I confess

shame

Claudia’s email got right to the point. “Question: do You own a house?” she said in the subject line. And that was it.

I am asked this all the time. Usually by realtors or condomaniacs who, once they have my attention, often make helpful suggestions about what I can do with various body openings. The intent of such a query is obvious. If I own real estate, then where do I get off warning other people about doing the same thing? And if I believe housing is an unsustainable, dangerously inflated gasbag of a bloated commodity, why would I keep any?

The question’s also hurled at me by house-horny young renters incensed that their spouses read my drivel, then callously repeat it during breakfast. Instead of saying, “You want a home, honey? Great. I’m there for you. Let’s do some open houses this weekend!”, they offer, “Garth says don’t be an idiot.” I’d want me dead, too.

So, do I own a house? It’s a fair thing to ask, easy to answer.

Yes, Claudia, I do. I also rent. My million-dollar residence in the city is leased and my way-less-expensive house in the country is owned. Over the last three decades over sixty houses and investment properties have migrated through my hands. Actually, I’m a real estate junkie.

But how do I justify owning anything I think might decline in value? First, real estate is an asset class and like every other it ebbs and flows in value. I think US stocks are overvalued as well, but I’m not exiting that asset inside my own investment portfolio. There’s no way of knowing how much prices might correct or how long they’ll stay down. If a plop happens, I’ll probably buy more.

Houses are the same, but different. The cost of getting in and getting out is massively higher than with an ETF, and it can take weeks, months or even years to sell a property, whereas a financial asset can be liquidated in two seconds. But the principle remains: if you’ve worked hard to achieve balance in your financial life, why not stick with it, whatever markets do?

So here’s the key point: establish the correct weightings for assets, then maintain them. That’s where my Rule of 90 comes into play. A sane portion of your net worth to have in residential real estate is 90 minus your age. That means a 30-year-old can have about two-thirds of all wealth in house equity, but a retiree should have three-quarters in financial assets. That’s because the young have time to pay down debt and increase wealth over time, while the old need income. Simple. Just do the opposite of what most house-heavy, illiquid Boomers are doing, and you’ll be fine.

The trouble these days, as you know, is that stupid-high house prices and insanely-cheap debt have encouraged people to borrow like little piggies and consume real estate beyond their means. Now 85% of the wrinklies own houses and record numbers face retirement with unpaid mortgages. They’ll soon learn you can’t eat drywall.

So, Claudia, as long as my residential real estate represents a reasonable portion of my net worth (less than a third), and I enjoy it (which I certainly do), and I maintain an overall balanced portfolio (duh) why would I sell even if it might lose 20% of its value?

Now let’s compare that with a GenXer couple buying a trash urban semi for $750,000 with 10% down ($90,000 including closing costs), which is pretty much all the wealth they possess. They may have good salaries and strong stomachs, but a 20% housing correction would reduce the value of their real estate to just $600,000. Not only would that erase all of their net worth, it would make the value of their asset less than the debt placed upon it. If the property didn’t recover in value and they needed to sell five years later, after commission they’d net about $570,000 – three grand less than the mortgage left owing. They’d have spent $190,000 in mortgage payments while chewing through the downpayment of $90,000 – a $280,000 hit, compared with maybe $120,000 in rent.

You see, Claudia, if there is no year-over-year price appreciation in real estate values, the young – even with 10% down and a cheapo mortgage – are taking on huge dollops of risk. A house simply isn’t worth it, which is why I’m so cautious on their behalf. But with a geriatric, sexed-up old prune like me, the beneficiary of decades of inflation and economic growth, the risk’s minimal.

Does this suck? Totally. And it’ll change. For all the reasons I have blathered on about in this pathetic blog. Rates will rise. Tons of Boomers will have to sell. Debt will take its toll. Overbuilding will swell supply. Condos will crumble. Reality will return with a vengeance. We will look back at price-income and rent ratios and say, ‘what the hell were we thinking?’. And real estate over time will revert to the mean. That doesn’t mean everybody gets a house. It means houses get more affordable.

You can curse the fact prices are insane just when you’re hot to buy. You can accept and absorb the growing risk, roll the dice, and jump in. Or, you can wait.

Too bad Google murdered patience.

160 comments ↓

#1 help on 11.21.13 at 9:06 pm

What is your opinion on buying an apartment
building in Hamilton with a 9% cap rate?

Show me. — Garth

#2 Victoria Real Estate Update on 11.21.13 at 9:06 pm

. . . . . .Percentage Price Decline From Peak (MLS HPI). . . . .
. . . . . . . . Greater Victoria – Single Family Homes. . . . . . .
. . . . . . . . . . . . . ( 6 month high-low chart ). . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .0%. . . . . . . . . . . . . . . .*. . . . . . . . . . . . . . . . . . . . . . . . .
– 0.5%. . . . . . . . . . . . . . . .*. . . . . . . . . . . . . . . . . . . . . . . . .
– 1.0%. . . . . . . . . . . . . . . .*. . . . . . . . . . . . . . . . . . . . . . . . .
– 1.5%. . . . . . . . . . . . . . . .*. . .* . . . . . . . . . . . . . . . . . . . . .
– 2.0%. . .*. . . . . . . . . . . . *. . .*. . .*. . . . . . . . . . . . . . . . . .
– 2.5%. . .*. . . . . . . . . . . . . . . .*. . .*. . . . . . . . . . . . . . . . . .
– 3.0%. . .*. . .*. . . . . . . . . . . . *. . .*. . . *. . . . . . . . . . . . . .
– 3.5%. . .*.. . *. . . . . .*. . . . . .*. . .*. . ..* . . . . . . . . . . . . . .
– 4.0%. . .*. . .*. . . . . .*. . . . . .*. . .*. . . * . . . . . . . . . . . . . .
– 4.5%. . .*. . .*. . . . . .*. . . . . .*. . .*. . . * . . . . . . . . . . . . . .
– 5.0%. . .*. . .*. . . . . .*. . . . . . . . . . . . .* . . *. . . . . . . . . . .
– 5.5%. . .*. . .*. . . . . .*. . . . . . . . . . . . .* . . *. . . . . . . . . . .
– 6.0%. . .*. . .*. . . . . .*. . . . . . . . . . . . .* . . *. . .*. . . . . . . .
– 6.5%. . .*. . .*. . . . . .*. . . . . . . . . . . . . . . . . . ..*. . . . . . . .
– 7.0%. . . . . . *. . . . . .*. . . . . . . . . . . . . . . . . . . *. . . . . . .
– 7.5%. . . . . . *. . . . . . . . . . . . . . . . . . . . . . . . . .*. . . . . . . .
– 8.0%. . . . . . *. . .*. . . . . . . . . . . . . . . . . . . . . . *. . *. . . . .
– 8.5%. . . . . . *. . .*. . . . . . . . . . . . . . . . . . . . . . . . ..*. . . . .
– 9.0%. . . . . . *. . .*. . . . . . . . . . . . . . . . . . . . . . . . . *. . *.
– 9.5%. . . . . . *. . .*. . . . . . . . . . . . . . . . . . . . . . . . . . . . *. .
-10.0%. . . . . . *. . .*. . . . . . . . . . . . . . . . . . . . . . . . . . . . *.
-10.5%. . . . . . . . . *. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-11.0%. . . . . . . . . *. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-11.5%. . . . . . . . . *. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-12.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
———————————————————————————————
. . . . . . . . . 08. . . . . 09. . . . . 10. . . . .11. . . . .12. . . . .13. . .

My 6-month high-low price chart was put together using MLS HPI data for Greater Victoria single family homes.

There have been 7 consecutive (6-month) price bars with lower highs since the peak in 2010. A SFH price downtrend has been firmly established in the Victoria market.

So far this year, the total number of SFH sales is slightly ahead of 2012’s pace, however, 2012’s sales total was the lowest since 1982.

Supply of properties in Victoria continues to exceed demand from buyers by a wide margin. Many frustrated sellers have not accepted that the party is over in Victoria and that the good times are a thing of the past. Now sellers must face facts – only aggressively priced houses are selling.

Victoria’s housing market has been a buyer’s market for a long time, meaning that buyers have the advantage over sellers with plenty of inventory to choose from and falling prices on their side.

Girls and guys, bigger price declines are on the way. House prices in Victoria have fallen 10-15% (since 2010) in an environment of falling rates. Falling rates have provided a strong force that has pushed upward against falling prices. Now that rates have stopped falling, that upward force has been eliminated and downward price pressure will become even more dominant.

Continue to rent and wait for lower prices.

Until next time – Cheers!

#3 Mister Obvious on 11.21.13 at 9:10 pm

You simply can’t make it any clearer than that.

Now prepare for droves of innumerate young pups asking you if now is a good time to buy.

#4 Godth on 11.21.13 at 9:11 pm

Good deal…
Special Report: The Pentagon’s doctored ledgers conceal epic waste
http://www.reuters.com/article/2013/11/18/us-usa-pentagon-waste-specialreport-idUSBRE9AH0LQ20131118
That means that the $8.5 trillion in taxpayer money doled out by Congress to the Pentagon since 1996, the first year it was supposed to be audited, has never been accounted for. That sum exceeds the value of China’s economic output last year.

What Happened to the Future?
http://www.peakprosperity.com/blog/83594/what-happened-future

#5 Jackofall on 11.21.13 at 9:12 pm

Hmmmmmmm. Now it’s 20%. Interesting. ;)

Every market is local. (How many times do I have to state the obvious?) — Garth

#6 TurnerNation on 11.21.13 at 9:20 pm

More Bay St. layoffs today. It made the news but I heard. Record stock price. Merry Xmas!

National Bank makes cuts in mining, mergers

http://m.theglobeandmail.com/report-on-business/streetwise/national-bank-makes-cuts-in-mining-mergers/article15551148/?service=mobile

– Top trader warned me away from these guys earlier this year. Said they were burning through holes like nothing. Costs more to find new ones. LTS.TO formerly Petrobakken

Lightstream shares plunge on dividend halved

Calgary Herald – 3 hours ago
CALGARY – Shares in Lightstream Resources Ltd. tumbled to an all-time low Thursday after it halved its dividend and announced a lower 2014 capital budget that provides for no production growth.

#7 Rexx Rock on 11.21.13 at 9:22 pm

Cashable gic with rbc is 1% ,why are the banks not rewarding the savers?I guess they know Canadians will now accept decades of very low interst rates like the Japanese people.Pretty smart from the bankers and the goverment.

#8 Jackofall on 11.21.13 at 9:23 pm

Hmmmmmmm. Now it’s 20%. Interesting. ;)

Every market is local. (How many times do I have to state the obvious?) — Garth
_____________________
Just buggin ya, Garth ;)
What else is there to do on a thursday night when everyone around me is house poor.

