Rick’s house

RH modified

Rick’s a Yank living in Calgary. He reads this blog, looks around, and shakes his head at the déjà vu of it all. Here is his story. — Garth

In the lusty days of 2006’s housing boom, we were living in Charlotte, North Carolina: a fairly progressive variant of the Southern town, replete with too many churches, not enough decent bars, and far, far too many banks. That last suited me: I am a Technology Project Manager, and Banks have been my bread and butter.

In 2006 I was 44 (American), my wife 46 (Canadian), 2 kids at home. I was working steadily, and we were flush. So we decided to lose pretty much all our senses and buy a house. Why not? The media told us a “bubble” was years off (they’d been saying “bubble” for a year and a half or more).

FAILURE #1: We went to see a mortgage broker.

Our guy “George” was normal, rumpled, spoke plainly, and had us at hello. “Charlotte,” he said “has never had a meteoric rise in prices, so even if there is the bubble they talk about, we won’t lose much value. Even then, we can’t lose much, and if you are buying for five, maybe seven years before you move we’ll recover and you’ll make money. It’s all good.”

He got us approved for a $700,000 loan on what was inexpertly named a “jumbo, non-conforming” loan. We were smart. Way smarter than him. Smarter than you, too. We set our limit at $250-$275K. See how smart?

FAILURE #2: The New Build.

“North Carolina’s #1 builder for 5 years in a row!” Yessir, Shea Homes was indeed #1 in North Carolina, and had the provenance: articles published by local papers about the great design, superb build quality, and sky-high customer approval ratings. All fabricated, but who knew? We went to the “design center” and picked tile, hardwood, granite, told them to build the laundry room right here, don’t build the 5th bedroom, Berber carpet upstairs including the bonus room. Our house was so much nicer than yours, you should be ashamed.

We moved in, painted, showed off pics on Facebook, over-decorated at Christmas, and realized we could easily make the payments, including the ones they didn’t talk about like insurance, property taxes (2.2% in Charlotte, based upon 70% of the selling price), and still put money away for retirement on one salary. We are so much smarter than everyone.

In 2007, weird things happened. Things like a global collapse of the banking industry. We refi’d. got our interest down, and reduced our payment. We were so smart and had it made, while everyone in Las Vegas with a $400,000 home couldn’t sell them for $150,000.  Life was good. Until The Phone Call.

At five months of unemployment, I started to realize Cramer was maybe slightly wrong. I started to realize my mortgage banker George, who had disappeared from the face of the planet, had been a little optimistic. We had the house listed, but we owed all of the $260,000 we originally paid so we needed to sell for WAY more than $260,000 to cover costs. Oops.

Seven realtors told us we were good for $225,000, maybe.

At eight months, we were good for $210,000. Still no job. At eight months we also ran out of money. I called the bank and said we’d start failing payments. And no, my family had no money: my mother’s 1600 square foot falling-apart Southern California rancher was no longer worth $1.1 million. It was only worth $700K.

At about 14 months: a.) I got a job (at another bank!) earning 70% of what I was originally earning, b.) we abandoned the house. As we left the bank said: “If you give us $25,000 we will give you your original mortgage back, from the date of signing.”

We moved to a rental across town just before the drop-dead date. Better to hope for a short sale than pay $285,000 or so for a house that was tracking to sell at perhaps $200,000. Or so we thought.

We got three offers. Two were simply declined by the bank: $260,000 loans are not forgiven with $180,000 and $185,000 offers. The last offer prior to a total foreclosure was $195,000. There was much rejoicing. The bank said “yes!!! We’ll take this!!! This is PLENTY of money! Buuuut…you need to get a personal loan through us for $45,000 for us to accept the deal to make up for some of the shortfall.”

And so we lost our house. 2 years of payments, plus about $40,000 of up-front money. Gone. North Carolina is a “recourse” state in the US. This means lenders can sue foreclosed customers to reclaim any lost monies on the failed loan. They take a $250,000 home, short sell it for $175,000, and sue the previous owners for $75,000 plus fees.

The house eventually became an REO property; “Real Estate Owned”. It also eventually sold. For $167,000.

Here it is, sitting on a street littered with other foreclosures:

RICKS HOUSE modified

We aren’t on the market for a house any time soon. Notably, we moved to Calgary to be with family, where our rent is as high as our mortgage was, but if things go Garth-ward, we’re going to have reduced rent sometime mid-2015. She finished school and is earning a hell of a lot of money, and I am between contracts but slated to start up again (at a bank!) in June, so I am a stay at home dad until Canadian immigration catches up with my paperwork and I can work locally, rather than remotely

Hey, maybe someday we will buy. Maybe not, but given my tale of woe above, the Canadian “it can’t happen here” mantra rings in my ears like a freaking shotgun blast to the head. If we find a distressed property that has been reduced, we’ll swoop in like vultures and pick it up for a song. I’d have given anything (other than $45,000) to have that short sale go through, rather than the foreclosure. Someone will have a little place in central BC that they’ll surrender for a song, and we can retire there.

Things we’ll never do:

1.)    Trust a bank.
2.)    Trust a builder.
3.)    Trust a realtor.
4.)    Trust ANY news outlet that says “housing is rocking right now!”

So there you go. Big fan, Pathetic Blog Guy.

222 comments ↓

#1 Raj on 03.26.14 at 6:11 pm

Looks like I am first

#2 jeff on 03.26.14 at 6:13 pm

first

#3 View on 03.26.14 at 6:14 pm

Hey Rick, maybe I can sell you a fabulous duplex for $1M in Tuxedo Park?

#4 Protea on 03.26.14 at 6:16 pm

Living in North Vancouver we have noticed that over the past several months Condos have become a tough sale. Often sitting unsold for a long time. Houses above 1 million take a long time to sell and we have a friend that has a beautiful 3600 sq ft home that has been on the market for 9 mths. The price started out at 1.7 mill and is now down at 1.399 mill.

Talking to a realtor yesterday he said that he presented an offer on a home in Lynn Valley N.Van. at 959k 19k above asking and his offer was the second lowest out of 9 offers ? Realtor said it wasn’t worth it and it needs structurally about 40k. A lot of young people making bad decisions.
We were fortunate to take Garths advice and sold our 3000 sq.ft home in 2012 within one week. The investor who bought the house made some renos and it has been back on the market for one year not sold. I figure at the price they are asking if he does ever sell will lose a cool 200 k.
So we sitting pretty in a condo right now watching the market and maybe will never buy again depends on what evolves within the next 2 years. Its a good position to be in relaxing and stress free.

#5 Brian on 03.26.14 at 6:21 pm

Moral of the story… Rick is a loser.

I own 3 properties.

1. Mortgage free 4 bedroom in Oakville (consistently ranked one of the best cities to live in Canada). Paid $580k 7 years ago. House backs onto a ravine and very private. Great neighbours. Less than 20 minutes to work for both of us. Walk the kids 3 minutes to school. Will stay for another 20 years. Annual costs including property tax, utilities, insurance and maintenance total $10k (just added them up for taxes since I write off the home office). House could drop 25% in value and I wouldn’t care since net worth is well over $2M and growing quickly (not including any real estate appreciation and I value the house at $800k even though it would easily sell for $880-900k)

2. Commercial building. Paid $1.4M and its grossing over $13k/month net with triple net leases (two tenants paying all the bills including property taxes). Income far exceeds carrying costs and every month I add $4k to the net worth. Will own forever and maybe be buried in the parking lot.

3. Detached bungalow with a nice pool in a gated community in Florida. On the short term rental market and brought in $60k gross rent last year plus we used it 35 nights. Super low HOA fees, healthy reserve, great management and properties in this neighbourhood sell quickly. We bought in 2012 when our dollar was above par. Zero headaches and we love the place. Market has been improving steadily in the last two years but who cares we aren’t selling.

Not everyone who buys real estate is a loser. Oh yeah we have a 7 figure portfolio too with maxed RSPs, TFSAs, RESPs and growing non reg accts. Will be retired in our early 50’s with $120k after tax income (todays dollars).

No inheritances, gifts or lottery wins. No pensions. Smart diligent planning, good jobs (wife 15 years in hers, 18 for me).

Live beneath your means, have a plan, take a few calculated risks. Don’t fear any asset class but diversification is key.

No friends either, I imagine. You are nauseating. — Garth

#6 Roman on 03.26.14 at 6:24 pm

Rick, you’ve been away for too long, here is the list for you:
#1 Canadians have nowhere to run
#2 Real Estate will never go down in Canada, because of #1

On the bright side, we’re smarten than our north border friends.

PS
If 260k was a disaster, I can only image what those hamsters with 500-800k debt will feel.

#7 Smoking Man on 03.26.14 at 6:32 pm

Rick, where you at Bank of America or Wachovia.

I was there 2007 to 2008.

Who cares about bars…. You had live at 5 on Tryon Street. I staggered home to Woodlawn many a Thursday night?

Why did you move to Calgary…

Send my youre resume, ask garth for my email.

I can hook you up… Odds are we know each other, Charlotte was small.

#8 hohoho on 03.26.14 at 6:32 pm

Re: US dollars

> … If BRICS gets their act together first it is game over …

if you travel you’ll know that for a lot of people around the world, the only non-native-tongue phrase they can utter is …..

“dull – lar …. Uuu Ess dull-lar”

how many here can recognize the BRIC currencies or SDRs? never-mind accepting them as payment?

USD … accepted everywhere (TM)

#9 mark on 03.26.14 at 6:35 pm

And how much would that place currently go for in Calgary… yipes

#10 Montellino on 03.26.14 at 6:36 pm

But our bankes are sound..they would never lend money to an IT strawberry picker like Rick…

#11 DAN on 03.26.14 at 6:37 pm

1st place

#12 DM in C on 03.26.14 at 6:38 pm

Thanks for sharing, Rick. We’re in YYC as well, and if our landlord hadn’t listed last year, we’d still be renting too. As it was, there were no rentals available in our neighborhood then. None. I searched for weeks.

Luck and timing were on our side though, and we found a place in our ‘hood for under what it would cost to rent now. YMMV.

#13 T.O. Bubble Boy on 03.26.14 at 6:41 pm

Things we’ll never do:

1.) Trust a bank.
2.) Trust a builder.
3.) Trust a realtor.

I’d put Realtor #1, Builder #2, Bank #3… but that’s just me.

#14 LH on 03.26.14 at 6:43 pm

Another lesson, buy bricks in the City proper, not pressed cornflakes in the suburbs.

LH

#15 hohoho on 03.26.14 at 6:43 pm

Re: Chinese bank run

> … Now the panic is beginning to spread and ordinary citizens are creating BANK RUNS in China … all hell will break loose down in China …

the Chinese government is just weeding out the undesirable part of the bubbly economy, if you think they cannot stabilize the situation when push comes to shove, remember that

when you get booted out of public office by the people over here, you sign up for board director, special consul, distinguished professor / research fellow … etc. when you get booted out of public office by the people over there, you die.

#16 just an observation on 03.26.14 at 6:45 pm

Go home yank.
Canada only wants people from asia and other developing countries.
Sad but true.

#17 just an observation on 03.26.14 at 6:48 pm

BT – what a gorgeous house for so little money.
You couldn’t buy a garage in Canada for that.
All the best to you and your squeeze…. :)

#18 hohoho on 03.26.14 at 6:49 pm

Re: real estate title

> … to buy a home in China, the buyer never receives title …

what is title? isn’t it effectively a license to use the property, if you are current with your property taxes? over there you lease from government in one lump sum every few decades, over here you pay a portion every year.

#19 polecat on 03.26.14 at 6:53 pm

Well good luck with the new life Rick. Hard lesson many have shared I’m sure. Our time’s coming. I bought a distressed property down east here for just over what rent would be but that is rare. Prices are nuts and wages do not justify it, gonna be a lot of sorry people around Halifax. They keep building like the party is still on but sales are tanking. Maybe the projects were planned years ago but I’m thinking a lot will sit empty, this place is becoming a retirement villa.

#20 Virtual Ted on 03.26.14 at 6:53 pm

Good story and cautionary tale.

Sorry for your grief, thanks for sharing.

#21 JAS on 03.26.14 at 6:56 pm

This post along with previous dozen or so, got me thinking why Jim Flaherty called it quits.
It is well know that he screwed millions of average Canadian retirees when he pulled the plug on income trusts after he “promised he would not.”
Now even today he must deal with the continued fall out each and every week as retiree after retire reminds him of his “broken promise.”
I sense Flaherty does not have the stomach to go all through it again when millions of average Canadian homeowners get screwed with higher mortgage rates and foreclosures, when the Bank of Canada, with the Minister of Finance blessing, starts rapidly rising interest rates to defend the beaver buck as it falls against the mighty US dollar.
So Flaherty called it quits now and is running for cover knowing full well that the “interest rate tsunami” is racing our way.

#22 Smoking Man on 03.26.14 at 6:57 pm

See Rick everyone hates banksters, you don’t advertise that. Illuminati kind of thinking from herd here.

