The wrong idol

WRONG modified

Pete’s down, but counts himself among the lucky. “At least I’ve got this government pension,” the former CRA guy says, “as miserable as it might be – at least it’s something.” Three grand a month is okay in some places, but not in Victoria, not with a dependent spouse and a 24-year-old son in the basement.

It’s a classic tale. Work, have kids, buy a house, then a better house, then a really better house, then retire. So Pete and Marg now have a place appraised at $1.2 million (with financing) which they figure they might get $800,000 for. “Don’t listen to the realtors,” he says, “this market’s toast.” The 66-year-old also owns a condo – bought for his daughter, “and as an investment.” They paid $375,000, were hit with a fat special assessment, and now have $415,000 into the place. “Apparently,” says Pete, his voice bitter and sad, “it’s worth maybe $340,000, but the mortgage is $380,000.”

So, $1.5 million in real estate, maybe a hundred grand liquid, some CPP grocery money, and that pension. Obviously, P&M are candidates for a serious financial makeover – dumping the mortgaged properties, licking their wounded egos, kicking out of the kid, getting invested for income, renting and hoping to stay solvent for the next two decades.

Get used to stories like this. Many more are coming. Many of them worse – since seven in ten of us are pensionless.

The latest numbers paint a picture of what happens when a society worships the wrong idol and mistakes real estate for wealth. This week stats from the Canadian Payroll Association and a BeeMo survey are truly disturbing. More than half (51%) say they’d be screwed if their paycheque was more than a week late. Over a quarter (27%) couldn’t scrap together two thousand bucks if they had to. Almost 45% of people say they spend 100% of their incomes on kids and houses.

As a result, the savings rate’s plunged to 3.9% (it was 21% three decades ago, when families could afford houses). Almost eighty per cent of people now expect to delay the age at which they can retire, and (shockingly) half of Canadians over 50 say they’ve saved only a quarter of what they’ll need when the paycheques stop.

Now, at the same time, 70% of people own real estate – which means they’ve made great sacrifices to buy a house, and most of their net worth much be sitting there. Like Pete and Marg. So just imagine the consequences if property values were ever to go down.

Well, we may be getting closer.

Here’s what we learned this week – markets under stress even as five-year mortgage rates dipped below 3%. Below are quotes from realtors’ own official monthly reports.

National Capital Region: “Members of the Ottawa Real Estate Board sold 1,203 residential properties in August through the Board’s Multiple Listing Service® system, compared with 1,216 in August 2013, a decrease of 1.1%.” On the other side of the river: “Le marché immobilier tourne au ralenti dans la région. Selon la Fédération des chambres immobilières du Québec, les marchés des copropriétés et des maisons unifamiliales ont enregistré des recul de 25 % et 17 % au second trimestre de 2014.” (Condo sales fall 25% and SFH sales off 17% in Gatineau.)

Winnipeg: “The Winnipeg Realtors Association said today that sales through the local Multiple Listing Service (MLS) were down 12% from August 2013 — 1,137 units versus 1,292 — and five percent below the 10-year average for the month. The dollar volume of sales also declined by 8% to $301.3 million from $326.9 million. It noted the number of active listings was 59% above than the 10-year average for August, while the number of new listings was 22% higher.”

Montreal: “The Greater Montréal Real Estate Board today released its residential sales statistics for the Montréal Census Metropolitan Area. According to the real estate brokers’ Centris® provincial database, 2,234 residential sales transactions were concluded in August, a 6% decrease compared to August of last year. This drop in sales follows increases of 3% and 2 per cent registered in June and July, respectively. The most notable difference was in the number of condominium transactions, which fell by 1% in August after jumping by 13% in July. The two other property categories also registered a decrease in sales in August, as sales of single-family homes fell by 3% and plex sales tumbled by 9%.”

Oakville-Milton: “According to figures released today by The Oakville, Milton and District Real Estate Board (OMDREB), the number of all property sales decreased by 7.7% in August compared to the same period in 2013. Monthly property sales totaled 637 compared to 690 in August 2013. The dollar volume of all property sales decreased in August to $299,325,753 from $320,801,577 in August 2013 – a decrease of 6.7 per cent. Oakville’s median sale price for the month of August was $682,500, an increase of 8.5% compared to August 2013. The median sale price in Milton was $454,250, a decrease of 3.5% compared to the same time last year.”

Edmonton: “In the last half of the summer, residential sales were down compared to July from 1,999 to 1,552 units. Single family sales were down 15.4%, condo sales were down 20.8% and duplex/row house sales were down 11.8% in the month. Total sales were down 6.0 per cent when compared to August 2013.”

Regina: “The number of sales and selling prices as compiled through the Regina and area MLS® System in August were both down from 2013 levels while the number of listings for sale remained at long-term highs, said the Association of Regina REALTORS® Inc. During the month there were 348 residential sales reported in all geographic areas, down 8% from 379 reported in 2013. The number of sales inside the city was down 14% with 263 being recorded compared to 307 last year. This was the lowest number of sales in the city since 2008 when 217 occurred. An increasing number of listings continue to have a significant impact on the market inside the city. At the end of the month, there were 1,433 properties for sale compared to 1,039 in August of 2013 and 644 in 2012 – representing increases of 38 per cent and 223 per cent respectively. Inventory levels have been in the 1400+ range for the past three months – the highest in over 20 years.”

Does this sound like a housing boom? Or a disappointment in the making?

If you’ve not already started to diversify out of Canadian real estate, this might be the moment. We got it wrong.

218 comments ↓

#1 OG on 09.10.14 at 5:44 pm

I love my house.I love my house.I love my house.

#2 Retired Boomer - WI on 09.10.14 at 5:52 pm

Yikes! I hope this guy retired with a mortgage and an underwater condo is the rare exception, not the general trend for the newly retired.

He should still be working until the crap is paid off, or sell the crap!

Welcome to broke geezer land! A GREATER FOOL no doubt

#3 Happy Renting on 09.10.14 at 5:53 pm

Pete – not that it’s a princely sum, but would you be willing to tell us where that $3k/month pension and CPP gets spent? Wanting a gauge on how survivable that level of income is…

#4 Ardy on 09.10.14 at 5:56 pm

Sales declining across the country, and prices falling in some cities.

It looks like the bubble up has ended….and we await the ride down.

#5 Joe on 09.10.14 at 6:02 pm

More QE on the way?

http://dailyreckoning.com/why-the-federal-reserve-will-launch-another-round-of-qe/

#6 OG on 09.10.14 at 6:10 pm

So, $1.5 million in real estate, maybe a hundred grand liquid, some CPP grocery money, and that pension.

How? Problem is? Is all the house financed? I don’t get it if it is. “Lifestyles of the rich and famous, they’re always complaining” good Charlotte
Rich people problems.

I say he’s all set. I hope he loves his house as well.

#7 Catalyst on 09.10.14 at 6:11 pm

A lifetime as a government worker (likely over $100K income with CRA) and no savings beyond lucrative pension. A public sector worker would need a portfolio worth $720,000 yeilding 5% per annum to attain the same.

No sympathy here, signed public sector worker.

#8 april on 09.10.14 at 6:11 pm

I’m looking forward to when Vancouver and Toronto are added to that list or did I miss it……..

#9 Big Leafs Fan on 09.10.14 at 6:25 pm

Pete forgot what counts once you get your last paycheque from work. Hard to take a 50-60% paycut in retirement and not adjust your lifestyle accordingly. And it’s not like he didn’t know it was coming. EVERY Government employee knows years in advance what their pension is supposed to yield.
What counts is cashflow not equity . Equity you cannot eat! How much rent does the 24 year old pay? Ya that’s exactly what I thought.
Time to get liquid Pete. Best of luck to you….

#10 Catalyst on 09.10.14 at 6:28 pm

Also, I read the other day they are floating the idea of requiring banks to have some skin in the game for CMHC insured mortgages by introducing a deductible payable by the bank. Now THAT is what I call a potential catalyst!

#11 Mean Gene on 09.10.14 at 6:29 pm

Marg will be hosed if Pete passes away before her, his pension cheque will shrink by 50%

#12 justsayinidpluckher on 09.10.14 at 6:34 pm

whats up with Trans Alta stock…is it a buy Garth..cmon Garth go out on a limb and make a call

#13 Smoking Man on 09.10.14 at 6:39 pm

Damn phone designers, they put the T to close to the R

RE above post

#14 takla on 09.10.14 at 6:40 pm

re#8 April take the time to check out Vancouverpricedrop.com for their weekly installments of the biggest losers in Vancouver area realestate.Its current and gives all listing info for the last few yrs on profiled properties for sale…some real eye-openers for all the died in the wool house humpers.
So it starts,the smell of desperation is already drifting over the fraser valley,co-workers that used to ridicule my opinion on realestate when we sold 2 yrs ago are lineing up and asking “what would you do with 400 grand of mortgage debt” and “do you realy think prices can fall that much”…My wifes best friend luckily just sold her home last week,2013 municipal acesment of 466,00,sold 369,after listing for 389,000.
She cant thank me enough for tipping her to sell asap …unfortunately she had a 350 tho mortgage.Lots of folks rushing to the door now to sell,it will be a bleak fall/winter

#15 High Plains Drifter on 09.10.14 at 6:41 pm

Sad but true, you have to pay people big money to live in Edmonton. My bet is that is what is happening,in fits and starts.

#16 Shawn on 09.10.14 at 6:44 pm

A 21% savings Rate three decades ago?

I know, I know, it’s from Stats Canada but I can’t quite believe it.

How long was it over 20%? The better part of a Monday morning?

I suspect is was some kind a statistical artifact. With 18% interest rates people were killing themselves to pay down chunks on mortgages and that was probably counted as “savings”.

I was around back then and we had high inflation and high unemployment (stagflation) and there is just no way the AVERAGE savings rate was really 20%.

Just like today, a good half of the people at least were pay cheque to pay cheque, so were the other half saving 40% to make up for those at 0%? Does not add up.

But sure savings would have been higher than today what with GICs paying 12% or whatever.

What else would rational people do but save more when rates are high and save less when banks pay nothing?

#17 miketheengineer on 09.10.14 at 6:45 pm

Garth et al:

We are never happy/content with what we have, and always want more….human nature.

Guy I know, refinanced his home, put his line of credit, school loans all into the mortgage…said it was like he was starting off brand new….with no equity in his mortgage. But has 2 almost new cars, trips to vegas, golf trips, trips to the falls to the fancy water park with the kids, then bought brand new golf clubs.

Gotta live that life, right now, on command…

What me worry about the future…that is how they live now, no worries or cares…rack up the credit. Here we go.

#18 mitzerboy on 09.10.14 at 6:52 pm

The Saskatchewan advantage is starting to slip

#19 Mark on 09.10.14 at 6:59 pm

“Also, I read the other day they are floating the idea of requiring banks to have some skin in the game for CMHC insured mortgages by introducing a deductible payable by the bank. Now THAT is what I call a potential catalyst!”

Yeah that’s a catalyst all right! A catalyst for the banks simply to walk away from writing new CMHC insured subprime loans. And if they try to do such a ‘deductible’ retroactively on existing loans, a systemic crisis is likely.

“What else would rational people do but save more when rates are high and save less when banks pay nothing?”

High interest rates typically are associated with negative real after-tax rates of return. Also, one doesn’t need high rates in order to ‘save’. Fixed income rates are low right now because there is an over-abundance of savings relative to investment. The real deficiency in the economy is that of investment in things other than housing. As I pointed out, its perhaps great for the consumer that they can borrow cheaper than big ol BCE can borrow, but its terrible if you’re a young telecom worker hoping to get a permanent job in the industry. IMHO, business borrowing should *always* be cheaper than consumer borrowing in a healthy economy. An inversion of such is a sign of a profoundly unhealthy economy, and a government that engages in policy measures, ie: CMHC subprime mortgage insurance, with the intent of driving the cost of consumer credit beneath business investment credit, is one that is effectively committing economic treason.

#20 Andres on 09.10.14 at 6:59 pm

@ #3 Happy Renting

I’m a yuppy urbanite and I survive quite glamorously on $3k a month (I make more, that’s just what I ballpark budget for monthly spending). $1,200 for shared rent, $200 for groceries, $200 for phone/hydro/cable, ~$75 for gas, which leaves over $300 a month for general spending which is really enough to live like a king. Assuming you aren’t going out of your way to spend the whole $300 you can easily do a fancy dinner out every weekend or buy some gadgets or clothes. If I were retired it would be even easier – no need to constantly update the wardrobe for work, and a lot more preparing meals at home which is way cheaper than eating out for lunch (often a necessity).

#21 Dirty debtor on 09.10.14 at 7:03 pm

I dunno who Pete thinks is going to buy his million dollar home if he doesn’t plan to sell it just quite yet.

The next wave of the boomers is just as broke. Of Pete’s 2 kids, 1 can’t even afford to rent their own joint, rather Pete has to cover it, and the second can’t even afford his own groceries, so he opted to move into the basement.

Average student loan debt of 27k upon graduation, small minority of those studied anything that translates into a liveable income. This set will be scraping every dime for a down payment on 270k$ suburban row houses they can barely afford.

Good luck buddy, signed, mid 20’s, over educated, underpaid, 40k in debt, and planning my next overseas 6 mo backpacking trip!!

#22 Shawn on 09.10.14 at 7:03 pm

The Rose colored past

And I believe six decades ago families only needed one income to support a half dozen kids and they paid cash for everything and they all had pensions and I think they saved at least 20% per year – after donating 10% to the church. And they grew and canned their own food which was way healthier. And the kids played outdoors all day until all sat down for the healthy meal. And there was almost no crime. I believe I have that right.

(Yeah, right… Does anyone really believe times were so grand back in the 50’s)

#23 Mark on 09.10.14 at 7:04 pm

“The Saskatchewan advantage is starting to slip”

What ‘advantage’? I never really understood the big thing about Saskatchewan. Salaries seem to consistently be less than Alberta. House prices have now been elevated to similar levels. Taxes are somewhat higher. Sure, the housing stock got to be pretty run down after many years of minimal investment, and a few potash mines did some upgrades, but what else is there really to cheer about in or about Saskatchewan?

#24 tintin on 09.10.14 at 7:07 pm

Finally, the end, is beginnig but most important, the Montréal canadian
will win the stanley cup in 2015!!

#25 Mark on 09.10.14 at 7:08 pm

“whats up with Trans Alta stock…is it a buy Garth..cmon Garth go out on a limb and make a call”

Big coal will eventually come back and look a lot more attractive when interest rates rise and financing for marginally economic natural gas wells/projects disappears. But until then, its gonna be tough across the coal industry.

Are we at the heights of despair? Perhaps. But with that firm in particular, debt is really a problem. Might be better to take a crack at the bonds and hope for a bail-in (debt to equity conversion), rather than the common. At least you’ll sleep better at night.

#26 Longshorebore on 09.10.14 at 7:10 pm

Where’s vancouver? Seems to always get left out when numbers are published?

#27 cash-hater on 09.10.14 at 7:17 pm

Also, I read the other day they are floating the idea of requiring banks to have some skin in the game for CMHC insured mortgages by introducing a deductible payable by the bank. Now THAT is what I call a potential catalyst!

WOULD YOU CARE TO PROVIDE LINK ??

#28 Mishuko on 09.10.14 at 7:18 pm

I’ve been kinda sick lately and had a dream this afternoon I met you Garth… fan girl’d you a bit then asked some questions. Then you asked what are my assets I told you my miniscule portfolio and about my depreciating car. You flipped me the bird :(

Meet me IRL and see what happens. — Garth

#29 Retired Boomer - WI on 09.10.14 at 7:18 pm

Garth’s last comment…”We got it wrong.”

Got WHAT wrong? Seems you have been advising people NOT to buy at the grossly inflated market top. Was that wrong? I don’t think so.

Pete & Marge might have thought buying the house & Condo were good moves. Although we don’t know the extend of the home mortgage, as retired folk, it is a dead weight on the income stream. Bad enough that retired owners meet taxes, utilities and insurance -for get owning a mortgage.

The basement dweller should be paying market rent, and the daughter carrying the condo, or it should hit the market.

While the young can borrow to finance higher education, as a retired guy you CAN NOT borrow to finance your retirement.

