The other half

couple 1 modified

Katy’s sister-in-law is smart, but late. “She sent me to this blog recently,” says K, “and I need your input.”

She’s 30. He’s 31. Baby’s 15 months. They moved out of their one-bedroom in North Van and live in her parents’ house (while they’re in Mexico). Life for three in 700 feet understandably sucks. So, they plan to rent something bigger for a while, “and have anther baby”, then buy when they can afford. On a combined $100,000 income in YVR, that could take a long time.

But here’s the question: “We paid $343,000 with 20% down 7 years ago and now owe $157,000 (making good headway in our opinion ). We met with a realtor last night and signed / listing at $347,000.

This morning my other half is now thinking that we should keep it and rent it out and gain equity on it over time?  I’m unsure…. Should we sell and invest the proceed in a balanced portfolio? Keep it, deal with tenants and gain equity, risk vacancy? Pls help.”

Sure, K. Help is almost as important on this pathetic blog as sinewy, rippling abs and thirsty underwear (we cater to all demographics). Since your other half is a confused puppy, let’s lay down some facts for him.

First, as an investment, this condo has sucked. After seven years there’s virtually no appreciation – and those have been the “best” years in history for real estate in 604. It shows how a bunch of lunatics buying ridiculous properties on the Westside, combined with an unethical real estate board, can skew the stats. In fact, after paying your agent for the sale, the place will change hands for less than you paid in 2008.

Now consider this: after retiring the mortgage and subtracting your down payment ($68,600), you’ll net just over $104,000. But to achieve that you spent $117,400 in financing plus almost $20,000 in strata fees and property taxes, plus your down payment earned nothing when it could have grown by 7% a year. In total, you spent $161,000 to end up with $104,000.

By the way, if you’d rented, the cost over seven years would be just over $100,000 and you’d have $84,000 in liquid assets (the down payment plus growth). See what I mean? Renting rocks.

Now what? Stick with an asset that has cost you more than it made, or bail? Well, a one-bedder in North Van is not going to generate enough income to pay the financing, strata fees, property tax plus give you a reasonable return on the $190,000 in equity sitting in the unit. Not even close.

That means you’ll be cash flow negative, and the only justification for losing money is that a tenant is helping to pay down the mortgage. In effect, this means you’re subsidizing the renter to get a portion of your losses back, which will be realized in a future sale – but after some capital gains tax is paid (since it’s now a rental).

Maybe your weaker half believes the condo will rise in value? But since it didn’t during the boom years for Van real estate, why would it now? The big news, K, is that we should all expect less from the immediate future, not more. The oil thing is already having a substantial impact on the Canadian economy, and it seems certain there’s more to come. Everyone around us has pigged out on debt, and now we have mounting job losses plus slower times ahead. All of this is bad news for your condo.

But, wouldn’t it also be bad for financial assets?

If you buy the wrong ones, for sure. But a balanced portfolio contains both exposure to stock markets and income-producing, safer assets. When stocks wobble (as they have been lately), bonds go up (as they are now). Meanwhile you get interest and dividend income which is locked in. Just as important is being diversified. That means an ETF with oodles of companies in it instead of individual stocks. It also means being twice as heavily invested in US and international companies as Canadian ones.

Cheap crude may be kicking the crap out of Alberta (Calgary house sales now down 30% and listings up 59%), but it’s a net benefit to the US, Europe, China, Japan – in fact the 85% of the world that uses more oil than it makes. Thus, 2015 should end up being a good year for investors, despite the rocky start. In America, for example, consumer confidence is at an 11-year high and Scotiabank just confirmed its belief US rates will rise by summer – to cool off an economy that could actually overheat.

Finally, tell the boy a balanced portfolio is completely liquid, while a condo in a down market can end up being a wealth trap. Plus your tenant might grow pot on the balcony. Or raise cuddly pit bulls. Or call you every time the toilet plugs. Or split.

Nope. List it. Duct tape your spouse to the bed and read him this post. The result will amaze you.

188 comments ↓

#1 TurnerNation on 01.16.15 at 7:31 pm

Buy oil and Tsx here.

#2 Sam604 on 01.16.15 at 7:31 pm

First

#3 Derek R on 01.16.15 at 7:32 pm

It’s a great thing when both halves are on the same financial page.

#4 mitzerboy aka queencity kid on 01.16.15 at 7:35 pm

thank what ever god u may serve

for inventing
duct-tape

#5 Fed-up on 01.16.15 at 7:35 pm

Real estate in this country has a long way to come down before it makes any logical sense in order to buy again.

For now, I am happy that I sold my home in the 416 late last year and rent a lovely condo while I sit in vulture position.

Muhuhuhuhahahahhhhh

#6 calgaryPhantom on 01.16.15 at 7:37 pm

Just don’t understand why you are advising to be overweight US. After so many years of gains, shouldn’t we expect some sort of a pull back?
Like oil, it will just take a few session for US stocks to shave off 20-30% (correction remember?). Just six months ago you were talking about taking some money off the table from US stocks. What suddenly changed, that now you are screaming buy buy buy US?

You don’t read too carefully, do you? — Garth

#7 Ontario's Left Coast on 01.16.15 at 7:41 pm

Happy weekend, dogs! First?

#8 Muttley O'Toole on 01.16.15 at 7:42 pm

Well, who would have guessed it? Oil down, Swiss Franc freedom; what other Black Swans are out there to slay the indebted?

#9 View on 01.16.15 at 7:47 pm

Denial across Alberta. I traded vehicles down last week and a beautiful blond sneered my way this afternoon. People don’t realize what is coming!!

#10 Smoking Man on 01.16.15 at 7:51 pm

Pink Floyd who?

I’m going country from here on in, it’s country music night at Seneca..

I have never in my life seen such an abundance of hot Milfs, Wow!!!!

Rick and Roll, what the hell was I thinking.

Tonights going to be a good good night, I got a feeling.

#11 waiting on the westcoast on 01.16.15 at 7:51 pm

And get an extra job to make a 25k safety fund if the economy slides…

#12 Peter on 01.16.15 at 7:53 pm

First one!

#13 kilby on 01.16.15 at 7:54 pm

Just heard on CBC that some are now saying no interest rate increases for Canada until 2017 and possibly a cut. Just reading this and hearing that sales of large vehicles are up because gas has been cheap for a few weeks makes me think that with all this lax lending we are just kicking the can farther down the road…Maybe until after the fall election? We don’t have a lot of money but we owe none and that alone feels pretty good…

#14 Irish Stew on 01.16.15 at 7:54 pm

Renting sucks, but losing money sucks even more.
Good luck everyone – ISIS will soon have all your money in the Bank of Islam and nothing will matter any more.

#15 Farhad on 01.16.15 at 8:01 pm

My wife and I sold our house in vaughan. Made quite a bit for only a 2 year period. We have 2 young kids but have chosen to rent. i think we are officially adults now.

#16 Stefan on 01.16.15 at 8:03 pm

FIRST!!!

#17 Keith in Calgary on 01.16.15 at 8:12 pm

I love these “kick them in the balls” articles.

You cannot “spin” the math.

#18 Yo on 01.16.15 at 8:21 pm

Sorry I couldn’t help it: first!!!

#19 Grouchy on 01.16.15 at 8:22 pm

Our neighbours are moving in the spring. Have finally seen the light and will be renting from now on. Sad tale really. The couple are in their early sixties, both forced into early retirement so that screwed up their pension plans. Five years ago, they bought their dream home intending for the profit from its sale would help make up for the shortfall in their pension.
They found that carrying costs, even with low mortgage rates, were too much for them to afford so downsized sooner than they had anticipated and downsized to their current home. Even this is costing them more than renting and ill health has prevented the husband from doing the part-time work that covered their extra costs.
So, as I said, they are now selling again. The amount that estate agents fees and land transfer taxes will have cost them would have paid their rent for the past five years. Plus of course, they’ve been paying interest on their mortgage, property taxes and upgrading their home.
They will be lucky to net the amount of money that they started out with. So much for real estate being such a great investment.

#20 Washed Up Lawyer on 01.16.15 at 8:31 pm

Out of curiosity today, I checked WestJet flight prices for round trips of Ft. McM to Calgary. About $200 (almost 30%) cheaper. Demand down perhaps?

Yay, easier to go home and visit My Reasons For Living.

#21 Mark on 01.16.15 at 8:36 pm

“Out of curiosity today, I checked WestJet flight prices for round trips of Ft. McM to Calgary. About $200 (almost 30%) cheaper. Demand down perhaps?”

Check out the cost of flights to Florida. This is peak season, yet I’m finding flights 30-50% less than normally would have been available at the same time last year. Fuel is only 30% of the cost of flying an aircraft, so even fuel going down by 50% doesn’t explain the severity of the discounts. Only a significant drop-off in consumer demand does, a characteristic of deflation.

#22 Retired Boomer - WI on 01.16.15 at 8:37 pm

#243 Bdwy Skytrain

A place banning Cheese or, Cheese flavored products? Say it isn’t true!! The Pack may not win (9 pt underdogs) I hear. Still,, a good game will come forth.

Tonight, RE is SOOO over !! What part of Stupid do Canadians not seem to understand? The getting out was yesterday, the money was made then. Today you see;p the rotten leftovers from diddling too long.

Well, people sell stocks too early, or too lets why the hell not RE?? It does not matter unless a majority of your wealth is tied up in that house, then you bet your financial life!!

We here in the US saw what a bad RE market looks like. You might just get your chance as well. 604 and 416 are NOT immune to the factors of time vs money.

I wish you well, but don’t bet on a great outcome.

#23 james on 01.16.15 at 8:39 pm

I would not want to be holding a condo in Vancouver, Toronto (etc). Not at all. The risk is too great, the returns too poor, and the construction quality issues are sure to surface sooner rather than later.

The amount of money that this family sunk into their condo is significant. They really didn’t have much in the way of returns, given the movement of stock markets, precious metals and other assets in that time frame.

#24 nonplused on 01.16.15 at 8:40 pm

Oh boy another bad day in Europe with the Swiss abandoning their EURO peg. Already half a dozen brokers have declared they are bankrupt. Word is the Swiss did it because they couldn’t fight the massive EURO printing but who knows.

And then the Ukrainians passed a law to draft 50,000 subjects into the army. To do what? Fight the rebels? It can’t be to fight the Russians, that would be like a mosquito attacking a moose.

There are varying reports now that maybe Russia hasn’t cut off gas supplies through the Ukraine just yet but said in the future all gas must go through Turkey. Hard to know the truth because other sources are still saying the gas flow is now zero. Either way I predict a lot of Colman camping stoves get sold in Europe in the next few weeks.

#25 calgaryPhantom on 01.16.15 at 8:41 pm

Just don’t understand why you are advising to be overweight US. After so many years of gains, shouldn’t we expect some sort of a pull back?
Like oil, it will just take a few session for US stocks to shave off 20-30% (correction remember?). Just six months ago you were talking about taking some money off the table from US stocks. What suddenly changed, that now you are screaming buy buy buy US?

You don’t read too carefully, do you? — Garth
—————————————————————–
I try my best to read very carefully, all the valuable info you provide. But i just dont get why you are recommending being overweight US. Overweight rest of world makes sense, but i strongly believe US markets have all the growth priced in and is a strong contender of a correction.

Believe what you wish. Strongest economy in the world. — Garth

#26 Musty Basement Dweller on 01.16.15 at 8:42 pm

Thanks Garth. Today’s post is a more real life example of what is actually going on in real estate in the lower mainland, as opposed to the Real Estate Board lies.

It concurs with most of the real life stories I have heard from people here in Vancouver, even most single family dwellings have truly not appreciated that much in the last four or five years.

