Down she goes

SIGN 1 modified

News you can use (as opposed to what you hear on Global):

Mortgages dip.
No, it is not because of the recent and knuckleheaded move by the Bank of Canada to nip its trendsetting rate by a quarter point. Instead, RBC is easing fixed-term rates a little to reflect lower yields in the bond market. So you can now get a five-year fixed for 2.84%, down one-tenth of a point – the same price brokers have been offering it for months.

The bank’s posted rate doesn’t move. More importantly, the prime doesn’t budge, either. So variable-rate mortgages – usually the beneficiary of a central bank cut – remain the same. And remember that even if banks relent and dip VRMs, monthly payments will not be reduced. Meanwhile, though, the amount of interest banks are paying on deposits has decreased. More proof saving is so yesterday and investing is so now. In the eternal words of Meatloaf, good girls go to Heaven. Bad girls go everywhere.

Overweight in the USA
Long ago I made the point your portfolio should contain a minority of Canadian growth assets. So, for every dollar in a Canadian equity ETF, you should have two in American and international securities. Looks like we have only started to feel the effects of the oil slide, with job losses, more consumer inflation, a lower dollar and big government deficits in the months ahead. Add to that a horny populace that thinks $800,000 bug-infused semis are worthy of epic debt.

Meanwhile, have you been following the US economy? The federal deficit was 9.8% of the economy in 2009. It’s on track now to be 2.6% – the fifth consecutive year of decline – as tax revenues shoot higher along with consumer spending, thanks in part to cheap gas. The jobless rate is expected to be 5.5% in 2015, about half the level of six years ago. The US economy has been growing by 5%, and the Fed will raise its key interest rate in a few months for the first time since the GFC.

Look at the US home ownership chart below. Could the contrast be any starker?

US HOME OWNERSHIP modified

Cowtown Death Watch
Yes, I know this irritates the hell out of realtors there, lots of whom have been coming here lately to have a dump on this pathetic blog. But that’s okay. How can you really be angry at anyone who believes what they read in the Calgary Herald? We all have a responsibility to care for them. Like retired geldings.

Well, this week opens with a 38.3% drop in house sales compared to the same time last year – from just over a thousand to 640. The big story, however, is listings. At almost 4,500, there are 79.2% more of them than last January. New listings have jumped almost 40%, perfectly in negative correlation with the price of oil. I hear listings have bloated in Saskatoon, as well. Edmonton next. Fort Mac is already done. Interestingly enough, this could be just the start.

Finally, a smart economist.
Because he agrees with me, of course. Doug Porter is the chief egghead at BMO and he supports the notion that the Bank of Canada was a total dipstick in dropping its rate and stirring the loins of all those moist Millennials now begging to borrow money. How, he wonders (me, too) can this possibly be good for a country with a condo economy and citizens already pickled in debt?

“Far from helping growth, the rate move could actually increase consumer and employer anxiety and uncertainty,” Porter writes. “More fundamentally, the economy’s shape is arguably already heavily skewed by the persistence of negative real interest rates, and the cut threatens to make the skew grotesque.” (Negative rates happen when the cost of a loan is less than inflation.)

Porter says the central bank’s move is not the ‘insurance’ that boss Stephen Poloz claimed, and will “do nothing” to help the economy.

Is there more to come?
Porter may be disgusted, but he thinks the Bank of Canada may cut its rate again in the Spring. Capital Economics economist David Madani agrees. In fact, now that the BoC has turned poodle some people think it could take its benchmark rate, currently at .75%, down to .25% by the end of the year – even as the Fed raises the cost of US money.

Well, imagine what that’ll do to the loonie. Could there be a clearer admission the Canadian economy is pooched?

I hear daily MLS sales in Toronto and Van are up. Poor sheeple.

294 comments ↓

#1 HD on 01.26.15 at 7:00 pm

In case you missed it….

#288 For those about to flop… on 01.26.15 at 5:44 pm
I know ETF’s have lower MER ‘s but do you think a 2% MER on a buy it and leave it alone mutual fund is excessive ?
The fund is 60 /40 and has U.S ,Canada and international content.

Of course it is. That’s 2% you have to pay in after-tax dollars. Figure it out. — Garth
————–

Say you have$100K you can invest 4 different ways. How much could it potentially cost you per year?

A. Your MF with MER of 2%: $2000
B. S&P 500 ETF MER of 0.10%: $100
C. TSX ETF MER of 0.05%: $50
D. 3 Fund Couch Potato ETF MER of %0.18: $180
(http://canadiancouchpotato.com/wp-content/uploads/2015/01/CCP-Model-Portfolios-Vanguard.pdf)

Now tell me, why would you go with option A?

Best,

HD

#2 Mark on 01.26.15 at 7:01 pm

Panic by the ‘smart money’ to get out while they still can? Watching the past couple years of slow decline and weakening of the housing market must be making them nervous.

Its likely that we’ll see years of below normal policy rates. And probably even QE. As historically, a ‘savings’ account is only supposed to keep up with inflation, and interest paid on ‘savings’ accounts, for a lengthy period, actually exceeded that of inflation. Mean reversion in action over the long term. People who do not take any ‘risk’ with their money should not come to expect long-term above-inflation returns.

#3 Dave on 01.26.15 at 7:02 pm

I just had a short conversation with a #realtor going door to door distributing his wares so I decided to harass him with #truth After all, why was he spreading ads door to door if the real estate market was doing so well?

I told him interest rates will be rising, and that real estate in this city is #overvalued to which he obviously disagreed because his business is selling bullshit to soccer moms and dads with that newborn and/or sexy children (debt collateral) looking for a new house which they spend probably 8 to 10 hours a day in if they work full time. He kept saying interest rates had to stay low, but I countered that the last time they raised interest rates high was the 1980s to which he had nothing to say and looked shocked I knew about it because I look so young (even though I’m mid 30s)

I love assaulting people with truth! The sad fact is it doesn’t win me very many friends among the living dead.

#4 Mean Gene on 01.26.15 at 7:02 pm

Poor sheeple…. baaaad.

#5 Nobody on 01.26.15 at 7:03 pm

Early today Garth? Thanks,

#6 Definitely not last on 01.26.15 at 7:03 pm

down, down, down she goes

#7 Definitely not last on 01.26.15 at 7:05 pm

Hey that’s a lyric you snuck in there…. it’s a meatloaf world.

#8 Terrier on 01.26.15 at 7:05 pm

IBM is cutting tens of thousands of jobs, we still don’t know how many Canadian positions will be wiped out … forget about interest rates, the name of the game is a paycheck.

#9 Jimmy on 01.26.15 at 7:07 pm

Jimmy says SM will give a thumbs up to free ejucashun:
Codecademy.com

#10 waiting on the westcoast on 01.26.15 at 7:08 pm

Is the Canadian economy pooched or will the effect of these strategies pooch the Canadian economy?

I love the chart – nearly 70% home ownership right at the peak… what number are we at in Canada right now? Oh yeah – 69%… I guess we are all [email protected]#$%^ (I mean pooched) now.

#11 JSS on 01.26.15 at 7:11 pm

What will happen to Canadian bank profits if BoC keeps dropping interest rates?

#12 Greg on 01.26.15 at 7:11 pm

I don’t understand the relationship between the BoC and the GoC. This rate reduction appears to be more political than anything, designed to keep the party going for as long as possible without regard for the consequences.

#13 Mike in the Okanagan on 01.26.15 at 7:11 pm

Any guesses how low the loonie will sink? I’m putting my bets on 65 cents by end of year if oil stays around $45.

#14 John Doe Doe on 01.26.15 at 7:12 pm

Isn’t Poloz really really smart to sink the dollar to boost exports? It seems most countries and economic unions around the world are trying to deflate their currencies to get a competitive edge?

#15 Vancouver coastal on 01.26.15 at 7:12 pm

Yah the market is hot here in van …vancouver real estate needs and exorcism but it laughs in the face of the pope “you have no powers here” ..Garth it is gona take a major black swan to knock his juggernaut down, vancouver don’t need no stinkin oil or anything for that matter, it stands alone , so Garth get your exorcism kit and an apprentice priest and get out here for a house call and watch this head spin 360 , the horror

#16 MEANWHILE IN FRANCE on 01.26.15 at 7:13 pm

So many unknowns, how does one make informed decisions up there in Canada

#17 Flatlander on 01.26.15 at 7:13 pm

I only have a TFSA, and it is sitting in cash.. I would like to get into the American market.

XUS, VUN, and ZSP all seem very illiquid.. Is ZSP the best bet of the three? It seems the most liquid.

#18 Steve French on 01.26.15 at 7:15 pm

First!!

Ohhh yaaaaaaahhhh!!!!

And just ahead of my arch rival, the Smirking Man.

#19 polecat on 01.26.15 at 7:16 pm

Aren’t we supposed to hire smart people to run the Bank of Canada. Or is he taking orders from the boss. And Joe says he’ll still balance the budget, must be more layoffs coming in public service. Guess it’s our turn to eat the s#!t sandwich we avoided during gfc. Hang on dogs, gonna be a wild one. Smokin man, we should get together I got given some shine.

#20 crossbordershopper on 01.26.15 at 7:17 pm

if your poor then you will stay poor, i will coin a phrase, inter-generational lack of upward mobility. When your a kid living with your younger brother living in an apartment with your single mother, the topic of rate reduction in mortgage rates or more real estate listings on mls are as irrelevant as the asteroid that passed earth today.

#21 Schlitz on 01.26.15 at 7:18 pm

Sadly, wolves are in charge of watching over the sheeple.

1st?

#22 North Burnaby on 01.26.15 at 7:20 pm

Despite the economy, Vancouver real estate market is still extremely buoyant. Thank godness for those foreign investors’ cash.

#23 MikeyMus on 01.26.15 at 7:22 pm

First!!!

#24 T.O. Bubble Boy on 01.26.15 at 7:24 pm

So, will Doug Porter and other Bank Economists *finally* come out and tell Canadians that Emperor Harper has no clothes?

#25 Strider on 01.26.15 at 7:27 pm

In other real estate news, another home buyer has been shafted by an unscrupulous realtor’s Buyer Representation Agreement:

http://www.cbc.ca/news/canada/homelife-superstars-realtor-accused-of-duping-homebuyer-of-12k-1.2928982

#26 tkid on 01.26.15 at 7:31 pm

Awaiting the furious realtor response to being called retired geldings and their customers being called sheeple in 5, 4, 3, 2, 1 …

#27 Debtfree on 01.26.15 at 7:31 pm

Stephen ex polozion . Joe owe . Stevie the economist . What a trifecta . We are so screwed .

#28 Jeff on 01.26.15 at 7:33 pm

Ouch, we’ll see back our loonie to 0,60 like in the 2000.

#29 saskatoon on 01.26.15 at 7:34 pm

“I hear listings have bloated in Saskatoon, as well.”

SAY IT AIN’T SO, GARTH!

NOOOOOOOOOOOOOO!

#30 Anson on 01.26.15 at 7:36 pm

It is very unfortunate and quite obvious that the we are in a low interest rate death trap. Rates to low for to long makes everyone even more dependent on low rates. As I stated numerous times we are stuck between a rock and a hard place and rates yes are not going up anytime soon.

#31 Piccaso on 01.26.15 at 7:36 pm

60M people in path of NE U.S. blizzard

That’s 3 states…. lol

#32 Happy Renting on 01.26.15 at 7:37 pm

Perhaps it wasn’t intended so, but I found today’s post strangely uplifting (maybe it was the Meatloaf reference!)

#33 marnic on 01.26.15 at 7:39 pm

Hmmm…only half the story on the US deficit (which is still almost half a trillion). Their own CBO says it’s going to start widening again in a couple of years on tepid projected growth over the next decade (at the end of which it looks like the United States government will owe around $26 trillion…ouch!).

The CBO says it will be 4% of the economy in 10 years, not ‘a couple.’ At least they are planning ahead, compared to us. — Garth

#34 For those about to flop... on 01.26.15 at 7:39 pm

HD,I got it and thanked you on the previous page .Cheers

#35 BLM on 01.26.15 at 7:43 pm

1. “Persistence of negative real interest rates” makes a lowly leveraged investment in real estate a good bet.

2. The U.S. Fed are increasingly unlikely to raise rates until late this year (or early next, or if at all). Even then it only looks to be a small symbolic one. The latest US CPI data was flat. Raising the US interest rate will mean risking deflation and negating all the effort that’s been put into avoiding that.

Sage advice is to assess the economic landscape and adapt to it. Far better than to sulk and deny what is.

#36 TurnerNation on 01.26.15 at 7:43 pm

Alberta was always a bit too big for its britches. Bums will be leaving freely of their own will now.

#37 Freedom First on 01.26.15 at 7:47 pm

“Cowtown Death Watch”. I like it, sort of has a nice ring to it.

I am noticing that there is quite a few big Trucks in Alberta that are having their balls removed these days.

Yes, interesting that Toronto and Van MLS are up. Hey, would they be interested in buying any of the for sale balls, with Truck attached, from Alberta?

#38 Mark on 01.26.15 at 7:49 pm

“What will happen to Canadian bank profits if BoC keeps dropping interest rates?”

That’s a tough question to answer, as there’s a number of things that can happen.

In the short term, as we’re seeing with the major Canadian banks, lowered interest rates will allow them to pick up more spread. However, over the medium to longer term, excess spread is not sustainable. Additionally, interest rates are only likely to be lowered on account of a weakening economy, which is definitely bank negative.

However, lower rates can be good for bank shares, as savers will increasingly be pushed to look at alternatives to bonds and cash, as asset classes to invest in.

Furthermore, banks have an ace in the hole when it comes to deflation, and that is, most of the mortgages on their books are protected with CMHC subprime mortgage insurance. Effectively CMHC subprime mortgage insurance is a “put” option for 100 cents on the dollar on mortgages, that the banks can exercise when it is to their advantage in a deflationary environment.

How does this ‘put’ option, the CMHC subprime mortgage insurance work? Well let’s say that mortgages currently yield 3%, and houses are 100% of the current value. In a year or two, let’s say that mortgages yield 6%, an houses at 50% of their current value (yielding identical interest expense). The bank, by exercising the ‘put’ option, is repaid 100% of the loan, and can actually go out and write *2* loans at a much higher interest rate, effectively augmenting their profitability without necessitating an increase to their deposit base. Why might mortgages go to 6% from 3%? Because of increased perception of risk, perhaps. Or because of a rotation away from housing lending towards another type of lending. Either way, the put option implied by CMHC subprime mortgage insurance is incredibly valuable to a bank in a house price decline.

If you look to the 1990s, generally, the decade was very bank-positive, although other sectors of the TSX outperformed (Nortel, Bombardier, etc.). So I wouldn’t personally be getting rid of banks simply because you believe in the inevitability of an acceleration of the housing decline. But there’s no particular reason to want to overweight them either.

#39 Smoking Man on 01.26.15 at 7:53 pm

Ha, I’m not an economist, but I hit em out of the park on a regular basis on here with my calls and my gambling trading accounts . It’s all in the archives.

My specially, going against 90% and being right, just like my call on No Tapper, the end of the bond rally, and last week’s, the rate cut.

What’s my secret, I dident go to the same school. My dues where paid by bloody knuckles, knocking on doors, selling shit.. That was my education.

You learn alot about people, best paid education you can ever have. I read Poloz perfectly, I read the quicky changing markets, currency war. It’s was so obvious to me and made a small fortune in the last month, even fronting my kid 100k, to trade forex, he sort of thinks like me.

Yet I have no credibility with the majority of the blog dogs, the schooled. I’m on the egnor list, skip he’s posts. I love it.

Trained to listen only to the sanctioned polite voices, voices they’ve been trained to listen to as worthy. They completely tune off the receptors when the message delivered by the out cast… The loon. The drunk. The guy who can’t speel. The guys who always says crazy shit. I’M Judged by behaviour, but not a track record of perfection.

Fortunately for me our great worthy host allows me to play here because he’s got a few demented demons in his head… Cowboy boots in Parliament.. Need I say more.

Your schooling did that to you dogs..

Ok run along to Mark..

#40 condopoor on 01.26.15 at 7:53 pm

Dear Garth,

Two years ago I locked in a 10 year mortgage at 3.79%. With today’s announcements I’m considering taking the penalty and switching out to a VRM. In my case, I intend to have the balance paid off in the remaining term (7 years, 11 months).

Would you kindly offer your opinion on this move?

Dumb. — Garth

#41 its OVER for Canadian oil sands on 01.26.15 at 7:53 pm

The Saudis are going to turn the lights out to the canadian oil sands. First of all it costs them almost nothing to pump it out and second the Saudis had enough of canadian oil sands stealing market share. The US was taking a lot of canadian oil but now canadian oil was reaching Europe . Oil from shale oil is hard to shut/bankrupt them down as they don’t need very much capital or manpower to turn on and off. Canadian oil sands take a lot of capital and resources and so Saudis will pump and pump until the oil sands are shut down. There will be NO reason to restart the oil sands unless oil prices stay $70-80 for a long time. With US shale oil which can come online quickly will leave canadian oil sands oil in the ground (worhtless). Alberta RE will be worth what RE is worth in Detroit. Yes that is what will happen.

#42 rsv on 01.26.15 at 7:57 pm

Hmmmm…

A steady 7 year decline in US home ownership… yup, that’s got “humming economy” written all over it.

ooops!

#43 [email protected] on 01.26.15 at 7:58 pm

I suppose I’m a Millennial. Not at all moist.

Battening down the hatches, really. Staying a renter, contrary to the pressure from other Millennials who have recently taken the dive.

I live comfortably…why change that now?

Looking forward to the ‘lection that’s inevitable. Be nice to get some fresh blood into office. This stalling economy will surely bring changes.

#44 Stv on 01.26.15 at 8:01 pm

I only have beginner micro and macro economics and that is enough to know that what Harper’s puppet in BoC is doing goes against everything they are saying.

Harper seems to be completely out if the news on anything Joe O or numb nuts at the BoC are doing. He’s all campaign now and if he ignores this craziness, it’s only to signal to the sheeple that everything is alright. You know he approved this move before it happened.

