Dustan Woodhouse’s a mortgage broker in Vancouver who writes a regular commercial and calls it a blog. That’s cool. It’s an eat-what-you-kill business. Why would he be objective? Still, his answer to the question, “Would you buy real estate in Vancouver today?” is one you hear a lot around town these days. It’s yes.
Why?
“Perhaps the timing will prove poor initially – whether you buy this month, next year or three years from now. However 7-10 years from the date of purchase you will most likely be glad that you bought into whatever market you did. It is difficult to find many homeowners who regret buying in 2003… Focus on the big picture, know that time fixes pretty well every Real Estate mistake as far as values are concerned.”
The average house price in Vancouver in 2003 was $329,447. The median family income was $57,926. Today the median income is $68,970, and the average house costs $922,600. Hmmm. A ratio that was nosebleed ten years ago (the average house costing 5.6 times income) is nuclear now, at 13.4. If we saw similar gains in incomes and prices over the next decade, as Dustbuddy suggests, the typical Van house would sell for about the net value of Detroit.
Of course, he’s nuts. The point of unsustainable absurdity has been reached in a number of Canadian markets. There are only two reasons why houses cost what they do, and that’s cheap money and cheaper pitchmen. By counseling people to jump in, whatever the cost, because “time pretty well fixes every real estate mistake”, we’ve reached a new pinnacle of ethical fuzziness.
In case Dusty missed the news of the last 24 hours (don’t expect to see it on Global TV tonight), let’s recap. First, the IMF says we’re screwed. Well, not everybody – just those who borrowed a boatload of cheap-for-now money in the past few years to buy a house in Toronto or Van or Calgary or The Peg.
Look at this chart, which tracks real estate valuations based on a house-price-to-rent ratio. The only serious country which comes close to being as screwed as we are is France, where men cry and carry handbags.
And then there’s the Royal Bank, just making it worse for the Dustmeister.
Our biggest bank (and issuer of mortgages) says housing affordability continues to erode, thanks to mortgage rate increases this year and the fact stunned buyers (clients of you-know-who) continue to buy houses and inflate prices. The combination has resulted in a bizarre situation. It now takes 55.6% of pre-tax family income (an average) to carry the average Toronto house (mortgage, taxes and utilities), even after a whopping 25% downpayment.
The average GTA family income, by the way, is about $98,000. Fifty-five per cent of that is $53,900, which is actually 75% of the money that family brings home in after-tax income. Ridiculous. But it’s nothing compared with Vancouver, where RBC says it now takes 84.2% of gross income to carry a house (with 25% equity, remember), which is $6,000 more than the average family actually nets. “Affordability slipping,” adds the bank. No kidding. They said that.
Of course, Rob Ford isn’t the only great thing about Canada drawing widespread attention these days. The boys at Motley Fool just came up with “7 Remarkable Numbers from Canada’s Housing Market.” They’ve all pretty much been beaten to death already on this pathetic site, and include a 150% increase in real estate values, household debt at 163% of income and 53,000 more condos under construction in Toronto (“That’s twice the rate of New York City — an area with three times as many inhabitants.”)
But the Fool also reminds us of the really scary stuff: “This debt binge has produced some eye-popping valuations. Today, Canadian real estate is priced at 27 times annual rental income. In certain cities, the figures are even more outstanding. In Toronto, the average home sells for 37 times average rental income. In Vancouver, it’s 60 times annual rents! This is well outside historical averages.”
And this, of course: “Today, 13.5% of all jobs in Canada are linked to the construction industry — the highest proportion in 40 years. Compare that to the United States, where only 5.8% of jobs are related to construction.”
No, Dustbunny, this isn’t 2003 anymore. We have an asset class so swollen and gorged by debt, rendered so unaffordable by house lust, and pimped so far into the absurd by enablers like you that a reckoning cometh. Time will not heal this mistake. But you can.
Update: Mr. Woodhouse responds. Says he owns the hat, not the car.
176 comments ↓
I’ll print that picture and will hang it in my Vancouver rental :)
What is your take on Ottawa? Do you believe the single homes are overpriced? Many think it’s different here but I think not.
Nowhere is different. — Garth
Halifax experiencing worst RE market in over 30 years. Realtors getting part time jobs to make ends meet. This could be ground zero.
http://thechronicleherald.ca/business/1170210-taylor-homes-buyer-s-market-out-there
yet it keeps on going…
Dustan Woodhouse has finally made it in real estate – you haven’t made it in real estate until you’ve been bashed on Garth’s blog :)
Nice hat, too. — Garth
Conference I was at today had David Chilton as keynote speaker. No surprise here, but he was harping on the fact that people carry too much debt and accumulate too much stuff, also went into detail about the ‘granite countertop phenomenon’ and the potential that people are being led down the path to financial ruin. Felt instantly validated that following your advice was a good thing.
Also snagged a signed copy of his book. Free stuff, score.
Don’ forget the IMF’s recommendation.
Government should get out of the mortgage business.
Image that, who will buy CMHC. HOlder of crackhead borrowers. And what will you do if you get a hold of these volitile accounts. F*&^*&^cK only one thing raise the interest rates on these “HIGH RISK” accounts.
If you think home owner ship is costly now just wait till !!!!!!!!!
The Dyslexic Tree Hugging Man is done with you.
After years of hibernation the tree hugging kleptocrats publicly sidelined, silenced, and castrated by the hacked emails of East Anglia University and IPCC are back in full force. The carbon tax collectors confident that the life span of the sheepeople’s memory has elapsed are aggressively selling again. Game back on with a vengeance.
While researching this post I came across good old Super Smoking Man’s website. The great Al Gore. Following his links and laughing and crying at the shear absurdity of what these people live and breathe. On one link the author claimed that 98% of scientists think that man made global warming is real. That’s right 98% and that the only way to save the planet is for all of us to go back to living like the cave men.
If you randomly polled 100 people and asked them do you think the world is flat, at least 5 would say yes. A 98% consensus on any topic is imposable. The regurgitated bull shit French kissed to the young schooled birds in the nest is hard to watch. Primarily cause I don’t have a piece of that action, yet.
One would hope that Justin Trudeau, and Cathleen Wynn are Smoking Men, have offshore accounts to funnel there future windfalls from this scam of the century.
But looking at Wynn on stage with Al Gore I got the sense that she is totally into cool aid. The thought of leaving my wealth easily accessible to these infants crawling around in a Vietnamese jungle is a horror far beyond a Colonel Walter E. Kurtz nightmare.
The globalized world has become a competitive winner take all environment, for the nation to prosper we need cheap power, we need creative out of the box thinkers, we need enterprise, but not the kind that gets a negotiated guaranteed hand out by govt. That’s just wrong.
But that’s the future. As any old bastard sitting on a mountain of self-made loot, you don’t like change. But as Martin Sheen playing Captain Willard at the start of apocalypse now said.
“Waiting for a mission … getting softer; every minute I stay in this room, I get weaker, and every minute the tree hugger squats in the bush, he gets stronger. Each time I looked around, the walls moved in a little tighter.”
Screw fighting them, they are coming for my loot no matter what I do, every country, every government.
It’s time to switch teams and make more loot.
It’s time for the Smoking Man to go Green, and get in on all the future action and take my cut….
I’m on a mission now, to pillage and plunder while hiding in sheep’s clothing, every single Toronto Star tree hugger. What a huge market…..
And they will love me at the same time.
I can see it now!!!
The Dyslexic Tree Hugging Man on stage, big crazy eyes, perma smile being cheered with evangelical worship with every hunk of bull shit I through into the audience’s face.
I always knew I had a greater purpose.
Oh BTW my freakin RRSP and Non Taxible shelter went up by 15.7% over this year. This is include the 20% in interest bearing crap and 5% in gold and precious metal stuff.
How did your real estate do this year! I sold mine and its invested!
#8 Smoking man
They should tax people for “WASTE”. When a single family of 3/4 people live in a freakin monster house they should add additional taxes for the excess waste.
Its a good thing Hydro is going up. Its because of those greedy people who stains the current electrical grid
“The average GTA family income, by the way, is about $98,000.”
C’mon, Garth, didn’t you read any of those posts from yesterday and earlier today??? $98k is pocket change to all of those young go-getters. If I don’t make what they do, then it’s all my fault because I just don’t work hard enough, apparently.
There isn’t going to be a correction!! Gen X makes WAY too much money for thing to go wrong! I mean, look at that 27 year old realtor who has “pulled in $1.5 mil consistently for the past 3 years.”(Mr. Finance on 11.27.13 at 5:13 pm )
With the extensive knowledge that comes with three whole years of work experience, what could POSSIBLY go wrong???? Donald Trump should have consulted these guys before he filed for corporate bankruptcy four times.
________________________________________
I’m waiting with baited breath for the epic “Life and Opinions of The Smoking Man” that he promised us last night. I need a little comic relief.
Yo! Smoking Man! Life and Opinions Thereof!