For anyone who disagrees, and thinks that prices have gone up as much as the real estate board says, ask them for some real life examples, not the real estate board BS. That will shut them up.

#27 BlackDog on 01.16.15 at 8:42 pm

I hope they are wrong, but,

Morgan Stanley says “there’s little chance that the Bank of Canada hikes interest rates in the next two or three years, and says there’s a one in three chance of a rate cut by the end of the year.”

http://www.cbc.ca/news/business/morgan-stanley-canada-has-1-in-3-chance-of-interest-rate-cut-in-2015-1.2912834

They’re wrong. — Garth

#28 mark on 01.16.15 at 8:44 pm

Garth, if you have continuing contributions would you rebalance through sales or just allocate the new contributions to under performing parts of the portfolio?

#29 ANON on 01.16.15 at 8:46 pm

List it. Become so liquid that it drips.

#30 Smoking Man on 01.16.15 at 8:47 pm

Linda I left you a rather sarcastic rebuttal on yesterday’s.

You have to understand something about tin foil hats. If your a lush, and on occasion make huge all in bets. You need very high quality tin foil.

If I listened to sanctioned, teacher approved MSM reports to make those bets, I would have gone broke several times over.

The higher up the food chain you go, the smarter the lier, the narrative, the sales pitch excellent. Mind you they seriously botched France last week. I mean when those guys shot the cop in the head. I was revolted. But my tin foil sent me on a quest to see the entire clip. Guess what.

They missed him by two feet, no blood. What bugged me about it that sent me on the chip quest. Why would these guys stop a car, walk up to a cop, shoot him then go back in the car. Camera Man in perfect position. That car, the one with crome mirrors. Yet the car they found abandoned, with the left behind ID had black mirrors.

Now seeing that you don’t have a tin foil hat.. Please promise yourself, for the sake of your family that when making bets. Use a professional.

When we are finally turned into a police state, if you want to know what your life will be like, I know this will be hard, not watching the sanctioned stuff. Go on line and see what life is like for gaza folks.

As for me.. I’ll be alright, I’ll make a deal with the devil.. I will sell out in heart beat.

I’m street schooled.

Now go save the trees.

#31 North Burnaby on 01.16.15 at 8:47 pm

Shiny new condos are a must nowadays to find a girl to marry

#32 bigtown on 01.16.15 at 8:52 pm

Visiting Myrtle Beach, South Carolina and the gas is honing in on $1.90 per gallon. As a boomer I appreciate the help when I shop here…like at the Murphy’s gas station where the girl had to run out and give me back a dollar as I prepaid $15 to fill up.

Shopping for food at PUBLIX is so very out of the norm from Toronto… every five seconds they smile at you and ask if you want help; they run and pick up a jug of milk or wine if you forget; they bag everything nice and (wait this will really shock all of Canada) they carry out the bags or if you are too tired from all that smiling they push the cart to your car and then they give you a coupon for ice cream or chocolate milk. It really is America. Publix has little old ladies cooking nice dinners and handing them out at the entrance. America has embraced the service economy and it shows.

#33 saskatoon on 01.16.15 at 8:54 pm

heather mallick has a crush on you, garth:

“By that I mean that people seem more interested in real estate than in sex. I have a neighbour who insists on keeping the blinds open but who knows, he might be glued to Houzz.com rather than porn. You can look up “dual sinks” and “undermount” on Houzz and only come up for air 14 hours later, dazed and wrung out.

I would not do that. Twin sinks are wrong.

And this is what I mean about porn. Real estate runs on hunger and taste, just like the sex industry. Think of how your eyes slide over house photos. You know instantly if a house interests you, if the kitchen is shabby or just how you like it, the same way you know instantly from a photo if you could have coffee with someone. “

#34 Michael on 01.16.15 at 9:06 pm

#28 mark on 01.16.15 at 8:44 pm
Garth, if you have continuing contributions would you rebalance through sales or just allocate the new contributions to under performing parts of the portfolio?

————————————————————–

I would allocate new contributions to under-represented parts of the portfolio. You set your weights and use contributions to prop up assets that become underweight (usually due to under performance). There is no point in needless transactions; having 9% bonds (or any other asset for that matter) for an extra month instead of 10% bonds is not going to materially affect return in the long-run, but high fees will.

#35 BlackDog on 01.16.15 at 9:09 pm

Re: #27, Garth: “They’re wrong.”

Yeah, I don’t believe everything I read either.

#36 Freedom First on 01.16.15 at 9:12 pm

Thanks for the Photo and the very apt matching Post Garth. They both represent my worst nightmare. I am living the dream, thanks to 2 very important ingredients. The first, I have been blessed. The second, I have always put my own Freedom First.

Thank you for your Blog Garth. For showing the sane, and the insane actions of human beings. I need to see them both. Helps keep me living in gratitude and freedom.

#37 BlackDog on 01.16.15 at 9:14 pm

2014 hottest year on record says NASA and NOAA:
http://www.theweathernetwork.com/news/articles/its-official-nasa–noaa-confirm-that-2014-was-the-hottest-year-on-record/43779/

#38 Smoking Man on 01.16.15 at 9:15 pm

Believe what you wish. Strongest economy in the world. — Garth

Couldn’t agree with you more.. But the way I see it, the strongest resident in the nursing home.

Note to self, stop drinking Jack.. If feel aggression starting to alter my mood.

#39 Washed Up Lawyer on 01.16.15 at 9:20 pm

#32 Bigtown

re: Visit to Myrtle Beach

I think there might be an element in addition to embracing the service economy. When I went to Texas as a 17 year old to attend farrier’s school, I formed the impression that the Texans were so proud of their state that they went out of their way to ensure you enjoyed it too. Wonderful folks. Similar experiences in New Mexico, California, Oregon, Washington, Idaho, Montana, Hawaii, etc.

Very willing to help.

#40 HD on 01.16.15 at 9:23 pm

@#28 mark on 01.16.15 at 8:44 pm

Those 2 blog posts should help and answer your question:

http://canadiancouchpotato.com/2014/06/23/rebalancing-with-cash-flows/

http://canadiancouchpotato.com/2011/02/24/how-often-should-you-rebalance/

Best,

HD

#41 DigDug on 01.16.15 at 9:28 pm

This story is nonsense. Real estate doesn’t always go up, but condos in North Van from 7 years ago sure have.

I suppose here is where we jerk off to the crash unfolding before our eyes.

“That condo will be worth 150K next year and we can rent it back to them for $1500 a month! Stupid homoaner!”

Sad.

#42 economictsunami on 01.16.15 at 9:45 pm

Increased business spending due to low borrowing costs, lower taxes and devalued loonie, the trifecta for possible growth remains anemic.

Demand? Savings from lower energy prices doesn’t increase consumer spending but merely shifts it.

Why A Falling Loonie Won’t Rescue Canada’s Economy:

http://www.huffingtonpost.ca/2015/01/16/manufacturing-canadian-dollar-cibc_n_6488138.html?utm_hp_ref=tw

Hopefully Canadians (consumer/ business) get over our dual addictions to both low rates and debt.

Don’t count on your friendly CB, bond market or creditors to do what’s best for you.

The Swiss can attest to that…

Hamish McRae: Does QE pass the test for all policy initiatives – first, do no harm?

http://www.independent.co.uk/news/business/comment/hamish-mcrae/hamish-mcrae-does-qe-pass-the-test-for-all-policy-initiatives–first-do-no-harm-9979016.html

#43 Smoking Man on 01.16.15 at 9:45 pm

#24 nonplused on 01.16.15 at 8:40 pm
Oh boy another bad day in Europe with the Swiss abandoning their EURO peg. Already half a dozen brokers have declared they are bankrupt. Word is the Swiss did it because they couldn’t fight the massive EURO printing but who knows.

And then the Ukrainians passed a law to draft 50,000 subjects into the army. To do what? Fight the rebels? It can’t be to fight the Russians, that would be like a mosquito attacking a moose.

There are varying reports now that maybe Russia hasn’t cut off gas supplies through the Ukraine just yet but said in the future all gas must go through Turkey. Hard to know the truth because other sources are still saying the gas flow is now zero. Either way I predict a lot of Colman camping stoves get sold in Europe in the next few weeks.
……..

This is the problem, the men that built the machine here in the west, we’ll they’re old, or dead.

The kids that inherited the power are clue less.

Putin’s not…

I feel like I’m on a hockey team with a coach that’s stoned on acid..

#44 No Canada, No on 01.16.15 at 9:46 pm

Sell condo and short crude oil futures with proceeding on max margin.

#45 crowdedelevatorfartz on 01.16.15 at 9:54 pm

@#31 North Burnaby
“Shiny new condos are a must nowadays to find a girl to marry”
++++++++++++++++++++++++++++++++++++
Wow those gals are real “keepers”……..

#46 Smoking Man on 01.16.15 at 10:02 pm

DELETED

#47 Mark on 01.16.15 at 10:17 pm

“Garth, if you have continuing contributions would you rebalance through sales or just allocate the new contributions to under performing parts of the portfolio?”

It all depends upon how large your new contributions are relative to the size of the portfolio. A young investor can probably maintain pretty good overall balance by just re-investing dividends and new contributions in the most under-allocated asset class. An almost retired investor whose contributions are minimal relative to the size of their existing portfolio, probably would have to sell at least some of the outperforming asset classes in order to rebalance.

“For anyone who disagrees, and thinks that prices have gone up as much as the real estate board says, ask them for some real life examples, not the real estate board BS. That will shut them up.”

I’ve been pointing this out as the obvious for quite a while now. The sales mix of RE has changed quite dramatically over the past year and a half, which has given rise to a situation where the RE boards can claim that prices are still rising, but actual prices on identical houses (ie: the stuff that normal people own) haven’t been.

As time goes on, as we’re seeing, changes to the sales mix become increasingly small, and even the RE boards reach limits as to how they can massage the figures.

So I wouldn’t go calling anyone liars here, but rather, it is fairly obvious that the RE boards’ interpretation of the sales statistics in their public statements is rather oblique to say the least. With the exception of the Regina RE board, which actually came out and admitted that the sales mix changes were driving any alleged “increases”.

#48 AK on 01.16.15 at 10:18 pm

“That means an ETF with oodles of companies in it instead of individual stocks.”
====================================
There is nothing wrong with owning individual stocks.

It’s about risk, not correctness. — Garth

#49 Obvious Truth on 01.16.15 at 10:18 pm

#25. It’s good to be skeptical. Always have to be diversified. But can’t overthink.

And never let your personal views stop you from making money.

S and p has been correcting for months now. It just bounced off summer highs. What more?

#50 raisemyrent on 01.16.15 at 10:20 pm

People are emotional about real estate so they will remain emotional as the ship sinks. Reason and numbers are pointless. With all the Calgary news, my friend who has 2 properties (using that word loosely), a condo that she rents (for slightly more than the HELOC!) and an old bungalow, well she flogs the realtor tripe about homes rising in Calgary in 2015. Sigh.
Smokey, sounds like we’re on for some good posts. I don’t read all the comments, but looks to me like it’s been a while since we read a story to good to be false.

#51 Tri-Guy on 01.16.15 at 10:26 pm

As a proud pit bull owner…I’m offended

#52 Smoking Man on 01.16.15 at 10:31 pm

Just got escorted out of a booth of 20 somethings goddess . At leased I tried.

In the corner alone, trying to figure out some words to amuse my record breaking 33 fans..

Drawing a blank… That’s what smokes are for..

Reflection…

Ha deleted above.. Gartho still love your cowboy boots.

#53 drydock on 01.16.15 at 10:31 pm

#234 Linda on 01.16.15 at 3:13 pm
For smoking bumwipe and the other mentally defective conspiracy idiots here:

http://www.theglobeandmail.com/technology/science/2014-sets-mark-for-earths-hottest-year-on-record/article22486786/

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

Smoking bumwipe, ooooooh, ouch.