Everytime I see Joe Owe on tv, all I can see is old Iggy, heaven forbid, then my blood pressure rises. And that mouth breather Stephen poloz gives me hope that I could fall back on banking career if the economy falls to poop, because if he made it to the top, anyone could.

#45 Rob on 01.26.15 at 8:03 pm

“The US economy has been growing by 5%”

So looking at the steady US decline in home ownership since 2004 in your chart, I’m wondering as to the reason(s), given that the Yanks can write off their mortgage rate in their income taxes and US housing is generally a lot cheaper than here in Canukland. Is it due to demographics where the (now) old fart baby boomers had their planned retirement wealth sandbagged in the 2008 recession (when many also lost their homes) and now everyone is gunshy into getting back into house ownership? With US house ownership in decline (and showing no signs or a turnaround) then obviously their construction industry and other related industries must be hurting, I would imagine. If so then is it their increased oil fracking that is now driving their economic growth? Am I missing something here?

#46 its OVER for Canadian oil sands on 01.26.15 at 8:04 pm

All that money that was being pumped into Canada daily via oilsands is now going bye bye forever. No money for Canada spells game for for the credit bubble which is going to exploded and burn the RE market to the ground. Looks like the short Canada bet is going to pay off in spades. Realtors a slow down plus lower commissions means many of you might lose your own home in the canadian RE crash.

#47 Don Derc on 01.26.15 at 8:06 pm

Popped into a pre-sale today at Surrey Centre. Six buildings currently stand (25 floors high) and sold/occupied. The realtor says 14 more scrapers to be built over 5 years in the ‘hood as well. Yes Vcr to Surrey may be the exception but where will Vcr (or Toronto) be in 15 years? Double the current population of today.

I liked the 316 sq ft for $100K. The realtor says come on a weekday – they had over 800 horny tire kickers on the weekend. The buzz, and enthusiasm is infectious. Lots of buyers are very confident but….the people I talked to were high in cash, low in debt, had a few extra properties rented etc etc. Quite the contrast from the young couple with a highly leveraged mtge on a property over valued by 30%. If these things don’t leak, Surrey may be the deal of the day….for now.

My bike lives in a bigger space. — Garth

#48 kabloona on 01.26.15 at 8:07 pm

#25 – Strider, thanks for the link…..Garth has warned against those bloody agreements, hasn’t he…?

;-)

#49 Mishuko on 01.26.15 at 8:11 pm

@#11 JSS

When there is a negative overnight rate (like in Europe/Swiss) the banks will start charging you to hold your money.

Correct me if I’m wrong (to the rest of the blog dogs) that’s when your credit worthiness will determine how much you can get and at what percentage.

#50 Snowboid on 01.26.15 at 8:14 pm

The professor obviously struck the nerve of Vancouver realtors with this reality check, already 10% of replies are from them!

Maybe the weather isn’t the only thing getting watered down in YVR!

#51 tkid on 01.26.15 at 8:20 pm

#31, it will be nice to leave a resource to the next generation instead of yet more debt.

LOL on your anti-Alberta rant. Alberta was the last running engine of Canada’s economy, now that the provincial Liberals have killed Ontario’s economy. The only thing the federal Liberals will do is fleece anyone with any cash left in the country.

As soon as the Liberals get elected into Ottawa, every dime I own gets moved out of the country.

Very hard times are a’comin’ and all you can do is sit there and dance in glee because Alberta is no longer doing so well? Freakin’ weirdo.

#52 Marco on 01.26.15 at 8:24 pm

Thanks Garth,

That U.S. Housing chart says a lot. “Once bitten, twice shy”. Great White.
With lowering the interest rate and thus lowering the bond curve we will have less investment into Canadian bonds? whereas the States when they raise their rates and thus steepen their bond returns they will attract more investment into their economy? The uncertainty of where the Canadian dollar is going could also deter investors which could lead to less job creation and deflation?
Cheers.

#53 DreamingInTechniColour on 01.26.15 at 8:26 pm

It used to be common knowledge that listing prices of homes often ticked upwards as they were bought and sold because the seller’s Realtor’s fees were added into the selling price every time the property became listed for sale- e.g. so that re-sale home buyers effectively would be paying for the seller’s Realtor expenses when making a property purchase with the price they agreed to pay for it. With all the hype and hoopla – Have buyers and real estate appraisers somehow forgot this ?

#54 Smoking Man on 01.26.15 at 8:27 pm

Porter may be disgusted, but he thinks the Bank of Canada may cut its rate again in the Spring.
………

Brilliant call by Porter, ah I beilive Poloz said he was going to do that in his press conference. Oh well at least Porter can finally say he hit the ball.

Canada is a little shit country with a big land mass. Without a positive trade balance, AK exports, we are doomed.

You don’t need a fancy spreadsheet to figure that one out.

Yet nobody gets it…

#55 its to late on 01.26.15 at 8:29 pm

Down she goes it right garth. You can feel it in the air. Dollar is toast and consumers tapped out plus jobs disappearing everyday. Interest rates should of been higher years ago so that when disasters hit economically like it is now they could of done something but now it’s way to late. RE is going down.

#56 DreamingInTechniColour on 01.26.15 at 8:31 pm

# 22 – They might like North Burnaby but they love moving to California a whole lot more..

http://www.mingtiandi.com/real-estate/outbound-investment/chinese-buy-22b-in-us-homes-to-become-biggest-foreign-buyers/

#57 Down she goes | Realties.ca on 01.26.15 at 8:31 pm

[…] Source: http://www.greaterfool.ca/2015/01/26/down-she-goes/ […]

#58 Mark on 01.26.15 at 8:33 pm

“Correct me if I’m wrong (to the rest of the blog dogs) that’s when your credit worthiness will determine how much you can get and at what percentage.”

That’s *always* the case in any interest rate environment. Owners of money in a negative interest rate environment will simply warehouse the money, as physical cash if necessary, if they can’t find reasonable investment prospects for it. The cash serving as collateral for additional borrowing, and hence, additional warehousing. Until the economy is so deflated and currency so scarce that the value of the remaining currency in circulation shoots to the moon.

The opposite, the unwind of such, of course, is where you get the currency depreciation. High rates push down currencies. Its been proven over and over again, despite going against what might be described as conventional wisdom.

#59 kothar on 01.26.15 at 8:34 pm

I found this explains much to currency movement, CAD going up, now the opposite for CAD going down.

http://www.parl.gc.ca/Content/LOP/ResearchPublications/prb0326-e.htm

#60 nonplused on 01.26.15 at 8:34 pm

But in any case what we learned from the Swiss is you can’t count on or predict central bankers. Just when everyone is short the loonies Stevie will raise rates or some damn thing.

#61 Victor V on 01.26.15 at 8:35 pm

#17 Flatlander

VFV will give you better liquidity and has lower fee than ZSP.

#62 Victor V on 01.26.15 at 8:40 pm

http://business.financialpost.com/2015/01/26/canadians-dont-just-love-home-ownership-theyre-growing-fond-of-income-properties-too/

Derek Petridis, a 39-year-old chief financial officer at Shikatani Lacroix Design Inc. in Toronto, has loaded up on seven condominium rental properties over the past decade.

It may seem like he’s got an extreme bet on the housing sector, but a new survey shows he is far from alone, with about one in 20 Canadian households owning some type of rental property.

The study from Altus Group, which relies on research from the Financial Industry Research Monitor, considered highly accurate on a national basis, shows that among households earning more than $100,000, the rate on rental property ownership is about 10%.

Rental property ownership tends to be higher for households with residents under age 50, which the study’s authors think may be driven by basement apartments and flats that homeowners are using to pay down their mortgages.

#63 Mark on 01.26.15 at 8:41 pm

“The only thing the federal Liberals will do is fleece anyone with any cash left in the country.
As soon as the Liberals get elected into Ottawa, every dime I own gets moved out of the country.

Really? Last time we had a Liberal government in Canada, the TSE/TSX tripled during their reign less than 6 years after coming to office. What have we gotten under the current government? The TSX went from roughly 12k when Harper assumed office in 2006, to today’s roughly 15k almost 9 years later. The Liberal record of delivering stock returns to Canadian investors appears to be much better if you want to do a comparison.

#64 CPG on 01.26.15 at 8:41 pm

“So what does Alberta have to show for some 24 billion barrels of conventional crude and bitumen that have so far come out of the ground? The province is currently over $12 billion in debt and is projected to run a budget deficit of $500 million this year, the seventh consecutive year in the red for a province that prides itself on having a sharp fiscal pencil.”

Alberta’s Crazy Oil Bender Is Over

Now stuck with a crude hangover, it could’ve been like wise and sober Norway.

http://thetyee.ca/Opinion/2015/01/19/Alberta-Oil-Bender/

#65 Victor V on 01.26.15 at 8:43 pm

http://www.thestar.com/news/gta/2015/01/26/mayor-linda-jeffrey-to-brampton-residents-expect-bad-news-in-auditors-report.html

Brampton Mayor Linda Jeffrey is urging residents to brace themselves for a special in-depth review of the city’s books coming out later this week.

Former provincial auditor Jim McCarter was hired by council last month at Jeffrey’s urging. It was one of several accountability measures the new mayor listed during her inaugural address last month after taking over the reins from scandal-plagued former mayor Susan Fennell.

“We are going to find out how the city managed its books, and my sense is we are going to hear some news that is going to be difficult to swallow,” Jeffrey told reporters Monday after meeting with Premier Kathleen Wynne, where she discussed the urgent need for all-day GO Train service to Brampton.

#66 bob on 01.26.15 at 8:44 pm

Garth – can you explain this?

If the economists thought that the current interest rate cut was dumb, why would they think there would be another cut in the spring? Is that like saying they believe Poloz / BoC is dumber than dumb?

or is it a case of “oops, I got it wrong? we really are pooched.” i.e. “either I (the economist was) dumb or Mr Polez your really dumb”…. but in the end, someone’s is dumb, right?

And please don’t say it is the author of this comment post, that would be way to easy.

#67 Smoking Man on 01.26.15 at 8:52 pm

Took some flowers to my mom’s grave on Sunday. Two spots over, I see a name I recognized, M U.. Same age as my middle son, born in 87.

No it can’t be, that was same name as his old team mate from minor hockey

Tonight I tell my kids, in five seconds, university of Google, yup that was him..

OD on oxy….As I recall a great sweet kid.

Dogs, if you’re on that shit, get help, it will kill you on it, or kill you trying to get off it.. As was his case.

Booze, dope, anything but Oxy.

Seriously, that’s the fourth young person from my kids age group that has died in the last two years on,, Oxy.

I won’t even try it, and I’ve tried everything.

#68 Financial Freedom at 40 on 01.26.15 at 8:52 pm

#39 Smoking Man
Your stock call woke me up to the sad lack of Cdn aviation industry in my mix. But ended up in simulators instead. Low dollar boosting some local manufacturers, some still the best of the best. So putting CAE up against your BBD.

#69 Retired Boomer - WI on 01.26.15 at 8:57 pm

#44 Rob

You could not be more wrong on this one. Sure, some Boomers on their 2nd, 3rd or even fourth wives lost a lot in the past forget 2008.
Some Boomers have their houses PAID off and their retirement accounts stuffed with $500K to $2Mil depending on what they earned, saved, and inherited.

Boomers (defined as born between 1946-1964) is a dam WIDE band. 18 years worth of wide there, bunky.

1946 they’re 69 years old probably retired, more than likely have a pension of sorts, and a 401K.

1964 they’re mere sprouts of 51 working til normal full retirement age of 67. Probably have no pension, a 401K and a mitfull of debt. (might as well be a dam millennial, huh)?

Me, I am in between that in 1951. Decided to cut out early as I am still on my first wife, and we did ok.

Feel sorry for my clueless kid who has zero ambition. Should send him to Smokey for re-programming, he won’t listen to me.

I notice most people don’t pay attention to their own stupidity, which causes the great bulk of their troubles.
Worse, most seem to think, it is “somebody else’s fault” they are clueless idiots. That means the ones -a good many- who abandoned stocks in late 2008 near the bottom because they couldn’t stand the pain. So, enjoy the lingering pain. I smile, read this blog’s content, comment when it might do somebody some good.

Not a hell of people can fix stupid.

#1 HD Flawless answer there, good work!!

#70 Nemesis on 01.26.15 at 8:59 pm

#DasDeutscheBankBoot… #Tauchen!… #NurEinScherz…

http://youtu.be/eVBPGZEVRH0

#71 The Patient on 01.26.15 at 8:59 pm

Garth, you’re really committing yourself to a ’15 Fed rate hike, eh? Very ballsy!

Explain me this: if

– Japan is recessing
– China is slowing
– the EU is in ICU
– the Greeks are prepping to Greek the EU
– Canuckistan (or Albertans, anyway) is wiltng
– emerging markets (3rd world) are battening down the hatches burdened with appreciating USD debt
– continuing fallout (lag effect) of sub $50 oil

then just how can the U.S. **alone** buoy the global economy **and** jack interest rates?

Actually the Fed doesn’t care. — Garth

#72 Washed Up Lawyer on 01.26.15 at 8:59 pm

#39 Smoking Man

As fan #34, I read all of your posts. Often twice. I laugh and learn.

Take my family. 2 parents and 5 kids. 7 people and 13 university degrees. Lawyers, doctors, math professors, MBAs, the usual.

206 bones in a human body so about 1400 bones among us anx not a single enterpenialial one.

Buncha leftie pinkos. I am ashamed of the lot of us.

Thank goodness my son (the academic failure) (age 21) is on his 5th job in five years. What is a “rivet bucker”?

Shirt sleeves to shirt sleeves in three generations.

#73 aL pacino on 01.26.15 at 9:01 pm

#27 Debtfree on 01.26.15 at 7:31 pm
Stephen ex polozion . Joe owe . Stevie the economist . What a trifecta . We are so screwed .

******************************************
You’re screwed because you have no money.
keep in mind though, the rich are always getting richer.

#74 Willy H on 01.26.15 at 9:03 pm

On this blog I have stated over and over that energy, in particular oil, would trigger the housing bust in Canada*

However like Brazeau I missed the mark as I foresaw higher oil prices driving a collapse and never in a million years did I anticipate the damage of a massive sustained oil price drop on Canada.

The Fed’s blew their wad when they cut corporate taxes (billions) and the GST by 2% (7 billion per year for each 1% drop lost in inflows) when Harper was engaging Canadians in minority foreplay a few years ago. If either of these cuts had been tempered we would have balanced the books in 2013 or 2014!

These cuts inadvertantly left our economy, in particular Alberta’s Sheikdom reliant more than ever on resource tax inflows. Look where we are now …

In then end Harpernomics was just a lot of fiscal heavy petting driving asset classes higher, flip-flopping on mortgages, and sending mixed messages to sheeple on personal debt. We appear to be taking a cold shower.

*The world’s 2nd biggest energy pig!

#75 BLM on 01.26.15 at 9:07 pm

#53,

The rate cut was not ‘dumb’. It is a needed poison, like chemo, to strengthen the economy before worse things happen.

Most ecnomists expected a rate cut in Spring but that fact that the BoC cut in January just shows how dire thE economy has become – and not simply by its own making.

Take what you read here, and in mainstream news, with a grain of salt.

#76 We the Sheeple on 01.26.15 at 9:08 pm

It’s never too late to drop the interest rate.

The can is kicked down the road, borrow till you blow your load. 416 and 905 are the next 212 and 646

Sincerely,
BJ Lambizzle

#77 Smoking Man on 01.26.15 at 9:09 pm

#67 Financial Freedom at 40 on 01.26.15 at 8:52 pm
#39 Smoking Man
Your stock call woke me up to the sad lack of Cdn aviation industry in my mix. But ended up in simulators instead. Low dollar boosting some local manufacturers, some still the best of the best. So putting CAE up against your BBD.
…….

The C Series is a remarkable plane. Few glitches with engines but will be worked out. Being a rivet bucker for the first 5 years of my working life, I keep tabs on things that fly.

They took a nice hit when they dumped lear. I’m betting my bet beats yours. All it would take fir that stock to double or triple is one big order from a USA airline, after the idiotic Fed just to prove the economy is fine and spikes the rate, and export mad Poloz drops ours, sending the CAD to 70 to 65 cents.

Then the orders will fly in… So go long on USDCAD long on BBD

Can’t lose, two aces in the hand, and two on the flop..

#78 Flatlander on 01.26.15 at 9:10 pm

#60 Victor V

XSP’s volume today was 191,064.00
VFV’s volume today was 92,152.00

Is XSP not more liquid? Not to mention has a larger market cap.

#79 Frankie on 01.26.15 at 9:13 pm

Yeah- Don’t trust the Calgary Sun but the Government stats are sooo much more honest.
John Williams of shadow stats who has been a statistician for 40 years uses the pre-1990 government stats for unemployment and has it at +25% in the USA. US GDP is up for ONE reason only- Obamacare- Which by the way is NOT a indication of increases economic output.
“Lies- Damn Lies and Statistics” In this case they are making up numbers.

#80 The Patient on 01.26.15 at 9:14 pm

“Actually the Fed doesn’t care. — Garth”
============================

Agreed. Apathy is a problem. But who cares, eh?

#81 Ben on 01.26.15 at 9:18 pm

Just like the UK Canada is cutting rates to try and force savers into riskier assets. The tactic is called financial repression.

Luckily I can hand all my CAD over to Uncle Sam as he seems to like (relatively) free markets and innovation.

#82 Obvious Truth on 01.26.15 at 9:22 pm

We’ve clearly been left to fend for ourselves in canada.

As for the rest of the world….

Could 2015 surprise everyone? Could we get the long awaited rotation? Or does everything work again?

#83 Marco on 01.26.15 at 9:23 pm

@Kothar,

Thanks for that link, very educational. The Canadian dollar, a commodity – based currency, says a lot.

Cheers.

#84 Vanecdotal on 01.26.15 at 9:27 pm

#46 Don Derc

I wonder if you are a RealTroll™, however if you’re not, I do apologize, but be careful about buying into the hype of this “re-invigoration” of one of the worst ghettos west of the DTES, (Whalley) Surrey Central is a Ghetto of Tomorrow waiting to happen, er… still happening.

