The end of normal

Michael was in the lounge at Pearson. “Hey Garth. Sitting here at YYZ on my way to Orlando,” he iPadded me.

“Right next to me a d-bag mortgage broker with TD. On the phone with his client coaching him on how to somehow get his gf on the loan app to make the numbers work.. Then remove her later and leave him with the $800,000 loan he needs on his commission-only income. But of course you already know about all if this…”

You bet. Sadly. The country is drowning in credit, creating an epic catch-22 for central bankers. On one hand, the economy’s slow-walking as nobody expected. Yesterday’s news of 1,000-person layoffs at BeeMo and Potash – two of the signature corps in Canada – were great examples. While the US economy rebounds (new home purchases just popped the most in 30 years, while exports surged) we’re unwinding when it comes to jobs, GDP, balance of payments and the currency.

This week Stephen Poloz, the new Bank of Canada boss, made a point of citing ‘greater downside risks’ when it comes to inflation. In other words, it’s gone. We actually have disinflation, which can morph into deflation. That’s the economic equivalent of ED, which means nobody goes home happy (of course, I wouldn’t know).

No inflation means no growth, making higher interest rates lethal. It’s a surprise how things have fallen apart in the six months since Mark Carney left to cavort around London on his million-dollar salary as head of the Bank of England. After spending two years warning Canadians to stop borrowing or he’d whack them with higher interest, Carney now watches his poor replacement standing helpless before a giant, swelling credit bubble.

So that’s the catch. Raise rates and trigger a recession. Or leave them in the ditch and watch people balloon on loans. The first is no option, since we’ve never actually recovered from the last downturn (unemployment’s still 7%). And the second choice is worse. Giant heaps of debt will suck off family income for years, ensuring even more layoffs at Best Buy, Sears and Sun Media. Worse, for borrowers, dirt-cheap money is like crack to a mayor – totally irresistible. And we all know what that leads to…

Which brings us to the latest housing numbers for places like Toronto and Calgary. According to the realtors’ cartel (so be careful) resales last month climbed 14% in the GTA and 19% in Cowtown. SFHs in 416 jumped 24% and the average selling price overall increased 11%. In Calgary, prices are 8.5% more than last year, where the average detached costs almost $471,000. (In Vancouver, prices are flat for the year, and appear to be dropping even as sales recover.)

Detached houses now average one SUV less than $900,000 in urban Toronto, while they remain just above $1 million in Vancouver. How can citizens whose incomes have not really budged in six years afford such things? According to RBC, they can’t. It takes more after-tax income to carry a house in Vancouver than average families earn. Across Canada 43% of gross income (or close to two-thirds of take-home pay) is gobbled by real estate. No wonder Sears is closing stores and Sun Media’s shuttering 11 newspapers for lack of ads.

This is the Poloz Problem. Home ownership’s a total cult and 70% of the people living here are bombed on the Kool-Aid. Every month total debt rises, and even more money is diverted away into the burgeoning FIRE sector – real estate and the financial services supporting it. Relying on diversified consumer spending to spur the economy is no longer an option. That means recovery has to be export-driven – which makes us reliant on growth in other countries. That sucks.

As I wrote here yesterday, risk on. In a regular world, rising unemployment and a slackening economy would bring motivated sellers and cheaper houses. People would worry more about job security than Moen faucets. They wouldn’t buy anything with 95% financing, let alone real estate. They’d be liquid, flexible, debt-trashing, concerned savers. That’s normal.

This will not end well.

186 comments ↓

#1 T.O. Bubble Boy on 12.04.13 at 9:40 pm

According to the realtors’ cartel (so be careful) resales last month climbed 14% in the GTA and 19% in Cowtown. SFHs in 416 jumped 24% and the average selling price overall increased 11%.

Here’s my question: how much does this factor in renovations?

From simply driving down any street in North Toronto, you can see that nearly every bungalow was torn down and re-built into a McMansion. When the average price rises 16% (as is the case with the average SFH in the 416 for November 2013 vs. 2012), this doesn’t factor in the hundreds of thousands of dollars that many of these sellers have poured into gutting and/or re-building the house.

Garth – is there any kind of Case-Shiller concept in Canada that factors in the size/age of the house?

I realize that the “frankenumber” HPI from B.C. is very flawed, but so is the concept of an average price when the average house has been drastically changed from the original design.

#2 [email protected] on 12.04.13 at 9:43 pm

we are going back to 80s era economy 60 cent dollars, k cars and mr t.

#3 Peter on 12.04.13 at 9:44 pm

No economic term for Canada – stagdeflation.

#4 ILoveCharts on 12.04.13 at 9:50 pm

Vancouver has the same problems as other places re locals speculating and taking on way too much debt. HAM adds an extra $200,000 effect to the bubble and that HAM effect may pop at a different time.

It’s sad to see CAD drop. I was putting a lot of my money into USD after I earned it. That isn’t going to be working as well for a while.

Deflation is scary business.

Maybe it’s time for me to get moving on that US PR application.

#5 Peter on 12.04.13 at 9:51 pm

Correction NEW economic term for Canada – stagdeflation

#6 Sherwood Park on 12.04.13 at 9:51 pm

Poloz Problem … Lets acronym it and add it to the dictionary? “The PP.”

#7 pathcontrolmonk on 12.04.13 at 9:52 pm

Meanwhile, 2 self-employed friends in the last 3 months have bought $1 mil vacation homes in Whistler, both exclaiming, “Whistler bottomed out, prices are down 40-50%, now is the time to buy!”

No wonder, they are so giddy, I just found the same parroted in this YVR Sun article:

http://www.vancouversun.com/business/Vacation+property+market+ticks/9131336/story.html

#8 Randy on 12.04.13 at 9:54 pm

It was just announced on the 6 pm Barrie TV station news that a Bradford, Ontario auto seat manufacturer is closing its doors due to the high cost of manufacturing in Ontario. 500 permanent employees and 100 temporary employees will be laid off, effective February 2014. This follows on the heels of many other companies leaving Ontario, taking their jobs with them……Ontario ….a high cost jurisdiction ????

#9 Bob Rice on 12.04.13 at 9:57 pm

“That means recovery has to be export-driven” G Turner

Well, dollar has dropped 10 cents in 1.5 years… and dropping. That should help

#10 mark on 12.04.13 at 9:57 pm

Garth, do you think F is going to step in again to cool down the housing ?

#11 blase on 12.04.13 at 10:02 pm

A 7% unemployment rate is historically normal, so that’s no reason to have kept rates low the last few years. They were kept low out of pure greed and short-term thinking, but the biggest problem is economists who believe in economic theories instead of bubbles. Carney gets lauded for pumping up debt, whistling in the wind, and leaving a trail of tears.

It’s a long article, but it pretty much explains the last 30 years of economic theory and practice. Well worth the read. http://online.barrons.com/article/SB50001424053111904253404579207793809107008.html

#12 Young Boomer on 12.04.13 at 10:02 pm

I’ve watched a lot of for sale signs here in NW Calgary come down without the sold sticker, especially once we hit Dec. – both at the low end and the high end. A neighbour near the house we rent sent their tenants on their way at the end of July, spent a month slapping some paint and pretend wood flooring in, put it on the market in Sept, slowly lowered the price, and now new tenants have just moved in. The headlines here don’t make sense to me.

#13 Bob Rice on 12.04.13 at 10:02 pm

#10 Mark

Probably not.

#14 Paully on 12.04.13 at 10:03 pm

#1 T.O. Bubble Boy

Excellent point! If you tear down a cheaper, older place, and rebuild a pressed-cornflake McMansion that sells for a million more, that should be accounted for in some manner.

#15 Canaan on 12.04.13 at 10:05 pm

Stagdeflation! Sounds about right. In the aftermath of the financial crisis, it has felt at times like we had the potential to go back to the 80’s, but I resisted the temptation to consider such a notion. Now I’m not too sure about that….

You couldn’t get me to invest in a property anywhere in Canada now. The risk is just too high….

#16 Chickenlittle on 12.04.13 at 10:06 pm

I may need to get back into the bartending business after all. People who bought houses at these crazy prices may need to drown their sorrows with a few cocktails once the poop hits the fan.
All these yuppies making 6 figures may need hard alcohol very soon.
So yes, TnT, I may need my old job back. This could be good…

#17 ronthecivil on 12.04.13 at 10:07 pm

If by risk on do you mean be sure to get another investment loan after I pay the existing one off? Sure.

And though you don’t like it, I bought a townhouse in the Vancouver region lately, but I got it on the super cheap and it’s precisely three times my income. So when that comes up for renewal I am betting I will be going to variable (first time home buyer they didn’t like the idea).

But yep, so long as at least some of the things I own that I used with borrowed money pay me more than what it costs to carry the debt, I sure as heck will risk on.

If the bank offered me a billion dollar loan I would take it in a second!

#18 ronthecivil on 12.04.13 at 10:08 pm

Re: falling dollar. Well at least the low interest rates are finally making that happen!

#19 juno on 12.04.13 at 10:12 pm

This will not end well for many, but can be a blessing for others.

Depending on which side of the coin your on. For savers with investments in canada and out of canada, eg like the US , If canada craps out and things tank. Then the Vultures can come in and pick the bones of the feeble

#20 X on 12.04.13 at 10:13 pm

If rates were lowered, and F clamped down on the RE cartel, as well as prudent lending with the banks, they may just be able to head off further debt loads.

But we all know that won’t work, or be adhered to.

So to lower rates, and actually encourage manufacturing something other than houses, would F increase the minimal downpayment amount to 10%, increase CMHC lending to 30%, eradicate 30 year amortization periods all together?

Can’t really have both, without repercussions either way.

#21 X on 12.04.13 at 10:15 pm

Hopefully we will see the effects of the falling dollar in another 6 months….

#22 Smoking Man on 12.04.13 at 10:18 pm

The end of Normal is right.

The machine has dumb down the herd to the point of no return.

What a hatched job by the cops on Ford. BBlair is the devil, when those cop cars were on fire at the G20, void of the expensive computer systems that every cop car has, I new he was a bad bugger.

Question I have is why have the people responsible for trying to black mail ford not behind bars, clearly a crime has happened. This was a coordinated hatchet job of Ford. Who knows what the status quo Pinko’s at city hall offered him down the road. I smell a rat…

MSM all the rage again because some one lied about personal miss deeds. Ontario mfg will be leaving the province in droves due to the about to be most expensive power. The Libs deleted public emails a crime. Nothing, nada, zilch. No cameras on Wynn’s drive way.

The coordinated attack in this much detail on the Fat bastard tells me he’s doing a good job. He’s has starved the Pinko’s Commies from our wallets. Nothing psss off people more than when someone attacks your revenue stream.

And good old Dalton, yes smaller class rooms, blab la bla. More Teachers will work right.

Ontario student’s worst math scores in the world. Like I said it’s all about behavior, politically correct molding. They don’t give a shit if you get or learn it. That is not the machines goal.

The aim is to make man weak, take away freedom by removing primitive emotions like hey buddy you just stol a billion dollars from us, Now I’m punching you in the face.

Not in brain washed Ontario.

Would not be surprised in the distant future to see men on wearing skirts, as to freighted, sensitive that a female might be offended If he was wearing a suit.

They already started, see those wacky socks they wear now. :)

Doomed we are all.

To paraphrase Garth “This will not end well.”

#23 Onthesidelines on 12.04.13 at 10:23 pm

I want to hear you say again how smart the central bankers are compared to the rest of us. LOL

BTW…. define normal. As far as I can see, normal hasn’t been around for quite a while.

And, oh yeah, I guess somebody has let you know that your interest rates cristal ball has been broken for a while. Nice to see you finally acknowledging the dilema many of us have been pointing out for quite a while here.

Actually I said mortgage rates would rise in 2013. They did. — Garth

#24 John in Mtl on 12.04.13 at 10:25 pm

American housing recovery? What do you make of this. I shudder to think it is true!

“…beneath the fanfare, a whole new get-rich-quick scheme is brewing. Over the last year and a half, Wall Street hedge funds and private equity firms have quietly amassed an unprecedented rental empire…”

“…Wall Street has devised a solution: It’s going to rent these foreclosed houses back to us. In the process, it’s devised a new form of securitization that could cause this whole plan to blow up—again.”

Full article (quite interesting) here: http://www.truthdig.com/report/item/the_empire_strikes_back_20131126

No material impact on the broader market. — Garth

#25 Early Spring on 12.04.13 at 10:27 pm

This really doesn’t help my home province of Saskatchewan either. I will continue renting and working on learning more in finacials.
http://www.thestarphoenix.com/touch/story.html?id=9247072

#26 Bob on 12.04.13 at 10:30 pm

The Poloz Problem indeed.

