Canuckistan

CUDDLE modified

Mortgage guys face a brutal spring. The big banks are chasing market share and revving up for a rate war. A shortage of listings has squeezed prices higher and throttled sales. Yet borrowers are facing stagnant incomes, with down payments dropping. It all means to make a deal, lenders are forced into cut-rate offerings just so buyers can afford the mounting debt.

What a mess. What a danger.

Yesterday I wrote about liquidity. Hope you made notes. The balance sheet of most Canadian families continues to worsen, making me happy the bulk of my net worth is not in a house. For the next minute, just think about some sobering news.

First, Canadians are making less money than they were in 2008. Median family income is lower than before the recession and savings have decreased. Yikes.

INCOME modified

Of course, wealthy people have more income than before (about 5%) because they have income-producing assets, while everyone else has less, since they all bought houses. By the way, the number of people making minimum wage in Canada (about 7% of us) has jumped by 50% since 2006.

Now, here’s the key point. We’re making less, but buying more, so we’ve turned into debt pigs. In 2006 our household debt equalled that of Americans (then in a real estate orgy), while today it’s far higher (in part because US families have massively deleveraged). In allof the western world, we’re the worst little piggies there are.

DEBT modified

And here’s the toll real estate has taken. Look at mortgage debt. How much more delusional can people get? Incomes fall, borrowing bloats. Record high prices in Calgary and Toronto – and lenders scramble to slash rates to encourage more.

MORTGAGE DEBT modified

The above factoids and graphs came via Bloomberg, the global leader in economic and financial news which, like most analysts around the world, wonder what the hell we are smoking. More significantly, how can Canadian families and governments be making the same mistakes that led Americans into a housing spiral. Did we learn nothing?

Silly question. Of course not. We’re special. Snowflakes. The entitled ones, who have figured out how to buy more and live better while making less. Even the statisticians and media have fallen for this fiction, as we saw two weeks ago with a StatsCan report that our net worth has increased over the past few years. And while the house-humpers took this as proof people in Toronto can easily afford $900,000 average detached homes, it simply reflects inflated real estate prices, supported by a brimming ocean of debt.

In short, trouble.

Canadians cannot turn lead into gold. Nor water into wine. We can’t even regrow Peter Mansbridge’s hair.

So why do we believe debt can become equity?

Note: As mentioned, the above graphics originated in a piece that another journalist assembled and interpreted. His name is Chris Flavelle and he’s a writer for Bloomberg View (www.bloombergview.com).

186 comments ↓

#1 Cici on 04.01.14 at 7:26 pm

We’re early tonight (maybe even first!)…must be the Spring hormones ;-)

#2 retired WI Boomer on 04.01.14 at 7:28 pm

In part the media sold you on a bunch of bullshit advertising.

Then, you believed your parents chart getting a good education ensured a good job. Not necessarily true.

You believed that the “easy life” was a simple purchase, or two away on credit; ditto the education. Then reality smacks your puss, we lost a lot of great jobs to cheaper producers, they aren’t coming home.

Welcome to post 2008 north american dilemma

The liquid with low debt will survive.!

#3 frank le skank on 04.01.14 at 7:28 pm

no April fools joke?

#4 Waterloo Resident on 04.01.14 at 7:28 pm

I’VE GOT A GREAT IDEA!
If you are a new grad with $50,000 in student debt, go buy yourself a massive $1.2 Million new house in the suburbs, and enjoy life while you’ve got it.

Marry your honey and buy her a brand new $60,000 Corvette (all on credit of course) like this young 20-something guy just did for his wife:

“Wife Gets 2014 CORVETTE STINGRAY Z51 Surprise On Christmas !!!”
https://www.youtube.com/watch?v=CM0P_TXZGNA

Just watch that video and see how happy his wife is, don’t you want your wife to be happy with her new Corvette and living in a nice luxury estate also?

I mean, what is so wrong to want to enjoy the good life like those guys are living?

Please tell me why would it be so bad to simply copy their lifestyle for yourself?

I just give up trying to be frugal, it’s just not working, so go ahead and get buried in debt and have a blast. I’m not going to do that, I’m a cheap bugger and I’m going to stick to renting and driving my 2006 Corolla, but you should go ahead and borrow $2 Million on your $50,000 / year income; why not?

#5 Mark on 04.01.14 at 7:29 pm

Debt becomes the equity of Realtors and bankers that cater to the lending demand. But as we are now seeing, with deflating house prices pretty much across Canada, that equity is receding. Hence, the inability of the BoC to meet its inflation target, even in the environment of extraordinarily accommodative policy.

This is why the CAD$ is set to strengthen considerably, as Canadians cut back on their foreign debt-fuelled consumption and start saving Canadian dollars again.

#6 dave b on 04.01.14 at 7:29 pm

Challenge Brad Lamb to a debate!

#7 gladiator on 04.01.14 at 7:32 pm

We are the champions, my friends
And we’ll keep on fighting till the end –
We are the champions
We are the champions
No time for losers
‘Cause we are the champions – of the world

Source: Queen – We are the champions

#8 Hawk on 04.01.14 at 7:32 pm

All this asset inflation will continue till at-least next summer,…… then once the election’s over, ……………it may well be KABOOM!!!!!!!

#9 hohoho on 04.01.14 at 7:35 pm

Skill testing question 2:

If A has a dollar bill, lends it to B on a one year fixed term, B then lends it to C on a short term basis, C then lends it to D as a demand loan, and D has the dollar bill in pocket.

Q1. how much M0 money is in this system?
Q2. how much M1 money is in this system?
Q3. how much M2 money is in this system?
Q4. how much M3 money is in this system?
Q5. is this a “fractional reserve” system?
Q6. if so, what is the reserve ratio being used?

#10 Blase on 04.01.14 at 7:37 pm

2015 the pigs get slaughtered.

#11 Paul on 04.01.14 at 7:37 pm

No question listings are down people afraid to sell as there is nothing to move up to or sideways. All the new listings sell fast or they are at least 15% over priced.

#12 gladiator on 04.01.14 at 7:39 pm

Cuddle for food?
Here’s cuddling for money:
http://www.youtube.com/watch?v=sv8LAd5ZnrE

#13 Lala on 04.01.14 at 7:42 pm

Turn lead into gold….the golden rule. Who owns the gold rules. Brace for impact.

#14 Barry Lainof on 04.01.14 at 7:42 pm

Thanks Garth for putting DEBT on the forefront. Personal, corporate and governmental DEBT is driving this country into the ditch. DEBT and a misplaced sense of entitlement shown individually and societally.

BTW, as someone that has had both hips replaced – make sure you concentrate on pushing off your toes as you learn how to walk with your recently rebuilt ankle.

#15 Dave D on 04.01.14 at 7:45 pm

This may have been missed yesterday but I spend less than a couple of hours researching relevant ETFs based on Garth’s recommendations for a typical balanced portfolio and came up with what I have below. I have about half of the ETFs covered ( although out of balance)
I am going to wait for a slight correction in the US stock market before I get my US Large/Small Caps in proportion. I did pick up 10G of CLU back when there was a dip in feb, its up well over 5% already! If anyone can recommend supperior ETFs to what I listed below please reply.

Fixed Income
============
Pref Shares 18% : CPD – iShares S&P/TSX Canadian Preferred Share Index Fund
Gov’t Bonds 3% : CLG – iShares 1-10 Year Laddered Government Bond Index Fund
Corp Bonds 5% : CBO – iShares 1-5 Year Laddered Corporate Bond Index Fund
High yld Bonds 3%: CHB – iShares Advantaged U.S. High Yield Bond Index ETF (CAD-Hedged)
Inflation idx Bonds 6%: HFR- Horizons Active Floating Rate Bond ETF or XRB – iShares Canadian Real Return Bond Index ETF

Growth
======
REITS 5%: XRE – iShares S&P/TSX Capped REIT Index ETF or VRE – vanguard FTSE Canadian Capped REIT Index ETF
CND Eq. Large Cap 8%: ZCN – BMO S&P/TSX Capped Composite Index ETF or XUI – iShares S&P/TSX 60 Index ETF
CND Eq. Small Cap 4%: XCS – iShares S&P/TSX Small Cap Index ETF

USA eq. Large Cap 10%: XSP – iShares S&P 500 Index ETF (CAD-Hedged) or CLU – US Fundamental Index Fund
USA eq. Mid/Small Cap 8%: IWM – iShares Russel 2000 Index fund (on NYSE) or XSU – iShares U.S. Small Cap Index ETF (CAD-Hedged)

Int Large Cap 10%: CIE – iShares International Fundamental Index Fund
Int Large Cap 8%: VEE – Vanguard Emerging Markets ETF or ZEM – BMO MSCI Emerging Markets Index ETF

#16 johnny d on 04.01.14 at 7:46 pm

I’ve been noticing lately in the comment section here and comment sections of RE related stories on media websites that there is a lot of negative Garth Turner related sentiment.

Knowing what I do about human behavior, this is a clear sign to start believing what Garth is saying now more than ever.

People ignore warnings when things are still working their way, and get angry at the truth when it starts to hurt.

#17 VT on 04.01.14 at 7:53 pm

#4 Waterloo Resident

Nice clip. The 2014 Corvette Z51 is truly an awesome car! For those that live in Ontario, Prostate Cancer Canada is raffling one off so try your luck for a good cause.

Tickets here: http://www.rocktheroadraffle.ca

#18 Trojan House on 04.01.14 at 7:53 pm

Three new buzzwords: High Frequency Trading

So, real estate has become a racket and HFT traders are skimming off the top of your every trade.

All the “little guy” gets: Screwed.

#19 not 1st on 04.01.14 at 7:56 pm

This is a little off topic, but has anyone noticed that this years winter including the couple weeks of minus 50 has destroyed pretty much every highwat and street in the country?

Everywhere I have gone the roads are in utter shambles. The Transcanada is a roller coaster and the streets in a couple major cities including rich Cowtown are an undulating mess of frost heaves and now pot holes breaking through. I see a tax hike some time soon in order to get Canadas infrastructure in decent shape.

#20 Daisy Mae on 04.01.14 at 7:57 pm

“More significantly, how can Canadian families and governments be making the same mistakes that led Americans into a housing spiral. Did we learn nothing?”

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

Nope! And this is so damn infuriating. The ‘cons’ thought they were so smart when actually they were so stupid….and led non-thinking Canadians astray. Now we’re a total mess. Everyone affected will, as always, learn the hard way. Such is life.

#21 Dave D on 04.01.14 at 7:57 pm

Just want to add to my prev comment. All of the ETF tickers I listed are on either the TSX or NYSE, if you have a TD Waterhouse account with over 100K the trades are $9 each. rebalancing would be maybe $180/year compared to 1% of what you have invested. You can have a look in detail at any of the tickers on tmx.com. I’m only adding this because honestly before I started reading this blog 4 years ago I really didnt know what the #&%^ I was doing. I actually have 35K in Market linked GICs sitting in my RRSP which I purchases back in my ignorant days in 2010, they mature in 2015. I guess the most important thing is to learn from your mistakes and never repeat them. Now my goal is to invest in a low cost balanced portfolio and maybe move to the states (when my job in T.O ends which will be soon) and pay for a decent house with a cash cheque instead of taking out a 700K mortgage to buy a run down out house shack somewhere at queen and coxwell!