If you’re considering buying as an “investment”, I highly recommend doing some serious dd well away from the salespeople, including talking directly to those who already bought into the Phase 1 towers as an “investment” there a few years ago, still hanging on only to avoid crystallizing their losses yoy…. for now. There is good reason these units are selling “cheap” by Vancouver prices.

Not only are the condo values steadily all across Surrey/Langley?White Rock sinking year over year for at least 4-5+ years now, but good luck finding a reliable pool of quality tenants in that area especially, for oh, maybe the next 50 years or so? Owner occupiers I’ve also anecdotally heard, tend to not last too long either due to high-crime, and then become reluctant landlords.

The salesperson stating all 6 of those towers are max. occupied is full of bs, as a quick craigslist rental search will corroborate. There are endless perpetual craigslist ads looking for tenants for these particular buildings, many appear to be straight from unsold condo stock the developers can’t unload so far, in addition to amateur landlords desperate for a tenant. I strongly suspect turnover and vacancy rates are likely higher than the regional averages.

That area was for a very long time, and still is a lock-your-car-doors-when-driving-through war zone, and will likely remain so, if not worsen, for a very long time, despite what Surrey City Council would like you to believe.

Sure, if you can wait a couple decades for gentrification to catch up, go for it. Otherwise, you may be looking at some serious lost opportunity cost in addition to potential depreciation in unit value.

Sure, maybe 20-50-100 years from now it’ll be a thriving twin City to Van, (maybe), but certainly not anywhere in the near future, but in that time frame, investment capital would perhaps be much more wisely used elsewhere. Buyer beware.

#85 Mr Stats on 01.26.15 at 9:29 pm

Lower Loonie = RE on sale for foreign Money!

20% off going to 30% off. Vancouver and Toronto going higher.

#86 Mr Stats on 01.26.15 at 9:32 pm

And for those that think the ‘economy’s pooched’. You are being played. Jokes on you.

There are a lot of people making a lot of $$$$ with the events of the past 6 months!

7 months wait for a new Range Rover Sport now!

#87 TakingResponsibility on 01.26.15 at 9:33 pm

Ballin’ truck fer Sale! Check it!

http://www.kijiji.ca/v-cars-trucks/edmonton/1990-gmc-c-k-2500-pickup-truck/1046451924?enableSearchNavigationFlag=true

Pure Alberta Gold : D

#88 Tom from Mississauga on 01.26.15 at 9:37 pm

425 basis point cut by BoC during the GFC. That was a cut! 25 or 50 basis points? Ain’t moving the needle.

#89 The American on 01.26.15 at 9:37 pm

RealTURDS are out in full force tonight. It’s HILARIOUS! The more realTURDS you see posting on these blogs, the more you know the ship is sinking fast. If things were so sound and stable, they would have no other reason to fight the contrary. Their job, first and foremost, is to give a fair and balanced view of the market. Instead, NEVER do you EVER hear a realTURD say, “Yes, the market is compressing, and I would wait for a bit to make an offer.” Show me one, JUST ONE, and I’ll show you one with ethics. Hell, I remember even here in Seattle when the market was at its low, realTURDS would continually pressure people to make offers above asking. Its absurd. Now, there’s a clear calling and provisions have been made for greater controls from the States. After all, realTURDS play roulette with a person’s largest lifetime investment. Don’t we all agree there SHOULD be greater scrutiny over these hacks?

#90 set your Betamax recorders on 01.26.15 at 9:39 pm

CBC is touting a story on The National tonight about RE Agent duping a client. Someone found out the hard way that their first RE Agent still had to be paid his commission – even though the first offers fell through. Another agent made a new offer, did the work & closed the deal.

First agent points out the 15 months representation agreement clause and the 90-day holdover clause, so demands his cut for the deal done by the second agent.

read more (if your video recorder gizmo is busted):
http://www.cbc.ca/news/canada/homelife-superstars-realtor-accused-of-duping-homebuyer-of-12k-1.2928982

#91 Kenchie on 01.26.15 at 9:40 pm

“Goldman Sachs Group Inc. says China’s official errors and omissions data — figures used by nations to balance cross-border flows when records don’t match — point to a record $63 billion leaving the country in the third quarter of 2014. Bank of America Corp. estimates $120 billion of capital flowed out of China in the final quarter of last year.”

China Switches to Support Yuan as Outflows Mount

http://www.bloomberg.com/news/2015-01-26/china-switches-to-supporting-yuan-as-outflows-mount-currencies.html

#92 Retired Boomer - WI on 01.26.15 at 9:49 pm

#288 For Those Who are about to flop (Yesterday)

Costs are the single biggest determination of your investment success over time. The LOWER your MER the more you get to keep.

2% a year for an investment lifetime you give up about 2/3 of what you could have had to the manager in costs.

While there is the miracle of compound interests, there is a corollary, the expense of compound costs!

Minimize your expenses!!!!!!! .10 % vs 2% over say a 30 year investing lifetime! Shocking differential!!

#93 Smoking Man on 01.26.15 at 9:56 pm

#71 Washed Up Lawyer on 01.26.15 at 8:59 pm
#39 Smoking Man

As fan #34, I read all of your posts. Often twice. I laugh and learn.

Take my family. 2 parents and 5 kids. 7 people and 13 university degrees. Lawyers, doctors, math professors, MBAs, the usual.

206 bones in a human body so about 1400 bones among us anx not a single enterpenialial one.

Buncha leftie pinkos. I am ashamed of the lot of us.

Thank goodness my son (the academic failure) (age 21) is on his 5th job in five years. What is a “rivet bucker”?

Shirt sleeves to shirt sleeves in three generations.
……..

I’m so sorry to hear that about your family. Seriously.

A rivet bucker, it’s a form of art. Requires a steel bar, you crawl in an aircraft wing.. Your rivet shooter, I’ meen that’s what a rivet bucker aspires to be. Takes years.

The shooter puts a rivet in the hole, you push it out with the steel bar, he pushes it back and fires the gun. The steel bar flattens the rivet, hence the wing gets fused to the spar.

On a good night you can buck thousands of rivets.

Now when you go on strike, selling aluminum doors, door to door and make more money on one weekend than two months salary bucking rivets..

An entrepreneur is born….

PS your fan 43 been killing it in the fan department as of late..

#94 Gmpeak on 01.26.15 at 9:58 pm

DELETED

#95 Washed Up Lawyer on 01.26.15 at 10:00 pm

Smoking Man

Never mind my question about bucking and catching rivets. I briefly attended the U of Google just now to see what a rivet bucker was. Nothing is being built out of steel in Alberta these days and won’t be for a while. Steel is a falling bargain here. My son might have to return to bootlegging stolen booze out of his car.

#96 Vanecdotal on 01.26.15 at 10:00 pm

Further to prev. post:

This is but one example of many via quick cl search. This ad has been running continuously for months and gives you just a taste of the massive rental pool, currently available in the Surrey Central City area in the new towers alone.

http://vancouver.craigslist.ca/rds/apa/4837652248.html

Competition amongst landlords in this area is already steep, everyone already chasing a small pool of quality tenants.

I believe there are a few thousand more units in just the immediate area due to complete in the next 3-5 years.

Yes, immigration numbers are projected to be constant for many years, point is though there are, right now, thousands (10’s of thousands?) of cheaper places to live in Surrey, in much nicer (safer) areas than what these units currently rent or sell for. Immigrants who are budget conscious (the majority), will gravitate to the best areas available for the least amount of $. Currently, the new condos on offer in this area offer neither.

If one then factors in a prolonged and painful overarching RE correction in the GVRD (already in progress in the outer ‘burbs), the potential (lack of) roi from buying a new condo here in the near-term starts looking downright scary.

#97 Marcus on 01.26.15 at 10:01 pm

Here is a good anecdotal report. Last Tuesday I was returning to the United States at the Peace Arch border. I made the crossing at approx 11:30 AM. Normally this crossing takes about 1 hour or so. It has been this way for years. When I approached there was only 1 car in front of me. Only 1 car! I asked the border agent and she said it has been dead for the past 2 weeks. She hasn’t seen the like for years.

#98 Ole Doberman on 01.26.15 at 10:01 pm

#84 The American on 01.26.15 at 9:37 pm

RealTURDS are out in full force tonight. It’s HILARIOUS! The more realTURDS you see posting on these blogs, the more you know the ship is sinking fast. If things were so sound and ….
———————————————————-
Agreed. My RE buddies on facebook are also posting “bullish” articles anywhere they can find.
I suppose if I posted anything from the Greater Fool they would de-friend me.

#99 VICTORIA TEA PARTY on 01.26.15 at 10:04 pm

THE MADNESS SURROUNDING…EVERYTHING MONETARY!

The only good reason the BoC lowered its bank rate was to SEEK a boost to our non-oil/nat gas exports.

We need SOMETHING with which to pay our bills, being that we are supposed to be a trading nation.

While we mourn low hydrocarbon prices, and about-to-become much lower living standards, oil and gas surpluses can be found stored up all over the world including in the holds of huge anchored oil tankers.

Amazing.

So, sequestering our precious non-renewables is about to become a “non-voluntary”, if unhappy, past-time like it or lump it.

So, when will prices move up?

I was watching a TV interview with Financial Times economic guru Martin Wolf yesterday and he believes oil prices will be with us, in this current range, until well into next year!

While we can now say “good night, Irene,” to the energy-related prairie real estate market where ELSE can investors (from anywhere) plunk their capital, outside of the edgey stock and bond markets, here in Canada or anywhere else?

Oh, I know, Vancouver real estate.

Why? It’s STILL viewed by many investors as a SAFE PLACE to do business.

Which gets back to the title of my piece and, specifically the word “monetary”.

For it is “monetary” policies of manipulating interest rates, QE, and trying to create inflation, that allow this current economic unease to continue unabated.

A lower Canadian dollar, can also be used as a come-one in assisting in the purchase of Vancouver real estate by SOME off-shore interests using currencies more amenable to their needs, other than the “triumphant” US dollar, in concert with our buck.

I still maintain that Mr. Poloz (like the Swiss National Bank which earlier cut its currency ties with the Euro) cut our rate as part of the larger currency war now being “won” by the US dollar. Canada and Switzerland didn’t stand a chance in this tussle and they unceremoniously retreated.

So they, along with Russia and Greece, suffer the slings and arrows of a currency pummeling and await another opportunity to “get back into the fray.”

When will that be? When the USD starts to crumble. When will that happen? Well, when it does! Which currency will emerge the winner?

Doesn’t matter; because the war will keep on until, exhausted, the various sovereign state participants, in this awful madness, will be forced to sort this all out “peacefully.”

By that time the world’s economy will be a total disaster.

It’s well on the way to that date with destiny right now: witness as I’ve already mentioned: Greece, Russia’s NEW junk-bond status, AND huge unemployment in Europe, negative interest rates just about everywhere, and debts that continue to pile up all the way to the edge of the known universe.

Marvellous, isn’t it? These central bankers sure know how serve us well, don’t they?

The blighters.

But, all “good” things must come to an end.

And, dammit, they will. That will include Vancouver real estate and all those wise-acres who thought they KNEW how to stiff the system. Instead the system shall stiff THEM. Guaranteed.

#100 Red Deer Rob on 01.26.15 at 10:06 pm

“We all have a responsibility to care for them. Like retired geldings.”

This is wordsmithing at its finest.

Yes, people will finally have to come to a realization that taking on exorbitant amounts of leveraged debt is not prudent. Since 2007 I have beleived the real estate market was bubbling and was perceived like a tool to friends. I was 23 then, living in BC and only making peanuts. I resisted the urge to leverage up and it was the right choice.

Now it seems the market is actually correcting. A bittersweet moment knowing I did what I could to sway the geldings but also a nice reassurance that in some ways my economic sense is free from media control. I still have a lot to learn in terms of investing but this blog is kicking my ass in the right direction.

#101 Calgary Car Guy on 01.26.15 at 10:09 pm

Re #41 it’s OVER for the Canadian oil sands
“There will be NO reason to restart the oil sands unless oil prices stay $70-80 for a long time. With US shale oil which can come online quickly will leave canadian oil sands oil in the ground (worhtless). Alberta RE will be worth what RE is worth in Detroit. Yes that is what will happen.

Apparently you don’t know about another very major resource here in Alberta that we have barely touched.

http://www.energy.alberta.ca/coal/643.asp

http://www.energy.alberta.ca/coal/coal.asp

We will always recover here in Alberta, just sometimes it takes a little longer than others. We’ll be fine.

#102 kommykim on 01.26.15 at 10:13 pm

RE: #17 Flatlander on 01.26.15 at 7:13 pm
I only have a TFSA, and it is sitting in cash.. I would like to get into the American market.
XUS, VUN, and ZSP all seem very illiquid.. Is ZSP the best bet of the three? It seems the most liquid

ETFs are as liquid as their underlying stocks that they hold. Never trade ETFs after hours or when the underlying markets are closed. ie: Don’t trade VUN on the TSX on Martin Luther King day.
Always use a limit order to avoid surprises especially on larger trades.
Personally, I like VUN due to the large number of stocks it holds.

#103 Bobby on 01.26.15 at 10:13 pm

#46 Don Derc, of course he’s a realtor.

Who gets excited about paying over $100k for 316 sq ft? That’s not much bigger than a hotel room. Sure, anyone would certainly look forward to that!

Yes, there are some realtors that are doing well but many are struggling. Sadly, for those that they represent, many will say anything to make a sale.

It’s buyer beware.

#104 marnic on 01.26.15 at 10:14 pm

The CBO says it will be 4% of the economy in 10 years, not ‘a couple.’ At least they are planning ahead, compared to us. — Garth

Yup, I guess a plan to plunge yourself into a further $8 trillion of debt over the next ten years is still a plan…

#105 Financial Freedom at 40 on 01.26.15 at 10:15 pm

#76 Smoking Man …….
Being a rivet bucker for the first 5 years of my working life, I keep tabs on things that fly.
——
Spent first years out of ‘school’ learning how to fly, still work in the cloud, but sadly from a desk. Lots of maple pride still in aerospace.

Current bet is Health + Internet of ‘Every’thing. Can’t walk across the floor spaces of CES in Vegas without training for a half marathon. PHM was my ’14 star. So I like CAE’s healthcare tech play, but with you on things that fly.

#106 Rob on 01.26.15 at 10:17 pm

I just sold my house for an insane price and I’m going to rent. Thanks Garth.

#107 fisheman on 01.26.15 at 10:17 pm

Pretty quite west side Van last summer into the fall. Not anymore, like hungry bees buzzing for the honey HAM is back in the hunt. Prices haven’t jumped (actually fallen 10% with the $C)but there isn’t one 33’x120′ bldg. lot for less than 1.8m on the market. Big expectations for bountiful Chinese New Year (thats when some of the 60,000 Chinese worth over 200 million come for a little shopping.) Feels pretty good to have these guys as partners. They pay cash & don’t cut & run. There is a huge pool of capital out here on this beachead. We all like the good stuff,federal licences,quotas,gravel pits,good farmland, woodlots,R/E with cash flow & a chance of rezoning in 25 years. The kids are at UBC and take the hard stuff. Daddy gives them training money to practice business. Dad stays on the mainland to play with the big boys. Now you blog dogs got the heads up; Like the Canucks on Juneau Beach this crew is marching East. The falling $C just softens up the targets. Billions of ammo in our houses & good supply lines for more. Laugh at the wet coasters all you want; there’s tons of money out here; its coming from everywhere & everything. And its going to outbid you.

#108 Rexx Rock on 01.26.15 at 10:18 pm

On bnn this morning,one pro trader said the fed will not raise rates in the US because of global economic slowdown.Maybe in 2020 or 2021.Oh yes there will be qe 4.so there you have it.Canada is going to look a lot like Europe in the next few years ie: deflation,no growth,high unemployment and a destroyed young generation with no hope or jobs.Can’t wait to see the flood of foreclosures and our goverment spewing more lies and propaganda.

#109 Martin G on 01.26.15 at 10:20 pm

Federal deficit 2.6% :)
Garth you are wrong here.
You are drinking government cool aid on this one.

Official cool aid news
———————————————————————————————-
The federal budget deficit slid to $483 billion in fiscal year 2014, down from $680 billion in 2013 and more than $1 trillion each of the prior four years.
————————————————————————————————–

Real numbers
——————————————————————————————————-
On 9/30/2013 there was $16,738 billion in federal debt.
On 9/30/2014, the end of last fiscal year, there was $17,824 billion of federal debt.

The net increase is $1,086 billion, or $1.086 trillion dollars, not $483 billion.
Official link with numbers
http://www.treasurydirect.gov/NP/debt/search?startMonth=09&startDay=28&startYear=2013&endMonth=09&endDay=30&endYear=2014
—————————————————————————————-

Why the discrepancy? Because as in the Clinton years the government has been stealing the “excess” from Social Security and Medicare tax receipts and claiming that is a “deficit reduction” — despite the fact that the obligation generated from those programs was not reduced by that same $603 billion!

Info from Karl Denninger site – Market Ticker.
http://market-ticker.org/akcs-www?singlepost=3372297

I don’t have time to dig out this quality information myself but I read couple blogs, this one included :)

#110 Smoking Man on 01.26.15 at 10:22 pm

#94 Washed Up Lawyer on 01.26.15 at 10:00 pm
Smoking Man

Never mind my question about bucking and catching rivets. I briefly attended the U of Google just now to see what a rivet bucker was. Nothing is being built out of steel in Alberta these days and won’t be for a while. Steel is a falling bargain here. My son might have to return to bootlegging stolen booze out of his car.
….

That’s fine, and remeber to tell your son, apart from slime sucking communists.. All pay checks are diverivatives of a sale. And if you own the sell, you are King. And the ones you write checks to are the slaves.

Encourage your son to manage slaves to do the bootlegging, just manage them, stock there ego, Pat them on the head.

Tell him to only hire grads with obedience certificates, you can trust them. Their idiots. All those thousands when it’s all free at the university of Google.

If he hires one of my kids, it would be bad news, they would steel his customers and staff, his girlfriend, while convinceing him, he made a great deal.

#111 Sniper on 01.26.15 at 10:23 pm

There are three types of people in the world: wolves, sheep, and sheepdogs. The evil wolves (aka realturds) threaten the sheep. The sheep are good people, but vulnerable to harmful real estate investments because they’re too naive to understand that evil exists. That means that it’s up to the sheepdogs (aka Garth) to protect them from harm.

