Writing history


Lisa’s 26 and bought a condo six months ago for $335,000. She put $25,000 down for a deposit, closing costs and CMHC insurance. Her mortgage is just over $320,000, and with condo fees plus property tax it costs her more than $2,000 a month to live there. She could rent the same place for $1,400.

Why does she do it?

“Because if I don’t buy now I’ll probably never be able to,” she told me, all innocence and progress. “I’m building my future.”

The last time real estate caved, in 1990, Lisa was sucking on a plastic ring and dealing with carpet burns on her Huggies. Months before that happened, about this time of year, I drove out to a suburban field where dozens of young couples were lined up in the cold and dark outside a developer’s sales trailer. As the queue inched forward, some guys showed up and hoisted a new banner over the existing one on the side of the trailer. The price of the houses just increased by tens of thousands.

Why are you doing this, I asked?

“Because we want a home. And it’s now, or we’ll never get in.”

In the Eighties, when the last real estate bubble faked people’s heads and made them crazy, house prices doubled, even though interest rates were high, buyers needed at least 10% down and nobody could raid their RRSPs for deposits, get a cashback mortgage or buy with zero money. Despite that, there was a meme that property would climb forever and was a hell of a lot safer than the stock market, which briefly but spectacularly crashed on October 19th, 1987. (The year Lisa was born.)

The boom was attributed to increased immigration and the fact everybody wanted to live in Toronto (and Vancouver, and Montreal). Speculation was rampant, especially among the forest of new condos being built on the waterfront. As buyer demand and prices swelled, listings decreased and prices jumped even more. The media went nuts, and house horniness was suddenly everywhere. How could anyone lose buying bricks and dirt in a world-class city?

At the time I was a vaguely rebellious, disorderly, long-haired, former hippie daily financial columnist for a cowboy tabloid. This, I told my readers, will end badly. But they ignored me, of course. Until it did.

The unwinding began in 1989 and took more than four years to bottom. After that there was a long, long period of stagnation followed by a slow recovery.  The average house price in Toronto fell by a third, equal to the decline which decimated the US real estate market following the 2008 crash.

It took 13 years for the average Toronto house price to recover to 1989 levels, not reaching that until 2002. Of course, that didn’t take inflation into account, which continued through the piece. Factoring that in, the buyer of a house in the months before 1990 didn’t get her money back until 2010 – a twenty-year wait. This means when your parents told you how they made out like bandits owning real estate during the Eighties and Nineties, they were probably stoned for at least half the time. Or they lied. Your choice.

It’s worth noting that during the last boom the economy was growing at more than 2% a year and house values appreciated by 2.5%. In our current bubble, condos have added an average of 5% a year since 2009, and the economy is growing at 0%. If that doesn’t worry you, pay closer attention.

Of course, Lisa can Google 1989 and discover that mortgage rates jumped and the jobless rate climbed, leading to the collapse. Maybe she believes that simply can’t happen now, or next year, or ever. We tend to dismiss what we have not seen. Because real estate values have climbed during her whole sentient existence, Lisa thinks they always will. It’s called ‘recency’ and it’s usually fatal.

It sure won’t take 13% mortgages to prick this speculative gasbag, as it did at the end of the Eighties. Today household debt is vastly higher, leverage has doubled, house prices have reached a new pinnacle, and yet the economy is weaker. In 1989 the unemployment rate was almost identical to that of today – a little over 7%. But once the housing bust hit, things changed fast. By 1993, it was 11.4%.

If this were 1989 and history repeated, Lisa’s condo would again be worth what she paid by the time she neared her 50th birthday. She’d have made at least $500,000 in payments, and still have a mortgage.

Some things outlive youth.


#1 Derek R on 11.25.13 at 9:37 pm

Poor Lisa. I hope that her purchase makes her happy. because she may be living in it for a long time.

#2 Big Sexy on 11.25.13 at 9:40 pm

Thank God I’m about to buy a house in an already economically depressed area of the country. No speculators here!

#3 bill clinton on 11.25.13 at 9:41 pm

well said garth…kudos to you..I remember the housing crash in the 80s as I was entering university. yep somethings never change people dont learn. I bought in 2001 with no mortgage now and resisted the temptation of trading up to a monster home using easy credit…it will all end BADLY!

#4 Alex on 11.25.13 at 9:45 pm

ETF’s, being liquid and FIRST !!!

#5 counter current on 11.25.13 at 9:48 pm

I hear this kind of thing all the time, about being priced out of the market, etc.
Garth, your blog is really helping me stay the course, and rent instead of buying downton, or in the GTA

#6 Janet on 11.25.13 at 9:48 pm

I sold my crappy condo last year. My agent told me, I hope you’re not thinking about renting, you’re going to spend all that money, you will never get back into the market again, that’s just stupid! I am now renting in a condo I would pay $500 more to own.

#7 DreamingInTechnicolour on 11.25.13 at 9:51 pm

Excellent post. Sadly too many live beyond their means

#8 Liquid on 11.25.13 at 9:52 pm

I was born in 1987 too. For people like Lisa and myself this current housing boom is the only trend we can relate with. As with other asset bubbles in the past, it often takes a large personal loss in the form of a price correction in the markets for one to truly appreciate the risks.

What’s interesting is that despite the higher home prices in Canada, the actual cost of the mortgage interest payments as a percentage of our disposable incomes have actually become more affordable since 1990, according to a TD bank report I recently read. Not surprising considering how mortgage rates have fallen but Canadians incomes are rising, according to StatsCan.

#9 Got out in time on 11.25.13 at 9:52 pm

It is so crazy what is happening with real-estate market these days. I am having hard time understanding why so many people are not even entertaining an idea of market troubles and risks involved with buying property. But than again this lunacy will keep on going until it doesn’t. So many young people will be stuck in the same place for decades(paying off mortgages) and who really cares about what happens to baby boomers…..they should be getting out of the market NOW if they can.

#10 HD on 11.25.13 at 9:52 pm

#186 Derek R on 11.25.13 at 9:24 pm
#178 Cici on 11.25.13 at 8:20 pm gave good advice to #69 Kyla.

Good stuff, Cici. I always enjoy reading what you have to say.


I second that.



#11 Waterloo Resident on 11.25.13 at 9:54 pm

Don’t worry, house prices in Canada won’t fall this time because people have learned their lessons and now they are more prudent with their spending.

#12 John R on 11.25.13 at 9:56 pm

I want to tell you how much I enjoy reading your blog. Last year I found a very nice little brick house, well built and insulated, high on a hill with a very nice view. The asking price was 89K, down from an original price of 115. I bought it on the spot. Since I live in Johnstown PA, I thought the hill was necessary. I can hardly believe the prices you talk about in Canada. Keep up the good work!

#13 Curious on 11.25.13 at 9:57 pm

#2 Big Sexy on 11.25.13 at 9:40 pm

Interested to know where. Would that be Windsor?

#14 Julia on 11.25.13 at 10:03 pm

Garth speaks the truth. The house I bought in Toronto end of 1996 had three previous owners since 1989 who each lost money buying and selling that house. That’s when I knew it was love and I had to have it. Sold it last year and rent now. I was a renter before and I’m happy to rent now. Just got my notice of annual rent increase today from my rental building. I almost fainted. Only nine dollars! Less than one percent this year.

#15 Got out in time on 11.25.13 at 10:11 pm

At the present time all real estate is toxic across Canada however I did notice that West Vancouver has increased number of properties on the market and they are priced smarter than East Vancouver. Perhaps news and acceptance of what’s coming is making some people to act on relevant data and some others to stay delusional.

#16 Retired Boomer - WI on 11.25.13 at 10:13 pm


Just for grins, what effect would a run-up in interest rates to say, a modest rate of 7% have on the “typical” Canadian mortgage holder who is due to renew in 2018?

Assume economy is basically “stable” at current levels.

That might be an interesting impact to those with little ‘wiggle room’ in their current budgetary habits.

#17 Devore on 11.25.13 at 10:14 pm

I too remember the 80s crash, even if only periperally. We came to Canada in 89, and were met with lots of long faces, and plenty of recently bought trinkets (Porsches and such). There was little trinket buying amongst the adult set for the next 10 years. Unfortunately for them, immigrants didn’t crate their bubble, and didn’t save it either.

History never repeats, but it does rhyme. The hopeful better pray the Permanently High Plateau theory will pan out at least once in modern history.

#18 Potato on 11.25.13 at 10:16 pm

Interest rates went up, but it was likely a red herring in the etiology of the crash (or a trigger for a tumble that would have come sooner or later). Rates went up only about 2% from a starting point of 12%, and only stayed up for about a year. In terms of the impact on payments, that would be like a 1% increase today.

#19 Nemesis on 11.25.13 at 10:18 pm

Yikes! Jumpin’Jehoshaphats! [I don’t use that often]…

Where did you find that keyboard, AuldPol!?…

Conservative Party ByElection HQ?…

I’m pretty sure that I used to work with one like that, too.


[Hint: You really don’t want to press that key…]

#20 Daisy Mae on 11.25.13 at 10:21 pm

“…This, I told my readers, will end badly. But they ignored me, of course. Until it did.”


You’re just a glutton for punishment, aren’t you? LOL But you’ve been right…all along…every time. How did you get to be so smart?

#21 Vangrrl on 11.25.13 at 10:22 pm

‘I’m building my future/building equity’… Ugh, what a trite expression.
Who are these 20-somethings? At her age I was travelling the world with my life in a backpack and picking the most obscure city in the most random country to live and work in- and I did it alone. BEFORE the internet existed. That was called building the skills and character needed to face anything in the future.
People are so boring nowadays ;)

#22 JSS on 11.25.13 at 10:22 pm

But I heard that things are different this time.

#23 T.O. Bubble Boy on 11.25.13 at 10:24 pm

@ #14 Julia on 11.25.13 at 10:03 pm

Just got my notice of annual rent increase today from my rental building. I almost fainted. Only nine dollars! Less than one percent this year.
That’s pretty typical for the non-condo rental apartments in Toronto… rent for the Midtown Toronto apartment building that I lived in almost 15 years ago is the same as it was then! (about $1100 for a 1-bedroom)

#24 X on 11.25.13 at 10:26 pm

“In the Eighties, when the last real estate bubble faked people’s heads and made them crazy, house prices doubled, even though interest rates were high, buyers needed at least 10% down and nobody could raid their RRSPs for deposits, get a cashback mortgage or buy with zero money.” Garth

Looking at how higher risk borrowers can get a property for 5% down now, and lower risk borrowers can extend their payments for 30 years, and some of the rules and regulations that have changed over the past few years…the gov’t must be fully aware that they have caused people to pull funds that would have otherwise gone into the economy and pushed it into RE that will be paid to banks. These mortgage payments will rob many of what chance they had at saving for retirement, yet nothing is done to reverse these changes, for risk of making the house of cards collapse.

#25 Daisy Mae on 11.25.13 at 10:30 pm

“We tend to dismiss what we have not seen….”


Is that why we, as a society, keep making the same mistakes over and over and over….? Politically, economically…pretty much every way. And so, ‘history repeats itself’.

#26 rob ford on 11.25.13 at 10:41 pm

hi garth, why dont you run for mayor of TO – think you will do a fantastic job given your financial and business acumen!

#27 Bob Rice on 11.25.13 at 10:43 pm

I remember the 80s crash cause my dad got screwed..bought 2 “investment” properties (condos) in DT Toronto… took 13 years to “break even”

I hope we have a nasty crash. I think Cdns (well, Vancoverites and Torontonians) need to be humbled…

I’m renting and I pray for a crash so I can smugly state “I told you so… now your net worth isn’t what what you though it was, now was it?”

Hoping it drops 20%+

#28 Tiger on 11.25.13 at 10:48 pm

Your rite Garth , the better person does , the more people will detest you, or hate you, sums it up to jealous ! U YouTube it baby! Or just look that word up in the dickshonary, there are a helof allot out there!
Seems to me there are a lot of people driving around early morning day time , nite time , with there fog lights on , pickup trucks and local transit buses seem to be the worst! Aren’t these lights for fogy conditions!
Maybe there brains are foged!
To much re on there mind, could they be jealous !
I know that they are at least ignorant !

