Redemption

HOMELESS modified

Devon says he stumbled on to this blog for the first time last week. “I’ve been reading post after post, and I wanted to thank you for giving me the greatest Christmas present of all, confirmation that I’m not crazy,” he babbles, his brain obviously turned into a bowl of slop after consuming multiple articles. The 30-year old rents a $1,900-a-month pad with his GF. And he has a tale to tell.

“Back in August, my girlfriend and I started looking for a home to buy, we’ve had enough of apartment living.  We were the EXACT horny house hunters you reference, staring at house porn every night trying to find our $550K SFH.  We got given the same old information from our realtor, on now is just as good as any time to buy.

“There was always something nagging at me, a voice in the back of my head constantly questioning.  It kept saying “Are you really gonna shell out a 50 grand down payment on a house built in 1912?”  or ” What part of spending 600 grand on a house you don’t need, outside of downtown, and then spending an hour and a half/day commuting, do you really think this a good idea???”

“That voice…I now know, was common effing sense.  But where do you get validation on a thought process like that, when all of your house horny friends, or parents, constantly give you that “ohhhh you’re still renting??”, like you’re some kind of failure in society?  They’re like a god damn cult.

“I remember every house we walked into with our realtor (and bless her heart, she is a very nice, honest, and good person just doing her job) kept saying “this place is GREAT for entertaining”.  I kept thinking…”why the hell should I care so much about entertaining??  Why would I spend this much money to have a great place to entertain my friends??”  Besides, all my horny friends are mortgage broke and can’t go out to enjoy the city they live in…

“And here’s the part that was really driving me crazy; I make $240,000/year after graduating from med school.  I have zero debt, and almost $100,000 in liquid.  On top of that, my girlfriend makes ~50,000/year.  How could we not afford to buy a reasonable house??? We’ve since decided to never go on mls.ca again.  We’re going to rent one of those downtown houses built in 1912, and if the roof caves in, then great, not my problem.

“Thank you so much for your blog Garth.  I’m literally amazed reading it.  I feel better than ever about my future plans to continue renting, and socking away as much money as possible into investments while still spending money on the things in life that bring true happiness like travel and experiences.  Merry Christmas Garth, and thanks for the Christmas present.”

Ah, that’s so cute. Young doc making a quarter million a year discovers the true meaning of life three days before Christmas after reading a pathetic blog with disturbing sexual undertones. I knew I was sent down here for a reason.

Actually there’s a point to this post other than serious ego-stroking and nauseous self-promotion, as if that were not enough. It’s about attitudes – the kind that have led those folks I wrote about Friday to start a hedge fund betting we’re all going to blow up over real estate. In many places around the world analysts and financial players look at Canada and see a country with a middling economy and record debt where 70% of everybody owns the same thing, which costs twice as much as next door in the US, an economy ten times larger. Duh, they say. This is classic asset inflation, divorced from economic fundamentals. It’s a bubble unsupported by local incomes, especially in BC. It shall not last. It cannot. Especially now, in the Age of the Taper.

Most Canadians, unlike young Dr. Devon, aren’t even listening. Prices and sales inch higher, so each month we grow more overweight in real estate. The amount of net worth people now have in this one asset class is staggering, at an estimated 85%. Is this not the very definition of risk?

Many Yanks think so. In fact, almost seven years after the American real estate market peaked and crashed – even though prices are now recovering at an astonishing 1% a month – families there aren’t about to make the same mistake twice. The Canadian mistake.

Earlier this year a survey done for the MacArthur Foundation came up with some telling findings:

  • Almost 60% of adults believe ‘buying has become less appealing,’ even though prices are still a firth below 2005 levels and 30-year mortgages are cheap.
  • 54% think ‘renting has become more appealing.’
  • Nearly half of current homeowners (45%) believe they’ll become renters at some poin, and are okay with it.
  • More than 60% believe ‘renters can be just as successful as owners at achieving the American dream.’
  • And two-thirds (65%) say the role of government is to equally promote renting and owning, not to favour one over the other.

All the way back to Bill Clinton, Washington (like Ottawa) has had a blatant pro-real estate agenda. Federal politicians even called it ‘the Ownership Society’ with the twin goals of ‘economic liberty’ and the ownership of property. It’s why both countries subsidize mortgages, baby first-time buyers and maintain outrageous gifts like mortgage interest deductibility (US ) and tax-free gains on housing (Canada). The result was a wealth-killing bust in the States, and popular delusion here.

Whether we’ll rewrite economics and, for the first time in history, have an asset that rises forever, is out there. Your mom thinks so. I don’t. Dr. Devon almost did but, verily, he is saved.

Yes. It’s a miracle.

156 comments ↓

#1 JB on 12.22.13 at 5:52 pm

FIRST time for everything!

#2 Rob on 12.22.13 at 5:57 pm

We bought at 2002 a 1912 house, now paid off. Earning a third of Dr Devon’s getting, investment since 2010 up by 20%, I guessed we’re on the same footing.

#3 John on 12.22.13 at 6:08 pm

I’m torn on what to do. My wife and I own a place that is paid for, we have investment money, will be retiring at the end of 2014. Our plan is to travel in the winter.
Keep the house which we really like which is reasonably small.. or sell and rent. Not interested in buying a condo. Easier to leave a condo empty for 4-5 months.
Tough decision.

#4 Godth on 12.22.13 at 6:30 pm

May all your hearts shine forth like the sun; without discrimination. Particularly with the knowledge that we’re not actually that smart.

http://www.tampabay.com/news/military/veterans/the-atomic-sailors/2157927

http://www.youtube.com/watch?v=ypEaGQb6dJk

#5 Shawn on 12.22.13 at 6:34 pm

Manna From Heaven?

As we close out a year in which the S&P 500 rose 27.5% (and paid a dividend of close to 2%) and in which the Toronto stock index rose 8% (and again paid a dividend around 2%) and where house prices rose again, it is worth asking:

Where do asset gains come from? houses gain 10% on average in a year or of stocks gain 20% on average in a year, those who hold them see gains in net worth.

Does this mean others lost a similar amount?

#6 T.O. Bubble Boy on 12.22.13 at 6:34 pm

@ #2 Rob on 12.22.13 at 5:57 pm
We bought at 2002 a 1912 house, now paid off. Earning a third of Dr Devon’s getting, investment since 2010 up by 20%, I guessed we’re on the same footing.
————–
Here’s the magic question for you Rob: would you be willing to buy your current house at the current price?

For most Canadians who’ve owned 10+ years like yourself, the answer is HELL NO!

#7 Tony on 12.22.13 at 6:47 pm

I used to own a horse named Devon’s Rainbow that was also the dam of Devon’s Scout and Devon’s Count.

#8 Shawn on 12.22.13 at 6:54 pm

BANK PROFITS ON CURRENCY EXCHANGE

I don’t usually complain about profits made in a relatively free market.

But it seems to me that bank profits on the exchange of currency are beyond obese.

Visa, the last I checked, charges 2.5% over and above the wholesale exchange rate every time Canadians use their Canadian credit card to buy in the U.S.

At a bank it costs about 1.7% to convert.

One of the cheaper conversions I have seen is in my TD Waterhouse account. For $10,000 the rate over and above the wholesale exchange rate is 1.46%.

It recently dawns on me that this is indeed usurious.

This is just the purchase of a financial asset. In the case of TD Waterhouse it is purely electronic.

How is that I can purchase $10,000 in a U.S. stock for a $10.00 fee or 0.1%? but $10,000 currency costs me a fee (over and above the wholesale exchange rate) of 1.46% to 1.7% or more. More dramatically I can purchase $100,000 or even (I am told) $1 million of a highly liquid American or Canadian stock for a fee of $10.

How is it that U.S. dollars can’t be bought on an exchange? (At least, if they can, I don’t know how to do it).

Something seems seriously wrong here. Visa and the banks are making out like bandits on this. It seems like they quietly refuse to compete aggressively on this.

I think there is an opportunity for a competitor here.

There may be some good options that I don’t know about.

One option I do know about is to buy a highly liquid stock in Toronto that also trades in the U.S. and immediately sell it on New York. When there is $10,000 or more involved, I believe that this would be far cheaper. And if we are talking $50,000 then usually it would be much cheaper. But there would be the risk of the stock price moving against you.

Thoughts?

#9 KG on 12.22.13 at 6:55 pm

Garth, you are all bloated today, belittling the rest of us…

It’s okay. I forgive you. — Garth

#10 Retired Boomer - WI on 12.22.13 at 6:55 pm

Who believes house prices will rise? What happens if they fall? What happens if they fall faster than your ability to pay it off?

Sure, we see that in car purchase financed for more than 36 months, really ugly if you wreck it before its paid down.

Think about that scenario if you “feel” you still need a house. 5 year renewal and you have negative equity oops!

#11 T.O. Bubble Boy on 12.22.13 at 6:58 pm

Most Canadians, unlike young Dr. Devon, aren’t even listening. Prices and sales inch higher, so each month we grow more overweight in real estate. The amount of net worth people now have in this one asset class is staggering, at an estimated 85%. Is this not the very definition of risk?

The crazy thing about Canadians is that they aren’t just overweight with their real estate investments – many only hold real estate. I would guess that the % of Canadians that would qualify for Garth’s “Rule of 90” is in the single digits.

#12 Bill Gable on 12.22.13 at 7:10 pm

Can we have a loud “Hallelujah”?

Great post.

#13 jan on 12.22.13 at 7:24 pm

Canada, the most polarized country on the world. FREE MARKETS HAVE DIED.
There is no free market here !!!!!

Inflation….Good
Deflation….BAD

Real estate goes up/////GOOD
Real Estate goes down…..Bad

THERE NO FREE NARKETS IN CANADA, only rigged ones!!!

#14 Nemesis on 12.22.13 at 7:26 pm

“Yes. It’s a miracle.” – HonGT

A miracle? You wanna talk miracles? That’s not a miracle… THIS is a miracle… pay attention Dr. Devon:

http://youtu.be/D9tAKLTktY0

#15 T.O. Bubble Boy on 12.22.13 at 7:28 pm

For some reason, I thought of Cam Good’s helicopter RE tours when I read this article:
http://www.cbc.ca/news/world/chinese-billionaire-feared-dead-after-helicopter-crash-in-france-1.2472948

(It is an unfortunate story… But HAM in a helicopter tour? Seriously?)

#16 Smoking Man on 12.22.13 at 7:28 pm

Re pic

The most generous, the weed smoker.

#17 Chris L. on 12.22.13 at 7:31 pm

What fool can’t own a $500k house when they earn $300k/year?

This guy has a travel and experience problem.

Dude, buy a fricken house for the love of everything combined.

