Ant talk

KIA modified

Peter has a house but no job. “I was severed in my mid-40s,” he says, “only to lose them, go on EI and then repeat the cycle. It is hard for me to just pay property taxes, home and car insurance, as well as normal utility bills and family related expenses. I also drive an 11 year old van.”

What prompted him to write me today were comments posted here about an economy in which house prices endlessly rise and borrowing never stops. “Where I relate to your posts, is that I just cannot reconcile how I can be struggling and at the same time others are borrowing, spending, not saving much, and having a good time and not worrying. I absolutely don’t begrudge others who have earned the means to live in a higher economic strata; I am happy to just be able to have a job that lets me pay the bills, save a little, and repair my old car as needed.

“What frustrates me is that I cannot reconcile how these macro trends in your blog apply with what I see around me on a daily basis. It sounds like a story I read my children about an ant who stored food for the winter and a cicada who played guitar all summer and fall. In the story, a cold snowy winter comes and it is not clear that the cicada will survive. Around me, it is as if the winter never seems to comes, and we just go from fall to spring, year after year, and the cicada just continues to play without consequences. Please provide your comments in blog.”

Well, Peter, you’re perceptive and articulate. The ant and the cicada have much to teach us still. The fable explains macroeconomics perfectly and, unlike me, does not require 1,579 posts (this will be number 1,580) to lay out a complex problem with only one viable solution. The world’s a volatile and changeable place and as much as each generation of people thinks it has things figured out better than the last, it never does.

Lots of folks hate me because I challenge the idea that you need do only one thing to be secure. Buying a house is not a financial strategy, a replacement for saving and investing, a justification for debt, a retirement plan, tax-planning move or even necessarily wise. The correlation between cheap money, indebtedness and house prices is irrefutable. The majority of people around us are cicadas who think they’re ants. Most have no idea what they do not know.

Why does life look good through the restaurant windows, Peter, while you struggle? Seems obvious. You spend what you have. Others live on what they borrow. Half-million dollar home loans are routine and million-dollar ones now common. Credit card debt is extreme. Cars loans last longer than the cars. Student debt is obscene, and there’s a wave of retired people being sucked into reverse mortgages. Few souls have actual cash in their wallets or money in their account at month’s end. As I’ve pointed out, investors are rare, and debtors abound. Without easy, cheap credit, house prices would crumble and lives with it.

Thus, wealth has been segmenting. Remember the chart I posted here weeks ago, Peter? The rich hold assets, it showed, while the non-rich hold debt. The 1% who are wealthy have just 10% of the net worth in houses. In contrast, the middle class has almost 70% of its net worth in real estate, steeped in borrowed money. How could there be such an extreme gulf?

For one, wealthy people like diversification. It helps them stay that way. Second, they seem to know what’s coming, or at least to buffer against it. The cicada class is investing massively in Canadian real estate, for example, at a moment of gathering risk. They’re gorging on debt when rates are low, and will struggle profoundly when they rise. They’re ignoring the warning signs, because they’re oblivious to them. Like a 92.5-cent dollar, pounded down close to 10% in the past year on global concerns about Canada. To rational outsiders, our condo economy is utterly unsustainable. Compared to the US, we’re on the wrong path. We watched the American middle class melt down, shrugged, then carefully repeated its mistakes.

Now this blog is filled with people desperate to ‘prove’ America’s a failed empire and its recovery is a lie. It’s sad, Peter. We’re surrounded by denial. House lust and its financing have created a patina of prosperity, and an illusion of security – a sense Canadians are both entitled to possess what they cannot afford, and protected from the consequences of their baseless desire.

So, why be ant-like, gathering and storing your food in tunnels underground when Scotiabank will give you a prime-plus-one line of credit? Why work and scrimp for a downpayment when CMHC says you don’t really need one? Why struggle to save and invest when your Boomer mom tells you to just buy a condo? Why sacrifice for a retirement plan when there’s so much cool stuff you need to spend money on?

Easier to listen to the Re/Max guy and dismiss Garth. He’s easy. I’m hard.

Hope you find some steady work, Peter. Keep the attitude. We both know where this is headed. Cicada casserole.

214 comments ↓

#1 view on 01.08.14 at 9:07 pm

This year is going to be full of fun changes!!

#2 visorman30 on 01.08.14 at 9:14 pm

Added detail, the cicada often mocks the ant and when they inevitably get burned will be asking the ant for help.

#3 Babblemaster on 01.08.14 at 9:14 pm

“We both know where this is headed. Cicada casserole.” – Garth

———————————————–

No we don’t. No one does. Hyperinflation (no matter what you say Garth, it is possible) would take everyone down. All we can do is operate on best guess and hedge as best we can.

You are the only hyper thing in evidence. — Garth

#4 uncle d on 01.08.14 at 9:19 pm

If I was able to pay cash for a house, is it still not advisable at this time?

#5 mark on 01.08.14 at 9:20 pm

Oh wow, the Kia zombies won’t be happy!

#6 will on 01.08.14 at 9:23 pm

It’s tough to be conservative in a liberal world. But stick with it man. Oh and did I say this already? – the so-called conservative government we currently have do NOT want YOU to be conservative. They want you to spend spend spend. Stick with being conservative. Your clear thinking will be rewarded eventually. Love ya man. Love the part about the van.

#7 Cow Man on 01.08.14 at 9:24 pm

Sir Garth:
The system is set up to support Cicada not workers. That is why we are watching the clock-wise swirl of the drain, taking initiative out of our economy.
Very few Peters are willing to work hard to succeed. Get on the gravy train. Just look at the Hamilton cop today sentenced to Four Years for turning over information to Hells Angels. Paid in full until the day of sentencing. Cicada everywhere.

#8 Mr. Monday Night on 01.08.14 at 9:26 pm

Being the voice of reason is no fun – wouldn’t you rather just brag about the amount of SS&G you have?

Hard to not be skeptical about the 70% in my ear telling me that RE will never go down – after all, if the herd says it loud and long enough, maybe this correction won’t happen after all! It is just noise to me now…

#9 Waterloo Resident on 01.08.14 at 9:26 pm

What if that proverbial ‘WINTER’ never comes, and for the next 200 years we continue to go from fall to spring?
Who’s going to look foolish then?

What if interest rates start to fall and continue to fall for the next 100 years?

#10 Cow Man on 01.08.14 at 9:26 pm

Sir Garth:
Link to cop paid until sentencing.
http://www.thespec.com/news-story/4305700-niagara-cop-who-gave-information-to-hells-angels-sentenced-to-4-years/

#11 chopper on 01.08.14 at 9:27 pm

Cannot wait for the time when this all blows up and this blog will be exalted.

#12 Bill Gable on 01.08.14 at 9:30 pm

“Not waving but drowning” – *object lesson – and it makes for stark reading.

“IN 2000 Loretta and Clifton Christian bought a two-family home in Irvington, a hardscrabble New Jersey town of 54,000, for $132,000. They poured money into it, fixing the roof and replacing the boiler. But in 2008 the world caved in and the couple lost their jobs soon afterwards; they now live off their pension and the income from a second-floor flat they let out. They manage to meet their monthly mortgage payments of $1,845. But their house is now worth just $71,000, significantly less than the outstanding mortgage of $115,000.

Nearly 11m American homes are similarly “underwater”. Despite the housing recovery, parts of the country are still struggling: 3m-4m people are in default, in foreclosure or awaiting liquidation.”

::Vancouver, 416, 905, hello?

http://tinyurl.com/kysuc9g

#13 Jon on 01.08.14 at 9:30 pm

Garth,

I have so far listened to you, specifically, I have not purchased a house and I funnel as much money as possible into retirement accounts (max out every year) and other savings vehicles, with funds directed toward ETFs, etc. Me and the wife bring in a combined $175,000 and have about $450,000 saved between all accounts. We are in our mid-30s. So, I’m sold – I will not get house-horny, however, your reference to student debt in today’s post prompted me to write – what do you think about spending serious cash on an MBA??

Does anyone care? — Garth

#14 Sean on 01.08.14 at 9:31 pm

The problem with the ant versus cicada analogy is that, in it, nature is the ultimate arbiter. The punishment doled out is inevitable, and unavoidable. As is would be in markets, if they were free. But, given our affinity for socialism that masquerades as capitalism.. for TBTF.. it is not guaranteed that the ants will prevail. It is quite understandable for the basement dwelling cicadas that populate this blog to be nervous and confused… our government has proven its willingness to go all in trying to preserve the status quo.

#15 Marco Polo on 01.08.14 at 9:32 pm

I agree with Peter’s view, I see the same here, usually excess debt brings higher interest rates, which slows new debt, but not in these new Frankenomics.

I’ve heard it said: ‘ too many people are in too much debt, buying too many things… To impress people they don’t like! ‘

I think there’s plenty of truth to this. I’m unimpressed with anyone showing off a new car or home, all it shows is an ability to buy something.

It’s much more impressive to see someone’s unique skill or talent.

#16 Jon on 01.08.14 at 9:36 pm

Garth,

I have so far listened to you, specifically, I have not purchased a house and I funnel as much money as possible into retirement accounts (max out every year) and other savings vehicles, with funds directed toward ETFs, etc. Me and the wife bring in a combined $175,000 and have about $450,000 saved between all accounts. We are in our mid-30s. So, I’m sold – I will not get house-horny, however, your reference to student debt in today’s post prompted me to write – what do you think about spending serious cash on an MBA??

Does anyone care? — Garth

Helpful.

I hope so, because MBAs are a devaluing commodity. — Garth

#17 P&S in the Kootenays on 01.08.14 at 9:37 pm

What really gets under my skin is the thought that my hard earned tax dollars will bail out the cicadas when the party is over and it’s time to pay the piper!!!
(I’m all cash, debt free and renting…)

#18 Sean on 01.08.14 at 9:37 pm

#7 Waterloo Resident on 01.08.14 at 9:26 pm
What if that proverbial ‘WINTER’ never comes, and for the next 200 years we continue to go from fall to spring?
Who’s going to look foolish then?

What if interest rates start to fall and continue to fall for the next 100 years?

===========

Did you honestly just write that? So.. we will be staving off deflation.. of a massive credit bubble… with no inflation.. printing money at increasingly manic rates… FOR ONE HUNDRED YEARS!! And nothing will go wrong… Yes, you will look mighty smart when that happens!

#19 AK on 01.08.14 at 9:40 pm

“Like a 92.5-cent dollar, pounded down close to 10% in the past year on global concerns about Canada.”
====================================

On the way down to 80.00-cents.

#20 In the Cold from Toronto on 01.08.14 at 9:45 pm

Peter, I’ve been looking around trying to understand what happens and second your bewilderment. The only thing that supports my decision not to buy a house (behind reason and this blog) is the quote about the stock market – which can stay irrational well past the point at which most people are solvent.

I met a friend whose house was flooded a few months ago… a few hours into the night he said – with a conviction bordering on religion – that the best strategy for getting rich is to invest in real estate! This from a guy who spent >$20,000 (of his own money, the insurance picked up some of the cost) to be able to live in his own house.

I don’t understand most of my friends or co-workers, BUT I’m no longer trying to.

#21 AisA on 01.08.14 at 9:46 pm

I just had a funny thought run through my mind…

Our housing market is going to crash so hard it will surface in Australia.

Gave me a chuckle anyway.

#22 nincompoop on 01.08.14 at 9:47 pm

I call BS on that clearly photo shopped picture!

A KIA with door handles???…please

#23 Smoking Man on 01.08.14 at 9:49 pm

Peter, you’re old and expensive by slave master standards.

Your only hope is to start a business, looking for work is like begging to be a slave. Trade things not your time for crumbs.

You want some free guitar lessons, just ask the smoking man..

No one plays the hot air guitar better than I.

Chapter 2 in the most epic up coming success book ever written, will have a few technical errors but that’s me.

Seeing that your so down and out, you will get a free autographed copy.

#24 jan on 01.08.14 at 9:52 pm

#19 AK on 01.08.14 at 9:40 pm
“Like a 92.5-cent dollar, pounded down close to 10% in the past year on global concerns about Canada.”
====================================

On the way down to 80.00-cents.

And of course housing will be higher by an equal amount.
Canada really is one o the most socialist countries in the world.

#25 Alex G on 01.08.14 at 9:52 pm

@ #9 Waterloo Resident on 01.08.14 at 9:26 pm

“What if interest rates start to fall and continue to fall for the next 100 years?”

—————–

Mark Twain once said that “History does not repeat itself but it does rhyme.”

Here’s history: http://www.tradingeconomics.com/canada/interbank-rate

You find the rhyme for the next 100 years of interest rate fluctuations; but I don’t see how it could possibly be downward for sustained periods of time.

#26 shane on 01.08.14 at 9:53 pm

Garth, is it difficult to buy an existing business in the USA if your a Canadian resident would you recommend it?

Shane

#27 Smoking Man on 01.08.14 at 9:54 pm

People are in debt cause they can’t do basic math.

So the Ontario liberals are throwing away our tax dollars again. Seams teachers don’t know how to teach math to kids grades 1 to 4. We are not talking calculus, special training to teach teachers how to teach add subtract, times tables. Wtf.

And people call me crazy,

If they can’t do it fire them all. Put them out on street and let’s see how the schooled survive.

But then, look at all the idiots, spending and going into debt.