Gaaaaaaarth, what have you done to me?
Deliberately make a mistake then just let time heal the mistake? Buy a house now because it will make sense in 10 years? It makes sense now because it made sense 10 years ago?
I’m actually really impressed, because if that guy can make a living with that sales pitch, he’s got talent. Hat’s off, that’s brilliant.
My economic outlook is still coming.
Have the flu, slowed me down….. tomorrow
Another great post. Nobody knows what catalyst we will point to eventually but the correction usually begins on its own. Even as nobody is listening to all the facts Garth gives us.
Can we add Another 6 or 7% lower on the C$ and the boc could be stuck between cost push and low growth as a potential issue. EM repeat?
How many tech analysts noticed Tuesdays action in the banks followed by the outside day today. I’m sure the emails went out in earnest. Issue?
Goldman chimed in today too. Really?
I found today’s action in Canada and the US the most interesting of the year. Change is happening.
Its a little late for regulation when a bank itself tells you their lending ratio is way above where it normally is.
Sanity will return. Its always the social implications I worry about. Hoping people haven’t added leverage to an already leveraged asset.
Never understood why tax payers are on the hook if real estate goes belly up from the reckless lending that has been allowed to happen.
Ban CMHC like what the IMF has recently suggested and let the Banks begin risking their own money.
Ever thought of getting your hair and beard cut by the Wealthy barber.
Could be a fund raising event for the “Out of work Realtors Foundation”.
x-mas is coming. Support the less fortunate.
If housing is sooo detached from fundamentals as per your graphs and prose,
Then,
Why do you insist that there will be no crash?
Smoking Man,
David Suzuki is getting old.
We need you to become the new Standard Bearer of the Green movement.
Tree hugging is not that difficult.
Start with the thinner trees.
Ok… I’ll admit to being occasionally stubborn. Therefore, may I please try once more?
Hopefully the following Obscuration [a HigherLevel ComedicAbstraction] will pass the EditorialReviewBoard – rest assured, AuldPol – anyone who gets it will likely be far too modest to admit why.
Well, apart from ‘him’. But if he chooses to respond you can always hit “Delete” in that case.
http://youtu.be/yHNGvEdTwBQ
HOW TO INVEST IN FALLING HOUSE PRICES?
To borrow some words from Warren Buffett, in situations like this predicting rain is not what counts. Building Arks is what counts.
So people, what is your Ark? Can you survive a house price decline? Can or should you make investments to take advantage of predicted lower house prices?
How to take advantage?
Sell and rent and invest your equity?
Wait to buy? (assuming you don’t own a house now)
Short housing-related stocks?
As for me my house is not a huge portion of my net worth (and it’s the asset value that matters, not the equity though both are the same in my case). I am keeping the house because I can’t be bothered selling and renting. (It would be a LOT of bother) If I was moving in any case I might rent. But as long as I am not moving to a different City I will keep my house.
I also will not short housing-related stocks as shorting seems too much like a gamble and is very stressful.
In any case I am not about to drown as my other assets are my Ark.
Different here?
Also I forgot to mention, it does seem a little different in Alberta, people still pouring in.
Then again, it does flood here from time to time…
#8 Smoking Man,
they’re coming to take you away, he he, ha ha, hey hey (and it’s not CSIS because CSIS doesn’t wear white coats.)
Sooo……is the gov’t just trying to keep this RE gas bag going until after the election late 2015…I don’t think its going to make it that far.
this blog is brilliant!
How many French chateâux could you buy for the price of one Vancouver tear down?
Scroll to the third video.
http://globalnews.ca/bc/
Music to my ears Turner, very well written. The reckoning is near indeed.
Nice hat, too. — Garth
He got a bowl of soup with it.
Here’s the direct link.
http://globalnews.ca/news/994702/how-many-french-chateaus-could-you-buy-for-the-price-of-one-vancouver-tear-down/
I am curious on the future Calgary market.
I am in a waaaaay too expensive house just N of downtown and of course always looking for an upgrade (my current granite does not match my eyes). Not much moving in the 1.2M+ market. The 2M plus market is absolutely dead…one prominent home builder lost it’s collective shirt on one house deal…400K loss. I know of three other houses where builders are listing at below cost.
About 2000-3000 high paying O&G jobs will be lost by likely March 2014 (EnCana, Devon, Conacher, Shell, BP etc etc)…curious on the realtor spin…I mean if mass flooding is good for real-estate, rampant unemployment must be better!
That pic reminds me of the guy who has been showing interest in my house for the last 6 weeks – brings his family, loves the house – gonna make an offer in a few days.
After a month, calls back, wants to see it again and show his “cousin” who’s a contractor. Wants to make a deal now (not in writing of course). “Whats your best price??” they demand. I politely told him to put something in writing. He did – by way of text msg. I told him he was too low.
Calls a week later, ready to make an offer – “I’ll drop it off tomorrow” he says. Sure, whatever I think. Another week goes by “Can I bring my brother over to show him?” Sure – make an appointment for the weekend.
So what’s the lesson in all this boys and girls? Be in a position where you can say no if you want, dictate the rules as you want them to be and be patient. I’ll entertain this guys antics because his delusions of grandeur are thoroughly entertaining and its winter – I need some entertainment.
Hey Garth, I am a regular reader, and also own rental property in Victoria, BC. I would conservatively value it at 18 times rental income. Is there any property on the island that you would consider keeping or would you just sell it all?
He looks lie a drug pusher to me.
I wouldn’t trust him if he told me its Wednesday…..LOL
Very interesting article today in yahoo.ca, you can google it – interest rates to stay low… for long time, courtesy of the coordinated efforts of central banks.
So real estate and stock market will keep going up….
———————
Until the bond market revolts.
And then?
1. Negative interest rates, central banks monetizing all the deficit, bitcoins and gold 10 k.
Or:
2. default on all debt and reset.
The choice is yours.
I would not be surprised to see 5 million dollar shacks in Toronto. Or Gas 50$/gallon.
QE will have unintended consequences in medim to long run. In the meantime the savers will be screwed. Bread 15 $, coffee 10 $, how does this sound?
Joe Schmoe, why would anyone pay top dollar for Calgary RE when they could buy shares in the Calgary-based energy producers for 1/3rd to 1/5th of the relative price?
Houses are liabilities. The energy firms are assets.
Agree 100% with #21 Shawn.
There are so many good places to invest right now. If things crumble then waiting for the appropriate long position is the way to go.
YES
It is different here.
Canada is the second largest country in the world with almost no people in it so YES, its definitely different here….LOL.LOL.LOL
Smoking Man turns green? (Somebody choke him!!)
Global Warming, or not? IF we reduce carbon, reduce waste, and make a better world…what have we lost?
A few $$ in TAXES. Who gives a $**T over money? Not me. I’m reading a blog where REAL human beings are forfeiting their own futures betting on a quarter acre of crabgrass, or less? Nose-bleed prices than CAN crash, when is the only question.
Long before a 25 yr or 30 yr amortization is satisfied.
As for the climate, how long, if they’re even half right?
Are species NOT going endangered? Is water becoming clean, and MORE plentiful? Storms becoming MORE normalized over time? Think about the logic shown here.
Who ARE the REAL Smoking Men here?
The guy who tells his significant other “NO” when she gets house Horny, until prices return to a more normal ratio to income, or the PW’ed whimp who signs up for house bondage, and his complicit banister, or the one who wants ‘his cut’ on a green initiative??
You judge, I already have made my choice.
What I DO know, is in the US the richest., and for my disclosure I’m in the top 10%, but FAR from the top 1% pay WAY too little in taxes.
Screw the “advertised” rates, it is only the effective tax rates that truly matter. Hey, on 6 figures if you can legally manipulate it down to teen figures you are doing ‘alright’ in the spendable green shit department.
It pays to hire that CPA. That’s why they are there.
I’m all for “fair Taxes” for all. After figuring federal, state, sales etc. you should never be over 25% if you are at 100K. Double that add 4.1%, Triple That add 8.3%, Quad that add…you get the picture. At 100 X 100K pay through the F-ing nose baby!! My opinion here. It isn’t “earned” by that stage, it is trust fund, interest, stolen, gawd knows!
Take a look at income “spreads” and see what I mean.
There RANT over !
So average Vancouver house costs more than 13 times the average Vancouver income.
Does this mean the average house is purchased with money made outside of Vancouver?
Here’s another one for your reading pleasure:
http://www.biv.com/article/20131127/BIV0111/131129941/overseas-buyers-dominate-vancouver-retail-real-estate-purchases
he owed CAUTION to his clients
he risks being sued in case of downturn
things do not end well in VC
Its no different in the Peg.