But he seems to be making the problem worse. He has to choose between the worst of two evils. Take away the increasing rate bias to try to help out exports – good luck with that. Exporters in Canada aren’t selling because our currency was at par. Buyers won’t buy much more when they can save a little more. The truth is Canada has been focusing on developing condos instead of new industry.

But this is how Mr. Poloz thinks he is going to fix the economy. It’s going to self destruct faster now. Keeping rates low will only make the debt/housing bubble way worse. And we know how that ends. Just look South 5 years ago, or to Spain, or most of Europe.

The OECD said recenty to raise rates slowly in Canada. A quarter point is not going to torpedo the economy. It will only lets some air out of this housing baloon before it explodes.

#27 John in Mtl on 12.04.13 at 10:34 pm

@ 22 Smoking Man on 12.04.13 at 10:18 pm

“The machine has dumb down the herd to the point of no return.”

Yep! first in the US, now well into Canadian territory.

A shocking report on America’s school system & one of the ways they dumb people down: https://www.youtube.com/watch?v=_Ih9uzNLkz4

“Extensive skills study from the OECD finds young Americans are ‘dead last’…”

#28 richard leblond on 12.04.13 at 10:35 pm

I would actually be surprised if the home ownership rate was really 70%. If this number is based on Stats Can data, well, Stats Can data is at least five years old. In reality, I bet the home ownership is closer to 75%. Highest ever. And 10% higher that what it was in the U.S. before their market crashed into oblivion (what morons….). So, my question is, at 75%, who is left to buy? Not a lot of “credit worthy” people…

#29 Smoking Man on 12.04.13 at 10:38 pm

I’m selling in the spring, the peak, and leaving this country of stupid polite zombies.

I will be lying on a beach, growing the three reaming hairs I have into dread locks, drinking my wine, and undressing all the babe’s on the beach with my eye balls.

Somewhere in side, a bit of a man still exists.

That kind of man no longer welcome in the land of the educated fools and tree luggers.

#30 John in Mtl on 12.04.13 at 10:39 pm

@ Garth “No material impact on the broader market. — Garth”

I certainly hope you are right Sir, I’ve grown very suspicious of any financial montage our neighbours think up…

#31 Early Spring on 12.04.13 at 10:41 pm

Garth, or anyone care to posts their thoughts on why saskatchewan would run two separate finance books like they do? The link I posted above suggests that if totals where run through properly the provinces would have a annual deficit of $590 million instead of the annual surplus of $58 million which Brad Wall and crew report.

Garth I believe Saskatchewan is the only province running books like this, thoughts?

This will not end well

#32 FI Guy on 12.04.13 at 10:43 pm

Garth – great post.

Do you see a mild recession on the horizon for Canada?

Where do you think 5 year government of Canada rates head from here? Lower with a dovish Poloz?

#33 not 1st on 12.04.13 at 10:44 pm

No inflation means no growth…

The best thing our economy needs is to have the excesses purged. Ever tried hiring a contractor or buying a new car? Outrageous prices. An overall correction will mean pain? yes, but thats the only thing that people understand.

Prices have to moderate because wages are not keeping up and people are acquiring too much debt. How will people be able to earn more to afford higher prices or have extra cash to cut debt? Answer, they won’t and can’t therefore prices come down like they should. Sorry Garth, its written in the cards now, the little monetary experiment has no clothes.

#34 jackplant on 12.04.13 at 10:48 pm

If people are dumping all their pay into housing, then they aren’t saving or spending; hence, the reason why tons of companies are laying off staff. No one is buying their widgets. What needs to happen is to limit the amount of mortgage that people can qualify for. A reasonable 3-4 times a family income should be the maximum. Seeing as the average income in Toronto is 75K. The annual SFH should not exceed 300K. Instead, we have houses exceeding 10 times this amount. This means people will spend the next 30 years paying a mortgage they are over extended on. This means 0 savings, and little progress in the economy.

I think it is time that some measures are made to limit purchase prices.

#35 not 1st on 12.04.13 at 10:49 pm

Garth, better get used to double digit employment. Its here to stay.

http://www.youtube.com/watch?v=w2lDmF8ZShI

#36 Tiger on 12.04.13 at 10:50 pm

22# y ain’t your , ass in jail? It just takes time, bro!
Rob and sm what a team! Top or bottom,bro?

#37 johnny d on 12.04.13 at 10:53 pm

So the Chinatization of Canada is well on its way. Instead of hocking cheap manufactured goods, it’s gonna be our resources. Quality of life here will fall hard and the population will balloon what with all the immigration. The Canadian dollar will be worthless. Wanna see middle class Canada in 10 years? Look at some of the rag tag shanty towns in China or India.

#38 Tiger on 12.04.13 at 10:53 pm

Bitten again!

#39 Smoking Man on 12.04.13 at 11:10 pm

Actually I said mortgage rates would rise in 2013. They did. — Garth

Ha politicians

Thought you worshipped a big one. — Garth

#40 Retired Boomer - WI on 12.04.13 at 11:12 pm

I’m quite distressed to hear about the “terminal illness” that has gripped our great neighbor to the north.

The BEST thing that could have happened is interest rates spiked two years ago, along with anything over 20 yr amortization to kill the RE “super bug.”

Now, how DO you kill this malevolent disease?

We did it by trashing the banking sector, then resurrecting the dam dead! Still not certain the cure was better than the disease, but we are here now.

What’s your cure?

#41 recharts on 12.04.13 at 11:18 pm

This is the Poloz Problem. Home ownership’s a total cult and 70% of the people living here are bombed on the Kool-Aid. Every month total debt rises, and even more money is diverted away into the burgeoning FIRE sector – real estate and the financial services supporting it. Relying on diversified consumer spending to spur the economy is no longer an option. That means recovery has to be export-driven – which makes us reliant on growth in other countries. That sucks.

That was a little bit hypocritical
This blog calls for investing money not buying homes
I call it hypocritical because you not say that it sucks to depend on others’ economies when you say Sell Canada Buy America
And how do you expect the economy to come back to life when everybody goes for the easy money (if they will ever get it) by investing in stocks or indexes instead of eventually starting a business.
This mentality is as toxic as relying on FIRE to bump your GDP.

Hey, genius. Putting money into financial assets like equities is investing in businesses. Stop embarrassing yourself. — Garth

#42 not 1st on 12.04.13 at 11:18 pm

#34 johnny d on 12.04.13 at 10:53 pm

Actually, Canada will fair well in the long run. Any resource based economy will be ok for the most part. its the manufacturing sectors that will be whacked with robots and automation and 3D printing.

#43 Carpe Diem on 12.04.13 at 11:20 pm

Where to start today.

2 workmates are moving. One at 40 is thinking of putting down only 5% down for his home. The other in her 30’s just sold her place and after her new home she has NO money for anything! but she still plans to get nice x-mas presents for her parents and in-laws… because she has no choice.

WTF?

Seriously … we are heading towards a precipice.

I think Poloz and the BoC want to devalue the CAD fast! This will result in inflationary pressures, make Canada more competitive and give some room to raise interest rates ….

#44 recharts on 12.04.13 at 11:23 pm

#8 Randy on 12.04.13 at 9:54 pm
It was just announced on the 6 pm Barrie TV station news that a Bradford, Ontario auto seat manufacturer is closing its doors due to the high cost of manufacturing in Ontario. 500 permanent employees and 100 temporary employees will be laid off, effective February 2014. This follows on the heels of many other companies leaving Ontario, taking their jobs with them……Ontario ….a high cost jurisdiction ????

here is the link
http://barrie.ctvnews.ca/faurecia-closing-bradford-plant-in-2015-1.1574513

Some of them will be out of work as soon as Feb 2014
The business will be shut down in 2015

This will be interesting as we have data for Barrie sales.
Flaherty God bless you!

#45 BCD on 12.04.13 at 11:24 pm

Is it just me or are the commenters particularly nutty tonight?

Honestly, who the hell really knows how much debt people have or don’t have. One thing is clear, they were out on Black Friday and Cyber Monday spending like Loonies and Greenbacks are going out of style. Are we to believe everyone filmed fighting over a 23 inch flat screen is a redneck Walmartian with 15 credit cards all maxed out and living on weiners and Wonderbread? I think there is more money in our society than we know of. I mean just look how fat everyone is! Many people are buying with family help, big down payments, aggressive repayment strategies. Not everyone in Canada is a total financial inbred imbecile as this blog would have us believe.

But enough of that. . .back to the theme song of this blog: “Da-Da-Ling-Ding-Ding-Ding-Ding-Ding DING! I bet you can squeal like a pig. Weeeeeeee!”

#46 recharts on 12.04.13 at 11:34 pm

#179 Canadian Watchdog on 12.04.13 at 8:36 pm
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.

This chart is not realistic
http://i.cubeupload.com/Hw7VvO.png

I played with that sort of chart too and you have to be careful how you chose your price ranges

For example the segment 0-500K has a critical limit at 500K as many properties jump in to the next segment (500K-1M) due to price appreciation
Also running the stats per type of property (Condos/TH/Semis/Detached) produces different results
As prices move into the next category the YoY price for the next category decreases

Ex houses moving from 0-500K into 500K-1M will decrease the average price in the first category
At the same time the category 500K-1M is suffering of the same problem, more houses are added to the bottom of the category while more houses are moved from 500K-1M to the over 1M category

It is difficult to make o correct analysis this way, you need to work with two segments the border between the two should be the average price

Ex: SFH Toronto
first category 1-800K
second category 800K-1M

I would love to see that chart

#47 Toromierda on 12.04.13 at 11:38 pm

I say fire Stephen Poloz, hire Paul Volcker.

Now that guy knew how to take a punch bowl away.

#48 Spectacle on 12.04.13 at 11:38 pm

Thanks Garth.

Loved it …. ” 70% of the people living here are bombed on the Kool-Aid.”

Regarding #1 T.O Bubbleboy, you make a good point about the renovations and material rebuilding of structures that twist/distort the Frankennumbers (probably to serve some kool-laid vendor after all). Another point we see often is the absolute dump that sells for so much ( adding to that Frankennumbers distortion).

Reminds me of when a Vancouver promotors Murray Pezzim built his new waterfront home, his doors cost 20% do the value of the average home, $110,000 alone. His one home distorted the new build values on west side of Vancouver , for sales.

Having said all that, companies are dumping employees by the 1000 per! Now that is significant and material to me.

I don’t drink the kool aid , and appreciate Garth’s blog & the variety of comment section insights.

#49 Uh Oh Canada on 12.04.13 at 11:39 pm

I’m taking painting classes once a week. Can’t help but listen to the conversation around me. Each week someone’s been laid off. The sectors are all different- financial, manufacturing, admin., etc. Yikes!

We are entering into tough times…keep liquid folks and learn how to hunt squirrels.

#50 Smoking Man on 12.04.13 at 11:46 pm

#40 recharts on 12.04.13 at 11:23 pm
#8 Randy on 12.04.13 at 9:54 pm
It was just announced on the 6 pm Barrie TV station news that a Bradford, Ontario auto seat manufacturer is closing its doors due to the high cost of manufacturing in Ontario. 500 permanent employees and 100 temporary employees will be laid off, effective February 2014. This follows on the heels of many other companies leaving Ontario, taking their jobs with them……Ontario ….a high cost jurisdiction ????
…………………………………..

Business are leaving because of outrageous cost of electricity prices now and in the future, insane insurance rates. Cell phone Rates. Air travel costs. Generally getting goosed by monopolize industries critical to business services.

And an absolutely stone stupid left certificate toting population that keeps voting in thieves and a dumb liberals.

People like FORD, sadly is the only thing that can save us from the madness.

You who stay will be doomed……

#51 Canadian Watchdog on 12.04.13 at 11:50 pm

Read this report for the latest on Canada's home price indexes.

Developing a Residential Property Price Index (RPPI) for Canada

The geographical coverage of the MLS data, although extensive, is skewed towards mostly major metropolitan areas. CREA has already stated its intention to negotiate with additional real estate boards to join the MLS-HPI project. Another limitation of this approach is , the absence of data on private transactions, that is, properties marketed outside the MLS system. Venues available for private transactions have increased in importance in recent years, currently accounting for anywhere between 10% and 30% of the total residential properties sold in Canada.   

Complete reliance on a private provider for the resale component of a RPPI data may expose Statistics Canada to new risks with respect to data quality, reliability, potential for index manipulation, index longevity and changes or revisions to index methodology. There are few precedents for use of data from a private source and navigating this new territory has implications for the agency’s reputation as a credible national statistical organization.

Although not stated in the abovementioned report, the issue at hand is the lack of pass-through shelter and housing related inflation in our CPI. The understating of inflation may have some believe there is disinflation, when in fact data shows inflation turning upwards.

There are many metrics for inflation: If you're Ben Bernanke or Alan Greenspan, you may be looking at nominal GDP. If you're Robert Mundell, you're looking exchange rates with a pass-through model. Import prices could be used and so on..