It’s good for the economy, especially for smoking men

#28 the jaguar on 01.08.14 at 9:54 pm

“Lots of folks hate me because I challenge the idea that you need do only one thing to be secure.”…..

Garth, please don’t say lots of folks hate you. Not possible. Hopefully most come here to hear others viewpoints, learn something, or engage in intelligent and respectful debate. Clearly the number of comments each day show people are interested in this topic. To Dale from Calgary who posted yesterday….it isn’t just Altadore that is speckled with attached infills (the word ‘duplex’ is just too common sounding). Most of the neighbourhoods immediately outside the inner city look like your neighbourhood. The ones being built now that have that “contemporary design” look are making the ones with all the river rock appear dated. Oh dear! Must be time to tear them down and start all over again!

#29 AlbertaGuy on 01.08.14 at 9:56 pm

CatfoodLady from yesterday

On a brighter note, I was just loaned a really neat little book. 70 house plans from 1956…

Would be interested in name of book, publisher, etc. I find the 50s-60s designs timeless and efficient, unlike modern mcmansions. Especially enjoy atomic ranch era and design.

http://www.atomic-ranch.com/

#30 jan on 01.08.14 at 10:00 pm

0.9233 Down

That is the cdn dollar in a free fall.
Down .25 cents in the last hour alone.

#31 not 1st on 01.08.14 at 10:01 pm

#16 Jon on 01.08.14 at 9:36 pm

—-

Re: MBA, save your money. Advanced degree is total waste of time and money. Better off to invest that money in a TFSA or something.

Some advice from a former cube rat. The only way, and I mean only way to make big bucks at a company is to give them your life and rise the ranks into the manager and higher level. At that point, you wage will by $100,000 more than your staff and you will get precious stock and options thrown at you.

But you gotta be a god boy, dog like actually. Tow the company line, give up family time, put company first always.

Thankfully I engineered my own retirement at 40 and left that dog eat dog world.

#32 X on 01.08.14 at 10:03 pm

All of the ants can see this one coming. Not one person out there thinks housing prices are reasonable. But that damn cicada keeps playing on…

#33 not 1st on 01.08.14 at 10:04 pm

So I read to day that Norway has squirreled away decades of their oil wealth so that now every one of their residents is a millionaire thanks to the sovereign wealth fund.

I realized Norway is a much different country than Canada, smaller, fraction of our infrastructure required to service the country, but the question remains…why don’t we have such a fund built up?

#34 Retired Boomer - WI on 01.08.14 at 10:05 pm

#12 Bill Gamble…… has a correct view. We (US) lived the house bubble dream, seems EVERYBODY who wanted a house got one, because they could -aided by less than forth-right mortgage lenders in some cases.

Quite a few of those ‘buyers’ went belly-up, losing the houses, but quite a few of those buyers lived up to their obligations, and now see their dream home worth quite a bit LESS than they paid, quite a bit LESS than what they still owe. I ask, whose the GREATER FOOL in this picture?
The house horny buyer of 2006, 2007, 2008…..the buyers who bought the “falling knife” in 2009,2010….he might be underwater, too.

No, the answer is anyone who bought as a minimally qualified buyer at the higher price. Sure, it could have been a buyer in 2001, or 2002 who decided to “trade-up” five years later…some of those surely got crushed later as well.

If you have a decent down payment, secure job, other assets, and find a good home at the right price by it. I dare say those type of “qualified buyers” might be rather rare, but they DO exist.

If you bought in the heat of the market, now might not be a bad time to hit the exits -beat the June rush- as it were.

Only YOU know your personal situation, but there are 4 million here who might advise you to rethink Real Estate.

Nobody wants to see lives ruined via finances, but it is done nearly everyday, whether RE, credit card debt, car loans…. or a neat mix of all of the above.

Try to Live below your means, save a buck, and invest a buck always.

#35 raisemyrent on 01.08.14 at 10:06 pm

@ #16 Jon
I think he means who cares if you get/have an MBA?
Most people I know with MBAs already have jobs, but they feel better at night. One or two are unemployed, but hey, MBA (you never really get the tuition back).

#36 Victor V on 01.08.14 at 10:06 pm

Toronto’s deputy mayor wants a 2.25 per cent property tax hike—which includes 0.5 per cent earmarked specifically to pay for the Scarborough subway extension.

http://www.torontolife.com/informer/toronto-politics/2014/01/08/deputy-mayor-norm-kelly-puts-rob-fords-low-tax-rhetoric-shame/

#37 OttawaMike on 01.08.14 at 10:16 pm

That photo reminded me of a good story for the Kia Blog.

About 5 years ago a coworker arrived one morning and excitedly told me how, last night, he had been to the local auto mall to buy a cheap 2nd car.

In the Kia showroom, there was another buyer and spouse also inspecting the “cars” when a big scene erupted. It seems the other prospect had made the mistake of running his hand along the inside of the trunk lid opening. His screams and hand gushing blood from the razor sharp metal stamping prompted all staff including the receptionist to provide immediate first aid.
No Kias were sold that night.

#38 not 1st on 01.08.14 at 10:19 pm

Garth, this guy has $300,000 in his TFSA;

http://www.moneysense.ca/save/tfsa/the-great-tfsa-race-penny-stock-investor

#39 smartalox on 01.08.14 at 10:21 pm

Why has income inequality increased over the past 20 years? Why have costs increased while labour wages have remained stagnant for the most part? Dual incomes.

But sual incomes means dual desires, fewer desires deferred, and greater access to credit. If you save on two incomes you double your wealth. If you spend on two incomes, you double your debt. It’s that simple.

#40 Macduff on 01.08.14 at 10:24 pm

I recently ended a seven year marriage, and in the process gave away the keys to the house. I’m 52, with liquid assets that will pay for a comfortable retirement . Garth, what do you think of a “rent for life” strategy aimed at optimizing the retirement years versus using some of the funds to at some point purchase a house?

#41 Herb on 01.08.14 at 10:27 pm

Knock KIA all you want to, but the very same thing happened to me and my Subaru Forester in 2005.

#42 bobnbmore on 01.08.14 at 10:27 pm

I think the already underway significant devaluation of the CDN dollar by the Bank of Canada could just be the event/catalyst that damages domestic consumer confidence and brings the housing market to its knees

the 10 year rise of the CDN dollar has been cited by many as a significant source of nationalistic pride

a weak dollar will make for a weak consumer and damage national economic confidence

#43 Frustrated Kiwi on 01.08.14 at 10:28 pm

#4 uncle d
Can you both pay cash and not violate Garth’s rule of 90? If so, then sure buy a home, but don’t pretend it’s a wise investment decision. The chance of it being close to the top of the cycle is very high and almost nowhere is it cheaper to own then rent. Garth has a number of posts on how to buy a house if you do want to. Also, may not make sense to pay all cash given how low interest rates are.

#13 Jon: I think the long version of Garth’s reply would be, if you are pretty sure your career is being limited by the lack of one then go for it, but if no one but you (and your mother) is going to care then why spend the big bucks?

#44 TurnerNation on 01.08.14 at 10:29 pm

It’s everywhere. Whereas USA IPOs are on fire:

“The TMX Group has its 2013 trading and financing reports. Volume on the TSX decreased to 310 million shares a day last year, down 6 per cent from 330 million shares a day in 2012. On the TSX-V, average daily volume dropped to 147 million shares, down 15.7 per cent from 174 million in 2012. The number of new listings also decreased. The TSX added 108 last year, down from 132 in 2012. The TSX-V did even worse, adding only 76 new listings, down from 161 a year earlier. Money raised by TSX-V-listed companies also took a dive, to $3.7-billion in 2013, down from $5.9-billion in 2012.

The junior environment is looking especially grim heading into 2014. Newsletter writer John Kaiser has been crunching numbers, pointing out that 500 TSX-V companies currently have negative working capital totaling $1.6-billion or negative $3.2-million per company. These zombie-like juniors, Mr. Kaiser says, have no ability to do anything and he thinks they will peter out this year, probably around April when their annual audits come due. ”
© 2014 Canjex Publishing Ltd.

#45 TheCatFoodLady on 01.08.14 at 10:30 pm

AlbertaGuy – The book; booklet really as it’s a large, thin soft covered item is called ’70 Low Cost Homes For Canadians’. It was published for at least one newspaper, (not specified so I’m guessing more than one), & the designs were provided by a company called HomoGraf. No publisher listed but the order form for complete plans & specs, (only $9.75!), is missing. I did find inside though, a mimeographed half sheet insert from a company called The Building Center (B.|C.) LTD. acknowledging the order & delivery of this book: ‘Herewith your Plan Book…’ etc. & flogging another plan book. House horniness appears to not be that novel.

Second paragraph of the blurb on the back cover goes as follows:

***This home plans book is part of our home design service. In it you will find an excellent selection of home designs, most of which fall within the $10,000 to $15,000 bracket – the popular price range.***

Most are bungalows & although I’ve really only glanced at a few plans up to now, these homes are clearly built with another sensibility. Bedrooms are small – meant for sleep & other bedroomly activities, NOT as ‘retreats’. Closet & storage space is limited – clearly they weren’t into ‘stuff’. Most are bungalows & are drawn perched on seemingly fairly wide suburban lots – the new normal back then.

It’s going to be a lot of fun going through the plans – the little I’ve seen shows little wasted space & makes the point that size isn’t everything.

#46 Spiltbongwater on 01.08.14 at 10:30 pm

I hope so, because MBAs are a devaluing commodity. — Garth

You have a Masters in what? Basket Weaving, or Creative Writing?

I’m an employer. — Garth

#47 Fodork on 01.08.14 at 10:33 pm

From my perspective, Canadian home prices have already stagnated or fallen. Here’s how- for people like me, and I know of at least 3, moving CAD savings monthly over to USD and then investing in USD has already yielded more virtual canadian real-estate purchasing power (over and above market returns). But I’d be stupid to be converting back to CAD and buying Canadian RE right now. I think the loonie is going well below 90 cents.

#48 Paul on 01.08.14 at 10:38 pm

Hey Garth
If the Canadian dollar keeps dropping how will the Government attract foreign or Canadian investors to buy our government bonds if the rate is like 2-3 % and our dollar keeps dropping fast then the accrued interest?

#49 Keith on 01.08.14 at 10:40 pm

#33 Norway created a government run oil company and charged a massive royalty. The oil companies said we won’t invest, the Norwegian government said fine, the oil will sit. In an amazing turn of events, despite the fact that the Norwegian government did not roll out the carpet to the huge investment required, the oil companies came, invested, built and are paying a huge royalty which has created a massive sovereign wealth fund.
So when the business lobbyist tells you that capital is scarce, and mobile, and won’t play in a high wage/high tax environment, think of how Norwegian policy makers look at the oil sands and shake their heads as we give away a resource and spoil the land and get nothing in return. It’s the Canadian way.

#50 Paul on 01.08.14 at 10:44 pm

Re-28 the jaguar on 01.08.14 at 9:54 pm
“Lots of folks hate me because I challenge the idea that you need do only one thing to be secure.”…..

Garth, please don’t say lots of folks hate you. Not possible. Hopefully most come here to hear others viewpoints, learn something, or engage in intelligent and respectful debate. Clearly the number of comments each day show people are interested in this topic. To Dale from Calgary who posted yesterday….it isn’t just Altadore that is speckled with attached infills (the word ‘duplex’ is just too common sounding). Most of the neighbourhoods immediately outside the inner city look like your neighbourhood. The ones being built now that have that “contemporary design” look are making the ones with all the river rock appear dated. Oh dear! Must be time to tear them down and start all over again!
.———————————————————-I Hate him becuse he was right! OUCH XFXFXF LOL

#51 MD on 01.08.14 at 10:46 pm

Who’s that idiot talking about hyperinflation. Fed has only printed 8000$ for every American living and u can’t even buy a KIA with that. They will raise their taxes and rates when the time is right.

#52 Uh Oh Canada on 01.08.14 at 10:46 pm

“Synergy” from this blog must be crossing into my life. Was just made fun of today by a Cicada.

Them: McMansion, fully renovated- crown mouldings, new black splash etc., hundred of thousands in debt, living paycheck to paycheck monthly

Me: No debt, investments ( one stock up 43% last year) and RRSPs, two vacation a year, and renting

And yet I still feel like a loser in Canada.

#53 an ant on 01.08.14 at 10:47 pm

Lots of interesting things in this article on the Canadian Dollar’s slide:

http://www.huffingtonpost.ca/2014/01/08/canadian-dollar-cad-usd_n_4562636.html?ir=Canada+Business

#54 quebec economist on 01.08.14 at 10:48 pm

@not 1s #38

Thanks for the link. I agree with Jim (from the article you linked) TFSA could be used for fun and risky growth stocks. However I must say that he did not play that safe, his 300 000$ win was mostly luck and could easily have tipped the other way. I am a risk seeker, but like a good poker player, I play my game with a solide strategy, double down when luck comes my way and minimizing losses when things go wrong. I used to play poker for money, and must say it is much easier and safer to win at stocks then poker. (I do stay away from ressource stocks…as they are too hard to get solid information to take good decision)

But as Garth would probably say : who cares? or maybe ‘get help!’

cheers.

#55 coastal on 01.08.14 at 10:50 pm

I know you’re just trying to be nice to those who are bloated on too much house and debt Garth. The facts you portray over and over say 25% correction easily.

