Rick sold a couple of hick-town weeklies in backcountry AB and SK, then moved to Mexico. They live in a three-bedroom, 1,200-foot house whizzing distance from the ocean. “In Vancouver it would cost $1 or $2 million,” he says. “We paid $70,000 and have spent about another $15,000 on upgrades. Our property taxes are $85 a year, by the way. We both work on-line and have significant savings.”
However, irritating everyone with a $750,000 repeater house in Calgary, where the low tonight is minus one, is not his mission. He wrote me to make a point about owning assets that pay you. Rick parrots one of the themes of this blog, namely that financial security has nothing to do with having a house, and everything to do with income. Too bad the majority of Canadians don’t get it. But they will.
Says the amigo: “You need to live somewhere. If you live in an (overpriced) house or condo in Vancouver, Toronto, Calgary, Montreal etc., there is a pretty good chance you don’t have positive cash flow. Your house is not ‘paying you’. If, on the other hand, you live in a paid-for house or condo in those cities (or in Mexico) and have $500,000 or $1 million invested in stocks or bonds etc. (or rental property) that yields income – positive cash flow – you are arguably in a much better position than someone who “owns” a house or condo with a huge mortgage.”
But that’s not most people. The average RRSP has less than $50,000 in it, and there are only 298,000 people in the whole country who have $1 million to invest (0.85% of the population). Meanwhile 70% (and 85% of Boomers) have chosen to put their net worth into one asset. Rick says they’re fools.
“As long as housing prices rise, they think they’re winning the investment game. But they likely aren’t, particularly if they earn a middle class income and “bought” a house or condo recently in one of the major cities. Only when they convert that “gain” to cash or its equivalent, move to lower cost accommodation and invest some of the gains in something that will generate positive cash flow will they win the game. Why is this such a difficult concept?”
Partly because Canadians are led around by the nose, hombre. We poked away at that a bit yesterday, showing how realtors use questionable, massaged numbers to create the illusion of never-ending price gains. It’s also in our culture.
I saw it again yesterday when I visited with Alvin and his wife. They rent a great, spacious townhouse in the GTA with a garage and a BY for just $1,750 a month, while their invested $300,000 earns more than 7%. Then along came Jasmine, now 2, and everything changed. Suddenly they need roots, stability and permanence, which also means debt, overhead and immobility. They’re buying a house for $780,000 – just like the one they live in now, and there isn’t a single rational argument to support the decision.
(Alvin’s also planning to send Jasmine to Montesorri, then to a private school which will suck up about $20,000 a year, which he can’t actually afford. ‘Is the kid that special?’ I asked. He was shocked. ‘It’s my child,’ he sputtered. I gave up.)
So, combine this nesting thing with the illusion that buying a house is actually an astute investment strategy (it was at one time, but no more), and we have this mess. Most people have houses, and sacrifice massively to keep them. Like Alvin & squeeze & Jasmine. Once that deal’s done, they’ll have no savings or retirement fund, a half-million-dollar debt, and a house bought in 2013 (when rates were low and prices high) that was rentable for a fraction of the cost.
Oh well. I already confessed my mistake several posts ago. Most people continue to be lemmings in suicide vests – a mass delusion I didn’t think would last.
For the remaining scant few of you with aspirations to join the 0.85% club, chew on this: As of yesterday, a bunch of things may have changed, and new opportunities opened.
- Disgust with a political system hijacked by a few Tea Party whackos, and the economic damage done, will probably push investment bucks from US equities into other markets. Like Canada. Maybe it’s already happening.
- The TSX has broken through a trend line, trading above 13,000 for the first time since 2011. It’s a big deal for chartists who say the index is now on track for a return to levels 30% higher. After seriously trailing US markets, it may be catch-up time.
- Events of the last 16 days cost the US economy $23 billion and will take a bite out of the American GDP. So what? So, no Fed tapering this year. Expect rates in the bond market to retrace, pushing bond prices higher.
- This will probably fuel fixed-income assets which were sideswiped when everyone expected central banks to ease off on their stimulus. So, seems reasonable that REITs and preferred shares will be moving up, since they’re still trading at a serious discount to last Spring.
- Oh yeah, and expect the cost of a five-year fixed mortgage to decline, at least a quarter point. This will be followed by a call from your mom asking if you’ve bought a condo yet. Pretend it’s the wrong number.
177 comments ↓
Where can you buy these suicide vests? I want to blend in.
Only kidding. The 0.85% club sounds like way more fun.
“…After seriously trailing US markets, it may be catch-up time”
Thanks to tanking gold and lagging resource stocks. Garth now bullish on commodities, say what?
woo hoo: 0.85% renter!
Anyone else in the club?
Hey Garth;
Didn’t you indicate on an earlier post that there were 422,000 Canadians instead of the 288,00 indicated in this post with an investable millski? PoTAto, poTATo, but which one is it? :)
Quite true, Mr. Observant. The stat I used previously came from WealthInsight, and the one used in this post from RBC. My research suggests the latter is more accurate. — Garth
To prove that RE is still red hot in certain areas: a “For Sale” sign went up on a SFH in my neighbourhood today… with the SOLD sticker already on it!
That’s right – this place was sold before it was even listed… I wonder if it will register as zero days on market in the magical world of CREA stats?
Is Mexico safe for the Rich and Infamous?
Rick has his money invested in Canada but spends the income in Mexico. — Garth
Garth, can you talk a little bit about the ~1,000 sq. ft. bungalows in Calgary that sell for around $250,000? Yes, there are GTA-like $600,000+ homes in Calgary’s NW & SW, but there plenty of deals (maybe they’re deals?) to be had in Calgary’s NE & SE.
Why? There are only 40 listings between $225,000 and $275,000. — Garth
If real estate goes through a long bear market our national wealth will probably stagnate because most of us aren’t diversified enough. Some people don’t realize that the market value of their homes in the future does not depend on how quickly they pay off their mortgage. But the size of their investment portfolio in the future does depend on how much they invest in the financial markets today. 4 years ago I had just bought my first home and had 90% of my net worth tied up in it. But by reading your blog I have learned to diversify and divested into stocks and bonds with my savings instead of buying another condo to rent. Today about 30% of my wealth comes from the equity in my home, and the rest is in investable assets :) Who knows, maybe one day I’ll have enough to be a liquid millionaire and join the 0.85% club haha. Great analyses of recent economic events by the way.
Alvin, this one’s for you:
DELETED. No it’s not. — Garth
Is the kid that special?…
I don’t believe for one second you said that,anyhow
Being a renter in this country sucks giant balls and in many cases is downright abusive from greedy landlords and general perception that you poor and unstable.
I Vancouver you won’t even get a second date if you a renting shmuck.
Of course I said that. — Garth
Was thinking about markets as they blasted to new highs and 10 broke 260.
I frightened myself as I could not remember a time when almost every asset class could go up in tandem. Even gold.
I almost wished we could retrace a little so it could keep people doubting. Guess last stops were at 1730. Then I read some blog comments. Feel better now.
TSX could have legs but does anyone else get the feeling the Qs could make new highs? How bad are hedge funds doing if Goldman wet the bed. Talk about an oversized bad bet on taper.
The average joe index guy is going to smoke Goldman this year. One small step for man ………..
It’s nice that Rick is enjoying his cash flow down south, nice for awhile but you have to like Mexico, it is not for everybody. We have a friend that has owned a 4 bedroom, 3 bathroom house a 4 minute walk from the beach in Sayulita, fun for awhile but has turned into a real hassle, always problems and hard getting things done. The house has been for sale at a reasonable asking price but the economy is dead there so no takers. Mexico is one place I would rent in only, lots of good deals everywhere. Owning a home somewhere in Canada away from the five largest cities and spending a few months renting in Mexico, Scottsdale or Palm Springs is far more appealing and comes with a lot less headaches.
Garth wrote:
So, combine this nesting thing with the illusion that buying a house is actually an astute investment strategy (it was at one time, but no more), and we have this mess.
It amazes me that more people don’t see this. particularly Garth’s words of wisdom — the ones that I’ve emphasised.
When I came to Calgary in 2003 I thought that houses here were a steal and bought the biggest one that I could afford. But by 2010, it was obvious that it was time to cash out. So I started work on convincing my wife. It took a while but finally we were on the same page, so we sold and moved to a rental. Did we miss out on more price gains by cashing out early? Probably. But far better to cash out early and get a decent profit than to cash out late and get little or nothing.
Would I do the same thing if I arrived in Calgary in 2013? Not a chance.
A House is No Longer an Astute Investment Strategy. It’s just a place to live.
Good video posted today by Peter Schiff on Yellen and her lack of foresight regarding RE leading up to 2007.
Starting at 26:50 is a summary of his past TV interviews starting in 2005ish – his last spiel to mortgage bankers at the end is eerie in that everything he said turned out to the tee:
https://www.youtube.com/watch?feature=player_embedded&v=rfLlF1vtit8
Garth should have become the new Fed chairman – but I’m sure he has more fun writing for the Greater Fool.
But here in my hood houses continue to have sold signs, the Asian invasion goes on unabated, who else could be snapping these up.
…Thats in Calgary BTW.
Garth, I couldn’t find the video, but Robert Shiller who won the Nobel Prize this week was emphasizing 2 radical themes for the future;
1. That current behaviour economical models should be rewritten because at their core, people behave irrationally, not rationally. That really goes against Econ 101.
