The obvious

WET FLOOR modified

Sears dropped another 700 of so jobs on Wednesday, bringing the body count close to 3,000. A few hours later Best Buy punted 950 more. Obviously when major retailers throw people off the roof, it says a lot about the strength of consumer spending. Meanwhile Canada Post was announcing plans for the phasing-out of mail delivery to six million addresses, which tells you something about eight thousand more workers with good jobs and decent pensions.

Meanwhile we just heard the feds got the counting wrong on the November jobs report. Instead of creating 21,000 new positions that month, the country actually shed 27,600. Whoops. I guess the margin of error is now 200%. And as you know, we lost another 46,000 jobs in December, punching the unemployment rate higher than that of the United States. There’s no pretty way to put this – the elimination of 73,000 jobs in the last sixty days of 2013 is an unmitigated disaster.

And did I mention 1,700 jobs at Bombardier a few days ago? Kellogg’s? Heinz? Encana? The media chains?

In the last year job growth equalled 0.8%, which is less than the increase in the population. That pace of growth was two-thirds less than in 2011. All this underscores why the dollar has collapsed in 2014, losing more than four cents against the American currency, and now solidly under the 90-cent mark. As I told you a day or two ago, many believe it’s on the way to 85. Some say less than 80.

The impact of that will be most keenly felt in rising consumer prices, since almost all imports from places like China are paid in US dollars. The Canadian economy is 67% comprised of consumer spending, which is why this is a big, hairy deal. When the price of socks and sweatshirts rise, not to mention most of what you eat, it’s hard to avoid feeling it. These days debt is at the highest level in history, and folks have never, ever carried such mortgage loads, so it makes ya wonder. Are the guys running Sears and BestBuy just getting ready to survive what they know is coming?

That was a rhetorical question. Of course they are. And thus you can see the nature of the negative feedback loop developing. A slowing economy with job losses begets a lower currency which brings higher input costs, rising prices, declining consumption and fewer jobs. This is not an easy sucker to reverse, especially when interest rates are already in the ditch, meaning the central bank has a limited set of tools to work with.

Isn’t this all depressing?

It gets worse. Canada has one of the highest home ownership ratios among developed countries, and a far greater debt-to-income ratio than the nation most like us, America. Owning a house is not like having an ETF. Once your income is stretched by rising prices, or your wife loses her job at the department store, you can’t just phone some guy and sell your home to raise cash and cut costs. Unless you’re in one of those very localized hot hipster zones in Toronto or Vancouver, where heavily-publicized bidding wars are taking place, selling can take a long time. Closing takes even longer. So the process can easily stretch out six months or more.

This means most of the net worth in Canada (real estate has at least 75% of it) is to some degree illiquid. So, when families feel an economic pinch, they first have to rein in spending, before they bail on the house. More negative feedback.

Okay, so where’s all this heading?

It’s reasonable to expect the Canadian economy will stagger for much of 2014. No real reason for the dollar to go up. More job cuts likely. Bad time to be in retail. Variable mortgage rates won’t move. Fixed rates may come off ten or twenty basis points. Realtors, bankers and brokers will make a huge deal of that, and you can already tell how much hype is being thrown at the Spring market. The high-profile bidding wars and large-dollar sales will mask underlying traits that should be worrisome. Like a steady decline in detached home sales in Toronto, or 74% of all homes in Vancouver sitting over the $1 million line. There are so many indicators that this market is fragile and fickle, held together with the gossamer threads of desire and the duct tape of blunt force marketing.

So, try to resist buying. Regardless of your spouse. If you’ve thought about selling, ask yourself if you really think it’ll be better in the fall when the jobs situation is more dire, or a year later when mortgage rates start to click higher.

And, as always, if the bulk of your net worth is in a house, you’d best change that. Seriously.

152 comments ↓

#1 Naish on 01.30.14 at 8:31 pm

I thought it was 1700 at Bombardier…

It was. — Garth

#2 Chopper on 01.30.14 at 8:31 pm

We ain’t see nothing yet, it will get bad the job market, then the RE market will collapse. People are in survival mode right now. This winter has beeb brutal on our bodies and pocket book, sales are down for non essentials, food, and fuel is what people will be spending on, not iPones and, iPods. The domino effect is in full effect.

#3 flash on 01.30.14 at 8:48 pm

Took your advise from an article you posted a few days ago with a bit of a twist. I’m permitted to place $32k into an RRSP. I took the funds out of my TFSA and placed it into a spousal RRSP since my wife has no pension plan. According to the tax software, I will receive back $16k as the tax refund and I will place it back into my TFSA. Thanks Garth.

#4 prairie person on 01.30.14 at 8:51 pm

I agree. The logic is inescapable. However, the parking lots at the local malls are packed. Just try getting a parking spot. Yes, the local Best Buy went under a year ago. Future Shop seems deserted but their prices are as high as ever. They’re not fighting back with lower prices. 10.00 for a telephone line splitter that probably cost 5 cents to make. Used to cost a buck or two. Small TVs (under 50″) are now relegated to one side and ignored. If you aren’t buying over 50″ no one is interested in you. Start looking at the 5,000.00 TVs and you get some attention. Starbucks still has lineups wtih singles and DINKS excitedly talking. At the nearby park thousand dollar carriages seem to be the status symbols. Hard times may be coming but if the lifestyle I’m observing is an indication, it isn’t here yet. Although bloggers here and on the Victoria website talk about how houses aren’t selling, sold signs up up, empty lots are being sold at crazy prices, new houses are being built. Somebody is buying them. House renovations seem to be going strong. I had to wait three months to get the carpenters I wanted.

#5 Smoking Man on 01.30.14 at 8:55 pm

best buy was not about spending it was about a retro Active min wage.

basement dwellers you want by my place for fifty cents.

campaign for Wynee. go to gay pride parade with your man purse and bike.

make sure the teacher wins the election.

you wont have a job but at leased your advisories friends with grant will be crushed.

bragging rights for you

#6 Ontario's Left Coast on 01.30.14 at 8:56 pm

I agree completely… just opened my propane bill to see the horror of a 40% increase over the same period last year — Yikes!

#7 Leptokurtosis Jones on 01.30.14 at 8:56 pm

Basically, any Canadian that is taking out a mortgage right now to buy a house or condo, for any reason, is a complete and total idiot. I used to pull my punches before when commenting on real estate buyers in Canada, but I’m fed up with the nonsense that is going on here. If you are buying a house, you are an idiot. I think housing prices are going to tank 50-60% over the next five years.

#8 Media spring market pump is on on 01.30.14 at 8:59 pm

Spring market pumping has already started.. Cp24 ran news today for their hot properties show… Headline “how to be prepared for this Springs bidding wars!” Lol…. Unreal

#9 Smoking Man on 01.30.14 at 8:59 pm

the only reason grammar and spelling is a bit off.not using Google keyboard .look pretty stupid taking to my phone on the go train.

#10 Ralph Cramdown on 01.30.14 at 8:59 pm

#167 angela

So Zeroedge says GM is stuffing the channel. Maybe there’s some way we could check on actual sales to consumers? Fred to the rescue:
Domestic auto retail sales:
http://research.stlouisfed.org/fred2/series/DAUTOSA

Auto inventory to sales ratio:
http://research.stlouisfed.org/fred2/series/AISRSA?rid=93&soid=18

Heavy truck sales:
http://research.stlouisfed.org/fred2/series/HTRUCKSSA?rid=93&soid=18

Autos and commercial vehicles both selling at 2x the rate of the 2009 lows. Lots more info available at Fred. Or keep reading Zeroedge and losing money.

#11 Drill Baby Drill on 01.30.14 at 9:01 pm

CTV Calgary had an article on the current boom in vacation travel being experienced here in Alberta. Discretionary spending is still alive and well in Calgary. It truly is different this time.

#12 BWilson on 01.30.14 at 9:01 pm

We’re going to see a huge roll off of construction jobs over the next 12-18 months as well, very high levels of residential + commercial construction right now with many projects wrapping up over that time period.

#13 [email protected] on 01.30.14 at 9:06 pm

Garth, and everyone, did you watch/listen to Barack Obama’s state-of-the-union speech? I felt like I was missing out by living in Canada.

Garth do you have staff that write your weekly posts?

#14 Oh no! on 01.30.14 at 9:06 pm

“Canadian Dollar To Sink To 70 Cents, Hedge Fund Manager Says” – http://www.huffingtonpost.ca/2014/01/29/70-cent-dollar-loonie_n_4688245.html

Bring it on, since 2008 I have been holding 80 percent of my savings in USD; time to see some payoff :-)

#15 AfterTheHouseSold on 01.30.14 at 9:07 pm

“held together with the gossamer threads of desire and the duct tape of blunt force marketing”.

Beautiful! So well put, keeps me coming back. Yet breaks my heart to see the carnage coming.

We have tried to convince two friends to consider selling. One, a retired single sitting in a huge house in the suburbs (Pickering Ont), the other, a couple living in a waterfront home in central Ontario. Both are convinced that the market is going gangbusters, prices only go up. Don’t know what else to do. So sad.

#16 ronh on 01.30.14 at 9:07 pm

this year will be where we transit from I Want, ( house, car, Ipad, etc) to I Need, ( job, money, etc.) Where have all the good times gone? What we fear, Garth being right
all along.

#17 Ralph Cramdown on 01.30.14 at 9:07 pm

#167 angela

And hey, GM is up 46% since that Zeroedge article, and with the newly instated dividend, yields 3 1/4.

#18 Arcs55 on 01.30.14 at 9:10 pm

So with the declining dollar would you recommend buying more Canadian ETF’s REITs etc rather then American?

#19 KiaOwner on 01.30.14 at 9:13 pm

My thought – CA-Dollar will finish above parity by year end !

#20 Infused with Opiates on 01.30.14 at 9:14 pm

No no no. We’ve covered this. You have described a positive (de-stabilizing) feedback loop.

