Nobs and tubes

 

MERCEDES modified

Above: Mike was walking his dog in Ottawa and came across this. “They are offering a 3-yr lease to the first twelve people that purchase a condo worth $300K or more,” he says.  “I checked Mercedes web site for a lease on a 2014 base model CLA and it suggests monthly payments of $399.21. Total value not accounting for time value of money is $17,801.56. This works out to a maximum 6% “reward” of the purchase price of the condo. I’ll stick with the dog. She will make me happier.”

Now, the latest mortgage news. The 2.99% special is no more, at least at BeeMo, the naughty little bank that loves debtors. On Tuesday Bank of Montreal will announce a jump to 3.29%, thanks in part to the bond market.

It’s still cheap money, of course, but also an indication of real estate torpor. An extreme lack of listings and a frightening puff in prices are dialing back sales in many markets. Some, like Halifax – where deals are down 20% from last year, which were 20% lower than the year before – are a swamp. Others (like Ottawa) are flatlining. Others (Regina) are in a slow slide. Even in hyperventilating Toronto, detached home sales are ahead of 2013 levels, but trail 2010, 2011 and 2012.

Listings have shrunk like manhood in a cold pool. Homeowners hear the media buzz about raging prices and conclude they’d never be able to buy, so why sell? And as fewer homes come to market, the ones that do command more. Presto – inflated values, especially when we have the lethal combination of greater fool buyers and unethical agents.

Here’s an example:

115_glencairn.jpg.size.xxlarge.promo modified

This unrenovated 1930s-era house full of knob-and-tube, in need of a $300,000 makeover, was listed days ago in a high-demand area of North Toronto. On that street (Glencairn), every 30-foot lot is worth about $1 million, and has been for at least a decade. So, this was probably a $1.1 million property, considering that dolled-up equivalents sell for at least one point five.

But for listing agent Bradley Hutton, this was an opportunity to milk an unbalanced market, and in the process make almost a thousand people irritated, while getting his name in the media. So he listed it for $699,000, or about four hundred grand lower than current market value.

The result was predictable. A thousand people made appointments to view it. Adults drooled. There were 72 offers. Eighty per cent of them were for at least seven figures The market value of $1.1 million was pushed higher by sheer competition. The beater sold for $1.366.

So, Agent Hutton succeeded in sucking more than $200,000 extra out of the ‘winning’ buyer with his cattle auction tactics. And he also double-ended the deal, because the buyer was Hutton’s own client – a person he introduced to the property. That means he collects double commission.

Lessons?

When you see something wildly underpriced, don’t even bother booking a showing. This is a technique used by agents who are destined to have short, brutish, lonely careers. The last thing you want to be involved in is a blind auction.

Second, do some research before being swept up in such a circus. Get the comparables on a property before you bid on it, and see what its neighbours or similar houses on the street have commanded recently.

Third, to do that, engage an agent. An principled one. Buyers flying blind into competitive situations almost always end up as emotional wrecks, divorced, neutered, or paying a huge premium for their stupidity. Having a seasoned agent represent you will cost nothing, arm you with facts and experience and hopefully keep you far away from the sleaze.

Fourth, stop looking for real estate (except in Halifax, maybe). This is not the time. Hormone levels are high and inventory’s low. Sellers have been media-whipped into a greedy state. Fools abound who believe this price push is indicative of the months and years to come, and it only takes one of them to ruin your perfectly good offer.

There is a time to buy, and a time to sell. You must choose. Unless you’re Bradley Hutton, and do both.

182 comments ↓

#1 CPG on 04.28.14 at 8:38 pm

 
In March, the Bank of England published an excellent, very clear paper titled Money Creation In The Modern Economy.

It explains how, contrary to what people might think, a bank doesn’t make loans, by taking the deposits of a client and then lending those deposits out. Instead, the bank creates money out of thin air. If you want to get a mortgage for a house, and the bank deems you to be credit-worthy, it puts the amount of money you need into an account. That money in your account becomes a liability for the bank. And the mortgage it now owns is an asset of the bank.

http://www.businessinsider.com/where-does-money-come-from-2014-4

#2 www.totalinvestor.com on 04.28.14 at 8:39 pm

The Canadian Housing Bubble Puts Even The US To Shame

http://tinyurl.com/n3mp67c

#3 Son of Ponzi on 04.28.14 at 8:40 pm

Listings have shrunk like manhood in a cold pool.
——————-
It shrinks?

#4 45north on 04.28.14 at 8:41 pm

Bo-Peep closes!

http://bluffsadvocate.ca/march2014/bopeep.html

#5 LB on 04.28.14 at 8:41 pm

1,000 bookings? SERENITY NOW!!!!

#6 blase on 04.28.14 at 8:43 pm

How about in secondary cities where detached houses in good hoods can be had for less than 3 large? Are those buying opportunities with these crazy low rates?

#7 Nemesis on 04.28.14 at 8:43 pm

“Listings have shrunk like manhood in a cold pool.” – HonGT

HeHeHe…

http://youtu.be/aJyHTr9GN10

[NoteToGT: ColdPool? Try the NorthPacific in January @ 100′ down with 1/4″ ‘wet’ rubber for insulation… Practically qualifies as TransGendered – without the surgery.]

#8 JBird on 04.28.14 at 8:44 pm

If the place was full of knob & tube, how was it insured?

#9 Son of Ponzi on 04.28.14 at 8:45 pm

Talking about applying the double screw.

#10 Jackofall on 04.28.14 at 8:46 pm

Principled agent.

Oxy moron.

Well I suppose owning the cheapest mercedes on the market gives better bragging rights than owning the most expensive ford on the market. Apologies to all the Mustang owners. Lets just hope these Ottawa condo buyers never find out that their neighbor’s tricked out Honda civic is worth more than their Merc lease.

#11 -=jwk=- on 04.28.14 at 8:46 pm

Why do so many GF posters think a crash can’t happen unless interest rates rise? Interest rates were going DOWN when most of the world crashed. USA rates went from 7% in 2005 (start of down fall) to 3% in 2010 (pretty much bottom).

Rates do not need to drop for values to start to free fall. Irrationality works in both directions – on the way up (but now!) and down (we should wait…)

#12 Sparky55 on 04.28.14 at 8:47 pm

“Fourth, stop looking for real estate (except in Halifax, maybe). This is not the time.” – Garth

I’d stay away from Halifax for a while also – listings are way up, but prices are only starting to turn.

#13 Freedom First on 04.28.14 at 8:50 pm

I have come to the conclusion that the majority of Canadians know the value of a million$$$$$$$ only if their net worth exceeds that amount. However, in the U.S. the majority of Americans have learned the value of $$$$$$$, unfortunately, like many other countries, they learned the hard way. We are no different than the Americans, except maybe we are dumber, as we didn’t learn from their mistakes. Canadians are in a housing mania. Americans are watching us in disbelief. Me too.

#14 Son of Ponzi on 04.28.14 at 8:50 pm

Agent Hutton must be related to G.F. Hutton.
“when he speaks, the idiot house buyers listen”

#15 devore on 04.28.14 at 8:55 pm

#12 Sparky55

I’d stay away from Halifax for a while also – listings are way up, but prices are only starting to turn.

Sharpen your pencil, and make an offer.

#16 Aggregator on 04.28.14 at 8:59 pm

Great story. Too bad list prices are still dropping on that street.

Glencairn Ave List Price History (data)

2011
Average $1,363,829
Median $964,400
Standard Deviation $799,169

2012
Average $1,348,885
Median $995,000
Standard Deviation $877,884

2013
Average $1,216,850
Median $964,000
Standard Deviation $697,591

2014 YTD
Average $1,173,713
Median $936,000
Standard Deviation $696,731

#17 Smoking Man on 04.28.14 at 8:59 pm

Tylenol, I’ve been quite today for a reason.

I’ve been sitting on this surfboard on a calm sea since Feb waiting to catch a wave of creativity, nothing for 10 weeks.

Without warning a massive tsunami wave of originally creeps up behind me.

Dude I’m surfing that bitch hard, trying to stay on top of it. It’s not that I don’t like sharing equally with fans and foes on here. Neurons are firing off, visions, voices, screaming at me from all directions. I can’t keep up. Then I see a beautiful wacked out Manon Bay Street today, big hair, Grey beard singing and dancing by himself. Crowds terrified, crossing the street nearly getting run over to get away.

Me just enjoying his show.. Tried talking to him, see if he was high or just wacked. Combination of both me thinks.

But I promised to deliver a book this year.. God damn it I’m going to.

I would like to thank Bob who posted on my blog that he really enjoyed reading in the beginning. That’s all it took to inspire me, plus reading Hemingway and his style, thanks to the dog that emailed me iceberg theory, causing me to do all this research. Which let me know I’m not wasting my time, just because I failed English in grade 11 & 12 doesn’t meen it’s not doable. My teachers passed me only because of my outstanding performances in drama class.

The Books going to be a beauty work of fiction, this pathetic blog and a few characters are in it. Hemingway said, write about things you know and experience.

I live more life in a year than most humans do in a life time.

I’ll see you dogs when the seas are calm… Enjoy the break..

#18 Bill Gable on 04.28.14 at 8:59 pm

“Listings have shrunk like manhood in a cold pool.”

In my best FogHorn Leghorn voice “Stop it, I say stop it, yer’ killin’ me…..”.

#19 Peppered Piper on 04.28.14 at 9:02 pm

Garth–
Have you received any testimonies from buyers who figured out they were fleeced (by overpaying for a property) and are now in remorse?
Besides wanting to feel a bit of schadenfreude (as I wait out the storm and wait to buy), I am curious if there is any regretful hipsters out there who know know their ship will sink eventually.

#20 Joe on 04.28.14 at 9:05 pm

never mind housing….I am confused….So many optimists and buying houses….
Please enlighten me…Personally I don’t see good job market…and economy going….for me is a very stagnant Canadian Economy ……is just scary to take mortgage….
Everyone counting on US economy…..

Looks like everyone working in government area…

Most of the couples, emigrants, non-emigrants just working long hours… to pay the house off…
What a life!!!!! no productive…just surviving…till burned out…..vicious circle…..measure of success,,,,
ridiculous…

#21 Mark on 04.28.14 at 9:13 pm

A few units might still be moving in the higher-end enclaves of Toronto, but there has been quite a noticeable shift in the sales mix. Claims of rising prices need to be taken with a grain of salt, especially against such a backdrop.

#22 mark on 04.28.14 at 9:17 pm

He gets his own client into a bidding war on a property he’s selling on the other end?

I must be a simple man with simple ethics.

#23 Johnny on 04.28.14 at 9:19 pm

Vancouver’s olympic village now sold out.
Zero cost to taxpayers.
https://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&cad=rja&uact=8&ved=0CDsQqQIwAQ&url=http%3A%2F%2Fwww.vancouversun.com%2FAquilini%2BGroup%2Bbuys%2Blast%2Bremaining%2BOlympic%2BVillage%2Bcondos%2Bmillion%2F9784174%2Fstory.html&ei=Ff5eU_ffOsf4yAHmpYCgBQ&usg=AFQjCNFypasPqQpyffv8rBwa-AwwVGBe1g&sig2=ZfgfnZWewktsEBvNeXkDiA&bvm=bv.65397613,d.aWc

#24 Joe on 04.28.14 at 9:20 pm

I am just shocked that everyone says and explaining bad economy because of cold…..The climate didn¸t change suddenly !!! It was always cold in winter….geeeeee…
What a lime excuses….like kids…
I can’t believe it what’s going on….
Are we have smaller brains maybe…..and “they ” can put any shit in it…in a new age…….

#25 Eaglebay on 04.28.14 at 9:24 pm

#1 CPG on 04.28.14 at 8:38 pm

“In March, the Bank of England published an excellent, very clear paper titled Money Creation In The Modern Economy.
That money in your account becomes a liability for the bank. And the mortgage it now owns is an asset of the bank”
————-
A liability to who? The bond holders?
Explain.

#26 Johnny on 04.28.14 at 9:26 pm

#24 Eaglebay on 04.28.14 at 9:24 pm
#1 CPG on 04.28.14 at 8:38 pm

“In March, the Bank of England published an excellent, very clear paper titled Money Creation In The Modern Economy.
That money in your account becomes a liability for the bank. And the mortgage it now owns is an asset of the bank”
————-
A liability to who? The bond holders?
Explain.