#29 Snowboid on 11.25.13 at 10:48 pm

#11 Waterloo Resident on 11.25.13 at 9:54 pm…

Oh WR, you are so, so good at sarcasm – subtle but to the point – bravo!


#18 Potato on 11.25.13 at 10:16 pm…

Back in 1981-2 our rate went up to 18% – did a 5 yr term because the trend was up – they did go over 20% briefly.

It did have a big impact on rates, we took weekend jobs to keep our home.

By the time we renewed in 1986-7 it was down to about 10% – then back up to about 11% by 1991-2.

Still how many people can afford a 10% rate?

#30 Big Sexy on 11.25.13 at 10:58 pm

#13 Curious on 11.25.13 at 9:57 pm
#2 Big Sexy on 11.25.13 at 9:40 pm

Interested to know where. Would that be Windsor?

Cornwall! Average house price is 169,000! A lot better than Montreal or Ottawa, yet right in the middle of commuting distances for both.

#31 old gringo on 11.25.13 at 11:00 pm

Ahhhhh memories, I was able to buy a waterfront condo for 40 cents on the dollar in Victoria.
Remember MURB’S thousands of rich professionals bought houses through MURB’S to save taxes….then lost everything as the market crashed.
c’est la vie

#32 Bottoms_Up on 11.25.13 at 11:00 pm

#8 Liquid on 11.25.13 at 9:52 pm
What would you rather have, a $2000 payment on a $400,000 mortgage (at ~3% interest) or a $2000 payment on a $200,000 mortgage (at ~8% interest)?

Being able to ‘afford’ the payment and housing affordability are not the same thing.

#33 Bottoms_Up on 11.25.13 at 11:01 pm

#30 Big Sexy on 11.25.13 at 10:58 pm
LOL Cornwall commuting distance to Ottawa? Perhaps if you owned a small plane….or teleworked. The Ottawa burbs are barely commuting distance to Ottawa.

#34 Bottoms_Up on 11.25.13 at 11:05 pm

#12 John R on 11.25.13 at 9:56 pm
Always good to hear from our friends down south, and their views on just how crazy it is here.

#35 TS on 11.25.13 at 11:06 pm


Housing was killed in Ontario due to a little thing called NAFTA.

You could learn a little something from David Orchard.

Maybe he should start a financial blog.

NAFTA started five years later. How is David’s planet these days? — Garth

#36 How the F,,,,, on 11.25.13 at 11:07 pm

How the f%$K do you compare today’s world to 1987??? You never had the govnts and central bankers make credit so easy and will continue to do so despite sword rattling to the tightening. Garth you are wayyyy off base. The world is awash in debt, esp govts. They cannot aloow rates to increase and this will allow tangible assets to stay afloat- not race ahead- but stay afloat. There is no crash, no melt, no clowdaown.

On the other side of the code yes people die, but there are a hell of a lot of people moing I into the greatest city in the world—TORONTO. I could care less about any where else.

Eat it suckers

#37 Jack26 on 11.25.13 at 11:08 pm

I was in a similar situation as her, just last month…very tempting at that age, gatta say. Especially in Calgary where there seems to be an endless pit of suckers willing to spend.

Priced at 380k, probably around 400k with all the fees. Very tempting, nice place…but then did the math and decided to wait, here is the math based on a 5 yr. time frame:

100k for down payment gives total monthly cost of

$1400 mortgage (about $600 interest for 5 yrs)
$500 condo fees and utilities
$600 for120k (20k fees) oportunity cost ave. for 5 yrs

roughly $2500/month of which only about $800/m goes towards the equity!? besically minimum $1700 to live there…but its an over 20 year old building, soo most likely renovations in the future…lets say $1800 month just to live there.

This is the best case scenerio with about 3% interest rate, 25 yr mortgage.

Lets now say, roomate covers $500 month:

So your still covering $1300/m just to live there. $%^#

Then you start wondering what else can I get for that, there are lots of places to rent for that price…no commitment, no realtors, no lawyers, no bs, not dealing with roomate paying the rent on time.

I would have bought the place for 100k less.

So the sale is currently pending, I guess its really on a case by case basis when it comes to real estate, to some that is worth that extra 100k, not for me…and its Calgary, whats a 100k anyways. Seriously, ignorance is bliss:)

#38 coastal on 11.25.13 at 11:09 pm

“Back in 1981-2 our rate went up to 18% – did a 5 yr term because the trend was up – they did go over 20% briefly.”

#29 Snoboid,

I remember in mid 1979 a first mortgage was around 11% but a second mortgage(which seems unheard of now), was 14%, I know cause I had one. Lucky both were locked in for 3 years. Of course back then no one had lines of credit, nor multiple credit cards. This is a time bomb about to explode.

Personal loans are currently even hard to come by with 30% secured with cash and long term clean credit and work history. The tides are changing and the naive and their bullshitting agents who say the bubble has never happened, so it won’t, are in for a very rude awakening.

#39 Tiger on 11.25.13 at 11:11 pm

Sold, i think they got a bargain!
For got to tell them you also get , 100000000000.00000.00 mosquitoes with it, the best thing, it’s year round! just chuckling !

#40 rosie "moving forward" in the knowledge that, "this won't end well" on 11.25.13 at 11:15 pm

Nuff said? Nah, it’s different here.


#41 Hollywood on 11.25.13 at 11:21 pm

21 Vangrrl,

Yes, did the same thing at that age with just a backpack went to Austraila 93/94 before internet existed. It was a unique time as did not have google maps or access to what was going on throughout the world. One thing I can say is I’m glad I grew up in that time period or at least experienced both. That was also the time when Canada was in a recession and house prices took a considerable decline. I recall average house prices in Edmonton were about 125k. I even built “new” houses for that price during university summers. Although contrary to belief, I thought that recession was easier to live through based on cost of living. Good jobs were more abundant as well in relation to daily expenses. I recall coming out of university and got a 27k annual job. Seems like lots of university graduates don’t even get that today.

#42 Dr.NickRiviera on 11.25.13 at 11:22 pm

Apparently it’s different here in Edmonton.

Garth can you write about delusional Alberta one of these days? Everyone I talk to here thinks we are absolutely immune to any sort of housing correction. What sort of timeframe are we looking at on this impending bubble burst? A year? Five… ten?

#43 VT on 11.25.13 at 11:23 pm


Just know this. It’s people like you making decisions like the one you’re making that allow people like Brad Lamb to drive a Rolls Royce while laughing at you all the way to the bank.

If you buy, never forget that the decision was yours and only yours to make. No finger pointing please once the sky and glass panes begin to fall.

#44 DR on 11.25.13 at 11:25 pm

I’m renting and I pray for a crash so I can smugly state “I told you so… now your net worth isn’t what what you though it was, now was it?”

Hoping it drops 20%+

Drop 20% from what exactly?

And because your dad went through it you want to see it again? huh

#45 GTA Girl on 11.25.13 at 11:27 pm

Back in 1990, I was one of the idiots to buy a pre-sale townhouse that was to be built in the middle of a cow field in Mississauga. Hurontario close to 401. I was going to be married in 2years, and the nest egg needed to be built.

We lined up in a trailer showroom in a muddy field and signed our lives away. $150k. Bought into media frenzy that we’d never afford a place. Seemed sane when we saw friends of ours with a downtown 1 bedroom condo for $197k. It was tiny, and we’d have 3 bedrooms.

After 5 years of construction hell, we got out. Luckily we only took a $10k bath. At end of it we found out the developer never bothered to fire-insulate between the townhouse units. The new owners had to deal with that.

That was a lesson I never want to repeat. Did I mention interest rates were over 10%?

#46 wallflower on 11.25.13 at 11:28 pm

ba ha ha … sitting here with my rum and coke checking out that cool site some guy started and linked here in earlier posts
“GTA Price drop”


WELL worth revisiting. I went to the first listing thinking, oh, it’s probably sold………..
nope…. it’s down AGAIN and funniest thing, the opening “reaturd-speak” line:
“Beautiful Family Home In High Demand Area!!!***”

Hilarious. I could probably list two pages of realturd-speak that ought to embarrass realtors (how about, ‘story’ when we all know it is ‘storey’ — realturd can’t even spell a basic feature of a simple house) but this is a classic, particularly when we are on PRICE THREE
1 – 515,000
2 – 495,500
3 – 488,000
Seems like all realturds are jumping on the disappearing HAM wagon, throwing around those lucky 8s at every twist and turn, now………………..
and yep, about that “high demand neighbourhood” with the lowering list prices. Now, if the realturd could just find the bottom on that pricing scheme for that high demand neighbourhood…………. might not need all those lucky 8s.

#47 WhiteKat on 11.25.13 at 11:36 pm

I bought my first house in 1989 in Hamilton, and lost big time.

I also lucked out and was born in USA just after my Canadian parents moved their temporarily for employment reasons. This makes me a dual Canadian-American citizen from birth.

To make matters worse I sold my house two years ago, before I realized I was a US tax payer. US tax payers pay capital gains tax when they sell their principal residence.

Two years ago president OBAMA signed the HIRE ACT and tucked FATCA in to pay for it. The money from the proceeds of the sale of my house puts me over the 50K FATCA reporting limit.

I HAVE TO BUY A HOUSE IN A BUBBLE A SECOND TIME or IRS will penalize me to the point of bankruptcy.

Sucks to be me. Oh well, I still have my health.

Someone just shoot me now.

#48 I'm stupid on 11.25.13 at 11:49 pm

But Garth it’s cool to “own” debt you can’t pay back.

#49 Ben on 11.25.13 at 11:49 pm

LOL Cornwall commuting distance to Montreal!

Two hours each way. Maybe if your time is worth nothing, yes, it’s worth it.

#50 guelphstudent on 11.25.13 at 11:53 pm

unemployment in 1989 was 4.2% in the City of Toronto and 3.4% in the GTA.
Current unemployment in the City of Toronto is <a href=http://www.toronto.ca/legdocs/mmis/2013/ed/bgrd/backgroundfile-63800.pdf<9.8% (Oct 2013) and 7.2% in the 905 (October 2013)

Toronto employment never recovered from the burst of the first housing bubble!

Toronto Unemployment Graphs 1987-2012 here

P.S. During the past two months City of Toronto lost 57,000 jobs. City officials are going nuts as they can’t figure out what the heck is going on. They contacted Statistics Canada to see whether they messed up. Stats Canada said that there is nothing wrong with the labour force survey. Anyways, you can read the City Report on this mess below.


#51 Tiger on 11.25.13 at 11:54 pm

36#how the f\\\\
That’s what smokin crack will , do you in!
Are you a retread from rob ford! Or you just get a bad batch of re!

#52 Obvious Truth on 11.25.13 at 11:55 pm

What the heck is a 26 year old doing with that kind of loan. This can’t be true. I couldn’t get that with 200 000 in income in the late 90’s.

800 sq ft could be bought for 70 000 in the early 90’s. With parking. Right downtown. Condo fees at 120. Nice brick and stone buildings too.

Our young hopefully fictional friend probably doesn’t get 70 grand mortgage without a cosign and a grilling about how condos are bad investments back then.

Please nobody say things are different. Money always works the same.

If this is true The condo situation is more laughable than the leslieville shed featured here recently.

Is it just me or does big sexy from the wall have it right. Regional centre folks. And place of great nicknames.

#53 Christopher Mewhort, EA on 11.25.13 at 11:56 pm

#47 Are you not eligible for the exclusion? $250000/500000 would go a long way. If you think you can offset the gain on a sale of a home by purchasing another home, that tax provision went away back in the Reagan presidency. You might want to consider consulting a tax professional.
Christopher Mewhort, EA

#54 stage1dave on 11.26.13 at 12:06 am

Ahhh…the eighties! After a really “blah” monday, it’s nice to do a bit of reminiscing.

Close friend of mine (at the time; he later retread the 60’s road of chemical experimentation without the somewhat redeeming charm of social experimentation; & became a narciscistic drug-addicted moron…perfect 80’s guy) bought a WMB in a poor area of town…OK, awful area of town…for $79,900. 10 % down, mortgage @ 14%. 1989…Wow

He spent the first several years shooing hookers & dope dealers off his sidewalk & garage pad…well, that & trying to make his mortgage payments…& bitching about all three!

