La fin

ATHEIST modified

Kate and Glen and Austyn and Neil bought a house. Wait. They only put an offer in on a house in North Van. Outcome unknown.

What we do know, however, is that the fixer-upper (a.k.a. dump) costs $798,000 and between the two GenX couples, the best they could do was 5% down. That’s forty grand, or ten thousand per person in their thirties. And that’s pathetic.

The young fools were the focus of a feature in the Vancouver daily this week on how nobody can find an affordable house there anymore. So they decided to buy a house together through a tenancy-in-common agreement – with Kate and Glen getting the main floor while Austyn and Neil get the moldy part.

And welcome to Misery Week, la fin.

It’s a sweet illustration of what property horniness does to young brains, and how the cult of real estate has so distorted social norms. Of course, we’ll start by reminding you of a GreaterFool rule: never buy a house with anyone you’re not sleeping with. There are just too many risks and potential negative outcomes.

IDIOTS modified  For example, in this case KGA&N will all have to provide personal guarantees to Vancity for the mortgage of at least $750,000, and then fight over who borrows to finance the renos. What happens if there’s a marriage breakup (we have a 40% divorce rate), and one of the four has to leave? Or babies, and not enough space? Or a job relocation? Unemployment? What if one couple wants to move and the other can’t buy them out? Or if Kate and Glen sell their share upstairs to bikers? Or Conservatives?

Do they know that in a tenancy in common arrangement any of the owners can sell or remortgage their interest in the property without the consent of the other tenants? Or that one owner could go to court for a ‘partitioning’ of the property to force the sale of the entire asset, if the others tried to block a deal?

Misery awaits. There’s probably no good outcome to an arrangement like this. But it’s the kind of insanity you can expect when real estate becomes an entitlement. When the media tells you we have a ‘problem’ because people without savings can’t afford $800,000 houses, and there have to be solutions, then we’re kinda screwed. So, best to just take cover.

On Friday the latest numbers showed we’re still living a dream. CREA said sales of existing houses popped in July to a level not seen for four years – ahead 7% from last summer, with prices swollen 5%. The average is $401,585. The median US price is $223,400.

We also got that big revision in the jobs numbers, which proved not only that StatsCan can’t count, but that we still have a weak economy. Although a net gain of 200 was bumped to 42,000, last month we lost 18,000 full-time jobs, and created 60,000 positions for part-timers. How can anyone feel happy about that? It was telling that our dollar barely moved on the news.

There’s no doubt in my mind where all this will be taking us. Inflated houses and deflated job prospects – when mixed with higher bond yields and fixed mortgage rate hikes in the months ahead – will clash with expectations. Maybe that’s already being previewed in smaller markets.

Writing in the Halifax paper the other day Michael Lalonde, who can’t sell his house, had this to say:

“It is interesting how this market is not following basic economics. which dictate that an oversupply will result in lower prices, creating increased demand until supply meets demand. Statistics show average prices for homes have remained steady and, at the same time, the number of price reductions have not created more buyers to take advantage of those deals.

“Perhaps in the coming weeks, sellers will choose to stop listing homes because they cannot get the price they want. I forecast that if prices trend lower over the coming months, many people will have to take their houses off the market, not because they do not want to sell, but because they cannot afford to buy the next house due to lack of equity.”

By the way, in Halifax currently there are 16 houses on the market for every one buyer. And yet prices aren’t tumbling lower, as Mike observes. Why? Because the locals believe this is an aberration, not a trend, since the bozos at CREA make everyone think ever-rising prices are the norm. When the moment of capitulation comes, it will be more extreme.

This week we looked at the indebted future of the thirtysomethings and why they’re worse off than their parents were at the same age. We reviewed the fallacy of rising net worth. Most families have saved or invested little and embraced debt, while wealth is concentrating in the hands of the few. We moved on to poke the myth of investment property, lying at the heart of condomania, and finally reviewed how towers of glass could tank entire markets.

At the core of this misery is the reckless real estate lust embodied by four naïve people and a $798,000 piece of junk.

Misery Week is done. Now, where did I put the scotch?

190 comments ↓

#1 Randy on 08.15.14 at 5:54 pm

Garth…Nice try…Can’t fix Stupid !

#2 Crowdedelevatorfartz on 08.15.14 at 5:54 pm

Friday night!
Time to swill my sorrows away………

#3 Yogi Bear on 08.15.14 at 5:55 pm

We also got that big revision in the jobs numbers, which proved not only that StatsCan can’t count, but that we still have a weak economy. Although a net gain of 200 was bumped to 42,000, last month we lost 18,000 full-time jobs, and created 60,000 positions for part-timers. How can anyone feel happy about that? It was telling that our dollar barely moved on the news.

But when the US created hundreds of thousands of part time jobs and lost 250,000 fewer full-time jobs you called that indication of a strong US economy.

/confused.

US jobs = 1.2 million in six months, unemployment rate 1% below ours. — Garth

#4 Flawed on 08.15.14 at 5:58 pm

Beautiful and sunny here in my “un-disclosed” location in S. America. Have fun moldy’s and HAM lovers…..we are starting the residency proceedings in about 60 days.

People here are happy. There is no mold. No HAM. Govt does not steal your money and piss it away on themselves. Cost of living is lower than Canukustan and best of all it’s sunny most of the year compared to Moldcouver where we will be leaving soon. Love it !!

#5 raisemyrent on 08.15.14 at 5:59 pm

Back in my school days, you were taught not to grow dependent on calculators and software. A good engineer could identify a nonsense answer no matter how precise.
One thing is to be off, and another thing is to PUBLISH (read: reviewed figured) a number ORDERS OF MAGNITUDE off. It also magically means a 0.1% increase on jobs for the government.
That’s called fudging through mathemagics.
And EI claims were frozen while they did the job. Talk about irony.

People in my city doing that (referring to the post). I hope they print a few copies of that picture. Something tells me that it will be hard to find in a few years.

What a world we live in. Where can I find someone offering blue and red pills???

#6 Virtual Ted on 08.15.14 at 6:03 pm

Hope you can turn your analysis into cold hard cash. Good luck Mike.

Cheers
Ted

#7 Spiltbongwater on 08.15.14 at 6:07 pm

Shark week >>>>> Misery week.

#8 calgarydown on 08.15.14 at 6:08 pm

so in Calgary I still can’t find a place to rent in a good central location or a place to buy that isn’t a) a dump or b) a 5 hour commute in the middle of nowhere. No sign of this ever slowing down. Why doesn’t this stop and become normal already like the 90s.

#9 Alberta Ed on 08.15.14 at 6:08 pm

The situation is clearing moving from SNAFU to FUBAR.

#10 LH on 08.15.14 at 6:12 pm

The indebted middle class is sooo screwed. Let me tell you the secret plan of the top 0.1% (e.g. my people)

1) lower interest rates
2) ensnare the middle classes (50-99% percentiles, as the bottom half have nothing) into mortgage debt
3) eliminate middle class jobs and replace them with robots, software, and overseas labor
4) ????
5) PROFIT!!

LH

For those who have not seen this yet, “Humans Need Not Apply”
https://www.youtube.com/watch?v=7Pq-S557XQU

This is scary! Maybe top 0.1% will no longer be enough, I will have to save neurotically to get to 0.01% to be safe from the robot revolution. After all, robots and software will still be owned by (a few) humans!

LH

#11 Happy Renting on 08.15.14 at 6:17 pm

Well… Maybe they swing with each other.

#12 Sean on 08.15.14 at 6:19 pm

LH, I think the top 0.1% refers to wealth, not mortgage debt.. lol.

#13 I stand corrected on 08.15.14 at 6:22 pm

@calgarydown

I live in hipster kensington in Calgary in a owner subsidized glass shard. It is a one bedroom with a view of downtown.

What can you afford? I’m looking for someone to take over the lease so I can move abroad. Winter’s coming you know!

#14 Mister Obvious on 08.15.14 at 6:22 pm

When I was preparing to buy my first place in 1985 (at 34 years of age) I felt I could not get “enough of a house” without investing together with other parties.

I actually looked at some listings with friends and seriously planned to do something similar to what Kate, Glen, Austyn and Neil are attempting.

My mother recognized that for the folly that it was. She pleaded with me to reconsider and get a place of my own. I finally listened to her and it was the best advice I ever received.

Hey mom, wherever you are: I am eternally grateful! Rest your beautiful, sweet soul.

#15 Sean on 08.15.14 at 6:24 pm

Garth, say it ain’t so… more misery next week please.

In particular, I would like to hear your take on just how ugly things are going to be for the broader Canadian economy, in the years to come.

Assume that your wise and wealthy blog dogs have side stepped the real estate debacle in their personal lives.. but what will they be looking at in terms of a weak economy, a higher tax burden, a lower dollar? What is the overall outlook? For one thing, I think it is logical to assume that the government will have to attempt some form of bailout, misguided though it will undoubtedly be. How might this take form?

Your vision of the future “burden” that all Canadians are likely to face, would be appreciated.

#16 Shawn on 08.15.14 at 6:25 pm

Sleeping Arrangements

Never sleep with anyone you’re not owning a house with.

(Another reason not be a long-term renter)

#17 Piano_Man87 on 08.15.14 at 6:26 pm

Forget the gun, those people just shot themselves in the foot with a missile.

#18 David on 08.15.14 at 6:27 pm

Who’s to say they’re not all sleeping together.

#19 Shawn on 08.15.14 at 6:28 pm

The Stats Can Error

I tried counting all the jobs in Canada and kept losing track somewhere around 4 million and had to start over.

For one thing people kept changing jobs even as I tried counting.

What is 42,000 as a percent of all the jobs in Canada?

Around two tenths of one percent?

Get over it, people.

#20 James on 08.15.14 at 6:30 pm

@#8 calgarydown

Heyy!! Same problem here! Also in Calgary and have been looking for over a year. I can’t justify paying half a mil for a dump from the 80s. But someone does! That’s the scary part.

Comoooonnnnn higher interest rates. I need you.

#21 waiting on the west coast on 08.15.14 at 6:31 pm

#4 Flawed – I love Argentina but there have been so many defaults… Paraguay doesn’t seem that much better in terms of stability, etc.

#10 LH – totally right about the ensnarement. Look at the US… Once you have a larger than normal proportion of the market tied up in an overinflated asset class, there are only smart/vulture funds available. And they are very patient for the lowest price point…

Garth – enjoy your drink!

#22 Shawn on 08.15.14 at 6:33 pm

The Secret Society of the 0.1%

LH at number 10 said:

Let me tell you the secret plan of the top 0.1% (e.g. my people)

******************************************
LH, was that you in the red pants at the meeting of the 0.1% last night? Also, shhhsss!

