Snowflakes

COKE modified

Thirty months ago Cal bought a rancher in a Phoenix suburb, right on the border of prestigious Scottsdale, for $289,000. Three beds, two baths, big lot, renovated, walk to the ttrendy Fashion Mall. “But it’s too damn hot here,” he tells me. So he listed it for $430,000, and sold three weeks later for $414,000.

“Best investment I ever made,” says Cal, who is heading home to Vancouver in time to see the daffodils come up. “Phoenix rocks.”

Well, not exactly. Prices have increased 8.3% in the past year, but the number of sales have gone down as busloads of bargain-hunters left town after snapping up distressed properties at rock-bottom prices. There are still as many foreclosures or bank-owned houses for sale (6,845) as there are normal listings (6,568). But the days of 70%-off in certain Zip codes are definitely over.

Cal’s note made me think once again about the disparity that’s opened between Canada and the US. That was driven home Friday with the latest jobs numbers – the States creating 175,000 positions last month (17% more than anticipated) while Canada lost 7,000 jobs (150% worse than expected). The American unemployment rate is again less than ours, which was unthinkable when Cal was down arranging to snap up that appealing rancher. In fact, there have been no net jobs created in Canada since last August, says the government.

Also Friday came news Montreal-based Bombardier is freezing the wages of 38,000 employees. And speaking of Quebec, now that a provincial election has been called, the betting is the separatist-leaning PQ will coast to a majority win. Throw in a crappy jobs report, and no wonder the Canadian dollar just deflated again. If people in Calgary or Kelowna or Richmond Hill don’t think a sovereignist government in Quebec City won’t hurt them, they’re daft.

Even more consequential is debt. US households started seriously deleveraging after the housing bubble burst, while Canadians keep on toking. At more than a trillion, we have never had as much mortgage debt, nor as much exposure to real estate. Despite almost five years of in-the-ditch interest costs, household debt levels continue to rise. In other words, people are not using cheap rates to reduce borrowing, but to add more.

This is beyond stupid. There’s a 100% chance interest rates will be higher in the years ahead (bankers actually say mortgages will cost more by Hallowe’en), which will just make debts harder to pay. Meanwhile the dollar has lost enough altitude that consumer prices are rising at the same time businesses have lost a window of opportunity to import technology and equipment with a strong loonie.

Add it up. Weak, indebted consumers. Families over-extended on real estate. Rising prices but zero job creation for the last six months. Sickly levels of business investment. And yet house prices keep going up in major markets, along with debt, meaning people have less to spend at retailers like Sears or Best Buy. No wonder they’re hurting.

It wasn’t hard to see this coming a few years ago, which is why this pathetic blog told you then to ‘sell Canada, buy America.’ Last year the Dow and S&P gained 30% while the TSX grew 9% – and that was its best performance since 2010. It’s a lesson most people here seem incapable of understanding.

Just as 70% of Canadians who have equity investments only own Canadian companies, an equal number of us have the bulk of our wealth in a single asset, at a single address. This lack of diversification is a serious impediment to actually growing wealth, and gravely increases risk. Obviously we’re a country of snowflakes – people convinced they’re unique, special, favoured and immune from the booms, busts and travails of everyone else on the planet. Good luck with that.

Yes, this is a good nation. I’m not leaving. Much opportunity left. Plus, the US isn’t nirvana.

But I sure fear for a lot of people around me. Not a clue.

170 comments ↓

#1 Victor V on 03.07.14 at 8:17 pm

Here’s the Bombardier story

http://www.theglobeandmail.com/report-on-business/bombardier-puts-salary-freeze-on-its-38000-non-unionized-employees/article17371103/

#2 Lost Decade on 03.07.14 at 8:17 pm

Reading about Japan’s lost decade. If asset price bubbles can pop in the world’s two largest economies (U.S. and Japan), why not here? The big bank economists all paint a rosy picture, but why not, with record quarterly profits?

#3 Prov on 03.07.14 at 8:21 pm

Just got news my fixed rate of 3.4% for 5 years was now lowered to 3.2% with a good chance it will drop to 3.05% for the spring market.

As long as money is cheap prices won’t change and atleast go up with inflation. owning in canada is cheap.

#4 Lando on 03.07.14 at 8:27 pm

LAST!

#5 Calgary Conditional Owner on 03.07.14 at 8:28 pm

Hey Garth,

Is it still a good time to go variable on a mortgage?

Hope you’re doing better.

Cheers.

#6 buttminer on 03.07.14 at 8:36 pm

Garth, I hope you’re not eating up the numbers you’re getting for our friends down south. Their stock values are questionable, likely in a massive bubble on life support from the Fed pumps. Normally you’re quite the skeptic on taking numbers at face value, but I don’t see why you don’t dig into American numbers.

#7 Ralph Cramdown on 03.07.14 at 8:37 pm

I figure the most important thing is where the revenue is being generated and where the customers are, rather than where the head office is. I see some excellent values in Canada-based companies that are tough to match in the US market where most small and mid caps are far more closely watched.

#8 DaleFromCalgary on 03.07.14 at 8:39 pm

What was Cal’s net profit? He had property taxes, utilities, commissions, legal fees, etcetera. Also he has to pay income tax to the Arizona and federal governments plus Canadian taxes. Did he really make that much of a profit compared to investing in Canadian equities?

Also, since he would have had to pay American taxes, he is now on their radar screen. Just saying.

#9 mitzerboy on 03.07.14 at 8:39 pm

thankz for the insite garth….
now maybe sask can go back to being 1 horse cities….in a 2 bit province………with a semi-pro football team…..
that’s where have I lived and learned…and loved ….soulwise

#10 Debtfree on 03.07.14 at 8:39 pm

I’d have to add . Letting the maple group thwart the LSE merger didn’t help either.

#11 Rexx Rock on 03.07.14 at 8:41 pm

Yeah,I think in the next few months a lot of Canadians will start cashing with huge profits in the real estate market.They’ll switch their money into the stock market for more liqidity.
Great timeing for the ones who stayed in the housing bubble until now.
Lower wages coming for Canadians,I can see bidding wars for new jobs in the future.I’ll do the job for 18 hr,no I’ll do it for 16 hr, ok 14 hr with no benefits.
Also for some good jobs, I would pay the employer a few thousand dollars for the chance to work a well paying job with benefits.When you have 1.4 million people not working ,what do you expect.

#12 World According To Garth on 03.07.14 at 8:51 pm

Last I checked the US govt numbers are just as “govt” as the phony Canadian ones.

I will never understand how people (sorry Garth) continue to post govt statistics and believe them like the gospel.

#13 Ariya on 03.07.14 at 8:52 pm

Composition of Canadian Households Assets in 2012:

– RRSPs, RRIFs, LIRAS (median value median $48,000)(10.2% of total assets)
– Employer Sponsored Pension Plans (median value $123,300)(19.9% of total assets)
– Deposits in Financial Institutions (median value $4,000)(3.7% of total assets)
-Mutual Funds, INvestment funds and income trusts (median value $50,000)(2.5% of total assets)
-Stocks (median value $30,000)(2.2% of total assets)
-Bonds (median value $3,000)(0.3% of total assets)
-TFSA (median value $10,000)(0.7% of total assets)
-other Finacial assets (median value $10,000)(1.8% of total assets)
– Real Estate Principal Residence (median value $300,000)(34.6% of total assets)
– Real Estate Other ( median value $180,000)(9.9% of total assets)
-Vehicles (median value $15,000)(2.6% of total assets)
– Other non-financial (median value $10,000)(3.3% of total assets)
-Equity in business (median value $10,000)(8.4% of total assets)

#14 John on 03.07.14 at 8:54 pm

Dale #8

Why would he pay income tax? No mention of him working there.

#15 LJ on 03.07.14 at 8:58 pm

So, house prices in Phoenix go up 43% in 30 months and they’re calling Canadians nuts?

Then Cal goes on to call it an “investment?” More like a lucky gamble.

#16 zee on 03.07.14 at 9:03 pm

Hey Garth

Most of the jobs lost in the economy was part time jobs. Part timers are not buying house so all is still good with Canada housing market as long as rates stay low. And rates are not going up in any significant way.

#17 Brian Ripley on 03.07.14 at 9:03 pm

Garth said: “…the dollar has lost enough altitude that consumer prices are rising…”

The weak dollar is adding commodity cost to the cost of housing as demonstrated in my “real” price of housing which is spiking up:
http://www.chpc.biz/real-price-of-housing.html

Canadian CPI is rising at 147 bps annually measured over the last 9 months:
http://www.chpc.biz/real-interest-rates.html

…and so when Garth quotes: “bankers actually say mortgages will cost more by Hallowe’en” they could very well be correct.

#18 mark on 03.07.14 at 9:09 pm

buttminer the returns aren’t questionable. They already happened. Walk away now if you have to, but if you were invested in the US last year you made that money.

#19 Bottoms_Up on 03.07.14 at 9:13 pm

#14 John on 03.07.14 at 8:54 pm
————————————-
He WOULD have to pay income tax there if he was down there for a certain length of time. There’s an equation they use for figuring it out and it spans multiple years (it takes into account length of time spent down there year after year).

#20 AK on 03.07.14 at 9:21 pm

#6 buttminer on 03.07.14 at 8:36 pm
“Garth, I hope you’re not eating up the numbers you’re getting for our friends down south. Their stock values are questionable, likely in a massive bubble on life support from the Fed pumps. Normally you’re quite the skeptic on taking numbers at face value, but I don’t see why you don’t dig into American numbers.”
====================================
Dude,

You need to stop watching Peter Schiff videos.

#21 valleyrenter on 03.07.14 at 9:23 pm

Reminds me when the wife asked me about BestBuy closing in south Surrey/White Rock. “Don’t people have lots of money to buy stuff up there? It’s a brand new store.” Nope, all they have is debt with those new home purchases. Hat tip Mr.Turner!

#22 AK on 03.07.14 at 9:27 pm

“Best investment I ever made,” says Cal, who is heading home to Vancouver in time to see the daffodils come up. “Phoenix rocks.”
====================================
Big whoop. Cal made 43% in 30 months with U.S. real estate.

He could have made almost 300% by investing in the S&P 500 and with less Bullshit…

#23 Bottoms_Up on 03.07.14 at 9:31 pm

Harper on the public service:

Canada’s bureaucracy is a “shining example for the world.