Watch Glee. — Garth

#9 JustTryingToProtectEquity on 11.21.13 at 9:31 pm

My wife and I bought a house in 1989 for $178,000.00. We completely renovated it from cellar floor to roof peak, high-end work too. 7 years later (1996), all we could get for it was $148,000.00. Now, we then bought in the same down market in Toronto. Again, 1996, we paid $325,000.00 for a house that, only 18 months earlier, was listed for $580,000.00. And we know many, many, friends and neighbours who faired far better than we did. We sold this house, the one we had paid $325,000.00 for, in 1996, last June, for $975,000.00. Mortgage paid, we were able to invest the full amount and rent in the same neighbourhood. Using Mr. Turner’s guidance (and a tiny bit of Smoking Man’s taste for somewhat risky investments)(I should tell you, we had a substantial amount invested before we sold our home)… I feel comfortable in saying, we will never have to work again. And, like Mr. Turner, we too have a lovely property in the country. The market is correcting right before our eyes and any suggestion to the contrary is absolute balderdash. The debt loads people are carrying and their obscene mortgages, will ruin them. Now is not the time to be loading up on real estate. Now is the time to be solvent. As always, Mr. Turner, keep up the good work. The relationships, the marriages, the bank accounts you are saving today, will pay dividends in the future. You provide an unequalled financial service with this ridiculously wonderful blog. All the best.

#10 not 1st on 11.21.13 at 9:34 pm

Garth, you may have noticed the Bank of Canada is on the other side of your RE bet.

I told you already that they are trying to reinforce their policy position. — Garth

#11 not 1st on 11.21.13 at 9:35 pm

#7 Rexx Rock on 11.21.13 at 9:22 pm

Cashable gic with rbc is 1% ,why are the banks not rewarding the savers?
———

Because cash sitting in a savings account is dead money in the economy. Why should it be rewarded? Dividends from equities are the reward.

#12 Blase on 11.21.13 at 9:36 pm

Stop being rational, Garth, it’s infuriating. Can’t you see my friends all have houses and condos? It’s not fair that I should wait. And I can’t be expected to Instagram pics of a rental!

#13 VT on 11.21.13 at 9:39 pm

My million-dollar residence in the city is leased

Garth, as an illustration, if one were to take a $1M residence, what would be the correct way to value the price to rent ratio for the city of Toronto. I did some sleuthing online and one site offered this guideline, however, with the caveat that different cities would have different ratios. Could you offer perspective for those of us seeking to lease in terms of what ratio would represent good value?

-Price-to-rent ratio of 1 to 15 would mean it makes more sense to purchase than to rent.

-Price-to-rent ratio of 16 to 20 would mean its typically better to rent than to buy, but this is the grey area where a lot would depend on the particular market and situation.

-Price-to-rent ratio of 21 or higher means its much better to rent than to buy.

Covered in a recent blog post. — Garth

#14 William of the North on 11.21.13 at 9:40 pm

Hey Garth,

The Fed is talking about tapering again.

What do you think; this time? Do we still have ‘no reason’ not to believe that they will in taper this time?

And….how does this effect rates?

#15 I'm stupid on 11.21.13 at 9:40 pm

Decades of growth… Lucky you and by you I mean your generation. After the decades of growth the boomers are going to cry poor. The final F.U by the most wasteful generation in human history. The thing that hurts the most is that after squandering fortunes they still feel entitled.

#16 Soylent Green is People on 11.21.13 at 9:41 pm

Harper has just slipped another omnibus (Trojan Hourse) bill through the house, disguised as an anti-child bullying bill:

Some lawyers worry things like stealing a wireless Internet signal or cable,

or condemning apartheid Israel could be made illegal under a new Conservative government bill.

http://thechronicleherald.ca/novascotia/1169122-impact-of-bill-worries-experts

.
.
.

#17 Nemesis on 11.21.13 at 9:52 pm

“Watch Glee.” — HonGarth

Even better than your InvestmentAdvice, AuldPol…

Seriously, when you’re on top of your game… it ReallyShows…

http://youtu.be/GwuR8ddtAGU

#18 help on 11.21.13 at 9:53 pm

check it out
295 Melvin ave Hamilton

#19 Barold on 11.21.13 at 9:54 pm

@turnernation – I occasionally connect with friends from bay st for drinks – they have been twiddling their thumbs for some time now -deal flow is nearly stopped. People aren’t working for bonuses- they’re working to keep their salaries. That being said, I don’t think the RE market will pop – long slow painful deflation (we can’t just walk away like they did in the US). Absent a foreign crisis where the corrupt Chinese and Oligarchs need to access they cash they’ve laundered and stashed in condos here, what’s the catalyst?

Garth if you were looking to invest a chunk of cash these days Where would you be looking? US equity is too high – I know it will still run but I think it can fall more than it can run

#20 Ripped on 11.21.13 at 10:05 pm

Looks Ripped

http://24.media.tumblr.com/7f4bc6ba516d38767e926dd02bb44efd/tumblr_mw9ziaErCe1s4naa8o1_1280.jpg

#21 Bob Rice on 11.21.13 at 10:06 pm

@ Jackofall; 20% would be epic… I can only wish!

Just rented our second home… lease commences in 2 months. Guess what? The real estate agent we dealt with is renting! Bahaha! Told me that he wouldn’t buy a home now if his life depended on it… smart man.

#22 JSS on 11.21.13 at 10:08 pm

Soooooo, I went to RBC to discuss mortgage renewal. I’m around three months of a renewal.

The options [email protected] presented to me were:
1) 5-year fixed rate @ 3.69% (semi-annual compounded interest)

2) 5-year variable rate @ Prime-0.35%=2.65% (Monthly compounded interest)

I was also told that because I have a HELOC alongside my mortgage, my mortgage is a “collateral” mortgage. So for me to leave RBC, I have to leave my HELOC, which is at Prime (3%)

Are any of these options good? Advice plzzzzzz.

#23 Devore on 11.21.13 at 10:12 pm

#11 not 1st

Because cash sitting in a savings account is dead money in the economy. Why should it be rewarded? Dividends from equities are the reward.

I figured you would know better. I figured wrong.

If the money was just sitting there, banks would be charging YOU. The fact they pay interest, however pitiful, means they are making money with your money, not paying interest out of the goodness of their hearts.

You may have an issue with WHAT they do with your money, but to say it is dead money is flat out wrong.

#24 Elmer on 11.21.13 at 10:13 pm

Garth, is buying a house only a good idea when RE is appreciating? What if prices are expected to remain flat, still ok to buy?

#25 Ripped on 11.21.13 at 10:13 pm

ScarFord

http://24.media.tumblr.com/7f4bc6ba516d38767e926dd02bb44efd/tumblr_mw9ziaErCe1s4naa8o1_1280.jpg

#26 Condo crash in Toronto on 11.21.13 at 10:17 pm

The final nail has been HIT and HIT HARD! NO ONE will buy a condo in Toronto. Flippers from around the world set to take a BATH of 50%. I wouldn’t be surprised if condo’s crash more then 50%. Look out below.

#27 sasquatch on 11.21.13 at 10:18 pm

Oh boy this is sad. How many times has Garth told and retold the hapless masses that owning a house depends on your own situation. It just so happens most of the Canadian population are currently not in a position to reasonably take on a mortgage.

The absurd has become the norm for so long that Gen x, Gen Y, and millennials have not a clue what housing should be. I’ll give people a hint; it’s where you keep your stuff and sleep. It should not be an investment strategy.

#28 Henrik on 11.21.13 at 10:30 pm

Thank you for this; it gives me more confidence that I haven’t done such a dumb thing buying a house at $115k, which seems like nothing compared to the prices you talk about in Canada. Now I just need to start getting the non-real-estate portion up to one-third based on your 90-rule.

I like your blog.

#29 VT on 11.21.13 at 10:32 pm

Thanks Garth. A wee bit more googling and it turned up. For others looking to compare buying vs renting, here is the blog in question:

http://www.greaterfool.ca/2013/08/13/renting/

#30 Condo crash in Toronto on 11.21.13 at 10:43 pm

Condo’s in Toronto are GARBAGE…pure GARBAGE. I wouldn’t pay more then 30 cents on the dollar.

#31 Shawn on 11.21.13 at 10:43 pm

WHY INTEREST RATES ARE LOW

Not first suggests it is “Because cash sitting in a savings account is dead money in the economy. Why should it be rewarded? Dividends from equities are the reward.”

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

Maybe, but then again cash does not “sit in an account” at the bank; it gets loaned out. In at 1% out at 4%. A 3% spread is not great until you realize the bank earns 3% on someone else’s money. They need to hold only about 10% equity so they can lever up 10 times and 3% becomes 30% gross margin, 20% pre-tax (after expenses) and 12% after tax. Everyone is happy. If not happy, buy bank shares.

Interest rates are generally set by supply and demand. Low interest rates mean many want to save and few want to borrow. Today central banks work to push interest rates down by buying up federal bonds from banks which puts cash back in the hand of banks and the banks can’t find enough borrowers for the cash therefore they pay little for deposits.

Generally speaking in our advanced economies there is an abundance of installed infrastructure (buildings, factories, houses, schools, highways, everything that has to be built). Due to the abundance of installed infrastructure there is little demand to borrow more money to install new infrastructure. Existing infrastructure kicks off cash to the owners who place it in the bank as they have little call to build new. Ergo, much savings, little incremental borrowing and interest rates fall.

If, as many claim, we were truly awash in debt on a global scale, then interest rates would be high, not low.

YOU may be awash in debt but on a total dollar basis there is more savings than there is debt. (Check any bank balance sheet, deposits usually exceed loans)

Equities are giving great returns mostly in order to give lower returns going forward. Today’s very high U.S. equity returns are certain to be temporary. To understand why, study long-term bonds. The P/E ratio can only rise so far.

#32 Condo crash in Toronto on 11.21.13 at 10:47 pm

Toronto condo’s are the future SLUMS. In ten years they will be GARBAGE as they are falling part after a few years. Toronto is screwed and condo owns in a financial would of hurt.

#33 BSI on 11.21.13 at 10:49 pm

@JSS I was you, I would take 5yr variable rate prime-.35% with your line of credit at prime rate… If you had been doing that for the last 20yrs you would have been a head of the game…In my opinion, you will still be winning for the next 10yrs, and poof your mortgage should nearly be paid off…but please pay off your prime rate credit line at the same time!!! Debt free it is the name of the game!!! Advice from someone who is mortgage free in the GTA and has large stock portfolio, for what it is worth…have a nice day!

#34 BSI on 11.21.13 at 10:51 pm

Correction…* If I was you….

#35 Mrs Riverview on 11.21.13 at 10:53 pm

Thanks for your honesty, Garth.

I guess the short version of it is: you own a house because you can afford it. Most cannot.

Correction: most own houses even though they can’t afford it. — Garth

#36 BSI on 11.21.13 at 10:55 pm

@JSS …correction…*If I was you

#37 Knickerbockers Knosty on 11.21.13 at 10:56 pm

#61 Smoking Man on 11.21.13 at 7:45 am — “They can’t even wait. City Taxes going up . . . Al Gore coming to Toronto to help Kathleen Wynne lie about Ontario’s green energy record ” — Time for Al Goregonzola and his bunch of tree-hugging, green-based screaming nutjobs to go sunbathe in the northern climes.

