The empty middle

tough modified

On Monday night Patrick snapped the picture below outside the liquor store in Aurora, an affluent exurb of Toronto. It speaks for itself. The pursuit of wealth, without money. Own a home, even when you lack the resources. In our entitled times, why not? Everyone else is doing it.

He adds this:

Just this past weekend I observed dozens of miserable people shivering in minus 15 outside a sales office. In 2002 I paid 286k for my detached 4bdr, here in Aurora. Took a few weeks to decide, and at least six trips to a sales office before signing on the dotted line. Today these folks are ready to pay 686k for the same average 4bdr on a lot two-thirds the size of of mine, with a decision made before they saw the floor plans.

It will take me well over a year to kill off the remaining $26k of my mortgage, and then I’ll remain with a 12-year-old box of pressed cornflakes. I can’t fathom living in a 25-year-old house made out of Popsicle sticks, and having another $120k and 5 years of mortgage remaining. The delusion runs deep in this country. Stay strong, we need you.

LCBO modified

Real estate prices go up, but incomes don’t. So we borrow. “Homes for Sales $0.00 Down Payment” is a marker of our attitude towards debt. The common wisdom’s simple – buy by whatever means. House values will keep swelling. Everybody ends up making money.

The sentiment runs deep now, as it did in the States before the music died. It doesn’t matter what you owe, it’s what you own. After all, everybody can drive by and ogle your property. Nobody sees the loan.

Until everybody sees the consequences, that is.

Oakville is a wealthy place. Four times the number of affluent people live there as in the rest of the GTA, and its main street, from Trafalgar Road to the river, has always been lined with boutiques catering to those who think malls are where your employees shop. Just what you’d expect in a place where the average house costs almost $750,000, and homes of historic significant are three times that.

But all that is changing. Empty storefronts now mar the boulevard, and retailers are so pinched they’ve taken to moaning to the media, decrying what a soft economy is doing to the seemingly affluent.

“They’re cashed out. We call it ‘maxed’,” says Greg McKinnon, owner of The Running Company. “They’re paying $2,000 a month for the Beamer and the Land Rover in the driveway, they have million-dollar mortgages and $50,000 in landscaping. There’s not a lot of money left over.” Julia Hanna is an executive member of the Oakville Chamber of Commerce and the past chair. She also owns a downtown Oakville restaurant. “I’ve been a business owner in downtown Oakville for 30 years. I’ve never seen it this bad. Never.”

It’s a phenomenon now well known in the States, called ‘wealthy hand-to-mouth households.’ They have lots of stuff (houses, cars, clothes), but little liquid wealth. As a study by the Brookings Panel on Economic Activity pointed out, these folks consume their cash flow just getting by, in activities adding nothing to their wealth or security. “The wealthy hand-to-mouth, therefore, behave in many respects like households with little or no net worth, yet they escape standard definitions and empirical measurements based on the distribution of net worth.”

The authors (two of them Princeton economists) looked at the impoverished rich in Canada as well as the US, Australia and Europe and found that someone who is living “hand-to-mouth” is twice as likely to be middle class as poor. The house, in other words, is sucking them dry. No wonder the shops on Oakville’s Lakeshore strip are drying up with them.

And as an article The Atlantic pointed out, it’s those couples trying to buy their way into what they perceive as a good school district who are the biggest ticking time bomb. “Couples can only afford the mortgage with both their salaries, so they’ll get in trouble if either of them loses their job. But even if everything goes right, they’ll still be cash-poor for a long time. They’ll probably have to use most of their savings on the down payment, and use a big part of their income on the mortgage payments. In other words, the wealthy hand-to-mouth are parents overextending themselves to get their kids into the best schools possible…”

Of course, you can see this any day for yourself. Wander an upscale street in the GTA or Vancouver some night after dusk, when the view through windows is ideal. Check out the furniture.

The Princeton guys have a key point: the hand-to-mouth rich are completely vulnerable to economic shocks. Ironically, more than the poor. So imagine what happens if the economy softens or rates rise or asset values (houses) decline.

Yup. More stores gone. Jobs, too. Soon, houses listed in distress.

Then the modest, and the debtless, shall inherit the earth.

216 comments ↓

#1 Sidera on 03.25.14 at 6:10 pm

Now watch all those commercial reits plummet along with the Canadian economy. No customers equals no cash flow for the reits. Sure the yields look good, but at what price?

Big REITs don’t invest in boutique retail. — Garth

#2 Paully on 03.25.14 at 6:18 pm

I look at the daily solds email and think that people must have lost their fricken’ minds! People are buying homes for over asking price all over the GTA, even in the crappy parts of Scarborough and Jane & Finch! What gives?

#3 Sam on 03.25.14 at 6:26 pm

The real opportunities in Real Estate won’t kick in until the market starts imploding. I’m no expert, but I’m willing to bet smart money is watching and waiting for the inevitable correction before investing.

Garth – you’re absolutely surgical when it comes to picking apart the insanity that’s infected our country, but I’d appreciate an equal amount of unsolicited advice.

#4 Smoking Man on 03.25.14 at 6:33 pm

Ying Yang….

4 James Street, just sold for 880.00 was that your buddy.

Go LongBranch, soon I will need to move to Hamilton, I don’t like classy hoods. Kills my creativity.

Screw it… Mexico even better.

#5 Son of Ponzi on 03.25.14 at 6:36 pm

Of course, you can see this any day for yourself. Wander an upscale street in the GTA or Vancouver some night after dusk, when the view through windows is ideal. Check out the furniture.
———————-
In Richmond and Vancouver West there’s no furniture.
The are all empty

#6 Smoking Man's Old Man on 03.25.14 at 6:37 pm

Sad, sad, sad.

People are so misguided as to what constitutes a life well lived.

Just sad.

#7 mitzerboy on 03.25.14 at 6:45 pm

amen garth….

#8 robert james on 03.25.14 at 6:58 pm

Chinese are getting jittery.. http://www.zerohedge.com/news/2014-03-25/what-bank-run-china-looks-hundreds-rush-banks-following-solvency-rumors

#9 T.O. Bubble Boy on 03.25.14 at 7:01 pm

“Couples can only afford the mortgage with both their salaries, so they’ll get in trouble if either of them loses their job. But even if everything goes right, they’ll still be cash-poor for a long time. They’ll probably have to use most of their savings on the down payment, and use a big part of their income on the mortgage payments. In other words, the wealthy hand-to-mouth are parents overextending themselves to get their kids into the best schools possible…”

Welcome to most of the GTA.

#10 T.O. Bubble Boy on 03.25.14 at 7:03 pm

Oh – and to the note on retail stores/restaurants struggling: there are more “For Lease” signs on Yonge St. (Yonge&Lawrence area) right now than any time I can remember.

#11 Willy2 on 03.25.14 at 7:12 pm

I guess those people also suffer only suffered from the “Polar Vortex”. Has been a tough winter for everyone.

This does indeed doesn’t bode well for Oakville & the rest of Canada……

#12 Vangrrl on 03.25.14 at 7:13 pm

Okay, who can click on that link to the Atlantic story and not have the theme song to Weeds pop into their head??!

#13 Paul on 03.25.14 at 7:14 pm

The debtless seem to be the odd one out. People are driving home prises up and have car loans to pay but are living the life. Once things correct they will expect the tax payers to bail them out. Unfortunately, the government will. Something is wrong here.

#14 Bobs ur uncle on 03.25.14 at 7:14 pm

Curious what will happen to the ghost cities of china and the spillover to the resource-based Canadian economy. Can their government keep the borrowed money flowing forever? Maybe you’ve addressed this before, but seems like that can’t end well either.

#15 Smoking Man on 03.25.14 at 7:14 pm

Slightly disappointed, just read a few pages of Galveston, Nic Pizzato book, just before he wrote the master piece True Detective..

Going to read the whole thing, but damn it.

I think I’m a better writer…

Talk about a motivator…..

Back to the keyboard…

#16 Steve on 03.25.14 at 7:16 pm

Wow, that’s exactly what I’ve been trying to articulate with grunts and screeches for years! I never thought I’d see this so tidily summed up. The whole demented mess has a handle! I’m going to print this out and put it in my wallet so I can read it with my debt free eyes. Every year in kelowna thousands of family’s are driven into actual poverty because they’re afraid of looking poor to the neighbours. The neighbours of course are debt humping greed-tards too. I’m so glad someone could finally articulate this! I never could… It’s like some people have a way with words, and others not have way…

#17 LH on 03.25.14 at 7:16 pm

Aurora may as well be Nunavut
This is why I avoid SFHs north of Dupont, east of Yonge, or west of Bathurst. In fact most of my houses are south of College.
Entry level 5% down buyers need not apply here.
Which is exactly why downtown C01 will best weather the coming storm

LH

#18 Steve on 03.25.14 at 7:19 pm

Also, I declare myself a rare canadian debtless unicorn person. (A person with no debt who lives in Canada and May or may not have a giant twirly horn)

#19 Willy2 on 03.25.14 at 7:24 pm

Mr. Turner,

Question: Does Canada have the same school district system like in the US ?

#20 Montellino on 03.25.14 at 7:32 pm

Smoking Man – re James st… that’s 18K under asking… Now when do you think the Red one is going up for sale? I call this weekend!

Hopefully the new buyers realize they can’t drive a car around back through that driveway– long branch, town house size, 900k, no garage… Best deal ever..

#21 DigDeep on 03.25.14 at 7:35 pm

I hear you #13 Paul:

What reward shall the debtless receive when the indebted get bailed out?
As the minority group I would guess nothing. I read about the great unravelling in textbooks. It is reaffirmed in forums such as these. My only defence is to make my footprint smaller and take some comfort in doing the right thing by not participating in the RE illusion.
Angry we shall be if they have to print money to fix this.., if the presses can.

#22 Lala on 03.25.14 at 7:40 pm

Slightly disappointed, just read a few pages of Galveston, Nic Pizzato book, just before he wrote the master piece True Detective..

Going to read the whole thing, but damn it.

I think I’m a better writer…

Talk about a motivator…..

Back to the keyboard…

Great blog, but post like this make me vomit. Why don’t you share what did you ate for breakfast, that might be interesting as well.

#23 lurker on 03.25.14 at 7:40 pm

#21 Before the bail out there will a huge transfer of wealth from those who were in debt to those that waited patiently for a buying opportunity.

My plan is to have my C1 house paid off within 2 years, I’m 35. I’m also dying to buy an investment property, but I’ll need at least a 30% drop in prices before that makes a lick of sense.

Yes, there will be some bailing out, but look at what happened in the US. The institutions generally get the real bail outs, main street just puts up “for lease” signs.

#24 Lala on 03.25.14 at 7:42 pm

Over 20 store for rent/lease signs on yonge/Eglinton area. Lala it will open a dog food store for humans.

#25 NotAGreaterFool on 03.25.14 at 7:46 pm

Great news! No more bidding wars!

http://www.thestar.com/business/2014/03/25/real_estate_council_aims_to_ease_bidding_wars.html

The cartel is trying hard to discourage this ;)

#26 MoralHazard on 03.25.14 at 7:46 pm

Here is a recent comment from Jim the Realtor on the bubbleinfo.com blog, which documented the US/SoCal bubble.

“The big difference now compared to history is that if trouble comes your way, you don’t have to make your payments.

Readers will scoff at the thought, but how can the banks and BigGov go back to foreclosing on people?

The new Policy: Reduce their payment to something they can afford and keep them in their house.

It’s a policy that will solve all problems; unemployment, recession, earthquake, terrorist, war, divorce, death – you name it.”

#27 airhead princess on 03.25.14 at 7:46 pm

The desperation of Canadians to ‘look rich’ has overwhelmed the sense of morality , ethics and humanity in this country. Look at the recent example of the Portland Hotel Society and socialist political hacks in Vancouver. These do-gooders couldn’t help themselves from scooping six and seven figure salaries out of money intended for the poor. Imagine the mindset of these quango/civil servants/socialist politicians who racked up $9000 dollar limo bills driving through the country’s poorest postal code….literally past the face of the sickness the money was supposed to address. These champions took to upgrading hotel rooms to $800 per night in Disney Land and river cruises through Europe. The greed was spectacular.

What causes this sickness of over consumption among people who have never made an attempt to qualify themselves to actually earn the money they seek as an entitlement?

Is the basis of this greed a decades-old liberal philosophy mantra that ‘wealth distribution’ is part of a righteous class war? That city hall posts should pay as much as neurosurgeons? That cutting grass and planting seasonal bulbs should pay as well as a professionally qualified accountant? That handing out tickets on the Sky Train should pay upwards of $200,000 per year?

Where did this culture of class warfare and greed begin the ugly spiral of nasty jealousy and envy? Is it because advertising on heavy rotation is selling dreams to people who have no means to achieve possession of such things? Has the socialist liberal movement sold the concept of equalization between worker and professional and bred a culture of greed instead? Have the civil servants taken too many vacations to Cuba?

What makes these people envy the rich so much that they will beggar themselves and steal from the poor to ‘look rich’?

#28 Retired Boomer - WI on 03.25.14 at 7:52 pm

Do I detect the odor of “consumer maxxed filet of idiot” in the air? It would seem to be. We suffered that stench in the US but, unmet monthly payments drove them out of their homes, their cars, their credit cards.

The good news is, the don’t repossess used underwear & clothes, the rest is fair game. Houses, and cars for sure, and you CAN get a sweet deal from the repo men.

Most people make far more money than they really need, they just want too much crap-make that bought too much crap ON CREDIT.

Bring on the deflation, please. Make the squeeze HURT!!!

Cash in hand, no debt, will buy your ‘stuff’ at a great price!

ask me if I give a dam about your bad decisions?

#29 Cara on 03.25.14 at 7:53 pm

Garth, I follow your blog for 4 years now. We got a downpayment(about 20-25%) for the house and keep waiting when prices for the real estate finally will come down. For the last 4 years you are keep telling us, you followers that the real estate is about to fall, but look around… In our area(Port Moody, BC) bidding wars are back to town, houses sells for $50.000 -$100.000 over asking… Since 2010 prices in Port Moody went up by at least 20%!
What do you think- when this insanity will be over? I know that you don’t have a crystal ball, but I believe that you’re having a better idea than we do. Please and thank you!

