Gen why?

YOGA modified

Cheryl and Paul are 57 and 60 and live in a Mississauga house they figure is worth $900,000. They’ve spent the last 14 years paying down the mortgage and have about $80,000 yet to go. She’s been at home since the last kid left the nest six years ago. He sells real estate, made $126,000 last year and has no pension. Between them they have $37,000 in TFSAs, $160,000 in RRSPs and about forty grand in a high-yield savings account.

“How we doing?” Cheryl asked, hopefully. I paused to collect my thoughts. “Oh,” she said. “That bad?”

Of course she knew the answer. The Boomer couple has just over $1 million in net worth, but 80% of it’s in one asset. Paul has no pension. Worse, as a commissioned salesguy, he has no business to sell. And he’s just as good as his last deal – which means any housing correction will not only sideswipe his income, but also his family’s net worth. It’s double jeopardy. And then there’s the nature of their liquid investments – the bulk of which sits in high-cost mutual funds inside an RRSP, meaning the money’s fully taxable.

Cheryl stayed at home to raise three boys, and knows her CPP will be negligible. Paul figures he might qualify for $800 a month, but for that he has to wait five more years. It might be a stretch. Deals so far in 2014 have been scarce. Listings in the city of 750,000 are 14% lower than a year ago, and sales have fallen 15%. Paul told me on the weekend they might need to dip into savings by May, unless he sells something in the next week or two.

“It’s a lot of pressure. You just blog about. I live it.”

See how fragile life can be for two millionaires?

So many people in a similar situation. Boomers learned the lesson of go-go inflationary times well. Buy houses, flip houses, crawl up the property ladder, it’ll all work out. Now, like Cheryl and Paul, a fat number are coming up to retirement age with the bulk of their net worth in a single thing. If that thing were an ETF holding the biggest US or Canadian companies, they could turn it into cash in a day or two. If it were a 12-unit apartment building, they’d have a steady income stream. If it were a dividend-spewing portfolio worth a million bucks, they’d be getting a $5,000 monthly paycheque.

But it’s a house. No dividends or interest. Just property taxes, maintenance, insurance and eight hundred grand of locked-in equity which must be released, or these folks are going to run out of money before they run out of time.

This brings us to Jason. Their kid. He’s 28. A member of Gen Y which, at 27% of the population is almost as big as the Boomers (32%). Jason rents in Toronto, makes $52,000 as a IT guy, rides a bicycle and the TTC, likes being urban, has no debt and puts money monthly into a TFSA with $18,000 in it. That makes him typical, too.

It doesn’t take much to see the divide between the generations. I’m sure Jason (I haven’t met him, but Cheryl described) doesn’t think he’ll ever be better off than his folks, even though he has no idea how unbalanced and precarious their finances are. The kid probably wouldn’t mind owning a condo, but likely understands he’ll never be in a position to take a $900,000 house off the hands of some Boomers. Nor would he want to. Death by suburb. Shame by minivan.

A slew of recent surveys, duly noted on this pathetic blog, have shown that somewhere between a third and a half of all the wrinklies understand they’ll need to convert their houses into an income stream in order to retire. At the same time, cheap rates and real estate lust have driven prices to a point where the traditional house-buyers – people between 25 and 38 – can scarcely afford them, even with a 3% mortgage. Despite 5% down and 95% financing, how can a Gen Yer cough up $50,000 for a down payment, or qualify for $870,000 in financing?Jason can’t. And won’t. It’d be insanity.

Incredibly, almost 45% of all young people between 20 and 29 live at home. The jobless rate for the cohort is about 14%. Student debt averages $37,000 after a four-year degree. Underemployment is endemic.

And this is the big hope for so many Boomers – that the ‘next generation’ will pony up and bail them out? Good luck with that.

House prices have completely divorced from incomes, and the economy. Measured against rents or family cash flow, real estate values in Canada are among the highest in the world. Scores of people with expensive houses – like Cheryl and Paul – have equity, but no assured income. Without dumping the real estate and downsizing or renting, they’ll be living on fumes and Fancy Feast within five years of retiring.

So, either we go hunting for many boatloads of house-horny, millionaire Chinese immigrants a year to bail out the Boomers (and forever shut out their kids), or real estate falls.

Sorry, Cheryl.

173 comments ↓

#1 DreamingInTechnicolour on 03.09.14 at 5:33 pm

They don’t call it “SUB – BURBIA” for nothing – just a whole lot of money pits owned by the nearly and newly retired who still want to put a roof over their “stuff” a long ways out in the hinterland. Storage lockers, transfer station fees/ recycling and garage sales are much cheaper.

#2 Chickenlittle on 03.09.14 at 5:34 pm

You said it Garth! Well put!

#3 Honey Singh on 03.09.14 at 5:35 pm

Housing bear here that just bought a house, despite my better judgement.

Hey, I agree with everything that you’ve written except “Death by suburb. Shame by minivan.” Minivans are awesome when you have young kids. And I’ll take my commute from the burbs on my FZ6 any day over living in a shoe box in DT Vancouver. Plus I “need” my double car garage and a big back yard!

#4 5beans4cow on 03.09.14 at 5:39 pm

‘Incredibly, almost 45% of all young people between 20 and 29 live at home.’

And what is their prime desire; leave the basement for a mortgage. Attach the stone of shame…

#5 TurnerNation on 03.09.14 at 5:43 pm

Never forget, H led us through the Yoga Pants Crisis of 2013.

#6 Relocated Aussie on 03.09.14 at 5:49 pm

I hope my retirement goes a lot better financially than most. 55 weeks of work left and 430k in the bank waiting for the property that fits my criteria. 410k in rrsp’s and 32k in TFSA’s. A financial planner gave me some decent monthly income figures based on 6.5% growth in my investments. I hope he was right.

Wouldn’t like look better with $870,000 invested at 6.5% with half of it non-registered? — Garth

#7 KommyKim on 03.09.14 at 5:52 pm

RE:Between them they have $37,000 in TFSAs, $160,000 in RRSPs and about forty grand in a high-yield savings account.

It boggles the mind as to why they haven’t maxed out their TFSA contributions between the two of them. Instead they pay tax on meager returns in a taxable account. At least earn more of the the meager returns tax free if they are risk averse.
I hope you told them to do the 3yr spousal RRSP income splitting jig. Risk free money.

#8 Same story since 2007 on 03.09.14 at 5:53 pm

Alberta is only province that created jobs, in fact more 18K… It looks like people are moving to the province and as a result real estate is booming…. Situation is that a good property is hard to find. Not sure if its going to 2006-2007 situation or not.

#9 Detalumis on 03.09.14 at 5:54 pm

Maybe Cheryl can get a job, she’s 57 not 77. I went to a grocery store in Mississauga and the cashiers are commuting from Hamilton to work there. It’s certainly better than dipping into savings and I’m surprised that was never suggested. This couple must think they live in 1960-land with the “little woman” tied to the kitchen sink waiting for her man to come in the door.

#10 RE Observer on 03.09.14 at 5:55 pm

So did you convince them to liquidate their home while they can still get close to $900k for it?

#11 not 1st on 03.09.14 at 6:08 pm

Garth sad to say but many cats and dogs eat better than some people in the world and have a better quality of life too.

Our priorities are really messed.

#12 Whinepegger on 03.09.14 at 6:13 pm

My guess would be that these folks will pay off the 80k and then sign up for a reverse mortgage to insure they have a consistent cash flow. What do they care what’s left of the place when they go? I’d bet the son isn’t sitting around waiting for the big inheritance.

From what I hear from my friends, the reverse- mortgage is something more and more people over-invested in RE will be considering as they approach retirement. When I mention that they only qualify for a reverse mortgage if they’re mortgage free I see the answer to the “Do you still have a mortgage?” question in their eyes.

This definitely won’t end well.

#13 not 1st on 03.09.14 at 6:14 pm

A little off topic but a question that comes up – is a REIT already a diversified investment and all you need to own?

These are holding real estate positions in retail and manufacturing and apartments and office towers. Aren’t those items really the underpinnings of a lot of the entire economy? Why risk investing in some uncertain company product that is at the whims of consumers wishes when I can invest in the underlying operation.

Take a company like Blackberry whose product was pretty much blown off the map by competition however its corporate headquarters still retains all of its value even though the product is not selling.

#14 r on 03.09.14 at 6:20 pm

Why not go for reverse mortgage and enjoy the retirement.

#15 45north on 03.09.14 at 6:31 pm

“It’s a lot of pressure. You just blog about. I live it.”

a little bit of truth leaks out, great post Garth!

#16 Steven on 03.09.14 at 6:36 pm

So, either we go hunting for many boatloads of house-horny, millionaire Chinese immigrants a year to bail out the Boomers (and forever shut out their kids), or real estate falls.

My guess is that real estate cultist will say to hell with the kids and future generations. They want their tax free profits. All other priorities are expendable.
What does international law have to say about this?
Convention on the
Prevention and Punishment
of the Crime of Genocide

Article 2
In the present Convention, genocide means any of the following acts committed with intent to destroy, in whole or in part, a national, ethnical, racial or religious group, as such:
• (a) Killing members of the group;
• (b) Causing serious bodily or mental harm to members of the group;
• (c) Deliberately inflicting on the group conditions of life calculated to bring about its physical destruction in whole or in part;
• (d) Imposing measures intended to prevent births within the group;
• (e) Forcibly transferring children of the group to another group.

Being priced out of having a home and being underpaid very well could violate sections b,c and d.

What is happening is being done deliberately and that implies intent to harm others by indulging in jacking up real estate prices and depriving others of the nessesities of life. In winter being out inthe cold is serious and if you make it impossible for young adults to settle down and breed you are preventing the births of identifiable groups in whole or in part and that includes individuals. Fighting genocide includes fighting high real estate prices and low pay.

#17 mitzerboy on 03.09.14 at 6:41 pm

yoga with your doggie … I luv it

#18 Bobby on 03.09.14 at 6:46 pm

Paul reminds me of a realtor a number of years ago who said I was stupid to have money in savings. Real estate was where it was at he said. Gee….one portfolio was up last year at 18%, the other 14.5%. Both well managed, conservative at 60/40 invested with leading reputable investment firms. And, I’m only planning on 6% annually.
Many houses here in Victoria that were north of 1 million are now in the $990 k range and still sitting empty. Drove by one open house today, originally listed at $998k, now $899k and not a car there. Many are just taken off the market. The Real Estate Board is trying to put some lipstick on this pig, but I don’t think anyone is buying it.
Perhaps Paul and Cheryl can rent out a few rooms to other realtors.

#19 Mark on 03.09.14 at 6:51 pm

So this couple has $1,117,000 in net worth. That would put them in the top 1% of Canadians. Cry me a river.

#20 sheane wallace on 03.09.14 at 7:00 pm

900 k for a house in Mississauga?

It is absolutely ludicrous, the property tax alone would be 12-15 k pretty soon. with added utilities and maintenance it would be a sink hole. On 900 k investment one could be earning 45-50 k per year.
For half of these money one could be a king in Spain – free health care for residents, nice weather, cheap non genetically modified food.

Sigh…

#21 Retired Boomer - WI on 03.09.14 at 7:01 pm

He sells real estate she sits Idle? House not paid for and piddly savings. I smell Boomer Toast.

Well, if they have any brains they would sell the property before it eats them. She might want to think of some kind of employment. Selling the place might net them around the high 700’s coupled with their savings could do the trick for them retirement wise.

They are hardly alone. tether you’re a Canadian, or US when you hit wrinkly time you really don’t ant to face it with house debt, or debt of any consequence.