#23 Larry on 08.15.14 at 6:34 pm

Sometimes its not a good idea to buy a house with someone you are sleeping with, also. Here in Regina, a friend was telling me his buddy met a woman, she moved into his house with her two kids and all was well. She started complaining about how the house holds too many memories of his ex and he agreed to go together with her and get a brand new $800,000 house built in a new treeless development called Harbour Landing on the frozen windswept tundra. Several months later, the relationship breaks down and he’s out $30,000 and had to give the house back to the builder as nobody else is stupid enough to buy it.

#24 mark on 08.15.14 at 6:42 pm

Why are they smiling? That things have come to this means they should be horrified.

#25 Smoking Man on 08.15.14 at 6:44 pm

After my epic fx bet this week Garth, any brand you like, as much as you want, come on down to falls view.

#26 Glen&Neils Parents are all Dentists. on 08.15.14 at 6:46 pm

Both guys parents are long time Dentists in North Van.

With what they’re going to get in inheritance, I wouldn’t be worried either.

#27 Anonymous Coward on 08.15.14 at 6:54 pm

Single malt or blended?

#28 FormerSaskie on 08.15.14 at 6:58 pm

My niece started a job in July, of course it ends at the end of August as most student/summer jobs do.

#29 Obvious Truth on 08.15.14 at 7:00 pm

Falling yield are even scarier. Deflation? Cue government stimulus. Monetary policy can’t do any more.

Looks to me that almost all those jobs were in education.

#30 Whitey on 08.15.14 at 7:03 pm

A quick question to any of the blog dogs who may have an answer (and sorry if it has been asked in previous blog posts)

Let’s say I bought a house for 1.2 million prior to the cmhc rule change of maximum coverage of 1 million. At the time I would have put down $50k as
My down payment

#31 Ben on 08.15.14 at 7:05 pm

“Financial innovation”. Just like our friends in The City of London.

Societies that can’t work out that banks are a bad thing will fail.

#32 Whitey on 08.15.14 at 7:08 pm

Grrr iPhone error (maybe dumbass me error)

Essentially I’m trying to figure out if the CMHC will renew coverage for a mortgage if the amount of debt owing on the property exceeds $1 million at let’s say 5 years later from that initial purchase. And if not where does it leave the poor saps who are holding the bag?

#33 Cici on 08.15.14 at 7:14 pm

What a recipe for disaster. Kate is probably already pregnant with baby 1, by the time baby 2 comes along she’ll find out that Austyn’s been banging Glen, who will have a third child to on the way to support. Austyn will then try to take Neil for everything he’s got (in the house), and an ugly legal battle will ensue, following which the two couples will be trying to offload the communal shack during the biggest RE meltdown in Canadian history.

Doesn’t anyone think anything through at all anymore? It only takes 15 seconds to imagine the most likely scenario…

#34 Vangrrl on 08.15.14 at 7:15 pm

Wow, that is seriously beyond pathetic….

#35 Not an economist on 08.15.14 at 7:15 pm

“On Friday the latest numbers showed we’re still living a dream. CREA said sales of existing houses popped in July to a level not seen for four years – ahead 7% from last summer, with prices swollen 5%.”

Pardon me Mr. Turner, but isn’t it true that in almost all asset bubbles there has been observed to be a small period of time just before the highest peak when the rate of increase in valuation accelerates dramatically? Perhaps this is that one last hurrah.

After all, it’s a mathematical certainty that there can’t be new money entering the market at accelerating rates indefinitely, given the job situation and the low and stagnating incomes. And that’s to say nothing of other macro factors that would crash the party all on their own: a perfect example being the illiquid boomer generation being forced to cash in all in the span of less than 2 decades. No matter how dumb and eager to borrow someone is, everybody on the planet has a credit limit. The music might keep playing up to, but no further than, the point where the credit limit cannot be further expanded.

#36 Singaporean Investor on 08.15.14 at 7:19 pm

These people are idiots… They should have given up their dreams of owning a house, they simply can’t afford it. They should just keep living in their condos.

#37 Slow Canada on 08.15.14 at 7:25 pm

Thanks, as always, Garth. I’ll buy you a dram.

#38 Sebee on 08.15.14 at 7:30 pm

I for one am glad we’re back to rainbows, unicorns and pixies next week.

I added to my misery this week by watching Dear Zachary documentary – so I say good riddance to misery week.

#39 45north on 08.15.14 at 7:35 pm

And yet prices aren’t tumbling lower, as Mike observes. Why? Because the locals believe this is an aberration, not a trend, since the bozos at CREA make everyone think ever-rising prices are the norm. When the moment of capitulation comes, it will be more extreme.

amen

#40 Realties.ca » La fin on 08.15.14 at 7:38 pm

[…] Source: http://www.greaterfool.ca/2014/08/15/la-fin/ […]

#41 Doofus (not) on 08.15.14 at 7:40 pm

Years ago when I was a young buck living in Calgary my live-in GF at the time and I were looking to buy a house. My parents were going to lend us a downpayment as we had no cash. Next morning the GF asked me: “If we break up can I keep the house?”. I replied “Why wait? I’m going to work now, so have all your crap out by the time I get back.” She did. Best $$$ my parents never spent!

Moral of the story? House horniness drops your IQ into single digits.

#42 Son of Ponzi on 08.15.14 at 7:42 pm

4 local people and all they can afford is 800k.
So, who’s buying the > 1 million homes?

#43 I'm stupid on 08.15.14 at 7:43 pm

Who remembers the 80s? Do you remember when you saw a Benz or a Porsche? Did you think, wow they must be rich. Today seeing a Benz or a Porsche is common. That’s not because we’re better off but because the majority don’t fear debts bs embraced living with monthly payments. It’s no wonder why 4 people in their 30s can only scrape together 40k.

I’m a car guy. I’ve had a love affair with them for as long as I can remember. I dreamt of owning a Ferrari since I was a little boy. I remember watching the president of Ferrari explains the companies target market. It was men with a net worth over 10million. This was in the early 90s. Now how many Ferrari owners meet that requirement today? I can bet that less than 50% do. The rest are leasing at 3-4k a month.

#44 CanadianOne on 08.15.14 at 7:52 pm

Garth,
Thanks for all the great work you chart out for people here and across the web. Truly a voice of reason.

With the end of misery week, I would like to bring our collective attention to the issue upcoming on Sept. 12 as JoeO closes “public consultation” on Taxpayer Protection and Bank Recapitalization Regime.

IMHO, the following two links shed some light on a sort of benchmark to have. After all liquidity is life, cash is king. Recap regime as they will call it should in effect set a standard for the larger populace to follow, aka less reliance on borrowed money. In the event we miss this upcoming opportunity to set ourselves for future resilience…. the bubble game shall perpetuate. There is a whole swath of “financial products”and consumers(investors) likewise who will be required to re-posture themselves(if they put their cash/savings to work at all). Now I am not assuming this is going to be easy, but that is what real women/men do.

Unlike the condo flogging sector of our economy.

http://bankersnewclothes.com/wp-content/uploads/2013/06/parade-continues-June-3.pdf

http://www.nytimes.com/2014/08/10/business/when-she-talks-banks-shudder.html?_r=

#45 nonplused on 08.15.14 at 7:59 pm

#11 Happy Renting on 08.15.14 at 6:17 pm
“Well… Maybe they swing with each other.”

In a little house like that they may as well. The year I got divorced I lived in a basement suite whilst sorting out the legal and financial stuff. I could certainly tell when the upstairs tenants had girlfriends over. Some of them were quite enthusiastic is how I would describe it. There are no secrets in a little house.

Then I bought my own little house with a basement suite, got a girlfriend, and it was my turn to keep the tenants up at night! After about a year of that my girlfriend moved in and I never re-let it.

#46 Inglorious Investor on 08.15.14 at 7:59 pm

I wonder what else KGA&N are sharing?
(wink, wink, nudge, nudge).

———————-

Love the tombstone by the way. I would think of a clever epitaph for my own tombstone, like:

He invested in assets like stocks, bonds, and gold
And bought a home close to a school
But he never bought a condo, truth be told
He left that one for the greater fool

but I won’t be needing one because I’m just going burn myself to ashes. Right, Singapore?
(wink, wink, nudge, nudge)

#47 Singaporean Investor on 08.15.14 at 8:07 pm

My condos in Singapore have made me boatloads of money, I’m also investing in rental condos here in Vancouver. Keep in mind, 1/3 of my assets are in dividend-paying stocks. So, I am very diversified.

#48 Frustrated on 08.15.14 at 8:12 pm

A big reason why homes are going for more every month is flippers. If you buy a fixer upper at 400 k and resell it the same year for 550 k of course you will see year over year gains. That’s just my thought

#49 Daisy Mae on 08.15.14 at 8:15 pm

#21 Waiting: “Garth – enjoy your drink!”

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

With the situation what it is, there’s no way he’ll stop at one. ;-)

This weekend I’ll have TWO adults, FIVE kids, and ONE pit bull….so I’ll need something, to.

#50 Daisy Mae on 08.15.14 at 8:17 pm

Further to last: Should be ‘too’ — not ‘to’. I hate that….

#51 Sheane Wallace on 08.15.14 at 8:18 pm

this sale would not be happening if not for CMHC.
400 k + property taxes + utilities to live in a basement?
it seems the stupidity of the inhabitants of the great white north has no limits.

I would expect soon 2 families in a room as we don’t have enough space here in this small country of ours.

the job numbers of course are a blatant lie.

#52 Inglorious Investor on 08.15.14 at 8:23 pm

Mr. Lalonde could learn a few things, I think:

“It is interesting how this market is not following basic economics […]”

Maybe he should eschew basic economics and learn more about capital flows.
————————-

“[…] which dictate that an oversupply will result in lower prices, creating increased demand until supply meets demand.”

Supply and demand are both always in flux. A change in one does not necessary mean an opposite change in the other. What matters are the relative rates of change, not the changes themselves.
—————————-

“Statistics show average prices for homes have remained steady and, at the same time, the number of price reductions have not created more buyers to take advantage of those deals.”

First of all, he says prices have remained steady, yet in the same breath he cites price reductions. Which is it? But that aside, if prices are falling but sales are not increasing, then that would mean demand is also falling at the same or faster rate than supply.
————————

“Perhaps in the coming weeks, sellers will choose to stop listing homes because they cannot get the price they want.”

His fear is that less supply will cause an increase in prices. But that would only be true if demand were not falling. Prices can still come down with lower supply if demand is falling faster than supply. But if the market is indeed trending down, then at some point expectations will change and people will become more motivated to sell.

————————-
“I forecast that if prices trend lower over the coming months, many people will have to take their houses off the market, not because they do not want to sell, but because they cannot afford to buy the next house due to lack of equity.”