2. Income inequality is going to rapidly accelerate leaving an ever widening gap between rich and poor. In fact, many simply rich people are moving into another category of even higher wealth while poor people only lose ground.
Of course. The rich own assets. The poor hold debt. — Garth
@ #9 Liquid on 10.17.13 at 8:32 pm
How come greaterfool.ca doesn’t make the blogroll on your Freedom Thirty Five blog?
I’m sure it will happen when he hits puberty. — Garth
Mexico is a great place to visit but to live there (yes there is an accelerating crime rate). I would however rent there. There is no panacea, our immediate family and grand babies are all here in Calgary. I feel that for myself renting in Mexico is a great option but maintaining our payed off homestead back home is our reality. Our Family is a close one whereby we have many family get together’s so trucking off for most of the year to Jalopeno land will not cut it. Or shall I say my wife will cut it if we do.
Garth, you gotta put yourself in the shoes of those would-be savers. For 12 years now they’ve tried to scrounge $500-1000 per month to save for a down payment. Only to watch their house outpace their savings at a rate double that. Fairly disconcerting….leading rationale people to buy in to the ‘buy now or be priced out’ mantra. Which is true, as the years rolled on they now had to settle for less house. Only when the coin flips and savings can outpace the growth in housing price will their be a societal shift. Until then it is sheeple all the way baby.
“…will probably push investment bucks from US equities into other markets. Like Canada. Maybe it’s already happening.”
I doubt much movement is going to happen. Big money needs liquidity and US markets provide that more than any other market. Plus there is always Tower Watson report:
Most cash is under US management:
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CCkQFjAA&url=http%3A%2F%2Fwww.towerswatson.com%2FDownloadMedia.aspx%3Fmedia%3D%257B0F72ECAF-320F-48E1-B043-31D94166AC83%257D&ei=-IdgUr6AE9PI4APblYGwBg&usg=AFQjCNF–o93LivIRFBFv-xAcwnhs5B8Pw&bvm=bv.54176721,d.dmg
Not enough liquidity on the TSX? You need to get out more. — Garth
@ #19 T.O. Bubble Boy
Hey thanks for reminding me. I haven’t updated that page in so long lol. I just added greaterfool.ca to my blogroll now :D
Mexico is a great place to visit but there is an accelerating crime rate ALL over the country. Renting there however is a good idea for set periods of time buying property there not so much thank you. Our homestead here in Calgary is payed off and besides our grand babies and family are all here as well. If I even suggested we sell our home and moved to Jalopeno land I would never need the little blue pill again. There would be no need nor member.
Vancouver is a joke for homes. Absolute gut jobs going for 1.7 million. Vancouver is garbage for real estate. No one in their right mind would buy anything in that shit hole.
Here’s a 5O-yr old couple with $600K in cash and $400K in RRSPs and enough cash in their chequing account to cover their next 12 months of expenses. But “she” wants to buy a house in a $1 million neighbourhood while “he” is happy paying $2,000 in rent….. Because buying a house is the “only” option, right?
http://www.theglobeandmail.com/globe-investor/personal-finance/financial-road-map/sophias-ready-for-own-kitchen-no-matter-the-heat/article14867887/#dashboard/follows/
Most children, and people in general, are ordinary and average. On a statistical basis, half are below that. Parents will say they want their kids to have the best opportunities and head start money can buy, but the best money can buy is giving the kid opportunities to explore all kinds of activities, sports, arts, sciences, etc, so they can find out what they like and what they are good at. But that costs money and time, both of which are in short supply when you’re paying for private school and a monster mortgage for a house “in the right area”.
It’s just another form of lazy parenting. Throw money at it, pretend you’re doing a good job, call it a day, rather than actually talk to and interact with your children.
#11 jan
Uhhhh yea, perception and vancouver. Love that one. “No second date if a renting schmuck”.
Maybe that renting schmuck is worth 7 figures and if on his first date she doesn’t come across as money grubbing self entitled twit …….
Some very excellent points in this post.
Rick is correct about housing prices. Homeowners typically feel good when home prices rise because it makes them feel wealthier. But if everyone’s home is rising in price, no one is richer in real terms. If you sell your over-priced home and move to another, bigger over-priced home, what have you gained financially, except perhaps more debt?
So unless you can arbitrage the capital gains by selling your home and buying lower cost digs somewhere else, or just rent, and then invest the gains, you are really no further ahead.
People with large mortgages gain when asset inflation is high and wage inflation keeps pace. The inflation (or reduction in the value of money) will erode the real cost of your mortgage over time, as your rising income makes the mortgage more and more affordable. Win. Win.
But when real estate prices rise and incomes don’t, you have no recourse but to harvest the gains somehow, if you want to benefit from the higher prices.
The point about money moving into Canadian markets, makes sense. Actually, I think, as crazy as this may sound to some, it may be time to start peeking into the venture exchange. The world economy will continue to grow and at some point the search for resources will have to resume in earnest.
Lower rates ahead also makes sense. The Fed thus far has tamed the bond market, but the US gov still cannot afford higher interest rates. I said for a long time that the US was turning “Japanese.” If the markets don’t blow up for some reason, we are on course for the slow burn, whereby governments keep confiscating wealth from the people via inflation, taxes, bail-ins, surtaxes, and any other way they can pick your pocket. They need to do this slowly so the pain for ‘We The People’ just becomes the new normal.
(Like high inflation. Inflation in the latter half the 20th century and thus far the 21st has been historically very high, but most people accept this as normal. They just don’t know any better. They don’t know that we’re always playing catchup with our incomes because we have an insane monetary system where the banks can create their own wealth and stick us with costs.)
If wages and salaries in the private sector start to catch up with inflation, unless we have a severe recession, Canadian housing prices for SFHs could remain nominally stable while declining slowly in real terms as the markets just runs out of enough new buyers vs. sellers to keep upward pressure on real prices.
Not to say we can’t have a severe correction ahead, but equities may just be the place to be as not even the banks will be safe from failure or confiscation. If the markets can levitate on very low volume, what happens if the retail investor, the foreign investor et al suddenly decide it’s time to get back in?
Follow the money.
#22
How many tsx 60 stocks are dual listed?
It’s elementary tower Watson.
Even with higher rates and tighter mortgage rules
prices still look solid.
I’m worried for you guys who are now waiting three years and counting. October was in my view a big test, higher mortgages and it seems that it passes the test.
Prices are still strong especially in SFDs. Looks like you will need a spike in both variable and fixed or massive job losses.
BIG MISTAKE for those who decided not to buy in 2010. Prices will NOT drop to 2010 levels
Actually if I do get out, I won’t see those huge blocks being printed on goog stock. Let’s see Citadel makes about 5% of NYSE volume…think about it.
So, Garth, have you seen the numbers for mid October?
http://business.financialpost.com/2013/10/16/toronto-housing-market-shows-no-signs-of-slowing-down-as-early-october-sales-spike/
I just came back from a bidding war in Toronto. House sold for 55k over as king price.
That sounds unlikely. Winning bids numbers are normally not made available to suitors. You the agent? — Garth
— No, Garth. I am a buyer. My agent simply gives me the info every time we lose a bidding a war. The house sold 60k over asking price.
Then stop doing it. — Garth
shouldn’t we know Alvin and co’s annual salary before jumping to conclusions? As well as age?
What if they make 500k a year? Then 800k for a house isn’t that unreasonable, in my opinion.
That’s a key bit of information missing.
More like $85K. — Garth
Dodged a default, what will our little law-makers do now with the time? Will they really try to solve problems? Tune in next week to your favorite station, and join us again for the hapless adventures of the “tea lover”.
…”…when I visited with Alvin and his wife.” – HonGT
You do HouseCalls, too!?
Egads! Whatever will Ontario’s College of Physicians and Surgeons say?
You’re setting a VeryBadExample, AuldPol.
@Jan/#11
…”I Vancouver you won’t even get a second date if you a renting shmuck [sic].”
Yikes! You say that as though it were a bad thing!
“shouldn’t we know Alvin and co’s annual salary before jumping to conclusions? As well as age?
What if they make 500k a year? Then 800k for a house isn’t that unreasonable, in my opinion.
That’s a key bit of information missing.
More like $85K. — Garth”
85k combined????
madness.
Real life and death issues here at ranch.
No comments tonight. Sorry fans.
Garth – The MSM is saying sales remain hot and prices are soaring. If rates dip down, they will entice some to buy now or never afford. This is contrary to F’s wishes. Any new measures to come?
Alvin wants his chipmunks to be well educated?
Boom! Boom!
Garth – have you seen Brother C in action lately? He is doing to UK what he did here. Is he still a blog dog?
“We paid $70,000 and have spent about another $15,000 on upgrades”
Shows how much of your house is materials and how much is restricted supply plus loose credit! Everything else falls in price so the elite keep everyone working all hours by upping the cost of housing.
Significant Deterioration in the Federal Access to Information System
Ottawa, October 17 2013 – Suzanne Legault, Information Commissioner of Canada, tabled her annual report to Parliament today, highlighting weaknesses in the information system that need to be urgently addressed. The report cites both a lack of leadership and resources as the main failings.
“All together, these circumstances tell me in no uncertain terms that the integrity of the federal access to information program is at serious risk,” said Suzanne Legault.