As for Savings, uh better be north of 500K on either side of the 49th parallel or your later years are probably going to suck! More is better in this instance, and if you are short there are lifestyle adjustments, and renting is hardly the sign of a loser.

Most of my generation does not have a pension, or if they do its usually not indexed to inflation, and usually not very meaningful.

Most have a 401K, but many have invested badly, or inadequately. They reacted in fear when markets tanked locking in losses, and never recovering!

Average Joe does not know -or care to know- about investments, allocations etc.

His loss, but now many have no time left to adequately recover. Who will feel sorry for Boomers? Right, nobody!

#22 Entitled Conservative Senator on 03.09.14 at 7:07 pm

Even the owners of print media are jumping ship and looking for government jobs.

At least this one is not looking for a Senate post – I am keeping mine.

http://www.torontosun.com/2014/03/09/quebecors-pierre-karl-peladeau-to-run-for-pq

(Why don’t they just run more advertorials for the real estate cartel, like always but even glossier?)

#23 Infused with Opiates on 03.09.14 at 7:07 pm

19 Mark – top 1%?? Not even close

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil116f-eng.htm

#24 sheane wallace on 03.09.14 at 7:08 pm

#16 Steven
…………………………
Agree, housing should actually be subsidized by building cheaper houses for young people.

In normal world a house would be worth 300-400 k In Toronto and Vancouver, would be affordable, rates would be 5-6 % and there would be no jobs outsourcing.

In the real world brought to you by F, H and the banks that need profit and do not care that Canadians have no homes and whoever has a home can not afford kids is is a genocide, but what are you going to do? Sue them?

Good luck, They have kids and homes, this is what matters. Does anyone actually believe that these people actually care about retirees?

#25 Chris on 03.09.14 at 7:09 pm

She’ll still get a pension. The gov’t recognizes time spent at home raising kids. They can sell their home and live comfortably ever after. They’re in fine shape.

#26 FormetSaskie on 03.09.14 at 7:14 pm

Cheryl, Paul sell now and invest. Rent something that meets your needs and have $$ to have a life.

#27 45north on 03.09.14 at 7:32 pm

Retired Boomer – WI : Well, if they have any brains they would sell the property before it eats them. Selling the place might net them around the high 700′s coupled with their savings could do the trick for them retirement wise.

my thought is that is what they will do – I mean Paul sees the light

thinking of WI, the Great Lakes are frozen over

http://www.glerl.noaa.gov/res/glcfs/anim.php?lake=l&param=glsea&type=n

Steven : Fighting genocide includes fighting high real estate prices and low pay.

no it doesn’t

#28 Red Deer Rob on 03.09.14 at 7:34 pm

This blog post resonates with me. I can’t speak for my entire generation but, as for me, there’s not a chance I’m going to buy that kind of a house let alone a house for half that price in the next 5 years; even if I’d qualify for a mortgage.

Some gen y’ers like myself are cognisant of how much disequilibrium there actually is between incomes and housing affordability. We’re opting out of buying property in lieu of job mobility and building a financial future that does not involve insane amounts of debt.

#29 Nemesis on 03.09.14 at 7:35 pm

@MitzerBoy/#17

I believe that it’s called, “HotYoggie”… Well, from Poochie’sPerspective at any rate.

#30 Smoking Man on 03.09.14 at 7:41 pm

The accent to wealth, the ride down, those that never hop on the roller coaster, that’s life.

These stories are cool, but in the end we are all speeding to a brick wall, you can wear your seat belt tight, helmet on.

Life’s an adventure, live it fearlessly cause no matter what you do. The walls not going away.

Don’t worry..

#31 Linda Mulligan on 03.09.14 at 7:43 pm

Just wondering – what IS the rental availability in Ontario, specifically Toronto/Hamilton etc? Are there rentals enough for all the boomers who will ‘have’ to bail on their homes in order to have income in retirement? Plus, if they can’t sell those homes why would any financial institution want to give them a reverse mortgage? Presumably the financial institution would also have an unsellable asset of diminishing value on their books which does not a healthy profit margin make. Or is the dream to give the reverse mortgage in return for having the home occupied/kept up to sellable standard for X years until miraculously a horde of house hungry purchasers arrive on the scene so all ends well? Financial institutions usually want something a little more likely to give them ROI than the possibility someone will eventually want to buy the asset at whatever the perceived value would be…..
Bottom line is, if ‘millions’ of Boomers do indeed have all their equity in their home & nothing much outside of it then I can’t see how any of them can ever afford to retire. CPP/OAS do not a fat monthly income make, especially if you take CPP at age 60.

#32 Happy Renting on 03.09.14 at 7:45 pm

“It’s a lot of pressure. You just blog about. I live it.”

I think that qualifies as foolish whining. He, you, and everyone else needs a place to live, food to eat, money to pay expenses, and usually income to obtain that money. His chosen profession has challenges right now (none are perfect and the good times never roll forever), but I’m sure you told them the fastest and easiest way to improve their situation: sell the house, downsize/rent. He doesn’t even need to switch industries to significantly reduce their exposure to the RE market. Net worth north of $1M is definitely cry-me-a-river territory (#19-Mark). They’ve got it, it’s up to them to manage it well.

Cheryl should consider getting some paid employment (not in RE) outside the home. Even $1k/month can do a lot to take the pressure off if Paul is selling nothing.

You know, being part of the generation that expects not to do as well as our parents, that might be mostly a case of optics (especially if your Boomer parents don’t have juicy DB pensions.) Is the huge suburban house with two cars really better than urban living? The more possessions you have the more time and money you spend cleaning, maintaining, keeping them.

If their kid Jason meets another Gen-Yer with an $18k TFSA and they get a nice wedding present from the parents they can afford the 5% down on a McMansion. Heaven forbid.

(Love the pic!)

#33 Ritenote on 03.09.14 at 7:52 pm

“Incredibly, almost 45% of all young people between 20 and 29 live at home. The jobless rate for the cohort is about 14%. Student debt averages $37,000 after a four-year degree. Underemployment is endemic”

Garth: I have a friend who is a real estate agent, and he tells me many parents are funding their kids [the ones who do leave home] down payment for their housing purchases. Any idea how widespread this is? and, Are theses parents. by doing this, further risking their abilities to retire? Thnx

They are perpetuating the same high prices that prevent average people from affording average homes. — Garth

#34 Bottoms_Up on 03.09.14 at 7:52 pm

When people find themselves living in houses they no longer could afford to buy themselves, that speaks volumes about the loftiness of the housing market (and the obviousness of what they should do next).

#35 zee on 03.09.14 at 7:58 pm

If boomers need to sell to pay for retirement, then where are they because listings across the GTA is just not there.

In denial. Check back in five years. — Garth

#36 Aggregator on 03.09.14 at 8:13 pm

So, either we go hunting for many boatloads of house-horny, millionaire Chinese immigrants a year to bail out the Boomers (and forever shut out their kids), or real estate falls.

From a fiscal and monetary secular standpoint, my more recent view is the former along with a major CAD devaluation, meaning, in nominal terms prices may not decline much, but fall by 30-50% in real terms against major currencies over the next five to ten years. More notably the yuan.

An easy way to think about owning a Canadian home is like owning a villa in Mexico twenty years ago: At face value, prices kept rising in peso terms, but if weighed against the CAD, USD or EUR, large gains were lost. This is inflation's phenomenon; where average citizens see prices rising when it's really the local currency losing in value.

If this is the govt's plan going forward (which I believe it will be because it is the stealthiest way for them to confiscate wealth), then Canadians may want to consider holding assets out of Canada as anything denominated in CAD will lose its value, including wages. This will take place slowly over many years and go unnoticed by most.

That said, I still hold the view that governments and CBs will lose control when an exogenous shock comes out of nowhere and sets policymakers back to square one. It's bound to happen at some point with the amount of leverage in the system.

The status quo can't be sustained. Even doubling or tripling immigration won't be enough to offset our aging population. That's why they'll devalue in concert with raising net immigration, so it's best to think ahead and anchor your assets before it's too late.

#37 Ripped on 03.09.14 at 8:13 pm

First it was my parents and now the inlaws are dumping.

These are your typical 80 year olds that have been in the same house for 50+ years and are extreme hoarders.

It’s all very valuable to them, that’s why they keep it. To anybody else it’s nothing but a pile of shit.

Try and tell them this when they’re downsizing to a senior’s condo.

#38 Steven on 03.09.14 at 8:15 pm

#27
You must be a boomer with a house and you are afraid of losing your real estate profits or may be a realtor who will miss getting big commissions.
I think there is a corelation between high real estate prices and a falling birth rate. That is what happens when real estate stops being a place to live and becomes an investment. It is genocide done slow sans firing squads and gas chambers. A bit like in pre nazi germany when a loaf of bread cost 2 billion marks.
A total crime against humanity.

#39 Daisy Mae on 03.09.14 at 8:16 pm

#9 Detalumis: “This couple must think they live in 1960-land with the “little woman” tied to the kitchen sink waiting for her man to come in the door.”

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

Ya know what? It worked then. Stay-at-home moms weren’t ‘tied’ to anything. The costs involved with raising kids is astronomical.

All we’ve done now, it place that responsibility on very expensive daycares…who will raise your kids for you for a very expensive ‘fee’. So you can work.

Today is different. Not better.

#40 nonplused on 03.09.14 at 8:17 pm

Hey Garth, just checking in. Your predictions have been spot on as always. As you may remember, I got laid off from my nice Canadian job in Calgary. I have found work though! Guess where? The US. The commute sucks and I have to live in hotels during the week. I don’t like being away from my family so much but the pay is ok. But it’s all planes trains and hotels. I don’t know what else to do until something comes up here. I’m following the money, and right now it’s in the US. Plus it’s good experience and I’d rather have a paycheck than sit around moping like I was before.

The US has it’s fair share of problems, but it also is still the center of the world economy. Ya, maybe China is rolling high speed, but it’s still the case that without the US there is no world economy. Not yet. They still do a lot of cool things down there.

#41 Waiting on 03.09.14 at 8:24 pm

http://www.richmond-news.com/news/chinese-groups-may-sue-over-cancelled-immigration-program-1.884178

40 chinese community groups in Richmond BC banding together to discuss cancelled immigration program. One speaker said the first casualty will be real estate.

#42 Internal Auditor on 03.09.14 at 8:27 pm

Look, these high price properties in well developed areas are able to sell at or near asking price if the rhealtor (per Garth’s blog the other day) does their job by driving the demand. Also, these nicer areas can and will most likely be purchased by younger families that are most likely dual income earning professionals (engineers, accountants, traders, doctors etc) which means the real pressure will be placed on the less desirable homes i.e. South Oshawa (for comparison sake). You get what you pay for, if you purchase quality then expect to weather the storm better than others. If you go on the cheap and buy some garbage/below average property then enjoy all the risk you’ve signed up for.

Garth I am surprised you generally tell people to go 60/40 etc when you don’t mention or discuss whether or not someone should keep a certain % in cash to take advantage of corrections. Also, why not discuss having stop losses in place as a hedge to a large shock to the equity and bond markets? It’s not as easy as buying an ETF and letting the dividends roll in. What happens if someone takes all their gains from the prin resi and then loses 25%-40% in the market?

I agree that having a large portion of your net worth (at that age) is risky, but please remember to address the market risk involved with the alternatives you recommend. It’s not as easy as selling the house and then transferring all the cash into an investment account.