#21 Notta Sheeple on 01.30.14 at 9:17 pm

Does this mean that our Prime Asthmatic Ankle-skater is going to start playing the ‘fragile economy’ song on his piano again?

Perhaps a violin would be better suited for His Tubbiness. What’s that burning smell?

#22 Yitzhak Rabin on 01.30.14 at 9:22 pm

Don’t be so sure variable rates won’t move with a collapsing currency and higher than expected inflation. Central banks tend to have a monkey see, monkey do attitude. In just the last few days there were big rate hikes in Turkey, South Africa and India. None were “what economists expected”.

#23 World According To Garth on 01.30.14 at 9:24 pm

Must feel great to be an overpaid $91,000 paper pushing govt worker with a 1 million dollar working poor funded pension.

Oh wait…..

Posties…..gone
Veterans Affairs…….gone
DFO……gutted

200,000 more to go !!! Then maybe we can pay lower taxes based on services we DON’T get in Kanaduhhhhhhh. The dictator knows there is no way unemployed workers can fund a pension deficit of 600 billion. I wonder which useless paper pusher is going to go next?

#24 the jaguar on 01.30.14 at 9:27 pm

OMG. Garth just used the “I” word. Illiquid.
That’s straight out of the vocabulary of OSFI.
Run, don’t walk, to your nearest exit.

#25 cariboojohn on 01.30.14 at 9:31 pm

Hey Garth. My main Man…
Can you give us a heads up on the Emerging Market thing.Things don’t look good.
I was just wondering how bad this is going to get ?
The nice Lady at the bank,talked me into. Going all in on this.
I,ve lost 20 large so far this year on this.
I know I can,t do anything ,but just watch.
And think what diversification really means.
I know I,am toast for 2014 anyway. just asking.

#26 Vancouver Falling on 01.30.14 at 9:33 pm

I built this for you –

http://www.findyourworth.org/vancouver-housing-bubble#.Uur9BjJdW5U

#27 Devore on 01.30.14 at 9:33 pm

In the last year job growth equalled 0.8%, which is less than the increase in the population

Don’t worry, immigration will save us. Everyone knows when you dump a bunch of people with no money in one place, a robust economy promptly self-organizes.

#28 Adam on 01.30.14 at 9:35 pm

This would be funny if it weren’t so sad. I remember complaining at least a year ago (maybe two?) in the G&M comments section that if Carney raised rates the loonie would spike, seriously damaging exports, increasing unemployment and throw Canada into a recession.

That’s not the interesting part. I also said that if he kept rates low, then, as Garth has been chanting for years, consumers would binge on debt and slowly but surely stop spending which would cause massive layoffs and throw Canada into a recession. It’s so surreal to see the second prediction happening before our very eyes.

So what’s the solution Poloz? Rates have been kept low for so long that we’re about to go into a recession, I guess the only way to approach this now is to…….yep, that’s right, keep rates low.

Thanks Carney! Don’t come back!

#29 Piccaso on 01.30.14 at 9:36 pm

#11 Drill Baby Drill
CTV Calgary had an article on the current boom in vacation travel being experienced here in Alberta. Discretionary spending is still alive and well in Calgary. It truly is different this time.
…………………………………………………………………..

That’s a pile of moose dung… watch the wheels fall off the Vegas, Phoenix, Florida road show with the LOON in a dive.

#30 OK on 01.30.14 at 9:39 pm

#14: Bring it on, since 2008 I have been holding 80 percent of my savings in USD; time to see some payoff :-)
_________________________________________

Really, so how much will your $500 be worth then?

#31 aprilNewwest on 01.30.14 at 9:41 pm

Cameron Muir is at it again with what sounded like he was trying to put a positive spin on the spring market.I think it was CTV… suppertime newcast. I didn’t listen to much of it.

#32 Ronaldo on 01.30.14 at 9:44 pm

Welcome to 1983. The gamble of low interest rates since 2009 only prolonged the agony. Now the fun begins. Public and private sector layoffs, public and private sector strikes, housing collapse, stock market correction. Wage rollbacks, benefit rollbacks. Going to be nasty.

#33 Retired Boomer - WI on 01.30.14 at 9:46 pm

US having its market pause, and that was needed. Growth is still on the agenda, but poly’s tics could yet interfere.
OK, so what?
I’m retired balanced between decent bond funds and index mutuals with about 15% in individual stocks. It’s OK Garth, the portfolio puked over 7 figures at years end. I’m retired with a decent dividend stream, ask me if I care anymore? No, not a whole lot. -Thanks for your good help.

On Canadian RE. Too bad you are where we were. Over-leveraged, recession looming, and idiots trapped into the future by their house porn. Not to fear, a few missed payments, forced sale, you get to make up the shortfall.
Same as a car repo only uglier. Bankruptcy awaits some, others will curse the purchase. Spending shrinks neil household debt gets to a more reasonable level.

I really wish it WAS different there. (sigh)

#34 zee on 01.30.14 at 9:48 pm

hi

Sears and Best buy are losing market share and that is why they are laying off people. Their business is no longer workable. J.C Penny in the states continues to lay off people where you keep saying is economic growth. Why.
If your business model fails then lay offs will occur.

Better jobs were lost during the 2008-2009 economic crissis and house ownership kept growing during that period.

#35 Ronaldo on 01.30.14 at 9:52 pm

Decided to take a tour of the new Target store in Vernon a few days ago since hadn’t done so yet. I walked the entire perimeter and counted 12 customers. Workers were double that. And they plan to open more. They must be buggers for punishment. Can’t see how they can survive especially now with our dollar dropping like it is making imports more expensive. I’ll stick with Dollarama and the other discount stores selling the same stuff for 1/3 the price. Could not see any advantage in shopping at Target. Just my opinion.

#36 AfterTheHouseSold on 01.30.14 at 9:53 pm

#29 Piccaso
“watch the wheels fall off…Florida” re currency drop

Funny you should say so. We were just commenting that there is a noticeable drop in the number of Ontario plates here in Florida compared to last year.

#37 Buddy on 01.30.14 at 9:57 pm

There is a point you never seem to bring up Garth.
With the falling CDN $, foreign real estate investors are taking a bath. A $1M house bought in Canada with $USD just took a $100K loss with the CND drop from 1.00 to 0.90. How many foreign investors do you think are looking to buy in Canada, with our dollar plunging and no bottom in sight?

#38 ty on 01.30.14 at 9:57 pm

link for statscan revision? can’t find it

#39 Form Man on 01.30.14 at 9:58 pm

According to the local Kelowna newspaper ‘Capital News’, the current average asking price for a home in The central Okanagan is $ 908,000. The current average selling price is $471,000. Just shows how useless ‘averages’ are ………

I miss DA and the opportunity to completely skewer his nonsensical rantings.
Let him come back Garth……..

#40 Devore on 01.30.14 at 9:58 pm

#14 Oh no!

“Canadian Dollar To Sink To 70 Cents, Hedge Fund Manager Says

On the bright side, gold priced in CDN is doing well. Of course, just about everything else priced in USD has done even better, but who am I to spoil a good party.

#41 Smoking Man on 01.30.14 at 10:02 pm

#28 Adam on 01.30.14 at 9:35 pm

what has this stoner been calling for the last four years.

I have a sermon coming up on every pathetic blog dog and Garth.

not tonight to hammered not tomorrow night will be to hammered.

Saturday stay tuned dogsters.

#42 Dinglenuts on 01.30.14 at 10:07 pm

“There’s a bathroom on the right…….”

#43 Smoking Man on 01.30.14 at 10:09 pm

The playing field through technology has been leveled.

No longer will I live in conrad blocks shadow or garth turner or Kristi Blackford or Hunter S Thompson.

it is now my imagination my wit agains your superior technical skills we’re even in that regard I am going to so on this universe shortly.

I love this thing man it writes faster than I can type.

#44 Cici on 01.30.14 at 10:11 pm

#19 KiaOwner,

That’s what I had been hoping, but given the circumstances, I think we are in for an unfortunate shock :-(

#45 Ronaldo on 01.30.14 at 10:13 pm

#28 Adam –

”So what’s the solution Poloz? Rates have been kept low for so long that we’re about to go into a recession, I guess the only way to approach this now is to…….yep, that’s right, keep rates low.”

In an interview recently he even indicated that interest rates could even come down from where they are. Asked whether he was concerned about the real estate prices in places like Vancouver he replied, “We can’t engineer bubbles”. He did say that we can’t just look at the prices of real estate and that the cost to service is still lower for people coming up for renewal. That is as long as interest rates stay low. I suspect we are going to see low rates for a few more years to come. At least the variable rates. If long term rates go up the banks will simply go back to their “prime minus” rates as they did before the GFC of 08. Interesting times.

#46 Edmontonian on 01.30.14 at 10:14 pm

In edmonton here we have seen a huge plunge in New Luxury condos sales, one referred to as the Pearl ,has sold only three dozen units since it started advertising in 2008, another one Glenora Skyline has collapsed and halted development, after it was originally advertised in 2011! Can’t sell enough… the one partner wants out, the Bank has frozen financial support to the Project. http://www.edmontonsun.com/2014/01/30/glenora-skyline-condomium-tower-construction-stopped-leaving-an-eyesore

#47 not 1st on 01.30.14 at 10:21 pm

Garth, we used to have a couple locally owned mom and pop electronics stores here 20 years ago. Family run businesses with pretty good service and knowledgeable staff.

BestBuy and FS came in and big boxed them out of business and staffed their own stores with know nothing monkeys.

I shed no tear for them and the “staff” that were laid off are just bored college students anyway who would rather be sexting somewhere else.

#48 Paolo on 01.30.14 at 10:21 pm

I haven’t commented here on this blog for a long, long time however it’s just incredible to see how quickly things are changing.

Will this finally shift the Canadian home ownership obsession?

How much consumer debt can people take?

What is the tipping point?

Have we reached critical mass?

Still to be determined – – 2014, stay tuned.