The report contains cases of institutions not having enough staff to even acknowledge the receipt of access requests for six months. Other examples show the response time to requests can vary from a year-and-a-half to more than three years.
“It is imperative that the problems in the system be fixed and fixed promptly and substantively,” said Ms. Legault.
The Commissioner’s report calls for leadership on the part of the government and federal institutions, increased funding to handle access to information requests and a modernization of the 30-year old Access to Information Act, including extending the legislation to Parliament.
—
Pffft. And people complain about housing stats when FOIA is at risk of becoming obsolete in due time. I give Legault about a year before she's thrown out of office.
#11 Jan
“In Vancouver you won’t even get a second date if you a renting shmuck.”
Reminds me of this
http://www.youtube.com/watch?v=0iyeUcFKRv4
#11 Jan
” In Vancouver you won’t even get a second date if you a renting shmuck.”
Why the hell should you have to own a house to get second date? The 5% of women smart enough to know why you rent instead of buy now would be “keepers”. It would be a great test.
Makes more sense to spend a couple hundred bucks on the odd hooker over a $600K/25 year mortgage and property taxes. Your odds of getting lucky go to 100% …. you get variety and you don’t have to buy dinner …. unless you’re hungry.
#9 Jan:
See #25 ;)
Garth I agree with a lot of what you have said here….It appears clear that the $85Billion/month in Fed stimulus is here to stay for quite a while longer. I don’t think we’ll be hearing much more about taper for a few quarters.
One consequence that will result from continued Fed stimulus along with the US political landscape to come over the next 4 months is weakness in the US dollar. This will drive the price of Gold back-up and will be a big reason for TSX to outperform US markets.
Disclaimer – I am not a Gold bug….I just understand economics
#27 Most children, and people in general, are ordinary and average. On a statistical basis, half are below that.
I don’t mean to be mean but you know shit about median. Pois it on.
DELETED.
This must be written by a RealTurd:
http://www.nasdaq.com/article/the-best-way-to-short-treasuries-and-collect-10-yields-cm288722
#11 Jan
I rent where the top 1% live and my landlords are super nice.
I also don’t have a huge mortgage that all other Gen-X family have in the area.
Rent is less than what I would pay for my mortgage payments + taxes + maintenance and when I have a problem, one free phone call gets the job done.
I have a hot ex-Vancouver babe as a wife and she understands what a true man is versus some pussy whipped idiot with a 300K+ mortgage and no investments outside RE.
She also followed me out of Vancouver into a nice town called Ottawa. She loves it here versus Raincouver. My kids have an awesome school not requiring us to waste 20K a year on private education.
#11 Jan
“I Vancouver you won’t even get a second date if you a renting shmuck.”
——————
Hey! I a renting shmuck. Don’ need no date, neither.
The lovely wife and I are perfectly happy in the 0.85% club and renting downtown. Nice building, great management all paid for with yield from invested money that used to be a very overpriced house.
(Some other shmuck lives there now.)
Garth, can you talk a little bit about the ~1,000 sq. ft. bungalows in Calgary that sell for around $250,000?
______
You mean the “doll houses”? Yup I know them well. They have no garage, rotten wooden porch, no back parking. These used to be worth about $80,000 back in 2001 and real homes worth about $200,000. You really think this is a deal?
AVERAGE?
The average RRSP has less than $50,000 in it…
**************************************
But no one is actually precisely average. (I have this from a reliable source.)
The thing I like about being in the club is that it’s for those “who have $1 million to invest”. Not to be confused with the insiders and risk-takers that belong to another club with members “who have $1 million invested”.
Garth, a plug for your profession. I am way up in the .85% range but I could tell you virtually nothing about most of my investments. I have no interest in investing or the fine points of various ETFs etc. I probably could learn these things but what an effort. So I leave it to a large professional firm with an excellent adviser to take care of the details. In past 10 years have gone from around 1.2m to around 1.8m and I have never had to deal with anything more than consent to recommended purchases and sales.
#16 – I wouldn’t say it’s HAM that’s buying Calgary houses. It’s tradesmen and flood victims.
For those who think oil is powering Calgary’s economy, the skyscrapers downtown have a 16% vacancy rate. That doesn’t include companies that are trying to sublet privately. The petro-executives are contracting geological work to Texas. Design and build work on the oilsands projects are done overseas, and fabrication done in China or Germany. We just put a new walking beam on one of our pumpjacks that came from Malaysia.
What I’m trying to say is that unemployment is low in Calgary not because of oil, but because of all those tradesmen building particleboard shacks and their girlfriends who work as shopgirls.
Garth, in fairness to people in general, most had their introduction to investing by a mutual fund salesman back in the day and that probably turned a lot of people off for good.
If you know much about these people, they were one off from used car salesman and realtors. In fact, just about anybody could sell mutual funds back then. None of them paid any dividends and they were never actively managed to improve returns. Banks and financial companies just wanted the fees.
Lottery Winner Wastes the Money…
A man who won a $5 million lottery was broke a few years later.
He explained that half of the money he had spent on gambling, women and booze.
The other half, he said, he just WASTED (perhaps on real estate).
23 billion wasted, could have funded all the food programs for the american schools for 2 years…. Pretty sad
Will variable mortgage rates go down or stay the same? 3 Year rates will follow you 5 year rate decline prediction?
Unlikely. VRMs are tied to prime. No movement there. — Garth
Google shares are flirting with 1,000.
It’s just an on-line library, for Christ’s sake!
Just dug another foot deeper in my bunker, and bought some more tuna cans.
I don’t know why the TSX shows legs as resource stocks are at 52 week lows.
As I continue to post on here the message remains the same: No Fed Tapering, Inflation will accelerate, the US dollar will weaken dramatically, The US is not recovering, Gold will soar.
Markets are complacent until they aren’t. Inflation does not pre-announce its coming appearance.
The TSX will be worth more than the DOW once again. That won’t save our real estate market but the country as a whole is far from screwed.
If we adopt the neo-Socialist interventionism and currency counterfitting like the USA, Canada will enter the Dark Ages.
And you’ll be there to greet us. — Garth
25 year amortization or 30? I can handle the higher payments with the 25. Ehat route is the best?
#31 Realtor #1 on 10.17.13 at 9:15 pm…
“…Prices will NOT drop to 2010 levels…”
SFH Central Okanagan
Sep 2013 $ 465,966
Sep 2010 $ 466,382
SFH Victoria
Sep 2013 $ 610,055
Sep 2010 $ 612,109
Whoops, this doesn’t even include the approximate 5.5% inflation.
But keep on dreaming…
Garth…perhaps the 244k vs 422k or so is due to counting spousals ? I qualify that way, but not if she kicks me out :) re: 0.85%
#62 Son of Ponzi on 10.17.13 at 10:52 pm
You use the internet every day and you seriously question Google’s revenue, profits, and soaring stock price? If they figure out Motorola (and eliminate death) then watch out 2,000 (and 100,000+).
Hey Garth,
As far as we preferreds go, what’s the general rule of thumb for investors who only have registered accounts? Are they not worth it since there’s no tax credit?
Party on Garth!
Feel good story of the day…
http://www.huffingtonpost.com/2013/10/16/stranger-overhears-diagnosis-pays-tab-_n_4109542.html
Enjoy. Pass it on.
Ralph Cramdown,
This is for you.
http://ca.finance.yahoo.com/news/analysis-lurching-gold-prices-mystify-traders-undermine-confidence-042125396–sector.html;_ylc=X3oDMTEwdDlpZzMxBF9TAzExODQ1NTAwMDgEcG9zAzEEc2VjA211c3RyZWFk
@#52 Mister Obvious
#11 Jan
“I Vancouver you won’t even get a second date if you a renting shmuck.”
——————
Hey! I a renting shmuck. Don’ need no date, neither.
The lovely wife and I are perfectly happy in the 0.85% club and renting downtown. Nice building, great management all paid for with yield from invested money that used to be a very overpriced house.
(Some other shmuck lives there now.)
————–
We have a friend who rented after selling their company for over 10 million with a sibling. It was a great place on the water and a good deal. Did they splurge in other areas? Absolutely. Did they invest the bulk of it wisely. Yes. So yes, intelligent, successful people do rent. We have another friend who is renting with her teenagers following a recent divorce. She thought about buying again but did the math and started reading this and other good blogs and decided to sit tight for now. It’s freeing up funds for some much needed travel and new future savings. She may not be worth millions but trust that being a renter is not stopping interest from potential good dates and she’s too smart to be interested in anyone who would hold renting against her.