It’s not market risk that brings people down, it’s investor risk. — Garth

#43 X on 03.09.14 at 8:30 pm

Wouldn’t like look better with $870,000 invested at 6.5% with half of it non-registered? — Garth

I would be willing to bet they could rent the same place they want to buy, for less than the actual month to month cost of the purchase price money, when the lost investment potential at 6.5% is factored in.

I have been following a few places here in the GTA and to make things worth buying, rather than renting them, asking prices need to come down about 30%.

It is all about return on investment dollar. Purchasing RE at todays prices, just doesn’t provide the same return on my investment dollar, vs investing the difference of renting a similar property.

#44 Smoking Man on 03.09.14 at 8:31 pm

Been the longest day of my life. That’s even with an advance of an hour..

I hate TV never watch it much, but then I found true detective.

30 min to go… What has happened to me..

#45 Mark on 03.09.14 at 8:31 pm

#23 Infused with Opiates

So in 2005 the top 20% of Canadian households had a worth of $862.850 or more.
In this case this family has a worth of $1,117,000.
That is quite the gap …. and I would be willing the top 20% breaks down real quick.
Top 1% maybe not …. but I would lay odds the top 5% for sure.
Get me some real statistics on what constitutes the top 1% in assets in Canada …. I bet it’s around one million.

#46 Tony on 03.09.14 at 8:32 pm

# 38 Zee
Denial is the first phase as can be seen here:

http://www.globaldeflationnews.com/wp-content/uploads/2014/02/Dow-2012-2016-forecast.jpg

Here is the projected direction of real estate in America:

http://www.globaldeflationnews.com/wp-content/uploads/2014/02/case-shiller_01_20114.jpg

Don’t even ask about Canada just rent.

#47 rp1 on 03.09.14 at 8:38 pm

Last line should be “Sorry, Jason.”

#48 VICTORIA TEA PARTY on 03.09.14 at 8:38 pm

LOCAL TAXES THE BIG UPCOMING DEAL

For all of our concentration on stupidly high real estate costs nation-wide the other big nasty lurking in the gloomy financial deep are municipal taxes: property, school, transit, water and sewer, the rest.

They are getting out of control and local politicians have not yet figured it out. And if they have, then what to do about it. Nothing seems to be the current answer. Uncontrolled municipal taxation is a really big deal and an economy killer.

IT’S NOT DIFERENT HERE

Concerning Greater Victoria, a tsunami of rigorously high future taxes is baked into our collective real estate cake.

That’s thanks to: a new bridge being built in downtown Victoria, which should cost about $100 million, and way over budget; and, a new regional billion dollar-plus planned sewage treatment system mandated by our cheery court system.

So freaked out are the local pols about being convicted of contempt of court, if they don’t build the damnable plant, that they are treating their local ratepayers with contempt that simply defies description. They have pumped $50 million (must be borrowed, I guess) so far and nothing to show. The final cost will be well past $1-billion. No end to this craziness.

LIVIN’ THE GOOD LIFE IN VICTORIA

All of which is a round-about way to note that, unless you’re totally mad, moving to Victoria from anywhere else on this planet is about as nutty as it gets.

Now, it’s starting to dawn on many locals, too many of whom believe themselves to possess the utmost in environmental creds just because they live here, that their own home-owning parties could come crashing down upon their flaky ears. Our house taxes are rising at nearly unsustainable rates.

OTHER BERGS SIMILARLY AFFECTED

Victoria-area politicians are not alone in their quest for further taxes in a demographically-challenged locale where here, specifically, lattee serfs seem destined to pay the wrinklies’ endlessly porky lifestyles. How long before they either split town or stick a fork in us!

And, no. China will not be bailing us. Their economy is in serious bubble territory with debt defaults starting to happen in some major corporations.

You’re so right, St. Garth of Rightful Resignation: we’re all so hooped.

#49 TurnerNation on 03.09.14 at 8:42 pm

I got BC Business mag (mailed, on dead bleached trees natch).
Highest unemployment in that province? Kelowna’s at 7.1%. (The chart didn’t make it to their web site.)

Who will be buying the boomer manses and AB oil patch’s cabins.
http://www.bcbusiness.ca/careers/the-recruiting-push-to-small-cities

#50 takla on 03.09.14 at 8:49 pm

start tightening up your belts folks.Cost of living is riseing ,unemployement is becoming more obvious daily,and the cost of diesel for my pickup rose 6 cents a litre last 2 weeks!Stagflation garth??Just how many folks have these kind of saveings/pensions and investment portfolio’s in Canada…not many!The middle class engine is being squeezed and spending less on everything,were just beginning to feel the pain of the great reset.Of course it was nice to see to see the 5 lb gold bars the ousted Ukraine president couldn’t manage to get into his getaway helicopter as the Ukraine surfs approached with there pitch-forks.Im sure HE has a very attractive portfolio!!

#51 Ben on 03.09.14 at 8:56 pm

What we never get is the price they paid (in real terms today) for the house. I bet it’s well under a third of the 900K. Say it’s 300k. Where does the 600K profit come from when they sell up? The next generation has to work harder and longer for exactly the same pile of bricks.

Cry me a river indeed. The boomers had every chance and still they wanted more.

#52 TurnerNation on 03.09.14 at 9:01 pm

Gotta like the free-market cons. Viva El Presidente.

Ottawa orders railways to move grain each week
CBC.ca – Mar 7, 2014
The federal government says it will introduce an order-in-council forcing railways to move a minimum amount of grain each week. Transport Minister Lisa Raitt says that minimum will be set at 500,000 tonnes, which works out to 5,500 grain cars each for …

#53 Jsan on 03.09.14 at 9:09 pm

How China Fooled The World (Documentary)

“It is a story of spending and investment on a scale never seen before in human history — 30 new airports, 26,000 miles of motorways and a new skyscraper every five days have been built in China in the last five years. But, in a situation eerily reminiscent of what has happened in the west, the vast majority of it has been built on credit.

This has now left the Chinese economy with huge debts and questions over whether much of the money can ever be paid back. Interviewing key players including the former American treasury secretary Henry Paulson, Lord Adair Turner, former chairman of the FSA, and Charlene Chu, a leading Chinese banking analyst, Robert Peston reveals how China’s extraordinary spending has left the country with levels of debt that many believe can only end in an economic crash with untold consequences for us all.”

http://www.youtube.com/watch?v=HUSjMnmS5lI

.

#54 Victor V on 03.09.14 at 9:15 pm

http://www.thestar.com/business/personal_finance/2014/03/09/women_need_to_take_more_investment_risk_roseman.html

So, why are women more conservative than men when it comes to stocks?

“Women think differently than men do,” says Wiley, one of the few female leaders on Bay St. “That’s why there’s an emphasis on getting more women at the boardroom tables in business.

“They have a different way of learning, too, and seek different ways to get comfortable with their options.”

Exchange-traded funds (ETFs) are good for risk-averse women, she adds. As an alternative to mutual funds, they allow investment novices to get into the stock market through a well-diversified, transparent and low-cost portfolio.

#55 devore on 03.09.14 at 9:17 pm

#20 sheane wallace

900 k for a house in Mississauga?

Regardless of where in Canada they may be, no two people need a 900k house. Selling it and downsizing is definitely a very realistic option for them.

#56 tim on 03.09.14 at 9:21 pm

He says he has a lot of pressure…for that income, given that it takes all of three months and a grade ten education to become a realtor, he deserves that pressure. He won’t see $126, 000 again with this declining market

#57 Dr. Wu on 03.09.14 at 9:23 pm

Chinese-groups-may-sue-over-cancelled-immigration-program-

It’s getting tribal, as it should.

Canadians should Copy the China Tribe- Sue Ottawa for sending Our jobs to China

What does Harper say when he goes there?

” hey, I remember factories like that from my childhood”

It’s very difficult to boycott Chinese products; however, it’s definitely the way to go. The media brainwashing machine stopped putting the word “Red” in front of it because it might hurt sales. Boycott China=boycott slavery.

#58 tim on 03.09.14 at 9:25 pm

“So, either we go hunting for many boatloads of house-horny, millionaire Chinese immigrants a year to bail out the Boomers (and forever shut out their kids), or real estate falls.”

We’ve already done that…look at the consequences…

#59 Nemesis on 03.09.14 at 9:27 pm

#SeriousSunday #GenWhy? #Dazed&Confused #ExistentialAngst #AlcoholCompulsory #DancingDiscretionary #DiptychParables

http://youtu.be/On1u4QhbkVA

http://youtu.be/pvAYGz6Iwmc

[NoteToSaltyDogz: I blame the ‘Downfall of WesternCivilization’ on TheCarpetbagger™Mentality.]

#60 BG on 03.09.14 at 9:31 pm

#19 Mark on 03.09.14 at 6:51 pm
So this couple has $1,117,000 in net worth. That would put them in the top 1% of Canadians. Cry me a river.

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

Glad to see some people on this blog haven’t completely lost touch with reality.

#61 Ret on 03.09.14 at 9:32 pm

Her CPP won’t be enough to spread on a cracker even with the credit for child rearing.

The good news. If she works part time until 65, she should be able to clear off the mortgage debt and earn a little CPP credit.

Lots of people who don’t even have to work, look forward to 2-4 days of part time work a week. I hope to keep part timing until I go toes up.

I would hope that he is keeping contact with his customers, doing a yearly personal phone call, records of addresses, updates using computer e-mail addresses, first names of family members, interests, etc. etc. etc.

He could be working part time himself after 65, and working his database “book” for another 5-? years could make a big difference. He has the touch. He took in $126,000 last year!

Good luck to them.

#62 Pope Snugglebums the 666nd (aka Nosty) on 03.09.14 at 9:33 pm

#30 Smoking Man on 03.09.14 at 7:41 pm — “Life’s an adventure, live it fearlessly cause no matter what you do. Don’t worry . . .”

Hey SMan, instead of being sucked in via the msm, just gloss over the junk of this world and spend some time focusing on the better things of life. Cheers!

#63 Linda Mulligan on 03.09.14 at 9:34 pm

#48 – the cost of safe water (anyone recall Walkerton?) bridges that don’t collapse (hello there, Montreal) & other infrastructure repairs is NOT cheap. The cost of materials plus labour (& for all those who keep on demanding work be contracted out because it is less expensive, hello, those companies need to MAKE A PROFIT so why IS everyone ‘surprised’ when that low ball quote balloons to a much higher number?) plus the sheer volume of what needs to be done to meet the needs of a large urban population means replacing or repairing infrastructure is going to cost. The older the infrastructure is, the more quickly it is going to require replacing or repairing. Yes, we would all of us like to live in a magical land where nothing ever wears out, needs upgrading/replacing or costs us a cent in taxes. That is NOT reality. Stuff does wear out. Have you ever thought about how much we rely on our infrastructure & expect it to work safely & reliably? My current ‘per day’ cost to live where the drinking water is safe, the sewage is treated, the infrastructure, civic & emergency services are reliable is a mighty $6.30 (six dollars & thirty cents) PER DAY based on my latest property tax assessment. If I paid twice that amount I’d still be getting a bargain given the value of the infrastructure & services I receive in return. By the way, I think a daily large latte at Starbucks would be about the same amount as I currently pay for my daily property taxes. Stop whining & be thankful you live somewhere where the infrastructure works & your property taxes actually go to maintain said infrastructure rather than live in some 3rd world country. Better yet, visit some of those countries & see what life is like when there isn’t the infrastructure you take for granted.

