Screwed

TUNNEL modified

What a drag it must be being a millennial. When the GFC rattled the world, you were in college. When the dot-com bubble exploded, you were in high school. When the last serious recession hit, you were in Huggies. When financial apocalypse erupted 27 years ago Sunday, you were an urge.

So how can we expect you to have any real context for all of this angst? Suddenly a lousy job market and temporarily inflated house prices have created a crisis that makes WW2 look inconsequential. Worse, it’s all a seething conspiracy.

Well, that’s the way they’re feeling at The Tyee these days, an online journal for the youthful, oppressed underclass that, astonishingly, uses the word ‘screwed’ more often than this pathetic blog. Days ago, readers lapped this up:

“Vancouver has morphed into a machine for screwing millennials.

“Unless we do something drastic, we will have deprived that generation of productive 20- to 35-year-olds the ability to own a house in Vancouver. If you think that’s no big deal, consider this: each person shut out of affordable home ownership in Vancouver is consigned to the screwed side of the increasingly widening global wealth divide.

“That’s right. Vancouver’s perverse real estate market is a textbook example of the suddenly fashionable realization that the rich are getting way richer at the expense of an evaporating middle class.”

Now, there is some logic to lamenting the middle class. The demise of the middle is obviously happening, a phenom best illustrated by American society, where just 1% of the people control 37% of the wealth, and the average family has saved only $25,000 for retirement (or anything else). But there’s one overriding reason for this. Real estate. American families bet big on housing, and they lost spectacularly. It’s estimated that $6 trillion was wiped away when real estate values collapsed an average of 32% – and most of that slipped through the fingers of middle class households.

Ironically, while American millennials have seriously backed away from home ownership, Canadian puppies can’t get enough of it – and feel, yes, screwed when a person in their twenties is denied a house. Simply because they can’t afford it. How awesomely unfair is that?

Despite watching the meltdown south of the border (if any of these whiny kids were paying attention), plus the way real estate has decimated wealth in many European countries, along with deflationary threats and the risk of borrowing a mountain of mortgage money, they’re still horny. Can’t help it. They see houses as wealth. Evidence be damned.

So, society is “depriving” millennials of real estate ownership thereby pushing them into the screwed side of the wealth divide. It sounds like a human rights violation, and the push is on to find solutions – like (as the Tyee author suggests) carving up existing houses into micro-units that the kids can afford. I think we used to call those  “apartments.”

But here’s the deal. Somebody with credibility (and that’s not a Boomer blogger with a titanium leg and penchant for Harleys and Amazons) needs to keep a generation of horny millennials from self-destruction. Just this week another alarm was raised. Giant ratings agency Moody’s affirmed Canada’s good credit standing, but said our housing is “particularly inflated” and the ever-increasing debt load of the middle class is a risk that cannot be ignored.

“This combination presents a potential risk to the banks and to the federal government directly, as it guarantees a considerable portion of mortgages,” said the report – as Moody’s joins fellow rating company Fitch, plus Morningstar, The Economist, the IMF, the World Bank and other international observers who think we’ve flipped. And now that oil prices have fallen, imperiling one of the country’s major export industries, while the dollar has tanked, how can young people think housing is safe? Why would they want the debt, potential illiquidity and likely losses?

Simple. They don’t believe it. The generation these kids hate and blame did an excellent job in brainwashing their offspring. Nick Nanos knows that.

The pollster’s latest Canadian numbers are precious:

  • Those who believe the economy is getting worse: 83.7%
  • Those who do not feel better off financially: 80.2%
  • Those who believe real estate prices will rise: 40.3%.
  • Those who think house prices will decline: 10.6%.

How do you are argue with that? You don’t, of course. Because when most people think something, it just has to be so. Today the majority of us, including our educated-to-the-gills young people, fail to make the connection between the stuttering economy and the one asset that depends on economic expansion more than any other. Without more income and more jobs, housing is doomed. No matter how cheap mortgage rates get.

Seems obvious to me. But I spent my youth growing hair.

162 comments ↓

#1 calgaryPhantom on 10.20.14 at 6:16 pm

“But I spent my youth growing hair.”

Are you talking about your beard?
That’s a slow growth rate.

#2 Randy on 10.20.14 at 6:19 pm

Love the pic…

#3 johnny d on 10.20.14 at 6:27 pm

So the solution is to carve up houses into micro-sections and sell them like that? That will just help lock in over-inflated prices and lead to some crummy housing conditions in the country with the world’s second largest land mass.

There should be a push to make housing cheaper by raising interest rates and tightening mortgage rules. Short term pain as things normalize for sure.

#4 Sideline Sitter on 10.20.14 at 6:28 pm

I remember 1989 well… it’s why I’ve been bearish on R.E. for the past two-three years. We lost EVERYTHING and I was just a teenager – I swore off R.E.

Of course, I grew up and bought in 2005, made a killing on my house when I sold in 2012, and now I patiently wait.

#5 Fred on 10.20.14 at 6:31 pm

Give them bubble gum and ask them to blow a bubble and not stop. Maybe now they’ll know what bubbles do. Pop, and it’s all over their face. Insert selfie pic here.

#6 Mister Obvious on 10.20.14 at 6:32 pm

Our young people may be ‘educated-to-the-gills’ but they don’t seem to be in possession of very much useful information. Thank you, Huffington Post and Twitter.

#7 Steve French on 10.20.14 at 6:38 pm

Smoking Man:

Damn right i’m still a paid up member, and a Dudeist Priest, in the Church of the Latter Day Dude.

Garth is a bit like the Dude, in is own way. And by that I mean — a man for his time and place.

http://dudespaper.com/about/

Take it easy man.

#8 Not an economist on 10.20.14 at 6:47 pm

” When financial apocalypse erupted 25 years ago Sunday, you were an urge. ”

Oh my, Garth. Such a wordsmith.

BTW the housing mania is certainly playing its part in enabling increasing inequality in our society, but a smart person like you would have to have horse blinders on to think it’s the only cause. We have some structural issues in law, government, and the economy that need to be worked out, otherwise what the “doomer millennials” believe might just become reality.

Thanks for doing what you do though, and helping us for free on the blog, and for a reasonable fee otherwise. But I do have one question. If something was to happen to you (sorry for bringing this up), and your fans need a trustworthy replacement for your advice, where can we turn? Any chance you can have a standing list of people YOU trust? The financial advice market is full of shysters just like real estate. We could use some alternatives, just in case. Not everyone that follows you has both the ability and inclination to self-manage their financial and investment plan. And as you can see, Canadians can use all the help they can get. Let your legacy for us be the younger Garths you know who can guide us when you can’t.

Also, why not make your next book a compilation of time-agnostic investment advice? Sort of an anthology of explanations and guides you’ve written over the years. About asset allocation, rebalancing, a bit of law in how it affects finances and housing, you know, the works. You’ve already written it, but it’s scattered over what is now a very very large blog archive.

#9 pathcontrolmonk on 10.20.14 at 6:47 pm

As big as Americans may bet on housing, you can still buy a nice house everywhere except Manhattan and SFO for less than $500k.

#10 takla on 10.20.14 at 6:56 pm

Ah let them millenials take their lumps…we had to,82-84 I couldn’t buy a job in Vancouver as a fully qualified tradesman and my first residential mortgage had me struggling….then came 90-91 stagnation era house prices hardly moved… at least mortgage rates started to normalize from the 19% I payed on my first house in 84′.90’s to 2000′ we didn’t do too bad but increasing equity in the home was a slow go,It wasn’t till 2002-till the great financial crisis where prices doubled to tripled on our home investment.
thinkin back it hurt but it builds character and once burned most tend to learn from their home purchaseing mistakes.We did..gone full circle and happily renting now and The Wife {old girl’}still speaks to me!!

#11 I'm stupid on 10.20.14 at 6:56 pm

A wise old man told me that tge problem today is that people buy too much junk. I thought about it and it makes sense. The gap between rich and poor is due to the fact that the poor pretend to be rich. Plain and simple! If the middle class lived as they should, there would be far fewer rich people.

#12 Nemesis on 10.20.14 at 7:01 pm

#Alfred’sTunnelOfLove… #RomanticCompartmentalization… #Or,RogerChooChoosTheChattanooga?

http://youtu.be/DPt-4Nwght0

#13 TS on 10.20.14 at 7:02 pm

Middle Class people always think it’s the rich that raising prices on them.

Except it’s Middle Class people who listen to the TNLB on how much of a mortgage they can afford and their real estate agent on how much they should offer.

It’s always easier to blame some mythical rich guy than your brother / cousin / best friend.

#14 geogar on 10.20.14 at 7:09 pm

“…rich are getting way richer at the expense of an evaporating middle class.” increasing ‘capital polarity’ between the upper crust and the rest of us..Heaven forbid that I should finally figure out that “I want what I have…

#15 Here there on 10.20.14 at 7:11 pm

Garth, are you trying to say that yesterday’s urges are today’s masters of their own domains?

#16 Nattie on 10.20.14 at 7:14 pm

What #11 said. Many people, but especially millenials (I am one), are addicted to stuff. We “deserve” that new iPhone, MK purse, and annual exotic vacation on a 40k salary. A house is just the ultimate manifestation of, well “stuff.”

#17 DM in C on 10.20.14 at 7:15 pm

“The gap between rich and poor is due to the fact that the poor pretend to be rich.”

Welcome to Calgary. This is where I tried for 6 months to hire for an entry level marketing job, and most candidates who passed the entry test only wanted to know the salary and the vacation time. Easier to do it myself. Most of the female candidates came with seriously high end purses/bags that cost min $500-$1,500. I have friends who are 40 who don’t have designer bags like that. Oy.

#18 McPastMaster on 10.20.14 at 7:21 pm

#3 Johnny D – my wife and I both lived in London England for many years and notice that the long-standing phenomenon of what is coyly referred to in the UK as “flatting” (turning houses into apartments) has hit TO with a vengeance. In ten years’ time, the leafier suburbs of the city (except Rosedale and Bridle Path, natch) will in fact be subdivided vertically as well as horizontally, with places like High Park becoming renter hell. Those high-seven-figure mortgages will feel so good to purchasers when they find out their neighbours are in fact “Houses of Multiple Occupation” – i.e. short-term lets to students, itinerants, musicians and er bloggers (sorry Garth!) :-)

#19 Babblemaster on 10.20.14 at 7:23 pm

Government fiscal schemes created this ponzi based housing bubble and they will do everything they can to maintain the facade. At least until the next election.

#20 sideline sitter on 10.20.14 at 7:29 pm

#11 – to build on your point, when middle class people buy disposable crap instead of saving up and buying quality goods, they end up spending more because they have to replace stuff sooner.

Also, why people need to buy the latest and greatest toy? Is an iPhone4 so bad that they need to buy a new one for $600? Or a bigger TV or new car, etc…

#21 Cici on 10.20.14 at 7:37 pm

“…and the push is on to find solutions – like (as the Tyee author suggests) carving up existing houses into micro-units that the kids can afford.”

Either the Tyee author is a REALLY dumb kid, or a very ruse real estate developer. I’m thinking the second…wants to get all the raging young hornies on a mission to make him piles of cash in return for FA (F_C_ All)

#22 Keith on 10.20.14 at 7:39 pm

@ #8 Not an economist

Try Tom Bradley, Steadyhand blog

#23 Ben on 10.20.14 at 7:46 pm

Here’s what they can’t do:

* pay down the debt in real terms

Here’s what they can do:

* real default via a crash or
* soft default via inflation

Which will they choose? Real and it pays to sit on the sidelines. Soft and you get screwed. Place your bets. Don’t bother working hard, just guess the right way – that’s what will make the difference.