#49 len on 01.30.14 at 10:21 pm

#38 ty – citing or linking is just not Garth’s thing….

the revisions are in the middle of the page, this is the yearly report – adjusted I think

http://www.statcan.gc.ca/daily-quotidien/140130/dq140130a-eng.htm?HPA

#50 aprilNewwest on 01.30.14 at 10:25 pm

#31- Correction: It was CBC.

#51 GenXer on 01.30.14 at 10:28 pm

The revisd job numbers are buried deep in the bowels of this report:

http://www.statcan.gc.ca/daily-quotidien/140130/dq140130a-eng.htm?HPA

#52 DR on 01.30.14 at 10:32 pm

#87 Franco on 01.30.14 at 7:05 am
RE prices in Canada, have only one place to go and that is up, maybe not by a lot, but they will rise. It’s time to throw the book away.

I am with you!
The best Return of Investment I have ever seen is from RE.
Instead of putting your money into stocks to experience this:
http://i.imgur.com/rSJuRFU.png

You better buy a house renovate and sell. Here is one example
W2728750 2 Abner Pl 500000 04/09/2013
W2813815 2 Abner Pl 725000 17/01/2014

225K gross profit in less than 4 months baby!

I challenge anyone around here to show me a similar return in stocks/indexes whatever financial instrument you prefer

recharts im surprised. I thought you were against real estate. But ill tell you your example is just ok. I have done much better

#53 economictsunami on 01.30.14 at 10:39 pm

Canada has a really dreadful case of the Icarus Syndrome…

TD: The Loonie Will Bottom Out Around The Middle Of 2014:

https://businessincanada.com/2014/01/30/td-economist-loonie-bottom-85-cents/

Canada vs US Home prices:

https://twitter.com/datanrd/status/427828884898185217/photo/1

Canadian/U.S house prices & household debt:

https://twitter.com/ac_eco/status/425452066035601408/photo/1

#54 Mark Bourrie on 01.30.14 at 10:40 pm

Just to tease you, it’s “rein in spending.” Usually you don’t get tripped up, even by the tricky ones. BTW, I love the blog.

Auto-correct, sun. — Garth

#55 Bill Gable on 01.30.14 at 10:43 pm

Mr. Turner has been singing this tune for a long time – and so here it is again and it is stark:
D-E-B-T and a stalled economy and we have trouble in River City:

“In other words, too many of us are living paycheck to paycheck. The CFED calls these folks “liquid asset poor,” and its report finds that 44% of Americans are living with less than $5,887 in savings for a family of four.

The plight of these folks is compounded by the fact that the recession ravaged many Americans’ credit scores to the point that now 56% percent of Americans have subprime credit.

That means that if emergencies arise, many Americans are forced to resort to high-interest debt from credit cards or payday loans.”

Link: http://tinyurl.com/lujnxtz

#56 Red Deer Rob on 01.30.14 at 10:53 pm

Thanks Garth for your daily dose of sanity. I’ve lived in Toronto, Vancouver and Calgary. You’re spot on with your observations and daily blogs.

Gen Y’ers like myself are already feeling the pinch. Too few good paying jobs, too much competition for those good jobs, too much debt, insane costs of living. No wonder the birth rate is dropping.

Btw I know you’re a redditor.

#57 tiger on 01.30.14 at 10:54 pm

Lol!

#58 ElGato on 01.30.14 at 10:55 pm

“And thus you can see the nature of the negative feedback loop developing.”

This self-amplifying behavior you’re describing is the result of positive feedback (with admittedly rather negative consequences)

#59 I_AM_HAM on 01.30.14 at 10:57 pm

Ahhh fang-shui! Those retail jobs mean nothing as they pay below subsistence levels.

In fact. retailers are simply adjusting to the fact that malls and thus retail space are going the way of the do-do. Online shopping is the way to go. Ahh-so those reits?

#60 High Plains Drifter on 01.30.14 at 10:58 pm

The currency drop will affect the regions quite differently. You could say a balkanization of the country could take place. Some provinces are large enough that even provincial fracturing is possible. Do B.C., Alberta, Quebec, or others feel loved enough to reject the big ugly suitor of forgeign countries south of here? Our lovers here in Alberta go by names like Shell, Imperial, and Bectel, now wouldn’t that make for some government caucus? I love Toronto but brace for a fight.

#61 DigDeep on 01.30.14 at 10:58 pm

Economics 101… it was 1987, Monday night class. It was darker than normal. Black it would be known to be. Innocence lost as we watched our prof enter stage left, shoulders rolled forward and eyes to the floor. He said, “So I guess you have heard?”

So anyways, supply and demand graph, milk, with the presence of price floors and ceilings. I argued that at some point, with these conditions, suppliers should pay us to take the milk off the shelves. Free milk!

I then offered that with the same conditions in the money markets, banks at some point would pay us to borrow money. Free money!

Economics and I weren’t for each other as it turns out.

I work in the ironic world of digging deep holes with borrowed money as there is no free lunch. Be it a two kilometer tunnel for transit or seven levels of underground parking for a condo, we are moving lots of rock in this town… for now.

Supply and demand is never as simple as it seems.

#62 Ralph do you really care of what you say? on 01.30.14 at 10:58 pm

#172 Ralph Cramdown on 01.30.14 at 7:25 pm
#163 recharts — “Would you be able to show me a RE market that crashed in 4 moths to the point where no costs could be recovered ?”

The list of people who’ve gone broke speculating in real estate is long and illustrious, including Canada’s own Robert Campeau and Reichman family, the current League REIT train wreck in BC, the odious Donald Trump and many more. Thousands of small time spec developers and flippers have also taken this time-honoured path to insolvency, but weren’t big enough to gain infamy.

It isn’t hard to imagine a flipper, after gaining confidence on his first few successes, having three or four houses on the go; a finished one or two up for sale, one being renovated and another ready to go. Ten thousand dollars a month in carrying costs. Then the market turns, and real estate agents’ phones simply stop ringing.

Like I said, it’s a time honoured way of going broke. Ask any older banker.

1) this was never about the institutional investor or big sharks. Don’t diverge from the topic. Try to focus. Remember what the internet is doing to your brains. Fuck Trump and his league. Garth is writing for mortals and my advice was for mortals too…
2) Small investors got broke on the stock market too. Many more than in the RE market. Just because it is easier and more volatile.
3) “It is hard to image…” well you must have poor imagination then. Out of around 50 homes sold these days somewhere between 2 and 4 properties are like in my example. The percentage is small. That is because people are lazy. Who got fried in this sort of arrangement was the speculator who added no value and wanted to keep the house, who was betting on appreciation and who planned to sell it later
This last argument of yours is almost absurd and irrelevant. Do you have any idea how difficult is to find the people who can do the renovation for you? Where did that come from “3-4 properties on the go” ..hear that!
I bet that you extrapolated what you know about condos and those speculators who actually RENT the properties ..you extrapolated that to “buy, renovate and resell” which is an entirely different business set up. If you ever tried to renovate one house you wouldn’t be speaking like that. What you just described applies to a business in renovation and that is an entirely different animal.

You rebuttal is rather a rambling a swing between various points of view but not even an answer to the questions that I asked you:
-why did you bring up Pot-trash and not an index
-why couldn’t you show a RE crash that totally destroyed the values of the houses in 4 months

To recap my points:
-invest in what you something that you can handle yourself, something you can do yourself, ultimately invest in yourself (point made previously in a different conversation, you were not involved)
-investing in RE as described gives you a much better return than investing in stocks, indexes, whatever.
-stock market and the entire industry based on it is far more volatile than the housing market.

#63 out of work realtor on 01.30.14 at 11:03 pm

I see a lot of my fellow out of work realtors here posting on garth blog. You guys need to try and hide the fact that many of us are realtors. To bad we can’t Go back to the good old days. Don’t believe the pump Job in the media. It’s all paid lies.

#64 recharts on 01.30.14 at 11:05 pm

Unless you’re in one of those very localized hot hipster zones in Toronto or Vancouver, where heavily-publicized bidding wars are taking place, selling can a long time. Closing takes even longer. So the process can easily stretch out six months or more.

Garth, where is your data coming from?
What sells sells quite quick
The insanely priced one and the very expensive properties indeed stay on the market for very long.
The bidding wars are RE fabricated garbage as you know it.

Closing alone takes two to three months. Your comments are hopelessly urban-centric. — Garth

#65 LS in Arbutus on 01.30.14 at 11:26 pm

Look, what a deal, a coach house for $1.8 million! (It’s new and almost 2000 square feet!)

http://www.realtylink.org/prop_search/Detail.cfm?areatitle=&ARPK=&ComID=&agentid=&MLS=V1039903&rowc=6&rowp=6&BCD=GV&imdp=9&RSPP=5&AIDL=26&SRTB=P_Price&ERTA=False&MNAGE=0&MXAGE=200&MNBT=0&MNBD=0&PTYTID=5&MNPRC=200000&MXPRC=99900000&SCTP=RS

#66 eddy on 01.30.14 at 11:28 pm

416 sales are down because of shortage of supply.
Gath inspires a new name for the 416 reno artists- Habitat for Hipsters

#67 jan on 01.30.14 at 11:29 pm

#3 flash on 01.30.14 at 8:48 pm
Took your advise from an article you posted a few days ago with a bit of a twist. I’m permitted to place $32k into an RRSP. I took the funds out of my TFSA and placed it into a spousal RRSP since my wife has no pension plan. According to the tax software, I will receive back $16k as the tax refund and I will place it back into my TFSA. Thanks Garth.

Me. Can i do that too Garth.
I have not worked in decades and have no pension coming nor do i have an income right now, period.
Could i instead take the tough from my high interest savings account and put au to the limit in order to claim a simillar refund….Thanks a bunch.

#68 exitstageright on 01.30.14 at 11:35 pm

Canada should voluntarily exit the G-7 and apply to join some economically disadvantaged economic grouping either in the emerging market world, or the mediterranean.

