlier.

Mr. Dimon called the company’s legal charges “painful,” though he said the bank was “a lot closer” to getting through its legal problems. There hasn’t been any discussion of possible changes in management tied to the company’s mushrooming legal expenses, he said on a post-earnings conference call with reporters.”…

http://online.barrons.com/article/SB10001424052702304066404579129013401973346.html?mod=rss_Earnings

#129 Country Girl on 10.11.13 at 10:48 am

Love the picture.
Yes, agree that you’re wrong about the slow melt. It’s more likely to be a crash.

#130 Just checking on 10.11.13 at 10:52 am

Just more bad taste?

#60 posted by jj on 10.10.13 at 10:42 pm
… (oh christ the DUE FOR’S)…

#131 T.C. on 10.11.13 at 10:57 am

Well, you are certainly wrong about it being Tea Partiers pushing the Senate to vote down the ACA:

http://redalertpolitics.com/2013/10/10/college-grad-pens-letter-on-the-affordable-care-act-obamacare-raped-my-future/

What was it you were saying about conspiracy theorists?

Looks like those who voted for Bam Bam the Clown are starting to turn on him big time.

What? You don’t have enough about in Canada? — Garth

#132 lawboy on 10.11.13 at 11:06 am

#82 HDJ

Hey dummy. Read the comments here. As many have pointed out, those who sell today at a greater “gain” than if they sold five years ago, simply have to dump those gains into a new property that has risen similarly in value over the past five years.

#133 the beebs on 10.11.13 at 11:19 am

hi garth, my husband and I recently sold our condo in the north york area and would eventually like to buy a home for our growing family. we’re okay with waiting on the sidelines and renting but when do you think it’ll be a sane time to buy again? thanks!

#134 Don't Forget About the Praries on 10.11.13 at 11:20 am

Hi Garth,

I would appreciate some advice.

Here in Edmonton I can rent a decent house for around $2200/month (depending on size and location) and I can buy a similar house for around $2400/month (taxes, etc. included).

Even if I invest that $200 a month and get a decent return for 30 years I would still have less cash than the house is worth.

Am I missing something? Should I rent? Wait for a downturn? Advice would be appreciated.

Thanks

#135 young & foolish on 10.11.13 at 11:28 am

“Four years ago I believed some things to be self-evident.” – Garth

Hmmm … methinks Mr. Turner is clever by a half here.
The virtue of restraint went out of fashion a couple of generations ago.

#136 Canuckle head on 10.11.13 at 11:31 am

Come on Garth. Every one knows Bank of Canada is the weaker siamese twin to the US Fed. We are unfortunately connected at the hip. If our bully twin wants to inflate its debt away we are pretty much along for the ride.

Inflation is the USA’s biggest export. Too bad
they cant use it towards there trade deficit.

#137 Ben on 10.11.13 at 11:31 am

Garth, two points:

“In the same period of time (since March 2009), stock markets are ahead 150%. Ask her about that. — Garth”

1. The masses don’t have ready cash – they have access only to debt. That’s why they love leverage. Go try to borrow 500K from the bank for “a sure fire thing in the stock market”. They will refuse, yet for housing they love it

2. Glad you are looking more at this through the UK perspective. The UK is past the point of no return so they have to keep pumping houses and praying for a miracle. Maybe Canada is at this point also? If so expect them to pull out the stops just like Mark Carney is doing now.

Long term I agree with you. Glad to see that you are now seeing that the masses won’t stop of their own accord. Only US rates going up will shake down the market. And even then at the state level they will try to intervene and only step back once the whole thing is even worse.

#138 Canadian Watchdog on 10.11.13 at 11:32 am

When conspiracy myths, become conspiracy facts.

*U.S. SAID TO OPEN CRIMINAL PROBE OF CURRENCY MARKET RIGGING
*SWISS, UK REGULATORS REVIEWING ALLEGED CURRENCY MARKET RIGGING
*EU ANTITRUST REGULATORS SAID THEY ARE PROBING CURRENCY MARKET

And yes, that would include XAU/USD, which is perhaps the reason why London is now considering an overhaul (like LIBOR) or termination of GOFO rates, that way world benchmarks are not based on backdoor deals for bottles of Bollinger, cash, hookers and Ferraris.

