Bite me

DOG modified

Nary a day passes that some fool realtor doesn’t enter this pathetic blog to say one of two things: houses are for sure, stock markets suck. Or, property is the best wealth-builder there is. Just shut up and buy. Oh yeah and, Garth hates real estate and this site’s for mouldy, basement-dwelling loser renters.

Let me clarify.

Owning real estate is fine, so long as it’s in balance with other stuff. Hence my Rule of 90. But you don’t have to buy, because renting is absolutely fine – as long as you beaver away building wealth in another form (like a fat, balanced portfolio). Besides, renting is less costly than owning (even in Calgary). Finally, our housing obsession isn’t creating financial security. It’s actually tipping the scales towards a financial crisis.

Here’s my thesis. If you’re a real estate agent and don’t like it, bite me.

We’ve massively over-spent on houses, at the expense of saving and investing. About 70% have property, including 85% of the wrinkly Boomers. The savings rate has plunged as the real estate ownership has swelled. In 1983 it was 30%. In 1993 it was still 13%. Today it’s 4%, and is negative in BC.

Sure, interest rates used to be bloated and GICs once paid 12%. I get it. Today saved money returns nothing and mortgages are 2.99%. So people save little, pig out on debt, and own houses they otherwise could not afford.

But other things have also changed, and it’s all not looking too good for the 30- and 40-year-olds right now. These people (on average) save nothing, whereas their parents in mid-career saved double-digit amounts of their incomes. In short, Gen Xers are rolling the dice in a way their parents never did, putting all their eggs in the real estate basket.

Second, pensions are dying. Twenty years ago about 40% of people had a company pension. Now it’s 30%, and most of those pensions are ‘defined contribution’ which means you have no idea how much you’ll actually get in retirement. So, without liquid investments or a healthy pension down the road, what, exactly, are all these yuppies planning to live on when they need thirsty underwear?

Third, the whole argument that our collective net worth is rising so we must be better off, is false. We’ve simply shoveled all our money into houses which inflated as mortgage rates fell, and provide no guarantee of future value. In doing so we’ve accepted epic levels of debt, which won’t fall unless it’s paid back. What a risk people have shouldered.

A year ago CIBC economists warned us. Nobody listened.

“A concern is that since 2001 the majority of the annual gain in net worth has come from appreciating home equity, mostly generated by inflation in real house prices. Selling a house can convert those valuations onto cash, but replacement housing or rents are also more expensive. Financial assets, which are more liquid and easier to draw down for retirement, have grown more slowly than they did in the 1990s…”

NET WORTH modified

So, obviously, if you chunk everything you have into a house and it goes up in value, your net worth increases. But without other assets, at some point you have to dump the house to generate income in retirement (or unemployment). And this is where risk rears its ugly proboscis. You’d better pray you get to sell when real estate is buoyant.

The CIBC eggheads make one other worthy point. Boomers’ kids are largely screwed. You know why. They all own only one asset.

These people, we’re told, “are headed for a steep decline in living standards in the decades ahead, particularly those who are currently younger and who are in middle-income brackets.” That includes 60% of those born between 1985 and 1989, and almost half of those born in the 1960s – about 5.8 million working age people. And real estate is unlikely to save them, no matter what the market does, says the bank.

“Allowing these individuals to monetize half the value of their home equity (which few actually do) doesn’t dent the numbers much, as there would still be 5.2 million headed on a course that will result in a 20% or more drop in living standards.”

The bottom line is that a house is not a financial strategy. The wealth you build in equity can be erased by a price decline, trapped inside an illiquid asset if the market slows, or severely compromised by rising rates. Yes, you need a home. Yup, owning a nice house is cool.

But never, ever believe the hype. People buy for hormones, not for smarts. Which is why I am irrelevant.

138 comments ↓

#1 chopper on 04.06.14 at 7:03 pm

We are heading for some hard economic times, debt is keeping the economy afloat but it all will come to a day of recogniting.

#2 PJ on 04.06.14 at 7:11 pm

Gullible people who believe in governments, media outlets and aliens usually end up with the common result of a little probing.

#3 Bobby on 04.06.14 at 7:12 pm

Realtors refer to buying real estate as building wealth, but what they fail to state is it for their own wealth, not yours. Remember if they aren’t part of the buy/sell they don’t get paid. And there are a lot of realtors out there not getting paid.
No real estate doesn’t always go up. The recent National Post Financial facelift shows how a depreciating condo has financially ruined a couple. Here in Victoria there are condos for sale that originally sold for 900k sitting unsold now at 599k. And the realtor calls them a good investment.
The key is to do your homework and ask a lot of questions.
The last time. Realtor told me a property was a screaming it, I asked him why he didn’t buy it. His response, he got burned in the last downturn.
Enough said!

#4 zee on 04.06.14 at 7:14 pm

Garth,

I agree with everything you are saying but why is the govt not doing some thing about it. they just watch this mess get bigger.

talking to a realtor and he says most young people buying on borrowed money from parents. this is crazy. surely the govt is aware of this.

when are these rates ever going to rise. it goes up a bit then comes down just as quickly. taper has started but rates don’t move.

#5 mark on 04.06.14 at 7:15 pm

Not quite there yet, but Sydney, Australia nearly gets 1 million for a 2 bedroom crack shack. And household debt to income is at 177%.

http://www.idiottax.net/2014/04/important-things.html

#6 MoneyMyHoney on 04.06.14 at 7:22 pm

Graphs are all great. Show me the real crash. Given that this potential crash has been predicted for too long, it looks like a mirage now.

It’s not about crash or boom, but a balanced approach to financial life. — Garth

#7 OttawaguyRenting on 04.06.14 at 7:23 pm

I can’t bring myself to buy.
Get a txt from someone I know..we are talking real estate. They are quipping about how houses in my neighborhood where I rent is going up like crazy.

This person know how much I make.

“with your money you would do quite well with a purchase..I am about to buy a house where I can rent out the other half”

me –
“that works for you…I could buy it and not have to live in the other half”

“why don’t you then?”

Me –
“do you think the market is not already the very least 15% above reality here? what are you going to do in 5 years when rates go up 3-4% minimum?”

“I am not afraid of anything like that…I”ll just sell and in the meantime I will have equity”

I didn’t even bother. I am too tired. I wished them well..

#8 Ted on 04.06.14 at 7:23 pm

Shared your rule of 90 on reddit. It works well. Thanks.

#9 T.O. Bubble Boy on 04.06.14 at 7:32 pm

Tonight’s post reminded me of the Globe & Mail finance column from this weekend:
http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/cash-flow-a-force-for-better-savings/article17829878/

Age 35, 2 kids, $800k net worth, with more than half of that being equity in their $950k house (“only” $477k on the mortgage).

Now, this is actually FAR more balanced than the average Canadian (in fact, they are close to passing Garth’s Rule of 90). However, the article calls them “Good Savers”… they have a $233,500 gross annual income, and I’m sure the 50% equity in their house came from the housing market rising vs. paying off $475k of principle.

#10 not 1st on 04.06.14 at 7:33 pm

“In 1983 it was 30%. In 1993 it was still 13%. Today it’s 4%, and is negative in BC”

—-

Maybe had something to do with the interest rates the bank was offering…no? In 1980 people got more than 10% just dumping it into an account, now its 1%.

The powers that be want your money in the economy, not in a bank account and they have structured everything to make sure that happens.

Of course not. Buying resale houses is not an engine of economic growth. — Garth

#11 Financially Literate on 04.06.14 at 7:36 pm

Nothing wrong with real estate. But the caveat is that it’s only OK if a drop in price will not affect your future plans. Take two people, both with a net worth of $2 million. One has a $500K house and $1.5 million invested in a balanced portfolio netting 5% (sorry GT but 7%?) . The other has a $2 million house and nothing invested.

Who has the greater risk of cat food souffles in their future?

It’s all about managing risk. Most people look at a major purchase (car, house) whatever and think: “If this goes right and that goes right and that goes right, we’ll be just fine”. Financially savvy people think ” If this goes wrong and that goes wrong and that goes wrong we’ll be just fine”.

#12 John on 04.06.14 at 7:44 pm

#8 Ted Do you mind sharing a link?

#13 Luc on 04.06.14 at 7:44 pm

HDI stands for Household Disposable Income for your information.

#14 8102 on 04.06.14 at 7:49 pm

I don’t think that the government, nor the big banks are going to do anything about the Real Estate Market until after the Federal Election. Think about, do either of them really want to have this blow up just before the 2015 election and risk losing further seats to the Liberals and NDP. I don’t think the fun will begin until after the election regardless of who is sitting in government.

#15 blase on 04.06.14 at 7:51 pm

Couple pays off $68,000 in one year living in Manhattan. Live in a 2 bdr 2 br apart for $1695/month. http://www.mrmoneymustache.com/2014/04/06/frugal_living_in_manhattan/

#16 johnny d on 04.06.14 at 7:52 pm

So now we’re going with the inflation scenario where stagnant wages and painful price increases start affecting our standard of living?

#17 Paully on 04.06.14 at 7:53 pm

“Thirsty underwear?”

Best turn-of-phrase for the day!

#18 AK on 04.06.14 at 8:00 pm

#12 8102 on 04.06.14 at 7:49 pm
“I don’t think that the government, nor the big banks are going to do anything about the Real Estate Market until after the Federal Election. Think about, do either of them really want to have this blow up just before the 2015 election and risk losing further seats to the Liberals and NDP. I don’t think the fun will begin until after the election regardless of who is sitting in government.”
====================================

Ofcourse it will be after 2015.

Actually, it will start happening at the end of 2016.