Keep it up dog, u da man!

#112 OttawaMike on 01.26.15 at 10:31 pm

Re #41 it’s OVER for the Canadian oil sands

That post is a verbatim repeat of a CBC radio news story from today.
At least cite your source when you repeat word for word.

#113 Kenchie on 01.26.15 at 10:32 pm

#46 Don Derc on 01.26.15 at 8:06 pm
“Popped into a pre-sale today at Surrey Centre. Six buildings currently stand (25 floors high) and sold/occupied. The realtor says 14 more scrapers to be built over 5 years in the ‘hood as well. Yes Vcr to Surrey may be the exception but where will Vcr (or Toronto) be in 15 years? Double the current population of today.”
——————————————————–

No it won’t. In 2001, Metro Vancouver (known as the GVRD back then) had 2,093,125 in it according to the BC government’s estimates. In 2014, they estimated that Metro Vancouver had 2,474,123 people in it. Over that time period, 13 years, the population grew by approximately 381,000, which translates to about 1.295%. If that rate continues, it will take about 54 years to double. Of course, these are just based on the government’s estimates… but one thing for sure is the population ain’t doublin’ in 15 years… And it surely will be older on average.
————————————-

“I liked the 316 sq ft for $100K. The realtor says come on a weekday – they had over 800 horny tire kickers on the weekend. The buzz, and enthusiasm is infectious. Lots of buyers are very confident but….the people I talked to were high in cash, low in debt, had a few extra properties rented etc etc. Quite the contrast from the young couple with a highly leveraged mtge on a property over valued by 30%. If these things don’t leak, Surrey may be the deal of the day….for now.”

These things are only for investors. If an owner-occupier bought one, they should be laughed at like they crapped themselves in public. I doubt their stabilized vacancy would be lower a regular-sized 1-bedroom though. It takes a very desperate person to want to stay in such a small place for more than 1 year. Particularly in Surrey, where rent is inexpensive. That said, even 1-bedrooms will suffer over the next 10 years as the number of millennials in their renting/first time buying phase dwindle. As they say, buyer beware.

“My bike lives in a bigger space. — Garth”

Don’t brag, Garth. It’s unbecoming…

#114 Smoking Man on 01.26.15 at 10:32 pm

#104 Financial Freedom at 40 on 01.26.15 at 10:15 pm
#76 Smoking Man …….
Being a rivet bucker for the first 5 years of my working life, I keep tabs on things that fly.
——
Spent first years out of ‘school’ learning how to fly, still work in the cloud,
…….

Dude me too, especially on Friday nights. Just fill up the tank and go.

I love it..

#115 Prudent Observer on 01.26.15 at 10:33 pm

This 30 min video is a gem. It explains what might happen to the economy once it starts deleveraging. http://youtu.be/PHe0bXAIuk0

#116 Josh in Calgary on 01.26.15 at 10:34 pm

#63,
Alberta may be $12 billion in debt but we’ve shipped out $250 billion in transfer payments over the years. I’m not passing judgement on that, but let’s do away with the myth that we’ve squandered all of our oil money. And somehow there are people out there who still think we didn’t “share the wealth”.

You are correct though that Albertans and our politicians aren’t the fiscal Hawks we claim to be. A lot of money has been wasted on nice to haves (and fattening political wallets) and paid for by oil money instead of saving it for a rainy day. Also the low tax is nice but not the way to run a sustainable province. It does win votes though.

#117 Andrew Woburn on 01.26.15 at 10:37 pm

The two-minute guide to why trade imbalances matter. Become an expert. Amaze your friends!

http://video.ft.com/4000123703001/Martin-Wolf-on-why-trade-imbalances-matter/editorschoice??ftcamp=crm/email/_DATEYEARFULLNUM___DATEMONTHNUM___DATEDAYNUM__/nbe/FirstFTEurope/product

#118 Bobs ur uncle on 01.26.15 at 10:38 pm

#79 The Patient

Agreed. Apathy is a problem. But who cares, eh?

***

Thanks for the laugh.

#119 Andrew Woburn on 01.26.15 at 10:40 pm

Further to my recent comment about Li Ka-shing tiptoeing away from Hong Kong.

“Asia’s Richest Man Has Seen the Future and It’s in Europe”

http://www.bloomberg.com/news/2015-01-25/li-s-special-feeling-is-thrill-of-a-well-timed-bet-opening-line.html?cmpid=yhoo.bottomline

#120 Blobby on 01.26.15 at 10:43 pm

From poster above..

>I liked the 316 sq ft for $100K

I live (rent) in a TINY downtown vancouver apartment, my bedroom is bigger than that!

(I’ll have to check, but i think my bathroom is getting close to being the same size too!)

#121 andy on 01.26.15 at 10:44 pm

“Any guesses how low the loonie will sink? I’m putting my bets on 65 cents by end of year if oil stays around $45.”

By year’s end they’ll be talking about $100-oil again. While deflation is all the rage, everything I’m buying these days is going higher (other than gas, that is…for now)!!

#122 its OVER for Canadian oil sands on 01.26.15 at 10:47 pm

#100

Lol coal? LOL coal. I have to find you the chart of resources that were once valuable but got replaced. First we had wood that was valuable and got replaced by coal which became another valuable commodity that became replaced by oil. As you can see the once valuable coal was replaced by oil so all that coal that in the ground is not as valuable. Canadian oil sands has become worthless in the sense it will be left in the ground. Canadian dollar being sacraficed for an orderly shutting down of operations. Coal is peanuts $$$$$ wise vs oil. The conservatives in Alberta squandered the money made over the year unlike Norway. Conservatives have always been financially irresponsible and Alberta is proof. Detroit is Alberta future. You just don’t get it yet.

#123 Bill Gable on 01.26.15 at 10:47 pm

Forget RE for a second.

Look at some other indicators – and the more you read, the ‘iffier’ things look.

Mr. Turner has coached investment assets – and with this current mess, maybe that’s the reason there is a rush into bonds – that yield zilch.
I have been hearing rumours of ‘negative interest rates’ – and then I see this.

How rough are the seas?
I’d put a reef in the main, and get ready, Fredddy ->

>> This is from last week -> But the trend continues:

>> For example, the price of copper got absolutely hammered on Wednesday. As I write this, it has fallen more than 5 percent and it has not been this low in more than five years.

In financial circles, it is referred to as “Dr. Copper” because it is such a valuable indicator regarding where the global economy is heading next.

For example, in 2008 the price of copper was close to $4.00 before plummeting to below $1.50 by the end of that year as the global financial system fell apart.

Now the price of copper is plunging again, and many analysts are becoming extremely concerned…

One growing global worry is the steep decline in copper, which is used in many products and is often viewed as good gauge on how China is doing. The price of copper hit its lowest price since 2009 on Wednesday at $2.46. Copper is down nearly 7% this week alone.”

Link: http://tinyurl.com/p8oqj9n

#124 Joe2.0 on 01.26.15 at 10:48 pm

Lock’n Load
Shear the sheep and then up the rates.
Disaster looms down the road when rates are raised and mortgages renewed.
But, but, but….

#125 dick on 01.26.15 at 10:49 pm

The death of king dollar.
Not fear porn-reality.
https://www.youtube.com/watch?v=RaJjCeW-d7k

#126 Get ready for a 6 day work week on 01.26.15 at 10:50 pm

The K o c h Bros worth 100 billion are spending $1 Billion in donations for the upcoming US election.

One thing they want done is institute a 6 day workweek in the USA. Say they can’t compete with Asian countries.

If this happens, expect same in Canada.

http://www.apnewsarchive.com/2015/Political-machine-backed-by-Koch-brothers-close-to-1-billion-for-2016-expected-to-dwarf-RNC/id-dcc3e4fd836e4638ab8829284a2e0bbf

Are you also a moron in real life? Just wondering. — Garth

#127 Mike on 01.26.15 at 10:52 pm

Night is darkest just before the dawn. What the new day brings is up for debate…or is it? Greater fools here seem to think, just because they have been waiting, praying forever and ever on the sidelines of life that prices will finally decline in the 416, so that they could just show up and scoop up something for almost nothing. It ain’t gonna happen – not in the 416.

Cow-towns and one-trick-pony industry towns aside T.Dot housing is solid (excluding pre-2000 suburb condos). The funny thing is, we haven’t seen anything yet, and I am not even going to mention foreign investors – who are already enjoying fat discounts on the depreciating CND.

Picture this. Over the next year or two subsequent interest rate drops don’t even spur a frenzy. No problem. Banks announce a minimum 10% downs by a certain date, to be able to qualify. Watch demand skyrocket as every Joe, Dick and Harry scurry like cockroaches to find a few grand to put down on something…anything. Maybe they double the allowance for RRSP contributions to put down toward your down – so those with fat downs that have been forever waiting, finally jump in (of course by them prices for a newer 1 bed condo will be approaching $400K). Who knows, maybe a warning of a tiny quarter rate rise a few years down spurs another rush into housing. Or those who have been making massive gains on stocks past few years decide they want to cash out some of their winnings and splurge a bit with some real asset purchases.

All the while the economy is ho-humming along with CND in the low 70’s, as mass immigration continues unabated.

Meanwhile a coffee and a donut at Tim’s is running you $7 and you are just left there scratching your head..

Hey, why not?

I thought you buy-now-or-buy-never realtors had the corner on roaches. — Garth

#128 @fisheman on 01.26.15 at 10:54 pm

Pending sale for 33×120 foot lot between Cambie and Main today at 2.08 million. $1.8 M was the good old days.

#129 Kenchie on 01.26.15 at 10:56 pm

#83 Vanecdotal on 01.26.15 at 9:27 pm

“Sure, maybe 20-50-100 years from now it’ll be a thriving twin City to Van, (maybe), but certainly not anywhere in the near future, but in that time frame, investment capital would perhaps be much more wisely used elsewhere. Buyer beware.”

Very well said, Vanecdotal. I couldn’t agree more with your whole post.

#130 Devore on 01.26.15 at 10:58 pm

Vanectodal,

You sound awfully like that Westside Realtor guy on another Vancouver condo blog who spews bs all day long.

#131 Paul on 01.26.15 at 11:17 pm

Just thought i would point this out
400k mortgage / 25 year amor/ 8% = approx 3100$ / month
700k mortgage / 25 year amor/ 2.75% = approx 3100$/ month

I think we are in a new world people

#132 Kenchie on 01.26.15 at 11:18 pm

#106 fisheman on 01.26.15 at 10:17 pm

“Laugh at the wet coasters all you want; there’s tons of money out here; its coming from everywhere & everything. And its going to outbid you.”

Perhaps… Perhaps the next wave won’t be as strong as the last. Perhaps, Xi Jinping wants to tax all of these offshore Chinese citizens. Perhaps, Harper will help him do it. Perhaps, those who bought in 2012 don’t like the idea of losing 15% in currency depreciation and are telling their friends that Canada isn’t as stable as they thought. Perhaps the economy back in China makes Daddy not feel so rich in the future as his properties there decrease in value and his employees demand higher wages. Perhaps the cheaper average houses in the US, and the stronger economy there, attract more Asian capital south of the border.

The world is uncertain. Don’t expect the next 10 years to be the same as the last 10 years, particularly as the IIP backlog dwindles.

#133 Ray Vasquez on 01.26.15 at 11:19 pm

To Anson #30

Look at other economies that depend on low interest rates for years, decades. Real estate becomes almost worthless, a 70% to 80% property devaluation in the more worse cases.

Be careful what low interest junkies wish for!

#134 Kenchie on 01.26.15 at 11:19 pm

And don’t forget about Harper’s dislike of all things Iranian…

http://www.theglobeandmail.com/news/national/iranian-immigrant-investors-shut-out-of-provincial-programs/article22282232/

#135 Smoking Man on 01.26.15 at 11:20 pm

#19 polecat on 01.26.15 at 7:16 pm
Aren’t we supposed to hire smart people to run the Bank of Canada. Or is he taking orders from the boss. And Joe says he’ll still balance the budget, must be more layoffs coming in public service. Guess it’s our turn to eat the s#!t sandwich we avoided during gfc. Hang on dogs, gonna be a wild one. Smokin man, we should get together I got given some shine.
…….

Get together? not a chance, I’m a God damn celebraty now… 43 fans dude.

Where the hell where you when I had 2 fans fighting the world on my own.

Just call my agent, I’ll see what I can do.. Schedule is full, just warning you.

#136 Smoking Man on 01.26.15 at 11:24 pm

DELETED

#137 For those about to flop... on 01.26.15 at 11:25 pm

To all the people that have tried to stop me from throwing my money away on MER,s I Thankyou.
I wasn’t too concerned because I only invested 5k of the 31k in my TSFA In a mutual fund with 2% MER .
So I guess that will be a hundred dollar lesson this year.
The bank I use is useless at explaining anything so I’m relying on you guys .

#138 Mike on 01.26.15 at 11:32 pm

I thought you buy-now-or-buy-never realtors had the corner on roaches. — Garth

If I were a realtor, I’d probably be closing sales at this hour. I do drive an Audi though, thanks.

Sadly, the buy now or buy never (in the 416) may actually be upon us over the next few years. We have some of the most lax entry to market requirements in the world..5% downs and a pulse more or less. It’s approaching the ludicrousness of 96 month Benz leases to high school burger flippers with thousand downs – only a fool would think such absurdities will last forever.

But hey, those mortgages will be paid by owners or renters – so we definitely need them both.

#139 Industrial Guy on 01.26.15 at 11:41 pm

BOC rate at 0%? You betcha.

Read up on your Milton Friedman.
He advocated for zero rate interest policy.

Desperate people do desperate things and there’s a Federal election coming.
Our Prime Minister and late Finance Minister bragged for a decade that they were the masters of the global financial universe.
The truth is, they were busy lining up the dominoes. We had the infamous $114 Billion dollar un-bailout of the banks.
The Harper Government focused on building an economy that sent raw materials and energy to the USA and China.
That sent the Petro-Loonie into the stratosphere and killed off the manufacturing sectors in Ontario and Quebec. That will teach them for not voting for the Conservatives.
“Could there be a clearer admission the Canadian economy is pooched?”
Sure, Harper could resigned.

“You won’t recognize Canada when I get through with it”.
Mr. Prime Minister, mission accomplished. You can leave now and good riddance.

#140 Victor V on 01.26.15 at 11:49 pm

#78 Flatlander

VFV is more liquid than the VUN you had referenced within the Vanguard series.

Fee for VFV is lower than both VUN and XSP.

XSP is CAD hedged so not apples to apples.

#141 devore on 01.26.15 at 11:55 pm

#80 Ben

Just like the UK Canada is cutting rates to try and force savers into riskier assets. The tactic is called financial repression.

I think not. Returns on cash have always been low vs real rates. You can’t talk about the days when a savings account paid 5% without also talking about what you’d get in a GIC or a 5 year government bond. You can’t talk about the return on your cash, without talking about what you pay to borrow it.

Lets face it, savers have always been getting screwed, that’s the reality of risk-free, liquid cash. High interest rates just masked it, while inflation chipped away.

#142 Kenchie on 01.27.15 at 12:03 am

Singapore population = 5,469,700 in 2014 (est)
Metro Vancouver population = 2,474,123 in 2014 (est)

Singapore Density: 7,615 per square km.
Vancouver Density: 856.2 per square km.

“During the housing boom in Singapore, prices soared 40 percent to a record in 2013, spurred by low interest rates and demand from foreign buyers. As prices peaked, the government capped borrowers’ total debt repayments at 60 percent of their income, making it harder for Singaporeans to refinance loans, and placed additional taxes on home purchases by foreigners and levies on property sales.”

http://www.bloomberg.com/news/2015-01-26/defaults-send-singaporeans-bargain-hunting-at-auction.html

#143 Cici on 01.27.15 at 12:07 am

#39 Smoking Man

Ahhh, that was funny. Awesome post ;-) you arrogant, but shrewd little bastard.

#144 Nomad on 01.27.15 at 12:10 am

Our company hires people from England, Poland and China because they expect a smaller salary. So it looks like job growth but it’s not going to those looking for a job here. Other corporations must do the same to improve the bottom line. Keeps salaries from matching inflation.

Anyways, while canadians obsess with banks and energy stocks, they’re missing the trend: technology like OpenText, CGI keep going up. Forestry like Western Forestry Product got itself a mention in Bloomberg for benefiting the low CAD. Telus attracting boomer money that needs yield but doesn’t need energy stock stress.

My Horizon SP500 unhedged ETF up 13% in less than a year.

It pays to save. I mean, it pays to invest.

#145 Kenchie on 01.27.15 at 12:10 am

More from the article above:

“The restrictions have had the biggest effect on landlords and the rental market. Landlords face a rise in vacant apartments as more new properties come on the market this year and the pace of foreigners arriving in Singapore slows.”

“City Developments Ltd. (CIT), Singapore’s second-biggest developer, warned last year that the local housing market may face “fire sales” and mortgage defaults due to falling rents, especially for high-end homes. Rental prices of residential properties fell by 3 percent last year compared to a 0.9 percent increase in 2013, URA data show.”

““Some of the properties in the auction are those where the owner has multiple properties and he can’t rent them,” said Grace Ng, deputy managing director at broker Colliers International in Singapore. “If the government measures are not relaxed or removed we could see more sales” by homeowners who are in default.”

““Besides the stringent loan curbs, which made it difficult for local homebuyers to secure loans, particularly for properties with higher price tags, the falling yields as a result of the softer rental market have also deterred investors from committing to purchases of investment homes,” Ng at Colliers said.”

If it can happen in Singapore, it sure as shit can happen in Vancouver.