Me – I feel your pain.
This is truly a disturbed universe.

#27 Its Shrinkage! on 04.28.14 at 9:26 pm

>#3 Son of Ponzi
> It shrinks?

The Seinfeld episode “The Hamptons” is ranked top-ten on the IMDB

Sample Dialogue:
Jerry, George Costanza: Elaine!

Jerry: Do women know about shrinkage?

Elaine: What do you mean like laundry?

Jerry: No, like when a man goes swimming afterwards.

Elaine: It shrinks?

Jerry: Like a frightened turtle!

Elaine: Why does it shrink?

George Costanza: It just does.

Elaine: I don’t know how you guys walk around with those things.

Some people think that episode has the best George freakout — ever!

You’ll never hear the word ‘shrinkage’ again without smirking.

#28 Nemesis on 04.28.14 at 9:31 pm

#HowStuffReallyWorks #UncleAlbert #ShoeLaces[Couldn’tTieThem] #DropOuts #QuantumMultiVerseOfPoeticJustice

@HommeDuTabagisme/#17

http://www.howstuffworks.com/15-notable-people-who-dropped-out-of-school4.htm

#HotDoggerPower #TheLivingCurl #SurfThatBitch

http://youtu.be/yaFaCcJHSe8

#BonusZen

http://youtu.be/T8__EwAT8VM

#29 Mitts Sheeple on 04.28.14 at 9:32 pm

“….. And he also double-ended the deal, because the buyer was Hutton’s own client – a person he introduced to the property. That means he collects double commission…..”
=========================

….and, fifth, if you find you really must use a REALTURD® never, EVER deal with anyone BUT the listing agent.

The listing agent will do everything in his power, including screwing over his fellow REALTURD® comrades, by forwarding intimate ‘wink, wink, nod, nod’ information to his OWN clients, in order to preserve the entire commission for himself.

I know, as I’ve narrowly lost out on many bids of my own in the past, with one agent admitting to the practice after being caught red-handed with his hands in the cookie jar.

#30 Roger_Home_Inspector on 04.28.14 at 9:43 pm

Why are houses getting so big? Even the one photographed here is fairly large. In the 30’s it might have made sense (you had 8 kids) but today you’ll often find a couple or small family living in a home of this size or larger.

These are US stats:

http://www.census.gov/const/C25Ann/sftotalmedavgsqft.pdf

They tell an interesting story however; since 1973, single family detached home sizes have increased in average size from 1660sf to 2392sf in 2010. That’s a 44% increase folks. A lot, especially when you consider the fact that families are getting smaller with time. Less people, more room.

I still insist the best houses going are the small ranch style bungalows built post war between say 1955 and 1965. They range between 850sf and 1200sf, were built with quality materials by people who were truly skilled at their craft. These little shacks are bullet proof. Plus, they are super simple in their design and construction so maintenance and upkeep (like changing a roof) is no big deal.

Interestingly, it’s not uncommon that a home like this used to house a family of 4-6 people when first built. Now, after the first kid people are bailing on them for larger digs.

So why do we feel the need now for so much room? Specifically when wages have stagnated and the cost of operating a home (fossil fuels for heating, hydro etc…) have increased well above the background levels of inflation? You’d think we’d be trying to look for smaller and smaller houses to facilitate affordability and shrinking family sizes.

#31 test on 04.28.14 at 9:44 pm

#16 Aggregator on 04.28.14 at 8:59 pm
Great story. Too bad list prices are still dropping on that street.

Glencairn Ave List Price History (data)

2011
Average $1,363,829
Median $964,400
Standard Deviation $799,169

2012
Average $1,348,885
Median $995,000
Standard Deviation $877,884

2013
Average $1,216,850
Median $964,000
Standard Deviation $697,591

2014 YTD
Average $1,173,713
Median $936,000
Standard Deviation $696,731

“No surprise” says RE agent “licensed” (owner of the infantile domain name “www.itssoldyouremoving.com” )
The RE orgasms starts here:

http://forums.redflagdeals.com/gta-real-estate-provide-your-input-1475094/17/#post18739685

and spans 4-5 pages to the end of the thread:

She has access to the same data as Aggregator but …. should I explain you the differences?

It is interesting how many idiots in that thread. Just read it. It would be interesting to know what they have to say when they read the above stats :))

#32 chopper on 04.28.14 at 9:48 pm

Great advice Garthzinski but you do not understand the power that possess the greater fools, they will continue to rush in blindly.

Some will head your advice but most will not.

#33 Nemesis on 04.28.14 at 9:49 pm

#CrossPlatformCompatibleAddendum

http://youtu.be/3bKG0p6Tv9Q

#34 End CHMC on 04.28.14 at 9:57 pm

I have no problem with foolish people with more money then brains spending it the way they want since it doesn’t effect the taxpayers in any way. The conservatives who are no longer conservative under madman Harper which allowed CHMC to back now over a trillion dollars in sub-prime mortgages MOST of which happened under madman Harpers watch. H is a true lunatic. A man who was taught how to smile in order to appear sane to the voting masses. I am a true conservative who understand the free market is the only one who should value and lend money. The taxpayers have no business in CHMC.

#35 OttawaMike on 04.28.14 at 9:59 pm

Re: The Mercedes lease bonus in Ottawa

That offer came out in March. 2 different condo mega 44 storey projects near Dow’s Lake. The Mercedes one is under construction. The 2nd one is still trying to find suckers or “buyers” as the developers like to call them.

Condo #2 has even redesigned the unit size down to closet like allowing a price drop but still can’t make the 60% sold mark commencing construction.

Another luxury condo project slated for the site of the Keg Mansion restaurant in Westboro overlooking the Ottawa River has been trying to reach the 60% sold mark for 2 years now with the start schedule getting pushed ahead three times.

#36 Drill Baby Drill on 04.28.14 at 10:01 pm

Dear Pathetic Blog ; “Listings have shrunk like manhood in a cold pool” or listings have shrunk like manhood on low testosterone. Garth we know you are right about the Canadian RE market but it is so frustrating seeing this very slow train wreck developing before our eyes. Calgary is an amazing RE market right now. There is a development in Bearspaw on the western outskirts of town were just in the last 3 months alone there were 173 homes sold for over 1.1 mil for 1 developer only.

#37 april on 04.28.14 at 10:06 pm

#11 – exactly what I’ve thought for some time now and I think Garth agrees with us.

#38 MD on 04.28.14 at 10:08 pm

I would like to know which bank financed his mortgage. Or was the house paid in full as without knowing this critical information it is hard to know how much risk banks are taking in financing million dollar mortgages without CMHC backing.

#39 Larry1 on 04.28.14 at 10:10 pm

When will the madness end?

On the behavioral side, here’s a link to a good quote from Robert Shiller on…

Why Americans are Biased Toward Real Estate – They Can’t Calculate Returns
http://advisoranalyst.com/glablog/2014/04/25/why-americans-are-biased-toward-real-estates-they-cant-calculate-returns.html

#40 Shawn on 04.28.14 at 10:15 pm

Money Creation and Wealth Creation

CPG at number 1 says:

the bank creates money out of thin air. If you want to get a mortgage for a house, and the bank deems you to be credit-worthy, it puts the amount of money you need into an account.

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

True, indeed. But it’s not a bad thing.

A link to that excellent Bank of England article was posted a few weeks ago. The original article states how things work. It does not contain the term “thin air” or even the word air.

And what is the next step when you take your loan away and buy the house?

You write a cheque and give it to the person you bought the house from. He deposits it in HIS bank. Now your bank owes that other bank money. Where will it get it? Perhaps it will just in effect have a loan from the other bank.

What is the home seller deposts your cheque to the same bank? Now you owe the bank (say) $500k and the home seller has a deposit at the bank of $500k. And the home seller can withdraw that at any time. And if you don’t pay your (created-out-of-thin-air) loans the bank still has to let the home seller with the money and is out that money if you don’t pay up (let’s pretend it is a NON-CMHC situation).

Yes the bank created money out of thin air in a sense. But its wealth (net equity) is unchanged. The customer’s wealth is unchanged as he got money to buy the house but owes the same money to the bank.

The main point is that this is simply how banking works and is not nefarious and is not unfair and in fact is a key reason we live in such a wonderfully advanced and plentiful world compared to the way things were a few hundred years ago.

If you read articles attacking banks for creating money from thin air and attacking the fractional reserve banking system and he you believe that is wrong and nefarious and unfair then you have done yourself a great disservice.

Money and its creation is a tough topic to understand.

What really matters is how you can make more money and more wealth.

And I will hazard a guess that not all of us on this blog are doing a good job at that. But some are.

Banks usually do make money, so go ahead and buy some shares.

Meanwhile I stand ready to lend any of you $1 million at anytime as long as you let me hold it on deposit with me as security for the loan. I will charge you only 2% for the loan and will pay you 1% on the deposit. My costs are low but I will have it all drawn up in legal paperwork as a private loan but I will actually keep the money back as security. Every year you can send me my $20,000 in loan interest and I will send you $10,000 as your deposit interest. Meanwhile your personal balance sheet has grown by a million and so has mine. We both have a new asset of $1 million and a liability of 1 million. In substance the $1 million will not exist at all, but just be shown by both of us as an asset and as a liability. Impressive no? If this works then next year we can do it with $10 million.

Not sure why any of you would take my deal, but you may have your reasons.

#41 Nemesis on 04.28.14 at 10:21 pm

#Superfluous? #It’sJustHistoriography.

http://youtu.be/NgEDcfsIY2s

#42 Derek R on 04.28.14 at 10:23 pm

#25 Eaglebay on 04.28.14 at 9:24 pm asked:
A liability to who? The bond holders?

The money in your deposit account is a liability for the bank and an asset for you. Your mortgage is an asset for the bank and a liability for you.

The bond-holders are there to cover the possibility that you bought your house from someone who had an account with another bank. In which case the money that they paid the bank for their bonds may be used to pay the other bank to credit the house-seller’s account.

But if you bought your house from from someone who has an account with your bank, the bond-holders’ money isn’t needed. Your bank just reduces your account and increases the seller’s account. No actual money changes hands.

#43 Bob Rice on 04.28.14 at 10:24 pm

“detached home sales are ahead of 2013 levels, but trail 2010, 2011 and 2012.”

that’s b/c there’s nothing to buy…

#44 KG on 04.28.14 at 10:25 pm

Don’t you see a pattern Garth, first lower rates to get the sheep come running in, and then raise the rates, so all the pre-approved sheep embrace the slaughter.
Sheep they are…

#45 KG on 04.28.14 at 10:26 pm

Perfectly timed for spring.

#46 Andrew Woburn on 04.28.14 at 10:26 pm

25 Eaglebay on 04.28.14 at 9:24 pm
#1 CPG on 04.28.14 at 8:38 pm

That money in your account becomes a liability for the bank. And the mortgage it now owns is an asset of the bank”
————-
A liability to who? The bond holders? Explain.
============================

Any money deposited in a bank is a debt the bank owes to the depositor. Most people seem to believe that their money is somehow held “in trust” and [email protected] keeps it in a safe so they can have it back anytime. When you deposit money in a bank you are making an unsecured loan to a corporation so they can invest it somewhere else. This is why the government invented deposit insurance so average people could be protected in case the bank screws up and can’t pay you back all your money. It is deliciously ironic that masses of Canadians think that buying bank preferred shares amounts to gambling but somehow buying GIC’s is like burying gold bars in your garden.

#47 Bdy sktrn on 04.28.14 at 10:27 pm

Money isn’t everything. It’s what you do with it that Matters.

I propose some of the high rollers on this blog make a small donation to a much needed cause.

For those with the means please send whatever you can to the “Get Nemesis a keyboard with a working spacebar” fund

Tax receipts Available.

#48 Tom from Mississauga on 04.28.14 at 10:29 pm

Lots of empty store fronts on Yonge at Glencairn. This homebuyer won’t be shopping there either.

#49 Derek R on 04.28.14 at 10:33 pm

#40 Shawn on 04.28.14 at 10:15 pm gave a nice explanation of how bank loans and deposits work.

Cheers, Shawn! But I think I’ll pass on your generous $1M loan offer.