#56 Drowning not waiving on 01.08.14 at 10:52 pm

Brilliant post Garth, I needed that. I often feel the same way as Peter, driving an old car and keeping it running and wondering wtf people are thinking. I try to explain to others that we live within our means and are very happy with that and that a house not really necessary… They look at us like we have three heads.

# 27 Smoking man
Although I hate to agree with you on anything cuz you seem rather “special” – on this I can’t argue and you bring up a good point. These kids today can can text you a novel with their thumbs but can’t give you change for a dollar.

This will not end well…

#57 Herb on 01.08.14 at 11:10 pm

A bedtime laugh/horror story for blog dogs –

a realtor I know has linked to the FP’s “Bank of Canada Chief Poloz says rates on hold until economic data improves” article on his FB page with this lead-in:

“More good news for a great year for sales in Royal LePage Real Estate!”

#58 World According To Garth on 01.08.14 at 11:23 pm

Yes I totally agree. The idea that the US Economic Model is failing and that evil bank manipulation is behind much of it is incorrigible.

http://armstrongeconomics.com/2014/01/08/jp-morgan-fines-for-manipulation-reaching-20-billion/

Oh wait…….

#59 Smoking Man on 01.08.14 at 11:23 pm

Ha, Garth worried about folks hating him. When anyone express an opinion, people are going to love you, and hate you.

It’s what we do, but those who are to frightened to express an
opinion, are the world’s biggest losers.

Oh they will express when they feel consensus is on there side.

Just as they have been trained.

The machine is good.

I enjoy hate filled chirps, far more than, you’re cool smoking man.

Why? Cause I forced out an opinion.

I like it when people hate me.

#60 I'm stupid on 01.08.14 at 11:28 pm

We’re so screwed, words can’t describe how bad. I am not thanks to the hard lesson I learnt during gfc. I was a moron, I was making over 150k a year and spending every penny of it because I thought it would last forever. My business took a dive and I scrapped by for a year before things got back to normal. I was a cicada, but I became an ant. I live on $800 a week now and save $1000. I’m glad I was put in such a bad situation because I learnt the true value of money.

#61 Calgary Conditional Owner on 01.08.14 at 11:28 pm

I sympathize with Peter, but I disagree with the general tone of this particular post. As you can see from my nickname, I just bought property. But instead of being a greater fool who deserves punishment for buying at this crazy time, I think I am simply balancing out my overall assets. If I get it right, the idea is not to be over invested in one singular asset, but in my opinion, that also means not having ONLY financial ones (even if they are diversified and balanced). Chances of inflation are slim but can not be ruled out 100%, and owning real estate at this time of cheap money, as long as you don’t strangle your ability to invest in financial assets, is covering two different angles at the same time.

#62 KG on 01.08.14 at 11:30 pm

Reminds me of two consecutive winters few years back. Broke the plastic door handles on each of the front doors of my Tercel. It was 14 years old by then.

#63 Don on 01.08.14 at 11:31 pm

Peter…you are not alone. I watch the nuttiness around me and nothing replaces experience and common sense, besides..stress kills.

Good luck.

#64 Jon on 01.08.14 at 11:34 pm

Thanks Garth, and all others that chimed in on the MBA question. I understood Garth’s response and truly found it helpful…and will continue following his advice!

#65 The Hawk on 01.08.14 at 11:37 pm

Subjects I think should be dicussed 1.The national debt 2.The total all provincial debt 3. The CMHC debt and the riders total 4.The total home equity loans. 5.Consumer debt. I know by reading this Blog that some of these issues have been dicussed in the past but what is really frighting is when you see these numbers all at the same time.Canada is in very serious trouble with debt.

#66 KommyKim on 01.08.14 at 11:40 pm

RE: #24 jan on 01.08.14 at 9:52 pm
Canada really is one o the most socialist countries in the world.

You’ve never been to Europe have you?

#67 KommyKim on 01.08.14 at 11:50 pm

RE: #33 not 1st on 01.08.14 at 10:04 pm
I realized Norway is a much different country than Canada, smaller, fraction of our infrastructure required to service the country, but the question remains…why don’t we have such a fund built up?

Because we sold out. The government in Norway owns 67% of the shares of Statoil. That’s a controlling interest. The last time Alberta tried to raise the royalties charged to the oil companies, they kicked up a stink and the government backed off.
Trudeau tried nationalizing our oil and was sent packing. Canadians have only themselves to blame.

#68 OwlEyes on 01.08.14 at 11:53 pm

Someone please explain:
If property value assessments in the city of Toronto have gone way up in the last 10 years, then surely revenues have too? And when you add all these thousands of condo units? Who pays taxes on the unsold ones?

And if the assessed values fall in coming years?

Isn’t it crazy to fund cities using property assessments, when property prices are so sensitive to macroeconomic factors, i.e. prime rates or bond yields???

http://www.thestar.com/news/city_hall/2014/01/08/duelling_mayors_norm_kelly_rob_ford_dispute_size_of_toronto_tax_hike.html

#69 Shawn on 01.08.14 at 11:54 pm

MBA?

Don’t bother if you are over 30 and already have a decent job. MBA is a masters degree in name only (does not require business undergraduate). MBA has been watered down brutally with short-cut executive programs. I hold an MBA.

Do get an MBA is you are under 30 and get admitted to Harvard.

For non Harvard people, Try the CFA, it’s part time, cheap, exam based. Only one outfit offers it. Not watered down. But you need investment-related work experience to get the designation.

CMA program has been toughened up a lot. It’s worthwhile.

But Canada is designation happy, we want designations for every job these days…

#70 Shawn on 01.08.14 at 11:57 pm

AWASH IN DEBT?

With low interest room rates we must also have LOTs of savers with money on deposit at the bank. It may be the rich, corporations or effects from China. But at the end of the day low interest rates suggest a surplus of savers. Middle class is in debt. Someone is saving a ton!

Lots of people have a million in investments and easily $300 k could be in cash in the brokerage account

#71 Flamed out in Kitchener on 01.08.14 at 11:59 pm

As long as we continue to place a low value and weak support to Canadian innovation and creativity, a low Cdn dollar will have to come to our rescue to save the economy; although, with the U.S. getting way too good at fracking all that new domestic oil and gas, I fear that Alberta will have to adjust it’s booming expectations.

On another note Garth, I know long bonds are a no-no right now, but how do you feel about a small weighting of 5% of real return bonds? (TD rrb fund), just as a small portion of an otherwise diversified portfolio.

The time to buy inflation-indexed bonds is when there isn’t any. — Garth

#72 George on 01.09.14 at 12:00 am

Condo bust only. SFH with a backyard is solid.

#73 Shawn on 01.09.14 at 12:01 am

AWASH IN DEBT?

With low interest room rates we must also have LOTs of savers with money on deposit at the bank. It may be the rich, corporations or effects from China. But at the end of the day low interest rates suggest a surplus of savers. Middle class is in debt. Someone (geezers?) have tons of savings that the banks are lending out!

Lots (yes lots!) of people have a million in investments and easily $300k could be in cash in the brokerage account and loaned out. That’s how banks make money.

70% stocks, 30% cash worked real well the last couple years… not suggesting it, just saying…

Also bonds issued by banks represent someone’s savings available to lend out.

#74 Ontario's Left Coast on 01.09.14 at 12:01 am

Best of luck to Peter in the weeks and months ahead! Following an unceremonious restructuring in 2003, I had to do an extremely thankless job for three years, taking abuse from people I wouldn’t give the time of day to out in public. It was a blow to my pride, but had to suck it up in the name of three kids at home. I sincerely wish you the best.

#75 Quebec is Great on 01.09.14 at 12:02 am

Smoking Man,

In the spirit of quid pro quo I give you this:
Ghost of Tom Joad.. I’m an old Roger Waters fan, and appreciated your past Floyd opera links so I thought I’d throw something different yet perhaps equally impressive at you….

usd.cad … specs are hopping on the shorts so might see 1.10 by Fri

#76 D.D. Corkum on 01.09.14 at 12:03 am

#9 Waterloo Resident on 01.08.14 at 9:26 pm

“What if Winter never comes? What if interest rates continue to fall forever?” (paraphrased)

—-

Interest rates must eventually stop dropping or else they would go negative.

One could even argue that rates are already trending upward since taper-talk began last year.

#77 Shawn on 01.09.14 at 12:07 am

How property taxes work

Owl eyes asks

If property value assessments in the city of Toronto have gone way up in the last 10 years, then surely revenues have too?

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

No, not at all. Municipal taxes are adjusted for assessment changes. If assessment doubles the tax rate per thousand dollars drops in half all else equal.

Check your tax records tax rates are down as assessments have soared over the years.

Municipal taxes are essentially indexed..

A 3% tax increase means 3% if the assessment stayed same.

Cities do NOT scoop increased revenue when assessments rise.

It is an honest tax, actually, in that way.

#78 Westcdn on 01.09.14 at 12:08 am

I received my preliminary Calgary property tax assessment. It is up over 10% so with my spend thrift mayor wanting a 5% increase this year; I expect a 15% increase in my property tax bill for 2014. I blame my renovating neighbours before they sell. My fear that property tax will exceed my income tax is gaining legs. God bless our governments for they understand economics better than the 99% (sarcasm). Why does government think they are exempt from productivity?

BTW, I think the luckiest boomers were born before 1955 – everyone else can only dream about what was “given” to them. Too often they suck up all the rewards before I get there and then they tell me how smart they are.

I have been selling my equities to raise cash. Despite rising interest rates, I like US$ Treasuries because I think the US$ is about to soar. Although my Line of Credit interest is deductible for income tax – I think having dry powder available is prudent. Meanwhile, I will carry a mortgage because it is bearable. I continue to like equities but this side of the table is getting over crowded with optimists.

#79 Andrew Woburn on 01.09.14 at 12:14 am

Fortune500 on 01.08.14 at 8:10 am
” I really feel for the young generation as delaying children and face serious debt, and poor job markets in comparison to their parents.

— but very little concern or care seems to be given to those just starting their lives.
==============================

I couldn`t agree more. I have little patience with younger conspiracy theorists who want to believe that a whole generation of their parents and grandparents set out to shaft them. On the other hand I am appalled by the reckless real estate lending policies of our chartered banks aided, abetted and funded by our senior government. They prey on the ignorance of young people who should never have access to such insane amounts of credit. I do not see how this is morally different from the scummy payday loan operations that prey on the uneducated. At the very least, kids signing on for huge mortgages should be forced to sign a waiver that clearly spells out what the monthly carry is going to if they have to renew at reasonable historic interest rates. They are lambs to the slaughter. Where are the responsible adults or have the pushers taken over the neighbourhood?

#80 Blogeyes on 01.09.14 at 12:20 am

Love this blog, but wanted to throw a dash of reason in with some of the frenzied comments.

I own a house in downtown Toronto, and love it. Having my own space that I picked out and customized to my liking is by far the thing I own that makes me happiest. I choose to drive a 10 year old car, ’cause I don’t care about cars, and the money to satisfaction ratio can’t justify me getting a new one. I pay my mortgage down ferociously and will be clear in the next 4 years (before I’m 40).

I agree with 99% of what I read here, especially that a home is not asset.

BUT… I think all of the house bashing in the comments is a bit weird. Renter-for-life etc.

A house is a kick-ass luxury. It’s one of the things that can provide the greatest enjoyment.

Houses are certainly inflated to insane extremes, and you’re a nut if you take a huge mortgage to buy something you can’t afford. But putting on the blinders and missing out on the enjoyment of home ownership so you can live like a king when you’re 70 seems weird to me.

Obviously if you’re not going to be able to retire with a million+ if you buy a house, then don’t do it… but, if you can make the money work, it’s awesome.

I just wanted someone to say it.

#81 alex on 01.09.14 at 12:22 am

Government should oblige CHMC to ensure not more then 200CAD for condos and 300CAD for houses. This will cool market. Maybe not bring such changes so abruptly, but that is the only way how to cool housing market in Canada without touching interest rates.

#82 Kreditanstalt on 01.09.14 at 12:28 am

“The Recovery™…”

Yes. The myth of “The U.S. Recovery™…”

What recovery? Peter is quite right.

Unless you are employed in or somehow connected to unionized government or to forestry, oil or gas, etc., – which have monopoly access to natural resources and government protection from labour and resource competition – you’re SOL.

This IS all dependent on debt. No underlying problems have been solved at all…so why perpetuate the mythical “recovery”?

#83 DR on 01.09.14 at 12:38 am

Garth I see you noted Leslieville semi’s going for 700K

If I bought two last year for around 350 each. should I be worried.

#84 Useless Millenial on 01.09.14 at 12:40 am

Garth, what do you think about Bogle’s idea that the liquidity of ETFs is bad? On aggregate, investor psychology will result in, on aggregate, bad decisions to sell, and result in, on aggregate, bad outcomes?

#85 an ant on 01.09.14 at 12:49 am

this pretty much sums it up (even though it’s Australian and some of the tax rules are different, etc)

Speculation – in particular the tactic of leaving properties vacant to create scarcity – ought to be dealt with by our overlords.

http://topdocumentaryfilms.com/real-estate-4-ransom/

#86 Andrew Woburn on 01.09.14 at 12:51 am

bobnbmore on 01.08.14 at 10:27 pm

a weak dollar will make for a weak consumer and damage national economic confidence
=============================

Remember that most of our commodity exports are priced in US dollars so loggers, farmers, miners and oil producers just got a big win because they bill in USD and pay most of their operating costs in CDN. However imports are going to take a big hit.