Don't be a laggard. Get new data and change your framework. And certainly don't believe government statistics when their objective is to financially-repress you.

#52 mark on 12.04.13 at 11:53 pm

Everyone overcomplicates things. This blog is entertaining but shouldn’t even be needed. So sad. Cheap debt for a decade…what happens when everyone has already bid as much as they can? When everyone who can afford to buy has bought? Who is going to buy houses tomorrow? What happens in a free market with no buyers? Recency will be our doom. Timing is impossible to predict – people remain dumb until the bank says no. The outcome is inevitable.

#53 takla on 12.04.13 at 11:59 pm

lounging around last evening listening to some old CSNY on the vintage tube amps and felt a drip,yup,had to call the landlord again,plumbing line froze and snapped,gave up the ghost and dripping right down thru the pot light into our suite.Last week I went thru a step heading up the stairwell accessing the patio.now the furnace is hooped and will need to let the repair guy in fri.Actually starting to feel for these poor {literally}home owners.they cant believe all these problems are starting already and the homes only 7 yrs old after paying a a cool half million for it…their problem not ours!!

#54 In the Cold from Toronto on 12.05.13 at 12:00 am

I think there’s some truth in #34 (jackplant’s) post.

The current bubble in the RE market originates in the decoupling of risk. We would have normal prices if Banks would be liable for 25% of a mortgage. The government standing behind all the value of a mortgage removes the stick… so the banks see only carrots – wherever they turn. That’s why people with a pulse get mortgages (no brains required).

The government should not guarantee mortgages larger than than 3 times the average income. Anything more than that – should be left to the free market to be priced and administered there.

Pithy our new top banker – he needs to choose between doing what is:
• right for the country (increase the interest rates), but bad for his masters (the Conservatives), or
• bad for the country, but good for the Conservatives.
I think he will do the responsible thing, and put Party Allegiance first (there are not that many people like you, Garth). Canada will limp towards the next election, and then, after a new Conservative Majority is ushered in, we will have to confront this problem… but, Hey! We just earned a new majority, which means that the country approves of our social & economic policies, so why not try to kick the can even further down the road?
… and so on. Until one day, this will not work any more.

That day will not be pretty.

#55 Smoking Man on 12.05.13 at 12:00 am

Thought you worshipped a big one. — Garth
……………………………………………..

I only worship the dude that mimics me in the mirror.

It’s not that I admire FORD but his creepy advisories like Vaughnnn and Mini Wong.

My vocabulary far to limited to describe the shear un adulterated hate I feel for these elite slimesters.

#56 Yuus bin Haad on 12.05.13 at 12:01 am

“Don’t confuse a lower dollar with productivity.” Peter Lougheed.

#57 Devore on 12.05.13 at 12:06 am

#8 Randy

Ontario ….a high cost jurisdiction ????

Of course. Ultimately, all those houses and granite needs to be paid for, with money earned working. Flipping houses to each other will only work for so long. When the exact same worker, just a few minutes south, across the border, has 1/2 or lower housing expenses, wage competition is a no brainer.

#58 Pete on 12.05.13 at 12:13 am

Seems to me that the RE fish is rotting from the head and the tail, while still wriggling dementedly in the middle. Nobody can surely doubt that we have an unfolding disaster in the condo market, while the > $1M market seems to be as dead as Monty Python’s parrot, at least in our area (Oakville).

None of us should wish for a RE crash though. Would be nice to think that we could have a neat little RE crash to clean out the greedy developers, realtors, brokers, spekkers and flippers, who have been making far too much money providing no value to anyone, but we all know from experience that a RE crash causes widespread devastation. No point if that house down the road is half price if you don’t have a job anymore!

The types who were counting on selling that $2M+ house to fund their retirement though, look to be in real trouble.

Absent an external shock of some sort, seems to me that we will have an accelerating multi-year price decline, but we should all hope that it does not turn into a full-blown disaster….not at all confident that it won’t though.

#59 Peter on 12.05.13 at 12:40 am

HI

to T.O bubble boy about renovations, houses require maintenance and everything in a house will need replacing over a given time , ALL houses are depreciating assets in every year in history, maintenance is required (at a cost) to keep a house working properly.

Things like kitchen , roof , furnace (25 -30 yrs ) sometimes less depending if they were well maintained. The costs of these things have always added to the cost of a house and because of inflation , every time you renovate the cost of materials , labour , and new and improved building codes and engineering requirements and architectural requirements add to the value of the house but not to the perceived profit to the owner , and depending on what area your house is in and the quality of the work will determine if the value added was profitable (net gain less spending).

Based on CAAMP mortgage numbers , home owners in Canada will not be defaulting , and anyone thinking that after a home owner replaces a kitchen and a roof, he will sell the house for the same money that he purchased it for because the neighbor does is dreaming.

ALL real estate numbers are based on bad math , and housing is way more complicated than averages , real estate is local , math is not , unless you are using real numbers , you are just guessing.

I also think inflation numbers are worse because the ‘basket’ of items used to calculate excludes everything that goes up. I am unable to find out what the use in this mystery basket , to come up with the inflation numbers. If anyone knows , I would appreciate the info.

Prices may or may not increase but because the RE industry releases sales numbers, no thinking human being that knows anything about owning, buying or selling a house with an ounce of business sense would not factor in what was spent on a house when determining VALUE.

#60 Finally on 12.05.13 at 12:42 am

Live in YVR @ 43 and just got married. Patiently still waiting for the market to get cheaper. Just finished paying off my 2 year car loan @1600 a month, now have close to 300K as a downpayment, have over 250K in RRSP and make over 100K a year. Plan to get a pre-approval in the next month and see what I can afford in 2014. I pray it gets cheaper because I’ve been saying it for the past 2 years, but I’ve been wrong so far.

#61 johnny d on 12.05.13 at 12:42 am

@#42 not 1st

I never said Canada’s economy will do bad. Keeping with the China comparison, the economy can do great while at the same time the middle class struggles. We’ll have that export based economy Harper and the BoC so dearly want when the dollar is worthless. At the same time our consumer sector will languish and price inflation will make living here way harder. As someone who lives in Canada and earns Canadian dollars at my job, I’m a bit concerned.

#62 TheCatFoodLady on 12.05.13 at 12:51 am

This is scary now. I feel like a very small boat in a very large ocean with storm fronts coming in from all directions. Do I set a sea anchor? Go balls to the wall, screaming defiance as I turn my face to the, driving rain? Or do I tie myself to the nearest oarlock & whimper?

I hate seeing the gleeful, malicious “they deserve penury!” type comments. Few of us are born financial brainiacs & if something seems to work, if we don’t think to really learn & crunch the numbers for ourselves; isn’t that pretty normal?

We buy houses & cars without being expected to know the intricacies of a solenoid or the proper application of vapour barrier? We have faith vehicles & homes were properly built with a reasonable measure of quality control.

So it with the financial products in which we dabble. We’ve long expected them to be regulated to some degree, to not be too badly screwed. When we were told, (collective we, not necessarily specific posters here), we could handle the level of credit being offered us, over & above our want of stuff & RE, we believed those loaning us money. After all, they had tons more experience with loans than do most of us.

Okay, the pooch has been screwed at so many levels, I no longer recognize the breeding of the resultant offspring.

I can’t save the Titanic. All I can do is make my financial lifeboat is as sound as possible – well put together, caulked, with a bailing can, extra oars & life preservers. Some potable water & food, (no tuna) & a small bottle of hard stuff for shits & giggles along the way is the best I can do to stay afloat until land is once again in sight.

I’d love to beach on a nice tropical paradise but after the rough seas we’re about to encounter, I’ll settle for anything solid.

#63 World According To Garth on 12.05.13 at 12:53 am

Going to be interesting to see how Herb and his public servant brethren get their 500 billion in pensions (not to mention ongoing 91,000 dollar salaries for pushing paper around) when there is no tax revenue to pay for said public servants.

On another note I guess less is the new more when it comes to recovery stateside in the World According To Garth.

http://theeconomiccollapseblog.com/archives/wow-the-holiday-shopping-season-is-off-to-a-horrible-start

#64 Cici on 12.05.13 at 1:01 am

According to the realtors’ cartel (so be careful) resales last month climbed 14% in the GTA and 19% in Cowtown. SFHs in 416 jumped 24% and the average selling price overall increased 11%.
_______________________________________________

I don’t believe those numbers for a single second. I think the cartel has been smoking too much of Ford’s stash.

#65 Cici on 12.05.13 at 1:05 am

Also, if the cartel’s numbers are right, we probably aren’t at 70% ownership anymore…probably more like 97%, LOL!

#66 Cici on 12.05.13 at 1:09 am

#2 [email protected]

Oh well, at least the music will be markedly better :-)

#67 Cici on 12.05.13 at 1:14 am

#7 pathcontrolmonk

Eek! Sorry to offend your friends, but brings to mind the expression: stupid is as stupid does.

Anyone who makes RE decisions based on what they read in the mainstream media (especially the Sun) is in for big-time heartache.

#68 Cici on 12.05.13 at 1:17 am

#9 Bob Rice

But real estate (even for companies) is too expensive in many locals, not too mention wages. Something’s got too give, but when either one does, so will the other ;-(

#69 Tony on 12.05.13 at 1:29 am

Re: #12 Young Boomer on 12.04.13 at 10:02 pm

In Edmonton sales are down 23.3 percent month over month as the idiots there catch the Vancouver and Victoria syndrome where they take their house off the market in some sort of self-induced hallucination it’ll sell for more next year. The problem being it won’t sell at all unless they keep on reducing the price.

#70 pathcontrolmonk on 12.05.13 at 1:31 am

I finally took a look at the IMF’s infographic about Canada having the most overpriced RE in the world based on price to rent ratio. Took a quick look at houses for rent near where I grew up in Richmond, B.C.

$4,700 / month mortgage with 20% down
http://www.blairmiller.ca/m_fixed_listing.asp?listing_id=%7B9CE3A55B-7C97-44A3-89F8-94F40B3F95DF%7D&src=sitemap

OR,

$2,380 / month to rent it
http://vancouver.kijiji.ca/c-real-estate-house-rental-Beautiful-house-in-Richmond-with-dyke-view-W0QQAdIdZ531479768QQfeaturedAdZtrue

I think my brain imploded.

#71 Freedom First on 12.05.13 at 1:33 am

The end of normal. Very fitting headline to match the photo Garth.

I know 1st hand that this is a quality washroom in the photo compared to the washrooms in some of the 3rd world countries. Many Canadians are ignorant as to how rich a country Canada is. Such arrogance, entitlement, complacency, and ignorance of the world they live in, that to be happy, so many Canadians have to buy RE they cannot afford, rather than be happy with the beautiful rental home they can easily afford. The “Richer than you Think” slogan is really true, but not in the way the bank means it. Happiness is being grateful for what you have. A Billion+ people in the world would be extremely happy to be able to use a washroom facility like in the photo. And other Billions of people can never be happy/satisfied with what they have, always wanting more. The Richest countries in the world are learning this lesson the hard way: “You cannot borrow wealth.” Re-read Garth’s last 2 paragraphs from today’s Post, and take heed. Freedom First, always.

#72 Spectacle on 12.05.13 at 1:34 am

Thanks again Garth had to laugh: but ouch !

” Actually I said mortgage rates would rise in 2013. They did. — Garth

Ha politicians

Thought you worshipped a big one. — Garth ”

Reminds me of the old joke:
They came out with a commemorative Rob Ford Postage Stamp, but it had to be recalled. Seems they kept falling off the letters because people were spitting on the wrong side of the stamp.

Ouch & G-Night….

#73 crackservative on 12.05.13 at 1:43 am

Smokingman #50

You really are an uneducated realtor. You know the crackservatives are the one who screwed hydro up by selling public hydro and making it private. Of course the debt remains public. Here are some facts the crackservatives don’t want you to know . http://www.mississaugastreetsville.ca/public/hydroDebtRetirement.aspx

#74 Crackservatives on 12.05.13 at 1:52 am

The crack head conservatives sold hydro to private (for profits) interests so hydro rates will go up no matter who is in power. The cracks head conservatives sold the 407 to a Spanish company in a 100 year lease for a billion dollars. The crash head conservatives have backed $600,000,000,000.00 in sub -prime loans. Conservatives are truly crack heads .

#75 Crackservatives on 12.05.13 at 1:56 am

Ontario is a high cost province because wages are to high and why are they to high? Because housing prices are out of wack with reality. RE is choking the real economy. Companies will close down here and move to 50% cheaper wages and houses USA. Get it now you uneducated realtors and silver spoon crack head conservatives ?

#76 Babblemaster on 12.05.13 at 1:57 am

#58 Pete – None of us should wish for a RE crash though.