805 – 1720 Pembina Hwy – Pembina on the Red Condos
Sept 28 – $254,900
http://www.youtube.com/watch?v=Ih1sFPDsdqE
Oct 7 – $244,900
http://winnipeg.kijiji.ca/c-real-estate-condos-for-sale-1100-SQ-FT-SOUTH-FACING-PENTHOUSE-CONDO-PEMBINA-HWY-FOR-SALE-W0QQAdIdZ531097570
Oct 24 – $239,900
http://winnipeg.kijiji.ca/c-real-estate-condos-for-sale-South-Facing-1100-SqFt-Penthouse-Condo-For-Sale-On-Pembina-Hwy-W0QQAdIdZ536428297
In a market where nothing in that price range was sitting longer than a week only 6 months ago.
#35 Mark,
sighhh…my wife is way out of my league…what was I supposed to do? Actually I am lucky as real-estate makes up less than half our assets with no current debt…wife has a kick ass job and I got lucky with tech stocks in the late 90s which got me started…and it was lucky.
Be careful with O&G, there is a current reckoning…I am with Garth on diversification…putting some money into stocks is ok, but watch the % of portfolio by asset class.
35-40% gain in 2013 on US ETFs…not many (if any) O&G companies did that.
Some of these shale oil/gas failures cost 60Million to remediate…not many companies are forthcoming on their failures….latent effect on share value once production targets are not met.
Look at this chart, which tracks real estate valuations based on a house-price-to-rent ratio. The only serious country which comes close to being as screwed as we are is France, where men cry and carry handbags. Look at this chart, which tracks real estate valuations based on a house-price-to-rent ratio. The only serious country which comes close to being as screwed as we are is France, where men cry and carry handbags.
…………………..
Ha Ha, my 83 YO French FIL always carried a handbag & he was no sissy. I remember many yrs ago going to Strasbourg with FIL & hubby. Hubby, acting the fool, pretended they were gay. A couple of British ladies in front made some comments not realizing hubby & I spoke English. The ladies & we had a good laugh after. FIL has a good sense of humour too.
PS – Howling winds & pounding rain here. Surpised we haven’t lost our power yet. We’ve flash lights & candles at the ready.
I disagree, Edmonton’s average home takes 3.5 times an average income. Migration is at 2007 levels, do not see a correction here. If you disagree Garth give me one stat that tells otherwise…. don’t think you can’t find one.
It’s Edmonton. — Garth
Agree with #3 Halifax Observer on 11.27.13 at 9:37 pm
I see so many homes for sale, many with reduced price in my area in Dartmouth.
The word is out. The flood will begin this Spring.
Mr. Turner
“nothing compared with Vancouver, where RBC says it now takes 84.2% of gross income to carry a house (with 25% equity, remember), which is $6,000 more than the average family actually nets.”
Hmmm ….. I smell a rat …. how is this possible? (a.) $68,000 income earners paying cash for $922,000 homes? (now THAT’s saving). (b.) Lots of non-reported income from tenants in the basement? (c.) Cash businesses (taxes shmaxes) as main source of income?
(d.) lots of people bought their BC house a long time ago when you COULD buy a house making $50 or $60 grand a year …. and once in the market early could ride the wave to oblivion (with low mtg rates and “everyone qualifies” financing). (e). big fat cheque comes from over sea’s to buy million dollar house with a 17 year old university kid making zero income as main resident. (f.) a few sad souls actually trying to do this legit … financed to the gunnels and paying every nickel they have (and earn) to keep a shack roof over their head.
I’m guessing probably a combination of all of those …. but totally ridiculous any way you slice it.
You missed ‘Duster’, ‘Dustvac’ and ‘Dustbuster’.
#8 Smoking Man on 11.27.13 at 9:53 pm…
The Smoking Man Character you created has held our attention, people have loved you and hated you.
Felt sorry for you and proud of you.
Love, Pity and Contempt on the same day.
The Smoking Man Character is just a bloody Character.
(with apologies to another SM character circa 2011)
that picture is taken at the service department at the BMW store at 5th and burrard . is that even his car or did he randomly walk up to somebody’s beemer and get somebody snap photo?
Occupy CMHC! Drop it like it’s hot. 1/2 mill, max.
IMF recommends Canada scale back CMHC
CBC.ca – 6 hours ago
The International Monetary Fund says Canada is exposing itself to risk by insuring mortgages through the Canada Mortgage and Housing Corporation and recommends scaling back the federal housing agency.
IMF wants Ottawa to scale back CMHC’s mortgage insurance The Globe and Mail
Bank of Canada Should Factor Deflation Risk into Policy, IMF Says Wall Street Journal
This is not a Smoking man blog.
#45 John on 11.27.13 at 11:30 pm
I disagree, Edmonton’s average home takes 3.5 times an average income. Migration is at 2007 levels, do not see a correction here. If you disagree Garth give me one stat that tells otherwise…. don’t think you can’t find one.
It’s Edmonton. — Garth
……………………………………………………………………
The average house price is $400,000 in Edmonton…
http://www.bobtruman.com/Edmonton_SFH_stats/page_1918017.html
…so the average income must be $115,000 considering your 3.5 times calculation.
Ya right and we all work up in the Tar Sands. lol
#16 Count Flipalot
#7 juno
CMHC (today) ~ Freddie Mac (2007) ~ Freddie Mae (2007)
oops… it is Fannie Mae
My point exactly, you don’t have one. Edmonton is a great city, new arena, low unemployment rate…..can go on and on. You have to admit Garth 3.5 times your income is affordable plain and simple.
“Does this mean the average house is purchased with money made outside of Vancouver?”
Not generally. It means that there’s a huge amount of borrowing/leverage involved in the market.
#31 FTP – First Time Poster on 11.27.13 at 10:53 pm
—————————————————-
Wow, you have patience. Or a house you know will be hard to sell.
Anyone that poses with their car is with out a doubt a total a** hat, no matter what industry they are in.
#2 Curious on 11.27.13 at 9:34 pm
—————————————
Well Ottawa’s not as bad as Toronto or Vancouver. In Ottawa city proper for a decent SFH, annual rent ratio may be 20-25.
Garth”france where men cry and carry handbags”ok ,hit a nerve…come-on garth,i think you would agree that stereo-typing people of different nationalities is for the less fortunate in the brain department.being of French Canadian decent and traceing my family back to 1747 who landied in montreal after a danger filled crossing of the atlantic in fall of that yr I don’t think there was a cry baby in the lot.Being somewhat watered down over the yrs with some NA indian blood ,my Harley riding _ss has never been tempted to pick up a handbag and stroll around town,there are still some testosterone filled smoking men of French decent left!!
#2 Curious on 11.27.13 at 9:34 pm
What is your take on Ottawa? Do you believe the single homes are overpriced? Many think it’s different here but I think not.
Nowhere is different. — Garth
———————————————-
I beg to differ Mr Turner
The Public Service staffs and functions all of the subsequent departments, agencies, commissions, crown corporations, and other federal organizations. Over 40% of the Public Service of Canada is located in the Ottawa-Gatineau area, although there are staff in 1,600 locations across Canada. It is also the nation’s largest single employer.
I don’t think pencil pushers making 91k a year plus a million dollar pension will be pushing down on RE prices hard anytime soon
@#34
The choice is yours.
I would not be surprised to see 5 million dollar shacks in Toronto. Or Gas 50$/gallon.
QE will have unintended consequences in medim to long run. In the meantime the savers will be screwed. Bread 15 $, coffee 10 $, how does this sound?
___________________________________
Neither would I be surprised to see prices continue to rise in Vancouver and Toronto. Real estate has become too much like religion in some places. . .it’s like the story of Jesus, we all know it isn’t true but it sure makes us feel good.
Honestly, I don’t care if the prices of houses rise, I’ve given up ever owning another property, but what burns me is that I can’t make a wooden nickel on any cash I have saved in the bank without taking excessive risk. The next time RBC denies me a decent rate on a 1 year GIC I am going in and withdrawing 20K cash and walking to the bank next door. Electronic numbers be damned, if they won’t give me a fraction more of what they lend my money for I am going to make sure it is no longer physically sitting in their vaults.
@#34 scoby doo on 11.27.13 at 10:55 pm – Your assertions of $50/gal gas are ridiculous. That would imply it would take $1000 to fill my tank, based on what? At $144/bbl oil the global economy sputtered and gasped. Everything has a counter balance and will over and undershoot the long term trend.
@#59 Bottoms_Up on 11.28.13 at 12:24 am
My house has been very well maintained and is only 7yrs old with a newly renovated basement and well landscaped yard. I am VERY patient and have been in tougher negotiations than this one – but the entertainment value from someone offering you well under value while claiming having to squeeze every last dime from his bank & savings all while telling you how he’s going to get all new furniture and all new appliances (some of which are a year old) while his Land Rover sits running in the drive way makes for a comedy I can’t turn away from! God I wish I could tape it – its hilarious!
BC hydro rates are going up , IMF warning Canadian Govt. about CMHC, City of Surrey warning about non registered basement rental suites, lay offs,rental vs. home prices etc. nothing but all good news. It really different here. We even dance with out music.
