Moist

BEARS modified

Ever wonder what would happen to the housing market without a bunch of horny, moist virginal first-time buyers, all toked up on pre-approved loans and peer pressure, just itching to plunge headlong into that first, awesome mortgage? Yup, it would tank.

In fact, a stunning 55% of all the houses changing hands in Canada last year were sold to the kids, according to the national mortgage brokers association. For that you can thank 5% downpayments, federal CMHC insurance, race-to-the-bottom mortgage rates, the RRSP Home Buyer Plan, the Bank of Mom, and a splay of fed and provincial tax credits encouraging millennials to become debt slaves, so they can trade their mobility, spontaneity and freedom in order to imitate their parents.

Here’s some evidence of what happens when young people decide to act, well, young.

A big comeback story in US real estate has been Phoenix. It was hooped by the housing crisis, with prices in at least a couple of Zip codes falling by 70%. But since hitting bottom around 2006, the market – and house values – have rebounded. In large part that was because real estate was simply too cheap not to buy. So a flock of vultures descended and feasted, swallowing up the cheapest of the cheap – which are not so cheap any more.

With that demand waning, true market forces have emerged. And they’re scaring local realtors. There’s been a 16% drop in single-family home sales in the past year, with entry-level homes ($150,000 or less – imagine that) seeing a decline of 37%. Now, with sales scarce, supply is also dropping. “It is not a fast diminishing sector of the market,” says one agent.

Why? Because young people across the US, and as evidenced in this city, have decided that buying real estate is an idiot move. Even in a country where you can get a cheap mortgage with no rate increase for 30 years, and write off the interest against taxes. Blame demographics and a new way of looking at achievement.

Household formation in the States has been declining steeply. Millennials are not getting married, buying condos, having babies and moving into slanty semis with $600,000 mortgages, like here. Marriage rates are now at all-time low levels. Unemployment among young adults, high student debt and experience watching real estate eat their parents’ wealth also also contributing to this:

HOUSING modified

Mortgage applications are at the lowest level since 2000, according to the Mortgage Bankers Association, and surveys show a majority of Millennials would far rather rent than settle down with a mortgage, lawnmower and a property tax bill. While 80% of young, brainwashed Canadians say real estate is cool, surveys show a majority of Americans between 20 and 35 want nothing to do with it.

Will our kids ever become so weird once again as to wish they had unfettered independence and the opportunity to travel, experience and experiment before they turn into their wrinkly folks? Or is it too late?

Beats me. But it’ll only take one good housing correction to scare the crap out of people who have almost no equity, lots of debt, and no idea of how illiquid a concrete box in the sky can be. The kids should worry about the future, says BMO economist Robert Kavcic. He thinks our real estate is headed for ‘a protracted slump’ all on its own, because of shifting demographics.

Boomer kids, who have been fueling the market as first-time buyers, will shrink as a market force by 2018, he says, putting downward pressure on sales and prices. Of course this coincides nicely with the period in which most economists think interest rates will have been normalizing, making 3% mortgages a distant memory.

So, here’s another chart to digest, and more reasons to stay living in the basement.

FIRST TIMERS modified

Thank you, Joe Oliver: The federal finance minister late Friday kindly confirmed the announcement made on this pathetic blog seven days earlier that career bureaucrat and nicely-behaved Jeremy Rudin will be the next bank cop.

Rudin replaces the feisty and feared Julie Dickson as head of the Office of the Superintendent of Financial Institutions (OSFI), who was in the saddle for eight years and helped engineer the effective but secret bail-outs of Canadian banks after the 2008-9 financial crisis.

As I reported an insider saying: “They chose him because he’ll fall in line with the program,” says a departmental insider, “unlike the more independent Dickson.”

In the same week our banks were downgraded, just what we need. A pet.

248 comments ↓

#1 Roman on 06.13.14 at 7:44 pm

I see mama bear with three children and they come to bid on the Toronto house.
Looking at their faces its pretty obvious they gonna lose.

#2 LazyJBird on 06.13.14 at 7:52 pm

Can you explain in a blog perhaps just how the CMHC insurance works. If a CMHC insured property goes into default, does the bank owning the mortgage not have to try and sell it first and use the proceeds to pay the outstanding debt? The difference left is what CMHC is on the hook for?

#3 Mark on 06.13.14 at 7:59 pm

If the banks’ cost of capital increases, they will directly pass this cost, and more, directly onto mortgage borrowers. This could get really, really fun for those with incomes correlated to RE or to other short-term debt laden industries.

#4 omg on 06.13.14 at 8:00 pm

Why is the youth in the US more conservative than their great grandparents?

Because thry have see first hand how 20 to 1 leverag can wipe you out in an instant.

One family in arizona that i have known for years are basically starting from zero.

They are in thier late 50s. They went from having a great retirement planned to now having to work until they are 70. They had ridden the market up in the early 2000s and levered into several rental properties. All gone now plus they lost their own house.

Think that doesn’t scare the crap out of their 30 year old kids?

#5 Mark on 06.13.14 at 8:02 pm

“Can you explain in a blog perhaps just how the CMHC insurance works. If a CMHC insured property goes into default, does the bank owning the mortgage not have to try and sell it first and use the proceeds to pay the outstanding debt? The difference left is what CMHC is on the hook for?”

That’s right. But nobody defaults on a loan if they still have equity. So the only loans that are defaulted upon are those with negative equity, meaning that the CMHC has to cough up cash.

Oh, and people who don’t pay their mortgages due to long-term financial distress typically will neglect a property. In extreme cases, they may even remove valuable fixtures and vandalize. In the US, the experience was that it was costing the banks $60-$80k *per foreclosed house* simply to re-market them, in addition to whatever loss position the loan already was in.

#6 totalinvestor.com on 06.13.14 at 8:03 pm

You Only Live Once.
See you guys at the auction

http://www.conciergeauctions.com/video/four-seasons-private-residences-toronto-ontario/

#7 Smoking Man on 06.13.14 at 8:03 pm

Garth do you secretly yarn to be a zoo keeper, animal pics everyday…

Come on, at leased on Friday how about some hotties, give us old bastards with low testosterone some inspiration for the week end..

#8 Mark on 06.13.14 at 8:10 pm

“Think that doesn’t scare the crap out of their 30 year old kids?”

Didn’t Garth write that the “30 year old kids” have been socking it all away in cash “savings” accounts? And they just don’t trust “the stock market”?

Luckily (and perhaps to my detriment), I didn’t get caught in that trap and had a million dollar portfolio by the time I was 30. Yes, some of it bought with credit, but its a heck of a lot safer to buy assets with P/E = 15 on credit than it is to buy assets with P/E = 35 on credit.

#9 not 1st on 06.13.14 at 8:10 pm

Garth, you always seem to comment about some obscure news piece and avoid the main story of the day. Like Ontario loading both barrels and shooting itself square in the face last night. Ontario alone can shave a point off our GDP and threaten our credit rating can’t it? Isn’t this worry time?

#10 statsfreak on 06.13.14 at 8:11 pm

Garth, Can you do a piece on how a housing crash affects people with “cash in the bank”? If the Canadian banks ended up in big trouble, and the Government won’t bail them out, is it even remotely possible that funds on deposit would be scooped (a la Greece?)

#11 LazyJBird on 06.13.14 at 8:14 pm

re: #5 Mark

Even with vandalism and reduced property value (due to correction or whatever), there will still be an inherent value in the property. So to say CMHC (taxpayers) are on the hook for $600 Billion (or whatever it is), is not an accurate statement.

Plus a portion of the outstanding CMHC debt will be at a lower LVR, as well as be on a variety of property types. Therefore the likelihood that ALL of the debt defaults at the exact same time is probably very low. And if something causes that to happen, well then we’ve got bigger problems to deal with, non?

#12 Marco Polo on 06.13.14 at 8:25 pm

We live in a new, financially dangerous era.

A completely indebted Ontario has the same leader, promising more of the same. This won’t end well. Ontario has more debt than California.

Iraq is a complete mess again, the US can’t afford to return, but may be forced to. After an expensive Iraq war, an expensive bailout and QE, can they afford it again? Is this the straw to break the back?

There’s never been a better time to be balanced, liquid, and diversified. Garth, I’m afraid that does mean some yellow rocks.

Unless of course, we funded the last Iraq war on bubblegum and lollipops..

#13 Nemesis on 06.13.14 at 8:27 pm

#YouHadMeAt”LawnMowers”

http://youtu.be/LDnFpgimHH4

#14 michele on 06.13.14 at 8:30 pm

Did you mean ….ANOTHER pet?

#15 RIDDLED_WIT_AIDS on 06.13.14 at 8:33 pm

This is a question for Totalinvestor.com, I’m thinking of buying but I would like to know; what is the appartments proximity to the nearest Beer store?

#16 Mark on 06.13.14 at 8:35 pm

“Even with vandalism and reduced property value (due to correction or whatever), there will still be an inherent value in the property. So to say CMHC (taxpayers) are on the hook for $600 Billion (or whatever it is), is not an accurate statement. “

~$600B + 90% reinsurance of approximately another $350B. And you’re correct — they will not suffer anything near 100% losses.

But even if they suffer a 10% loss across the entire portfolio, that’s $95B. CMHC’s capital is only around $20B. A $75B deficiency at the CMHC is a big deal. They won’t be able to recover it by raising insurance premiums in a down-market either because as house prices decrease, increasingly few new borrowers would actually need CMHC subprime mortgage insurance. So it will probably have to come from the CMHC’s ultimate guarantor, the GoC, and hence, taxpayers.

#17 Nemesis on 06.13.14 at 8:36 pm

#BonusZen. #CautionaryTales. #Oddly,ItEndsWell.

http://youtu.be/ViPVPgUJUgM

#18 Mark on 06.13.14 at 8:41 pm

“Plus a portion of the outstanding CMHC debt will be at a lower LVR, as well as be on a variety of property types. Therefore the likelihood that ALL of the debt defaults at the exact same time is probably very low. And if something causes that to happen, well then we’ve got bigger problems to deal with, non?”

The problem at the CMHC is that they’re so much a part of the housing finance market that even pulling back on CMHC’s subprime mortgage issuance in and of itself causes a significant disturbance to market prices.

For instance, Vancouver, Calgary and Toronto RE has spent the past year declining in price. This was due to the significant changes made in Budget 2013. CMHC’s presence in the mortgage financing market was so pervasive that when they pulled back even the slightest, it caused effectively a crash in entry-level housing sales.

As Garth has written many times, there’s zero appetite in the Tory caucus for expansion of CMHC subprime mortgage guarantees. So as loan quality continues to deteriorate, the only way to ration CMHC subprime guarantees is to raise the premiums (ie: higher effective interest rates on subprime CMHC mortgages). This effectively causes a feedback loop of lower prices, and hence, increased risk, and even more measures taken by the CMHC.

Of course default won’t all happen at once, but a slow moving train wreck is still a train wreck nonetheless. And at some point, the financial markets may come to a significant moment of revulsion towards subprime credit, much like they did in the US circa 2008. Given Canada’s bubble prices, its a long, long ways down.

#19 Mister Obvious on 06.13.14 at 8:43 pm

#4 omg

“One family in arizona that i have known for years are basically starting from zero.[….]They had ridden the market up in the early 2000s and levered into several rental properties. All gone now plus they lost their own house.”
——————————-

What really got them was a lack of financial diversity, no balance and no appreciation of growing risk. Perhaps if they’d had a blog like Greater Fool in the early 2000’s they might have had half a chance. Only in Canada, you say?… pity.

#20 DM in C on 06.13.14 at 8:49 pm

“had a million dollar portfolio by the time I was 30.”

OH yeah? Well I had a two million dollar portfolio by the time I was 25, with my job that pays $350k/yr and my giant schlong and my hot wife…. etc etc etc.

Anonymous internet bragging wins again. For the insecure and ugly.

#21 Sebee on 06.13.14 at 8:50 pm

Friday the 13th. Fool moon. Blog title Moist.
Conclusion?

DELETED

#22 Mark on 06.13.14 at 8:54 pm

““had a million dollar portfolio by the time I was 30.”
OH yeah?

Not hard. Work a decade, save $20k a year, hit a few decent windfalls, and buy stocks on margin.

Not bragging, just pointing out that there’s ways of accumulating a lot of wealth in one’s youth in asset classes other than real estate. While my friends were borrowing their brains out for mortgages, I borrowed my brains out to buy stocks.

#23 R on 06.13.14 at 8:57 pm

They’re going to have to invent some wonderful new lies, or people just aren’t going to want to go on living.

#24 sheane wallace on 06.13.14 at 9:13 pm

#11 LazyJBird

The total amount of guarantees is over 1 trillion, around 1.1-1.2 including genworsh and other private mortgage agencies.

out of these probably 1/2 are substandard mortgages with 5 % down that CAN NOT BE PAID with interest rates over 4-5 %.

If the housing market declines as it should be you are looking easily at 200-300 billions of losses, easily, unless they start dropping cash or remove the taxes and start printing.

Total CPP fund is less than 200 billions.

So we either face several hundreds of billions of losses through government guarantees or currency destruction.

You think the cons care about your kids? They care about the banks.

80 % of the loans in the last 5-6 years would not have been approved by the banks if it ws not for CMHC

#25 Shawn on 06.13.14 at 9:15 pm

Reading the Chart

Does that chart claim there was a bear market in house prices in Canada from 1988 to 2005?

Was there?

Might be more convincing if the chart contained a line to show the house price bear market instead of simply claiming it happened 1988 to 2005.

Of course it did. — Garth

#26 would-be buyer on 06.13.14 at 9:19 pm

I never thought I would say this, but I miss F.

#27 Shawn on 06.13.14 at 9:23 pm

Don’t Do as the Poor Do

Because young people across the US, and as evidenced in this city, have decided that buying real estate is an idiot move.

*******************************************
And yet, in the U.S. buying a house in the past few years has more of a genius move.

In the U.S. where houses are cheap, kids don’t buy.

In Canada where houses are very expensive kids do buy.

What was that Garth said a few years ago? when it comes to real estate, Buy America, sell Canada.

American existing home prices are likely still well below depreciated replacement cost.

What a golden opportunity it was for retired Canadians a few years ago to buy a place in America. We had our high dollar and their ultra cheap prices. The opportunity was pointed out on this blog many times.

My own father bought a house in Florida in 2011. He was 79 years old and the purchase has worked out very well. It was a no-brainer really. Smart people buy low. The crowd buys high.

You can’t beat the crowd by following the crowd.

#28 Nemesis on 06.13.14 at 9:27 pm

#YouHaven’tLivedTotally… #UntilYou’veLivedTwice. #SomeCatsDoEvenBetter*. #*ActualMileageMayVary.

“You only live once.” – TotalInvestor

Rebuttal:

http://youtu.be/hcIl_6amBvU

[NoteToOldMan: Devour2005? Scary? You totally missed StockwellDay&Friends at the BC Liberal Party 2014 Kelowna Convention, right? NoteToSM: I’d oblige you with an appropriate illustration but our MagnanimousHost would lose his PG13 MPAA… and let’s not even imagine what happen to my Seattle privileges. Discretion. Valour.]

#29 Old Man on 06.13.14 at 9:28 pm

#7 Smoking Man – we need to get ourselves some drones to entertain the ladies and the H 107D hits the spot with 720 HD to watch a few movies while eating some popcorn.

#30 Basement dweller on 06.13.14 at 9:29 pm

Don’t know you like Dickson. What exactly
Did she do? Almost Every rule change was a joke.
1. 2nd property must have 20% people just declared the recently bought property was their principle propert this No 20% needed.
2. Any home sold for a million or more that didn’t
Have 20% down was not eligible for insurance
I was under the impression that is you had 20% or more
You didn’t qualify for insurance. Not, bank were insuring
Homes of a million or more

It appears that these last few changes have more
Substance than the previous ones.

She really was no maverick she implemented nothing
Substantial

Her job was to regulate banks, not CMHC. — Garth

#31 Godth on 06.13.14 at 9:41 pm

In 33 U.S. Cities, It’s Illegal to Do the One Thing That Helps the Homeless Most
http://www.policymic.com/articles/91055/in-33-cities-it-s-illegal-to-do-the-one-thing-that-helps-the-homeless-most?utm_content=buffer85e51&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

#32 takla on 06.13.14 at 9:44 pm

the millennials are a social and connected lot,with social media,face book,Iphones ,with all this connectivity bad news travels fast believe me,i proudly possess 4 of them{between 20-25 yrs old} and they have all been read the riot act on consumeing over inflated realestate debt.

A couple yrs back they just didn’t believe good ol’dad,,,quit reading Garth ! was the familiar response to my warnings…..they get it now.

They truly all believe there will be a correction and have all turned into savers hopeing to buy into a corrected market,the few friends they have that have drank the coolaid are all broke and cant enjoy the freedom having a bank account affords them….Im glad they listened..