#50 Johnny on 04.28.14 at 10:34 pm

#47 Bdy sktrn on 04.28.14 at 10:27 pm
Money isn’t everything. It’s what you do with it that Matters.

I propose some of the high rollers on this blog make a small donation to a much needed cause.

For those with the means please send whatever you can to the “Get Nemesis a keyboard with a working spacebar” fund

Tax receipts Available.

Me – priceless and thank you for taking these words out of my mouth.

#51 Sold and renting on 04.28.14 at 10:40 pm

No way: At #30 who says: “I still insist the best houses going are the small ranch style bungalows built post war between say 1955 and 1965. They range between 850sf and 1200sf, were built with quality materials by people who were truly skilled at their craft. These little shacks are bullet proof. Plus, they are super simple in their design and construction so maintenance and upkeep (like changing a roof) is no big deal.”

We rent one of those and it’s not well built at all, and very poorly insulated. In fact, if I owned it, I’d tear it down. The lot is lovely though, and near a golf course. These tear-downs go for $500,000 to a million where I live (Golden Horseshoe Ontario). All being replaced with huge press-board mansions that go for around a million.

#52 Nemesis on 04.28.14 at 10:51 pm

#YesPlease!

@Bdysktrn/47

http://www.bella-usa.com/pro

[NoteToSaltyDogz: What the Hell, eh… After all, the OldOne is on its LastLegs… I’ll trade for ScreenCredits. No receipts, though.]

#53 Flawed on 04.28.14 at 11:06 pm

#40 Shawn on 04.28.14 at 10:15 pm
Money Creation and Wealth Creation

CPG at number 1 says:

the bank creates money out of thin air. If you want to get a mortgage for a house, and the bank deems you to be credit-worthy, it puts the amount of money you need into an account.

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

True, indeed. But it’s not a bad thing.

A link to that excellent Bank of England article was posted a few weeks ago. The original article states how things work. It does not contain the term “thin air” or even the word air.

And what is the next step when you take your loan away and buy the house?

You write a cheque and give it to the person you bought the house from. He deposits it in HIS bank. Now your bank owes that other bank money. Where will it get it? Perhaps it will just in effect have a loan from the other bank.

What is the home seller deposts your cheque to the same bank? Now you owe the bank (say) $500k and the home seller has a deposit at the bank of $500k. And the home seller can withdraw that at any time. And if you don’t pay your (created-out-of-thin-air) loans the bank still has to let the home seller with the money and is out that money if you don’t pay up (let’s pretend it is a NON-CMHC situation).

Yes the bank created money out of thin air in a sense. But its wealth (net equity) is unchanged. The customer’s wealth is unchanged as he got money to buy the house but owes the same money to the bank.

The main point is that this is simply how banking works and is not nefarious and is not unfair and in fact is a key reason we live in such a wonderfully advanced and plentiful world compared to the way things were a few hundred years ago.

If you read articles attacking banks for creating money from thin air and attacking the fractional reserve banking system and he you believe that is wrong and nefarious and unfair then you have done yourself a great disservice.

Money and its creation is a tough topic to understand.

What really matters is how you can make more money and more wealth.

And I will hazard a guess that not all of us on this blog are doing a good job at that. But some are.

Banks usually do make money, so go ahead and buy some shares.

Meanwhile I stand ready to lend any of you $1 million at anytime as long as you let me hold it on deposit with me as security for the loan. I will charge you only 2% for the loan and will pay you 1% on the deposit. My costs are low but I will have it all drawn up in legal paperwork as a private loan but I will actually keep the money back as security. Every year you can send me my $20,000 in loan interest and I will send you $10,000 as your deposit interest. Meanwhile your personal balance sheet has grown by a million and so has mine. We both have a new asset of $1 million and a liability of 1 million. In substance the $1 million will not exist at all, but just be shown by both of us as an asset and as a liability. Impressive no? If this works then next year we can do it with $10 million.

Not sure why any of you would take my deal, but you may have your reasons.

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

Your idea that printing money out of thin air and charging interest (interest money that does not even exist) is a good thing is so flawed I don’t know where to begin. Just because banks and govts are “buddy buddy” in this global scam does not make it legal or morally correct.

#54 Nemesis on 04.28.14 at 11:19 pm

#MeaCulpaMeaMaximaCulpa. #Gloria.

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

#55 Relocated Aussie on 04.28.14 at 11:19 pm

After looking for over a year I have purchased a house with the one thing I consider essential, a 24X 32 shop. It needs some upgrading but in a year when I retire I will have lots of time to perfect it as well as building hot rods. There is no way that I could rent a property like this and in retirement I will have the ability to play with all my projects, rather than getting bored sitting around in a place where I can not access my tools and equipment. An agent was looking for over a year for me and found some properties that I refused to buy because of the prices. I knocked on the door of this house and asked if he wanted to sell. Yes, soon for 330K. The agent said he would have listed it for 365K. If the market corrects I probably will not be one of the losers as I paid cash and intend to stay for the rest of my life. If I meet a compatible woman and we merge our assets then buying a house in Arizona for winter escapes is another priority.

#56 UVZ on 04.28.14 at 11:40 pm

#40 Shawn

Banking is not that complicated. The first thing to realize is that banking is an industry like no other. The second thing to visualize is a one-bank scenario where all loans originate and all deposits occur. Then apply a fractional reserve ratio. It can be shown mathematically that this one bank can create money supply equal to the original deposit divided by the reserve ratio. For example, on a $1 deposit, if the reserve ratio is 10%, the bank can eventually create $10 of money supply in the economy in theory. The way the bank does so is by holding back 10% of every deposit (the cash “reserve”) and loaning out the rest (together, its “asset”). Its “liability” is the whole deposit amount. Every time the loaned out amount (to the buyer who takes on the “debt”) comes back to the bank as a deposit (by the lucky seller), the bank can continue the process. This is what the “money-out-of-thin-air” crowd are referring to.

The original definition of “inflation” is money supply inflation.

Real estate agents, real estate lawyers and the construction-related vendors in the economy get the newly created money supply first. This money has the most purchasing power.

In my example, if all the depositors suddenly decided to withdraw more than 10% of their deposits at the same time, the bank would crash. This is now called a “run on the bank”. It used to be called “bankruptcy” — the rupture of the bank; although now, the word has a different meaning we are more familiar with which applies to the customers of the bank. This is also why, the word “confidence” is often used in reference to the banking system.

The depositors must have “confidence” and sleep well at night.

#57 For those about to flop on 04.29.14 at 12:08 am

Australia is in the middle of a housing bubble too,one difference there that would help here is they have an affordable homes programme.
Here’s the basics….houses in certain neighbourhoods are NOT allowed to be bought by developers and demolished
Until 3 months has elapsed from the time of listing the property.
To be eligible you have to be going to use the house as your primary address and be able to put a sizeable down payment but to keep it affordable the houses are in the
200 to300k price range.
If no one wants to buy the house and live there ,then the developers can bulldoze it.
These places are “no frills” but isn’t that what a starter home is supposed to be?

#58 UTSBLUE on 04.29.14 at 12:14 am

Double ending deals should be prohibited. How can the agent possibly be working in the best interests of the buyer and seller at the same time?!?! Especially in a blind auction… WTF. It’s a complete joke.

#59 Brian Ripley on 04.29.14 at 12:15 am

#23 Johnny
re your link (without comment) to: “Aquilini Group buys remaining Olympic Village condos for $91 million, retiring Vancouver’s debt”

One of the problems with this “news” is that there seems to be some detail missing. The Vancouver sun reports that the city of Vancouver sold their last 67 condos to Aquilini for $91mil.

That “sale” price works out to $1,358,209 average per condo. I have looked at some of these units and the there are construction deficiencies, presale buyers suffering from remorse and from a neighbouring resident’s point of view, the location is sort of not close to anything especially shopping and services… one would need a car to get out and get stuff.

I would wager that the city had to “give” something else to the buyer to induce the transaction … they are a major player: http://en.wikipedia.org/wiki/Francesco_Aquilini

$1.358mil per condo is beyond the stats as you can see from my chart: http://www.chpc.biz/vancouver-housing.html

Average strata unit prices in Vancouver have been range bound since 2007 between $400,000 and $500,000.

Not $1.35mil

#60 James on 04.29.14 at 12:34 am

Staggering prices on these homes. How much does the buyer make in a year? I’m pulling in far more than the median family income in my area, and yet I am hesitant to buy a house because (unlike police officers and government workers) I don’t have a job for life, and I may have to move at some point. At 3x family income, they would have to make 400k. A few couples might make that much, but not a lot.

#61 T.O. Bubble Boy on 04.29.14 at 12:48 am

meanwhile… far away from the Nobs bidding up the Glencairn house… U.S. 401(k) balances are up up up:
http://www.cnbc.com/id/101620600

ok – so, most of that is from the market recovery (only 25% of the increase is from contributions), but still a stark contrast from the Canadian story where apparently we can’t find $50 to put in a RRSP but can bid 10x annual income on a tear-down in the GTA or Vancouver.

#62 Killaboy on 04.29.14 at 12:51 am

I live in Calgary on a little cul de sac duplex condo development with 20 similar units. A few weeks ago my neighbour listed for $275 K, the highest any of the units have listed for since I moved here in 2006 (when I paid #340K with a 50% down payment). It sold last week, but I don’t know for how much, but I expect close to the asking. Anyway, it seems the real estate market is pretty healthy here in Calgary with “days on the market” down 21% from a year ago, total sales up 4%, new listing up 5%, and average price up 7%. With unemployment very low, lots of oil and gas jobs – people have money. I don’t see our housing market correcting anytime soon.

#63 T.O. Bubble Boy on 04.29.14 at 1:05 am

An “All Vaughn” special edition of $900k house of the day… Vaughn is clearly the GTA burb with the most disconnected sense of reality (and, the most McMansions listed just under the magic $1M CMHC limit).

3 Finalists:
1) $999,999 house ‘Perfect For A Large Family Or More Than One Family’
2) $966k 2756 sqft house Under Construction
3) Another $999,999 special… well, ok, nothing special. ‘Minutes To GO And Shopping’, but with a walkscore of 37.

WINNER:
There are no winners here – just a bunch of giant burbs houses priced at $250k per bedroom.

#64 Andrew Woburn on 04.29.14 at 1:25 am

#30 Roger_Home_Inspector on 04.28.14 at 9:43 pm
Why are houses getting so big?

I still insist the best houses going are the small ranch style bungalows built post war between say 1955 and 1965.
===================================

It’s interesting how we’ve gone from wanting 1,000 sq ft houses on a half acre in the suburbs to 2,500 foot houses jammed together on 6,000 foot lots as close to the centre of the city as we can afford. I think in part it is the easier access to credit. I remember people often moved into new houses that were only roughed in and then they added refinements as they could pay cash for them. They weren’t ashamed of not having carpets on their new bare wood floors because prudent people did without until they had saved the money. In a galaxy far away!

Although it has long been fashionable to sneer at those who prefer suburban comforts to cool city bugshacks, the original suburbanites were not turning their back on urbanity. In the fifties and sixties, no Canadian city was remotely cool except Montreal. I recall looking for a restaurant on a Sunday evening in downtown Toronto circa 1965 and finding nothing open except for a hotel dining room. There were no coffee bars and pubs were indescribably nasty. There was no lifestyle penalty for moving to the suburbs and no real traffic either. Perhaps because most people were not that far removed from country living, they still valued the space and privacy of the suburbs. Today having three or four children in a tiny bungalow sounds like torture but, in those days, kids lived their lives outside either at school, at the playground or in the big backyard. I am still wondering how today’s hipsters are going survive in their 800 foot playpens in the sky when their two designer babies grow into surly six foot teenagers.

#65 Blacksheep on 04.29.14 at 1:45 am

Daisy Mae # 196,

#161 Blacksheep: “The gov. (+ influencers) makes the rules. The gov. (+ Influencers) pulls the levers….”
**********************
“We seem to forget these goons work for US. We’ve essentially ‘hired’ them to do a job. I hope the electorate corrects this mistake next time ’round. What a pathetic bunch of politicians we have…”
——————————–
No Daisy, not forgetting, also not pretending.

I understand some need to cling to the precious fairytale that is democracy, that’s your right.
I choose to accept the world as it is, not how I wish it to be.