He does not seem to understand that property prices in the same area tend to trend together. Therefore, there is no price arbitrage to gain or lose from.

#53 Mark on 08.15.14 at 8:29 pm

“4 local people and all they can afford is 800k.
So, who’s buying the > 1 million homes?”

“afford”??? Good one. But on a more serious note, the >1M houses are being bought by move-up buyers. Those selling to people like these $800k buying group, who already have a significant chunk of equity. The balance is being filled in, of course, with debt.

A tiny number might be purchased by offshore buyers, but we’re talking a very tiny number here.

#54 takla on 08.15.14 at 8:33 pm

when you’ve got skin in the game who wants to admit failure,comeon,they told us housing values seldom drop,there not making anymore land so better rush out and get your piece before its all gone and your priced out forever..lol
AS for the happy foursome Flash forward 6months to a yr and I sure hope they put lots of insulation between those floors as the bickering will be intense as the home-ownership bills accumulate ,real shame to see young couples saddled with huge housing DEBT.
Speaking of soundproofing between floors…I hope the bedrooms are at separate ends of the house..afterall men are dogs

#55 Mark on 08.15.14 at 8:35 pm

“Essentially I’m trying to figure out if the CMHC will renew coverage for a mortgage if the amount of debt owing on the property exceeds $1 million at let’s say 5 years later from that initial purchase. And if not where does it leave the poor saps who are holding the bag?”

CMHC coverage is not ‘renewed’. It lasts the life of the loan (or until it is refinanced into something that’s not CMHC-insurable). Additionally, one may not extend their amortization on a CMHC-insured subprime loan. For instance, if you take a 25-year amortization today, in 5 years, you renew with a 20-year amortization. The CMHC does not allow you to renew with a 25-year amortization. Hence, a CMHC-insured loan cannot be, in a higher interest rate environment, negative amortizing. If an individual cannot renew a CMHC-insured subprime loan on the terms offered by the banks, keeping within the confines of the CMHC subprime mortgage insurance terms, or otherwise arrange for the loan to be paid off, then the loan goes into default.

This is what I figure is going to trap a lot of buyers. As RE continues to go down across Canada (as it has over the past year), the lenders are going to demand increasingly hefty risk premia (policy rates are going nowhere!!!). Its this increase in risk premia, along with lower prices and a loss of jobs in previously very hot industries, that’s going to tip borrowers into default and cause claims to be made on CMHC subprime mortgage insurance.

#56 CrazyCanuck on 08.15.14 at 8:38 pm

Excellent week of articles Garth.

You deserve that scotch. Enjoy.

#57 Renter's Revenge! on 08.15.14 at 8:49 pm

Speaking of magical job numbers, does anybody understand Manitoba’s economy? We have one of the lowest unemployment rates in the country (5.3% vs 7.3% for Canada in 2012), yet the economy doesn’t seem to be based on anything (like oil in Alberta, weed in BC, manufacturing in Ontario or seafood in the Maritimes). Also how can a 30 year old 1000 sq ft house cost $300k when the median family income is $60k? It doesn’t add up. I demand an explanation!

#58 Rexx Rock on 08.15.14 at 8:49 pm

My advice if your young and if you can run up huge debt do it.Travel ,buy whatever your heart desires and declare bankruptcy.After 18 months you regain your credit rating and do it all over again.I know a couple people who have done this and they say its no big deal.Its like a lottery with no consequences.The credit card companies actually encourage this behaviour.

#59 A Yank in BC on 08.15.14 at 8:58 pm

Aside from the obvious perils of such a communal living arrangement.. I cannot for the life of me figure out how they can be comfortable buying such an expensive (and likely over-valued) asset with only 5 percent down. We have failed our children if they truly believe that this is how life should be lived.

#60 Porsche on 08.15.14 at 8:58 pm

Where’s Halifax?

#61 Assquatch on 08.15.14 at 8:58 pm

Smoking Man,
How much $ did you make in the end from your fx wager?
I’ve only traded stocks, never forex, and not sure how to calculate your winnings on your 40 contracts…

#62 Mark on 08.15.14 at 9:03 pm

“Speaking of magical job numbers, does anybody understand Manitoba’s economy? We have one of the lowest unemployment rates in the country (5.3% vs 7.3% for Canada in 2012), yet the economy doesn’t seem to be based on anything (like oil in Alberta, weed in BC, manufacturing in Ontario or seafood in the Maritimes). Also how can a 30 year old 1000 sq ft house cost $300k when the median family income is $60k? It doesn’t add up. I demand an explanation!”

Manitoba, just like Saskatchewan, are places that people leave if they can’t find employment as soon as possible. And in Manitoba, especially, there is a significant (often native) non-labour-force participating section of society that you don’t have to nearly the same extent elsewhere.

As for housing being at 5X income, that’s primarily been driven by speculation and the CMHC’s significant emission of subprime mortgage credit guarantees. 5X isn’t even as severe as we see in other parts of the country.

#63 Entrepreneur on 08.15.14 at 9:08 pm

They are entering a partnership just like a partnership in a small business. Partnerships never work most of the time.

Have they tried renting together first to see what is really feels like living together. Can rent a upstairs/downstairs to simulate the bought house. Rent together for a year then come back to us.

People have different views/attitudes when it comes to who/what should be done and how/when and with what/who’s money. A lot if hidden/silent unanswered problems/questions. Always a lazy one, always the one who works more, who does more/less and why. The list can go on. Unless one person holds up the rest to make it work but that does not last very long either, burnout.

#64 Smoking Man on 08.15.14 at 9:13 pm

#61 Assquatch on 08.15.14 at 8:58 pmI’ve only traded stocks, never forex, and not sure how to calculate your winnings on your 40 contracts…

…….

Google it..

But stay away from forex, very dangerous, only aliens with esp, can kill it….

I don’t play that often, but when I see a sure thing… I bet huge…

#65 Retired Boomer - WI on 08.15.14 at 9:20 pm

Glad misery week is over. There will be new, and different miseries next week, the week after….etc.

It is Friday, time for the cocktail minded to enjoy their favorites.

The indebted are still there, as are the debt free. Older not necessarily wiser, but more experienced.

Weekends are offered for restoration, relaxation, contemplation, participation, and visitation.

#66 Sold and renting on 08.15.14 at 9:21 pm

Great series this week. So happy I started paying attention several years ago. We sold our too big country estate two years ago, and have more than made up the selling and real estate fees with our investments.

#67 juno on 08.15.14 at 9:43 pm

Don’t worry Garth I think the guy on the left will be sleeping with the girl in the right.

Total insanity. They will soon be killing each other in no time.

About the job number. Yeah that about right. Some Politician probably said make it right. A little tweaking of the number eliminating negative data and voila Magic.

I bet you they got rid of retiring people as a job loss. And added the retiring people who came back part time consultant as a job gain. It would be interesting to see the numbers of retiree’s each month because where I work, there are quite a few each month.

Meaning less taxes collect, a payout in pension and a negative expense on the government benefits.

Also means they are collecting less money on taxes feeding into the government spending machine

#68 TFSA's scuttlebutt on the Hill, Tories want to get rid of them on 08.15.14 at 9:44 pm

Question for you Garth. First the background: my financial advisor from CIBC Wood Gundy mentions to me that the banks info is that TSFA’s are going away after the next federal election, keeping in mind that Harper wants to kill them.

The story from my advisor is the Tory government will allow Canadians who have contributed to them to keep them, but no more adding contributions. For the people who have not opened they’re out of luck.

The reason given to me by the advisor at CIBC Wood Gundy is that the Government has forecasted that they’ll lose out on too much on future tax income.

I’m about to write my MP and inquire if this rumor is even being discussed up on the Hill.

Garth, do you agree with this? Would really like to know your thoughts since you had such an impact on getting this fantastic legislation passed in the first place.

Your advisor is an idiot. Tell him I said so. — Garth

#69 SWL1976 on 08.15.14 at 9:46 pm

Great post again Garth

#1 Randy,

Garth…Nice try…Can’t fix Stupid !
—————————————-
But you can maintain it !

Since it is misery week, let me add the following… I work right in the heart of oil country, and while things are still busy busy busy, big oil is really starting to tighten their belts and once these construction projects start to wind down and come on line many people just might not be needed… Yikes, I wouldn’t want to compete with TFW’s for a job, I mean they are already here. Right? Anyways time will tell, ouch this might also affect the ‘rosy’ Okanagan market

If anyone is interested I have brushed up on my html and decided to post a few links that some might find interesting on the sky above and a interview close to home and Nano-fibers Yuck!

Have a good weekend and cheers to Garth and all the blog dogs who make this site an interesting and knowledgeable place to visit

#70 A Yank in BC on 08.15.14 at 9:48 pm

Bikers perhaps. But a true Conservative would be far too intelligent to get mixed up financially in such a crazy living arrangement.

#71 Rapier Wit on 08.15.14 at 9:57 pm

Happy Misery Week to All. I raise my glass of Sheep Dip to Garth. May the real world approach with all due haste!

#72 Cow Man on 08.15.14 at 10:04 pm

Sir Garth:

Thank you for printing the facts for those who seek the truth to read. Folks, even your ex-bass Stephen, don’t like the truth. Goes back to the little boy yelling out, “the Emperor is wearing no clothes”. It will be a sad day for Canada when the “dam breaks” and we see the damage created by CMHC at the bidding of our Government.

#73 Funky on 08.15.14 at 10:04 pm

The thought of “Conservatives” moving in would scare the hell out of me.
Thanks very much for your fine work and wonderful sense of humour Mr. Turner.

#74 Smoking Man on 08.15.14 at 10:10 pm

Getting into the lonney zone….

I hate cats, last night a stray landed on my lap… It was love… I strocked it, it purred..

I’m obviously getting old..

Who would have guessed I love strange cat…

#75 Capt. Obvious on 08.15.14 at 10:19 pm

I enjoy that the file name of the happy couples is IDIOTS-modified.jpg. That is, ah, accurate.

#76 Assquatch on 08.15.14 at 10:20 pm

#64 Smoking Man on 08.15.14 at 9:13 pm
#61 Assquatch on 08.15.14 at 8:58 pmI’ve only traded stocks, never forex, and not sure how to calculate your winnings on your 40 contracts…

…….

Google it..

But stay away from forex, very dangerous, only aliens with esp, can kill it….

I don’t play that often, but when I see a sure thing… I bet huge…

About $24k from my UOG calculation. Nicely done!

#77 JSS on 08.15.14 at 10:22 pm

Question for you Garth. First the background: my financial advisor from CIBC Wood Gundy mentions to me that the banks info is that TSFA’s are going away after the next federal election, keeping in mind that Harper wants to kill them.