You are now the leech off the system as a retiree. Remember that, plan accordingly!

#30 Not an economist on 09.10.14 at 7:18 pm

> kicking out of the kid

Garth, not everyone is like you. Not in terms of strengths and weaknesses, not in terms of life experience, not in terms of anything.

It’s narcissistic of you and very sad to see that you think the way you lived your life when you were young is the only way of life for young people.

I really don’t see why you had to lock horns with Stephen over your blogging or whatever when in fact you’re both fighting for the same thing: a neo-con paradise of dog-eat-dog capitalism where the love of money is elevated to the status of a religion, and apparently everyone is a selfish little island.

You write a lot of good stuff, but sometimes I read a sentence or two and I shake my head, wondering how you can be so wise about some things and yet have such child-like ignorance about others. You really did belong in the reform/conservative party. You’re one of the smartest people I know, but I wouldn’t vote for you because your compassion goes only as far as your political beliefs.

As for the rest of you on the blog, I did learn some time ago that almost all of you are well on track to Garth’s level of financial success. I sincerely hope not too many of you share his moral judgments of young people. Remember, you can have money and not be a jerk. It’s not easy, but it’s possible. It’s easy to sneer when you weren’t born in the 80s or 90s.

A 24-year-old is not a young person. He is an adult. If he lacks the responsibility and drive to stand on his own feet, he should at least have the wisdom and compassion not to drain his parents’ dwindling resources. Your references to my political efforts speak more of you than me. Stereotyping is unhealthy. It causes blindness. — Garth

#31 JSS on 09.10.14 at 7:24 pm

$3k a month is not a bad pension, but not by itself. It’s a good supplement to CPP, OAS, RRSPs, non-registered dividends, part time consulting/walmart gig, etc.

Imagine how many more “Pete” stories are out there.
Shitty way to live at 66 years old.

#32 David Lee on 09.10.14 at 7:24 pm

3rd attempt @ #153 Mark (yesterday’s post):

“They talk as though a housing correction hasn’t even begun. Even though evidence of such having been in progress for more than a year now is quite abundant”.

Again: not a challenge, just looking for some help in Vancouver.

Please point (e.g. by providing links) to where you are getting your data from such that you can say that evidence is quite abundant.

Any help would be appreciated.

Thanks,

#33 devore on 09.10.14 at 7:28 pm

#6 OG

How? Problem is? Is all the house financed? I don’t get it if it is. “Lifestyles of the rich and famous, they’re always complaining” good Charlotte
Rich people problems.

They’re not rich, that’s the problem. They no doubt feel, or felt, like millionaires, living in a million dollar house. They clearly cannot afford the house they live in. It’s effectively a lease.

#34 Ayn Rand Army on 09.10.14 at 7:29 pm

#19 Mark on 09.10.14 at 6:59 pm
Fixed income rates are low right now because there is an over-abundance of savings relative to investment.
—–
Yes Mark, there is not any savings when punished by low rates and inflation at 5-10%…..and no investment. in capital or job creaation… you are a F’ing Genius!

Mark, i’m sure you mean well and are an intelligent guy, and concerned about the world today and peoples well being and making money and thriving this modern day…. but

do me a favor, apply yourself in a more useful way and try reading some serious economics literature by true intellectuals…. and then lets see if you cab shine with the full candle power of enlightenment by THE LIGHT ON ECONOMIC UNDERSTANDING! (Like the cavemen)

You gotta read Human Action my Ludwig Von Mises and also, for fun and reality, Atlas Shrugged for a taste of applied economics and romance in the human wold of activity and progress / regress that never ends…

Good times and bad, nuclear war or world peace, people are active everyday trying to acomplish something…

some are productive and some r thieves…. which one are you and what makes you happy and accomplished, stealing or producing.

We are all on one side…. or the other…… these days….

So long as money is backed by government guns more will be on the side of leeches….

Once money is truly limited and demand for investment and savings reflected in real market interest rates…. we r all F’D

Both have never been more pertinent.
Regards,
ARAmy

#35 Detalumis on 09.10.14 at 7:36 pm

Cry me a river of tears, poor old bitter Peter and poor old dependent Marg, they have “pocket change in your eyes” CPP money and they will get what, another 1K in OAS, income split and pay no income tax at all – play the poor pensioner cards and have more net income than most young couples, get the poor old pensioner property tax break in BC as well.

What did poor-old dependent Marg do the last 30 years while all the women her age were working and raising families, oh right she lived in 1955-land, being “dependent” and wow, did a fine job of raising kids, a baby boy living in the basement and a daughter who can’t stand on her own two feet.

Is the best story of senior-poverty you can find, people with at least 750K or more in assets and getting every tax break under the sun. Give your head a shake.

The assets are far less. The spouse is disabled. You’re sad. — Garth

#36 devore on 09.10.14 at 7:38 pm

#16 Shawn

It doesn’t really matter how you count savings, as long as they are comparable across time. They’re just relative numbers. Households used to save more in the past, today they spend more on stuff and financing charges.

#37 cash-hater on 09.10.14 at 7:39 pm

Government meddling distorts markets, and the CMHC is a perfect example.

#38 TexasTea on 09.10.14 at 7:43 pm

40% divorce rate

What pension?

#39 Mark on 09.10.14 at 7:57 pm

“Yes Mark, there is not any savings when punished by low rates and inflation at 5-10%…..and no investment. in capital or job creaation… you are a F’ing Genius!”

Sorry buddy, you lost any sort of credibility with me when you started to claim inflation was 5-10% (per annum I assume, since that’s how we normally talk about inflation). Inflation is officially under 2%, and even that seems to be a fairly aggressive calculation of such that probably overstates such.

And how else are central banks and “the economy” more broadly supposed to incent investment in the face of a lack of real investment? High rates? Guaranteeing non-investors a rate of return on their savings in excess of the economy’s growth rate? Come on, its hard to have a lot of sympathy for those who don’t have the benefit of good financial advice and put it all in GICs. After all, those individuals are authors of their own misfortune if they just take all their loot to the bank and expect a ‘bank’ to act in their best interests. Or worse, put invest it into housing which is in the early stages of a longer-term real price decline.

#40 Realties.ca » The wrong idol on 09.10.14 at 8:02 pm

[…] Source: http://www.greaterfool.ca/2014/09/10/the-wrong-idol/ […]

#41 TexasTea on 09.10.14 at 8:03 pm

#31 JSS

Imagine how many more “Pete” stories are out there.
Shitty way to live at 66 years old.

………………………………………………………………………

When your 66+ your not doing much. Hitting Tim’s with a few other cronies is your highlight of the week.

#42 Mark on 09.10.14 at 8:03 pm

doesn’t really matter how you count savings, as long as they are comparable across time. They’re just relative numbers. Households used to save more in the past, today they spend more on stuff and financing charges.”

Someone out there is saving all the money that gets lent out to all these free spending households that you speak not kindly of.

Who are these people?

You must should be aware that, by definition, for every dollar borrowed, someone had to invest a dollar into the loan, right? Someone’s debt, is someone else’s investment.

I happen to believe that a resolution of the housing bubble will occur simultaneously with a resolution of excessive debt in the economy. Probably through a combination of anti-cyclical asset inflation, and housing asset deflation. So probably not good to be either an excess “saver”, nor an excess borrower. Nothing wrong with owning an iPhone or eating out every night if one can afford it and it legitimately enriches your life!

#43 the jaguar on 09.10.14 at 8:04 pm

#30 – Not an Economist:
Garth is right on. You probably have a 24 year old living in your basement which is why you are sensitive about it. A parent job is provide all the support they can to teach their kid how to survive and prosper in the real world. But to accomplish that you need to push them out of the nest. Otherwise you are an enabler.

#44 Kenchie on 09.10.14 at 8:05 pm

From yesterday:

#121 pbrasseur on 09.10.14 at 9:04 am
“That may work for a person with a seven-figure portfolio and flinty emotions, but it fails for most. Garth

I disagree you don’t need to be a millionaire to invest smartly, for example I have a TFSA now worth around 45K with only 5 or 6 very good common stocks in it. Good, profitable, financialy sound companies that are growing are the best insurance against bad surprises, not dilution nor rebalancing.

It is true that many fail at this, and it is because they get caugth up in emotions, they end up selling low in panic and rejoin the market after it has recovered (as it invariably does). But if people can learn the benefits or rebalancing they should also be able to learn to invest intelligently and the difference between investing and gambling.”

Pbrasseur, you’re neglecting the risk of concentration in such few stocks and far too much specific risk (as opposed to systemic risk). The point of rebalancing is to maintain some form of preset strategy that will do well over the long-term.

Funnily enough, you don’t even see how risky your “$45k” portfolio is. While you may be lucky over the next little while with your selected portfolio, luck doesn’t last forever. Those same companies that are “financially sound” companies may not be in the future…

PS: rebalancing isn’t about emotion and panic selling. It’s about minimizing the temptations of panic selling when SHTF.

#45 Snowboid on 09.10.14 at 8:05 pm

We were in a similar situation to Pete and Marg, but sold our investment properties before retiring – still we had most of our net worth tied up in a Victoria home.

Sold the main home in the spring of 2011, and have watched comparables in the old neighbourhood drop over 20% since then.

We bought a winter home in Phoenix and rent in the Okanagan, and will likely continue to rent. We like the Kelowna condo lifestyle, but aren’t quite ready for the risks of ownership – but still in vulture mode.

Funny thing, after selling the Victoria home and investing most of the proceeds, our costs aren’t much more now, even with two residences.

And it helps that our overall retirement income is over 80% of the current position I retired from.

It’s mainly due to the great advice from the professor, and some luck (or was it skill?) buying low and selling high!

#46 palebird on 09.10.14 at 8:08 pm

#23
You don’t understand the “advantage”? Then you have never really been there or taken a hard look at things. Too bad for you. Do you know who Brad Wall and the Saskatchewan Party are. Start from there and keep reading.

#47 Mr. White on 09.10.14 at 8:12 pm

Gee I’m glad I sold and invested the proceeds a few years ago. I am one happy renter with lots of good investments.

#48 Ayn Rand Army on 09.10.14 at 8:13 pm

#16 Shawn on 09.10.14 at 6:44 pm

A 21% savings Rate three decades ago?

I know, I know, it’s from Stats Canada but I can’t quite believe it.
—-
Well Shawn, you’re another moron who post like puke on this board who has no idea, but thinks he knows everything.

People WILL SAVE if the reward is a higher standard of living later by forgoing consumption in the now.

This is why interest rate matter. When the cost for business is high to borrow, you better have a damn good idea what to do with that cash at 10% interest rate! (Demand for savings, savers are rewarded)

But when rates are zero, no one saves, everyone consumes, there is no productions and investment, standard of living collapse…. governments who started the problems, with their guns and, ECONOMIC ACTION PLANS, only help to hasten the problems and make them worse.

How can any government, EVER, claim to know anything about the economy. They are only theives and do not produce or provide anything via the FREE MARKET, where the real world lives and works.

GOVERNMENT IS THE PROBLEM AND IS WHY THEY BROKE THE GOLD STANDARD SO THEY COULD STEAL EVERYONE’S SAVINGS.

Stop shouting. — Garth

#49 Flawed on 09.10.14 at 8:17 pm

Broke CRA Public Sector worker with a pension bigger than most working non-govt worker Canadians?

The irony…….

Three people living on 3K a month in retirement – yes, the sweet life. — Garth

#50 Mark on 09.10.14 at 8:24 pm

Garth is right on. You probably have a 24 year old living in your basement which is why you are sensitive about it. A parent job is provide all the support they can to teach their kid how to survive and prosper in the real world. But to accomplish that you need to push them out of the nest. Otherwise you are an enabler.

Condemn a 24-year-old to a life of being in debt, and probably being unable to help you very much in old age, merely to satisfy a short-term whim?

Seriously, if jobs were abundant and housing prices were such that a 24-year-old could reasonably leave home, find a decent job, and get into home ownership at a reasonable price, I’d have to agree with your line of thought concerning “enabling”. But in this environment, its effectively a death sentence financially. Since hiring of the youth has been scant for much of the past decade, merely kicking them out and “hoping” they’ll land on their feet is often more than a bunch of wishful thinking. And worse, it can absolutely destroy a relationship forever.

#51 Mark on 09.10.14 at 8:27 pm

“But when rates are zero, no one saves, everyone consumes,”

Wrong. Even at “zero” rates, someone has to save in order to fund the consumption. I agree that low rates can breed malinvestment. But the low rate, low inflation environment has also facilitated extreme returns on savings, especially for fixed income investors.

When the rate cycle reverses is when the world of hurt actually begins for the fixed income crowd. As they will experience capital losses on their bonds, and inflation likely is to be meaningfully higher than its current state of almost non-existent.

#52 Fred on 09.10.14 at 8:29 pm

First world problems and this ain’t one….I rent

#53 Ayn Rand Army on 09.10.14 at 8:32 pm

A 24-year-old is not a young person. He is an adult. If he lacks the responsibility and drive to stand on his own feet, he should at least have the wisdom and compassion not to drain his parents’ dwindling resources. Your references to my political efforts speak more of you than me. Stereotyping is unhealthy. It causes blindness. — Garth

Interesting comment by not an economist, and your reply also points out his point…. the economy is a disaster and there are no jobs for the next gen.

His point is exactly that, the old rules do not apply. You and older gens. grew up in an age of prosperity where if one was willing to work, one would have a job and never go hungry or homeless…. now a house is out of the question for a student with debt and food is number one priority.

Once food is out of reach, we will reach revolution!!

ps, to Shawn, the rest of your post and posts were pretty good. so maybe i got the wrong shawn…

I ain’t perfect, but i keep trying!

#54 Chickenlittle on 09.10.14 at 8:32 pm

TexasTea:

Why don’t we ask Garth what the 65-66 year olds do….

I always though blogging was the highlight of Garth’s week. A double double probably makes it easier. Throw in some Baileys and you’ve got yourself something amazing.

So BeeMo lowered its rate, eh? Why?

#55 Ayn Rand Army on 09.10.14 at 8:43 pm

5-10% (per annum I assume
—-
well duh, not only r u a waste of space on this blog, but you r a waste of time. There will be no further conversation from me with you. Get a brain.

#56 Wrinkly on 09.10.14 at 8:51 pm

The cashier was surprised when I paid for my groceries with cash. Granted, a lot of people pay for stuff to “get the points”, but it does make me question just how many people are adding to their debt load just to by food.

#57 Cici on 09.10.14 at 8:54 pm

This comes as no surprise: the 70% Canadian Greater fool demographic has been partying on by bidding up and selling each other overpriced real estate. The market is now saturated, because the remaining 30% are not fools and refuse to buy at ridiculous prices. Meanwhile, the 70% have finally priced each other out of the market. Now there’s too many people running for the exits and not enough buyers. Expect this to get worse as aging boomers are forced to retire due to health problems, and as structural unemployed hits the younger generations, forcing them to offload RE under the strain of debt or the need to relocate for better work opportunites.

Honestly, if BMO or one of the big banks offered me a -5% mortgage right now, I probably still wouldn’t take it. The potential equity loss would likely make it too risky.

As for the real-estate associations, WTF happened? Are they finally reporting accurately and ethically (did a watchdog step up to the plate), or is this the usual “optimistic” version/BS covering up even darker and more hideous statistics?

#58 Mark on 09.10.14 at 8:57 pm

“So BeeMo lowered its rate, eh? Why?”

Simple, a surplus of funds in the treasury relative to creditworthy borrowers lining up at their door to borrow.

At some point, they’ll realize that the housing jig is up, and send their investment bankers off to large and medium sized Canadian businesses in search of opportunities to recapitalize them. But until then, they have funds, and nowhere for them to go at the rates they were previously hoping to achieve.

#59 TexasTea on 09.10.14 at 8:59 pm

Does Canada follow these rules?

What measures determine home affordability? Mortgage lenders have traditionally expected borrowers to have a housing expense ratio of 28% or less. The housing expense ratio is an indication of a borrower’s ability to make the payments on their mortgage loan. The ratio measures housing expense as a percentage of gross income (income before deducting for Social Security, Medicare, and taxes)

For example, if a borrower’s salary were $4,000 per month, a lender would approve their loan if the housing expense – mortgage payment, fire insurance, and property taxes – were less than $1,120 per month. $1,120/$4,000 = 0.28.