#139 An Cat Dubh on 10.11.13 at 11:33 am

There never was a true govt. shutdown as over 80% was still operating. Wish we had one in BC. There still will be a day of reckoning in the future.
As for sub-prime real estate, GM Exec warns of auto bubble as sub prime loans are the reason vehicle sales are at record numbers
http://freebeacon.com/general-motors-executive-warns-of-impending-auto-bubble/

#140 IM in C on 10.11.13 at 11:40 am

http://www.thestar.com/business/2013/10/11/canadas_tallest_residential_tower_reaches_for_the_top.html

Susan Pigg at her real estate pumping finest. Almost makes me want to run out and buy one of those condos with -gasp! -a specialy designed stainless steel fridge in every unit. Note that she gives the size of the fridge ( 16 cubic foot stainless steel and black glass beauties) but not the size of the units except for the unsold penthouses.

#141 recharts on 10.11.13 at 11:42 am

Some SFH stats for the hottest TO MLS districts

http://img812.imageshack.us/img812/3770/ghni.jpg

this area

http://imageshack.us/a/img716/5843/h0bk.png

is in trouble as you can see in the first picture

#142 HDJ on 10.11.13 at 11:45 am

” Perhaps you should be a little less enthusiastic in marketing your educated guesses – they have an impact on the lives of others. During this blog’s lifespan it’s likely that many Canadians acted upon your advice (sell, rent, invest) and sold their homes. Unfortunately, in doing so they lost out on large increases in property value. Yes, they’re responsible for their own erroneous housing decisions, but your assessment of the housing market trend was wrong and you egged them on.”

” A realized capital is far more valuable than an illusory one. The sellers are not the ones taking losses.”
— Garth

“Garth, Sell five years ago for $700,000, or wait four or five years and sell for $882,000 (26% increase). That’s a $182,000 tax-free gain, or the loss if you sell too soon.”

“The same money in a balanced, diversified liquid portfolio would have returned double that. Stop being a one-trick pony.” — Garth

Sheesh, you’re a hard nut to crack. Sure, selling five years ago would have made available $700,000 for liquid investments, but only if there was no mortgage. More realistic is the case where there is a mortgage remaining on the property. In this case selling the house (80% mortgage?) wouldn’t free up enough cash to produce anything like the investment revenue you’re suggesting ($364,000). In fact, I doubt it would produce enough to pay the rent. This person lost $182,000 by selling five years ago.

Your hypothetical person still needs to sell (less commission) to realize one cent. Discuss it with me when it happens. — Garth

#143 TorontoBull on 10.11.13 at 11:49 am

@Garth – so this should be ok?
“You multicultural clowns all belong in the same multifamily home in Brampton”

on another note, keep up the good work, as even the best get it wrong from time to time

#144 James Bond in Gold Finger on 10.11.13 at 12:02 pm

Garth the debt debate is still going, and a chance of default yet.
Where do you get your info from. We all have internet and can look this stuff up you know.

Same chance of default as last week and two years ago. Zero. — Garth

#145 Bob on 10.11.13 at 12:03 pm

Not just financially poor hipsters love these micro-condos, wrinklies now like them too. Makes sense – transition to the size of your permanent space 6 feet under.

http://www.bnn.ca/News/2013/10/10/Micro-condo-trend-growing-in-Toronto.aspx

#146 LP on 10.11.13 at 12:04 pm

#11 Cow Man on 10.10.13 at 9:23 pm
Sir Garth:

You graduated 40 years or so ago from the University of Toronto. Did you ever consider doing Post Graduate work, on the topic you write about every day? The title the “Honourable Dr. Garth Turner”, so of suits you. Beard and all, sort of a Bernanke image. Maybe the script would have to be written on the back of your business card as well.
**************************************
Picture it…corduroy jacket with elbow patches and cowboy boots. Nah, that’s just so wrong!