#18 jess on 12.22.13 at 7:43 pm

data brokers

NEW YORK (CNNMoney)
Consumer data companies are selling lists of rape victims, seniors with dementia and even those suffering from HIV and AIDS to marketers, underscoring the need for tighter government regulations, a privacy group told Congress Wednesday.
The World Privacy Forum uncovered these lists, along with several others, while investigating how data brokers collect and sell consumer information.

=====
Introduction & Summary
What do a retired librarian in Wisconsin in the early stages of Alzheimer’s, a police officer, and a mother in Texas have in common? The answer is that all were victims of consumer data brokers. Data brokers collect, compile, buy and sell personally identifiable information about who we are, what we do, and much of our “digital exhaust.”

We are their business models. The police officer was “uncovered” by a data broker who revealed his family information online, jeopardizing his safety. The mother was a victim of domestic violence who was deeply concerned about people finder web sites that published and sold her home address online. The librarian lost her life savings and retirement because a data broker put her on an eager elderly buyer and frequent donor list. She was deluged with predatory offers…”
http://www.worldprivacyforum.org/2013/12/testimony-of-pam-dixon-executive-director-world-privacy-forum-before-the-senate-committee-on-commerce-science-and-transportation/

http://money.cnn.com/2013/12/18/pf/data-broker-lists/index.html?hpt=hp_t3

#19 Mr. Reality on 12.22.13 at 7:55 pm

And consumer debt keeps on rising……

A generation of home buyers spawns a generation of renters. You ask any 20 year old their plans. Their answer will tell you to sell your house yesterday because first time buyers will be a thing of the past.

The hangover from this mess will last a very long time indeed.

Mr. R.

#20 Al Berta Drill Hadist on 12.22.13 at 7:58 pm

Housing prices here in Canada can only go up because we are an energy superpower and also a super power in multicuturalism.

We bring in the best people from around the world who know the true value of a house in this great land.

#21 I'm stupid on 12.22.13 at 8:05 pm

Good for you doc.

I know of a plastic surgeon who’s practice makes $2million a year. He should be set but the dumbass wanted to build his dream house together with his wife. Now I could understand a $3- $5million house for someone making that much money but no he began building a $20million home. Guess what, he had to sell before it was completed and at a discount.

SMH

#22 I'm stupid on 12.22.13 at 8:07 pm

He spent $12million and had to sell. It was estimated it needed another 8 before it would be complete.

#23 jan on 12.22.13 at 8:09 pm

#20 Al Berta Drill Hadist on 12.22.13 at 7:58 pm
Housing prices here in Canada can only go up because we are an energy superpower and also a super power in multicuturalism.

We bring in the best people from around the world who know the true value of a house in this great land.

Well of course.
After all, the USA only attracts the worst newcomers in the world..LOL

#24 raisemyrent on 12.22.13 at 8:11 pm

My friend probably makes 60-70k a year, and goes to school part time online (might be done now).
Said friend bought a condo in an “eclectic” (read: full of junkies) area of Calgary about 2-3 years ago.
Now, she can rent it for twice her mortgage/HELOC payment.
So she did.
And bought a house down the street.

*Sigh*

p.s. yes I did say don’t buy a house months ago and I said don’t rent the condo, sell it and use the cash flow thing as a selling point. I used graphs, charts, links, sex appeal, but nothing beats real estate horniness and the herd mentality. Also, realtors and their fear mongering.

#25 jess on 12.22.13 at 8:12 pm

PBS Drops a Bombshell on the Federal Reserve’s 100th Birthday Party
By Pam Martens: December 22, 2013

PBS had invited James Grant, Editor and Founder of Grant’s Interest Rate Observer, and Richard Sylla, the Henry Kaufman Professor of the History of Financial Institutions and Markets at NYU’s Stern School of Business to debate the pros and cons of the fed.

http://wallstreetonparade.com/2013/12/pbs-drops-a-bombshell-on-the-federal-reserve%E2%80%99s-100th-birthday-party/
========
…”The program, The Retirement Gamble, showed how if you work for 50 years and receive the typical long-term return of 7 percent on your 401(k) plan and your fees are 2 percent, almost two-thirds of your account will go to Wall Street. Under a typical 2 percent 401(k) fee structure, almost two-thirds of your working life will go toward paying obscene compensation to Wall Street; a little over one-third will benefit your family – and that’s before paying taxes on withdrawals. The dirty secret is the negative impact that Wall Street fees subtract from compounded interest over long blocks of time.”

http://wallstreetonparade.com/2013/12/pbs-drops-a-bombshell-on-the-federal-reserve%E2%80%99s-100th-birthday-party/

#26 TurnerNation on 12.22.13 at 8:12 pm

Almost at the level of a FortMac welder.

Blog dogs do not tarry in the wine instead; seek comfort in the bosom of your preferreds.

Yep I barely recognize H’s Canada: a bunch of pot smoking prostitutes, walking to their mailboxes. #wordlclass

2014 predictions: O’Leary will declare bankruptcy. Thus the Slang & O’Dreary show ending.


To be successful as a politician these days one must be shrill, screechy and have the belief system of a five year old. So, yeah, sucks.

#27 Entrepreneur on 12.22.13 at 8:15 pm

Dr. Devon knows that he will be overpaying for real estate. He has the intelligence to know that it is inflated in value. Always said if overpriced time to make or build yourself. When buying real estate today or even yesteryears you are buying into the system. Not everyone is onboard with this show.

Love the quick flicks on this blog but would not call this blog a “pathetic” blog; call it realistic, expressions, or the truth blog, sounds better. Also, ever consider having a counter to see how many people are spying here.

Always come back here to get inform, listen, and broaden my field on financial planning. Thanks Garth Turner for having this enlightenment blog.

#28 Godth on 12.22.13 at 8:30 pm

#20 Al Berta Drill Hadist

You should visit your eye doctor, myopia is treatable.

No one knows the future but expensive, crappy energy doesn’t replace cheap, fine grade energy. It’s really all about surplus. Immigrants are as prone to short term thinking as you are. Oh well, who cares?

It’s hard to care about this world as it’s constructed, nay impossible. Integrity is a dirty word.

#29 Tri-Guy on 12.22.13 at 8:41 pm

#17 Chris L. – What fool can’t own a $500k house when they earn $300k/year?

couldn’t agree more…what is he a doctor of? the guy that makes my u-brew beer has a phd in brewing…ya i’m that cheap

#30 AisA on 12.22.13 at 8:52 pm

“We bring in the best people from around the world who know the true value of a house in this great land.”

75k?

#31 pinstripe on 12.22.13 at 8:53 pm

Garth, why are you devoting so much energy to educate the hornies? What are you trying to prove? To Whom?

The hornies cannot be educated.

Instead, push the group think benefits to the hornies and give them a chance to learn from a self inflicted direct experience. Works every time.

#32 :):( Ying Yang on 12.22.13 at 8:53 pm

Smoking Man greeting from Hongcouver, just checked the weekends blog, no major words of wisdom from you! What happened with all the deletes man. You on a bender?
Just saying…..

#33 Son of Ponzi on 12.22.13 at 8:54 pm

All I want for Christmas is Peace on Earth and a granite countertop.

#34 :):( Ying Yang on 12.22.13 at 8:59 pm

Smoking Man my brother got a job offer in Singapore as a code monkey for another bank over the holidays. Head hunter chased him down. He is considering pays $270k USD plus all expenses. He will be the head monkey!
I can’t believe he is just thinking about it!

#35 LMF on 12.22.13 at 9:05 pm

@#20 Al Berta

“We bring in the best people from around the world who know the true value of a house in this great land.”

Check out what these best people are facing in Canada:

http://www2.macleans.ca/2013/04/24/land-of-misfortune/

Great land, indeed.

#36 Smoking Man on 12.22.13 at 9:07 pm

#32 :):( Ying Yang on 12.22.13 at 8:53 pmSmoking Man greeting from Hongcouver, just checked the weekends blog, no major words of wisdom from you! What happened with all the deletes man. You on a bender?
Just saying…..
……….

Yup, been experimenting with JD. Over come writers block. Wine stopped working for me.

Should never have started reading fear and loating in Las
Vegas.

I can’t come within a thousand miles of Hunter S Thompson. He’s brilliant.

Going to take a break, from JD and writing.

That shit makes me too aggressive, nearly got into a srap with security. I would have got my ass kicked.

#37 Daisy Mae on 12.22.13 at 9:07 pm

“…discovers the true meaning of life three days before Christmas after reading a pathetic blog with disturbing sexual undertones….

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

Love the humor! LOL

#38 Ralph Cramdown on 12.22.13 at 9:07 pm

“What fool can’t own a $500k house when they earn $300k/year?”

It seems to me that he said he can but he doesn’t feel it’s good value, so he won’t. So refreshing to see someone who weighs value in a society full of price takers.

#39 Smoking Man on 12.22.13 at 9:11 pm

Ying, Yang for Singapore 270k not that great, mind you expenses paid.. Might work.

Tell him to counter offer. 350.
See what happens.

#40 gg on 12.22.13 at 9:16 pm

Taper?

If the US economy is doing so well why is the Fed pushing out 0.25% interest rates to 2017?

Because there is no inflation and a fragile recovery. Why raise rates? — Garth

#41 Daisy Mae on 12.22.13 at 9:19 pm

#3 John: “Not interested in buying a condo. Easier to leave a condo empty for 4-5 months.Tough decision.”

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

Condos are so restrictive. I wonder about spouses who enjoy puttering. Can’t do it in a condo — no gardening, no work shop — nothing. Rent a house.

#42 Daisy Mae on 12.22.13 at 9:26 pm

#3 John:

Further to last…this is where gated communities excel. You can own your own home, have a yard to putter in if you are so inclined…and when you travel, you have a reasonable level of security. We can’t be complacent about this, however.

#43 Smoking Man on 12.22.13 at 9:30 pm

Yang Ying, went to see what you were talking about yesterday’s deletes.

Ha, so I’m going up to heaven to chop God’s head off.

Lmao. I do not remember writing that, in fact from post 122 forward. It’s a blank funny all the same.

Yup, No more JD for me.

#44 Daisy Mae on 12.22.13 at 9:32 pm

#9 KG: “Garth, you are all bloated today, belittling the rest of us…”

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

We can handle the truth. We MUST be able to handle the truth.

#45 Snake on 12.22.13 at 9:35 pm

1) Our banks were in good shape, growth wasn’t overly robust, interest rates and inflation were low, consumers weren’t strapped, and our real estate economy was overall in pretty good shape. We were dragged into this recession by the actions of the U.S. and the megabanks/financial institutions of the world.
——————————————————————————————-
At some point during the crisis in 2009. Three of Canada’s banks — CIBC, BMO, and Scotiabank were completely under water, with government support exceeding the market value of the company, without government supports to fall back on, Canadian banks would have been in serious trouble.

The Harper government stepped in and used a number of measures to free up money for Canada’s banks during the financial crisis including buying mortgage-backed securities and providing short-term loans.