The story from my advisor is the Tory government will allow Canadians who have contributed to them to keep them, but no more adding contributions. For the people who have not opened they’re out of luck.

The reason given to me by the advisor at CIBC Wood Gundy is that the Government has forecasted that they’ll lose out on too much on future tax income.

I’m about to write my MP and inquire if this rumor is even being discussed up on the Hill.

Garth, do you agree with this? Would really like to know your thoughts since you had such an impact on getting this fantastic legislation passed in the first place.

Your advisor is an idiot. Tell him I said so. — Garth

——

I also heard the same thing from my financial advisor at RBC.

#78 Jas Girn on 08.15.14 at 10:23 pm

Misery week is the best week ever in Greater Fool history!

#79 Dave on 08.15.14 at 10:28 pm

Garth, there is a typo: you said – ‘higher bond yields’. That’s not happening currently or within the foreseeable future with this type of economy.

#80 lucyj on 08.15.14 at 10:30 pm

Love misery week. But please stay with the Single Malt. I think blended refers to gasoline,

#81 TFSA's scuttlebutt on the Hill, Tories want to get rid of them on 08.15.14 at 10:33 pm

#68 TFSA’s scuttlebutt on the Hill, Tories want to get rid of them.

Thanks for the answer, I appreciate that. I think so too, I’m firing next Monday.

#82 Smoking Man on 08.15.14 at 10:35 pm

Today, I went to see a urologist, my psa on last physical was a bit elevated, well obviously, you drink every night can’t empty the thing.

Plus my doctor about to retire sending me for every test going…

OK, this doc, explains to me, the biopsy will be uncomfortable, but he says it with such a thrill in his eyes. .

So it leaves me to wonder, who in there right mind, a male would want to be a urologist.

Shit, I figured it out..

OK my dad had it a problem since 70 the bastard is 97.
And these yellow high lighter pros. Want to prob me.

I’m not going for the test….

#83 Ey up on 08.15.14 at 10:36 pm

#60

It’s in England, Yorkshire in actual fact.

Now you know !

Oh and there’s one in Australia too.

#84 Mark on 08.15.14 at 10:38 pm

“my financial advisor from CIBC Wood Gundy mentions to me that the banks info is that TSFA’s are going away after the next federal election, keeping in mind that Harper wants to kill them. “

Agree with Garth here, that the TFSA won’t be touched by the Tories. A future government of different political stripes certainly could introduce many measures, including a limit on the size of a TFSA, a one-time contribution limit, etc.

I personally feel a lifetime cumulative capital gains exemption would have done the same job as a TFSA, but less overhead in terms of the CRA trusteeship. With the added benefit of encouraging investors to seek out investments that produce capital gains, rather than just the minimal interest-bearing investments that most hold in TFSA’s. Then again, its clear that this government is 100% committed to a RE bubble, and the banks need a pool of cash savings in which to fund such.

#85 underpaid accountant on 08.15.14 at 10:39 pm

#57 Renter’s Revenge! on 08.15.14 at 8:49 pm

“Speaking of magical job numbers, does anybody understand Manitoba’s economy? We have one of the lowest unemployment rates in the country (5.3% vs 7.3% for Canada in 2012), yet the economy doesn’t seem to be based on anything (like oil in Alberta, weed in BC, manufacturing in Ontario or seafood in the Maritimes). Also how can a 30 year old 1000 sq ft house cost $300k when the median family income is $60k? It doesn’t add up. I demand an explanation!”

You’re unedgemecated. Manitoba has the most diverse economy in Canada, relying on agriculture, mining, financial services, hydroelectricity, manufacturing, and tourism. Yes, tourism. Manitoba has around 3 million lakes (60% of the world’s lakes) and offers some of the best fresh-water fishing and mosquitoes in the world.

#86 Dr. Talc on 08.15.14 at 10:51 pm

They look very happy. Big smiles all around, they’re laying down chump change, I don’t see a problem here.
I agree the market prices are too high, but these folks are just adjusting to that reality. The prices are real.

#87 Hazey on 08.15.14 at 10:59 pm

Next week is opportunity week?

#88 will on 08.15.14 at 11:02 pm

It’s all mixed up Garth. Get another scotch and enjoy this view of new York RE (everything will be all right):

https://www.youtube.com/watch?v=GQSUIRDs6VE

#89 Wiggleroom on 08.15.14 at 11:08 pm

Again comparing average numbers to median. You’re being very michael moorian in your stat reporting here.

I did not compare. Actually Canadaian median prices are hard to find. — Garth

#90 45north on 08.15.14 at 11:17 pm

Entrepreneur : Have they tried renting together first to see what is really feels like living together. Can rent a upstairs/downstairs to simulate the bought house. Rent together for a year then come back to us.

good idea. After reading the article in the Vancouver Sun, I get the idea that the banks are saying no. Back in the day, a group of us rented a house on Granby Street, across from Maple Leaf Gardens (in Toronto). I did most of the dishes. After a couple of months I moved out. The idea of signing a mortgage with them would be insane.

#91 I'm Still Around on 08.15.14 at 11:30 pm

Misery week was awesome! Garth you’re awesome.

#92 Tony on 08.15.14 at 11:54 pm

Re: #59 A Yank in BC on 08.15.14 at 8:58 pm

What could very well happen is each puts their 10 grand down and very soon all 4 will be 100 grand in the hole apiece when the house drops 400 G’s.

#93 greenfairy on 08.16.14 at 12:40 am

Garth

If this goes on much longer, you’ll be tradin’ the scotch in for absinthe. Remember, absinthe makes the heart grow fonder…

#94 Jon B on 08.16.14 at 12:40 am

Enjoyed the theme of misery this week. How about a week dedicated to the foreign buyer and the lack of hard data on what nationalities own Canadian real estate.

#95 Herf on 08.16.14 at 1:13 am

In the group photo, which one is Larry, Curly, Moe and Shemp?

#96 Tom from Mississauga on 08.16.14 at 1:16 am

Even if bond rates don’t go up. A retiree with $500K 10 year GoC bonds will get what, $10K in income? They’ll go through that in no time.

#97 Tom from Mississauga on 08.16.14 at 1:22 am

BTW, the bond market seems sure that deflation is coming. The German 2 yr bond is negative yield. A post on how to play this Garth?

#98 Mark on 08.16.14 at 1:37 am

“so in Calgary I still can’t find a place to rent in a good central location or a place to buy that isn’t a) a dump or b) a 5 hour commute in the middle of nowhere. No sign of this ever slowing down. Why doesn’t this stop and become normal already like the 90s.”

Try being presentable, go rental shopping with a copy of your clean credit report in-hand, and ditch the over-sized pick-up truck with the cow teste replicas hanging from the hitch.

Seriously though, as a professional, I never have run into a problem in finding decent quality rentals in Calgary, and have never heard of any problems with colleagues. Now, if you are a redneck, insist on bringing your pit bull and cats, and present an aura of uncleanliness and a pain-in-the-butt factor, its perhaps a different world out there. Calgary RE prices have been falling for the past year, and the rental environment has loosened considerably after the short-term blip higher associated with temporary relocation of flood victims.

#99 News or Paid Advertising? on 08.16.14 at 2:01 am

The author of the story is Michael Bernard of Bernard Communications Consulting.

http://www.indeed.com/r/Michael-Bernard/f4e7cfe1cdd5a06b?sp=0

…is a link to one of his online CVs. In part it reads:

“• Ongong contract writer for Vancity Savings Credit Union, developing stories on Vancity’s community activities for pitching to the mainstream media”

Do I read correctly that it’s his paid job to praise Vancity as he gushingly does so in presenting it as news?

I did not check to see if he is also possibly paid by any other interests that appear in the article.

#100 Metro Van Observer on 08.16.14 at 2:04 am

Um it looks like bond yields are trending lower Garth. Global growth is stalling and deflation is winning it seems. You are sounding too alarmist like that Carney guy used to in terms of rates. Nonetheless, debt in and of itself may cause the crumble, absent rate hikes.

#101 Don on 08.16.14 at 2:05 am

This was a miserable week for so many reasons, reading the posts here were the least of them. Any chance for a good news week next week?

#102 Jon on 08.16.14 at 2:15 am

Crowdedelevatorfarts your links shows you are wrong can you read. “Now, Wall Financial will put dark glass on those top floors starting this April after successfully making the case that the clear windows, which let in more sunlight, wreaked havoc with the tower’s heating and cooling systems.” It was origonally built clear i should know i used to live there, the reason was to make it less visible on the skyline my curtains were blue on the outside to make it look like sky. They followed rules of city but it has been over ruled due to air conditioning costs and all windows are being converted to dark buddy…

#103 LPWgg on 08.16.14 at 2:18 am

So forever you say price dropping but drop not only go up like tree in good weather with water and sun. Prices very high and you making cents but possible different is here. 4 people buy house is easy to pay. If rising price then money they make. If house fall then keep because no sell is no loss. Same as you say with invest yor gain or loss is paper until sell. House same. No sell no loss and no gain. Or rent and watch money come like magic in lost Vegas. Houdini?

#104 Turtle on 08.16.14 at 3:21 am

Two at a time, or four all together – it is their personal business. This way or another, but four-income household is the future of Vancouver.

So, no misery here, just a hard core reality.

#105 Stupesing in Cabbagetown on 08.16.14 at 6:31 am

#55 Mark “Hence, a CMHC-insured loan cannot be, in a higher interest rate environment, negative amortizing.”

But, but, but, in an article yesterday in the Toronto Sun by Steve Jacques entitled Options are available for mortgage payment difficulties he writes:

For mortgages insured by Canada Mortgage and Housing Corporation (CMHC), CMHC provides mortgage professionals with tools and the flexibility to make timely decisions when working with you to find a solution to your unique financial situation including:

* Converting a variable interest rate mortgage to a fixed interest rate mortgage in order to protect you from a sudden interest rate increase, should one occur.

* Offering a temporary short-term payment deferral. Your mortgage professional may be prepared to offer greater payment flexibilities, particularly if previous lump sum prepayments have been made, or if you have previously chosen an accelerated payment schedule.

* Extending the original repayment period (amortization) in order to lower your monthly mortgage payments.

* Adding any missed payments (arrears) to the mortgage balance and spreading them over the remaining mortgage repayment period.

* Offering a special payment arrangement unique to your particular financial situation.

Steve Jacques is the Ontario Manager, Community Development, Research & Professional Services at CMHC.

I am searching for this article online to provide a link but I can’t find it. Perhaps it has been pulled?

#106 bigrider on 08.16.14 at 7:06 am

CP 24 -Hot property last Thursday- Al Sinclair, Ann Rohmer -Things to do to save for your 5% down payment.