#147 Old Man on 10.11.13 at 12:16 pm

#122 JSS – my daddy told me at the race track never bet on the winner, but play it safe with a bet on a Place Ticket. Never get sucked in with a high yield, but if you want to invest in REITS go with a basket that is well managed and diversified such as XRE; not all, but take positions in order to adjust for an increase in interest rates which is called dollar cost averaging, and no more than 10% of your total portfolio.

#148 Mixed Bag on 10.11.13 at 12:19 pm

“Surely most people would understand cheap interest rates were a tool for paying off debt, not gorging on it. Surely they’d know putting all of their wealth in a single asset at one address on one street was a danger. ”

My mortgage is my largest debt, at a rather low rate. I’d like to rid myself of that debt. But that goes counter to your other posts where you espouse balance, as dividends should be paying more than the current mortgage rate. Frankly, I like to hedge my bets, and throw whatever money I might have at both.

Best pic as related to the post, had.

#149 T.O. Bubble Boy on 10.11.13 at 12:25 pm

Hey, look: another 14 ft wide semi-detached property selling for an outrageous amount.

http://www.realtor.ca/PropertyDetails.aspx?PropertyID=13737926&PidKey=-446734117

#150 Nemesis on 10.11.13 at 12:29 pm

Macabre though it may be, SaltyDogz… your FridayZen isn’t really about ‘DIY HealthCare’ – think of it as a parable for a culturally specific brand of pragmatic stoicism with altogether larger implications…

[UK Independent] – Chinese ‘tough guy’ saws off his own leg to avoid hospital fees

…”Zheng Yanliang, 47, was apparently known as his home town’s tough guy even before he was forced to take matters into his own hands.

Suffering from severe arterial thrombosis in both legs, surviving on a diet of ineffective painkillers in searing daily pain, and unable to pay the hospital’s fee for surgery, Zheng was forced into the makeshift surgery.

Biting down on a wooden back scratcher wrapped in a towel, he successfully removed his own leg about 15cm below the hip.

According to Shanghaist, Zheng waited until his wife had gone to bed before getting started.”…

http://www.independent.co.uk/news/world/asia/chinese-tough-guy-saws-off-his-own-leg-to-avoid-hospital-fees-8874322.html

#151 :):( Ying Yang on 10.11.13 at 12:34 pm

#27 Smoking Man on 10.10.13 at 9:32 pm
Good vs. Evil
Conclusion,
Good is when you’re with us and our gang.
Evil is when your with them in that gang.
I am with neither.
………………………………………………………………………
Smoking Man one of my course in University was ethics and you do have a conscience. Pick a side and stand for good or evil.
As I understand it, every human being has a conscience which is always informing the human being about what is right and wrong, and so, even a person who was given no education in morals or ethics, and even a person who grew up around adults who were constantly doing evil things and calling them good things, would still have the ability to know right from wrong.

Take the case of Hitler. He gave all sorts of justifications for his inhuman treatment of Jews and other non-“Aryans.” Hitler always claimed to be doing what is right and good. But, inside himself, did Hitler have a conscience that was nagging him, making him feel guilty and ashamed on the inside? I think there is evidence that he did feel guilty and ashamed. One bit of evidence: the fact that he killed himself rather than face a trial. I think he knew that once all the evidence was put forward in the trial, he knew all his justifications would look weak and pitiful, even to him. He knew he was guilty. Also, look how careful he was to keep the vast majority of the German people from knowing about the direct killing of civilians (Jews and others) in the concentration camps. If he thought that was justifiable, why not tell the German people? I think the answer is that he knew it really wasn’t defensible. Yes, he could have been hiding these things from the German people because he felt that he had superior knowledge and judgment compared to them, and so he felt that he had the right or even the duty to deny the Germany people a right to know about and influence this matter. Some people do have a very serious “Superiority Complex.” Yet, perhaps a Superiority Complex is itself just a cover for a guilty conscience.

#152 Fiscal Cliff on 10.11.13 at 12:37 pm

#100 Fortune500

As Keynes rightly states, “Markets can remain irrational longer than you can remain solvent” So Garth has been wrong about when, it doesn’t mean he is WRONG.