#87 Banjopete on 01.09.14 at 12:56 am

It should be mentioned that Norway’s oil situation is the way it is also because they’ve acknowledged a bottom to their pool of the resource. It won’t last forever but while the sun shines… that kind of thing. They found oil, nationalized it, saved the vast rewards, and if they’re smart will be able to create a real meaningful legacy for a once struggling nation.

#88 Obvious Truth on 01.09.14 at 1:12 am

Agree with AK. Not much resistance appears on the chart if CAD cracks 90. Seems to be a popular short so it could be very volatile. Have to be careful.

Anyone else see that 44 billion surplus in the US for December. Could there be a surplus next year?

On the story book side The Little Red Hen is one of my favourites. This is why we get more income inequality every time we get a recession. Those who plant harvest and bake will get to eat. It’s hard work.

Others will learn only by going hungry.

#89 Jon B on 01.09.14 at 1:29 am

Great post. I could feel the heat emanating from your blog through the dense pixel structure of my Samsung galaxy note 10.1 2014 edition (paid for with cash). The lenders certainly do produce a no negative consequences message directed to the fools who will listen.

#90 Freedom First on 01.09.14 at 1:41 am

Peter, congrats on your being so resilient. About others carrying on and having a good time with no worry reminds me of one of my own short personal stories.

Years ago, when I still used to talk to the grasshoppers, they would tell me I worried too much. I never knew what to say to that, but then it came to me a few years later. The grasshoppers saw what I was doing as worrying, whereas I saw it simply as taking care of business. Today, everything Garth writes about the grasshopper insanity, I see all around me, but now, I know to keep my mouth shut, and my business private. I live well, but not extravagant, as I like my personal privacy, and care not what others think or do, only what I do, and what I think. I have learned to be face to face quiet, and, as I don’t wish to argue with insanity from my mind, why on earth would I argue with the insanity from a grasshopper mind? As an aside, people who know me, have sought me out for advice on their personal financial troubles, and I am happy to freely help someone if they ask for help. Some have even followed my advice:)

It is a gift to be able to come to Garth’s blog, for my daily dose of financial sanity, and I do believe that some people really do hate Garth. Besides knowing that Garth gets a mailbag full of hate mail on a regular basis
from people offering to physically abuse him, I know this age old saying is true: “If you try to correct a fool, he will hate you, whereas, if you correct a wise person, he will thank you”.

Also, some people who unethically profit off of the grasshoppers also hate Garth too, for trying to save people from their evil lies. Garth has shared some of the hate filled publicly printable letters from the unethical, and while Garth hasn’t said so, I would guess it is the unethical, rather than the grasshoppers who want to do things to every orifice on his body, as Garth described the intent of some of his non-fans communications. Garth is not against RE, he is against financial idiocy and those who fleece them.

#91 AlbertaGuy on 01.09.14 at 1:47 am

#45 TheCatFoodLady – I googled “70 Low Cost Homes for Canadians” and look what i found – see text below house of the week…

http://newspaperarchive.com/winnipeg-free-press/1958-04-05/page-2

dont you just love the internet?

#92 Babblemaster on 01.09.14 at 2:16 am

#51 MD

“They will raise their taxes and rates when the time is right.”

————————————————

By the time the US decides to raise rates and taxes it may be too late. The Chinese could decide, before then, that they don’t want to keep buying US treasury bonds if the US has no intention of stopping their monetary printing presses. The US is over 17 trillion in debt. Divide that by 315 million and see what figure you get.

#93 Helmut on 01.09.14 at 2:20 am

My wife sand I are in our early 30’s and are considering purchasing a new build in Ottawa for $500,000. I was told that materials and labour alone were $300,000. With the Dollar tanking, wouldn’t the house cost more to build into the near future? We earn about $280,000 yearly but have a lot of taxes to pay. We also have about 20 years left until our pensions kick in so I think we should be fine.

#94 prairie person on 01.09.14 at 2:27 am

As usual, the Globe and Mail is finally catching up to Garth. REad it here first, and in the G&M months later.
http://www.theglobeandmail.com/globe-investor/inside-the-market/canaccord-sees-double-digit-returns-from-canadian-reits-in-20

#95 World According To Garth on 01.09.14 at 2:31 am

#66 KommyKim on 01.08.14 at 11:40 pm
RE: #24 jan on 01.08.14 at 9:52 pm
Canada really is one o the most socialist countries in the world.

You’ve never been to Europe have you?
——————————————————

Aha but here is the difference between the embarrassment of Kanada and Europe:

Need an MRI in Europe? How is Friday. In Kanada? Friday of 2015

How’s the GMO in Europe? It’s banned. In Kanada? GMO is everywhere. No need for “organic” labels in Europe.

How’s that Kanadian $50,000 student debt working out for ya? In Europe….skooool iz phreeee.

Infrastructure in Kanada? Second rate or bloated (our retarded overpriced kickback city sky train in moldcouver) in Europe it’s 21st century. If the Norwegians had been here they would have built an underwater tunnel to Van Isld instead we get 30 year old klunkers or piece of shit fast kats for 500,000 million dollars. What an embarrassment.

Oh…….did I mention that when you add in ALL the taxes (in BC anyway) your paying the same as you do in Europe. Income, gas, pst, gst, phony carbon tax, MSP (free health care huh?). What a joke. But stoooopid Kanadians take it cuz its different here.

#96 AngryMan127 on 01.09.14 at 2:41 am

Problem is the ants will have to bail the cicadas out…

#97 Benchwarmers on 01.09.14 at 3:18 am

Cowtown has been over run by these Locust, gorging on debt and devouring every consumable good in site.
There are only but a few of us ants left in this town. A good economic cold snap can’t come soon enough.

#98 William Bell on 01.09.14 at 3:26 am

“Why does life look good through the restaurant windows” …. I teared up when I read that sentence.

I insist not to borrow anymore after getting myself out of a messy decade. But things are just as tough watching peers and families from the other side.

#99 Andrew Woburn on 01.09.14 at 3:40 am

From Cain to Keynes. God 0, Mammon 1. Sign of the times.
——————————————
“One of the oldest and most elegant buildings on the University of B.C. campus will soon be switched from the study of spirituality to economics.

The stone-faced Vancouver School of Theology, built in 1927 as a seminary for Protestant clergy, has been sold to the university for $28 million, it was announced Tuesday. It will become the new home of UBC’s school of economics.”

http://www.vancouversun.com/life/Theology+building+converts+economics/9362476/story.html

#100 Tony on 01.09.14 at 6:04 am

Re: #17 P&S in the Kootenays on 01.08.14 at 9:37 pm

Someone got it right. The idea is to be in all cash and time the first crash correctly. Many think it will start in China. I think it will be the American stock exchanges. The best short of course will be the German Dax. You could also short American stocks when the plunge protection team steps in but get short before they close all the exchanges for a week or two.

#101 Matt on 01.09.14 at 8:10 am

While we are on the subject of the ant and cicadas, what does everyone think about cpp? It’s 30 years away for me, but do people think they will get back what they paid into it , or will the actuarial ppl say we need to pay more and get less?

The best plan is to assume you’ll get nothing. — Garth

#102 Not 1st on 01.09.14 at 8:41 am

#95 World According To Garth on 01.09.14 at 2:31 am

You do realize that geographically Canada is bigger tha Europe right? There are more roads in Sask than the entire EU. All the countries are a day drive apart. Our cities a day drive apart or more. Lots of Europe still doesn’t even have plumbing. They have had 2000 yrs of development we have had 250. Lots of their wealth came from colonial plunderings and don’t forget the trillions pumped in to rebuild that place after 2 world wars. And they still have a debt 100s times bigger than ours. Get some perspective before you post.

#103 TurnerNation on 01.09.14 at 8:55 am

Thinking about this, clearly he made a mistake in not going into the public sector.
An undergrad degree in ‘Urban Planning’ [sic] or Masters in ‘Public Policy’ could lead to a sunshine list job as a city manager – even salaried higher than the PM. Because lord knows we need more of them overseeing our crumbling infrastructure and kando paradises. Or into a quasi corp like OPG, ORNGE.

Not into years of schooling? I know someone with friends/family on Toronto Parking Services payroll. With a bit of OT the front line officers can earn 6 fig each year.

Clearly today’s protagonist fatally directed his career away from the money source.

#104 World Traveller on 01.09.14 at 8:58 am

Why are people so down on KIA? I had a Hyundai that lasted 220,000 km and still sold it running.

#105 GenXer on 01.09.14 at 9:00 am

#13 Jon – I did my MBA in my mid-twenties and it was worth it back then, since I was young and it gave people confidence I could do more advanced jobs. Today, as Garth said, no one cares. I haven’t seen the letters MBA on a business card in years.

A lot of today’s business leaders don’t have an advanced education – they grew up in a neverland where you walked into a great job and learned from the school of hard knocks. Don’t expect that crowd to care that you can do regression analysis or understand porters 5 forces model – they don’t. They make more than you and know less – learn from that. They have great jobs because they are good with people and know great people. Start networking and build your Rolodex. An executive MBA will help fill out your Rolodex with executives, but a regular MBA is mostly young folks trying to differentiate themselves without doing real work. There are easier and funnier ways to meet great people.

For a free MBA – Learn to do two by twos and tell great stories. Lots of free Ted talks to learn from on both of these topics. Good luck!

#106 World Traveller on 01.09.14 at 9:03 am

#95 World According To Garth on 01.09.14 at 2:31 am

Have to agree with this, gas is more expensive here, but you have the option of buying diesel so it’s a wash. and gas prices in Canada are a lot closer to the EU now than 10 years ago. Plus much better climate so the roads are in better condition and this equals less car repairs. I know climate is not in Canada’s control, but still it is a factor in comparing EU and Canada. Coupled with high housing costs, Canada is not the bargain it used to be…

#107 DocInWaitingRoom on 01.09.14 at 9:14 am

Gotta love the people buying Kias with the snazzy leds and hd lights. Same with the genious range rover 5 mpgers. Same people buying cardboard mcmansions with poor insulation, poor efficiency, and no energy generation. I guess I am an idiot tree hugger buying the Toyota hybrid which looks like new 6 years running not one issue and renting to buy eventually a high R rating home with solar water, high efficiency and energy generation. My father a baby boomer likes to pay $400 a month on heating and cooling his “well ventilated” home. Well all the great new homes have no snow on roofs asall the heat vents up and melts the snow. Only the idiots have R 50 plus in the attic and they have snow on the roof all winter…

#108 DocInWaitingRoom on 01.09.14 at 9:18 am

Actually I should say Leasing kias and rovers… I bought/ financed mine :p

#109 Castaway on 01.09.14 at 9:22 am

#13 Jon on 01.08.14 at 9:30 pm
Garth,

I have so far listened to you, specifically, I have not purchased a house and I funnel as much money as possible into retirement accounts (max out every year) and other savings vehicles, with funds directed toward ETFs, etc. Me and the wife bring in a combined $175,000 and have about $450,000 saved between all accounts. We are in our mid-30s. So, I’m sold – I will not get house-horny, however, your reference to student debt in today’s post prompted me to write – what do you think about spending serious cash on an MBA??

Does anyone care? — Garth

Don’t bother Jon. As was said above MBAs have been watered down big time. Every school offers them and they are just a money maker for the school. Tuitions way too high for what you get. Only ones of value (if you are in your 20s) are top Ivey league schools in US and those will run you $120,000+ for 2 year progam. Factor in you lost wages and you will never recoup your investment. Exec part time ones of even lesser value. I did the analysis 12 years ago. Skipped it and happily retired at 51. Your on the right track. Good luck.

#110 Gotthardbahn on 01.09.14 at 9:40 am

‘You spend what you have. Others live on what they borrow.’

Hey Garth – That is a great quote! Two years ago I learnt my lesson and now I am ‘living small’ – another Garth quote – living entirely within my means and I have never felt better, watching all these debt slaves and mortgagees frantically trying to maintain their obscenely out-sized mortgages. It’s remarkable how much you can live without and still be content.

#111 Heloguy on 01.09.14 at 9:41 am

“a sense Canadians are both entitled to possess what they cannot afford”

DING,DING,DING,DING.

We have a winner!!!

#112 Jim Lahey on 01.09.14 at 9:58 am

Hey Captain Garth could you please explain why this debt fueled housing market in Canada keeps going up while the same conditions of debt brought down the US housing market over a half decade ago. We had 0% down and 40 year amortizations in 09, so why, a half decade later, do Toronto SFH prices as an example, continue to reach for the stratosphere?

#113 Call the wambulance on 01.09.14 at 10:03 am

#95 World According To Garth on 01.09.14 at 2:31 am

Just leave and be quiet. The rest of us like it here.

#114 Jeff in Moose Jaw on 01.09.14 at 10:04 am

Garth everything in this post is simple and sounds rational to me. I enjoyed reading it.
Assets = wealth
Liabilities = spending $

#23 Smoking Man – thank you for telling it like it is, and my first laugh of the day “Peter, you’re old and expensive by slave master standards.” its the truth.