#22 Smudgekin on 04.01.14 at 8:05 pm

Hairless?
But not senseless.

Dwight & Mamie bought their first property – a ranch after the war. The army had provided IKE before. I think hairy canajan prime minister pale by comparison. That hairless, commie jerk Khrushchev, after Cuban missile crisis they put him on train and wave bye bye. And they cut his pension. I think they need to put Putin on a train. Then cut his pension too.

#23 Waiting on 04.01.14 at 8:08 pm

#16 johnny d
You’re right – Nuriel Roubinni is a case in point …
Totally warned the IMF about the impending gfc and was met with total scepticism.

#24 Ben on 04.01.14 at 8:10 pm

Said it before and I’ll say it again Garth, look to the UK for a steer on what the establishment do when they get desperate. Have you had QE yet? Have the govt started loaning direct into the market yet?

The UK is right there next to Canada for indebtedness. Only difference is the UK has near to zero exports and a balance of trade that would make Adam Smith cry like a baby.

Are your establishment like ours Garth? Would they rather have 4 more years at the trough and ruin the country? Bet they are! That means this is the end of the beginning.

#25 Julie on 04.01.14 at 8:10 pm

I think often you’re either a saver or a spender and that’s how you live. I was asking a close friend recently how they manage all the fancy foreign cars and vacations and on and on. I was curious as I know we have similar incomes but our lifestyles are nothing alike. She basically laughed, said they were in debt up to their ears and one day someone would show up at the door and take it all away but in the meantime, she was going to have fun!! I can’t even imagine that! I’d never sleep another wink if my life was filled with such insecurity. Of course, if the stock and real estate markets totally tank and we lose all we’ve worked so hard for, I’m going to be pretty pissed and feel like she had the winning plan – enjoying herself while she could!

#26 zee on 04.01.14 at 8:11 pm

Garth, if the canadian economy and housing market is as bad as you say, then explain why the best banking system in the world continues to lend money to purchase homes.

Because its not really that bad.

#27 Fred on 04.01.14 at 8:13 pm

Dave D.
Sounds like you were self educated. Good job. Recommend any books?

#28 airhead princess on 04.01.14 at 8:17 pm

For once…. I completely agree with you…..keep up the good work. The only people that don’t get it are the ploticians and the suckers……otherwise….it’s quite a show.

#29 Eh? on 04.01.14 at 8:18 pm

Garth, you know it’s 2014… right…?

Why the chart showing 2011 median household income?
The data is over 3 years old and Canadians may very well be over the 2008 median income today.

Leave the stat cherry picking to the realtors. You are above that…

StatsCan isn’t. Those are the latest numbers. — Garth

#30 Saskatoon-Living on 04.01.14 at 8:18 pm

Kudos on yesterdays post Garth. I’m glad you finally acknowledged investing into individual stocks. Although I believe people can play the game with 1/2 million bucks rather than the 7 figures you suggested. Good post though.

#31 Daisy Mae on 04.01.14 at 8:18 pm

#16 johnny d: “I’ve been noticing lately in the comment section here and comment sections of RE related stories on media websites that there is a lot of negative Garth Turner related sentiment.

Knowing what I do about human behavior, this is a clear sign to start believing what Garth is saying now more than ever.

People ignore warnings when things are still working their way, and get angry at the truth when it starts to hurt.”

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

Exactly. People don’t want to hear the truth. They just tune out. Doesn’t change the facts, however.

What is so appalling is that the government doesn’t give a damn…and neither does CREA…or the bankers…or Brad Lamb and his type….or anyone who stands to benefit.

As always it’s BUYER BEWARE.

#32 SWM on 04.01.14 at 8:18 pm

“It all means to make a deal, lenders are forced into cut-rate offerings just so buyers can afford the mounting debt.”

There is more than this going on. Some one I know just got approved today for a mortgage that is 1.54X the supposed ‘maximum mortgage’ from the CMHC online calculator.

I am very curious as to how, it seems the recent changes to mortgage rules apparently are a joke that everyone turns a blind eye to.

#33 DreamingInTechicolour on 04.01.14 at 8:21 pm

We should all get used to saying Prime Minister Mulcair – because once the dust settles – we are all going to need to get government jobs- or receive some other other form of monthly gov’t cheques to survive – look to the south for a hint – after Bush came Obama x2 terms – people all across the Country just as they need to in the States, will need to be looked after as never before in Canada as the dismal economy continues to unwind.

#34 Smoking Man on 04.01.14 at 8:23 pm

It’s OK one more Provincial Wynne term, we will need the IMF

One thing to chirp people, but our Government is setting the example for debt lust..

Central banks screwed up, left to much on the table so old farts like me can simply invest a bit of loot and make money for nothing.

Took to much from the slaves, it was direct BOC policy, to them inflation =Wage growth.

No they are trying to fair things out a bit, low rates as I have been calling for years, inflate debt away, create a bit of a Labour shortage to get wages up a bit.

Problem is last 20 years of making sure it didn’t happen left no gas in the tank to make it up the hill.

They screwed up..

Good thing is Prozac has it figured out, USA can spike rates kill tapper.

He’s not spiking nothing. You debt slaves got about 3 years to reduce it..

#35 Ben on 04.01.14 at 8:25 pm

Here’s what’s gonna happen:

* older people vote more and there are more of them
* the have only known house price rises – they love it
* no politician will want to call a reality check – they will double down on housing
* things will get even more nuts and the masses will cheer it on
* at some point it will pop

For reference see the UK from 2000 to now. The UK is an extreme case it’s not as bad here but the voting habits are similar in that people vote for unearned wealth redistribution that will never be realised but they don’t realise it!

#36 totalinvestor.com on 04.01.14 at 8:31 pm

Canadian banks leading race to financial pain

http://tinyurl.com/oeo82wk

Your site sucks. — Garth

#37 Ben on 04.01.14 at 8:34 pm

Last one!

Here is what the end game looks like:

* Selling UK Plc is the only way we can avoid a full-blown crisis

http://www.telegraph.co.uk/finance/economics/10737749/Selling-UK-Plc-is-the-only-way-we-can-avoid-a-full-blown-crisis.html#disqus_thread

#38 ss on 04.01.14 at 8:38 pm

The market is totally out of control. More than 10 years of loose credit has pumped re values higher and higher. People are losing sensibility and only the final pop will wake them!

#39 jshum on 04.01.14 at 8:38 pm

I suspect the conservatives will argue in the next election the middle class is doing great based on net worth going up because of housing going up. They are loving what is happening right now

#40 TS on 04.01.14 at 8:38 pm

I am getting so sick of this crap. The debt pigs seem to be getting further ahead while the prudent savers are falling further behind. What a bizzaro world we live in!

#41 Waterloo Resident on 04.01.14 at 8:38 pm

The SOLUTION to get rid of the High Frequency Trading scandal IS SIMPLE = add a 1-cent tax on all buy orders and all sell orders, whether they are filled or not. Do this for all orders on stocks that are priced over $1 per share.

If an ordinary investor buys a stock he will simply pay $10 for the trade instead of $9.99 for the trade, not a big difference for the consumer, but if a high frequency trading system is placing millions of orders and then cancelling them instantly before they can be filled, just to be able to see what current orders are out there.

Now if there is a 1-cent tax on these cancelled orders, the high-frequency traders will quickly be put out of business in as little as a week, their model cannot operate even when such a small tax as 1-cent exists.

If a few million orders are placed and then cancelled instantly, that cost for them will be 1-cent times 1 million, or a total cost of $10,000.

Do this every minute and the High Frequency traders will pay $5 Million in taxes every day, and they cannot exist in such an environment as that.

So the solution is simple; just add a 1-cent PER ORDER tax on all buy and sell orders, filled or not filled.

The only problem is that the government is in bed with the banks and the banks tell the government to keep their hands off of the banks, so none of these new crime-stopping taxes will be introduced.

#42 omg on 04.01.14 at 8:39 pm

I wonder how many real estate AGENTS will post explaining why, in their UNBIASED view, those two OECD graphs are WRONG.

#43 fin on 04.01.14 at 8:40 pm

Garth

Still think HAM had limited affect and even suggesting was racist? http://www.yattermatters.com/2014/04/issac-newton-visits-vancouvers-detached-homes/#more-37169

Prelim report is West Side Vancouver detached sales in March were 40% of February. Ya, HAM demand was overstated and used to hype the market… rrrright.

#44 housings not going to collapse on 04.01.14 at 8:41 pm

You guys are smoking to much M-J if you think places like Toronto, Vancouver or Montreal are going to “tank.” These are fully built economies. You need to keep dreaming because you’re not living in reality if you think a house in Toronto is going to lose any value, even in a severe recession.
Calgary, Ottawa, and all the tiny tim cities in between, that’s a different story.
No one really cares about the small towns/cities in between – that’s reality. It sucks that Mr Smith is going to be out of a job because a heinz plant, or a ford plant shuts down. I feel for you. But welcome to globalization and the new world.

#45 Spectacle on 04.01.14 at 8:44 pm

Thanks Garth, great last several blog postings too!

Re:#18 not 1st.
…..but has anyone noticed that this years winter including the couple weeks of minus 50 has destroyed pretty much every highwat and street in the country?

Answer: great observation not 1st ,
and notice the millions spent on “bike lanes” ,
closing off of public roads/streets,
and the building of MASSIVE toll bridges and user pay transit trains!

Oh so much more to come “not 1st”, really the western civilizations demon hiding in plain site. The “agenda 21 ” is going to completely gut the middle class as Garth elegantly, patiently explains and explores daily on here! And he is using kindly kid gloves.

Anyone care to look into it….”agenda-21 “.

Heal well Garth.

#46 saskatoon on 04.01.14 at 8:44 pm

c’mon garth:

you still think that this is all some big billion dollar governmental “mistake”?

#47 dave c on 04.01.14 at 8:44 pm

Liked the corvette video. They know how to live! Why wait until you develop breast cancer, parkinsons or ALS before you spend your money. Enjoy life NOW!

I’m sure the satisfaction level of 20-35 year olds today is higher than it was in previous generations. Mental happiness is worth some debt.

The world is a different place now. You don’t stay at one job, you don’t have 4 kids and you make more money than ever before. Almost all the cars in the school parking lots are less than 5 years old, no junkers. 30 years ago the parking lot was filled with VW bugs and Pintos. There is more money to enjoy now.

Spend and be happy now because you will most likely develop a serious illness early and regret enjoying life when you could.

Spending and debt is the new normal. The wrinklies don’t get it like they don’t get technology. Let them die with their flip phone and millions in the bank while they clipped coupons and drink free McDonalds coffees instead of Starbucks.

#48 Tiger on 04.01.14 at 8:44 pm

What’s a spider , Garth can u answer this , rbc shure did dwell on it!
Re the the 1 % advisors?

#49 ovidet on 04.01.14 at 8:45 pm

First graph does not illustrate the true picture of the Canadian median household total income. I really don’t like when Garth exaggerates/tweaks facts to make a point.

