An awkward romp

ROCKS1

“I went to a networking event last night and I was cruising the room chatting with people about everything under the sun,” says Stu, gratuitously, “until I hit the mother load!!

“This guy I’m talking to, fairly high up in his company, makes good coin, and were chatting about investing. The guy flat out tells me, and a couple other people, that he invests in his mortgage! I say oh u mean pay down your house, he says no it’s an investment…that I can guaranteed get 20-30% ROI. BAM!! Well my jaw drops… Seriously you think you’re guaranteed 30% on your house??

“Star wipe to 5 mins later, he’s explaining a junior bright-eyed bushy-tailed newby to the real estate investing world, who had a situation where he contemplated paying 60k over asking and the seller had a condition that he could not get a home inspection!! Any sane person would tell the seller to cram it with walnuts… But brainiac from above tells him, “ya you know in a market like this you gotta get your hands on a property and wait for the $$ to roll in!!” SERIOUSLY!!!???? Would you invest $500,000 in Apple if they refused to open up their books??? Me thinks NOT!!

“Just figured I’d share with you my aneurism from last night due to people’s ignorance!”

Now, aren’t you glad you don’t know anybody that Stu hangs with? Or maybe you do. Because it seems the real estate death wish is alive and well among an entire generation. Yup, those GenXers are working hard to morph into their Boomer parents. They’re now at a point in their lives and careers when they can borrow huge amounts of money, still take life advice from Mom, and will do just about anything to get a SFH.

How else to explain this?

BROOKFIELD

The Toronto row house on an anorexic 16-foot lot features stylish vinyl siding and sent the listing realtor into spasms with this feature: “Rare Front Hall Closet!”. It sits just off Queen Street across from Canada’s largest psych hospital, and lasted all of five days before being scooped up in a bidding war.

The asking price: $629,000. The selling price: $770,000. That’s right. Fevered combatants all hopped up on pre-approved cheapo mortgage money actually shoved this geriatric wobbler almost $150,000 over the asking price (plus another $23,000 in double land transfer tax). Why? It’s an almost-trendy area or, as the agent put it: “Steps To Ossington Restaurants/Shops/Yoga Studio And Transit!”

But here’s the thing. It’s a dive. Not the house, exactly (it has “Barnboard Laminate Floors & Pot Lights!”), but the location – and herein lies an important lesson. Let’s look and see what’s beside this house. Hey it’s an urban art gallery! How cool is that when you’re teaching your toddler to spell?

BROOK

And across the street? It’s a really nice building fronting on Queen called “Wicked.” Looks like some kind of a club. Hmm.

Let’s Google that and see what some of the patrons have said ‘cuz gee, Hon, you know we really enjoy grabbing a nice latte and listening to some music on a Friday night, and now that we own this great little row house we can just, like, walk on over. Yeah, I know we paid a lot, but you remember what Larry the realtor-guy said, you’re not just buying 16 feet, you’re buying an entire neighbourhood. Wicked…let’s see…here’s a review…

“We picked up a third couple and were ready to go upstairs. We reach the top of the stairs, put on our birthday suits, cram our stuff into very small locker and check the place out. Nobody is changing any sheets anywhere. We select the largest bed and start the party. We start having fun and other people take an interest, then they start getting over involved. Men touched me without asking, couples joined without being invited, my date was not spared. He was orally (not verbally ;) assaulted by an 80 year old woman and harassed by a man who wanted “a black guy” to have unprotected intercourse with his wife. Eventually my date and I find each other, have an awkward romp in a small corner of the bed and run like our someone said Fire! Oh did I mention that the fire alarm went off and there was no communication about what was going on. Thank heavens it was a false alarm because no one took it seriously.”

Yes, this is billed as a “hedonistic on-premise club” which “provides a safe, erotic environment where you can live out your sexual fantasies no matter how wild or how mild! Cutting edge music, provocative performances and weekly special events will ensure an erotic experience to remember.” You can read more client experiences here, but only if you’re currently naked.

So there ya go. Hot listing, sells for 122% of asking in a bidding war after five days, to people who spend almost $800,000 to live beside a condom-festooned parking lot across from a building full of moist mattresses. The sellers made out like bandits. The listing agent cleared almost fifty grand in commission. The bank likely scored with a massive mortgage. And a new floor’s been set for a geriatric row house on Sex Lane.

This is why the real estate market’s doomed. Oh, maybe not this month or by the end of the year, especially now that the Bank of Canada has thrown in the towel on monetary policy. Cheap money will continue to flow. Idiots will continue to buy. The premium commanded by single-family homes – now at an historic high over every other type of housing – will continue to swell and bloat like a midnight gland.

Until somebody looks up, and says Fire!

167 comments ↓

#1 The Money $aver envelope on 10.24.13 at 8:46 pm

Money $aver envelope in the mail today
Let’s ignore for a moment that this is an apratment building and let’s open the envelope and look inside:
12 flyers, here are the most relevant 6 of them
-Closets by design
-Canadian Carpet Cleaning
-High Efficiency windows, doors,
-Reinvent your bathroom
-XXXXwood Mortgage
-Carpet Cleaning again

I removed the names for most of them just not to make them more publicity
I have never seen so many home related flyiers in one bag. Is this a sign?

#2 tkid on 10.24.13 at 8:49 pm

*your logic amounts to a false premise, as parliamentary immunity prevails.*

http://www.huffingtonpost.ca/2013/08/11/raymond-lavigne-prison-sentence_n_3734133.html

#3 Ask Youself This... on 10.24.13 at 8:53 pm

Why can’t Toronto Detached prices catch up to Vancouver’s??

After all, as has been pointed out on this blog, Toronto is several times larger than Vancouver. Toronto incomes are higher as has been pointed out on this blog. Toronto receives more immigrants than Vancouver as per this blog.

Wait and see. Toronto is playing catch-up.

#4 Bigrider on 10.24.13 at 8:54 pm

Men will travel to the stars and colonize other planets before Torontonions stop humping houses.

Price correction here you thinking??? Not in any of our lifetimes

#5 TurnerNation on 10.24.13 at 8:54 pm

Dropped by here on lunchhour. A sea of gray as one would expect.
Saw up to three mortgage fund booths claiming 7-10%, including Fortress’s.

http://www.moneyshow.com/tradeshow/toronto/world_moneyshow/exhibit_hall/exhibitor_listing/?=AZ

Later a meeting at Blog Dog Lodge #2.

#6 What about Fortress? on 10.24.13 at 8:54 pm

When do we get to hear more about Fortress?

#7 Island Girl on 10.24.13 at 8:56 pm

Damn! You would have to pay me to live there. What are people thinking, and yes I lust after houses, but I am not stupid enough to throw myself on the fire to get one.

#8 Soylent Green is People on 10.24.13 at 9:00 pm

Today’s pic and yesterday… I LOVED THEM

Stubbon men… NO WE WON’T? I LOL

…………………..

Duffy’s testimony is disastrous for Harper because we so seldom get an insider spelling it out like this, an insider who had been one the party’s favourite people. The PMO might be able to poke some holes, but since Duffy’s lawyer claims to have documented evidence, it might not be easy.

http://www.ipolitics.ca/2013/10/23/the-duffy-affair-the-record-speaks-for-itself/

.

#9 JayBee on 10.24.13 at 9:03 pm

I don’t know about the house; but that club sounds freakin sweet!

#10 gtaguy on 10.24.13 at 9:07 pm

Had no choice but to finally buy a property. About 45% down and 2700 sq feet in and 8 year old Burlington detached house with double car garage. For about 600K I fell like a bloody genius compared to this poor fool.

Who the heck would want to invite any friends over to see that dive anyways? Guess it depends on the company you keep I guess.

#11 sheane wallace on 10.24.13 at 9:11 pm

This lunacy will most likely end with complete destruction of the value of certain currencies.

The reason to save is non existent, capital is being depleted by insane fiscal and monetary policies.

If this goes for another 3-5 years as indicated – large deficits, significant currency creation, zero interest rates and miss-measured inflation then we are doomed.

Considering the end game with the ultimate destruction of the value of the currencies buying a home and able to handle the payments in high inflationary, low interest rate environment might sound like a good deal.

#12 Smoking Man on 10.24.13 at 9:11 pm

This is why the real estate market’s doomed. Oh, maybe not this month or by the end of the year, especially now that the Bank of Canada has thrown in the towel on monetary policy. Cheap money will continue to flow. Idiots will continue to buy. The premium commanded by single-family homes – now at an historic high over every other type of housing – will continue to swell and bloat like a midnight gland……..

………..

Ha, my crystal ball isn’t to shabby, been saying this for years.

Now if only I had a gland that was a bit more reliable…

You can’t have it all….

#13 Shawn on 10.24.13 at 9:13 pm

On the Fence

I will hold off having an opinion on this matter until we hear from Call Girl.

#14 Toon Town Boomer on 10.24.13 at 9:16 pm

flippin unreal what people will buy

#15 Freedom First on 10.24.13 at 9:19 pm

Wow! I mean WOW! $770,000! I was going to say some people have more money than brains, except that we all know the average personal debt load for Canadians.

Some mistakes will stay with you forever. I have lost track of how many people have told me about their past life ruining mistakes, saying “How could I have been so stupid”. Many Canadians are still unaware that to the rest of the world, our economy is flashing: “CANADA, DANGER! DANGER! slowing economy with high consumer debt loads”. We are making headlines in foreign newspapers, as well as hearing repeated warnings from the IMF. They talk about Canadians having learned nothing from the world wide financial tsunami that they have experienced and are mocking us. Garth has informed us of everything I just wrote in his blog. Reminds me of a famous quote: “A man convinced against his will, is of the same opinion still”.

#16 Franco on 10.24.13 at 9:19 pm

The old rules of RE just do not apply anymore, people are willing to put over half their yearly income into mortgages.
If the RE market has not crashed in Vancouver, why would it crash here in Toronto?