#115 rosie "moving forward" in the knowledge that, "this won't end well" on 01.09.14 at 10:10 am

#95

False argument. Comparing 350 million people living in an area the size of Quebec to 35 million running this huge land mass, with socialized medicine is childish.

#116 Uh Oh Canada on 01.09.14 at 10:19 am

Our housing market will crash a la Canadian- we’ll outdo those Americans.

#117 Penny Henny on 01.09.14 at 10:25 am

It sounds like a story I read my children about an ant who stored food for the winter and a cicada who played guitar all summer and fall.

_Cicadas playing guitar, as if.

#118 Ronaldo on 01.09.14 at 10:33 am

#112 – Jim Lahey – ”so why, a half decade later, do Toronto SFH prices as an example, continue to reach for the stratosphere?”

Maybe because the Torontonians think the prices are cheap compared to Vancouver (or New York). Same type of thinking that caused prices in some far flung areas of BC back in the late 90’s early 2000’s to climb for no good reason only to get hammered in 2008. It’s difficult to figure out the mentality of the herd. Toronto and Vancouver are in total denial but that is about to change.

#119 ozy - The ANT will BAILOUT the GRASSHOPPER on 01.09.14 at 10:33 am

like always – The ANT will BAILOUT the GRASSHOPPER

this is normal and there is no other place the money can be pulled from.

what is abnormal is the high amount of GRASSHOPPERS vs ANTS, and boy, ooooo this is a problem, and it’s pure Canadian….I did not see it anywhere else in the word, the sense of entitlement, instant gratification, shying away from tough work and from responsibilities, not facing the problems head-on but using gossip and small talk to back mouth the people that do the right things. And this is wide spread, and don’t blame the unions, it happens regardless of work place.

BRING ON THE CASEROLLES GARTH, but realize Real Estate is not the cause, but just the effect of something really rotten in Canada.

#120 Rawinder on 01.09.14 at 10:33 am

Problem is, in Canada when the s**t hits the fan, the cicadas will elect a government which promises to give the cicadas some of what the ant has saved.

#121 FullOfFear on 01.09.14 at 10:53 am

“We both know where this is headed. Cicada casserole.” – Garth

No, the ant has to share what it has with the cicada and the cicada then secretly laughs to himself and says … sucker!

#122 cowtown cowboy on 01.09.14 at 10:55 am

Garth,

I have so far listened to you, specifically, I have not purchased a house and I funnel as much money as possible into retirement accounts (max out every year) and other savings vehicles, with funds directed toward ETFs, etc. Me and the wife bring in a combined $175,000 and have about $450,000 saved between all accounts. We are in our mid-30s. So, I’m sold – I will not get house-horny, however, your reference to student debt in today’s post prompted me to write – what do you think about spending serious cash on an MBA??

Does anyone care? — Garth
———————————————————

Jon,

Having just completed my MBA about a year ago, I can weigh in…for me I did an evening program while working and raising a family which can be a bit stressful on the home life but you adjust, cost me about $30k, mostly out of my own pocket but as a consultant I can easily recoup that in just a year as my rates have gone from about $75/hr to $100+ depending on the role. Despite what the naysayers say, it is a differentiater, just as any grad degree is, all things being equal, every employer will take an MBA over a BComm or BA, although it is much cheaper to hire an undergrad and train them on the job. I did my MBA in my 40’s which I wouldn’t recommend as it won’t propel your career if it isn’t in a good spot already, nor would I put much value on a 23 yr old with an MBA and no experience of any kind. Typically your late 20’s / early 30’s is the sweet spot, but like Garth says there is more to life than graduating at 20 and working for 35 years. I had the pleasure of graduating in the early 90’s in the middle of a recession with very limited job prospects, selling photo copiers or being a brokers lacky for 18k/year…worked in the salt mines around Edmonton for awhile, moved to Tokyo and taught English, retrained as a systems engineer and for me, the MBA seemed the logical way out of technical roles, and into the management stream or at least to broaden my consulting tool belt. To each their own, but education is never a bad thing.

#123 VICTORIA TEA PARTY on 01.09.14 at 11:15 am

CICADA — ROAD KILL STEW PARTS

Peter. You’re right and the crickets are wrong.

Slow and steady will win this race as time will amply tell.

I can’t imagine being young and loading up on more than half a million bucks in debt, then going further in the hole with other debt-making instruments such as a credit card, LOC, car and student loans and whatnot.

Weather forecasters can’t tell us what the weather will be like next week, with much accuracy.

Climate scientists BS us with global warming/climate change nostrums as if they’re real.

Like all new age alchemists they, and the crickets, don’t know squat what lies ahead next day or whenever.

One day the tide will come in.

It’ll sink more boats than it’ll raise.

And those restaurants you see packed with the credit card regiments will be of yore in that they’ll be no more.

Keep up the struggle. That’s what life’s mainly about.

Watch for crickets on your windshield!

#124 Ronaldo on 01.09.14 at 11:16 am

#107 DocInWaitingRoom – your father must be one of the younger boomers then because all the older boomers like myself that I know made sure that there would be snow on their roofs all year with proper insulation. Hate paying more for heat than I need too.

#125 drewjw on 01.09.14 at 11:30 am

“#101 Matt on 01.09.14 at 8:10 am
While we are on the subject of the ant and cicadas, what does everyone think about cpp? It’s 30 years away for me, but do people think they will get back what they paid into it , or will the actuarial ppl say we need to pay more and get less?

The best plan is to assume you’ll get nothing. — Garth

Damnit. I’ve been hearing this from insurance and MF salespeople since I left University 20 years ago. We’re being conditioned to role over and take it. I’m pissed off at the lack of outrage when F pushed back the OAS. Boomers are safe, my genX crowd gets screwed.

F F

#126 Agio on 01.09.14 at 11:30 am

Excellent post today. Excellent.

[email protected] -you have some real serious 1st world problems. Christ, I hope you manage. Maybe study ‘situational awareness’

#127 bentoverpayingtaxes on 01.09.14 at 11:36 am

Yah….regarding Norwegian oil vs Canadian….apples and oranges. The infrastructure investment for a platform rig is miniscule compared to oil sands SAG-D. Suggesting Trudeau was trying to nationalize Alberta oil resources for purposes other than a monetary transfer to his stronger electoral base in Quebec is simply naive. Look into the Liberals economic policies of the 1970’s and you won’t find investment anywhere in the literature. The national debt was created under the Liberal Party. …doesn’t anyone remember LIP Grants….they couldn’t give money away fast enough. Trudeau was also responsible for gutting Canada’s manufacturing economy in favor of sustainable development in the 3rd world. Its a good thing we still have libraries….cause some people have awfully short memories.

#128 Ronaldo on 01.09.14 at 11:40 am

#100 Tony – I have a couple questions for you. In September of 2008 the Fed Chairman came on the TV and warned the world that if we didn’t bail the banks out with 800 billion dollars that the Financial System would fall apart. What did you do then? Did you go to cash at that time? I know what I did? When silver went below $9.00 five weeks later while the markets were crashing, did you buy any? I know what I did. When silver hit $49.44 on May 2, 2011 did you sell or maybe you didn’t buy any? I know what I did. When the banks declined 50% by Feb. 23, 2009 did you load up? I know what I did. Tell us what you are doing right now.

I do daily. And sorry about that silver, man. Tough break. — Garth

#129 Macrath on 01.09.14 at 11:40 am

Sleazy Insiders rule the roost on wall street. Good luck to anyone trading that thinks they have an intellectual edge.

“Isn’t This Illegal?”
“It’s phone calls like the one that Turney Duff took early in his career at the Galleon Group that authorities point to as what’s wrong with the hedge fund industry.”

http://www.pbs.org/wgbh/pages/frontline/to-catch-a-trader/?autoplay

#130 Big Brother on 01.09.14 at 12:08 pm

#59 Smoking Man on 01.08.14 at 11:23 pm

Ha, Garth worried about folks hating him. When anyone express an opinion, people are going to love you, and hate you.
It’s what we do, but those who are to frightened to express an opinion, are the world’s biggest losers.
Oh they will express when they feel consensus is on there side. Just as they have been trained. The machine is good. I enjoy hate filled chirps, far more than, you’re cool smoking man. Why? Cause I forced out an opinion.
I like it when people hate me.

MKULTRA doesn’t want Smoking Man to be hated at all. We have programmed you and planted you here on this tiny blue planet, third from the sun to confuse the masses.
You are MKULTRA’s “creatio ex nihilo” and “ex nihilo nihil fit”
Carry on Smoking Man, as you were.

#131 :):( Ying Yang on 01.09.14 at 12:12 pm

#125 drewjw on 01.09.14 at 11:30 am

“#101 Matt on 01.09.14 at 8:10 am
While we are on the subject of the ant and cicadas, what does everyone think about cpp? It’s 30 years away for me, but do people think they will get back what they paid into it , or will the actuarial ppl say we need to pay more and get less?

The best plan is to assume you’ll get nothing. — Garth

Damnit. I’ve been hearing this from insurance and MF salespeople since I left University 20 years ago. We’re being conditioned to role over and take it. I’m pissed off at the lack of outrage when F pushed back the OAS. Boomers are safe, my genX crowd gets screwed.

F F
………………………………………………………………………

I’m Gen X as well. Who really gives a crap about CPP. If you intend to live on your CPP or supliment your income off of CPP then you better start stocking up on cat food now! Make your investments now while young, take chances on investing. The only advantage we have is our age. We can make mistakes and have the time to make up for losses!

#132 Montreal fan on 01.09.14 at 12:13 pm

Thanks for keeping this blog Garth. Your posts are like comfort food for all us ants out there.

#133 Ronaldo on 01.09.14 at 12:22 pm

#93 – Helmut – a strategy you may want to explore.

When I was your age I decided that I could probably build my own home (act as the general contractor) and save a lot of cash. So, I purchased a lot in the location I desired and a couple years later after I had saved a good stash of cash, I decided to build.

That was in 79 and just before the interests rates took off. Luckily I locked in my mortgage with the bank in early spring at around 9.75% and got a building loan which I drew from in stages as the building progressed.

Anyway, we had the plans drawn up a few months before and in the early spring when the trades people were hot to trot to get to work, we set out getting quotes from the different trades, concrete, framing, roofing, etc. etc.

I hired a contractor to dig the basement, do the concrete work and backfill and install the floor joists. After that I did pretty much all the framing with the assistance of my brother.

This part I could have had done by a contractor as well as it is not the expensive part of the whole process but still it saved me a lot of money and I was off work at the time anyway. I hired a fellow to do the roofing. I installed the windows and doors and the siding and built all the decks, stair and sidewalks. I contracted out the plumbing, heating , electrical and drywalling.

We did all the painting and trim work and installed the cabinetry and interior doors and trim and did all the painting. A lot of money was saved by shopping around for deals and getting contractor prices. In the end we determined that we had saved about 1/3 of the cost of buying a new build.

Even if you contracted the whole thing out there would be a good deal of savings for you and the best part is the knowledge that you would gain by doing this. It’s not rocket science. I watched a neighbor couple in their late 70’s do this same thing across the street from me a few years ago and they were having a tremendous time. They lived there for several years before having to sell. If they can do it, I you can bet you can too.

#134 Mike on 01.09.14 at 12:34 pm

I’ve spent the last 25 years dispensing tax and other forms of financial advice. Early in my career I had a contract with an out-placement agency to advise people on what to do with their severance packages. I’m in Calgary and at that time oil companies were slashing and burning staff. Lots of anger and lots of tears. But I remember one guy – a scientist who did gasoline research. He never did make much money over his career but he had a big smile, a funky t-shirt and cut-off shorts when he came to see me wearing his sandals. He had almost $2.0 million in his investment account and a mortgage free house. He was also in his mid-50’s and he now had a nice severance package to mull over.
I looked at the income he made over the years and asked him how he did it. He said it was simple. He drove his cars for at least 15 years and still lived in the first house he and his wife bought when they were first married. Early on he found a good investment advisor and listened to the advice.
He raised 2 successful sons and a couple of dogs while all his friends bought new cars ever 2 or 3 years and upgraded their houses to Casas Grandes every 3 or 4 years – because they all believed they deserved that. His friends all had mortgages while he had cash.
I’ve met lots of successful people in my career but I’ve never forgotten this guy. Meeting him was the best thing that ever happened to me.

#135 Fed-up on 01.09.14 at 12:43 pm

@ #113 Call the wambulance

———————————————————————–

He shouldn’t have to leave due to the fact that he speaks the ugly truth. World class taxes, 3rd rate services and infrastructure, that is what we have become. Acceptance and defending it by most comatose Canadians is the #1 problem.

#136 Agio on 01.09.14 at 12:44 pm

Uh Oh Canada @ 52

No debt, comfortable earnings and still feel like a loser huh?
Here’s what ya do. Go out and spend 10k on something absolutely useless-like a quad or some other thing you can kill yourself with or a stylin watch-anything that is new, shiny and most important-has a receipt.
Now, take it home and stare at the pretty pretty for a few days. You’ll start to sleep poorly, shakes will come over you and then you’ll finally start to hyperventilate. Grab a bad-not plastic, calm yourself , return the shiny and caress your 10k right back to where it belongs.
Works like a charm;)

#137 Iso-Classical on 01.09.14 at 12:45 pm

Garth,

Any figures on RE market of NL (specifically St. John’s)?

Maybe a blog post? :)

Thanks!