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil108a-eng.htm

I referenced it as a Bloomberg chart. Be truthy. — Garth

#50 55rider on 04.01.14 at 8:47 pm

In today’s Vancouver Sun:
Barbara Yaffe: Rising cost of Vancouver houses means it may be worthwhile to rent.

http://www.vancouversun.com/business/real-estate/Barbara+Yaffe+Rising+cost+Vancouver+houses+means/9683256/story.html

While she has argued in the past that there is no bubble, this may indicate a change in her opinion.
Of course she goes on to imply that investing in rental infrastructure may be wise.

#51 Obvious Truth on 04.01.14 at 8:48 pm

Former boc boss doesn’t like second place. Go uk. No problem though. Just crush the c$ and £. Problem solved and the wealth gap widens some more. Probably like the stans.

#52 sheane wallace on 04.01.14 at 8:54 pm

So gold matters after all.

I thought it is a tradition… (B. Bernanke).

Markets will self regulate, just get the governments out of them and let the stupid fail.

I dare Poloz and Joe Oliver to come and ask ME to pay for their stupidity.

#53 Freedom First on 04.01.14 at 8:56 pm

Did we learn nothing? Good answer Garth: we’re the worst little piggies there are.

And the mortgage for buying the house is only the half of it. I see the piggies who gained some house equity then turn around and HELOC it into a $60,000 SUV, and then, adding a little more to it, and take an International holiday. Now, they have a newborn and Mom is working part-time, while Dad is stressed and working all the overtime he can get. I am seeing this more and more.

Call ME crazy, but I think a house should be made of brick, not straw. Big storm coming.

#54 TheCatFoodLady on 04.01.14 at 8:57 pm

The Main Squeeze & I spent the afternoon shopping. Okay, he did most of the shopping, I lurked in the weeds among the shelves of ‘final sale!’ clothing & observed the prey at the various water holes.

Monday afternoon at the outlet mall – plenty of cars in the parking lot & fairly pricey, late model cars. (Leased? Cheap 7 year car loans?) Well dressed matrons for the most part, artfully coiffed & loaded with multiple carats of cubic zirconia. (Ladies, if you’re off Monday afternoon, driving this & wearing THAT, why the look of desperation?)

I’m a ninja shopper. I go with a specific list, go right to the area, identify the best item for price, try on, pay & leave. Shopping is not a recreational activity – although it can make for fine spectator sport! The Main Squeeze is learning to enjoy shopping, (yawn!) & his list was far longer than my 3 items, only 2 of which I found.

Lots of looking, little shopping. There appeared to be a frantic hunt for the best bargains going & the air was filled with grim. Few looked to be enjoying themselves this spring. I’m lucky – built like a bean pole so few people wear my sizes & I don’t often have to do a ‘snatch & grab’ for what I want, although there are rarely many choices – no biggie – if it ain’t on my list, it’s not being purchased… usually.

I was lucky – found my items within the first 20 minutes, then was available to assure the Main Squeeze: “No hon, those shorts don’t make your ass look fat. Yes that shade of blue is better than the other. Uh huh – that shirt makes you look hawt.” I lugged his choices, paced outside fitting rooms, (I feel sorry for anyone stuck doing that much) & watched other shoppers.

We went to 4 stores & had to work hard to avoid the fresh rose petals I swear the clerks were tossing before us. They choked up when either one of us said: “I’ll take that.” and damned near snivelled when our credit cards weren’t denied. Some customers in line ahead of us had to shuffle their cards before finding anything with room on it for even small purchases.

Grocery store – more credit cards being denied, items being put back & sale items really picked over.

It’s getting rough out there.

Which may explain why at this end of town, there was very little action at the Open Houses.

#55 BG on 04.01.14 at 8:57 pm

Did my groceries today, and walked uphill all the way to my rental apartment holding two heavy bags.
That’s one of the only times when I wished I owned a car.
One of these big SUVs that seem so common nowadays.

I really feel like a cheap bastard counting his coins in the middle of house party. Everybody’s partying like there’s not tomorrow.

Who’s really taking the risk here? Them, enjoying it while it last. Or me, betting on the future.

I’m really not sure.

#56 victoria on 04.01.14 at 8:57 pm

Since rates r going down I wonder if there will be a dead catbounce I wznt to sell in victoria but I think I missed the boat

#57 sheane wallace on 04.01.14 at 8:57 pm

Isn’t it strange that the shittiest cases are the one managed by Marc Carney as a central banker?
Just saying…

#58 Habs76-79 on 04.01.14 at 9:00 pm

#30 Daisy May,

Yep your post reply is very true.

Here is one of my most favourite quotes and so appropriate to what we are seeing as events and such in Canada and even abroad circa 2014.
———-

The truth is incontrovertible. Malice may attack it, ignorance may deride it, but in the end, there it is.

Winston Churchill

#59 Bob Rice on 04.01.14 at 9:02 pm

#11 “No question listings are down people afraid to sell as there is nothing to move up to or sideways. All the new listings sell fast or they are at least 15% over priced.”
_______________________________________________

Garth and a few others have stated this before also. I don’t buy this logic b/c the prospective sellers will be selling their homes at a premium price too… so buy hi, yes, but they’re selling high.

There are few listings b/c not enough detached homes are being built in places like the GTA and this has put pressure on the overall supply of detached homes.

Rubbish. Active listings are below historic levels precisely because prospective sellers fear buying. Would you buy your own house today at market price? — Garth

#60 sheane wallace on 04.01.14 at 9:06 pm

#56 Habs76-79 o
…………………..
Yep, after LIBOR there were whales (London), Forex manipulation, commodities manipulation, now HFT (High frequency trading) scandal, CMHC, … you name it, every market rigged. Not to mention gold and silver market manipulation for years.

AND THERE IS NOT A SINGLE BANKER IN JAIL!

JPM and GS have quarters with no days with trading losses! Amazing. And the sheeps buy houses.

#61 X on 04.01.14 at 9:14 pm

It is disappointing that O won’t do anything to the lending rules or regulations. That no one oversees the RE industry or their marketing practices, where most Canadians have most of their wealth is a shame.

IMO the job of gov’t is to protect Canadians, not to make themselves look vote-worthy prior to the next election.

We know withdrawing from the RRSP isn’t going to change. It is probably the only thing making some contribute to their RRSP.

Increasing the downpayment to 10% or so, which would probably be prudent to protect buyers from market dips, would crash the current RE market. So that isn’t going to happen.

I am sure that the market will eventually crap out, despite it sounding like Yellen will wait longer to start increasing rates.

…but what ever happened to doing the right thing?

#62 Bob Rice on 04.01.14 at 9:15 pm

@ #43 “housings not going to collapse”

So Chicago, L.A. Miami, Atlanta, etc, etc… aren’t “fully built economies.”? Each of these cities experienced steep declines… If anything, Mtl is an economic basket case…

Your logic isn’t sound, sir.

#63 Morpheus on 04.01.14 at 9:22 pm

Re-watched the Matrix last night, see lots of parallels with Canadian real estate…look at this classic quote from Agent Smith,
“Agent Smith: I’d like to share a revelation that I’ve had, during my time here. It came to me when I tried to classify your species. I realized that you’re not actually mammals. Every mammal on this planet instinctively develops a natural equilibrium with the surrounding environment, but you humans do not. You move to an area, and you multiply, and multiply, until every natural resource is consumed. The only way you can survive is to spread to another area. There is another organism on this planet that follows the same pattern. A virus. Human beings are a disease, a cancer of this planet, you are a plague, and we are the cure. ”

The only question is whether Garth is Neo or the Oracle……

#64 PeterfromCalgary on 04.01.14 at 9:32 pm

Notice how all the feel good MSM articles use average income and Garth uses Medium income. Medium is a better refection of middle income because it is the half way point average is much higher because rich people drive it up. For example say you have a country of four people with the following incomes $10, $20, $30, and $1000000. The medium (middle) income is $25 but the average or mean income is $250,050. Even though the average income is high the majority of people in this country are poor. The average income is so high only because of the one guy.

#65 gladiator on 04.01.14 at 9:36 pm

@45 dave c

“Liked the corvette video. They know how to live! Why wait until you develop breast cancer, parkinsons or ALS before you spend your money. Enjoy life NOW!”

I do sincerely pity the people whose life enjoyment is about driving a new Corvette. Or having a big-azz house. Or having lots of stuff. And I salute those who know what I mean.

#66 Steve on 04.01.14 at 9:36 pm

Almost got my coworker mad enough to fight me today. It was totally innocent on my part. I know he was in banking before so I asked him why he has four mortgages? That led to bickering and then outright fuming and if I hadn’t stopped I bet we would have scuffled. I asked him if it makes sense that real estate will always appreciate in value. He said yes. Then I asked him if that means that the dump I just sold would one day be worth a million dollars. He said no. So then I said “I thought you said it would always increase in value” and then he was like “people can afford a million dollar mortgage because the wives also work now.” And then I countered with “in that case in twenty years the kids will have to work too!” Then he said I was a [email protected]&$ing moron and didn’t understand anything. I’m cool with that. I’m also cool with being right. I’ve actually never seen anything that will enrage a guy faster than this topic. I was accused of calamity howling by some of the other guys buddy whined too about it. I guess it comes down to fear. No one wants to admit that the worst is ahead because they’re in a delightful slumber. Fed and stuffed with things and self importance. Comparing designer nooses. “Mines got a view ! Mines got granite! ” Its a noose…

#67 Chickenlittle on 04.01.14 at 9:39 pm

Garth, I know why you couldn’t make a career of politics: you are too smart and have too much common sense.

Politicians are like bad parents: they can’t say “no” and they have all kinds of stupid rules than no one agrees with.

PM Mulclair (I gagged when I wrote that) will muck things up more than they already are. Don’t even get me started on the NDP…

Frat boy JT…don’t even get me started…

Uncle Steven needs a vacation.

Garth, can you run for PM? I don’t like any of my options. Even the Republicans are starting to look good.

#68 Joe Schmoe on 04.01.14 at 9:42 pm

Would you buy your own house today at market price? — Garth

That is precisely the logic I am using to push off my own personal Houseageddon. Honey bunny is buying it for now…

Is two gs or ds…my spellcheck isn’t helping

#69 Dave D on 04.01.14 at 9:43 pm

@ #26 Fred
Yes, self educated from the school of hard knocks. I never actually read any books, just learned from my mistakes (and even successes in some cases) and read relevant artiacles online. for example Now I would never buy individual stocks, but in the past for example I have bought TD,Sun Life, Shoppers drug mart, and Pengrowth (PGF). I totally got burned on pengrowth, bought it at $10+ and it sunk below $4 at one point, now its around $6.50-$7 Felt really stupid for making this PGF purchace in hindsite. on the other hand, TD has gone up %50 since I bought it and pays great divs, Shoppers got bought by Loblaws and jumbed from $45 to $60 almost instantly and SLF is up even more than %50 since I bought it in the downturn. I easily could have lost in all 4 of those investments and been really discouraged with investing, which is why I will stick to ETFs. ie When I invested in PGF at the time I had no idea the demand for gas was going to plummet, it had been solid for years before and even in the 2008-2009 crisis did not go to the low level it hit ‘After’ I invested. All I know is I dont yet have a 7 figure portfolio and am am not qualified, and should not be gambling on individual stocks. I have a computer science degree but that does not qualify me to be a market god! not even close!