A very large number of high yield bonds will start to mature.

Will be very interesting if they can roll them over @ 5%. I highly doubt it. :-)

#19 Doug in London on 04.06.14 at 8:00 pm

Yes, this site’s for mouldy, basement-dwelling loser renters who are debt free because they’re not severely over leveraged from buying a house they can’t afford and the paltry amount of equity they have in the house represents ALL of their net worth. These mouldy, basement-dwelling loser renters instead have investments that pay out dividends and distributions. The real estate equity they own is in REITS, which are completely portable so they can easily take them when they move and, as I said above, pay the owner to own them. Yes, I am VERY PROUD and make no apologies whatsoever for being a mouldy, basement-dwelling loser renter. I wouldn’t have it any other way.

#20 Chickenlittle on 04.06.14 at 8:05 pm

Never trust someone with something to sell, ESPECIALLY if they get commission selling it.

#21 Fleabitten Monkey on 04.06.14 at 8:11 pm

Hey Garth,
Would like to hear your view on Peter Schiff’s recent opinion on the US economy going down, worse than in the 2008, before Obama’s term ends. His thesis is once the cheap credit is gone, things are gonna be real nasty.
Cheers,

Schiff is trying to matter again. Sad. — Garth

#22 Survivor on 04.06.14 at 8:12 pm

Real estate is a game of survival. All markets fluctuate, stocks more so than real estate. They both can crash, difference is if a stock crashes companies can go out of business and investors are left with zero. Real estate crashes and investors are left with land that never goes away (unless they are too leveraged). Use debt responsibly when investing in real estate and if you are a survivor, real estate has proved to be an asset class that has always appreciated in the long term view.

Not as much as stocks. — Garth

#23 TurnerNation on 04.06.14 at 8:16 pm

Toronto, 11 feet (!) in width, 1 mill with land transfer taxes.

http://www.realtor.ca/propertyDetails.aspx?propertyId=14098421&PidKey=548573242

(Title is fitting unto: Doobie brothers – takin it to the streets live
http://www.youtube.com/watch?v=i9_e0rRvyz8
At 5:00 the piano lets loose – this is almost praise music.)

#24 Daisy Mae on 04.06.14 at 8:18 pm

#4 zee: “Garth, I agree with everything you are saying but why is the govt not doing some thing about it. they just watch this mess get bigger.”

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

Because they’re greedy gutless wonders?

#25 Litig8or on 04.06.14 at 8:22 pm

“Allowing these individuals to monetize half the value of their home equity (which few actually do)…”

Do tell.

#26 Sebee on 04.06.14 at 8:22 pm

Saving, debt, equity, whatever man.

HPI is 139.3, weather is 41.6, hormones are 69.69, and banks are 2.99. Add foodstuffs at 56.9 and you have enough misinformation to know saving for the future is something most will worry about when time index is 20/20.

#27 Smartalox on 04.06.14 at 8:26 pm

I don’t understand why realtors would be so angry with Garth: they get their commissions whether prices are going good or going down. Of course, instead of chasing bigger commissions with every sale as prices rise, they might have make up the difference by selling more as prices fall.

Twenty percent less per house sold is nothing if you’re selling twice as many, right? In fact, you’ll make more!

It’s not the agents that get screwed when housing crashes, it’s only the people who OWN real estate who lose. It’s not like real estate is the only asset class that most agents own, right?

Right?

#28 learningfromyou on 04.06.14 at 8:32 pm

Thank Garth for your post.

Fine, I got it, partially!!

you said it is necessary to buy financial assets, I went out and bought some ETF indexes, now some people say they are too high, I look at the bond ETF indexes, what to buy??, I checked the bonds returns and still need to understand them
-how to buy preferred shares?
-corporate vs government bonds, the latest do not convince me for their returns

Financial illiteracy, I accept it, maybe somebody reading the blog could help
Maybe Garth prepares a future post about the subject, EVEN BETTER

Thanks in advance for any guidance.

#29 Condo Minion on 04.06.14 at 8:32 pm

Desperation and Demographics – signs of the times

Thinking about Garth’s comments the other day, about 40,000 real estate people in the GTA trying to make a living, I thought more about all the cold calls from realtors we keep getting, as well as junk mail.

Friday ‘s mail told a story. Eight pieces of junk mail.

Four from realtors desperate to sign us up.

Four from funeral homes, selling deluxe to budget package deals for that big farewell. (They must know something we don’t…?)

The lessons?

The big demographic shift is starting

…and cremation is not as cheap as I thought.

(Maybe we’ll check the vet’s office that turned our eighteen year old pet into a nice little urn for $75 to see if they’ll
do us a favour when we need it)

#30 valleyrenter on 04.06.14 at 8:33 pm

Thoughts on using 100% leverage and paying a 10% premium over 5yrs rent vs buy? We are getting sooooo close to them being equal out here.

#31 Smoking Man on 04.06.14 at 8:38 pm

See dogs, I’m not that bad….

My message to Handsome Family…

I downloaded your tunes via pirate Bay. Amazing sound, thank true detective. Don’t know where to buy it up here in Toronto, AK Ford Nation .

How can I send you guys loot.. Love your music, guilt is Killing me.
Forward instructions please.

There reply :

Hey Smokey, you are a good egg. Thanks for thinking of us. Maybe next time you can purchase something from our website http://www.handsomefamily.com and we’ll mail it up to you. Until then we’re just glad you’re out there listening. xo Rennie
……

Tomorrow they will be pleasantly surprised…

#32 Jl on 04.06.14 at 8:42 pm

“But other things have also changed, and it’s all not looking too good for the 30- and 40-year-olds right now.”

I don’t get all this talk about how my generation is so screwed and hard done by.

I’m 31, live with my GF and our dog and cat in a condo I bought a few years ago. Also own another condo that I bought during university that I now rent out. I started a business when I was just out of high school and ran it during university and served tables making good money in the summers. Graduated with a BCOMM in 5 years so was able to buy my first property with the old 25% down “stated income” while in University. Only needed to save $70,000 which wasn’t that hard to do in 3 years while living at home and going to school. U of C tuition was like $5000 per year then.

Now at 31 I’ll probably sell the investment condo, its up a bit in value in 8 years, not much, but so much pay down that I have almost a $150,000 in equity. Have another $50,000 in registered and non-registered investments.

So at 31 years old I’ll have $200,000 in the markets, where I plan to invest in a balanced portfolio (90% equities) and I’ll be saving $5500 in the TFSA and probably $8,000 in RRSP. Go to a future value calculator and $200,000 PV and $13,000 in annual payments and I’ll have $2.7 million by age 61.

Owning the condo the GF and I live in IN NO WAY hinders my ability to save and plan. In fact, with the dog and cat we would be VERY hard pressed to rent a place at the same cost of the mortgage and condo fees.

I really don’t see how I’m so special and what advantages I had over others (other than living at home during first 3 years of University). I had some good fortune, no question, but nothing out of the ordinary.

#33 Hipster hobo on 04.06.14 at 8:45 pm

So RRSP’s are better than Difined contribution pensions?

#34 Jl on 04.06.14 at 8:50 pm

“It’s not about crash or boom, but a balanced approach to financial life.” — Garth

Garth, don’t you have book titled “After the Crash”? If its not about crash or boom, why do you have a book called that? Does it sell more books?

http://www.amazon.ca/After-Crash-Guard-Money-Turbulent/dp/1554701821

The ‘crash’ the book references is the 2008-9 stock market drop, written in 2009. — Garth

#35 shawn on 04.06.14 at 9:07 pm

The CIBC chart

I have no idea how to interpret that thing.

The left side appears to suggest that net worth rises at 35% of disposable income on average. At that rate net worth would be many times income in a few decades.

Imagine net worth compounding at 35% per year.

#36 May on 04.06.14 at 9:30 pm

This might interest some… The Ghost of Negative Equity will stalk the land again – a cautionary mortgage tale from 25 years ago here is the link:

http://simple-living-in-suffolk.co.uk/2014/04/when-not-to-buy-a-house-a-cautonary-tale-from-a-quarter-of-a-century-ago/

UK perspective but relevant to discussion here.

#37 Gossip Girl on 04.06.14 at 9:37 pm

#32 Jl on 04.06.14 at 8:42 pm

I’m just being nosy when I ask…does your girlfriend have a financial interest in it as well? Does your province’s ministry of finance consider you two to be, er, matrimonial-ish? Did you two sit down and talk about these things?

Congratulations on fabulous RE timing, by the way. I believe that we are all blessed…in different ways, at different times in our lives. Anybody who slags you for being a smug owner is probably just jealous.

#38 Wiggleroom on 04.06.14 at 9:41 pm

Can somebody please explain that chart? It makes no sense to me. Especially the left side.

Also, I can relate to what Jl says above. I am 41 and have done just fine. I bought a condo at 25, and later sold it to buy a house with my fianncé, using the equity as my half of the 25% down. Now we are mortgage free and have no debt. No special advantages, just worked hard over the years. We are now trying to beef up the savings and investment accounts, but are not too worried.

But whenever I read this blog I wonder… Should we be worried?! We are nowhere near passing the rule of 90. We’d need another 600k in savings to get there! Eek.

At 41, sounds like you should. — Garth

#39 shawn on 04.06.14 at 9:41 pm

Correction to my post at 35

Net worth would rise at 35% of disposable income each year, not at 35% of net worth. In any case it’s doubtful and the whole CIBC chart is hard to read

#40 Chris on 04.06.14 at 9:45 pm

I don’t understand your statement that 70% have property. That seams quite high. Is there an age bracket for that?

