Safety first

SAFE modified

It was like the passing of the passenger pigeon. The Vancouver daily ran a big spread on the death of the $599,900 home, with experts telling the locals never again to expect to buy anything (well, a garage maybe) for less than six hundred thousand.

By the way, the last $599,900 house, a 700-square-foot Lilliputian special on a dirty laneway snaking between several businesses, went for above asking. A builder snagged it, will destroy it, and erect a big house with a rentable suite and a laneway rental.

Over in Toronto all the housing buzz is about bully offers, bidding wars, heartbroken hipsters and a persistent lack of listings. Demand is less than it was two years ago, but there are significantly fewer houses for sale, and mortgages are 2.99%. Ergo, a price pop.

It’s a self-reinforcing cycle, of course. People don’t list their homes because they’re afraid of buying again. As I have said in the past, no seller today would actually pay what they want for their own house. Everybody knows it’s stupid time. So, fewer listings keep prices buoyant because there are always enough idiots around to buy.

This is not a healthy market. Don’t for a minute believe the flotsam that Royal LePage or Re/Max turn out in their ‘reports’ about higher prices equating a buoyant housing scene. There’s lots of evidence demand is slacking, even in the hot spots of Vancouver and Toronto. (Calgary is another story as that market heads in fifth gear for a wall.) In other major centres, like Halifax, London or Edmonton, varying degrees of rigor mortis are setting in as the Canadian economy stutters.

Hell, even in Vancouver – where monthly sales just shot way past 2013 levels – there’s a serious social problem in full flower. A municipal report this week revealed 71% of all the houses in the region are only affordable to those who earn at least 20% more than half the population. In fact, only 29% of homes were judged to be affordable by the typical family.

More evidence of a market that is unsustainable. When the average family can’t buy the average house – even with mortgage rates at the lowest point in history – then a correction is inevitable. And I wouldn’t be at all surprised to see it start right along with the equity markets.

Now, we have this other problem. The kids. They didn’t get the memo.

Not content with the emotional blackmail dripping from its latest YouTube marketing campaign, (“Honey, I need that house. I’m pregnant. We’re running out of time…”) RBC has just delivered a stunner of a survey. Either the bank is straight-up fibbing, or we’ve just raised a generation of innumerate morons.

Says the bank’s poll on home ownership…

  • Percentage of those between the ages of 25 and 34 (prime rutting years) who think buying real estate right now, at the most inflated prices in history, is a ‘solid investment’: 86%
  • Percentage of those who felt the same way last year, when houses cost less: 78%
  • Proportion of people who therefore plan on buying this year: 41%.
  • Those who planned to buy last year, at lower prices when there was more choice: 25%.

See what I mean? This is the same group of people who think a bank account is the best vehicle for retirement saving, and whose one goal in life is to turn into their parents, and be safe. They’re hot to get mortgaged up the wazoo as soon as possible, to trade mobility for Miele, and yet seem oblivious to the mounting risk.

More proof that people lust after what’s rising in price, and eschew what’s falling. There’s no doubt when real estate cools, prices moderate and listings bloat (it always happens), the RBC survey will find the number of virgins who think houses are solid investments will plunge. So when they should be buying, they won’t.

Of course, that’s when the $600,000 house will migrate back to Vancouver.

203 comments ↓

#1 billy on 04.11.14 at 6:17 pm

First!

#2 Old Man on 04.11.14 at 6:32 pm

There is truth in the statement that people might not list as they are afraid to buy again. I had a friend in Markham whose home on Main Street was zoned commercial/residential, and it was worth good money, so why not cash in? He was too settled in one location and the cost of buying another home or renting was not on his page, so decided to ride it out. He refused to list for a flip and to even trade down a bit on a new purchase out of fear.

#3 walking dead on 04.11.14 at 6:34 pm

There is no good sign around, with house sell for record price.

#4 Smoking Man on 04.11.14 at 6:34 pm

I just tweeted Harper, Lets make April 10 green tie day, in respect for the lepricon…

Attention tree huggers it’s your chance to come punch me out tonight..

I’ll be at Pravda tonight, honoring chess master Putin..

#5 kommykim on 04.11.14 at 6:35 pm

RE:And I wouldn’t be at all surprised to see it start right along with the equity markets.

By that do you mean the Canadian equity markets due to their heavy weighting in financials? Or are we in for a coincidental perfect storm of international markets correcting at the same time as the demise of Canadian RE?

#6 James on 04.11.14 at 6:36 pm

Spring market is hot. Friends just bought a townhouse in Milton for 420k; after losing out on previous offers.

#7 Happy Renting on 04.11.14 at 6:38 pm

The Globe and Mail has an interactive map showing current price levels in various Toronto neighbourhoods. The figures include houses and condos and the numbers are just staggering. Even if I won the lotto I wouldn’t be buying at these prices!

#8 Holy Crap Wheres The Tylenol on 04.11.14 at 6:40 pm

Have you noticed lately Garth that there’s a lot of hooey coming out of RBC. Who knows what to believe from these people remember these are the guys that are generating all those new videos for the house horny children.

#9 Smoking Man on 04.11.14 at 6:40 pm

This f-ed I put down my wine on the floor to go to little boys room, my dog, 4 pound poddle was nose deep into it.

I said get a job buy your own…

10 Min latter she starts barking at her ball, obviously an angree drunk.

Thank God my wife’s not around..

If she saw that…. My boys would be in the blender right now.

#10 shawn on 04.11.14 at 6:41 pm

Bubblicious?

Well it wouldn’t be a housing bubble if most people (like 86% in the survey) did not think prices would keep rising, now would it?

Bubble on… until it ends…

Either way there is money to be made, mostly elsewhere than houses…

#11 Fleabitten Monkey on 04.11.14 at 6:48 pm

That BC Province article was stupid. The author didn’t even get the clark drive listing details correct. It’s more than 600sqft, that was the back deck. The “experts” calling for the end of the $599K home are a realtor and the RBC vp of residential mortgages, then they throw in a reference from comfort economist Tsur Somerville as some support, who apparently didn’t even know there was such a creature less than $600K in Vancouver. And the youth just sit there and make hasty decisions as a result.

#12 Juan Refrito on 04.11.14 at 6:52 pm

Off topic, but in your view should the average ETF investor be concerned about “high frequency trading” and/or “dark pools”? Much written about both of late. Might be a worthy subject for a pathetic blog post.

#13 Freedom First on 04.11.14 at 6:52 pm

Royal Bank is blowing up the bubble one breath at a time until it bursts, at which point almost everyone will say “nobody saw it coming”. Of course, the people who will get screwed are the greater fools, who, of course, nobody forced to buy, and the also screwed over taxpayers who are backing the CMHC mortgages. Royal Bank: “Taking Care Of Business”, every way. Don’t get me wrong, I am not complaining, as I am fine, I do what the financially sane and fit do, I observe, and I profit. Thanks for your never ending help Garth, even in this eye of a hurricane, you never give up trying to help people stay solvent.

#14 BubbleBoy on 04.11.14 at 6:54 pm

Seems like the top when pronouncements like these are made…

#15 David Lee on 04.11.14 at 6:54 pm

More on the lack of data:

http://www.vancouversun.com/opinion/columnists/Barbara+Yaffe+Absence+data+Vancouver+real+estate/9729419/story.html

I think Barb and/or the editor is going to get rapped on the knuckles by the development and real estate industry that has the Vancouver Sun and other related publications wrapped around its fingers.

#16 yash on 04.11.14 at 6:58 pm

Finally fuurst .

#17 TurnerNation on 04.11.14 at 7:03 pm

I found myself in the Turner-Tomenson Tower (formerly ‘Scotia Tower’) last night not on the 50+ floor range as usual but in the brand new latest vapid after-work spot on its main floor, the “Speakeasy”.

What’s interesting there’s like a dozen single-room washrooms on the lower level, airplane style. Possibilities abound….

#18 East Van on 04.11.14 at 7:05 pm

http://www.vancouversun.com/opinion/columnists/Barbara+Yaffe+Micro+lofts+could+answer+Vancouver/9725651/story.html

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

http://www.vancouversun.com/opinion/columnists/Barbara+Yaffe+Absence+data+Vancouver+real+estate/9729419/story.html

http://www.vancouversun.com/health/Housing+homeless+costs+same+leaving+them+streets/9716144/story.html

#19 Mike T on 04.11.14 at 7:05 pm

‘Either the bank is straight-up fibbing, or we’ve just raised a generation of innumerate morons.’

definitely the second one

look at what they eat, watch, and do for entertainment

#20 Godth on 04.11.14 at 7:05 pm

Chief Economist Of Central Banks’ Central Bank: “It’s Extremely Dangerous… I See Speculative Bubbles Like In 2007”
http://www.zerohedge.com/news/2014-04-11/bis-ex-chief-economist-i-see-speculative-bubbles-2007

Riots In Spain
http://www.liveleak.com/view?i=762_1397160302

#21 T.O. Bubble Boy on 04.11.14 at 7:07 pm

Here’s what used to be that “$599k house” in Toronto… a 2-bdrm semi in Leaside (now $900k):
http://www.realtor.ca/PropertyDetails.aspx?PropertyID=14275681&PidKey=-1928413167

Another one… the 2-bdrm bungalow in Lawrence Park:
http://www.realtor.ca/PropertyDetails.aspx?PropertyID=14273196&PidKey=973817400

More proof that everything under $1M is being bumped towards $1M because of the lack of listings and the CMHC cap, and because of the developers who buy up almost every SFH dump in North Toronto to tear it down and create $2M McMansions.
(which, apparently there is a never-ending demand for???)

#22 johny on 04.11.14 at 7:08 pm

This morning alone, we saw catastrophic earnings results from everyone from the Gap to JP Morgan itself – following Wednesday’s disaster from Alcoa, kicking off what will likely be another abysmal reporting season. Coldwater Creek filed for bankruptcy and the fact that the “dollar store” retailer Family Dollar is closing 370 stores – while fellow “low end” retailers Wal-Mart and McDonalds post miserable sales figures – should tell you all you need to know about the so-called “recovery”;

#23 OG on 04.11.14 at 7:16 pm

Dang wish i was first

#24 sideline sitter on 04.11.14 at 7:18 pm

It amazes me when my in-laws, who lived through 89-92 housing cycle, try to guilt me into buying a house for their ‘baby’.

When they say they bought their house for $X and I say “that was 4x of your income, and now it’s 8x income” I *think* they get it, or they think I don’t make enough money.

I’m pretty sure it’s the former (thankfully)

#25 mitzerboy on 04.11.14 at 7:18 pm

poor old Saskatchewan…..we got lots of what garth has been blogging about here in the flatlands and we are also making a new stadium for a semi-pro football team….we sure are different out here

ps the meadowlarks are back singing their hearts out…
its beautiful for the soul.

#26 waiting on 04.11.14 at 7:25 pm

Sold two years ago and decided to rent for a while, thinking I’d buy something else … then found this blog. Now the “temporary” rental my partner and I took for the price is looking more long term so we’ve started looking to see what else is out there.
Lots of stuff! Looking at a place tomorrow that’s bigger, with view, three bedrooms, two baths and the necessary garage for my partner’s Harley. (some things you can’t give up…)
We looked at a 2 bed, 2 bath, with huge patio in a building I’ve always liked, on the seawall in Vancouver. It was close but only one parking spot, (again, the Harley). At $2100, a bargain for the area. A similar unit in the building is listed for $800,000, (with monthly maintenance of $550 and taxes of ?) I’ve noticed there are more deals out there than I’ve seen in two years, and a lot of vacancy signs. With so many younger couples buying condos and vacating their rentals, there aren’t enough new renters to fill the gap.
An acquaintance’s son and DIL just sold their unit in a Vancouver suburb that they bought about 3 years ago. It sold for $30,000 less than what they paid. New baby on the way and they plan to buy something bigger.

#27 X on 04.11.14 at 7:36 pm

Great poll RBC. You proved that most Canadians are financial morons.

That should help pad the banks quarterly profits.