#60 Kenchie on 09.10.14 at 9:03 pm

“So Pete and Marg now have a place appraised at $1.2 million (with financing) which they figure they might get $800,000 for.”

“The 66-year-old also owns a condo – bought for his daughter, ‘and as an investment.’ They paid $375,000, were hit with a fat special assessment, and now have $415,000 into the place. ‘Apparently,’ says Pete, his voice bitter and sad, ‘it’s worth maybe $340,000, but the mortgage is $380,000.'”
—————————————————————

Sounds like the boomer doesn’t control the condo if he bought it for the daughter. Is there any more info on how much equity he has in his residence?

Anyhow, this guy sounds like a perfect candidate for housing rationalization, as you prescribed.

And, as you mention, expect a lot more in the not-to-distant future…

I’ve been warning my millennial friends (most are a bunch of DINKs – newly married) for 2+ years to wait until late in this decade to buy a house, until at least a significant portion of boomers are 1) retired, and 2) on fixed-incomes, 3) and have had a few years to realize that owning the family home is no longer financially feasible. The boomers in who are postponing the inevitable will chat amongst themselves and then downsizing will be the popular thing to do. And that’s the sweet spot for us millennials to pick up “affordable” housing.

Of course, the smart boomers, like my parents (not all of their friends though!), have already downsized and “crystallized” their gains, as you love to put it.

Ahhh, gotta love capitalism.

#61 april on 09.10.14 at 9:03 pm

To #14 Takla. I do like checking out Vancouverpricedrop but no new postings since July 8… it does say he’ll be back in the fall. Thanks anyway.

#62 Mark on 09.10.14 at 9:07 pm

“Does Canada follow these rules?

What measures determine home affordability?

The problem in Canada, just like during the US housing bubble, was that qualifications were/are done at short-term ‘teaser’ rates, and not at rates which are more reflective of long-term interest rates, or, as in the case of the USA, actually contractually locked in for a long-term (ie: 30 years).

So Canada has a population that is mostly perfectly capable of paying mortgages on-time with minimal defaults if mortgage rates remain at historic lows, with almost no risk premium associated with defaults. But as houses go into oversupply and fall in price, just like in the USA, this is all going to unwind. Actually, the unwind in Canada could be turn out to be even more vicious than in the USA because of the near ubiquitous nature of adjustable rate financing in Canada.

#63 Kenchie on 09.10.14 at 9:09 pm

#14 takla on 09.10.14 at 6:40 pm
“re#8 April take the time to check out Vancouverpricedrop.com for their weekly installments of the biggest losers in Vancouver area realestate.Its current and gives all listing info for the last few yrs on profiled properties for sale…some real eye-openers for all the died in the wool house humpers.
So it starts,the smell of desperation is already drifting over the fraser valley,co-workers that used to ridicule my opinion on realestate when we sold 2 yrs ago are lineing up and asking “what would you do with 400 grand of mortgage debt” and “do you realy think prices can fall that much”…My wifes best friend luckily just sold her home last week,2013 municipal acesment of 466,00,sold 369,after listing for 389,000.
She cant thank me enough for tipping her to sell asap …unfortunately she had a 350 tho mortgage.Lots of folks rushing to the door now to sell,it will be a bleak fall/winter”

Thanks for the eye-opener. My friend dismissed my analysis of premium/discount to assessed value of comparables in his area. I did it last year and this year. Last year it was a 3% premium. This year, it was 2.2% premium. That’s from a sample of 100 transactions and their assessed value. Not an insignificant drop when we’re talking 100s of thousands of dollars.

#64 saskatoon on 09.10.14 at 9:10 pm

regina may falter, but saskatoon hangs in there!

#65 Freedom First on 09.10.14 at 9:11 pm

Using Pete and Marg as an example was very kind of you today Garth. At the very least Marg will get the OAS pension too. But then, you knew this, as further down on today’s Post you mentioned that many more stories like this will be worse. I heartily agree. Many of those many more will be horror stories. Pete and Marg would do well to sell all of their RE right now and rent. Rent a 2 bedroom for the kids when they visit, or wish to rent the 2nd bedroom. If both kids are in dire straits, they can always afford to rent and share the 2nd bedroom together. Yes, life can be tough, and many generations today and from the past world wide have had to use extreme measures to survive. It would be wise to take measures like this now, before circumstances force you.

#66 NostyVlad the Snugglebombed on 09.10.14 at 9:13 pm

The wrong idol. Hmmm. Who here has ever tried white water rafting on sharp, jagged rocks (water not needed), and lived to tell about it?

None in this blog, but we’re about to find out how much a major downturn hurts.
*
#120 BillyBob on 09.10.14 at 8:50 am — “Shhh! As one of the drivers of those big Boeings, don’t tell anyone this!”

G’day BillyBob. Nice to make your acquaintance!

I dug deep and found these links. First sentence on second para. in the first article is good, but as you say, technology must advance by leaps and bounds.

Don’t know enough about Airbus’s Big Berthas, but they’re probably on track with Boeing. Cheers! (Second link is for Blacksheep, SMan and Spectacle.)

First and second.

#67 Ayn Rand Army on 09.10.14 at 9:19 pm

#58 Mark on 09.10.14 at 8:57 pm

“So BeeMo lowered its rate, eh? Why?”

Simple, a surplus of funds in the treasury relative to creditworthy borrowers lining up at their door to borrow.

At some point, they’ll realize that the housing jig is up, and send their investment bankers off to large and medium sized Canadian businesses in search of opportunities to recapitalize them. But until then, they have funds, and nowhere for them to go at the rates they were previously hoping to achieve.
—-
This comment proves you are the dumbest person in the world who thinks he knows everything.

U R very funny but more so sad

ps, this is not a conversation but just a comment.

carry on…. lol

#68 No school in BC on 09.10.14 at 9:21 pm

#42 Mark Ever heard of fractional banking? A dollar borrowed is not a dollar saved.

#69 Kenchie on 09.10.14 at 9:22 pm

#17 miketheengineer on 09.10.14 at 6:45 pm
“Garth et al:

We are never happy/content with what we have, and always want more….human nature.

Guy I know, refinanced his home, put his line of credit, school loans all into the mortgage…said it was like he was starting off brand new….with no equity in his mortgage. But has 2 almost new cars, trips to vegas, golf trips, trips to the falls to the fancy water park with the kids, then bought brand new golf clubs.

Gotta live that life, right now, on command…”

I thank god all the time for sending the world people like the guy you know. There are many reasons the “rich get richer, and poor get poorer”, and personal fiscal irresponsibility is probably at the top of the list, IMO.

PS: If you want to see Average Joe fiscal irresponsibility, work as a bank teller for a year or so in a relatively large branch. You’ll see all sorts of monetary-challenged lo$ers that will scare you straight.

#70 salonist on 09.10.14 at 9:24 pm

“A 24-year-old is not a young person. He is an adult. If he lacks the responsibility and drive to stand on his own feet, he should at least have the wisdom and compassion not to drain his parents’ dwindling resources. Your references to my political efforts speak more of you than me. Stereotyping is unhealthy. It causes blindness. — Garth”

idiot

#71 NotAGreaterFool on 09.10.14 at 9:24 pm

Just got an email from a realtor that reads:

“This property will appeal to the owner/occupier who wants to live in trendy Hillcrest Village and have the mortgage subsidized by the income of two other suites. It will also appeal to the investor who wants a long term investment offering a cap rate of approximately 5.35% in a fabulous location near the best facilities any metropolitan city has to offer”.

I said the realtor said this, not the financial/investment advisor.

#72 gladiator on 09.10.14 at 9:31 pm

I’ve traveled a bit and will do so even more before I retire. Have to see more of Asia, South America and Africa.
The idea of retiring outside of Canada gets more and more interesting as I think about it as a potential retirement option for me and my squeeze.
Currently, a couple can live like kings on a 3k CAD pension in the Philippines, Thailand, Chile, Central America, even Turkey. There are resorts in Turkey wholly occupied by German retirees who live there year-round and their pensions are enough to pay for everything they need for an enjoyable life.
Combine a pension that covers all your needs and some wants, a warmer climate, good-quality natural food, and you’re kinda set. Just find the right (and secure) community in which to settle down and enjoy.
Am I wrong? Ideas/suggestions?

#73 Terrier on 09.10.14 at 9:31 pm

The cracks are getting more visible … wait until the army of construction workers, real estate agents, insurance brokers, mortgage specialists, banking staff and everyone else in between hit the unemployment office.

#74 TexasTea on 09.10.14 at 9:34 pm

The most expensive home in the U.S.

With a 20% down payment ($27.8 million)30-year mortgage rate of 4.12% (last month’s average, according to Freddie Mac), you’re looking at a monthly payment of $550,559 for Le Palais Royal. Annual taxes are $143,425

https://ca.finance.yahoo.com/news/most-expensive-home-america-120015759.html

#75 Kenchie on 09.10.14 at 9:38 pm

#21 Dirty debtor on 09.10.14 at 7:03 pm
“I dunno who Pete thinks is going to buy his million dollar home if he doesn’t plan to sell it just quite yet…

Good luck buddy, signed, mid 20’s, over educated, underpaid, 40k in debt, and planning my next overseas 6 mo backpacking trip!!”

I don’t know who you think you are, but maybe you shouldn’t be planning a 6-month backpacking trip if you’re a) in debt, b) relatively new graduate without a good job under yet.

Think about this: when you come back from that trip, your skills will have atrophied a lot and there will be a new “wave” of students looking to take up the opportunities you think are suitable for you. And you’ll likely lose out to them because (most) employers will think that break on your resume is a red flag, thus (most likely) making your resume disappear into the ether. Obviously, it’s always a possibility that you’ll get a job upon returning. But the probability ain’t great.

#76 Ayn Rand Army on 09.10.14 at 9:39 pm

Was it any coincidence that the SnP500 bottomed in 2009 at 666…. or is it destiny.

http://www.youtube.com/results?search_query=iron+maiden

Song one and two are relevant to today.\

As well as the downing of MH17 and disappearance of MH370. Nothing is by accident when done by the west.

http://vineyardsaker.blogspot.ca/2014/08/watershed-press-conference-by-top.html

Respect to East Ukraine!

#77 Ayn Rand Army on 09.10.14 at 9:41 pm

whoops… wrong fist link to Iron Maiden,
http://www.youtube.com/watch?v=WJIOR3fSuLw
666

#78 Ben on 09.10.14 at 9:42 pm

Great story. Let’s hope housing drops more and this guy never climbs out of his debt hole. He was quite happy to do zero work and book a fat profit paid for by the next generation. Well guess what? It’s not a one-way bet. Suck it up…

Lots of vintage Millennial whine tonight. — Garth

#79 Kenchie on 09.10.14 at 9:42 pm

#27 cash-hater on 09.10.14 at 7:17 pm
“Also, I read the other day they are floating the idea of requiring banks to have some skin in the game for CMHC insured mortgages by introducing a deductible payable by the bank. Now THAT is what I call a potential catalyst!

WOULD YOU CARE TO PROVIDE LINK ??”

http://business.financialpost.com/2014/09/08/cmhc-could-force-banks-to-pay-deductibles-on-mortgage-insurance/

It, literally, took 15 seconds to find the link.

#80 Mark on 09.10.14 at 9:46 pm

“This comment proves you are the dumbest person in the world who thinks he knows everything.”

Nice try at a drive-by slur (with no basis in reality). But it is well known that Canadian mid and large firms generally (outside the oil and gas sector) are the least leveraged as they’ve been in a generation, and are quite ripe for significant recapitalization.

The upside of this for investors should be a significant acceleration in dividends and dividend payout ratios. After all, the Canadian large-cap dividend scene has been, the banks and the pipelines aside, fairly austere for so many years.

#81 HD on 09.10.14 at 9:48 pm

#68 Kenchie on 09.10.14 at 9:22 pm

PS: If you want to see Average Joe fiscal irresponsibility, work as a bank teller for a year or so in a relatively large branch. You’ll see all sorts of monetary-challenged lo$ers that will scare you straight.

Did it…not as a teller but as [email protected] Lasted 3 months. That was about 6 years ago and I still can’t believe what some people did to themselves.

Best,

HD

#82 Inglorious Investor on 09.10.14 at 9:48 pm

#19 Mark on 09.10.14 at 6:59 pm

“High interest rates typically […] is one that is effectively committing economic treason.”

Good comment. I agree. These low mortgage rates are the sign of a sick economy. Try to get a mortgage and the banks are falling all over themselves to stuff money in your pants. But try to get a loan for a business and they treat you like you have ebola.

Another thing. People too often fixate on nominal interest rates. But everything is relative. So a 15% (or whatever) interest rate on bank accounts some years ago was not necessarily better than a 2% rate today. You have to look at all the numbers: inflation, incomes, etc. Used to be RE investors demanded at least a 10% CAP rate in Toronto. Today they are accepting less than 4%. Like I keep saying, in economics, the metrics are all relative. Nominal means nothing.

#83 Irnie on 09.10.14 at 9:48 pm

Garth

Surprised that you never mention that people do not really “own” the land, but rather they simply have an exclusive right to its use, if and only if they continue to pay the property taxes(i.e. rent) to the Feds…..try missing some of these tax/rental payments and see to what extent you really own this asset….

I was able to get the right to own property included in amendments to the Canadian Constitution when the Charlottetown Accord was signed. This was subsequently defeated in a national referendum. So I don’t bother any more. — Garth

#84 Cici on 09.10.14 at 9:50 pm

To all who are jealous of Pete: yes, he has it way better than many, but his situation is still very shaky, and the RE is costing him way too much. $3,000 doesn not go far between three adults, especially when there is debt on the table.

If Pete doesn’t have the balls to kick the son to the curb, he should at least sell the condo ASAP, because owning it is costing him more than he can afford. If the son is going to be allowed to stay, he needs to start paying fair market rent in relation to his salary. If he’s not working, he needs to get on it ASAP with whatever is available until he achieves full-time hours: washing dishes, walking dogs, delivering pizza…anything! But honestly, if his mom is disabled, he should have a lot of know-how and experience in caring for people with disabilities, and can probably find a good-paying job providing homecare to people in need. The daughter also needs to be accountable and start paying daddy back ASAP!

Once those steps are taken he can look into selling the house, downsizing and moving to a cheaper location, or renting.

Good luck Pete!

#85 Inglorious Investor on 09.10.14 at 9:51 pm

#68 Kenchie on 09.10.14 at 9:22 pm

“We are never happy/content with what we have, and always want more….human nature.”

Like economic metrics, expectations are relative. If we all lived in a wet hole in the ground and always have, then the guy living in a clapboard shack is living in the lap of luxury.

#86 westcanguy on 09.10.14 at 9:52 pm

Ayn Rand Army on 09.10.14 at 8:43 pm
5-10% (per annum I assume
—-
well duh, not only r u a waste of space on this blog, but you r a waste of time. There will be no further conversation from me with you. Get a brain.
____________________________________________

This from someone who can’t be bothered to actually type out words…

#87 Transplant on 09.10.14 at 9:59 pm

#22 Shawn “The Rose colored past”

Well, I belong to the earliest set of Baby Boomers and grew up in the 1950’s. My story I would say is typical of my cohort and none of us as far as I am aware felt hard done by, but our expectations were so much lower than those of today’s generation.

My parents, hard-working immigrants from Eastern Europe in the 1920’s and 1930’s, raised three children. As was the norm for the day my Dad worked outside the home and my Mom cared for the family at home, so one income supported a family of five. Cash was used to pay for everything, my parents never had a credit card to their name. My Dad ended up with a negligible pension, my parents supported the church and I think very likely saved 20% of the household income.

We lived in a very harsh climate but still grew some vegetables that Mom put up, as well as blueberries that we picked. Late each Summer and early Fall our relatives in Southern Ontario sent up bushel baskets of fruit that Mom put up. We never lacked for food, clothing or shelter and never felt that we were poor, we were just regular folks like all of my friends.

When not in school we played outdoors all day-biking, building forts in the bush, playing “cricket” in the back lane. We sat down and ate as a family every day. We had no TV until 1957 (no station available before then), no car until 1957 (used) and vacations consisted of visiting family. A Florida vacation was an exotic dream and available only to someone like E. P. Taylor.

