“Call me Fearful in Toronto,” his note says. And he is. But afraid of what?
“I have been reading your blog since inception and can’t thank you for your invaluable sage advice over the years,” he continues. “I have learned so much about ETF’s, TFSA’s, RRSP’s and how to navigate a seemingly complex world of money matters. I’m a 42 year single guy living in Toronto after moving from Vancouver a few years ago. I work in the non-profit sector and make a paltry $80k a year compared to my high flying banker pals.
I am one of those fearful folks who’s financial trajectory got screwed in the tech bust in the 90’s and pulled my bucks out of my mutual funds in 2008 and have realized more losses than I care to think about. In fact, I could be a poster boy for what not to do in the investment world. That said, I currently save almost 50% of my salary, invest in a balanced ETF’s and live well beneath my means. I have amassed a very small nestegg of around $175k including RRSPs, cash etc. I live with a roommate, choose not to have a car and have wanted to buy a home for seemingly forever. When I stumbled on your blog years ago, your advice seemed to make solid sense so I started following it. Today I continue to stand on the sidelines watching massive condo buildings spring up around my rented condo in the downtown core. Until now.
I was hoping to bang another year or two out of my living arrangement in the hope that the condo market would decline, however, my roommate has just informed me that his partner is moving into the apartment and I will need to find a place to live in November. So I started looking for rental units in the downtown core and was shocked to see that $1400 to $1800 seems to be the rental price average for any have decent place (500 square foot crap box) place to live. This represents at least double my current rent.
Over the years I have had to endure the ridicule of family, friends and acquaintances because I am a renter. I have had to suffer through dinners and cocktail parties where the main topics of conversation are real estate gains, renovations and those losers (me) who continue to rent in a robust economy. I have tried to rise above the inflated nonsense and have watched my friends purchase homes that they clearly can’t afford armed with the secret knowledge that I know what their financial future will look like with a turn in the market and an increase in interest rates. Sadly these morons continue to buy and sell and realize gains that I only dream about.
Right now I honestly feel that I am being pushed into buying a place in order to fix my costs. Even if interest rates doubled, I would still be able to carry my mortgage as I have no intention of buying anything but an entry level home and my primary focus is still on my retirement. I could put 25% down which I know would screw me out of a compounded 5-7% annual return.
Garth please kick some sense into me. I can’t believe that I am even entertaining the thought of buying but I can’t rationalize the thought of paying some bonehead’s mortgage and helping them get ahead while I sit on the sidelines hoping for the market to turn. I don’t need to be rich I would rather be free, but I want to make the right decision. Please help.”
Wow. The anguish. The emotion. The ridicule of family and friends. The agonizing decision to gut your savings and sprout a mortgage instead.
Here’s a guy who obviously knows better than to make rash, hormonal decisions. After all, he reads this pathetic blog. He saves. He’s got a balanced portfolio of ETFs. Plus a tax-free account and retirement funds. He now understands the big mistake in buying high (tech mutual funds) and selling low (in 2008). He’s cheap and frugal. If he had a beagle or a GF he’d be perfect.
But he’s also 42 years old, making modest money with modest savings and is 18 years away from collecting CPP. In other words, Fearful is behind the economic curve since it’s highly doubtful his non-profit-sector job comes with a pension. Or a career path. So, should be buy a condo because his roomie is shacking up? Is his family right?
Well, reading the news you’d think so. This week we’re being bombarded with realtor porn. First it was Sotheby’s telling us everybody’s buying million-dollar houses, so we should too. Then LePage joined in, telling Fearful’s mother that Toronto prices will gain 8.1% this year. In a few days CREA will unveil its latest statsfest, based on Frankenumbers supplied by real estate boards. And CMHC says housing starts are greater than expected, with that industry on track for a soft landing.
Lost in all of this is common sense. It tells us real estate costs a lot now because money is cheap. So when money costs more, houses will cost less. We know this because wages and family incomes are stagnant – in fact, running behind inflation. So as debt becomes more expensive, people can carry less of it. And real estate declines. It will happen. Count on it.
Therefore people buying today – with rates at the bottom and prices at the top – probably could not pick a worse moment to take the plunge. It also suggests FIT is about to repeat his experience of fourteen years ago, at least the ‘buying high’ part. You’d think that at 42 years of age he’d be old enough to remember what happened in his market back in 1990. Even an 18-year-old was probably aware of the 30% dive real estate values took after hitting a speculative peak in 1989.
Then, like now, house lust was all around us. People were convinced it was different this time. How could real estate drop in value when everybody wanted it – and nobody trusted the stock market after that precipitous (but short) crash in 1987? Even though mortgage rates were crazy high (14%), it was better to jump in than be priced out forever.
Only it wasn’t. House prices dropped by a third, even as mortgage rates fell by half. And someone moving in to a house in 1990 had to wait until 2005 to see their money returned – less inflation.
You see, Fearboy, it’s never different this time. It’s never different in any one city. Assets get overvalued when demand exceeds supply or debt becomes so cheap people fear it no longer. You might not like paying rent, but why would you like shelling out for mortgage interest, property tax and condo fees any more? The fact remains you can rent one of those 500-foot concrete boxes for less than owning it.
You don’t need a condo to be a man. Get a new roomie. Girls dig you winpering types.
154 comments ↓
FIRST!!! OH Yeah BABY!!!!
So why buy now after the diligence?
I always wanted to be first
Firssssst!
80k salary which is decent enough, no house, no car, no kids, cheap rent… and a net worth of 175k? something is missing from this story…
Get new friends and spend less time with family that trash one because you rent…So shallow.
Go rent somewhere on the rapid transit line. Problem solved.
Interesting blog.
Not on topic exactly, but still relevant, as it pertains to rates. The US Fed minutes from last month came out today, and the end to QE is finalized. What folks don’t get is that they have no choice but to stop, as the manipulation of long and short rates are messing with the duration matching for the huge players such as insurance companies and pension funds. Economic recovery has no impact on this decision. It has to end.
Interesting times.
how do you know it’s the flu season? by the large number of cough med commercials on tv. how do you know many people are in financial doo doo? by the large number of bankruptcy / pay day loan / pawn shop commercials.
watch some tv, and know the end is closer than you think.
1400$ a month for 500 sq ft? check out the building on college street. much better than what you are looking at. if you buy now, your monthly cost will be double of $1400 / month, for the next 25 years!
My parents and I cruised the show home strips on Sunday – only to get decorating ideas and taunt realtors. One Realtor said the market in Regina is so saturated with listings, not a single builder is planning to build for 8 months.
One realtor radio ad this morning talked about Regina being a buyers market, and another one was promoting a girls night out starting at some of best show homes in the city.
Things are gettin’ weird.
Fearful in Toronto is correct, and I feel for him.
Since the downturn of the 1990s, it IS different in Toronto.
Population has exploded, up over 43% in the CMA (GTA Toronto) since 1991.
This is what will keep demand up for properties inside Toronto, and also prevent a crash in the suburban areas, where population drives local demand.
This is a far different place than it was in the 1980s, Garth. Yes, we are not London or New York – yet. But we have much more in common with those types of cities than we do with Toronto of 1990.
This person is wise to jump in now, rather than endure the torture he is experiencing for possibly the rest of his life.
‘Torture’? Didn’t you embarrass yourself enough here yesterday? — Garth
*JAPAN MAY CORE MACHINE ORDERS FALL 19.5% M/M, Y/Y -14.3%
This was the largest drop in history, and Japan is the world's third largest economy, so grab some popcorn because the chances of you seeing a major economy print into hyperinflation or default within your lifetime is just about guaranteed.
Aside from the social pain of enduring RE talk at parties amongst friend, something smells fishy. I mean, 175k at 6% is over $10k per year which would cover half your rent. Your 5 year objective should be to try to get your invested interest to completely pay for your yearly rent.
Don’t purchase property unless, adjusting for risk, you can assume the new asset (ie. house/condo) will pay you better returns than the current investment + the interest on your mortgage.. thats the basic idea I try to keep in mind.
Will another 1990 come around, i.e. 14% mortgage rates?
You seem to be ignoring huge swaths of the city that are both central and have affordable rents. Midtown on the subway you can get a nice-sized one bedroom (700ish sq/ft) for under a grand a month. They don’t have the condo amenities but many are historical properties with character of their own. There’s a whole world out there north of Bloor and the neighbourhoods are still very walkable. The few stops on the subway are an easy commute (or bike it in the summer!). There is no reason to pay 1400-1800 for a 1 bedroom or studio…I live in a 3-bedroom unit and pay just over $1400/mth (Bathurst and St.Clair area).
Sounds like he should invest in himself. Monthly rent of 700 bucks, 42, no girlfriend and sounds like rent will double soon and living expenses will go up because it costs singles more to live than doubles.
Solution is simple: stop being so damn cheap, live a little and maybe he’ll get a woman with a beagle. And don’t buy… honestly, all single people should be renting.
Yikes ill just hang on to my house, gf, dog and stocks for now
Dude you should have listened to me 5 years ago.