#54 Juanito on 01.16.15 at 10:34 pm

Just for kicks, I started tracking mls listing volumes in the Edmonton capital region. I listings have grown 20% since I started all the way back on…Tuesday. No joke.

#55 drydock on 01.16.15 at 10:34 pm

Adam the camel.
For some reason that name cracks me up.
Adam the camel, it’s great.

#56 Smoking Man on 01.16.15 at 10:35 pm

It’s amazing, after at leased 1.5 letters of wine and 26 onunzes of JD my spelling perfect…

I’m getting good..

#57 lee on 01.16.15 at 10:39 pm

Bond etfs/mfs suck. They go up very little when stocks tank. You’re better with fixed in pref etfs and cash. The cash will yield what bonds do after taxes more or less. Cash provides the stability you need in 10-15 per cent of your portfolio net of pref etfs. Bonds are for suckers.

#58 Smoking Man on 01.16.15 at 10:40 pm

DELETED

#59 Smoking Man on 01.16.15 at 10:47 pm

I’ve insulted God to many times.. The bastard removes my puke reflex, you know, that thing that says go to bed loser.

God I’m not asking you for a challenge, saw what you did last time I did that…

I still don’t beilive in you, just hedging ass hole.

I can’t wait to meet you, if your real.. And I don’t end up worm food.

Won’t be a good day for you.. Realy I’m serious..

#60 For those about to flop... on 01.16.15 at 10:50 pm

#36 Freedom First
Why are you such a bum kisser?

#61 Berry Cup on 01.16.15 at 10:51 pm

Amazing how little financial literacy Canadians have. It’s like many Canadians stop learning after they graduate highschool or college and don’t inform themselves of how to have a sound future. I hope this couple realizes that the writing is on the wall and it’s time to embrace renter-ship.

#62 Washed Up Lawyer on 01.16.15 at 10:53 pm

Smoking Man:

You make me howl out lowd with laughter and I don’t do that very often in the frozen tundra of Ft. McM.

I am fan number 34.

As far as Country & Western music is concerned, try old school. Ray Price and the Cherokee Cowboys, Lefty Frizzell, George Jones, the Hag. You might like the Honky Tonk Tradition.

#63 stage1dave on 01.16.15 at 11:04 pm

I must have nothing to do lately…turning into a post ‘ho here…but it is January, & ever since they axed the local car show I have very little to do after Christmas.

Took some time today to do a bit of “Value Villaging” & scored a couple of awesome tour t’s, collected some overdue bills, & ruminated about the state of the world…well, in AB that means the price of oil…period.

So gas hit 77.9 in Edmonton today but it’s still 70.9 in Camrose. WTF? As our host once said, the price has very little to do with supply & demand…started wondering what else could get “commodified”; Electricity? Natural gas? Wheat? Nursing homes? Apartments? Well, we already got REIT’s so I guess they’re almost commodified along with the preceeding.

Then I got depressed & figured I’d buy a lottery ticket…the dude in front of me looked like he’d crawled outta the ditch, but spent $60! I still bought the ticket, but got thinking maybe this will be a growth industry in AB this year…

Well, that & photo radar.

Gawd knows it ain’t gonna be RE in this town…4 sale signs popping up everywhere.

(please note that in order NOT to offend anyone’s religious sensibilities, I have deliberately misspelt “God”…& apparently mispelt misspelled too)

Can’t be too careful these days…but after reading SM’s previous comment, it reminded my of something that has been nagging the interior of my cranium. Am I the only person who wonders why a professional terrorist takes his ID with him when he knows he will be committing mass murder? And then forgets it in the car? Huh?

Must have had an interesting relationship with his GF, who has apparently decamped to Syria.”Damn, honey; think I left my ATM card at the scene of my last killing…think you could pay for dinner?”

I don’t get it…even our PM has now said that the jihadists have declared war on western civilization. Did I miss something here? I thought the “terrorists” were objecting to cartoon depictions of of their prophet.

Since the only members of Western civilization that seem to be involved in the middle east are corporations & politicians, I’m relieved that they have acknowledged the threat & will be henceforth summoning their friends & family to enlist, & subsequently defend the democratic ideals our society is founded upon. No doubt we can expect a hasty end to this endeavor, as the response at recruiting centers will be overwhelming…

Unhh…yeah, then I woke up again…but in a further exercise of the imagination, I got thinking about how “war” would come to Alberta. It will undoubtedly begin when someone wears a Niel Young tour t shirt in downtown Ft MacMurray, or at a Firebag mess hall.

Now that’s something worth fighting over!

I’m thinking that declining RE values & impending economic catastrophe might be a wee bit more important to most Albertans than all of the above. It’s in peoples’ nature to respond firstly to what’s going on in their own backyards, after all.

Maybe TPTB have decided the only way out of three decades worth of economic charade is to be misdirection & distraction. Should be an interesting spring…

#64 Leo Tolstoy on 01.16.15 at 11:11 pm

Believe what you wish. Strongest economy in the world. — Garth

Bang on.

Again.

Also… No rate hikes by the BoC. US Fed raises mid-2015. Canadian dollar continues deeper into the crapper.

#65 Smoking Man on 01.16.15 at 11:20 pm

There is only one smoking man.

At stir, Ear buds on.. Shades.

In a music loop on my dumb phone..

Weightless again, from handsome family. Over and over again.

#66 Waterloo Resident on 01.16.15 at 11:25 pm

Has anyone heard about how the Swiss have just dropped their central rate down to a MINUS 0.75% ? Yes, that’s right; NEGATIVE RATES.

With Canada’s oil and mining sectors in the dumps, out housing market is the only thing keeping us out of recession, and I think soon we too will be finding our interest rates falling, perhaps even going negative.

Just imagine that, imagine the banks paying you 0.75% interest each year if you borrow money from them to buy a house? I can see that coming here too.

Idiot comment of the week. — Garth

#67 john on 01.16.15 at 11:26 pm

Garth,
Maybe the TREB knows more about the GTA RE market than you and the bloggers give them credit.
Last check on kijiji, houses for sale listings for GTA have declined from 20500 to 13500 in the last six months. At the current sale rate, that is less than two months supply. During the RE crash in the Miami- Forth Lauderdale area there were 80000 listings, or about 10 months supply. Until the for sale listing in GTA increase to 100000, I wouldn’t hold my breath for prices to decline. Unless we go into a full blown depression the HAM money and the 100000 new comers will continue the upward pressure on RE prices.

#68 Market Man on 01.16.15 at 11:27 pm

Check out TREB report

http://bit.ly/1BDlfet

Prices are down in SDF

#69 TFSA QUESTION on 01.16.15 at 11:32 pm

quick question. If i keep ETF’s like VUN ( holds US companies but listed on the TSX), am I still subject to the foreign dividend tax if its kept in my TFSA ? or is it only US listed ETF’s that are taxed……..

#70 john balong on 01.16.15 at 11:39 pm

consumer confidence is at an 11-year high and Scotiabank just confirmed its belief US rates will rise by summer – to cool off an economy that could actually overheat.-Garth-

Garth do you actually believe your scotiabank overlords word on that…. buy then world currencies will be turmoiling .11 yr high consumer confidence after 11%drop in sales on black friday sure whatever you talk yourself in circles

My ‘Scotiabank overlords’? This blog is getting weird. — Garth

#71 TurnerNation on 01.16.15 at 11:42 pm

Sorry I couldn’t help it: First!?

I was first in long oil tirade.
#avarice.

#72 The other half | Realties.ca on 01.16.15 at 11:46 pm

[…] Source: http://www.greaterfool.ca/2015/01/16/the-other-half/ […]

#73 Strathcona on 01.16.15 at 11:53 pm

Here in Edmonton, stagnation has started. House prices that were 100K overvalued have come down 30K so far. Many local construction yards are filled with heavy equipment which used to be out on jobs. These yards used to be empty. Areas like Acheson, Leduc, could be seen by satellite photos soon, with the massive difference from 2014 and now. This is slow and painful. Each quarter we’ll see smaller budgets and cuts. It is dead at our oil services shop.

#74 Mark on 01.17.15 at 12:00 am

“Just imagine that, imagine the banks paying you 0.75% interest each year if you borrow money from them to buy a house? I can see that coming here too.”

A negative policy rate doesn’t mean that retail borrowers get to borrow at negative rates. Banks, and lenders more broadly, will just warehouse their cash, or alternatively, buy gold, if they cannot lend out at a rate of interest > 0. This is one of the main reasons why deflationary cycles are very hard to break.

Credit-worthiness is now a big issue in the Canadian RE mortgage market, with declining equity on account of lower house prices. The BoC will probably decrease policy rates (of course, Garth vehemently disagrees!), but retail rates probably won’t actually move down much, if any. As rates will increasingly include a premium to protect the lender against default.

#75 devore on 01.17.15 at 12:02 am

I found the same as today’s couple, with a condo in Coal Harbor. Sold at a slight loss on purchase price (minus all the usual expenses), despite market supposedly clocking in double digits. It’s the sales mix stupid: shiny and new sells at a premium, old and busted gets a fire sale. Looking at recent sales in that building, I wouldn’t have done any better if I held on, just would have made my losses greater. All the while I could have been renting for 65% of the cost, which is ultimately why I sold; I was really missing that 35%, I just wasn’t getting ahead in my savings, and the special assessment put the final nail in the coffin.

Pride of ownership? More like price of ownership.

#76 Jim on 01.17.15 at 12:02 am

Interest rate hike? Real estate collapse? Of course they’ll happen.. But will they happen before you die?

#77 For those about to flop... on 01.17.15 at 12:08 am

Two dudes on this blog yesterday arguing on how to spell centre /center.
In school I considered myself a reasonable speller but now having lived in 5 different countries my spelling has got worse not better.
I am now constantly second guessing myself over words as to how to spell a word in certain countries.
I will try to think of a few examples…
color/colour
tire/tyre
jail/gaol
The point is it does not really matter as long as it makes general sense.
Sorry to disappoint anyone but none of us are going to win a Pulitzer Prize any time soon.
It’s very cathartic to put your thoughts down on paper so let’s not argue over a few misspelled words here and there and overall just enjoy the healthy discussion.
If someone wants to correct their own post because of spellcheck interference so be it ,but let’s not be correcting each all the time like the dude who lectured someone on grammar and then used the wrong grammar themselves (post/posts).
0 0
( :: )
\_/

Enjoy the banter!

#78 Mark on 01.17.15 at 12:14 am

“quick question. If i keep ETF’s like VUN ( holds US companies but listed on the TSX), am I still subject to the foreign dividend tax if its kept in my TFSA ? or is it only US listed ETF’s that are taxed……..”

VUN appears to be a Canadian Mutual Fund Trust, which holds US securities or units of a US-domiciled trust which holds US securities. Hence, the fund itself is subject to IRS withholding tax on dividends received from the underlying trusts/securities it holds. The fund would then be able to issue a tax receipt for the foreign tax credit corresponding to IRS withholding tax paid.

Obviously in a TFSA/RRSP/RESP, the foreign tax credit is of no consequence, so unfortunately, you are subject to non-refundable IRS withholding tax on dividends ultimately derived from foreign firms.

If you held such an investment in a taxable account, you would have to pay tax on the income derived from the trust, at your marginal rate. But you would have an offsetting foreign tax credit available.

#79 devore on 01.17.15 at 12:15 am

#67 john

First, Kijiji is not where you go to count listings.

Second, what are you even talking about?

#80 devore on 01.17.15 at 12:28 am

Seriously, today’s blog brought out all the weirdos who can’t put together a coherent English sentence.