—————————————————

Why not? Well, for one because wishing is a waste of time. However, Cdn RE is vastly overpriced and has been bid to unsustainable levels. It is priced so high only because of market distortions brought on by idiotic government subsidization (CMHC) and other stupid buyer schemes like 5% down. It should be much lower in price and the only expeditious way to get there is via a crash.

#77 Tony on 12.05.13 at 2:11 am

Re: #42 not 1st on 12.04.13 at 11:18 pm

The Canadian dollar is falling due to falling commodity prices which are a result of slowing growth in China.

#78 P.Bocanegra on 12.05.13 at 2:15 am

#55 – “I only worship the dude that mimics me in the mirror.”

http://en.wikipedia.org/wiki/Narcissistic_personality_disorder
That explains all the inane ramblings then.

#79 Subprime on 12.05.13 at 2:28 am

If you are stupid enough to think the head of any central bank is solely responsible for setting policy then it’s time to get your head out of your butt. central banks are private companies that are owned by anonymous shareholders..you know the usual suspects..old money controlling elites. They are pulling the strings..they are not trying to create a healthy balanced world where people live a life of harmony. their twisted worldview depends on greed and lack which creates fear and competition. Control and power is the name of their game. Like any game it only ends when the players decide to stop playing. at this point the controllers are shaking their heads in disbelief…sayin I cant believe they fell for the RE bubble gag aaaagaain!!

#80 DON on 12.05.13 at 2:37 am

#45 BCD on 12.04.13 at 11:24 pm

Is it just me or are the commenters particularly nutty tonight?

Honestly, who the hell really knows how much debt people have or don’t have. One thing is clear, they were out on Black Friday and Cyber Monday spending like Loonies and Greenbacks are going out of style. Are we to believe everyone filmed fighting over a 23 inch flat screen is a redneck Walmartian with 15 credit cards all maxed out and living on weiners and Wonderbread? I think there is more money in our society than we know of. I mean just look how fat everyone is! Many people are buying with family help, big down payments, aggressive repayment strategies. Not everyone in Canada is a total financial inbred imbecile as this blog would have us believe.

But enough of that. . .back to the theme song of this blog: “Da-Da-Ling-Ding-Ding-Ding-Ding-Ding DING! I bet you can squeal like a pig. Weeeeeeee!”
***************************

True nuttiness is not taking into consideration that at this point in time after 10 long years people are used to risk buying an over valued house cause the main herd is doing it. People have many credit cards and line of credits especially if their own homes. Take a look at banking numbers. Geezus…but don’t play the I think card.

#81 SmallTownTokenBrown on 12.05.13 at 2:44 am

Smoking Man “People like FORD, sadly is the only thing that can save us from the madness.”

Tell me, your “book” is going to be a comedy as well?

#82 OffshoreObserver on 12.05.13 at 3:28 am

#Canadian Watchdog:

Why are the StatsCan Bureaucrats meeting in Copenhagen?

Haven’t they learned email, Skype and Google Hangouts?

In fact, using the above named tools, they would not need any office space in some giant Fed-leased building.

My feelings are the same for schools and their professors.

#83 souvereigninternational on 12.05.13 at 3:30 am

#50 Smoking Man on 12.04.13 at 11:46 pm wrote:

“Business are leaving because of outrageous cost of electricity prices now and in the future, insane insurance rates. Cell phone Rates. Air travel costs. Generally getting goosed by monopolize industries critical to business services.

And an absolutely stone stupid left certificate toting population that keeps voting in thieves and a dumb liberals.

People like FORD, sadly is the only thing that can save us from the madness.

You who stay will be doomed……”

but you forgot we have the best HEALTHCARE SYSTEM in the world why would anyone leave. It is worth all of the above. The masses will repeat that mantra ad nauseum. So agree with you on education.See John Taylor Gatto at the link below:

http://www.youtube.com/watch?v=8ogCc8ObiwQ

#84 Dan on 12.05.13 at 4:54 am

Via Zero Hedge…

UK to implement capital gains tax on foreign realestate
launderers…I mean buyers! Coming soon to the Youu
Esss Ehh…?

Look out below!!!!V
A
N
C
O
U
V
E
R
r
r
r
(yeah its a factor Garth)

Dan

#85 Blobby on 12.05.13 at 6:51 am

Meanwhile – in the UK.

.. Property prices are ballooning and credit levels are at a near all time high… since Carney took over.

(Wonder where he’ll jump ship to next time before it all imploads? )

#86 kitchener on 12.05.13 at 7:51 am

So Garth if I read this right, rates are not now going to rise? That’s a pity I guess the realtors were right and I will never own because the new guy is going to save real estate before all else and keep prices up so he can keep his job and his friends. Hats off to all you realtors who called it, you were right.

Of course rates will rise (and did in 2013), but more slowly. Trust me, this is not good news. — Garth

#87 kitchener on 12.05.13 at 7:58 am

Dan I don’t think taxing foreign holders of real estate in London will cause Vancouver prices to drop. If anything it could cause some people who might have otherwise parked their money in London to look elsewhere (like Vancouver, or Montreal). The Telegraph newspaper is having conniption fits over this one, article after article on how Osborne and Cameron are out to get middle class Brits who have moved away but kept their little patch of earth in England. Of course taxing foreign owners on houses they don’t live in was long overdue and fair.

The proposed tax is on capital gains only, not on ownership or usage. If the impetus is political, not economic, it is far from fair. — Garth

#88 Smoking Man on 12.05.13 at 8:23 am

#78 P.Bocanegra on 12.05.13 at 2:15 am
#55 – “I only worship the dude that mimics me in the mirror.”http://en.wikipedia.org/wiki/Narcissistic_personality_disorderThat explains all the inane ramblings then.
………….

I read your link, hum 1 present of population suffers from this condition. One present. Dose that not tell you something.

You never contribute crap on here, chirp your specialty. Why you Google your disorder. I have,your coward, afraid to post something of substance for fear of being judged.

Out of the millions of people that venture here on an annual basis, you would think a shrink would come on and blast smoking man.

They don’t, they know their occupation is a fraud, and lay low.

I have also emasculated all the teachers, they too know better that you take on the 1 present.

#89 johnny d on 12.05.13 at 8:34 am

@#77 Tony

Seems more like the dollar is falling because the dovish tone Poloz is showing, and the possibility of cutting interest rates.

In the next 10 years and on Interest rates will be cut (possibly made negative), the dollar will fall hard, price inflation will get painful, house prices will continue to climb as with the price of everything else (not wages though) and the middle class (Generation Y and later) will struggle. An increasing number of neighborhoods will fall into disrepair and most middle class houses will be dilapidated but still cost over a million. Neighborhoods will become overpopulated shanty towns. Debt will still be a huge issue. Many people will work in resource based jobs. Canada’s GDP numbers will be great. People in the top 1% will do great (as in any country). We’ll continue to have a swelling population as poor people will come for a slightly better quality of life (which will narrow more over time) and rich people will come for the good locations Canada has to live.

The middle class will essentially be squeezed out of existence. Canada will essentially be what China has been for so long… a poverty stricken middle class supporting the rich.

And you will learn to write better fiction. — Garth

#90 Herb on 12.05.13 at 8:38 am

Smoking Man,

you’re Monty Python with a twist: your black knight Ford hacks off his own own limbs and you proclaim “It’s only a flesh wound.”

#91 NoName on 12.05.13 at 8:45 am

20% plunge…

http://mobile.bloomberg.com/news/2013-12-05/china-s-pboc-bans-financial-companies-from-bitcoin-transactions.html

I just received this relevant email: “I sell things on Etsy and Ebay, and frequent the forums. There have been a rash of people being scammed, paying in Bitcoins for items and then having exactly zero recourse when it turns out it’s not a legitimate seller. There is someone on Etsy right now who supposed bought a bitcoin mining machine (oh, irony) for over seven grand, and then the shop disappeared. Another buyer on Ebay was taken for $16,500. Unlike a credit card purchase, or paypal payment, say, there is nobody to contact, no process to appeal and no way to get your btc returned to you, short of calling the police and keeping your fingers crossed they have the slightest idea what you’re talking about. More food for thought, for those who think the complete lack of regulation or oversight in bitcoins is a desirable thing.” — Garth

#92 jerry on 12.05.13 at 9:30 am

Devalued loonie.

A rate cut by any other name?

Geeze how low could BOC go?

#93 rosie "moving forward" in the knowledge that, "this won't end well" on 12.05.13 at 9:57 am

Jobs leaving Ontario due to hydro, taxes, Real estate, insurance, etc. being too high. If you thought about it seriously, and with a little bit of googling, you would come to one conclusion. Asia is cheaper. Now it’s Canada’s turn to learn this.

#94 Q2 CLASS DUPLEX-DRIVE on 12.05.13 at 9:58 am

Hey Garth –

There is a third option for Mr. Poloz, one that could conceivably rescue the Canadian economy from this RE foolishness and get things back on track, ratewise and inflationwise. It’s an option Canadian politicians and central bankers have ALWAYS prayed for: a roaring recovery in the US. It isn’t rocket science and, on that basis, Mr. Poloz and his minions are likely closely watching developments stateside, praying earnestly for a strong recovery which, after five years and trillions in stimulus spending, has yet to arrive.

Frankly, I believe they will be disappointed. Mr. Obama has doubled-down on his far-left policies and, with the ongoing debacle of Obamacare and next year’s looming disaster with employer insurance plans, it’s hard to see how either individuals or corporations will start spending freely. Which means no strong US recovery any time soon. (Yes, I know about GDP and jobless this AM. GDP is inventory build-up and claims are down because employers have no one left to fire. Look at the Challenger number instead)

Lastly, with reference to the ‘d-bag’ mortgage broker coaching his client to borrow $800,000 – have these people lost their minds? This is insane and, you’re right, won’t end well.

P.S. I’m still watching the condo madness at Young & Eligible in Muddy York. It is manifestly NOT letting up.

#95 Toronto_CA on 12.05.13 at 10:05 am

TD Earnings:
“The bank incurred a $129-million restructuring charge related to “retail branch and real estate optimization initiatives,” something TD alluded to during the third quarter.”

Optimization intiatives is such a nice way of saying “mass layoffs”. BMO lays off 1000 people and now everyone else will too.

#96 maxx on 12.05.13 at 10:06 am

Insightful, relevant and as usual, a warning that will unfortunately fall on too many (willfully?) deaf ears. One comment in particular, struck a chord:

“Relying on diversified consumer spending to spur the economy is no longer an option.”

No doubt about that. I would also add that, not only are people tapped out, but also, those who have savings and the power to spend, aren’t, for the most part because interest rates are so punitive.

A ginormous cohort of boomers is no longer interested in taking risk at this stage of life. They want financial stability and also to sleep at night.

So many people with assets have now resorted to buying “off the grid” and/or getting what they want and need for pennies on the dollar. Retailers are cutting prices to the bone more and more every day in order to compete. The sea of money moving to discount/charity and church basement shops is gargantuan. Charity shops also charge NO TAX. They are now so successful, that most have/are upgrading their premises and provide a fun treasure-hunting experience. Regular retail is poised to take an ever-increasing hit over the coming years.

It’s called survival, and people will find ways to do just that: buying off the grid, donating, bartering and trading. And naming their price.

Those with assets will find ways to keep what they have worked so hard to accumulate.

So, the more interest rates are squeezed and savers punished, the tougher and more creative people will get. Canada is only spawning increasingly tougher consumers the longer these dumb central bank policies continue.

Pity the real economy. As for exports, Canada has plenty of competition in ALL sectors and successful nations will be no different than guerilla consumers in squeezing prices down to the bone marrow.

Best of luck Mr. Poloz.

So those who pig out on debt are compromising the future, and those who have money are holding back and getting truly creative with their spending so that quality of life is preserved at a mere fraction of the cost. And they get better at it every single day. I see people in BMW’s, Mercedes, etc. in charity shop parking lots and they are there for a good reason: these places are treasure troves and they are great for the bottom line. Need baby stuff, toys, designer, kitchenware…..on and on…and I’m not talking garbage- often all of this stuff still has price tags attached.

#97 Ralph Cramdown on 12.05.13 at 10:07 am

#79 Subprime — “central banks are private companies that are owned by anonymous shareholders.”

Do you make this stuff up, or do you just repeat it when others make it up?