(He once told me about having to continually chase sidewalk people out of his truck: when he went to work in the am, someone he did not know was invariably sleeping in the front seat. I asked him why he simply didn’t lock the damned thing? He replied that he was also tired of replacing vent & side windows…if it was locked, apparently; they would just break a window to gain admittance! Better to just leave it unlocked. Hmmm.)

Anyway, FF to present day & it’s worth almost 280K…yay! (The only other thing that has changed in the neighbourhood is that the hookers have also tripled their prices) Still has a few years left on his mortgage, (thanx to a couple re-fi’s) property taxes have more than doubled, & the amount of actual cash he has spent simply maintaining this dump would buy me a new Shelby…& now all he bitches about is his ex-wife. Well, that & the high cost of dope…

But of course, the familiar mantra utters forth from him, as it does from this present HH generation…”if I hadn’t bought when I did, man, I’d have nuthin”. A well- financed retirement is at hand, I presume; thanx to his prudent investing 24 years ago in this future crackhouse…probably around Paynton SK; or thereabouts.

(He’s probably also hoping that Safeway continues to offer cases of KD on a 2 fer 1 basis at least once a month well into the future, because he’ll be eatin’ a lot of it)

So this is living, huh? I always wonder what a half-million bux would have done for this person (& a hell of a lot of others) if they’d chosen to DO something with it, other than just hand it over to the bank.

Anyway, I missed most of the nineties recession (Hey, I thought 2 br apartments…oops, condos for 56K were obscene) because I was too busy gypsying between airshows, carshows, & dragstrips. (well, that & driving 500 miles out of my way to catch a live Ozzy show, or an AHL all-star game so I could watch some high-school buddies play shinny again…hahaha) Slept in that truck so damned much my buds started calling it the “Hotel Silverado”.

I’m still not sure if all those car & airplane people were recession-proof, or their “industry” was…but they were sure havin’ a lot more fun than the rest of the people I knew.

I learned a lot those few years…for instance, every one of those successful performers/builders/racers had invested in themselves! Housing, as it turned out; was something they picked up as they could afford it…they didn’t sacrifice their lives for it. And I don’t remember ANY of them ever talking/bragging/discussing it! It was just somewhere they lived.

The last few years have brought some of these silent lessons into sharper focus, to me anyway. Because it’s a rare day when the subject of “housing” (“…how much did you pay?” “…what’s your interest rate?” “…what part of town?” “…how long ya been there?” “…what’s yer square footage above grade?”) doesn’t enter into a conversation at work or play.

It truly has become a national obsession. And perhaps, a yardstick of personal and/or business accomplishment? Philosophically, I think that is a bad thing. It’s definitely something new in the national character…the substitution of long-term debt for short-term accomplishment (home ownership) is a collective delusion; and as our host continually reminds us, will not end well. Considering 33 million of us are on the hook for the loans backing these inflated property values…

Btw, at 26 I was a bit more concerned over how to make my Hemi’Cuda just a bit quicker…now that car was a good reason to RENT!

#55 omg on 11.26.13 at 12:26 am

#35 TS – you mean the Canada-US Free Trade Agreement (FTA) that came into effect in 1989. The NAFTA was subsequently negotiated in the early 1990’s to bring Mexico into the fold.

At the time the refrain of the left was that the FTA and NAFTA would end up commercializing our water resource, allow US missiles on Baffin Island and, my favourite, result in privatized public libraries – there must have been a lot of unionized library employees supporting the Centre for Policy Alternatives.

Gotta love a leftie.

#56 Nemesis on 11.26.13 at 12:52 am


You had me at Shelby.

HemiCuda! Bastardo!

Colour Nem Green…

#57 Dean Mason on 11.26.13 at 12:56 am

If the Liberals or NDP or both win the next federal election, there goes the current $5,500 TFSA contribution as it is today and we will not see the $10,000 TFSA contribution limit in 2015-2016.

The TFSA will end up like income trusts when the liberals and NDP are done with it but it will affect much more people for decades to come.

Canadians get ready for a big mess like McGunity, Wynn and other left, liberal tax, spend, debt, regulate, red tape, nanny state, squeeze everyone like a lemon policies.

They make Canadians lives impossible from double digit electricity rate increases, water rates, new taxes all of kinds from eco fees to smart meter fees, B.C.’s $30 to $35 a month per month, health taxes, carbon taxes, H.S.T. on everything from gasoline, hydro, heat, natural gas etc., land transfer taxes doubling in Toronto getting power from McGunity to Miller for Toronto, $60 annual car tax, 5 cent bag tax etc.

Giving Miller and Toronto new power to add 14 new taxes, Google it. Ask businesses all the red tape, over regulation, taxes etc. that Ontario Liberals and NDP, B.C. liberals have done so far and costs them every year.

Never in Canadian history has a family of 4 adults allowed to save $22,000 a year and earn all income tax free interest, dividends, capital gains etc. and not included as income taking away retiree, elderly, senior benefits.

Even at net 4.31% provincial strip bond yields today which is equivalent to a 6.50% to 8.62% annual return in a non-registered account or from RRSP, RRIF income can grow these TFSA’s to millions in 30 or more years.

The TFSA is the main incentive today to even start saving money and investing it. I hope I am wrong in 2015 but people will have much less money to do anything.

#58 DR. on 11.26.13 at 12:59 am

Great blog Garth, new reader.

I live in tha Peg and back in ’09 my better half managed to convince me to buy when we were 28. I would echo many things in your blog today back then. The place we bought is 2 storey, 3BRM, 1100 ft2 house with garage for 100K in westend. We put 20K down and currently have 55K left.

Similar houses in my neighbourhood now go for 200K. I’m glad we bought, I guess it was the right decision back then. Although our rent was only $550 split three ways.

When will the party end? Every year I continue to be shocked at the sale prices in our fast gentrifying neighbourhood.

#59 WhiteKat on 11.26.13 at 1:06 am

@Christopher Mewhort, comment #53

Yeah, since I bought in a bubble, I never made anywhere close to the capital gains threshold, so no worries there. I just like to whine about USA’s arrogance thinking I am a US tax payer just because I spent the first few months of my life there. Over my dead body…I would rather buy another house in this bubble and hide from FATCA.

#60 Andrew Woburn on 11.26.13 at 1:08 am

Where have we heard this story before? Can’t be true though because it’s only anecdotal. Obviously a shameful and distasteful case of technophobia.

Technorati face backlash in San Francisco

As the center of the technology industry has moved north from Silicon Valley to San Francisco and the largess from tech companies has flowed into the city – income disparities have widened sharply, housing prices have soared and orange construction cranes dot the skyline. The tech workers have, rightly or wrongly, received the blame…..symbols of a city in danger of losing its diversity – one that artists, families and middle-class workers can no longer afford.


#61 Questions on 11.26.13 at 1:12 am

Has anyone here who sees 5-9% growth as the only valid way to success been willing to acknowledge that well timed leveraged gain far exceeds a balanced portfolio…. And… Is just as risk mitigated?

#62 sideline sitter on 11.26.13 at 1:16 am

I remember the late 80s crash… I was just becoming a teenager and cleaned my family out … so sad to see my dad lose everything in his 50s after becoming a millionaire in the 70s (back when a mil was a LOT of money).

I swore that I would never get into Real Estate as a profession, and so far so good,

I dont want anyone to go through the same heartache, but things will change and people will get hurt.

if you dont learn from history, you’re bound to repeat it!!!

#63 Dean Mason on 11.26.13 at 1:27 am

In 1994, Paul Martin Federal Liberal Finance Minister with Jean Chretien Federal Liberal Prime minister got rid of the lifetime $100,000 capital gains exemption for each adult family member.

This is $400,000 for a family of 4 in tax free income and at a 5% rate of return in TFSA’s, it would take 4* $5,500= $22,000 annual maximum TFSA contributions for 20 years to earn $405,470 in actual income tax free income.

This is what they took away in one time with a stroke of a pen.

If 4 adult family members contributed their unused TFSA contributions from 2009 to 2013 at one time which is $25,500 each and $102,000 for the whole family earning the same 5.00%, it would take 33 years to earn $410,325 in total income tax free income.

This is what they took away one time with a stroke of a pen.

These are lifetime, wealth destroying policies for individuals and families.

They leave your principal residence for now but these lefties are looking at it, Capital Gains taxes!!!

#64 patience on 11.26.13 at 1:35 am

i’m a 32 year old dude from vancouver. i have been waiting out this market for the past 7 years as my friends have scooped up property and have been getting a lot of love from a lot of women!!! i have a brother in law that has been chirping out reasons why i should buy but of course i have been blocking out many of those reasons with your blog … lol with all joking aside, i am curious to know garth, with the correction of the late 80’s early 90’s, what were home prices selling for in relation with propery value assessments???

#65 kabloona on 11.26.13 at 1:37 am

#12 John R: yes, you better buy something on the high ground in Johnstown, PA. Thanks for the comment….that brought back fond memories of driving through central Pennsylvania.

#66 John Prine on 11.26.13 at 1:43 am

11 Waterloo Resident on 11.25.13 at 9:54 pm
Don’t worry, house prices in Canada won’t fall this time because people have learned their lessons and now they are more prudent with their spending.
They are falling everywhere now, even realtors will tell you that. 10 to 15% here on the wet coast (outside Vancouver) Mid Vancouver Island, Kelowna and Whistler are really in trouble and have been for a long time. Home in the $300’s and low to mid $400’s sell if they are good, over $500K languish. Lots on the market for 400 + days. Stony Creek looks pretty cheap these days…

#67 Poorgeoisie on 11.26.13 at 2:06 am

The main difference between now and the 80s is that rates spiked back then because there was a legitimate lack of supply. The bulk of boomers were getting into the market and the borrowers had to compete with each other for loans. By the time the supply side caught up to (and exceeded)demand there was no one left to buy. Higher rates were there because they could be based on the available demand. Now it’s different, lower rates were introduced to stimulate demand that wasn’t there. This got buyers into the market ahead of their time essentially taking tomorrow’s buyers today. So what happens when tomorrow comes and the buyers just aren’t there? It won’t be a rate hike, no sadly we will do just as the Americans did: bring in the NINJAs and the extreme sub prime borrowers, perhaps even lobby the govt, anything to make it even easier to buy at current prices and keep the party going.
The bottom line is that if there was actually the demand to support these prices rates would be going up just like in the 80s.

#68 JimH on 11.26.13 at 2:36 am

#47 & #59 WhiteKat
You are mistaken in your belief that “US tax payers (sic) pay capital gains tax on the sale of their principal residence”. A single filer is entitled to a $250,000 exclusion on the capital gain (after deducting all costs of the sale), while married filing jointly can exclude up to $500,000. This after being able to deduct mortgage interest as the gains were being accrued!

Yes, you do love to whine, and it’s getting rather tiresome. If you haven’t done so already, why not just do the right thing and hustle down to the nearest US embassy, or arrange for a hearing at a US consulate and simply renounce your US citizenship?

#69 Liquid on 11.26.13 at 2:47 am

@ #32 Bottoms_Up on 11.25.13 at 11:00 pm
That’s a great point. I would much rather borrow at the higher rate because my overall debt will be lower. Interest rates are temporary, a moving target. But a balance sheet is long term.

Some people tend to borrow as much as the banks are willing to lend, and unfortunately the formula that the banks use for their lending practices only consider ratios around the lender’s income and debt servicing capability, which can be dangerously mislead by prolonged periods of low interest rate. But they do not consider the actual amount of the loan in total dollar terms. This is a somewhat flawed lending method because the more debt they create in the economy, the harder it is for Mr. Poloz to raise interest rates in the future, perpetuating this trend of excess credit.

#70 Exurban on 11.26.13 at 2:48 am

Condos don’t look like a good investment to me either, but it’s a bit too much of an echo chamber in here. Two things that are different from 1990 — first, the interest rates. Second, a story that could easily be datelined Vancouver, West Vancouver, Burnaby, or Richmond:

Chinese buying up California

#71 JUNO on 11.26.13 at 3:16 am

Yeah the good old days.

Unemployment for the first two year were high, people lining up to fill in an application for factory work.