#81 devore on 01.17.15 at 12:36 am

#66 Waterloo Resident

You don’t understand what a bank overnight rate means. No person in the world is ever taking out a loan where repayment is less than principal. It’s horrifying anyone would even believe that, as such a loan guarantees losses to the lender. Further, a negative lending rate would mean a negative deposit rate, and no one would deposit money into a bank holding it in cash instead.

Here are Swiss mortgage rates: http://moneypark.ch/en/mortgage/rates/

#82 Carousel on 01.17.15 at 12:48 am

To smoking man … Please leave this planet .. You are nuts!

#83 Joe Bigwood on 01.17.15 at 1:23 am

About yesterday.

Garth ..are you still sawing on that dead wood about the Liberals imaginary ‘surplus’?

“Ten years of Liberal surpluses have been followed by eight years of Conservative deficits.”

You know as well as everyone else that there was never any ‘surpluses’. There was only an accounting jiggery pokery of epic proportion. The Federal Liberals off loaded all infrastructure , health and education spending onto the provinces. municipalities and cities.

With that shell game we saw property taxes and the cost of all services…from drivers licenses to fishing licenses, policing, schools, sewer…etc etc etc etc etc double and treble with a very short time. The ‘surpuls’ fraud remains …a fraud.

Regarding additional spending during the last recession. Weren’t the liberals and the unions screaming themselves blue to increase spending? The government acquiesced for political peace…..much to the chagrin of conservatives.

So….is the Harper government damned if they do and damned if they don’t? Are you too old to remember the origins of the federal deficit and larks such as the ‘LIP Grant Program’ under Pierre Trudeau?

#84 Happy Renting on 01.17.15 at 1:49 am

#69 TFSA QUESTION on 01.16.15 at 11:32 pm
quick question. If i keep ETF’s like VUN ( holds US companies but listed on the TSX), am I still subject to the foreign dividend tax if its kept in my TFSA ? or is it only US listed ETF’s that are taxed……..

—-

Yes, you lose the foreign dividend tax (for the TFSA there’s no agreement to avoid being taxed by the home country or ability to claim it back.) I think you’re not subject to the tax if it’s held in your RRSP in USD (VUN wouldn’t qualify as it’s in a CAD wrapper). Outside a registered account, in USD, I believe you can claim credit for the foreign tax withheld.

All that said, I still hold VUN in my TFSA. The withheld dividend tax is a very small part of the dividends + capital gains that I hope to reap from US equities.

#85 Happy Renting on 01.17.15 at 2:01 am

Katy, the numbers from your story hurt my head. No price appreciation in seven years? By Garth’s math you’re already down $41k. Sell the damn thing and move on.

#86 Ronaldo on 01.17.15 at 2:05 am

#60 For those about to flop… on 01.16.15 at 10:50 pm

#36 Freedom First
Why are you such a bum kisser?
————————————————-
He’s on commission.

#87 kommykim on 01.17.15 at 2:16 am

RE: #48 AK on 01.16.15 at 10:18 pm
“That means an ETF with oodles of companies in it instead of individual stocks.”
====================================
There is nothing wrong with owning individual stocks.

True. As long as you have oodles of money so that you can buy oodles of different stocks.

#88 kommykim on 01.17.15 at 2:18 am

RE: My ‘Scotiabank overlords’? This blog is getting weird. — Garth

Come on Garth. This blog has always been weird. That’s why we keep coming back. ;-)

#89 kommykim on 01.17.15 at 2:30 am

RE: #69 TFSA QUESTION on 01.16.15 at 11:32 pm
quick question. If i keep ETF’s like VUN ( holds US companies but listed on the TSX), am I still subject to the foreign dividend tax if its kept in my TFSA ? or is it only US listed ETF’s that are taxed……..

I think with VUN there’s no difference as far as TFSA vs RRSP. You lose the withholding taxes in both cases. You can recover them in a taxable account though. More details here:
http://canadiancouchpotato.com/2014/02/20/the-true-cost-of-foreign-withholding-taxes/

#90 Entrepreneur on 01.17.15 at 2:53 am

People think that they are so smart with easy credit.

Off topic. While living on a small gulf island, someone said that people from other countries get their Canadian citizenship by buying a business or starting one here in Canada. How true this is, don’t know, but maybe this will clear the air about Vancouver.

#91 screwed on 01.17.15 at 3:06 am

UST 10 yr paper is hovering near 1.7%
UST 30 yr paper is 2.5%

Market is driving rates down. Fed won’t raise rates. Give it up.

http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield

“overheating US economy”

which sectors?

#92 Freedom First on 01.17.15 at 3:17 am

#60 for those about to flop…..

Yes, I like to kiss a nice bum, I admit it. But I was snipped as a young man, so I never have to pay for it, live with it, or marry it. I always put my freedom first. You, however, can kiss my a$$.

#93 groovin123 on 01.17.15 at 4:09 am

” In America, for example, consumer confidence is at an 11-year high and Scotiabank just confirmed its belief US rates will rise by summer – to cool off an economy that could actually overheat. ”

For the love of God, US T-Bills are hammering new highs. (New yield lows). I’ve been trading markets for a living since they invented dirt, and I can’t take this quote seriously.

Anyone buy my recommended tax loss picks? Probably not. AR.T up over 100%, and G.T (yes Goldcorp) up over 40% now from the ho-ho-ho-lows. Heck, even the senior-gold index is up over 35%ish off the lows (XGD.T). You see, when less than 2% of peeps out there are bullish on a sector, like gold, you buy the heck out of it. I don’t care what it is, I’m not a metalhead – coulda been corndogs.

The gold trade is getting tired, however. Goldman predicting $39 oil (bottom is in at $45), copper flushed out with the Swissie dumping the peg to the Euro….

The financial paper trade has been a great one since 2011, for sure. Huge money has been made, but it’s a hiccup in a longer-term trend. Re-load the commods…. before this blog starts recommending it.

I’ve been saying Canadian real estate has been a sell for the last 7 years and been very, very wrong… (lol)… maybe now this broken clock will be right.

#94 Vanecdotal on 01.17.15 at 4:38 am

#26 Musty Basement Dweller

I can also corroborate this, and not just N. Van, same across all of Greater Van. Generally speaking, in many cases, condos (and townhomes) are proving to be a terrible “investment” if bought in the last 7 years or so. Even in metro Van. the exception might be HAMmy high demand pockets, but I’d love to see real numbers on actual appreciated value on even those in the same time frame. I suspect they have underperformed as well, perhaps to a lesser degree though. I can tell you that in the ‘burbs, there has been little to no price appreciation, in real inflation-adjusted terms, in 3-4 years in many areas, in both average SFH’s and condos/townhomes.

#23 james
Agreed. Seeing this amongst my peers who own. Quality in the ol’ rainforest climate is proving to be an issue even in concrete buildings not 5 years old…. yet every single building is inspected and “passed”. Riiiight.

#41 DigDug
Please do cite your examples, where condos in N. Van have been a great investment in the last 7 years? IF this is even true, it would likely be confined to the absolute hottest HAMmy pockets only, (like Westside Van), elsewhere in N. Van, and most of greater Van, this couple’s story is absolutely the New Normal – Year 4 and counting…

#95 Renters unite on 01.17.15 at 6:31 am

Wow this site still is up and running telling people to rent rent rent. Renting does suck and will always suck and you know why so no need to explain and btw if you don’t know why then you’re delusional. You have to be smart when buying a FREEHOLD home with NO road maintenance fees. Look at what your salary is and base the property you buy on a wise purchase where if you make 70gs a year you buy a $300,000 home (well roughly around there) but instead I’m seeing people buying $600,000 homes to act like big shots and impress friends and family and so this is when they run to mommy and daddy for hand outs and rack up credit cards and even wish for inheritance very quickly. So you see the difference in ways of purchasing. So all you renters out there who are waiting to buy or shooting down the SMART BUYERS – all I can say is keep staying on the side lines and you will never own or own when home prices increase and increase more and more and more and……

#96 juno on 01.17.15 at 7:09 am

#66 Waterloo Resident on 01.16.15 at 11:25 pm

Yep I can see the hedge fund guys borrowing infinite canadian dollars and buying us.

They would make a killing, and the Canadian Peso will go negative infinite to 1 usd.

Go back to school grade 5 and relearn your math

#97 maxx on 01.17.15 at 9:02 am

#9 View on 01.16.15 at 7:47 pm

“Denial across Alberta. I traded vehicles down last week and a beautiful blond sneered my way this afternoon. People don’t realize what is coming!!”

People are generally (most dawgs excepted) pretty shallow and certainly Fiscally Challenged. Only buy designer or prestige brands from second-hand sources. There is a huge stock of nearly everything out there.

Let the “F.C.s” shoulder the costs above rock-bottom, including tax. Think of it this way: far more satisfying to have a designer bank account than designer stuff, no?!

Designer…what a farcical concept. Everything man-made, from the first cave-man club to sexy cars is “designed”.

View the sneer as a badge of honour.

#98 Ultra on 01.17.15 at 9:05 am

If they can find company to rent condo for them and to manage so that they do not have to deal with tenant issues maybe someone else could pay off that condo so they could go live in Mexico with parents. In Toronto my condo gets managed by http://www.delrentals.com and so far I am satisfied with service. No dealing with tenants was my number one priority. Soon when condo is payed off I will be able to use my monthly income from the rent and retire like king in Thailand where I pay $2500 per year rent in motel and monthly cost of living is less than $500 a month so I will have extra $1000 left to invest in stocks!

#99 T.O. Bubble Boy on 01.17.15 at 9:41 am

If they are going to sell (which they should), can’t they kick the renters out and claim it back as principal residence to avoid capital gains?

#100 Stephen Harper's Closet on 01.17.15 at 10:14 am

In case you were looking for Steve and Joe, yes they are in here with me, hosting a ‘leadership retreat’ so they say.

If anyone is passing by, could you please bring some clean diapers and night vision goggles? They keep pissing their pants and are too afraid to turn on the light.

Thanks much!

#101 john on 01.17.15 at 10:14 am

reply #67
Do you have better number for the total number of listing in the GTA?

#102 Obvious Truth on 01.17.15 at 10:16 am

At least the couple here has questioned what they are doing. They will see both sides and decide. But most won’t.

Witness #89. The downturn has started and he’s still in dreamland. Most are in his camp. That’s why this will be such a tragedy. All those dreams they have been sold are preventing them from doing math.

Make no mistake. These are not investors. They are leveraged speculators that are all on the same side of the bet. No different than oil. And we are hearing on this blog about what is happening in oil services when the music stops. Misallocated capital always gets flushed. No exceptions.

#103 Lawboy on 01.17.15 at 10:25 am

#98 T.O. Bubble Boy

If they are going to sell (which they should), can’t they kick the renters out and claim it back as principal residence to avoid capital gains?

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

Depends on their prior occupancy. This is an area where a lot of rookie scammers are getting screwed by CRA bigtime, rightly so.

To claim a property as a principal residence, capital gains tax exempt, you must be able to show that you have “routinely and habitually” made it your principal residence over a significant period of time (as determined by CRA)

So flipping won’t qualify. Neither will a claim to be living in a place for a few weeks or months before or after you rent it out. It must be your actual HOME in order to avoid capital gains costs. You’ve got to have months of utility bills, proof your kids went to the local schools, witnesses, etc… to prove a regular occupancy that is tax exempt. CRA will demand such proof now and has multiple projects cracking down on stuff like this, not just condo flippers.

And to be fair to all of us and our tax base, the scum of the earth who try to pull tax dodges like this richly deserve to be penalized plus face extra penalties, or better yet, thrown into prison for a spell.

#104 Sunshine on 01.17.15 at 11:19 am

Any comments on prices in the latest TREB mid month report? They are finally going down.