#24 Ben on 10.20.14 at 7:50 pm

Also to the iphone moaners. There is an exact copy of you guys sat in the UK. How many iphones do you think I’d have to cut back on to close the gap and afford a home?

People need to justify their position. If you are over 60 it doesn’t feel nice on your cruise to think that you are paying for it by farming the young via renting homes or unfunded pensions. So they justify it as the young “buying too much junk”.

It’s as easy as dismissing the poor social position of black people because they are lazy. The young are the new blacks and Irish. Discriminated against with loaded dice. Dismissed by people who are too lazy to think.

Enjoy your drink. It’s on me.

#25 seeker on 10.20.14 at 7:53 pm

Yes the younger people I work with have all the I everythings and of course the latest models, hottubs, etc but the debt they have is endless. Have tried to teach budgeting but their stuff keeps growing, their wants never end. Whatever happened to gratitude, appreciating what you have

#26 Ben on 10.20.14 at 7:59 pm

Also we have to understand that this is an experiment. Here’s the question:

What happens when you raise an entire society with advertising that is driven by subliminal psychological messages, largely rooted in feelings of inadequacy. When you run people through these wall-to-wall adverts from birth to adulthood?

We are finding now the answer. This is the first time in human history this experiment has been tried. This is the world built for us, not by us. It’s messed people up.

We could have limited advertising but oh no, business told us it was a free lunch. Well – here’s the cost.

#27 TakingResponsibility on 10.20.14 at 7:59 pm

Another perspective on “housing shortages” is that perhaps, there are simply too many old people on this planet. All the overfed baby boomers taking up space. Overpopulation is a problem. As well as oppressive financial and caregiving burdens on family, community, and state, living too long also places too much emphasis (fear) on death.

The author of the article “Why I hope to die at 75” argues that “this manic desperation to endlessly extend life is misguided and potentially destructive.”

http://www.theatlantic.com/features/archive/2014/09/why-i-hope-to-die-at-75/379329/

After age 60, the author notes that creativity and innovation are virtually nil. Creativity and innovation begin around age 30 and peak in early 40’s.

I don’t know who (or their ages) writes at the Tyee, but this author – Emanuel – is a reasonable and rational older guy who has (perhaps inadvertently?) come up with a solution (on making room for millennials) that is helpful.

PS. Oh. Googled that Tyee article’s author and he looks pre’ old, too.

#28 frank le skank on 10.20.14 at 8:04 pm

My 5 year old daughter asked Santa for big ass twilight sparkle doll last xmas. You know what she did with it? She played with it for 5 minutes and never looked at it again. If given the choice, she would buy it every time we go to walmart. That’s why the middle class is disappearing, because we’re a bunch of collective knuckleheads with the impulsive nature of a 5 year old. We buy shit we don’t need, use it for 5 minutes and throw it away, rinse…. repeat.

#29 Uh Oh Canada on 10.20.14 at 8:04 pm

True story from Florida:

A couple lost both their jobs during the financial crisis and their house was foreclosed on. In time, they both found work again at less pay. They were able to rent a swanky newish condo for $800/month. In 2010-11, some of those condos were selling for only 50k. When asked why they were renting and not buying at bargain prices, they said the couldn’t get a mortgage- even for 50k- because of their credit rating.

#30 deaner on 10.20.14 at 8:05 pm

Garth, your shots at the lack of historical context in the minds of millenials is inconsistent with the article’s reference to Thomas Piketty’s book on income inequality throughout history. Piketty’s book provides fantastic context, pointing to capital destroying world wars and inflation crises as a major cause for the temporary reduction in inequality during the 20th century.

These crises temporarily lowered the ratio of assets to income (private wealth to national income). See charts here: http://piketty.pse.ens.fr/files/PikettyZucman2014QJE.pdf

In 1970, the typical Canadian had an income of 40% of average net worth. In 2010%, that figure is was 25%.
The falling incomes are hitting young hardest, while the housing gains are accruing to the evil soon-to-dies.
Let’s extrapolate: A young stud of 25-34 with an undergrad in Vancouver has a median income of $41,981 (the lowest in the country). Median net worth of his prospective 55-64 father in law is $533,600. The stud makes 8% of the prospective father-in-law’s net worth.

Not very studly.
I like Piketty’s proposal of massive inheritance taxes on the very rich.

#31 Mister Obvious on 10.20.14 at 8:08 pm

#10 takla

I used to post comments somewhat similar to yours. They met with profound indifference.

Here’s what happens: Older folks like me will read it and say “aint that the truth, buddy”.

Younger folks will see only a blank space. For them, ‘history’ goes back a mere fifteen years. Any reports of conditions before that time are pure boomer fantasy.

#32 Ferrari321 on 10.20.14 at 8:10 pm

Fool editing team … “and the ever-increasing dent load of the middle class is a risk that cannot be ignored.”

We should all be concerned about dents. What’s the issue? — Garth

#33 Don't look directly at the light! on 10.20.14 at 8:10 pm

Pessimists will say that’s an oncoming train.

Optimists will say that is the recovery coming.

Garthists are prepared for either outcome.

#34 Freedom First on 10.20.14 at 8:17 pm

The Pollster’s latest Canadian #’s say it all. Financial insanity. Screwed.

Too bad the millennials hate the boomers. They will someday be the wrinklies. When the boomers were the millenials of their time many of them also envied the wrinklies who held all the wealth. Envy and jealousy are part of the 7 deadly sins. Sitting in either will guarantee misery. No exception.

#35 Rudy on 10.20.14 at 8:23 pm

@ #8 Not an economist

Try Tom Bradley, Steadyhand blog

I too recommend Tom Bradley. Canadian, experienced, balanced and appears not to be in conflict.

#36 Renter's Revenge! on 10.20.14 at 8:24 pm

It’s a weird kind of an argument because if house prices didn’t go up, the young’uns could afford them, but then they wouldn’t be considered a source of wealth to be or not be deprived of because they didn’t go up in price. Then they’d probably see them for what they are: part of the cost of living.

Meanwhile, they convieniently ignore the fact that REITs like H&R, the one that owns the ivory tower in which Garth writes his blog, yield over 6%. Are you reading this, Casey? For the price of your precious condo, that’s enough yield to pay your current rent twice over, and you could pretend to be Garth’s landlord and call him once a month to remind him to pay his rent on time!

#37 Kenchie on 10.20.14 at 8:33 pm

Let’s have some fun with this post:

#119 Cato the Elder on 10.19.14 at 10:50 pm

“Fraud would be enforced by the courts and by police forces, just like they are in every other instance.”

But earlier Cato said he wants to abolish the SEC. Yet Cato refuses to accept the concept that some actual human, with an actual mandate to investigate crimes has to do the actual work in order for the “courts” and “police force” to do their job. That’s, of course, the mandate of the SEC. But, but, but… the bureaucracy is bad? Hmmm, maybe, just maybe, you can’t have “enforcement” with “bureaucracy”.

“This is how it existed for over a hundred years in this country and in the US. At the turn of the 20th century, that’s when things started to change. Funnily enough, over that time period it has become increasingly difficult for the middle class.”

Of course, Cato, clearly, lived at the turn of the 20th century in small town Ontario and has first hand knowledge of how much better life was then. Of course, his younger sister had polio (http://health.howstuffworks.com/diseases-conditions/rare/12-deadly-diseases-cured-in-the-20th-century.htm#page=10), his father worked 60 hours a week doing manual labour, and at the tender age of 11 his grandma died at age 54, after having lived a full long life (http://demog.berkeley.edu/~andrew/1918/figure2.html).

Cato so right about the middle class having a FARRRR better life back then, despite it being so much shorter than today and they had to work so many more hours (http://eh.net/encyclopedia/hours-of-work-in-u-s-history/). Who needs luxuries like single-payer health care, access to higher education, roads for the horseless carriages, and airports for the burgeoning industry of flight (Wright Bros’ first customer: Uncle Sam).

“Ever since they managed to convince us to accept their paper dollars in lieu of gold and silver the middle class hasn’t had an increase in real wages for 40 YEARS.”

But, but, but… didn’t Cato just say that the golden age of humanity (i.e. middle class) was pre-1900? So shouldn’t he be saying for “over 114 years”? But, but, but… didn’t it only truly emerge as a consciousness as we know it today (i.e. modern) in the early to mid-20th century? (http://en.wikipedia.org/wiki/Middle_class)

But, but, but…. hasn’t paper money been around in Europe since at least the 14th century? (http://en.wikipedia.org/wiki/Banknote) Ohhhh, the Chinese figured it out first. Never mind. Cato’s right, we can’t trust anything the Chinese invented.

“If there is to be any government, it ought to be at the local level. The largest and most intrusive should be in your neighborhood because they are more accountable to you than a federal government thousands of miles away.”

And then maybe there will never ever be wars again! Good idea. Because small, scattered nation-states never go to war with each other. Nor do tribes, despite their competition for resources.

PS: I don’t know about y’all blog dogs, but Toronto to Ottawa is only 450 km away. Heck, Queen’s Park is less than 1 km from my work. City Hall is even closer. Cato’s right though, physical proximity makes all the difference in the world in a democratic society. Why should we have a federal and provincial gov’t when we have Rob Ford running the show (or at least we did). Give him all the tax dollars collected by all levels of gov’t within the City of Toronto. All our problems will be solved!

“Governance is difficult and complicated.”

Oh golly, Cato is fundamentally correct on this one, guys (not being facetious). That’s why it’s ill-advised for anyone to try to dumb-it down into a “good vs bad” mindset. Except Cato, he does such a gooooood job of deciphering the complexities and makes it simple for even simpletons to digest.

“We ought to adopt the Swiss model. The average Swiss citizen is 4 times richer than any Canadian.”

Hmm, Switzerland sure is a rich country. It’s also super expensive. And according to this (http://en.wikipedia.org/wiki/List_of_countries_by_wealth_per_adult) they are heavily in debt too. And, if this link is to be believed, they surely aren’t 4 times richer, on average, than Canadians.

“They live in a TINY country with NO natural resources.”

Cato seems to be forgetting to mention that they’ve been bankers to the world for hundreds of years, eh? But, but, but… didn’t he just rail against bankers and their fiat currency just above? And isn’t the Bank of International Settlement located in Switzerland? Ain’t that organization the “Central Bank of Central Banks”? Hmmm… seems like Cato wants it both ways.

#38 Linda Pearson on 10.20.14 at 8:35 pm

#26 Ben on 10.20.14 at 7:59 pm

What happens when you raise an entire society with advertising that is driven by subliminal psychological messages…When you run people through these wall-to-wall adverts from birth to adulthood?

This is the first time in human history this experiment has been tried. *******************

‘Fraid not. In his book, “The Hidden Persuaders”, Vance Packard wrote – in 1957 – about the power of subliminal messaging in advertising. I read it in high school circa 1962 or so.

So at least half of the boomer generation also grew up in an age that presented possibility over actuality, things just out of reach as the must haves of the day. Don’t blame whatever ails the millenials on external forces; rather they should look first to themselves for clues.

#39 Mister Obvious on 10.20.14 at 8:43 pm

Buying too much junk is not the exclusive pastime of any specific generation. I know plenty of people of all ages who are sitting on mountains of useless, obsolete chaff, most of which you couldn’t even give away on craigslist.

But throw it way? Never. That stuff cost real money and must therefore surround them forever.

Speaking of lost money. I have a relation that has smoked cigarettes for fifty years. I explained that the opportunity cost on tobacco over that period of time was enormous. It could have instead grown into a million dollar nest egg.

He had the wherewithal to agree. “But”, he said “I really do like smoking”.