#30 Ben on 03.25.14 at 7:54 pm

Feel like Garth’s missing the bigger picture. Why do people go for very high LTV mortgages? Why does the state let them exist? Answer: they are both desperate.

People can’t go get a decent job, work their way up with an expectation their company will be there in 20 years time. They can’t get a decent stake in society. So why not get a big mortgage and take a chance – they might go up, might go down. Everyone these guys know made big on housing. It’s the only way they know out. Same reason kids are obsessed with celebrities in poor areas. Pop stars came from poor areas like them. They don’t know anyone who made good working hard.

The state is desperate too. They know house prices aren’t the answer, but they don’t know how to create real growth. So they let the banks synthesise wealth and hope things pick up. Then 10 years later they are painted into a corner.

Given the above, if Canada did decide to deflate housing what would replace it? We need someone to articulate the next step beyond the banks popping. How to arrest decline?

#31 Ben on 03.25.14 at 7:56 pm

Lurker can’t wait to join in! To hell with the fact that it’s not real wealth creation – he just wants a piece of the pie.

You’ll be disappointed on a US style crash. Garth’s already covered this and here I agree. You can’t hand the keys back in Canada, you have to eat that negative equity. Best served cold.

#32 Finally on 03.25.14 at 7:57 pm

Live in YVR. The weekend was full of talk with friends about real estate. I say it will correct, they say never. Their reason, economy is booming, china investors want to live here, Vancouver is beautiful and everyone wants to live here, it’s different than in the past. These friends own property and plan to buy more. I’m sick of it, trying to explain why it’s not different, there will be a correction, price to rent off, debt ratio record, over leveraged, 70% own, it’s just a matter of time when it will slide down. They all just laugh at me … I hate it.

#33 last laugh on 03.25.14 at 7:59 pm

Googled the phone number, and the first item was an ad for “playnow online casino”.

Is google laughing at us mere mortals?

#34 juno on 03.25.14 at 8:01 pm

Yep we’ve been creating a phony economy.

Get rid of the manufacturing plants. RIM, refine our oil in China.

We can just build houses and get Canadians to spend spend spend and not save a penny. Add debt to keep on fueling the spending.

In order to keep the drive alive we must create more debt, in our fuel by debt, die by debt economy.

Garth you should explain to people how money is created and how what happens when we print more money and what happens when the world no longer wants to buy Canadian bonds

#35 Mishuko on 03.25.14 at 8:01 pm

I can attest, I commute daily from yonge 401 to yonge king, more storefronts are closing down, for lease / sale signs galore.

Yonge Lawrence… what a crap shot. 6 years to put in an emergency fire vent and to block / narrow lanes going both north and south. The irony is the fire station adjacent to the subway.

Sometimes I wonder what these guys are smoking… then I realized they should start.

#36 Cici on 03.25.14 at 8:04 pm

#14 Bobs ur uncle

That’s a very good question! And well, it looks like our friendly pension managers are helping prop up their real estate bubble too:

http://www.theglobeandmail.com/report-on-business/international-business/asian-pacific-business/cppib-partners-with-chinese-residential-developer-in-250-million-deal/article17656231/

I suppose it wouldn’t be good for Alberta’s oil and gas industry if China’s real estate sector were to implode any time soon…

#37 Smoking Man on 03.25.14 at 8:04 pm

#20 Montellino on 03.25.14 at 7:32 pm

The access to transit, priceless. 15 minutes to union station on go train. 5 minute walk to long-branch go station, mississauga transit, and street cars.

People paying premium to cut the commute…

I though it would go for 750 not 880.

Holly crap….

#38 Debt Collector on 03.25.14 at 8:06 pm

For the last few months I have been working for one of those payday loan places. My job is primarily to trackdown people who have skipped on their payday loans. When I first took the job I assumed most of the people would be folks working minimum wage jobs at McD’s, BK, Tim’s, etc. True, maybe 70% are like that, but I’ve also threatened to take to court: a cop, a headmaster of a private school, and at least half a dozen people in the medical field (nurses, secretarial staff, etc.). You would not know they have basically nothing to their names just by looking at them. It’s pretty scary.

#39 Ben on 03.25.14 at 8:07 pm

#33 Carney has done if for Garth at the BoE:

http://www.bankofengland.co.uk/…/qb14q1prereleasemoneycreation.pdf‎

#40 Sam on 03.25.14 at 8:14 pm

all this just based on six shop closure in oakville ? I need to see more all over GTA to believe.

An illustration, of course, not a cause. — Garth

#41 Mandria on 03.25.14 at 8:21 pm

30 years old. No debt. 2 employer pension plans. Maxed out TFSA’s (indexing strategy). Rent a beautiful 1250sq/ft 3-bedroom historic apartment in Forest Hill for $1500/mth. Live very comfortably on my hubby’s earnings as an electrician. My equal paycheque goes entirely to savings/investments.

Yet…we’re horribly pitied by friends and family for our decision to rent. Now with a baby on the way they’ve stepped up the pressure to buy. Every so often after one of their “interventions” I’ll have some moments of doubt about our decisions. Thankfully they pass quickly.

Thank god for my parent’s voice of reason…raised 3 kids on a single income (blue collar salary) with a stay-at-home. Never tried to keep up with the Joneses, spent their pennies wisely. Retired at 50. They are the smartest people I know and I’ll never be able to thank them enough…I just hope they spend every penny of my inheritance they deserve it and then some!

I’m not against home ownership, I just wish that greater society could accept that it’s not the only path to wealth and comfort and renting is an equal and legitimate choice.

#42 DocInWaitingRoom on 03.25.14 at 8:25 pm

Toronto looking like it may go down for the count. Hasnt grown this year 0.4% from beginning of year. Maybe a peak of bubble… Month to month –0.08%…
For those that say homes never go down see 2008 drop -12%…
The drop thats coming will make 2008 look like a rounding error

Housepriceindex.ca

#43 Linda Mulligan on 03.25.14 at 8:29 pm

I agree that many people are likely cash poor but – I wonder what percentage of the struggling businesses/closing stores is due to 1) people already have that thingy, don’t want or need another; 2) peoples tastes have changed & only the unique thingy grabs their attention/wallet – lots of stores are chains, even the ’boutiques’ can have very similar merchandise; 3) on-line shopping is possibly part of the reason the stores are struggling too. Online has less overhead, the customer pays the postage/shipping/duties etc. & a picture with a good description means tons of selection, no having to drive in crappy weather, park the vehicle, maybe pay for parking etc. As for the restaurants, always a hard business – most ‘new’ restaurants are closed within a year of opening & the start up costs are astronomical. Plus so many people have food issues that eating out is more like playing Russian roulette than a pleasure to look forward to. Not to mention eating out an ‘easy’ budget choice if you are feeling purse pinched & esp. if you have allergies, much safer to eat at home, plus you can drink without having to worry about being ‘over the limit’. Just saying lots of reasons for stores to struggle beside the cost of homes these days.

#44 blase on 03.25.14 at 8:30 pm

#32 finally

Save your breath. If houses crash they will not thank you, and they will resent you. If houses go up, you will look stupid. You can’t win. The only way most people learn is through hard knocks.

#45 Smoking Man on 03.25.14 at 8:34 pm

#22 Lala on 03.25.14 at 7:40 pmSlightly disappointed, just read a few pages of Galveston, Nic Pizzato book, just before he wrote the master piece True Detective..

Going to read the whole thing, but damn it.

I think I’m a better writer…

Talk about a motivator…..

Back to the keyboard…

Great blog, but post like this make me vomit. Why don’t you share what did you ate for breakfast, that might be interesting as well.
……….

That made you vomit…. Baha

Don’t go to the archives, and read posts by the the gracious, master of the English language, king of content, the greatest poster in the world.. The Smoking Man.

And what ever you do. Never Google Dyslexic Smoking Man.

You will need a therapist for sure.

Bye the way, it was what it is every day… Eggs over medium, bacon crispy..

#46 joseph on 03.25.14 at 8:51 pm

I spoke with my local banker [Big 5] and he stated that Canadian banks are being instructed not to allow short term foreclosures when home owners can’t make adequate payments. [1-2 years]. Canadian banks are to do whatever it takes to keep people in their homes. If it gets to be about 2 years or so of delinquent payments, then they can take some form of action. Until the two years rolls around, they are told to prop up the home buyer. This policy will prop up the housing market even when the economy tanks.

You mistook the janitor for the manager, or you made this up. — Garth

#47 Bob Rice on 03.25.14 at 8:51 pm

I don’t know where this housing collapse is. I used to read this blog and lap up everything I read. But I don’t see a collapse any longer… not where I’m from (GTA). There’s VERY little supply here of SFH.. LOTS of buyers and lots of cheap credit… sure maybe it’ll settle down bit, but we won’t see declines in SFHs – This isn’t Halifax or Mtl… don’t look at the unemployment rate… everyone I know is gainfully employed here and living well…

I’m still renting but I’m buying as soon as I find a deal… and they are out there IF you’re patient…

#48 Smoking Man on 03.25.14 at 8:53 pm

#42 DocInWaitingRoom on 03.25.14 at 8:25 pmFor those that say homes never go down see 2008 drop -12%…
The drop thats coming will make 2008 look like a rounding error

Housepriceindex.ca
…………

Abiviouly You can’t read real estate charts.

Where’s the hockey stick..? The catalyst to any re- bubble pop.

Keep dreaming and playing loto

#49 Detalumis on 03.25.14 at 8:56 pm

Downtown Oakville stores have always been cyclical, one closes another opens up. My guess is that it’s because the area has fewer wealthy women shopping during the week. The old hausfrau ladies are dying off and the younger wealthy dual-income couples are out all day working on Bay Street or as doctors and such so have no time to shop. I am 4 kilometres due west of the downtown and only go about 2 times a year. If I want to spend a day shopping I take the “ladies that lunch” 9 a.m. express Go train to Toronto and come back before rush hour. That’s probably the same thing the trophy-moms do.

Oakville actually has the worst shopping of any GTA area, the mall is really bad, you can’t even buy basics like tights, always out of stock and limited selection. For a shopping mall I go to Sherway Gardens in Etobicoke, that’s what most people would do, shop outside of the area.

#50 Lala on 03.25.14 at 8:57 pm

Lala don’t use google, lala go to library…. Why do you smoke?

#51 jan on 03.25.14 at 8:59 pm

#10 T.O. Bubble Boy on 03.25.14 at 7:03 pm
Oh – and to the note on retail stores/restaurants struggling: there are more “For Lease” signs on Yonge St. (Yonge&Lawrence area) right now than any time I can remember.

The same in van city.
Not only that, they sit empty for months and even longer.
Red for lease signs everywhere.
In my south east Van area there are 5 in a row with a for lease signs on the window one of whom used to be my fido store.

#52 Andrew Woburn on 03.25.14 at 9:01 pm

Did Hyman Minsky find the secret behind financial crashes?
http://www.bbc.com/news/magazine-26680993

QUOTE:

To generate an economic crisis or a sudden boom some sort of external shock has to occur – whether that be a rise in oil prices, a war or the invention of the internet.

Minsky disagreed. He thought that the system itself could generate shocks through its own internal dynamics. He believed that during periods of economic stability, banks, firms and other economic agents become complacent.

They assume that the good times will keep on going and begin to take ever greater risks in pursuit of profit. So the seeds of the next crisis are sown in the good time.

#53 DJG on 03.25.14 at 9:04 pm

Boutique retail has always been fragile. Most of the shops you’re talking about in Oakville are full of stuff that is affected much more by online retailers than it is by the size of mortgages. It’s also true that people have been bemoaning the death of small-scale retail for the same 30 years to which Hanna refers. I just don’t see the trends you’re describing. I see my friends and neighbours in Toronto buying art, travelling on $30k vacations, going on shopping trips in New York and London. There is certainly a profile of middle class homeowners who are stretched to breaking point, but the 1% are richer in assets AND disposable income than ever.

We have a blog full of comedians tonight. — Garth

#54 jan on 03.25.14 at 9:07 pm

#27 airhead princess on 03.25.14 at 7:46 pm
The desperation of Canadians to ‘look rich’ has overwhelmed the sense of morality , ethics and humanity in this country. Look at the recent example of the Portland Hotel Society and socialist political hacks in Vancouver. These do-gooders couldn’t help themselves from scooping six and seven figure salaries out of money intended for the poor. Imagine the mindset of these quango/civil servants/socialist politicians who racked up $9000 dollar limo bills driving through the country’s poorest postal code….literally past the face of the sickness the money was supposed to address. These champions took to upgrading hotel rooms to $800 per night in Disney Land and river cruises through Europe. The greed was spectacular.

What causes this sickness of over consumption among people who have never made an attempt to qualify themselves to actually earn the money they seek as an entitlement?

Is the basis of this greed a decades-old liberal philosophy mantra that ‘wealth distribution’ is part of a righteous class war? That city hall posts should pay as much as neurosurgeons? That cutting grass and planting seasonal bulbs should pay as well as a professionally qualified accountant? That handing out tickets on the Sky Train should pay upwards of $200,000 per year?

Where did this culture of class warfare and greed begin the ugly spiral of nasty jealousy and envy? Is it because advertising on heavy rotation is selling dreams to people who have no means to achieve possession of such things? Has the socialist liberal movement sold the concept of equalization between worker and professional and bred a culture of greed instead? Have the civil servants taken too many vacations to Cuba?

What makes these people envy the rich so much that they will beggar themselves and steal from the poor to ‘look rich’?

Well put.
What we really need is take it to the streets the way people do it in Europe.
Even if it means blood will flow in the streets of those who offended and sloe form us.
Until then nothing will change !!!!!!

#55 jan on 03.25.14 at 9:08 pm

sloe ….stole

#56 Chickenlittle on 03.25.14 at 9:09 pm

You’re right. The last time I was down in Oakville I was amazed at how many stores were closed. My favorite coffee place was closed too!

It’s sad because that’s one of my favorite places to relax.

I asked one shop owner why they were closing and they said the rent was too high.

Whatever. I’m from Hamilton: Oakville and Hamilton hate each other. You’ve got pretence and faux wealth on one side, and on the other a blue collar attitude mixed with a dose of reality. If you’re from Hamilton you don’t pretend to be something that you aren’t. It just doesn’t work!