What’s happening on March 20, 2014? Did I miss the memo…
Is F finally taking my advice on the Federal Budget after the Twitter machine promotions?
ftp:
brings his family
After a month, calls back, wants to see it again and show his “cousin” who’s a contractor.
“Can I bring my brother over to show him?”
so I count three showings to the same customer which I see as not so entertaining, I mean I’d rather collect pop bottles along the road
Here’s something funny. The RAHB stopped updating their monthly report after a record 32.9% sale increase in September. For some reason, there’s no update for October’s numbers. This might be the reason why..
http://www.cbc.ca/news/canada/hamilton/news/hamilton-housing-prices-dip-in-october-1.2427997
November’s number should be due in about 2 weeks. Could this be the beginning Garth?
Definitely. Renting in France is much more affordable than owning a house. Stop paying rent after three month and stay for free another 12. That’s how long it takes on average to get a freeloader out. Socialism here is out of control and will always side with the “poor unemployed”.
http://theceliachusband.blogspot.fr/2013/11/its-complicated.html
Living in Vancouver with the most over valued real estate, in the Country with the most over valued real estate on the planet…I am watching anecdotal evidence that people are in financial straits.
Check outs at the Grocery store, with 15 bucks worth of barely anything….watching people put 7 bucks worth of gas in a 30 thousand dollar truck….and friends that can’t scrape together enough to pay for anything, unless they are committing financial suicide by draining their Home Equity, with demand loan HELOC’s.
Mr.Turner has been begging people to wake up.
Well the bugle has sounded and a lot of financial tyros are in a world of hurt, and it is just going to get worse.
How about this for a number?
In 5 years, 3700 Broadcasters have been cut lose.
That’s just ONE industry getting eviscerated. No jobs – none on the horizon = no money, nada.
Oy, vey.
Gazing in awe at Dustan’s tie and pocket puff, I suddenly remembered the seventies when Dustan’s dad probably wore a polyester business suit tastefully accessorized with matching white shoes and belt.
A Vancouver shopper walks into a grocery store. “Wow! the price of banana’s has tripled. Let’s buy a crate in case the prices go up.”
I agree totally with the article as severely overpriced in Canada on the rent/own ratio. That being said, people are somehow able to continually qualify to own houses/dwelling at historically high prices. Also, people continually are able to make the mortgage payment. That part puzzles me the most. I agree people have good investments/jobs/inheritances. Does the average person overall still able to own a 400/450k home without continual money worries and to make that monthly mortgage payment? Or are many people in high debt situations.
And there’s NZ sitting at number 2, right below Canada – bet we can overtake you! I was in London on the weekend, overheard a kiwi accent on the tube, and started eavesdropping. She was telling the bloke she was with about how she plans to send money home in order to go in with her father on an investment property. Because the one he has already has gone from $350K to $450K, so it’s a sure thing dontcha-know! Was tempted to say something but just stayed quiet. Amazing to me that she lives in the UK but saw no risk whatsoever in the idea.
To all of the people who follow Dusty the mortgage porn star, and actually believe him, please, when you are out at a house party/public event, do us all a favor and keep his nonsense to yourself. You are only embarrassing yourself showing everyone you are an idiot. As for Duster the mortgage porn star, you remind me of Brad Lamb.
Wake me when the first house on the the corner of Russell Hill Rd and St Clair is $800,000.00 dollars again.
[…] The enabler […]
What! Australia isn’t a serious country?
Garth, people are too stupid.
http://www.telegraph.co.uk/news/politics/10479466/Boris-Johnson-some-people-are-too-stupid-to-get-on-in-life.html
There is no saving them unless you let them move in with you.
Here’s a great video of ‘Merica’s version of saving money.
http://www.youtube.com/watch?v=-xL8rE9DT4g#t=201
Why do you bother, Garth? Why?
#57 John
Don’t Albertans have the highest non-mortgage consumer debt in the country? Against all odds, people manage to live paycheck to paycheck there as well. Albertans are not prepared to face any shocks to their resource based economy. We have seen it crash before. If it does, there will be tens of thousands eager to leave and ride out the storm elsewhere. Alberta is not home for a lot of people who work there. Keep looking through those wild-rose coloured glasses.
ex-BoC Gov and current BoE Gov Mark Carney gave the UK housing market a passive aggressive kick in the nards in his remarks at this morning’s “Financial Stability Report” in London. Carney said that while he doesn’t see house prices “an immediate threat”, they are an “evolving threat”.
He should know a thing or two about that…
http://www.theguardian.com/business/2013/nov/28/nikkei-hits-six-year-closing-high-as-rally-continues-business-live
From the Guardian
“[The BoE] is consulting on a tool which would mean that the FPC [Financial Planning Committee] could instruct banks and building societies immediately change the long-term forecasts for interest rates which they use when assessing affordability [of mortgages]. So if the FPC saw a risk of higher rates in the money markets in five years, it could make banks take that into account.”
Surely the BoC is listening to this…
#21 Shawn
What was the point of that post? You basically said all the options you have to be protected from a housing correction but can’t be bothered with any of them. So basically your going to do nothing.
MLS# E2781941 C2776133 C2783265 E2631275
Initial 1088888 798000 1349000 7500000
Relisted 988000 689000 1098000 6750000
Sold 825000 660000 1125000 6193735
%or relisted 84 96 102 92
of initial 76 83 83 83
Taxes 3270.18/2013 4403.74/2013 5204.48/2012 22953/2012
Declared DOM 16 25 7 204
Real DOM 42 103 75 227
Price history
E2781941 ,2013-10-16=1088888,2013-11-11=988000
C2776133 ,2013-08-16=798000,2013-09-05=749000,2013-09-18=719000,2013-11-02=689000
C2783265 ,2013-09-13=1349000,2013-10-17=1288000,2013-11-13=1098000
E2631275 ,2013-04-14=7500000,2013-05-09=6750000
Catch of the day: E2631275 ($6.1M)
That would certainly screw the Avg price of SFH in TO, give F an infarct and TREB another media orgasm.
Do you ever get the feeling that introducing Black Friday to Canada is the last vestiges of an overblown consumer debt ridden economy; in it’s final death throes?
That’s funny… me too.
But too many have a laissez-faire over confidence in the ability of both politicians/ technocrats and the fleeting wealth effects they create .
Throughout history economies, business & credit etc all run in short wave cycles but also in a secular, long wave trend.
All of the financial tricks of the trade can only bend but never break this fact…
Episode 5: When money is Corrupted…
http://www.hiddensecretsofmoney.com/videos/episode-5
#14 Smoking Man on 11.27.13 at 10:18 pm
“My economic outlook is still coming.
Have the flu, slowed me down….. tomorrow”
You may have the flu, but your comment about taxing waste was definitely lucid and sensible.
#63 World According to the Resident Neandercon Troll,
you certainly have a point on the Ottawa economy, although as always, you drive it off the cliff.
I know I’ve asked you this before when you propagandized under another label, but what is your plan to reduce the Federal Government to the size you could drown in a bathtub?
Please note that the Fraser Institute’s five-year old 25% haircut is NOT a plan.
“Bitcoin gained credibility this month after law enforcement and securities agencies said in U.S. Senate hearings that it could be a legitimate means of exchange. -Reuters”
___________________________________________ -Garth
Garth, please fill in the blanks, the above space was left so you can call me a tax evader again.
No wonder why private money is fleeing China.
http://goo.gl/zpQ3GA
“And Chinese bank assets now absolutely dwarf the assets of the U.S. Federal Reserve, the European Central Bank, the Bank of Japan and the Bank of England combined.”
Putting the rate of change in perspective, while the Fed was actively pumping $85 billion per month into US banks for a total of $1 trillion each year, in just the trailing 12 months ended September 30, Chinese bank assets grew by a mind-blowing $3.6 trillion!
The IMF?
No, let’s just keep CMHC and abolish the IMF
http://cockburnproject.net/songs%26music/atcid.html
Are REITs the next tax target?
What else is new.
http://opinion.financialpost.com/2013/10/07/are-reits-the-next-tax-target/
a little black friday laughter
http://www.youtube.com/watch?v=sGi21YQFjMM
#88 “Ottawa is different”
————————–
If Ottawa is different, why are condos sitting empty? Why are more “for rent” signs popping up on houses that have not been sold? Are prices not stalling here too? All this while the gov’t axe is still out getting sharpened.
# 65 FTP – First Time Poster
$ 50 /gallon and $ 10 coffee is something we all will see pretty soon.
Once inflation shows up and bond market revolts its over. Watch for crossing 3 -3.5 % on the 10 years treasury bonds. From there on is an avalanche.Scoo
Protection Needed?
I’m stupid at 84 responded said to my post at 21:
What was the point of that post? You basically said all the options you have to be protected from a housing correction but can’t be bothered with any of them. So basically your going to do nothing.
***************************************
The point was for others to think about what they would do. I mentioned that predicting a house price fall counts for nothing. It’s actions that count. I mentioned that in my case where my house asset value is a small part of my net worth (it’s about 20%) I don’t have to do anything. The other 80% gives me ample protection. You?