#41 KommyKim on 04.06.14 at 9:50 pm

RE: #22 Survivor on 04.06.14 at 8:12 pm
All markets fluctuate, stocks more so than real estate. They both can crash, difference is if a stock crashes companies can go out of business and investors are left with zero

Then buy the major stock indexes via ETFs. No index in the 1st world is going to zero and if it did, you’d have much worse things to worry about than money.

#42 TheCatFoodLady on 04.06.14 at 9:55 pm

Let’s take a flyer here. Gazillions of young house hornies decide to hold off on buying until house prices get real. They save assiduously, while beavering away at paying down student debt.

Wrinklies, as time shows them they’ll not be able to stay in their homes forever; start realizing equity, investing it – what they can harvest – as best they can.

Every damned fool with squillions in consumer debt vows to stop buying anything but essentials until their debt levels are more rational.

What happens?

What IS a reasonable level of household debt overall? I know, I know, it varies depending on family income, reliability of that income, location, total debt held now, age & other factors but if we’ve been looking at an overall percentage – close to 164% of annual disposable income, surely there’s a corresponding national level of safe.

What I can’t wrap my empty little head around is this – how does the nation deleverage massive amounts of debt in a reasonable amount of time without completely killing the economy?

#43 Harbour on 04.06.14 at 9:57 pm

It’s all interest rates.

Even my parents 55 years ago had a 6% mortgage locked in for 25 years

My era, you were tickled to get 8.5% and I had 12% on one 5 year term

#44 Frustrated Kiwi on 04.06.14 at 10:01 pm

It is the complete certainty in how houses are a great investment, with no risk, that just blows my mind. Guess what this 11-year-old entrepreneur is saving up to buy:
http://www.nzherald.co.nz/wairarapa-times-age/news/article.cfm?c_id=1503414&objectid=11233534

#45 Brian Ripley on 04.06.14 at 10:13 pm

I wonder if low mortgage rates are here to stay (think Japan) and the real threat to Canadian overvalued housing is deflation at the hand of CA$ depreciation.

My TSX chart is registering a breakout on the BoC commodities index measured in CA$.
Chart: http://www.chpc.biz/tsx-indexes.html

We have had 5 years of ZIRP but CPI is running at 1.1%

If low rates cannot ignite inflation to reach the BoC target, dollar depreciation will.

#46 Frustrated Kiwi on 04.06.14 at 10:22 pm

Some interesting graphs just posted on wealth invested in housing.
http://www.macrobusiness.com.au/2014/04/is-housing-the-great-investment-delusion/
Graphs include Canada, US, Australia, NZ, and the UK.

#47 Cici on 04.06.14 at 10:31 pm

Garth, of course the agents are going to dis renters and say that real estate is a sure investment…for them it is; their big salaries and commissions depend on it.

#48 Yuus bin Haad on 04.06.14 at 10:35 pm

Price decline? Rate increase? How ’bout when the roof leaks? Or, the stove blows up? Sump pump failure? It is spring after all.

#49 Retired WI Boomer on 04.06.14 at 10:42 pm

#42 the CAT FOOD LADY

The Economy takes a dump. The U.S. in 2008 began its “Debt Dump” all because of overpriced Real Estate, and shaky buyers. We were NOT at 70% ownership levels, more like 66% but let us not quibble over a mere 4%.

From here, it appears your Canadian economy in many areas is beginning to take that “dump.” How big a “dump” and for how long are unanswerable questions.
Will it freeze prices, cause them to fall, or cause a panicky sales situation should overly indebted begin to lose their stuff to the repo man? -unknown-

Will the newly retired “sell” their properties or try to hold onto the house? Many will try to hold onto the house, more doable with no debt to service of ANY type.

We are trying to live on just my wife’s social security, and my supplemental pension presently. That’s about 2 grand a month -and taxable at that. So far so good, actually it is interesting to see us actually “save money” on that amount.

There is money in the bank of we “need” it, but after seeing us drop poor spending habits over the years, frankly, it just doesn’t take a heck of a lot to live rather nicely. We do it because it is natural for us.

I think more people could drastically reduce their debts if they really wanted to do so. Many are just not yet motivated to do that. They will learn in time -maybe- or circumstances may force them.

#50 OffshoreObcerver on 04.06.14 at 11:11 pm

#32 Jl:

You have forgotten about the risk of divorce–half to wifey–and the associated legal costs.

#51 I'm stupid on 04.06.14 at 11:14 pm

@9 T.O Bubble boy

That story is Bullshit.

Max RRSP contribution is just under $25k

His pension is $1750 a month thats $21k a year.

25k-21k= 4k contribution room

How can he have 178k in his RRSP when the maximum allowable contribution room is 4k a year for 2014 and less for every year before 2014?

I guess they had masks on for a reason… To hide the BS the paper was selling. SMH

#52 };-) aka Devil's Advocate on 04.06.14 at 11:15 pm

REGARDING: Yesterdays Blog

It is a REALTORS job to market their clients home for all it’s worth. If there is any way they can create a supply/demand situation that leads to multiple competing offers it is their duty to do it.

You can overprice a home but you can not under price one for if you do, given adequate exposure, buyers will flock to it and bid the price up to market if not over. On the other hand there is nothing quite so effective in killing interest as overpricing.

#53 Waterloo Resident on 04.06.14 at 11:27 pm

reply to #21 Fleabitten Monkey:
your quote ((“Would like to hear your view on Peter Schiff’s recent opinion on the US economy going down, worse than in the 2008, before Obama’s term ends. His thesis is once the cheap credit is gone, things are gonna be real nasty.”))

Answer = Keep an eye out on Japan. Their finances are a lot worse than America’s so if the world’s economies start to unravel similar to 2008 then Japan will collapse before the U.S., anywhere from 2 weeks to 2 months earlier. And yes, when rates in the U.S. start to rise, Japan’s economic house of cards will crash down. That will cause the U.S. to cascade a few weeks later, so keep your eyes open for that.

As for houses: yes, if you own the house outright 100% and don’t owe anything on it, then sure, you’ve got nothing to worry about, you won’t lose it. However, don’t expect to be able to sell it in the near future for anything you hope for. If you want to retire, don’t expect any revenue from the sale of the house as there will be way too many people trying to sell and almost no one left willing or able to buy.

#54 Aggregator on 04.06.14 at 11:39 pm

The sad thing is nobody even asks how StatsCan calculates home values, so everyone assumes what they're told is true.

First, this survey took place in Sep-Nov 2012 and consisted of….ready? 20,000 dwelling units. There were 14.6 million dwellings in Canada as of 2011. Home values are marked-to-market and presumes the amount each home would sell for at that time of the survey. And if their NHPI (survey) was used for modeling values (which most likely it is) then the survey would be biased towards new single family homes and exclude resales and condos.

How the hell can StatsCan calculate net worth which such a flawed method and tiny sample size? Does anyone know that StatsCan is frequently criticized by other statistics agencies of developed countries? These people are paid to guess on a razor thin budget that should make one even more skeptical about who's ass these numbers were plucked from.

Today's statistics are meant to promote confidence and get politicians re-elected. That's all.

#55 BG on 04.06.14 at 11:41 pm

#32 Jl

Well some (most?) people don’t go to university.

And saving $70 000 in 3 years not that hard…
Man, someone on the minimum wage would have earned $60 000 before tax in 3 years. Saving 100% would not even have allowed to do what you did.
And that’s the minimum wage of a full time job by the way. You were attending University.

Yes you had some advantages.
Does not mean you didn’t work to deserve what you have though.

It’s just that some times you have to admit you were dealt good cards.
I’m 31 too, not doing as good as you but still I can see I was lucky. I know people living pay check to pay check, with no hope of improving their situation ever.

It makes you think.

#56 omg on 04.06.14 at 11:42 pm

REAL ESTATE HAS BEEN A SPECTACULAR INVESTMENT.

Over the past 30 years on the coast (and 20 years in most other parts of Canada) RE has produced spectacular gains for people, absolutely spectacular.

Plus the most risk averse person levers up 10 or even 20 to 1, so returns on net investment have been crazy. It has made a couple of generations extremely house wealthy.

BUT IF YOU DO NOT BELIEVE IN REVERSION TO THE MEAN YOU ARE A FOOL.

Prices will correct to their long-term values (which by the way is 50% to 70% below current values). Now this may take a generation or two to unfold, just as the run up has taken a couple of generations. But the market don’t care, she has time.

And unfortunately those last into the market will watch the declining value of their highly levered investment eat up all their equity.

For a real world example of reversion to the mean check out a graph of the S&P 500 over the past 25 years. There was a huge run up from 1988 to 2000, then basically flat (with blips of course – it is the stock market) for 12 yrs. In real terms it has only recently shot past its high 2000 high.

#57 Carpe Diem on 04.06.14 at 11:43 pm

Here is a good read to support Garth’s thesis:

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/renters-make-for-wealthier-investors/article17834799/

#58 marketsrule on 04.06.14 at 11:49 pm

Garth. I was going through the mail today and found my CI funds statement for 2013. Here is the performance for a modest sized LIRA that is a conservative 65/35 mix: growth from jan 1 to dec 31 is 15% after fees. That follows a similar return for 2012. During the same year, my more upscale custom home fell (easily) 15%. In fact, in this market of markets, my particular neighbourhood has zero liquidity – zilch. the very very nice 1.3M house across the street has been sitting on the market for 2 years. Even the decent $600 to $800K homes sit idle week after week. month after month, only selling after a very significant price cut. Knowing I have half a mil growing 15% a year helps to offset knowing that my once three quarters of a mil house is falling to $500 faster than the playoff chances of a particular white and blue hockey team. If my house was my retirement plan I would be doomed…

#59 MarcFromOttawa on 04.07.14 at 12:05 am

Hi Garth,

Is it better to average into a position over a few months or just buy according to your asset allocation in a day or two?

