Tammy wrote to this pathetic blog almost four years ago, agonizing about her condo box in Kits. The value of the place had doubled and the question was simple: should she and her family grab the equity, invest it and rent in Vancouver, or stay homeowners with no liquid assets, two kidlets and a mortgage. We talked. They sold.
“So glad,” she says now. (Their portfolio has grown by half.)
“In fact, we now look at a million as either making or costing us $4000/month. A million in a house means a mortgage and all other associated costs of home ownership (none of which we can afford, nor do we want to go that route!). That same million invested is early retirement with continued growth of the million. This is simplified, but it is the bottom line for us. “
Well, events of the last few weeks – especially since the Bank of Canada poodles nipped their key rate – have once again altered the landscape in Vancouver, and to a lesser extent, Toronto. Stephen Poloz, of course, knew exactly what he was doing. By sending out a signal that money would get cheaper, he fed the debt addicts. I told you that on the day of his disappointing media conference. Already we can see the result.
Thought you might be interested in this newsletter, send yesterday to clients of a prominent property agent in YVR:
“Houses that have come on the market over the past few weeks have been met with a demand unlike anything we have seen since the mad markets of Spring 2012. Last week we were involved with a sale that generated 37 offers and set a new record for 33′ land sales on the west side for a collector street at over $1.5M (previously value would be $1.3M). Accordingly, prices on quiet streets through the prime Westside neighbourhoods have followed suit resulting in 33′ lots soaring past the $1.7’s and into the $1.8M range. Prices have literally jumped by $200,000 over the past 2 months for 33′ lot bungalows.
“When we look at our 50′ lot sales the story gets even more surprising. Last year 50′ lots were selling for $1.7-2.0M. The lack of lots for buyers to choose from over the past few months has driven the pricing up past the $2.5M mark with some hitting $2.7-2.8M in highly desirable pockets near popular schools. It won’t be long before we see the standard 50′ lot on the Westside hit $3M, over $1,000,000 past what we were seeing last year.
“Is this possible? Could prices for some lots really have gone up 15-20% in several months? If this momentum continues through spring it is highly likely. The sales numbers and prices are real, and the current market is overheated.”
The same realtor says lots on the Eastside, where all the poor people live, have also exploded. The cost of an “entry-level bungalow” on a thirty-foot lots is, practically speaking, now over $1 million.
Well, in Toronto, the Poloz touch has also been felt. I told you what the numbers looked like in the first two weeks of January – values were down year/year with the price of the average detached house in 416 falling by more than 4%. Clearly the market was cooling, losing momentum and heading for a correction. Nothing too surprising about that, with the oil collapse clouding economic growth prospects, the crushed loonie promising higher consumer costs and dire straits in the retail sector, with a slowdown in the financial core.
Then, poodlenomics! The dizzy whirl in monetary policy not only shocked the markets and stunned economists, but it lit up realtor switchboards. Even though mortgages were essentially unchanged, the meme was out there. Rates are falling! So houses will be rising! Gotta buy!
What happened in the last two weeks of January not only reversed the GTA tide, but turned the entire market. Sales ended up ahead 6.1% and average prices gained almost 5% from last year. The detached 416 house that was worth $859,672 on January 15th, was clocking in at $948,713 on the 30th. The biggest sales surge happened in 905 land, where hipsters go to die.
Coincidence?
Hardly. During this period of time the financial and economic news sucked. Jobs numbers revised downwards. A litany of layoffs, from Target to Suncor. The economy sliding into negative growth. The dollar tumbling below eighty cents. Oil crisis. Pink slips even at the banks, of all places.
In other words, more financial stress. Less employment certainty. Talk of deflation. Stagnant incomes. And the clear logic of avoiding a massive new pile of debt – no matter how cheap it came. But all it took to distract the masses were twenty-five little basis points.
So, like I said the other day, I give up. There’s no longer any semblance of logic guiding the actions of the people you work with, your mom or the guy fixing your taps who last week bought his eighth rental.
Hormones, 1. Garth, 0.
The outcome will be more difficult but I can live with that, after years of showing people how to be careful, diversified, balanced, liquid and free. But most don’t care. The goal of ordinary lives is to be envied, despite being enslaved or at risk. Freedom and flexibility are invisible. Real estate has curb appeal. The house wins. No contest.
So, I’m considering turning this into a dog blog. You in?
341 comments ↓
Yes, if only because regular commenters would then be dog blog blog dogs.
First!
All in!
More photos of Bandit! Possibly he could guest blog on renting vs buying a doghouse:)
OK. I’m in.
Which breeds have the best curb appeal and speculative promise?
I want to see myself as a pet owner/investor, to ensure others will think I’m cool.
Are there any tax incentives for investing in a mutt, hybrid or pure?
Tell me now! I can’t wait for tomorrow, everyone will have a dog by then!!!
Patience my son. 604 will fall. They all do
My previous position was, if you ever get tired of the financial blog, you have un-covered an astonishing lack of reading comprehension, and you should explore those opportunities.
Make it fun.
Use people who have commented here (include me!!) for examples.
The problem is people are empowered with the wrong information. The wrong information comes straight from the government. And then it is re-inforced by those who stand to benefit from the ignorance created.
It’s hard to figure out the traps, and it’s easy to blame someone else when things go to the crapper.
This will go on and on until people demand better.
This reader is not holding his breath.
It’ll probably feel like somewhat of a Pyrrhic victory, but the day you get to say “I told you so” might be approaching.
Nothing against dogs, but I’m more of a cat person myself. Probably because I own the C.O.O.K.A.T. From Scratch Recipe Book, along with the Complete Squirrel Stew Collection (C).
*Laugh, it’s a joke (hopefully)*
It should be abundantly clear by now that the Feds will, and are, doing everything in their power to keep RE prices propped up. That’s why you should stop predicting lower prices for TO. It isn’t going to happen.
As they say in New Hampshire: Live Free or Die!
So, no dog blog, thanks. Some of us appreciate your insights.
Fuurst!
$ilver.
This train wreck is going to slam headlong into a thick brick wall some day soon.
Avoid counter-party risks at all costs. Europe is falling apart currently and it is going to spread to NA.
Regards.
Is it not possible that Canada is heading into a unaffordable housing market like many places over seas? We might be the last generations that wil be able to payoff a house before retiring. Will my kids hand down a mortgage the thier kids?
How about covering Vancouver most expensive dog houses. Or a reality show about the real dogs of Vancouver.
Fido poops every day in a 2 million dollar Vancouver crack shack. Does he care. Nope because his owners are too worried about paying the mortgage to even notice the big pile of dog poo growing in the living room.
I will believe in eternal youth before I believe the debt piggies will ever see the consequences of their actions. They get bailed out at every turn. It’s amazing really.
Doesn’t this kind of sound like a bubble top though? Diminishing supply while prices skyrocket? And people scared to sell because they think they have nowhere to go; trapped in their houses.
Looks like the peak before the monster crash has happened. Garth has given up ? The economy is so screwed. Look for more businesses to close down and or go bankrupt. Look for more factories to close down as well. Take a bow realtors scum you have destroyed the Canadian economy.
My dog says “woof”. I assume that means “yes” because that’s also what he says when I ask him if he wants a bit of sausage.
Zombie Canadian real estate market…nothing can kill it. I think we kickstart a new reality show “Canada’s Million Dollar Crack shacks”. Maybe Honey Bo Bo’s mom can host.
Okay.So, are you ready to concede its indeed different here mr.Turner ????
Btw – not first.
Please don’t turn this into a dog blog. I live in Vancouver and am surrounded by crazy people. This blog is my life line to sanity. I don’t want to go to the dark side where $2M for a 60 year old, neglected house seems like a deal.
I guess you need to take your own advice when it comes to real estate – stop timing the markets. As fast as oil dropped last year will be as fast as the real estate bubble burst. Everyone in the world with a little economic understanding is counting on it.
Garth has given up. Finally we know the top is in!
WOOF. BALTIC DRY INDEX JUST TANKED TO LOWEST? ON RECORD. WE’RE POOCHED AND THE HOUSE LUSTING MASSES DON’T WANNA KNOW NUTTIN. Garth: the voice crying in the wilderness.
Don’t quit yet garth. Yes the masses are stupid to the point they will spend until they go bankrupt and everyone is tapped out. To get the last few suckers to max out on debt and thus unable to spend in the economy = crash. Look for more and more businesses to go under. The dominoes are set to all fall down.
Thanks for showing me how to be careful, diversified, balanced, liquid and free. Thanks for the blog… It’s the only place I can get advice on investments and real info on the economy. When I talk to co-workers, family and friends, about the advantages of renting versus owning, they look at me like I have 3 heads, probably ponder if I am on drugs. No one I know, knows about preffered shares or REITS or any financial vehicles. All they know is housing, and “growing your money” by paying a mortgage. “Just think of the money you will have when you finish paying your mortgage” they say. I say, “just think of the money I have, that i can have access to in a matter of minutes, by tapping my smartphone a few times during business hours monday to friday”. It’s pretty messed out there, I work with 10 people, all make over 100,000 a year, yet they have not a cent in a TFSA and if they do, it’s “earning” them a lousy 1.25%. It’s all housing. I really get great enjoyment from watching my money grow month after month. I care, I diversify. Don’t turn this into a dog blog. Or maybe just a saturday dog blog special from time to time…
Thanks again.
Take care, watch that slippery driveway of yours.
It’s tough when people need to be warned; you warn them; and the vast majoity ignore you. But there were a few who listened; there are a few who are listening; there will be a few who will listen. Be thankful for the few. They are thankful for you.
GOLDEN RETRIEVERS – THE BEST
Dogs are cool, and I’m getting bored with the same ‘ol dire warnings about debt and real estate. But why not turn it into a lifestyle blog with advice, for those who followed your previous advice, on what to do with all the extra cash flow, ala “bikez, babez and balanced portfolioz”? I need some fresh ideas on how to realize the philosophy behind my screen name.
Let dogs be dogs. I’m from Calgary. You’re telling the masses what they don’t want to hear. When housing prices suck its owners down its spiraling black hole, they will turn to you in desperation asking how do they get out of their mess…RUFF RUFF!
The social fallout from these problems only furthers the case the interest rates should be set 100% by the market and not by a central bank.
Setting the cost of money the way the Soviet Union set the price of grain only leads to massive mis-allocations of capital.
Sadly, the few people who recognize the problems of low interest rates and the credit boom will insist the “right people” simply weren’t in charge. The entire concept of Central Banking needs to be reconsidered.
Garth, I had a realtor knock on my door today in North Vancouver preaching of inflation, stock markets crashing, slashed interest rates that mean nothing and the Vancouver bubble that’s about to burst. Obviously looking for new potential clients to list with him, to sell before the house drops in value…when I told him we rent and were not looking to buy into the ridiculous market he said I would be well advised to keep to that plan for the time being. Been a long time since I’ve had a realtor knock on my door old school seeking new clients. Desperation is the worlds worst cologne.
And yeah, I’ll read your dog blog.
Just curious,
Does Tubby own a house in Cow town? would explain a lot…….
We need data on who’s buying!
I like dogs.
But I really like reading financial stuff from you, as you see fit to dole it out. There is only so much the financially illiterate (me) can do with books. Having someone who understands the jargon and massages it a little bit (dums it down) for those of us who feel like we’re trying to build a jet engine with Coles Notes, is very very helpful.
But I also like dogs – so: do both?
15 mins watching W or Hgtv and you can see who wins the arguments (out of budget vs. woman’s dream house). I don’t think I’ve ever seen a house purchased under budget on one of those shows.
I love the idea of a dog blog!
Which dog will you feature first?
The poodle?
This is not the case in Montreal : jobs are tougher than ever to come by, mining industry is in the ditch, and even what would have been considered decently priced houses just a year ago stay on the market. No sales. Except for very few select areas that may (or may not) attract buyers who do not need a regular paychecks to cover their electricity bill, taxes, gas and groceries – that is 1.5M$ to 2.0M$ and above by local standards. Every pseudo-new-rich neighborhood is full of $400k-$750k listings with prices being revised downwards, with no tangible result.
So far this winter market conclusion is clear – these are not market-clearing prices.
Mmmmm… Eating your own dog food…
Shouldn’t it be:
Hormones 5 Garth/Dogs 0
Sometimes being ahead of the pack is not the best strategy. That said, here I am waiting… Now I know why they call us vultures. ;-)
“Release the hounds”
Meanwhile across the pond:
From the Guardian UK,
“David Cameron says a second financial crash is imminent. If he’s right, it’s because the government bailed out the wrong industry, argues Renegade Economist host Ross Ashcroft. He says the last recession was brought on by too much debt. Today private debt is at the greatest level in recorded human history. By ignoring this and instead focusing on the banks, we are heading for economic armageddon.”
Watch short video here:
http://www.theguardian.com/commentisfree/video/2015/feb/04/another-economic-crash-is-coming-how-did-this-happen-video
You realize, Garth, that most dogs can qualify for a realtor’s license? (especially poodles)
So it would be the same troll property pumpers showing up to post here as before.
Plus ca change…….
Have you figured it out yet Garth? Or after all these years you still stare in amazement at evidence that the majority of people are not like you and me, and everyone else on this blog. This is why your Conservative philosophy doesn’t work. The average person isn’t interested in the difference between a regular and a preferred. Isn’t interested in paying some guy to figure it out either. Isn’t interested in negotiating their salary and conditions, saving for retirement in sufficient amounts, or being in any way wise with their money.
The middle class was built by socialism (oh yes, that dirty word), and destroyed by your old pal and his gang of koolaid drinkers.
People are, generally speaking, dumb. You’re not going to change that. Noone will. Society needs to work for everyone, or failing that, needs to work at least for the great majority of people. That’s why our economy is falling apart, because too many have been given the tools with which to fail. Low interest rates being part of that.
Again, why are you surprised, Garth? It’s human nature. It doesn’t thrive in a dog eat dog world. And that’s what this is. If you don’t know investments, you lose. If you’re not 100% in control of all aspects of your life, you lose. Minimal safety nets, and tons of ways to screw up your financial life. Too many gotchas.
You’re not going to change the world in the way you think. I mean sure, you’re helping a bunch of soon-to-be 1 percenters get there a bit faster (i.e. the blog dogs). But your best bet to leave a positive mark on our country is to influence decision makers into better policy, but the truth is that what you would do isn’t that much different than what Stephen did. You’re not interested in protecting people from their own poor decisions. That’s why people end up eating cat food on a pension of 600 a month.
This isn’t meant to insult you. I respect you a great deal. But why are you always surprised. What exactly do you expect out of the majority of people? Something that humankind has never had, universal wit? Come on…
The Walking Dead explains it all.
When figures of $ 1.5-2.5 million for a SFH are tossed around in Vancouver (and similar in Toronto) and median family incomes are under $ 100K, how can one not see this is not sustainable.
All that Poloz has accomplished is a sure bet that real estate won’t experience a soft landing, but a crash likely worse than the US saw.
All this has done is convince us the safest way to weather the coming storm in Canada is to rent and keep our balanced portfolio of investments growing.
I’m in to a dog blog even though i’m a cat person.
You’re not going to have a hissy fit melt down if us cat people praise the virtues of cats every now and then like you do when someone mentions gold or silver are you?