#64 Freedom First on 03.09.14 at 9:35 pm

Great post Garth. Makes your rule of 90 look like a life and death rule. Makes the variation of the %’s for all assets you have outlined look like life and death. Sometimes, like every day, there is people who read your blog and think you write an anti-RE blog, but the regular followers of your blog, I mean the ones who are not idiots, grasp that this free blog has been awarded the title of “Top Canadian Personal Finance Blog”, and that Garth’s blog shows us how to manage our finances and become: diversified, balanced, and liquid, so we do not end up in the unbalanced, undiversified, and unliquid position that Paul and Cheryl are in, and to manage our finances with financial literacy and sanity and not the human emotion thinking and brainwashed behaviour of the herd on its way to the slaughterhouse. Many many countries and hundreds of millions of people world wide have already learned this lesson the hard way recently, but sadly, Canadians have ignored the warnings. Foolish.

#65 bigtown on 03.09.14 at 9:41 pm

Gen Y in the states cannot access CREDIT to finance a home so the alternative is RENTING. The latest stats from U.S. show that the bulk of NEW HOUSING being built are RENTALS. The only time renting has been very affordable for me was back in the 70’s in downtown Montreal where I rented a two bedroom walk-up for about $250 per month and that included utilities located on Tupper Street near the Forum. You rarely see any rentals being built in Canada but now that housing is beyond the reach of most Canadians and since money is cheap we might see an unheard of thing on this blog: new rentals. There are a few SENIOR RENTAL buildings going up in Burlington but they are geared toward the upper middle incomes not the middle and working incomes.

#66 HD on 03.09.14 at 9:43 pm

@ #21 Retired Boomer – WI on 03.09.14 at 7:01 pm

I sincerely,honestly, really enjoy your posts. I suspect I’m not the only one. Please keep posting.

Best,

HD

#67 notagreaterfool on 03.09.14 at 9:44 pm

Yikes Garth!

I just read the Post and the most bearish panel guest was Brad Lamb. Holy smokes!

#68 omg on 03.09.14 at 9:45 pm

PAUL WILL JUST KEEP WORKING

Like so many other BOOMERS Paul will just have to keep working well past his “planned” retirement.

All the Boomers working into their late 60s will be taking job and advancement opportunities away from Gen Y’s.

Too bad Gen Y’s – you’ll be paying for us Boomers for the next 30 years.

#69 triplenet on 03.09.14 at 9:50 pm

#56 Tim

Yes you’re right.

Ever took the bus out of Dog River Saskatchewan?
Sorry…..but you must evolve.

#70 Linda Mulligan on 03.09.14 at 10:05 pm

OMG – if the Boomers keep working & keep all the ‘best’ jobs then they will be paying for themselves, because they will also be paying the most taxes. Plus if the Gen Y’s can’t get a job, they are presumably being either supported by Boomer parents OR by social assistance paid for by – you’ve got it – working Boomers. Bonus for the next generation is that if Boomers work until they die then they presumably won’t cost the next generation a cent in social support in their turn:)

#71 World According To Garth on 03.09.14 at 10:07 pm

Nothing to see here….

http://video.xin.msn.com/watch/video/ufo-spotted-over-ukraine/1j8yhj3ze

#72 fred on 03.09.14 at 10:09 pm

Prem Watsa’s 2013 Letter to Fairfax Shareholders
…In the last few years we have discussed the huge real estate bubble in China. In case you continue to be a skeptic, here
are a few observations from Anne Stevenson Yang, an American who has been in China for over 20 years and is the
founder of JCapital Research in Beijing:
1. China added 5.9 billion square metres of commercial buildings between 2008 and 2012 – the equivalent of
more than 50 Manhattans – in just five years!
2. In 2012, China completed about 2 billion square metres of residential floor space – approximately
20 million units. For perspective, the U.S. at its peak built 2 million homes in a year.
3. At the end of 2013, China had about 6.6 billion square metres of new residential space under construction,
around 60 million units.
4. Yinchuan, a city of 1.2 million people including the suburbs, has 30 million square metres of available
apartments – roughly 300,000 units that could house 900,000 people. This is in addition to the delivered but
unoccupied units. The city of Guiyang, capital of Guizhou Province, has roughly 5.5 million extra units for a
city of 5 million.
5. In almost every city Anne has visited, pretty much the whole existing housing stock has been replicated and
is empty.
6. Home ownership rates in China are estimated to be over 100% versus 65% in the U.S. Many cities report
ownership over 200%. Tangshan, near Beijing, is one.
7. This real estate boom could only be financed through unrestrained credit growth. Since 2009, the Chinese
banks have grown by the equivalent of the entire U.S. banking system or 15% of world GDP.
8. The real estate bubble has resulted in companies extensively borrowing and investing in real estate or
lending on real estate in the shadow banking system. This is exactly what happened in Japan in the
late 1980s.
9. And one observation of our own: Since 2009, the easing by the Federal Reserve combined with the explosive
growth in China, backed by higher interest rates, has resulted in huge inflows (‘‘hot money’’) into China.
The near unanimous view that the renminbi would strengthen has resulted in a massive carry trade where
speculators have borrowed at low rates across the world and invested in China, almost always backed by real
estate. The shadow banking system in China – i.e., assets not on the books of the major Chinese banks – is
estimated by Bank of America Merrill Lynch to be approximately $4.7 trillion or 51% of Chinese GDP. Oddly
enough, prior to the credit crisis, the U.S. had $4.5 trillion in asset-backed securities outstanding or
approximately 31% of U.S. GDP. You know what happened then. When the flows reverse in China,
watch out!
16
These observations remind me again of the following quote from Michael Lewis’ essay in Vanity Fair, ‘‘When Irish
Eyes are Crying’’, which I wrote to you about in our 2010 Annual Report: ‘‘Real estate bubbles never end with soft
landings. A bubble is inflated by nothing firmer than expectations. The moment people cease to believe that house
prices will rise forever, they will notice what a terrible long term investment real estate has become and flee the
market, and the market will crash.’’ Amen!

#73 John in Mtl on 03.09.14 at 10:10 pm

@ #53 Jsan on 03.09.14 at 9:09 pm
“How China Fooled The World (Documentary)”

In this now pretty phony world, they probably don’t care if they can pay it back or not ’cause you can’t move an airport or walk away with a few hi-rise towers under your arms – they now have REAL assets, more important than a pile of worthless paper OIU’s in the form of credit or money.

#74 Smoking Man on 03.09.14 at 10:14 pm

Thanks Vladimir…

Mortals can not understand

Nic Pizzolatto

when I got into his head via the
UCC, an un known gifted writer.
Now he’s famous, or soon to be.

My gift, Rust Chole

The universe is all I’m saying..

#75 Bob Rice on 03.09.14 at 10:27 pm

“he bulk of which sits in high-cost mutual funds inside an RRSP, meaning the money’s fully taxable.” – Garth Turner

I always thought RSPs shelter investments like mutual funds….

Not when you want to spend it. — Garth

#76 Valyrian_Steel on 03.09.14 at 10:29 pm

I can’t claim to be a boomer with a million dollar portfolio “spewing” (Garth, you wordsmith) $5000 a month.

But I am a Gen X’er (early 40’s) with an $800,000 portfolio that pukes forth a tidy $4000 a month. We own a very modest home outright. I have a DB pension that I may or may not transfer to a LIRA at some point.

Don’t plan on working in my 50’s, or my late 40’s for that matter. How am I doin’ Garth?

Now they all hate you. — Garth

#77 Waterloo Resident on 03.09.14 at 10:32 pm

I just visited my sister (near Newmarket Ontario, just North of Toronto), and she told me that there is now literally and epidemic of divorces going on. Everyone she talks to knows of 4 or 6 couples who are now in the process of going through a divorce, while just a few years ago such a thing was unheard of.

The main reason in most of the divorces: The Husband’s income declined.

The husband did not have to lose his job for his wife to bail, all that had to happen was his income fell 20% to 30% and that put enough stress on the family situation for the LOVING WIFE to dump her ‘LOSER’ hubby and seek as much as she could in family court.

So if you are right and men’s income will drop just a bit, there is going to be a MONUMENTAL FLOOD of houses soon hitting the market, all from divorce proceedings.

#78 Smoking Man on 03.09.14 at 10:35 pm

CNN, breaking news, the world is in debt 40 trillion.

Huh, who does the world owe it to, Jupiter?

The quest for Labour ownership..

#79 Spiltbongwater on 03.09.14 at 10:35 pm

Just wasted 50 mins of my time listening to CKNW audio vault from this morning 0900, with Dr. Tsur Somerville, and some publisher of Real Estate Weekly. They took a totol of 1 call in, and was mostly fluff about no signs of bubble…..

#80 TnT on 03.09.14 at 10:38 pm

What a joke….

Worse example of a “doomed” boomer ever….

Would love to have Paul’s 900K that makes up 80% of one asset problem at 57…

Lawlz…

#81 Tiger on 03.09.14 at 10:42 pm

#30 smoking man!
Some good insite from ya!
A lot can be learned from the habbits of sheep!
They think brick wall!
Hm, only 1% don’t , very sad.

brick wall

#82 Tiger on 03.09.14 at 10:50 pm

Had two road rage incidences within 4 days,lots of zombies, married woman calling me , it’s just not going end well,

#83 Retired Boomer - WI on 03.09.14 at 10:54 pm

I have been keeping a little score on my high school graduation class of 1969 small class of 44 graduates.

This week we lost #5 so we are finally more than 10% who have gone on to their “final reward”

Just think of the retirement, and health care expenses do to be paid on this group of smokers, ex-smokers, druggies, and drunks (some reformed…)?

Don’t know the finances of everyone, but a good many don’t own their homes “free & clear” Good grief we are 45 years past knowing everything!

Only know of two who are financially “set” Where ARE the golden years…… probably at the “golden arches” for some

Smoking Man said it best…..the Wall awaits!! BOOMER!!

#84 Truth is ... on 03.09.14 at 10:57 pm

# 128 This is normal

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

I do not advise clients.

RE values, like the balanced financial portfolios you recommend, almost always rise in the long run.

Were this not true one could not argue that people should invest in balanced portfolios, nor would so many have bought RE.

Alwyn

#85 Infused with Opiates on 03.09.14 at 11:03 pm

45 Mark – I guess your google is broken. Tons on the
net for you. Here is one.

http://business.financialpost.com/2011/05/06/canada-just-an-ordinary-millionaire-nation-eh/

Answer 12%ish.

Now this includes home equity which is included in the
example. And that is the point. These people are not “rich” unless they sell their house, for which they never really had much control over its value. The real point is how low their other savings are.

#86 Harold on 03.09.14 at 11:03 pm

Nah, when the time comes, they`ll just sell out and move to small town Ontario where I`ve lived for many decades. This town is full of Toronto refugees, selling in toronto for a million and buying here for 300K while congratulating themselves for being so astute.

#87 Infused with Opiates on 03.09.14 at 11:06 pm

Some more reading

http://www.canada.com/story.html?id=5d6d73e1-88c2-418c-aed0-41d28541783c

#88 Obvious Truth on 03.09.14 at 11:14 pm

Change is hard. Requires a leap of faith. Have to say they don’t have their house anymore. Not easy.

It’s like the show Lets make a deal.

Garth is saying trade your house for the unknown. It feels like a gamble for most.

But for Garth the gamble is keeping the house. Make the deal?

#89 Happy Renting on 03.09.14 at 11:21 pm

#38 Steven on 03.09.14 at 8:15 pm

I think there is a corelation between high real estate prices and a falling birth rate.
—————————————————————–

I’m sure there is. The “requirement” of having a house in which to raise children is very deeply ingrained. I certainly felt this way when I was younger (though houses were far more affordable back then.) Nowadays, I think couples feel they need to have career, finances, and a house established before they can have kids. While some caution and a safety net are good, you can spend your whole life waiting if you’re holding off until your life is just perfect.