#28 Shawn on 04.11.14 at 7:38 pm

So-Called Recovery?

Johnny at 22 bemoans some poor earnings reports.

Well, S&P 500 index actual earnings were $100.20 in 2013 versus $86.51 in 2012, so yeah, I call that a recovery. And at the bottom in 2008 the figure was $14.88. The peak earnings prior to the crisis were in 2006 at $81.51

So yeah, recovery may not be quite the right word not when the “patient” is now earning 23% higher than before the crisis.

Sorry, to bring facts to the table. But those are the facts.

You mention a few bad earnings reports and such but where do you come up with “another abysmal (earnings) reporting season”, when in fact earnings were gangbusters in 2013? You. know the year the S&P 500 rose 30% while you presumably doomed.

And did you notice Wells Fargo, which I own shares in, which reported today a 14% rise in Q1 earnings?

#29 Van Isle Renter on 04.11.14 at 7:40 pm

I think we are finally at the long predicted peak. By definition the peak is only one trade, one house or one sale. It just feels like it this time.

Not a bang, but a whimper.

#30 Van Isle Renter on 04.11.14 at 7:42 pm

#23 OG on 04.11.14 at 7:16 pm

Dang wish i was first
+++++++++++++++++

I’ve been first several times. It’s my HFT algorithm.

High Frequency Turnering.

#31 Shawn on 04.11.14 at 7:43 pm

Low Interest Rates and House Affordability

Low interest rates were never ever going to increase affordability since market forces require the house prices to rise to offset that. works just like in bonds though a little less precisely.

Interest deductibility would do the same it would be subsumed into higher house prices.

House prices will come down when expectations of price increases evaporate for any reason or interest rates rise or mortgage debt gets harder to come by.

It’s not clear any of those will happen just yet.

#32 Joe on 04.11.14 at 7:56 pm

Prices will go up and up to financial crash….
and governments have to write off big mortgages…

So house buyers over always winners….
Conclusion…buy right now and use the bank money.,,,
many people think like that…..just ask

#33 DocInWaitingRoom on 04.11.14 at 7:58 pm

Im a 14%er then. Touring the usa I found homes from 50k mortgage was 345 bucks a month. Detached. ..

Here the only suckers are those that have horse blinders ans have never seen the world.

Id rather buy 14 homes in the usa than one 4k sq foot small lot house in Jokeville. At least I could sell one if I needed to instead of sleeping in my only”investment” lmao

#34 Joe on 04.11.14 at 8:09 pm

You have to explain me this one.

how you can trust any financial tools of “today`s“ economy….after so called bailouts!!! :)) it is ridiculous….
stock market , bonds , houses…everything is manipulated…..game for adult scouts…

#35 East van mama on 04.11.14 at 8:23 pm

You really can’t analyze people’s house lust logically. In Vancouver, despite insane prices, there is no shortage of people who want to buy, and will invent ridiculous schemes to make it possible. Honestly, I don’t expect to see any piece of freehold property, regardless of location or condition, for under 600k again.

#36 Mammal on 04.11.14 at 8:28 pm

Rutting, eh Garth? As in the boring daily grind as someone approaches the middle age lifestyle, or the other, more saucy, meaning?

#37 sheane wallace on 04.11.14 at 8:29 pm

Organic apples 3-3.50 per pound, regular apples at 2.50 per pound – Metro and Loblaws.
Gas at 1.35 today.

No inflation, right.

I don’t f…g care what happens on the stock market and whether it tanks 20 -30 %. dollar is not worth a crap.
I am not selling.

Read some article about ‘safe heaven’ bonds today and almost chocked. Yeah right, at 2.6 % it is definitely a great deal to buy 10 years T bills.

As there is ‘deflation’. Everyone can feel it in the stores.

#38 Cici on 04.11.14 at 8:31 pm

Is $600,000 even affordable for most families? I doubt…that’s more than 6 times most households’ average yearly income.

Buying a house in Canada is an exercise in self-strangulation ;-0

#39 Cici on 04.11.14 at 8:32 pm

#37 sheane wallace

Your lucky…gas in my neck of the woods was $1.43. Let’s just say I can’t wait to hop on the bicycle!

#40 sheane wallace on 04.11.14 at 8:34 pm

#35 East van mama on 04.11.14 at 8:23 pm

Honestly, I don’t expect to see any piece of freehold property, regardless of location or condition, for under 600k again.
………………………….
You certainly will. After the currency reform and the revaluation (10 to 1). Gold at 1000 (new dollars), house at 50 000 or less.

#41 CowtownKooks on 04.11.14 at 8:35 pm

My bro just rented a new infill in Calgary, cost $2,000/month. Infills in the area are listed for $818,000 (Chinese anyone?). Next door to the infill is a granny 950 sq ft circa 1940, and next to that a 1973 duplex that screams white trash. Oh, the duplex is on a semi-artery road, and three houses down is an artery road and intersection. Anyone buying this “investment” is going to have their hat handed to them in July 2015. Inflation is coming, David Rosenberg will be bang-on with his forecast/analysis of a) zero productivity growth b) more capital spending c) fed 2.5% inflation target d) rearview mirror forecasting by most economists.

Conclusion: There WILL be inflation, CPI in the States just saw a huge bump in prices, the Fed WANTS inflation, so they can inflate away the debt, cheap money days will end this year, Canadian borrowers with long duration loans and short duration renewals will get run over by the steamroller.

And that semi-detached in Calgary/Toronto/Vancouver will be a CMHC liability.

#42 Alberta Ed on 04.11.14 at 8:45 pm

Actually, out here in Alberta Harley country, you can use sixth gear heading for that wall.

#43 dave on 04.11.14 at 8:52 pm

In all of your articles you find a cute way of tying-in the last sentence.

#44 Joe on 04.11.14 at 8:53 pm

Exactly !!! you think Garth that ordinary Joe doesn`t see what`s going on….houses will skyrocket!! because “the dollar “ is a piece of crap and everyone knows it…except guru from Bay Street…they are to high..to see

#45 Derek on 04.11.14 at 8:59 pm

And you haven’t considered that prices could stay flat the next decade?

#46 AisA on 04.11.14 at 9:03 pm

“no seller today would actually pay what they want for their own house.”

This in and of itself is why I chuckle at the thought of a soft landing.

#47 Inverse ETFs on 04.11.14 at 9:05 pm

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(c) Another Fool

What do you think? :)

#48 The Financial Hub on 04.11.14 at 9:08 pm

Rob Carrick wrote a great follow-up article on owning a home versus renting and investing the difference

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/real-estate-or-stocks-the-finer-points/article17945012/?cmpid=rss1

#49 AK on 04.11.14 at 9:09 pm

#16 yash on 04.11.14 at 6:58 pm
“Finally fuurst .”
====================================
A day late and a dollar Short…

#50 Ben on 04.11.14 at 9:13 pm

Ok Garth you are now in what, UK 2010? So here is what’s in store for you boyz:

* some kind of govt backed loan to “help first timers get on the ladder”

* more back-door lending to banks to keep home loans low

Enjoy!

#51 Suede on 04.11.14 at 9:26 pm

Good to see the farm growing a whole wad of Greater Fool’s!

#52 World According To Garth on 04.11.14 at 9:36 pm

And while the main slime media covers Trevor Linden and other mindless shit, down in Nevada militiamen are showing up to take back Amerika from the bank/corp controlled fascist govt. Look up what word fascism means before you roll your eyes.

Maybe once the shooting starts the news will begin to cover it.

http://www.wnd.com/2014/04/armed-militias-rally-in-support-of-nevada-rancher/

This might be a good time for you to go away. — Garth

#53 sheane wallace on 04.11.14 at 9:38 pm

Gas tomorrow in Toronto is: 136.9.

Yep, no inflation

#54 airhead princess on 04.11.14 at 9:57 pm

Markets are stupid everywhere with the ZIRP firmly in place. I was standing behind a couple in a grocery line in Dallas talking about her house selling in two days.

The fact is that our governments are so far in debt that they are using the idea of raising rates as suasion without real intention of ever doing so. Our governments are so far in debt that they can’t afford to pay the interest on the money they’ve created at any more than ZIRP rates.

Good example of the attempt to bolster confidence was the issue of 5 billion in Greek debt at 6% ……the entire subscription was taken up by the ECB. The system is trying to inspire confidence with lies and obfuscation.

Rates will not go up in this generation…..prices ( inflation) will continue to spike higher. As a home owner….this makes me very happy…thank you Mr Greenspan for quadrupling my house price in the 14 years since your Keynesian monster child was birthed. At some point I will sell and move to a country that costs a quarter what it does to live in Canada….following the advice of Adam Smith/Wealth of Nations…..but with prices still going up….that time is not today….hence the shortage of listings.

#55 NewsFlash on 04.11.14 at 9:58 pm

As long as immigration stays high and concentrated…and the temps flood in…the sky’s the limit

#56 Pope Smartalec Snugglebums the 666lb (aka Nosty) on 04.11.14 at 9:58 pm

A brief interlude with comedic undertones provides some respite from the onslaught of RE / financial info.

#57 Nemesis on 04.11.14 at 10:05 pm

#RogersSuperTramps #TakeTheLongWayHome #Peterson35’s #WhiteIsletsMoonLitRaces[SponsoredByCuttySark, “Natch.”]

FridayNight CockTailChillaxTrack:

http://youtu.be/HfApBz4_XQk

[NoteToSaltyDogz: So close to the TrueLiesTruth… it even scares ‘N’. Chillax. All ‘N’ productions have a HollyWoodEnding… CriticsBeDamned. {&SolicitorsThanked}. Right. “I started putting boats down on paper when I was 10, and have never wanted to do anything else.” – Doug Peterson; He built ’em… we Raced’Em… TakeTheLongWayHome, SaltyDogz… Life is FarTooShort for “SafetyFirst” – and as we were collectively wont to say, “You’re a LongTimeDead… So live, already.” NoteToSmokingMan: The TrophyBoat belonged to SuperTramps’ LightingDirector; an inestimably MadRhodesian… the Helmsman, another Rhodesian, handled her like the F-4Phantom that had previously been his Pride&Joy. Speaking of which… what happened to StevieRay right after he ‘CleanedUpHisAct’… Hint: Some days, ya just gotta say, “No”… to the ‘Helo’… and have a Bud with your friends, instead. It’s a SemperFiThang, SaltyDogz. Over&Out.]

#58 ozy -gas was below 50 cents in 1998 on 04.11.14 at 10:08 pm

gas was below 50 cents in 1998 – 1.5 decade later is like real estate 140% higher

#59 World According To Garth on 04.11.14 at 10:08 pm

This might be a good time for you to go away. — Garth

Why? For reporting fascism? I notice now that the us recovery is bust that you never talk about that either.

#60 Andrew Woburn on 04.11.14 at 10:15 pm

#207 shawn on 04.11.14 at 5:57 pm
Andrew at 117 questioned my view that Income Trusts were tax scams.
****************************************
Thank you Andrew it’s always good to explore assertions respectfully.
===========================

Thank you for your thorough and informative answer, Shawn. This is the kind of exchange of information I hope to find here as opposed to inane epithets.

I agree that F had no choice but to shut down income trusts but I think the manner in which it was handled was politically inept.

I suspect many people think that the government created income trusts and then perfidious F reneged on them bringing pointless grief to worthy pensioners. Actually these trusts were adapted from existing laws and legal concepts. Such innovations cannot get to market without a supportive legal opinion from one the major tax law firms. These firms maintain close contact with the senior people at Finance so they have a good sense of what will fly and what won’t. None of them would advise a client to incur the significant cost of restructuring as an income trust unless they were pretty sure it was going to work. For the income trust craze to explode the way it did, they must have been getting the signal that Finance was not going to attack the structures.

Finance was obviously asleep at the switch here since any one could see what would happen once the first income trust schemes kicked the door open. Finance could have quietly expressed its displeasure with the concept to key tax practitioners and got them to cool their jets a bit. Instead they let it burn out of control until F had to step in with a firehose and take the political heat.