#98 rosie "moving forward" in the knowledge that, "this won't end well" on 12.05.13 at 10:07 am

After reading this latest Pigg porn, I had to shower.

http://www.thestar.com/business/real_estate/2013/12/04/house_and_condo_sales_and_prices_keep_rising_in_gta.html

#99 recharts on 12.05.13 at 10:18 am

#91 NoName on 12.05.13 at 8:45 am
20% plunge…

http://mobile.bloomberg.com/news/2013-12-05/china-s-pboc-bans-financial-companies-from-bitcoin-transactions.html

I just received this relevant email: “I sell things on Etsy and Ebay, and frequent the forums. There have been a rash of people being scammed, paying in Bitcoins for items and then having exactly zero recourse when it turns out it’s not a legitimate seller. There is someone on Etsy right now who supposed bought a bitcoin mining machine (oh, irony) for over seven grand, and then the shop disappeared. Another buyer on Ebay was taken for $16,500. Unlike a credit card purchase, or paypal payment, say, there is nobody to contact, no process to appeal and no way to get your btc returned to you, short of calling the police and keeping your fingers crossed they have the slightest idea what you’re talking about. More food for thought, for those who think the complete lack of regulation or oversight in bitcoins is a desirable thing.” — Garth

This is complete B$ ☺☺
China has realised that Bitcoin is the very backdoor that the money needed to get out of the country for less wealthy people. The wealthier, as the articles says, always have options.

A random link for you:
http://www.finextra.com/community/fullblog.aspx?blogid=8581

Read between the lines

Although his comments last Friday were a bit vague, Yi Gang, one of the People’s Bank of China (PBOC, China’s central bank) vice governors, indicated at a recent talk he was part of that the PBOC would not make the Bitcoin legal now, but people were free to use the currency.

So, with comments like that, you need to read between the lines a bit to understand what they are trying to get across. From our analysis, the comments are positive for Bitcoin. While not full acceptance of the currency and very similar to the US government’s comments, the indication is that the Chinese government is keeping an eye on the currency and will likely move to make sensible regulation around its use.

We also feel that if either government were going to ban the currency outright, they would have made the decision now rather than later as it would really serve no purpose to not make the decision now beyond fueling speculation. Likely both governments have accepted that virtual currencies are an unavoidable part of the future of the financial industry and will have to be addressed at some point; even if the dominant future player in the market is not Bitcoin, it will certainly be another.

There has been some speculation at least in China that the reason that regulation hasn’t happened yet is because some officials are using Bitcoin to move their wealth outside of China. We don’t support this view: wealthy Chinese have always had ways to take their money outside of China. Certainly Bitcoin currently does provide an additional channel to get money in and out of the country easily and we would be remiss to say that no one is using it for this purpose, but we believe this to be a minority of the users.

#100 live within your means on 12.05.13 at 10:18 am

Another OT post. What else, LOL Today we`re switching to Bell Alliant. Hubby will take the afternoon off as I`m too old & stupid when it comes to tech stuff now. Hubby got a call 2 days ago from an Eastlink sales rep. telling us what a great deal they could give us for 2 yrs. I said to hubby, while he was on the phone w/her, why didn’t they offer that great deal to us. Her reply – we can’t unless you ask. Screw them – at least for now.

Hubby has pull strings from the basement through drilled holes in the floor attached to cable. Otherwise, AFAWK, cable co. would drill holes on the outside of the house.

This is really sweet – Emotional Baby – http://www.youtube.com/watch?v=nIsCs9_-LP8

Totally reminded me of my niece singing & talking to my grand niece.

I don’t post about housing or investing. We paid our modest home eons ago & rely upon Garth to take care of our modest investments.

Bumped into an old friend the other day. She sold her lovely townhouse yrs ago & now rents a fab apt. overlooking the Bedford Basin. Said she’d never buy a condo. She’s a retired high school VP but works part time at a university appraising new teachers. Doesn’t need the money but likes to keep active. She’s invited me to see her new digs.

#101 James on 12.05.13 at 10:23 am

Of course rates will rise (and did in 2013), but more slowly. Trust me, this is not good news. — Garth

The rise was negligible. Clearly because Re price didn’t budge. Plus rates will stay low for a very long time.

A 1% hike in mortgages may be negligible to you, but it isn’t for most. — Garth

#102 thanks_garth on 12.05.13 at 10:24 am

agree with Garth on the RE inflation, will be the shits before 2015.

However believe in stock crash in US January 2014. Will sell equities before Xmas…invest in some undervalued ventures and will buy general ETF (SP 500) after crash 2014.

Opinion based on clairvoyance and alignement of stars…
-Be careful-Good luck

No crash but (of course) a correction. — Garth

#103 Big Brother on 12.05.13 at 10:30 am

#29 Smoking Man on 12.04.13 at 10:38 pm
I’m selling in the spring, the peak, and leaving this country of stupid polite zombies.
I will be lying on a beach, growing the three reaming hairs I have into dread locks, drinking my wine, and undressing all the babe’s on the beach with my eye balls.
Somewhere in side, a bit of a man still exists.
That kind of man no longer welcome in the land of the educated fools and tree luggers.

MKULTRA says no you won’t be selling in the spring and retiring on the beach. We have programmed you to stay in Long Branch for a long time. Close to tax farm and close to the motorway that takes you to la la land at Seneca. No Senecas on the Island Smoking Man.

#104 live within your means on 12.05.13 at 10:34 am

This may sound contradictory to my previous post. I’m an avid online reader of both political & financial articles but don’t comment on any I read.

#105 Daisy Mae on 12.05.13 at 10:37 am

“…Carney now watches his poor replacement standing helpless before a giant, swelling credit bubble.”

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

…while he proceeds to take the UK down the identical path. Oh boy, will they soon be regretting their decision to hire this man.

#106 NORMANDIE on 12.05.13 at 10:42 am

#98

I read the article in TorStar. Madness! This quote says it all –

‘“Houses in the $750,000 to $850,000 range are now considered entry-level homes in the city, and they may need $200,000 worth of work,” says realtor Sheree Cerqua’.

These people really have taken complete leave of their senses.

#107 Another investment firm returns cash to investors: No more investment opportunities on 12.05.13 at 10:45 am

The mad cow disease is spreading among profesional investors

http://www.zerohedge.com/news/2013-12-05/david-tepper-follows-baupost-returning-excess-cash-investors

America is recovering but the investors see not room for investment.
This is like Canada’s GDP is rising but we are bleeding more jobs every other week.

#108 Holy Crap Wheres The Tylenol on 12.05.13 at 10:46 am

#58 Pete on 12.05.13 at 12:13 am
Seems to me that the RE fish is rotting from the head and the tail, while still wriggling dementedly in the middle. Nobody can surely doubt that we have an unfolding disaster in the condo market, while the > $1M market seems to be as dead as Monty Python’s parrot, at least in our area (Oakville).
None of us should wish for a RE crash though. Would be nice to think that we could have a neat little RE crash to clean out the greedy developers, realtors, brokers, spekkers and flippers, who have been making far too much money providing no value to anyone, but we all know from experience that a RE crash causes widespread devastation. No point if that house down the road is half price if you don’t have a job anymore!
The types who were counting on selling that $2M+ house to fund their retirement though, look to be in real trouble.
Absent an external shock of some sort, seems to me that we will have an accelerating multi-year price decline, but we should all hope that it does not turn into a full-blown disaster….not at all confident that it won’t though.

_____________________________________________

Pete we are also Oakvillians and I can agree with you the market here has slowed down for anything over $1M. I have watched some neighbors here selling their homes in the $1.5M-$3M range and what took one month in the spring to sell has now slowed down to four months average. It hasn’t dried up but it has slowed. It is amazing to see the developers here still purchasing our older 1970’s bungalows with large lots to turn into McMansions. The McMansions appear to be doing well so I can only imagine they are sold during the five months of construction. The typical McManison in our area goes in the range of $4M and up, go figure?

#109 eddy on 12.05.13 at 11:07 am

@#98 rosie “moving forward”

416 is still smokin’ (insert your own Rob Ford joke here). That street, Hazelwood, had three sales since Nov 27 2013, All three went 122-139 over list.

#110 broadway skytrain on 12.05.13 at 11:16 am

63 World According To Garth on 12.05.13 at 12:53 am
Going to be interesting to see how Herb and his public servant brethren get their 500 billion in pensions (not to mention ongoing 91,000 dollar salaries for pushing paper around)
——————————————————
HR association conf in Van yesterday

human res ppl from all over , public and private.

sick days comes up in discussion…and the number of sick days /yr used at which HR will intervene/investigate.

private sector – 3 days
public sector – 32 days

govt office workers are mostly stealing from the taxpayer everyday.

#111 Just some really cheap guy on 12.05.13 at 11:27 am

Ref Comment 96

I think you are right. I drive by a Good Will shop about twice a week. The parking lot is full of expensive cars. We donated some furniture lately at Good Will and I remember the car in front of us at the drop off point was unloading a large box of what looked like high end wine glasses. And the box appeared unopened.

My wife and I are fortunate to be reasonably well off and we routinely shop carefully. We don’t need to but we do. Frankly, we are concerned about levels of consumer debt and a possible reckoning. None of my fricken’ business what people do but I hope we don’t crash and burn.

Having vented a bit though, I still believe we still live in one of the wealthiest countries in the world. If more people started heeding the advice of El Gartho, we would all be better off. Why is it that as a country, we always seem to shoot ourselves in the snowshoes?

#112 heineken on 12.05.13 at 11:28 am

#22 Smoking Man on 12.04.13 at 10:18 pm

great analysis. very accurate.

to add to your thinking: the sheep will be begging for less freedoms and more govt control of their miserable misdirected lives.

#113 Bob Rice on 12.05.13 at 11:38 am

Article in star today… “Bidding wars keep going up”

Some days, I wonder if this is just the new normal…Maybe the GTA will just become a place for the haves and the have nots.. middle class is being squeezed big time…

There’s a LOT of money in toronto.. a lot more, per capita, than the rest of Canada.. quite enough to keep this going..

Maybe $950K for an modest size SFH is the norm here…

Still, I’m going to continue to rent even if I have great job security, good wage and savings…

#114 Kilby on 12.05.13 at 11:44 am

33 not 1st on 12.04.13 at 10:44 pm
No inflation means no growth…

The best thing our economy needs is to have the excesses purged. Ever tried hiring a contractor or buying a new car? Outrageous prices. An overall correction will mean pain? yes, but thats the only thing that people understand.

Prices have to moderate because wages are not keeping up and people are acquiring too much debt. How will people be able to earn more to afford higher prices or have extra cash to cut debt? Answer, they won’t and can’t therefore prices come down like they should. Sorry Garth, its written in the cards now, the little monetary experiment has no clothes.
*********************************************
This statement pretty much says it all, pragmatic and logical, so many are in denial of this which should be pretty obvious to anybody that has been paying attention..

#115 omg on 12.05.13 at 11:44 am

Deflation and the recession risk in Canada is just more “flavour of the month” stuff (or maybe “flavour of the day” stuff). Give it a few weeks, a couple of good news announcements by some big corporations, and the Canadian media will be producing good news stories.

Its just human nature to get caught-up in the reading of the tea leaves on a daily basis.

Remember – just a few weeks ago the US economy was slowing and tapering was off. This week the market is down three days in a row because there are signs of renewed growth and tapering talk is back on.

Here’s what will happen over the next few years.

– The US economy will recover and grow.

– The world economy will recover and grow.

– And Canada will be dragged along with it.

Just don’t worry about the week to week fluctuations.

#116 maxx on 12.05.13 at 12:03 pm

#40 Retired Boomer – WI on 12.04.13 at 11:12 pm

“The BEST thing that could have happened is interest rates spiked two years ago, along with anything over 20 yr amortization to kill the RE “super bug.”

Now, how DO you kill this malevolent disease?”

The short answer is, it’s impossible without a return to some semblance of prudence, with no disproportionate favoritism to any sector of the economy at large.

It’s likely too late anyway. Two reasons: Erroneous policy aimed squarely at FIRE industry favoritism over the past 2 decades, creating enormous damage and also, a staunch refusal to slowly turn things around by raising rates.

It seems that resorting to destabilizing the masses with central banker innuendo is the renewed order of the day, in the absence of enacting a reasonable schedule of measures for a sensible return to economic health.

#117 Ralph Cramdown on 12.05.13 at 12:18 pm

#96 maxx — “No doubt about that. I would also add that, not only are people tapped out, but also, those who have savings and the power to spend, aren’t, for the most part because interest rates are so punitive.”

So they’d be saving less if only the reward for saving was greater? Gotcha.

#118 Paul W on 12.05.13 at 12:30 pm

Garth, Thankyou for this blog, all the time and energy you expend. Thankyou for informing people with “no strings attached”
I look forward to reading your blog everyday and value your opinion/s…

#119 not 1st on 12.05.13 at 12:33 pm

No crash but (of course) a correction. — Garth

—-
Garth, your definition of a correction may need modification . People are in so deep this time that what would have been a normal correction will feel like a crash to many.

And what are the odds of a prolonged recession? We had one about every 10 years since the early 70s, that probably means we are due for another one.

Probably a robot will be writing this blog someday.