#105 Henry Rearden on 01.17.15 at 11:52 am

The blog dogs make me chuckle. Upset over a small decline in the stock market this year. I’m personally hoping for a big correction so I can pick up some good dividend payers at a low price. But then I’m young and have time on my side.

On another note, ever noticed how everything government touches turns to mud? Healthcare (sucks), Real Estate (artificially inflated, punishes savers), Education (kids of today taught to play their part in the herd). And what do people want when we have an economic crisis? More government! My sides hurt laughing.

Oh, read this post. It’s a great analysis of the real estate asset class: http://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terrible-investment/

#106 Henry Rearden on 01.17.15 at 11:58 am

PS All I see on viewpoint is price changes. And they ain’t going up. One home was purchased for 2 million in 2010, selling now for around 1 million. This is here in beautiful Nova Scotia. Price decrease after price decrease. Good time to be liquid and free. And I’m not talking about beer.

#107 static on 01.17.15 at 1:32 pm

Smoking Man fan number 35.

You the shizzle SM!

#108 For those about to flop... on 01.17.15 at 1:48 pm

# 90 Freedom First.
Spoken like a true bum kisser!

#109 Rainclouds on 01.17.15 at 1:54 pm

#83

Its called Math. And Leadership.

#110 TurnerNation on 01.17.15 at 2:00 pm

I always put my money where my mouth is re. calls on oil, Treasury Blondes and TSX. Via ETFs and in my two workplace RRSP plans with their middling mutual fund choices:

Since January 1, 2014 13.7%
For the past 1 year 13.7%

….and…
Since January 1, 2014 11.6%
For the past 1 year 11.6%

Speaking of gamblers…Stones nugget: most Led Zep-esque driving blues track they have I think.

“Talkin’ ’bout the midnight gambler
The one you never seen before, yeah
Talkin’ ’bout the midnight gambler
Did you see him jump the garden wall?”

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

#111 Mike T. on 01.17.15 at 2:03 pm

#154 Andrew Woburn (and others)
from Thursday

just want to thank you for taking the time to write that post about the SMI

#112 jess on 01.17.15 at 2:08 pm

LuxLeaker – the auditor’s “public duty”
Auditors Can Be Whistleblowers: A Guest Post On Recent Developments In Whistleblower Case Law

http://retheauditors.com/2015/01/05/auditors-can-be-whistleblowers-a-guest-post-on-recent-developments-in-whistleblower-case-law/

======
Conflicts?

The Full Service Firm: McKenna Comments For Canada’s The Bottom Line On Legal Services
By Francine • Jan 3rd, 2015 • Category: You Can Quote Me On That

“Jeff Buckstein at Canada’s The Bottom Line published a feature back in October about the largest public accounting firms’ expansion into legal services. We’re not talking about due diligence, corporate investigations and e-discovery activities but the inclusion of full-fledged law firms into the networks that will compete with traditional firms in the UK, China and other places where they are now allowed…

http://retheauditors.com/2015/01/03/the-full-service-firm-mckenna-comments-for-canadas-the-bottom-line-on-legal-services/

#113 blue77 on 01.17.15 at 2:31 pm

Don’t invest in a balanced portfolio. S&P at least corrects 15%+ this year if not more. RE is even worse. Don’t listen to fund managers. Hold cash to buy later

The reason people acquire balanced portfolios is so they can stop listening to market-timing bozos like you, who waited all of 2014 for a correction. — Garth

#114 Blacksheep on 01.17.15 at 2:56 pm

As I await Linda’s scathing response from my post yesterday (#245) I realized her link showing 2014
was a record hot year, is actually friggen awesome!

Some context…yes.

Being in the Fraser Valley, I personally am loving the no snow, less rain & more sun scenario that’s playing out. The wife spent half of last year with her cars convertible top down. The local ski mountains look like its April. Annual new Bike show next weekend, maybe we’ll ride the Harley : )

And yes, as I have told Garth many times before, it is all about me.

#115 Linda on 01.17.15 at 4:06 pm

#114 Blacksheep

As I await Linda’s scathing response from my post yesterday (#245) I realized her link showing 2014
was a record hot year, is actually friggen awesome!

Some context…yes.
——————————————————————

No context, actually; that appears to be beyond your intellectual ability, Blacksheep Droppings.

Like all climate change deniers, you really are a lazy douchebag of ignorance.

The researcher you cite, from 14 years ago, is here as a co-author ten years later as part of the IPCC, making it clear that serious climate change is here and sea level rise will be disastrous. This report includes this statement, co-authored by your denial “source”.

“The natural state of the Earth with present carbon dioxide levels is one with sea levels about 20 meters higher than at present”

You and smoking bumwipe and other lazy ignoramuses of climate change denial are not even remotely challenging, I am afraid. Tedious, yes.

Only people like yourself would think that selective browsing (out of context as well) on the internet stands up to 95% agreement on the part of the best minds investigating the subject.

http://www.nytimes.com/2013/08/20/science/earth/extremely-likely-that-human-activity-is-driving-climate-change-panel-finds.html?pagewanted=all&_r=0

https://limitlesslife.wordpress.com/tag/intergovernmental-panel-on-climate-change/

#116 Mark on 01.17.15 at 4:15 pm

“Any comments on prices in the latest TREB mid month report? They are finally going down.”

Sounds like the changes to the sales mix have finally run their course. And the TREB is trying to preserve whatever little credibility they have left in the marketplace by finally showing that prices are going down.

Astute observers would have understood that the melt has been occurring since the middle of 2013, when “F” whacked Canada’s subprime sector by refusing to expand the CMHC subprime mortgage insurance limit from the $600B authority.

#117 Arfmooocat on 01.17.15 at 4:35 pm

#115 Linda

I think this whole climate change thing caused by man is a load of absolute bull dung.

I will be long gone before any dramatic climate change.

But maybe in a million years there will be palm trees in Alberta, just like we uncover in the fossils from 5 million years ago…. before man.

Fossil. — Garth

#118 Arfmooocat on 01.17.15 at 4:47 pm

#116 Mark

The ERB December report shows Y/Y December listings up 20%

That’s before the oil patch started to announce shut downs and massive layoffs.

Be interesting to see what January will look like

#119 honeybooboo on 01.17.15 at 4:52 pm

#116 Mark on 01.17.15 at 4:15 pm
“Any comments on prices in the latest TREB mid month report? They are finally going down.”

Sounds like the changes to the sales mix have finally run their course. And the TREB is trying to preserve whatever little credibility they have left in the marketplace by finally showing that prices are going down.
+++++++++++++++++++++++++++++++++++
How do you explain the price per square foot for condos going up every year? What was once $500/sq ft is now $600/sq ft, all else being equal.

No change to the sales mix, just rising prices per sq.ft.

#120 For those about to flop... on 01.17.15 at 5:02 pm

The earth is warming ,that is an un disputable fact.
What’s causing it is obviously up for debate.
With 7 billion people on the planet it is hard to see how we are supposed to have a minimal effect on climate change.
Capitalism favours taking all the commodities now instead off taking what is only essential now and leaving the rest for later.
Governments around the world are so indebted and so focused on only doing what it takes to stay in power that the HARD decisions that need making keep getting put off.
We have to strike a balance between commerce and preservation.
We know that there are cleaner fuels up for grabs than coal and oil but we continue to use them because governments pander to big business .
I accept that there has to be a little bit of pollution but walking around with a respiratory mask on like they do in China has to be a red flag.

#121 Oil Is Sticky on 01.17.15 at 5:06 pm

#45 james on 01.15.15 at 8:38 pm
#3 Oil Is Sticky

Exactly how does the fact that a model is implemented on a digital computer make it accurate?

I get the sense you aren’t up on modeling, scientific computing and the like.

I agree that people should have foreseen a drop in oil prices due to Bakken and other oil fields ramping up in the USA. There is a bit of an oil field bubble in many ways. However, if anyone has an accurate model that can predict events in economic systems i would love to see it.

——–

You are right. I am no expert on models. Which is why I posted the question. I was just using logic and reason. This 2015. They have scanning equipment that proves oil now before they spend millions moving in equipment. It’s not the old days of poke and prod.

So now you understand my question. With this many straws (proven oil) in the ground……where was the model saying this can’t last. In which case does a “glut” in any economy EG Elmo, houses, glitter barbie, dot com stocks – ever not have prices come down because of a economic slow down OR a glut in the commodity. In this case both.

#122 Mark on 01.17.15 at 5:07 pm

“How do you explain the price per square foot for condos going up every year? What was once $500/sq ft is now $600/sq ft, all else being equal.”

I haven’t seen any data to that effect, but as an example, if more luxury condos are being sold (which generally would be financed with prime mortgages, either from wealthy buyers, or “move-up” buyers), and less lower-end condos (generally financed with CMHC subprime mortgages, for first time buyers), then you could have an increase in the $/square foot without actually having an increase in price on ‘identical’ units otherwise.

#123 Mike T. on 01.17.15 at 5:27 pm

Linda is dead wrong about the cause of climate change

our ‘leaders’ have the tech to end all fossil fuel TODAY if it was an actual problem

I am no fan of digging up the Earth and burning carbon to power the planet – but no way and I mean no way is burning carbon heating up the planet

if it was, why is the proposed solution to burn more carbon, as much as possible, in fact, and apply a tax?

why would you not introduce the tech to end fossil fuel?

the answer is self explanatory

the sun is getting hotter

ie the planet is getting hotter

superstorms?

check this out

‘Operation Popeye (Project Popeye/Motorpool/Intermediary-Compatriot) was a highly classified weather modification program in Southeast Asia during 1967-1972.’

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

if you can prove this did not happen you are free as an Earthling to modify wiki as you please

if government had this ability in the 60s……what can they do now?

I would offer an opinion but you wouldn’t understand.

#124 Mike T. on 01.17.15 at 5:37 pm

also, this is what I think about ‘Science’ journals

http://www.theguardian.com/commentisfree/2013/dec/09/how-journals-nature-science-cell-damage-science

http://www.theguardian.com/science/2013/dec/09/nobel-winner-boycott-science-journals

http://retractionwatch.com/2013/06/19/why-i-retracted-my-nature-paper-a-guest-post-from-david-vaux-about-correcting-the-scientific-record/

also, when you resort to name calling you invalidate yourself

the sun is getting hotter because it is a second mechanism involved in evolution and this is an evolutionary period on Earth

Not a climate change blog, Mike. — Garth

#125 Shawn Allen on 01.17.15 at 5:38 pm

Announcing the GreaterFools Anonymous Program

While some have said that too much of a good thing can be… wonderful, others know that addictions have to be dealt with. Sometimes interventions are needed.

Therefore the GreaterFools anonymous program has been set up.

If you know you are addicted to this blog and it has got to the point where it is harmful to your life then you can voluntarily come in for anonymous treatment.

Others will never admit that they have a problem. Therefore an intervention squad has been established. If you are posting here more than ten times a day then you know who you are.

Fair warning, Mark and Smoking Man, they are coming for you.

#126 LadyInWaiting on 01.17.15 at 5:41 pm

Some comments made on this blog refer to money from drugs and/or other illicit activities going into housing. As a foil to the all the HAM discussions, could we discuss whether housing has been the recent investment tool of choice for the criminal element (why not, they would like to get nice returns too) – on their laundered money. I refer to the recent story by CBC on Arthur Porter stating, “A shell company in her name [his wife’s name] was used to purchase eight homes, several bought for more than $1 million”. Could this partly explain the increase in housing prices, beyond what would be supported by the economic fundamentals (and incomes) in Vancouver and Toronto? These folks do not care much about prices, and pay all cash. It is also possible that many of the properties remain vacant. Could this explain observations people make about their neighbourhoods, which they ascribe to overseas investors? If so, where are the investigations?