#70 devore on 04.01.14 at 9:44 pm

#25 zee

then explain why the best banking system in the world continues to lend money to purchase homes.

I assume you’re asserting that’s a reference to Canada?

Banks lend money. There is little risk to them to continue to do so. Why would they not?

#71 Paul on 04.01.14 at 9:49 pm

#57 Bob Rice on 04.01.14 at 9:02 pm

#11 “No question listings are down people afraid to sell as there is nothing to move up to or sideways. All the new listings sell fast or they are at least 15% over priced.”
_______________________________________________

Garth and a few others have stated this before also. I don’t buy this logic b/c the prospective sellers will be selling their homes at a premium price too… so buy hi, yes, but they’re selling high.

There are few listings b/c not enough detached homes are being built in places like the GTA and this has put pressure on the overall supply of detached homes.

Rubbish. Active listings are below historic levels precisely because prospective sellers fear buying. Would you buy your own house today at market price? — Garth
———————————————————-
Hey Garth
It’s not would you it’s could you! Most could not, and yes you can sell at a premium but the days of selling for high and buying up say 25% to get another bedroom or that garage are over know it’s more like 50%

#72 bothsidesnow on 04.01.14 at 9:52 pm

‘Rubbish. Active listings are below historic levels precisely because prospective sellers fear buying. Would you buy your own house today at market price? — Garth’
————————————————-

So if prospective sellers fear buying and don’t sell, then when and why would prices fall . There would be no supply to put downward pressure on prices.

#73 Dave D on 04.01.14 at 9:54 pm

@ #64 Steve
I used to get in those kind of fights with co-workers about religion. The real estate bubble is no different. you can’t convince them otherwise no matter what you say, their convictions are irreversible until the bubble actually bursts. Long time ago I decided to avoid religious discussions at all costs (I’m agnostic) and recently avoid the housing market/bubble discussions (I rent, and hear many anecdotes about peoples buddies who made millions on the market and it goes nowhere but UP!, and will go up for ETERNITY!). not worth it. you cant win an argument when 90% of the people are part of the delusion.

#74 Mike Leblond on 04.01.14 at 10:05 pm

There is no shortage of listing in Ottawa. In fact there are twice as many listings now as three years ago. Hundreds of homes listed for 600K and more in the suburbs are not selling. Many have been on the market now for three to four years with no one knocking on the door……. Condos are just as bad. Hundreds for sale, but no takers….. will the market improve? for the seller, no. Prices will crash, eventually, when owners realize there is no way but down….

#75 Andrew Woburn on 04.01.14 at 10:10 pm

#45 dave c on 04.01.14 at 8:44 pm

Spending and debt is the new normal. The wrinklies don’t get it like they don’t get technology.
==============================

Dave, the only difference between you and the wrinklies is that they have mainly forgotten that they were once that stupid too.

However if you think “wrinklies” don’t “get” technology, who do you think bought enough of Bill Gates stuff to make him a billionaire? Not caring about sending selfies and pictures of your lunch to all your Facebook “friends” does not amount to technophobia.

#76 walltiger on 04.01.14 at 10:10 pm

#45 Dave C
if playing your phone 24/7 is enjoyment, good for you.
if you borrow all that money in order to live the “good life”, fine. but you forgot to mention you have to keep working everyday, no stopping, and that, to me, is the biggest sadness in life.

#77 Smoking Man on 04.01.14 at 10:20 pm

https://m.youtube.com/watch?v=xP-6gMLTc-M

How teachers think, this kid in lala land is a former teacher, chirping some one who exhibits oddities in his private life.

But word is behavior, doing an amazing job is not given any weight.

It’s all about good behavior, sucking up to the collective (communism).

The gang rules… The individual regardless of talent, attached…

That’s Canada.

#78 ss on 04.01.14 at 10:23 pm

banks do not care. they will continue to approve people 5 or 6 times of income till cmhc’s 80 billion guarantee is used up later this year.
remember those declined loan apications late last year?

#79 Pope Snuggledeebums the 666zz (aka Nosty) on 04.01.14 at 10:23 pm

#4 Waterloo Resident on 04.01.14 at 7:28 pm — “Marry your honey and buy her a brand new $60,000 Corvette (all on credit of course) like this young 20-something guy just did for his wife . . .”

Speaking of liquidity, Lamborghinis and karma are like oil and water — they don’t mix, and Lambos have to be repaired. / This is neat. Well, somewhat — being in the firing line of a Mig-29! Lavrov on Ukraine / Crimea

SMan — let McWynne know that More CO2 is good for the planet! Chart

#44 Spectacle on 04.01.14 at 8:44 pm — “The “agenda 21 ” is going to completely gut the middle class as Garth elegantly, patiently explains and explores daily on here! And he is using kindly kid gloves.”

The Rothschilds and other wealthy individuals are toying with sheeples of the world, generally making their lives miserable via the withdrawal of money from the system (if there is a system). IMF-induced poverty in Ukraine

Agenda 21 is probably linked to TPP and TTIP New stuff, and would include the fiscal shenanigans happening throughout the world. Combine these few things, and it’s easy to see why people don’t have a clue.

#80 WileyM on 04.01.14 at 10:32 pm

#26 Fred
For an excellent book on do-it-yourself investing, read Millionaire Teacher (sample portfolios for Canadians and Americans included) Another excellent resource is the Canadian Couch Potato website.

But before you read those, I would try to find a copy of our host’s book, Money Road. It’s been awhile since I read it but I remember thinking at the time that it was one of the best all round personal finance books I’d ever read (and I’ve read a lot of them). Great explanations of stocks, bonds, etc.

However, it seems to be out of print. Garth, are you going to republish it? I wanted to give your book to my kids as a Christmas present (I’m serious). They wanted ponies but I thought this would be more practical.

I also recommend The Wealthy Barber Returns. An easy read and very funny. Not a step-by-step tutorial on investing but lots of wise words about saving and living within your means.

#81 Aquaman on 04.01.14 at 10:35 pm

Garth,

I’m completely liquid. I don’t see what all the fuss is about.

#82 World According To Garth on 04.01.14 at 10:38 pm

Speaking of Rothschilds Nosty, I was sad to learn that while climatologist Dr Tim Ball of Canada is busy trying to un-brainwash all you dupes about climate change, the Rothschilds man Maurice Strong is busy destroying your lives by bullshitting you about it.

http://politicalvelcraft.org/2010/05/22/architect-of-global-warming-conspiracy-maurice-strong-awol-from-u-n-to-china-after-oil-for-food-scandal/

You remember Monsweer Strong Oui? He’s the guy who destroyed Ont Hydro and stole tons of dough in the Iraqi oil for food program.

But as I keep telling you boobs that don’t seem to care or listen…..it’s Just Us. Not justice. And govt does not give a crap about you. Civil unrest will come here. I hope good folks here choose the right side.

#83 High Plains Drifter on 04.01.14 at 10:42 pm

I keep reading in this blog “you can’t turn debt in to equity”. Put “forever” on the end and I might agree. I have turned in as much debt as borrowed into equity. This fete was difficult for me, well a little bit. The point is, for people more strategically placed, the sky would be the limit. By the way I did all my borrowing from my pals, the boomers. The love of a couple of interest rate points can leave people quite dogmatic.

#84 Smoking Man on 04.01.14 at 10:43 pm

#77 Pope Snuggledeebums the 666zz (aka Nosty) on 04.01.14 at 10:23 pm

This kind of wording our, in
Canada MSM is truly a insult to those if us in the know.

We know in Ukraine it was a violent take over by neo nazis.
The current gov is the result of a coop. They were not the elected. govt.

Crimea has a referendum, a truly Democratic process.

Peter Mansbridge, the annexation of Crimea. Bla Bla Bla.

And you basement dwellers think this machine is going to be Straight on Real Estate.

The fact that they blatantly twist the facts on Ukraine it’s really a statement of, the herd is dumb, they are stupid, we can get away with this..

And there right…

You batards are so lucky you have a smoking man that you can come and learn from.

As far as the herd…. Going to be a record spring market in Toronto real estate.

#85 Another waterloo res on 04.01.14 at 10:43 pm

@ Dave d, Steve…

I hear ya… @ 30 yrs old, mid 6 figs salary… You should see the puzzled looks and queries I get for being a renter. The mortgaged debt slaves just don’t get it… And treat us renters like lepers!

#86 sheane wallace on 04.01.14 at 10:43 pm

So why do we believe debt can become equity?
———————————————–
small trades driving large valuations.
velocity of money and financial oppression.
fractional reserve banking

All the ‘wealth’ is paint made out of a fart.

The more debt one takes the more wealthy he/she becomes.

The nillionaire who game the system and live in million dollar homes having nothing than debt.

The outcome of this folly would be destruction of currencies, there is no other way to erase debt.

#87 World According To Garth on 04.01.14 at 10:46 pm

#58 sheane wallace on 04.01.14 at 9:06 pm
#56 Habs76-79 o
…………………..
Yep, after LIBOR there were whales (London), Forex manipulation, commodities manipulation, now HFT (High frequency trading) scandal, CMHC, … you name it, every market rigged. Not to mention gold and silver market manipulation for years.

AND THERE IS NOT A SINGLE BANKER IN JAIL!

JPM and GS have quarters with no days with trading losses! Amazing. And the sheeps buy houses.
——————————-

This is why civil unrest in the US is a guarantee. Right now it’s all about big govt and big banks (just us). There will be no justice until the people start “enforcing” it. Everyone in govt is bought and paid for and they don’t givea crap about you.

#88 Sideline Sitter on 04.01.14 at 10:47 pm

median household income is under $50K?
how is that even possible? serious question.

also, does anyone know – if we reverting to the mean for housing price increases, what would a SFH Detached in Toronto go for?

as things start to unravel, I’d like to know when it’s time to buy :)

#89 Republic_of_Western_Canada on 04.01.14 at 10:56 pm

#53 BG on 04.01.14 at 8:57 pm

Did my groceries today, and walked uphill all the way to my rental apartment holding two heavy bags.
That’s one of the only times when I wished I owned a car.
One of these big SUVs that seem so common nowadays.

I really feel like a cheap bastard counting his coins in the middle of house party. Everybody’s partying like there’s not tomorrow.

Who’s really taking the risk here? Them, enjoying it while it last. Or me, betting on the future.

Or, just carry smarter.

You’re not supposed to carry bags of groceries, either paper ones or plastic ones with handle-holes. A thousand years ago, they invented things called BACKPACKS.

Put all your groceries, new hardware, water etc into a good large-frame, well-adjusted packpack at the store, and walk a dozen blocks without it really meaning much. Especially effective if you have to climb a dozen flights of stairs in some old walkup, or even climb over a wall to get home.

Even works on a bicycle if you’re careful.