One of the most well-known ways in which policymakers helped the banks during the crisis is through a $69-billion CMHC program whereby the housing agency took mortgages off the balance sheets of big Canadian banks. In contrast with other support facilities, all of the funds granted by the CMHC were through selling assets (in this case mortgages) to the housing agency. They were not funds that had to be paid back.

If harper government haven’t saved the bank and your ass (I mean realestate sector) you be sitting in downtown subway pandhandling for living.

Why would a good shape bank need that much money for a bailout, I don’t visit hospital emergency just for the fun of it do you?

Here is the full report read it

http://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2012/04/Big%20Banks%20Big%20Secret.pdf

2) The reason why we are seeing such a weak recovery is very simple. Our government has too much debt, Canadian corporations are hoarding cash and holding off hiring and all world governments are printing money, keeping inflation very low. Hard hit economies in Europe are still mired in recession and likely won’t turn to growth for a couple for years. All countries have too much debt and can’t stimulate their economies. We also need developed Europe to exit from its recession in 2015.

Government has so much debt is because of CHMC insuring mortgage for $600 billion, Not because they spend on improving economy by creating well paid jobs .it’s already 2014 Europe with 27 million unemployment, it’s not getting out of the recession at least for a decade.

3) I expect robust growth during 2015-2020. Consumer spending is going to start to move higher again in Canada by late 2014.Unfortunately for those looking to buy real estate, prices are going to take off again in the near future despite what a few economists and journalists are predicting. Some of these guys are of the belief that prices may fall, maybe collapse. This is just not going to occur.

———————————————————-

Were you even in touch with currently events, last 75 days?

There were massive layoffs in the 1000’s, People in different sector making good money at least $40,000 to $60,000 a year range have been laid off. Here is the list, this is just the start more are coming in the newyear, this not including what you said about construction

740 (Heinz)
800 (Sears)
275(Loblaw)
500 (Kellogg)
800 (EnCana)
200(Sun Media)
100 (Blackberry)
1,000(PotashCorp)
1000(Bank of Montreal)
8,000 (Canada Post) YEAH you read it right.

Now they all have to look for a job. How the heck people are going to find money to spend when they just got laid off?

Do you spend money when you are working, or try to save money when you are laid off?

Even if the house price increase who in the right mind will be dump enough buy it without an income to pay for the mortgage Do you think people will buy house when they don’t even have a job?

I think you know the answer

4) Construction layoffs in excess of 75,000 jobs will start to occur over the next 6 months to a year due to new condo sales slumping

———————————————-
Holy S*IT did you write that ,let me write that again so I don’t make a mistake ,in the next six months 75,000 jobs will be loses in construction sector. The estimated figure you gave is just in Toronto, image the all country with unemployment already hovering around 7% it will push to 10% when the economy really need growth.

If there is no construction happening these people are sitting home and reading you blog about your predictions “I haven’t commented recently on the state of Toronto’s real estate economy for several months as I wanted to have some time pass to see whether my predictions continued to be correct or if I was advising readers in the wrong direction. So far, since the early 2000’s, I have been bang on (refer to past newsletters on my blog). Without going into the vast number of comments and predictions I have made over the last 15 years, I will reflect on some of the more important comments I’ve recently made and predict some real estate events going forward”

So who is going to buying condos not those people, I wish this prediction doesn’t come true?

5) There are less than half as many new projects per year since 2012 compared to prior to 2012. This ultimately means less construction jobs and soon, less finished product. As a result, 2017 will see a shortage of new completed condominium homes. We are now starting to see the return of the investor, chomping at the bit for opportunities to buy new investment product. There will not be enough product to satisfy this demand. Low-rise new sales are anemic due to a lack of new available lots. This single-family low-rise supply issue will continue to drive home prices to higher and higher prices. Essentially, unless you are wealthy ($200,000+ income per year) you will not be able to buy a low-rise single family home in the city by 2017. A house within minutes of the core area of the city will be $1,000,000+. I expect robust growth during 2015-2020. Consumer spending is going to start to move higher again in Canada by late 2014.Unfortunately for those looking to buy real estate, prices are going to take off again in the near future despite what a few economists and journalists are predicting. Some of these guys are of the belief that prices may fall, maybe collapse. This is just not going to occur.
———————————————————-
People in Vancouver are already paying $1 million for SFH for the last three years believe me they are not making $200,000+ income per year. They are buying because of cheap interest rate and willingness by the CHMC who come with 40, 35 & 30 year mortgages. You don’t have 20 % for a down payment don’t worry just pay the Mortgage insurance you are good to go, go and buy the next crackshack. Isn’t it the same rationale used by Fannie Mae and Freddie Mac in USA got them into housing crisis.

When they start losing jobs so goes the housing, even if they hold onto the job the income will not keep with rising inflation and interest rates. Now imagine with all the layoffs they will be begging their employer not to worry about a salary increase as long as they can hold on to a job so they can pay the mortgage debt that have gotten into. They will spend their life imbedded with the mortgage just like crack head embedded with how to score the next fix.

Buy a house even it worth millions, it will always go up, even when u don’t have a job to pay for the mortgage. What kind of logic is it?

6) A recession is coming eventually. It is not on the visible horizon. For Canada to fall into negative growth we will need to see Europe exit their recession and expand into robust growth for several years. We will need the U.S. to do the same. This is perhaps 8-12 years away. We will need both 5 year interest rates and inflation to rise above 7% and 4% respectively. This is a long way off. Until then, like it or not, we will see rising real estate prices and low interest rates.
———————————————————-

Now I am confused you say recession will come, but keep buying houses and get into more debt so Brad Lamp can have job. In the last Recession all over world they are so many jobs that lost will never ever come back, whatever the new job that gets created will not able to bridge that gap.
Even if the interest rate stays the same, the job growth would not able to match the inflation, in the end just like Greece, USA, Ireland, Spain and Japan combined Canada will have a spectacular crash the world has never seen.

Around 2006 when I was in Ireland there was so much construction happening just like in Vancouver and Toronto. Everybody thought the house will go up in value there will be no crash. I was thinking this not going to end well because the income didn’t match the house value plus there was no big industry to support the jobs to pay for the housing debt. People were taking so much debt to own a house, it was astonishing just like in Canada. Look how they end up.

Even if USA lead a recovery Europe is doomed, there are 27 million people without jobs that a lot of jobs that needed to be created which will never happen.Why do all the realestate guys think Canada would be immune from the housing crash, when most of the countries went through in the last 6 years?

Do you seriously believe that Canada with the population 35 million could be immune from the housing crash when the population of 375 million (USA) people couldn’t prevent a realestate crash with much more resources than us?

http://business.financialpost.com/2013/07/16/oecd-unemployment-to-remain-high-as-canada-and-the-world-fails-to-shake-financial-crisis/

7) Economists and so-called real estate experts have been wrongly predicting the impact of the new sales done in 2010 – 20,491 units, 2011 – 28,190 units, 2012 – 17,997 units, and 2013 – 12,200 units (estimated). All of the sales from 2009 and earlier are mostly absorbed. The question is, how will these 4 years of sales be delivered to the real estate economy? Are these homeowners, investors, or speculators? Up to now, we have seen few speculators. The more homeowners and investors, the better the situation. The total sales from 2010-2013 is approximately 77,700 units. Will the buyers who intend to be homeowners and the rental economy absorb these deliveries? The four year average is 19,400 units; however, due to production delays, it is more likely that a 5-6 year horizon will result. That equates to an average of 13,000-15,500 closings over the 5-6 year period from 2014-2018/2019. This is easily managed within our economy as seen by the absorption rates from 2005-2013. Going forward, from 2014-2018, we will likely only see 60,000 new units sold (15,000 per year) as developers have sharply cut back project launches. These sales will be delivered between 2017 and 2021. The Toronto economy needs 30,000 new homes built every year to keep up with demand. 50-60% of this supply has to be condominiums (15,000-18,000 per year). There exists unsold developer inventory of approximately 3000 units per year. This will be easily absorbed by the resale market.
———————————————————-

RBC Global Asset Management’s chief economist Eric Lassalle’s who used to work as chief economist at TD securities estimates there are currently 65,000 too many condos under construction across of Canadaa.

You going to say this wrong, there job is to analysis risk working for a bank of all places which TD holds most Canadian mortgage.

http://media.rbcgam.com/pdf/economic-compass/rbc-gam-economic-compass-tattered-maple-leaf-201312.pdf

8) Much has been said about Canadians borrowing too much money. This is bunk. The much talked about “trouble” indicator is when debt exceeds 1.6X income. If a potential buyer earns $125,000 per year, they can qualify easily to borrow $500,000 in mortgage financing with $200,000 in equity. They could buy a home for $500,000 and borrow $350,000. They could also buy a $200,000 investment property and borrow $150,000. The house will cost $2200 per month and the investment property’s rent will more than carry the costs to own it. Let’s assume they have no credit card, educational, or car debt. This buyer then would have $500,000 in debt. Let’s assume they have no credit card, educational, or car debt. Their debt to income level is $500,000/$125,000, or 4Let’s assume they have no credit card, educational, or car debt. This buyer then would have $500,000 in debt. Let’s assume they have no credit card, educational, or car debt. According to most bean counters at the Ministry of Finance, this buyer has a problem. I refute that

Not according to many illustrious economists and our Finance Minister. I guess they would rather we put our money in a sock and hope for the best as they conspire to strip away any pretence of old age and retirement benefits. What I see is Canadians starting to wake up and realize they are on their own. Governments are going to tax more and offer less

———————————————————-

I couldn’t believe you hate CHMC & Jim Flaherty who practically saved your ass from panhandling for a living at Toronto downtown subway, with all incentive thrown at you, let me see Ottawa has raised the amount of mortgage insurance CMHC can have outstanding from$350-billion to $450-billion and to $600-billion, double the limit in place at the end of 2007.

which will be covered by taxpayers money when they themselves looking for a handout after they lost the job, this is not going to end well is it?

Let see who make $125,000 a year in this economy. Canadian population is 36 million, in that working people amount to 18 million minus 2 million who is looking for work so out of 16 million people total income of $125,000 earned are by the 500,000 people what about the rest of the 17.5 million people who want to own a house, they do into debt by buying a house that not a smart move is it?

How is the buyer being smart and setting them self-up for financial security in the future, when they only accruing debt of epic proportions, when you have said recession is coming, you know for the first 10 years most of the money 70% goes for the interest while the principle get measly 30% so they are not paying down debt they are they paying $20,000 interest for the first 10 years. At least in the USA you can deduct you interest on the mortgage plus most of them are at a fixed rate for the life of the mortgage in Canada you can’t even do that.