1)Take staycations.
2)pack a lunch
3)sell your car and take the bus
4)have evenings in with friends instead of out at bars and clubs
5) sell a kidney
6) perform sexual favours for money
7) become a surrogate mom or sell sperm

The obsession with owning a house in the GTA has hit the twilight zone.

#107 bigrider on 08.16.14 at 7:18 am

http://www.thestar.com/business/personal_finance/2014/08/15/weisleder_real_estate_to_crash_not_by_these_yardsticks.html

And another positive spin on our indestructible housing market.

#108 Nobleton Bill on 08.16.14 at 7:19 am

I’m seeing price reductions on every listing in town, same with Caledon Garth… Then when they do sell it’s about 96% of asking.

So agents are listing at full value, then reducing

#109 Overseas Canuck on 08.16.14 at 7:19 am

They’re probably going to sell the rights to their little social experiment for a Big Brother-type reality show on HGTV. It’ll be called something insipid, like “Buying with Besties”.

#110 drydock on 08.16.14 at 8:03 am

“Or if Kate and Glen sell their share upstairs to bikers? Or Conservatives?”

There goes the neighborhood.

#111 Uh Oh Canada on 08.16.14 at 8:08 am

This is the modern day sacrifice of the virgins.

#112 yo on 08.16.14 at 9:02 am

For me the real caveat of this story is why do four people only have $10k each and want to buy a house? Even if the price of the house went down by half they would still havr only a 10% down payment. The real questions i have is why do we have a market where they allow people like this to buy and distort prices and screw people who actually have cash to buy the property. The govt needs to get chmc out of this kind of business.

#113 rainclouds on 08.16.14 at 9:38 am

#60
What’s a porsche ?

#114 };-) aka Devil's Advocate on 08.16.14 at 10:10 am

Get over it. What other people do is their business. It’s a different economy. Money has never been as cheap and society has never been so obsessed with “stuff”.

There is a 50 million dollar home being built in the Carrs Landing area of the Central Okanagan by a wealthy Edmonton developer. Yup that’s right $50,000,000.00, seven zeros to the right of the “5” and left of the decimal. And while that is one of the most expensive homes in the area it’s not alone as there are several multiples of $10,000,000.00 homes dotting the shoreline up and down Okanagan Lake. A $2,000,000.00 home here is common yet we get all bent out of shape because the average SFD breaks through $500,000.00. It’s the price of admission folks. If you are not prepared to pay it there is someone else in line who is. Step aside.

And as far as that typical $500,000.00 shack goes; it’s a lot more house than that of yesteryear. Of course it’s going to be more expensive. Extra square feet, a double garage, central air, a man cave, a media room, and ensuite, a designer kitchen decked out in stainless and granite all cost money. A ‘50s bung didn’t have any of that and a ‘60s shack much less too. Hell air conditioning and an ensuite were rare luxuries in a 1970s home let lone everything else todays home buyer insists on.

It certainly is a different economic landscape. The list of “must haves” has grown exponentially over the last few years. From Hummers and Harleys to hardwood and granite, people want it all and will not settle for less.

Garth says ” By the way, in Halifax currently there are 16 houses on the market for every one buyer. And yet prices aren’t tumbling lower, as Mike observes. Why? Because the locals believe this is an aberration, not a trend, since the bozos at CREA make everyone think ever-rising prices are the norm. When the moment of capitulation comes, it will be more extreme.”

Well the reality is, the “Bozos” at CREA don’t make people do what they do. The “Bozos” at CREA simply report the facts and the fact is that rising prices have been the norm. People can see that for themselves. Will it continue in the future? Well I know a lot of people, including myself, who in the past thought it couldn’t possibly yet each decade it has and history is a pretty good indicator of what the future holds in store.

Keep doing what you’ve done and you’re likely to get the same results in the future as you have in the past. We are creatures of habit.

So get over it. What other people do is their business. You don’t have to follow suit if you chose not to. And don’t think you’re going to change their ways because there are a whole lot more of them than there are of you. Sit back and enjoy the show… no one knows when the climax is going to arrive and no one knows the ending. Anyone who thinks they do is fooling themselves and in reality the “greater fool”.

Seriously you sound like a bunch of nattering old gossiping housewives. What others do is their own business as long as they aren’t breaking any laws.

#115 Renter's Revenge! on 08.16.14 at 10:40 am

@62 Mark:

“Manitoba, just like Saskatchewan, are places that people leave if they can’t find employment as soon as possible.”

I’ve heard that before. It makes sense. After all, where in Canada are you most likely to freeze to death if you can’t pay your rent in the winter?

“significant (often native) non-labour-force participating section of society”

So what you’re saying is, without federal wealth transfers and “social services”, civilization as we know it would collapse here?

@85 underpaid accountant:

“agriculture, mining, financial services, hydroelectricity, manufacturing, and tourism…60% of the world’s lakes…best fresh-water fishing and mosquitoes in the world.”

And what you’re saying is, Manitoba’s economy is diversified and liquid? Garth should be proud of us!

#116 High Plains Drifter on 08.16.14 at 10:46 am

I was average the day I was born. I started to fluctuate but due to unknown sources I started to drift below average. Years of struggle and by golly, I think I hit the fifth quadrille and that called for a snappy dance. My mother started to throw average people at me and gradually I conceded the need to at least appear average. I studied the situation and found a secret foundation that had to be cracked. I disguised myself as average or the best I could come up with. Next polishing school, where the average people of Toronto the beautiful, Young St. type were my template. Hard work and mathematics with a shot of pixie dust had me signing all the documents needed to be average. I was over 50 but my Mother had to admit me to average but not my wife. My need to be average is sadly gone ,still I have the stick pin and I suppose thats as much of average as I need.

#117 Gord In Vancouver on 08.16.14 at 10:50 am

Global BC Is At It Again

At least they acknowledged that “bank of mom and dad” are behind most of this.

http://globalnews.ca/news/1510941/multiple-offers-on-homes-in-greater-vancouver-driving-up-prices-once-again/

#118 Keep'er soft on 08.16.14 at 11:01 am

In Ottawa, I’ve watched home prices on my street drop for two straight years now.

Town homes that were being listed for $329,900 two years ago are now listing for $299,900.

http://grapevine.ca/listing/42206#.U-9xL_ldWFg

I was planning to get out next Spring…I think I’m already too late

#119 jess on 08.16.14 at 11:13 am

depends who is the deliverer

check out the wheel of misfortune!

It’s free for the viewing, well, actually for the reading. It’s as shocking and scary as anything you’ll see in The Walking Dead.
http://www.forbes.com/sites/kotlikoff/2014/08/13/728/

64b or 17b

How High Up Did the Madoff Fraud Go at JPMorgan?
wallstreetonparade.com/…/how-high-up-did-the-madoff-fraud-go-at-jpm…
3 days ago – Now, together with attorney Lance Gotthoffer, Chaitman has written a book … The book is being made available to readers on a new web site

http://jpmadoff.com/

#120 Shawn on 08.16.14 at 12:38 pm

Devil’s Reality

Devil’s Advocate at 113, good post, I especially like the line:

It’s the price of admission folks. If you are not prepared to pay it there is someone else in line who is. Step aside.

Amazing how real estate bears lash out bitterly at CMHC, banks, borrowers, real estate agents, greedy home sellers, naïve home buyers, real estate associations and others.

Meanwhile, reality moves on as it will. Lash out to your heart’s content people, it’s all good entertainment.

#121 Mister Obvious on 08.16.14 at 12:53 pm

#100 Don

“Any chance for a good news week next week?”
———————————-

This blog always been a veritable fountain of good news. A peaceful island of sanity in a sea of barking madness. That’s why the majority of faithful readers return day after day. That, and of course, Garth’s entertaining style and fearlessness in the face of vicious haters.

The great revelation is this: as free Canadians in a democratic capitalist society we are not forced by circumstances of birth to jump into a rat hole of indentured servitude. Those that do jump willingly.

Canadians are free to choose a sane financial course. All necessary laws and intuitions are in place to facilitate financial security for anyone who is patient, realistic and starts early. I thank my lucky stars daily.

—————————–

Want some good news? Try this hit sing from 1965 (it will help to be over 60)…

https://www.youtube.com/watch?v=Q4KzGKnuUuc

#122 World Traveller on 08.16.14 at 1:23 pm

These grinning schmucks will get wiped out in Canada’s most bubbly city. As some have stated, a lot of partnerships go south especially when the details are not hammered out before. I doubt this group has done the required due diligence. It won’t be pretty for them when it goes down the toilet. They would have been better off renting or even staying in their condos, I don’t get the attraction of overpaying for bricks.

#123 TurnerNation on 08.16.14 at 1:40 pm

https://www.cibc.com/ca/loans/home-power-plan/home-equity-line-of-credit.html?

Enjoy an introductory rate of Prime + 0% on the
CIBC Home Power® Plan Line of Credit until May 3, 2015.1

LOL:

The CIBC Home Power Plan Line of Credit is the smartest way to borrow for the things you want today

Home renovations
Buying a car
A vacation, or another major purchase

#124 crowdedelevatorfartz on 08.16.14 at 1:51 pm

@#101Jon
“Crowdedelevatorfarts your links shows you are wrong can you read. “Now, Wall Financial will put dark glass on those top floors starting this April after successfully making the case that the clear windows, which let in more sunlight, wreaked havoc with the tower’s heating and cooling systems.” It was origonally built clear i should know i used to live there, the reason was to make it less visible on the skyline my curtains were blue on the outside to make it look like sky. They followed rules of city but it has been over ruled due to air conditioning costs and all windows are being converted to dark buddy…”
+++++++++++++++++++++++++++++++++++

Uh , yes, I can read.
Apparently your reading comprehension skills are at a similar level to your spelling and punctuation abilities. Which , I regret to inform you, are near zero.
So I must inform you that you are completely wrong on this issue and the fact that you live in the building further enforces my theory that I should never indulge in a “battle of wits” with an unarmed man.

P.S. I walked past the hideous Wall Tower while going to the RBC bank machine on Hornby and Nelson st last night . THAT also makes me an expert on Wall Center…..yeeesh.

#125 };-) aka Devil's Advocate on 08.16.14 at 1:54 pm

#116 Gord In Vancouver on 08.16.14 at 10:50 am

Global BC Is At It Again

At least they acknowledged that “bank of mom and dad” are behind most of this.

http://globalnews.ca/news/1510941/multiple-offers-on-homes-in-greater-vancouver-driving-up-prices-once-again/

Bu, bu, but wasn’t the market supposed to have slammed into a brick wall by now?

Sorry fence sitters, looks like you missed your window of opportunity. But it could all come crashing down… maybe…

Actually the market will correct as it always does after a period of irrational exuberance, which we have quite hit yet by the way. But it won’t, as it never does, correct nearly as much as it will have cranked up by then. The “correction” will just be enough to slap those last in “Greater Fools” upside the head – the ones who epitomize “irrational exuberance” and, again, we’re still a ways from that.