Basement dwellers will have no mercy on you.

That’s why I slave at a Hedge Fund…

#23 DM in C on 03.26.14 at 6:59 pm

#5

Brian, I think you are the loser — insecure enough to whip out your bank balance and brag on an internet blog.

Do we need a microscope to see your personal ‘asset’. Bet you drive a Hummer too.

Cripes.

#24 Steve on 03.26.14 at 7:14 pm

This is really disturbing. All of this bad advice coming from banks and realtards. They like want to destroy us all. Who knew? They seem so honest and caring. They want to enable you and empower you. To screw up. Big style.

#25 T.O. Bubble Boy on 03.26.14 at 7:24 pm

@ #5 Brian on 03.26.14 at 6:21 pm

No friends either, I imagine. You are nauseating. — Garth
———————

How did Rob Ford get on this blog? Wasn’t he “debating” (i.e. yelling lies) tonight?

Brian – did you save a billion dollars?

#26 Lala on 03.26.14 at 7:30 pm

Hi Rick, thanks for sharing your story. We do not learn from experience…we learn from reflecting on experience.

#27 Calgary Owner (2nd. Round) on 03.26.14 at 7:36 pm

Rick, as you explained it, the problem was that you lost your job rather than the plunge in prices. I don’t know if you can blame your bank, builder or agent for that one!

#28 Blame Game on 03.26.14 at 7:36 pm

Sure, blame everyone else…don’t blame the people hot and horny to keep up with the “Jones’s”

This is a misfortune created by people who control the economy and people like puppets and profit off them!

#29 Sylar on 03.26.14 at 7:39 pm

The illustrious First.

#30 Chickenlittle on 03.26.14 at 7:42 pm

That is one sad story. I’m sorry that happened to you, Rick. Good luck to you.

The agent we rented our new place from was pushing us to “grow up” and buy a place. He said RE always goes up, bla, bla, bla. I would have recommended your blog, but I just wanted him to leave.

He also told us what the landlords paid for the house….over. $600k. WAAAAAAAAY too much for a cardboard box in Milton. So I get to live there for less while their investment “grows”. Yay for me!
***************************************

BTW: I read that comment on how “everyone” in TO makes from $75k to $150 a year…Riiiiight…..and I lay golden eggs.

#31 Md on 03.26.14 at 7:43 pm

Canadian Housing will peak in summer of 2015 till than u can keep hoping for crash. This time it won’t be crash it will be slow bleeding of net worth of Canadians too much debted in housing asset. Good luck till 2015.

#32 Obvious Truth on 03.26.14 at 7:45 pm

The story will always be about people. Not houses. Good luck to you and your family going forward.

#33 Chickenlittle on 03.26.14 at 7:46 pm

#5 Brian

I feel another 24 karat golden egg coming….it’s a big one…

#34 Chickenlittle on 03.26.14 at 7:46 pm

That should say “gold”. Stupid IPad.

#35 Nemesis on 03.26.14 at 7:47 pm

#FieldOfDreams #GoTheDistance #MagicInTheMoonlight

You’re a brilliant writer, Rick… there is no higher accolade.

These are for you:

“Go the distance…”

http://youtu.be/Yxzq9BLE5Hg

“To stare him down… and just as he goes into his wind-up… Wink. Make him think you know something he doesn’t…”

“Is there enough magic out there in the moonlight to make this dream come true?”

http://youtu.be/Y9yrupye7B0

[HistoricalNoteToSaltyDogz: Richard Harris taught Nemesis how to wink. Seriously. &Frivolously, too. Well, that’s AManCalledHorse, for ya. You SaltierDogz should all check that title out sometime… But try this first: http://youtu.be/TkBRjGN9SBg NoteToRick: There’s always enough “magic in the moonlight”… if you know where to look: http://youtu.be/fyBaYduYMvI ]

#36 Smoking Man on 03.26.14 at 7:51 pm

#5 Brian on 03.26.14 at 6:21 pm

Nice Job Brian, I love to hear success stories.. The herd hates braggers. F-em

Years of schooling who’s goal is to crush the Individual spirt, and reward the cooperative consensus obedience.

I hear on the radio that school no longer teaches the times table… WTF

And if they brought it back it would cost millions to train teachers to teach it again.

So teachers don’t now the times table.

The Herd can’t do basic math..

Long Real Estate is all I’m saying

#37 Observer on 03.26.14 at 7:52 pm

Wow….powerful testimony today. Sober reminder and says it all….thanks.

#38 TurnerNation on 03.26.14 at 7:53 pm

If life gives you an empty middle make Timbits.

I see a steel plant closing in Welland and Saputo closing up in some small towns. Gone forever. They all can get McTimmy’s jobs.

#39 David Lee on 03.26.14 at 8:00 pm

Uh-oh, they’re at it again:

http://www.theglobeandmail.com/report-on-business/bmo-slashes-key-mortgage-rate/article17688398/

#40 Smoking Man on 03.26.14 at 8:01 pm

#36 TurnerNation on 03.26.14 at 7:53 pmIf life gives you an empty middle make Timbits.

I see a steel plant closing in Welland and Saputo closing up in some small towns. Gone forever. They all can get McTimmy’s jobs.
……..

Yes and it never crosses anyone’s mind that they can open a McTimmys. Ah, Risk….. No, fear… Trade time for peanuts is the road to success.

I got to finish this book…

#41 DigDeep on 03.26.14 at 8:04 pm

“It is nice to be nice to the nice.” – Frank Burns, 4077 M*A*S*H

Nice of Rick to share this his story. He is seems nice. So be nice.

I also like that he mentioned wage pressure. He secured another contract but for 70% of what he used to make.

Europe has people bidding for work, not just contracts, full-time positions. Submit resume and what you are willing to be paid. Qualifications met, low bid wins. It has been going on for years… it will happen here.

Sustainability is a moving target. Less maybe more than we can afford.

#42 Move On on 03.26.14 at 8:12 pm

After ‘scanning’ you posts Smoking Man, because there is no real ‘reading’ of semi-coherent babblings, its very clear that you have a great deal of insecurity around your lack of formal education.

While there are faults with the K-12 and post-secondary education systems, and while not everyone needs to be educated, many people do actually succeed with higher education.

I get the impression you get snubbed quite a bit by individuals that can speak and write with an articulate voice, and that just grinds on you…

Relish in your supposed ‘success,’ and stop revealing your insecurities to the world. If people can pick it up in your diatribes, I am sure people can see it in person…

#43 Cici on 03.26.14 at 8:13 pm

Wow, Rick, you sure are a fabulous writer! Especially for a tech guy (I work with brilliant techies, but usually their mathematical aptitudes are stronger than their linguistics).

In any case, thanks for the douse of cold water, I’ve never heard a real, firsthand, personal account from the field. Scared me shitless and I like it!

Renting rules, even if it doesn’t ;-)

#44 Smoking Man on 03.26.14 at 8:13 pm

#31 Md on 03.26.14 at 7:43 pm

That’s a good guess, but till we see a hockey stick it’s business as usual.

We could have a stick in as little as 2 months or as far out as 20 years..

The market will tank after I call it, which will be as soon as my house sale gets closed.

No plans of selling till I see a stick.

My IP address will me in Mexico..

#45 Steve on 03.26.14 at 8:14 pm

CTV news online: Sandra Rinomato lies like a dog. Enjoy! It’s in the video line up right now…

#46 Just some guy on 03.26.14 at 8:16 pm

To Rick: thanks for telling that story; that took guts. You did a good thing. Canada needs more people with your open and honest outlook.

Thank you Garth for putting it up on your blog. Hopefully others will take heed.

#47 Cici on 03.26.14 at 8:19 pm

#40 Smoking Man

C’mon SM, be fair. How many people can afford to open a Tim Horton’s. Definitely not the average Joe or Jill who just got laid off in their line of work and doing Timbit’s time to cover the rent or mortgage until a position in their field becomes available.

I like your core message, but it usually takes money to make money…especially these days, where start-up costs are enormous and risk of failure is huge. Just sayin’.

#48 Furio on 03.26.14 at 8:20 pm

Garth, BMO’s posted rate is now 2.99 for 5 years. It looks like this is the new normal and all the fear mongering about rates going up is just that- fear mongering?

#49 TurnerNation on 03.26.14 at 8:26 pm

All this talk over cars from 1986.
I’d gladly buy 1984-88.
One of these. Timeless. Still hauls crass.

http://tinyurl.com/pghos4a

#50 Marco Polo on 03.26.14 at 8:26 pm

All this talk of housing reminds me of the stock bubble of the early 2000’s. If you didn’t have Microsoft, Cisco, or Intel stocks, you weren’t cool then either.

Back then, there wasn’t much talk of hot housing, interest rates were quite a bit higher, and falling.

I just wonder how many people bought property in 2011 or 2012, and predicted hordes of Russian troops massed on the border with Europe. Who predicted a Chinese credit or market change?

Housing is about the last thing i’d want to be tied down to right now.

#51 Ret on 03.26.14 at 8:28 pm

Have a look at what $3-500,000 for a new build buys now in the Charlotte NC area.

http://www.sheahomes.com/newhomes/charlotte/

#52 High Plains Drifter on 03.26.14 at 8:30 pm

Big plans in Calgary, geopolitics is de rigour tower talk in the windy canyons. I am sure Bay st. can think this one through if they don’t bust a gut over our P.M.’s role as damsel Kiev’s white knight. Tell your expat N. Carolinian, stay put and pay big money to listen to any big shot with Illuminati tattooed on their lip. Hey, this does not have to be a house play but it can be a bit dangerous trying to get ahead of the big boys in the paper trades.Meanwhile I will start humming The Boys Are Back In TOwn by that great Irish Band, Thin Lizzy. Been out of Toronto too long, am getting …………with anticipation.

#53 frank le skank on 03.26.14 at 8:32 pm

Thanks for sharing Rick, the US crash is what made me reconsider my desire to purchase real estate.

#54 TS on 03.26.14 at 8:34 pm

#5 Brian on 03.26.14 at 6:21 pm

It is only when the rich are sick that they fully feel the impotence of wealth.
Benjamin Franklin

Hope you have both health and wealth, but you should really tone down the bragging. Like Garth said, it’s nauseating.

#55 Daisy Mae on 03.26.14 at 8:36 pm

#4 Protea: “…we have a friend that has a beautiful 3600 sq ft home that has been on the market for 9 mths. The price started out at 1.7 mill and is now down at 1.399 mill.”

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

Monster homes — with their high property taxes, high utilities, high maintenance and so on — just don’t appeal. Who needs that much house? Anyway, no one will look at it until it drops to $999,999.

#56 Chump on a Stump on 03.26.14 at 8:38 pm

Well-written cautionary tale.
The figures you included in the stories seem like peanuts compared to the numbers that have been thrown around the past decade. It’s almost hard to imagine that someone can go bankrupt because of that amount. Especially in a low interest rate environment.

I worry for the people who are mortgaged to the nose here. (and won’t attempt to hide my feelings of scandenfreude!)

#57 Daisy Mae on 03.26.14 at 8:42 pm

#5 Brian: “Moral of the story… Rick is a loser.”

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

I don’t think so. He tried to do it right — remember he could have borrowed $700,000 but didn’t? — he did get caught in the downturn which is unfortunate. And should be a warning to us all. But, as usual, it won’t.

You, on the other hand, are a complete JERK.

#58 Freedom First on 03.26.14 at 8:51 pm

Thank you Rick. It is not easy to reveal ones’ crushed gonads on a public Blog, but well done, you may very well have helped save someone from the same drawn out and agonizing no anesthetic financial neutering.

The sage saying: “A smart man learns from his own mistakes, but a wise man learns from the mistakes of others” is, and has always been true. I am so glad, that with Garth having presented us with numerous “Ricks”, plus the unethical: condo kings, house salespeople, bankers, developers, mortgage brokers, as well as the ignorant/arrogant/ego driven: MIL’s, co-workers, friends, family, majority of people who are everywhere we go, that still, in spite of this full frontal attack on our financial well being, Garth has managed to save many people with his free blog of the truth. People who listened and learned. And then have publicly thanked him for their now enhanced financial virility.

And also, Garth has only written 10,000 times on his Blog, that he is not “Anti-RE” at all, but simply writes that having all of your $$$$$$$ in ANY “one” asset makes one extremely vulnerable to a financial castration. So easy does it, and always be: diversified, balanced and re-balanced, and $$$$$liquid$$$$$. No exception. For RE, the rule of 90. Personally, I like being debt free always.

#59 Mean Gene on 03.26.14 at 8:54 pm

Mr Turner is right again.

http://mobile.businessweek.com/articles/2014-03-26/wanted-more-employed-25-to-34-year-olds-to-buy-houses

#60 Drill Baby Drill on 03.26.14 at 8:57 pm

Dear ever so pathetic blog : todays write-up was a very good one. It really typifies what can happen to anyone who borrows for a home and thru unforseen circumstances loses their so called investment to banksters. The real estate mortgage laws in N. Carolina are really brutal compared to Canada however the basic economic laws still apply. It is ironic that the couple in the article ended up in Calgary but such is the way with perpetual losers it seems. I know this is a mean comment but how else do banks and mortgage lenders make their money ?