——

Absolutely right!
Inevitably, bubbles end. RE pricing gains can’t continually outpace income gains.. period! It is astounding how many ‘house hornies’ fail to understand that there is a limit on how much mortgage debt they can service, even at 0% interest.

As far as Garth’s assertion ‘the US debt crisis is over’, that may be true, for now. The notion that sovereign debt is inherently different than private debt is false. Sovereign debt differs only that it can be carried seemingly indefinitely to perpetuity with no consequences. If that was the case, why did the Ben Bernanke not taper QE and instead possibly be increasing QE? http://www.cnbc.com/id/101104392
The reality is that in due time, the standard of living enjoyed by a society corresponds to their productive output. Coherently, their overall sovereign and private debt is indicative to the degree that they’ve mortgaged their standard of living.

#153 Edward on 10.11.13 at 12:39 pm

I don’t care much that you were wrong in underestimating the fools. I’ve been underestimating stupidity my whole life as well.

So “wrong” there, but very “right” on Monday when you said, “Bring it on.” I decrypted that to mean “buy” and I’m now my portfolio is sitting a few K higher 5 days later. Thanks again!

#154 Smoking Man on 10.11.13 at 12:48 pm

#63 RichHill – RichVale Girl on 10.10.13 at 10:50 pm#24 Smoking ManGarth your not wrong, it’s going to happen, you just suck at timing it.That’s why I’m around……

Dear SM, When do you think it’s going to happen
…..

When I will it, lol,

we need a rapid escalating prices, right now the re price curve is on a steady plane, it needs to turn up like an old guy on viagara. 3 steady months of that, time to bail.

Or rates need to go up substantial, that’s not happening..

I will let you know 2 months before the peak. Or 5 seconds after I sell

#155 Blacksheep on 10.11.13 at 1:01 pm

Garth,

You, (and I) underestimated the Cattle’s willingness to not only bend over, but actually ask for more (debt burden), in an effort to fill the systemically engineered, emotional hole.

Until the herd, for whatever reason, ‘sees’ the fences and applies some critical thinking to their lives, life on the farm will carry on……Place your bets accordingly.

#156 Beach Girl on 10.11.13 at 1:11 pm

Really pissed off. I have one disabled child. I talked to a lawyer from Ottawa who specializes in The Henson Trusts. Just a phone conversation. He send me a lot of info. I never signed up, no signatures. Talking a run at me. He is Kenneth C. Pope LL.B TEP.

Apparently the bastard wants 565.00 dollars. Try phoning that office. Just voice mail. Scammers, fraud artists.

Born at night, not last night.

What to do? Call my MPP. I have a perfect credit rating. Please any help. Getting angry. And this man was going to try helping my son get my RRSP’s as equivalent to a spouse. Imagine how he was planning to rape us.

My sons attended school with Mr F’s boys. Triplets, one with an infirmity. This is life.

Fighting a lawyer is rough. My mother told me never marry one. They will decimate you. I am royally pissed off.

#157 Bottoms_Up on 10.11.13 at 1:13 pm

#122 JSS on 10.11.13 at 9:57 am
—————————————-
Garth has recently mentioned a few times that these types of stocks are oversold.

#158 NotAGreaterFool on 10.11.13 at 1:16 pm

If smoking man agrees with you, you must be wrong.

#159 Bob on 10.11.13 at 1:20 pm

Nanaimo BC – the next target of HAM and yellow helicopters! So says the article:

http://www.nanaimobulletin.com/news/227084891.html

So, these are new tourists that would be coming over to Nanaimo just to visit a new hotel? They wouldn’t be tourists that would otherwise be already coming over and staying at other hotels in the area? I really doubt if it would increase tourism by much. New hotels are usually built because of need. There not like magical baseball fields – build them and they will come. Boy, someone is selling City council a bunch of crap.

And as expected, the local realtors are jumping on the building of one hotel as the salvation of an anemic real estate market and it’s now going to be the next target of HAM. Buy now or forever be priced out!

#160 laughingthroughthe tearsofaclown on 10.11.13 at 1:21 pm

Tough slugging in the prognostication department eh? Preferred shares are taking a second leg down….looks like more capital is being lost in the waterfall death spiral as we speak. If we’d listened to reports of the coming crash over the past few years we would have lost substantial gains due to misplaced fear.