“As prime minister I have been around the world on government business and I can tell you that the dedication, competence and integrity of our public service is unrivalled. The Canadian public service is indeed a critical asset, a comparative strength that this country possesses in a challenging and dangerous world,” he said.

http://www.ottawacitizen.com/business/Public+servant+gets+award+overhaul+pension+systems/9588617/story.html

#24 A Yank in BC on 03.07.14 at 9:37 pm

#14 John

What I think Dale meant to say was that Cal will have to pay Capital gains tax in the US.. not income tax. As “the seller”, Cal also has to pay the 6% Realtor’s commission ($24,840) at closing, as well as for title insurance and various and sundry other charges and fee’s that add up to a lot of dough. Additionally, the Buyer was probably successful in getting Cal to pay for some of his closing costs too (as is common in the US), so in the end Cal likely didn’t make nearly as much as the original figures would suggest.

#25 Carpiker on 03.07.14 at 9:38 pm

So sorry for SM today, USD up CAD down….didn’t see this coming Jimmy!? I’m sorry for SAtoshis corolla too, the guys is worth 1 mil butcoins and he is driving an eight generation corolla, beige colour. SM are you still driving the Tercel!

#26 Uh Oh Canada on 03.07.14 at 9:39 pm

If Quebec ever separates, we will become a third world country surrounded by nations of the first world.

#27 Chickenlittle on 03.07.14 at 9:43 pm

He left the sun for the rain…..I am not impressed. So what if it’s hot in Arizona? That’s the point!

#28 souvereigninternational on 03.07.14 at 9:48 pm

Garth wrote:
“Cal’s note made me think once again about the disparity that’s opened between Canada and the US.”

Well, and I thought it was my Hagen-Dazs principle :)

for reminder I wrote yesterday:

A Hagen-Dazs rule:

I promised my daughter ice cream when she did well at her swimming lesson. We go to our local GTA supermarket, I pay 7.50 (+tax ) for the strawberry delight. Now generally the price ranges for this product from 7 to 9$ (highest in a corner store). Occasionally I have seen it on sale for 6$ or even 5$, usually in the suburbs or out of GTA supermarkets. I can get the same ice cream in USA for 4.50-5$ regular price pretty much most places with sales prices ranging 3.50-4$ (no extra tax ). Now my (and most people’s income) after tax is relatively similar to what I made in US. If we spend 30% more on many things like Hagen-Dazs ice cream that means there is precious little we have left for savings & overpriced RE. We already know we don’t save much as Garth frequently points out. We cannot pay for things more than people in other countries and eventually some things will have to come down in price to compensate. Is it going to be taxes, cost of health care, real estate or Hagen-Dazs?

to which #79 Bottoms_Up on 03.07.14 at 9:54 am replied
——————————————————-
While it sucks that Canadians typically pay more, we actually do have higher average wages.

Then factor in economies of scale (10 of those ice creams will sell in the USA for every 1 up here–so the price can be lower in the USA and they still make more money down there), factor in our weak dollar, higher taxes, possible duty/freight charges etc. and it’s easy to see why we pay more for things.

Dollar 10% difference now, before it was at par Hagen-dazs price was the same. NAFTA= no duty on US, mexican products, taxes/economies of scale (baloney)= our economy is the size of California with similarly high taxes and socialism, over 30 mil. consumers mostly within 2 hours of the border. Our prices should be lower especially in southern Ontario than in Maine or North Dakota. If that line of thinking worked it would be the cheapest to buy things in NY metro.Anyway you missed the point , basics economics, there is only so much money to go around prices will have to come down somewhere. One can run away from the free market but cannot escape.

#29 Freedom First on 03.07.14 at 9:52 pm

Garth, really enjoyed this post today but it really sucks for a lot of Canadians who have gorged on debt and are heavily leveraged on one asset. Canadian debt levels ARE now sucking the life out of the economy. Proven by all of the facts and figures you have given us pertaining to Home ownership levels: record construction employment #’s, record low interest rates for several years with escalating debt levels all along the way, the #’s of Canadians with no company pensions, lack of savings for Canadians, % of net worth in housing for Canadians, credit card debt levels, Line of credit debt levels, Heloc debt levels, payday loan debt levels, 6-7-8 year dealership inspired car loans, plant closures and layoffs in Canada, dead job growth levels, and TA DA…..House bidding wars in a few of the major cities in Canada, topped off by a glut of Condos available now and coming on stream shortly, and what do we have? Well…….I certainly couldn’t put it better than Garth did with the last 2 sentences of today’s post. Batten down the hatches. Being debt free, liquid, diversified, balanced……priceless. No exception.

#30 SilverMeridian on 03.07.14 at 9:54 pm

SilverMeridian Greater Ottawa surReal Estate Update

http://www2.ottawarealestate.org/home/NewsInformation/LatestNewsRelease.aspx

So there you go, apparently “less than favourable weather, and possible distraction of the Olympics,” prevented Ottawans from going on the house buying spree in February of this year. OREB states that “Members of the Ottawa Real Estate Board sold 870 residential properties in February through the Board’s Multiple Listing Service® system, compared with 903 in February 2013, a decrease of 3.7 per cent.” For the record, in February 2013 OREB reported sales of 914 residential properties, a decrease of 9.3 percent in comparison with February 2012 (1,018 properties).

Other indicators always overlooked in the so-called “News Releases” are:

* Number of months of inventory increased by full month in comparison with last year (from 6 to 7 months).

http://creastats.crea.ca/otta/images/otta_chart04_hi-res.png

* Active Listings have gone up by 500 properties, all the way to 6000 active listings and almost doubled in comparison with 2010. It is quite possible that by the mid-summer Ottawa RE market will hit a new all-time record of 10 000 active listings.

http://creastats.crea.ca/otta/images/otta_chart03_hi-res.png

#31 Retired Boomer - WI on 03.07.14 at 9:54 pm

Garth, you are correct, the U.S. is not nirvana. Neither is ANY country I have visited. Some are better than others in economics, social development, the ability to earn a decent living.
That said, yours seems bent on self-destruction through real-estate, much as ours was almost a decade ago. We sold houses at greatly inflated prices to over-indebted buyers. The buying stopped. The jobs stopped. The Banks stopped. The debt remained. That was the story in a nutshell. Many lost everything in the speculation mania of RE. We saw speculation in NASDAQ stocks (mostly) until that gas bag blew in 2000-2002. RE trashed stocks AND bonds in 2008 – early 2009, right after the DOW hit it’s then all time high in Oct 2007.
There is a lesson in there.
Stocks have been a good place to gain value since re-testing the lows in March 2009. To jump in with both feet today might not be yield as much, we are in high water again. That said, we are growing, and we can expect the stock market to reflect that growth. Our RE markets are recovering, but nobody’s calling for them to exceed the tops of the late aughts just now.
We aren’t back to pre-meltdown levels in all areas. That said, we are a heck of a lot better off than we were in late 2008. That’s called “progress” Interest rates should rise slowly- as we progress to more normal.

I would love to interest rates rise to the normal 5-6% rate of yore. Inflation is roughly 2-3% why not get paid for lending out your money? House financing “should” cost that rate, maybe more for 30 year terms.

Wages are set by your value in the marketplace these days not by a union. Cost of production too high in your hood we move production elsewhere. Taxes too high in your state? Move elsewhere, though it is not always nirvana in the new one.

There are always new problems on the horizon, there always will be.

Only the fool hobbles his options through excess debt.

Here endeth my RANT

#32 sheane wallace on 03.07.14 at 9:58 pm

debt nation.

erasing capital (savings) through inflation (while lying that there is no inflation) leaving stocks as the only alternative to preserve wealth.

And real estate.

Garth is right on real estate in general but he is not counting eventual collapse of the currencies that could be far closer than we thing.

I appreciate the ‘pretend to be calm’ play but we are very close to loosing it. BRICS are more than half the world population and resources and when they decide to dump the US dollar which is a matter of when not if it is the game over with the western bankers supremacy.
When US dollar looses is reserve currency status the states will dramatically drop imports with all consequences to Canada.

Herr H is later paying attention to China which is surprising, it seems there are some Canadian players behind him after all beside the London masters.
interesting times.

#33 Ralph Cramdown on 03.07.14 at 9:58 pm

#12 World According To Garth — “I will never understand how people (sorry Garth) continue to post govt statistics and believe them like the gospel.”

There’s no need to take government stats on faith. Every three months, public companies release quarterly reports detailing sales and profits for business domestic and foreign. You can read those reports and see if the largest cyclical companies are growing or shrinking. It isn’t hard to figure out which companies are economic bellwethers. If they’re all lying about their numbers too, the conspiracy is truly vast.

#34 Not Smoking Man on 03.07.14 at 10:07 pm

We heard the same sermon from you 2 months ago
when the job numbers dipped, then the next month they increased and your silent. Like a true politician you cherry pick your arguments.

No new net jobs since August. What’s to pick? — Garth

#35 sheane wallace on 03.07.14 at 10:08 pm

excuse my spelling errors this is what you get after few glasses of wine,

In vino veritas,

#36 sheane wallace on 03.07.14 at 10:15 pm

#34 Not Smoking Man
…………………………………………………….
Jobs? You must be kidding.
Welcome to global leveling, Out of 300 000 graduates from universities and colleges 16 000 found a job, handful from graduation classes, either top 5 % or with connections.

Jobs outsourcing, read Paul Craig Roberts who is one of the few to state it openly.

Put it politely: You are not an asses but a liability. Shut up and learn to work like in Asia: more for less money, higher taxes and no benefits. Deal with it.

#37 John_inMtl on 03.07.14 at 10:24 pm

Yeah, here we go again with the election thing. Millions wasted, again. PQ not keeping their promises, again. Threat of referendum, again.

There are no more good politicians and parties in Quebec, Canada or in the USA. What a sad lot we are!

#38 Smoking Man on 03.07.14 at 10:26 pm

4 Neo Citrine, 2 wines, one beer glass topped with JD.

Handsome Family full blast in the ear buds and watching Grimm.

Hard to describe the sensation, but damn the spelling near perfect..

#39 economictsunami on 03.07.14 at 10:30 pm

Cullen Roche (Prag Cap) summed it up best in June of 2013:

“We’re in the backstretch of the recovery. We’re now into month 47 of the current economic recovery. The average expansion in the post-war period has lasted 63 months. That means we’re probably in the 6th inning of the current expansion so we’re about to pull our starter and make a call to the bullpen. The odds say we’re closer to the beginning of a recession than the beginning of the expansion. That puts the Fed in a really odd position and not likely one where they’re on the verge of tightening any time soon.”