Garth,
**I’m not even sure if I even want you to put this on the web site, it might be too harsh – it’s up to you . **
So I’m one of those .85% ers, but it really is nothing, and worst still – I feel poor. A couple of paid off rentals that net just under 2K a month, maybe 400K in retirement plans and maybe 200K in unregistered accounts, but I’m pushing 55 and my future work life is minimal, for the wrong reason – I’m too high end for what I do here. I made most of my money working in high end engineering in the US, until I couldn’t get my working visa renewed. For all practical purposes the work has little value north of the border – that’s the predicament that makes me feel poor. 55 with just over a million and little future expectations – you realize how poor you really are.
http://business.financialpost.com/2013/06/26/nairne-the-changing-face-of-global-wealth/
From the above
“BCG estimated that Canada had 373,000 millionaires in 2012 comprising 2.8 out of every 100 households. Considering that BCG defines millionaires the old-fashioned way – those having at least $1,000,000 in liquid financial assets – and leaves out the value of residences, vacation properties, and private businesses, this is not an inconsiderable number. Thanks to our stability during the global credit crisis and its aftermath, our standing in terms of the number of millionaires has improved greatly. In 2006, we ranked 15th but by 2012, we’d moved past the likes of France and Italy…”
So it appears more like the 2.8%……
There are 35 million Canadians. Figure it out. — Garth
#11 Jan
Your post confirms a fact that every wise and well off bachelor knows. Never, and I mean Never, let anyone know your financial situation. Much better to rent and have ETF REITS as the RE part of your liquid, balanced, and diversified portfolio. Wise well off bachelors enjoy their wealth quietly while putting thought into maintaining their financial anonymity. There is good women out there, always is, and always has been, but defense is the best offense for the female “Gold Diggers”. And don’t kid yourself Jan, the wise well off single women know how to protect themselves too. Thanks for the reminder to everyone Jan.
so the majority of U.S. politicians who are putting the U.S into bankruptcy and doing nothing about it are not wackos, but the tea party, which is not really a party but a genuine grass roots organization of concerned citizens who want to avoid fiscal collapse and resist an irresponsible and increasingly oppressive government – they’re the wackos.
garth – you undermine the otherwise intelligent message of your website when you resort to such unfair and slanderous comments.
“Will variable mortgage rates go down or stay the same? 3 Year rates will follow you 5 year rate decline prediction?”
Prime is likely to stay the same or down. But the spread on residential RE loans is likely to increase ad residential RE lending increasingly goes out of favour.
#22 – I’m with you on this one . There may be liquidity in TSX listings but most of them are junk when compared to the NYSE or even Nasdaq which has most of the big tech stocks. The TSX is a resource-laden market and doesn’t have the size or sophistication for world money managers to start piling in so the two American ones will still get most of the big play and who says their politicians won’t finally see the harm they’re doing to the country- well maybe.
To Realtor #1 on Post 31
re: “BIG MISTAKE for those who decided not to buy in 2010. Prices will NOT drop to 2010 levels.”
My Vancouver chart shows that strata units are currently trading at 2007 price levels:
http://www.chpc.biz/vancouver_chart.html
We bought a pad on the ocean, gated….also in Mexico for 235k.
It rents for 5-6k for six months and then less for the off season, it can make up to 50+k a year less management costs which are negotiable.
Adios
@Jan : “In Vancouver you won’t even get a second date if you a renting shmuck.”
Oh dear – i feel sorry for you!
Wait, wait, wait, WAIT! Gawddamnit! Did I hear Alvin was making 7% on $300K a year? That’s $21k And if they just had a kid, I can assume they’re realitivly young? Garth! Why aren’t you smacking around these people that come to you for advice? I know you’re a great guy and all, but there’s a time when you have to get Christopher Walkens on these cats! Their rent is $1750 and they’re making $21k! It’s a frickin wash! They’re living somewhere for free! WHY ARE PEOPLE SO STUPID!
By the way ladies, I’m having dinner at Swiss Chalet this evening. I’ll be at the bar.
http://www.youtube.com/watch?v=wCDIYvFmgW8
“You need to live somewhere” is the reason 90 percent of people die broke. This applies to all countries around the world not just Canada. The average person doesn’t even have the ability to think. Rick is an imbecile coming up with a line like that he will die broke just like the other 90 percent. My father once told me the same identical line when real estate peaked the fall of 1987. I rolled my eyes and told him you do what you want. I sold everything and bought wholesale in Elliot lake when houses were going for 20 grand apiece that year. My father would die broke if not for mr giving him money to compensate for his shear stupidity all born out my that same line “You need to live somewhere”.
Is Elliot Lake better than death? — Garth
#1 Derek R — “Where can you buy these suicide vests?”
http://www.safetygearforsmallanimals.com/SGSA.html
Re: #77 Mark on 10.18.13 at 2:12 am
Exactly right and falling interest rates in America will push the Bank Of Canada rate down in Canada.
No it won’t. — Garth
“This will be followed by a call from your mom asking if you’ve bought a condo yet. Pretend it’s the wrong number.” This just made my day! Great post for the weekend, Garth!
Good luck with the TSX, a resource biased market not nearly as well regulated as the US market, if fact for small caps it’s a jungle, information is very unreliable.
To make money you need to invest in one thing: quality companies. And there are just not enough of those in Canada.
I get my morning smile from reading the MSM headlines of what is supposedly moving the markets.
Wall St interpretive narratives continue to fail trumping reality.
China still runs almost exclusively on direct government mal-investment and the US has merely delayed by kicking the can.
All this adds up to the Fed placing QE to the back burner until possibly sometime in the New Year.
With organic global growth remaining sluggish on main lining injections of $85B/mnth of liquidity, the Fed would like nothing better then be handed an air tight reason to become even more interventionist…
Disgust with a political system hijacked by a few Tea Party whackos, and the economic damage done, will probably push investment bucks from US equities into other markets. Like Canada. Maybe it’s already happening.
*******
How about Europe, is this the time to invest in European markets, or too volatile still?
You should have had exposure there since at least 2010. — Garth
Re: #77 Mark on 10.18.13 at 2:12 am
Exactly right and falling interest rates in America will push the Bank Of Canada rate down in Canada.
No it won’t. — Garth
***
Why wouldn’t it, weren’t CDN rates always dependant on US interest rates?
There is adequate monetary stimulus in Canada. Lower rates are not only unneeded, they would exacerbate a potentially destructive credit bubble. Ain’t gonna happen. — Garth
@87: It’s always been my impression that telecoms and financials dominate the TSX although imo you do raise a valid point re small caps.
http://www.channel4.com/news/broken-ladder-generation-rent-microapartment-oldham-landlord
From the UK, but probably applicable in Canada as well. From the quote at the end, seems the bloke has his head on straight.
http://www.bloomberg.com/news/2012-08-08/recession-generation-opts-to-rent-not-buy-houses-to-cars.html
looks like the owership society is all but dead.
http://www.youtube.com/watch?v=xtYZc75_lh4
worst sales pitch on the Den that actually got a deal,
skip to 28:00
My mortgage comes up for renewal in January. Should I be locking into a fixed mortgage rate or variable? If fixed, how many years?
Article last night, Loblaws headoffice layoffs in the hundreds. A commenter mentioned a few more, a few months ago. Who’s going to get another job before Christmas time?
As mentioned I’ve dropped my weekly Loblaws grocery spend down to 35%, from 100. Buying small. Locally; butcher, baker.
In-store monitors feature the scion’s smirking mug. Then, they beg me for $2 at the cash for their ‘charity’ I don’t think so. Divert your own billions, or those paid as Divs to all classes of share holders, first.
I don’t give to charities except to War Amps whose keychains and address labels I actually use.
Greatest scams of our times:
http://www.tampabay.com/americas-worst-charities/
we’re number 2!
“Although second overall, Toronto claimed the top spot when people rated which cities they would work in.”
you can thank Rob Ford later.
http://www.thestar.com/news/gta/2013/10/17/toronto_named_second_most_reputable_city_in_the_world.html
@ #73 1 mil is nothing on 10.18.13 at 12:56 am
Garth,
…So I’m one of those .85% ers, but it really is nothing, and worst still – I feel poor. A couple of paid off rentals that net just under 2K a month, maybe 400K in retirement plans and maybe 200K in unregistered accounts, but I’m pushing 55 and my future work life is minimal, for the wrong reason – I’m too high end for what I do here. I made most of my money working in high end engineering in the US, until I couldn’t get my working visa renewed. For all practical purposes the work has little value north of the border – that’s the predicament that makes me feel poor. 55 with just over a million and little future expectations – you realize how poor you really are.
———————————-
You aren’t poor, you’re just comparing your future retirement income to your peak earning years.
Most Canadians will have a far bigger shock when they hit retirement… by being “under-employed” now, you have likely already adapted to the standard of living that you’d have in retirement.
You said: “Disgust with a political system hijacked by a few Tea Party whackos, and the economic damage done, will probably push investment bucks from US equities into other markets. Like Canada. Maybe it’s already happening.”
How long would this last, pushing some equities into other markets? Are you revising your position that now is a good time to buy into the US (via ETFs, for instance)?
And wouldn’t any rise in the TSX be temporary, given the sizeable chunk of our economy that depends on real estate?
There are opportunities everywhere. It’s what balance, diversification and weighting are all about. — Garth
By Greg Hunter’s
Economist John Williams says the U.S. budget and debt ceiling circus is not the real problem. Williams contends, “The issue here, very simply, is the long term solvency of the United States of America. . . This gap based deficit is going to kill us . . . We are going to be in very serious trouble in this next year, and the global markets know this is happening.” Williams goes on to explain, “They are not going to address the long term solvency problems of the United States. That’s going to trigger a massive decline in the dollar in the not-too-distant future, and that, in turn, will give us the early stages of hyperinflation in this next year.” Williams says, “We’re basically at a point where we can’t kick the can down the road. This is it. . . . Going forward from here, you’re going to generally see a weaker dollar, and it will get much weaker. You’re going to have a dollar panic, but I can’t give you the exact timing on that.” Another potential problem is a credit downgrade of U.S. debt. Williams says, “If we get a downgrade here, that would accelerate the process of the dollar selling and moving us again into the early stages of hyperinflation.” Williams says you can protect your wealth by holding hard assets. Williams goes on to say, “If your assets are denominated in dollars and Treasury bonds, those will become worthless in hyperinflation.” Join Greg Hunter as he goes One-on-One with John Williams of Shadowstats.com.
http://www.youtube.com/watch?v=wF3kS0yx-dI#t=35
Garth re 74
Attributing $1M of assets to one particular individual in a
family unit or household may not be the best
representation.