You also have to note this time around

– Prices more than double, closer to 3.2% or higher, depending on the area
– Downpayments were 10% on first house and 25% on second at 25% amort –we have 0% down on all house and 40% to interest only loans
– the baby boomers were still in the working force, the bulk of the workers were in their mid 30’s. There weren’t too many old people, They died in the war –> the bulk is now retiring who will support them
-“PEOPLE HAD SAVINGS” –> we have huge debt

US were producers of goods (manufacturing) now we are just importers and export only debt to other countries

#72 Bobby on 11.26.13 at 3:45 am

Yes, I have seen the crashes before. It is always the same as everyone says this time is different. But it isn’t.
Out looking for properties here on the Island. The market is stalled with many properties empty and languishing forever. Many are now priced significantly less than what was paid a number of years ago and still sit for sale.
The older realtors say we have seen this before and sellers better take what they are offered or risk following the market down. The newby realtors say get in now as property can only go up in price.
Did Garth mention this won’t end well.

#73 Freedom First on 11.26.13 at 3:56 am

Thanks Garth! Loved tonight’s post. I read it as a reminder to “ALWAYS” be doing the opposite of the masses. Lisa is the average Canadian: financially illiterate/close minded/brainwashed/only learns the hard way.

I like: cash, cash flow, income streams, diversity, liquidity, balance, steadily/regularly increasing net worth, and no debt. Takes knowledge, work, patience, creativity, discipline, ignoring/disregarding/avoiding people not like Garth, and putting ones own financial well being “FIRST”. Another bonus: The [email protected], everyone else trying to “sell” you something, and most of the people who know you are doing well, will hate you. Freedom from bondage……priceless.

#74 Buy? Curious? on 11.26.13 at 5:47 am

If there is a correction, and the market drops say 20%, won’t the people who were renting jump in until the market froths up again? How many times have heard people say they’ll sit on the sidelines until the market crashes then come in and “vulch”? It’s kind of like dieting, someone can lose 10-15pounds around Jan 30 but come Dec1, they’ve gained it all back plus and extra 5-10pounds. Anyone stupid enough to time and predict the bottom or top of the market will waste your time telling you how smart they are.

What I’m looking forward to seeing is the deterioration of these condo buildings. If the glass is popping out of those suites, I can’t imagine what else is wrong with them. Owners of these places are going to be whacked with Special Assestments to cover all the costs to repair the dodgey workmanship. That’s when you’ll see some drama.


#75 I'm stupid on 11.26.13 at 6:13 am

#21 Vangirl

Imagine that… You had fun while you where younge. You actually had life experiences. I’m 33 and did the same. I didn’t live life vicariously threw some random socialites who’s claim to fame was that they where born rich. In 20 years I think we are going to have one Mamma of a midlife crisis. An entire generation who will realize that they screwed up their youth. I won’t be one, I did some crazy things, have had life experiences to last 2 life times. I can carry a conversation with complete strangers without mentioning my job or money. Those that can’t haven’t really lived.

#76 George the 7th on 11.26.13 at 6:33 am

I remember the late 80’s, people at work coaxing me to get into buying a house. I remember running the numbers thinking I would never be able to own – kept renting til the mid-90’s. Bought a house which I now own – just missed the trap though!

#77 drydock on 11.26.13 at 6:45 am


Very interesting read about who might be buying up U.S. real estate and how and why.

#78 Smoking Man on 11.26.13 at 7:04 am

Nothing would give more satisfaction watching the Toronto condo market and it’s band of Toronto Red Star worshipers get crushed in a condo melt down.

These loti drinking, bicycle ridding Al Gore cultists standing dazed and confused when the walls come tumbling down.

Unfortunately not going to happen for a while. No hockey stick pattern in he real estate chart, like the made up one IPCC a few years back.

#79 History on 11.26.13 at 7:32 am

“Asian investors who are driving up housing prices in Canada’s big cities are provoking an angry, anti-immigration attitude among Canadians, a top economist says.” -Toronto Star, January 25, 1989

“For most young people in metro [Toronto]… the great Canadian dream of owning a single, detached house is slipping beyond reach….” – Toronto Star, March 16, 1967

“Does the name Jeff Rubin ring a bell?
Remember a controversial and distressing prediction back in June, 1989, that Toronto house prices would crash by 25 per cent over the next 12 months? It came from Jeff Rubin, an economist immediately and viciously written off as a wacko. How accurate was Rubin’s forecast? Toronto house prices plunged nearly 30 per cent from the peak that spring, and wallow there 7 1/2 years later.” – Toronto Star, September 21, 1996

#80 History on 11.26.13 at 7:49 am

Sound familiar?

“Metro’s housing boom has been fed by a variety of factors including: Migration to the city from other parts of the country; Buying by Asian investors who view prices as cheap for a city of Toronto’s stature; Housing speculation; and fice years of falling interest rates….” -Toronto Star, February 1989

“Condo building boom leads to glut in Metro” – Toronto Star, February 20 1990

“Fears that mortgage rates will again rise are helping to fuel the Toronto real estate market, industry officials say….” -Toronto Star, March 10 1989

#81 History on 11.26.13 at 8:10 am

Investment dealer Wood Gundy’s prediction that Toronto housing prices could drop as much as 25 per cent over the next year is way off base and is panicking buyers, real estate agents and analysts say. The Toronto market may be slowing, but the area’s economy is too strong to permit a housing crash of that magnitude, they said yesterday. The Wood Gundy report said the country is heading for a recession and the Toronto housing market is in for a crash next year that could cut prices by 25 per cent. That was too much for the Toronto Real Estate Board. “We feel that this story has been very inflammatory with respect to promoting mass hysteria in the marketplace and obviously across the country,” board vice-president Stephen Moranis told Canadian Press.

-Toronto Star, June 3rd 1989

#82 The real Kip on 11.26.13 at 8:16 am

“This, I told my readers, will end badly. But they ignored me, of course. Until it did.”

You also told your readers there are only three things to remember when buying real estate. Location, location and location. I’ve been reading your shtick since before Lisa was born.

That’s when buying. When deciding to buy, it’s timing, timing and timing. — Garth

#83 [email protected] on 11.26.13 at 8:19 am

Andy Xie, Morgan Stanley: “Odds are that the world is experiencing a bigger bubble than the one that unleashed 2008 global financial crisis”
Of course the guy is an amateur who is not even following this blog.
This next bubble burst “will likely bring another global recession worse than the one after the 2008 crisis.”

#84 History on 11.26.13 at 8:24 am

“The housing market in Metro [Toronto] is now being described as unreal, crazy, a repeat of the 1973-74 boom, volatile, like an auction, with bidding wars between potential buyers”

-Toronto Star, February 28th 1981

#85 Frustrated Kiwi on 11.26.13 at 8:36 am

Ah yes, “buy now or be priced out forever” – the meme is here too. There’s a really interesting question on whether house prices show ANY long term trend above inflation. Steve Keen thinks they don’t:
States: “By 2012, the US index had fallen back to its 1890 value, having peaked 75 per cent higher back when Alan Greenspan was dismissing talk of a bubble.” Of course, we are talking average prices across a region – neighbourhoods can gentrify (or decline) and type of housing stock can change but fundamentally people living in an area buy the housing in that area based on income – a truly long term trend above income (buy now or be priced out forever) doesn’t seem possible.

#86 Squad on 11.26.13 at 8:41 am

So, with the British government’s “Help To Buy” scheme released earlier this year by David Cameron’s lot, here comes a repeat of the Canadian market – surprise, surprise!

This is what happens when the government involves itself in stimulating the housing market. Is it so difficult to see this coming? Why are governments so shortsighted and where is brother Carney in all this – he should know better!


#87 Exceptional SFH sales -50% and 75% of the initial asking price on 11.26.13 at 8:43 am

Is this the big panic????!
There are a couple of others sold for -10% under asking
I believe that the confirmation that F is going to do some changes again, leaked and the well connected people are exiting the market!!

C2781250<—-this guy sold 300K under the price of the area!!!!
Initia asking= 1990000
Last asking=988000
% of first asking=50
Declared DOM=14
Real DOM=225
Price history

E2781966<—–This guy was lunatic. He got the price of the area
Initia asking=849900
Last asking=599900
% of first asking=75
Declared DOM=13
Real DOM=136

Price history

Hey MLS …..FY!

Price Histogram (100K bins)<–this is unusual too. 13 properties above $1M in a singe day

Above Sales
300000 9
400000 9
500000 10
600000 10
700000 9
800000 7
900000 6
1200000 1
1300000 3
1400000 4
1600000 1
1700000 2
1800000 1
2200000 1

#88 Time bandit on 11.26.13 at 8:57 am

Canada’s trouble with investment advisers

Should I be surprised ?


I’ve often stated commission-driven advisors are salespeople. Find one that sells nothing, refuses to collect commissions, is fee-based and practices active management. — Garth

#89 Thaya on 11.26.13 at 8:59 am

Hi Garth,
I am asking you this very sadly when would the housing in Canada correct? Average hard working people cannot afford a house in GTA. Me and my wife work in the health sector and combined income of annual 160000. Living in a condo which is worth 200000 thought of buying a property a couple of years ago due to affordability we could not buy now it came to a point we could not afford at all. Do you think the housing and the stock market would correct in the next 5 years. I am really angry of the housing market and the way the stock market is behaving now. I lost all my savings in the last 2008 collapse.
I would appreciate your realistic opinion.

The only people who lost all their savings in 2008 were the ones who sold. The problem isn’t the markets. — Garth

#90 ozy - single women can't drive the kondo market up forever on 11.26.13 at 9:01 am

single women can’t drive the kondo market up forever
because they eventually bring men home and we like space – not to mention the babies hot in the oven. So a generation shift in a few years – with kondo dwellers looking at their equity value erode RAPIDLY.
there are only 3 areas of TO where condo prices might stick. and they are not large, obviously.


#91 Sean on 11.26.13 at 9:18 am

Wow, great perspective.

#92 Dean Mason on 11.26.13 at 9:19 am

I am also hearing that the $60 annual car tax is coming back soon. This time it would be at least $65 from what I am hearing.

All the lefties are rubbing their hands with glee and are just getting started picking all the brainwashed lefties in Toronto that think their alternative city council is normal.

Liberalism is a mental disorder and it is called stealing other peoples money and running their lives, NANNY STATE!!!!!

They call it social engineering but when they will get scammed like everyone else. It is Miller time again in Toronto!!!!!

#93 Castaway on 11.26.13 at 9:33 am

#40 rosie “moving forward” in the knowledge that, “this won’t end well” on 11.25.13 at 11:15 pm

Good post Rosie. Everyone needs to check out that link to the chart comparing average house prices to average income in Canada. This is the most meaningful stat out there. Frankly it is the only one that matters. Then go look at the same chart for US for the period 2000-2008. If you still beleive we arent in for a major correction you need to seek professional help!

#94 Castaway on 11.26.13 at 9:36 am

Just wished I could short the market like Paulson, Watsa and few others did with US MBS’s. there will be winners and losers and most condo buying sheep will be the latter.

#95 jess on 11.26.13 at 9:42 am

1998 -2009

…”The indictment alleges, among other things, that from at least as early as 1998 and continuing until as late as February 2009, prior to the commencement of certain tax lien auctions in New Jersey, the investors and their co-conspirators agreed not to compete for the purchase of certain municipal tax liens.

The department said that the primary purpose of the conspiracy was to suppress and restrain competition in order to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent property owners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached. Since the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition, the department said….”read more


#96 jaguar on 11.26.13 at 9:46 am

I lived in Toronto from January 1982 to May 1988. I remember the development in housing that took place and the fever that accompanied it. People become so obsessed with keeping up with the herd they seemed unable to step back and view the bigger picture. A recent contributor to the blog talked about 50,000 new jobs in Alberta, but one wonders what these numbers represent and who is spinning them. I believe a lot are in low paying service sector jobs and those filling them are doing so on foreign working permits. There will be another gasp of excess during the Christmas season and then the spring may hold a real dose of reality.

#97 Ralph Cramdown on 11.26.13 at 9:57 am

#61 Questions — “Has anyone here who sees 5-9% growth as the only valid way to success been willing to acknowledge that well timed leveraged gain far exceeds a balanced portfolio.”

Of course! But if you’re good at timing, you can do better than 5-9% without leverage.