I see a future with boatloads of economic refugees………..escaping the country, and not coming in.
This will make the Irish potato famine look tame in comparison.
The question is which country will take in these dispossessed and needy individuals.

#69 Tri-guy on 01.30.14 at 11:38 pm

I promised never to read this blog before bed Now I’m going to wake her up with my night terrors

#70 Irealistic, really on 01.30.14 at 11:40 pm

Garth: “And, as always, if the bulk of your net worth is in a house, you’d best change that. Seriously.”

Ozy:
How can someone still own their house today e.g. 8500000 and then have another 850000 cash for investments… it looks to me you are giving upper-class advise to the lower-class? Nothing wrong with it, it is admirable actually, but How can they fricking implement it??

#71 Irealistic, really on 01.30.14 at 11:42 pm

Garth: “And, as always, if the bulk of your net worth is in a house, you’d best change that. Seriously.”

Ozy:
How can someone still own their house today e.g. 8500000 and then have another 850000 cash for investments… it looks to me you are giving upper-class advise to the lower-class? Nothing wrong with it, it is admirable actually, but How can they fricking implement it?? Sell their house and become RENTERS??? in post-kollonial Kanata? with kockroaches all over? When was the last time you rented in an apartment building brother…rethorical, don’t bother

#72 Irealistic, really on 01.30.14 at 11:43 pm

Garth: “And, as always, if the bulk of your net worth is in a house, you’d best change that. Seriously.”

Ozy:
How can someone still own their house today e.g. 8500000 and then have another 850000 cash for investments… it looks to me you are giving upper-class advise to the lower-class? Nothing wrong with it, it is admirable actually, but How can they fricking implement it?? Sell their house and become RENTERS??? in post-kollonial Kanata? with kockroaches all over? When was the last time you rented in an apartment building brother…and did laundry in common with the whole renter base…rethorical, don’t bother

#73 Smoking Man on 01.30.14 at 11:47 pm

urban-centric. — Garth

wtf does that mean…

OK I’m an inch away from carpet burns on my head witch is not easy seeing i got hardwood.

urban centirc ..,..I will try..you need a bike , a mister happy that says OK I got it. next mensril cycle I’m up. let me park my man purse , and pull out my yoga mat.
who is that Neanderthal with the Harley.

what the hell put down that bacon , muffins and orange jucuce only.

#74 45north on 01.30.14 at 11:47 pm

the elimination of 73,000 jobs in the last sixty days of 2013 is an unmitigated disaster

same as in the US, unemployment preceded the collapse of real estate but in Canada there is also the decline of the Canadian dollar, worse the US was able to lower its interest rates to cushion a declining real estate market. Canada cannot – it’s already as low as it can go.

Are the guys running Sears and BestBuy just getting ready to survive what they know is coming?

That was a rhetorical question. Of course they are.

I read Sears had a special deal at the Eaton’s Centre – $1/sq foot but management pulled the plug. Not a good sign.

#75 recharts on 01.30.14 at 11:48 pm

#52 DR on 01.30.14 at 10:32 pm
#87 Franco on 01.30.14 at 7:05 am
RE prices in Canada, have only one place to go and that is up, maybe not by a lot, but they will rise. It’s time to throw the book away.

I am with you!
The best Return of Investment I have ever seen is from RE.
Instead of putting your money into stocks to experience this:
http://i.imgur.com/rSJuRFU.png

You better buy a house renovate and sell. Here is one example
W2728750 2 Abner Pl 500000 04/09/2013
W2813815 2 Abner Pl 725000 17/01/2014

225K gross profit in less than 4 months baby!

I challenge anyone around here to show me a similar return in stocks/indexes whatever financial instrument you prefer

recharts im surprised. I thought you were against real estate. But ill tell you your example is just ok. I have done much better

See the bolded part? I too thought that our host here is against mindless and unsubstantiated RE pumping up …..
As long as I see comments like that I will support them with examples.
The bolded quote is a shameless pro RE post who probably originated from one of the extreme cavities of a RE agent.
For a while I was mad that Garth allowed that here. Later I understood why. It is his site and he does what he likes. Since he considered that those unsubstantiated posts deserve to see the light here then I decided to look behind that and to see if that is possible. Instead of getting mad I told myself that is better to stay positive and to find if there is any truth in that.

Garth …keep them coming ☺ please.

#76 Ayn Rand Army on 01.30.14 at 11:49 pm

This is not an easy sucker to reverse, especially when interest rates are already in the ditch, meaning the central bank has a limited set of tools to work with.
———
Actually the fix is the opposite of what the CBs have been doing for years, they need to raise interest rates.

Capitalism is called capital-ism for a reason, the reason is production of lower order goods or consumables like energy, food, all final goods and services etc always require prior investment in higher order goods, goods not want for them in and of themselves, capital equipment – machines, tools, trucks, tractors etc.

So to get higher order capital equipment and factories for production we need savings and under consumption which comes from higher interest rates.

Then increased production increases our wealth and exports and strengthens the dollar…..

or something like that until the government starts punishing the producers and workers with taxes which basically destroys the effort and leaves us poor again in our socialist capitalist mixed economy country.

So also need less gov and less public sector and more actual workers who produce stuff.

Easy fix but no politician will ever recognize it, never mind do it.

And our modern economist dont even know these basics. They’re all morons too.

#77 Angie on 01.31.14 at 12:18 am

For a while I was mad that we didn’t buy a house because a few of my friends bought in 2007 when there were low interest rates and got 40 year mortgages on semis that have risen $60K in value. The payments would be so low, like, cheaper than my rent. Grr! I mean, Canada didn’t burn to hell after 2008 like we thought it might and everyone that bought still, after all these years, look like a genius.

So we paid down our student loans and maxed out our RRSPs and TFSAs. Flash forward seven years and we have two small kids and rent. Now I stay home with the kids and bring home what money I can. We usually owe taxes and, thankfully, we can draw on the income thrown off by our investments to do that. If we had a house who knows if we’d have enough equity to draw on, but even if we did we’d be going further into debt to pay our tax bill. It makes me feel fairly secure. We’re not getting ahead, per se, but at least large expenses like taxes aren’t setting us back. I’d still like a house and look forward to when the kids start school and I can get back to working more and save for a down payment on a house we’ll be in for 10 or more years.

#78 Ralph Cramdown on 01.31.14 at 12:25 am

recharts, I don’t know why you think fix-and-flip is relatively easy, risk free money. Here’s how I see it: Pretty much everybody understands how it works. Many families get a TV channel which shows examples daily. Magazines are dedicated to the topic, and every huckster from Robert Kiyosaki to Don Cambell is on the road teaching more people. Credit is still fairly easy right now. All that means that the returns are going to be low for the risks involved. If you think the returns are high, maybe it’s because you’re mispricing the risk.

At the end of the day, a Toronto flipper has to find a buyer who is willing to pay far more for the house than it would cost to rent, far more than it would have sold for only a few years ago, and far more than nicer houses on larger lots in many nicer cities cost. That buyer is fundamentally a speculator even if he’s planning on living in it for the next 20 with the wife, kids and dog, because it would be cheaper to rent.

You ask what real estate markets have had large price collapses in four months. Who cares? When real estate markets go South, it’s the SALES that collapse. Flippers can put a fire sale price on it, follow the market down with ineffective price cuts or wait it out until their bank calls the loan, but they can’t conjure up a buyer at a fair price if nobody’s buying. One of the bigger canards in organized real estate is that a fairly priced home will sell quickly. They do, right up until they don’t.

Why did I mention Potash? It was humour. I did sell POT calls earlier this week, and after today’s earnings announcement, they got a lot cheaper to buy back and more likely to expire worthless. Since I didn’t put up any money for this transaction, my return is infinite.

#79 AfterTheHouseSold on 01.31.14 at 12:28 am

#60 High Plains Drifter
“even provincial fracturing is possible”.

Ontario continues to sink in a mire of debt, corruption and scandal:
1 billion ornge air
1billion olg
7 billion green energy (against advice auditor general)
1 billion per yr kinder-care ( against advice Drummond)
1 billion gas plant relocation ( vote buying 2 seats)
new proposed Ontario pension plan

Us along with our two mid twenties children in health care and trades, are all house free and mobile. We hear the siren call of Alberta.

#80 D.D. Corkum on 01.31.14 at 12:58 am

#23 on 01.30.14 at 9:24 pm

“Must feel great to be an overpaid $91,000 paper pushing govt worker [plus a pension]”

Federal public servants in the “Clerical and Regulatory Group” profession have salaries between $33 and $67K per year — far below the figure you quote.

To be in the upper end of that range, you have to have one of the more important jobs within that particular job classification. For example, an accountant would only get up to $48K as a middle of the road.

Someone making $91K has to do more than push paper.

#81 KommyKim on 01.31.14 at 1:01 am

If the US recovery is real, then the Canadian one will inevitably follow. They account for 77% of our exports and 52% of our imports. China comes in at a distant second at 2.2% & 9.8% respectively.
Our total trade is worth more than 67% of our GDP.

#82 James on 01.31.14 at 1:20 am

David Fleming has a point. Anyone hoping for a correct, specifically in hot area can be waiting for a lifetime time.

http://www.torontorealtyblog.com/archives/the-friday-rant-whats-it-going-to-take/10485

#83 DreamingInTechniColour on 01.31.14 at 1:21 am

#61 – For the first time I saw stickers in the store offering 50 cents off 4L jugs of milk at Shoppers Drug Mart.

What is happening – has the time finally come when Canadians are no longer able to afford to pay full price on their dairy products ? , e.g. the “marketing board’s premium”

#84 Out Of Work Realtors on 01.31.14 at 1:28 am

Come on guys! trying to spin lay offs and the falling dollar as a non event or a good thing is poor realtor spin. Not so easy selling when less are qualifying for mortgages. Sssshhhhhhh Don’t worry I won’t tell anyone.

#85 Son of Ponzi on 01.31.14 at 2:06 am

What’s the problem ?
Sears let’s go 700 workers.
All we have to do is import 700 temporary foreign workers.
Problem solved.