Canadian homeowners with mortgages owe an average of $161,200. That alone represents 82% of all outstanding debt in the country.Candian non-mortgage debt is 29,000.

http://www.ctvnews.ca/business/canadian-consumer-debt-to-hit-record-28-853-in-2014-transunion-forecast-1.1600091#ixzz2oDgYlML1her

http://www12.statcan.gc.ca/nhs-enm/2011/as-sa/99-012-x/99-012-x2011002-eng.cfm

Were you smoking crack with Rob Ford when you wrote this article that what it sound to me when I read your report.

I think everybody should able to own a house, but you don’t have to spend all your life paying for a mortgage, for an insane amount on a median income or juggling two three jobs so you can say house poor. I am talking about people getting $1 million mortgage on 60,000 salary, there is more to life than buying a house this is definitely not the right time and definitely not for a $ 1 million dollars in any market for a SFH that is just freaking insane.

#46 Snake on 12.22.13 at 9:36 pm

THIS is Brad lamp report (http://new.bradjlamb.ca/2013/12/toronto-real-estate-market-november-201) and my comment to his article above

#47 quebec economist on 12.22.13 at 9:36 pm

a touching story really, miracle on bay street…

Renting is great.

Had an economics teacher at University of Ottawa in 1999 who studied and published articles comparing the ‘economic benefit’ of renting vs. buying. I have repeated what he has told me to hundred of deaf and horny friends. I have change jobs and cities three times (with my two kids) without having to worry about selling. Always finding an awesome rental home far cheaper than a mortgage. (Not always easy to find, must be persistance, patient and quick) Invested my ‘surplus’ in ‘not your average’ portfolio with remarquable yields (no I do not publish an investors newletters…only lossers do that) out-gaining even the ridiculous gains of RE market. Looking to buy a cottage home soon, but will continue renting my main residence until forever. Once the boys leave will be easier to move into something smaller.

So while Garth might be right…I must send thanks to my U of O prof from saving me from folly.

Happy Holidays.

#48 Daisy Mae on 12.22.13 at 9:41 pm

31 pinstripe: “Garth, why are you devoting so much energy to educate the hornies? What are you trying to prove…give them a chance to learn from a self inflicted direct experience. Works every time.”

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

Garth is trying to save us from ourselves. It doesn’t always work…but it’s a lifesaver for alot of us. Quite educational. And I’d hate to lose it. When I look around me, the ignorance I see is mind-boggling.

#49 nomad on 12.22.13 at 9:42 pm

A fellow manager at work who recently moved from London Ontario to Toronto after being laid off, has still not sold his house. It’s been 6 months. The best offer he got was 15k under. The man has a wife and 2 kids. You know where they live? In London, in the house. He’s here, in Toronto. Not good.

I’m being less annoyed by coworkers about renting these days. When I do get bugged about it, I explain with an educational angle that I made 10k of dividends and 6k of non-taxable income this year. You know what they typically reply? “That’s impossible, interest rates are at 1.25%”.

The one thing I worry about is people being saved by our government if the foreclosures count explodes. Fools pardoned for their risk-taking. Plus, our market likely would react and impact investments. Basically, I’d pay for their sins.

#50 Shawn on 12.22.13 at 9:43 pm

WHO STOLE MY RETURN?

Jess at 25 said:

…”The program, The Retirement Gamble, showed how if you work for 50 years and receive the typical long-term return of 7 percent on your 401(k) plan and your fees are 2 percent, almost two-thirds of your account will go to Wall Street.

******************************************
Not Quite. It is true that 50 years at 7% grows money 2850% while 50 years at 5% grows money at 1050% and so your return would be close to 3 times higher with the 2%.

It’s not true that the “missing” return gets collected by Wallstreet. The missing money goes to whoever owns the securities that you were unable to buy due to the 2% fee. Wall Street won’t buy those securities because they will use the 2% for salaries and office expenses.

The main message here is not that Wall street is stealing your return. The message here is that every extra scrap of return counts a LOT after 50 years. So try to minimize your fees while still getting good advice. And learn to live with volatility if it means you can get extra return.

On Friday someone posted a very good lecture about how compound growth works.

#51 GTA Observer on 12.22.13 at 9:43 pm

#3 John Not interested in buying a condo. Easier to leave a condo empty for 4-5 months.

So how about selling the house at peak and renting a condo? Maximize your (untaxed) gains, invest them and use the proceeds to rent the condo or travel. That’s a long time away to worry about a house. Big change though … takes time to get used to the idea, eh?

#52 Freedom First on 12.22.13 at 9:44 pm

Garth, I have been reading your Blog for years, and I have yet to see any “disturbing sexual undertones” from you. Mind you, I love humor with wit that can poke some fun at the human race for it’s twisted thinking about reality. This, and your solid financial advice on everything we deal with in the real world keeps me coming back here. “Merry Christmas” Garth, to you, Dorothy, the Amazons, Bandit, and of course, the blog dawgs, who I enjoy immensely. And, nice to see too: “The Doctor is In”. Welcome!

I have to say, however, what is disturbing on your blog at times Garth, is the thinking of the “House Horny Virgins” and their “RE Pushers” that leads to multiple acts of insanity, not the least of, the “Bidding Wars” they engage in, without even knowing who, or what, they are bidding against. Let us not forget: “The Lamb” at Christmas time. Redemption.

#53 John on 12.22.13 at 9:46 pm

#42 Daisy Mae

Re gated communities. Good suggestion, thanks! Definitely something to consider.

John

#54 GTA Observer on 12.22.13 at 9:47 pm

Daisy Mae on #3 John: Rent a house

Of course, that’s another good choice. Maybe a bit more worry, depends on the landlord situation.

#55 GTA Observer on 12.22.13 at 9:49 pm

Bad ice storm, hope everyone is okay, safe and warm. At times like these, thinking about the possibilities of pipes bursting and ice dams forming in the evestroughs…glad we rent.

#56 Tony on 12.22.13 at 9:51 pm

Re: #3 John on 12.22.13 at 6:08 pm

Sell and rent or move to a remote city where real estate won’t fall in value if you stay in Canada 6 months of the year.

#57 Tony on 12.22.13 at 9:53 pm

http://www.allbreedpedigree.com/index.php?h=DEVON+RAINBOW&g=5&query_type=progeny&search_bar=progeny&done=y&inbred=Standard&x2=n&username=&password=&x=0&y=0

Devon’s Prince is a full sister to Devon’s Scout and Devon’s Count who were full brothers.

#58 Waiting-since08 on 12.22.13 at 9:54 pm

Uncle Garth – Are we there yet ?

#59 Freebird on 12.22.13 at 9:58 pm

@#38 Ralph cramdown
“What fool can’t own a $500k house when they earn $300k/year?
———
”It seems to me that he said he can but he doesn’t feel it’s good value, so he won’t. So refreshing to see someone who weighs value in a society full of price takers
———
Agreed. We know someone who after coming into millions of dollars (no he didn’t win it) sold their condo they had owned for years and happily rented for a few years until this year and now have a nice little place in Florida. Like Garth they rent a nice place in the GTA as well but are in no rush to buy in Canada right now. Could they afford to? Absolutely. They also have a very good investment portfolio and very good with money but far from cheap. They have always enjoyed life even before the wealth and give back in many ways. Sacrifices were made but also smart choices.

There’s a popular misconception that (large) income equals wealth but I learned the hard way it’s not how much you EARN, it’s how much you KEEP. In other words cash flow doesn’t equal NETWORTH. Obviously the good doc and his wife figured this out. Now if only friends of ours who don’t have near the cash flow and building their second half million dollar house while still living in the first because it didn’t sell this year -as they were told it would – would read this blog and find some sense before it’s too late. Oy vey.

#60 Godth on 12.22.13 at 10:02 pm

#44 Daisy Mae

You want to handle the truth? Search Marc Dutroux. I knew you couldn’t handle it, so why ask for it? You don’t want the truth, you want self affirmation.

#61 John on 12.22.13 at 10:06 pm

#51 GTA Observer

Yes we are considering renting a condo. We would keep our house but I just don’t feel comfortable leaving it empty that long when we are away.
Yes it definitely takes some getting used to. Decisions, decisions. At least they are good ones to make!

Thanks, John

#62 Son of Ponzi on 12.22.13 at 10:07 pm

[email protected],
Glad to hear that your brother is making a good coin.
And I’m especially happy to hear that your parents are enjoying the complementary health and pension benefits
offered by this great country.

#63 Freebird on 12.22.13 at 10:07 pm

Also have a friend who went through a nasty divorce this year and was tempted to buy after the dust settled but sent her to this blog and showed her the math…she now rents a great house with her kids and has started a proper savings plan. No, shes not getting any funds from the ex. Another one saved Garth.

#64 Son of Ponzi on 12.22.13 at 10:19 pm

Ying&Yang,
My wife works for a company that is a subsidiary of a HongKong and German company.
They use SAP. Had a code issue.
First, brought in 2 code monkeys from HongKong for 500 a day each. After 14 days, they had to bring in the Germans for 12,000 for 3 days.
Problem fixed.
Maybe, your brother is the exeption.

#65 FIW on 12.22.13 at 10:20 pm

A simple fact that many people seem to be missing…if you don’t own a house then you MUST rent. There are only two options. A house must be built somewhere that will provide you and your family a roof over their heads. The smart real estate investor realizes this simple fact and also the fact that when property markets crash as they did in the US…..even more people rent! I would never consider the house I am living in an investment, anyone who does deserves what comes to them. But I really hope to never hear another amatuer financial adviser spout off the line that housing has only increased X historically and the stock market Y. Who cares! That oft-repeated line compares the house you are living in to the stock market….which is more like comparing your daily commuter car to a 1966 Shelby Cobra ….show me the stats comparing income property returns to the stock market …and also show me the chart that captures the leveraged returns that rental property can generate… They never do… And for good reason, they get to take less of your money. I will continue to aquire more and more income properties, while this blog continues to manufacture more and more people averse to owning housing of any kind. I will continue to spread my risk over multiple ‘renters’ and yes I said renters and not properties…because you my friends, are the real investment…you work to generate money so that you can pay me, and for that I am greatful!!!!

Actually, chances are you’re subsidizing your tenants. They are the grateful ones. — Garth

#66 Blacksheep on 12.22.13 at 10:20 pm

Bottoms_Up # 146,

“I think the short fund is not going to do as well as they anticipate.”
————————————————–
The funds success or failure was not focus. We were given obvious RE warnings, yet behaved like emotional children. If the outcome goes bad, there will be few tears shed for the participants. I believe a significant % of the US pop. had / have no medical insurance, enjoyed tax deductible mortgages and a general lower cost of living due to a global pool in which to distribute, inflationary fiat dollars. Our medical system for what its worth, is definitely not free. Was that research performed by a Canadian firm, by chance?