“Don’t speculate unless you can make it a full-time job.”

#98 Incubus on 11.26.13 at 10:11 am

“Because if I don’t buy now I’ll probably never be able to,” she told me, all innocence and progress. “I’m building my future.”

When you read that, you are wondering if people have brains?

“If this were 1989 and history repeated, Lisa’s condo would again be worth what she paid by the time she neared her 50th birthday. She’d have made at least $500,000 in payments, and still have a mortgage.”

It will happen.

#99 Steven on 11.26.13 at 10:12 am

Lisa like many people suffer from the bizarre idea that the market prices for everything are reasonable and legitamate when infact they are not always so. Is lisa making $115,000 or better per year on her own? If not she let her lust for a roof over her head get in the way of financial common sense and decency. She was the greater fool. When interest rates normalize or go higher Lisa will find out there really is more than one way to get screwed and it is not always enjoyable.

#100 Tulip Aficionado on 11.26.13 at 10:21 am

Dr. David Ley is an academic geographer at UBC. Here is a brief blurb from UBC’s website:

Dr. Ley was Department Head (2009-2012). He was the UBC Director of the Metropolis Project, examining issues of immigration and integration in Greater Vancouver and beyond, from 1996-2003, and was appointed a Trudeau Fellow from 2003-2006. He holds a Canada Research Chair in Geography.


Dr. Ley is quoted in the Vancouver Sun:

Ley said Chinese migration was “undoubtedly” a driving force at the top end of the market in premier districts. But this also had a trickle-down effect.

“Anecdotally, [those who sell in Vancouver West] are moving into suburban areas, Langley, Burnaby, Tsawwassen, Ladner. So there are effects in those markets too,” he said.

Ley said he was surprised there had been no “political pushback” against the effect that various Canadian immigration schemes had had on Vancouver’s property market.


Make of it what you may. It may be the case that HAM has been a manufactured story made up by the real estate industry to scare Canadians into buying overinflated real estate by gorging on cheap credit. If that is the case, it is remarkable that the realtors have even duped Dr. Ley into believing the HAM story–that in itself is worthy of posting here because it shows how well crafted the HAM story is and how even high profile, highly intelligent academics like Dr. Ley have fallen for this lie.

It is more an exaggeration than a lie. And academics are usually the first victims. They believe what they read. — Garth

#101 Ralph Cramdown on 11.26.13 at 10:22 am

#57 Dean Mason — “The TFSA is the main incentive today to even start saving money and investing it.”

Bunk. The main incentive to saving money today is the same one as in my father’s time and my grandfather’s time; to have money for an emergency and for retirement. The secondary incentive is watching the investments grow, the tertiary one is hearing someone complain about price increases in w, x, y and z and thinking “I’m getting a taste of all those except the transit fare.” Woe betide the economic actor whose reason for saving $5,500 is that the tax he saves on the interest he earns in a year will buy him a case of beer.

#102 NoName on 11.26.13 at 10:28 am

#27 Bob Rice on 11.25.13 at 10:43 pm

I don’t understand people like you that they want to see crash just out of spite, so they can say I told you so. It is makes no sense that “only” (widely sperd) wealth building “system” that is based on prediction that re always goes up, and unfortunately any system based on “prediction” will blow up. If system of wealth creation thru principal residence brekes sequentaly, it will make system stronger. But we are looking at whole blown cascading failure, with accelerating harm to younger ones.
I would like you to learn new word today.

It means, causing harm in a way that is gradual or not easily noticed.

So, cat that $#!+ out “I hope we have a nasty crash”.

#103 Ronaldo on 11.26.13 at 10:32 am

#58 Dr. – your timing was excellent. As Garth has stated when it comes to buying its timing. Edmonton and Winnipeg were both late joining the party. This has been true in the past as well. Winnipegers from what I gather are still drinking the cool aide. When things turn there as they will once again, it won’t be pretty.

#104 KG on 11.26.13 at 10:38 am

I wonder if people still know how to spell it, need to check the short form on twitter / whatsup…. whatever.

#105 Ralph Cramdown on 11.26.13 at 10:50 am

More on savings incentives.

How many took up TD on its recent offer? Sign up for automated monthly savings into mutual funds (e series if you’re on your game), get a cash bonus after four months. Say you and the wife each sign up for $400/month, you’ll get a $200 bonus. Put it into money market funds, because who needs risk at these rates? You can think of it as a four month GIC paying 18.75%, but since you don’t deposit all your cash at once, the actual rate paid is about 30%. Or just think of it as $200 from the bank.

Sad to say, I was too lazy to bother, though I could have signed up four people for $400. Was a time when I’d always spend an hour for that kind of return.

#106 [email protected] on 11.26.13 at 11:01 am

Shiller on CNBC: “It looks like we’re a little bubbly in the stock market.”

Shiller is well known for his mild vocabulary ..but what does he knows, “there is no storm coming”

A correction, of course. Storm? No. — Garth

#107 Just Some Guy on 11.26.13 at 11:04 am

In the main, what Garth advises works. My wife and I rented up to 2001 and in that period of time before the purchase, we laid the foundation of our portfolio, currently low seven figures. Not having any rug rats or ankle biters helped too although owning motorcycles probably set me back a bit.

We bought a house just after the tragedy of the twin tower bombings which seemed to be a time when buyers and sellers were in a state of shock. I have no facts or indeed any means of proving that last statement but I think that the Rothschild dictum of buying when there is blood on the streets probably came into play. The house was paid off in seven years.

In a side-by-side comparison of asset appreciation, the portfolio has beaten the house by about two percent a year over time. But that is before considering the costs of maintenance, repairs, renovations, taxes, operating costs (electricity, gas, water, garbage collection), and insurance. Then, our portfolio handily beats the house appreciation by a very wide margin. If I were smart enough to calculate the lost opportunity cost of not investing the money that was sunk into brick, mortar, and other inedible things that surround me, I think the picture would be worse.

#108 [email protected] on 11.26.13 at 11:09 am

#106 [email protected] on 11.26.13 at 11:01 am

Shiller on CNBC: “It looks like we’re a little bubbly in the stock market.”

Shiller is well known for his mild vocabulary ..but what does he knows, “there is no storm coming”

A correction, of course. Storm? No. — Garth
Define correction. What percentage do you expect ?

The usual. Yawn. — Garth

#109 Ralph Cramdown on 11.26.13 at 11:10 am

Ah, Garth. Still downplaying HAM effects in the lower mainland? Here’s my takeaway from yesterday’s commenters:

The Mayor of Vancouver goes on a tour of China with an Airbus full of suits. He talks about Vancouver real estate (presumably because somebody asks, or he thinks his audience will be interested). The South China Morning Post quotes him, presumably because they think their readers will be interested.

I don’t know how big the effects are, but I can think of several interested parties who would be not at all interested in finding out. How is it that the Harper Government wants to scrutinize every oilpatch deal to see whether it’s in the national interest, but none of the deals on the West Side of Vancouver? There’s only about an order of magnitude difference collectively, and the possible effects of the latter on leveraged individual Lower Mainland families far outweighs the diluted effect of the former on Albertans and Canadians.

I just want more data, and am growing increasingly suspicious of those in a position to get that data who won’t.

#110 lawboy on 11.26.13 at 11:19 am

The reason the country is full of real estate fixated zombies (Lisa) is because people know full well they make nowhere close to enough money to live comfortably, so they try to make it up through buying real estate. IT DOESN’T WORK. We can’t get rich or financially secure selling houses to each other at higher and higher prices.

#111 fixie guy on 11.26.13 at 11:24 am

The kink in this blog post’s language is perspective. Markets don’t technically ‘recover’ from bubble crashes. The return to mid-Eighties valuation was only possible with another bubble begun in the Chretien days. That’s not the definition of a recovery. In the context of bubbles that would be going down and staying down.

Break even with today’s situation won’t happen again until the next seated government that mismanages the economy for short sighted political goals. For those interested in a century-long view of real estate markets, Robert Shiller still makes available updates of his famous graph data in Excel form on his academic site. It’s for the American market but Canada isn’t better, it’s just later.

#112 Auditor on 11.26.13 at 11:34 am

What people fail to recognize is that we all need a place to live. If someone is making a longer term commitment and buys then so be it. Maybe she bought a place that needed a lot of work?

There are some places that will maintain value and blanket statements implying that everything will crash is not accurate. Even when the US meltdown happened there were still areas that did not suffer a setback. Mind you they were the nicer areas, but the point is the world will not end.

There are a lot of people on this blog that want to see an epic crash, it probably won’t happen. If it did, there’s a good chance a bunch of us would be out of jobs. Is that what you’re hoping for?

Most of those hoping for a crash are the same people looking to get in. I should know I was one of them. We found an undervalued property that was on the market for 3 months, had a favourable price to rent ratio and is in a high demand area. I didn’t need a crash to find value.

At the end of the day a purchaser should enusre they are balanced, living within their means and living modestly. That’s what we should hope for, not an epic crash.

#113 recharts on 11.26.13 at 11:42 am

#108 [email protected] on 11.26.13 at 11:09 am
#106 [email protected] on 11.26.13 at 11:01 am

Shiller on CNBC: “It looks like we’re a little bubbly in the stock market.”

Shiller is well known for his mild vocabulary ..but what does he knows, “there is no storm coming”

A correction, of course. Storm? No. — Garth
Define correction. What percentage do you expect ?

The usual. Yawn. — Garth

You are being evasive here.

Look it up. Convo is over. — Garth

#114 Ronaldo on 11.26.13 at 11:54 am

According to Peter Grandich:


#115 ponerology on 11.26.13 at 11:56 am

I’m surprised that no one has tried to counter with this:

“The largest percentage increases of the Dow Jones occurred during the early and mid-1930s, but it would not return to the peak closing of September 3, 1929 until November 23, 1954”.
25 years for the stock market to recover (in that case). Does this make stocks worse than real estate? :)

(yeah I know, there are many problems with this argument )

#116 Ronaldo on 11.26.13 at 12:06 pm

Sometimes when all around you all you here is doom and gloom, it’s nice to take a break and listen to something like this. Incredible.


#117 Mixed Bag on 11.26.13 at 12:10 pm

““Because if I don’t buy now I’ll probably never be able to,” she told me, all innocence and progress. “I’m building my future.””

At least if it were a house or semi. But a condo at a peak? Where you as the purchaser have no control over maintenance costs, special levies, the maintenance work itself and who it gets contracted to? Condo’s scare the shit out of me for these reasons, never mind the high purchase prices. Condominium = another way to give up control of your life. Baa-baaaaa.

#118 Mixed Bag on 11.26.13 at 12:12 pm

#101 Ralph Cramdown on 11.26.13 at 10:22 am


#119 Herb on 11.26.13 at 12:19 pm

#92 Dean Mason,

you’ve suddenly made me aware of the difference between lefties and righties (or whatever you want to call the latter.)

Lefties/liberals want to steal other people’s money and spend it on other people. Righties/conservatives want to steal other people’s money and spend it on themselves.

Thanks for clearing up that existential difference for me.

#120 Mr. Frugal on 11.26.13 at 12:32 pm

So let me get this straight. You graduate from school, get a job and promptly borrow $320K so you can “own” a concrete box. Mortgage your entire future against a job which could evaporate at any moment! And these same nuts would say that the stock market is way too risky. The reality is that the company which you work for is probably less risky than your the future income which they provide you with to pay your mortgage. I mean what are the odds of you surviving your job and the company failing? These kids needs to start living frugal, saving and investing.

#121 Suede on 11.26.13 at 12:34 pm

1987 was a good year

Guns n Roses – Appetite for Destruction
Bon Jovi – Slippery When Wet
Def Leppard – Hysteria
US – Joshua Tree

hot damn

#122 happity on 11.26.13 at 12:35 pm

It’s hilarious that government and central bank influence is used to describe the overpriced ready to fall real estate market.

But at the same time those same conditions and mental gymnastics just can’t be applied to the stock market.

The stock market is somehow different.

Look at market multiples and cash flow. You compare apples to Buicks. — Garth

#123 not 1st on 11.26.13 at 12:42 pm

I’ve often stated commission-driven advisors are salespeople. Find one that sells nothing, refuses to collect commissions, is fee-based and practices active management. — Garth


Isn’t that the point of investments like ETFs? The commissions and active management are really rolled up in the MER aren’t they?