#33 Happy Renting on 06.13.14 at 9:44 pm

With poor career prospects for young people, they already have unfettered independence (unencumbered by employment), but lack the funds or security to travel or participate in experience or experimentation that isn’t free (or close to it.) No wonder they want to become their parents; at least the parents appear to have money (unrealized cap gains in the family home, or lavish lifestyle funded by credit.) Young people hope to climb the property ladder and make their million bucks by owning a home, too. While the bubble inflates, the endlessly upward trajectory is all that is visible to them.

#34 WhiteKat on 06.13.14 at 9:48 pm

It’s all the woman’s fault.

Did anyone notice that Friday the 13th on a Full Moon only happens on average every 20 years?

#35 Nemesis on 06.13.14 at 9:48 pm

#WritersQuizForSM. #WhoAdaptedFleming’sNovelIntoThatMovie. #WhichGenreIsHeBetterKnownFor?

#NoPeeking.

#Twice,Much?

http://youtu.be/XuyElRs_48Q

#36 JimH on 06.13.14 at 9:53 pm

#19 Mister Obvious
“… Perhaps if they’d had a blog like Greater Fool in the early 2000′s they might have had half a chance…”
…………………………………………
You make a valid point; but actually, there were many people like dean Baker, Mark Zandi and even Peter Schiff (who has been dead wrong just about 100% of the time since) were raising red flags, and by 2006 as housing prices softened, Barrons, Fortune, Business Week, and Bloomberg were all issuing warnings.

All it took for the bubble here in the USA to inflate was a few greedy sellers, many of greedy buyers, and lots and lots and lots of greedy homeowners sitting on the sidelines with no intention of selling while they counted their imaginary wealth.

There was no “crash” in the USA in general, outside of a few areas where new residential and commercial building had gone crazy.

Generally, house prices throughout the USA began to slide throughout 2006. In many regions, they took until this year to bottom out; that is, 7 years of depreciation. This should provide a cautionary tale to those readers that might be in a great rush to “vulch”! ‘Buying the dips’ in any Canadian RE correction will prove to be just as financially suicidal as it was for those Americans who were sure it was all over by 2009 and dove in! Greed kills!

cheers!

#37 Conservatives HATE free markets on 06.13.14 at 9:55 pm

#24 sheane wallace

’80 % of the loans in the last 5-6 years would not have been approved by the banks if it was not for CMHC”

Yup 100% true and every Realtor , mortgage broker that posts daily on this Blog knows it to be true. Canada is the biggest house of cards in the world . I know investors like yesterdays example who have 40% down and banks have to sit down and think about it and even then 40% down is not enough. But 5% down and weak employment and banks loan 95% like they are giving away candy since the bank takes no risk. CHMC has to go.

#38 Joe2.0 on 06.13.14 at 9:55 pm

Unbearable or just plain grizzly?

#39 KommyKim on 06.13.14 at 9:58 pm

RE: #10 statsfreak on 06.13.14 at 8:11 pm
If the Canadian banks ended up in big trouble, and the Government won’t bail them out, is it even remotely possible that funds on deposit would be scooped (a la Greece?)

You must be new here. I don’t know how many times Garth has said that there will be no “bail in”. Your deposits are safe.

#40 Mark on 06.13.14 at 10:03 pm

“So we either face several hundreds of billions of losses through government guarantees or currency destruction.”

Guess what currency destruction entails? Much higher interest rates. The only way the government will able to dig themselves out of this hole is to either engage in savage austerity (just like Tim Hudak proposed, but was soundly defeated on the basis of such), or some dramatic form of economic re-invigoration caused by foreign demand.

The wildcard in all of this, IMHO, is how well Canada’s gold sector does over the next decade. If it performs like the tech sector did in the USA in the 1990s, great, the problem can be papered over. If not, then its going to be a very tough road.

#41 wex19 on 06.13.14 at 10:06 pm

Request for Mr. Garth Turner:

I remember as a kid, my parents borrowing to top up their RRSP back in the 80’s and paying back the loan the remainder of the year. My Dad had little financial knowledge back then but had a federal gov’t job. I remember him later in life always saying “I wish I would have had that money in those tough years with 3 young kids, didn’t need RRSP” He bought RRSP for about 10 years before he realized it wasn’t the right tool and didn’t need it. (wife/mom died young so RRSP splitting aside)

Wondering if one day you could go across the great country Canada, and highlight a few of the pension plans. Your thoughts pertaining to their future? For instance would the teacher in ON need to save a single penny for retirement or bank on their pension being there in 20-30 years from now? Would the city worker need to worry about his OMERS pension disappearing in a doom and gloom situation in the future?

Good vs bad, save more or save some, guaranteed or not etc.

Several personal reasons for asking, but discussions regarding pensions usually cover two things: hard to get a job with one today, the boomers will suck them dry for those who are say 1/3 of the way through contributing to one. A lot of discussion surrounds pups getting into the workforce, or old dogs about to leave. What about the guy or gal who is mid thirties, paying into pension plan already, bought house 10-15 years ago, middle class?

It is definitely understood by myself, not to bank on CPP and OAS as a means to live on. However, will they even be there in 20-30 years after the boomers go through?

Just in case your looking for a topic one day soon. Thanks in advance.

#42 Oy Vey on 06.13.14 at 10:08 pm

my REITS

#43 dosouth on 06.13.14 at 10:09 pm

B.C. continues to be on fire…… realtors just can’t believe their luck!!

Best since 2007

#44 Happy Renting on 06.13.14 at 10:10 pm

#22 Mark on 06.13.14 at 8:54 pm

Not hard. Work a decade, save $20k a year, hit a few decent windfalls, and buy stocks on margin.

Not bragging, just pointing out that there’s ways of accumulating a lot of wealth in one’s youth in asset classes other than real estate. While my friends were borrowing their brains out for mortgages, I borrowed my brains out to buy stocks.

==========

It’s certainly doable, but I would argue for most it would be a very hard achievement because:

1) the average young person cannot fathom making the lifestyle sacrifices needed to save an impressive amount of their income. Why save 50% of your income when you can just consume more? People are conformists and the herd is all about conspicuous consumption.

2) most people are so financially illiterate the last thing they need is leverage to magnify their stupid money moves. “Blowing your brains out” is right, whether it’s for financial assets or a house.

For all our slagging of CMHC and the banks, at least they spoon-feed mortgage holders so that at the end of the amortization period, provided there’s no HELOC and the house isn’t trashed, they have an asset with some kind of value. Works better in a non-RE bubble, but I think otherwise a lot of people would have nothing to show for decades of life and work.

#45 Joseph R. on 06.13.14 at 10:20 pm

#30 Basement dweller on 06.13.14 at 9:29 pm

Don’t know you like Dickson. What exactly
Did she do? Almost Every rule change was a joke.

———————————————

“The Office of the Superintendent of Financial Institutions (OSFI) is an independent agency of the Government of Canada, established in 1987 to contribute to the safety and soundness of the Canadian financial system. OSFI supervises and regulates federally registered banks and insurers, trust and loan companies, as well as private pension plans subject to federal oversight.”

Source: http://www.osfi-bsif.gc.ca/eng/Pages/default.aspx

Also, the OSFI chases after imaginary terrorist money.

#46 Inglorious Investor on 06.13.14 at 10:30 pm

#39 KommyKim on 06.13.14 at 9:58 pm

“I don’t know how many times Garth has said that there will be no “bail in”. Your deposits are safe.”

Page 145 of the 2013 budget says:

“The Government proposes to implement a “bail-in” regime for systemically important banks. [Note: OSFI declared all six big banks “too big to fail.”] This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital. This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada.”

After everyone freaked out in reaction to the Cyprus bank bail-in, Ottawa tried to assure Canadians that any Canadian bail-in would not use deposits. Okay, but…

The budget DOES NOT define what “certain bank liabilities” actually means in this case. Bank deposits are bank liabilities. In a crisis, I’m certain that if any liabilities had to be converted into equity to recapitalize the banks they would go for things like bonds first. But, if there is no chance of ever converting deposits, why not DEFINE exactly which “liabilities” are eligible for conversion up front? I believe they left the language purposely vague in order to leave the proverbial door open… just in case.

Are you really going to trust them when they say “trust us”? Ever hear of the term ‘force majeure?’ That’s ‘French’ for “All bets are off.”

#47 Mountain Man on 06.13.14 at 10:32 pm

OK, who is correct: “Edmonton: Even though 13 fools bought houses worth over $1 million last month, the average price of a single-family home in Edmonton fell in April.” -Garth’s blog on May 5th 2014.

The graph from the Edmonton Real Estate Blog shows the opposite:

http://edmontonrealestateblog.com/2014/06/average-prices-reach-all-time-high-in-greater-edmonton-in-may.html

Hard to know what to believe. I’m not sure which is correct, anyone have any insight?

I referenced SFH price. The graph is all properties. — Garth

#48 Inglorious Investor on 06.13.14 at 10:36 pm

#40 Mark on 06.13.14 at 10:03 pm

“The wildcard in all of this, IMHO, is how well Canada’s gold sector does over the next decade.”

Gold miners, as as sector, are in deep do-do right now. I wouldn’t count on them for anything at this point in time. However, if you want to play in that sector, maybe you can pick some take-over targets and say a few prayers to a golden calf.

#49 takla on 06.13.14 at 10:37 pm

whats Goldilocks doing in the Sow grizzly bear costume//??.. … getting ready for the comeing housing bear market I suppose…

#50 Shawn on 06.13.14 at 10:39 pm

Don’t Blame CMHC

CMHC is not the main reason that house prices soared in the last 10 and 20 years or so.

CMHC’s 2013 annual report indicates it has been around for 67 years.

Its requirements to qualify for a CMHC mortgage are about as tough today as they were about 20 years ago.

Low interest rates led to higher house prices and that led to EXPECTATIONS of higher house prices.

People buy expensive houses because low rates make it doable and because they expect house prices to keep rising.

If either low rates or the expectation of ever higher prices no longer applies then we should see house prices fall.

There could come a tipping point and once reached it could get ugly.

CMHC will still be there but it won’t matter.

If something can’t go on forever, it does eventually stop.

#51 Shawn on 06.13.14 at 10:41 pm

P.S.

Only the stock market goes up forever… (when measured in decades)

#52 W on 06.13.14 at 10:44 pm

Conservatives are making noise about income splitting again. I’m still hoping they decide on doubling TFSA limit instead.

Why help couples with kids who can already split expenses but not single parents who can’t. Everyone can use more TFSA room.

#53 45north on 06.13.14 at 10:52 pm

wex19 : For instance would the teacher in ON need to save a single penny for retirement or bank on their pension being there in 20-30 years from now? Would the city worker need to worry about his OMERS pension disappearing in a doom and gloom situation in the future?

pretty funny

I mean suppose Kathleen Wynne worried only about making sure that the provincial and municipal workers had their pensions. Then they would more likely have them (their pensions) but then she would not be elected.

#54 -=jwk=- on 06.13.14 at 10:53 pm

Just saw a car ad with “weekly” payments. $65 a week for 7 years and it is all yours!

#55 -=jwk=- on 06.13.14 at 10:54 pm

LA isn’t winning. Refs need to call another penalty on NY….

#56 Just askin' on 06.13.14 at 11:01 pm

Re: Julie Dickson
“helped engineer the effective but secret bail-outs of Canadian banks after the 2008-9 financial crisis.”

I may be wrong, but weren’t you denying any kind of bail-out had occured for ANY of the Canadian banks just a couple of months ago??

You’re wrong. — Garth

#57 -=jwk=- on 06.13.14 at 11:07 pm

@#11 re: #5 Mark

Even with vandalism and reduced property value (due to correction or whatever), there will still be an inherent value in the property. So to say CMHC (taxpayers) are on the hook for $600 Billion (or whatever it is), is not an accurate statement.

Uhm, no properties can and will have 0 inherent value. This crazy myth about land always being worth something really has to die. Land is worth nothing if nobody wants it. And land with a crappy building, or polluted or whatever is worth less than zero. Happens all the time. See Palmdale, CA and Detroit MI for examples.

#58 Waterloo Resident on 06.13.14 at 11:22 pm

Why does everyone in the Toronto area have this feeling that the entire world has their sights focused on bidding for Toronto houses? Ask any guy in Phoenix if he’s interested in bidding for a house in Toronto and he will most probably say “What?”

#59 Mark on 06.13.14 at 11:26 pm

“American existing home prices are likely still well below depreciated replacement cost.”

Still way, way too much credit available in the US to buy houses with. Wait till that disappears or substantially dries up. There will be much better opportunities for Canadians, in the not-so-distant future, to buy US RE. Especially as Canada’s declining housing market implies a much higher Canadian dollar.

#60 stop lying on 06.13.14 at 11:32 pm

Just bought a house in upper west side tonight.

Admittedly i’m probably nuts, but you only live once as they say, and I have done well on my current house.

The actual public open is tomorrow so not sure what the demographics will be like then, but today the buyers were very mixed, I’d say the biggest group were Jewish, some gentile (for lack of a better word), some Asian (east and south). They were all surprisingly young. Very happy with the diversity.

#61 vulcher relax or be vulched on 06.13.14 at 11:45 pm

JimH. I agree with you 100%
I am a regular reader of this blog and am delighted to see there are so many intelligent people who post daily on this site.
However as JimH stated when housing turns it takes many years to bottom.
So to all those who are waitng to vulch be very very patient because the first vultures buying a 10% correction will be the first greater fools a few years down the road when the market bottoms and the true patient experienced vultures step in.

#62 Cici on 06.14.14 at 12:08 am

This blog post must have been inspired by yesterday’s awesome comment/reflection by TheCatFoodLady.

And you are definitely right about the demographics equation, certain economists have been warning about the impending crisis for at least the past 15 years.

As for the US, I wonder if part of the rebound in Phoenix and elsewhere was due to greedy, horny and overleveraged Canadian “immigrants” buying into this “foreign” market, skewing prices and housing stock. In Florida and Cali, I’m almost sure it was.

#63 pete on 06.14.14 at 12:14 am

so are you saying the housing bubble will continue till at least 2018?

#64 Cici on 06.14.14 at 12:16 am

#4 omg

“They had ridden the market up in the early 2000s and levered into several rental properties. All gone now plus they lost their own house.”

This is the specker demographic that’s worrying me in Canada. Most of the rentals I’ve been in over the years have been owned by people in their 50s or beyond who are leveraged to the max with several rental properties. As prices ramped up higher and higher, they’ve held on hoping for even greater future gains. One is now trying to sell her building for twice the already overinflated price she paid for it 5 years ago, but I can’t see how anyone would sign the dotted line at the ridiculous price she’s asking (FSBO, of course).

#65 Cici on 06.14.14 at 12:24 am

#10 statsfreak

If you like stats so much, you should read them more so that Garth doesn’t have to keep responding to the same questions!

From last night’s post:

#154 domain on 06.13.14 at 1:07 am
So Garth, are you still 100% sure that there will not be a bail-in? And if there was one, do you still think there is no risk to depositors in the event that the systemically important financial institutions (basically all of our banks) become capital impaired? Your ‘hysteria’ post clearly stated your position on the matter, and that you believe that no deposits will be touched during a bail-in in Canada.

Very recently, Moody’s has changed their outlook from stable to negative “on some of the senior debt and uninsured deposits of Canada’s largest seven banks.” The article says they took these actions “in the context of previously announced plans by the Canadian government to implement a ‘bail-in’ regime for domestic systemically important banks.”

Since the 2013 Action Plan made mention to bail-ins that you said people mistakenly interpreted as a risk to depositors, has Moody’s also mistakenly interpreted these bail-in provisions as well?

The article of interest is below, and I am curious what your opinion is:

http://business.financialpost.com/2014/06/11/moodys-downgrades-outlook-for-some-of-canadian-bank-debt-over-bail-in-regime/

No bail-in here. Ever. — Garth

#66 vancouverthunder on 06.14.14 at 12:34 am

Why? Because young people across the US, and as evidenced in this city, have decided that buying real estate is an idiot move – GARTH

PU LEEEZ! Its because they are DEAD ASS BROKE!

Q1 total Federal student loans rose by another $31 billion to a record $1.11 trillion, and up a whopping $125 billion, or 12% from this time last year.

The only job they can find after graduation involves the phrase “would you like fries with that?”
Student loan delinquencies have surpassed credit card delinquencies in the past decade, while student loan debt has surpassed all other forms of non-housing debt:

The New York Times reports that debt might be a major reason why the number of 27- to 30-year-olds taking out home mortgages has plummeted in the past decade.

With average loan balances of $29,400 and national student debt growing from $300 billion to $1.1 trillion since 2003, fewer college graduates are “[entering] the ‘grown-up’ economy” — i.e., buying houses and cars and filling them with pricey consumer products.

Geee ya think?

The Wall Street Journal reported yesterday that home-equity lines of credit (Helocs) had increased at a 8% rate year-over-year in 1Q14. Some banks are more aggressive than others, and perhaps we shouldn’t be surprised to see TBTF government welfare baby Bank of America leading the charge, with $1.98 billion in Helocs in the first quarter, up 77% versus 1Q13.

Yep our neighbours to the South are getting smarter with their money! They are DEAD ASS BROKE!