#67 Blacksheep on 12.22.13 at 10:22 pm

Daisy Mae # 162,

“Right. Canadians are a bunch of naive, greedy, self-entitled, ill-informed idiots…believing CREA and the general media.”
————————————————-
For the most part, Yes.
——————————————-
“What’s the governments excuse?”
——————————————-
Excuse for what, not teaching us to think critically?
Unfortunately we are on our own, in this particular arena.

#68 Ripped on 12.22.13 at 10:27 pm

Funny we read comment shots from mortgage owners about… your still a basement dweller ha, still renting that bachelor ha, still living with mom ha.

How come we never read about the smuck with the 500K mortgage on his 510K semi?

#69 Pawel on 12.22.13 at 10:59 pm

Seriously…….
So some dork who spent his entire life cramming books can now buy a 500k house and have it paid off in less then 3 years and he’s still loosing sleep over it?
Forget the noise, Get a life ,you probably never hade one before……

#70 Julia on 12.22.13 at 11:09 pm

#55 GTA Observer on 12.22.13 at 9:49 pm
Bad ice storm, hope everyone is okay, safe and warm. At times like these, thinking about the possibilities of pipes bursting and ice dams forming in the evestroughs…glad we rent.

Exactly what I was thinking…

#71 Ralph Cramdown on 12.22.13 at 11:10 pm

#65 FIW — “A simple fact that many people seem to be missing…if you don’t own a house then you MUST rent.”

If you really think this has escaped anybody who is paying a mortgage or the rent, I fear for the validity of the rest of your analysis.

#72 rp1 on 12.22.13 at 11:19 pm

Merry Christmas Garth and friends :)

#73 Ralph Cramdown on 12.22.13 at 11:20 pm

#49 nomad — “The one thing I worry about is people being saved by our government if the foreclosures count explodes. Fools pardoned for their risk-taking. Plus, our market likely would react and impact investments. Basically, I’d pay for their sins.”

I’m not so worried. The numbers get so big so fast that I doubt many governments would consider it. Certainly not the budget balancing gang currently in Ottawa. Forbearance of $10,000 on 100,000 homes would be $1 billion, and that’s a small amount on a small number of homes. And it’s not a big vote getter, because everyone who doesn’t get directly helped will begrudge the government and everyone who does.

#74 willworkforpickles on 12.22.13 at 11:28 pm

Forgive the Jackass, who is going off the deep end and is clearly delusional in criticism.

#75 FIW on 12.23.13 at 12:11 am

Actually, chances are you’re subsidizing your tenants. They are the grateful ones. — Garth

There is more than enough literature to support my thesis that owning income property is a spectacular method for generating wealth…If you call this subsidizing – so be it.

#71 Ralph Cramdown – “If you really think this has escaped anybody who is paying a mortgage or the rent, I fear for the validity of the rest of your analysis.”

Ralph, unfortunately you missed the word in capitals (MUST) implying no other choice. If you don’t own a mortgage free home – you either are a slave to the bank or a slave to a landlord, like my self…. The only difference is who you ‘must’ pay. If you are okay with this arrangment, fine – continue to rent. And by reading the comments on this blog, it does seem this point has been missed by many indeed.

#76 Godth on 12.23.13 at 12:27 am

#74 willworkforpickles
You prefer the shallow end? Understandable, but is it forgiveable? :)

#77 KommyKim on 12.23.13 at 12:31 am

RE: #8 Shawn on 12.22.13 at 6:54 pm
But there would be the risk of the stock price moving against you.
Thoughts?

You could use the DLR.U and DLR ETFs to do Norbert’s gambit instead:
http://www.moneysense.ca/invest/norberts-gambit-a-better-way-to-buy-u-s-dollars

#78 KommyKim on 12.23.13 at 12:44 am

RE: #52 Freedom First on 12.22.13 at 9:44 pm
Garth, I have been reading your Blog for years, and I have yet to see any “disturbing sexual undertones” from you

Did you miss this “wicked” post:
http://www.greaterfool.ca/2013/10/24/an-awkward-romp/
Complete with a link to “client experiences” which got some blog dogs “excited” in more ways than one.
It’s never dull around here. :-)

Merry Christmas Garth and dogs!

#79 45north on 12.23.13 at 12:46 am

snake: 2,596 words and I don’t know what you said!

#80 rich young on 12.23.13 at 1:08 am

“Because there is no inflation and a fragile recovery. Why raise rates? — Garth”

aren’t food prices, tuition, fuel, oil, tim Horton’s etc .. higher than 3 years ago?

yet we continue with these low rates? seems like we have inflation to me. I sell cars and all of our 2014 models are priced higher than the 2013 and some of them have barely changed. inflation is alive and well yet we continue to see retarded rates. I sent an angry email to my mp and they replied back with the BOC address.

The question was about US monetary policy, not the Canadian situation. — Garth

#81 Ronaldo on 12.23.13 at 1:25 am

#29 Tri-Guy on 12.22.13 at 8:41 pm

”#17 Chris L. – What fool can’t own a $500k house when they earn $300k/year?”

”couldn’t agree more…what is he a doctor of? the guy that makes my u-brew beer has a phd in brewing…ya i’m that cheap”

Only a fool would waste money buying an overpriced “tear down” when they can wait a couple years and get it for half the price, or, have one built. There will be plenty of empty lots for sale at discounted prices as there were at every other ”bubble” time. The true fools are the ones buying into this overpriced, cheap money induced scam.

#82 Ronaldo on 12.23.13 at 1:49 am

#65 FIW on 12.22.13 at 10:20 pm

”A simple fact that many people seem to be missing…if you don’t own a house then you MUST rent.”

Unless you’re a lighthouse keeper and your accommodation is supplied.

#83 TEMPLE on 12.23.13 at 2:35 am

#69 Pawel on 12.22.13 at 10:59 pm

Seriously…….
So some dork who spent his entire life cramming books can now buy a 500k house and have it paid off in less then 3 years and he’s still loosing sleep over it?
Forget the noise, Get a life ,you probably never hade one before……

Did they teach you to act that way in ReMax school? You are “loosing” your mind if you think making a lot of money means a person should be stupid with it.

TEMPLE

#84 YEGrenter on 12.23.13 at 2:39 am

#8 currency conversion

By far the best way in Canada to convert currency us an interactive broker’s account. You can buy and sell on the forex market and only pay around $2 commission. No markups or fees, and you can leave limit orders sitting to fill at whatever exchange rate you want.

#85 aprilNewwest on 12.23.13 at 2:50 am

#17 – Why should he have to buy a house. He has more smarts the some of the bloggers here plus is being financially prudent in not buying at the top of the market.

#86 gtrz4peace on 12.23.13 at 3:38 am

Garth, Happy Holidays and ditto to everyone on the blog.

This post’s photo is sheer brilliance — this guy is a genius as his donation scheme prompts donations by effectively guilting the “competition” urge within people — and also exposes the hypocrisy of all religions.

By the way, atheists are not a “religion”. We are just simple folks who prefer scientific method and science to religion, which I personally call “the battle of the imaginary friends.”

That said, we wish all our friends who believe in their religions well — everyone needs something, or someone, to believe in.

#87 gtrz4peace on 12.23.13 at 3:56 am

One other comment, for some of us, whether to sell in Vancouver is more complicated.

Rents are so expensive here – more expensive than our monthly payments for a piece of junk compared to our relatively new town home with panoramic ocean view. We bought 10 years ago and owe about $200K. We would like to sell now, “at the top” but we also value a quality of life. We work often at home so that means you are in your home all the time — you better like it.

We have a large dog, and conditions home that don’t allow us to have carpeting, we require low VOC paints, etc. So calling rentals was a rather dismaying experience.

Not everyone who does not sell is a moron. If you are a “homebody”, the quality of that environment matters more than it may to others who choose to travel. Some of us choose to stay because we won’t be underwater in the crash, and we have to live somewhere so we might as well like it.

But like everyone else, I would never buy the house we own at the prices people are asking now. And when we consider moving into something cheaper, seeing teardown shacks for more money than we paid for our 2500 Sq Ft home makes us nauseous. And sad.

The real estate bubble here is indeed about to burst.

#88 Buy? Curious? on 12.23.13 at 4:00 am

Ah, witty signs for begging. If they’re so smart to come up with a line and a sharpie to write that line on a piece of cardboard, why aren’t they smart enough to get their lives together? Short term smarts is no match for long term planning.

Garth, have a great holiday but think about how to improve this site. This ain’t 2008. Let’s give the user a richer experience.

http://www.youtube.com/watch?v=bXGOMuylYe0

#89 Andrew Woburn on 12.23.13 at 4:10 am

All the way back to Bill Clinton, Washington (like Ottawa) has had a blatant pro-real estate agenda. Federal politicians even called it ‘the Ownership Society’ with the twin goals of ‘economic liberty’ and the ownership of property.

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

Governments like to say that home ownership builds a stable society. What they mean is that mortgage slaves are easier to manage.

#90 Tony on 12.23.13 at 4:52 am

Re: #4 Godth on 12.22.13 at 6:30 pm

At least my reply was more on topic than yours especially if you’re a moose man which is slang for horse player.

#91 Buy? Curious? on 12.23.13 at 5:00 am

A great article about the importance of hiring a realtor, and discussing what’s involved with a BRA (A Buyers Realationship Agreement? What DID you thnk what a BRA was?)

http://gawker.com/new-jersey-realtors-caught-on-camera-having-sex-in-a-cl-1488323799

Rob Ford 2014. Do it so we can get Rob Ford Bobble heads for another 4 years! They’re like Beanie Babys! I sold one on ebay and shipped it out to Japan for some killer cash! They LOVE him! That solves my money woes.

#92 Tony on 12.23.13 at 5:08 am

Re: #69 Pawel on 12.22.13 at 10:59 pm

The ironic part is most doctors from Canada went to America to pay less tax. They’ll lose twofold in the end as taxes will end up higher in America than Canada and the Canadian dollar will be worth something whereas the U.S. dollar will be worth less than the Mexican Peso in due time.

#93 Tokyo calling on 12.23.13 at 9:09 am

#89 andrew Woburn
I had a boss when I was a young businessman in Toronto. I was 21 and had a wee pinch of attitude. He told me I could be a fantastic employee, but first…I needed a wife and a mortgage. Easier to manage indeed.

#94 Gmpeak on 12.23.13 at 9:15 am

Case in Point…

Heres from a mother who wrote into a comment section for a CBC article on “bubble” today.

Juliska Magyar GuestRank 20524

“Canada has the highest rate of home ownership of the G20 countries. About 75% of adults.
Those who say they can’t afford a house need to reevaluate their lives. Where did you go wrong?
All three of our children were home owners by their mid 20’s. All well on their way to self sufficient financial security”.

Oh my! Such a smart mother to guide her children to such wealth! Hope they bought in the trough like I did!…back in 1997.