Most ETFs have no management. Plus, no advice, no tax avoidance strategies, no retirement planning, no overall asset allocation. — Garth

#124 WhiteKat on 11.26.13 at 12:48 pm

@JimH re: comment #68

Yes Jim, I know all about the Capital gains exemption of 250K, but thanks for reinforcing that for others!

About my whining about FATCA, while you are busy watching the antics of Rob Ford, or obsessing over the housing bubble, I am worried that Canada is selling out its sovereignty and trashing its Charter of Rights and Freedoms because we are scared of the big bad USA. And I am going to keep on whining about it until FATCA dies, whether you are tired of hearing about it or not!

By the way, it seems I am not the only Canadian that is pissed off. If you are not too busy reading Garth’s latest post, check out this new article from the CBA with close to 1000 comments from Canadians who practically broke their keyboards with their angry responses:

#125 Vangrrl on 11.26.13 at 12:50 pm

#41 and #75:
Whew. At least there are a few of us non-boring types around. Seriously though, I thought about your comment re; 20 yrs from now and people realizing they wasted their youth. Yesterday a friend sent me an article from the Globe and Mail- Life of Solitude; Loneliness Crisis Looming. One of the stats that threw me was the high number of people between the ages of 25-34 who reported feeling ‘lonely’. I can’t help but make some connections between young people like Lisa whose idea of building a future/a life is to indebt herself for the next 3 decades to live (for the most part alone?) in a glass box in the sky.
Who has time at that age to even think about whether they’re lonely or not? The things we did when we were younger- having roommates, travel, trying new things (which would be difficult to do if you’re pouring all your income into housing)- these things all involved a sense of community. I don’t know, I don’t have the answers. But it does make one wonder if this obsession to own, esp when so young, is contributing to social and personal malaise.

#126 TS on 11.26.13 at 12:55 pm

If this were 1989 and history repeated, Lisa’s condo would again be worth what she paid by the time she neared her 50th birthday. She’d have made at least $500,000 in payments, and still have a mortgage.

The whole description is just based on first two letters.

Exactly what all residential real estate decisions are based on. — Garth

#127 happity on 11.26.13 at 12:57 pm

Look at market multiples and cash flow. You compare apples to Buicks. — Garth

Exactly, cash flow comes from the fed to a tune of over $85 billion a month, fortune 500 puts more cash on hand into stock purchase than at any time in history while spending the least on new equipment and hiring, and the ratio of banker fines to criminal charges is unprecedented.

But still it’s different

#128 WhiteKat on 11.26.13 at 1:00 pm

Speaking of writing history (JimH are you reading),
Canada is in a unique position right now, to change the history of the world, except most Canadians haven’t got a clue what I am talking about.

If our Harper government suddenly grew a pair (and it just might yet), and said ‘NO’ to FATCA, the US plan to control every financial institution in the world, would be toast. Canada is a KEY win for the USA. Once Canada says NO, expect a tsunami of ‘NO’s’ heard across the world, and a big hit to USA domination.

#129 rosie "moving forward" in the knowledge that, "this won't end well" on 11.26.13 at 1:03 pm

Maybe they should ask for a raise. Thanks Canada, for making it different here.


#130 Ralph Cramdown on 11.26.13 at 1:03 pm

#112 Auditor — “There are a lot of people on this blog that want to see an epic crash, it probably won’t happen. If it did, there’s a good chance a bunch of us would be out of jobs. Is that what you’re hoping for?”


Not that I’m actively wishing economic misery on anyone. But if the choice is between that or to continue levering up selling each other houses, while the rest of the world gets ever better at creating products and services for export? Bring on our great national readjustment, the sooner the better.

#131 Fed-up on 11.26.13 at 1:14 pm

@#110 lawboy on 11.26.13 at 11:19 am
The reason the country is full of real estate fixated zombies (Lisa) is because people know full well they make nowhere close to enough money to live comfortably, so they try to make it up through buying real estate. IT DOESN’T WORK. We can’t get rich or financially secure selling houses to each other at higher and higher prices.


I totally agree. It seems like half the Canadian economy and economic action plan is fixing up and selling over-priced shacks to each other and higher and higher prices, sending people deeper into debt and becoming more and more reliant on the warped Canadian Banks.

Sooooo innovative. and reeeeeeeaaaally sustainable.

#132 not 1st on 11.26.13 at 1:17 pm

The most disturbing thing about that doc The Condo Game was the sterile downtown towers in Toronto filled with latte drinking metros and millennials living in 600 sqft boxes and no families with kids anywhere in sight.

Bash the burbs all you want but I would rather see kids and families than trendy self important urbanites strolling around.

#133 Westcdn on 11.26.13 at 1:19 pm

I watch the American economy closely because I think it drives the Canadian one. I saw this article about Home Equity Line of Credit (Helco) becoming an issue in the US housing market. Most of their Helco’s have a 10 year term thereafter they are required to repay the principal. Apparently a lot of American homeowner bills are set to surge. It will cause headwinds in the US real estate market.
The question sprang to mind. Could this happen in Canada and more importantly – me? I went and found this article – an incredibly boring read. http://www.dbrs.com/research/244990/rating-canadian-home-equity-lines-of-credit-helocs.pdf
Fortunately it contained a few nuggets of information. Most Canadian Helco are of indefinite term, so are most American ones 10 year terms? It turns out the reason is tied to fact that mortgage interest in the US is tax deductible. (See Helcos in Canada and the US for a mind numbing explanation). Basically, Canadian Helcos are “to manage cash flows better” and are “more profitable for the lenders than regular floating-rate mortgages by offering little discounts from the lenders’ prime rate”. They act more as revolving credit than a mortgage.

I can relax. My Helco is the tool I expected it to be – funds for investing (or gambling in some minds) with my hammer on repayment. I like having time as a friend.

#134 WhiteKat on 11.26.13 at 1:23 pm


You are going to love this! It is short, funny, and to the point.


#135 Ralph Cramdown on 11.26.13 at 1:25 pm

#95 jess

I’ve always been a bit leery about monopsony competition laws. Two trophy hunters go to an auction with two Picassos, and one leans over to the other, saying “Let’s not fight about this. How about you take the one on the left, and I’ll have the one on the right?” That’s illegal collusion?

How about this?
“Cynthia Spann is suing Penney over what she says are phantom discounts. She bought three blouses at 40% off the regular price of $30 in March 2011, according to her complaint. But instead of $30, the prevailing price for the blouses in the three months preceding her purchase was $17.99—exactly the same as the sale price she paid, the lawsuit alleges. Ms. Spann said in the complaint that she wouldn’t have bought the blouses if she had known the discount wasn’t real.”

Has money and is examining the goods in her hands. Rather than deciding whether she’d rather have $18 or this item based on its quality and appeal to her, she argues that she only wants it if she’s getting a deal. I can think of a few judges whose opinion of this I’d love to read. Yes, there’s misrepresentation. But does a reasonable customer rely on it?


It’s a war out there, folks. I own shares in companies that are going to try to get you to spend every last dime, or even more with easy finance or credit. Marketing and advertising are better than they’ve ever been, and hidden fees and charges are endemic. If you can resist temptation and save and invest, you and your descendants win. If not, victory to me and mine. Of course, as a consumer myself, I’m in the exact same situation every day. And the government knows full well that if our average saving rate went up from the current 5.5% to 10%, calamity would ensue as the economy readjusted. Stay frosty, people.

#136 matt on 11.26.13 at 1:25 pm

despite housing prices increasing while incomes remain stagnant, does it not seem that prices will stay high in some areas if the demand continues? Like Toronto has been increasing steadily for decades has it not? I don’t see the demand decreasing anytime soon, so shouldnt the price stay high or continue to increase?

Congratulations. You just won a Re/Max Appreciation Award. — Garth

#137 Dean Mason on 11.26.13 at 1:35 pm

Herb #119

Liberals and lefties want to make an equal society by stealing other peoples money. They make everyone equally poor.

You must be benefiting well from social programs and don’t like cuts in your free money every month. I never stole anything in my whole life.

Getting my money back in taxes being reduced or not paying tax on my investments like a TFSA is not stealing your money.

It is my money and you socialists steal my money and call it a tax then give it to your socialist voters which bring their whole family on board.

Go live in Greece, Argentina, Venezuela, Bolivia, Cuba, North Korea, Spain, France, Portugal, Italy etc. and see how far you stealing goes.

Tell those almost 800 people that lost their jobs at Heinz in Ontario why they lost their jobs.

It is because McGunity and his liberal fools stole too much money by raising electricity prices, taxes etc. and Heinz can move getting away from the Ontario socialists.

It looks more like Heinz hired the wrong CEO. Not that you care. — Garth

#138 ABC on 11.26.13 at 1:37 pm


Trashing people will not advance your personal agenda. Sure you can find a FATCA blog where to vent your issues.

#139 Derek on 11.26.13 at 1:38 pm

Unfortunately here in Regina, it is different. Not because there is no bubble, there is. Not because there will be no deflation, there will be. But because rents are insane due to low vacancy rates which are still under 2%. This makes buying even a falling asset still make more financial sense than renting in many cases.

I am currently renting a 1000 sq ft, brand new but cheaply built condo (poor sound insulation from neighbors) for $1600/mo. The same condo is worth $236,000 according to Regina tax assessment. This is typical for the rent/buy ratios here right now.

If I could pay that rent and get something much better compared to the buy price such as Garth does in Toronto, then renting fully makes sense. But I’m currently building a 1600 sq ft bungalow which will cost around $550,000. You could never rent an equivalent home here for less than $2500.

#140 Johnny Hash on 11.26.13 at 1:45 pm

I can see clearly now the rain is gone.
I can see all obstacles in my way.
Gone are the dark clouds that had me blind.
It’s gonna be a bright (bright) bright (bright) sunshinin’ day.
It’s gonna be a bright (bright) bright (bright) sunshinin’ day.

#141 :):(Ying Yang on 11.26.13 at 2:04 pm

My brother just came in to town from Hong Kong and is astounded by how cheap it is to live here. I told him everyone bitches about the cost of living in Toronto and it is expensive, but he said compared to Hong Kong this is a joke. His flat in Strawberry Hill is around 8500.00 Canadian dollars per month. All utilities are included in the rental price and a cleaner comes twice a week to take care of the common areas. That’s just his flat. Everything else is around five to ten times more expensive over there. He said if he could just make the same money as in Hong Kong he would consider moving back to North America. Not Toronto though he says this city has no character and is a concrete void. He would purchase a real estate investment property here but not now. Has a place in Vancouver but doesn’t care if it losses money or not. He gave it to our parents to live in. Most Asians are heading back to invest in the US again for some reason. He says it’s stupid because overseas they see North America as a safe investment, but the main reason people invest here is because they feel there is a rush on and if they don’t invest now it will only go up making investments further out of reach. The exact opposite is occurring but they do not see that as a trend and keep investing. It is a fallacy as he says it is very hard to move your assets around in Asia so you take it anywhere safe. He said the herd mentality is easy to see in the faces of overseas investors. Land is in our nature he says we can’t own it back east so we buy it anywhere we can afford it. Renting is only a temporary way of putting a roof over your head. For most of us we must own a property to be successful.
BTW He says none of the Rob Ford stuff really made it into the daily news over there. He was laughing for hours when I showed him some of the video clips. He said Toronto is not on the world map so it doesn’t matter!

#142 Serge on 11.26.13 at 2:13 pm

GTA Weekly Drop – November 24, 2013

#143 broadway skytrain on 11.26.13 at 2:14 pm

hear about the new BC “charged-up” high interest savings account? it pays

9% in the first yr
6% in the second yr
3 1/2% in the next three yrs….

GURARNTEED not to go down, but may (likely) will increase. what a deal.

oh wait, that’s what we PAY not the interest we earn…my bad:(

those are the next 5 yrs of bc hydro rates.
even after the total 28% increase bc will still enjoy near .11/kWh , and if done right it should pay for new/upgraded dams, which is a damn sight better than just about everywhere.

#144 RainBird on 11.26.13 at 2:21 pm

To Dean Mason #57 “Even at net 4.31% provincial strip bond yields today which is equivalent to a 6.50% to 8.62% annual return.”

