Stressed out

Carmen’s stressed out of her young mind. Pat’s brother-in-law thinks he’s an idiot. Their situations are different, but the same. She’s in Toronto. He lives in Vancouver. Pat has a shoebox condo, a wife and kid. Carmen has a boyfriend and desire. They’re both 30ish. Both savers. Both dismayed by a real estate market that’s poised to eat them.

The question looming for each: buy now, or buy never?

Before I spill the intimate details of their lives, let’s reflect on why people think this way. And right on cue, here comes the self-lubricating duo of the Globe and Mail and the Vancouver real estate board:

“Over the past five years, prices for West Side detached properties have surged 45.3 per cent while they have jumped 35.2 per cent on the East Side, according to statistics released Monday by the Real Estate Board of Greater Vancouver. The Vancouver region’s single-family detached homes are on track to get ever-more expensive in the long term, while price hikes for townhouses and condos are forecast to be restrained by increased supply for those multifamily developments, said Cameron Muir, chief economist at the B.C. Real Estate Association.”

Not to be outdone, let’s cue this week’s now-or-never story from the housing harlots of CTV and that always-credible source, bankers:

“A new RBC report finds that buyers are being “priced out” of prime GTA real estate due to increasing prices and a lack of single-family homes in desirable neighbourhoods. The report notes that the demand for detached and semi-detached single-family homes in desirable GTA neighbourhoods has exceeded supply and caused home prices to go up. This imbalance means that many buyers are unable to afford homes in the GTA and are essentially “priced out” of the market.”

Is it any wonder poor Carmen and Pat think they’re the losers in a giant competition for the holy grail of human existence – a house? This media pounding is relentless, making it seem as if average home prices – for the first time ever – will detach themselves permanently from the ability of average people to afford them. Not only does that make no common sense, of course, but it’s gonzo economics as well. Values always revert to the mean, and the more extreme they deviate from this, the more dramatic is the correction.

But, there’s another little issue at play. Realtors fib. As this pathetic blog has shown with moronic repetition, real estate boards secretly revise their numbers to make them look better, allow double and triple listings of homes, cook up meaningless frankenumbers to mask market trends and hire ‘economists’ to tell you prices will certainly go up forever. We’ve left the entire, unregulated compilation of real estate data to the very people whose livelihoods depend on selling houses. So what do we expect? Truthiness?

Journalist (there still are a few) Win Wachsmann gets it. Writing in the HuffPost this week he says:

“Don’t go making huge real estate buying decisions based on data released by realtors and Real Estate Associations whose main goal is to separate you from your hard-earned money. By buying/upgrading/enhancing your lifestyle. Is now a good time to buy? Will prices ever go down? Can I afford to wait?… Evaluate all those housing statistics carefully.”

Okay, back to the kids.

“I’m 26;” says Carmen, “and my boyfriend is 31. We are now in the fairly aggressive process of trying to buy a house. Our real estate agent has advised us that there is no hope in hell of affording a home in Toronto’s core with our budget (piddly $400,000 pre-approval + our $100,000 down payment).

“My question for you is, what the hell are we supposed to do? We are feeling the pressure and almost bid on a condo this past week that was sufficient at best. For two people who are on the cusp of affording property and could be seriously hurt by not purchasing now (should prices continue to rise in the next couple of years) it seems crazy not to go for it. I feel like if we had a $700,000 budget, and we held back now but prices still went up, we could buy in two years and still be able to afford something. But that’s not the case for us, and that I why I feel so stressed at the thought of not buying…But you blog makes me think I shouldn’t.”

Now to Pat. “Please feature my situation in one of your blog entries,” he says, “and I can be a great case study of what to do or not to do in Raincouver.

“My wife and I have recently been blessed with a beautiful baby boy. We are 34 years old, we decided to wait a bit on the baby thing so that we are more financial sound, I really want to be careful on our next move as I don’t want to jeopardize my families’ future, I’m counting on you and your readers for advice.

“We purchased a condo in 2007 in Yaletown, Vancouver, a yuppie side of town. Yes, I was stupid enough to do it. We bought at 347k, the place is now worth 380-400k. Mortgage sits at 160k now with a 2.5% interest rate up for renewal Q3 2014, we’ve been able to pay a lot due to we are great savers and don’t have a car. The problem is that this is a show box (600sq) and with the baby, I’ll give it max a year to survive here. So in max a year, we’ll have to get more space, either renting or buying.

“As I know that the condo market can crash on us anytime, I decided to diversify so now we have around 200k in cash/fixed income/equity investments. IF the condo market crashes, at least we’ll be able to eat. So my strategy is: don’t upgrade (buy), find a rental (won’t be cheap either), sell the condo, and have liquidity. We’ll go back to the RE market in a year or two, when I expect things to be more sane. My brother in law things I’m an idiot. What do the blog dogs think?”

Well? Let’s have it.

Is Carmen a dizzy nesting female by thinking they may be ‘seriously hurt by not buying’? Is Pat playing it safe, or being a total wuss in not grabbing a home for his family? Is the BF a piggybacking dink for not contributing more to the real estate fund? If Pat was going to breed, why did he irresponsibly pay $350,000 for a hipster box? And why are they all obsessed with getting a mortgage instead of finding their souls in Morocco?

Buy now or buy never? What a ruse.

234 comments ↓

#1 Eliasz on 12.02.13 at 9:16 pm

Thanks for the post. As always a great read.

Could you send some blog dogs over to us on Reddit? http://www.reddit.com/r/PersonalFinanceCanada We could use some help from the well educated commenters here

#2 Michael Wolf on 12.02.13 at 9:16 pm

What happened to being scared of commitment and remaining flexible. Why does my generation choose granite countertops over liquidity and freedom? We’re not boomers – the economy is more competitive now and mobility is paramount to building a career.

#3 DM in C on 12.02.13 at 9:17 pm

Carmen: Really? REALLY? Rent. Save yourself. Housing can be an albatross — you have $100k in the bank. Take $20k of it and travel. Live before you tie yourself down.

Pat: Maybe your brother in law is an idiot. Who care? Does he pay your bills?

People always give such power to peer pressure, marketing tactics and in-laws. WHO CARES WHAT THEY THINK!?!

Are you mentally strong or weak? I suspect there are many weak people out there.

http://www.forbes.com/sites/cherylsnappconner/2013/11/18/mentally-strong-people-the-13-things-they-avoid

#4 Steve French on 12.02.13 at 9:21 pm

In my day, when i was 28 i was backpacking through Nepal, India, and Thailand, and other inexpensive countries. $10,000 for 6 months of backpacking.

That wuz back before the internet though. We only had Lonely Planet books back then (early-mid 90s).

Broadened my mind. Not a care in the world. Certainly wan’t trying to become a debt slave with a mortgage.

#5 totalinvestor.com on 12.02.13 at 9:21 pm

Does that scale belong to Rob Ford?

#6 doomsday prepper on 12.02.13 at 9:24 pm

First…ahem…they should buy a piece of land in the countryside to grow food on

#7 [email protected] on 12.02.13 at 9:26 pm

When will cities allow affordable housing? can you build something like this in any province ?

http://cdn.goodshomedesign.com/wp-content/uploads/2013/11/flatbed-trailer-house.jpg

#8 TnT on 12.02.13 at 9:27 pm

At some point the “Buy Now or Buy Never” statement became true for New York, London, Paris etc….

#9 Alison on 12.02.13 at 9:27 pm

I feel for Carmen. The $500,000 to $999,999 space in Toronto is basically yuppie outbidding leverage hell at the moment. My husband and I (me 31, him 32) rent in Riverdale, $2,500 per month. Pricey, but much less than we’d be paying in a mortgage and I being in the securities industry manage our investments well. We are both professionals; I net over $200K a year and he hovers between $100K and $150K. BUT I have extreme discomfort with the idea of purchasing a home in Toronto at this time, and I can’t help but think, well, if we (with no kids, good health and good jobs) don’t feel OK with it, what the hell is holding the market up?

We may end up doing no better in the end by waiting — mass stupidity has a longer lifespan than you’d think — but the new plan is to keep renting and simply get the point, a few years from now, where we can comfortably buy something over $1M (where there can be some bargains, relatively speaking, to be had) and stay in it for 20 years. But that plan sure as hell doesn’t stop everyone we know from encouraging us to BUY BUY BUY NOW or else die alone in a rental trailer filled with cockroaches and the smell of regret.

#10 soma on 12.02.13 at 9:28 pm

I don’t know man – I hear you whining and trying to make a point about the pointless situation.

Do a simple math:
Let us say you get a $700000 mortgage at the “superinflated” “crazy” market of today at 3.25 % (5 year term / 25 yr amrt) you are looking at paying
monthly $ 3403.17. Right ?

Now let us say you are the Great Crystal Ball Gazing Seer you pretend to be, and the market crashes really bad and you are able to scoop the same deal at – let us say – $575000 mortgage in two years and by your predictions the mortgage rates then will be let us say 5.25 %, then with same term and amrt you are looking at paying $ 3426.53.

So you are damned if you buy now and damned if you wait.

Pick up which “damned” you like :-)

#11 J.P. on 12.02.13 at 9:29 pm

Rent….for sure. We cashed out about a year and a half ago and watched our investment grow….a lot! Moved across the street for the first year and enjoyed a $800,000 townhouse…brand new first occupants. A little pricey but behind us were our investments making double what our rent was for the year. The children didn’t have to change schools and it was luxurious. 6 months ago….moved into a detached for $400 less a month than the first and we had twice the home. Same school, more money in the bank, and our own backyard. Our neighbours…paying twice as much to own….we just picked up the phone to tell the landlord that something was broken and needed fixing…may never own again. Not paying the Toronto land transfer tax, capital gains tax, or the commuter tax (2hr drive) ever. Get out while its good and let the losers own.

#12 Drill Baby Drill on 12.02.13 at 9:30 pm

Carmen please take a valium and wait it out for 2 years. Pat sell your condo now and retrench then wait it out for 2 years. The upcomming real estate correction is a slow moving train wreck. Both of you please ignore the RE husksters who only care about their sales volumes and not your families well being.

#13 Got out in time on 12.02.13 at 9:33 pm

Ahhh Morroco,
Was there with wife and kids in 2010. Great food, great times and memories. And That was after spending a week in Barcelona.
Just to clarify, I am renting and I am proud of decision to do so.

#14 Serge on 12.02.13 at 9:33 pm

GTA Weekly Drop – December 1, 2013
http://gtapricedrop.blogspot.ca/2013/12/gta-weekly-drop-december-1-2013.html

#15 pathcontrolmonk on 12.02.13 at 9:36 pm

“Buy now or never” works on the assumption that people must stay in Vancouver forever. If you work in a job where your income is only 1/4 of what other countries / cities pay, you would likely move to where you can earn more. So, why is the opposite not true in regards to living costs that are 4x other countries/cities. Vancouverites have options like everyone else but have been brainwashed by the idea of “best place to live”.

#16 Van Isle Renter on 12.02.13 at 9:38 pm

Rent. Definitely. If you think the stress of wanting to buy is big, wait until the stress of a massive mortgage and payments settle over you. That can be a marriage killer.

On the other hand, if you don’t want kids, a massive mortgage is a better contraceptive than a 55″ HD TV in the bedroom. The fear will keep you up all night and your hubby down.

#17 Snowboid on 12.02.13 at 9:42 pm

My advice is to rent, at least for a couple of years as condos are high risk almost everywhere in Canada.

We are currently sitting in an ocean-front condo which rents for $ 1500 US a month – or could buy it for $ 169,000 US. 2 bed, 2 bath – 1200 sq ft!

Of course we also have to put up with $ 2 beer and shrimp dinners at $ 10 per 3 lb feast – but it’s a semi-annual ritual trip south now.

Happened to say hello to another couple earlier today, turned out they are from West Kelowna! There are several AB and BC plates in the lot, we thought we were getting away from all the Canadians in Phoenix by heading south!

Off to the bar now, for “quisiera quattro cerveza por favor”

#18 Bob Rice on 12.02.13 at 9:42 pm

Carmen, just RENT! Even if that means doing so for a long time… it’s shelter! Enjoy your life… your BF might not even be in the picture in a year… Why would she even contemplate buying a property when you’re not in a committed relationship… I’m sorry, anything outside of marriage is not a commitment… any other arrangement is easier to get out of. My wife and i are renting a great house and will continue to do so for years… maybe we will buy one day, but not of prices remain stupid high.. we don’t care b/c our relationship’s success and our happiness isn’t predicted on “owning” a tiny piece of crappy real estate.. And you’ll never be able to go on a holiday…or eat a decent me again..

And if the vancouver dude thinks prices are gonna go down in a “year or two” he’s nuts.. the agents are right.. they won.. prices will continue to go up, at least for the foreseeable future..

Get over it hornies! It’s bricks and mortar.

#19 pinstripe on 12.02.13 at 9:43 pm

Never ask a barber if you need a haircut.

Apparently, now is a good time to buy a car.

Make your own decisions. do not depend on a third party to do it for you.

There is no right time to either purchase or sell a house. Houses are bought and sold every day.

#20 Babblemaster on 12.02.13 at 9:54 pm

Hate to say it, but I now think “buy now or never” is valid. That is if you’re talking about Toronto or Vancouver. Rates are NOT going up for a long time and there is every reason to believe that governments will do everything possible to keep RE prices up. That includes keeping rates artificially low and subsidizing the banks, CMHC, new buyer schemes, etc.. They’re too politically invested in maintaining high house prices.

Bottom line is that there just doesn’t appear to be much downside risk to buying RE, though many people, including myself, have been saying that there is for the last 5 years. And, we’ve been spectacularly wrong.

#21 Bob Rice on 12.02.13 at 9:55 pm

#TnT “At some point the “Buy Now or Buy Never” statement became true for New York, London, Paris etc….”

You’re not comparing Toronto or Vancoiver to Paris or London, are you? God I hope you’re not…

You could combine all the “best” qualities of canada’s cities and they wouldn’t amount to the shittiest slums of London.

#22 omg on 12.02.13 at 10:01 pm

Really hard for anyone on this blog to give advise about housing – let’s face it we have all been waiting breathlessly for the past 6 years for the bubble to burst.

Prices will eventually revert to the normal price/income multiples which are magnitudes lower than what they are currently. But whether this reversion will happen in the next 5 years or 25 years is anyones guess.

Best advice – if you do buy run a “stress test” on yourself and see if you can afford the mortgage at higher interest rates or with one of you off work for a year. One or the other (or both) has a pretty good chance of happening in that time frame.

#23 Nemesis on 12.02.13 at 10:03 pm

Hmmmm… Ok, I know what SteveMiller would say:

http://youtu.be/6MneA9pgLVw

#24 Flamed out in Kitchener on 12.02.13 at 10:05 pm

My wife and I have spent the last three seasons carefully assessing a house purchase. Looking for good value in an older (1960’s) build, with reasonable upgrades. Every time we get close, we lose out to some house horny couple who probably feel this is their only chance – we refuse to enter into a bidding war of any sort. Even with the local Blackberry meltdown, any good house in a good area goes fast, as long as it’s priced appropriately. We are driving our realtor nuts by not moving faster on a purchase, but will only bid when the numbers make sense. The one thing we’ve learned in the process – there will always be another opportunity to buy another house – it’s just a matter of time. In the meantime, will keep a large down payment liquid (30%) and wait for the right situation. Patience … and a little cash, is king.

Thanks for all the great articles Garth … and the good common sense. Too bad the general population has none.

#25 Smoking Man on 12.02.13 at 10:06 pm

Stressed out!!!

Really!!!!!!!!!!!!!!

How do you think I feel man.!!!!!!!!!!

My days at the tax farm are reaching an emotional end. I need to talk the slave masters into getting me an apprentice to pass down the craft, the shit I do behind the scene in stealth to keep the lights is incredible, like being deaf and blind playing pinball. Not mention the hundreds of apps that I built that never break.

Been here far too long, 3 years a life time by my standards, wasted time, much longer than I ever planned, but I like these assholes and don’t want to split till things get finally stabilized, it’s close.

My boys at the farm will one day get the keys to the gulfstream, I can see, I can feel it. I know it. I would never tell those smoking men this in person but they are amazing, smart as shit, cream of the crop in there craft with the good fortune of being The Alpha male’s, alpha male.

This is what happens when and high a level obedience certificate is in the hands of Smoking Men.

Who knows, one day in the distant future I might make some bad bets, lose it all, and want one more trip to Vegas. I will be hitching a ride with them, hey boys remember me, the lowest paid slave at the farm, You got to admit, boys, I played my role very well when you where positioning, projecting alpha and climbing the stairway heaven.

But let’s get serious dogs.

It’s imposable form smoky to bet bad. I have the UCC.

But god damn it, I got to get this one book out of me, I’m running out precious of time.

I can’t do it with distraction of the casino on the weekends, the daily markets and my bets, riding the train with zombies who have lost their tongs, void of facial emotion, and who live in fear of eye contact. They have mastered the art of hiding their cement faces into a 4 inch screen.

I’m going stone numb ridding daily with the living dead, it’s depressing.

I need stimulation, or even better, isolation. This middle nothing world I now live in is killing my creative time on this planet. I feel like I’m slowly turning to nothing.

My only joy in life right now is coming here and sharing what ever wacky demented lie or thought that pops into this bald and booze bashed coconut.

I enjoy all the chirps and the praise. That is just f-ed but it’s true.

I was born to be a story teller, and man have I got one in here somewhere.

I just got figure out a way to do it. A blog dog suggested the other day I should talk it into a tape recorder. That’s great idea but won’t be good enough.

I need place of Isolation, maybe one or two fellow crazies with me, the need for a captive audience to piss off and please, to love and hate.

We get a motel in Yellow knife in mid Feb when going outside can be fatal,

We stock up with enough wine, smokes and recorder batteries to last a week. That’s all it will take.

And shit…..

If it’s really good.

I might just give it away for free…..

#26 Rent 4 Such a Nice Life to Enjoy on 12.02.13 at 10:11 pm

Hi Everyone,
I really enjoy renting and enjoy investing in ETFs and living a low stress, high leisure life.
I enjoy looking at real estate and watching the shows and not buying because it more fun to imagine and enjoy dividends than get stuck in a mortgage with taxes and renos and maintenance and insurance. I wish the very Best for Carmen and Pat and Garth too!

#27 Rexx Rock on 12.02.13 at 10:17 pm

Thank god we have people like Garth who tell the truth about the lies and propaganda the media and goverment tell Canadians to buy into the ponzi houseing bubble.Get everyone to be debt slaves so the big banks can make their big profits.Oh well thats why we’ll have low rates like Japan to prolong this scheme.

#28 Vangrrl on 12.02.13 at 10:17 pm

Garth- you say ‘If Carmen was going to breed why did he irresponsibly pay 350k for a hipster box?’ ??? Carmen and Pat aren’t partners… Mix up or am I missing something?

#2: I think a lot of your generation think they are middle aged at 30? Like they’re only going to live to be 50 or something so they have to do all this boring stuff expected of middle aged people. It’s weird. 100k at 26 and 31 and they want to dump it in real estate, geezus. My head would have been spinning trying to figure out where to go first if I’d had that kind of money so young. Of course I could never have sat still long enough to amass so much. I remember thinking I had saved lots (2 grand) in my early 20s (early 90s) and quitting my job to go travelling in Europe bbecause I was afraid I was missing out on living.
And I was living and partying in the Rockies at the time, haha.

#29 Retired Boomer - WI on 12.02.13 at 10:18 pm

Seen this flick once before. Ends badly.

Carmen RENT!! Your BF is just a ‘rental’ so should your housing be. If that changes, wait a couple of years to see if you want to keep each other. Gee, sometimes (45% of the time) things do NOT work out.

Pat sell that shoebox while you can -IF you can! RENT for a couple of years, feed the savings, and let the earnings lower your rent.

My crystal ball is not working, but here in the US housing melted. Expensive areas melted further, and are taking longer to recover. How much can you afford to lose? More than a few markets lost 50% of their PEAK prices. Where are your prices right now? PEAK or, darn near peak.

A house should be bought with comfort to your income. Much like stocks, you buy after a decline, not when they are within spitting distance of a recent “high point.”

Good luck, there will be cheaper prices in time.

#30 Shawn on 12.02.13 at 10:20 pm

Revert to the Mean, means what?

I had heard that phrase many times over the years in regards to the stock market. What did it mean I wondered? Stocks go up long term so surely they don’t decline 50% to get back to the average between zero and today’s price? (That would be the mean, no?)

Same for houses, they will not revert to the mean average of their prices from all of time and creation, THAT is FOR SURE.

Later I learned or deduced or something that “revert to the mean” means that the average gain per year reverts to the mean (that is the claim) That houses and stocks are destined (according to this claim) to climb at some certain long term average per year, which plots as a straight line of a log chart.

If currently above the line, the price is expected to fall eventually back to the trend line. If currently below, to rise to the trend line.

I guess most people (although they may have a lot less than my many years of math and finance education at the university level) probably understand immediately that revert to the mean, means the price reverts to a long term straight trend line when plotted on a log chart (a long term constant percent gain).

I am never afraid to say when I don’t understand something. Which is often. Others should not be afraid either. Too often people pretend to understand most everything. If they really did they probably be a bit richer.

#31 buysilvernow on 12.02.13 at 10:23 pm

Ok bearded one and hot shot blog dogs….listen real estate is a need…even moreso when you have a child. DO u have kids Garthy Parthy??? U wanna rent with a child so that in a year or less the landlord kicks u out because his son has to move in? No control over your own life and the life of a baby? You want the kid to go to a good school… so buy a house in a good area and palnt roots…that’s a family….a home.

#32 Paul on 12.02.13 at 10:26 pm

When your agent says buy now every thing is going up and no end in site.
Tell him to pick a great rental that’s for sale and offer to go partners with him.
You will see what he really thinks

#33 X on 12.02.13 at 10:27 pm

Carmen – The entire mentally of buy now or forever be priced out, tells you something about the market conditions. And no, it does not tell you to run out and buy.

Pat – compare numbers, there are places out there that actually are cheaper to rent than to buy.

I always try to remember this quote when I am in need of patience or discipline in regards to the markets: “Markets can remain irrational a lot longer than you and I can remain solvent.”

This RE market is no different.

#34 Ripped on 12.02.13 at 10:33 pm

#4 Steve French on 12.02.13 at 9:21 pm
In my day, when i was 28 i was backpacking through Nepal, India, and Thailand, and other inexpensive countries. $10,000 for 6 months of backpacking.

That wuz back before the internet though. We only had Lonely Planet books back then (early-mid 90s).

Broadened my mind. Not a care in the world. Certainly wan’t trying to become a debt slave with a mortgage.
……………………………………………………………………..

Same here man, about 23ish in the early 80’s

This is when Phuket, Bali, Boracay, Chaing Mai, Columbo, Tonga were $1.50 a night nepa huts.

Just wired for sound 24×7 on majic mushrooms, pot or opium. lol

I was gone 2 years traveling through out South East Asia, the islands of the South Pacific, Australia and New Zealand.

Best friggen time of my life bar none!!

#35 LH on 12.02.13 at 10:36 pm

@ 25 smoking man

With pardonable pride, I am “what happens when and high a level obedience certificate is in the hands of Smoking Men”.

LH

#36 Tri State Pat on 12.02.13 at 10:37 pm

#22 omg I agree with you!

Running the numbers with one salary is wise. Renting is the solution right now, and I’m sure as we move forward that landlords will be more than accommodating in being open to lowering initial rent asked.

#37 Shawn on 12.02.13 at 10:41 pm

Revert to the Mean and Trend Lines

hmmm not I have got myself thinking about this…

Imagine that you plot of a log scale the prices of houses for the past 100 years. You use a log scale because that is the ONLY way to fairly present a long-term trend.

You observe a line that rises from the lower left to the upper right corner is a jagged fashion with many ups and downs.

You want to know the long term average growth. That’s easy its ending price divided by starting price raised to the power 1/100 minus 1 and covert to a percent.

You want to plot a trend line. You put a straight line on the graph that starts neat the price of 110 years ago and ends near today’s price and you also try to hmake it so half the time the jagged graph is below the trend and half the time above.

And voila, look the jagged line appears to return to the straight mean line. But wait,

#38 Ex Limey on 12.02.13 at 10:41 pm

Hey Bob #21,

Can I assume that you’ve never been to London? I’m a former Brit who used to live there and I can assure you that even the middle class areas of London can be pretty depressing, let alone the gang infested slum areas.

London is a fabulous place for the ultra-wealthy to have one of their several homes, but for Joe Average it’s pretty sad.

#39 Infused with Opiates on 12.02.13 at 10:41 pm

Sold out to the frankenumbers……but they still have the plain old average and median near the end.

http://www.vireb.com/assets/uploads/11nov_13_vireb_stats_package_5118.pdf

#40 TheCatFoodLady on 12.02.13 at 10:41 pm

First, Carmen & Pat – it’s not easy to ‘put it out there’ for people to pick over & pick apart. Kudos for that. And kudos for admitting you’re not sure what to do. Collecting advice, sifting through it in your own time & coming to decisions best suited for YOUR situation is the way to go.

We don’t know what Carmen or Pat did before they started sweating real estate. Perhaps Carmen spent 2.3 years ‘Amazoning’ for a Smoking Ruin, (oops – Man), in the wildest wilds of the wild, surviving on dew drops, scrap metal & learning 56 now extinct indigenous languages. Pat may have done similar.

Let’s look at their issues NOW.

Carmen – that’s a healthy down payment & pre-approval. It must make your ache with resentment that in many other markets, you’d be in like Flynn on an awesome home. Unfortunately, you’re stuck trying to buy in the GTA. Clearly, you’re priced out of core SFHs for now. The issue seems to be – do you drop your hard earned coin on a condo, hoping the value will rise enough to build some equity? Without knowing your annual income or other expenses, my answer would be ‘no’. About the only folks touting TO condos right now are those heavily involved in the condo industry. Otherwise, there’s a growing consensus that the condo market is overbuilt & poised for a major fall. That’s just capital value. A crucial aspect of success in condo ownership is building management. That’s proving an issue in many buildings. Anyone watching The Condo Games who follows condos didn’t learn but had confirmed what they already knew. Many condos are full of problems that are not being properly addressed – falling glass & leaks may just be the beginning. Special assessments & increased strata fees are rarely in anyone’s planning.

My crystal ball is a tad muddy lately but I’d keep renting for now. Believe me, I understand, over & above the high pressure societal & media marketing, the urge to OWN. We all want to be able to point to a little piece of SOMETHING & proudly proclaim we own it. I rent. If circumstances were far different & I could have it my way, I WOULD own. But no granite or stainless – hate the stuff. Keep saving & investing. Your day will come. You will be able to own & at a level of comfort where your purchase choice won’t keep you awake at night.

Pat – congrats on the new ankle biter & yeah, 600 sq. ft. is tight with a little once crawling around. Unless you’re a minimalist, there ain’t no room for the stuff you have & with a baby, there’s little choice about stuff. I like your plan to get out now… I think prices are going to drop. Sell for the best price you can get & keep investing. I think you’ve done very well so far.

Damned hard to be patient though when it seems everybody is putting on the pressure. It wasn’t all that long ago that families couldn’t afford a home of their own until they were into the 30s. Maybe we’re back to that – bad or good? Doesn’t matter; it may simply be that it’s the way it is.

Housing – rented, owned or any permutation, shouldn’t keep people awake at night. If it is, there’s something wrong.

#41 scanner on 12.02.13 at 10:41 pm

Dr. Doom speaks about housing booms:
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/12/02/these-18-countries-may-have-housing-bubbles-if-they-pop-god-help-us-all/

#42 John on 12.02.13 at 10:44 pm

#21 Bob Rice

“You could combine all the “best” qualities of canada’s cities and they wouldn’t amount to the shittiest slums of London.”

I certainly would not compare VCR or TOR to Paris or London, but the above statement is more ludicrous than the original comment, it that was his intent to compare them.

#43 Shawn on 12.02.13 at 10:44 pm

The rest of that post

… but wait the straight line depends on the jagged line not the other way around.

If the jagged line can be represented well by a straight line then maybe we have case of return to the mean.

Beware of phrases of like prices always return to the mean (return to the mean trend line). It may be more apparent than real.

I am not suggesting house prices won’t fall. I don’t know if they will or not. Does anyone? really?

#44 Smoking Man on 12.02.13 at 10:51 pm

#34 Ripped on 12.02.13 at 10:33 pm
#4 Steve French on 12.02.13 at 9:21 pm
In my day, when i was 28 i was backpacking through Nepal, India, and Thailand, and other inexpensive countries. $10,000 for 6 months of backpacking.

That wuz back before the internet though. We only had Lonely Planet books back then (early-mid 90s).

Broadened my mind. Not a care in the world. Certainly wan’t trying to become a debt slave with a mortgage.
……………………………………………………………………..

Same here man, about 23ish in the early 80′s

This is when Phuket, Bali, Boracay, Chaing Mai, Columbo, Tonga were $1.50 a night nepa huts.

Just wired for sound 24×7 on majic mushrooms, pot or opium. lol

I was gone 2 years traveling through out South East Asia, the islands of the South Pacific, Australia and New Zealand.

Best friggen time of my life bar none!!
…………………………………………………….

Dude’s I did that to, around the same time. But I did it in style. We may have crossed paths.

I had a mortgage and a family with 3 small kids. There was a building rescission here.

I talked building material mfg to cough up loot for me to put their goods on display at international building material trade shows. Charged 5k a pop, could get 20 companies in one booth. Booth travel cost 10k.

I stayed at 5 star hotels, Shangrala was my favorite, and when I got keen interest, and I knew we had some business. I gave the 5k back and worked on commission. usually around 5 to 10 %.

And the best, I learned karoki well. And any dudes that have been there should know what that means.

Screw back packing. 5 Star only way to travel,

bit of brain. no that’s not a pun…..

#45 Tiger on 12.02.13 at 10:52 pm

20 # bablemaster, do you have the basics in math!
Then use it, or just read Garth’s posts!

#46 happy renters in Victoria on 12.02.13 at 10:54 pm

It’s an interesting cultural phenomenon that renting has become an embarrassment yet being mortgaged into retirement years is normal.

Also strange that when people consider having babies many think they need a house and yard for the child. Reality is that it’s a good few years before kids play outside alone – may as well live small (clean less) and go to the playground.

Home ownership does not equal a healthy, happy family. There are plenty of dysfunctional families with lovely homes and likewise healthy families in rental homes.

We sold up in another town and when it came time to move realized we don’t want to play in this insane sand box where fundamentals don’t warrant present house prices. If the worst case scenario is that my kids don’t get to have a dog now or if we eventually have to move before we’re ready, so be it.

I think our three children benefit from this decision. They have traveled extensively, we are not financially stretched and I hope that they will learn that more important than owing bricks and mortar is creating a sense of home within the family no matter where we live.

I get a guilty giggle out of shocking people who ask when we bought our house and I tell them we rent.

Only time will tell if the decision is a good one long term, but for now we feel it’s the right one for our family.

#47 NorthOf49 on 12.02.13 at 10:55 pm

The builders are getting into the fib marketing as well. Check this “news” article on Hamilton area builders, meant to instill the panic in the fencesitter buyers. ‘We’re running out of land!’ ‘Prices will only go higher!’ ‘Buy now or perish!”

http://www.thespec.com/news-story/4246375-hamilton-house-prices-on-the-rise-builders/

See if you can figure out which comment after the article is mine.

#48 Nemesis on 12.02.13 at 10:55 pm

“We stock up with enough wine, smokes and recorder batteries to last a week. That’s all it will take.” – Homme du Tabagisme

“There is nothing to writing. All you do is sit down at a typewriter and bleed.” – Ernest Hemingway

BonusZen:

http://youtu.be/Jvxl9KtgKXE

[Hehehehehehe….]

#49 [email protected] on 12.02.13 at 10:57 pm

this guy is a good RE investor, smarter than the avg joe fresh

http://www.thestar.com/news/gta/2013/12/02/engineer_accused_of_trying_to_give_shipping_plans_to_china_was_procommunist_says_former_boss.html

The house, which Huang bought for $365,000, was paid off and remortgaged several times. Huang currently has an outstanding mortgage of $470,000 on the property. The address is listed on a $42,415 loan Huang took out in November for a 2012 Volvo.

Huang is also listed as the owner of five townhouse properties in northwest Toronto, near Finch Ave. and Martin Grove Rd. The properties were purchased between May 18, 2011 and March 28, 2013.

He paid between $68,800 and $114,000 for the two-storey townhomes. One tenant, who did not want to be named, said she paid $550 in rent and lived with four other people. Many who rent at the homes are students at nearby Humber College.

#50 Van guy on 12.02.13 at 11:01 pm

Garth,

Van SFH avg price just hit an all time high. Whats next???

#51 Smoking Man on 12.02.13 at 11:03 pm

#48 Nemesis on 12.02.13 at 10:55 pm

Je ne peux pas le faire comme ça. Tout devient blanc

Typing in this little shit window works, a big ass word doc page. ahhhhhhhhhhhhhhhhhhh

nothing comes out

#52 Ripped on 12.02.13 at 11:03 pm

#38 Smoking Man

Screw back packing. 5 Star only way to travel
……………………………………………………………………

You never saw a thing compost, 2 Star didn’t even exist in those places. lol

#53 Smoking Man on 12.02.13 at 11:04 pm

#35 LH on 12.02.13 at 10:36 pm
@ 25 smoking man

With pardonable pride, I am “what happens when and high a level obedience certificate is in the hands of Smoking Men”.

LH
…………………………………
Je vous déteste

#54 Randy Macho Man Savage on 12.02.13 at 11:06 pm

#25 Smoking Man on 12.02.13 at 10:06 pm

Stressed out!!!

Really!!!!!!!!!!!!!!

How do you think I feel man.!!!!!!!!!!

Smoking Man, you’re a legend around here. I look forward to your daily posts, as I’m sure many others do too.

Do what you have to in order to find that inner peace. If it means staying at the farm, then stay, if not, then explore your options.

#55 Christopher Lackey on 12.02.13 at 11:08 pm

The “priced out” study is tragic-comic. As is the stuff we read like this, parents literally betting the farm on their kids RE leverage

http://www.thestar.com/business/personal_finance/2013/11/30/the_perils_of_helping_kids_buy_a_home_weisleder.html

Having said that, if you like where you are living, can afford a house there for about what you’re paying in rent, not cleaning out your net worth for your cash down, and have your eyes wide open about inspection, lawyer, land transfer and reno costs down the road, it could still make sense. It’s still dirt cheap to borrow money, and not everywhere has lost their minds to the degree that residents in my home town, Toronto, or Vancouver , have.

I’ve been laughing about Canadian RE here for a long time. But remember that blog dogs don’t need to be as dogmatic in the other extreme as Brad Lamb, Cameron Muir and their pumper ilk

#56 Tiger on 12.02.13 at 11:10 pm

25# smoking man! By by, you should try writing horror stories, oh yeah, deceit stories, how drugs can make it happen for yah! Certificates are garbage!
I know it ,you are already recognized by rob ford!
Just an assumption bro!
I’ve got an app for you! It’s called looser…….

#57 TheCatFoodLady on 12.02.13 at 11:10 pm

#47 – Jimmy – is that you?

Comment earlier about Very Smalls, (babies & toddlers), not needing a back yard, etc. because you’re not letting them out on their own anyway. Very true as I cast my memory back to the stone age.

As to the argument that a landlord can punt you out any time for his brother in law, or something like that. In some markets maybe – but if you pick the right property, (go a teensy bit down market), you can end up being the most reliable tenant in a landlord’s portfolio. Succeed in doing that & you’re set for as many years as you choose.

#58 Smoking Man on 12.02.13 at 11:24 pm

#56 Tiger on 12.02.13 at 11:10 pm
25# smoking man! By by, you should try writing horror stories, oh yeah, deceit stories, how drugs can make it happen for yah! Certificates are garbage!
I know it ,you are already recognized by rob ford!
Just an assumption bro!
I’ve got an app for you! It’s called looser…….
………………………..

Nice you figured out the name of the book.

The Losers lounge.

#59 duffy dawg on 12.02.13 at 11:24 pm

Even though interest rates are now at historic lows compared to the 80’s when defaults were in some cases, caused by 16-19% rates, interest is still a substantial cost in a mortgage. Would it be better if the Fed was in charge of lending money @ 0 interest rate…. they could then put the brake on real estate prices through various means….Banks would make their money through banking fees and investing up to 20% of their deposits in stocks and bonds …….potential investors would have to go to the stock market to build their wealth as they do today…….although tax dollars would be lost from the profits of large banks more small businesses would start and succeed, lowering unemployment and raising GDP…..
was that a dream or a nightmare I just had…….

#60 The American on 12.02.13 at 11:25 pm

Sorry, Canada. :-) Maybe we’re sending you our seconds.

http://news.yahoo.com/blogs/oddnews/woman-buys-‘new’-ipad-from-target-with-past-user’s-personal-information-212926070.html?vp=1

#61 mick on 12.02.13 at 11:26 pm

nice article garth as always, thank you.

just a small grammatical suggestion that i believe is germane to your discussion on being mindful of investor psychology (especially in this market, its a zoo).

in my view, it is critical to make the distinction between price and value. they are not the same. price is what you pay and clearly value is what you get. the issue in real estate right now, at least in canada, is that you pay a lot but get very little value.

so when you say “Values always revert to the mean, and the more extreme they deviate from this, the more dramatic is the correction.” i believe it is more useful to say something like “prices tend to revert to value over the longterm”. “mean” is irrelevant unless by luck it relates to value (i.e., the cash flows of an asset).

its a subtle shift but one that allows for the confusion of speculation with market efficiency, in my view at least.

i would suggest renting until net yields are compelling enough to enter the market as a homeowner.

after all, why would you do otherwise?

#62 Garth's Disciple on 12.02.13 at 11:30 pm

I can’t speak for the rest of the country, only for my realm of knowledge that is the southern Ontario strip from downtown TO to Burlington/Hamilton. And all I can say is that people here are all under some real estate spell/trance and don’t even think twice about making themselves debt/mortgage slaves for the rest of their lives. It is insane that someone will freely pay $950k to the owner of a mediocre house who only 3 years ago himself paid $650k. You are better off moving to a small town, buying the same house for $150k and getting a job in the local Walmart. Think about it.

#63 Freedom First on 12.02.13 at 11:30 pm

Okay, we have been given the go ahead by both couples to offer advice.

First, I congratulate these 2 couples for being, if maybe not financial experts, both are relatively level headed and certainly not in financial dire straits. Very good!

I do see Pat and Carmen and SO’s facing a significant financial decision. First, Carmen, relax, enjoy your life, keep managing your finances and growing your net worth. Time is on your side, and the RE market will correct, and when it is time to buy, you will be calm, and absolutely know it is the right time. Read Garth’s previous posts, all of them, while still reading his posts to come, and ignore everyone else, especially [email protected], the MIL, BIL, etc. Do this, you win big time over your WHOLE life, as you will be financially literate and not become a “Greater Fool”.

Pat. Congrats on your new baby boy! Now, first, you’re not the idiot, but your BIL is. Pat, time is also on your side. Get a very good Realtor right now, listen to him/her and price to sell your condo immediately. You, wife, and baby @ 600 sq. feet does not a happy family make, and this RE market is/will definitely correct. Garth is right on this, and that is why the RE pundits/pre-verts:) hate his guts. Pat:”Be happy right now”. Simply rent a bigger place, keep managing your money well and growing your net worth. Now simply read what I wrote to Carmen.

I wish both of you couples well, and also, asking Garth for help was a smart thing to do, and I admire your humility and open mindedness for seeking advice. Very wise.
Lastly, Garth is on your side, as he helps people on a daily basis, is one of the “Good Guys” you can trust, genuinely wants the best for you, all while steadfastly speaking the “TRUTH” on his blog, in radio and tv interviews, in msm. He does this while never becoming aroused(except by Dorothy, and possibly the Amazons) and even when he was a Member Of Parliament, his unflinching gaze, steel gonads, and iron like abdomen were unpenetrable, as he strolled out of the House with his manhood intact, having earned the respect of the Canadian people as being a man of truth. Oh yeah, the “dawgs” don’t want to see you “victimized” either. I thank God for Karma.

#64 The American on 12.02.13 at 11:32 pm

“If it got into the wrong hands, that could be pretty dangerous. As soon as I finish night shift, I’m gonna go to Target and talk to them, see about returning it so that I can get a brand new one… ’cause as far as I’m concerned, that’s not brand new.” Sorry, but I can’t stop laughing. Of course, I’ve had three Jack Daniel’s on the rock, an Ambien, an a couple tokes.
http://news.yahoo.com/blogs/oddnews/woman-buys-‘new’-ipad-from-target-with-past-user’s-personal-information-212926070.html?vp=1

#65 heineken on 12.02.13 at 11:33 pm

morocco is a shit-hole.
camel dung everywhere.

save your hard earned after-tax dollars and spend your money on a property.
lowest mtg rates ever!!!! free money !!!

when you move in buy a bag of weed. next go around the neighbourhood and collect all the dog shit you can gather. then put all this crap on the living room floor, turn the furnace up to 40. buy 15 bags of sand at the hardware store and spread it all over – next, put on abba’s greatest hits, throw your garbage all over your front lawn and you will feel like your in downtown Marrakech. remember to talk slowly when your high.

#66 Mayor of Transcona on 12.02.13 at 11:33 pm

31 buysilvernow on 12.02.13 at 10:23 pm

Your sentiment is relatable but your name and punctuation and text message slang are ridiculous!

I make an ok dollar for someone in Garth’s “people of the week” age demo (or “Gen X hornies”) and am lucky to live in Winnipeg where madness came late. BUT I’ve always made the best real estate decision for my family and my pocketbook. I’m onside with every financial planner metric and I managed to have a townhouse with one baby and a modest bungalow with two babies (that might be the mystical “forever house”).

If you don’t make enough money to live in TO or Vancouver LEAVE. There’s life out there. I promise. And you don’t have to have a suitcase of buried metal in the backyard.

#67 NorthOf49 on 12.02.13 at 11:40 pm

#57 – A prize to the Lady with the CatFood. :)

#68 David on 12.02.13 at 11:40 pm

And why not buy never?

#69 JUNO on 12.02.13 at 11:42 pm

Sorry Guy, if your continually in the RED, your not a good saver. Basic Accounting 101 and 201.

I bought my first home and had it paid for in 2.5 years.

(PS. I lived at home and rented it.)

2nd home I bought live in it and rented it to 3 co-workers . Had that one paid for in 1.5 years.

Your not a saver, your an amatuer. So lose those Starbuck coffee and eat mac and cheese for a few year.

If your not willing to sacrifice your not a good saver

#70 No Debt on 12.02.13 at 11:42 pm

#10 soma – Let’s play devil’s advocate with your scenario and ask – What will have happened to the person(s) who buys today at $700k, in two years from now?

For one, they’re out of pocket $125g’s.

Second, they’re assured to be looking at a renewal that is going to be extremely painful.

#71 DON on 12.02.13 at 11:43 pm

#18 Bob Rice on 12.02.13 at 9:42 pm

Carmen, just RENT! Even if that means doing so for a long time… it’s shelter! Enjoy your life… your BF might not even be in the picture in a year… Why would she even contemplate buying a property when you’re not in a committed relationship… I’m sorry, anything outside of marriage is not a commitment… any other arrangement is easier to get out of. My wife and i are renting a great house and will continue to do so for years… maybe we will buy one day, but not of prices remain stupid high.. we don’t care b/c our relationship’s success and our happiness isn’t predicted on “owning” a tiny piece of crappy real estate.. And you’ll never be able to go on a holiday…or eat a decent me again..

And if the vancouver dude thinks prices are gonna go down in a “year or two” he’s nuts.. the agents are right.. they won.. prices will continue to go up, at least for the foreseeable future..

Get over it hornies! It’s bricks and mortar.

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

YUP!

#72 Entrepreneur on 12.02.13 at 11:45 pm

To rent or buy now and be locked out. The answer is in the common statement that housing has become unaffordable. If housing is unaffordable now (has been unaffordable for a long time) that translates into less buyers.

Also, with the real estate making false number to get group emotions in a frenzy, what is the real truth out there?

#73 45north on 12.02.13 at 11:48 pm

Carmen in Toronto
Pat in Vancouver

think first about your job/career. What is your best move to keeping your job/ advancing your career?

I did very well with one promotion in 40 years ( in the Federal Civil Service ). If you have to get a promotion because you need to pay the mortgage then you’re gona burn out.

#74 harboursnug on 12.02.13 at 11:49 pm

#65 heineken on 12.02.13 at 11:33 pm

morocco is a shit-hole.
camel dung everywhere.

save your hard earned after-tax dollars and spend your money on a property.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

I assume your talking Toronto?

#75 Shocked in awe on 12.02.13 at 11:50 pm

Played hockey with my buddy yesterday (successful realtor). Selling his home and two of three rentals. He’s gonna rent and bank money and let somebody else service the cost of owning. That’s gotta tell you something

#76 scanner on 12.03.13 at 12:01 am

Hmmmm Nuriel must be getting nervous – same article as the WaPo in another mag:
http://www.project-syndicate.org/commentary/nouriel-roubini-warns-that-policymmakers-are-powerless-to-rein-in-frothy-housing-markets-around-the-world

#77 REIT guy on 12.03.13 at 12:01 am

That’s really interesting and all but WTF
Is happening with XRE?

#78 Bottoms_Up on 12.03.13 at 12:02 am

Carmen: with your budget, avoid buying a condo (where you’ll lose money). Either rent in your ideal location, or buy a semi or townhouse on the outskirts of T.O.

Pat: sounds like you have good ideas floating around in that noggin’. Sell the condo, and rent (potentially in a good school neighbourhood) a bigger space (you kid will love it when he/she turns two and wants a bigger space to run around). Don’t expect a major correction in 1-2 yrs. This is going to be a lifestyle choice, if you do rent commit to doing it for 5-10 yrs. OR, leave raincouver. The cost of living is atrocious, and you can have a better lifestyle elsewhere in Canada.

#79 Andrew Woburn on 12.03.13 at 12:05 am

#2 Michael Wolf on 12.02.13 at 9:16 pm

What happened to being scared of commitment and remaining flexible. Why does my generation choose granite countertops over liquidity and freedom? We’re not boomers – the economy is more competitive now and mobility is paramount to building a career.
================================

“Mobility is paramount to building a career”. True now and always was.

“Why does my generation choose granite countertops over liquidity and freedom?” A really good question that baffles this old hippie. How is it cool to be locked into a life of debt at 30. What is the point of chaining yourself to a concrete shoebox because it’s walking distance to 40 top restaurants that you can’t afford to visit because you are a mortgage slave? What is exciting about living in a petrified forest where everything at ground level is corporate chains because no funky little stores can afford to be there? Vancouver used to be full of quirks but now it has been totally condomized. Where’s the fun?

#80 Bottoms_Up on 12.03.13 at 12:13 am

#55 Christopher Lackey on 12.02.13 at 11:08 pm
—————————————————
Being ‘priced out’ is the truth. It has been the truth for decades. Think about it. There is a limited supply of SFH in good locations…and over the years, population growth and net worth growth drives those (and similar homes/locations) out of reach of the average family.

What ends up happening is that the DEFINITION of the average home changes. In Vancouver, the ‘average’ home is a basement apartment. In Toronto, it’s a condo. In Windsor, it’s an SFH. It all makes sense given the population growth and wealth accumulation out there.

So, yes, the average family can afford the average home, it just all depends on what the definition of average home is to you (and also depends on the supply and location of all the various dwelling types).

#81 Longterm on 12.03.13 at 12:19 am

#31 buysilvernow

You clearly can’t separate wants and needs.

My wife and I had a baby in London (UK) in 2011 while living in a rental flat. This is after renting in London for eight years and travelling to 43 countries with over 600 days of travel. Ten months after our dughter was born we ditched the London flat and then rented a house in Merida in Mexico for three months over the winter where my daughter had her first birthday. We then returned to London in the spring and moved into a small 450 SF one bed flat and stayed there for ten months without any difficulty. We then got the opportunity to move into a flat in Kew, west London with the toddler [she had her second birthday there] and we were able to visit Kew Gardens three times a week. We then sold a small business we’d set up, left that rental and went to Greece for an extended holiday. Finally arriving in BC this past spring. We then spent 12 weeks living in a mini van through the Okanagan and up and down Vancovuer Island and the Gulf Islands. We are now in a rental house on on of the Gulf Islands, which is great. Heat is included and we have it pinned.

To be clear, we do own – 1/5 of a rental duplex in Cowtown that I never lived in. We also just bought 5.5 acres on our island to build a house next year. This wasn’t about needs and wants though, it’s to go through the experience of building our own house by hand. If it doesn’t work out here over the next few years for us then we’ll go back to London or maybe try Germany or the Netherlands or possibly Singapore or Hong Kong where we have friends from the London days.

Along the way our daughter will simply continue to adapt and go to whatever school is local or my teacher wife and I will educate her at home. Already it’s normal for her to have friends in other countries and to hear other languages spoken. So much the better.

All this renting has given us real control over our lives not the phoney control of owning a house and watching life and the world pass you by from your mortgaged windows. As renters we can and do leave whenever we want to try somewhere new, have life experiences and enjoy ourselves.

#21 Bob Rice

‘You could combine all the “best” qualities of canada’s cities and they wouldn’t amount to the shittiest slums of London.’

London is beyond great. I spent a decade there and will return to live there again but I can assure you that you are dead wrong in more ways than I can count.

#82 prairie person on 12.03.13 at 12:20 am

There have been a lot of negative reports re Victoria but the bldg hasn’t slowed down. I’ve been waiting two weeks and will have to wait two more for railings to be put up. The contractor has two apartment blocks to do. None of the contractors I’ve dealt with recently are hurting for business. Maybe that is coming but it isn’t here yet. There have been some good deals in the neighbourhood but they were the kind of good deals that are always around. Someone becomes seriously ill or dies and a house has to be sold quickly. Often such places need some work but are still bargains. Otherwise, it is a waiting game. Twenty four hour flips with bidding wars have disappeared. That may be the sign of the coming slump in prices.

#83 harboursnug on 12.03.13 at 12:24 am

#75 REIT guy on 12.03.13 at 12:01 am
That’s really interesting and all but WTF
Is happening with XRE?

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Black Friday
Cyber Monday
Tapped Tuesday
Wiped Wednesday
Tanked Thursday
Foreclosed Friday

No money left for shopping in a mall

#84 souvereigninternational on 12.03.13 at 12:32 am

To compare with US crash we’re in DECEMBER 2005 and all our opinions and wishes will start to come true next year. The MSM will ring the alarm bells in the fall when it will all be painfully obvious. Buy some precious metals now before the loonie drops into the 80’s. They will go down in US$ but stay level in Canada. When they catch a next wave past 2016-18 you will be buying your house for less than 100 ounces of Gold. US stocks up(mostly)/down next year. Will correct , risk to great to enter positions now. Will do post correction sometime between fall 2014 – fall 2015. Sell bitcoin now ( shoud have gambled a few hundred in 2009). Crude will go down soon to 75. Your taxes will go up everywhere but you already knew that.

#85 Ralph Cramdown on 12.03.13 at 12:40 am

Can house prices NOT revert to trend?

Well, trend over the long term is basically inflation plus labour factor productivity increases plus increase in median home size and features/finish level, right?

And most people have to pay rent or mortgage out of current income, right?

So what can cause prices to deviate from long term trends?

– a lower or higher share of GDP going to labour wages
– longer mortgages (30.. 35.. 40.. up to 100 in Japan during their infamous “new normal”)
– exogenous wealth going to global cities or more local wealth’s playgrounds (e.g. Martha’s Vineyard, parts of the Hamptons, retirees moving to the Okanagan, Vancouver, Victoria)
– landlords accepting a lower cap rate
– home buyers willing to pay a premium over rents
– middle class hollowing out, with most people either low income or high net worth

Can some of these become permanent? Yes. But human recency bias, and salesmen who reinforce our beliefs/fears by telling these stories means that at any given time, there’s more people believing they’re in a permanently different market than actually are.

#86 Hollywood on 12.03.13 at 12:40 am

#4 Steve French,#34 Ripped

I did the same thing backpacked in Australia 93/94. Some of the best times in my life. Did all my travels on the lonely planet books without google maps etc. Back at that time easier and more “fun” to be independent as no internet. I still remember single dwelling houses in Edmonton were approx. 125k now there 400-450k. I agree with some of the previous articles the “average” wage does not justify in relative terms i.e. 30-35k ish then 45-50k ish now.

#87 Loser on 12.03.13 at 12:49 am

#43 Shawn on 12.02.13 at 10:44 pm

I think this is deeper than just reversion to mean. If you think of a house as an asset, then risk neutral pricing (see fundamental theorem of asset pricing) says that the appropriately discounted price is a martingale. Take whatever discount curve you want, you’ll see that it isn’t, in fact it’s supermartingale implying a bubble. House prices behave more like fixed-income securities than stock.

#88 Cici on 12.03.13 at 12:52 am

#16 Van Isle Renter,

Hilarious post…thanks for the laugh :-)

#89 Tony on 12.03.13 at 12:52 am

Re: #30 Shawn on 12.02.13 at 10:20 pm

You must be too young to understand reversion to the mean because you never lived through it over and over again. Reversion to the mean in stocks is about one-quarter of the present day valuations for instance. You’ll see stocks fall below the mean in due time.

#90 what bubble on 12.03.13 at 12:59 am

Who is well aware that RE bubble here is real and want it to thrive as long as possible: 74% of population (home owners), realtors, mortgage brokers, developers, bankers, investors(speculators), government, at last, (return from from the babble is duly taxed).

and on the other side we have those who want that bubble to be burst – a small group of marginal bloggers, led by Garth, miserable renters, oppressed by their ladies and mothers in low.

You don’t have to have an MBA degree to figure out who is going to win…. do you still have any doubt, indeed?

#91 Tony on 12.03.13 at 1:04 am

Re: #30 Shawn on 12.02.13 at 10:20

The “mean” in reversion to the mean refers to the long term trend line (or longest term trend lines). Various things trade above or below the long term trend line on a short term basis.

This is the not from the dictionary definition.

#92 Loser on 12.03.13 at 1:11 am

#10 soma on 12.02.13 at 9:28 pm

There are two reasons why the lower mortgage at higher rate is better.

1. Imagine under both scenarios both buyers were able to save another $X per month. If they both put that savings into the mortgage than it would take the first buyer 700/575 =1.22 times as long as the second to pay down the mortgage (more if you take into account compounding!).

2. Historically, capital gains on real estate are made in periods of decreasing rates and are erased in periods of increasing rates. Buying at a higher rate (even though the monthly is the same) gives you a better probability of capital gains.

#93 DonDWest on 12.03.13 at 1:26 am

#28 Vangrrl on 12.02.13 at 10:17 pm

“I think a lot of your generation think they are middle aged at 30?”

I would say it’s the baby boomers who have a distorted thought process in regards to aging. I’m 32 – and yes I consider myself to be middle aged – gladly. I have no problem with stating I’m middle aged as I have a healthy attitude and perspective in regards to aging.

Sorry boomers, but 50 isn’t the new 30 and 32 isn’t the new 18. If I’m not middle aged, then what exactly are you implying? That I’m a young adult? Well, if I’m considered a young adult at 32, then mathematically that means I’ve live to be 128 years old. Somehow I doubt that. . .

#94 Spaccone on 12.03.13 at 1:57 am

#77 REIT guy on 12.03.13 at 12:01 am
That’s really interesting and all but WTF
Is happening with XRE?

________________________________________
Nobody knows. If you keep it in the low single digits of your portfolio as I think Garth advocates you shouldn’t really be stressing about it.

I went over and above (~11k shares…double-digit % but let’s say less than 25%) and it’s not playing to how I expected (though I did expect a 2.5% hit per my post on Nov 18)…the formation is starting to look kind of worrying to me but I have a funny feeling this could be the final shakeout stage here though I’ll probably eat my words.

#95 Robert on 12.03.13 at 2:22 am

Couple 1. 600sf sell as fast as you can.
Couple 2. You have your whole life to buy!!!

#96 Robert on 12.03.13 at 2:32 am

9# Alison make that 1 mil first but don’t buy it will give enough cash flow to rent what ever you want and keep your money to enjoy your life because it does go by quick!

#97 John J on 12.03.13 at 2:45 am

I can understand how these people are feeling the “need” to buy now rather than wait but the reality is that home prices in Vancouver and Toronto are over-priced and it is only a matter of time before collapse. Timing is a tricky thing but as a good investor saying is it is better to get out of the market a month earlier than a day later, the reverse would be true of a real estate bubble.
John

#98 Jonb on 12.03.13 at 2:50 am

I’m concerned that low rates and sky high real estate prices are here to stay for a while, maybe a long while. Canadians carrying record levels of debt continue to pile it on without a care in the world. All off the rock solid arguments on this blog suggesting it can’t last are being undermined by time itself. I’m concerned the melt and eventual correction might outlast our fearless host. Garth, how’s your health?

#99 Vamanos Pest on 12.03.13 at 3:11 am

#10 Soma
Sorry, but that’s just stupid. You’re saying that if the monthly payment is the same, it makes no difference if you owe 665,000 or 540,000?

This is hopeless.

BTW, if you’re damned if you buy now and damned if you buy later, you don’t actually have to pick one. You could just not buy! (Did I just blow your mind?)

#100 Devore on 12.03.13 at 3:21 am

#8 TnT

At some point the “Buy Now or Buy Never” statement became true for New York, London, Paris etc….

Ah, the “world class city” argument. Followed immediately by “everyone wants to live here”.

If the demand-supply equation was messed up, rents would be skyrocketing too. Obviously they are not. Figure it out.

#101 Cougar on 12.03.13 at 3:36 am

We were in Pat’s situation 5 years ago, 35 years old, paying off a condo, first kid coming. 5 years later, we are still in the same condo, now paid off and 2 kids. Our condo is big enough for us (1100 sq ft) and has doubled in price. We have thought many times about moving to a house but realized that we enjoy city living where we can walk to the park, library, kids’ classes, grocery shopping, restaurants, etc. Sometimes during my maternity leave, I went to Yaletown, met up with my friend who had 1 kid and lived in a 600 sq ft condo, walked around the seaside and played in the Roundhouse community center. Friend stayed in the condo for a few years until after their 2nd kid was born and they really couldn’t stand living there anymore and had to move to a house.

I thought we make a decent living (220K/year) but we feel too poor to buy a house, 2 kids in daycare, kid activities, doesn’t matter how much we make it doesn’t seem enough to buy a normal house in Vancouver. After reading Garth for about a month, we decided not to buy. But we won’t sell our condo either, selling and renting is just too much hassle and what if Garth is wrong and the price does not go down in crazy Van?

But then, I hope Garth is always right, because I have opened self directed accounts for everything and am slowly moving out my mutual funds that are in fund prison and will buy a well diversified ETF portfolio, I feel a little better about my investment and retirement each day I read this blog.

#102 CSI on 12.03.13 at 3:39 am

Didn’t people used to raise large families in small units? Don’t they still do in some parts of the world? And here’s this guy thinking its impossible for 2 adults and a baby to live in a 600 sq m apartment. They need a McMansion, pronto.

#103 Pall Cursey on 12.03.13 at 4:12 am

#46 said:
‘I hope that they will learn [that’s] more important than owing bricks and mortar’.

OWING ON bricks ‘n’ mortar?

Indeed.

I sold my 70s-built Raincouver condo in 2007, at the then apex. Then I world traveled. No regrets.

Today a unit in my old bldg sells for less than what I sold mine for. Shudder to think what the condo fees have been jacked to.

Will never buy again unless I pay cash and own the property outright.

Of course, this might mean living in Fiji, or Cambodia.

Life is hard.

#104 CSI on 12.03.13 at 4:14 am

Okay disregard my earlier comment. That’s 600 square feet, not meters, which I agree is too small even for a family of three. And they paid how much for this glorified walk-in closet?

#105 Frustrated Kiwi on 12.03.13 at 4:15 am

Carmen – in any normal market condos are a depreciating asset (as the land is a small portion of the cost and it’s easy to build more). Absolutely don’t buy a condo in Toronto – haven’t you seen the stats on how many are in the pipeline? Auckland had a condo price crash a decade ago and prices still haven’t recovered (single family homes continue to bubble away though).

Pat – sell the condo before you get too burnt by it. You have at least five years until you “need” a house.

#8 TnT – What makes you think people can’t buy in New York?
http://www.realtor.com/realestateandhomes-detail/5-Sherlock-Pl_New-York-City_NY_11233_M47282-84271?row=8
http://www.realtor.com/international/rdc/listing-detail/4260-Broadway-Apt-605_New-York_NY_10033_3616178608

In the long run, either the average person can afford the average home in a city region or someone is making a really bad return on their rental property investment (which only makes sense in times of high capital appreciation, which can’t continue indefinitely). It seems like it’s possible to be priced out of a particular suburb but not an entire region (because average folks have got to live somewhere)! Let me know if I’m missing something.

#106 broadway skytrain on 12.03.13 at 4:17 am

#83 harboursnug on 12.03.13 at 12:24 am
#75 REIT guy on 12.03.13 at 12:01 am
That’s really interesting and all but WTF
Is happening with XRE?
——————–
xre moves inverse to int rates.
10yr went up 2.19% so xre goes down some
rates wont sustain much/long so xre will be ok.

i would like to get some at sale prices.

#107 broadway skytrain on 12.03.13 at 4:31 am

captcha me?

#108 broadway skytrain on 12.03.13 at 4:32 am

ps. teardown on a 50′ lot in east van has just listed for 2m.
this is 5-400k higher than anything i have seen before.
it is spitting dist off the dirty drive. jesus

development land is still blasting off in vancouver
asia/cdn inflow will keep it ever higher i suspect.

#109 broadway skytrain on 12.03.13 at 4:34 am

is everyone else getting new captcha codes to post or is it just me?

#110 Bob Rice on 12.03.13 at 6:50 am

My point about London, Paris, etc, was that Canadian cities are not world class by any stretch, and they are at best 2nd tier cities (Only Van and Toronto are.. they others don’t crack even that). Toronto’s public transit system is a JOKE. Aside from a couple of some semi-interesting inner-city neighbourhoods and some lovely posh areas like Rosedale and Oakville on the lake, the GTA is one big hideous car-dependent series of suburbs mostly made up of ugly cookie-cutter cheap track housing and generic box retail… it’s a soulless place.

#111 Nicholas on 12.03.13 at 7:45 am

#10 Soma

I don’t think that payments will go down, unless incomes do. Right now with low interest rates people have room for more principal.

But have a look at the effect of accelerating your payments at 3.25% compared to 5.25%. The difference is dramatic.

Adding 20% to the monthly payments at 3.25% will save you 4 years on a 25 year amortization. Adding 20% to the monthly payments at 5.25% will save you 7 years on a 25 year amortization.

Higher interest rates reward financial responsible individuals by giving them better returns on savings/investments, and by increasing the benefit of accelerated debt repayment.

#112 Martha on 12.03.13 at 7:45 am

Pat wrote; IF the condo market crashes, at least we’ll be able to eat.

There is no “if” there is only “when”…. Crashing prices is what happens when there is more stuff than there is demand.

What I find fascinating is that a lot of people focus on just the PRICE of a house/condo and not on the ongoing COSTS…you must figure into your monthly expenses all of the costs related to your house/condo.

#113 1980s Redux on 12.03.13 at 8:30 am

“Take a walk down any modest residential street in Metro [Toronto] – and dream on, because you may never be able to afford to live there. There are signs that Metro’s housing crisis is becoming a permanent tragedy, a chronic case of too high prices and not enough cheap places to rent or buy.”

Toronto Star, May 20th 1989

#114 1970s Redux on 12.03.13 at 8:42 am

“Ottawa made mortgage money cheap and readily available. The effect was to attract still more people into the over-heated market…. Governments ought never to underestimate the power of complicated systems to pervert their good intentions into unintended results.”

Richard Gwyn, on the subject of the housing boom of the early 1970s (and subsequent late 1970s bust)

Toronto Star, September 12 1978

#115 Detalumis on 12.03.13 at 8:45 am

#93 I don’t think boomers distorted aging, I graduated in 1980 at age 20 and immediately lived the life of a 50 year old, no partying, no clubs, just work many hours a day, save money, commute. It’s a good thing I did because these days you are old at 50, I call it 50 is the new 90 it’s when you are lumped into the 50+ category and nobody tries to sell you anything but personal alarms and step-in baths.

If I had spent my 20s traveling and partying I would have been up the crick without the proverbial paddle when my IT job was shipped to Bangalore by a bank that outsourced for 10 years before the media found out. Instead I had a paid up house and a big retirement nest egg full of blue chip stocks, so big that I could take a marginal interesting job and be just fine the rest of my natural born days.

Ageism is so rampant today that I would suggest all young people do the same thing, go live your life on fast forward because at 53 I am exactly the same media-age as my 93 year old neighbour, the one who just got carted into LTC.

#116 TurnerNation on 12.03.13 at 9:03 am

Was this posted? Hewers of wood indeed.
Ho ho ho. Tis the season. :-(

PotashCorp to cut hundreds of jobs

CBC.ca – 1 hour ago

Potash Corporation of Saskatchewan is cutting its workforce by about 18 per cent, affecting about 1,045 people – with the biggest hits in its home province of Saskatchewan as well as Florida and New Brunswick.
Potash Corp. to Cut Over 1000 Jobs Wall Street Journal
UPDATE 1-Potash Corp to cut 18 pct of workforce as prices slump Reuters

#117 maxx on 12.03.13 at 9:12 am

Stories like this, with young people trying desperately to get into a home of their own, but facing manufactured headwinds, abound. Life is challenging enough and can often be unfair, yet many of these very challenges are overwhelmingly the result of government and central bank policy regarding suppressed interest rates, as well as a complete laissez-faire attitude vis-a-vis the re juggernaut’s machinations.

What a waste of youth, optimism and hope.

Our economy has been horribly distorted by these highly destructive gambles masquerading as policy. They have produced less than nothing fiscally, huge and lasting damage, not the least of which are highly stressed and very unhappy cohorts of the young and elderly. Generational resentment only exists because of a deep and growing sense of disparity in circumstantial advantage- and fiscal austerity could have been averted- entirely. Canada is nowhere near taking care of its citizens as well as it should.

People have been driven close to insane in trying to buy themselves a home and are bathing in confusion as to what to do. Putty in their hands…and so many relationships have been strained to the breaking point.

All of this has knock-on effects with respect to the economy and productivity.

The desire to circumvent realtards altogether will hopefully coalesce to produce a much better system for transacting re without their interference.

#118 Victor V on 12.03.13 at 9:16 am

PotashCorp Announces Operating and Workforce Changes

Listed: TSX, NYSE Symbol: POT
Potash Corporation of Saskatchewan Inc. (PotashCorp) announced today that it is taking the difficult but necessary step to reduce its workforce in Canada, the United States and Trinidad by approximately 18 percent from current levels.
We expect workforce reductions by region as follows:

— Saskatchewan – approximately 440 people
— New Brunswick – approximately 130 people
— Florida – approximately 350 people
— North Carolina – approximately 85 people
— Other US locations and Trinidad – approximately 40 people

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

570 jobs disappearing in Canada.

Consistent with what I said here last week. Worry about deflation. Eschew a real estate purchase at this time. — Garth

#119 economictsunami on 12.03.13 at 9:25 am

The industry has done an absolutely fine job of playing on people’s emotions (thereby short circuiting cognitive skills) and by enlisting both family/friends who still cult-ishly believe the pitches (but may have bought under different circumstances) to also act as ‘owning at all cost advocates.’

When multiple generations fail to understand WHY relative historical trend data have broken down and deviated, they fall prey to further mindless/soulless over consumption.

I am ever so thankful to be at a comfortable age, where I’m too old a cat to be played by kittens…

Is the U.S. Economy Slowing Down or Speeding Up?:

http://www.businessweek.com/articles/2013-12-03/is-the-u-dot-s-dot-economy-slowing-down-or-speeding-up#r=rss

#120 Stickler on 12.03.13 at 9:25 am

““I’m 26;” says Carmen, “and my boyfriend is 31.”

…and boo hoo we can barely afford a house in the most expensive part of the most expensive city in the country.

Entitled much?

#121 TurnerNation on 12.03.13 at 9:26 am

#23 Nemesis

He still has that smooth as scotch voice. But he’s playing it too straight, the album version essentially.

Why not let loose, like Santana and SRV in a mega jam:
http://www.youtube.com/watch?v=z2VoWikBa6Y

#122 TurnerNation on 12.03.13 at 9:27 am

I passed the new “Are you a drunk smoking man?” Captcha verification!

#123 The Greater Fool Is... on 12.03.13 at 9:45 am

“Over the past five years, prices for West Side detached properties have surged 45.3 per cent.”

Pity the souls that started reading Greater Fool in 2008 and not buy real estate because the “great meltdown” was coming, only to watch prices soar 45% and the much anticipated crash is nowhere to be seen… That 45% is pretty much what my properties have increased since 08. Nice return on the capital appreciation and better than bank dividends on the rent.

#124 Toon Town Boomer on 12.03.13 at 9:55 am

Listen to this kid

http://www.youtube.com/embed/Bx5Sc3vWefE?feature=player_embedded

…if you like juvenile, unformed thought. — Garth

#125 Mr. Frugal on 12.03.13 at 10:01 am

Carmen:

The reason why real estate is so expensive in Toronto is wage competition. There are lots of people with good paying jobs and no common sense. They are quite willing to mortgage their entire future in exchange for the bragging rights of home ownership. So, unless you make as much as they do and are just as crazy, you won’t be able to afford to buy in Toronto. The best advice is to look outside of Toronto. There are lots of small towns within commuting distance of Toronto (i.e. Bolton, Orangeville, Barrie, Acton, etc). Look for something with good transit to the downtown core – like the GO Train. Lots of people on this blog will disagree. But, if you do the math you will save a ton of money if you are willing to spend a bit of time commuting. As well, you can put that time to good use.

#126 Shawn on 12.03.13 at 10:07 am

JARGON?

Loser at 87 responded to me:

If you think of a house as an asset, then risk neutral pricing (see fundamental theorem of asset pricing) says that the appropriately discounted price is a martingale. Take whatever discount curve you want, you’ll see that it isn’t, in fact it’s supermartingale implying a bubble.

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

Martingale? Part of my original post about regression to the mean at 30 (see also 37 and 43) was that people use a term like regression to the mean and assume that people know what it means.

I have no idea what a Martingale is.

As for Tony who responded to me he has predicted 1000 of the last zero market crashes. Thanks Tony but I think you are seriously off base. (Also my initial $2000 investment is up 1850% since I started in 1989 so yeah I have experiences ups and downs in the market because I have been in it a while. I buy what is selling at good prices and sell when expensive.)

#127 Thirdy on 12.03.13 at 10:09 am

I think it is true that a lot of 30-year-olds these days act like they are middle aged and are too keen to buy real estate. I think there are several things going on. I am 30 myself and I remember being in high school around the turn of the millenium and they showed us a video in class about corporate downsizing. The video was talking about the recession in the early 90s and how so many companies were in a process of downsizing and getting rid of employees. The message of the video was–it’s not going to be as easy for you kids as it was for your parents–you will not have a good job for life–if you don’t want a lifetime of poverty you better go to university and get yourself into a profession. (How ironic that more than a decade later many of my generation are in poverty precisely because they went to university.) We didn’t have time to rebel or go backpacking in Europe because we’ve been too busy worrying about our GPAs and our career prospects.

We’ve also been told for years that CPP won’t be around by the time we are ready to retire. We have been told we are on our own when it comes to saving for retirement. This leaves little time or money left over for fun.

Many of us have uncritically digested the “buy now or be priced out forever” mantra of real estate–all we’ve ever seen is real estate prices going up. In many cases, it would seem to my generation that real estate is a better path to riches than employment (so many are stuck on low level jobs that we are overqualified for) and investing (we don’t have capital to invest in the first place–you can’t get a low interest 30-year mortgage to invest in the stock market). We see renters getting renovicted in Vancouver and so we feel that the only way we can remain in our community, in the only place we have ever known is to buy real estate.

Many thirty-year-olds have been helicopter parented by their baby boomer parents. Young people today don’t know how to rebel or how to even just do what seems like fun naturally because parents have invested so much in us. Parents have taken over control of so much of our lives that many young people today don’t know how to be independent. It’s pretty hard to go backpacking in Asia when you don’t even know how to do your own laundry (I’ve known people in their 20s whose parents still do their laundry). Go backpacking in your 20s–it just seems to irresponsible to so many of today’s young. They will worry about how they can build up their education and career so that they can eventually buy a house in their 30s and have a kid or two before 40. It’s going to take a lot of us until we are 40 until we are in a position to have kids. Backpacking in Europe or Asia in your 20s could push that out to almost 50–at which point most people are too old to have kids.

What it comes down to is for today’s young, there is no time or money for fun or travel and most have been overparented and don’t have the independence of mind and spirit to go backpacking anyways. There is way too much fear in backpacking–we are afraid of everything–a girl I know the other day told me not to eat canned food because the cans have BPA, which causes cancer. I mean we can’t even eat canned food so how are we going to go backpacking!!?? There are too many unknowns and things we cannot control.

#128 Simon says on 12.03.13 at 10:18 am

I find it interesting how the phrase “buy now or buy never” puts people in a panic. Why is “buy never” not an option?

Many posts on this blog point out that buying a property is not a guarantee of financial stability, far from it.

Buy never is a viable option which saves you lots of headaches and gives you a more flexible lifestyle.

#129 -=jwk=- on 12.03.13 at 10:22 am


#TnT “At some point the “Buy Now or Buy Never” statement became true for New York, London, Paris etc….”

You’re not comparing Toronto or Vancoiver to Paris or London, are you? God I hope you’re not…

You could combine all the “best” qualities of canada’s cities and they wouldn’t amount to the shittiest slums of London.

Agreed, but not relevant. Pries in new York are quite reasonable compared to Toronto. Live in manhattan, pay 1.2M for a nice 1000sf pre-war and make 400k a year. Or live in Toronto pay 700k for a glass falling 100 sf sky dump and make 100k yr. Do the math. No contest.

#130 Smoking Man on 12.03.13 at 10:35 am

Anyone short USDCAD.

Get out today. Or you will be doomed….

#131 recharts on 12.03.13 at 10:51 am

#90 what bubble on 12.03.13 at 12:59 am
Who is well aware that RE bubble here is real and want it to thrive as long as possible: 74% of population (home owners), realtors, mortgage brokers, developers, bankers, investors(speculators), government, at last, (return from from the babble is duly taxed).

and on the other side we have those who want that bubble to be burst – a small group of marginal bloggers, led by Garth, miserable renters, oppressed by their ladies and mothers in low.

You don’t have to have an MBA degree to figure out who is going to win…. do you still have any doubt, indeed?

I kind of like this sort of idiocy: boomers happy with price appreciation but they have to pay for their children’s homes which ..are inflated ☺
I thought that the idea was to sell high and buy low. If you sell…
On the other hand, if the prices go to the sky and you sell you will have to either leave the country or buy something else or rent.
I doubt that many owner’s dream is to rent, I don’t see people cashing out and start renting. (low sales ast year, not stellar this year) so ..in the end who benefits from this other that RE agents and the government.
The above quoted logic sounds a little retarded to me, considering the situation

#132 heineken on 12.03.13 at 11:00 am

Do you really want a home in Toronto/vancouver?
Are you ready and willing to do just about anything to have one?
Do you think that you have what it takes?
Do you think you can make the payments?
TOUGH SHIT IF YOU CAN’T HAVE one. Go get a box of Kleenex and cry me a river.
Lets face it—immigrants have been coming to this great nation for over 50 years. They came here with the willingness to work extremely hard under any conditions. They decided to hold onto their after tax dollars. Incredibly, most did not work for the public service or lazy govt institutions who pick their nose all day long and organize their company sick days to suit their personal needs. these people are Asians, Italians, Portuguese, Ukrainians, Polish – they came here with no money and today are home owners in the Toronto core.
Personally, i know a Portuguese man who if you looked at him and his vehicles , you would doubt that he owns commercial, investment and principal residences which easily exceed 10 million dollars.

Do you want to know what’s really strange?? He is illiterate.

Meanwhile, all you lazy dumb ass Canadians (which includes myself) have been sold a bullshit view of life. It has been perpetrated by our parents who were fortunate enough to live when the US dollar was the reserve currency. It has been further driven by our useless dumb-down school system who has brainwashed people to believe that working with your hands is one of the sinful Ten Commandments.

I’m going to let everyone in on the secret of success (which translates to home ownership in Toronto): HARD WORK. Working 16 hours a day for 20 years. No new cars, ttc everywhere, no new clothes from Reitmans, no cool dinners on queen st —just working and saving. Thats how these immigrants did it. They had no education and no degrees behind there name.

Just hard work. Most Canadians have become entitled cry babies wondering how life became so bad. Poor babies were cuddled and hugged all along. And now, anti-depressants have replaced those hugs. If we have too work, when im i going to watch don cherry or play my X-box. Life is so unfair.
lets form a committee and brainstorm stupid ideas so that we can generate letters to the govt about how unfair it is that we cant have home ownership on college st next to the u of T .how will i be able to lust after those beautiful horny 20 something year olds? I want to be able to tell the world that i walked to the pan-am games wrestling championships. Life in Toronto is so cool: to be owning a home in the big smoke. Not taking the GO train. Wait a minute, i don’t want that house in Weston village, it has to be in the annex fool!!

#133 Smoking Man on 12.03.13 at 11:15 am

#130 heineken on 12.03.13 at 11:00 am

I’ll drink to that. Excellent post Sr.

You nailed it.

#134 Holy Crap Wheres The Tylenol on 12.03.13 at 11:17 am

#123 Mr. Frugal on 12.03.13 at 10:01 am
Carmen:

The reason why real estate is so expensive in Toronto is wage competition. There are lots of people with good paying jobs and no common sense. They are quite willing to mortgage their entire future in exchange for the bragging rights of home ownership. So, unless you make as much as they do and are just as crazy, you won’t be able to afford to buy in Toronto. The best advice is to look outside of Toronto. There are lots of small towns within commuting distance of Toronto (i.e. Bolton, Orangeville, Barrie, Acton, etc). Look for something with good transit to the downtown core – like the GO Train. Lots of people on this blog will disagree. But, if you do the math you will save a ton of money if you are willing to spend a bit of time commuting. As well, you can put that time to good use.

Amen!

#135 Ronaldo on 12.03.13 at 11:23 am

#130 heineken on 12.03.13 at 11:00 am

You are pretty accurate in your analysis.

#136 Ralph Cramdown on 12.03.13 at 11:27 am

#110 Nicholas — “Higher interest rates reward financial responsible individuals by giving them better returns on savings/investments, and by increasing the benefit of accelerated debt repayment.”

And they penalize financially responsible individuals and corporations who want to borrow to invest, to start or expand a business, to develop real estate, or to consume some of tomorrow’s earnings today.

Every dollar lent at interest by someone must be borrowed by someone else. Higher rates means fewer borrowers and more lenders, and vice versa.

Turning a system seeking equilibrium into a morality play with terms like ‘punish,’ ‘reward’ and ‘responsible’ won’t help. Suggesting that someone with money to lend is forced to lend it to his local bank or his government and is entitled to a rate above inflation won’t help either. It isn’t true and hasn’t been for a long time. And for years now these lenders have been earning only inflation or less. That’s their choice.

#137 Bill on 12.03.13 at 11:40 am

There is definitely a NEW HOME SUPPLY problem in the GTA. Look in the Toronto Star and you will see only ONE new subdivision for sale south of King Road. And its a ‘prime’ location (Jane & Sheppard) Next stop…Oakville

That’s what is driving the market.

#138 souvereigninternational on 12.03.13 at 11:44 am

#109 Bob Rice on 12.03.13 at 6:50 am wrote:

“My point about London, Paris, etc, was that Canadian cities are not world class by any stretch, and they are at best 2nd tier cities (Only Van and Toronto are.. they others don’t crack even that). Toronto’s public transit system is a JOKE. Aside from a couple of some semi-interesting inner-city neighbourhoods and some lovely posh areas like Rosedale and Oakville on the lake, the GTA is one big hideous car-dependent series of suburbs mostly made up of ugly cookie-cutter cheap track housing and generic box retail… it’s a soulless place.”
But it is the center of the world, didn’t you know? Best Metro area in the best country in the world.

Seems people who never lived outside of this city and in another country will never understand that despite some good qualities this is a mediocre place to live. They are easily influenced by “group think”, MSM and misguided local patriotism. And as usual the final argument if they can’t win on weather, ocean front, size, quality, price, lot, traffic etc. to reason TO prices and their decision to enslave themselves to house debt=HEALTHCARE.Also the excuse for Gov. taxing us to death. Wake up Morons. Watch more ” Live here, Buy this!” on your HGTV. Sheep.

#139 recharts on 12.03.13 at 12:06 pm

@#130 heineken on 12.03.13 at 11:00 am

I thought that the secret is to invest in stocks and buy the house when you get rich.
WTF is that “work” and who invented that?

#140 Babblemaster on 12.03.13 at 12:06 pm

#130 heineken

————————————————

Simplistic in the extreme. Those immigrants bought their houses way back when the average house was a mere 2.5 times average wage. No one denies the value of hard work, sacrifice, frugality and saving for a rainy day, but it’s a vastly different world today than it was 50 years ago.

#141 X on 12.03.13 at 12:14 pm

It is so hard to go to an open house and not get swept up in the emotion of things. Really, I am surprised that RE boards need to make the effort to fudge numbers, when it is so easy to buy a place. If you like the house, you leave thinking how can we get this…..it consumes you.

I have found it more difficult to rent in the past, then to buy. LL’s want to ensure they will get their rent cheque, Banks know they will get it out of you.

#142 Nemesis on 12.03.13 at 12:19 pm

TuesdayZen for SaltyDogz…

Speaking of StressedOut, pity the PoorBankers at Britain’s RBS… as if battling the FCA wasn’t bad enough, now it turns out that running an IT department on abaci probably wasn’t such a good idea:

[Reuters] – RBS admits decades of IT neglect after systems crash

…”Royal Bank of Scotland has neglected its technology for decades, the state-backed bank’s boss admitted on Tuesday after a system crash left more than 1 million customers unable to withdraw cash or pay for goods.”…

http://www.reuters.com/article/2013/12/03/us-rbs-technology-idUSBRE9B20F220131203

NextUp, file this one under #SucksToBeAirBus

[BloomBergBizWeek] – Airbus to Customers: Your $200 Million Plane Is Not a Lemon

…”Two years after ending production of its A340 jet, Airbus is scrambling to persuade customers who bought the $200 million aircraft that they aren’t stuck with a gas-guzzling lemon…

…More than customer relations is at stake here. Airbus sold many A340s with so-called asset-value guarantees, in which it pledged to compensate buyers if the plane’s resale value fell below a specified level. Analyst Douglas S. Harned of Bernstein Research estimates that 40 percent of the 119 A340-500 and A340-600 models now in service have asset-value guarantees of $60 million to $70 million.

“Based on discussions with airlines, lessors, and appraisers, we doubt these airplanes can be sold for even $20 million today,” Harned writes in a research note published Dec. 2. “Cash exposure from the asset-value guarantees could be in the $1 billion to $2 billion range.”…

http://www.businessweek.com/articles/2013-12-02/airbus-to-customers-your-200-million-plane-is-not-a-lemon#r=most%20popular

Wow! 10¢OnThe$ !!!… I want one!… Hmmm… OTOH, parking could be a tad tricky – perhaps an RV would be more practical?… [Hint: SalesUP… why? It ain’t the loans… Wrinklies are bailing on RE in droves and going, like, TotallyNomad. Our MagnanimousHost will no doubt be tempted to follow the embedded link to Thor’s 39ft. OutLaW!]

[BloomBergBizWeek] – RVs, Fueled by Cheap Loans, Pick Up Steam

…”This year, sales of motorized RVs (as opposed to towable models) are on pace to increase by 35 percent. The RV trade group expects a further 10 percent gain in the category next year.”…

http://www.businessweek.com/articles/2013-12-03/rvs-fueled-by-cheap-loans-pick-up-steam#r=hpt-ls

PenUltimateZen: file this one under #NemToldYouSo… [PartyOrgan SmackDown! China: 1 UK: 0 ]

[FT] – David Cameron comes under fire in China

…”David Cameron has suffered a fierce attack from China’s largest Communist party-run newspaper during his visit to the country, undermining the prime minister’s insistence that the relationship between the two nations is “indispensable”…

…“His visit this time can hardly be the end of the conflict between China and the UK,” said an editorial in the newspaper which falls under the direct control of the propaganda department of the Communist party.

It added: “The Cameron administration should acknowledge that the UK is not a big power in the eyes of the Chinese. It is just an old European country apt for travel and study.”…

http://www.ft.com/intl/cms/s/0/1a98808e-5c02-11e3-931e-00144feabdc0.html?siteedition=intl

LastUp, TuesdayBizzaroZen for SaltyDogz inspired by: @Scanner/#41… “Dr.Doom”

He’s been right before, Scanner… but, ah… ah… Well, let’s just say that Dr. Roubini’s taste in interior decoration is somewhat ‘unconventional’:

…”We’ve been curious about Nouriel “Dr. Doom” Roubini’s Tribeca loft ever since we heard his walls were “indented with plaster vulvas,” partly because we couldn’t even begin to imagine what that means or would look like. Turns out, they look just like plaster vulvas on a wall! Internet sensation Julia Allison attended Roubini’s 50th-birthday party this weekend and, while she was there, snapped some pictures of the infamous V*****s of Doom.”…

[NY Mag] – Nouriel Roubini’s Wall V*****s Revealed!

http://tinyurl.com/o9nrpkk

#143 Obvious Truth on 12.03.13 at 12:20 pm

Great discussion. Heineken is my beer of choice.

As for RE. Bmo? Net income and eps down and could have been worse. RY dandruff?

I’ve said before that there would be a catalyst but in my opinion the turn is already in.

Is the catalyst the C$. I believe the Boc has a tougher and more significant decision than anyone thinks.

#144 ponerology on 12.03.13 at 12:20 pm

@123: actually there are lots of *overpriced* areas outside of 416. I personally wouldn’t pay $500K for a cookie cutter house in Milton that probably is made from bread crumbs and bird seed and your only entertainment is the local strip mall.
I suppose things would be improved if there was regular 2 way go service on most of the lines but I doubt that will happen in my lifetime.

From what I can tell, prices only start to drop significantly if one goes as far as Simcoe.

Regarding travelling: much preferred over owning a house although lately I’ve been a lot partial to stuff closer to home. Heck I can even feel like a homeowner for a week by renting a very nice cottage up in Muskoka/Blue mountain without having to go through much hassle.
Having said that, Tyrona park in Colombia is also amazing:)

#145 fixie guy on 12.03.13 at 12:26 pm

“Not only does that make no common sense, of course, but it’s gonzo economics as well. ”

More accurately, since economics these days appears to go to the highest bidder, it’s gonzo mathematics. A asset that always appreciates at a higher rate than wages eventually becomes unaffordable to all by definition. Media ‘experts’ pimping otherwise are either completely irrational or CREA members.

#146 Nemesis on 12.03.13 at 12:28 pm

@Heineken/#130…

If HardWork were all it took, these guyz would be billionaires, right?

[Reuters] – Ukraine’s Illegal Coal Mines Lure Desperate Workers

…”Kandourov, who was 44, is one of many casualties of Ukraine’s illegal coal business, a nightmarish world where day laborers—some in their teens—toil underground in narrow, crudely dug shafts without proper structural support or ventilation. The miners usually labor without safety equipment, and they have no hope of a pension when they can no longer work or health insurance if they’re injured. They work for as little as 150 hryvnia ($18) a day, below the regional average of 185 hryvnia. Mining and energy experts estimate that hundreds die every year in such unlicensed mines, which produce anywhere from 3 million to 10 million tons of coal, or about 4 percent to 12 percent of the country’s annual total.”…

http://www.businessweek.com/articles/2013-11-27/ukraines-illegal-coal-mines-lure-desperate-workers#r=hp-sf

#147 Daisy Mae on 12.03.13 at 12:30 pm

#10 Soma: “Now let us say you are the Great Crystal Ball Gazing Seer you pretend to be, and the market crashes really bad and you are able to scoop the same deal at – let us say – $575000 mortgage in two years and by your predictions the mortgage rates then will be let us say 5.25 %, then with same term and amrt you are looking at paying $ 3426.53.”

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

You will have had two years to prepare…and should have a substantial down payment to purchase a house that has, by then, reverted to the mean which, of course, greatly affects your mortgage payment. It’s worth what you’re paying.

#148 carpicker on 12.03.13 at 12:33 pm

SASKATOON – Potash Corp. (TSX:POT) is cutting its workforce by about 18 per cent, affecting 1,045 people — with the biggest hits in its home province of Saskatchewan as well as Florida and New Brunswick.

#149 :):(Ying Yang on 12.03.13 at 12:39 pm

Tell me something new!

http://www.thestar.com/business/real_estate/2013/11/27/rising_prices_mortgages_making_real_estate_unaffordable_for_many_rbc.html

#150 :):(Ying Yang on 12.03.13 at 12:44 pm

Smoking Man you thing we are in for a Canadian dollar loss? It is already here.

http://www.forexcrunch.com/category/forex-weekly-outlook/us-dollar-forecast/

#151 Suede on 12.03.13 at 12:48 pm

Whoa, #130 Heineken, where did that come from!? Beauty.

———————–

#75 REIT Guy

don’t worry, wait till tomorrow after 10am EST when XRE goes up. I heard it from a guy who interpreted it from a guy.

#152 rosie "moving forward" in the knowledge that, "this won't end well" on 12.03.13 at 12:53 pm

The message should read, What did we just do? Love the look on the guys face. His wife is concerned. Child, oblivious.
http://www.letsgetthisrighttoronto.ca/01-2/

#153 DonDWest on 12.03.13 at 12:59 pm

#130 Heineken

Ah, didn’t take long to get a rant from a baby boomer that “kids these days don’t want to work with their hands.”

I’m tired of being diplomatic in regards to this topic. As a “young” Caucasian that has been turned down from hundreds of trade related jobs – shut up!

It’s not that young Caucasians are unwilling to do such jobs, it’s just that people like you who are in charge of the hiring process are unwilling to hire us. Mostly due to your condescending attitude, your snobbish behaviour, and dare I say it, racism in general towards Caucasians.

Believe you me, I’ve tried multiple times to change my career towards one of those jobs that involves using my hands that are so touted by the media as in demand. I always get the same results, “kid, looking at your resume, you’re an office worker. You can’t handle this work.” That’s if I even get that far, most of the time I don’t even get an interview after a hundred plus attempts.

It’s always the same flimsy excuses. I’m apparently “too weak” to handle any physical labour. Yet the truth of the matter is I can bench press around 200 lbs and the tiny little Pilipino you’ve hired instead can at best lift 50 lbs.

The second excuse is that I’m apparently “too uneducated” to do physical labour and I have to be shipped off to the community college to “upgrade my skills.” Funny, half of the labour force you’ve hired can’t even speak English and many haven’t even graduated from high school, yet I’m supposed to go to community college to get the same job? Bullshit.

Employers who run these industries are some of the biggest snobs I’ve known. Which is ironic, because they continuously complain, whine, and moan about snobbish behaviours from “office workers like me who look down upon them.” If I “looked down on people who worked with their hands,” I wouldn’t be applying to a job using my hands, now would I? And to be quite frank, my main reason for wanting to change to a career using my hands is because yes, it does pay better. I don’t give a s*** about image as long as the price is right.

However, I’ve now come to the conclusion that if you’re young with Caucasian skin, the only way you’re going to get a job using your hands is to work for yourself. The ageism and racism barriers to entry are far too great if you try to work for any established company. Employers in these industries often hire their own ethnicities (which means white people are not allowed in), and if your job history is “tarnished” with any “paper pushing work” – you can forget ever getting an interview, let alone getting hired.

#154 Shawn on 12.03.13 at 1:03 pm

Can houses NOT revert to the mean (long term trend line price?)

Ralph Cramdownat 85…

So what can cause prices to deviate from long term trends?

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

That would be deviate from the PAST long-term trend of course.

I would think interest rate changes could cause it?

#155 S. on 12.03.13 at 1:06 pm

I think middle age depends on how long your previous family members tended to live. In my case, they tended to live to their mid-80s so middle age for my family would be 40-something. As people are living longer due to advances in medicine, the bar could move and middle age may end up being 50- or even 60-something in the future – hate to think of the implications for retirement savings for those people.

For the 30-something who considers herself middle aged she may have had previous relatives with shorter lifespans. I think that more likely she has a middle-aged mindset but I’ve seen octogenarians who have a young mindset so who knows, maybe “middle age” is just a construct invented by those who wish to hasten us into saving sooner for retirement – which is not such a bad thing.

#156 heineken on 12.03.13 at 1:17 pm

news flash!!
Please don’t buy a home in toronto.
i seen a “immigrant” looking woman and man spanking their helpless infant. it was awfull to watch. i recorded it and called metro’s finest.

#157 rosie "moving forward" in the knowledge that, "this won't end well" on 12.03.13 at 1:21 pm

This ad was wallpaper on the Toronto Star page. Glad to see the real estate board is in it for the kids. Which, according to some on this blog, is what 20-30 somethings still are.

http://www.letsgetthisrighttoronto.ca/about/

#158 Ole Doberman on 12.03.13 at 1:24 pm

Garth my girlfriend and I were thinking about finally getting a place in Calgary, and thanks to you I talked her out of it. Wasn’t easy with friend and relative pressure – you know the drill.

So just yesterday I let it all ride on Bitcoin when it pulled back. I can’t wait to surprise her when I tell her I doubled my money and now we can afford a beautiful place with almost no mortgage.

Thanks to my broker friend who sees cyber currencies as the wave of the future. Hope everyone else is getting in before the big lift off. Happy blogging!

#159 heineken on 12.03.13 at 1:25 pm

#151 DonDWest on 12.03.13 at 12:59 pm
my reply– i grew up in northern ontario with the same attitude that you have. Nepotism was and is still alive and well.
my suggestion–keep trying. this is such a fantastic country for those people who work hard and take risk.

#160 shiny mirrors on 12.03.13 at 1:35 pm

Carmen, you should buy! Stop the stress and the pressure. There’s no point on being different than everybody else. I mean, everybody has gotten into real estate, so, why haven’t you Carmen? If everybody’s doing it it must be because it’s good, because it always works out. You can make money off of it. Again, everybody is doing it!

Of course you already know that renting is for losers. Being a home owe-ner is one of the most rewarding feelings ever. Haven’t you read the magazines? Your whole life changes, your self esteem goes up, your friends and family will see you in a better way, your chances of getting a promotion increase, etc. It’s time to aggressively finish what you aggresively started and commit to the market. You’re up there Carmen, you’re already 26, and the clock is ticking away. It’s time for you to do the right thing and buy a house. You’ll very quickly forget about the fact that you owe $400,000 to the bank. Hmm Hmm.. that new house smell Carmen… that’s priceless.

Buy now!

#161 DonDWest on 12.03.13 at 1:42 pm

#153 S.

It’s not difficult to understand:

18-29 = young adult

30-39 = early middle aged

40-55 = middle aged

55-65 = late middle aged

65-70 = depends, gray area, could still be considered late middle aged if you’ve worked out at least 5 days every week since you were in your 20’s. Unfortunately, for most people, they’ll be surprised just how quickly they’ll age during these five years. Seen it first hand in my family, the deterioration is rapid and unexpected for what were otherwise extremely healthy people just a few years ago. The government is kidding themselves by raising the retirement age to 67. The only people I’ve seen who can work productively around that age had a history of being athletic their entire lives.

#162 Smoking Man on 12.03.13 at 1:44 pm

#142 :):(Ying Yang on 12.03.13 at 12:44 pm
Smoking Man you thing we are in for a Canadian dollar loss? It is already here.http://www.forexcrunch.com/category/forex-weekly-outlook/us-dollar-forecast/
……………

Wait till 10 tomorrow, the whole street has it wrong.
Prozac is a different bird than Canary

#163 BCD on 12.03.13 at 1:50 pm

#4 Steve French on 12.02.13 at 9:21 pm
In my day, when i was 28 i was backpacking through Nepal, India, and Thailand, and other inexpensive countries. $10,000 for 6 months of backpacking.

That wuz back before the internet though. We only had Lonely Planet books back then (early-mid 90s).

Broadened my mind. Not a care in the world. Certainly wan’t trying to become a debt slave with a mortgage.
________________________________

Why are there so many people on this blog that feel that one should “travel” and “seek out life experiences” in Morocco or Thailand or wherever? What is with this western notion that “travelling” makes you wiser and more worldly and generally a better snob capable of better conversations? I’ve been to poor countries and all it did was make me sad–there is a reason that you can spend six months travelling and only spend $10K–it’s called poverty. Great that you feel like exploiting the cheap prices made you more worldly–I don’t see it that way. Everyone wants to emigrate to Canada or the US–there is a reason for that. So you have travelled in Nepal before “Internet” (big deal). I’d be more impressed if you solo skiied to the North Pole, as it is there were millions of people that travelled before Internet and if anything it was a huge inconvenience not to have access to quick communication–but I take it you feel like that made you a better person? Okay? lol

I’ve met small minded people who are well travelled and I’ve also met intelligent worldly people who have never left their back yards. Either buy the overpriced house or don’t, but don’t listen to the “go travelling and find yourself” bunch. People can “find themselves” crying in a Chinese laundromat or on a solo stroll around Stanley Park–you elitist bunch who think a person needs to travel need to get out more.

#164 Alwyn on 12.03.13 at 1:56 pm

while a friend who recently sold his house for $1.3 said his lawyer told him that he was mandated (by whom I do not know) to charge him double the amount of the usual conveyancing fee because the transaction was over $1 million, this is what the past chair of the Real Property Section of the Canadian Bar Association had to say:

http://cba.org/CBA/sections_realprop/main/Wenner.aspx

#165 TheCatFoodLady on 12.03.13 at 2:18 pm

We boomers rebelled big time by throwing off the ”chains of oppression”, doing things OUR way & essentially rewriting the rules.

Maybe the generation behind is rebelling in their own way by becoming more inclined to espouse values our parents tried to drill into us to no avail…LOL

Mobility – the human race spread out over the earth by being mobile BUT only a percentage of people were ever willing to take that gamble & see ‘what was on the other side of the mountain’. Some were well rewarded, others did okay & others died. And if a group moved elsewhere, most – once they found a new happy place – stayed. Then a generation or two later, a few new restless spirits moved on again.

Some of us are born restless or enjoy the idea of mobility, others don’t. Neither way is right or wrong. Rather, I submit it’s a combination of personality, vision, opportunity. If you want to stay where you were born & raised & can do well for yourself; why move for the sake of moving? Conversely, if you develop itchy feet after a few years, why tie yourself down?

I think most of us end up doing a combination. If we’re mobile, most of us may indulge that mobility while we’re young & relatively free of obligations. Others, who’ve lived in one place all their lives, pack up & leave when the local economy is moribund & there are no opportunities left.

There’s a security in feeling rooted to a place, a community. I grew up in a mobile family & have no sense that any place is HOME. I envy that in people who have a strong sense of roots. On the other hand, I’ve had opportunities & experiences others have not enjoyed.

We’re all different – thank heaven for that!

#166 spaceman on 12.03.13 at 2:29 pm

Why do you want to buy a living space ? What do you think you will get out of it? Its not an investment, but all we see is the last 10 years of price increases. Look back to 94-2001, price decreases for 6 solid years… that is where we are at. Its not worth the risk, rent what you can afford, and “invest in your family”

And why would you want to raise a kid in Vancouver anyway?

#167 Smoking Nun on 12.03.13 at 2:29 pm

#160 Smoking Man

What in God’s holy good name are you blathering about now?

#168 BCD on 12.03.13 at 2:34 pm

#30 Shawn
I am never afraid to say when I don’t understand something. Which is often. Others should not be afraid either. Too often people pretend to understand most everything. If they really did they probably be a bit richer.
____________________________________

Exactly.

Years ago (2003) I was in the same situation as this couple. Everyone (my wife included and a baby on the way) telling me “BUY, BUY, BUY”. I had just seen the price jump 30-50K in 6 months and the houses we used to be looking at were now priced beyond us. I found this blog, I read it and became convinced that prices would fall. FORTUNATELY, for me, my wife wanted a home BAD. . .so we stumbled into a mortgage at 5% and $370K on one income (she was going on mat leave). At the time we thought we couldn’t afford it–truth is we would have been okay even if we paid 50-100K more as the price has gone up some 200k since we bought.

In the end it was the third best decision I ever made (first was marrying my wife, second was having kids). IF you can afford a home and IF you don’t plan to move I don’t think it is a bad decision–with another “IF”–IF you can get a decent deal.

Look around, buy what you can afford. Don’t be a slave to your mortgage. Rent if you want, but don’t pretend that doesn’t come with it’s own set of problems. I have a family, I won’t rent. Years later (2013)we are almost mortgage free. My dad used to always say “there is no better feeling then to close your own doors”. I think about this every night when I close mine and I think he was right. But at what cost? Only you know the answer. Good luck.

#169 DM in C on 12.03.13 at 2:40 pm

” I’ve also met intelligent worldly people who have never left their back yards.”

I highly doubt that. Not the intelligent part. But worldly? Nah.

Traveling is not to reaffirm that you have it better than others. Nor is it to ‘find yourself’. You only have so much time on this planet — it’s nice to take the opportunity when you have it and see it. At 26 with $100k in the bank, not married, no kids? Not saying she hasn’t, but IF she hasn’t — get out there.

The question for me is why are you so against it? You sound like one of the ‘small-minded’ ones you rail against.

#170 DonDWest on 12.03.13 at 2:43 pm

#161 BCD

Bravo! I’ve always wanted to say that to the “traveling is a virtue” crowd. I’ve actually lost out on promotions for management positions to people who didn’t do an ounce of work under the argument “my travelling better equipped me for the global economy.” What a pile of bullocks! I’ve even seen people who put their vacation experiences on their resumes.

I’m sorry, but living in the “tourism bubble” of any given country doesn’t increase your cultural experience, your knowledge, or your character. All that shows to me is that either you or your parents are rich snobs.

Now maybe if you went artic skiing, doing search and rescue, in northern Siberia that would count as being worthy to put on a resume. However, the time you spent in India living amongst the gated communities in the fancy hotels, doesn’t count for much in my books. It’s a caste system buddy, did you hang out with the aristocrats or the real people? We all know the answer for most tourists who visit that country.

The fact that how many vacations you’ve had seems to have any sway in how you’re viewed by society, or bizarrely even has a say in whether you get a job or not, leads me to believe that Canadian work ethic has taken a rather big dive. Especially beginning with those at the very top who make selections based on such criteria.

How the heck is blowing your money off vacationing a greater sign of maturity than say buying a house? Yes, the house is vastly overpriced and isn’t a good buy at present, but I have a lot more respect for people who save their money to buy a house versus people who blow their money away on a cruise to the Caribbean.

#171 DM in C on 12.03.13 at 3:04 pm

#125

Thirdy

That’s just depressing.

I am GenX and graduated into a recession in 1992. What did I do? Worked three retail jobs — took off for the Canary Islands for a month. Graduated university with a coop program and had working experience better than a lot of peers. First job in 1993 paid 18k.

Everyone has their issues. Your post is full of a lot of excuses, not much action.

Thank goodness we raise(d) our boys differently. Our 18 year old took off for California in January — was supposed to be there for 2 weeks, stayed for six months. Hung out, met people. He’s now in Vanc working FT — loving life. He’s NOT AFRAID.

Again, we’re here for a short time. Get out there!

#172 Victoria - the Original on 12.03.13 at 3:05 pm

Are housing bubbles inflated by foreign capital?

http://www.canadianbusiness.com/blogs-and-comment/foreign-capital-and-the-u-s-housing-bubble-a-cautionary-tale-for-canada/

#173 Daisy Mae on 12.03.13 at 3:08 pm

#7 [email protected]: “When will cities allow affordable housing? can you build something like this in any province?”

http://cdn.goodshomedesign.com/wp-content/uploads/2013/11/flatbed-trailer-house.jpg

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

This is your basic mobile home and they’ve been around for eons. Not a new concept.

#174 :):(Ying Yang on 12.03.13 at 3:08 pm

#160 Smoking Man on 12.03.13 at 1:44 pm
#142 :):(Ying Yang on 12.03.13 at 12:44 pm
Smoking Man you thing we are in for a Canadian dollar loss? It is already here.http://www.forexcrunch.com/category/forex-weekly-outlook/us-dollar-forecast/
……………

Wait till 10 tomorrow, the whole street has it wrong.
Prozac is a different bird than Canary

……………………………………………………………………

Governor Stephen Poloz and his colleagues have already dropped their signal for higher interest rates, and markets will be closely watching what they have to say tomorrow. The dollar may suffer but so what annalists have been touting for over two years that its overvalued. Just a slow spiraling correction!

Besides have my money in other spots where I can get decent long term returns. I already have a girlfriend who gambles all of my cash away on weekends. Shes a Smoking Woman, burns through my cash and I don’t even know how she does it. BTW she works downtown in a bank headquarters as an International Investment Advisor. She makes great $$ and still spends my $$. I wonder what would happen if I cut her off my $$?
Will advise later what happens………….

#175 recharts on 12.03.13 at 3:14 pm

So it took the two of you 10 good years to pay 360K?
I think that you have to tell us about the worst 3 decisions you took in your life.

#166 BCD on 12.03.13 at 2:34 pm
#30 Shawn
I am never afraid to say when I don’t understand something. Which is often. Others should not be afraid either. Too often people pretend to understand most everything. If they really did they probably be a bit richer.
____________________________________

Exactly.

Years ago (2003) I was in the same situation as this couple. Everyone (my wife included and a baby on the way) telling me “BUY, BUY, BUY”. I had just seen the price jump 30-50K in 6 months and the houses we used to be looking at were now priced beyond us. I found this blog, I read it and became convinced that prices would fall. FORTUNATELY, for me, my wife wanted a home BAD. . .so we stumbled into a mortgage at 5% and $370K on one income (she was going on mat leave). At the time we thought we couldn’t afford it–truth is we would have been okay even if we paid 50-100K more as the price has gone up some 200k since we bought.

In the end it was the third best decision I ever made (first was marrying my wife, second was having kids). IF you can afford a home and IF you don’t plan to move I don’t think it is a bad decision–with another “IF”–IF you can get a decent deal.

Look around, buy what you can afford. Don’t be a slave to your mortgage. Rent if you want, but don’t pretend that doesn’t come with it’s own set of problems. I have a family, I won’t rent. Years later (2013)we are almost mortgage free. My dad used to always say “there is no better feeling then to close your own doors”. I think about this every night when I close mine and I think he was right. But at what cost? Only you know the answer. Good luck.

#176 Nemesis on 12.03.13 at 3:15 pm

@DonDWest/#151…

VisibleMinority? TellMeAboutIt:

http://tinyurl.com/on6z8gl

Still… We’re making progress:

[UK Guardian] – The American lawyer seeking human rights for chimpanzees

http://www.theguardian.com/world/shortcuts/2013/dec/03/chimpanzees-human-rights-us-lawyer

Hopefully it will all WorkOut in TheEnd… But of course, if it doesn’t… WellThen! I suppose we’ll just have to GoApe… BigTime, as it were:

http://tinyurl.com/oempcxj

#177 Derek R on 12.03.13 at 3:22 pm

#166 BCD on 12.03.13 at 2:34 pm wrote:
Years ago (2003) I was in the same situation as this couple. Everyone (my wife included and a baby on the way) telling me “BUY, BUY, BUY”. I had just seen the price jump 30-50K in 6 months and the houses we used to be looking at were now priced beyond us. I found this blog, I read it and became convinced that prices would fall.

How did you manage to find and read this blog in 2003? It didn’t start up until 2008. Do you own a crystal ball? Or do you just like talking bollocks?

#178 recharts on 12.03.13 at 3:24 pm

#135 Bill on 12.03.13 at 11:40 am
There is definitely a NEW HOME SUPPLY problem in the GTA. Look in the Toronto Star and you will see only ONE new subdivision for sale south of King Road. And its a ‘prime’ location (Jane & Sheppard) Next stop…Oakville

That’s what is driving the market.

With all due repesct (Garth please please please, let this go through)…so with all due respect, sir: Go and Flaherty yourself!!

read here:
http://www.thestar.com/news/gta/2013/12/01/more_density_downtown_will_cut_down_on_gridlock_hume.html

That report, released in 2012, has now been followed by a second that looks at why GTA housing prices are so high.
The first myth it dispels is one promulgated by the development industry, namely that land is in short supply. Connected to that is the secondary belief that the cause of the land shortage is the provincial Greenbelt and Places to “Our study shows there’s plenty of land left,” says Pembina’s Cherise Burda. “In fact, there’s enough land left in settlement areas to accommodate growth and employment well beyond 2031.”

#179 High Plains Drifter on 12.03.13 at 3:30 pm

My compliments to the master mind behind this most economical of political economy websites. It is rare for a modern blogger participation site to have so many participants capable of recognizing budding misers. Today #130’s epic description of misers who undoubtable put much effort in their clawing to the top or as far as their compulsive behaviour could take them was an “I second that motion” glow, of a pole star clarity of goodness. I am dizzy now. It is time for the rodeo song out here on the high plains.

#180 Porsche on 12.03.13 at 3:38 pm

#130 heineken

and then you die

#181 harboursnug on 12.03.13 at 4:20 pm

#105 broadway skytrain

xre moves inverse to int rates.
10yr went up 2.19% so xre goes down some
rates wont sustain much/long so xre will be ok.

i would like to get some at sale prices.
………………………………………………………………………

Look at a 5 year chart, this is the biggest dump it’s taken. To me that spells the parties over.

If were all crap on real estate why are REITS any different. I don’t care if it’s commercial or residential.
Real estate is real estate.

Hardly. REITs are cash flow. — Garth

#182 HD on 12.03.13 at 4:49 pm

@ #132 Vis on 12.03.13 at 5:48 am from yesterday

We’re not going to accomplish anything here as you won’t put any stock in what something a random person says online.

Right you are.

Why don’t you go ask a woman feminist in your life -if you know any- why you shouldn’t call women bitches.

Done. They expressed full support in my post.

Best,

HD

#183 Lurker on 12.03.13 at 4:51 pm

#130 Heineken:
The parents of a guy I know (in his 50’s now) fit the description you detailed. Immigrants from east Europe, bought rental properties (apts) and built up a small empire, then died. Left it all to the two sons (thanks, dad!). He never took a vacation or did anything that required the spending of any money. Apparently on his deathbed he said he regretted not ever taking his wife on a vacation or enjoying life more. Priorities, I suppose.

#184 Vangrrl on 12.03.13 at 4:52 pm

#168: You agree with #161 but you are talking about entirely different ways of travelling. Backpacking in Nepal and Caribbean cruises? haha… yeah, not quite the same thing.
I agree about the ‘early middle aged’ thing- so lighten up, you’re only 32, right? #153 was so right about a lot of it being mentality. I have a friend, an Irish lady, who is 73, bikes all over the city and has more spirit than most 20- something people.

#125 Thirdy: Interesting post, thanks!

#185 save. spend. splurge. on 12.03.13 at 4:58 pm

Carmen: Wait. You don’t need to buy a place.

It’s not the end of the world if you don’t own a place, is it?

You can rent and wait until it is in your budget ($400K with $100K down), so that you don’t end up screwing yourself for the future and regretting it.

Pat: Sell the condo and rent. Then wait.

Personally, I am in this cohort. I am waiting to buy a place, but not if it is not the price I am willing to pay ($400K).

Furthermore, I have another rule on myself (my partner and I), where if we don’t have the cash, we don’t buy it. This extends to a house.

As it stands, I have the cash to cover my half of a condo but I am refusing to buy one for 2 reasons:

1. I do not want my net worth 99% in a condo and will build up sufficient cash so that it is at most, 50% in a condo and 50% in cash.

2. I have not found what I wanted for the price I wanted to pay (plus I am waiting for the market to tank, which I am certain it will).

Either way, I am not bothered if I never end up buying anything and have to rent for the rest of my life. It’s not the end of the world.

#186 Smoking Man on 12.03.13 at 4:58 pm

#165 Smoking Nun on 12.03.13 at 2:29 pm

#160 Smoking ManWhat in God’s holy good name are you blathering about now?

………..

If you don’t know it won’t affect you. Means you have no skin in the game.

#187 calgaryPhantom on 12.03.13 at 5:09 pm

Potash layoffs making news, but look at this. BeeMo quitely lays off 1000 employees

http://ca.finance.yahoo.com/news/bank-montreal-cuts-nearly-1-000-jobs-single-204924998–finance.html

#188 Rabbit One on 12.03.13 at 5:16 pm

>#166 BCD
“there is no better feeling then to close your own doors”.

Glad this worked for you, but again, this is kind of the words real estate purchase is “emotional investment”.

Just like “why pay someone else’s mortgage?”

Take your emotion away, and as you said, as long as you can afford it, totally agree to buy.

But someone can take this words wrongly,
I buy because I want to close “my own doors”.
(remember, they are “just doors”)

#189 Nemesis on 12.03.13 at 5:20 pm

PostClosingBellBonusZen…

Wow! Lobbying TheFeds finally paid off for BC’s PremierClark – can enhanced TourismRevenues be far off!?

[CBC] – Same-sex couples flock back to B.C. seeking divorces

http://www.cbc.ca/news/canada/british-columbia/same-sex-couples-flock-back-to-b-c-seeking-divorces-1.2449294

DesperatePeopleDoDesperateThings or #CouldBeWorse

[G&M] – Inside the life of the Ontario man charged with trying to pass on secrets to China

…”The Ontario man charged with attempting to pass naval secrets to China has long raised eyebrows on his sleepy street, including for police visits in relation to domestic disputes, a stream of tenants and his unkempt lawn…

…Property records show Mr. Huang bought his house in Waterdown for $365,000 in 2006, taking out a mortgage of $295,000. In May of this year, he obtained another mortgage for $470,000. Public records also indicate he leased a 2012 Volvo one month ago with another person, who gave the same address in Waterdown.

In the past 2.5 years, he bought six properties on the same street in northwest Toronto that he reportedly rents out to students at nearby Humber College. He paid between $68,800 and $136,800 for each home.”…

http://www.theglobeandmail.com/news/national/inside-the-life-of-the-ontarian-charged-with-trying-to-pass-on-naval-secrets-to-china/article15739135/

LastUp: The HA’s FavouriteMayor TakesOneForTheTeam…

[G&M] – Photo of Toronto Mayor Rob Ford with Hells Angels appears on gang’s website

…“I don’t check for people’s credentials and ask for resumes before I take a picture. I take pictures with every single person that wants to take a picture with me,” Mr. Ford said Tuesday when asked about the picture which has been posted in the photo gallery of the Hells Angels Toronto website.

In the picture the three men are surrounding the mayor, two with their arms around him and one appears to be wearing a large necklace with the Hells Angel logo.”…

http://www.theglobeandmail.com/news/toronto/rob-ford-causes-fresh-stir-after-photo-surfaces-on-website-of-toronto-hells-angels/article15736766/

#190 EB on 12.03.13 at 5:27 pm

#90 – what bubble – “74% of population (home owners), realtors, mortgage brokers, developers, bankers, investors(speculators), government, at last, (return from from the babble is duly taxed)”

This is of course what was missing from the US housing crash – they didn’t have a large segment of the population with a vested interest in house prices continuing to climb! It’s all so clear now…

#191 mississaugamatt on 12.03.13 at 5:40 pm

Regardless of whether you agree with garth’s assessments or not, i don’t understand the rush to buy property some people seem to have. What’s the panic? If there’s demand it will be satisfied with supply, not going to run out of houses for sale.

#192 Ralph Cramdown on 12.03.13 at 5:40 pm

#179 harboursnug — “If were all crap on real estate [sic] why are REITS any different. I don’t care if it’s commercial or residential. Real estate is real estate.”

I don’t care if it’s commercial or residential either. Just give me a decent management team, portfolio, and an ROI that reasonably compensates me for my risk, and I’m in like Flynn.

Of course, I need more compensation for an individual real estate play given the concentration, illiquidity, higher management fees or hassle, transfer taxes and having to deal with real estate agents…

#193 Rockylal on 12.03.13 at 6:11 pm

#130 heineken on 12.03.13 at 11:00 am

Good post. I’m of Italian descent and you have described by uncle. Illiterate, hardworking and probably never made more than $40K per year. Construction worker then school janitor for the last 20 years before retiring. He currently has 5 rental homes worth over $3M plus his primary residence, all mortgage free. How did he do it? Living below his means. Paying cash for everything, no debts, etc..

#194 OZY - DO NOT UNDERSTAND on 12.03.13 at 6:11 pm

SO, if RBC is true – it means a lot of beautiful PRICE INCREASES in desirable areas! HOOREY – anyway, my home is worth 120000 more in 1.5 y in TO – we paid 750000 fully detached huge lot last bastion of elitism in TO. so, why the new generation does not buy in SCARBOROUGH and PICKERING – do you think could compete with the hundreds of thounsands of foreigners banks give mortgage with no jobs but 35% down?
plus, many of those foreigners were cream a la cream in their countries and obviously kick as here as well, I just see it everyday. They move into best locations uprooting the natives to the burbs. shameful? maybe, but surely REAL.

GO EAST!

“A new RBC report finds that buyers are being “priced out” of prime GTA real estate due to increasing prices and a lack of single-family homes in desirable neighbourhoods. The report notes that the demand for detached and semi-detached single-family homes in desirable GTA neighbourhoods has exceeded supply and caused home prices to go up. This imbalance means that many buyers are unable to afford homes in the GTA and are essentially “priced out” of the market.”

#195 Steven on 12.03.13 at 6:14 pm

Garth before they get destroyed they come down with a severe case of intellectual and moral disfunction plus gullibility. This gets them believing lies and making mistakes in order to be like folks. This sets them up for all kinds of disasters. Aechylus of ancient greece summed it up. “Whom the gods would destroy they first make mad. ”
Mad as in crazy.
A minority of people can be corrected by wise council, the majority have to learn the hard way. It is their nature.

#196 Piccaso on 12.03.13 at 6:17 pm

Look at these shit wages they pay in Alberta for a telecom engineer.

http://www.workingincanada.gc.ca/job_search_results.do?fjsf=0&fn=7246&fprov=48&sort=D

I especially like the $34 an hour Fort Mac one !!!

You might have enough left over after expenses to buy yourself a Big Mac.

LMFAO

#197 OZY - DO NOT UNDERSTAND on 12.03.13 at 6:17 pm

I guess we can use this blog to also brag about handsome price increases, lol

where else can we say it so happily!

thanks G for keeping the army of buyers at bay, until we bought!

now, please, would you release them? let them ravage the housing stats to the stratosphere

#198 BCD on 12.03.13 at 6:20 pm

@#175 Derek R

I was talking about Garths book “The little Book of Real Estate Wisdom” I read around 2003. . .been here at this blog so long I forgot where truth and fiction begin and end, but I was well aware of Garth’s ideas prior to buying was what I meant.

@#173 recharts
Yes, about 10 years to own a home in Greater Vancouver. And yes, it was one of my best decisions. But no, I never did have a 360K mortgage as I had a big down payment. How did you make out? Still renting?

@182 Vangrl
You are clearly one of the travelling elites. And you are right, backpacking in Nepal and Caribbean cruises are different. Backpacking in Nepal reveals that you are more comfortable exploiting poverty for some perceived “experiential” gain. Be sure and take plenty of photographs of the poor locals in various stages of undress so your FB friends can see how worldy and “astounding” your experiences have been. It’s nice to “go slumming” with the locals in other countries and pretend you had a “real experience” when you have all the benefits of living in Canada and a Canadian passport. In the words of Shania Twain (because I am not well-travelled enough to come up with someone “more worthy of quoting) “That don’t impress me much”.

#199 Piccaso on 12.03.13 at 6:22 pm

Actually they’re absolute crap right across Canada

http://www.workingincanada.gc.ca/job_search_results.do?page=1&noc=7246&fjsf=0&d=50&sort=D

I was making $60 an hour in the U.S. where it cost a third the amount to live.

LMFAO

#200 espressobob on 12.03.13 at 6:26 pm

REITs tanking? Take a look at the long term instead. No one took profit on the way up? Examine the graph ‘below’ over the years. Whats there to figure out?

http://ca.ishares.com/product_info/fund/overview/XRE.htm

#201 Canadian Watchdog on 12.03.13 at 6:27 pm

As they say, patience pays off. ;)

#202 carpicker on 12.03.13 at 6:28 pm

BMO cut 1,000 jobs in last quarter

#203 jess on 12.03.13 at 6:30 pm

just hard work eh

Japanese mobsters becoming ‘Goldman Sachs with guns’: Executives at Japanese banks apologise for lending millions to underworld figures

Read more: http://www.dailymail.co.uk/news/article-2516479/Japanese-mobsters-Goldman-Sachs-guns-Executives-Japanese-banks-apologise-lending-millions-underworld-figures.html#ixzz2mS6E66wj

#204 harboursnug on 12.03.13 at 6:45 pm

#198 espressobob

You haven’t made dick holding XRE in over two years.

http://www.stockwatch.com/Chart/Advanced.aspx?action=go&time=5&symbol=XRE&region=C

So, Dick, did you miss all those posts about rebalancing? — Garth

#205 Ralph Cramdown on 12.03.13 at 6:54 pm

#196 BCD — “You are clearly one of the travelling elites. And you are right, backpacking in Nepal and Caribbean cruises are different. Backpacking in Nepal reveals that you are more comfortable exploiting poverty for some perceived “experiential” gain.”

Me too. The difference between me and you is that I know that the BEST thing I can do for the third-world poor is to go there and spend my money, or spend my money on things made there. Anything that involvesa photo op with two smiling politicians or sitting at home paying $80 for a goat that costs $10 in the place I’m ostensibly helping… is NOT helping.

Maybe if you spent more time travelling and less time pontificating [though Rome is wonderful, too… ed.] would know this.

P.S. If you think cruise ships aren’t ‘exploiting’ third-world labour, you ain’t been on one. Lighten up, and read “A Supposedly Fun Thing I’ll Never Do Again” by an author who was about as happy with life as you seem to be.

#206 Canadian Watchdog on 12.03.13 at 7:06 pm

Illinois Passes Retirement-System Overhaul

SPRINGFIELD, Ill.—State legislators passed an overhaul of the state retirement system Tuesday, cutting benefits for public-sector workers and retirees that sets up a court battle with organized labor.

Supporters say the pension legislation is expected to save $160 billion and put a retirement system considered the most beleaguered among U.S. states on a path to solvency. Gov. Pat Quinn, a Democrat, is expected to sign the bill into law.

“We’re here today because the cost of our present state systems are simply too rich for the resources available,” said House Speaker Michael Madigan, a Democrat.

Illinois has seen its credit rating fall in recent years to the lowest among U.S. states as it fails to address a gap in its pension funds that’s nearing $100 billion. Chicago is also looking for legislators to act so they can next address the city’s own pension crisis.

Are you a public sector worker? If so, that's going to be your savings confiscated within the next ten years, and that's on top of purchasing power lost from inflation.

It's all fun and games until some sovereign, state or city loses a few A's, then it gets serious.

#207 harboursnug on 12.03.13 at 7:11 pm

You haven’t made dick holding XRE in over two years.

http://www.stockwatch.com/Chart/Advanced.aspx?action=go&time=5&symbol=XRE&region=C

So, Dick, did you miss all those posts about rebalancing? — Garth

……………………………………………………………………..

Can you elaborate a little… do you sell 50% at a loss or average down and buy 50% more?

#208 Shawn on 12.03.13 at 7:18 pm

The Most Powerful Thing in Wealth Accumulation

Albert Einstein said:

“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays.”

http://www.goodreads.com/quotes/76863-compound-interest-is-the-eighth-wonder-of-the-world-he

What is even more wondrous and powerful is compound returns on equity at rates higher than prevailing interest rates.

The very simply fact is that if you own a stock that continuously earns 10% or more on equity you must eventually get very rich.

Now you must buy that stocks at a reasonable mutile of book value (the lower the multiple the better).

Contrary to popular belief if you find a company that earns a high ROE it is better that it pays no dividends, all the better to compound your money. (Dividend reinvestment does NOT fix the problem).

For 12 years I have known Jason Donville and he has invested in high ROE compaies . Check out his hedge fund track record extraordinary. Simple but extraordinary.

http://www.donvillekent.com/product-historical-perf-CI.php

I have association with Jason Doville, just want to point out successful application of ROE investing. I believe only accredited investors can access Jason Donville.

Einstein would understand all this, do you fellow readers?

#209 Nemesis on 12.03.13 at 7:27 pm

[TheStar] – Shania Twain museum and the fleeting nature of fame: Editorial

…”Hoping to cash in on that glory the singer’s hometown of Timmins built the Shania Twain Centre in 2001 and packed it with the diva’s memorabilia. But an expected flood of tourists never came. In a testament to the fleeting nature of pop celebrity, and folly of municipal government, the centre closed this past week to be turned into an open-pit mine.

Sadly, the Shania Twain Centre just didn’t impress fans much.”…

http://www.thestar.com/opinion/editorials/2013/02/03/shania_twain_museum_and_the_fleeting_nature_of_fame_editorial.html

#210 Derek R on 12.03.13 at 7:34 pm

#196 BCD on 12.03.13 at 6:20 pm wrote
I was talking about Garth’s book “The little Book of Real Estate Wisdom” I read around 2003

Ahh, all is now clear. Cheers!

#211 Doug inToronto, usually in London on 12.03.13 at 7:46 pm

It’s very obvious these younger 20 or 30 something people like Carmen aren’t old enough to have seen a real estate bust. If they did, they would keep quiet, stay mobile, keep renting, and be glad they don’t have the ball and chain of a big mortgage.

@Detalumis, post #114:
I agree with you about this ageism thing, and am glad to have had the presence of mind to save money while I had the opportunity. Who says you can’t travel when older? I did a lot of travel in my forties and plan to do even more now in my fifties.

#212 recharts on 12.03.13 at 7:49 pm

BCD’s brain puked these:
Yes, about 10 years to own a home in Greater Vancouver. And yes, it was one of my best decisions. But no, I never did have a 360K mortgage as I had a big down payment. How did you make out? Still renting?

And his bottom said this:

so we stumbled into a mortgage at 5% and $370K on one income (she was going on mat leave). At the time we thought we couldn’t afford it–truth is we would have been okay even if we paid 50-100K more as the price has gone up some 200k since we bought.

So you had a big down payment but you were not sure if you could afford it

Indeed you “forgot where truth and fiction begin and end”

Bottom line: you are a liar and a loser. Ask your RE board to cancel your license because your stupidity is a public concern.

#213 recharts on 12.03.13 at 7:51 pm

#199 Canadian Watchdog on 12.03.13 at 6:27 pm
As they say, patience pays off. ;)

Can you add RE to that graph ?

#214 Doug in Toronto, usually in London on 12.03.13 at 7:56 pm

@broadway skytrain, post #105:
Interesting you ask WTF is going on with XRE, but say you want to buy it on sale. Well, if it has dropped so much did it ever, even once, occur to you that it IS on sale? When you hear a lot of negative comments about the low price of ANY asset class, not just REITs, it should be YOUR signal to BUY. At 15 bucks a share, it’s a good time to buy it if you don’t yet have any REITs.

#215 Mister Obvious on 12.03.13 at 8:03 pm

#161 BCD

Well BCD, even thought some here might feel your comments have a whiff of ‘anti-boomerism’. But, as a boomer myself, I largely agree you.

I have never been much of a world traveller and yet still managed to ‘discover myself’ in my own front room many years ago. In fact, I still find myself there often.

The suggestion to ‘go travelling and find yourself’ is a poor stand in for a much better message which should be:

‘get busy building your dreams but don’t expect others to cater to your specific needs or go out of their way make your path easier… you’ll have to do most of the work yourself. Oh yeah, you’ll find nine rip off artists for every honest person you might do business with. Seek out that tenth person with a passion.’

Old Zen proverb:

“It does not further you to go anywhere”

#216 BCD on 12.03.13 at 8:19 pm

@#203 Ralph Cramdown

Me too. The difference between me and you is that I know that the BEST thing I can do for the third-world poor is to go there and spend my money, or spend my money on things made there.

_________________________________

Right, because people in the third world want and need YOU to save them and their society through donations, and their souls through your religion and also their values through adoption of your own.

This is the exact kind of thinking I am talking about, and travellers are full of it. Typical and privileged “white man’s burden” type Canadian/American. You spend a few months drinking authentic chai tea in India and think you have the worlds problems solved.

If you want to help them so bad go live there and renounce your citizenship and then talk about what a great person you are. Didn’t think so. . .

PS. Never said Caribbean cruises weren’t bad, just not AS bad.

#217 Cici on 12.03.13 at 8:24 pm

#196 BCD

I think you comment directed at Vangrrl is a little harsh and way out of line. I’m sure she set out to meet people from new cultures, expand her knowledge of the world by seeing what is beyond the occidental boundaries, and get in some great hiking and ecotourism. And I’m sure she was kind and respectful to the local tourists that her hard-earned travel dollars were supporting.

Although I do get where you are coming from. Going to Cuba was such an eye opener for me. I stayed on the resort, but tipped and was gracious to everybody all the time. And when I went out of the resort boundaries into the poverty of Havana and the likes, I tipped wherever and whenever services were rendered, purchased things from the locals and gave art supplies and the like to the school children. However, I was disgusted with myself for the royal treatment that bestowed on us travellers at the expense of the locals, and even more disgusted at the many pigs and pigettes at the resorts who ordered the Cubans around like dogs and gorged themselves on all-you-can-drink and all-you-can-eat fare without hardly even or ever tipping. And I was very embarrassed to be Canadian. I’m sure we behave the same way in Mexico too…

#218 Alberta Guy on 12.03.13 at 8:32 pm

Picasso, I am not sure what you’re getting at. There aren’t any jobs in those lists that ask for an engineering degree. Most require high school, maybe college, and up to 5 years of experience.

#219 espressobob on 12.03.13 at 8:35 pm

#205 harboursnug

What to do???? Look below.

http://www.investopedia.com/articles/pf/05/051105.asp

#220 Ronaldo on 12.03.13 at 8:43 pm

#213 Mr. Obvious –

”Old Zen proverb:

“It does not further you to go anywhere” ”

The one I like is: “The journey is not in finding yourself, the journey is in creating yourself.”

#221 Bill Gable on 12.03.13 at 8:53 pm

Nouriel Roubini, the noted economist who correctly predicted the U.S. housing bubble and its collapse, now sees an impending housing market train wreck of global proportions, with housing markets in 18 countries vulnerable to a meltdown.

In a column for Project Syndicate, Roubini, an economics professor at New York University, wrote that “signs of frothiness, if not outright bubbles” are evident in Asia, Europe and emerging markets.

“What we are witnessing in many countries looks like a slow-motion replay of the last housing-market train wreck. And, like last time, the bigger the bubbles become, the nastier the collision with reality will be.”

Roubini said the symptoms of overheated conditions include fast-rising home prices, high and rising price-to-income ratios and excessive levels of mortgage debt as a percentage of household debt.

He wrote that in developed countries, the housing excesses are being caused by very low interest rates fostered by a “wall of liquidity” from central banks.

In emerging markets, the housing bubbles are being formed by efforts to manipulate currency rates, high inflation, lack of other investment alternatives and rapid urbanization whereby housing demand is outstripping supply, Roubini notes.

According to Roubini, who is often bearish when it comes to investment assets like housing, equities and bonds, the affected overheated housing markets include those in Switzerland, Sweden, Norway, Finland, France, Germany, Canada, Australia, New Zealand, the United Kingdom (London), Hong Kong, Singapore, China, Israel, Turkey India, Indonesia and Brazil.

> Sounds very familiar to us “Turnerites”, what?

Link: http://tinyurl.com/l4d2wtf

#222 Dumbo on 12.03.13 at 9:01 pm

Why do we feel that we must do anything by putting these options in our life.

To buy or not to buy,
To rent but to our friends or “peers” look poor.

Warren buffet believe’s cash is king. Garth turner believes the end is in sight on this ten year bull run of low interest and surging home equity.

So the question is what do you believe?

My mom has a home in Buranby BC prices have tripled I am begging her to sell, Thats what I believe.

#223 Ronaldo on 12.03.13 at 9:10 pm

#156 Ole Doberman – B.S.

#224 Piccaso on 12.03.13 at 9:13 pm

#216 Alberta Guy on 12.03.13 at 8:32 pm
Picasso, I am not sure what you’re getting at. There aren’t any jobs in those lists that ask for an engineering degree. Most require high school, maybe college, and up to 5 years of experience.
……………………………………………………………………

Ya I know, pathetic isn’t it. Just the grunts to dolly the equipment in and bolt it to the floor.

#225 Daisy Mae on 12.03.13 at 9:17 pm

#98 Jonb: “Canadians carrying record levels of debt continue to pile it on without a care in the world….”

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

And expected to spend billions of dollars over this Christmas. BILLIONS. Whew….

#226 DM in C on 12.03.13 at 9:34 pm

BCD you’re awfully judgmental and harsh about other people’s experiences, when you admitted here on this blog last month that you are not a doomer yet you hoard food and ammo.

If you hate the people here, why don’t you take your own advice?

#227 BCD on 12.03.13 at 9:43 pm

@#210 recharts

I am not a real estate agent, nor am I a liar or a loser, but you are entitled to believe what you want. You cast the first stone, I responded to clarify. Are you asking for specific financial details of our house purchase? I have revealed the story in it’s essence, the details of which are not as important. Did I say I make a million bucks a year? Did I say I live in a mansion that I bought for 370K? Get a life. I had a big mortgage at one point, I paid it down fast, I also had a big down payment. What part of that don’t you understand?

Wait. . .you are still renting and waiting for some sort of crash–oh yeah–you don’t understand any of it.

#228 Nemesis on 12.03.13 at 9:51 pm

LoveBoats? NotQuite…

The ShortCourse:

[UK Guardian] – Cruise liner crews slave below decks: Passengers enjoy luxury on the high seas, but a new study reveals the misery of those who serve them

http://www.theguardian.com/travel/2002/sep/08/travelnews.uknews.theobserver

The GraduateCourse [Thank you, Prof. Klein – PrettyGood for a Newfie. TeeHee!]:

[NewSociety] – Cruise Ship Blues: The Underside of the Cruise Industry

http://www.amazon.ca/gp/aw/d/0865714622/ref=mp_s_a_1_8?qid=1386121745&sr=8-8&pi=AC_SX110_SY165_QL70

#229 Ronaldo on 12.03.13 at 9:59 pm

#68 DonDWest – have you tried here?

http://www.forbes.com/sites/randalllane/2012/10/05/go-north-young-man-this-city-will-find-you-a-six-figure-job-no-questions-asked/

#230 Shawn on 12.03.13 at 10:12 pm

Oops, NO association with Jason Donville

I meant to say I have no association with Jason. I have met him twice over a twelve year period and we have corresponded by email just a few times over the years. I am on his newsletter list.

I was not sure Garth would also the link and am impressed that he did.

I just happened to be thinking today about the power of a high ROE (if it can be sustained) as I looked at a certain company that was running at 23% ROE…

#231 Shawn on 12.03.13 at 10:12 pm

allow the link that is, damn these fat fingers…

#232 Tiger on 12.03.13 at 10:12 pm

151#Don D west! I assume the app thing did not, work out for you! Save your tears , and sell them,,,:)

#233 economictsunami on 12.04.13 at 7:44 am

Oil futures are up in a big way; off of their recent lows.

This is largely based on narratives which contain elements of truthiness about bottle necks but where is the final demand?

The world is awash in over production of oil but supply chain kinks offer the opportunity for price “enhancement”.

Who needs Middle East tension and turmoil?…

WTI Rises on U.S. Supply Dip as Discount to Brent Shrinks:

http://www.bloomberg.com/news/2013-12-04/wti-oil-advances-a-fourth-day-as-u-s-crude-stockpiles-decline.html

#234 Huuk on 12.04.13 at 1:10 pm

I love when people say to those in Toronto: “Just wait it out for two years, you’ll see”.
I think 2 years must be the psychological barrier where you can justify waiting.
I heard that like crazy when I bought a 700K GTA fixer upper in 2010. People thought I was crazy. “Its so inflated”. “Interest rates are going to rise next year”. “Next year, the bubble will burst”. “You should rent and save, you can make more in the markets”.
Nothing is new at the end of 2013. Same as it was at the end of 2010 when I bought (against the advise of this blog, BTW). Same as it will be at the end of 2015 when prices are still astronomical and still going up. This is entirely based on local real estate markets…small neighbourhoods where demand will always be high and supply will always be low.
Take the jump and enjoy the ride…better than biting your lip on the side lines.