#66 Dr. Wu on 04.29.14 at 2:03 am

Unethical to whom? The 1000 potential buyers. The LA doesn’t work for 999 of them, just the one he sold it to.
Another ethical issue is that the LA knew what every other offer was and his client MAY have had an unfair advantage. So the unethical screams will come from the other agents.
I have approached many LAs to represent me in multiple offer situations and always been told ‘no, but someone from my office can represent you’. ( Which technically remains dual agency minus the appearance of unfair advantage)The assumption is that I’m looking for an unfair advantage and they want to maintain a high level of ethics.

#67 Buy? Curious? on 04.29.14 at 2:05 am

I guess it’s time for all the smug renters to come out and say that prices are coming down and they’re going to scoop up some distressed bargin. If it does happen, how long are you going to wait, a month, a year, a few years? If you’re coming here for financial advice (you get what you pay for) and you’re still renting, at your age, you can safely assume that you have failed in life.

It Takes Two To Make A Thing Go Right.

https://www.youtube.com/watch?v=phOW-CZJWT0

#68 Flawed on 04.29.14 at 2:08 am

The real reason MH370 disappeared?

http://www.youtube.com/watch?v=DKwXDL7loLc

#69 Happy Renting on 04.29.14 at 2:23 am

Since that house was in the $1M+ territory, I’d be curious to know the financial and employment situation of the bidders. A whole bunch of executive/doctor couples or something? Or a really confident (and deep-pocketed) flipper?

I also wonder if the sellers took the highest unconditional offer (how high was the highest conditional offer?) or if this house will be back on the market shortly because “the financing fell through”.

#70 Fed-up on 04.29.14 at 2:27 am

“When you see something wildly underpriced, don’t even bother booking a showing.”

————————————————————————————–

Only in Moronto or Dampcouver could that dump be considered “wildly underpriced” at 700 grand.

Madness.

#71 World Traveller on 04.29.14 at 4:31 am

I own a new Ford Fusion which will probably be less troublesome than a Merc, and also has all the bells and whistles like a Merc. and my insurance is much less too.

#72 Detalumis on 04.29.14 at 5:50 am

#30 Sorry to break your bubble, I live in a 1960 ranch style bungalow built in 1960 that is just under 1200 square foot. Some of the materials are quality like I will say the plasterwork on the ceilings probably done by Italian immigrants, is superb but they have really bad layouts. The kitchen is so tiny that you have no counter space, it’s like nobody must have cooked from scratch back then just ate TV dinners. The dining rooms are too small to entertain in, so nobody must have done that either.

They also are missing one important thing called insulation, it’s impossible to add any to the walls and they are very cold in the winter when the prevailing wind blows. I tried to paint one winter and the paint was condensing and running down the walls.

#73 TurnerNation on 04.29.14 at 6:51 am

Haven’t heard much about that “store of value/Money of kings/gods” lately. A tad off $5000.
Any day now, huh. The spaceship is coming…

http://finviz.com/futures_charts.ashx?t=GC&p=w1

#74 2CntsCdn on 04.29.14 at 7:46 am

#58 UTSBLUE
“Double ending deals should be prohibited. How can the agent possibly be working in the best interests of the buyer and seller at the same time?!?!”

They aren’t … you’re missing one more person in the equation (and the most important to them) …… and that’s themselves. To gain the most $ possible for themselves from a single transaction. This system works when listings are rare in a hot area, the snow has melted and the hornies are running around with eyes glazed over, a bit of equity and a bucket load of credit. But agents ALWAYS say they’re doing what is best for their client … which makes them look less greedy.

Dear bloggers ……. please stop looking at things as “unfair, immoral or unethical” … none of that matters … the only thing that matters in business is “is it illegal?” … and more importantly “will I get caught?” … and equally important …… “if I’m caught … can it be proven I’m guilty? … and lastly … is the cost of getting caught and found guilty more or less than the extra dollar gain?”

Most things that are unfair, immoral and unethical ARE NOT illegal. RE is very big business folks …. and very sharp sharks are out cruising the waters. The innocent should tread lightly. And remember …. emotion will ALWAYS cost you money.

#75 Sean on 04.29.14 at 8:40 am

#1 CPG on 04.28.14 at 8:38 pm

In March, the Bank of England published an excellent, very clear paper titled Money Creation In The Modern Economy.

—————-

Yes.. it’s “Money and Banking 101”.

It is shocking, almost sickening, that almost no one understands this. It’s almost as though our education system was actually designed to blind us from the important truths.

Even more appalling, the more “classic” version of money creation was somewhat bound by the imposition of a “reserve ratio”.. the bank could indeed create money, but with the caveat of keeping say 20% of deposits on hand. This at least served to “shape” the parabolic function of money creation.

Google what has happened to reserve requirements in the last decade or so.. they are basically gone… approaching zero.

#76 Sean on 04.29.14 at 8:45 am

#22 mark on 04.28.14 at 9:17 pm
He gets his own client into a bidding war on a property he’s selling on the other end?

I must be a simple man with simple ethics.

————————–

Well said… without even knowing what the “ethical rules” are in that sleazy business, any one can see this is just plain wrong.

#77 TorontoRentor on 04.29.14 at 9:01 am

These tactics are deplorable. Talk about lacking in a moral compass.

#78 Shawn on 04.29.14 at 9:02 am

Banking Doomsters
UVZ at 57 and Flawed at 53, thank you for the response.

UVZ said:
The original definition of “inflation” is money supply inflation.

Actually, no, inflation has only one definition and that is rising prices. Increased money supply could lead to that but does not always.

Flawed said:

“Your idea that printing money out of thin air and charging interest (interest money that does not even exist) is a good thing is so flawed I don’t know where to begin.”

Well dig in and study. Start with the banking article from Bank of England at post number one.

I believe it indicates that loans create deposits which are money. Therefore it is the borrowers that create money, no. Actually its banks and borrowers together, it takes both.

I have seen the enemy and it is us as borrowers.

We all should be SO thankful that fractional reserve banking exists. It is responsible for the growth of trade that led to living standards rising exponentially in the last several hundred years.

Also if you still doom about banks charging interest on thin air, for gosh sakes buy their shares.

An important life goal of most of us is to accumulate money. (Or wealth as measured in money.) Like air you don’t need to understand how it is created in order to benefit from it.

Be very skeptical of doomer bank bashing articles. They are very dangerous to your financial health.

To each his own.

#79 Realtor # 1 on 04.29.14 at 9:03 am

Much has been written about the CMHC but today’s example shows that its not whats driving the market.
Over 50 offers were over a million so NO insurance needed.

Debt service ratio — interest rates are not going higher anytime soon.

Time and time again rules change and it effects nothing
Start from the Toronto tax, each time there was a rule change it did nothing to effect the prices.

And the notion that they are not enough homes for sale is a farce. In that same area for around the same price of 1.366million are homes for sale. Its not like its the only home for sale.

Check theredpin/blog every monday and you will see listings are rising.

Remember 50 offers over a million, when did that area ever have 50 homes for sale in one season??

#80 Old Man on 04.29.14 at 9:14 am

#74 2CntsCnd – are you talking about Caesar, as he is not selling Real Estate yet?

#81 Porsche on 04.29.14 at 9:27 am

I’m not a real estate agent but well done.

If a buyer is that stupid to pay twice what a place is listed for and get involved in some auction.

Oh well… to bad for the stupid buyer.

#82 Daisy Mae on 04.29.14 at 9:33 am

#3 Son of Ponzi on 04.28.14 at 8:40 pm
Listings have shrunk like manhood in a cold pool.
——————-
It shrinks?

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

You’ve been watching too much Seinfeld. ;-)

#83 liquidincalgary on 04.29.14 at 9:34 am

@ #1 CPG

this is known as ‘fractional reserve lending’

good work

#84 UVZ on 04.29.14 at 9:35 am

#78 Shawn

Inflation in the physical sense is a measure of volume. Money supply is volume. Prices are not — and particularly not a “basket” of prices selected by economists. That is one way to see it.

At any rate, the link between money supply inflation and long term price inflation is quite established. You can google it for many examples and sources.

#85 2CntsCdn on 04.29.14 at 9:39 am

#79 Realtor #1
“Much has been written about the CMHC but today’s example shows that its not whats driving the market.
Debt service ratio. Remember 50 offers over a million, when did that area ever have 50 homes for sale in one season??”

That’s the point …. there never has been 50 homes for sale in a season in that area … that’s why 50 people were willing to pay “what ever it takes” to be in that area. I know people so desperate for status that they will do ANYTHING to make it happen. And about the no CMHC being needed. Anyone who has owned a house in Toronto since 2004-ish will easily have $5,6,700K of equity in where ever they live (easy) ….. and many people in Toronto have great paying jobs (I know many doctor/lawyer, lawyer/lawyer, doctor/doctor families) ….. who wouldn’t flinch at a $600-800K+ mortgage (and banks would give it to them in a heartbeat) … as crazy as that might seem to people living elsewhere in Canada.
The point is … either way …. this is nuts, plain and simple. If one Lemming runs off a cliff or if 1,000 Lemmings run off a cliff …. Its still ridiculous and over-all dangerous for the country. Look on the big scale of what is going on here?

#86 Daisy Mae on 04.29.14 at 9:40 am

Is this the same sleaze? QUOTE: “His passion for real estate was passed on from his father at an early age. Now, he shares that passion with his loyal clientèle that trust him, as well as the agents that work under his direction. His secret for success in Real Estate are happy families.”

Yup!

#87 Ayn Rand Army on 04.29.14 at 9:47 am

Anyone interested in what’s going on in Japan and else where with CBs, the Ukraine, inflation, gold etc… this is one of the best TTMYGHmm i’ve ever seen.

The read is good and the two interviews at the end with Pippa Malmgren and Bill Kaye are excellent

http://www.mauldineconomics.com/ttmygh

#88 Castaway on 04.29.14 at 9:47 am

#22 mark on 04.28.14 at 9:17 pm
He gets his own client into a bidding war on a property he’s selling on the other end?

I must be a simple man with simple ethics.

No doubt he disclosed to his client, THE BUYER, that he was using this deception so he could max out the price for his client, THE SELLER, and that he was representing both in negotiations! See as a professional realturd he is able to remain impartial while representing the interest of both parties. Even partners of law firms dont take clients when another partner in the same firm represnets the other side. But dont worry, realturds are so professional they are able to do this. You just cant make this stuff up.

#89 Ayn Rand Army on 04.29.14 at 9:57 am

#40 Shawn on 04.28.14 at 10:15 pm

“True, indeed. But it’s not a bad thing.”

You are so wrong and foolish. I rarely read your posts because you’re such a misinformed know it all almost everything you say is wrong or misleading.

Are you for real or are you some kind of gov. shill?

I think the later cuz nobody could act so smart yet be so dumb.

Printing money or credit expansion is theft. Real savings and under consumption are required for real capital formation.

You’re a fool

#90 The American on 04.29.14 at 9:57 am

LMAO Really? A new Mercedes Benz CLA on a purchase of $298,000? Wow. At worst in the U.S., the biggest promotion I ever saw was a “free” Smart Car with the purchase of a $900,000 condo or more. Hmmmmmmmm. How bad is it really going in Canada? Pretty damn bad. If you look at the true value of the CAD with consideration to purchasing power parity, the CAD is incredibly weak compared to the USD. That’s it, everybody, just keep sticking your heads in the sand and acting like all is well.

#91 Shawn on 04.29.14 at 10:25 am

Daggie Taggert is a Hottie

Any Rand Army says to me:

You’re a fool…

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

Well maybe, but a wealthy fool. Can you put in a good word for me with Daggnie? She’s hot.

Ayn Rand however could have REALLY used an editor. Atlas Shrugged was a good book but could have used a lot less of 60 page speeches and more bedroom scenes.

#92 Ralph Cramdown on 04.29.14 at 10:31 am

#53 Flawed — “Your idea that printing money out of thin air and charging interest (interest money that does not even exist) is a good thing is so flawed I don’t know where to begin. Just because banks and govts are “buddy buddy” in this global scam does not make it legal or morally correct.”