Where do you find such a bond? It’s true if a bond is for like 20 years in duration. But the current ones are less than 1.5%. No?

#145 James on 11.26.13 at 2:24 pm

Now we are going back to 1989? Being a little bit desperate here. It’s a different world. You are comparing apples to oranges.

“Those who cannot remember past horniness are condemned to repeat it” — Garth

#146 Dean Mason on 11.26.13 at 2:45 pm

Ralph Cramdown #101

$5,500 earning 4.31% in the first year is $237.05 and the total income taxes would be $71 to $120 for a year.

A case of beer costs between $30 to $35. TFSA tax savings is not just for a year or two. Your argument has more holes than a golf course.

$5,500 at 4.31% compounded over 35 years is $24,086.31 and the total interest is $18,586.34.

The income taxes total $5,575 to $9,293 over 35 years or $159 to $259 per year.

You obviously can’t do math and nobody puts only $5,500 in a TFSA for one year and that is it.

In 2014, there is $31,000 in TFSA contribution room available if a person never used it.

The total taxes on this $31,000 one time amount is between $27,879.51 and $46,465.50 over 35 years.

This is $796.54 to $1,327.57 per year in income taxes.

This is for only one person. A family of 4 adults would pay between $3,186.16 to $5,310.28 income taxes per year or a total of $111,518.04 to $185,862 income taxes in 35 years.

Remember, these are one time TFSA investments and nothing is added each year.

All 4 adult family members earning 4.31% over 35 year contributing $22,000 a year to their TFSA’s would have $1,799,295.

The total interest is $1,029,295 in 35 years and the total income taxes would be between $308,788.50 to $514,647.50 over 35 years.

The annual income taxes would be between $8,822.52 to $14,704.21 for all 4 adult family members.

This is $2,205.63 to $3,676.05 in annual income taxes per 1 family member.

This means that with the one time $31,000 unused TFSA contribution room per 1 adult family member and the $5,500 annual TFSA contribution per 1 adult family member would have to pay a lot of income taxes over 35 years.

The total income taxes paid over 35 years would be between $420,306.54 and $700,509.50 for all 4 family members.

It is not just the huge income taxes paid over 35 years which is simply lost capital.

If this money was earning 4.31% a year simple interest not compound interest, it would be between $18,115.21 and $30,191.96 in annual interest income lost too.

This would be all income tax free interest income if it is in their TFSA.

If annual TFSA contributions rise to $10,000 then the total income taxes would be between $764,193.71 and $1,273,653.64 in 35 years.

The annual interest lost would be between $32,936.75 and $54,894.47 after 35 years.

This is if bond yields don’t rise or normalize and income taxes don’t rise in 35 years.

They both will and the lost interest, capital or principal from income taxes eating away if TFSA’s disappear because of TAXOCRATS will only balloon and grow even more.

This is not including OAS and other senior, retiree reductions and claw backs, basically taxes because this income was being included in their annual income tax returns.

They can steal a lot of money by just getting rid of the TFSA, taxing it and does not get increased to a $10,000 annual limit.

Ontario’s Liberals are talking about forcing down peoples throat, their OPP, Ontario Pension Plan paying $700 a month 25, 30 years from today for those that are 40 years and older. Liberal Ontario Pension Plan=peanuts.

Mr. Cramdown, cram down your argument with a lot of holes and no concrete facts, numbers, math to back it up to someone else that is clueless.

#147 BCD on 11.26.13 at 2:48 pm

Not1st said:
“The most disturbing thing about that doc The Condo Game was the sterile downtown towers in Toronto filled with latte drinking metros and millennials living in 600 sqft boxes and no families with kids anywhere in sight.

Bash the burbs all you want but I would rather see kids and families than trendy self important urbanites strolling around.”

You hit the nail on the head. The red head urbanite with the section of her condo dedicated to a closet and shoes was downright scary. All this excess in the condo market is being pumped up by single or double income no kid types who treat their puppy dogs like children and spend on meaningless accumulations. They pretend to be “green” and “consumer conscious” but the ecological footprint of their dogs/condo/restaurant lifestyle is more than most 4 person families. What are they contributing to this country? This idea that “single-dom” is the new standard and should be afforded the same rights is downright weird. In my day those people were called “strange” and “misfits”, now it is the new normal.

#148 Smoking Man on 11.26.13 at 2:54 pm


it’s obvious you belong to Suzuki Nation. I find that odd when considering your age. For sure I had old dudes in Ford Nation who have the wisdom to know the difference between cool aid and 18 year old scotch.

I will just pencil it in as you’re past the zone.

Just before my dad list his mind, he started buying lotto tickets, then found god, then Suzuki.

Now he just mumbles…

#149 edmontonian on 11.26.13 at 2:57 pm

Leaky mouldy condos has been a problem in EDmonton, but Toronto takes the cake! http://www.canada.com/onlinetv/documentary/doc-zone/9198167/video.html

#150 Dean Mason on 11.26.13 at 3:01 pm

Higher electricity and energy costs, higher taxes, fees etc., red tape, over regulation, labor costs that are too high, not equivalent or matching close to the value added of a product, all makes the CEO’s job more difficult.

Heinz or any company is no exception in a competitive global economy.

Higher Government spending and taxes, fees etc., rising costs due to government policies all crowd out private investments and jobs.

#151 jess on 11.26.13 at 3:40 pm

Ralph Cramdown

e-commerce vs bricks and mortar
A ruling by the Supreme Court in 1992 stated that taxes be collected only by those with a physical presence in a state — now a tax loophole that has left many retailers feeling burdened by the presence of competing online retailers not affected by the ruling. Rep. Bob Goodlatte, R-Va., chairman of the House Judiciary Committee, has released guidelines to shape the legislation on the matter. The Marketplace Fairness Act received bipartisan support when it passed the Senate in May.


Illinois Supreme Court moves toward closing big sales-tax loophole

Court upholds New York City tax on hotel-booking companies (23 Nov 2013)
The case is Expedia v. New York City Department of Finance, New York State Court of Appeals No. 180

#152 Ralph Cramdown on 11.26.13 at 3:44 pm

Thanks for the master class in compound interest and taxation, oh great Ramanujan of zero coupon bonds.

The number of people who, but for the TFSA, would have blown all their extra cash at the tittie bar but are now happily earning 4.3% in provincial zeros is approximately zero. Those smart enough to seek out high yield, high quality and low fee investments in this environment were saving before the TFSA, and those who only started saving because of the TFSA are either in high interest savings accounts paying 2% or worse (thus my case of beer calculation) or are in high fee bank mutual funds. That is all.

Now tell us something useful:

Who do you trade bonds with, and how’s their pricing and service? Because it’s much easier to shop for equity brokerage fees, but hard to see what a broker’s retail bond desk looks like without signing up.

#153 -=jwk=- on 11.26.13 at 3:56 pm

@ #141
He said if he could just make the same money as in Hong Kong he would consider moving back to North America

Wont happen. Hong Kong is a financial and economic powerhouse. Toronto is, uh Toronto. My sis in law from Shanghai could not believe how little money I made compared to the same job in shanghai. Of course prices of everything are less in shanghai, so it all balances out. oh, wait, what?

He said Toronto is not on the world map so it doesn’t matter!

Pretty much sums it up. One stop light town, but now with world class prices!

#154 jess on 11.26.13 at 4:02 pm

party like it is 1999

Curious tale of the central Asian oligarchs and the City of LondonThe Guardian ‎- by Simon Goodley ‎- 3 days ago
Mining firm ENRC bids farewell to the Stock Exchange but its Uzbek and Kyrgyz creators are here to stay

#155 Shack63 on 11.26.13 at 4:17 pm

Here’s a gem that many don’t consider when pricing a new home – it has to be paid for with after-tax money. So, assuming her effective tax rate is 30%, that $500,000 of total payments equates to close to $715,000 of earnings.

#156 What about CMHC? on 11.26.13 at 4:31 pm

Anybody following Dundee REIT? Currently at 52-week low.

#157 Bob on 11.26.13 at 4:31 pm

According to a Reuters poll of Economists, Canadian housing is over valued. But there will be no crash according to them. Just mild price appreciation:


#158 Entrepreneur on 11.26.13 at 4:38 pm

#150 Dean Mason

Your last statement is true. How can a business survive in this higher fee mentality. The government should realize that they are part of the problem (but that will not happen because they like their salaries and pensions). A small business owner cannot compete so goes under.

I would like to see the day that small business is recognized…the part it plays in the economy. It is the driving force that is needed but is constantly drained. Many owners are just hanging on; no big salary, no big pension.

What I have been taught is that to keep people under control from protesting is to keep them knee high in taxes, fees, etc. but this might backfire when families lose their jobs, go hungry, deprived of necessities.

#159 A Yank in BC on 11.26.13 at 4:43 pm

Leaving Buffalo is one thing. But why in the hell would anyone then want to move that NFL franchise to Toronto? And what is a Bon Jovi anyway?

#160 Canadian Watchdog on 11.26.13 at 4:49 pm

G&M: Sears Canada to lay off nearly 800 employees

You're going to see a lot more of this as banks, lenders and mortgage insurers front-run big box retail spending in order to reserve whatever bankrupt consumers are earning every month to pay off their debts. Hence the rise in personal consumers proposals and debt consolidations.

All while Equifax says there's nothing to worry about because delinquencies are low, when all lenders are doing is putting old debt into new debt vehicles, and in many cases, charging even higher interest!

#161 James on 11.26.13 at 4:50 pm

“Those who cannot remember past horniness are condemned to repeat it” — Garth

If you own a condo perhaps. It’s not like a 1M home in rosedale can be bought for 600K in the coming RE “correction”. Let’s get real here.

#162 sciencemonkey on 11.26.13 at 5:14 pm

@ 147 NCD

The DINK (dual income no kids) is a natural response. Excessive immigration leads to a crowded city with high living costs and depressed wages. This obviates the need to produce children for the next generation while simultaneously making it unaffordable if one still desired to do so. At least we can skip out on the expense and work of raising the next generation, and still rely on waves of new tax slaves to foot the bill for government services in our old age.

(I’d prefer if it wasn’t this way, but we’ve got to roll with the punches.)

And I’m sorry, but it takes a terribly wasteful family of 2 to equate to the environmental damage associated with a family of 4.


#163 jess on 11.26.13 at 5:14 pm

quantity over quality

PVC pipe manufacturer

-blame it on the customer and insist the problem was caused by the way the customer installed the pipe

The trial was the culmination of seven years of litigation that began in 2006


#164 Nemesis on 11.26.13 at 5:19 pm

“Those who cannot remember past horniness are condemned to repeat it” — HornedGarth

Funny you should say that, AuldPol… given the cant of today’s Zen…

In no particular order, and without further comment – ScientificRibaldry for SaltyDogz:

[BBC] – Modern life ‘turning people off sex’

…”Dr Cath Mercer, from University College London, said: “People are worried about their jobs, worried about money. They are not in the mood for sex.

“But we also think modern technologies are behind the trend too. People have tablets and smartphones and they are taking them into the bedroom, using Twitter and Facebook, answering emails.”…


[BloomBergBizWeek] – Why Are Women So ‘Bitchy’ to Each Other?

…“Some people have written to me, worried that I’m perpetuating the stereotype that women are mean to each other. Well, they are,” she says. “All women act this way. I mean, if I were 20 years old and encountered that girl in a sexy outfit, I’d probably do the same thing.”

This doesn’t mean that women are crueler than men are. Men exhibit the same type of behavior. (What do you think Jerry Seinfeld was accomplishing with all that “Hello Newman?“) They’re also more likely to use physical aggression such as hazing or getting into fist fights, which makes criticizing someone’s outfit almost civil in comparison. Basically, every member of both genders is a complete jerk.”…


[G&M] – Men and women take home different regrets after sex, study finds

…”More women than men included “having sex with a physically unattractive partner” as a top regret.

The report was based on three studies with a total of about 25,000 people and the findings were published in the current issue of the Archives of Sexual Behavior, an academic journal.”…


#165 Dan on 11.26.13 at 5:20 pm

Sears chopping another 800 jobs .This won’t end well

#166 Nemesis on 11.26.13 at 5:43 pm

“They believe what they read.” — Prof.Garth

Prof. Hefner & Guccione constructed two publishing empires on that very premise…

Of course, their journals’ illustrations were conspicuously superior to rival offerings of the period.