#57 shawn on 03.25.14 at 9:10 pm

Thank Goodness!

these folks consume their cash flow just getting by, in activities adding nothing to their wealth or security. “The wealthy hand-to-mouth, therefore, behave in many respects like households with little or no net worth,

********************************************
An individual can get rich by avoiding much debt and investing 10 to 15% of income in (mostly) equities.

In order for this to work best we need a strong economy. In order for that to happen it seems you need most other individuals to go on spending like crazy. … So, thank goodness for these spend-it-all-and-then-borrow-and-spend-some-more people.

It’s sad but true, and I did not make them do it.

#58 Happy Renting on 03.25.14 at 9:11 pm

Oh Garth, stroking your blog dogs’ hopes of vultching someday! Though straight-up inheriting something nice is good, too.

I totally thought the sign was going to be someone panhandling for money to make the mortgage payment. There are a few cases where a hand-written sign in marker is acceptable, this is not one of them.

Read a new acronym to go along with DINK, PANK, yuppie: HENRY. High earner, not rich yet. You have to think, if you can’t get rich by *starting off* with lots of money, you’re doing something very, very wrong.

#59 bono on 03.25.14 at 9:12 pm

Garth, thank God your around to provide voice of reason.

The fact that I can’t remotely afford anything in the GTA with a modest income is ridiculous.

People are buying with no hindsight that this money on housing is sucking away for the later years. Its really sad. An interest rate spike or an economy downturn will put a lot of people underwater.

Keep doing what your doing. We need more people like you to show us the madness. And hopefully put an end to it.

#60 wallflower on 03.25.14 at 9:21 pm

Old downtown Unionville same thing as old Oakville. I walk it all the time and there is an increasing number of vacant store fronts. I see a lot of Chinese tourists with their cameras walking up and down the street (why, when so many vacant store fronts?). But that is the chief activity. I rarely see people in the stores that remain open. Restaurants do better than other retail, however.
I also see a whole lot of adults walking around in the mall (which just went upscale) but rarely see people buying in those stores. This is not like when mom and I went to the mall in the 60s and 70s when people went to shop and the shops were busy and people did not roam the concourses. Now, it’s the opposite. Roamers.

#17 LH on 03.25.14 at 7:16 pm
Lived there. Knew many others living there. Roach district.

#61 DC on 03.25.14 at 9:25 pm

Bidding wars coming north…!

Front page real estate ad/”news” in today’s Barrie Advance:
http://www.simcoe.com/news-story/4428673-few-real-estate-listings-leading-to-bidding-wars-in-barrie/

“We’re seeing competing offers on properties that come on the market if they’re in nice shape,” said Hay, who noted the Barrie market also benefits from retirees selling their Toronto homes and seeking to leverage their cash here.

“You have to be quick to make a decision if you’re a buyer. Someone else will be there waiting, ready to go.”

#62 Smoking Man on 03.25.14 at 9:27 pm

#50 Lala on 03.25.14 at 8:57 pm

I smoke cause I’m a bad, bad boy…

#63 Sheane Wallace on 03.25.14 at 9:28 pm

There is another term: NILIONERS

people with nothing leaving in million dollar homes.
Courtesy of H&F&M.C.&CMHC &Co

#64 Sheane Wallace on 03.25.14 at 9:28 pm

darn spellchecker. Living

#65 Kris on 03.25.14 at 9:28 pm

“..has always been lined with boutiques catering to those who think malls are where your employees shop.”

Great line, Garth, and it’s not an exagerration for that part of town.. I live a stone’s throw from there. Being a guy with a limit of one Starbucks latte per week, I’ve often wondered how those folks can get money to throw around.. Apparently they’re wondering the same.

#66 Andrew Woburn on 03.25.14 at 9:33 pm

The Fed has announced the results of its annual stress testing of America’s 30 largest financial institutions and 29 of 30 exceeded the minimum Tier 1 capital common ratio. Regulators use the ratio, which compares a firm’s common equity capital to its risk weighted assets, to measure a bank’s cushion against losses.
http://www.bloomberg.com/news/2014-03-20/fed-stress-test-shows-29-of-30-banks-meet-or-top-capital-target.html

I extracted and reordered a table from the Fed report showing the banks in descending order of strength. A pass is 4.0. Note that Goldman Sachs Group, Inc., JPMorgan Chase & Co., Morgan Stanley and Bank of America Corporation. are not at the high end of the scale.

13.3 State Street Corporation
13.1 The Bank of New York Mellon Corporation
13.1 Discover Financial Services
12.6 American Express Company
11.4 Northern Trust Corporation
10.7 RBS Citizens Financial Group, Inc.
9.2 KeyCorp
9 The PNC Financial Services Group, Inc.
8.8 Regions Financial Corporation
8.7 SunTrust Banks, Inc.
8.5 BBVA Compass Bancshares, Inc.
8.4 Comerica Incorporated
8.3 Fifth Third Bancorp
8.2 BB&T Corporation
8.2 U.S. Bancorp
8.2 Wells Fargo & Company
8.1 UnionBanCal Corporation
7.6 BMO Financial Corp.
7.6 Capital One Financial Corporation
7.4 Huntington Bancshares Incorporated
7.3 Santander Holdings USA, Inc.
7 Citigroup Inc.
6.8 The Goldman Sachs Group, Inc.
6.8 HSBC North America Holdings Inc.
6.3 Ally Financial Inc.
6.3 JPMorgan Chase & Co.
6.1 Morgan Stanley
6 Bank of America Corporation
5.9 M&T Bank Corporation
3.5 Zions Bancorporation

#67 Happy Renting on 03.25.14 at 9:34 pm

#32 – what #44 said. And you need some like-minded friends so you can live it up together when the RE party stops.

—–

#41 Mandria on 03.25.14 at 8:21 pm

Congrats on the baby-on-the-way! I’m glad your moments of self-doubt pass quickly, because you’re doing great. Sure, buy something if you want and you won’t gut your portfolio and over-extend yourself, but that’s hard in the GTA nowadays.

Raising a child in an apartment has challenges (we don’t have ensuite laundry or a dishwasher), but even more challenging would be having a child and being broke. THAT would be stressful.

We’ll eventually want a three-bedroom, so thank you for the tip on Forest Hill area! They’re not so common.

—–

#47 Bob Rice on 03.25.14 at 8:51 pm

Well, even if GTA prices stay insane forever, having diverse investments and following the rule of 90 set you up well to weather shocks that happen just to you or your family. In a crisis, the last thing you want is to have no money. You want cash around to make hard times easier and give you options.

#68 Sheane Wallace on 03.25.14 at 9:38 pm

As Garth asked me in the yesterday’s thread:
——————————
Explain exactly how the yuan is backed by gold. — Garth.
——————————
Gold is official central bank reserve according to Basel 3.

They are not hoarding it because it is pretty or is a ‘Bank tradition’ /Ben Bernanke/.

According to rumors the future reserve currency – the SRDs would be backed partially by commodities and precious metals.
—————————-
As for Smoking man’s comments on Putin and Russia I would not worry about them, they are busy negotiating gas and oil deals with India and China bypassing the dollar.

Maybe is time to buy ERUS and Gazprom (P/E of 2!)

#69 Sheane Wallace on 03.25.14 at 9:44 pm

The fact that BRICS is baking something is clear, this is why we have the panic lately. I really hope we get our act together as BRICS is firmly behind Putin:

http://economictimes.indiatimes.com/news/economy/policy/bric-countries-oppose-ban-on-putin-attending-g20-summit/articleshow/32616450.cms

If BRICS gets their act together first it is game over.
Make no mistake, Brazil is far larger and more important economy than Canada, India and China are 2.5 billions and Russia has all the resources and weapons in the world.

#70 sideline sitter on 03.25.14 at 9:47 pm

if the debt-free will inherit the earth, does that make me meek as well?

#71 GTA for lease on 03.25.14 at 9:49 pm

Drive around the GTA and you will see stores closing down or for lease signs everywhere and I mean everywhere. This is the conservative idea of a strong economy? Regressive Conservatives are out to lunch and distorting our economy. Garth is bang on when he said we exchanged factories for building condo’s. All this building on debt loads that people can’t afford to pay back. Have to vote liberals next election since Mr crazy Harper is a man who’s ambitions and desires trump what’s best for Canada and Canadians . Mr crazy will loan out a trillion dollars in sub-prime mortgages regardless if it starves the real economy. Canada is facing a world of hurt. Good job Mr crazy.

#72 TheCatFoodLady on 03.25.14 at 9:54 pm

Jan – your post #202 from yesterday deploring the lack of rentals being built for those of more ‘modest’ means.

There’s no margin in it for developers. Their costs to build won’t vary much, no matter if it’s higher end or lower cost rental. At whole sale, it doesn’t cost a ton to ‘tart up’ a unit & if that guarantees a higher return – that’s where I’d go as a developer.

Limiting rents to certain income levels means dealing with government AND following their rules for lower income housing. I don’t know a whole lot of landlords happy to do that.

I live in a ‘low rent’ building & more units than not are a mess, if not out & out trashed, when tenants leave. It doesn’t matter if they’ve lived there 1 year or 5.

In Ontario – electricity costs as well as gas are going nowhere but up; rentals with included utilities aren’t going to want to play the ‘modest rent’ game. Costs to operate rentals are rising quickly & I’m seeing more small landlords getting out of the game – just not worth it; you are likely to end up operating at a loss & if you’re not gaining equity – even on paper, what’s the point?

Housing in general in the hot & big markets. It doesn’t need housing to start sinking for the economy to be thrashed. If most of your income is feeding the house, there’s little to nothing left for consumer items. I think many of us are seeing more & more empty store fronts & they stay empty longer. When even the chains are hurting, it does not bode well.

#73 Nemesis on 03.25.14 at 10:11 pm

#AllegoricalTriptychs #”TruckDrivers”

http://tinyurl.com/mhd9bkx

http://youtu.be/9nRM8zfG9xE

#74 bdy sktrn on 03.25.14 at 10:19 pm

Okay, who can click on that link to the Atlantic story and not have the theme song to Weeds pop into their head??!
————————–
boxes , little boxes….

#75 saskatoon on 03.25.14 at 10:23 pm

#71 GTA for lease

vote liberal, conservative, ndp…it doesn’t matter.

they are all sides of the same mega-corporate coin.

outside the box thinking leaders needed.

just ask SM.

#76 Mark on 03.25.14 at 10:29 pm

Of course the economy doesn’t look so good. House prices pretty much across Canada have spent the past 8 months pretty much falling. The RE vendors have been able to play with the numbers (fast and loose I would suggest), but the evidence is strong that prices on “identical properties” have actually gone down and any increase in the ‘headline averages’ is largely an artifact of the changed sales mix.

BoC’s Poloz is going to have one heck of a time lowering interest rates enough to extricate Canada from this mess. A significant amount of US-style QE is likely to be required.

#77 Smoking Man on 03.25.14 at 10:44 pm

Re Mh370

Im a curious bastard. Tell me any you dogs tried this.

Chinese families claim they call people on the planes cell phones and got rings.

So I call my phone, and I get rings.

I turn it off, and goes to voice mail.

I turn it back on, put it in a zip freezer bag, submerged it in the tub……..

Goes to voice mail….

Take it out, call it again… It rings…

Sorry I got to go with alien abduction, worm hole time travel.

Cause the Narative on MSM, not working for me.

#78 Old Man on 03.25.14 at 10:49 pm

#4 Smoking Man: – I must say you would enjoy Mexico City in the Centro Historico, as that is where the writers hangout late into the evening seated in the park under the lights. Young women bring their violins to make music, and the good news is store purchased beer is sold in 16 oz. bottles for $1.52 USD. I hope you can dance the tango to make it festive as its party time under the stars – you will never come back.

#79 Nemesis on 03.25.14 at 10:52 pm

#BonusZen #BeardedTroubadours

http://youtu.be/Bi79wy97Wug

#80 KommyKim on 03.25.14 at 11:00 pm

RE: #72 TheCatFoodLady on 03.25.14 at 9:54 pm
There’s no margin in it for developers. Their costs to build won’t vary much, no matter if it’s higher end or lower cost rental.

I agree. Rents will eventually rise to a level that makes it profitable to be a landlord again. Resale prices of homes/apts may come down a bit, but not enough to keep rents low for any appreciable period of time.

#81 devore on 03.25.14 at 11:04 pm

#1 Sidera

Now watch all those commercial reits plummet along with the Canadian economy. No customers equals no cash flow for the reits.

What’s above all those boutiques? Yeah, 2-3 floors of condos. REITs don’t own these. They own marketable, diversified retail and office space.

#82 Joseph on 03.25.14 at 11:07 pm

#46 You mistook the janitor for the manager, or you made this up. — Garth

Not really, as a few of the Big 5 banks have a policy which lowers a mortgage payment to reflect the principal value of the mortgage already paid off when the homeowner is having difficulty in making payments due to financial distress (e.g. job loss). So, if your house is worth $200K, and you have $100K paid off in the house already, the bank can “roll over” part of the principal (equity) of the home into the mortgage payment for quite a while until such time as you get back on your feet financially, and can make full payments again. It doesn’t mean they accept nothing as a monthly payment alternative. The homeowner takes a hit but they are generally happy with the new setup if it means they don’t lose their homes. This setup can last years depending on how much equity you have established in the home, but people generally bounce back quicker. My branch manager expressed frustration with this policy as he cites that some homeowners who need this fallback plan are invariably indebted clients who take advantage of the lower monthly house payments by then going out and buying a newer car with the extra monthly income stream freed up by the bank. Instead of showing fiscal discipline after approaching the bank being scared to death that they will lose their house, they perceive that the banks are being compelled to prevent foreclosure, so they exploit the policy.

#83 Erik in YYC on 03.25.14 at 11:13 pm

#83 JL on 03.24.14 at 10:05 pm
Calgary is crazy right now…

I’m currently renting in the Calgary market and we’ve been looking for a house to rent or buy since January. Detached homes in the NW are very expensive to rent. We pay $1750 (up from $1500 last year) and can’t find anything comparable for under $2000. Lots of ‘executive’ houses in the $2500-$3500 range, though.

We’ve also looked at buying in the $400k-$450 range and have witnessed several bidding wars (participated in 2). Most are going for $50k-$100k over asking. Some of these houses are absolutely disgusting and would require a full gutting. We won’t even consider bidding more than $10k over and have been shutout of everything that is half-decent.