…But here’s the thing. Countries where the banking system works this way have performed so much better for their citizens than countries where it doesn’t. I.e. standards of living have increased. This applies across space (i.e. current countries with this style banking vs. ones without) and across time (i.e. countries that switched experienced more moderate boom/bust cycles with attendant deprivation after the switch than before). I wouldn’t trade places with somebody living 30 years ago, never mind 100.

How banking works is interesting. But people interested in increasing their wealth should learn about profits. inflation, cash flow, amortization and depreciation, goodwill, real estate investment, terms of trade, commodity cycles, or any of fifty other subjects before they learn the nitty gritty about how banking is different from the 3-6-3 rule. Look up most of the world’s millionaires and billionaires, and you’ll discover that their wealth didn’t rely on arcane understanding of banking.

#93 Daisy Mae on 04.29.14 at 10:33 am

#74 2CntsCdn: “Most things that are unfair, immoral and unethical ARE NOT illegal.”

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

In other words, “the crime (anything unfair, immoral and unethical) is not in the doing, but in getting caught”.

#94 2CntsCdn on 04.29.14 at 10:44 am

Take away CMHC
…. (if our soldiers from WW2 haven’t bought a house yet … they probably never will : ) and let the banks use their own “lending comfort range” formula’s to dole out mortgages …… only then will we be back to reality (a terrifying place for many).

But so much debt is backed by outrageous property values that Canada would crumble (current govt CMHC guarantee’s, banks & business and personal/discretionary spending). And what government in a democratic society would do that? (political suicide … if not shot in the streets).

So it will NEVER happen. We’re painted into the most intertwined web of corners. And one more question ….. can the world even function now in reality?

#95 Daisy Mae on 04.29.14 at 10:51 am

#90 The American” “That’s it, everybody, just keep sticking your heads in the sand and acting like all is well.”

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

And that’s just what everyone is doing. Two friends loooove Harper and one says we should be enjoying all the ‘perks’ Harper offers…and I don’t know what the hell she’s talking about and haven’t asked. Why bother? The other one points out how great the economy is doing because restaurants are full, malls are busy…and I wonder if it’s occurred to her people are using CREDIT if they’re buying at all. *sigh*

#96 Old Man on 04.29.14 at 10:51 am

I find it unethical that hackers are attacking IE and Microsoft has put out a second warning to shut down or use another browser. There is a way around this all as the hack runs on scripting, and a few minor things won’t run. Just set your internet security on high and all is well at the neighbourhood. Why has not Microsoft informed us about this simple trick?

#97 Ralph Cramdown on 04.29.14 at 10:51 am

About the ethics of double ending a real estate deal:

Some people say that an agent cannot possibly serve two masters. I disagree. Let’s look at the facts.

The seller engaged the agent to get the highest price possible. The agent put it on the market at an auspicious time, underlisted and, by all accounts, got a lot of people to look and a lot of people to bid. Mission accomplished.

The buyer engaged the agent to buy THAT house for the minimum amount possible (let’s say $1,000 above the next highest price, because a peppercorn is worth so little these days). I’m assuming collusion here, because the chance that the selling agent’s buyer was the one in seventy-two that bid highest without collusion is small. Maybe the buyer just said “$1,000 above any other offer, to a maximum of $xxx.” Maybe he was told what the next highest offer was.

How, otherwise, could the seller have gotten a higher price? If the buyer needed THAT house, AND was willing to enter a blind bidding war, AND would have been the highest bidder, the seller would have gotten more. Otherwise not. Another possibility is that the seller’s agent is known to often sell in multiples in which — surprise, surprise — the agent’s own buyer wins, and that knowledge led some buyers and their agents not to participate, and one of those buyers would have bid higher.

Fundamentally, the squawking about double ending is two things: 1) Buyers who didn’t bid high enough, sad about losing the house, and feeling they’re entitled to a fairer process than the one allowed under current laws and regulations. The winning buyer obviously wanted it more. 2) Buyer’s agents sad that, having found a buyer, they haven’t yet made a commission, and feeling that for one agent to eat two steaks while the others eat none is somehow unfair. Their buyers wanted it less.

There are plenty of situations where a double-ending agent is screwing one side or the other. But if there’s 72 bids, this wasn’t one of them. Both sides got what they wanted at the best gross price they could achieve, and the 71 losers were merely the insurance of that.

#98 T.O. Bubble Boy on 04.29.14 at 10:52 am

@ #79 Realtor # 1 on 04.29.14 at 9:03 am
Much has been written about the CMHC but today’s example shows that its not whats driving the market.
Over 50 offers were over a million so NO insurance needed.
———————————–

Those are 2 different markets you’re talking about…

CMHC is driving the price of sub-$1M homes up towards $1M. There are semi-detached dumps in places like Riverdale being bid up to $800k and $900k every week.

Buying in places like Rosedale and Lawrence Park etc. are obviously not driven by CMHC. As noted by Garth – this type of premium property hasn’t been sub-$1M for many many years… and is on a street with all kinds of homes that are $2M, $3M, and above. This market is actually driven by the McMansions that developers build on the lots after they tear down the old Knob & Tube houses.

#99 T.O. Bubble Boy on 04.29.14 at 10:56 am

@ #94 T.O. Bubble Boy on 04.29.14 at 10:52 am
@ #79 Realtor # 1 on 04.29.14 at 9:03 am
Much has been written about the CMHC but today’s example shows that its not whats driving the market.
Over 50 offers were over a million so NO insurance needed.
———————————–

Those are 2 different markets you’re talking about…

————————–

I will add: these 2 markets are related. If people can’t sell their dumpy semi-detached homes for $800k or $900k, they won’t have the down payments to buy bigger detached places for $1.3M etc.

#100 Aggregator on 04.29.14 at 11:12 am

Investors snapped up Canada’s first 50-year bond

The government of Canada went looking for a minimum of $750 million Monday when it launched its first ever long bond, meaning a security that matures in 50 years’ time

And it ended up with twice that amount, as institutional investors — mainly pension funds and insurance companies which have need to fund long-dated obligations — piled in.

The Ottawa regime's propaganda continues as Canadian banks and pension funds are 'forced' to buy domestic bonds priced against a dictated inflation rate to assure fiduciary duties are not breached and the funds' performance is at par with rising real world prices, when in fact, its losing purchasing power, making the life savings of millions of Canadians worth less and less every year.

And while one may think Canadian bonds as a percentage of pension funds' assets have increased, the fact is they've been rotating out of domestic bonds into foreign bonds, therefore moving their money out of Canada, not in!

Don't pay too much attention to the rising purple line in the first chart (where smart money is going). Be a good Canadian and keep buying a losing investment to support your own country's demise.

#101 steve on 04.29.14 at 11:23 am

He (Mr Agent) was probably telling his sucker client:

if you want the house bid around 1.3 M, I know the other offers. lol….. poor sucker buyer, never ever will know if he was biding against himself!….lol

#102 winterpeg on 04.29.14 at 11:24 am

# 6 Blase: How about in secondary cities where detached houses in good hoods can be had for less than 3 large? Are those buying opportunities with these crazy low rates?

You can buy a detached bungalow in Winnipeg for less than 300,000, but I wouldn’t consider that a great “buying opportunity” House prices have gone up ridiculously the same as elsewhere. What goes up should come down just like everywhere else.

Would like Garth to revisit some secondary cities soon.

#103 T.O. Bubble Boy on 04.29.14 at 11:24 am

Or, instead of bidding on the $1.3M Know&Tube place…

Buy a $1.2M Victorian-style house with a pool in the kitchen?

http://www.blogto.com/city/2014/04/house_of_the_week_375_shaw_street/

(the comments are pretty funny)

#104 2CntsCdn on 04.29.14 at 11:25 am

#74 2CntsCdn: “Most things that are unfair, immoral and unethical ARE NOT illegal.”

In other words, “the crime (anything unfair, immoral and unethical) is not in the doing, but in getting caught”.

Well sort of …. but take that idea a few steps out further ….. getting caught is a calculated risk. You hope not to. But big business just looks at the net profit of the whole situation. A few examples …. way back when Ford Motor Co. knew Pinto’s blew up and killed people … but the cost of the law suits and actual payouts was less than fixing the car design and exploding gas tanks … so they kept making exploding cars. Until enough word got out (took longer then …. no internet) and exploding Pinto’s stopped selling and they were bad for business. GM is going through a similar thing now with ignition switches (an additional $1 per car at manufacturing would have made it right).

Right/wrong, legal/illegal, moral/immoral, tomato/tomoto ….. a law suit and/or the incurring penalties are just a cost of doing business … and as long as after it’s all done there is still a substantial profit, big business is happy. Unlike home buyers … big business strips emotion out of things …. it’s just business … the ONLY purpose of a business is to make profit.

RE in Canada has millions of people (of various IQ’s, horniness and totally lacking discipline) running around with hundreds of thousands of (gov’t guaranteed/bank loaned) mortgage dollars to buy boxes to live in. The RE industry is licking their chops and out to scoop up those dollars everywhere they can.

#105 D'Oh! on 04.29.14 at 11:25 am

Sweet a 6% dividend from the condo builders over 3 years. Now that is smart planning.

Btw, cmhc new rules will only push slum lords to go get financing with private insurers at higher rates, therefore causing rentals to increase and in turn pissed off 20 somethings to go buy their own condos. Again with a 6% dividend for doing so.

#106 Just the facts Ma'am on 04.29.14 at 11:26 am

#16 Aggregator on 04.28.14 at 8:59 pm
Great story. Too bad list prices are still dropping on that street.

Glencairn Ave List Price History (data)
——————————————————–
it’s a long street. you can take the info from glencairn and caledonia and compare it to glencairn and yonge

#107 Successful Renter on 04.29.14 at 11:31 am

#67: If you’re coming here for financial advice (you get what you pay for) and you’re still renting, at your age, you can safely assume that you have failed in life.


Um. Some of us move in and out of renting and owning, depending on the market and lifestyle choice. Owned, sold in a bidding war, now renting, zero sense of failure. Especially of having “failed in life.” Wow! Judging much?

#108 Successful Renter on 04.29.14 at 11:35 am

#72 They also are missing one important thing called insulation, it’s impossible to add any to the walls and they are very cold in the winter when the prevailing wind blows. I tried to paint one winter and the paint was condensing and running down the walls.

That’s funny. We rent not a 1960 bungalow but a 2006 corn-flake mini-mansion and it’s the same exact thing. Very cold when the wind blows. Condensation running down the windows in the winter. What’s with Canadian builders – do they not insulate because they build in the summer and their imaginations do not extend beyond that?

#109 tkid on 04.29.14 at 11:36 am

Are you a fan of the ‘sell in May’ philosophy Garth?

#110 Mixed Bag on 04.29.14 at 11:41 am

30 Roger_Home_Inspector on 04.28.14 at 9:43 pm

I’ve got one of these, built in 1951. Sure the insulation is practically non-existent, as if the 1930’s special high-lighted in this post would have had better original insulation. People, it’s called maintenance. Our walls are not well-insulated, but our ceiling/roof is, and that has made a large difference. The front door and windows need to be changed, as they are wooden and drafty – well heck, they’re over 50 years old, the state of the art has improved since then, and in the meantime, we covered the worst offenders with the insulating plastic sheet over the winter.

The house is a tank though. Bones are solid. Did not flood during last summer’s flood. I tell people a plane could fall on the house and the kitchen would probably still be standing. There are cosmetic, maintenance, and energy efficiency-type improvements to be made, but I have no worries about cracked or leaking foundations, or punching a hole in the wall in case someone falls into one.

#111 Nemesis on 04.29.14 at 11:43 am

@BrianRipley/#59

…”One of the problems with this “news” is that there seems to be some detail missing.”…

There’s an AuldSaying in ShowBiz, Brian: “Never let the truth interfere with a GoodStory.”…

In this instance, all is – indeed – not ‘quite’ what it seems. Let’s go granular – starting with the Horse’sMouth:

“We’ve got some partnerships with some Asian developers who have buyers waiting to purchase expensive units in Vancouver.” – Francesco Aquilini

[TheTyee] – From Red to Black, but Olympic Village Far from Gold

…”Said Michael Geller, a real estate consultant and unsuccessful 2008 NPA council candidate: “It’s improper to suggest taxpayers did not lose a cent.”…

…In early 2009, after Robertson declared taxpayers were on the hook for $1 billion, the city got a special exception to borrow enough to finish construction. It was delivered on-time for the 2010 Games, but when VANOC transferred the complex back to the city in May 2010, sales flopped. Ernst and Young was appointed the receiver in late 2010 and it was rebranded the Village on False Creek in Feb. 2011.