For Canada
35M / 2.7 per HH = 13M HH
373K / 13M = 2.8%
Not everyone is in a household, and the divorce rate is 40%. Not buying it. — Garth
SaltyDogz… and particularly you unsuspecting SoonToBeErstwhileBachelors… If you want to make it into the fabled “0.85%Club”… it would best to heed this morning’s Zen/CautionaryTale…
“Your wedding day is not a business venture.” –
Alison McGill, “Weddingbells” editor-in-chief
[G&M] – Meet the new breed of bridezilla: Fork over the cash or face social media wrath
…”A 2013 bridal survey from Weddingbells found that 69 per cent of Canadian women polled said they’d be going over budget. As journalist Rebecca Mead elucidated in her 2007 book, One Perfect Day: The Selling of the American Marriage, “The modern wedding industry has been assiduous in working to establish the trappings of the lavish formal wedding as if they were compulsory rather than optional.” That pressure worsened postrecession as brides with less credit kept growing expectations for their big day. “Couples end up walking down the aisle feeling backed in a financial corner,” said Gonzalez. “It’s desperation to recoup some of this money.”…
http://www.theglobeandmail.com/life/relationships/meet-the-new-breed-of-bridezilla-fork-over-the-cash-or-face-social-media-wrath/article14902806/
#63 Ripped “I don’t know why the TSX shows legs as resource stocks are at 52 week lows.”
—————————————————————–
Read a little about investing and then it may all make sense. I’ll save you some time. ‘buy low, sell high’
BonusZen!
The FinerPoints of PM Harper’s ‘Plan d’Action Européen’ can now be revealed:
“The government hopes, however, that Canadians will continue to consume more and more cheese…”…
[G&M] – Canada’s auto industry faces sweeping change with EU trade deal
http://www.theglobeandmail.com/report-on-business/international-business/canadas-auto-industry-faces-sweeping-change-with-europe-trade-deal/article14925024/
#73 1 mil is nothing
So I’m one of those .85% ers, but it really is nothing, and worst still – I feel poor.
55 with just over a million and little future expectations – you realize how poor you really are.
***************
This is comical… Thanks for the great laugh
And just in case you are being serious… go volunteer at a soup kitchen. This will be great to re-align your perspective on what poor really means.
Cheers!
Government shutdown have you eyeing Canadian real estate? Expecting a midlife crisis sometime soon? This contemporary home on a quaint street in Ottawa’s Civic Hospital neighborhood comes with a two-year lease on a Jaguar F-Type, the sports car marketed with the following slogan: “How alive are you?”
http://ca.finance.yahoo.com/news/buy-ottawa-home-leased-jaguar-free-220004295.html
Yep, that morning block of 692K of Goog looks dope..Multiply that by $1K and we get 692 Million. Market makers are busy today.
STOOPID LOGIC
STOOPID Idiot at 100 quotes Wiliams who claims:
“If your assets are denominated in dollars and Treasury bonds, those will become worthless in hyperinflation.”
***************************************
True for treasury bond which is an investment IN dollars, completely false for assets (like houses and companies) that are merely measured in dollars but are not investments IN dollars.
Bond prices collapse in hyper-inflation, house prices should soar.
Dream deal- It’s the kind of home many of us dream of owning if we won the lottery. The high end house is situated near Mission Hill winery in West Kelowna. While it does have a for sale sign out front, it’s not being sold in the conventional manner. It’s being “auctioned off” and handed over to the highest bidder. With no reserve pricing, it could go for a steal. Klaudia Ceglarz reports.
http://globalnews.ca/news/909660/watch-dream-deal/
Time to shut down the Mother in Law factories.
They need to retool, break the mold and develop new model.
At TGiving plumbing issues, time, $, frustration etc.
So I say out loud…just another reason to rent.
MIL ” Oh no, you would probably wait 3 months for something like this to get fixed”.
My head almost exploded!
*CHINA URGES CANADA TO APPROVE INVESTMENT TREATY: XINHUA
What's the big secret in this deal?
From CBC, Oct 27, 2012
One question: Whenever Canada's sovereignty is sold off to corrupt communist SOEs, do they put a "sold over asking price" sticker on it?
You really hate China, don’t you? — Garth
This chart is dedicated to all those who were bailing out of XRE and telling others to sell their REITs, when I was calling the buy under $15 (You know who you are):
http://ca.finance.yahoo.com/q/bc?s=XRE.TO&t=5d&l=on&z=l&q=l&c=
But this is Canada. We sell stuff when it goes down and buy after it crests! — Garth
#89 World Traveller — “How about Europe, is this the time to invest in European markets, or too volatile still?”
Wrong question, asked of the wrong person. You need to ask yourself whether you have the time, skills and inclination to be a market timer. If not, you should always be invested in Europe, rebalancing as necessary. If so, you should form your own conclusions, or at least follow the opinions of those who you believe to be the very best global macro strategists. Nobody likes a tourist:
http://markdow.tumblr.com/post/29342504820/why-are-global-macro-hedge-funds-struggling
Too early? I don’t think so. I got in in the Spring. Astrazenica +9%, BP +6%, Banco Santander +22%, Deutsche Telekom +36%, Hellenic Telecom +53%, Navios Maritime Partners +11%, Orange +32%, Portugal Telecom (-8%), Telecom Italia +10%, Telefonica +33%. Add dividends on top, some quite generous and the Greek shipping and British ones tax free. One loser out of ten. I wish all my ideas were that good/correct/lucky.
#102 Nemesis
The niece of a friend was married last year on Vancouver Island.
About two hundred of their closest friends were in attendance. Very swank hotel and dinner. Formal everything. Six-course gourmet meal catering.
I estimate the price tag at perhaps $40,000. Neither they nor their parents were people with money to burn.
I think we have lost our way.
from #18;
Of course. The rich own assets. The poor hold debt. — Garth
i disagree. Debt will enslave most people, but if applied correctly, debt can provide huge upside benefits. for example, when purchasing a home, i like to borrow 5 dollars for every 1 dollar that i invest.
there are many advantages of debt.
debt can kill you or it can make you free.
A big mortgage will set you free? Call us when it happens. — Garth
For Canada
35M / 2.7 per HH = 13M HH
373K / 13M = 2.8%
Not everyone is in a household, and the divorce rate is 40%. Not buying it. — Garth
———————————————
Once again. You are counting children as part of the 35M.
Garth, if you have to manipulate numbers to try and make a point then you make yourself less credible.
It’s as if you were writing at the Sun still.
By the way, why wasn’t my prior observation not posted?
Was it “Abusive, obscene or disrespectful”? NOT.
There are 298,000 people in Canada with investible assets of $1 million or more. I bet none of them are wasting time right now figuring out the statistcally correct percentage of the population that they constitute. Knock yourself out. — Garth
Good bye!
Here is why: http://urbantoronto.ca/forum/showthread.php/20149-Admins-please-delete-or-bloc-my-account?p=772681#post772681 … No more data from me. RE is clear as mud and a lot of pigs are in this mud right now!
PS: their damn forum would not let me correct the “bloc” typo.
I have to admit that the RE agents and the many idiots invested in RE are outnumbering and outspeaking the rest of us even online.
An online argument with any RE retard will get a lot of support on his/her side from the above mentioned idiots while those interested in having real data are just passive suckers who prefer to say nothing instead of fighting the bullshit promoted everywhere by these plague called RE agents.
Lottery Winner Wastes the Money…
A man who won a $5 million lottery was broke a few years later.
He explained that half of the money he had spent on gambling, women and booze.
The other half, he said, he just WASTED (perhaps on real estate).
#59 Shawn on 10.17.13 at 10:40 pm
I think I would fit the money spent on women in the money wasted category?
You really hate China, don’t you? — Garth
Not at all. In fact I'm bullish on China and the yuan. But I do hate foreign special interest groups who have an agenda to influence laws that will affect the rights and livelihood of Canadians. If you want to know the end result, just look at Vancouver's bought and paid for city council members and where home prices are.
I'm just reporting the news. And right now I see an expideted agenda to flood FDI and more immigrants into Canada, all because the black line on this chart along with green one on this one are declining.
I'm a realist Garth. We could both be wrong on real estate if government intervention succeeds.
Does anyone have any idea how to find a fee-based advisor? I can find plenty of fee-ONLY advisors and loads of advisors who are commission based – which for my needs, is not a good fit. Where oh where are the fee-based advisors hiding? What gives? I’m in Abbotsford, BC if anyone knows of a fee-BASED advisor that is with a large firm???
#116 Good bye! on 10.18.13 at 12:23 pm
I have to admit that the RE agents and the many idiots invested in RE are outnumbering and outspeaking the rest of us even online.
