How to uninvest

INVEST modified modified

Aman lives in Vancouver, where his friendly realtor just blanketed the hood with a five-year statistical report showing real estate has performed better than Beyoncé.

Too bad for Scott Johnson that Aman is Vice President of Research for Pacifica Partners, which has a riveting reputation for delivering credible analysis of the Canadian housing market. “He keeps telling me that he expects prices to appreciate 6%,” Aman says. “I use logic to tell him why that isn’t going to happen – he won’t refute my logic but will counter with things like, “My office is super busy”, or “I have been involved in 5 deals with multiple offers in the last month”. …yadda yadda.”

So, our researcher buddy went to work on realtorboy’s data and calculated the 3-year annualized price appreciation (before subtracting inflation) for detached houses in all of the hot burbs surrounding Van itself. “I didn’t see a bull market,” he told me. “Shave off 1% for inflation, and you have pretty pathetic returns.”

You bet. After that inflation-adjustment, prices have been negative to anemic. The biggest gain in the entire region was 1.8% in New Westminister and 1.7% in Burnaby. Huh? Aren’t these GIC rates of return? Where’s this steamy market?

But it gets worse. Aman also told Agent Hype about home sales in the giant burb of Burnaby, which has been touted as the New Paris of the Lower Mainland. In 2009, 1,223 detached houses sold. In 2013 the number was 20% less, at 975. But that was better than 2012, when the decline was a staggering 33% (817). “However, realtors will say, 2013 had strong sales because it was 19% more than 2012 (975 vs 817). To me 975 still sounds pathetic in comparison to 1223.”

This should be a little reminder to those poor sods who believe Global TV, have mortgaged their boxers off, and stuffed all of their net worth into a home they think is appreciating, without the risk of financial assets. So, over the last three years they have seen less than 2% annual gains (if they picked the best places), while a balanced portfolio averaged just over 10%. And to get that 2%, most homeowners had strange, pasty-looking people living in their basements, rising property tax bills and fat monthly interest payments.

How much longer is anyone going to believe residential real estate is an investment? Especially now, with a slowing economy, rising unemployment stats, weather nobody can trust and 45,000 fewer Chinese millionaires at the gates?

No joy in Toronto, either. Too many damn condos. Even a bank says so now.

This week CIBC’s Benny Tal became the latest ecodude to state all is not well with the nation’s biggest market. (You will recall days ago Bank of Montreal called Hogtown’s gaseous bloatbag one of the three major threats to Canada’s immediate future.) Tal figures about a thousand too many condos are hitting the market each year, and because about half of all condos are owned by speculators who rent them out in the desperate hope of covering the mortgage and condo fees, nothing good will come of it. Unless you rent.

He expects the condo rental market to weaken and rent hikes to fade. In fact, he adds, the whole thing probably peaked in 2012, and is now moving downward.

The key points here are that renters will continue to be subsidized by landlords and, second, that a whole mess of specuvestors are pretty much screwed. Because in Toronto it’s virtually impossible to rent a condo out for consistent positive monthly cash flow (despite what the realtors and developers are telling seminar rooms full of new victims), the only thing investors really have to hope for are consistent capital gains. Without them, buying a condo you’re not going to regularly sleep in is a massively bad idea.

CIBC estimates between 45% and 50% of all condos coming online in the GTA end up as rental properties, owned by some poor schmuck from Scarborough whose mom loaned him $15,000 so he could grow up, be a man, and close a deal. The bank says it expects rental vacancy rates to increase, making it even harder for these ‘investors’ to make any profit from their tenants. Meanwhile the bank (and everyone with a pulse) knows interest rates will be increasing as the years pass, which will “test he market.” Lower prices, in other words.

So, buy a condo, get negative cash flow, then sell for a loss. Sounds like a great scheme to separate the fools from their money.

Like I said, how much longer can anyone claim residential real estate is a good investment?

But if you don’t believe me, they’re waiting for you here.

166 comments ↓

#1 Macduff on 02.13.14 at 8:44 pm

Italy’s PM resigned today with a more leftist replacement taking his place. How can this be good for a country already struggling under deficits? Will this further destabilize Europe?

#2 pathcontrolmonk on 02.13.14 at 8:45 pm

and still barely a peep in the MSM about Flaherty quashing the Canadian dream for 59,000 rich HAM, the silence is deafening.

#3 Victoria on 02.13.14 at 8:48 pm

Garth, you (conveniently?) forget a few things.
1. Living in a rental house and investing, you have to subtract your rent from your income. (You can’t live in an ETF, can you?)
2. Appreciation of your property is first of all appreciation of bank-borrowed 500/600+K, so your 1.7% after inflation comes out as a much nicer slice than 6% (before inflation) on your own meager 20K.
Does that make sense?

#4 Cdn flier on 02.13.14 at 8:50 pm

Loving my $91000 public service job and living mortgage free. and…..I can spell.

#5 :):( Ying Yang on 02.13.14 at 8:51 pm

First, dam and I got nothing witty to say!

#6 valleyrenter on 02.13.14 at 9:02 pm

*Estimates only for informational purposes. Ha!

#7 GsAmazon on 02.13.14 at 9:04 pm

hey hey my my the 4th estate will never die – uncle garth is clearly on the mend :)

#8 Sebee on 02.13.14 at 9:05 pm

Yes, but let us be honest.

The F, Realtors, Lambs of this world have done one heck of a job. If the Canadian RE is a jet heading for a crash landing these guys flying it have kept it in the air in exemplary fashion.

#9 Pounding sand in Peachland on 02.13.14 at 9:20 pm

Who do you like for best picture? Gravity was good

#10 prairie person on 02.13.14 at 9:21 pm

Someone is listening. One of my friends has sold and is renting. Another friend is getting her h ouse ready to sell and is planning on renting. The move is happening. Nobody is making a big noise about it. The question now is where are the rentals going to come from? For quite a while there has been a tight rental market. Much that is for rent is dreadful. And there isn’t much of that. When I sold and thought about renting, I couldn’t find any place in which I wanted to live. So downsized to a bungalow. No rats, cockroaches, mice, bedbugs, fleas. A friend who’d been in a rental for 14 years was the victim of a reno-eviction with its strong arm tactics, intimidation, lying (foreign money). If the shift to rental is going to work for a lot of middle class people, there’s got to be decent accommodation, not five foot ceiling, basement hovels or houses divided up willy nilly rented to temporary renters. If the retirees are going to move to rentals, the rentals have got to provide the kind of living space they are used to. It may be that the people who bought condos as investments may provide that space at subsidized rents because of falling rental prices. However, if the move to rentals is substantial and there isn’t enough appropriate accommodation, rents are going to rise.

#11 Realtor # 1 GTA on 02.13.14 at 9:22 pm

Condos maybe be plentiful, however,
Detached homes are limited and out
Of reach for most people.

No crash this year “maybe next year”

#12 Freedom First on 02.13.14 at 9:25 pm

Nothing but the truth Garth, as per usual, and the photo is a perfect pic for a Stretched out over leveraged Canadian/condo-RE speculator/owner.

#13 Sean on 02.13.14 at 9:37 pm

Burnaby, which has been touted as the New Paris of the Lower Mainland…

———

For the love of God, realtors and other humpers… please stop embarrassing yourselves. Was it a particularly obnoxious cell phone tower that you thought resembled the Eiffel Tower? Or was it the “je ne sais quoi” at the local Time Horton’s

#14 Mr. Reality on 02.13.14 at 9:40 pm

#11 Realtor # 1 GTA on 02.13.14 at 9:22 pm
Condos maybe be plentiful, however,
Detached homes are limited and out
Of reach for most people.

That’s precisely how the market starts to unravel. Decreased demand (out of reach prices) followed by price drops as new home buyers disappear. Then things really get moving.

You’d think a realtor would understand this but hey, i hear a level three first aid ticket is way more difficult then becoming a realtor these days! lol

Reality

#15 Smartalox on 02.13.14 at 9:42 pm

@Victoria,
I rent a house (for less than my neighbour pays in interest on his mortgage, never mind the strata fees, taxes, and that looming special assessment) and my family’s investments STILL grew by over 11% in 2012 – 2013!

The difference is that my costs for shelter are not linked to my investment portfolio in any way, so I can adjust my portfolio and lock in my investment gains without the hassle of moving to a new address.

#16 Ray Skunk on 02.13.14 at 9:51 pm

How about THIS for an investment?

http://www.dailymail.co.uk/news/article-2558648/The-BULL-Premier-League-wages-One-tonne-bovine-stud-makes-owners-100-000-just-36-hours-worth-2-2million-course-career.html

(I just wanted to use this quote…)

“Garth’s testicles are also 45cm in diameter”

No wonder my leg snapped. — Garth

#17 Vamanos Pest on 02.13.14 at 9:54 pm

#3 Victoria

I think the 2 points you make are widely held by many Canadians, accounting for why we currently have both record high homeownership and record high household debt. However, neither of these arguments actually hold up to scrutiny.

1.) Of course you will have to pay rent if you don’t buy. But if we’re going to account for associated costs of either decision, you must subtract transaction, maintenance, property tax, and mortgage interest costs, as well as in most cases CMHC insurance costs. Not to mention opportunity costs (the money your down payment would make if it was invested instead). If you include all these costs, they easily add up to more than rental costs. So the notion of “being able to live in your investment” is an illusion. It costs more than it saves.
(Note: this is not ALWAYS true, it just happens to be true at current purchase vs rental prices).

2.)If you use some cash to borrow more money to invest, in real estate it’s called a mortgage, in investments its called leveraging. Leveraging is commonplace and done all the time. The increased returns of this strategy are exactly mirrored by the increased risk. In your example, you only address the upside. (If you make 20% on 20,000 you only make 4 grand, but if you get a mortgage (or leverage) the money as 5% down on 400k, you make 80 grand).

You didn’t mention the downside. If you invest 20k and lose 20%, you’ve lost 4 thousand. Not a good day, but not the end of the world. If you mortgage to 400k and lose 20%, well that’s a life altering financial disaster that in many cases would result in bankruptcy.

So using capital to borrow money to increase the size of your investment is a strategy, but not germane to the discussion of buying a house vs renting and investing, as the strategy could be used in either case. The fact is, most people immediately see the risk in leveraging into investments, but nobody seems to appreciate these same risks when it comes to a mortgage. That doesn’t mean the risk is not there. It is. Plain as day.

#18 Pat on 02.13.14 at 10:00 pm

Several friends and family each own 2-3 highly leveraged investment properties. They believed they would make a killing selling to those immigrant investors that F just killed off yesterday. I’m guessing there won’t be any bagging at our next get togethers.