#138 drewjw on 01.09.14 at 1:17 pm

#131 :):( Ying Yang on 01.09.14 at 12:12 pm
#125 drewjw on 01.09.14 at 11:30 am

“#101 Matt on 01.09.14 at 8:10 am
….
Damnit. I’ve been hearing this from insurance and MF salespeople since I left University 20 years ago. We’re being conditioned to role over and take it. I’m pissed off at the lack of outrage when F pushed back the OAS. Boomers are safe, my genX crowd gets screwed.

F F
………………………………………………………………………

I’m Gen X as well. Who really gives a crap about CPP. If you intend to live on your CPP or supliment your income off of CPP then you better start stocking up on cat food now! Make your investments now while young, take chances on investing. The only advantage we have is our age. We can make mistakes and have the time to make up for losses!”

Living on CPP is not the point.
By pushing back OAS eligibility 2 years, that’s at least 6.6K/yr in lost income at 65 in today’s dollars.
If you get 7% return on investments, you need over 94K in additional savings to replace that. So F took about 100K out of my savings plan.

If CPP goes away, that’s potentially another 200K I’ll need to have saved.

I’m paying into those plans my whole life. If they both go away, it’s like stealing 300K from my retirement savings FFS.

Assuming it won’t be there is buying in to theft!!

#139 Son of Ponzi on 01.09.14 at 1:21 pm

Article in the Globe&Mail
“I want to be a Barista. What will my salary be?”
That’s what’s wrong with Canada.

#140 Just some guy on 01.09.14 at 1:33 pm

#122 – Cowtown Cowboy

Good work – I agree about the usefulness of education but I think what is also quite clear from your experience is that you learned what you could in each job and constantly looked out for other opportunities. You built upon your experience and you supplemented it with education as needed. As I said, good work.

I think that it is this kind of flexibility that is essential to survive and prosper, not just in these troubled times but always.

I believe that it is really important to consider that we really only have one “employer” and it is ourselves. We need to get out of this mindset of being wage slaves and being so willing to sacrifice out most precious asset which is our time.

#141 Rex on 01.09.14 at 1:35 pm

How is the US not a failed empire with a 17 trillion dollar debt that can never be repaid? The same obscene levels of debt you talk about individual house buyers applies to the good old USA.
Meanwhile, house prices just keep rising.

Severeign debt is not personal debt. Nations can create currency, control the cost of their own debt and increase revenues at will. There is no comparison, nor do nation states ever need to retire debt. The US is the leading economy in the world, and nothing about that will change anytime soon. — Garth

#142 Shawn on 01.09.14 at 1:37 pm

Moncton House Market

Ronaldo at 133 mentioned built your own house…

***************************************
My relative in Moncton is a trades guy and has built and renovated about ten houses over the last 35 years. He can do it all himself. He also gets wholesale prices from almost all suppliers through his day job.

Five years ago he helped his kids build houses, build small, sell, build larger, pretty soon emerged with a big houese and tiny mortage for each kid.

Today hes says prices have dropped. One kid tried to sell a very nice two storey quite new. Riverview area. Assessed $270, should be worth $300 sold (with difficulty) for $250.

He says he cannot build at a profit today. This is a guy who can do it all himself and enjoys the work and gets wholesale prices.

That’s just one take on the Moncton market.

Maritimers retiring from Alberta might find some bargains…

#143 Kilby on 01.09.14 at 1:44 pm

#104 World Traveller on 01.09.14 at 8:58 am
Why are people so down on KIA? I had a Hyundai that lasted 220,000 km and still sold it running.
______________________________________________
My wife had a 2010 Kia Forte (uber leather model) as her company car. It had a tinny sounding trunk and doors and the automatic transmission hunted all over the place but apart from that it was a pretty nice town car. That being said, we would never buy one ourselves….

#144 Vamanos Pest on 01.09.14 at 1:44 pm

Diversification is SWEET.

My old habits crept back into a conversation with my financial guy. I asked if we needed to change strategy a bit to protect the portfolio from a decline in CAD. He said it already kind of is. With the overweighting in US equities, resulting not of strategy, but of a huge run up last year and the fact it hasn’t come time to rebalance yet, I have substantial exposure to USD.

So rather than worry about it further, we just drank some beers.

Garth, is your strategy supposed to be this easy?

#145 pinstripe on 01.09.14 at 1:46 pm

Peter is on to something and there are many good points mentioned upthread for his improvement.

I will add my analysis to the list.

Peter, the entire global system, including Canada, has created an era where the middle class is being wiped out and whoever is left hanging on is being punished for saving whereas at the same time those in debt are being rewarded. That is a fact that must be accepted FIRST. Our elected politicians know what they are doing.

To get into the learning curve in this era it would be beneficial to learn the basics of entitlement. Get a job with the Feds, either as a senator or any Fed civil servant. Thereafter, adjust the mindset to go with the flow, be aggressive by demanding upward movement within the organization. Demand and accept any Acting position, even Acting on an Acting position is viewed as very favourable. The work ethic, political correctness, responsibility and accountability will become the norm as an cicada. The principles of a cicada become the REWARD while the principles of the ant are PUNISHED.

If that bothers you, Peter. It is not mandatory to drink the Kool-Aid, but you MUST hold the glass of Kool-Aid at the watercooler, and the sooner you learn the right laugh, the better it will go for you.

Good Luck.

#146 Son of Ponzi on 01.09.14 at 1:50 pm

#99
Who needs religion?
Most Canadians are now worshipping on the altar of granite countertops.

#147 Network Admin on 01.09.14 at 1:51 pm

There is another cicada :)
http://en.wikipedia.org/wiki/Cicada_3301

#148 Canadian Watchdog on 01.09.14 at 1:52 pm

TREB 2013 Average Home Price Gains – YoY%

Detached +5.5%
Semi-Detached +5.4%
Condo +2.1%
All Home Types GTA +5.0%

TREB 2013 Sales – YoY%

Detached +1.5%
Semi-Detached -1.2%
Condo +0.5%
All Home Types GTA +0.9%

TREB 2013 Sales by Price Range – YoY% (All Home Types)

>$1,000,000 +15.0%
$500,000-$1,000,000 +12.6%
0-$500,000 -5.7%

#149 Son of Ponzi on 01.09.14 at 1:54 pm

#144
everything is easy after a few beers.
And it also keeps the Molson guys happy.

#150 Smoking Man on 01.09.14 at 1:54 pm

#122 cowtown cowboy on 01.09.14 at 10:55 am

Education is a scam, everything you learned taking the MBA is available free of charge at the University of Google.

Did the MBA teach you Too:

Swipe the customer list and open up shop accros the street.

How to send in goons to collect receivables when invoices not getting paid.

How to look poor to your slaves so they don’t ask for raises.

How to keep loyalty from your best clients by getting them short term rentals.

I could go on. But a modern day MBA does not teach you how to own slaves that make you money. It just makes you a better slave for someone else.

No thanks.

#151 georges on 01.09.14 at 1:59 pm

Royal lapage article globe today says spring market will be a big seller market. It will make up for soft 2013. I believe them because house prices continue to go up. There is no stopping at all. We have heard nothing but a correction forever now and nothing has happened. I am sellingy house this spring and will get top dollar. I am sitting on a nice gain tax free off course . how can total lapage be wrong? They have the likes of klump to back up their figures!

#152 liquidincalgary on 01.09.14 at 2:03 pm

@ #76
yes, mr corkum, rates can go negative…real rates

#153 quebec economist on 01.09.14 at 2:03 pm

my prediction january 2nd in the comments of this pathetic blog was that If China crashes, (and this is likely in the next 1-3 years) all hell breaks loose…worst then US crash….hold on to that car handle!

http://business.financialpost.com/2014/01/09/did-george-soros-just-predict-a-china-crash/

#154 Canned Goods and Buckshot on 01.09.14 at 2:04 pm

#79 Andrew Woburn on 01.09.14 at 12:14 am

“Where are the responsible adults or have the pushers taken over the neighbourhood?”

Andrew, you speak like a Red Tory or Blue Liberal. That’s a compliment. Unfortunately, the decision makers are beholden to the moneyed interests that they serve.

#155 REK on 01.09.14 at 2:04 pm

Just came from Miami – went to look at a preconstruction condo, ocean front, north mami, 2bdr 3bth – 1650 sq ft – 800,000 USD – nobody even talks to you unless you put down 50% – it was gone in a day – so much for failed USA economy…

#156 HogtownIndebted on 01.09.14 at 2:11 pm

The repeaters of the mainstream media are loudly proclaiming that we should ignore that man behind the curtain:

http://www.thestar.com/business/real_estate/2014/01/09/no_slowdown_on_horizon_for_housing_market_royal_lepage.html

http://www.theglobeandmail.com/report-on-business/economy/housing/sellers-to-benefit-in-strong-spring-housing-market-report/article16252115/

http://www.theglobeandmail.com/life/home-and-garden/real-estate/ice-storm-or-no-the-deal-gets-done/article16252802/

http://business.financialpost.com/2014/01/09/what-soft-landing-bullish-realtors-see-no-slowdown-at-all-for-strong-housing-market/

Interesting.

So, apparently neither freezing rain, nor personal debt, nor income/price imbalance, nor even that Doomer Furby Garth Turner shall keep real estate from marching onwards and upwards. Forever.

Coincidentally, Titanic is in reruns on AMC and two other channels this week. Flip back and forth between that and HGTV and the attitudes are the same, only the characters’ names have been changed.

#157 Toronto_CA on 01.09.14 at 2:21 pm

#138 drewjw on 01.09.14 at 1:17 pm

Not following your calculations. OAS isn’t being eliminated it’s being pushed back 2 years, so about $6600 x 2 in 2014 dollars. If inflation is 3% but you can get 7% return, you can present value that $13k or so in today’s dollars down at a rate of 7-3=4%so that he only added a few thousand to your savings needs to replace that income in the years you are 65 and 66, depending on how far you have to go until you hit 67 and collect OAS.

If CPP or OAS is eliminated entirely, then yes, we’d need to save hundreds of thousands of dollars to replace it depending on how long you live. But that’s not actually happening.

I’m less fussed about the 2 years of OAS because I think I will have it clawed back based on my DB pension plan projected payments those years (private pension that is well funded).

#158 Ralph Cramdown on 01.09.14 at 2:28 pm

#141 Rex — “How is the US not a failed empire with a 17 trillion dollar debt that can never be repaid?”

How are you not a failed armchair economist?

British Consols (the perpetual bonds, not the cigarettes) were first issued in 1751. The Canadian Pacific Railroad first issued perpetual bonds in 1893.

Rational government finance ministers knew that they were never going to repay their debt over 250 years ago, as did the rational investors who bought those bonds. Over 100 years ago, rational investors bought the debt of CPR on the understanding that it would never be repaid. This couldn’t have been too crazy an idea, because it was authorized by a Canadian act of parliament. Both issues still trade today, though rarely.

Yet in 2014, we still have to put up with the young and ignorant publicly spouting “Zounds! That debt won’t ever be repaid!” like it was news of the town church afire. Spare us, and get some learnin’.

#159 Spectacle on 01.09.14 at 2:33 pm

Thanks Garth….

Re: #142 Shawn on 01.09.14 at 1:37 pm
Moncton House Market

And Ronaldo at #133 mentioned built your own home…..

….relative in Moncton is a trades guy …built and renovated about ten houses over the last 35 years. He can do it all himself…also gets wholesale prices from almost all suppliers…… says prices have dropped. One kid tried to sell a very nice…..Assessed $270, should be worth $300 sold (with difficulty) for $250.

He says he cannot build at a profit today. This is a guy who can do it all himself and enjoys the work and gets wholesale prices.”

My quick input here, building and renovating properly, is very expensive in 2014, in cities. Yes IF a person can be a GC on their own project fine, and you will know if you can already! The trades will have too many tricks over on you and build you a KIA of a house, meaning something less than you bargained for!

There is a time to buy and a time to build, this is neither. Perhaps a time to rent and hold, will leave that one to you.

Thanks All.

#160 TheRealTruth on 01.09.14 at 2:37 pm

Garth:

How did you like my call on the dollar being sacrificed? And of US interest rates being raised before Canada’s? And the timing of the US rate increases?

Check the details of my predictions in my past posts of 3-4 years ago.

If any Bay Street Investment firms need solid advice, I am available :)

#161 TheRealTruth on 01.09.14 at 2:38 pm

Oh its 91 cents and falling.

Get out of C$ NOW!! The next US equity correction is going to decimate the C$.

#162 KommyKim on 01.09.14 at 3:01 pm

re:#99 Andrew Woburn on 01.09.14 at 3:40 am
From Cain to Keynes. God 0, Mammon 1. Sign of the times.
——————————————
“One of the oldest and most elegant buildings on the University of B.C. campus will soon be switched from the study of spirituality to economics.

Well there’s not much difference between spiritual and economic studies. Both require a leap of faith and rely on a BS story.

#163 Son of Ponzi on 01.09.14 at 3:06 pm

Just came from Miami – went to look at a preconstruction condo, ocean front, north mami, 2bdr 3bth – 1650 sq ft – 800,000 USD – nobody even talks to you unless you put down 50% – it was gone in a day – so much for failed USA economy…
—————-
I understand HAM has arrived in Florida.
Liquidating their holdings in Canada.