An online argument with any RE retard will get a lot of support on his/her side from the above mentioned idiots while those interested in having real data are just passive suckers who prefer to say nothing instead of fighting the bullshit promoted everywhere by these plague called RE agents.
———–
Do not waste your time trying to correct someone who’s living depends on believing in a lie. Most will refuse to see the light no matter how good your argument. This goes for all walks of life too, not just RE.
Like almost all public sector workers will tell you their job is necessary and their pay is fair. But ask them to compete then in the free market and stop taking tax revenue and they’re will go pale white.
Just look out for number one and sell if you need to or wait to buy like me, or buy cheap shack with land value etc…
#38 Smoking Man on 10.17.13 at 9:40 pm
life and death?
like the beer taps are broken?
#57 DaleFromCalgary on 10.17.13 at 10:31 pm
#16 – I wouldn’t say it’s HAM that’s buying Calgary houses. It’s tradesmen and flood victims.
For those who think oil is powering Calgary’s economy, the skyscrapers downtown have a 16% vacancy rate. That doesn’t include companies that are trying to sublet privately. The petro-executives are contracting geological work to Texas. Design and build work on the oilsands projects are done overseas, and fabrication done in China or Germany. We just put a new walking beam on one of our pumpjacks that came from Malaysia.
What I’m trying to say is that unemployment is low in Calgary not because of oil, but because of all those tradesmen building particleboard shacks and their girlfriends who work as shopgirls.
You have no idea what you’re talking about…
http://www.calgaryherald.com/homes/developments+push+Calgary+downtown+office+vacancy+upward/8770888/story.html
The current vacancy rate is about 5.5%..and set to rise as new space comes available, 20yr average is just below 10%…try to do the bare minimum or research before you spew your nonsense. You keep going on and on about how everything is done elsewhere, I’ve worked at Nexen, EnCana, Cenovus, Devon and others, never heard of any work being done elsewhere. If there is some fab being done elsewhere it’s likely that we don’t have the manpower or expertise to do it here, everybody I know is making at least 100k downtown.
#118 Canadian Watchdog – I can fully understand your concerns, but how does one rationalize the history of Canada after WW2 which made it great? There were waves of various ethnic groups that came here to start a new life, and added a dividend that made us prosper into a great nation. I love Chinese food, and life would never be the same without tray service for Dim Sum. Just a thought, as who among us does not have great grandparents; grandparents; or parents that came from elsewhere? We are all Canadians with foreign roots with diverse backgrounds one way or another; give this some due consideration.
#121 Valley Renter Chick – well discount the following: lawyers, bank advisors; mutual fund, and insurance sales people, and those that call themselves advisors, as the list is long. These are know nothings in my book as just laugh at them all, so you have a problem. It all depends upon the amount of capital you are talking about, as a means to an end. If small you must take the time to educate yourself, but if large they can be found.
I almost dropped from my chair when I read this
http://urbantoronto.ca/forum/showthread.php/10523-Baby-we-got-a-bubble!?p=772723#post772723
Of course there is a mistake, there must be 582 condos, it all depends who is counting…you will see.
#38 Smoking Man on 10.17.13 at 9:40 pm
Real life and death issues here at ranch.
No comments tonight. Sorry fans.
Keep cool buddy, was getting dragged to Casino by my girlfriend tonight was going to see if we could finally buy each other a beer. Hope all is OK in Smoking Man Land? We wish you well.
I’m a realist Garth. We could both be wrong on real estate if government intervention succeeds.
How do you measure that success. any stagnation in RE at this point will be catastrophic, especially for condo where we are over supplied.
On the other side advancing (keep things moving/selling) means more debt.
Hi,
A few things that I have noticed that shows things are getting bad.
1. Was at my friend’s cottage on Lake Erie fishing over the long weekend. I lost count how many For Sale signs there were. I would say at least 30-40% of the cottages in his area were up for sale, same for my uncle’s cottage area on Lake Simcoe.
Two. Noticed a few people that I know who are having trouble closing condo transactions. They all own houses.
Three. I recently took over a few businesses at work, one that deals with the airport and another that deals with retail. All are down in revenue by allot.
Whats going on? People are trying to deleverage. The question is once everyone tries to get through the door, how much pain there will be. Has someone modelled what asset prices will be as Canada tries to deleverage?
It simply is not natural or good for society to have an average debt/income ratio of about 163%. Higher than the US (about 100%) and the highest in Canadian history. All one is doing is taking future consumption and bringing it forward, and paying interest to do it.
Another thing that makes things smell off. I have about $500K invested in the stock market, rent a town house for $1850 and make about $100K a year. When I look around at houses to buy in GTA, I still would have to take at least a $300-500K mortgage just to get something decent for my family in Toronto. And I would be stretched to save much even at my salary if I did that. I basically would have to eat peanut butter sandwiches even though I have $500K to put down and make $100K just to stay with the crowd to own in Toronto. It does not add up.
“Bond prices collapse in hyper-inflation, house prices should soar.”
Nope. Houses are priced off of bonds. House prices won’t soar in hyperinflation except insofar as their utility as firewood. In various hyperinflations, ie: Weimar Germany, houses sold for mere pittances. As nobody was able to obtain credit to buy them. Entire apartment blocks for an ounce or two of gold in Weimar Germany.
#110 joblo on 10.18.13 at 11:24 am
Time to shut down the Mother in Law factories.
They need to retool, break the mold and develop new model.
At TGiving plumbing issues, time, $, frustration etc.
So I say out loud…just another reason to rent.
MIL ” Oh no, you would probably wait 3 months for something like this to get fixed”.
My head almost exploded!
***************************************
Now that’s just plain hilarious. Does your MIL think that just as soon as something requires fixing in an owned house that it’s repaired right away? For instance, my husband is a great man in every respect but, given a list of “to do” items, it may take anywhere from a week to several months for something to be fixed. I’m not a nagger by choice and inclination; however, somedays I could just scream when a seemingly tiny little job that requires only a few moments attention (I think) remains on the list.
#71 Son of Ponzi
“Lurching gold prices mystify traders, undermine confidence”
Confidence??!? The goldbug world is a nest of conspiracy theorists, people who think the government will confiscate if you’re not in personal possession of physical metal, that the custodians are lying about the amount or ownership of what’s in the vault, that shadowy, deep pocketed forces manipulate the market for profit or political reasons, and more!
Yet they all continue to play, generally on the long side. It’s the only market I know with a bunch of little guys who are convinced the game is rigged but want to play anyway.
Mexico is fine….as long as you aren’t extorted, robbed or kidnapped or murdered. I think a person has to think long and hard about exposing his spouse to such dangers. Playing Russian Roulette is no way to live in retirement….or is it necessary. It all comes down to good personal planning…and this does not always equate to a certain sum of money…cash flow etc….more about quality of lfe overall.
Plan it right and you will own a home in Canada and afford to live elsewhere….not have to expose ones loved ones to danger over a dollar figure.
Don’t forget your health….stay out of Canada for six months consecutively and you lose you MSP ( OHIP) etc. If you do need major health care and come back to Canada ( you really don’t want major surgery in Mexico or Indonesia etc) you will find yourself out of pocket until the 4 month waiting period expires. So much for the savings.
I have had many people tell me the same story…that after buying a place in Mexico they have a very hard time unloading it……Thailand to for that matter. …aren’t you better off renting?
Oviously if you have retained your investments in Canada there is no tax benefit to living offshore…you do for the lifestyle only. I would plan to own property in Canada as a safety net…..with unrestricted ability to return ( so don’t rent out…otherwise where will you stay when you have to return?) You need better personal planning over the long term…..a balanced portfolio is just one aspect of a fully planned retirement portfolio…..real estate is a must have item for retiree’s imho….if for nothing else but peace of mind. f you can’t have it all….you’re not ready to retire yet.
#131 Yo
My situation, variable salary last 3 years average = $230K, spouse makes $81K fixed.
We have about $600K in non-registered investment.
$600K earns about 6% in last 5 years, so we have about $25K income from invetsment after tax, we are not taking out return, but re-invested.
I own 2 R/E properties, bought in 1994 and 1996, good long term tenant, about 60% of market rental amount, 2 condos are self-served.
OK, we got pre-approval from big banks we can get up to $1.8MM mortgage (!).
We are renting 2 storey house in nice neighbourhood for $3,400 / month. Utilities + insurance about $300 ~$400 month.
If we buy similar house we are living now, Our D/P is at least $400K D/P, and still need to borrow $1.4MM. (!!)
Yes, we are going to dry up financially if we do that.
Property tax and repair (1~2% of property value), add $2~3K / month.
This is property in high-end neighbourhood, but considering our income and D/P, we might be close to be deserve to own, but from this point, no.
Same for couple who makes $70K fixed, spouse makes $45K both full time (pretty well off average couple in their 30’s ~ 40’s in BC), D/P with $50K for example, can barely afford decent R/E property for 2 children family in 1 hour from Vancouver core area.
This is very insane.
By the way, the big bank we talked to, offered us 30Y Amortization. They said it is still qualifies for “non-CMHC”, “within GDS/ TDS applicant” with “good credit”.