#61 Daisy Mae on 03.26.14 at 8:58 pm

#34 Chickenlittle: “That should say “gold”. Stupid IPad.”

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

Why doesn’t spellcheck leave us ALONE? If we misspell, so be it. But we gotta check every word before you click ‘send’, dammit….

#62 Reid Fleming on 03.26.14 at 9:02 pm

I bought in New England in 02, 12 years later, I will be lucky to sell for what I paid, maybe eke out a small gain. Rick’s story brought back the sick and hopeless feeling from 08-09 when the financial world was imploding. Notice the catalyst… job loss. Everything will be fine until unemployment crosses a threshold and people start to get fearful for their jobs. Once the fear sets in, it’s all over.

#63 pathcontrolmonk on 03.26.14 at 9:06 pm

#5 Brian, your misplaced schadenfreude and anonymous narcissism is truly “nauseating”.

Your progeny have good teachers though, so I suspect karmic revenge will come in the form of them directing their learned sociopathic miserliness toward you and your wife in your retirement.

FYI, it is well known that those south of the 30th parallel despise Canadians, ask your neighbor if it is true and watch his eyes flit all over the place. Also, evenings in the Sunshine State can get chilly, so I am sending you a maple leaf adorned hoodie, the latest in Floridian gated community fashion.

#64 Ralph Cramdown on 03.26.14 at 9:07 pm

#100 Outrage — “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.”

This is a key observation. The world IS awash in money.

There are different kinds.
– Local cash, from rich people
– home equity, from rich-ish people
– money from faraway places, both dirty and clean
– money borrowed from banks, because credit is easy and the government insures many loans
– old money; landlords who make great returns because they bought some time ago. A buyer at today’s prices would lose money collecting the same rents.

All of these sources of money affect house prices and rents. They have different motives, different objectives and different time horizons. Good luck.

#65 James on 03.26.14 at 9:10 pm

#5 Brian

Your entire post is a non sequitur. The point was not that anyone owning real estate is dumb. Of course those who were lucky enough to buy at the right time did quite well. (Those who bought gold at the right time did even better, and just take a look at stocks).

Those who are buying NOW, putting too much of their wealth into their homes, are foolish. You completely missed the part about macro-economic trends, job losses and the like. Sure, you can weather a 25% downturn. The family that bought recently is likely not in the same boat.

To add my two cents, in a shifting economy, mobility can be key. Not everyone has a guaranteed job for life. High housing costs mean high transaction costs, lowered rates of mobility, and (if recent studies are to be believed) reduced employment opportunities. I would not want to be holding a mortgage on a bloated Oakville home in the face of a job loss.

#66 Smudgekin on 03.26.14 at 9:12 pm

Eat my ass Oakville.

What the hells there? A Mall, a bit of pricey shoreline and congested QEW ramps. A yacht club in sixteen mile goose poop. To the North Milton, west Burlington and east Missitauga.

Plum, Pat Nixon bedroom community sans Ashleys.

#67 Trojan House on 03.26.14 at 9:15 pm

#5 Brian

Congrats on your success but no need to brag on it. I have a buddy that owns probably 10 times what you have but you won’t see him on a blog waxing poetic about it.

Real estate can be good and bad as can equities, etc. The moral of the story is that Rick ain’t no loser dude. Unfortunately, he’s just unfortunate. Lost his job as did millions of others back then. Who would, if it weren’t for circumstances, move from the relative comfort of SC to the frozen hellhole, Calgary?

#68 Shawn on 03.26.14 at 9:25 pm

Jealous Canadians

Brian at number 5, as you can see most Canadians are nauseated by reports of success.

You probably should not have called Rick a loser. He was unlucky in losing his job.

Some people were able to take advantage of the house price crash in the U.S.

Bad things can happen, but a giant recession and a huge fall in Canadian house prices does not seem to be in the cards.

Brian, congratulations on your success.

#69 Steve on 03.26.14 at 9:26 pm

http://www.ctvnews.ca/mobile/video?clipId=314058

Lol!! I finally figured out how to paste a link.

#70 Ford Prefect on 03.26.14 at 9:27 pm

Rick said house eventually sold for $167k (no date given) but Zillow site, at link above, says last sold in 2006 for $264k. I assume the $264k was his purchase but what about the subsequent purchase at $167k? Why is it not shown on Zillow? And if Rick is right then Zillow is not very reliable.

#71 Sam on 03.26.14 at 9:29 pm

Tornoto star no longer charging for online version. chepos.

#72 Happy Renting on 03.26.14 at 9:32 pm

Rick: thank you for having the courage to share your story. Glad to hear your family is seeing better times now and ahead.

If it’s any consolation, your former kitchen looks gorgeous (Zillow picture). I can see why, superficially, renters look poor and homeowners look rich. My kitchen looks like garbage in comparison, but hey, it’s only a rental. The Toronto RE bubble had to get pretty bad before I realized, “this is stupid and totally not worth the money to own vs. rent.” Getting sucked in is very normal.

Garth: for all your logical arguments backed by hard data, sometimes we just need to see what “financially castrated” looks like. Thanks for this post!

#73 Lala on 03.26.14 at 9:33 pm

@5 Brian

Your fear is screaming ….Do you feel better now you let it out. If you keep repeating same note everyday you migh feel like musician one day.

#74 Happy Renting on 03.26.14 at 9:34 pm

Oh, and I was going to say, “party at Rick’s house!” Too bad it’s in the U.S., would be hilarious if two dozen blog dogs showed up with a keg. Though I guess the current owners might sue for damages… Might have been worth it anyway, though!

#75 Mark on 03.26.14 at 9:39 pm

If RE wasn’t so darn expensive, maybe there would be capital available for other things in Canada. Like creating jobs for the hoardes of unemployed and underemployed. Especially in the engineering sector. A decade has passed since the Nortel debacle, and the sector is nowhere near recovered.

#76 Dinner_with_Groucho on 03.26.14 at 9:41 pm

Hey, Brian

You seem to have lost track of how much money you’re worth in that post.

On the troll scale I’ll give it 1/10.

#77 Old Man on 03.26.14 at 9:42 pm

#18 hohoho: Title is something that you will never see in China because the State owns all the land so is this freedom or slavery? Now in China one buys the home with no title for a fixed term between 40 to 70 years depending on location. So who controls your life, and what is left to pass on in the form of inheritance? The State considers the purchaser as the user of such, so what happens if the State frowns on your politics? The user only obtains the right to use and is this called freedom? Not on my page! Do you see the world buying residential real estate in China for an investment?

#78 Peter on 03.26.14 at 9:43 pm

HI Garth,

As much as I feel empathy for any family losing their home . If this couple were in their 40s when they purchased , I find it unethical to blame the realtor (who present options for homes) , builder (was the place defective too?) or the banker (who lend money for profit, and lost money) . I have been involved in lending , as a borrower and lender. If I could do a first mortgage , I wouldn’t trust Rick. Good luck in Calgary

#79 gladiator on 03.26.14 at 9:45 pm

The scariest thing I find in Rick’s story (besides his losses) is that NC being a recourse state, the house sold for 35% less than what Rick paid for it. I was always kinda skeptical to transpose what happened in the US to the Canadian RE market due to this very significant difference (US being mostly non-recourse and Canada being recourse), so that I had huge doubts that we might experience a large drop or maybe a crash in RE.
Today’s story shows that if the market is to drop – it will, no matter what. And given the absolute crazy heights that our RE is at, a 35% drop will be a blessing. I was expecting around 30% drop, but today adjusted my number to 50%. As Garth stated, it will not be sudden. But the longer it takes to slowly deflate, the more pain it will cause, just like peeling a huge frigging Band Aid one millimeter at a time. Priceless.

#80 45north on 03.26.14 at 9:47 pm

Maybe not, but given my tale of woe above, the Canadian “it can’t happen here” mantra rings in my ears like a freaking shotgun blast to the head.

it rings in my ears too. Boy are we for a shock!

#81 b on 03.26.14 at 9:49 pm

Wow, Garth, you seem to be bringing out the supreme, arrogant a-holes e.g. #5 Brian. What drives people to such depths?

#82 medic on 03.26.14 at 9:52 pm

Brian forgot to mention that he also has a full head of hair, the body of a Greek god, and his shit doesn’t stink.

#83 George on 03.26.14 at 9:53 pm

From the previous thread:

Mike in Surrey #171 said: “Ontario min. wage will be $11 an hour starting June 1, one week pay equals $440 rent per month per bedroom.”

Yeah that’s right. Because we know all minimum wage workers have full-time jobs and get 40 hours per week. Gimme a break. Most minimum wage workers are lucky to get 25 hours per week. Don’t know about Ontario, but in BC it is legal for the employer to schedule you for a 2 hour shift.

#84 joblo on 03.26.14 at 9:55 pm

“Things we’ll never do:

1.) Trust a bank.
2.) Trust a builder.
3.) Trust a realtor.
4.) Trust ANY news outlet that says “housing is rocking right now!”

Things I’ll never do:
1.) Trust Conference Bored of Canada
2.) Trust F
3.) Trust Carney
4.) Trust that ANY Conservative has a clue how to fix Kanada!

#85 fisheman on 03.26.14 at 9:59 pm

I’ve been keeping an eye on a big lot that sold in Kerrisdale (Van westside) (2.4-2.9 m range)to HAM ; was subdivided & two smaller houses built to lockup. Then a big container showed up in the yard. Guess what’s in there? Flooring, doors,kitchen cabinets,hardware & prebuilt interior stuff , stuffed to the hilt & direct from China. Word on the street with spec builders & a few sellers is that Ham is backing off. Not that it matters. I’ve seen three waves of HAM immigration.(Cantonese from Hong Kong, Mandarins from Taiwan& just lately the Mainlanders) They’ll lay low 3-10 years & come roaring back more than ever. I’ll be to old for the next hit.

#86 Nick on 03.26.14 at 10:08 pm

BMO cuts 5 year rate to 2.99%…

http://business.financialpost.com/2014/03/26/bmo-mortgage-rate-cut-canada/

#87 KommyKim on 03.26.14 at 10:11 pm

RE: #22 Smoking Man on 03.26.14 at 6:57 pm
That’s why I slave at a Hedge Fund…

I think I spotted you SM:
http://lopezislandkitchengardens.files.wordpress.com/2013/03/hedge-scott-side-view.jpg

#88 Bottoms_Up on 03.26.14 at 10:13 pm

#79 gladiator on 03.26.14 at 9:45 pm
————————————
Isn’t recourse vs. non-recourse a provincial thing, and most provinces are in fact non-recourse?

#89 Aggregator on 03.26.14 at 10:13 pm

What do Richmond Hill, Markham and Toronto all have in common? Hint

#90 Babblemaster on 03.26.14 at 10:19 pm

Things we’ll never do:

3.) Trust a realtor.

————————————————-

OK. That’s going too far. Credibility is now in question. Also, the R word is copyrighted and should properly be capitalized.

#91 Montrealer on 03.26.14 at 10:27 pm

That Zillow listing shows the house is worth $199-222k and rent $1.4-1.7k

This is a very high rent and good returns. Here you can rent a $400k house for about $1700…

#92 Eatin' Bonbons on 03.26.14 at 10:31 pm

… And then Brian’s wife left him and took half – and ’cause he was such a ‘humble’ fellow all his life… his kids never visited, never called when he was old and alone…

Dude – don’t go around calling people Losers just ’cause they had a some rough luck. You never know how your story will turn out down the road. Be happy for the life and HEALTH you and your family have, learn to be modest IF you are capable of that.
Absolutely not cool to put others down. Sheesh!

#93 Nemesis on 03.26.14 at 10:33 pm

@TurnerNation/#45

’86!? PishPosh! You really meant ’75? Right? Right?

If not… Well then… I’ll just have to throw down the gauntlet, won’t I!… You, TeutonicPhilistine, you!

http://tinyurl.com/pq39bpp

#BonusKraftwerk [forMotorHeadsOnly]

http://youtu.be/y7n65wQhTNU

[NoteToSnowBoid: You must have an opinion on this? PS – ForYourEyesOnly – & PleaseView InThisOrder: 1. http://tinyurl.com/pd43u3e 2. http://tinyurl.com/nsrgftz 3. http://tinyurl.com/q8fy6y3 #GrandeFinaleBonusZen {sadly, not available on AllPlatforms} : http://youtu.be/2_1wWdrqhEI – NoteToMillenials: Please don’t talk to us about the ‘marvels’ of iGadgetry™ – until you’ve experienced the RealThing®… because, as PeterLorre could well have told you { http://tinyurl.com/nhatfzc } – technology you can hold in your hand is a lot like onanism… a VeryPoorSubstitute for the RealMealDeal. So to speak. Well. There it is, SaltyDogz. GoodNight, All… BeWell.]