We subscribed to the daily newspaper and a couple of magazines. All clothes were handed down. Books were too expensive to purchase so many hours were spent in the library. When we were old enough each of us kids got jobs that we worked after school, on weekends and during the summers. All 3 children graduated university and entered professions and worked hard.

By sheer coincidence I Google mapped my childhood home yesterday and cannot believe what we lived in-probably a 700 sf home with a garage that my Dad built with the help of friends. The house never had a mortgage on it. By the way, although we did lock our doors, crime was never an issue and I never once feared for my safety.

This is not an atypical story. But what is the point of it? Namely, that one’s satisfaction with life is largely dependent on one’s expectations. Second, and more apropos to Mr. Turner’s blog and the valuable advice that he freely gives, I learned for the most part not to spend money that I did not have and when one must do so, for example when buying a house, do so wisely and only after much serious deliberation and do not bite off more than you can chew. I understand that with the current economy and job market it’s a very difficult time for many people but isn’t that always the case in one way or another? This is the very time that folks should not be rushing headlong into making decisions that will burden them for a lifetime. Most everyone is willing to help those who face misfortune through no fault of their own, but I don’t particularly fancy having a third party (government) using my hard-earned money to bail out someone who lived a profligate lifestyle.

#88 old gringo on 09.10.14 at 10:03 pm

Funny how Canadians/Americans still cannot fathom living in another country where $3000 gets you a house with a pool, cabana for guests and a maid and gardener.
Money left over for great health care and vacations.
Perhaps the writing is finally on the wall.

#89 Banjopete on 09.10.14 at 10:05 pm

Mobility is one of the trumpeted messages of the blog. For those that complain that 24 is a tough age to be these days, give your head a shake. I’m not much older than that and if you were a little braver than your facebook friends you’d realize there are plenty of jobs out there if you’re willing to leave the cozy confines of your neighbourhood of birth.

Many reasons to stay of course if there are loose purse strings of parents nearby but seriously lots of people move for jobs, look around you. There’s a reason many folks of the world move here to work, it’s not as bad as it can be, and you never know you might get a better job, or better opportunities where the competition is lower.

Try competing against highschool dropouts for postings that they can’t find qualified people to fill. I bet you get it, and I bet you can ask for some sweet compensation. I bet they also won’t offer you an unpaid intern position in the big smoke center of the universe either to “start” your career with.

Please. There’s a job for you out there, and one that will support your first apartment/basement suite/shack rental. With enough money to occasionally entertain a beau/buck with a few pints of Lucky :)

#90 Kenchie on 09.10.14 at 10:06 pm

“You gotta read Human Action my Ludwig Von Mises and also, for fun and reality, Atlas Shrugged for a taste of applied economics and romance in the human wold of activity and progress / regress that never ends…”

Mark, if you do listen to ARAmry, remember that Von Mises’ work has been criticized by a) other ASOE professors, such as F. A. Hayek, and b) Chicago School of Economics professors, such as Milton Friedman, and c) pretty much every other notable economist since the 1980s. Not to mention it was based on a 19th century economy in which the service industry hardly existed (neither did the same ratio of household consumption and gov’t consumption in GDP, and globalization of trade and finance). So any lessons you learn, think about them in the context of today’s economy and if they are even applicable.

Also, Ayn Rand was a screen writer by profession, not a philosopher, so take her book with a big boulder of salt. Her main point is individualism is superior to collectivism, which she interprets as communism that she experienced in the USSR when she was younger. Therefore, she’s super skewed when interpreting the role of government in people’s lives. She, naively implies that government can do only bad for society (pardon me, but I like potholes to be filled in, and sidewalks for walking, and healthcare safety net if I absolutely need it, and new skytrains and subways to deliver people over great distances, etc.).

#91 Nemesis on 09.10.14 at 10:06 pm

#FailureToLaunch?!? #NoHayProblema! #JustHireSarah!

http://youtu.be/DjANcJEduN0

[NoteToSaltierBasementDwellingPuppies: If the HeadLines and your Mater/Pater are depressing you and you’ve finally decided that, ‘EverybodyWantsToRuleTheWorld’ { http://youtu.be/3OFOZQ6pMGo } sounds like a ParentalRecipeForDisaster in the making… Hey… CheerUp… &ExerciseYourImagination {you can even call in some favours if you have to}… but when it’s AllSaid&Done – just EmulateCubanPete… & ‘DanceTheRumbaBeat’: http://youtu.be/A8VqdhNnwdY … That’s how RevolutionsStart, Boyz&Girlz. Now get out of that basement. And start living. They’re Parables, by the way. Did I have to say that?]

#92 45north on 09.10.14 at 10:12 pm

They paid $375,000, were hit with a fat special assessment, and now have $415,000 into the place. “Apparently,” says Pete, his voice bitter and sad, “it’s worth maybe $340,000, but the mortgage is $380,000.”

funny how it’s an investment when you buy but not when you sell.

Here’s what we learned this week – markets under stress

funny from a macro level, the first thing evident is that the market is under stress, then latter it’s evident that people are under stress

as this became universally evident in the US, the Federal Government launched HAMP ( Home Affordable Modification Plan )

http://en.wikipedia.org/wiki/Home_Affordable_Modification_Program

my plan would give a family $1000/month for a year in the case they lost the house. Less paper work.

#93 Catalyst on 09.10.14 at 10:12 pm

#71 Transplant

You know what we also had in the 50’s? The aftermath of a global war where north america was basically untouched. Nowadays, the corporate world tricked women into thinking they were being imprisoned in their homes and to join the workforce, slowly halving everyone wages. Now we are all forced to have 2 incomes to survive with 1 or no kids and a shoebox in the sky.

I can’t help but roll my eyes when a boomer starts rambling about how they supported a mortgage, wife and 2 kids by 25 and today’s young folk are just lazy. The ignorance is very prolific and very frustrating.

#94 Dominoes Lining Up on 09.10.14 at 10:14 pm

This story is a great example of what we are heading for and the generational ripple effects it will have, for decades probably. The crippling debt of most ordinary people is about to bite hard in Canada and for families like these folks.

And there really will be no economic refuge elsewhere, not in Europe, not in the U.S. as some believe, including you Garth, with due respect.

Tonight on CNN, after Obama’s speech about his ISIS response plan, David Gergen made some powerful comments. Gergen has served presidents of both parties over some forty years as an adviser and commentator, and is one of the most balanced observers of the U.S. state of affairs I can think of.

Gergen said Obama’s speech was very good, right until the point he started boasting about the economy.

“What surprised me…… was the second part of the speech, when he talked about how well the country is doing, about how well we’re doing with jobs and how we’re leading around the world. I think for an awful lot of people…America is feeling pretty blue right now. I think those assertions don’t ring true….and it detracted from the main message of the speech. I thought he started on very, very strong ground, but when he shifted ground like that it makes us think, calls into question, well, how much should we believe the rest of the speech….” (CNN)

David Gergen is not a gold pumper. Nor a financial advisor. He has no skin in the game of either pumping up or dumping on the U.S. economy.

This is where your own analysis and suggestions have been lucky, but ultimately very wrong, Garth. People who have invested in the U.S. the last few years have indeed done well, on paper, for now. That too will change and revert.

The U.S. is not a haven for us, and is absolutely not in recovery in any meaningful way, except for the few lucky elites sponging off the top. It is merely in the midst of one of the longest, most pathetic dead-cat-bounces in recent western economic history. It will end up in even worse shape soon, and most know this in their gut.

Americans know this, Gergen and others do too, so much so that for a president to talk this way tonight literally can undermine his credibility on other life and death matters, they rightly say.

This has been going on since the energy crisis of 1974, the recessions of 1981, then 1991, then the tech crash of 2001, then the GFC of 2008. The cycles of doom are repeating at shorter intervals with more terrible structural effects each time. We have not even begun to address the real issues of the 1974 oil problems, let alone the other crashes that followed. It’s a downward spiral with far too many enablers in denial.

Pitchforks is much closer to where we are all heading, I’m afraid, locally and globally.

And in Canada, it will only be worse as our real estate bubble bursts at the same time as our economy is gutted of jobs – at least the Yanks had some more years to adjust in between.

Let’s just hope none of the international pitchforks are nuclear-tipped.

#95 Spctacle on 09.10.14 at 10:14 pm

Thank You Sir Garth

& a Big thank you to Sir NostyVlad !

I too had a heart ache upon seeing the little girl on the lane pic.

The “objects” that apparently pierced the aircraft look to me like explosive ammo, with tracer. Note the burnt entry hole, as it hits and disintegrates ( sort of ) upon damage! 50 cal ( or small NATO hi-technology round) , I’ve shot it. Frightening stuff, goes right through cast iron engine block .

Truth will come out.

Thanks again Garth & Nostyvlad ….peace all

#96 Steven Jon Kaplan on 09.10.14 at 10:16 pm

As usual, this is a carefully researched and well-written article which almost everyone will unfortunately ignore until it’s too late. Thank you, Garth!

#97 Bottoms_Up on 09.10.14 at 10:18 pm

#20 Andres on 09.10.14 at 6:59 pm
———————————————
who knew yuppy urbanite = student living?

#98 Kenchie on 09.10.14 at 10:19 pm

#43 the jaguar on 09.10.14 at 8:04 pm
“#30 – Not an Economist:
Garth is right on. You probably have a 24 year old living in your basement which is why you are sensitive about it. A parent job is provide all the support they can to teach their kid how to survive and prosper in the real world. But to accomplish that you need to push them out of the nest. Otherwise you are an enabler.”

24 is definitely an adult. But at the same time, if the kid doesn’t have the means (yet) of succeeding on their own, then it’s just a very expensive (for the kid) life lesson. There is merit in delaying “leaving the nest”, if there is savings made in the family’s total savings. It may just mean a lower future inheritances, if there is some.

The condo situation is a much bigger problem than the son.

#99 Inglorious Investor on 09.10.14 at 10:19 pm

So today Bronco Bama officially declared ‘war’ on the Egyptian goddess of fertility.

I find it interesting that the government and the media can’t agree on who they are actually supposed to kill. Is it ISIS, ISIL, ICE-T? Someone obviously did not read the CIA memo. I mean you don’t really believe that Operation Mockingbird or its contemporary equivalent is not on-going, do you?

Parsed excerpts from the Cool Daddy Prez:

“ISIS bad. America good. ISIS is killing innocent people in the Middle East. We will show them that America can kill even more innocent people.”

“Because I don’t want to offend my Moslem American brothers I must say that ISIS is not Islamic. They are evil. Like the old Christian Crusaders.”

“I hope Congress supports me on this, even though I really don’t need their OK, so that if it all goes really bad I won’t get all the blame.”

“We will degrade and destroy ISIS using our air power. We’ll coerce other countries to actually do the hard work on the ground. See, the problem is, after so many years of using nothing but drones, our soldiers today are only capable of moving their wrists.”

“America is blessed. We are special. With this blessing comes a great burden. Namely, is it our responsibility to push everyone around and force them to do what we want. OK, except maybe that bastard Putin. Geeezus he’s a hard ass! And the Chinese… I don’t who the hell they think they are running their own country… Oh well, good night and God bless America.”

After the speech CNN conducted a poll asking Americans if they supported Bronco’s decision to bomb ISIS. 87% of respondents said, “What’s an ISIS?”

#100 Bottoms_Up on 09.10.14 at 10:25 pm

#60 Kenchie on 09.10.14 at 9:03 pm
—————————————————
the boomers i know that have done that plan have left 100,000s of thousands of dollars on the table by selling too early, then overpaid for a condo that is now worth less. great plan, horrible timing.

#101 Mark on 09.10.14 at 10:25 pm

“So any lessons you learn, think about them in the context of today’s economy and if they are even applicable. “

If you’re forward thinking, the ‘old’ lessons you learn may very well be more ‘applicable’ than all the new-world stuff.

After all, history usually has a habit of repeating itself the moment that the last bearers of past wisdom are dead.

The recent surge in the USD$, fall in oil, etc., is, I am told, awfully analogous to the events of 1932-1933. Its not too hard to figure out what happened next….

#102 Ayn Rand Army on 09.10.14 at 10:29 pm

are the least leveraged as they’ve been in a generation, and are quite ripe for significant recapitalization.
—-
So they are the least leveraged yet need to be recapitalized.

Like i said, ur moron idiot x 10

#103 Kenchie on 09.10.14 at 10:33 pm

#55 Ayn Rand Army on 09.10.14 at 8:43 pm
“5-10% (per annum I assume
—-
well duh, not only r u a waste of space on this blog, but you r a waste of time. There will be no further conversation from me with you. Get a brain.”

Ahhh, classic! Can’t compete intellectually with facts and well-founded theories so ARArmy resorts to typical spewing of abuse when outsmarted. Boo hoo.

#104 OttawaguyRenting Worried but not too worried still a worrier but look on the brightside on 09.10.14 at 10:34 pm

Lots of vintage Millennial whine tonight. — Garth
___________________________________________
Truly a heart felt LOL right there

The whine does smell quite sour as of late.

I am ahead of the Millens by a decade and see them swarming around under neath me in my work space…

Oh my goodness do they feel like they are owed. I THOUGHT I was OWED..ahahahaahhaha..baaaah
I did.
At that age I wasn’t happy with what was going on around me with older peeps living on the high horse.

I did something about it that these kids can’t.

Play a social game.

I swear and house or no house or beard or no beard these kids are all walking “rain man” types that can’t carry a conversation.

Millen Whine can’t keep the silver hairs above me entertained. You go out to a pub with these mustaches and two senior Directors and they spend all night complaining
juuuuust cruising through the 3 hours they should be playing the social game faces lit by Iphones waiting to get the hell out.

They don’t get it. Mustaches don’t come play poker on a Friday night at Senior Directors house and have a few beers. Or they say.. “ya..like txt me when it starts”
Never see them.

Millens have to remember – Old Grey Hair guys own them and are the ticket to middle management.

They also forget that the hip guy renting in DT in his 40s and has a nice ride…
ya that guy *me*
IS the next grey hair Director in waiting…

Stop whining. Work. Stay off your phones at a pub to hold a conversation with old dudes.
Don’t wish they lose their house because you chose Iphones and “brewery tours” instead of paying down student debt

Ottawa is a mess BTW when it comes to houses for sale..

#105 Happy Renting on 09.10.14 at 10:35 pm

#20 Andres on 09.10.14 at 6:59 pm

I totally got ya, but Pete & Marg aren’t yuppies, and I’m curious how much cash the house and condo suck out of their monthly budget. I’m guessing the RE burden is pretty heavy, but there are certainly other everyday costs of living that add up (and by the time one is a retiree you’re probably wanting a few comforts that are easily passed up when young.) Garth mentioned Marg has a disability, so there are likely additional costs related to that.

#106 Kenchie on 09.10.14 at 10:38 pm

#59 TexasTea on 09.10.14 at 8:59 pm
“Does Canada follow these rules?

What measures determine home affordability? Mortgage lenders have traditionally expected borrowers to have a housing expense ratio of 28% or less. The housing expense ratio is an indication of a borrower’s ability to make the payments on their mortgage loan. The ratio measures housing expense as a percentage of gross income (income before deducting for Social Security, Medicare, and taxes)”

TexasTea, as far as I know, banks require 32% of gross income to pay for housing costs (including estimated utilities and property taxes and insurance).

#107 Happy Renting on 09.10.14 at 10:40 pm

#28 Mishuko on 09.10.14 at 7:18 pm

We had a pretty good chuckle over your dream. ;) Just don’t write anything in the comments that will make it onto Garth’s single-spaced doc and I’m sure he’ll be nice when you meet.

Get well soon!

#108 Doug in London on 09.10.14 at 10:40 pm

The question that begs to be asked is if they knew 3 grand per month wouldn’t go far, why didn’t they sell the house when the market was stronger? They could rent or better yet buy a much cheaper house in an economically depressed area, pocket the difference, and retire in comfort.

#109 Tony on 09.10.14 at 10:41 pm

Re: #16 Shawn on 09.10.14 at 6:44 pm

Remember 1980 when everyone was lined up to buy gold? That was back when everyone had money. By 1984 people still had money. Today most people are broke and the middle class is being wiped out in Canada just like in America. Things will only get worst much worst.