#40 Retired Boomer - WI on 10.20.14 at 8:47 pm

WAAH!!! WAAAH!!! WAAAHHHH! I deserve a house!!

Reality: you deserve shit.

Reality: You ARE here. The world does NOT owe you a living, a house, or a dam thing!

Reality: Your parents (there were two) you may have grown up with one, or less, or perhaps a whole new set like I did. I’m sure they tried to give you the best opportunities, whatever they may have been.

Reality: whether you went through High School, trade or technical school, college, or higher what you elect to do to earn your sustenance is your choice in a world of limited choices. I say “limited” as an unlicensed physician is not likely to practice medicine long. Whatever, you choose your vocation within limits, right?

Reality: You need food, clothes, shelter among other things. We all do.

Reality: Cities cost far more than most rural locales, yet the wage earnings do NOT compensate for the city life.

Well, now that we understand the basics what do you want me to do? Nothing, you say? Good that is EXACTLY what I am prepared to do!

Go forth, live your life, as I live the rest of mine. I am here for advice, commiseration, and neighborly help.

No, I won’t buy you a house, you can buy mine when I decide to sell it -commission free too. Just stop whining!

#41 crowdedelevatorfartz on 10.20.14 at 8:47 pm

Ahhhhhh the early 80’s in Vancouver……. What a jobless nightmare that was. I worked as a janitor at nights and a highrise window cleaner by day. There was no other work. Nothing.
I had friends that were journeymen tradesmen that actually begged me to get them hired.
One friend had just bought a new Toyota 4WD truck and his interest payment at the BANK( manufacturer vehicle loans were unheard of back then) was 23.5% per annum.
Yup. The “good” old days.
Houses worth 240k in 1980 were worth 80k in 1982.
I had a friend approach me because his Uncle had mortgaged 3 houses on “spec” and was going bankrupt. He wanted them burnt. My reply, “My freedon is worth more than 10k.”
There were a lot of “suspicious” fires in the Lower Mainland in “81 and 82″.
And, no……I wasnt involved.

History aside. Lets talk about prsent day issues.

The recent slowdown in Brazil, Russia, and China doesnt bode well for the ‘BRIC” consortium. Germany needs a “fiscal” enema. France , Italy, Greece all wring their hands and then sit on them.
Accomplishing zero or, in the eyes of investors, less than zero.
The middle east is a powder keg waiting to explode.
The US president is about to become a lame duck for his final two years in power when the Republicans win the Senate in next months mid term elections.
Nothing worse for the economy than a lame duck president.
Canada, resourced based economy, ugh.
World does need $85 oil, copper, coal or LNG gas. Because they are waiting for prices to drop further……until we reach Garth’s dreaded…deflation.

Interesting times for Millenials.

Been there , done that.
Wasnt fun.

#42 Ben on 10.20.14 at 8:52 pm

Linda – has advertising exposure increased massively since the 1970s? Yes, it has.

They also didn’t raise house prices to the moon. House prices are an insane multiple of *joint* income and therefore utterly unaffordable. Even if the kids spend nothing on “junk” they couldn’t afford them.

Summary: I totally disagree.

#43 Kenchie on 10.20.14 at 8:54 pm

#172 xdisciple on 10.20.14 at 1:32 pm
“#170 Kenchie on 10.20.14 at 1:00 pm
“Bwhahaha, this commentary by Barry Ritholtz hits the nail square into Cato’s coffin.”

No, it doesn’t. Not even a little bit. All Ritholtz asserts is his opinion that the ideas he’s listed are “failed”. The article makes sweeping generalizations and presents a few logical fallacies, one of which is guilt by association. I don’t believe in many of CTE’s childish ideas, but his post today at 119 was really good… Kenchie, you’re tripping but I expect better quality posts from you moving forward… thx – a fellow Millennial.”

I was expecting backlash, lol. It just made me smile while at work. I agree, it’s a bit of a stretch.

PS: I wrote my response to his post after seeing this post.

#44 OttawaMike on 10.20.14 at 8:54 pm

27 TakingResponsibility on 10.20.14 at 7:59 pm

Thought provoking read.

Speaking of dying before 75, what happened to Smoking Man?
Did he die of emphysema?

#45 Kenchie on 10.20.14 at 8:54 pm

** I mean before seeing your post.

#46 will on 10.20.14 at 8:57 pm

love the picture. the light at the end of this tunnel is actually something that is coming toward you and about to mow you down. great!

#47 JO on 10.20.14 at 9:01 pm

The underlying system by definition had rewarded the older ones who bought the assets, got their degrees, and pensions prior to the greatest expansion of mostly junk debt ever. They system rewards those who got in first as credit grow has been several times the growth in GDP. GDP, our incomes, has itself been inflated due to the same credit bubble that was mostly based on inflating the cost of our shelter. Credit has been growing at between 8-10% / year until a few yrs ago when it slowed a bit but still dwarfs GDP/ incomes.
To the young ones it becomes for most an insurmountable feat to try and outrun the rate of growth in credit. So buying a house, education or any other financialized asset becomes next to impossible without massive debts and other forms of assistance.
On the other hand, the older crowd basks in the inflated asset prices and pensions for which they deducted very little for. The benefits for many recently retired were set based in the credit inflated GDP. Add in their income splitting which lowers their effective tax rates just as their health care costs explode and you begin to understand how serious the generational inequality is. No amount of tax increases or confiscatory inheritance tax will work and should not be allowed.
Yes there is room for some sort of inheritance tax but where does it stop ? Many of ones calling for high taxes on others don’t themselves contribute to the tax base. Piketty’s work has many holes in it and is junk.
If high taxes and big gov’ts was the answer, his native country and most of Europe would be the most prosperous region of the world. What a loser. F’N communist.
JO

#48 -=jwk=- on 10.20.14 at 9:04 pm

@ #24 BEN.

Nailed it Ben, nicely said. All the ‘whiners’ have to do is sell just 500 of their $600 iPhones to afford the down payment on a boomers home. Too bad they only have one each.

But the boomers NEED their Harely’s! They worked hard for it, you see…

#49 Kenchie on 10.20.14 at 9:05 pm

#176 Cato the Elder on 10.20.14 at 2:59 pm
“Re: #170 Kenchie

See, I’m not going to waste my time reading that. Bloomberg is a socialist/fascist – why would anything his news organization has to say be impartial, objective, or promote LIBERTY in any way?”

Lol. Yes, a jewish billionaire (Michael Bloomberg) is a “socialist/fascist”. Also, it wasn’t personally written by Michael Bloomberg. It was written by Barry Ritholtz. He’s got an impressive resume: http://www.ritholtz.com/blog/barry-ritholtz-curriculum-vitae/

You don’t. So don’t even bother saying you know more about capitalism than people who have actually participated and made it in this world.

#50 Kenchie on 10.20.14 at 9:21 pm

“Maybe then a single head of household can work and provide for a whole family, a house, and several kids WITHOUT debt – all while having ample leisure time. Imagine what that would be like again.”

So why don’t “YOU as a voter” ask government to limit the ability of women to join the workforce.

Although you say “singe head”, given your machismo on this blog, you probably really mean “man”.

Guess you haven’t thought about the rise of women in the workforce affects nearly every aspect of the economy, whether it be number of condos built (independent woman don’t need no man), types and styles of products produced (women’s clothing options are enormous, as are beauty products), volume of products produced (using up resources that could have been used for other things), number of spots in university (more women in higher education than men), competitive pressure on wages (now it ain’t as easy as it once was to for a joe-schmoe man to get a job). And it sure as shiza won’t get easier for men as they continue to fall behind women in the education.

http://www.statcan.gc.ca/pub/81-004-x/2008001/article/10561-eng.htm

http://www.forbes.com/sites/ccap/2012/02/16/the-male-female-ratio-in-college/

http://www.theguardian.com/education/datablog/2013/jan/29/how-many-men-and-women-are-studying-at-my-university

DISCLAIMER: Women should be afforded every opportunity to succeed as possible. Cato’s desire to return to such an idyllic time is extremely misogynist when the underlying causes of changes to society are looked at.

#51 Godth on 10.20.14 at 9:23 pm

#42 Ben

If you haven’t seen the BBC documentary “The Century of the Self” you may want to check it out. Or the book “Propaganda” by Edward Bernays (1928).

The millennials learned well from those that came before them. A 3-4000 sq. ft. ‘hotel’ for two aging boomers sets a pretty high bar for the entitled to grasp for.

#52 Kenchie on 10.20.14 at 9:25 pm

#177 Setting the Record Straight on 10.20.14 at 3:03 pm

“Very little if any has to do with CTE.”

It was mostly this part:

“we suffer greatly when we make an error that we fail to reverse. That was what Bridgewater Associates founder Ray Dalio was referring to when he said “More than anything else, what differentiates people who live up to their potential from those who don’t is a willingness to look at themselves and others objectively.” But it’s as true about our society as it is our P&L. The sooner we recognize that, the better off the country will be.”

He will never live up to his potential with his current mindset.

#53 Ben on 10.20.14 at 9:29 pm

Hi Godth. Seen Century of the Self: https://en.wikipedia.org/wiki/The_Century_of_the_Self

Formed my opinions before that but certainly agreed with it. Not read Propaganda yet, I’ll push it onto the back of a reading list that may well outlive me. Thx.

#54 Kenchie on 10.20.14 at 9:33 pm

#11 I’m stupid on 10.20.14 at 6:56 pm
“A wise old man told me that tge problem today is that people buy too much junk. I thought about it and it makes sense. The gap between rich and poor is due to the fact that the poor pretend to be rich. Plain and simple! If the middle class lived as they should, there would be far fewer rich people.”

Totally agree.

Does anyone else have middle-class friends that make comments like “that’s only 4 starbucks mochas a month” when referring to $20?

(They are Vancouverites, of course)

#55 cowtown cowboy on 10.20.14 at 9:33 pm

So just heard my bil just sold his place in bloor west village for 1.5mil, then turned around and spent about 1.8 on another place somewhere not far too far away….not sure how that’s going to work out for him. I’d been to the first place, and any idiot spending 1.5 for that place deserves what they get….for that money you can have 2 acres and a nice view of the Rockies with a shorter commute to downtown in Calgary. Greater fools indeed!

#56 Doug in London on 10.20.14 at 9:40 pm

@Godth, post #51:
No, 3-4000 sq. ft. ‘hotel’ for two aging boomers did not set a pretty high bar for anyone. If these boomers have the bulk of their wealth tied up in this “hotel’ it shows what fools they are. They should have sold the 3-4000 sq. ft. ‘hotel’, moved to a smaller place, and invested the difference in that diversified portfolio we keep reading about here.

#57 Inglorious Investor on 10.20.14 at 9:41 pm

# 30 deaner on 10.20.14 at 8:05 pm

“I like Piketty’s proposal of massive inheritance taxes on the very rich.”

First, that’s just sour grapes. And I’m not rich. The government should only tax incomes/gains once. No matter how much it is.

Second, instead of higher taxes or more taxes, how about smaller, more efficient government?

#58 Hawk on 10.20.14 at 9:42 pm

#131 TRT Post 70 Hawk on 10.20.14 at 2:34 am

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

I am certainly open to the idea that I’ll lose the $100 bet, but a mathematical certainty??? Why so sure?