#61 Nemesis on 04.11.14 at 10:16 pm

#BonusZen #Who’sYourPride&Joy?

http://youtu.be/NU0MF8pwktg

#62 Son of Ponzi on 04.11.14 at 10:20 pm

The 600 k house is dead.
Long live the 400 k house!
Just be patient.

#63 sheane wallace on 04.11.14 at 10:22 pm

#54 airhead princess

If that is the case – inflation and ZIRP forever your house will be worth gazillion of worthless dollars and that sooner than you think.

Thank you very much but I will keep my European and energy dividend paying EFTs.

#64 Son of Ponzi on 04.11.14 at 10:24 pm

Gentleman, fasten your seat belts.
This is gonna be a bumpy spring.

#65 TheCatFoodLady on 04.11.14 at 10:33 pm

Two comments tonight…

Inflation, CPI & the other ‘funny numbers’. I’ve made up our own ‘FIB’… Family Inflation Basket. I track the 30 items/services we actually USE; that factor highest in our spending & those are the numbers that matter.

Secondly – something is going on in Kingston. The official KREA numbers for February, (not in for March yet), state that sales were down 2.8% YOY. A week later in the House Horny section of the weekly birdcage liner, revised numbers were given listing 4 fewer sales YOY & that brought the real drop to a bit over 5%. I figure a certain number of sales are not going to go through for various reasons & it’s nice to be able to track that using KREA itself.

What I’ve been noticing over the winter is an interesting development in rentals. In the last decade, we’ve had a very tight rental market with fewer new builds. We’ve averaged below 1.5% vacancy rate & landlords happily hiked rents yearly… & got what they asked for.

That’s changed. The owners of our complex own 3 others – their starting rents have remained flat for the better part of a year & they recently ended a several month long campaign offering $100/month less rent for a year lease. That had to be extended but worked – all complexes are full & have waiting lists. For us ‘older’ tenants it means WE are paying more for places that haven’t had paint applied or new flooring – bummer.

Even higher end rentals can’t fill. A recently opened new build tried renting for way too much with little success – after 6-7 months of being open, they’re still only about half full. Yesterday they held an Open House offering $2,500 worth of unspecified incentives for those filling in applications at the Open House. They’d already dropped their rental prices over the past few months – clearly with not a whole lot of luck. I have a client in the original building in that complex – outrageous rents for Kingston for the location, even considering the units are generously sized, excellently managed…

My client tells me a number of tenants, (most seniors who sold the family pile), are now nervous. Many are singles living in large, two bedroom apartments & suddenly, they’re finding it tough to pay the bills. They’re increasingly looking to share places.

I’m seeing a lot of that – people of all ages sharing where a few years ago they would have curled their lips in scorn at the very idea. It’s the economy – it sucks here unless you’re in health care or the academic world. No industry or manufacturing to speak of & job fairs are full of employers taking applications for later or for out of town work. I shake my head at the kids who could but won’t move to where the jobs are. Increasingly though, they’re doing just that. Those who aren’t are flat sharing or moving back to the Parental Subterranean Moulding Space. It’s led to an almost doubling of the rental vacancy rate in a single year.

I’ll be very curious to see the first cut at March house sales data; much of our market is March/April. Granted the weather in March wasn’t stellar but I wouldn’t let that hold me back if I was house hunting. That will not be an excuse for April.

#66 betamax on 04.11.14 at 10:48 pm

The other day in Vancouver I happened to be walking behind two students about to graduate (no idea what program, but heard ‘bachelor degree’). Each was talking about how they intend to buy a house soon after graduating. A house! Then one asked the other if he was going to buy a car first. The reply: “No, have to get a house and a mortgage going.”

It was stunning how convinced they were that it was a financially sound idea, not to mention how confident they’d be able to afford one, though at least one can’t currently afford a car.

Aside from the cost, these two unemployed students were shockingly wiling to immediately destroy their job mobility by locking themselves into a local mortgage.

I don’t know what they learned at uni, but they didn’t learn to think.

#67 Andrew Woburn on 04.11.14 at 10:49 pm

#34 Joe on 04.11.14 at 8:09 pm
stock market , bonds , houses…everything is manipulated
===================

It’s really hard to manipulate cash flow and dividends. If you want to choose an investment, that is a good place to start.

#68 betamax on 04.11.14 at 10:54 pm

re. China

If Vancouverites think China is supporting our high prices, then they’ll be shocked to learn that the Chinese housing market is crashing hard. I heard from some relatives in mainland China (some own multiple houses, condos, etc) that the market had been tanking in lesser cities for some time, but now it’s finally tanking even in Beijing and Shanghai.

Haven’t heard much about this in the media, but that doesn’t surprise me given govt. pressure to keep a lid on the story. These people are intimately involved and know what’s happening right now. They are (or were) housing bulls, so if they’re crying “uncle” then the party is finally over.

#69 jan on 04.11.14 at 10:54 pm

Btw – did those RBC housing tarts get back to you as per your call to them a few days back ??

#70 AngryMan127 on 04.11.14 at 11:03 pm

With esl rates of 80% in lots of Vancouver neighbourhoods, it astounds me that you think income levels relevant. Clearly, you circulate in the parts of Canada that resemble the completely out of touch Ottawa demographic.

We are in the trenches and we grow tired of the 700k starter house. Unlike your legion of wishful thinkers we see no end in sight.

#71 espressobob on 04.11.14 at 11:07 pm

#47 Inverse ETF’s

Profit taking & rebalancing can prove a better option. Inverse ETF’s are short term plays, probably better left to the pros! They can sting!

#72 2CntsCdn on 04.11.14 at 11:39 pm

Smoke, mirrors, lies and hype …… still enough ignorant people to keep the insanity going. Tick tick tick.

#73 KommyKim on 04.11.14 at 11:50 pm

RE: #52 World According To Garth on 04.11.14 at 9:36 pm
take back Amerika from the bank/corp controlled fascist govt. Look up what word fascism means before you roll your eyes.

I fail to see how the government preventing a rancher from running cattle on government owned land is fascism.

#74 Tony on 04.12.14 at 12:08 am

Resale townhouses and apartments which are still about 40 percent below the 2007 peak price are finally being bought up in Edmonton. It only took the local morons almost seven years to figure it out.

#75 jan on 04.12.14 at 12:24 am

Garth, you’re a bad boy for not allowing people to express themselves truthfully. As in, to speak the truth,be it the banks or anyone else tor that matter.

#76 Chief Keef on 04.12.14 at 12:26 am

Vancouver. A City in crisis
http://www.vancouversun.com/opinion/columnists/Barbara+Yaffe+Absence+data+Vancouver+real+estate/9729419/story.html

#77 Retired WI Boomer on 04.12.14 at 12:27 am

Car Sell and Buy Time here in WI

After 11 years and 140,000 miles it was time to say “good-bye” to that faultless Buick, but better to get out when you have a willing buyer.

So, need a new beater, but what to buy? Providence puked up a nice Fleetwood older than mine, but not exposed to WI salt & harsh winters! 58,000 miles no rust, everything works!! So, I’m $2800 lighter and 90,000 miles fewer. Who said it’s not a good time for….

Is the stock market open? I hadn’t noticed. I’m getting more like my friend Warren from Omaha every day. Buy good companies, hold them forever, and collect the dividends, and you might even be rewarded by capital appreciation! ETF’s or Mutual Index Funds, or even those individual company stocks -in moderation- are ok by me.

RE? That is so…. last year, why bother now? Buy them when they’re on sale, much like those good stocks!

#78 Dean Mason on 04.12.14 at 12:36 am

To Shawn #31

Mortgage rates and interest rates will not be the real financial pain in the next 25 years by the time most people pay off their mortgage.

When they are paying at least 325% to 375% more for their property taxes, utilities, electricity, condo fees, home and auto insurance, heating costs, home and auto repair and maintenance costs etc. in 25 years then they will be with little to no savings, financial investments.

This is not mentioning all the higher and new taxes people will face as well.

Most people don’t think far ahead and just think about the present and maybe next few years if that at all.

#79 NewsFlash on 04.12.14 at 12:40 am

Premium gas $1.63 in Vancouver. Regular at $1.48.

Yep. No inflation. Worry about deflation.

Biggest scam put forth by bankers and ALL financial advisors.

Deflate the currency, pump up the stock market….

and “worry about deflation”…

#80 Tony on 04.12.14 at 12:40 am

Re: #28 Shawn on 04.11.14 at 7:38 pm

Cockamamie accounting and share buybacks are masking the real shape of the U.S. economy. Car and student loans (gone bad) will once again sink the U.S. banks. More than just a coincidence everything has come unraveled once helicopter Ben left the helm at the FED.

#81 Notta Sheeple on 04.12.14 at 12:57 am

“…. A builder snagged it, will destroy it, and erect a big house with a rentable suite and a laneway rental…..”
=========================

Soooo….where does the new Middle Class fit in?

A mouldy basement? or a backlane gutter?

Myself, I’m leaning toward a retirement cell in a Harper Super-Prison….very cost effective.

Unless, of course, the Supreme Court throws that one out too….

#82 Nemesis on 04.12.14 at 1:05 am

#GoodMorning!HappyCampers #BonusBonusUncleAlbert #¡Hasta la Victoria Siempre!

Intellectuals solve problems, geniuses prevent them. – Albert Einstein

http://youtu.be/qGaoXAwl9kw

http://youtu.be/kZvWt29OG0s

Sentir, campistas felices realmente musicales???…

Ahumado en Caliente!

http://youtu.be/86LSuXi5TLU

[NoteToGT: Gimme a break, eh!… After all, Ernesto did ride, “La Poderosa”… http://tinyurl.com/k5g2rnv – Albeit, just between the TwoOfUs… I’ve always thought TheSeventhArt would have been FarFarBetter served if he’d lived long enough to mount a “Commando”: http://tinyurl.com/kn4eac9 – Wouldn’t you agree? See y’all on Monday, SaltyDogz.]

#83 Ronaldo on 04.12.14 at 1:41 am

Some background information on how the TFSA’s came to be. This goes back to a study by Kesselman and Poshmann (Feb. 2001) where they advocated the introduction of TPSP’s because of two groups of people not being well served by the Canadian tax regime. TPSP’s (Tax Prepaid Savings Plan) where withdrawals in retirement would not be taxed as income and would not reduce GIS (guaranteed income supplement) entitlements. Similar to todays TFSA.

The other report by Richard Shillington (2003). New Poverty Traps, Means Testing and Modest Income Seniors. Talks about why for a large proportion of tax payers RRSP’s is of no advantage as a savings vehicle.

Unfortunately for a large percentage of retired people today who listened to the [email protected] and most financial planners promoting RRSP’s find themselves in a tax trap and realizing that those that did not save are no worse off than they are when it came to retirement. The savers ended up being penalized for their efforts through the tax regime. The reason why TFSA’s came to pass.

Thanks to Garth and his efforts in making this happen.

http://openpolicyontario.com/wordpress/wp-content/uploads/2012/09/allinonelowincomeretirement.pdf

http://www.cdhowe.org/pdf/backgrounder_65.pdf

#84 k on 04.12.14 at 1:48 am

Yash Finally 16th ? Good for YOU !!!!

#85 Waterloo Resident on 04.12.14 at 1:56 am

At current rates of house price appreciation and job losses, soon people earning $11/hour at Tim Hortons will be buying $5 Million dollar 2-bedroom townhouses in Milton Ontario.

Crazy? Yes, but not that much more crazy than things are right now.

#86 Turtle on 04.12.14 at 2:35 am

1. The reason behind “buying the house” is to have a place to live that will cost you zero rent… at some point in a future. The problem would be that mortgage never ends.

2. The reason behind “buying financial assets” is to have money coming in when you don’t go to work anymore… at some point in a future. But there is not enough money today to buy enough assets for tomorrow.

When you are under pressure to make a decision “to buy RE or not”, think about your life as a whole. If you are young and you want to have family, kids, mortgage, financial assets etc… put everything on a paper as milestones. Life is not endless and resources are usually limited.