WHO YOU GONNA LEND TO?
Halifax observeror asks:
Don’t Albertans have the highest non-mortgage consumer debt in the country?
**************************************
Imagine that! The people with the highest incomes and best ability to pay debt use it most! What would you expect, that welfare recipients have the highest debt?
It’s not the amount of debt that matters it’s the ability to service it.
Looks like Canadian real estate will take a 15-20% haircut in the future. But in the form of Canadian currency becoming less valuable.
Goldman Sachs is calling for an .88 USD loonie next year. Add to that talk of the BoC lowering interest rates at any sign of a housing slowdown here and it becomes pretty clear.
WE’RE INFLATING OUR WAY OUT OF THIS.
The average Canadian might be paying 2-3 times what we’re used to for food, clothes, gas etc etc but hey, as long as we can keep selling oil to other countries, we’ll let the dollar tumble here.
Dustbin looks like Ray Barone’s brother
http://www.x17online.com/BradGarrett111108_01_X17.jpg
#8 Smoking Man on 11.27.13 at 9:53 pm
If you want to see the future of Ontario, see Spain, they are looking to tax the sun now!
http://www.thelocal.es/20131112/spains-solar-police-to-kick-in-your-door
Spain needs a revolution it never had, and the F87k’s in power need to hang from their boots Mussolini style.
The photo is hilarious (Not the first but the second one).
Hi Garth ,
I recently took some equity from my rental property to fill my TSFA, and I am planning to fill it on my own. I know Garth cannot and does not give specific investment advice on this blog, but I was hoping some of the intelligent readers on here can give me advice on how to fill it.
I was planning on buying XRE to fill the whole thing but I an not sure if I should split it up, the 265oo represents on small share of my net worth, thank you in advance
If $26,500 is a ‘small share’ of your net worth, why are you asking blog strangers for generic advice? Hire some help. — Garth
There is no affordable real estate any where near a job in Canada. If there was I would be busy doing stairs instead of sitting on my butt typing out this comment.
Then again if I did have a job doing stairs I still couldn’t buy a home due to low pay rates. It is very easy for some one like me to look forward to the annihilation of real estate prices because I have little to lose and quite a bit to gain. Then again it is entirely possible that Canada will be destroyed by radioisotopes from Fukushima and buried by an ice age first. Punishment of sins comes in many forms.
It is interesting to ponder some of the statements made in a recent Business in Vancouver article, such as:
“foreign investors are switching from residential to commercial”
…So maybe foreign investors sense trouble with residential real estate in Vancouver and that is why they are switching to commercial (if they are indeed switching)
“they outbid local buyers by quite a margin.”
…Sounds right to me.
“an unnamed “foreign buyer” paid $1,803 per square foot for a 13,200-square-foot retail building on Robson Street; another paid nearly $500 per square foot for an older eight-storey office building on West Pender.”
…I wonder which buildings?
“Foreign buyers are also snapping up land, and are in no hurry to build. “It is a different mindset [than with local investors], they may be looking at development in 10 or even 20 years,” Szabo said.”
…well land sitting fallow undeveloped for 20 years while some foreign investor waits to build sure sounds like a way to build an exciting, dynamic city that people want to live in. Highlights difference between use value and exchange value.
“threats of higher mortgage rates, which have hammered real-estate investment trusts (REITs) this year, have aided cash-heavy foreign buyers by reducing competition.”
…So clamping down on mortgage lending may actually assist foreign buyers, potentially having the perverse effect of increasing Vancouver’s real estate bubble, depending on the extent to which cash-heavy foreign buyers are influencing this market (which we don’t know because we don’t have the stats).
“The Middle Eastern buyers are primarily from Iran, but Dubai money has also been flowing into Vancouver, the conference was told.”
…So foreign investment is more diverse than HAM. That sounds true to me.
http://www.biv.com/article/20131127/BIV0111/131129941/overseas-buyers-dominate-vancouver-retail-real-estate-purchases
#14 Smoking Man on 11.27.13 at 10:18 pm
My economic outlook is still coming.
Have the flu, slowed me down….. tomorrow
_______________________________________________
MKULTRA took a photo of you!
Sure you have the flu…..the photo above shows where you have been my friend. After consulting the UCC at the brim of the toilet what did it say? This was a shot of Smoking Man at the Casino after drinking at club 101. See you again on Friday at Seneca. You will be the one with the Fedora, sunglasses, ear-buds plugged in, cigarette burning, slightly unshaven, loose flitting shirt (Charlie Sheen style) and a glass of wine. Will your wife give you another free pass on this weekend?
Post #102 … O snappppp … good reply
If $26,500 is a ‘small share’ of your net worth, why are you asking blog strangers for generic advice? Hire some help. — Garth
Sorry Garth, I made most of my net worth through real estate , and will be selling and looking to hire someone soon, but for the TFSA, it was just a start and the amount is so small that the only help I would get would be from the bank and did not think anyone would be interested , I have been reading a long time and I will try on my own , sorry for asking, enjoy reading the blog, thanks for your time
You are quite free to ask, and while I will not make specific recommendations, others will. Good to hear you will seek help when you dump the house. Investing, tax avoidance, retirement planning – it all goes together. — Garth
We all know how expensive it is Canada.Basically if you are a senior on a fixed income you have to leave if you want to have a some what quality of life.Thats a given.I’m in Puerto Vallarta right now and met an American on a disability pension and he said he lives quite comfortable on $1100 a month.For a couple on a crappy pension even better.Its an absulout no brainer.Its sad but true if your poor and a senior in Canada your a liabilty ,your just another burden to the system.So if your smart and want to escape the Canadian winter ,come to Puerto Vallarta and give it a try.I love it here,people have way more freedom here than a police state Canada.
#51 jaksun: “that picture is taken at the service department at the BMW store at 5th and burrard. is that even his car or did he randomly walk up to somebody’s beemer and get somebody snap photo?”
****************
Funny! If this RE agent was all that clever he’d have had that pic cropped. ;-)
@53 TurnerNation:
Garth loves everybody.
Group hug?
Garth,
When things are corrected, do the banks win again?
uk-britain-bank-regulation-idUKBRE9AR0B420131128
Seems like Mark has been checking in again. He’s starting to believe what you’ve been saying for several years now. Probably too late there too.
“…13.5% of all jobs in Canada are linked to the construction industry … the United States, where only 5.8% of jobs are….”
Given the high overlap between economies, it suggests roughly 7.7% of all Canadian jobs are federally subsidized artificial creations of our ‘fiscally conservative free market’ government and the CMHC. Ministries of Digging Holes and Filling Holes would be too politically transparent.
BTW, does anyone know if the Greater Fool Platinum Pass Membership includes a Smoking Man filter? How much for the optional sock puppet add-on? PayPal OK?
After sitting with my brother for the last few days he has brought me up to speed on what is going on overseas in Asia. It is just as volatile there as it is here. Difference being for the same job in Hong Kong you make around ten times more pay than here. He says working for a large corporation as a code monkey and programing strategist has its perks. The lips in the office are always tight but, you can pick up all sorts of subtle leading indicators about what investments are going to trend high. I can not believe how much cash you can make over there?
Get ready for for more overseas investment Canada.
http://www.scmp.com/business/money/markets-investing/article/1352922/tax-treaty-makes-hong-kong-investment-key-north
Even the people in Hong Kong are part of the herd.
http://www.scmp.com/property/hong-kong-china/article/1336908/developers-lure-buyers-paying-more-tricks
Is tracking an index worth the cost.
http://www.advisor.ca/investments/market-insights/is-tracking-an-index-worth-the-cost-135724
Arguments against ETF’s
That’s as dumb as “an argument against stocks” or “an argument against bonds.” It’s not the kind of assets that is germane, but how they are managed, and the weighing/rebalancing that is arrived at for each person’s portfolio. — Garth
Pigg is now a ‘Business Reporter ” at the Torstar
http://www.thestar.com/news/gta/2013/11/27/toronto_lawyer_spearheading_trump_lawsuit_disappears.html
This is the best part of the article:
It was only this week that stunned colleagues in his upscale offices in the Toronto-Dominion Centre discovered that Heydary rents, rather than owns, his Forest Hill Rd. home.
He rents!! That must explain everything . Oh the humanity
#114 :):(Ying Yang on 11.28.13 at 11:16 am
I can believe how much they make in HK.
You should see the bets placed in Baccarat At Seneca.
Crazy by my standards, takes me 2 months to make chairmen statice, they don’t it in 2 hours.
Reson folks firm HK so loaded.. They are huge gamblers.
Not like Canadian GIC investors….
Garth, you know deep down in your heart that the only thing that ends this insanity and excess is a recession?
Tweaking at the edges by regulators and govt won’t do it.
And yup, that means some deflationary pressures, but just like stocks, a lot of stuff will be on sale again.