She said there is a rumour this 30Y amor – each banks’ descretion base – may be withdrawn as of Jan-2014 (so hurry! – lol)
You demonstrate half an understanding as to point out and treat a symptom, but fail to properly diagnose the disease MV + M1V1 = PT
http://en.wikipedia.org/wiki/Gresham's_law
Gresham’s law states that any circulating currency consisting of both “good” and “bad” money (both forms required to be accepted at equal value under legal tender law) quickly becomes dominated by the “bad” money. This is because people spending money will hand over the “bad” coins rather than the “good” ones, keeping the “good” ones for themselves. Legal tender laws act as a form of price control. In such a case, the artificially overvalued money is preferred in exchange, because people prefer to save rather than exchange the artificially demoted one (which they actually value higher).
So a coin with silver in like say a 1968 dime is worth how many paper dollars?…. yet in 1968 it was worth a dime. I can see the DOW in excess of 30,000 because standard GAAP for corporations are adhered to compared to say the shares of the U.S. government… U.S. Dollars
http://coinapps.com/silver/coin/canadian/calculator/
so the Chinese (and no one ells for that matter) are no longer buying U.S. Treasuries… buy the Fed is…. Is that not….
===========================
On another note:
OTTAWA INTENDS TO SIGN A TREATY WITH THE EUROPEAN UNION THAT WILL COMPROMISE PARLIAMENT’S ABSOLUTE POWER OVER MONEY AND BANKING. THE TREATY WOULD TIE US TO THE KIND OF PERPETUAL AUSTERITY THAT THREATENS EUROPE. TO SIGN IT WOULD BE AN ACT OF TREASON!
http://www.victoryfortheworld.net/
Yeah, right. And free trade with the US meant we’d lose our water. Now, if we only export stupidity… — Garth
#4 – “woo hoo: 0.85% renter! Anyone else in the club?”
Yes, I am a renter in the 0.85 club, in fact I am in the elite 0.005 club – Beat that!
#131 Yo on 10.18.13 at 2:09 pm
Comes down to expenses. I doubt many/most in McMansions make your money. Outside of their biggest lavish expenditure they are probably taking very few or cheap vacations, very rarely eat out, buy used, non-extravagant cars, don’t buy groceries at Yuppie grocery stores, aren’t rotating through new wardrobes every few months and hence not throwing out garbage bags full of clothes several times a year etc.
#100 Stoopid Idiot
Please spare us John Williams’ bleatings on hyperinflation. A certain loony fringe has been predicting hyperinflation forever. In fact, John Williams himself has been predicting it forever. I’ve recently shown here that the US can balance its budget and pay its debts. Neither you nor John Williams have brought any facts to the table showing otherwise. And his shadowstats is a joke. he just adds a constant to the US government’s official inflation number every month. He’s been thoroughly debunked, should you care to look.
“I’ve worked at Nexen, EnCana, Cenovus, Devon and others, never heard of any work being done elsewhere.”
Doubtful. All of those named companies (and more) use EPC’s for the bulk of their needs. The EPCs are actively engaged in the outsourcing, whether to their other offices, or to offshore partners.
CC:
You keep going on and on about how everything is done elsewhere, I’ve worked at Nexen, EnCana, Cenovus, Devon and others, never heard of any work being done elsewhere. If there is some fab being done elsewhere it’s likely that we don’t have the manpower or expertise to do it here, everybody I know is making at least 100k downtown.
You have disqualified yourself… I’m looking at Banker Hall wondering where you’ve gotten your facts. Everyone… 100K..? silly boy. Where was Kearl Lake module’s built? Or their expansion for that matter? Where’s Fort Hill’s been built? Hell CC where was Opti Nexen built? Stop been silly. Ledcor’s Edmonton South Yard, Blackfalds are the only yards that have built for smaller project In the last five years, Laraciana? No clue. Voyageur was? Sunrise?… CNRL?… stop making the West look silly. Confine your statement to that in which your qualified to speak on…. That goes for you to Ralf. Just a thought…. If the work is not performend overseas how do you account for oversea workers at CNRL or Husky Sunrise… may be just demographics but I’m sure they’re not buying Canadian realstate
Well said old man # 125
#126 Old Man. Thank you for your reply (re: #121)
I have about $100K for investment purposes (TFSA & RRSP). I’m realizing that although Garth suggests a 1% fee-based advisor, they are impossible to find. Apparently there are compliance issues with advisors and that is the reason for the absence of fee-based advisors(?). I would trust Garth with my money, but I do not have enough $ for that. I need help to get to that point. My dilemma now is do I go the route of DIY or do I pay an advisor who has a hidden agenda (i.e. sells mutuals funds, insurance etc). Argh.
For over100 years before 1913 there was no Fed and no taxes, and in that time USA built up to being the nation to replace UK in very short order.
Today when folks stand up against more debt and money printing they are called the wackos.
Welcome to the new world.
HYPERINFLATION
Mark at 132 responded to me that:
“Bond prices collapse in hyper-inflation, house prices should soar.”
Nope. Houses are priced off of bonds. House prices won’t soar in hyperinflation except insofar as their utility as firewood. In various hyperinflations, ie: Weimar Germany, houses sold for mere pittances. As nobody was able to obtain credit to buy them. Entire apartment blocks for an ounce or two of gold in Weimar Germany.
*******************************************
I would hazard a guess that the Weinmar bonds remains fairly worthless but that houses and apartment blocks soon recovered in value.
The guy who bought an apartment block for a couple of ounces of Gold made out like a bandit I am willing to bet. The fool who took the Gold, not so much.
Houses have utility as living spaces of course. that remains hyperinflation or not.
Anyhow there will be no hyper inflation and it will continue to suck to be a doomer.
S&P 500 pffft 23% for the year lol that’s a joke the venezuela stock is up 451% over a year
http://www.bloomberg.com/quote/IBVC:IND
Allow me to take a tangent, on today’s post, please.
I am wondering if there are MORE folks that are struggling than we know, by the ‘stats’, published by the Gov.
I am noticing people at my local grocery store, usually boomer, or older, with tiny food orders. People buying food with ‘best before dates’ passed, and other small items.
It gives me pause. This is in Vancouver’s West End (high density – multi levels of income etc) and it seems like stores are very much quieter and only the liquor store seems busy.
One more: My therapist told me that 75% of his sessions are with people with MONEY stress issues. I was shocked.
The times ahead are a time to pay attention, and I suggest our genial host is a very able Captain, and with his skill, maybe can help keep more people off the rocks.
To #137 Garth says:
Yeah, right. And free trade with the US meant we’d lose our water. Now, if we only export stupidity… — Garth
__________________________________________
Well, they need MORE water…
#125 Old Man
"but how does one rationalize the history of Canada after WW2 which made it great"
That was a time when governments were i) spending vast amounts of debt on military and union wages ii) income tax was low and iii) less red tape that didn't discourage and control one from opening up a business. Today the union movement is dead, personal taxes are high, CPI is understated (eroding one's purchasing power) and small business is declining from mega corporations taking over. Ever notice how they design communities now? A few banks and big box retail outlets with no small commercial units anywhere to be found. It's all pre-planned by developers and designed so that you keep giving your paycheck to big corporations.
As for immigrants, I feel bad for those coming abroad because they're being duped by our government and immigration lawyers who are selling Canada like it's Disneyland with flying unicorns, when really their intention is to accumulate more debt slaves to avoid a recession or housing bust.
Below is an example of what you'll find on Chinese microblogs when searched on local search engines (not government-controlled Google)
Canadian Immigration Various Welfare Details [Translated]
Apparently, almost everything is free in Canada. So if you buy a house and work a little bit, the rest can be paid by taxpayers.
Alberta and China sign non-binding energy development deal.
http://www.ctvnews.ca/business/alberta-and-china-sign-non-binding-energy-development-deal-1.1503039
#128 :):( Ying Yang on 10.18.13 at 1:48 pm#
38 Smoking Man on 10.17.13 at 9:40 pmReal life and death issues here at ranch.No comments tonight. Sorry fans.Keep cool buddy, was getting dragged to Casino by my girlfriend tonight was goi ng to see if we could finally buy each other a beer. Hope all is OK in Smoking Man Land? We wish you well.
………………
All is well now, nothing 15k can’t fix.
Unfortunately do to this event being very real, affecting some one I care deeply about, will not be sharing. For there protection, if it was me in the same shoes, you would all know about it.
I heading over to the cottage, see you if your their.
@ #138 Renter in an even smaller group on 10.18.13 at 2:44 pm
#4 – “woo hoo: 0.85% renter! Anyone else in the club?”
Yes, I am a renter in the 0.85 club, in fact I am in the elite 0.005 club – Beat that!
——————————-
Is that a blood alcohol reference?
If not – congrats, and I must say that I do not understand how you have enough time on your hands to read this blog if you are one of the 1750 richest people in Canada.
(0.005% x 35M = 1750)
At least we know you aren’t a billionaire, since that would put you in the top 67:
http://en.wikipedia.org/wiki/List_of_Canadians_by_net_worth
But, you likely make more than $2M/year, since the cutoff for the top 0.01% is right around $2M annual income (2010):
http://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2012/01/Canadas%20CEO%20Elite%20100FINAL.pdf
.85% of Canadians are millionaires? Let me rephrase that as having 1 million to invest.
Certainly any sharp moron can have a million or so in a home and no equity. Here, we call ’em TEXANS or, all hat and no cattle.