#19 AisA on 02.13.14 at 10:04 pm

Once it goes, it’s gone… there will be no 600 Billion bailout for Joe Shmoe Canuck. Houses will dive way way WAY past the historical average.

When Joe Shmoe realizes he is 100k+ underwater and it’s never coming back, an entire generation will be poisoned on the idea of real estate as a form of investment.

Perhaps the country will be able to move forward at that point, because real estate lust has set us back over a decade. 10 freaking years gone bye bye and we are talking about 500k and 1m houses lining pothole ridden streets. It’s beyond absurd.

#20 raisemyrent on 02.13.14 at 10:05 pm

real estate is dying. the bubble is bursting.
the interesting prediction I can add is that people won’t calmly say “I was wrong.” Or the even rarer “You were right.”. We may say “I told you so.”, but the reality will be that the herd will blame someone/thing.

Take your guess.

I already speculated as to how F and Harpy will blame this one one whoever may be in next, but we need a nice list of quasi force majeure elements here (like HAM).

How about:
– remnants of the GFC
– the new immigration rules and the end of HAM (it can work both ways)
– greedy banks (rising interest rates, a perceived by the herd)
– condo flippers (as perceived by SFH mum and pup)
– millennials
– boomers
– post-secondary education (Smoking Man hehe all in good fun)
– any variation of “it’s different here” applied to the downturn
– mismanagement of CMHC
– Rob Ford

any more takers?

#21 T.O. Bubble Boy on 02.13.14 at 10:10 pm

In other news: Bitcoin crashes again ($415 as I type this).

That’s about a 60% drop in 2 weeks.

Goodbye Bitcoin… hello Bitcoin v2.0.

#22 Holy Crap Wheres The Tylenol on 02.13.14 at 10:10 pm

With all of this doom and gloom about upcoming baby boomers retiring one has to ask who the hell is going to be able to afford our McMansions? Sure as he’ll not many of today’s kids can afford them. Out here in Oakville, my neighbourhood our homes are running between 1.5 to 6 million, are they worth that much hell no! It’s a whacky market that has driven up the prices south that many of my neighbours have sold the farm now while the market bares it. Many of my friends are now early baby boomers that sold the McMansion and bought condos. They have invested the large sums of realestate cash they recieved for the home in tidy investment funds. They don’t shovel snow, they go south for two months and just lock the door! The condos are roughly 1/4 or less of the cost of their former domicile. I have to say perhaps they are not that dumb, especially if condos are going down in price lately. Well for us older boomers perhaps we should unload the farm now before we can’t sell it for beans as there’s a storm coming and it’s roughly 65 millions boomers getting ready to hit the rocking chair. I have give it some serious thought as I ponder holding onto the ranch at 1.8 million today’s value vs perhaps 75% or less value in the next ten years!

#23 sheane wallace on 02.13.14 at 10:15 pm

gold outperforms spectacularly this year, as well as silver.
gold and silver mining stocks up 20 % ytd.

I caught it early but with very small investment. Should I jump all in? something tells me jdxj could double this year.

#24 quebec economist on 02.13.14 at 10:15 pm

@#15 and #17

Good answers to Victoria…beat me to it!
If I may add that I cannot live in my ETFs, but moving them is much easier on the back…

@Garth

Thanks for the link to the ‘free lunch’ and learn…Going for the lunch not the learn!

#25 Smoking Man on 02.13.14 at 10:17 pm

I’m such an idiot, so I go down UOT tonight to start my class only to discover it started on Tue, Not Thu. Anyone can see this is an hounest mistake.

So I pay the loot, but I will be in Yuma next week, so I am going to miss class two to. Can two to’s even go together?

So the admin person a smoking hot brunnet goes, and I mean in pure Cathleen Wynne posture. We will only alow you two absences, a third will get you expelled.

Like that’s never happend to me before. Ha ha. I am going to deliberatly skip the second last class, then on the final one will chirp the hell out of the instructor for allowing me to sit through it.

Ah man now I got to wait almost two weeks before I can f with live peoples minds.

#26 Victoria Real Estate Update on 02.13.14 at 10:18 pm

In Victoria, single family home prices have declined 11% below peak.

In 2010, the average house in Greater Victoria sold for about $650 K.

The same house is now 11% cheaper and would sell for $578.5 K.

By the time a mortgage holder is done paying for a house, they typically pay for that house 2.5 to 3.0 times (principal plus interest). In the example below I will use 2.75.

In Victoria, a 2010 buyer will end up paying a total of $1 787.5 K in mortgage payments (principal plus interest) by the time the mortgage is paid off.
($650 K x 2.75 = $1 787.5 K)

A 2014 buyer (paying 11% less for the same house), will end up paying a total of $1 591 K in mortgage payments. ($578.5 K x 2.75 = $1 591 K)

A 2014 buyer would save a total of $196.5 K
in mortgage payments compared to a 2010 buyer (for the same house). ($1 787.5 K – $1 591 K = $196.5 K)

Obviously a 2014 buyer would have paid a lot less than $196.5 K in rent over 3.5 years.

Girls and guys, now is not the time to buy a house in Victoria. House prices will continue to fall.

Wait for lower prices and save money. Let your landlord continue to subsidize your rent.

Millions of American families bought real estate at or near the peak of the 2006 US housing bubble and many continue to experience financial distress as a result. Many of them now realize that buying at bubble prices was a mistake and that renting would have been a much better choice. Unfortunately it is too late for them. It isn’t too late for you. Buying a house at Victoria’s current bubble prices would end up being a big mistake with serious financial consequences for you and your family.

Until next time – Cheers!

#27 Silver on 02.13.14 at 10:26 pm

Warned them 3 years ago… they didn’t pay attention

I know a lot of small downtown east ender buisiness owners in Vancouver who just got themselves a new asshole chewed by property tax increases… $38,000 for one, $27,500 for another… I could go on….
Many others got 30- 50% increases… they are not happy with the bankrupt bums spending public money like no tomorrow.
As one of the city councilors told me… to my face …buisiness owners deserve to pay more taxes as they have to much land and are depriving people of a place to live in Vancouver…

A. Remer or something like it comes to mind.

with leaders like this we are so scr…wwweed.

Here it comes…. weeeeeeeee…..

Silver

#28 Chris on 02.13.14 at 10:27 pm

If you can’t make 20-30% in a modest investment portfolio, you are brain dead. Which is exactly what these idiots who buy these houses are.

#29 economictsunami on 02.13.14 at 10:32 pm

File this under Deli-investments.

They’re not only back in vogue but now new & improved.

“Foreclosure Rebound Pattern”: Foreclosures SUDDENLY Jump 57% in California (And Soar In Much Of The Country)

“… now Wall-Street-engineering firms have come up with a new and improved contraption, a synthetic structured security that on its polished surface looks like that triple-A rated mortgage-backed toxic waste that helped blow up the banks. But this time, it’s different. The securities are backed by sliced and diced rental payments from single-family homes that are, hopefully, rented out.”

http://tinyurl.com/qaquwwg

I can only imagine the sales pitch for these ‘investments’ after hitting G’s link for Dundas
Square Gardens.

Slightly less Greater Fools out there so the closers are more polished and perceptive…

#30 Victor V on 02.13.14 at 10:38 pm

And to get that 2%, most homeowners had strange, pasty-looking people living in their basements, rising property tax bills and fat monthly interest payments.

I have an anecdote to share as my cousin owns a house in north GTA, on a decent street, with a basement tenant.

We met for coffee this week and he was quite depressed so asked him what had happened. Well it turns out that his tenant had turned out to be a deadbeat; she had not paid rent in months; strange men were ‘visiting’ her at all hours; and when my cousin finally went to inspect the premises it was completely trashed.

After getting a lawyer and securing an eviction notice, the tenant was finally kicked out.

My cousin has lost months of rent and is also out $7000 in damages that he’ll never be able to collect given the court judgement isn’t worth much when you’re chasing a deadbeat.

Anyways, this is but one story of the slings and arrows of home ownership and amateur landlords.

#31 Obvious Truth on 02.13.14 at 10:39 pm

I love realtor number 1. Great enthusiasm. Never discouraged. If I’m a seller you’re my guy. And a good salesperson will be busy in any market.

But people are starting to realize that houses cost money. Planning some renos earlier today. No illusions here about getting it back. When I hand over a cheque it never comes back.

Does that ad make anyone else feel dirty?

TNT. Love the Chrétien quote. Could picture him saying it.

#32 Roial1 on 02.13.14 at 10:45 pm

“Garth’s testicles are also 45cm in diameter”

No wonder my leg snapped. — Garth

LOL

best re-poste all week, no all year. So far.

Keep up the good work

#33 World According To Garth on 02.13.14 at 10:46 pm

Too bad your neighbors 68 year old grandma has to work at Timmies to keep herself fed…and keep you in a hacienda at 55 in Mexico with her taxes.

#4 Cdn flier on 02.13.14 at 8:50 pm
Loving my $91000 public service job and living mortgage free. and…..I can spell.

#34 AfterTheHouseSold on 02.13.14 at 10:51 pm

#22 Holy Crap
“Well for us older boomers perhaps we should unload the farm now before we can’t unload it for beans…”

Holy crap, Holy Crap! Don’t “ponder holding onto the ranch” much longer! You’ve been here long enough to know that Garth has been pounding this message home for quite some time. Is it just sinking in now?!!! You need to get the place listed yesterday.

#35 Whitey on 02.13.14 at 10:52 pm

What were the National Post smoking?!?

http://business.financialpost.com/2014/02/13/condo-correction-not-in-the-cards-for-toronto-vancouver-says-new-report/

#36 Victor V on 02.13.14 at 10:53 pm

PRICE DROP #7 – 116 Glen Road – ROSEDALE

http://themashcanada.blogspot.ca/2014/02/price-drop-7-116-glen-road-rosedale.html

Though the reno might be great to some (I don’t love it), this is NOT a $3.3 million house.

I thought it was more of a $1.75-$1.8 million house.

After the price drop in February 2013 to $2,990,000

Then in May to $2,780,000

And then the end of May to $2,685,000

Again in September to $2,395,000

AND again in November to $2,295,000

And AGAIN last month to $2,249,000

This house is FINALLY listed below $2 million!!!!!

The new price is $1,995,000.

#37 I'm stupid on 02.13.14 at 10:53 pm

Thanks for the link Garth. Who said there is no free lunch.

#38 research on 02.13.14 at 10:53 pm

For the name of Aman’s organization, I think you meant to type “Pacifica” not “Pacific” ?