How about a HOG blog, about motorcycles and such?
I figure that there will be lots of slightly used bikes flooding the market in a few weeks, us financially secure types could use some advice to invest in the best.
Seriously though, please don’t give up. Your advice has helped thousands of people build better lives for themselves.
Garth – I think you’re onto something. When you consider “animal spirits” (obviously not fundamentals) happens to be the ONLY THING supporting asset prices (equities and housing) at these insane levels, a dog blog would be quite apropos and targets 99% of the population. You could also do a sheeple blog, although you would most likely cannibalize you dog blog audience.
Calgary: Business commentator Deborah Yedlin talks about the downturn in the city’s real estate market.
(6 minutes)
http://www.cbc.ca/player/Radio/Local+Shows/Alberta/ID/2651933422/
You suggest to buy America but with the Canadian dollar so low American stocks are very expensive. Is it better to seek beaten down Canadian stocks with US exposure like TD bank or just suck it up and buy US stocks and ETFs?
Don’t buy stocks. Secure ETFs with US exposure in C$. There are many to choose from. — Garth
When the staunchest of bears capitulates is when the market turns ;)
#16 mto on 02.04.15 at 8:43 pm
Garth has given up. Finally we know the top is in!
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Actually, with out dumb,ballless gov we probably reached to bottom if you can believe it…GOOD GRIEF !
“Freedom and flexibility are invisible”. Bingo!! Nailed it.
Speaking of dogs. The sniffing dogs at airport are cramping my style. Wolf! Strip Search, Where have you been? Where are you going? Miss connecting flight.
If that happens looks like I’ll be doing a lot of back-reading…
Youngin’s like myself need to be schooled a bit. Real knowledge by providers like you and other dogs here.
we’ve entered a new era where people only care about the monthly payments and have no long term plan. This is terrible.
Everything you ever wanted to know about the Baltic Dry Index.
“The Baltic Dry index, which plunged before the 2008 financial crash, is now at its lowest level since 1986”
However before you crawl out on the window ledge, note that some of the price drop results from shipping over-capacity and some from lower oil prices. It’s not all down to a drop in bulk commodity trade volume but it’s still not good news for Canadian exports.
http://www.telegraph.co.uk/finance/commodities/11387837/This-is-the-most-important-financial-market-in-the-world-right-now.html
The ‘insanity rampantus” here in Dampcouver has me just amazed.
If you had been here in the crash in the early 80’s – you wouldn’t be slamming down a mill plus for the garbage Vancouver special, with 33 feet frontage, on Fraser Street.
I think that status and hormones seem to win out over common sense, with us bipeds, and it was ever thus.
Reminder – the housing Crash in Rome, took 1,000 years to recover from (*look it up).
Well, Mr. Turner, you tried. (sigh).
“It’s dying,” says Wang, shaking his head as he looks out at abandoned stores and torn promotional posters in what was once the busiest market in the Zhongguancun district, known as China’s silicon valley. “There are more sales staff than customers around here. Everyone buys online now.”
http://www.bloomberg.com/news/articles/2015-02-03/china-retailers-play-poker-in-empty-malls-as-shoppers-go-online?
“Mr. Garthachev tear this blog down!”
#40 james on 02.04.15 at 8:55 pm…
Dogs as real estate agents? How about dogs as doctors?
On the ABC Phoenix news last night, their consumer reporter Joe Ducey talked about how easy it was to get degrees from overseas ‘universities’, but that the FTC is finally cracking down.
He paid $ 400 and got an official looking Doctor of Veterinary Medicine degree, including a complete set of marks, etc.
It was in the name of his golden retriever, Sedona Ducey!
“Yes, my dog now had a degree in veterinary medicine.” Ducey said.
http://finance.yahoo.com/news/negative-mortgage-rates-denmark-3-210020766.html
Negative mortgage rates in Denmark…$3.6 trillion of European and Japanese debt with negative yields!
According to Finans.dk, mortgage rates are now negative in Denmark. The situation is so bizarre that Nordea Bank’s IT systems need to be reprogrammed, as it’s not accustomed to situations where the bank isn’t receiving interest payments on outstanding mortgages.
dogs are great
beer is good
and people are crazy
My “high-interest savings account” just cut my interest rate to 1.05% – without your help, this is the kind of BS I would be stuck with, instead of a very restful retirement portfolio that just gave a little uptick to 10% returns with the last bit of crazy.
You’ve done great work here. If you want to interview some dogs on their opinions of the economy, bring it on. Make a nice change from realtors.
I believe a potential dividend increase from BCE is to be announced tomorrow.
Sir Garth:
Oil down 8 % gas at the pumps up 12 cents a litre. Nothing makes sense. Greece is going to exit the EU no question. The markets go up. It is like the Seinfeld show where do the opposite to what makes sense and come out a winner.
We found this blog in May & sold our house in Sept. 1.3 mil for lot value in N Van. as of today a house 1 block away on a street with a line down the middle (ours was a sidestreet & therefore more desireable) was listed for 1,398 mil & sold for $1,465,000 in 2 days. this home is even worse than ours so is lot value. could not beleive my eyes. people are nuts ! it will be interesting to see what happens. absolutely nothing will surprise me. Please keep writing Garth, we need you!
A serious question before this blog goes to the dogs…is it even possible for rates to rise in this zirp-addicted, debt heavy world? Seriously, are there examples of economies being able to increase rates once this deflationary state has been reached? Japan has been in deflation for decades. I don’t know if rates will ever be raised…some rates are negative on Europe. How can the Fed raise rates when the rest of the world is shrinking?
Face it people in Canada worship RE because they have nothing else to do, they have no social life. Then when you have no life you turn to wood and cement. All they talk is work, carrier, housing, jobs but they forget the juice. It doesn’t matter how much you make if you wake up in the morning to work, you are done. After you spent couple of hours in your car eating tim bits you go home sometimes around 6pm and you are cooked for the rest of the day. It grows with you in your early education, they keep you till 4-5 pm at school so you ready robot when you grow up.
#17…I’m exactly there. Would love to sell! My PCS listing is beeping 5 times a day with new listings. Those who have waited appear to be listing now. I can’t find any rentals though, at all. I’m terrified if I list, and it would sell pretty quick I think….where do people move to? What does one do with a family of 4 with pets, boats, camper… Hubbys garage bursting at the seams with his stuff… We only see a few basement suites or small house for rent.
What do the sellers do???
So Garth, will you be buying now? I know you currently rent but if Poloz will NEVER let the housing market correct, will you now be a buyer? Or will you plan to rent for the rest of your days, since no correction will ever arrive? Just curious.
And where would little Tammy be without someone younger being the greater fool to hand them their equity?
Housing is handing money up the ages.
Don’t give up, Garth. We are with you.
It is always darkest before the dawn – or brightest before dusk, may be better.
Hey Garth – how about a holiday – somewhere far away – leave your icy sidewalks…..take your nearest and dearest to a saner place for a while.
We’ll survive.
Whatever you decide to do with this blog, I have really appreciated your good advice over the years.
I’m looking forward to my next appointment with my financial adviser. Thanks to you I know what makes long term financial sense and have planned accordingly.
Ever grateful…..
With only two strong markets left, it is only a matter of time before it all comes crashing down. Then, it will be who can all of these clowns, with underwater mortgages blame. They will demand government action to avoid bankruptcy.
Here in Victoria, prices are falling, so I’m just watching and waiting.
DON’T do anything to this blog!!! Keep it up good sir! This millennial for one praises your view. Only thing that’s real anymore. Have a great night and thanks once again.
Oil is down because rigs are being opened because oil was up because rigs were being closed
satan told me to short oil yesteday
I still have my- tin-foil fedora on do you?
Just in form Global.
Foreign buyers pushing house prices skyward, thanks to falling CAD and in-migration of people not just from overseas but also rest of Canada.
There you have it folks.
West side up 10%
East side up 12.7 % on and on and on…….
Yes, Global. Must be true. — Garth
Garth,
Don’t feel too bad. I’m in the same boat as you. Yes, looking at fundamentals it makes absolutely no sense. However, it’s all based on belief. As long as people continue to believe that houses are worth as much as they are they’ll continue to be so. I gave up too.
You should know that predicting anything financial is a fools game. I’ve always been surprised how you expound that about investments but ignore it with housing. When housing will come crashing down is unpredictable. Like I said, belief is a powerful thing.
The only thing you can do is manage risk and be exposed to most markets to defuse it. Not buying a house has saved me at LEAST 100K so thanks. I may have jumped in if not for this blog (recently divorced – it would have wiped out EVERYTHING) so thank you.
Who’s your lawyer Mr.Smoking Man ?
put a freeze on high wealth immigration and we will see
realestate correct overnight.With shrinking pools of highly payed vancouverites and torontonians,just who’s buying /asumeing these million dollar morgages on 35.00 an hr jobs.
We hear constantly of the middle class shrinking and know for a fact the incomes have been stagnant the last 7-8 yrs yet all these homes that were formally middle class digs are somehow now suddenly worth a million dollars with folks lineing up for bidding wars…
Herd dynamics..
I’m not going to brag, and say I told you so.
But that’s not relevant, what is, is how simple it is to move these people.
I just watched that video of the pilot getting burned alive.. I laughed my guts out. So fake.. At critical stages of the burn, they switch camera angles, then on fire and he’s just standing there. It will be debated for a while on line.. It was poorly made.
The point is, that moved the herd, they are eagerly willing to give up privacy rights in all Western Countries , doesn’t take much. Now let’s send our kids to war
Even the libs, and commies are going to vote in favour of this new Harpo spy bill.
The point is the machine dosent even try hard any more, the herd is truly dumb down.
Yet the machine is in all out fear of its subjects, buying farms with With. airstrips they seam to think they can front run a revolution. Those things happen faster then there algo’s can predict.
LaughingCon, its going to be a nasty price increase, a nasty one.
Garth:
This blog has been an enormous help. We’ve applied the balanced approach to our registered portfolios and they’ve worked extremely well. Others around the office devote their resources exclusively to feeding a mortgage or getting blown up on some crazy junior resource stock.
One fellow working near me has lost nearly 1 million on Africa Oil (AOI) and yet he continues to “average down”.
We’ve setup the wife’s medical professional corporation to generate passive income from a variety of REITS, preferreds and blue chip canadian equity. There’s also a healthy smattering of XUS for capital gains. We don’t keep the bonds in the Prof Corp. since they are fully taxable.
We’ve managed to outperform those incredibly expensive MD Management mutual funds.
Keep doing what you’re doing and thank you.
#65 Edgemont on 02.04.15 at 9:16 pm
We found this blog in May & sold our house in Sept. 1.3 mil for lot value in N Van. as of today a house 1 block away on a street with a line down the middle (ours was a sidestreet & therefore more desireable) was listed for 1,398 mil & sold for $1,465,000 in 2 days. this home is even worse than ours so is lot value. could not beleive my eyes. people are nuts ! it will be interesting to see what happens. absolutely nothing will surprise me. Please keep writing Garth, we need you!
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Agreed.
We’re looking at 0.25 by the end of 2015 with loonie at 60c and real estate higher by another 15 % by end of 2015.
Real estate will NEVER be allowed to go lower in kanakistan !!!
Jean – you mustn’t like history. You don’t have to go back far. SNB were going to defend the CHF peg indefinitely until they couldn’t. UK guv were going to defend GBP under ERM until they couldn’t. US were going to backstop housing until they couldn’t. ECB weren’t going to do QE – until they couldn’t.
The one thing that never stops – blow hards like you.
@#66 steve on 02.04.15 at 9:16 pm
Seriously, are there examples of economies being able to increase rates once this deflationary state has been reached?
———–
By choice, none. All of them HAD their rates increased and were forced to cough up.
#79 john balong on 02.04.15 at 9:25 pm
Who’s your lawyer Mr.Smoking Man ?
His name is Shlong Zoomanga
As a fellow employee once stated to me …
“Just when you think you’ve hit rock bottom, you find out you were not even close.” Ah … railway mentality …
Don’t give up Garth, losers like me look forward to reading your blog every nite. You’ve taught me so much in so little time. Use money to make money, spread it out, diversify, some realestate is good, and most importantly Canadians (I am one, was born here) are LOSERS. We would give up our lives and anything we love to do outisde of work to work more hours, do nothing, and make sure we NEVER miss a payment on the debt we have. Look at how nice my house is! I never leave my yard on weekends! Look I cut my grass again! I have no life other than work and payments! This is life?? I really didn’t expect it to be like this… And I’m only 29… So yes. Thank you Mr.Turner you rock.
“Hormones, 1. Garth, 0.”
Garth, if i could only educate you and let you see the light.
Points:
1) There are no detached homes/lots of 33′ wide under $1 Million in Vancouver.
2) CMHC doesn’t touch anything over $1 Million.
Conclusion: Reread both statements above.
Who is buying all these properties with no conditions with at least $200,000 down or most likely cash?
I’m assuming many people will walk if there is a crash here. Take the 7 year hit to the credit…move overseas for those years so no wage garnish…and let the state deal with the debt.
Who can blame them for a government creating unreasonable imbalances? The Supreme court may even rule against the gov/BoC
#79 john balong on 02.04.15 at 9:25 pm
Who’s your lawyer Mr.Smoking Man ?
His name is Shlong Zoomanga
you lose my lawyers name end with “STIEN”
Garth,
Keep the faith…there are still a lot of people out there who take your advice and have been doing so since the beginning of this blog.
As for the general population out there, well, I give up too…
The time for telling when the crash comes has passed. They unleashed the gates of paper. We will never know anymore.
When the bag of potatoes is 80% more expensive and your house 50% more than last year, was it a 30% housing crash? How come? The stats show it’s 50% increase. That’s fantastic.
A potential theme for the new site:
Walking the Dog,
by Rufus Thomas (I think)
“If you don’t know how to do it,
I’ll show you how to walk the dog”
Keep it up on the financial side of things, i don’t like pets.
PS all this house price rising stuff in YVR & YYZ but nothing on YUL or the East coast. Whats happening there?
… before that, deflation. Suck in, blow out. Remember… uhm… Wellington?
Garth, forgive them, for they know not what they do…
I thought humans were above sheep and lemmings. People need to fail to learn the hard lessons in life. Forget us old dogs, Garth, we get you. The wrong audience reads your blogs, you should lobby to get this financial education into our schools. Save our youth from lifelong economic slavery.
Hi Garth,
its not you fault . housing is subsidized by the government. I recall buying a GIC @ aug 2008 @ 4.35% interest maturing @ 2009.
during these last 5 years it went as low as 1.10%.
the highest I can get right now is 1.70 %.
this is not normal. most likely we will have a retirement crisis where people will be slave to banks and banks will own this country.
when its too big to fail . it too big to influence / control and regulate. they do what they want and the people take the risks.
only thing I can do is buy stocks low like gdx/ gdxj when there low and sell high …because my income is not going to get ant higher.
don’t change this blog…please . this place seems like the only place where people do any math.
true economist like shillier they constantly lecture real estate only grows just slightly better than inflation with 80-90 years of data …but its different this time
Panic hits Calgary’s luxury real estate as oil takes its toll
After pouring thousands into granite countertops, hardwood floors and new appliances, Sandra MacKenzie listed her 102-year-old house on a corner lot in Mount Royal for $1.4-million in November, just as oil prices were collapsing. Similar houses in the neighbourhood were selling for $1.5-million in the summer, but after weeks with little interest from buyers, Ms. MacKenzie recently slashed the price to $900,000. An open house last weekend brought 30 people, but no takers.