#94 ole Doberman on 03.26.14 at 10:33 pm

If Kevin O’lreary is now saying there is no bubble the end must be near. The rich with tv power all stick together and help buddies out. Great post today.

#95 Andrew Woburn on 03.26.14 at 10:35 pm

Putin’s Russia caught in US and Chinese double-pincer

Mr Putin is discovering that global finance is more frightened of the US Securities and Exchange Commission than Russian T90 tanks

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/10725643/Putins-Russia-caught-in-US-and-Chinese-double-pincer.html

#96 Nemesis on 03.26.14 at 10:38 pm

#NemesisErratum – That should have been: @TurnerNation#49

#97 Odessa Barb on 03.26.14 at 10:41 pm

Thanks for the great story Rick. Takes courage to relate these personal life lessons, especially in a public forum. As a Calgarian myself, I saw what the 80’s did to this city. It is inevitable that prices move back to their averages. So many people forget that everything is cyclical.

#98 Cici on 03.26.14 at 10:49 pm

#70 Ford Prefect

I believe he said that “real estate” purchased his real estate, meaning a realtor or large-scale investor.

#99 Happy Renting on 03.26.14 at 10:50 pm

#4 Protea on 03.26.14 at 6:16 pm

Congratulations on getting out in time. Nice to hear success stories, too.

———————————————

#8 hohoho on 03.26.14 at 6:32 pm

My experience is that you are right. Except for Cuba, anywhere else in the developing world greenbacks are like candy. I always stock up on smaller denominations when travelling, they are always useful.

———————————————

#27 Calgary Owner (2nd. Round) on 03.26.14 at 7:36 pm

Not quite. Sure, Rick lost his job, but if the GFC hadn’t pounded the industry where he worked, if long-term unemployment hadn’t gripped the jobless (stay out of work long enough and no one will ever hire you again), and if his house value hadn’t collapsed he wouldn’t have been in such dire straits. Add in dubious lending practices (pre-approved for $800k, two years of payments and no dent in the $260k mortgage principal, WTF?) Sure, lose your job, get another one, disaster averted. A lot more happened than a simple job loss.

———————————————

#30 Chickenlittle on 03.26.14 at 7:42 pm

Ugh, gross real estate person. If the place cost $600k, the owners would have to be collecting $3333/mth rent to make a rent-to-price ratio of 15, where buying and renting are about equally attractive. I think you said rent was around $1800… Those landlords are subsidizing you big time. Make sure they get a gift from you at Christmas. :)

———————————————

#41 DigDeep on 03.26.14 at 8:04 pm

Yeah, I don’t get why some commenters feel the need to shit all over Rick. His painful story is a teaching/reminder to us not to get caught in the same way. And the way it’s written, he clearly takes responsibility and has learned from it. He’s not blaming the bank, government, economy, MSM, MIL, etc. Seems like a good guy, wish him well.

Re: wage pressure. If bidding for jobs is the wave of the future, it’s even more important than ever to be a shareholder, not an employee. Though you’d have legions of employees using company time to constantly bid on other job openings… Would have to be a severely unbalanced job market.

———————————————

#51 Ret on 03.26.14 at 8:28 pm

To my weary Toronto eyes, some of those places are $2m+ mansions! Maybe I do need to move someday, down the line…

———————————————

#56 Chump on a Stump on 03.26.14 at 8:38 pm

Agree completely, $260k is a teeny condo in Toronto. If I could get a new, detached house for that in the GTA I’d be all over it like white on rice.

———————————————

#60 Drill Baby Drill on 03.26.14 at 8:57 pm

Why is someone a loser for ending up in Calgary?

———————————————

#65 James on 03.26.14 at 9:10 pm

That’s one advantage not talked about nearly enough in a tough job market: ability and willingness to relocate. I guess the situation isn’t desperate enough yet. People cling to the idea that they should be able to live where they want. When there’s a shift in thinking and mobility increases, we know we’ll have hit a whole new level of unemployment desperation.

———————————————

#70 Ford Prefect on 03.26.14 at 9:27 pm

Maybe because it was a bank foreclosure? Price secret except to Rick, whose family gets to pick up the tab for the difference.

———————————————

#81 b on 03.26.14 at 9:49 pm

The guy pretending to be millennial “Kylie” wanted some variety.

#100 Sean on 03.26.14 at 10:57 pm

Reading the comments sometimes makes me think of the Beverly Hillbillies… bumpkin Canadians who have won the lottery with their million dollar homes… and just don’t know it. Bumpkin Canadians, with their million dollar homes.. wondering what kind of riding mower to buy to mow the lawn, worrying about gas prices, and bragging about how their home is close to a walking path or public transit… WTF!?! In the rest of the world, a million dollars could still be considered wealth.. and in fact in relation to the pitiful incomes in Canada, it should be in Canada as well. Wake the F up Canada! Sell the damn particleboard palace, forego the snow blowing obligations.. and move somewhere that a million bucks buys you a lifestyle, not a life of debt slavery and snow blowing duties.

#101 Littlebigman on 03.26.14 at 10:57 pm

I am SOO tired of reading about how F tamped down the Canadian Housing Market by reducing the 40 year Mortgage to just 25 years, as reported in the National Post every 2nd day among others.
They NEVER mention that he is the one that created the 40 Year gasbag, he is the 40 year amortization Flaherstein

#102 Snowboid on 03.26.14 at 11:04 pm

#63 pathcontrolmonk on 03.26.14 at 9:06 pm…

You will be happy to know the Brits also love retirement in Florida.

http://www.youtube.com/watch?v=7NzCg-oKVBk

#103 TurnerNation on 03.26.14 at 11:05 pm

Smoking man as mentioned by me you need $500,000-750,000 for a freakin greasy spoon or candy store franchise.

I think the Franchisors are the real smoking men.

http://www.greaterfool.ca/2013/06/09/wasted/#comment-245728

#104 Dean on 03.26.14 at 11:11 pm

Yabutitsdifferenthere.

#105 Snowboid on 03.26.14 at 11:12 pm

#79 gladiator on 03.26.14 at 9:45 pm…

The place we purchased in Phoenix was pretty close to a 50% drop from its’ peak value in 2006-7.

Many places we have followed for the last few years in Kelowna (re-listed ad infinitum) are already down 25-35% from their peak in 2010. SFHs on the lower end and condos the higher percentage.

#106 retired Boomer - WI on 03.26.14 at 11:21 pm

Rick – Thanks for your story. Sorry you had to be in the middle when TSHTF. When your income disappears your debts keep on keeping on. When there are NO jobs locally… and you hold RE you either sell at the market, or lose your holding.

You went through the sausage grinder as have many others both in recourse, as well as non-recourse states. Credit gets damaged, and you’re damaged goods for a time. Not forever, but a time.

I am glad you are doing well today, keep saving your dough, there will be another time to own if you choose it.

Never be in a “rush” to buy, whatever the market. It will change, and sometimes so violently you could never guess the outcome!

Markets get the last laugh on most people.

#107 OttawaRentingGUY on 03.26.14 at 11:31 pm

Dear Brian,
Money Talks
Wealth is silent
Kthx
signed
Most of my family

#108 gmc on 03.26.14 at 11:39 pm

As Bill Bonner has said, the financial world is distorted, that is why I think most Canadains are confused and worried about investing, sure your calls on the market have been OK but it could have gone the other way, one wrong move and your wipe out, just ebcause things have been the same for the last 30 years deosn’t mean it i will be so int he future.
First, we need to understand that this is a very different world from the world of the 19th and early 20th centuries. It is a world where central bankers play a role somewhere between con artists, mad scientists and God Himself.

Quote “They deceive and cheat. They conduct their experiments without any real idea how they will affect people. And they move almost every price in the world – sending investors, householders and business people all running in one direction.

Their experiments change not only prices quoted on the Big Board and the supermarket. They also change the physical world. Jobs are lost to machines that – without such low interest rates – would not have been built.
The housing bubbles have occured all over the world, here in Canada, we are the best and safets place in the world, and precieved as NOT LIKE THE REST OF THE WORLD, we just extended the time for the bubble to happen, WE ARE NOT DIFFERENT, Garth will have his day, but his call was off by many years, but he will be right.

#109 RayofLight on 03.26.14 at 11:42 pm

Thank You Rick.
I spend 7 months in Canada,5 months in the US.
The Americans are great people,their politics suck.
Canadians are in for a brutal awakening re :RE.
Never short America!

#110 Happity on 03.26.14 at 11:44 pm

It’s all a hall of mirrors, that digital creation where folks stash their hard earned cash… with full faith it will always be there (oh and don’t even think about global banking integration and $100’s trillions in off balance sheet derivatives).

BoE paper states:

“In the modern economy, most money takes the form of bank deposits. But how those bank deposits are created is often misunderstood: the principal way is through commercial banks making loans. Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

* The reality of how money is created today differs from the description found in some economics textbooks:

* Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits.”

#111 Paul on 03.26.14 at 11:56 pm

Too bad Calgary is not Toronto. Yes it is different here.

#112 fixie guy on 03.26.14 at 11:56 pm

Not to be a debbie downer but the CDN banks only rock at the grace of the good kings Harper and Flaherty backing dump trucks of loan (read: profit) guarantees at every door. The international financial community caught on and that dog don’t hunt any more.
Don’t trust banks and have an exit plan, employment included.

#113 John Prine on 03.27.14 at 12:38 am

hings we’ll never do:

1.) Trust a bank.
2.) Trust a builder.
3.) Trust a realtor.

I’d put Realtor #1, Builder #2, Bank #3… but that’s just me.
1.) Banks
2.) Banks
3.) Banks

Builders and realtors wouldn’t have any fodder if the banks weren’t forever pushing “You’re richer than you think” to the great unwashed…

#114 Turtle on 03.27.14 at 12:44 am

Rick, thank you for sharing. Job loss for such a long period of time changes everything, but I see you guys are still together. You can change 10 months of summer in NC to 10 months of winter in AB and regain all your losses, just stay together. You are the winner in my eyes.

#5 Brian, thank you for sharing too. I wish you never to experience a tragedy or even a hardship in your life. It looks like you got everything figured out. Tell us more… Are you a good father to your kids? Some people believe that person’s success or failure measures by their kids’ success or failure. Think about it.

#115 John Prine on 03.27.14 at 12:48 am

Never heard a tech nerd use the word “Lusty” but have heard it on this blog before……Seniors word only.

#116 Christopher lackey on 03.27.14 at 12:52 am

Nice to see gratitude and humility are alive and well in Oakville.

Nice townhome down the street from me a few km from downtown montreal recently reduced from 489 to 459k. Who cares if its a newer home 2 min from subway and highway? Who pays the wages to service
that mortgage here?

As a 30 year old with a family renting on the same street id be a prime
candidate for that house. Thing is, im only willing to pay half that price.

I can rent forever but a lot more people are going to have to discover the meaning
of “paper gains” before I get in this market

#117 TakingResponsibility on 03.27.14 at 12:58 am

Rick, you are way too cool to be so old. You were on Facebook in 2006 before the rest of the public?
Wow!
Good thing you are in Calgary – Non Recourse province, Rick! Buy it up big! Don’t worry, zero down abounds here in AB, and hey, if you lose a job in AB, it’ll take the bank more than a year to foreclose. Free rent. Pffft – don’t worry about jobs here though. Nah, bankruptcy, foreclosures, no reason not to buy again (and obviously past credit issues doesn’t hurt bank employment either!) – banks don’t care about past credit problems because we Canucks have CMHC insuring bank loans – banks want anyone who can Breathe to Buy, Buy, Buy!!
And, you know what – it doesn’t matter if you have your PR papers, or citizenship papers, – Rick, CMHC wants you to Buy. Banks want you to Buy. Just do it!

#118 NVrrr on 03.27.14 at 2:00 am

Need clarification:

what does “recourse” and ‘non-recourse” mean?

also: what does “HAM” signify (I’m trying to guess)

#119 Prime Minister's Office on 03.27.14 at 2:44 am

BMO just announced 2.99% 5 year fixed !!! Wow.

TD just said “they’re confident there will be no crash” because of “Federal Immigration policies”.

Is anyone allowed to comment on this blog about this?

Also the new Federal Immigrant Investor program will be released on June 1st. Wish I had the inside details. Word is that buy a home in Vancouver ASAP. Going to average $3 million for a SFD after this.

#120 4 AM Sunrise on 03.27.14 at 2:46 am

Something for the Smoking Man…

The new common core curriculum in America teaches kids that 3×4 can equal 11 if they can explain how they got the answer:
http://finance.townhall.com/columnists/michaelschaus/2013/08/19/common-core-will-instruct-teachers-to-praise-wrong-answers-n1667595/page/full

#121 Humpty Dumpty on 03.27.14 at 3:19 am

These guys,
G7 leaders – Britain, Canada, France, Germany, Italy, Japan, and the US

dont trust those guys….
Brazil, China, India, and South Africa

With Brazil and China now wealthier than some G7 countries, Russian foreign minister Sergei Lavrov noted the G7 has lost its monopoly on global governance.