Go find an ugly rich older woman at about 55, at 47 your a perfect toy boy. But At 47 you are about to lose a big chunk of you’re sex drive anyway, who cares..
If you recently started wearing reading glasses, that a sure sign of Mr sadly about to make a disappointing entrance soon.
If buy now you’re nuts. Less of course you find a tear
down in long branch. South of Lake shore, and you’re a bit handy.
Or you can do what I do now that I’m not that interested in stuff I use to be obsessed with. ,
Get drunk, unleash your imagination, write and entertain yourself till you die.
Cause once that loving feeling is gone, gone, gone, oh o.
There’s just, booze, casinos, boating and writing.
Screw golf…. Got to talk to too many people..
Sponge off her.
Not only that, but as Toronto RE has spent the past year and a little bit declining, this gentleman’s savings now go further in buying RE. RE is priced at a P/E in most of Canada in excess of 35 (and certainly well above that in the major centres, especially Vancouver and Toronto). Stocks, its still trivial to put together a good ETF portfolio at 15X earnings or less, and there are many great long-term investments out there that sell at less than highly depreciated book value.
A few more years of price declines in Toronto RE, and price appreciation/earnings growth on the stock market, and this gentleman’s $175k in savings may very well buy him a nice town-home or similar. Don’t believe the hype, nor the lies, of the Realtors who are claiming prices are going up, even though it is obvious that the sales mix has narrowed extremely to only higher-end properties that do not particularly require a lot of subprime credit for their purchase.
Garth, bond buying by US reserve is supposedly kaput by October. Last you you posted quite few pieces on the effects of QE on interest rates. When October arrives what impact will this have on rates? Or has this been expected for some time now therefore it won’t have much affect at all?
Thanks
To all you bitcoin lovers that frequent the comment section I would be more comfortable getting paid in Canadian Tire Money! Oh and it’s not government controlled either…
Uh oh, bail-ins coming to Canada.
http://armstrongeconomics.com/2014/07/09/banksters-more-fines-european-bail-ins-coming-to-canada/
Just what you’d expect from a gold-pumping site. No bank depositor in this country, in this lifetime, will experience a bail-in. — Garth
Hey, nothing wrong with working in the non-profit industry. And let’s not forget, some of them do QUITE well indeed:
http://www.huffingtonpost.ca/2014/03/20/portland-hotel-society-audit-expenses_n_5001325.html
(I won’t even mention Chris Mazza and the gaggle of people engaging in fraud in the public service in Ontario).
Man up, stop caring what other people think, find new digs and keep saving. You are right to focus on your retirement when everyone else is focused on their housing fetish. Given your savings rate, you’ll be pulling ahead of the herd once housing hits a sour note and those unrealized gains start to wither.
PS: Given that you are single without kids, what ties you to Toronto or Canada?
Nevar before had I read so terrible news, again and again and again, for many its loosing everything for house, cant find condo, houses, or can renting for many!! Lost people cant buy, cant look, cant even find the number one payment!! Soon jobs gone, then what??!
Although interest rates may start rising next year, the rise will be very gradual and thus rates will be low for the foreseeable future.
As someone who has been reading this blog for 5 years, I have invested a lot in the stock market, but I think it is time to buy a SFH in Toronto. I will start the hunt next week.
Stocks, and now a house? You’re a real genius. — Garth
WTF??? No comments yet? The only time I say first is if the Harpo Govt. has screwed up yet again. This time with some Con MP mouthpiece beaking off if rape equates self expression. No lows for this Reform bunch of despicable losers. 2015 can’t come soon enough!
Fearful, why on earth would you risk losing most of your savings and get yourself in a debt trap like many are doing. It’s only a matter of time before this bubble starts to deflate. Stay liquid, keep doing what you’re doing. When the bubble pops, you will be able to get rent far cheaper than what you are now and will be free to come and go as you wish while others are trapped in their underwater mortgages. Listen to Garth.
Most likely this time next year those over-indebted granite countertops idiots will come across asking you for some rental advice. Never go with the crowd … it doesn’t hurt less just because everybody else is in the same pile of crap.
First, $80K per year is IMO well above a modest income, especially for a single earner and given the median household income in Canada is what $65-$69K.
Don’t forget, once a person is able to earn enough money to responsibly live aka; shelter, food, clothing, basic utilities some level of savings and transportation costs, all else earned above is icing. Money spent above such basics is all 100% by choice and as such if money is blown and used to acquire a greater ability to sink into debt well it won’t matter if you make $80K or $800K.
As to allowing others to try to beat you down or ridicule you as to how you live and where you live, TELL THEM TO STFU! They are not privy to all aspects of your life unless you tell all and live all on the numerous waste of time and bloated social media sites. If they know that you rent, and bug you for it, tell them, that you have a $500k or even $1Mill in investments, who cares if it may not true. They are likely living much a lie of their over extended BULL$HIT lives too. Then just change the subject.
True friends and caring relatives should not care about such stuff nor judge you on it as long as you are responsibly providing for yourself and those who may be in your care if you have such dependents.
Mr. 42-year-old is lucky he’s a Mr. and can live his life like he is still 21 with roommates, a 42 year old woman would be almost a senior citizen, lucky to have even a single child if she could find a husband at that advanced age.
I never go by averages. I bought my house in south Oakville at the top of the last peak 1990 when people were pulling them off the market and leasing them rather than lowering the price. I paid 218K for it, the price fell to 196K so 10 percent less, not 1/3, it stayed that way for exactly 6 years, than in the 7th spring it went to 260K all in one fell swoop. There was no gradual increase. In year 7 I had half the mortgage paid off, another 7 years later all paid off. Nobody then could time the market, just like nobody can today.
If I saw something I really liked today I would go for it, not put my life on hold trying to time the crash.
Live a little. Saving half your income is madness unless you make so much you can’t even spend it.
Let’s all stop this fruitless battle to be the richest person in the graveyard.
That being said, I salute your intestinal fortitude to endure the ignorant blathering of friends and family in regards to RE. Many here could share similar stories, myself included.
Chicks don’t dig whimpering types, unless you’re Drake.
#9 JSS on 07.09.14 at 8:20 pm
”Will another 1990 come around, i.e. 14% mortgage rates?”
At these inflated levels in RE, 6% is equivalent to the 14% of the 80’s. Keep in mind that interest rates in the beginning of 1979 were around 10.5 to 11% and 14% by fall. That represented only about a 25% increase. Rates peaked at around 22% a couple years later which is 100% increase. With today’s rates of 3 or less %, 6% will do the job. Don’t need 14%.
42 yrs old+no house+no spouse+no wheels????
Dude there are kids half your age with all of the above.
Your roomie is moving out? Why not try the Youth Hostel, ask for a Seniors Discount
“Uh oh, bail-ins coming to Canada.”
Nothing wrong with bail-ins. The non-banking sector has been subject to bail-ins since the beginning of time. Air Canada was the subject of a bail-in back in 2003. Life goes on. If one wants to avoid the risk of having their debt investment converted to equity (which is often quite valuable equity, see what happened in the case of the Saskatchewan Wheat Pool), then they need not lend to the financially imprudent.
”Will another 1990 come around, i.e. 14% mortgage rates?”
Of course. Mean reversion always happens over the long term. Abnormal periods spent below the mean are matched with abnormal periods spent above the mean.
Your on easy street at 42…
just be thankful your not making child support payments for 3 kids at that age on that wage
You have controlled yourself for this long, you can control yourself and get over this hump. It’s not all joy being a homeowner.
Just rent a room in a house….or get a 2-3 bdrm place to rent and get some roomies yourself, you are not the only one out there looking for a roommate.
” real estate prices plunged 30% back in 1990 from their speculative peak ”
Yes and they are up some 400% since then making everyone who bought just before the peak, at the peak or after a winner
Actually it would make them idiots for not harvesting gains. — Garth
As we see our manufacturing base decimated into 2nd and 3rd World countries our sadistic leaders/mind controllers will keep the false hope alive:
“We stand by our record of job creation”
“Let’s get Ontario back to work!”
“Jobs for working families”.
Eyes cried open for some.
Sounds like Fearful doesn’t much enjoy spending time with his friends or family. His solution is to spend half a million on a tiny condo, to presumably impress them, rather than to meet new people and make new friends. And while one can’t get a new family, you certainly are not forced, or even expected to, spend time with them. You don’t have to read them the riot act, or drop an ultimatum. Just stop calling the pricks, and surely at least a couple of them have some redeeming qualities.
Jeez, he’s 42, I need new glasses, I though he was 47.
Disregard my previous advise… You still have one great last run….
#11 I love real estate on 07.09.14 at 8:15 pm
“…..This person is wise to jump in now, rather than endure the torture he is experiencing for possibly the rest of his life…….”
=========================
I now firmly believe in reincarnation.
Jimmy Jones just came back as a REALTURD®, purple cool-aid and all.