Who the hell invented auto-correct? — Garth

#39 Willdaman on 02.13.14 at 10:57 pm

Garth, everyone already knows that toronto condos are doomed, no need to beat a dead horse on that… What I really want to know is what your thoughts are on 416 SFH and whether you believe any correction may be coming, flatlining of prices, or a continuance of escalating prices.
It doesn’t seem that the recent job losses have affected this segment at all…demand is still through the roof.

#40 45north on 02.13.14 at 10:58 pm

Aisa Once it goes, it’s gone… there will be no 600 Billion bailout for Joe Shmoe Canuck.

nothing in the budget about a housing stimulus

raisemyrent I already speculated as to how F and Harpy will blame this one

Flaherty is going to walk out of Parliament, shrug his shoulders and say “it’s the market”

#41 World According To Garth on 02.13.14 at 11:03 pm

Just in case you anti-bitcoin people forgot that it’s “just us” if you are a banker not justice. If your a banker, laundering terrorist money gets you a traffic ticket unlike you or me who would get 20 years in Kanaduhhhhh or Amerika.

http://armstrongeconomics.com/2014/02/13/gangster-bankers-too-big-to-jail/

#42 Brian on 02.13.14 at 11:05 pm

Garth likes Reddit.

Never been there. — Garth

#43 Tony on 02.13.14 at 11:07 pm

Re: #23 sheane wallace on 02.13.14 at 10:15 pm

It could more than double but at some point in time the stock market will crash and margin calls could take gold down about fifteen to twenty percent on the day. Most say a basket of currencies will replace the U.S. dollar as the world’s reserve currency.

#44 Infused with Opiates on 02.13.14 at 11:10 pm

138 Keith – thanks, glad its worked out so well for you. Do you have an idea of how many non-Brazilians might be buying there? Even though the mechanics you have described are different, the semantics to a local may be very similar to the “HAM” of the last blog. You are not there for most of the year, and prices have increased 3 fold in the last decade or so. Maybe the locals call us “CCC” (Cold Cdn cash!)

#45 Nemesis on 02.13.14 at 11:11 pm

@KommyKim/#182 PriorThread

“I don’t think you’d [BelovedNosty] recognize a communist even if they messaged you directly on this forum.’ – KommyKim

KommyKim, I don’t mind telling you that the Guffaws inspired by your brief remark expelled a Squadron’s bucket load of chicken wing bones & BudWeiser onto the wall behind the HonkyTonk’s bar.

WellDone!

And now to more salient matters…

Nosty! We love you… but seriously?

Consider what follows an educational opportunity…

HowToSpotACommunist!:

http://youtu.be/AWeZ5SKXvj8

&Now that you’ve finished the short course…

Your first assignment; you must identify the Communist[s].

Nosty, you have 3 minutes and 18 seconds. Begin:

http://youtu.be/AWeZ5SKXvj8

http://youtu.be/ZMUCnCUbm-U

[*NoteToSaltyDogz: DistanceLearningStudents sufficiently motivated to Contrast&Compare and/or Discuss today’s lesson will be awarded extra course credits… and, not unlike either Oxford or Cambridge – a bonus Masters Degree at modest additional cost without further study shortly following the successful of completion of your undergraduate coursework and examinations, successful reconciliation of any outstanding DiningClubObligations and – naturally – your HousePorter’s endorsement.]

#46 Bobby on 02.13.14 at 11:13 pm

Gee, my balanced retirement portfolio was up 14.5% last year. No muss no fuss.

Been looking at properties here in Victoria. Lots of empty condos and houses sitting for sale. Then relisted again with a new realtor.

Again, never seek real estate advice from a realtor.

#47 FTP - First Time Poster on 02.13.14 at 11:17 pm

#4 Cdn flier on 02.13.14 at 8:50 pm

“Loving my $91000 public service job”

There’s the problem with this country right there – too many leeches sucking the public teat!

Toronto, Vancouver, Vancouver, Toronto…add a dash of Calgary…..got anything else Garth?

#48 Andrew on 02.13.14 at 11:20 pm

Garth,

While the ‘big three’ condo markets – Vancouver, Calgary and Toronto – get most of the media attention, the condo market here in Regina also seems to be stagnating.

Last October I visited several new condo developments to get a sense of the market. After telling the realtor at a newly completed condo close to downtown that I had obtained pre-approval from the bank, she quietly urged me to make an offer. “I know they’re willing to deal in order to sell the remaining six units,” she told me. On Saturday I opened the paper and saw a large advertisement for the same condo. “Five units remaining!” it exclaimed. One condo unit sold between early October and mid-February. Yikes. And these were units that were move-in ready!

I’ve also been tracking another condo that was for sale on the com-free website. It is a 1,000 sq ft., 2-bed, 2-bath in a good location built in 2010. It was originally listed in October for $399,000. Then it rotted on the market for two months before the price dropped to $379,000. A few weeks ago the unit was taken off the com-free website and re-listed with Re-Max for $369,000. I’m betting it still has room to fall.

After scanning the market I decided to hold off on a condo purchase for the time being. I maxed out my TFSA in January and my RRSP in February. I’ve also noticed that while I had trouble sleeping in October/November, the last few months I’ve slept like a baby. I doubt it’s a coincidence.

Cheers,

Andrew

#49 Nemesis on 02.13.14 at 11:20 pm

Egads. Cut&PasteFatFingerFailure…

DistanceLearningAssignment actual FirstLink:

http://youtu.be/lH2oeYj_JSs

#50 Tony on 02.13.14 at 11:23 pm

Re: #23 sheane wallace on 02.13.14 at 10:15 pm

Ticker symbol jdxj does not exist in Canada or in America.

#51 Notta Sheeple on 02.13.14 at 11:30 pm

No worries, the Flatulance Minister plans to cushion the upcoming economic downturn when he comes to surplus in 2015:

“……Should the Tories proceed with the promised income splitting pledge as written, it would eat up 40 per cent of the forecast surplus……the benefits, it forecast, would be “highly concentrated” among high-income, one-earner couples…….85 per cent of all Canadian households, including single parents, would gain nothing…….”
– The Globe, February 13

Let me see if I have this right. The Harpocrites (yeah, the ones that taxed income trusts when they said they wouldn’t) are going to blow 40% of the forecast surplus on tax breaks for the richest 15% of the population, ironically those who need tax breaks the least?

I’m with Garth. We’re doomed.

#52 Suede on 02.13.14 at 11:31 pm

I miss HAM already.

They brought so much capital appreciation since 1995 to the Lower Mainland.

Dear F: Please let them all in. 51,100 x $1.5M houses each = lots of dough into this country.

We can be richer than we think!

#53 A Fan on 02.13.14 at 11:31 pm

What makes you so sure rents won’t adjust with mortgage rates?

#54 X on 02.13.14 at 11:38 pm

#3 Victoria on 02.13.14 at 8:48 pm

Garth, you (conveniently?) forget a few things.
1. Living in a rental house and investing, you have to subtract your rent from your income. (You can’t live in an ETF, can you?)
2. Appreciation of your property is first of all appreciation of bank-borrowed 500/600+K, so your 1.7% after inflation comes out as a much nicer slice than 6% (before inflation) on your own meager 20K.
Does that make sense?

Sure as long as you:
1. deduct your interest payments to the bank from your income…..but what really matters is the amount you have left over at the end of the month to invest.
2. No…getting a $500-600,000 loan on a home with 20,000 down does not makes sense. There is a difference between leverage and foolishness.

#55 Grantmi on 02.13.14 at 11:38 pm

#35 Whitey on 02.13.14 at 10:52 pm

What were the National Post smoking?!?

Garry Marr is just a cheerleader for the RE industry. Full grain of salt on his RE reports!!

http://oi62.tinypic.com/21o282p.jpg

#56 SoFaKing on 02.13.14 at 11:43 pm

@Paully ‘what cheese goes best with Realtor Whine?’

Munster…but of course

#57 tim on 02.13.14 at 11:44 pm

Burnaby the new Paris of the Lower Mainland?
Who’s on crack? Ugly hi rise towers and millions of Asians and shopping malls…it couldn’t be further from Paris

#58 Smoking Man on 02.13.14 at 11:45 pm

Nice, the win bag teacher going down, no pun intended in two bi election ridings.

Cryptology at its finest.

Should see how the book is shaping up…

#59 dienekes on 02.14.14 at 12:03 am

If anyone wonders what a housing price decline feels like, talk to an air canada ac.b holder today.
Only difference is ac. B will be at 10 by third quarter, housing will have decades of quarters to see any recovery.

#60 Smoking Man on 02.14.14 at 12:07 am

Where the hell is the JESUS of global warming, sir AL Gore.

All the great Lakes almost totally frozen over. Polar ice caps growing like a hemorrhoids fuled on Mexican hot sauce.

Caught a clip of him. The heat is hiding in the Pacific Ocean..

How stupid of us… Science is settled…

Ha

#61 Savers beware on 02.14.14 at 12:30 am

The closing of HAM investment loopholes and the spread of negative outlook comments by bank economists may have at most a small slowing effect on rising RE prices. Whether it will be enough to create a “soft landing” remains to be seen.

Either way, F cannot afford to raise interest rates to do the job, at this time.

In the meantime, corporations continue to foster stagnant productivity by postponing capital investments while they deny wage increases, preferring instead to reward executives and shareholders.

Inflation rocketed in pre-globalized western economies in the 1970s after oil prices were quadrupled overnight. The price inflation that followed led quickly to similar massive wage inflation and debts were more easily paid off.

With slowing RE asset appreciation and no Sheik Yamani on the scene today there could be a lot of support from debt laden consumers and governments for anything that encourages more wage and price inflation – to the detriment of savers.

Alwyn

#62 Capital One on 02.14.14 at 12:41 am

#3 Victoria.

Spend some time with this spreadsheet (rent vs buy). It should help you work through scenarios to help you with the concepts others have brought up.

http://www.holypotato.net/?p=1073

On your point #2 – someone else correctly equated a mortgage with leverage. If you put $100k into a brokerage account, your broker would probably lend you (at some interest rate) another $400k to buy $500k worth of stocks. Would you do that? Because that’s essentially what you do when you buy a house with a mortgage. No guarantee that either the stocks or the house will go up in value.

To which, you will probably counter with your “can’t live in an ETF” argument. Renters have to pay rent and tenant insurance out of their income. That’s it. Home owners have to pay property tax (easily the equivalent of 3 months rent), house insurance, routine maintenance, periodic large maintenance (furnace, roof, windows, appliances …) – all on top of the interest on their mortgage. All also out of income. Garth has spent more than one entry on one other item that many don’t consider – the opportunity cost of their down payment. The larger the down payment, the bigger the lost opportunity.