#110 Nathan on 09.10.14 at 10:43 pm

http://www.greaterfool.ca/2014/09/10/the-wrong-idol/#comment-323600

Speaking as someone a mere 5 years older then this person, Garth hit the nail on the head. Kick me out, or better yet, charge $500/month rent!

#111 Kenchie on 09.10.14 at 10:46 pm

Wow, CBC Toronto just mentioned their top stop following the National: A senior couple having problems after a jump in rent.

Thought that was relevant for today’s posting.

#112 Vicpaul on 09.10.14 at 10:48 pm

#128 Sue on 09.10.14 at 9:45 am
#106 vicpaul
Wouldn’t that be 3 WEEKS without a cheque?
If you worked the summer you may have gotten a little sympathy.
Talk about entitled.
Kinda nice to see the bc gov have a little backbone.

Sue, arrogance and anger is no excuse for ignorance. In a 24 year career, I have worked 21 summers – 12 of which teaching ESL to international students – no sense of entitlement here. I budget a ten month salary for twelve months quite effectively in a typical year – including max tfsa and reasonable rrsp contri – all the while raising three children (23F – educational assistant, 20M, full time Electrian and 16M, grade 11 student athlete). You say you’re happy the criminal (twice proven in BC Supreme Court ) Liberal Government had the “backbone ” to breach the Charter of Rights and Freedoms stripping Teacher’s contract to hobble our ability to adequately service special needs children – and we have soldiered on for twelve years doing our best for each/every student who walks or rolls in the door.

Making incorrect assumptions and uninformed comments paints you as you are – a bitter, ignorant fool. The government will be targeting the idiot group next.

#113 Inglorious Investor on 09.10.14 at 10:54 pm

#93 Dominoes Lining Up on 09.10.14 at 10:14 pm

” [David] Gergen has served presidents of both parties over some forty years as an adviser and commentator, and is one of the most balanced observers of the U.S. state of affairs I can think of.”

Don’t bet too enamored with Mr. Gergen. He is apparently a regular attendee of Bohemian Grove where, it is said, some of the richest and most powerful men in the world engage in a secret, pagan-like cult ritual known as the Cremation of Care. Even if the ritual does not have evil undertones as Alex Jones says, it’s still kind of, well, weird. Watch: http://www.youtube.com/watch?v=r5dHhvpHIjM

Alex Jones confronted Gergen http://www.youtube.com/watch?v=p-job9wwKPM about the ceremony. Gergen was obviously embarrassed, angry and flustered to be caught in the act. He called Alex Jones uncivil and ungentlemanly. But one has to wonder if he was more angry at Jones for secretly infiltrating the Bohemian Club or for getting caught on camera participating in exactly the same kinds of rituals that conspiracy theorists attribute to organizations like Skull & Bones.

#114 Kenchie on 09.10.14 at 10:57 pm

#77 Ben on 09.10.14 at 9:42 pm
“Great story. Let’s hope housing drops more and this guy never climbs out of his debt hole. He was quite happy to do zero work and book a fat profit paid for by the next generation. Well guess what? It’s not a one-way bet. Suck it up…”

Oh yeah, so you think tax issues get sorted out by themselves when people are trying to get as much tax refunds as possible? You don’t think that the government needs CRA employees to correctly sort out the tax cheaters from the people who deserve a proper tax refund? Do you think the government doesn’t collect tax, but rather prints its money to pay its bills and keep the country afloat?

Do you even know what the guy’s education is? He may be an accountant by trade for all we know. Not every gov’t employee is unqualified for the pay that they receive. Don’t put all gov’t employees on your $hit list without considering the non-monetary service provided to a first-world society.

PS: I’m a pure-breed capitalist. That doesn’t mean starve the gov’t of tax revenue, it means that the taxes are just a cost of doing business.

#115 Ben on 09.10.14 at 11:06 pm

Lots of vintage Millennial whine tonight. — Garth

It’s a ’77 Garth. Fill your boots.

#116 Kenchie on 09.10.14 at 11:09 pm

#84 Inglorious Investor on 09.10.14 at 9:51 pm

“#68 Kenchie on 09.10.14 at 9:22 pm”

‘We are never happy/content with what we have, and always want more….human nature.’

‘Like economic metrics, expectations are relative. If we all lived in a wet hole in the ground and always have, then the guy living in a clapboard shack is living in the lap of luxury.'”
—————————————————————

Inglorious, that wasn’t my quote. I was quoting #17 miketheengineer. I was commenting on the story of the guy he knows.

And I agree with you regarding everything being relative. I always find it funny when people speak with “rose tinted glasses” about the past being so great, etc. Well, it wasn’t (unless you were an low-income white male relative to today’s equivalent).

#117 Ben on 09.10.14 at 11:12 pm

Kenchie – honestly mystified by your post. The word tax doesn’t appear in the original article or my post once.

I don’t know or care what the guy’s job is. He made a bet on a zero-sum game hoping to be paid out by the next generation and he lost. Some youngster will pick up that house off him for less than he paid for it and they will need a smaller mortgage so the banks also get less money. Great. Let’s hope houses fall further and we all get to pay more money on things we want instead of to serve the interest portion on huge loans.

#118 Andrew Woburn on 09.10.14 at 11:14 pm

#22 Shawn on 09.10.14 at 7:03 pm
And I believe six decades ago families only needed one income to support a half dozen kids and they paid cash for everything and they all had pensions and I think they saved at least 20% per year – after donating 10% to the church. And they grew and canned their own food which was way healthier. And the kids played outdoors all day until all sat down for the healthy meal. And there was almost no crime. I believe I have that right.
===================================

I was around then and yes that is pretty much how it was and I lived in the gritty steel city of Hamilton. If you had a job and most people did, life was pretty good by the standards of the day. Of course there was poverty and there was no safety net except charity for the unfortunate and no medical insurance but doctors made house calls then and were lenient on collecting from the poor.

Yes we played outside all day at age eight and we went anywhere we wanted to. Mostly our mom’s were at home but they didn’t worry about us. Of course the food was mainly healthy because junk and fast food hadn’t been invented. As for crime, my parents never locked the house and people just left the keys in their car when they parked it. We didn’t know what bicycle locks were for and a bank robbery was front page news. Yes, in Hamilton.

There were lots of trade-offs. Canada has become a much more tolerant and entertaining place. It was a whitebread world and gays, blacks, natives and Jews were on the outside. Conformity was the rule. There were hardly any restaurants or night life. Travel was very expensive and there were few luxuries. We didn’t worry about ISIS. We practiced getting under our school desks in case of at nuclear war. Air raid sirens were tested every few months. We didn’t stress about global warming but we were worried about strontium 90 in our milk. Kids at school still got polio.

So no, there is never a golden age but “progress” is relative. Since the fifties we won a few but we also lost a lot, especially the freedom and innocence of childhood.

#119 cash-hater on 09.10.14 at 11:16 pm

That is so true.
My wife is an ece educator and has to up with $15 an hour after 19 years experience, yet our teachers don’t think 81,000 plus current increase is enough for them.
I guess my wife’s only crime is not belonging to a union.
Our country is so divided!

#120 Dd on 09.10.14 at 11:18 pm

Garth … Do you think Edmonton is good predictor of calgary? Edmonton is hub for what actually happens in oil patch.

#121 Kenchie on 09.10.14 at 11:34 pm

#99 Bottoms_Up on 09.10.14 at 10:25 pm
“#60 Kenchie on 09.10.14 at 9:03 pm
—————————————————
the boomers i know that have done that plan have left 100,000s of thousands of dollars on the table by selling too early, then overpaid for a condo that is now worth less. great plan, horrible timing.”

Are those $100,000s on the table in paper only? Don’t go on the listed price for an expected current value. Put a range of discount on it of from 5% to 15%, if priced over $1m and suburban. Then net it of market rate commissions.

Regarding the condo, it’s probably going to be their last home they will live in, if they are lucky. So unless they crystallize their loss, and their cost of living in it is manageable for the long-term, then they will be fine and made the right decision in retirement.

#122 Hawk on 09.10.14 at 11:43 pm

<<<>>>

Absolutely…………throw to the Wolves the single most precious thing one has in life, so as to facilitate the stacking up of more pieces of paper.

The truth & life, …..stranger than fiction………..

#123 Transplant on 09.10.14 at 11:46 pm

#117 Andrew Woburn response to Shawn #22

Amen. Every era has its own challenges. We’re not looking back on the old days through rose-colored glasses, but by now having surmounted the obstacles placed in our way and with the wisdom of experience we can breathe a sigh of relief; the issues we confronted don’t seem to as daunting as they appeared to be in real time. I hope this proves to be the case for those of the present generation as well. They just need to use whatever resources they have very wisely and not give in to pressure whether it’s from their peers, family or those trying to sell them stuff they don’t really need.

#124 Kenchie on 09.10.14 at 11:47 pm

#116 Ben on 09.10.14 at 11:12 pm
“Kenchie – honestly mystified by your post. The word tax doesn’t appear in the original article or my post once.

I don’t know or care what the guy’s job is. He made a bet on a zero-sum game hoping to be paid out by the next generation and he lost. Some youngster will pick up that house off him for less than he paid for it and they will need a smaller mortgage so the banks also get less money. Great. Let’s hope houses fall further and we all get to pay more money on things we want instead of to serve the interest portion on huge loans.”

My apologies, I interpreted “He was quite happy to do zero work and book a fat profit paid for by the next generation” as an insult to him being a CRA employee doing “zero work” and the “fat profit” being his pension paid for “by the next generation”. Lol

I see what you were talking about now (and I don’t disagree with the idea of him taking a loss). Sorry about misinterpreting your premise.

#125 Carpe Diem on 09.11.14 at 12:01 am

#30 – Not an Economist and all the anti-posts

Being a Gen-Xer, I communicate to my kids (under 10) that I’m saving for their education. But I expect the best marks possible – even for 9 year old who has dyslexia and ADHD (not on meds since his IQ is above 97%-tile and I think he just takes advantage of the school system – but he can chew gum and listen to music on his ipod in class).

I also communicate that by 19, if they are not in a top University, they get no funding.

(If a kid really has a hard time in school, his RESP can go for some other skills training … but that’s the last resort).

I sure hope this 24 is studying hard or working hard at a skill!

My kids, by 19, if not studying hard will be out of the house to understand how hard it is ….

I think my 9 year old gets it. When I ask if he will get 90%+ on his spelling or reading test, he says “I’ll memorize all those words the teacher wants so I can keep my games for the next month.” He understands the school system is just a game and points to accumulate … he doesn’t like it but he plays the game!

He also communicated he’s interested in robotics. The school system can’t keep up with him so I guess that’s my next hobby or I get him into a program around that.

He knows, U of Tokyo is where he should go for robotics … so hopefully figure out reading in French, English and Japanese! Chop, Chop!

24 year old in the basement should be studying for his Master degree by now or should be out the f’ing door.

Boomers are too easy on their kids. They should have been hard like my parents were on brother and sister. They were somewhat easy on me since I had “dyslexia and ADHD” … I sure got over all that when it was time to succeed.

No mercy. Kill or be killed.

#126 Chaddywack on 09.11.14 at 12:05 am

@41

When your 66+ your not doing much. Hitting Tim’s with a few other cronies is your highlight of the week.
*************************************

I’m in my 30s and that’s the highlight of my week now ;)

#127 Cha Ching on 09.11.14 at 12:09 am

The older generation that complains about the youth of today are basically saying that they were shitty parents.

#128 Don Sanderson on 09.11.14 at 12:16 am

Hopefully Rob Ford will be okay. Crackservative is missing in action tonight.

#129 Ayn Rand Army on 09.11.14 at 12:28 am

#113 Kenchie on 09.10.14 at 10:57 pm
PS: I’m a pure-breed capitalist.

No you’re not, you’re a total Kenchie the commie.

#89 Kenchie on 09.10.14 at 10:06 pm
based on a 19th century economy in which the service industry hardly existed () So any lessons you learn, think about them in the context of today’s economy and if they are even applicable.

Real work that is paid for voluntarily is not different today than it was a 1000 years ago, value is for value.

Ludwig von Mises lived til sept 29 1981 fighting against the commie fascist like yourself, hence your slander of him and miss Rand, both now dead but left me to defend them by their works….. and you to basically disgrace yourself when you type your words of attack against the good and love of liberty they both encased in all they did.

Mises ain’t that out of date, died in sept 1981.
http://en.wikipedia.org/wiki/Ludwig_von_Mises

Also, Ayn Rand was a screen writer by profession, not a philosopher, so take her book with a big boulder of salt. Her main point is individualism is superior to collectivism, which she interprets as communism that she experienced in the USSR when she was younger. Therefore, she’s super skewed when interpreting the role of government in people’s lives. She, naively implies that government can do only bad for society (pardon me, but I like potholes to be filled in, and sidewalks for walking, and healthcare safety net if I absolutely need it, and new skytrains and subways to deliver people over great distances, etc.)

yeah well she knew first hand the evils of collectivism, to dismiss her experience as extreme is to show how ignorant and misleading you are with respect to her.

You’re also apparently useless too, as i can fill a pot hole myself on the street front of my house for 1/10 the price the city costs.

But i am a capable type person, whereas u r apparently useless, by self omission.

Most commies r, hence is why they’re commies.

:)

Governments role is the monopoly on force and enforcement of laws and national defense. Ayn had no issue with those valued functions of gov. her issues were same as mine and ours today as a society, what ails us today, government cronyism and meddling in the economy and monetary system and selling their power and influence to lobbyist etc…

And their drive for war without our consent…

Their drive to make us DEPENDENT upon them the gov. to secure their place in our lives.

#130 april on 09.11.14 at 12:28 am

I totally agree with Garth in that a 24 yr old is an adult. No wonder they behave like kids when everyone refers to them as kids.

#131 Spectacle on 09.11.14 at 12:34 am

Re: #82 Irnie on 09.10.14 at 9:48 pm
Garth, Surprised that you never mention that people do not really “own” the land, but rather they simply have an exclusive right to its use,…….

I was able to get the right to own property included in amendments to the Canadian Constitution when the Charlottetown Accord was signed. This was subsequently defeated in a national referendum. So I don’t bother any more. — Garth
***********************
WOW, I’m impressed. Saddened by the Defeat though. I should read more of your books Garth to get a depth of your input into Canadian history.

This comment and your reply remind me of the Strata Real Estate course I completed. Some deeply disturbing risks to unbalanced real estate holdings . Risk management is so important, and from other insights here tonight, that crumbling sound can be heard by those eager to know. Crumbling,like that house lst night in Ontario …….and Victoria and…..

Thnx

#132 Gen X on 09.11.14 at 12:56 am

Let 65+ year olds pay for their own healthcare with their housing equity? After all, they are the greatest burden per capita.

What’s wrong with risk based premiums?

The younger generations have to wake up. The dumbest in history.

#133 Gen X on 09.11.14 at 12:59 am

Post #118 cash hater:

Maybe all labour whether skilled or not should be paid $10 MAX per hour in Canada. If some job wants more, open the immigration floodgates in that field.

People with assets will be the non-working class. Its always been like that in history.

#134 Spaccone on 09.11.14 at 1:11 am

@Not an economist

I thought it was an accepted fact that multi-generational Canadians (and Americans) kick their kids out on their ass at about 18 or so no matter what.

I think the majority of new/more recent immigrants have the mentality of living with your parents until you’re married. As a 1st gen Canadian of Euro roots I left only at about 30 (unmarried! the horror!) to go live in the city core for many years.

#135 Mark on 09.11.14 at 1:22 am

“So they are the least leveraged yet need to be recapitalized.
Like i said, ur moron idiot x 10

Debt recapitalized. Canadian firms are under-indebted and have excess shareholders’ equity on their balance sheets. Something is very wrong with you if it takes a very clear plain-English explanation to make this clear to you. The rest of your post (ie: calling me an idiot) is painfully and intuitively obvious evidence of such.