Do you still want $700k mortgage before kids? What is your plan to pay that sucker off? When are you gonna build yourself a retirement portfolio, so you can stop working some day? What if you need to move?

I am lucky… my wife still loves me. (That is my first priority and my safety). We have kids. (That is second). We moved across Canada seven times and owned RE twice. Life is full of surprises. Don’t settle for dull and boring big S mortgage… Don’t do it.

#87 Nemesis on 04.12.14 at 4:39 am

#LastWords #Masters&Commanders #♥FarSideOfTheWorld #DiptychParables

http://youtu.be/6oyQGHHz8U8

“Arrrrgh, me SaltyDogz… FarFarEasier it be to talk like a Pirate… than live like one… Yet, if ye practice – ye can do it. ‘N don’t be forgettin’ – jeopardy is not only for the Captain… but for the whole LoyaleCrew, MeMateys. Adventure beckons! Aye, and for them that lives to tell the tale, there be Medallions… & BounteousTreasures beyond your wildest dreams… Arrrgh!”

[ScrubTo: 05:20/SequenceEnd: 07:53]

http://youtu.be/yC_PR7YWQOc?t=5m20s

#88 Cowlick on 04.12.14 at 5:44 am

Interest rates are really shooting up. Look at the US 10 year.

Stocks will correct and money will flow into fixed income, driving rates lower.

#89 EmpCod on 04.12.14 at 6:44 am

Newly elected Quebec Liberals want to prop up home ownership with a new savings account : http://www.plq.org/en/article/a-liberal-government-will-help-quebec-families-to-set-aside-the-necessary–funds-to-purchase-their-first-home

#90 economictsunami on 04.12.14 at 7:30 am

I tip my hat to anyone who tosses their hat into the public office ring; no matter their political stripe.

(But when did public service turn almost exclusively into a sense of self entitlement?)

Although, politics itself can be a very corrupting influence of endless revolving door cronyism, our elected officials must understand that the days of Wine & Roses from tax payer funded perks has run it’s course.

Better to accept change, then be unprepared and have it thrust upon you…

Our addiction to housing debt in 11 charts…

http://www.macleans.ca/economy/realestateeconomy/11-charts-about-the-housing-market/

#91 sheane wallace on 04.12.14 at 7:48 am

#88 Cowlick on 04.12.14 at 5:44 am
Interest rates are really shooting up. Look at the US 10 year.

Stocks will correct and money will flow into fixed income, driving rates lower
………………………………………

This is what was intended by design. Prop the stock market then crash it to have people move to the manipulated bond market perceived as ‘safe heaven’ at low rates while inflation soars.

Unfortunately it will not work this time for a simple reason:
The World stock markets are detaching itself from the US stock market.
What will tank is the US stock market. In the market decline lately there are bunch of international ETFs and stocks that actually trade higher, EWZ is a very good example.

What will happen is a move away from the US stock market, US bonds and US dollar to something else – Europe, Asia, BRICS.

The currency swaps that supported the dollar so far in addition to the FED QE, , gold leasing and naked short selling as well as Belgium buying bonds to the tune of $ 50 billions per month lately are probably running on fumes, I surely hope Canada has not signed some stupid swap agreement to prop useless dollar or at least that that agreement is limited.

Some magicians are running out of options and I am afraid the big inflation is coming, judging by the food and gas prices lately.

International ETFs and stocks would be fine, we will see solely US market correction. Europe is undervalued.

Very few will run into US bonds.

That was amusing. — Garth

#92 Reader on 04.12.14 at 7:58 am

All this above prove only one thing, you are wrong, again. Your wisdom means nothing your guesses are incorrect. Prices will only drop when interest rates goes up, there is nothing else in the world will make a difference to prices. I am surprised you have not gotten an idea that it is a collective effort from all these thieves ( read govt, financial institutions, msm, RE organizations, builders etc) to keep the prices high for their own profits. I am really impressed by you persistency but all your efforts are waste of time because people will not listen to you, in the back of their mind people know what you are saying is correct but in the end lust always prevails. This is the most stupid educated nation which is happily getting screwed by handful of thieves out there, I pity them.

#93 Stickler on 04.12.14 at 8:02 am

“As I have said in the past, no seller today would actually pay what they want for their own house. ”

—————————-

-> I’ll go one further…I know several folks who could not afford to buy their own homes at today’s prices!

#94 T.O. Bubble Boy on 04.12.14 at 8:14 am

If you want some proof that GTA inventory is super-low, check out guava’s charts:
http://guava.ca/indicators.html

GTA Available Inventory lowest in 10 years for February and March!

Yes – FSBO is probably a factor as well, but that can’t explain the 30%-50% difference from historical levels.

#95 Just some guy on 04.12.14 at 8:16 am

It is not just the very young who are infatuated by house ownership to the extent that they take on ruinous debt. The Saturday G&M has an article, one in a series, of a retiree in which she explains why she took on a 200,000 dollar mortgage on a 600,000 dollar townhouse in Oakville. Her original budget of 400,000 was based on the sale of her downtown Toronto condo on which she lost money. She was in the Toronto condo for a short time.

#96 Millenial on 04.12.14 at 8:18 am

#89EmpCod
Newly elected Quebec Liberals want to prop up home ownership with a new savings account : http://www.plq.org/en/article/a-liberal-government-will-help-quebec-families-to-set-aside-the-necessary–funds-to-purchase-their-first-home
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Oh Boy.

#97 T.O. Bubble Boy on 04.12.14 at 8:49 am

ok – I’m starting a new theme post:

It’s the “$900k House of the Day”.

I will pick 1 house listed on realtor.ca between $899k and $1M, for a showcase here on greaterfool. This “900k” pricepoint is bubble central right now in Toronto, as house-horny people (who still need CMHC insurance, and cannot buy over the $1M CMHC cap) fight bidding wars for the right to live in a 100-yr-old dump somewhere within a 30 minute walk of a subway.
(yes, it probably deserves it’s own blog, but that can come later)

Here were the finalists for the first ever “900k” winner:
1) $899,900 2-bdrm semi in Leaside (listed 3x on MLS!)
2) $899,900 “legal duplex”? in Leslieville/Little India
3) $950k 19.92ft-wide skinny house in Cedarvale (St. Clair/Bathurst)
4) $929,900 2-bdrm, 15ft-wide “loft style?” 1880-era semi-detached house in the Annex
5) $899,500 16-ft wide semi in Riverdale/Leslieville

TODAY’S WINNER:
#4!
$929,900 2-bdrm, 15ft-wide “loft style?” 1880-era semi-detached house in the Annex

Key factors:
– Called “2.5 storey” and “loft style”, even though that extra 1/2 storey is a puny/useless space that you need to climb a ladder to get to.
– skinny lot (very typical for these “900k” houses)
– likely full of potential repairs, given that it was built in 1880, and last reno’ed in the 1980’s

#98 T.O. Bubble Boy on 04.12.14 at 9:14 am

Oh – by the way, CMHC’s online calculator tells me that to by today’s “900k House” ($929,900), you need:

– approximately $180k annual income
– zero debt
– $50k down payment
– 3% / 25-yr mortgage

#99 Daisy Mae on 04.12.14 at 10:04 am

“Not content with the emotional blackmail dripping from its latest YouTube marketing campaign, (“Honey, I need that house. I’m pregnant. We’re running out of time…”) RBC has just delivered a stunner of a survey….”

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

RBC has MyFinanceTracker, a program to assist customers with regard to every aspect of their private and personal lives — categories listing savings, investments, goals. It will even help with income taxes and calculate your refund.

Sure, go ahead — tell RBC how much you earn, what you spend it on, what you plan to purchase in the future — tell ’em everything. The info gleaned from MyFinanceTracker is invaluable to RBC….and its customers are fools.

#100 Old Man on 04.12.14 at 10:10 am

For all you cheap penny pinchers go to gasbuddy for the deals in gas and hurry for a Toronto bargain at 128.9 before they hoop you once again. Get moving before its too late.

#101 George on 04.12.14 at 10:18 am

Educate yourselves, Rest of Canada, about the complexities and diversity of Metro Vancouver’s Chinese communities. The Alliance of the Guard of Canadian Values is a group of Chinese-Canadians who support the cancellation of the Immigrant Investor Program. From the Richmond News:

“A group of around 50 ethnic Chinese community members – calling themselves the The Alliance of the Guard of Canadian Values – held a meeting last Saturday at the West Richmond Community Centre to back the government’s move to close the investorclass program, which would expedite wealthy, would-be immigrants through the residency process…

“We believe the move is too late, but it’s better late than never,” Huang told the News.”There’s been a limited contribution from (the investor-class immigrants) anyway, so it’s no great loss to Canada.”They have been buying their way into Canada for a long time, while most of us have come to Canada because we love the country and Canadian values and the way of life.”

http://www.richmond-news.com/news/chinese-groups-at-odds-1.951322

#102 Castaway on 04.12.14 at 10:23 am

Garth, you have been writing this blog focused on how over priced homes are and why they are a bad investment for quite awhile. For the most part great information for the general public supported by facts with clever writing thrown in as a bonus. Yet the masses, or herd like SM calls em, just keep on paying stupid prices for RE.

Nobly, you have done your part to try and help yet the lemmings just keep following one another over the cliff. Like Forest Gump said, you can’t fix stupid.

Why not shift the blog theme to include more emphasis on other investment topics? Keep it fresh.

Darwin will look after the RE investors who don’t realize they arrived at the party too late.

#103 Andrew Woburn on 04.12.14 at 10:29 am

How to stop worrying and love the Fed.

“Only the ignorant live in fear of hyperinflation”

http://www.ft.com/intl/cms/s/0/46a1ce84-bf2a-11e3-a4af-00144feabdc0.html?siteedition=intl#axzz2ye4ldfNV

#104 Shawn on 04.12.14 at 11:14 am

Who Fathered the TFSA?

Ronaldo at 83:

Some background information on how the TFSA’s came to be.
*******************************************
Keep in mind the saying:

“Success has a thousand parents, failure is an orphan”.

And why not? Praise and credit for a job well done are both sort of infinitely divisible substances. Yet we dole them out as if scarce and as if giving praise diminishes our own credit, but in fact giving praise only makes us appear smarter in most cases. (Especially in the eyes of the recipient of the praise.)

And a new saying:

“This blog has a 1000 doomer lunatics”. Well at least it has a few. You know who you are.

#105 Shawn on 04.12.14 at 11:17 am

Praise…

I should offer some..

This blog has a unique format that draws us in like flies. Well done.

It also has many very strong contributors. You know who you are.

#106 T.O. Bubble Boy on 04.12.14 at 11:21 am

@ #96 Millenial on 04.12.14 at 8:18 am
#89EmpCod
Newly elected Quebec Liberals want to prop up home ownership with a new savings account : http://www.plq.org/en/article/a-liberal-government-will-help-quebec-families-to-set-aside-the-necessary–funds-to-purchase-their-first-home
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Oh Boy.
————-

So, let me get this straight… the RRSP homebuyers plan (where you can withdraw $20k per person and then re-contribute the funds over 15 years) was too restrictive???

This Quebec Liberal plan sounds identical to the existing RRSP plan, except that you can put more $$$ in (up to $50k over 10 yrs), and never have to re-contribute the funds after you take them out for a home purchase.

The only reason that I can see for putting a 2nd plan out there is because the current RRSP Home Buyers Plan is that people are maxing out at the $20k per person limit… which I doubt.

If people aren’t maxing out on the current HBP to buy houses in Quebec, why would they need this new plan?

#107 T.O. Bubble Boy on 04.12.14 at 11:25 am

typos galore!

(The only reason that I can see for putting a 2nd plan out there is because the current RRSP Home Buyers Plan is used TOO MUCH, and people are maxing out at the $20k per person limit… which I doubt.)

#108 Infused with Opiates on 04.12.14 at 11:48 am

96 Millenial – nothing new there. They had a plan in BC 30 years ago. Not sure if it was provincially or fed regulated. I think you could save $5K(!). There was some tax advantage but you lost that if you used the $$ for something else. I used mine for school.