BlackRock’s CEO Larry Fink has a few words of warning for the exuberant – the US housing market is “structurally more unsound” today that before the last financial crisis.
What does this clown know? He obviously doesnt read Garths blog.

Just because he co founded and built BlackRock – the largest money-management firm in the world by assets under management (4.4 Trillion) dont mean nuttin. He doesnt ride a sportster with stock exhaust and tassels so what could he possibly know.

Dont bet against America – their economy is improving!

#67 Cici on 06.14.14 at 12:39 am

#20 DM in C

OK, that was funny, but an unfair attack. Judging by all of his posts, Mark is quite obviously VERY SMART, and I don’t think he was bragging for the sake of bragging, but to show that RE is not the only or the best way to leverage up huge gains.

Of course, over the past 16 years, almost any idiot could have made huge gains in RE, but most didn’t and won’t because greed will stop them from converting the paper to real gains. In other words, most RE winners are actually losers and will never cash in the gains.

On the other hand, making money via a diversified portfolio takes some time, research and experience, in addition to brains, patience and a bit of an appetite for risk. When you throw in individual stocks, especially those purchased on leverage, you’d better know what you are doing and at least have a lot of balls, if not a big schlong and hot wife.

Personally, if I were Mark, I’d be bragging too.

#68 Cici on 06.14.14 at 12:53 am

#23 R

…or go on WORKING. Most people work to spend their money: big screen TVs nestled inside their RE, SUVs, vacations and kids who need iPhones, expensive clothes and expensive activites before needing to go to expensive universities.

Condos are only cool for a short time, and renting isn’t attractive because it’s not a pinnacle of success.

So, if home prices keeping rising to unattainable levels, those who have been resigned to a life of condo or rental appartment just may decide that early retirement via welfare, or even better, disability, is the way to go. It’s already happening in BC. With the latter, you get free transportation, discounts on cultural events and activities, and other freebies, in addition to time out from the rat race. The only problem? As usual, the people who need it will have a hard time accessing it, because the freeloaders will have loaded up on it in mass numbers.

#69 Keith on 06.14.14 at 12:57 am

@22, @44

In order to accumulate half a mill at age thirty, assuming 20k per year and a ten year time horizon, you would have to average better than 17 percent per year based on a quick online calculation. Very very few investors manage 17 percent per year for ten years, what with the market having a nasty habit of falling off a cliff once in a while.

20k per year in saving in your twenties? That’s a serious income very early in life and a serious rate of savings, or a ton of leverage for someone without a lengthy credit history. Not a realistic life situation for most twenty somethings I’ve met.

#70 Axxman on 06.14.14 at 1:11 am

Good call on the new OSFI head, mid-week the Globe was reporting some retread from CIBC was the lead candidate. They also said that several senior OSFI people who stickhandled the crisis well, left OSFI for big private sector $$$, so they had no choice but to draw from inside the Ottawa gang. I hope this new guy is up to the task!

#71 Freedom First on 06.14.14 at 1:19 am

Yes, I remember the “Secret Bailouts” of the Canadian banks when they happened, but you had to look for the info as the feds and the msm did not inform us about it. I remember trying to tell a few people about the bailouts, but I quickly gave up as people not only looked at me as if I was crazy, but they also were verbally rude about it. I know about our banks being downgraded, but I have quit talking to people about anything financial face to face with most people as their ignorance is painful and they are angered quickly by the truth. See below.

Just look at the insane comments supporting Julia this week and all of the e-mail diarrhea Garth received from the RE worshiping house lusting “Christians”.

Garth. Love it-……….just what we need. A pet. Yes, the banks doing everything possible to lure the house horny with “teaser rates” just like happened in the U.S. and elsewhere world wide, and our feds doing everything possible to, well, well, just like a famous line in the movies describes perfectly: “Damn the torpedoes, full speed ahead”. This is going to be a blast.

#72 Flawed on 06.14.14 at 1:21 am

Bitcoin is a joke. — Garth

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

I wonder if Garth thought this pathetic blog would be here 20 years ago. According to stats I doubt it. Everything everyone is saying about bitcoin they said about the internet in the 90s. May the best futurist win.

#73 };-) aka Devil's Advocate on 06.14.14 at 1:38 am

My information on the US millennial market is quite opposite to yours. I’ll have to dig up and provide my sources and then perhaps you can share yours.

#74 derek on 06.14.14 at 1:53 am

Of course it did. — Garth

Quite conviently forget about the next 10years of bull market.

#75 };-) aka Devil's Advocate on 06.14.14 at 2:09 am

Millennials do want different housing than their parents did though. Eco-friendly, smaller homes with high walkability indecies in urban centres are what Millennials seek. But so too now do Boomerss want that kind of home and they have more money with which to outbid Millennials. Millennials buyers are, consequently, being pushed out to the burbs buying what the Boomers are selling.

I’ll round up my sources and post them tomorrow when I have some time

#76 Nemesis on 06.14.14 at 2:11 am

#GoodMornin’SaltierDogs. #WhatAreYouDoin’Today?

http://youtu.be/1FXKyQUE-BI

#77 To the Moon.. on 06.14.14 at 2:19 am

TSX going to the Moon.

Markets expect “QE Canada 1”

Get in now. Buy any assets. You will be rewarded.

Equities –> WIN
Bonds—> WIN
RE —-> WIN

Cash —> WIN if you get it out of Canada.

Workers —> Lose. Friend is setting up a skills matching service. Foreign workers will be matched with Canadian Employers. The new “Express Entry Visa” system will be in place Jan 1st. This will be a game changer. Lower pay for Pharmacists, Engineers, Tradespeople coming.

Welcome to Globalization ;)

#78 To the Moon.. on 06.14.14 at 2:26 am

A MUST read for all the armchair economists on this blog:

This bubble can be popped by one rule change.

Consider the incomes in Vancouver and the average house price. What gives? Talked to a banker and he said this was the smoking gun that the powers that be try to keep secret.

—> CMHC/Genworth/Canada Guaranty DO NOT VERIFY INCOME FOR APPROVAL WITH CANADA REVENUE AGENCY!

Hmmmmmm…..

#79 Spectacle on 06.14.14 at 2:26 am

Thnx Garth.

Superintendent of Financial Institutions (OSFI), who was in the saddle for eight years and helped engineer the effective but secret bail-outs of Canadian banks after the 2008-9 financial crisis.

Coincidence today, but just heard some details of the Canadian Secret bail-outs for several,of the major Canadian several banks. Real eye opener! Love the trivia .

Re :
#23 R on 06.13.14 at 8:57 pm
They’re going to have to invent some wonderful new lies, or people just aren’t going to want to go on living.

My response: Oh Yeah…the lies are already tumbling in my friend. Their are groups embedded so deeply into the fabric of society in the western world , and their goal is take over banking ( already done ) take over political functions at all levels ( all ready near 100% done ). Motivating to be involved in sharing their truth.

Night all….

#80 benchwarmer on 06.14.14 at 3:22 am

I swear half of the people in Calgary have cosigned on their kids mortgage, own a rental property and a home in Phoenix.
This collapse will be EPIC!

#81 SHELTER THE MONEY NOT THE PEOPLE on 06.14.14 at 4:18 am

https://www.youtube.com/watch?v=HsS1MS3EqyM

Thank you, Government of Canada.

#82 SHELTER THE MONEY NOT THE PEOPLE on 06.14.14 at 4:22 am

#45 Joseph R. on 06.13.14 at 10:20 pm

I’m with you on the imaginary terrorist money.
What a Quack!

We have sunk below Soviet Union levels of freedom.

#83 Roial1 on 06.14.14 at 4:42 am

I just love to read this blog every day.
I listened to. Garth at several of his talks when he was out west, and because I did listen. I am now reading today here in Switzerland as we travel on the payouts from our investments.
Thank you Garth.
Al from lotus land. (Vancouver Island )

#84 SHELTER THE MONEY NOT THE PEOPLE on 06.14.14 at 4:51 am

Carrot on a stick:
My fellow humans. Are we possibly being manipulated like a carrot on a stick?
Our good Government has ascertained that inflation should reach a level of 2%.
Why?
Because they through research that humans will not buy things unless they think that “things” will increase in cost or “value”.
Us, mere humans are fickle and funny things.
If we don’t see the carrot in front of us on a stick.
(inflation) We will simply stop buying “things” because we think we can get it a little cheaper if we wait six months or so for a cheaper price.
Our good government, always acting like our father, has decided this for us.
Therefore they will stop at nothing to manipulate our markets as if we were donkeys always chasing after that carrot!

#85 SHELTER THE MONEY NOT THE PEOPLE on 06.14.14 at 4:58 am

My fellow humans:
Have you ever thought what life would be like in our country if our good government did not manipulate the inflation “target” of 2%?

Would you all be working less?
Would you all possibly be spending less time making money?
Have you ever in your life been so busy?
Why?
If the inflation target was not there would we be spending more of our precious time smelling the roses?
Making more babies?
Spending time with those babies?
Why are we here?

#86 SHELTER THE MONEY NOT THE PEOPLE on 06.14.14 at 5:12 am

How many of you wont answer the cell phone when it rings?
Why?
Is it because of the stress imposed upon you when a person in their voice wants a decision on their request immediately?
Is that why you must now text your children instead of talking to them?
Are we so stressed out that we now cannot answer the phone?

#87 Getting taken to the cleaners on 06.14.14 at 5:19 am

Tried to sell a property in Phuket to a buyer in Hong Kong. He asked if I could come to Hong Kong where he would give me cash! What would I be able to do with a suitcase filled with 500k usd in cash?!!! doh!

#88 basement dweller on 06.14.14 at 7:14 am

Yes, I see now,

Banks did a great job using CHMC insurance and giving everyone HELOC and large preapproved mortgages.

Still not clear why she was independent.

It appears the banks or the banking system all had the same game plan – sell mortgages !!

#89 Shavonne on 06.14.14 at 7:32 am

I’m a 25 year old Sociology graduate and I’ve already made my downpayment for my 3 story home in Thornhill.

Finding a job is all about networking, co-operating, teamwork and respecting everyone regardless of sexual orientation.

The house is valued at $541,194, and house prices are rising every year. If my valuation goes past $800,000, I’m in business ;-)

XxOxx

#90 Crossbordershopper on 06.14.14 at 7:42 am

Since I know both sides of the 49th very well. The most striking difference right now is not the stupid flags of countries I cant recognize on peoples car on the 401/403. Its that it doesnt exist as soon as you cross the border. There is only one flag in the USA, just ONE. You can talk about multiculturalism etc but when the world cup comes around you really notice the difference.
Garth’s point about american 25-34 age group as not having irrational exuberance as their Canadian counterpart is just one difference. Canadian youth i find more conservative. My nephew just graduated WLU, great, he is happy getting an entry level job at an in insurance company. No travelling? No finding yourself?, He is playing it more safe then his own parents. Yes real estate is viewed very differently, They love it up here, in every way, talk about it, track it, value it, fix it up, compare it, etc. Down there, its a place to sleep between going out the door and pursuing your happiness and living your life. Canadian kids dont understand that there is more to life then drywall and laminate flooring. There American counterparts have generally chosen a different path to living their life.

#91 T.O. Bubble Boy on 06.14.14 at 8:05 am

CHINA now going sub-prime!
http://www.bloomberg.com/news/2014-06-12/china-s-no-money-down-housing-echoes-u-s-subprime-lending-risks.html

(did they hire Carney as Finance Minister too?)

#92 maxx on 06.14.14 at 8:05 am

“For that you can thank 5% downpayments, federal CMHC insurance, race-to-the-bottom mortgage rates, the RRSP Home Buyer Plan, the Bank of Mom, and a splay of fed and provincial tax credits encouraging millennials to become debt slaves……”

Absolutely……and that same party attitude towards the acquisition of mortgage debt spills over into consumer debt. Then the bank of mom often comes to the rescue. Again. And again.

#93 maxx on 06.14.14 at 8:23 am

#26 would-be buyer on 06.13.14 at 9:19 pm

“I never thought I would say this, but I miss F.”

What happened to poor F is sad, very sad. However, you might want to re-frame your perspective as he is but one on a continuum of terrible money management/policy decision makers.

#94 Dr. Talc on 06.14.14 at 9:26 am

Nemesis
==

learn to type,
put spaced between words
stop using #
when using links, type what it is, so we don’t have waste out time.
or at least describe the link, you know-
‘singing dinosaurs’

#95 Musty Basement Dweller on 06.14.14 at 9:56 am

I haven’t heard a lot of stories lately about people making big money on flipping real estate in Canada. Watch out when most investors clue in to this. The gravy train has stopped but most don’t realize it yet.

#96 Daisy Mae on 06.14.14 at 10:14 am

#55 Just askin’:

QUOTE: “A bail-out is when outside investors rescue a borrower by injecting money to help service a debt. Bail-outs of failing banks in Greece, Portugal and Iceland were primarily financed by taxpayers.

By contrast, a bail-in, a term first popularized in the pages of The Economist, forces the borrower’s creditors to bear some of the burden by having part of the debt they are owed written off.”

#97 Jonathan on 06.14.14 at 10:18 am

David Dodge, former BOC head and deputy finance minister under Paul Martin, was on CBC radio this morning.

He made it absolutely clear that it makes perfect sense for Ontario to borrow to finance growth and infrastructure now. In fact, he made it clear it would be foolish not to, given historically low interest rates and the need to invest in the public sphere.

Contrast this with the handwringing in conservative media already, claiming that Wynne has no choice but to invoke austerity, lie to her supporters etc…

I can’t remember such a sudden and vicious backlash against a duly elected government since the National Citizens Coalition put up anti-Bob Rae bullboards comparing him to Stalin after he had barely been in office. Seems to be part of the modern right wing BS and manipulation strategy.

Dodge is smart. He played a key role in managing national finances in the 1990s. Remember those days?

Isn’t it interesting how consistently it is neocon, right wing governments that plunge us into debt, and centrist or left leaning governments that get us out, much more smartly?

Mulroney hugely inflated the debt. So did Harper and Flaherty.

This continuing conservative swindle of the middle class probably all really started with Reagan, the biggest fiscal fraud in history, who already had alzheimers while in office and massively grew the US debt in the name of stupid ideology.

When will conservatives realize how far out of touch they are with reality, not just voters? Voters are smarter en masse than commentators, and they recognize that situations are complex, requiring tough choices and prioritizing, not simple ideological temporary fixes.

On balance, they prioritized such prudent government over the gas plants and other ‘scandals’, and the vision offered by Wynne made more sense than the decontextualized, rabid, slobbering at the mouth rantings of Hudak.

#98 Daisy Mae on 06.14.14 at 10:18 am

#55 Just Askin’:

“No bail-in here. Ever. — Garth”

#99 Doug in London on 06.14.14 at 10:20 am

@Cici, post #66:
Renting isn’t attractive because it’s not a pinnacle of success you say? If you rent, then put the money you save into an investment portfolio and have seen it go up in value because you had the common sense to buy on the dips, how could that not be defined as success?

As a famous man once said about this real estate bubble, it will all end badly.

#100 Porsche on 06.14.14 at 10:22 am

Doesn’t CMHC make oodles and oodles of money off all these mortgages. Why would the government let this house of cards fall apart. lol

#101 mathman on 06.14.14 at 10:27 am

RE Shawn #49

You are correct in one aspect low interest rates are a huge part of what is driving the market, but you are dead wrong about CMHC. It has been around for a number of years, but your comment is the same as saying my cell phone from 1995 is the same as my iPhone today.

CMHC has morphed into a beast with policy that insures lower and lower quality mtg’s. Much in the way that Fanny and Freddie evolved, the original spirit was to help families, now CMHC helps anyone with a heartbeat, who wants to speculate on rental properties, “self declared income” (Liar Loans), new canadian programs etc.

We are no different than the US, a five year mtg that renews in 5 years is an ARM. This country will be put into a deep recession once rates rise, as 27% of all employment in canada is tied to real estate both directly and indirectly.

10 years ago I knew 1 real estate agent, now I know a significant amount. The comments above regarding millenials in the states are spot on, young folks here have never experienced a correction in real estate so recency bias is in full swing.

In the 60’s and 70’s if you couldn’t get through high school or pass grade 9 math you had the option of working for big auto and or steel. Today these same folks become real estate agents.

i truly hope i am wrong, but everything in Ontario points to Ireland in 2008.

#102 };-) aka Devil's Advocate on 06.14.14 at 10:36 am

Garth, clearly you are casting your own paradigm biases upon the Millennial generation. Millennials are different than Boomers (you and I and most of they who read your blog). Millennials have different priorities and a different conscience. Boomers are about retirement Millennials are not there yet. Millennials are about making a difference, about “balance”, about “collaboration”, about “technology” and “ecology”. Millennials are going to change the world and they are going to change it for the better. They have seen the mistakes we made and they are hell bent and determined not to follow in our footsteps. Millennials are our future.