The market will never act out as we would like it too….the invisible hand Smith described is the collective conciousness of the masses…. the appreciation we see is a natural example of a market climbing a wall of worry. Delta is never assured…..Beta is….if you play in the market…learn the basic mechanics of mass psychology if you expect to get ahead. Nothing will ever be perfect….if anyone tells you it will be ( except maybe Jesus or Buddha) run the other way……buckle up for more inflation.

Hardly. Worry about deflation. — Garth

#161 Jimmy on 10.11.13 at 1:26 pm

“Garth, Sell five years ago for $700,000, or wait four or five years and sell for $882,000 (26% increase). That’s a $182,000 tax-free gain, or the loss if you sell too soon.

‘The same money in a balanced, diversified liquid portfolio would have returned double that. Stop being a one-trick pony. — Garth'”

Wrong. Who pays for their house with cash? Its the down payment plus monthly principle payments that you would include when calculating the return on investment with other vehicles, not those numbers plus the size of the whole mortgage. Even subtracting mortgage interest, the guy who put 5% down on a $550,000 house five years ago is way ahead, plus he could invest other capital into securities. No way to sugar coat it Garth — your advice on housing was largely misguided.

Try to keep up. The question was an absolute one about retaining a gain or realizing it. — Garth

#162 Bottoms_Up on 10.11.13 at 1:31 pm

#103 meslippery on 10.11.13 at 6:29 am
——————————————-
I wouldn’t say that’s the “root” of the housing problem.

Toronto is approximately 150,000 acres. With a population of 2.6 million, let’s say 500,000 families, giving each family 0.3 acres.

Population growth, and desirable areas to live, changes the dynamics of housing affordability. In this way it is difficult to say that a plumber in 1960 should be able to buy the exact same house for the same relative price today.

#163 angela on 10.11.13 at 1:56 pm

Thousands of doctors fired today in the USA ….aint the recovery awsome lol
http://nation.foxnews.com/2013/10/11/thousands-doctors-fired-united-healthcare

#164 dave b on 10.11.13 at 2:13 pm

148 T.O. Bubble Boy on 10.11.13 at 12:25 pm
Looks like Property brothers material…put lipstick on a pig. Grossly over valued.

#165 Old Man on 10.11.13 at 2:14 pm

#144 Beach Girl – Never phone your MPP in Ontario except to make a face to face appointment with him or her with his assistant. This is the only approach, as have done this before, and the only way to get action with your child is to look them in the eyes, and tell them what needs to be done. You would be surprised at what might take place, so gal get moving with a personal appearance. Now with the other issue contact the Ontario Legal Association and file a complaint; great angry, and fight the system.

#166 Mr. Monday Night on 10.11.13 at 2:15 pm

“…irrational gains like not as a sign of danger, but lost opportunity.”Sums up the sentiment of the masses quite well.

Because I didn’t buy x number of years ago, I got screwed out of thousands, so I’d better buy soon because then I’ll make even more.

The 12-foot wide bidding war from the other day was an anomaly. I’m still seeing piles and piles of unsold inventory. Does that look like lost opportunity or the beginning of boatloads of pain?

#167 ripped on 10.11.13 at 2:41 pm

Gold Crushed! 2013 Losses Now Over 20%

Gold’s brutal 2013 continues. The price of the yellow metal is dropping again, off more than 2% today and breaking well below critical support

http://finance.yahoo.com/blogs/breakout/gold-crushed-2013-losses-now-over-20-162819490.html

#168 EB on 10.11.13 at 2:55 pm

#158 Bob –

“A potential fast ferry could add to the allure of Nanaimo real estate, he said…”

Hooray, finally a fast ferry. That’s number – what? five? – in the past thirty years? Shame they keep dropping out because nobody wants to actually do that expensive and unreliable commute every day.

#169 HDJ on 10.11.13 at 2:56 pm

#131 lawboy on 10.11.13 at 11:06 am

#82 HDJ

Hey dummy. Read the comments here. As many have pointed out, those who sell today at a greater “gain” than if they sold five years ago, simply have to dump those gains into a new property that has risen similarly in value over the past five years.