Why does everyone assume he needs a girlfriend as opposed to a boyfriend? The fact that his roommate’s partner is moving in should sensitize people a little bit to the possibility that he might be gay and all this “girlfriend” talk is weird. Moreover, the possibility that he might prefer to be single (or at least not be married) does highlight some of the financial planning challenges of single people.
It’s Ford Nation, dude. No funny people. — Garth
I think FIT needs to become a banker. He thinks his 80k salary is paltry and his 175k nest egg is small. He doesn’t fit in with his rude and materialistic friends and family. He needs so nice an apartment it’ll set him back $1400-1600 a month.
FIT, either adjust your expectations and attitude or adjust your life. They are currently not in synch.
You still have a lot to learn from Garth’s blog if you think renting is just “paying some bonehead’s mortgage and helping them get ahead”. When you rent your cost of accommodation is known ahead of time. You neither participate in any gains in value, nor do you shoulder any risks or responsibilities of ownership. Don’t think ownership is all sunshine and roses. Renting allows you to be free.
Housing starts are down across the major centers in Canada except for Alberta:
http://www.chpc.biz/housing-starts.html
Real Estate developers want markets that have a population with earnings stability or growth and a measured demand for housing supply. Alberta fits the bill and their starts are up 63% M/M.
Never much cared what the jones were doing,Sure I owned property for some 30 yrs ,The idea being to have a stable home to raise my family in and enjoy country living ,not to keep up with the jones and avoid ridicule from family and friends for being a renter.
well 23 yrs later the home was sold,garth tells us most never stay in the same home for more than 5-10 yrs…we did.
My wife and I happily rent now,eat the better cuts of steak 2-3 times a week and enjoy a higher standard of living solely because we don’t carry mortgage/property debt..it feels good,our lovely landlady suppliments our liveing,we like that,it affords us more money to invest at the end of every month.
Often we overhear folks whineing about extreme mortgage payments,Property upkeep and residential property tax’s,they have our sympathy..live and learn I guess and lifes too short to be a debt slave.
#”Après-moi, le déluge.” #LouisXV #&OtherPopular… #ApocryphalCautionaryTales.
Well, FearfulInTorontoTonto… what can one say?
Other than that… cramped, modest quarters will never discourage the truly interested. Especially aspirant Mesdames de Pompadour.
More importantly, take a hint from King Louis. He was right you know. Which is to say, that if you jump in now…
In due course, a public Guillotining will, comparatively speaking, seem like a rather pleasant diversion from the HumDrum.
HistoricalContext:
“Popular legend holds that Louis said, “After me, the flood” (“Après moi, le déluge”). This quotation is attributed to Madame de Pompadour, although it is not certain that even she ever said it.[29] Historians point out:
At this time the fable of the four cats became current: the thin cat was the people, the fat cat the financiers, the one-eyed cat the ministry, and the blind cat the King who saw nothing and refused to see anything.[30]”…
http://en.wikipedia.org/wiki/Louis_XV_of_France#Image.2C_public_opinion_and_history
#BonusZen #JacksonB.Does”BeforeTheDeluge”@LaMirada
http://youtu.be/Va3bv8DI3qg
[NoteToGT: You wag, you! You do realize that RockFalls are rather more hazardous than puddles, don’t you? Well… for the most part.]
greasing the wheel /lines of credit
…”The roughly $8.9 billion deal is the largest sanctions case brought by the Justice Department and the largest penalty in any criminal case involving a bank. Prosecutors say the penalty was necessary not only because of the sheer volume of the illicit transactions but also because of the bank’s efforts to hide them and executives’ lack of cooperation with the Justice Department.
http://origin.swissinfo.ch/eng/commodities-traders-await-bnp-paribas-fall-out/40480902
#91 dosouth on 07.09.14 at 4:02 am
Nanaimo is still the place to be….. apparently housing prices are taking off? (again)
This hype is getting long in the tooth…
========================
I can’t speak for the rest of Vancouver Island, but in my area of Nanaimo, it’s not hype. Houses that would have trouble selling for $500K two years ago are now selling for $550 or $600K at a steady pace. Since the economy hasn’t suddenly caught fire, I can only assume the pace is being drive by cheap money and retirees. We focus here on the losers who pay a million for a bug shack and forget that there is a winner on the other side of the trade. Looks like lots of them are moving here or to Nanoose Bay just north of us.
You might not like paying rent, but why would you like shelling out for mortgage interest, property tax and condo fees any more?
you know Fearful you haven’t really found yourself . For the next year spend 100% of your income. On whatever, avoid long-term commitments (such as a mortgage or marriage). At the end of the year see where you are.
ShawnG : how do you know many people are in financial doo doo? by the large number of bankruptcy / pay day loan / pawn shop commercials.
in Ottawa, on Bank Street between Heron Road and Walkley pay day loan places are growing like mushrooms. There must be a lot of people who don’t have anything in reserve.
Piccaso : just be thankful you’re not making child support payments for 3 kids at that age on that wage
thinking of Fearful maybe God wants him to be married.
Bruce Joseph does a bit about real estate on youtube:
he talks about ” a massive unprecedented debt crisis, a saturation of people employed in the real estate sector”
https://www.youtube.com/watch?v=sskylgIjMRk&feature=em-subs_digest
#11 I love real estate
……………………………………..
I agree to some extend, the guy just needs to change the country, there are two many idiots per capita here.
Rob Ford keeps going up and up in my list of favourite politicians.
There is no other place in the world where people actually live in and rent basements.
There would be way more losers once government pensions dry out and graduates out of universities become permanently unemployed, we have not seen anything of the fun yet.
Just what you’d expect from a gold-pumping site. No bank depositor in this country, in this lifetime, will experience a bail-in. — Garth
………………………..
Of course, courtesy of CMHC. Otherwise….
1) Don’t buy now and sabotage the progress you’ve made to-date.
2) Move uptown/midtown. There are plenty of well run apartment buildings near transit where you can live at relatively affordable rates.
3) Money is important, but experiences are even more important. What you lack in terms of perceived loss of ‘pride of ownership’, you can make up for by pursuing other passions, such as travel. Do this within your means.
4) Building wealth alone at your age and income level is not without its challenges. Work hard on meeting your life mate; not only will this bring you more personal satisfaction, but a working couple will build up a nest egg much faster. Just pick the right woman (employed and fiscally conservative, to match your disposition) or the point is moot.
You’ve been patient, but you need to stay the course. Understand that you’re reaching the point of capitulation (puke point); this is a good contrarian sign.
As for your friends, let go of the negative energy as it will only eat you up. They have things you don’t (life partners, better digs, toys, higher incomes), but you have a good head on your shoulders, are doing noble work (kudos on serving in the charitable sector) and most importantly, are not indebted. Keep your chin up and good luck.
Of course banks are rock solid, we know that is criminal offence to question the stability of the banking sector.
So my questions is: what is wrong with full reserve banking (common practice in the past in Europe for a very long time) where banks loan from their capital, not from the deposits?
Is it fair to treat depositors as bank creditors? They are receiving 0.25 on their GICs for Christ’s sake.
All Hail “the System”
Ralph Cramdown yesterday noted Flawed’s complaint about “supporting a corrupt system” and replied:
I don’t support the system. The system supports me.
****************************************
That is an important point. “The system” whether it is corrupt or not supports and feeds us all.
No one could live more than a subsistence (and short) living without a system of laws and contract enforcement and banking and the various features of a modern economy.
It is a freaking miracle that with 40 hours of work per week most of us are well fed, well housed, well clothed and well entertained and have money for vehicles and the odd vacation. Anyone looking at us from 200 years ago or more would be totally amazed.
We should all thank god that the system exists.
It’s not perfect but it’s a heck of a lot better than no system. It’s the best system ever invented.
Yet many people who post here would bite the hand that feeds them. I support their right to do so. But they are obviously wrong.
Get in the game!
I can’t speak for the rest of Vancouver Island, but in my area of Nanaimo, it’s not hype. Houses that would have trouble selling for $500K two years ago are now selling for $550 or $600K at a steady pace. Since the economy hasn’t suddenly caught fire, I can only assume the pace is being drive by cheap money and retirees. We focus here on the losers who pay a million for a bug shack and forget that there is a winner on the other side of the trade. Looks like lots of them are moving here or to Nanoose Bay just north of us.
What a load of shyte. Only sales in Nanaimo that are selling are around $400K. Nanoose has a lot of old 90’s homes that need total renos and still sit on the market for years…Ever tasted the drinking water there?
Andrew you must be a realtor…
My ‘Drama Queen’ comment for today:
Yesterday in response to a comment, Garth wrote, “Once you have abandoned integrity, it never returns. Money is no compensation. — Garth.”