Hollywood on 11.28.13 at 3:06 am
I agree totally with the article as severely overpriced in Canada on the rent/own ratio. That being said, people are somehow able to continually qualify to own houses/dwelling at historically high prices. Also, people continually are able to make the mortgage payment. That part puzzles me the most. I agree people have good investments/jobs/inheritances. Does the average person overall still able to own a 400/450k home without continual money worries and to make that monthly mortgage payment? Or are many people in high debt situations.
—————————————————————–
People must be drowning and that effect is hitting retail hard. Drive around the GTA or anywhere and look at all the for lease signs. I can not recall that many for lease signs as I do now and businesses seem to be hurting Sears , Target etc.
Damn you IMF, what on earth would make you suggest CMHC needs to be wound down?
Oh… I guess they must have checked out some SFH listings in Toronto, like maybe a $899k 1-bdrm teardown?
http://www.realtor.ca/PropertyDetails.aspx?PropertyID=13881267&PidKey=1242800531
(or, should we just call this what it is: a $899k 25-ft lot to build a McMansion on)
Garth’s reply to bigrider at #115.
People who use ETF’s, who may not understand how cost inefficient they can be ,nor how arbitrarily there performance can waiver from there intended objectives and/or targets will find the link an eye opener.
ETF’s are far from a perfect tool.
No one , including the article itself, questions the need for management or re-balancing of individual portfolios, so your response to the articles points is off point.
FAULTY LOGIC
People ask: Does the average person overall still able to own a 400/450k home without continual money worries and to make that monthly mortgage payment?
*****************************************
Faulty leap of logic 1: That the average peron owns an average house. Fact is only 70% own, so right there we should understand that homeowners on average have higher incomes than average.
Faulty leap of logic 2: That he average home owner needs to be able to afford the current value of thier home. Fact is most bought years ago at lower prices.
Fact is as long as today’s buyers can afford to buy the houses that trade today then we are okay. The typical buyer is not and does not need to be an average person.
The typical buyer of an average house in the big cities is older than average and has a higher income than average.
Of course the average person canot afford the average house. So what? It has ever been the case.
#117 Smoking Man on 11.28.13 at 12:21 pm
#114 :):(Ying Yang on 11.28.13 at 11:16 am
I can believe how much they make in HK.
You should see the bets placed in Baccarat At Seneca.
Crazy by my standards, takes me 2 months to make chairmen statice, they don’t it in 2 hours.
Reson folks firm HK so loaded.. They are huge gamblers.
Not like Canadian GIC investors….
_____________________________________________
My brother wants to go to see Seneca Casino while he is here but we are leaving for Montreal this weekend. You are right he will unload a ton of cash on the tables at Casino Montreal this weekend.
We may go to Seneca tonight just for fun. If not he might not make it as he is then flying to Vancouver to be with our parents for Christmas. He fly’s back to Hong Kong from Vancouver. His boss in HK goes to Macau and stays at the Venetian Macau. They fly him in a helicopter and it is only about 55 km from HK. He has gone with him on a few trips. His boss unloads about $150,000 per trip. Gets top treatment from start to finish. Huge roller! Drives a Bentley! His home is worth around $15M. I am not a code monkey in the banking and investment industry so no free rides for me! I told my brother to remember me when he makes it big!
………..
When asked for my opinion, which I was for the piece in question, it is most often an Optimistic one that I will offer. If that is a fault, I can live with it.
HOW ABOUT YOUR CLIENTS? CAN THEY LIVE WITH IT?
Keep in mind that ~47% of homeowners in Vancouver have NO mortgage at all.
When you want to park your moneys overseas you do not apply for a mortgage
It is also worth noting that the average mortgage in BC is ~285,000 which is well in line with the average income figure.
F…. shit!
Two lines above he was talking about Vancouver
For “oversimplification” he switched to BC stats.
This is starting looking more like in the first picture
As for the image(s) chosen for Mr. Turners post, the first is not I.
We never doubt it but we like your thinking.
You probably had some doubts regarding a possible confusion.
I just wonder why!?
I look forward to revisiting this topic again with Mr Turner in 2023
An IT guy would say make that a rounded number: 2024
Vive la difference!
Yeap.Let’s quote your article again:
“Focus on the pig picture, know that time fixes pretty well every Real Estate mistake as far as values are concerned.”
So mister Dustan, to paraphrase you:
“When asked for my opinion, it is most often an Optimistic one that I will offer. If that is a fault, can you live with it ?”
Any thoughts Garth.? http://m.theglobeandmail.com/report-on-business/top-business-stories/why-goldman-sachs-recommends-shorting-the-canadian-dollar/article15648571/?service=mobile
Mr Woodhouse isn’t good with numbers. Writes that his market share is 0.005% in his response (116 out of 24,000 files).
116/24000 ~ 0.5%
@#95 Scooby Doo on 11.28.13 at 10:01 am
I’ve heard this type of doomer style tripe before. No one who posts that crap understands our monetary system if they think gas is going to $50/gal, plain and simple.
Stop scaring yourself and focus on what you can change and manage, not what some high ticket shill is selling you so that you’ll “buy his plan”. Are people really this uninformed?
No matter how ugly the comments, Edmonton still loves you scoundrels. We need all hands to chip out the cokers so the oil runs smoothly. So many stampeding the real estate market, it does make one wonder if the foreigners aren’t licking their lips at the prospects at driving the market down. That is what the buy low crowd does, is it not? All the international types are so worried about the debt proclivity of the Canadian masses is so very kind. The casino requires you to place a bet Ladies and gentlemen, other wise you are just loitering.
Hey CanadianWatchdog, it’s recharts here.
A while ago you mentioned that your Kijiji stats are indicating that the condo rents in To are going up.
Here is an article saying the opposite
http://www.theglobeandmail.com/report-on-business/toronto-condo-rents-look-poised-to-fall-report-shows/article15652306/
As you might remember, based on MLS stats my conclusion was that they were flat.
Any comments?
thanks
recharts
PS:
And here is a new form of discounting the new condos in order to sell them
These developers are pretty creative aren’t they?
Ying, Yang.
Good to hear that your brother is doing well in HongKong.
My sister and brother in law doing not so well with three kids.
All going to school now. Very expensive.
Brother in law makes good coin, but works his butt off.
No time for family.
They are also Canadian citizens. Planning to move to Canada soon
Ying Yang don’t attempt to go to Seneca unless you have nexus,
I’m going tomorrow. As
MKUltra pointed out.
Lines are huge, black Friday sales..
Time fixes most real estate mistakes?
Okay, but time fixes most every investment mistake. Even if you bought into the stock market in 1929 before the original Black Friday and the onset of the Great Depression, you’d have still made your money back by 1954.
While patience and a long term perspective are valuable in investment decisions as they will help limit mistakes of recency and emotion, watch out for the person telling you “in the long term it will be fine”.
In the long term, we’re all dead.
Funny, the comments about $10 coffees.
Did you know coffee prices (wholesale) are at multi year lows? Lowest price in over 5 years, and have been low for years?
You still pay up for your starBUCKS. They rake in well over 100 Million extra on the price drops… and laugh at you.
Want to lower the price of coffee? then stop over paying for them.
Want to be a saint, insist growers & pickers get their fair share….because they absolutely do not.
Investing in 1929
Investing a one-time lump sum in 1929 turned out horribly.
Also anyone who was retired and living off of a portfolio in 1929 did horribly.
But anyone just starting to invest in 1929, so much per month or year did wonderfully. One of the best times in history to start investing was 1929. Summer of 1931 was the ideal time to start. Early 2009 was another fantastic time to start investing.
A market crash is the friend of the young investor. It’s only the old that really get hurt permanently.
In no particular order, some TipTop BizarroZen to WhileAway a QuietDay…
FirstUp, SciencesSociale practitioners have long known that ‘Hu’sYerDaddy’ is statistically the most accurate predictor of LifeChances… and every now and again, an EpicHospitalMixUp confirms that thesis:
[UK Telegraph] – Japanese man born to wealthy parents is accidentally switched at birth and endures life of poverty
…” The error apparently happened when a midwife took the new-born babies away to be bathed and then returned them to the wrong mothers.
Speaking to media in Tokyo, the man condemned to a life of hardship described his shock at learning the people he grew up believing to be his parents and brothers were unrelated to him.”
http://www.telegraph.co.uk/news/worldnews/asia/japan/10481091/Japanese-man-born-to-wealthy-parents-is-accidentally-switched-at-birth-and-endures-life-of-poverty.html
NextUp… a fascinating phenomenon… Pranksterism or NascentPoliticalMovement; you decide:
[UK Independent] – Stop clowning around! Police urge public to ignore creepy clowns after sightings across UK
…”Police have vowed to track down pranksters dressing up as clowns and offer them “strong words of advice” – but added that dressing up as a clown is not actually illegal.
The police advice follows sightings in towns across England and one in Carrickfergus, Northern Ireland.
Pictures of a man dressed as a creepy clown and stalking the streets of Northampton went viral earlier this year becoming a global internet sensation.