Seven Volcanoes in six countries enjoy a giant burp together, blocking the sun’s rays out. Fortunately, Yellowstone and Toba (super volcanoes) weren’t among them. If they had been, we would be heading toward a mini-Maunder (little ice age) right about now. However, electricity and gas rates will jump substantially, as they have done in the UK. Buy a couple of portable, efficient heaters? To boot, there is also an active undersea Volcano in Antarctica which has been belching lately. Good job, Al!

#109 Waterloo Resident on 11.21.13 at 1:21 pm — “Here’s why CHINA’s economy is set for a crash (and with Canada so dependent upon China for exports, why Canada’s economy will probably also crash):” — Correct — China Oh No, China Won One and China Too Two.

Remember, the only reason dubya went into Iraq (illegally) was because Sadaam was about to leave the petro-buck and team up with the Euro or Yuan. In any event, America’s legacy in Iraq lives on.

#38 Retired Boomer - WI on 11.21.13 at 11:00 pm

#15 I’m Stupid

Can’t speak for your parents, but some people didn’t have a silver spoon in their mouth, or any other orifice.

Many of my fellow class of babies in1951 retired, or nearly retired, or dead worked dam hard for what they have. Many like myself have plenty, but ask me if we have “enough.”

Of course not, dumb ass, that’s why some of us yet work, invest, and save. Naturally, there ARE some who never saved a thing, despite making good money. Others went through 2 or 3 spouses leaving half a loaf behind with each departing spouse. Others lived within their means, saved and invested what they could.

Same crap as Gen X, Y, and soon millennial’s will go all too soon pass through. So, what is new? Nothing as far as I can tell.

Boomers were the bulge in the population python. We competed in schools with the largest student populations up to then. We competed for jobs, housing, and now will strain government resources as we retire.

Boomers were gassed in 1973-74 recession, again in 2001-02 and the BIG melt of 2008 from which we are -still-slowly crawling back.

There U .R. Stupid, said my piece for the Boomers. Love ’em or hate them, we’re just passing through.

Some pass easier than others….

#39 VanDammeCouver on 11.21.13 at 11:16 pm

“Too bad Google murdered patience”

I wouldn’t say murdered, it was more like assisted-suicide

#40 Carpe Diem on 11.21.13 at 11:33 pm

In my 20’s and early 30’s (before I had a wife and kids), I lived in a condo 33 floors from the street. I actually tried to buy it but then my younger, hot girlfriend got pregnant and I now have 3 kids 8 years later.

I brought my friends over, some chicks over and they never questioned if I rented or owed the place. They were simply amazed by the view.

There are lots of places you can rent with a view and it cost less to rent than buy. If you are single or DINKS, don’t believe the hype. You can have more renting for less than buying.

What is important is you keep saving/investing 20% of your earnings per year for your future retirement. That is your nest egg.

#41 DocinWaitingRoom on 11.21.13 at 11:47 pm

My price to rent is 300 :) I walk to work while others ride rocket or go train or sit on 401 400 or qew. Auto insurance halved as car sitting in garage underground. About 90% of rent only covers maintenance 400 per month taxes on over 800k unit and interest on a loan of that amount. Glad I rent after owner spent 40k on roof leak and renos leaking aink and roof causing damage over 6 months. Gave us 3 months free rent due to damages and hassles of finding new quality renters like us

Talked recently to family friend buying new home said homes arent a depreciating asset. I replied do you think in 10 years the roof wont leak and which gen y or z will want your 2013 kitchen in 2023?

#42 HAWK on 11.21.13 at 11:55 pm

The Dow breaks 16,000…………onwards and upwards…………..

#43 Carpe Diem on 11.21.13 at 11:55 pm

#37 Retired Boomer – WI

Are you serious?

My dad was born in ’38. He saw lots including you economic headlines and we have compared notes – both of us love doing that.

The boomers have seen plenty but still believe real estate will keep going up!

Some boomers I know have kids buying home with 5% down and hope RE corrects since prices are crazy! HUH?

The educated boomer is wise, diversified and have awesome homes in awesome neighborhoods.

The mass are not.

And that what you should worry about.

#44 AngryMan127 on 11.22.13 at 12:13 am

Garth have you ever considered the delicious irony of selling mortgage broker advertising on your blog?

On the other hand you might be content with a simple thanks for turning out a consistently well written, thoughtful, relevant and sometimes hilarious piece of writing virtually everyday!

Thank you!

#45 mark on 11.22.13 at 12:19 am

Brad Lamb going mad on twitter after CBC’s condo report!

Must feel a fire in his wallet.

#46 detalumis on 11.22.13 at 12:22 am

#1. Stay away from any rental apartments in Hamilton. Every building has at least one apartment selling crack and other assorted drugs including those you wouldn’t suspect from the outside. The middle class does not rent apartments in that city, that is for the poor, the baby mammas, refugees etc etc with their welfare vouchers and such.

#47 Cici on 11.22.13 at 12:24 am

#22 Devore

Agreed!

#48 Andrew Woburn on 11.22.13 at 12:30 am

#119 Son of Ponzi on 11.21.13 at 2:50 pm
Free fares on BC ferries for Seniors eliminated.
R.I.P. Retirement RE in Victoria and Sunshine Coast.
===============================

Not exactly. Ferry fares are charged separately on individuals and their vehicle. The standard personal one-way fare is $16 and pensioners will now have to pay half of that, so the increased retiree cost on a round trip is $16. Pensioners have always paid full fare for their autos, now approximately $160 return. If you can afford to take your car, you can pony up another $16.

There will be no impact on RE because you can save hundreds of thousands by retiring on the Island anywhere but Victoria (or even there if you wait). We got a gorgeous water view home for $500K that would sell for $2-3 million in Vancouver.

#49 Retired Boomer - WI on 11.22.13 at 12:32 am

#37 Carpe Diem

My dad was born in 1910, my mother in 1915. sorry I was the “late kid” the only child in the second marriage for both my parents. (both childless in their 1st marriages for clarification).

Yes, when your dad had a front row seat to the “Great Depression” -he graduated high school in 1928- you get an education very young on the dangers of credit. Guess that makes me one of the ‘lucky boomers’ who never got carried away on RE or credit cards. Hey, my last home built in 1997 is the most expensive one I have ever owned.

RE is over. Get used to it, anyone buying now will likely not see the prices grow more than inflation -IF not melt.

My kid can buy a home when he has the requisite 20% down, and is convinced it IS better than renting.

Currently, local prices give the advantage to the renter.

As for the others, well, you just can’t fix stupid.

#50 Son of Ponzi on 11.22.13 at 12:36 am

Feast your eyes.
http://translate.googleusercontent.com/translate_c?depth=1&hl=en&prev=/search%3Fq%3Diask%26client%3Dsafari%26hl%3Den&rurl=translate.google.ca&sl=zh-CN&u=http://forum.iask.ca/showthread.php%3Ft%3D679444%26utm_source%3Dnews%26utm_medium%3Dp1%26utm_campaign%3Dh2f&usg=ALkJrhhiWZK9ue2w3nkPylE_4sg1d-wUfQ

#51 Dean Mason on 11.22.13 at 12:42 am

to Rexx Rox #7

Your first mistake is dealing with RBC. Home Trust has a 1 year cashable GIC after 90 days with no interest or any penalties that pays 2.00%.

Big Canadian banks make most of their money on fools buying mutual funds with 2% to 3% annual MER’s or annual management fees.

Other fools that have 18% to 25% interest rate credit cards plus paying dozens of fees that catch them.

#52 Dean Mason on 11.22.13 at 12:50 am

I meant to address it to Rexx Rock #7

I forgot to mention that it is the Bank of Canada, U.S. Federal Reserve, ECB, Bank of England, Bank of Japan, Reserve Bank of Australia that are keeping short term savings accounts and GIC rates low.

They are the culprits. Look at other countries interest rates and central Banks that have higher annual inflation of 5% or 6% but 9%, 10%, 12% short and longer term bonds, savings investment rates.

They want people to be in debt and have crappy, falling apart condos like mentioned in the Condo Game on CBC tonight shown at 9 P.M to 10 P.M.

#53 Freedom First on 11.22.13 at 12:54 am

#45 detalumis

Does Rob Ford rent? detalumis, don’t kid yourself, there is illegal drug use and alcoholism in every neighborhood. You just can’t see it as easily as in the poor/skid row areas. But I will tell you something, there is many people who have fallen from being wealthy professionals/actors/musicians/ to being poor/skid row dwellers, or, are now dead. detalumis, you should change your handle to read “cluelesselitist”.

#54 Dean Mason on 11.22.13 at 1:45 am

To Rexx Rock #7

ICICI Bank of Canada has a 5 year RRSP GIC, TFSA GIC paying 3.15%.

In 5 years, this is 16.7740% total interest and RBC’s 1.00% cashable GIC will only total 5.10% interest in 5 years.

Google GIC rates and you will find it, click on it and see all the information.

#55 not 1st on 11.22.13 at 2:26 am

I told you already that they are trying to reinforce their policy position. — Garth

—–

Yup, got you, but until that policy has some inkling of tightening in it, there will be no crash or correction or softening. That is the catalyst, not all this other noise you keep reporting on like board stats and debt levels etc.

#56 OffShorePbserver on 11.22.13 at 2:42 am

This is a link to an interview with a co-director of “The Condo Game”

http://youtu.be/0kmLZBK6Sp8

Would anyone please upload the CBC documentary to Youtube or Vimeo so I can watch it in Thailand?

CBC restricts their reach.

#57 six-figure-renter on 11.22.13 at 3:03 am

Hey Garth. First off, always great read :)

I came across this article and thought that you and the readers would get a kick out of it.

Welcome to the most delusional city in Canada. Enjoy!!

http://www.scmp.com/news/china/article/1354767/vancouver-benefits-influx-mainland-chinese-migrants-says-mayor

#58 Rob the happy rentor on 11.22.13 at 3:08 am

Funny we get asked that all the time, we own a small apartment in Frankfurt Germany but rent were we live , currently Munich, previously Madrid.

Had we followed conventional wisdom we’d be stuck with an over priced place in Madrid Spain

Having watched Spanish house prices drop some 60% I have no desire to own unless it pays me.

#59 Tony on 11.22.13 at 4:26 am

Re: #1 help on 11.21.13 at 9:06 pm

There’s many ways to lose all your money. One way is through the domino effect. When one domino falls they all fall. Such can be said for real estate in that city with the remnants of steel stench known as Hamilton. Get the point?

#60 Onthesidelines on 11.22.13 at 5:29 am

“whereas a financial asset can be liquidated in two seconds. But the principle remains”–Garth

Sounds like a sure thing. Very Brad Lambish of you.