The BOJ is pumping out yen to devalue and import inflation; as the ECB looks to be at the ready to kick it up a notch themselves.

The PBOC appears to tighten but shadow banking continues to thwart their efforts; while The Fed tapers adding to their $4T balance sheet. (while being audited for off book liquidity of possibly up to $9T.)

Low rates and massive liquidity rescued the financial system but the economy continues to pay the price…

The Banks that Ate the Economy…

http://tinyurl.com/mwnqdbd

#40 Realtor # 1 on 03.07.14 at 10:32 pm

Rates rose last year and did little to cool the market.
Till all rates are over 4% it will not help slow the market
As seen last fall when rates were in the mid 3s and prices were still stable.

You need lenders to pull back and more job losses.

#41 Nemesis on 03.07.14 at 10:46 pm

#BlastFromThePast #FridayNightFun #Realpolitik #BlackRain #ErrantMathmeticians

http://youtu.be/kTKn1aSOyOs

[NoteToGT: Remember when a billion was, like, a billion?]

#42 hohoho on 03.07.14 at 10:48 pm

> When US dollar looses is reserve currency status the states will dramatically drop imports …

and in China there will be 500 million jobless people on the streets as factories close. now you know why they keep buying those US treasuries …

#43 Son of Ponzi on 03.07.14 at 10:53 pm

#33
Your trust in the reported numbers of Public companies is naive.
Obviously you never worked in one.
Here’s how it works:
The CEO asks the CFO: What are our financial results?
To which the CFO replies: What do you want them to be?

#44 Internal Auditor on 03.07.14 at 10:55 pm

Rates may increase in the near term (12-24 months) but there is a lot to lose if rates spike. I doubt the powers that be would allow for a sharp rise in rates. Look at the 10yr Treasury this summer, it hit 300bps and was getting a little to heafty and as it would happen it came back down, over 10% which helped the US Gov’t and the consumers stay the course.

I work at a financial institution and it is running lean. I agree Garth that there will be more layoffs etc but a majority of major companies will get to the point where they cannot cut costs anymore in order to remain competitive. They will have to generate top line growth, enter into acquisitions and enhance technology in order to compete. Moves such as those may not help create jobs but it will deploy people and their talents/capabilities into jobs the market deems fit for their skills.

#45 Smoking Man on 03.07.14 at 10:55 pm

#36 sheane wallace on 03.07.14 at 10:15 pm

True but there is a way out…

Start a business and hire some grads, after years and years of schooling, they believe in, and blindly trust the authority figure in there life.

The will obey, you can trust them with the cash box, the customer list. Just don’t tell em about your mistress, something like that will short curict some brain cells.

Get them involved in tree planting, hang a picture of AL Gore In your office, they will love you..

#46 sheane wallace on 03.07.14 at 11:05 pm

#42 hohoho
…………………………………………
You do not understand.
The US dollar as reserve currency stimulates China to import. With the dollars they buy stuff/commodities internationally.
If the dollar declines US would simply be bypassed in the international trade. Chinese will buy stuff with the Yuan and produce for internal consumption and the rest of the world. US economy would be as predicted only 18 % of the world economy in few years.

China and Russia will gain immensely economically and geopolitically by the demise of the US dollar.

This is why the current standout with 2 possible outcomes:
1. Nuclear war
2. demise of the west.

Which one do you choose?

#47 sheane wallace on 03.07.14 at 11:06 pm

stimulates China to import

sorry I meant:
stimulates China to export.

#48 sheane wallace on 03.07.14 at 11:09 pm

One can’t have 64 % of the world currency reserves with 21-23 soon to be 18 % of the world economy,
Euro and Yuan as well as gold will shine,

#49 Chickenlittle on 03.07.14 at 11:11 pm

#35 Sheane Wallace:

Garth and wine go great together!

Enjoy!

#50 gladiator on 03.07.14 at 11:15 pm

How is CRA going to get ifs share of loot off of Cal’s profits from his RE adventure in the US?

#51 sheane wallace on 03.07.14 at 11:15 pm

#45 Smoking Man on 03.07.14 at 10:55 pm
#36 sheane wallace on 03.07.14 at 10:15 pm
True but there is a way out…
Start a business…
……………………..
Start a Business working for whom, the Chinese?
You are not getting the picture. The US is producing very little, most of the US companies are truly international companies.

The north America has no qualified people to compete, the outsourcing took its tool, just look at Nortel and RIM.
You think you can compete with Samsung? No way, you stand no chance.
Europe and Asia have chances I would advise to heavily diversify in these areas.
North America is toast.
maybe still 20 % in north american internationals.

#52 Notta Sheeple on 03.07.14 at 11:17 pm

“……Cal’s note made me think once again about the disparity that’s opened between Canada and the US. That was driven home Friday with the latest jobs numbers – the States creating 175,000 positions last month (17% more than anticipated) while Canada lost 7,000 jobs (150% worse than expected)……..”
=========================

Canadian jobs (Bombadier, Caterpillar, Heinz, yadda, yadda) will continue to be outsourced and off-shored to countries whose citizens don’t require above market wages to pay for over-priced housing. This scenario brought to you by the CMHC and the authors of zero-down/40-year mortgages.

Good thing we still pump valuable liquid and dirt from the ground. No wonder the Harpo/Flatulence gong-show so desperately pushes the Keystone pipeline. They need SOMETHING to mask their own domestic fiscal incompetence.

#53 Just some guy on 03.07.14 at 11:19 pm

Is there such a thing as borderline real estate disorder?

#54 Jon B on 03.07.14 at 11:20 pm

FYI on Arizona. Few Canadians understand this. It’s not just a big hot desert expanse. AZ has hot and cold regions. Phoenix is low elevation. Flagstaff is high elevation. Forests, deserts and lakes. Check it out.

#55 Son of Ponzi on 03.07.14 at 11:27 pm

Garth,
This kid in snorting Coke.

#56 Snowboid on 03.07.14 at 11:27 pm

#8 DaleFromCalgary on 03.07.14 at 8:39 pm…

Just to clarify your statements:

Property Tax- yes, but much lower than in Canada
Utilities – same or less than Canada
Commissions – 4.5% to 6%
Legal fees – none, but there is the sellers’ share of title insurance
The buyers share of closing costs are minimal (we paid around $ 250)

Tax is only owing on the capital gains to the IRS, no AZ tax.

Canada has a tax treaty with the US, so your paid capital gains are credited in Canada.

You won’t be on the IRS radar unless you are considered a ‘resident alien’ – which is determined by the amount of time you spend in the US each calendar year – unless you provide the IRS with a 8840 form showing your primary residence is in Canada.

You will need a temporary (ITIN) number to file the capital gains with the IRS.

If you have a net worth over 5 million, then you may be liable for estate and inheritance taxes.

#57 Smoking Man on 03.07.14 at 11:27 pm

The pic brings back memories, sitting in my reclining man chair in a some what ulterd state.

Pondering?

I left the tax farm early, share a couple of smokes with some homeless kids at bay and front.

So many people walk by, never making eye contact with them.

Is it fear?
Is it, I’m God damn slave and you should be too. Did you not read the manual.
Is it, I got to get to union to stare at the TV that will tell me what track my train is on, even though it’s on the same track every day.

Questions.

When charity is for show, perhaps my boss will see my kindness at the annual charity event and extend the same to me?

I don’t know why they walkers can’t make a connection with the kids.

Damn better stop typing, minds drifted to brests. Not KFC

#58 Shawn on 03.07.14 at 11:27 pm

God Bless America!

Buy America indeed. That was good advice.

Sunday marks exactly five years since the market bottomed on March 9, 2009 with the S&P 500 at 677.

Today it closed at 1878. That’s a 177% gain, not counting dividends.

That’s a compounded average return of 22.6% per year. Add in a bit for dividends and it rounds off to 25% compounded per year!

Man, it must suck to have been one of those fools who back in early 2009 chewed out his broker and then sold out of the market, to “preserve capital” ya know.

#59 sheane wallace on 03.07.14 at 11:28 pm

#44 Internal Auditor
…………………………………
You are not getting the picture either, the rates can only be manipulated in short to mid term at the cost of huge risk (of complete system collapse) accompanied by dangerous inflation but not in long term.

I would not lend a single penny to a government neither invest a single penny in bonds,

#60 StaticFuzz on 03.07.14 at 11:30 pm

@ SilverMeridan

I just want to say I appreciate your Ottawa based info, and feel compelled to share some more Ottawa based reality news:

I started tracking OREB’s numbers, at least the ones they provide via their press releases, in July of 2012.

I was thinking of buying in Ottawa, but I couldn’t wrap my head around the ridiculous prices being asked to buy in what might just be Canada’s most boring city. My wife and I are in our mid 30s, and have no family here, why attach an anchor if we didn’t need to?

I felt compelled to start keeping PDFs of those press releases in October of 2013, because OREB keeps revising the numbers for the previous year, without fail, in every press release. And they don’t provide access to the original press releases… so, for outsiders, there is little in the way of evidence of their number tampering.

I understand that sales can fall through, and revisions may need to occur, but the fact of the matter is, housing Sales in Ottawa are down 20% for Feb. 2014 (807 stated in the press release) when compared to February 2012 (1008 according to the revised numbers on the Feb. 2013 release). And total average prices are pretty much flat – 350588 (2012 revised numbers), versus 353407 (this months release).

Yet every month, it’s the same song and dance from OREB, of picking the numbers that best illustrate their story (for example, saying Feb this year was awesome, compared to Jan, but Jan sales have fallen for two consecutive years.) The fact is, according to what I’ve tracked, the Average Total Sales in Ottawa peaked in 2012, and have declined almost every month since (there are exceptions).

I’ve given up on buying here – my rent is half of what my mortgage payment would be if I put 20% down on a home, considering the neighborhood I live (little Italy) in, and where I’d like to live. Heck, my neighbor has owned her house for over 45 years, and she thinks the prices of houses in Ottawa have gotten stupid.

OREB press releases are full of sh*t, and as former journalist, I find it incredibly hard to believe that there is almost no scrutiny in the MSM about it. Most of my friends just swallow the bait, hook line, and sinker, never questioning the reality of the situation. For them, housing always goes up, and all of them are looking to real estate as their primary savings vessel.