#59 45north on 10.20.14 at 9:47 pm

from your link : A simple solution emerges. Split that average home into smaller more affordable parts

bad idea. first of all most home owners are not prepared to be landlords. In Ontario that means being familiar with the Residential Tenancies Act:
http://www.mah.gov.on.ca/Page137.aspx
(thanks to the Cat Food Lady )

I’m pretty sure the same thing applies in BC
http://www2.gov.bc.ca/gov/topic.page?id=FE38AA18AC2B437A8C274E030254B3DD

The author, Patrick Condon proposes : you could split a single family bungalow in Killarney or Dunbar into five units of various sizes, the purchase price would be, in simplified terms, $250,000.

oh yeah there’s another requirement: The stipulation for adding this density has been a requirement that, even while in many cases more than doubling the habitable square area of the structure, the existing structure must be reused.

then he states : Architectural skill is required to insure such alterations respond both to existing architectural and neighbourhood context.

no kidding, I’m thinking a miracle is required, indeed serial miracles – talk about faith based communities!

#60 NoName on 10.20.14 at 9:48 pm

@kenchie

do youhave a life?

#61 east van on 10.20.14 at 9:50 pm

Garth. Read Thomas Piketty: Capital in the Twenty-First Century. The demise of the middle class has little to do with real estate.

It sure did in the US. — Garth

#62 Mr. Reality on 10.20.14 at 9:52 pm

The kicker here is like the US our economy is based on consumption and in this case real estate. Imagine a generation of consumers (boomers) followed by a generations of non-consumers. We’re doomed the second people stop spending and debt becomes tough to get.

This is precisely why i rent. I’ll buy at the bottom thanks.

Mr R

#63 Nathan on 10.20.14 at 9:52 pm

[quote]
What a drag it must be being a millennial. When the GFC rattled the world, you were in college.
[/quote]

My only complaint on that one is that I was too damn broke to buy anything when the bottom fell out!

#64 raisemyrent on 10.20.14 at 9:56 pm

I don’t care for millennials anymore. You have to have a snappy blog or trend on twitter for them to listen (I think). They can elarn from themselves. Every generation goes through some shit to know how things work.

#44 OttawaMike on 10.20.14 at 8:54 pm

I don’t know, but Smokey HAS been missing. He likes to hang out in the States. He too, like many of us, is always right. He likes to drink and speak his mind. They like to own guns and throw people in jail until further notice.

#65 Linda on 10.20.14 at 9:59 pm

Just checked to see what average cost of a one bedroom apartment is in Canada. As per one site, a one bedroom (not located in city centre) apartment runs $843 per month as of 2014. Plus an average $155 in utilities on top, for $998 per month. If one presumed an average person lives to age 90, leaves parental home by age 25 that is 65 years of rent. If one presumes the costs stay as per the 2014 prices for the entirety of the 65 years of rent then the cost to rent for 65 years would be $778,440. It is of course highly unlikely that both utility & rental costs would remain at 2014 averages over a 65 year period. Bottom line is however that in Canada you need shelter & global warming or not, it is not that likely Canadians will be able to live in grass huts in the foreseeable future. So shelter must be had & it will take a certain percentage of your income to acquire that shelter.

#66 Janet on 10.20.14 at 10:01 pm

Seems obvious to me. But I spent my youth growing hair.

#####################################

Looks like i should have spent my youth growing weed.
Thats pretty much the only people who aren’t unionized get ahead here on the rain-coast.

#67 Grasshopper 604 on 10.20.14 at 10:11 pm

Massey Lectures in 2008, Margaret Atwood…Payback: Debt and the Shadow Side of a Wealth…part 1 can be streamed from cbc archives http://www.cbc.ca/ideas/massey-archives/2008/11/06/massey-lectures-2008-payback-debt-and-the-shadow-side-of-wealth/ – also available as a book, a transcript of the lectures.
La Atwood is occasionally a bit too taken with her own sense humour, but a well-researched and thought-provoking lectures series. She talks in the beginning about her parents living “within their means” in the Depression years, and back when credit was virtually unknown – at least as we know it today. What they couldn’t afford, they didn’t get… Novel idea!

#68 JSS on 10.20.14 at 10:22 pm

Forget the millenials for two minutes…

Is it just me or are the common shares of Canadian banks these days HAWT?

Ok, so back to the millenials…no one forces anyone to buy anything. Many of them kinda screwed themselves. I know I know, you can’t get laid if you buy an ETF instead of a condo or house. But you need to use your head (the one on your shoulders).

#69 Inglorious Investor on 10.20.14 at 10:25 pm

#59 45north on 10.20.14 at 9:47 pm

“A simple solution emerges. Split that average home into smaller more affordable parts”

Didn’t I say that soon all homes would be multi-family homes? They’ll be renting out floors, rooms, garages, attics, sheds, crawl spaces, closets, cantinas, cabinets and cubbies to make ends meet.

It may be a bad idea, but that won’t prevent homeowners all over this land from trying.

#70 SWL1976 on 10.20.14 at 10:26 pm

Hmmm, a person in their 20’s being denied a house? I call that a blessing in disguise these days. I don’t think most people even do the math involved to pay anything off anymore, it’s all about perpetual bi-weekly and monthly payments.

Who wants to do math anyways?

My phone’s so smart

#71 Sheane Wallace on 10.20.14 at 10:30 pm

#65 Linda

Dear dummcopf (in German).
A house will cost you twice in property taxes, utilities and mortgage payments. At least twice.

This is not Europe where property taxes are low, darling.

#72 Sheane Wallace on 10.20.14 at 10:32 pm

sorry, twice with the interest payments. with mortgage principle payments it will triple.

#73 Kirk on 10.20.14 at 10:34 pm

Nobody’s concerned about the alien on the tracks? The train will pass.

#74 Sheane Wallace on 10.20.14 at 10:37 pm

#65 Linda
So shelter must be had & it will take a certain percentage of your income to acquire that shelter.

And that percentage is? 1000 % of income for purchase, 150 % of income as running housing cost per year?
Stupidity would have an end, even though it certainly looks limitless in Canada these days.

#75 Blacksheep on 10.20.14 at 10:43 pm

Kenchie # 50,

“Maybe then a single head of household can work and provide for a whole family, a house, and several kids WITHOUT debt – all while having ample leisure time. Imagine what that would be like again.”

“So why don’t “YOU as a voter” ask government to limit the ability of women to join the workforce.”

“Although you say “singe head”, given your machismo on this blog, you probably really mean “man”.”

“Guess you haven’t thought about the rise of women in the workforce affects nearly every aspect of the economy, whether it be number of condos built (independent woman don’t need no man), types and styles of products produced (women’s clothing options are enormous, as are beauty products), volume of products produced (using up resources that could have been used for other things), number of spots in university (more women in higher education than men), competitive pressure on wages (now it ain’t as easy as it once was to for a joe-schmoe man to get a job). And it sure as shiza won’t get easier for men as they continue to fall behind women in the education.”
———————————————-
Sorry, but you’ve been had.

There is world of difference between rightly opening doors for those whom wish to pass through and systemically removing choices, including the option to raise children in a traditional setting.

Elizabeth Warren lays it all out. Relevant part starts about the 7:00 min. point.

https://www.youtube.com/watch?v=akVL7QY0S8A

#76 AB Boxster on 10.20.14 at 11:01 pm

#40 Retired Boomer
You don’t deserve Shit
________________________
Nice.
You got yours, why should you care right?

How about that the it’s not a good thing for society that the ‘opportunity’ to own a home is not possible.
They are not demanding the right to own, just a reasonable opportunity.

You had that reasonable opportunity and frankly we should all demand that people have the opportunity. Its good for society.

But hey, you got yours right? So F them.

#77 Shawn G in TO on 10.20.14 at 11:07 pm

oh my.,the Tie-ee piece makes no economical sense at all. is the author advocating a war or french revolution? and his math, 10 year stock return at 5%, but real estate is 300%, is what i call Wrong!

let’s see, the author is a prof of urban design. prof, don’t quit your day job.

#78 Inglorious Investor on 10.20.14 at 11:11 pm

Today, most people do indeed have too much ‘stuff’, in my opinion. So many people now have a home for themselves, and another home for their stuff. We call them self-storage units. So much junk that actually costs you money just to have it.

If I were single and lived alone, I would adopt a semi-ascetic lifestyle, possessing only those things that added real value to my existence––no matter how much money I had. Of course, the things that I owned would be of the optimum quality. The highest utility. Not name brand stuff necessarily (I don’t give a crap what name is affixed to a product) just very good quality. But the bare minimum.

Some advice for millennials:

• Stay mobile. The world is changing fast. Opportunities can come from anywhere. Be flexible and ready to go where the opportunities are.

• Only buy stuff you really need. The way you test for this is don’t buy the thing in question and see if you can live without it. However, that does not apply to things that you may be able to live without, but can add real value and utillity. Don’t buy an iPhone just because your colleagues have one. Buy one only if it will make you richer by either making you money, or saving you more money than it costs to own.

• Invest in yourself. Try to become a better person. Buy/own/borrow things that will expand your knowledge, your wealth, your health and your happiness. But if you can borrow instead of buying (e.g. books), do that.

• Live below your means, and save and invest as much as possible.

• Don’t watch TV. Period.

• Don’t listen to other people, unless they have something of real value to impart. That includes me, of course. No matter how emphatic someone is, 90% of what most people say is either factually wrong, uninformed, a lie, or just stupid. Socialize with people who are more educated, more experienced, more informed and richer than you. And learn.

• Wake up early, exercise and cook breakfast. Bag your lunch. Cook dinner. Restaurants are a waste of money and time. And the food is crap––no matter how expensive it is. Go out. Make friends. Walk. Read. Dance. Stay away from Starbucks unless your friends are there.

• Learn about money and value. Just because you finance a purchase, you should still buy based on the actual value of the product, not the monthly payment. Try not to borrow to buy stuff. Buy it only when you have the cash. Borrow money only if you can generate a return with that money.

• Buy simple things. For example, if you need a stove, buy a stove, not a computer with a burner attached. Nothing wrong with computer-stoves necessarily, but today electronics are all crap so you can’t trust ’em to last. Save the fancy electronics for where you really need them. Instead of an expensive vegetable slicer, buy a good knife and learn how to chop. Simpler. Faster. Easier to clean.

•…

#79 crowdedelevatorfartz on 10.20.14 at 11:11 pm

@#61 eastvan

Thomas Piketty?

Is that the “economist” from bankrupt socialist France?

Hmmm, I bought his book. Read it…….( wont get THAT weekend back thankuverymuch)
And now I use it to hold up my broken toilet seat cover. …….. until I run out of toilet paper……..

Which I should use as MY thesis for a Nobel prize in theoretical economics…..
WHY? is(are?) hardcover book pages soooooooo much better to use in an outhouse than paperbacks?

Inquiring minds, Nobel judges, and buttocks wanna know…….

#80 Andrew Woburn on 10.20.14 at 11:26 pm

Just came back from a weekend in Victoria. Shocked by the number of storefronts for lease in the heart of downtown, worse than the real estate collapse in the 1980’s.

Checked out a classy looking small condo building right across from the park, steps to the ocean, retiree heaven. It looked empty but the internet says it was supposed to have been 70% sold in Oct 2012. Well, OK, but how come none of those buyers can afford curtains yet?

#81 Winterpeg on 10.20.14 at 11:40 pm

“Somebody with credibility (and that’s not a Boomer blogger with a titanium leg and penchant for Harleys and Amazons) needs to keep a generation of horny millennials from self-destruction”…GT
Gail Vaz-Oxlade, (another boomer) has her mission of teaching people of all ages about money management. Whether you like her in-your- face style or not, she is getting the message out through various media. (TV: “Money Moron” etc) She now has a column in free daily mag/rag where she harps about $$$$. There is another column next to her written by a younger person who expresses the need to manage finances which is good. But it doesn’t have same crusty “voice of experience” tone that Gail has.
Anyway, the message is slowly getting out there but most of the currently- indebted from Millenials to Boomers will have to learn the hard way.