Either way I would be re-balancing 3-4x/year.

Souhaitant que vous accéderez à ma demande.

#60 Whinepegger on 04.07.14 at 12:11 am

“…most of those pensions are ‘defined contribution’ which means you have no idea how much you’ll actually get in retirement.”

Correct me if I’m wrong but don’t employers contribute equal amounts into your defined contribution plan? I understand that the amount you’ll get out of it is not defined but it seems a no-brainer to contribute the max into a DCPP if the employer is matching contributions.

#61 sideline sitter on 04.07.14 at 12:59 am

I just bought my first tranche of ETFs (cdn, us + intl growth), and I’m scared and excited… nothing quite like buying equities at 1am (or, at least ordering them).

as nervous as I am, I only spent about 10% of the cash in my account… slow and steady wins the race!

#62 JL on 04.07.14 at 1:01 am

#37 Gossip Girl

1. GF certainly comes into the planning. But as my old finance prof Larry Wood from UofC taught. Plan financially for a future alone and if you end up together great, that’s a bonus. She’s 7 years younger and so will need to plan on 15 years of living when I’m dead – most women don’t consider that in their own financial plans. And to your second question unless we get married there are no property rights that go to a common law partner. Read the Alberta Matrimonial Property Act – critical reading for any financial planner in Alberta.

And I’m not sure what fabulous real estate timing you are referring to. The rental I currently have was bought in 2006 at the absolute peak of the real estate market (maybe 3 months after peak) bought it for $295,500 and today figure it’s worth $330,000, pitiful gain in 8 years. The condo we live in I bought in 2009, paid $250,000 assumed the mortgage for $20k down and overpaid for the thing by $30,000 at least. I’ve been under water on it since about 3 days after moving in but I’ve been saved by low rates. Mortgage down to $187,000 and it’s back up to about $215,000 (at one point it was probably with $190K$ so 5 years to get to positive equity.

All I’ve demonstrated is that you can make a lot of mistakes when you’re young (geez I haven’t even talked about the money I lost speculating on McFaulds lake mining juniors!), but still come back.

#63 chapter 9 on 04.07.14 at 1:16 am

The writing is on the wall. As soon as I sell my house I will be able to retire. My wife hears that every week from one of her co-workers. The only problem is that in the two years it’s been listed he has had only two potential buyers and that is it. Asking price$850K and turning 63 this month with a $600k mortgage.
He could be the poster child for the train wreck facing tens of thousands of wrinkles in the same boat.
Won’t end well!!

#64 dosouth on 04.07.14 at 1:21 am

VIREB see’s market soar….. Well according to them anyway.

Nanaimo sales soar as does the bulls$#t meter….

#65 Win on 04.07.14 at 2:15 am

Rob Carrick at the Gloke and Mail talks renting vs buying with Adrian Spitters, a Senior Wealth Advisor http://www.globeadvisor.com/servlet/ArticleNews/story/gam/20140405/RBGICARRICKPORTSTRAT0404ATL

#66 Buy? Curious? on 04.07.14 at 4:45 am

Hey Garth! Great Post!

https://www.youtube.com/watch?v=pjJbtb4Bs0Q

When is the 15% decline in propoerty values followed by a slow melt going to happen? I keep getting flyers through my door asking me to sell my house. It’s April 2014. My portugese neighbours, who loved watering the driveway, sold their place for a low $600k and bought a mansion in Vaughn. They paid $180k back in 2000. We bought in 2003 $300k-ish, sold in 2008 for $550k-ish, rented until 2012, bought for just under $500k and if I do compareables, a conservative estimate would be that the value of our house is up 12%. It may be more but I definately know that the value hasn’t gone down. All my eggs are in one basket. Am I smart? Ladies?

#67 Tony on 04.07.14 at 4:52 am

Re: #32 Jl on 04.06.14 at 8:42 pm

You’ll be flat broke at age 61 as both the Canadian housing market and all the worldwide stock markets will crash and never come back for generations in the future. Maybe they should have taught a course in planning ahead when you went to school. Live and learn… you’ll learn.

#68 Tony on 04.07.14 at 5:03 am

#45 Brian Ripley on 04.06.14 at 10:13 pm

Re: My TSX chart is registering a breakout on the BoC commodities index measured in CA$.

As the yield curve flattens in America that is telling me the opposite is going to happen.

#69 Mark on 04.07.14 at 6:40 am

So basically boomers’ kids that leverage balls-to-the-wall into financial assets, equities, are likely to have a historically very unusual outcome.

Equities, historically are cheap. Policy rates are going to be low for quite a period of time to come to counter the housing deflation that’s now ongoing.

Fun stuff, eh?

#70 Mark on 04.07.14 at 6:42 am

” If low rates cannot ignite inflation to reach the BoC target, dollar depreciation will.

Not very likely. Housing deflation is very CAD$ positive. The BoC very likely will need to engage in policy measures, including lowering rates to 0%, and some form of debt monetization, to stabilize the CPI growth even at current low levels.

#71 MEANWHILE IN FRANCE on 04.07.14 at 6:56 am

While I fully agree with a balanced portfolio for future income, one might as well start pointing out to balance life a bit more for future benefits and wealth.

Not all comes up smelling like roses here in France, but one thing is sure. People here life on less but have more.
Meaning incomes are less, but life is more. If one could adapt that to the average North American lifestyle, individual savings accounts would be massive.

#72 I'm stupid on 04.07.14 at 7:32 am

http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/cash-flow-a-force-for-better-savings/article17829878/

This is the article from my post #51.

I can’t believe how B.S. this story is. Let’s play a game. It’s called find all the BS in the story. Remember numbers don’t lie. I’ve spotted a few numbers that don’t add up.
1. RRSP contribution
2. $2k cash when monthlys are over 11k
3. Net income 14300 on 19600 that’s at combined tax rate of 25% that’s impossible. Even if the income distribution is 50/50 they should have a tax rat of 36%

#73 Ralph Cramdown on 04.07.14 at 7:51 am

#42 TheCatFoodLady — “What I can’t wrap my empty little head around is this – how does the nation deleverage massive amounts of debt in a reasonable amount of time without completely killing the economy?”

If inflation was 4% and everyone was getting annual raises in a similar range, those debts would start to melt away like snow in springtime. But old people and rich people wouldn’t like it, and we’ve got a generation of central bankers who would consider it a personal failure.

#74 Victor V on 04.07.14 at 7:59 am

http://business.financialpost.com/2014/04/05/canada-mortgages-old-age/

Will Dunning, chief economist with the Canadian Associated of Accredited Mortgage Professionals, says among homeowners 65 years or older, 35% have a mortgage. Among those with a mortgage, the average loan-to-value ratio is 33%.

“I have a feeling a lot [of cases] of the mortgages in retirement are they’ve refinanced for some purpose, to finance a kid’s wedding or to lend money to a kid to pay for a down payment,” says Mr. Dunning.

Lise Andreana, a certified financial planner based in Niagara-on-the-Lake who counts many seniors among her clients, says going into retirement with debt is fraught with challenges.

“I’m totally against it,” says Ms. Andreana about taking a mortgage into your retirement. “You’ve got to make payments that will be coming out of retirement income.”

In situations where people do still have a mortgage going into retirement, it often proves a major problem, she says.

#75 Wiggleroom on 04.07.14 at 7:59 am

But whenever I read this blog I wonder… Should we be worried?! We are nowhere near passing the rule of 90. We’d need another 600k in savings to get there! Eek.

At 41, sounds like you should. — Garth

Whoah, so that’s your prognosis! Interesting.

We paid off a 500K mortgage in 8 years, and now have a TO house worth 1M (conservatively) and 400K invested. If we should be worried, then I fear for everyone else we know in our age group!

Because of you, Garth, and your power to prompt fear among the masses with prognoses such as this, we are now feeling the urgency to save and invest. We should be able to reach 1.2M in investments in 10 years, now that we can redirect the cash flow towards savings. I don’t expect to be living in a 1M dollar house eating cat food in retirement. Even if the house drops 50% in value, we’ll be OK.

If we’d read your blog 10 years ago we may be retired basement dwellers by now, rolling in dough, but you have to do the best you can with where you are now.

#76 Victor V on 04.07.14 at 8:03 am

http://business.financialpost.com/2014/04/04/condo-price-drop-vaporizes-couples-life-savings/

What does it take to resuscitate financial life in middle age? That’s the dilemma of a couple we will call Sally, 48, and Bobby, 40, formerly artists in Britain and now parents of a seven-year-old daughter. For years, they lived in squats in East London, then came to Alberta in 2008, Sally’s former home before her approximately two-decade stint abroad, and settled down. Then they put their life savings into what turned out to be a rotten investment. They have money abroad but can’t touch it, a modest income in Canada, and wonder how to get out of their trap of debt and low income.

Sally has a full-time job with a nonprofit cultural group, Bobby a part-time position with a transportation company. She has come full circle from middle class security to cultural hobo and back to middle class but without financial security. They have take home salary income of $6,284 a month and receive $650 rent from a condo they own. Total income — $6,934 a month. That should buy a decent living in a low tax province, but their debts, a deficit in what they charge for rent and a big investment gone sour have drastically reduced their standard of living.