Sightings have since followed in Mansfield, Scunthorpe, Burnley and now King’s Lynn.
According to the BBC, there have been clown sightings in the market town on Tuesday and Wednesday.
Supt Carl Edwards speaking to the BBC said: “Firstly, I’d like to stress that it isn’t against the law to dress up as a clown.”…
http://www.independent.co.uk/news/uk/home-news/stop-clowning-around-police-urge-public-to-ignore-creepy-clowns-after-sightings-across-uk-8970548.html
LastUp: So much for ‘NakedOfficials’ – an EntrepreneurialOpportunity occasioned by a curious resemblance to the GreatHelmsman proves disastrous in the BedRoom:
[UK Telegraph] – ‘Chairman Mao ruined my marriage’
…She is a 57-year-old shopkeeper who transformed herself into China’s first and only female impersonator of Mao Tse-tung.
But while Chen Yan’s unlikely career as a Mao Tse-tung look-a-like has brought her fame and a measure of fortune it has also wrecked her marriage, a Chinese magazine claimed on Thursday.
For Mrs Chen told the Global People magazine that her husband had grown tired of feeling “he is sleeping with [the] Chairman and that their sex life had been destroyed. “…
http://www.telegraph.co.uk/news/worldnews/asia/china/10464908/Chairman-Mao-ruined-my-marriage.html
#100:
wow… Reading that article really pisses me off. I can relate fully to your sentiment about hanging those people. Spain is way ahead of us when it comes to development of the PV industry. I can’t help but wonder if our government will try something like that on us here when we reach a similar level of development to Spain.
Garth may disagree but I think ETFs are a better hold in registered accounts like LIRA and TFSA and RESP because decent yeilders have sizeable fees.
For monthly income I think it’s better to individually hold a basket of dividend bearing stocks not ETF.
I guess you enjoy paying full tax on capital gains. — Garth
@130 Son of Ponzi
DELETED
Kevin O’Leary:
http://www.cbc.ca/player/News/Business/ID/2420941862/
88 Herb on 11.28.13 at 8:34 am
#63 World According to the Resident Neandercon Troll,
you certainly have a point on the Ottawa economy, although as always, you drive it off the cliff.
I know I’ve asked you this before when you propagandized under another label, but what is your plan to reduce the Federal Government to the size you could drown in a bathtub?
Please note that the Fraser Institute’s five-year old 25% haircut is NOT a plan.
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SECOND time now – Herb the govt worker spending YOUR tax dollars pushing useless paper around is asking YOU the taxpayer for info on how well THEY the govt are spending your money.
So we have this straight – I’m supposed to take the time out of my busy day (taxpayer) to find information to prove Herb (govt worker) is giving me value. Now I’m no marketing genius……but shouldn’t the govt be PROVING TO ME (and you) we are getting value for all the money they are stealing from us?
BTW – Govt Worker Pension liabilities right now? 500 BILLION dollars
How much evidence would it take before you acknowledge the Chinese are screwing our unrestricted RE market.
Can you answer this question.
My guess is you won’t.
https://www.google.com/url?q=http://www.theglobeandmail.com/life/home-and-garden/real-estate/asian-buyers-give-a-boost-to-vancouvers-luxury-housing-market/article13465110/&sa=U&ei=EK2XUpCrL8mLiAL4-YDYDQ&ved=0CAYQFjAA&client=internal-uds-cse&usg=AFQjCNGloRoGGZhcr9hqghE9PR5MN4VyzQ
A lot more than an article talking about a relative handful of sales which have zero impact on the wider market. Face facts. People who live in Vancouver are the architects of their own misfortune. White and yellow. BTW, I just deleted your other post. You know, the racist and pornographic one. — Garth
Whatever your opinion on real estate or mortgage brokers – I say full marks to young Dustan for a restrained and coherent response!
football head injuries
http://www.pbs.org/wgbh/pages/frontline/league-of-denial/
1994 –
http://www.pbs.org/wgbh/pages/frontline/sports/league-of-denial/timeline-the-nfls-concussion-crisis/
hockey’s turn
Toronto Condo Rents Poised to Fall — good article
http://www.theglobeandmail.com/report-on-business/toronto-condo-rents-look-poised-to-fall-report-shows/article15652306/
#130 Son of Ponzi on 11.28.13 at 3:49 pm
Ying, Yang.
Good to hear that your brother is doing well in HongKong.
My sister and brother in law doing not so well with three kids.
All going to school now. Very expensive.
Brother in law makes good coin, but works his butt off.
No time for family.
They are also Canadian citizens. Planning to move to Canada soon
____________________________________________
He is single, no wife, no girlfriend, no spare time. Rakes in huge cash. Lives in Strawberry Hill, $$$$$$$$$$$$$$ but has good investments. He is very diversified. He is only intending to do this for another five to seven years then bailout. Most of his peers burnout over there.
You are correct very expensive to raise a family there. That was why my parents moved to Canada and made a new home. They love it here, (Vancouver). they actually do not like Toronto at all.
#131 Smoking Man on 11.28.13 at 3:52 pm
Ying Yang don’t attempt to go to Seneca unless you have nexus,
I’m going tomorrow. As
MKUltra pointed out.
Lines are huge, black Friday sales..
____________________________________________
We are going tonight for about four or five hours, knowing my brother he will stay until tomorrow morning. He goes big or goes home!
Good luck on Friday, we will be in Montreal investing in the french casinos.
“There are only two reasons why houses cost what they do, and that’s cheap money and cheaper pitchmen.”
In Vancouver, there are lots more reasons. In no particular order:
A. Land restrictions that reduce the amount of buildable land, coupled with reluctance of governments to build roads good enough to commute to suburbs.
B. Enormous flows of offshore investment money, from mainland China, Hong Kong, India, the Emirates, and elsewhere.
C. The effective rezoning of SFH so that additional suites and “laneway houses” can be added to the property, thereby increasing its value (look for this one to come on in a big way if RE does wobble; opponents will be accused of racism and environmental war crimes against the planet).
D. Massive immigration now set at 265,000 a year, but to which must be added the influx of “Temporary Foreign Workers”, now running at 125,000 in the first six months of 2013 (you can check my figures at that nativist organ the Toronto Star.
E. The widespread practice of extended families living in a large house and paying the mortgage with 3 or 4 incomes.
There’s more, but those are the major ones. I am not a realtor (that needs an internet acronym) and will readily acknowledge that RE is indeed plunging outside Metro Vancouver, but the fixation on price-to-rent and average-income-to-mortgage ratios is simply not that relevant in this area. Garth, you discredit the valuable parts of your messages about prudence, debt and sane investing when you do this.
None of your points are exclusive to Vancouver. They are but local myths to help justify a market where delusional people sell each other houses at prices they collectively cannot afford. But, wait and see for yourself. — Garth
Craigslist GTA Average Rental Price Index – Chart
November Average $ YoY%
1 Bedroom +8.2%
2 Bedroom +15.2%
November Median $ YoY%
1 Bedroom +10.7% ($1,550)
2 Bedroom +17.1% ($2,050)
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#129
Two prices always exist in every market: a bid and an ask. Craiglist prices are offer prices and do not reflect what people are paying, but do give some insight on availability by looking at price dispersions and locational premiums.
As for the article: the analyst is looking at cap yields in domestic terms in a market that is globalizing. There is no constant yield in a globalized market open to international investors. To them, cap yields and gains fluctuate depending on what currency their condo carry trade is based in. Condos prices can drop by 10-15-20% and still be positive for a global investor. It all depends on where you're from and how you're taxed.
Developers offering guaranteed rent is like how presale owners were guaranteed condo specs. And that's the condo game: promise today, sign here, screw you tomorrow. It's nothing deep pockets and a few fine lawyers over at DWPV can't take care of.
#121 bigrider
ETF’s are far from a perfect tool?
Well lets take a closer look at that. Advisor.ca is the first flag. Commissioned advisers resent ETF’s in general. Could it be the lack of trailers for the most part?
Tracking error, a quality better related to mutual funds whos main objective is to outperform their benchmark over a given period of time… second flag. Like 80 to 90% underperform in the worst way, especialy over the long haul! Oh, and those MERs.
XIU on the other hand just tracks the TSX-60 with an MER of 0.18% and pays a dividend. What tracking error?
http://ca.ishares.com/product_info/fund/overview/XIU.htm
#140 World According to the Neandercon Troll,
no, I’m asking you to prove your point, i.e., that there are 1. too many public servants, and 2. that they are not worth their cost. You may not know this, but the usual practice in debate is to state the “Yea” case first, so get on with it.
The trouble is that you will not put up because you can’t, and you won’t shut up because you won’t.
BTW, I spent my professional life in the Army, and even pushed some pencils in defence of Canada. Unlike you, I know what public service is about. Oh, I also worked in the private sector, so don’t try to baffle me there either. And I have paid taxes since 1959, so I have some experience of that too.