There is a whole generation of people, those that straddle Gen X and Gen Y, that are going to find themselves deeply underwater – and not a single one of them even wants to hear an argument about this. Maybe I’m over analysing the situation – but Ottawa, to me, appears to be another great example of the Transfer of Wealth that is currently taking place, in the wrong direction. Where that’s going to leave my cohort in 30 years time? I’ll be truthful, I’m not too positive on the outlook for most of my generation.

Anyhow, big long rant, I appreciate you providing the Months of inventory. Thanks.

Oh, and Garth:

Long time creeper, first time poster. Keep up the great work, I’ve learned a lot, and generally learn more every day. I deeply appreciate and value all the information you post.

#61 sheane wallace on 03.07.14 at 11:31 pm

Read ‘Atlas shrugged’

#62 Canada set to crash 20% on 03.07.14 at 11:39 pm

Yet another investment fund who sees Canada being 20% or greater overvalued.

http://bloom.bg/1eWB4gY

#63 sheane wallace on 03.07.14 at 11:40 pm

Garth, you can erase the last statements, too many drinks I think…

#64 TrumpVu on 03.07.14 at 11:58 pm

Around and around we go

Though the Wormhole – God an Alien Concept

Around 19:30 to 21:15 sorry no link

One of the best mathematical demonstrations for sheeple I’ve seen

We only know what we know

#65 devore on 03.08.14 at 12:16 am

#43 Son of Ponzi

Here’s how it works:
The CEO asks the CFO: What are our financial results?
To which the CFO replies: What do you want them to be?

That’s not how accounting works. That might be true to a small extent when planning for the next year (balancing opex vs capex, shifting tax treatment, prioritizing some projects over others, share buybacks, debt issuance, acquisitions, bonuses, restructuring, etc), but you don’t just get to make up numbers like that.

#66 KommyKim on 03.08.14 at 12:18 am

RE:It wasn’t hard to see this coming a few years ago, which is why this pathetic blog told you then to ‘sell Canada, buy America.’ Last year the Dow and S&P gained 30% while the TSX grew 9%

I did the opposite when I rebalanced my portfolio this year. I sold some of my America and bought more Canada. It is now back in balance. Oh well…..

#67 Furio on 03.08.14 at 12:30 am

Garth, I did it- won a bidding war and bought a house. Friends of ours are insisting that the Greater Fool is the one that takes out a conventional mortgage. They insist taking out a HELOC as a mortgage will allow you to pay less interest to the bank and get rid of your debt much faster. Is a HELOC really the secret to becoming richer and mortgage free?

#68 Ryan on 03.08.14 at 12:46 am

#47
stimulates China to import.
sorry I meant:
stimulates China to export.
____________________________________________
I’m being stimulated by China as we speak.

#69 World According To Garth on 03.08.14 at 12:46 am

#23 Bottoms_Up on 03.07.14 at 9:31 pm
Harper on the public service:

Canada’s bureaucracy is a “shining example for the world.

“As prime minister I have been around the world on government business and I can tell you that the dedication, competence and integrity of our public service is unrivalled. The Canadian public service is indeed a critical asset, a comparative strength that this country possesses in a challenging and dangerous world,” he said.

——————————————————-

Spoken like a true govt worker. Too bad it’s a gigantic

FAIL

http://www.huffingtonpost.ca/donald-j-savoie/public-service-problems_b_4892421.html

#70 airhead princess on 03.08.14 at 1:06 am

“Yes, this is a good nation. I’m not leaving. Much opportunity left. Plus, the US isn’t nirvana.”

You wouldn’t believe the BS involved to file a US tax return as a Canadian working on a visa…… they consider the RESP and TFSA ‘a gift’ and as such has to be reported as income. The other disclosure filings are as intrusive as a colonoscopy……every account over $10,000 or face fines to $250,000.

You have to count the exact number of days you’ve been in the country….and account for which country gets how much tax……mark the dates….or you could be fined…..again. The reason so many Canucks work in the US is because they are forced to due to the utter lack of business in Canada.

Our government was forced to comply with US IRA…to the point where the yanks have access to your bank accounts if you’re inarrears from your ‘fines’…..so much for soveriegnty.

#71 Mark on 03.08.14 at 1:12 am

Not a snowball’s chance in Arizona that BoC policy rates will be rising in the next few years, especially with RE continuing its downwards price spiral throughout most of Canada. However, interest rates as applicable to retail residential real estate borrowers could climb as the financial system perceives such borrowers to be less creditworthy.

#72 Christopher Mewhort, EA on 03.08.14 at 1:59 am

#24

What I think Dale meant to say was that Cal will have to pay Capital gains tax in the US.. not income tax.

Huh? Please quote the relevant section of the Internal Revenue Code that would have made Cal pay capital gains tax. Hint: look at Sec 121.

#73 Brian on 03.08.14 at 2:42 am

A 100% chance interest rates will go up (by a meaningful) amount in a year? You dont have a magic crystal ball Garth. They could stay low for 20 years. They could go up in 20 days.

#74 aggie on 03.08.14 at 3:13 am

A house is one thing. A home is another. Home might be a house, or a condo, a moho, or any place you’ve both worked on together to make as safe and comfy as can be for laying your eggs… https://www.youtube.com/watch?v=tfBlInPFbto&list=PLZKIAjfq609LJq_t5PALmOXf-ltxOqPPV.
(But a nest egg is a bird of another feather entirely–for that, trust the words of our dear Bard and his pathetic — not– blog!)

#75 valleyrenter on 03.08.14 at 3:46 am

Interesting…Facebook has been said to be the realm of the 30+ crowd, out here in little ol’ Abby it seems to be true. The local FB bidding wars group has 18,000+ members, other groups in the same vicinity have only 3,000 or so. Is there a direct link to real estate prices and where Y/X can afford to live based on FB membership? Smoking Man, got an algorithm for that? Could one project future growth based on a FB flea market?

#76 Waterloo Resident on 03.08.14 at 4:12 am

I just found a YouTube video that is probably one of the most important things you will ever learn in your entire life. It explains EVERYTHING. And I mean ‘EVERYTHING’. It explains how our current world economies changed after we discovered oil in 1859 in Titusville Pennsylvania. Before that our economies were mostly agricultural. After easy and abundant energy we were freed to do OTHER THINGS with our lives. Our financial system became one of compounding debt, that means the economy must continue to expand so that the interest owed is paid back by a continuously expanding economy. The problem occurs when the economy stops expanding because the supply of CHEAP oil stops expanding. That started in 2005. And the funny thing is we had the financial crisis start just a few years later, and no matter what the governments do to try to get things going again, without an expanding supply of cheap oil, the economy WON’T expand, and this means there WON’T be money to pay the interest on the debt, and soon that means… well, I don’t want to say ‘Doomsday’, but it’s pretty close. This thing about Peak Oil explains why America’s had all their Middle East wars, why Russia is getting more powerful (because they have large reserves of oil), and why Alberta will soon be hiring 20-times the number of workers they have now working on the oil fields. But it won’t stop the world’s economies from collapsing because the cheap conventional oil supplies are collapsing faster than we can replace them. And this mean we don’t have the continuously expanding supply of cheap energy to fuel a continuously growing world economy. And that means there won’t be an ‘excess’ growth in world economies to pay back the interest owing on our debt based economy, and that means eventual financial collapse of the world’s economies within 10 years. Yes, 10 years, probably a lot less than that. You can only keep juggling the balls for so long before your arms get tired, then the balls drop. The governments can only keep creating new financial accounting tricks for only so long before people realize that their interest payments will soon not be paid back, and then it’s a free-for-all.
Now what does this have to do with Canada? Easy; our economy is DEAD. The only thing still growing is our housing market and our oil production, nothing else. Without those our economy would be shrinking, and if it shrinks then the government cannot pay interest on it’s debt and that would be deadly for the Canadian economy. Our dollar would drop to 10 cents in one month easily. So for heaven sakes, please let us hope our housing economy keeps growing for as long as possible because when it stops, well, we are doomed. By doomed I’m talking about 75% unemployment levels, that’s what I mean by doomed.
Here, watch the video yourself, you will see what I mean:

Must watch!!! Peak Oil and Economic Contraction

https://www.youtube.com/watch?v=auHJlWwwTKk

now that you have watched it, you might wonder what do we do to survive? Good question. I have no idea.

#77 Tony on 03.08.14 at 4:13 am

Re: #8 DaleFromCalgary on 03.07.14 at 8:39 pm

You forgot the huge capital gains tax he had to pay in America because he’s a nonresident. Enacted after the Japanese started buying up all of Hawaii in the late 1980’s. Someone who lived there and owned it in the same period of time would pay no capital gains tax even on a second property.

#78 Dan on 03.08.14 at 4:15 am

Yoozaint gotza clew!

This party in the Ukraine will:
-Victimize the US dollar,ie (petrodollar)
-ditto UST bonds
-ultimate loss of reserve currency
-accelerate the return to the gold standard

The USA is trapped!!
Sorry non believers,

Dan

#79 Andrew Woburn on 03.08.14 at 4:15 am

#43 Son of Ponzi on 03.07.14 at 10:53 pm
#33 Your trust in the reported numbers of Public companies is naive. Obviously you never worked in one.
Here’s how it works:
The CEO asks the CFO: What are our financial results?
To which the CFO replies: What do you want them to be?
========================================

In the early 70’s I was a boy accountant for a major national audit firm. I flew to Chicago to help consolidate the Canadian figures into the world wide financial statements of a Fortune 500 mining conglomerate. I met with the assistant controller and showed him my list of audit adjustments which amounted to a decrease in their net profit of $1 million, not huge, but more than a rounding error in those days. He produced a list of adjustments the company hadn’t yet made and, one by one, countered each of my adjustments with one of theirs. His list was very long and had presumably had enough scope to deal with the Australian division, etc.

Now, in my own investing, I am skeptical about “audited” profits. On the other hand, no amount of crooked accounting can fake a dividend.

#80 Tamsen on 03.08.14 at 4:49 am

43 Son of Ponzi on 03.07.14 at 10:53 pm

“#33
Your trust in the reported numbers of public companies is naive. Obviously you never worked in one. Here’s how it works:
The CEO asks the CFO: What are our financial results?
To which the CFO replies: What do you want them to be?”

So true!! We sat in on meetings for two different public companies and couldn’t believe the blatant greed, thieving and general skullduggery – was enough to keep us from EVER buying individual stocks!

#81 maxx on 03.08.14 at 8:29 am

“Obviously we’re a country of snowflakes – people convinced they’re unique, special, favoured and immune from the booms, busts and travails of everyone else on the planet.”