#90 Andrew Woburn on 03.09.14 at 11:59 pm

Nor would he want to. Death by suburb. Shame by minivan.
=========================

Actually many of Gen Y’s fat, balding, utterly lame parents and their siblings also lived in total fear of suburbs and minivans back when they could still fit skinny jeans. Pete Seeger’s song, “Little boxes made of
ticky-tacky” came out in 1963. Most boomer males regarded the purchase of their minivan as a psychic orchidectomy. This is the basis of appeal of the smaller SUV which is a minivan with a higher price tag,less space but a simulacram of male honour.

Boomers had no idea what parenthood was going to do to their aspirations and neither do childless Gen Y’ers. I have met otherwise intelligent young women who think that their plans for skiing and the writing of their first novel will be largely unaffected by motherhood. I give them my Yoda-like silent smile of boundless compassion. We have a couple of new parent Y’s in the family now and I am silently amused at their increasing struggle to pretend that living without a car with two children in a 700-foot Yaletown condo is somehow still cool.

Most of the Boomer’s ill-gotten gains in house equity accrued since 2003 and will probably evaporate as prices revert to the mean. Therefore IMHO Gen Y is not permanently priced out of suburbia even if it is now their worst nightmare. If hipsters can make a fetish out of ugly sweaters and crappy American beer, surely they can create a suitably ironic cover story for suburbia when the inevitable happens.

#91 Happy Renting on 03.10.14 at 12:47 am

#31 Linda Mulligan on 03.09.14 at 7:43 pm

From what I gather, reverse mortgages are only up to a certain amount (50%?) of the house’s value, and you must be mortgage-free. I don’t worry about the availability of such arrangements. The banks can always skew the conditions in their favor to turn a profit.

———–

#40 nonplused on 03.09.14 at 8:17 pm

Congrats on the new job! While not ideal, good experience and a new environment can be exciting for a while. It’s easier to get a job when you have a job, so keep looking but good for you for landing something.

———–

#75 Valyrian_Steel on 03.09.14 at 10:29 pm

High five for you. Hoping my family gets there within a decade.

————–

#76 Waterloo Resident on 03.09.14 at 10:32 pm

Wow, depressing. Unless the wives have richer boyfriends lined up, though, divorce will only make financial troubles worse.

#92 Fortune500 on 03.10.14 at 12:56 am

As a member of Generation Y just over the 30 mark, I can tell you that my wife and I are not overly concerned about ‘owning’ a house. We have a young son, and could not care less about whether the bricks-and-mortar are in our name or someone else’s.

This is something a lot of Boomers I talk to have a hard time understanding. We need to move to where the good jobs are, and we have an adventurous spirit that keeps us interested in traveling and seeing the world (which you instilled in us). Staying liquid and mobile is hugely important in today’s world. Fewer of my generation see the ‘settling down’ thing in the same way you did. Be aware of this because, as Garth has rightly pointed out, it will have a major impact on your future.

Not to mention that a large sub-section of my generation is making minimum wage with and without a trade, degree, etc.

#93 fleetwoodboy on 03.10.14 at 1:08 am

This is great if you ever wondered if it’s actually worth it – 10 over-priced homes in Vancouver:

http://priceypads.com/insane-monday-top-10-overpriced-vancouver/

Just a quick note on Fleetwood (Surrey, BC) SFHs. Quite a few come on recently at $619k and selling fast…..would have been $649k last year. A few houses in my area at $679k, $739k, and $769k been on the market for months (the last one for 18 months and started at $849k).

#94 airhead princess on 03.10.14 at 1:28 am

Me thinks the realtard in question is drinking his own bathwater. For one thing one thing…he has to ask himself ” would I buy this house for 900K?” If the answer is no…then the writing is on the wall. The first thing an investor asks himself is ‘who is going to buy this from me later if I buy it now?”

No real estate asset is ‘net worth’…c’mon guys…we’ve been through this before. RE is a non fungible asset…worth nothing until sold. At best you can convince the reverse mortgae guys to pay 40%….maximum….that’s why thats all you can get. Holding on is very risky when prices are in the stratosphere.

I was in the business and have twice witnessed prices falling MORE THAN 50%. In 1982 through 1986 you could have fired a cannon down any RE Max hallway with no fear of hitting anyone……the offices were abandoneded to the mice. Royal Le Page agents had gone back to delivering pumpkins on Halloween hoping for one sale when an ambulance appeared in the driveway.

A guy on commission who is caught with $4500 property taxes…and upkeep…who hasn’t seen a sale for 9 months….when the market has gone completely dead will want to kill himself if he is reminded of the day he could have taken $900K and put it in the bank…..instead of driving around with a trunk full of pumpkins.

I used to get the same with my investor clients…..greed builds on the way up and it’s almost impossible to convince someone who’s in the black when the time to sell is nigh. Unlike a stock portfolio….real estate isn’t something you can sell incrementally until you’re playing house money….ten percent at a time every instance the issue has appreciated 20%. That’s why the TD Waterhouse people won’t accept your real estate for investment or margin. That’s why they call those guys…’the smart money’.

#95 PC on 03.10.14 at 1:42 am

This is the very question I have been waiting to be answered.

“Either we go hunting for many boatloads of house-horny, millionaire Chinese immigrants a year to bail out the Boomers (and forever shut out their kids), or real estate falls.”

How likely the former?

After the big 2008 bailout, it has become apparent that government will do anything to help the majority. If real estate were to start to crash, might they reopen the immigrant investor program perhaps with different requirements?

#96 PC on 03.10.14 at 1:43 am

And if so, how might this affect real estate?

#97 James on 03.10.14 at 1:47 am

How about reverse mortgage and me down house.

#98 TakingResponsibility on 03.10.14 at 2:24 am

“So, either we go hunting for many boatloads of house-horny, millionaire Chinese immigrants a year to bail out the Boomers (and forever shut out their kids), or real estate falls.”

Wow, a whole thesis could be written on the conundrum/paradox presented in that one sentence!

Would it really be ‘Selling Out’ the Kids/ Grandkids/Great Grandkids? Or, just being a good capitalist?

What’s a Boomer to do? (Facing such nightmarish horrors of old age, death, catfood…)

#99 Julia on 03.10.14 at 2:33 am

#63 Linda Mulligan on 03.09.14 at 9:34 pm

Nice post. Maybe if we had to pay for our lattes by an annual bill and our property taxes monthly with a detailed breakdown of everything we are getting for the money we would see the relative value more clearly.

#100 RockStar on 03.10.14 at 2:41 am

Another good demonstration of how a homeowner is light years in a better position than a renter.

#101 RockStar on 03.10.14 at 2:46 am

#79 TNT

No kidding. Champaign problems and caviar dreams.

#102 Longterm on 03.10.14 at 3:25 am

#75 Valyrian_Steel on 03.09.14 at 10:29 pm

Nice one mate, well done. You are an inspiration. I doff my hat to you.

I’m early 40s, a much smaller $330,000 portfolio that vomits $1500 a month. 5.5 acres of land in BC with a high efficiency, self-built timber frame and slipstraw house, not fully paid for yet but the land produces lots of food, timber and other valuable products and payments are weeney at $760 a month.

I’ve got about ten years left to achieve my goal of $4500 a month in dividend income, but could probably retire with much less.

I’ve got no pension, but then again you’ve probably worked a lot more than me. I’ve only really worked about 11 years full time and then set up and sold a small business. With all those Boomers bunging up the job market, it took me until age 31 and leaving Vancouver for London in the UK with $18,300 of student loand dept to finally land a full time job.

I have managed to travel to 43 countries though and spent over 900 days travelling since 2002 .

I’ll see you on the other side [of work].

#103 Moe on 03.10.14 at 3:36 am

Nouriel Roubini on the Canadian Housing Market
http://www.youtube.com/watch?v=1xS1PpoLnYY

Guy must have been reading Garth lately…

#104 whatever!! on 03.10.14 at 4:21 am

#57 Dr. Wu on 03.09.14 at 9:23 pm

I’m actually surprise that our housing has gone so high for so long. If there is truth in immigrants invading our housing.

There will be a end to this just like mexico and many other countries in which you actually have to pair up with a local in order to buy.

This is risky, cause the local can royally screw you. And complicated if they pass away.

You knew this was coming, cause the politician will always bend over to get your votes. When Canadians cannot afford a place to live, and are property rich, but living below proverty levels. Change will come

#105 Big M on 03.10.14 at 4:40 am

Looks like the RE rush in the future will be all those houses back East for $100-200k…

#106 Tony on 03.10.14 at 5:53 am

Re: #75 Valyrian_Steel on 03.09.14 at 10:29 pm

Plan on working ’till the day you drop like these other idiots holding stocks. All that’s left is day traders, short sellers and I almost forgot the public that’s always last to the party and is always left holding the bag.

#107 mousy on 03.10.14 at 6:30 am

Dear Cheryl and Paul,
You guys are going to be just fine. My parents were in similar boat with the property and had way less for RRSP’s and just CPP. They sold the house, down sized to a fabulous condo with a very nice gym and swimming pool, close to everything, with an extra bedroom for the grandkids and plopped a serious chunk of change into some conservative investments and life has never been better. Neither of them ever earned anything close to $126,000 per year and they have plenty of cash for dinners, trips and even after paying for my university (ages ago) still ask me if I need anything. I think you guys are very lucky. From where I sit, you guys are a success story. I suppose it is a matter of perspective. Some have more, some less.

#108 I'm stupid on 03.10.14 at 6:40 am

Valiyran_Steel

I’m 34 and won the DB lottery. When I started in HVAC under a CBA, as an independent contractor, the boomers before me didn’t want a Db pension. They all wanted money in their pocket. Finally in 1992 they allocated .25 per hour. Then they realized they were screwed, and increased it to nearly $6 per labour hour. When I began in my trade nearly 14 years ago I wasn’t prorated as prorating came into effect 1 year later and I fell under the old CBA. I’m 34 and my guaranteed pension money equals nearly 3k a month. That doesn’t mean that I will rely on it because things happen. The point good for you. You realize that a home isn’t security, money is.

#109 BillyBob on 03.10.14 at 7:19 am

I’m Stupid,

So at 34 you already know you’re going to be stuck in the same profession, probably in the same location, until the day you retire – because you can’t realize that “lottery win” until you cash it in?

Sounds like a double-edged lottery win to me. More like golden handcuffs.

#110 Bob Loblaw on 03.10.14 at 7:20 am

Nothing in Mississauga is WORTH $900K.

#111 Mel on 03.10.14 at 8:44 am

PAUL WILL JUST KEEP WORKING

Like so many other BOOMERS Paul will just have to keep working well past his “planned” retirement.

All the Boomers working into their late 60s will be taking job and advancement opportunities away from Gen Y’s.

Too bad Gen Y’s – you’ll be paying for us Boomers for the next 30 years.
—————————————————————–
Being in this business is hardly working, what with flexible hours etc. I know a person who went into real estate after he retired, he is now 75 and says it is the easiest thing he has ever done and the money is great.

#112 Musty Basement Dweller on 03.10.14 at 9:02 am

“Boomers learned the lesson of go-go inflationary times well. Buy houses, flip houses, crawl up the property ladder, it’ll all work out. ”

Yes the classic Ponzi scheme, most recently backed by our government for another good run . It was great while it lasted. I pity those that are only recently into the game. No question that it’s over now for a long time.