Any bloggers remember this?

#109 EdmontonShaan on 04.12.14 at 11:51 am

Mike T says.

“look at what they eat, watch, and do for entertainment”

Mike, what do they eat, watch and do for entertainment. I really don’t know. I see a lot of them eat awful crap but some of them are serious. Watch ? I don’t even know whats on TV these days. Entertainment ?

#110 OttawaguyRenting on 04.12.14 at 11:57 am

Ottawa is a sea of “for sale” signs as far as the gloomy eye can see.

“when are you going to buy” says the friend
“when are you and the wife planning on getting a house in hintonburg” the other says

Rent.
Cheap.
Never had more money in my life.
As a previous RE holder I get more satisfaction looking at a REIT I own crawl up 3.5% this year in worth while it kicks me 1.75% back in TFSA

Stop the 600K madness.

Babies and their driveling parents with Yoga Pants and debt..let them wash ashore in the sea of “for sale” signs.

ill watch the whole thing burn from my balcony and buy when Mercedes 45 year old hipster down the street has to “cash” out.
His wife “boffs” the bartender at the local watering hole when he is away for weeks at a time anyways.

The house is half empty.

Like their life.

#111 airhead princess on 04.12.14 at 12:01 pm

#54 airhead princess

If that is the case – inflation and ZIRP forever your house will be worth gazillion of worthless dollars and that sooner than you think.

Thank you very much but I will keep my European and energy dividend paying EFTs.”

Yeah Sheane… I have those too…..but real estate values are the least of my concerns……and I don’t consider the value of my RE holdings as ‘net worth’.

I don’t believe in ETF’s …I believe that these products are a rookie mistake. Targeting the best companies is always far more safe and profitable than shotgunning the market taking the good with the bad. The index dogs drag performance down measurably.

Sector performance is something else…….in this case even a managed mutual fund is better than an ETF…….look at the performance of any actively managed mutual fund this year against the performance of the energy index ETF’s……it’s an 85% beat down. What many people don’t understand is market cycles……and when to sell.

#112 Jim on 04.12.14 at 12:20 pm

Hi Garth: A Canadian citizen can open a savings account in any bank with one set of ID, but for a trading account in the same bank they need to purchase a photo ID such as a passport or drivers licence. The CRA site mentions just a SIN number and a date of birth. Can a person open a TFSA trading account with a discount brokerage without a valid photo ID?…. Thank you

No. — Garth

#113 Jim on 04.12.14 at 12:28 pm

I should mention I have been with the same bank for 25 years. I have an expired passport and an expired government issued ID

#114 World Traveller on 04.12.14 at 12:31 pm

Banks and the government take a dump on small businesses and sole proprietors, what a surprise (not).

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/self-employed-face-latest-hurdles-in-quest-for-a-loan/article17614139/

#115 scibadubadeebumbado on 04.12.14 at 12:49 pm

#15 David Lee on 04.11.14 at 6:54 pm
http://www.vancouversun.com/opinion/columnists/Barbara+Yaffe+Absence+data+Vancouver+real+estate/9729419/story.html

Sorry to disagree with Garth about the impact of foreign ownership in our country. Whoever thinks it has little effect on pricing and surrounding neighborhoods is simply deluding themselves.
We live it in Vancouver, and now Toronto is the newest Hot Money depository for Corrupt officialdom from the Third World.
People with good businesses in China and elsewhere that built the businesses from the ground up don’t just get up and move lock stock and barrel from their home country and start fresh 8000 miles away. They are running from Prosecution.
Foreign Hot Money bubblenomics could be stopped by simply taxing the hell out of foreign ownership. If you were to try to purchase land in the second and third world you would be met with heavy restrictions. They know better. Our politicians are either naive or using the bubbles for political gain.
Land is for the residents. Not a commodity to trade and manipulate.

More Vancouver xenophobia. Ugly, as usual. — Garth

#116 Panhead on 04.12.14 at 12:53 pm

#108 Infused with Opiates on 04.12.14 at 11:48 am
96 Millenial – nothing new there. They had a plan in BC 30 years ago. Not sure if it was provincially or fed regulated. I think you could save $5K(!). There was some tax advantage but you lost that if you used the $$ for something else. I used mine for school.

Any bloggers remember this?

—————————————————–

I remember a plan that outright gave you $2000.00 from the fed’s and another $2000.00 from the BC govt when you bought your first house. I took advantage of it and the money was paid quickly. This was in 1982 and the price I paid for a nice house on a flat 50′ lot in Burnaby was $80,000.00. So the $4000.00 was a “chunk o’ change” back then. Mind you I think the interest rates were somewhere around 17% and the market dried up overnight. I was lucky enough to be sitting on enough cash to buy outright. Different times indeed …

#117 World According To Garth on 04.12.14 at 1:11 pm

#73 KommyKim on 04.11.14 at 11:50 pm
RE: #52 World According To Garth on 04.11.14 at 9:36 pm
take back Amerika from the bank/corp controlled fascist govt. Look up what word fascism means before you roll your eyes.

I fail to see how the government preventing a rancher from running cattle on government owned land is fascism.
—————————————-

Because if you would read all the stories and not the one you cherry picked you would know this is about Facist Harry Reid and his buddies getting fracking rights and building a Chinese owned solar farm. It has nothing to do with land ownership, tortoises or cattle.

It’s fascism.

#118 Steve-O on 04.12.14 at 1:15 pm

@#92 Reader

Agreed, lust is a powerful thing. But fear even more so.

Even if interest rates stay where they are today, what do you say about more job-losses in markets other than Alberta?

People will try to stick it out where they are now, but supply dries up for a while pushing prices higher for a short period then BOOM!

People start moving to where the jobs are and the landslide begins.

No one likes to put a For Sale sign on their front lawn when times get tough due to the pride factor.

But at some point, everyone needs to swallow their pride.

#119 Old Man on 04.12.14 at 1:30 pm

#113 Jim – was in the bank on Friday and casually asked about getting a pin for my identity card so I could use the cash machine. Gal wanted two pieces of ID and requested specific stuff which I didn’t have with me. Cashed in a mutual fund once and needed to show my drivers licence; also have opened a couple of trading accounts without no ID. Things change from time to time and who knows what is next.

#120 deadmountain on 04.12.14 at 1:35 pm

More Vancouver xenophobia. Ugly, as usual. — Garth

Xenophobia that’s the newest trendy word used to silence anyone who thinks there should be limits on immigration.

Immigration is not the problem. — Garth

#121 investment virgin on 04.12.14 at 1:48 pm

I just heard a radio ad for Daytona Homes in Regina. They’re giving a free car with the purchase of a new Daytona home. What is going on? Is the Regina market getting that desperate?

#122 Shawn on 04.12.14 at 1:49 pm

CHUM for Bank Haters, Cat Nip for Bank Investors

Wells Fargo released Q1 earnings on Friday morning.

Some facts:

Average rate paid on market rate deposits (it’s largest funding source, by far) 0.07%

Average rate charged on loans 3.43% on commercial loans and 5.02% consumer loans.

Overall average spread earned by lending / investing deposits and other funds 3.20%

Return on Equity 14.1%

Price to Book value to buy these shares 1.62%

P/E 12.0

Earnings / Price 8.3%

Dividend yield 2.9% (using planned increase from 30 cents to 35 cents per quarter)

Now, can anyone think of how such a situation means that those with money to invest for the long term can grow richer at the expense of those who borrow and never invest?

Now , what was that someone said about U.S. shares being “pumped up” to high P/E ratios?

What action does this call for?

#123 Dr. Talc on 04.12.14 at 2:03 pm

“Our politicians are either naive or using the bubbles for political gain.”

Bubbles are not created by naive people: everything is forecast. Who does the politician represent? Obviously not you. They used to call your point of view ‘isolationist’, I would take that as a compliment, even though I disagree with most of what you wrote about foreign buyers. The alternative, your way, could be that no one wants to buy your house because foreigners are banished and locals don’t have good paying jobs, because our representatives sent our jobs to foreigners.

‘But he was told. I know that.’

One mo’ time

‘But he was told. I know that.’

#124 Inverse ETFs on 04.12.14 at 2:03 pm

Re: #71 espressobob on 04.11.14 at 11:07 pm

Thank you, espressobob – got the same advice on Canadian Money Forum (I’m “Moneytoo” there – in case you’re there, too :)

#125 Shawn on 04.12.14 at 2:35 pm

Typo…
Price to Book value to buy these shares 1.62%

Should read 1.62 times, not percent

#126 Aggregator on 04.12.14 at 2:45 pm

Well what do you know. Canadian banks don't mark-to-market property values in covered bonds. Link

So, covered bonds (CB) and mortgage backed securities (MBS) are valued solely based on the probability of higher delinquencies — excluding current home values and market liquidity (sales), and presumes the mid-twenty something levered CMHC will have the wherewithal to backstop already insured CB and MBS payments should many defaults happen at once. Where have we seen this before?

Meet hedge fund manager Kyle Bass, who prior the U.S. housing crash was on a mission to discover how banks, insurers and rating agencies were valuing MBS, CDOs and CBS, who later found that everyone assumed home prices would rise and claims would be paid forever in their models. Video

Moreover, for those wondering why home sales are stalling, the reason is simple: Canadian banks are stuffed with uninsured and insured-pooled and unsold mortgages on their books. If they can't offload these mortgages (due to rising yields), they can't free more capital, so they lend less in-house and stop buying mortgages from b-lenders.

This is the core of what drives today's housing market. It's all based on lower funding costs with government backstops to keep net interest margins at a profitable spread, in turn, allowing lenders to offshore risk to global investors. If this cycle stops, which by math, it must, it's game over for housing.

Why game over? Just look at U.S. mortgage origination Q1 volume, and this is with the Fed buying up the entire MBS market: US banks just had the worst quarter for mortgages in 14 years If volume couldn't increase with that kind of intervention, then you can definitely bet there's trouble ahead without more central bank intervention. But what else can the Fed buy when it already owns 90% of all MBS? See the problem now?

Even if central banks intervene again with more QE to lower yields, it would have to be more aggressive (trillions) to get the same effect as prior QEs because today's price levels are higher, meaning everything costs more, so the Fed gets less bang for more fiat money created. And even then, it would do more harm then good as commodity prices break new highs – sending prices on mandatory household goods and services higher, in turn, lowering consumption followed by job cuts and so forth.

We're nearing another inflection point. That is evident in the data. The question is how will central banks and governments act this time now that rates are at the lower bound and there is no crisis or bogeyman to unleash another mass spending program? And even if those measures are taken, what is the cost, how aggressive should it be, and how effective would it be?

We're in uncharted territory here. So be extra careful with where you put your wealth.

#127 espressobob on 04.12.14 at 3:15 pm

#63 Sheane wallace
#111 airhead princess

Sector ETFs & individual stocks are in fact a ‘rookie mistake’. Actively managed mutual funds are even worse! How would you know in advance which ones will outperform? And for how long? Most don’t!

Index investing may be boring, but it beats the hell out of market timing & stockpicking the vast majority of the time!

#128 Shawn on 04.12.14 at 3:27 pm

BAITING the Fractional Reserve Alarmists

Those who think fractional reserve lending is some kind of scam and who sound the alarm about it always point out that when a bank makes a loan it simply credits a deposit account (liability of the bank) and debits a loan account (asset of the bank) which right there costs it nothing. They also point out that if the loan is spent it will get re-deposited into some bank and ultimately the same dollar loaned out 20 times.

They do forget that the first bank has to have that cash when the loan is spent by the borrower.

And they forget this fractional reserve also creates 20 deposits on which interest must be paid. Except that today the interest rate might be zero%.

Well, what are they waiting for but to buy bank shares?

And if they don’t like borrowing from banks why not try their Mommy or maybe a loan shark?

The bottom line is banks are good and fractional reserve lending is good. Good for borrowers, bank owners and good for the economy.