#127 Arfmooocat on 01.17.15 at 5:43 pm

#120

I accept that there has to be a little bit of pollution but walking around with a respiratory mask on like they do in China has to be a red flag.

…………………………………………………………………….

Wearing a face mask in China isn’t a red flag for global warming…….. it’s a red flag for pollution.

#128 honeybooboo on 01.17.15 at 5:51 pm

#122 Mark on 01.17.15 at 5:07 pm
“How do you explain the price per square foot for condos going up every year? What was once $500/sq ft is now $600/sq ft, all else being equal.”

I haven’t seen any data to that effect, but as an example, if more luxury condos are being sold (which generally would be financed with prime mortgages, either from wealthy buyers, or “move-up” buyers), and less lower-end condos (generally financed with CMHC subprime mortgages, for first time buyers), then you could have an increase in the $/square foot without actually having an increase in price on ‘identical’ units otherwise.
+++++++++++++++++++++++++++++++++
Boy oh boy. Are you stretching for an answer or what.
I’ll let you what is really happening same building, identical units, with prices rising year after year. That is what is happening in Toronto. No difference in the sales mix. It is very easy to track with condos.
Admit it Mark, you know not of what you speak.
Granted renovated units are driving up the price per sq.ft. somewhat that cannot explain the total increase.

You know why there are less SFH selling in TO for under a million compared to 2 years ago, it’s because what once was $900,000 is now a million plus.
Simple as that, prove me wrong.
Same reason there are less SFH sales under $500,000.
You would have others believe that the low end buyer is having trouble getting financed, this again is FALSE. What once was $450,000 two years ago is now $525,000.
Prove me wrong.
Your theory on sales mix is just that, a theory.

#129 Godth on 01.17.15 at 6:01 pm

#115 Linda

So what’s the solution Linda?

#130 For those about to flop... on 01.17.15 at 6:09 pm

#127#120

I accept that there has to be a little bit of pollution but walking around with a respiratory mask on like they do in China has to be a red flag.

…………………………………………………………………….

Wearing a face mask in China isn’t a red flag for global warming…….. it’s a red flag for pollution.

——————————————————————–
You missed my point on pollution ,it is the goverments responsibity to look after the citizens that elected them not bend over for big business .
Do you want to walk around with a mask on all the time?

#131 Mark on 01.17.15 at 6:10 pm

“Boy oh boy. Are you stretching for an answer or what”

No. I was just giving you an example of how a shift in the sales mix can show prices on sales actually made rising, while prices on identical units remain relatively constant.

Since my example was hypothetical, I’m not sure why you would attack it as though it was specific.

And from all of the evidence I’ve seen, over the past 1-2 years, its been changes to the sales mix, not actual price increases, driving any alleged “gains” in most Canadian markets.

“What once was $450,000 two years ago is now $525,000.”

We’ve had various posters and posts to that effect from Garth and others. As well as ample macro data to support such. Identical units are flat to down over the past two years, which has had a corresponding impact on consumer and lender confidence.

#132 Smoking Man on 01.17.15 at 6:23 pm

#115 Linda

Be sure to have a few jugs of holy water and a garlic necklace if you click on below link.

IPCC Please….. Hide the decline, the hacked emails.

Promise me you will hire an advisory body before you invest any money.

You are so gullible.

http://www.climatedepot.com

#133 honeybooboo on 01.17.15 at 6:51 pm

“What once was $450,000 two years ago is now $525,000.”

We’ve had various posters and posts to that effect from Garth and others. As well as ample macro data to support such. Identical units are flat to down over the past two years, which has had a corresponding impact on consumer and lender confidence.
))))))))))))))))))))))))))))))))))))))))))))))0

Mark I thought of a new user name for you.
Bizarro Mark.
Up is down and wrong is right. Or is wrong write??

Bizarro

#134 Mark on 01.17.15 at 7:10 pm

“Could this partly explain the increase in housing prices, beyond what would be supported by the economic fundamentals (and incomes) in Vancouver and Toronto? These folks do not care much about prices, and pay all cash.”

No. At best, transactions such as described, are an almost infinitesimally small part of the overall market. Meaningful amounts of ‘cash’ being brought to the Canadian RE market would be reducing overall market leverage, which clearly is not happening. And people mostly do not become wealthy by investing in some of the most overpriced asset classes available, so to suggest that these individuals are now buying houses at the inflated multiples we see is profoundly insulting to their intelligence.

Its no surprise that Realtors would offer up and exaggerate anecdotal accounts of events that are quite rare in the marketplace. After all, the buoyancy of their industry and their livelyhoods depend upon the maintenance of the perception of confidence in RE pricing.

#135 crowdedelevatorfartz on 01.17.15 at 7:13 pm

@#115 Linda
“you really are a lazy douchebag of ignorance.”
“Blacksheep droppings”
“Smoking Bumwipe”
++++++++++++++++++++++++++++++++++++

My, such an eloquent discourse.
You aquired your colorful vocabulary at the Prison For Women School of Charm ?
Or just grew up on an army base as a the daughter of a drill sargent ?

#136 If you think house cost too much...you just wait on 01.17.15 at 7:13 pm

As of june 2015 people from China will no longer need visas to come to Canada.\
Undoubtedly, the horniest RE bunch on the planet.
Home ownership rate in Canada to surpass 100% in the next three years.
House prices will double in the next five years.
Mark my words !!!!!!

#137 Musty Basement Dweller on 01.17.15 at 7:31 pm

So the price of oil has dropped dramatically in a few short months, back to where it was 5 short years or so ago.

More and more people are saying that this price may stay roughly at this level for a while. That would make sense in a way, because the supply/ demand balance at that time, is not a lot unlike the present supply/ demand balance.

This make me wonder, why have we been paying so much for oil in the past 5 years? Just old fashioned screwing of us unknowing, oil dependent consumers?

#138 prairieboy43 on 01.17.15 at 7:36 pm

@ Godth #129. Fewer Humans.

#139 Blacksheep on 01.17.15 at 8:48 pm

Linda #115,

Was hoping for an adult exchange of ideas, but you respond with:

“Blacksheep Droppings”

“Like all climate change deniers, you really are a lazy douchebag of ignorance.”

“bumwipe and other lazy ignoramuses of climate change denial are not even remotely challenging,”

Clearly, I am no match for your superior intellect .

Believe what you like.

#140 Hospital Overcrowding on 01.17.15 at 9:18 pm

BC Nurses Union just released a statement saying that Surrey Memorial Hospital is critically overcrowded.

Maybe this population growth is leading to higher prices?? Huge numbers of nonresidents have recently come to Canada. Buying an overpriced home will be the least of your worries if this population growth continues without adequate infrastructure.

#141 Hospital Overcrowding on 01.17.15 at 9:21 pm

http://bc.ctvnews.ca/mobile/unprecedented-congestion-infection-outbreaks-at-surrey-hospital-fraser-health-1.2193608#

#142 NEVER GIVE UP on 01.17.15 at 9:40 pm

#63 stage1dave on 01.16.15 at 11:04 pm
Since the only members of Western civilization that seem to be involved in the middle east are corporations & politicians, I’m relieved that they have acknowledged the threat & will be henceforth summoning their friends & family to enlist, & subsequently defend the democratic ideals our society is founded upon. No doubt we can expect a hasty end to this endeavor, as the response at recruiting centers will be overwhelming…
____________________________________
You hit a nerve there Dave.

I have always felt that I would be ashamed if any of my children signed up and died in a war.
Most of these wars are between Money men and politicians.
My child’s life would have been for nothing.
Power hungry people who will use your children by drumming up a sense of patriotism and “Us Against Them” mentality to get you to sacrifice your sons and daughters to “Their” fight.
Bombing some rocky villages in Afghanistan has nothing to do with our border security. It only lessens our security.
I would draw the line at defending your actual border from incoming hordes.

On another note, us being one of the most generous nations for immigration. I would like to see a little responsibility with the trust we give.
Why cant we offer graduated citizenship like our graduated drivers licenses.
A simple contract between the parties. You want in to Canada so you must remain Crime free or you lose your citizenship and go home. Simple, Easy. What universal law says we have to call troublemakers Canadians when they came here under false pretenses.

Are you saying immigrants are more likely to be criminals? Corrections Canada says the opposite. People born here are more likely to be incarcerated. — Garth

#143 Andrew Woburn on 01.17.15 at 9:54 pm

Is the era of the mega-bank ready to come to a close?
Increasing regulatory pressures mean banks may be too big to succeed, rather than too big to fail.

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11351862/Is-the-era-of-the-mega-bank-ready-to-come-to-a-close.html

#144 Retired Boomer - WI on 01.17.15 at 10:18 pm

#132 Smoking Man

Posting a link, and reading about WHO operates the link are quite disparate issues.

Suggest you see WHO actually operates the CFACT staff.

Mostly journalists with decidedly right tinged backgrounds.
Hardly a group devoid of any “agenda” there.

My opinion (and remember opinions are like bums – everybody’s got one), climate change appears real. Is it man induced, probably. Unless we stop crapping up the atmosphere how can we ever know? Would less fossil fuel consumption help? Couldn’t hurt.

We are seeing the climate denier politicians positioning themselves already for presidential politics in 2016. An example would be WI’s governor Walker. A decidedly mediocre administrator, but a great politician!

#145 A on 01.17.15 at 10:56 pm

#234 Linda on 01.16.15 at 3:13 pm
For smoking bumwipe and the other mentally defective conspiracy idiots here:

http://www.theglobeandmail.com/technology/science/2014-sets-mark-for-earths-hottest-year-on-record/article22486786/
——————————-

The above suggests Freud gave up too easily on the theory of the downside of poor toilet training. What’s even more depressing is that our national journal of record waits until paragraph nine to let us know that the heat has in fact soared by several hundredths of a degree. Maybe.

Fishwife meets fishwrap.

#146 Andrew Woburn on 01.17.15 at 10:59 pm

“A” should have been “Andrew Woburn

#147 If you think houses cost too much...you just wait on 01.17.15 at 11:06 pm

With our economy in the shitter and the bonehead government we here have sure looks like interest rates here are soon going to zero.
Get Ready for 50c loonie before to long.
Oh well, at least we’re bringing in 35,000 quality people from Syria.
Yup, all is swell.

#148 Shawn Allen on 01.17.15 at 11:09 pm

Irony?

The reason people acquire balanced portfolios is so they can stop listening to market-timing bozos like you, who waited all of 2014 for a correction. — Garth

*************************************
True enough, the Balanced investment approach has been good regarding equities and bonds including REITs and county diversification.

But does anyone detect a “hint” of irony here regarding home prices and the approach to investing in homes espoused on a certain addictive blog by a certain gifted writer over the past seven years or so? Not that I think the advice was wrong but it might fairly be viewed as a market timing approach that was espoused?

Or was it just advice to rebalance the exposure to house investment? Tough to do when for most people they either own a house or they don’t — no half way — though they could own a cheaper house as opposed to an expensive house. Reducing equity in the house with debt changes the investment in the house by not one iota.

Repeatedly I have suggested a one-asset is risk-laden. As houses rise in value, so does that risk. Telling people to diversify is hardly market timing. — Garth

#149 Nomad on 01.17.15 at 11:12 pm

Sunlife, BNS, National Bank all had a solid pullback. They have 3.8%+ yields now.

Everytime we have a pullback and it comes back, people regret not buying. Well, let me remind you that it’s time to buy right now. Buy some US ETF, buy some canadian stocks.

Sure the market could keep going down, but if it does and doesn’t come back, that means our country’s got big non-imaginary problems at that point and that house you’ve been investing for, it’s extremely likely you’ll get it cheaper.