#136 Nemesis on 09.11.14 at 2:14 am

#GoodMorningZen[WhatEverTheTimeZone]… #ForWarm”Jet”Bodies.. #InThoseCockPitBucketSeats. #Seriously… #WhoTheF**k[WithHalfABrainOrMore]… #WouldEverBoardWithAnAlgorithm’Driving’?

http://youtu.be/IqMGM8Mnc8w

[ThatWasJustForFunCapt.BB… But seriously, FastMovers full of civilians… are kind of serious. WeSaluteYou.]

#137 juno on 09.11.14 at 2:45 am

#57 Cici on 09.10.14 at 8:54 pm

Don’t forget the 70% whom has bought, 20% of those probably own multiple houses (leveraged)

My landlord has 4 (2 bought in the past two years close to market peak)

The remaining 30% who doesn’t own, 10 % are under employed or unemployed, so you can take them out to the equation, 10 % probably can’t afford or has no security to buy. There’s probably only 10% who can buy and are waiting.

But with all these new houses and condos built. Only 10% can buy. And the ones who already owns, only a small percent can buy, because houses are not rising fast enough for them to leverage another house.

The true test will be prices heading south. This is untested territory for the market.

The way I see it downside pressure.
– Aging population – who must sell in order to maintain a certain lifestyle
– Downside in price will force owners to sell as the start moving into the red zone and the banks forcing sales to mimumize their losses.
– Banks starting to freeze credit and take a defensive stance
– CMHC takes losses. Until they run out of money to fuel the Mortgage bubble.

#138 Son of Ponzi on 09.11.14 at 3:27 am

TD offers GIC with 9% return:
http://www.tdcanadatrust.com/products-services/investing/market-growth-gic/mkt-growth-gics.jsp?cid=DFA:8076019:1329700:108138838:58757861

Over 3 years, maybe. Cheap trick. — Garth

#139 Vanecdotal on 09.11.14 at 3:30 am

#14 takla
#63 Kenchie

I can also corroborate what you’re saying in that in the lower Fraser Valley / Cloverdale / Langley area prices have been drifting down year over year for @ 3-5 years, depending on specific area. In our ‘hood alone a high percentage of the houses that sold during the most recent assessment year were assessed lower than what they sold for in the same year. (I look up local housing values when that info is available at the beginning of each calendar year). Some stayed essentially at the same assessed value for last 3 years, very few went up (only modestly). Some devalued by a very large margin (6 figures)! Yikes. I kid you not. Don’t believe the house humpers spin, it’s bs. When you consider tax assessments are by their very nature, inflated in value, I feel bad for those recent buyers. There has been some ping-pong list pricing, same as with the assessments, but the macro outlook was sideways, and now trending down. I also know people in Maple Ridge that were lucky to unload their sfh just off the peak couple years ago, and it took a while to do so. Values falling steadily there as well year over year. Know other folks in Langley that bought in recent years and are likely already underwater and can’t sell “for their price” despite listing off & on for couple years. They seem resigned to being reluctant landlords as they want badly to move. Honestly the only stubbornly sticky pricing I see anymore is on new build construction (developments and sfh’s), they seem to have their head in the sand. Have seen many $ million+ homes on & off the market over 3 years now, these properties are unsold. The ones that eventually have sold have adjusted their pricing waaaay down.

#140 broadway skytrain on 09.11.14 at 4:08 am

does anyone actually believe rates will actually rise more than 1.5 to 2% higher than today’s?

even if they do jump 2% a mortgage going 3.5 to 5.5 three years from now, in an improving econ/job mkt, the most stretched 500k mtg, no equity ex-virgins will have to come up with 5-10k/yr to cover the new payments. if they are not making more pay in a few years later(as most young do) and cant cover it, then they will make a sacrifice – used car/staycation/quit smoking/east at home etc and keep the house. no crisis. not even close. defaults will remain at/near zero.

if the value drops, they wait for a while, cdn urban land will always recover, just like profitable businesses.
condos will fare worse.
———————————

old gringo – another country where $3000 gets you a house with a pool, cabana…

donde this sweet casa , jalisco perhaps?

#141 I'm stupid on 09.11.14 at 6:09 am

#118 Cash-hater

Why didn’t she become at teacher? 81k a year is considered a middle class salary. Do you think teachers don’t deserve to belong to the middle class? The reason ece’s get paid so little is because they are only qualified to teach jk/sk.

#142 Bob Rice on 09.11.14 at 7:46 am

Let me first remind others that I am a renter. I invest in a balanced portfolio and I am a diligent saver. But, if there are folks out there waiting for a crash in places like the GTA, I think you can forget it. Best case, a slowdown or levelling off might occur. Rates are going to remain rock bottom and people are just too house-horny to change the mindset. My reasin for not buying right now is mainly based on the fact that I have not yet reached my savings goal of putting down at least 20% (preferably 25%) while still having at least 20K in the bank for the type of house I want to buy. At the same time, we continue to put money aside for retirement investments. Onwing a home is vilified quite bait on this blog. There should be a more balanced view. Owning a home, over the long term, is a very sound investment. Over the long term, houses do go up, even though there can be corrections along the way. So if anyone tells you otherwise, they have vested interests at stake. I am very happy to rent at this time. It’s reasonably priced and in a great location. BUT, there are limitations renting that have aggravated me over the last couple of years. We cannot make alterations to the home (for instance, our backyard deck is not that usable). Landlords will paint your home if you’re lucky and do basic repairs. But they won’t make wholesale improvements to your living arrangements. Sure, you can move but where I live (suburban GTA), good rentals are scare and not cheap! And moving is a pain in the arse, especially when you have a wife and young children and all the stuff you’ve accumulated!

Renting is a good option at certain times of your life (for e.g. if you need to sell at an elderly age to take advantage of the huge equity you’ve built over the decades of you’e owned). Renting is not a good option (or a smart one) when you’ve settle into a community and you have no desire to constantly move every few years.

Like Garth says, it’s all about balance – balance has multifaceted implications.. it’s not just a dollars and cents thing.

#143 Londoner on 09.11.14 at 7:50 am

No reason Jr. has to be relegated to the basement. It can be converted into a rental suite and he can move back upstairs. The daughter can get a roommate.

#144 Bob Rice on 09.11.14 at 8:01 am

Boomers aren’t necessarily about to downsize and sell those nice detached homes in the burbs…

http://business.financialpost.com/2014/09/10/why-the-boomers-may-not-leave-home-as-fast-as-we-think/

Surveys have consistently shown a third to a half of this cohort realize they have little option but to sell and rent or downsize. Plenty enough to impact the market in a large way. — Garth

#145 Rob Ford's Colonoscopist on 09.11.14 at 8:04 am

DELETED

#146 Rob Ford's Colonoscopist on 09.11.14 at 8:09 am

DELETED

#147 Rational Optimist on 09.11.14 at 8:09 am

My initial thought about Pete is this: the kid in the basement is a huge albatross, but eventually he’ll stop weighing him down when he meets someone and starts his own family. But Pete himself didn’t have a kid until 42, so God knows how long his kid will take.

#148 Kenchie on 09.11.14 at 8:51 am

Ahh, yes.. so many people mention that the end of USD hegemony as a reserve currency is nigh, because China! China is a beacon of economic stability in a profligate world!

Oh, wait. Maybe she ain’t..

http://www.bloomberg.com/news/2014-09-10/speculators-go-online-chasing-profits-as-home-prices-drop.html

#149 Kenchie on 09.11.14 at 9:06 am

For those who wonder if they are saving too little, please play around with this infographic. (will require to you write down the categories, etc). It’s an easy way to visualize your saving ratio.

I scored 31. See how well you did.

http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/real-life-ratio/article17580588/#dashboard/follows/

PS: Lower the better.

#150 rosie "moving forward" in the knowledge that, "this won't end well" on 09.11.14 at 9:09 am

Gergen only says nice things about his past employers. Quite a list.

http://en.wikipedia.org/wiki/David_Gergen

#151 crowdedelevatorfartz on 09.11.14 at 9:16 am

@#30 Non Econ
It’s easy to sneer when you weren’t born in the 80s or 90s….

++++++++++++++++++++++++++++++++++++

Did you REALLY say that?
What a maroon
Would you like some cheese with that whine?

I have a friend who’s 34 year old son is a self made millionaire. He got his electricians ticket , started his own company, worked his ass off and now he’s rolling in money.
Grow up.

#152 Don't even think it on 09.11.14 at 9:19 am

#124 Carpe Diem

A typically skewed Gen X view:

“I communicate to my kids (under 10) that I’m saving for their education”
-Thinks that paying for their kids education (And telling them so when they’re nine!) is going to toughen them up.

” If they are not in a top University, they get no funding.”
-Thinks that mere attendance at a “top university” is the be all and end all for financial success. Daddy GenX judges what is a valuable life. No entrepreneurs allowed, only specialized worker bees.

“U of Tokyo is where he should go for robotics”
-Thinks that the grass is greener because it’s so much more expensive than going to a local university.
As if anyone cares what U you’ve been to, after your second job. Obviously, GenX still on his first job.

” not on meds since his IQ is above 97%-tile”
” The school system can’t keep up with him”
Putting aside the thinly veiled boasting about their progeny:
-Thinks that a high IQ can actually overcome a mental disease? Some highly educated people assume that because they have spent years gaining expertise in one field, that they must be savant in all. Of course their huge time investment in a narrow interest ensures that the opposite is true. Admittedly not just GenX hubris, but they are particularly good at it.

“24 year old in the basement should be studying for his Master degree by now or should be out the f’ing door.”
-Words that will come back to haunt a GenX with kids.

And that the ability to spend more in one day than 99% of the world earns in a year is the only goal worth pursuing

#153 Kenchie on 09.11.14 at 9:44 am

#128 Ayn Rand Army on 09.11.14 at 12:28 am
“#113 Kenchie on 09.10.14 at 10:57 pm
PS: I’m a pure-breed capitalist.

No you’re not, you’re a total Kenchie the commie….”

Lol, you didn’t even get his time of death right! Haha

You, clearly, have no idea what the definition of fascist or communist is (even though you have read what Ayn Rand warns about). Keep speaking in sound bites, it really improved your credibility…

If you are so efficient at filling in pot-holes, start a company to do it! I’m sure neighbourhood associations will pay you to fill in pot-holes! If you’re such a beacon of capitalism, why haven’t you done this yet? Maybe no one will pay you for your time at the value you want? Maybe you would be poorer doing that, and anyone else who tried, than if you continued doing what you currently do? Maybe the people currently doing pot-hole filling are acting in their own self-interest by attempting to keep you out of the industry? They would definitely be following Ayn Rand’s POV of that acting in their own self-interest is best for society. (FYI, theory of opportunity cost was thought up by ASOE)

PS: I’m not talking about the value of “real work” having value as being wrong. There is much more to ASOE than “real value” of work. The main problem I have with ASOE, in general, is the fixation on hard currency as being superior than a market-based floating currency. How can they profess to be market-fundamentalists but be supportive of an inflexible exchange rates (fixed to gold) and despises price discovery on exchange rates? They can’t, it’s called cognitive dissonance.

#154 luc on 09.11.14 at 10:06 am

C.D. Howe recommends new RRSP contribution rule. Read here… http://www.ctvnews.ca/business/consider-changes-to-rrsps-before-provincial-pension-plan-says-c-d-howe-1.2001851

#155 Grantmi on 09.11.14 at 10:19 am

If Pete and his wife were Canadian Italians… their troll in the basement would probably be 35 not 25 years of age.

#156 maxx on 09.11.14 at 10:21 am

#16 Shawn on 09.10.14 at 6:44 pm

“….A 21% savings Rate three decades ago?

How long was it over 20%? The better part of a Monday morning?

I suspect is was some kind a statistical artifact. With 18% interest rates people were killing themselves to pay down chunks on mortgages and that was probably counted as “savings”.

I was around back then and we had high inflation and high unemployment (stagflation) and there is just no way the AVERAGE savings rate was really 20%.”

Agree. However, some, after having dealt with those horrendous mortgage rates, did indeed save that and much more.

It is possible to save at least as much as you pay in taxes to government.

As for “savings”, debt of all kind absolutely needs to be paid off in order to earn the privilege of saving.

Tightening ones belt in youth pays huge dividends later in life.

This, of course, falls on deaf ears for the most part, as most feel entitled and live with little thought for the future.

Strikes me that savers are amongst the most optimistic in society. They truly believe that there is a future to save for.

#157 45north on 09.11.14 at 10:22 am

Catalyst : in response to Transplant : I can’t help but roll my eyes when a boomer starts rambling about how they supported a mortgage, wife and 2 kids by 25 and today’s young folk are just lazy. The ignorance is very prolific and very frustrating.

first an aside:
Cha Ching : The older generation that complains about the youth of today are basically saying that they were shitty parents.

pretty funny but the point is the link between generations is parent-to-child – the strongest link there is.

I am the same generation as Transplant and Andrew Woburn and I could try to describe the 50’s but nothing can replace the visceral understanding the child gets from his parents. Nothing.

so Catalyst, you are right about being forced to have 2 incomes to survive with 1 or no kids and a shoebox in the sky. Not absolutely but there is a force in that direction. But what about your parents? When your father came in from work, tired but grabbed a disk cloth – didn’t that somehow communicate some perspective? Or when your mother spent the whole day looking after a house full of sick kids – didn’t you see her?

#158 GTAHouseHunter on 09.11.14 at 10:28 am

Great comparisons across Canada. However GTA seems to be totally out of sync. with these price drops.
The Great Suburbs Mississauga/Brampton/Markham/Pickering/Ajax/Vaughan seem to have a price increases slowly and surely.
What’s your take on that.
Listings in these areas are selling way more than the listed price.
Can you share data from these Suburbs ?

#159 Holy Crap Wheres The Tylenol on 09.11.14 at 10:42 am

Oakville-Milton: “According to figures released today by The Oakville, Milton and District Real Estate Board (OMDREB), the number of all property sales decreased by 7.7% in August compared to the same period in 2013. Monthly property sales totaled 637 compared to 690 in August 2013. The dollar volume of all property sales decreased in August to $299,325,753 from $320,801,577 in August 2013 – a decrease of 6.7 per cent. Oakville’s median sale price for the month of August was $682,500, an increase of 8.5% compared to August 2013. The median sale price in Milton was $454,250, a decrease of 3.5% compared to the same time last year.”
____________________________________________

In my neighborhood the sales have been flat as far as I can see. I really don’t study the charts I just watch the neighbors home go up for sale and gauge how long it takes for them to sell. I always ask them if they go what they wanted in $$. Generally they get asking $$ or more. Quite a lot of the homes here though are in the 40-50 year old range, quite spacious bungalows and two story’s. What happens 99% of the time is a developer buys them out, boom wrecking ball, fences around the trees, cart away the demo, raise the ground, punch foundation, and voilà McMansion! The home value has gone from $1.2M to $3-8M. Who the hell buys these places? It always looks like young 30-40 year olds are the buyers. Two incomes, blah, blah, blah, BMW, Mercedes, dragging a couple of kids off to Appleby College. I have the income and resources to purchase these homes but I’m not that stupid! Just old and cranky perhaps. Holy shit give your head a shake kids! Oh its going to be like shooting ducks in a pond when this goes bad. The winners will be the original developers who I’m sure will swoop in the scoop up the leftovers at pennies on the dollar.
Stay tuned, watch for the For Sale signs!

#160 mousy on 09.11.14 at 11:03 am

My two bits:
1.Sell the condo asap – it’s a money pit!
2.Son moves upstairs and basement rented out to supplement income.
3.See a tax accountant and make sure you are getting every break you are entitled to.
4.Dad gets interesting part time job – low pay doesn’t matter – just gets him out the door and gets some pennies in his pocket.
5.Target a date to sell home. Look what is out there to rent and make the plan.

No advice about making the kids pay, kicking kids out or whatever. Sometimes kids support their parents in other ways, ie. son and daughter take mom around town, companionship, help around house. Good luck.

#161 A Yank in BC on 09.11.14 at 11:11 am

So the G&M is now pumping RE in Richmond?