Lawboy, You aren’t listening to Garth’s advice. Why would you dump those gains into a new property?? Put that money into a balanced, liquid portfolio and rent.

#170 jess on 10.11.13 at 3:02 pm

http://www.fhlbanks.com/
http://www.fhlbanks.com/assets/pdfs/section-newsevents/press_releases/ABA_lbc_131011.pdf
http://www.bloomberg.com/news/2013-10-10/jpmorgan-taps-taxpayer-backed-banks-for-bailout-rules.html

#171 :):( Ying Yang on 10.11.13 at 3:09 pm

For Smoking Man

Surprisingly Adolph Hilter came in third for evil!

http://sprott.physics.wisc.edu/pickover/good.html

#172 Old Man on 10.11.13 at 3:22 pm

I looked at the temperatures in Halifax on a hunch for the holiday weekend, and will be a bit chilly, so for those in the far east keep warm and burn a few logs in the fireplace, and Happy Turkey Day for all in Canada from coast to coast.

#173 Country Girl on 10.11.13 at 3:39 pm

#155 Beach Girl on 10.11.13 at 1:11 pm

You might want to contact the Better Business Bureau (or, at least, threaten to if the lawyer isn’t willing to settle for less – go for $0)

#174 jess on 10.11.13 at 3:46 pm

http://www.citizensforethics.org/pages/scoundrel-of-the-month-august-2013

http://www.citizensforethics.org/worst-governors-in-america

#175 Beach Girl on 10.11.13 at 3:53 pm

Hey Old Man

Well buddy backed off large when I said what I was posting to this page. Clerical error. Yah.

Widow, I wish. Orphans, do to of age, singleness self imposed.

I have had to hire Clayton Ruby in the past. I told this scumbag, The Toronto Sun, Toronto Star and the National Post will be receiving my messages. I know real lawyers.

But, I will back off now.

Appreciate the advice though. On the same team.

#176 Canadian Watchdog on 10.11.13 at 4:15 pm

Presenting the correction-less stock rally. chart  More fools needed to jump in.

#177 Pulp Faction on 10.11.13 at 4:52 pm

Dude makes $50,000/yr, his GF makes maybe $18,000 working part time in retail.

Dude bought a $400,000 house after dating for four months because he doesn’t want her to leave him for someone else who will buy her a house.

He doesn’t ask her to pay stuff out of her wages, it’s HER money.

The world’s oldest trade still alive and well, however you slice it.

#178 Smoking Man on 10.11.13 at 5:03 pm

Ying Yang you do know that in war history books are written by the winners.

Hitler was a bad ass, but what to you call G bush, he killed million or so in the wars he started.

And what do all war lords have in common, devotion to a holly book.

All wacky phycos.

#179 CrowdedElevatorfartz on 10.11.13 at 5:16 pm

@#125 Just Checking

…….actually the only thing I took issue with was.

Instead of “throwing them off a cliff” I think it should be “pushing them off a cliff” ( since hypothetically, they are inside a burning trailor)……… :)

#180 CrowdedElevatorfartz on 10.11.13 at 5:18 pm

@#174 Beach Girl

I think we have room in the burning trailer for a lawyer………….

#181 Randy Macho Man Savage on 10.11.13 at 5:21 pm

#166 ripped on 10.11.13 at 2:41 pm
Gold Crushed! 2013 Losses Now Over 20%

Gold’s brutal 2013 continues. The price of the yellow metal is dropping again, off more than 2% today and breaking well below critical support

http://finance.yahoo.com/blogs/breakout/gold-crushed-2013-losses-now-over-20-162819490.html

—————————

With barrick being the lowest it’s ever been, do you think it may be a good time to start sprinkling a little money on them in the market?

#182 Mike T on 10.11.13 at 5:58 pm

#60 jj on 10.10.13 at 10:42 pm
———–
Dear jj,

May the infinite Creator bless your soul and guide you on your path. You have deviated in a most un-fortunate way.

Happy Long Weekend all.