Today in response to a comment, Garth wrote, “You think money is more consequential than ethics? — Garth”
Today, only one week after ushering-in FATCA on Canada Day, effectively throwing one million Canadians with a ‘US connection’ into the IRS lion’s den, Canada’s government is warning the Eritrean consulate to stop harassing Eritrean-Canadians or risk closure of its consulate. Foreign Affairs Minister John Baird made the announcement today in Ottawa (be sure to watch the video as well): http://www.cbc.ca/news/politics/john-baird-warns-eritrean-consulate-over-diaspora-tax-1.2701635?cmp=rss
This is certainly one of the most egregiously hypocritical moves the Conservative government has ever made – and there have been far too many to count over the years. I would love to hear Mr. Baird explain to Canadians how it is acceptable for the United States to impose its infinitely more invasive extraterritorial tax laws in Canada but Eritrea’s amateur-hour 2% shakedown warrants impending closure of its consulate? Could it be that Mr. Baird is in fact preparing a subsequent announcement that he will be ordering the immediate closure of the US Embassy as well? Should we give him the benefit of the doubt?
Buy a 2bedroom midtown and rent the other room….
Personally, I’d take that 175K and do what Garth has been suggesting for years. Invested in preferreds or other items that will return about 6% a year in dividends, thats 10,500 a year that could go to living “half-rent-free”. AND he’d have liquidity. That 875 per month in dividends is the ideal room-mate. Quiet, clean, pays the rent on time, and doesn’t bring home a partner that decides he/she is moving in.
Perhaps at the age of 42, it’s time to start living a little. 80K a year and he’s balking at paying 1,400 to live without a room-mate?
#57 shawn
………………………………..
you are either brainwashed, sarcastic or a complete idiot.
There is indeed miracle but due to the cheap oil.
everything else…
The food you eat is not real, there is actually a small section labelled ‘Natural food’ in some stores, everything else is ‘unnatural’, GMO, nitrates, pesticides,… in the wheat there is 50 % of the nutrients compared to just 60 years ago.
Once the cheap oil runs out (and it is already running out) you miracle is gone and the hardship begins.
Sheane Wallace at 56 Asks:
So my questions is: what is wrong with full reserve banking (common practice in the past in Europe for a very long time) where banks loan from their capital, not from the deposits?
******************************************
Common what century? fractional reserve has been around since at least the year 1200.
Equity holders like to make at very least 6% on their money even in a safe equity. Banks lending their own capital would be much safer so let’s say 6% net profit is good. Well bump that up for income tax, operating costs and loan losses and even safer borrowers would need to pay at least 10%. Is that what you want?
As for deposits, such a bank has no use for them as it can’t lend them out. Be prepared to PAY big time for a bank to hold your money and process cheques and debit card payments. Sound good to you?
So, THAT is what is wrong with your idea. But go ahead and try it. Start by lending money to friends and neighbors. Cut out that nasty bank middleman. Good luck. Please report back.
did I mention the wood pulp /cellulose in our fast food?
http://www.slate.com/blogs/browbeat/2014/07/02/_wood_pulp_in_burgers_it_s_just_cellulose_and_that_s_nothing_to_worry_about.html
I guess we don’t need to wipe it up any more, the toilet paper is already included in the food!
That deserves surcharge…
#57 shawn
It is a freaking miracle that with 40 hours of work per week most of us are well fed, well housed, well clothed and well entertained and have money for vehicles and the odd vacation. Anyone looking at us from 200 years ago or more would be totally amazed.
Two charts for the idiot comment of the day! Charts
“Is it fair to treat depositors as bank creditors? They are receiving 0.25 on their GICs for Christ’s sake.”
Its absolutely fair. The rules are out in the open and known to everyone. If the elderly morons who control most of the funding for the Canadian banks want to line up and take 0.25% on their GICs, instead of finding more productive investments (ones that actually create jobs, for instance, so their grand-kids aren’t chronically unemployed), then that’s their prerogative. A big part of the problem in the Canadian economy is there’s no risk capital, no appetite for risk taking, and we’ve lost a significant amount of innovative industry (ie: the high-tech sector) because of it.
80ķ at a non-profit? I’m gonna stop donating.
Go north my young 42 year old. Stay on transit line, and RENT for less than in the downtown core.
This will never last, rates will rise, new politicians make make TO unlivable shortly. Nothing remains as it was beyond a 3 yr cycle – the new rules.
SMan, thought you would enjoy this pic. Kind of a reality check for those who think that school / university is necessary, but the reality is is that they stifle creative imagination and thinking from the illumined mind. Cheers!
#63 shawn
Banks will loan from their capital. They can extend the capital by selling bonds.
4 % is more than sufficient return on capital, adding operating expenses it goes to 6.
And the loans would always be collateralized.
How much do you think would be the interest rate today if it was not for the central banks stealing form savers through inflation and ZIRP/NIRP?
You are advocating for theft my friend.
You think you are entitled to loan at low rate? Just wait….
#36 Mark
”Will another 1990 come around, i.e. 14% mortgage rates?”
Of course. Mean reversion always happens over the long term. Abnormal periods spent below the mean are matched with abnormal periods spent above the mean.
————————————-
Just curious, what do you think would happen to the financial markets if this were to happen?
I know that if Interest rates came close to say 10%, I would probably liquidate the majority of my holdings to buy all bonds and gics.
It would be crazy expensive for companies (large and small) to borrow money to fuel growth, economy could be in the gutter.
Happy to hear opposing views.
You just can’t save all those main stream metrosexuals in the big smoke anymore Garth. It’s too late for them. Their mortgage debt will be eating them up very soon.
Never post, but I couldn’t resist today about a conversation I had. Guy tells me he makes $110,000 a year, he wants to start saving for retirement to retire at age 55. He’s 34 today. Has less than $10,000 in savings but, this is where my jaw dropped, $1 million in real estate in 3 houses. I asked how much the banked owned. He said almost all of it! Doomed!!!
When young (42 is young) we all want to a home but now is not the time.
#57 Shawn…”most of us are well fed…get in the game”
I have trouble with that, get in the game… what does that mean? What about the private sector? Can they get in the game? Tell me, Shawn, is this about union and/or public sector? Please explain.
Fearful – why would you buy a condo when it is so much cheaper to rent (condos in any normal market are a depreciating asset as it is easy to build more)? Why would you buy a SFH when you have no kids and work full time (taking on the yard work, maintenance, etc.)? You have made some very bad financial decisions based on emotion before – becoming the greater fool and buying into this market would be another one of those. Just run the numbers on buying versus renting (or look them up from previous posts) and you’ll see that only emotion can justify buying into this market. “Paying someone else’s mortgage” is a complete red herring – run the numbers on cashflow and you’ll see.
RE: #43 Smoking Man on 07.09.14 at 9:32 pm
Jeez, he’s 42, I need new glasses, I though he was 47.
Disregard my previous advise…
He could just add 5 years to the rich woman and still take your advice.
Fearful, suck it up. My husband and I have a little one and we rent a condo. Yes, all family and friends think we are nuts. My mother worries so much about this she went to a fortune teller who told her we would own a house in ten years. I shit you not! I got pretty mad at her wasting money and told her I did not want to own a house. However, I would not mind renting one in the future. :) do what is right – not what the herd thinks is right. Your financial future is too important to mess around with now. In a blink of an eye you’ll be in Depends with mortgage payments and special assessments!
#62 Sheane Wallace
The goal posts of depleting carbon reserves and needs of feeding, etc of the world’s population do not change, regardless of your -isms and beliefs. Meanwhile, what we have is indeed a miracle, or rather a technological marvel.
#59 WhiteKat on 07.09.14 at 10:36 pm
Well said.
I think the USA will have difficulty in enforcing their invasive extraterritorial, Tyrannical tax law when the USD becomes a second tier currency.
I know China has a long way to go but don’t count them out. They could make big changes and they actually have rumored to have been catching up with Gold reserves to back up their currency. Even though Central Banks Poopoo anyone who speaks of anything other than Fiat currency… NO one has explained why countries keep Gold reserves if there is no use for it.!
Why not have a big jewelry sale and pay down debt?
The real and tacit reason is because the country with the most gold has the most credibility in their currency.
Well Now that China is expanding their RMB trading block the USA may not have the Bully pulpit they once had to Muscle weak governments like ours into selling out their citizens.
http://www.bullionbullscanada.com/gold-commentary/26166-chinas-real-gold-reserves-at-4000-tonnes
Every time we stood our ground in our dealings with the Americans. We paid dearly in trade difficulties.(Softwood lumber). When the Liberals departed power the Softwood Lumber treaty was signed in a month or so after the election.
The Americans have a real sell out friend with Harper. He will give up anything to make peace and get a deal with the US. Give up our sovereignty… no problem.
Look up Marc Emery. Now the in your face banking privacy surrender.
All empires crumble. The USA’s days of hegemony are numbered.
#58 John Prine on 07.09.14 at 10:35 pm
What a load of shyte. Only sales in Nanaimo that are selling are around $400K. Nanoose has a lot of old 90′s homes that need total renos and still sit on the market for years…Ever tasted the drinking water there?
Andrew you must be a realtor…
============================
No, I’m just a happy taxpayer. I guess you don’t get out much. These are 2013 sales in my area of North Nanaimo over $450K as provided by BC Assessment. I can’t get the 2014 figures yet but they will show higher prices and a bigger spread over assessment. I have already posted a number of 2014 sales at $100K over assessment but I didn’t keep a list handy.