There are two major disruptive forces changing the real estate industry: 1. The accelerated technology revolution, and 2. The millennial revolution.
Born between 1977 and 1995, there are 84,000,000 millennials, outnumbering the 77,000,000 baby boomers. Gen X, the generation between, only comprised 40,000,000. As the boomer generation begins to shrink, the wealth has to go somewhere, and the millennials are going to be the beneficiaries. 35% of all real estate transactions in 2013 involved a millennial. According to estimates by the National Association of Realtors, boomers have 1.5 transactions left in their lifetime, while millennials have 6-8.

Here are some characteristics and trends of the millennials:

1. Work/life balance. Why? Look at their driven parents. Over 50% of millennials come from divorced families. Why is there such a high divorce rate with boomers? Every generation has problems, but the huge houses of the boomers allowed separation and fostered lack of communication.

2. Collaborative. No winners, no losers as they were growing up. They never competed against, always worked with. They don’t make decisions in a vacuum. Parents, friends, colleagues all become part of the decision making process. 67% want to live close to friends. 65% want to live close to family. On average, they live 10 miles from where they grew up.

3. Multicultural. Where their parents were part of white flight from the cities, the inner-city failure resulted in forced busing and diversity training. They engaged with other cultures. The suburbs are still homogenous and lack the energy they seek.

4. Eco sensitive. The environmental impact is very important or important to 57%. Walkability is important. They’re pushing back toward the urban centers. The baby boomers are also looking toward the cities. The two largest generations are now vying for the same properties. The boomers have the money. Builders are looking to retrofit the suburbs with urbanized centers.

– Travis Robertson

There is a plethora of information about Millennials on the net just Google “Millennials real estate” or any other such phrase and you will be inundated with opportunity to learn about this exciting next generation.

You don’t think they are going to have a significant impact on real estate? Think again…

TRULIA SURVEY: “RENTER NATION” JUST A MYTH AS 93 PERCENT OF MILLENNIAL RENTERS PLAN TO BUY A HOME

#103 Bubblicious on 06.14.14 at 10:40 am

With that demand waning, true market forces have emerged. And they’re scaring local realtors. There’s been a 16% drop in single-family home sales in the past year, with entry-level homes ($150,000 or less – imagine that) seeing a decline of 37%.-Garth

Quite obvious that if prices go up there will be less properties available under a certain price point and subsequently the number of sales at that price point will drop.
Just like SFH in Toronto under $500,000. Sales numbers in that category have been dropping for many years, not because there aren’t buyers but because almost every SFH is now selling for north of $500,000.

There are currently 4,741 properties for sale in the greater Phoenix area for less than $150,000. Stop making things up. — Garth

#104 omg on 06.14.14 at 10:47 am

#19 Mister Obvious said…
What really got them was a lack of financial diversity, no balance and no appreciation of growing risk.
————–

Exactly, but who could blame them. They really had done no investing before and it was pretty much free money, and appeared at the time, to be without risk. A classic NO-BRAINER, no irony intended.

In hindsight it is easy to see they got caught being greedy. But at the time would it have been easy to get caught up in it. After all everybody was doing it, and even Goldman said it was were the smart money was going.

Prices were going up 20 to 25% annually and rents were going up too. My friends actually put money down on properties, but people could buy things with zero down or “money back” mortgages. All the forecasts were for Arizona to continue to experience strong growth.

I thought about throwing in with my friends on a property but just didn’t have the spare funds at the time (not because I had brilliant insight into the Arizona bubble).

I also remember having the conversation with my friends that even in a downturn they were up so much already that a 10 to 15% correction would not hurt them. NOBODY saw a 30 to 40% correction and NOBODY saw vacancy rates going through the roof.

#105 Shawn on 06.14.14 at 10:49 am

A million dollar portfolio at age 30 is not realistic for most according to Keith at 67.

Of course not, if it were realistic for MOST it would not be worth talking about.

It’s worth knowing about because it is very rare but doable.

And what is some kids tried and “failed” and only got to $400k portfolio at age 30? Not too shabby.

This could work for (a few) kids that enter trades and other high paying jobs where one can get started by age 20 or 22 at most and with no student debt. Only would work for those few that make it a real priority.

As for me, I got started working full time at age 24 with student debt. I managed to raise my net worth to zero by age 30. But I was doing okay and mortgage free at 42 because I made that a priority.

When I was 30 buying a house plus a rental house made sense. Does not appear to be the case today.

#106 };-) aka Devil's Advocate on 06.14.14 at 10:50 am

Because your followers find Trulia a more credible source than CREA

MULTIMEDIA
• To view the full survey results and analysis, click HERE

• To download a SlideShare on the findings and Trulia’s 2013 outlook for housing, click HERE

• To download an infographic of the survey results, click HERE.

The data is two years old. Fail. — Garth

#107 underpaid accountant on 06.14.14 at 10:52 am

#89 cross border

There are reasons why youth don’t travel as much as you old farts did. It costs a fortune to go anywhere overseas these days. Why would you encourage a 22 year old to max out the credit card just to see some foreign land? “It teaches you to find yourself blah blah blah.” Today’s kids have to pay 300% more than you did to do the same thing. Your 1970s degree was worth more and there is no fancy DB plan waiting for the kid when he gets back from ‘seeing the earth.’ It’s a different world today than it was for you. There will be no 20 year Boomer inflation wave that makes us think we’re all financial geniuses. Your nephew is just doing what your generation taught him to do.

FYI It would be “Their American counterparts”

#108 Big John on 06.14.14 at 10:58 am

OK, a main point of this article seems to be that first time young buyers are so important to the market, but they are going to shrink in numbers. The problem is that the graph of projected population numbers supplied by Garth’s article doesn’t show that.

It shows y/y INCREASES in population of 25-34 year age group, until 2020 when it starts to fall slightly.

Also, a National Post article yesterday talks about the echo boom generation starting to become a force in buying houses STARTING in 2020.

#109 omg on 06.14.14 at 10:58 am

#101 };-) aka Devil’s Advocate…..
Garth, clearly you are casting your own paradigm biases upon the Millennial generation. Millennials are different than Boomers (you and I and most of they who read your blog). Millennials have different priorities and a different conscience.
—————————–

Yes the Millennials are different just like the Children of the 60s were different and were going to change the world.

Now those Children of the 60s are running the corporations that are polluting the environment and producing the weapons of mass destruction.

It just one big circle and generations all go through it. We all change the world in some way but in the end its all about human nature which is about “how much” can I get.

The same basic paradigms govern all generations.

#110 Hillbilly on 06.14.14 at 10:59 am

Jonathan – comment # 96

David Dodge essentially resigned / after CMHC started to drastically loosen lending practices for which he called them on the carpet for. (and rightfully so). Some say it was why he left the BOC.

Now he is in the private sector and his opinions have done a 180 degree turn – cheerleading anytime someone suggests taking on debt whether private or public.

He has lost his credibility with many, some saying that he has been fully co-opted.

#111 Shawn on 06.14.14 at 11:00 am

Adjustable rate mortgages

Mathman at 100 kindly responded to my post,

“We are no different than the US, a five year mtg that renews in 5 years is an ARM.”

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

That is a huge exaggeration. Adjustable rate mortgages (ARMs) in the U.S. were purposely below market for a few years and then rose above market by contract.

Canadian mortgages have been mostly 5 year max for the rate since at least the early 80’s. No part of the loan has a below market interest rate offset by a contractual above market part later. Stop making things up.

CMHC did some unverified income mortgages over the past decade and charged a higher rate. That is mostly gone now.

CMHC is simply NOT the reason for high house prices. It may be a necessary condition for high house prices but it has been around through bear as well as bull markets in house prices.

Low interest rates and the self fulfilling prophecy of high prices begatting higher prices are the main reason for high prices and they can fall a lot even if CMHC changes nothing.

First people simply PREDICTED lower house prices. When they went ever higher SOME people started looking for a villain and found it in banks and CMHC.

Some of us merely admitted we were wrong in our predictions.

People should stick to predicting as they will not succeed in getting CMHC banned and it’s not a villain.

“Adjustable rate mortgages (ARMs) in the U.S. were purposely below market for a few years and then rose above market by contract.” Wrong. These mortgages were appropriately funded at market levels and are nothing more than the equivalent of VRMs in Canada, which roughly 30% of all borrowers here now have. Stop making things up. — Garth

#112 Bubblicious on 06.14.14 at 11:03 am

With that demand waning, true market forces have emerged. And they’re scaring local realtors. There’s been a 16% drop in single-family home sales in the past year, with entry-level homes ($150,000 or less – imagine that) seeing a decline of 37%.-Garth

Quite obvious that if prices go up there will be less properties available under a certain price point and subsequently the number of sales at that price point will drop.
Just like SFH in Toronto under $500,000. Sales numbers in that category have been dropping for many years, not because there aren’t buyers but because almost every SFH is now selling for north of $500,000.

There are currently 4,741 properties for sale in the greater Phoenix area for less than $150,000. Stop making things up. — Garth

Regardless if there are 4,741 properties available. The number is meaningless unless you can show that last year there were a similar number of properties available at that price point.

Just admit you made it up. You’ll feel better about yourself. Trust me. — Garth

#113 };-) aka Devil's Advocate on 06.14.14 at 11:11 am

The thing about people is we adapt. We aren’t particularly proactive so much of the time as should be. We tend to hope the inevitable Black Swan will never rise up over the horizon. We know it’s there. We may not know exactly what form it takes we know it’s there and we do have a pretty good idea of what is likely to be the cause of the Black Swan symptom. Yet we do little about it as we bury our heads in the sand and go about our day to day existences.

But we (humans) are a resourceful lot and we will do whatever it takes to smack down that Black Swan once it does appear. The bigger the threat the more resources we will throw at it. And we will continue to throw whatever resources necessary at it until we do defeat it and defeat it we will. We may emerge a different people than we were at the advent of the fight but that is evolution. What doesn’t kill ya makes ya stonger.

I really don’t care what form that Black Swan takes I am confident we will tame it. It will not be an easy fight, it never is. Many will perish, economically or, more devastatingly, in life, as a consequence. But eventually we will overcome the adversity and life will go on. C’est la vie.

It’s all good.

SHIFT happens, always has, always will. Embrace it. };-)

#114 New Investor on 06.14.14 at 11:17 am

I know this isn’t a financial advice blog but actually between this blog and Canadian Couch Potato I’ve learned most of what I know but have a couple of final questions… and help would be appreciated.

Now that I’ve read this blog for a few months, I’ve sold off all my RBC MF’s and am in the process of switching over RRSP’s and TFSA’s into Questrade and building a portfolio of 40% bond and 60% ETF’s (mostly TSE Vanguards)…

2 questions:

1. With all this talk of doom and gloom bubble popping of the RE market, should I avoid 5-10% allocation in REITS and just wait it out for an unknown period until there’s a dip and then buy in, or buy in now and keep reassessing every 3-4 months and at the slightest sign of a pop reallocate away from it?

2. If I’m holding 40% Cad bonds (RRSP) and then 20% Cad large cap equities (TFSA), and potentially adding 10% Cad REITS, (20% left each for USA and International), isn’t that too heavily biased towards Canada?

2b. If there’s such a RE pop about to happen, what will be the impact of the 40% Cad bonds I own? Is that good or bad for my bonds?

Thanks y’all

#115 glutton for punishment on 06.14.14 at 11:20 am

Your bond ETF may not be worth the paper it’s printed on as institutions pile in exceeding the face value of the paper the ETF holds.

http://business.financialpost.com/2014/06/12/bond-etfs-surge-in-size-and-risk-as-institutions-pile-in/

This is insane….Wall St firms can’t buy individual bonds because of a shortage and so they buy ETF’s in amounts that exceed the face value of the bonds the ETF owns…..ergo….they’re virtually worth zero.

False. The ETFs hold valid bond positions and may be priced above or below underlying asset values. They will not go to zero. What a reckless statement. — Garth

#116 };-) aka Devil's Advocate on 06.14.14 at 11:29 am

#108 omg on 06.14.14 at 10:58 am

I tend to agree but do believe we are evolving and each successive generation is doing a better job than the last.

The current economic paradigm, for example, is unsustainable. We all know that. But, as per my last post, as it falters we will throw whatever resources are necessary to resuscitate life into it. We will continue to do this until we have evolved enough that we are ready to adapt a new paradigm because the old one just can’t be fixed anymore. But this will not happen in your or my lifetime, nor that of our children or their children’s lifetime. That paradigm SHIFT comes closer and closer with the evolution of each generation as each improves upon the work of the last. None fail for failure is nothing more than trial and error learning experience. Life is a journey after all.

The Millennial generation is not without it’s faults. They are learning like we did. “I fear the day technology will surpass our human interaction. The world will have a generation of idiots” – Albert Einstein. Yet technology is not going away. We simply are too technologically immature for the level of technology we have achieved. We’ll get there though. I expect we will find the blend of it’s use somewhere between Boomers “belly to belly” and Millennials “don’t phone me, text me”.

Same basic paradigms govern all generations as we are one mass learning as we move forward.

#117 DM in C on 06.14.14 at 11:35 am

“In order to accumulate half a mill at age thirty, assuming 20k per year and a ten year time horizon, you would have to average better than 17 percent per year based on a quick online calculation. Very very few investors manage 17 percent per year for ten years, what with the market having a nasty habit of falling off a cliff once in a while.”

EXACTLY. And he states he had the full million by 30 — I suspect there was a property or two thrown in there, maybe an inheritance, maybe a loan. There’s no way it was done on brains and luck.

If so, he should write a book, “Make a Million in 10 years, saving only $20k ……. THE EASY WAY”

Again, no proof, no substance. Horseshit.

#118 Jonathan on 06.14.14 at 11:36 am

#109 Hillbilly

You said about David Dodge:

“…his opinions have done a 180 degree turn – cheerleading anytime someone suggests taking on debt whether private or public. ”

Quite a sweeping generalization there. Any evidence, at all for that, and the sentiments underlying it? How do you measure “180 degrees”?

Really?

“He has lost his credibility with many, some saying that he has been fully co-opted.”

You mean, “you”, I think.

Debt for investment by government makes a great deal more sense than debt created by unnecessary tax cuts for the 1%, so often supported by neocon nitwits like Hudak, Harper and Reagan.

#119 rosie "moving forward" in the knowledge that, "this won't end well" on 06.14.14 at 11:50 am

115 Devils Advocate

You know, you’re spot on. We humans will run it up the flag pole and all salute. We’ll get into the corners with our elbows. We’ll be a team player. 110% or more. The millenials will iPad us into the future, always moving forward. Owning houses will be the promised land. You really are an awesome inspiration. We all thank you in advance. Onwards towards the great Shift.

#120 AisA on 06.14.14 at 11:51 am

Value much like beauty, is in the eye of the beholder. When I looked at listings from one end of the country to the other a couple of years ago … It was like being put into a value deprivation chamber. I am sure things have not improved.

I don’t know what singular event will set it off, but I am certain that once prices turn, it will not result in a dip from here. House lust will take off it’s velvet cloak and porcelain mask and, house terror will show it’s hideous, yet much welcomed face to this country, as it did in the USA not all that long ago. The pit left behind will indeed smolder.

If you have a place to live that you can afford and are happy with, kudos. If you don’t, waiting will reap rewards that outweigh what at this point is but temporary inconvenience . If you are accumulating real estate assets at these peaks, you will probably financially neuter yourself FOREVER.

The stage is set, all the props are in place. The correction from hell can begin it’s performance whenever it bloody well feels like it. Should it cross the 50% mark I will give it a one man standing ovation.

#121 Adriana Lima on 06.14.14 at 12:17 pm

We’re a millennial couple with 2 young kids and we rent in GTA. We are not insane to put our money in an over evaluated market. We save & invest and we’re free!
We like to travel, my kids have been to 14 countries, we have 1 car and I pay almost everything in cash. We are prepared for the big crash with enough funds to get away from here when the shit hits the fan. Nothing against real estate but we have no desire to own an expensive shack in Toronto and be slaves to the bank. Have a couple of house poor friends, feel sorry for them because they work so hard and all their money goes to the mortgage (interest). They don’t do anything fun; they pass their summers in their backyard BBQ all the time… Well, I rather travel!

#122 Tony on 06.14.14 at 12:17 pm

Re: #25 Shawn on 06.13.14 at 9:15 pm

It was actually the fall of 1987 when rates peaked to around the summer of 1997 in southern Ontario.