#113 "cheryl and paul" on 03.10.14 at 9:13 am

Wait…I think we are “Cheryl and Paul” with a few minor differences…pension and cpp benefits, beginning at 60 will be in the range of 34,000 annually. Investments presently stand at 250,000 and counting. Property worth 900.000, no mortgage. Present age 49, and counting. We buy, renovate and sell real estate…renovate other people’s houses when not selling our own properties, and one of us is employed with a school board in the GTA. Three, 20-something children, working on post-secondary education, funded by RESP’S.
Is this a ‘boat” anyone would want to be in? Objective comments appreciated…

#114 Hoser on 03.10.14 at 9:26 am

I wonder if Paul realizes that Cheryl is already retired and has been for years. Keep pulling that plow, Paul.

#115 NoName on 03.10.14 at 9:30 am

this is kind of interesting, taking a mortgage sized loan just to rent…

http://qz.com/183412/koreas-crazy-system-for-renting-apartments-is-driving-the-country-deeper-into-debt/

It works like this. In exchange for access to the property for specified term—usually two years—tenants make a lump sum deposit to the landlord, based on a percentage of what it would cost to buy the property. The transaction is essentially a loan, with the tenant as the lender, the
landlord as the borrower, and the house as the collateral.

and this one
Learning From the Illusion of Understanding

http://bigthink.com/insights-of-genius/political-explanation

Years ago two psychologists, Leonid Rozenblit and Frank Keil, conducted this study to find out. In a series of 12 experiments they discovered that when participants tried to explain how an everyday device worked they realized that they had no idea what they were talking about. Although it seems like we know how something like a zipper works – we use it everyday, after all – when we stop to think about the details we realize our ignorance.

#116 Penny Henny on 03.10.14 at 9:34 am

#85 Harold on 03.09.14 at 11:03 pm
Nah, when the time comes, they`ll just sell out and move to small town Ontario where I`ve lived for many decades. This town is full of Toronto refugees, selling in toronto for a million and buying here for 300K while congratulating themselves for being so astute.
——————————————————
I’m curious Harold, where you at?

#117 jeff on 03.10.14 at 9:37 am

the main reason half of these kids are living at home is because the good paying work has migrated to Mexico (3 dollars per hour) and Asia (30 cents per hour); it’s called the search for cheap labour and a tendency of capitalism

#118 $$$BPOEFormer#1$$$ on 03.10.14 at 10:22 am

I put the sell signal out a month ago. HAM angry.
http://www.richmond-news.com/chinese-groups-may-sue-over-cancelled-immigration-program-1.884178

#119 Daisy Mae on 03.10.14 at 10:29 am

#76 Waterloo Resident: “….and that put enough stress on the family situation for the LOVING WIFE to dump her ‘LOSER’ hubby and seek as much as she could in family court.”

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

I understand financial difficulties is the #1 cause of divorce. And we ARE going to see many in the future. But does she really think she’ll be better off after the dust settles? In a divorce, both lose.

#120 Youngatheart on 03.10.14 at 10:32 am

I did it Garth……six months ago this 61year old widowed sold her house in Burlington and is now renting same city. I’m debt free (CC, LOC, even adult children’s loans gone.) TFSA is maxed and earning. Old $50,000 RRSP is actually earning too. The monthly dividends from the $440,000 ETF’s is covering the rent. Early CPP and monthly payback from the kiddies help top up the monthly income. I have travelled to Asia, Australia and Europe and will continue with my “Year Off” plan to October at which time I hope to find a low stress PT job to save towards next year’s travels. This was a big mindset change mostly born out of your blog and a very helpful friend. Thanks

#121 cramar on 03.10.14 at 11:31 am

What!? Paul and Cheryl are doing fantastic! $900,000 house and only owe $80k!!?? They are in a perfect position.

SELL!! And pocket $800k to invest. Retire NOW with years of health left. And move out of the Big Smoke!

Like to travel? Rent an apartment in a smaller town and use your investment income to travel.

Not into traveling? There are multiple options. Retire to a warmer, cheaper climate. Think Panama.

Or buy a $150,000 house in a more relaxing area like here in S-W Ontario, still leaving $650k to add to investments. Or rent with $1m invested!

You’ve got a million dollar opportunity here. DON’T BLOW IT!!

#122 shocked! on 03.10.14 at 11:39 am

I find it extraordinarily interesting that we both sneer at those who do not have a corporate pension to look forward to, while also ridiculing those who will work for many years, for the same company and in the same profession, in order to be entitled to one…
Life requires real choices, with real results, based on real work…for a lifetime:)#108 please take note…

#123 Ralph Cramdown on 03.10.14 at 11:44 am

#76 Waterloo Resident — “So if you are right and men’s income will drop just a bit, there is going to be a MONUMENTAL FLOOD of houses soon hitting the market, all from divorce proceedings.”

But a divorce turns one household into two, increasing the number of housing units occupied (unless one or both spouses have, ahem, already found a warm bed in another house). Maybe they’re worried about a bust and getting out ahead of it? Divorce is a lot less feasible when neither partner can carry the house (+ support payments?) alone and the house can’t be sold for enough to pay the debts.

In the US, divorce levels are only now recovering from their depressed levels during their bust. If you think divorce is ugly, how about living under the same roof with someone you desperately want to divorce, but can’t afford to? There’s likely a Brontë novel about that…

http://www.bloomberg.com/news/2014-02-18/worsening-u-s-divorce-rate-points-to-improving-economy.html

#124 Smoking Man on 03.10.14 at 11:53 am

Still no jet…

Huh.. Cell phone calls to family, rings but no answer. If phone under water, no ring…

I hate say this but there where ufo sightings in Malaysia at about the time it went missing…

#125 Victor V on 03.10.14 at 12:17 pm

Condo prices in GTA likely to fall about 8% over next 2 years: report

http://www.theglobeandmail.com/report-on-business/economy/housing/condo-prices-in-gta-likely-to-fall-about-4-this-year-report/article17392116/

Condo prices in the Greater Toronto Area will likely fall by about 4 per cent this year and a further 4 per cent next year, Toronto-Dominion Bank economists predict in a new report.

The report takes an in-depth look at the housing market in Canada’s most populous city, and wades into the debate about just how much damage could be inflicted by the plethora of new condo towers that are sprouting up. It’s a debate that Finance Minister Jim Flaherty is keeping a close eye on, having expressed fears about the number of condos going up as far back as 2012, one of the key reasons why he tightened the mortgage insurance rules.

The report says that new condos are increasingly having trouble competing with older ones, which are generally larger and cheaper. This comes at a time when the high-rise segment is facing excess supply, as about 70,000 units will be completed during this year and next, 9,000 of which are still unsold. There are also fears that people who bought the condos as investments may be planning to sell them once the buildings are complete.

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

For those with 5% down, this will end especially badly.

#126 Nemesis on 03.10.14 at 12:20 pm

#MondayMischief #RussianOligarchs #DungBeetles

“I like to think of the banker as a human equivalent of a dung beetle…” – Alexander Lebedev, Publisher of the Independent titles and London Evening Standard

[UK Independent] – Russia’s banker thieves remain above the law

…”The estimated $100bn which annually leaves the Russian economy and joins someone else’s is far less than what was stolen every year in the 1990s. Today, it’s supposed to be different, isn’t it? Once, unmarked, Hercules planes stood at Sheremetyevo airport, their holds brimming with US dollar bills. Nowadays, we have watchdogs and anti-corruption measures. Still, though, the thieves, fraudsters and their accomplices in the banking system of Russia retain their invincibility.”…

http://www.independent.co.uk/voices/commentators/russias-banker-thieves-remain-above-the-law-9178974.html

#127 Bottoms_Up on 03.10.14 at 12:24 pm

#112 “cheryl and paul” on 03.10.14 at 9:13 am
————————————————
Sounds good to me but you’re real estate heavy.

I’d take out a 300k loan on your house — and call Garth — he’ll tell you what to do with it. Over the next decade you can pay down your loan, claim interest, and watch your portfolio grow.

#128 Chickenlittle on 03.10.14 at 12:26 pm

Sigh…some of these posts make me sad.

Kids in daycare, day in, day out, even when parents are off. If anyone needed “me time” it was our grandmas.

Women divorcing because their man makes less. As my mom told me yesterday, “What did my generation teach their kids?”

All you have to do is watch “The Bachelor” and you’ll see what they taught us.

Ahhh, women! We want it all, but that is impossible.

http://www.theatlantic.com/magazine/archive/2012/07/why-women-still-cant-have-it-all/309020/

#129 Catalyst on 03.10.14 at 12:36 pm

So let’s say they sell and downsize to a rental and net 700K from the transaction.

If they had rented & invested for the last 30 years would they have a networth exceeding 1M?

I doubt it. They did well and hopefully will take advantage, but I doubt it.

#130 High Plains Drifter on 03.10.14 at 12:41 pm

Poking generations x,y, and z in the eye with the boomer myth,” all I had to do to be a millionaire ,failed boomer was sell bloated real estate in the right bedroom town near Toronto”. My take on Garth’s featured couple is they were born with a silver spoon in their mouths and they, to their credit, did not lose their early family given advantage. This article suggests to me that the big story is the money supply has increased so much that the favourite asset that represents wealth(real estate) has had to go to up to find it’s true level. Yes, foreign money included.

#131 Gen Y & Millennials don't want their parents life on 03.10.14 at 12:43 pm

Gen Y & Millennials don’t want their parents life and see finance and banking totally differently. They value experiences over accumulation and are not interested in million dollar mortgages.

In a recent study about Millennials, 33% think they won’t need a traditional bank ever and most of them believe innovation in banking will come from outside the industry.

They don’t trust today’s banks & here’s why.

http://www.wysiwygventures.com/banks-credit-unions-set-to-experience-major-disruption/

#132 Vamanos Pest on 03.10.14 at 12:51 pm

#112 cheryl and paul

Given your age and assets, you could end up pretty well off by 60…but you need to lose the house. Currently, you’re in pretty gross violation of the rule of 90. (~80% of your net worth is your home, while at your age this should be 40% tops).

Sell the house and rent, diversify the proceeds and let that grow until your 60. Retire with about 2.25M “spewing” off ten grand a month, PLUS the pension of 3 grand a month, how’s 13 grand a month in passive income sound? Think you can manage?

And they say renting is for losers.

#133 airhead princess on 03.10.14 at 12:59 pm

I’m often chastised for outing the public service as ‘pigs in the trough’…..but just as I was raked over the coals for screaming about the debt to income ratio five years ago at only 80%….now 170% of income…..the public servants are escaping gravity and shooting for undiscovered stars in an unknown universe for all other Canadians in the private sector.

http://www.vancouversun.com/business/half+million+dollar+club+ranks+public+sector+highest+paid+list/9598367/story.html

There is no precedent for this kind of wallowing.

#134 devore on 03.10.14 at 1:00 pm

#48 VICTORIA TEA PARTY

Quit your crying. You should be ashamed it took a court order to get Victoria to finally think about treating their sewage, rather than just dumping it into the ocean.

#135 devore on 03.10.14 at 1:03 pm

#93 airhead princess

No real estate asset is ‘net worth’…c’mon guys…we’ve been through this before. RE is a non fungible asset…worth nothing until sold.

Real estate is worth at least its rental value. Minus a risk premium (owning is more risky than renting), minus expenses (owning has expenses renting does not). Outside of real estate, that is how investments are valued, save for the wonders of government guarantees, subsidies, policies, and extreme leverage.