“I just can’t go any lower than that, but everybody is so scared to buy now because of the oil prices,” said Ms. MacKenzie, whose parents had taken out a reverse mortgage on the property, leaving her little equity amid falling prices. “I would even sell to a builder at this point. I hate saying that because it’s a beautiful home, but I’m getting desperate.”
This is not going to end well-deserved…
http://m.theglobeandmail.com/report-on-business/economy/housing/the-real-estate-beat/panic-hits-calgarys-luxury-real-estate-as-oil-takes-its-toll/article22796181/?service=mobile
Please no to the dog blog. Cat persons are people too.
I smell a bottom in the markets time to get in
Jim Cramer
Garth,
Please answer this one question.
Why do you have to delete anything that has to do with foreign money propping up the Vancouver RE market?
Can we have a reasonable adult debate?
I know many first, second, and third generation immigrants (I’m one) who had land overseas. They never sold because they couldn’t get their money here anyways. So over the years, the populations of China and India grew, they industrialized and property in the cities became obscenely expensive.
No these first, second, third generation immigrants WANT that money because it is a substantial amount. Along with globalization and import/export companies, lots of money is being funnelled here.
You can’t put that money in the bank. So what do you do? Buy a new home and pay builder with cash. If you know no build, then you make your monthly payments with cash.
Please don’t delete this. I see it all around me.
#90 john balong on 02.04.15 at 9:45 pm
#79 john balong on 02.04.15 at 9:25 pm
Who’s your lawyer Mr.Smoking Man ?
His name is Shlong Zoomanga
you lose my lawyers name end with “STIEN”
…..
Ha more like a tie, my lawyers a drunk, lost his mind, changed his name.
His real name ended with burg.
I commented the same about a year ago… I said that Canada has always been sort of ho-hum, a little reserved a little boring. Other than hockey, we don’t really stand out as exceptional… top of the heap. Any yet, here we are. We have finally made it. We are world renowned, now, as idiots. We have taken a housing bubble, and made it exceptional… perhaps unprecedented. We have made it utterly ridiculous.
I fear that our collapse will also be epic. We are not going from 1M and 2M and 3M dollar lots, back to normalcy, without one hell of a lot of pain.
All I can say is that anyone still bullish on Canadian real estate is a true and complete idiot. Anyone thinking their rental properties are “investments”, are genuine simpletons. You are holding pets.com in March 2000… lol!
Don’t give up, Garth. Most people are stupid. It’s just a fact. You know that. When the reckoning comes – and it will, it will be that much greater. Keep up the great work.
Hey Smokey, I think you might like it: http://www.youtube.com/watch?v=njG7p6CSbCU
Keep kicking butts
how about an animal blog?
Those folks who are buying 2-3 million dollar homes in Vancouver are not average Canadians is insuring up to 1 mil, so average Vancouverites with $76K family income a year are not running…
With Canadian dollar down 20%, HAM stash of US dollars went on rampage.
Although I would agree with Garth that relative speaking, HAM does not account for large portion or RE transactions, but in otherwise balanced market, it is enough to tip the scale and move the market. Government is skillfully playing domestic and foreign cards. Unfortunately, it poison the ecosystem we all are living in, and the time will come when we all will be paying terrible price for it.
Why don’t they teach Herdonomics at universities, the teach economics, you know, calculator and slide rule.
But the Herd is the Market.. Only seasoned door to door sales men have a handle on that.
Who’s coming to my class.. Warm boots, and a good bull shit story is all it takes.
You can size the herd up into four categories. Once you discover which one you have, the close is child’s play..
Less of course you knock on my door. Only tempted to buy in warm weather, and she needs to be good at flirting.
fascinating, looks like another rate drop won’t be needed until an actual (country wide) recession is declared….
Garth, If I were you (and I’m glad I’m not) I’d get one of those new lust-worthy Harley Trikes (safer, you don’t have to put your leg down and rates are low, haha) and drive away from this pathetic blog before it extracts what little is left of your life force….
#74 Bobby
“Here in Victoria, prices are falling, so I’m just watching and waiting.”
———————
No they’re not. They did peak in 2010 and fell until 2013. But since then, they’ve been inching back up. Now, they’re getting close to 2010 prices, so they’re not falling.
Sales for January are up a little, so are prices and listingS are down a little. But, the market is pretty well balanced and has been for a couple of years.
http://www.vreb.org/vreb-news/posts/january-sales-numbers-are-in-for-victoria-and-area
http://househuntvictoria.blogspot.ca/
Investing your money is simple because that’s the kind of portfolio you should start with if you knows nuthin’, and hard because we’re always distracted by the wacky investments on offer daily online, in your paper and on BNN.
Start with a highest quality bank, utility, telco, REIT, CNR and a pipeline. Stay away from resources/materials where earnings volatility thrive …
Buy the highest quality US stock such as JNJ and Procter and Gamble. If you must own a resource stock you can’t go wrong with Exxon which has raised its dividend 32 years in a row during $11 and $147 oil.
That’s NINE stocks I’ve recommended where you have to do almost zero work except watch the dividends and your tax efficient income grow.
But no one listens to me.
Arf arf
Trends do seem unstoppable at times, which is precisely what makes change so jarring when it inevitably comes. This perception of a rebound is just such a trend, albeit short term. It will be undone shortly in YYZ and YVR.
I just finished a walk along St. Clair west in Toronto, C2 district, high flying hipster and yuppie horse horny hood.
I was stunned by what I saw this cold snowy night. In just one two block stretch on the north side, there were at least eight business closures, all in the last week. Sheriff’s notices on doors, landlord letters for unpaid rent, signs taken down. The restaurants still there were emptier than usual too.
Most people going past in cars wouldn’t notice this.
Yet.
They will.
Well it’s obvious what’s happening really. I don’t think my post about reading Animal Farm got published a couple of days ago. I think it’s because I cautioned people about blaming each other and mentioned that the people to blame are the ones you cannot – under any but illegal circumstances – speak to directly.
This is a global financial war, and housing stocks are part of the grand chessboard.
Yes, of couse there are house horny dupes who buy in thinking they are part of the in-crowd but they are a very very small part of the problem. How do I know this? because NO ONE HAS ANY MONEY AND BAN KS AREN’T LENDING. So, that means you have to have some *other* sort of connection in order to get your hands on a million dollar crack shack.
I am not sure of the end game, but then at the rate that the uber-wealthy are pollution our land, air and water I have to think that the ‘end game’ isn’t something rational and therefore none of us regular folk could possibly dream it up.
Tin foil? Yes, heavy duty.
But please tell me how in h#ll this adds up without a measure of light weight aluminum??
Can’t save everybody Garth. You’re not Jesus. But you done good.
Garth knows as everybody in the minority knows, the majority always get screwed. Smoking Man is right, the Herd has been dumbed down. They can’t think. That’s why the rich are few. Deep in debt Canadians are screwed, and their numbers are growing. Most unfortunate. Canadian dog days are coming.
Well is sure hasn’t been for lack of trying. Forget logic and forget reason. I personally know someone who bought in Calgary only a few weeks ago despite numerous people recommending he wait, and get this. This is his second property, as he owns another in the Halifax area that he can’t sell.
Yikes. Anyways to each their own, pretty sure he won’t read this
Sure let’s talk about dogs. I’m sure whatever you write about Garth, us blog dogs can run with any subject and turn it upside down and inside out. You have created quite a blog and with such a diverse group of dogs commenting here I don’t think it will ever be boring
Big thanks to everyone.
Most of us know how things will end with these million dollar shacks.
Not far of Trailer Parks Boys when Ricky says he has an endless supply of money and he wants the best double wide in the park
yes, exactly #107 neta. exactly.
Not just HAM.. lots of big players from off shore (and on-shore) but most definitely NOT “regular Canadians”
#77 aL pacino on 02.04.15 at 9:25 pm
Just in form Global.
Foreign buyers pushing house prices skyward, thanks to falling CAD and in-migration of people not just from overseas but also rest of Canada.
There you have it folks.
West side up 10%
East side up 12.7 % on and on and on…….
Yes, Global. Must be true. — Garth
*******************************************
Sir, are you suggesting all the sold signs i see are just a pigment of my imagination ???
Garth,
Why don’t you turn off your computer, dust off some of that 1% fee you charge to manage other people’s money, grab your better half and fly somewhere warm, drink the local beer and dip your toes and titanium leg into the sand and surf?
The socially inept and other various malcontents that pepper this blog daily will go through some withdrawal which could provide comic relief for those unfortunate enough to have to deal with them in the real world… but they’ll survive.
Garth you can lead the horses to the water but you can’t always make them drink.
It’s more evident everyday when it comes to more and more people you can’t fix stupid.
Garth I know you’re a dog lover so I guess you can’t see a dead cat bounce in housing.
It’s time for a survey question Garth. Something along the lines of “Has this Pathetic Blog influenced you to: a) sell your home to capitalize gains?
b) change the way you invest to a diversified, liquid portfolio? or c) both a and b ? Then you will have an idea how many people you have helped by producing this blog so faithfully. Please, keep on keeping on :)
Garth don’t give up the faith. We need you to keep telling it as it is.
Garth don’t give up, it’s always darker just before the dawn. This madness will come to an end, but the cannon fodder will be extensive.
Your advise has always been spot on and will help a lot of people avoid financial ruin.
Gartho – well it’s becoming obvious it’s international capital flows, lower dollar more wealth around the world propping up real estate in Canada.
I dunno who in Canada is buying 900K homes, and what bank is going to lend that kind of money?
Eurasier is the Newfoundland’s dream for the silk road to Shar Pei. The Saluki IS messing around in the dessert with Pharaoh Hound, Sloughi and Canaan playing a rough and tumble game. The Kangal is playing all sides screwing the Puli and the Ovcharka as well as the Saluki. The Black Russian Terrier is on the run, or is it the hunt, with the Red Bone Coonhound in hot pursuit. The Akita is just barking up the wrong tree while the Bulldog may have baited it’s last bull. Meanwhile neutrality just had an Entlebucher Sennenhund.
This blog is all that keeps me from buying a different house.
Please carry on.
J.
Let’s not kid ourselves Garth ,your in it for the long haul and most investors are in it for the long haul.
We belong together regardless of income ,status and geography .
Besides packing up now would be like taking a book back to the library when the final chapter was yet to be read.
We all no the next chapter is going to be a story that is going to spoken about for DECADES .
@#101 TRT on 02.04.15 at 9:57 pm
I’m first gen immigrant also. Had to sell everything I owned (almost nothing, in fact, I had to borrow) to immigrate. I come from one of the countries which was forced to cough up after its peak oil, and we actually did it. We almost went full medieval after all that coughing, and the country is in the midst of its 3-rd hyperinflation, with two kinds of money in circulation.
I don’t make moral judgements anymore, since I’ve understood the root cause. I understand your point also, because I’m seeing hot money coming from my native place, along with the dreams. They will lose it, even if they want the best for their children, even if they are good people. And if you really listen to the emerging vibes, they will also be blamed. Nothing to do about it, the road to hell is paved with good intentions.
Can this conversation get any more adult than this?
Garth! You’re being too hard on yourself! Never underestimate the herd, but don’t blame yourself either!
Every success story as above is indeed one more
Person saved. Also, you gave us the TFSA! I cannot stress how big a gift that has been for (some of) us.
First, my most sincere thanks for replying to my question yesterday.
Second, my most sincere thanks for all the time and effort you devote to this blog. Without this blog I don’t think I could have convinced my wife that we are better off renting, especially with the kid (who was on the way and is now here).
I know a simple thank-you doesn’t count for much, but I really do appreciate the blog.
Oh, and the Canadian Eskimo Dog transformed into the Mexican hairless.
Garth, you have lifetime friends here. No matter what you choose to do with the blog.
#70 jean on 02.04.15 at 9:20 pm
Or will you plan to rent for the rest of your days, since no correction will ever arrive? Just curious.
==================
Even the bank of Mom can’t lever many kids into a Vancouver special at $1.5 million. So who’s still buying?
“China Sees Biggest Outflow of Capital Since at Least 1998”
http://www.bloomberg.com/news/articles/2015-02-03/china-sees-biggest-outflow-of-capital-since-at-least-1998?
I know HAM didn’t create our RE mess, but it is still important at the margin in Vancouver and the GTA for higher end properties. What do you think will happen when that flow dries up?
This will make the inevitable fall of 604 even more painful for buyers. I worry for my crazy real estate obsessed town. So many otherwise sharp people of my acquaintance have followed the hype.
#124 DW on 02.04.15 at 10:34 pm
Garth don’t give up, it’s always darker just before the dawn. This madness will come to an end, but the cannon fodder will be extensive.
Your advise has always been spot on and will help a lot of people avoid financial ruin.
…….
Garth won’t give up, he’s just as addicted to this pathetic blog as us regulars.
Well in my case Superior.. But who cares.
Bottom line, Garths warning about deflation is the Holly grail of his calls. And the most important to pay attention to.
From what I see from the abstract on the bottom of an empty bottle of JD. He’s spot on.
Be afraid..
All these anti terror laws are not about finding religious extreamest.. Since when do governments give two Shits about there subjects. Tax cattle.
It’s about coming deflation, and its
nasty consequences.
They want read everyone’s texts, calls, so they can ID the leaders of the ones coming with pitch forks.
And like said, when it happens, it’s synergistic, who you thought was the ring leader. Is not.. And the one you thought was not is.
I’m calling plumber will start it here.
Garth get me into CSIS.
I will save the rich, but I want a good cut.
I’ve been a faithful reader for years, but if this turns into a dog blog – without equal and fair treatment of felines — I may have to give my cats complete liberty to throw hairballs up onto effigies of Garth and/or his dogs…Just saying. :)
People will learn soon enough that it’s not nice to fool Mother Nature.
I have the answer…
In my Financial Trading classes they talk about price movement and technical analysis, what we have here sir, it pure price movement. It’s a run-away-train, best not step in front of it and don’t bet against the market.
But those poor passengers who are on it are financially doomed never knowing the value of liquidity, diversification and risk management which would have saved them all.
Headline today from the Saskatoon star phoenix:
Recession fears grow
Half of respondents to Sask. survey bracing for slowdown
– See more at: http://www.thestarphoenix.com/business/Recession+fears+grow/10786055/story.html#sthash.k1XaigTi.dpuf
Garth I’ve told you before – the UK is ahead of Canada.
http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/11371820/Will-income-from-a-750k-buy-to-let-empire-pay-for-our-three-babies.html
A postman and his part-time sculptor wife (who makes no money) want to start a buy to let empire with £20K to their name that will provide an income stream of £2K per month within two years.
This is a national newspaper. This “plan” calmly expects over 100% return per anum after 2 years.
This is the bottom Garth. You ain’t there yet.