#123 };-) aka Devil's Advocate on 06.14.14 at 12:27 pm

Seriously, do you people not know what a significant game changer 2008 almost was? The economic implosion which took place then as a consequence of our greed was the near end of this current economic paradigm. Why did it not collapse that we could move on to something that makes more sense?
There are two reasons we came through the financial crisis of 2008 relatively unscathed:

1. We are not mature enough yet to move on to the next paradigm shift which requires a whole new way of thinking. No generation has been so close to it as the Millennial generation but neither are they yet entirely there none-the-least because they still carry the excess baggage of the competitive wanton material possession lust of the Boomer generation before them.
2. They who are in control have too much at stake on this economic paradigm to let go of it and move on to the next. We all know the increasing divide between the Haves and the Have Nots. There are more and more Have Nots and fewer and fewer Haves. The Haves have the bulk of the wealth. It’s the Pareto Principle on steroids.
The eventual and inevitable undoing of this current economic paradigm will be a consequence of #2. There will eventually be so many Have Nots that they will rebel as we become a more collaborative and less competitive society. We have already moved significantly in that direction. Competition is so yesterday. Yet competition is the lifeblood of this economic paradigm and it is competition that will, ultimately, be it’s undoing. This is why so many are becoming so disenfranchised with Capitalism. Capitalism is a symptom of our current economic paradigm which will have no place in that paradigm which follows. I’m not saying capitalism is a bad thing… capitalism is absolutely a necessary component of our current economic paradigm. The more innovative spawning components of capitalism will be carried over to the next in a more collaborative capacity and function with the competitive material lust component of capitalism left behind. But we are so firmly entrenched in that competitive materialistic current paradigm we are reluctant to let go. And so were we motivated to fix 2008 and we did. Well THEY did and will continue to until such time as you rise up and take back that which by majority is yours. It will happen, just not in your lifetime.

#124 Detalumis on 06.14.14 at 12:58 pm

#101 that made my day, you must know any actual milleniums, the suburban ones stay in the suburbs and start driving at 16, you will see 4 and 5 cars in some driveways. They care about who is hotter than who and partying on the weekends. The few that relocated downtown do it so they can live near the action, the bar scene, the clubs, they don’t do it to wear Birkenstocks and carry string bags to get groceries. They are just as narcissistic as anyone ever was or will be.

They do not collaborate at work, the “Lord of the Flies” thing is just as strong as ever in any workplace. The quiet nerds get their ideas stolen by the golden boys and girls – and so on and so on and so on.

#125 Bubblicious on 06.14.14 at 1:08 pm

Hey, rosie “moving forward” in the knowledge that, “this won’t end well”.

Question for you. Since you have inside knowledge that something is not going to end well. Can you share with us what is it that will not end well? What have you specifically done to prepare yourself for this end you speak of? And lastly, and this is a two parter, when is this end to take place and how do you even know if you’ll still be around to see it?

#126 catalyst on 06.14.14 at 1:09 pm

Just read your post yesterday Garth on Commercial vs Residential lending. There is no arguing there is a huge discrepancy in risk tolerance between the two however there is no way that accountant is telling the whole story. Working as a commercial banker for one of the big 5, I can tell you 60% LTV on owner occupied RE is good business. The absent facts from this case I can guess are the owners do not want to provide a personal guarantee nor do they wish to give a GSA over the collateral property. Finally, potentially there was environmental inspection failure/refusal and banks wont touch lending to those commercial properties. Those are the only things that would turn a bank away and I think, they are prudently managing their risk.

When it comes to residential, there is very little risk management that goes on because most are govt/private insured or have very low LTV if they are ‘climbing the ladder’ from a previously paid off property.

#127 TurnerNation on 06.14.14 at 1:19 pm

Re. voting I temporarily opted out of voting in Provincial elections, by removing my name from the electoral list, by sending a form to Elections Ont.

Why: late last summer I got a notice for jury duty. I was just starting up my first part-time MBA course that Sept. (Why? They gave me advanced standing for all my securities courses, only need 10 courses there instead of the 16. Easy target)
I freaked and also cannot afford potentially weeks off work without pay though my employer will cover one week. I wrote letter explaining school obligations to court and got out of it. Would have gladly done it on weekends, would have been interesting for sure but…

Why: We are taught we are rational economic actors right? Cannot have it both ways. Either I protect my own paycheque or not at all. Letter of the law.

Anyway I learned the jury duty lists apparently are culled from the provincial voting lists. We’ll see.

Maybe this is an anarchist blog after all.

#128 4 AM Sunrise on 06.14.14 at 1:23 pm

#121 catalyst on 06.14.14 at 1:09 pm

collateral property. Finally, potentially there was environmental inspection failure/refusal and banks wont touch lending to those commercial properties. Those are the only things that would turn a bank away and I think, they are prudently managing their risk.

————————————————–

A bank refusing a loan on a piece of real estate because of a failed inspection. WHOA!!! Imagine that! I wonder what would happen to banks’ or CMHC’s books if they declined mortgages based on inspections of the same standard.

#129 Gregor Samsa on 06.14.14 at 1:26 pm

Garth made a very prescient comment yesterday:

“The goal of our existence is not to dwell in a big, empty house, go nowhere and live the same day repeatedly. That’s sad.” — Garth

I don’t know what’s wrong with young people today. They don’t want to live, they want spend all their time, energy, and money on houses. If they can afford it, they will go to Mexico once a year for a cheap “vacation” and consider this living. I know countless people like this, who can never do anything fun because every weekend they are doing something to their precious house.

#130 Smoking Man on 06.14.14 at 1:53 pm

ISIS The next big mover of the markets..

My call, CIA funded and armed to take down Assad. And piss off Russia.

USA will do nothing, oil to spike, stocks to fall. Bonds to rally…

#131 Mark on 06.14.14 at 1:57 pm

“In order to accumulate half a mill at age thirty, assuming 20k per year and a ten year time horizon, you would have to average better than 17 percent per year based on a quick online calculation”

Let’s see, 1990-2000, the TSE tripled. Lots and lots of stocks did a lot better (and I happened to be invested in some of those stocks). Does a tripling in 10 years add up to 17%? Not quite, but that’s without even calculating the impact of leverage. Do the math before you go spouting claims of complete nonsense.

#132 Retired Boomer - WI on 06.14.14 at 1:58 pm

#27 and #104 SHAWN

Best posts of the DAY!!!

Yes, the young, (Millennial’s) seem to have it backwards. In the US they are averse to RE, while their Canadian counterparts can’t seem to buy it fast enough!

The danger of RE is mostly gone from UYS pricing, though it is not as “great” a buy as it was a few years ago. In Canada it is just the opposite, priced to perfection, and priced for a fall!!

As for the 30 yr old with a million portfolio, good job! Even is were only half the way there it would still be fabulous for a 30 year old! (Wish I was that smart…didn’t start investing til my mid 30’s… but I think it turned out OK).

TIME is your best friend, or your worst enemy! Tell the
young ones to Get Moving Now!! Time waits for no one.

#133 };-) aka Devil's Advocate on 06.14.14 at 2:01 pm

#128 Gregor Samsa on 06.14.14 at 1:26 pm

Seriously Gregor, who are you to say they are wrong? To each their own. Just as you would have none of their telling you you’re wrong, neither should you them.

BTW we’re really talking gross generalities here. There are, of course, those who do not follow the generalities of their generation. But they are insignificant as pertains to the force behind the SHIFT. };-)

#134 Mark on 06.14.14 at 2:04 pm

“TSX going to the Moon.

Markets expect “QE Canada 1″

Get in now. Buy any assets.

Agree completely. A long-term trendline of the TSX going back to the 1970s tells me the TSX needs to be around 26,000 at this point (so 15k is quite a bargain!).

Taking the ratio of dividends from the TD e-Series funds for the TSX vs. the S&P500 tells me that the TSX needs to rise approximately 90% to be equivalent (and probably will overshoot).

Canada is in for many years of low policy rates, and very likely, QE. As the economy continues to weaken.

Housing will not benefit though, as housing is the asset class in overcapacity, and its decline will be the reason for “Canadian QE”.

#135 dumb and dumber on 06.14.14 at 2:05 pm

Sharks eat smaller sharks…..is the basic analogy that describes the Phoenix market. In the crash it was companies like Blackrock and Marriott that bought distressed house packages from the banks by the hundreds of thousands of units. There was no money available to average private borrowers.

What we see today is speculators buying houses for cash from the big sharks…selling to foreigners….and still no money available for the little local guy. The market upswing is entirely moved by speculation…entirely smoke and mirrors….there are no first time buyers who qualify for loans….and the loan origination stats bear this out…..the vast majority of sales are still all cash….so where’s the ‘recovery?’

#136 Beach Girl on 06.14.14 at 2:25 pm

I don’t have the time to read all the responses. I have owned rentals for like ever. Shit is starting to fall apart. I have the funds to redo them and will. I think I want to rent. But, if I don’t want to do this much longer, who will? I do not also want to be nice to a landlord.

#137 Daisy Mae on 06.14.14 at 2:34 pm

#128 Gregor: “I know countless people like this, who can never do anything fun because every weekend they are doing something to their precious house.”

***********

Well, to be fair…”to each, his own”. Many, many homeowners derive a great deal of pleasure working around their homes. Designing, constructing, landscaping — puttering, gardening. And winding up the perfect day with a backyard barbecue. The end result is alot of satisfaction in a job well done. It’s fun.

There are many ways to have ‘fun’. What is your definition?

#138 Hillbilly on 06.14.14 at 2:46 pm

Jonathan – comment # 117

How old are you and were you even aware of the BOC when Dodge was running it?

Ever met the guy?
I have.
He was wearing a cheap suit and was notorious for frugality and prudence at the time and his legacy confirms that.

Go do some research and then get back to me.
Go read his policy papers.
Go and read the facts about him calling the head of CMHC and being outraged that they would loosen their lending criteria WITHOUT informing him, the head of the BOC before they announced it citing that it would cause house price inflation.

Believe any old bs you want to buddy, doesn’t change history or the facts.

Don’t let my blog name fool you, I have decades of experience in finance, particularly Canadian finance.

#139 chapter 9 on 06.14.14 at 2:47 pm

#120 Adriana Lima
Great call on your part not to become a house zombie. You know what is important in life!!

#140 Cici on 06.14.14 at 2:49 pm

#98 Doug in London

I totally agree with you on that; I wasn’t expressing my personal opinion, I was sharing my views on what I see going on around me.

I don’t care if I’m not considered successful (I rent and invest savings in the market), but unfortunately, most of the population is focused on material assets and keeping up with the Joneses.

#141 Mark on 06.14.14 at 3:25 pm

“What we see today is speculators buying houses for cash from the big sharks…selling to foreigners….”

Many buyers are just mortgaging or taking out loans against other assets to buy RE, instead of going through the trouble of a mortgage. Just because a significant proportion of buyers in the US are able to produce “cash” doesn’t mean that such cash wasn’t borrowed. The whole ‘cash buyers’ thing is a highly misleading statistic. An individual who sells an existing paid-off house and buys a different one, for example, is considered to be a ‘cash’ buyer. Since this normally makes up a fairly static number of RE transactions, a shrinking of first-time subprime credit buyers will make the ‘cash’ stats look quite inflated as a percentage of overall activity.

#142 Mark on 06.14.14 at 3:30 pm

“Go and read the facts about him [David Dodge] calling the head of CMHC and being outraged that they would loosen their lending criteria WITHOUT informing him, the head of the BOC before they announced it citing that it would cause house price inflation.”

Of course. When the GoC decided to dramatically expand CMHC subprime mortgage insurance, they, in effect, were usurping the normal role of the BoC in creating monetary policy. Ordinarily, it is supposed to the BoC that sets monetary policy for the broader economy, including policy rate targeting, to set inflation within the 2% band. CMHC provided for excess short-term stimulus, which made a mockery out of the BoC’s role.

Now, if the CMHC didn’t exist, perhaps the Canadian economy would be more balanced. For instance, Canada is many tens of billions short of investment in the area of telecom infrastructure. As I pointed out in various comments, this is one of the results of Canada’s telecom operators having to pay 3.5% rates of interest while the equivalent residential RE borrower only pays 2.5% for the same 5-year money due to CMHC subprime mortgage insurance. Ultimately this lack of balance saps economic growth and, in the case of the telecom sector, significant unemployment of some of our brightest minds.

#143 rosie "moving forward" in the knowledge that, "this won't end well" on 06.14.14 at 3:38 pm

#124 bubbles

All excellent questions. I’ll get back to you.

#144 Keith on 06.14.14 at 4:04 pm

@#130 So you have the awesome timing in life to be born in 1970, start investing in 1990, do better than the market triple by 2000. Fair enough, you have your half a mill. After that brilliant stretch of investing, you correctly call the tech crash of 2001 – 2002 and go to cash before that happens, unlike 99.999 percent of active investors. Your theoretical investor is still a black swan.

#145 Chickenlittle on 06.14.14 at 4:05 pm

DA:

#93% of Millennials plan on buying a home….”

Of course they do! That may not mean in the near future. It could mean 10 years from now. That stat means nothing. Howe many Boomers plan on downsizing in the future? Where is that stat?

******
The “shift” will only come when people realize they don’t need half of the things they think they do. Downsizing, simplifying, and budgeting are the way to go. Things will begin to change when we the majority say “No, thank you, we don’t need it.” We need to stop being manipulated by the corporations and powers that be.

#123 Detalumis:

You are right. I work with younger Millennials and they are cutthroat. Actual screaming matches happen at work all the time. And for what? To be the Queen Bee at a dead end job.
I hate the screaming and yelling, but that’s what you get when you work with all women. Too much estrogen.

#146 Andrew Woburn on 06.14.14 at 4:48 pm

Banking giants brace for technological ‘disruption’

“In the United States, tech-savvy “millennials” — who have grown up reading headlines about rotten banking practices, huge banker bonuses and banking failures — are flocking to mobile banking.

Startups are attacking credit cards, low hanging fruit for which companies charge merchants 2.5% per transaction to join their network. One interesting player is Ben Milne, CEO of Dwolla, who is providing a new payment network.

“We charge 25¢ per transaction and people who spend less than $10 are not charged any fees,” he said. In just a few months, his startup has attracted 35,000 merchants and 500,000 customers who can open an account with Dwolla by providing a simple piece of identification like a drivers licence.”

http://business.financialpost.com/2014/06/13/banking-giants-brace-for-technological-disruption/

#147 };-) aka Devil's Advocate on 06.14.14 at 4:53 pm

#146 Chickenlittle on 06.14.14 at 4:05 pm
DA:

#93% of Millennials plan on buying a home….”

Of course they do! That may not mean in the near future. It could mean 10 years from now. That stat means nothing. Howe many Boomers plan on downsizing in the future? Where is that stat?

Actually according to a survey of Millenials 72% plan on buying a home within the next 4 years. Did I not post that somewhere along with the source?

I have work with a good number of Millennials helping them find a home. I have never found them cut throat. They generally know what they want, house and REALTOR wise. They have done their research but they value your guidance. Once they have picked you to work with the only way you can screw up with them is not deliver. They need time to “process” the information and then they act – quickly.

If their decisiveness strikes you as cut throat you simply do not understand them. They aren’t going to wait for you to catch up with the new paradigms for if they do they know they too then become a part of the problem.

#148 WhiteKat on 06.14.14 at 5:07 pm

@NewInvestor re:#115

Stay on topic will you? Sheesh!

Garth, why do you put up with this?

#149 Ralph Cramdown on 06.14.14 at 5:31 pm

#148 };-) aka Devil’s Advocate — “Actually according to a survey of Millenials 72% plan on buying a home within the next 4 years.”

And if the economy performs well and produces good jobs for their age group, household formation will be high, and lots of them will buy. If not, they won’t.

Does anybody ever check whether these surveys are accurate? Millenials are a difficult group to survey accurately, because they’re less likely to have land lines, and any survey that involves self-selection is likely to have inaccurate results. My feeling about most of those homebuyer surveys is that they’re PR material for the companies that sponsor them, usually banks or other interested parties.

#150 Pope Nosty666qpVlad the Snugglebombed on 06.14.14 at 5:59 pm

#131 Smoking Man on 06.14.14 at 1:53 pm — “ISIS The next big mover of the markets … My call, CIA funded and armed to take down Assad. And piss off Russia.”

There are many definitions of ISIS, and these are two of the better ones. The first one — here — would make sense from your view, as they would be CIA funded.

The second — here — gives another point of view. Iraq, Egypt, Iran, China, Russia and many others — all move to a new gold-backed currency!

#151 };-) aka Devil's Advocate on 06.14.14 at 6:01 pm

#150 Ralph Cramdown on 06.14.14 at 5:31 pm

Close your eyes, cover your ears and repeat after me “la, la, la, la, la, la, la, la”.

#152 Shawn on 06.14.14 at 6:07 pm

I was (partly) wrong on Adjustable Rate Mortgages

I said they had teaser rates

Garth responded:

“Adjustable rate mortgages (ARMs) in the U.S. were purposely below market for a few years and then rose above market by contract.” Wrong. These mortgages were appropriately funded at market levels and are nothing more than the equivalent of VRMs in Canada, which roughly 30% of all borrowers here now have. Stop making things up. — Garth

*******************************************
Actually my post at 107 also said that our five year mortgages are not equivalent to ARMs Adjustable Rate Mortgages as Mathman claimed.

And they are not.

Garth says our variable rate mortgages are ARMS. And they are. Except that the really dangerous ARMS in the U.S. included teaser rates. Below market rates just like 50% payments for the first year on a car loan)

According to Wikipedia:

Option ARMs are often offered with a very low teaser rate (often as low as 1%) which translates into very low minimum payments for the first year of the ARM.

So anyhow, the things that were going on in the U.S. with teaser rates and mortgages to complete deadbeats and bums dragged off the street is NOTHING like the situation in Canada.