Victoria – those of us who have drunk the kool-aid on this issue get these questions ALL the time

CapOne

#63 Sideline Sitter on 02.14.14 at 12:48 am

got my rent increase notice today… $13.50 a month!

Not sure what the max is, but rent going up $13.50 a month is still a deal… except for monthly internet, we have no other monthly expenses and we live downtown, have very nice concierges, underground parking, and can walk to the Movies, Subway, or Whole Foods.

Life is good.

By the way, accountant says I should put in $48K into my RRSPs – anyone have some tips on where to put it?

#64 research on 02.14.14 at 12:51 am

Seems that people have already posted up good responses to #3 Victoria (link: http://www.greaterfool.ca/2014/02/13/how-to-uninvest/#comment-286669)

If you want to get some hard numbers for comparing buying vs renting check out this tool built by Ontario Securities Commission (OSC):

http://www.getsmarteraboutmoney.ca/tools-and-calculators/buy-or-rent-calculator/buy-or-rent-calculator.aspx#.Uv2fP_ldWGE

Make some assumptions, plug in some numbers (interest rates, inflation, investment returns, housing appreciation rates, rental increase rates, etc), and see what the range of possible outcomes might be ie: best case scenarios and worst case scenarios for real estate as well non-RE investments

#65 Mr. Monday Night on 02.14.14 at 12:55 am

#53 A Fan on 02.13.14 at 11:31 pm

What makes you so sure rents won’t adjust with mortgage rates?

—————————–

You my friend are assuming with a very limited set of variables. Not everyone bought at the same price and there exists no cartel amongst amateur landlords.

When the rent gets too high, you re-negotiate or move, to a different city if necessary. You are not bound by landlord greed, unlike buying at the top and being at the mercy of increasing interest rates.

The rental market is set by affordability, keeping in mind that people’s definition of affordability may differ, dependent upon many variables.

Unless you’re moving to a very hot area with limited vacancies or your budget is unreasonably low for the area you’re looking at, there’s always a better option to absorbing any arbitrary rent increase.

#66 Keith in Calgary on 02.14.14 at 1:10 am

#44 Infused……….

The RE market in Rio de Janeiro (not to mention Sao Paulo and the interior states) increased dramatically in the last 5-7 years due to central bank pumping, and the introduction of increased mortgage lending with 35 year amortizations. Sound familiar….??

10 years ago there were really no RE brokerages per say, everybody sold FSBO thru the paper. A lot of Brasilians moved back from the US and set up shop as RE brokerages in Brasil, which as you know drives up prices when combined with cheap and easy money and heavy duty advertising for your “casa propria”.

They’re due for a RE crash of endemic proportions very soon as the middle class is getting squeezed financially, and the lower class has been given way to much easy consumer credit in the form of payday loans, overdrafts and credit cards, not to mention car financing. It’s the making of a 1982 Canadian style economic crash all over again, except this time it is in in Portuguese. I’ve sold all my R$ dominated holdings and am sitting in a basket of 4 currencies and a lot of gold and silver right now, plus this condo. When it explodes, and it is inevitable because the Argentine spill over will hit Brasil too…..I plan to move closer to the beach than the 4 blocks away we are sitting at right now, for about 1/3 the price.

#67 Keith in Calgary on 02.14.14 at 1:13 am

#44 Infused…….

I have no clue how many gringos own RE down there……I don’t think it is too many though………..Brasil is not a place to live if you are easily scared by the third world, don’t like extreme heat, or are not willing to learn a new, and very difficult language, in order to live.

#68 Mr. Monday Night on 02.14.14 at 1:31 am

I like (or laugh at, sometimes out loud when I hear it) the new argument I get these days, the ‘at least when it’s time to sell I’ll get SOMETHING!’

Sounds like those people who pay extra taxes throughout the year because they think it’s like forced savings and they get the big windfall come April.

Struggling through your 30s, 40s and 50s to get ‘something’ in your 60s doesn’t sound like fun to me at all.

#69 Debtfree on 02.14.14 at 3:01 am

Who the hell invented auto correct ? Same bastards that invented progestive lenses and auto fill .
Have you got anything for the exception to the rule doc ?

#70 Steve French on 02.14.14 at 3:02 am

*** DELETED ****

How can moi get deleted while dyslexic SM postses to his hart’s contents?

#71 gtrz4peace on 02.14.14 at 3:22 am

Would love to rent – but just don’t see the affordability when it is literally twice as much per month for us to rent anywhere near our West Van townhome as we pay in mortgage, or renting from the bank.

We are watching carefully, though, but in the Vancouver fantasy market rental prices are very high unless you wish to live in someone’s “suite.”

#72 benchwarmers on 02.14.14 at 3:47 am

Sebee on 02.13.14 at 9:05 pm
Yes, but let us be honest.

The F, Realtors, Lambs of this world have done one heck of a job. If the Canadian RE is a jet heading for a crash landing these guys flying it have kept it in the air in exemplary fashion.

Just like the pilots of the Hindenburg. And we all know how well that ended.

#73 Blacksheep on 02.14.14 at 4:05 am

raisemyrent #20,

The RE bubble will pop in Canada when debt saturation is reached, Just like the US.

We’ve been dealing with off shoring of labour, the automation of manufacturing and now we can add the larger issue of, the erosion of surplus energy to our problems.

These challenges are gradually (rapidly?) killing the middle class in Canada.
These facts have been largely buffered / hidden from the Cattle via the wealth effect created by inflated RE values, stimulated by lax lending and low rates.

Trouble is, once this type of traumatizing RE correction unfolds, the masses will be debt shy for the better part of a generation. This is a real problem for a consumption based economy that no longer makes stuff and instead supplies low skill (and pay) services to each other.
Any body who dissed the Bernanke and his QE programs, only needs to look at the collapse in commercial lending after the GFC to realize, as Garth has mentioned, the US would be in a full blown depression (or worse) with out it.

Garth, a significant portion of the weak US recovery is QE based and as such, is already fading. The private sector is just not willing to borrow like they have in the past. 150K jobs per month are necessary just to cover immigration and birth models and they aren’t even consistently getting that. Real recovery needs 200-300K jobs per month, for years to get the labour participation to were it was, even ten short years ago.

So when I connect these dots, I’ve got to ask, who or what the hell’s going drive the economy going forward? Whom is going to borrow an additional, 100-200 billion US per month required create all that money from nothing and get inflation, really going again?

Inflate or die? Debt jubilee?

#74 Waterloo Resident on 02.14.14 at 5:07 am

My advice to everyone is this:
Rent for now, and in your spare time build a ‘TINY HOUSE’ on a small trailer, somewhere around 400 sq feet. Find a small vacant lot way out in the country, about 2 hours drive from the city, and put your house on that lot. Its a trailer so it won’t have to meet zoning bylaws.
With your house now mortgage free, you are left with only the small mortgage to pay on the land, and that won’t be much. The rest of your income can go towards investing in the stock market.

#75 World Traveller on 02.14.14 at 6:29 am

Maybe higher education isn’t for you (or lower education either), I fixed some of the grammar for you and gave it a better narrative.

***
#25 Smoking Man on 02.13.14 at 10:17 pm

I’m such an idiot, so I go down UofT tonight to start my class only to discover it started on Tuesday, not Thursday. Anyone can see this is an stupid idiotic mistake.

So I payed the loot, but I will be in Yuma next week, so I am going to miss class two as well. Can two to’s even go together? (no but you can use “as well”.)

So the admin person who is a smoking hot brunette says, in full Ontario Premiere Kathleen Wynne mode, “We will only allow you two absences, a third will get you expelled.”.
If I want to take this class I’d better shape up!

Like that always happens to me. Ha ha. I am going to deliberately skip the second last class, then on the final one will annoy my professor and the entire class for allowing me to sit through it.

Ah man now I got to wait almost two weeks before I can try to lift my self esteem by harassing and bullying others until they call security and finally kick me out of the class.
***
There fixed it for you.

#76 No Anecdotes Please on 02.14.14 at 7:49 am

“…how much longer can anyone claim residential real estate is a good investment?” ~Garth.

I don’t know. How many times can you say “Boo!” before nobody is scared anymore?

#77 thinker on 02.14.14 at 8:14 am

#17 Vamanos Pest

You are right, except you forgot the main thing about leverage, THE MARGIN CALL. You see if I leverage to buy stocks and dropping 20%, I am going to be stopped out before I can even click to exit myself. If you buy a house and it drops in value, as long as I have my job and pay the monthly bills, that is my full liability.

I know you think rules exist for 5 yr re-newal, etc and top up on mortgages. Find me one document from a bank on how it works. It doesn’t exist. No bank is going to start margin calling and force selling homes, it would be catastrophic to banks loan books and be self inflicted.

This is why you cannot compare a margin call leveraged asset with NO margin call asset. THINK about it. Not plain as day.

#78 Hillbilly on 02.14.14 at 8:19 am

comment # 11 Realtor # 1 GTA

Reread your posting.

If SFH are out of reach for most, who do you think is going to buy them?

Furthermore, the higher the prices go, the smaller the market demand for them at that price.

The cure for high prices is high prices.

Condos are merely the “bleeding edge” of this phenomenon.

#79 nerd CA on 02.14.14 at 8:25 am

#3 Victoria:

Bad calculation on your part.
1) I haven’t found anything in last 3 years that’s cash positive.
2) if you consider savings from rent, you must than also consider mortgage interest that you pay on 500k. Garth spoke about 1.7% only after inflation and not even considering mortgage interest on 500k and opportunity cost on 20k. Your returns would be definitely negative and far worse than 1.7%.

Garth is absolutely right – your only gain must come from capital appreciation. If you are not gaining 6% EVERY YEAR, you have negative returns. If you get 6% every year, your million dollar house should be worth 2 million in 12 years. Not likely! Close to impossible. Mark my word, you will see zero capital gains for next 2 decades until inflation catches up with the house prices.

#80 Dwide Schrude on 02.14.14 at 8:27 am

Garth,

I have 7000 shares in a stock worth zero. It can’t be bought on the stock market anymore and is worth zero technically. But, the company got bought and I’m expecting about 35 cents a share. If I move the shares into my TFSA at a zero value, can I shelter the gain completely? I have no TFSA contribution room which is why I can only do this now while the stock is worthless.

#81 maxx on 02.14.14 at 8:55 am

From yesterday:

“Realtor Clarence Debbelle, for example, said this Tuesday night to a CBC reporter in Vancouver: “I deal directly with these people…

….who bring a lot of wealth, who are creating lots of jobs for local Canadians….”