#17 Chickenlittle on 10.24.13 at 9:22 pm

#9 Jaybee:

NOOOOOOOOOOOO!!! It isn’t and they aren’t!

I took a second job as a coat check girl at a place that shall remain nameless, but exactly like “Wicked”. It’s not all lingerie models and jocks believe me.

I had a good laugh the first night at all the losers that needed to go to a place like this to get any action, but then I realized that I am associated with that filth just by being there. I left after 2 nights.

My favorite people were the 400 pound woman and the 80 year old man. She was hilarious and he was quite the player.

So unless you’re into big-boned women, old guys, and penicillin then don’t bother.

#18 Julia on 10.24.13 at 9:23 pm

I have a meeting tomorrow across the street at what still is Canada’s largest psych hospital, unless we’ve built a bigger one somewhere. I think I’d rather live in one of the new CAMH buildings than in that house. A lot cheaper too, just need a form one.

#19 do i should sell on 10.24.13 at 9:25 pm

Garth undoubtedky u are wise. But using your logic

explains why the metals wil roar. because as u say
the bankers will keep rates low forever. the confidence
in paper money is nill. the cost of it is in the hands
of criminals.

#20 Nemesis on 10.24.13 at 9:26 pm

Damn! William S. Burroughs’ got nothing on you, AuldPol!

NakedLunch, indeed.

I’m actually jealous.

#21 mark on 10.24.13 at 9:26 pm

If you had to pay 700k+ for that garden shed, why wouldn’t you just move to somewhere that you could buy a mansion for probably half the price.

#22 Realtor # 1 on 10.24.13 at 9:26 pm

not this month or by the end of the year, especially now that the Bank of Canada has thrown in the towel on monetary policy

Are you inferring that “next year” there will be a crash

This is just getting embarrassing. I thought 70% ownership would bring it down or baby boomers retiring
And flooding the market with listing.

#23 Victoria Real Estate Update on 10.24.13 at 9:30 pm

The upper end of the single family home market in Victoria has declined 10.7% from the peak (reached in 2010) and is basically at the lowest price point since the peak. The upper end of the SFH market is made up of Oak Bay, Saanich East and North Saanich.

. . . . . .Percentage Price Decline From Peak (3-month median) . . . .
. . . . . . . . . (Oak Bay, Saanich East and North Saanich) . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 3.5%. . . .X. .X. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 4.0%. . . . . . . . . .X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 4.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 5.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 5.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 6.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X . . . . . . . . . . . . . . .
– 6.5%. .X. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 7.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X. . . . . . . . .
– 7.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X . . . . . . . . . . .
– 8.0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 8.5% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 9.0% . . . . . . . . . . . . X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 9.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X. .X . . . .
– 10.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . .X . . . . . . . . . . . . . . . . . . .
– 10.5%. . . . . . . . . . . . . . . . . . . . X . . . . . . . . . . . . . . . . . . . . . . .X . .
– 11.0%. . . . . . . . . . . . . . . . . X . . . .X . . . . . . . . . . . . . . . . . . . . . . . .
– 11.5%. . . . . . . . . . . . . . X . . . . . . . . . X . . . . . . . . . . . . . . . . . . . . . .
————————————————————————————-
. . . . . . . M J J A S O N D J F M A M J J A S . .
. . . . . . . . . . . . . . 2012. . . . . . . . . . /. . . . . . . . . . 2013. . . . . . . . . . . . .

The lower end of the SFH market in Victoria has declined 14.2% from the peak and is now at the lowest price point since the peak. The lower end of the SFH market is made up of Esquimalt, Sidney, Colwood, Langford and Sooke.

Canada’s housing bubble is much bigger than the 2006 US housing bubble.

There has never been a bubbly housing market that has gone through a soft landing. Canada’s housing market will correct substantially.

Girls and guys, house prices continue to decline in all areas of Greater Victoria. Renting for now and waiting for the housing market to experience more significant price declines before you buy is a no-brainer.

Until next time – Cheers!

#24 David Fitzpatrick on 10.24.13 at 9:31 pm

I disagree with calling the location a dive. Maybe that was true in the mid-90s, but today this is one of the most sought after areas of the city.

#25 Mr. Frugal on 10.24.13 at 9:32 pm

Torontonians are nuts! You could buy two good houses in Bolton, Orangeville, Halton, Guelph or New Market for that price. But then I guess that would be two “boring” for these folks. I can do without that kind of excitement. They’d better have body armour and a good supply of pepper spay for when they take out the recycling after dark.

#26 Ron on 10.24.13 at 9:34 pm

I’ve given up thinking there will ever be a correction in Vancouver RE to a level that is reasonably affordable. Too many people moving there. Wish I had bought a few years ago but this blog made me believe a big correcton was coming soon so I held off. Too late now. Thanks for nothing Garth!

#27 [email protected] on 10.24.13 at 9:34 pm

maybe the buyers are regulars there

me i go to da keg for red meat.

#28 pinstripe on 10.24.13 at 9:37 pm

Potential buyers who waited for a big drop in price for a house have lost a lot of money.

Low interest (cheap) money will be available for a long time.

Any attempt to educate most potential buyers is a waste of valuable resources.

All real estate sales people are pushing their service but only a few know how to sell.

#29 Observation Post: GTA on 10.24.13 at 9:37 pm

The 905 has some listings for “specious houses.” Maybe that one is specious, too.

#30 Habbit on 10.24.13 at 9:39 pm

So as long as there are low rates the insanity continues? Course no one can predict it. LOL

#31 Retired Boomer - WI on 10.24.13 at 9:41 pm

Fun times in Dreamland! While this can continue ad nauseum, I have no doubts that when it ends, it all end with quite the THUD!!

I look around, I see stagnant wages, COLA formula’s being revised (to screw the recipients’s), and a slowly healing US economy, relatively flat earnings, flat to declining forecasts, coupled with an ill-advised monetary policy!

So, where is the growth to come? Inflamed glands?

At a juncture of self imposed destructive impulse by one of our 2 lame political fronts, no prospects for a third, fourth, or fifth alternate, the best amusement to be had is the inane antics of the northern neighbors!

I need a life!

SMOKING MAN, try those little blue pills might help the gland problem.

#32 Mr. Monday Night on 10.24.13 at 9:46 pm

Gross…but RE’s still local. Obviously it’s different in Toronto, where salaries are apparently sky-high and rising.

Try getting someone looking for a house in the North Shore of Nova Scotia to pay over asking, ain’t happening. Lots of deals still to come, if people’s jobs aren’t chained to a major market.

Can’t find a buyer at your asking price, and can’t find a renter at your asking price…just how long CAN you hold out?

#33 dienekes on 10.24.13 at 9:47 pm

They deserve it. But of course, it’s backed by CMHC. Maybe it’s time to move the money out of the country, and move to the balkans for seven years.

#34 Pr on 10.24.13 at 9:48 pm

Its the first time this year that i laugh that much. Thanks. Canada real estate mania.

#35 lawboy on 10.24.13 at 9:48 pm

$770k. Unreal.

I live in the neighbourhood and have walked by that listing….meh. It doesn’t look in very good shape (ie cheap concrete front steps that are a bit uneven) and its depth is almost as narrow as its width. I thought $629k asking was ridiculous, but about right. Sad that people have so little common sense and rationality. How many better things are there to spend that much money on!! Ten years ago that place would have fetched maybe $200k!

#36 Sideline Sitter on 10.24.13 at 9:50 pm

$770K… wow. any row house within puking distance to queen is a dump. these were built poorly for poor people about 100 years ago.

I have a few old Toronto maps. Back in the 1890s it was called “Lunatic Asylum”.. looks like it moved a couple blocks, exactly where this house sits.

I understand why they bought it. The neighborhood is gentrified – two starbucks within 400 meters (one has some of the spicy ‘locals’ haha), and I’m sure they think “hey, it’ll only go up as the city keeps growing”.

problem is, you could buy a block away, in a semi, for the same price. this is just RIDICULOUS.

most important, for the blog dogs that read my posts from the other day, I GUARANTEE the price bid was done by some amateur agent. $120K over? damn.

#37 Ahead of the Curve on 10.24.13 at 9:52 pm

C’mon Garth,

Maybe they want to live where all the action is :)
Look how much they will save in commuting by virtue of living across the street from their favourite spot. Plus, this house has a front hall closet…

hahaha… some people are way too funny!!!

#38 Number #1 thinker on 10.24.13 at 9:54 pm

“#22 Realtor # 1 on 10.24.13 at 9:26 pm

not this month or by the end of the year, especially now that the Bank of Canada has thrown in the towel on monetary policy

Are you inferring that “next year” there will be a crash

This is just getting embarrassing. I thought 70% ownership would bring it down or baby boomers retiring
And flooding the market with listing.

When will you ever learn that it takes time for things to happen and there are happening right now…you as most of the deluded will ride the wave right to the end…right into the rocks. Vancouver Island is dead, and that is where all the retirement folk with money are currently living. Houses are being significantly reduce outside the urban areas, and the urban areas are not fairing well either. No substantial amount of new building and this in areas where the per capita millionaires is very high. The Conservatives our trying to make it to the next election without the Country being awash in middle class anger when people realize their true situation. History repeats and sadly only some humans progress.

#39 Sideline Sitter on 10.24.13 at 9:59 pm

#25

first, you’d have to LIVE in those cities (shoot me)
second, what’s the gas, insurance and depreciation (or transit) add to that daily commute???

I rent in a rather posh neighborhood downtown, for less than the “average” price per sqft, and ride my bike to work… all it costs me is calories.

#40 mac on 10.24.13 at 10:02 pm

Why do you ask ‘how else to explain this?’ when you’re not open to hearing the other explanations?

#41 Renter's Revenge! on 10.24.13 at 10:03 pm

Realtor #1:

No crash, just a boot stamping on a homebuyer’s face – forever.

With apologies to George Orwell.