#95 Sven Gunder on 12.23.13 at 9:40 am

I’m skeptical about that original poster. Almost $300K with $100K down payment and he’s looking at $550K houses that he doesn’t want and would have to commute for?

If they really are house horny, that doesn’t add up.

#96 Daisy Mae on 12.23.13 at 9:47 am

60 Godth: “#44 Daisy Mae You want to handle the truth? Search Marc Dutroux. I knew you couldn’t handle it, so why ask for it? You don’t want the truth, you want self affirmation.”

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

I don’t WHAT the hell you’re talking about. Garth explains the economic situation we face in Canada and around the world. And we’d better pay attention. That is all I’m saying. Relax…..

#97 Kilby on 12.23.13 at 9:52 am

Devon’s writing has a lot of familiar nuances I suspect that he is a made up character. I agree with everything as usual but the style looks disturbingly familiar. Merry Christmas to Garth and all who contribute meaningful information on this blog.

Another year has gone by with us renting and waiting for an “adjustment” in house prices back to sane levels…..It’s a wonder this insanity has gone on for so long, defying all fundamentals. At least the realtors in this area are telling us that they “Don’t expect prices to go up in the spring”.

#98 TurnerNation on 12.23.13 at 9:55 am

You’d think a frigid First World Country like Canada would have buried most of the essential infrastructure in cities like power lines away from the grasp of ice.

Instead we have an ever-expensive 2nd World system?
Many noticed how our govt leaders/mind controllers leapt onto centre stage last night conditioning us with empty “trust us!” words: “Pro government forces are dutifully working to restore power. We are also dealing harshly with anti government sentiment which will only servers to weaken our state”. Oops I transposed some of Turkey’s news today onto there.
Anyway I’m sure the Hydro managers, earning 200-500k total comp are warm and snug. Party Faithful.

#99 Daisy Mae on 12.23.13 at 9:59 am

#67 Blacksheep: “What’s the governments excuse?”
——————————————-
Excuse for what, not teaching us to think critically?
Unfortunately we are on our own, in this particular arena.

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

The governments’ ineptness in this regard has been rehashed over and over and over…

#100 Ralph Cramdown on 12.23.13 at 10:06 am

#75 FIW — “There is more than enough literature to support my thesis that owning income property is a spectacular method for generating wealth…”

Don’t confuse a bull market with brains, son. If you buy a property with reasonable leverage and an honest cap rate of 7%, you’ll slowly accumulate wealth. If moderate inflation, declining interest rates and increased investor preference for real estate over other investments then compress cap rates to 4%, you’ll look pretty good on paper. But if you believe that returns are going to be good from a starting point of low cap rates, very low interest rates and very low inflation, you don’t understand real estate.

I am sure that there are places that you can find properties with decent cap rates, and that a diligent investor can find them. I’m also sure that in many places, you’ll be competing with an undercapitalized, overleveraged fellow real estate investor willing to bid that cap rate down to a level that a prudent man would consider unacceptable, and who’s forgotten that when the real estate cycle turns, market rents AND property prices go down, unemployment goes up, and lenders get a lot pickier. Those investors’ fire sales will only add to your woes.

#101 Devore on 12.23.13 at 10:15 am

#17 Chris L.

What fool can’t own a $500k house when they earn $300k/year?

Dude, buy a fricken house for the love of everything combined.

People who are wealthy, or aim to be, don’t spend money they do not need to on things that are overpriced, regardless of how affordable they may be. And since it looks like the GF is on board (or has no say in the matter), Devon has no current need to buy a house.

Say, Chris, are you a millionaire?

#102 Steven on 12.23.13 at 10:20 am

Blessed be the igloo owners for they have affordable housing and no mortgage. They also don’t give a crap about real estate values, tax free profits, property taxes or making the next mortgage payment.

#103 nelson on 12.23.13 at 10:41 am

Michael Hudson interview here discussing the fact that cost of living (read: cost of housing) is unsustainable everywhere – including unrealistic rents brought on in large part by Blackstone and other conglomerates buying giant swathes of real estate in cash directly from the banks:

http://www.truth-out.org/news/item/20788-trade-advantage-replaced-by-rent-extraction

You want to invest in something like that? I know many will say yes, they do, it’s dog eat dog out there. I wouldn’t do it, even if I had the min buy in of 5 million.

#104 -=jwk=- on 12.23.13 at 10:48 am

nicely done Snake.

And #65 FIW. Me too, but not in this country. Why buy one house here that rents for 3000 when I can buy 8 houses in the US that rent for 800 each? Much better spreading the risk, 1-2 vacancies don’t kill us and NO rent subsidies while speculating on capital gains…

#105 Derek R on 12.23.13 at 10:57 am

#75 FIW on 12.23.13 at 12:11 am wrote
If you don’t own a mortgage free home – you either are a slave to the bank or a slave to a landlord, like my self…. The only difference is who you ‘must’ pay.

Slave to the bank? I’ll give you that but slave to a landlord? You have delusions of grandeur. I’m the sort of reliable, middle-class tenant that pays on time and keeps the property nice. You’d better treat me right, if you want to keep me. Forget your place and I’ll be looking for a new “master” before you can blink.

#106 RVP on 12.23.13 at 11:06 am

In Vancouver here and reading the news about the terrible ice storm in Central and Eastern Canada. My heart goes out to those whose Christmas plans have been hampered by this storm. Please take care of your safety above all else.

There are some very smart, politically and economically aware Ontarians on this blog so I want to ask you a question: What are the political and economic implications of this ice storm? What will be the political fallout? What will be the economic fall out (surely retailers are taking a hit just before Christmas)? Is this simply an Act of God, a natural disaster–or can be portion out some of the blame to politicians? We saw what the ice storm did to Quebec in 1998–that was the warning call that seems to have gone unheeded. Couldn’t the Hydro authorities in Ontario and Quebec have been using the past 15 years to build a more resilient hydro electric network that is less vulnerable to ice? Couldn’t they have put more of the electrical network underground where it would be less vulnerable to ice instead of overhead wires? Despite what the Alberta-boosters say, Toronto remains the economic heart of Canada and what happens to Toronto has national implications. We saw what the ice storm did in 1998–that put our country on notice as to the vulnerabilities of Canada’s economic heartland to ice storms–and our politicians seemingly did nothing to prevent a repeat of the devastating damage to the electrical system brought on by ice storms. There has to be a political and economic story in this ice storm. I am too far removed from Ontario politics to know what that story is because I live out here in BC. So I appreciate the thoughts of those who are closer to the current ice storm on this issue. And please take care of yourselves. Merry Christmas!

PS: The snow has melted in Vancouver. Darn! Missed a white Christmas by just a few days!

#107 Alberta Ed on 12.23.13 at 11:15 am

Dr. Devon is not alone. On Vancouver Island there is about a year-long wait to find a family doctor, if you can find one accepting new patients at all. Walk-in clinics offer good service, however. We were told by one doctor that many clinics are staffed by young physicians who are not interested in buying into an established practice (and taking on decades of debt). They can make excellent money by filling in where needed, and are renting rather than buying real estate.

#108 Not 1st on 12.23.13 at 11:32 am

No housing correction. Canada to ride US wave…. I hope.

#109 Greetings Earthlings on 12.23.13 at 11:37 am

Freedom is power.

Debt is slavery.

You pick.

#110 James on 12.23.13 at 12:19 pm

I am looking at the chart. The long term is up.

http://vreaa.files.wordpress.com/2012/05/canadian-cities-house-price-index-with-quotes-1980.jpg

So it keeps pace with inflation….

If you see that chart as comforting, you need help. — Garth

#111 Sinful Man on 12.23.13 at 12:21 pm

#43 Smoking Man “… I’m going to chop God’s head off …”

Thus says the Lord: “Cursed is the man who trusts in man and makes flesh his strength, whose heart turns away from the Lord. He is like a shrub in the desert, and shall not see any good come. He shall dwell in the parched places of the wilderness, in an uninhabited salt land.

Blessed is the man who trusts in the Lord, whose trust is the Lord. He is like a tree planted by water, that sends out its roots by the stream, and does not fear when heat comes, for its leaves remain green, and is not anxious in the year of drought, for it does not cease to bear fruit.”

#112 Alex on 12.23.13 at 12:35 pm

Here is the big financial picture:

http://rt.com/op-edge/fed-us-dollar-manipulate-049/

You believe that crap about “little parasitic mega-bankers”? Poor you. — Garth

#113 Son of Ponzi on 12.23.13 at 12:35 pm

It’s a well known trick by professional panhandlers to fill the cup with their own money.
It’s like the empty store syndrome, people stay away, but when it’s full they want to be part of the action.

#114 Al Berta Drill Hadist on 12.23.13 at 12:37 pm

@jan

Yes of course is we who bring in the better immigrants than the states.

Look at them and their “integration”, what a joke. Who would want to integrate ? I want new Canadians to keep their proud and traditional cultures its what makes this nation great.

If you want to see a true success story, look no further than India, anyone who immigrated from there will tell you how great a nation it is. Then why do they come here then you ask ? I would guess just for the sheer challenge and to exercise their entrepreneurial / innovative spirit.

#115 Doug in London on 12.23.13 at 12:48 pm

@RVP, post #106:
Good questions you ask. However, if utilities like Hydro One, Hydro Quebec, or local distribution companies like Toronto Hydro were to build a power grid that was totally immune to the effects of an ice storm (like having all transmission lines buried) it would cost a fortune and you would be paying at least 50 cents per kilowatt hour of energy, perhaps closer to a dollar. Imagine how well that idea would go over in an election year.

On the suject of a more resilient power grid, the best way to make a city more resilient to the effects of losing high voltage lines (I mean really high voltage lines, like 230,000 of 500,000 volt lines) in a storm is to have more power generation closer to where the load is. That was the idea behind having 2 gas fired power plants in the GTA, one in Oakville and one on Mississauga. Both were, as you are no doubt aware, cancelled at an outrageous price of $1.1 billion. I suggest you all look for ways to reduce your own energy consumption, then put the savings toward buying a generator for backup power. How’s that for being more resilient? Better yet, did I give anyone an idea for a Christmas present?

#116 Shawn on 12.23.13 at 12:49 pm

Currency Exchange in brokerage account

Thank you for responses to my question at 8

I had mentioned I could convert by buying say BCE on Toronto and selling in New York or vice-versa. That is called Norbert’s Gambit. The risk is that BCE changes in price between my buy and sell. (And one would expect to lose the bid /ask spread on average even if no real price movement)

KommyKim at 77 pointed out DLR and DLR.U which are Toronto ETFs. They are an investment in U.S. dollars, DLR is priced in Canadian dollars and DLR.U is priced in U.S dollars. Apparently this can’t work for RRSP accounts but works when you have a non-registered account that has a Canadian dollar portion and a U.S. dollar portion. You have to phone the broker to journal it over, see the link at 77.