My theory is that anyone who wants to rent a detached family house /w garage is going to spent $1800-$2800 per month. At that rate, you can easily afford the payments on a $450k – $600k house, so what’s the big deal to overpay by $50k-$100k.

We’ve been saving diligently for 8 years and now have our 20% down payment + a decent investment portfolio. Just recently, our landlord decided to roll the dice and let us renew for another year. We will likely keep saving and wait for things to calm down next year.

#84 meslippery on 03.25.14 at 11:19 pm

# 43 Linda
plus you can drink without having to worry about being ‘over the limit’.
—————
Also not pay big $$$ for a beer that if bought it at the beer store would only cost $1.16 and If you like to smoke going out side this winter… No Thanks.
Also over priced food with 13% HST with 15%
gratuity. Only for the 1%. They have Limos and cash.

#85 GTAHouseHunter on 03.25.14 at 11:23 pm

Well,I have been meaning to write this for a while and doing so after a lot of deliberation.It has been nearly 5 years since I have been visiting your Blog.But my patience is wearing off, not that I will jump into buying a house right away.
But I have seen Semi-detached house go from 330K to almost 520K in the last 3 years or so with no respite.It seems that this would never stop.
You said the Fall of 2103 2014 would be very interesting,nothing happened,infact the prices seem to have slowly inched up since then.Now we are in Spring of 2014….lets see how that turns up.

So even if the prices stagnate and stay sluggish from here onwards it wouldn’t make too much of a difference as they have already jumped so high.

This example of Oakville is totally out of context as try going to an open house in Oakville this weekend and chances are you will run into atleast 2-3 offers on that property.

Well your suggestion of slow stagnation price decrease is not really happening.

#86 Debtfree on 03.25.14 at 11:39 pm

@70 SS define meek .

#87 Sam on 03.25.14 at 11:45 pm

Are people nuts ? I mean what about all the great places in u.s. why on earth anybody would want to buy in this cold and dingy canada. its just beyond me..

#88 Future Expatriate on 03.25.14 at 11:56 pm

Canada AND America need busing. That will fix the “good schools” real estate problem.

#89 ozy - you don't like it, move to London, UK on 03.26.14 at 12:03 am

You don’t like it in Toronto, move to London, UK

I heard houses are a bargain there…

Can we get a POST on London prices Garth? SQF, prices, etc, apples to apples

#90 John on 03.26.14 at 12:25 am

DJG on 03.25.14 at 9:04 pm
Boutique retail has always been fragile. Most of the shops you’re talking about in Oakville are full of stuff that is affected much more by online retailers than it is by the size of mortgages. It’s also true that people have been bemoaning the death of small-scale retail for the same 30 years to which Hanna refers. I just don’t see the trends you’re describing. I see my friends and neighbours in Toronto buying art, travelling on $30k vacations, going on shopping trips in New York and London. There is certainly a profile of middle class homeowners who are stretched to breaking point, but the 1% are richer in assets AND disposable income than ever.
—————————————————————–
You sad out of work realtor look so foolish with your obvious post that is full of lies. Drive round the GTA and see empty store after empty store after empty store with for lease signs EVERYWHERE. Never has the GTA seen so many mom and pop/retail stores closed down with even the big box stores taking a huge hit. Did you miss the evening news a few days ago where retail business interests in Canada are blaming the cross boarder guards for not enforcing cross boarder shoppers that are buying goods over the allowed limit without being taxed? That isn’t the real problem as maxed out consumers are tapped out and just not shopping(buying). Go to yorkdale mall and see the parking lot filled with tons of cars and then go inside and see 90% and greater are window shoppers. Realtors are not the only ones hurting real bad right now.

#91 Realtors are shameless scum of the earth on 03.26.14 at 12:35 am

http://www.thestar.com/business/economy/2014/03/26/ontario_women_at_both_ends_of_age_spectrum_hit_hard_by_recession.html

When Eva Saphir suffered two heart attacks at age 64, she felt her body was sending her a message.

#92 Christopher lackey on 03.26.14 at 12:47 am

In the financial post the other day two guys who had some success with
frozen yogourt business based out of london ON were talking about
expanding to quebec and bc. Why arent you in toronto was one of
the interviewers questions, almost incredulous. The guys were diplomatic but the real answer was obvious; opportunity cost too high. High rents and highly saturated market. Throw in three dysfunctional levels of government who can’t figure out how to build any new infrastructure and this likes a bad case of hubris. I am so sad what my hometown has become this culture of wannabe-rich poseurs trying to oitspend and out-douchebag each other. This blog is a sensible oasis in a desert of insanity

#93 Ilona on 03.26.14 at 12:57 am

to buy or not to buy that is the question… and a rhetorical one at that as scrolling through 100+ comments on my iPhone to see if my comment passed the moderation (2 out of 3 don’t) and if anybody replied makes me wonder what esteemed readers of this blog do for a living…

TD Waterhouse would like to inform you that the following New
Issue has just been announced.

Laurentian Bank of Canada  – Class A Preferred Shares, Series 13

Short Description: Treasury Offering of Non-Cumulative, Rate Reset Preferred Shares, Series 13 via Bought Deal                    
Price: $25.00 CDN per share.
Settlement: On or about April 3, 2014.

You are deemed to have received the prospectus as they are available
to you on WebBroker.

too brain-dead after work to look at the prospectus… and maybe as with RE by the time i do look and decide to buy – the shares will be sold to the highest bidder(s)… need to unsubscribe from all the condo/stock junk mail… but loved the closing sentence of today’s post :)

#94 prairie person on 03.26.14 at 1:25 am

Garth, I believe you. What you say re house prices makes sense. There are disasterous stories about people trying to unload property on the islands and Sunshine Coast but there’s a neighbourhood here that I visit occasionally, six new houses, 5 sold, people have moved in, 6th isn’t quite finished, two empty lots back a bit from the water, been for sale for some time, one just sold. I see this and say to myself, who are these people? The local real estate hotshots say prices are going down but that seems to have stopped, or paused, and houses are selling. What the overall numbers are, I don’t know. But five house buyers and a lot buyer in this small area have been writing cheques.

#95 Hickster on 03.26.14 at 1:38 am

I had a chance to see falling prices in real recently. I currently rent a condo, which the owner is selling. There are 2 other units for sale in the same complex. Our unit is slightly nicer – ground level bungalow vs 2nd level 2-story. Owner priced 5K under the others, and they instantly dropped their prices. At least 15 other units are for sale in a different complex accross the street, many of them for months. Condos are not moving.

#96 Andrew Woburn on 03.26.14 at 1:41 am

#193 Ralph Cramdown on 03.25.14 at 3:34 pm
#173 sheane_wallace — “You need dollars to buy oil and commodities, this is it, once this changes there
would consequences.”
==================================

The goldhumper sites are full of predictions of the imminent catastrophic end of the dollar’s reign as the global reserve currency. Americans will apparently then be reduced to begging for euros on the streets of Paris. The arrogant US will no longer be able to just print money whenever it feels like it and run up ridiculous debts to support its warfare/welfare economy. Foreigners will stop buying US government debt or demand interest rates that will torpedo America’s economy. America will be crushed beneath the hooves of the Asiatic hordes and never rise again.

Well, maybe. But why exactly? First the petrodollar concept and the reserve concept are distinct from each other. Yes, the US persuaded Saudi and the other Gulf States to price their oil in dollars in exchange for US military and other support, but that didn’t bind any other oil producers such as Russia. If Russia prices oil in USD, it is not to make nice with America, it’s because they would rather take dollars than pesos, or yuan. My guess is that these side deals to trade oil in other currencies will turn out to effectively be barter deals because vendors will want to turn the sketchy paper they receive into hard goods ASAP.

The US dollar is a called a reserve currency simply because central banks are allowed to include it in their reserves along with others such as the Euro, Swiss franc, the Canadian dollar and gold. These are strong currencies which are safe to hold for more than five minutes. The USD is a reserve currency because it is strong, it is not strong because it is a reserve currency.

International businessmen use the dollar because it is the most stable currency, not because central bankers like it. If China and Russia could create a “yuble” that had superior features, they would use that instead. Don’t hold your breath. Ralph isn’t.

The doomsters breathlessly predict the crash of the USD. I assume this means relative to other major currencies. The relative value of the USD against a basket of major currencies is measured by the US dollar index. The index in 2000 had the dollar around 100. Now it’s at 79. Is this a crash? Should I break out the survival gear?

#97 Freedom First on 03.26.14 at 1:47 am

Garth, your last sentence in today’s post is perfect.
You are very kind and tactful with people Garth.

The people who fit into that description will appreciate it, both for the simple and absolute truth of the message, and, also as a reminder to them to never let their EGO get out of control.

For the EGO is the main culprit in the ruination of human beings. Birthing an unfounded arrogance so many people unknowingly cultivate, but who can not, or will not see the folly of their own false pride. Yet this 1 character defect alone is a sickening self castrating steadfast refusal to see their own ignorance/blockage of the obvious real truth, the truth which is always revealed by the rational thinking of adhering to basic principles and fundamentals which never lie.

And Garth shares this wisdom on a daily basis, for free.

I will put forth a simple question to the real estate brainwashed. Is it sane to put all of one’s net worth into any 1 asset?

If you answer yes, You are financially insane. No exception.

#98 Fortune500 on 03.26.14 at 2:48 am

#18 Love it! We are proud members of this rare species as well.

#99 Outrage on 03.26.14 at 4:01 am

Garth, do you condone this behavior?

http://m.scmp.com/comment/blogs/article/1457626/let-us-canada-or-give-us-c5m-axed-investor-migrants-demand

#100 Outrage on 03.26.14 at 4:10 am

Finally:

Joke is on you. Toronto SFD prices will average over $1 million soon. Yvr prices passed that mark ages ago…we thought it was nuts but they are much higher now .

The world is awash in money. Its confusing to those on this blog because they don’t have any.

#101 eddy on 03.26.14 at 4:17 am

#71 GTA for lease on 03.25.14 at 9:49 pm
==
So the ‘we’ who exchanged factories for condo construction includes everyone but Liblerals?
The ‘we’ are individuals and organizations who have names. They’re up to no good.

#102 Waterloo Resident on 03.26.14 at 4:33 am

Seeing the signs of the Chinese economy slowing down was the first shoe to drop.

Then seeing some really large scale debt defaults was the second shoe to drop.

Now the panic is beginning to spread and ordinary citizens are creating BANK RUNS in China.

If this continues for a few weeks, things are going to get worse, really really worse. If a few large banks in China find they cannot pay back all of the depositors wanting their cash out, they will start imposing capital controls, and when that happens all hell will break loose down in China.

I don’t know if it will affect the American Stock market or not.

If the Chinese financial system collapses, will the American and Canadian stock markets even notice it?

#103 World Traveller on 03.26.14 at 4:52 am

#22 LALA
Great blog, but post like this make me vomit. Why don’t you share what did you ate for breakfast, that might be interesting as well.

***

I don’t know why Garth doesn’t pull the plug on this guy, comic relief I guess, but it would be nice to be able to put his posts on ignore.

#104 World Traveller on 03.26.14 at 5:12 am

#41 Mandria on 03.25.14 at 8:21 pm
30 years old. No debt. 2 employer pension plans. Maxed out TFSA’s (indexing strategy). Rent a beautiful 1250sq/ft 3-bedroom historic apartment in Forest Hill for $1500/mth

***

Keep going, you are the envy of your generation, even though no one will acknowledge it.

#105 Steve French on 03.26.14 at 5:44 am

#22 Lala please watch your language with our resident jester in the high court of Sir Garth a Lot.

That is…. the Smoking Man.

Nobody puts Smoking Man in the corner.

#106 Fortune500 on 03.26.14 at 6:03 am

Good article today over at the Motely Fool on Canadian Real Estate:

https://www.fool.ca/2014/03/25/6-signs-canadas-housing-market-is-a-bubble/

Of course, the average Canadian will not be looking there, and even if they did, they would probably use the usual justification… Something like, “People have been saying this for years. It hasn’t happened, therefore it won’t happen.”

#107 Meck on 03.26.14 at 6:18 am

In the last week one house on almost every block in the Upper Beach is either for sale or “coming soon.” I’m thinking that will cool prices then I see TD offering 2.99 for four years….

#108 robert james on 03.26.14 at 7:17 am

Ham is a bit PO ed as it were !!! http://www.scmp.com/comment/blogs/article/1457626/let-us-canada-or-give-us-c5m-axed-investor-migrants-demand

#109 Gord on 03.26.14 at 7:29 am

Have you seen the parking lots at your local Wal-Mart, that is where you will find the Beemers and Acura’s.

As long as renter are considered second class citizens, since it is assumed the only read on one would rent is they can’t afford to buy, people will continue to buy over-priced real estate.

As a renter, I know that many people think I rent because I can’t afford to buy. I rent because I can afford not to buy.

Quality rental apartments are getting harder to find ( outside of Toronto at least) due to building being converted to condos and no new units coming on stream. At least that is the case in the Hamilton area.

Governments need to require multi-unit developers to build equal number of rental units for each unit for sale to keep an adequate supply of rental accommodations on the market.

#110 Clueless About YYC Income Growth on 03.26.14 at 7:31 am

Garth, you just keep sipping on that koolaid. People need to live somewhere, and as has been pointed out repeatedly here, renting in YYC is presently more boneheaded than owning.

Also, stagnant income growth you say? Nearly every person I graduated is experiencing 10% to 20% income growth annually. Perhaps the Tim Hortons and hotel staff class of worker isn’t experiencing income growth, but should they really have owned a house in the first place?

Personally (I have to brag a bit), I have experienced income growth to the tune of 550% year-over-year from 2013 to 2014. And my starting point was already six figures. Go ahead. Correct the price of my home by 30%. It’ll be paid for at the end of this year anyways.

So, you received a $500,000 raise to do what, exactly? — Garth

#111 robert james on 03.26.14 at 8:23 am

Let us into Canada or give us 5 million dollars … Has anyone ever sued to get into a country before ?? This must be the twilight zone !!!! http://www.scmp.com/comment/blogs/article/1457626/let-us-canada-or-give-us-c5m-axed-investor-migrants-demand

#112 BG on 03.26.14 at 8:32 am

#57 shawn

Borrowing for a mortgage does not sound like the best way to boost the economy.