We’re special all right….more stupid for RE than the rest of the planet. Crazed, willfully blind and completely out of control.

Why would canuckleheads mind in many cases paying a multiple of the original purchase price on RE? They’re already doing the credit card minimum payment two-step…..and loving that line of credit.

The rest are keeping their wealth safe and not spending. Much. At all.

Monetary policy drove this disastrous result, leaving most citizens angry,frustrated and fearful.

So much in the world could happen to drive interest rates up, eliminate even more jobs and melt the little snowflakes…and it’s a heck of a world to be in without money.

#82 TorontoBull on 03.08.14 at 9:32 am

Garth, US and Canadian unemployment rates are not directly comparable due to methodological differences. When adjusted to US unemployment, Canadian is still lower albeit marginally…

#83 tony bologny on 03.08.14 at 9:43 am

Rich Chinese angry over cancelled Canadian immigrant program .poor bastards spent alot of their millions earned in china to buy property at inflated prices now they get the boot from canadian government
http://www.theglobeandmail.com/news/world/rich-chinese-angry-over-cancellation-of-canadian-immigrant-program/article17269390/

#84 Ralph Cramdown on 03.08.14 at 9:44 am

What’s coke-dribbling-out-your-nose laughable isn’t that the US Dollar might lose its global reserve currency status one day, but that it might lose to the Chinese Yuan, and soon.

Reserve status isn’t only made by central bankers holding dollars because, should they wish to adjust their currency exchange rate, the dollar FX markets are the most liquid in the world. And not only because the US does a great deal of trade with nearly every nation on earth. It is also because billions of ordinary people the world over use it as a relatively portable and stable store of wealth, and a medium of exchange for transactions legal and otherwise. They trust the US Federal Reserve more than they trust their own central bankers and tax authorities, and are willing to pay for that privilege by accepting the inflation that comes with storing wealth in actual dollars.

There may be some people who post on this blog who’d rather trust the defence of their wealth and purchasing power to the Communist Party of China than to the US Federal Reserve. I rather suspect it’s just the latest harebrained theory out of the goldbug camp as to why the Dollar is going to crash this year, just like every other year.

The thesis of Yuan world domination might be more credible if Hong Kong had switched from a dollar peg to a yuan peg, or a peg to a basket, or had even announced plans to do so. No, the sole reserve currency of Hong Kong is the US Dollar.

#85 economictsunami on 03.08.14 at 9:55 am

The economy can be quite cryptic; speaking of which…

Joel McHale & Jim Rash’s ‘True Detective’ Parody:

http://tinyurl.com/nq5fbzq

#86 My Life is a Pile of Shit on 03.08.14 at 10:23 am

Re: #58 Shawn on 03.07.14 at 11:27 pm

“Sunday marks exactly five years since the market bottomed on March 9, 2009 with the S&P 500 at 677.

Today it closed at 1878. That’s a 177% gain, not counting dividends.

That’s a compounded average return of 22.6% per year. Add in a bit for dividends and it rounds off to 25% compounded per year!”

If you ignore the bear market, the recovery is remarkable. But if you count both the bear market and the recovery, the return is 21% over 6.7 years or just 3.1% per year (1553 Jul 12, 2007 to 1878 Mar 6, 2014). Even the 7-year return is only 4.8% (from 1403 Mar 8, 2007). You could have, and still can, get the same or better return from a corporate bond, which has less volatility.

#87 Eaglebay - VI on 03.08.14 at 10:55 am

#54 Jon B on 03.07.14 at 11:20 pm
“FYI on Arizona. Few Canadians understand this. It’s not just a big hot desert expanse. AZ has hot and cold regions. Phoenix is low elevation. Flagstaff is high elevation. Forests, deserts and lakes. Check it out.”

Boring…

#88 Snowboid on 03.08.14 at 11:07 am

#15 LJ on 03.07.14 at 8:58 pm…

Don’t forget that the $ 289,000 house would have sold for $ 550-600,000 in 2007.

in 2010, we purchased a home in the west valley – but at a price almost 1/3 of its’ peak value from three years before.

A bit of a gamble maybe, but nothing compared to purchasing real estate in Canada.

Then there is the real bonus – spending the winter in the Valley of the Sun.

#89 Alberta Guy on 03.08.14 at 11:19 am

Garth, at some point it will be time to “sell America and buy Canada”. When will that be?

#90 Snowboid on 03.08.14 at 11:23 am

#77 Tony on 03.08.14 at 4:13 am…

Based on his sale price, after RE, title insurance and other fees, allowed improvements, etc – the overall capital gains would be under $ 8000 – hardly ‘huge’.

#91 Eaglebay - VI on 03.08.14 at 11:24 am

#83 tony bologny on 03.08.14 at 9:43 am
“Rich Chinese angry over cancelled Canadian immigrant program
NATHAN VANDERKLIPPE”

This guy wrote the article. That is his opinion. The rest is BS.

#92 Daisy Mae on 03.08.14 at 11:31 am

“The immigrant investor program offered a way to buy entrance into Canada for people with a net worth of $1.6-million who were able to lend Ottawa $800,000 interest-free for five years.”

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

Our government is so desperate for revenue, they must borrow from Chinese millionaires. We Canadians ARE special!

#93 SRV on 03.08.14 at 12:00 pm

US recovery…

Still drinkin’ the Koolaid I see Garth.

How about we get the Wee Guy to order the BOC to print up some cash (oh, say about $50B a month) and give it to the banks to buy our bonds… then buy them back through “permanent open market operations” (POMO) at interest?

Then our bank CEOs can be even richer than they are now (how’s $13M/year for TD), and they can pour all that cash into the TSX… PRESTO, we’ve got >30% ROI just like Amerika.

Would you have backed that financial plan for your country? Do you really believe it will end well?

For those interested in what other nefarious activities US criminal banks have been up to, here’s the latest CFTC Bank Participation Report (don’t worry, they’re working on ending the requirement to report the gory details) for silver. The last of 5 charts is the total long/short position of the major banks. Now I realize it’s blasphemy in these parts, but pretty sure one may be excused in suspecting there may be a little price suppression going on here, since the monetary slight of hand began in 2008.

http://d1w116sruyx1mf.cloudfront.net/ee-assets/gsd/yesterday/140308Silver_BPR.png

p.s. The US R/E recovery is yet another bank mirage… 80% of sales are cash (there’s only so many “stawks” to buy ya know) for rentals and the market’s been saturated. They’re already starting to “monetize” with IPOs, hoping to rope in the Greater Fools… this of course will not end well.

At least not for those with gold and silver. — Garth

#94 liquidincalgary on 03.08.14 at 12:14 pm

@ #32 sheane wallace

really? the US “looses” reserve currency status??

what other country/market has the debt depth, breadth, and rule of law that the US has??

which market/country is considered a ‘safe haven’ to park your cash during turbulent times?

HINT: their currency has been appreciating lately
(so far about 10% gain on CAD) because of these
very reasons

d’oh!

#95 Eaglebay - VI on 03.08.14 at 12:35 pm

#88 Snowboid on 03.08.14 at 11:07 am
“#15 LJ on 03.07.14 at 8:58
Then there is the real bonus – spending the winter in the Valley of the Sun.”

Doing what? Booooorinng……..

#96 pinstripe on 03.08.14 at 12:39 pm

Canada would be in a hellava financial mess if it wasn’t for the resource activity in AB and SK.

When I look around where I live, there is no shortage of money. Everyone is buying houses, vehicles, toys etc. Parking lots are FULL at all malls. Restaurants and bars are FULL. The traffic in Edmonton and area is mind boggling. The pot holes in Edmonton are a way of life, everyone is moving well above the posted speed limit. Time is money.

The cause of the have-not provinces is because the policy makers want to be have-not provinces. The sheeple are snug as a bug with that too.

Don’t get east much, do you? — Garth

#97 ozy - this guy exagerates a bit but have solid points on 03.08.14 at 12:40 pm

read it slowly until the end – aside of a bit pumped optimism, is seems right. I will cut his bull projections by 35% but incline on seeing a future for downtown condos

http://www.torontocondos.com/_media/_newsletters/TheMythOfTheTorontoCondoBubble.pdf

#98 Son of Ponzi on 03.08.14 at 12:45 pm

I recently spend a week in Phoenix.
I agree, unless you are into golfing everyday:
boring…..
In Vancouver, however, you can golf and ski at the same time.
At least, that’s what the Realtors tell you.

#99 Son of Ponzi on 03.08.14 at 12:47 pm

For those who place misguided trust into audited financial statements of public companies:
Remember Arthur Anderson and Enron.

#100 pinstripe on 03.08.14 at 12:49 pm

IMO, a separatist win in QC will be new and better challenges for QC in this era with the global economy. The province will be able to set their own QC policies (100%) and not have to waste resources dealing with outside dysfunctional policies dictated by the ROC.

It is different now and the old way of thinking is forcing a lot of hardship on the population. It is about time to start rewarding the performers.

#101 Rainclouds on 03.08.14 at 12:53 pm

To follow ths through to it’s conclusion:

Assuming the RE Market here in Canada does correct curious to see what transpires in the Sun Belt. Lot of Canucks purchased US property since the meltdown, many using the equity of their principal residence.

Uh Oh

#102 Spiltbongwater on 03.08.14 at 12:53 pm

The rich Chinese are just so darn cute when they get all mad and such.

Last week I did not know what Crimea was. Now I know it is like the Quebec of Ukraine. If Russia wants to make the world happy and annex Quebec and leave Crimea alone, I could be ok with that.

#103 pinstripe on 03.08.14 at 12:59 pm

Don’t get east much, do you? — Garth

——————————————————

Depends on the definition of “east”. “east to me is NS’. I have put some scent on property in both the Chester and Annapolis valley area. To date a jump every six months to NS to do some checking.

to answer your question —— No, not as much as I would like to.

Then you would see the absurdity of your traffic comment. Try driving through Montreal or Toronto. — Garth

#104 liquidincalgary on 03.08.14 at 1:00 pm

@ #76 Waterloo Resident

Peak Oil

yes, peak oil is a possibility; however, lots of new oil/gas is being found.

one large recent example is Argentina. shale oil reserves, that are fourth largest in the world, and 802 TRILLION cubic ft of natural gas.

another example? the oil sands formation in alberta does not stop at the AB/SK border, just because there is a line on a map…this same formation, on the sask side, is larger, richer (up to 50% in some areas), AND closer to the surface. (Oilsands Quest did initial drilling to ‘prove up’ reserves on SK side)

however, as long as AB oil remains landlocked, SK oilsands may sit undeveloped for quite some time.