#183 Old Man on 10.11.13 at 6:09 pm

#177 Smoking Man – you should now better that history has all been cooked, and remember the words of George Orwell, ” Who controls the past controls the future. Who controls the present controls the past. ” Now who are they? I know do you?

#184 angela on 10.11.13 at 6:10 pm

#180 Randy Macho Man Savage on 10.11.13 at 5:21 pm

well i dont know about you but it seems only fools put money into things at the top of the market ….ie S&P500 and smart people buy things on the bottom of the market like barrack gold at least thats what I heard sell on the top or record highs anyways and buy things on the bottom but Garth is now confusing me

#185 Alex Gregory on 10.11.13 at 6:12 pm

“Those around you care more about a house than they do about anything. And that will go on, until it ends. Don’t expect gentle.”

When the band-aid finally gets ripped off, there will be a day of reckoning like no other. I still see people dumbly refusing to believe the market is coming down, but we’ve already seen the first signs.

I’m waiting until the crash before I spring on a condo. I give it six months at best.

#186 Smoking Man on 10.11.13 at 6:22 pm

Old man, everyone knows, it’s

The Nemgnikoms.

I Kind of like them, they think like me.

#187 happity on 10.11.13 at 6:34 pm

“Rich folks hold assets. The poor hold debt.”

Actually the poor hold tangible assets like real estate based on digital debt. The rich digitally hold debt that directly or indirectly has a claim to those tangible assets. When real estate goes down and the 99% can’t pay the rich are left holding the bag.

Just like you said about USA don’t bet against it. Well how come the fed is buying hundreds of billions in mortgage crap?

But next time around the gov won’t bail out the debt holders, why do you think they agreed on a bail in?

The whole global economy is debt based, those believed other wise already got PUNKED by the fed when there was no taper.

The rich are relatively just as doomed as the poor in the coming years.

#188 Old Man on 10.11.13 at 7:06 pm

#180 Randy – Barrick at one time was a great horse to ride as made a lot of money with it, but the past is history and that horse is all but bankrupt, so is no longer investment quality like Nortel and so many giants that went by the wayside in Canada; do not look for perceived bargains with a balance sheet that screams bankrupt filled with massive debt.

#189 happity on 10.11.13 at 7:15 pm

The rich just hold digital assets in street name at the lowest priority of claim in a global economy with unprecedented levels of debt and a quadrillion of derivatives.

Their day when it comes will also be with the poor.

Maybe you will post this since you deleted the last one…

I didn’t. It was posted. — Garth

#190 Form Man on 10.11.13 at 7:48 pm

smoking man

interesting article here on how dyslexics are much better at processing some types of information. might explain your powers of prediction………

http://www2.macleans.ca/2013/09/08/dyslexics-of-the-world-untie/

#191 Obvious Truth on 10.11.13 at 7:51 pm

#121 Ralph Cramdown

Been trying to find inflation and think it’s coming.

Starting to wonder if it will be stagflation. Continued printing with little growth.

NA seems to need $90 oil. Are food inputs following while metals signal slow growth.

#192 2CntsCdn on 10.11.13 at 7:59 pm

Takes a big man to admit he was wrong. Garth you mearly underestimated the stupidity and despirate drive to own a roof and four walls (at all costs) of the avg. Canadian. Not to mention the power of the current MSM system, banks, gov’t programs and RE industry bambooziling the public (and all for short term self fullfilling goals). It will end where it ends. No other country in the world has pulled this off (and country’s with a lot more going for them than Canada). Garth you are still right … it’s just a question of how long the smoke puffers can keep puffing smoke and how long the guy holding the mirrors can keep holding the mirrors. But there is no way this is going to end in Canada without pain. And the sooner we admit this, take the hit, re-adjust and re-build the better.

#193 lawboy on 10.11.13 at 8:05 pm

Beach girl, if there is no debt, your credit cannot be damaged. If there is any attempt to put a collection file on your report, you simply dispute the existence of the debt. If you haven’t signed anything, you should be fine. I’m not sure I’d worry though – no one is going to go through too much effort to get you to pay 565$.