AND, gives doomers something to complain about.

So it’s ALL good.

#129 Shawn on 04.12.14 at 3:33 pm

Mortgage Backed Securities

Aggregator, Wells Fargo has about 10% of its assets in Mortgage Backed Securities.

One of the great ironies about the toxic mortgage backed securities in the U.S. that had high defaults is that the banks themselves owned tons of these. They were considered zero risk by regulators which to some extent forced banks to hold them.

But if the banks themselves really thought they would default they would not have held them.

Banks were major victims of the financial crisis. (When dead beats refused to pay their mortgages)

Also aggregator, mark to market is WAY over rated. In fact it is a concept that has run amuk in the accounting world. It means a house is worthless if it can’t be sold tomorrow. It can lead to ludicrous results.

#130 nonplused on 04.12.14 at 3:41 pm

Hey Garth, just enjoying a beer at the airport here in the big stench as I have a bit of a layover. What a disaster, Swiss Chalet is the best place to get a beer before going through security. The big stench has no priorities. Oh well, I like gravy.

Anyway my point is I am coming through from the US where I have been working as a consultant on a TN Visa (Thank you free trade!!!) Good thing too because the jobs are scarce back in Calgary, as the gas part of oil&gas shrivels up. So expect Calgary to lead the wave down, as they always do when energy prices fall.

That’ll be the tipping point, just like in 1981.

#131 EmpCod on 04.12.14 at 5:50 pm

@ #106 T.O. Bubble Boy on 04.12.14 at 11:21 am
If people aren’t maxing out on the current HBP to buy houses in Quebec, why would they need this new plan?
———————————–

The way I understand it, you get a tax refund when you put money in the new plan, but you don’t get taxed either when you take it out to buy a house. If that’s the case it’s strictly better than a RRSP. We’ll have to wait to see the details.

#132 Victor V on 04.12.14 at 7:02 pm

Almost 50 and almost $500,000 in debt means couple’s early retirement dream will have to wait

http://business.financialpost.com/2014/04/11/almost-50-and-almost-500000-in-debt-means-couples-early-retirement-dream-will-have-to-wait/

#133 sheane wallace on 04.12.14 at 7:03 pm

That was amusing. — Garth
………………………………
Some parts or the whole of it?

It is undeniable that:
1. US market did run ahead and is worse as P/E that remaining major markets except maybe Japan but they have a bigger fish to fry. So other markets are more attractive.
2. US dollar index has consistently declined vs basket of currencies that are inflated themselves.
3. Fiscal situation in states is dire.
4. Markets are manipulated by fiscal and monetary policies and rigged by major players and governments.
JP Morgan paid 20 billions in fines this year in fines – London whales, Libor, CDSs, now there is investigation for precious markets manipulation, manipulating energy markets in California, the list is endless. No one in jail.
5. US openly acknowledged in 2009 currency swaps for 400 billion dollars with sole purpose to prop the dollar.
6. There are mysterious buyers of US government debt emerging from Brussels that buy 50 billions a month now after Chinese stopped buying and actually start selling US bonds.
7. Food inflation in the states is 20 % since the beginning of the year. Gas at 1.38 in Toronto today.
8. MSM keeps proclaiming US bonds as high quality collateral and safe heaven which they are not. If they were and the economy was fine the fed would not need to buy 4 trillion of these and to continue maintaining ZIRP.

I understand your desire not to rock the boat but the boat seems to be sinking.

You clearly do not advocate for investing in US government bonds. Who would?

What is particularly troublesome is the blatancy with which the markets are manipulated.

#134 Aggregator on 04.12.14 at 7:40 pm

#130 Shawn

I feel like ranting today.

Wells Fargo has about 10% of its assets in Mortgage Backed Securities.

Correct! And who bought their securities to help clear their books? The Fed Chart And where are Canadian banks running to now to help offshore those mortgage securities they can't sell? The BoC and the Fed Link ( also see self-securitization in FSB's Global Shadow Banking Monitoring Report 2013)

It's not hard to understand Shawn. If there is a buyer of last resort that will guarantee a price for any loans major bank issue, then yes, banks will earn profits, but at the same it will diminish NIMs to a point where making a loan or maintaining a sizeable mortgage operation is not worth it. Hence the drop in mortgage originations and Wells Fargo slashing more mortgage jobs.

Then you have mortgage insurers; private and public that are all insolvent without government support. Look at this latest loot grab from Genworth: Genworth prepares for 2014's biggest IPO to date

US financial services giant Genworth Financial has launched the initial public offering of its Australian mortgage insurance business, The Australian Financial Review's, Street Talk column has reported.

First for those who didn't know, Genworth Canada is more then 50% owned by their parent company, Genworth Financial USA, of which General Electric (GE) is a majority shareholder. GE pretty much owns the government and has been milking taxpayers since it was bailed out in during the great depression and every other crisis since then. Therefore, what GE wants, GE gets.

Now down under to Australia — Genworth Financial's next taxpayer bailout target, where the discussion over the last year has been whether to adopt a housing system like Canada to fund banks with never ending government-backed insurance and guarantees to keep Australia's reckless home price winning streak from collapsing. You can read about how Australian financiers just love Canada's socialized housing policy — they want more, and Genworth's right in there to grab the loot: Mortgage & Finance Association of Australia

This is all crisis management to save companies and banks that would have been bankrupt decades ago if rates and premiums were priced by private markets. Look what F did that pecker: very quietly under the radar, he gave back Genworth Canada's (General Electric really) collateral that was suppose to be held in The Government Guarantee Fund for taxpayer's 90% backing, in exchange, Genworth would pay a marginal higher premium to Her Majesty for the risk. In other words, another can kicking scheme to buy time. Over to you now Oliver.

But if the banks themselves really thought they would default they would not have held them.

U.S. banks didn't think they would default because they assumed bundles of securities could always be sold in the marketplace, and if worse comes to worst, insurers would still provide insurance on those securities, or as Bernanke put it, to paraphrase: banks were "overconfident" that there was sufficient backstops. Then came the day…

[M]ark to market is WAY over rated. In fact it is a concept that has run amuk in the accounting world. It means a house is worthless if it can’t be sold tomorrow. It can lead to ludicrous results.

I hear this nonsense all the time. As if RE value is objective, when its value is subjective.

What happened in 2008 when sales plummeted and banks couldn't even estimate the value of foreclosing homes bundled in securities? How is it, that, all that granite and renovation spending invested in homes — all of sudden within months was viewed as worthless? No bids. What do you tell senior MBS and bond creditors' lawyers what their underlying assets are worth when the value of assets were priced at origination, modeled on perpetual payments and now there's no sales to base property values on?

That's when everything breaks down, because the 'new' system wants everyone to believe the business cycle is linear, when every data point in history shows that markets are non-linear, guaranteeing that major crises can never be avoided, and even worse, each oscillation gets larger and larger with every bailout, pretty much assuring the next one will dwarf the 2008 GFC.

How does RE price discovery work?: The total value of Canadian homes is $3,727,853,000,000 as of Q4 2013 (StatsCan). What determined the value of those homes in 2013? $175 billion in dollar volume transactions (CREA), meaning, the RE market place commands $3.7 trillion worth of all assets with only $175 billion dollars. That also means that it only takes 5% of buyers bids to revalue total household's RE assets. If that doesn't make you uncomfortable, it should.

Now what do you suppose happens when that 5% gets spooked or loses confidence, while 80% of mortgage credit sits on the Big Five's balance sheet? That's right. Home prices crash. Only this time, they can't lower rates 400 or 600 beeps. Which is why government and banks focus on promoting confidence and perpetual lending to any willing buyer to keep the populous moving in an upward linear fashion, or better said, thinking prices always go up.

Gone are the days that for every seller there must be a buyer, whereas today, where savings are nil, it is for every seller there must be a willing lender and a government to insure that transaction.

Everything is controlled. That's what people should worry about.

#135 scibadubadeebumbado on 04.12.14 at 7:51 pm

Our good government knows how many times we wrap our junk in rubber before sex.
Did anyone ever wonder why they choose not to tell us how many properties are owned by foreigners.
It is clear that Hot money is a problem in all countries of the world. This money moves quickly. from country to country. It creates and deflates bubbles in Currencies, Stock Markets and Property all over the world. The fact that our government is silent on the issue is testament to the fact that they are asleep at the wheel. Perhaps they are embarrassed to admit they are too neophyte to handle the problem.
The hard-assed government in China isn’t too shy to deal with Hot Money. They have many tough provisions in place and wield a large stick when it comes to Hot Money. You can bet the Bubbles in place in China are there for purposeful reasons, right or wrong. They know what is going on, unlike the tenderfoot amateurs we voted in.
http://www.vancouversun.com/opinion/columnists/Barbara+Yaffe+Absence+data+Vancouver+real+estate/9729419/story.html

#136 straight six on 04.12.14 at 7:51 pm

re 116 scibadubadeebumbado
xenophobia rocks!

A municipal report this week revealed 71% of all the houses in the region are only affordable to those who earn at least 20% more than half the population.

translation: if you’re one of a multitude of gov workers, which includes highly skilled pie cutters working for BC Ferries, you qualify!

#137 The Patient on 04.12.14 at 8:02 pm

#79 wrote:

Premium gas $1.63 in Vancouver. Regular at $1.48.

Yep. No inflation. Worry about deflation.

Biggest scam put forth by bankers and ALL financial advisors. Deflate the currency, pump up the stock market….and “worry about deflation”…
===========================

It’s an amazing fib that never gets seriously challenged, I agree. Blame financial illiteracy. I think at one time a few years ago F was keen on addressing that. Dunno whatever happened to that effort. Garth helps but we need a serious federal effort. Why isn’t there one? Especially these days…

Wilful ignorance is afoot big time.

P.S. Gas here in Toronto is 129/1.36/1.33 reg/super/diesel.

#138 Retired WI Boomer on 04.12.14 at 8:04 pm

SHAWN 123, 29, 130

WHAT are you doing? It is much better for investors to invest, and for the dormers to doom. The dormers put their savings into WFC at low rates so other consumers can borrow that cheap money at higher rates, which boosts returns which enhances my dividends, which pushed up share prices for me -the stock owner.

Do you WANT these idiots to begin to get wise? WE need “fear” that everybody is going to lose their investments, so they put more ‘safe’ money into piddling payout savings vehicles. Do we want them to get smart, or rather be stupid?

I vote to let them stay stupid, e will be better off in the long run. Thanks for thinking.

#139 T.O. Bubble Boy on 04.12.14 at 8:04 pm

@ #132 EmpCod on 04.12.14 at 5:50 pm
@ #106 T.O. Bubble Boy on 04.12.14 at 11:21 am
If people aren’t maxing out on the current HBP to buy houses in Quebec, why would they need this new plan?
———————————–

The way I understand it, you get a tax refund when you put money in the new plan, but you don’t get taxed either when you take it out to buy a house. If that’s the case it’s strictly better than a RRSP. We’ll have to wait to see the details.

—————————

Yes – that’s what I read… it would be just like a RRSP, except ONLY for savings that go to buying a house, and $5000/yr x 10 yrs for everyone (i.e. contribution limit not tied to income).

The part about “not getting taxed when you take it out” is the same as a RRSP… assuming that you can pay 1/15th of the withdrawal back into the RRSP each year. The only time you get taxed with the HBP is if you refuse to contribute that small amount back into the RRSP over 15 yrs.

#140 scibadubadeebumbado on 04.12.14 at 8:05 pm

#121 deadmountain on 04.12.14 at 1:35 pm

More Vancouver xenophobia. Ugly, as usual. — Garth

Xenophobia that’s the newest trendy word used to silence anyone who thinks there should be limits on immigration.