#82 Cato the Elder on 10.20.14 at 11:45 pm

EVERYONE I STRONGLY RECOMMEND YOU WATCH THE VIDEOS I AM POSTING. The explain quite clearly why we aren’t living in a ‘laissez-faire’ environment and why you should demand REAL free markets if you want to get wealthier

**********

Kenchie, I feel for you. You are obviously having a difficult time grasping the concept of CRONY-capitalism (fascism) and free-market capitalism. This is something many people have difficulty distinguishing, and it is frightening. It’s frightening because the solutions being proposed by our benevolent government officials (who never have anything but the best intentions at heart, right?) are always MORE GOVERNMENT.

If you endorse the view that free markets are to blame, when it is in fact big government+big business working together, then we are going to get in DEEPER TROUBLE.

You KEEP mentioning the SEC. The SEC works as an entity engaged in prior restraint primarily – it doesn’t even do fraud investigations very well. Look at the fines they levy on the banks, it’s a pittance. I’ve already explained to you the concept of ‘regulatory capture’ and it appears you haven’t spent a minute researching it, yet are adamant about arguing against me. Because you can’t be bothered to READ about it, here’s a short video I found (this is the first one that came up, I’m sure there are better ones):

https://www.youtube.com/watch?v=BUvUtqTmd5c

It’s not farfetched for a critical thinker to imagine a scenario in which it is CHEAPER and more EFFECTIVE to spend money on lobbying the government to pass regulations than it is to innovate and compete with rivals. In fact, there are many studies that show that the multiplicative effect of political donations are the BEST INVESTMENT a company can make in terms of dollar returns.

Here’s one explaining something that is happening in Canada if you have time:

http://www.fraserinstitute.org/research-news/news/display.aspx?id=19247

This is wide spread in Canada as well. This is NOT a level playing field, or fair, or capitalist in any way. This is a system that FAVOURS those with political connections the most – this is fascism without the violence.

You think the little guys, the mom and pop shops near your house, benefit from this environment? Many small businesses would go bankrupt with even a MINOR increase in their monthly expenses, much less these damn massive ones they seem to pass with every day.

Here’s another one, and there mostly about the US but we’re not that much different and the principle is the same:

https://www.youtube.com/watch?v=qiMaipssKt4

**********

This needs a separate section. I obviously don’t want to go back to the technology of the early 20th century – that’s ridiculous. I want the same level of freedom afforded to the citizens of that time period though.

See, even in spite of everything the government does, the market still has a way of improving things over time. I think it would be incredible to see just how much more quickly things could progress without them in the way so much.

We don’t need government agencies that engage in prior restraint. We need stricter laws that deal with crime AFTER it has happened. We don’t need police telling people to stop taking risks – we need them to arrive on the scene if their risks hurt someone.

Government can’t prevent people from hurting themselves. But they sure can do a lot of destructive harm to the entire population by inhibiting progress, raising costs, and depleting our wallets.

If you must know, I’m a libertarian. I believe in liberty. Libertarians are socially tolerant and fiscally responsible. Everyone else is only half right (liberals endorse social tolerance but not economic, and conservatives the opposite). I don’t have to agree with everyone else’s life choices or decisions, and I often think they make stupid ones. However, I sure as hell don’t want a government that is all powerful and can be wielded by them at some point against me. That is what we really should all agree on.

#83 Joe2.0 on 10.20.14 at 11:54 pm

Did a drive around West Van today/British properties.
A majority of the listings we saw were with Chinese agents.

There is so much asian money looking for a place to park that our kids don’t have a hope in hell.

The size of the Chinese population dictates the obvious amount of wealthier people.

Fact vs wishing.

#84 Kenchie on 10.21.14 at 12:14 am

#60 NoName on 10.20.14 at 9:48 pm
“@kenchie

do youhave a life?”

Yup. Thanks for asking. Right now, however, I am in savings mode and bored so I am reading comments on this pathetic blog.

“#75 Blacksheep on 10.20.14 at 10:43 pm”

“Sorry, but you’ve been had.”

Actually, she’s pointing out exactly what I am talking about. The introduction of women into the workforce (in larger numbers than the past, of course) has fundamentally altered the economy and taken away the ability of an average male-headed Single-income household.

Furthermore, as women earn more money for themselves than in the past (i.e. independent if they wish), they are able to spend on themselves more than any time in previous human history. That aggregate demand led to an increase in the number of goods catered to female tastes while still requiring a slow moving change in aggregate supply. More women buying things made for women requires more humans (i.e. women and foreigners) to work to supply (often excessive) goods. For example: go look at any HQ of a fashion retailer. Look at the guys to girls ratio. It’s worse than the opposite in finance, yet the profitability per worker is lower, hence lower wages.

Ms Warren asked “Where did they spend the money?” when talking about the man and woman’s income plus the addition debt taken on between 1971 and 2003. (An answer that required info sourced from the US gov’t records on consumption, of course). In every example, she says, off the cuff, at least 4 different reasons why the spending habits have gone down. Which brings me back to my point of my post replying to Cato’s idyllic life: nothing is as simple as it seems. The advent of consumer electronics over this period would, by definition, lower the % of income spent on incumbent products (particularly when they are getting better in quality and longevity).

Even getting to the part where she talks about the mortgage, she points out that spending increased by 76%, and that everyone needs “granite counter tops”. It’s quite simple, who can bid up a house price more?: single-income HH or double-income HH? Who can service more debt?: single-income HH or double-income HH?

She makes brilliant points on so many issues. But none contradict what I said.

PS: You realize I was quoting Cato the Elder on the top section, right? And then using his own phrase “YOU as a voter” along with only one of the many reasons his idyllic world doesn’t exist anymore (increased female participation in the economy)? I was hoping my disclaimer at the bottom would clear up any confusion.

PPS: Thanks for providing this video. It’s very interesting. More people should watch it.

#85 devore on 10.21.14 at 12:21 am

#39 Mister Obvious

Speaking of lost money. I have a relation that has smoked cigarettes for fifty years. I explained that the opportunity cost on tobacco over that period of time was enormous. It could have instead grown into a million dollar nest egg.

You could say that about anything over and above water, bread and gruel subsistence diet and living in a tent dressed in clothes you made yourself 10 years ago. Hope you don’t drink coffee, eat deserts, watch TV, go on vacations or go to a hairdresser, because all those would make you a millionaire if you saved that money instead.

Money is there to enjoy life, not hoard it, because you can’t take it with you.

#86 Dm in c on 10.21.14 at 12:25 am

“for that money you can have 2 acres and a nice view of the Rockies with a shorter commute to downtown in Calgary. ”

For a third of that we got a quarter acre on a pie lot with an unobstructed view of the Rockies and a brand new LRT station, with a 20 car commute to boot.

#87 Dm in c on 10.21.14 at 12:26 am

20 min car commute.

#88 devore on 10.21.14 at 12:54 am

#76 AB Boxster

You got yours, why should you care right?

How about that the it’s not a good thing for society that the ‘opportunity’ to own a home is not possible.
They are not demanding the right to own, just a reasonable opportunity.

People make it sound like young people are no longer able to buy houses. In fact, the largest house buying demographic today are those very same 20-somethings that supposedly have no opportunity to do so.

What you mean to say, then, is that YOU cannot buy a house. Well, you know what they say, when someone else loses their job it’s an economic slump, when you lose your job it’s a recession. The beauty of the internet is that it allows people to find others like them. They all get together, and you get an echo chamber. And if everyone around you is in the same boat, it sure seems like a sure conclusion.

#89 Entrepreneur on 10.21.14 at 1:14 am

“The demise of the middle class is obviously happening, a phenom best illustrated by America society…” in above article.

Federal election next year from this day sooooo vote for the one that benefits the middle class like factories, mills, manufacturing. Vote for the one that will speak for us and if silent on it then don’t vote for them.

#119 Cato the Elder on last session. “Most business lose money…” I agree with you on the first part about business lose money. We are too risky for banks and government. Small business have to evolve with the times. Evolving with the time creates a healthy environment which we don’t have now.

I would say since the seventies I noticed small business disappearing. People rush for government work, union work, some safe cave where the banks are willing to loan/mortgage. Small business do not have a chance as we are considered too risky.

We can’t go back in time but we can correct our mistakes to enhance what we call democracy.

#90 Happy Renting on 10.21.14 at 1:16 am

I don’t suppose there’s an objective measure of whether Millennials are as dumb/less dumb/dumber than previous generations at that age? There’s so much information at hand and very little knowledge to show for it.

I’m willing to believe that, like the economy, opportunities to get a foot in the door are cyclical. Sometimes it’s easy and there are lots of opportunities. Sometimes it’s hard and barista-hood is your best option for a job with benefits. When times are hard, though, those who’ll succeed aren’t the ones sitting around moaning about what should have been. If you don’t even try to play the hand you’re dealt you will get nowhere.

(BTW – carved-up homes = high-density housing with expensive exit costs = HELL. One bad neighbour ruins your enjoyment of the dwelling and can sink your micro-unit’s value.)

#91 Happy Renting on 10.21.14 at 1:18 am

#73 Kirk on 10.20.14 at 10:34 pm

Nice catch. The ground, tracks, and bushes are symmetrical, perfect mirror images.

#92 nobody on 10.21.14 at 1:21 am

#17 DM in C on 10.20.14 at 7:15 pm
“….most candidates who passed the entry test only wanted to know the salary and the vacation time.”
___________________________________

So? What’s your problem with that? They wouldn’t have to ask if you had the decency to show some respect for their time and had provided that information up front before asking them to sit for a test.

#93 Polynesian-Renter on 10.21.14 at 1:59 am

#34 year old professional
First time to post but have been following for 2 years. Wanted to say that I am truly grateful for your words and your efforts to educate. grateful for the content and the context. “Words do not convey meanings, they call them forth”. I appreciate the new meanings you have given to words that realtors and other piranhas continue to exploit. #snakeoil

#94 nobody on 10.21.14 at 2:08 am

“The demise of the middle class has little to do with real estate.”

It sure did in the US. — Garth
_______________________________________

Actually it didn’t. The middle class had already been in significant decline and the realestate crash was simply the nail in the coffin.

The realestate bubble in the US, like elsewhere, is the result of using debt financing to fill the gap in increasing long term wealth inequality.

#95 Charles Ponzi on 10.21.14 at 2:25 am

If only the real estate bubble had popped sooner. A decade is long time to wait when you are young.

#96 observer01 on 10.21.14 at 2:37 am

#76 AB Boxster on 10.20.14 at 11:01 pm

The Right to own should not be given, but earned.

With cheap money and this generation (the entitled ones)
They don’t understand that there are sacrifices which has to be made in order get things you need
and want.

They old rules worked for the boomers. It should applied now. Without CMHC help! Let the banks take the risk not the taxpayers

10% down, has to show assets and earnings which can substain your mortgage

2nd house was 25% down

3rd 45% down. And you couldn’t hedge on the other assets.

Now with basically zero savings you can hedge an infinite amount of houses

#97 brower on 10.21.14 at 3:07 am

Yesterday’s urge is tomorrow’s money shot!

#98 battler519 on 10.21.14 at 4:42 am

Get the foundation of that suicide portfolio laid…
If the stability of the banks is threatened, that’s okay. Weren’t there ‘bail-in’ provisions enacted in last year’s budget bill?
You could have added my post #103 from yesterday in this stellar blog entry.
Btw, img & sso had decent days yesterday and fco is beating the tsx so far this year. Go figure.
Regards.