Foolish comment. Liquidity is a hallmark of financial portfolios. — Garth

#61 I'm stupid on 11.22.13 at 7:37 am

#37 retired boomer

I respect your argument, and while it’s true that there are exceptions to my previous statement. As a generation most lived beyond their means. I’m not saying anything about work ethic or competion for jobs. I’m just pointing out the fact that if your generation would have had some constraints on spending and excess, that it would have been the wealthiest in human history. Instead most squandered it (remember the 80s). You lived in a time when wages and economies where linked. A time when cheaply manufactured good did not exist, when manufacturing was the driving force of an economy. GenX and GenY now compete for barista positions paying minimum wage. It was your generation that caused this shift with your never ending need for more. Your generations contribution to society can be seen in the landfills of every major city.

#62 economictsunami on 11.22.13 at 7:52 am

Interesting viewing of The Doc Zone-Condo Game last night.

It was surprising to see that the OMB has basically supplanted the City of Toronto Planning Department. Think density versus deteriorating/ non existent services.

Not surprising to see were big developers contributions of $8M to both Liberals/ Tories and how their powerful lobby groups keep effective consumer legislation at bay.

Interesting comment by “The King Cobra” that he considered TO condos to be more of an international commodity play.

Important and expensive condo lessons were learned in Vancouver but you still can’t trump market forces…

#63 Onthesidelines on 11.22.13 at 8:38 am

Foolish comment. Liquidity is a hallmark of financial portfolios. — Garth

Evasive reply. Principal is almost always exposed to some degree of risk regardless of such liquidity. To say it “remains” implies there is no possiblity of loss.

If you disagree with that, I’ll happily hire you as my financial advisor. But you’ll have to guarantee no loss of principal ever. And that guarantee will have to be backed by your personal assets. Do we have a deal?

I didn’t think so.

The principle I referred to was evident in the sentence you half-quoted. To wit, “But the principle remains: if you’ve worked hard to achieve balance in your financial life, why not stick with it, whatever markets do?” It did not refer to the principal. — Garth

#64 AgentSmith on 11.22.13 at 9:00 am

2 Part..

How many people read this blog. You don’t even sell advertising..:)
How many visitors a month?

Best post of the lot. Right to the point about eating up all payments and paying the bank IF…no no..WHEN the correction hits.

About 500,000 visits a month. No ads here because I don’t want any. This is not a commercial site. — Garth

#65 recharts on 11.22.13 at 9:09 am

#44 mark on 11.22.13 at 12:19 am
Brad Lamb going mad on twitter after CBC’s condo report!

Must feel a fire in his wallet.

Yeap, I just had a look at his tweets. Bullshit all the way.
I actually found the CBC documentary quite interesting, I did not expect them to tell just one side of the story.
Well…. we have heard the other side of the story for years, last night the public had the chance to see a summary of the condo situation and to hear that part of the story that was never told so far.
I am positive that this documentary was needed by Flaherty and his team, they must do something about the condo market in Toronto because as BoC said this will bring down the entire economy.

Diane Francis of Financial Post said we avoided the crash or the bubble with the latest measures implemented by F.
How so, the Avg. prices are still rising in TO!? The sales of new homes are 50% this year…I guess that include new condos as well. And guess what, the Avg price for condos in GTA is falling rapidly. In my charts it reached the lowest price on record since May-June when I started watching this market.

If you ask me the condo market is doomed. It will implode under its own pressure, too many and too much speculation. The very fact that RE agents speak against this industry tells you something. The two RE agents quoted in this documentary revealed two important aspects: tax evasion by reassigning the condo units and poor construction standards. These guys wouldn’t speak bad about this industry if they could still profit from this industry.

Also lots of people are now trapped by the recent CRA measures, they bought the condos but they have to prove that they lived in these condos if they intend to sell them earlier, so they are forced to rent for a while and this is why we do not see much panic right now. IMO this will aggravate as the time passes.
Also big money investors who bought 8-10 units might have a problem because of these new CRA measures.

The documentary also revealed an interesting aspect: you actually won’t hear about the problems that the condo buildings have because it is in the owners’ interest to keep their mouth shut. I never realized that.
I am happy that my opinion regarding the TO DownTown condos was confirmed: the area will become a slump. They did not build the infrastructure required to sustain the population that was suddenly implanted there. Right now most of these guys are young and we do not see lots of problems.
This could evolve in two ways: these guys will get older and they will want to sell and move to the outer areas of the city. The market might hold the prices and the condo demographics might not change and then the infrastructure problems will not surface entirely. (schools, stores, hospitals etc)
The other option is that the market will not hold the prices and now older these guys will have to move out of the area and they will take a loss when they sell. This will lower the price and this will be a deadly spiral because the older the building gets the lower the price will be (more problems will surface) and with lower prices you will have people who care less for the building and its amenities.

Note that the condo owners interviewed in this doc had about that age and situation: they were older and lived at least 5 years in their condos.

Anyway…no matter how you look at it, it is not rosy and this documentary will raise questions.

#66 The Man From Nantucket on 11.22.13 at 9:21 am

#11 not 1st on 11.21.13 at 9:35 pm
…………Because cash sitting in a savings account is dead money in the economy.

I dunno. I’m guessing the bank puts the savings account and GIC money to work in the economy.

The only person it’s not working for is the guy who gets the account statement and the tax bill.

#67 Mr. Frugal on 11.22.13 at 10:00 am

A generation ago, a small bungalow was a perfectly reasonable home for a middle class family. Now everyone seems to think they are special and they require a huge McMansion. Many families would be better served by a little bit of modesty and frugality. A smaller, less expensive house translates into financial security and that brings comfort. Personally, I wouldn’t trade that for anything.

#68 Kaganovich on 11.22.13 at 10:11 am

#62

“The principle I referred to was evident in the sentence you half-quoted. To wit, “But the principle remains: if you’ve worked hard to achieve balance in your financial life, why not stick with it, whatever markets do?” It did not refer to the principal. — Garth”

Classic. Watch out Garth, with spelling corrections like that, the dawgs will start calling you a snob! Too funny.

#69 Retired Boomer - WI on 11.22.13 at 10:12 am

#60 I’m Stupid

Agree with the “consumption & waste” past. One needs to throw in there the US manufacturing concept of ‘planned obsolescence” in cars, electronics etc. In the early 1960’s when Toyota arrived for the 2nd time their offerings showed you could have quality, and a reasonable price. Honda followed a decade later.
Good jobs moved away as factory infrastructure became outmoded, and cheaper wages could be had elsewhere. Look at the movement first to our southern states, then to Japan, then China, and now you see the bottom feeders in Vietnam, and Africa. Eventually, it will circle around to back here, but that is yet generations away.
In the meantime, will people overspend? Yes
Will they be over taxed to satisfy THEIR demands upon the state? Yes
Will their be a shifting of blame to other generations? Yes

It’s never MY fault…. Every generation in every time has failed to do their best. Boomers had been the most marketed to population, and it worked! We bought crap we didn’t need.

This generation can’t carry on a conversation ass they have their eyes on a dam phone instead of the world around them. Is that going to improve communications between humans, or stifle it?

Like I stated earlier, not much has really changed.
Sad really. We ARE all in this together

#70 Toronto_CA on 11.22.13 at 10:15 am

#66 Mr. Frugal on 11.22.13 at 10:00 am

Have you seen what semi-detached crappy looking Archie Bunker style bluecollar in any other generation/place houses are selling for in Toronto and Vancouver?? That 1.2million dollar house that Garth posted about last week was hardly a McMansion.

Your point is well taken if you live outside of these areas.

#71 peter on 11.22.13 at 10:16 am

Claudia, Garth is telling you is he has ~1.5 million in real estate and 3.5 Millions in other liquid assets…. ;)

How did you know what’s in my cheqing account? — Garth

#72 live within your means on 11.22.13 at 10:27 am

Not sure if I posted this earlier – I have a CRAP memory like our current govt.

http://images.businessweek.com/ss/05/11/egreetings/image/01.swf

#73 Big Brother on 11.22.13 at 10:32 am

Where is Smoking Man today? Awfully quiet!
Tin foil hat on contacting the Aliens to discuss the 50th anniversary of the greatest conspiracy theory ever concocted? I thought we taught you better Smoking Man!

#74 live within your means on 11.22.13 at 10:32 am

Monty Python reunion

http://www.telegraph.co.uk/culture/comedy/comedy-news/10464904/Monty-Python-reunion-press-conference-as-it-happened.html

Hope it airs on Canadian TV. I especially loved the silly walk episode.

#75 Holy Crap Wheres The Tylenol on 11.22.13 at 10:35 am

#68 Retired Boomer – WI on 11.22.13 at 10:12 am
It’s never MY fault…. Every generation in every time has failed to do their best. Boomers had been the most marketed to population, and it worked! We bought crap we didn’t need.
This generation can’t carry on a conversation ass they have their eyes on a dam phone instead of the world around them. Is that going to improve communications between humans, or stifle it?

Like I stated earlier, not much has really changed.
Sad really. We ARE all in this together

Touché………………………………….

#76 Mike on 11.22.13 at 11:02 am

Nice post. Very good summary of your investment style and beliefs.

#77 Infused with Opiates on 11.22.13 at 11:04 am

64 recharts – If condo prices are falling, why would purchasers have a problem with CRA?

#78 Shawn on 11.22.13 at 11:11 am

HOW TO STAY POOR

Onthesidelines at 62 says:

I’ll happily hire you as my financial advisor. But you’ll have to guarantee no loss of principal ever. And that guarantee will have to be backed by your personal assets. Do we have a deal?

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

That was said to make a point but such an immature attitude and refusal to take ANY risk is a great way to stay poor. Or at least to stay on the sidelines looking in at the 1% and richer.

Investment strategies that refuse to countenance even temporary dips are doomed to mediocrity.

#79 live within your means on 11.22.13 at 11:18 am

One of sisters & her hubby as well as their daughter, her partner & their baby are way over their heads in debt. My sis’s hubby convinced my sis to buy a condo townhouse (when they sold their home) instead of renting as they originally planned. Her hubby said RE would always increase. He did the same with his daughter. Now both of them are in deep shite financially. Family members can only help them out so much. DH is totally against me sending more money to them.

#80 live within your means on 11.22.13 at 11:37 am

A PS to my previous post. This spring when my hubby’s twin bro was on the verge of divorce we paid for his airfare to visit us. He stayed 10 days w/a cast on his foot, would only drink Perrier water, & I had to cater to him all day. I was so happy to see him leave. His bro & wife spend like there’s no tomorrow.

#81 Bobby on 11.22.13 at 11:47 am

For # 2 Victoria Real Estate Update,

Your take on the Victoria market is indeed correct. I have been out looking at both houses and condos. Lots and lots of empty condos for sale and houses that are languishing until the listing expires. There are new condo projects with half the units still for sale. Yes, it is indeed a buyers market.

What is interesting is the opinions of the overall market from long time experienced agents and those that have only worked in a market that is on the rise. The old timers say we have seen this before and sellers had better become more realistic. A house or condo is only worth what a buyer is willing to pay. Yet, the newby’s say real estate is a safe bet and will only rise. And of course, there’s always the last Hail Mary comment as you decide to keep looking. That they are expecting an offer coming the very next day even though the unit has sat for 4 months with little interest.

It’s getting ugly out there.