#113 Mr. Frugal on 03.26.14 at 8:59 am

#41 Mandria on 03.25.14 at 8:21 pm
==================================

You’re on the right track and don’t let anyone tell you any different.

Financial security will bring alot more happiness and peace of mind than flashy toys.

#114 shawn on 03.26.14 at 9:05 am

Boost the Economy?

BG at 112 said:

#57 shawn

Borrowing for a mortgage does not sound like the best way to boost the economy.

*****************************************
It’s a decent way to boost the economy, but at today’s prices probably not a great way to get rich.

As this article says some people blew their entire boost on the mortgage payments and have nothing left to spend elsewhere in the economy. But mostly they do find ways to borrow even more (on credit cards and such) and the economy is doing okay.

We equity investors need these people to spend. Sad but true.

#115 The real Kip on 03.26.14 at 9:15 am

“It speaks for itself. The pursuit of wealth, without money.”

You got all that from a finger sign on a truck? Wow. What if it had said “wash me”? What would that have meant?

When realtors market houses to people without downpayments, only the fools believe it’s inconsequential. — Garth

#116 :):(Ying Yang on 03.26.14 at 9:18 am

#4 Smoking Man on 03.25.14 at 6:33 pm
Ying Yang….
4 James Street, just sold for 880.00 was that your buddy.
Go LongBranch, soon I will need to move to Hamilton, I don’t like classy hoods. Kills my creativity.
Screw it… Mexico even better.
……………………………………………………………………….

No he and his wife opted for Bloor Islington area, still looking but I told him you can not find a home for less than $780K there and it will be small, a box around 900 square feet. I’m single and I could function in that square footage let alone with three others. His wife likes the shopping, restaurants, pubs and subway line. I thought James st property had potential but not at that price. They just did not like the neighborhood for their children, 3 year old and 6 year old.
When I worked in the US we were close to Mexico and could hop the border. Unless you get to a ex-pat zone every other place is downright scary. Hablas español?

#117 Dee on 03.26.14 at 9:23 am

I’d hate for anyone to miss seeing this:
http://www.theglobeandmail.com/globe-investor/funds-and-etfs/etfs/etf-giant-blackrock-slashes-fees-on-its-core-funds/article17674849/

If (like me) most of your portfolio is made up of ETFs, this is great news.

#118 Clueless About YYC Income Growth on 03.26.14 at 9:23 am

Well, Garth, it certainly wasn’t for writing a blog. ;-)

Given this is a public forum and my income is tied to a large amount of proprietary information, I’ll keep it to myself. But if you have any disbelief, I’ll gladly email you a copy of my T4.

[email protected] — Garth

#119 DJG on 03.26.14 at 9:24 am

John #90: What you and many others on this blog don’t get is that a small number of people in Toronto and elsewhere are making more money and are richer than ever before. It is not possible to live well on anything like the average family income in these places, but the top end is doing better than ever. You can get angry about this, deny it, throw insults around all you like, but it doesn’t change that it’s true. I am certainly not a realtor and think that most realtors are useless, barely literate parasites. A structural change in the retail and manufacturing landscape is to blame for the decline of the mom and pop stores you’re referring to; real estate as a factor is a rounding error compared to what is really influencing this sector of the economy.

#120 Ray Skunk on 03.26.14 at 9:31 am

Meanwhile every other week TD is hitting me with something, be in pre-approval for a new credit card, pre-approval for a line of credit, or pre-approval for a mortgage.

Sorry, not interested.

Opposite strategy for me – I find myself doing very few kms since I work from home, pleasure driving only in fact. Therefore I’m selling my 2012 vehicle for >$20k, buying a 1986 for <$10k. The '86 has bottomed out on the depreciation curve and examples are starting to increase in value. The 2012 only has one way to go.

Taking the $12k difference and investing it.

Plus I'll have a nice hobby to keep me occupied on Sunday afternoon.

Friends are dumbfounded. But the 2012 is shiny! And new! TD should be reaching out to them.

#121 jess on 03.26.14 at 9:33 am

#52 Andrew Woburn
who drives the feeds?

ex goldman sachs trader tells the truth about trading part 1 2 3
http://www.youtube.com/watch?v=LoIJZEbOLuc
===
BBC Speechless As Trader Tells Truth
Secrets of a former high speed trader
http://www.youtube.com/watch?v=itxbyXO67XY
===========
read Ben Hallman’s article regarding
Housing Watchdog Slams Massive Property Inspection Industry
===========
satellite view inspections?

“This is an emerging and serious statewide problem,” said California Insurance Commissioner John Garamendi. “Insurance companies are using satellite imagery and just plain photos to red-line vast areas of the state without taking into account the individual circumstances of an individual home.”
http://www.consumerwatchdog.org/story/inspections-surprise-homeowners

#122 Steven on 03.26.14 at 9:34 am

These huge real estate prices and debts have got to be having a negative impact on the real economy that requires the purchase of goods and services in order to function and maintain employment of people.

While looking at the Kijiji apartment rental adverts I keep seeing 800 to 1500 a month rents on 1 to 3 bedroom apartments. For the $10.25 an hour worker that is 2, 3 and nearly 4 weeks pay a month just for rent. For a home if you are buying the local average is over $300,000 which means you need a six figure income which amounts to $2,000 a week in earnings.
Clearly real estate prices are out of line to the point of being a crime against humanity and the economy.
If you have to pay more than a weeks pay to rent or buy you are paying too much.

#123 Daisy Mae on 03.26.14 at 9:40 am

#5 Son of Ponzi: “In Richmond and Vancouver West there’s no furniture. The are all empty…”

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

Uninhabited? Or are the owners too poor to buy furniture?

#124 Holy Crap Wheres The Tylenol on 03.26.14 at 9:45 am

Oakville is a wealthy place. Four times the number of affluent people live there as in the rest of the GTA, and its main street, from Trafalgar Road to the river, has always been lined with boutiques catering to those who think malls are where your employees shop. Just what you’d expect in a place where the average house costs almost $750,000, and homes of historic significant are three times that.

But all that is changing. Empty storefronts now mar the boulevard, and retailers are so pinched they’ve taken to moaning to the media, decrying what a soft economy is doing to the seemingly affluent.

_____________________________________________

As an Okvillian I can attest that some of this is true. Stores have closed, however before that store closed another was in its place. Another boutique will come in its place. Believe me in downtown Oakville there are no strip malls nearby. It is just a sign of the times. I do agree with the fact that quite a lot of newcomers to Oakville are mortgaged to the hilt for their McMansions. That’s because quite a few of the nouveau riche young professionals think that bigger is better and spend money conspicuously or that the 5000 square foot home is a good investment. Yes that makes a lot of sense when I see two or three people living in these homes. Hell I make more money than four of these couples together and I still live in the home I purchased back in the 70’s. My wife and I never up-sized the home, (ranch bungalow 2400 sq ft). Its worth over $1.8 M but what do I care. I need a place to live, its paid for and I can park four cars when friends visit. I have enough space for the seadoos, all the boat crap for the 40′ sailboat. Its’ not the old that will crash and burn its the nouveau riche that are stretched. They can no longer afford the high end foreign car, $150 dinners for two downtown, the private school for kids and as you stated the $30K vacations. Start saving, invest wisely and if you can’t afford it, don’t buy it as you don’t deserve it! Rant over!

#125 George on 03.26.14 at 9:47 am

I am not a real estate agent. I am just a lowly renter in the Vancouver area. I do think this real estate bubble still has some steam to keep growing. I think Canadians are absolutely obsessed with real estate and will do whatever it takes to buy, whether or not it makes any financial sense.

Regarding HAM–I know this is a sensitive subject on this blog, but a lot of people in Vancouver are looking at what is going on right now in China. The panic in China seems to be limited to China/Hong Kong right now. There are stories of Chinese investors who bought real estate in Hong Kong putting these properties up for sale with steep discounts as they are desperate for liquidity. Just because it is happening in Hong Kong, doesn’t mean it will happen in Vancouver, or Toronto for that matter. For Chinese investors, Hong Kong real estate is entirely about finding a safe place to store money. That’s it. With Vancouver real estate, the motivations of Chinese investors are more complex. Yes Vancouver real estate is a way for Chinese investors to store money. But it also serves other purposes as well. Vancouver real estate represents a second home for Chinese investors. Vancouver is a place where they can come to breath some fresh air and enjoy some natural tranquility. People don’t go to Hong Kong for the fresh air or natural tranquility. Chinese investors will sell their Hong Kong and China real estate holdings first if they need cash. They will sell Canadian real estate last because they want to keep their options open and have a place to live if they want to leave Asia.

Waterloo Resident #102 said the situation in China may lead to capital controls in that country. Again, this will not necessarily take the steam out of the real estate bubble in Vancouver (or Toronto). China already has capital controls. The reason why Chinese wealthy elite are buying Vancouver real estate is that they are trying to get around China’s capital controls. If China increases capital controls, that might just lead to even more money trying to get out of China and be free of capital controls–so more Chinese money going into Vancouver real estate.

I won’t be popular for saying this, but I also think Toronto real estate has a lot of room to grow higher. We are so used to high prices in Vancouver that Toronto real estate looks cheap. If it’s a SFH (or even attached rowhouse) and it’s in the 416 and it’s under a million, that looks very cheap to a Vancouver person. Toronto has better jobs and more exciting night life than Vancouver so there is no reason why Vancouver real estate should cost more. Many people are looking to leave Metro Vancouver because of what’s happening here with our government constantly raising taxes and all the tolls on the bridges and the insane traffic congestion. Even though those are all problems in Toronto, someone from Vancouver who lives in the suburbs might actually be able to afford to live closer to downtown and have a shorter commute if they moved to Toronto where the real estate is more affordable. Toronto looks really good compared to Vancouver.

Yes, it’s insane. This whole bubble has been insane. No reason for the insanity to stop now. Interest rates are still low and HAM is still flowing. This bubble has already lasted longer than anyone thought it would and I wouldn’t be surprised if it goes on for another 10 or 20 years.

Then prepare to be surprised. — Garth

#126 High Plains Drifter on 03.26.14 at 9:53 am

My, my, the blue bloods are feeling distemper at the impertinence of low brow knockoffs. But for the little, lady’s money, “there goes I”. Those management fees are keeping me in $250 shoes butt my silk undies are in tatters, tatters, I say. Still those of us who were removed from the printing presses find ways to print up some of our own script. I will say it is love of real work that has been my saviour in this material battle. Making deals with reasonable people but knowing I work for myself and my people.

#127 2Cntsdn on 03.26.14 at 9:58 am

The closing store fronts phenomena in Oakville is interesting. I live in Aurora (40+ years) and I see it here and near by Newmarket as well. Long standing “nicer” retail stores and restaurants along the main drag (Yonge St.) have been quietly closing the last 6-9 months. What’s popping up are small ethnic food restaurants with goddy yellow and red banners screwed to the front of the store and loud signs with neon letters on the sidewalks. The main strip now has 2 or 3 tattoo shops. Its starting to feel like a drive through Scarborough or Brampton. The industrial section of town also has many more “for sale” and “for rent” signs than usual. I can see the economy slowing and even in this town of above average income …. people are strapped. Forget what you read ….. things ARE slowing, people ARE hurting.

#128 frank le skank on 03.26.14 at 10:09 am

#110 Clueless About YYC Income Growth on 03.26.14 at 7:31 am
Personally (I have to brag a bit), I have experienced income growth to the tune of 550% year-over-year from 2013 to 2014. And my starting point was already six figures. Go ahead. Correct the price of my home by 30%. It’ll be paid for at the end of this year anyways.
———————–

Here we have the greatest fool of all – A person who brags about losing 30% on an investment.

#129 Holy Crap Wheres The Tylenol on 03.26.14 at 10:09 am

Putin may have opened a can of worms for Russia. Nationalism, rules on both sides of the border. It raises the issue of the Russian minorities in other parts of the former Soviet empire, notably the Baltic states and Kazakhstan, where 25 per cent of its 17 million people are Russian. Is Putin is trying to recreate the Russian empire of tsars and commissars? Furthermore, Stalin drew the boundaries of Central Asian states to include large minorities from neighbouring ones, and used deportations of ethnic groups and settlement of Russians to dilute non-Russian nationalism.
In the longer run, Russian ambitions are doomed by demography – Russian populations are shrinking while those of Kazakhs, Uzbeks and the like continue to rise. But, meanwhile, Putin has given notice that he can and will use ethnic Russians as levers. Ethnic-based politics, however, is a two-edged sword. Putin may have largely suppressed the Chechen separatists but Chechnya’s majority Chechen population would relish freedom from the Russian yoke. The same applies to Dagestan. So Mr Putin what are you going to say when Chechens decide to leave mother Russia? Now the question is what will the ball-less west say when this happens? Hmmmm We support it? We didn’t support the Crimea severance from Ukraine but we support the Chechen or Dagestan severance from mother Russia. Problems for both mother Russia and the west!

#130 Calgary Rip Off on 03.26.14 at 10:19 am

Another incorrect post.

Irregardless of financial status the person in receipt of the bank loan doesnt own the house, the bank does. You own a mortgage.

Given that reality, do you really expect people to take risk and wait to buy a mortgage given current trends in cities like Calgary? This has nothing to do with “house lust” or other juvenile definitions. It has to do specifically on the discomfort of renting long term knowing full well that prices of properties continue to climb. Posting about “house lust”, getting mortgages when financially stressed really doesnt help. There arent enough reasons specifically as to why a person shouldnt do this. So a person waits 15 years and rents. Then they buy a mortgage. Housing costs have gone up by that time, and all that rent money is gone. And now they have an additional 25-30 years of mortgage to pay. How specifically is that any worse than taking a gamble with what is right now and getting a mortgage rather than waiting? It is very very easy and comfortable to give advice to those in this situation and I highly doubt the owner of this blog could do what he is advising people to do because both options, waiting to get a mortgage and getting a mortgage often involve enormous amounts of emotional and psychological pain. There is no way around this pain. Instead of addressing the very real concerns of managing this pain surface level nonsense is addressed which really doesnt matter. People want a place. It could be argued that even with mortgage ownership that a flying bus could land on your roof, you could be shot dead in your bathroom, anything could happen, but what really is lacking here is a systematic cost and benefit analysis of specifics of each area in all the major cities such as Calgary and others. Why hasn’t this been done? It cannot be done because advice on the future is only speculation and therein lies the argument that many will get a mortgage and take a gamble on the future. The argument to rent only takes precedence if a person wants to move in Calgary in 1-10 years. If a person will be employed for the next 30 years in Calgary-best to get a mortgage.