The full history of the Village remains hidden from citizens for the foreseeable future. City manager Penny Ballem, who remains the City of Vancouver’s representative on the VANOC board, signed a Sept. 30, 2010 contract with VANOC and the Canadian Olympic Committee that agreed to keep minutes of VANOC board meetings, monthly financial statements and contracts sealed from the public until 2025.

…While Olympic Village may be debt-free, it is not yet controversy free. More than 50 owners of condos, who bought in 2007 and 2008, are still suing city hall in B.C. Supreme Court for refunds over shoddy workmanship and claims of deceptive marketing practices…

…”The plaintiffs completed their purchases in spring/summer 2010. Contrary to what they had been told, the Olympic Village and strata lots therein were not luxury. In addition, they contained numerous significant defects, many of which are not remediable. Some of the environmental technologies did not work, and still do not work. While the market for condominiums had decreased since the time of purchase by about 0-10 per cent, the unsold strata lots in the Olympic Village were marked down 30-50 per cent. The plaintiffs were not delivered what they had been promised.”

Ernst and Young vice-president Kevin Brennan does not do interviews, according to spokeswoman Lesli Boldt. She said the transaction announced yesterday meant the Aquilini family took over SEFC Properties Ltd. from the City of Vancouver and became the secured creditor. City hall, however, remains the defendant in the lawsuits….

…The Aquilinis have been on a buying spree since last September, when eldest son Francesco’s divorce was settled out of court. The family has snapped up Washington vineyards, a chain of luxury restaurants and partnered with the Musqueam and Tsleil-Waututh nations to buy surplus provincial land in Burnaby.

While their Canucks missed the playoffs, the family ended a concession contract with Aramark a year early. Hundreds of UNITE HERE Local 40-represented workers were laid-off. The company is starting a non-union operation this summer.”

http://www.thetyee.ca/News/2014/04/29/Olympic-Village-Far-from-Gold/

#112 Ian - Ottawa on 04.29.14 at 12:03 pm

http://www.cbc.ca/news/canada/manitoba/woman-who-bought-1m-mice-infested-house-sues-ex-owner-agent-1.2625237

Woman spends 1 M on Winnipeg home infested with mice! No inspection I bet!! Crazy.

#113 Realtor #1 on 04.29.14 at 12:20 pm

When you compare carrying of 2004 with 2014 you will notice its the same.

My point is the debt service ratio or carry costs is what people look at not the size of the mortgage.

If you want prices to go down then you need to raise the carrying costs.

I doubt they were builders bidding on that lot. Look at that area and you will see plenty of mcmansions for sale

#114 OttawaguyRenting on 04.29.14 at 12:29 pm

OttawaMike and I must live in the same hood.

I am often asked “what about buying into one of those condos going up around your place?”

My word.

OttawaMike knows where it is at. Some of these billboards have been up for sooooo long.
Like the one next to the Grace Hospital on Wellington. Tammarack Condo living space. Someone in the know told me it took 9 months to sell and “SECURE” 12 units.
Only like one a month.

My response..I’ll wait until the bottom falls out of the whole thing and rent one or buy one on the cheap..
MAYBE

Paying Rent = no Slave to the Bank

#115 frank le skank on 04.29.14 at 12:34 pm

Lots of talk about morals and ethic of the RE agent. Although I don’t disagree, the real problem is with the buyer. They obviously place too much value on the location of their house. They are willing to pay a anything to get it, maybe without doing any research. Maybe they can afford to overpay, maybe they can’t. I don’t see this buyer as being a sheep lead to the slaughter, I see them as more of a lemming jumping off a cliff. There would be no place for these types of agents if there weren’t so many lemmings around. Buyers are not innocent, they seem to be lazy and have misplaced values.

#116 Godth on 04.29.14 at 12:35 pm

To all the people (Shawn) that are conflating the fractional reserve banking myth with endogenous money creation (what the BoE paper is talking about) I suggest you do some more reading. You don’t know what you’re talking about.

Conventional economics theory goes out the window. Steve Keen, Michael Hudson and the rest of the MMT crowd just got their validation.
http://www.debtdeflation.com/blogs/2014/03/18/monetary-realism-from-the-bank-of-england/

The take-away is that one way or another debt will have to be written off of at some point as the game is unsustainable in the real world. Same as it ever was.
http://www.youtube.com/watch?v=00iY4cpEQDY

#117 Old Man on 04.29.14 at 12:35 pm

What has occurred in the Real Estate business over the past decade or so is a form of social engineering for people to buy or sell using deceptive techniques. They have reformed the system with media, presentations, videos, hype, false expectations, lies, and whatever it takes to earn a commission. Ethical behavior has gone out the window, as money has become their new God as a means to an end at the expense of the people in the transaction. In more ways than one they become obsessed with creating a false reality to make a sale, and have lost their way as professionals.

#118 bigrider on 04.29.14 at 12:38 pm

I watch the Barrett Jackson automobile auctions on TV whenever I can.

When a car goes on the block all bids are there for all to see, no matter how coveted the car is. Usually all bidders are open to be known for who they are ,although some want to remain anonymous and that’s fine. Much like all auctions for all other things, full and immediate disclosure for all to see.

Only in Canada is the scam of blind auctions for RE permitted to exist and only for RE.

To all who participate in this activity ,you are either a disgusting perpetuator of the activity, or a stupid participant

#119 frank le skank on 04.29.14 at 12:42 pm

#96 Old Man on 04.29.14 at 10:51 am
Why has not Microsoft informed us about this simple trick?
——————
Because Microsoft wants you to call their support team in India and pay $100 to resolve.

#120 Son of Ponzi on 04.29.14 at 12:43 pm

Double Agent Hutton.

#121 John Prine on 04.29.14 at 1:06 pm

World Traveller on 04.29.14 at 4:31 am
I own a new Ford Fusion which will probably be less troublesome than a Merc, and also has all the bells and whistles like a Merc. and my insurance is much less too.

Mercedes Benz are rated higher than Honda Accords or Toyota Camrys, they have been bulletproof for the last 6 or 7 years. The “bells and whistles” on the newer Fords are seriously problematic……Have a look in “Consumer’s Reports”.

#122 UVZ on 04.29.14 at 1:06 pm

#94 2CntsCdn

The CMHC can be privatized. Its premiums could rise per their underlying risk. These would be business decisions to be made by the private entity or entities which take on the CMHC portfolio.

Mortgage rates and terms would rise per their underlying risk. The banks would apply appropriate moral hazard, which is only fair. This would more properly reward savers, and also makes logical sense.

Property values would correct.

The Canadian banks could be okay. For one thing, they have issued mortgage-backed securities known as covered bonds with which they have passed on the risk. They would keep their less risky mortgages. In other cases they could develop property rental arms based on defaulting property. Other power of sale properties could be sold without loss, etc…

The government could issue some rescue packages which involve converting existing owners into renters while keeping them in their homes.

The media would keep everyone calm. At least you don’t live in the Ukraine or Tornado Alley.

The lights will still turn on, people will still go shopping and the economy would re-balance from its real estate focus.

We won’t see real estate agent photos on the sides of buses, benches and billboards anymore.

My 2 cents for yours… :-)

#123 Vamanos Pest on 04.29.14 at 1:09 pm

#67 Buy? Curious?

I have a one percent (almost a 0.1%) income, drive Bimmers (yes, more than one), wear Armani and rolex, date girls WAY too good looking for me, and live in a 3 year-old 2800 sq.ft bungalow overlooking a golf course, granite, hardwood, gourmet kitchen,etc. My wine collection is worth more than most cars on the road (I’ve been purchasing Bordeaux futures for several years now).

And, I rent.

I don’t know if it’s failure, but I like it.

#124 shawn on 04.29.14 at 1:12 pm

Doomers (of the fractional reserve banking and of other persuasions)…

It’s REALLY got to suck to be a doomer as the stock market roars ahead and non-dooming investors get rich.

It looked like you had your biblical flood and end-times in 2008 but darn it the sun came out and the economy moved on and non-dooming investors grew richer.

#125 Tom on 04.29.14 at 1:14 pm

Nothing is selling in Ottawa. Houses just sitting and sitting on the market. Price drops happening. Utility costs and condo fees are the only things that are rising (some might say even skyrocketing).

#126 Old Man on 04.29.14 at 1:18 pm

#118 frank le skank – its a global computer pandemic that has been declared. The social engineers are watching the stats to ascertain if the herd is following the directives of panic. Will they take the shot or not is the question. What a coincidence that XP no longer gets any updates, and Microsoft is recommending that all must buy Window 7 or 8 now, or forever face the consequences from those hackers, and who be they?

#127 Flawed on 04.29.14 at 1:22 pm

#92 Ralph Cramdown on 04.29.14 at 10:31 am
#53 Flawed — “Your idea that printing money out of thin air and charging interest (interest money that does not even exist) is a good thing is so flawed I don’t know where to begin. Just because banks and govts are “buddy buddy” in this global scam does not make it legal or morally correct.”

…But here’s the thing. Countries where the banking system works this way have performed so much better for their citizens than countries where it doesn’t. I.e. standards of living have increased. This applies across space (i.e. current countries with this style banking vs. ones without) and across time (i.e. countries that switched experienced more moderate boom/bust cycles with attendant deprivation after the switch than before). I wouldn’t trade places with somebody living 30 years ago, never mind 100.

How banking works is interesting. But people interested in increasing their wealth should learn about profits. inflation, cash flow, amortization and depreciation, goodwill, real estate investment, terms of trade, commodity cycles, or any of fifty other subjects before they learn the nitty gritty about how banking is different from the 3-6-3 rule. Look up most of the world’s millionaires and billionaires, and you’ll discover that their wealth didn’t rely on arcane understanding of banking.

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

So what you and Shawn are saying is that its okay to commit fraud and break the law as long as its for the greater good?

I have two boys. They are 1 and 3. How much is a the 18 dollar hamburger going to be when they are 40? $65? I don’t think wages will triple in 40 years for the “average” worker.

And I disagree that fraud banking has made things better. Human ingenuity and technology has done that all by itself. Guys that sit in front of computers and buy bank shares and think this is the way it is have obviously never built anything themselves or invented or improved anything to increase our std of living. And no its not because banking created money for IPOs either. We humans were making great strides in technology all by ourselves without the need for criminal banking cartels who now pretty much dictate the world. Now the question is what do we do about it?

#128 Ayn Rand Army on 04.29.14 at 1:23 pm

This one’s for you Shawn. Maybe you can try to argue your case with real living persons such as me or Stephan.

http://www.dailypaul.com/317842/banned-from-youtube-by-stefan-molyneux-spoiler-hes-back

Your reply made me laugh. How interesting that you attack a dead author and a fictional character in her best selling novel which is still a top seller globally.

Hahahaha, how feeble.

#129 Flawed on 04.29.14 at 1:26 pm

#123 shawn on 04.29.14 at 1:12 pm
Doomers (of the fractional reserve banking and of other persuasions)…

It’s REALLY got to suck to be a doomer as the stock market roars ahead and non-dooming investors get rich.

It looked like you had your biblical flood and end-times in 2008 but darn it the sun came out and the economy moved on and non-dooming investors grew richer.
***************************************

That’s really easy to say when it’s a rigged game. And just like how the bible is a plagiarized work of the Sumerians, this current banking system will eventually fail once people figure it out via critical mass.

#130 Godth on 04.29.14 at 1:28 pm

Doesn’t it suck when facts intrude on Magical Thinking Shawn? Enjoy the short game, it’s getting shorter.

#131 :):(Ying Yang on 04.29.14 at 1:33 pm

#96 Old Man on 04.29.14 at 10:51 am
I find it unethical that hackers are attacking IE and Microsoft has put out a second warning to shut down or use another browser. There is a way around this all as the hack runs on scripting, and a few minor things won’t run. Just set your internet security on high and all is well at the neighbourhood. Why has not Microsoft informed us about this simple trick?
………………………………………………………………………
Smoking Man has been very quite, I believe he is behind this IE hack, he is after all a code Monkey.