#146 Flo on 01.27.15 at 12:14 am

Just read this from CBA website. Curious what everyone’s thoughts are around low % of Canadians behind in their mortgage payments considering the low interest rate climate.

link 1:
http://www.cba.ca/en/media-room/50-backgrounders-on-banking-issues/548-household-borrowing-in-canada

stats link: http://www.cba.ca/contents/files/statistics/stat_mortgage_db050_en.pdf

Excerpt

Banks are prudent mortgage lenders
Banks take their role as mortgage lenders very seriously, adhering to prudent standards and ensuring consumers only take on manageable levels of debt. This is clearly evident when looking at national mortgages-in-arrears numbers for Canada’s nine largest banks, which show that less than half of one per cent of homeowners have gone three consecutive months or longer without making a payment.11
Mortgage debt has been growing and this growth has been driven by the housing market, not changes in bank lending practices. House prices have almost doubled in the past decade, requiring home buyers to borrow more to finance their homes.
Today’s historically low interest rates will inevitable rise. Banks take this into account and ensure potential borrowers are able to make future payments under higher interest rate conditions. For example, for variable rate mortgages, banks normally assess borrowers using interest rates that are one to two per cent higher than the rate for which they qualify so that the borrower could continue to make mortgage payments if interest rates go up.”

#147 Cici on 01.27.15 at 12:20 am

#45 Rob,

Personally, I think you are missing the fact that with house prices and homeownership down in the US, people no longer have to consecrate the majority of their income to housing expenses, and can instead spend the difference in the real economy (purchasing goods and services, and/or investing). When your mortgage is costing upwards of 60% of your take-home (or even more in some major cities), the savings rate goes into the negatives, people are surviving off of credit, and that only goes well until they’re maxed out. Then shit hits the fan big time.

#148 b.sktrn on 01.27.15 at 12:38 am

Hey there, I.O.F.C.O.S. , sounds like you were listening to cbc radio tooday!

CDN Oil Sand production , in fact can be easily and quickly and cheaply swithced on and off. Diggers and dump trucks are pretty simple stuff and the nat gas supply seems like infinite/2 lately.
(expansion is the $$)

there is plenty to dig for hundreds of years without looking for more reserves.
shale needs to explore/drill/produce and repeat

when the shale runs dry(er) ft mac will boom again – guaranteed

it may take a decade or two, but that energy is like money in the bank until fusion is widespread(+100yrs)

————————

#41 its OVER for Canadian oil sands on 01.26.15 at 7:53 pm
Oil from shale oil is hard to shut/bankrupt them down as they don’t need very much capital or manpower to turn on and off. Canadian oil sands take a lot of capital and resources and so Saudis will pump and pump until the oil sands are shut down. There will be NO reason to restart the oil sands unless oil prices stay $70-80 for a long time. With US shale oil which can come online quickly will leave canadian oil sands oil in the ground (worhtless). Alberta RE will be worth what RE is worth in Detroit.

#149 Tiggertoo on 01.27.15 at 12:46 am

Hi Garth – what’s your call on mortgages for those of us in the market. Fixed or float – is there much more downside potential to actual rates charged ?

#150 Vanecdotal on 01.27.15 at 12:58 am

#130 Devore

Fascinating. If you say so. Don’t know who/what you’re referring to but judging by the RE pumping tone of your past posts I’ll just take that as a compliment.

I only report what I personally observe, and anecdotally through my peers, on the ground in the Lower Mainland in an attempt to provide objective information that neither the RE industry nor the msm is providing… yet.

I always state these observations are imho, and suggest to others to do their own Due Diligence.

Guessing you are in the RE trade? Sorry if sharing a more accurate reflection of local REality offends you. Feel free to skip ahead from now on if you are upset by this.

Do enlighten us if I’ve drawn incorrect conclusions along the way. Links to reliable stats to prove your case are always appreciated and encouraged!

Ad hominem attack ARE much easier though.

#151 Leo Tolstoy on 01.27.15 at 1:03 am

The U.S. economy continues to look stronger and stronger.

Good bye loonie. It was nice knowin ya…

http://www.businessinsider.com/fed-weekly-bank-lending-up-2015-1

#152 Alex on 01.27.15 at 1:09 am

Can someone please explain the hostility against realtors? When last I checked they are just trying to make a living like everyone else … Not unlike the mercedes salesman who sold me my diesel SUV last year (sold me on the cost benefits of diesel) today diesel is $0.20/Liter more than regular gasoline … Should I dog all car salesmen? I am yet to meet a person who was forced into buying a piece of real estate by a realtor … I have even read words like uneducated, unqualified etc … On the flip side … What education is required to be a financial advisor? I know a good friend of mine was in hotel mgmt and recently went into financial planning … within a year has a bunch if ridiculous initials after his name … Love the guy, been friends forever, but quite frankly would prefer to leave my financial future in the hands of my 13 year old daughter.

Not sure what all the negativity is re realtors … I generally have great respect for anyone trying to make an honest living regardless of their education, background, or whatever. For some reason they are blamed or apt minimum taking the slack for the last 10 years of rising real estate prices … That’s laughable … They sell real estate !! Of course they will promote their product !! If you want to know who is really to blame, look in the mirror.

#153 Vanecdotal on 01.27.15 at 1:27 am

#129, #132 Kenchie

Tnx, enjoy your posts as well, informative and rational, and often with appropriate links to corroborate the relevant facts presented.

Great fact-based rebuttals btw to the Hump & Pump Hoarde tonight.

Judging by the increase in RE Pimps posting lately, seems the RE cartel has noticed the uptick in gfool.ca traffic in recent weeks/months. Not so good for them if the Average Buyer stumbles across the blog beforehand.

#154 jane24 on 01.27.15 at 1:32 am

The real laugh about Calgary are that some people ARE still buying! Why? Surely they must see the writing on the wall.

May just be early days in the down cycle and these sales represent intentions from a few months back or folk buying because they sold a few months back. Only explanation I can think of.

A quid says that Calgary listings will hit 5000 by the end of this month and 8000 by the end of Feb.

This from the woman who once took a tourist bus tour of Calgary and was so disgusted by the fact that there wasn’t actually anything to see that she demanded and got her money back.

I seem to remember that the highlites were the closed Stampede grounds, a so-called art gallery where everything was on sale, in other words a shop, and a heritage home section of town where the homes were considered notable because they were built in the 1920’s. I don’t have a house that new on my road.

Oh and after 6pm the central part of the city literally closed own, there wasn’t a soul on the roads. Right Hicksville.

#155 Rick on 01.27.15 at 1:43 am

Re #96

Any Craigslist ad that is “reply by email only” is highly likely to be a scam.

#156 Robert on 01.27.15 at 2:18 am

#134 Kenchie. That’s not quite fair. If you check the list of who’s who on the BOC board you’ll find a prominent Persian mega-millionaire well placed to provide sage advice to Mr. P. Take a closer look at the makeup of the boards governing CMHC and BOC and it should be clear that the foxes are running the henhouse …. For now.

#157 Happy Renting on 01.27.15 at 2:27 am

#115 Prudent Observer on 01.26.15 at 10:33 pm
This 30 min video is a gem. It explains what might happen to the economy once it starts deleveraging. http://youtu.be/PHe0bXAIuk0

Nice little video, thanks for the link. Simplified a lot of concepts to make them understandable.

As far as deleveraging goes, the video makes it sound like the U.S. managed it without catastrophe (though with some pain and wealth inequality still entrenched.) By the same pattern, that means Canada hasn’t even started and we are teetering on the precipice of a lost decade.

The hard question is, how does one survive and prosper through the coming austerity, possible defaults/restructuring/redistribution/QE? Two easy answers come readily to mind: own financial assets that plump with QE, or move to the U.S.! I’m doing the former willingly, the latter would be with difficulty and reluctance.

#158 Happy Renting on 01.27.15 at 2:42 am

I am smiling nostalgically at all mentions of how small and crappy a 316 sq ft unit is. My first apartment out of school was that size. I loved it! Wonderful for a single, young adult. My entry-level salary covered it just fine and I had a lot of fun living downtown and going out with friends.

While small, a 316 sq ft unit is desirable and appropriate for a certain life stage. It’s just unlikely anyone young enough to be in that stage is also wise enough to be reading this blog!

Did you pay $100,000 for it? In Surrey? — Garth

#159 juno on 01.27.15 at 3:47 am

Do the right thing people, leverage against the canadian dollar by mortgaging you houses and buying usd.

#160 BillyBob on 01.27.15 at 4:58 am

Greetings from Dubai.

Every financial move cuts both ways. I have wanted to relocate back to Canada for some time, but the news just seems to get grimmer and grimmer. The rate cut has to be the most obvious sign of economic trouble possible. If the country was an aircraft there would be flashing caution lights and sirens. Even as I’ve received in effect a 20% raise over the last few months, the chances of longterm employment in Canada are also fading. Is Timmy’s hiring anyone other than TFW’S?

“Little shit country with a large land mass”. (Was that Smokey’s quote? Too lazy to read through the comments again.)

Pretty much sums it up, I’m afraid. Pay now or pay later, you always pay. Canada chose not to pay in 2008 when everyone else was eating the GFC. As usual, lagging the world.

Am I bitter? Yep! A little. So much potential, squandered. Absolutely zero leadership.

#161 ASD on 01.27.15 at 7:11 am

I don’t get Saskatoon – listings going up faster than a Saturn V rocket, and the prices too. Look a this shocking graph, yet still no Challenger…

http://teamfisher.com/images/stats/week/2015/01_24/actives.jpg

#162 Raymond Cheng on 01.27.15 at 8:05 am

http://www.theglobeandmail.com//report-on-business/reits-warned-over-failure-to-disclose-shortfalls/article22645042/?cmpid=rss1&click=sf_globe

Please comment, Garth. As an avid regular reader, I know you’ve recommended REITs time and time again. Thoughts?

Stick with quality REITs, preferably in a basket such as XRE. — Garth

#163 Nobleton Bill on 01.27.15 at 8:10 am

******Smoking Man*****

your like a rock star around here. Incase you didn’t see this the other day. this ones for you bud.
https://www.youtube.com/watch?v=4TAixFYnDh4

#164 Cato the Elder on 01.27.15 at 8:27 am

A couple things…

Poloz doesn’t care about the average Canadian or the Canadian economy. He only cares about his crony friends. That’s why he inflated the currency and made it worth less – it’s a great way to enrich those with access to credit, and impoverish the middle class.

The US deficit is much larger than is being reported. Under Obama, the US debt has increased more than ALL PREVIOUS PRESIDENTS COMBINED. They are doing accounting trickery to mask the problem.

The lesson from a man born 2000 years ago? NEVER TRUST GOVERNMENT.

#165 Bottoms_Up on 01.27.15 at 8:44 am

We are referred to as Sheeple.

Yet Canada leads the world in terms of having an educated population.

51% of us have earned a post-secondary degree. This is higher than Israel, Japan, the US and New Zealand.

http://www.cbc.ca/newsblogs/yourcommunity/2012/09/canada-leads-the-world-in-highly-educated-adults.html

#166 Bottoms_Up on 01.27.15 at 8:47 am

#161 ASD on 01.27.15 at 7:11 am
——————————————–
As Garth has bleated on, prices follow listings. So you’ll have to wait a few months for a price drop. It’s a good time to be a buyer in Saskatoon (read Garth’s buying advice from past entries on protecting yourself and ensuring you get the best deal).

#167 Bottoms_Up on 01.27.15 at 8:50 am

#159 juno on 01.27.15 at 3:47 am
————————————————
Did you see the poor Russian woman in the news last night? Her house is mortgaged in US dollars, yet her earnings are in roubles. Her mortgage payment effectively doubled over night. She has stopped paying it. I think ultimately this is what the elites fear, when the middle class just stops paying.

#168 rosie "moving forward" in the knowledge that, "this won't end well" on 01.27.15 at 8:56 am

The banks would be failing the “ethics” test if they didn’t serve their shareholders. After the article the comments are classic millennial rage and teacher bashing.

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/banks-fail-ethics-test-by-not-lowering-mortgage-prime-rates/article22642899/

#169 CalgaryRocks on 01.27.15 at 9:15 am

164 Cato the Elder on 01.27.15 at 8:27 am

The US deficit is much larger than is being reported. Under Obama, the US debt has increased more than ALL PREVIOUS PRESIDENTS COMBINED. They are doing accounting trickery to mask the problem.

Hey, did you know that because of the ’08 financial crisis, ’09 revenues nosedived by ~1.4T (at the fed & state level, I think that is out of 5T$ or 6T$ total).

They have only recently caught up and of course the population has increased since.

Then there were bailouts & wars to pay for.

That’s one big hole that we had to dig out of both in terms of income and expenses.

source:
http://www.usgovernmentrevenue.com/recent_revenue

Year / Federal Revenue (only)
2008 2.52
2009 2.10 <<
2010 2.16 <<
2011 2.30 <<
2012 2.45 <<
2013 2.78 <<
2014 3.02
2015 3.34 (projected)

#170 TurnerNation on 01.27.15 at 9:28 am

We have 34 million Canadian sheeple being herded by maybe ~100 collie dogs/pit bulls.

H’s headline yesterday said he’s crack down and pass laws against ‘violent jihadism’. This must poll well in Alberta and other thumper belt places. The “other”.

Anyway, I’d rather he do something against the thousands of crimes occurring daily. The break ins, fraud, assaults, drug crimes. Oh wait, we already have strict laws against these crimes.

#171 old gringo on 01.27.15 at 9:42 am

re# 165 BOTTOMS UP
51%of us have earned a post secondary degree.

Please remember not to confuse education with intelligence.
An educated herd is still a herd.

#172 neo on 01.27.15 at 9:48 am

Garth,

So what happens if/when you are wrong about U.S. rates going up this year? Then what? At best they won’t move. At worse they will decline. You seem to think the U.S. is immune to what is taking place in every other major economy in the world. Your confidence in Canadian rates rising was hubris and so is your call on U.S. rates.

I expected Canadian rates to remain static (how many times do I have to say this?) All major economists predict the Fed will move this year. If it delays the increase, so what? It won’t impact your life, and yet you seem oddly obsessed. Maybe you should get a dog. — Garth

#173 Brutus on 01.27.15 at 9:57 am

Bottoms_Up #167

Did you see the poor Russian woman in the news last night? Her house is mortgaged in US dollars, yet her earnings are in roubles. Her mortgage payment effectively doubled over night. She has stopped paying it. I think ultimately this is what the elites fear, when the middle class just stops paying.
—————————————————————-

I saw that too. She has to lie to her kids to pretend things are all right, with a current monthly mortgage on her shoebox condo of $2100. On a Russian income. A small food basket has gone from 340 to 830 roubles in just a few months, the story said.

Not surprisingly, the reporter told us this poor woman is staunchly behind Vladimir Putin and blames the sanctioning countries, not him for their troubles. She and others like her are all with Putin.

From my knowledge of the area and what relatives from that part of the world tell me, this is extremely frightening.

Indebted, insecure, angry people will be quick to support all kinds of aggression against the West, the evil bad guys.

I guarantee you Putin is weighing his options right now about what and how to attack in the west, militarily and otherwise.

It is not a question of “if”.

War and aggression are always seen by many as the ‘way out’ of difficult times. I greatly fear that 2015 will be a sad reminder of that.

#174 Ollie on 01.27.15 at 10:05 am

Shinetty gold, slicketty oil… Get positioned.

#175 NoName on 01.27.15 at 10:12 am

#167 Bottoms_Up

pretty much all of former kommi countries have two tier loans one in domestic currency and other one in euros or some other currency. It did took me a while to convince my sis to only take domestic loans regardless of the rate and to save is foreign funds, so far so good, works like magic.
(usually interest on loan taken in foreign currency is almost half of what it would be in domestic currency.)

#176 Daisy Mae on 01.27.15 at 10:14 am

“Well, imagine what that’ll do to the loonie. Could there be a clearer admission the Canadian economy is pooched?”

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

The feds are opening up the gates to ‘millionaire immigrants’ who will save the day — another harebrained scheme.

#177 jean on 01.27.15 at 10:20 am

Hi Garth I’m sure you normally dismiss zerohedge as doomer nutters, but would you be willing to comment on the first chart (from GS). Basically saying we (i.e. the world) have moved from investment to exploitation stage in oil extraction and therefore prices could stay low for a very long time.

My questions:
1. Do you remember the state of the Canadian economy during the last exploitation stage (i.e. from 1983 – 1998) and how did we cope?
2. Do you agree/disagree with GS’s premise and if oil prices do stay low for 15-20 years what effect do you think this will have on (a) the Canadian economy and (b) Canadian stocks.

Thanks!!

http://www.zerohedge.com/news/2015-01-26/why-oil-prices-will-be-lower-longer-3-simple-charts

#178 bdy sktrn on 01.27.15 at 10:22 am

U.S. durable goods unexpectedly fall in December, adding to a bearish view as corporate earnings disappointed.

Orders for business equipment fell 3.4 percent last month, illustrating the slowing global economy is impacting U.S. multinationals.
——————————————–
about that growth story?

#179 bdy sktrn on 01.27.15 at 10:28 am

cat to open down 8%

looks like piss poor results from the other heavies reportng this am

could be a 500 point day

#180 Franco on 01.27.15 at 10:32 am

DELETED

#181 Mark on 01.27.15 at 10:40 am

“The banks would be failing the “ethics” test if they didn’t serve their shareholders. After the article the comments are classic millennial rage and teacher bashing.”

What a hilarious article. The sense of entitlement to having a rate, which, at the outset was made clear that it is a *bank set rate*, lowered, is amazing.

But there are some good comments there. For instance:

“The real reason for banks not wanting to cut Prime is that they are increasingly worried about the creditworthiness of Canadians.

TD’s latest report estimates that 8 out of 10 provinces will see declining house prices this year (and they have a vested interest in talking the market up!). Canadians have massively over-borrowed and are teetering on the edge of a debt-deflationary spiral. The banks know this and are reluctant to trigger a further expansion in lending when it will only make creditworthiness worse.”

Which is 100% spot-on accurate. And something that most of these people clamouring for “Prime” rate decreases are reluctant to admit.

#182 TnT on 01.27.15 at 10:46 am

Funny truck ad all those cowboys

http://www.huffingtonpost.ca/2015/01/26/edmonton-truck-kijiji_n_6548556.html

#183 Cato the Elder on 01.27.15 at 10:54 am

Re: #169 CalgaryRocks

The bailouts were unnecessary – they were a transfer of wealth from the middle class to the wreckless speculators who should have suffered.

The recession would be over by now and we’d be on a nice, smooth, upward path to growth if they had done the right things.