So, in RRSP if I wanted to bet today that the Canadian dollar would fall, I could buy DLR in Canadian dollars, wait and then sell at a higher price.

I have some U.S. dollars in my RRSP in a U.S. money market account, if I want to bet that the Canadian dollar will rise I can sell that money market but I incur a fat commission of about 1.46%. If there was a Canadian dollar ETF trading on New York, I could buy that , wait and sell later and with the automatic wash trade that TD water house offers, I would be back in U.S. dollars with more U.S. dollars.

Basically, what would work perfectly is if DLR and DLR.U both also traded in New York. As far as I know nothing on New York trades in Canadian dollars so DLR cannot possibly trade on New York. DLR.U could probably trade on New York.

I think I will enter a buy on FXC at 93 just to hedge some of my U.S. dollars.

I have not heard of any ETF that trades in both Canada and the U.S. like an inter-listed stock, but it should be possible.

I now see that there is FXC on New York that is Canadian Dollar Trust (FXC) so to bet the Canadian dollar will rise or to hedge that risk when I have U.S. dollars in a money market in my RRSP I can buy FXC and sell later if it rises. TD Waterhouse allows wash trade.

YEGrenter at 84 suggested interactive brokers. It sounds excellent but I really don’t want to get into opening an account with another broker. I really like having all my assets at one broker, TD Waterhouse.

Something still stinks about TD Waterhouse charging 146 basis points on a simple currency exchange. And the banks charge even more at the branches. At VISA and MasterCard charge an indefensible 2.5% just because they can. (Damn, why did I sell my Visa inc. shares too early?)

#117 Al Berta Drill Hadist on 12.23.13 at 12:54 pm

Ok guys time to get serious for a moment. Where can I get the best exchange rate in getting some US dollars ? Or any other currency i trust more than the Canadian dollar.

#118 Doug in London on 12.23.13 at 1:00 pm

Addition to my above comment, since the ice storm of 1998 all new towers put up by Hydro One shed water more easily and are less prone to ice buildup. That’s money well spent (probably less than a penny per kilowatt hour), so contrary to popular belief there are a lot of good competent people in these publicly owned utilities. The pork barreling gets a lot of public attention but success stories don’t.

#119 coastal on 12.23.13 at 1:36 pm

Looks like those micro-condos that are all the rage in Victoria and Vancouver aren’t all they’re “cracked up” to be. ;) What do you expect when the real estate humpers can’t quit talking about what a great place to own for the urban dweller. Sounds like future mental health hotels.

Micro Apartments Can Make You Crazy

http://nypost.com/2013/12/23/experts-fears-health-risks-with-micro-apartments/

#120 fixie guy on 12.23.13 at 1:38 pm

“..Bill Clinton, Washington (like Ottawa) has had a blatant pro-real estate agenda”

No surprise the politician who released financial institutions from Glass–Steagall and regulated derivatives also had a consumer indebtedness adgenda.
My chair remains upright.

#121 fixie guy on 12.23.13 at 1:46 pm

@115 “On the suject of a more resilient power grid, the best way to make a city more resilient to the effects of losing high voltage lines (I mean really high voltage lines, like 230,000 of 500,000 volt lines) in a storm is to have more power generation closer to where the load is. ”

The utilities were on the news reporting high voltage distribution remained in excellent shape after the storm. The bulk of the damage is low-voltage ‘last mile’.

#122 TurnerNation on 12.23.13 at 2:01 pm

#106 RVP you read my mind.

I came to realize this: our elites have decided, never again let us have capital infrastructure projects for ‘free’. By free I mean already funded using the 40-50% of income we pay as tax.
Henceforth all inf. projects allowed to tax slaves will be funded using extra taxes and sold/tendered to favoured partnerships or vulture capital (friends of the Party. Sounds silly, unless you recall SNC in QC.). Examples: that new troll bridge in BC; Hwy 407 troll road in Ont which the Cons sold to private equity and quadruped troll rates, Toronto subways and tax/fare hikes. All those PhD Urban planners and and City managers on the sunshine list for years, nay decades, failed to predict or ensure Toronto’s growth? Two major subway lines from the 1960’s? Get real. I’m sure other examples abound.

I am coming to see that our govt and in fact all 1st World govts are under the agenda to blindly rob and turn us into 2nd World countries. Evidence otherwise? We are on the cusp. Being sold fables of Owelimpic promise (Own the Podium mind control)and debt, “Green energy”, and so forth.

#123 IM in C on 12.23.13 at 2:03 pm

The Canadian real estate market will not collapse, at least no in the near future. When will it collapse? 20 years from now when the boomers move in to their 80’s and truly have to sell. Until that time, the Canadian real estate market will continue on its merry way

It will neither collapse nor boom. You should fear the middle. — Garth

#124 Joe on 12.23.13 at 2:09 pm

To buy the space we rent valued around 700k (upstairs of a 1.4$ house in N Van) around 35-4500 a month.

The rent is 1900 and includes a gardener when required.
No property taxes.
No upkeep, gutters, lawns.
The owner does it all.
No honey do’s.

Our rent payment is generated by invested funds raised through the sale if our house in 2011
We also bought a place in Costa Rica for 200k that pays for it self in two months (maintenance fees, insurance…)

The market here is currently held together and promoted by smoke and mirrors techniques it will decline significantly, indicators say 2014-2015.

Or believe my friend a Re Max used house salesman who says…..
Are you ready for this..

It’s different here.

#125 Smoking Man on 12.23.13 at 2:40 pm

111 Sinful Man on 12.23.13 at 12:21 pm
……….

Does God know you playgerized his book.

Did they teach you nothing in school.?

#126 Old Man on 12.23.13 at 3:15 pm

Well do you all just love the ice storm, as have been stuck for two days without any cash. I did a bank transfer days ago at the Royal, and had to take the car out to the nearest branch. The parking lot was filled, so parked waiting for someone to move, and it was a fight for a spot, as am not going away without some green in my pocket; it was like everyone needed some cash, and we all had to do it now for the days ahead. Never seen so many mean people in my life. I really need to get a debit card for a machine with a pin, but deal in cash for buying. Guy told me to do all on the internet, but am afraid of hackers.

#127 Ralph Cramdown on 12.23.13 at 3:20 pm

#122 TurnerNation — “Hwy 407 troll road in Ont which the Cons sold to private equity and quadruped troll rates”

The sale was a travesty. But the toll rates would be exactly the same even if the government still owned it. They’re set to maximize use without congestion. Nobody would pay to get on a clogged toll road when free alternatives exist.

#128 James on 12.23.13 at 3:34 pm

It will neither collapse nor boom. You should fear the middle. — Garth

That sounds pretty good to me. Stable.

You wish. — Garth

#129 KG on 12.23.13 at 3:52 pm

would this ice storm show the fallacy of Leaside etc and be the straw that broke the camel’s back.

People will always pay a premium to be close to the core in a leafy hood of safe SFHs. Traditional demand neighbourhoods are usually that way for a reason. This still does not make properties there good investments. — Garth

#130 Elmer on 12.23.13 at 3:58 pm

Given the huge wage disparity between this medical grad and his wife I hope when he finally does decide to buy a house, he makes her sign a prenup.

#131 DeadMountain on 12.23.13 at 4:01 pm

Middle Garth ?

Is there a middle anymore now that a central authority has realized it can get away with stepping full force on the accelerator, then pushing the break. Such a “blunt instrument” in the hands of non elected and unworthy people. And it has gotten worse now that they know they can do this electronically, and expand the balance sheet with the touch of a button.

Tapering ? What tapering. By 5 out of 85 billion a month ?

Tapering starts with $10 billion, and will be raised steadily. Don’t get too excited. — Garth

#132 Ralph Cramdown on 12.23.13 at 4:03 pm

“People will always pay a premium to be close to the core in a leafy hood of safe SFHs.”

Yep. But they won’t always get what they paid for.
http://en.wikipedia.org/wiki/Parkdale,_Toronto#History

Parkdale is no Leaside. — Garth

#133 not 1st on 12.23.13 at 4:12 pm

Garth, you are going to have to do another detailed post about how and why REITs avoid trouble in a RE downturn.

I know they buy shopping malls and apartment blocks and offices, but if people have less disposable income servicing their underwater mortgages, they don’t shop as much, and if there are less jobs, there is a higher office vacancy rate. Apartments? I don’t know how those are effected.

It might take five years to ripple through, but a general recession is not in the cards. Worry about hair loss and cholesterol. — Garth

#134 James on 12.23.13 at 4:17 pm

People will always pay a premium to be close to the core in a leafy hood of safe SFHs. Traditional demand neighbourhoods are usually that way for a reason. — Garth

You are on a roll today. You have given many reasons to buy/own a home for the long term.

If you have $1.5 million to buy in Leaside or $2.5 million in Kitsilano, and don’t need financing, your odds of a stable property value are greater than in most other areas. But with entry and exit costs you’ll still face medium-term losses. — Garth

#135 Smoking Man on 12.23.13 at 4:23 pm

http://fullcomment.nationalpost.com/2013/12/21/conrad-black-the-toronto-stars-ideological-shakedown-operation/

Conrad Black Emasculated The Toronto Star

How can you not love this guy. I
do.

#136 Canadian Watchdog on 12.23.13 at 4:41 pm

#122 TurnerNation

Green policies proposed by Tree-hugging PHDs aren't going to end anytime soon as the latest tax proposals are only measures taken to service debt borrowed from 2008/2009. Once they start rolling over debt at a higher interest rate with a rising dependency ratio, then it really gets interesting.

If you think the government is being aggressive now, you ain't seen nothing yet.

#137 Shawn on 12.23.13 at 4:49 pm

The AMERICAN Consumer is Strong

For those who would bet against America, consider the following couple of sentences from Bank of America’s Q3 report which came out a couple of months ago.

“The provision for credit losses was $296 million in the third quarter of 2013 …$1.5 billion less than the third quarter of 2012.” (on page 3 of 36)

“The number of 30= days delinquent loans, excluding fully insured loans, declined across all consumer portfolios, again reaching record low levels in the U.S. Consumer Credit Card portfolio.” (on page 11 of 36)

Yeah, unemployment is still about 7% and much higher if discouraged workers are counted. Nevertheless, loans are being paid. The delinquencies of 2008/ 2009 are history.

The American economy is much improved, which explains the HUGE rise in stocks in 2013.

I believe Garth said something about Buy America a couple of years ago. Then there was a certain Mr. Buffett with a New Your Times Editorial in late 2008 tiled, “Buy America, I am”. He was careful to make no short-term forecast but he said America would do well over time.

#138 Blacksheep on 12.23.13 at 4:50 pm

Daisy Mae # 99,

“The governments’ ineptness in this regard has been rehashed over and over and over…”
————————————————————
To protect us, from ourselves ?

The expectation that governments, banks, or anyone else, will or should act in our best interest, is naive.