There is the argument that all housing will crash in Calgary. That certainly is a possibility given trends. The real question is, if a person wants to own a mortgage, is there enough time and their employment sector is it resilient to crashes? If they will be working another 30 years is it really best to wait until prices really skyrocket and then pray that prices will crash? This is reactive thinking and for some it may provide comfort and mobility if their retirement is sooner rather than later. For others, younger people, they will be renting a very very long time which seems an unwise strategy tactically and long term.

Ultimately as long as a person has clean water and air, edible food and reasonable health the issue of whether to rent or buy becomes quite clear looking at the life and death matters such as basic necessities. In Toronto and other provinces there may be protections afforded renters that are non existent in Alberta. Many of the landlords are creeps and this is specifically why people dont often want to rent here they would rather not deal with these people and I agree despite the fact that housing has remained a total ripoff since 2004 in Calgary.

#131 DM in C on 03.26.14 at 10:20 am

Ilona:

“makes me wonder what esteemed readers of this blog do for a living… ”

I often wonder the same…. perhaps a quick poll. I’ll start:

VP for software company in YYC, no connection at all to O&G.

#132 Aggregator on 03.26.14 at 10:20 am

Living in retirement: How and why I sold my downtown Toronto condo

When I decided to sell my condo in Toronto’s trendy Queen West district, my real estate agent did everything possible to alert me to the challenging conditions of today’s condo market. Unlike the giddy real estate flyers that land weekly in my mailbox, my agent calmly laid out listing and sales spread sheets for my building. The numbers tell the story: flyers raise expectations. Spread sheets keep it real.

Of the 88 condos in my downtown building listed from April 2013 until mid-March 2014, only one unit, a moderately priced one-bedroom, one-bathroom, sold for more than the listing price of $345,000 and that was by $6,000. Most units sold at $5,000 to $10,000 below the asking price. Thirty-seven units never sold at all. The overwhelming reason for that is they were overpriced.

Oh so you mean when an agent actually provides a client with real information (inventory matrix, actual DOM and original list price), the math shows condos are a losing investment? That's shocking! (but once again explains why organized real estate doesn't want data to be public).

But hang on, this story gets better, because Joyce Wayne was a speculator, as noted in her column Trading a suburban house for a city condo in October 2013

Instead of renovating I decided to downsize to a condo. I’d also set my mind on moving back to the city. Life in the burbs, however pleasant, was lacking the artistic and literary stimulation I was yearning for. The ultimate goal was to be debt free and on the fast lane to retirement.

With my heart pounding, I bought a two-bedroom condo with an expansive terrace. From plans. Purchasing a residence from builder’s drawings is at best a gamble, but I chose a condo on a raucous stretch of Queen Street West in a western neighbourhood downtown Toronto.

A gamble indeed, because she couldn't see this view based on her floor plans, but luckily was able to get out with only a minor loss.

#133 Daisy Mae on 03.26.14 at 10:23 am

#41 Mandria: “….raised 3 kids on a single income (blue collar salary) with a stay-at-home. Never tried to keep up with the Joneses, spent their pennies wisely.”

**********

Diddo. It can be done. And without doing without. You can still have the toys — RV, boat, motorcycle.

#134 Penny Henny on 03.26.14 at 10:25 am

#56 Chickenlittle on 03.25.14 at 9:09 pm
Whatever. I’m from Hamilton: Oakville and Hamilton hate each other. You’ve got pretence and faux wealth on one side, and on the other a blue collar attitude mixed with a dose of reality. If you’re from Hamilton you don’t pretend to be something that you aren’t. It just doesn’t work!
——————————————————–
Hey Smoking man, this just in.
Hamilton doesn’t want you.

#135 Daisy Mae on 03.26.14 at 10:46 am

#71 GTA: “This is the conservative idea of a strong economy? Regressive Conservatives are out to lunch and distorting our economy.”

**********

Yes. But what else can the government say? They must sound optimistic in spite of the truth. They’ll grab at any straw. The “our economy is strong” ads are tiresome. I have a friend who believes Harper is wonderful, the economy is strong, employment is rising…simply because she believes what she wants to believe. And ya can’t fix ‘stupid’…..

#136 Clueless About YYC Income Growth on 03.26.14 at 11:05 am

#128 frank le skank
Here we have the greatest fool of all – A person who brags about losing 30% on an investment.
———————–

Hey, call me a fool all you want. My bank balance and investment portfolio are doing far better than 30% per annum. Cash is king, but volatile markets (read: NOT equities) are the trump card if you know what you’re doing.

#137 Mixed Bag on 03.26.14 at 11:12 am

Curious, instead of parents over-extending themselves “trying to buy their way into what they perceive as a good school district”, would they be better off living in an affordable home, and sending their kids to private school? Assuming the affordable area is a not good school district.

We’re currently in this situation. At the moment, staying put makes financial sense, we can afford the place on one salary should anything happen to the other’s job, big yard for the kids, family nearby, but the schools rank poorly on the Fraser report (mind you there are a lot of ESL kids here). My little ones are quite young, I’m not too concerned about the kindergarten years, but as they get older, I do wonder if moving up (sigh) or going private would do them better. Thoughts anyone?

#138 Daisy Mae on 03.26.14 at 11:14 am

#90 John: “That isn’t the real problem as maxed out consumers are tapped out and just not shopping(buying). Go to yorkdale mall and see the parking lot filled with tons of cars and then go inside and see 90% and greater are window shoppers. Realtors are not the only ones hurting real bad right now.”

**********

Exactly what I witness here in the sunny Okanagan — 90% of mall shoppers are window shoppers. Including me. I see store clerks trying to look busy….

Stores are closing, chains are cutting back…even Walmart. There are no ‘greeters’ on the job before noon when business picks up.

And, thanks to Garth, I’m always asking myself: “Do I NEED it…or do I just want it?” :-)

#139 Old Man on 03.26.14 at 11:17 am

There is this continual confusion why HAM is coming from China to buy property in Canada. In China the State holds title to all urban land, and the buyer or user of property that is built obtains only the use right. Thus it becomes a land lease of sorts lasting for a period of time, and to buy a home in China, the buyer never receives title. What a deal!!!

#140 Just some guy on 03.26.14 at 11:18 am

On my way into work this morning, I had to deal with the usual assortment of frantic drivers who jammed and crowded themselves into every space on the roadways in their desperate efforts to get to where they are going. My approach, as a driver and a former rider is to simply back off, leave lots of space, and to be content that although I am not moving as fast as I would like when cars cut in front of me, at least I am not moving backwards (yet). I also get to keep the car out of the body shop, always a good thing.

What I am seeing more and more of though, in the last few years, is a marked increase in the sheer desperation and panic that seems to have gripped many drivers. I see lots of people getting tail-gated, being cut off, and blocked from either entering or leaving the roadways. What is the cause?

I believe that Garth has nailed the reason why there are so many angry and frustrated people out there. This middle class group of probably well educated and reasonably intelligent people are enduring the long-term effects of being in debt up to their eyeballs. And this applies to young and old. How many people do you know who have had to remortgage their houses or rack up ruinous amounts of debt through HELOCs or credit cards? While some of it may be poor money management and a failure to budget, a fairly high amount of it is just people who are financially in way over their heads and who go into a panic mode. Garth’s post makes this abundantly clear.

And of course, in a car, this panic and frustration will be expressed as anger when they encounter some obstacle or impediment. There is no reasoning with these people. Sadly, there is not much hope for them either.

As an aside, I implore anyone that is riding a motorcycle to be extra careful this year. I don’t ride anymore as I suffered a bad accident in 2006 thanks to a distracted driver. More to the point, I let my guard down and I got smacked. But for those of you who do ride, please be careful out there this Spring. Given the increased number of potholes, the ever present distracted drivers, the wannabe racers, and other hazards, it really could be a bad year for possible accidents. You really are invisible. Please ride safe.

#141 Smoking Man on 03.26.14 at 11:22 am

#134 Penny Henny on 03.26.14 at 10:25 am

Hey Smoking man, this just in.
Hamilton doesn’t want you.
……….

Nor does God. Can’t please everyone.

#142 Ray Skunk on 03.26.14 at 11:22 am

#132

“Instead of renovating I decided to downsize to a condo. I’d also set my mind on moving back to the city. Life in the burbs, however pleasant, was lacking the artistic and literary stimulation I was yearning for. ”
———————————————

Lord, spare me. It’s this utter tripe that makes me despair about Toronto.

Let me get this right… there’s no artistic or literary stimulation in the suburbs… where you can have a big garden, peace and quiet and you’re only ever a bike ride away from nature? Yet artistic stimulation can be found in Queen West identikit high-rise among dozens of others, and in the local globalization brand coffee shop?

Give me a break. Another reason for living in the ‘burbs: avoiding pretentious characters like this.

#143 Bottoms_Up on 03.26.14 at 11:23 am

#130 Calgary Rip Off on 03.26.14 at 10:19 am
———————————————
It’s either ‘regardless’ or ‘irrespective’.

Not ‘irregardless’, although that word has probably worked it’s way into wikidictionary by now.

#144 Bottoms_Up on 03.26.14 at 11:26 am

#124 Holy Crap Wheres The Tylenol on 03.26.14 at 9:45 am
————————————————–
They don’t deserve it but you do? Because you won the generational lottery?

#145 Bottoms_Up on 03.26.14 at 11:28 am

#2 Paully on 03.25.14 at 6:18 pm
————————————–
A handful of homes available for purchase in a market of millions of people. It’s a huge supply/demand imbalance.

#146 airhead princess on 03.26.14 at 11:49 am

The ‘middle’ might be empty…as you suggest…but the ‘upper middle’ of the elite civil service is doing just fine thank you. The piggishness has gone to such an extreme….I guess it’s become a ‘monkey see monkey do’ environment in the public service.

http://www.vancouversun.com/business/Speaker+Linda+Reid+billed+taxpayers+thousands+business+class+flights/9660116/story.html

Since when did seven figure salaries and pensions….European luxury trips and African Safari’s become a standard ‘perk’ for the elite class…. whose dictatorship has run it’s course…. methinks.

Where is the outrage? Where are the police in all this. If I stole ( allocated on my personal lifestyle) that much from my employer as a custodian of company funds…. I would be put in jail…..no doubt about it. Are we to assume that because this stunning greed is done by the civil servant….that the civil service is above the law?

#147 Lurker on 03.26.14 at 11:53 am

Speaking of entitled, the young couple profiled in this article want it all… NOW! Apparently they are doing almost everything right.

http://www.moneysense.ca/debt/how-to-pay-off-debt-and-save-for-the-future

#148 april on 03.26.14 at 12:17 pm

#87 – Sam
i think one has to have half a million to buy a home in the US?

#149 jess on 03.26.14 at 12:18 pm

Kijiji economics
see globe article on: How Kijiji’s data threw off Ottawa’s math on skills shortages

—————
http://www.reuters.com/article/2014/03/24/us-facebook-google-lawsuit-idUSBREA2N1L620140324

http://www.macobserver.com/tmo/article/apple-google-anti-poaching-lawsuit-gets-class-action-status

http://www.justice.gov/opa/pr/2010/September/10-at-1076.html

#150 tkid on 03.26.14 at 12:24 pm

Gleaned from Kijiji:

I have this 276 sq.ft. two-bedroom unit at Smart House condo in hand. It is listed by the builder at $236,200. I can offer it exclusively with a $5,000 discount. If you are looking for a pre-construction condo downtown, this is probably the best deal available.This unit also comes with an Extended deposit structure (20% deposit over 1.5 years) and a free assignment.Smart House Condos is a new preconstruction condo project by Urban Capital Property Group & Malibu Investments Inc. The new development will be located at 219 Queen Street West in Toronto, ON M5V 1Z5 (Queen/University) – just steps to Osgoode subway station.Smart House Condos will be 25 storeys with a total of 241 condo units mix of Studio , one bedroom , one bedroom plus den , two bedrooms and two bedrooms plus den.The estimated completion date is March 2017.

Who buys a 276 square foot condo for OVER $200,000? And it ain’t no two bedroom deal, not unless the bunk beds are built-ins and each bed is considered a bedroom.

#151 lawboy on 03.26.14 at 12:38 pm

#38 Debt collector

I guess all you can do is “threaten” to take the deadbeats to court. Your employer must know full well it would be pointless to spend the money and time (issuing claim; serving claim; settlement conference; trial date) to get a judgment of…what?…$1,500 against people who you indicate have “nothing”. Good luck collecting on the judgment even if you get it!

#152 Lurker on 03.26.14 at 12:41 pm

#32 Cara is making that up.
No bidding wars in the tri-cities this yr.

#153 pinstripe on 03.26.14 at 12:58 pm

With the Premier of Alberta resigning, the political back stabbing is in full swing. In this whole process, the migrants are more red necked than the original Albertans, pointing to us that they are well aware what some political policies do to jobs. These migrants appear to not want any compromise to living within your means.

The growth in the Edmonton area is mind boggling. There is a lot of money in this area. last weekend, the home/reno show was standing room only with high end stuff available. People were buying.

#154 Fed-up on 03.26.14 at 1:04 pm

@110
Personally (I have to brag a bit), I have experienced income growth to the tune of 550% year-over-year from 2013 to 2014. And my starting point was already six figures.

————————————————————————

Holy cow!!! And we are only less than 3 months into 2014.

The last time I personally experienced that kind of income growth was way back in ummmm, uhhhhh, let’s see…never.

:s

#155 Pre-retiree on 03.26.14 at 1:20 pm

We have been warned, and not everybody wants to believe that a slowing down is coming. I personnally believe it has already happened and no one has told us. The fact that the decline is now discussed in the regular papers is enough of an indication for me. As a comparison, people like to flock to buy a “hot” stock discussed in The Globe when in fact, it has already reached its crest. When the newspaper talk about it, it is too late!
We are planning to retire in Ottawa, and for curiosity, I have been looking at RE there, lurking as it were on the MLS website. Some houses, outrageously priced for Ottawa, if not for GTA, have been sitting for 2-3 years. Gorgeous properties, but not priced realistically given the current conditions. The dream is over.