What are the right things? Let failing companies go bankrupt. Sure, the recession would have been more severe, but it would have been ACUTE and QUICK. The ‘killers of capital’ that misallocated resources would have died, and those resources would have moved into more productive businesses. Those productive businesses would have hired more people, and the recession would be over.

All this is is a BIG GIANT RUSE. All you are IDIOTS if you think western governments have your interests at heart. Like Garth said the other day, they refer to you as ‘sheeple’. They don’t care about you, they care about their nice kickback packages after they retire from government (with full gold plated pension as well by the way).

All the safeguards that were in place have been systematically widdled away over the decades, starting with the end of the gold standard. Now, they’re not even bothering to pretend that what they’re doing is right, and they are outright engaging in criminal activity.

Look at the corruption, it’s unprecedented! I was reading about ‘Giacomo Draghi’ who is Mario Draghi’s son (the head of the ECB). Guess what Giacomo does for a living? He’s an interest rate trader at Morgan Stanley! That’s right, the son of the man who single handedly sets interest rate policy is an interest rate trader! And you can BET that he’s making a hell of a lot of money off that very convenient relationship.

It was peaceful and positive here while you were off leading the Greek dipstick to victory. — Garth

#184 Dub on 01.27.15 at 10:56 am

We as a country have one of the most educated citizens out there. For the CDN politicians such a Baird to call us sheeple is outrageous. They should not take our kindness for weakness. There are also pitchforks and shovels if you prefer that type of population. If they think we are sheeple, then educate us, guide us, do not feed us bull and then call us sheeple. If the kids are bad, it is the parents fault. Taking advantage of the masses that choose to be ignorant is not the answer, unless if you want us to be as such. Therefore that would make you worst than we are….evil. On one side CDN politicians use communism tactics when they want something from us and on the other side they use capitalist tactics when they want to make us feel small. Shame on you Baird, we should sue you.

#185 pinstripe on 01.27.15 at 11:02 am

Welcome back Cato the Elder.

Good to have some meaningful wisdom around here.

The geezers will have some uplifting at the coffee shop this morning.

#186 rosie "moving forward" in the knowledge that, "this won't end well" on 01.27.15 at 11:17 am

But I thought we were in debt up to our eyeballs. Apparently we are becoming net savers.

http://business.financialpost.com/2015/01/26/the-natural-rate-of-interest/

#187 LOL Canada on 01.27.15 at 11:18 am

Seems as if Canada is trying to avoid deflation. As people borrow more, they seem to be trying to keep their head above water to pay their debt. This isn’t helping to add to inflation. Instead, borrowing to pay debt is contributing to the deflation problem and making more debt. It seems like the banks are making a lot of money off of Canadians.

Here is a great infographic on deflation:
https://www.mint.com/blog/wp-content/uploads/2009/04/visualguidetodeflation21.jpg

IMO: The GOC needs to do one of two things. Lots more government jobs or Guranteed Income Supplement for everyone or better a reverse tax.

Where are we going to get this money? No Idea, but better the bank borrows than the sheeple.

#188 Kenchie on 01.27.15 at 11:38 am

Foxconn to shrink workforce

http://uk.reuters.com/article/2015/01/27/uk-hon-hai-labor-exclusive-idUKKBN0L00YZ20150127

#189 Setting the Record Straight on 01.27.15 at 11:38 am

@139
BOC rate at 0%? You betcha.

Read up on your Milton Friedman.
He advocated for zero rate interest policy.
******
You might point out that you are referring to nominal rates, while real rates would be positive, because the rate of deflation equaled the interest on government bonds.

#190 flipside30 on 01.27.15 at 11:42 am

Calgary in a dive.

With oil predicted to hit $19-26/bbl in the next 4-6 weeks that will surely shut down the rest of the oil patch here in Alta and Sask. No way producers will lose $40-$50/bbl X millions of bbls. Hopefully things will recover faster than the two to three years the experts predict or Alberta will become a ghost town. The most worrying thing is the house price collapse we’re seeing. That is my only ticket to retirement and the prices in my neighborhood have fallen 15-16% in the last month in my neighborhood – according to my next door neighbor who just put his house on the market last week. Things are getting desperate in Calgary. You can see the stress on everyone.

#191 rosie "moving forward" in the knowledge that, "this won't end well" on 01.27.15 at 11:46 am

The pause that refreshes?

http://calgaryherald.com/life/homes/new-homes/oil-prices-leave-housing-market-up-in-the-air

#192 Daisy Mae on 01.27.15 at 11:55 am

http://www.cbc.ca/news/politics/60-millionaire-immigrant-investors-to-be-offered-permanent-residency-1.2932616?cmp=rss&cid=news-digests-canada-and-world-morning

#193 SWL1976 on 01.27.15 at 11:57 am

I think one would be a complete fool at this point in the game to not prepare for some sort of financial collapse within the next decade. If you look closely the writing is on the wall. Really the only question is going to be the catalyst, how bad, and how many sheeple will be affected?

Speaking of sheeple… How do you like being sprayed like rats in a cage?

Check this out

As sad as it is, people are opening their eyes to the reality that governments would do this sort of thing to their sheeple. It has to be exposed for what it is. Once you see it, there it is plain as day. I see it on the coast of BC, I see it in Alberta, I see it on my parents’ farm in Ontario, its everywhere folks. Heck even Disney is drawing them into skies in their cartoons. Subliminally get the young to think the sky has always looked like that.

Anyone remember the deep blue skies from our youth?

As sad as it all is I would still rather know than not

Red pill or Blue pill?

#194 Kilby on 01.27.15 at 12:06 pm

#12 Greg on 01.26.15 at 7:11 pm
I don’t understand the relationship between the BoC and the GoC. This rate reduction appears to be more political than anything, designed to keep the party going for as long as possible without regard for the consequences.

Harper is pulling the strings at the BOC just like everything else, why do you think Poloz looked so unhappy announcing the rate reduction?

#195 Jabba the Mutt on 01.27.15 at 12:12 pm

The $C is pooched because our home grown flunky Trojan Horse Poloz was sent in to bash the dollar down in a global race to the bottom. I just got in from Malaysia…they’re doing the same thing there …as they are in Japan….the EU…etc etc etc. US companies are crashing along with the massive loss in business due to the high dollar…no time to invest there. Rates will not go up…oil will not stay down.

Wait for the last retail puking of commodities stocks while Chinese and Yanks stockpile heavies during this phony crisis ( as always) and buy like a mofo for the fast ride up after Obama can’t afford to subsidize the Arabs twin deficits with arms .

#196 frank le skank on 01.27.15 at 12:14 pm

#131 Paul on 01.26.15 at 11:17 pm
Just thought i would point this out
400k mortgage / 25 year amor/ 8% = approx 3100$ / month
700k mortgage / 25 year amor/ 2.75% = approx 3100$/ month

This is a fun game….. watch this!

700k mortgage / 25 year amor/ 5% = approx $4,701 /month
700k mortgage / 25 year amor/ 8% = approx $5,342 /month

#197 Daisy Mae on 01.27.15 at 12:15 pm

USA forces attacking ISIS at night.
Centcom attack on ISIS fighters.

https://t.co/7y4mTryb7d

#198 TurnerNation on 01.27.15 at 12:15 pm

Tradable bottom in oil and XEG here imo.

Oil is going to $20….like it was going to $200 when it was $120. Headline seekers sucker.

#199 Canary in the Mineshaft on 01.27.15 at 12:20 pm

Just checked the number of active drilling rigs in North Dakota. They are at 155 rigs, down 50 rigs from 205 in late December; just over a 24% reduction. Pretty soon North Dakota production will plateau as a result of fewer new wells. We’ll see how fast this shale- oil play dwindles.
https://www.dmr.nd.gov/oilgas/riglist.asp

#200 Nutted wildroser. on 01.27.15 at 12:32 pm

This place needs an overlay of twilight zone music… in the white room…

#201 waiting on the westcoast on 01.27.15 at 12:38 pm

#84 Dub

“If they think we are sheeple, then educate us, guide us, do not feed us bull and then call us sheeple. If the kids are bad, it is the parents fault.”

I hope you are being sarcastic… We need to take the bull by its horns and demand more and better from the government not wait patiently for them to teach us.

Once a kid turns 18 (or whatever the legal definition for owning their own life is), they are responsible for themselves. They can do what they want so they better let go of any parental baggage and move forward with their lives…

#202 Nemesis on 01.27.15 at 12:39 pm

#Oh,TheHumanity!… #WetCoastMicroCagesAuxFolles…

“I think minimalists and architects are the perfect people to live in these things.” – Susan Saegart, professor of environmental psychology at the graduate centre of the City University of New York

[CBC] – Analysis: Micro-condos: tiny units with big challenges for married, noisy slobs – Vancouver’s tiny home trend can be ‘depressing’ according to experts

http://www.cbc.ca/news/canada/british-columbia/micro-condos-tiny-units-with-big-challenges-for-married-noisy-slobs-1.2932300

#BonusFolles… #Three Contortionists In A Box… #VancouverMicroCondoOlympics…

http://youtu.be/FsMwZtsD40g?t=28s

#203 Mike S on 01.27.15 at 12:44 pm

“Well, imagine what that’ll do to the loonie. Could there be a clearer admission the Canadian economy is pooched”

I think by now, the market assumes:
– Additional rate cut in Canada
– Rate hike in the US, sometime this year
– Slow growth in the Canadian economy as a result of O&G
– Oil at 45$

Would it be fair to say, that everything is already priced in the CAD/USD exchange rate?

I.e. is the 80 cent loonie close to the bottom?
Can we really expect it to go significantly lower, without new information?

It was ~77 cent during 2007/8, so I guess there is some support there?

#204 Rob on 01.27.15 at 12:45 pm

Francois Chou (CDN Value Investor) comments on CDN housing market:

Do you believe that Canada will soon face a deep housing correction? If so, how can we position ourselves to benefit from this situation?

Yes, try to rent rather than buy a house.

#205 Oceanside on 01.27.15 at 12:45 pm

Not sure what all the negativity is re realtors … I generally have great respect for anyone trying to make an honest living regardless of their education, background, or whatever. For some reason they are blamed or apt minimum taking the slack for the last 10 years of rising real estate prices … That’s laughable … They sell real estate !! Of course they will promote their product !! If you want to know who is really to blame, look in the mirror.
_____________________________________________

Interesting observation and true, I know a dozen realtors here in the Parksville/Qualicum area, all seem to be aware of the market, are involved with the community and are pretty “low pressure” salespeople. We are lucky here as real estate prices are not too high and there seems to be a steady stream of buyers from Vancouver, Calgary, Victoria (Us included) and other parts of Canada. A little concern here about the Calgary market affecting peoples ability to sell their prairie homes but with the low prices here it would take a pretty big crash in Calgary to stop people moving here.

As pointed out above though, realtors can’t force people into homes or condos that they can’t or shouldn’t afford, we just purchased a home in September after two years of renting, no mortgage and a big reduction as the home was on the market for 200 days. The only person responsible for their finances can be found in the mirror, we have to think for ourselves a little more…

#206 Nutted wildroser. on 01.27.15 at 12:53 pm

The future?…

http://www.washingtonpost.com/sf/investigative/2015/01/26/distressed-family-swamped-by-an-underwater-home/?hpid=z1

#207 Reddy on 01.27.15 at 1:02 pm

#136, finally!! and thank you!

#208 mike in Toronto on 01.27.15 at 1:02 pm

#204 Rob

Kevin O’Leary even said the same thing on the radio a couple weeks back. “rent and wait it out a couple years.”

#209 Happy Renting on 01.27.15 at 1:03 pm

#158 Happy Renting on 01.27.15 at 2:42 am
I am smiling nostalgically at all mentions of how small and crappy a 316 sq ft unit is. My first apartment out of school was that size. I loved it! Wonderful for a single, young adult. My entry-level salary covered it just fine and I had a lot of fun living downtown and going out with friends.

While small, a 316 sq ft unit is desirable and appropriate for a certain life stage. It’s just unlikely anyone young enough to be in that stage is also wise enough to be reading this blog!

Did you pay $100,000 for it? In Surrey? — Garth

—————-

Touché. It was a rental apartment, downtown T.O.

#210 Mike S on 01.27.15 at 1:04 pm

“However, lower rates can be good for bank shares, as savers will increasingly be pushed to look at alternatives to bonds and cash, as asset classes to invest in”

There is the alternative of the foreign markets, and or under performing sectors in the canadian economy, which might deplete the bank deposit base

Also sooner or later the people will figure out that:
conservative mutual fund MER > 5 yr CAD bond yield

means their mutual fund provides negative results, and will invest their funds in other places (hopefully the balanced portfolio)

#211 Ogopogo on 01.27.15 at 1:07 pm

#98 Ole Doberman on 01.26.15 at 10:01 pm
#84 The American on 01.26.15 at 9:37 pm

RealTURDS are out in full force tonight. It’s HILARIOUS! The more realTURDS you see posting on these blogs, the more you know the ship is sinking fast. If things were so sound and ….
———————————————————-
Agreed. My RE buddies on facebook are also posting “bullish” articles anywhere they can find.
I suppose if I posted anything from the Greater Fool they would de-friend me.

I’ve lost count how close I’ve come to posting links to this blog on Facebook, were it not for my good realtor friend in Toronto. Mind you, he has openly mocked clients to me after a few beers, essentially saying how he tricked them into going all-in with the max pre-approved bank loans. He’s otherwise a swell guy, but I’d never use him to buy a house myself. Just as well I don’t live in Toronto or our friendship probably wouldn’t survive the long term…

#212 Incubus on 01.27.15 at 1:09 pm

No Fed rate hike until March 2016, Morgan Stanley says.

http://www.marketwatch.com/story/no-fed-rate-hike-until-march-2016-morgan-stanley-says-2015-01-27?siteid=rss&rss=1

#213 pinstripe on 01.27.15 at 1:15 pm

Cato the Elder.

Would you be willing to explain the system used by the derivative market? Please keep it simple and explain it in old geezer talk.

It seems no one has a good understanding how the derivatives work and yet there is some leakage that the derivative debt is a lot more than what is being told. apparently it is so bad tha no one political leader or business leader wants to talk about it.

the old geezers are confused.

#214 Cato the Elder on 01.27.15 at 1:32 pm

Re:

It was peaceful and positive here while you were off leading the Greek dipstick to victory. — Garth

********

Nice to see you too Garth. But I wouldn’t exactly call this blog a purveyor of optimism. It’s more a realistic assessment of the world, and anyone can attach a particular emotional slant to it.

And Cato isn’t Greek, he’s the last true (republican) Roman!

If you’re referring to the elections, I’m the most opposite Syriza there is. I believe in free markets and government several restrained to very limited functions and power.

#215 Grantmi on 01.27.15 at 1:32 pm

#206 Nutted wildroser. on 01.27.15 at 12:53 pm

The future?…

http://www.washingtonpost.com/sf/investigative/2015/01/26/distressed-family-swamped-by-an-underwater-home/?hpid=z1

WTF! These folks haven’t paid a mortgage payment in SIX YEARS!!!!!

Shat! Sign me up! Love to live in a place like that for 6 years living fat (as you can see) off the hog!!

Unbelievable! Only in AMERICA!!!

#216 pinstripe on 01.27.15 at 1:36 pm

Do you believe that Canada will soon face a deep housing correction? If so, how can we position ourselves to benefit from this situation

—————————————————————–

As a senior who is pushing the 90 yo mark in a couple years, my experience shows that the business model made drastic changes over the years.

everything in our daily life is subject to a correction. how a person acts vs reacts will determine their outcome. everyone is in the business to sell something, whether it is good or bad does not matter.

the savers and renters are being punished. The authorities are doing everything at their disposal to force the savers and renters into the market. What happens thereafter no one knows. There are no guarantees in the business world.

In the current environment and how things are going and if I was young, I would go into debt as much as possible and grab all the realestate possible. NO TOYS.

Interest rates will stay and go lower. Real estate will wobble a bit on price but will trend upward in price long term.

there is a lot of manipulation in the business world these days, more than ever before. a lot of risk these days and safety is being removed from the savers.

good luck

#217 Nerf Herder on 01.27.15 at 1:46 pm

As a natural saver myself, the system is eroding my ability to come out on the other side of this mess and help in the re-build.

#218 Nemesis on 01.27.15 at 1:48 pm

#MissionAccomplished?,Or… #CaptainBillyBobReallyWishes… #He’dBoughtThoseKevlarUnderPants… #BeforeSkyMallWentBust…

[AlArabiya] – Mideast airlines suspend Baghdad flights

“We suspended it right now,” Sheikh Majid Al Mualla, Divisional Senior Vice President of Commercial Operations at Emirates, said on the sidelines of a Dubai conference, according to Reuters news agency…

http://english.alarabiya.net/en/News/middle-east/2015/01/27/Emirates-suspends-Baghdad-flights-after-shooting-involving-flydubai.html

#219 Mark on 01.27.15 at 1:54 pm

“There is the alternative of the foreign markets, and or under performing sectors in the canadian economy, which might deplete the bank deposit base”

Indeed. Which is actually what happened in the late 1990s, with the high-flying tech stocks taking up most of the investment enthusiasm. When, in hindsight, the banks were quite fundamentally sound businesses at the time, and (then) Finance Minister Paul Martin’s rejection of bank mergers was actually a good thing for the long-term health of the Canadian banking sector.

What might that high-flying sector be this time around? Well could be the precious metals miners. Bombardier could have another run at it as the C-Series gains traction (as Smoking Man points out, an awesome airplane, with practically no meaningful competition in its class). Etc.

#220 Snowboid on 01.27.15 at 1:56 pm

#93 Smoking Man on 01.26.15 at 9:56 pm…

How come you told me you were a draftsman at DH?

Or is ‘rivet bucker’ something that sounds more macho for your book?