#167 WhiteKat on 11.26.13 at 5:47 pm

@ABC, re: comment 138

Oh come on, I was hardly trashing JimH. He was the one complaining about my posts first. And besides, this is a an investment as well as housing blog. FATCA fits here perfectly. If I can educate a few ‘US persons’ and those they share accounts with, so they don’t make the same mistakes I did, like investing in RESPs, TFSA’, and Canadian mutual funds (considered passive foreign income corporations) then I have accomplished something positive.

#168 sciencemonkey on 11.26.13 at 5:59 pm

@166 WhiteKat
It was your post that alerted me to the need to get tax compliant. I am reserving the option to work in the US due to my poorly-chosen highly-specialized career, so you’ve done me a great service.

#169 BCD on 11.26.13 at 6:02 pm

@ 162 Sciencemonkey

Your logic is flawed. Sure. Blame it on the immigrants. It has nothing to do with the immigrants–it’s a part of the new “self-absorbed-Facebook-look-at-me” individual/consumer culture. Western people are pampered and selfish and it is revealing itself in the huge condo-boom in Toronto.

And who do you think will foot the bill for government services when all those singletons retire if we aren’t busy building the next generation of “tax slaves” as you call them.

You are being short sighted. And my comment about ecological footprints was being exaggerated–the point being that families of 4 actually use their footprints to raise humans to contribute to society–not to raise dogs and cats in empty 1 person occupied apartments sucking heat and resources to make sure an excessive shoe/clothes collection doesn’t get cold.

#170 broadway skytrain on 11.26.13 at 6:05 pm

“the herd mentality is easy to see in the faces of overseas investors. Land is in our nature he says we can’t own it back east so we buy it anywhere we can afford it. Renting is only a temporary way of putting a roof over your head. For most of us we must own a property to be successful.”
therefore vancouver RE stays hot FOREVER it seems, or until asia somehow dissapears.

ow well.

#171 Shawn on 11.26.13 at 6:08 pm

WASTE, defined

Ralph Cramdown mentioned The number of people who, but for the TFSA, would have blown all their extra cash at the tittie bar

A man won a big lottery and was later broke. He explained what happened. Half the money he spent on women, booze and partying.

The rest….

He just WASTED!

#172 WhiteKat on 11.26.13 at 6:16 pm

@sciencemonkey, re: post #168

I am very happy to have helped you sciencemonkey!

#173 Ralph Cramdown on 11.26.13 at 6:23 pm

#161 James — It’s not like a 1M home in rosedale can be bought for 600K in the coming RE “correction”. Let’s get real here.

Yes, let’s. Pick your favourite rich neighbourhood of your favourite rich city in the USA, and look at the data. Perhaps http://www.trulia.com/real_estate/Nob_Hill-San_Francisco/1442/market-trends/

#174 A modest proposal on 11.26.13 at 6:28 pm

We’re all boycotting Heinze, right?
What about everyone else? We HST ketchup, that’s right, we re-classify it as a candy, it sure has enough sugar.
Think about it, Perrier water is HSTd and Ketchup not.

#175 jess on 11.26.13 at 6:55 pm

America’s “Highest Paid Government Workers”

Ron Packard, CEO of K12 Inc., America’s highest paid teacher.

K12 Inc. is a publicly-traded (NYSE: LRN) for-profit, online education company headquartered in Herndon, Virginia


#176 PoltawaDiva on 11.26.13 at 7:09 pm

Thanks, WhiteKat, for your comments. They helped me when I gave up my US citizenship in June. I still have a year of hassles ahead – the final tax return, etc, but your info has “shown the light” on the road ahead. Incidently, I’m still waiting for the Department of Justice to officially “release” me from US citizenship.

Luckily (stupidly?) I have been complying with requirements to file from day one (37 years!!!). During that time I paid taxes to the US only once (capital gains, but I suspect it also was incompetence on the part of the Softron filer). However, it evened out because the next year I got the Bush $700 refund/incentive.

My point? What a waste of US taxpayer money on the bureaucracy involved: for 37 years, someone had to review that tax return and bank forms. There were several instances of correspondence/phone calls (I was on hold for over one hour) because of mistakes (their fault). But I guess this huge bureaucracy (IRS, Justice Department) provides a number jobs to bureaucrats. That’s how governments operate, and efficiency/cost effectiveness is not part of the formula.

#177 T.O. Bubble Boy on 11.26.13 at 7:26 pm

@ #156 What about CMHC? on 11.26.13 at 4:31 pm
Anybody following Dundee REIT? Currently at 52-week low.
Yep – buying more! (Bought some at $30 already)

#178 Doug in London on 11.26.13 at 7:28 pm

I remember you were on Moneysworth, a show on TVO, in about March 1989 warning about high house prices and we all know what happened the following year. Is it different this time around? Not likely.

#179 Westernman on 11.26.13 at 7:31 pm

Freedom First @ # 73,
Nice post! I couldn’t have said it better myself…

#180 Dean Mason on 11.26.13 at 7:31 pm

# 158 Entrepeneur

These other people that like stealing other peoples money through taxation, fees, income wealth distribution are also part of the problem.

They do not want to know because they are getting freebies for their whole family.

They have no idea what the private sector and real world is like.

All they care is how much they can beat the system and put it to the man.

You are losing it. This thread is over. — Garth

#181 Dean Mason on 11.26.13 at 7:38 pm

To Ralph Cramdown #152

It is easy, I figured it out and there is the internet and Google these days.

Find out like I had to. I already showed you the numbers and the 4.31% are net yields.

It is not hard. If people work hard for their money ,they should appreciate it more and do their own research.

All the people with university and college degrees, diplomas out there and people can’t figure out this stuff, sad!!!

I gave you the real life numbers and you are still making excuses. Even an idiot knows that 2.00% is peanuts.

#182 James on 11.26.13 at 7:39 pm

#173 Ralph Cramdown

Of all cities in the USA you pick San Fran. Good luck finding a home there when there are 50 offers on average for a home.

#183 Macrath on 11.26.13 at 7:47 pm

#174 A modest proposal
We’re all boycotting Heinze, right?

No more HP sauce , it`s going to be rough.

Uncle Warren is going to be feeding us Chinese tomato paste. You know, shareholder value and all. Enjoy !

#184 Vamanos Pest on 11.26.13 at 7:56 pm

Lisa, you’re not investing in yourself, you’re just rationalizing buying something that you can’t afford but feel entitled to nonetheless. Paying over 2000 a month to live somewhere you could be paying 1400 a month? On what planet is that the smart choice?

#185 TurnerNation on 11.26.13 at 8:23 pm

More Carbonazi, Climate Conspiracist robbery.

Whistler, in spite of its straight 10 years of tax increases, cut bus service. Took perfect good buses and gave in to the Carbon Crooks. Built a giant mostly unused bus bay for these.
Now look. BK. As I say, they are turning us into a 2nd World country. Bikes, rickshaws, scooters only. Who will be able to afford elsewise. However, the Party Elite will pass by in their grand limos.

“The Vancouver Sun reports in its Tuesday edition the future of the Whistler, B.C., hydrogen fuel-cell buses — the largest fleet in the world — is in doubt after BC Transit said it cannot afford to continue to run and maintain the fleet when the $89-million demonstration program wraps up next spring. The Sun’s Kelly Sinoski writes documents suggest Whistler’s 20 hydrogen fuel-cell buses cost three times more in maintenance and fuel costs than the conventional Nova diesel buses they replaced in 2009. BC Transit set up the hydrogen bus fleet in 2009 as part of a grandiose scheme by Gordon Campbell’s Liberals to showcase fuel-cell technology during the 2010 Winter Olympic Games and have a “hydrogen highway” stretching from Whistler to California. That did not happen; hydrogen is trucked from Quebec every 10 days, instead of from a hoped-for fuelling station in B.C. The buses, which cost $2.1-million each, are powered by hydrogen fuel-cells provided by Ballard Power Systems. They produce fewer greenhouse gas emissions and can be twice as energy-efficient as conventional buses, but because the hydrogen used to fill the buses is hauled in from Quebec, the savings in greenhouse gas emissions is limited.”

#186 TurnerNation on 11.26.13 at 8:27 pm

Unless one is Chancellor Rebalancer better buy some kaputs on XFN.TO.

#187 Vangrrl on 11.26.13 at 8:37 pm

I laughed out loud at your comment about self-important people/no kids. Riiiight, because everyone who breeds is just entirely unselfish, altruistic and making the world a better place. The irony is most are raising kids to be self important (hmm… Wait a minute?). People with kids are less materialistic?? Haha- there’s a ridic generalization. As they push their 1000 dollar strollers down Robson.
People are all the same and it has nothing to do with having kids or dogs or living downtown, having lots of shoes or not, needing a massive car to ferry your little prince around in. We’re all causing too much of a footprint.

#188 Daisy Mae on 11.26.13 at 9:01 pm

“The only people who lost all their savings in 2008 were the ones who sold. The problem isn’t the markets. — Garth”


The problem can be simply bad management. Such as Investors Group.

#189 Tiger on 11.26.13 at 9:03 pm

136# Matt
I think your rite! I’m whypeeing my boots on the Matt !

#190 Cici on 11.26.13 at 9:31 pm

#45 GTA Girl
That was hilarious, thanks for sharing. And don’t worry, we’ve all made idiot financial decisions. The important thing is to learn from them (some people prefer denial and repeat).

Hopefully your comment will save at least one naive and moist virgin from making the same suicidal decision.

#191 WhiteKat on 11.26.13 at 9:34 pm

@PoltawaDiva, re: comment #176

Congrats on being almost FREE! Glad I was of assistance!

#192 Big Sexy on 11.26.13 at 9:41 pm

#49 Ben on 11.25.13 at 11:49 pm
LOL Cornwall commuting distance to Montreal!

Two hours each way. Maybe if your time is worth nothing, yes, it’s worth it.

It works when you have an awesome job that requires you to work 11 days/mo when it’s busy, and 1 day/mo during the slow times (which happen to be summer), yet still get paid full salary.

Hint: I wear a uniform to work.

#193 WhiteKat on 11.26.13 at 9:43 pm

@PoltawaDiva, re:comment #176

As you have demonstrated, FATCA is not about collecting taxes from Canadians. FATCA is about penalizing money earned by Canadians within Canada that has already been taxed by the Canadian government, and on which for the most part no US taxes would actually be due. Our government should be ashamed of itself if it signs a so-called ‘intergovernmental agreement’ with USA over FATCA which is nothing more than a one-way ram down.

I bet you are happy you will soon never have to file another FBAR (foreign bank account report) for any of your local accounts held in Canada where you live.

#194 wallflower on 11.26.13 at 10:45 pm

same house listed twice on this page
Was listed several months ago $1,750,000.
Guess next listing we see will have more 8s.

#195 prairie person on 11.27.13 at 2:44 am

Went shopping today in Victoria. Store 1: a large shoestore, lots of high end shoes. We were the only people in the store. Store 2: really high end furniture store, (7,000 dollar coffee table), we were the only potential customers in the store. We weren’t really potential customers, just looking at how the rich shop except there weren’t any rich there. Just 4 sales clerks with no customers. How long can places like this stay in business. If most businesses lose 20% of their business over a period of 3 months, they’re done. Rent, stock, loans, staff, insurance, etc. No customers. Not just a few customers. No customers. Ain’t making the money to pay for a high priced condo, sfh, townhouse.

#196 Duane Storey on 11.27.13 at 9:36 am

If you were going to spend some amount on a mortgage, say $300k, wouldn’t it be in your best interest (on paper at least) at current interest rates to have the longest amortization possible, and use the difference in monthly payment to invest in something else giving a return higher than the interest payments? Then if interest gets raised you simply accelerate your payments?

#197 economictsunami on 11.27.13 at 9:37 am

Financial engineering is a no brainer, print money.

Economic and social engineering though is a whole other kettle of fish…

Analysis: Surfing central banks in a benign ‘QE trap’…


Fed Reveals New Concerns About Long-Term U.S. Slowdown: