Jake’s three years away from retirement, eight years on this job, way short of pension, with a house just north of Edmonton. What’s it worth, I asked?
“About four-fifty,” he says, “I hope. They all used to be more than half a million a couple of years ago, before the slump.” Jake works on a massive oil upgrader, making $150,000 in a blue-collar job. Not much saved, since his strategy was to dump everything into the house, plus his cabin. All of a sudden that’s not looking too cool.
Talk of cutbacks and downsizing slices through the oil patch lately. Jake’s wife, Penny, fights to keep the house until it’s time to retire and move. But Jake worries there could be lots more lost equity ahead. “For years all I did was shovel money into this house to pay it off,” he told me. “So basically it’s everything I’ve got. You’re going to tell me I screwed up, right?”
Of course not, I say. We all make choices. You have more now. You should sell. Get liquid, invest and let the returns pay the rent until you retire to the cabin. Cut the risk.
Sadly, risk’s making a comeback. It was hard not to think about that if you were in Saskatchewan yesterday, learning that giant Potash is punting 18% of its workforce and closing two mines after prices have plunged by a quarter. Add these thousand jobs to those being offed at Encana, Heinz, Sears or Blackberry. And today, Sun Media (after all, why do newspapers need expensive reporters?).
Even the titans are squeezed. This week Bank of Montreal let slip it’s turfed almost 1,000 people in recent weeks, mostly in Toronto. This is the deepest cut since the aftermath of the financial crisis in 2009, and even though it’s a public company with an obligation to fully disclose everything, BeeMo chose to stay quiet. The news drifted from a call chief operating officer Frank Techar made to analysts following release of the bank’s earnings (it made $1.09 billion last quarter).
Risk. Our economy is slowing, obviously. You know that when even Royal LePage worries a little.
The real estate marketing gorilla this week released a study admitting there are way too many condos being built in Montreal, Vancouver and Toronto, so we should all expect “turbulence.” The surplus is pegged at between 36% and 68% – a massive amount – as developers wildly overshoot the market. While demand is expected to be between 26,000 and 32,000 units a year for the next two decades in the three cities, folks like the legendary and scary Brad Lamb have been sausaging almost 44,000 of them.
The report says this is no condo bubble, and demand from renters will stay high. “It is likely that future construction will slow to levels that are more in line with the growth rate and evolving demographics of the population.” And, “there may be some instability.”
It may all be bad news for crane operators, especially given the 40% drop in new condo sales over the last two years in the GTA, but the real toll will come on property prices. Just imagine of what a surplus of 36% to 68% could do to the value of the ubiquitous, one bedroom-plus-den, 700-foot concrete box that you paid $429,000 for last year? Yes, the one you can’t rent for enough to pay the carrying costs.
Risk. It’s not just an elevated stock market. This week some of the most awesome unions in the world were unable to stop a judge from agreeing that Detroit can renege on billions in public sector pensions. Imagine that. What a precedent.
Today (Wednesday) the Bank of Canada announced no change in interest rates, but there’s talk on Bay Street boss Stephen Poloz is starting to mull the unthinkable – a rate drop. Inflation has cratered to comatose levels and the economic recovery’s in a stall. Weak global growth is hurting companies like Potash, while tapped-out borrowers are eating into BeeMoo revenues. It looks like the Iran deal could unleash an oil glut, with falling prices that won’t be good news for Jake and his buddies. And now a dangerous hunk of the economy comes from building condos, which LePage hints is about to blow up.
The best-case scenario may be that which TD strategist David Tulk just outlined: “It feels like it’ll be a repeat of the 1990s, where house prices just move sideways for about 10 years.”
But I doubt it.
188 comments ↓
I think economy is pooched, housing prices will be the same in 15 yrs as they are now….
nooooooooooooooooo growth
Do you think there is a condo bubble in Toronto Garth?
No Bank of Canada rate cut; just a devaluation of the Canadian dollar to come, in 2014.
No matter how you look at it, “it ain’t gonna be pretty”
As if RE prices are over inflated in the GTA? Like I find myself buckled over in laughter even amusing the thought? This is a joke, right? Please tell me this aint real. Please!
Today (Wednesday) the Bank of Canada announced no change in interest rates, but there’s talk on Bay Street boss Stephen Poloz is starting to mull the unthinkable – a rate drop. – Garth
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Who said it was unthinkable? I’m afraid rates are NOT going up for as long, long time. Over the last few years, you’ve been monumentally wrong on this call Garth.
Hardly. Fixed mortgage rates increased a full 1% this year. — Garth
If the Feds don’t come up with tighter rules to restrain the mortgages ), I doubt that people will stop borrowing and further inflate the house prices. Maybe the condos will stagnate, but the SFH prices will just continue their upward move. People just don’t get it! They will borrow and borrow and borrow… Until they start sinking. And pull us all with them!
I can never understand when people say “prices will just move sideways”… maybe what some people hope. People who have to sell, for whatever reason, will have to start dropping their asking price, and that will, I would think, make a precedent for more overall price decline.
If I’d have a million dolars, I’d move to Bahamas, and not think for one minute about buying a semi in Toronto… And I guess most people would agree with my statement.
Why is it than that most people go to the bank to borrow the said million and buy the semi? What’s wrong with people? Why do they dumb down?
I don’t know, nor can I pretend I’ll ever understand. All I can do is try to talk sense into them, and when I notice that they’re not listening, get out of the way.
Garth, Why is oil surging suddenly?
And, is QE a negative interest rate on savers?
The doom and gloom sayers always go overboard. I recall being told in the early 90s by someone who sounded an awful lot like Garth that Generation Xers would never make what their parents did, and would never work the hours of a 5 day work week. We were all in four less hours and less pay. It was recession time baby. It never came to pass, and nor will the worst case this time around.
Baby? Do you also have sideburns? — Garth
no spaghetti sauce talk this time MR. P
Best wishes to the appox.440 PCS workers in Saskatchewan who found out they lost their jobs today.
ahhhh, summer.
enjoyed a stunning tennis match today out in the brillant sunshine – i didn’t wear shorts but my partner did.
dry, bright, and plenty warm enough after a quick 3min jog to the courts.
yes, it seems everyone does want to live here but we would need 10x houses if they all came.
Bank of Canada Rates are not going up. Who cares about bond yields? Go variable on renewal. Canada’s hands are tied.
70 Cent USD Canadian Dollar will come before rates rise.
Anyone that can’t see this deserves to be lead to the slaughterhouse one way or another…
EarlySpring:
Don’t worry about the 440, double that number with $$ just landed at YVR and YYZ.
I have mentioned many times that the market is FIXED.
The money policy people are rewarding those who are accepting more risk, only to pull the rug out to benefit the 1% in the overall FIXED market.
Many money market investors are not spending their money due to low interest rates. These people are being punished for using low risk investments. These same people are not budging to move to any High Risk stuff.
The safest approach is to be debt free, with a lot of cash on hand and be ready for the CRASH.
No crash. — Garth
Garth –
Is Dundee REIT dead? It’s lost over 25% value this year, and is paying over 8% dividend.
Can’t figure this one out
Extra yummy. — Garth
“This week some of the most awesome unions in the world were unable to stop a judge from agreeing that Detroit can renege on billions in public sector pensions. Imagine that. What a precedent.”
The line up for cities preparing to file their insolvancy papers just increased dramatically.
Maybe the employee’s from Potash and BMO will receive the same “Generous” severence packages that are to be offer to Heinz workers by Warren Buffett.
So condo construction is set to implode just as the nation’s publicly funded infrastructure crumbles. Sounds like a perfect opportunity for smart tradesmen and contractors to bid on public work.
As people lose their jobs or get reduced hours will cause people to pull back spending which is now causing people to lose their jobs which will cause more people to sell and or reduce their spending…… the housing crash is here. look out below.
Did Mr Tulk misremember the 90’s? As I recall, house prices slid about 30% then took about 20 years to recover.
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The economy is in bad shape in the gta as store after store closes down and the for lease sign goes up. Toronto condo’s will see a 50-70% haircut but they are garbage to begin with. Realtors on here have a lot to worry about as many had to find real jobs. The house of cards is falling down as people lose their jobs and will be forced to sell the home they can no longer afford. Many of these people live paycheck to paycheck . No spinning this one RE shills
“Today (Wednesday) the Bank of Canada announced no change in interest rates”
Quit making me double and triple check my calendar.
As always on this site, you are reading tomorrow’s blog tonight. — Garth
Corporate Disclosure
and even though it’s a public company with an obligation to fully disclose everything, BeeMo chose to stay quiet.
****************************************
I understand companies must disclose if something material to the stock price occurs. And the definition of material seems to be MAJOR.
1000 layoffs at BMO is not material to the share price. It’s HUGE for the workers affected but fairly insignificant to share owners. Especially if some of this was by attrition. And share owners would be hard put to decide if this was positive (cost cutting) or negative (lower business), in the end it must have been judged non-material.
Also the fair way to disclose this (if material) was outside of trading hours so that the news could be fully digested (in the bid / ask) before any shares traded hands. Hopefully this was the case.
Earnings releases are almost always outside trading hours in Canada ever since 2010 when I wrote in and complained to the regulator about the former unfair practice of disclosing earnings during trading hours. (True story, believe it or not, I have the emails to prove it)
Analyst conference calls during trading hours are also unfair but I can’t solve all the market’s failings at once. Once they stopped the day-time earnings releases I said thank you and left it that.
Everyone knows RE is overvalued. Nobody wants to admit it. Homeowners feel rich, Cities make more in taxes.
Even a 10% haircut for RE would bring things closer to reasonability….
If rates go down, F will have to do something, otherwise household debt will be setting new highs.
#25 john
The economy is in bad shape in the gta as store after store closes down and the for lease sign goes up. Toronto condo’s will see a 50-70% haircut but they are garbage to begin with. Realtors on here have a lot to worry about as many had to find real jobs. The house of cards is falling down as people lose their jobs and will be forced to sell the home they can no longer afford. Many of these people live paycheck to paycheck . No spinning this one RE shills
************
Hey John, Chickenlittle called and he wants his job back…
Check out this post from Garth’s site back on April 1st 2008
_________________
#5 Jeff on 04.01.08 <– check the date
William:
Wake up neighbour! I am a Realtor in Vancouver and word on the street amongst Realtors is that we’re due for a 20% correction. And I am of the opinion that Vancouver will experience a 40% plus crash.
_______________
Fun on a bun people!
I remember the 90s… what’s that TD dude sayin? House prices in Jan 1990 were 30% higher than Jan 1996! They dropped until 1995, then went sideways til about 2000 (when adjusted for inflation it was until 2005 I believe where house prices recovered to 1989 levels)
So I say, Whutch u takin bout Willis?
#9 In the Cold from Toronto on 12.03.13 at 9:57 pm
If I’d have a million dolars, I’d move to Bahamas, and not think for one minute about buying a semi in Toronto… And I guess most people would agree with my statement.
Why is it than that most people go to the bank to borrow the said million and buy the semi? What’s wrong with people? Why do they dumb down?
I don’t know, nor can I pretend I’ll ever understand. All I can do is try to talk sense into them, and when I notice that they’re not listening, get out of the way.
————————————————————-
Hopefully you were not talking them out of a semi in Rosedale. Or the Annex, for that price.
#19 JSS on 12.03.13 at 10:17 pm
Garth –
Is Dundee REIT dead? It’s lost over 25% value this year, and is paying over 8% dividend.
It’s on a linear downward trajectory with the evaporation of its market price shredding any potential gains in dividend returns.
Nation-wide layoffs and the seizing-up of the Hogtown economy aren’t particularly stimulating for commercial real estate.
Haven’t been to a Toronto mall lately, have you cowboy? — Garth
aprilNewwest – they moved sideways (or more accurately up and down a lot) in the UK for a good while as the govt pulled out all the stops with ZIRP and QE. Your central bank will probably do the same – they all love it!
If I put 25% down and my property appreciates 3%, doesn’t my investment increases 12%. (for argument’s sake only- not including closing costs etc etc)
After you sell and pay commission, you mean? — Garth
Gath the truth is that the party will soon be over. The key was the fire sector, which is literally about to set the herd on fire. This ride is going to be rough.
Haven’t been to a Toronto mall lately, have you cowboy? — Garth
Had enough of that back during the project in equatorial Africa.
Seems to me that if a flower shop has to move to a back-lane corner shop because of collapsing business due to mortgage payments bleeding a population dry, anyplace having Sears as an anchor won’t be handing out xmas bonuses this year either.
If real estate prices pull back 10-15%, there may not be blood in the street, but the sewers will be overflowing with home owner sweat.
Need I say what follows next?
Indebted consumers, businesses and now more so: municipalities and provinces; just as revenue streams begin to dry up.
Low rates have worked to disguise risk and seemingly pushed debt to the back burner.
CPA’s who practice the dark art of ‘innovative’ bookkeeping may be in high demand.
On a temp/contract basis no doubt …
Canada’s government debt problem: The numbers just don’t add up:
http://opinion.financialpost.com/2013/12/03/canadas-government-debt-problem-the-numbers-just-dont-add-up/
http://www.youtube.com/watch?v=dn1u6tzwRxA
Maybe this guy has figured out what the problem is with the housing market.
It’s hard to find the sanity in all of this, isn’t it? Just when you think the consumer is uber-tapped out, he/she finds a way to borrow more for something or other.
A few things are increasingly clear to me. Banks & other creditors seem focused more on the ability to make the monthly payments on any loan or combination of loans, than they do total debt. The more you owe, the longer you stretch out the payments… no matter how low interest rates may be, the loaners do just fine.
I’m not sure what’s going to happen with interest rates. The Canadian consumer, many would have us believe, is so close to the edge with debt payments, the merest uptick in rates would almost immediately send many running for consumer proposals or bankruptcy trustees. Sure, savers would be marginally better rewarded kin the short term but it seems to me rates don’t have a lot of room right to move upwards.
The ’emergency rates’ may well have been put into place with good intentions – to assist consumers in the onerous task of reducing debt. Instead – we were urged to pig out on debt financed goodies. Nothing prevents the banks from tightening their own criteria for mortgage & consumer loans to match their talk of ‘fiscal responsibility’ on the part of their clients. Have they?
Not only do they not appear to have made serious attempts to do so, they’ve raised service fees of all sorts. Want a paper statement? That will cost you a few bucks a month & hurts most those least able to take advantage of online statements – the poor who can’t afford computers & the many elderly who can’t even manage an ATM. And if my bank is any example, they’re flogging insurance on a pretty hard sell basis. I’ve spent the last few months throwing out the same insurance offer only to get a sales call at nine o’clock a few Friday nights ago. “This is M— from CIBC. Mumble, mumble, your banking security, mumble, mumble.” I thought one of our accounts had been hit or an attempt made. No – I was being offered the security of overpriced life insurance.
Rent to Own, Cheque cashing services, all sorts of sleazy E-Z borrowing options are out there. The only thing any of them focus on is the weekly/monthly running costs. If they’re obliged to add up total costs, it’s buried in fine print at the blurry bottom of glossy brochures.
Inflation? Deflation? Recession? Depression? Stagflation? I have no idea. All I know is that my best weapon against any of the above is to either remain completely debt free or to plan short term borrowing with strict repayment schedules in mind. Diversify. Stay liquid.
And keep my fingers crossed we don’t get hit with news of more job losses. It may not directly affect anyone I know but it’s still PEOPLE being hurt & a hell of a lot of them weren’t ready for anything like this.
I’m seeing more & more empty store fronts in my city. People around me are either having hours cut or losing their jobs entirely. Our apartment building is nothing to write home about & by all measures, not expensive. We pay roughly $1.30/month in rent & that’s utilities included, rent controlled. Even so, increasingly people are taking in roomies just to keep their heads above water.
And you have to know it’s going to be worse after Christmas, it always is as the bills come in.
#19 JSS on 12.03.13 at 10:17 pm
Garth –
Is Dundee REIT dead? It’s lost over 25% value this year, and is paying over 8% dividend.
Can’t figure this one out
Extra yummy. — Garth
………………………………………………………………….
It’s going to get a lot yummier too!
Do you think the other banks will follow suit or is this the cost of BMOs expansion to the US, needing to streamline CDN costs to fund US expansion. I am not sold 100% yet that this is a sign of weaker economy unless RBC, TD follow.
Also, a devaluing the CDN dollar has been much hyped recently; in your opinion, what impact, if any, would this have on CDN residential RE?
This week some of the most awesome unions in the world were unable to stop a judge from agreeing that Detroit can renege on billions in public sector pensions.
———————————————
Someone needs to point this out to Ontario unionized workers who are reminded (harassed?) by their leaders constantly to vote for the party that keeps borrowing to give them more and more.
We’re $250bn in the hole. The hole gets bigger by $18bn a year. No effort made to plug the hole. Ontario now has to deal with a 42% rise in hydro rates in three years. That’s going to make employers flock here I’m sure. More job losses on the horizon, guaranteed. Add those to the dole line when then RE industry stumbles. Tax revenues are going to stutter… no room for more “revenue tools”.
What else? Oh, interest rate rises combined with credit downgrade will increase the $10bn already paid in interest alone on the debt. Wynne wants to increase the public payroll (with pension obligations, natch) with such creations as her Ontario Pension Plan – designed to be the saviour for individuals with as much financial prudence as the government that leads them. No thanks, I’ll give my money to Garth to manage without the ridiculous hemorrhaging of overhead.
Think a Greece or Detroit scenario won’t happen in Ontario? I’ve already told my partner (who is happily saving bugger all in anticipation of her Ontario government pension covering her ass) that she might wish to reconsider her strategy.
So glad to be working for a recession-proof company based outside of this province.
Garth,
Based on this it seems like now is the perfect time to be buying oil and gas stocks; and probably potash as well. Your thoughts?
Garth, I know you have frequently said that the various real estate figures given by the industry can not be relied on and are altered from time to time with no explanation given. Well, I have discovered that “altered” is the understatement of the year in the Comox Valley. I have been downloading figures for this area for the past year. I will give a few examples of what I have discovered.
November 2013, Single Family Sales: 288, Last year (2012) 286, all taken from this month’s figures.
November 2012, as reported at that time: Sales 56!, a difference of over 500%.
November 2013, Single Family Inventory: 2141, Last year (2012), 2395, again all taken from this month’s figures.
November 2012, as reported at that time: Inventory 420!, a difference of over 500% again.
And all offered with absolutely no explanation whatsoever.
#10 Oil is not surging in fact it has fallen 10% in the past 2 months. Oil will rebond during the next upset in the middle east but in the meantime it will probably fall to the mid eighties by x-mass. This will have an impact in Alta but for the time being RE in Van and GTA will take a big hit especially the condo market. There will be too many segments of our Canadian economy over the next year hanging by their fingernails. There will be Blood!!
one of the blog dawg’s posted the head honcho at Dundee say’n buy gold and hard assets like RE just 3-4 months ago
Not a word on CMHC limit increase today huh…..Hmmmm
#29 TnT: “Hey John, Chickenlittle called and he wants his job back…”
No I didn’t! Besides, I’m a chick!
@Ford Perfect
November 2013, Single Family Sales: 288, Last year (2012) 286, all taken from this month’s figures.
November 2012, as reported at that time: Sales 56!, a difference of over 500%.
November 2013, Single Family Inventory: 2141, Last year (2012), 2395, again all taken from this month’s figures.
November 2012, as reported at that time: Inventory 420!, a difference of over 500% again.
**********************
Dude are you sure they did not add a digit by mistake?
Those inventory numbers are bigger than in TO!?
#19 JSS on 12.03.13 at 10:17 pm
Garth –
Is Dundee REIT dead? It’s lost over 25% value this year, and is paying over 8% dividend.
Can’t figure this one out
Extra yummy. — Garth
—–
Unfortunately, Garth said no individual stocks, so I guess we just have to watch this one and hope the ETF holding it increases its yield nicely as well.
Benjamin Tal got it right.
http://www.cbc.ca/player/News/TV+Shows/Lang+%26+O%27Leary+Exchange/ID/2421771672/
Since we are so in debt relative to the other nations the rise interest rate will be very (very very) slow…almost negligible. I don’t see any pullback or correction in RE.
Most people will lock in longterm (ie 10yrs). We are good. Garth, you got it wrong. Hate to tell you I told you so….
Rates can stay low for years. Housing is still at risk. — Garth
Panic!! SELL! BUY! Opinions!! ETF’s Up Down REIT’s melt
How can people get SO excited by the Trivial moves in the market, interest rates, and employment stats every day?
Today us markets down 94 yesterday down 77. So what?
A 1% move maybe a tad +/- really meaningless.
So, who got rich today? Who went broke today? Who had fun today, or just studied their hood / herd for insight?
Opinions are a great read, but solve few problems.
Me, I’m just on cruise control autopilot tonight, fun day!!
More likely that prices will go sideways rather than down or up for at least 10 years, especially with no rate hike in the near future.
HAM! HAM! HAM!
Please buy my $888,888 1-bdrm bungalow….
http://www.realtor.ca/PropertyDetails.aspx?PropertyID=13893252&PidKey=1256909568
… and turn it into a giant cartoon palace!
http://sellandbuyrealestate.ca/gallery/10.html
Garth, don’t forget to add in 1000 layoffs at BMO (they tried to sneak that one by but the news caught it today)
RIM/BB/Whatever – 5000 + 4500
Potash – 1000
Heinz – 1000
Sears – 1000
BMO -1000
Economy is STRONG though! We’ll all work at tim hortons and for the public sector.
Doesn’t anyone else think it’s bizarre that Jake is making $150k per year and has virtually nothing to show for it other than a paid for house worth about $450k? No savings to speak of? What has he been blowing his money on?
Investing is all well and good but it’s got to start with saving money instead of spending it. I’ve never made anywhere close to $150k per year but have almost the same amount in investments that he has in his house (if he sells it before the prices fall) and will have a paid for home when I retire in 6 years.
A home is not an investment – it’s a place to live. If it’s more reasonable to rent, then rent; if it’s more reasonable to buy, then buy but never buy a house that will prevent you from saving enough money to invest for retirement or whatever your goals.
People agonize over pittance differences in their returns but think nothing of wasting thousands of dollars every year to maintain their “lifestyle”. It’s no wonder that Canada has a housing bubble with such delusional consumers.
#56 Economy is STRONG though! We’ll all work at tim hortons and for the public sector.
Actually, no, because only Temporary foreign workers can get jobs at Tim Hortons.
Jobs aren’t for canadians anymore!
#159 DonDWest on 12.03.13 at 1:42 pm
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.
====================================
Totally true. It is exactly what happened to me, and my parents before me, starting at about 66. I am still physically active and have no medical conditions, but it is like the air starts gently leaking out of your tires for no obvious reason, affecting stamina and concentration. There is a reason people retire at 65 and increases in life span do not mean 20 more years of being 55. People need to stop believing media bullshit and factor decline into their retirement planning.
On the other hand accepting the inevitable can lead to a saner view of work/life balance. If you are really agonizing over paying for overpriced particle board in the GTA, ask yourself how important will it all seem as they are wheeling you into the hospice. On my mother’s 80th birthday I asked her what she felt. She said, “How did it all go so fast?”. Ten years later I asked her what she thought about hitting 90. She said “I think .. I think…I think, what the hell was all that about?”
Garth.
Most questions on here are “when do i buy/sell/etc”. Well here’s one for you, I’m currently renting, i’m looking at having a change of scenery soon – when would be the best time to start looking to rent (with this influx of surplus)?
When should i start looking to take out new 1 year rental contract? How long before rents start dropping like flies?
(live in Vancouver, thinking westend or north shore)
As to the comment of ‘ cheep cheep’, it may be a bit odd to be making the 150k pretax without savings. A house and cabin don’t come cheap in Alberta anymore. After his taxes, his child support payments, the new topend truck payments to keep up with his buddies at the refinery here, the bad investments in the past, combined with the good, there isn’t much to show for it.
To many in Canada, a house is a retirement plan, an investment, and always goes up. There are many here looking for a greater fool.
One of the most foolish parts here is the shoddy state of almost all construction. Its extremely rare to find a old structural brick building here in Alberta. So much is shoddy 2×4 framed. Like zero stone houses, and very few log homes. If we ever had a war in this country, the images wouldn’t look like Kosovo, with burned out houses, it would look like southeast asia after a typhoon, splintered matchsticks everywhere!
Sure, you can buy a house in Detroit for $1, but the crime there is so bad that now even the Chief of Police is getting carjacked !:
“Detroit Police Chief Catches Flak Over ‘Carjacking’ Experience”
http://detroit.cbslocal.com/2013/10/24/detroit-police-chief-catches-flak-over-carjacking-victim-experience/
Crime is exploding so badly in Detroit that there is now an interactive map one can explore:
http://www.detroitnews.com/article/99999999/SPECIAL01/120606001
“six people were carjacked over an eight hour span earlier this week”
http://detroit.cbslocal.com/2013/08/23/6-people-carjacked-over-8-hour-span-in-detroit/
#30 Bob Rice – absolutely correct. Same thing in the Okanagan.
By mid 90’s they had overbuilt so badly that some projects took up to 4 or more years to sell out. Many projects sat uncompleted with doors and windows covered with plywood.
Prices of units dropped considerably from when project first completed. They were building condo’s and selling at cost just to unload the land they were sitting on.
A townhome that sold for 115,000 in 1992 sold for same price in 2000. Absolutely no demand. Open houses and nobody showed. It was dreadful.
Market topped in 94 then dropped about 20% and did not recover back to original price til around 2000.
Same thing happened in the 70s and same thing happened in the 80s. Why would we expect things to be different now?
TnT realtor with no brains how will people who lost their jobs and reduced income make their payments? Many are already getting foreclosed on . MLS has them grouped as “as is” . Drive around the GTA and it is clear as day all the for lease signs as business go bankrupt and or close down. Big box store like best buy, target, sears are taking a pounding. Big and small businesses are hurting and the lay offs . Banks are cutting people like crazy. Points have laid off a lot of agents. The list keeps growing by the day as the RE house of cards comes crashing to the ground. Realtors are worse then criminal car salesman . RE is choking off the economy. Are these realtors really that stupid and uneducated? Why do people even hire these useless uneducated morons?
#58 ex Tim Hos employee on 12.04.13 at 12:38 am
”#56 Economy is STRONG though! We’ll all work at tim hortons and for the public sector.
Actually, no, because only Temporary foreign workers can get jobs at Tim Hortons.
Jobs aren’t for canadians anymore!”
I was working in Alberta in 06 when the housing market was going gangbusters and they were having difficulty finding people to work.
Speaking to the manager of Tim Hortons in Red Deer, she said that they were having great difficulty finding people to work at the wages they were paying which if I remember correctly was around 15.00. Much higher than what was being paid in B.C.
It was not long afterwards when returning to Alberta I noticed that a lot of the workers were from the Philippines. Plus, the service that was being provided by these new workers was 2nd to none.
And now we complain that foreigners are taking over our jobs. I saw the same thing happen on the railways going back as far as the 50’s when a lot of the workers were from Portugal and Italy. In the 70’s it was the East Indians who took on work that the rest of us didn’t want to do. Nothing much has changed really. We only have ourselves to blame.
wouldn’t it be nice if the feds had negative interest rates.
I would borrow like hell and move the fund to another currency which actually pays interest rates.
BTW the low interest in not only sparking up Mortgages. Its also sparked up an increase in people build stock on MARGIN.
The feds are really paddling up CrapCreek without a paddle
Rates can stay low for years. Housing is still at risk. — Garth
Risky if one thinks short term and/or a flipper.
45 Ford prefect – dont know what source you are citing but it looks like someone is confusing the comox valley stats with the island (exc victoria) stats
http://www.vireb.com/assets/uploads/11nov_13_vireb_stats_package_5118.pdf
You have to scroll through the frankenumber to page 9
Here’s last November. Looks like they removed one sale.
http://www.vireb.com/assets/uploads/11nov_12_sales_summary_1938.pdf
Fictitious Investing Example:
I know a guy who invested 100% of his money into one asset in the commodities market, the commodity being walnuts. All of a sudden there was a huge glut of walnuts, and warehouses of walnuts were being emptied, flooding the market with walnuts, and this guy said he did not even see it coming. I asked the guy what he ended up with? …….and he said: “crushed nuts”. Canadian RE: This will not end well…..always, Freedom First.
#55 – y8ou can build new and maybe have a rooftop deck to see and smell the rush hour traffic on the 401! “only” 900k for the privilege, neigh, the honour!
A lot of the companies in the XIU have cut heads recently. The gold companies all have.
aint ya’s never slid sideways down hill before?
#58 ex Tim Hos employee on 12.04.13 at 12:38 am
Actually, no, because only Temporary foreign workers can get jobs at Tim Hortons.
Jobs aren’t for canadians anymore!
_______________________________________
The farther you drive away from the GTA (like into areas where every other home has a Canadian flag) the less this is the case. A very Canadian but brown friend of mine likes to joke about the usually 99%-100% whitey-white Canadiany staff in these TH’s having to serve him instead of the usual ethnicy staff in the GTA.
http://img703.imageshack.us/img703/3668/c0q4.jpg
HEM, hot european money is saving Montreal.
http://www.bloomberg.com/news/2013-12-04/wealthy-global-buyers-favoring-montreal-spur-17-gains.html
“Risk. It’s not just an elevated stock market. This week some of the most awesome unions in the world were unable to stop a judge from agreeing that Detroit can renege on billions in public sector pensions. Imagine that. What a precedent.” – Garth
A precedent just for the US I’m afraid, here we’re going to pay like pigs…
A rate drop would kill the already wobbling $CAN, sure it would create inflation, but not the kind that grows wages but rather another burden on consumers who would pay more for most things. A rate hike is out of the question obviously.
The problem in Canada is taxes are way too high, add to that high debt levels and canadians are just squeezed, no margin, squeeze them more with anything, either with taxes, inflation, higher rates and the consumer driven economy (and government budgets) is heading for trouble.
In Quebec we are already there, the rest of Canada will follow.
#44 Mr. Frugal on 12.03.13 at 11:32 pm
Garth,
Based on this it seems like now is the perfect time to be buying oil and gas stocks; and probably potash as well. Your thoughts?
Potash yes, oil no. Potash cartel will resurface when they have killed off the new mines that were on the drawing boards. That coupled with 2 mines closing will bring supply back in line with demand. Prices will go back up and you will get nice 30-60% return within 3 years. In meantime enjoy resonable dividend. World needs food.
“Generation Screwed”
The “Bottom Line” panel on CBC’s “The National” last night discussed the subject that often crops up on this board and always is the fault of the rapacious boomers, unions and public servants.
Leave it up to the pinko labour economist to raise reality in the discussion. Jim Stanford pointed out that the next generation’s problem is that “there are no good jobs”, and that this is due to the way we manage the economy. Corporations are driving down wages, governments are cutting income supports, and good jobs are being outsourced around the world. For him, there is no economic reason and no rationale for why the next generation has to be worse off. His recommendation to young people: in addition to individual job-seeking efforts, demand, protest like the Quebec students or the Occupy Movement, and refuse to take it any more.
http://www.cbc.ca/thenational/content/analysis/thebottomline/generation_screwed.html (15:00 – 15:47 time mark.)
But of course it’s all the fault of the boomers, unions and public servants. After all, it’s they who manage the economy. Don’t they?
You can stick in your rear your house market cooling measures.
I believe that the prize for the idiot of the year is yours.
http://www.torontorealestateboard.com/market_news/release_market_updates/news2013/nr_market_watch_1113.htm
Sales up, prices up ☺ Job market going down ☺☺
I am extremely annoyed. So many assumptions going around whether the interest rates will remain low for years or creep up and climb dangerously high. No one of course seems to know what will happen in the next 5-10 years. I, for one, have been waiting for the opportunity to buy my first home for 5 years…patiently waiting for the “right time” to jump in. Yes, I rent, and it’s the smart thing to do, but what annoys me the most is hard working people like myself who does the prudent thing and saves his money, will never get this opportunity in the very near future. Why do the savers have to be punished for the stupidity of others?
I sit here with my pile of cash earning 1%, it really stinks. Now before everyone says “invest your money”, I do, i have a well diversified & liquid RRSP & TFSA, however, my down payment for this “dream” home of mine sits in a savings account. Why? it’s about risk and time horizon….as for my portfolio, this is long-term and I can withstand the ups and downs, but if I need access to cash for the potential opportunity to buy a home, I can’t stomach the volatility right now in the short-term.
Perhaps I should take this money and buy property somewhere besides Canada…maybe a summer apartment in Algarve, PT or Barcelona, SP…i heard there are some deals there since the opportunity to own a home in Canada for this ‘fool’ will never happen.
If you’ve been sitting on a pile of cash for five years at 1%, it’s you who are the fool. Stop thinking like the Jar Lady. Big mistake. — Garth
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
Bye Bye Lonnie…….
Just finished reading this book… I suggest everybody else read it..
http://blogs.wsj.com/moneybeat/2013/10/23/forget-tapering-its-a-code-red-economy-john-mauldin-says/
Another doomer book. — Garth
Tara Perkins on twitter:
Toronto’s existing home sales in Nov were about 4% higher than the 10-year avg, Toronto Real Estate Board’s Jason Mercer tells me
☺
This must be due to foreign investment since our $ is going down ♫♫♫
Perhaps I should take this money and buy property somewhere besides Canada…maybe a summer apartment in Algarve, PT or Barcelona, SP…i heard there are some deals there since the opportunity to own a home in Canada for this ‘fool’ will never happen.
If you’ve been sitting on a pile of cash for five years at 1%, it’s you who are the fool. Stop thinking like the Jar Lady. Big mistake. — Garth
Hold on, don’t buy anything Canadian.
Spain is a good market right now if you can manage the property after buying it. Regarding the location, Costa del Sol is also OK. You can rent it, there is lot of english people on that side of Spain. Many of them retired there and have established property management companies so you can probably use them to do the work. Barcelona is cool as well, that is where I plan to retire.
Netherlands is also a place where you can buy and if your skills are suitable you can move there to work and live for a while.
Believe me, when the canadian shit is going to hit the fan it will be worse than US because F (may his name be F..ed for ever!) has no more bullets to fire without destabilizing the entire country.
The retard was supposed to cool off the RE market but what he did was like wanting to sleep with a girl and wanting her to be virgin after that.
Anyway, back to your problem; read this
http://www.zerohedge.com/news/2013-12-03/15-signs-we-are-near-peak-stock-market-bubble
and think twice before you put your money in the stock market no matter what sort of stocks of amalgamation of stocks you buy. The analysts (Rubini, Schiller etc) all agree that the QE inflated the markets as well.
Your other option would be to buy art work (ex paintings http://www.sothebys.com/en.html) or start a business that you know and you control.
What exactly does this mean “Jake’s wife, Penny, fights to keep the house until it’s time to retire and move”. How exactly is Penny fighting, no mention of Penny contributing financially is there. These people have very little to show for that income level.
I am sure Gail with the money jars would show that they have shoveled a lot of money into discretionary spending, it’s not possible to earn that sort of money and have nothing to show for it that close to retirement except for a 450K house and a cabin.
This bubble is surely going to make neighbours loathe each other, as it seems to be creating two camps, the Jakes who are barely hanging on and those who are waiting for the Jakes to fall.
You advise poor Jake to sell at the top so he’ll have a comfortable retirement, while I advise any potential buyers to steer clear – screw Jake, he made his choice when he bought at the top. Otherwise the can’s only being kicked down the road, and the risk passes on to the next poor unfortunate soul who believes that the only safe investment plan is real estate.
Eventually this will all start unravelling, and while I feel for the Jakes and the fact that their retirements will not be as comfortable as anticipated, I am rooting for those of us who are waiting for a correction so affordable housing becomes available once again.
Garth my jaw dropped reading that….
“Stephen Poloz is starting to mull the unthinkable – a rate drop”
The emergency interest rate policy has been with us since the end of 2008.
I’d like rates to start rising, but I think Smoking Man is right, remember reading how he thinks a rate drop will happen.
Just thinking about the rate going from 1% to say .75% or less, 2008-2009 its still here.
More evidence the US and Canada are on divergent paths. It’s a real shame that 70% of all Canadians who own equities have only Canadian assets. — Garth
Hi Garth – I would love to see a future column on intelligent strategies to “leverage the value tied up in your home”. Ie, For those of us with mortgage-free houses – how can we best put that equity to work? (borrow against the house, invest, tax deduction for the interest, blah blah… ) Catches, gotchas, risks, etc.
Thanks!
#65 Ronaldo — “Speaking to the manager of Tim Hortons in Red Deer, she said that they were having great difficulty finding people to work at the wages they were paying which if I remember correctly was around 15.00. Much higher than what was being paid in B.C.
It was not long afterwards when returning to Alberta I noticed that a lot of the workers were from the Philippines. Plus, the service that was being provided by these new workers was 2nd to none.
And now we complain that foreigners are taking over our jobs. […] We only have ourselves to blame.”
Really? Which of us should take the blame, those who didn’t feel $15 per hour was adequate compensation for slinging coffee in Red Deer, or those who had better jobs paying the same or more with another employer?
It’s an economy. Every employer wants to pay the minimum for competent labour. If the franchisee couldn’t fill the jobs at $15, he should have tried $16, raising coffee prices if need be. Or he (and the franchisor) could have invested in outsourcing, with the drive-thru intercom being manned by someone where wages are cheaper, and automation, with automatic dispensers so staff could service 150 customers per hour instead of 100.
Some job classifications and business models just don’t survive in modern labour market conditions. For example, it’s very hard to get a job as a butler, valet, lady’s maid or footman.
But the right answer to shortages of unskilled labour at a certain price usually isn’t to import it from abroad. Our Harper Government’s websites do a great job of describing the “Temporary Foreign Worker” program to Canadians, while telling overseas applicants about the path to permanent residency and family sponsorship via that same program. It appears that immigration policy is being driven by the needs of current and future Conservative Party supporters, rather than as part of a public and coherent plan for the country as a whole.
Garth –
Is Dundee REIT dead? It’s lost over 25% value this year, and is paying over 8% dividend.
Can’t figure this one out
Extra yummy. — Garth
__________________________________
So something doesn’t add up to me…
Garth you’ve essentially been saying that rising of interest rates is inevitable (which is one part of “RE is going to flounder” thesis). Yet you’re also pretty much saying REITs were attractive in the summer and apparently D.UN is looking good (or extra good) now.
Unless I’m mistaken, rising interest rates means that yield for REITs and other fixed income must also rise….unless these companies decide to kick out more $$ in distributions (which i guess could happen for REITs, but not for prefs), the only way the increase in yield can happen is a decrease in the share/unit price, i.e. capital loss.
In the past few weeks, the Dundee REITs i follow have been getting destroyed, to the point where you wouldn’t make up the capital erosion with distributions for years.
So what makes these things so yummy at this point in time??
“Add these thousand jobs to those being offed at Encana, Heinz, Sears or Blackberry.”
***************
And, don’t forget Bank of Montreal….
@#85 Jeff in Moose Jaw
I’d like rates to start rising
—
——-
Please explain . i’ve got more cash than debt and i don’t want rates to start rising
Oops! Should have read abit further. LOL
#81 annoyedbuyer — “I sit here with my pile of cash earning 1%, it really stinks. Now before everyone says “invest your money”, I do, i have a well diversified & liquid RRSP & TFSA, however, my down payment for this “dream” home of mine sits in a savings account. Why? it’s about risk and time horizon….as for my portfolio, this is long-term and I can withstand the ups and downs, but if I need access to cash for the potential opportunity to buy a home, I can’t stomach the volatility right now in the short-term.”
Your cash isn’t “earning” 1%. It’s getting a 1% honourarium for sitting around doing nothing.
Yes, I know. Somebody told you that if you have a possible large outlay coming up, you should keep the capital for that in cash, lest the market move against you. Why did they say that? It comes down to the psychology of loss aversion coupled with money managers’ desire not to get fired.
Do you need the house, and could you not afford the house at future prices if your downpayment was reduced by 10%? If yes to both, keep the DP in cash. Otherwise, BET. Life is a game of poker. Bet when the EV is positive, pass or fold when it’s negative.
“The best-case scenario may be that which TD strategist David Tulk just outlined: “It feels like it’ll be a repeat of the 1990s, where house prices just move sideways for about 10 years.””
According to UBC Sauder housing data, Toronto real prices peaked at ~$350K in 1989 and bottomed ‘sideways’ at $210K until 1997. Prices didn’t reach the first peak again until 2006. Whatever that Tulk guy is smoking, pass it.
“Toronto’s existing home sales in Nov were about 4% higher than the 10-year avg, Toronto Real Estate Board’s Jason Mercer tells me”
Any time a shill compares current sales in a high-growth area to the ten year average, it’s bad news. How many fewer people were living in Toronto ten years ago? An honest person would look at the trend in # of households and compare turnover with that.
#87 Detalumis — “What exactly does this mean “Jake’s wife, Penny, fights to keep the house until it’s time to retire and move”.
I think it means that they’re staying put until the Penny drops.
#64 john
John the Baptist Prepares the Way!
Preaching in the GTA of Toronto
“Repent, for the kingdom of heaven has come near.”
God bless you brother…. ;)
“If you’ve been sitting on a pile of cash for five years at 1%, it’s you who are the fool. Stop thinking like the Jar Lady. Big mistake. — Garth”
I don’t disagree with your first statement, but if everyone listened to the jar lady they would be far, far better off than most. Before you can invest you require the knowledge to live within your means and save. Most don’t do that. Jar lady teaches you how.
That does not sound germane in this instance. — Garth
#92 REIT dead money? — “In the past few weeks, the Dundee REITs i follow have been getting destroyed, to the point where you wouldn’t make up the capital erosion with distributions for years.”
Which did you want; the capital, or the distributions? Buying a REIT is trading a lump for an income stream. Did your income stream get reduced? No? Well then, you got what you bargained for. I think if you compare REIT yields to life annuities, accounting for the fact that REIT yields go on after your death, they’re a pretty good deal.
According to UBC Sauder housing data, Toronto real prices peaked at ~$350K in 1989 and bottomed ‘sideways’ at $210K until 1997. Prices didn’t reach the first peak again until 2006. Whatever that Tulk guy is smoking, pass it.
So what you are saying price recovered in less than 10 years. What risk?
17 years. — Garth
#92 REIT dead money? on 12.04.13 at 10:35 am
So what makes these things so yummy at this point in time??
——————————————
Gravy. mmmmmmm!
What ever happened to “Don’t be a yield hog.”?
17 years. — Garth
Good one. Mortgage paid off by then.
Seventeen years = 0% return. If that was a stock, you’d shoot it. — Garth
“That does not sound germane in this instance. — Garth”
Well you brought it up. :) For the record she doesn’t recommend sitting on a pile of cash, other than an emergency fund. She recommends investing in… get this… a diversified portfolio.
Of course. Why wouldn’t she? — Garth
#98 Ralph Cramdown on 12.04.13 at 10:53 am
“Toronto’s existing home sales in Nov were about 4% higher than the 10-year avg, Toronto Real Estate Board’s Jason Mercer tells me”
Any time a shill compares current sales in a high-growth area to the ten year average, it’s bad news. How many fewer people were living in Toronto ten years ago? An honest person would look at the trend in # of households and compare turnover with that.
***********************
The average does exactly that
in 2003 the number of homes and sales in To was a lot lower (X) than in 2013 (Y)
Most probably (X+Y)/2 is exactly what was 2008 ☺☺
The funny thing is that you had a boom and bust in these 10 years so …how do you suggest they should calculate?
Interest rates also varied and that has an effect on sales as well. How do you put that into equation
There is no perfect solution for this but as long as the comparison shows a 4% increase above that average we are clearly in dangerous waters and it still makes sense to consider that number no matter how flawed the calculation method is.
In reference to $1M plus homes.
“In Vancouver, which boasts a rugged Pacific coastline and cultural ties to Asia, 40% of buyers of 1,239 such homes were from aboard.”
http://business.financialpost.com/2013/12/04/canada-housing-foreign-buyers/
Link, set and match.
@ #101 John
“If you’ve been sitting on a pile of cash for five years at 1%, it’s you who are the fool. Stop thinking like the Jar Lady. Big mistake. — Garth”
I don’t disagree with your first statement, but if everyone listened to the jar lady they would be far, far better off than most. Before you can invest you require the knowledge to live within your means and save. Most don’t do that. Jar lady teaches you how.
That does not sound germane in this instance. — Garth
______________________
Sure, hindsight is 20/20, he could have made some great gains had he invested his money in the market 5 yrs ago, but with his goal of keeping his principal ultra safe and liquid to pounce on a purchase when something came up, what else could he do?
If this was the situation today, with a lump of money that you want to keep safe, intending to be deployed in the short term, you can’t tell me you would recommend buying some balanced ETFs to achieve these objectives.
Why would there be losses in a balanced, diversified, liquid and professionally-managed portfolio? This is irrational, amateurish fear. — Garth
Should people move provinces for a juicy $15/hr Tim Hortons job? I can already picture my upper middle class lifestyle…
@91 Ralph
Good point about the government’s duplicity.
Temp foreign workers are a mixed bag. If you owned shares or a franchise of Tim Hortons, wouldn’t you prefer them to use this government-collusive process to drive down wages? If they raised wages to attract Canadians, would this translate into lower profits for the business, or could they pass the entire increase off onto the consumers?
From the joe-sixpack viewpoint, no temp workers would be nice because wages would rise. However, again we must note that the business could raise prices, and in general inflation in turn hurts joe-sixpack. Joe-sixpack only comes out ahead if the business cannot pass off the entire increase with higher prices, and must let some of the profits shift to wages instead. What do you think would happen?
Investing in automation may be viable, but I read in an online news story a while back that (for manufacturing at least), a machine shouldn’t cost more than 2x the annual salary of the human it replaces.
The best bet for wage slaves going forward is to not do something that technology can easily replace. I regret my career choice, but at least it doesn’t suffer in that regard.
@215 Cici from yesterday
On my recent once every five years vacation, my girlfriend and I went to a week-long all-inclusive in Cuba. It actually made it somewhat hard to enjoy the trip when I saw how little opportunity the Cubans had. How can I laze around drinking alcohol when these people are working 12 hours a day? It’s true that some Canadians acted poorly at the resort. At least tourism helps Cubans, both in the tips we give, and also in the fact that working on a resort is the highest paying job available to them. Just as an interesting aside, from talking to the guy who took us on an excursion, a tip of even one CUC is equivalent to 25 of the regular cuban pesos, which is roughly equivalent to the cost of a pound of pork.
#99 Ralph Cramdown on 12.04.13 at 10:58 am wrote:
I think it means that they’re staying put until the Penny drops.
Ooooo. That was… that was… well, let’s just say I’m still groaning inside.
If this was the situation today, with a lump of money that you want to keep safe, intending to be deployed in the short term, you can’t tell me you would recommend buying some balanced ETFs to achieve these objectives.
_______
Why would there be losses in a balanced, diversified, liquid and professionally-managed portfolio? This is irrational, amateurish fear. — Garth
_______
Seriously? So you’re telling us that it is not possible for a balanced, diversified, liquid and professionally-managed portfolio to have any short term losses. Again, I’m talking about the situation where a lump sum needs to available to deploy short term.
I’m not purposely trying to be confrontational, but your answer is just not what I expected.
Then educate yourself. Five years is a long time. — Garth
Seventeen years = 0% return. If that was a stock, you’d shoot it. — Garth
If you lived in the high demand area, the recovery is actually less than 10 yrs. We all know what happened to RE prices for the next 10 yrs. And it aint 0% return.
Location Location Location.
#94 eddy
Please explain . i’ve got more cash than debt and i don’t want rates to start rising
.
______________________
Hi Eddy,
Well like cheap and plentiful booze, no economy can recover with more easy/cheap money – we tried that (like trying to get sober by drinking more). How bad do you want this hangover to get? Until the economy (patient) is killed? Pay now or pay later…. That’s how I see it.
From Mr.Poloz:
“The housing sector has been stronger than expected but is consistent with updated demographic data and a pulling forward of home purchases in light of favourable financing conditions,” the Bank of Canada said as it held its benchmark overnight rate at 1 per cent and again gave no signal on the path of interest rates.
“The bank continues to expect a soft landing in the housing market.”
Arshy Mann on twitter:
Goddamn, it never ends. RT @christinedobby Sun Media says it is cutting 200 jobs – about a quarter will come from editorial operations
Add that to our list at #56
“Of course. Why wouldn’t she? — Garth”
ZACTLY! Quick picking on her! :)
Jarology doesn’t work. — Garth
Seriously? So you’re telling us that it is not possible for a balanced, diversified, liquid and professionally-managed portfolio to have any short term losses. Again, I’m talking about the situation where a lump sum needs to available to deploy short term.
I’m not purposely trying to be confrontational, but your answer is just not what I expected.
Then educate yourself. Five years is a long time. — Garth
During that 5 years he wanted to be able to buy at any moment. Your answer is not an answer it is just saying “you should have paid somebody to manage your money”
☻
He made the wrong choice, n’est-ce pas? — Garth
@Ralph/#
…”For example, it’s very hard to get a job as a butler, valet, lady’s maid or footman.” – Ralph
“Will that be one lump or two, M’Lord?”…
[UK DailMail] – The British butlers earning £100,000 a year in Dubai: But they no longer just polish silver, they motivate and manage properties
…”Dillon, 37, dropped a military career to become a butler three years ago and moved to the Palm Jumeirah to work for an Emirati family business.
‘I went in at entry level at £35,000 plus all expenses paid. I now earn £70,000 but I work very hard,’ he told the BBC.
‘I travel bi-weekly and I am expected to be on call 24/7, caring for my principal’s personal things like clothes, travel bookings, reservations and shopping. I also have to make sure he’s always looking good and that he stays hydrated in the heat.’
His salary is tax free, with bonuses, and the holidays are long. His mode of transport is private jet and his apartment is impeccable.”…
http://www.dailymail.co.uk/news/article-2419031/The-British-butlers-earning-100-000-year-Dubai-But-longer-just-polish-silver-motivate-manage-properties.html
Rate drop is obvious when you follow the economic and geo-political news around the world. Canada simply follows. As an export Country we don’t have many other options. The consequences of all Central Banks around the world printing money at the same time: Inflation of the things we need, and deflation of the things we own.
#103 “What risk?”
That an artificial recovery fueled by the most aggressive regime of federal real estate stimulus in the country’s history can’t be sustained any longer.
Why not? — Garth
#121 fixie guy on 12.04.13 at 12:35 pm
That an artificial recovery fueled by the most aggressive regime of federal real estate stimulus in the country’s history can’t be sustained any longer.
—-
Imagine for a second that you are Ben Bernake or any central bank planner. You are probably part of the 1% group. Now imagine you just watched the scenes from Black Friday of the fights and storming of wall marts by the frenzied unwashed masses.
Now you don’t think that the 1% of this world can’t imagine a scenario where the economy is in tatters and those zombie hordes are climbing the walls of their Hamptons estate? They will never let the economy falter to that level and will do whatever to maintain the illusion; inflation, currency debasement, whatever.
If F doubles the contribution limit on TFSA, I will vote for Harper forever.
Last week, Australian mining and energy services giant Worley Parsons posted their 3rd consecutive quarterly loss and saw their market share evaporate by 1.36 billion over night, a staggering 26% drop.
They blamed delayed Canadian oil sands projects as one of the key reasons for the loss. They shortly after shut down their Victoria office (not a hot bed of oil sands, but collateral damage I guess). I haven’t seen any official announcement of it and don’t know how many worked there. Wonder what will happen to staffing levels in Alberta.
Wow – I don’t know how Garth will pick his topic for tonight’s post:
1) Poloz stays at 1%, cites concerns on “disinflation”. $CAD at 3-yr low vs. $USD.
2) November RE numbers are released, and TREB’s headlines are as bubbly as ever (11.3% YOY average price gains, and 16% for SFH in 416!!!)
3) U.S. job gains well above expectations (assuming ADP report is accurate).
4) Layoffs, layoffs, layoffs from BMO, Potash, and many others. Also – the bad news continues for Sears.
5) European and Japanese economies may not be as strong as their stock market gains would have suggested.
#123 not 1st on 12.04.13 at 12:56 pm
If F doubles the contribution limit on TFSA, I will vote for Harper forever.
—
Why? you’ve already been saved, the jobs done, he’ll win anyway. He just promised 95 million (and more if needed {it will be needed})that he doesn’t have to clean up the last psyop ,Lac Megantic
“The purpose of Government is to borrow money”
http://cluesforum.info/viewtopic.php?f=33&t=1646&hilit=CGI&sid=fde1004690d3dd141de08aaa386c76ec
http://tinyurl.com/ows3u3s
Where did this guy find those numbers ?
– 49% of homes that cost at least 1 million are purchased by foreigners in Montreal
– 25% of such homes in Toronto are foreign owners
– 40% in Vancouver
“Today (Wednesday) the Bank of Canada announced no change in interest rates, but there’s talk on Bay Street boss Stephen Poloz is starting to mull the unthinkable – a rate drop.”
———————————
…not unthinkable to many people.
Most recent rate changes around the world:
Australia – cut
Brazil – raise (inflation issues with currency)
Canada no change, cut suggested
Chile – cut
China – no change (pegged to the USD)
Colombia – cut
Euro area – cut
Hong Kong – no change
India – raise (inflation issues with currency)
Israel – cut
Japan – 0 rate
Mexico – cut
South Korea – cut
Thailand – cut
Turkey – cut
UK – no change (0.5%)
USA – no change (0.25%)
What does this all mean?
Low rates & slow growth for a long, long, long time.
Bonus tips:
Kinder Morgan on sale today
REITs in Canada will be under pressure due to tax loss selling -> wait until Jan to buy.
…and DOW 20,000 is my call for 2014.
#127 Stickler on 12.04.13 at 1:23 pm
…and DOW 20,000 is my call for 2014.
—–
James Altucher, a weird ex wall street guy made this prediction about 3 years ago and everybody said he was certifiable but he was right on. Insiders know when the FED stimulates, it goes right to stocks. Consumers never see it except maybe for a 1% suppression in lending rates which is miniscule.
#58….”#56 Economy is STRONG though! We’ll all work at tim hortons and for the public sector.
Actually, no, because only Temporary foreign workers can get jobs at Tim Hortons.
Jobs aren’t for canadians anymore!”
Hey…don’t diss TIMS…..I bought the stock 2 years ago at 18 and it trades at $63 today…..luv the TIM…..
Most Canadians would love to work for the public sector…but those jobs are saved for new immigrants….to “represent the face of the community”….said Stockwell Day…..in other words there are no jobs for 350,000 immigrants per year…but if the politicians want to mine votes in immigrant communities…we must create jobs for the new immigrants out of the public purse…..sounds Orwellian….but I didn’t write Stockwells speeches.
RE: #92 REIT dead money? on 12.04.13 at 10:35 am
Garth –
Is Dundee REIT dead? It’s lost over 25% value this year, and is paying over 8% dividend.
Can’t figure this one out
Extra yummy. — Garth
__________________________________
So something doesn’t add up to me…
===========SNIP!===============
So what makes these things so yummy at this point in time??
The fact that some other SOB took the 25% capital loss on D.UN, makes it extra yummy for the vulchers.
The question is; will it get tastier?
Bad Decision versus Bad Outcome
He made the wrong choice, n’est-ce pas? — Garth
***********************************
this was about keeping money to used to buy a house in a savings account versus balanced investment.
A bad outcome, revealed after the fact does not mean that the decision was wrong (based on the facts and risks) at the time the decision was made.
Yes it does. — Garth
@Herb #79,
I watched the panel last night. The funniest was right at the end of the segment when the Union guy was asked what (tenuously employed) young people, saddled with debt, and desire for a better life, should do if their employers were treating them poorly. His answer: “don’t be afraid to complain, stand up for your rights”
Yeah, and watch as NOBODY else stands with you. Don’t be surprised if your employer would rather dismiss you with severance than put up with your whining. Two weeks pay in lieu of notice is less than what their lawyers will charge in the first week.
And don’t expect any of the union co-workers to come to your defense, either. They already voted to give you the shaft by agreeing to multi-tiered wage scales, and demanding priority when it comes to allocating overtime.
They’d rather divide up the shifts left by your dismissal amongst two or three long-serving union members getting paid time and a half (at their wages) to do your job as their overtime.
Wow double top collapse on Canadian subprime lender Home Capital Group:
http://www.stockhouse.com/companies/quote/t.hcg/home-capital-group-inc
The long awaited correction could finally be here.
Garth was right all along!
#129 Stickler – I looked into my crystal ball and I saw the Dow at 17500 by spring of 2014 and dropping down to 14875 by summer and ending 2014 pretty much where it is now. I figure that is just as accurate as any other prediction that is thrown out there.
#109 REIT dead money? “Why would there be losses in a balanced, diversified, liquid and professionally-managed portfolio? This is irrational, amateurish fear.” — Garth
——————————————————
I believe that fear is well justified in this artificially buoyed economy because it is difficult to have a consistent strategy when things can be so unpredictable. Especially when the capricious actions of central banks is at play. As an example, in your recent book “Money Road” of 21010, you state that “we’re on the verge of range bound stock market in which finding growth assets is critically important. Equally, why those who passively invest in index funds or ETFs may be in for a nasty surprise.” Well, Garth, this advice is in direct conflict with your more recent advice to invest passively with a balanced and diversified portfolio based on index ETFs that you simply rebalance as prices adjust. Garth, it’s hard to not be afraid when the ground is shifting so much.
Where did I advocate passive investing? — Garth
#92 REIT dead money? on 12.04.13 at 10:35 am
____________________________________________
expect RIETS to get crushed by another 25-30 % in 2014. along with the DOW and SP. just watch from the sidelines.
the 2009 bull market is finally over. hold on for a hard landing.
Did you just make that up? Because there is zero evidence for a crash. — Garth
#132 Kommy Kim –
”The fact that some other SOB took the 25% capital loss on D.UN, makes it extra yummy for the vulchers.
The question is; will it get tastier?”
Same questions were being asked on March 9th, 2009 when the market was down 50% from its high. The dumb money was selling and the smart money was buying. Are we supposed to feel sorry for those that were foolish enough to bail at this point. Even the CEO of the RBC was buying up his own stock in early February with his bonus money at the same time that the [email protected] was too scared to put anyone into equities and suggesting GIC’s. Wow.
#91 Ralph Cramdown – you should know.
@ 134 Smartalox
Good point, it’s impossible to complain when you know there are a number of competent people hungry for your job.
Be NOT Afraid of Capital Losses
Warren Buffett had most of his wealth in one stock. Berkshire. By the 80’s Berkshire was something like 98% of his net worth, eventually it was over 99%.
During the time that Warren Buffett had so much wealth invested in Berkshire its share price dropped at least 50% on four different occasions. Buffett himself mentioned this recently.
He was not afraid. Are you, fellow blog reader?
Of course astute traders could have jumped in and out and ended up with a higher return on Berkshire than Buffett did. Can anyone name such a person? I have never heard of one.
Rich traders are rare. Rich “buy-and holders” (of the right stocks) are common.
An interesting tale about a “BitCoin Bungler”.
http://www.bbc.co.uk/news/technology-25120902
ToTEM 2 -Terms-of-Trade Economic Model
multiple interest rate models
http://www.bankofcanada.ca/wp-content/uploads/2011/08/dorich.pdf
What affect would this have on the model?
http://www.cbc.ca/news/business/interest-rate-rigging-nets-2-3b-fine-for-global-banks-1.2450339
http://www.bankofcanada.ca/2012/09/publications/speeches/dutch-disease/
Re:#9 In the Cold from Toronto on 12.03.13 at 9:57 pm
If I’d have a million dollars, I’d move to Bahamas, and not think for one minute about buying a semi in Toronto… And I guess most people would agree with my statement.
That might be an excellent idea In the Cold from Toronto . The reasons being the Fukushima nuclear disaster and a big and or little ice age that is just about due.
Either way Canada is toast but you don’t have to be.
If you can afford to buy…buy.
As long as you arent dumping every single cent into it. If its part of your portfolio. Then good. But too many people have everything in RE and nothing elsewhere.
It gets harder and harder for first timers to break into the market….but why people want to rush into being tied down with a mortgage I dont know. Its not like you will sell if the price goes up in 2 yrs. So what does it matter.
So build other aspects of your portfolio. There is a lot of stress and lost cost with owning. You lose money with rent too but you have a place to live and less worry imo.
Everyone has to make a call for their own situation.
diving into real estate when you really cant just doesnt make any sense. You may potentially lose out on possible profit but long term for the vast majority of us its probably better to hold off on buying right now, imo.
MA, the mealoaf!
Wouldn’t it be ironic if the clumsy behaviour of the real estate cartel itself pushed RE past the tipping point?
I have been trying to log on to the “new and improved” MLS, Realtor.ca today.
The site repeatedly will not open up.
Great timing, dudes.
So…no point in browsing properties.
But nothing bad will come of that, I’m sure. Just yesterday I heard Phil Soper say there’ll be no downturn in condos because of so many immigrants who prefer them.
What could possibly go wrong?
Obamacare Realty – has a nice ring to it.
Not sure if anyone has posted this yet.
Right now it is the fringes of our society that are living rough. will be interesting tosee what happens .
http://www.spiegel.de/international/germany/campgrounds-turn-residential-in-germany-a-935811.html
Home Capital
Ole Doberman at 135 said:
Wow double top collapse on Canadian subprime lender Home Capital Group:
http://www.stockhouse.com/companies/quote/t.hcg/home-capital-group-inc
*****************************************
LOL, your graph is a most painful reminder of how much anyone stupid enough to have sold Home Capital based on “technical” analysis (voodoo) has lost.
Another OT post from yours truly. Talked a gal at the HO of TD bank couple of weeks ago & happened to mention I had ordered cheques on line but never rec’d them. Finally did today. She waived the fee. My first name is spelled incorrectly. It just riles me. I run into this all the time – It’s either my first or last name that is spelled incorrectly. Only one I ever met was by DH who spelled my surname correctly when I met him some 28 yrs ago. Sorry for my rant, just PO’d. You’d think a bank employee would get it right as I’ve dealt with them for over 30 yrs.
#83 Smoking Man on 12.04.13 at 9:35 am
Bye Bye Lonnie…….
As in Lonnie Anderson?
Smoking Man you quotes are without any anticipation always a eye opener. Please use spell check to make it easier for us regular tax farm people to understand whatever your vomit-us spews from from the dark regions of your altered state.
Always entertaining anyway, as you were!
@ #88 Mr. Monday Night
Eventually this will all start unravelling, and while I feel for the Jakes and the fact that their retirements will not be as comfortable as anticipated, I am rooting for those of us who are waiting for a correction so affordable housing becomes available once again.
____________________________
There is always one on here everyday at least. I imagine you sit there grinning and salivating as you write this. BUT. . .cheering for affordable housing is kinda like watching reruns of old Beatle concerts in your living room and pretending you are really there. The ship has sailed my friend. Might as well jump from the docks and see if a generous sea snail will sell you their old shell. As a homeowner I am “rooting” for your ability to grow gills and evolve so you too can enjoy this wonderful city from your underwater abode at Kits Beach.
Garth
Will devaluing our currency ( or rather – allowing it to drop against the US dollar) effectively prevent a lending rate increase ?
When TheQuantumFlows… it ReallyFlows!
Like today, for example… [which will necessitate two RegrettablyChunky posts. SeriousFirst/FunLast]…
SaltyDogz, from the Sublime… to the Ridiculous – your WednesdayZen:
“No man is an Iland, intire of it selfe; every man is a peece of the Continent, a part of the maine; if a Clod bee washed away by the Sea, Europe is the lesse, as well as if a Promontorie were, as well as if a Mannor of thy friends or of thine owne were…[22]” – John Donne [original spelling and punctuation]
Evidently, TheDonne never had to contend with the BC Ferry Corporation… Sorry about that, BC CoastalCommuters – but it would appear that The Bell Tolls for thee:
[G&M] – Islanders feeling the pinch of B.C.’s skyrocketing ferry fees
…”In 2007, the bill for a car and driver going from Vancouver Island to Hornby was $39.22. In 2012, it was $65.20 – a 66 per cent increase. Fares have gone up on major routes by about 50 per cent over that same period. Increasingly, he says, Islanders’ lives are severely affected by the burden ferry fares put on their budgets.”…
http://www.theglobeandmail.com/news/british-columbia/islanders-feeling-the-pinch-of-bcs-skyrocketing-ferry-fees/article15754617/
Ah yes… “RiskOn”… 3 TimelyPrimers:
[CounterPunch] – Back to the Future on Wall Street: The Stock Market Bubble by MIKE WHITNEY
…”In fact, according to Google Trends, interest in the term “stock bubble” was higher in November 2013 than anytime since October 2008.
And that should be expected given that the Dow Jones just broke through the 16,000-mark while the NASDAQ sailed-past the 4,000 milestone for the first time in 13 years. And did I mention that S and P 500 just closed above 1,800 for an all-time high?
While surging stocks are not proof of a bubble, they do draw attention to the condition of the underlying economy which is still in deep distress 5 years after the recession ended. With unemployment at 7.2 percent, GDP barley growing, droopy personal consumption, flagging durable goods, shrinking revenues, flatlining wages, falling incomes, widening inequality, plunging consumer sentiment, 47 million Americans on food stamps, and myriad other signs of persistent economic stagnation; the so called “recovery” is anything but robust. So where are stocks getting the oomph to keep rising?”…
http://www.counterpunch.org/2013/12/04/the-stock-market-bubble/
[TheTyee] – Your Bank’s Not as Safe as You Think
…”Throughout the Great Recession, Finance Minister Jim Flaherty and the financial community managed to keep secret the fact that our largest banks were in financial difficulty. Had people known the reality, they might have wanted their money back.
In fact, all of Canada’s five big banks (BMO, CIBC, Toronto-Dominion, Scotiabank, and the Royal Bank of Canada) faced serious financial problems in 2008, the Canadian Centre for Policy Alternatives (CCPA) found.
Our banks held far too many toxic United States sub-prime mortgages, the same mortgages that sank the U.S. economy. For a while, some of our Big Five were close to not being able to pay their debts.
All totalled, the five wrote down losses of $16.17 billion during the financial crisis, much of it due to losses on near-worthless bundled mortgages. What ensured the banks’ survival was massive relief, worth $114 billion, from three sources: the Central Mortgage and Housing Corporation, the U.S. Federal Reserve and the Bank of Canada.”…
http://www.thetyee.ca/Opinion/2013/12/04/Your-Banks-Not-as-Safe-as-You-Think/
[PandoDaily] – The bitcoin market is struggling with illiquidity as prices and demand rise sharply
…”The price of bitcoin has quintupled over the last five weeks, rising from a price of $200 on November 1 to $1,071 currently. Ignoring for a moment arguments for and against bitcoin’s long-term viability and the sensibility of its current prices, the exponential growth curve can largely be attributed to an imbalance between supply and demand in the market. But beyond giving speculators whiplash, this increase in demand and rapid rise in price is starting to create problems for the underlying market infrastructure.
Several of the most prominent global exchanges and wallet programs have suffered temporary illiquidity and delays in withdrawals and trading during the last month. It’s not a new issue, or necessarily an unexpected one in the early stages of a marketplace, but this illiquidity is becoming more significant as the total bitcoin market cap grows and it commands a growing global spotlight.”…
http://pando.com/2013/12/03/the-bitcoin-market-is-struggling-with-illiquidity-as-prices-and-demand-rise-sharply/
[G&M] – RCMP searching for alleged fraudsters in worldwide Toronto-based trading scam
…RCMP Sergeant Richard Rollings said police have issued warrants for the arrest of Mr. Zer and Mr. Spektor, but do not know where they are. Their last known location was Israel, Sgt. Rollings said, but they may have left that country.
“Our investigators are trying to locate these two fellows, so it’s a possibility they are in Canada, but it’s quite possible they have moved around the world,” he said in an interview Tuesday.
RCMP say victims lost over $4-million. In addition to victims in Canada, others were in England, the United States, Taiwan, the Philippines, Spain, Hungary, Israel, Germany, the Czech Republic, Russia and Australia.”…
http://www.theglobeandmail.com/report-on-business/rcmp-searching-for-alleged-fraudsters-in-worldwide-trading-scam/article15739883/
[NoteToSelf: “Oops.” Hopefully, PM Harper wasn’t counting on a donation to his BirdSanctuary from those two…]
…CONT
And now for ‘dessert’… FirstUp:
@SustainableDevelopment/#131…
AhYes, TheStockWell… Well, no one could accuse of him not PuttingHisMoney WhereHisMouthIs, figuratively speaking; e.g. Mr. Day’s recent/timely HinterLands JobCreation program for former PoliticalAides!…
From ‘Butler’ to Parliamentarian in OneEasyGo! TeeHee… [Egads! YetAnother Realtor seeking PublicOffice? OhWoeIsUs.]
[PWN] – Neufeld steps up for Conservatives
…”It won’t come as much of a surprise that Penticton realtor Marshall Neufeld, one time aide to former Conservative MP Stockwell Day and president of the local conservative riding association, has declared he will be seeking the Conservative nomination for the new South Okanagan-West Kootenay riding.”…
http://www.pentictonwesternnews.com/news/234327411.html
Next… when Innuendo&Euphismism cross ‘TheMaginotLine’…
[CBC] – Does crude banter lead to sexual harassment at work?
…”Sleep Country Canada employee Adele Kafer had her claim for sexual harassment dismissed because she took part in conversations of a sexual nature with her colleagues.
During the process, the company admitted crude banter was the norm in the workplace, but also claimed Kafer willingly engaged in sexually lewd interactions with other staff.”…
http://www.cbc.ca/news/canada/british-columbia/does-crude-banter-lead-to-sexual-harassment-at-work-1.2450208
…and, concluding Today’sBroadcast – more Geopolitical PhotoOpsFun! from the Orient [and yet another splendid opportunity to assist Xinhua’s CaptionEditor – an ‘album’, as it were]:
[XinhuaNet] – Xi Jinping meets with U.S. vice president [illustration]
President Xi: “Oh yes, about the ADIZ… see what happens when you don’t file a FlightPlan, Joe?”
http://news.xinhuanet.com/english/photo/2013-12/04/c_132941767.htm
[XinhuaNet] – British PM Exiled to Chengdu, SW China – Furiously Paddled by School Children
http://news.xinhuanet.com/english/photo/2013-12/04/c_132941730_2.htm
Finis.
Well, almost…
@KC/#48: on 12.01.13 at 11:04 pm
Thank you so much for your kind words… regrettably, I have no news for you at the moment. Although I wouldn’t be at all surprised, however – if the immortal words of General MacArthur [viz. Phillipine Itineraries] were to apply. TeeHee!
http://www.huffingtonpost.ca/2013/12/04/house-prices-sales-toronto_n_4385156.html?utm_hp_ref=canada
Others are pressing Finance Minister Jim Flaherty to do something about the country’s lack of data on foreign investors in housing. Unlike many other countries, Canada doesn’t collect data on foreign buyers of housing. That’s a key part of the puzzle to understanding the housing market, critics say.
Why wouldn’t key institutions want this type of data?
Because it’s a free country. — Garth
# 142
if I had that kind of dough, I would not be afraid, either.
Interesting read from Lance Roberts:
We Need Economic Reform To Address The Silent Depression Running Through America’s Underbelly…
“This “shift” has been critical to the employment landscape in the U.S. over the past 5-years as the number of individuals that are no longer counted as part of the “labor force” has risen above 90 million individuals which equates to roughly 36% of the entire working age population that are 16 years or older.”
“In a recent study entitled “Labor Force Participation And Monetary Policy In The Wake Of The Great Recession,” by Christopher Erceg and Andrew Levin of the Federal Reserve Board, the authors provide solid evidence that the decline in the labor force participation rate since 2007 has been due to cyclical factors–the recession and slow recovery–rather than to demographic factors.”
In other words, due to the weak economic recovery a large number of people have simply “dropped out” of the labor force but are not retired. Since the unemployment rate does not count the people who dropped out of the labor force it no longer gives a good reading of the state of the labor market. The unemployment rate would be much higher without this large decline in the labor force participation.”
http://stawealth.com/daily-x-change/1894-low-labor-force-participation-is-not-due-to-demographics.html#ixzz2mXdJcioC
The mad cow disease hits another legendary investor
Due to lack of investment opportunities they are returning money to their investors
1)http://www.institutionalinvestorsalpha.com/Article/3285746/Seth-Klarmans-Baupost-to-Return-4-Billion-to-Investors.html?LS=Twitter
2)http://www.zerohedge.com/news/2013-12-04/another-titan-legend-returns-cash-investors-due-lack-investment-opportunities
The drama in the senate is getting better as each day moves on. Romeo cannot sleep at night, but rushing to the red chamber for a snooze did him in when sleep overcame him, then hitting the lamp post gives the sheeple some indication of the daily routine in the old farts club.
On another note, a few weeks ago mp benoit had a town hall meeting at the local shop. One report indicted that about a dozen attended, which included all the local voices. Seems like everyone is fed up with his nothing speeches.
I was asked to attend and decided to rip up my cpc membership card instead. I take it that many others felt the same way too.
The NY Times is having a discussion about home ownership and migration of workers. Here is an interesting take on things:
http://www.nytimes.com/roomfordebate/2013/12/03/life-in-a-mobile-nation/homeownership-stalls-the-economy
#137 Babblemaster
“Where did I advocate passive investing?” — Garth
——————————————————–
I’m just trying to understand. In your post of Nov 17th “Finding Balance”, you advocate ETFs and not individual bonds. That pretty well means index type ETFs.
In another post, for the the 60% growth-oriented portion of a portfolio you have suggested “an ETF containing the major REITs, one pacing the TSX 60, one mirroring the S&P 500 and one for emerging markets.” Garth, isn’t that pretty much “passive” investing.
No. The asset matters not. It is the style of management. — Garth
#92 REIT dead money? on 12.04.13 at 10:35 am
Garth –
Is Dundee REIT dead? It’s lost over 25% value this year, and is paying over 8% dividend.
Can’t figure this one out
Extra yummy. — Garth
…………………………………………………………………….
Look at the 52 week chart…
Goes from upper left to bottom right, the trend is intact.
http://www.stockwatch.com/Quote/Detail.aspx?symbol=D.UN®ion=C
Sell low and buy high. Why be different? — Garth
Lots of NEW REstaurants opening here DT in EDmonton, but many-often ones that have been in business since the 1980s have closed as well. In any case many area that are very desirable here in EDMONTON have seen crashing prices the last few months, and talking to a realtor they believe that the prices seem much high than they are since many new builts from deals done last year or early this spring have their possesions taking place before Christmas! I guess we will wait and see. One high demand area in edmonton- with stunning, gorgeous historical homes with trees all around 5 storys high, near the river valley just east of DT had houses that never came under $300,000 in 2007.. now, 6 years later we see remodeled old little character houses sitting on the market for months and months close to $200,000…. http://www.realtor.ca/PropertyDetails.aspx?&PropertyId=13428170&PidKey=-888166431
#162 harboursnug
Sell low and buy high. Why be different? — Garth
……………………………………………………………………
Amateur trying to falling knives, hoping you called the bottom. Wait until the knife sticks the floor is smarter.
Garth! I LIKE the Jar Lady – she’s as prone to profanities as I am… seriously if you’ve been stupid enough to get into the debt scenarios may of her show guests find themselves in – her method for getting out works. I have some critiques of her methods though. Sometimes I think her timelines for completely eliminating debt are unrealistic. Eliminating all debt in as short a period of time as possible is laudable but a small amount of flexibility should be built in – life happens.
She’s still too focused on home ownership. I watched her ‘help’ people figure out how to hang on to houses I didn’t think they should hang on to – too big, too blingy, too aspirational.
I do agree 100% with her approach that you should control your money – not the other way around. Watching her show the early years clued ME in to a few stupidities I was going along with – all slack jawed & drooling because I didn’t think I had choices. Wrong.
House down payments: no one is their right mind is going to an Open House & sitting down right there & cutting a down payment cheque. Those who are that dumb might as well leave their down payment in a savings account. I’m not saving for a house but if I was, I’d prefer the well balanced portfolio approach. If I couldn’t access that money when needed by converting investments fairly quickly, then I’d consider my investments are poorly placed.
Garth, any chance you can write a blurb on what kind of strategy might be attractive/viable for a person looking to hold short term (say 1 year or less), with an emphasis on capital preservation?
Other than GICs / high interest savings account of course…
Shunning ?
Internal documents from the American Legislative Exchange Council (ALEC) published by The Guardian provide stunning insight into the inner workings of the “corporate bill mill” — and offer new evidence about how the group has continually misled reporters, the public, and even its own members.
http://www.prwatch.org/news/2013/12/12328/leaked-docs-show-alecs
The notoriously secretive ALEC has been thrust into the sunlight in the two years since the Center for Media and Democracy launched ALECexposed.org, analyzed over 800 of ALEC’s previously-secret model bills, and documented the corporations and legislators pushing ALEC’s legislative agenda. It now appears that ALEC has been scorched by the sunshine.
According to the new Guardian documents , which were apparently prepared for ALEC’s board in August, over the past two years ALEC has been losing corporate members, suffering from major funding shortfalls, and anticipates legal trouble with ethics rules and its charitable tax status.
Looked at a condo yesterday, ocean-front and very high-end – 300 sq ft deck.
2000 sq ft, Italian marble floors, granite and stainless all top quality. Imported etched glass in the bathrooms, jacuzzi tub with a view – I mean really high-end.
Amenities like negative edge pools, hot tubs, tennis, basketball and professional gym with in-house trainer. 2500 sq ft party room with bar, kitchen and game/pool tables. And underground parking.
Fully furnished with top quality leather, flat screens in living room and bedrooms. All small appliances, kitchen ware, towels, you name it!
Strata fees $ 275 a month – taxes $ 250 a year.
Was it $ 2 million or $ 3 million? Nope, it was $ 450,000!
Or for the value of the condo we rent in Kelowna, we could live like the 1%.
Of course we still love Canada, but it was tempting nonetheless.
#152 BCD on 12.04.13 at 4:27 pm
As a homeowner I am “rooting” for your ability to grow gills and evolve…
———————————
Yep, make me the bad guy for sitting on the sidelines and not buying into the hype that RE keeps going up and up and up. Just looking for a place to live man, doesn’t make me a looser. Like I said, a lot of bitterness starting to come out of certain people.
If you are a Jake, I am so sorry your retirement funding isn’t going to go the way you planned it.
It is unfortunate that certain people are going to be left holding the bag when the music stops, and their lives are going to truly suck because of it.
“Yes it does. — Garth”
Do you stomp your foot when typing such things?
My little happy dance. — Garth
Totally off topic, but, was watching a discussion of “generation screwed” on the National last night. (Anybody catch that?). Anyway, was really disappointed in the discussion as the “experts” get an epic FAIL for the following:
One kid asked “can a person of my generation ever expect to own a house?”
The answers we’re like “adjust you’re expectations, you may not be able to afford the size of the house you grew up in or the neighbourhood, but home ownership is still an achievable goal”
WRONG
The correct answer is “Yes. It is utterly impossible, in a free market, for an entire generation to not be able to afford a home. As the younger generation takes its natural place in the economy (i.e. becomes the bulk of the production within the economy) they will also be the bulk of the market. Therefore, prices will adjust to reflect their ability to pay.” If you disagree with this, tell me, how else can it work out? If an entire generation is priced out, then what exactly is left to support inflated prices?
Also, there was a large discussion of unemployment and kids with degrees being forced to move back in with their parents.
Again the experts fail. Their answers were “Focus on networking, take any job just to stay in the workforce, even if it’s outside you’re field”
WRONG
Correct answer is: youth unemployment could be solved in large part by raising interest rates so that people of retirement age could actually expect a decent return on their nest-egg, and allow them to retire like they actually want to. This would open up these jobs for younger people. (and would lower housing prices)
I realize this wouldn’t completely solve the problem, but the fact that ridiculously low rates are a huge part of the problem here, and it wasn’t even mentioned is really disappointing from so called experts.
No crash in Edmonton. This is clear to anyone who bothers to look at the fundamentals.
Mr. Monday Night
> re: BCD
I don’t know why but this is kind of attitude I hear, feel from homeowners (I am one of them, though).
– Superiority complex discorder
I mentioned before in this blog comment:
Participate in R/E investment is low entry.
No certificate, no high intelligence, no education,
no business sense required.
Besides, no large capital required either.
You can leverage at maximum as long as you are buying R/E.
(probably not on your unsecured personal loans)
Deals with lawyer, surveyers, agents, senior bankers, talking about “numbers”, you feel like a business man!
But job market so deteriorating in Canada, if you just sign a piece of paper, with large debt, making more than ten time of your salary in unrealized house-gain, you feel like you are very very smart guy, isn’t it?
#156 TnT
Because it’s a free country. — Garth
********
That’s a “They hate us for our freedom” George W Bush answer
#167 REIT Dead Money
You have a few options for capital preservation:
1) Mattress (but inflation will ruin it)
2) Chequing account, like Manulife pays 1.55% (fully taxed as income)
3) Bitcoin
4) Betting the Don’t Pass line and putting down odds at the Craps table
Holding cash is a) a short bet against everything (stocks, houses, origami) and b) used as attack capital
There’s no strategy for this, dude.
Just keep 5-10% handy of your net worth. 10 if you downhill ski in pizza formation and 5 or less if you have them pointed straight forward
Just to add: None of the successful, and respectful businessmen would say someone who is not as successful as him, loser.
Not pointing someone else infirior to him.
Meaning, they are not business man, not successful, probably their life is somewhat miserable contrary to what they claim (who closes his own doors….)
“Because it’s a free country.” — HonGarth
Free for who? At what price?… and who pays?
Which rehtoricals segue ‘nicely’ into Pinstripe’s #160…
I wouldn’t be too hasty BeatingUp on Lieutenant-General [Ret.] Roméo Antonius Dallaire, OC CMM GOQ MSC CD, PinStripe.
What follows is why Senator Dallaire [among far too many others] has problems with sleep disturbances [or worse].
Nick Nolte’s character is based on Dalliare – PayAttention SmokingMan and other Aspirant InkStainedWretches, this is how you turn HarshRealpolitik into Art [PG13, but some Dogz may find the language offensive]:
http://youtu.be/XKjprq67kYI
HistoricalContext & ProductionCredits:
http://en.wikipedia.org/wiki/Rom%C3%A9o_Dallaire#Genocide
http://www.imdb.com/title/tt0395169/?ref_=nv_sr_1
Big divergence in GTA sales by price range – chart
For those still confused as to why any foreigner would want to buy a GTA property at record prices, here's a chart showing what prices look like in global currencies. chart
If those rising swiggly lines are too hard to understand, then think of it this way.
I'll tell you one thing. If central planning continues, it's going to be a confusing world to those who can't obtain quality data and measure value properly.
Now, this is an idea for Canada: Foreign UK Homebuyers To Be Subject To Capital Gains Tax.
http://www.zerohedge.com/news/2013-12-04/its-payback-time-foreign-uk-homebuyers-be-subject-capital-gains-tax
You people in beautiful Toronto by the lake would be thinking all the Jake type stories are peopled by neanderthals, financially speaking. You would be right allegorically speaking. I was on the taxi squad, grid iron speaking, in the same industry. Jake is quite well off, as there is plenty spilt between the cup and the lip here on the high plains.
High house prices and higher prices on imported goods from a falling dollar. Higher rates anyone? Somehow I doubt it.
Chart on #179 was mislabeled. Corrected
CanadianWatchdog as always very good info!
The prices in foreign currencies are not relevant if you don’t chart the inflation for those currencies.
Love that pic lol…. Just need the CN tower in there
http://www.zerohedge.com/sites/default/files/images/user 5/imageroot/2013/12/london%20sale.jpg
#134 Smartalox,
you’re right, of course. Nothing like anxiety to keep the sheep docile.
If it can keep up the propaganda against unions and public servants and is blessed with interesting economic times, the goverment might be able to report “Mission accomplished” to its corporate base before too long.
@174 Rabbit One
No superiority complex here–I sense the opposite actually, like the ones who haven’t bought in feel like they have a superiority complex waiting to vulture the tears and misfortunes of others–as sure that it is going to happen as ever when they’ve been wrong for years. Just saying. . .keep dreaming the dream if it makes you feel better.
Chinese proverb:
“He who believes in his dreams spends his whole life asleep”
@ #58 (ex Tim Hos empl.)
so true, at my Tim’s I only see Filipinos,Chinese.East-Indian and a lady with a strong British accent behind the counter. Good for the economy, for employment stats and their masters who own the Tim shop.