Some day? — Garth

#120 not 1st on 12.05.13 at 12:41 pm

I think Garth spends most of his days rubbing his hands together in anticipation of whats coming down the pike this time. Its got to be so close to the tipping point now and most people oblivious to the underlying fundamentals like my neighbor. He thinks his house will go up 5% per year forever.

#121 Bo_ling on 12.05.13 at 12:44 pm

Don’t worry so much Garth. By now you should be well educated on how HAM and the the PBOC has and will save our FIRE economy. Another $12 Trillion from the BPOC will do the trick and the party continues.

#122 Renter's Revenge! on 12.05.13 at 12:56 pm

@117 Ralph Cramdown “So they’d be saving less if only the reward for saving was greater? Gotcha.”

It’s called the law of unintended consequences :P

#123 James on 12.05.13 at 12:56 pm

A 1% hike in mortgages may be negligible to you, but it isn’t for most. — Garth

This statement is just as factually correct aa there is no HAM (sarcasm) .

Of course it is correct, and of course there is foreign investment amounting to about 9% of Vancouver sales. Next? — Garth

#124 not 1st on 12.05.13 at 12:59 pm

We will see how much discretionary consumer spending Canadians will want to do when their house is worth half and their interest rates are a point higher. They will be spending a lot more time sitting in their house so its good they got a nice one.

The solution for Canada now is to take a page out of JCs (Jean Chretien) playbook and devalue the loonie to 60 cents and flood the world with our exports.

#125 Suede on 12.05.13 at 1:08 pm

Hey BitCoin nuts, your currency has been hacked.

womp, womp, womp

http://voiceofrussia.com/news/2013_12_04/Germany-arrests-hackers-for-illegally-making-Bitcoins-4649/

#126 bob Rice on 12.05.13 at 1:22 pm

BBC thinks we have a great economy…

http://www.bbc.co.uk/news/business-25054229

#127 Bo_ling on 12.05.13 at 1:27 pm

And I forgot to post this link of the source of HAM.

http://investmentwatchblog.com/wall-st-banks-hire-children-of-chinese-leaders-to-make-big-dollars-some-never-work/

#128 Smoking Man on 12.05.13 at 1:41 pm

#112 heineken on 12.05.13 at 11:28 am
#22 Smoking Man on 12.04.13 at 10:18 pmgreat analysis. very accurate.to add to your thinking: the sheep will be begging for less freedoms and more govt control of their miserable misdirected lives.
……………

Mommy daddy state.
Canada is the land of wimps, loyalist, love to see the old queen on our money.

We never fought for freedom, we got down on our hands and knees pleaded loyalty.

Our whole system is based on kissing ass. Appropriate behaviour,. Matters not that you are smart, industrious, productive. Can pass the test with out home work.

Look at Wynn, behavior good. Out put…. Shit.
Ford behaviour bad, out put excellent.

Yup thus country doomed…

Our competition in the global market are going to eat us alive..

#129 Conflicting on 12.05.13 at 1:43 pm

An interesting perspective from the BBC…

http://www.bbc.co.uk/news/business-25054229

“Canada’s a great country and such a rich part of the world. There’s so much work here, it’s unbelievable”

#130 Ben Dover on 12.05.13 at 1:48 pm

#97 Ralph Cramdown

Oxymoron: Federal Reserve, neither Federal nor do they hold reserves. Yes they are a privately owned corporation owned by the twelve regional reserve banks.
The owners of the regional reserve banks are anonymous and only known to the president of the United States.
The Federal Reserve was created in 1910 on Jeckyl Island of the coast of North Carolina, by six of the richest men in America at the time. Their theory was to allow them through this government sounding name the right to print money autonomously from the Federal Government. They are neither liable nor audited for their
Creative Methods!

Read: the Creature from Jeckyl Island.

That book is a conspiracty-theory-laden joke. The Fed was created to stabilize and regulate the financial system, and is answerable to Congress, which is elected by voters. — Garth

#131 -=jwk=- on 12.05.13 at 1:51 pm

@Peter #59

Based on CAAMP mortgage numbers , home owners in Canada will not be defaulting

Yeah it’s different here. A 50% rise in defaults is enough to swamp the system and lead to clogged courts, robo signing and chaos. Also, much, much lower property valuations. You’ll see the context switch like so:

defaults only rose by 0.15% last quarter
defaults rose by 0.14% last quarter, no change from quarter before
defaults rose at a slower rate of only 0.13% last quarter
(context switch) defaults are at only 0.6% of mortgages which is a tiny amount, nothing to worry about

But what where they 3 quarters ago then? Oh it doubled?!

and anyone thinking that after a home owner replaces a kitchen and a roof, he will sell the house for the same money that he purchased it for because the neighbor does is dreaming .

I’ve personally seen people walk away from 600k homes with 100k+ recently completed renovation. Not sell – no one would buy it – but walk away with absolutely nothing. That was in Los Angeles. The reno was to add a 2nd story to large bungalow, done really nice too. I have also seen houses in the 350k range walked out on in Henderson, NV. Both people I knew well, both very painful but that was their best option. I helped them both move. we had an amazing poker party+crash vegas on Friday, then moved them out Saturday.

Or are you saying it is different here? Right, sorry carry on then. This is the one place on earth where it will be different. Got you. nevermind. Phew!

#132 Subprime on 12.05.13 at 2:01 pm

# Ralph cram down

#79 Subprime — “central banks are private companies that are owned by anonymous shareholders.”

Do you make this stuff up, or do you just repeat it when others make it up?

Please do some research into central banks starting with the fed. Do you think the fed is owned and operated by the US federal government?? Guess again.

The Fed is an extention of the US government, answerable to Congress. — Garth

#133 Perspective on 12.05.13 at 2:31 pm

Lol why would you delete this garth?

An interesting perspective from the BBC:

http://www.bbc.co.uk/news/business-25054229

“Canada’s a great country and such a rich part of the world. There’s so much work here, it’s unbelievable”

#134 Pigg strikes again on 12.05.13 at 2:32 pm

http://www.thestar.com/business/real_estate/2013/12/04/house_and_condo_sales_and_prices_keep_rising_in_gta.html

Ben Rabidoux :
Bidding wars in Toronto picking up as year comes to an end http://www.thestar.com/business/real_estate/2013/12/04/house_and_condo_sales_and_prices_keep_rising_in_gta.html … With quotes from @TORealtyBlog

——————————
recharts:
The article is a clear exaggeration They sell around SFH 50 houses/day out of which around 20% under asking
How come that sales like these never make it to the media?
http://imageshack.us/f/703/c0q4.jpg

☺More bidding wars 4U: sold for the price for the area. Stunning % over asking 36%,25%♥
http://imageshack.us/a/img404/4409/g9a.png

#135 Mikey B on 12.05.13 at 2:45 pm

Hi Garth,

We recently sold our 2 bed room condo and are now liquid.

What advice do you have for investing this new found wealth. I am too busy to balance and manage my own portfolio.

I already have my RSP set up with Ing (Tangerine) – Streetwise Portfolio. I would like to max out the TFSA for my wife and I.

Are there better options available then using streetwise. An option that doesn’t require too much of my time or thought.

Thank you kindly

#136 happity on 12.05.13 at 3:10 pm

“So that’s the catch. Raise rates and trigger a recession”

Finally, and the stock market tanks too, what I have been saying in this pathetic comments section for a long time, that’s why the taper prophets got punked.

No reason for a tanking, nor will it likely occur unless current US economic conditions change drastically. What would cause that? — Garth

#137 Old Man on 12.05.13 at 3:17 pm

Some of you think you have problems in life, as own a home which was being held in my holding company that was leased to a huge corporation long term with a break clause. I was netting $2,000 a month, as they furnished all, and all expenses were paid from USA; it was their party home somewhere in Ontario as a rewards program for vacation trips, and other things that do not want to know about.

Well, they are slashing the work force all over the world and was kicked under the bus with a check for 25% of rent payable for the term balance and keep the furniture, as they exercised the break clause. I was going to move in myself as has a nice pool, but with the latest stats on Real Estate exploding have listed it to catch me a fool.

I find it interesting that this international company has never been mentioned on this blog with the Canadian operations based in Toronto, but the Smoking Man knows who they are.

#138 recharts on 12.05.13 at 3:26 pm

#124 Suede on 12.05.13 at 1:08 pm
Hey BitCoin nuts, your currency has been hacked.

womp, womp, womp

http://voiceofrussia.com/news/2013_12_04/Germany-arrests-hackers-for-illegally-making-Bitcoins-4649/

The world is full of idiots
Some leave their computers unprotected and smarter people use them to mine bitcoins
Others post the news and distort the facts not making difference between hacking bitcoins and hacking computers to use them at “making” or mining bitcoins

Indeed that guy Satoshi Nakamoto deserves his millions, so much stupidity around these days.

#139 happity on 12.05.13 at 3:44 pm

No reason for a tanking, nor will it likely occur unless current US economic conditions change drastically. What would cause that? — Garth

And there’s the rub, asking the wrong question.

It’s not traditional economics, free market forces don’t exist like they used to with zero interest rate policy, unprecedented printing, and derivatives manufacturing to 100 times global gdp. The short answer is the lockstep chart of fed printing and the stock market. Simple math and the balance sheet tells a 5th grader that the longer money printing and banker leverage increases the worse the eventual rebalancing act will be.

In other words, you have no idea. — Garth

#140 eddy on 12.05.13 at 3:49 pm

#132 Subprime on 12.05.13 at 2:01 pm

# Ralph cram down

#79 Subprime — “central banks are private companies that are owned by anonymous shareholders.”

Do you make this stuff up, or do you just repeat it when others make it up?

Please do some research into central banks starting with the fed. Do you think the fed is owned and operated by the US federal government?? Guess again.

The Fed is an extention of the US government, answerable to Congress. — Garth

^^^^^^^^

Eustace Mullins wrote the book on this subject (The Secrets of the Federal Reserve) , G. Edward Griffin (The Creature from Jekyll Island)is a plagiarist. Here is the mp3 interview archive, commercial free:

https://archive.org/details/EustaceMullinsInterviewCollection

Put them on a flash drive, nice stocking stuffer.

#141 Blacksheep on 12.05.13 at 3:53 pm

The Fed is an extention of the US government, answerable to Congress. — Garth”
————————————————-
Is this sites explanations, incorrect?

1. The Fed is privately owned.
Its shareholders are private banks. In fact, 100% of its shareholders are private banks. None of its stock is owned by the government.

2. The fact that the Fed does not get “appropriations” from Congress basically means that it gets its money from Congress without congressional approval, by engaging in “open market operations.”

“When the government is short of funds, the Treasury issues bonds and delivers them to bond dealers, which auction them off. When the Fed wants to “expand the money supply” (create money), it steps in and buys bonds from these dealers with newly-issued dollars acquired by the Fed for the cost of writing them into an account on a computer screen.”

3. The Fed generates profits for its shareholders.
The interest on bonds acquired with its newly-issued Federal Reserve Notes pays the “Fed’s operating expenses plus a guaranteed 6% return to its banker shareholders.”

“Federal Reserve Statistical Release H.8 puts the total “loans and leases in bank credit” as of September 24, 2008 at $7,049 billion. Ten percent of that is $700 billion. That means we the taxpayers will be paying interest to the banks on at least $700 billion annually”

http://www.globalresearch.ca/who-owns-the-federal-reserve

The Fed is an extention of the US government, answerable to Congress. Period, full stop. — Garth

#142 angela on 12.05.13 at 4:12 pm

Hey, genius. Putting money into financial assets like equities is investing in businesses. Stop embarrassing yourself. — Garth
lol garth giving money to corporations isnt actually creating jobs to produce things which seems like only the chinese know how to do, it only makes for ever increasing bonuses for the top cats but its ok if you think that producing money for corpoations is better than acually producing things .Good luck with that train of thought sounds sustainable to me

#143 jess on 12.05.13 at 4:14 pm

From article April/13
“wrappers’ cross border product
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aCjco55_cnMo

Commerzbank Raided in German Tax Probe Over Life Insurance (4 Dec 2013)
==============

Ft. Lauderdale Attorney Convicted of Conspiracy to Commit Wire Fraud, Mail Fraud, and Money Laundering in Connection with $1 Billion MBC Fraud
30,000 victims who invested in the viatical and life settlement company Mutual Benefits Corp. (MBC).
According to the evidence presented at trial, from approximately 1994 to May 2004, MBC purchased life insurance policies from the elderly, as well as persons suffering from AIDS and chronically ill. Thereafter, MBC sold fractionalized interests in insurance policy death benefits, known as “viatical settlements,” to approximately 30,000 investor-victims. MBC told investors that its viatical settlements offered a fixed rate of return with low risk and that investors’ principal and returns were paid by the insurance companies. Evidence presented at trial established that MBC misrepresented many important facts relating to its viatical settlements, including, for example, the estimated life expectancies of the insured persons, MBC’s fraudulent methods used to acquire life insurance policies, the risks associated with certain policies, the payment of premiums, and the source of funds used to pay investors.