#90 Roy on 04.01.14 at 10:56 pm

Canada’s ‘Too Big To Fail’ Bank Problem Is Worse Than U.S.: IMF
http://www.huffingtonpost.ca/2014/04/01/too-big-to-fail-canada_n_5068508.html

The three largest banks — RBC, TD and Scotiabank — control more than 60 per cent of all banking assets

Goes hand-in-hand with the much greater allocation of construction jobs in housing compared to the US, and the fact that Canada has by far the most concentrated ownership of TV media in the G8 (or former G8). Billions in profits every quarter for the banks from housing. A collective mind drowned in housing industry controlled propaganda.

Its like a race to the bottom here. Every last man for himself. A nation divided is a nation that falls to the powers that be. Canada is being devoured and the public cater to it. The middle class is being crushed unable to afford the average home now. Yet convinced the way to prosperity is by buying into a McMansion.

The next 20 years will be very ugly here. But most people only think one month at a time. When is their next paycheck and will it be enough for their monthly payments. Not exactly a winning social construct.

#91 chris on 04.01.14 at 11:17 pm

What does etf mean?

#92 Entrepreneur on 04.01.14 at 11:21 pm

Whatever happened to controlling and paying down your debt? How can a economy grow when so many people are in debt? It seems to me that politicians and bankers do not understand how the system works or else we would not be having these conversations. They did not get the same education as I did and just talked their way into a position.

The only reason we are following what the States did is because to keep their system afloat but so much the family man who gets sucked into buying a high-priced house (it is not called a home anymore). I really don’t see how some people can sleep at night but I guess they were not taught that either.

#65 Chickenlittle why are you so down on PM Muclair and the NDP. The Liberals are cons and the Conservatives pass bills so they can get their way. At least the NDP will protect Canadian jobs and protect the land.

Read your history on how the Health Care was introduced to Canada. In Saskatchewan the people considered NDP their “bread and butter” as mentioned on a radio talk show.

The BC Liberals here in BC are brought BC in the worse debt in history. Oh, and they say they are for families but that is not so. Words but action is louder is than words.

#93 ottawagUyRenting on 04.01.14 at 11:29 pm

Try growing Scott Oaks hair back

#94 Andrew Woburn on 04.01.14 at 11:43 pm

David Stockman was Director of the Office of Management and Budget under President Ronald Reagan. Here’s what he thinks about China’s economy.

“China’s Monumental Ponzi: Here’s How It Unravels”

http://davidstockmanscontracorner.com/2014/03/31/chinas-monumental-ponzi-heres-how-it-unravels/

#95 Nemesis on 04.01.14 at 11:45 pm

#AfterTheGoldRush

http://youtu.be/-rXwBro3bJc

#BonusZen

http://en.m.wikipedia.org/wiki/Tennessee_State_Route_449

#96 Happy Renting on 04.02.14 at 12:03 am

#53 BG on 04.01.14 at 8:57 pm

When doing grocery shopping on foot do you use a backpack? Distributes the weight elsewhere (or you can just buy and carry more…)

Yes, there is a chance the massively indebted will be the winners. If a meteor wipes out all life on Earth tomorrow, the debt piggies will be better off for having brought their potential future consumption into the present, whereas we won’t be rewarded for delaying yesterday and today’s consumption because we won’t get a chance to enjoy it tomorrow.

If you’re a good saver, enjoy a little of it today. Just a little. Enough so that you don’t feel deprived or resentful of your normally thrifty ways. And so that if you get struck by lightning tomorrow, you won’t regret having never done some of the things you always wanted to.

#97 chapter 9 on 04.02.14 at 12:03 am

#45 dave c
“I fear the day technology will surpass our human interaction. The world will have a generation of Idiots
Albert Einstein
And let’s not forget that these new technologies have enabled unparalleled invasion of privacy sorry dude I’m with the “wrinkles”.

#98 sam on 04.02.14 at 12:34 am

What really boggles my mind – compared to Canada:

– Salaries in U.S are at 30% higher than in Canada ( Not talking about blue collar jobs)

– Prices of things from Gas to Clothes, Food, Entertainment, air fare, car insurance, hydro, almost anything is half or less that half we pay in Canada.

– Taxes are much lower.

Yet, Canadians are able afford and pay this type of mortgages when U.S bubble popped. Unbelievable!!!

#99 Setting the Record Staight on 04.02.14 at 12:55 am

“IMO the job of gov’t is to protect Canadians”

Really!

Empirically false. Philosophically bankrupt.

#100 Notta Sheeple on 04.02.14 at 2:01 am

“…….First, Canadians are making less money than they were in 2008. Median family income is lower than before the recession and savings have decreased…..Of course, wealthy people have more income than before (about 5%)……By the way, the number of people making minimum wage in Canada (about 7% of us) has jumped by 50% since 2006……..”
========================

Well, at least we know now what the Prime Minister of Omnibus and Temporary Foreign Workers’ Action Plan was all about.

#101 Mark on 04.02.14 at 2:18 am

“So if prospective sellers fear buying and don’t sell, then when and why would prices fall . There would be no supply to put downward pressure on prices.”

No transactions = lots of employment problems for the marginal and correlated holders of RE, the Realtors, the lawyers, the construction workers, etc.

Also, if banks get whiff of an asset class being in distress or a state of illiquidity, lending tends to be reduced to a trickle, and this drives loan renewal costs significantly higher.

#102 Mithan on 04.02.14 at 3:38 am

Its recency. Since the 1970;s when you could buy a house for a few thousand bucks, homes have increases thousands of percent. The obvious trend is that the same thing will happen over the next 40 years.

Or so people think.

How could your parents not tell you to invest it all in real estate when they saw those types of returns.

#103 BigM on 04.02.14 at 3:58 am

#76 SS they will continue to approve people 5 or 6 times of income ..

Interesting, the BBC mentioned this morning that UK banks want to limit lending to 4 times income…

But the avg price of a home in the UK is 180K, which is 7 times avg income.
Except in London, where the avg price is double that..

Who will make up the difference ?

#104 Buy? Curious? on 04.02.14 at 4:07 am

Hello? April’s Fools was yesterday. Duh.

This has to be the silliest question ever asked:

“Would you buy your own house today at market price? — Garth”

Yer damn right I am! Why? Because in a couple of years it will be worth more! If you were to get into a time machine made out of a Jacuzzi and asked me that same question back in 2008, recorded my answer, then zoomed back today and played it back, who would look more foolish? The Buy? Curious? guy who rented or the Buy? Curious? guy who bought?

And yes, I am as sexy as you think I am.

https://www.youtube.com/watch?v=_TXNEE6SaoI

Rob Ford 2014! Cuddlier than a Teddy.

#105 Freedom First on 04.02.14 at 4:53 am

$5 dave

It would do you a world of good to get some cognitive therapy for yourself. Your thinking is your problem as it has somehow been severely warped. Spending and debt is not the key to having a good time/enjoying life.

Truly enjoying life is in the living of such a lifestyle with sound principles of a wide variety in every area of life, so every day you are alive, you live a life of pure joy. The younger a person discovers this is truth, the happier their life will be. Most unfortunate dave, many people world wide of every age group have set in place a societal altar of MUST haves/wants/expectations/entitlements to satisfy and meet, or else they are unable to reach a place of fulfillment/serenity/peace/comfortability/happiness. But the world can indeed be a very tough taskmaster, and this line of “Group thinking” brainwashed, idiot ideals is like a carrot in front of a donkey, leading the donkey to have and live a slave driven life. Hard to believe, but unfortunately, we do live in a world of donkeys. So many sad, unhappy, and miserable donkeys, living the life of a slave. Not me.

#106 Freedom First on 04.02.14 at 4:57 am

oops my post was for #45 dave, not #5

#107 liquidincalgary on 04.02.14 at 4:59 am

@ #9 hohoho

OMG. third day in a row.

you still don’t get fractional reserve lending? in conjunction with minimum bank reserves?

please do more research

#108 I'm stupid on 04.02.14 at 7:09 am

@4 Waterloo resident

That video is irrelevant to your argument. Firstly they live in Oklahoma, (look at the special thanks to Norman Chevrolet) so that “luxury home” is worth 300k the most.

The problem in Canada is that housing is too expensive. When housing sucks up so much of household income discretionary spending suffers. Sure you can make the argument that the wealth effect from higher housing values can off set this a little but the fact remains that when people are debt free they spend more. Not having high household debt benefits the economy in 2 ways.
1. People go out to eat, buy cars, clothes etc etc
2. They will invest in business and themselves which will create more jobs.

#109 Chickenlittle on 04.02.14 at 7:14 am

I guess the days of putting an addition on a home are gone. Mike Holmes scared everyone away from that option.

At least with older homes you got more land so adding on was possible. In my new neighbourhood the houses are so close there is no room to expand. Good luck to all those people who are living in a lean-to in Bloor/Lansdowne who are lucky enough to have a “rare front door closet.”

#110 maxx on 04.02.14 at 7:15 am

“So why do we believe debt can become equity?”

Because, stupid-low rates short-circuit common sense and thereby the ability to create real wealth.

#111 maxx on 04.02.14 at 7:22 am

#17 Trojan House on 04.01.14 at 7:53 pm

Holy mackerel! What a phenomenal moniker. Love it.

#112 Basement Dweller on 04.02.14 at 7:27 am

Era of low interest rates.
BoC definitely has some control of the bond market.

A – 500K @3% 25y = $2366 five years later
427K @4% 20y = $2580

Two hundred more a month or about 9%

I suspect most people will refinance (to go back to 25y) or go variable .

#113 Fortune500 on 04.02.14 at 8:13 am

Ouch. Anyone catch this scathing personal attack by Brad Lamb (and no … it isn’t even against Garth)?

http://new.bradjlamb.ca/2014/04/rob-carrick-wrong/

#114 fixie guy on 04.02.14 at 8:34 am

#17 Trojan House : “Three new buzzwords: High Frequency Trading”

The only surprise is anyone finds this a surprise. Articles were published in the Bush era about houses setting up as close as physically possible to exchanges to skim the top with high frequency arbitrage trades. Maybe it’s just taken this long for media to understand the technicalities.

#115 Robin on 04.02.14 at 9:01 am

Think house prices are crazy in TO and Van, check out this madness in Guelph: http://www.century21.ca/prudentialestatesrmd/Property/ON/N1H1T6/Guelph/6_TORRANCE_CRS

$349K for a 1165 sg ft War Time house??? I understand it sold for more than asking. Yikes!

#116 Uh Oh Canada on 04.02.14 at 9:07 am

“We can’t even regrow Peter Mansbridge’s hair.”
—————————————————————–

Made me laugh and I almost coughed out this morning’s coffee. The Canadian solution to this would be a toupee. And that’s what we see all around us today- a false wealth. A banker from Brampton, ON once told me that for every asset you see out there, the average person still owes money for 90% of it.

#117 Retirement awaits hopefully on 04.02.14 at 9:40 am

re Waterloo resident driving a 2006 Corolla:

I know this is off-topic but Toyota Canada needs a kick where it hurts. I’m driving a 2003 Camry and have to spend over $4k to replace a head gasket involving heli-coils, etc.

Toyota sold over a million of these lemon engines, the ill-fated 2.4 liter four-cylinder.