#82 Chris L. on 11.22.13 at 11:48 am

Do you prefer a bull in a china shop or weasel in the hen house. Why is it that people will still support a man tied to drug dealers, hookers, who cusses and runs over Councillors? Might have something to do with saving a buck and something the Liberal party needs to reexamine.

http://bodylanguageproject.com/articles/mayor-rob-ford-body-language-a-bull-in-a-china-shop/

#83 Ogopogo on 11.22.13 at 11:50 am

My wife’s co-worker yesterday told her that the condo board in her building just raised the strata fees by a whopping 30%. Just like that. She was barely making the mortgage payments as it was, and now this. More and more Kelownians express envy to us that we rent a luxury condo unit, while they struggle to “own” (a.k.a. rent money from the bank, a.k.a. mortgage) on their underwater, overpriced financial-death boxes in the sky.

I usually feel smug at the desperation of once cocky “owners” who used to tease us for not buying. But today I feel pity for my wife’s co-worker. She got suckered into buying the unit by her parents and delusional friends. Too bad I didn’t know her when she was house horny. But would she have listened? I doubt it.

#84 Chris L. on 11.22.13 at 11:51 am

And by the way Garth, one of your best posts yet….namely because it sets people straight. Like the article I linked to, it’s hard for people to separate the man from the message.

#85 Ralph Cramdown on 11.22.13 at 11:57 am

#78 live within your means — “DH is totally against me sending more money to them.”

As am I, unless you’ve amassed enough wealth to want for nothing from now until death, and have no children and no plans for any. Don’t let their and their bankers’ problems become your problems. One of the joys of paying taxes in a welfare state is knowing that nobody’s going to starve to death if you don’t help them personally.

Geez, looks like I’m pretty bitter again today. Maybe because my broker won’t electronically execute a buy order for an OTC ADR, and I’m going to have to call them and likely fight over fees. Explain to me again why I deal with the largest discount broker in the country, knowing that there are better and cheaper options available? Somebody get a Chicago School economist on the line to explain how I’m behaving rationally.

But let’s end with some levity. Here’s a direct quote from a goldbug blog. No ellipsis or editing; these sentences appear unadulterated and side by side in the original:

“Yes, gold has had a bad year as an investment but its role of a store of value during the last 13 years is unquestioned. An asset class that reflects the psychology of global investors needs to be understood by the world’s central bankers.”

Got that? It’s a great store of value measured on the bog-standard thirteen year timeframe, and its price is based on psychology.

#86 TnT on 11.22.13 at 12:06 pm

#74 Holy Crap Wheres The Tylenol on 11.22.13 at 10:35 am
#68 Retired Boomer – WI on 11.22.13 at 10:12 am
It’s never MY fault…. Every generation in every time has failed to do their best. Boomers had been the most marketed to population, and it worked! We bought crap we didn’t need.
This generation can’t carry on a conversation ass they have their eyes on a dam phone instead of the world around them. Is that going to improve communications between humans, or stifle it?

Like I stated earlier, not much has really changed.
Sad really. We ARE all in this together

Touché………………………………….

**********

There’s an argument to be made that having boys chat online and phones has connected them to their feelings as they could say things in that format that they could never say in person.

On the flip side…

Grade 6 dance
Girls on one side and boys on the other side of the gym

They can no longer approach each other as they lack eye contact social skills.

They actually text each other to see if they want to dance….

#87 heineken on 11.22.13 at 12:15 pm

#24 Ripped on 11.21.13 at 10:13 pm
Love the photo.

A moment of silence and reflection should be given to one of the greatest leaders of all time- Jfk. He would have affected everyone’s lives in a positive way. Unfortunately, the satanic driven new world order took care of business 50 years ago today.

I watched the cbc condo presentation. I wasn’t surprised with any of it except the restaurant owner’s viewpoint (that is, the higher density population makes his restaurant less attractive). We all know that huge problems always show up later when construction practices are implemented at the minimum code level. It’s not a big surprise. Its happened everywhere else and its going to happen here. Guess what, all the new suburban houses in Toronto, Ottawa, London, Whitby, Ajax etc… are at minimum code as well . You want a great house/condo, built it yourself— but your building costs will appreciate. BUYERS BEWARE. That’s what i take away from this cbc report. Maybe tinker bell can fly over these condos and spray her angel dust everywhere and make this right again.

Let’s face it, living downtown is exciting- it’s alive and vibrant. Everything in walking distance; tough to beat. Sure the prices MIGHT come down: how much -no one knows! When are they coming down-no one knows!
If I had to choose a condo and wanted to reside in Toronto; areas such as Bathurst/college or the new high-rises in front of High park/Bloor west village, young and eglinton are far more desirable locations. One day, I will be picking 1 up for a bargain price.

Garth, I love that term “roll the dice”. It describes everything in a nutshell.

#88 -=jwk=- on 11.22.13 at 12:17 pm

@ #66 easier said then done. A 900 sf bungalow with original 1957 décor goes for about 600,000 in Toronto. Nice ‘starter’ home. Might as well get the 750,000 McMansion instead…

#89 TnT on 11.22.13 at 12:17 pm

#64 recharts

That’s a fair assessment of the program….

I am hopeful that it does not turn into another St James Town as that would be the real life version of Escape from New York…

http://www.youtube.com/watch?v=ckvDo2JHB7o

#90 Ralph Cramdown on 11.22.13 at 12:20 pm

#4 Godth — “Special Report: The Pentagon’s doctored ledgers conceal epic waste”

Dude, it’s the PENTAGON. They waste more money before 9AM than most organizations their size waste all day. They wasted money by the numbers under McNamara, they wasted money in an out-of-this-world way under Reagan, and they wasted money because deficits don’t matter under Rumsfeld.

A lot of us feel that the vast majority of Pentagon spending is wasted even when spent exactly as authorized by Congress. On the other hand, one could take the Keynesian view that since Republicans won’t countenance any other form of stimulative spending, pissing it away on the military when we’re in a slump is better than nothing.

#91 rosie "moving forward" in the knowledge that, "this won't end well" on 11.22.13 at 12:28 pm

Looking for greener pastures? http://www.dallasnews.com/business/commercial-real-estate/headlines/20131121-toronto-high-rise-developer-thinks-dallas-is-ready-for-more-condos.ece

#92 Onthesidelines on 11.22.13 at 12:30 pm

The principle I referred to was evident in the sentence you half-quoted. To wit, “But the principle remains: if you’ve worked hard to achieve balance in your financial life, why not stick with it, whatever markets do?” It did not refer to the principal. — Garth

My apologies. Nothing wrong with your writing. Completely misread the lines.

#93 Godth on 11.22.13 at 12:41 pm

I’m watching the CBC doc. To quote John Anthony West: “This isn’t civilisation, it’s shiny barbarism”.

#94 Snowboid on 11.22.13 at 12:49 pm

#82 Ogopogo on 11.22.13 at 11:50 am…

We took a serious look at a Kelowna condo before we headed south, good price, great location.

The fees seemed a bit steep at $ 385 a month, but they had a healthy contingency and a good depreciation report.

As we looked closer we discovered poor design, construction and ridiculous bylaws, so we passed.

We like the condo ‘lifestyle’ but could be miserable as owners, so renting continues to make more sense.

Patient as ever…

#95 World Traveller on 11.22.13 at 12:52 pm

#16 Soylent Green is People on 11.21.13 at 9:41 pm
Harper has just slipped another omnibus (Trojan Hourse) bill through the house, disguised as an anti-child bullying bill:

Some lawyers worry things like stealing a wireless Internet signal or cable,

or condemning apartheid Israel could be made illegal under a new Conservative government bill.

http://thechronicleherald.ca/novascotia/1169122-impact-of-bill-worries-experts

******

Governments are becoming really scared of the people, they know they have screwed over the middle class and are now putting any anti demonstration/communication law they can easily push through.
Witness a similar thing happening in Spain:

http://spanishnewstoday.com/opponents-to-citizen-security-law-fear-undemocratic-repression_19099-a.html?Banner=56#.Uo-LyGTXQzI

#96 World Traveller on 11.22.13 at 12:54 pm

Does anyone know how to watch TCG outside of canada, the proxy service does not seem to work, and I cannot find it in Torrents.

#97 Ralph Cramdown on 11.22.13 at 12:54 pm

Speaking of McMansions, here’s a note for all those trying to keep up with the Joneses. In my neighbourhood, I’m accustomed to seeing structural steel supporting the second floor of new builds, typically three I-beams in an H pattern, allowing the all-important open concept main floor. The new thing is a steel supported main floor, presumably allowing an open concept basement? Keep on keeping up, folks.

#98 Smoking Man on 11.22.13 at 12:54 pm

#72 Big Brother on 11.22.13 at 10:32 amWhere is Smoking Man today? Awfully quiet!Tin foil hat on contacting the Aliens to discuss the 50th anniversary of the greatest conspiracy theory ever concocted? I thought we taught you better Smoking Man!
……..

Fell asleep on couch last night at 6pm just woke.
I thought MKUltra knows all.

Dogs got rid of wife for tonight, me leach chains have been cut.

Bad boy hat is coming out of the closet

Where should I go… Tonight

Suggestions welcome…..

#99 2CntsCdn on 11.22.13 at 1:13 pm

This last 5-6 years has been such a perfect storm for real estate value growth. So many factors that will likely never happen again. It’s to bad that 95% of the people won’t benefit from it. Benefiting means getting out when prices are HIGH …. and diversifying. Just riding the roller coaster with everyone else won’t get you to independent wealth. All roller coasters eventually go back to the start (usually the lowest point on the track). You can’t show a picture of your big house to people and they wave all your bills. Nothing lasts forever …. all good things eventually come to an end.

#100 Son of Ponzi on 11.22.13 at 1:22 pm

Ralph # 84
“and it’s price based on psychology”.
I always believed that sociologists and psychologists are better equipped to analyze financial markets than economists.

#101 Snowboid on 11.22.13 at 1:24 pm

#79 live within your means on 11.22.13 at 11:37 am…

Know the feeling, in the past year we had many friends and relatives come to visit us in the Valley of the Sun.

Three of the close relatives are ‘rich’ ones in the family, but with bitter divorces, family disasters, etc – we had to coddle them like babies.

Up to Sedona so they can look for the ‘vortexes’ to find salvation, eat at high-end Scottsdale and Biltmore restaurants – etc. etc.

Turns out after discussions they aren’t so ‘rich’ after all – and the common thread was too much money tied up in real estate (they can’t sell).

For us retiring at 55 was a choice we made because of a combination of luck and timing – and the assets and income to allow it.

They are still working (because they have to) in their late sixties and early seventies. One has figured out retirement will be possible at 77 if he can sell his house (and all the toys – boats, RV, ATVs).

Rant off (it’s raining today and only 16C)

#102 Son of Ponzi on 11.22.13 at 1:27 pm

“its price”

#103 IM in C on 11.22.13 at 1:41 pm

CBC ran the documentary ‘The Condo Game’. Two things that stuck out –
1. That a signifigant number of condos in Coal Harbour Vancouver are owned by people who neither live in them nor rent them out.
2. The vast majority of condos in Toronto coming on stream are owned by investor/speculators; not by people planning to use them as a priciple residence.