Better ride the economy on one horse: invest or buy a house (or both), but shivvering under your mattress with cash in hand is not smart.

#150 Herf on 01.17.15 at 11:17 pm

#115 Linda
#114 Blacksheep
#132 Smoking Man

“Blacksheep Droppings”? “lazy douchebag”? “smoking bumwipe”? “lazy ignoramuses”?

Hmmm. Let’s see if we can approach the subject more rationally and less emotionally.

Here’s a blurb that calls out NASA and NOAA for spinning their data in favour of global warming by being less than forthcoming or misleading about the data and/or other assumptions and known facts:

http://joannenova.com.au/2015/01/2014-noaa-nasa-produce-weakest-science-on-hottest-fantasy-in-modern-record/

Here on NOAA’s own web site is THEIR own explanation concerning the uncertainty present in trying to measure the earth’s average temperature. Note that their own numbers indicate it is “more UNLIKELY” that 2014 was the warmest year, “than likely” (i.e. 48%, i.e <50%).

http://www.ncdc.noaa.gov/sotc/global/2014/13/supplemental/page-1

Here's a blurb that explains graphically and mathematically the relative (miniscule) portion of CO2 that comprises the earth's atmosphere:

http://www.americanthinker.com/articles/2014/06/my_two_favorite_questions_for_global_warmists.html

Here's a blurb in a well-known financial magazine that discusses some intellectual fraud within the the global warming debate. This link was embedded toward the end of the article of the previous link:

http://www.forbes.com/sites/peterferrara/2012/03/01/fakegate-the-obnoxious-fabrication-of-global-warming/

Here's a blurb that reports that the agency that supplies the climate or temperature data to both NASA and NOAA, admits that the earth's mean temperature hasn't increased in the past 18 years, during which time (according to another agency) the earth's CO2 level has increased by 9%:

http://www.wnd.com/2014/10/global-warming-scare-declared-over/?cat_orig=world

And let's not forget about the polar bears and ice caps. Here are a few articles to get you started with more such available at the following link:

http://polarbearscience.com/2015/01/15/faux-polar-bear-figures-my-editorial-in-the-national-post/

http://polarbearscience.com/2014/12/19/challenging-noaas-arctic-report-card-2014-on-polar-bears/

http://polarbearscience.com/2015/01/12/if-summer-ice-was-critical-for-s-beaufort-polar-bears-2012-would-have-decimated-them/

http://dailycaller.com/2014/05/30/scientists-admit-polar-bear-numbers-were-made-up-to-satisfy-public-demand/

http://business.financialpost.com/2013/03/13/we-should-be-listening-to-susan-crockford/

Be wary and skeptical of any information emanating from the UN (and their umbrella groups such as WWF, WHO, IMF), BBC, ABCNNBCBS, CBC, CTV, Global, New York Times, Washington Post, LA Times, etc., etc., etc. Always follow the money.

Cheers!

Lazy Ignoramus (aka Herf)

#151 Oil Is Sticky on 01.17.15 at 11:27 pm

#137 Musty Basement Dweller on 01.17.15 at 7:31 pm
This make me wonder, why have we been paying so much for oil in the past 5 years? Just old fashioned screwing of us unknowing, oil dependent consumers?

—–

Yes.

My brother explained it to me perfectly. There is way more money in the development of the tar sands than there is from the oil coming out. Huge trucks, salaries, taxes for govt, houses etc etc etc. This is why they kept the price high. Totally artificial. Conspiracy? I would believe it. I saw a chart once that showed how only a few companies ruled by a few elites control like 90% of everything so it would not be hard for them to have influence on oil and in return they make billions in their other industries that support it. I don’t think this is the world your Grandpa was born into.

#152 Oil Is Sticky on 01.17.15 at 11:31 pm

#115 Linda on 01.17.15 at 4:06 pm
#114 Blacksheep

I listened to an interesting lecture on all of this. One the things brought up was that most of what we are being told about climate change are computer models. There is no scientific evidence for anything. It’s all computer modeling. IPCC? Read too many articles about their lying, making up stuff, hacked emails etc etc that I don’t believe anything they say. And I’m sure someone is making money somewhere on climate change. So the pump will continue.

#153 45north on 01.17.15 at 11:44 pm

Mike T: Andrew Woburn from Thursday

just want to thank you for taking the time to write that post about the SMI

yeah thanks Andrew

honeybooboo (to Mark): Boy oh boy. Are you stretching for an answer. I’ll let you what is really happening same building, identical units, with prices rising year after year. That is what is happening in Toronto. No difference in the sales mix. It is very easy to track with condos.
Admit it Mark, you know not of what you speak.

I like Mark’s explanation. In the US, between 2006 and 2008 real estate prices fell. Hard. Canada is not the US but they are similar in terms of debt per household. In fact debt in Canada is higher than it was in the US. In the US there were (and are) big differences in real estate markets. Suburbs fell further and faster than core areas, some cities fell more than others. The 416 area of Toronto, I expect would be the most resistant to fall. Also Ottawa because it is the seat of government.
The assertion “That is what is happening in Toronto. ” could be entirely correct but at the same time masking what is going on in Woodbridge.

#154 BlackDog on 01.17.15 at 11:48 pm

Linda,

You are an embarrassment to scientists. Whose side are you really on?

#155 Bob Hobbes on 01.18.15 at 12:11 am

Just going home to the Okienogan after a visit to Raincouver and the adjacent colonies of Richming and Surribad. Real estate signs are everywhere. RE business seems to be flipping booming. I hope Revenue Canada has teams of auditors going through RE transaction files.

#156 Kibbutz McGee on 01.18.15 at 12:29 am

Canadians will get no break from lower fuel costs as politicians intend to ratchet up taxes to claw back any savings.

Meanwhile the BOC keeps insisting there’s no inflation….haha

http://cnsnews.com/news/article/ali-meyer/despite-decline-cpi-food-index-increases-december

Seniors have already boiled and eaten the leather off their car seats and now shiver in the dark as food and heating costs more than ever. No problem if you have a fat inflation indexed civil service pension

#157 Vanecdotal on 01.18.15 at 12:31 am

Hmmm. Seems a lot of Realtrolls™ posting today? Business must be slow…

#158 Kenchie on 01.18.15 at 12:37 am

#26 Musty Basement Dweller on 01.16.15 at 8:42 pm
“Thanks Garth. Today’s post is a more real life example of what is actually going on in real estate in the lower mainland, as opposed to the Real Estate Board lies.

It concurs with most of the real life stories I have heard from people here in Vancouver, even most single family dwellings have truly not appreciated that much in the last four or five years.

For anyone who disagrees, and thinks that prices have gone up as much as the real estate board says, ask them for some real life examples, not the real estate board BS. That will shut them up.”
———————————————————-

Yup and, surprisingly, the G&M has published this little video by Preet Banerjee on debunking the myth of how much people make off of appreciation of their owner-occupier homes. Worth a watch for everyone:

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/you-made-how-much-selling-your-house-you-sure-about-that/article22410703/

#159 Kenchie on 01.18.15 at 12:39 am

#31 North Burnaby on 01.16.15 at 8:47 pm
“Shiny new condos are a must nowadays to find a girl to marry”

Lol, you’re looking for the wrong type of girl then. But I do know some girls who are like what you are describing… I feel sorry for the guys who put up with their crap.

#160 Kenchie on 01.18.15 at 1:29 am

#127 Arfmooocat on 01.17.15 at 5:43 pm

“Wearing a face mask in China isn’t a red flag for global warming…….. it’s a red flag for pollution.”

You, clearly, do not understand anything about global warming… So please stop commenting on it.

#161 nonplused doesn't like Garth's day off on 01.18.15 at 1:53 am

So Garth is off today, and I’ve been thinking to try and be a bit more affective on dating advice than my dad was. His advice was “if you want to marry a virgin, you have to leave a few around to choose from.” But that was my brother running amok and my mom who thought we should marry virgins.

Anyway, my advice, I’ve decided, is this:

“If you have your choice to date one of two girls, and they are both beautiful, take care of themselves, are working towards good careers, have good personalities, and one has larger, well you know, she can fit more spices in the kitchen, date the one (wait for it) that smiles at you more.

#162 NEVER GIVE UP on 01.18.15 at 2:21 am

Are you saying immigrants are more likely to be criminals? Corrections Canada says the opposite. People born here are more likely to be incarcerated. — Garth
———————————————————–
Not at all. You are probably right the average immigrant is likely a good citizen.
But why cant we shoot for 100% good citizens.
Here in Vancouver there are numerous examples of foreign born gangsters.
We already have enough of our own Canadian born criminals.
If we are kind and extend help to refugees, doesn’t it irk you when your generosity is repaid with a slap in the face.
There are so many examples of the refugee system being abused as well.
There was a very bad situation in 2008 when we lifted visa requirements to Hungary. We were flooded with Roma refugees.
Now we can pretend that all people in the world are nice and play fair but Canadians are complete suckers for hardened people like the Roma.
Of course not Every Roma person is a criminal but if you look into their culture you will see they thrive on Crime and they are proud of it.
This is why our Government was smart enough to do this when they arrived.
http://globalnews.ca/news/1618256/canada-pays-thousands-of-roma-to-abandon-refugee-appeals-leave-country/

http://www.torontosun.com/2012/06/19/feds-to-close-loophole-allowing-criminal-newcomers-to-stay-in-canada

Immigrants are good for our country. But we should have complete control over who we invite in. That is all I am saying.

#163 drydock on 01.18.15 at 2:46 am

#151 Oil Is Sticky on 01.17.15 at 11:27 pm

This is true of all resource depletion.It’s called a peak event.

In physics, energy economics and ecological energetics, energy returned on energy invested (EROEI or ERoEI); or energy return on investment (EROI), is the ratio of the amount of usable energy acquired from a particular energy resource to the amount of energy expended to obtain that energy resource.[1][2]

When the EROEI of a resource is less than or equal to one, that energy source becomes an “energy sink”, and can no longer be used as a primary source of energy.

EROEI = \frac{\hbox{Usable Acquired Energy}}{\hbox{Energy Expended}}

#164 drydock on 01.18.15 at 2:49 am

#156 drydock on 01.18.15 at 2:46 am

The info about eroei comes from Wikipedia.

#165 cra on 01.18.15 at 3:12 am

#155 as government revenues vanish from low oil and high ei payouts, you can betcha cra will crack the whip on RE flippers, ie they go after the ones who have cash to confiscate

#166 Mr Complainy Pants (aka Rob in Munich) on 01.18.15 at 3:50 am

Just don’t understand why you are advising to be overweight US. After so many years of gains, shouldn’t we expect some sort of a pull back?
Like oil, it will just take a few session for US stocks to shave off 20-30% (correction remember?). Just six months ago you were talking about taking some money off the table from US stocks. What suddenly changed, that now you are screaming buy buy buy US?

You don’t read too carefully, do you? — Garth
—————————————————————–
I try my best to read very carefully, all the valuable info you provide. But i just dont get why you are recommending being overweight US. Overweight rest of world makes sense, but i strongly believe US markets have all the growth priced in and is a strong contender of a correction.

———————————————————-

He didn’t say anything about being overweight in US stocks, only to be balanced. that is a portion in the US a portion in the rest of the world and a portion in bonds. He DIDN’T SAY how much to have in the US only to choose a percentage and stick with it

#167 bdy sktrn on 01.18.15 at 4:14 am

So now you understand my question. With this many straws (proven oil) in the ground……where was the model saying this can’t last. In which case does a “glut” in any economy EG Elmo, houses, glitter barbie, dot com stocks – ever not have prices come down because of a economic slow down OR a glut in the commodity. In this case both.
————————————
new supply was known. assumption was demand growth would soak it up. then
a;china, and world ex-us slowed (who knew?)
b;opec/saudi chose not to lower production to support price

imbalance appears ‘out of thin air’ and the market eventually reacts.
any model with those inputs should have pointed to a big drop.

herdonomics takes over and there is overshoot(like now, but i’m hoping for more – 30anything buy heavily)
look at the oil chart , day after day after day down , it’s pretty clear in hindsight.

when opec announced 50 days ago oil was still 70bbl. at that time both inputs were known – then was time to exit oil/energy. it has saved saved me a bundle.