Wealth, perhaps. As for “lots of jobs”…..PROVE IT.

#82 thinker on 02.14.14 at 9:02 am

Does anyone know why the US housing market crashed so fast?

Because of MARGIN CALLS on loan books – those books were around the world and everyone suddenly had to exit a small door

In CANADA, the loan book is sitting with banks, investors and guess who first gets the margin call = NOT YOU, CMHC, yes every paper linked to housing is backed by the full faith of the Canadian Government.

Since housing loans in Canada don’t have long durations, are hedged with CMHC (they sell general POOL mortgages) you don’t even have a tool to short the housing market, let alone paper that is linked to margin calls. So a US style crash cannot even happen in Canada, we simply don’t have the financially engineered products that could trigger it. THINK about it.

#83 David W on 02.14.14 at 9:20 am

#4 Feb flier

Try and be more humble, if not, might come back to bite u in the ass.

#84 PJ on 02.14.14 at 9:47 am

Greece’s unemployment hit 28%. The people in Europe are so happy they are celebrating ”Montreal won the Stanley Cup” style with riots and violence.

If by US recovery we’re talking about Wall street bailout called QE given to banks and multinationals and the military industrial complex then yes, the US recovered quite nicely with the trillions of tax payer money. Plus hey, when you stop looking for employment, you don’t count, so unemployment is at 6%. Awesome. That’s why I love politics so much. And the people? Bah!! We’ll just send them to war. It’s not like we’re going to take care of em’ properly if they survive anyway.

But why worry? Let’s gamble our money in a greater fool’s paradise. The stock market is going to the moon.

#85 DR on 02.14.14 at 9:50 am

Wow Bitcoin. down to 335. was 900 last week

Would a house value do that? nope

That BC chart looks scary.

#86 T.O. Bubble Boy on 02.14.14 at 9:54 am

@ #21 T.O. Bubble Boy on 02.13.14 at 10:10 pm

In other news: Bitcoin crashes again ($415 as I type this).
———————–

Correction: $346 as of 8:50am (crashed another 17% overnight)

#87 BBB123 on 02.14.14 at 10:00 am

I know when I look at multiple unit rental properties for sale north of Toronto around Orillia that there is nothing available at all except for a few rooming houses and a few converted houses. I think that the REITS are scooping up any of larger apartment buildings and the smaller six or eightplexes are either being kept or sold privately.

#88 Ralph Cramdown on 02.14.14 at 10:38 am

#78 thinker — “I know you think rules exist for 5 yr re-newal, etc and top up on mortgages. Find me one document from a bank on how it works. It doesn’t exist. No bank is going to start margin calling and force selling homes, it would be catastrophic to banks loan books and be self inflicted.”

It can’t happen here, right?
http://www.theglobeandmail.com/globe-investor/xceed-turns-off-the-mortgage-taps/article561740/

#89 Blacksheep on 02.14.14 at 11:14 am

Thinker # 77,

“I know you think rules exist for 5 yr re-newal, etc and top up on mortgages. Find me one document from a bank on how it works. It doesn’t exist. No bank is going to start margin calling and force selling homes, it would be catastrophic to banks loan books and be self inflicted.”
———————————————
TD just revised their contract language on certain mortgages to do exactly what you say they won’t.

They can now request more funds be deposited to maintain the required 20% LTV. If you don’t deposit funds, they have the option of calling the loan, based on their own valuation of your home, no outside appraisal needed. Oh, forget the 5 year renewal, they can do it any time they feel the LTV is outside the magic, 20% mark. The comments below tell the story.

http://www.mortgagebrokernews.ca/news/td-mortgage-clause-change-176155.aspx

Someone’s getting nervous.

#90 NoName on 02.14.14 at 11:16 am

http://www.forbes.com/sites/joshfreedman/2014/02/13/should-we-place-a-tax-on-all-college-graduates/

Under a graduate tax-funded system of higher education, students would pay nothing to attend college upfront. Instead, once they graduate and move out of their parents’ basements, they would begin to pay an additional income tax (say, for example, three percent) on their earnings that would fund higher education.

what a concept, dont know is it ingenious or just stupid…

#91 Mark Wu on 02.14.14 at 11:23 am

>>while a balanced portfolio averaged just over 10%.

Instead of spouting this gibberish as if it were a fact, perhaps you could back this up by something (data, facts, non-cherry-picked statistics, etc.) And explain why, if you are able to beat the market in this way, you waste your time writing this pathetic blog.

Done, many times. Obviously you are not an investor. — Garth

#92 rosie "moving forward" in the knowledge that, "this won't end well" on 02.14.14 at 11:24 am

#82 Think.

Keep thinking.

http://www.uvu.edu/woodbury/jbi/volume8/journals/SummaryofthePrimaryCauseoftheHousingBubble.pdf

#93 shawn on 02.14.14 at 11:31 am

Calulations To Prove Your Point? (Not Likely)

Today’s discussion illustrates that whatever preconceived notion anyone has about buying verus renting, they can use calculations to “prove” their point.

Those who think owning a house as an investment show their numbers to “prove” it and those who claim they made big gains show the opposite “proof”.

As TnT reminded us yesterday at his post 167, Jean Chretian said it best in the house of Commons, years ago:

“A proof is a proof. What kind of a proof? It’s a proof. A proof is a proof. And when you have a good proof, it’s because it’s proven.”

Who can argue with that?

We all seem to be entertained by this Site. But few minds are being changed here. Attitudes form over years and a view calcualtions or graphs don’t change opinions. For most people it’s a case og “Don’t confuse me with YOUR facts, I am have my own, thank you very much”.

Still, the debate is enjoyable… Just don’t be dissappointed if you post calculations and fail to convince others.

All preaching is best enjoyed by the already converted.

#94 Skiffy on 02.14.14 at 11:44 am

#21 T.O. Bubble Boy on 02.13.14 at 10:10 pm

Say hello to Dogecoin!

#95 IgnoranceIsBliss on 02.14.14 at 11:58 am

@74: Just remember that in Ontario (and maybe other provinces), you apparently can’t just purchase a plot of land and then live in your trailer. Of course if no one catches you and your neighbour doesn’t rat you out then it may work.

#96 Crap on 02.14.14 at 11:59 am

Bull. The housing market did not break so far. Only your bones broke.

#97 Obvious Truth on 02.14.14 at 11:59 am

I’m not sure how much longer the RE industry can hold sentiment high.

January lower than December.

Story posted by Ralph is starting to prove what I’ve been hearing anecdotally. The lending may have gotten more out of hand than anyone thinks. And that condo add yesterday. Wow.

It won’t take long now till we know.

The important part will still be about people. Remember that most just wanted a home for their family. And whole industries that should be more responsible may not have looked out for them.

#98 Seeing it from both sides on 02.14.14 at 12:24 pm

@Shawn #93

Most reasonable post I’ve seen on this blog. Both camps on either side of the fence want to be the one to say to the other “see, told ya”, at the slightest piece of data that comes out that skews the picture in their favor, however ephemeral it be.

#99 High Plains Drifter on 02.14.14 at 12:31 pm

Hey, hate for Toronto can only be temporary. I admit my temp. went up when I was confronted by the new Church St.. I somewhat got over it when I realized comparing a modern Torontonian with say, Punch Imlach just wouldn’t be fair. Our punchy webmaster excepted.

#100 Shawn on 02.14.14 at 12:31 pm

ANGRY AT NON-BELIEVERS

As illustrated by the comments of Mark Wu at 91, not only are few people convinced to change their minds, some (and not to pick on Mark) become angry, belligerant and/or hostile at the fact that others post opinions that differ from their own.

I guess it illustrates why evangelicism (sorry for no spell check) is often a lonely and unappreciated role. Many people simply refuse to be led to the promised land (or any better land) and some are angry that anyone should speak of it.

#101 JL on 02.14.14 at 12:33 pm

Oops, didn’t mean to post that mid sentence writing, I will continue…

Garth, you have commented on the IMF report saying Canadian real estate is up to 60% overvalue. I just read this (from the same IMF report) and it talks about Price-Rent ratios in Canada:

http://theeconomicanalyst.com/content/house-price-rent-ratios-canadian-cities-alarming-levels

Vancouver: 60 – off the charts
Toronto/Montreal: 35 – pretty high
Calgary: 30 – not as bad but still very high

HOWEVER, I actually live in Calgary and happen to run a property management company with about 200 rentals. (So yes I work in real estate, but I’m not biased, I could care less what happens with prices, in fact I would do better if prices fell as it would bring more investors into the market which means more properties under management for our firm and more business). But I digress. My point is I HAVE NO IDEA WHERE THE IMF GETS THESE NUMBERS. I cant speak to any City other than Calgary, but I have been going trough our portfolio and the ratio is NOWHERE NEAR 30 for Calgary. (Unless I’m missuing the ratio) pretty sure its Price/Annual Rent – Garth, correct me if I’m wrong please.

So for my portfolio I decided to run the numbers. I did a fancy spreadsheet for all 200 properties which I would be happy to share with anyone. But here are some highlights:

2 bed 2 bath condo inner city, worth approx. $300,000, rents for $1800 per month. Price/Rent = 13.8

3 bedroom house in NW Calgary. Client just purchased for $405,000. We rent it for $2000 per month. Price/Rent = 16.8

2 bed 1 bath condo inner city, worth approx. $260,000, we rent for $1600 per month. Price/Rent = 13.54

5 bedroom luxury home in SW, worth approx. $1.1 million, we just rented for $5200 per month. Price/Rent=17.63

Two side by side infill duplexes. Client just bought them for $700,000 per side. We rent one side for $4200 and one for $3900. Price/Rent=14.4

Bungalow in NE Calgary, UP/DOWN rental. Worth approx. $340,000. Main floor pays $1300 basement pays $1000. Total rent is $2300 per month. Price/Rent=12.3

Like I said, we manage 200 properties, should be more than a large enough sample size, our AVERAGE price to rent for the portfolio (and properties values vary from $150,000 apartments to homes worth $2 million) is 14.8.

Where on earth the IMF gets this figure of 30 is beyond me.

Garth, by all valid measures a 14.8 ratio is not particularly overvalued. What am I missing here. Did I misapply the formula??

#102 45north on 02.14.14 at 12:40 pm

thinker Does anyone know why the US housing market crashed so fast?