Next time you are in Nanoose, check out the Fairwinds area. Lots of properties in the $750-1,500K range.
All markets are local. North Nanaimo and Fairwinds are West Van for 1/3 the price. That’s why the price is rising.
Property Address Assessed Sale Date Sale Price
5230 FILLINGER CRES $979,000 02-May-13 $1,085,000
6168 NITINAT WAY $729,000 04-Jun-13 $800,000
5530 CLIFFSIDE RD $758,000 26-Aug-13 $750,000
5254 FILLINGER CRES $766,000 09-Oct-13 $742,500
4856 FINNERTY PL $708,000 20-Aug-13 $737,000
5330 SMOKEY CRES $639,000 29-Mar-13 $732,500
6137 CARMANAH WAY $625,000 27-Jun-13 $705,000
4934 FILLINGER CRES $616,000 03-Sep-13 $620,000
5373 WESTHAVEN PL $527,000 12-Jul-13 $587,500
5321 FILLINGER CRES $552,000 25-Aug-13 $575,000
6201 BRICKYARD RD $479,000 22-Mar-13 $575,000
5518 CLIFFSIDE RD $504,000 09-Aug-13 $570,000
5381 ENTWHISTLE DR $542,000 02-Apr-13 $560,000
5352 COASTVIEW PL $536,000 22-Aug-13 $530,027
4684 LAGUNA WAY $537,000 28-Jul-13 $523,809
5370 HIGHRIDGE PL $492,000 18-May-13 $520,000
5320 CASCARA DR $466,000 11-Apr-13 $510,000
4930 BRODYS PL $488,000 13-Aug-13 $499,900
6188 NITINAT WAY $433,000 20-May-13 $467,141
6037 SIERRA WAY $428,000 06-Mar-13 $461,500
6343 WATERBURY RD $425,000 14-Jan-13 $459,900
6342 WATERBURY RD $461,000 20-Jul-13 $459,500
100 ANTON RD $393,000 09-Aug-13 $454,000
4979 FILLINGER CRES $475,000 10-Jan-13 $450,000
PS the most surreal thing about making the offer on the home is that the seller’s agent arrived at the property in a new Lamborghini …. The world is a really, really messed up place when a slick RE agent shows up in a car like that.
PSS we capitulated because we got sick of being asked to move every two years because the owner is knocking down the really nice house to build a new monstrosity (we have 2 kids that we want to give them stability and keep them in the same school)
“30% dive real estate values took after hitting a speculative peak in 1989”
Only that didn’t happen in downtown or north Toronto. Pick your neighborhood wisely.
You are wrong. — Garth
FIT, you are doing well right now. And this is after 2 errors in judgement, the Tech bubble, and the mutual funds sell-off. 3 strikes and you’re out. Listen to Garth.
Me, live with someone else. No thanks. Let people judge my single-no kids-no wife-renter lifestyle. DELETED.
FIT, for God’s sake, you’re 42, grow some balls and rent your own place. You need a mortgage like you need a hole in your head. Wake up, realize your freedom, which you have, is priceless. Time for a vasectomy, a cute childless girlfriend who likes having her own place, and to enjoy your life. FIT, what you have are imaginary problems.
It’s all record foreign money causing this boom. 600,000+ new people coming here every year. Their $$$ follows them with the aid of China’s biggest bank.
Still want to deny this Garth?
http://www.scmp.com/business/banking-finance/article/1550351/bank-china-laundering-money-would-be-emigrants-cctv-reports
The whiner says:
” I work in the non-profit sector and make a paltry $80k a year compared to my high flying banker pals.”
Garth agrees:
“making modest money”
Look Garth, this crap really needs to stop. No wonder that the financial demographics were so skewed when you took your mini-census a little while back. Whether you realise it or not, the way you write is really alienating to the vast majority of regular people, ostensibly those most in need of your advice, and as you’ve said previously, the fuel that’s feeding this real estate fire. Because you’re right Garth, it’s regular dumb Joes making regular dumb systematic mistakes with their money that’s at the root of this real estate bubble. Not foreign asians, not mansions for the rich and famous, not speculators (those came later), and certainly not “running out of land”. But. The median wage is hardly over 40k, so no, 80k is not “modest money”, Garth. Especially when you consider that wages are significantly lower in the “non-profit sector”, generally speaking.
And honestly, given how full of estrogen and emotion his message was, I’m surprised you didn’t focus on the emotional aspect of all this. This is the real point you have to drive home into people’s stupid heads. Because emotions like unchecked, uncontrolled greed and fear are what get people to do stupid things like invest only in GICs at less than inflation, buy heavily leveraged real estate at the peak of the market, or sell all their financial assets in a downturn with absolutely no f-ing plan on what to do with the cash after and then crying years later when everyone else recovers. This guy pretty much hit every point. Selling in 2008 because of fear. Lusting after houses because he’s embarrassed at the family dinner or whatever. Trying to rationalise buying at insane prices when he really ought to know better. Crying about how his friends “locked in their gains” and oh-no why doesn’t he get to ride the gravy train either?
So you see Garth, all this crap is tied in together. The same emotions that get him to moan about his “low” pay are what’s fuelling his dumb decisions like selling all his stock, or throwing logic out the window to buy a grotesquely overpriced condo. So don’t tell him that indeed poor-little-him has a low pay, don’t feed his pity party. In today’s economy he’s a lucky lucky guy, he needs to go to work with the attitude that he’s fortunate and he needs to justify his pay every day he’s at work. Because that pink slip could be a lot closer than he thinks. Tell him to man up, and in moments when greed takes over, to remember the fear. To arrive at a balanced mix of both, not to be swinging like a yo-yo from one to the other. Selling all his stock like a moron. Then taking whatever paltry retirement savings he has and putting it on a down payment for a Toronto condo.
The Fed ending stimulus in October doesn’t mean QE is done. They’re still rolling over the maturing debt with interest. The real pain will come when the Fed starts winding down it’s balance sheet. A significant rise in rates is still a while away.
To Mr. Fearful – if you were a self respecting person I would say:
You’ve already demonstrated the capacity to live with other people so why not find a place where you can share the carrying costs. Or better yet, why not find another way to make more money? Move to another country, do something else with your life or just enjoy the company of your friends and family.
However, your whiny note tells us all what kind of person you really are. Calling other people “morons” for realizing gains you “only dream about” while you come here begging to be told how to save yourself. At least your friends had the courage to make their own decisions, even if they may be wrong. Clearly you’re the type of person that values money more then personal relationships or enjoying life, which explains why you’re drawn to cocktail party conversations about housing. You’ll probably only be happy when your family and friends lose money on real estate while you look on with a smug smile. They’re right for calling you a “loser”, and it has nothing to do with being a renter.
How’s that for kicking some sense into you?
Not an economist: RIGHT ON!
80K SHOULD be enough to live comfortably, were it not for inflated real estate prices.
It’s not about being able to simply afford day-to-day bills. Most working careers are now 40 years (25 to 65), and yet life extends to beyond 80, with a fading pension system. Those who do not accumulate assets consistently while they work often live to regret it. — Garth
Earning 80k with 175k saved, even at 42, is not that bad. The median household earns 70k and Scotiabank ran a study saying that half of 50 year old households have less then $100,000 saved.
Relax, keep saving, enjoy life. You will have $250,000 saved with no debt soon with another 20 years before retirement at the rate you are going. You will meet the right gal and laugh when all your in debt friends watch their houses go underwater as their home equity evaporates
#18 – …”Go find an ugly rich older woman at about 55, at 47 your a perfect toy boy”…
47 is too old…25 is better! LOL
Garth,
Do you believe is a coming short term market correction as we hit all time highs or do you see the market continuing to gain? I know you posted the other day about an economists position and the effect easing QE back will have on equities (up) and bonds prices (down). You hinted at following his advice but I could not help but wonder if you were being sarcastic as you always talk about doing the opposite of the herd. A short term market correction would not suprise me.. but then again I’m a rookie.
Trevor
Of course markets will correct. But we are nonetheless is a long-term uptrend based on relentless, if glacial, global growth. — Garth
This one doesn’t come from a “gold pumping site”.
Everything is possible by those days.
http://www.zerohedge.com/contributed/2013-03-30/canadian-government-offers-bail-regime-prepares-confiscation-bank-deposits-ba
…”The Canadian Government Offers “Bail-In” Regime, Prepares For The Confiscation Of Bank Deposits To Bail Out Banks”…
# 22 – Just what you’d expect from a gold-pumping site. No bank depositor in this country, in this lifetime, will experience a bail-in. — Garth
Same mentality. The zero guy has demonstrated in the past his thin grasp of the Canadian financial system. There will never be a bail-in here because (a) nobody is remotely contemplating a rule saying retail depositors would be forced to participate and (b) no Canadian bank will fail. Irresponsible twaddle. Red meat for the tin foil brigade. — Garth
Crazy…listed at $799K, sold at $905K
C2955888
A semi!
This guy is Ontario’s answer to Frugal Chad.