#221 OMG on 01.27.15 at 2:06 pm

#39 Smoking Man on 01.26.15 at 7:53 pm
Ha, I’m not an economist, but I hit em out of the park on a regular basis on here with my calls and my gambling trading accounts . It’s all in the archives.
My specially, going against 90% and being right, just like my call on No Tapper, the end of the bond rally, and last week’s, the rate cut.
What’s my secret, I dident go to the same school. My dues where paid by bloody knuckles, knocking on doors, selling shit.. That was my education.
You learn alot about people, best paid education you can ever have. I read Poloz perfectly, I read the quicky changing markets, currency war. It’s was so obvious to me and made a small fortune in the last month, even fronting my kid 100k, to trade forex, he sort of thinks like me.
Yet I have no credibility with the majority of the blog dogs, the schooled. I’m on the egnor list, skip he’s posts. I love it.
Trained to listen only to the sanctioned polite voices, voices they’ve been trained to listen to as worthy. They completely tune off the receptors when the message delivered by the out cast… The loon. The drunk. The guy who can’t speel. The guys who always says crazy shit. I’M Judged by behaviour, but not a track record of perfection.
Fortunately for me our great worthy host allows me to play here because he’s got a few demented demons in his head… Cowboy boots in Parliament.. Need I say more.
Your schooling did that to you dogs..
Ok run along to Mark..
……………………………………………………………………….

Holy Shit Smoking Man do you f$%king love yourself or what! What an f$%$king attention seeker. Sure as shit you can’t spell, your grammar sucks and your a blowhard. OK I admit you make some good calls on the market but for Christs sake lay of the holy-er than thou stuff. Jesus every time you rant on and on about me,me,me. Stick to the topic without interjecting your delusions. We don’t give a shit about you and your failing past schooling problems, go see a freaking shrink!

#222 Marco on 01.27.15 at 2:07 pm

@ The American.
I concur.

In the late 70’s when my parents bought their first house for peanuts, they had to pick up the Realestate agent because he didn’t own a car. True story.

Cheers.

#223 Cato the Elder on 01.27.15 at 2:07 pm

Re: #213 Pinstripe

I’m not 100% sure on derivatives, but I know they are a paper claim to something.

Take corn – you can have a derivative based on some quantity of corn that gives you claim to it. Now, it’s actually quite helpful. Take a farmer for instance – they want to know what they will get paid BEFORE they even plant a single crop – it lets them plan for the future. If they know they are getting X dollars per ton, then they can arrange their costs and everything months in advance. In this example, companies that USE the corn like a cereal manufacturer ALSO wants to know their costs with certainty, so they are willing to purchase these derivatives.

What’s going on now though is people are speculating on them and they’ve gotten completely disconnected from this very useful market mechanism. See, these derivative contracts also have a value associated with them. If one contract was bought for grain delivery 3 months ago, but was bought at 10$/ton, but now grain has risen in price to 12$/ton, people want to make money through trading them.

I don’t know if derivatives are really that big a problem to be honest, but the ‘scalping’ or profiting off the spread hurts productive members of society (those using derivatives for the REAL purpose). Reason I don’t think it will be a calamity is you probably have half of the traders taking a ‘short’ position (betting it will go down in price) and half taking a ‘long’ position (betting it will go up in price). It balances out in the end roughly. Of course, there are areas of the market that get saturated with one way bets, and that’s where the trouble spots are.

#224 waiting on the westcoast on 01.27.15 at 2:21 pm

For all of you money creation conspiracy theorists… Check out Dilbert in ROB today – who knew?

#225 Nemesis on 01.27.15 at 2:22 pm

#TitillatingTuesday’sPotPourri’OFunnies…

#IsThatASalamanderInYourPocket,Constable?…

[Guardaian] – Chinese police alleged to have eaten endangered giant salamander at banquet

http://www.theguardian.com/world/2015/jan/27/chinese-police-eaten-endangered-giant-salamander-banquet

#EvilPussII?….

[Independent] – Zombie cat buried after being hit by car in Florida ‘comes back to life’ and turns up at owner’s home five days after burial

http://www.independent.co.uk/news/world/americas/us-zombie-cat-buried-after-being-hit-by-car-in-florida-comes-back-to-life-and-turns-up-at-owners-home-five-days-after-burial-10005723.html

#ForgetSalamander!,Or… #NoveauHauteCusine?

[Telegraph] – Would you eat squirrel for your dinner?
Many people recoil at the idea of eating the cute and fluffy critters, but squirrels are increasingly popular with British chefs

http://www.telegraph.co.uk/foodanddrink/11372438/Would-you-eat-squirrel-for-your-dinner.html

#”SheWasATallGirl… #WithAShapely,ProminentBosom”,Or… #RoaldDahl’sPosthumousAdviceToSmokingMan

[Independent] – Roald Dahl letter warning student to ‘eschew beastly adjectives’ rediscovered after 35 years

http://www.independent.co.uk/arts-entertainment/books/news/roald-dahl-letter-warning-student-to-eschew-beastly-adjectives-rediscovered-after-35-years-10003181.html

#226 Holy Crap Wheres The Tylenol on 01.27.15 at 2:29 pm

#114 Smoking Man on 01.26.15 at 10:32 pm
#104 Financial Freedom at 40 on 01.26.15 at 10:15 pm
#76 Smoking Man …….
Being a rivet bucker for the first 5 years of my working life, I keep tabs on things that fly.
——
Spent first years out of ‘school’ learning how to fly, still work in the cloud,
…….

Dude me too, especially on Friday nights. Just fill up the tank and go.

I love it..
____________________________________________

Smoking Man I didn’t know you were in the aircraft industry once. We didn’t call our guys at the base “Rivet Buckers” they were our life lines to getting an aircraft to home base. I recall some of the techs had to climb up inside the landing gears and work their way out past spars to replace skin. We took a bit of flak once just on the south side of the DMZ and blew off about ten feet of skin. The poor buggers had to climb inside the wing with just around 95% RH and around 98 degrees. They would climb inside down to skivvies only. Anyway I came over to watch them one day and learned what cleeco’s were and how to repair skins. I ended up buying them a bottle of whiskey as they were our best friends.
Cheers!

#227 Oceanside on 01.27.15 at 2:46 pm

Were it not for my good realtor friend in Toronto. Mind you, he has openly mocked clients to me after a few beers, essentially saying how he tricked them into going all-in with the max pre-approved bank loans. He’s otherwise a swell guy.

Realtor like this could only exist in a large centre where there is enough new business to not have to rely on repeat business as realtors do in smaller towns and cities. Unfortunate that these are the ones we hear about all the time. Not very bright people to be “tricked” into something like this. everybody is ultimately responsible for their own financial well being and whether it’s a home, automobile or boat. You should know what you can afford to pay before entering into any deals, nobody else to blame…..

#228 SMC on 01.27.15 at 2:49 pm

Hey Garth. I’m 22 living in Vancouver. When I have a couple drinks at parties I tend to reiterate the ideas on your blog to my friends. They hate what I’m telling them.

I’m always told “people have to live somewhere” when I mention how overcooked our housing market is. All my friends want to cash in on the housing market like their parents did. These people have no concept of saving, and they don’t even know what a tfsa is. I always thought my generation wouldn’t be house obsessed. Now I’m not so sure.

Stop drinking. — Garth

#229 Daisy Mae on 01.27.15 at 3:12 pm

“….and he supports the notion that the Bank of Canada was a total dipstick in dropping its rate…”

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

But…but…but, Harper and Poloz are ECONOMISTS! Financial experts! They MUST know what they’re doing! ;-) Being facetious.

#230 Jetfixer on 01.27.15 at 3:19 pm

It’s true, the C-series’ only main competitor is really the Embraer 175/190, which is coming out with the next gen, E2. I guess to a lesser extent the CRJ 700/900 and B737 are competitors on either ends of the spectrum. Bombardier is near their target order and I’m sure there will be more orders for the C-series with the dollar at this level.

#231 neo on 01.27.15 at 3:20 pm

I expected Canadian rates to remain static (how many times do I have to say this?) All major economists predict the Fed will move this year. If it delays the increase, so what? It won’t impact your life, and yet you seem oddly obsessed. Maybe you should get a dog. — Garth

Ok. So all the major economists never saw the rate cut by the BOC coming yet those same economists expect The Fed to raise rates. Maybe you should stop listening to economists.

#232 Renter's Revenge! on 01.27.15 at 3:29 pm

Bank preferred share redemptions! :(

For those who didn’t notice yet. Bye-bye fat dividends on:

TD.PR.P
TD.PR.Q
CM.PR.E

http://www.newswire.ca/en/story/1475803/td-bank-group-announces-redemption-of-non-cumulative-redeemable-class-a-first-preferred-shares-series-p-and-series-q

http://micro.newswire.ca/release.cgi?rkey=2212089049&view=16497-0&Start=&htm=0

On the plus side, this should be positive for their common shares if they can refinance at lower rates.

#233 Jetfixer on 01.27.15 at 3:30 pm

Would now still be a good time to do a Norbert’s gambit?
It seems like the CAD might have more room to fall?

#234 For those about to flop... on 01.27.15 at 3:34 pm

Hey HD and espressobob,once I get a self directed brokerage account through my bank I can buy Vanguard products then?
I’ve been doing the homework you gave me but I just called the bank and the lady couldn’t tell me what ETF’s they had!
I can’t go to the bank to sort this crap out because I snapped a tendon in my ankle and can’t walk,so I am trying to learn about investing in the meantime .
Nothing on t.v during the day anyway!

#235 gut check on 01.27.15 at 3:39 pm

“#216 pinstripe on 01.27.15 at 1:36 pm said:

the savers and renters are being punished. The authorities are doing everything at their disposal to force the savers and renters into the market. ”

Yes, I feel this keenly. My lease is up and I have been looking for something different – the rents being asked for are high for what you get and I believe that they are going to keep getting higher for the next while at least.

In the US rents skyrocketed and landlords became more and more demanding (no pets, smokers, longer term leases) after the correction. I believe this is still going on, in some places.

In Canada I’ve watched rents get higher and higher throughout the boom as everyone jumps into the landlord game and expects a return on their larger and more highly leveraged investments. I suspect that if Canada does experience a correction many of these rents will stay high – at least for a while – due to supply and demand.

I cannot decide whether or not to buy – it`s a bad time to have to find a place to live no matter how you slice it.

#236 Mike T. on 01.27.15 at 3:50 pm

#152 Alex

‘I generally have great respect for anyone trying to make an honest living regardless of their education, background, or whatever.’

that is not what most realtors do though is it?

I made the case against politicians a few days ago, the good ones don’t get far, same with realtors —> the honest ones don’t make as many sales

in the rat race, the biggest rat wins

is that a prize worth winning?

#237 industrial Guy on 01.27.15 at 3:52 pm

#189 Setting the Record Straight

“You might point out that you are referring to nominal rates, while real rates would be positive, because the rate of deflation equaled the interest on government bonds”.

Geeeeeeez!!! I’m sorry I didn’t post some long winded lecture of what Nominal Interest Rate, Real Interest Rate & Effective Interest Rate are. Yes, everything is relative. You can have negative real rates too.

If we look at World Bank numbers … Just to be precise on definitions, ” Real interest rate is the lending interest rate adjusted for inflation as measured by the GDP deflator”.

Canada 1.7%
Japan 1.9%
USA 1.7%
UK -1.2%

….and our winner is
Venezuela -27.5%

Is everyone bored enough now?

#238 TnT on 01.27.15 at 3:56 pm

Thousands of millionaires who had been waiting for permanent residency under the program sued the federal government after it wiped out the backlog of applications.

Thousands of millionaires waiting for permanent residency????

This is Thousands of millionaire families….

Yeah…. money made outside of Canada has no effect on our Real Estate…. hmmmm

http://www.cbc.ca/news/politics/60-millionaire-immigrant-investors-to-be-offered-permanent-residency-1.2932616?cmp=rss&cid=news-digests-canada-and-world-morning

#239 Mike S on 01.27.15 at 3:58 pm

“What might that high-flying sector be this time around? Well could be the precious metals miners. Bombardier could have another run at it as the C-Series gains traction (as Smoking Man points out, an awesome airplane, with practically no meaningful competition in its class). Etc.”

What are the sectors that going to benefit from low CAD? I think the answer is there

After all past the elections we can expect the government to run a huge deficit, to make for all the missing spending in the privet sector (debt leveraging), CMHC losses and the O&G sector, should the energy stay low

These expected deficits are sure to have downward pressure on the CAD …

The other theory you present, about households selling their foreign assets to close their CAD debt, doesn’t stand to reason:

For instance, there is a clear divide between the indebted having 300% debt/income ratio, and the financial asset owners.
I for sure not going to sell any of my foreign assets to close anybody’s mortgage …

#240 Smoking Man on 01.27.15 at 4:00 pm

#226 Holy Crap Wheres The Tylenol on 01.27.15 at 2:29 pm

No one here will know what a click is, and you need special plyers to work em.

Let’s she how good my memory is

Black Cleeco 3/16
Copper Cleeco 1/8
Silver 1/16

For the life of me, can’t remember colour of 1/4

#241 Calgary Death Watch - REALLY? on 01.27.15 at 4:04 pm

Well this developer is pretty bullish on Calgary.

http://calgaryherald.com/business/real-estate/developer-looking-to-build-eighth-condo-tower-in-the-beltline

#242 Jim B on 01.27.15 at 4:14 pm

TSX up 1.13% YTD as of yesterday’s close. S&P 500 down 0.09% YTD as of yesterday’s close. My wife’s and my portfolio up 5.42% YTD. WTF? What magical mix of stocks and bonds have I ingeniously assembled. Well, pretty much what the overseer of this blog recommends:

Canadian equity 24% (about one-third preferreds/REITs)
U.S. equity 31%
International equity 18%
Corporate bonds 11%
Government bonds 11%
Cash and equivalents 5%

No magic there.

#243 Smoked salmon on 01.27.15 at 4:20 pm

Beats Hawaii any day. Can’t wait.

http://www.theglobeandmail.com/globe-investor/personal-finance/retirement-rrsps/gimli-offers-lake-lifestyle-without-the-high-price-tag/article22605450/

#244 Canadian saver on 01.27.15 at 4:21 pm

DELETED

#245 Josh in Calgary on 01.27.15 at 4:35 pm

#152 Alex,
I think the “hate” for realtors is partly in jest, but it is spurred on by the constant fluff pieces that the local real estate commissions have published in the news papers as news. They constantly reinforce the idea that real estate only goes up, that now is the best time to buy, etc. Numbers are actually manipulated and they even use twisted logic to try and explain how houses are “better” investments than everything else.

I’ll agree that it’s partially your own fault if you believe everything any sales person is telling you, but in this case a lot of people think realtors are obligated to act in their clients best interests. Some do, some don’t.

I was fortunate enough to work with a great realtor. Used him several times. He never pressured us to buy or sell. Always gave us good advice and let us make up our own minds. Worked hard for the money he earned. But he had been in the business longer than I’ve been alive. I think part of the problem is when housing prices started to sky rocket you had an influx of NEW realtors just looking to make a quick buck and not even realizing that ethics or repeat business were a thing. Even Garth recommends working with a realtor if you’re buying or selling, but be chosey and wait for a good one, not just the first one that latches on to you at an open house.

Then there’s the stories in the news (hopefully a minority of realtors) about guys who trick their clients into signing a buyer representation agreement, show them a few houses and then sue them for $12,000 if they buy something 11 months and 25 days later.

#246 NoName on 01.27.15 at 4:45 pm

#228 SMC

get your friends to read this, How Poverty Impairs Mental Functioning And Promotes Risky Decision-Making.
http://goo.gl/kX2nYj

#247 Canadian saver on 01.27.15 at 4:47 pm

DELETED

#248 Mark on 01.27.15 at 4:57 pm

“The other theory you present, about households selling their foreign assets to close their CAD debt, doesn’t stand to reason:

For instance, there is a clear divide between the indebted having 300% debt/income ratio, and the financial asset owners.
I for sure not going to sell any of my foreign assets to close anybody’s mortgage …

I don’t know about this. There’s an awful lot of oil patchers and the sort who bought recreational Arizona and even Canadian RE in the past cycle. As they see increased stress in their finances, they’ll likely be significant sellers as well. Government financial reform, necessitated in the wake of having to pay the big CMHC bailouts, inevitably will have to hit public sector retirees, another big group that buys the foreign RE, and they’ll be bringing money back home as well.

Just because you happen to have great counter-cyclical income that prevents you from shedding assets, there’s a large number of people who don’t. And besides, if the CAD$ remains suppressed, artificially I might add, there’s apt to be a lot of opportunistic buying of the CAD$.

#249 Vanecdotal on 01.27.15 at 4:57 pm

#152 Alex

True, there are decent people out there who are just trying to put food on the table, who also happen to sell homes for a living. I have a few in my inner circle and they are good souls. The negativity you see is perhaps more directed at those less-ethical types who specifically troll and disseminate misinformation to pump their selling agenda.

The real issue is with the obfuscating of real market data under the guise of “RE Board Proprietary Information”. There is a court case due to be heard in May this year between the TREB and the Federal Competition Bureau about this very issue. The Govn’t. believes all Canadians should have the right to access the REAL housing market data, not just massaged-for-the-boards-own-gain bastardized data, which is the present norm. In the US they have open and unfettered access via Zillow and other outlets, to the entire price history, and other relevant info, of a property just a mouse-click away for all to base an educated buying decision on.

So the Feds have taken the TREB to court to open up this data for all to see, as it should be in a “free market” economy. Especially a “free market” backstopped via CMHC with $Billions of taxpayer dollars.

It’s the only way “sheeple” can then begin to make educated buying decisions, but they need access to accurate and unbiased data to do so, which is not yet happening.

#250 Ollie on 01.27.15 at 4:57 pm

Canadian saver – DELETED

LOL. Just sums it up.

His comments were porno. — Garth

#251 Setting the Record Straight on 01.27.15 at 4:58 pm

@237
No my point was that is discussing Friedman’s suggestions on zero interest rates, I think you left out some relevant components.

#252 Darryl on 01.27.15 at 4:59 pm

annnnd ….RBC drops prime. Next.

#253 Mark on 01.27.15 at 5:00 pm

“Would now still be a good time to do a Norbert’s gambit?
It seems like the CAD might have more room to fall?”

Being forced into Norbert’s Gambit means that you are dealing with a very poor quality financial institution that is more interested in extorting you for unjustified fees, rather than providing you a service at a reasonable commission.

Find a new broker instead of doing the “Gambit”.

And no, its probably time to be buying CAD$, not selling it. Buy low, sell high.