“If our Western partners believe this format [G8] has exhausted itself, let it be. We are not clinging to it. As an experiment, we can wait a year or a year and a half and see how we live without it,” he said.

http://euobserver.com/foreign/123616

Let the trade wars begin….

#122 Exurban on 03.27.14 at 3:34 am

#55 Daisy Mae

Monster homes — with their high property taxes, high utilities, high maintenance and so on — just don’t appeal. Who needs that much house? Anyway, no one will look at it until it drops to $999,999.

Mmmkay, but is 3600 sq. ft. actually a monster house? Build a two-storey house 40′ by 40′, tack on a 20×20 garage, and you’ve got a 3600-square-foot house. Even the monsters in cramped Vancouver are bigger than that.

#123 Humpty Dumpty on 03.27.14 at 4:01 am

Hey Ralph Cramdown…

Observe this…

Wal-Mart: Food Stamps Spending by Customers Key to Its Profits

It looks like Walmart is awash with funny money while 50mill “different kinds” of Amerikans try “different kinds” of nutritional twinkies…..

http://www.newsmax.com/TheWire/wal-mart-food-stamps-customers/2014/03/25/id/561526/?ns_mail_uid=14578862&ns_mail_job=1561664_03252014&promo_code=16EB2-1

#124 I'm James Bond on 03.27.14 at 5:19 am

OK Brian, in a virtual world you have elevated yourself above anonymous people you’ll never meet. But you remain a waste of space

#125 Mr. Happy on 03.27.14 at 7:06 am

“Not everyone who buys real estate is a loser. Oh yeah we have a 7 figure portfolio too with maxed RSPs, TFSAs, RESPs and growing non reg accts. Will be retired in our early 50′s with $120k after tax income (todays dollars).

No inheritances, gifts or lottery wins. No pensions. Smart diligent planning….

Live beneath your means, have a plan, take a few calculated risks. Don’t fear any asset class but diversification is key.”

No friends either, I imagine. You are nauseating. — Garth

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

Wow, somebody smart for a change (like me as I have an almost identical story but slightly larger portfolio) and you crap on him????

ps. we have friends as I am sure they do as well….

#126 Eric on 03.27.14 at 7:15 am

Everything will be fine until unemployment crosses a threshold and people start to get fearful for their jobs. Once the fear sets in, it’s all over.
**************************

So true. Once things start to turn down, the first thing that will happen is that new housing construction slows down, and people working in construction have a hard time finding work, but also lenders, appraisers and of course realtors. But it doesn’t stop there – retailers that sell furniture see a business turndown. And once the general public is in fear of losing their jobs, then virtually every business sees a turndown in business, which can result in more layoffs. Governments see a reduction in tax revenues, and the temptation is great to lay off government employees as well.

That’s the crux of it really. You might think that since you are in a line of work that isn’t related to housing that you are relatively safe, but when the economy takes a dive, there aren’t as many safe harbors as one might think.

#127 sheane wallace on 03.27.14 at 7:39 am

#8 hohoho

USD … accepted everywhere (TM)
…………………………….
Agree, but the exchange rate…
USD is down 80 % compared to the CHF in the last 30 years.

I preffer my CHF/FHF

#128 sheane wallace on 03.27.14 at 7:46 am

how many here can recognize the BRIC currencies or SDRs? never-mind accepting them as payment?
………………………..
Just watch it.
They already use their own currencies to settle their trade deals/between BRICS members.

China will surpass the US economy shortly, this might have happened already.

US economy is comprised from large multinationals that are really internationals and for them weak dollar works better. And no, I am not going to sell my large cap US dividend paying stocks.

On the SDRs I would not be surprised if that has been in the plans for quite some time.

#129 5 Brian says: Rick is loser !.... LOL on 03.27.14 at 7:47 am

Ha ha !

Brian DO YOU mind if save your comment here and repost it in few months or next year?

And read Ricks letter again !
He was there where you are now:
swimming in money
and starting every sentence with ME ME ME !!!

Except he was stashing money, and you are blowing it on RE and Taxes and Capital Gains beating…

We shall see who is loser very soon…

Yours Truly: Happy Renter…

#130 Ronaldo on 03.27.14 at 7:49 am

#5 Brian – there are those like yourself who have gotten a rude awakening when the wifey decided to pull the plug (worse than losing your job). They soon discovered that they weren’t as rich as they thought. Then they sang a different tune. Karma has it’s ways. Have a good life.

#131 jess on 03.27.14 at 7:53 am

economic relationship

http://www.nord-stream.com/about-us/our-management/
German companies have invested €20 billion in Russia,

http://www.testosteronepit.com/home/2014/3/27/german-industry-goes-to-see-uncle-putin.html
======================
Capture and Curse?
Financial lobby puts down shadow banking regulation
By Markus Henn, WEED
http://somo.nl/dossiers-en/sectors/financial/eu-financial-reforms/newsletter-items/issue-23-march-2014/financial-lobby-puts-down-shadow-banking-regulation

#132 I'm stupid on 03.27.14 at 7:55 am

#118 NVrrr

Non recourse means if you walk on the house the bank can’t sue for loses after they sell the house

Recourse means they can

HAM= hot Asian money

#133 Centre-ville on 03.27.14 at 7:55 am

That was an excellent first-hand account. Thank you, Rick.

#134 Ralph Cramdown on 03.27.14 at 8:01 am

#123 Humpty Dumpty — “Wal-Mart: Food Stamps Spending by Customers Key to Its Profits”

This isn’t by any means news — it has been discussed for years. They also have the phenomenon of the midnight shoppers, food stamp users so broke and hungry that they arrive at the Walmart cash right around 12AM, the time that their food stamp debit card gets recharged by the government.

I’ve consistently said that the American economy is not good, and for many of its citizens positively lousy. But it is improving. It may sound callous, but I’m more focused on how America is doing from a shareholder’s perspective than from that of a citizen in the lowest quintiles of income and wealth.

http://advisorperspectives.com/dshort/updates/Big-Four-Economic-Indicators.php

#135 Smoking Man on 03.27.14 at 8:20 am

An Ice Pick in the eye balls of squatting, vulch position basement dweller waiting to attack.

5 year rate back to 2.99%

And the dandy lions about to pollinate making buyers go of to a hypnotic dream state, out bidding each other with no regard to anything.

A generation that thinks 4×3 = 11

A generation that values how you explain getting the answer, rather than getting it right.

The Spring will be huge…..

#136 HogtownIndebted on 03.27.14 at 8:25 am

So BMO is plummeting its rates again…so these people can buy?

Not very likely.

Enjoy this link and song, by new band London Grammar. It speaks to the lost generation of twenty-somethings, very soon in their thirties, who can not get into the workforce, let alone the housing or even rental markets.

The song is called “Wasting My Young Years”

From the Guardian:

“But at a time when young people feel entirely at sea – unable to find work or afford rents, forced back into their childhood homes – the song takes on a generational eeriness.”

“I have a lot of friends now who are really lost,” says Reid. “We got to go to university and have a good education, but we’re finding ourselves in a position where it’s impossible to get jobs, and we’re terrified. So many people I know don’t know what to do with their lives.”

http://www.theguardian.com/music/2013/sep/05/london-grammar-if-you-wait-interview

Great band and lead singer. Too bad all millennials can’t just pay their bills creating bands, or new apps for Clash of Clans. But they can’t.

I know so many folks like this, well educated, good backgrounds, but unable to climb into what used to be the middle class, childless and still looking in their thirties for that entry level job with some upward mobility.

The bubble is leaking badly in Toronto. What comes next will surprise even the pessimistic, I think.

#137 Kris on 03.27.14 at 8:46 am

It’s worth recalling that Garth himself does not see Cdn RE suffering a massive shock like the US. A 15% haircut, and over many years, wasn’t that the projection?

Nuriel Roubini was more optimistic about Canada, guesstimating a mere 10% drop.

These sort of corrections won’t matter to most people.

Not exactly. The perceptible correction should be 15%. The bottom, after a long slide, far deeper, depending on the community. — Garth

#138 Shawn on 03.27.14 at 8:48 am

Forbidden Topic – Your Wages and other financial success

We have been conditioned to keep our salaries to ourselves and not to brag about our investment portfolios.

This suits society. If one worker reveals his salary it can upset many others.

Hockey players were paid peanuts until their salaries became public. When that happened they had the ammunition to negotiate higher, in a race to the highest common denominator.

Same happened with executive pay.

Secret salaries promote low pay, public salaries promote high salaries but also grumbling.

Why should it be socially frowned upon to state what you are paid or what you have gained in the real estate and financial markets?

Who does this secrecy serve? You or your employer? You or others?

Why shouldn’t high salaries and returned be remarked about so that others can aspire to similar?

#139 Mr. Frugal on 03.27.14 at 8:52 am

#5 Brian on 03.26.14 at 6:21 pm

Moral of the story;

1. Brain is an a-hole.
2. See #1.
3. See # 1.

#140 Steven on 03.27.14 at 8:54 am

The house eventually became an REO property; “Real Estate Owned”. It also eventually sold. For $167,000.

$167,000 is still a lot of money to pay for a home and would require an income of $55,667 or better to safely buy. That would be like $27.84 an hour. No minimum wage worker is buying that house any time soon with out a huge down payment that makes the mortgage payments insignificant.
Home prices probably have more room to fall before there is wide spread support from wage earners.

#141 Holy Crap Wheres The Tylenol on 03.27.14 at 9:03 am

#40 Smoking Man on 03.26.14 at 8:01 pm
#36 TurnerNation on 03.26.14 at 7:53 pmIf life gives you an empty middle make Timbits.

I see a steel plant closing in Welland and Saputo closing up in some small towns. Gone forever. They all can get McTimmy’s jobs.
……..
Yes and it never crosses anyone’s mind that they can open a McTimmys. Ah, Risk….. No, fear… Trade time for peanuts is the road to success.
I got to finish this book…

_____________________________________________

I personally know the Saputo family and I can tell you the plants they closed are not worth upgrading. It is sad to see good paying jobs go in these small towns. Saputo is shifting production to other plants so there is growth at the new locations. I don’t’ believe that these small town locations will recover. I know that these people will suffer in their job losses but unfortunately this is a very competitive global business. Saputo is a very successful Canadian dairy company. Founded as a cheese store in 1954 by Italian immigrant Giuseppe Saputo. It is the world’s twelfth largest dairy producing company. After growing in its home region of Quebec, the company has expanded by mergers and acquisitions. Saputo operates in Canada, as well as in the United States, Germany, Wales and Argentina. It is the largest dairy processor in Canada, third largest in Argentina, and among the three largest cheese makers in the United States. About a third of its revenues come from the company’s United States operations. Saputo has the Canadian rights to Hostess Brands products such as Twinkies!

#142 Trevor on 03.27.14 at 9:05 am

Thanks for the story Rick.

I apologize for my fellow countrymen who unfortunately think they are smarter then everyone else too and choose to ridicule you for learning from a life lesson. These are the type of stories that help keep hormones in check.

#143 Grantmi on 03.27.14 at 9:15 am

#17 just an observation on 03.26.14 at 6:48 pm

BT – what a gorgeous house for so little money.
You couldn’t buy a garage in Canada for that.
All the best to you and your squeeze…. :)

Kijiji http://bit.ly/1iDAQ3i

hell! You can barely rent a Laneway home in Hongcouver for the same price it cost to rent Rick’s old home in Charlotte!!!!

3,000 ft vs 800 ft.

What’s wrong with this picture??

#144 Ralph Cramdown on 03.27.14 at 9:17 am

The point is:

– If you got a great whopping raise last year, how many people making the median salary got raises of zero to counterbalance that and validate StstsCan’s average salary increase number?
– If you’re in line for a big inheritance, how many in your cohort will inherit zero to validate the average inheritance statistic?

I’m not commenting on the fairness or unfairness of income and wealth distributions, but a number of commenters come up with something that boils down to “You don’t get it. There’s lots of money. All my friends…”

If you’re in the group with the money, you have to understand that prices are also being supported by people without money who can (for now) borrow it, and by money from faraway places.

#145 gladiator on 03.27.14 at 9:28 am

@88 Bottoms_Up:

“In Canada, mortgages are typically “full-recourse” loans, which mean the borrower continues to be responsible for repaying the loan even in the case of foreclosure. Lenders can take legal action to recoup money from the homeowner if a foreclosed home is sold for less than the amount owing on the mortgage. In many U.S. jurisdictions, mortgages are “non-recourse,” which means that borrowers can often walk away from their homes and the associated mortgage debt, leaving lenders with no recourse beyond the property.”