#164 Son of Ponzi on 01.09.14 at 3:10 pm

#158
Great example.
Whatever happened to the Great British Empire?
Completely overshadowed by the prudent Germans.

#165 Ralph Cramdown on 01.09.14 at 3:14 pm

#80 Blogeyes — “Obviously if you’re not going to be able to retire with a million+ if you buy a house, then don’t do it… but, if you can make the money work, it’s awesome.”

#84 Useless Millenial — “Garth, what do you think about Bogle’s idea that the liquidity of ETFs is bad? On aggregate, investor psychology will result in, on aggregate, bad decisions to sell, and result in, on aggregate, bad outcomes?”

This is what seems to be missing generally today; a long term perspective. General hopes and expectations have gone from comfortable retirement through paid-off house down to own a house. Just think what things would be like if bank mortgage sellers and independent mortgage brokers were required to ask “where’s your plan to have $1mm in 2014 dollars saved by age 65?”

Here’s a couple of old saws with varied assumptions that I’m sceptical of: “At retirement, you can withdraw 4% a year of your savings and likely not run out before death” and “You should have ten times your final year’s income saved at retirement.”

Regardless of whether those things are true, I hardly ever hear much about the hard numbers of retirement planning, even with our demographic realities. Sun Life was running “money for life” ads, what the old school used to call life annuities.

Think about a retirement investment which would prevent dumb investors from buying at the top, selling at the bottom, paying high fees, getting poor management or taking too little or too much risk. We’d call it a defined benefit pension. They used to be common.

Here on this blog, a few posters have limitless bile reserved for the small segment of society who have through collective action managed to keep their retirement on track: Public sector workers with defined benefit pensions. Corporations have spent the last generation stressing the need to “remain competitive” to their workforce, meaning low wage growth and reduced benefits, especially pensions, rather than productivity improvements, a state that Carney used to bemoan when he was here.

Good luck, folks.

#166 Daisy Mae on 01.09.14 at 3:19 pm

#65 Hawk: “Canada is in very serious trouble with debt.”

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

Didn’t you know? F is a ‘winner’ — an ‘economical hero’ — getting credit for making the following projection.

Huffington Post: “Personal struggles aside, federal Finance Minister Jim Flaherty had some big wins this year, crowned by his fall projection that the economy was on track to post a $3.7-billion surplus in 2015 — the year of the next federal election. The news that the federal government is some $7 billion and a year ahead of schedule on its balanced budget plan painted the finance minister as an economic hero, despite the fact that Canada’s economy is under performing many of its global peers.”

However, in the same breath, so to speak, “Canada’s economy is under performing….”

A ‘projection’ means nothing.

#167 Realtor # 1 on 01.09.14 at 3:19 pm

Why you shouldn’t count on a price crash

If people don’t need to sell then they won’t especially at a loss.

That’s why employment numbers are key. If you don’t have a job to pay your mortgage then you will lose your house, those people have no choice and NEED to sell
even at a loss. Also there are fewer buyers willing to buy a home. Makes for the perfect scenario.

Rising interest rates only effect a small percentage. You can still get a 3year @ under 3%, or go variable or do a 50/50- there is usually a way to counter rising rates.

#168 KommyKim on 01.09.14 at 3:21 pm

RE:#101 Matt on 01.09.14 at 8:10 am
Damnit. I’ve been hearing this from insurance and MF salespeople since I left University 20 years ago. We’re being conditioned to role over and take it. I’m pissed off at the lack of outrage when F pushed back the OAS. Boomers are safe, my genX crowd gets screwed.

It was an obvious calculated move by Harper and the CONs. Mess with the OAS of the people who are far enough away from retirement so that they either don’t care or notice.
I agree that we are being conditioned to expect nothing. Young people complain about governments but don’t get out and vote. Boomers vote.

#169 frank le skank on 01.09.14 at 3:27 pm

#148 Canadian Watchdog on 01.09.14 at 1:52 pm
0-$500K is indicative of the condo market going down.
500K- $1 million could be explained by the CMHC 1 million mortgage cap.

>$1,000,000 +15.0% – not sure how to explain this one?

#170 jess on 01.09.14 at 3:28 pm

re: amanda lang /o’leary regarding fine over madoff scam…whoop dee do duh

… Warren/Coburn bill is a signal to the media to stop being so slavish in uncritically reporting the bogus headline numbers on settlements handed to them by DoJ.

http://www.warren.senate.gov/files/documents/Truth%20in%20Settlements%20Act%20Fact%20Sheet%202014.pdf

http://www.nakedcapitalism.com/2014/01/david-dayen-warren-coburn-introduce-naked-capitalism-right-corruption-financial-regulators-act-actually-called.html

#171 };-) aka Devil's Advocate on 01.09.14 at 3:29 pm

This one’s for you Form Man

The SOPA opera continues

#172 dogman01 on 01.09.14 at 3:31 pm

For 90 Freedom First

“You have brains in your head.
You have feet in your shoes.
You can steer yourself any direction you choose.
You’re on your own.
And you know what you know.
And you are the guy who will decide where you go.”
– Dr. Seuss, Oh, the Places You’ll Go!

and

“Truth, when discovered, comes upon most of us like an intruder, and meets the intruder’s welcome.” – Charles Mackay

#173 Holy Crap Wheres The Tylenol on 01.09.14 at 3:46 pm

#150 Smoking Man on 01.09.14 at 1:54 pm
#122 cowtown cowboy on 01.09.14 at 10:55 am
Education is a scam, everything you learned taking the MBA is available free of charge at the University of Google.
Did the MBA teach you Too:
Swipe the customer list and open up shop accros the street.
How to send in goons to collect receivables when invoices not getting paid.
How to look poor to your slaves so they don’t ask for raises.
How to keep loyalty from your best clients by getting them short term rentals.
I could go on. But a modern day MBA does not teach you how to own slaves that make you money. It just makes you a better slave for someone else.
No thanks.

::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::

Wow I am glad I am not one of your customers. Whatever business you are in. You are not working for the “Don” are you? I don’t want to sleep with the fishes.
I can tell you that certain mandatory classes even for us stupid schooled Engineers was ethics. In an ethics class it does help you to keep on a solid moral ground and not crawl down to the worst of the worst to get the all mighty dollar. Don’t get me wrong business is business and I fight for every dollar I spend and earn but not by stealing, lying or treating my employees as cattle. By the way I do not own slaves, my employees are a vital part of my company and its success. Yes I took the initiative and risk to create the company so therefor I am the boss, but don’t equate owning a company to being a plantation owner of slaves. Slaves could not leave their owner / employer. Employees are free to come and go with their opinions and beliefs fully intact. Good luck Guido!

#174 Not 1st on 01.09.14 at 4:16 pm

This is not widely reported and Garth probably knows about it, but even though the US has racked up 17 trill in debt, their pending oil boon is likely to save the day.

Predictions are that a cheaper domestic supply of oil will drop the price at the pump for consumers and along with increased house prices the consumer will open their wallets again. At the same time the domestic production will lessen mitary spending overseas. Extra budget savings and inceeased govt revenues could cut the deficit in half in a few yrs time. If that happens watch the US rip.

#175 Junius on 01.09.14 at 4:38 pm

#167 Realtor #1,

You said, “Why you shouldn’t count on a price crash

If people don’t need to sell then they won’t especially at a loss.”

Prices always move on the margin. At any one time only a fraction of homes are selling yet these set the market. This is one of the many lessons from the US, Irish, Spanish, (fill in the blank) crashes.

A change in interest rates will impact enough that things will drop – perhaps quickly.

Job creation and wage increases would have to be significant to offset even a 1% rise in mortgage rates.

#176 Future Expatriate on 01.09.14 at 4:50 pm

There’s simply much too much Obama Derangement Syndrome Media out and about flogging their “imminent collapse” and useless gold sponsors for people to ever believe the truth about the US recovery. This is what is different in today’s culture. We always had the “Doomers” in the past; they just never were as mainstream and accepted as they are today. Back in the day doomsaying wasn’t an accepted nor artery-hardened political strategy either.

While that creates legions of Greater Fools, it also creates vast opportunity.

#177 Ruff on 01.09.14 at 5:01 pm

Quebec and Ontario are have not Provinces and Alberta paying to support their bad economic realities. While those two Provinces live high off the transfer payments. What will happen when Alberta gets taken out by Justin Trudeau, carbon tax or the next NEP?

I would be looking to the next Fed election. If the Liberals get into power. Then houses in Toronto, Vancouver, Calgary and such might be in for ruff time.

Think about it people. People in Quebec and Ontario want to take out the Oil Sands, but forget how many from Ontario and Quebec have moved to Alberta because we have jobs here!! Don’t see Quebec creating jobs and the idiots in power in Ontario are chasing jobs away.

Socialism as an economic and political system like you have in Ontario and Quebec is not good for a free country.

More posts like this will be deleted. — Garth

#178 cowtown cowboy on 01.09.14 at 5:05 pm

#122 cowtown cowboy on 01.09.14 at 10:55 am

Education is a scam, everything you learned taking the MBA is available free of charge at the University of Google.

Did the MBA teach you Too:

Swipe the customer list and open up shop accros the street.

How to send in goons to collect receivables when invoices not getting paid.

How to look poor to your slaves so they don’t ask for raises.

How to keep loyalty from your best clients by getting them short term rentals.

I could go on. But a modern day MBA does not teach you how to own slaves that make you money. It just makes you a better slave for someone else.

No thanks.
———————————————————-

Like I said SM, to each their own, however, as the benefactor of our school, who has sat on or chaired some of the major corp boards in this country, mentions over and over again, the only thing any of us really have is our reputation, once that’s gone, it is very hard to get back…so if all you want to do is make money, it’s not that hard, there are plenty of templates to follow, but try setting the bar a little higher, you will probably feel a little better about yourself….

#179 Ruff on 01.09.14 at 5:10 pm

DELETED

#180 Victoria - the Original on 01.09.14 at 5:13 pm

Good News! Royal Lepage said no correction no hard or soft landing …

http://www.huffingtonpost.ca/2014/01/09/housing-prices-royal-lepage_n_4567030.html

#181 pinstripe on 01.09.14 at 5:20 pm

Peter, get that MBA thought out of your head ASAP. Total waste of time and money. Today many are either unemployed or working in sales for a car dealer.

The MBA became a big fad in the early 1990’s when businesses thought they must have a MBA on board to improve their bottom line. It turned out to do the opposite.

To improve the bottom line takes a hard lined hatchet man. Someone who has the guts to say either “NO” or “GET OUT”.

If you find it impossible to make the switch to cicada from ant, then your best option would be to work for yourself. Be an entrepreneur and don’t waste too much time to invoice the cicada with big dollar money amounts.

#182 cowtown cowboy on 01.09.14 at 5:32 pm

50 Smoking Man on 01.09.14 at 1:54 pm

#122 cowtown cowboy on 01.09.14 at 10:55 am

Education is a scam, everything you learned taking the MBA is available free of charge at the University of Google.

Did the MBA teach you Too:

Swipe the customer list and open up shop accros the street.

How to send in goons to collect receivables when invoices not getting paid.

How to look poor to your slaves so they don’t ask for raises.

How to keep loyalty from your best clients by getting them short term rentals.

I could go on. But a modern day MBA does not teach you how to own slaves that make you money. It just makes you a better slave for someone else.

No thanks.
——————————————————–

Oh, and btw, an MBA basically teaches you exactly how to own slaves (or as we were taught, EMPLOYEES!) to make you money….Accounting, Finance, Marketing, Economics, Operations Management, Human Resources,Strategic Management, Decision Modelling, etc., everything you need to run a business…or you can sell whatever it is you’re smoking….don’t need an MBA for that :-)

#183 MSM reports more Soper BS on 01.09.14 at 5:41 pm

Good ol CBC letting Soper spew his BS again today….hilarious

#184 Second Hand Smoke on 01.09.14 at 5:42 pm

Re: #69 Shawn

Toronto is the most saturated market for CFA charterholders in the entire world. Yes, even more so than New York and London, which are obviously markets that dwarf Toronto in financial services.

There is an entire army of people in Toronto thinking that they will be fast tracked to a high flying front office capital markets role if they can just pass the three exams; however for the most part, unless you’re already in the industry, it does very little for you. Advancing in finance in Toronto requires a cookie cutter approach of attending one of a few business schools for undergrad and landing a finance job out of school. For others, particularly in this market, it’s a pipe dream at best.

#185 Canadian Watchdog on 01.09.14 at 5:52 pm

#161 TheRealTruth

Get out of C$ NOW!! The next US equity correction is going to decimate the C$.

The time to get out of CAD was last year when it was 1.02, not now. There isn't much downside risk left, and even if there was, the BoC is likely to intervene by selling USD and buying CAD under its swap facility with the Fed.

Now is when you sell USD and buy CAD. The Fed won't tolerate a high dollar for too long. If they do, they risk exogenous shocks from emerging markets, whose currencies have depreciated rapidly over the last six months and, whose economies are now destabilizing, like India.

When you're the world's reserve currency, you have to think globally and do what's right for the global financial system. The last thing the Fed wants is an external currency crises they can't control. Especially today when the financial system holds more systemic risk then it did in 2008.