There should be a class-action lawsuit against Toyota because their dealerships, like the one here in Lethbridge, tell everyone to go fly a kite when they are asked if there is any recall or any help available from Toyota to remedy putting out a useless engine that has been failing all over the world.

#118 not 1st on 04.02.14 at 9:53 am

Well even being liquid now is no panacea because if you are existing a significant position of any type, you have to give your pound of flesh to the HFT server farms in New Jersey.

#119 Stickler on 04.02.14 at 9:53 am

@ #102 Freedom First on 04.02.14 at 4:53 am

Truly enjoying life is in the living of such a lifestyle with sound principles of a wide variety in every area of life, so every day you are alive, you live a life of pure joy. The younger a person discovers this is truth, the happier their life will be. Most unfortunate dave, many people world wide of every age group have set in place a societal altar of MUST haves/wants/expectations/entitlements to satisfy and meet, or else they are unable to reach a place of fulfillment/serenity/peace/comfortability/happiness. But the world can indeed be a very tough taskmaster, and this line of “Group thinking” brainwashed, idiot ideals is like a carrot in front of a donkey, leading the donkey to have and live a slave driven life. Hard to believe, but unfortunately, we do live in a world of donkeys. So many sad, unhappy, and miserable donkeys, living the life of a slave. Not me.

——————————————

I like what you said. You should work on simplifying it for the masses though.

#120 TheCatFoodLady on 04.02.14 at 9:54 am

#53 – bg: I’ll add to #87’s comment about backpacks. The Main Squeeze & I are vehicle free. We’ve lived the last 6 years in a reasonably decent apartment about 2 km. from the nearest grocery store & I do 99% of the grocery shopping – all 50 kg. of me. I live & die by my backpack & it doesn’t even have a frame – just well padded shoulder straps. I can carry 15 kg. of groceries with no problems & push it a little further if necessary. Added bonus – weight bearing walking is healthy.

#121 Paul on 04.02.14 at 9:55 am

#114 Retirement awaits hopefully on 04.02.14 at 9:40 am

re Waterloo resident driving a 2006 Corolla:

I know this is off-topic but Toyota Canada needs a kick where it hurts. I’m driving a 2003 Camry and have to spend over $4k to replace a head gasket involving heli-coils, etc.

Toyota sold over a million of these lemon engines, the ill-fated 2.4 liter four-cylinder.

There should be a class-action lawsuit against Toyota because their dealerships, like the one here in Lethbridge, tell everyone to go fly a kite when they are asked if there is any recall or any help available from Toyota to remedy putting out a useless engine that has been failing all over the world.
———————————————————-
2003 Camry you are kidding right didn’t you get the 20 year warranty you was robbed

#122 Holy Crap Wheres The Tylenol on 04.02.14 at 10:07 am

Brad Katsuyama the ex head trader in New York for RBC Capital Markets on Wall Street is a hero to some and a villain to the robot traders. We cannot compete with automatic high-frequency trading programs as most of us do not have the same capabilities as what the investment firms have: High-speed fiber optics lines to exchange servers, precise algorithms and the budget to finance all of the latest software and hardware. This was so interesting to watch last night when I saw the interview with Michael Lewis as he detailed the high-frequency trading methodology in a nutshell. You get your server as close to the exchange as possible, run your programs and make money in milliseconds. You trade a position and dump it in milliseconds. Many have made millions from programming this technology. It is unfair and it creates middlemen that are unnecessary.
Investment firms have embraced high frequency trading, as the profits were limitless. You could buy and sell in a flash. You could buy a stock then short it. You were taking advantage of a price difference between two or more markets striking a combination of matching deals that capitalize upon the imbalance by buying other stocks as others went up or down. You could buy what others were buying, take a quick profit, and then dump it, but all in milliseconds or even quicker perhaps microseconds. We would never even know what had occurred before we made our trade. The possibilities were infinite and legal however this practice has caught the attention of the FBI, New York state attorney general and other administrators.
I think I’m going to like the IEX (Investors Exchange) a new Wall Street trading platform Brad founded. It would appear that the middle portion of fat is going to be trimmed.

http://www.cnbc.com/id/101544742

http://www.cbc.ca/news/business/canadian-brad-katsuyama-in-spotlight-over-rigged-markets-allegation-1.2594639

#123 john on 04.02.14 at 10:17 am

“We’re special. Snowflakes. The entitled ones, who have figured out how to buy more and live better while making less” . . .
and Americans have figured out how to successfully run an economy with the printing press! This is economics of the 21st Century and this time is different.

#124 Rabbit One on 04.02.14 at 10:19 am

#110 Fortune500

Read Brad Lamb’s article

>From 1980 to 2010, virtually every large Canadian >city saw its average real estate prices rise by 5 ½ – >6% a year compounded. A Toronto home buyer that >bought a home in 1980 for $100,000, with $5000 >down, in 2014 now has a home worth $500,000. His >$5000 down payment has now risen to a $500,000 >windfall. For those of you bad at math, that is 100 >times more that the down payment, or a 10,000% >return on invested money.

Wow, he is not counting any mortgage payment, insurance, and strata / maintenance fee on leverage return.

Apprently he has his own audience who listen and are impressed with these numbers – 10,000% (LOL)

#125 rosie "moving forward" in the knowledge that, "this won't end well" on 04.02.14 at 10:25 am

114 retirement awaits…

By my reckoning you have a 12 model year old car. You could fix it or do the Canukian and live it up. YOLO is the new trend. The trend is your friend.

http://www.toyota.ca/toyota/en/vehicles/camry/overview

#126 Woke To The Sounds Of Horking on 04.02.14 at 10:25 am

#45 Dave C —
And why shouldn’t folks be wary of technology? I could tell you things about the manufacturing of products and how much better stuff was built 20 yrs ago — hell, 10 yrs ago — but you’d probably call me a delusional wrinkly bastard. Go back to your gadget and surrender some more privacy already.

#88 Roy —
And that’s the very reason I got the eff outta Canada. Too many sheep and over-regulated to hell and about to get worse. And nearly nothing is worth the price you pay for it. And the income:expense ratio is way outta whack. And I don’t feel like being a debt slave. And on and on.

#127 Rabbit One on 04.02.14 at 10:32 am

Just to add about Brad Lamb’s article

1: >From 1980 to 2010, virtually every large Canadian city saw its average real estate prices rise by 5 ½ – 6% a year compounded

Stock market / Balanced portfolio did better, probably double of 5.5~6%

2: > A Toronto home buyer that bought a home in 1980 for $100,000, with $5000 down

Hey Hey Hey, Brad, in 1980, you cannot buy real estate with 5% down…..!

#128 lebowski on 04.02.14 at 10:53 am

Notice how all the feel good MSM articles use average income and Garth uses Medium income. Medium is a better refection of middle income because it is the half way point average is much higher because rich people drive it up. For example say you have a country of four people with the following incomes $10, $20, $30, and $1000000. The medium (middle) income is $25 but the average or mean income is $250,050. Even though the average income is high the majority of people in this country are poor. The average income is so high only because of the one guy.

This is fascinating insight. I had no idea. Can you post again please. Maybe explain how fractions work. Like what is 1/8 ? that is just crazy.

#129 lebowski on 04.02.14 at 10:54 am

chris on 04.01.14 at 11:17 pm
What does etf mean?
.

answer: electronic transfer fee.

#130 Just some guy on 04.02.14 at 11:00 am

I have to wonder at the sanity of the bankers who are allowing this continued access to credit. On the one hand, the more indebted people are, the more money the banks will make. On the other, do they believe they can get blood from a stone? Do they have some reference point to establish an acceptable level of risk that relates to indebtedness?

Another aspect of all this that concerns me, raised frequently by GT, is that so much money going into a single class of asset is not going into other, more productive areas. Time and time again, I see charts related to levels of investment in new technologies, or rankings about innovation, and the like (a lot of soft stuff perhaps and not likely as clear an indicator as I would like) and the single most obvious thing to me is that Canada is nowhere in sight.

Case in point: Robotics – the most recent issue of The Economist provides a chart to show, by country, how many robots each country has which, by extrapolation, is perhaps a reasonable indicator as to how much capital and human effort is invested in this technology (the programmers, the techs, the designers, and the like). It may also tie into manufacturing “viability” in that a country that embraces robotics, in all of its many forms, may be seeking to have a more complex, nuanced, and sustainable approach to manufacturing thus increasing the likelihood of keeping manufacturing in its country.

So what is Canada doing? We build houses. What a bunch of fricken’ doofuses we are. Seriously! Houses and commodities? We really need to get our heads out of our collective southern orifices.

#131 Kris on 04.02.14 at 11:01 am

“Of course, wealthy people have more income than before (about 5%) because they have income-producing assets, while everyone else has less, since they all bought houses.” – Garth

Not entirely accurate. Those who bought houses in 2008, even 2010, in the GTA or suburbs, have seen their homes increase in value by 15% at least. That’s being very conservative – In my nook west of Missga, 2400sqft detached homes that sold for $475K in 2010 are now $625K, a hefty 25%-30% rise.

Sure, they haven’t banked the money till they’ve sold – and how would they sell if they can’t afford to buy anything else, etc – These are valid points. Flip side, though, they haven’t lost money, either, till the market actually falls.

The market hasn’t fallen. For 6years. And counting.

#132 Sean on 04.02.14 at 11:15 am

http://www.macleans.ca/economy/economicanalysis/why-canadas-household-debt-problem-could-get-worse/

#133 Ret on 04.02.14 at 11:16 am

Is this what the end of a debt orgy looks like?

http://www.nytimes.com/2014/02/20/world/europe/some-greek-victims-of-hard-times-are-left-with-nothing-but-rust.html?_r=0

My greatest fear. I tired the public transit thing once and I don’t do it well. Some of the people riding the Barton bus in Hamilton scared the heck out of the wife. They should at least provide hand sanitizers.

#134 chickenlittle on 04.02.14 at 11:24 am

Entrepreneur:

I only have my Bob Rae experience to go by.

When we packed up and moved because he ruined Ontario, that was it.

#135 Enthalpy on 04.02.14 at 11:26 am

It seems no one cares or has plans to pay down their debt. yolo!

New corvettes for everyone

#136 Jimbo on 04.02.14 at 11:30 am

Statscan only takes into account what’s on paper. Cash economy, in the words of Rob Ford, is “booming” in Ontario.

There is no way to determine true disposable income.

Nonetheless, chart is still scary even taking the aforementioned unkown into account.

#137 Doug in London on 04.02.14 at 11:32 am

@dave c, post #45;
I’m one of those wrinklies at age 53, and actually remember recessions like in the early 1980s and 1990s when people who were overleveraged lost their homes due to foreclosure or power of sale. That’s a highly stressful hell to go through and I’ve gone to great lengths to arrange my life in such a way to avoid it. The stress of such an experience can bring on all kinds of health problems including breast cancer, Parkinsons or ALS. By contrast, I absolutely LOVE the comfort and freedom of being debt free and having savings. It’s a gorgeous sunny day today, and I’ll be outside (after sleeping in) enjoying it and not worrying about where my next paycheque will come from. For 6 weeks I was absent here, did anyone miss me? I didn’t think so. During that period I was in sunny Australia, enjoying hot weather not at all worrying about the fact I’ve been unemployed since the beginning of the year. I saw the temperature hit 36 degrees or more in Alice Springs for many days in a row, and not a cloud in the sky. So there I was blissfully enjoying my vacation where it was summer while many poor suckers were stuck in this brutally cold winter that seemed to go on forever, working long hours just to pay interest on debt. I would take this life of freedom and low stress over having the Corvette or all that other stuff (and all the debt that goes with it) any day, any month, any year.
I’m signing off now to plan my next trip, financed with dividends from my investments.