The budget breaker is an investment in a B.C. rental condo which has lost 35% of its original price. The bargain it seemed at the time turned out to be a money pit. To keep a tenant who is a friend, they charge $545 less rent than their own cost of ownership and operation of the unit. Thus they generate a negative return on a collapsed asset. The price drop has vaporized their down payment of $70,000. “That was our life savings,” Sally explains.

#77 Victor V on 04.07.14 at 8:09 am

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/boomers-more-comfortable-taking-on-home-loans/article17826891/

The traditional mortgage market, where younger Canadians scrimp and sacrifice in the expectation that they’ll be paid up when they retire, has been changing, says Mr. Veselinovich, vice-president of banking and mortgage operations for Investors Group in Winnipeg.

“There has been a trend developing where people appear to be more comfortable in carrying debt into what may have typically been their retirement years,” he says.

Pre-retirement Canadians in their 50s are taking on an alarming amount of debt and are most at risk of bankruptcy, says April Dunn, owner of the Red Door Mortgage Group, a mortgage brokerage in Vancouver, citing a new study that examined some 7,000 insolvency filings.

“More than half of all retired Canadians are carrying debt, with many stuck managing two or more payments a month,” she adds, noting that it’s not unusual to see baby boomers who reach retirement about $400,000 short of their financial goals.

#78 TurnerNation on 04.07.14 at 8:24 am

Today’s pic: the anthropomorphization of Bandit is completed? :-(
Chalk this one up to his fans.

#79 Ret on 04.07.14 at 8:56 am

#60 “Correct me if I’m wrong but don’t employers contribute equal amounts into your defined contribution plan?”

Some do, some don’t. It could be anywhere from 40-60% or who knows. Also don’t forget that there may be a a $ limit on how much is contributed/matched each year.

The employer writes the rules and can change the terms at any time. It is their money that comes off their bottom line so IMHO anything offered is better than nothing.

#80 gypsykid on 04.07.14 at 9:05 am

we need to buy more real estate according to the rule of 90…maybe a cottage??

#81 Shawn on 04.07.14 at 9:07 am

Big RRSP possible with small contributions”?

I’m stupid at 51 said:

How can he have 178k in his RRSP when the maximum allowable contribution room is 4k a year for 2014 and less for every year before 2014?

*******************************************
It’s called compounded returns. My wife’s RRSP (which I look after) has 66k contributed over 26 years and has a value of $640. Nearly a ten bagger on every dollar in. It’s amazing what compounded returns will do if you are compounding at say 14% average. (last year was 33%)

#82 swl1976 on 04.07.14 at 9:20 am

I just want to share some of my story, because I simply cannot understand how the debt piggy’s can go on, I think of the current situation, like those extreme eating shows, where they eat until they hit the wall, well many will soon be hitting that formidable wall

Anyways back to my story I was house horny in 2007 and bought a house well within my means, but overpaid none the less, then 2008 hit and suddenly I was sweating bullets to make ends meet, I got through it no big deal. Today all my debts are manageable, and thanks to this blog I have a balanced portfolio that is starting to grow nicely

I’m in my mid-late 30’s earn more money that the average family in Canada, but wouldn’t even consider paying the going price for the average home these days. I am still working on a family and let me tell you after being on the brink of bankruptcy in my late 20’s I learned a valuable life lesson. Being on the brink of bankruptcy is no fun at all even when you are young, there are so many stresses and hardships that come along with it, I can’t imagine being on the bubble in my 40’s or 50’s

Great pathetic blog Garth thanks to all that you do, and thanks to all the pathetic blog dogs for the great posts as well

#83 Holy Crap Wheres The Tylenol on 04.07.14 at 9:44 am

#31 Smoking Man on 04.06.14 at 8:38 pm
See dogs, I’m not that bad….
My message to Handsome Family…
I downloaded your tunes via pirate Bay. Amazing sound, thank true detective. Don’t know where to buy it up here in Toronto, AK Ford Nation .
How can I send you guys loot.. Love your music, guilt is Killing me.
Forward instructions please.
There reply :
Hey Smokey, you are a good egg. Thanks for thinking of us. Maybe next time you can purchase something from our website http://www.handsomefamily.com and we’ll mail it up to you. Until then we’re just glad you’re out there listening. xo Rennie
……
Tomorrow they will be pleasantly surprised…
_____________________________________________

I have heard these guys before Smoking Man and based on your musical genre I am truly surprised that you were into this group. The Handsome Family’s style is a blend of traditional country, bluegrass, and murder ballads. For some particular reason I thought you were more of a rocker with a penchant for Pink Floyd.
You surprise us all, just when we think we know what makes up your psyche. Carry on………………

#84 World Traveller on 04.07.14 at 10:16 am

These socialists never learn….

http://blogs.wsj.com/brussels/2012/02/29/spain-moves-to-top-of-tax-table/

and as a result, hello!!

http://finance.fortune.cnn.com/2014/02/14/spain-underground-economy/

#85 sheane wallace on 04.07.14 at 10:25 am

Stop CMHC and get governments out of markets and out of manipulation of interest rates.

If we continue on this unsustainable path we either would need to:
1. default on debt and bankrupt the government
or:
2. destroy the currency.

either way it won’t be pretty.

#86 airhead princess on 04.07.14 at 10:26 am

The generation born in the 80’s are the most ignorant of all because they have no knowledge of anything except massive personal debt…they take it as ‘normal’. Most have come out of university with massive student debt…..now the banksters have hoodwinked them with zero down mortgages. These people have zero savings…are the least traveled….a great many have no cars. This is the generation who will vote for the Trudeau’s and the slimy Mulcairs who are offering free and subsidized everything.

As I have said before this generation will force political change to ride taxes up as their sense of entitlement is not bound by traditional ideas’ of hard work and saving…but instead…entitlement and the thought that the ‘rich ‘ are holding them down as this is what they being spoon fed by the unions and socialists. Say good bye to the fat government civil service pensions and any benefits for seniors and anyone who stands in the way of this new demographic powerhouse of me – first gluttons who will tell you they’re tired of being starved out. They want what they won’t work for…..and they’ll take by initiating political schemes to raise taxes on everyone else so that they can get.

#87 Rt Hon S Harper on 04.07.14 at 10:30 am

Garth,

Houses are for sure, stock markets suck. Property is the best wealth-builder there is. Just shut up and buy. Oh yeah and you hate real estate and this site’s for mouldy, basement-dwelling loser renters.

I am happy however that you got yourself a nice hobby, writing this little blog.

Stephen
ps: still fired

#88 sheane wallace on 04.07.14 at 10:32 am

#70 Mark on 04.07.14 at 6:42 am
” If low rates cannot ignite inflation to reach the BoC target, dollar depreciation will.

Not very likely. Housing deflation is very CAD$ positive. The BoC very likely will need to engage in policy measures, including lowering rates to 0%, and some form of debt monetization, to stabilize the CPI growth even at current low levels.
…………………………………

Wrong.
House crash will cause:
1. CMHC insured losses
2. reduced revenue from taxes
3. reduced employment

and government would need to print money as there are no savings to use, with zero interest rates nobody will buy the government bonds, once the inflation shows up (and it is already here, in the grocery stores, gas at 1.33 today,…) Ca dolar will tant already lost 8 % in few months.

#89 sheane wallace on 04.07.14 at 10:34 am

Ca dollar will tank, nosedive, shrink, become worthless, ….
It would be worth less than 1/millionth of a crack shack in Toronto or Vancouver.

#90 bdy sktrn on 04.07.14 at 10:47 am

#184 sciencemonkey on 04.05.14 at 8:46 pm
This Friday I went down to the US consulate and applied for my passport.
——————————-
??? US consulate??? for a cdn passport??

you may be waiting awhile.

#91 Dan on 04.07.14 at 11:30 am

You’d better pray you get to sell when real estate is buoyant. – Garth.

That’s never going to be problem when you own a house popular hoods like Rosedale, Moores Park, Lawrence Park, Junction, High Park, North York and the likes.

The demand is always there. That is a safe bet comparing to financial markets.

#92 ozy - VANCOUVERIZATION - THE NEW MANTRA AND HOPE on 04.07.14 at 11:34 am

What would happen if Garth threw off the gloves and gives up sounding the alarm, since not many (%) listen anyway???

Then Toronto will surpass Vancouver in home prices, average detached selling for 1.3 million BY END of 2015. Imagine a well located house….

BRING IT ON BABY!

Then I sell.

#93 sciencemonkey on 04.07.14 at 11:49 am

@86 airhead, we just want steady decent paying jobs! Is that too much to ask? My fiance has an MS in nursing and can’t find full time work in Toronto.

@90 sktrn, it was for my murican passport; I’m a dual citizen.

#94 Nemesis on 04.07.14 at 11:51 am

#BiteMe #TroubleInParadise #ClubFed #Congratulations,You’veBeenSupermaxxed!

“It feels like laws are being broken here. And the fact they can get away with it — and it takes someone [junior] like me to come out and say something — is kind of horrifying.” – Kalen Crist

[CBC] – Exclusive: McDonald’s accused of favouring foreign workers

…”McDonald’s is under federal investigation over possible abuses of the Temporary Foreign Worker program at a franchise outlet in B.C.

“The pattern is that the temporary foreign workers are getting more shifts and that the Canadians are getting less,” said employee Kalen Christ, a McDonald’s “team leader” who has worked at the Victoria location for four years…

…The government probe began after Christ told Go Public the fast food outlet is bringing in Filipino workers while cutting local staffers’ hours and turning away dozens of seemingly qualified Canadians seeking jobs.”…

http://www.cbc.ca/news/canada/british-columbia/mcdonald-s-accused-of-favouring-foreign-workers-1.2598684

#BonusZen

“GreatNews!… We’ve arranged an extended vacation for you at ClubFed… where every day is a new adventure in ‘SuperSize’ me. Don’t worry, though – you’ll fit in just fine.” – Nemesis

http://youtu.be/Cz_xTbYzEwk

#95 H on 04.07.14 at 11:51 am

Its just like musical chairs: as long as the music is playing, there are no losers.