Selling Realtor describes this POS as “a little cream-puff..” Sold 31k over asking in 5 days. Good Lord.

http://www.theglobeandmail.com/life/home-and-garden/real-estate/richmonds-lowest-priced-detached-fetches-31000-premium/article20381304/

#162 NFN_NLN on 09.11.14 at 11:26 am

DELETED

#163 RexxRock on 09.11.14 at 12:04 pm

The moral end of the story is for the young to get a federal or provincial job.Theres gold at the end of the rainbow.Forget about the private sector,most of their pension plans suck big time.
I think the government can make big money by implementing a $25,000 fee for each government job for a great pension in return.Myself if I was 25 years old I’d pay over $50,000 for a job that pays a great pension.Time for the government to start charging people for this wonderfull reward for your retirement.

How is a 3K pension that you contributed to for 25 years ‘great’? You have low goals. — Garth

#164 Smoking Man on 09.11.14 at 12:11 pm

Wow, not one comment on the anniversary that changed everything.

A moment of silence for the victims and families.

Some very bad ass people in the world. Hopefully we can all stay off their radar.

Happy 911 people… OK that didn’t sound right..

Somber 911 no…

Shit I’m wordless.. What’s the correct thing to say.

#165 Shawn on 09.11.14 at 12:17 pm

EI cut is utter joke

Will cut EI from $188 to $1.70 per $100 of wages. For just two years and not starting till January.

So on $10 per hour job we are talking 1.8 cents per hour, 3.6 cents per hour saved on a $20 per hour job.

It will save $275 million per year spread over 780,000 small businesses. That’s whopping $353 per business per year on average.

It’s only for small business. Think of the cost to implement and monitor this.

It’s a ridiculous and costly joke.

If it applied to all employers and was permanent that would be better but still would not lead to any hiring to speak of.

It’s a farce!

#166 Shawn on 09.11.14 at 12:27 pm

Great Pension

From post 162…

How is a 3K pension that you contributed to for 25 years ‘great’? You have low goals. — Garth

*****************************************
$36 k per year pension is not too shabby.

According to the rule that you can only take 4% out of a portfolio, that equivalent to about $900k in an RRSP.

FAR more than average.

Yes some of us aspire to be 1%ers and at least 10%ers. But a $36k per year government pension for life is not bad and probably puts this pension in at least the top 20% earnings bracket for seniors.

And what about a couple with two government jobs and two of these $3k per month pensions?

Rexx is correct that a 25 year should be prepared to buy a government job for $50,000 if it was possible to do so. In fact it’s worth far more than that.

See what a sucky idea your RRSPs are? Thanks for proving it. — Garth

#167 pbrasseur on 09.11.14 at 12:35 pm

Nice french touch Garth!

Makes you look sophisticated, good to wipe out the bearded Harley image :-)

Wait until you hear my Croatian. — Garth

#168 realitybytes on 09.11.14 at 12:37 pm

A little over 3 years ago I was feeling sorry for my financially illiterate boomer mother and step-father. They had a crap credit rating and no money and didn’t want to live in an apartment. So I cashed out RRSP’s to put a down payment on a house in the Maritimes. They essentially became my tenants. Knew it wasn’t a financial investment, but a family one. Now they want to retire and won’t be able to afford even the subsidized rent and utilities.

The market there sucks, so selling the house at a loss and they’re moving into my Aunt’s basement. I’d keep renting to others, but the place needs new roof, windows, furnace, and general updating in the next 1-3 years that I don’t want to absorb. If you count opportunity costs of lost investment and subsidizing their rent, this has cost me about 20K. They’ve been appreciative and I love them; I’d do it over again. But their place in life after all the opportunities they’ve had makes me cringe.

There are a million exceptions for every stereotype, but as a whole, I’m fed up with the boomers. The wasted years of economic growth, resistance to reality (i.e. climate change), and just general selfish thinking. I plan to do my utmost to make sure my kids don’t feel the same about my generation some day.

#169 Flawed on 09.11.14 at 12:50 pm

How is a 3K pension that you contributed to for 25 years ‘great’? You have low goals. — Garth

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

1. Its three thousand more than MOST Canadians get.

2. He didn’t contribute to most of it. Taxpayers did. The ones that DON’T get a pension. And even the part he did contribute to came from tax payers as its tax dollars that pay his salary.

Government, and the people who serve you through it, are not the enemy. Your comments are vacuous. — Garth

#170 Blacksheep on 09.11.14 at 12:51 pm

Just heard about this on CBC.

“The finance minister (de Jong) also included raising sales tax to 7.5 per cent or a $200 increase to school property tax as options on how the BCTF $300 million binding arbitration could be funded.”

Now, I’m no fan of global or government for that matter, but I absolutely hate the idea, of any tax increases.

The era of the exalted repeater (teacher) is waning.

Indoctrination is not enough.

#171 Blacksheep on 09.11.14 at 12:56 pm

Link for above De jong comment:

http://globalnews.ca/news/1554746/b-c-teachers-strike-possible-cost-to-taxpayers/

#172 screwed on 09.11.14 at 1:01 pm

The loans against the properties are all money from nothing. That’s right. The banks produce the “money” behind the loans out of thin air. You all pay a fee, interest, premium whatever suits you on a big chunk of hot air.

Banks profits are climbing steadily. The profits are made off of your backs who take out the loans. The profits are affording a very good lifestyle to the upper echelon.

All central banks have coordinated their “efforts” to keeping interest rates low. They don’t need higher rates as the money from thin air allows them to have it all now anyway. They know, we know this.

It doesn’t matter what the ratio is. If they can create 10 Dollars for every 1 Dollar or 25 Euros for every 1 Euro in deposits. Doesn’t matter. Bottom line is that there is nothing backing the fiction other than your signatures and the “full faith” of the citizens declaring to accept it and pay it off. Whether this is private, public or corporate debt doesn’t matter either.

Central banks are walking a very tight rope. If one of them slips, they will all fall.

Why are governments, our elected officials not acting in our best interests and putting an end to this bondage? It’s not hard to figure out whose interests they are representing.

If you’re posting or lurking here, my guess is that those interests are not yours. If you think they represent you anyway, you are delusional.

Same as it ever was. This time is not different.

Banks do not create money ‘out of thin air.’ — Garth

#173 Setting the Record Straight on 09.11.14 at 1:06 pm

@45

“We bought a winter home in Phoenix…”

What are the tax implications of buying in the US?
How many days do you so spend in the
US each year? Do you spend enough time to have to file with the IRS? What happens if you sell or one spouse dies?

#174 Contrarian on 09.11.14 at 1:11 pm

Garth, why do you always cite adjacent month to month numbers when you know as well as anyone that there are seasonal variations?

Because they provide the most accurate snapshot of current market conditions. Lots of data posted here on longer trends. Try to keep up. — Garth

#175 Flawed on 09.11.14 at 1:17 pm

Government, and the people who serve you through it, are not the enemy. Your comments are vacuous. — Garth

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

Please tell us what you call a group of people providing very poor service to it’s citizens while stealing 60% of ones paycheck away. Your friend?

So move. — Garth

#176 Flawed on 09.11.14 at 1:23 pm

http://en.wikipedia.org/wiki/Central_bank

I guess Wiki has it all wrong. They reference “creating money” three times. Shame on wiki. Garth can you please contact wiki and tell them banks do not create money out of thin air? Thanks !!

#177 dangeresque2 on 09.11.14 at 1:25 pm

Anyone believe this, or is it just house pumping?

http://www.cbc.ca/news/canada/edmonton/edmonton-home-builders-working-flat-out-to-meet-demand-1.2763102

#178 Flawed on 09.11.14 at 1:25 pm

Please tell us what you call a group of people providing very poor service to it’s citizens while stealing 60% of ones paycheck away. Your friend?

So move. — Garth
***********************************

So now your saying that because of my fault of being born here I have to move because the govt can do no wrong by being so bloated and poorly run that it taxes it citizens 60%? Don’t you read the news? This is happening everywhere in the world. Where is everyone supposed to move to? The moon?

That would improve this blog. — Garth

#179 Mister Obvious on 09.11.14 at 1:33 pm

#167 realitybytes

You are fortunate to lose only $20K subsidizing your parent’s financial shortcomings in the Maritimes. Had you done the same thing anywhere here in Greater Vancouver you would probably be lighter by about ten times that amount.

#180 screwed on 09.11.14 at 1:56 pm

Banks do not create money ‘out of thin air.’ — Garth

They don’t? Then how come they can increase their loan supply? It’s coming from somewhere. The central banks will print it at the bank’s request. Maybe not even that.

Banks can leverage every Dollar in their deposits 7 ways to Sunday. They create paper to back the loans and then they create CDS to insure the loans. It really is all paper created from some group’s imagination but the bottom line is…

Money supply for loans is from thin air. Debt is money. Money is backed by debt.

The money supply is controlled by the BoC. The chartered guys do not create currency. — Garth

#181 Dogman01 on 09.11.14 at 2:14 pm

Dominoes Lining Up on 09.10.14 at 10:14 pm

You might be interested in this interview, seems to predict where the US is at.

https://www.youtube.com/watch?v=4PQrz8F0dBI

#182 screwed on 09.11.14 at 2:17 pm

The money supply is controlled by the BoC. The chartered guys do not create currency. — Garth

The charter gives them the right to create loans. They create loans at a ratio of 1:10 in Canada, 1:25 for some banks in Europe.

Who keeps track anymore? Doesn’t matter anyway. There’s no “sound” money anymore and maybe never was. Fighting windmills never made sense either.

Sucks to be house poor though which is the essential message of your blog.

#183 Son of Ponzi on 09.11.14 at 2:21 pm

The money supply is controlled by the BoC. The chartered guys do not create currency. — Garth
—————————
True.
However, through the Mortgage Backed Security scheme,
they create near infinite capacity to lend.

#184 FormerSaskie on 09.11.14 at 2:30 pm

I don’t understand why Pete thought this financial/housing situation would have a positive outcome, ever. He knew how much money he would have to live on when he retired and that a chunk of it would need to go to mortgage payments on two properties. It doesn’t appear that there was much money saved or invested during his working years so that cushion wasn’t going to be available. Why didn’t he sell at least one property before he retired? He needs get rid of his debts and get some advice from Garth about investing whatever money is left over after the mortgages are paid off.

I think a blog aimed at this kind of situation would be interesting, Garth. What the h*ll can they do to live. Not just survive.

#185 screwed on 09.11.14 at 2:39 pm

True.
However, through the Mortgage Backed Security scheme,
they create near infinite capacity to lend. – Son of Ponzi

Yes and those loans are less likely to get cancelled or called in as “unsecured” loans. The example during GFC and subprime crisis in the US has shown that banks can be very pliable in their loan modifications as long as some form of payment is made on the loan.

I know of two cases where loans were higher than house values after the crash and the banks played nice. The mortgagees basically dictated the banks what the conditions would be or no payment. Bank’s response is typically : Mr. Smith, how much can you afford to pay?

The mortgage loan paper is a bogus document. The banks don’t have a leg to stand on but they will not stop trying to evict the poor and uninformed. The reason why banks were sloppy in their documenting (robo signing) and gave out loans to everyone with a heartbeat was because they never thought to get into this default crises. Letting Lehman go BK set the wheels in motion.

How this is going to play out in Canada where mortgage debt is at unprecedented levels, mostly not due to a speculative market but due to housing demand is really anybody’s guess.

If the banks play nice, they could cut mortgage debt and seek protection from BOC. There’s no free market in play anymore to threaten a C$ and loan crisis which could catapult interest rates higher. The bond market is tightly managed and controlled by the central banks.

The US is slowing down again and we’re finally slowing down as well. The recovery is stalling everywhere and new and wider QE measures are on the table. Canada hasn’t really done much in terms of QE but it will have to or our strong Dollar destroys the export based economy. I could see Poloz lowering rates but what would that accomplish other than blowing up the RE bubble bigger? Prices and valuations keep going higher but the volume of buyers able to afford these prices is getting smaller. Like I said, there’s not much in terms of a free market and price discovery.

The tide doesn’t seem to go out really…

#186 Shawn on 09.11.14 at 2:54 pm

RRSPs Suck

I pointed out that a $36k per year pension is equivalent to $900k in an RRSP assuming the rule that one can take only 4% out of a portfolio starting at age 65 if one is not to risk running out of money.

Garth responded:

See what a sucky idea your RRSPs are? Thanks for proving it. — Garth

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

You are quite welcome. I only ever seek to provide the truth which I tend to back up with math.

My RRSPs suck? If you say so. But I thank taxpayers for allowing me decades of tax free growth on my RRSPs. Taxpayers have always basically owned 40% or so of my RRSP (which they contributed via tax refunds to me) and they will be pleased to know it’s going to be 40% of quite a large number.

I look forward to paying these massive RRSP tax bills in future. There are worse problems to have.

#187 Keep On Working on 09.11.14 at 3:00 pm

Sorry to add to people’s misery. Many people who think they going to keep on working as long as they want or need to are in for a rude awakening. People are forced to retire for many reasons – poor health (either their own or spouse), employer going out of business, employer lumping all of their older employees in one department and then laying off the whole department or transferring them to another location.

#188 Rexx Rock on 09.11.14 at 3:02 pm

Buy stocks on the dip.

#189 Mark on 09.11.14 at 3:05 pm

True.
However, through the Mortgage Backed Security scheme,
they create near infinite capacity to lend.

Not really. Every MBS, just like every mortgage that is held by a bank on their balance sheet, must be funded by a saver lending money or buying that MBS.

The only way that leverage exists in the economy is that there are people out there saving and willing to lend.

Securitization is just a question of packaging and semantics. Not a fundamental alteration of the economic transaction of lending or borrowing.

#190 Smoking Man on 09.11.14 at 3:34 pm

So my wife is getting anoid with me, I’m spending to much time on my book.

I suggest she write one about her retarded family. She thinks it a great idea. But not sure where to start.

So I write the leed in.

We had enough, it was Xmas and my husband after consuming 26 ounces of Jack Daniels, fearlessly stabbed my entire family into the eye sockets with a vicious ice pick of truth. It was posted on Face book for the world to see. Our lives will never be be the same. We will never see them again.

It’s true, money changes people. My life started out perfect……. Then…..

(There’s your lead in sweet….)

She’s got 100 pages done from this morning alone.. Damn. It took me one year for the first 50 pages.

#191 Nemesis on 09.11.14 at 3:38 pm

#JuxtapositionalMischief… #NoMoonCakesForYou!… vs. #WokInKitchens…

[SCMP] – 16,000 Chinese factory workers strike after receiving ‘banana and chicken’ holiday gifts

http://www.scmp.com/news/china/article/1590104/16000-chinese-factory-workers-strike-after-receiving-banana-and-chicken

[SCMP] – Cash from China drives Vancouver’s prime property market to new heights

“It’s all about status,” said Sherry Chen, a realtor with Rampf-Anderson Real Estate Group, who deals mainly with wealthy clients from mainland China…

http://www.scmp.com/news/china/article/1590114/cash-china-drives-vancouvers-prime-property-market-new-heights

[NoteToGT: I was originally going to take a different tack with the ‘Banana&Chicken’ piece… but demurred in the interests of propriety.]

#192 chapter 9 on 09.11.14 at 3:48 pm

#45 Snowboid
Bought some digs in Phoenix? You just bought an admission to the U.S. tax system. Hope you have done your homework!!

#193 Holy Crap Wheres The Tylenol on 09.11.14 at 3:51 pm

#163 Smoking Man on 09.11.14 at 12:11 pm
Wow, not one comment on the anniversary that changed everything.
A moment of silence for the victims and families.
Some very bad ass people in the world. Hopefully we can all stay off their radar.
Happy 911 people… OK that didn’t sound right..
Somber 911 no…
Shit I’m wordless.. What’s the correct thing to say.

____________________________________________

The correct thing to say is Rest in Peace all of the 3000 or so innocent souls that lost their lives to the madness and disparity of some unlearned malevolent individuals. Evil that permeates and creeps into our lives from such despots shall not traverse into our freedom and right to exist, as we desire. We can remember those, whom perished by cherishing the fact that they lived, breathed, loved and were here. While the evil that took them we will throw their memories to the wind forever!

#194 Blacksheep on 09.11.14 at 3:56 pm

Screwed # 171,

“That’s right. The banks produce the “money” behind the loans out of thin air. You all pay a fee, interest, premium whatever suits you on a big chunk of hot air.
————————————–
I too, previously viewed the banking system much like you describe here (less vitriol) But I believe I found a healthier way to view this interaction.