#42 Old Man on 10.24.13 at 10:04 pm

The property is located on Queen Street West which is where the psycho hospital is located as dated a nurse there years ago, and she was a wild one.

#43 BG on 10.24.13 at 10:07 pm

Fools will keep on buying means the market will keep on getting irrational.

I’m not an expert at all, but this sounds like the correction will have to be more brutal.

#44 Shawn on 10.24.13 at 10:09 pm

31 year old House Torn Down

Here in Alberta (Edmonton area) our neighbors of 18 years (see some people do stay put) just today (and yesterday) had their 31 year old house torn down. The place looked perfectly fine from the outside. A standard looking two story with vinyl siding. Apparently the layout was not the best.

They like the street so tore the house down and will build a larger home. (Though the lot is pretty small) Tore it out completely foundation and driveway are gone. Just a hole in the dirt is left.

Would have been surely cheaper to sell that place and build new close by. But, not too many lots close by, so they tore the place down.

They run a small insurance brokerage office and have for years. (Thought of torching it for the insurance money must have crossed their minds, but …)

I have never witnessed a perfectly decent house being tossed tot eh garbage heap… It does go to show that much of the value is in the land/location.

#45 Waterloo Resident on 10.24.13 at 10:11 pm

Mortgage rates are slowly going down to 1%.

Might take 3 or 4 years, but slowly rates will go down, and home prices will double.

(yes, the meds are working really nice, thanks.)

#46 Entrepreneur on 10.24.13 at 10:14 pm

It is a lot easier to borrow the money then it is to pay it back. The real estate agents are good at knowing what to say to the customer. Reminds me of a fairytale story.

Debt: In the last 40 years we have been conditioned to believe that having debt is rewarding. It is getting worse. As one can see in the real estate, credit cards, vehicles, etc. Our society has that “look at me” image and the customer have their own reason to borrow.

When hearding a crowd into one way of thinking does it mean that the leader is right? Obviously not as so many people are living pay cheque to pay cheque. The young couples are opting out on having children to maybe one.

My grandparents had ll to 13 on each side, my parents only had 7, we all only had 2 each, now out of that only one but mostly none. People are saying that having kids are too expensive.

By being disrespectful to new buyers we will be paying for it in the end. You may be selling your house at a high price, real estate agents have pretty nice salaries,
the banks have customers; your wheels are turning.
Your wheels, not everyone as the smart ones are on a different page.

#21 Furio: The only think we have to fear is fear itself.

I believe in that statement but replace the second “fear” with “greed”.

#47 renters rule on 10.24.13 at 10:15 pm

I rented in a pretty nice hood in montreal about ten years ago; St Andre and Maisonneuve. Place was great (4 1/2 sous sol in a 100 year old stone building, exposed brick, fully renovated, etc) — $400 a month, steps to Berri UQAM metro… BUT across the alley from my place, was a club frequented by folks from Montreal Nord who were not Italienne (les montrealais can do the math on that). Anyways, bar was dead 6 nights a week, but Sundays, from midnight til about 4 am….. awesome loud music, you know, bounce you around your apt with vibration, dance music, lots of arguments and fights outside the club, not to mention on my little terasse: barf in the snow, stabbings (blood in the snow) and even sexual assaults (yes, I was a nerd and called the police and had to be interviewed etc)…. quite the eye opener for a west van girl who had never lived anywhere “weirder” than the west end.

Point of all this being: never, EVER live within 2 blocks of any kind of club, unless you are into “the life”, as you will have no peace (even if it is only one night a week) and lots of concerns.

#48 Vamanos Pest on 10.24.13 at 10:19 pm

#26 Ron
Thanks for that, you were just vague enough to make it obvious you’re actually a realtor trolling the blog. You deny it? Ok, what was you’re budget in 2010? How did you invest the down payment? How much more have you saved since? What is you’re budget now?

It’s not that you’re lying (although you are) it’s that you are so obviously lying that it insulting.

#49 Ripped on 10.24.13 at 10:21 pm

I assume the 80 year old took her teeth out.

#50 HAWK on 10.24.13 at 10:23 pm

#21 mark on 10.24.13 at 9:26 pm

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

Ah but a large garden shed in the midst of the teeming metropolis that has JOBS may hold better value than a McMansion way way far out in Surburbia.

Besides in a sexed up world, is a yuppee type gonna find a castle in the back of beyond and middle of nowhere more cool than being in the center of it all where they can at a stone’s throw get their cappuchino, frappuchino, moccachino, maccaiato………………. :-)

#51 Cow Man on 10.24.13 at 10:24 pm

Amigos:

When every one of Garth’s readers say “cheap money will last forever” the end of cheap money is probably near. Remember it is not the BOC rate; but the Bond market that will set the housing market in a tail spin.

#52 Snowboid on 10.24.13 at 10:27 pm

#22 Realtor # 1 on 10.24.13 at 9:26 pm…

Many of our US friends and neighbours in Arizona were affected in some way by the ‘crash’ in the US. Some took it in stride, just losing a few tens of thousands of dollars – others lost their McMansions and downsized to our community.

One RE agent we know lost two investment homes to foreclosure in 2009 – they were purchased as ‘Can’t lose’ investments from a developer. He ended up declaring bankruptcy.

The previous owner of the home we purchased paid more in 1999 than we did in 2010.

It surprising how ‘matter-of-fact’ people are down here – they realize what happened and are getting on with their lives.

The economy has picked up substantially in the last year, even as prices get ‘bubbly’ from the large number of large RE investors.

From what we have gathered from our working (and retired) neighbours salaries and pensions are similar to Canada.

So let’s say the average couples’ pension is about $ 70K and the working couples are about $ 120K.

Difference here is that $ 200K will buy a good quality SFH on a large lot. Even with the cost of health-care here (most folks we know have coverage paid for), the overall cost of living is less than Canada.

Paying $ 700K plus for a 16 foot wide closet in Toronto is as bad as spending $ 1 million for a similar property in Vancouver – this cannot be sustained.

All the Canadian real estate industry (and credit agencies) is doing is going to make the ride down that much worse for home buyers.

Sadly for your industry, there are many people who realize the economics don’t make sense – but based on the Professors’ example above – there are still a few lingering Greater Fools!

#53 Bottoms_Up on 10.24.13 at 10:29 pm

What’s sick about that, even in over-priced Ottawa (15 minutes to downtown), for 100k less, you get a 3700 sqft bung, dream kitchen, steps to the River, great schools and parks (unfortunately no ‘wicked’ across the street):

http://www.realtor.ca/propertyDetails.aspx?propertyId=13382529&PidKey=682156962

#54 Young Man on 10.24.13 at 10:29 pm

OK, I give up. We have a fascist PM, unaffordable housing, massive student loan debt, high youth unemployment, six months of winter etc. Sucks to Canada, I’m moving to Belize.

#55 sheane wallace on 10.24.13 at 10:30 pm

The problem is easily solved. Just move your money from countries with deficit spending, money printing and zero interest rates to countries with growing economies, just invest in these growing economies.

As for the people keeping money in the bank.. I feel for their loss.. NOT

#56 sheane wallace on 10.24.13 at 10:32 pm

#51 Cow Man

bond market crash will mark the death of the dollar. In the next 2-3 years.

#57 sheane wallace on 10.24.13 at 10:34 pm

bond market crash will mark the death of the dollar. In the next 2-3 years.

this is a predicament. problems have solutions, predicaments don’t.

#58 "Callgirl" on 10.24.13 at 10:35 pm

#13 Shawn-
That wouldn’t be right to share personal information about swelling and historic highs.

Speaking of sexy- I convinced someone not to take out 65k in cash! from a tax sheltered product just because it was there and now available. I didn’t feel right going ahead thinking he might not fully understand what he was doing and why.

It would have caused a massive, painful tax bill in April.

Once we cleared it all up through the help of a licensed translator, he in the end traded out of an investment that had more than doubled- realized gains and added it to the RRSP balance, which opened today at over 130k. No disastrous taxable event, no locking in.

Great feeling when you see someone make a decision like that.

Then, there’s the investment in the house above.
Wow.

#59 Snake on 10.24.13 at 10:35 pm

1)Bank of England’s Mark Carney dogged by fears of U.K. housing bubble

http://business.financialpost.com/2013/10/15/bank-of-englands-mark-carney-dogged-by-fears-of-u-k-housing-bubble/

2)Reflections of a former bear: Why the economy isn’t as bad as the Fed thinks

http://business.financialpost.com/2013/10/24/reflections-of-a-former-bear-why-the-economy-isnt-as-bad-as-the-fed-thinks/

3)11 Great Reasons to Carry a Big, Long Mortgage

http://www.ricedelman.com/cs/education/article?articleId=232&titleParam=11%20Great%20Reasons%20to%20Carry%20a%20Big,%20Long%20Mortgage#.UmnPWPltjO9

#60 Old Man on 10.24.13 at 10:35 pm

I don’t mean to trash those with mental problems as that hospital is huge on Queen Street West, and is not a cool location for any Real Estate buy, as the area is the pits. Now can you imagine being an RN that has a position there working with patients like the movie called, ” One Flew Over The Cuckoo’s Nest “. She was a great date, and would say I have had enough, so lets hit the town; get drunk a bit, and afterwards we will know what has to be done. She had a very depressing job.

#61 Bill Gable on 10.24.13 at 10:39 pm

Bugs Bunny, the carrot chomping Rabbit said it best -“Maroons, I am surrounded by maroons…”.

#62 Shawn on 10.24.13 at 10:42 pm

TWO THINGS THAT CANNOT HAPPEN AT THE SAME TIME

1. Low interest rates

2. Death of dollar.

The evidence is that the world is awash in savings available to be loaned out at low interest rates.

The mega rich and the cash-rich corporations have to do something with their money, much of it is in the bank as deposits and then loaned to the poor (and to the house poor)

#63 Obvious a Truth on 10.24.13 at 10:47 pm

You would have needed 10% down and 400000 a year salary to get that mortgage in 98.