The better choice is to be ahead of the curve (before something happens as it always does if no action is taken) and devalue the dollar to align currencies into better equilibrium. The other choice is to allow the dollar to appreciate against all other currencies and pray nothing happens, like they did in 2008. (The 2008 crisis could have been contained to a domestic crisis if the Fed didn't allow the dollar soar by 30-40% against major currencies. That's where the Fed messed up and why they won't allow it to happen again)

Make no mistake. Janet "Do More" Yellen will print. Just wait until you hear her tone. She's worse then Greenspan and Bernanke. No joke.

#186 Nosty swimming in Jack Daniels on 01.09.14 at 5:57 pm

SMan — Has anyone ever asked what was in Building Seven? BTW, between plus 5 and 8 degrees this weekend. Enjoy The Big Smoke!

#187 drewjw on 01.09.14 at 6:06 pm

“#157 Toronto_CA on 01.09.14 at 2:21 pm
….If CPP or OAS is eliminated entirely, then yes, we’d need to save hundreds of thousands of dollars to replace it depending on how long you live. But that’s not actually happening….”
________

Yes, if you only do the math on those 2 years, then I’d need 26K additional to use that principal in 2035 to replace the OAS using your math.

BUT… I was calculating based on the implication from Garth’s comment and the reply to me from ‘ying yang’ that we need to assume neither OAS or CPP will be there at all. This point has been fed to us for so long… and the 2 year pushback is the 1st step on a slippery slope.

I’m not standing for it.

I might get to $1million by age 65, which would provide a meager living on the interest from a conservative portfolio, especially in 2035 dollars.

I’m counting on the OAS/CPP to make the difference between a basement appt and cat food retirement, and a respectable life.

I’m paying in, I’m getting it back. or I’ll be spending my retirement in a tent on parlaiment hill.

#188 Smoking Man on 01.09.14 at 6:13 pm

#173 Holy Crap Wheres The Tylenol on 01.09.14 at 3:46 pm

Business is war, obviously I don’t call my employees slaves, and my clients and customers love me.

But they to get to peek into the way my mind works like the privileged few who venture into this pathetic blog.

In the real world I come across as a lovable great boss, and vendor. I won the drama award for best actor in high school every single year.

Now if you guys are a really goody, goody, two shoes as you claim.

Get the customer list in the safe.

#189 Entrepreneur on 01.09.14 at 6:16 pm

Buy house or property without the banks. Save and buy what you can, then grow. Property value have gone down around here. Houses are not selling either…only the odd one.

#145 pinstripe…to learn the basic of entitlement…get a job with the Fed…go with flow.

Much easier when one gets a job with the federal goverment, follow the flow and reap the benefits (as long as the job last). Love the humour but so true.

People have said that a person running for politics is good until they get in then run with the gravy train mentality. So much for the people and the middle class. Our local political reps. are suppose to voice our voices in
parliament but that is not so. So much for the people and the middle class. A disconnect.

#190 Victor V on 01.09.14 at 6:17 pm

http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/canadians-excessive-debt-has-made-rest-of-world-wary-of-loonie/article16266451/

The global Canada craze is done.

Our plunging dollar makes it official. Foreign investors are selling their holdings in this country because they see better opportunities elsewhere. It’s not all high finance in play here. The habits of everyday Canadians play a role, too.

Foreign investors used to look at Canada and see a rock of economic stability in an uncertain world. Now, they see an economy that has been fuelled in large part by an unsustainable run-up in debt. Housing market optimists may dispute this, but the pool of people able to take on big mortgages or draw way down on their lines of credit is shrinking. Less borrowing suggests less commerce, which is bad for a Canadian economy that is already running sluggishly enough to prompt concern about deflation, or falling prices.

#191 Smoking Man on 01.09.14 at 6:22 pm

#182 cowtown cowboy on 01.09.14 at 5:32 pm

All those roles you listed are slave jobs.

P&L is all that matters, if you’re not getting what you want, fire people till you get the right ones that make you money.

It’s that simple.. Not rocket science.

Buy low sell high.

#192 Junius on 01.09.14 at 6:26 pm

Dear Peter,

Here is one opinion on the value of a degree – from the Harvard Business Review no less:

http://blogs.hbr.org/2014/01/the-degree-is-doomed/

Where is that poster with the name “Harvard Grad” now?

#193 Smoking Man on 01.09.14 at 6:27 pm

#184 Second Hand Smoke on 01.09.14 at 5:42 pm

Well said.

For some reason people think they can get schooled up and get in.

You need contacts and you got to be really good, just like when a young minor hockey player needs to be top dog to make it in Jr. And top dog in Jr to go pro.

The rest are wasting time.

#194 heineken on 01.09.14 at 6:42 pm

garth even though gold is getting killed, on BNN today, they stated that gold is still up 450% over ten years.

is that true?

It’s down over 4o% in two years. That’s true. — Garth

#195 Ralph Cramdown on 01.09.14 at 6:45 pm

#167 Realtor # 1 — “Why you shouldn’t count on a price crash. If people don’t need to sell then they won’t especially at a loss.”

Yeah, that’s the story. I’m not counting on a crash. I’m not buying because my rental keeps the rain out and costs less than owning, and my money, I believe, will earn a greater return than in an owned home.

Other places have shown that people who don’t need to sell participate equally in the price declines caused by their neighbours who do. People who don’t need to buy aren’t willing to pay more than they think is the minimum. I’m sure you’ll find a way of explaining this to your clients.

#196 screwed on 01.09.14 at 6:53 pm

#174 Not 1st

[..if that happens, watch the US rip]

Probably true but what does that say about the rest of the world? Fooled again? How many times over can the US pour crap on the rest of the world, keep all its assets, keep the status and reserve currency and come out smelling like roses on the other side?

I’d rather not have to see anymore smug and self adoring Americans in my lifetime. Their success is at the back of the slaves everywhere else. Changed little from the days when they ran plantations. Their plantation is much of the world now.

IMF, World Bank and so on are all creations and owned by the same group that started the Fed. Debt and currency enslavement across the globe for the benefit of a handful of people.

To boot, they created their own enemies in AQ so they had a fresh target. I hope the Chinese can come up fast and furious and challenge the Yanks and put them in their rightful place, once and for all and at any cost.

#197 Junius on 01.09.14 at 6:53 pm

#190 Victor V,

Everybody in Canada with a brain knew that the Cons pimped up our economy by juicing the Canadian Housing market in 2007 and 2008 to avoid recession and win a majority in the next election.

Now the rest of the world is seeing us as we are now that the Botox and Boob job are wearing off.

#198 TheCatFoodLady on 01.09.14 at 7:07 pm

AlbertaGuy – thanks for finding that info – I wondered what Canadian papers carried these plans.

Fellow ants not ashamed to be seen shopping at low end grocery stores… No Frills is carrying some incredibly sale priced staple items this week. This ant will be toiling back & forth to the grocery store tomorrow, trusty backpack at the ready, bringing home some most awesome deals. Don’t care if I’ll be slogging barefoot, uphill, both ways. Savings is savings, it is!

#199 TheRealTruth on 01.09.14 at 7:28 pm

Junius buddy, you’re back after all these years.

What do you have to say now about my predictions of several years back?? Told you it was the time to buy SFD in Vancouver.

#200 Ronaldo on 01.09.14 at 8:11 pm

#159 Spectacle – good info. From a quick check on Moncton real estate I can certainly understand now why you couldn’t build for what it would cost you to buy.

I thought when Shawn had first mentioned this about his relative unable to build at a profit himself that maybe it was because of land prices. Seems you can buy a house on property there for less than the cost of building the house.

I had read somewhere that they had tax laws there that discouraged non-residents from buying land to speculate so as to keep prices down. Looks like they’ve done a good job of that.

Even central Alberta it would be difficult to be your own GC with land prices as they are. Over double what they were in 05. The developers have a tight hold on prices it seems. Maybe the Alberta government needs to follow the NB method of keeping prices down.

You couldn’t build this one for this amount. This would barely buy the bathroom in a teardown in bubbly Vacouver or Toronto.

http://www.remax.ca/nb/moncton-real-estate/na-79-noel-na-mreb_2140086-lst

http://www.remax.ca/nb/moncton-real-estate/na-98-high-street-na-crea_2105100-lst

#201 Second Hand Smoke on 01.09.14 at 8:16 pm

Re: #193 Smoking Man

Thanks.

Let me just say that your contributions are refreshingly unique.

I certainly went down the education route – in “business relevant” realms i.e. finance and law, and even I can see that the real money is made going against the grain rather than being a perpetual employee. Too many people, whether it’s driven by fear or pragmatism, take the safe route and become a cog in a faceless corporation. Eventually they find themselves with a title that is indecipherable to the rest of the world, and with skills that are relevant only to the machine to which they have dedicated their working lives.

Then “poof,” they lose their job, or its outsourced, and their stuck wondering what happened. And they never work again.

The key for longevity is to either develop a specific skill set, a profession, or create your own job.

#202 Bill Gable on 01.09.14 at 8:17 pm

“Most have no idea what they do not know.”

Wise words, from a brilliant post.

This was yet another example of GREAT writing.

Take a bow, Mr. Turner – you just keep nailing it to the wall.

#203 Second Hand Smoke on 01.09.14 at 8:17 pm

correction: “it’s” and “they’re.” Oy.

#204 prairie person on 01.09.14 at 8:21 pm

A degree is what you make of it, I guess. I know two men who went from small rural towns to university to become the head of corporations and make themselves rich. Another didn’t go to university and started his own business and now has a small empire. A fourth invited me onto his yacht a couple of summers ago. He paid 25 million cash for it. Yup, he had a university degree in the field in which he made all the money. Someone he contracted with only had high school but started his own company and became well off, if not rich. So, both paths work. Depends on which one you want to take. But does an education guarantee anything? No, of course not. It’s just a tool and knowledge base. However, a lot of the bluster on this board sounds like it comes from people who really haven’t accomplished much yet. Lots of talk but not much action.

#205 Daisy Mae on 01.09.14 at 9:00 pm

#138 DrewJw: “I’m paying into those plans my whole life. If they both go away, it’s like stealing 300K from my retirement savings FFS.”

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

It won’t happen. We’d be a nation living on the streets. It would be theft, as you say. All hell would break loose. We’d have an all-out revolution. I don’t think future governments really want that, do you?

#206 Squish on 01.09.14 at 9:09 pm

We sometimes feel the way Peter does, but have introduced the expression “veneer of wealth” into our everyday vocabulary to explain what we see around us here in the lower mainland of BC. It may seem that others are getting ahead, but in fact they are just digging deeper and deeper into debt with blinders firmly in place.

#207 sideline sitter on 01.09.14 at 9:23 pm

Got my MBA waaaaaaay back in 1999, right out of undergrad… Basically, I wasn’t ready to work, school was too much fun and I was too young.

Is it worthwhile? Not if you’ve been working 10+ years. By then, it’s But your experience, personality, and who you know.

It was absolutely worth it for me, but I was wet behind the ears then…

#208 Ret on 01.09.14 at 9:27 pm

Everything I own is in Canadian dollars. Why didn’t you tell me this Garth?

I now find out that the CDN$ has now dropped 10% in the last year wrt the US$. This is good?

If a 10% drop is good, maybe we should go for a 20 or 30% drop in our currency.

We will be prisoners in our own country forced to drive second hand Kia Rios. Foreign travel and Toyotas will only be affordable in 1st world countries.

#209 Daisy Mae on 01.09.14 at 9:32 pm

#198 CatFoodLady: “Don’t care if I’ll be slogging barefoot, uphill, both ways. Savings is savings, it is!”

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

Another Dollarama has opened in the Kelowna area where temps are going to +8 Celsius this weekend (ahem…) and they’re doing very well. The consumer WILL find a way….

#210 Bugaboo Bill on 01.09.14 at 9:43 pm

Garth Please send your cicada casserole recipe to this site, as it could be a winner.

http://edibug.wordpress.com/list-of-edible-insects/

I personally prefer bamboo worms as they go better with beer.

#211 Ruff on 01.09.14 at 9:54 pm

Deleted?? Just saying what a lot of Albertan’s are thinking. I lived a long time in Ontario and have a good understanding of the politics when it come to the West.

#212 Detalumis on 01.09.14 at 10:57 pm

#125 and #168 boomers aren’t affected by the OAS date change? Please study your history. The highest number of boomers were born after 1957 and are affected, that’s why that date was chosen actually. They lump 18 years of people together into this demographic and blame them for all the problems past, present and future for the entire country. I’m sure in 20 years Gen X and Y will also be vilified by whatever generation is next.

#213 Doug in London on 01.10.14 at 4:52 pm

On something related to this topic, did anyone see the article posted by Rob Carrick in yesterday’s (Jan. 9) Globe Business Section? He suggested that at the rate house prices are going up by 2020 few people will be able to afford them anymore. While that’s true, whatever made him think prices will keep going up? I expected better than such rubbish, given the much better content of other articles he’s written. Who do you think determines prices, the government? Obviously the market, and when the price (as well as payments when interest rates rise) go beyond what people can afford, prices will stop going up. I won’t even get into why they could fall, Garth has done a better job of that than I ever could.

@Uh Oh Canada, post #52:
Be patient, you will fell like a world class winner when the ants are comfortably sitting up in a tree watching the cicadas get run over by a steam roller!

#214 Future Expatriate on 01.10.14 at 6:08 pm

#211 If this blog has ANYTHING to teach ANYONE, it would be the simple fact that what a lot of people are thinking is NEVER RIGHT.