Jackass!
Although I don’t disagree with some of your points, I suppose if you keep preaching the same housing crash premise while housing is going up (and proving you wrong in the process), at some point prices will come down and you will look like a profit?
If I keep preaching the sun will come out int he face of 9 straight days of rain here in Vancouver, I suppose I will be proven right eventually.
I have not forecast a crash, just the kind of market which is evolving in many centres right now. BTW, it’s ‘prophet.’ — Garth
S&P says banks may have to spend extra $104bn on mortgage cases
Nov 27 2013 – 11:17am
http://www.bettermarkets.com/
#140 World According to Herb on 11.28.13 at 4:44 pm…
Nothing like a group of discombobulated statements to prove the value of your argument.
Of course, it’s difficult to think for yourself when you are forced to quote the NeoCon phrasebook.
You most certainly fit the definition of a troll, and are worthy of high honours on this blog.
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On a lighter note, Happy Thanksgiving to our US friends – it’s tough to stay light when we get two Thanksgivings a year!!
#147 Exurban. Yes the same lies in every boom just to keep the thing going. Only the uninformed think that home prices are going to continue upwards. Less and less people can afford to buy these out of reach homes…….even most of the rich won’t pay for overinflated products… they’re not so stupid. Prices are plunging outside city of Vancouver but it’s always the ourskirts that drop first and then the core.
Vancouver is not any different much as some people like to think.
@Mr. Monday Night, post #6:
Last year I heard David Chilton speaking and he said much the same thing, including of course the granite counter tops. Just recently Rob Carrick (regular article writer in The Globe Report on Business) was on TV also warning of high debt loads some people are carrying. Again, what he said sounds a lot like something Garth has said here many times. My crystal ball is made of black ebony so don’t ask me for any predictions, but the signs point to a lot of people having much difficulty (which could have been avoided) in years to come.
I guess you enjoy paying full tax on capital gains. — Garth
—-
Capital gains not realized until sale in either an ETF or owning indivudual equities. But there is a better chance of a fund manager rejigging the ETF and triggering a capital gain/distribution.
You miss the point. All gains in registered vehicles are taxed as income. Bad move. — Garth
It seems like only yesterday when I asked the rhetorical question
“Show me a bungalow in Leaside for under 1 million dollars”
I just checked, there are NO bungalows for sale in Leaside, again.
Tax in Registered Accounts
You miss the point. All gains in registered vehicles are taxed as income. Bad move. — Garth
***************************************
For the above reason, the traditional argument is put fixed income in the RRSp and go for capital gains outside the RRSP in non-registered.
Problem: Between RRSP and RESP most people would have nothing left over for non-registeded.
My thought: As long as I have money (basically only) in RRSP and will pay 40% of that in tax on withdrawal, why not go for the biggest return, forget fixed income, I go for stock returns. (Yes these days I have TFSA as well)
The goverment contributed 40% of my RRSP via refunds, they will take 40% on withdrawal. My net contribution 60% grew completely tax free. That is the simple math, assuming marginal tax rate unchanged at 40%.
I have contributed a total of exactly $138,061 to our two RRSPs since 1989. (About $82,840 bet cost to me assuming the refunds averaged 40%) Today that is worth exactly $1,078,900 (pre-tax)
I love stocks and they apparently love me.
I have about a million reasons to love RRSPs. Government will collect a lot of tax from us.
No complaints about the taxes from me.
Not only are condo prices coming down but rents. Owning a condo in Toronto is a great way to lose thousands and tens of thousands a year for the next few years.
Herb @ # 150,
And yet after all that, you still believe that Gov’t is the answer to everything and that people have no intrinsic right to keep their own money that they themselves earned…
As I’ve said before, Liberalism is not a political philosophy but a mental defect – and you are living proof of that statement…
You miss the point. All gains in registered vehicles are taxed as income. Bad move. — Garth
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Gains in a TFSA all tax free, gains in an RESP also tax free until with drawl but this is government matched so worth it. Equity holdings held in a regular non-registered account can throw off up to $50,000 tax free dividends and no capital gains until sale which then only taxed at 25%.
Where is the tax trap? unless you are talking about RRSPs. I don’t buy those but lots do.
12 November 2013
A global investigation into alleged currency-market manipulation has been expanded to 15 of the world’s biggest banks, the Financial Times says.
http://www.bbc.co.uk/news/business-24921097
#160 westernman
you , a self-admitted criminal ( tax evasion is a crime ) are the one who is being supported by the taxpayer. Start paying your own way, and stop being such a crybaby.
Amazing article Garth on Vancouver housing metrics. And that’s why that city is poised for a major collapse in smart people leaving for greener pastures. Vancouver is extremely screwed. No if’s and’s or buts about it. Why on earth would anyone want to live there? And earn less, owe more, and pretend to take ownership of mountains and water? Perceived wealth. Frankenstein wealth. Leave Scamcouver now.
No industry, no meaningful middle class strength at all. Just a hollow shell of its self in mere months. Whistler was on the auction block. No buyers either. Hmmm, wonder why? No more Americans coming.
@Herb/#150…
This is for you:
“You could hear a pin drop.”
[WaPo] – An Army in transition…
http://www.washingtonpost.com/world/national-security/an-army-in-transition-awaits-west-point-cadets-as-wars-end-military-budgets-shrink/2013/11/28/591fabf4-53c2-11e3-9e2c-e1d01116fd98_story.html?wpmk=MK0000205
[NoteToHerb: SemperFi]
It seems that you and the other guy have different perspectives and and different sets of data
Nomatter what the investor asks for rent the market (the average Toronto guy) will pay just “that much”.
When there is too many of them available they will compete for each other and the price drops.
What happens at the other end (the investor) of the equation is not relevant for the potential tenant! So while your perspectives might be different regarding one end (the investor) they should be the same regarding the tenant.
#70 meanwhile in france : I am OK withe the ex-pat thing.
Thinking about it myself.My issue is,that I see comparisons with rent,buying,food,wine,culture,etc…
but I don’t ever see a price concerning health care.
In thailand ,for instance after 60 Y.O. you are looking at
over $500 a month,and after every 5 years ,it rises dramatically.Of course you can buy a Thai plan.But often if you have received a bee sting when you were 12 Y.O. It can morph into a pre-existing condition!!!
If you don’t get a full time plan before 70 Y.O. ain’t gonna happen.(with most plans anyway).
To recap,I keep seeing stunning savings for being an ex-pat,but I can’t seem to see health care figures included.
Care to illuminate?
141 # jan
She is a real princess! Ynot jump on comet Ison , bebe!
Form Man @ # 163
Tax Avoidance, Comrade , Tax Avoidance – big difference…
You should work less on creative beer bottle opening techniques and more on reading comprehension…
#160 Westernmoron,
ah, resurrected!
Mental defect or not, “Liberalism” is still better than the Right’s studied, self-serving ignorance.
#166 nemesis,
thanks for the link – interesting reading. The key question would be what kind of an Army and other forces America needs, to do what. Considering the economic and political implications, it will be impossible to find a realistic answer.
I think that the post Iraq/Afghanistan experience will be like the post-Vietnam I observed from across the border. At first it will be everything, but before too long it will be irrelevant if not a downright hazard to progress.
@ #168 Johnny
I can, but it’s a bit longer than this reply area will handle
In general, once you decide to live here and pay taxes, you are in.
While it is a good and (almost) free system, there are pitfalls.
Email me through my Blog for more details if you want.
I am always doubtful of the price to rent measure as a great many neighbourhoods have zero rental housing stock. This is especially true of family-size housing (1600 s/f+). The near complete lack of comparative rentals makes such comparisons dubious. Personally I live in a neighbourhood of ~600 homes by postal code) of which exactly 1 is a rental. There are a few basement suites. I can go to neighbourhood after neighbourhood and find exactly the same.
So the price to buy vs price to rent has poor context if the rental stock in key areas and for core housing types is almost non-existent. Remember: no one builds rental single family (detached or rowhome) housing.
This article from FT.com — How China’s Stunning $15 Trillion In New Liquidity
Blew Bernanke’s QE Out Of The Water
need further proof garth? I don’t see many other countries doing that. Do you?
Re: Ottawa market
Things are NOT looking up in Ottawa!
This past month, I’ve noticed the prices of at least three houses in desirable locations (close to the canal and downtown) go DOWN by $25-50K within a 3 weeks of first listing. Original prices ranged from $425-$875K.
Also, For Rent signs are popping up in these locations and units are staying empty for months.
Conversely, during the past couple of weeks some units have been listed with abnormally high prices. E.g. what may have been listed at say $500K this past summer is currently being listed at $700K. What? They’re inflating the prices so that they can later knock off $50K and ‘fool’ people into thinking they’re getting a deal?? Has anyone else noticed this?
People are leaving Ottawa to find jobs. The housing market sucks. And yet, some people still talk of buying a condo …as an investment.
This is such manure! I need an anti-emetic.