#126 Mr. Reality on 08.16.14 at 2:01 pm

Its quite sad that the MSM latches on to the stories of stupid people.

And when it comes to risk associated with purchasing real estate, these folks are at a whole new level of stupidity.

Mr. R.

#127 George on 08.16.14 at 2:11 pm

Off topic: just wondering, how come this blog does not have a search box? Weird.

#128 crowdedelevatorfartz on 08.16.14 at 2:16 pm

@# 101 Jon Jon

Another reading and comprehension skill test.

http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=2&cad=rja&uact=8&ved=0CCIQFjAB&url=http%3A%2F%2Fwww.cbc.ca%2Fnews%2Fcanada%2Fbritish-columbia%2Fwall-centre-gets-window-makeover-1.1316574&ei=95rvU7SzOc7poAT46ILoCw&usg=AFQjCNEFWECAMHpFXfSpVuzb4tNySWBKGQ

Please read link provided and pay particular attention to paragraphs 3 and 4 (if you even know what a paragraph is)which mentions the city lawsuit of 14 years ago over the color of the glass and the eventual outcome of the lawsuit.
The city won, the developer lost. Hence the ugly, clear glass on the top half of the hideous Wall Tower.
I remember the Court case very and followed it with interest as I had watched the tower being built in the mid 1990’s. The tower was orignally supposed to be all clear glass but the developer “pulled a fast one” with the city planners and showed them tinted glass during meetings . The city planners didnt realize they were looking at tinted glass under the fluorescent light and accepted it. ( I’ve tried comparing glass samples under artificial light and I can see where they would have been duped without a clear glass sample next to the tinted sample)
When the developer started installing the tinted glass the neighbors complained saying that the glass was supposed to be clear glass. The neighbors complained that they “didnt want another dark monolith next to their homes” ( monolith means “big block” for the grossly uninformed, aka Jon Jon). The city put a stop work order on the entire project for several months while they argued it out.
Wall center was forced to continue with “clear glass” but the delevoper stored the tinted glass in the hopes that eventually he would be able to install the tinted glass.
So, almost 15 years later, he finally won.
After financially supporting a new city “clouncil” that voted in favour of his tinted glass replacement.

However this entire arguement is somewhat moot.
You have entirely missed Garths warning that eventually glass clad condos leak……….

Hope you like rising condo fees.
P.S. Wall Tower was once described by renowned architech Arthur Erickson as ” A hideous striped football devoid of any warmth or charm”.

Jon Jon, there will be a test later…….

#129 young & foolish on 08.16.14 at 2:31 pm

Lots of talk about housing being way above the mean … but how about equities/bonds and excess liquidity?

#130 seeing it from both sides on 08.16.14 at 2:49 pm

@#121 World Traveller

“These grinning schmucks will get wiped out in Canada’s most bubbly city. As some have stated, a lot of partnerships go south especially when the details are not hammered out before. I doubt this group has done the required due diligence. It won’t be pretty for them when it goes down the toilet.”

I get flummoxed when I read hyperbolic comments like these. Why do people doubt that these people did their due diligence? Or just assume that they are stupid/naive. Perhaps these people are smarter than that and have drawn up private agreements/contracts that cover different scenarios that may arise in the course of life, and how to deal with them. Maybe they did get legal advice about all that can go awry with this kind of arrangement, and drew up private agreements, which would supercede any regulation in a court of law, I would wager.
This is the problem with bias. Every news event is slanted to support that bias, no matter how myopic.

#131 crowdedelevatorfartz on 08.16.14 at 3:03 pm

@#128 seeing it…….

Or World Traveller is right and they are “stupid schmucks”…….. touched a nerve did it?

#132 Mike T. on 08.16.14 at 4:02 pm

Ah that is the old DA we have grown to know

bitter, frustrated, and lashing out at folks whom he does not know

we really should start the pool….

#133 45north on 08.16.14 at 4:13 pm

rainclouds : What’s a porsche ?

it’s a car but the written word looks like porch

http://www.qatarliving.com/funnies/posts/its-not-porch-its-bmw

“it’s not a porch it’s a BMW”

#134 KAC on 08.16.14 at 5:08 pm

Crowdedelevatorfartz 127 & Jon Jon 101,

Sorry but you are both wrong.

The city approved glass with a platinum tint, not transparent glass. If you re-read the article you not they used the word “translucent” not “transparent”. Here is the definition which I hope will clear up your confusion.

“ADJECTIVE

(Of a substance) allowing light, but not detailed shapes, to pass through; semi-transparent:”

Transparent glass is clear and allows detailed shapes to pass through, translucent glass is not and does not.

You’re welcome.

#135 devore on 08.16.14 at 5:30 pm

#129 seeing it from both sides

Maybe they did get legal advice about all that can go awry with this kind of arrangement, and drew up private agreements, which would supercede any regulation in a court of law, I would wager.

A contract with clauses that are contrary to the law of the land (supersedes regulation) is not valid, so your claim makes no sense. The best they can do is work within the framework of the existing legal system.

Regardless of how ironclad and clear any contract or agreement may be, someone will always find an issue with it and challenge it. This would be resolved in that court of law, which you malign so.

#136 Alain on 08.16.14 at 5:30 pm

“It’s a sweet illustration of what property horniness does to young brains”

I do not see brain here, the brain of a jellyfish is more complex than their own.

I hope they are vasectomized.

#137 devore on 08.16.14 at 5:32 pm

#129 seeing it from both sides

Any lawyer would advise them this is a stupid arrangement, advice they would immediately ignore, because they’re hell bent to buy a house at the end of the day. Most likely, however, the only pre-signing advice was from realtors and mortgage brokers.

#138 Chauncy Gardner on 08.16.14 at 5:33 pm

#107 Nobleton Bill on 08.16.14 at 7:19 am

I’m seeing price reductions on every listing in town, same with Caledon Garth… Then when they do sell it’s about 96% of asking.

So agents are listing at full value, then reducing
====

Yes. In the garden, growth has it seasons. First comes spring and summer, but then we have fall and winter. And then we get spring and summer again.

#139 MountainRoad on 08.16.14 at 5:36 pm

Sorry, but I don’t understand the relationship between the unemployment rate and the labor force participation rate. If the unemployment rate in the United States is dropping, shouldn’t the labor force participation rate be increasing?

In the last 6 months, the labor force participation rate in the U.S. has dropped from 63.0% to 62.9% which is insignificant, but is hardly the sign of a healthy economy. In the past year, it has dropped from 63.4% to 62.9%.

In fact the U.S. labor force participation rate is the lowest it has been in the last 10 years.

http://data.bls.gov/timeseries/LNS11300000

As the economy improves more people look for work, so the labour pool increases.– Garth

#140 Snowboid on 08.16.14 at 5:37 pm

Residential waterfront prices in the Okanagan up, up and away…

June 2008 Av – $2,445,000 Med – $2,925,000
June 2013 Av – $1,848,113 Med – $1,711,250
July 2014 Av – $1,812,700 Med – $1,500,000

Courtesy of the historical stats from OMREB.

#141 Mark on 08.16.14 at 5:57 pm

“Lots of talk about housing being way above the mean … but how about equities/bonds and excess liquidity?”

Bonds, sure, big problems there, as the high bond market is what is causing much of the RE bubble worldwide.

As far as stocks go, stocks can be separated into a few different categories. Stocks that have inverse correlation to the interest rate cycle, and those with positive correlation.

Inversely correlated stocks tend to have long-term debt which funds long-term assets. Think of telephone companies, electric utilities, mines (particularly precious metals), railways, etc.

Positively correlated stocks tend to be mostly funded with short-term debt, and have short-term assets. The social media sector, for instance. Their customer base tends also to be heavily funded using short-term debt.

The S&P500 consists primarily of stocks positively correlated to bonds and interest rates. So such stocks will suffer. But the TSX Composite/TSX60 indicies tend to be inversely correlated. Hence, the TSX’s underperformance over the past 6 years due to lower interest rates.

As for valuations, they’re extremely attractive for the TSX. The dividend yield of the index is around 3%. The P/E is in the 13-15 range, which is below historic average. Inverse correlation can provide for significant growth into the future higher interest rate environment. P/B is extremely attractive, and some sectors, such as the miners and Bombardier, are trading at a mere fraction of the replacement cost of assets.

My prediction: the equity risk premium, noticeably absent in Canada over the past 30-35 years, is going to return with a vengeance for the next 30-35 years in Canada.

#142 };-) aka Devil's Advocate on 08.16.14 at 6:02 pm

#131Mike T. on 08.16.14 at 4:02 pm
Ah that is the old DA we have grown to know
bitter, frustrated, and lashing out at folks whom he does not know
we really should start the pool….

Bitter? Nope. I’m really quite happy with my lot in life. Sometimes I can’t believe how fortunate I am quite. My needs are modest and I have much more than I need. I do what I want, when I want, how I want. Remember, I’m a narcissist – it’s all about me.

Frustrated? Not at all I’m lovin’ it… the market is, as always, doing exactly what it is supposed to under the circumstances. I understand and accept that and have learned how to ride the tide.

Lashing out? Well… I am a Troll after all… };-)

#143 Setting the Record Straight on 08.16.14 at 6:19 pm

@68
“Question for you Garth. First the background: my financial advisor from CIBC Wood Gundy mentions to me that the banks info is that TSFA’s are going away after the next federal election, keeping in mind that Harper wants to kill them.”

If the Liberals or NDP Wynne.

#144 };-) aka Devil's Advocate on 08.16.14 at 6:22 pm

#138 Snowboid on 08.16.14 at 5:37 pm
Residential waterfront prices in the Okanagan up, up and away…

June 2008 Av – $2,445,000 Med – $2,925,000
June 2013 Av – $1,848,113 Med – $1,711,250
July 2014 Av – $1,812,700 Med – $1,500,000

Courtesy of the historical stats from OMREB.

That’s AWESOME news Snowjob.

That means I can afford that lakeshore property I’ve had my eyes on since passing up that 90 foot waterfront frontage home in 1980 that I could have bought then for $157,000 which is currently assessed for tax purposes at $1.78 mil for the land alone. When they balk at my offer I’ll provide your stats as a proof source.

#145 blobby on 08.16.14 at 6:25 pm

@77 : Quote – “I also heard the same thing from my financial advisor at RBC”

… Why would you get financial advice from a bank? They’re more interested in selling you products.. Let me guess, with the next breath they told you to buy GICs?

#146 Shawn on 08.16.14 at 6:32 pm

Labour Force Participation versus Unemployment rate

Mountain Road at 137 asks: If the unemployment rate in the United States is dropping, shouldn’t the labor force participation rate be increasing?