#136 live within your means on 03.10.14 at 1:19 pm

#37 Ripped on 03.09.14 at 8:13 pm
First it was my parents and now the inlaws are dumping.

These are your typical 80 year olds that have been in the same house for 50+ years and are extreme hoarders.

It’s all very valuable to them, that’s why they keep it. To anybody else it’s nothing but a pile of shit.

Try and tell them this when they’re downsizing to a senior’s condo.
……………………….

PIL’s are in their 80’s – in hospital for 2+ mos. are going into a nursing home in a few weeks. Hubby will go to France for a month this summer to help his bro. get rid of stuff they have collected for 50 yrs. Some furniture is beautiful – old armoirs, etc. which would fetch big $$$’s here. Lots of beautiful dishes, etc. but majority will have to be sold or donated. Only thing I want is a needle threader I gave her years ago. Can’t find the same one now.

Hubby & I just spent the wkend clearing out stuff to be donated, trashed, recycled, etc. A sis has been doing the same but is having a tough time convincing her spouse to get rid of his junk.

#137 45north on 03.10.14 at 1:36 pm

Once upon a time, I served as a scribe in the sprawling empire of Pierre Karl Peladeau

In confirming his long-rumoured entry into politics as chief economic consigliere to Quebec Premier Pauline Marois, Peladeau, appears to have borne this view out. For among the many important and troubling aspects of his candidacy there is this, he has thrown the Sun News Network, the TV channel he founded and the most stridently patriotic of organs, under a bus. Likewise the Sun papers, and the former Osprey titles he acquired in 2007, many of them small-city Ontario newspapers that have served their communities loyally since the 19th Century. Good luck to them all now, as they craft their national unity editorials, secure in the knowledge that their major shareholder has pledged all of his intellect, energy and passion to the breakup of the country.

Michael Den Tandt

http://www.ottawacitizen.com/Tandt+Premier+Marois+brings+lion+into+tent+good/9597696/story.html

didn’t know that, so that’s what my $6.77 subscription to the Ottawa Sun is buying

#138 Holy Crap Wheres The Tylenol on 03.10.14 at 1:43 pm

#115 Penny Henny on 03.10.14 at 9:34 am
#85 Harold on 03.09.14 at 11:03 pm
Nah, when the time comes, they`ll just sell out and move to small town Ontario where I`ve lived for many decades. This town is full of Toronto refugees, selling in toronto for a million and buying here for 300K while congratulating themselves for being so astute.
——————————————————
I’m curious Harold, where you at?

………………………………………………………………………

Harold must be at least 50 miles away from the core to purchase for $300K, you can not even get $300K in Acton and they say its “Worth the drive to Acton.”

#139 omg on 03.10.14 at 1:44 pm

48 victoria tea party

not to mention the absurd increase in basic property taxes AND fees.

don’t you love it when the slimball politians congratulate themseves on holding property taxes to just a 30% INCREASE over the past 6 years.

meanwhile fees for sewer and garbage collection have increased 280%

but people seem to be ok with it??

I bet between the bridge and sewage plant propert taxes and fees will increase by another 60% over the next 5 years.

#140 jess on 03.10.14 at 1:49 pm

chinese gen’s

Alibaba tests the limits of China’s non-bank banking By John Foley
Shanghai Daily, February 17, 2014
http://www.china.org.cn/opinion/2014-02/17/content_31496764.htm

#141 Holy Crap Wheres The Tylenol on 03.10.14 at 1:52 pm

#30 Smoking Man on 03.09.14 at 7:41 pm
The accent to wealth, the ride down, those that never hop on the roller coaster, that’s life.
These stories are cool, but in the end we are all speeding to a brick wall, you can wear your seat belt tight, helmet on.
Life’s an adventure, live it fearlessly cause no matter what you do. The walls not going away.
Don’t worry..

_____________________________________________

You have to think like Kowalski and hit the wall full tilt!

http://www.youtube.com/watch?v=Re8U_on4Gn4

#142 Westcdn on 03.10.14 at 2:11 pm

Wow, I would swear you posted a picture of my oldest daughter but she has red hair and a lot of freckles. She is gen Y. She went to U of L (Lethbridge) and graduated with a business degree as did my youngest daughter. We bought a duplex that my daughters could rent out bedrooms. The place was cash flow positive and was sold for a profit. We paid the university expenses which were claimed by my former wife as she was in a higher tax bracket. Story is that the duplex made money and the daughters graduated without debt plus the wife reduced tax payable and built up her RRSP. So I question the value of a RESP. Meanwhile, eldest daughter got an MBA and lives in the US earning income through the internet. Youngest daughter is happy being at a HR position in a senior housing company. Sorry if it sounds like bragging (which is partially true) but gen Y will prove to be force although delayed. They are not stupid and the majority will not commit to a system which looks corrupt. I think the criticism of gen Y is misplaced although there is no shortage of bad examples.
A favorite picture of boomers… riding the happy train
http://i.imgur.com/gKyEAhV.jpg

#143 Nemesis on 03.10.14 at 2:15 pm

#OneStopShopping #FederalCourting #AmbassadorBridge

Curiously ‘MissingInAction’ from today’s MapleSyrup QuantumMediaFlow… but fortunately, thanks to the SCMP, accessible here to SaltyDogz everywhere:

[SCMP] – Canadian court victory for group of Chinese migration applicants: Would-be migrants allowed to challenge decision that dumped their applications to controversial investor scheme

…”A group of 95 disgruntled applicants were granted leave by Canada’s Federal Court on Friday to seek a judicial review of February’s decision that resulted in about 50,000 rich Chinese having their immigration applications terminated.

Toronto immigration lawyer Tim Leahy, who organised the case, said on Saturday that anyone wishing to join the legal action should do so before an initial hearing in Toronto in five weeks.”…

http://www.scmp.com/news/world/article/1444783/canadian-court-victory-group-chinese-migration-applicants

#BonusZen

SaltyDogz [& Amateur FortuneTellers] will doubtless enjoy the following micro-biopic abstracted from Mr. Leahy’s website:

“Mr. Leahy entered the private practice of immigration law after resigning his commission as a U.S. Foreign Service Officer (Political). Prior to becoming a diplomat, Mr. Leahy, who is a Chartered Life Underwriter and Licensed Insurance Counselor, and previously held U.S. securities licences, designed group programs and set up pensions for small businesses while doing estate-planning for the owners.”

As to why potential clients might consider availing themselves of his services, Mr. Leahy exuberantly avers that, “they have better ways to allocate their time than dealing with imperious immigration functionaries”.

#144 jess on 03.10.14 at 2:20 pm

1930’s credit cards
http://mattstoller.tumblr.com/post/78752620095/big-oil-hooked-americans-on-credit-cards

#145 Aggregator on 03.10.14 at 2:30 pm

#121 Victor V

The report says that new condos are increasingly having trouble competing with older ones, which are generally larger and cheaper.

I seen this one coming a while ago when developers began shrinking units at breakneck speeds and selling them with forward contracts; not realizing that eventually a glut of resale condos that are larger and cheaper would be competing with speculators presale units. Chart 1  Chart 2

But whatever. They'll just keep building more master-planned communities and keep selling them abroad. That's the name of the game now.

#146 TEMPLE on 03.10.14 at 2:35 pm

#133 airhead princess on 03.10.14 at 12:59 pm

I’m often chastised for outing the public service as ‘pigs in the trough’

And so you should be, since you cough up what seems to be an endless supply of lies and right wing jingoisms.

I usually ignore you, but you have successfully trolled me today. Anyhow, a quote from the article you link, which you purport to be evidence of civil service largess:

The corporation…invests money on behalf of the pension funds of more than 500,000 public-sector employees in B.C., a portfolio worth more than $100 billion.

Here you are taking issue with portfolio managers making, according to the article, as much as 1.2 million for managing a portfolio worth over 100 billion. Oh, the shame!

Just out of curiosity, why don’t you take a look at what it would cost to have that much money managed in the private sector? Seems like 1.2 million is actually a pretty good deal to me.

TEMPLE

#147 Entrepreneur on 03.10.14 at 2:38 pm

#16 Steven…right on the button on “Prevention and Punishment of the Crime of Genocide”. I agree with you as through my lifetime I see couples are not having babies. In psychology buying a house is like nesting, to mate and carry on but that has been stopped by the Too Expensive House Prices. Families numbers are dropping as reported.

#93 airhead princess, you are not an airhead after all. My dad use to say “Prices go up, prices go down”.

The real people that support this whole system; worked hard and had no one to back them are small businesses.
They are dying and so are their families. The greed live.

Freedom of speech through the internet and Garth Turner blog. Thanks and I will always stand behind the local small business owner and buy from them.

#148 Spectacle on 03.10.14 at 3:12 pm

Thanks Garth, for the opportunity to bring in distant , but related & meaningful contributions!

#16 Steven on 03.09.14 at 6:36 pm

” My guess is that real estate cultist will say to hell with the kids and future generations.

What does international law have to say about this?
Convention on the Prevention and Punishment of the Crime of Genocide

Article 2
In the present Convention, genocide means any of the following acts committed with intent to destroy, in whole or in part, a national, ethnical……
• (c) Deliberately inflicting on the group conditions of life calculated to bring about its physical destruction in whole or……..

Being priced out of having a home and being underpaid very well could violate sections b,c and d.

What is happening is being done deliberately and that implies intent to harm others by indulging in jacking up real estate prices and depriving others of the nessesities of life. In winter being out inthe cold is serious and if you make it impossible for young adults to settle down and breed you are preventing the births of identifiable group……… Fighting genocide includes fighting high real estate prices and low pay.”

Reply: I appreciate your inclusion tonight! Brave, intelligent and it brings intelligent thought to the blog. You get my top post of the week, and it’s Monday!

Quoting Michael Crichton ( .com if you wish to read for yourself) : ” Once again, groups with other agendas are hiding behind a movement that appears high-minded. Once again, claims of moral superiority are used to justify extreme actions. Once again, the fact that some people are hurt is shrugged off because an abstract cause is said to be greater than any human consequences. Once again, vague terms like sustainability and generational justice — terms that have no agreed definition — are employed in the service of a new crisis. “. He was speaking of genocide, and of the new crimes to humanity: the farce of sustainability movement.

Regards

#149 dan on 03.10.14 at 3:17 pm

Garth,

Is there an argument to be made about buying houses/condos now (as ridiculous as prices are) to avoid higher interest rates in the future (assuming there’s a 20% correction)?

That is, do current house/condo prices + interest rates, offset or equate to future (lower) house/condo prices + (higher) interest rates?

Thanks

Of course not. — Garth

#150 Lurker on 03.10.14 at 3:17 pm

#48:
Provincial leadership hopeful (BC Conservatives) John Cummings challenged BC municipalities to cut their budgets by 1% a year y.o.y.. You should have heard the derision and protests from local politicians over that suggestion. Meanwhile the City of Burnaby BC has a hundreds-of-millions dollar surplus (was 1 billion dollars at one point) and yet had the gall to jack up taxes by about 2% this year.

#151 Chickenlittle on 03.10.14 at 3:28 pm

#139 happy Renter from Friday:

“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.”

He is going to give us time. We have a townhouse right now so I’m pushing for a detached. I hate hearing my neighbours music!

So it’s not the worst thing to happen. No one died and my credit is still good. I’m ok! :)

#152 Republic_of_Western_Canada on 03.10.14 at 3:32 pm

#139 omg on 03.10.14 at 1:44 pm

Sounds to me that you finally have some ‘politicians’ showing positive character in finally funding desperately-needed infrastructure.