*disclaimer* stay balanced outside what you can afford to lose

#168 liquidincalgary on 01.18.15 at 7:56 am

# 115 Linda

Like all climate change deniers, you really are a lazy douchebag of ignorance.

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

i have no dog in this fight; however, labeling someone a ‘denier’ is associating them with ‘holocaust deniers’.

you do yourself, and your cause, a disservice with such unnecessary vitriol

#169 live within your means on 01.18.15 at 9:23 am

#100 Stephen Harper’s Closet on 01.17.15 at 10:14 am

In case you were looking for Steve and Joe, yes they are in here with me, hosting a ‘leadership retreat’ so they say.

If anyone is passing by, could you please bring some clean diapers and night vision goggles? They keep pissing their pants and are too afraid to turn on the light.
…………………

What a zinger. Love it.

Thanks much!

#170 Waterloo Resident on 01.18.15 at 10:05 am

Okay everyone, its official: DEFLATION HAS STARTED IN EUROPE

(consumer prices across the European Union fell for the first time since records began in 1997.)

http://www.wsj.com/articles/eu-consumer-prices-fall-for-first-time-on-record-1421402407

Its only a matter of time until it transfers over here also.

#171 maxx on 01.18.15 at 10:55 am

#32 bigtown on 01.16.15 at 8:52 pm

“America has embraced the service economy and it shows.”

Agree. Except to say that America invented the service economy. After at least 20 trips, I’ve never had even remotely bad service in the U.S. I love shopping there and the experience is galaxies away from the dross excuse for assistance we generally get in Canada. Pitiful.

On a very regular basis, if a cashier is on the ‘phone, it’s a personal call and she, and very rarely, he, simply carries on, looking straight through you. You’re lucky if you can find anyone for information. Snotty, disgruntled attitudes are rife, along with a crisply imposed feeling of really, truly being a bother. All I care about is paying loss-leader prices or much lower if I’m forced to buy retail.

You get waaay better service in second-hand shops. And just like in America, they actually smile.

Good for America. It’s earned every bit of admiration it gets at the retail level. I can’t wait for my next cross-border shopping trip.

#172 BS Meter Reader on 01.18.15 at 10:56 am

#150 “Lazy Ignoramus (aka Herf) ”

I’m afraid you and the other deniers …

(yes, that is the appropriate word liquidincalgary, and good grief, what the hell does that have to do with the holocaust???? Talk about your straw man fallacies!)

….are all up the creek without a paddle here.

For all of you calling ‘Linda’ impolite, it is fascinating to see your bullying and bullshit tactics on full display.

Are you sure you deniers are not all Dalhousie dental students? Seems like you have the same sort of attitudes towards women. JMHO.

Anyway, climate change is profoundly relevant to the discussions here. Keystone will die because of that concern, Alberta’s economy will go into a long term funk because of it as well, and Calgary, Fort Mac (and more) real estate is going to completely crater because of a tar sands economy that won’t be able to, and won’t be allowed to, recover.

Herf and others, as someone scientifically trained, I am appalled at how you illiterately cherrypick your sources. Herf, here’s some info you should be able to understand about just the last source author you referred to. His agency is considered mostly a fraud, with ties to big oil producers and the British equivalent of Mike Duffy.

http://www.sourcewatch.org/index.php?title=Global_Warming_Policy_Foundation

Canada’s real estate bubble has been fuelled by Harper’s crazy focus on resource extraction, and that exuberance is now coming to an end, and for geopolitical climate-related concerns, that era will likely never return. We now have a much less diversified economy as a result of this incompetent leadership. Our overwhelming focus on real estate (FIRE sectors overall) faces us with a meltdown that could be much worse than what the USA faced.

You deniers here, even with some of your obvious support for the real estate industry (which naturally lowers expectations about your intellects) are really an embarrassment to humanity.

You are the herd.

#173 Renter's Revenge! on 01.18.15 at 11:08 am

“Or was it just advice to rebalance the exposure to house investment? Tough to do when for most people they either own a house or they don’t — no half way — though they could own a cheaper house as opposed to an expensive house.” – #148 Shawn Allen

I think you answered your own question there.

#174 eric on 01.18.15 at 11:36 am

https://ca.yahoo.com/news/morgan-stanley-canada-1-3-192730511.html

2% 5-year variable coming to your neighbourhood soon? At this point I think most people would choose variable over fixed.

#175 maxx on 01.18.15 at 12:01 pm

#42 economictsunami on 01.16.15 at 9:45 pm

“Don’t count on your friendly CB, bond market or creditors to do what’s best for you.”

Absolutely so. On a related note, I can’t wait to see what the next pernicious volley of idiotic, tax flushing vomitus will become part of the economic “action plan”.

Monthly, gold-embossed gift cards for families? Or, perhaps just bet everything on red this time?

#176 van guy on 01.18.15 at 12:07 pm

one more point i will make. Jim Rickards, this man has a extremely bearish call. Quite freaky and im not sure what to really think. What worries me about Jim is, hes everywhere on the media and when he speaks, people listen. They dont argue or rip into his prediction. Its like hes the god or something. Garth, you get ripped everyday. See what i mean? CNBC, BLOOMBERG, FOX, etc….

Garth, have you heard of this guy and your thoughts please?

Rickards is an extremist. Follow him at your own risk. — Garth

#177 Mark on 01.18.15 at 12:26 pm

“2% 5-year variable coming to your neighbourhood soon? At this point I think most people would choose variable over fixed.”

I doubt it. Why? Because credit-worthiness is now an issue, with declining prices and most importantly, declining equity. BoC policy rate cuts will increasingly have little effect on actual interest rates charged to retail residential mortgage borrowers.

#178 maxx on 01.18.15 at 12:48 pm

#61 Berry Cup on 01.16.15 at 10:51 pm

Ah yes, for far too many than is healthy for their wallets and the economy at large, the siren song of self- definition through re is so difficult to resist- until they lose jobs, wealth, etc.

“Whatever will I be after I sell?? I’ll be stuck down there with the renters!” “Lions and tigers and bears, oh my!”

#179 maxx on 01.18.15 at 1:15 pm

#74 Mark on 01.17.15 at 12:00 am

“Credit-worthiness is now a big issue in the Canadian RE mortgage market, with declining equity on account of lower house prices.”

Let’s not forget ever-increasing consumer debt, continuous, pan-Canadian job losses, and the drying out of savings as a result. These additional factors will suck enormous liquid wealth out of circulation and will reinforce tighter lending standards going forward. This will cause rate-hike risk to be much more vulnerable to external forces.

#180 liquidincalgary on 01.18.15 at 1:23 pm

#171 BS Meter Reader

(yes, that is the appropriate word liquidincalgary, and good grief, what the hell does that have to do with the holocaust????

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

yay!

Jimmy Keegstra lives, and ernst zundel

#181 NEVER GIVE UP on 01.18.15 at 1:59 pm

What a cool thing to do!
Spreading the love.

https://www.youtube.com/watch?v=09R8_2nJtjg

#182 Shawn Allen on 01.18.15 at 2:03 pm

Diversification away from house investment

Repeatedly I have suggested a one-asset strategy is risk-laden. As houses rise in value, so does that risk. Telling people to diversify is hardly market timing. — Garth

*****************************************
I have no argument with that.

The problem is how to diversify away from too mach investment in the house, as houses rise in value.

Most people own one and only one house. So it’s a binary decision. Rent or own.

Owning a house with less equity and more debt would not lessen the real investment in the house and certainly would not lessen risk. One cannot diversify away the chance that their house will fall in value by borrowing against it to invest, even in a balanced portfolio. Debt always adds to risk.

So how to diversify away from the $500k house?

Sell and buy a cheaper one? Yes that works but is enormously disruptive.

Don’t start out by buying an expensive house. – Yes that works, absolutely. Though it does smack a bit of market timing, which is okay with me.

Don’t trade up at this time. Absolutely, that works. Did I say at this time? That is market timing then, which is okay with me, but others deride it.

Rent rather than buy based on high house prices. That works but would seem to be about market timing.

Sell and rent. That works and is hugely disruptive and is surely market timing.

The advise not to get over invested in houses “as houses rise in value” is very good advice but is surely market timing? Or is it just rebalancing?

#183 Victor V on 01.18.15 at 2:04 pm

http://www.theglobeandmail.com/news/politics/tories-prepare-for-further-spending-restraint-due-to-cheap-oil/article22511451/

“We’ll have to certainly look at potentially continued spending restraint. For example we’ve had an operating spending freeze. The Finance minister may have to look at extending that,” Mr. Kenney told CTV’s Question Period in an interview broadcast Sunday.

“We will get a balanced budget next year. It may take some additional spending restraint,” he said, adding that the restraint would be in the “operating costs” of government rather than in services to the public.

#184 Shawn Allen on 01.18.15 at 2:17 pm

Rebalancing Out of House Value Exposure

And the problem is, unlike stocks and bonds and REITs and all marketable securities, you cannot sell 20% of your house.

And, again, taking out debt against the house only increases risk.

So I agree too much exposure to house value is a problem, but the solution is tough when the investment is so binary and really there are no cheap houses in or near most big Cities. And moving is HUGELY disruptive in any case.

#185 eric on 01.18.15 at 3:28 pm

#131 Mark on 01.17.15 at 6:10 pm

Even if similar flats are down, this is just temporary price fluctuations. Most people come out ahead over 25 yr period. Worst case senario a house is a value of wealth store.

#186 Herf on 01.18.15 at 3:35 pm

#171 BS Meter Reader

Thank-you for the reference to Sourcewatch. However, Sourcewatch appears to use the same model/means as Wikipedia for collecting and editing its information, taking inputs from the general public and allowing same to edit the information collected. As far as I’m aware, Wikipedia has no or limited credibility amongst professional researchers and academics. I suggest the same credibility issue exists with Sourcewatch because it uses the same information gathering and editing model as Wikipedia. In fact, here is the disclaimer from Sourcewatch itself concerning the reliability and credibility of the information posted on its web site:

http://www.sourcewatch.org/index.php/SourceWatch:General_disclaimer

#187 Gweillo on 01.19.15 at 12:04 am

Good evening Canada from the land of Ham.
If I had received a dollar every time I was told that they don’t make anymore land in Hong Kong in the run up to 1997 I would now be richer than Li ka Shing.
Post 1997 property prices more than halved, rates went down and the supply of land hardly bugged . All that changed was the price people at the time were willing to pay for it.
Property is no different to stocks in one way and that is that upward momentum sucks in the masses. Once purchased the post purchase rationalization sets in.
The higher the price the more money is needed to keep it up there in the thinner air. Once the momentum slows investors ask themselves questions . As they see momentum turn down they bail esp if bought on leverage. 10x leveraged and a 10% price decline whipes out 100% of your capital.
In real estate as in stocks it is the marginal seller or buyer who sets the price. If someone in your street or apartment block sells for 10% below assessed all other prices will be re-set.

I sense a lot of hope in the responses to the various articles . Sadly hope is not a strategy.

#188 villagemoron on 01.19.15 at 3:17 pm

YIKES!

http://www.marketwatch.com/story/most-americans-are-one-paycheck-away-from-the-street-2015-01-07