Absolutely not up for the dog blog. What would we do with out your daily guidance Garth, I’ve been an addictive for several years now.
http://www.ecb.europa.eu/press/pr/date/2015/html/pr150204.en.html
How is Greece going to access funds now?
Care to comment Garth?
Thanks
How about a dog housing blog. This will not end well.
http://i.dailymail.co.uk/i/pix/2011/05/24/article-0-0C3C1ED200000578-402_634x364.jpg
100 john balong on 02.04.15 at 9:56 pm
I smell a bottom in the markets time to get in
Jim Cramer
=====================
I heard he’s one of the best bottom sniffers in the market.
Woof. Woof woof woof. Rarrr. Woof!
I gave up on trying to understand the willingness of people to snorf up debt 20 years ago.
How anyone can sleep at night knowing they have to get up in the morning every day and go to work simply to pay off debt is beyond me. It’s kind of like knowing you have to sit on the QEW for an hour and a half every morning to travel a total of 40 km to get to work, to pay your debts.
Dog blog works for me. Can’t be any less entertaining or informative.
#38 Rolling The Dice on 02.04.15 at 8:51 pm
I love the idea of a dog blog!
Which dog will you feature first?
The poodle?
= = = =
Being in a poodle of a predicament can be brought on by a series of pickling exercises best exemplified by pro forma sampling of good ZIRP or bad ZIRP.
Most poodles curl at the prospect of the vapourization of ZIRP.
etc.
If the house-horny in Canada have you down, Garth, I’d love to read a post or two about deflation, what deflation will do to most governments (EU, Canada, and the US) and the ordinary average Joe.
And you’ve helped not just me, but those around me to whom I preach the gospel of Garth.
Garth,
I’m a long time reader though I rarely post. I know I’m one of many that enjoy reading this pathetic blog. I’ve also done my best to share your message, help friends see the side of balance, liquidity and diversification, and consider the risks of buying condos at this point in the cycle. Unfortunately they don’t want to listen.
I myself bought in 2009 and sold in 2012 with a tidy profit, have been renting ever since while my portfolio calmly grows and compounds. I can and do thank you and a few others for that.
If you’re serious about retiring this blog in favour of one for canines, please consider adding my email address to a distribution list for a Blog Dog Scotch Evening, or for a newsletter if you choose to write out of sheer interest. With a neat, single malt, cheers and thanks for educating those of us who are willing to listen and learn.
Larry from ON
That’s it, if Garth is ready to throw in the towel, I call the top of the housing market, its done, put a fork in it.
move up buyers, taking out HELOCs. The no money downers that got a few years of gains and letting it ride because in their mind they cannot lose. I see lots of empty houses hitting realtor.ca. People are buying before selling.
For those who think foreign buyers are gushing in because of the falling dollar, I’d be interested to hear from all the Chinese millionaires that bought last year how they feel about their investment.
First time buyer stats will be telling as I just can’t see where they will all come from. My guess is the end of spring will be record listings for entry level as well as the sub 400k (some places in Canada have houses for under 400k)
#137 Brad on 02.04.15 at 10:50 pm
Oh great, infested with Felineist’s now?
SHIFT happens. The excitement intensifies, exponentially, with nothing less than true climatic vigour. They never know quite when that climatic peak will be achieved but the closer they get the harder they push for it wanting it oh so bad – this time is different, they all are… And then it pops with dizzying ecstasy, caught up in that brief fleeting moment not thinking about anything but the euphoria of it . What happens next is a sudden contraction as all those resources are called back to sustain the fundamental life support systems that were shortly before neglected but now needed so desperately to retain a conscious, clear headed, quick response. But lethargy has set in as they are drowsy from the intensity of those euphoric moments preceding. It is then when so many are caught with their pants down, hobbled and unable to regain their footing. Too late, their spent.
Real estate porn. This, now, is more than just foreplay.
};-)
Australia’s economy is presently mirroring ours quite closely.
“Australia’s housing market is a classic pyramid or Ponzi scheme like the ones we previously saw in Ireland, the USA and Spain, and the RBA lowering rates is only going to add fuel to the fire,” said Philip Soos, a researcher at Australia’s Deakin University. Soos cited the economist Hyman Minsky’s definition of a Ponzi scheme, in which asset owners are completely reliant upon rising prices to meet the cost of owning the asset.”
Freedom and Flexibility are truly invisible Garth! After 5 years of following your advice the choices in front of me daily does not even compute as possible in the minds of my indebted,mortgage to the hilt peers. Thanks for the advice:)
they’re spent… but their spent works to in a way };-)
too
I have to say, we lost the fight. Can’t fight the government. Is there a point to blog about this anymore, I ask myself. Maybe 1 post a week,
I have one idea. Start telling people to buy houses now, that’ll keep going up. That way the bubble will inflate faster.
I started this at work.
I told one guy who loves real-estate that I bought 2 houses and that he’s missing out only owning one.
Seriously.
#110 – NO?… you sound exactly like one.
The crash is coming! When? When the wrinklies need to sell to Pay for their retirement. UNLESS, the government doubles or triples oas and cpp to win the elections. Tax the workers while giving it all to the boomers keeping housing high.
How do you win an election? Please the majority and do what they want. The majority is the boomers, and they want more money.
#92 Ollie on 02.04.15 at 9:51 pm
A few people on the blog are getting it and putting things in perspective. We are on the verge of a hyper-inflationary period unlike seen before on this continent.
The main topics on this blog seem to revolve around hating on those who got in ‘early’ on RE and those swearing by their ‘well diversified portfolio’. These are false opposites. In an hyper-inflationary environment, which sees rapid decline of one’s purchasing power – the name of the game is getting out of paper – all paper…Who cares if you stocks are up 20% year after year, when real inflation is running at 16 – 18%. All that risk for GIC level real-returns.. Oh, and for the fools with the high interest savings accounts at the orange bank, don’t worry those rates won’t be getting past the low single digits for a long, long time.
The question isn’t should I sell my home today and get a diversified portfolio instead but rather what assets can I pick now, on the cheap, that have a great chance at keeping up with real inflation. It’s also not about ‘striking it rich’ with RE or any other asset but simply preserving your purchasing power. It’s not about the digits on your RE assessment or portfolio statement and how much they go up nominally, but rather their ability to preserve purchasing power.
If this sounds ludicrous, consider the following:
Short Term: 1-3 years – layoffs in the oil-sands, manufacturing retail all set to continue (and no, most of those jobs are not coming back) somewhat deflationary environment (against all the made in China stuff no-one needs) ultra low interest rates – with RE increasing in the cities that matter (yea, we have seen nothing yet in the 604 and 416 to be specific).
Medium-term 4-6 years: the job situation stabilizes somewhat, minimum wage adjusted to inflation in effect, infrastructure projects galore and a few other goodies tossed in – all funded with ultra cheep money to keep the party going – orange bank still paying single digits on the ‘high interest’ savings account. What do you think is happening with asset prices, when a Starbucks barista making $22/hour now qualifies for $300K mortgage on a 300sq ft condo in the 416?
Long term 7+ years: Relatively lower incomes, yet somehow thing are humming along. Consumer habits have evolved – online shopping is now just shopping, car ownership at all time lows, self driving car service drives you everywhere.. your groceries are automatically delivered – people can save more than ever and have learned to do more with less..10% annual raises for everyone. Orange bank still paying single digits..Forget about real assets at this point – that’s for the people who made the moves back in 2015.
RE:So, I’m considering turning this into a dog blog. You in?
The prices on dogs is reaching bubble territory. After purchase costs, vets bills for initial shots and regular maintenance, a dog is a poor investment bought purely on emotion. The same money invested in a balanced portfolio will kick out dividends which will keep a cat (which you can get for free) fed for a lifetime.
#110 Not a Realtor on 02.04.15 at 10:05 pm…
Technically prices have more catching up than you surmise.
One of your links shows the peak in 2010 of a SFH of $ 563,478.
Adding inflation means that same home should have risen to a tad over $ 600,000 by the end of 2014.
But the chart shows the actual is $ 538,632.
That looks to me like a 10% loss alone.
The peak SFH value is close to what we sold our Victoria home for in early 2011.
We are so much further ahead today by getting out when we did.
In fact, with some luck, and great advice from Prof. Turner (buy US home and invest in a balanced portfolio), four years later we are almost $ 150K ahead than if we had kept that home.
In my opinion it is unconscionable to suggest this is a good time to buy real estate in Canada.
> … I know HAM didn’t create our RE mess, but it is still important at the margin in Vancouver and the GTA for higher end properties …
dude the link you provided says
“China’s capital account posted the widest deficit since at least 1998 in the fourth quarter as companies in the world’s second-largest economy increased overseas investment … The expectation of yuan depreciation has appeared and that helped the capital outflow.”
and the ones who bought into the oil sands are facing big write downs, I expect any RE HAM will have a similar issue soon …
Don’t pack it in yet Garth, the chickens are coming home to roost albeit in extreme slooooo-mooooo thanks to seemingly neverending *ass*inine government intervention in a supposed “free” market economy. Once this last bounce plays out, Wil-E RE is falling off the cliff, just gotta shake out the last of the last greater fools.
I may not agree with everything you say, however you’ve provided a much needed rational perspective on RE, & personal finance over the years. I only wish I’d stumbled across this info at an earlier age…but better late than never.
The fact you choose to do this for FREE is greatly appreciated. Thank you.
I’ve turned countless Gen Xers, Millenials and even the odd Boomer onto your blog over the years, you’re doing good work and have likely saved many of all ages from financial suicide over the years. My own family has benefited greatly from your wisdom. Keep the faith!
I believe that this country will endure permanently, half free and half slave…
Mind control slavery and chattel slavery are the same.
The Canadian list of standard basic human desires anno 2015
1) mortgage free 5000 sq ft house
2) loan-free max. 3 yrs old cars for each adult family members
3) mortgage free lake front cottage in Canada
4) mortgage free vacation property at a tropical climate
5) solid prospect to retire at 55
6) liquid balanced portfolio CAD/USD 1-5 million by 55
7) CAD 0.5-1 million LOC
8) fully paid credit cards
9) no outstanding student loans in the family with multiple university degrees for each adult family members
10) 4-5 weeks vacation per year
Anything else (e.g. business ownership, girlfriends/boyfriends on the side, yacht, Ferrari) is extra.
Its ok to make mistakes, as long as you learn from them and dont repeat.
So hire a realtor Garth, and buy a multi million dollar mansion.
Fisgard interest-only mortgages
http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2015/02/fisgard-spreads-east.html
Its standard mortgages are now interest-only
Alternatively, it can offer up to 35-year amortizations.
“We always had a philosophical belief that we wanted borrowers to pay back some principal,” explains Noble. “But brokers came to us and said that it’s easier for me to sell [a higher rate with] an interest-only payment.” (For illustration purposes: A $100,000 mortgage payment at 7% is $575 a month, versus $700 a month with a 25-year amortization.)
Nice right?
Croatia begins forgiving poor people’s debt …. Hmmm …
What does one do when there is no way out? Find a way further in.
Kevin 1, Hormones 0. Reading this blog is saving me a lot of money. I’m so glad I’ve left my downpayment invested in the markets. Thanks G!!
The two Stevie’s say SIT,STAY, there’s a good boy and girl .
Personally, I love dogs and cats, but there are probably already lots of dog and cat blogs out there.
Hmmm Garth…but I can see your frustration with all of the artificial house pumping and massaged stats…couldn’t we just admit quasi-defeat (not real defeat, because if we were dealing with reality, prices never would have climbed this high), and turn the topic of this blog away from real estate and more toward investing? Although, I guess we, and you especially, have already beaten this topic into submission, but then again…
I just love coming here. You’re funny, and I love the way you make fun of people and things that I can’t stand. I guess it’s the dose of honesty, reality, common sense and pure wit that reel me in.
I don’t know what I’d do with myself if you closed this blog or turned it over to fuzzy, cute and more intelligent creatures. Hmmm…may I’d start working out and lose the love handles, have an immaculately tidy (rented) house, metamorphose into the perfect non-married trophy wife? Or would I just start reading Zero Hedge? Anyways, I can’t fathom any of those unhappy eventualities…please keep writing and save me from curse of having too much spare time.
Do not quit on us Garth; being the lone voice of reason is by definition a lonely affair.
I too have considered going cookoo while living in the madhouse; sanity is no longer a value it seems.
But…being a thorn on their side is actually fun in a Stockholm syndrome kind of way. You know what I am talking about, don’t you?
Plus, the landlord just spent $10,000 on new windows and the portfolio is doing great. My problem is counting the days until the fancy car comes out of winter storage, which BTW is financed at 1.9% while the cash I could have paid for it is earning me 6%.
Life is good for us long-standing blog dogs.
Hi Garth,
First time poster. I’ve been following your blog before Lehman Brothers became a household name. Opened up the kids RESP e-series accounts yesterday.
I’m very grateful for what I’ve learned here over the years. It’s discouraging times if you care about the direction of the country, but in the end you have to take care of yourself and play the cards that are being dealt I suppose. And help where you can.
I always look forward to the ever consistent Sunday-Friday(!) posts. Read almost every one. Of course, I don’t agree with them all – but the overall message does get through and it’s obvious that you’ve helped countless people who were never exposed to the basics of real-life financial literacy. Thanks for that.
https://www.youtube.com/watch?v=peD3xMWjrok
Contributors to this blog often continue to underestimate the importance in Toronto and Vancouver of: Public sector urban containment policies; poorly developed transportation systems that would facilitate urban expansion; geographic restrictions on development; the enormous and continuing outflow of money directly and indirectly from China into real estate in a handful of foreign countries and cities and the possible channels for this as immigrant family populations grow; the appeal of non or low taxable treatment of gains in real estate by many countries even as they raise income tax rates; and the increasing availability of funds from the bank of Mom and Dad as their home equity sky rockets. Also of importance is the interest in wealthy Canadians in Toronto and Vancouver in ensuring that these policies increase their largely non-taxable wealth in real estate. Finally, there does seem to be some appreciation that a reduced value Canadian dollar puts all real estate in Vancouver/Toronto on sale to offshore investors when viewed in the context of the other factors–particularly the desire by the wealthy to ensure that their massive and largely non-taxed capital gains in real estate are preserved. Of course, further reductions in interest rates contribute in ensuring the protection of the wealth– this land based wealth–Henry George is smiling from his grave.
Looking back at the last oil collapse in 2008-09, Calgary average single family home house prices dropped from a peak of $506 K in July/07 to $436 K in July/09. This was a drop of 13.8%. The price then climbed to $553 K by Dec/14 which was a climb of 27% from the bottom and a climb of 9.3% from the previous peak. 9.3 % over 7 years is not much to Email home about. Here we are again. Not expecting much different. Probably a drop of 10-15% until the oil price recovers. Don’t hold your breath for a 25% drop. Won’t happen. For more data check bobtruman.ca, a Calgary real estate agent who publishes the numbers straight up.