Because of MARGIN CALLS on loan book

“margin calls”? Mark Hanson doesn’t use that term to describe the US market

Ralph Cramdown It can’t happen here, right?

good link Ralph

Blacksheep from your link:

Paolo Di Petta
I mean the banks consistently preach about how great the market is doing, and then pull stuff like this.

Don’t listen to what they say, watch what they do. That will give you a better indicator of the true state of housing and our economy.

#103 World Traveller on 02.14.14 at 12:53 pm

It’s going to get even harder to save for retirement as well.

http://www.bloomberg.com/news/2014-02-14/companies-squeeze-401-k-plans-from-facebook-to-jpmorgan.html

#104 Big Brother on 02.14.14 at 12:58 pm

#25 Smoking Man on 02.13.14 at 10:17 pm

I’m such an idiot, so I go down UOT tonight to start my class only to discover it started on Tue, Not Thu. Anyone can see this is an hounest mistake.
So I pay the loot, but I will be in Yuma next week, so I am going to miss class two to. Can two to’s even go together?
So the admin person a smoking hot brunnet goes, and I mean in pure Cathleen Wynne posture. We will only alow you two absences, a third will get you expelled.
Like that’s never happend to me before. Ha ha. I am going to deliberatly skip the second last class, then on the final one will chirp the hell out of the instructor for allowing me to sit through it.
Ah man now I got to wait almost two weeks before I can f with live peoples minds.

———————————————————-
MKULTRA says the first sentence above is correct but why are you telling the truth now! We programmed you to lie.
As for your education don’t forget your smoking, drinking and gambling classes tomorrow night at Seneca Casino. We have programmed you to be the main act on the new stage floor. Dance like there’s no tomorrow Smoking Man.

#105 gladiator on 02.14.14 at 1:03 pm

@93 shawn:
there is a saying “A man convinced against his will is of the same opinion still”.
This blog may not change many opinions, but it surely does change some.
However, to me, the biggest value of Garth’s blog is lots of educational information on the most important part of our financial well-being: personal finance and housing economics. I have learned loads here, am very grateful to Garth for hosting us all and for his posts, as well as to fellow dogs for their valuable information, links, ideas and life stories.
I’m hooked…

#106 Aggregator on 02.14.14 at 1:14 pm

California foreclosure starts.. oops

It's the weather and drought's fault. Not the minimum wage hikes, the weather and drought I say.

#107 Tripp on 02.14.14 at 1:16 pm

#57 tim on 02.13.14 at 11:44 pm

“Burnaby the new Paris of the Lower Mainland?”

—————————————————

Few years ago an article in a national newspaper was calling Sussex drive in Ottawa “our Champs-Élysées”.

Some people really need to start travelling.

#108 stop lying on 02.14.14 at 1:25 pm

#91 here is from my eoy 2013 standard life account (and these are evil mutual funds!)
3 mo – 7.33
6 mo – 11.97
1 y – 18.66
3 y – 9.64
5 y – 10.91
since beginning – 10.10

granted i picked the most aggressive basket so i could be more susceptible to a downturn, it was as simple as clicking a box to get those numbers. now my self directed resp with etf’s is another story, only done like 2% the last year and that’s only if i include distributions.

#109 Panhead on 02.14.14 at 1:31 pm

#20 raisemyrent on 02.13.14 at 10:05 pm

any more takers?

———————————————-

How bout Garth?

#110 fixie guy on 02.14.14 at 1:31 pm

#19 AisA: < someone who gets it. Once Canadians further clue into the reality that it was driven by conservative federal policy and the only benefactors were loan-holding financial industries things will really get interesting.

#111 fixie guy on 02.14.14 at 1:33 pm

@ #82 thinker: Do you know why those margins were called? Clue: the meltdown was an unavoidable consequence, not a cause. Think about it.

#112 Ann on 02.14.14 at 1:40 pm

Came across a copy of your book “After the Crash” at a used bookstore. Cheap. You were a prepper! You were, you were, you were! Why didn’t you make the logical move to being a doomer? I know – there’s no money in it. But you gave good advice in that book. I’m sure no one listened to you, though, and the book went to the used bookstore and you went to Parliament.

The crisis has now reached another critical level. Here’s a good summary of the conditions under which the last bubble will pop:

http://agonist.org/one-last-bubble-pop/

And here’s Matt Taibbi in a jaw-dropping article:

http://m.rollingstone.com/politics/news/the-vampire-squid-strikes-again-the-mega-banks-most-devious-scam-yet-20140212

A bank bail-in for Canada? Is the Pope a Marxist?

Actually, the crisis passed. — Garth/em>

#113 Nemesis on 02.14.14 at 1:59 pm

Immigration Minister Chris Alexander’s BelatedValentine…

[SCMP] – Canada still wants you, minister tells Chinese applicants in axed investor migrant programme

http://www.scmp.com/news/world/article/1427382/canada-still-wants-you-minister-tells-axed-investor-migrants

…and their response…

[SCMP] – Mainland millionaires turning backs on Canada and looking to the US and Europe, say migration agencies: Millionaires are looking elsewhere after axing of investor visa scheme, with the US and Europe the prime alternatives, migration agencies say

http://www.scmp.com/news/world/article/1428139/mainland-millionaires-turning-backs-canada-and-looking-us-and-europe-say

BonusZen!

[SCMP] – Minister Denies Vancouver’s high property prices linked to Chinese investor migrants: Blames Leprechauns

http://www.scmp.com/news/world/article/1427669/vancouvers-high-property-prices-not-linked-chinese-investor-migrants-says

#114 Reddy on 02.14.14 at 2:02 pm

My House purchase closes next week. I’m in the market for another too. Anyone have info on a good deal in ncc? Condo or multi-family, let me know,.. Thanks

#115 Just some guy on 02.14.14 at 2:09 pm

About 15 years ago, my parents, retired in Victoria BC, were hit with a bill for 50,000 dollars on their low-rise condo to pay for the re-building and waterproofing of their building. A lot of buildings in BC had to have similar work done. Each condo owner had to fork over the money. Lots of speculation as to why this problem arose but it would appear to be true that many buildings were put together without adequate inspection and without regard to the demands of the climate. Yes, shocking as it may seem, it rains in BC. Who knew?

If all the topless towers that now occupy a lot of the Toronto downtown start to experience problems with their glass cladding (and some already have), I wonder what it will cost? In all fairness, every property owner has costs to pay for maintenance but as Tom Wolfe noted in his book “From Bauhaus to Our House,” the costs of skyscraper construction are very expensive compared to other forms. If they are expensive to build, they are expensive to fix.

I wonder if the glass-clad condo buildings were designed to accommodate the possibility of climate extremes that we appear to be facing, especially this winter. It would be really interesting to see what the operating and maintenance costs of these buildings are. If the costs “go through the roof” or if people feel they are “throwing money out the window” then perhaps they may be speaking literally as opposed to figuratively.

#116 Old Man on 02.14.14 at 2:11 pm

I will make two points as leveraging cheap money is insane to buy debt in the form of real estate within the context of wage growth, job security, and the future prospect of higher cost of money going forward for a term renewal. There is the official inflation rate vs the real inflation rate with items out of the basket which attacks purchasing power. Thus in todays world the dollar value is going into a negative position, and at renewal time many will go under water.

The only time I have seen leverage work when this millionaire was in my office funding and buying second mortgages on real estate with large equity positions. He had a huge line of credit at the bank and would assign the paper as security, and his net spread was 4% at this time. He was using bank money to earn money with very little risk, and just laughed about it all.

#117 Keith in Calgary on 02.14.14 at 2:19 pm

ROTFLMAO…..!! Damn weather……….

http://www.theglobeandmail.com/report-on-business/economy/housing/canadian-home-sales-soften-for-fifth-month-in-january/article16893785/

“A number of buyers likely waited out January’s deep freeze before going house hunting, particularly where I’m from in Southern Ontario,” CREA president Laura Leyser stated in a press release.

The majority of Canadian cities saw sales decline in January both from December and a year earlier.

#118 Willdaman on 02.14.14 at 2:23 pm

@91
>>while a balanced portfolio averaged just over 10%.

Instead of spouting this gibberish as if it were a fact, perhaps you could back this up by something (data, facts, non-cherry-picked statistics, etc.) And explain why, if you are able to beat the market in this way, you waste your time writing this pathetic blog.

Done, many times. Obviously you are not an investor. — Garth

The 10% return is not a fake number, anyone with a heartbeat and a balanced portfolio has achieved that and more in the past couple of years quite easily.

The fallacy with what Garth keeps preaching is that 6-8% returns will be consistently achievable in the future.
Garth looks backward at historical averages to come up with his justification.

The problem is that this market is “different”, we’re mired in a shitstorm of unpredictability because we’re in uncharted waters right now…historically low interest rates, the US QE debacle artificially inflating the market, and mass automated algorithm trading that has contributed to crazy market volatility.

Will 6-8% returns be consistently achievable in the future? Perhaps, but I doubt it.

Many people here (including Garth) are fans of Pref shares that can provide these types of returns, but I don’t see how these will actually hold up when interest rates rise. I keep asking the question and nobody seems to answer. If you buy a Pref today spitting out 6% yield, that’s great, it will keep spitting out that yield on your initial principal forever (in the case of perpetual) or at some reset rate (for rate resets). However, when interest rates rise, the share price will be driven downward so the resultant yield will be more reflective of the then current interest environment.

e.g. say you bought 1,000 shares of some TD fixed perpetual prefs spitting out 5%, at the current market price of $25 (which equals $1.25/year divi).
If prevailing interest rates go up say 2%, the market is not going to be satisfied with that 5% return, but will want a 7% return. The only way that can happen is if the share price is equal to ~$17.89. SO while you’re still earning your $1.25/ year, your principal of $25,000 shrinks to $17,890.

So it seems to me that if you’re banking on bonds/prefs or other fixed income type investments to achieve your 6-8% return going forward, you might be in for some rough times.

There were no rougher times than the last decade, which included the worst crash in 80 years. The balanced portfolio averaged just over 7%. — Garth

#119 Blacksheep on 02.14.14 at 2:28 pm

Shawn #93,

“We all seem to be entertained by this Site. But few minds are being changed here. Attitudes form over years and a view calcualtions or graphs don’t change opinions.”
——————————————————
Valid observation. I believe some here are victims of group think. They come to find like minded souls and do, but unfortunately resist stepping back to reassess whether their reasoning was sound to begin with, or if possibly the situation has changed making past conclusions, untenable.

Few share, truly Independent opinions in a group setting do to the risk of ridicule, or grief for non conformation.

#120 bill on 02.14.14 at 2:46 pm

#45 Nemesis on 02.13.14 at 11:11 pm
have you read ‘porterhouse blue’?