#156 Makarand Pradhan on 03.26.14 at 1:35 pm

I knew my wife hated the blog, but I found out how much yesterday.

After gaining the daily dose of info/knowledge from the blog, I was telling my wife how buying a house is soo uncool these days. She then gave me a cold stare and I knew she was irritated. She then calmly said:

“You know this web site that you read should be renamed to “AllOfUsAreFools.com” and guess who should be named “GreatestFoolOfThemAll? :)

#157 Shawn on 03.26.14 at 1:42 pm

Non-words and phrases that become part of the lanquage over time

143 Bottoms Up said:

It’s either ‘regardless’ or ‘irrespective’.

Not ‘irregardless’, although that word has probably worked it’s way into wikidictionary by now.

****************************************
Indeed, irregardless is annoying as it is a double negative.

Other examples are

Things that fail to “cut the mustard” a mistake that should be fails to “pass the muster” (a military inspection term nothing to do with a yellow condiment)

Does not jive, should be does not jibe

I am sure there are hundreds of these…

But I could care less (oops I, of course, mean couldn’t care less)

#158 Cory on 03.26.14 at 1:48 pm

#120 Ray Sunk

Buying a 1986 model used car. Seriously. I would think you can get a car like that for 1K. I bought a 2006 Volvo wagon in excellent condition for 7K. Beautiful leather interior, turbo engine, smooth as silk to replace my 2002 Volvo (bought new) with 342K and still running by the way. You are really fishing downstream.

#159 Penny Henny on 03.26.14 at 1:58 pm

Hey Smoking man, this just in.
Hamilton doesn’t want you.
……….

Nor does God. Can’t please everyone.

—————

Garth still loves you.

#160 Soylent Green is People on 03.26.14 at 2:12 pm

#41 Mandria on 03.25.14 at 8:21 pm

#67 Happy Renting on 03.25.14 at 9:34 pm

If you rent in an apartment without an en-suite laundry washer and dryer, you may be interested in this little portable washing machine that does not use electricity and gets your clothes as clean as using a regular washing machine.

WonderWash: do laundry faster, no electricity needed,

***********works via locked-in heat expansion

http://youtu.be/R1hD-KYfmIY Mini Spinner is a plug in

WonderWash | Compact Washing Machine | Apartment Size Washer – Laundry Alternative
$50 USD
http://www.laundry-alternative.com/product/The-Wonderwash

Deal or Dud: Wonder Wash
http://youtu.be/yk-CK_2OmHk

.

#161 Old Man on 03.26.14 at 2:16 pm

Retail stores: average gross sales are down 25%; store expenses are on the rise; then the renewal term lease comes up (5 Year), and Landlord says 25% more for 5. There is your hypothetical answer subject to adjustments.

#162 airhead princess on 03.26.14 at 2:18 pm

#140…JSG…

“What I am seeing more and more of though, in the last few years, is a marked increase in the sheer desperation and panic that seems to have gripped many drivers. I see lots of people getting tail-gated, being cut off, and blocked from either entering or leaving the roadways. What is the cause?”

Exactly…..like rats on a caged treadmill being force fed on cocaine. The mood is one of pure desperation as the personal debt numbers pile up. I wonder if the road rager’s are thinking ” You can’t be ahead of me….don’t you know what I’m paying monthly for this piece of crap? I hate you for being ahead of me … I’ll use my car to show you how much more important my problems than yours.”

Vancouver is statistically the road rage capital of North America. I guess people are watching TV and reading how the civil service salaries and pensions are six and seven figures……they see the elite living large while they hide and shiver between collection calls and calls from the school that their child is complaining of hunger.

God, but you are tedious. — Garth

#163 Ray Skunk on 03.26.14 at 2:22 pm

#158

Of course I could get an ’86 for 1k… but not this one. As I said, I don’t drive much and this is more of a hobby, so think a little more along the lines of sportier/collectible than a Volvo wagon :)

(Not that I have anything against Volvo wagons, if I had a lot of stuff to carry around and wanted a reliable beater, I’d be all over a 240)

#164 Nemesis on 03.26.14 at 2:28 pm

#SpotTheDifference #”QualityNeverGoesOutOfStyle*” #”Have you ever had a bad time in Levi’s?” #”HowAreThingsInYourTown?”

http://youtu.be/h7Gd7D1JscU

[LAT] – Levi Strauss eliminating 800 jobs to cut costs

…”Levi Strauss & Co., the San Francisco apparel company best known for its denim clothing, said it will remove 800 jobs as part of an effort to cut $175 million to $200 million in costs.

The so-called global productivity initiative will roll out over the next 12 to 18 months, the company said Wednesday.

The first phase is expected to result in $75 million to $100 million in savings, the company said. The job cuts, which will affect 20% of Levi’s non-retail and non-manufacturing employee base, are to occur during the period.”…

#BonusRetroDenimZen:

http://youtu.be/iRwn03qZS9U

[NoteToSaltyDogz: *HistoricalNotes of interest to PoliticalEconomists, CultureVultures and FortuneTellers – http://en.wikipedia.org/wiki/Levi_Strauss_%26_Co.#1990s_and_later ]

#165 Nemesis on 03.26.14 at 2:30 pm

[LAT] – http://www.latimes.com/business/money/la-fi-mo-levi-strauss-jobs-20140326,0,3619528.story

#166 Bill Gable on 03.26.14 at 2:43 pm

*Mr. Turner has talked about the impact of the USD losing it’s “World Reserve Currency” status:

To whit:
“China is calling for a global currency to replace the dominant dollar, showing a growing assertiveness on revamping the world economy ahead of next week’s London summit on the financial crisis.

The surprise proposal by Beijing’s central bank governor reflects unease about its vast holdings of U.S. government bonds and adds to Chinese pressure to overhaul a global financial system dominated by the dollar and Western governments. Both the United States and the European Union brushed off the idea.”

Link: http://tinyurl.com/k3s6f8c

#167 2CntsCdn on 03.26.14 at 2:46 pm

april
commenting on #87 – Sam
i think one has to have half a million to buy a home in the US?

Are you kidding? Half a million in the US would get you a house that would be $1.3M in Toronto and $2M in Vancouver. There are lots of decent stuff for around $200K and lots down around $100K .. even though things have gone up 20% ish the last few years. Still bargains galore.

I’m not a RE agent and I don’t know if I’m allowed to post others web sites … but this is the one I look at daily. http://www.palmbeachflorida.com

Any place between Ft Lauderdale and West Palm Beach (if you want to hang out with Donald Trump) is decent and 1/4 mile from the ocean will cost a premium … but a little inland is still very reasonable.

http://www.palmbeachflorida.com

You’ll have to log give a name and e-mail address .. but they don’t bother you.

I bought a 2 bedroom/2 bath gated older place in Boca Raton a few years ago ($90K short sale which MIGHT be sell-able for $120K now) …. it costs about $6K a year to keep sitting there (property taxes, hydro and condo fee’s) …. but between myself, friends and family it gets used often … especially this winter.

I’m currently looking for a place a little further north in a Delray Beach …. a really cool/fun town. But The first number will be a 3 now. No $90K’ers in Delray.

It can be done. Lots of Canadians down there. I pay all the bills on line. And don’t let the “death tax on your entire Canadian estate” fear mongers scare you …. ask a legit accountant it’s not as bad as they say.

#168 Nemesis on 03.26.14 at 2:47 pm

#Addendum #Trending

“We will take a large demographic and refocus their attention away from the public facilities into the private spectrum.” – Peninsula Club Society Chairperson, Mary Manning

[CBC] – Exclusive Peninsula Club proposed for South Surrey: Annual Membership to the 160,000-square-foot facility could cost as much as $50,000

http://www.cbc.ca/news/canada/british-columbia/exclusive-peninsula-club-proposed-for-south-surrey-1.2586641

#169 Spaccone on 03.26.14 at 2:53 pm

“I can’t fathom living in a 25-year-old house made out of Popsicle sticks, and having another $120k and 5 years of mortgage remaining.”

I can’t fathom having $700k+ liquid and CHOOSING to live in or be locked down in a lifeless/cultureless suburb/exurb or sticking it out in Toronto where your erection accessories sink into your stomach for 5-6 months out of the year.

#170 Setting the Record Straight on 03.26.14 at 2:54 pm

“Governments need to require multi-unit developers to build equal number of rental units for each unit for sale to keep an adequate supply of rental accommodations on the market.”

Why should government, that is taxpayers, create regulations and programs to accommodate your desire for rental accomodation?

More bureaucrats, more paper, useless deadweight losses imposed on the economy. Fewer condos and higher prices for those built. Redistribution of income to renters!

#171 Mike in Surrey on 03.26.14 at 2:55 pm

#122 Steven
Ontario min. wage will be $11 an hour starting June 1, one week pay equals $440 rent per month per bedroom. So 7 bedrooms McMansion House cost $3080 per month to rent. I am sure you can find one; don’t forget to pay more rent as min. Wage increases. Clearly real estate price is NOT out of line everywhere.

#172 happity on 03.26.14 at 2:56 pm

So garth, this situation is probably the worst scenario for the middle class in N America since they existed.

And you haven’t even factored in global debt, environmental issues and peak this peak that.

Do you think the middle class will recover or will they effectively become the upper poor class at best?

#173 Gabi on 03.26.14 at 3:12 pm

“My wife and I never up-sized the home, (ranch bungalow 2400 sq ft). Its worth over $1.8 M”

Oakville-1.8m, hahahahaha
Canadians are so stupid
Take the money and run!!!!!!!!!!!!!!!!!!!!!

#174 Rob on 03.26.14 at 3:22 pm

Love it, The Impoverish Rich!

My wife turned down what could have been an extremely lucurative position because ir would have required a major move, and the money wasn’t worth the stress. Some things in life money simply can’t buy!

#175 devore on 03.26.14 at 3:23 pm

#89 ozy – you don’t like it, move to London

Can we get a POST on London prices Garth? SQF, prices, etc, apples to apples

Comparing Toronto to London doesn’t feel very “apples to apples” to me, but it is a slight better than the incessant comparisons of Vancouver to tier 1 world metropolis.

#176 Panhead on 03.26.14 at 3:35 pm

#140 Just some guy on 03.26.14 at 11:18 am

Man, what a theory. You just may be onto something. I always figure that if I get “smoked” it will be because of some other “stupid” driver. There is WAY too many out here on the West Coast. Been close a few times. Number one priority while in the wind … stay out of people’s blind spot. Thanx for your offering …

#177 Paul on 03.26.14 at 3:39 pm

C.I.B.C. New four year rate 2.74% Time to load up don’t miss the boat.

#178 Smoking Man on 03.26.14 at 3:41 pm

So I summon the power of the UCC To find MH730

It said, screw Indian Ocean, look at White Sands NM.

Find the cargo on Captain Phillips ship that made it on MH370.

Find out why 2 X elite Navy Seals guarding the cargo, both end up dead, overdose.

What was that explosion

#179 Holy Crap Wheres The Tylenol on 03.26.14 at 3:46 pm

#173 Gabi on 03.26.14 at 3:12 pm

“My wife and I never up-sized the home, (ranch bungalow 2400 sq ft). Its worth over $1.8 M”

Oakville-1.8m, hahahahaha
Canadians are so stupid
Take the money and run!!!!!!!!!!!!!!!!!!!!!
_____________________________________________

Run where? I dont need to sell, this is not my investment portfollio. This is only my home. I own a corporation and really do not need any cash from a home sale. BTW this home is a bargain here if you have never been here. The investors buy home like mine and knock em down, in a few months bam, 5000 sq ft McMansion. Its insane I agree, I feel sorry for the poeple that have invested here in property. Way over priced.

#180 maxx on 03.26.14 at 3:46 pm

#13 Paul on 03.25.14 at 7:14 pm

“Once things correct they will expect the tax payers to bail them out.”

True.

“Unfortunately, the government will.”

Doubtful.

#181 DM in C on 03.26.14 at 3:46 pm

I’m all for the unique turn of phrase but I cannot figure out what this means, even as a metaphor.

“sticking it out in Toronto where your erection accessories sink into your stomach for 5-6 months out of the year”

???

Nonetheless, sounds painful. — Garth

#182 Derek on 03.26.14 at 3:52 pm

I am with #110 Clueless. Everyone I know in Toronto makes 80-250K a year. There are lots of rich people in this big city. It’s not unreasonable that houses are 1M+. People can afford it.

To afford a $1,000,000 home you need $250,000 in cash and an income of $145,000, financed at 3% variable. Yeah, everyone can swing that. — Garth

#183 Holy Crap Wheres The Tylenol on 03.26.14 at 3:57 pm

#144 Bottoms_Up on 03.26.14 at 11:26 am
#124 Holy Crap Wheres The Tylenol on 03.26.14 at 9:45 am
————————————————–
They don’t deserve it but you do? Because you won the generational lottery?
_______________________________________________
No I deserve nothing that I did not work and save for. My first home a 1100 sq ft bungalow. Took ten years to pay off, while I scrimped and saved to open a business. It has nothing to do with a generational lottery. If I was young today I would not start off with a McMansion, Mercedes, lattes every morning at Starbucks for $6 a cup and my vacations would not be to San Cabo for $8K a drop. They would be affordable home, Chevy, Ford or whatever is cheapest to get from A to B, Tim Hortons at $1 a cup and camping up north. Now that I can afford to do anything I can chose how to spend. Anyone deserves what they can afford! Plain and simple!

#184 Holy Crap Wheres The Tylenol on 03.26.14 at 4:04 pm

#178 Smoking Man on 03.26.14 at 3:41 pm
So I summon the power of the UCC To find MH730
It said, screw Indian Ocean, look at White Sands NM.
Find the cargo on Captain Phillips ship that made it on MH370.
Find out why 2 X elite Navy Seals guarding the cargo, both end up dead, overdose.
What was that explosion
____________________________________________

WTF? Don’t quite know what you are trying to convey, but interesting at least. Please go on……………….
Especially the explosion part.
P.S. Listen for the ping, the ping, dam it the ping!

#185 shawn on 03.26.14 at 4:08 pm

Justifying the $1 million House:

Derek at 182 says:

It’s not unreasonable that houses are 1M+. People can afford it.