#99 live within your means on 10.21.14 at 6:02 am

I’ve a younger sis who lives off the island of Mtl. Several years ago, after they sold their home with the intention of renting, they ended up buying a lovely 2 level condo with attached garage, etc. Her hubby said RE always goes up. We know they are in deep financial trouble. My BIL also convinced their daughter & her partner to buy for the same reason. Neither my sis nor BIL work. He gets the odd day substitute teaching in one of the poorest neighbourhoods where the children come from broken homes &/or parents are addicts. He loves working with the kids tho.

Niece can’t even find a job as a receptionist paying min. wage. Unfortunately, she didn’t finish her thesis in Art History which she loved. I know, there aren’t many jobs in that field. They too are in financial shite tho he earns a good wage. They bought an old 1920’s flat in the Village in Mtl. with terrible insulation & an earth basement & no parking. They have a darling 2 yr. old & he has to support a daughter from a former marriage. She goes to a private French, as in France, school & lives with them part time. Can only imagine what their heating costs must be. Both couples overpaid & know they need to sell, but will they? Of course they would lose, but IMHO it would be better to lose & get out now.

And then there’s my older sis who is still a shopaholic, tho buys less expensive stuff. She’s proud that she can pay off her visa at the end of the month. Half of what she buys she ends up giving away. Both consider us to be too frugal. We’re not, but we buy judiciously.

Pardon my long rant.

#100 Derek on 10.21.14 at 6:41 am

Morning Garth,

Listening to the Zack Martan on CBC Nova Scotia this morning while his 22year old guests who are complaining that with all their student loans they can not afford to buy a house even with the parents help with down payment.What a joke.

#101 The real Kip on 10.21.14 at 6:58 am

“Giant ratings agency Moody’s affirmed Canada’s good credit standing, but said our housing is “particularly inflated” and the ever-increasing debt load of the middle class is a risk that cannot be ignored.”

Moody’s? Really? Is that the same Moody’s that gave their seal of approval for your beloved GFC? Of course not. They needed assistance from the other rating agencies to become a key enabler of that financial crisis.

No, the Canadian arm. — Garth

#102 Linda on 10.21.14 at 7:41 am

#71: 65 years of rent at 2014 averages (including utilities) $778,440. Like it or not, shelter costs. Up to the individual to decide whether spending that amount on rent or on a mortgage. The difference is that eventually you may actually own a potential asset if you buy rather than rent. Buying at the top of the market is not the best decision financially. Right now, best to wait if you can & shop around for the best deal once prices do drop, though that might take years. However, that time could be spent researching exactly what kind of property one wants, renting if possible in the area of choice to see what life there is really like & whether that dream location is what works for you.

#103 maxx on 10.21.14 at 8:01 am

#54 Kenchie on 10.20.14 at 9:33 pm

“Does anyone else have middle-class friends that make comments like “that’s only 4 starbucks mochas a month” when referring to $20?”

I’m certain that there are many who do. However, middle-class or not, wouldn’t a better, wealth-building/preservation mindset be: what could I get at a second-hand shop for $20.00? Yesterday’s answer:

– Designer leather coat, perfect fit and perfect condition, with lining (appears unworn);
– 2 large watercolour frames, with glass and in perfect condition;
– 1 T-shirt;
– 1 designer sweater.

Today, I will wear my beautiful new coat out for coffee. I can certainly bankroll the Americano on those savings.

…and- equally yummy, no tax at the charity shop! Enough of my tax is already being wasted.

#104 the Jaguar on 10.21.14 at 8:23 am

Re the Millennials topic. They are no better or worse than any other generation I think, but it could be their sense of entitlement that annoys everyone, and the blame for that can be shared equally between the advertising business and their parents. If only they would get their own music and stop trying to impress the boomers. Don’t get mad, just go away, as they say.
I observed the current state of affairs of one earlier this week. Bought a house in 2008 which is now worth about 50 thousand less. Financed through CMHC with 5% down on a long amortization. Now about to get divorced and of course is ‘under water’ on the house. Three little kids and no savings. Also has a massive auto loan on that depreciating asset. All he has to look forward to these days is debt and heartbreak. And the support payments haven’t been worked out yet.
He is one Millenial I can feel some empathy for, and he isn’t/won’t be alone in his misery.
G. Marr (who is banned for life for being snarky with Garth) has an article in the Post today. Interview with a CMHC honcho, the two of them musing on the % of foreign ownership in the lower mainland (BC). Interesting that they want to count horses when they have already left the barn.

#105 David McDonald on 10.21.14 at 8:24 am

I owned a grand old house in Ottawa build during the first world war. During the second world war the government tried to ease the housing shortage by obliging owners to divide up their residence and take in boarders. The grand old house gradually became a slum.

It had history though. I found a bullet hole in the floor on the second level and traced through the ceiling of the third floor and out the roof! It’s tough to have neighbours like that.

One winter my wife complained that a cantaloupe froze on the kitchen floor. I went to the basement to check on the insulation and dug out a newspaper from 1945. The headline was about the coldest winter in history. The wife of some poor soldier had surely complained to her husband about the cold.

#106 maxx on 10.21.14 at 8:40 am

#57 Inglorious Investor on 10.20.14 at 9:41 pm

“Second, instead of higher taxes or more taxes, how about smaller, more efficient government?”

Hear, hear!

#107 Millennial_Falcon on 10.21.14 at 9:03 am

31 year old “Millennial” here.

Thanks to the old(er) folks who have doled out the advice on here.

It is much appreciated!

MF

#108 Nemesis on 10.21.14 at 9:12 am

#FartzingInACrowdedOutHouse… #Or,PassTheCoconutsPlease… #LifeBeforePiketty:

http://youtu.be/ZNpDI8lpnr0

#109 Funny that on 10.21.14 at 9:17 am

Does anyone else see the head of an alien between the train tracks in today’s picture?

#110 Paul on 10.21.14 at 9:22 am

Interesting read on foreign ownership.

http://business.financialpost.com/2014/10/20/cmhc-admits-data-gap-in-foreign-ownership-of-canadian-real-estate/

#111 Cramar on 10.21.14 at 9:47 am

So Canadian millennials feel screwed when a person in their twenties is denied a house!?

Well I felt the same way 40 years ago when I was in my twenties, plus had a wife and two little kids to support. I knew there was no way I would ever be able to afford a house in the GTA. The obvious solution to me was to move away from the GTA. Which I did! Got a job with less pay, moved to an affordable area, bought a house a year later, paid it off within 15 years, and have never looked back! I suggest millennials do the same. You can’t live in Van or TO and eat cake!

#112 Mister Obvious on 10.21.14 at 9:58 am

#85 devore

I get your point and essentially, I agree with it. The purpose of life is not to save up every bean until you can claim to have a million of them in old age.

But my point was that a lifetime of smoking has had a very detrimental effect on the person mentioned. That same person continually laments the fact that they were never able to achieve certain lifelong dreams.

I only pointed out that one potential avenue to those dreams was literally smoked away. It was a free choice, I suppose.

The inspiration for my comment was the assertion that people buy too much stuff. Too much useless, rapidly superseded consumer claptrap. Then they sit in the middle of it all wondering why they are in debt and out of financial options.

I would also argue that the purpose of life is not to blow every dime (and every unearned future dime) on consumption for consumption’s sake.

That is the real killer of freedom.

#113 Daisy Mae on 10.21.14 at 10:12 am

#34 Freedom First: “…wrinklies who held all the wealth.”

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

As it should be, after a lifetime of hard work.

#114 Daisy Mae on 10.21.14 at 10:19 am

#39 Mr. Obvious: “He had the wherewithal to agree. “But”, he said “I really do like smoking”.”

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

Would he ‘really like’ to pay his forthcoming associated medical costs?

#115 Daisy Mae on 10.21.14 at 10:30 am

#Cowtown Cowboy: “…1.5mil, then turned around and spent about 1.8 on another place somewhere not far too far away…”

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

I know lots of people who’ve moved across the highway, down the road, up the street. I have no idea how they rationalize the RE fees, moving costs, utility hook-ups. All the packing/sorting. :-)

#116 AB Boxster on 10.21.14 at 10:32 am

#88 devore

I am a Boomer.
I own my own home and have for years.
I have personally benefitted from the massive run up in the stock market and the absurd increase in house prices over the last 30 years.
Anyone that invested in the stock market in the 90’s (in pretty much anything) and bought a home at the same time benefitted massively due to this.

Anyone that made money investing in the stock market from about 1960 – 1984 (when the Dow Jones hovered around 800 points – eg. no massive runup) can certainly be described as a savy investor. Anyone that was able to make money in real estate prior to 1980, can claim to have skill in real estate investing.

However, unlike some (ie. ‘Retired Boomer’) I don’t for a moment attribute success to any brilliant investing decisions I made or my great real estate prowess.
A monkey could have invested in the stock market in 1982 an easily be a millionaire today.
The same monkey could buy any house in 2000 and have it paid off with its ‘value’ today at 2-3 times purchase price.

Frankly, if the price (value) of real estate in Canada were to drop in half, I would be thrilled.
It might mean that a whole new generation of people could be able to reasonably afford to purchase a home.
You know, just like every generation prior to this one had the opportunity to do without having to bankrupt themselves.

Housing (shelter) is, in my opinion, a basic human right and should not be a part of a ‘balanced portfolio’.
It is a societal good for people to have the option to rent at a reasonable rate.
(ask people in Calgary how well renting is working out right now)
It is also a societal good to be able to be able to purchase a reasonable home without having to jeopardize your financial well being.

There is nothing wrong with renting. It should be an affordable choice. There is nothing wrong with buying. It should be an affordable choice.

It one was an affordable option for every generation for the past 100+ years.

The fact that some 20 somethings have been buying overpriced boxes does not in any way mean that they can afford them.
You have been following this blog right? When interest rates return to the mean, these buyers will be road kill.

And that will definitely ‘not’ be good for society.

#117 Bottoms_Up on 10.21.14 at 10:34 am

Without more income and more jobs, housing is doomed.
———————————————————–

Garth let’s take that one step further.

Without good jobs for the up and comers, who are we to tax in order to provide social assistance and good health care for ageing Boomers?

Housing is doomed….but it is also possible the quality of life for ageing Boomers is doomed too.

#118 DM in C on 10.21.14 at 10:46 am

#92 Nobody

“So? What’s your problem with that? They wouldn’t have to ask if you had the decency to show some respect for their time and had provided that information up front before asking them to sit for a test.”

Of course it’s a discussion you have, but it’s bad form for those to be the first questions, particularly when it’s already part of the screening process. You’ve obviously never sat on that side of the table.

#119 Daisy Mae on 10.21.14 at 10:47 am

#70 SWL: “My phone’s so smart.”

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

Aren’t they, tho’? Yesterday while volunteering a patient waited in the lobby two hours for his wife — lost, somewhere. She’d gone to get the car which had probably been towed. And he had her purse. No way to communicate. However, if they’d both had iPhones….

#120 Holy Crap Wheres The Tylenol on 10.21.14 at 10:56 am

#44 OttawaMike on 10.20.14 at 8:54 pm
27 TakingResponsibility on 10.20.14 at 7:59 pm
Thought provoking read.
Speaking of dying before 75, what happened to Smoking Man? Did he die of emphysema?

_____________________________________________
Perhaps he follwed R Zimerman from Cheech & Chong?

http://grooveshark.com/#!/s/Testimonial+By+R+Zimmerman/Bh4ke?src=5

#121 NoName on 10.21.14 at 11:01 am

#84 Kenchie on 10.21.14 at 12:14 am

http://www.bestpsychologyschoolsonline.com/internet-trolls/

#122 Holy Crap Wheres The Tylenol on 10.21.14 at 11:03 am

#109 Funny that on 10.21.14 at 9:17 am

Does anyone else see the head of an alien between the train tracks in today’s picture?
_____________________________________________
Yes but Ive been exposed to agent orange, what are you smoking?