Garth, Most of us on this blog are expecting at some point still unknown for a mix of interest rates, job loss, increasing costs, to push people into not being able to pay their mortgages. My grandparents lost their house this way during the Great Depression. They eventually were able to buy another, smaller house but they never got over the foreclosure. They carried the pain with them to the grave. Most of us really don’t know what happens when you can’t pay your mortgage. I know it is different in each province but if you could do a point by point description, the process, the time frame, the likely outcome, it might be enough to convince people not to buy. When I’ve talked to people, I still get the “We’ll just walk away. Jingle keys in the mail.” The vast majority of people seem to have no idea what really happens on the day you can no longer pay your mortgage.
Garth, I have a dog whose name is Bob Loblaw, and he’ll gladly lend his name to your new dog blog. Henceforth, it will be named:
“Bob Loblaw’s Blog Dog Blog”
Now say that fast three times. ;)
P.S. Please don’t ever change your fine acerbic wit, or this fine blog.
Oh oh, the world is slowly sinking into a depression.
Greece is about to be cut off from EU financing and might soon begin to default on their debt. That alone will have a cascading effect, resulting in other countries defaulting on their debt a few months later.
This is serious bad news.
The odd thing is that each week we have incremental bad news happening: Swiss start negative interest rates, China’s economy slowing down dramatically, Canada cutting their interest rates instead of rising them, and the list goes on and on.
Come on now, its been 7 years since the great recession and the world’s economy should be BOOMING right now with all of the financial stimulus that the world’s central banks have been pumping into the system. But instead of a booming economy, all we have is a massive housing bubble about to pop here in Canada. And when it does pop, what jobs with there be for the hundreds of thousands of newly unemployed house construction workers? Will they work at Target, or in one of the quickly disappearing manufacturing jobs? Will they all try to become nurses and work in the booming health care field in Canada? With so many unemployed men, will the government even be able to afford to pay the existing health care sector, never mind add to it? ( I think not.)
So my view on what is happening and is soon about to happen is this: THE WORLD IS STUCK IN A FORM OF QUICKSAND, A DEBT QUICKSAND, and it is this debt that is sucking us down into a new depression.
So what about Canadians? Well, they too are stuck with their own massive debt: HOUSING DEBT.
Then there is Ontario’s debt, it is a crushing debt that will soon become all to evident to everyone here. If you want an idea of how big a mess we are in and how we will soon become a huge additional burden sucking the economy down, just read this:
http://www.fraserinstitute.org/research-news/research/publications/Comparing-the-Debt-Burdens-of-Ontario-and-California/
Quote: (( “in a comparison of the outstanding gross amount of debt in the form of government-issued bonds, California (in the most recent year for which the data are available) carried US$144.8 billion, while Ontario carried CAD$267.5 billion, almost double California’s amount. This figure understates the disparity between the two regions, because California has a much larger economy and government revenues than Ontario. The gross debt in the form of bonds is 7.6% of California’s economy, while it is a whopping 40.9% of Ontario’s economy.
Per person, Ontarians currently owe $20,166 (Cdn) compared to $3,844 for Californians—more than 5 times the per capita level of debt.” ))
So just as people lose their house construction jobs, or their retail jobs, and need to depend on government support; it won’t be there for them.
In other words, it will be just like the depression of the 1930’s all over again.
Hi Garth,
Lets face it you’ve been miserably wrong about housing (in Vancouver) for years now, however it’s challenging to predict something in an environment where the rules constantly change on you, ie. Amortization periods, first time buyers programs, interest rates and more, albeit that is a part of the game you have to deal with. That said you’ve been spot on with a variety of other things such as the US markets, gold, and more. You’ve had very valuable knowledge to pass on and I’m certain you still have much more. To time a market, any market is challenging. All of the reasons you have pointed to as to why the market will go down are valid and logical. Eventually logic catches up and wins, the challenge is timing the “eventually. ” I would like to hope you continue to share information and are simply more open ended in you’re understanding that information doesn’t have to be 100% accurate to have a positive benefit on someones life.
Garth, finally you are feeling and admiring to gave been defeated. Please don’t feel too bad, and welcome to the club of defeated rationals. Maybe nothing short of a world war or disease epidemic will turn yvr real estates value to be back to your sense of reasonable value. Hong Kong value us still more than a few times that of yvr, so still a long way to go. Yvr now is tracking Hong Kong in the idea of valuation, that’s the fundamental driver here.
Historian Thomas Carlyle called Economics the “dismal science”.
It’s still living up to its reputation. Time to renew the Prozac prescription.
A dog blog for blog dogs? Sure sounds like we’re chasing our tails ……..
Well let the greater fools buy it looks good on them, I have no pity for the fools! When they crash and burn too bad so sad, anyone so stupid not to see how grim things are deserves whats coming buying over inflated real estate in a collapsing economy.
I have no idea who would want to live in Dampcouver anyway in an old molding crap hole. I been there done that west van in July could see my breath it was so cold packed up left and never looked back lol.
GT – stop being dramatic. If you need a week off, take it.
A lot of smart people depend on your daily teachings to remain out of trouble, and our Canadian story is just getting interesting.
If this turns into a dog blog I might have to start reading the paper again. And that’s not fair.
Latest body count from North Dakota: 139 rigs drilling, down from 205 in December. Down 32%. Production has plateaued and will now start a downward trend as a result of fewer new wells.
I’d read a blog about dogs. Just saying…
[…] Source: http://www.greaterfool.ca/2015/02/04/no-coincidence/ […]
For #110 Not a Realtor
You’re kidding right. What else would you expect from the VREB monthly stats. May I suggest you get out more.
I’ve been following the market rather closely and yes prices are falling. Many listings are sitting on the market and then expire. Every one of the homes I’m watching that sold, were 5-10% under the final list price. In fact, some were 15% less than the original list price.
Sorry, I don’t put too much stock in VREB’s report. Remember, these are the clowns that said to buy now because if interest rates go up, prices will rise.
You can’t make this stuff up.
#118 aL pacino
How does a sold sign imply a foreign buyer?
What happened to Canadian Watchdog, he had some amazing posts and market information to share.
Smoking Man, don’t push it with laughingcon………….he may yet have the last laugh if the economy crumbles further……….. “its gonna be a nasty crash realtor smoking man a nasty nasty crash” :-)
#163 kommykim
“The prices on dogs is reaching bubble territory. After purchase costs, vets bills for initial shots and regular maintenance, a dog is a poor investment bought purely on emotion.”
————————————
So, why not rent one? I do, sort of. My upstairs neighbors have a beautiful and extremely good natured Setter. It’s a wonderful house guest and really no trouble at all.
Sometimes when they go out to a movie or dinner they will drop her off here. My wife and I get to enjoy the dog’s company for a few hours and then its back to mom and dad. Perfect for those who aren’t ready to make a life long canine commitment.
“Clearly the market was cooling, losing momentum and heading for a correction” – Isn’t the sample size of a mere two weeks too small to make this call?
Also, didn’t we have a Vortex winter last January? I would argue, sales could only go up from that data (anomaly) point.
In the absence of further rule changes by Oliver, rates must go up or there must be sizable job losses causing poor consumer confidence, for prices to drop in he 416.
Dog blog? No thanks. I will pass. Keep up the good work.
#In… #WorkedForJohnny… #”And here’s GT…”…
http://youtu.be/9Eg-myT7PDE
Garth I think I speak for thousands of Canadians when I say, thank you for all your hard work. You’ve enlightened and empowered so many of us. Don’t feel dejected by all the financial illiteracy that’s out there. Many people are just plain foolish and cannot be helped and they’ll get burned. Hope you keep this blog alive. You have many loyal followers.
#154 };-) aka Devil’s Advocate on 02.04.15 at 11:14 pm
For a second there I thought I was reading a piece out of MacBeth.
Mark – Keynessian is not poodle economics
it saved the planet after the millennial legalized schemes ….
get used to it. buy real estate
The blog dogs do not want a dog blog.
FIRE industries have infiltrated (taken over) government. Corps control political parties. End result is this. RE inflation.
Thanks Garth but I agree the time has come to move on to the next chapter of Canada (a well defined banana republic now) .
To all the young folks here. Educate yourself where you can emigrate to the USA. Let the boomers pay for their excesses. Don’t be the sucker that pays taxes to fund their OAS and healthcare.
Maybe I’ll see you in Phoenix.
Goodbye.
Forget about a dog blog. There’s more important things to be done for us blog dogs. Like will depositors every face negative interest rates. When the house of cards topples, how will the Feds bail out the indebted, surely they will come seeking hand outs in exchange for votes. And there’s no way you’re shutting her down until you find us hard data on HAM and their spending habits.
The Greeks were just thrown under the bus by the ECB.
Will Greece throw Greece out of the Club?
The Greek stock market is tanking and is down 10 percent. Spain and Italy are next. Germany and France must be freaking. 200 Trillion outstanding debt is the number the BBC is throwing round. 280% of global GDP. UH, Mr. Turner, are we having fun, yet?
Stop acting like the greaterfool and quit implying to us your readers your thinking about throwing in the white towel.
We read because in this crazy time in this crazy world, once a day we have a chance to read for two minutes a opinion that is raw and real.
Peter Mansbridge was on tonight talking about journalism with a kick back. Amanda Lang proud CBC example.
You, no advertisement (maybe small touches of your firm) Just a man with a great resume telling it how he sees it.
Us young “hormonal” kids need your jaded experience thoughts to keep us who listen with the competitive edge from the herd of “sheeple” who are our peers.
Also if you were to make a wager, BC PST increase to pay for transit, will it be a voted YES or NO by the people?
Garth, this is the first time I have left a comment but I feel compelled tonight. I have been reading your blog every day since a coworker mentioned it to me and I would like to thank you for putting the way our family looks at our finances in perspective. We have made some huge changes (sold the Riverdale home in TO, invested, rent) all in the last year and I need to give credit where credit is due. My family and I thank you very much for taking the time to take on this blog!!!!!!!
Hey Garth,
Fighting against the hormones of the masses is a losing battle. Instead, you should just use a software algorithm to churn out fluffy blog posts based on data from the real estate boards. Kind of like this technology:
http://www.wired.com/2012/04/can-an-algorithm-write-a-better-news-story-than-a-human-reporter/all/
I think that’s what the MSM uses these days.
Remember this Garth?
I once posted that you are a slave if you have a dog. Cats are the contrarian’s best friend (not dogs).
Go back to the blog post titled The Contrarian on Dec 6 2013 and see what I had to say on the matter. Refresh your memory…
Is it not true that you fell while taking your dog for a walk and broke your leg not long after that (proving my point)?
Why you would want to start a blog about dogs (as a contrarian) is beyond me.
Yaroslav
I too would like to offer a voice of support. Through the information provided here I’ve been able to set up a balanced, diversified, boring in a sexy way portfolio that makes me feel good about the passage of time, because I’m always getting a little richer.
Housing can’t fall until people aren’t willing to mortgage their lives for a box. There are compelling reasons to own a house, and compelling reasons not to bid infinity billion dollars for it.
As you’ve said it’s each day that counts, live it up.
Hmm… I gotta create some fear and spread the news so people in 604 (Vancouver lower mainland) will flee and house price will fall.
Like a nuclear fall-out of some sort.
Wait a minute! Debris from Fukushima are here on BC coast! And I’m damn sure they are radioactive: contaminating the salmon and the water.
Last time I checked: my tongue was glowing a bit green after salmon sashimi sushi. Mmmm… tangy, no need for wasabi this time…
Oh, hells-to-the-yeah!
Hi Garth
(Long-time lurker here, first-time commenter, but have followed you almost since the inception and genuinely appreciate the advice and information you have made available)
I am sure I echo the sentiment of everyone here when I beseech: please keep doing what you are doing.
Keep on keepin’ on, although I can imagine the discouragement you must feel some days!
Nonetheless, if you do decide to transform it into a dog blog, I offer this:
https://www.facebook.com/groups/124878037543731/
:) Stay well, sir!
Garth, close the blog and let us out of our basements
Garth
This has to be the top as it makes no sense at all. Tulips are truly blooming in Canada just look at the price of those bulbs.
Govt is just trying to keep the ship afloat till the election as most of the consumer impact of a low dollar is a few months away and folk always feel better in the spring after a rough winter.
Or the Red Prince wins the election and he gets blamed when the wheels come off. Conservatives win either way.
Anyone in Canada with any sense has taken their money off the table by now, you can’t save the others. They don’t want to be saved. They literally want to go down with the ship.
From an international perspective Cdn RE has gone down by 20% in the past two months along with the value of my Cdn RRSPs but most Canadians have no international perspective. They never go anywhere. They don’t read the international press with its scathing comments about Canada’s future. They just want the granite, the same as their friends have. They confuse debt with wealth.
When this does go down, the impact will be massive. Stand clear blog dogs.
HAM does not account for large portion or RE transactions, but in otherwise balanced market, it is enough to tip the scale and move the market.
——————————
and tip it does, with the heaviest properties as the ham target.
…
Unfortunately, it poison the ecosystem we all are living in, and the time will come when we all will be paying terrible price for it.
——————————-
is living in burnaby really gonna kill ya?
look at london,nyc,etc. it is our future.
“The social fallout from these problems only furthers the case the interest rates should be set 100% by the market and not by a central bank.
Setting the cost of money the way the Soviet Union set the price of grain only leads to massive mis-allocations of capital.
Sadly, the few people who recognize the problems of low interest rates and the credit boom will insist the “right people” simply weren’t in charge. The entire concept of Central Banking needs to be reconsidered.”
+1
So far as I can tell this group includes Mr. Turner. He has nothing but contempt for people who do not believe ( can I even use the f-word) fiat currency is a sensible monetary regime.
#51 seeing it from both sides on 02.04.15 at 8:59 pm
When the staunchest of bears capitulates is when the market turns ;)
……………
Agreed! That’s the first thing I thought when I read the post today, Mr. Turner. Must be the blow off top… The hockey stick formation right before the crash. Well, it will become apparent over the next little while.
I am frustrated with the longevity of this craziness in Vancouver. I have some money saved, I should be able to but a house. I get constant flack from my parents (somewhat unbelievable at my age and theirs!) about not owning. But I refuse to get trapped in any kind of mortgage nightmare.
The people around me think I’m crazy to talk market top even though most of them don’t know why has is cheaper right now…. Yikes. And they all want to tell me how to get ahead with real estate. Nauseating really.
Blog about dogs, poodles, finances … I’d read it either way… Cuz I’m just hanging around waiting for a crash.
Sheesh!! Got to stop writing at night…
That’s … Why ‘gas’ is cheaper
The socially inept and other various malcontents that pepper this blog daily will go through some withdrawal which could provide comic relief for those unfortunate enough to have to deal with them in the real world… but they’ll survive
———————
speak for yourself buster.
this flea-bitten blog needs a succession plan.
As you said before, Garth, the goal is not to be like most people, nor to have an ordinary, enslaved life.
The majority of people won’t be reached by your message, but those that choose to learn will have been helped, profoundly. It’s the value of foregoing the application of 1000 band-aids in favour of resuscitating one drowned person (or teaching someone to swim, in the first place.)
Financial literacy is scarce, so your efforts provide the opportunity of economic mobility to your readers, with no income or social class barriers to access this knowledge. Anyone can read and learn about investing, managing your finances, intelligent real estate choices, or simply to understand how the economy is evolving and how it affects them. If even a few of your commenters are honest and genuine in their self-description, the comments section is a valuable chance to converse with some diverse and experienced people one might not have the chance to speak with, in real life.