#138 airhead princess on 04.02.14 at 11:56 am

“Kudos on yesterdays post Garth. I’m glad you finally acknowledged investing into individual stocks. Although I believe people can play the game with 1/2 million bucks rather than the 7 figures you suggested. ”

Rubbish….I started trading stocks with my rent money ( sub $1000) on a hall phone at UBC I retired quite comfortable without ever having to ask anyone’s advice. The same rules apply today. Plenty of momentum and speculative stocks around today that double and triple overnight. In the past the opportunity of a lifetime came along and gave us junior uranium stocks and gold through the 90’s and 20’s….I believe there are lots of junior oil and gas stocks around today that fit the same profile. Investing is about information, education, conviction and IQ….nothing to do with how much money you need to start. How closely are you following today’s market….how badly do you want to make money. Somebodies getting rich……what happened to you? Do you expect to retire in twenty years with a 5% return? Get crackin’ dummy….or get left in the dog food isle.

#139 Daisy Mae on 04.02.14 at 12:08 pm

#4 Waterloo Resident: “Just watch that video and see how happy his wife is, don’t you want your wife to be happy with her new Corvette and living in a nice luxury estate also?”

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

Yes, she’s smiling. But it’s an uneasy smile. She knows the damn thing hasn’t been paid for….

#140 :):(Ying Yang on 04.02.14 at 12:11 pm

#119 Holy Crap Wheres The Tylenol on 04.02.14 at 10:07 am

Brad Katsuyama the ex head trader in New York for RBC Capital Markets on Wall Street is a hero to some and a villain to the robot traders. We cannot compete with automatic high-frequency trading programs as most of us do not have the same capabilities as what the investment firms have: High-speed fiber optics lines to exchange servers, precise algorithms and the budget to finance all of the latest software and hardware. This was so interesting to watch last night when I saw the interview with Michael Lewis as he detailed the high-frequency trading methodology in a nutshell.

……………………………………………………………………….

Saw the same interview last night. My brother is a code monkey for a bank in Singapore and said this type of technology is not going to be welcomed. They are getting read to set some rules regarding this.
KC Chan, Secretary for Financial Services and the Treasury of Hong Kong, says rules will need to be set for high frequency trading in order to protect the Asian market.
http://video.cnbc.com/gallery/?video=3000263171

#141 SRV on 04.02.14 at 12:15 pm

Attention equity investors… two “must see” charts…

http://jugglingdynamite.com/2014/03/31/equity-market-more-suicidal-in-2014-than-2000-or-2007/

#142 Holy Crap Wheres The Tylenol on 04.02.14 at 12:23 pm

MANNKIND CORPORATION, nice jump up 73%.

http://investing.money.msn.com/investments/stock-price/?Symbol=MNKD&icid=sktptnews

#143 Holy Crap Wheres The Tylenol on 04.02.14 at 12:28 pm

Here in Canuckistan we Canadians cannot turn lead into gold, nor water into wine, but we can take great ideas and corporations to lofty heights and then sell them for pennies on the dollar to the USA.
I hear we do make great beer though!

#144 TnT on 04.02.14 at 12:30 pm

#110 Fortune500
#121 Rabbit One

Buying vs. Renting is so hard to pin down as each side constantly moves the goal posts to gain advantage to their argument.

The answer to this question is so unique to each individual that it never gets properly answered on a blog.

Chicken or Egg ad nauseam…….

#145 Daisy Mae on 04.02.14 at 12:32 pm

#38 jshum: “I suspect the conservatives will argue in the next election the middle class is doing great based on net worth…”

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

What is so deceptive is that the government plays down the fact that their interference with mortgage amortization rates initially caused this problem.

And instead, touts the ‘four tough changes’ — from 40/0 to 35/5 to 30/5 and finally back to 25-year mortgages — which always worked and never should have been tampered with. Liars, all of them.

#146 Rabbit One on 04.02.14 at 12:49 pm

#141 TnT

Excatly.
That’s why when you compare Own vs: Rent,
you have to include all aspect / each individual scenarios.

Brad Lamb didn’t do that.

#147 Smoking Man on 04.02.14 at 12:59 pm

Shocking silent, MSM take on Wynne….

Ford continues to have cameras following him every where.

Moral of the story…

To the loony left, your a hero if you blow a billion dollars.

You’re a scum bag if you save a billion dollars.

Wish I was on MH370 we would be flying past Pluto by now.

#148 Condo Minion on 04.02.14 at 1:08 pm

Wow. I cannot recall ever seeing such a long term, pessimistic outlook as this one today for Ontario:

http://www.thestar.com/news/queenspark/2014/04/02/gloomy_outlook_in_ontario_finance_ministers_economic_report.html

Sadly, I think it is very true.

A slowing economy, and aging population with higher health care costs for 20 years will be a powerful drag on the economy.

Current inflated real estate values don’t stand a chance in this.

Let’s just hope we don’t get anywhere close to Detroit.

#149 Shawn on 04.02.14 at 1:17 pm

Equity Market Suicidal

SRV at 141 alerts us to a sensentionalist headlinea dn some charts.

Attention equity investors… two “must see” charts…

http://jugglingdynamite.com/2014/03/31/equity-market-more-suicidal-in-2014-than-2000-or-2007/

The first chart suggests that it is margin debt that drives equity markets, not fundamentals.

The second just proves that if you torture data long enough it will confess to anything. In this case the standard technique of using different scales for two lines on the same chart was used.

More importantly, I would suggest it is more likely that margin debt declines when the market corrects. So they are corrleated. But cause and effect is likely in the opposite direction to that suggested.

Just sour grapes from those who largely missed this huge equity run and are pining for a crash.

#150 What's to come on 04.02.14 at 1:55 pm

I thought you might all enjoy this one. Dare we think it could enlighten a few?

http://www.tmxmoney.com/news/read/?id=66829828

#151 Son of Ponzi on 04.02.14 at 1:56 pm

#143
I hear we make great beer, though.
—————-
You must be kidding.
Molson Candian is pissbeer, that’s what the Germans call it.

#152 Son of Ponzi on 04.02.14 at 1:58 pm

Condo Minion
Get’s my vote for most ingenious handle.

#153 Aggregator on 04.02.14 at 1:58 pm

You want to rent a one bedroom in Toronto? Here's what speculators expect you to pay. Chart (data is one bedroom condo asking price with furnished listings filtered out) And if you're currently renting, don't be surprised when you eventually have to move and find that your current rent price now rents a space that is half the size you were living in. The speed of TO developers shrinking units is incredible and like no other city in the world right now.

Alas, as long as Torontonians are willing to live in smaller shoeboxes like cockroaches, and more condos are sold abroad to foreign speculators who like sitting on empty units and watching it appreciate against their falling currency, that trend will continue until Toronto is a skyline of glass-shattering high rise favelas.

The only way one can win in this situation is by picking up their bags and leaving or taking on a lot of leverage and praying central banks keep boosting western asset prices.

#154 Bottoms_Up on 04.02.14 at 2:02 pm

#138 airhead princess on 04.02.14 at 11:56 am
————————————————–
you’re talking about gambling — Garth’s point is about being properly diversified.

#155 Bottoms_Up on 04.02.14 at 2:10 pm

#121 Paul on 04.02.14 at 9:55 am
———————————–
LOL at the very least a 13 yr old vehicle should have been paid off 6 years ago, so having to invest $4000 now is really a monthly expense (or ‘car payment’) over the past 6 years of $56/mo.

Still beats driving under finance or a lease.

#156 AndrewAB on 04.02.14 at 2:16 pm

Just read the Maclean’s “Soft Landing” article, didn’t they have a burning house on the cover last year?

or was that Canadian Business?
or the Wall Street Journal?
or the Economist?
or the IMF reports?
or….

#157 Smoking Man on 04.02.14 at 2:19 pm

#140 :):(Ying Yang on 04.02.14 at 12:11 pm

And Tylenol…

HFT doesn’t really affect small retail trades, it hurts the big banks that need to buy sell big lots..

I like it cause it does add liquidity and my usual trade plan is 3 to 6 months so getting skimmed by a a tiny fraction of what I make, I could care less.

But I would like to hand it to Brad and the author of the book.
Smart… And tactful.
Free press, and good press, the moral high road..

They can’t lose

#158 gigi on 04.02.14 at 2:33 pm

Somebody is desperate…

Now, I don’t know Brad Lamb, but based on his advice, I’d venture to guess that he makes a living selling real estate. So, do you think is right?
http://new.bradjlamb.ca/2014/04/rob-carrick-wrong/

#159 Old Man on 04.02.14 at 2:35 pm

#147 Smoking Man – Wynne is doing a good job considering the circumstances and is politically well spoken. Now look on the bright side of the equation as later this year will be putting booze in the major grocery stores for your convenience.

#160 SRV on 04.02.14 at 2:43 pm

#149 Shawn

I really didn’t think anyone on this site could catch catch that in the 2nd chart… u r good!

Although another reason (u should be careful ’cause Garth isn’t a fan of “conspiracies”) might be that one tracks the S&P, and the other tracks the $billions$ in margin debt in the markets… a pretty simple, and commonly applied technique in any serious analysis of inharmonious data sets.

… which just may have skewed the “conclusions” of your learned analysis just a tad

#161 Holy Crap Wheres The Tylenol on 04.02.14 at 2:43 pm

#147 Smoking Man on 04.02.14 at 12:59 pm
Shocking silent, MSM take on Wynne….
Ford continues to have cameras following him every where.
Moral of the story…
To the loony left, your a hero if you blow a billion dollars.
You’re a scum bag if you save a billion dollars.
Wish I was on MH370 we would be flying past Pluto by now.

_____________________________________________

Amen to that brother, the loony lefty, scumbag hero thing that is, not the flying past Pluto thing!
What is it with this province and for that matter all of us when we appear to elect one sad government after another every time!

#162 Van Isle Renter on 04.02.14 at 3:08 pm

84% of all new car purchases are financed. 50% of all new Porsche purchases are financed. Ferrari will on say that “most” of the cars are purchased for cash.

But what does “cash purchased” mean anyway? If you take the $$ off your LOC and pay “cash” for your car, it really isn’t the same as writing a cheque using real funds rattling around in your chequing account.

Case in point: My BIL knows guy who had an Aston Martin. Somebody had to have the car and paid him more than he paid for it. MY BIL says “Man, you just pocketed some serious cash”. They friend said “Not really, it just all goes back against my LOC”. Ya gotta love Calgary.