From here:
http://www.cmhc-schl.gc.ca/en/corp/nero/jufa/jufa_018.cfm

#146 Penny Henny on 03.27.14 at 9:57 am

Rick’s story
-I was 44 (American), my wife 46 (Canadian)
-and realized we could easily make the payments,
-and still put money away for retirement on one salary.
-At eight months we also ran out of money.
and finally
-but we owed all of the $260,000 we originally paid

It’s got to be said that Rick is lost when it comes to money. Mid forties, put zero down on house, says they were saving for retirement and ran out of money in eight months.
Loser

#147 Detalumis on 03.27.14 at 10:01 am

You actually meet a lot of Brian’s in IT, they often have a touch of Aspergers and there ain’t such a thing as Karma, it’s a religious invention to keep the proletariat from uprising. The Mrs. Brians are often exactly the same and they go on to live very long lives.

Some people are just mean to the bone but to give him the benefit it may not be his fault, empathetic personalities are often inherited just like blue eyes or brown and he is missing that gene.

To give you an example of his “cheapness” the costs of running my itty-bitty 1,157 square foot bungalow in Oakville is more than 10K a year and I’m sure his ravine place is twice as large.

#148 Rick on 03.27.14 at 10:11 am

I had no idea I would be famous. If I’d know you were going to publish me, Garth, I’d have taken a shower or something.

Bonus – favorite comment: “Rick is a loser.”

Hard to argue that one.

#149 Gigi on 03.27.14 at 10:19 am

# 5 Brian Darling

Who the hell wants to live in Oakville?
Ostentatious mega-homes that look all the same, actually they sort of characterize the place and the people.Booooooooring.
C’mon Brian, vacation in Florida? OMG you’re the loser!

#150 gladiator on 03.27.14 at 10:22 am

@146 Detalumis:

So happy there are more people like me who know that there is no such thing as “karma”. Total and utter BS.

#151 Daisy Mae on 03.27.14 at 10:22 am

#108 GMC: “….WE ARE NOT DIFFERENT, Garth will have his day, but his call was off by many years, but he will be right.”

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

Garths’ call has been right on the mark. But he can’t reach everyone. Deluded Canadians have been listening to the government/CREA/realtors/media. And that will be their downfall.

#152 calgary rip off on 03.27.14 at 10:25 am

Unlike most, Rick has the cajones to tell what really happened. Most people dont have the decency. Thank you Rick.

What a person has in Calgary is simply a disaster. The best thing to do is to find pleasure in small things. There is no security in renting or buying a mortgage. Rents are too high and so are mortgages vs. incomes. Given that reality and the reality of a steady appreciation of properties, if 1)you will be working for the next 40-50 years, and 2)your job is some steady type of employment(eg, healthcare where there are always sick and dying people) then it may be good to consider getting a mortgage. As a renter I was paying $1600/month with no utilities. I asked the owner if I could buy the place. He said no. So I paid that rent every month from 2007 until late 2011 when I got a mortgage, for the same monthly payment, and almost same house, 10 houses down the street. Calculate how much money I paid on rent in that time period. Gone. Sure most of the money I pay on the mortgage goes towards interest, but what choice do I have if I am long term in a job? Am I supposed to sit tight for the possibility that prices may drop short term? What about long term? If I wait 10 years will the house I am renting from the bank be worth $1 million or some crazy amount? Is it really wise to wait and find out?

The reality is is that all real estate(except in texas) is overpriced crap. Most of the construction is mass produced and shoddy quality. Laminate floors, pipes put in wrong, etc etc. There is no comfort in real estate, just heartache and headaches.

What this blog repeatedly fails to explain is why decisions should be made regarding real estate(or anything) but explains what happened but not the internal workings of why decisions were made.

I will illuminate this because the author doesnt. People get houses because of the priceless things that are memorable: Your first puppy. Your daughter learning to ride a bike. Spending time with your family. Your wife telling you about her new job. Without some basic level of security this cannot happen.

#153 Daisy Mae on 03.27.14 at 10:32 am

#122 Exurban: “Mmmkay, but is 3600 sq. ft. actually a monster house? Build a two-storey house 40′ by 40′, tack on a 20×20 garage, and you’ve got a 3600-square-foot house. Even the monsters in cramped Vancouver are bigger than that.”

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

It is, compared to a 350 sq.ft. condo.

#154 Derek on 03.27.14 at 10:36 am

Not exactly. The perceptible correction should be 15%. The bottom, after a long slide, far deeper, depending on the community. — Garth

If you keep repeating it might come true some day. Reality is that big cities like Vancouver and Toronto have households making the big bucks. Any correction, which is going to be minor in big cities, will be a drop in a bucket. For example, it’s not like that 1.5M house in Lawrence Park will be had for 900K in a few years. And you know it.

#155 Daisy Mae on 03.27.14 at 10:37 am

#125 Mr Happy: “Wow, somebody smart for a change (like me as I have an almost identical story but slightly larger portfolio) and you crap on him???? ps. we have friends as I am sure they do as well….”

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

Most people aren’t impressed by braggarts putting others down…

#156 Rational Optimist on 03.27.14 at 10:48 am

#122 Exurban on 03.27.14 at 3:34 am

“Mmmkay, but is 3600 sq. ft. actually a monster house? Build a two-storey house 40′ by 40′, tack on a 20×20 garage, and you’ve got a 3600-square-foot house.”

You think a garage is included in living space?

To answer your question, yes it is. A two-storey home with a 40’ x 40’ foot print is not actually 3200 square feet as you assume. A garage would reduce that more so.

3600 square feet of living space is huge. A family of seven would be quite comfortable there, and those scarcely exist any more. Do you live in a home new enough that you have an accurate figure for living space? If not, figure out how to measure it and you will be surprised how “small” it is relative to the offerings builders suggest people “need.”

Daisy Mae was spot on: people are increasingly not wanting the costs to maintain, heat, insure, and furnish houses that are far larger than what they need.

129 Ronaldo on 03.27.14 at 7:49 am

Ronaldo identifies a big risk for a lot of people. Not enough is made about this as we all believe we’re better-than-average at everything, relationships not excluded. It is something that we should all prepare for and more importantly try very hard to avoid.

#157 Nodebt on 03.27.14 at 10:52 am

#5 Brian,
A wise old man once told me:
There’s always gonna be a guy with a bigger house…
There’s always gonna be a guy with more hair…
There’s always gonna be a guy with a hotter wife…
There’s always gonna be a guy with more money…
There’s always gonna be a guy with a bigger dink!!!
Hey Rick at least you have more hair, hotter wife and bigger wang than Brian !

#158 Bottoms_Up on 03.27.14 at 10:54 am

Not exactly. The perceptible correction should be 15%. The bottom, after a long slide, far deeper, depending on the community. — Garth
—————————————————-
Garth that is quite the important point there.

“Perceptible correction” vs. Reality.

Sure people can quote stats of average year over year declines, but if you can’t sell your house, or can only sell it at a fire-sale price (and choose not to sell), these ‘results’ of the decline in the housing market don’t get captured in the statistics (other than perhaps by lower sales volumes).

#159 Paul on 03.27.14 at 10:58 am

#144 gladiator on 03.27.14 at 9:28 am

@88 Bottoms_Up:

“In Canada, mortgages are typically “full-recourse” loans, which mean the borrower continues to be responsible for repaying the loan even in the case of foreclosure. Lenders can take legal action to recoup money from the homeowner if a foreclosed home is sold for less than the amount owing on the mortgage. In many U.S. jurisdictions, mortgages are “non-recourse,” which means that borrowers can often walk away from their homes and the associated mortgage debt, leaving lenders with no recourse beyond the property.
———————————————————-
That’s how it is supposed to work.But in Canada 99.9% of homes that go power of sale the owners have paid their mortgages first and bills last so by the time the bank gets the house back the owner is broke and they typically go bankrupt. Sadly

#160 Believe It Or Not on 03.27.14 at 11:00 am

Brian is a full time resident of Simcity. Successful people don’t behave that way.

Re: the world is awash with money.

Not all of it. There was a Polish politician named Andrzej Lepper who complained that there was not enough money in the system. If fact he complained a lot about that . Contraction of the money supply is the oldest trick in the book. They tried everything to discredit him. Then one day in 2006 he hung himself in his office.

Believe It Or Not

http://en.wikipedia.org/wiki/Andrzej_Lepper

#161 Smartalox on 03.27.14 at 11:02 am

I just saw TD Economist Craig Alexander interviewd by Suhana Marchand on CBC, to talk about BMO’s move to cut rates to 2.99%. If you can, dig up the video, and watch him tap dance as he tries to explain how rising prices on declining sales is nothing to be worried about. Watch his eyes: at every other point in the interview he’s calm, but during this one response, his eyes dart around like CRAZY. The sheen of flop sweat didn’t help either.

The stress was evident. Either he doesn’t personally believe the party line, or he was worried for his job, shilling for his competition (really CBC?, a TD guy trotted out to defend BMO’s decision?) but if the latter, I’d expect him to show the same nervousness throughout the entire interview, and not just the commentary on pricing and the market.

#162 X on 03.27.14 at 11:06 am

Unless there are changes to mortgage rules, lending practices, or required downpayments, we won’t see any changes in the RE market until next spring. Increasing rates this fall will slow things, but be brushed off as a slow winter market. We will see how much Yellen increases fed rates and how fast next year.

#163 HD on 03.27.14 at 11:06 am

#146 Detalumis on 03.27.14 at 10:01 am

(…) and there ain’t such a thing as Karma, it’s a religious invention to keep the proletariat from uprising. The Mrs. Brians are often exactly the same and they go on to live very long lives.

—————————–

Bang on.

You nailed it.

Best,

HD

#164 airhead princess on 03.27.14 at 11:08 am

BMO announces a rate cut…to below 3%….this is encouraging and mega inflationary ….and a boon to those ‘who are missing out’ on a further rise in property values. In other words …monthly payments just got a lot cheaper. Yayyyy!!!

The bottom line is that rates are going no where for a long long time. Bill Gross says ten years of repressive rates are ahead. Repressive means that savers will be gutted….and the generation who has savings will be handing nothing over to their children. The Millenials will be the first generation ever to be born so mired in debt that they will shift political winds to such an extreme that debt will become sanctified.

I foresee massive tax increases to cover all the things that entitled persons will want more of…..basic food…housing…child and rent….education subsidies etc. The last of the seniors are being forced to crystallize their remaining assets….it’s happening now.

So who’s going to buy real estate in the future…..who are the rich in Canada……ownership will be4come a facet of the corruption and nepotism we are already seeing as an elite class raises its fist and forces the public to acknowledge its existence.

http://www.vancouversun.com/news/metro/Portland+Hotel+Society+spinoff+companies+alarm+bells+after/9666004/story.html

There won’t be enough money for all of us…so who do you think will be getting the lions share in the future? I have already witnessed this in my personal life watching Vancouver’s elite moving into downtown co-ops that were built for the poor…..shunting away the most needy seniors and single moms. Lawyers, actors….friends and supporters….nepotism at its ugliest. This is the future…..a society made up of those who have free access and the will to gut the public purse…and everyone else….get used to it.

#165 Steven on 03.27.14 at 11:11 am

Re#146 Rick’s story
-I was 44 (American), my wife 46 (Canadian)
-and realized we could easily make the payments,
-and still put money away for retirement on one salary.
-At eight months we also ran out of money.
and finally
-but we owed all of the $260,000 we originally paid

Mistake #1 combining incomes encourages paying more and contracting more debt. It also takes away the possibility of saving extra money for emergencies.
If the wife is off work due to pregnancy and looking after children there is less income and greater financial stress. Far better to count one income when buying real estate for safety sake.
Mistake #2 No down payment. A downpayment of 25% should have been made in order to give the home buyer some skin in the game and reduce the principle owing on the house.

Conclusion: People and institutions have bent and broken the rules and are at serious risk of financial disaster. The solution is to return to the time honored basics that people followed back in the 1950s and 60s.

#166 Drill Baby Drill on 03.27.14 at 11:22 am

#99 Happy Renting

The statement “they are losers by moving to Calgary” is based on the fact that what happened to them in S. Carolina is going to happen here in oil boom & bust Calgary. I have lived here for 40 yrs and I have seen this movie rerun 4 times.

#167 Just some guy on 03.27.14 at 11:23 am

Regarding the reactions to Brian and to Rick, I believe it comes down to what we value. For some, wealth is a means to an end to obtain what they value such as security, freedom, and control of one’s time. For others, however, the appearance of material wealth and the concomitant (albeit assumed) increase in status becomes the goal and in service of that goal, some are prepared to assume a huge level of indebtedness.

I think it was the English prime minster Lloyd George who said in the 1920s that if the average working man was ever more than two paycheques away from financial ruin through the loss of a job then society as a whole would suffer. I believe the intent here is to say that financial indebtedness is a form of enslavement that tends to keep people in line. If people think they are “better off” because they have the appearance of wealth through debt, who am I to argue?