#144 Ralph Cramdown on 12.05.13 at 4:14 pm

Here’s what I think about the US Fed:

POTUS appoints the board members and the chair, subject to confirmation by the US Senate. When the Fed makes a profit, most of it goes to the US Treasury. The Fed has spent years saying that inflation is low, unemployment too high, and monetary policy will be accomodative (read “easy”) until either of those two things changes.

Regardless of whether you believe those to be true, investing as if they were true in an improving economy (i.e. overweight equities, underweight investment grade bonds) has been making you a lot of money. The type of people (sorry to pigeonhole, but…) who feel that the inner workings and creation of the Fed are important tend to be long gold, and have been losing a pantload.

#145 Canadian Watchdog on 12.05.13 at 4:20 pm

Ontario YTD Employment Results – chart

Seven of the ten major occupational groups in Ontario recorded employment gains over the January to October period of 2013. The largest job gains were in Social Science, Government Service and Religion (+29,300); Trades, Transport and Equipment Operators and Related Occupations (+26,400); and, Business, Finance and Administrative Occupations (+24,300).

Nothing works better then good ol' government spending to boost job growth, until it's time to pay the piper at a higher interest rate.

#146 dv8 on 12.05.13 at 4:20 pm

The Fed is an extention of the US government, answerable to Congress. — Garth

Don,t be so naive stick to realestate that,s why your not in government because thats not how the world works

I see you are long on tinfoil. — Garth

#147 :):(Ying Yang on 12.05.13 at 4:24 pm

Smoking Man first thing I thought of was this song is your mantra. Enjoy RIP……………..

http://www.huffingtonpost.ca/2013/11/27/out-for-a-rip-video_n_4350768.html

#148 Peter on 12.05.13 at 4:49 pm

to -=jwk=-

I do not think it is different here, my point was you have to factor in a lot of info , about sales and price, renovations, use, need , area , taxes , insurance fees, entry fees , exit fees, area , location, layout, rental ability, income , maintenance , country , province, interest, time span, before anyone decides to rent or buy. Do your homework on everything and make an informed decision, no one knows what the future holds anywhere. Canada is DIFFERENT , but not special

#149 smartalox on 12.05.13 at 4:50 pm

The Fed is an extension of the US government, answerable to Congress. — Garth

I agree, but given the competence of legislators, can Congress really be considered to be effective oversight? I’d almost want to have people who were at least knowledge about the effects of public finance overseeing the federal reserve.

#150 Entrepreneur on 12.05.13 at 4:59 pm

#50 Smoking Man: You who stay will be doomed…

My reply, a Real Canadian.

Heard on the news that Ontario is closed for business…what happened with the HST and all those jobs.
B.C. voted against the HST & had to fight against it.

Liberals got in again in B.C. and were surprised that they won. I think it is because there are a lot of old people that are investors and watch the Lang & O’Leary Show. O’Leary likes the pipeline to go through to make money. Christy Clark who also likes the Liquid Natural Gas plans on using tankers. A 1000 tankers will be going along our coast with oil and natural gas. A disaster in the making.

On that thought above, it does not look good for the environmnet. How long can a Real Canadian keep living in their own county? The only way to survive this insanity is by making jokes.

#151 Teulon on 12.05.13 at 5:09 pm

S.M. @ 22
You’re not paraphrasing you’re parroting!

#152 happity on 12.05.13 at 5:43 pm

In other words, you have no idea. — Garth

The IMF would disagree, their October 2013 fiscal monitor report titled taxing times spells all this out and lays the groundwork for global wealth confiscation, particularly targeting the mobility of financial wealthy.

This is coming very soon.

You should try stand-up comedy. — Garth

#153 Mike T. on 12.05.13 at 5:54 pm

What is the approval rating of the US Congress? Gallup says 9%.

http://www.gallup.com/poll/165809/congressional-approval-sinks-record-low.aspx

#154 maxx on 12.05.13 at 5:57 pm

#117 Ralph Cramdown on 12.05.13 at 12:18 pm

#96 maxx — “No doubt about that. I would also add that, not only are people tapped out, but also, those who have savings and the power to spend, aren’t, for the most part because interest rates are so punitive.”

“So they’d be saving less if only the reward for saving was greater? Gotcha.”

Nope! Sorry, RC.
Savers being savers…..we spend more when the hay is more plentiful, but we always, always save as well. One does not preclude the other. Gotcha back.

#155 BCD (D for Doomer) on 12.05.13 at 6:08 pm

#142 angela on 12.05.13 at 4:12 pm

Hey, genius. Putting money into financial assets like equities is investing in businesses. Stop embarrassing yourself. — Garth

lol garth giving money to corporations isnt actually creating jobs to produce things which seems like only the chinese know how to do, it only makes for ever increasing bonuses for the top cats but its ok if you think that producing money for corpoations is better than acually producing things .Good luck with that train of thought sounds sustainable to me
__________________________________

I’ve been saying this forever. Financial investment managers and their ilk (including banksters, fraudsters, stocksters, devils etc., whatever you want to call them) are adept at turning wheels that move nothing. From this fervent turning they weave profits like Rumplestiltskin–only they are not using straw and spinning it into gold–they are using someones labour and suffering, because someone somewhere down the line has to be producing something of VALUE in order for a profit to be reaped. A lot has been said about the government worker sitting at his desk and making money for nothing, but that worker is actually performing a service of some kind that is more often than not useful to others. When someone in the financial market buys low and sells high what service have they performed for society???

Thieves, all of them. . .

Without whom there would be scant jobs. Say, do you make money at something? What? — Garth

#156 Penny Henny on 12.05.13 at 6:11 pm

Of course it is correct, and of course there is foreign investment amounting to about 9% of Vancouver sales. Next? — Garth
——————————————-
40% of sales over 1M

Wrong. — Garth

#157 jess on 12.05.13 at 6:17 pm

Argosy University, Denver and parent company Education Management Corporation (NASDAQ: EDMC

DENVER– The Colorado Attorney General’s Office has filed a civil lawsuit and stipulated consent judgment against Argosy University, Denver and parent company Education Management Corporation (NASDAQ: EDMC). Argosy is accused of deceiving, misleading and financially injuring students seeking doctorate of education in counseling psychology degrees (EdD-CP) in violation of the Colorado Consumer Protection Act.

http://www.coloradoattorneygeneral.gov/press/news/2013/12/05/attorney_general_suthers_announces_consumer_protection_settlement_argosy_unive

#158 Ronaldo on 12.05.13 at 6:25 pm

#144 Ralph Cramdown –

”The type of people (sorry to pigeonhole, but…) who feel that the inner workings and creation of the Fed are important tend to be long gold, and have been losing a pantload.”

As you are no doubt aware, there are preciously few smart investors that are exposed to gold, paper or physical. Less than 1% of total global assets are invested in the stuff. Hardly anything to write home about. It’s a total non issue.

#159 Knickerbockers Knosty on 12.05.13 at 6:27 pm

#22 Smoking Man on 12.04.13 at 10:18 pm — “The machine has dumb down the herd to the point of no return. The aim is to make man weak, take away freedom by removing primitive emotions like hey buddy you just stol a billion dollars from us, Now I’m punching you in the face.”

Yo SMan, I, Vladitata here. As usual, you’ve hit the nail square on the head, and as per normal, your words of wisdom will fly over most people’s heads, as they only understand the mindless bovine excrement being fed to them by the world wide m$m.

However, that being said, I have been contemplating the delightful and colorful journey back into the next worlds by writing my own eulogy first. Then I can have a great time like this before taking up my next position in the nether worlds. Wot say ye?

Now for those Nitboin lolliplops here, these are pour vous — Bitcoin and Bitcoin One

#160 jess on 12.05.13 at 6:27 pm

re federal reserve

http://www.rooseveltinstitute.org/new-roosevelt/interview-randall-wray-truths-and-myths-federal-reserve
———
see
http://www.wilsoncenter.org/about-woodrow-wilson

#161 jess on 12.05.13 at 6:52 pm

small groups lots of power$$$ = oligarthy

Rome concentrated wealth
Michael Hudson: Oligarchy will never cancel the debt we owe
http://www.youtube.com/watch?v=00iY4cpEQDY

#162 Dorothy on 12.05.13 at 7:10 pm

#27 – John in Montreal

If even half of what is claimed in that video is true, it is both shocking and disgraceful.

#163 harboursnug on 12.05.13 at 7:10 pm

#135 Mikey B

We recently sold our 2 bed room condo and are now liquid.
What advice do you have for investing this new found wealth. I am too busy to balance and manage my own portfolio.

……………………………………………………………………..

Whatever you do, don’t put your new found wealth into REITS !!!

#164 dv8 on 12.05.13 at 7:12 pm

I see you are long on tinfoil. — Garth
lol i do appreciate your hillariousness tho

#165 Smoking Man on 12.05.13 at 7:16 pm

Thanks Valdster.

The eulogy was awesome.

How it should be

#166 Blacksheep on 12.05.13 at 7:17 pm

dv8 # 146

“Don’t be so naive”
———————————
Garth is any thing, but naive.

I 100% believe Garth has privileged “systemic insights” that no one else here would know. The
game is trying to pry it out of his cranium, while
on a public blog.

If you listen, a little slips out, every now and then

#167 Nemesis on 12.05.13 at 7:17 pm

CockTailHourZen for SaltyDogz…

WongWrong.” – HonGT

Well then! Perhaps it’s time for some… QuantitativeMischief! TeeHee!

[LAT] – Asian Americans are the most prolific spenders in U.S., survey shows

…”Asian Americans have emerged as the most prolific and impulsive buyers in the nation, according to a Nielsen survey released Thursday.

They prefer Costco over Wal-Mart, brand names over generics and lead the nation as a demographic in online buying. As a group, their spending power outpaces the coveted millennials — those in their 20s and early 30s, according to Nielsen’s “Significant, Sophisticated and Savvy: the Asian American Consumer 2013.”

Asian American households, on average, boast incomes of $100,000 or more — earning more than general U.S. households and representing the highest among cultural groups, according to the findings.

Asian Americans are the fastest-growing cultural segment in the nation, with a population of nearly 19 million, and with an increase expanding beyond the traditional hubs of the West Coast and New York City. Asian Americans continue to swarm to urban areas, with all states except Hawaii experiencing 33% or more growth in the last year.

The survey also concluded that:

…Asian Americans tend to live with multiple generations under one roof, making shopping decisions based on culture, value, efficiency and convenience. This population, compared with the general population, recorded more trips to warehouse clubs, mass merchandisers and drug stores.”…

http://www.latimes.com/local/lanow/la-me-ln-asian-american-prolific-spenders-20131205,0,2462761.story

Alas… it’s a LongWay from RodeoDriveToTipperary… and there definitely ain’t no ‘Tipperary’ at Tim’sFernie:

[CBC] – Tim Hortons boss accused of cheating Filipino workers for OverTime

…”Two former employees of a Tim Hortons in small-town British Columbia say their employer took advantage of their status as temporary foreign workers to cheat them out of overtime pay, and to pressure them to keep quiet about it.

Heidi Kibanoff and her boyfriend, Richard Pepito, say Pierre Pelletier hired them and other Filipinos under Canada’s Temporary Foreign Worker Program to work at the Tim Hortons in Fernie, where they often put in long hours.

The pair allege that Pelletier often made sure that the overtime that was paid came back to him — in cash.

“He will issue a cheque to us and then what he wants is you cash the cheque, and after you cash the cheque you give the money back to him,” Pepito said.”…

http://www.cbc.ca/news/canada/british-columbia/tim-hortons-boss-accused-of-cheating-filipino-workers-for-ot-1.2451512

How sad… What’s worse is that in BC these days, ‘rodents’ are by no means confined to the UpperEchelons of DriveThru HighFructoseCornSyrup dispensaries:

[G&M] – Rats on the rise in B.C. cities

…“I never used to be afraid of rats,” Ms. Beardall said. But since the summer, the problem has become so bad she is reluctant to have friends over for dinner parties outside. “It’s embarrassing,” she said.

Although she has noticed rats outside in the yard since she moved in, this year she is seeing a lot more. And they have moved inside. She can hear them squealing in the walls.

Pest-control companies in the Lower Mainland and Vancouver Island say they are dealing with a surge in rats and mice. But researchers say more has to be done to keep track of rodent populations and the health risks they may pose.”…

http://www.theglobeandmail.com/news/british-columbia/rats-on-the-rise-in-bc-cities/article15777196/

Well. There it is. Shall we ShiftGears?