#121 AndrewAB on 02.14.14 at 2:48 pm

How’s UK Mark doing these days? Haven’t heard much lately.

#122 Rational Optimist on 02.14.14 at 2:56 pm

51 Notta Sheeple on 02.13.14 at 11:30 pm

“Let me see if I have this right. The Harpocrites (yeah, the ones that taxed income trusts when they said they wouldn’t) are going to blow 40% of the forecast surplus on tax breaks for the richest 15% of the population, ironically those who need tax breaks the least?”

I don’t get it. Taxation of income trusts was the betrayal of an election promise, which you are justifiably upset about. Not implementing income splitting even after the budget is balanced would also be the betrayal of a long-standing election promise, but you’re all for that.

There’s a limit to how much income can be split between spouses, and it could be tweaked any number of ways to reduce the benefit to high-income households. You have it wrong when you say that it is a tax break “for the richest 15% of the population,” though. It’s true that it would be a tax break for only 15% of Canadian households, but those are not equal to the highest-earning 15%.

#123 bdy sktrn on 02.14.14 at 3:12 pm

canada – austria

game over 6-0 but i won’t say who got the 6.

#124 confused on 02.14.14 at 3:12 pm

Gold is over the $1,300 mark…looks like another bull run forming for gold prices again. Dollar going up as well…

#125 KommyKim on 02.14.14 at 3:14 pm

RE: #60 Smoking Man on 02.14.14 at 12:07 am
Where the hell is the JESUS of global warming, sir AL Gore.
All the great Lakes almost totally frozen over. Polar ice caps growing like a hemorrhoids fuled on Mexican hot sauce.
Caught a clip of him. The heat is hiding in the Pacific Ocean..
How stupid of us… Science is settled…

It’s called Winter. It happens once a year.
But you did guess one thing right. The oceans are a huge heat-sink. It’s one of the reasons the weather is so mild here on the west coast of BC.

#126 bill on 02.14.14 at 3:31 pm

#91 Mark Wu on 02.14.14 at 11:23 am
‘you waste your time writing this pathetic blog.’
he wasnt wasting his time with me. I am quite grateful for the advice.
Mark are you a realtor? or a financial adviser?
could you provide some data, facts, non-cherry-picked statistics, etc that would support what ever your view is?
thanks!
Bill
ps
hey its dividend day tommorrow!
thanks again Garth.
I can only manage 7-8% myself as I am not the sharpest knife in the drawer. not exactly blunt tho’

#127 4 AM Sunrise on 02.14.14 at 3:32 pm

A couple of thoughts about this HAM thing…

The Louis Vuitton store in Paris limits handbag sales to two per person per day. Chinese customers who want to buy more (like 20) stand around outside the store and ask honest-looking Asian tourists to buy more them (in cash). I’ve had it happen to me, but since I wasn’t aware of the rule at the time, I thought it was a scam.

Hong Kong has limits on the amount of baby formula that people can take out of the territory. So on top of the usual drugs and guns, customs also busts people heading to mainland China with Enfalac in hidden suitcase compartments.

The calls for limits/restrictions on real estate purchases remind me of these limits.

#128 quebec economist on 02.14.14 at 3:36 pm

#28 Chris

Glad to see someone with higher objectives. I too believe 20-30% is easily attainable. This is not naive. I was heavily exposed to the high tech (i.e Nortel) crash in 2001 and to the recent drop in US, however my investements are mostly in undervalued stocks, correction do not have much effect on these. (since they don’t need correction) Furthermore correction create great undervalued stocks. So holding undervalued stocks is safe, like a bond, but has much more room to grow… In other words get out of Bonds and get into low valued stocks!

To start, a good read is:

Value Investing : From Graham to Buffett and Beyond.

A good start, but you must go beyond that to outperform markets. Once I have tested my strategy for a couple more years I will publish it…. so far my high growth venture portfolio has surpassed 30% (annum) for 4 years… I think I am getting better at this so I hope to get up to 50% this year. Why settle on 10%?

#129 Mike T. on 02.14.14 at 3:54 pm

haha

#74 Waterloo Resident

why don’t you give it a try, start a blog, and let us know how it all works out for you

#130 Randis on 02.14.14 at 3:59 pm

#3 Victoria …

Buying a house with mortgage is like trading stocks with a margin account … People (like you) comes out and yap when they make money because it magnifies the return. The same people hide and weep in their little corner when they lose because it magnifies their loss as well … You think you are a genius, well you are not.

#131 BCD (D for Doomer) on 02.14.14 at 4:00 pm

#33 World According To Garth on 02.13.14 at 10:46 pm
Too bad your neighbors 68 year old grandma has to work at Timmies to keep herself fed…and keep you in a hacienda at 55 in Mexico with her taxes.

#4 Cdn flier on 02.13.14 at 8:50 pm
Loving my $91000 public service job and living mortgage free. and…..I can spell.

______________________________________

To bad for her she didn’t get an education and a good government job. Can’t fix stupid. High flying business owner types want to change the world, here at gov’t Minute Lube jobs we just want to change your oil. Civil servants are rewarded with a pension for “serving” their entire lives. Get over it and stop with the jealousy. No one’s fault you didn’t get a degree and a gov’t job.

#132 Old Man on 02.14.14 at 4:08 pm

I am going to disclose a secret in Toronto, as had dealings with the son with clean private money years ago as he was a mortgage broker, and we did well, but then was his daddy. I will not mention names but the biggest strip club in Toronto was located just east of Yonge on Dundas Street, and never went there as was an angel. They were dealing in $millions during the 1970’s to finance real estate deals for 5 points plus a spread with borrowed bank money, and that was big leverage to make a buck.

#133 Enrique III on 02.14.14 at 4:12 pm

#101 JL

I think you are right that 30 is way too high for Calgary right now, but it could have something to do with the fact that the article you linked to was from a few years ago. From my perspective the landscape has changed over the last 12-18 months (even before the floods).

I have been renting for 5 years in Calgary and we just moved to an inner city townhouse where our ratio is ~20. Our first apartment and house (also inner city) were closer to 30-35. Looks like Summer 2012 was the time to buy.

#134 James on 02.14.14 at 4:14 pm

Garth, have considered just maybe there won’t be any sort of correction due to demographic changes because people are content living in a condo. And just maybe SFH price will remain flat for the next decades to come.

#135 4 AM Sunrise on 02.14.14 at 4:16 pm

Drat, when they said, “trade your car for a condo”, I thought it was a 1-to-1 trade!

http://ingastown.com/car-for-condo.html

To give them a smidgen of credit, they’re assuming price appreciation of 2.5% instead of the 7% or higher that’s bandied about in other developments.

#136 happity on 02.14.14 at 4:18 pm

The rent situation in Edmonton and Calgary is worse than ownership, had been for a long time.

#137 kitchener on 02.14.14 at 4:30 pm

80 Dwide Schrude on 02.14.14 at 8:27 am……
I have 7000 shares in a stock worth zero. It can’t be bought on the stock market anymore and is worth zero technically. But, the company got bought and I’m expecting about 35 cents a share. If I move the shares into my TFSA at a zero value, can I shelter the gain completely? I have no TFSA contribution room which is why I can only do this now while the stock is worthless.

*******

Dwide, why not sell the shares now and lock in the capital losses which you can then use to offset capital gains. Then take the proceeds ($0) and invest that in your TFSA? Better yet, if the price is going from $0 to $0.35, you should probably mortgage your house and put all of it into your TFSA, RRSP and secret offshore trading account because you will be rich rich rich.

I think you should also tell everyone here what stick this is so we can all get rich too. Kthxbye.

#138 happity on 02.14.14 at 4:33 pm

Oh gee, Alberta has a $7.4 billion public pension unfunded liability. The richest province in Canada.

And Calgary pays 53% of its tax revenues on pensions, benefits, et al.

How long before this becomes a story of cuts, union fights, surprises, reduced pensions, and failure?

USA is well along this path.

#139 liquidincalgary on 02.14.14 at 4:35 pm

@ 91 Mark Wu

proof? i have a very conservative portfolio of mostly mutual funds (i know i know, garth). my personal rate of return, for 2013, was just under 23%.

just imagine the possibilities, if I had started reading this “pathetic blog”, just two years ago!

#140 eddy on 02.14.14 at 4:44 pm

#117 Keith in Calgary on 02.14.14 at 2:19 pm

ROTFLMAO…..!! Damn weather………

—Yep, everyone who didn’t want to go to Syria got Haarped….with ‘weather events’ Surfs up!

http://www.surfertoday.com/surfing/9773-striking-footage-of-the-black-swell-that-hit-europe

#141 Robbie on 02.14.14 at 5:44 pm

#60 Smoking Man

Well, Australia and California are baking and experiencing extreme droughts. Sochi has the snow melting…in mid-Feb. Here on Salt Spring the flowers are coming out…snowdrops are blooming, strawberry plants have been growing all winter and have lots of fresh shoots. Doesn’t sound too cold here!

There is a great difference between climate and weather. Looking out your window is not a great way to analyze climate change!

#142 ronh on 02.14.14 at 5:46 pm

Slightly off topic, for your reading enjoyment. Do you see yourself?

http://www.fool.com/investing/general/2014/02/10/77-reasons-youre-awful-at-managing-money.aspx

#143 Snowboid on 02.14.14 at 6:03 pm

#60 Smoking Man on 02.14.14 at 12:07 am…

Funny you should mention that, hope you at least have a good A/C unit in your ‘Roger Miller’ hotel. And keep that JD in the freezer!

You, the gila monsters, rattlers, and scorpions will enjoy next weeks’ 30C+ forecast!

#144 Snowboid on 02.14.14 at 6:03 pm

#132 Old Man on 02.14.14 at 4:08 pm…

You’re Anthony Crispino, right?

http://screen.yahoo.com/weekend-anthony-crispino-000000897.html

#145 Old Man on 02.14.14 at 6:03 pm

#25 Smoking Man – you are being watched and the flight to Yuma will have extra riders on it, as no book will be written, as they are monitoring your every move, and all communications. You are a threat to national security and here is what is going down, as when you book into a motel your booze will be spiked, and off you go across the border into Mexico. They will leave you in some dump when you wake up with no money or identification, and will be arrested as an illegal alien thrown in jail with the bad criminals and maybe in a year might go to trial. Forget the Embassy of Canada helping you out, as they know you naught, so wish you the best of luck.