Moral of story? When you look out your car window and see somebody driving a shiny new car, be it Toyota, Porsche, Ferrari, Aston Martin, or Audi R8 there’s likely only a 15% to 50% chance that the guy actually owns the car, not the bank.

#163 TnT on 04.02.14 at 3:09 pm

#146 Rabbit One on 04.02.14 at 12:49 pm
#141 TnT

Excatly.
That’s why when you compare Own vs: Rent,
you have to include all aspect / each individual scenarios.

Brad Lamb didn’t do that.

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

Nor does Rob Carrick…

Chicken and Egg… Chicken and Egg…

#164 TnT on 04.02.14 at 3:15 pm

#156 AndrewAB on 04.02.14 at 2:16 pm

Just read the Maclean’s “Soft Landing” article, didn’t they have a burning house on the cover last year?

or was that Canadian Business?
or the Wall Street Journal?
or the Economist?
or the IMF reports?
or….

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

All of the above and then some….

#165 Smoking Man on 04.02.14 at 3:15 pm

ick-wrong/

 Old Man on 04.02.14 at 2:35 pm#147 Smoking Man – Wynne is doing a good job considering the circumstances and is politically well spoken. Now look on the bright side of the equation as later this year will be putting booze in the major grocery stores for your convenience.
……

No she’s putting in mini LCBO’S in grocery stores. Same hours as other LCBO Stores. So if it’s Sunday 6:00:01 you’re shit out of luck.

Stores will be staffed by Fully indexed pension govt employees.

Resulting in the bastards coming after my loot when they eventually run out…

Offshore baby, offshore….

#166 Bad Catsuyama on 04.02.14 at 3:22 pm

chris on 04.01.14 at 11:17 pm
What does etf mean?
.

answer: electronic transfer fee.

NEW ANSWER: Economic Trading Frequency

#167 April on 04.02.14 at 3:24 pm

I love it when a realtor shares their perspective. This “isn’t a bubble market in YEG, apparently “it’s a boom”… Suddenly… I feel so informed..

http://www.cbc.ca/news/canada/edmonton/average-house-costs-in-edmonton-reach-record-high-1.2595834?cmp=rss

#168 Bad Catsuyama on 04.02.14 at 3:39 pm

chris on 04.01.14 at 11:17 pm
What does etf mean?
.

answer: electronic transfer fee.

NEW ANSWER: Economic Trading Frequency
Better ANSWER: Everyone Trading Fairly

#169 Alberta Ed on 04.02.14 at 3:40 pm

I’ve often wondered about StatsCan figures. Seems a lot of the so-called analysis it does could be performed at much lower cost (and greater reliability) by independent private institutions or universities.

#170 pinstripe on 04.02.14 at 3:42 pm

The housing market is HOT in Edmonton.

http://www.cbc.ca/news/canada/edmonton/average-house-costs-in-edmonton-reach-record-high-1.2595834

#171 Smoking Man on 04.02.14 at 3:56 pm

Old Man I’m sensing you got a bit of pinko blood.. Bit of fondness for Wynne…

Look at Adam Vaughan, the crusader for the hard done by.. He’s paid from funding by all of us.

These pinkos think the got it figured out…

You want to help the working poor. Remove corporate tax, weeken Labour laws.

Wages only go up when Labour is in tight supply. Bring every business in the world here by incentive.. And the jobs will come.

Remove monopoly of big corps, telecom insurance, air travel. Etc etc.

The libs don’t understand this. They think they can just keep shaking the money tree (tax payer)

On day they will wake up and discover the trees ran away to a place that I’ve just described..

#172 airhead princess on 04.02.14 at 3:59 pm

“#138 airhead princess on 04.02.14 at 11:56 am
————————————————–
you’re talking about gambling — Garth’s point is about being properly diversified.”

What I’m talking about is making a million dollars starting with a thousand….and then becoming diversified. This Canadian fear of risk…except for housing…is insane.

Frankly I never considered my ‘gambling’ as you call it as overly risky….I always knew exactly what I was investing in….and when to take a profit and move on. Thats not gambling…..thats whip smart investing. Gambling is taking out a million dollar mortgage on faith that real estate will always go up. If I’d strictly followed Garths advice I would never have made a million investing……never. It’s mathematical suicide to hide under the bed…..especially when there’s an orgy on the mattress above. I’d suggest everyone take some time and learn how to understand momentum and technical trades….it isn’t rocket science.

#173 Sorry about the link on 04.02.14 at 4:03 pm

Re: #150 What’s to come

Correct link: http://apps2.tmxmoney.com/news/cpnews/article?locale=EN&newsid=f49141

“More Americans feel they’re slipping from middle class after harsh recession and slow recovery”

It’s worth a read IMHO. :-)

#174 JL on 04.02.14 at 4:19 pm

So why do we believe debt can become equity?

Bought my first property in 2006 (at close to peak of the market), paid $295,500 for a 2 bed 2 bath condo inner city Calgary. Put 20% down, so mortgage was $236,400.

Lived in the unit for a couple years while I rented a room. Then finished school so didn’t need to rent the room out and moved a GF in (in theory you would think she would pay half the mortgage or rent or something, but that never happened…. hmm). Mortgage then was fixed at 5.49%!

Today mortgage is down to $181,000. I rent the unit now for $1800 (bought a new place to move into a couple years ago).

Mortgage payment is $1130, condo fees are $425, taxes $150. So it’s positive a $100 per month plus mortgage paydown.

Property worth probably $315,000 now (so very little increase in 8 years, maybe 6.5% total in 8 years, so nothing when inflation has been running at least 3% in Calgary, probably more like 4%). In spite of that I now have $134,000 in equity ($120,000 if I sell now and pay commissions).

Sure seems like taking on debt in 2006 even at nearly the peak of the market in Calgary turned into equity somehow?

Now I can either refinance up to 80% again, pulling out $71,000 in equity tax free to invest in a balanced portfolio, or I could sell the property outright.

#175 Son of Ponzi on 04.02.14 at 4:36 pm

#162
Moral of story? When you look out your car window and see somebody driving a shiny new car, be it Toyota, Porsche, Ferrari, Aston Martin, or Audi R8 there’s likely only a 15% to 50% chance that the guy actually owns the car, not the bank.
——————
obviously, you’ve never been to Richmond or Vancouver West.

#176 Son of Ponzi on 04.02.14 at 4:40 pm

#165
SM.
Ni hao.
The Middle Kingdom awaits.

#177 espressobob on 04.02.14 at 4:40 pm

#138 airhead princess

Playing the ‘juniors’? That sounds liquid? Any predictions?

#178 Son of Ponzi on 04.02.14 at 4:46 pm

#171 SM
On day they will wake up and discover the trees ran away to a place that I’ve just described..
——————
Great prose.
Almost on par with:
They paved paradise and put up a parking lot.

#179 Shawn on 04.02.14 at 5:12 pm

Technical “Analysis”

Airhead Princess at 172 said:

I’d suggest everyone take some time and learn how to understand momentum and technical trades….it isn’t rocket science.

*****************************************
True, it’s not rocket science. In fact it is no science at all, it’s not analysis either, it’s basically voodoo. It is to fundamental analysis what astrology is to astronomy.

Nevertheless I must agree with the princess about this weird fear of risking even a few thousand on the market. Risk depends on both volatility AND the amount invested.

Spending one dollar on a lottery ticket may be almost a certain loss but it’s just a dollar. It’s not a risk of an significance at all.

Similarly $5K in the markets is just not much of a risk at all for anyone with decent job. Ya gotten start someplace and aiming for 7% is not likley to cut it. In early years, most people should go 100% equities for their long-term investments and learn to live with (and profit from) the volatility.

Balanced portfolios almost NEVER out perform equities in the long run (30 years). Learn to live with some risk.

#180 rosie "moving forward" in the knowledge that, "this won't end well" on 04.02.14 at 5:30 pm

171 sm

Macwynn shall never vanquished be until Great Birnham Wood to High Dunsinane Hill shall come against him. Macbeth (A4S1)

#181 Life's a supermartingale on 04.02.14 at 5:54 pm

Garth, your graph of median income is not correct. I’m not sure what it is showing, but I can guarantee you that it is not median household income.

Median total family income has increased from $66,550 in 2007 to $72,240 in 2011. It is an entirely false statement that people are making less than in 2008.

Furthermore, the title of the plot makes no sense. “Change” in median income means just that – a change. On a year-over-year basis, median incomes are not changing by $40,000+.

Some of the stuff you put on this blog is fun, amusing. But this just plain wrong.

Blame Bloomberg. — Garth

#182 Smoking Man on 04.02.14 at 6:20 pm

#180 rosie “moving forward” in the knowledge that, “this won’t end well” on 04.02.14 at 5:30 pmMacwynn shall never vanquished be until Great Birnham Wood to High Dunsinane Hill shall come against him. Macbeth (A4S1)
……
MacBeth?….

was forced to read it in high school…let’s glorify murder.

anyway on an other note

apperantly I’m now a terrorist in Suadi Arabia.. athest….here.

I demand my government to impose sanctions on them.

#183 Kilby on 04.02.14 at 6:29 pm

#162
Moral of story? When you look out your car window and see somebody driving a shiny new car, be it Toyota, Porsche, Ferrari, Aston Martin, or Audi R8 there’s likely only a 15% to 50% chance that the guy actually owns the car, not the bank.
——————
obviously, you’ve never been to Richmond or Vancouver West.

Loans officer for a North Vancouver credit union told me last year that hardly ANY cars (talking about BMWs) are owned, 9 out of 10 are leased….

#184 kommykim on 04.02.14 at 7:22 pm

RE: #91 chris on 04.01.14 at 11:17 pm
What does etf mean?

Here ya go:
http://lmgtfy.com/?q=ETF

#185 Van Isle Renter on 04.02.14 at 7:23 pm

#175 Son of Ponzi on 04.02.14 at 4:36 pm
#162
Moral of story? When you look out your car window and see somebody driving a shiny new car, be it Toyota, Porsche, Ferrari, Aston Martin, or Audi R8 there’s likely only a 15% to 50% chance that the guy actually owns the car, not the bank.
——————
obviously, you’ve never been to Richmond or Vancouver West.

+++++++++++++++++++++++++++++

Was in Van and Richmond last week actually. Went to pick up some parts for my sailboat (paid cash for it, real cash , not put it on an LOC kind of cash).

I was also speaking of legally obtained funds. Sorry I didn’t make myself clear.

#186 Dr. Wu on 04.03.14 at 10:24 am

Smoking Man said-
Moral of the story…
To the loony left, your a hero if you blow a billion dollars.
You’re a scum bag if you save a billion dollars.

—-
Calling the ‘left’ looney is an understatement.
The ‘left’ point of view gives the illusion of a moral high ground; it allows politicians to spend money they don’t have on things no one even asked for. Things like”metric”. When we went metric a reporter asked Regan ‘Canada’s going metric, are we going metric too?’
Regan said:
“Sure anyone who wants to go metric, go right ahead”

Meanwhile we had metric cops handing out fines to our own citizens.

The ‘politician’ and ‘war’ have the same purpose, to create debt. Send in the tanks, send in the banks, more dupes on the ground, more dupes in the ground, their children can pay.