Immigration is not the problem. — Garth

Deadmontain: Garth is right about this Immigration is not the problem… it is immigrant and non immigrant Hot Money. When they buy a house in this country they simply create a false shortage of housing that will simply crash if they ever turn off the immigration or Hot Money taps. Meanwhile your basement dwelling kids can’t afford a home because the prices have been bid up by non – residents and immigrants (who are unnaturally wealthy above our average wealth quotient.) Housing should not be a Futures commodity to be traded up and down like the stock market. There are some things that are here for our lives. Property is a precious resource for those living here locals and immigrants who LIVE in the community. The foreign investors should be investing in business and production of things we need. Not edging us out of our domain.
http://www.irvinehousingblog.com/blog/comments/houses-should-not-be-a-commodity/

The majority of properties changing hands in Vancouver are bought by locals, from locals. Let’s lay blame where it belongs. — Garth

#141 Smoking Man on 04.12.14 at 8:28 pm

How does one cure the mother of all hangovers…..

Hum now let me think…..?

No idea what my bar tab at Pravda was last night, just happy that my credit card was in my wallet..

Good news is two no brainer 4 of a kind at Seneca on ten dollar anti..

Party time tonight at Seneca. Need to lose a grand so I don’t need to declare it at the boarder..

One shot, black or white on rullet..?

#142 Sheane Wallace on 04.12.14 at 8:28 pm

#138 The Patient o
P.S. Gas here in Toronto is 129/1.36/1.33 reg/super/diesel.
………………………………………
I did fill regular/87 today in Toronto, it was 137.9.
Stop lying.

#143 scibadubadeebumbado on 04.12.14 at 8:33 pm

The majority of properties changing hands in Vancouver are bought by locals, from locals. Let’s lay blame where it belongs. — Garth

It is true that most properties are bought and sold by locals but it only takes an extra 10% from outside the local market to send it spiraling upward.

There is no evidence supporting that statement. — Garth

#144 Shawn on 04.12.14 at 8:42 pm

I feel Like Helping People Get Rich

Aggregator at 135

130 Shawn

I feel like ranting today.

******************************************
Rant, all you want.

Meanwhile I feel like getting Rich everyday and helping others do the same.

I have made at least $100k profit on U.S. banks in the last couple of years. Just check the price charts.

To each his own.

#145 Old Man on 04.12.14 at 9:02 pm

I have no idea what the banks are doing today, but will tell you what the Trust Companies did with their funded NHA insured mortgages. They packaged and sold them to whoever and maintained all the portfolio administration. NHA mortgaged are backed with a government guarantee, so who is on the hook; the taxpayers not the Trust Company.

#146 Smoking Man on 04.12.14 at 9:06 pm

Words I hate, like finger nails on a black board.

Safety
Risk Free
Appropriate behaviour
Hedged
The

#147 Shawn on 04.12.14 at 9:30 pm

You Can’t Fix Doompid

A doomer / conspiratist-alarmist said:

There are mysterious buyers of US government debt emerging from Brussels that buy 50 billions a month now after Chinese stopped buying and actually start selling US bonds.

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

Sorry to interrupt with facts but the Chines are listed at having increased their par value holdings of U.S. bonds in the latest month.

http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt

Admittedly China did reduce holding a bit in December. Maybe they had Christmas shopping to do. It takes a lot of money when you have a billion people on your list.

And yes it is true that Belgium (the country and /or other Belgian buyers) did buy about $50 billion in each of December and January.

Not sure how any of this proves the U.S. dollar is under much threat.

But pretty sure this is not relevant to the job at hand, getting rich(er).

#148 Infused with Opiates on 04.12.14 at 9:41 pm

133 Victor – nice problem

#149 Son of Ponzi on 04.12.14 at 9:43 pm

#130
But if the banks themselves really thought they would default they would not have held them.

Banks were major victims of the financial crisis. (When dead beats refused to pay their mortgages)
———————
So now, the banks are the victims.
How about moral hazard?
To big to fail, my ass?
In Canada, without CMHC, the banks would ask for 30% down and charge about 6% interest on a mortgage.

#150 Andrew Woburn on 04.12.14 at 9:45 pm

Very informative background article on High Frequency Trading

“The Real Reason the Stock Market Is Rigged”

http://econintersect.com/b2evolution/blog3.php/2014/04/10/the-real-reason-the-stock-market-is-rigged

#151 Smoking Man on 04.12.14 at 9:45 pm

DELETED

#152 Ronaldo on 04.12.14 at 9:47 pm

Shawn, I know that you will agree with Rhys on the following issues since you and Warren both agree that the rich should pay more taxes including yourself. It seems that Mr. Flaherty had second thoughts on some of these former promises.

https://www.broadbentinstitute.ca/en/blog/other-costly-tax-break-rich

http://democraticvotingcanada.blogspot.ca/2014/03/tax-free-savings-account-whopping-tax.html

#153 Old Man on 04.12.14 at 9:50 pm

#143 Sheane Wallace – two gas stations in Etobicoke were selling all day long at 128.9 and a couple in the east end as well.

#154 Son of Ponzi on 04.12.14 at 9:55 pm

The majority of properties changing hands in Vancouver are bought by locals, from locals. Let’s lay blame where it belongs. — Garth
———————
A majority is 51%.
So 49% of RE transactions by offshore investors is quite substantial.

But under 10% is less so. — Garth

#155 Smoking Man on 04.12.14 at 9:57 pm

Why did I do this, do I want to see so poor bastard made into a pancake… No I made sure there was stopping distance…

I wanted to see Who was the biggest risk taker…. It was George, he got some luck and a taste of loot, he went for it…

Out of the gang of the hard dones
George will out succeed them.

He risked….

From my prospective, he could have been flattend, song over, not a bad out come if you where in his shoes.

Now he gets to bye drugs or booze and lesson the pain.

I should get a noble prize….

#156 just an observation on 04.12.14 at 10:03 pm

#87 Nemesis on 04.12.14 at 4:39 am
#LastWords #Masters&Commanders #♥FarSideOfTheWorld #DiptychParables

http://youtu.be/6oyQGHHz8U8

“Arrrrgh, me SaltyDogz… FarFarEasier it be to talk like a Pirate… than live like one… Yet, if ye practice – ye can do it. ‘N don’t be forgettin’ – jeopardy is not only for the Captain… but for the whole LoyaleCrew, MeMateys. Adventure beckons! Aye, and for them that lives to tell the tale, there be Medallions… & BounteousTreasures beyond your wildest dreams… Arrrgh!”

[ScrubTo: 05:20/SequenceEnd: 07:53]

http://youtu.be/yC_PR7YWQOc?t=5m20s

Me- Why do you write like this.
Are you having a continuous stroke ???

#157 Smoking Man on 04.12.14 at 10:29 pm

Picking plack off your teeth while inserting yourself into a booth with about 10 20 something estrogen ingorged females is not cool.

Why, I need challenge in my life…

#158 Vancouver RE agent on 04.12.14 at 10:36 pm

Vancouver RE is heating up folks. The sooner you realize that the better. The time to get in is now. Price doesn’t matter. As long as you can make monthly payment it is all good. With 10% a year GUARANTEED by the government appreciation of RE you cant loose. I became a millionare at 27 by just buying a house , living in it for a bit and then selling it. It is that simple folks. Interests will continue to slide. I see sub 1% interest rates in Canada in 2016. And the end of Vancouver 1M house is not too far out.

#159 Smoking Man on 04.12.14 at 11:03 pm

Why would you delete 152 is it like a habit of Fridays and Saturdays..

Gartho get off the pain killers before it’s to late…

Hammered at the bar, got a Scottish accent going….

It’s working, ha I love life

#160 sciencemonkey on 04.12.14 at 11:04 pm

Regarding the discussion on whether the TFSA only helps the rich: what percentile income do you need to earn to be able to max it? Especially if you decide to take on the expense of procreating? Probably at least 75th percentile.

Instead of the TFSA, why not introduce tax brackets for investment gains? This would help the smaller guy while preventing the ultra rich from paying really low overall tax rates.

#161 cowtown cowboy on 04.12.14 at 11:19 pm

#133 Victor V on 04.12.14 at 7:02 pm

Almost 50 and almost $500,000 in debt means couple’s early retirement dream will have to wait

Assets of 2.15 million and liabilities of 500k…. IDIOT

#162 brainsail on 04.12.14 at 11:24 pm

Gas Prices…

A lot of talk about gas prices today. We live in Austin TX and I paid $3.26 US gallon to fill our tank today. US gallon is equal to 4 liters but about a cup shy. You people are paying about $5.50 or more for the same. Alberta has all this oil that they can’t get to a market. You are paying 50% more. Where is the money going? Government taxes?

#163 Sheane Wallace on 04.12.14 at 11:54 pm

#154 Old Man on 04.12.14 at 9:50 pm
#143 Sheane Wallace – two gas stations in Etobicoke were selling all day long at 128.9 and a couple in the east end as well
……………………………
Probably,

My daughter also got 2 cupcakes for free from Lablaws as they messed up the price. Free cupcakes in Toronto, everyone!

#164 Chief Keef on 04.13.14 at 12:32 am

Mind providing some stats to back up your statement
The majority of properties changing hands in Vancouver are bought by locals, from locals. Let’s lay blame where it belongs. — Garth

#165 KommyKim on 04.13.14 at 12:33 am

RE:#118 World According To Garth on 04.12.14 at 1:11 pm
Harry Reid and his buddies getting fracking rights and building a Chinese owned solar farm…

Sounds like good old Capitalism to me.

#166 sciencemonkey on 04.13.14 at 1:16 am

Teacher smoking man

http://cheezburger.com/59903233

#167 Andrew Woburn on 04.13.14 at 1:28 am

Sneaky Chinese refuse to admit they plan to smash the US dollar with a gold-backed yuan by next Wednesday.

“To make the yuan a global reserve currency, Huang [of Beijing University] said the mainland must have a continually growing economy, further liberalised trade and investment, a sound legal system, a stable and accountable political system, a deep and liquid enough financial market and good institutions that investors had confidence in.

Zhang said he was “not that optimistic” about the yuan’s prospects of becoming a global reserve currency any time soon.”

http://www.scmp.com/business/money/article/1475607/yuan-decades-away-being-global-reserve-currency

#168 World According To Garth on 04.13.14 at 2:44 am

Take this as the shape of things to come. Govts around the world are corrupt and greedy and only think of themselves and their fat salaries, pensions and benefits.

Well guess what……ARMED pissed off American patriot men and women who ran the risk of being SHOT by thuggish fascist govt workers….won today.

And you aint seen nothing yet folks. Go back to your Canucks and Starbucks now.

http://www.dailymail.co.uk/news/article-2603026/Senator-speaks-favor-Nevada-rancher-militias-join-battle-federal-agents-accused-acting-like-theyre-Tienanmen-Square-fight-disputed-ranch-land.html

If you really think ths was about back fees and reptiles you need to stop cherry picking articles and actually read the facts.

#169 Just Sayin on 04.13.14 at 3:31 am

You mean this Trillion dollar safety net…

Boomers stand to inherit approximately
$1 trillion over the next twenty years

http://www.bmo.com/pdf/mf/prospectus/en/09-429_Retirement_Institute_Report_E_final.pdf

There will be no crash in Canadian real estate until they devour this entire pie first…

After all , Home ownership, GIC’s, health care and hockey are what makes us all Indebted Canadians fell safer…

Doesn’t it?

#170 Steve French on 04.13.14 at 6:42 am

smokey’s hitting the bottle hard folks !!!

#171 rosie "moving forward" in the knowledge that, "this won't end well" on 04.13.14 at 7:44 am

But we need the space.

http://www.salon.com/2014/04/13/let_them_eat_mcmansions_the_1_percent_income_inequality_and_new_fashioned_american_exess/

#172 maxx on 04.13.14 at 8:19 am

#22 johny on 04.11.14 at 7:08 pm

Yes indeed….with second-hand stores and charity shops that charge no tax packed to the rafters. Bargains abound. Examples- Louis Ferraud sheared mink jacket in perfect condition: $10.00 (retail (checked it): $5,000). Heeled Crocs: $1.00. Portable drafting table with wired sliding ruler in mint condition: $5.00.
Once you taste the sweet nectar of mega-bargains, even low-end retail seems expensive. Brilliant quality and far better prices.