Where is ozy – Kanatians trading million dollar bungs and kandos amongst themselves?
http://mobile.bloomberg.com/news/2014-07-10/loonie-reverses-as-poloz-muted-by-faster-inflation.html
Bears waving the white flag.
If The BoC lowers its key rate, we are in deflation. What a mess. And unlikely. — Garth
To Garth all the Blog Dogs who chimed in on my recent (albeit dramatic) question – thanks. Helpful indeed. I suppose I needed a bit of a kick in the ass or at least some external validation that I am on the right track and should stay the course.
The general assumption that I am straight and want a woman in my life is somewhat laughable but many of the other comments were very worthwhile. Thank you.
….”Same mentality. The zero guy has demonstrated in the past his thin grasp of the Canadian financial system. There will never be a bail-in here because (a) nobody is remotely contemplating a rule saying retail depositors would be forced to participate and (b) no Canadian bank will fail. Irresponsible twaddle. Red meat for the tin foil brigade.” — Garth
I hope your right.
But we are living “crazy” time!
Nothing would surprise me…
Shawn Responds
To Aggregator who said:
#57 shawn
It is a freaking miracle that with 40 hours of work per week most of us are well fed, well housed, well clothed and well entertained and have money for vehicles and the odd vacation. Anyone looking at us from 200 years ago or more would be totally amazed.
Two charts for the idiot comment of the day! Charts
****************************************
I don’t think you did have the idiot comment of the day. Debt rises with GDP ooh, and kept rising as GDP faltered. Debt is how the rich share with the poor to be paid back later with interest. Without debt GDP today, would be much lower and many more would starve. (Today, many eat well despite biting the hand that feeds)
*********************
Entrepreneur said to me:
#57 Shawn…”most of us are well fed…get in the game”
I have trouble with that, get in the game… what does that mean? What about the private sector? Can they get in the game? Tell me, Shawn, is this about union and/or public sector? Please explain.
**************************************
Public, private or both, your choice, it’s part of the game. Winners win and losers lose.
*********************
To the “only oil made us rich guy” – not worth a response.
Enjoy the day…
Seams to me The Zero Guy has been reading Canadian MSM
Investor ratings service Moody’s has changed its outlook for Canada’s biggest banks to negative from stable, citing concerns over the Canadian government’s plan to implement a “bail-in” system in the event of a bank failure.
The “bail-in” rule, included as part of the 2013 omnibus budget bill, asserts that the federal government would not necessarily bail out a bank on the brink of failure with taxpayer money.
http://www.cbc.ca/news/business/moody-s-cuts-bank-outlook-to-negative-on-ottawa-s-bail-in-rule-1.2700128
http://business.financialpost.com/2014/06/11/moodys-downgrades-outlook-for-some-of-canadian-bank-debt-over-bail-in-regime/
Old news. Of course the feds would not bail a major bank. It won’t defend us against a unicorn attack, either. — Garth
#130 Mark on 07.09.14 at 1:05 pm
“Well, I acted last year, scooping up one of the few kinds of Canadian real estate that were on sale, namely REITs, and am glad to have done so. “
REITs on sale? What are you smoking? Very few, if any actually have GAAP earnings. And firms like Loblaws, Sobey’s, amongst others, are selling their RE into overpriced and inflated REITs as fast as they possibly can to take advantage of the bubble.
===========================
Mark, truth lies in the chart.
https://ca.finance.yahoo.com/q/bc?s=XRE.TO&t=1y
Mark has Angry Guy issues. — Garth
#MeanWhile,BackInPortugal #BancoEspiritoSanto #IsTaughtATimelyLesson #InStructuralReformByThe… #PeripateticMonasticAuditorsOfThe #InstituteForReligiousWorks
http://youtu.be/ZNPdmeHBlM8
#85 Vancouver
“…It’s all record foreign money causing this boom. 600,000+ new people coming here every year…”
……………………………………………
What a load of Bullshit! Did you just pull that “600,000+” number out of your backside?
In 2013, about 258,000 people immigrated to Canada; of these, about 33,000 were from China. (13%)
During 2013, an estimated 66,000 emigrated FROM Canada, so the net population increase from migration in 2013 was about 192,000.
Canada’s population is growing at about 0.77% per year and ranks 144th in the world; by comparison, the USA is growing at a rate of 0.90% per year and ranks 127th. Neither country is growing at rates that are at all alarming, despite conventional ill-informed wisdom
Facts are usually much more helpful that fantasies; even for you assumption-burdened inhabitants of Lotus-Land.
“Just curious, what do you think would happen to the financial markets if this were to happen?”
If gradual, it would be just the other extremity of the long-term interest rate cycle. If sudden, of course, it’d be cataclysmic. Which may very well be the whole point.
I know that if Interest rates came close to say 10%, I would probably liquidate the majority of my holdings to buy all bonds and gics.
Perhaps, but rates going to those levels implies huge amounts of loss on GICs and bonds previously purchased. It takes being a huge contrarian to buy assets after you’ve watched them only go down for a while. Not too many people have the stomach for that. After all, what is to say that the rates would just stop at 10%? Why not 12%% 15%?
It would be crazy expensive for companies (large and small) to borrow money to fuel growth, economy could be in the gutter.
OTOH, the economy may very well be smokin’ hot as labour is used as a substitute to expensive fixed capital. Expensive borrowing also drives inflation for the same reasons — nobody can cost-effectively borrow to expand inflation-defeating industrial production and/or to modernize existing production.
I’d caution against thinking that everything is a binary outcome, ie: rates are high, growth would be slow. High rates may not actually quell inflation either, but may actually, to a degree, fuel inflation itself.
“If The BoC lowers its key rate, we are in deflation. What a mess. And unlikely. “
Actually extremely likely. We’re facing down a deflationary abyss now that housing prices are falling in most major Canadian markets. With housing being such a huge demand driver over the past decade, what is there really to replace it? Replacing the housing bubbles’ excess contribution to GDP is going to be enormously difficult. And it would appear that Poloz is now way behind the curve in actually responding to the deflationary threat by lowering policy rates. Even if the short-term inflation figures look, at least in the very short term, a bit gnarly due to one-off energy price changes.
So “what a mess” indeed, if you were somehow thinking that there would be rate hikes, or a lasting depreciation in the CAD$. The CAD$ is on its way to well beyond parity, and policy rates are headed down. Won’t help home-borrowers though as housing loans are regarded as increasingly risky in this era of widespread price declines.
Nope. Too extreme. — Garth
Every day I come to Greater Fool and read the comments. Only to come away thinking thank God I’m not as crazy as those people.
Thank you for coming here to comment. — Garth
@#80 SHELTER THE MONEY
“Now the in your face banking privacy surrender.
All empires crumble. The USA’s days of hegemony are numbered.”
How does Canada protect itself from this looming train wreck heading America’s way? When other countries wake up and figure out FATCA was never about catching tax evaders and a way to control the world’s banks thus nations what might a “push back” look like? There is a great article in Forbes today re exposing FATCA for what it is: http://www.forbes.com/sites/greatspeculations/2014/07/10/not-just-fat-cats-hopping-through-fatca-hoops/
It is my belief that the world is starting, slowly, to wake up. What should Canada and Canadians do if indeed this all blows up? Does exposing what this really is put the Canadian government in any better position to renege on the IGA? This is scary stuff!!
“Only that didn’t happen in downtown or north Toronto. Pick your neighborhood wisely.”
Actually, during the last crash Downtown of Toronto was hit the worst with over 50% decline in value of a home. So yes choose your location wisely. Some of the prices downtown are the most ridiculous and could suffer accordingly.
http://www.torontocondobubble.com/2013/02/toronto-housing-bubble-in-1980s.html
Of course markets will correct. But we are nonetheless is a long-term uptrend based on relentless, if glacial, global growth. — Garth
“market participants not factoring in sufficient uncertainty about the path of the economy and monetary policy” the recent (yesterday) Fed minutes said.
@ #86 Not an economist on 07.10.14 at 3:05 am
Great post.
Best,
HD
Shawn # 57
“We should all thank god that the system exists.
It’s not perfect but it’s a heck of a lot better than no system. It’s the best system ever invented. Yet many people who post here would bite the hand that feeds them. I support their right to do so. But they are obviously wrong.”
————————————-
Wholly crap man, get off your knees already! Did you get any on you?
Ok…ok, not pc enough? How bout this:
I also, support your right to function as this blogs paid systemic lapdog, but hell, what a shitty way to make a buck.
Shakes at a crappy no name establishment in Portugal caused the VIX to jump 8-10% this morning while north america on average shed 1% before the morning trader had a chance to take a sip of his first vanilla-skiny cow-no-foam-two farts starbucks latte (no tip!)..
imagine if something actually noteworthy happens in the news…
Garth from the diversification point of view.. with VIX at 52wk low and storm a brewing – is a small portion (2-5% )of portfolio a reasonable trade to make at this point (TSE:HVU). I know you cant comment on individual securities but I am just giving an example.. market overvalued – contrarian betting tool is at the low point – everyone is calling for a pull back – why not capitalize on the opportunity
cheers
Lots of houses in Nanaimo for under $250.00… not tear downs… and lower they go .