#123 Holy Crap Wheres The Tylenol on 10.21.14 at 11:07 am

What a drag it must be being a millennial.
_____________________________________________

Hell its the same shit when I was a teenager back in the early sixties. We all bitched and complained about our parents generation and how they didn’t understand. So what goes around comes around!
What a drag it is getting old!

http://www.youtube.com/watch?v=tfGYSHy1jQs

#124 Bottoms_Up on 10.21.14 at 11:09 am

#116 AB Boxster on 10.21.14 at 10:32 am
———————————————-
There’s also another way to look at it, that expectations need to be changed (and have been changing) given the high cost of housing.

Visit any big city in China — everyone lives in 600 sqft apartments.

So “housing” should be affordable, but that can mean buying a big house in the suburbs or renting a downtown apartment. However, given we live in Canada, it is not unreasonable to think that entry level homes should be townhouses/semi’s….and for an average young family with income of $80,000 would then be affordably priced at ~ $240,000–280,000.

#125 Holy Crap Wheres The Tylenol on 10.21.14 at 11:16 am

#111 Cramar on 10.21.14 at 9:47 am

So Canadian millennials feel screwed when a person in their twenties is denied a house!?

Well I felt the same way 40 years ago when I was in my twenties, plus had a wife and two little kids to support. I knew there was no way I would ever be able to afford a house in the GTA. The obvious solution to me was to move away from the GTA. Which I did! Got a job with less pay, moved to an affordable area, bought a house a year later, paid it off within 15 years, and have never looked back! I suggest millennials do the same. You can’t live in Van or TO and eat cake!
____________________________________________

I personally know of at least 10 millennial kids that after graduating from university found it tough here getting jobs that paid well enough to support their wanton need to live in the big smoke here. So they took their degrees and headed south to the USA. All of them were picked up and now have decent paying jobs that they never would have had here. In addition they are living in a much lower cost region of the world with a decent income to expenses ratio. Albeit it is the USA and not Canada thems the breaks guys. Make your $$ while you are young, you can always come back to Canada after the dust settles here from the housing insanity. That’s the advantage they have! They have theie degrees and their youth!

#126 Godth on 10.21.14 at 11:19 am

#113 Daisy Mae

Actually most of the hard work was done by machines courtesy cheap oil. The factories were moved elsewhere chasing cheap labour for higher profits and the era of financialization on the homefront began. Now it’s all going pear-shaped.

If peak oil theorists are correct these millennials will see the return to a lifestyle more reminiscent of their great-grandparents (at best, for those that survive) rather than perpetuating the entitled lifestyles cheap oil and empire provided for the boomers.

#127 Spaccone on 10.21.14 at 11:29 am

Was at a gathering recently (all Italians), and the married sister of a distant unmarried cousin (late 30s) came up for some small talk, telling me how their brother needs to venture away from their parent’s house like I did, and buy a residence as an investment and (unintentionally) make money on real estate like I did.

I wasn’t being weird or preachy but when I mentioned that 4-letter word (rent) before locking himself into an area to see if he likes it, it was like I threw a stinkbomb into the room.

Reminds me of another story from a decade or so ago, an Italian-Canadian guy was being introduced to a girl from the home country with (coming from our area) likely barely two € to rub together. Barely knowing each other, one of her initial comments/demands was that before she’d even consider marriage, he would have to have a fully-furnished house, no renting.

#128 Mister Obvious on 10.21.14 at 12:01 pm

#116 AB Boxster

If the boomer generation was simply able to stumble into prosperity, why then are so many of them in dire financial stress today? Why must they continue working well past their own past-due date complaining that “freedom 55” was such a scam?

Fifty percent of this blog is concerned with the topic of how royally screwed that generation has become with only themselves to blame.

I think maybe you have sold yourself short. Perhaps your present financial position has more to do with good decision making and less to do with bygone historical opportunities.

#129 Doug in London on 10.21.14 at 12:21 pm

@Funny that, post #109:
If you look closely, you’ll see that half the picture is a mirror image of the other half. That’s how symmetrical images, like the alien’s head come about.

#130 on the sidelines on 10.21.14 at 12:26 pm

I was looking forward to a market correction because I
believed that monies on the sideline or monies in Bonds would flow into equities, resulting in bond yields rising fast however what I see is the 5 year CAnadian Bond around 1.5% again

I think we will be experiencing low interest rates for years until 2016. With gold and silver at lows and now oil in the 83$. We will be experiencing low employment not high interest rates.

#131 Retired Boomer - WI on 10.21.14 at 12:34 pm

#116 AB Boxster

I got lucky (scared) once. That was in 2008 early spring, when I saw the folly of sub-prime mortgages thru the eyes of the two failed funds that Bear Stearns set up. That only prompted me to shift my assets to Gov bonds until the smoke cleared.

No prowess, just dam lucky!!
(there is a difference)

#132 BCD on 10.21.14 at 12:45 pm

@#120

Speaking of dying before 75, what happened to Smoking Man? Did he die of emphysema?
___________________________________________

Can’t you tell that he is posting a bunch of junk under several pseudonyms here?

#133 Retired Boomer - WI on 10.21.14 at 12:50 pm

#76 AB Boxster

1974 Just married. Earned a big income of $13 Grand that year. Cars cost $3800 and up in 1974.

1976 bought first home $29,900 an older (50’s) bungalow that when new probably cost $9200 or so. Mortgage interest then 7.75%

It IS all relative AB.

The big difference is right now in parts of Canada homes are not realistically priced for the market. Simple as that!

1974 wages bought you roughly 1/4 of a new home.

2014 wages are what? New homes are what?

No I’m not comparing minimum wages here. I worked for the RR in 1974. They pay decent wages my boy. People get hired by applying there. Re-apply as needed, until you get hired. Not easy, but not impossible either. Places are always in need to talent.

#134 Retired Boomer - WI on 10.21.14 at 12:53 pm

#122

meant.. home prices are not realistically priced for the wage market. too high a price (sorry)

#135 elrowe on 10.21.14 at 1:10 pm

Interesting.

All the comments today bashing Boomers (nothing new there) and now, women in the workforce. Yes, it so happens that the cost of a middle-class lifestyle has increased at the same time that women’s participation in the workforce has increased. But to say that housing is out of reach of so many Millennials simply because your mother went to work to support you is beyond stupid.

What’s really going on is this: Millennial boys would have an easier time of it if all the women were sent home. Might as well exclude all the black men, the immigrants, those without a recent degree from the workforce too. And find a way to keep them out. That would improve a Millennial male’s prospects much more than devotion to this blog c ould.

Garth, I am deeply offended that you have not responded to these ridiculous notions since you are so quick to jump on any suggestion of HAM influencing the RE market and label it as racism. Isn’t agism and sexism as bad as racism? Do you believe a valid solution to current economic issues is to suggest disenfranchising other members of society in order to give some their “entitlement”??? Millennials seem to suggest this at every turn, one way or another suggesting that they will in future confiscate Boomers’ wealth and that it’s only the right thing to do. Some even sound like they think we should just all F.O. and die. It’s totally backwards and if my son entertained such ideas after all the money I spent on his education, I don’t care how old he is or how much bigger than me he may be, his momma is gonna open a great big can of whoop a##. I think that if some of your commenters’ mothers saw what was written, they’d open up their big can of W.A. too.

#136 Retired Boomer - WI on 10.21.14 at 1:10 pm

Did somebody change the rules? Seems to me you can buy a property with 20% down or less. Gee, the lenders used to make us Boomers “prove” we had a reasonable amount of income to meet the obligations we signed.
If they had too much debt, some didn’t get a loan even with 20% down, the banks weren’t stupid they knew what could go wrong.

Today with the price / earning ratio so out of line in some markets it might be tough to get qualified. So I’m sure the same thing existed in the 70’s-80’s.

So what is so radically different except the calendar?
We had FNHA (Fannie Mae/Freddie Mac similar to CHMC) for less qualified borrowers, less than 20% down buyers.
yes you could get a 30 yr fixed rated or a variable rate also.

#137 Blacksheep on 10.21.14 at 1:13 pm

Kenchie # 84,

“Actually, she’s pointing out exactly what I am talking about. The introduction of women into the workforce (in larger numbers than the past, of course) has fundamentally altered the economy and taken away the ability of an average male-headed Single-income household.”

“It’s quite simple, who can bid up a house price more?: single-income HH or double-income HH? Who can service more debt?: single-income HH or double-income HH?”
————————————————–
Now if you view this from a hard core, independent, career first, type persona, (kinda the vibe I’m getting, not an insult) this whole convo is pointless.

But,

If you ever find yourself forming a two parent household (M/F, F/F, M/M, irrelevant), and choose to raise a child, you will find out very quickly, that it would be nice to have the choice as to whom you wish to raise, said child.

You, your spouse, or a day care facility. (Grandma’s not available, she’s working too)

I’m all for equal everything, but that second income earner has been used (manipulated) to jack home prices to ridiculous levels. Yes, of course there is all sorts of other marketing crap (sq. ft / granite ) that’s just made this equation less viable, but it’s primarily, two incomes (or the banks demanding two incomes) that has fundamentally cancelled the traditional, single earner home.

Warren is pointing out the vulnerabilities of the now required, two income HH, such as illness or job loss. Twice as much risk. In a single income HH, the second person can seek employment if the first falls ill, or looses their job. This is not an option for a 2 income HH.

I should state, there is no bitterness on my part. My wife and I were raised with stay home mothers, as was my daughter (we all owned businesses) Unfortunately, unless my daughter’s future house hold, has higher than average income, this will not be an option when raising her kids.

Like I said, (in my opinion) you’ve (we’ve?) been had.

Thanks for the respectful response, but I maintain my right to disagree.

#138 Son of Ponzi on 10.21.14 at 1:30 pm

They are called “Millenials”.
No wonder they feel special.
We were called the hippies, and we changed the world, on cobble stone throw at a time.

#139 Blowback on 10.21.14 at 1:45 pm

DELETED

#140 devore on 10.21.14 at 2:11 pm

#116 AB Boxster

However, unlike some (ie. ‘Retired Boomer’) I don’t for a moment attribute success to any brilliant investing decisions I made or my great real estate prowess.

Not sure why you’re ascribing the success of a whole swath of people to blind luck, rather than hard work and good planning and decision making. I already described one tendency of people; to seek out others like themselves. You’re exemplifying another; we believe that our experience and circumstances are typical and average. While seeking out copies of ourselves, we also assume, or conclude based on our selective experiences, that EVERYone is like us.

To discount the successes of millions of people, and indeed, the cumulative success of a whole generation, and write it off as “even a monkey could do it”, is doing a great disservice to everyone.

A monkey could have invested in the stock market in 1982 an easily be a millionaire today.
The same monkey could buy any house in 2000 and have it paid off with its ‘value’ today at 2-3 times purchase price.

A monkey could have done many things, in hindsight. You can easily chart an investment course investing only in major asset classes that would have doubled your money every couple of years for the past 50.

It’s easy to see cycles looking in the rearview mirror, not so easy looking forward. That’s why the past always seems easier than the present. That’s survivalship bias in action; the failures of the past die, and no one remembers them. Except they’re not dead yet, are they? Plenty of boomers around today are flat broke, deep in debt, and unable to retire until their eventual death. I guess they weren’t even as smart as monkeys?