#105 Worried realtor on 03.08.14 at 1:20 pm

A Lot of worried realtors on garth’s blog posting. The fear from these realtors are so transparent. The RE market is slowing down with falling sales and prices. People are not going into bidding wars and bidding below asking which is weird since not that much product on the market. Sold a home in the GTA near subway line with original asking of $630k and had to reduce it three times to $590k and it finally sold at $580k. This house was well done with nice finishes and compared to past sales should of gone for well above $610k and normally it would after doing six open houses. Only one offer which we had to fight to even get the $580k offer and even had to throw in a few extras. Housing market is not doing well and sellers better get realistic or else they will not make a sale. The Board better change their bs message of sunshine and roses since it is making it extremely difficult to sell in this market.

#106 Al on 03.08.14 at 1:26 pm

The chart on this website illustrates how the drop in interest rates has goosed real estate values;
http://www.zammit.com/charts

#107 Worried realtor on 03.08.14 at 1:36 pm

#97

Toronto condo’s are going only one direction and that is down. Ask an honest realtor who will advise if you don’t want to lose a lot of value then say away from condo’s. Many gta condo’s are cheaply and poorly built. Many are falling apart from the outside to the inside that you can not see. I wouldn’t want to buy a condo with someone else’s money

#108 Federico Garcia on 03.08.14 at 2:23 pm

May be, only may be, that one reason for the US dollar to be the world reserve currency is in plain view, although not very often considered in people’s discussions.

– Over 700 military bases in 63 countries sitting on 30 million acres.
– 255.065 military personnel deployed Worldwide
– 7700 nuclear warheads
– etc.

http://tinyurl.com/nqwujwa
http://tinyurl.com/3v8hafb
http://tinyurl.com/268sp2
http://tinyurl.com/m38jn89

Just wondering….

#109 airhead princess on 03.08.14 at 2:33 pm

Last week it was reported that Bill Gross at Pimco had sold out of Canada by 50% or more. That was read by the unwashed that a smart guy like Bill had an insight that none of us shared about dark clouds headed towards Canada. I said at the time that Bill was maybe playing at other games…..I was right….Bills in trouble….not Canada

http://business.financialpost.com/2014/03/08/pimcos-got-bigger-problems-than-the-soap-opera-weve-been-reading-about-lately/

PIMCO merely reduced its Canada holding by half in the Total Return Fund. — Garth

#110 Aggregator on 03.08.14 at 2:36 pm

#84 Ralph Cramdown

The thesis of Yuan world domination might be more credible if Hong Kong had switched from a dollar peg to a yuan peg, or a peg to a basket, or had even announced plans to do so. No, the sole reserve currency of Hong Kong is the US Dollar.

The only reason why Hong Kong and others haven't pegged their currencies is because there isn't enough offshore RMB reserves and platforms to trade on, but that will change soon with the development of China's new Free Trade Zone (FTZ) in Shanghai — the first step major step to internationazing the yuan.

Whether the yuan will be successful or not is entirely up to the market. No global reserve currency ever gained its status without a major war, so there isn't blueprint for how this unfolds over the next decade or so.

#111 Nemesis on 03.08.14 at 2:37 pm

@SonOfPonzi/#98

“In Vancouver, however, you can golf and ski at the same time.” – SonOfPonzi

Indeed, a frighteningly popular misconception opportunistically exploited by regional Carpetbaggers™ preying upon the gullible, SOP…

Although, as it happens, SOP – the SkiGolf fallacy was originally promulgated by a reprehensible assortment of Austro-Bulgarian tour/resort operators:

http://tinyurl.com/meg9lzo

http://tinyurl.com/ku5qyfr

[NoteToSaltyDogz: For obvious reasons, the IOC has thus far refused to recognize the sport.]

#112 Realtor #1 GTA on 03.08.14 at 3:38 pm

Take the interest rate today 3.2% @ 25 years = $484 per 100k
Lets say in Oct its 3.75%@25years = $513 per 100K

Thats 30$ extra per month per 100K, won’t cause a crash!

Its an issue of – income to mortgage ratio instead of 30% its more like 55%.

#113 bigtown on 03.08.14 at 3:38 pm

Fountain Hills is an oasis of quiet and zenlike dessert hills just west of Scottsdale and ideal for your typical Canadian.

Canadians will appreciate the cute town amenities and parks and excellent roads and security. We go there to see the incredible beauty of the dessert and you will never run out of views to remedy any winter blues.

#114 Old Man on 03.08.14 at 4:11 pm

Did I see someone mention the word traffic? I knew one day those monster cars would cause trouble, as the parking lots of old are not functional the way they are spaced. I went to break some bills into change to pay a bill tomorrow, and the lot was filled with those monster cars. Drove in and what a mess, as nobody could back out, or could leave, and cars could not move forward, so was stuck in line facing a monster car as I was going one way, and he another, but no space to proceed in safety. Solution: some guy hopped out of his car to wave us through with a few inches to spare on either side. I split for home base as was fed up.

#115 what bubble? on 03.08.14 at 4:26 pm

For the sake of objectivity, here is the latest documentary of Thousands of pro-Russian demonstrators in eastern Ukraine in Donetsk, people there kept chanting “Russia! Russia!”. It doesn’t look there will be a “soft landing” there: http://www.youtube.com/watch?feature=player_embedded&v=kVFHGvFfY-s

#116 Infused with Opiates on 03.08.14 at 4:40 pm

95 Eaglebay – vaild point, but what do you do on VI at this time of year? Most outdoor activities are more
enjoyable when it’s not pounding rain like today. Others need large investments, upkeep or are restricted to certain areas – like fishing or skiing. I
cycle, but the recent snow put a damper on that.

#117 Oceanside on 03.08.14 at 4:49 pm

#87 Eaglebay – VI on 03.08.14 at 10:55 am
#54 Jon B on 03.07.14 at 11:20 pm
“FYI on Arizona. Few Canadians understand this. It’s not just a big hot desert expanse. AZ has hot and cold regions. Phoenix is low elevation. Flagstaff is high elevation. Forests, deserts and lakes. Check it out.”

Boring…

Eaglebay..Good to see you back contributing the old negative spin on everything……Don’t worry, the rain will stop.

#118 Bobby on 03.08.14 at 4:49 pm

Yes Cal made a buck on his house but there are costs. He will have to file an income tax return in the US and declare his capital gain. And, given that Canada taxes on worldwide income he will in turn have to claim the capital gain in Canada. Since the Canadian dollar has fallen, the gain will be even greater.

After all costs and taxes are reconciled, Cal may come out with $50k.

Up to him to decide if it was all worth it.

#119 Nemesis on 03.08.14 at 5:17 pm

#SaturdayMischief #IllustratedFeature #OldMan’sFantasyMealsOnWheels #StrangerThanFiction

[MelbourneHeraldSun] – Perth twins Anna and Lucy DeCinque spend AUD$240,800 on breast augmentation and lip implants to look identical and share boyfriend

…”The twins, who used to work at Lash Sublime — Eyeline Extensions in Perth, now share a job serving meals to the elderly. They split shifts and pay.”…

http://www.heraldsun.com.au/lifestyle/fashion/perth-twins-anna-and-lucy-decinque-share-boyfriend-and-have-plastic-surgery-to-look-identical/story-fnjhc0h7-1226848828954

#120 souvereigninternational on 03.08.14 at 6:19 pm

#81 maxx on 03.08.14 at 8:29 am

Snowflakes, i love it. It entered my dictionary.

#121 Old Man on 03.08.14 at 6:19 pm

#115: what bubble?: anytime I face a complex problem filled with propaganda and geo-political nonsense simply break it down into small pieces with logic in a pure form. Now if someone comes to my home and says it is mine now and not yours I get a bit upset, so will fight back, as they want to coup my ownership or historical rights thereof. I have two choices; either roll over and play dead, or fight for what is mine with my neighbourhood behind me.

#122 BCD (D for Daturday) on 03.08.14 at 6:21 pm

All this talk about money and the US debt/recovery. . .right or wrong. . .how many of you know what a trillion dollars really looks like?? It’s eye opening.

http://www.pagetutor.com/trillion/index.html

#123 Lurker on 03.08.14 at 6:25 pm

Was doing some grocery shopping in the local Save-On Foods in Burnaby. The check out girl was chatting to a customer she knew: “we are trying to selling our house…” and the customer asks: “why?”, she responds: “to make money and get ahead like everyone else…”. I was thinking, this just can’t end well.

#124 BCD (D for Daturday) on 03.08.14 at 6:32 pm

Okay. . .you guys are getting boring. I thought Garth was teaching you all to be studs?

Bunch of old crusty men talking about making money. . .(yawn). Time to go to the gym and oogle the ladies in Lululemmon pants. It’s Saturday, that’s when you spend money on women after making it all week. Get with the program.

#125 TheCatFoodLady on 03.08.14 at 6:56 pm

I’m trying to figure out when it’s all going to grind to a screeching halt. The first choke point isn’t hard to figure out. When people run out of money, out of available credit; that will impose a ceiling on house prices & those will vary by community.

It’s easy enough to say foreign money will keep gobbling up our RE at ever in creasing & outrageous prices but does that make sense? What is the point of sinking money into property you can only rent at a loss? Why buy places to leave them empty? Empty homes deteriorate, are expensive to insure & purchasing an ‘asset’ that not only offers lousy returns but probably losses. I can’t see anyone of any nationality who worked hard for their money or inherited hard earned money being willing to throw it away on depreciating assets.

It won’t be simply a matter of lousy returns – municipal taxes can only increase over time. Most communities are facing higher overheads, even with serious cost cutting. In Ontario, we know hydro rates are going to skyrocket over the next 5 years. Quebec has just announced a 4.3% increase in hydro rates. Can other provinces be far behind?

Home owners facing cost pressures, retirement pressure & other fiscal stresses will be looking to sell. Not all at once & not in every market but I can’t see much else happening than stagnant pricing at best in MOST markets & serious declines in some sectors of several markets.

Interesting times.