Curious if it will be THAT hollow and cold a future for a lot of my fellow Boomers who prepared not. I don’t know, they sure live well right now… but I am not keeping count of their cattle, only my own.
We just do not fully know.
@ #131 Yo on 10.18.13 at 2:09 pm
Another thing that makes things smell off. I have about $500K invested in the stock market, rent a town house for $1850 and make about $100K a year. When I look around at houses to buy in GTA, I still would have to take at least a $300-500K mortgage just to get something decent for my family in Toronto. And I would be stretched to save much even at my salary if I did that. I basically would have to eat peanut butter sandwiches even though I have $500K to put down and make $100K just to stay with the crowd to own in Toronto. It does not add up.
—————–
Correct – no housing math in Toronto adds up.
(unless you are the developer buying bungalows at $800,000 and selling McMansions at $2M)
services / contracts
17 states were unable to use their electronic food stamp debit cards due to glitch!
http://truth-out.org/news/item/19481-food-stamp-outage-highlights-problems-with-privatization-of-public-services
http://www.inthepublicinterest.org/case/indiana-public-benefits-eligibility-system
http://www.sourcewatch.org/index.php/Affiliated_Computer_Services,_Inc
http://online.wsj.com/news/articles/SB125003802691324435
“engineer-procure-construct”
http://www.sourcewatch.org/index.php/CH2M_HILL
I’m XRE-ally happy today! lol
Facebook stock at $50, wow. 4 figures P/E ratio, nice dot com level nostalgia going on.
Rick has his money invested in Canada but spends the income in Mexico. — Garth
Which means he is a deemed Cdn resident for tax purposes; and could very well be paying both Canadian and Mexican income tax as well as missing out on the free Alberta medical care. Not to mention Goat’s Eye skiing.
Housing is another story of course…
“I would hazard a guess that the Weinmar bonds remains fairly worthless but that houses and apartment blocks soon recovered in value.”
Nope, the housing was impaired for a very long time as the capacity of the economy to pay rent or engage in finance contracts was impaired. Investment in industry, later needed for the war, had dramatically better results.
DELETED
Yeah, right. And free trade with the US meant we’d lose our water. Now, if we only export stupidity… — Garth
Arrow Lakes
My personal experiences, med to large size cities in Mexico, there are very good medical doctors available for reasonable fees also there are good emergency care.
Canadian medical doctors maybe superior in blood cancer treatment, children / youth disease care, diabetic research, etc.
The Government is Broke
http://www.youtube.com/watch?v=1AcrnX1LrR4&feature=c4-overview&list=UUB1o7_gbFp2PLsamWxFenBg
The Next Event
http://www.youtube.com/watch?v=30LQyFj5FYM&feature=c4-overview&list=UUB1o7_gbFp2PLsamWxFenBg
Watching that will liquify your internal organs. — Garth
#73 1 Mil is Nothing: “For all practical purposes the work has little value north of the border – that’s the predicament that makes me feel poor….”
********************
Rather than feeling ‘poor’ perhaps you feel ‘unfulfilled’?
@154: I’m not totally sure. Just for fun I went to mls and browsed through 416. I could actually find some decent looking townhouses/condos between $100K and $250K although these were in areas of somewhat ill repute: Galloway park, Jane/Steeles, Victoria Park, etc..
Is it bad of me that my first thought was: this is my golden opportunity to become a slum lord.
Mind you they probably still make way more sense to buy than the $500K shed that one can buy elsewhere in the city..
To #152: Most individuals in that bracket did not generate our wealth through being employed, but by being entrepreneurs. Canada should encourage enrrepreneurship and, directly related to that, innovation, without us the Canadian economy will go to hell in a handbasket. I fear it is too late, alas. Once the housing bubble is bursting for good, Canada will have nothing to make up for it. So, am I going to buy a house in the current climate? Hell no!
Renter in an even smaller group on 10.18.13 at 2:44 pm
#4 – “woo hoo: 0.85% renter! Anyone else in the club?”
Yes, I am a renter in the 0.85 club, in fact I am in the elite 0.005 club – Beat that!
——————————-
Is that a blood alcohol reference?
If not – congrats, and I must say that I do not understand how you have enough time on your hands to read this blog if you are one of the 1750 richest people in Canada.
(0.005% x 35M = 1750)
At least we know you aren’t a billionaire, since that would put you in the top 67:
http://en.wikipedia.org/wiki/List_of_Canadians_by_net_worth
But, you likely make more than $2M/year, since the cutoff for the top 0.01% is right around $2M annual income (2010):
http://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2012/01/Canadas%20CEO%20Elite%20100FINAL.pdf
The Prophet Elijah: Good video posted today by Peter Schiff
it is good: “I was totally confident that President Obama would choose Janet Yellen because she was the worst choice”. Peter Schiff does a very good job of researching Janet Yellen’s public pronouncements in 2005 and 2006 showing that she did not sound the alarm and in fact found one reference where she herself admitted that she did not know what was coming. He then goes on to reference interviews he himself did where he did sound the alarm. In these interviews he was mocked and ridiculed for predicting that house prices would dramatically fall.
Again and again Garth has shown us a chart which shows that as the Americans debt to income has gone down, the Canadian debt to income has gone up. If anything like what happened in the States happens in Canada we are in big trouble and my question is “how could it not?”.
Old Man #125
Typical comment from a Cultural Relativist.
#140 Ralph Cramdown
The first thing one needs to understand about CPI is its purpose. It is NOT to measure any increase or decrease in prices, rather a measure of how much an individual would need to increase or decrease spending to keep pace with a standard cost of living. That is the proper definition defined by statisticians.
Secondly, rising prices is a symptom of inflation, and not inflation itself. Inflation can happen without nominal or quality-adjusted prices rising, simply by reducing the quality or quantity of an item, i.e., a few years ago one could buy 200 grams of yogurt for $2.99, while today it's the same price for 100 grams (the old kid sized cups). That's a 100% increase, but hardly noticeable to the consumer who is more likely to pay more and eat less. How about banking fees, now $2 from $1.50 (+25%) for withdrawing money at a non-customer ATM machines. It's the small items where consumer get hit the most.
Yes you're probably laughing and saying that's just nickels and dimes, but that is exactly how consumers get pillaged by inflation. It's not the price, it's what you get for it. I don't think anyone who does food shopping can disagree that what we've seen over the five years is product shrinkage and lower quality to keep prices affordable. Companies can only shrink or reduce quality by so much until they're forced to raise prices. That's the point we're at now.
Then there's the other issue who is tracking prices. What non-government data do anti-inflation heads have to disprove high-inflation? I'd like to see that.
#56 Happy to be ignorant:
So your money grew at 4.14% annually. How much did you pay this large professional firm to get you 4%? How much did they lose in the financial crisis? I’m pretty sure my parents were buying GIC’s in early 2000’s that paid 4% or 4.5%.
But hey, if that makes you happy, all the more power to you. 1.8 million, even minus taxes, is plenty if you live a simple life.
Why would you want that? — Garth
Quote: ” They’re buying a house for $780,000 – just like the one they live in now, and there isn’t a single rational argument to support the decision.”
Answer: the rational argument to support the decision is this: IF YOU DON’T, SHE WILL DIVORCE YOUR BUTT then take you to court to make you pay CHILD SUPPORT payments that will probably be MORE than the mortgage payments on that house.
Lesson: Don’t get married, not these days.
#133 LP: “however, somedays I could just scream when a seemingly tiny little job that requires only a few moments attention (I think) remains on the list.”
*********************
Or…the project goes as planned. But stops short of never quite getting completed. Maybe it’s resistance? I was never a nagger, so I never figured it out. LOL
#163 Daisy Mae on 10.18.13 at 7:33 pm#73
1 Mil is Nothing: “For all practical purposes the work has little value north of the border – that’s the predicament that makes me feel poor….
”********************
Rather than feeling ‘poor’ perhaps you feel ‘unfulfilled’?.
………….
Old man was right be afraid, very afraid..
The show must go on – Roger Waters
China is making a move againg the US dollar
http://www.zerohedge.com/news/2013-10-18/9-signs-china-making-move-against-us-dollar
Sure, right. And how many of them does China own? — Garth
Meanwhile in Victoria, a $1 bil development project goes bust
http://www.timescolonist.com/group-behind-1-billion-colwood-project-files-for-creditor-protection-1.664541
Ladies and Gentleman,
What were are watching is a classic Greek drama:
The Protagonist (Ralph Cramdown) vs the Contagonist (Canadian Watchdog).
Cast your vote.
My vote goes tooo (drumroll) Canadian Watchdog.
Halifax Initiative in Canada have just launched this new tax justice resources site.
the vicious cycle of capital flight undermining investment and growth, leading to deeper debt which precipitates further capital flight.
http://www.halifaxinitiative.org/node/3423
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labeling wars
On Wednesday, Washington Attorney General Bob Ferguson filed a lawsuit alleging that the Grocery Manufacturers Association violated the state’s campaign finance laws by failing to disclose the sources of its $7.2 million in contributions to No on 522, the main group campaigning against the labeling initiative.
Also take a look at Peter Gillespie’s essay on the trouble with tax havens.
“REITs and preferred shares will be moving up, since they’re still trading at a serious discount to last Spring.”
This is probably a dumb question, but when you say “last spring” do you mean spring of 2013? or spring of 2012?
Thanks