Our favourite finance minister and new governor are clearly frustrated. They know it’s too late. These credit booms take on a life of their own. We are clearly in a stage where people are just flipping each other homes for incrementally higher monthlies. No regard for what something should really cost because we’re all doing it.

But top is in. The lower end of the pyramid is crumbling. It never goes back down slowly. It always busts. Always.

Any chance our elected protector of the public purse does anything. I think not. Politically he can now say I tried. If he goes further and pricks this now he gets blamed going into an election.

What’s with the tips reversal today? Dxy is 30 bps off February lows. C$ is going the same way. It wasn’t in February. Hmmmm. Will this make things cost more?

Attention kmart shoppers.

#64 omg on 10.24.13 at 10:53 pm

#23 Victoria Real Estate Update

Good work. I am in Oak Bay and based on asking prices you’d never know that things are down, as they always seem $150K north of ridiculous.

Must be a lot of houses selling 10% to 15% below asking.

There are two 3 bdrm houses on the street right now asking over $1.0 MM – seriously!

I’ll continue to happily rent for about 60% of the cost of owning.

#65 45north on 10.24.13 at 10:59 pm

The asking price: $629,000. The selling price: $770,000.

16 foot lot! row house which means you cannot tear it down

Sideline Sitter: these were built poorly for poor people about 100 years ago.

so over the years, there has been fix up after fix up. I’m guessing the walls are new gyp rock and the original original lathe and plaster has been ripped out – a dirty job. The laminate flooring was laid on pine flooring that could not be sanded anymore. The basement floor was poured directly onto clay with no stone base? no vapor barrier, no sound insulation between the units. new electrical panel, completely rewired, new forced air furnace but inadequate cold air returns. oh yeah and a flat roof that was to be redone every 10 years.

#66 Carpe Diem on 10.24.13 at 11:05 pm

As a single guy living the 33rd floor of a Yaletown apartment was fun. A hop away from plenty of clubs. A step away from a bike path that spanned all of downtown.

10 years ago (before I married), I was ready to purchase a condo that was far less than this piece of shit. Then I married and left Vancouver downtown … I miss it. Richmond under-sea level living convinced me to move to Ottawa. We love it here!

I just visited realtors.ca and can’t imagine how much asking prices have increased in Vancouver downtown. It is absolutely CRAZY!

This will not end well.

#67 Mr. Reality on 10.24.13 at 11:08 pm

http://mobile.bloomberg.com/news/2013-10-25/record-low-h-k-home-sales-spur-realtor-loss-chart-of-the-day.html?cmpid=

Garth the looming correction for our housing market will be the result of a chain reaction of events. Hong Kong is ground zero. Mainland China is next.

#68 Mr. Reality on 10.24.13 at 11:12 pm

http://mobile.bloomberg.com/news/2013-10-25/record-low-h-k-home-sales-spur-realtor-loss-chart-of-the-day.html?cmpid=

Hong Kong is ground zero, mainland China is next. The fallout from these markets will be the chain reaction needed to tip canada into a deep economic downturn and market correction.

We have set our pins up, someone needs to simply throw the bowling ball.

Mr R

#69 Bob Rice on 10.24.13 at 11:21 pm

Lets keep in mind that this kind of lunacy (bidding on very mediocre real estate) is confined, for the most part, to pockets of the city. From my window, renting in the ‘905’ i see quite a few decent homes on 1/2 acre lots sitting for months now. You can get nice 70s vintage here for 700ish… trees, fresh air, big lot. Sure you might have to put some work into it, but it’s a hell of a better value IMO. We are debating whether to continue to rent or buy. If we see downward pressure and lower rates this Dec-winter, we might take the plunge too… I just don’t know if SFH will crash in the GTA. Maybe slowing, but I think the “crashing” will happen with high-rise condos. For those unfamiliar with the GTA, there’s a surprising low supply of SFH on nice lots… They don’t build many detached homes here anymore – thanks to the Greens and McGuinty who imposed a “green belt”

#70 Cici on 10.24.13 at 11:22 pm

Another plus about renting. We were in a hurry to sign a place and wanted something central. Looked like a residential neighbourhood – a bit ugly, but there was supposed to be a yard, and it was supposed to be a non-smoking building.

Moved in to discover it was inhabited (except for one sane couple who left the next year just like us) by noisy, arrogant trash who stole our section of the yard (I mean literally dug a huge hole in it and try to pass that off as a garden). All of ’em smoked and all their smoke poured into our apartment so we had to gag on it for a year, and as a shit bonus, the sex shop down the street opened an after hours swingers club a month or so after we moved. We got to deal with stupid, drunk perverts littering the streets with themselves, their noise and their broken beer bottles for a whole, glorious year.
But, it was only a year, and because we were renters we were able to move on to far greener paths. And next year, we are taking the douche bag landlady to court for lying about all the promises she made on the lease. I don’t even care whether we get financial compensation…I just want to drag her ass to court for the pure pleasure of giving her back some of that pain.
Lesson learned: always research the area you are planning to live in, ESPECIALLY if you are planning to buy and put down roots. And always try to rent in the area before you buy: you’ll be in a better position to make an informed decision when you do part with all of your $$ and sign on for a life of mortgage servitude.

#71 just asking on 10.24.13 at 11:24 pm

is “mother load” the same as “mother lode”?

’cause I always thought it was mother lode.

hm.

#72 Bo Xilai on 10.24.13 at 11:26 pm

You really have to wonder about the financial institution which would do the underwriting for the mortgage for a dump which sells for 150K over asking… Then again, how do you spell absolution for institutional financial stupidity?

C
M
H
C

Please feel free to enter your own phrase for C-M-H-C…

Mine is

Canadian (lack of)
Moral
Hazard
Corporation

#73 recharts on 10.24.13 at 11:28 pm

#67 Mr Reality
They must have fabricated more land in Hong Kong
That wouldn’t be possible in To

#74 William of the North on 10.24.13 at 11:31 pm

So… no taper by the Federal Reserve. The Bank of Canada is not going to raise interest rates. Easy money and credit into the distant future. The Central Banks have to way to turn off the ‘stimulus’; painting themselves into a corner. Tell us why gold and silver are bad in this economic paradigm again?

Because they pay no interest, no dividends, are insanely volatile and are purely speculative? — Garth

#75 Cici on 10.24.13 at 11:35 pm

#28 pinstripe

No, actually they’ve gained a lot of money by not throwing themselves over the debt cliff.

I can’t wait to see how these idiots are going to fund their retirements. Look out below…when this one crashes, there will be rubble in the streets.

#76 souvereigninternational on 10.24.13 at 11:36 pm

Re.: The Toronto row house

Great post Garth. This really hits “home” for me as I frequently park on that street when I visit Queen St. W. (free x 1hr.). The buyers better have a few off street parking spots. It’s getting really tough to find parking there. I did house shop the area in 2001-2003 period and these type of places sold in 175-250 K range. Garth please, let’s not stigmatize the mentally ill across the street, The real nuts just moved in to the hood.Hope they loose their shorts. @WICKED!?

#77 Obvious a Truth on 10.24.13 at 11:39 pm

#24.

Did they get the urine smell out of the area. What time do the nightly garbage trucks come by. Is the street car rumble soothing.

Isn’t this basically in park dale. Do you check in with the local station to see what colours are permissible.

Forget the price. I wouldn’t move my family there fir free. This will be obvious to everyone in a few short years.

Put your thinking cap on please.

#78 Nemesis on 10.24.13 at 11:44 pm

Blame it on the Bordeaux, but – strictly for the ArchivalRecord/GT’sRollingHistory… Here’s a taste of Burroughs… VancouverStyle! Circa1974…

What would Kilroy say?

“I would like to take this opportunity to endorse the candidacy of Mr. Peanut for mayor of Vancouver. Mr. Peanut is running on the art platform, and art is the creation of illusion. Since the inexorable logic of reality has created nothing but insolvable problems, it is now time for illusion to take over. And there can only be one illogical candidate-Mr. Peanut. “. – William S. Burroughs

#79 souvereigninternational on 10.24.13 at 11:44 pm

There is still a chance to gobble up this slightly less appealing, reno ready palace with extensive gardens next door asking 675K. Distance to Wicked may affect the sold price though.

http://www.realtor.ca/propertyDetails.aspx?propertyId=13656878&PidKey=1616028451

#80 souvereigninternational on 10.24.13 at 11:51 pm

#74 William of the North on 10.24.13 at 11:31 pm wrote:

…Tell us why gold and silver are bad in this economic paradigm again?

Because they pay no interest, no dividends, are insanely volatile and are purely speculative? — Garth

that’s correct Garth, but what about the approaching paradigm? They are also the only money when paper is burning.

#81 From Mississauga with Love on 10.25.13 at 12:00 am

Question: now that a rate hike has been kicked further down the road, does it make sense for me to break my 5-year fixed rate (started August this year) for 2.99% and go on variable?
Serious question.. need serious answer please…

#82 In Van on 10.25.13 at 12:00 am

So ballpark best time to buy; I know it’s a guess; 1 year; 3 years; 5 years? How long? This house of cards is going down.

#83 Albert on 10.25.13 at 12:04 am

When will cheap money end ?
can anyone answer me on that ?

Thanks !!!!

#84 Ripped on 10.25.13 at 12:05 am

Another fraudulent Chinese company crashes on the Nasdaq this aft. Symbol NQ

#85 Stockmarket student on 10.25.13 at 12:05 am

@ #56 Sheane

Deflationary environments are a normal, although painful, part of the economic cycle. Its happened before and guess what, the bond market and the dollar survived. The US has been in a deflationary environment since the late 1990s, though it took the Fed till 2001 to figure it out, and main street still has no idea what has/is transpiring. Hence the decoupling of the U.S. stock / bond yield relationship. Everyone just needs to breath, even during the great depression great investments abounded for those that did their homework. If you question the validity of this statement please read Trading with Intermarket Analysis (a branch of technical analysis) by John Murphy for an in-depth understanding of the topic.