#86 Suede on 01.31.14 at 2:11 am

Hahaha, 200% wrong on the jobs report? LOL

John Williams must be ROTFLOL.

92% of stats are hopeless!

#87 Spitballer on 01.31.14 at 2:33 am

Remember to Happy New Year to your new bosses tomorrow.

#88 Freedom First on 01.31.14 at 2:51 am

Ouch! Our job losses in Canada are now resembling the pace of job losses in the U.S. that rocked the U.S. economy, reverberating around the world when the GFC hit. We are at the same place now as when the Bernanke, U.S. politicians, U.S. RE industry, U.S. media, etc. were saying everything is stable, and housing will only experience a “soft landing”, which they kept saying it until no one, not even them, could deny TShadHITF.

Millions of families world wide lost everything being leveraged up to their a$$e$$ in one asset, having to learn a simple financial truth the hard way: “Ignorance is very very very expensive”.

#89 Relocated Aussie on 01.31.14 at 4:50 am

I wish this adjustment in RE prices would happen soon. I Have seen a property that fits my criteria but, even though the listing agent declares that a lot of work is needed the owners want 114K more than the assessed value. Unfortunately I have seen people pay way more than market value for a fixer upper and they do not seem to question why the price is so high.

#90 Buy? Curious? on 01.31.14 at 5:08 am

Garth, Toronto is becoming a ghetto for the rich. Poor people will live in condos. Rich people will live in SFH’s. Price will appreciate in homes faster than wages.

On a few side notes, TurnerNation, if it wasn’t for my immaturity, my exaggerated sense of self-confindence as a result of my fighting skills, and a stress free approach to money, I’d be the poster boy for smoking weed regularly. Right now, we’ve got Willie Nelson, Snoop Lion, Justin Bieber and George Michael. I don’t drink alcohol any more unless it’s free. It has too many negative side effects.

http://www.youtube.com/watch?v=CWxgfTMLtc0

Speaking of fighting, no disrespect Smoking Man, but try not linking homosexuals to weakness. Nothing will send a man into a lifelong depression then getting ass kicked by another man wearing a green lycra body suit (The green is for the legalisation of marijuana, the lycra is for the positive effects it has on the skin). I’ve got a man purse but it’s more of a holster that I can wear under my blazer. It’s cool as long as I don’t get pulled over by the Fuzz and make sudden hand movements.

Rob Ford 2014! We love you because you don’t give a rat’s tail about anything! Go on, smoke crack, drink booze and go down on the Mrs all you want, my Brotha from another Motha! You’re going to get elected again for sure!

#91 World According To Garth on 01.31.14 at 5:13 am

http://armstrongeconomics.com/2014/01/30/the-shocking-truth-in-ukraine-mainstream-will-not-report/

Good thing we live in Canada where our PM listens to the MPs, the economy is booming and everyone is gayfully employed making $55 per hour like paper pushing govt employees.

Oh wait….

#92 Buy? Curious? on 01.31.14 at 5:26 am

Oh, and Happy New Year to all my Chinese Milfs out there! Keep telling your friends to buy houses, very cheap.

http://www.youtube.com/watch?v=K0wxWouI6uA

#93 angie on 01.31.14 at 6:43 am

None of my friends understood a couple a years ago why we sold our big house, made a huge profit, and then dumped it all into a smaller house. They were all doing the opposite: taking on more debt while we were getting rid of ours.

But, then again, we also started saving for retirement at 23, and they are just starting now at 40.

#94 economictsunami on 01.31.14 at 6:55 am

How can you repair a problem when no one agrees what the problem nor root cause is?

Better yet, how do you quantify a problem when no one trusts the official statistician’s numbers as anywhere near an accurate reflection? (Not talking about fudging numbers, just poor quality data.)

Tired old economic models are missing both the seismic shifts, as well as the subtle…

Europe’s ‘Japan’ Problem Continues: Eurozone Inflation Drops Again…

http://www.businessinsider.com/eurozone-january-inflation-2014-1

As for Japan, they may get their much awaited inflation but be careful what you wish for.

The amount of ‘juice’ needed to sustain at least a 2% core inflation will be both lengthy and an exhausting process…

Japan’s Inflation Accelerates as Abe Seeks Wage Gains:

http://www.bloomberg.com/news/2014-01-30/japan-inflation-exceeds-estimates-as-abe-aims-to-end-deflation.html

#95 Brian Romanchuk on 01.31.14 at 8:09 am

Garth,

The difference in jobs data was not a revision, it is from a different survey. The data you referred to was the data taken from employers, the equivalent to the Establishment Survey (Nonfarm Payrolls) in the US.

The headline data everyone normally follows (for December) is from a survey of households. It is fairly noisy, but over time has less of a bias.

The fact that there is a gap between the two is no big deal; in the US you often see +200k for Payrolls, and -300k for the Household survey for the same month. You have to look at averages over time for the same survey to get a good picture.

#96 Trying to be realistic on 01.31.14 at 9:09 am

We have a paid for house in one of those hipster TO neighbourhoods. I’m confused by your advice to sell… Right now if one of us lost our jobs, we could pare down our expenses to a minimal amount, due to being mortgage free. We also have a 650k untouched HELOC, an emergency fund (I know you are against these!) and around 300k in investments. House heavy, but not an emergency-sell situation… Is it?

I like the reality check I get from this blog, but it can sometimes be confusing.

#97 raisemyrent on 01.31.14 at 9:28 am

in other news, the google spat this out (amongst others):
http://www.oecu.on.ca/tools/rrsptax_calc.htm
http://www.tax-services.ca/rrsp-canada/rrsp-tax-savings-calculator.html

Is it me, or are they broken?

wait, you’re richer than you think!

#98 angela on 01.31.14 at 9:42 am

Sears and BestBuy just getting ready to survive what they know is coming? ~Garth~
You sound like a conspiracy theorist. Whats coming Garth??higher s&p 500 ,dow the main stream media says different than you, we are in full recovery mode eveything is hunky dory haven’t you looked at the stock market

#99 TurnerNation on 01.31.14 at 9:43 am

Got my rental kando increase notice. $20/month. Lower than this year’s prop tax hike here in FjordNation.
Owned by a REIT my building is, so I’m helping XRE…

#100 angela on 01.31.14 at 9:49 am

great article I especially like when you mention a negative feedback loop which is a result of lose of purchasing power of the canadian dollar

#101 Steven on 01.31.14 at 10:12 am

Did you all think there would be enough consummer demand and money to keep these enterprises viable in Canada when the lions share of after tax income goes to real estate and the investment markets? What goes around comes around and when that stops so does jobs and businesses. Economic and spending priorities need to be rebalanced.

#102 Darren on 01.31.14 at 10:22 am

@#3 Flash

>I took the funds out of my TFSA and placed it into a spousal RRSP since my wife has no pension plan. According to the tax software, I will receive back $16k as the tax refund and I will place it back into my TFSA.

Be careful with this. Funds withdrawn from a TFSA aren’t allowed to be re-contributed until the next calendar year (unless you have fresh contribution room, which it sounds like you don’t). If you immediately roll that savings back into your TFSA, you’re going to be hit with a hefty over-contribution tax of 1% of the over-contributed amount, per month.

#103 Rational Optimist on 01.31.14 at 10:29 am

This is interesting: http://www.bloomberg.com/news/2014-01-30/anxiety-hits-norway-s-housing-market-as-premier-monitors-decline.html

Maybe we should look at Norway’s real estate market. Prices are down 5% in the last five months; their currency has lost 12% against that of their major trading partner since a year ago; the financial regulator is being asked to loosen rules (imposed in 2011 to help cool the market) capping loan-to-value at 85%.

Upshot is that the biggest bank in Norway (this is all from the Bloomberg) article is anticipating a 20% decline in prices within two years.

By the way, Ralph Cramdown’s point about real estate risk was spot on: it’s not prices, it’s sales. If you’re left holding the bag when buyers decide to go on strike, it’s fairly irrelevant what the assessment/appraisal/your own guess at fair market might be. Your carrying costs will murder you. I know people already who fancied themselves “flippers” who have taken baths- not because of the market, but because of their poor understanding of it.

#104 JL on 01.31.14 at 10:39 am

Garth,

Continuing our debate from your previous blog post, I’m very aware that 67% of the Canadian economy is consumer spending and of course the falling dollar will add inflationary pressure and hurt consumer spending. But there is no denying that Canada would do much better for the next 5, 10, 15, and 20 year periods with a CAD dollar between 88-92 cents then we would with a dollar at parity. Why the heck do you think China artificially pegs their currency lower that the USD than it otherwise would be? For the heck of it?

I live in Alberta, the price differential between Alberta oil and WTI just fell by 10% because of the CAD falling. That’s GREAT for us. Alberta consumer spending is already through the roof on a per capita basis, we can afford to pay a bit more for imports because we have a massive trade surplus. The rest of Canada can figure out what they need to do.

#105 angela on 01.31.14 at 10:50 am

@#10 Ralph Cramdown on 01.30.14 at 8:59 pm

Since you don’t believe zerohedge charts about channel stuffing i thought I would just post from a mainstream media outlet about channel stuffing it appears you need your edumacation from mainstream rather than contrarian views .channel stuffing is illegal and controversial so thus a little on the hard to prove side but there are now lawsuits being filed against GM
http://www.bloomberg.com/article/2012-07-13/aTnSu.gj3ZI4.html NOTE: bloomberg not zeroguy .Another term for this situation with GM can be termed as “corruption” but of course that cant be with a big company like GM because we all know that big corporations are too big to lie they would never fudge the books .I will say that while I was on business trip in Michigan I personally saw 2011 unsold Malibus and trucks sitting in what appeared to be 2 football fields of land this was 2013 i witnessed this if you dont believe me here’s a link
http://online.wsj.com/news/articles/SB10001424127887323401904578159601729569798
and Ralph not trying to prove you right or wrong or who makes more money just looking at this from a different perspective just seems fishy that there are still loads of brand new 2011 vehicles still sitting around with 0 km on them

#106 recharts on 01.31.14 at 11:02 am

#78 Ralph Cramdown on 01.31.14 at 12:25 am
recharts, I don’t know why you think fix-and-flip is relatively easy, risk free money.

where did I say that? I said it is more efficient and safe. I posted numbers and I showed what happened with the same capital if invested in an index. This is what I initially posted

Here’s how I see it: Pretty much everybody understands how it works. Many families get a TV channel which shows examples daily. Magazines are dedicated to the topic, and every huckster from Robert Kiyosaki to Don Cambell is on the road teaching more people. Credit is still fairly easy right now. All that means that the returns are going to be low for the risks involved. If you think the returns are high, maybe it’s because you’re mispricing the risk.