Mr Drama queen,
I m 43 turning 44 in a few months. I only earn 53 K from university but I do hAVE a pension so i cant add it to my assets yet. however i didnt succumb to the 2008 sell off so i about $270k up on my investments
30 % cash
40 % stocks/ etfs
30 % rrsp mutual funds
some of my stocks/ etfs dividend yield range from 3- 7% so i feel exactly what you feel. a little remorse, disapoointed but what can you do. Some condos and t/ h are decreasing so i’ll wait for the right price/ place .
I had family commitments and leg surgery to overcome. but i’m still hanging in there . Lets face it no matter what you do your family is goining critticise one thing or the other.
so make a decision. your life your money…most decsion had good and bad points anyways
Andrew Woburn
Next time you are in Nanoose, check out the Fairwinds area. Lots of properties in the $750-1,500K range
All markets are local. North Nanaimo and Fairwinds are West Van for 1/3 the price. That’s why the price is rising.
Fairwinds from June 1st 2014 to June 30th 2014 had just 6 sales from 81 listings. From $560k to $799K (started at $934K) Not exactly a hot market and prices are down as well.
REALTORS® don’t SELL houses, people BUY houses and that is why the market does what it does. NOTHING absolutely NOTHING happens without a ready, willing and able motivated buyer. Get used to it because that is what is happening now. As absurd as it may seem to you that the market is headed up again you might as well accept that it is going to get a whole lot more absurd before it corrects because most don’t see it that way.
There is a pent up demand in the market right now the likes of which I have never seen. People are tired of waiting for that perfect time to buy and they are jumping off the fence in droves. But don’t be discouraged for, if you wait long enough, you can be sure the market will eventually correct just as it always does. Unfortunately no one, not even Garth who has been predicting it for years now, can predict with enough accuracy when that correction will take place to truly benefit by such all too illusive good timing. Meanwhile others are living their lives and fulfilling their dreams. And you know what, they, by and large, are doing just fine for it.
“Ours is not to do what lies dimly at a distance but to deal with what lies clearly at hand.” – Thomas Carlyle
SHIFT happens – deal with it.
};-)
#67 Fred on 07.09.14 at 11:10 pm
80ķ at a non-profit? I’m gonna stop donating.
—————————————————————————-
I stopped a long time ago. “Non-profits” are highly profitable for those scamming errr I mean working for them.
Recovery in US? …nope!
“The Fed has maintained repeatedly that QE “helps the economy.” The facts say it does no such thing; gross economic output trends downward to flat when QE has been in process, and net-net economic progress is negative.
They lied.
What QE did was boost asset prices — but not economic activity.
In other words QE was nothing more than intentionally blowing a bubble by widening the band between economic output and debt accumulation.
These are facts, not opinions — and match my original prediction that in terms of actual economic activity QE was incapable of having the claimed and desired outcome.
Unless the “desired outcome” was blowing yet another bubble in financial markets.
There aren’t any pins floating around these days…… right?”
http://market-ticker.org/akcs-www?blog=Market-Ticker
#46 “He thinks his 80k salary is paltry and his 175k nest egg is small. ”
It blows my mind. The only people I know who claim to be earning $200k+ are the spouses of people living in very large houses in nice areas.
Everyone else I know in their 30s is lucky to be earning over $50k and not have credit card debt.
Best recommendation from “The American Dream” for dealing with family and friends:
“Here’s a set of balls. Put them on! You’re gonna need them”.
Then…
Take a chunk of that nest-egg put it in REITs and boast to your relatives that you own diversified commercial properties that _pay your rent_. That way you “own” without liquidity risk. “rent paid” to you through dividends is also going to cost you 80% less taxes than what your pals make off the strange people in the basement.
Just find a new roomie. Even renting at 1400 – 1600 is not that bad, compared to burning through your nest egg. That 175$K would disappear in interest and condo-fees. Besides rent paid can be made tax-deductible.
FIT, how about this slogan:
“From renter to rentier!”?
#116 };-) aka Realty’s Advocate,
but this SHIFT didn’t happen, it was caused.
Just have your industry stop lying and see what SHIFT happens.
#112 Montellino — “Garth from the diversification point of view.. with VIX at 52wk low and storm a brewing – is a small portion (2-5% )of portfolio a reasonable trade to make at this point (TSE:HVU).”
There is no cheap way to replicate the VIX. That fund is down 98% in the three and a half years since inception and 45% year to date. Here’s what happens at the ETF’s offices on Wellington Street in Toronto: They deduct a generous management fee for themselves, and then they BURN THE REST OF THE INVESTORS’ MONEY IN A FURNACE.
It is difficult enough to find and accumulate the shares of moneymaking companies at good prices. Why make life harder by trying to trade something which is guaranteed to lose value nine days out of ten? If you need to add an extra frisson of excitement to your otherwise conservative portfolio, write covered calls.
Here is what you do…dude.
Find the biggest condo you can, near the university, with 3 bed rooms. Then you rent it 2 rooms out to university students….and if you are single……tada money and companionship issues are a thing of the past. Problemo solved dude.
And you think you have issues….ha ha ha.!
Garth, when Harpo gets around to appoint new senators and he gives you the tap on the shoulder, will you take the time to continue with this blog?
Tap on the shoulder? I still have tire tracks on my butt. — Garth
#117 Fed-up on 07.10.14 at 12:29 pm
#67 Fred on 07.09.14 at 11:10 pm
It’s a tough balance to find. On the one hand, you don’t want amateurs or volunteers to be handling millions in donor money, so you need to offer competitive pay to attract competent workers. On the other hand, it’s a charity, so every dollar possible should go towards the actual cause. While employee overcompensation is an issue I am more concerned about the cost of fundraising at some of these places. If more than 50% of the money goes towards wages and fundraising you’re no
longer a charity, you’re a job-creation entity for the people working there.
I echo the comments of Mandria #15. Move away from the core and head into Midtown, older buildings, easy walk to the subway and lots of Cafes, and shops in many areas.
The rents you are seeing for downtown are nuts for what you get.
You will get a bigger unit for less rent definitely. I never understood why people shy away from the older buildings-they have so much more character and value.
If at 42 you resisted the urge to buy, why blow it and do it now? You will find yourself barely saving anything and it will drive you crazy, not to mention you likely will start raiding your savings to fix stuff or renovate.
Keep renting and if a nice job opportunity pops up outside T.O. or outside Canada, then take it, explore, live a little.
Sounds like you may need to accept you’re a little on the frugal side. Remember; you can’t take it with you. Don’t get so caught up in saving a getting a good deal. It makes sense to be frugal if you make $40k a year in T.O. but not at your salary, investment income and lifestyle.
To “Fearful in Toronto”, I say just keep renting. A new bathroom nowadays will cost you $20k easy. Your saving is hardly enough for a decent renovation even if a house is given to you for free.
Don’t try to be those people who are waiting for the market to come down. How many of them would actually buy something when it does come down? Take RIMM (aka BBRY) for example, every body loves RIMM at $130. But Every body hates it at $7. If you love it at $130, shouldn’t you love it more at $7?
What I am trying to say is that, don’t try to time the market. If you need a house and can afford it, then buy it. Owning will always cost more, there is no dispute about that. If you can’t swallow the potential loss, then keep renting.
Wow, I’m the exact same statistic as this dude. I make a tiny bit more, live in Ontario, same age, same net worth, no anchors or kids, *straight*, and rent. Only I live in North Bay instead of the Smoke and my place is rent fixed back to 1999. Friends and family never poke fun at this renter when they hear I’m paying $547 a month and don’t have to shovel a driveway or mow the lawn.
Nice lies JimH post 102.
And so emotional in your response. What’s your agenda?
#22 totalinvestor.com on 07.09.14 at 8:32 pm
Uh oh, bail-ins coming to Canada.
http://armstrongeconomics.com/2014/07/09/banksters-more-fines-european-bail-ins-coming-to-canada/
Just what you’d expect from a gold-pumping site. No bank depositor in this country, in this lifetime, will experience a bail-in. — Garth
**********************************
I’m surprised you would say that. I have read Mr Armstrongs blog. He does not pump gold anymore than you do Mr Turner. In fact like you he says the stock market is going much higher.
The difference is it looks like he has a more “reality” version of the way the world works as opposed to “Nope – nothing bad will ever happen”.
Bad things will happen. That’s not one of them. — Garth
#21 Bob on 07.09.14 at 8:31 pm
To all you bitcoin lovers that frequent the comment section I would be more comfortable getting paid in Canadian Tire Money! Oh and it’s not government controlled either…
**************************
Please do us a favor in a year or two and come back and tell us you were wrong. It would be appreciated. The problem with history is when its corrected, it is never done publicly because the people that wrote it originally were either too embarrassed or part of the “control system like we have today” and don’t want the truth to be known. The Spanish discovering “the new world comes to mind” when its now known that the Chinese, Romans and Vikings and been here for centuries. Where do you think the spanish got the maps to come here? They were Chinese.