#132 Ayn Rand Army on 04.29.14 at 1:34 pm

ps, not that i’m a fan of bitcoin, but the concept is the same, just replace the words bitcoin with gold or sound money.

#133 happity on 04.29.14 at 1:37 pm

The previously proclaimed USA housing recovery is now being exposed as a sham.

Blackrock was the biggest buyer, and last week there was a 15% plunge in new home sales.

#134 2CntsCdn on 04.29.14 at 1:38 pm

#122 Vamanos Pest

#67 Buy? Curious?
” I have a one percent (almost a 0.1%) income, drive Bimmers (yes, more than one), wear Armani and rolex, date girls WAY too good looking for me, and live in a 3 year-old 2800 sq.ft bungalow overlooking a golf course, granite, hardwood, gourmet kitchen,etc. My wine collection is worth more than most cars on the road. And, I rent. I don’t know if it’s failure, but I like it.”

Lol ….. Touche! (can’t find that accent thingy to put over the e). When this thing all re-adjusts the knuckle heads will call you a genius. But we’re telling them to do what you have done NOW … they have the opportunity as well. But they won’t.

#135 Nemesis on 04.29.14 at 1:43 pm

#TuesdayTititallations #FunnyOldWorld

#NoHouseNoRing

[SCMP] – Younger generation in Beijing increasingly dependent on parents for housing, poll says

http://www.scmp.com/news/china-insider/article/1500042/younger-generation-beijing-increasingly-dependent-parents-housing

#Can’tWin’EmAll

[AlArabiya] – Why Clooney may owe Michelle Pfeiffer $100k over Lebanese love

http://english.alarabiya.net/en/life-style/entertainment/2014/04/29/Why-Clooney-may-owe-Michelle-Pfeiffer-100k-over-Lebanese-love.html

#ShouldHaveStuckToKnobs&Tubes

[AviationWeek/Beast] – New U.S. Stealth Jet Can’t Hide From Russian Radar

http://www.thedailybeast.com/articles/2014/04/28/new-u-s-stealth-jet-can-t-hide-from-russian-radar.html

#¡AyCaramba!!

[UK Telegraph] – ‘Our €250,000 Spanish villa sold for just €87,000’

http://www.telegraph.co.uk/finance/personalfinance/expat-money/10792602/Our-250000-Spanish-villa-sold-for-just-87000.html

#AlienAbductions

[TheNation] – ThisModernWorld/TomTomorrow

http://www.thenation.com/sites/default/files/tmw2014-04-30colorlowres.jpg

#136 UVZ on 04.29.14 at 1:56 pm

If you have children or young, loved ones, I think that understanding of the mechanism of banking is required these days. This is because the escape velocity required from the clutches of debt slavery is getting higher at the rate of compound interest, which is the math at its core — that is, exponentially.

With the current banking system design where money is created out of debt and taxation is high, the degree of skill and entrepreneurship and technological innovation needed by normal, unconnected individuals to escape and achieve wealth — and freedom — will fade out of reach at a high rate of change. Just look at the balance sheet of what was the middle class just 20 years ago.

This is why this topic is paramount and not “arcane” as one poster put it. Of all the balls in the air such as cash flow, profits, depreciation, investments, etc…, this one is the mother.

The answer is intelligent, civilized redesign of the banking system through proper understanding of it. The more people who analyze, understand and discuss it, the better.

The heroes will be the ones who elegantly and smoothly fix the system before the game is over.

#137 Pope SnugglyJigglyBums the 666da (aka Nosty) on 04.29.14 at 1:57 pm

#125 Old Man on 04.29.14 at 1:18 pm — “What a coincidence that XP no longer gets any updates, and Microsoft is recommending that all must buy Window 7 or 8 now, or forever face the consequences from those hackers, and who be they?”

Once all our monthly bills are done and paid for in a few weeks, I will switch my four year old XP machine to
Zorin OS, the closest Linus alternative to XP.

It is quicker and easier for me to pay a techie to clean out the garbage from Microsoft, then download (free) Zorin plus take a couple of lessons.

#138 2CntsCdn on 04.29.14 at 2:01 pm

#122 Vamanos Pest
re: Renters are failures comment by Buy? Curious?

About cashing out and renting. I know 3 Toronto lawyers (late 50’s to mid 60’s, kids moved out) …… who have quietly sold their nice paid for TO homes the last 6 months ($1.8 to $2.7 million range). One rents a very nice house …. two rent very nice condo’s … all in very nice area’s. They know what’s going on … and what’s likely coming.

#139 HD on 04.29.14 at 2:03 pm

@ 122 Vamanos Pest

#67 Buy? Curious?

I have a one percent (almost a 0.1%) income, drive Bimmers (yes, more than one), wear Armani and rolex, date girls WAY too good looking for me, and live in a 3 year-old 2800 sq.ft bungalow overlooking a golf course, granite, hardwood, gourmet kitchen,etc. My wine collection is worth more than most cars on the road (I’ve been purchasing Bordeaux futures for several years now).

And, I rent.

I don’t know if it’s failure, but I like it.

——————————————-

LMAO

Allow me to pitch in on this one too.

I make good coin but nothing close to the 0.1%. Ditched the car last year. Using my bike, public transit and car 2 go now. I try to live as frugal as possible (Not Mustachian Style but still) but indulge whenever reasonable.

I recently placed an order for 60 bottles in one the ‘make your own wine’ type of deal. Total value: about $385.

And, I rent.

I don’t know if it’s failure, but I like it.

Best,

HD

#140 Nemesis on 04.29.14 at 2:03 pm

#BonusZen

[Salon] – 10 (insane) things I learned about the world reading Ayn Rand’s “Atlas Shrugged”

http://www.salon.com/2014/04/29/10_insane_things_i_learned_about_the_world_reading_ayn_rands_atlas_shrugged_partner/

#141 OttawaMike on 04.29.14 at 2:14 pm

#124 Tom on 04.29.14 at 1:14 pm
Nothing is selling in Ottawa
————————————-

That statement is inaccurate Tom.

Drive through the Glebe. Lots of sold signs. Centretown, a shortage of listings and stuff sells quickly.

SFH in the core are still a commodity. February inventory was 8500 with the 10,000 mark likely to be hit this spring if we are not there already so yes condos and ‘burbs are slow.

#142 basement dweller on 04.29.14 at 2:15 pm

I don’t understand how prices keep rising when the interest rates are the same as last year??

#143 Retired Boomer - WI on 04.29.14 at 2:25 pm

30 – 72 – 106 Simple ranch Houses

I have one of those as well. Designed back in ?? We built it in 1997. 2 X 6 walls, triple pane glass, better roof, vinyl siding, 200 amp electric, natural gas.
Biggest heat bill this winter $67.21

Old idea, straight roof, 3 bedroom, 2 pooper and laundry on 1st. Att 2.5 car garage. Finished basement and 3rd bath down.
Less costly to build, less costly to heat, lower taxes
1280 Sq Ft. You get to pick the material quality. do your homework first. Pick Quality – it never goes pout of style.

#144 Corban on 04.29.14 at 2:29 pm

“Imagine if your grandparents bought a Tuxedo Park Bungalow, back in 1912, for $2650! To put it into perspective, in 2114 that house could be worth $75,000,000 !!! (150 x avg price of 2013 Tuxedo home ($500,000)*[)] So, maybe now is a good time to buy a home in calgary’s popular North Hill Area.”

Got that in the mail. So if i buy TWO houses, i’ll have 150 mill in 2114? SIGN ME UP!

#145 frank le skank on 04.29.14 at 2:48 pm

#125 Old Man on 04.29.14 at 1:18 pm
and who be they?
—————-
They be Microsoft

#146 BCD on 04.29.14 at 2:52 pm

#118 frank le skank on 04.29.14 at 12:42 pm
#96 Old Man on 04.29.14 at 10:51 am
Why has not Microsoft informed us about this simple trick?
____________________________________________

Setting your Internet security to high causes all kinds of problems when web surfing–that’s why they are not telling you to do it. Internet Explorer is slow enough as it is with all kinds of spyware etc., latching on, turn your security settings to high and watch Windows deliver you one of their classic blood pressure inducing web surfing sessions.

#147 Old Man on 04.29.14 at 2:54 pm

#136 Pope – I am riding the SeaMonkey for my backup, as a hacker gal of mine is part of the development team.

#148 saskatoon on 04.29.14 at 2:54 pm

Hey Agg, (#100)

The “purple line ” is described as “other assets”?

What does this mean?

Great info., by the way.

#149 Daisy Mae on 04.29.14 at 3:25 pm

#107 Successful renter: “What’s with Canadian builders – do they not insulate because they build in the summer and their imaginations do not extend beyond that?”

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

Would you believe it’s simply that they’re cheap — cutting corners and doing shoddy work — conducting unethical, amoral and unfair business practices? And they’re okay with that…until they get caught?

#150 Shawn on 04.29.14 at 3:26 pm

Vanamos Pest’s Success Story

Vananos Pest at 122:

I have a one percent (almost a 0.1%) income…

****************************
Congratulations, most Canadaians have been conditioned to not like tales of personal success.

But if you can, I’d like to hear what line of work or business or investing you are in to create that income.

I like to think the Board here can learn from tales of success, perhaps some people here or their kids could emulate you.

#151 Aggregator on 04.29.14 at 3:28 pm

The bizarre reality of the US housing market: Home sales are tanking, and prices are soaring

But here’s what’s weird. Even though the sales numbers are not great at all, prices of new homes are still rising sharply. In fact, they hit an all-time high in March, when the median price of a new home was $290,000. That’s 10.4% higher than the pre-crisis peak set in March 2007. And the 11.2% price jump between February and March was the highest on record.

What’s going on? If sales are low, shouldn’t prices be declining, not rising? Maybe not. Sales could also be low because there aren’t enough houses to buy. JPMorgan Chase economists note that while housing inventory has been drifting higher, it remains pretty low by historical standards, so if demand is rising, that could push prices up.

New One Family Houses Sold: United States

Existing Home Sales

Monthly Supply of Homes in the United States

30-Year Fixed Rate Mortgage Average in the United States

All Federal Reserve Banks – Total Assets

If you can't figure out what's wrong with the so called housing recovery, then God help us all.

#152 BCD on 04.29.14 at 3:37 pm

@ 122 Vamanos Pest

I have a one percent (almost a 0.1%) income, drive Bimmers (yes, more than one), wear Armani and rolex, date girls WAY too good looking for me, and live in a 3 year-old 2800 sq.ft bungalow overlooking a golf course, granite, hardwood, gourmet kitchen,etc. My wine collection is worth more than most cars on the road (I’ve been purchasing Bordeaux futures for several years now).

And, I rent.

I don’t know if it’s failure, but I like it.
__________________________________________

Rolex? Seriously? Who wears a Rolex anymore? Wrist Watches are sooooooo 1990’s? You must be some old curmudgeon like that bald guy on Dragon’s Den. . .in which case the women you date who are WAY too good looking for you are probably WAY too ugly for me. . .which means I don’t envy your lifestyle. . .and income wise I am doing fine. . .so i don’t envy that either.

The true test of a man is how he can woo women when the chips are down, not when he can lean on his wine collection and car as the sole attraction at the fair. I’ve succeeded then as now when times are more favorable for me. . .but if you haven’t then you are just blowing smoke.

#153 2CntsCdn on 04.29.14 at 3:45 pm

#141 basement dweller
“I don’t understand how prices keep rising when the interest rates are the same as last year??”

Because stupid people keep paying the higher prices. The rule of business is you keep raising prices until people stop buying … then you lower them little by little until you find where people buy again …. that’s how you find the market price for things. Bidding wars add a pinch of extra ridiculousness to the process. Prices are based on many things ….. mostly irrational …. but interest rates are only part of the equation.

#154 sciencemonkey on 04.29.14 at 3:46 pm

I am a failure because I rent.

I always liked DA ;)’s description of things, how when you buy a house you join the winner’s circle. I want to be a winner!

#155 Ayn Rand Army on 04.29.14 at 3:53 pm

#135 UVZ on 04.29.14 at 1:56 pm

You are asking the right question and the answer is quite easy, the Bretton Woods agreement was step one in getting the world on the gold backed USD, step two was 1971 Nixon removing of the gold backing.