Bob is selling his home. John wants to buy it.

John only has 10% of $ required to purchase Bob’s home. John could offer Bob the 10% down, and ask for him to personally finance the loan. He could explain how good his credit is and how many loans he’s paid off in past.

John would give Bob, personal I.O.U.’s guaranteeing payment.

Now if Bob was very wealthy and John was his brother, this arrangement could work. But Bob and John are strangers, so Bob does not trust him enough to take his I.O.U’s.

This is were the bank comes in. John has a long history of reliably paying his debts with the bank. The bank offers to act as a go between in this transaction and take the risk of repayment from John, over a multi year period, in exchange for a fee and some interest.

Bob will gladly take I.O.U.’s from the bank in payment for his home because he knows bank I.O.U.’s will be accepted to purchase goods everywhere.

Think of the bank as simply applying a STAMP of APPROVAL on John’s personal I.O.U.’s, so that Bob is comfortable taking them in exchange for the sale of his home.

You point out banks, create I.O.U.’s ($) out of thin air. Remember, when the I.O.U’s ($) are is paid back to the bank, they also disappear, into thin air. It’s simply ledger entry’s.

Banks facilitate transactions, for a fee. That’s all.

#195 jet black on 09.11.14 at 3:56 pm

The really sad thing is that Canadians have to have at least 2 million set aside to generate 3 grand a month for this loser. Think of the millions of other civil servants who have suckered the tax payer into subsidizing their sorry lives….and how much tax revenue is dead money. How many new schools could be built, roads paved etc…..? If we could only cut this bunch off at the knees and make them put up like every other Canadian has had to do. If there are any young people reading this…they should make cutting these leaches off the backs of the taxpayer if they’re ever going to want to improve the Canadian standard of living. It’s not too late for this generation to act…but hopefully the next will be smarter and ciciv service unions will be something their kids have never heard of.

Those who serve you – from doctors to teachers to cops, soldiers, paramedics and IT guys – are not leaches. Nor does your generation have the corner on any special insight or morality. If you want to change the system, get elected. Sadly that involves real work, expense and risk. It’s easier to blog. — Garth

#196 Holy Crap Wheres The Tylenol on 09.11.14 at 4:01 pm

#189 Smoking Man on 09.11.14 at 3:34 pm
So my wife is getting anoid with me, I’m spending to much time on my book. I suggest she write one about her retarded family. She thinks it a great idea. But not sure where to start. So I write the leed in. We had enough, it was Xmas and my husband after consuming 26 ounces of Jack Daniels, fearlessly stabbed my entire family into the eye sockets with a vicious ice pick of truth. It was posted on Face book for the world to see. Our lives will never be be the same. We will never see them again. It’s true, money changes people. My life started out perfect……. Then….. (There’s your lead in sweet….) She’s got 100 pages done from this morning alone.. Damn. It took me one year for the first 50 pages. _____________________________________________ Smoking Man you just told us your wife went to some Price is right show so obviously she has no problem with sister? All is good with the family.

See below??????????????
#50 Smoking Man on 09.05.14 at 9:11 pm

Home alone, with no one counting my drinks. My master plan executed with precision.
Bought the kids hotel rooms so the can entertain there honeys with Chinese food and what ever the young like to do.

“Wife poo at the price is right with sister. “

#197 Flawed on 09.11.14 at 4:10 pm

The money supply is controlled by the BoC. The chartered guys do not create currency. — Garth

The charter gives them the right to create loans. They create loans at a ratio of 1:10 in Canada, 1:25 for some banks in Europe.

Who keeps track anymore? Doesn’t matter anyway. There’s no “sound” money anymore and maybe never was. Fighting windmills never made sense either.

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

Well that’s a matter of opinion on sound money. Bitcoin does not allow for “unlimited to 1” fractional banking. The inflation rate is small, measurable and mathematically controlled so it cannot be corrupted or co-opted like the current hierarchical models of central banking. And it has mathematical rules that are impossible to break unlike “ambiguous regulations” for central bank money that is “enforced” if your some young punk and “not enforced” if your HSBC laundering drug money (usually US dollars).

#198 elrowe on 09.11.14 at 4:12 pm

Lots of Millennial and Gen-X whining, but also good solid reality checks. I try to remember that we can all learn from one another if we really listen.
My parents strove to provide my younger sister and I with a typical 1950s upbringing. The problem: it was the 1970s. When as a teen in 1973 I told my parents I was having friends over to play some records (meaning we were going to smoke a doob and listen to Zeppelin) they thought I meant we were going to put on a stack of 45s and teach each other the latest dance steps. They had the chips and pop ready for us and my dad even moved the furniture in the rec room to make more space for us to dance. No we didn’t dance but we did have lots of room to sit on the floor, and the chips were certainly welcome ;-) … the moral is that it’s different yet familiar for each generation. The technology changes, what’s desirable changes, what’s smart and what’s stupid even changes. The only thing we can count on with any certainty is that none of us know what the future holds, not now and not back when some believe the streets were paved in gold and that the Boomers pissed it all away. Every winner of any age and at any point in time has to play the hand they’re dealt; never in the history of mankind has anyone ever been able to get in the game and much less win it by blaming others and demanding compensation because their other demands are not being met. I would think that if one were to express that attitude in face to face encounters it would lead to one’s face meeting a lot of fists. Just a guess on my part, based on my own likely reaction.
I’m so glad that this kind of attitude is limited to a small (but unfortunately vocal) minority of young people. I’d be afraid, very afraid of spending my last years in the world that would be one day if these apparently very spoiled very angry dangerously self-centered people were the norm.

#199 Dominoes Lining Up on 09.11.14 at 4:13 pm

Good news:

Gold may be a good investment after all.

If you can make shields out of it. To protect yourself from pitchforks.

We are so screwed. :(

The real estate collapse will just be part of the mess we are walking into.

http://www.huffingtonpost.ca/2014/09/11/wealth-inequality-canada-broadbent-institute_n_5805674.html

#200 Mark on 09.11.14 at 4:14 pm

The problem with RRSPs isn’t so much micro in nature, but rather is macro. RRSPs have allowed investors to substitute, and bid up debt, relative to equity. As they remove the disincentive to invest in debt relative to equity.

Fortunately this has created a situation where equity in Canada is abnormally inexpensive relative to debt. Thus, over the next 30 years, pretty much guaranteeing an abnormally large equity risk premium. To make up for the lack of an equity risk premium over the preceding 30 years.

Housing finance has also been a beneficiary of the RRSP, for the same reasons — lots and lots of fixed income in RRSPs.

#201 Kenchie on 09.11.14 at 4:19 pm

“How Keynes became a dirty word”:

http://www.bloombergview.com/articles/2014-09-11/how-keynes-became-a-dirty-word

#202 Dreez on 09.11.14 at 4:22 pm

Y’know…me thinks Mark is Smoking Man when sober…

:D

#203 Transplant on 09.11.14 at 4:25 pm

#92 Catalyst response to #86 Transplant:

Please point out any reference to my characterizing the younger generation as being lazy. I did, however, acknowledge the hardships and challenges it is facing.

I agree with you though-“the ignorance is very prolific and very frustrating”.

#204 tkid on 09.11.14 at 4:25 pm

Advice?

Kick daughter out of condo. Move into condo. Sell house. Get fee based advisor to invest the profits.

If daughter wants to keep condo, she can buy it from you at 380. Maybe son wants in on condo also; he and his sister can go halvies on a mortgage.

#205 Nattie on 09.11.14 at 4:34 pm

& #30 #50

Actually no, it is disgusting for a 24-year-old to be living with family and not be paying market room and board cost. (with the exception of a disabled individual, in which case it’s depressing that social assistance isn’t able to pay the parents that.)

And I’m not a cranky old person, I’m 26. While of course I acknowledge that I benefit from white/cis/ability priviledge, my background is pretty average: immigrant blue collar dad and stay at home mum. I haven’t lived with family since I was 18, I graduated university without loans, and have a decent job in my field of interest. How? I’m no smarter or more skilled than the average 20-something. I just have a decent work ethic and am okay with managing my money. There are plenty of jobs out there for millenials – since 2006, I’ve lived in BC (including Vic), ON, PQ, and AB. Instead of going to the bar or taking a reading week vacation to Europe, I worked 30+ hours a week (and 70 hours in summer) while I was a full-time student so I wouldn’t have loans. This had the benefit of improving my resume so that I was working in my field well before graduation.

It’s not rocket science, but I can think of so many people between 24-28 who live with their (middle-income) parents for free while taking multiple gap years before/after postsecondary perhaps while grudgingly working part-time jobs. That said, I went to a low-income high school and I can think of multiple friends who were paying household bills and assuming primary caregiver roles of younger siblings well before they turned 16. Quite a few of these actually went onto university or trade school (while still assuming those household responsibilities) and experienced great financial success for themselves. This makes me even more judgemental of people like Pete’s kid.

#206 Funny that on 09.11.14 at 4:46 pm

#32 David Lee on 09.10.14 at 7:24 pm
3rd attempt @ #153 Mark (yesterday’s post):

“They talk as though a housing correction hasn’t even begun. Even though evidence of such having been in progress for more than a year now is quite abundant”.

Again: not a challenge, just looking for some help in Vancouver.

Please point (e.g. by providing links) to where you are getting your data from such that you can say that evidence is quite abundant.

Any help would be appreciated.

Thanks,
+++++++++++++++++++++++++++++++++

So there you have it folks.
Mark annoyingly replies to a dozen or more posts every single day. Even posts where he is asked to please not post his unwanted opinion. Actually he doesn’t reply to posts he voices his opinion on just about every subject matter that one can think of. He is just that smart!
But above you can see a post actually asking for Mark to reply and ……….. crickets.

So Mark please put up or shut up.
Here again is the request.—Please point (e.g. by providing links) to where you are getting your data from such that you can say that evidence is quite abundant.

#207 Funny that on 09.11.14 at 4:47 pm

#32 David Lee on 09.10.14 at 7:24 pm
3rd attempt @ #153 Mark (yesterday’s post):

“They talk as though a housing correction hasn’t even begun. Even though evidence of such having been in progress for more than a year now is quite abundant”.

Again: not a challenge, just looking for some help in Vancouver.

Please point (e.g. by providing links) to where you are getting your data from such that you can say that evidence is quite abundant.

Any help would be appreciated.

Thanks,
+++++++++++++++++++++++++++++++++

So there you have it folks.
Mark annoyingly replies to a dozen or more posts every single day. Even posts where he is asked to please not post his unwanted opinion. Actually he doesn’t reply to posts he voices his opinion on just about every subject matter that one can think of. He is just that smart!
But above you can see a post actually asking for Mark to reply and ……….. crickets.

So Mark please put up or shut up.
Here again is the request.—Please point (e.g. by providing links) to where you are getting your data from such that you can say that evidence is quite abundant..

#208 Smoking Man on 09.11.14 at 4:51 pm

#195 Holy Crap Wheres The Tylenol on 09.11.14 at 4:01 pm

Dude the reason I blew of the rest of the family off is cause the one sister she went to price is right with is the one who wasn’t invited to Xmas dinner.

She a bit nuts, but that’s what I love about her.
Plus she’s got two great kids, and they were not invited.
Alpha chic, Newvo Rich is playing the others like toy dolls.
Sticking to watch others suck up. Plus I’m richer than Newvo, that’s probably my problem…

#209 Keep On Working on 09.11.14 at 5:12 pm

I agree that teachers should be paid a decent wage. Divide their current annual salary by the number of months they work (approximately 9) and that is what they should receive. There is no physical aspect to their jobs that prevents them from working until 60 or 65 so they should not be able to retire at age 52 with 30 years of service.

#210 common sense on 09.11.14 at 5:50 pm

Let any civil servant retire whenever they want…just make sure that there are no after work subsidies paid for by the taxpayer.

“there is no physical aspect to their jobs that prevents them from working until 60 or 65 so they should not be able to retire at age 52 with 30 years of service.”

Civil servants should save like every one else or pay the same consequence. With civil servants making double to quintuple the average persons wage….the DB pension is a travesty.

#211 Kevin Unfortunately in Winnipeg on 09.11.14 at 6:09 pm

Not one Winnipeg news agency covered the dismal August real estate news. Sorry, Metro did. Last month, every paper had a story about the “record breaking” July. We know who runs the papers now.

#212 screwed on 09.11.14 at 6:21 pm

#193 thanks for taking the time to respond

If money out of thin air was to disappear back into thin air how does the vast expansion of the US Fed balance sheet or the US.gov balance sheet over the last 5 years fit into the narrative? We can also stick with the Canadian example of the ever increasing debt and ever decreasing savings ratio.

Still, bigger and bigger loans get written as savings rates decline

@ #188 Mark …. see the problem with your explanation that MBS are supposedly all backed by savings?

#213 Kenchie on 09.11.14 at 7:15 pm

#210 screwed on 09.11.14 at 6:21 pm
“#193 thanks for taking the time to respond

If money out of thin air was to disappear back into thin air how does the vast expansion of the US Fed balance sheet or the US.gov balance sheet over the last 5 years fit into the narrative? We can also stick with the Canadian example of the ever increasing debt and ever decreasing savings ratio.”

Some regional Fed Reserve presidents want to shrink the Fed’s balance sheet back to a “normal” level. However, supposedly, it will take up to 20 years after they start raising rates!

The “Canadian example of the ever increase debt” is just a couple of calculations to determine how much one can borrow. If rates rise, as many people expect them to in the coming year or 2, then there will be downward pressure on the maximum approved mortgage banks will be willing to give. The calculation doesn’t change, whether it’s 1982 (double-digit rates or 2014 (low rates).

As for the savings ratio, that’s not governed by anything other than people’s self-discipline and fiscal responsibility.

#214 Snowboid on 09.11.14 at 8:12 pm

#191 chapter 9 on 09.11.14 at 3:48 pm…

Actually we did our homework and are well aware of the requirements. Simple process, just file a f8840 with the IRS and stay under the maximum days allowed.

BTW, the RE search and purchase process was infinitely simpler than any RE transaction in BC, and far less expensive.

#215 Whut? on 09.11.14 at 11:35 pm

Catalyst on 09.10.14 at 6:11 pm

A lifetime as a government worker (likely over $100K income with CRA) and no savings beyond lucrative pension. A public sector worker would need a portfolio worth $720,000 yeilding 5% per annum to attain the same.
No sympathy here, signed public sector worker.
—————————-

A public sector worker is a government worker.

#216 Carpe Diem on 09.12.14 at 12:08 am

#124 Don’t even think it

Actually, I’m teaching my kids long term financial planning, buy low, sell high and that money they save in the bank (monthly) will someday be used to buy some preferred shares so they make more than having sit idle in a bank account. I remember my dad teaching me early so I’m passing down the knowledge.

I have my own corporation and have sold a startup. Don’t talk to me about entrepreneurship. Actually, the most successful entrepreneurs I know have a medical, engineering or commerce degrees.

Having a store dependent on people spending their debt and someone with a hammer sure doesn’t compare.

My kids show interests in subjects and I teach them everything about it – including the best schools in terms of research. You can’t put a price on knowledge. Treating your kids like idiots breeds just that!

School was boring to me, so I understand why it would be for my kid. I remember this one time the hot 5th grade teach completely made a fool of herself teaching everyone the wrong thing in Math. I challenged her and told her she had to get another teacher to to validate our argument. That cost me 6 months seeing a phsyc. I am not fond of the school system … but higher learning and research has its merits.

I’m very frugal and on a tight budget so we can retire well and my kids get out of school with no debt. I have no government pension and I’m sure the CPP will be dried up by the easy going boomers so Gen’xer should never depend on that.

#217 Aggie on 09.12.14 at 1:13 pm

I’d just like to give #87 Transplant a big Thumbs Up. Expectations have skyrocketed and certainly play a huge role in today’s sad situation for our so-called middle class.

#218 cash-hater on 09.12.14 at 5:48 pm

Chinese Buyers Fuelling Seismic Spike In Vancouver’s Housing Market (HongKouver)
http://www.cireport.ca/2014/09/vancouver-chinese-buyers-fuelling-seismic-spike-in-vancouvers-luxury-housing-market-realtors-say.htmlmore-17797