#86 I smell fraud on 10.25.13 at 12:22 am

If the sale you describe is real and there are others like it, then there are truly people out there that have perspectives as narrow as the sliver of RE this folk just purchased. Or, they were desparate and needed a place, bad. Or, maybe these people, as in the offeree(s), the seller, the RE agent and others knew what they were doing. Honestly, who would get into a bidding war over that piece of crap?

Look at what happened just across the border in MI:

http://www.justice.gov/usao/miw/news/2013/2013_0328_EWilliams_etal.html

Garth,

I’m not saying it is, but it could be one possible explanation for some of this madness. Have you written an article on equity stripping and the likelihood of it happening in Canada’s outrageous RE market?

#87 Shawn on 10.25.13 at 12:23 am

WELL Anyhow, SOMEONE LOST A LODE…

#88 Tony on 10.25.13 at 12:24 am

That house isn’t even fit for farm animals to live in. Wait with 16 whopping feet width make that a horse with permanent blinders on.

#89 Nosty in Vladland on 10.25.13 at 12:26 am

Garth How would Bandit stack up against him?

For Shawn Plus this. Further to last night’s Q&A. “I can see where the Saudis might be thinking of switching sides. China’s currency is more stable than the dollar. China is a huge manufacturing nation, which means that currency can be traded back to China for well made products, something the US is no longer able to produce. Even our much vaunted weapons systems are proving to be costly duds.” wrh.com. The only problem with this is that Iran is the sworn enemy of SArabia (different types of the Muslim faith), and that China, Russia, India, Iran and Pakistan are working nicely together, by leaving religious beliefs out of it.

#59 Snake on 10.24.13 at 10:35 pm — Mark Carney Remember him?

#20 Nemesis on 10.24.13 at 9:26 pm — “NakedLunch, indeed.” — Are You Embarrassed Easily? Sound up!

#90 A Yank in BC on 10.25.13 at 12:26 am

Tulips in Toronto. How hard a lesson this will be someday. The only question is when and what will be the trigger.

#91 not 1st on 10.25.13 at 12:36 am

This story can’t be true…can it?

#92 Spectacle on 10.25.13 at 12:39 am

Thank You Garth

Blogs is addictive, and truly enjoy everyone’s comments on here!

Awkward fiscal Romp, Reminds me of an old story from 1986:

When real estate falls off an edge or on rocks, it begins in the south like a Bull Whip! It then carries on into the East Coast of Can/US and Midwest , then moves westward. By the time it hits the West Coast, we feel the Sting of the Whip before we hear the Snap. (Unless we are on the island?) remember 1981?

Ps: looks like his neighbour has lucky unit 13 from the picture! Sold some gold today, & now no North American realestate.

#93 Smartalox on 10.25.13 at 12:50 am

Fun with numbers:

So after reading about the guy who “invested in his house” instead of actual investments, I decided to see how that scenario would apply to my situation.

I’m 40 years old; my wife and I earn in the top 5%, and after a few years of spending we’ve saved a total nest egg of $300k. We rent our digs, and together, save about $40k per year.

I ran a comparison of a couple of options:

1) In two years, take $150,000 of our savings as a down payment on a $700,000 house. Over the following 20 years, we’d spend $40k yr paying off our mortgage (average interest rate @ 4.25%) instead of contributing the same amount to our savings. The result: we’d have paid off a $550,000 mortgage, and have savings of $402,000, providing an income of about $1400.

2) Keep saving at our regular rate (~40k/yr.) for 20 years. With dividend re-investment at an average of 4.25%, our net worth after 20 years would work out to $1.88 million, with a monthly income of about $6675.

So in order for the two scenarios to provide the same income for us in retirement, we’d have to sell the $700,000 house for about $1.48 million to have he same type of income to sustain us in our golden years.

Will houses double in value (from today’s prices) in the next 20 years? I doubt it. Is there a sweet spot, a combination of the two that would allow both the satisfaction of home ownership and saving for retirement? Probably. But this lesson tells us that you’d do better to concentrate on saving and investing, and minimize spending on shelter.

#94 Smartalox on 10.25.13 at 12:52 am

Or at least not raid our savings for a down payment on a fancy property.

Disclaimer: I’m a spreadsheet geek, not a CFP. This is only a model, your mileage may vary.

#95 Sue on 10.25.13 at 12:52 am

Isn’t it “mother lode”? There’s a gold bug reference if I ever heard one….

#96 crazed and a little confused on 10.25.13 at 1:12 am

hi

just some basic finance advice

http://lifestyle.ca.msn.com/video/?videoid=d9b55576-15b7-4462-a184-4f7dacbd091a

#97 goldie on 10.25.13 at 1:16 am

tonight’s post made me angry.

#98 juno on 10.25.13 at 1:56 am

Who needs porn and tv when you can open your blinds and watch the back alley. Hooker doing their Johns and pimp beating them.

Great stuff, I guess paying a mill to buy a house next to the highway is an upgrade

#99 Tom from Mississauga on 10.25.13 at 1:57 am

They will be by the Downtown Relief subway line when its built in 2030 however.

#100 Brdwy sktrn on 10.25.13 at 2:02 am

Isn’t this basically in park dale.
…………
I dont know where park dale is but if it’s near downtown and still dumpy it,s as good a buy as any,as the some of the best appreciation is to be had when formerly ,bad, areas gentrify . Sfh in core areas are a steadily and signifigantly decreasing supply
That thing is way too skinny though, get a real yard if you’re spending that much.
In a few years the sex club and graffiti and the the smelly earth it sits on will get scooped into big dump trucks and there will be a shiny new shoppers drug with a hip coffee shop in it’s place

#101 Tom from Mississauga on 10.25.13 at 2:03 am

BTW, the BoC has also thrown in the towel on the CAD. I own my S&P 500 index un-hedged for extra torque.

#102 Bob Copeland on 10.25.13 at 3:59 am

And yet your against the tea party.

#103 Buy? Curious? on 10.25.13 at 4:02 am

Yo Garth! Let’s see what that house is worth in 2020. Clubs like Wicked don’t hang around very long. In two years it may become a Starbucks, and that mental hosipital, it had a major reno a few years back and it looks good. The real sick people are monitored and the one that get “better” are moved to halfway houses out in the subburbs *barf*. People who move into places like that don’t have hang ups about graffiti or naughty words. And if they qualify for $800k, I don’t think they’re that low on the social tottem pole either. So while it isn’t backwater Nova Scotia, it’s probably more interesting than 90% of Canada. Barrie, I’m looking at you!

http://www.youtube.com/watch?v=qKvLr3Xwd10

#104 Hanging on grimly in the UK on 10.25.13 at 5:11 am

Cheap money will continue to flow. Idiots will continue to buy.

Yep, here too. That nice Mr Carney that our Chancellor Mr Osbungle hired away from you is giving “forward guidance” that rates here are flatlined for another 2 years or so minimum, and we have the spectacle of Government ministers saying openly in the media that “mortgages have never been more affordable”.

Government has also started a “Help to Buy” scheme, allowing people to buy houses with a 5% deposit – which just 3 years ago was a practice which was condemned as “irresponsible lending”. House prices are rocketing, idiots are crucifying themselves with debt because “property is an investment”, and the banks are creaming their corporate jeans over the profits they’ll make by financing loan guarantee premiums and jacking up the margins on high-LTV mortgages.

The next phase is easy to see; rates will have to rise, eventually, and all those who’ve overborrowed will start to whine about the injustice of their not being able to afford their mortgage. To keep the voters voting for them, whichever bunch of unsavoury reptiles holds political office at the time will come up with some sort of taxpayer-funded bailout or debt-forgiveness scheme.

Hundreds of billions of UKP being wafted out of the useful economy to bank profits, and to landowners. It stinks. We’re a nation of debt slaves, and it’s not going to end well.

But I wish – while paying down my mortgage over the years – I’d been able to get access to tax breaks like you folks obviously can!

#105 drydock on 10.25.13 at 6:21 am

https://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=5&cad=rja&ved=0CEQQFjAE&url=http%3A%2F%2Fwww.outstitute.org%2Fblog%2Fdownload%2FMichaelHudson%2FHudson_RoadToSerfdom.pdf&ei=N0RqUvT0Coq8kQfYx4B4&usg=AFQjCNF6ViwyxZzzwPu8zkYwqzMeQfkJOw

The New Road to Serfdom by Michael Hudson a short must read for those who wish to remain free and avoid debt slavery.

#106 Buy? Curious? on 10.25.13 at 7:29 am

Hey Garth! Here’s a trailer for a documentary about the importance and evolution of city living. I know that it won’t matter for Boomers but it seems that this person buying this place is in it for the long haul.

The subburbs and condos are the slums of the next 100 years.

http://www.youtube.com/watch?v=5CyLNS_ljHw

Somewhere between Sex Ave and the distant burbs, there are many fine places to live. — Garth

#107 Mr. Frugal on 10.25.13 at 7:34 am

#94 Smartalox

You are 100% correct!!! The numbers don’t lie. My wife and I bought about 20 years ago when rates were high and prices were low. At that time, it made sense to buy a house and pay down the mortgage fast. Today, it does not. Stick with your plan, you’ve got math on your side. Wish you well.

#108 Ralph Cramdown on 10.25.13 at 7:44 am

#74 William of the North — “Tell us why gold and silver are bad in this economic paradigm again?”

I realize that you probably have an underlying theory of why gold and silver ‘should’ perform well in this environment. However, if you consult price charts, the trend is down. Down 30% from the 2011 peak in nominal terms… add to that two years of inflation at whatever rate you feel appropriate, and you can see that gold has been a terrible store of value.

It isn’t hard to succumb to the allure of an inflation hedge when it’s at all time highs. But when it’s down 30% from the nearest peak and, adjusted for inflation, hasn’t yet surpassed its 1980 peak, trading well below its 40 week moving average, you should use the Indian onion farmers’ good crop and wedding season as an opportunity to sell gold, whether you currently own any or not. Put the proceeds into a nice REIT and you get tax-efficient distributions with inflation protection. The new paradigm is the same as the old paradigm: Get rich with compound growth. You’re welcome.