I agree with others who have suggested a vacation to refresh and relax. Go for at least ten days. Though you often discuss current events, many of your past posts are timeless, so put us on reruns and go enjoy a holiday.
After roughly 2 years of a weakening Calgary housing market, panic finally setting in:
http://www.theglobeandmail.com/report-on-business/economy/housing/the-real-estate-beat/panic-hits-calgarys-luxury-real-estate-as-oil-takes-its-toll/article22796181/
“The MLS Home Price Index Benchmark for Victoria this month has increased 2.39%..”
I don’t understand this.
On the same page of the report almost all the average and median prices for different property types are down considerably from last year.
Just under that statistics table the benchmark index prices are almost all up considerably from last year.
Why are there two statistics that give a totally different picture.?
Oh
http://www.vreb.org/pdf/VREBNewsReleaseAndSummary.pdf
We own you white devils and make your children sleep in moldy basements, sweet revenge.
I agree all this is frustrating to watch in real time, but just remember: The higher the top the longer the drop!
Cheers, Dawgs…
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We are different, in the way we sum debt. See, it’s not as bad. Keep borrowing.
>
There is a caveat – Canada’s household debt numbers include the debt of unincorporated businesses, which is counted as corporate debt in other countries. That may inflate Canada’s numbers, though McKinsey notes that the trend lines still show continuous growth.
The cost of an “entry-level bungalow” on a thirty-foot lots is, practically speaking, now over $1 million.
Wait … what? How can you have a “bungalow” on a thirty foot lot? 30 feet is two Chevy Cruzes parked bumper-to-bumper. How do you fit a bungalow in that space? I live in a 2-story, with all the bedrooms on the top floor, and it’s still 30 feet wide. How would you get a kitchen, living room, bathroom, and at least 2 bedrooms in the space of 2 parking spots? Is that even physically possible?
Central Toronto is littered with 900-foot bungs on 30-foot lots. — Garth
Glanced at a Tee-vee, our elite mind controllers tell us there are only about 5 main stories in the world we need to know.
7 billion people, controlled by “ISIS”. They do what our leaders tell us they do. Unseen. Unreal.
Is there anything they can’t do?
Technology used as black magic. Planes disappearing. I know it’s true, I saw it on tee-vee.
Our leaders harshly condemming. Same as they ever did, like selling the first invasion wayback when:
http://en.wikipedia.org/wiki/Nayirah_(testimony)
DELETED
Bubbles end in a frenzy of optimism. Some of us are lucky enough to buy some ETFs, eat popcorn, and watch the frothy end from the sidelines.
Garth please stop talking about discontinuing your blog and giving up. I personally have benefited massively financially from your basic advice even though I was brainwashed by the MSM before.
Thinking about it, I am very hard pressed to think of other online sources of real estate/ economic analysis that are even remotely worth the read.
Garth,
How is this buying frenzy continuing when the $600 billion CMHC cap hasn’t been bumped up? Seems like we are going on 2 years now since that announcement and there wasn’t much room left then.
New alarm bells over household debt as Canada faces ‘downward spiral’
http://www.theglobeandmail.com/report-on-business/economy/new-alarm-bells-ringing-over-household-debt/article22797037/
“What the financial crisis showed us is that when you have rising real-estate prices and rising household debt, it can be a deadly mix. You have to manage each carefully,” Susan Lund, Washington-based McKinsey partner, saud in an interview.
It is crucial to monitor household debt levels closely, she said – in particular, which segments by income or demographic group seem to be slipping under water. And policy makers need to tighten lending standards and reduce mortgage size limits when markets are overheated.
Of the central bank’s rate cut, Ms. Lund said it’s “tempting to try to spur growth through credit. But it makes the need to monitor debt more urgent.”
http://www.theglobeandmail.com/report-on-business/economy/housing/the-real-estate-beat/panic-hits-calgarys-luxury-real-estate-as-oil-takes-its-toll/article22796181/
Nearly half of the luxury properties in Calgary’s most prestigious neighbourhood, Mount Royal, have dropped their prices by $100,000 or more, with many homes that were selling well above $1-million now languishing on the market in the six figures. The average detached house in the neighbourhood sold for more than $2.6-million last year, but the neighbourhood hasn’t seen any sales since before oil prices began plummeting in November.
“If somebody had told me you could buy a home in Mount Royal for $900,000 a year ago I would’ve said they were lying,” Mr. Keeper said.
After pouring thousands into granite countertops, hardwood floors and new appliances, Sandra MacKenzie listed her 102-year-old house on a corner lot in Mount Royal for $1.4-million in November, just as oil prices were collapsing. Similar houses in the neighbourhood were selling for $1.5-million in the summer, but after weeks with little interest from buyers, Ms. MacKenzie recently slashed the price to $900,000. An open house last weekend brought 30 people, but no takers.
Garth,
Preferred shares have been taking a beating lately. CPD is yielding 4.8%. Isn’t this a little bit oversold considering the currently low rate environment. What are your thoughts?
“Freedom and flexibility are invisible.”
True.
Until your entourage asks you where you were last month and you tell them you were in the South Pacific.
Until they ask when you plan to retire and then ask: “you retired at what age?!!!!!”
Until they tell you about lack of sleep, debt stress, job stress, kids incessant demands for more stuff, tax increases, that they’ll probably never retire, the guy across the street with a BMW and how do they manage THAT?…..
I LOVE being liquid. I take my first morning coffee looking out at the rush-hour traffic blocking the bridge and thank the lord I never, ever again have to put up, shut up and suck it up.
Financial freedom is glorious Garth. You may feel like you’ve made no difference, but tptb can’t continue to destroy the economy by running away from its problems forever. It will not work.
The only way out is for people to use their power to craft financial freedom. I can thank my parents for inspiring me to start at 15.
Coffee is so delicious when sipped slowly, having the time to think about the next travel adventure.
Garth, you may not have access to those interest rate levers, but you rule.
Dogs? Gotta love ’em. “Dog People”? Not so much….we’ll cast our vote for the financial blog…Thanks Garth!
Garth, you lying bastard, you told us your Swedish friend was giving us a free flu shot!!
http://www.cnet.com/news/swedish-office-gets-under-employees-skin-with-rfid-microchips/
No wonder that needle was so big.
Can we trust anything you say anymore, Big Brother?
(Oh …. btw Garth, you know that little ‘crumb’ in your beard that we tell you we can’t comb out? It’s actually a GPS tracking device. The data has been fascinating. Shall we tell Dorothy now or later, about all your special little three way rendezvous sessions with Brad Lamb and Susan Pigg? Hmmm? Hmmm?)
Off topic a bit but interesting…
Jim Prentice speech in Washington, DC.. Another separatist vote coming? “Our two nations”
“I want to be clear that the energy relationship shared by our two nations, by Alberta and the United States, is much bigger than any single pipeline,” Prentice told the business crowd. “We need a renewed focus on the bigger picture and on the longer term.”
Hmmmmmmm….
#220 Mark
“After roughly 2 years of a weakening Calgary housing market, panic finally setting in”
——————–
A weakening housing market.
I hate commenting on your posts because most of what you write is completely made up crap. But here goes…
WTF are you talking about?
Woof, woof, woof, woof……………………….
You are doing a terrific job Garth. Thank you.
Don’t quit doing it. There are people listening.
What are the rates for SDDH (single detached dog house) in 604, 416?
Ouch Uncle Sam is bitch slapped with a (46.6B) trade deficit.. The high dollar kicking the old mans ass.
So when is that FED spike coming?
#29 John on 02.04.15 at 8:45 pm
GOLDEN RETRIEVERS – THE BEST
++++++++++++++++++
If I had a Golden I’d call it Molson.
I write a blog on making making reasonable choices with respect to food. I feel the same way you do in today’s blog. No matter how much you try to educate people on what makes sense and making good choices, they run to the next fad like gobs of butter in coffee, or snorting cocoa at the local idiot’s coffee shop. They look for the fast easy way out where they don’t have to think or make decisions about anything. I swear we’re falling back into the next dark age.
If you have helped at least one person breath a little easier your efforts are not in vain. You have helped many Garth. Don’t become the greater fool…keep doing what’s right. On the other hand, I do love dogs.
#164 Snowboid
“In my opinion it is unconscionable to suggest this is a good time to buy real estate in Canada.”
——————
So who’s suggesting that you buy?
Holding real estate is a good thing if it’s a proportionaly sound peice of your holdings. Ask your friend Garth.
Congratulations on selling your home back at the peak. I’m sure it was the best decision for you. Unfortunately your analysis that didn’t incorporate the annual inflation adjusted gains into the avearge cost of housing also didn’t account for the cost of renting being deducted from your gains.
For some renting is not a good option. Families with kids close to their schools and friends. Also some are, most are non hugley indebted and a drop in house prices will not kill them or matter in their daily lives. Some that hold real estate also have nice balanced portfolios.
My only comment was that real estate in Victoria is not falling at the moment.
“The goal of ordinary lives is to be envied, despite being enslaved or at risk.” – Garth
Naw! The goal of ordinary lives is to OWN a house! That’s why it does matter what it costs.
All the 33 and 50 footers on the west side get knocked down and built out to the max square foot allowance.
They sell to builders who need to feed the machine.
A 20 year old home that is already maxed out sits and sits. I know I live in point grey where it is all happening.
Garth – I never post but have been reading this blog for about 3 yrs everyday, the information I’ve learned is invaluable. Please don’t stop, but if you do, perhaps taking each blog entry and publishing it in a book? I’d be the first to buy, and so would 1000’s on here daily. Thanks for your dedication – Tyler from London, ON
Question for the dogs: What international dividend ETFs do you recommend? I know ZDI but what others?
The interest rate trick was ludicrously bad fiscal policy, but it’s simply not true that the Toronto market was slowing prior to the reduction. Your detached house stats are a reflection of very limited inventory and a different profile of properties being on the market. I doubt there is any detached house in Toronto proper (i.e. not fordnation country) that you could have bought for less at any point last year than the year before.
I get the daily sales figures, and everything that isn’t delusionally overpriced has been selling in single digit days at or very close (over / under) asking. It is insane that many people have accepted the logic that good houses in Toronto will increase by 10% / year, but many have and are paying these prices. Insanity, but you don’t need to be so deliberately misleading with your use of data to make the point. It just makes it harder for those who aren’t skeptics to become so.
“I hate commenting on your posts because most of what you write is completely made up crap. But here goes…”
None of my posts are ‘made up crap’. So please apologize and go sit in a corner for the completely unwarranted and uncalled for abuse.
Hi Garth,
I am going to invest into a balanced portfolio, as you presented here many times and in your books. So, don’t give up your blog, there is still hope (at least for some folks like me !). But I have one question. Let’s say for exemple, that all the parts in value ($) of the portfolio are stable but REIT goes down in value ($) and so in % of the portfolio. Rebalancing the portfolio, does it mean to sell some of the stable items in the portfolio, and buy REIT ? Thanks.
First, Toronto has too many dogs.
Second, for someone who frequently calls out other people for making basic cognitive errors, you have a tendency to do the same, e.g. looking for patterns in noise.
Prices for detached houses in 416 over the last year have varied from a high of $965,670 in April to a low of $880,433 in July, with substantial month-to-month variation. Most of this is statistical noise. The reason is that the sample size is fairly small, and prices for individual homes vary enormously (more than a factor of ten).
Back in July you noted that prices had dropped significantly. Now you say that prices spiked after the recent interest rate cut. But that cut happened in the last week of January – too late to have a huge effect, unless you think everyone ran out the next day and offered 20% over asking.
What worries me here is that you are doing the same thing as the realtors – cherrypicking the data to fit a narrative. Fun, but ultimately misleading.
Please stay the course Garth. Canadians need to hear from their own Benjamin Graham, Intelligent Investor who answers to Garth Turner.
Canada’s current Popular Delusion and Madness of the Crowd mentality won’t prevail. Whipped into a frenzy by social media with a big dose of Poloz culture of celebrity won’t last. When the fundamentals aren’t there, it is good to have a Garth Turner making people aware of real estate madness. All Poloz did was put the agony of real estate addiction off to another day. One rate cut too many will become one more is never enough. It’s kind of scary.
The Economist, the front page headline, regarding the rate decrease, wrote: “Canada, Risky Business”. Next up this government will ensure BlackBerry has to sell out to Samsung. So it can cheatingly say exports are up $7 billion this year.
Have a buddy who works for a North American manufacturer of office furniture. Located in Toronto. Asked him, “You guys must be pumped with the lower dollar.” Reply, “While the increase in US exports is welcome. It was more than lost to decreasing domestic demand” This is the real story.
“How is this buying frenzy continuing when the $600 billion CMHC cap hasn’t been bumped up? Seems like we are going on 2 years now since that announcement and there wasn’t much room left then.”
Its not. What is happening is that the sales mix has shifted dramatically in the major cities, such that, the Realtors can claim higher prices. But only because what’s actually being sold is in the mid to higher end segments of the marketplace. Activity in lower end has been substantially truncated.
There has been a minor expansion of the non-CMHC subprime loan sector, and there has been a minor expansion to the authority of the CMHC to re-insure subprime loans written by 3rd parties (up from $300B to ~$350B I believe). But generally speaking, hitting the $600B limit for CMHC subprime mortgage insurance slightly over 2 years ago was the top of the Canadian housing market. For identical houses and a ‘constant’ sales mix, its been flat to slightly downhill ever since. We are now starting to see evidence of a downwards acceleration. It took about 2 years for this to occur in the USA (ie: the US housing market peaked in 2005-2006, and the panic really didn’t start till 2007-2008), so Canada is pretty much following in the US’s footsteps timeline-wise.
@Yaroslave:
“I once posted that you are a slave if you have a dog. Cats are the contrarian’s best friend (not dogs).”
I agree 100%. One of the first things you’ll notice if you move into a brand new glass condo tower full of new homeowning sheeple who have drank the real estate kool, is the sheer number of dogs, especially those little yappy fashion-accessory type dogs that were popularized by Paris Hilton. You go up the elevator and there is always some fashionista with a little pooch in a purse. It seems like every properly mortgaged condo owner’s life is not complete without a little yappy dog. Those dogs are so annoying. Absolutely, a dog owner is a slave to their dog. The dog is incapable of even going to the bathroom on its own without the human owner taking it out for a walk. I think dogs really belong on farms where they can have more freedom.
Move into any purpose-built rental building that still allows pets (there are a few left), and you won’t find hardly any dogs, especially you won’t find those yappy little dogs. In purpose-built rental buildings that still allow pets, the most common pet you will find is cats. Those yappy little dogs are trendy so it’s mainly people who like to follow trends who have those dogs. Contrarians don’t follow trends. Cats aren’t trendy. The Trailer Park Boys love cats, the Trailer Park Boys are not what middle class trend followers aspire to be. Cats are also under attack from bird lovers, several recent anti-cat articles about the holocaust they cause on birds. Cats can think for themselves, they can provide for themselves, they have a measure of independence over their owners. Cats are the perfect pet for a contrarian.
Societe Generale’s notoriously bearish strategist, Albert Edwards, has warned that the deflation threat currently dogging the euro zone is greater in the U.S. and that equity markets will soon be “ripped to smithereens.”