You failed to demonstrate the risk by showing a RE market going down in 4 months as bad as the stock market did

At the end of the day, a Toronto flipper has to find a buyer who is willing to pay far more for the house than it would cost to rent, far more than it would have sold for only a few years ago, and far more than nicer houses on larger lots in many nicer cities cost. That buyer is fundamentally a speculator even if he’s planning on living in it for the next 20 with the wife, kids and dog, because it would be cheaper to rent.

I continue to surprise me. I am not sure if at this point you are arguing for the shake of it or you do have a point.
A person who buys a house, renovates that house and sells it adds value to what (s)he sells.
A person who buys POTCrash and sells it adds nothing to what he/she sells. How is that person different from a person who buys a house with the intention to sell it shortly after, without adding anything to it (the case for many condo sellers)
Cheaper to rent you say..that is interesting. What you are saying reminds me about brainwashing. How the heck has investing became the standard reference for everything? Why do you believe that anybody has to invest and anybody is cut for this. If the solution preached on this site (invest, you will get 8%) would be so safe everybody around the world would do it. Garth is not the first who has discovered this.

Your reference to costs in other cities is irrelevant. You live in a city for many other reasons other than the cost. I think that you are older than me and if at this stage in your life you have not understood this then all you must price in this life has a price and I feel sory for you.

Your statement that a buyer who buys with the intention of staying there 20 years is a speculator is so absurd and so unsubstatiated that makes me wonder if this conversation should continue

short story:
your view–>all those guys who buy and do not invest are suckers
my veiw–> people should better invest in anything that they can do by themselves and it is profitable

Buying POT ☺ stocks just to sell them months later just means that a sucker somewhere (potentially in Ca) lost the money you made.
Real estate buying is OK with the condition that you add real value to it.
An economy excessively based on RE or investing in stocks is set to fail.

You ask what real estate markets have had large price collapses in four months. Who cares?

Let me remind you one thing: there is institutional investors who, in their honesty, returned money to the clients saying they can not invest them at this moment. The stock market is flying too high and it might correct as it recently and partially did.
Buying stocks indexes whatever AT THIS MOMENT, even for long term investment is WRONG. This blog does a good job at educating people to invest but, IMHO, it does not say much about the best moment to invest especially now when after years of QE everything is so pumped up.

When real estate markets go South, it’s the SALES that collapse. Flippers can put a fire sale price on it, follow the market down with ineffective price cuts or wait it out until their bank calls the loan, but they can’t conjure up a buyer at a fair price if nobody’s buying. One of the bigger canards in organized real estate is that a fairly priced home will sell quickly. They do, right up until they don’t.

do you have any evidences for that? I want to see a RE crash where sales went to zero and the price went to what…20-30% down in a very short time span. Something similar with the stock market. I was looking at Nikei this morning: almost 4000 down since Dec 31. That is 25% in less than two months.

Why did I mention Potash? It was humour. I did sell POT calls earlier this week, and after today’s earnings announcement, they got a lot cheaper to buy back and more likely to expire worthless. Since I didn’t put up any money for this transaction, my return is infinite.

Making pointless jokes in a serious discussion is rather lack of humour and waste of time.
The mantra around here is NO INDIVIDUAL STOCKS.
The other mantra: RE is bad.

RE is bad when the credit is excessively cheap, the lending is far too lax and other interest are involved.
There is nothing fundamentally wrong with renovating houses in the core of the city where in many neighbourhoods everything (BUT EVERYTHING) looks like shit right now.
The current bubble is the result of an idiotic government policy. They should have discouraged flipping houses without adding value to that. If they wanted to reignite the economy via RE they should have done it this way:
-tax like hell any guy who owned the house less than 5 years, and who is selling at a big profig without adding anything to it.
-tax very little the guy who renovated a house and sold it with a good profit (the market will regulate the size of the profit) and who can prove that in the process of renovating the house paid other people for it or he did it himself. That will equate to money circulation.

Same should go for stocks et comp: tax the long term investor 5% and give a hell of a 75% taxes the <bspeculators who sell POTash three months after they bought it making a hefty profit but ruining someone else

Oh: and let’s not forget the midlemen in both industries-they should be eliminated

#107 jess on 01.31.14 at 11:34 am

foreign currency loans

What happened to all those Swiss Franc mortgages in Hungary,Cyprus,Croatia and Poland?
Posted on December 12, 2013 by Shaun Richards
http://www.mindfulmoney.co.uk/wp/shaun-richards

Foreign-currency loans and systemic risk in Europe
Pınar Yeşin, 26 November 2013

Before the onset of the financial crisis, European households and non-financial firms were borrowing heavily in lower-yielding foreign currencies to finance their home mortgages or business investments, even though they did not necessarily have a steady income in the currency concerned. Five years after the financial crisis, banks still hold a substantial amount of foreign currency loans to unhedged borrowers on their balance sheets. This column quantifies the systemic risk that these foreign currency loans pose to the European banking sector
http://www.voxeu.org/article/foreign-currency-loans-and-systemic-risk-europe

http://www.taxjustice.net/2014/01/30/goldman-tax-dodge-fury-shakes-denmark-government/

#108 Happy Renting on 01.31.14 at 11:35 am

#82 – James
David Fleming asks, “what’s it going to take?” and Garth answered a few days ago, “rising unemployment.” Plus increasing underemployment. People with no money to spend on houses or buying up because their existing mortgages are huge, consumer debt is huge, diving CAD means prices of goods are going up so their wages don’t go as far (and it’s not the good inflation that comes from increasing demand…) Too many people in such a financially precarious position that they can’t absorb a shock to the system (job loss, health crisis, stock market correction, a change in the rate at which the bank will lend them money, even a large, unplanned expenditure. Stuff that happens in life.)

Another downturn will see prices drop. Not equally across the board, but even desirable areas go on sale a bit when the financial sky is falling.

#109 jess on 01.31.14 at 11:41 am

#85 Son of Ponzi
but that new economy needs a “new type of driver” especially for those 50 foot driverless mining trucks

e.g
Argyle diamond mine in Western Australia.
but then i don’t care about diamonds

#110 PoltawaDiva on 01.31.14 at 11:43 am

You want to know which RE market had a huge collapse in four months? Try Vancouver (Suprised?) in 1980. Our house closed Dec 1, 1980, had sold for $254000. Was relisted almost immediately (don’t know the details – we were out of there with the money and a VTB mortgage for one year at 19.5%). Because of the mortgage, we know that the house sold by December 1981 for $180000
(the sum; that the mortgage was for). The buyer was creamed: over ?$25000 in interest, plus RE commission and 2xclosing costs plus an actual loss of $74000. Easy money? Low risk?

#111 heinekin on 01.31.14 at 11:47 am

#52 DR on 01.30.14 at 10:32 pm

#87 Franco on 01.30.14 at 7:05 am
RE prices in Canada, have only one place to go and that is up, maybe not by a lot, but they will rise. It’s time to throw the book away.

I am with you!
The best Return of Investment I have ever seen is from RE.
Instead of putting your money into stocks to experience this:
http://i.imgur.com/rSJuRFU.png

You better buy a house renovate and sell. Here is one example
W2728750 2 Abner Pl 500000 04/09/2013
W2813815 2 Abner Pl 725000 17/01/2014

225K gross profit in less than 4 months baby!

I challenge anyone around here to show me a similar return in stocks/indexes whatever financial instrument you prefer

recharts im surprised. I thought you were against real estate. But ill tell you your example is just ok. I have done much better
——————————————————–.
Just to let you know DR.
Real estate in downtown TORONTO is good. Theres tons of “muncha cakes” who cant replace a light bulb let alone renovate a bathroom. these suckers (literally) will cough up the huge coin to live next door to a bakery.
Real estate anywhere esle in Ontario sucks.
do you want to live in Timmins, Ottawa? Theres French cdns there. how bad is that! How about Owen Sound or Kitchener? Give me a break!

So, which investment has made more money than real estate? Gold and silver.

#112 Calgary Conditional Owner on 01.31.14 at 12:08 pm

#7 Leptokurtosis Jones on 01.30.14 at 8:56 pm
Basically, any Canadian that is taking out a mortgage right now to buy a house or condo, for any reason, is a complete and total idiot. I used to pull my punches before when commenting on real estate buyers in Canada, but I’m fed up with the nonsense that is going on here. If you are buying a house, you are an idiot. I think housing prices are going to tank 50-60% over the next five years.
_____________________________________________

I think your comment would have a bit more credibility if you opened with” “I don’t like to generalize, but…ANY Canadian taking a mortgage to buy ANY property for ANY price and for ANY reason, is a total idiot!” Hahaha that’s sound analysis at its best. Oh, and is your prediction on the 50-60% drop in real estate also across the whole board? Just brilliant! Hahahahaha.

#113 looking at it from both sides on 01.31.14 at 12:09 pm

@#37 Buddy
With the falling CDN $, foreign real estate investors are taking a bath
—————–
The flipside is that cdn real estate is now 10% cheaper to foreign buyers using US$. When the loonie was in the trenches in the early 2000’s , BC vacation properties (aka Whistler, waterfront anything) went hog wild with foreign buyers snapping them up.