Our delinquencies remain around 0.33% whereas in the U.S. delinquencies topped out closer to 10% (30 times higher).

Our banks and CMHC are not perfect but to suggest we had anything like the level of subprime and teaser rates that the U.S. had is misinformation and gross exaggeration (whether intentional or unintentional) in my opinion.

#153 Flawed on 06.14.14 at 6:16 pm

Canadian banks are sound
There will never be a bailout
There will never be a bail in
Canadian banks were not bailed out in 2008
“Hi I’m from the Govt and I’m here to help”
“Let’s build and toll everything in BC”
600 billion in unfunded public sector pensions

But don’t worry……

http://armstrongeconomics.com/2014/06/14/government-never-tells-the-truth/

#154 Smoking Man on 06.14.14 at 6:30 pm

http://dyslexicsmokingman.blogspot.ca/2014/06/son-my-cabin-in-muskoka.html

Al right you communist, my son meets his dad’s hero….. In Muskoka….

He’s a lean mean fighting machine…. His name, Rob Ford…

Pic is on my blog..

#155 devore on 06.14.14 at 7:06 pm

#116 glutton for punishment

Your bond ETF may not be worth the paper it’s printed on as institutions pile in exceeding the face value of the paper the ETF holds.

Do you understand how an ETF works? First of all, what you wrote makes no sense, literally. Second, even if I try to decypher your scribblings, the article you linked makes no such claims.

#156 Daisy Mae on 06.14.14 at 7:12 pm

#76 };-) aka Devil’s Advocate: “Millennials do want different housing than their parents did though. Eco-friendly, smaller homes with high walkability indecies in urban centres are what Millennials seek. But so too now do Boomers want that kind of home…”

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

Location…location…location.
Not a new concept.

#157 Chickenlittle on 06.14.14 at 7:14 pm

#150 Ralph C:

PR for RE agents like DA?

Im not surprised DA calls them “decisive”. I make decisions every day therefore that makes me decisive. Now whether I decide to contribute to DA’s kids college fund is another matter.

DA:
Sometimes acting quickly is not the best approach…especially when it comes to huge purchases. Oh well! Give them a few years then they will see how binding monthly payments can be year after year.

In my experience, I have found the younger millennials to be rude and uncivil towards anyone they don’t get along with because they don’t want to be “fake”. Is that cutthroat? No, but it does get annoying after a while.

PS: Im glad Garth let you post again. I enjoy different views on any given topic. I find you very entertaining!

#158 OttawaMike on 06.14.14 at 7:27 pm

Smokingman,

What’s a good bond ETF?

Been looking at PCN.NYSE with a nice yield and some hedging by the Pimco wizards.
———————————————
Ford’s biggest cock-up? Not going to rehab last year on the first round of allegations. Your hero could have made the comeback of the century. Too late now.
His last racist, drunken rant was his swan song.

#159 Jonathan on 06.14.14 at 7:28 pm

#157 Hillbilly

So basically, on the value of David Dodge’s opinion, you are only confirming what I have said and present no evidence to the contrary, save a lame straw man argument? Hmm…

“He was wearing a cheap suit and was notorious for frugality and prudence at the time and his legacy confirms that. ”

Agree, he is viewed as prudent, so his support of the Wynne govt. fiscal plan is a logical continuation of that. That was my point. R..E..A..D.

“Go do some research and then get back to me.
Go read his policy papers.
Go and read the facts about him calling the head of CMHC and being outraged that they would loosen their lending criteria WITHOUT informing him, the head of the BOC before they announced it citing that it would cause house price inflation.”

Actually, I have done my research. This again supports my thesis that Dodge is sensible, conservative politicos are stupid and irresponsible, like you appear to agree.

The onus was on YOU to present research to justify your expressed opinion that Dodge now somehow has become someone who supports ‘reckless’ debt accumulation (presumably this would support your view that opposes what Ontario plans to do).

Where is that evidence, Hillbilly? I see none.

“Believe any old bs you want to buddy, doesn’t change history or the facts.”

The history/facts support my thesis, and these are all you have repeated.

The only ‘bs’ continues to be your utterly unsubstantiated claim that Dodge has become reckless in his zeal for taking on debts.

One last time…any proof? At all? Even a teeny little bit?

Hillbilly, you there?

http://www.youtube.com/watch?v=K8E_zMLCRNg

It’s Saturday I realize, and perhaps you’ve been drinking I lot. I plan to. Have a good night :)

#160 Daisy Mae on 06.14.14 at 7:34 pm

#141 Cici: “I wasn’t expressing my personal opinion, I was sharing my views…”

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

Huh…? ;-)

#161 jess on 06.14.14 at 8:00 pm

#5 Mark
With regard to fraud, in the u.s.a, which of the self – regulating financial institutions self- reported?

http://www.cmhc-schl.gc.ca/en/hoficlincl/moloin/moloin_005.cfm
=======

Texas School District Probed in Visa Program

rogue enrichment programs

Federal agencies investigate the Garland Independent School District in eastern Texas for allegedly exploiting the H-1B program in its recruitment of teachers from overseas.
http://online.wsj.com/articles/school-districts-use-of-worker-visa-program-draws-scrutiny-1401908953

#162 };-) aka Devil's Advocate on 06.14.14 at 8:03 pm

#157 Daisy Mae on 06.14.14 at 7:12 pm
#76 };-) aka Devil’s Advocate: “Millennials do want different housing than their parents did though. Eco-friendly, smaller homes with high walkability indecies in urban centres are what Millennials seek. But so too now do Boomers want that kind of home…”

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

Location…location…location.
Not a new concept.

You read my post where-in I stated that the increase in Divorce these most recent decades coincides exactly with the increasing average home size of the Baby Boomer generation, right? There is a relation – in the minds of the Millenials. They don’t want it.

Location, location, location is a consequence of sociology. Change the social paradigm and you change the locational influences.

#163 KommyKim on 06.14.14 at 8:09 pm

RE: #46 Inglorious Investor on 06.13.14 at 10:30 pm
#39 KommyKim on 06.13.14 at 9:58 pm
But, if there is no chance of ever converting deposits, why not DEFINE exactly which “liabilities” are eligible for conversion up front? I believe they left the language purposely vague in order to leave the proverbial door open… just in case.
Are you really going to trust them when they say “trust us”?

One thing that politicians can be trusted to do is to operate in their own self interest. Any governing party that raids the bank accounts of its average citizen is committing political suicide and will never be seen again. Ever. That is if the pitch fork torch carrying mob doesn’t get to them first.

#164 Setting the Record Straight on 06.14.14 at 8:11 pm

“I was going to say that there should be a government entity equivalent to CMHC that could insure loans and reduce risk for commercial ventures seeking bank funding, in much the same way that CMHC absolves the banks of risks associated with sub-prime residential mortgages.

And then it occurred to me, that there was exactly such an entity, Export Development Canada, (http://en.wikipedia.org/wiki/Export_Development_Canada) complete with an ad on the back of the latest edition of a trade magazine I have on my desk – an ad that touts the expansion of someone’s welding operation (very prescient, Garth!)”

So you want more bureaucrats, politicians, central bankers promoting more crony capitalsm. Great plan.

#165 Vangrrl on 06.14.14 at 8:13 pm

#138 Daisy Mae:
Gregor was talking about YOUNG people. What you describe- gardening, designing, puttering, is fun, yes- when you’re over 40! As for ‘ending the perfect day with a backyard BBQ’, that can just as easily be done on a beach in Hualien, Taiwan with a bunch of ex-pat friends after a day of rock climbing in the mountains… for example.
He is absolutely right.

#166 };-) aka Devil's Advocate on 06.14.14 at 8:19 pm

#158 Chickenlittle on 06.14.14 at 7:14 pm

#150 Ralph C:

DA:

Sometimes acting quickly is not the best approach…especially when it comes to huge purchases. Oh well! Give them a few years then they will see how binding monthly payments can be year after year.

Go back and read my post and you will see I said; “They need time to “process” the information and then they act – quickly”.

They are informed more than you and I ever were. They know how to find the information, and a ton of it, they need in order to make the right decision.

You tell me what’s wrong with that…

SHIFT is like a bus that if it passes you buy there will be another. But unlike buses their schedule is sparse and largely unpredictable. I don’t think you want to miss this most current one Chickenlittle.

#167 Smoking Man on 06.14.14 at 8:21 pm

#159 OttawaMike on 06.14.14 at 7:27 pmFord’s biggest cock-up? Not going to rehab last year on the first round of allegations. Your hero could have made the comeback of the century. Too late now.
His last racist, drunken rant was his swan song.

……..

A thriving big nose teacher, void of natural reproductive instincts becomes the boss of Ontario..

I say anything is possible.

Do you really want to bet against a smoking man..

When did I ever say who-dat had it…

#168 MarcFromOttawa on 06.14.14 at 8:46 pm

Why are 26 year olds being referred to as “kids”?

#169 Ronh on 06.14.14 at 9:00 pm

Just repeating for no reason. Regarding Bail in.
When you give the bank your money to keep, you become an unsecured crediter. Based on an old English law.
And yes your deposit is insured.

#170 Mark on 06.14.14 at 9:19 pm

“Our banks and CMHC are not perfect but to suggest we had anything like the level of subprime and teaser rates that the U.S. had is misinformation and gross exaggeration (whether intentional or unintentional) in my opinion.”

Teaser rates = taking out loans at short-term interest rates which are a mere fraction of their long-term averages. I’d personally call the 1.99% that is offered by Investors Group to be a ‘teaser rate’ mortgage, as the rate could evaporate overnight.

Subprime = what the CMHC engages in guarantees of, with CMHC subprime mortgage insurance. Although CMHC vehemently denies it (to the point of having someone edit a Wikipedia entry), CMHC insurance is subprime mortgage insurance, as nobody in their right mind would pay for CMHC insurance if they believed a loan in question was a “prime” quality loan. CMHC subprime insurance is written to the least creditworthy borrowers — those who are so poor in credit quality and savings habits that they couldn’t even conjure up a 20% down payment!

#171 Mark on 06.14.14 at 9:22 pm

“Just repeating for no reason. Regarding Bail in.
When you give the bank your money to keep, you become an unsecured crediter. Based on an old English law.
And yes your deposit is insured.”

Not only that, but in a hypothetical “bail-in”, bank shareholder equity is wiped to zero. The Canadian market is signalling zero chance of that happening, with Canadian bank stocks being bid to record levels.

As it stands, there is zero chance of a ‘bail-in’ of Canadian banks, and even then, hypothetical bail-in-ees will end up with valuable bank stock if their deposits are converted to equity. The government “bail out” is codified in terms of the CMHC being required to pay 100 cents on the dollar for subprime mortgage guarantees made at the peak of the long-term housing market.

#172 Mark on 06.14.14 at 9:25 pm

“Why are 26 year olds being referred to as “kids”?”

Because that’s how older adults seem to treat them these days? The lack of respect in the workplace for young new hires is right off the charts. I’ve watched over the years, as young new hires out of the universities went from being “the future of the company”, to being considered so much of a burden that firms believe they’re doing the young new hires a favour by even allowing them to be employed.

Especially in the engineering sector. There’s a significant number of engineering employer representatives who have literally made statements such as, “a new grad engineer doesn’t actually produce anything until they’ve been on the job for 5 years”. The same employers damage the talent pool by hence refusing to hire people with less than 5 years of “experience”.

#173 Ralph Cramdown on 06.14.14 at 9:27 pm

#153 Shawn — “Our delinquencies remain around 0.33% whereas in the U.S. delinquencies topped out closer to 10% (30 times higher).

Our banks and CMHC are not perfect but to suggest we had anything like the level of subprime and teaser rates that the U.S. had is misinformation and gross exaggeration”

Careful where you get your delinquency data. I think the usual Canadian source is from the Canadian Bankers Association, which doesn’t measure our subprime lenders. And delinquency is a trailing indicator anyway.

I have trouble coming up with a coherent theory that explains how our home ownership rate at about 70% is about the level the US peaked at, our debt to income is at a level similar to the US peak, yet our marginal borrower is a good credit and the US marginal borrower was a bum. Americans can get hit with huge unexpected medical expenses that are less likely in Canada, and their GINI index means their richest own a bit more of the pie than ours do. But other than that?

We have subprime home and auto lenders here that trade on the TSX. We marketed loan products that have proven time and again to be a bad idea (40 year zero down loans with no principal payments for the first ten years. Cashback mortgages. Loans based on automated or drive-by appraisals. Debt consolidation MEW).

We live similar lifestyles in similar housing at similar income levels as our American cousins. And our houses in many places cost a lot more. High LTV lending at these price levels seems a bit subprime to me for any borrower without a lot of other assets. But maybe it’ll all work out.

#174 Andrew Woburn on 06.14.14 at 9:27 pm

#103 };-) aka Devil’s Advocate on 06.14.14 at 10:36 am
Millennials are about making a difference, about “balance”, about “collaboration”, about “technology” and “ecology”. Millennials are going to change the world and they are going to change it for the better.
==========================

Sort of like, “Turn on, tune in, drop out”?

#175 Nemesis on 06.14.14 at 9:28 pm

#ReturnOf’TheFatman’. #”It’s a desperate journey past mystic barriers!”

INT. ROB FORD RELECTION CAMPAIGN OFFICE – NIGHT

http://youtu.be/1C597ilpTeQ

#176 Godth on 06.14.14 at 10:11 pm

#148 };-) aka Devil’s Advocate

If their decisiveness strikes you as cut throat you simply do not understand them. They aren’t going to wait for you to catch up with the new paradigms for if they do they know they too then become a part of the problem.

Yeah, and the new paradigm is you are full of…yourself.

Keep your overpriced house – it’s a big ‘ole world.

#177 45north on 06.14.14 at 10:44 pm

TurnerNation : late last summer I got a notice for jury duty.

in one of Patrick O’Brian’s books, Lieutenant James Dillon has the watch on the Sophie (HMS Sophie). The Sophie is charged with finding and boarding an American ship and seizing some Irish rebels. Because of his past association, Dillon is anxious to avoid them. So contrary to his duty, he reduces speed but this reduction in speed brings the American ship into view which is then chased down, boarded and the rebels are brought aboard the Sophie much to Dillon’s unease.

Moral of the story: do your duty

#178 Big Brother on 06.14.14 at 10:47 pm

Smoking Man spotted again at Seneca Casino, just a little tipsy. Not Robo Fordo style though!

#179 Tim Hudak's Math Tutor on 06.14.14 at 11:14 pm

Told you so!!!!

http://www.thestar.com/news/ontario_election/2014/06/14/ontario_election_reversal_thornhill_goes_pc_not_liberal_after_data_entry_error.html

A little “math problem” , huh? Funny how the lying left wingers pick on Tim’s math, and then this kind of crap happens.

We’ re busy analyzing the other results across the province as well. We are now only 26 seats short of a majority. Since this took us two days to figure out for Thornhill, we expect by August 5, Tim will be declared duly elected Premier of Ontario with a majority.

Math rules!

#180 Cici on 06.14.14 at 11:19 pm

#161 Daisy Mae

Translation: Most people consider purchases of stuff, and a home in particular, the pinnacles of success.

My observation watching and listening to most people around me, but not my personal view.

#181 Pope Nosty666enVlad the Snugglebombed on 06.14.14 at 11:37 pm

#169 MarcFromOttawa on 06.14.14 at 8:46 pm — “Why are 26 year olds being referred to as “kids”?”

Most (not all) have been dumbed down to having the equivalent IQ level of a blunt pencil sharpener, and these are the next generation of politicos and lobbyists. Canada is well on the way to being a third world country.
*
Adding to post #151, it appears Obama and ISIS’ main objective is to break Iraq up into parts (to spread Iraq’s wealth around) [here], then take Iran’s public central bank and their not-so nuke facilities (remember Three Mile Island? Same thing, except modernized). One of the [un]intended consequences is higher gas prices, to screw sheeple ever more.

What makes an outlandish idea is that China and Russia have both vowed to defend Iran no matter what. America is helping them out, and this holds water, as well.

#182 Cici on 06.14.14 at 11:41 pm

#130 Gregor Samsa,

I totally agree with you. The boyfriend and I are renting a 3-bedroom, two-story home with a big backyard. We have everything we need here now, and no excuse or good reason to go out. End result: we eat a lot, watch TV alot, do a lot of nonsense puttering about the house, and barely ever leave the property. BORING!

When we lived in a tiny, shitty and depressing apartment that we never wanted to be in, we had a fabulous life: every weekend out hiking in the country, going to beer festivals, walking around the old port, taking music lessons, visiting friends. Almost all of our friends have bought homes or are renting large suites or houses, and the end result is that everybody is nesting and no one sees anyone any more.

So, I was on vacation recently and left the boyfriend at home (that’s another story, too long this time…sorry). While I was away, he invited a buddy over to play cards. This buddy is happily married with a fabulous wife and two beautiful young children and lives way out in the suburbs. Now, he spends almost all of his time cocooning and raising his children with the help of his wife. However, before going home that night, he told my boyfriend that he had really appreciated this short time away from home, and asked my boyfriend if he could invite him over once a week so that the two of them could just hang out, relax and play games. Yup, loves his home and family, BUT NEEDS to get away from time to time, just to destress and change his mindset.