This is the indoctrination conundrum.

The Cattle have been trained not to burden themselves with such thoughts, instead they let the ‘system’ and for profit corporations tell them what to do and how much they can afford. This absolution of responsibility works until reality sets in and the mortgagor realizes he/she alone, is left to support the onerous debt.

#139 Son of Ponzi on 12.23.13 at 4:58 pm

“but a general recession is not in the cards” – Garth
What kind of cards are u using? :)

There are no indicators of recession. Except in your fertile brain. — Garth

#140 Son of Ponzi on 12.23.13 at 5:05 pm

Buffett said “Buy America, I do”.
Of course that’s what the sheep want to hear.
The modern day pied piper.

#141 Old Man on 12.23.13 at 5:25 pm

I just came back from the underground parking garage to get something from my car. There was a car parked in the middle and it was a University professor who was drunk yelling must fail them all. I took his keys away from him to park his car, and walked him out of there as knew him well. He said hi my friend want to have a drink with me? Imao, as took him to his wife, and along the way was telling all Merry Christmas, and his wife was not too happy about this all. :)

#142 Ralph Cramdown on 12.23.13 at 5:51 pm

#135 Smoking Man — “How can you not love this [Conrad Black].”

Oh, that’s easy. Buy some shares in Hollinger and watch him loot the company while your shares go south (I got out long before his money or legal troubles, luckily).

Or read his history and realize that, basically, he defrauded an old lady out of a large fortune, relieved his employees of their pension surplus, turned the large fortune into a small one, fired the employees, renounced his citizenship for a gong, was stupid enough to notice video cameras while violating a court order and to keep right on doing it (a move worthy of the idiot criminals on any TV police procedural), and now crawls back to his renounced country, a convicted criminal, blustering on about wanting to address the Canadian gong committee in person, and reduced to interviewing Rob Ford… Oh, the ignominy of a loquatious, perspicacious Brobdignagian superfluity interviewing a yet-employed cretinous, gluttonous, gelatinous, Falstaffian flatus.

And speaking of your precious UCC, SM, that’s where Conrad the career criminal got his start. Clay feet up to the hips, SM.

http://en.wikipedia.org/wiki/Argus_Corporation

Reminds me of an old Royal Canadian Air Farce radio skit.

[Phone call]
“This is the man who runs the country.”
Hello, Mr. Black.”
“No. It’s Pierre Elliot Trudeau.”
“Oh, you mean ‘the man who thinks he runs the country.'”

#143 economictsunami on 12.23.13 at 6:06 pm

How much longer before F has to refuel the CMHC gas tank?

Will that be diesel, unleaded or rocket fuel?…

Former Goldman Banker To Head CMHC: “Canada’s Mortgage Monster”…

http://www.zerohedge.com/news/2013-12-23/former-goldman-banker-head-cmhc-canadas-mortgage-monster

#144 Smoking Man on 12.23.13 at 6:13 pm

#142 Ralph Cramdown on 12.23.13 at 5:51 pm

So.

You swallow the cool aid, truth justice and the Canadian way.

Hounsety pays, ha, fool.

Thank your teachers with filling your head with slave training.

Eat or be eaten that’s the law of nature for animals, we are animals.

The schooled think they are more special. Nope, dogs we are all.

Get use to it, it’s only going to get worse here on it.

#145 Bill Gable on 12.23.13 at 6:26 pm

China has seen their seven day paper hit 10% – “shadow banking”, as to be “toned down” in the Chinese Press.

Wonder what the impact of “shadow banking is” on this kind of scenario –

From Bloomberg: Dec 23/2013

“The amount of loans to the riskiest U.S. companies ballooned to a record this year, propelled by unprecedented demand for floating-rate debt that offers protection from rising interest rates.

The market for junk-rated loans increased to $683 billion, exceeding the 2008 peak of $596 billion, according to Standard & Poor’s Capital IQ Leveraged Commentary and Data. The $130 billion surge this year was fueled by borrowings that don’t include typical lender protections such as limits on leverage.

Loans, which suffered the biggest losses in the fixed-income market during the financial crisis, staged a comeback as investors funneled a record $64.4 billion into funds that buy the debt in anticipation”.

http://tinyurl.com/kpy45xt

#146 Alwyn on 12.23.13 at 6:32 pm

We have what economists call a “Liquidity Trap” in Canada and the US (and in most western countries) where the monetary authorities are unable to stimulate aggregate demand with low interest rate monetary policy, and we have persistent disinflation, which could lead to deflation…. blah blah blah.

BUT the sun will still rise tomorow, so let me wish all of this pathetic blog’s readers a Merry Christmas.

#147 Old Man on 12.23.13 at 6:37 pm

I remember the days with the Eatons and Conrad Black in Toronto and the office building that Conrad Black worked out was beside Excelsior Life owned by not him, but by a Royal Family from Germany. Now as far as Conrad Black is concerned this man was never on my page, but had many a meeting with the Eaton family members in my walk in life, both in Toronto and in Montreal over the years, and were good people.

#148 Nemesis on 12.23.13 at 7:20 pm

@OldMan/#147…

…”…had many a meeting with the Eaton family members in my walk in life, both in Toronto and in Montreal over the years, and were good people.” – OldMan

GoodPeople, eh? Well… Let’s climb into the WayBackMachine, shall we?….

….”There were approximately 30,000 employees, former employees, retirees, beneficiaries and others who were affected by the insolvency of Eaton’s and who were subject to our mandate.

Eaton’s did not restructure and immediately commenced liquidation proceedings similar to a formal bankruptcy. The vast majority of employees were terminated without being paid termination pay and severance pay and other amounts owing to them by Eaton’s. All retiree benefits were cancelled. The cash proceeds generated by the liquidation of Eaton’s assets, including the sale of Eaton’s to Sears in 1999, were insufficient to pay all creditors’ claims in full…

…The total amount of claims filed by all creditors in the estate of Eaton’s was approximately $215,000,000. After negotiations, adjustments, and claims hearings before claims officers and appeals to the court, the total amount of the employees’ claim that we prepared and filed for the employees and retirees was settled at approximately $112,500,000. The Liquidator released a series of dividend payments to all creditors, including employees, at the final dividend rate of 53.7¢ on the dollar of claims.”…

http://www.kmlaw.ca/Settled_Completed_Cases/Overview/?rid=100

BonusLordCrossHarbourZen:

Short&Sweet:

http://youtu.be/PVjSvKNBEro

Vs. SomeWhatLengthier & MuchJuicier [for SaltierDogz who prefer their aristocrats ThoroughlyFlogged, Roasted&Toasted]:

http://youtu.be/hBI35DMHjy4

[NoteToRalph: you forgot, “Corpulent Unctious Cad”… otherwise; PrettyDarnGood!]

#149 Shawn on 12.23.13 at 8:11 pm

Conrad Black

Ralph blasts Conrad at 142…

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

Ralph may be right. I was outraged from the start when Tweedy Browne exposed his obscene pay and bonus and the non-compete fees never sounded right…

But Conrad has paid his price. A HUGE price at that.

I find him most entertaining.

I thought the U.S. justice system treated him harshly. It should have been a civil matter. In one case he won in the Supreme court and the judge sent the matter back to the SAME judge who earlier heard the first level appeal. I don’t think that happens in Canada.

Conrad’s excessive pay from Hollinger looked like child’s play by the time the lawyers, accountants, receivers were done. They REALLY looted the place. And ran it into the ground while they were at it. That guy Paris who wrote the damning report, I have no use for.

Chretien had no business denying Black the right to his peerage. Anyone who would not renounce their citizenship to be named a Lord (in his then country of residence) seems a fool to me. Frankly what is citizenship these days but (in most cases) proof of a place of birth? Citizenship is a bit of an archaic notion in many ways. Should we not all just be satisfied to be citizens of the world? Why can we move freely about Canada but must have a passport or even seek prior permission to visit other countries? Freedom only goes so far.

I got a little off-track, but once Conrad became the underdog with everyone kicking him I became a bit of a defender of his.

And what of that old news about pensions at Dominion grocery or whatever. There was a surplus in the plan and he applied through the courts to get it. Business is business. Did anyone at Dominion subsequently not get their full promised pension? If not maybe blame the actuaries and the investment managers. If there was a surplus way back in the 80’s there should have been a cornucopia of money by about year 2000, even with the old surplus removed.

Yeah let he without sin cast the next stone at Conrad.

He is as Canadian as any of us.

#150 Shawn on 12.23.13 at 8:18 pm

Pied Piper?

Son of Ponzi

Buffett said “Buy America, I do”.
Of course that’s what the sheep want to hear.
The modern day pied piper.

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

I must admit I really don’t know much about the story of the pied piper.

I do know Buffett has been leading his flock of loyal sheep to wealth for over 60 years now.

You follow who you wish…

America, is not and was not a Ponzi scheme. It’s a country with some rules of law and property rights and an entrepreneurial culture that despite some problems is a remarkable setup for creating wealth and increased standards of living.

#151 shawn on 12.23.13 at 10:10 pm

Shawn,

You can knock off forex fees using usforex.com. open a Canadian bank’s us dollar account or in a US bank to send it there, then a usforex account. Now you can transfer from another canadian bank canadian dollar checking account of your own and you can transfer 10K or more free with usforexmcom., leaving you to pay the direct debit or wire tranfer fee ( the former is dirth cheap.) . you can also have usforex dump the funds in a us bank checking account, debit fees will apply but at a fix fee regardless of amounts. When I quote a transfer above 75k I get 1 point above the institutional rate, which goes down another quarter points when I follow up with a phone call shortly after placing the frorex order.

#152 Son of Ponzi on 12.23.13 at 11:35 pm

# 150
just found out they are tearing down Candlestick Park in San Francisco.
Iconic. only 40 years old.
That’s what the American economy is.
Tear down and replace with garbage, just like toothbrushes that last only 20 days.

#153 Son of Ponzi on 12.23.13 at 11:38 pm

#150
just like RE in Vancouver.
Tear down perfectly sound houses and replace with fake facades and granite countertops.
Fill up landfills with demolition material.
But for how long?

#154 Son of Ponzi on 12.23.13 at 11:41 pm

# 150
“a flock of loyal sheep”?
it’s a herd of stupid animals led to the slaughter.

#155 Old Man on 12.24.13 at 12:22 am

#148 Nemesis – agree as that was a corporate scenario, and there is a difference when such is placed within context, as chit can fly, but the members of the Eaton family were cool in my book, as against the one and only Conrad Black.

#156 Doug in London on 12.24.13 at 4:19 pm

@fixie guy, post #121:
You’re quite right. In this storm, most of the outages were caused by ice laden tree branches falling on 27,000 volt feeder lines. However in future storms, especially summer storms, high voltage lines can also be knocked down and cause outages. In all cases, a backup generator is a good idea.