“Some day?” — HonGarth

You have no idea…

[NewStatesman] – The New Statesman could eventually be written by a computer – would you care?

http://www.newstatesman.com/future-proof/2013/12/new-statesman-could-eventually-be-written-computer-would-you-care

However, until such time as SkyNet is WiredIntoHarlequinRomance – it would appear that we’ll just have continue settling for the usual dross [SmokingMan PayAttention]:

[UK Independent] – Bad Sex in Fiction award 2013: Manil Suri’s subatomic bisexual orgy in The City of Devi beats HillbillyHumping to Award

http://www.independent.co.uk/arts-entertainment/books/features/the-city-of-devi-manil-suris-subatomic-bisexual-orgy-beats-hillbilly-humping-to-bad-sex-in-fiction-award-8981162.html?origin=internalSearch

Hmmm… or perhaps we should just leave the WritingToTheDogz!?:

[BloomBerg] – Sit. Stay. Tweet. 7 Ways to Hook Your Dog Up to the Web

http://www.bloomberg.com/slideshow/2013-12-03/sit-stay-tweet-7-ways-to-hook-your-dog-up-to-the-web.html

Hmmm… and I always thought a “DoggyLoJack” was… well, never mind. Oh yes, speaking of ConnectedBlogDogz:

“And you will learn to write better fiction.” — HonGarth

The BestSpeculativeFiction… like Art and certain Blogs, always contains a PoliticalElement… and a judicious sampling of UnbridledPrimitiveEmotions:

http://youtu.be/T3tidwW1gGM

[NoteToGT: Did you enjoy my cameo? NoteToNosty: What ever you do… just be sure to get the SchmengeBrothers on board!]

#168 Shawn on 12.05.13 at 7:31 pm

The Return of Normal

The U.S. economy grew at a 3.6 per cent annual rate from July through September, the fastest since early 2012. But nearly half the growth came from a buildup in business stockpiles, a trend that could reverse in the current quarter and hold back growth.

Here we grow again!

#169 alison on 12.05.13 at 7:33 pm

We bought our house in a good area of Toronto in 1990. We were in our 20s and it was a run down little place – nobody’s dream home. We paid $375,000 and have put about $150,000 into renovations. Now I am 50 and the property is now worth easily $1,500,000 and with a new LRT station opening a few blocks away it will always be in a desirable area. The mortgage is long paid out and we are planning our final renovation so we can stay in it until we downsize or move out of the city to a cheaper location. The important point I am making is that 1990 was also considered to be a “bubble” in Toronto. We heard the same gloom and doom then as we are hearing now. I am not suggesting that prices can’t drop, but I would bet my life that they will not drop enough to cancel out the enormous gains I have made. If you buy a house you can afford, in a decent area, don’t overimprove and don’t waste your money moving every few years with commissions and Land Transfer taxes (especially in TO with double tax) – you will still do just fine.

Wrong. You profited from an age of expansion and inflation. To extrapolate that into lessons for the greater fool who will pay you $1.5 million for that little house, suggesting it will be worth $7 million in two decades, is arrogant and absurd. — Garth

#170 Bottoms_Up on 12.05.13 at 7:57 pm

#45 BCD on 12.04.13 at 11:24 pm
—————————————-
A $2 bag of chips has 1500 calories; a healthy salad having 1/2 the calories costs 400% more.

Fat people is likely more a sign of poor food choices, whether that be by design (i.e., they can’t afford the $8 salad) or laziness or lack of education or indifference or an aging population etc.

#171 Bottoms_Up on 12.05.13 at 8:01 pm

#169 alison on 12.05.13 at 7:33 pm
——————————————
Funny enough, if you factor in 3% per year inflation, and add your renovation costs, you’re at a $900,000 house right there. Sounds like it wouldn’t take that much of a correction to put your house price back closer to the ‘mean’.

#172 John in Mtl on 12.05.13 at 8:05 pm

@ #169 alison on 12.05.13 at 7:33 pm

“Wrong. You profited from an age of expansion and inflation. To extrapolate that into lessons for the greater fool who will pay you $1.5 million for that little house, suggesting it will be worth $7 million in two decades, is arrogant and absurd. — Garth”

Hum… by then, a loaf of bread will cost 400$, a coffee 500$, lunch 9500$ and minimum wage 300K :)

J

#173 Oilsands Guy on 12.05.13 at 8:10 pm

Young Boomer on 12.04.13 at 10:02 pm –

I’ve watched a lot of for sale signs here in NW Calgary come down without the sold sticker, especially once we hit Dec. – both at the low end and the high end. A neighbour near the house we rent sent their tenants on their way at the end of July, spent a month slapping some paint and pretend wood flooring in, put it on the market in Sept, slowly lowered the price, and now new tenants have just moved in. The headlines here don’t make sense to me.

We’ve been perusing the Calgary market closely for the last few months (ie: going to open houses, showings, and keeping a close eye on certain areas – not necessarily all “prime”). The headlines do in fact make sense. However, as you mention, stuff at the bottom and top lingers, as there are a lot of less desirable properties not moving, and plenty of expensive cookie cutter McMansions as well. Anything in the middle (400-600K) that’s decent is moving very quickly. Perhaps your neighbour’s house has been smoked in, had a crappy reno, or is overpriced?

#174 David on 12.05.13 at 8:19 pm

Deflation is rapidly approaching.

#175 Ret on 12.05.13 at 8:39 pm

Faurecia plant closing in Bradford, Ontario, 500 jobs.

http://barrie.ctvnews.ca/faurecia-closing-bradford-plant-in-2015-1.1574513

Is it any wonder? Hydro rates going up 33% in the next 3 years for one thing. Gridlocked transportation systems. Diesel oil 20% higher than US prices. Overpriced internet service. Municipal tax and water rate increases that are three times the inflation rate. Taxes upon taxes that have no connection to the services that they are to provide.

Why stay and try to hang on? “The production will be transferred to a facility in…” will be the end to this story.

The US state and municipal governments would like to thank all Ontarians for being the wind turbine hugging, car hating, tax loving socialists that they are.

#176 Cici on 12.05.13 at 8:43 pm

#169 alison

We bought our house in a good area of Toronto in 1990. We were in our 20s and it was a run down little place – nobody’s dream home. We paid $375,000 and have put about $150,000 into renovations. Now I am 50 and the property is now worth easily $1,500,000 and with a new LRT station opening a few blocks away it will always be in a desirable area. The mortgage is long paid out and we are planning our final renovation so we can stay in it until we downsize or move out of the city to a cheaper location. The important point I am making is that 1990 was also considered to be a “bubble” in Toronto. We heard the same gloom and doom then as we are hearing now. I am not suggesting that prices can’t drop, but I would bet my life that they will not drop enough to cancel out the enormous gains I have made. If you buy a house you can afford, in a decent area, don’t overimprove and don’t waste your money moving every few years with commissions and Land Transfer taxes (especially in TO with double tax) – you will still do just fine.

Wrong. You profited from an age of expansion and inflation. To extrapolate that into lessons for the greater fool who will pay you $1.5 million for that little house, suggesting it will be worth $7 million in two decades, is arrogant and absurd. — Garth
_____________________________________________

Arrogant…and naive.

Not only that, but she doesn’t say how much she put down, etc. Interest rates were a lot higher back then…it’s possible that they were paying close to $4000 in mortgage carrying costs alone, not to mention property taxes and other expenses. They could have easily paid $800,000 or more by the time you factor in the interest. If we knew the actual numbers and amortization period, we could calculate the average yearly rate of return. We don’t…but my guess is that they aren’t quite as hot as she thinks (she paid $525,000 after the first set of renos, but before all other extraneous expenses and the second round of renos she’s planned but hasn’t yet factored, so the house hasn’t even tripled in value, and after expenses and any applicable lost opportunity costs, it probably hasn’t even doubled in value). Hardly “enormous gains.”Not to mention the fact that she may not get the $1,500,000 she thinks it’s worth.

But, probably her best bet, because she obviously hasn’t even read The Wealth Barber, and therefore probably wouldn’t have had much luck in the markets.

#177 dv8 on 12.05.13 at 8:45 pm

Where are the tangible benefits of the Fed printing bonanza? Yes, our debt crisis has been stretched out for a few extra years, but has it been solved? Of all the trillions in national debt accrued through government spending, where has the money actually gone?

#178 Cici on 12.05.13 at 8:54 pm

Anyone notice all the bank stock splits?

#179 Daisy Mae on 12.05.13 at 9:08 pm

#96 Maxx: “…So those who pig out on debt are compromising the future, and those who have money are holding back and getting truly creative with their spending so that quality of life is preserved at a mere fraction of the cost. And they get better at it every single day. I see people in BMW’s, Mercedes, etc. in charity shop parking lots and they are there for a good reason: these places are treasure troves and they are great for the bottom line. Need baby stuff, toys, designer, kitchenware…..on and on…and I’m not talking garbage- often all of this stuff still has price tags attached.”

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

Yes! This is true. We ARE getting better at it every single day. Value Village, Second Tyme Around, and others truly are treasure troves if you have the time to scout around. And if you think you don’t have the time, make the time. It’s worth it.

#180 Smoking Man on 12.05.13 at 9:28 pm

#178 Cici on 12.05.13 at 8:54 pm
Anyone notice all the bank stock splits?
……………………………………….
Yup and I noticed that 3 CEO’s from the big banks are packing it in.

Roomers have it Harpo thinking about the same.

What do they know, they you dogs don’t?

#181 Stop bullying Alison!! on 12.05.13 at 9:36 pm

@#176 Cici

Don’t be a cyber-bully
Alison is counting her own money, she’s entitled.

There is an old curse:

“May you count other people’s money”

#182 Zürcher_Blutgerichtsordnung on 12.05.13 at 11:30 pm

#40 Retired Boomer – WI on 12.04.13 at 11:12 pm
==
What’s your cure?

Economic sclerosis from sharply-dropping velocity of money among the consumer class, implicitly enforced by the 0% floor on interest rates and the muppets’ present collective repayment commitments.

Further limited by the maximum mortgage financing banks can offer based on progressively more restrictive statutory loan limits and comparative profit margins of other fast-diminishing opportunities such as renting out floors of their office towers as latin dance clubs.

#183 Cici on 12.06.13 at 12:01 am

#181 Stop bullying Alison

Me a cyber-bully? Hardly. And yes, she is entitled to count her own money, but perhaps she should wait until it’s more than paper profits.

I’m sorry but I was only pointing out the faulty principles behind the basic equation, because if I don’t many herd members may trust the reasoning and get in way over their heads.

But glad it’s worked out for her. Seriously. But I doubt my generation will see the same gains, so we have to look out for each other.

End of story. Goodnight.

Oh, and don’t call people names and make lame threats based on superstitions. That’s not cool.

#184 rp1 on 12.06.13 at 4:35 am

“Risk to most people means losing half your RRSP in another 2008-style stock crash. But the odds of that are miniscule,”

That’s a matter of opinion. The US secular bear market has seen two ~50% corrections. If 2009 was the end, then it was both the shortest secular bear and it ended at an unprecedented P/E = 15, which is historically “fair”.

There are reasons why it could happen, but the assertion that P/E will not undershoot is akin to saying “it’s different this time”. Investing in anything without regard to price is guaranteed to end poorly. That seems to be the lesson that a certain group of people _stubbornly refuses to learn_. We could very well suffer until they learn it or run out of money. Markets are funny like that.

#185 alison on 12.06.13 at 7:52 pm

‘Wrong. You profited from an age of expansion and inflation. To extrapolate that into lessons for the greater fool who will pay you $1.5 million for that little house, suggesting it will be worth $7 million in two decades, is arrogant and absurd’

What odd and aggressive responses. I guess I hit a nerve. I never suggested that my house would be worth 7 million dollars or anything of the kind now or in the future. Maybe it will, maybe it won’t. I don’t have a crystal ball. I suggested that, as people do have to live somewhere, it is better to buy what you can afford, pay it off as quickly as you can and stay there. Renting may make sense for some people, but if you want to live in an established area with good schools and services pickings will often be very slim and not optimal for raising kids. And, by the way, I have read the Wealthy Barber, I have never paid a mortgage that was not easily affordable and I am completely financially literate. I have many non- real estate investments that have done, overall, quite well also. I just don’t think that terrifying people into real estate paralysis is desirable or necessary. Armageddon is not necessarily at hand.

#186 Victoria - the Original on 12.08.13 at 3:08 pm

Food Banks, Salvation Army in Victoria

On the front page there was a plea from the Food Banks and Salvation Army and other charitable organizations for more food. Apparently they cannot keep up with the demand. The Salvation Army has a waiting list of 1,000 people for hampers. Apparently they have never seen this before. I wonder how many of these “new poor” are home owners that can’t make ends meet.