#141 CP on 10.21.14 at 2:22 pm

Any comment Garth?

http://business.financialpost.com/2014/10/20/cmhc-admits-data-gap-in-foreign-ownership-of-canadian-real-estate/

#142 devore on 10.21.14 at 2:26 pm

#116 AB Boxster

As for houses, specifically, they have ALWAYS been expensive, on a relative basis, and no amount of rose colored glasses and nostalgia changes that. Young people and first time buyers have always had to compromise or sacrifice something in order to buy their first house. I’m pretty sure there’s never been a time when young people didn’t complain that family life is expensive. But again, survivorship bias in action, you don’t hear about it. Those people got on with their lives, discovered other things are more important and meaningful.

On an absolute basis, you’re right, houses today are expensive, but they have also been expensive in the past. They have also been cheap in the past, and will again in the future. These cycles are due to many factors, such as interest rates, credit availability, household incomes, disposable income, employment rates, societal attitudes driving demand for different types of housing, etc. Things are not great, but hardly dire today. Someone posted this on another blog, don’t know what the source is, but here it is:

Home ownership rates since 2001:
15-24yo: 16% to 24%
25-34yo: 47% to 52%
35-44yo: 67% to 69%
45-54yo: 74% to 75%
55-64yo: 77% (no change)
65-74yo: 75% to 76%
75yo+: 66% to 71%

#143 Daisy Mae on 10.21.14 at 2:37 pm

#126 Godth: #113 Daisy Mae

“Actually most of the hard work was done by machines courtesy cheap oil. The factories were moved elsewhere…”

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

I was hardly referring to politics…you’ve waaaay off track. No need to analyse every comment.

#144 Funny that on 10.21.14 at 2:47 pm

#129 Doug in London on 10.21.14 at 12:21 pm
@Funny that, post #109:
If you look closely, you’ll see that half the picture is a mirror image of the other half. That’s how symmetrical images, like the alien’s head come about.
+++++++++++++++++++++++++++++++++
Isn’t it amazing that something so symmetrical and on such a grand scale could occur in nature

#145 Holy Crap Wheres The Tylenol on 10.21.14 at 3:19 pm

#137 Blacksheep on 10.21.14 at 1:13 pm

Ditto, double ditto on that one.

What happened to the world? Its all about the money, big home, fancy car, designer shit. I’d better stop now I’m going to go into a tirade and get DELETED!

#146 AB Boxster on 10.21.14 at 3:45 pm

#128 Mister Obvious

I my mind there are 3 pretty simple rules:
(no brilliant investment or real estate strategy)

1. Spend less than you make
There have always been good times and bad times.
In the good times save as much as you can, pay down debts, and the bad times will not be an issue.

I mean, how many busts has Alberta (Calgary )had over the years and away we go again, with Albertan’s thinking that the boom will last forever?

2. Buy what you need, sometimes what you want.
The last 30 years of rampant consumerism has somehow convinced the western world, and now much of the rest of it (Boomers included) that we cannot survive without 300 channels, and a new iPhone 33 with a new data plan, or a new Wi-Fi thermostat that you can remotely control from your smart device (how the hell do I survive with my old mercury thermostat?) and a new truck (with a Hemi!) every 5 years, etc.

3. Despise debt
Once upon a time people used to hate being in debt.
Now the easy availability of debt is such that the banks are happy to loan you $1 million for a home, even though the house you need is only $350 K.
And most every one has bought into this cuz they can get what they want today.

But really, I don’t think its fair to pick on the Boomers.

The reason you hear them complain is that we are trying to be retire en mass over the next 20 years and we have no money.

But sadly its likely that every subsequent generation that follows them will have the same complaint and problem.

The Boomers just got here first.

These are simple rules.
They don’t require you to be a brilliant investor

#147 Bottoms_Up on 10.21.14 at 3:45 pm

#135 elrowe on 10.21.14 at 1:10 pm
————————————-
Who is bashing women in the workforce?

I would like to know as I would like to go back and read their posts.

And it’s nice to know you turned your own post into a millenial boy-bashing post. That was awfully nice of you.

#148 Debtfree on 10.21.14 at 4:21 pm

The zero marginal cost society by jeremy rifkin . From what I understand , it is already starting to distort gdp calculation . Darn good read . Put a great deal into perspective .

#149 jess on 10.21.14 at 4:32 pm

http://www.fhfa.gov/Media/PublicAffairs/Pages/Prepared-Remarks-of-Melvin-L-Watt,-Director,-Federal-Housing-Finance-Agency-at-the-MBA-Annual-Convention.aspx

…”To increase access for creditworthy but lower-wealth borrowers, FHFA is also working with the Enterprises to develop sensible and responsible guidelines for mortgages with loan-to-value ratios between 95 and 97 percent. Through these revised guidelines, we believe that the Enterprises will be able to responsibly serve a targeted segment of creditworthy borrowers with lower-down payment mortgages by taking into account “compensating factors.” While this is a much more narrow effort than our work on the Representation and Warranty Framework, it is yet another much needed piece to the broader access to credit puzzle. Further details about these new guidelines will be available in the coming weeks as we continue to advance FHFA’s mission of ensuring safety, soundness and liquidity in the housing finance markets.

Now, let me turn my attention to the continuing progress we are making in the multiyear process of developing the Common Securitization Platform (CSP), which will create a shared securitization infrastructure for Fannie Mae and Freddie Mac. As I announced in May, we are focusing on ensuring that the CSP fills the needs of Fannie Mae and Freddie Mac to carry out most of their current securitization functions. To achieve these objectives, FHFA and the Enterprises have revised the governance structure and operating agreement for Common Securitization Solutions (CSS). CSS is a joint venture owned by both Fannie Mae and Freddie Mac and is the corporate entity that we expect ultimately to house and operate the Common Securitization Platform….”

http://www.fhfa.gov/

————–

#150 Godth on 10.21.14 at 4:37 pm

It’s going to be interesting to see how these millennials respond when they realize that all this received wisdom from their elders was only applicable under certain conditions (expanding economy) that are no longer present, and likely never will be again.

I wonder if there has ever been a generation less adequately equipped to deal with the realities of their future.

#151 NoName on 10.21.14 at 4:38 pm

there you have it, my “cousin” talking about “choices”.
ted (15min)
https://www.youtube.com/watch?v=NRXCxJGQ4KY
and same-ish thing but in a comic form
rsa animate (15min)
http://youtu.be/1bqMY82xzWo?list=PL39BF9545D740ECFF

#152 DM in C on 10.21.14 at 4:40 pm

#147 Bottoms Up

Kenchie is trolling along those lines….but elrowe is exaggerating by saying all the comments are either bashing boomers or women in the workforce. Selective reading, I think.

#153 SWL1976 on 10.21.14 at 4:50 pm

#142 devore

Plenty of boomers around today are flat broke, deep in debt, and unable to retire until their eventual death. I guess they weren’t even as smart as monkeys?

Oh now that’s good…

Generalizations always are quite valid, but not all boomers have had the silver spoon life and not all melleinals are entitled snobs with the odds stacked against them, we always want what we don’t have. I’m sure any boomer would trade what they have to be young again, but would an entitled mellenial make the same trade to be a boomer?

I think not, being young and broke isn’t that bad most of us have been there. Being old and broke. Ouch

#154 CalgaryRocks on 10.21.14 at 4:53 pm

God old Ceausescu in Communist Romania took single family homes and filled them with multiple families. Each family living in one room, sharing kitchen, bathroom etc…

Congrats comrade Millenials, you can look forward to living the same lifestyle as Romanians at the peak of Communism.

Actually, Romanians got their housing for free. You Millenials will have to pay for your piece of cr*p with a big chunk of your income.

But, on the bright side, tons of bungalows are filled with people so old that they can barely get up in the morning anymore. There’s bound to be more and more inventory coming online in the years to come.

#155 Kenchie on 10.21.14 at 4:55 pm

Some economics lessons:

“In defence of Economics 101” – G&M (subscribers only)
http://www.theglobeandmail.com/report-on-business/rob-commentary/rob-insight/in-defence-of-economics-101/article21176504/#dashboard/follows/

“The perils of deindustrialization” – Project Syndicate (registration required)
http://www.project-syndicate.org/commentary/dani-rodrikdeveloping-economies–missing-manufacturing

#156 Harbour on 10.21.14 at 5:23 pm

Ha Ha… the markets

Last week the world was on fire and we were all screwed

This week it’s all rosy

#157 Sparky55 on 10.21.14 at 5:24 pm

That image is mirrored right down the middle!

#158 Millennial_Falcon on 10.21.14 at 5:34 pm

#135 elrowe

I think your comment is a joke. Have you not been reading Garth’s posts? He constantly talks about how us Millennials are pushed into housing by our boomer parents, because well, they made money on their houses.

I am a Millennial (31) and all the only bashing I hear going on from fellow Millennials is how dumb we think our own generation is. I agree, we might be the dumbest generation ever.

As for this inheritance issue that keeps being brought up. Do you honestly think we Millennials are the first generation with tension/conflict over who receives what after someone dies? Thanks for the comedy.

MF

#159 Renter's Revenge! on 10.21.14 at 5:45 pm

I’m not exactly a card-carrying feminist, but I’m not an idiot either. There’s obviously way more men commenting on this blog than women, judging by the number of comments quoting from Elizabeth Warren’s thesis on how the introduction of women to the workforce screwed everyone over. How could women working for a living, and producing goods and services that everyone uses, possibly be a bad thing? It just reduces the amount of work that men have to do by half. Plus, isn’t Elizabeth Warren kind of a hypocrite in that respect, what with her successful career in law and politics?

Besides, didn’t any of you watch The Wolf of Wall Street, where they explain what Quaalude was for? Pretty much anyone who’s stayed at home full time to raise kids (men and women) that I’ve talked to said that it drove them nuts.

If you want to go back to the 1950’s with your single family incomes, that’s fine; just be happy with your 700 square foot house, with 3 kids per bedroom, in cities and towns with populations under 500k, because that’s what they could afford back then.

Women working = bigger houses, more stuff and vacations, and fewer drugs and psychotherapy sessions. Win-win …win.

#160 Debtfree on 10.21.14 at 5:59 pm

What gave it away for you . The Martian or the wolf between the rails .

#161 Vangrrl on 10.21.14 at 8:33 pm

#159 Renter’s Revenge:
Ha, how long have you been commenting here? About a year ago I was commenting almost daily, calling several people on their female-dissing comments. There was one guy, long gone, who would back me up… Forget his moniker. Much less annoying to read now :).

#162 elrowe on 10.22.14 at 12:30 pm

I posted a response (very polite and respectful, I thought) last evening to the negative responses to my earlier post. But Garth, it isn’t showing here, and you didn’t even give me the benefit of “DELETED”!

What gives? I’m not a troll. I’m a real live human being with an interest in personal finance. I’m a 55 year old female, with several decades of work and life experience. I was [email protected] beginning in 1990 until I became her boss, then sold insurance & mutual funds (don’t get hate me, I lasted less than a year, it sucked), and I’d rather not state what I do currently, but it is in finance. I’m not full of crap. Many of your commenters would get their teeth punched out of their heads if they said face to face to a man the things they say about women and elders. I’ve tried skipping over comments and links that I find offensive, but Garth. This is YOUR blog; if it devolves into a soapbox for the frustrated, it’s on YOU. Every comment that you allow to remain reflects your vision of things. Boys’ club. Well, at least we know now where the young ones learned it.

Glad to see Renter’s Revenge & Vangrrl also noticed the female bashing. As to Millennial Falcon, how can you demand we take what you say or think seriously when you imply that Millennials buying RE are not responsible for it, it’s their parents’ fault! To that, I will add that I’ve seen more generations of people die off than you have, and I stand by my statement that many more folks today are counting on a big inheritance that may not happen, or may not happen when they want it to, than I have ever seen before. The temper tantrums will be epic!