Costs finally have to be accounted for, to replace or improve old infrastructure which always has a fixed and limited design life, and for ecologically-consumptive services which serve an ever-increasing user population and which must finally be provided in a modern responsible way.

That is best done through taxes and user fees on those like yourselves who are the cause of the need for those services in the first place. Especially if you’ve gotten away with too much for too long for too little. Hideous traffic jams or dangerously corroded gusset plates, and your raw sewage dumped into the ocean are absolutely unacceptable.

It’s been a long time coming; finally authorities are voluntarily or involuntarily doing the job right.

(Hopefully now impetus can also be generated to replace the dilapidated narrow LGate bridge before a bus wheel falls through the deck of that bridge too.)

#153 Renter's Revenge! on 03.10.14 at 3:34 pm

@127 Chickenlittle

“Ahhh, women! We want it all, but that is impossible.”

Depends on what you mean by “it all”.

Apparently, it’s all about “relative needs”.

Read this; it’s a bit old, and it’s written by some schmuck named John Maynard Keynes, whoever that is, but it explains everything:

http://www.econ.yale.edu/smith/econ116a/keynes1.pdf

#154 Happy Renting on 03.10.14 at 3:41 pm

#127 Chickenlittle on 03.10.14 at 12:26 pm

The divorce thing is sad, but no worse than husbands leaving for a younger woman when their wives get older and less attractive. Both cases of one spouse losing their “value” (if you’re superficial that way) and getting discarded (sad, either way.)

If both parents work there needn’t be lamenting over using daycare (they already get guilt for not staying at home… Then the stay at home parents get criticized for being “lazy” and not having a paid job outside the home.) Being absent from the workforce for a length of time can severely hamper one’s employability going forward. That rolls downhill to children in low-income families, retirees getting meager CPP, and family stress over lack of money (more divorces?) I know parents who spend every last second while not at work on their kids. They’re attentive and involved, while still having their kids in daycare. Lament actual parental neglect, not daycare use.

#155 happity on 03.10.14 at 3:51 pm

So garth, how do you explain the opposing direction in copper and SnP 500 charts?

#156 Happy Renting on 03.10.14 at 3:52 pm

#112 “cheryl and paul” on 03.10.14 at 9:13 am

You didn’t mention your income. Your choice if you want to hang onto the house for a while (or get while the getting is good), but for the next eleven years you need to save and fatten up your investment account. Now that you’re mortgage free you need to sock that money away (do not spend it on frivolous stuff.)

——–

#119 Youngatheart on 03.10.14 at 10:32 am

Congrats on living a different way! Maybe others will take note and follow your example.

———–
#121 shocked! on 03.10.14 at 11:39 am

+1

My envy of family members with DB plans is equaled by my relief that they will always be at least sort-of okay in retirement (and won’t need cash infusions from me!) So in that sense, their DB plan benefits me, too.

#157 :):(Ying Yang on 03.10.14 at 4:07 pm

Smoking Man your territory is starting to sizzle.
5 properties in your area, I think? You are in Longbranch? Friend was looking on the weekend and they showed him this place. I just about crapped myself.
Not sure if this is Longbranch its on the north
side of Lakeshore. What a mess this one was. Its a total reno for sure.

$950,000
MLS® W2807555
2 Beds, 1 Baths
20 THIRTY-SECOND ST, Toronto
RE/MAX PROFESSIONALS INC. Brokerage

#158 Pope Snugglebums the 666nd (aka Nosty) on 03.10.14 at 4:08 pm

#77 Smoking Man on 03.09.14 at 10:35 pm — “CNN, breaking news, the world is in debt 40 trillion. Huh, who does the world owe it to, Jupiter?”

Holy hot damn, it’s sunny and mild – warm here!

Don’t have to go that far, SMan. “Give me control of a nation’s wealth and I care not who makes the laws.” — Baron Mayer de Rothschild (or words to that effect).

Ever wonder why the Rothschilds are never on Forbes Top 100 list of wealthiest people in the world, who is causing all the trouble and who funds all sides in wars, plus who is in charge of private-for-profit central banks?

Not too hard to see where this is headed.

#116 jeff on 03.10.14 at 9:37 am — “the main reason half of these kids are living at home is because the good paying work has migrated to Mexico (3 dollars per hour) and Asia (30 cents per hour); it’s called the search for cheap labour and a tendency of capitalism”

See prior response to SMan.

#120 cramar on 03.10.14 at 11:31 am — “You’ve got a million dollar opportunity here. DON’T BLOW IT!!

Well said!

#159 Derek R on 03.10.14 at 4:24 pm

#147 Entrepreneur on 03.10.14 at 2:38 pm wrote:
The real people that support this whole system; worked hard and had no one to back them are small businesses.
They are dying and so are their families. The greedy live.

Very true. Small businesses are up against it. The tax regime is very much biased against them and rents are often extortionate, especially in areas where the taxes are a bit lower.

#160 Nemesis on 03.10.14 at 4:28 pm

@HolyCrap/#141…

#PedalToTheMetal… #ThunderBirdsAreGo #Thelma&Louise

http://youtu.be/zj-BGO05MJI

#161 Vancouver RE agent on 03.10.14 at 4:29 pm

Vancouver RE prices are going up this year again for 15% at least. Get into the money making game until it is too late. Don’t get priced out ! Condos are bargains at these prices.

#162 Stickler on 03.10.14 at 4:54 pm

Ive said it before, ill say it again:

– the developed countries face reduced standard of living, while the developing economies slowly improve their standard of living.

If you need to work, you should first think about that fact. -> you NEED to work!

Without working you are doomed. Your #1 priority should be to move to a situation where you don’t “NEED to work”

What does that mean?
– pay yourself first (save, save, save)

-Don’t go into MASSIVE debt for a house.

– Always be wiling to move for a better opportunity.

– Don’t assume that there will be any pension.

– Don’t buy into the consumer culture nonsense.

– You don’t need a new 6 foot long scarf, knee high boots or a new i thing.

#163 Stickler on 03.10.14 at 4:56 pm

…and a Hermes handbag is nothing but a sick waste of resources.

#164 airhead princess on 03.10.14 at 5:34 pm

#45 North….you said..

“Once upon a time, I served as a scribe in the sprawling empire of Pierre Karl Peladeau

In confirming his long-rumoured entry into politics as chief economic consigliere to Quebec Premier Pauline Marois, Peladeau, appears to have borne this view out. For among the many important and troubling aspects of his candidacy there is this, he has thrown the Sun News Network, the TV channel he founded and the most stridently patriotic of organs, under a bus.

Don’t forget that this is Jean Chretians son in law you’re talking about………the liberals have been trying to throw Canada under the bus for a long long time. The separation of Quebec is deep in the liberal dna. Peledrau willreplace the CBC as the main arm of the de facto liberal propagande division.

#146 Temple……this civil servant does not ‘run the money’….he farms that out to professional money managers……this guy just collects his million a year for being the civil servant in charge….don’t confuse the two….

“Here you are taking issue with portfolio managers making, according to the article, as much as 1.2 million for managing a portfolio worth over 100 billion. Oh, the shame!”

#165 Smoking Man on 03.10.14 at 5:46 pm

Ying Yang

Tell your buddy 4 James St, brand new, 900k.south of Lake shore. One block to South Side Johnnys

#166 shocked! on 03.10.14 at 6:07 pm

Interesting, very interesting…so, if we are all living off the “fat o’ the investments”, eschewing work and avoiding consumerism at all costs…how does a nation survive and thrive?
That four letter word WORK…should be one of the most important words in our vocabulary…nothing to scoff at, nothing to be ashamed of… the single most significant factor in the progress of any nation.
Hoping the children we’ve raised will feel the same…and contribute, without feeling like they’ve somehow failed because they”NEED” to work!

#167 Longterm on 03.10.14 at 6:37 pm

#119 Youngatheart on 03.10.14 at 10:32 am

Congratulations of bucking the trend and making it happen. Lot’s of wrinklies could learn from your example.

My parents did the same. Sold their house in 2012 after 42 years of ownership, invested the cash [not huge but $345k] and now rent a house in Calgary easily paid for by the income. At 75 and 73, they also continue to max their TFSAs with the proceeds and they have all of their capital at work.

#168 Longterm on 03.10.14 at 6:47 pm

#105 Tony on 03.10.14 at 5:53 am

Re: #75 Valyrian_Steel on 03.09.14 at 10:29 pm

Plan on working ’till the day you drop like these other idiots holding stocks. All that’s left is day traders, short sellers and I almost forgot the public that’s always last to the party and is always left holding the bag.
______________________

Ha! That’s the winning attitude that will get you there.

I’ll continue to be an idot with my stock portfolio that throws off $18,000 pa in dividends and compounding in front of our very eyes.

I’ve had some stocks for a decade or more, relentless rising dividends buying more shares quarter after quarter whether the share price si up or down. One of my best holdings is up 77% since I bought it and the company has been increasing sales, profits and the dividend for four consecutive decades.

It’s never too late to join the right Dividend Aristocrat stock party. Keep buying, DRIP, DRIP, DRIP. One ETF does it all if you don’t want to pick shares.

#169 Humpty Dumpty on 03.10.14 at 6:56 pm

In total, 7 million Americans have been served with the bitter taste of foreclosure.

From reading the mainstream press all you hear are glorious signs of housing resurrection! Come one come all into the house of real estate where the almighty Fed will allow no harm to occur. Just sign and pray and the next thing you know you’ll be the next Donald Trump. The flipping, rehabbing, and housing shows are once again filling the space on a cable station near you. The perception of the Fed being this almighty protector of housing makes a bit of sense but where was the Fed in 2007? Last time I checked the Fed came into existence in 1913, over 100 years ago. Frankly, the Fed on their list of priorities has: to keep member banks afloat, keep financials steady, a deep attempt to protect the bond market, and more importantly keep interest rates low on our massive $17+ trillion national debt that will never be paid back. Housing is low on the list of priorities especially with many of the foreclosures now shifting to “stronger” hands.

http://www.doctorhousingbubble.com/housing-graveyard-total-foreclosures-crisis-complete-foreclosures-reos/

#170 Dual Citizen in Canada on 03.10.14 at 7:17 pm

#161 Vancouver RE agent on 03.10.14 at 4:29 pm
Troll.

Canada RE market, still a better love story than Twilight.

#171 shawn on 03.10.14 at 7:31 pm

Hermes Handbag

…and a Hermes handbag is nothing but a sick waste of resources.

*******************************
Cheap to make and sells for a fortune. Good way to transfer excess wealth from one person to others. I’d don’t see a problem.

#172 shawn on 03.10.14 at 7:37 pm

WOW!

So garth, how do you explain the opposing direction in copper and SnP 500 charts?

Wow!

When I was in grade 3 (circa 1968) all the kids took a multiple choice achievement test. Later some kids said it was hard until they “figured out the pattern”. I suppose they grew up to be technical traders / chart readers. Wow.

#173 Snowboid on 03.10.14 at 8:41 pm

#133 airhead princess on 03.10.14 at 12:59 pm…

Hey, truth hammer, while you may support the MSM rabble-rousers, the reality is the folks at BCIMC operate under the same model as the private sector.

Given how well the investments are doing (and the supported pension plans) isn’t it fair they get performance bonuses?

When you look at the low costs of managing the fund with its’ exceptional returns, I for one applaud the management at BCIMC.

Or maybe you aren’t happy that a crown corporation can do as good a job investing as the private sector?