**************************************
And if they can’t afford it they can buy it anyhow because they certainly deserve it, right? Also the wife’s sister and her husband did so what’s wrong with you, hubbie?

#186 Gabi on 03.26.14 at 4:16 pm

Holy Crap Wheres The Tylenol
Run to California
A friend of mine just bougtht near Malibu, 3min to the ocean, huge lot on the mountain, awesome air, 800k
Some reno required
Invest the rest.
You have to use the fact that people are so stupid here

#187 HD on 03.26.14 at 4:24 pm

From #137 Mixed Bag on 03.26.14 at 11:12 am

(…) but the schools rank poorly on the Fraser report (mind you there are a lot of ESL kids here).

——————–

I am not sure if it just me but, the statement above is so disturbing on so many levels.

Normally I would ignore and move along but just couldn’t this time.

Best,

HD

#188 World Traveller on 03.26.14 at 4:27 pm

#162 airhead princess on 03.26.14 at 2:18 pm
#140…JSG…

****
Reads like the script for the next Mad Max movie.

#189 Happy Renting on 03.26.14 at 4:27 pm

#181 DM in C on 03.26.14 at 3:46 pm

He means it’s cold in Toronto.

It’s been a rough winter, though hardly reason enough to write off the city.

#190 T on 03.26.14 at 4:27 pm

Strange

I am one of those wealthy guys you describe. Yet I am nearly 100% debt free and sitting on piles of cash that is growing daily.

We have all kinds of extra cash to buy whatever and eat out all the time.

Perhaps these stores you mentions just suck, and people shop on line now? Perhaps get stuff delivered to house like we do?

Don’t believe me?

Why don’t you take a peak at the delivery box in Niagara Falls NY. CBI

They had to open a SECOND warehouse for all the product being shipped in from Canadians. On any given day you will see a line up of people picking everything from furniture, to tires, to car parts. All day long. And I don’t mean a t shirt. I am talking major purchases often in the thousands.

Licence plates are from Toronto down to Niagara falls.

Your examples Garth show one side of the story….but miss the other.

#191 GUY GADBOIS on 03.26.14 at 4:30 pm

time to buy Dollarama shares!

#192 T.O. Bubble Boy on 03.26.14 at 4:31 pm

To afford a $1,000,000 home you need $250,000 in cash and an income of $145,000, financed at 3% variable. Yeah, everyone can swing that. — Garth

To clarify: you need $250k in cash, $145k/yr income, and no other debt to reach the *minimum qualification* to buy a $1M house with a 25-yr amortization @ 3%. In other words, if you only have $250k and $145k income, you really can’t afford a $1M house.

#193 Derek on 03.26.14 at 4:33 pm

To afford a $1,000,000 home you need $250,000 in cash and an income of $145,000, financed at 3% variable. Yeah, everyone can swing that. — Garth

Not if your significant others makes that much too. Which many couples I know do. Get real.

“The richest 10% of individuals are making more than $80,400. And the very rich — the 272,600 individuals that make up the top 1% — are making more than $191,100.” 2011 Census. Get real. — Garth

#194 TheCatFoodLady on 03.26.14 at 4:40 pm

#41: Mandria – congrats on the upcoming baby. It sounds as though you & your husband have worked matters out nicely. You already know you could live on one income if need be – mat leave won’t be the huge fiscal shock it is to many.

In general, we all have choices – no matter where we’re sitting on the fiscal ladder. If we can figure out exactly what we want from life, what makes us happy, the decisions about how to get there should start falling into place. Solutions may not be quick & easy but they’re attainable for most.

What makes you happy

#195 shawn on 03.26.14 at 4:43 pm

To Wit:

Bill Gable To Whit: at 166 s/b To Wit:

#196 Old Man on 03.26.14 at 4:45 pm

#183 Holy Crap: I know this guy who owns a second home in a vacation area. Three bedrooms in a major city that is fully furnished and stocked with all. He is a writer/artist as owns this as an investment with another beautiful home down the street. Now one bedroom rents out for $60.00 a night, and so on, but if you only need just this alone you can have the entire house. Yes, he is booked solid until August 2014 lol. I read the guest comments on the web, as he will meet guests at the airport, and one was delayed but he was there at 1:00 AM.

#197 gladiator on 03.26.14 at 4:49 pm

@137 Mixed Bag:
I have done a lot of research not just about the schooling side of private schools, but also about how they influence the kids’ development overall. I have spoken with people who went to private schools, with ones who studied there for a while then went to public school system due to family reasons, I found that most of my company’s upper mgmt are either from old money (and went to private schools) or are priv school graduates, etc.
All in all, I must say that starting with grade 6 and up, I will do my very best so that my kids go to private school. The environment there is much better than in many public ones. Of course, there are very good public schools, but the houses in their catchment area are extremely expensive, and if you have no more then 2 kids, then private makes total financial sense, and I mean even the IB-certified ones.

@187 HD:
turning your eyes away from reality doesn’t make it disappear. It is very rare that ESL students are schooled at a good enough level. Do you know what happens with well-schooled kids when they are comparatively stronger than the others? They become lazy and lose their competitive edge. I would be running away from such schools too. There. I said it. Not politically correct, but when it’s about my kids’ future, being politically correct is not even on my list of priorities.

#198 Vancouver RE agent on 03.26.14 at 4:56 pm

Buying RE in Vancouver is the BEST financial decision you can make. Debt is cheap and will remain cheap and cheaper for decades. And with thousands of rich Chinese coming to Vancouver RE will return 20% a year for years to come. GARANTEED.

That was just scary. On so many levels. — Garth

#199 Cici on 03.26.14 at 5:05 pm

Even Saputo is getting into the game; closing shop at two locations in Alberta:

http://ca.finance.yahoo.com/news/canadian-dairy-producer-saputo-close-four-factories-193206597–finance.html

#200 Ayn Rand Army on 03.26.14 at 5:09 pm

Personally (I have to brag a bit), I have experienced income growth to the tune of 550% year-over-year from 2013 to 2014. And my starting point was already six figures. Go ahead. Correct the price of my home by 30%. It’ll be paid for at the end of this year anyways.

So, you received a $500,000 raise to do what, exactly? — Garth

—-
Must be Jim Flarhety.

Welcome to the board Jimmy!

#201 Mike T. on 03.26.14 at 5:17 pm

‘The world is awash in money. Its confusing to those on this blog because they don’t have any.’

is that so?

you do realize that a full third, more than 2 billion, of the people on this planet exist on less than $2 per day

#202 espressobob on 03.26.14 at 5:20 pm

Great post Garth!

Was in Oakville today doing bizz. I deal with many restaurants from Trafalger to Navy st. The general concensus is not good!

Ossington ave. between Queen & Dundas seems to be wobbling as well, as are a few other areas!

#203 Smoking Man on 03.26.14 at 5:30 pm

#184 Holy Crap Wheres The Tylenol on 03.26.14 at 4:04 pm

Read it fast, these stories are vanishing very quickly on line.

Never seen a vanishing act like that ever on the web

I need to know why the Chinese families are so pissed.. It’s all over Chinese MSN They are going with below story

http://greatgameindia.wordpress.com/2014/03/22/mh370-mystery-suspicious-cargo-destroyed-in-a-massive-explosion-near-1945-nuclear-bomb-test-site/

Seriously? — Garth

#204 Pope HotDamn SexyLegs Snugglebums the 666bq (aka Nosty) on 03.26.14 at 5:36 pm

#77 Smoking Man on 03.25.14 at 10:44 pm — “I’m a curious bastard.”
— and —
#178 Smoking Man on 03.26.14 at 3:41 pm — “It said, screw Indian Ocean, look at White Sands NM.”

Just to keep things interesting — Rothschild and Flt 370 and CIA Hoax Of course, there are no such things as coincidences. Everything, except our free wills, is pre-planned and arranged beforehand.

On other things, the IMF — Gas Price Hike, Bundesbaml QE, Ukrainian Govt. Brawl and Brazil energy costs soar.

#205 HD on 03.26.14 at 5:38 pm

#197 gladiator on 03.26.14 at 4:49 pm

@187 HD:
turning your eyes away from reality doesn’t make it disappear.

We both agree on that.

It is very rare that ESL students are schooled at a good enough level. Do you know what happens with well-schooled kids when they are comparatively stronger than the others? They become lazy and lose their competitive edge. I would be running away from such schools too. There. I said it. Not politically correct, but when it’s about my kids’ future, being politically correct is not even on my list of priorities.

However, I am not convinced that what you described above is part of reality.

Best,

HD

#206 Tony on 03.26.14 at 5:39 pm

Re: #23 lurker on 03.25.14 at 7:40 pm

The idiots will buy on the dead cat bounce just like we just witnessed recently in America. American real estate is going southward which is another good reason to unload all your holdings in Canada. Canada will probably see a huge fall followed by decades of sideways valuations after the stupid people buy the dead cat bounce up here.

#207 bigtown on 03.26.14 at 5:50 pm

The Oakville Mall is excellent…where else will the customer service booth give you a WALKER or WHEELCHAIR or stroller? They are very good people and I have never seen so POLITE AND CIVILIZED folks in Canada or the GTA. If you are handicapped and shop in Canada being noticed is tough but Oakville Mall is the most sensitive and caring place in Canada

#208 Mixed Bag on 03.26.14 at 5:58 pm

#197 gladiator on 03.26.14 at 4:49 pm

Thanks for your comment. I have wondered. Education will get you far. So will connections. Which one wins out?

#187 HD on 03.26.14 at 4:24 pm
What is disturbing about that sentence? Is it that the kids new to Canada don’t do well in school until they learn English, and so the school reflects poor marks? Is it that the school needs more resources? Is it that you don’t like the Fraser report? Do you think I was being a jerk? If it’s the last one – I don’t think the ESL kids are stupid or lazy, rather that not knowing English must have an affect on their ability to learn the curriculum (never mind the effect of the big transition to a new country), until their knowledge of the English language improves, and this therefore would reflect on the school’s Fraser report marks. Is the teacher’s time occupied with bringing students up to speed, instead of bringing them further forward? These are my guesses, please correct me if you know better.

gladiator’s comment “It is very rare that ESL students are schooled at a good enough level”, this would be a shame. If the school is struggling to teach the curriculum to students having difficulty with the language, how do the kids learn, how are they prepared for the following grades?

#209 Smoking Man on 03.26.14 at 6:00 pm

Seriously? — Garth

Ha, it’s between that and time travel worm hole, alien abduction.

Indian Ocean so boring….

#210 airhead princess on 03.26.14 at 6:10 pm

I’d agree with you G…if it wasn’t for the nasty bits between reality of how uneven the civil service relationship with the Canadian taxpayer has become has become.

http://www.cbc.ca/news/politics/public-sector-feds-reach-deal-on-retiree-health-benefits-1.2586998

How is it right that civil servant can get 50% of their health care paid for life with as little as 2 years of service? Does a single person outside the regime get the same benefit? Are we supposed to duck and pretend that these people aren’t living a better standard of living and recieving a better deal than the rest of the citizen?

#211 T.O. Bubble Boy on 03.26.14 at 7:20 pm

@ #200 Ayn Rand Army on 03.26.14 at 5:09 pm

So, you received a $500,000 raise to do what, exactly? — Garth

—-
Must be Jim Flarhety.

Welcome to the board Jimmy!

—————–

Exactly – Jim Flaherty? Dalton McGuinty? Doug Ford?
Which politician-turned-business owner are you?

The only other way I see the $100k employee magically becoming a $550k employee would be if the company went IPO and you cashed out… and that is not a salary increase – it is a one-time gain.

Or, you are a formally average/below average sales rep who just hit the MONSTER deal to get a giant commission cheque. Again, not a base salary increase, but a one-time payout.

#212 gladiator on 03.26.14 at 7:20 pm

@205 HD:
I respect your opinion and will stick with mine. Having kids in school I’ve seen enough to form my opinions described above.
My point: ESL students need some help with learning English while they also have to study school stuff. They struggle at first, and this is nothing to be ashamed of – I commend the kids who put lots of efforts into learning English and all other things in school. But I care about my kids and I don’t want them to wait for weaker colleagues to catch up. Time flies and if they don’t get challenged now – they lose focus, etc. The stronger the colleagues are in math, science, whatever, the stronger my kids will be – the environment matters very-very much.

@208 Mixed Bag:
Which one wins out? Both. And together.
Life-lasting friendships are made in the last 4-5 years of school and in the university. Connections matter, but what matters more is that in private schools kids have a more nourishing environment for general development: they discuss deeper ideas, they have wider horizons of personal interests, they have better grooming at home, if you will. Since I studied all this so much, every time I speak with someone new, I try to guess if that person went to a private school. Of course, I have been wrong – there are public school graduates who are very well-spoken, very smart and efficient. However, they were lucky to develop in a good school environment, and first of all I mean their colleagues. The “monkey see monkey do” principle is alive and well among kids (my personal observations on the playground and during my kids’ play dates). I want mine to be among well-educated, smart and competitive “monkeys”.
I rest my case.

#213 Mike in Surrey on 03.26.14 at 7:30 pm

#198 Vancouver RE agent
I can attest to what you said, high school friend of mine started out $40000 on his first detach house at age 26 now owns 2 houses in City of Vancouver worth 2.7 million combined, and a halve million Mortgage. 3 renters give him positive cash flow, that’s more than 20% return a year for the last two decades (including any additional money he put in). I brought first time 12 years ago, and my return is also over 20% year over year. I told my friend that he had won a lottery, but he has no plans to cash out.

#214 b on 03.26.14 at 9:32 pm

“Then the modest, and the debtless, shall inherit the earth.”

Garth, the modest and debtless don’t want to inherit the earth….. we’ll leave that to arrogant idiots like “Clueless About YYC Income Growth”

#215 None on 03.28.14 at 8:38 am

#162 airhead princess on 03.26.14 at 2:18 pm
I guess people are watching TV and reading how the civil service salaries and pensions are six and seven figures……they see the elite living large while they hide and shiver between collection calls and calls from the school that their child is complaining of hunger.

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

Wait so now every civil servant makes at least 6 figures, and 7 figures is pretty common too? Unreal. You are nuts.

#216 Follow the Money on 03.28.14 at 1:10 pm

Last :-)