#96 Pre-retiree on 04.07.14 at 12:05 pm

I wish journalists would be more responsible. Today, in the Globe, there is an article basically encouraging people to retire in debt. Curiously, there is an ad from a bank for mortgates just besides it, both in the digital and hard copy versions.

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/boomers-more-comfortable-taking-on-home-loans/article17826891/

#97 Alex n Calgary on 04.07.14 at 12:14 pm

Was at a party on the weekend with the people talking about houses. Young couple just got a starter detached, spoke of all the frustration in bidding wars on the places, eventually just gave up and put in a much higher bid just to end it all…text book right? another guy got a condo downtown, more bidding wars, put in offers way over list price, outrageous! the rest of the people talking about their rental properties…

Girl on FB complained her renters cheque bounced and its not often she has the 2k it takes to cover the bounced cheque…why do you have a rental house then? no risk right? Even dumps around here are listed in the high 400’s not close to downtown, its truly become unaffordable, no inventory on houses under 400k but a sure ton of em up towards a million.

#98 Derek R on 04.07.14 at 12:37 pm

#95 H on 04.07.14 at 11:51 am wrote:
It’s just like musical chairs: as long as the music is playing, there are no losers.

That’s a very good way of thinking about it. Kudos!

#99 Gainsaywhodare on 04.07.14 at 12:49 pm

Drove around Calgary inner city neighborhoods over the weekend. The feeding frenzy is on. For sale signs are everywhere, many with “Sold” sticker on. When people see many sold signs, they got all hot and worked up. Wannabe buyers want to join the herd and sellers want to capitalize. Home developers/builders are knocking down bungalows and turning them into attached infills. The “tear down specials” listings are popping up , asking $100k+ more than last year as the greed sets in. All the while, infills both new and under construction are flooding the market. The Bimmers and Mercs are out of the garages ready for the season. The wage and salary increase this year is pathetic and the layoffs continues. Oh well, it’s just another day in Calgary.

#100 Obvious Truth on 04.07.14 at 12:50 pm

C’mon people. No crashes. Every central banker in the world is on the same page.

#73 hit the nail on the head. We don’t need runaway inflation. The chair lady is on the job. She is in control. Make no mistake.

#101 Fed-up on 04.07.14 at 12:58 pm

7.1 billion people on earth and everyone wants to live here according to real estate pumpers. I guess once that news gets out to the 99.5% of the world’s population that lives elsewhere, we will REALLY be screwed.

#102 Obvious Truth on 04.07.14 at 1:13 pm

Read just recently that Nigeria is now the 20 the largest economy. Could that be true. If it is what does it tell us about global growth. Maybe we are just to used to looking in the wrong places. Are the former piigs that important anymore.

The world is an exciting growing entity that’s continually changing. The impact of a new generation of tech titans is in it’s infancy. People want progress.

#103 Paul on 04.07.14 at 1:13 pm

#95 H on 04.07.14 at 11:51 am

Its just like musical chairs: as long as the music is playing, there are no losers
————————————————————Just be sure you have a chair when it does!

#104 brainsail on 04.07.14 at 1:16 pm

“Ow, Canada: US retailers get the cold shoulder”

“That’s because Canadians are deeper in debt than Americans, on average, because many bought big-ticket items like homes at low interest rates. That has left less room for impulse spending.”

“It now would take a little more than a year and a half for Canadians to pay off their debt using all their income after taxes, compared with one year for Americans, Dana M. Peterson, director of global economics at Citi Research.”

http://finance.yahoo.com/news/ow-canada-us-retailers-cold-shoulder-152633759–finance.html

#105 Chickenlittle on 04.07.14 at 1:21 pm

JI:

Where did you get the money for the downpayment on your first condo if you were in university at the time?

Just curious…

#106 TheCatFoodLady on 04.07.14 at 2:05 pm

It’s been said here in endless variations: “You can’t fix stupid.” Sadly, too very true.

The only stupids I can fix are my own & I’ve seemingly always got more work there than I can handle!

I’m a late boomer, managing to keep a few steps ahead of cat food soufflé. I’ll never have a lot of extra loonies to rub together & I’ve learned to accept that. Even better, I’ve got a great family, spousal unit, kids & siblings. I have enough money coming in to pay the limited bills & get a bit extra once in a while. No debt & that to me, is priceless.

It means on a decent early spring day like today, I can dress in very old clothes & go out with a light heart to start cleaning up a winter’s worth of ‘yuck!’ from my garden. Bird song is bird song – not shrill reminder that: “You owe, you owe!”

So what if I’m covered in mud & right now, make most homeless people look well dressed? I’ll shower off once I’m done, (drink break!), toss the grubby clothing in the wash & note that today, my first yellow crocus burst into bloom.

That’s worth beaucoup ounces of gold in my book.

Life’s for enjoying, after all & soon I can get my bike out & go find some granite outcrops to scramble over. There’s always a new adventure over the horizon!

#107 airhead princess on 04.07.14 at 2:13 pm

Canada’s exception civil servant/non profits/ quango’s are the exceptional class of entrepeneurs we have produced out of the vacumn where business should exist but doesn’t. Instead our civil servants and non profit officers and workers pay themselves ‘executive salaries’…..just like real businesspeople would earn if they ( the slippery servants) were educated and capable of earning such money in the private sector.

Just like the situation in the Vancouver DTES where we saw the civil servants and insiders taking limos and canal rides ….(generally living the life of Wall Street Wolves)…..in Europe on the public dime….paying themselves multiple times for the same job….and taking ‘profits’ for providing services paid to companies they owned….here we have the top guys at Untited Way paying salaries of over $430,000 a year ….while the recipients are left to starve……typically Canadian way of ‘getting ahead’.

I know people are shocked when I recommend a guillotine be set up in the city square…..but isn’t this culture of piggishness at an end?

#108 Aggregator on 04.07.14 at 2:18 pm

Broker calls for CMHC pre-approvals

 

CMHC, Genworth, Canada Guaranty will not even look at a client until they have bought a house,” James Robinson of The Mortgage Centre told MortgageBrokerNews.ca. “So somebody puts an offer in, unconditional, because they are in a bidding war and even though there might be a piece of paper that says you’re pre-approved, it isn’t worth the paper it is written on because it has only been looked at by the broker and maybe the lender (but) not the insurer.”

 

Did you get that? This idiot is calling for CMHC to pre-approve buyers before they go into a bidding war. What does that tell you about this market?

But forget bidding wars, here's the other market sensitive issue that brokers should be worried about:

#145 Aggregator on 04.04.14 at 5:06 pm

My view is there's a glut of presales and assignments coming up for occupancy that were preapproved years ago, but don't qualify with major lenders anymore so they're being directed to b-lenders that won't be able to earn profitable spreads on securities without insurance. I call these preprime mortgages, and they're even worse then subprime because many of them didn't intend to get a mortgage in the first place and presumed they could flip or rent the unit on occupancy.

So the next time you pass one of those newly built high rise buildings, be sure to look up and see all those units with the white factory blinds that are sitting empty in developers' inventory, of which only a few models are listed in MLS.

#109 Ronaldo on 04.07.14 at 2:18 pm

This is what was happening with housing before the gov’t crashed the interest rates and spurred the insane prices we have today. Now we will all pay as a result of their moves.

E:\BC home prices fall almost 10% 2009 YTD Chinese in Vancouver.mht

#110 Wiggleroom on 04.07.14 at 2:21 pm

Chickenlittle: he says he started a business right out of high school and made good money during the summers. He lived at home during university, so his expenses must have been low enough to save all that income.

I graduated university with no debt despite living away from home and having no help from parents. Then saved up for a couple years after graduating to buy a condo. Not too difficult to do if you work hard and save.

#111 Nemesis on 04.07.14 at 2:26 pm

#DarkPools #LongWayToTipperary #LifeBeginsForAndy

“The exchanges have basically become the liquidity venue of last resort.” – Manoj Narang, CEO Tradeworx.

[Reuters] – Dark markets may be more harmful than high-frequency trading

http://www.reuters.com/article/2014/04/07/us-markets-darkpools-analysis-idUSBREA3605M20140407

“If you think about how much they spent in defeating the separate chairman and CEO proposal last year, I think fatigue may have set in.” – Michael Pryce-Jones, Analyst, CtW Investment

[FT] – US banks hold AGMs a long way from home

http://www.ft.com/intl/cms/s/0/a92d377c-bd41-11e3-8bdf-00144feabdc0.html?siteedition=intl

[LAT] – Mickey Rooney, with gumption and grit, put on a show

…”Rooney was more than just any star. In the final innocent prewar years of 1939, 1940 and 1941, he was the country’s biggest box-office attraction, period, end of story. And the actor reached that pinnacle not by being a dashing action hero lead or a glamorous romantic lead, but by playing a teenage boy, a character one contemporary critic called “the perfect composite of everybody’s kid brother.” Nothing says more than that about how America’s popular culture movie tastes have changed in the interim.”…

http://www.latimes.com/entertainment/movies/moviesnow/la-et-mn-mickey-rooney-appreciation-20140408,0,4196162.story

http://youtu.be/JMHoIZQacJs

#NonSequiturZen #RoadForce #Agent1? [for ScienceMonkeys &Other ReluctantSuperHeros LanguishingInCanuckistan]

http://youtu.be/pqcaoaR4nrQ

#112 Blacksheep on 04.07.14 at 2:30 pm

“Schiff is trying to matter again. Sad. — Garth”
——————————————
Peter Schiff is a proverbial rock star of economic predictions that count. I repeatedly watched as panels of ‘experts’ would forecast and discuss the economy, then at the end of the episode, to add some levity, they’d trot out Schiff and ridicule him.