#254 Waking Up on 01.27.15 at 5:03 pm

#234 For those about to flop… on 01.27.15 at 3:34 pm
Hey HD and espressobob,once I get a self directed brokerage account through my bank I can buy Vanguard products then?
I’ve been doing the homework you gave me but I just called the bank and the lady couldn’t tell me what ETF’s they had!
I can’t go to the bank to sort this crap out because I snapped a tendon in my ankle and can’t walk,so I am trying to learn about investing in the meantime .
Nothing on t.v during the day anyway!
——————————-

Hey, I am new to investing too and have some money in high MER mutual fund.

Based upon what I read on Couchpotato, I am considering Tangerine investment funds. They have relatively low MER 1.07% and are passive, quarterly rebalanced. This makes sense if you are starting with small amount and don’t want to pay $10 per trade every quarter for rebalancing. Also, you can keep contributing small amounts over time as there is no transaction fee.

Any comments anyone?

Why would you pay 1.07% to a fruit for a mutual fund when, for 1%, you can hire an actual human, experienced investment advisor? — Garth

#255 Waking Up on 01.27.15 at 5:09 pm

Why would you pay 1.07% to a fruit for a mutual fund when, for 1%, you can hire an actual human, experienced investment advisor? — Garth

I can’t until I have 100-150k. I figured it works out better with 1.07 MER fund than ETFs for say <25k investment. Isn't that the case?

Nope. ETFs are superior. — Garth

#256 TurnerNation on 01.27.15 at 5:12 pm

Rbc just cut their prime. On the wire now.

By 15 basis points. At least they have a sense of humour. — Garth

#257 Vanecdotal on 01.27.15 at 5:13 pm

#245 Josh in Calgary

+1

“I think part of the problem is when housing prices started to sky rocket you had an influx of NEW realtors just looking to make a quick buck and not even realizing that ethics or repeat business were a thing.”

Very well said.

Yes, the bad apples paint the rest with a bad (and potentially financially ruinous) brush. Their own Boards should be doing everything possible in the name of optics (if not Ethics) to weed out the unscrupulous ones before the bottom falls out.

#258 Mark on 01.27.15 at 5:14 pm

“annnnd ….RBC drops prime. Next.”<

Only by 15bp. The BoC cut was 25bp. Interesting though to watch the over-indebted borrowers squirm though.

Meanwhile Canadian National Railway just announced a 25% dividend increase, and grew earnings by over 30% YoY. Craziness!

#259 Snowboid on 01.27.15 at 5:17 pm

#152 Alex on 01.27.15 at 1:09 am…

Maybe it’s because real estate agents consistently score low on the trustworthy scale, right in there with car salespersons and politicians/lobbyists.

#260 HD on 01.27.15 at 5:19 pm

#234 For those about to flop… on 01.27.15 at 3:34 pm

Hey HD and espressobob,once I get a self directed brokerage account through my bank I can buy Vanguard products then?

I’ve been doing the homework you gave me but I just called the bank and the lady couldn’t tell me what ETF’s they had!

I can’t go to the bank to sort this crap out because I snapped a tendon in my ankle and can’t walk,so I am trying to learn about investing in the meantime .
Nothing on t.v during the day anyway!
——————-

Your post suggests that you need to learn a bit more about this before you venture into DIY investing.

You currently can’t walk and want more homework? Good. Here’s your next assignment:

http://www.amazon.ca/Millionaire-Teacher-Wealth-Should-Learned/dp/0470830069

To your question now…

ETFs are traded in the stock market so your bank does not necessarily ‘offer’ them unless you are dealing with BMO.

But that doesn’t matter because you can buy any ETFs you want from any provider once your brokerage account is set up.

Here are the main ETFs providers in Canada:

http://www.blackrock.com/ca/ishares

http://www.etfs.bmo.com/

https://www.vanguardcanada.ca/individual/home.htm
My advice to you: Stay put and read that book. It should be enough for you to see the light and manage by yourself. Pull the trigger only when you are confident you know what you are doing.

Feel free to ask more questions if you get stuck. I’ll do my best to assist and other blog dogs will chime in as well.

Good luck.

On another note, RBC is the 1st defector…they just lowered their prime rate to 2.75%

Best,

HD

#261 Waking Up on 01.27.15 at 5:19 pm

Nope. ETFs are superior. — Garth

How so? For ETFs, I will have to pay for at least 6 trades per quarter i.e. $240 i.e. >1% for 20k portfolio plus whatever is ETF MER.
I know it’s not a lot of money but still.. Am I missing anything?

Thanks for your response btw!

#262 HD on 01.27.15 at 5:26 pm

Sorry, I meant to say 2.85% Re RBC

Best,

HD

#263 BCD on 01.27.15 at 5:27 pm

As a natural saver myself, the system is eroding my ability to come out on the other side of this mess and help in the re-build.
____________________________________________

Yes, I agree. They will be lowering the interest rate to try to get your money into real estate or the market. Starting to think real estate is a safe bet. Either way I am not touching the market. GIC at 2% is enough to keep my saved dollars current to keep up with inflation. Nothing beats cash. Absolutely nothing.

#264 HD on 01.27.15 at 5:28 pm

#259 Waking Up on 01.27.15 at 5:19 pm

Nope. ETFs are superior. — Garth

How so? For ETFs, I will have to pay for at least 6 trades per quarter i.e. $240 i.e. >1% for 20k portfolio plus whatever is ETF MER.
I know it’s not a lot of money but still.. Am I missing anything?

Thanks for your response btw!
.

—————–

There is no need to rebalance every quarter especially with a portfolio of that size. Once a year will do it.

Best,

HD

#265 For those about to flop... on 01.27.15 at 5:31 pm

Hey Waking Up,you just crashed today’s lesson.
Don’t make him mad ,my bums still sore from when Garth kicked it yesterday!

#266 aL pacino on 01.27.15 at 5:42 pm

Canada can just go back to being the shitty frozen tundra that it is.
South park.

#267 Ralph Cramdown on 01.27.15 at 5:45 pm

#257 Vanecdotal — “Yes, the bad [real estate agent] apples paint the rest with a bad (and potentially financially ruinous) brush. Their own Boards should be doing everything possible in the name of optics (if not Ethics) to weed out the unscrupulous ones before the bottom falls out.”

If you look at the real estate industry, typically the top agents do most of the deals, but the licensing bodies are happy to collect a few thou in course fees from anyone with a pulse, the local boards collect the annual fees, the brokers are happy to collect commissions on a 50/50 split for the new agent’s friends’ and family’s deals until he washes out, and the top agents need the mopes to staff their open houses for them.

The industry feeds on a large group of poorly producing agents, by design.

#268 Jan on 01.27.15 at 5:54 pm

Tim hortons announcing layoffs.
Yoopidoo ..keep em coming baby.

#269 For those about to flop... on 01.27.15 at 6:00 pm

HD ,thanks for the advice.
I wasn’t going to try and reinvent the wheel or anything.
40% VAB
20%VCN
40% VXC
As suggested on couch potato balanced portfolio
I want to crawl before I walk.
This is also how I am getting around the house right now!

#270 Ray Vasquez on 01.27.15 at 6:01 pm

Canada’s 30 year bond yield at 1.99% today. It was around 3.85% at end of January-2010. A 50% cut.

These are Japanese style bond yields in 2010-2011.

#271 Mike S on 01.27.15 at 6:05 pm

“I don’t know about this. There’s an awful lot of oil patchers and the sort who bought recreational Arizona and even Canadian RE in the past cycle. As they see increased stress in their finances, they’ll likely be significant sellers as well. Government financial reform, necessitated in the wake of having to pay the big CMHC bailouts, inevitably will have to hit public sector retirees, another big group that buys the foreign RE, and they’ll be bringing money back home as well”

Oil pitchers don’t represent a big enough group out of the entire Canada. When I talk about housing decline I mean entire Canada (GTA and Vancouver included) not just Alberta RE. In the graph Garth presented a few weeks back you see the divide between highly indebted in the 200/300% debt to income, and the other groups that don’t hold that much debt

Public sector retirees? I think that it was shown here many times that most boomers have no other assets besides their house. Some have defined benefit pensions, but why are they going to bring money home, if the reasons to be abroad are still in place (warmer and cheaper in south us/mexico etc)?

My point is, that while some will be forced to sell their foreign assets to pay Canadian debt, not many are actually in the position/need to do so (not enough to force the currency appreciation you are talking about, especially in light of other factors)

Also about the “lower rates means stable/appreciating currency”. While it may be true over the very long periods, it has no practical use to most.
I mean CAD lost ~15% against the USD in 6 months, and it seems to be very volatile along with the oil/commodity prices.
Who will look for stability in a currency that can be artificially suppressed that much?
Besides who says it is the CAD that is artificially suppressed and not the BoC rate?

#272 bobo the clown on 01.27.15 at 6:06 pm

realtors getting desperate and starting to rob sheeples

http://www.cbc.ca/news/canada/homelife-superstars-realtor-accused-of-duping-homebuyer-of-12k-1.2928982

#273 kommykim on 01.27.15 at 6:10 pm

RE:#78Flatlander on 01.26.15 at 9:10 pm
#60 Victor V
XSP’s volume today was 191,064.00
VFV’s volume today was 92,152.00
Is XSP not more liquid? Not to mention has a larger market cap.

As far as ETFs are concerned, the daily trading volume of the ETF has little to do with it and EVERY thing to do with whether the ETFs market maker is active on the exchange.
Read this:
http://canadiancouchpotato.com/2015/01/20/taking-etf-trades-to-the-next-level/

#274 RE: rick155 on 01.27.15 at 6:11 pm

RE rick155,

I always deal with email first before moving to the telephone. After looking at that ad, and considering its in whalley and that area could hardly be called ‘gentrified’ yet, those prices look realistic for a 600ft condo!

Furthermore, the sales person ‘Ann Napier’ is one google away from looking like a legit realtor (website at a real looking company who have had a website up since 2004 and is hosted in burnaby.

But the main point is that email only till you get to know someone on CL is always a good idea! Most people on CL are flakes, and will flake off so i’d rather that they show they can carry on a small email conversation before i give out my phone number.

I guess thats a bit OT. I love renting! people are working themselves to death to pay more to live right next to me!

#275 espressobob on 01.27.15 at 6:13 pm

#234 For those about to flop
#260 HD

I tend to agree wholeheartedly with HD! This is a big step for anyone going from [email protected] to DIY investing with a discount brokerage account!

There’s nothing wrong with opening an account. In fact you can learn much just using a ‘practice account’. Take your time. Good luck.

http://www.rbcdirectinvesting.com/services/offer/account-open-offer-ft15-or.html?WT.srch=1&AFFCODE=27276&CAMP=30977&utm_campaign=Open+Account+-+Offer+-+20FT+-+EN&utm_source=bing&utm_medium=cpc&utm_content=phrase&utm_term=rbc+direct&V_TID=66711&ProspectID=B83E2C5CE83745DABEF24526E2CC86AD&utm_expid=71097950-4.cvtwiYm0S8KYtYRgmzJ4iA.0&utm_referrer=r.search.yahoo.com

#276 Waking Up on 01.27.15 at 6:15 pm

There is no need to rebalance every quarter especially with a portfolio of that size. Once a year will do it.

Best,

HD

Okay thanks. That is something to consider and also, as For those about to flop pointed out, I may not need all 6 to begin with.

#277 Blacksheep on 01.27.15 at 6:20 pm

HD # 260,

“On another note, RBC is the 1st defector…they just lowered their prime rate to 2.75%”
——————————————————–
New it was just a matter of time till the .25% gift came to my VRM.

It’s only .15%. They keep the rest. — Garth

#278 Vanecdotal on 01.27.15 at 6:31 pm

#266 Ralph Cramdown

Well put, very true. It’s seems to be a structural problem within the Boards themselves that contribute to the proliferation of Badder Apples.

#279 Blacksheep on 01.27.15 at 6:31 pm

HD,

“Sorry, I meant to say 2.85% Re RBC”
———————————————
I’m the victim of bad Intel. Oh well .15% a start and others will defect, now that the door has been opened.

That’s what I get, for reading the blog from bottom up.

#280 reddy on 01.27.15 at 6:38 pm

the article about RBC dropping their rate is boring, however the comments from the sheeple is great entertainment!

http://www.cbc.ca/news/business/rbc-and-bmo-lower-prime-lending-rates-1.2933499

#281 Snowboid on 01.27.15 at 6:38 pm

#235 gut check on 01.27.15 at 3:39 pm…

“…In the US rents skyrocketed…”

Maybe in some cities, but not in Phoenix.

After the correction rents did the opposite – although you could argue the differences were small.

In 2008 the median rent for a SFH in Phoenix was $ 1035 a month, and in 2013 it was $ 936.

#282 Mike S on 01.27.15 at 6:42 pm

“I wasn’t going to try and reinvent the wheel or anything.
40% VAB
20%VCN
40% VXC
As suggested on couch potato balanced portfolio
I want to crawl before I walk.
This is also how I am getting around the house right now!”

To re-balance you need just 3 orders.
Usually with a small portfolio you will do the first
re-balance with incoming funds, thus your investment becomes bigger

Also some brokerages allow you to buy etfs without commissions

so say your case is this:
20K initial investment (3 buys)

+10K investment after 1 year (additional 3 buys, or less, but now your funds are bigger)

#283 Wildrose smoked salmon on 01.27.15 at 6:47 pm

Thank goodness Canadians learned from down south, and didn’t load up on mortgages!

http://www.washingtonpost.com/sf/investigative/2015/01/24/the-american-dream-shatters-in-prince-georges-county/?hpid=z2

#284 its Over on 01.27.15 at 6:56 pm

Blacksheep #276

It’s still just 2.85 % which everyone could get a couple of weeks ago so the reality is no drop. At least the canadian dollar is cheaping meaning more money for everything making the 0.15% cut nonexistent. You realtors are clueless or shysters

#285 jess on 01.27.15 at 7:20 pm

Fake bank scams Chinese customers out of £20 million
A fictitious bank in eastern China tricked customers out of almost 200 million yuan (£20 million) before police shut it down

http://www.telegraph.co.uk/news/worldnews/asia/china/11365464/Fake-bank-scams-Chinese-customers-out-of-20-million.html

#286 For those about to flop... on 01.27.15 at 7:40 pm

HD and expressobob,wouldn’t it be less dangerous for a rookie just to open up an account at T.D and use the eseries ?
Until I get the hang of it at least?

#287 H on 01.27.15 at 8:11 pm

NEW YORK (MarketWatch) — With $100-a-barrel here for now, Goldman Sachs says $200 a barrel could be a reality in the not-too-distant future in the case of a “major disruption.”

Goldman on Friday also boosted by $10 the low end of its 2008-2012 projected range for crude to $60 a barrel — significantly lower than current prices, to be sure, but a possible mark for oil if “normalized” trends return to the marketplace.

————————————–
8 months later it was $35 a barrel.

Then the prediction was $10. Jan 2009.

__________________________________

June 2009 hit $76 a barrel with predictions of $250 a barrel

Be careful who you quote. They are wrong nearly as often a they are right.

#288 H on 01.27.15 at 8:20 pm

Goldman: Get Ready For Oil Prices To Go Back To $147

Aug. 6, 2009, 10:58 AM

http://www.businessinsider.com/goldman-get-ready-for-oil-prices-to-go-back-to-147-2009-8

__________________________
Then it went to $35.

The this call:

Jan. 19 (Bloomberg) — Goldman Sachs Group Inc. commodity analyst Jeffrey Currie said he expects a “swift and violent rebound” in energy prices in the second half of the year.

Oil prices may have reached their lowest point already, after falling to $32.40 in mid-December, and are expected to rise to $65 by the end of this year, the analyst said. There is scope for a “new bull market” in oil, Currie said.

World oil demand is likely to fall by about 1.6 million barrels a day this year, the Goldman analyst said today at a conference in London. That’s bigger than the reduction expected by the International Energy Agency, which last week forecast a decrease of about 500,000 barrels a day, or 0.6 percent, this year.

_______________________________

So explain how we are oversupplied by the SAME amount and this time its to go down.

Riiiiight.

#289 maxx on 01.27.15 at 9:04 pm

#64 CPG on 01.26.15 at 8:41 pm

Yes, not to mention the vast increase of ugly, polluted, geological scar tissue which has blighted Alberta’s landscape even more. What a colossal waste of natural life support and irreplaceable beauty.

What amazes me most about all of this is how incredibly quick and easy it is for a foreign power to manipulate and damage the Canadian economy and that of others- ours now lies like an overturned turtle, desperately flailing its legs, trying to right itself.

Our so-called leaders have failed on so many fronts. Time and time again. One gamble after another.

#290 Sean on 01.27.15 at 9:43 pm

Waking Up, if you are paying $40 (or $20, not sure how you are doing the math) per trade, your first order of business should be to find a new place to trade. CIBC is charging $7 these days, and places like Questrade will apparently give commission-free ETF purchases (have not verified personally).

#291 OttawaMike on 01.27.15 at 10:04 pm

When the going gets tough build design better microhomes:

http://www.slate.com/blogs/the_eye/2015/01/27/cubitat_from_urban_capital_and_nichetto_studios_is_a_compact_home_in_a_box.html

#292 CalgaryHappyRenter on 01.28.15 at 1:39 am

I wonder how much Kevin O’Leary was paid to draw a comparison between GICs and fixed income to owning real estate particularly on the residential front

http://www.jimsparrow.com/blog/kevin-oleary-on-calgary-real-estate.html

#293 meslippery on 01.28.15 at 5:47 pm

Some one did call for low oil prices.
July 18 2012

(We, on the other hand, see no prospect of demand recovering for years, despite what should turn out to be historically low oil prices in nominal terms.)

http://www.theautomaticearth.com/jeff-rubin-and-oil-prices-revisited/

#294 Rapier Wit on 01.28.15 at 6:09 pm

So, it appears that Joe Owe disagrees with the realities that I see unfolding all around my little part of Canada and the observations of other dogs in other little parts of Canada. What are we missing?

http://business.financialpost.com/2015/01/28/we-dont-think-theres-a-bubble-oliver-says-canadians-not-buying-houses-they-cant-afford/