******************************************
Not at all. An unemployed person looking for work is already counted as in the labour force. When they get a job they are still in the labour force. Unemployment rate could go to zero and in theory the labour force participation could be unchanged (In practice some non-participants would join the labour force and push the participation rate up.)

An 85 year old is typically not in the labour force and not counted as unemployed. Same for a student in school. Same for a stat-at-home parent who is not looking for work.

All my life people have worried about the unemployment rate. (And is was often higher than it is today such as much of the 70’s and probably all of the 80’s and some of the 90’s).

It’s only in the last ten years or so that I ever heard of the labour force participation rate. It was never a mainstream measure to my memory. Ignore it.

#147 Bill Gable on 08.16.14 at 7:49 pm

#58 Rexx Rock:

You were trying to be funny, right?

If not – I suggest you do your homework. Here are a few words to look up. Recourse and non-recourse loans.
Look up what rebuilding your credit entails.

A lot of people are already bankrupt, they just don’t know it yet.

Today’s post was stunning on any number of levels.

I’ll echo our host – “this will not end well”.

Elvis would agree.

#148 Rexx Rock on 08.16.14 at 8:36 pm

The U.S. government is bankrupt,we all know that.Official debt is 18 trillion.The U.S. pays over 250 billion a year in debt interest payments.So if rates rise even 2% more it’ll be over 1 trillion dollars a year.Including the welfare state , defense spending ,medi care .How long can that last?
No wonder they don’t care about a budget or debt ceiling.Brics countries will very soon not trade in US dollars.
So don’t believe all the lies and propaganda the news spews out every night.So interest rates will never go up.

Until 2015. — Garth

#149 Cdn Flyer on 08.16.14 at 8:40 pm

#85 underpaid accountant on 08.15.14 at 10:39 pm

a ten second google search shows your info is incorrect. Canada has 3million lakes, not Manitoba.

#150 Italians love real estate on 08.16.14 at 8:43 pm

All you RE doomers and predictors of an over valued RE market and impending ” correction”

Ever thought about what makes you all so negative, angry and antagonistic against those who would still buy RE and think it a positive move?

Yup , you guessed it.

#151 JimH on 08.16.14 at 8:55 pm

#82 Smoking Man
“… a bit elevated…”
====================================
Don’t sweat the small stuff. ‘A bit elevated’ may mean another PSA test in 3 months or so? (in the mean time; if you don’t use it, you lose it.)

Your liver, on the other hand, bears a startling resemblance to a 1920’s vintage deflated rugby ball, and just might be a better and more deserving candidate for your concern.

Nice punt on the fx. Try for a call leaps on DRYS, TNK, TNP and BALT???

#152 Ronaldo on 08.16.14 at 9:16 pm

137 Mountain Road & 144 Shawn

This is all you need to know about the unemployment and the labour force participation rate.

http://www.youtube.com/watch?v=O8TGgMkkEUE

#153 JimH on 08.16.14 at 9:33 pm

#144 Shawn
“… It’s only in the last ten years or so that I ever heard of the labour force participation rate. It was never a mainstream measure to my memory. Ignore it.”
==================================
While I agree with much of what you say, I wouldn’t go so far as to say, “ignore it”!

The ‘Labor Force Participation Rate’ calculation is narrow, (as opposed to the broader ‘unemployment rate’) and is limited to those working age persons either:
1. Employed, or
2. Unemployed, but actively looking for work

The ‘unemployment rate’ doesn’t care whether you’re out of work and looking, or out of work period.

The ‘Labor Force Participation Rate’ becomes most useful for investors when a trend is established during a recession, because if the downturn is long enough, many ’employable’ persons simply give up and quit looking for work. This trend-line can then be compared and contrasted to the trend in ‘New Claims for Unemployment and Continuing Claims For Unemployment’.

Now, at least we can make an educated guess at about how many have simply “given up” and quit looking for work. It was useful for me in 2009 and again in early 2012.

Hope this was helpful!

#154 Piccaso on 08.16.14 at 9:44 pm

This is late night comedy…

Visiting my parents both in their 90’s. Dad’s been collecting company pension longer then he worked… the highlight of the week is Tim Hortons with the other seniors.

Anyways my mom says to me “You know what?… I don’t care anymore and I don’t care that I don’t care anymore. Is that bad of me?”

LMAO… I thought that was good!

#155 triplenet on 08.16.14 at 10:32 pm

#52 Inglorious Investor

A lesson in elasticity.
Not bad.

#156 Mister Obvious on 08.16.14 at 11:16 pm

#154 Picasso

I quite enjoyed that vignette. Thanks.

#157 Shawn on 08.16.14 at 11:45 pm

Jim H said:

The ‘Labor Force Participation Rate’ calculation is narrow, (as opposed to the broader ‘unemployment rate’) and is limited to those working age persons either:
1. Employed, or
2. Unemployed, but actively looking for work

****************************************
Agreed, except it is not “working age persons”.

It is all persons 15 years of age and older.

Definition would please someone from 1820…

The labour force here is considered to include students and 90 year olds…

Don’t worry about a low labour force participation rate. In part it means that students aren’t working (duh) retired people aren’t working (duh), stay-at-home parents aren’t working (duh), most disabled people aren’t working (duh), those in the illegal workforce aren’t (officially) working (duh).

Worry about the unemployment rate. Which right now is below the average of the last 40 years, I suspect.

#158 Andrew Woburn on 08.17.14 at 12:12 am

Will wildly expensive housing devour the economies of wealthy countries?

http://qz.com/249000/will-wildly-expensive-housing-devour-the-economies-of-wealthy-countries/

#159 MississaugatoVancouver on 08.17.14 at 1:04 am

Why did the couple cross the road? Because there was a house to buy on the other side.

Why did two couples cross the road? Because ther was a condo to buy on the other side.

#160 Mark on 08.17.14 at 1:40 am

“So don’t believe all the lies and propaganda the news spews out every night.So interest rates will never go up.”

Of course rates will go up. All those things you state, which are entirely true, are the reason that rates will rise. If not policy rates, than actual rates that real lenders charge for credit.

Higher rates = Armageddon for pension funds, insurers, and basically the entire financial sector that has made out very well over the past 30-35 years in the declining rate, high-bond-return environment.

#161 cynically on 08.17.14 at 2:20 am

To #148 Rexx Rock – Don’t worry about the US’s economic condition because if they ever sneeze (they won’t) Canada will come down with pneumonia and you will have real worries then and the BRICs aren’t going to nurse you to health. Canada is a lot more fragile than its southern neighbor.

#162 rosie "moving forward" in the knowledge that, "this won't end well" on 08.17.14 at 7:40 am

Heard about this on NPR. Apparently it works quite well.
Any thoughts on the Canadian experience.

http://fusion.net/justice/story/bad-paper-outsmart-debt-collectors-941107

#163 crowdedelevatorfartz on 08.17.14 at 7:56 am

@#134 KAC

Wow! ‘hair splitting’ raised to a new level.
“translucent vs transparent”

Once again, Garths’ point was ……glass walled condos are a financial nightmare waiting to happen…….period.

The fact that the owner of Wall Center can get the strata to pay for half the installation of the new tinted windows that he originally planned on installing………… proves they are the greater fools….

I think I’ll go help my cat “kac’ up a hairball………

#164 Martin on 08.17.14 at 8:01 am

Nice post. I enjoyed reading it. Will this mess in real estate ever end? I can see this same exact trend in the US. When I bought my property a few years ago I had equity in it. Now I am under water struggling with mortgage payments, cannot sell it, cannot rent it, can’t afford to buy anything new (bigger due to increased family size). What looked like a great deal turned out as a nightmare. Should I walk away and default?

#165 crowdedelevatorfartz on 08.17.14 at 8:04 am

@#150 Italian canadians love real estate.
“Ever thought about what makes you all so negative, angry and antagonistic against those who would still buy RE…….”
+++++++++++++++++++++++++++++++++++

Reading mindlessly simplistic “real estate pumpers ” drivel day after day after day?

#166 epeacecraft on 08.17.14 at 9:48 am

Is this the Canadian dream now? That being in your 30s and able to scrap together a pitiable $10K merits buying a house?

#167 Italians love real estate on 08.17.14 at 9:49 am

#165 crowdedelevatorfartz

Nope you guessed wrong ( but something tells me u know the answer deep down under all that frustration)

Some advice . “If you can’t beat em join em”

#168 Smoking Man on 08.17.14 at 10:07 am

Two weeks ago I predicted MSN would go dark on the MH17 story… When it was proven Ukraine shot it down.

Didn’t realize how right I would be…..

Now let’s look at real estate reporting.. A big source of revenue for MSM is real estate advertising.. In a climate of shrinking revenue for those in MSM

Do any of you in your right mind think if there ever is real
Shrinkage in the market that MSM won’t be blowing sunshine up the Ying Yang.

#169 World Traveller on 08.17.14 at 10:17 am

Some have stated how do we know the couples have not done their due diligence for their purchasing partnership? The final sentence in the article gives us a clue

“We are really excited. We are looking forward to figuring out how everyone works together”

So in other words they have not laid out a framework for shared responsibility.

#170 JimH on 08.17.14 at 10:56 am

#157 Shawn
“…Worry about the unemployment rate. Which right now is below the average of the last 40 years, I suspect.”
=====================================
Questions:
Why do you use the term “suspect” when the numbers are rather easy to come by; at least post 1947???

If the current unemployment rate was BELOW the average of the last 40 years, why would I want to worry about that???

Here are the numbers, Shawn;

1948 through 2013 US unemployment rate avg. 5.7%

1974 through 2013 inclusive, (your 40 year suggestion) rate avg. 6.5%

Jul 2014 rate: 6.2% trending lower. Please explain why this is a worry.

source: http://data.bls.gov/pdq/SurveyOutputServlet

#171 Bdy sktrn on 08.17.14 at 10:56 am

Over a million for a tiny bung in a so so area of east van, no wonder those who waited to buy are passed off. 100k over, 200 lookers and nine offers. It appears east van houses are the very definition of liquid. (two prof friends and dog have spent 5 weeks now looking for a similar house to rent ,no luck, intense competition for rentals too)

5 -10 weeks to find a rental
5 days to sell

Owners have freedom, renters are the ones over a barrel if you are west of burnaby,
,,,,,,,,,,—————————-

It has been well documented in the media that the appeal of single-family homes in Vancouver appears to be showing no signs of abating as the sale of this property located between Knight and Fraser Streets

http://www.vancouversun.com/homes/bought-sold/East+home+sells+over+listing/10082977/story.html?__federated=1

#172 CalgaryHappyRenter on 08.17.14 at 12:02 pm

#127 George
Off topic: just wondering, how come this blog does not have a search box? Weird.
________________________________
Easy with Google:
keyword -site:greaterfool.ca

#173 CalgaryHappyRenter on 08.17.14 at 12:07 pm

Typo to search google:
keyword site:greaterfool.ca

#174 Don Derc on 08.17.14 at 12:10 pm

Misery week is brilliant week – great info and insight – again cdn quantitative easing, artificially low interest rates, over valued housing, and radio/television media pumping up the volume leave us teetering on a cliff…well some of us. We are not trained to ask questions, dig deep, and forecast our actions. We live in a life of illusion. This blog should be reviewed by every high school class in the country – we can still save Generation Z….