#114 Obvious Truth on 01.31.14 at 12:12 pm

#52. Gross profit. A new one.

After costs TLT probably beat that.

#115 angie too on 01.31.14 at 12:15 pm

@ #77 Angie

I think you guys did the right thing. Pay off debt now, and start saving for retirement early. Right now, renting makes more sense. But, if the market ever returns to like it was in 2000 (prices were really low, but interest rates were high ~7.5%), the the rent to purchase ratio will change dramatically. Then look at buying.

People who only look at the interest rate when buying a house are too short sighted. The mortgage lasts 25 years, but the rate changes all the time. Don’t pay top dollar for a house just because the interest rate is low. The rate will change, but the price you paid for the house never will.

#116 angie too on 01.31.14 at 12:26 pm

@ 72 Irealistic, really – “How can they fricking implement it?? ”

Really, that’s your question? Here’s your answer: Sell your house, and buy a less expensive one. So that the rule of 90 is followed. And do it soon.

Or are you one of those people that “must” have 2700 sqft house, with imported wood floors, a “custom” kitchen, a jacuzzi tub, and media room. Custom – the word means nothing anymore.

#117 bentoverpayingtaxes on 01.31.14 at 12:30 pm

“The impact of that will be most keenly felt in rising consumer prices, since almost all imports from places like China are paid in US dollars. The Canadian economy is 67% comprised of consumer spending, which is why this is a big, hairy deal. When the price of socks and sweatshirts rise, not to mention most of what you eat, it’s hard to avoid feeling it.”

And yet none of this will show up in the ‘official’ read on CPI. In fact…just the opposite. Because all the things mentioned are ‘too volatile’ to include we will see no response to consumer pain from the meat puppet BOC.

Lets not kvetch about a hacking of persons in the public trough……it is the expense of maintaining a bloated civil service that is at the heart of the outrageous taxation in this country.

“Meanwhile Canada Post was announcing plans for the phasing-out of mail delivery to six million addresses, which tells you something about eight thousand more workers with good jobs and decent pensions.”

The labor unions are always saying that the civil service has to pay the extraordinary salaries and pensions because they need to attract ‘the best and brightest’…to compete with the private sector……Give more civil servants cadre some free time in the private sector to prove themselves as entrepreneurs. Let them risk their vast wealth into the economy instead of on cruise ships and exotic vacations. Lets turn the phrase ‘let them eat cake’…..into ‘lets create some jobs.

Why not claw back the trillion dollars set aside to fund lavish civil service pensions and spend it instead on infrastructure jobs.

#118 angie too on 01.31.14 at 12:32 pm

Actually, I think the word ‘custom’ (when referring to homes) actually means ‘idiot tax’

;)

#119 BCD (D for Doomer) on 01.31.14 at 12:47 pm

Welcome to 1983. The gamble of low interest rates since 2009 only prolonged the agony. Now the fun begins. Public and private sector layoffs, public and private sector strikes, housing collapse, stock market correction. Wage rollbacks, benefit rollbacks. Going to be nasty.
___________________________________

I love doomers. I mean I am a doomer after all, but sweeping generalizations like these make me cackle (as I head into the bunker to open up a #10 can of tomato sauce).

Everywhere I look there is evidence of excess money. Hot cars, hot SUV’s, hot women with man-heat inducing surgeries. We don’t know how deep the well of Baby Boomer savings runs, but my feeling is it is pretty deep. No end to the financial party in my event horizon–just Miley Cyrus Twerking and Justin Beiber Beliebing until well into the next decade. God I wish I was young again and with a heavily financed coke habit.

#120 Chickenlittle on 01.31.14 at 1:00 pm

#62: Ralph do you……

Leave Ralph alone. If you think the internet is screwing him up then its probably screwing YOU up too. Don’t think you’re immune.

#121 Sheane Wallace on 01.31.14 at 1:01 pm

#45 Ronaldo on 01.30.14 at 10:13 pm

In an interview recently he even indicated that interest rates could even come down from where they are…
————————————-

I am afraid this might happen, they might try to reduce the overnight rate.
Central Bankers are trying to fight wrong behaviour and huge credit expansion by making money cheaper which encourages even worse behaviour and larger credit expansion.

It is a negative feedback loop.

What a choice… either fail immediately in severe depression on continue on the path of credit expansion and suppressed rates.

The problems with this are:

Medium and Long term bond rates are not determined by central bankers but by the bond market.

CMHC backing up and insuring mortgages severely changes the marketplace and removes market risks for the lenders offloading it to taxpayers. If banks were left on their own we would not have 70-80 % of the mortgages in the last 6-7 years approved at all, no bank would issue these knowing what the risk is.

With the government conveniently removing the risks from the lenders the borrowing escalates and capital miss-allocation is becoming worse.

Instead of letting markets decide on risk and cost of capital which ultimately leads to better capital allocation and increased productivity we are getting rigged markets (that have nothing to do with free markets).

Suppressing market forces and miss-pricing the risk will cost us dearly.

Government is taking risk for 1.1 trillion in mortgages (CMHC, Genworth,…) at very low premiums, this is absolutely and for certain guaranteed loss to the tune of at least 100-200 billions, could be more.
Whether that loss is paid by reduction in budget expenses, by further increase of the debt or even monetization is irrelevant.

The fact of the matter is that somebody is taking inappropriate risk at much lower premiums than justified. Where is the risk assessment for justifying CMHC insurance premiums?

In absence of such this is pure folly with taxpayers money, if not outright crime.

It is time to abolish CMHC.

Unfortunately we are already on an unsustainable path and I am afraid that we would we the worse of all:
– Inflation
– reduced earnings and benefits
– increased taxes
– higher unemployment
– severe recession /depression

followed by:
– potential collapse of the currencies
– increase of interest rates
– capital controls

It is funny, I wrote some time ago on this blog about governments reaching to the retirement savings of their citizens and at the latest state of the union address it was announced that this is becoming reality in US:
‘guaranteed’ savings in government bonds, for now optional, tomorrow potentially mandatory. Apparently buying government bonds of indebted governments is great and safe investment.

Mandatory bond purchase… It is coming.

#122 TurnerNation on 01.31.14 at 1:07 pm

The day this pathetic blog booed CAD I’d actually bought some FXC. Looking for a point or two.
See RSI.TO carnage today: Yield Hounds turned and ran.

#123 jess on 01.31.14 at 1:13 pm

kitchener

http://www.therecord.com/news-story/4344590-developer-ordered-to-fix-up-or-demolish-derelict-david-street-homes/

crowdfunding platform to the real estate investment market. Internet-based fundraising …
Revel Development Corporation (formerly The Madison Group

Revel is pioneering innovative new ways for all types of investors to own real estate. We are pleased to introduce our very own crowdfunding real estate platform – Open Avenue™. We are opening up institutional-grade real estate investment opportunities so that all types of investors can buy shares in income-producing real estate properties while managing their real estate investment portfolio online in a 100% transparent manner.

#124 Sheane Wallace on 01.31.14 at 1:15 pm

Reduced consumer spending (result of indebtedness) in a country where 60-70 % of the GDP is determined by consumer spending is terminal.

Savers would be screwed.

Maybe the best choice is just to remove governments from the markets, abolish free trade and return trading quotes and protectionism.

however silly it may sound it is probably much better choice than the alternatives.

As for the middle class: Let is rest in piece. Amen.

#125 Bottoms_Up on 01.31.14 at 1:35 pm

#35 Ronaldo on 01.30.14 at 9:52 pm
—————————————
The pricing at Target is not competitive with Walmart. You may find select items that are better, but it’s (currently) not a place where you want to do a bulk shop. However, they have amazing customer service. Will walk you right to the item you’re trying to find. And the stores are super-clean.

#126 Bill on 01.31.14 at 1:39 pm

Could there be an ETF apocalypse ?

http://www.cnbc.com/id/101378179

#127 Bottoms_Up on 01.31.14 at 1:39 pm

#91 World According To Garth on 01.31.14 at 5:13 am
————————————————-
If you can’t beat ’em, join ’em:

http://csiscareers.ca/en/jobs/protective-security-officer

ps. you’ll actually only earn $46,000/yr, and after paying your union dues and into your pension fund, you’ll be lucky if your biweekly paycheque is $1300.

#128 R1200C on 01.31.14 at 1:44 pm

Isn’t “negative feedback loop” when you sneeze while eating your morning cereal and one comes out through your nose?

#129 Bottoms_Up on 01.31.14 at 1:45 pm

#7 Leptokurtosis Jones on 01.30.14 at 8:56 pm
————————————————-
Way to generalize. And using your logic everyone that is not selling are also idiots, and anyone buying a POS, an investment unit that has positive cash flow, buying within their means, or a house in any of a number of small towns in Canada that haven’t gone up in value during this boom etc. etc. are also idiots.

#130 45north on 01.31.14 at 2:17 pm

AfterTheHouseSold: Ontario continues to sink in a mire of debt, corruption and scandal:
1 billion ornge air
1 billion olg
7 billion green energy
1 billion per yr kinder-care
1 billion gas plant relocation ( buying 2 seats)
new proposed Ontario pension plan

Ornge Air they cannot even spell orange!

olg Ontario Lottery and Gaming Corporation pulled its agreement with the Rideau Carleton Racetrack thereby disrupting an established business

green energy which includes the FIT program that pays 10 times as much for solar energy. This is an elitist program open to outright stealing.

all day kindergarden: I sat and listened while a retired schoolteacher gushed enthusiastically over this program. I thought “what about the cost?”

gas plant relocation: the Liberal government just bought two seats. That’s all. Oak Ridges Morraine. What a bunch of rich bitches! (my mother-in-law used this term – in this context it’s totally gender neutral )

proposed Ontario pension plan: “We believe that we need to set up a structure so that people can save their own money, and they can make investments along with their employers in their future,” said Wynne.
http://www.cbc.ca/news/canada/toronto/details-on-ontario-pension-plan-coming-this-spring-1.2514508

well our host believes that too and in fact he was instrumental in setting up the TFSA. He has expressed his disappointed that it has not been more widely adopted. Lead a horse to water.