There is also the general tendency of people to look unfavourably on others who have what they themselves do not. In a word, they are envious. This may spur them to compete or it may cause them to sulk. Judging by the range of comments on this blog, I think we have ample evidence of both reactions. In a sense, posters like Brian and subjects such as Rick are catalysts.

As others have said much more clearly than I, it all comes down to discovering what we really value. In my opinion, Shakespeare’s description of the seven ages of man is a key in that we have to find out at each age what it is that gives us pleasure (and, by extension, makes us happy and content). I think the art of living well is finding out at each age what does give us pleasure.

#168 Same Story since 2007 on 03.27.14 at 11:29 am

Its all about the JOB JOB JOB…
As long as there are jobs, market is less likely to be affected… That’s why housing market in Alberta is doing great.

#169 Chickenlittle on 03.27.14 at 11:29 am

#99 Happy Renter:

They will get something from me for sure!

Milton is strange: for $1750 I had a townhouse, now for $1800 I have a 4 bedroom detached that cost $300k more than the townhouse. The choice was obvious: the house wins.

And all this with no money down!

My life as a renter sucks, doesn’t it?!? ;)

MIND YOU, the lot size is very small. SO….if I had a choice between my old neighbourhood in West TO where the houses were smaller but the lots much bigger, or this place, I’d still take the TO neighbourhood. The subway was close by, lots to do, etc.

Milton going to be a dump in 10 years anyways.

#170 Alberta_bound on 03.27.14 at 11:35 am

#136

HAHA! who says guesstimating?

#171 TurnrNation on 03.27.14 at 11:43 am

Is Detalumis the new beachgirl with wry, trite axiomatic wisdom?

– Dollar-store nation we are. (Also never enter DOL.TO long position unless you see big ideally >300k volume. Otherwise it’s just 100 share algo trades all day.)

Went there this week, a bag full of items for $10. Would have been $20 easily at Loblaws. Lower incomes never had it so good.
(Including unlimited access of health care services.)

“The Toronto Star reports in its Thursday, March 27, edition that Dollarama is planning to open another 400 stores in Canada, including more than 150 in the next two years, says chief financial officer Michael Ross. The Star’s Francine Kopun writes that Mr. Ross says, “There is continued runway for growth.” He notes that Dollarama has become a “junior anchor,” or “second-tier” anchor in many Canadian malls. Mr. Ross says Dollarama is planning 85 net new stores in 2014, between 70 to 80 in 2015. …
Mr. Ross says Dollarama has also started planting seeds for international expansion, with 15 stores in El Salvador, and an eye on Costa Rica, Columbia and Peru as possible next platforms. … © 2014 Canjex Publishing Ltd.”

#172 slam dunk on 03.27.14 at 11:43 am

BMO is reducing their mortgage rate from 3.49 to 2.99 %

I can’t stress enough the importance of dismantling CMHC immediately, let the banks take responsibilites for the mortgages they underwrite.

I am so happy that I started difersifying on time out of Ca asssets and dollar (thank you Garth).

#173 slam dunk on 03.27.14 at 11:49 am

119 Prime Minister’s Office
——————————-
Our dollars would be worth nothing. To be presice: 1 dollar would be worth 1/3rd milionth part of a whooden SDF in a city in the middle of the f..ng nowhere with depressing weather.

#174 New mortgage war on 03.27.14 at 11:52 am

“New mortgage rate war looms as BMO cuts 5-year below 3%”
http://business.financialpost.com/2014/03/26/bmo-mortgage-rate-cut-canada/

#175 Mike T. on 03.27.14 at 11:58 am

#5 Brian on 03.26.14 at 6:21 pm

Moral of the story;

1. Brain is an a-hole.
—-
naw

just incredibly in-secure

#176 Ronaldo on 03.27.14 at 12:06 pm

http://money.ca.msn.com/investing/news/business-news/minister-to-watch-home-market-after-rate-cut-2

When have we heard this before? If they are serious about house price rises, so something about the CMHC level of insurance like thake it down to max of $700m and see how many houses sell.

#177 Sheane Wallace on 03.27.14 at 12:08 pm

No inflation, right?

I would not save a single dollar in a bank account in my life. Yealy interest of 0.15 % on GICs?
Thank you very much.

Can’t wait for the SHTF and for the government to turn to taxpayers for the resque. Will tell them to kiss my beh. nd

#178 Randis on 03.27.14 at 12:11 pm

#5 Brian:

Your claim on your wealth could be legit, nobody will ever find out.

But all due respect, I don’t quite understand your point and the necessity of stepping down on people and make yourself look good.

Rick could be hugely successful before shyt hits the fan, and that you will never be able to find out. Some fellow blogdogs here could be even more successful in life and we will never know. Why calling someone a loser when you know nothing of the person?

#179 Same story sine 2007 on 03.27.14 at 12:16 pm

If you can get 2.99% or less for a 5 year period with 40 year amortization is the sweetest deal… One can pay just $1800/month for a 650K home, like I do.

#180 chapter 9 on 03.27.14 at 12:36 pm

#5 Brian POMPOUS ASS!
Hey Rick welcome to Canada and all the best in your future endeavors.

#181 Sheane Wallace on 03.27.14 at 12:36 pm

780 g. loaf of rye bread at friggin Food Basics is 4 $.

Suddenly that $20 silver maple leaf does not look that expensive,

#182 Pete on 03.27.14 at 12:37 pm

“New mortgage rate war looms as BMO cuts 5-year below 3%”

Good sign that home sales volumes are decreasing, probably rapidly. 5-yr bond rates have been ticking upwards, not down as they claim. They need to compete for dwindling business, and accept lower margins to do so…

#183 Holy Crap Wheres The Tylenol on 03.27.14 at 12:40 pm

#148 Gigi on 03.27.14 at 10:19 am

# 5 Brian Darling
Who the hell wants to live in Oakville?
Ostentatious mega-homes that look all the same, actually they sort of characterize the place and the people.Booooooooring.
C’mon Brian, vacation in Florida? OMG you’re the loser!
____________________________________________

I like Oakville, I live here its great, yes ostentatious meg-homes but no different than Bridal Path or any other affluent neighborhood.

#184 Smartalox on 03.27.14 at 12:43 pm

Not to be out done, I see an ad that CIBC is suddenly offering mortgages at 2.97%* Race to the bottom, and… Go!

#185 Mark on 03.27.14 at 1:00 pm

“Good thing you are in Calgary – Non Recourse province”

Not really true. Anything that falls under CMHC insurance is full recourse, as is anything that falls under the Bank Act. And even then, the non-recourse provisions only apply to purchase money mortgages. Not refinances. The number of houses in Alberta that truly fall under “non-recourse” loans, just like in the USA, are few and far between.

#186 Penny Henny on 03.27.14 at 1:27 pm

Flight 370, there is a new angle now.
Pirates

#187 Pre-retiree on 03.27.14 at 1:44 pm

Again, I think the wheels have already fallen off the wagon. While many of us buy overvalued houses with cheap money, “winning” with their over-asking offers, and wedding pictures, there are others who just cannot sell their homes. This is just beginning, and when the slide will take hold, it will be fast and disastrous. It is happening now, but most will not be aware until we are far down the hill. This is how it has always happened, and I just don’t see why it would be different this time. And then….we will go and make our retirement home purchase in Ottawa, in a bottom market as we always have done.

#188 not 1st on 03.27.14 at 1:46 pm

Mini tech implosion today Garth….are you buying?

Now how does the layman understand the difference between a sale and an event like this? This is why fear reigns in the stock markets and people would rather just keep it in their mattress. You cannot really blame them.

#189 Smoking Man on 03.27.14 at 1:49 pm

PENNY HENNY
MH370

Mind control dudes always use what I call a yoke word.
A yoke word is used to try and turn opinion.

This sentence or various forms of it are using same Yoke a word. Can you spot it.
……………..
Apart from claims of a UFO abduction or a Bermuda Triangle-style disappearance into another dimension, one of the most outlandish conspiracy theories is that the flight MH370 plane was diverted onto a US Navy support facility on the island of Diego Garcia.
………….

It’s outlandish…… So a worm hole, or Ufo abduction is not outlandish…

The thing is, if you want the truth find the yoke.
The USA has been dead quite on this.

The plane had enough file to make it to that base and eye witnesses accounts of seeing the plane precisely at around the time it would take it to get there.

Outlandish I say.

 

#190 lawboy on 03.27.14 at 1:49 pm

#117 Taking Responsibility

Facebook was opened up to the public in late 2006. But in any case, Rick doesn’t say he was on Facebook in 2006. He said he was on Facebook after he moved into his new build house, which he started looking for in 2006.

#191 airhead princess on 03.27.14 at 2:04 pm

” Sheane Wallace on 03.27.14 at 12:36 pm

780 g. loaf of rye bread at friggin Food Basics is 4 $.”

Friggin’ right. But if you try and tell government officials there’s no inflation they look at you like you’re nutz….because the BOC keeps pimping no inflation. it looks to me like food inflation is up 20% a year for the past 6 years. Do you even see steaks on the grocery shelves anymore…..real steaks….not the crap they shave off as scrap. T Bones…Rib Eye…gone from the shelves of CDN grocery stores. As economists say people are ‘substituting’….bwahhahahahahaha….a nice way of saying ‘starving’.

I see people spending double today as single adults than I was spending for a family of three five years ago. A family grocery budget is $2000 a month today as opposed to $400 4/6 years ago. No small wonder schools are reporting huge increases in kids complaining of being hungry. No wonder families and seniors are the fastest growing segment of the food bank clientele.

#192 Debtfree on 03.27.14 at 2:25 pm

@#5 Brian . Canadians are like Scandinavians. They like to cut down all the tall trees . You may have heard the joke about the Canadian and American lobster fishermen on the dock . While walking away from their lobster buckets the American said watch out one of your lobsters is crawling out of the bucket . He answered , don’t worry he’s a Canadian lobster , his friends will pull him back down .

#193 Renter's Revenge! on 03.27.14 at 2:37 pm

@186 not 1st:

“Now how does the layman understand the difference between a sale and an event like this?”

You’ll only know in hindsight. You’ll look at the price history and tell yourself, “I should have bought at x.” Where x was the very lowest price the stock was traded at before resuming its climb. Who cares if the stock “goes down some more” after you buy, in other words, who cares whether someone sells their shares to someone else for less than you paid? You can never predict if that will happen. I think the trick is to not be such a perfectionist. Don’t worry about all the prices that the stock was traded at and just ask yourself, “Is this a company with bright future prospects? If so, and if I buy now, will I be paying a reasonable price?” Then wait. Your patience will eventually be rewarded.

#194 Sheane Wallace on 03.27.14 at 2:39 pm

#177 Same story sine 2007
………………………………….

Good for you. Somebody is paying for your gain. Luckily it is not me.

Poor savers and retirees on fixed income.

#195 killaboy on 03.27.14 at 2:39 pm

His real problem was bad timing.

#196 Sheane Wallace on 03.27.14 at 2:46 pm

EU is about to introduce negative interest rates…

Gold is down on the news…. How is your ‘deflation’ working?

I swear I will not touch fiat without gloves or bonds even with gloves in my life.

And so you buy groceries with…what? — Garth

#197 Ralph Cramdown on 03.27.14 at 3:17 pm

#153 Derek — “Reality is that big cities like Vancouver and Toronto have households making the big bucks. […] For example, it’s not like that 1.5M house in Lawrence Park will be had for 900K in a few years.”

What’s your thesis? Pretty much everyone who could afford to own a place in Lawrence Park already owns a house or two, somewhere. Many are leveraged or otherwise living according to cash flow rather than assets. If Toronto house prices slide, the stock market will slide, unemployment will rise and bonuses will shrink for those still employed. Who’s going to keep buying at current prices?

#198 jess on 03.27.14 at 3:22 pm

These atm’s are inside banks therefore, should the banks not be checking for this fraud?

..”Capt. Richard Gauthier of the Sûreté du Québec said the fraudsters installed cameras and card-reading devices on automated teller machines at Canadian banking institutions. The card-reading devices skimmed the cards for bank information, while the cameras read customers’ banking PINs.”

#199 Keith on 03.27.14 at 3:25 pm

Rick’s story raises an excellent point for the GTA market in particular. The GTA is very dependent on the FIRE (Finance, Insurance, Real Estate) sectors. Even a slight downturn in those sectors will hit particularly hard in the GTA.

As for figuring out when the party will stop. The truth is it won’t until rates go up. With median family incomes in the low 70s, the average GTA family has about $4700 after tax in hand. The average suburban home costs $500k. Even if you mortgaged 100% of that, the payments would be $2400 per month. So the question is, can the average family live on $2300 for all their other expenses (car, food, heat, hydro, clothing, furniture, child care, etc.). Right now it seems that family’s are managing. So no crash.

But the above scenario leave’s families very vulnerable to any downturn. Husband or wife loses their job and the family will lose the home. Just like Rick.