Yes, he’s got other calls wrong, (and may be wrong again, haven’t read lately) but on the big one, that really mattered, he got the timing right and hit it out of the ball park.

Surprised to read this from you Garth as some one whom has made a living (author) making economic forecasts, that have sometimes not played out as predicted, and that’s being very respectful.

#113 Brian Ripley on 04.07.14 at 2:41 pm

#68 Tony
Thanks for the note Tony. Yes I do see on my Canadian Yield Curve chart a “petite” inversion happening at the short end of the curve: http://www.chpc.biz/yield-curve.html

During the 2006-07 “grande” inversion, CPI was a bit lower than today but it did spike with the July 2008 oil spike which came after the inversion had turned back to widening and after real estate had turned down into a strong correction and eventually the March 2009 Pit of Gloom: http://www.chpc.biz/real-interest-rates.html

I simply wonder if the Commodities breakout as noted above in #45 is a “tell” about the direction of CPI (CPI data lags) and a possible spike that might further dampen sales momentum in the hot markets.

Before you know it the April-May-June sales peak will have come and gone.

#114 KommyKim on 04.07.14 at 2:47 pm

RE:#61 sideline sitter on 04.07.14 at 12:59 am
I just bought my first tranche of ETFs (cdn, us + intl growth), and I’m scared and excited… nothing quite like buying equities at 1am (or, at least ordering them).

You should never buy/order ETFs when the market is closed or just when it opens or is about to close. That way there is always the ETF provider available to keep the market price close to the NAV price of the ETF. Also, always use a limit order to avoid surprises.

#115 omg on 04.07.14 at 3:04 pm

32 jl & 67 tony

good work jl, I wish I was in your shape at your age. you will be set at retirement.

the idea the stock markets wll crash and not recover for “generations” shows the inability of people to see the big picture historically. we cannot believe that our generation is not living in the scariest, most financially fragile times.

compare our situation with the 1930s, ww2, the us-ussr showdown of the early 1960s, the s&l meltdown of the 1990s. did the markets crash ? nope, the markets just kept charging upwards.

one just needs to have a long term perspective and expectations of modest steadily compounding returns

#116 jan on 04.07.14 at 3:13 pm

(Maybe we’ll check the vet’s office that turned our eighteen year old pet into a nice little urn for $75 to see if they’ll
do us a favour when we nee

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

Don’t make fun of your pet’s passing dumb ass.

#117 Basement dweller on 04.07.14 at 3:20 pm

http://www.mortgagebrokernews.ca/news/broker-calls-for-cmhc-preapprovals-177285.aspx

I love the part where the realtor asks
His clients to get their parents to co sign or
Help with the deposit.

#118 airhead princess on 04.07.14 at 3:20 pm

Did anyone laugh as hard as I did when Obozo announced that ‘climate change was a fact’ at a recent speech at his fundraiser that attracted donors who have recieved $480 Billion tax dollars for ‘green tech projects……His biggest contributors are the same ones who recieve most of the money to subsidize their buisness…like Tesla and Solar City ( Solydra was a multi billion dollar loss but is still being touted as a sucees by the Oboozo administration. But building windmills and green scams abound under the O doofus administration.

I laugh because I am one of the few to have read the UN’s latest headline grabbing climate change ( no longer global warming) paper. Gone are the cliams that the Himalaya’s glaciers will be gone by 2035…..whew thats was close. Apparently there won’t be mass starvation and billions of climate refugee’s like the UN ‘scientists’ have been alarming us about. I quote ” current data sets indicate no signifigant observed trends in global activity over the past century”.

The global warming alarmist as far back as 2005 had us believing that by 2010 chaos would break out…..instead ” current alarmist predictions of massive flows of so called enviromental migrants are not supported by past experiances of responses to drought and extreme weather events and predictions for future migration flows are tentative at best”.

The report is equally cautious ( I wonder why this change in tone?) about temperature predictions, It acknowledges that the rate of warming between 1998 and 2012 “is smaller than the rate calculated since 1951″. …and also ” the inate behaviour of the climate system imposes limits on the ability to predict it’s evolution”. Bwahahahahahahahahahahahahaha …it appears the British Courts were right to ban ‘Al Gores ‘An Inconvieniant Truth” as nothing more than shallow sensationalism.

But reading on in the report I note a distinct change in the green armies direction of march. The IPCC is deciding to champion a new fund raiser….maybe the slush funds for ‘climate change’ are draining. Now they have a new focus…that of ” Existing gender and inequalities are increased or hieghtened by climate related hazards”….yes it is hilarious…… The report says “While dilating on the deletorious effects global warming has on ‘discrimination based on gender, age, race, caste, indigeneity, and disability…..bwahahahahahaha!!! It gets better.

“Recognizing how inequality and marginalization perpetuate poverty is a prerequisite for climate resilient pathways ….suggesting that the costs for global adaptation should run between 70 and 100 billion p/a from now till 2050!!!!!!!!!!!

So we’ve gone from a simple tax on carbon thirty years ago to pay for sustainable development in the third world…to the actual belief that climate change exists…..to a full blown tax funded circle jerk of every thing politically correct and liberal.

Oh Christ….I laughed so hard I fell out of my chair. How can god like creatures like Obozo keep a straight face. How could so many people have been hood winked by the rise of the climate change economy and the bureaucrats and civil servants who love the benefits of higher taxation.

#119 Entrepreneur on 04.07.14 at 3:28 pm

Debt is the answer to the government in the sense of getting the economy moving but debt is not the answer. A disconnect!
Business leader on the news today said that businesses are improving and hiring at least one more employee. Are these big businessess or small. Possible another disconnect!

Are the government leaders and the business leaders in another world from the 99%. A mass disconnect!!!
Has greed taken over the ones who hold power to satisfy themselves? Listen to the people and learn.

#120 World According To Garth on 04.07.14 at 3:58 pm

Oh Christ….I laughed so hard I fell out of my chair. How can god like creatures like Obozo keep a straight face. How could so many people have been hood winked by the rise of the climate change economy and the bureaucrats and civil servants who love the benefits of higher taxation.
———————————————————-

Easy. Humans are easily brainwashed. That is why the rich are rich. And the Govt is controlled by the rich. Its really as simple as that.

I had quite the epiphany the other day. WW III has always been planned just like I and II. However, my thoughts were that WW III will be a “Global Rebellion/Civil War”. It will still be war. It will still be world. Hence WWIII.

Laughing? Look at Thailand, Ukraine, Spain, Mexico, Argentina, Venezuala, France, Greece and soon to be the United Socialist States of Amerika (after 2015.75) and maybe you won’t laugh so hard.

#121 sheane wallace on 04.07.14 at 4:05 pm

from europac.ca:

Is the Canadian housing market ready to crash? What we do know is that there is plenty of data to suggest that Canadian housing prices are far higher than they should be.
And the usual suspects are to blame:

Artificially low interest rates, an expansionary credit environment and importantly moral hazard in the mortgage origination process.
We’ve focussed before on low interest rates and the expansion of credit so lets’ consider moral hazard:

What this fancy phrase means for us, is that those who are creating risks to earn profits are not the ones who bear the consequences for those risks. How has the Canadian government created this moral hazard? Primarily through the Canadian Housing and Mortgage Corporation. (CMHC)

CMHC is really our version of what the U.S. had with government sponsored entities (GSE) Freddie Mae and Fannie Mac.
These GSE’s are designed to buy the mortgages that have been originated from banks and loan companies.
You may remember these GSE’s when they went bankrupt in spectacular fashion as the US housing crisis unfolded. Thankfully, Uncle Sam was standing by with the government printing presses to bail them out. The final bill isn’t in yet, but estimates on the cost of this bailout run as high as 1$ Trillion. The bailout has been described as being perhaps: ”the biggest and costliest government bailout ever of private companies”.

Surprisingly, part of the problem was quite simple. The companies that were offering the loans were selling them onto to the GSE’s and so it really didn’t matter much to the banks or loan companies if the loans were good or bad. Turned out a lot were bad. This is quintessential moral hazard.

So what was the Canadian government’s response to the US housing crisis? Well, we decided CMHC should step up its support the Canadian housing market through massive purchases of loan portfolios from Canadian banks. In essence, we saw the failure of the US system and then went out to copy it.

But we haven’t had a housing crash… yet.

Here are some facts to ponder:

Government Guarantees:
USA – Fannie Mae guaranteed 25% of the market
Canada – CMHC guaranteed about 90% of the market

Leverage of our mortgage guarantors.
Fannie Mae had $1 to cover every $50 they guaranteed and look what happened.
CHMC only has $1 to cover every $100 borrowed.

If the Canadian housing market ever took a dive the CMHC would be bankrupt in the blink of an eye.

Here are some more facts:

Housing prices are way above their mean. Mortgage debt has exploded and other speculative indicators like listing to sales ratio are at all time highs. http://globaleconomicanalysis.blogspot.com/2009/11/canadian-says-short-canada.html

To our way of thinking there are real risks in the Canadian housing market.