“The deflationary fault line on which the U.S. sits is every bit as precarious as that of the euro zone, but is being disguised,” he said in a new research note on Thursday.
“The scales will soon lift from the market’s eyes.”
Check his track record. — Garth
#164 Snowboid
“In my opinion it is unconscionable to suggest this is a good time to buy real estate in Canada.”
——————–
That’s rediculous!
It’s not a good time to buy if you have to take on an excessive amount of debt to do so. It’s not a good time to buy if you’re expecting outsized near term gains.
But some markets in Canada are flat and some are still increasing. It’s not a given that housing is going to crash hard.
If you already own one property and are trading, what’s the difference?
By implying that every Canadian should sell their real estate out of fear of the big crash is even more unconscionable.
#250 Tyler on 02.05.15 at 10:47 am
——————————————
Garth’s just joking. Come on, this blog is his birthchild and a huge success. He could likely sell it when he retires and go buy a small island somewhere.
Instead of a dog blog, let’s get back to sharing squirrel recipes! The long time posters/readers will know what I’m talking about.
#7 Mike: “The problem is people are empowered with the wrong information. The wrong information comes straight from the government. And then it is re-enforced by those who stand to benefit from the ignorance created.”
********************
In a nutshell. This government is not our ‘friend’. But, I guess we get what we deserve….
Time for change?
Just watching the CBC site on the Target ‘final sale’.
My God people are dumb, no wonder there is such a housing bubble going on.
Keep plugging away Garth, some of us are listening.
#18 RE peak: “Take a bow realtors scum you have destroyed the Canadian economy.”
*********************
They ARE a worthless bunch…but the real culprit is our present government.
Uncle Garth, this blog once saved my brain from exploding, and now refreshes my sanity with humour on a daily basis. And informs my family’s finances.
Please continue giving us the lessons that our parents missed! I already know all about dogs…
#26 RE peak: “To get the last few suckers to max out on debt and thus unable to spend in the economy = crash.”
**************************
Amazing, isn’t it? Our economy is crashing…and the feds have nothing to offer except more pain for the electorate.
#28 Derek R: “It’s tough when people need to be warned; you warn them; and the vast majority ignore you.”
****************************
Garth can’t possibly reach everyone. What is the population of Canada again? ;-)
The spring wrecking balls are out early this year with 6 houses being flattened within 100 yards of mine on Vancouver west side.
No prizes for guessing who the buyers of these places are
If you consider buying a house for a long term (15-25 years) would not the same rule apply as for buying stocks, ETF, etc.: timing the market, looking for the bottom is pointless?
If you can afford to buy a house (where you will live) and invest in a balanced portfolio at the same time – would not the two work as hedging against each other – again, on a long run, 15-25 years?
Is there any guarantee that the stock market would not get crashed as much as the real estate market – even with a balanced portfolio?
Was the 2008 crash in the US really a real estate crash – or a financial crash, where real estate was basically a victimized target by a predatory financial product, acting as a parasite on the host?
@Victor V
Thanks for the link.
From that Globe and Mail article:
“And policy makers need to tighten lending standards and reduce mortgage size limits when markets are overheated.” Doesn’t seem to be happening. Without CMHC the Banks mortgage lending practices would have been tighter in the first place.
Here’s hoping Garth’s blog keeps on truckin’
#220 Mark
“After roughly 2 years of a weakening Calgary housing market, panic finally setting in”
——————–
So, tell us where you plucked that factoid from, if it’s not made up crap?
When you do, I’ll say I’m sorry.
Sweet vindication.
Garth et al:
I had the same face as that kid in the photo….when I saw the price of gasoline this morning…ouch.
What gives….and why soo high…should be like 70 cents a litre right now…based on the price of oil.
Me thinks the consumer is getting gouged again.
90 john balong on 02.04.15 at 9:45 pm
‘you lose my lawyers name end with “STIEN”’
Doug Ford, is that you with your outdated stereotypes?
Anyway, it’s “stein,” not “stien.” If you’re going to be a bit of a bigot, try not to be totally ignorant about it.
#18 RE peak has hit? Economy to crash on 02.04.15 at 8:40 pm
Looks like the peak before the monster crash has happened. Garth has given up ? The economy is so screwed. Look for more businesses to close down and or go bankrupt. Look for more factories to close down as well. Take a bow realtors scum you have destroyed the Canadian economy.
_____________________________________________
How could realtors destroy the economy? Could it be the sellers and buyers were so greedy, demanding high prices and paying for them, despite all the information out there warning that prices are to high and not sustainable.
At some point people have to take responsibility for their own financial well being and not blame others when they screw up.
#119 westcanguy: “Garth, Why don’t you turn off your computer, dust off some of that 1% fee you charge to manage other people’s money, grab your better half and fly somewhere warm, drink the local beer and dip your toes and titanium leg into the sand and surf?”
****************
That sounds like a plan! Garth needs a break from all the idiocy that surrounds him…
Life is short.
@101 TRT
You wrote
Why do you have to delete anything that has to do with foreign money propping up the Vancouver RE market?
Can we have a reasonable adult debate?
-The answer is no!
If Garth doesn’t nip that subject in the bud, this blog comment section will degenerate into a racist rant.
Dogs are Better than Cats
1) Dogs force you to leave your secure couch and exit your home for some exercise.
2) Dogs can play fetch – more exercise
3) Dogs can save your life – see numerous articles on web.
4) A Dog is your only “true friend”
5) Dogs are “Chick Magnets”, especially puppies.
I could go on, but you get the picture. I have had cats before, and I really like cats, but in my opinion….
Dogs Rule! ( I think Garth agrees!)
#208
#258
“Cats are smarter than dogs. You can’t get eight cats to pull a sled through the snow” – Jeff Valdez
“Canada and Australia along with a number of countries in northern Europe “now have larger household debt burdens than existed in the U.S. or the U.K. at the peak of the credit bubble,” according to a new analysis.”
The thing that got out of a stall in 2009 was consumer spending. Now that we have reached critical mass their their doing everything they can to keep the party going. Seems this may collapse under its own wait. And the can was kicked from 2009 to now.
#264 Daisy Mae on 02.05.15 at 11:48 am
#18 RE peak: “Take a bow realtors scum you have destroyed the Canadian economy.”
*********************
They ARE a worthless bunch…but the real culprit is our present government.
———————————————————-
I think ALL THE WOMEN NAMED Daisy Mae ARE a worthless bunch!
See how dumb that sounds!!!
The outcome will be more difficult but I can live with that, after years of showing people how to be careful, diversified, balanced, liquid and free. But most don’t care. The goal of ordinary lives is to be envied, despite being enslaved or at risk. Freedom and flexibility are invisible. Real estate has curb appeal. The house wins. No contest.
Words of Wisdom.
#247 Not a Realtor on 02.05.15 at 10:36 am…
I agree that real estate was good to ‘hold’ in the past, if you bought a few years back and had a small mortgage.
It is incredibly risky to purchase now, more so than even a couple of years ago.
The cost of rent is justified in most cities, especially Kelowna simply because it’s so low compared to the purchase cost.
We rent a large luxury condo in Kelowna for under $ 1500 a month.
If we had purchased it with 20% down the payment would be $ 1950 a month. Strata fees and special assessment are $ 400 a month. Taxes are $ 200 a month, then add in average maintenance of $ 110 a month.
The down payment if invested at a conservative 4% annual net would amount to $ 340 a month.
Total monthly costs to purchase: $ 3000
Total monthly rent: < $ 1500
So the costs and risks are low to rent, but much more risky to buy.
We do hold real estate, but in Arizona not BC.
We certainly wouldn't consider or recommend buying real estate in Victoria now or in the foreseeable future.
The bottom line is any calculation about real estate values should include inflation.
Does #222 not qualify as a questionable post?
100 john balong on 02.04.15 at 9:56 pm
I smell a bottom in the markets time to get in
Jim Cramer
=====================
I heard he’s one of the best bottom sniffers in the market.
___________________________
What market is he referring to?
I don’t see a bottom in either the US or canadian market at this point, and he is certainly not referring to the RE market. Anyhow, at rebalancing time, my holdings will tell me which ones need to be bought, or…I may do it earlier if there is a real tank.
#260 Edward on 02.05.15 at 11:34 am…
I didn’t imply that all Canadians should sell, that’s just plain silly. But I believe the risk of a crash is greater than a soft landing with the recent lowering of interest rates and the reported increased prices in major centres.
What do you consider excessive debt? With a median family income of $ 100K I would suggest a maximum mortgage of $ 500K.
Assuming that you had $ 50K to put down that’s a $ 550K home you could afford.
Unless you lucked out and lived in a smaller centre with a $ 100K family income, that amount won’t buy a SFH – you would be lucky to get a condo or small townhouse for that.
The bigger issue is that most buyers are taking on excessive debt, even Poloz admits they are at record highs.
Bottom line – this isn’t a good time to be buying real estate in Canada.
RE roulette.. because history never repeats itself.
Back in ’82 an old man who had been through the GD asked me how I was going to sell a spec house with rates at 19%.. and still climbing. I said I would pass the cost on to the buyer, because with RE you couldn’t lose!
Then the economy collapsed. I sold at a huge loss and all work ceased for the next few years.
RE delirium.. is like jumping off a cliff knowing you can always back it up a step, before you hit the ground.
That argument from the newsletter would seem to support foreign money buying and bidding up property prices.
A Canadian dollar at par with USD vs. fairly quickly moving to 0.80 would easily drive a $1.3 million house to $1.5.
#155 Marco on 02.04.15 at 11:17 pm
——————————————
Not quite a pyramid scheme. Sure, boomers may make out like bandits, and millenials get stuck holding the bag, but ultimately the millenials will own the house, and for all intents and purposes, that asset will have substantial value.
This is one pyramid you can actually live in.
“Is there any guarantee that the stock market would not get crashed as much as the real estate market – even with a balanced portfolio?”
Historically the “stock market” (by that, I assume you’re referring to the TSX index) has inverse correlation to the housing market. When the stock market does well, housing’s performance is usually quite muted. When housing does well, likewise, the stock market doesn’t usually do quite well.
This chart might give you some insight into the sort of cyclicality inherent in the stock market vs. housing market in Canada:
http://pacificapartners.com/blog/wp-content/uploads/2012/03/Wealth-Management-Burnaby.png
“A Canadian dollar at par with USD vs. fairly quickly moving to 0.80 would easily drive a $1.3 million house to $1.5.”
Only problem with this “theory” is that nearly everyone buys on credit, and credit against Canadian houses is only available in Canadian dollars. Hence, the purchasing power of Canadian buyers (the buyers of 99% of housing in Canada) does not improve merely on account of currency depreciation. In fact, such purchasing power probably is less with a weaker dollar on account of the presumably weaker economy that would typically accompany a weak CAD$.
Garth is vindicated, if only the masses listened. Oh well they must now experience the pay back.
http://www.theglobeandmail.com/report-on-business/economy/new-alarm-bells-ringing-over-household-debt/article22797037/
“So, tell us where you plucked that factoid from, if it’s not made up crap?”
The data is out there, but actually being in Calgary and seeing things for yourself can be useful as well. And evidence is abundant that the CMHC changes introduced by “F” in the 2013 Budget marked the top of the Canadian housing market, with weakening ever since.
So please, would you be a little bit more respectful?
I have long said, the current housing dilemma seems to be tied 100% to loose credit standards, and in a decent economy, it works… puts more people behind the debt umbrella, which we call, increasing risk.
So when the other shoe drops… (1-3 yrs from now) these are the people that get hammered… poor bastards.
And their logic is, “Well it hasn’t happened yet, so guess it never will”… No morons… it hasn’t happened yet, which only INCREASES, the chance that it will happen soon. As the longer a market cycle goes on, the greater the risk of correction.
We are 6 years into this market cycle, and its been a boom… some of my market funds are up 50 and 60%… I am happy with that… so have rebalanced 3000 a month for the last year, now sitting at 60/40, moving to 50/50 in 2 years. And yes I own a house, its not an investment… its a place to live… yes its more expensive to maintain, but its where I choose to spend my money.
There is no hope for Canada it is just mater of when we as a country will find our self’s in a big trouble. Earlier today I went to target to buy 9V batteries and couple of new CO and smoke detectors (20% off). While I was there store vas filled with I lululemon wearing stay at home moms piling up on kids diapers, toys and DVDs…
On a way out I talked to cashier, and I was told that up to yesterday or just yesterday employees could buy anything in store with very good discount, she sad some of hew coworkers went nuts they blew half od their paycheques, than she commented “They gave their money back to target, I just got two pair of jeans…”
Garth:
Please do not give up. I taught elementary school for thirty years. The best compliment I had was when a parent said about me: “He never gives up on a kid.”
Your perspective and advice have helped many. You just don’t see them because the media does not portray them. It is no coincidence that on the six oclock news we are shown a vehicle crash, a train derailment and then real estate news. Its cheap and entertaining.
If you need a break, take one. But don’t give up on us.
#293 Mark
MARK’S STATEMENT:
“After roughly 2 years of a weakening Calgary housing market, panic finally setting in”
MARK’S ANSWER:
“The data is out there, but actually being in Calgary and seeing things for yourself can be useful as well. And evidence is abundant that the CMHC changes introduced by “F” in the 2013 Budget marked the top of the Canadian housing market, with weakening ever since.”
————
So, more crap.
No apology.
What has David Madani been right about? Where does he get 25% drop in prices for RE? He still has a job?
Canada is going to have 100,000 job openings guaranteed this year.
The first 779 job openings were awarded to potential immigrants. The express entry program was quietly launched on Friday. You need a job offer to get in.
http://www.cicnews.com/2015/02/express-entry-invitations-apply-canadian-immigration-issued-024479.html
#159 Nomad: “Can’t fight the government…”
**********************
But we can get rid of it.
@Mark
Go get a girlfriend.
Or boyfriend.
If you build it, they will come.
Best medicine for ignorants is to ignore them. The more you try to change their idiotic ways the more they don’t listen. Just ignore them and all the sudden they will not feel so important any longer.
#176 Two-Thirds: “My problem is counting the days until the fancy car comes out of winter storage, which BTW is financed at 1.9% while the cash I could have paid for it is earning me 6%.”
*********************
Now, this is what I’m mulling over.
IS this the way to go?
#281 Paul
#264 Daisy Mae
#18 RE peak: “Take a bow realtors scum you have destroyed the Canadian economy.”
*********************
They ARE a worthless bunch…but the real culprit is our present government.
———————————————————-
I think ALL THE WOMEN NAMED Daisy Mae ARE a worthless bunch!
See how dumb that sounds!!!
*********************
Gosh! Did I hit a nerve? LOL
Not to sure why I am doing this but I think someone has to back up Mark.
I think the guy is as crazy as a coconut ,but at least he takes the time to back up his statements with
explanations of his reasons for his beliefs.
From here on out your on your own Mark!
““My problem is counting the days until the fancy car comes out of winter storage, which BTW is financed at 1.9% while the cash I could have paid for it is earning me 6%.”