#200 VanLarry on 03.27.14 at 3:30 pm

http://www.bloomberg.com/news/2014-03-26/hedge-funds-unlikely-saviors-for-new-york-area-homeowners.html

#201 Penny Henny on 03.27.14 at 3:34 pm

Smoking Man
MH370
Apart from claims of a UFO abduction or a Bermuda Triangle-style disappearance into another dimension, one of the most outlandish conspiracy theories is that the flight MH370 plane was diverted onto a US Navy support facility on the island of Diego Garcia.
………….

It’s outlandish…… So a worm hole, or Ufo abduction is not outlandish…

…………………….
My money is on Garcia too.
But by this time they could have already done what they had to do and dumped the plane in the ocean.
Lots of loose strings on this one, the Yanks will talk once the loose strings are gone.

#202 jess on 03.27.14 at 3:41 pm

what are “social impact bonds?”

http://truth-out.org/news/item/22730-goldman-sachs-outrageous-scheme-to-profit-off-jailed-young-offenders

=======
carbon bubble?
By Damian Carrington, The Guardian
Thursday, April 18, 2013 20:11 EDT

#203 Sabetino on 03.27.14 at 3:43 pm

Garth, can you comment on BMO’s five year fixed at 2.99 today…what’s the deal, something stinks?!

#204 Penny Henny on 03.27.14 at 3:48 pm

#186 not 1st on 03.27.14 at 1:46 pm
Mini tech implosion today Garth….are you buying?

Now how does the layman understand the difference between a sale and an event like this? This is why fear reigns in the stock markets and people would rather just keep it in their mattress. You cannot really blame them.
———————————————————
As I write I am looking at my TD Sci & Tech mutual fund statement from March 2013, it is up 50% from a year ago. Quite the run, is it over??

#205 LTL_FTC on 03.27.14 at 4:01 pm

#27 Calgary Owner (2nd. Round) on 03.26.14 at 7:36 pm
#28 Blame Game on 03.26.14 at 7:36 pm

Nowhere does Rick appear to say he blamed bankers, builders or realtors. It is implied that he blames himself for putting trust in those parties only to get burned. At the very least he unwittingly(?) shared a costly lesson. With my own child, I hope that lessons like this are learned by observing others rather than experiencing them first-hand.

Thanks Rick.

#206 jess on 03.27.14 at 4:02 pm

common core hum…

David Coleman – neo-liberal Education Guru explaining Common Core Standards in New York

A research document produced for the British Columbia Teachers’ Federation (BCTF) exposes the plans of Pearson to win ever greater profits from education globally

In this research, the writers show how Pearson is planning, in its own words, to “revolutionize how education is delivered around the world, starting with the United States.” It claims that its products will raise standards at the same time as cutting spending through “personalising” education.
It is the main provider of teacher evaluation and assessment in the US, as well as standardised testing for pupils. It was at the centre of a scandal this year when a comprehension test it had used in New York was exposed as meaningless nonsense – the story featured a pineapple racing with a hare . It was part of a bank of questions which Pearson had been using since 2004 to compare children and school systems across states. The BCTF report explains that Pearson “produces items (for testing) along the way, paid for by one or another state, and then re-sold and re-sold to other states.”

here’s the question
The Pineapple And The Hare: Can You Answer Two Bizarre State Exam Questions?
by Eyder Peralta
April 20, 2012 1:34 PM
http://www.npr.org/blogs/thetwo-way/2012/04/20/151044647/the-pineapple-and-the-hare-can-you-answer-two-bizarre-state-exam-questions

http://teachersolidarity.com/blog/bc-union-exposes-privatisers-plans

#207 2CntsCdn on 03.27.14 at 4:07 pm

#5 Brian
Shhhhhhhh! ….. no one likes a bragging wealthy guy. Oddly … in Canada people will actually hate you. I was lucky enough (actually a lot of hard work, persistence, planning annnd some good old fashion dumb luck) to make a lot of money in houses (mostly in the 80’s) and a 30 year old business that took off way above expectations and was sold. I am fortunate enough to be retired at 55 and my balanced portfolio makes quite a few times yearly what you hope to make when you retire. But my long term friends are not in the same boat so I go to huge efforts to be quiet about my situation. They have seen very little difference in my life style since things got good. Although I do try to cover the beer bill after hockey when they’ll let me.

But Rick isn’t a loser … he was burned once before and see’s the same thing happening in Canada. You should pay attention to his story ….. not degrade him. Timing is everything, and I guarantee you if you were to purchase your properties in today’s environment your life would be hugely different down the road.

In real estate, stocks, or anything …. there are times to buy, times to sell and times to sit tight. I wouldn’t buy anything right now in any Canadian major city. I do plan to buy a small TO weekend condo when things adjust (I live north). Everyone’s situation is different (income, work solidness, age, family) and just based on the most basic of economic fundamentals only a total fool would believe there is a smidgen of upside left in Cdn RE prices right now … and the odds of a substantial downturn are 100% …. it’s just when. I think it’s starting as we speak.

You have done well for yourself and did a lot of the right things at the right time and took risk. High five and way to go! But don’t be arrogant to others and don’t rub peoples nose in your success. And remember, everything is relative … if Oprah Winfrey had your money she’d probably kill herself : )

#208 Holy Crap Wheres The Tylenol on 03.27.14 at 4:13 pm

#199 Penny Henny on 03.27.14 at 3:34 pm
Smoking Man
MH370
Apart from claims of a UFO abduction or a Bermuda Triangle-style disappearance into another dimension, one of the most outlandish conspiracy theories is that the flight MH370 plane was diverted onto a US Navy support facility on the island of Diego Garcia.
………….
It’s outlandish…… So a worm hole, or Ufo abduction is not outlandish…
…………………….
My money is on Garcia too.
But by this time they could have already done what they had to do and dumped the plane in the ocean.
Lots of loose strings on this one, the Yanks will talk once the loose strings are gone.

_____________________________________________
This scenaro has been covered in a B movie already.

http://en.wikipedia.org/wiki/Millennium_%28film%29

http://www.youtube.com/watch?v=F7v9ozrTkMI

#209 Ronaldo on 03.27.14 at 4:29 pm

http://www.edmontonjournal.com/business/Buying+home+your+could+great+investment+with+right+plan/9668016/story.html

Yep, great advice for singles alright. Just jump in and buy and start building equity. Yeah right.

#210 Tony on 03.27.14 at 4:40 pm

Re: #202 Penny Henny on 03.27.14 at 3:48 pm

How do you say a repeat of the dot-com crash but this times raised to the power of two? The smart money is existing the stock market as fast as possible to the safety of treasurys. A newborn baby could figure this one out.

#211 Ralph Cramdown on 03.27.14 at 4:42 pm

#197 Keith — “With median family incomes in the low 70s, the average GTA family has about $4700 after tax in hand. The average suburban home costs $500k. Even if you mortgaged 100% of that, the payments would be $2400 per month. So the question is, can the average family live on $2300 for all their other expenses (car, food, heat, hydro, clothing, furniture, child care, etc.).”

As tempting as it is to do the analysis this way (because we have the data), it’s deeply flawed. Sales and prices don’t depend on whether the average family can keep making their payments. When the American crash started, the vast majority of families could and were making their monthly payments. As things got worse, jobs were lost, and more and more people became unable to make the payments.

But it started at the margins.

Most families can’t afford two homes. If they already own and want to move up, down, sideways or out, they need to find a buyer. The key players in the housing market are always the first time buyers and, to a lesser extent, the last-time sellers.

There’s no point looking at the average family for clues to the direction of the market. Look to those who can barely afford to buy, who can barely afford to keep paying the mortgage and other bills, or who need (or desire strongly) to sell. They drive changes in home prices, debt, and consumer spending generally.

As I said, the temptation to look at averages or medians is strong, because we often have data for that. But it doesn’t mean that the answers don’t lie elsewhere, which we don’t have data for.

#212 Ralph Cramdown on 03.27.14 at 4:47 pm

“The rental market is very expensive in Toronto and mortgage rates are so low that, in a lot of cases, it makes more sense to buy,” said realtor Miranda McKenna of Life and the City, Remax Hallmark Realty Ltd., who says nearly half of her clients are single.

Miranda… “Life” and the City… Right, she was the lawyer who’s big fear was dying alone in her apartment and not being discovered by the neighbours until her cat had eaten her face, right?

#213 Shawn on 03.27.14 at 4:57 pm

Only on this Blog?

Do we see Canadians moaning that banks are charging interest rates that are just too low.

Strange days indeed.

First step: Predict higher interest rates. Make financial bets in that direction (sell your house or wait to buy, short long-term bonds, short the stock market)

Second step: Lash out at anything that causes your prediction to turn out to be wrong. (Not singling out anyone here, but seems a general theme of a lot of people)

#214 Keith on 03.27.14 at 5:41 pm

@Ralph Cramdown

In this regard though, the US situation is different. The housing slowdown created an economic crisis by first creating a credit crisis in the banking sector. That crisis went on to massively damage the rest of the economy.

I am not so sure that Canada is analogous given how CMHC backstops mortgages in Canada. Banks here, might lose profits. But you won’t have a large bank taken out a la Lehman Brothers like they did in the USA.

So the idea that things will be apocalyptic here is just as egregious as the real estate bulls who say nothing will happen. What could (and most likely will) happen is something akin to a real estate crash in 89/90. A smallish but sharp drop (5-10%) followed by a long period of steady but small (few % per year) over the next few years. Bad for the economy? Sure. Catastrophic? I’m not so sure.

It’s not so much that it’s not different here. It’s that it’s not different this time. This bubble will pop, like any other before. And just like other bubbles before, it’s not going to painful for some more than others.

#215 Debtfree on 03.27.14 at 6:37 pm

@#211 Shawn . You do know that though books , seminars and this blog that Garth also taught us how to be vultures, right ? Like me for example I’m circling as we speak . I’m not landing till it’s good and dead .

#216 Vangrrl on 03.27.14 at 6:45 pm

#151:
Nonsense. ‘Security’ is a state of mind. Anything can happen to anyone at anytime. If you need to own a house to feel secure, that’s your issue.

#217 Cici on 03.27.14 at 7:23 pm

#212 Keith,

I’m not so sure…I think you may be overconfident. If SHTF, how many of the billions (or is now trillions) of mortgages can CMHC really afford to absorb before sending the economy into a major tailspin?

Personally, I think our RE market is looking very wobbly right now, and given the new Bank tactics to increase borrowing just in time for the spring market…I don’t think there’s much room left in the game, because we’re running out of lipstick to put on the ever-bloating pig.

#218 Daisy Mae on 03.27.14 at 7:28 pm

#147 Rick: “I had no idea I would be famous. If I’d know you were going to publish me, Garth, I’d have taken a shower or something. Bonus – favorite comment: “Rick is a loser.” Hard to argue that one.”

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

And you’ve also read the posts re ‘Brian’…and you know what we think of him, right?

#219 Daisy Mae on 03.27.14 at 7:36 pm

#163 Steven: “The solution is to return to the time honored basics that people followed back in the 1950s and 60s.”

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

Ya think? Life then was simple. And life was good. Then the sixties happened. And all hell broke loose…

#220 Snowboid on 03.27.14 at 8:12 pm

#93 Nemesis on 03.26.14 at 10:33 pm…

Like the Lincoln engine – can’t tell if it’s a 430 or 462 (my first was 430 in a 1962 LC – but stock). Tons of torque, even though it weighed over 5000 lbs you could still do ‘burn-outs’!

Not a Mercury fan, but looks like mid-1950s vintage interior, as is the hood ornament.

Nice song, but like this better:

http://www.youtube.com/watch?v=3R7l7nDuj1o

#221 Sick of Braggarts on 03.27.14 at 11:43 pm

#5 Brian and #146 Penny Henny: What a couple of a$$holes!

#222 Keith on 03.28.14 at 11:00 am

@Cici

In the early 90s crash, homes in Toronto lost 40% of their value by the time the slide was done. That still didn’t destroy CMHC, or any of the banks.

This time won’t be different. First off, the banks will be safe because they simply offload riskier loans to CMHC. Next, if CMHC is to be believed, even during the last big crash, the majority of Canadians simply stayed put. Housing sales declined and foreclosures rose. But nowhere near the levels needed to threaten CMHC.

I am inclined to think that this apocalyptic vision is both hateful and wishful on the part of doomers. It’s hateful because doomers seem to be willing to chop off their noses to spite their faces. If we ever got to the point where CMHC was collapsing, this entire debate would be irrelevant. This country would be entering an economic depression, where it wouldn’t matter how much you saved or how much you owed. And all of us would be paying significantly higher taxes to bail out CMHC. Next, it is wishful, because that kind of catastrophe cannot happen without a major catalyst. You would need either a sharp spike in interest rates (not possible with any recent economic data) or a severe economic shock (like the global financial crisis). Barring that, we’ll keep chugging along while the air slowly gets let out of the balloon.

I don’t even think Garth really believes that the whole thing is just going to come down with exploding bank towers on Bay Street.