This was it, this was the beginning of the global downfall we are experiencing today. Gold was the physical restraint that forced discipline upon banks, CBs, and governments.

Hence is why it was finally broke as France was demanding their gold from US trade imbalances. Now that the GS is gone the US has had an even larger and indefinite trade deficit.

What’s that old quote…

“Give me control of a nation’s money and I care not who makes it’s laws” — Mayer Amschel Bauer Rothschild

http://www.unc.edu/~ltolles/illuminati/moneycontrol.html

#156 2CntsCdn on 04.29.14 at 3:54 pm

#135 UVZ
The heroes will be the ones who elegantly and smoothly fix the system before the game is over.

UVZ … I like everything you say … but how does the govt pitch a new re-tooling plan to the not so understanding (or patient) masses …. who they need to vote them in again. Because there will be years of adjustment hardship (minimum) to get this ship back on course. Even a perfect plan is no good if you are not in power.

#157 Old Man on 04.29.14 at 4:05 pm

#145 BCD – its time for you to buy a new computer as mine is too fast to slow down. I have no problems with setting the security on high as it blocks out the bad guys. In fact, can now ascertain which websites are cluttered with potential holes, and those that are not.

#158 Johnny on 04.29.14 at 4:11 pm

#113 said…Paying Rent = no Slave to the Bank
Yes, but it does mean being subhuman slave to your landlord!

#159 Johnny on 04.29.14 at 4:12 pm

Also, I lived in Canada for 24 years now and believe me, renting here is a downright humiliating on all levels.

#160 gladiator on 04.29.14 at 4:17 pm

I’m a failure too. I rent.
I also have a family (2 kids in elementary and a stay-at-home wife who is starting her small business in a couple of months) and we live on one salary, 26% of which is saved – and that is after several grand set aside for big expenses during the year, 5 grand for yearly vacation, and after reasonable monthly amounts budgeted for everything we need and even want.
It’s not a life of luxury, but we sure know how to budget and still have a happy and enjoyable life.
But, house-wise, I am still a failure and I love it! :)

#161 Lebowski on 04.29.14 at 4:22 pm

#137 2CntsCdn on 04.29.14 at 2:01 pm

About cashing out and renting. I know 3 Toronto lawyers (late 50′s to mid 60′s, kids moved out) …… who have quietly sold their nice paid for TO homes the last 6 months ($1.8 to $2.7 million range). One rents a very nice house …. two rent very nice condo’s … all in very nice area’s. They know what’s going on … and what’s likely coming.

——uh please share some more fascinating anecdotal evidence with us. Maybe your lawyer friends have decided they don’t need their houses now with the kids gone and all. Dumbass.—–
.

#162 Nemesis on 04.29.14 at 4:27 pm

#110-Addendum… #OldiesButGoodies

[WindsorStar] – Aquilini family’s farming company tops list of firms fined by WorkSafe BC

http://www.windsorstar.com/sports/Aquilini+family+farming+company+tops+list+firms+fined+WorkSafe/8013429/story.html

#BackGrounders

http://thetyee.ca/News/2011/05/11/MexicanUnionBusting/

http://www.justicia4migrantworkers.org/bc/pdf/press_pack_may19_06.pdf

#163 UVZ on 04.29.14 at 4:37 pm

#154 Ayn Rand Army

Your angle on this is that crimes have been committed. What more do you want to add? LIBOR rigging or gold price fixing? Etc…

The problem with that approach is that it fosters hate which fosters violence.

At that point, those with the guns and the laws have you where they want you.

The eyes-glazed-over, debt-binging, house-horny masses won’t be there to rescue you.

So there has to be another way. Just look at any violent revolution. The risks for all are high and the losses are very high.

That’s not the way to do it and the answer is not clear.

That’s why I referred to “heroes”; I wasn’t trying to be touchy-feely or poetic.

#164 Aggregator on 04.29.14 at 4:41 pm

#147

Other assets held by pension funds would include acquisitions of private companies, commercial real estate, farm land, infrastructure projects, etc. Assets whose values are not dictated by a rigged casino. Hence the red line declining on that chart.

#165 Ry YYZ on 04.29.14 at 4:44 pm

#64 Andrew Woburn on 04.29.14 at 1:25 am

You’re right. My parents built a house (via some sort of house-building co-op) in 1970/71. Pretty modest, back split, 3 bedrooms, 1 bathroom, 1 family room, 1 kitchen/dining area. No separate living room or dining room (which never get used in most houses, anyway). I was very young in those early years (born ’67), but I do remember that the house did not have wall to wall carpets for some years, just bare plywood (not freaking OSB) floors. It was on a corner lot with a 1/2 acre of land, though, and an enormous back yard. Not until ’86 did they move to their dream home further outside town, which was still fairly modest by today’s suburban standards, but it did have lake frontage (Porter’s Lake, NS) and the lot was wooded. And it was built very well, by the owner.

As far as I can tell, modern developer-built homes are basically all junk. Fancy finishes and ornamentation on top of poor quality materials, poorly assembled. The best are merely OK in terms of durability, while many are disasters in the waiting. My dad, and the other guys in the co-op, despite none of them having any real house-building experience, built those houses way better than anything you’ll find in some new subdivision

#166 rosie "moving forward" in the knowledge that, "this won't end well" on 04.29.14 at 4:45 pm

#151 and others

Take your pick, then get back to us.

http://www.usatf.org/usatf/files/b7/b7286b40-3ef1-41b2-9d55-bc405b7293bd.gif

#167 Blacksheep on 04.29.14 at 5:56 pm

2CntsCdn # 155,
——————————-
#135 UVZ

“The heroes will be the ones who elegantly and smoothly fix the system before the game is over.-UVZ”
——————————-
“UVZ … I like everything you say … but how does the govt pitch a new re-tooling plan to the not so understanding (or patient) masses …. who they need to vote them in again.”
——————————-
All do respect, 2CntsCdn & UZV, but what your discussing is never going to happen.

The ‘system’ will never relinquish sovereign control of the currency through constriction. There is no voting the right guys in to fix something, that the wrong guys controlling the gates, see as not broken.

We saw how far Ron Paul got.

#168 Kilby on 04.29.14 at 5:58 pm

I have a one percent (almost a 0.1%) income, drive Bimmers (yes, more than one), wear Armani and rolex,

Hey we have something in common (I don’t wear a wristwatch) but we have 2 Bimmers….A 1993 and a 2004 so we must be doing well, Ha Ha..

#169 Ralph Cramdown on 04.29.14 at 6:15 pm

#165 rosie “moving forward” in the knowledge that, “this won’t end well” — “Take your pick, then get back to us.”

Feet and tenths of a foot? Costanza’s not going to like that one.

#170 devore on 04.29.14 at 6:35 pm

#23 Johnny

Vancouver’s olympic village now sold out.
Zero cost to taxpayers.

The land was still given away for free, and last batch of units was fire-sold to Aquilinis, who no doubt were merely displaying civic pride.

While this does not represent a cost to taxpayers, it is a huge loss of revenue, that will eventually come out of somewhere else, ie, from taxpayers.

#171 devore on 04.29.14 at 6:42 pm

#25 Eaglebay

A liability to who? The bond holders?
Explain.

A liability on the bank balance sheet. Balanced by an asset, ie, an interest bearing loan. This is similar to you writing a check (which is essentially a note, or money) which is a liability on your balance sheet, balanced by the contents of your checking account. (This is why writing a check without equivalent funds in your checking account is fraudulent and illegal.)

However, unlike your check, a bank loan is considered real money, as good as a coin or paper bills, through the magic of the Bank Act, which grants regulated chartered banks the power to legally create money that is fungible with central bank currency.

#172 Old Man on 04.29.14 at 7:13 pm

I went to Sears about 7 years ago and bought a nice Timex for $65.00. Never buy a Rolex as have one parked in the drawer R.I.P., as its worse than a car. First of all there are very few technicians trained that can fix it; clean it; or keep it running. Secondly, for the smallest thing they will rip you off $200.00 for this and $400.00 for that, and it NEVER ENDS. I ended that marriage quickly.

#173 2or3orsometimes7 on 04.29.14 at 7:36 pm

#124 Tom on 04.29.14 at 1:14 pm
Nothing is selling in Ottawa
————————————-

That statement is inaccurate Tom.

Drive through the Glebe. Lots of sold signs. Centretown, a shortage of listings and stuff sells quickly.

SFH in the core are still a commodity. February inventory was 8500 with the 10,000 mark likely to be hit this spring if we are not there already so yes condos and ‘burbs are slow.

—————————————————

Rent in Ottawa west. Sales def down. The only things reliably selling are SFH around 500,000 but needing a lot of work.

#174 devore on 04.29.14 at 7:37 pm

#125 Old Man

What a coincidence that XP no longer gets any updates, and Microsoft is recommending that all must buy Window 7 or 8 now

This borders on idiotic. Windows XP was released in 2001. How come you are not crying about the end of support for Windows 95? Windows 3.0? DOS?

Microsoft product lifecycle schedules are published and well known years in advance, because corporate IT departments need to plan upgrade budgets.

Now, pay attention, as I am about to reveal the world domination social engineering secrets for all to see:

http://support.microsoft.com/lifecycle/search/

Hold on, there is a black helicopter circling outside, brb.

#175 Daisy Mae on 04.29.14 at 7:38 pm

#96 Old Man: “…just set your internet security on high and all is well at the neighbourhood.”

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

Or…simply delete and do not open your junk mail, or any email address you’re not familiar with. Problem solved. Elementary, actually.

#176 David Lee on 04.29.14 at 8:07 pm

Garth,

Quick question on the 50 year bonds from the Feds:

Doesn’t the issue of these long bonds confirm that rates are going to go up significantly over the long haul (and maybe even sooner)? After all, if I was the Feds, I’d want to get my hands on money before the price of it goes up.

However, if the answer is yes to the above, then I don’t understand why investors would fork over money for these bonds if they know rates are going to go up and therefore, get more for their money if they hang tight for a bit (unless investors think that rates are going to stay low for a really long time).

It seems like the Feds (through the BOC) are telling everyone that rates are going to be low for a long time. Yet their actions (vis-à-vis these really long bonds) say the opposite.

I think I’m missing something.

Thanks in advance.

#177 Millenial on 04.29.14 at 8:09 pm

In the long run this move will bite Bradley Hutton in the ass.

#178 Daisy Mae on 04.29.14 at 8:14 pm

#164 Ry: “Pretty modest, back split, 3 bedrooms, 1 bathroom, 1 family room, 1 kitchen/dining area. No separate living room or dining room (which never get used in most houses, anyway)….”

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

With regard to dining areas, you’re right. Kitchen is the place to be unless it’s a formal affair. As far as family rooms vs living rooms, we can only sit in one area at a time…don’t need both unless you have a large family or unless hubby and wife don’t like the same TV programs which is often the case….or they can’t stand each other. LOL In gated communities for ‘active retired seniors’ there is no need for family rooms ’cause they’re not ‘family’ homes.

#179 Old Man on 04.29.14 at 8:46 pm

#173 devore – Microsoft stats as at March 5, 2014 Windows 8.1 4.89%; Windows 8 6.41%; and XP 27.69% plus unknown millions of illegal copied o/s.

In order for Microsoft to make money those XP systems must go, as the Windows 8 series is a huge corporate financial failure.

#180 Trojan House on 04.29.14 at 9:24 pm

Re: Mercedes for condo in Ottawa

I brought that up on this blog at least a month ago. I think I even attached a link. Nobody cared.

Re: the comments on money – pretty soon there will not be any paper money. It will electronic. Govt’s around the world are slowly pushing for this.

#181 piazzi on 04.30.14 at 3:16 am

Garth: “Third, to do that, engage an agent. An principled one”

easier said that done, isn’t it?

#182 Marco Polo on 04.30.14 at 3:36 pm

Here in Edmonton, I noticed a flyer in the door for a contractor who only builds garages and finishes basements.

I looked through it, some impressive photos, and suggested rated of monthly payments. No actual costs.

I took a trip downtown on the train. A big full page advert from RBC, selling “employee pricing” on mortgages. This is a bit of a scam, as like car dealers, they still make money on these deals. This is a new low for mortgage sales, with these tactics. Even KIA doesn’t sell cars like that!