#131 aprilNewwest on 01.31.14 at 2:17 pm

#72 – Many older non- rental apartment buildings do not have in-suite laundry. I’ve lived in a couple and had to go to the basement to do laundry.

#132 ichosetheredpill on 01.31.14 at 2:25 pm

Garth, what’s your take on the latest Pimco report? They’re claiming a drawn out correction to the RE market, not a bubble burst. http://www.theglobeandmail.com/report-on-business/top-business-stories/what-it-would-take-for-canadas-housing-market-to-bust-and-why-pimco-says-it-wont/article16625245/

#133 recharts-bitcoins again on 01.31.14 at 3:15 pm

Legendary Economist Milton Friedman Endorsed The Concept Of Bitcoin Before It Was Ever Created – See more at:
http://www.exploringmarkets.com/2014/01/legendary-economist-milton-friedman.html?utm_content=buffer700f5&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer#sthash.8B8P7UhC.dpuf

#134 Just some guy on 01.31.14 at 3:28 pm

This is a really interesting post, Garth, and as usual, you tie things together so that a big picture emerges. It will be interesting to see how, in the months to come, if the revenue that the Federal government forecasts from sales taxes will begin to fall. I think in Ontario alone that about 18 percent of the province’s revenue is based on the sales tax.

A sales tax revenue fall means that people are generally cutting back on all types of spending, which you make clear is the most likely thing to happen in 2014. And if this period of restraint and belt-tightening lasts for any length of time, it could mean reduced personal income tax revenue too as more people lose their jobs and instead begin to collect benefits. Welfare costs will rise. Food banks will be very, very busy. Down the road, health care costs will rise because of the cumulative effects of higher levels of stress, poor nutrition, and less preventive care.

Of course, we should keep in mind that unfunded pension liabilities are going to become more of a factor too as waves of public servants begin to retire. From what I understand, about 50 percent of the people now working for government are within five years of retirement.

While I do not begrudge public servants their pensions for their years of service, I very much doubt that the electorate is going to be happy paying increased taxes to fund any shortfalls nor will it be prudent for governments to run up deficits to get the money they need. Not only would we the electorate be peeved at increased borrowing but I imagine the international financial markets would take a dim view as well, particularly the bond rating agencies. I am sure that public servants in Greece and Detroit might find some similarities with what is happening here in Canada and what happened to them.

#135 Blacksheep on 01.31.14 at 3:36 pm

Bummer Blog today Garth.

A quick scan of Vancouver /Craigslist/ jobs/ Manufacturing, shows lots of demand for workers. This
is a bellwether I use to gage how my sector of the local economy is doing.

http://vancouver.en.craigslist.ca/mnu/

The loss of low skill retail jobs parallels the coming loss in low skill postal worker jobs. Both represent a technology shift more than a tanking economy. This type of change is older than the horse and buggy and will continue to take place.

I’ve learned to be cautious when processing negative (Doomer?) forecasts, because as rational as they may seem (and often are) at the time, events seldom unfold as dire as predicted, as you cannot count on the Cattle to think critically, nor the System to act in the herds best interest.

This is coming from a recovering Doomer that still hasn’t repurchased a house (5 yrs). I’ve realized that other than actual, Black Swan(9/11- GFC) type events, the world keeps humming along while the herd watches the idiot box (FOOK..YA! super bore # 137 !!!) and obeys.

Remember, EVERYBODY has an agenda.

#136 Crap on 01.31.14 at 3:37 pm

#2 Chopper
Garth feeds you well.

#137 Blacksheep on 01.31.14 at 3:58 pm

Forgot to add:

It’s sunny and 6 degrees in Langley. Near record low rainfall in the Valley for months now, if this is global warming, bring it on!

You may just need to get out of the frozen GTA to get a cheerier perspective Garth : )

#138 Big Brother on 01.31.14 at 4:00 pm

#41 Smoking Man on 01.30.14 at 10:02 pm
#28 Adam on 01.30.14 at 9:35 pm
what has this stoner been calling for the last four years.
I have a sermon coming up on every pathetic blog dog and Garth.
not tonight to hammered not tomorrow night will be to hammered.
Saturday stay tuned dogsters.

__________________________________________

MKULTRA says watch for Smoking Mans bizarre texts tonight. Google keyboard will be off. He will be stoned at Seneca Casino. Drinking wine and dropping Xanax. Don’t worry we won’t be watching you through the cameras. Oh oh did I tell you that. Big Brother is everywhere.

#139 Mr Happy on 01.31.14 at 4:00 pm

“#25 cariboojohn on 01.30.14 at 9:31 pm
Hey Garth.
Can you give us a heads up on the Emerging Market thing.Things don’t look good.
I was just wondering how bad this is going to get ?
The nice Lady at the bank,talked me into. Going all in on this.I,ve lost 20 large so far this year on this. And think what diversification really means.
I know I,am toast for 2014 anyway. just asking.”

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

You went ALL IN???

You deserve to be toast…… Just when I think …..

nah….never mind…..

#140 bob on 01.31.14 at 4:13 pm

I read your blog regularly and for the most part, like your analytical approach. But to start off with Sears and BestBuy and link that to bad economy (it may be true, yes), but really, those job losses have more to do with them as being laggards in a changing, online, industry.

To use them as your example is unfair fear-mongering. You should hold yourself to higher standards.

#141 Brian Ripley on 01.31.14 at 5:01 pm

“Are the guys running Sears and BestBuy just getting ready to survive what they know is coming?” Garth

Mark Carney is using his ax as well: “Bank of England will cut up to 100 jobs following a ‘Value for Money’ review”

Value for money is creating a big divergence between earnings and housing affordability. Here is the U.K. chart edition:
http://www.chpc.biz/2/post/2014/01/redundancies.html

#142 GUY GADBOIS on 01.31.14 at 5:21 pm

at Bombardier, it’s 1100 in Canada, mostly in Montreal and 600 in the U.S (Witchita)

#143 Bill on 01.31.14 at 6:18 pm

#3 flash on 01.30.14 at 8:48 pm

Just want to make sure you know that you can not replace your TFSA funds in the same year. You must wait until the following year when than contribution room is added back. If you do it in the same year there will be a penalty.

#144 Mick on 01.31.14 at 7:06 pm

All true, and keep throwing your money into the biggest pig of a market since 2000. I made 25% the last week shorting with a leveraged short, thanks Garth, the money you and your readers had, looks better in my account now.

#145 Daisy Mae on 01.31.14 at 8:46 pm

“Instead of creating 21,000 new positions that month, the country actually shed 27,600. Whoops. I guess the margin of error is now 200%.”

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

Well, as we know, the feds can’t ever get anything right….

#146 GoSeahawks! on 01.31.14 at 8:50 pm

It’s not obvious to the oblivious.

aka the 99%

#147 Daisy Mae on 01.31.14 at 9:46 pm

#77 Angie: “I’d still like a house and look forward to when the kids start school and I can get back to working more and save for a down payment on a house we’ll be in for 10 or more years….”

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

Stay the course, Angie. You’re on the right track.

#148 Daisy Mae on 01.31.14 at 9:59 pm

#125 Bottoms: “(Target) will walk you right to the item you’re trying to find. And the stores are super-clean.”

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

That doesn’t cut it. Service is outlets such as this isn’t a priority — prices are.

#149 DR on 01.31.14 at 11:29 pm

Just to let you know DR.
Real estate in downtown TORONTO is good. Theres tons of “muncha cakes” who cant replace a light bulb let alone renovate a bathroom. these suckers (literally) will cough up the huge coin to live next door to a bakery.
Real estate anywhere esle in Ontario sucks.
do you want to live in Timmins, Ottawa? Theres French cdns there. how bad is that! How about Owen Sound or Kitchener? Give me a break!

So, which investment has made more money than real estate? Gold and silver.
——————————
yes Downtown Toronto only.

#150 Victor V on 02.01.14 at 3:00 pm

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/when-the-walls-close-in/article16644502/

Kristen and Howard earn good money – $205,000 between them – so it’s no wonder they are growing impatient with living in her 600-square-foot Vancouver condo.

Their dream long term is to move to a detached house in North or East Van, but they will settle for less – a townhouse – in the meantime. He is 37, a lawyer, she is 34 and works in advertising.

They are being cautious because they may decide to have a child or two and Kristen may even go back to school – events that would lower their income temporarily. Once all that is behind them, they would sell the townhouse in a decade or so and move to their forever home.

“Our goal is to get to the point where we can make the leap to a larger condo or townhouse, but that’s been hard since the value of our condo has really stagnated,” Howard writes in an e-mail. “We were really hoping to be a bit further along by now.”

The centrally located townhouse they have in mind would cost $700,000. How soon can they move?

#151 Victor V on 02.02.14 at 12:10 pm

http://www.theglobeandmail.com/report-on-business/rob-magazine/invest-like-a-legend/article16555294/#next

What about BlackBerry? You were a prominent investor recently.

That’s an example of something company-specific. We’ve had back-and-forth positions in BlackBerry within the last year or two. When it got creamed, we bought it. We ran the share price up into the teens and we eliminated probably 90% of it. We should have got rid of all of it.

And you made money on it?

Mmmm hmmmm.

So how do you get out of a dog like BlackBerry?

I think the secret is to be incredibly objective and patient. First of all, don’t buy more. Also, stocks tend to fluctuate about 50%, from low to high, over 12 months. You’ll usually have opportunities to re-evaluate and exit.

#152 Anonymous on 02.03.14 at 1:56 pm

Interesting you mention retail… my girlfriend shops at a particular clothing store where the word “sale” is never mentioned or done regardless of the time of year.
Now…all of a sudden virtually the entire store is literally 1/2 price off all the clothes.
Retailers being nice? OR better to get rid of stock while you can…