#173 T.O. Bubble Boy on 04.13.14 at 9:48 am

$900k House of the Day for Sunday

3 Finalists:
1) Tear-down rental house on the side of the Don Valley Pkwy
2) $989k house on the wrong side of the “up and coming” Junction / Stockyards area
3) $895k 20-ft wide dumpy Semi down Queen St. W (yes, I broke the $899k-$999k rule already)

WINNER:
I have to go with #3, even though it is listed $4k under my initial range to qualify for the “900k House of the Day”. Dumpy semi-detached houses are far worse than Dumpy detached houses, since detached can typically be torn down and re-built (i.e. someone could justify buying it for the lot).

#174 Daisy Mae on 04.13.14 at 9:55 am

#124 Dr Talc: ‘But he was told. I know that.’ Garths’ quote.

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

No one makes a move without Harpers’ permission. He makes all the decisions. But, as Old Man says, if decisions don’t sit right politicians can always cross the floor….

#175 Dean Mason on 04.13.14 at 10:11 am

Watch the PBS program NOW and look up their archives under 2005, August-26-2005 program date.

You will find separate video and audio files that is about the U.S. real estate bubble being a real possibility coming soon and the boom times likely are going to be over.

The U.S. National Association of Realtors report that week of August-26-2005 showed the U.S. real estate boom times and prices may have peaked.

We all know what happened about 2 to 3 years later. Some U.S. cities saw their real estate prices decline as much as 70% to 75%.

The average national real estate price declines in the U.S. was about 32% when it was all said and done.

Our real estate boards here in Canada will never even attempt to admit that 2 to 3 years ahead of a likely Canadian real estate correction of 10% to 15% or a real, real estate prices bust of 20% to 30% on average across Canada.

They are doing the opposite and holding on to the last months to years of the most manipulated, artificial, 18 year Canadian real estate boom pushed and held up by a 65% to 70% decline in 1-5 year fixed rate closed mortgage rates, 10% to 3.00%.

#176 Infused with Opiates on 04.13.14 at 10:46 am

161 Sciencemonkey – TFSA limit is not dependent on income. From a percent standpoint, it benefits the small investor much more than the rich.

Investment income has tax brackets like other
income.

#177 Old Man on 04.13.14 at 11:00 am

The gas watchers in central Toronto are on patrol en mass as they know you are being hooped at the pump.
Lots of reports are coming in as the cartel is active looking for fools. Late last night on my other watch site a couple of independents dropped the price way down so you missed out. There are reporting sites for everything watching Big Brother all across Canada. I never take out my car without checking in for the Cop Watch as updates are made where the speed traps are located; thus no speeding tickets for me.

#178 EmpCod on 04.13.14 at 11:13 am

@ #140 T.O. Bubble Boy on 04.12.14 at 8:04 pm
The only time you get taxed with the HBP is if you refuse to contribute that small amount back into the RRSP over 15 yrs.
————————————

Whether you recontribute or not back in the RRSP is irrelevant. Money inside an RRSP will be taxed at some point in the future. So the REP will be strictly better if money taken out is never taxed.

#179 shawn on 04.13.14 at 11:44 am

Debt Nazi much?

Cowtown Cowboy at 162 said:

Assets of 2.15 million and liabilities of 500k…. IDIOT

*****************************************
A LOT of people would love to be that dumb.

If serious, this comment suggests a zealous anti-debt mentality.

Many smart people have leveraged debt to become wealthy.

#180 shawn on 04.13.14 at 11:52 am

Bad Advice

I read the financial advice to the couple at 50 with $2.5 million assets and $500 k debt. (link at 133)

I’d take advice from the couple before I would from the planner. The planner (who “coincidently” sells financial plans) is aghast that the couple has no “plan” and attributes their success to luck.

They have got 10 years to deal with the debt. And debt backed by SUBSTANTIAL disposable assets is a far cry from debt that MUST be paid from income.

The couple are obviously savers and investors. They will do just fine.

#181 Old Man on 04.13.14 at 11:58 am

Lambert Gas at Dundas and Roncesvalles in Toronto south is reporting 129.9 – hurry to fill up. :)

#182 Snowboid on 04.13.14 at 12:20 pm

A study in RE excess…

“Let them eat McMansions”

http://tinyurl.com/EatMcMansions

#183 Snowboid on 04.13.14 at 12:23 pm

#178 Old Man on 04.13.14 at 11:00 am…

Funny thing is gas today in Phoenix (at the Costco we use) is all of about .79 CAD per litre (3.27 US per US gallon)

And even then the Phoenicians are complaining about their high prices!

#184 Ronaldo on 04.13.14 at 12:33 pm

#180 Shawn –

”Many smart people have leveraged debt to become wealthy.”

Exactly. One that comes to mind is Jimmy Pattison who is currently estimated to be worth 9.5 billion. Not bad for a guy who started out as a used car salesman. The key to having debt is whether it’s good debt or bad debt. I taught both my sons early in life about leverage and debt and how to make it work for you. Both today are very successful and wealthy business people. It’s been a great pleasure to watch their progress along the way. Neither went to university. What do you think of that Smoking Man?

#185 World According To Arth on 04.13.14 at 12:34 pm

#166 KommyKim on 04.13.14 at 12:33 am
RE:#118 World According To Garth on 04.12.14 at 1:11 pm
Harry Reid and his buddies getting fracking rights and building a Chinese owned solar farm…

Sounds like good old Capitalism to me.
———————————————–

It’s fascism when SENATOR Harry Reid is involved. Please go look up the definition.

#186 World Traveller on 04.13.14 at 12:38 pm

Whats with all the gas price talk, is it set to go up dramatically? I’m here in Europe where it is always expensive. Thank God for diesel.

#187 Aggregator on 04.13.14 at 1:05 pm

Based on my per capita estimates, BC household debt-to-GDP surpassed 100% in 2013, the first of all provinces. Chart That means to produce $1 of provincial GDP, BC households must contribute $1 of borrowing.

#188 juno on 04.13.14 at 1:56 pm

More flooding in ontario. Man I bet those Fk-er’s/ Wished they were renter….

Too bad so sad!

#189 shawnEdmonton on 04.13.14 at 2:21 pm

This really must be the new normal. The result of a few things.

1. New interventionist attitude of governments in the world. ( Prop up prices at all costs, bailouts )

2. The invention of quantitative easing and the ability to do it conveniently with electronic banking balances.

3. Mass immigration. ( Not to blame immigrants, but it is one factor on the list )

4. Rise of the internet. As soon as anyone lists a property, anyone, anywhere can see it, and bid on it, and even have it managed by a company and talk to the property manager over the internet.

5. Extreme keynesianism, and neoliberalism.

#190 Ralph Cramdown on 04.13.14 at 2:45 pm

#181 shawn — “I read the financial advice to the couple at 50 with $2.5 million assets and $500 k debt. (link at 133) […] The couple are obviously savers and investors. They will do just fine.”

They’re going to finance my standard of living through their dumb mistakes and apathy. $1mm in investment assets, all in one RRSP = high taxes in retirement. And he doesn’t know what it’s invested in. $500k in a LOC which (given their attitudes and knowledge) was likely at least partially used for consumption rather than investment in taxable assets, making the interest non deductible. A supposedly $100k trailer “and lot” but a $300/mo pad rental fee.

However nice this couple’s retirement and legacy may be, it has been accomplished entirely by high income and frugal living rather than prudent investment or tax avoidance. The last smart investment decision this guy made was ticking the box to maximize his employer-matched RRSP contributions.

#191 Jim on 04.13.14 at 4:01 pm

# 184 1 US Gal = 3.75 Liters…about 87 cents a liter ?

#192 shawn on 04.13.14 at 4:46 pm

Rich People’s Problems

Ralph notes:

$1mm in investment assets, all in one RRSP = high taxes in retirement.

****************************************
Still, it’s a problem others would like to have.

We are on pace for dual million dollar RRSPs (currently at $1.1M total) and (dare I say it?) dual pensions (I better not mention the kind of pensions).

We will face high taxes in retirement. As it should be.

We’ll gladly make sure your supplement is paid if you need it.

#193 Clueless About YYC Income Growth on 04.13.14 at 5:50 pm

#41 CowtownKooks

$818K you say? Yeah, about that, there are many inner city infills in the $599K to $650K range. You’re the kook. Quit walking around with your eyes closed. Life’s more fun when you don’t keep walking into walls.

#194 Clueless About YYC Income Growth on 04.13.14 at 5:54 pm

#131 nonplused

Jobs are scarce in YYC? Could have fooled me. I just came back from a multi-year stint stateside on a TN Visa just because the job market here was so damn hot. When companies compete to have you in their employ, that’s not a sign of a weak market. That’s called labour deficit. 40,000 people per year moving to Calgary to collect pogey? I doubt it, bub.

#195 ShaanEdmonton on 04.13.14 at 8:13 pm

Iconoclasm, nice word I had to look it up. I think this word can also be used to describe the modern politically correct.

#196 Snowboid on 04.13.14 at 11:33 pm

#192 Jim on 04.13.14 at 4:01 pm…

I’m so used to calculating exchange the other way I did it wrong.

$ 3.27 US is about $ 3.56 CAD or .943 CAD a litre!

My bad.

#197 Maelstrom on 04.13.14 at 11:58 pm

http://mobile.nytimes.com/blogs/dealbook/2014/04/12/thought-secure-pooled-pensions-teeter-and-fall/?emc=edit_th_20140413&nl=todaysheadlines&nlid=45478530

#198 Carry on 04.14.14 at 3:58 am

Market goes up and down, you can guarantee people will buy at the top and sell near the bottom when this settles down.

Renting avoids alot of those risks and thats what I am doing!

#199 Aggregator on 04.14.14 at 9:46 am

Read OSFI's peer guideline review here, and when you're done read post #127 and #135 for a full explaination of what's really going on.

"Boy, that Timberwolf was one shitty deal"

#200 Aj on 04.14.14 at 12:40 pm

Looks like I am in that lowly 14%. Ouch.
And here all my friends berrated me over and over in the last 3 years about not buying a home.
I guess that means I can only look forward to taking advantage of my idiot peers soon.

#201 Aj on 04.14.14 at 12:47 pm

@ #110 OttawaguyRenting
Want to see signs? Check out Hazeldean across from the Petro Canada/Hazeldean Mall. There is a strip in front of some condos with atleast 10 For Sale/Rent Signs.
If buying meets your fancy, check out Terry Fox at Fernbank. Late last week we had those high winds which knocked around a few shingles (ok a lot of shingles) off numerous of those new cookie cutter homes. One was so bad, that there were strips of exposed plywood. That was the house that promptly put up a sheet over thier backyard fence mentioning “This is a Monarch”. Given that they’ve errected atleast 150 homes in blackstone across the street, it really has made me nervous as to the quality – more so after the weekend.

#202 nomad on 04.14.14 at 5:38 pm

Our agent told us during the winter that a lot more 2 bedroom condos would be listed in the spring (Toronto), but little is coming up (check High-Park). Those that come up are underwhelming value-wise.

Why so few listings? Is it that people are satisfied with their places? Those that get listed do get sold (for more). Confused.

#203 nonplused on 04.14.14 at 10:35 pm

#195 Clueless About YYC Income Growth

Well I guess ‘scarce” is a relative word. YYC is probably still a better job market than most in Canada, but it’s not like it was even a few years ago. Gas prices suck, and it’s causing a lot of capital budget cuts. Oil is still ok, but even that isn’t what it was with the differentials so high. There are a lot of people on the street. Even the banks are dumping whole trading floors.

Eventually the “trickle down” will get to everybody else.

My line of work is fairly specialized. The sort of company that will employ me is generally fairly large, uses computers extensively to track their business, and has trading operations. In Calgary that line of work sucks right now but it’s coming back in the US. But if you are a welder I understand times are still good for now. But it won’t last. Big companies don’t do 20% layoffs and then increase the amount they are spending in the field. 2014 will be the service industry’s disaster year.