#183 ed on 06.15.14 at 12:13 am

Excellent; it seems Canada has made an incredible physics breakthrough–we have found out how to break the rules of gravity; house prices shall never come down…

#184 Inglorious Investor on 06.15.14 at 1:53 am

#164 KommyKim on 06.14.14 at 8:09 pm

“One thing that politicians can be trusted to do is to operate in their own self interest. Any governing party that raids the bank accounts of its average citizen is committing political suicide and will never be seen again. Ever. That is if the pitch fork torch carrying mob doesn’t get to them first.”

Yeah, that sounds good, but there are ways around the politics. For example, make it a BOC initiative. Remember, the BOC is supposed to be independent and free from government oversight. In fact, they’ve used this tactic before. Furthermore, as was the case in Cyprus, only uninsured deposits would be affected. They can always attempt to claim that only those who can really afford it would bear the cost to save the banks, and by extension, the economy.

Never forget that when push comes to shove they will throw the people under the bus to save the banks. They can always engineer it or spin it in some way to sell it to the masses. This is what goverrnments do as a matter of routine. Now, I realize the risk of them raiding deposits may be very low at this point. However, I’d rather have any such exemption in writing (e.g. codified in law) rather than rely on hope and their good graces. Wouldn’t you?

#185 Setting the Record Straight on 06.15.14 at 2:19 am

For those of you bemoaning the results of the Ontario election, I certainly hope you did not vote.

If you get out on the ice, don’t complain if you are body checked. Watching politicians come and go and expecting different results is a definition of insanity.

If you want the right to complain and to object— stay away from the polling booth.

“If voting mattered they’d make it illegal.”

#186 BillyBob on 06.15.14 at 2:56 am

#167 };-) aka Devil’s Advocate on 06.14.14 at 8:19 pm

“Go back and read my post and you will see I said; “They need time to “process” the information and then they act – quickly”.

They are informed more than you and I ever were. They know how to find the information, and a ton of it, they need in order to make the right decision.

You tell me what’s wrong with that…”

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

Sure, happy to oblige.

Having access to masses of information has no correlation whatsoever to the quality of a decision. Facts are not wisdom. You make the assumption the decisions made are “right” without substantiating that. That’s how you’re wrong. Your self-assurance – based on nothing at all – is typical of the generation you describe.

I am an airline pilot, expat, living in Dubai. (So not unaccustomed to making fairly important decisions, quickly AND correctly). My cabin crew (16 on a flight) are drawn from 160 different nationalities, and total just over 18,000 in the company. The vast majority of this demographic is in the early-to-mid 20’s age group.

In the course of the job I spend a great deal of time interacting with them, socializing on layover and on the crew transportation, and count several as friends. I have seen NOTHING that would materially dispel the “Millennial Stereotype” that their bracket has been saddled with. I don’t blame them, they are a product of their lives and times.

But if you are waiting for them to save the world, you are in for a massive disappointment. They simply don’t have the impulse control, the self-discipline, or grasp even slightly the concept of delayed gratification. How could they? They never had anyone model this behaviour for them.

Your romanticizing of them is bizarre, to say the least. I find the complete lack of critical thought, terrifying. It’s like the zombie apocalypse, with smartphones.

But I suppose every generation thinks they will be the one to save the world with their “new” ideas.

#187 maxx on 06.15.14 at 8:17 am

#171 Mark on 06.14.14 at 9:19 pm

CMHC- full-bore, hypnotic and mindless conviction that more and more home ownership is “good for the economy”. What economy?

Gross mismanagement of the fiscal purse through dumb programs harms everyone.

Canadians pay gross amounts of tax for useless and often harmful cloud shoveling- at all levels of government.

After never-ending rounds of austerity-making waste, it’s “skip to my Lou, my darling”, push the dossier to the next butt in this post, here’s a fat indexed pension with benefits and no one can touch me, tra-la.

Try to get away with that in the private sector.

It is beyond irksome for fiscally responsible Canadians to be propping up re addled fools, both in and out of government, year after year after year.

CMHC helps nothing and no one, save the overpaid twits running it and FIRE.

FIRE CMHC.

The fiscal undertow has arrived.

#188 2CntsCdn on 06.15.14 at 9:24 am

No politician or political party has the balls to be a buzz-kill and stop this party …… for many …. home ownership (and evaporable equity) is the last positive thing Canadian citizens have left.

The market couldn’t care less about politics. When it turns no government can abate it. — Garth

#189 Daisy Mae on 06.15.14 at 9:28 am

“No bail-in here. Ever. — Garth”

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

So we can look forward to more secret bail-outs by taxpayers, since our banks have been downgraded to ‘negative’?

#190 the right move on 06.15.14 at 9:43 am

Homes will never drop as long as there is lots of work and cheap interest. Thats the reality sorry folks

#191 Ontario's Left Coast on 06.15.14 at 9:57 am

You guys are giving millennials way too much credit re: the future and the great shift. I work with a number and all I see is a bunch of self-absorbed babies looking for their next hit of unconditional love via broadcasting every detail of their lives on social media. I have nothing against this generation but – believe me – there is no grand plan.

#192 Daisy Mae on 06.15.14 at 10:16 am

#164 KommyKim: “One thing that politicians can be trusted to do is to operate in their own self interest. Any governing party that raids the bank accounts of its average citizen is committing political suicide…”

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

Not only that, but we’d go back to the barter system, the ‘underground economy’ would flourish, we’d be burying our money in the backyard….because once trust is gone, it’s gone forever. Period.

#193 Daisy Mae on 06.15.14 at 10:21 am

#166 Vangrrl: “…after a day of rock climbing in the mountains…”

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

I’ll leave that to you….

#194 Daisy Mae on 06.15.14 at 10:24 am

#169 MarcFromOttawa: “Why are 26 year olds being referred to as “kids”?”

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

Because they still have alot of growing up to do. They just don’t know it.

#195 Inglorious Investor on 06.15.14 at 10:31 am

#172 Mark on 06.14.14 at 9:22 pm

“[…] hypothetical bail-in-ees will end up with valuable bank stock if their deposits are converted to equity.”

First of all, if a bank becomes insolvent and needs a bail-in, how much will its common equity be worth?

Second, I call common shareholders the ‘bitches’ of the capital structure because they are last in line to get any value if a company goes bankrupt. So if you go from being, say, a bondholder to a common shareholder, your risk just jumped significantly.

If you love shares so much, then just buy shares. Nothing wrong with that; just understand what you are getting.

#196 Inglorious Investor on 06.15.14 at 10:33 am

Happy Father’s Day, Garth.

Bandit gave me a new set of heated grips. — Garth

#197 Daisy Mae on 06.15.14 at 10:35 am

#173 MARK: “…The same employers damage the talent pool by hence refusing to hire people with less than 5 years of “experience”.”

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

That has never changed. Every generation faces the same dilemma.

It’s always been: “(They) want experience…but how can I GET experience if no one will hire me?” Sooner or later an employer gives you a chance.

#198 ole Doberman on 06.15.14 at 10:44 am

Looks like more places coming up for sale here in NW Calgary. If they dont sell within 2 weeks we may have a changing trend.

#199 Daisy Mae on 06.15.14 at 10:46 am

#183 Cici: “When we lived in a tiny, shitty and depressing apartment that we never wanted to be in, we had a fabulous life: every weekend out hiking in the country, going to beer festivals, walking around the old port, taking music lessons, visiting friends.”

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

Sounds great. We all did it. But people get older. And interests change. And that’s just the way it is. And it’s not a bad thing.

#200 };-) aka Devil's Advocate on 06.15.14 at 10:54 am

#187 BillyBob on 06.15.14 at 2:56 am

Quit sounding like an old fart flying bus driver. You are no better than anyone else. The Millennial generation will be in control of our destiny soon enough and just as your and my forefathers passed the reigns of power to us so too will we to the Millennials.

I for one am confident and look forward to their being far better stewards of this planet than we ever were. And THAT my friend will not be hard to do.

#201 OttawaMike on 06.15.14 at 10:59 am

Bandit gave me a new set of heated grips. — Garth

Heated vest first if you don’t already have one. It took me 30 years of riding to discover these.

Not surprisingly, a few Canadian companies make this ware:
http://electrowear.ca/
Is the one I use.

#202 Ole Doberman on 06.15.14 at 11:07 am

Armstrong’s economic confidence model is right on track with the rebound in real estate – however it’s just a dead cat bounce and see’s large drops coming post 2015:

http://armstrongeconomics.com/2013/11/23/real-estate-3/

Interesting scoop on Canada’s economy declining with the US 2015.75:

http://armstrongeconomics.com/2014/06/15/comment-from-ontario/

Garth will be proven correct if all these come to pass, we are almost there blog dogs.

#203 kommykim on 06.15.14 at 11:29 am

RE: #185 Inglorious Investor on 06.15.14 at 1:53 am
#164 KommyKim on 06.14.14 at 8:09 pm
However, I’d rather have any such exemption in writing (e.g. codified in law) rather than rely on hope and their good graces. Wouldn’t you?

Yes, having it written so would be much better.

RE: #193 Daisy Mae on 06.15.14 at 10:16 am
Not only that, but we’d go back to the barter system, the ‘underground economy’ would flourish, we’d be burying our money in the backyard….because once trust is gone, it’s gone forever. Period.

Yup, and with a large part of the economy gone underground, the tax revenue would be gone along with it.

#204 Godth on 06.15.14 at 11:35 am

#192 Ontario’s Left Coast

A Grand Plan would be nice. Do you have a road-map for the future we should be following? The Grand Plan as I see it unfolding is US global hegemony at any cost. Then we can download our consciousness into a cybernetic universe of our creation and sing a collective binary Kumbayah.

That’s the vision we’re being sold. Sounds like UTOPIA.

#205 crowdedelevatorfartz on 06.15.14 at 11:37 am

@#187 BillyBob

“its like the zombie apocalypse, with smart phones”.

I almost inhaled coffee up my nose…

Good one.

747’s ?

#206 pinstripe on 06.15.14 at 12:11 pm

The millennials are highly overrated.

I will do without rather than hire a millennials.

The millennials are more self served than the boomers.

The boomers are the only role model for the millennials.

Anyone depending on financial support in the future via CPP, OAS and GIS better reconsider their options. Working until death is one of them.

#207 Daisy Mae on 06.15.14 at 12:31 pm

#189 2CntsCdn: “No politician or political party has the balls to be a buzz-kill and stop this party …… for many …. home ownership (and evaporable equity) is the last positive thing Canadian citizens have left.

The market couldn’t care less about politics. When it turns no government can abate it. — Garth”

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

Yup! It’s too late. There’s no turning back. The government created a monster it can’t tame. Out of control. How’s that for ‘leadership’?

#208 TurnerNation on 06.15.14 at 1:08 pm

#178 45north

What duty? This capitalism bro. I’d gladly pay more tax to ensure jurists get paid a reasonable amount.
Rational. Economic. Actor.

– Re. Ford. He’s not going to change or get better.

No incentives exist. He’s already lost his mayoral powers. His family will stick by him no matter what. His business interests and family fortune will remain intact.
Why change?

#209 SofaKing on 06.15.14 at 1:11 pm

‘No bail-in here. Ever. — Garth’

ok, so from the FP article posted by Cici, what I can interpret is that the ‘bail-out’ they referred to
during 2008 finance melt down, was that the tax payers were on the hook for the banks liabilities
through the use of CMHC?! It totally makes sense, as CMHC did the heavy lifting during the panic
and the CB pushed intra-bank lending rates as low as they could. Thus saving the CDN economy.
And now in 2014, CMHC with the authority of the finance dept. is shifting the tax payer’s ‘bail-out’
to the hands of the private insurers as the storm clouds of the past economic collapse havr completely
dissapated.

Wow, socialism for the rich when times are hard, and crony-capitalism for the rich when times are better.

How many times will this sad story have to repeat for tax payers to wake up?

#210 screwed on 06.15.14 at 1:24 pm

Real estate sales in the Fraser Valley are red hot. Yoy sales up 18% and prices up avg. 7%.

Personally, I can attest that every shag that’s been listed for 2+ years is finally selling. I’m talking old moldy musty dwellings on crappy pieces of land, never to see any sunlight and with a chance of flooding from a nearby creek come a good winter run-off.

What to make of this? I betcha money is flushing into real estate and buying titles because the value of money is going zero. Everything not nailed down will be bought and cash converted into real estate titles.

Interest rates will NEVER rise because the CBs flushed 30 trillion Dollars into the financial markets over the last 5 years. They doubled the money supply and although inflation has yet to hit hyper speed, the rising cost of everything is in plain sight.

Go out, buy a piece of land if you have cash laying around. There will be defaults on cash and hoarders of cash will get haircuts. Mark my words.

#211 triplenet on 06.15.14 at 1:26 pm

153 Shawn — “Our delinquencies remain around 0.33% whereas in the U.S. delinquencies topped out closer to 10% (30 times higher).

In the late 90’s the CMHC delinquency rate impacted the values of many real estate markets in BC.
It was a repeat of the mid 80’s.

#212 45north on 06.15.14 at 1:50 pm

AisA ( A is A not Asia ) : I don’t know what singular event will set it off, but I am certain that once prices turn, it will not result in a dip. House lust will take off its velvet cloak and porcelain mask and, house terror will show it’s hideous face to this country, as it did in the USA not all that long ago.

“velvet cloak and porcelain mask” – nice

stop lying : Just bought a house in upper west side tonight.

Admittedly i’m probably nuts, but you only live once as they say, and I have done well on my current house.

The actual public open is tomorrow so not sure what the demographics will be like then, but today the buyers were very mixed, I’d say the biggest group were Jewish, some gentile , some Asian . They were all surprisingly young. Very happy with the diversity.

here’s what I see: you bought another house in Vancouver. You now own two mortgages. You are nuts. “the buyers were very mixed”. What buyers? You either sell your first house or you don’t. You didn’t.

#213 Snowboid on 06.15.14 at 1:58 pm

How nice to see the golden god of RE back here shoveling SHIFT.

But as one poster noted, at least you are an entertaining addition to the blog!

#214 DonDWest on 06.15.14 at 2:06 pm

“For that you can thank 5% down payments, federal CMHC insurance, race-to-the-bottom mortgage rates, the RRSP Home Buyer Plan, the Bank of Mom, and a splay of fed and provincial tax credits encouraging millennials to become debt slaves……”

None of these ideas were “invented” by millennials. So why are we blaming young people again for the conditions of the economy? Oh right, it’s something old farts do to avoid responsibility, carry on. . .

#215 };-) aka Devil's Advocate on 06.15.14 at 2:23 pm

Once again I get the clear impression that the predominant demographic reading this blog is little more than argumentative, prejudicial, cranky old farts.

#216 bill on 06.15.14 at 2:31 pm

will there be enough moist virgins to feed a growing bear family?

#217 };-) aka Devil's Advocate on 06.15.14 at 2:35 pm

The eventual and inevitable undoing of this current economic paradigm will be a consequence of the increasing power imbalance between the Haves and Have Nots. There will eventually be so many Have Nots that their whispers of discontent will become a unified battle-cry. That unified battle-cry will be the hymn of a more collaborative and less competitive society – collaborating for change while they who have held the power until then compete to hold on to the past.

SHIFT happens. The Millennials are the future the Boomers were the past. Might as well embrace it because you can’t change it.

#218 Nemesis on 06.15.14 at 2:57 pm

#WhatWouldGrandPaDo?Or,BillyBobFlysAJurassicClassic? #WeekEnd’sBestThinkPiece

[NewStatesman] – Paul Mason: what would Keynes do?: The revolution in IT and how it is transforming our world in ways that even economists are struggling to understand.

…”Recently the news headlines were dominated by a striking image: a Turkish political adviser in a suit kicking the relative of one of 301 miners killed in the Soma disaster, as the man lay on the ground and was restrained by two security guards. Some saw the image as symbolic of the situation in Turkey. I think it is a metaphor for the global situation since the fall of Lehman Brothers.

The bargaining power of labour was already low – hence the stagnation of real wages in many economies, the disappearance of high-skilled work, the return of slave-style work intensity and surveillance at work. Trust in politicians is minimal, hence the tendency for unpredictable social crises and protest movements to break out repeatedly. When they do, ordinary people face a scale of repression, even for stepping off the pavement, that would have seemed to Keynes’s generation simply fascist.

The most symbolic figure in the picture is the man in the suit. He represents the essence of oligarchic power. For him, the added bonus was that he hurt his foot and was given a week’s sick leave; for the miners who went on strike for a day in memory of their colleagues, there were, naturally, two days’ pay docked.