#109 CB on 10.25.13 at 7:50 am

The area is “cleaning” up. As for the club, my wife and I have been there. Its not that bad of a place. Crowd is usually couples in their 40’s and 50’s. Its better than having a local pub / bar where the 20 yr old college and university crowd hangs out.

#110 T.O. Bubble Boy on 10.25.13 at 8:20 am

@ #72 Bo Xilai on 10.24.13 at 11:26 pm
You really have to wonder about the financial institution which would do the underwriting for the mortgage for a dump which sells for 150K over asking… Then again, how do you spell absolution for institutional financial stupidity?

C
M
H
C

Please feel free to enter your own phrase for C-M-H-C…

Mine is

Canadian (lack of)
Moral
Hazard
Corporation
—————
Constantly
Making
Homeowners
Cry?

Canadians
Making
Horrible
Condos?

#111 TurnerNation on 10.25.13 at 8:28 am

Just read the text. I think Smoking man will head over and check this place out. Gives him ideas.

#112 Babblemaster on 10.25.13 at 8:49 am

“This is why the real estate market’s doomed. Oh, maybe not this month or by the end of the year, especially now that the Bank of Canada has thrown in the towel on monetary policy. Cheap money will continue to flow. Idiots will continue to buy. The premium commanded by single-family homes – now at an historic high over every other type of housing – will continue to swell and bloat like a midnight gland.” – Garth

————————————————————

Garth, much to my dismay, I believe this to be a realistic assessment of the situation. And, you must admit, it is at odds with your predictions of previous years. Predicting the future with any accuracy is so hard.

#113 Bigrider on 10.25.13 at 9:21 am

#106 Buy Curious.

50 years ago , Yonge and Eglington would have been considered the suburbs. 100 years ago or so , St Clair street had farms and would have been considered the suburbs. Early 1900’s saw horse bound carriage and mud streets on Queen right where this schmuck bought this dump of a place. Sounds ‘suburban’ to me.

Fast forward 50 years from now, perhaps Newmarket will be part of T.O proper.

I get a real kick out of T.O city dweller phobia’s and prejudice against ‘The Suburbs”.

Tell me, what is an acceptable radial distance to live from the epicentre of T.O, oh , lets say, defined by Yonge and Queens Quay …LOL

#114 Shawn on 10.25.13 at 9:24 am

PAYING DOWN THE MORTGAGE

Mr. Frugal at 107 said:

My wife and I bought about 20 years ago when rates were high and prices were low. At that time, it made sense to buy a house and pay down the mortgage fast.

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

20 years ago when a mortgage was more typically 1 to 2 times income it was POSSIBLE to pay it down quickly.

If you take a Mortgage at 5 times income it is simply NOT POSSIBLE to pay it down quickly.

You might be fr better off to pay slowly taking advantage of super-low rates and invest the difference.

s has been pointed out you can effectively be borrowing at 3% and investing in bank preferred shares at 5%. You can beat the bank at it’s own game!

And you might (MIGHT!) make closer to 10% in the bank’s common shares over time…

Different strokes for different times folks!

#115 Nuke It on 10.25.13 at 9:50 am

Neighbour across the street is testing the waters. If successful buyer will be paying on a conventional mortgage about $55,000 a year more than I rent for. Not including property tax, opportunity costs of money, upkeep. It is a nice property but still that’s a lot of aftertax money to commit to.

#116 Herb on 10.25.13 at 10:08 am

#53 Bottoms_Up,

that palace is in Orleans, Dude, the equivalent of, say, Brampton.

#117 The American on 10.25.13 at 10:13 am

LMFAO! It just keeps getting worse in Canada. Seriously, Canada has managed to find a way to ride this bubble up to new heights, unlike EVER seen in the U.S. What’s happening now in Canada is far beyond what happened in the U.S. over 7 years ago. This is going to be a looooooooooooooooooooooooooooooooong ride down for anyone who has touched real estate in a major Canadian city over the past four years.

#118 "Callgirl" on 10.25.13 at 10:25 am

#94 You’re right. Mileage may vary, but just to back you up, according to this article every year McMaster MBA students are tasked with doing an analysis of cost versus renting. I remembered this article reading your post. The professor makes similar observations.
http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/would-you-be-better-off-financially-renting-or-buying-a-home/article11952313/

However, a nice home free from bed bugs, cockroaches and crazy landlords does certainly have value . I’m no home basher either. However, the underlying value of the asset has to be in line with the price, and salaries in Canada. I saw a lot of panic this summer and cashing out of RRSPs to pay property taxes. Next 10k for leaking roof, and as soon as October hit, the dreaded furnace breakdown. .. The well established and substantial emergency fund has to be part of the spreadsheet calculation.

#119 gladiator on 10.25.13 at 10:57 am

@54 Young Man:
I personally know a former IT consultant from Ottawa who was making really good dough contracting for the government and who just cut off all his ties to Canada, loaded up his van with the most necessary stuff and moved to Belize for good – with his wife and her daughter from a previous marriage (the daughter in law hates it there and will return to Canada to go to university). He bought a farm there and will do farming till he dies. He’s now around 45. Being there for more than a year he could not be happier with his life: no stress, warm weather, ~20 mins drive from the shore, and having a quiet and pleasant activity. Veggies in Belize are good business he says and there’s plenty of rain.
When he got there, he moved into a shack that had leaky roofs, no bathroom, no clean water supply, bad wiring, etc. but he knew about it, set his expectations low and was determined to fix all these issues. With all that, he says he is now truly happy and, most importantly, his wife is very supportive and shares and enjoys this life adventure with him to the fullest (she grew up in a village in Europe, where everyone has land for farming and raising chickens/cows/pigs).
Go figure…

#120 Obvious Truth on 10.25.13 at 11:11 am

#100

I’ve lived in a couple of homes not far from this. Used to ride my bike past to go to the EX.

We moved because of slumification and because the houses were built dangerously.

Will they tear down all the swanky park dale apartments?

Maybe they’ll built special schools and parks for those with 800000 in debt.

Let’s ask some important questions.

Oh. It was less dangerous when I moved. We could ride our bikes home late after peeking through fences to watch a concert. and there were more old people. And it smells worse now.

When the tide turns none of the real estate lingo you use will apply anymore. Seen it too many times. It’s never different no matter how much people want to believe it is.

Wake me up when condo projects get stopped part way through building and are locked by the bailiff. Ever seen that?

#121 Ronaldo on 10.25.13 at 11:28 am

It seems Smoking Man’s views over the past several months that prices in To would continue to rise will come to pass. It’s very difficult for anyone to predict what is going to happen when dealing with a government and population that lacks one of the most valuable assets one can have. ”Common sense.” What is happening with real estate in the major centers of this country totally defies this. The gamble with this government is that the economy will turn around and nullify their idiotic policies of the past several years. Bad times ahead for many young people and others who purchased a home in the past 5 years.

#122 TS on 10.25.13 at 11:39 am

Cheap money will continue to flow. Idiots will continue to buy.

The world is just so simple… . but who is smart?

#123 Ronaldo on 10.25.13 at 12:08 pm

An interesting article from January of 2012 regarding the housing bubble in Canada. Definitely defies logic.

http://www.canadianbusiness.com/business-strategy/prediction-the-canadian-housing-market-will-crash/

#124 jess on 10.25.13 at 12:23 pm

http://truth-out.org/news/item/19623-diebold-charged-with-bribery-falsifying-docs-worldwide-pattern-of-criminal-conduct

http://www.justice.gov/usao/ohn/news/2013/22octdiebold.html

…”According to court documents, Diebold paid bribes and falsified documents in connection with the sale of ATMs to bank customers in China, Indonesia, and Russia. With respect to China and Indonesia, the court documents allege that from 2005 to 2010, in order to secure and retain business with bank customers, including state-owned and -controlled banks, Diebold repeatedly provided things of value, including payments, gifts, and non-business travel for employees of the banks, totaling approximately $1.75 million. Diebold attempted to disguise the payments and benefits through various means, including by making payments through third parties designated by the banks and by inaccurately recording leisure trips for bank employees as “training.” The court documents also allege that from 2005 to 2009, Diebold created and entered into false contracts with a distributor in Russia for services that the distributor was not performing. The distributor, in turn, used the money that Diebold paid to it, in part, to pay bribes to employees of Diebold’s privately-owned bank customers in Russia in order to obtain and retain ATM-related contracts with those customers.”…

#125 Buy? Curious? on 10.25.13 at 12:26 pm

@113 Bigrider, are you arguing your point with “Back in my day, I had to walk 10 miles to school, in the snow, both ways” Boomer talk? C’mon! A hundred years ago there were no cars and 50 years ago there was barely any public transportation. Look to the future, gramps! See what other cities are going through. C’mon! If Newmarket becomes part of Toronto, they elect Rob Fords of the world.

http://www.youtube.com/watch?v=Bnb3M8whfL4

#126 Bottoms_Up on 10.25.13 at 12:30 pm

#93 Smartalox on 10.25.13 at 12:50 am
———————————————
I don’t think you should doubt houses doubling over 20 years. That’s the rate of inflation.

20 years is a long time….20 years ago the internet was just taking off (remember NetScape), the Habs won the cup and the Jays were a dynamo baseball team.