#122 World According To Garth on 04.07.14 at 4:08 pm

And its guys like Harry Reid that all but guarantee a civil war (as in the people against Govt) in the USSA. I pity all the cops/swat idiots there. Don’t they know they are outnumbered 100-1? Who do you think the people are going to go after first after 10 years of kicking in doors and shooting kids with 50 bullets that are holding a plastic toy watergun……

http://armstrongeconomics.com/2014/04/06/the-man-who-thought-he-was-king-and-wants-to-rule-the-world/

#123 Aggregator on 04.07.14 at 4:33 pm

The 'my presale is better then the other guys' slaughter has commenced as TO realtors start calling out projects by name in order to front-run competitors and catch the last buyers left in this market that are willing to sign off on a condo obligation that is now pretty much assured to lose money.

Remax Condo Plus says:

We can already think of some projects that will lose investors’ money as they come to registration. Besides the obvious Trump Tower, some investors in the Shangri La, Cinema Tower Condos, and soon to be occupied Ice Condos will find out that they will be losing money on closing or registration of their units. Obviously, some investors will choose to wait and hope that prices in the condo market will continue to rise over time to recoup their losses. How long is this wait? Ask the experts – some of which see a flat market over the next two years. Or you can look at your total income and decide that a Tax Loss Selling Strategy is not the worst option. We would talk to someone who knows the Assignment Market for a reading on your investment unit.

Hence the phrase "as they come to registration", like a bushel of wheat futures contract yielding to maturity where the speculator must now fulfill full margin on delivery, only he or she was locked in a one way long position and had no intention on taking delivery because the plan was to flip the unit before registration.

Alas, as developers' lobby efforts (BILD) to get the CIty to postpone registration for as long as possible so they collect more occupancy rent and front-run speculators to liquidate their units first, the premarket is now overly backlogged with speculators trying to get out that it's turning realtors, brokers and developers against one another.

Troubles are lurking. This market needs another accommodative funding scheme ASAP. Over to you Oliver.

#124 Smoking Man on 04.07.14 at 4:36 pm

83 Holy Crap Wheres The Tylenol on 04.07.14 at 9:44 am
………

Must be something to do with age, abusing your body with alcohol and other things, you start to lose brain cells rapidly..

And you start listening to music like that… The testosterone heave metal not doing if for me anymore.

Hell even had Johnny Cash on the ear buds this weekend….

It’s not good.

#125 Obvious Truth on 04.07.14 at 4:47 pm

#99. Oil is 100 dollars and nat gas is up big. Alberta should be the bright spot in Canada. We need the tax revenue from you guys.

#126 waiting on 04.07.14 at 4:55 pm

#86 Airhead Princess
“The generation born in the 80′s are the most ignorant of all”
It was my 80’s offspring who recommended this site to me.
They are hard-working, big savers, non-house owning, well-travelled, well educated (on their own dime) and knowledgeable about the politics of their own country and the world around them. They are grateful to live in a country that allows them the freedom to speak their minds and they are my biggest source of pride and joy.
Your calling an entire generation ignorant is more of a reflection on yourself than them.

#127 Blacksheep on 04.07.14 at 5:04 pm

Tony # 67,

“all the worldwide stock markets will crash and never come back for generations in the future”

Omg # 115

“compare our situation with the 1930s, ww2, the us-ussr showdown of the early 1960s, the s&l meltdown of the 1990s. did the markets crash ? nope, the markets just kept charging upwards.”
————————————
While Tony’s statement my be ridiculously negative, there is one big difference between any of the periods you mentioned and current times.

Cheap plentiful oil.

Diminishing EROEI cannot be denied. We currently have $100 dollar a barrel oil with shit growth. Expensive oil is functioning as a governor limiting growth, going forward.

The manipulated numerical value of an index doesn’t necessarily reflect what’s actually happening.

#128 straight six on 04.07.14 at 5:09 pm

Remember, it’s not the end of the world..
but in closing I’d like to say.. Sell everything!
Take what equity and little time you have left before the ensuing tidal wave of depreciating RE overwhelms us all!
and that concludes this lecture.

#129 HD on 04.07.14 at 5:17 pm

@ #59 MarcFromOttawa on 04.07.14 at 12:05 am

Voici ce que je peux faire pour toi Marc d’Ottawa:

http://canadiancouchpotato.com/2013/05/31/does-dollar-cost-averaging-work/

http://canadiancouchpotato.com/2011/02/24/how-often-should-you-rebalance/

Au plaisir,

HD

#130 Nemesis on 04.07.14 at 5:25 pm

@CatFoodLady/#106

http://youtu.be/il9jYK_bG5o

#131 TakingResponsibility on 04.07.14 at 5:45 pm

#121 sheane wallace on 04.07.14 at 4:05 pm

Very nicely articulated comment keeping the spotlight on CMHC and government policies.

The Conservative’s part in creating unbelievable public risk via CMHC needs to be kept in the forefront.

#132 Blacksheep on 04.07.14 at 6:05 pm

Entrepreneur # 119

“Debt is the answer to the government in the sense of getting the economy moving but debt is not the answer. A disconnect!”
——————————————-
If our economy was not based on consumption and the need to constantly expand, this would be true but:

1) Business’s don’t want to take on new debt because the growth upside looks bleak.

2) The consumer is debt shy, debt saturated or just plain, tapped out.

3) So the Gov. borrows to create new $ and avoid deflation at all costs.

The question becomes, with shite growth, when is the consumer coming back?

#133 bguy1 on 04.07.14 at 6:36 pm

Ottawa market = ouch

http://www.youtube.com/watch?v=q0Ex2fMJfOQ&list=UUgOOu3yxg2INY-jmZfl_qdw

#134 Pope Sexkitten Snugglebombs the 666kg (aka Nosty) on 04.07.14 at 6:40 pm

#120 World According To Garth on 04.07.14 at 3:58 pm — “Easy. Humans are easily brainwashed.”

Whoa baby — is that ever true! Remember Sandy Hook? Something obviously happened there (psy-op?), and it wasn’t necessarily the shootings.

Also, Ukraine, Threatening but Referendum, Hong Kong [Libya knows all about that], China, Diego Garcia and Flt. 370 which leads to . . .

“The source of all of Obama’s mistakes is trying to look like he is improving the economy without challenging the fundamental problem, which is a privately-owned central bank issuing all of the public currency as a loan at interest. There is only one way to fix the economy and that is the way Andrew Jackson did it; which was to shut down the Second Bank of the United States. Any other economic actions are pure political theater and doomed to fail.” wrh.com.

#135 bdy sktrn on 04.07.14 at 7:12 pm

Alberta should be the bright spot in Canada. We need the tax revenue from you guys.
————————————
get ready for two bright spots…

nat gas will be bigger in BC as a massive build out of LNG facilities (can you say 100B) get built from 2017 onward.

alberta oil remains seriously plagued by lack of a pipeline to move the product, sweet bc gas will be flowing through shiny new pipelines long before ft mac finally gets a real pipeline.

just announced deltaport DOUBLING in size.

ever increasing number of ships in english bay

vancouver housing is pretty damn safe.

from last year…
As British Columbia’s liquefied natural gas strategy moves closer to reality, Alberta is in an unusual place — on the outside looking in.

Historically, Alberta has been Canada’s natural gas powerhouse and the energy powerbroker.

But it’s B.C. that is best positioned to capitalize from the growing, global LNG trade. Its gas resources are bigger than Alberta’s and less drilled. They are located closer to its northern coast, where liquefaction terminals are to be located.

The first LNG projects are expected to rely on B.C. shale fields rather than pursue Alberta gas. And Christy Clark’s government is aggressively promoting development within its boundaries, motivated by the manna of royalty, tax and economic benefits

#136 straight six on 04.07.14 at 7:48 pm

RE always = prosperity!
and so when I built my ‘getaway’ on an acreage a few miles outside of nowhere, the telephone installer said the $500 installation cost would be recouped when I eventually sold.

By the time I did sell 8 yrs later.. the property taxes had doubled and the assessment had dropped by half, which is exactly what it sold for, only now it had a nice 600sf cabin with phone & power.

But that can’t happen again.. because it was the depth of the RE twilight zone in 1986.. when properties were 10% of what they are now, and mortgage rates were still hovering around 15%.
Back when lenders required 20% down, before it all went global and you only needed 5% down.. and mortgage rates tumbled off the chart.

Now RE is in the treetops..
But you have to admit, the view is spectacular.

#137 bdy sktrn on 04.07.14 at 7:52 pm

plus you can work on your tan, outside, today, in vancouver, once you finish your golf or tennis. motorbikes unleashed too.

canadians , along with the rest of the world, are happy to pay the vancouver premium.

here in east van, when i came in 95, i really stood out in our hood by driving a shiny black brand-spankin-new suv (ok just a chev but it was loaded dammit!), it was mostly beaters on the street and a new chevy stuck out from the crowd. there were regular car thefts and more disturbing , drop off of stolen cars too. forward to today , my truck is EASILY the most beater vehicle within blocks. there are still some renters living on ultra-low historical rents round here but the new guy who recently bought the infill nearby has recently upgraded to a 65kbenz and (shocking to see around here) a 100ktesla. i don’t think he’s too worried about a mortgage.

#138 Entrepreneur on 04.07.14 at 11:27 pm

#132 Blacksheep…when is the consumer coming back?
When this false debt economy comes down to reality.
People need and will buy things to survive but now they are in a debt/bubble world. Also, buying with debt takes the consumer away from the consequences of such a purchase. A make believe world. Will we hear reports of how people are not doing so well on debt…no. We have a one-sided view. We know that we do not have any wiggle room because of debt. To make the economy to work now in this whilwind of debt will take some creative thinking but it can be done.