In late neoliberalism, profit has become primarily rent. The art of making money has become the art of cornering the supply of something, repressing its workforce, rigging politics in your favour so that pleas for better regulation are blocked and registering your company in such a way as to avoid paying tax. Anybody who objects can be kicked.”…

http://www.newstatesman.com/economics/2014/06/paul-mason-what-would-keynes-d

#SardonicComicRelief #ZombieApocalypse #ShameAboutTheHardwareBut, “Hey,AtLeastTheAppsWork!” #MikeTheEngineerWillUnderstand

“We recognize the problems we have had with all the currently fielded interceptors… The root cause was a desire to field these things very quickly and very cheaply…. We are seeing a lot of bad engineering, frankly, and it was because there was a rush.” – Frank Kendall III, UnderSecretary of Defense for Acquisition, Technology and Logistics

[LAT] – $40 billion missile defense system proves unreliable

http://www.latimes.com/nation/la-na-missile-defense-20140615-story.html#page=1

#BonusZen! #HowDoYouSay,”Fore!”InMandarin?

[LAT] – Chinese investors buying up U.S. golf courses

…”Eight years ago, Du Sha cashed out his chain of home-improvement centers — the first superstores of their kind in China — with a sale to Home Depot for $100 million.

Today, with a net worth of more than $600 million, the former economics professor has taken up the conventional pastime for those with money and time: golf.

Du has bigger plans than reducing his handicap. Teaming with a Canadian golf executive, he has bankrolled Pacific Links International, which now owns 10 high-end U.S. courses, including the $20-million Dove Canyon Golf Club, in a private community abutting the Cleveland National Forest in south Orange County.”…

http://www.latimes.com/business/la-fi-chinese-golf-investors-20140615-story.html#page=1

#219 Flawed on 06.15.14 at 2:58 pm

#190 Daisy Mae on 06.15.14 at 9:28 am
“No bail-in here. Ever. — Garth”

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

So we can look forward to more secret bail-outs by taxpayers, since our banks have been downgraded to ‘negative’?

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

This is why bitcoin is flourishing. You cannot cheat a math based system. And the more corrupt the place, the more its flourishing. People are saying “Bitcoin is a joke” and it “is a ponzi scheme”. Really? And Govt is not?

http://www.economist.com/blogs/schumpeter/2014/06/bitcoin-argentina

What will make bitcoin skyrocket? I give you SOVEREIGN GOVERNMENT.

(here the Govt cuts the power on Die Hard and the vault opens – the Govt’s of the world will lose ALL credibility with it’s corruption, bloated public sector and money printing and bitcoin will soar as it cannot be cheated or manipulated like Govt can/is)

http://3.bp.blogspot.com/-ML5yAWVaPrQ/UBi2MJuzfkI/AAAAAAAADwY/IylVygWyDOY/s1600/Die-Hard-5.jpg

#220 Smoking Man on 06.15.14 at 3:06 pm

#179 Big Brother on 06.14.14 at 10:47 pm

I know who you are…. Ha

#221 sciencemonkey on 06.15.14 at 3:07 pm

I agree about jury duty, I will do anything to get out of it if it means I lose some of my already limited annual income. And what a great system that leads to, a jury of the retired and longterm unemployed.

#222 aaron on 06.15.14 at 3:10 pm

Garth, the Mom and Pap bank is merely the start of wealth transfer. The millenials would receive the greatest wealth transfer than the boomers have. The phenomenon will last for 20 – 30 years.

This is particularly bullish for RE in the long run. This is something you fail to see.

Good luck with that. Most house-rich, asset-poor, pensionless Boomers will be lucky to stay solvent. — Garth

#223 the jaguar on 06.15.14 at 3:23 pm

#187 Billy Bob. You nailed it. Never mind the rantings of aka. What he doesn’t understand is that we don’t have to “embrace” anything. We’ll just vote with our feet based on our values.
Give the millennials the keys to the kingdom. Then turn out the lights, sneak out the back door, and don’t tell them where we are going or how to find us. The cranky old farts will go off the grid. Love it.

#224 Godth on 06.15.14 at 3:30 pm

#218 };-) aka Devil’s Advocate

New York Times Says “Lack Of Major Wars May Be Hurting Economic Growth”
http://www.zerohedge.com/news/2014-06-14/new-york-times-says-lack-major-wars-may-be-hurting-economic-growth

#225 TheCatFoodLady on 06.15.14 at 3:30 pm

The kids are alright – really. Look, the millenials are going to be fine; eventually. They’re no more self centered, stupid or clueless than we boomers & other generations happened to be. And why are we generalizing them anyway? The only traits most of them share are youth, inexperience, dreams bigger than most realities can handle… the same things OUR generations all shared when younger or much younger than we are now.

Can they be self centered, rude, blow off work, expect to much? Sure. We were the same way. They’re also capable of incredible acts of generosity, kindness & compassion. Many do an extraordinary amount of volunteer work. Many more are smart to the point it takes my breath away & they’re savvy enough to use social media & connections to take their brilliant ideas & translate them into action – action that makes a great many lives easier, more productive, more rewarding.

They won’t completely redefine the world – there’s no grand plan’. There wasn’t when the world was suffering boomer indigestion either. Many things have changed – some for the better, some for the worse but change is one of the few constants in life. None of us know what then world will look like tomorrow or 20 years from now. But we’ll find a way – we always do.

And they are raising great kids. I recently took up fishing – until yesterday I’d been twice. My better half took me locally to make sure I knew which end of the rod to point to the water. He had to do everything else. I felt like a helpless child. Yesterday, he took me to a real fishing spot. Two sisters, roughly 8 & 10 saw I couldn’t deal – I had no clue what I was doing. They talked me through picking up a worm & baiting my own hook. Couldn’t have done it without them cheering me on. The younger one gave me a tutorial in setting hooks. It was humbling. It was great! Yup – the kids are alright.

As to it not being life’s goal to end up alone in the old home doing the same things every day. I humbly disagree when it comes to many elderly. No, they don’t want to be alone but they thrive on & take comfort in their routines. It gives them structure & for many, peace.

#226 BillyBob on 06.15.14 at 3:38 pm

@201 aka Devil’s Advocate,

Never said I was better than anyone, only that Millennials aren’t worth much as workers when they have no work ethic.Too bad there isn’t an app for that. I suppose I do seem old to them, in my early 40’s. But I’m just another Gen X’er, you know, the “slackers” from the 80’s. So only one generation older, if that – and I find the contrast, amazing. But then we didn’t have Facebook to tell us how great we all were.

It’s nice to see you’re as full of “shift” as ever. At least everyone knows you’re just here to make the rest of us laugh.

@206 crowdedelevatorfartz

B777 (Emirates Airline)

#227 Nemesis on 06.15.14 at 3:41 pm

#ForCiCi. #Janis: DialingForDollars

http://youtu.be/C-GFqhCq2HA

#228 };-) aka Devil's Advocate on 06.15.14 at 3:51 pm

#222 the jaguar on 06.15.14 at 3:23 pm
and
#223 Godth on 06.15.14 at 3:30 pm

1. Collaboration yields multiple gains over competition.

2. War is the pinnacle of competition.

Oh and by the way, that line in the sand between the Haves and the Have Nots; It’s moving. Which side are you on. Well, like, me and everybody else in “Disneyland”, we are far, far from that other side of the lines “voices of discontent”. But the line is moving our way and, while not in your lifetime, will arrive.

};-)

#229 Godth on 06.15.14 at 3:54 pm

#225 TheCatFoodLady

This is my favorite documentary, it’ll fill in some gaps:
http://www.youtube.com/watch?v=xLqrVCi3l6E

We Are The Monsters We’ve Been Waiting For
http://rigint.blogspot.ca/

A short history of progress
http://www.youtube.com/watch?v=00iY4cpEQDY

The kids will not be OK unless the oldsters change their minds.

#230 };-) aka Devil's Advocate on 06.15.14 at 4:11 pm

Billybob

I’m a Boomer who, until only recently, didn’t get the Millennials myself even though both our children qualify as such.

We coddled our children more than our parents did us, I know that. But what I am seeing is Millennials growing up and developing into a generation I am confident will do a better job than we did. It looks to me like we didn’t do a bad job raising them.

It’s called evolution and I believe in it more than I do divine intervention.

Not such a “laughable” comment but one I am sure will cause some controversy.

#231 shawn on 06.15.14 at 4:13 pm

Wake Up and What?

Sofa King at 210 concludes:

Wow, socialism for the rich when times are hard, and crony-capitalism for the rich when times are better.

How many times will this sad story have to repeat for tax payers to wake up?

******************************************
Wake up and what? finally save a few dollars and invest in profitable companies? Buy bank shares and be the lender rather than the borrower?

Or just wake up and whine some more.

And there was no bank bail out in Canada. For gosh sake CMHC bought back some mortgages that they already guaranteed. (CMHC now owned mortgages that it previously just guaranteed).

This put more cash on the balance sheets of the banks, probably to encourage lending. It was certainly not to deal with any run on deposits or anything like that.

To call it a bail out is to suggest that the Canadian Banks were in serious or at least some financial trouble . They were not. The 90 day mortgage delinquency rates in Canada in 2008 and 2009 peaked at all of 0.45% in late 2009. U.S. figures were about ten times higher.

It’s outrageous to describe the little bit of assistance the Canadian banks got as a bail-out.

Did they suffer even one quarter of losses as a group? I don’t think so. Did any individual bank report a quarterly loss right around the time of the so-called bail out? I don’t recall but if so I am sure it was related to some one-time write-off.

Yes, I think it is truly outrageous and misleading to call the purchase CMHC mortgages that occurred a bail-out.

Those who call it that are misinformed or perhaps just desperate to disparage the Canadian banks. Or perhaps more kindly are just exaggerating and using inflammatory language to generate a reaction.

Also I recall being aware of it, so it was no big secret either. If it was not front page news, perhaps that’s because it was no big deal.

#232 4 AM Sunrise on 06.15.14 at 4:17 pm

#222 sciencemonkey on 06.15.14 at 3:07 pm

Some people who work in big corporations relish jury duty for the chance to play hooky from work, get paid their regular salary AND receive the jury stipend. And a small per diem on top of that. Nobody is forcing you to forgo income. If you’re an entrepreneur or part of a small business that can’t spare you, they’ll let you off. I’ve been called up twice, couldn’t serve both times (vacations, etc.), but I’ve read the fine print, and it’s fair.

#233 G on 06.15.14 at 4:51 pm

#229 };-) aka Devil’s Advocate

Enjoy abusing both Peter Kropotkin and Charles Darwin en route to wherever you think we’re headed. I like how you conveniently keep wanting to cast the present predicament into a far flung future.

The time for cowards is over. Just sayin’.

#234 Old Man on 06.15.14 at 5:18 pm

The young women at universities across Canada want to throw Peter the Great under the bus over his new Prostitution Bill. They say he needs not Reform the trade as it messes up our gig on the internet for an education and the good life. The Sugar Daddy sites are vulnerable and what’s with freedom of communication, speech, and living the good life. One gal from Ottawa stated that many in his Party are good paying clients looking for a Sugar Baby and that is a conflict of interest and discrimination. They are upset with Peter.

#235 DonDWest on 06.15.14 at 5:41 pm

#227 BillyBob

“Never said I was better than anyone, only that Millennials aren’t worth much as workers when they have no work ethic.Too bad there isn’t an app for that.”

BillyBob, here’s the issue were I take exception to the “young people don’t have the work ethic” argument. My argument is that when you’re in your 20’s, the “work ethic” is merely a concept that has no basis in reality.

I’m 32 years old, and if I could go back in time, the one thing I would tell my younger self is to work less and relax.

I would explain to my younger self that there’s no rewards or recognitions when choosing to work hard in your 20’s, in part because your elders (the primary decision makers) will discriminate and you’ll never be taken seriously.

Do corporations promote 20 somethings? Nope. Even if you do exceptional work, excuses that have nothing to do with the actual work surely pop up. You “lack the soft skills,” you “don’t smile enough”, “your socially awkward,” etc. Essentially silly, disrespectful and juvenile high school arguments coming out of the mouths of 50 year olds that only serve to frustrate young workers who actually want to better themselves.

I used to work 70+ hour weeks and was always the most efficient worker in my given position – whatever that position happened to be. I have an ability to “pick up” positions quickly – usually by testing various strategies until I find a winning strategy that delivers sales to the majority of customers. I thought this was the key to making money and getting promoted – little did I know that it’s for this very reason I would be stuck in the same position as a worker bee. “You’re great where you stand,” says the baby boomer manager, “why would I promote you? You’re not management material.” That’s the all too common theme that played over and over again in my life from company to company.

I would tell my younger self to go out and have fun. I would attempt to reason with my younger self that they’ll never promote or respect someone in their 20’s, so why waste the energy and time? Do just enough to not get fired and leave it well enough alone. I would argue there’s a certain logic in that approach. Knowing my stubborn younger self though, I would most likely refuse to heed the counsel of my older self, and make the same mistake of yet again sacrificing my youth to the corporate alter.

If young people are not actually rewarded for demonstrating a “good work ethic”, then “a good work ethic” is merely a concept that’s meaningless. It’s a dream that people want to believe, but it’s just that – a mere dream.

Knowing what I know now, I’ve decided to take it easy. I’ll work harder when I’m old enough to be taken seriously for my hard work, say around my late 30’s.

Aaron Clarey summarizes the dilemma young people face when it comes to the “work ethic” here:

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

#236 sciencemonkey on 06.15.14 at 5:45 pm

@233 sunrise

I would love to do jury duty for the experience and to have a break from work. However, I don’t think my medium sized corp would continue to pay me my usual salary, or be able to spare me. Are there laws about it or is it simply the choice of the company?

I was called up during undergrad, and I was let off so I wouldn’t miss classes.

#237 Old Man on 06.15.14 at 5:48 pm

Some of you are confused about jury duty as you are just called into the court for a selection process for both sides to pick and select out of a crowd. One question asked is do you know the defendant being charged. Just say yes, and you will quickly be sent on your way out of the pool of candidates.

#238 devore on 06.15.14 at 5:52 pm

#173 Mark

Welcome to every industry ever, where less than 5 years experience makes you basically an intern. Schools can’t teach work experience.

Regarding the original question, why are 26 year olds called “kids”, that’s because so many of them are kids. Age has nothing to do with it. The last 200 years of human history has been about pushing back the onset of adulthood, from early teens to late well into 20s today.

#239 devore on 06.15.14 at 6:03 pm

#175 Andrew Woburn

Sort of like, “Turn on, tune in, drop out”?

Such BS, isn’t it? The peace & love flower children of the 60s are running places like Haliburton, Blackwater, BP, holding offices in Congress and sitting int he White House, waging wars, profiting from weapons trading, and polluting the environment.

But of course this generation will be different. Hope and change and all that, right?

#240 Nemesis on 06.15.14 at 6:23 pm

#BonusZenForCaptBillyBob. #JurassicClassics. #YouWish![MeToo,Actually]

http://tinyurl.com/p2ercao

#241 Porsche on 06.15.14 at 6:25 pm

Good luck with that. Most house-rich, asset-poor, pensionless Boomers will be lucky to stay solvent. — Garth
…………………………………………………………………………

A lot more solvent then your houseless, asset-poor, pensionless Boomer. LMAO

#242 4 AM Sunrise on 06.15.14 at 6:27 pm

#237 sciencemonkey on 06.15.14 at 5:45 pm

If your medium sized corp can’t spare you, all they have to do is write a letter stating that you are “key personnel”.

The law says that you can’t lose your job due to jury duty. Salary is at the discretion of the company.

#243 Nemesis on 06.15.14 at 6:50 pm

#OneOfLife’sGreatMysteries #What’sThePointOf’HardToPort’NoiseAbatementWhenYouHaveAfterBurners?

http://youtu.be/sc9kUFNGuy8

#244 Nemesis on 06.15.14 at 7:02 pm

#AfterThoughtsForDevore #TheyDidn’tAllSellOut

For example, this ‘LittleIsland’ – or, if you prefer, PlayGround – that our MagnanimousHost has been so kind as to provide us. Yes.

Right. Time for a HistoryLesson:

http://youtu.be/lBcABaoHfjY

[NoteToMagnanimousHost: Shortly after the DownFall… I spent some QualityTime with Salvador’sWidow. LifeChanging. ¡Hasta la Victoria Siempre! #TrueThat]

#245 Daisy Mae on 06.15.14 at 7:23 pm

#216 };-) aka Devil’s Advocate: “Once again I get the clear impression that the predominant demographic reading this blog is little more than argumentative, prejudicial, cranky old farts.”

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

So this is your cue to go away?

#246 AfterTheHouseSold on 06.15.14 at 7:29 pm

#236 DonDWest
work ethic and rewards

This is your best post to date. Very insightful.

#247 Daisy Mae on 06.15.14 at 7:32 pm

#226 TheCatFoodLady: “It was humbling. It was great! Yup – the kids are alright.”

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

Most are! I see alot of great university students volunteering at our hospital.

However, I also saw a young man in Emergency recently — handcuffs and leg chains, flanked by two officers. He greeted me in a nice manner. But I wouldn’t want to meet him in a dark alley…

#248 Kevin on 06.16.14 at 7:53 am

@Flawed (#73)

Everything everyone is saying about bitcoin they said about the internet in the 90s.

Al Gore invented Bitcoin?