Garth: I am pretty sure you watched the show. What are your thoughts?

Nothing new or unknown. The market is in peril. — Garth

#104 Canadian Watchdog on 11.22.13 at 1:50 pm

Canada’s retail sales leap as new cars fly off the lot at fastest pace in 4 years

Canadian retail sales rose more than three times faster than economists forecast in September on the biggest gain at new car dealerships in more than four years.

Sales rose 1% to a record $40.7 billion, the third consecutive increase, Statistics Canada said Friday in Ottawa. The gain exceeded all 19 economist forecasts in a Bloomberg survey that had a median 0.3% increase.

All thanks to subprime auto lending and GM channel stuffing wholesale dealers that StatsCan counts as retail sales. This sector is now a two times larger of a bubble then it was in 2008.

#105 Ralph Cramdown on 11.22.13 at 1:53 pm

Hey Smoking Man, I checked Florida car insurance prices on Geico. Less than 20% cheaper for comparable coverage. And you do want comparable coverage. I drove to Miami a few years ago. Only time I’ve ever seen a car upside down in a tree with the rear wheels still spinning was on a typical straight and level stretch of the I-95. Obvious drunks, maniacs and somnambulent oldsters filled the remainder of the roads.

Which reminds me: Who is underwriting Rob Ford’s car insurance?

#106 recharts on 11.22.13 at 1:55 pm

You probably missed this

http://www.nytimes.com/projects/2013/high-rise/?smid=tw-share

#88 TnT on 11.22.13 at 12:17 pm
#64 recharts

That’s a fair assessment of the program….

I am hopeful that it does not turn into another St James Town as that would be the real life version of Escape from New York…

http://www.youtube.com/watch?v=ckvDo2JHB7o

#107 Mister Obvious on 11.22.13 at 1:58 pm

It hard to imagine how Torontonians can get up and face a day’s work without dissolving into sobs out on the sidewalk. The single exception is the federal finance minister who recently became misty over the unfathomably bizarre behaviour of his personal friend Mayor Ford.

But let’s set aside the city government and its colossal failure of duty and jurisprudence (as we might also ignore a direct meteor strike on the city) and consider the horrifying state of real estate development as reported on CBC’s ‘Doc Zone’ last night.

Apparently, building one ill-conceived and poorly designed monolith on one downtown corner became the rationale to grant unlimited license for hundreds more. Today we gaze upon a Brobdingnagian cluster of third rate, glass shedding, porous boxes that constitute the city’s core housing stock and attract greater fools from an ever increasing radius.

Toronto seems either unwilling or powerless to guide this growth in any meaningful way. Once the developers have cut every possible corner and semi-completed a mere shadow of the original plan they are free to repeat the same scam in an adjacent block.

Meanwhile, the owners (who have been waiting up to three years to take possession) confront the damage. Although these buildings are of third rate quality they are still gargantuan, highly complex structures that have now fallen under the management of random collections of squabbling tenants most of whom are rank amateurs that couldn’t agree on lunch let alone comprehend the shortcomings of a highly deficient infrastructure.

They will vote to re-decorate the lobby while the walls are oozing sewage. And it is certainly in nobody’s interest to discuss the situation publically.

Conspicuously absent in the Doc Zone piece was a single mention of the public debt being incurred to support this madness and the direct involvement of the Canadian Government in aid of its existence. Not even the slightest nod in the direction of Garth Turner and his public service blog that has covered these issues for years.

There’s plenty of negative stuff to say about Vancouver although the Doc Zone documentary did present us in a comparatively favourable light vs the Big Smoke. But I feel most fortunate to live here in this little provincial western outpost with its dearth of corporate head offices and the bicycle-obsessed Mayor Moonbeam. Once we clear all that soggy rot out of our wooden low-rise California-style condos (we’re about half way there after 20 years) this will be one swinging town.

I offer my deepest condolences to the city of Toronto. Try to be strong.

#108 Canadian Watchdog on 11.22.13 at 2:03 pm

The next shoe to drop, big box retail.

Target Corp profit drops almost 50% as costs of expansion into Canada weigh

The retailer faced a harder than expected slog in this country after it began opening stores in March, surprising some customers for not matching its U.S. stores’ prices and missing its initial sales projections. Target also discovered too many of its Canadian customers buy goods regularly at multiple retailers instead of using Target as a one-stop shopping destination.

“We still had inventory that we had committed to from overseas that was basically shipped to Canada, and once we landed it, we realized our sales were under expectations and now we need to do what we can to get rid of that inventory,” Target Canada president Tony Fisher said Thursday.

High inventory indeed, which probably explains why retailers are scambling for credit in order to pay their distributors in yuan with a sinking Canadian dollar.

This is what happens when you don't destroy your currency faster then the other guy. It's a race to the bottom.

#109 gladiator on 11.22.13 at 2:05 pm

I wonder:
if RE profits from a residence in which I lived for less than a year are taxable income – will the losses from a residence in which I lived for less than be deductible from my taxable income?

#110 live within your means on 11.22.13 at 2:17 pm

50th anniversary of Kennedy’s death. I remember it well. I was 16 at the time & our teachers announced the news. I walked to the bus with my gfriends & that’s what we talked about. My family’s eyes were glued to the black & white TV the whole weekend.

#111 live within your means on 11.22.13 at 2:25 pm

#68 Retired Boomer – WI on 11.22.13 at 10:12 am
It’s never MY fault…. Every generation in every time has failed to do their best. Boomers had been the most marketed to population, and it worked! We bought crap we didn’t need.
This generation can’t carry on a conversation ass they have their eyes on a dam phone instead of the world around them. Is that going to improve communications between humans, or stifle it?

Like I stated earlier, not much has really changed.
Sad really. We ARE all in this together

Touché………………
……………..

Sorta agree. I don’t own a cell phone.

#112 spaceman on 11.22.13 at 2:56 pm

Ok so speculate on this.

Amethyst Inn
1501 Fort Street, V8S 1Z6 Victoria (Show map)

this place is for sale 2.9 MIL asking. 5 star B&B
winter revenue alone is about $4000/Month from rentals. 17 rooms, ranging from $150-$450 a night.

I will let you calculate the revenue. good deal or not?
Do I really care about the property value of a revenue producing property, if I plan to keep it 10 years, and the Value is already depressed? Tourism took a dive here, as we are so dependant on Americans coming to visit, the recession hit us hard.

#113 IM in C on 11.22.13 at 3:04 pm

Nothing new or unknown. The market is in peril. — Garth
Garth, I highly doubt that the powers that be in this country will allow a signifigant portion of the real estate sector to collapse.

#114 spaceman on 11.22.13 at 3:09 pm

Hey Ralph,

“One of the joys of paying taxes in a welfare state is knowing that nobody’s going to starve to death if you don’t help them personally.”

Like to see you live on Welfare… I help several friends with money and support, cut their grass etc. They are on Welfare, and they are starving, physically, spiritually, and emotionally. People need more than a mouth full of food a day to live…

#115 Oceanside on 11.22.13 at 3:09 pm

There will be no impact on RE because you can save hundreds of thousands by retiring on the Island anywhere but Victoria (or even there if you wait). We got a gorgeous water view home for $500K that would sell for $2-3 million in Vancouver.
+++++++++++++++++++++++++++++++++++++
The market for homes over $500K in Qualicum Beach and Parksville has been seriously affected by the economy and most of the current sales are between $375 and $425….By the description of your 2 to 3 million dollar home for $500K it must be in Port Alberni or Port Hardy.

#116 Big Brother on 11.22.13 at 3:15 pm

#97 Smoking Man on 11.22.13 at 12:54 pm

MKULTRA says you will be back at Seneca Casino again this weekend wearing your cowboy hat. Where else can a Smoking Man go to smoke and drink wine at the Centre Bar. I hear there will be a good band there so sit in the chair look up at the band and dream…………………………

P.S. Take the blue pill not the red pill. Taking the red pill will lead to your escape from the Matrix and into the “real world”.

#117 holdyourhorses on 11.22.13 at 3:22 pm

Wht percentage of your balanced portfolio is cash? I’m at ten…but it seems like a huge amount given the numbers. If a correction comes…and they always do….then cash is king eh? BTW…the Enrgy index has fully recovered from the twin falls of ’08 and ’11. With the snow blanketing the lawns of New Jersey traders what is the prognisis for a whiz bang winter of CDN energy issues?

#118 Westernman on 11.22.13 at 3:38 pm

Spaceman @ # 113
Then pony up your own cash, Mr. Bleeding Heart – don’t volunteer other people’s money…
Maybe your “friends” might try working – it’s always worked before …

#119 Ronaldo on 11.22.13 at 3:43 pm

#84 Ralph Cramdown

”Got that? It’s a great store of value measured on the bog-standard thirteen year timeframe, and its price is based on psychology.”

I would expect that the cost of getting it out of the ground would have something to do with the price of it as well. The psychology in the East is certainly favoring the stuff at this time since they are buying it up hand over fist. I wonder why that is? It’s well known by those who follow this market that the paper price and the physical price are totally disconnected given what those who want the stuff are willing to pay for it. I wonder what would happen if the psychology towards this metal happened to change abruptly.

#120 Smoking Man on 11.22.13 at 3:47 pm

#115 Big Brother on 11.22.13 at 3:15 pm#97 Smoking Man on 11.22.13 at 12:54 pm

MKULTRA says you will be back at Seneca Casino again this weekend wearing my your cowboy hat. Where else can a Smoking Man go to smoke and drink wine at the Centre Bar. I hear there will be a good band there so sit in the chair look up at the band and dream…………………………P.S. Take the blue pill not the red pill. Taking the red pill will lead to your escape from the Matrix and into the “real world”.
……………………

Going there sat night, and it’s not a cowboy hat damn it. INDIANA JONES HAT.

But everything else you said is right on except I have headphones on listing to opera when at centre bar.

All the same, damn good…..

#121 recharts on 11.22.13 at 3:51 pm

#107 Canadian Watchdog on 11.22.13 at 2:03 pm

High inventory indeed, which probably explains why retailers are scambling for credit in order to pay their distributors in yuan with a sinking Canadian dollar.
http://i.cubeupload.com/ncLF8s.png

This is what happens when you don’t destroy your currency faster then the other guy. It’s a race to the bottom.

This just screwed the chinese investors who speculated on the canadian market :D

#122 Ronaldo on 11.22.13 at 3:52 pm

#30 Shawn on 11.21.13 at 10:43 pm
WHY INTEREST RATES ARE LOW

Not first suggests it is “Because cash sitting in a savings account is dead money in the economy. Why should it be rewarded? Dividends from equities are the reward.”

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

Exactly. Why should the banks reward stupidity? If people are stupid enough to lend their money to the banks at next to zero interest rates, why should they be rewarded? Banks are in the business of making money. Invest in the banks. You’d be up 300% since Feb. of 09.