#146 Say No to Yoga Pants on 02.14.14 at 6:11 pm

Hey – so this is a quote from Michael Grange, sportsnet sports writer:

“Take Toronto’s over-heated housing market, for example: A house is listed at an artificially low price in order to drive interest. When it eventually sells for more than the initial asking price it’s considered a great deal for the seller because the final price was 25 percent higher than the initial listing.

It doesn’t matter that the initial listing was clearly less than market value – it inevitably shapes the perception of what kind of deal the buyer and seller got in the end.”

The party is O-VAH!

when sports writers reference housing bubbles you know you are in deep….

Happy Friday

#147 Renter's Revenge! on 02.14.14 at 6:18 pm

@ #80 Dwide Schrude & #137 Kitchener:

Shrude’s (shrewd’s?) idea sound ingenious. The only catch I can think of is that the shares might not meet the CRA’s criteria for what kinds of securities are allowed to be held in a TFSA. Better check first. You don’t want your gains taxed at 100%.

#148 Stickler on 02.14.14 at 6:18 pm

@ #131 BCD (D for Doomer) on 02.14.14 at 4:00 pm

#33 World According To Garth on 02.13.14 at 10:46 pm
Too bad your neighbors 68 year old grandma has to work at Timmies to keep herself fed…and keep you in a hacienda at 55 in Mexico with her taxes.

#4 Cdn flier on 02.13.14 at 8:50 pm
Loving my $91000 public service job and living mortgage free. and…..I can spell.

______________________________________

To bad for her she didn’t get an education and a good government job. Can’t fix stupid. High flying business owner types want to change the world, here at gov’t Minute Lube jobs we just want to change your oil. Civil servants are rewarded with a pension for “serving” their entire lives. Get over it and stop with the jealousy. No one’s fault you didn’t get a degree and a gov’t job.

——————————————–

Yea, everybody should get a government job…oh wait…where would the money come from to pay for that!?

The way it used to be was:

#1. you went into the public sector and expected greater job security

OR

#2. You went to the private sector and expected more compensation (to compensate for the greater volatility and less security)

Now:

One could argue that the public sector gets both.

10% cut across the board for all public service employees in all their compensation forms (pension, etc).

And no carrying forward your sick days to the next year (come on now, that is ridiculous). I could go on and on.

Cue government workers chirping about nonsense, with no real facts.

#149 Victor V on 02.14.14 at 6:31 pm

http://business.financialpost.com/2014/02/14/heenan-blaikie-staff-friday/

The carnage from the dissolution of Heenan Blaikie continues as professional administrative staff (IT, HR, marketing, support staff, etc. ) are left in limbo as to what will happen to those not moving with the mass exodus of lawyers to other law firms.

Staff have complained that they were kept in the dark and forced to rely upon the Legal Post and other publications to keep abreast of what was happening at the firm. There have also been allegations that support staff were told at a town hall meeting at the end of January, “to stick with Heenan Blaikie.”

There are further allegations that some, but not all, support staff have been given information with regard to termination dates or severance packages.

Many support staff feel betrayed, distressed and stunned as they watch lawyers madly scrambling to find firms to work at. The scene at the Toronto office of the firm after the DLA Piper merger fell apart has been described as “chaotic and people are crying and taking sleep-aid medication.”

Some staff have been told that the firm must move out of the Toronto office by February 28, 2014, but they have little other information.

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

And unfortunately, 7 in 10 of these people have mortgages.

#150 DR on 02.14.14 at 6:39 pm

ill say it again,
when can I buy a bungalow in Leaside for 350 again.
35 frontage and private drive.

#151 Bill on 02.14.14 at 6:42 pm

Re: #23 sheane wallace on 02.13.14 at 10:15 pm

Ticker symbol jdxj does not exist in Canada or in America.

I think he meant GDXJ. US ETF for Junior Miners. If you want to really play with fire try NUGT.

#152 screwed on 02.14.14 at 6:45 pm

Flaherty, the retro FinMin

Why doesn’t he bring back 10 cents per minute on local calls? Put rotary phones back in to government offices while he’s at it?

The man seems to love going back to past markets and policies.

WORST FINANCE MINISTER EVER

If it wasn’t for hard working and accountable Canadians, he wouldn’t have a leg to stand on or a pot to piss in.

#153 Old Man on 02.14.14 at 6:56 pm

I have noticed those trashing the Premier of Ontario from time to time, a one Kathleen Wynne. Well will be honest as when she came to power just shook my head and mumbled now what. This Lady took over a mess; she is well spoken; has a political smarts about her; is aggressive; and have grown to like her a bit. I say give her a chance in the political arena, as the men have failed, and she might turn out ok in the end.

#154 jan on 02.14.14 at 6:56 pm

Has any of you geniuses ever consider that both, RE and rent priced need to move lower, much lower.

Just have a look at rental properties in Germany or Switzerland and their respective incomes.

Oh I get it, who in their right mind would want to live there right, after all, everybody wants to live in frozen arctic Canada right…LOL

#155 Smoking Man on 02.14.14 at 7:01 pm

#145 Old Man on 02.14.14 at 6:03 pm#25 Smoking Man – you are being watched and the flight to Yuma will have extra riders on it, as no book will be written, as they are monitoring your every move, and all communications. You are a threat to national security and here is what is going down, as when you book into a motel your booze will be spiked, and off you go across the border into Mexico. They will leave you in some dump when you wake up with no money or identification, and will be arrested as an illegal alien thrown in jail with the bad criminals and maybe in a year might go to trial. Forget the Embassy of Canada helping you out, as they know you naught, so wish you the best of luck.
………..

No shit about embassy, when I was getting blackmailed by Thai customess in 90s, the girly men did nothing for me.

Thanks for the heads up, I’ll buy gun. Put some shoe polish under my eyes like football players. My Indiana Jones hat, trimmed with my raybands.

What I’m up against, dudes with Pollo shirts, dockers pants, and shiny new shoes with tassels.

Easy to spot, with in one min of talking to them they ask you what you think of Ron Paul…

It’s like they all read from the same manual…

Interesting enough though, my phone was hacked yesterday…

I love the drama..

#156 [email protected] on 02.14.14 at 7:04 pm

Here’s a great article that talks about why housing and income are out of alignment in Vancouver. It includes comments from Prof. David Ley, a Geography professor at UBC who studies hosing bubbles in various cities around the world. He is the author of the book “Millionaire Migrants.”

For Vancouver, Housing and Income Don’t Add Up:

http://m.theglobeandmail.com/life/home-and-garden/real-estate/for-vancouver-housing-and-income-dont-add-up/article12436288/?service=mobile

Some key points:
• Rich global investors are driving real estate prices. They “park their money in cities that are desirable and safe.”
• In other cities around the world, where inequality and affordability is an issue, concerns are addressed publicly and openly. However, Dr. Ley states, “In Vancouver, there’s an astonishing apathy to the very serious issue of inequality and affordability.”
• Everyone agrees that we lack data so that we can determine what is really going on. But, if we look at the numbers, Vancouverites are too poor to afford real estate.
• According to Dr. Ley, “A case could be made that we do not have a bubble. However, should the conditions change, prices may not be sustainable. Those conditions are cheap mortgages and that capital flow from foreign investors. And the capital flow probably won’t dry up.”

Although this article was published prior to F’s announcement to scrap the Immigrant Investor Program, I have no doubt that there will still be a pool of investors who continue to seek safe havens for their cash. I am pleased that the Immigrant Investor program has finally come to an end, but that is only part of the solution. All levels of government need to find the courage to openly address this very serious issue. They have pushed it under the rug for way too long.

#157 Smoking Man on 02.14.14 at 7:06 pm

#141 Robbie on 02.14.14 at 5:44 pm

You’re probably young, toting a newly framed obedience certificate. My kids not that old where bombarded with global carbon, sorry meet warming hype.

Or you’re an old Bastard, with investments in the scam, waiting to profit, if that’s the case you have my out most respect.

But if you’re the kid… Sucks for you. Once a fish always a fish.

#158 Smoking Man on 02.14.14 at 7:12 pm

#143 Snowboid on 02.14.14 at 6:03 pm

This is what will be on the head phones when hammering the keys

https://www.youtube.com/watch?v=p4zluA60hjs&feature=youtube_gdata_player

#159 jess on 02.14.14 at 7:18 pm

“This should be a little reminder to those poor sods who believe Global TV”

… PBS?
Former Enron trader John Arnold is using the network to wage his war on pensions
http://www.salon.com/2014/02/13/when_did_pbs_become_the_plutocratic_broadcasting_service_partner/

#160 No Anecdotes Please on 02.14.14 at 7:42 pm

CREA January stats out today. Prices up 9% y/y.

Anybody need a bear hug?

#161 T.O. Renter on 02.14.14 at 8:09 pm

Condos are already getting the snub from many would be buyers. A least in the Northern GTA.
No land & inflating maintenance fees as the 50% who don’t own don’t care what they scratch,break or look after as the common elements.

#162 Tony on 02.14.14 at 8:29 pm

Re: #124 confused on 02.14.14 at 3:12 pm

Gold closed above the 200 day moving average and the FED didn’t do anything to kill it yet. The FED did come in when the stock market looked like it would drop at least another 50 percent over the next few months when the S&P 500 index hovered just about the 200 day average. The cavalry came over the hill.

#163 A Fan on 02.14.14 at 9:09 pm

#65 Monday Night

> You my friend are assuming with a very limited set of variables.

I just asked a question – you assumed something about what motivated it.

#164 Lisa on 02.14.14 at 9:23 pm

Black sheep,

You asked what would drive the US recovery in the future. Janet Yellen’s philosophy revolves around the idea that creation is the lynchpin of recovery. Also note Joseph Biden’s timely comments about the sorry condition of Laguardia airport.

The game plan is to put money directly into the pockets of middle America through job creation in infrastructure. …I figure. New bridges, airports, sewer systems. They need it and fed gov will deficit spend to do it.

As they taper back on MBS purchases they will slowly start with this new program. No govt willingly allows a deflationary spiral without fighting it with everything they’ve got.

#165 Snowboid on 02.14.14 at 10:16 pm

#158 Smoking Man on 02.14.14 at 7:12 pm…

I thought you were more like Bruce Willis, not Matthew M.

But must admit I do like the series, especially episode 4!

And don’t forget that it was I that suggested you write a book back in 2011 – I expect a signed copy!

Next week while stoking the BBQ and sipping my JD I will think about you, suffering in the desert heat!

Happy Birthday Arizona!

#166 Woke To The Sounds Of Horking on 02.16.14 at 9:42 am

#48 Andrew —
Do you have any idea what $399,000 buys on the south coast of Turkey? On the Mediterranean? Regina? REE-GI-NA??? C’mon….