#194 2CntsCdn on 10.11.13 at 8:07 pm

#188 happity
“The rich just hold digital assets in street name at the lowest priority of claim in a global economy with unprecedented levels of debt and a quadrillion of derivatives.
Their day when it comes will also be with the poor.

“No they won’t (be with the poor). They are always one step ahead. Not necessarily IQ inteligence … just good gut feelings. They have what 95- 99% of the masses don’t have. They can see ahead. … they get there before everyone else … and get out as the masses are arriving.

#195 Devore on 10.11.13 at 8:20 pm

#183 angela

smart people buy things on the bottom of the market like barrack gold at least thats what I heard sell on the top or record highs anyways and buy things on the bottom but Garth is now confusing me

You must get confused easily, maybe that is because you misplaced your dictionary?

Cheap(er) does not mean good value.

#196 Old Man on 10.11.13 at 8:25 pm

#185 Smoking Man – don’t you wish that once again due to tragic circumstances in life were once again a free man; know Daisy Mae might be watching so will be cautious. Smoke you know about all my lady invites all over USA for a month here and 10 days there, and am chicken, as need some backup with a buddy as all these women would be too much for me to handle. I hope you enjoyed seeing the biggest gated community in all of North America, as few will ever know where it is.

#197 :);( Ying Yang on 10.11.13 at 9:08 pm

#177 Smoking Man on 10.11.13 at 5:03 pm
Hitler was a staunch anti Semitic and did not care for any religion. He was pure evil.

#198 jess on 10.11.13 at 9:15 pm

Q: What do you think about the growing popularity of positive psychology in higher education and pop culture?

A: It frankly scares me a lot that some of the most popular undergraduate courses today are in positive psychology or this “science of happiness.” … We don’t go to college to learn to be a positive thinker; we go to college to learn to be a critical thinker.

http://seattletimes.com/html/books/2010107304_webehrenreich20.html

#199 :);( Ying Yang on 10.11.13 at 9:19 pm

Smoking Man Pol Pot wanted ethnic cleansing he was an Agnostic. I could keep on teaching you tht not every war was fought over religion. Falklands war one of the stupid one simply over pride! I will agree many wars fought over religion but just as many for greed and material items.

#200 Snake on 10.12.13 at 3:07 am

#144 Bob
Not just financially poor hipsters love these micro-condos, wrinklies now like them too. Makes sense – transition to the size of your permanent space 6 feet under.
http://www.bnn.ca/News/2013/10/10/Micro-condo-trend-growing-in-Toronto.aspx
———————————-
i keep watch the news just for looking at the hottest news reporter

#201 Beach Girl on 10.12.13 at 8:16 am

Thanks for the comments, much appreciated. I lost the rag on that bastard.

Some people are just dumpster diving.

Betcha his finances are in a disastrous state.

#202 M on 10.12.13 at 12:23 pm

Garth baby, we know you were wrong. Don’t worry, it’s not the first time nor the last.
What matters though is that you do have the right idea and you also show ability to change your mind- such a rare quality in people these days.
So here, we love you, keep up the good work !

Methinks that if you would’ve looked like Angelina I might’ve sent you flowers. Since you’re not, I’ll just keep reading your blog.

Garth, damn it, put some more babe pics in there. You know just as well as me that they were created for our own delight !

#203 M on 10.12.13 at 12:35 pm

I forgot to add… There is NO LIMIT to the human stupidity as a collective ! Right down to minus infinity. That’s why it will be a crash landing, that’s why the “doomers” will end up being right (well not about everything- just metal) and that’s why you are sometimes wrong :)
My deep concern is that these “collectives” do vote :)

#204 Vig Lacera on 10.13.13 at 7:10 am

An albatross around Lou Ferrigno’s neck wouldn’t be any happier than a monkey at Swayambhu’s pavilions. Make snow scents. Were a thousand gleaming fish in the prairie fire accosted by a corrupt vertebrae? Unseemly at best, Garth. This fine dandy signals the end and we’re all going to run to the Corn Flakes when daddy gets home and takes off his belt, as he usually does after another day of calculations and permutations. He’s even conned himself you see.