#123 Canadian Watchdog on 11.22.13 at 3:56 pm

Outlook for New Homes in Toronto Dims as Sales Slump

Data showing slumping year-to-date sales of new homes in Toronto doesn’t bode well for new-home construction in Canada’s biggest city.

“You only build the number of homes that one has sold,” [and hide and lie about the rest] said Bryan Tuckey, president and chief executive of Toronto-based industry group Building Industry and Land Development Association, or BILD.

The group is expecting fewer new homes to be built in 2014 than this year, according to Mr. Tuckey.

Yes, data showed sales of low-rise homes – townhouses, semi-detached units and single-family dwellings – rose 67% in October from the same month last year, while sales of high-rise homes, or condos, climbed 17% in the same period.

And while CBC's outdated doc was focused on condos and increasing their viewership with negative news, here's what's going on in GTA's SFHEX futures market, that is, in comparison to condos, just as bad, if not worse because of the amount of leverage being offered relative to one's income.

Kleinburg welcomes you (4 Bedroom Detached Assignment Property)
KENNEDY /16TH – NEW DETACH ,SEMI & TOWNHOME ASSIGNMT – 金牌VIP

Markham Townhouse Freehold Assignment – $70,000 below Builders $

Brand New Assignment Townhouse For Sale (Brampton)

TURNBERRY FREEHOLD TOWNHOME BACKS ON TO GOLF COURSE (ASSIGNMENT SALE)

Brand New Upper Unionville Semi Detached Home 2253 sq ft

Aside from SFH assignments also being sold to foreign investors: as I've been arguing for some time while everyone is focused on condos, the majority of GTA's leverage is in SHFs, and more particularly in the 905 area. It's not hard to see after comparing mortgage affordability calculators that the more a household earns, the more leverage a lender is willing to offer them. Table

So while everyone is 'shocked' on old news about shoddy condos being built for investors and while buildings sit half empty, the next shock will be how many SFHs are sitting empty in the 905 area with 12" high grass on the front lawns. It's already happening, just that nobody is reporting it.

#124 aprilNewwest on 11.22.13 at 3:58 pm

#112- Im in C. No one has been forecasting a “collapse” and our Government has not ever being able to prevent a RE decline. The world has a history of RE booms and busts, what makes it different this time………

#125 Shawn on 11.22.13 at 4:22 pm

Manulife One Account

Manulife One, I understand allows your pay cheque to go straight to your mortgage balance. Rather than run a checking account with an average balance over the month of say $3000 or whatever earning nothing, the chequing account is combined with the mortgage to save interest.

Sounds like a disaster as it would allow people to spend far too easily and lose control of whether they were spending more than they made each month.

Is that how it works? Is it really just ONE account? Or is is several accounts but the interest on the mortgage is calculatred AS IF it were one account but you still have a separate cheqing account so you can see where you stand on your monthly spending?

#126 James on 11.22.13 at 4:32 pm

#122 Canadian Watchdog

So while everyone is ‘shocked’ on old news about shoddy condos being built for investors and while buildings sit half empty, the next shock will be how many SFHs are sitting empty in the 905 area with 12″ high grass on the front lawns. It’s already happening, just that nobody is reporting it.

———————————————————-

That’s why Toronto proper will be fine. It’s not in the middle of nowhere as well.

#127 Nemesis on 11.22.13 at 4:36 pm

Quote’s ‘OTheDay… [GuessWho?]…

“Modern cynics and skeptics… see no harm in paying those to whom they entrust the minds of their children a smaller wage than is paid to those to whom they entrust the care of their plumbing.”

“We believe that if men have the talent to invent new machines that put men out of work, they have the talent to put those men back to work.”

“History is a relentless master. It has no present, only the past rushing into the future. To try to hold fast is to be swept aside.”

“We have the power to make this the best generation of mankind in the history of the world or to make it the last.”

“Those who make peaceful revolution impossible will make violent revolution inevitable.”

“I don’t think the intelligence reports are all that hot. Some days I get more out of the New York Times.”

[#35… 1917-1963]

#128 :):(Ying Yang on 11.22.13 at 4:40 pm

#119 Smoking Man on 11.22.13 at 3:47 pm

Hey Smoking Man going to the airport on Saturday to pick up my brother as he is flying in from Hong Kong. Will have to convince him to meet a real North American Smoking Man. He has started to read this blog and is intrigued by what is going on here (real estate) and investing. Says you can make a killing in Hong Kong but you have to watch the Man! Everything is under strict control in Hong Kong.
BTW he doesn’t smoke and he doesn’t drink but he really makes risky investments by our standards here. Has done quite well but needs to unload more $$ here in North America.
Have fun at the bar Saturday, drink up and smoke em if you got em!

#129 Mister Obvious on 11.22.13 at 4:46 pm

#112 IM in C

“Garth, I highly doubt that the powers that be in this country will allow a signifigant portion of the real estate sector to collapse.”
——————————

Do you actually think the ‘powers that be’ have even a ghost of a chance to prevent such a thing? Profound inadequacies on the part of these ‘powers’ are being revealed daily.

#130 Big Brother on 11.22.13 at 4:54 pm

#119 Smoking Man on 11.22.13 at 3:47 pm

#115 Big Brother on 11.22.13 at 3:15 pm#97 Smoking Man on 11.22.13 at 12:54 pm
MKULTRA says you will be back at Seneca Casino again this weekend wearing my your cowboy hat. Where else can a Smoking Man go to smoke and drink wine at the Centre Bar. I hear there will be a good band there so sit in the chair look up at the band and dream…………………………P.S. Take the blue pill not the red pill. Taking the red pill will lead to your escape from the Matrix and into the “real world”.
……………………

Going there sat night, and it’s not a cowboy hat damn it. INDIANA JONES HAT.
But everything else you said is right on except I have headphones on listing to opera when at centre bar.

All the same, damn good…..

MKULTRA says sorry, my apologies to Dr. Henry Walton! and you are correct Smoking Man it is a Fedora, you purchased it at Swaine Adeney Brigg in London.
We were chiding your testiness. Enjoy Ça Ira and again take the blue pill otherwise you will see the real world!

#131 Nemesis on 11.22.13 at 4:55 pm

http://tinyurl.com/lk29cfl

http://tinyurl.com/m9pktxr

http://tinyurl.com/yj4dyjh

http://tinyurl.com/mbtfvh7

#132 Steven on 11.22.13 at 5:08 pm

“So here’s the key point: establish the correct weightings for assets, then maintain them. That’s where my Rule of 90 comes into play. A sane portion of your net worth to have in residential real estate is 90 minus your age. That means a 30-year-old can have about two-thirds of all wealth in house equity, but a retiree should have three-quarters in financial assets. That’s because the young have time to pay down debt and increase wealth over time, while the old need income. Simple. Just do the opposite of what most house-heavy, illiquid Boomers are doing, and you’ll be fine.”

All this is academic unless one is employed and getting paid enough to live near a job. Either wages have got to go up big time or house prices have to collapse otherwise the economy and peoples lives will continue to grind to a halt. At some point there has to be some kind of a correction that makes a sane approach to life and economics possible. It is like dealing with the gordian knot. The man that solved the problem got to the point and chopped it in half. He didn’t waste time and effort with trying to untie the knot. May be knocking a zero off mortgage debt and all real estate prices by fiat has to be done for the good of the species
and then we can get Canada growing again.

Sounds like you think people who can’t afford them are entitled to houses. Already 70% own, which is excessive. — Garth

#133 IM in C on 11.22.13 at 5:08 pm

@123 Aprilnewwest
what makes it different this time………
What makes it different is that banks are not foreclosing on people who aren’t paying their mortgage. I don’t know the hows and ways, Garth could probably fill you in

#134 Smoking Man on 11.22.13 at 5:22 pm

#127 :):(Ying Yang on 11.22.13 at 4:40 pm#

119 Smoking Man on 11.22.13 at 3:47 pmHey Smoking Man going to the airport on Saturday to pick up my brother as he is flying in from Hong Kong. Will have to convince him to meet a real North American Smoking Man.
…………

No need to be afraid of the man, machine if one owns a copy of my cool Keysme app and a Bitcoin account.

Not even MKultra can break to code.

Everybody’s shuffling,

OH darn should have keep my mouth shut, now CSIS will tail me again……..

#135 Mister Obvious on 11.22.13 at 5:23 pm

#109 live within your means

I remember well the shock of President Kennedy’s death. I was 13 years old. But for those who were not around at that time let me remind you of the political backdrop:

A little over one year earlier (during the Cuban missile crisis of October 1962) the world came closer to the brink of nuclear world war than perhaps we have ever been.

Khrushchev was adamant that he would sail nuclear equipped warships into Cuba to protect Russian missile installations. Meanwhile Kennedy was just as adamantly saying “no you will not”. It was unflinching superpower bravado with the exposed flesh of the human race hanging in the balance.

Fortunately, the Russians backed down and the doomsday clock moved from two seconds to midnight back to a more comfortable 10 seconds to midnight.

Had things gone slightly different there would have been no boomers to complain about since their numbers would have drastically diminished overnight.

Whatever was left globally (if anything) would have been a distant cry from the sweetness and light we now call the 21st century.

The uneasy peace lasted until November 22, 1963 when Kennedy was assassinated by an expatriate communist who had spent the previous few years in Russia.

Most of us found it easy to believe the Russians were preparing to finish what they had backed away from a year earlier. That thought more than anything else served to darken considerably the mood of an already tragic event.

#136 IM in C on 11.22.13 at 5:23 pm

#128 Mister Obvious
Do you actually think the ‘powers that be’ have even a ghost of a chance to prevent such a thing?

Yes, all they have to do is stop foreclosing

#137 Shawn on 11.22.13 at 5:30 pm

MAKING MONEY

Ronaldo at 121 said:

Banks are in the business of making money. Invest in the banks. You’d be up 300% since Feb. of 09.

**************************************
ALL companies on the stock exchange are in the business of making money. Some have an easier tme than others.

Noone would have invested 100% in banks.

I can’t claim 300%.

I am up 179% on my total portfolio since January 1, 2009, and probably 200% from the March 9, 2009 lows.

I stayed the course investing on the darkest days.

I considered borrowing big time from the banks (mortgage the house) in the Spring of 2009. Carry Trade. It would have worked out great but I was not up for risk other than a modest amount borrowed on Line of Credit and I did use some margin account borrowing as well in 2009. ‘Twas a no brainer.

#138 Vamanos Pest on 11.22.13 at 5:37 pm

Off topic, but anyone look at the chart of the S&P 500? The one year chart shows it clearly remains in an up channel, testing 1800 for the second time, and all retracements have nicely held the 50-day SMA. With historically pretty normal fundamentals underpinning current prices, i’m not so sure it’s done it’s run-up. If it breaks above 1800, this could still have some legs to run. I didn’t do an elliott wave to provide a target for the next expected resistance, but it looks like it will come off 1800, retrace to ~1730, then could approach 1860-1880 still in this calendar year.