#175 Blacksheep on 08.17.14 at 1:32 pm

Shawn,

# 146, “It was never a mainstream measure to my memory. Ignore it.”

# 157, “Worry about the unemployment rate.”
———————————————-
Since you clearly have a strong opinion on the subject, how bout a response to Ronaldo’s # 152 video you must have ‘missed’ ?

https://www.youtube.com/watch?v=O8TGgMkkEUE

I’m confident, the critical thinkers can figure out what’s going on, with out my telling them how to think.

#176 young & foolish on 08.17.14 at 1:48 pm

Mark – “The S&P500 consists primarily of stocks positively correlated to bonds and interest rates. So such stocks will suffer. But the TSX Composite/TSX60 indicies tend to be inversely correlated. Hence, the TSX’s underperformance over the past 6 years due to lower interest rates.”

You are suggesting sell America and buy Canada? Oh, and sell bonds?

#177 crowdedelevatorfartz on 08.17.14 at 2:11 pm

@#167 I Love Pasta
Nope. Been there done that. Sold 1.5 years ago . Tidy profit. Waiting for the inevitable drop in the market to vultch.
But you keep livin that dream and watch the carbs.

#178 Withdraw today, avoid the run on 08.17.14 at 2:43 pm

#166 epeacecraft on 08.17.14 at 9:48 am

Is this the Canadian dream now? That being in your 30s and able to scrap together a pitiable $10K merits buying a house?

Pitiable yes, but Try and withdraw it from your savings account.

Teller:
(Eyeballs to the ceiling)
(Deep breath, confused look)

“In cash?”

“Did you order it?”

“Sir, we have a document we’d like you to sign acknowledging the dangers of carrying cash and absolving us from any responsibility blah blah”

It’s easier to walk out with a new $500,000 mortgage than your own money.

Notice that with all the printing of new bills, silver plastic, holograms etc, the largest denomination is $100.

http://upload.wikimedia.org/wikipedia/en/5/5a/Birds_of_Canada_$1000_banknote,_obverse.jpg

http://canadacurrency.com/wp-content/uploads/2013/11/1911-Dominion-Of-Canada-500-Dollar-Bill-Front.jpg

http://canadacurrency.com/wp-content/uploads/2013/11/1896-Dominion-Of-Canada-500-Dollar-Bill-Front.jpg

http://canadacurrency.com/wp-content/uploads/2013/11/1896-Dominion-Of-Canada-500-Dollar-Bill-Front.jpg

#179 Shawn on 08.17.14 at 2:55 pm

Unemployment Rate and Worry

JimH responded to me:

1974 through 2013 inclusive, (your 40 year suggestion) rate avg. 6.5%

Jul 2014 rate: 6.2% trending lower. Please explain why this is a worry.

*****************************************
Jim I agree with you. I meant worry about the unemployment rate when it is high. Right now it is relatively low. And, as I said, don’t worry about the employment participation rate.

It’s the doomers who don’t believe the figures and/or who focus on the employment participation rate who worry.

Blacksheep and Renaldo. I seldom ever click on links or watch videos but I did indeed click on the little doomer cartoon recommended to me.

It tries to make a “revelation” out of the fact that to be counted in the unemployment rate you have to be actively looking for work. Otherwise students, retirees, stay-at-home moms, those unable to work and generally all those not wanting to work would be called “unemployed”. Some revelation.

I am an optimistic investor who owns my share of the economy through owning shares. I worry a lot more about the attitude of so many doomers than I do about the economy.

#180 Withdraw today, avoid the run on 08.17.14 at 2:58 pm

In 1935 when this was issued, 7 would buy a house

http://canadacurrency.com/wp-content/uploads/2013/11/1896-Dominion-Of-Canada-500-Dollar-Bill-Front.jpg

in 1935 Average Cost of new house $3,450.00

http://www.thepeoplehistory.com/1935.html

Can you buy a house today with cash? Can you say FINTRAC?

#181 Calgary Reality Check on 08.17.14 at 3:14 pm

Rents in Calgary are often much in excess of a mortgage. People listening to Garth’s advice to rent in Calgary will be hard done by if they are not retiring say in 10 years. There are no rent controls. Zero. And rents keep going up. Mortgages also keep going up. If a person is to keep working with a good paying job >$100K per year, what choice does a person have realistically?

It is very easy as a property/mortgage owner to say go and rent and compare past history to present day occurrences. Past and present variables are not identical. It is easy and arrogant for those that have lived through past fluctuations in market value to give advice that is largely based on subjective opinion. Present decisions are also based on subjective opinion. There is no answer to the buy or rent equation. This blog could be summed up in a short statement: Get what you can and get out because all of real estate sucks(renting and mortgage acquisition).(refer to post #8 about Calgary) In Calgary timing is everything and it is a rat race.

#182 Not Entitled on 08.17.14 at 4:23 pm

Simple rule – If you can’t save 15% minimum for a down payment do NOT buy real estate. And even then think it over very carefully. Compare the true cost of ownership with renting or else in this economic climate you will regret it sooner rather than later.

#183 Mark on 08.17.14 at 4:40 pm

“You are suggesting sell America and buy Canada? Oh, and sell bonds?”

Yes. Although one certainly has to keep in mind their overall portfolio, risk tolerance, etc. I think we saw, acutely, during the 2008 “credit crisis”, that Canadian firms suffered no issues with short-term credit because Canadian firms are only minimally exposed, while there was enormous amounts of pain throughout a wide swath of US-based corporations that primarily financed on short-term credit.

I’m not personally predicting another credit crisis, but the whole episode was a great lesson in determining the nature, on a macro basis, of US corporations’ balance sheets versus those of Canadian corporations. As the rumour goes, even major US multinationals were on the verge of bankruptcy had extraordinary policy measures and bailouts not taken place.

#184 KAC on 08.17.14 at 5:36 pm

#163 crowdedelevatorfartz on 08.17.14 at 7:56 am
@#134 KAC

Wow! ‘hair splitting’ raised to a new level.
“translucent vs transparent”

Once again, Garths’ point was ……glass walled condos are a financial nightmare waiting to happen…….period.

The fact that the owner of Wall Center can get the strata to pay for half the installation of the new tinted windows that he originally planned on installing………… proves they are the greater fools….

I think I’ll go help my cat “kac’ up a hairball………

——————————————————

You appear to have missed the point. The developer promised to install platinum tinted glass which would have reduced the visual impact of the tower and was designed to accommodate efficient cooling of the suites with the specified air-conditioning system.

Instead, the developer started installing that gawd awful dark blue glass and the city understandably reacted.

After much wrangling they allowed a compromise by approving clear glass instead of the promised platinum reflective glass. That was a mistake, it looked horrible and its lack of reflectivity caused serious overheating in the suites.

And you call the difference between transparent and translucent “hair-splitting”. Tell that to the residents who suffered the massive consequences of the difference between translucent and transparent!

#185 Mark on 08.17.14 at 6:24 pm

“Rents in Calgary are often much in excess of a mortgage. “

Not really. And mortgage rates are somewhat below their long-term averages, meaning that you can’t make such a claim for anything but a very short period of time. Additionally, Calgary housing prices have been falling over the past year.


People listening to Garth’s advice to rent in Calgary will be hard done by if they are not retiring say in 10 years. There are no rent controls. Zero. And rents keep going up.

Rents are not going up in Calgary. Neither are house prices. I think you might be stuck in 2004 or something. Its different out there now.


Mortgages also keep going up. If a person is to keep working with a good paying job >$100K per year, what choice does a person have realistically?”

There are fewer of those $100k jobs than there was previously in Calgary. And if you can’t find a decent job, perhaps one doesn’t belong in Calgary?

#186 crowdedelevatorfartz on 08.17.14 at 7:18 pm

@#184Kac
“Tell that to the residents who suffered the massive consequences of the difference between translucent and transparent!”
+++++++++++++++++++++++++++++++++++
Greater Fools that will share 50% of the cost of installation for a multimillionaire owner that planned on doing it anyway………….

#187 saskatoon on 08.17.14 at 9:59 pm

just a few scientists opposing the “climate change: agenda:

Freeman Dyson, professor emeritus of the School of Natural Sciences, Institute for Advanced Study; Fellow of the Royal Society
Richard Lindzen, Alfred P. Sloan emeritus professor of atmospheric science at the Massachusetts Institute of Technology and member of the National Academy of Sciences

et al.

please don’t fearmonger…and talk about “climate change” as fact.

yes, i am assume that some individuals in the above list make money from attenuating such a position…but so do those on the other side of the debate.

personally, i don’t know if it’s true or not…but to discuss it as dogma only serves to engender confusion, fear, and irrationality.

#188 bill on 08.18.14 at 1:05 am

#132 Mike T. on 08.16.14 at 4:02 pm
weird a day or two ago I was wondering the same thing…
he is definitely starting to get ‘manic’ again.

#189 Kitsilano Mike on 08.18.14 at 2:13 am

Wow, if you were still a Conservative MP, today’s post would have sealed your fate. What the hell are you talking about? More carbon dioxide, more water and higher temperatures are all good for plants. Everything you’re predicting is based on tentative and contradictory scientific evidence about climate trends.

#190 Nomad on 08.18.14 at 3:15 pm

“there are 16 houses on the market for every one buyer. And yet prices aren’t tumbling lower, as Mike observes.”

I always wondered how long it would take for sellers to accept price reductions. I like the analogy with a cartoon character that keeps running beyond a cliff, for a while…

In Quebec City I hear that there are 10-14 sellers for 1 buyer. It’s the opposite ratio of Toronto’s, yet Toronto has a worst employment rate and worst air. I don’t know if that’s for condos or houses.

Last time I was there, 3 months ago, I drove in one of my favorite areas and saw stickers on signs that say “prix reduit”. But when you check the new price, it’s not much of a a decrease. It’ll take time. During that time sentiment will have to remain low. If that’s the case, eventually, sellers will be more motivated.

If I was selling, after 6 months, I’d really be fed up. I’m guessing after 12 months enough people will talk about it and scare each other. After 18 months, you’d get some good price reductions.