#127 Ronaldo on 10.25.13 at 12:31 pm

Is the U.S. Market getting close to bubble territory? Some people in the industry think so and so do I. Today, with the U.S. portion of my portfolio up near 25%, it’s time to cash in my chips and that is what I intend to do. I see no reason to stay in this casino any longer. There will be some very good deals to be had later on down the road. It’s time to park some cash while things are still ripe. The housing market is not the only thing that is bubbling nowadays. Best to leave some cash on the table.

http://www.usatoday.com/story/opinion/2013/10/23/bull-market-stocks-bubble-wall-street-column/3173227/

#128 Realtor # 1 on 10.25.13 at 12:31 pm

Everyone is missing my point. Not saying that there won’t be a correction.
But waiting three to four years for it was a waste of time and money.
I’ve read all your explanations about why but specifically in the GTA your reasons mean nothing like TREB number mean nothing.
Like the number of sales mean nothing, its all about the price. You only need one person to buy your home.

Housing Doomsters had a chance when interest rates were going but that hope is gone.

My recommendation is wait till “next year” and hope interest rates go up. More regs will do nothing.

#129 Bottoms_Up on 10.25.13 at 12:32 pm

#90 A Yank in BC on 10.25.13 at 12:26 am
———————————————
Only these tulips provide shelter in the 5th biggest city in North America.

#130 Realtor # 1 on 10.25.13 at 12:37 pm

the new round of mortgage regulations was supposed to squeezed out the “subprime” mortgage people but clearly people are buying homes like the one above. Whether they bought it with less 20% we don’t know.

So even with the new rules and regs and lower amor rates people are finding a way. Which defies any of your explanations.

NO explosion of listings because no explosion of job losses or baby boomers retiring.
Lenders are still lending and that’s whats driving the market- LENDERS!

#131 Adrian on 10.25.13 at 12:48 pm

@ Shawn post #44: “I have never witnessed a perfectly decent house being tossed tot eh garbage heap” You’ve obviously never been to Calgary and seen all the “infills”

#132 Bottoms_Up on 10.25.13 at 12:50 pm

#116 Herb on 10.25.13 at 10:08 am
————————————–
No, that house is in the Greater Ottawa Area. And a 15 minute drive from Harper’s house. Or the Parliament buildings. I wouldn’t say that’s the equivalent of Brampton.

#133 Ripped on 10.25.13 at 12:51 pm

Headline after headline in the U.S. everyday…

http://finance.yahoo.com/blogs/daily-ticker/job-market-killing-housing-145341318.html

http://finance.yahoo.com/news/bank-america-cutting-thousands-mortgage-jobs-213731657–finance.html

… but not in Canada, we just keep rocketing up and up and up into stratosphere prices.

Don’t matter what the price is, will pay it!

#134 anotherreasonnotto movetotoronto on 10.25.13 at 12:55 pm

Blackstone announced a new investment club….they’ve spent six billion on tens of thousands of foreclosed houses and are now packaging them as a rental REIT…..bwhahahahhahaha….they are only one of the reasons why the vaunted real estate recovery in the US is entirely false political spin. Marriot Homes is also one of the ‘first time buyers’ moving the front pages of a coopted media.

Government has been on a spending spree….they have borrowed more than they can pay back….even at zero rates, if rates were to go up it would cause a Grecian Formula in both Canada and the US…don’t expect the BOC to lead on rate rises.

#135 jess on 10.25.13 at 12:58 pm

Fairness according to Elizabeth Warren to Wall Street Regulators: Put Big Bank CEOs in Jail

http://www.warren.senate.gov/files/documents/SIGTARP%20Letter%202013-10-23.pdf

=
Falciani says, “Banks such as HSBC have created a system for making themselves rich at the expense of society by assisting in tax evasion and money laundering.”

Authorities in France, Spain and the U.K. have used the data Falciani released to collect some $1.34 billion in back taxes from individuals with hidden HSBC accounts, according to Bloomberg.

…French tax officials handed a CD-ROM disc to their Belgian counterparts containing details of HSBC Private Bank accounts in Switzerland held by Belgian residents.
===========
Fairness culture
So for leaders today – both in business and regulation – the dominant theme of 21st century financial services is fast turning out to be a complicated question of fairness.

And at the centre of this debate about fairness is culture and accountability. How do we get firms to do the right thing, whether the regulator is watching or not? How to get senior management to be accountable for doing the right thing.

http://www.fca.org.uk/news/the-fairness-challenge
http://www.bankofengland.co.uk/publications/Documents/speeches/2013/speech690.pdf

#136 Holy Crap Wheres The Tylenol on 10.25.13 at 1:19 pm

#132 Bottoms_Up on 10.25.13 at 12:50 pm
#116 Herb on 10.25.13 at 10:08 am
————————————–
No, that house is in the Greater Ottawa Area. And a 15 minute drive from Harper’s house. Or the Parliament buildings. I wouldn’t say that’s the equivalent of Brampton.
…………………………………………………………………..
Not the same comparison at all.
I have news for you I have been to both places, in The Greater Ottawa area there are two of the official languages spoken. In Brampton one is English and the other is not English or French. The territorial dynamics are much different.

#137 Bigrider on 10.25.13 at 1:28 pm

#125 Buy Curious

No I am not arguing my point from a ” back in my day” point of view. It was not my point( I’m middle aged anyway).

All I wanted to get across is that the definition of the suburbs verse urban changes over time. 50 years ago Yonge and Eglington would have been considered far from the hustle and bustle of T. O proper. 100 years ago St Clair was a suburban ,almost rural spread of farms.

What I was trying to get across was that the recent prejudice of ” city dwellers” to suburban ones is sOmewhat comical.

You live where you like. Like Garth said , many nice neighborhoods between lakeshore and rural Ontario

#138 Herb on 10.25.13 at 1:52 pm

#132 Bottms_Up,

let’s not flog a dead horse, but Orleans is one of the bedroom suburbs of Ottawa, so take your pick of the TO equivalents.

You’ve made the drive from Orleans to Parliament Hill (or vice versa) in rush hour to establish your 15 minute timing? Don’t forget to tell City Hall that there is no east-west traffic problem and that they can save the money for LRT.

#139 Ralph Cramdown on 10.25.13 at 2:01 pm

#126 Bottoms_Up — “I don’t think you should doubt houses doubling over 20 years. That’s the rate of inflation.”

For houses to double in twenty years is annual growth of 3.6%. For those houses to be as affordable as they are today, wages will also have to rise at 3.6% and interest rates will have to remain as low as they are today.

Since I don’t think all of those things can happen together, or would be allowed to, I’m confidently predicting “not gonna happen.”

#140 Seeing it from both sides on 10.25.13 at 2:02 pm

#74 William of the North — “Tell us why gold and silver are bad in this economic paradigm again?”

#108 Ralph Cramdon
…”However, if you consult price charts, the trend is down….”
————
That depends on the time frame one looks at on the charts. Gold is still on an uptrend if looking at chart from 2000-2013.
http://www.kitco.com/scripts/hist_charts/yearly_graphs.plx

interesting to note that it broke above its 50 day MA. yesterday, and continuing higher today.

Like every commodity that’s traded, nothing goes in a straight line in any one direction without backing and filling. No different than real estate.

#141 Behavioral Finance on 10.25.13 at 2:10 pm

Lets face it. Here is why economy will be doing nothing for an average worker going forward if productivity gains will not start going to average worker’s packet. The massive amount of debt that middle class holds in North America is partly a result of this phenomenon.

http://www.epi.org/publication/ib330-productivity-vs-compensation/

#142 espressobob on 10.25.13 at 2:48 pm

Some years ago the ‘Vatican nightclub’ was a lot of fun here in parkdale. Electro-industrial-goth music was quite odd at the time but the owners, staff, & layout produced some good times! Yup, a personal hangout. And the dark synth soundscapes grow on you!

The problem back then where the sound levels which clearly annoyed the surrounding residential ‘hood’.
This location is now the infamous ‘Wicked nightclub’ at Queen w & Brookfield. A brothel beside your residence @ 770K? Whos got the real problem?

And Goths are great dancers! At least they where.

#143 Daisy Mae on 10.25.13 at 2:50 pm

“The sellers made out like bandits. The listing agent cleared almost fifty grand in commission. The bank likely scored with a massive mortgage….”

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

….and the government raked in oodles of land transfer taxes.

#144 Mister Obvious on 10.25.13 at 2:51 pm

#105 drydock

Thanks for the link to that excellent article. When such clear information is freely available, one wonders how adult people can be continually sucked in to bubbles from one generation to the next. But then I consider the name of this blog. Its always some other schlub who will pay the price. Never me.

#145 45north on 10.25.13 at 2:51 pm

Bob Rice: I just don’t know if SFH will crash in the GTA.

Garth says that interest rates will stay low for another year but if they don’t it’s the end of life as we know it.

Cici: But, it was only a year, and because we were renters we were able to move on to far greener paths.

an important point, you didn’t have to put your house up for sale, deal with real estate agents, open houses etc.

Just Asking: mother lode
http://en.wikipedia.org/wiki/Mother_lode

Bo Xilai:
C
M
H
C

Canadian
Moral
Hazard
Corporation

good one!

I smell fraud: As long as the market is rising the fraud is hidden. You only see who’s swimming naked when the tide goes out.

Hanging on Grimly: To keep the voters voting for them, whichever bunch of unsavoury reptiles holds political office at the time will come up with some sort of taxpayer-funded bailout or debt-forgiveness scheme.

Some sort of taxpayer-funded bailout is all about promises which don’t really apply. In the States the Home Affordable Mortgage Program (HAMP) promised to help 10 million Americans a year. Turns out it’s 1.9 million

Callgirl: I saw a lot of panic this summer and cashing out of RRSPs to pay property taxes. Next 10k for leaking roof, and as soon as October hit, the dreaded furnace breakdown.

that got my attention!

gladiator: a former IT consultant was making really good dough loaded up his van with his wife and her daughter from a previous marriage (the daughter in law hates it there).

that would be his step daughter

#146 gladiator on 10.25.13 at 3:05 pm

@145 north45:
haha, you’re right – I was speaking with someone at work about his daughter in law and accidentally wrote it in my post. Of course, a spouse’s daughter whom you’re not a parent of is a step daughter. It’s Friday.