Doubt your car is really financed at 1.9%. Most likely it was financed at 5-6%, but the cost of such financing was tacked onto the car in a higher up-front purchase price. Classic car salesmans’ trick to manipulate the numbers, that’s for sure.
#273 miketheengineer on 02.05.15 at 12:18 pm
Garth et al:
I had the same face as that kid in the photo….when I saw the price of gasoline this morning…ouch.
What gives….and why soo high…should be like 70 cents a litre right now…based on the price of oil.
Me thinks the consumer is getting gouged again.
…………………..
Me thinks you’re right! Disgusted again… Prices at 114.9….
Daisy Mae, what is dumb is blaming everyone else for our own decisions. If I max out the credit cards buying shoes, it isn’t the shoe salesman’s fault when I can’t afford to buy groceries.
Oh, but the government should have Stopped Me From Being An Idiot. It isn’t the government’s job to SMFBAI, it’s your job to SMFBAI.
Garth,
Said this before too, but going to try my luck one more time.
It would be really helpful if you can do a post on “Things to look for when preparing to make an offer on the house”, and how to go about checking all the important things before making an offer.
previous listings? number of days on market? is it fair value what they are asking? neighborhood check ?
As Calgary market is struggling, and in a possible scenario of 15-20% price drop. It would be nice to have your blog dogs prepared to be good vultures.
#301 TRT @Mark
Go get a girlfriend.
____________________
This blog sometimes brings the worst in people.
I come here for sane advice on financial issues, and I enjoy reading all the posts to have a wider and varied perspective. But I do not enjoy gratuitous insults, especially aimed at someone who never insults anybody else. This answer in particular, grates me the wrong way, since it insults an entire group of people who have absolutely nothing to do with this discussion… at all. What if Mark had a boyfriend? How would that diminish him in any way?
Can we just go back to the discussion?
Sir Garth: Your predictions are right on! I recently got a large lot in a great trailer park, I rent it! The trailer that came with the lot was condemned! So I got the lot for the price of the rental! So I need a trailer, the want ads have exploded with trailers for sale or rent, up thousands of ads, and drops of ” take the trailer off my hands” for the payments, or the trailer and the lot go together. Scary times
#308 DisgustMadeMePost on 02.05.15 at 3:33 pm…
I agree on the gouging in Canada, but it is also up here in Phoenix… to .548 CAD per litre.
Garth,
Could you give us a sample of your dog blog writing so we can make an informed choice between that and your financial stuff?
Cheers,
Steevee
P.s. Your advice over the last few years has been brilliant. As a result, my family and I are financially secure. And we owe it to you. Thanks, mate.
The way I percieve you is not one that would say ‘I told you so’ but at the same time… I almost can’t wait for you to say it when the house of cards collapses.
Cousin argued that you ‘cannot live in your stocks/securities’
I said ‘damn straight I can’t, but they pay me so I can live a grand life style with very little debt’
they still don’t get it.
Garth has achieved something amazing. He is relevant to a large number of decision makers. He is probably more influential than all but a few Canadians. On the other hand Garth does need a holiday once in a while. Maybe he could appoint a temporary stand-in. There are probably lots of pundits who would love the exposure but are there any up to the task? I doubt it.
#70 jean on 02.04.15 at 9:20 pm
So Garth, will you be buying now? I know you currently rent but if Poloz will NEVER let the housing market correct, will you now be a buyer? Or will you plan to rent for the rest of your days, since no correction will ever arrive? Just curious.
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I’m sure Jean’s comment is in jest, yet it truly amazes me coming to this site regularly how many comments state or imply that the Gov’t controls the (housing) market. Please apply some common sense to realize that they endeavour to influence various aspects of the economy with a limited number of fallible tools at their disposal. Anyone who fools themselves into thinking the government actually CONTROLS house prices is simplistic and/or naïve (not to mention out for an unpleasant surprise at some point depending on what they owe). Surely if the Cdn Gov’t controls real estate prices here, the US Gov’t also controls theirs! …Wait a minute!
Long-time listener, First-time Caller
What happened in the last two weeks of January not only reversed the GTA tide, but turned the entire market.
the corollary is that a 0.25% increase would collapse the entire market.
Logical thinking = terrorism.
Smoking man is right, these anti-terrorism laws are simply to root out trouble makers when the sheeple realize they are bankrupt and lose their minds.
Logically, a strong economy needs a mix of skilled labour and cheap labour, affordable housing, minimal taxes, efficient infrastructure, minimal regulation, simple taxes.
We have the exact opposite in Canada! Everything is backwards! Logic is forbidden.
The under 40 crowd is working minimum wage jobs, and more concerned about social justice issues than why they are dirt poor and have terrible jobs.
Helpful tip:
Any time you hear, “Well I bought a house in 2015.”,
just run away.. fast
#243 Smoking Man on 02.05.15 at 10:28 am
Ouch Uncle Sam is bitch slapped with a (46.6B) trade deficit.. The high dollar kicking the old mans ass.
So when is that FED spike coming?
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I don’t want to say I told you guys so, but I did say it just a few days ago. The high USD is killing their exports.
#299 TRT on 02.05.15 at 2:54 pm
Canada is going to have 100,000 job openings guaranteed this year.
The first 779 job openings were awarded to potential immigrants. The express entry program was quietly launched on Friday. You need a job offer to get in.
http://www.cicnews.com/2015/02/express-entry-invitations-apply-canadian-immigration-issued-024479.html
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Do Nectonites count as immigrants? Smoking Man you’re up!
https://www.youtube.com/watch?v=hC-T0rC6m7I
#296 Michael Lawrence on 02.05.15 at 2:16 pm
Garth:
Please do not give up. I taught elementary school for thirty years. The best compliment I had was when a parent said about me: “He never gives up on a kid.”
Your perspective and advice have helped many. You just don’t see them because the media does not portray them. It is no coincidence that on the six oclock news we are shown a vehicle crash, a train derailment and then real estate news. Its cheap and entertaining.
If you need a break, take one. But don’t give up on us.
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My wife was a calculus teacher for 35 years and she always loved it when the student finally had the “ah ha” look on their face when they learned how to solve a problem!
RE is definitely entertaining of late, have to agree.
Is Canada the new Greece?
http://www.ctvnews.ca/business/household-debt-in-canada-may-be-unsustainable-report-says-1.2222518
#278 miketheengineer on 02.05.15 at 12:37 pm
Dogs are Better than Cats
5) Dogs are “Chick Magnets”, especially puppies.
I’ll go you one better … I had a pet crow that used to sit on my shoulder … ALWAYS brought the girls in …
“Canada 2nd Only To Greece In Household Debt Growth, Risks Crisis: Study”
Yeah – everything’s just rosy, no worries.
Link: Huffingtonpost.ca
#305 Daisy Mae on 02.05.15 at 3:23 pm
#281 Paul
#264 Daisy Mae
#18 RE peak: “Take a bow realtors scum you have destroyed the Canadian economy.”
*********************
They ARE a worthless bunch…but the real culprit is our present government.
———————————————————-
I think ALL THE WOMEN NAMED Daisy Mae ARE a worthless bunch!
See how dumb that sounds!!!
*********************
Gosh! Did I hit a nerve? LOL
*********************************************
Not really, it just shows you are not equipped to make a point without disparaging a whole group of people
The Canadian Press, Published on Thu Feb 05 2015
DVD and Blu-ray rental company Redbox is shutting down its Canadian operations and pulling its rental kiosks out of Canada.
Wow!! even the customer service robots are leaving …….
“What do you consider excessive debt? With a median family income of $ 100K I would suggest a maximum mortgage of $ 500K.”
I disagree, that’s way, way too much debt for a “median family income of $100k”. 2-2.5X debt to income is the maximum that such families should be looking at. And over the long term, house prices have been in the 2-2.5X income range. A bit higher in the major cities, a bit lower in the country.
5X is just asking for trouble, minimal college funds, no retirement savings, and worse, an extreme amount of volatility.
Also ‘debt’ should also include ‘off balance sheet’ items such as leases, water heater rental cancellation fees, and even cell phone contract obligations.
#322 Holy Crap Wheres The Tylenol on 02.05.15 at 5:22 pm
#299 TRT on 02.05.15 at 2:54 pm
Canada is going to have 100,000 job openings guaranteed this year.
The first 779 job openings were awarded to potential immigrants. The express entry program was quietly launched on Friday. You need a job offer to get in.
http://www.cicnews.com/2015/02/express-entry-invitations-apply-canadian-immigration-issued-024479.html
__________________________________________
Do Nectonites count as immigrants? Smoking Man you’re up!
https://www.youtube.com/watch?v=hC-T0rC6m7I
………..
Only four of us here, we put a whole new spin on illegal aliens… :)
Well things at oil and gas co. are not looking great, of course. Lots of layoffs announced and many that most haven’t heard of. We’re on the hunt for our 3rd rental house in 4 years, lots on the Market, lots. Let me tell you how we have a taste of the goods to come. People are polite to us now when we see a place, they are trying to convince us to move in, a year ago, 2 years ago, they could care less, first come first serve. They’d barley answer emails or phone calls, now its QUITE a different story. Rents are still high, people are holding out, but you can actually see the listings languishing on rentfaster and Kijiji unlike MLS, months and months of empty places. After so many years of arrogance and amatuer landlords here, we get a taste of what it’ll be like to buy a house in a year or so.
Miami and LasVegas both bottemed in 12-18months as they were mostly tourism based, I think AB being 24% energy 24% Finance\Real Estate (gov stats) will bottom even faster.
Finally light at the end of the tunnel albeit my job is in serious jeopardy.
Can you do an overview of non-recourse mortgage implications for us in Alberta? I did some research on the programs in the USA that helped adjust mortgage’s for people who couldn’t make payments, they didn’t seem to be forgiven for their underwater, just longer term’s and less interest.
I’m sure you know all about it!
I love our dogs, hence why its so hard to get a good rental in Calgary, few rentals accept pets, they are mistaking a mistake turning us away at this point in time though….
Keep up the good work Garth, the few of us who’ve been holding on in Cowtown for so long cling to the blog to remind us we’re sane. (perhaps…)
Greg Robertson ( Vancouver mayor ) says there will be 1,000,000.00 people arriving in Greater Vancouver in the next 10 years.
Garth, what do you think that will do to our real estate prices…..Double..triple perhaps.. ??????
The U.S. EIA reported that domestic crude stocks increased by 6.3 million barrels to 413.06 million barrels.
This in the highest level recorded by the agency since it started in 1982.
That’s 4 consecutive weeks of gains …. if anyone is counting.
“Can you do an overview of non-recourse mortgage implications for us in Alberta? “
Non-recourse for mortgages only applies to provincially-regulated mortgages (ie: nothing written by the national Bank Act institutions). Provincially regulated mortgages covered by CMHC insurance also are not non-recourse either. So, in a nutshell, if your mortgage is legitimately “at risk” of default, chances are, its not even non-recourse.
Basically, non-recourse is a non-issue in Canada, just like it was in the USA. In nearly all cases, the practical consequence to defaulting on a mortgage in Canada is filing for bankruptcy.
As for principal reductions/work-outs, the banks have little reason to play kindly with the borrowers, knowing that the CMHC is obliged to pay any defaults in full. Posted rates will be all that the banks will offer such clients, which, considering the sort of discounts that have been on offer for the past few years, is, in and of itself, quite an interest rate shock. I do expect the CMHC to eventually come out with programs to “help” underwater homeowners whose loans are under CMHC subprime insurance, but as of yet, no such programs have been announced. As has been noted in the past, the CMHC has beefed up its staffing levels in the loan workout area considerably.
“This answer in particular, grates me the wrong way, since it insults an entire group of people who have absolutely nothing to do with this discussion… at all. What if Mark had a boyfriend? How would that diminish him in any way?
Can we just go back to the discussion?”
Absolutely correct.
Personal attacks have no place being here on this blog.
“the corollary is that a 0.25% increase would collapse the entire market.”
Not really. the funny thing that increasing rates would have exactly the same effect
Every bubble needs to run it’s course. Once it blows, no rate cutting is going to help, just like it didn’t help anywhere else in the world
Garth,
How is this buying frenzy continuing when the $600 billion CMHC cap hasn’t been bumped up? Seems like we are going on 2 years now since that announcement and there wasn’t much room left then.
I think we are not being told the whole truth here. That number is way over 600 Billion for sure
#327 Paul on 02.05.15 at 5:55 pm
#305 Daisy Mae on 02.05.15 at 3:23 pm
#281 Paul
#264 Daisy Mae
#18 RE peak: “Take a bow realtors scum you have destroyed the Canadian economy.”
*********************
They ARE a worthless bunch…but the real culprit is our present government.
———————————————————-
I think ALL THE WOMEN NAMED Daisy Mae ARE a worthless bunch!
See how dumb that sounds!!!
*********************
Gosh! Did I hit a nerve? LOL
*********************************************
Not really, it just shows you are not equipped to make a point without disparaging a whole group of people.
**********************
CREA does not impress. And it tarnishes all realturds.
#329 Mark on 02.05.15 at 6:14 pm…
I don’t disagree, but running the $ 100K income through through several mortgage calculators comes up with a $ 500K mortgage.
The point I was trying to make is that the stated median family income of under $ 100K in Vancouver won’t buy a house, not likely even a townhome – maybe a 1000 sq ft condo.
As you point out larger debt is trouble, this is of great concern for Vancouverites, Torontonians, etc.
ok, so we have the anecdotal evidence provided by the pilot, as well as the factual evidence by big layoff announcements from corps themselves but then we get the gov’t saying today that there were 35k jobs added last month.
who is right? who should we believe? I just don’t see that many jobs created to offset all of these that we know about, let alone the ones we don’t…
“So, like I said the other day, I give up. There’s no longer any semblance of logic guiding the actions of the people you work with, your mom or the guy fixing your taps who last week bought his eighth rental.”
Welcome to MY world !!!
I’ve just about had to take up kickboxing to repeat the stuff you say in your articles. I can’t count the times I’ve had to exit a conversation or exit entirely because someone is losing their shit over hearing anything about a decline in house prices.
HE told her this house will make them both rich, that’s why THEY bought it, and that is why SHE is with HIM.
You’ve come this far Garth, you might as well stay put and narrate the carnage that ensues, in your signature, colorfully sexy but meaty, hell’s angel with an economics degree, manly and astute, confident manner.
We would still miss your writing even if you had nothing much to say about finances of the day.
Besides, you owe it to dogs like me……
…….dogs who listened to you from the start. Dogs who took your advice, followed your every instruction, and hung on every word, greedily awaiting the next article.
Dogs like me who tried to warn people and spread the gospel of Garth and were ridiculed, humiliated, scorned, threatened, you name it. All true.
Dogs like me who supported you, read all your articles, bought your books, lived their lives by the good advice you gave us for free.
You owe it to dogs like me Garth…..to narrate the financial bloodshed that will soon occur, as the “house” of cards comes down hard.
I want to hear it in painful, gory detail, for all the times I’ve been harassed or harangued for trying to explain housing to people and for all the times that their glorious palaces and new cars have been flaunted in my face.
You owe it to dogs like me who have an incredible financial education now, thanks to you, when we came with no idea at all about finances and the economy. I enjoy it so much, I might change trades. Thank You.
Now get back to work ! ;-)