I’m balanced and diversified as G(od)arth has commanded, so I’m not trading it either way, but for students of technical analysis, this appears to be a great example of some of the basic tools in the tool-kit.

#139 eddy on 11.22.13 at 5:42 pm

Re The Doc Zone.
Blameless City Councilors were powerless to stop the condo craze because it was a provincial initiative. On appeal, the OMB Judges (who specialize in land use) favor the rule of law and ‘property rights’. So the Doc Zone blamed the province. Why not blame the United Nations? Of course the CBC never misses an opportunity to miss the point. Toronto has been designated as an Agenda 21 city of the future. Soon you’ll be needing a UN clearance to re-build your garage.

Toronto City Councilors want to eliminate appeals to the OMB, that’s right, they want an appeals process within City Hall. That means that if you lose at Committee of Adjustment you can go before other councilors and listen to what They think. There are no qualifications or education required to be a city councilor. The last thing any councilor cares about is Your property rights. These are the folks who invented the ‘PRIVATE tree bylaw’ to tell You what to do with Your BACKYARD.

#140 Victor V on 11.22.13 at 5:48 pm

The ‘illegal’ walk-in closet that’s costing this woman over $16,000

http://www.theglobeandmail.com/life/life-video/video-the-illegal-walk-in-closet-thats-costing-this-woman-over-16000/article15539997/

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

You don’t ‘own’ your condo; your condo board ‘owns’ you!

#141 Victor V on 11.22.13 at 5:53 pm

http://www.theglobeandmail.com/report-on-business/ccl-industries-closing-ontario-plant-cutting-170-jobs/article15568181/

The drumbeat of plant closings by manufacturers in Canada continued Friday as CCL Industries Inc., said it will close its aerosol manufacturing plant by the middle of 2015.

The plant will begin winding down operations early next year, eliminating 170 jobs in Penetanguishine, Ont., northwest of Toronto.

#142 Garth Fan on 11.22.13 at 5:59 pm

CBC ran the documentary ‘The Condo Game’.

Garth will we get your thoughts tonight on this?

#143 BBstudios on 11.22.13 at 6:20 pm

Blog doggs, I need to renew my mortgage. my first house with wifey and we have been owning for 2 years. should I go for a fixed 5yr? 3yr? screw it and go variable? how long can they possibly stay low? I wish the 5 yr rates were better…bah!

Over the last two decades the average five-year mortgage was 8.2%. Today you can get one for 3%. And you’re moaning? Maybe you can’t afford the house. — Garth

#144 Canadian Watchdog on 11.22.13 at 6:55 pm

#120 recharts

I wouldn't say they're screwed yet. Despite my bearish outlook on RE, there are major policy changes and market shifts underway that may favor Canadian RE.

On the policy front, some economic advisors are seriously proposing our government to increase permanent resident immigration figures (ex TFW) to 400k annually by 2020. Canada already has the largest per capita immigration program in the world and now holds a foreign-born migration stock of seven million people (20% of population) according to the UN's latest numbers. I guess they figure if it's working and is unchallenged by the unpatriotic Canadian-born citizen, why not import more fresh FICO scores and load them with taxpayer-backed debt?

Moreover, the politburo has announced after its third plenum that there will be serious reforms coming in all sectors for China's economy, of which the most important will be reforms for land and housing ownership for rural farmers, easing their second child policy, piloting free trade zones, currency convertibility and the launch of a municipal bond market.

What China does matters. This is the second largest economy in the world and because of their size, it will affect all of us. But even so, China has made many ambitious goals before that have not come to fruition.

On the market side, stocks look poised (with uncertainty) to avoid a correction and head straight up into an unprecedented parabolic phase. After all, at this point, all fundamentals are being ignored as the Fed and other central banks are solely boosting equities higher. A rise in equity prices is likely to boost investor confidence as they feel more rich, a positive indicator that is closely correlated to higher home sales in major cities. But even with central banks buying Bonds, MBS and ETFs (yes ETFs) and everything else the banks self-securitize for reverse repo purposes, stocks are always vulnerable to fat tail events.

It should be clear by now that central planning is about saving the wealth of boomers and all the yuppies that work for Wall Street, London and Bay St., not the middle class and Gen Y. The next few years will be a sloppy-choppy economy with lots of asset and foreign exchange dispersion that will make it extremely difficult for the average investor to understand what is really going up and down in value.

Think globally.

There is a zero chance of a significant increase in Canadian immigration. — Garth

#145 Ralph Cramdown on 11.22.13 at 7:57 pm

#136 Shawn — “ALL companies on the stock exchange are in the business of making money. Some have an easier tme than others.”

I think you’re being a little too charitable. There are some small companies which seem to exist solely to pay directors’ salaries until the money runs out. And then there’s Amazon. Bezos is far more interested in building something big than he is in rewarding shareholders with profits.

#146 eddy on 11.22.13 at 8:02 pm

re condo game doc

To paraphrase a city councilor in that doc:

“If we cant stop the developers we’ll just declare the whole block a ‘heritage preservation zone'”

Translation: If you’re in the ‘zone’ you’re land value is gone and the owner becomes a museum curator

#147 Daisy Mae on 11.22.13 at 8:50 pm

#34 Mrs Riverview: “…you own a house because you can afford it. Most cannot.”

Correction: most own houses even though they can’t afford it. — Garth

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Good response, Garth! ;-) Garth owns his. But most are not ‘owned’ — they’re mortgaged to the hilt.

#148 johnnny on 11.22.13 at 8:52 pm

Generation gap: I used to bad mouth the younger generation.Now I think differently.
Today during a bridge closure.We needed to use over 80 bags of grout(concrete mix without aggregate).this had to be done like the fire brigade with pails handed to one another,up a scaffold staircase.The pails were about 50 pounds each.
We had guys from 20 years old to 63 years old in the line.
The bridge needed to be opened at a certain time.
There was NO generation hissy fits anywhere in the line.
Afterwards we all thumped each other on the back.
Still can’t get past the tats and piercings though.

#149 Daisy Mae on 11.22.13 at 8:59 pm

#37 Retired Boomer W1: “Boomers were the bulge in the population python. We competed in schools with the largest student populations up to then. We competed for jobs, housing, and now will strain government resources as we retire.

Boomers were gassed in 1973-74 recession, again in 2001-02 and the BIG melt of 2008 from which we are -still-slowly crawling back.”

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Good for you, Retired. I am not a ‘boomer’ — missed it by a few years — but am tired of listening to the ‘entitled’ blaming their problems on your generation. Way to go! Are you listening, Stupid?

#150 Daisy Mae on 11.22.13 at 9:09 pm

#43 AngryMan: “On the other hand you might be content with a simple thanks for turning out a consistently well written, thoughtful, relevant and sometimes hilarious piece…”

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I think Garth is content with the above. He’s one good man who daily takes a lot of unnecessary s***t from posters and yet, he still carries on….

#151 Nemesis on 11.22.13 at 9:26 pm

http://tinyurl.com/ykhwq7c

http://tinyurl.com/c82d3pq

#152 Daisy Mae on 11.22.13 at 9:33 pm

#85 TnT: “Grade 6 dance. Girls on one side and boys on the other side of the gym…”

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Wasn’t that painful! LOL I was so tall…and all the boys were soooo short!

#153 Nemesis on 11.22.13 at 10:35 pm

Well, that was then… and this is ‘now’ [metaphorically speaking]…

A DarkParable for OurTimes…

http://youtu.be/jj8nz59W6IQ

[NoteToSaltyDogz: It is all apropos [if you enjoy VisualSymbolism]… but the EspeciallyRelevant dialogue begins at 06:30. It is about us… The HumanCondition. Not flags… nor borders… nor Anthems. JustLateLiquidModernity. How it ends… is up to us. Collectively. CinephileBonusZen: Stephen Spielberg watches Lean’s MasterPiece FrontToBack before beginning any new project which he is planning to personally Direct. That’s as cheerful as ‘Nem’ is going today. MyBad.]

#154 recharts on 11.23.13 at 1:10 am

For anybody comparing Toronto with an European city: guys, in one, maximum two hours, from any european city you can drive or fly to another city at least as big as the city you leave.
From To in two hours, no matter what direction you go you reach small cities only.
The transportation system in Europe is well above the caricature that we have here. I am not going to go farther with this comparison since it sounds like a good joke!

If there is one thing that abounds here in To then that is space, including green space. From that point of view we are OK …

@CanadianWatchdog: when I said that the chinese investors are screwed by that CAD/Youan ration I was referring those who already bought here in Canada
As for what China is doing or planing to do, as you mentioned it is har to place any bet on China’s achievements. However I think that they are seriously thinking about dumping the dollar and buying gold or other assets is probably the only way to get rid of their huge reserve of USD which continues to depreciate with each US capital injection in the mondial economy.

#155 What caused the downturn in Netherlands and Norway? on 11.23.13 at 1:18 am

I wonder what caused the bubbles in these two countries to pop? There was no financial or economic catastrophic event to cause that.
Finding out the reasons may teach us what could bring our RE markets down.
We are already seeing this in Victoria, Ottawa, Montreal etc etc.. I just wonder what is so special about Toronto and Vancouver that they won;t crash while the above countries and cities are taking a turn for worse.

No need to say that Norway has one of the richest sovereign funds, someone was saying that if they liquidate that each norvegian will pay his debts and they will end up with another house :-)) or something like that.
So how the heck was possible that their RE market could go down and how realistic is to say that TO and VAN will be better than the above!????

#156 Nemesis on 11.23.13 at 2:25 am

http://www.tcm.com/this-month/article/26959|26962/Behind-the-Camera-Lawrence-of-Arabia.html

#157 Nemesis on 11.23.13 at 2:27 am

FatFinger… Try this, SaltyDogz…

http://www.tcm.com/this-month/article/26959|26962/Behind-the-Camera-Lawrence-of-Arabia.html

#158 Nemesis on 11.23.13 at 2:28 am

I am so going back to my FountainPen…

Cut&Paste the whole link…

#159 Daisy Mae on 11.23.13 at 12:03 pm

#139 Victor V on 11.22.13 at 5:48 pm
#139 Victor: “The ‘illegal’ walk-in closet that’s costing this woman over $16,000…”

http://www.theglobeandmail.com/life/life-video/video-the-illegal-walk-in-closet-thats-costing-this-woman-over-16000/article15539997/

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Why not go after the developer?

#160 JimmyAAA on 11.23.13 at 4:20 pm

#158 Daisy Mae on 11.23.13 at 12:03 pm
#139 Victor V on 11.22.13 at 5:48 pm
#139 Victor: “The ‘illegal’ walk-in closet that’s costing this woman over $16,000…”

http://www.theglobeandmail.com/life/life-video/video-the-illegal-walk-in-closet-thats-costing-this-woman-over-16000/article15539997/

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Why not go after the developer?

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

The closet was added after the building was built. So the developer is out. Somethings fishy here. I think the closet is actually in the hallway or something and the previous owner was on the board or something. It does not all add up and what passed for investigative journalism was the usual half assed reporting. I guess she didn’t ask the right question.