Fearful of what? The fact that you don’t have suffocating mortgage debt,a car loan,credit card debt,line of credit,student loan debt,owe relatives money hey dude do you have any idea how many thousands of people would like to be in your boots.Relax and enjoy the ride!!
Happy # 127,
“If more than 50% of the money goes towards wages and fundraising you’re no longer a charity, you’re a job-creation entity for the people working there.”
——————————————–
The % is actually much higher, into the 75% to 90% plus for many large charities. I read a study a few years back and I couldn’t believe the numbers.
#105 Captain Sensible on 07.10.14 at 10:30 am
Every day I come to Greater Fool and read the comments. Only to come away thinking thank God I’m not as crazy as those people.
Thank you for coming here to comment. — Garth
Garth, you’re a card….I’m thinking the, “King of Clubs”.
The difference is it looks like he has a more “reality” version of the way the world works as opposed to “Nope – nothing bad will ever happen”.
Bad things will happen. That’s not one of them. — Garth
**************************
Considering the very simple things we need to do here to make Canada livable again such as Manufacture Stuff We Dig Out Of The Ground and SLASH the size of wasteful bloated overpaid public service I would agree.
” real estate prices plunged 30% back in 1990 from their speculative peak ”
Yes and they are up some 400% since then making everyone who bought just before the peak, at the peak or after a winner
Actually it would make them idiots for not harvesting gains. — Garth
Boy Garth, always the ‘come back ‘champ.
I challenge anyone on this blog ,to ask a person of wealth in this country ,how they have achieved it. I would trust that virtually no one would say that they did it in the financial markets.
No need to tell anyone here what the answer will be but just in case look up the land, commercial property and multi unit residential owners.
Fight all you want Garth but there is no denying that vast wealth has been created in real estate accumulation, not so on the financial markets side.
Someone once said that the way to get rich in the financial markets is to sell financial products.. I would agree with that one.. Lol
“Tap on the shoulder? I still have tire tracks on my butt. — Garth”
Thousands of one-liners later, you’ve still got it.
Kudos.
#65 Aggregator
‘totally amazed’ meaning ‘look at those crazy debt piggies’?
(btw, good charts, agg)
#30 Detalumis
Well said. You just can’t time the market. You got to buy when you are ready and have the cash. The guy is already 42. I bought my first townhouse at 21. Many upgrades later and it’s long paid off at 42. It’s really sad reading about all those people longing for a place of their own.
#128 Long Time Lurker — “What I am trying to say is that, don’t try to time the market. If you need a house and can afford it, then buy it. Owning will always cost more, there is no dispute about that.”
It boggles the mind that in the face of overwhelming evidence here and abroad, some people still think that owning always costs more than renting. No wonder they have trouble timing the market!
#131 Flawed — “I have read Mr Armstrongs blog. […]he has a more “reality” version of the way the world works as opposed to “Nope – nothing bad will ever happen”.
If you think he’s reality based, you’ve got to read his magnum opus, written on a comically busted typewriter while in jail.
http://armstrongeconomics.com/wp-content/uploads/2012/03/its-just-time-martin-armstrong.pdf
Greater fun really provides information of fun. But in this fun they have deep moral.
A condo, never… a house may have some merit, it will keep going down for an undetermined period of time, but at least you can rent some rooms to generate a small dividend. but remember this, that 175,000 still has a lot of room to grow in this market, 2 years maybe, i dunno… you dump that on a condo that is already overpriced, it only has room to drop… renting is not gambling at all, as soon as you buy… yer up to your neck in a leveraged investment… and leverage works both up… and down….
If ‘Fearful’ has any kind of credentials he should consider moving to a free enterprise region like Texas. Lots of jobs…big pay…low cost of living. A nice starter house in Arlington ( Dallas area) is still under $100,000. A mansion in a first class burb like Plano or Flower Mound tops out at $320’s….drive a half hour and find the same house at $279,000….with all the bell and whistles…pool…5 bedrooms etc. Easy to find a nice house in Dallas, Austin, Houston for under $200,000. Cars are half….gas is half….groceries half…clothes are half…..no state income tax…..chicks are way prettier…..lots of ’em….outdoor parties and music all the time….BBQ is the best….a couple hours drive to a real beach along the Gulf….. Being young and single…and staying in Ontario….you have to have your head examined.
“…The general assumption that I am straight and want a woman in my life is somewhat laughable but many of the other comments were very worthwhile. Thank you…”
I will amend my post to
“…You will meet the right GUY and laugh when all your in debt friends watch their houses go underwater as their home equity evaporates.”
“Just what you’d expect from a gold-pumping site. No bank depositor in this country, in this lifetime, will experience a bail-in. — Garth”
Canada was put on ‘negative watch’ just last week for it’s stand against bailing out the banks in a crisis. It’s hard to get more popcorn when the show is so interesting.
Canada was not put on a negative watch. Where did you get that? — Garth
#137 Italians Love Real Estate — “I challenge anyone on this blog ,to ask a person of wealth in this country ,how they have achieved it. I would trust that virtually no one would say that they did it in the financial markets.
No need to tell anyone here what the answer will be but just in case look up the land, commercial property and multi unit residential owners.”
Lots of people make decent money (a few million) investing in real estate, it’s true. To make the big bucks, they’re usually pretty levered — 20-35% equity in their portfolios. Lots go bust every cycle because they suddenly find they’re too leveraged for lenders’ comfort, or too many of their mortgages come due at an unfavourable time.
Of the really rich, some made it in real estate, but not many. Consult this handy table:
http://en.wikipedia.org/wiki/List_of_Canadians_by_net_worth
The first real estate baron in the list is at #10. #12 was another one, but he died yesterday. Most of them made it in non real estate related family businesses.
Real estate is very much a middle class obsession. Always has been, and probably always will be.
And the stock market? Not too many people get rich starting with very little money, but it’s a great place for people who’ve already saved/earned/inherited money to keep it growing and working hard at 6-10% per year. Some few do manage to extract 15-20% per year from it, and at that rate of compounding, their money grows very quickly indeed.
If FIT thinks that 80k is paltry compared to bankers, look at this website. He might see that his pay is not actually that bad and with not nearly the same amount of stress
http://news.efinancialcareers.com/us-en/177939/top-bankers-target-schools-earn-less-banking-pay-information/?dpfl=true&__utma=157191919.324360407.1405024869.1405024869.1405024869.1&__utmb=157191919.16.8.1405026224008&__utmc=157191919&__utmx=-&__utmz=157191919.1405024869.1.1.utmcsr=AMS_US_ENG|utmccn=MC_EDI|utmcmd=EM_NW&__utmv=-&__utmk=146313460
#132 Flawed
comparing bitcoin to canadian tire money is…well…very misguided, to put it nicely.
bitcoins derive value from scarcity/anonymity/ease of use/reduced/zero fees…
canadian tire money is not anonymous, is printed/controlled through private corporate interest…and is potentially infinite in terms of supply
#132 Flawed
A belief borne of ignorance, now corrected that we know a handful of lost sailors and adventurers stumbled onto north American shores and died out here after a brief settlement. Native residents themselves did not even know of this, how could a 3rd party?
The Spanish, who were looking for a westward “shortcut” to China/India were told by Chinese to come this way, using maps that did not show the Americas? It is not unlikely they were tipped off to the possibility of another route by Chinese traders, but certainly not so they could discover and conquer a vast untapped land.
What are you even talking about?
#137 Italians Love Real Estate
I challenge anyone on this blog ,to ask a person of wealth in this country ,how they have achieved it. I would trust that virtually no one would say that they did it in the financial markets.
————————
OK then, I’ll ask myself. Although I would never presume to call myself a “person of wealth”, I have done OK and enjoy a comfortable retirement.
How? In roughly equal proportions:
1. A lifetime of saving, investment & frugal living
2. Share options cashed out before the dot com bust
3. Real estate.
So, in my case, you are partly correct. I owe about a third of the credit to success with RE. However, I once calculated how much return I enjoyed on RE (over the 25 years I was involved) and it came to about a 6% average annual return.
Similar returns were available in the markets over that
time and the ride would have been just as much a roller coaster as RE was, is, and continues to be.
#149 Peter on 07.10.14 at 5:14 pm
I’m not an insider by any means, but those numbers seem low. The first table says “total” compensation, but I’d really only believe the figures if they were base pay, and bonuses of 100%+ were on top. It would be useful to know the standard deviation since those figures are averages.
If accurate… I guess compensation envy is not terribly warranted?
#137 Italians Love Real Estate
Warren Buffet has never invested in real estate per se, and he openly admits it. His investments have been 100% in companies, especially large ones that produce cash. Real Estate is just one of many financial vehicles, the biggest difference is the amount of leverage you can get with Real Estate, you can borrow almost 100% at a cheap rate to buy and hold. Can you do that with Equitys?
Lie… we didn’t do no stinking lying. We pointed guns at their heads and told them to buy.