#126 joblo on 03.08.14 at 7:37 pm

Ok so Chinese Millies pissed we get it, enough.
Zona is sooooo…boring, ask SM about Yuma.
Peak Oil not in this lifetime, deal.
US taxes still boring.
Bitter Sweet Symphony.
Now Perth twins and SKI/Golf…more please

#127 Old Man on 03.08.14 at 7:39 pm

#124 BCD: there is a new program and so sorry that all you have is to look at ladies in pants, and to spend money on them all. The women of today will not buy that stuff anymore, as they look for a man with a different view in life. Yes they must have a bit of money; the potential with a good education and career in life; and perhaps having common interests to fuel the passion over time. The real women in todays world are looking for ingredients in a man to make a union work.

#128 This is normal on 03.08.14 at 8:23 pm

Normal is what you are used to, what you are familiar with, what does not raise an eyebrow.

RE prices that rise in the long run, with ups and downs along the way, is normal.

Big cities attract lots of people. Most prefer to live there rather than in small towns so there is, and may well remain, a strong demand for RE in large cities.

RE prices in other large cities in and outside Canada exhibit steady upward pressure on prices in the long run.

I know it’s frustrating to preach for years that RE prices are going to crater at any moment but gradually rising RE prices in the long run are normal. Get used to it.

Alwyn

Real estate prices will neither crater nor steadily rise. Hope you’re not lying to your clients. — Garth

#129 Smoking Man on 03.08.14 at 9:12 pm

I’m going to go hard after the Toronto Star and it’s sweety men reporters on Twitter next week.

Been reading there shit for two weeks.

@SmokingMan if you want to play along.

There not going to know what hit em.

#130 45north on 03.08.14 at 9:19 pm

sheane wallace : Out of 300 000 graduates from universities and colleges 16 000 found a job, handful from graduation classes, either top 5 % or with connections.

Jobs outsourcing, read Paul Craig Roberts

Here’s a quote from his site: This is the month for our quarterly appeal for your financial support.

http://www.paulcraigroberts.org/2014/03/07/jobs-economy-prospects-peace-life-paul-craig-roberts/

now I don’t doubt that he’s a smart guy but he has missed the mark

#131 Chickenlittle on 03.08.14 at 9:39 pm

Best thing about renting: saving money.

Worst thing about renting: finding out you have to move.

My landlord is getting out of the business and is evicting all his tenants, including us! I’m so mad right now!

He did say that we are his best tenants and would give us a good reference, but we still have to move.

I just moved here last year!

Now I know a new question that I must ask all potential landlords: do you intend to sell this property in the near future?

Oh well…

#132 Snowboid on 03.08.14 at 10:43 pm

#95 Eaglebay – VI on 03.08.14 at 12:35 pm…

It is indeed boring down here, only a tad more exciting than trolling from your salmon skiff in the horizontal rain.

Fortunately, for us and the other 500,000 Canadians that spend all or part of the winter in Arizona, we like boring.

#133 Gemini Girl on 03.08.14 at 10:58 pm

I was sure I saw a new blog post from you Garth, dated March 8. I went back to re-read it and it is gone. At least ,I think it is. Please verify. Thanks

Nothing removed. — Garth

#134 Entrepreneur on 03.08.14 at 11:40 pm

World According To Garth…you are very clever.
Smoking Man you are “off”.
Sheane Wallace about Small Business. The top dog is not in touch with Small Business. To keep a community and people productive the government officials must make sure that Small Business are productive not big Small Businesses which are far off the “mean”.
#102 Spiltbongwater on Quebec and Crimea…I think B.C.ers are a little tired of Quebec; we had enough and separate if you you want. My dad said keep Canada together but, but, one does get a little tired of them. Stop the language fighting. It is hard on Small Business when ordered to use just French Canadian. Wake up people.
#109 airhead princess…just your name makes me laugh which I need right now.

#135 Andrew Woburn on 03.09.14 at 12:20 am

The only way a currency becomes a significant “reserve” currency is if the central banks of enough countries decided to include it in their reserves. They will not include much of a currency which is not freely convertible into other reserve currencies. At this time, China cannot allow the yuan (CNY) to freely convert. As part of its plan to internationalize its currency, China has created the offshore yuan (CNH) administered by the Bank of Hong Kong and CNH-denominated bonds are issued there including one issued by McDonald’s restaurants. It is steadily moving towards convertibility.

Central banks do not hold foreign currency reserves as investments but as tools to manage their economies. The Chinese central bank takes US dollars earned by Chinese exporters and gives them domestic yuan at the official exchange rate to keep the yuan within a competitive target range. The bank cannot sell these dollars without messing up the exchange rate so it buys US Treasuries, one of the only markets big enough and liquid enough to absorb their purchase volume. Gold bug websites that see Chinese holdings of US Treasuries as a gun to America’s head are delusional. It’s just financial mechanics.

The USD is the dominant, but not the only, reserve currency and there is no reason to believe the yuan will suddenly knock it out any more than did the creation of the Euro. On the other hand, when China is ready, the yuan will quickly grow into an important reserve currency but it may take decades to overtake the USD, if ever. Imagine how pleased you would be if your boss announced you are now going to be paid in Euros? In yuan? In rubles?

Nobody can foreclose on America because it doesn’t need to borrow. It can print whatever it needs. The US issues debt for administrative reasons such as creating “safe assets” for investors like pension funds. True there is a risk of currency depreciation, but what is the chance the US will just repudiate your debt in its entirety? Would you make that bet with Russia?

Good article at:

How China’s Renminbi Went From Overpriced Certificates To Major International Currency

http://www.businessinsider.com/understanding-chinas-renminbi-2013-2?page=1

#136 Brew on 03.09.14 at 12:29 am

Never understood the attachment to Arizona. Give me sun but give me water! Florida hands down.

#137 Bob Rice on 03.09.14 at 12:58 am

Any of you wonder if this is just gonna continue… the correction is long overdue.. and the stats just keep pointing upward…

http://www.bnn.ca/News/2014/3/6/Canada-building-permits-soar-residential-sector-hits-record.aspx

#138 JimH on 03.09.14 at 1:40 am

The Yuan will replace the Greenback as the world’s Reserve Currency?

Dream on… Not in your lifetime!

China’s credit markets are in a shambles and will remain so for a considerable timeframe. The plain reality is that no other currency can claim the trust and confidence that global finance places in the US dollar.

The Chinese have a long, long way to go to earn that
trust.

#139 Happy Renting on 03.09.14 at 3:47 am

#122 – BCD

Great image, thanks for the link!
————-
#130 Chickenlittle on 03.08.14 at 9:39 pm

That’s lousy, sorry to hear it! Are you renting in a house? I am worried my other half is going to start making noises about “more space” soon, and three-bedroom apartments aren’t common. Renting a house would mean 1) moving, 2) 50% increase in rent, 3) ever-present possibility the house gets sold to someone who wants to personally occupy it (eviction.) Ugh.

Check to see under what circumstances your landlord can legally evict you (even if selling the property.) Could give you some room to negotiate more time, covering moving costs/a few months’ rent, etc. Or, depending on the circumstances, dig your heels in and not leave.

#140 Dave Leigh on 03.09.14 at 6:58 am

Garth, you mention the US per capita debt loads are falling and they have learned their lesson on excess debt-2008. I think it is many have lost their houses and it appears the debts are lower. In essence the middle class has been wiped out, not because of discipline spending reduction. We have yet to go through this torturous journey.

#141 Dave Leigh on 03.09.14 at 7:04 am

Garth, you mention the US is doing better than Canada-true on many fronts. But their GDP will be 2.5% this year which is $400 billion and they are spending $900 billion on QE (Quantitative Easing) to get it. It may provide stock gains but I am not sure they are better off. It will simply make them more vulnerable to their debt obligations very shortly.

#142 Eaglebay on 03.09.14 at 7:58 am

#113 bigtown on 03.08.14 at 3:38 pm
“Fountain Hills is an oasis of quiet and zenlike…
Canadians will appreciate the cute town amenities and parks and excellent roads and security. We go there to see the incredible beauty of the dessert and you will never run out of views to remedy any winter blues.”

Turn around 360 degrees, now you’ve seen it all.
Boooorinng…

#143 Eaglebay on 03.09.14 at 8:02 am

#117 Oceanside on 03.08.14 at 4:49 pm
#87 Eaglebay – VI on 03.08.14 at 10:55 am
#54 Jon B on 03.07.14 at 11:20 Boring…
“Eaglebay..Good to see you back contributing the old negative spin on everything……Don’t worry, the rain will stop.”

What rain?

#144 Eaglebay on 03.09.14 at 8:12 am

#127 Old Man on 03.08.14 at 7:39 pm
“#124 BCD: there is a new program and so sorry that all you have is to look at ladies in pants, and to spend money on them all. The women of today …”

It’s about money, money and money. Unless old and ugly. Otherwise it’s divorce, divorce and divorce.

#145 Eaglebay on 03.09.14 at 8:27 am

#131 Snowboid on 03.08.14 at 10:43 pm
“#95 Eaglebay – VI on 03.08.14 at 12:35 pm…
Fortunately, for us and the other 500,000 Canadians that spend all or part of the winter in Arizona, we like boring.”

Hardly much rain this winter. Too bad rain is good and rewarding. You have to have something to come back to.
We grow trees here not sand.

As for fishing, it’s a herring skiff not salmon at the moment.

500,000 old Canadians and most of them not so healthy and not all at the same time.

#146 economictsunami on 03.09.14 at 8:30 am

Interesting reads:

Unemployment: Older workers waiting for the revolution

http://www.cbc.ca/news/business/unemployment-older-workers-waiting-for-the-revolution-1.2562431

Canada’s Labour Market Sputtered in 2013: Chamber of Commerce Policy Brief

http://www.chamber.ca/media/blog/140227-Canadas-Labour-Market-Sputtered-in-2013/140227_Canadas_Labour_Market_Sputtered_in_2013.pdf

#147 TurnerNation on 03.09.14 at 9:16 am

One of the next, hottest areas of grow/gentrification is appearing on Bathurst St. from King all the way up to Bloor St.
But there is an ugly abandoned Kromer Radio complex on one side. The leftiees/Nimbys shot down a Wal-Mart proposal. Imagine it, a commercial business being allowed location in a commercial zone? Not in Kanada. More kandos maybe.

– Yearning for kando living? Two recent nuggets from local group (addressed hidden):

“Fire on the 10th floor at _______. Apparently it’s now extinguished, but we still can’t go up until the smoke clears. Fire and police on the scene. No elevators or stairs. Kind of makes you think about all those times you don’t actually leave when the alarm sounds. ”


“Hi everyone… For those living in _______ there was a flood on the 30th floor this afternoon… None of the elevators are currently running and the stairs are the only way up until further notice. It might be a good day to work late and avoid this until the issues are resolved.”