#147 A Yank in BC on 10.25.13 at 3:08 pm

#129 Bottoms_Up on 10.25.13 at 12:32 pm

Shelter? Are you really calling today’s highlighted property.. shelter?

Here is shelter.. for 70k less with clean air and an enormously better climate than Toronto.

http://beta.realtor.ca/propertyDetails.aspx?PropertyId=13736506

#148 Shawn on 10.25.13 at 3:18 pm

False Phrophets?

Another reason at 134 claims:

the vaunted real estate recovery in the US is entirely false political spin.

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

The rise in U.S. house prices is no more false than the decline was. It is what it is.

If you think U.S. house prices will fall, find a way to bet on that. (Like short the residential REIT that you mentioned)

I have been betting U.S. house prices will rise and have made some serious money on U.S. homebuilders and U.S. banks in the past two years. But who knows what tomorrow will bring?

Instead of talking about false prices, just place your bet. Even a small bet shows you have the courage of your conviction.

#149 Smoking Man on 10.25.13 at 3:20 pm

#121 Ronaldo on 10.25.13 at 11:28

amIt seems Smoking Man’s views over the past several months that prices in To would continue to rise will come to pass. 
…….

What does you mean several months, try years.

It all makes perfect sense if you study all the players.

Prozac needs low cad, his first priority exporters, the herd, dumb as shit.

Charts, no hockey stick no crash, every bubble, stock, bonds, and RE. WE need to see a fast and furious trend up followed by a drop, a second spike, and a drop,

You unload when dananan, BATMAN.
So easy….

#150 espressobob on 10.25.13 at 3:46 pm

“Why Gold & Silver are Bad in this economic paradigm again”

Diversified investors already own this sector along with many others! As an investor, who cares! Thats the point! The producers pay dividend (some). Commodities pay nothing and produce the most risk!

Stop reading Eric Sprott! This dude needs a serious vacation!

#151 VanPerfecto on 10.25.13 at 4:04 pm

Sorry American. Strong fundamentals out in Vancouver with Global money pouring in. Lower Interest Rates. Bulk of HomeOwners not declaring proper Income? How else can the average Vancouver Income be less than 70 grand yet so many owners Wish you were right

The American on 10.25.13 at 10:13 am
LMFAO! It just keeps getting worse in Canada. Seriously, Canada has managed to find a way to ride this bubble up to new heights, unlike EVER seen in the U.S. What’s happening now in Canada is far beyond what happened in the U.S. over 7 years ago. This is going to be a looooooooooooooooooooooooooooooooong ride down for anyone who has touched real estate in a major Canadian city over the past four years.
.

#152 Country Girl on 10.25.13 at 4:06 pm

#24 David Fitzpatrick on 10.24.13 at 9:31 pm

Not sure about today, but the location was still a dive in mid-2000’s. And, can’t imagine any different today with CAMH and sex club neighbours.

#153 espressobob on 10.25.13 at 4:18 pm

#150 espressobob

Correction! I know a few ‘mutual fund’ managers who need to get out more often! I know a place on Queen St.
Um, never mind!

#154 Nemesis on 10.25.13 at 4:19 pm

Well, it’s not Zen Zen as such… but SaltyDogz may well enjoy today’s….. Quote ‘O Day!

“What’s been designed to replace it is a glorified Vancouver Special*.” – Anthony Norfolk, Arbutus Ridge, Kerrisdale, Shaughnessy (ARKS) Vision Implementation Committee

[G&M] – Effort to save Kerrisdale heritage homes fails, demolition looks certain

“Another little piece of old Vancouver will soon vanish when two Kerrisdale houses, both on the Heritage Registry, are demolished to make way for new, bigger houses.

For anyone with the mistaken belief that the Heritage Register protects Vancouver’s historical landmarks, the pending loss of the two mock-Tudor 1939 homes is proof that when an owner has their sights on redevelopment, preservation becomes almost impossible.”…

http://www.theglobeandmail.com/life/home-and-garden/real-estate/effort-to-save-kerrisdale-heritage-homes-fails-demolition-certain/article15076074/

[*Enthused by the elevation of “Vancouver Special” from the VulgarVernacular to LexicologicalLegitimacy by no less august a BroadSheet than the G&M – WetCoast etymologists could barely contain their glee upon learning that the outdated (and synonymous) expression, “Wok Kitchen” was now destined for the ColloquialCompost heap… as it were.]

#155 Ralph Cramdown on 10.25.13 at 4:29 pm

#141 Behavioral Finance — “[The] economy will be doing nothing for an average worker going forward if productivity gains will not start going to average worker’s packet. “

I agree with that. But the only two things that will raise wages are labour shortages and collective bargaining. I’m not seeing the former (and the government seems quite willing to import when necessary rather than allowing wages to rise until the market clears), and the latter is going out of style. Unless something changes, I think most of the benefits are going to accrue to capital.

“The massive amount of debt that middle class holds in North America is partly a result of this phenomenon.”

This I don’t agree with. When the middle class is borrowing to spend on manicures, $6 coffees, foreign vacations and German automobiles, it isn’t exactly a case of borrowing to keep body and soul together. The demand for bad loans is always infinite, it’s the supply that needs a firm rein.

Assuming the buyer of the house featured in Garth’s post approached you for an uninsured private mortgage and had excellent credit and income but not much in the way of attachable assets, what % of the purchase price would you be prepared to lend him, and at what rate?

#156 eddy on 10.25.13 at 4:39 pm

#126 Bottoms_Up on 10.25.13 at 12:30 pm

#93 Smartalox on 10.25.13 at 12:50 am
———————————————
I don’t think you should doubt houses doubling over 20 years. That’s the rate of inflation.

****

In 416 houses that were worth 50k in the early 1980s are now worth approximately 500k. In contrast a house in Niagara Falls ON that was worth 50k in the early 1980s would be in the 150k range today.

#157 NotAGreaterFool on 10.25.13 at 5:08 pm

Garth – You have explained BRAs before. What about Buyer Customer Service Agreement – For Use When the Buyer is Not Represented By the Brokerage. Any dangers?

#158 Canadian Watchdog on 10.25.13 at 5:23 pm

#155 Ralph Cramdown

So what you're saying is this is sustainable or that subprime consumer lending is the new normal? That's called kicking the can, not productive or sustainable growth.

#159 DR on 10.25.13 at 6:04 pm

That’s OK if you guys want to get your panties in a bunch maybe you should not know a semi two streets away sold for 580,000 MORE money than this little house here. If 95 percent of the commenters have actually been to this area I would be shocked

#160 Daisy Mae on 10.25.13 at 7:58 pm

#145 Gladiator: “Of course, a spouse’s daughter whom you’re not a parent of is a step daughter. It’s Friday.”

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

Right! Friday. Your comment had me confused, as well. ;-)

#161 Multiple Offers on 10.26.13 at 7:46 am

All you low-ball sillies, you’re not really helping!!
The trickster-agent uses your offers to show the Sucker that there is great demand here, Multiple Offers! The trickster-agent being one of high integrity & a keeper of fiduciary responsibility can never tell the Sucker anything about the other offers only that “if you really want the place you better put in at asking or to better guarantee, about a $50k cushion”. The Sucker goes for it not knowing the ONLY other REAL offer was 25% less than asking and 2 further offers were agents (or friends) creating the illusion of multiple offers.

That’s right, all that’s ever really needed by the trickster-agent are only two interested parties and his own creations of a demand which he gets from a little help from his friends. If the two interested parties show great enthusiasm for the area the show begins & goes & where it ends, nobody knows!!!

I’ll bet that if someone ever investigated the trickster-agent, the investigator would discover that the same names (his friends or peers) appeared over & over on many of his successful sales!

Be careful, the deck really is loaded!!

#162 Willy H on 10.26.13 at 9:36 am

Yup, those GenXers are working hard to morph into their Boomer parents. They’re now at a point in their lives and careers when they can borrow huge amounts of money, still take life advice from Mom, and will do just about anything to get a SFH.
_____
Most GenX’rs already own an SFH that I know and they have been indebted for the better part of a decade. It’s Gen Y that is beginning to fall for this same mantra, particularly in the GTA. Early 30’s, married for 5+ years and they are going for the SFH upgrade come hell or highwater.

#163 Beach Girl on 10.26.13 at 10:15 am

I once owned a large SFH 3 story Victorian on Cowan Avenue in Parkdale. Relator said this area will be the place to be. NOT. What a nightmare. I ran it as a rooming house. Total dump, that was in 82. Went back to look at it, it is still a dumpy area. Talk about depressing.

Also owned a few houses in Whitby once, when they were cheap. Got a kick out of the new people moving into that area around Whitby Shores. Huge Mental Hospital there. They were complaining about the crazy people in the neighbourhood.

Why would you move there? Just stupid. Cold down there too. I emphasize with people with Mental Illnesses, they were there first. Place is over a 100 years old. Really?

#164 Rexx rock on 10.26.13 at 10:57 am

Wow!Toronto rocks for flipping houses.Easy money for a few more years for speculators.I’m in.

#165 The Weekend Edition No. 3 | Urban Departures - Personal Finance Blog on 10.26.13 at 12:45 pm

[…] a year, the Bank of Canada has dropped any mention of the coming rise in interest rates. Looks like cheap money and real estate bidding wars are here to […]

#166 Daisy Mae on 10.26.13 at 8:18 pm

“…still take life advice from Mom…”

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

Hey! ;-) We moms figure our job is done…however, we’re always there if the bottom drops out of their world. But, by and large, our kids are adults and make their own decisions.

#167 krs hamilton on 10.28.13 at 2:23 pm

Why do people constantly say, “I bought a mansion in Burlington (or any other lame town) for the same price”. These places are not within walking distances of the 3rd largest city in North America. People who buy in the city don’t want a suburban mansion lifestyle with a 2 hr commute. Get over it already. There is a urban renewal happening in US as well. Suburbia is dying. Cities are thriving. I’II bet my money the Burlington mansion drops in value way more than my victorian row house in the city if a correction comes.