#148 Tony on 03.09.14 at 11:25 am

Re: #139 Dave Leigh on 03.09.14 at 6:58 am

Like one less grain of sand in the desert, one less star in the sky or one less spoonful of water from the ocean. Look at the national debt instead.

#149 BCD (D for Dumbday) on 03.09.14 at 12:27 pm

#127 Old Man on 03.08.14 at 7:39 pm
#124 BCD: there is a new program and so sorry that all you have is to look at ladies in pants, and to spend money on them all. The women of today will not buy that stuff anymore, as they look for a man with a different view in life. Yes they must have a bit of money; the potential with a good education and career in life; and perhaps having common interests to fuel the passion over time. The real women in todays world are looking for ingredients in a man to make a union work.
_____________________________________________

This ancient commentary coming from someone who has the moniker “Old Man”. Never have women been more liberated then they are now (sexually and financially) and that is a good thing for them and for men. Your comment smacks of some sort of outdated conservative values you “suppose” women “should” abide by. The “real women” of today know how to use their sexuality to get what they want from men–and good for them.

#150 Nemesis on 03.09.14 at 12:29 pm

#FrenchTaunters #DoggyZen #ImperialDecline

[UK Telegraph] – Crufts 2014: French winning British bulldog challenge

…”For 350 years, the barrel-chested all-British bulldog has served as both the emblem and embodiment of the national character.

But, sacre bleu! – figures newly released by the Kennel Club show that our signature dog has just been overtaken in popularity by the upstart French variety…

… The “Frenchie” as it is known to fans, is a kind of bulldog-lite, barely half the size of the English classic but reputedly easier to keep and possessed of a Gallic vivacity some people find irresistible.

Owners of the English variety counter that their animal gets a bad rap, suffering from the fad for “handbag dogs” although they take some consolation from their belief that the “bouledogue française” – as it is known across the Channel – owes its origins to Britain.”…

#151 Nemesis on 03.09.14 at 12:30 pm

http://www.telegraph.co.uk/lifestyle/pets/10685250/Crufts-2014-French-winning-British-bulldog-challenge.html

#152 Aggregator on 03.09.14 at 12:48 pm

#136 Bob Rice

Any of you wonder if this is just gonna continue… the correction is long overdue.. and the stats just keep pointing upward

Why wouldn't it continue when Canadian properties are allowed to be sold like futures contracts on the international market?

It works like this: A developer throws a condo broker party with lots of wine and cheese to entertain VIP investors that will be purchasing several units with 5% down. Once they commit, VIP brokers can list their properties on an international MLS site so foreign investors, say Russian for example, can easily type "Торонто" and get Toronto MLS properties quoted in rubles.

From there a deposit is wired and paperwork is settled, and just like that, some foreigner now has a contract to receive a condo in a few years that will likely appreciate (unoccupied) as their local currency declines.

This is the Canadian RE carry trade, a highly speculative trade that the BoC and F are well aware of and, the risks of imposing restrictions to stop it, which is why they won't.

Now imagine if these were stock shares being sold abroad. You'd have regulators all over this shadow market. But for some reason, it's o.k. for RE.

#153 jess on 03.09.14 at 12:55 pm

65 devore said …”that is not how acccounting works .”

How “stateless” entities work

Here’s How Apple’s Australian Profits Ended Up in Ireland (8 Mar 2014)
by nathanael arnold march 06, 2014
http://www.telegraph.co.uk/finance/businesslatestnews/10517899/Irish-tax-rules-are-transparent-finance-minister-says.html

#154 Bill on 03.09.14 at 2:15 pm

#94 liquidincalgary on 03.08.14 at 12:14 pm

Really? Citing US Dollar strength because it has performed well against the Canadian Dollar? The Canadian Dollar is not an important currency on the world market. It’s weakness against the US Dollar as of late is mostly due to weakness in the Canadian economy. Garth has pointed that out a number of times.

The US might not lose it’s reserve currency status next week but nothing lasts forever either. The writing is on the wall. More and more international trade is being done in non-US currencies. The Russians and Chinese are signing agreements to trade oil (for example) in their respective currencies. The petrodollar is one of the main reasons the US Dollar is the reserve currency of the world and losing that status would be a huge blow. 17 Trillion in debt and 100+ Trillion in unfunded liabilities tells me that the US is in huge trouble.

PS, The US Dollar is in a 10 year downtrend. Check the chart.

#155 Daisy Mae on 03.09.14 at 2:28 pm

#130 ChickenLittle: “Now I know a new question that I must ask all potential landlords: do you intend to sell this property in the near future?”

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

You won’t be expecting a straight answer, will you? Anyway, that’s the serious downside to renting. I can understand your anger.

#156 Old Man on 03.09.14 at 2:32 pm

Does anyone know what a condo developer in Toronto wants now for a real estate contract? I wonder if the banks will still fund the interim advances based on these contracts going forward for construction as the risk is greater.

#157 Daisy Mae on 03.09.14 at 2:35 pm

#138 HappyRenting: “Check to see under what circumstances your landlord can legally evict you (even if selling the property.) Could give you some room to negotiate more time, covering moving costs/a few months’ rent, etc. Or, depending on the circumstances, dig your heels in and not leave.”

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

And, this is precisely why I would never be a landlord. He DOES have some rights, too…or does he? Why make this ugly?

#158 JL on 03.09.14 at 2:43 pm

Garth, no new net jobs since August in Canada.. But Alberta’s doing just fine:

http://www.ctvnews.ca/mobile/canada/more-than-85-of-new-canadian-jobs-came-from-one-place-alberta-1.1721026

You’ve been negative on Alberta for several years, now you’re saying we have to worry about a sovereignty movement in Quebec? Right, someone tell Suncor, Canadian Natural, Total, Exxon, etc.. Not to continue investing billions here because some morons in Quebec want to have a referendum. I bet you all those corporate boards are having emergency meetings over it. Good luck continuing to bent against us.

We’re all in this together. — Garth

#159 Smoking Man on 03.09.14 at 2:59 pm

Every aircraft from a Cessna 150 to an A380 has an ELT electronic location transmitter.

Why they can’t find the Malaysian 777.

Ufo I’m thinking..

#160 Bottoms_Up on 03.09.14 at 3:13 pm

#159 Smoking Man on 03.09.14 at 2:59 pm
———————————————-
I think those things only give the location if within a certain distance of the plane. Therefore if they don’t get close enough to it they won’t find it.

#161 KommyKim on 03.09.14 at 3:26 pm

RE: #159 Smoking Man on 03.09.14 at 2:59 pm
Ufo I’m thinking.

Maybe it’s an older 121.5/243 MHz beacon which is no longer detected by the Cospas-Sarsat satellite?
Maybe the beacon failed on impact or was already faulty?

Naw! Aliens have disabled the beacon and are using the corpses/souls of the passengers as a power source to destroy the Earth. ;-)

#162 rosie "moving forward" in the knowledge that, "this won't end well" on 03.09.14 at 3:32 pm

#160 Bottoms up

As usual, cheap companies cheaping out.

http://www.thedailybeast.com/articles/2014/03/08/why-black-boxes-fail.html

#163 Old Man on 03.09.14 at 3:54 pm

No UFO involved as the plane was shot down with a particle beam weapon because there was those on board that needed to go.

This discussion is over. — Garth

#164 Happy Renting on 03.09.14 at 4:12 pm

#157 Daisy Mae on 03.09.14 at 2:35 pm

All parties involved have rights.

http://www.ltb.gov.on.ca/en/Law/116345.html

If Chickenlittle is being told by her landlord to leave (but, by law, is not required to), she can try to negotiate a set of circumstances she finds acceptable in order to move, or point out that the situation doesn’t qualify for her legal eviction. Further discussion with her landlord and a different outcome does not necessarily have to be ugly.

#165 Herb on 03.09.14 at 4:25 pm

#131 Chickenlittle,

don’t know if you live in Ontario, but if you do, your landlord can terminate you only in acordance with the Residential Tenancies Act, 2006. Read Part V, especially Sections 48 to 58, of that Act at

http://www.e-laws.gov.on.ca/html/statutes/english/elaws_statutes_06r17_e.htm#BK42

If you live in another province, it will have a similar act governing landlord/tenant relations, so check it out.

#166 triplenet on 03.09.14 at 4:30 pm

Real estate prices will neither crater nor steadily rise. Hope you’re not lying to your clients. — Garth

Average real estate prices may typically represent a stagnant or dormant market – therefore the propensity for inaccuracy.
But who’s analysing average real estate?

#167 Daisy Mae on 03.09.14 at 7:43 pm

#164 HappyRenting: “Further discussion with her landlord and a different outcome does not necessarily have to be ugly.”

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

But it will be.

#168 Internal Auditor on 03.09.14 at 8:34 pm

#59

Sorry, your post isn’t clear. Are you saying that if rates are manipulated in the short term that the long term rates will get out of control and cause a complete financial collapse?

The markets are rigged as it is and of all the intervention that takes place (most of which regular folks like us will never see or know about) it goes to show you that the powers that be can and will keep things under control. Volatility is fine and it allocates capital and profits to the right places, but a complete collapse is very very difficult to derive. Our systems are so complex and in many cases tightly controlled that a complete financial collapse will not happen. If you really believe that then you’re most likely keeping all your investments in coffee, gold coins, Max Keiser dvd’s and Alex Jones survival guides. Please clarify though, I don’t want to assume I’ve understood your post.

#169 Snowboid on 03.09.14 at 11:33 pm

#145 Eaglebay on 03.09.14 at 8:27 am…

After years in the prairies and Okanagan, I had my fill of snow, then several more years on VI I became waterlogged – sun and sand is fine with me.

“…it’s a herring skiff not salmon…” – the focus of my reply wasn’t the type of skiff or the fish.

Your definition of old is likely quite different than ours – but you would be surprised at how active and healthy most are.

#170 Bob124 on 03.10.14 at 7:36 pm

Out in my neck of the woods, the outer commuter zone for the GTA. Former Zellers building, 100,000 square feet is still empty after a year Pizza Hut gone. Carlton Cards closed last month. New TD branch couldn’t make a go of it after five years. Talk that the Staples will likely be one of those to be shut down in the next year. And lots of other empty commercial real estate. Next crunch is in retail.